BE.Mining by Business Excellence Magazine

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finning south america: Codelco Chuquicamata Mine: eurostar Diamond traders: ISSUE No.13

Tracking the trends 2 14 Deloitte highlights the top 10 issues mining companies will face in the coming year

+ Can Juniors Borrow Instead of Raising Equity?

HEREâ&#x20AC;&#x2122;S WHY ONTARIO, CANADA

IS YOUR NEXT

BIG IDEA Opportunities for mineral exploration in Ontario abound. Powered by global leaders in innovation and safety standards, our mining practices are among the safest and most sustainable in the world. With business costs lower here than in most G7 countries, Ontario suppliers are more competitive â&#x20AC;&#x201C; so you can depend on quality goods and services, delivered on time, on spec and on budget. Innovation is at our core. Make Ontario your next big idea.

YourNextBigIdea.ca/Mining

$2.9B

in non-metallic minerals, including diamonds, was produced in Ontario in 2012

$2.6B in gold

$1.5B in copper

$1.4B in nickel

$787M

in other metals such as platinum and silver

Paid for by the Government of Ontario.

business excellence

Business John Oâ&#x20AC;&#x2122;Hanlon Editor johanlon@bus-ex.com Will Daynes Editor wdaynes@bus-ex.com Matt Johnson Art Director mjohnson@bus-ex.com Louise Culling Production Designer lculling@bus-ex.com Richard Turner Director of Sales rturner@bus-ex.com Vince Kielty Director of Editorial Research vkielty@bus-ex.com

Business Excellence brings you content from leading business influencers and strategic thinkers providing inspiration and guidance to help you and your business grow. We showcase some of the best examples of successful organisations from around the world giving you a unique insight into how they operate.

Sharon Rooke Administration & Operations srooke@bus-ex.com Matt Day Head of Technology mday@bus-ex.com Andy Turner Chief Executive aturner@bus-ex.com

Contributors Deloitte Professional services firm

HINT: For the best experience, click the fullscreen icon

Kenton Ralph Toews Sprott Global Resource Investments Ltd

Subscriptions & Enquires info@bus-ex.com

Jacquard House, Queen Street, Norwich, NR2 4SX. England

Infinity Business Media Ltd

BE Mining

Issue No.13

lead story

Tracking the trends 2014

Deloitte highlights the top 10 issues mining companies will face in the coming year.

FEATURES: 18 finance

Can Juniors Borrow Instead of Raising Equity? Why a junior might opt for debt over an equity issuance.

22 Event preview

Dates for your diary A selection of upcoming events.

24 Greenland

Uranium in greenland

Greenland has now reversed its policy of zero tolerance toward radioactive elements: we asked the Governmentâ&#x20AC;&#x2122;s Chief Geologist Henrik Stendal to explain the implications of this decision on current and potential mining projects on the island.

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contents

minerals: 30 Greenland Minerals & Energy the final furlong

Greenland Minerals and Energy Ltd is an exploration and development company focused on the Kvanefjeld multielement project in South Greenland, which was recently given the nod by the Danish and Greenlandic governments.

44 Eurostar Diamond Traders A cut above the rest

Even in the face of challenging market conditions the sheer quality and unmatched excellence of Eurostar Diamond Traders products mean that it remains a leading global force in the diamond sector.

56 Walter Energy

Getting better all the time

Walter Energy Canadaâ&#x20AC;&#x2122;s continuous improvement initiatives, are implemented in its metallurgical coal mines, is helping the company navigate difficult market conditions.

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Issue No.13

metals: 74 codelco Chuquicamata Mine Bigger is better

The worldâ&#x20AC;&#x2122;s largest open-pit mine has been known since prehispanic times. Today a massive underground expansion project is taking the asset into a new era of future prosperity.

90 Cobre Las Cruces (CLC) 21st Century mining

100

By maximizing its return on considerable investment in recent years Cobre Las Cruces (CLC) is well on the way to achieving its vision of becoming a benchmark standard in modern mining operations.

100 Levon Resources

Rich in resources and resolve

In the last twelve months Levon Resources has worked hard to consolidate and progress its assets, gaining 100 percent ownership of the Cordero Project, one of the largest silver resources on the planet.

service providers: 110 Finning South America

Equipment and services which drive the economy

110 6|

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The most important partner in the distribution of Caterpillar equipment and services worldwide, with itâ&#x20AC;&#x2122;s focus on delivering an excellent service.

contents

120 bdo

Innovative thinking and insight

With more than 100 offices from Vancouver to St. John’s, BDO is one of the leading accounting and advisory firms in Canada, and an invaluable service provider to the countless mining companies that call the country home.

120

associations: 130 Ontario Mining Association

A province of possibilities

The mining sector has always existed as a pillar at the centre of Ontario’s growth. Thanks to the efforts of the Ontario Mining Association (OMA) its role in defining the province’s future will only continue to gain importance.

138 The Kenya Chamber of Mines (KCM) A land of opportunity

130 138

Monica Gichuhi, Chief Executive Officer of the Kenya Chamber of Mines (KCM), discusses how the country is playing a vital role in making East Africa one of the most exciting new frontiers for mining on the planet.

152 SEAMIC

Promoting responsible mineral development in Africa

The Southern and Eastern African Mineral Centre (SEAMIC), an international organisation under the umbrella of the United Nations Economic Commission for Africa.

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Tr acking the An executive summary of the top 10 issues that Words by

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Deloitte

| Researc

Mining

e trends 2 14 mining companies will face in the coming year

ch by

Richard Half hide

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Mining

hile mining companies are no strangers to volatility, 2013 stands out as a year of particularly significant shifts. Slower demand out of China and ongoing economic weakness in other parts of the world pushed down commodity prices and threatened to tip certain commodities into over-supply. Despite this softness, both operational and capital costs continued to rise and governments in many jurisdictions continued to demand outsized contributions from the natural resources sector. Companies, already struggling with the costs and risks of mining deeper deposits in more remote regions, floundered as a result, posting record levels of impairments amid shrinking share prices, revenues and profits. In response to this reversal of fortune, the same shareholders who demanded rapid growth in past years called for new management. For their part, equity and debt markets shut off the taps, putting mining companies (especially juniors) on a funding tightrope. To stay afloat, many companies were forced to put marginal projects into care and maintenance and halt capital expansion. To exacerbate the situation, cost containment efforts do not absolve companies from making the investments necessary to improve their safety records, strengthen community relations in the regions where they operate or attract the talent they need for future growth.

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To balance these potentially competing mandates, mining companies may need to make more significant structural changes than ever before. Beyond engaging in sustainable cost reduction, right-sizing capital projects and adopting new approaches for dealing with local communities, governments and regulatory bodies, they must embrace new forms of innovation. In a very real sense, it may be time for mining companies to change the way they do business. Although there is little doubt that the market will rebound, especially as long-term demand fundamentals remain strong, the companies that thrive into the future will be those that lay the groundwork for a new operational reality today.

Key recommendations 1. A s in previous years, current commodity price weakness is likely to be short-term. Rather than waiting out the market swing, however, miners should take the opportunity to evolve by adopting the processes, technologies and mindsets necessary to strengthen their long-term operations. 2. W hile mining companies cannot change global economic trends, they can change the way they operate. To mitigate the risks of endemic industry volatility, it is time to pursue more innovative approaches to enhance both internal financial, safety and talent management programs and external relationships with communities, governments, shareholders and regulators.

â&#x20AC;&#x153;In a climate of volatile commodity prices and shifting demand fundamentals, mining companies are entering a period of structural change. To rectify cost overruns, improve capital efficiency and rebuild investor relationships, companies need to sharpen their focus on productivity, sustainable cost management and enhanced shareholder value.â&#x20AC;? Phil Hopwood, Global Mining Leader

01 The cost of contraction Mining productivity hits new lows

• Despite commodity price weakness, input and production costs remain stubbornly high. The practice of extracting from lower grades also drives up costs. • T ighter margins have reduced shareholder returns, resulting in plummeting market capitalizations for the sector. • Dealing with this cost equation requires more than reactive cost cutting. To reduce costs sustainably, miners must improve their overall productivity, strengthen their management and reporting systems, use analytics to uncover their underlying cost drivers and rationalize their supply chains.

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02 Matching supply to demand Market imbalances wreak commodity price havoc

• A lthough the supply of many commodities continues to lag longterm forecasted demand, the legacy of unconstrained project development threatens to push certain commodities into over supply. • Ongoing global economic weakness and the short-term decline of demand out of China have pushed down commodity prices, resulting in industry performance dips. • On the flip side, long-term demand indicators remain robust. Rather than mothballing projects, then, miners should find ways to weather current supply/demand imbalances. • Some response strategies include building strategic portfolios that match supply to the demand forecasts of particular commodities, recognizing full asset value on corporate balance sheets, and integrating production and trading operations to better control the price of commodities sold.

Mining

“There’s no doubt the mining industry is experiencing tremendous pressure on costs. But cost constraints often lead to innovation. Mining has grown bigger over the past 200 years – bigger plants, bigger trucks, bigger blasts. But the industry itself hasn’t evolved much. Now is the time to make fundamental and dramatic changes.” Glenn Ives, Mining Leader,

The remaking of mining Exploring the innovation imperative

• To improve performance, mining companies typically make incremental changes to their various operational components. • Notably, however, genuine performance improvement comes only when companies revise their underlying systems – from mine design and planning to energy supply and the adoption of emerging technologies. • To achieve lasting change, it is time for mining companies to innovate more strategically. This may include rethinking energy management, adopting electric technologies, automating core mining processes, using techniques like remote sensing to localize ore deposits and building shared infrastructure to reduce costs.

Americas

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“Mining companies are hesitant to engage in transactions due to the uncertainty around the forward curve of commodity prices. Shareholder and board scrutiny is also discouraging acquisition. I suspect the M&A market will remain sluggish until there is greater clarity around future demand. That said, the industry is going through one of those cycles that will drive people, in hindsight, to say that this was a good buying opportunity. Companies that take advantage of this opportunity by going up the risk curve may find themselves rewarded over time.” Jeremy South, Global M&A Mining Leader, China

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Finding funding Debt up, deals down and juniors fight for survival

• In the face of weak shareholder returns and industry impairments, the equity markets have turned off the tap. Traditional lenders also are pulling back from the mining sector. • A lthough major diversified companies responded by issuing bonds, juniors have been hard hit. This may represent an acquisition opportunity for companies with large cash holdings. • For their part, juniors are increasingly seeking alternative forms of financing from sovereign wealth funds, private equity firms, non-traditional stock markets and pension funds. Consolidation also remains an option for companies that can present buyers with a strong rationale for their asset pricing.

Mining

The project pipeline stutters Record impairments call capital allocation practices into question

• I n response to demands from investors and analysts, mining companies developed massive project pipelines. Investment in marginal projects, however, has led to record asset impairments. • To turn the tide, miners need more robust project scoping processes, governance systems and risk control mechanisms. They also need to strengthen their capital allocation practices by incorporating multivariable risk modeling. • Other solutions include optimizing mine portfolios, rationalizing projects, engaging in phased modular construction and honing the skills necessary to contain costs.

Power to the people

06 Local community demands ramp up • Social media trends and attention from monitoring and standard-setting bodies are increasingly putting corporate reputations and market valuations at risk. • In some measure, this has empowered citizens around the world to hold mining companies more accountable for their contribution towards local economic development. • T his requires companies to take a more nuanced approach to stakeholder relations, including developing local supply bases, improving communications, sharing infrastructure among various economic clusters and sourcing local labor.

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Resource nationalism spreads

07 Government relations marked by rising hostility

• Amid a wave of anti-mining sentiment, governments around the world continue to demand outsized contributions from the mining sector in the form of taxes, royalties and other concessions. • To mitigate these sovereign risks, mining companies must improve government relations. For their part, governments must foster greater regulatory stability. • Strategies for opening this dialogue include forming policy development lobbies, coordinating local infrastructure projects, getting citizens onside and negotiating with all levels of government.

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Crackdown on corruption Zero-tolerance regulatory environment complicates compliance

• The risks of fraud and corruption remain significant in almost all the jurisdictions where mining companies operate. • In response, many governments are enacting – and more boldly enforcing – strict anti-corruption legislation. • To improve compliance, mining companies should adopt appropriate internal controls and policies, engage in compliance audits and risk assessments, and upgrade their systems to support sufficient reporting detail.

Mining

Changing the safety equation From zero harm to zero fatalities

• Fatalities in the mining industry remain high. Unfortunately, experience now shows that reducing minor safety incidents does not lead to a reduction of major incidents, like fatalities. • Uncovering the correlations that expose mining companies to serious safety risks requires a more sophisticated approach to safety analytics. For instance, companies should model highrisk events, re-examine their workplace practices and break down the data silos that prevent them from accurately identifying safety incident patterns.

A dearth of skills The talent gap slinks into executive suites

• Talent shortages in the mining industry remain and threaten to widen as the workforce ages. Now, however, those talent gaps are extending into executive suites. A similar gap may exist at the board level. As a result, many companies lack the skillsets crucial to shepherd them through the current commodity price downswing. • Closing the gap requires the adoption of a considered talent management strategy. In addition to standardizing systems, miners should also embrace new training environments and take the steps necessary to attract both skilled management and sectorsavvy directors.

Complete report To download the full report, Tracking the trends 2014. Click here

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Finance

Can Juniors Borrow Instead of Raising Equity? Kenton Ralph Toews of Sprott Global Resource Investments Ltd explaines how lending to resource companies works and why a junior might opt for debt over an equity issuance Words by

Kenton Ralph Toews

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uniors usually raise cash to keep their operations going by issuing new shares. These new shares are issued to investors in what is colloquially called a private placement. The new equity dilutes existing shareholders’ proportional ownership and decreases the value of existing shares. Therefore shareholders and management often prefer to keep a tight share structure, issuing as little new equity as possible. Low equity prices will exacerbate dilution since more shares are required to come up with the money to meet a company’s capital needs. To protect current shareholders from dilution and possible decreases in share prices, juniors who can afford it may turn to borrowing money. And just like some investors have the ability to participate in private placements where they directly fund the company, some investors may also participate in lending money directly to the company. Originating loans in the junior space is risky and not easily accessible to most investors. Sprott is probably better known

“To protect current shareholders from dilution and possible decreases in share prices, juniors who can afford it may turn to borrowing money”

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for raising money in the junior sector through private placements, but Sprott is also involved in loaning money to resource companies. The characteristics of debt can make it an attractive alternative to the equity in stocks. As Rick Rule says “the worst piece of debt on a balance sheet is better than the best piece of equity.” Why does Rick say this? Well, typically creditors have a higher claim to a company’s assets than a shareholder. This means that in a bankruptcy, creditors get paid back before stockholders. This may limit the creditor’s downside relative to common stockholders. In the United States, it is not always this simple. In US bankruptcy law, the court oversees the liquidation of companies that file for Chapter 11 bankruptcy protection. The court could also decide to favor the equity holders -- or any other group involved -- over the debt holders. A recent example of this the General Motors bankruptcy debacle from 2009.1 The US Treasury, the union’s retiree benefit trust, and the traditional bondholders had relatively equal claims to the company’s assets, but were treated very differently by the courts overseeing the bankruptcy. The US Treasury got $0.87 on the dollar for their $16.2 billion in loans. The union’s retiree benefit trust got about $0.76 on the dollar for the $20 billion they were owed. In contrast, the bondholders only received around $0.05 on the dollar for their $27.2 billion in GM bonds. In Federal bankruptcy law, taxes and retirement contributions get paid first. In the case of GM, the US Government

Finance

stipulated that the Treasury get paid ahead of the bond holders. To minimize risks related to the debtor’s claim to the borrower’s assets, Sprott avoids lending money to companies in the United States. Companies under the system of British Common Law in countries such as Canada, Australia, New Zealand, and the United Kingdom may be more attractive to lend to if the risk of default is real. Although foreign countries may present different risks to be aware of, when a bankruptcy occurs in these jurisdictions, creditors have the right to be involved in the management of the assets and their claims to those assets are respected. This is especially important in lending to junior resource companies because of the risk of default involved with these companies. The risk comes from the fact that few junior mining companies have any positive cash flow. This is why it is important to properly value the collateral put up for a loan. In the worst-case scenario, lenders may need to sell a property or auction off a piece of equipment to recoup their money. Sprott pays close attention to valuing the collateral of the companies it lends to and typically has a potential suitor in mind should a default occur and assets need to be sold. Since property or equipment could be challenging to sell off in the event of a bankruptcy, creditors may be at risk of not receiving full payment of interest and principle at the expected dates. Therefore a proper loan portfolio should be comprised of multiple companies -- similar to a proper stock portfolio being comprised of multiple positions to diversify risk.

“Lending to resource companies can be an attractive business, especially in the current market where share prices are weak and companies aren’t eager to issue new shares”

If the risks above are properly mitigated, then lending to resource companies can be an attractive business, especially in the current market where share prices are weak and companies aren’t eager to issue new shares. And because of the sector’s constant need for capital with few participants willing to lend, and the higher overall risk profile of companies in the junior resource space, the rates of return from these loans can be significantly higher than dividend yields or other sources of income, which can make them attractive for investors who have the ability to participate in lending and who have a higher tolerance for risk.

Contact If you are interested in hearing more about income opportunities, please e-mail Kenton Ralph Toews at KToews@sprottglobal.com or call him at 800-477-7853.

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3-6 FEBRUARY, 2014

Cape Town, South Africa

Cape Town South Africa

Where the World Connects with African Mining. Mention offer code M14BE and save US$100 through 13 December 2013

twitter.com/miningindaba Presented By:

miningindaba.com/linkedin facebook.com/africanminingindaba youtube.com/miningindaba

MINING INDABA, LLC

www.m in in gin daba.co m

events

Dates for your diary pdac 2014

mining indaba 2014

3-6 February 2014 cape town, south africa Investing in African Mining Indaba is the world’s largest mining investment event and Africa’s largest mining event. For 19 years, Investing in African Mining Indaba along with its partners in Africa have channeled billions of dollars of foreign investment into the mining value chain. Mining Indaba is the world’s largest gathering of mining’s most influential stakeholders and decisionmakers vested in African mining. 2013 was a record breaking year, with more than 7,800 individuals representing more than 1,500 international companies from 100 countries and approximately 45 African and non-African government delegations. This is where the world connects with African mining. Global professionals including key mining analysts, fund managers, investment specialists, and governments clearly define Mining Indaba as their preferred venue for obtaining the most current economic and mining developments from the world’s leading experts on African mining. It is held annually at the Cape Town International Convention Centre in Cape Town, South Africa and is organised by Mining Indaba LLC. www.miningindaba.com READER OFFER: Quote offer code M14BE to obtain your Business Excellence US$100 discount.

2-5 March 2014 Toronto, canada Only going to one mining investment show? Make it this one. PDAC International Convention, Trade Show & Investors Exchange is the world’s leading Convention for people, companies and organizations in, or connected with, mineral exploration. The four-day annual Convention held in Toronto, Canada, has grown in size, stature and influence since it began in 1932 and today is the event of choice for the world’s mineral industry. In addition to meeting over 1,000 exhibitors, 30,147 attendees from 126 countries, it allows you the opportunity to attend technical sessions, short courses as well as social and networking events. www.pdac.ca/convention

2014 CONEXPO-CON/AGG 4-8 March 2014 Las Vegas, Nevada, USA

CONEXPO-CON/AGG will represent an immense unveiling of all the newest equipment, technology and product breakthrough in construction. From earthshaking big iron to groundbreaking innovations, it’s all assembled in one place to help you work smarter. CONEXPO-CON/AGG 2014 – If it’s new, it’s here! www.conexpoconagg.com

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Greenland

U ranium in Greenland Greenland has now reversed its policy of zero tolerance toward radioactive elements: we asked the Governmentâ&#x20AC;&#x2122;s Chief Geologist Henrik Stendal to explain the implications of this decision on current and potential mining projects on the island

John Oâ&#x20AC;&#x2122;Hanlon Richard Half hide

Words by Research by

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Greenland

n Thursday 24th October, Greenland’s parliament voted in favour of removing its long standing zero tolerance policy concerning uranium and other radioactive elements. This landmark decision represents a significant moment for Greenland, placing it on the path to becoming a uranium producer, and thereby opens up coincident resources of rare earths and other elements to exploitation. The removal of the zero tolerance policy is in alignment with Greenland’s broader intent to develop mining projects as a core to its future economic prosperity. The zero tolerance policy was associated with the stance taken by Denmark on nuclear power generation before Greenland got self government status in 2009. Denmark still doesn’t want to contemplate nuclear power, and Greenland has not had to because it has abundant potential for hydro-electric generation. However thinking had shifted over the last couple of decades, says Henrik Stendal: “It has a lot to do with rare earth elements (REEs), for which demand has been increasing rapidly. Often REEs are associated with uranium and in Greenland one of the big deposits is Kvanefjeld and that is associated with uranium.” We look more thoroughly at the Kvanefjeld deposit owned by Greenland Minerals (GME) in another article. It

is a huge deposit at the southernmost extremity of Greenland, big enough to end China’s near monopoly in the world market for rare earths that are essential to making cellphones, wind turbines, hybrid cars and many other products. However the problem there has been the presence of uranium alongside these sought-after elements – you can’t separate them without processing the uranium as well, and that was not allowed. But Greenland has 58 percent of the world’s REE outside of China and 65 percent of the ‘heavy’ rare earths, which are in shorter supply. GME’s Kvanefjeld resource and the adjacent Tanbreez project, which is not associated with uranium, make up the world’s largest deposit of rare earth minerals. Now that the ban has been lifted GME can proceed with obtaining an exploitation licence and permission to process both rare earths and uranium, selling the latter into the many markets where nuclear power stations are being built. Uranium will be a by-product of Kvanefjeld, though an important one. However uranium can now be exploited for its own sake, and there are other known deposits in Greenland, which is centrally located between North America and Europe, both home to important uranium importers. “We know more about the geology of southern Greenland than about the north-west, in the area around the American air base at Thule

“Both niobium and tantalum are critical minerals for world industry, but these deposits do contain uranium so the lifting of the ban will positively help them as well” 26 |

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Drilling by Greenland Minerals & Energy (GME) at Kvanefjeld

“The largest uranium deposits in the world are in Canada where the geological environment is exactly the same as in the Thule region of Greenland, which used to be in the same land mass” for example, where more work needs to be done,” says Stendal, “but the largest uranium deposits in the world are in Canada where the geological environment is exactly the same as in the Thule region of Greenland, which used to be in the same land mass.” The presence of uranium stood in the way of other minerals than rare earths, he points out. “The Motzfeldt deposit, also in the south, contains significant quantities of niobium and tantalum. Both are critical minerals for world industry,

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but these deposits do contain uranium so the lifting of the ban will positively help them as well.” And there’s a high grade niobium deposit at Sarfartoq near the international airport at Kangerlussuaq in west Greenland. This deposit, which also contains rare earths, has been stalled since its discovery in the 1980s by the presence of uranium but could now be developed he says. Conversely, uranium is not the only radioactive element in the periodic table. The south-west Greenland carbonatite

Greenland

“Before a company is allowed in it has to offer a certain level of Greenlandic jobs, suppliers and subcontractors” intrusions nearly all contain thorium which, though not as highly radioactive as uranium, would have influenced rare earth development within these areas, says Stendal. “When people talk about the ban they always think of uranium but no one takes thorium into account. Yet it is associated with nearly all these deposits.” The decision to raise the ban does not mean mining can go ahead tomorrow, Henrik Stendal cautions. Greenland has at present regulations for exploitation of minerals within the Minerals Act. The regulatory framework to cover the mining, storage, transportation or exportation of radioactive material needs to be in place before exploitation of radioactive minerals can launch. It will take a couple of years to get it in place. There is plenty of best practice on which to benchmark, notably in Canada and Australia, however the International Atomic Energy Authority (IAEA) in Vienna will have to be given oversight of the new regime. There will be a lot of red tape in the process of establishing a new industry, and if only to reassure its own population Greenland is determined to see that all activities are certified safe. Finally, the change in legislation regarding uranium and other radioactive elements should be seen in the context of the large-scale mining act, passed in December last year and amended earlier in 2013. The act aims to ease the path for large projects the bill set the threshold for

a project to qualify as “large-scale” at DKK 5 billion, (approximately $920,000,000), and the project’s need for labour in carrying out the construction activities must exceed the suitable, available and accessible workforce in Greenland. To the debate on the need to mine nuclear materials in the first place will be added a fear that the country will be flooded by Chinese and other low cost foreign workers. These fears are nowhere near as well grounded as people fear, Henrik Stendal believes. The revision of the bill tightens the regulation of minimum wages considerably. No legal basis for nonfixed minimum hourly wages pursuant to foreign collective bargaining agreements is now to be found in the act. “Before a company is allowed in it has to offer a certain level of Greenlandic jobs, suppliers and subcontractors. They can’t come in if they are not competitive, and able to bring with them the necessary skills.” Naturally, Greenland wants to secure as many jobs for its own people, and establish an indigenous skills base to support its new industries. However with a population a little over 56,000 it will need help, especially if it is to preserve its traditional fishing-based way of life. Its great opportunities are attended by equally great challenges.

For more information about The Bureau of Minerals and Petroleum visit. www.bmp.gl

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Greenland Minerals & Energy

the final furlong Greenland Minerals and Energy Ltd is an exploration and development company focused on the Kvanefjeld multi-element project in South Greenland, which was recently given the nod by the Danish and Greenlandic governments

written by: John Oâ&#x20AC;&#x2122;Hanlon research by: Richard Halfhide

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Looking south over Narsaq towards the north Atlantic

Greenland Minerals & Energy

n 2006 when he seriously started to sell his conviction that Greenland would be the next game-changer in the global supply chain for minerals, Rod McIllree found that the investment community in his native Australia shared neither his enthusiasm nor his outlook. In Australia not many people had heard of the Ilimaussaq Complex right at the southern tip of Greenland, which had been investigated by geologists from Greenland’s ‘mother country’ Denmark for decades and had been found to be rich in uranium. So he turned his attention to North America and Europe where he found an audience much more interested in understanding Greenland’s potential. “It was much simpler to sell the story there,” he says. “Greenland’s continuously stated position is that it sees its future intimately entwined with the development of a successful mining industry.” In early 2007 GME acquired a majority interest in an exploration licence covering the northern Ilimaussaq Complex, and has subsequently increased that to 100 percent. The Kvanefjeld project is among the world’s most strategically important mineral projects because of the large amount of rare earth elements (REEs) that it contains. These are a group of about 17 minerals that have come into increasing demand for applications such as high powered magnets, lasers, mobile telecommunications and other electronic applications, optics, ceramics and the like. They are not in fact uncommon in the earth’s crust, but there are not too many places where they occur in commercially exploitable quantities. “Kvanefjeld is the largest global example of a uranium and rare earth deposit,” emphasises McIllree.

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20% Proportion of Greenlandâ&#x20AC;&#x2122;s GDP that Kvanefjeld could generate

Southern Greenland enjoys moderate temperature ranges allowing for almost year round exploration

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China currently dominates the market for rare earths, accounting for more than 90 percent of global supply and at least 60 percent of consumption, however a considerable proportion of Chinaâ&#x20AC;&#x2122;s production came from illegal sources sourced on the black market. Now China is tackling the environmental issues associated with this black market and as a consequence there is less supply available at a time when demand is rising with the result being reflected in rising prices for the critical rare earths. It has cut back exports of all REEs from the 35,000 tonnes it supplied in 2010, and banned exports of the heavier rare earths terbium and dysprosium. Understandably a number of projects are being advanced urgently to fill the gap. Kvanefjeld undoubtedly has the scale to supply 20 to 30 percent of the urgent and growing need from European and North American markets and GME is well placed to become one of the worldâ&#x20AC;&#x2122;s largest and most cost-effective producers of these speciality metals. It has many other advantages over rival projects. The sheltered fjord the deposit sits on is open to shipping all year long and is close to transatlantic shipping lanes. Distances from project to port is less than ten kilometres and the town of Narsaq is not much

Greenland Minerals & Energy

The first drill hole being set up in 2007

further. Narsarsuaq international airport is 40 kilometres away and low cost power can be supplied from hydroelectric generation. And if this did not trump the projects under consideration elsewhere in the western hemisphere, this is a non-refractory deposit. Refractory ores examples of which might be allanite or monazite eudylaite or other zirconium based minerals have to be broken down using what Rod McIllree calls a ‘hot chemical sledgehammer’. Kvanefjeld on the other hand can be processed in open air leach tanks with dilute acids. This vast resource is also amenable to simple beneficiation (pre treatment concentration) through a simple floatation step where the company is getting industry leading

upgrades of more than 10 times allowing for huge cost savings downstream. Until very recently just one thing stood in the way of GME. This was the Danish (and Greenlandic) government’s blanket ban on the exploitation of radioactive minerals. While rare earths are not radioactive the resource is mixed up with commercially significant quantities of uranium. When in the 1970s the Danish government backed examination of this site, it was uranium that it was interested in, but that interest was extinguished when Denmark decided to terminate its programme for nuclear power generation. The problem for GME has been that it couldn’t separate the rare earths without separating

“Kvanefjeld is the largest global example of a uranium and rare earth deposit” BE Mining | 35

“from the Danish government down to the local population at Narsaq, there’s a consensus that everyone wants this to happen” the uranium, and that was forbidden. But in October this year Greenland’s parliament voted to remove its long standing zero tolerance policy. This was not exactly a bolt from the blue, as it had been anticipated since November 2011 when Greenland’s Bureau of Minerals and Petroleum amended GME’s exploration licence over Kvanefjeld to include uranium giving it the right to apply to exploit uranium along with other economic minerals. As far as Kvanefjeld goes, uranium is a

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by-product, with around 15 percent of the revenue attributable to it. Uranium has a ready market to sell any product into but McIllree points to the ability to tie in with a major to potentially supply upwards of three million pounds for more than 50 years, it’s an attractive alternative to unstable production. “This policy change is a transformational event for the company as it now allows us to move forward with the mining licence application and continue to progress end

Greenland Minerals & Energy

Looking north up the Narsaq Valley

user engagement,” says McIllree. A bigger transformation, he continues, lies in the statement it puts out to the world at large. “Greenland, and its government, is now our biggest advocate; it is very vocal about its desire to get a mining industry up and going, and this is going to be one of the main foundations of the country’s move toward eventual independence. This is not a niche event – it is something that is being discussed at all levels of government from the Danish government down to the local population at Narsaq, where there’s a consensus that everyone wants this to happen.” Lifting the ban on exploiting materials like uranium and thorium was a transformative event for the company, but it is the beginning not the end of the process. A regulatory and safety structure needs to be established

by the Greenland government covering the extraction, processing, handling and transportation of these materials. In this it will no doubt benchmark on Canadian best practices which have been in place for a long time, and are particularly relevant considering the geology of north eastern Canada is identical to Greenland – they were a single land mass not that long ago in geological time. However the decision is a signal that GME can now move Kvanefjeld on with confidence and one that will be noted by current and potential investors. “At the moment we are working with the regulatory bodies in Greenland and Denmark to identify the most appropriate implementation model for all stakeholders,” says Rod McIllree. “Three main modules are required to produce the REEs and uranium: the first is the mineral

BE Mining | 37

â&#x20AC;&#x153;we are working with the regulatory bodies in Greenland and Denmark to identify the most appropriate implementation model for all stakeholdersâ&#x20AC;?

38 | BE Mining

Greenland Minerals & Energy concentration process which occurs immediately adjacent to the ore body. A second, an intermediate refining step will probably also be done in Greenland though we are still considering the economic implications of that.” The final stages of stockpiling and shipping the concentrates will require investment in roads and port facilities, and finance will have to be raised for this. However the path is now clear to lodge a mining licence application in 2014. By then GME will have firmed up its implementation strategy, with partners the government can accept and thereby assure total downstream security of the product: uranium is a new industry for Greenland, still sensitive, and one it wants to get right. Depending on how long it takes for the licence to be issued (and given the importance of Kvanefjeld to the nation that should not take long) he hopes to start construction early in 2015 to a schedule that will allow production to start at the beginning of 2017. “We would see one or two ultimate end users for the REEs and a single recognised western uranium utility refiner as an offtake partner for the uranium.” Kvanefjeld is the one project that will put Greenland on the map processing between three and four million tonnes of rock a year to produce 400,000 tonnes of mineral

Local Greenlandic work force

concentrate. It will, says Rod McIllree, generate more than 20 percent of Greenland’s GDP, boosting employment and downstream industries on top of the direct funds it will contribute in tax and royalties and will finally get Greenland off Denmark’s books. “The economic significance of this project cannot be overstated. When we look back years from now it is this policy event that will be seen as the spark that brought to life Greenland’s long awaited minerals industry” says McIllree, clearly conscious that Kvanefjeld is at the same time, both a company maker for GME and a foundation stone for the nation of Greenland. For more information about Greenland Minerals & Energy visit: www.ggg.gl

BE Mining | 39

company in brief Greenland Minerals and Energy Limited is an Australia-based mineral exploration company. It is engaged in mineral exploration and project evaluation. The Company focuses on its Kvanefjeld project. The Kvanefjeld Project global resource contains approximately 956 metric tons and is located seven kilometers from tidewater, with deep fjords running directly to the North Atlantic Ocean. The Company is primarily focused on advancing the Kvanefjeld multielement project (both light and heavy rare earth elements, uranium, and zinc) through the feasibility phase and into mine development. The

Kvanefjeld - REEs, uranium, zinc Kvanefjeld is located at the northwest corner of the Ilimaussaq complex. The Companyâ&#x20AC;&#x2122;s subsidiaries include Chahood Capital Limited and Greenland Minerals and Energy.

MANAGEMENT AND DIRECTORS Roderick Claude McIllree

Michael L. Hutchinson

Chief Executive Officer, Managing Director, Executive Director

Non-Executive Chairman of the Board

Miles Simon Guy

Non-Executive Director

Chief Financial Officer, Company Secretary

Shaun Bunn Chief Operations Officer

Simon Kenneth Cato Executive Director

John Mai Executive Director

40 | BE Mining

Jeremy Sean Whybrow Anthony Peng Ho Independent Non-Executive Director

Greenland Minerals & Energy stock watch

Office Head Office Ground Floor, Unit 6, 100 Railway Road SUBIACO, WAS 6008 Australia Tel: +61-8-93822322 Fax: +61-8-93822788

Exchange ASX

Shares 571.98M

Symbol GGG

Market Cap. 122.97M

www.ggg.gl

products • Rare Earth Elements

Currency AUD

• Uranium

Div/yield -

highlights • One of the world’s most strategically important mineral projects - 100% owned by GMEL. • Project underpinned by one of world’s largest REE-uranium resources with major upside. • Highly accessible – bulk orebodies favourably located in southern Greenland near towns, harbours and airport. • A non-refractory ore type conducive to simple, cost-effective processing with low-technical risk. • Greenland is politically stable and pro-mining; attracting increasing international interest.

operating territories • Greenland

Key stats and ratios Q2 (Jun ‘13) 2012 Net profit margin -3082.01% -4941.31% Operating margin -3082.01% -4941.31% EBITD margin - -3400.57% Return on average assets -17.13% -27.38% Return on average equity -17.43% -25.77%

Financial information from Google Finance and Thomson Reuters

BE Mining | 41

COMING SOON

Tanzania special Tanzania is serious about making the best use of its mineral resources, and its governing bodies are determined to be seen beyond its borders as an investment friendly jurisdiction for the benefit of its citizens. To be part of this authoritative report promoting Tanzania and showcasing its investment opportunities contact us today.

l report

BEST PRACTISE IN MINING

A cut above the rest Even in the face of challenging market conditions the sheer quality and unmatched excellence of Eurostar Diamond Traders products mean that it remains a leading global force in the diamond sector

written by: Will Daynes research by: James Boyle

44 | BE Mining

Eurostar Diamond Traders

Polishing the pavilion facets

Eurostar Diamond Traders

he diamond industry has been on something of a rollercoaster ride since the global financial crisis of 2008, with prices plummeting in 2008 and 2009, before rebounding to reach historically high levels in 2010 and 2011. This pattern of extremes was replicated in 2012, with retail sales of diamonds growing 1.8 percent from 2011 to $72.1 billion at the same time that overall prices for rough and polished diamonds declined by 14 percent and 13 percent respectively. Reassuringly, given that we are fast approaching the November/December period that is traditionally the healthiest for diamond retailers in any given year, the market has shown signs of continued improvement during the first half of 2013. “The main positive we can take from this year so far is that we have seen business levels remain slightly higher than those recorded in 2012,” explains Kaushik K. Mehta, Chairman of the Eurostar Group. “The real litmus test for the sector will come during the pre-Christmas months which are typically the busiest on our calendar.” Mehta has been at the helm of Eurostar Diamond Traders ever since he founded the business as a diamond processing plant in Belgium back in 1978. In the 35 years since he has witnessed all manner of economic events and successfully guided his company through both good times and periods of uncertainty. As such you would be unlikely to find a business in this field of industry better prepared for what the next couple of months hold. “We have already undertaken the work

BE Mining | 47

$72.1 Billion Global diamond retail sales in 2012

Facetting

48 | BE Mining

necessary to set ourselves out for the busy period that will be upon us shortly and for the sudden increase in consumer demand that we have come to expect,” Mehta states. “The Christmas buying season has always proven to be one of the most crucial times for us, if not the most crucial, and because of this we prepare many weeks in advance to ensure that our inventory levels and processes are up to scratch, thus making us perfectly positioned to satisfy consumer demand.” As one of the world’s leading diamond wholesalers and manufacturers, it is Eurostar Diamond Traders’ expressed aim to help in shaping and leading the global diamond market. In order to do so it has expanded its own operations into some of the most important regions for diamond sales, namely the United States, China and India, and this fact continues to reap considerable benefits to this day. Indeed, looking at the market ’s performance over the first half of this year, some of the most encouraging trends have originated from the US, Japan, China and India, with sales in the first two rising particularly strongly on the back of accelerating GDP growth, a trend that looks poised to continue during the remainder of 2013.

Eurostar Diamond Traders

Every Eurostar diamond undergoes 32 meticulous quality checks before reaching your doorstep

“While demand from key markets across Europe has slowed compared to that of previous years, this has been supplemented by the increase in demand we have been receiving from the US, China and India,” Mehta continues. “It is these parts of the world that we expect will go on to be the

driving force behind our sales throughout November and December.” The emergence of China and India as important growth centres for Eurostar Diamond Traders and the diamond market as a whole is an event that has taken on even greater significance in the last five years or

“The Christmas season has always been one of the most crucial times for us and we prepare many weeks in advance” BE Mining | 49

“The emergence of China and India as important growth centres for Eurostar Diamond Traders has taken on even greater significance in the last five years” so, and Mehta has a pretty good explanation for this. “Higher average incomes in these countries certainly seem to be one of the main factors driving demand,” he says. “Higher incomes have resulted in growing middle

50 | BE Mining

class populations and it is these people who are now being able to demand a better quality product when it comes to the diamonds they purchase compared to those which they were able to afford previously.”

Eurostar Diamond Traders

Marked rough diamonds, ready for sawing

Fortunately for Eurostar Diamond Traders, the foresight of its management and owner has enabled it to be extremely well geared towards the growth it is experiencing in these developing nations, as well as in the US which remains a vital marketplace in its own right. Today it retains a strong presence in these markets with offices in New York City, Shanghai, Hong Kong and Mumbai respectively. While Eurostar Diamond Traders’ peerless commitment to quality products and service has enabled it to retain what Mehta refers

to as its ‘bread and butter business’, the fact remains that growth across the greater part of the world has come to something of a standstill. This makes attracting new business the biggest challenge facing companies in the diamond market today. “From an infrastructure and business model standpoint we are confident we have the tools in front of us to overcome such difficulties,” Mehta highlights. “In addition to the hugely important sales and marketing centres that we have in places like China and the US we also have a number of teams made

BE Mining | 51

â&#x20AC;&#x153;What is as true about the company now as it has always been ... is the fact that it has never lost sight of the need to continually improve from withinâ&#x20AC;?

Sawing quality control

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Eurostar Diamond Traders up of highly experience professionals whose job it is to remain in direct contact with all of our key retailers. This allows our brand to maintain a sizeable presence in our core markets, thus we are able to retain our existing business while also making every effort to attract new growth as and when it appears.” What is as true about the company now as it has always been, even during those first years following the economic crisis when the diamond market suffered Sorting rough diamonds greatly, is the fact that it has never lost sight of the need “The diamond market to continually improve from of today is very much within. This has meant that a fragmented one,” he investment has continued to concludes. “The reality is that be poured into its facilities there are too many players and polishing centres to at present and I believe that The year that Kaushik K. Mehta founded the ensure that they follow in the long run this number company will diminish, especially if the latest international economic conditions remain s t a nda r d s a nd are much as they are at present. adequately equipped with innovative, state-of-the-art technologies. This will leave behind a scenario where only If diamond market data from the last the very best players are left and we will five years has highlighted anything it is continue to do our very best to prove that we the unpredictable nature of the business remain one of these players.” in what are uncertain economic times. In spite of this Mehta does have a theory as For more information about to how the market, and as such Eurostar Eurostar Diamond Traders visit: Diamond Traders, will evolve in the shortwww.eurostardiamond.com to-medium term.

1978

BE Mining | 53

company in brief Our mission is to guarantee you the very best diamonds. As one of the worldâ&#x20AC;&#x2122;s leading diamond wholesalers and diamond manufacturers, we aim to deliver the highest possible value to all our stakeholders: from customers to suppliers to employees, wherever they may be in the world. Our goal is to continue to shape and lead the global diamond market. By striving to outperform both ourselves and our competitors every day. By doing everything we do with the same passion and enthusiasm. And by setting the highest standards based on our core values: Excellence

- Innovation - Client Focus - True Purity. It is these values that enable us to achieve our mission time and time again, to build long-term relationships of trust and to drive both our business and yours beyond the limits.

people and partners Diamond engineers When it comes to blueprinting larger gemstones, our dedicated team of diamond engineers analyses how to achieve maximum value from every rough diamond that goes into production. Gemmologists Our gemmologists use the most sophisticated testing equipment such as a refractometer, spectroscope and microscope to identify and analyse all kinds of gemstones. They evaluate precious stones with confidence and prepare special identification and appraisal reports. Expert research and development Our own research and development department continues the never-ending search for new

54 | be mining

methods and new possibilities, experimenting with new ways to captivate the imagination with original shapes and techniques. Our partners Our close relationship and longstanding partnerships with key mining companies enables us to source and distribute both volume and variety of high-quality, natural and untreated diamonds at the most competitive prices. Our suppliers DTC is the rough diamond sales and distribution arm of the De Beers Family of Companies, the number one diamond mining and trading company. The DTC sorts, values and sells approximately 75% of the worldâ&#x20AC;&#x2122;s rough diamonds by value.

Eurostar Diamond Traders Corporate Responsibility

Office

As a responsible Corporate citizen we support social wellbeing, industry beneficiation and other activities. Eurostar Diamond upholds the highest global standards for workplace and environmental ethics. Integrity is sacred to us. We promise you total integrity from sourcing to delivery. Our business is transparent and pure, we follow a respectable list of grading and certification commitments reflecting a highly professional and ethical working environment. As a DTC Sightholder, Eurostar Diamond is subjected to Best Practice Principles (BPP) ensuring that the organisation is run in the most ethical and professional manner. This means that every Eurostar diamond is guaranteed 100% Kimberly Process Compliant. Eurostar Diamond is a member of the Council for Responsible Jewellery Practices (CRJP), another sign of our commitment to promoting and implementing ethically, socially and environmentally responsible practices throughout the diamond and jewellery supply chain.

Head Office Eurostar Diamond Traders NV Hoveniersstraat 53 box 79 B-2018 Antwerp

• Every diamond undergoes over 32 quality control procedures before it reaches the marketplace. • Independent certification from GIA, AGL, HRD, and IGI is available for total confidence. • Eurostar Diamond is certified compliant with the ethical, human rights, social and environmental standards as established by the Responsible Jewellery Council’s Member Certification System.

Tel. +32 (0)3 213 77 77 Fax +32 (0)3 213 77 99 www.eurostardiamond.com

products • Polished diamonds • Precision calibrated diamonds • Hearts & Arrows diamonds

operations • Antwerp • Dubai • Hong Kong • Mumbai • New York • Shanghai • Shenzhen

be mining | 55

56 | BE Mining

Walter Energy

Getting better all the time Walter Energy Canadaâ&#x20AC;&#x2122;s continuous improvement initiatives, are implemented in its metallurgical coal mines, is helping the company navigate difficult market conditions

written by: John Oâ&#x20AC;&#x2122;Hanlon research by: Peter Rowlston

BE Mining | 57

s reported last year, just a year in from its $3.3 billion purchase of Western Coal, Walter Energy had succeeded in dramatically increasing the output of the three Canadian mines. Wolverine, Willow Creek and Brule located near the towns of Tumbler Ridge and Chetwynd have all seen further rationalisation and improvement in the intervening year. Dan Cartwright, president of Walter Energy’s Canadian operations, though his brow may be knitted over global coal prices and a market over which he can have little influence, has plenty to be pleased about. Let’s start with the big one. Some really significant improvements in safety have been achieved over the last twelve months. “We have seen a rapid drop in the rate of reportable incidents at all three of our operations,” says Cartwright. “At the Wolverine mine for example, in September we celebrated a full year without a lost-time incident (LTI) for the first time in the facility’s history.” At the newer Brule mine too, a year has nearly passed with no reportable incidents at all, something that rarely happens in the endemically hazardous coal mining industry. “We are particularly proud of the Brule team and the results they have achieved,” he adds. These things don’t happen by luck – it takes the efforts of the entire team, he stresses. The approach of Walter Energy is to breakdown every activity and analyse it step by step. Safe Job Procedures have been developed for the majority of tasks within the company. You can’t hope to finish this process because jobs change and new jobs arise: this is part of a

58 | BE Mining

Walter Energy

Cheryl Franklin, Brule Training Coordinator

THE DUZ CHO GROUP OF COMPANIES Working together with other First Nations, Federal and Provincial Governments, industry and the communities in the areas in which they operate has been the hallmark of the Duz Cho group of companies. The companies provide a wide range of services to the mining, oil and gas, wind energy, and forest industries and are well recognized for their professional conduct.

The McLeod Lake Indian Band, the sole owner of the Duz Cho companies, is as innovative and progressive an Indian Band as you will find anywhere in All of the Duz Cho companies are presently North America. coming together under what will be known Much of this as the Duz Cho Group of Companies. credit must go to This includes Duz Cho Construction Ltd., their chief, Derek Duz Cho Logging Ltd., Mackenzie Wood Orr. He is young Processing, and a new joint venture-and vibrant and Northern Indigenous Crane. The Duz Cho knows very well what it takes to ensure a companies have earned the respect of future that is filled with opportunity for his both industry and government and are band members. Chief Orr has a vision for recognized as an organization that is his people. This includes development of approachable and open for business. The the natural resources we are all so blessed quality of the work performed by these with, while at the same time ensuring companies, as well as their understanding of that the footprint we leave on the land the need to be competitive in their pricing, base is minimized by adhering to sound has made them a company that industry environmental management of our land, looks to when a job needs to be done on air, and water. time and on budget. The Duz Cho companies are led by Jim and Although time and cost effectiveness is a Al Humphreys who have both helped turn cornerstone of what has earned the Duz these companies into the successes that Cho Group of Companies their reputation, they are. The key reason for their success is it is the safety of their workers and other teamwork and Jim and Al have built a team workers on the job sites that is their that is not only extremely competent but first priority. Duz Choâ&#x20AC;&#x2122;s safety record is each one is focused on the success of the something the entire team is very proud of companies that they are part of. and is what drives each and every job to its successful completion. www.duzcho.com

Walter Energy

Walter Energy Brule haul truck

culture of continuous improvement that by how those hazards can be mitigated. This definition is never-ending. information is shared with the supervisor. The company is going the extra mile Nevertheless the process has had a great bearing on the success achieved. â&#x20AC;&#x153;We have in terms of personal protection too. High established a safety contact policy that visibility reflective clothing is now a requires each supervisor to make a certain requirement, and passing beyond industry number of safety contacts each week.â&#x20AC;? This safety standards employees are now required involves observing the person to wear metatarsal boots. This at work then taking time is being augmented currently by the issuing of metacarpal with them to compliment gloves â&#x20AC;&#x201C; between them these work done well, challenge two initiatives will go a long where it could be better and discuss their individual way to protecting those risk evaluation. Before they vulnerable extremities. start any task, individuals Toes and fingers are the most commonly injured parts are asked to do their own Cost of Western of the body. It is important, inspections, walk around, Coal acquisition says Cartwright to address and note any hazards and

$3.3

Billion

BE Mining | 63

“Our results show in our operations one of the most dramatic cost transitions that I have been associated with in my entire career” the ‘routine’ hazards as well as the more infrequent but perhaps more serious ones. “We want to eliminate the cuts and bruises while not losing sight of the bigger picture. So we ask employees the question: ‘If you were away from work and heard there had been a fatality at the mine, what would you suspect?’ In other words, what would be the first thing that would come to mind without knowing the facts of the case?” Gut feelings are not always

64 | BE Mining

expressed but can provide valuable insight that could save a life, he acknowledges. The Canadian mines all started out being mined by mining contractors. That made sense for Western, a relatively new company, but Walter Energy’s policy is to bring what is after all its core activity in-house. The last of the Canadian mines to be shifted from contract to company mining was Brule, which has a production capacity of around

Walter Energy

Brule mine LeTourneau loader

two million tonnes per annum (tpa). The operation involves two big elements: people and equipment. The mining equipment had to be purchased from the contractor but the personnel could not be transferred so easily. Most of the management and a large proportion of the supervisory staff left, quite understandably, for reasons connected with continuity of employment and the fact that most of them were not locals, having been flown or driven to the remote site. “In some ways it was a bit like starting up a new operation, particularly from a personnel point of view,” says Dan Cartwright. “We didn’t want anybody to stay who didn’t want to be there. Part of the challenge at Brule is that it is our most remote mine. But it gave us the opportunity to convert to a more local workforce. We still have quite a

few drive ins though there are no longer many people who fly in.” Cost management, productivity and safety ideally go hand in hand. In the current climate, with coal prices well below where they need to be to sustain the higher cost operations, Walter Energy has been stepping up its program of cost reduction. One initiative that has been extended in the last year is its reliability centred maintenance, condition-based program. Reliability-centered maintenance (RCM) and condition-based maintenance practices can extend the duration between routine maintenance, improve unit availability, and eliminate some forced outages, he explains. “We also do sophisticated diagnostics and condition-based monitoring to determine the ‘health’ of key machines and to make sure that

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Walter Energy

CANADIAN NATIONAL RAILWAY CO CN is a true backbone of the economy, with access to over 75% of the North American population, we transport C$250B worth of goods annually. A key driver of our business is Western Canadian coal. We have been partners with Walter Energy since day one; collaborating and innovating together to form a fluid supply chain. Whether customers are shipping domestically or internationally, we are there to help them win in their market, wherever it may be. CN provides rail access to Walter Energyâ&#x20AC;&#x2122;s U.S. destinations, given that our network extends to three coasts. With nearly 20% of Canadaâ&#x20AC;&#x2122;s exports moving over our rail network, CN has also given Walter Energy worldwide reach. We have been able to supply them with direct rail access to two West Coast ports and three bulk terminals, including Ridley at Prince Rupert, the closest port to Asia. One thing that CN and Walter Energy definitely have in common is the understanding that supply chain partnerships are just that,

partnerships. We work together to balance and align capacity, improving the coal supply chain from mine to mill. We have expanded our capabilities to synchronize our growth with the growth that our customers, as well as the ports, are planning. This collaboration is based on continuous communication. We have a bulk logistics team that is engaged with our customers, connecting with them on a daily basis. With this visibility and in-depth understanding of our customerâ&#x20AC;&#x2122;s business, we can remain nimble and adapt to their needs. We have a solid supply chain with Walter Energy, one where we share the same goals and work hard every day to keep getting better and gain efficiencies. CN is proud both to be their partner, and to be able to play a key role in keeping Canada at the forefront of the global economy. www.cn.ca

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ELECTRICAL CONTRACTORS

Customer focused and result driven Lakewood Electric Ltd. is a customer focused, results driven Canadian Electrical/Instrumentation contractor. The Company encompasses the full scope of electrical, instrumentation, power and control, project design, and turn-key installations from coast to coast in the following industries:

• Mining • Oil and Gas • Pulp and Paper • Chemical • Instrumentation • High Voltage Power Distribution • Fiber Optics/Data Networking

www.lakewoodelectric.ca

PRECIOUS RESOURCE DISCOVERED Click here to visit our dedicated homepage for the mining community

www.bus-ex.com/mining

68 | BE Mining

we are listening when the machine is telling us work is due.” As an example, oil changes are no longer just time based. OEMs and agents tend to stay on the safe side when specifying maintenance schedules, but components and fluids can often work far longer before needing to be replaced. Using things like vibration analysis and thermography the condition of the machine can be monitored very closely. The machine rather than just the manual will decide when it needs help! There was a lot of room for improvement when he took over the job 18 months ago, he admits, but that slack has been taken up. “Our results show in our operations one of the most dramatic cost transitions that I have been associated with in my entire career. We have

Walter Energy

Brule mine shovel loading haul truck

seen reductions in cost that range between 20 and 50 percent.” But make no mistake, this has been achieved primarily by the application of common sense on the part of the people who actually have to implement it, he insists. “It is our people who make us what we are.” While emphasising the role of teamwork in safety, productivity, maintenance and lean working, he does not forget those team members who don’t work for Walter. “One of the things we have been doing is to reach out to our partners in the supply and delivery

chain to see how we can work together better.” He singles out the Caterpillar dealer Finning, which has been working with Walter to make the RCM work, optimise performance and at the same time preserve its reputation by avoiding equipment failure. “The leadership of Finning in British Columbia has done a really good job in working with and helping us. I believe that our success will be their success in the long run and they recognise that.” Mines and railroads are sometimes viewed as natural enemies and there’s no doubt a

“The leadership of Finning in British Columbia has done a really good job in working with and helping us” BE Mining | 69

Walter Energy Brule Pit

Walter Energy coal mine can be a demanding customer for a railroad. There is tension between the mine’s need to have trains ready to take loads whenever the mine is ready and the rail operator’s need to not have trains waiting. But this can be overcome by better communication and Canadian National Railway (CN) and Walter’s transportation group have done a great job in sharing information. “Both sides are now kept informed so they know our mining plans and we know their plans and commitments too.” He says. “It has turned a good relationship into an exemplary relationship!” In the end, the steelmakers of Korea and Japan who take most of the BC coking and PCI coal do have other sources to turn to so, the mining companies, the logistics operators and the ports of western Canada need to sell themselves as a united supply chain. The good news is that the railroads and port authorities have been responding to this situation. Westshore, Neptune and Ridley Terminals have recently seen over $1 billion invested in improvements to the efficiency and capacity of their terminals. This includes the addition of more than 20 million tonnes in coal handling capacity. Of all the commodities carried by rail and handled by ports in Canada, coal ranks number one, and an efficient and inter-connected network of rail and port infrastructure is critical to get Canadian coal to market, Dan Cartwright believes. For more information about Walter Energy visit: www.walterenergy.com

BE Mining | 71

company in brief Walter Energy, Inc., is a producer and exporter of metallurgical coals for the global steel industry. The Company also produces thermal coal and industrial coal, anthracite, metallurgical coke, coal bed methane gas (natural gas) and other related products. The Company operates in two segments: the Companyâ&#x20AC;&#x2122;s United States operations segment and its Canadian and United Kingdom operations segment. United States operations segment includes the operations of the Companyâ&#x20AC;&#x2122;s underground mines, surface mines, coke plant and natural gas operations located in Alabama and its underground and

surface mining operations located in West Virginia. The Canadian and United Kingdom operations segment includes the operations of surface mines in Northeast British Columbia (Canada) and an underground mine and surface mine in South Wales (U.K.)

MANAGEMENT AND DIRECTORS Walter J. Scheller III

Thomas J. Lynch

Chief Executive Officer, Director

Senior Vice President - Human Resources

William G. Harvey

Michael T. Madden

Chief Financial Officer, Senior Vice President

Senior Vice President, Chief Commercial Officer

Daniel P. Cartwright

Michael T. Tokarz

President - Canadian Operations

Presiding Non-Executive Independent Chairman of the Board

Richard A. Donnelly President of Jim Walter Resources Inc.

Earl H. Doppelt Senior Vice President, General Counsel, Secretary

72 | BE Mining

David R. Beatty OBE Independent Director

Mary R. Henderson Independent Director

walter energy stock watch

Office Head Office Suite 1700, 3000 Riverchase Galleria BIRMINGHAM, AL 35244 United States Tel. +1-205-7452000 Fax. +1-302-6555049

Exchange NYSE

Shares 62.58M

Symbol WLT

Market Cap. 983.70M

Currency USD

Div/yield 0.01/0.25

highlights • Achieved record metallurgical coal production of 11.7* MMTs • Improved cash cost per ton of production of met coal by six percent •E nhanced liquidity and extended debt maturities by issuing $500 million of senior notes due in 2020 • Reduced the total reportable injury rate by 26 percent compared to 2011 • Established a new senior management team to accelerate progress

www.walterenergy.com

products • Metallurgical Coal • Thermal Coal • Anthracite

• Metallurgical Coke • Coal Bed Methane

operating territories • Canada • United States

• UK

Key stats and ratios Q3 (Sep ‘13) Net profit margin -22.10% Operating margin -12.96% EBITD margin - Return on average assets -6.98% Return on average equity -46.49%

2012 -44.40% -42.22% 17.36% -16.88% -67.72%

Financial information from Google Finance and Thomson Reuters

BE Mining | 73

Bigger is better The mineral wealth of Chuquicamata, now the worldâ&#x20AC;&#x2122;s largest open-pit mine, has been known since prehispanic times. Today a massive underground expansion project is taking the asset into a new era of future prosperity

written by: Will Daynes research by: Candice Nice

74 | BE Mining

Codelco - Chuquicamata Mine

BE Mining | 75

Air extraction tunnel which is 11 meters in diameter

Codelco - Chuquicamata Mine

f you were to set out today from Chile’s capital city, Santiago, and head 1,650 kilometres north you would eventually come to what is the world’s largest open pit mine. Based 2,870 metres above sea level, the Chuquicamata Mine is without question one of the jewels in the crown of Codelco, the planet’s largest producer of copper. In its possession Codelco holds approximately ten percent of the world’s total copper reserves, producing some 1.75 million tonnes of refined copper in 2012 alone. This massive amount of copper stems through the company’s seven mining divisions, one of which is Chuquicamata, which itself is responsible for producing around 366,000 tonnes of fine copper per annum. Although mining at Chuquicamata commenced in 1910, its mining properties had been known for centuries by the prehispanic cultures present in the region. Said properties continue to be exploited to this very day with Codelco currently embarking on a structural expansion of the site in order to mine the resources located under the last open pit at Chuquicamata. This pit has successfully delivered wealth and prosperity to Chile for the better part of 100 years, and yet in its current state it will no longer be profitable by the end of this decade. It is with that in mind that the company embarked on its plan to transform the world’s largest open-pit mine into an underground operation and one with a projected output rate of 140,000 tonnes per day. “In recent years,” explains Sergio Bustamante, Project Director for Chuquicamata, “further explorations have

BE Mining | 77

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Codelco - Chuquicamata Mine been made which have siemens confirmed that beneath Direct drives equipped with synchronous motors are the pit exist 4,200 million a proven drive solution. These gearless drive systems tonnes of resources.” are often found in steel rolling mills, but also in mining This figure translates applications, such as hoists and mills. into around 1,700 million Direct drives are now being increasingly used for belt tonnes of copper ore conveyors requiring high power. Conveyor drives must be reliable and efficient – that’s why reserves and molybdenum ThyssenKrupp and Siemens partnered up to develop a simple (512 p p m), which drive solution with few components. The drive train consists represents over 60 percent only of the pulley, two bearings, the rotor and stator. of all mined resources The availability of the drive increases as a result of the low in the last 100 years. It number of components installed. has subsequently been Direct drives are more efficient and represent the best decided by the company choice for power ratings of several Megawatts. www.siemens.com/mining that exploiting the reserves through the construction of an underground mine, which will be one of the largest and most modern and efficient in the world, is the most economical option going forward. Such a large undertaking, especially one that is unprecedented anywhere in the industry, obviously throws out its own technical challenges, all of which have been taken into account by the mine operators. The material handling system for example will be unique in that it will run entirely through belts, with the main strap

“The material handling system is unique in that it will run entirely through belts”

The access tunnel is approximately 7.5km long

BE Mining | 79

The result of a joint venture Between ACCIONA Infrastructure, SA and Obras Subterrรกneas, SA. The Consortium ACCIONA-OSSA, SA is today a hugely important contributor to the Codelco Chuquicamata underground mine project PMCHS.

www.acciona-infraestructuras.es | www.ossaint.com

Codelco - Chuquicamata Mine

Entrance to tunnel number 12

ACCIONA-OSSA

ACCIONA-OSSA, SA brings over 100 years of experience in the construction industry with a philosophy of sustainable development and excellence in quality, technology and innovation, covering all aspects of our business, from engineering and design to implementation and maintenance. The philosophy of global character ACCIONA-OSSA, SA considers the interests and needs of the customers and the company both locally and globally. ACCIONA-OSSA, SA has all the necessary means to carry out innovative solutions to the most challenging projects, both small and large scale, located on any terrain and in any part of the world. All operations are carried out according to environmental, social and economic ties with a global sustainability criteria and constant attention is paid towards improving construction processes, innovation and implementation of measures for environmental protection. www.acciona-infraestructuras.es www.ossaint.com

having two sections of approximately three kilometres of belt each. Elsewhere, technical operations on the early stages of the mineâ&#x20AC;&#x2122;s structural design, which comprises of four levels of production, include the construction of a main access tunnel measuring 7.5 kilometres, a similar tunnel system that will be used to transport ore, five clean air injection ramps, two air extraction shafts and numerous other works. Despite the obvious scale of the task at hand Bustamante and the company have a clear target in mind when it comes to the timescale for the expansion project. â&#x20AC;&#x153;Underground operations are due to commence from 2019.

360,000 Tonnes of fine copper produced by the mine per annum

BE Mining | 81

Codelco - Chuquicamata Mine After that will be a ramp Sandvik up period that will take Sandvik Mining is a business area within the Sandvik about seven years to reach a Group and a leading global supplier of equipment and tools, production level of 140,000 service and technical solutions for the mining industry. The tonnes of ore per day which offering covers rock drilling, rock cutting, rock crushing, converts into 366,000 tonnes loading and hauling and materials handling. of fine copper a year.” Every product is preceded by extensive R&D and backed with application expertise and a worldwide service network offering As the home of both the on-site service, training and round-the-clock support. largest open pit mine and We have a tradition of localization and conviction that there the biggest producer of can be no substitute for direct service and contact with copper in the world, it really our customers. Our service-oriented, organization is wellgoes without saying that developed and we have technicians located strategically Chile is a hugely important around the world. location when it comes to the www.sandvik.com health and future growth of the mining sector, not only in South America but on a global scale. It therefore stands perfectly to reason that the State of Chile assigns a great deal of important to the industry. By breaking down the figure it becomes clear very quickly indeed how important Codelco’s operations are to the country and the wider region. In 2012 the state-owned company generated more than $7,500 million in income and since it was created in 1971 it has generated wealth equivalent to more than $100 billion. A sizeable percentage of this is in turn assigned by the state to areas Work platform for air extraction such as health, education, public services and

“In recent years further explorations have been made which have confirmed that beneath the pit exists 4,200 million tonnes of resources” BE Mining | 83

Codelco - Chuquicamata Mine infrastructure projects, all for the benefit of the Chilean Astaldi is a leading Italian general contractor with people, particularly those over 90 years of global experience. Its expertise is in classed as being the most the construction of large infrastructure projects in deprived. This makes the fact transportation, water and energy and civil and industrial that the industry is continuing building as well as concessions. Listed on the Italian to grow rapidly and robustly Stock Exchange since 2002, today Astaldi operates in 18 countries with close to 10,000 employees. Over the a hugely positive one, years Astaldi completed and delivered numerous iconic with a least five structural works in Europe, Central and South America, Africa and projects in different stages Asia. In 2012, Astaldi ranked among the first ten top global of development presently contractor in transportation and hydro-electric projects by underway under the Codelco Engineering News Record. banner alone. www.astaldi.com As well as supporting Chileans on a national scale, Codelco’s Chuquicamata mine has long been a vital source of support for the local Calama community. “Here,” Bustamante states, “the company has led a very important program called Calama Plus. Together with the support of various private companies the program centred on a voluntary citizens’ consultation, in which more than 20,000 residents participated, with the aim being to create a master plan to improve the standard of life in the community.” Looking at future of the mine and its underground expansion, the biggest challenges for Codelco when it comes to

ASTALDI GROUP

2019 When underground operations at the mine are due to commence Jumbo rig working in the transport tunnel

BE Mining | 85

Codelco - Chuquicamata Mine Building personnel separating different areas of construction

“The next five to ten years are arguably going to be this project’s most vital period of time” managing and constructing a mega-mining project valued at over $4,000 million will be to ensure that it continues to capture the enormous potential of the Chuquicamata site for many years to come, something that must be done within time and cost limits, and without serious accidents. This last point is critically important to the company as it has long placed emphasis on the fact that safety is its top priority and that it believes that there is no target it could reach that would ever justify placing its employees at risk. “The next five to ten years are arguably going to be this project’s most vital period of time,” Bustamante concludes. “This is the period in which we are going to be building the project, and then it will be put into operation and subsequently we will advance with the productive scaling (ramp up). Our primary goal throughout will be to materialise a good project to benefit Chile and all the people of Chile.” For more information about Codelco - Chuquicamata Mine visit: www.codelco.com

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company in brief Codelco is the main copper producer in the world. The Corporation also controls around 10% of the world reserves of this metal. The Name Codelco represents the Corporación Nacional del Cobre de Chile, an autonomous company owned by the Chilean State which main business is the exploration, development and exploitation of copper mineral resources and byproducts, their processing to refined copper and its commercialization. Codelco has more than US$ 20.835 billion in assets, and in 2011, its equity totalled US$ 6.065 billion. In 2011, Codelco produced 1.79 million metric tons of refined copper (including its interest in El Abra mine). This figure is equivalent to 10 % of the world copper production. Its key commercial product is Grade A copper cathodes.

The Company develops its operations through six mining divisions plus the Ventanas Smelter and Refinery, owned by Codelco since May 2005. Its corporate strategy is coordinated from its Head Office in Santiago, Chile. The Company also has ownership interest in several important mining companies, such as in Minera Gaby S.A., where it holds 100%, and El Abra, with a 49% stake; and other mining partnerships in geological operations both in Chile and abroad.

MANAGEMENT AND DIRECTORS Thomas Keller Lippold

Marcos Lima Aravena

President & Chief Executive Officer

Director

Gerardo Jofré Miranda

Marcos Büchi Buc

Chairman of the Board

Director

Fernando Porcile Valenzuela

Jorge Bande Bruck

Director

Juan Luis Ossa Bulnes

Raimundo Espinoza Concha

Director

Andrés Tagle Domínguez Director

88 | be mining

codelco copper output Division

2012

2011

Var

Chuquicamata

355,9

443,4

-87,5

-20%

Radomiro Tomic

427,8

470,1

42,3

-9%

Minera Gaby

133,0

118,1

14,9

13%

Salvador

62,7

69,0

-6,3

-9%

El Teniente

417,2

400,3

16,9

Total Output

1.647

1.735

-89

-5%

Q3 2013 highlights

Office

• Copper Production increased 4.5% up to September 30, 2013 compared to the same period of 2012 manly due to the addition of the new production coming from Anglo American Sur.

HEADQUARTERS: Huérfanos 1270, Santiago, Chile Tel:+562 6903000

• Revenues decreased 5.4% while LME Average Copper Price decreased 7.3% for the first nine months of 2013 compared to the same period of 2012.

www.codelco.com

products • Copper

• Cash cost increased 5.4% for the first nine months of 2013 compared to 2012 principally due to lower by-product credit.

operating territories • Chile

be mining | 89

Cobre Las Cruces (CLC)

21 Century mining st

By maximizing its return on considerable investment in recent years Cobre Las Cruces (CLC) is well on the way to achieving its vision of becoming a benchmark standard in modern mining operations

written by: Will Daynes research by: Louisa Adcock

BE Mining | 91

Cobre Las Cruces (CLC)

Ariel view of mining operations

ocated at the eastern end of the prolific Iberian Pyrite Belt in the province of Seville, Spain, Cobre Las Cruces (CLC) is a highly innovative open pit mine and the first industrial installation of its kind to operate within Europe. Providing direct employment to 800 employees, as well as generating approximately 1,500 indirect jobs, CLC represents a major €840 million industrial investment into an area that also spans the Spanish provinces of Badajoz and Huelva, and extends through the south of Portugal. Exploration of the mine site commenced in 1992, with a complete site evaluation running from 1994 to 1999. June 2009 saw the start-up of production at the mine, which has an estimated lifespan of 15 years. “Since the production phase began,” states Plant Director, Enrique Delgado, “the growth of the business has been marked by the evolution of the site’s production plant, which has been steadily approaching its maximum output of 6,000 tonnes of copper cathodes per month, a figure which was just achieved in mid-2012. In 2012 alone we produced 58,000 tonnes of copper cathodes, with a resulting turnover of €425 million .” The hydrometallurgical plant is the heart of the operations and the key element of the complex. Unique to Europe, it is where the ore is converted into copper sheets following a process that offers clear advantages at a technical, economic and environmental level; in fact it is considered by the international mining industry as being a clean technology for obtaining copper. The finished result

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Moving toward the future! INSERSA

INGENIERIA DE SUELOS Y EXPLOTACIÓN DE RECURSOS, S.A.

Mining and Tunnelling Drilling Civil Works Building Construction Paseo del Coso, s/n Minas de Riotinto (Huelva-SPAIN) Tel: +34 959 590 506 Fax: + 34 959 590 537 insersa_riotinto@insersa.es www.insersa.es

1988/2013 - 25 Years Anniversary

PRECIOUS RESOURCE DISCOVERED Click here to visit our dedicated homepage for the mining community

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94 | BE Mining

is grade “A” copper cathodes with a purity of more than 99.999 percent, according to the London Metal Exchange. It is this that makes up the final product of CLC, ready for commercialization and transformation into rods or copper wire. Today the core focus of the business is to advance the asset to its next phase, which fundamentally means gaining access to new, under-developed areas of the site. As far as the production plant goes, the company’s efforts are focused on optimising its output. This is a task made all the more important by the fact that 2013 marks the first full year during which the plant will have operated consistently at maximum capacity. Other long-term plans for CLC include examining the possibility of the exploitation

Cobre Las Cruces (CLC)

Hydrometallurgical plant

of other complementary mineral resources containing copper deposits. Bearing this and the aforementioned on-going developments in mind, it explains why the company has endeavoured to invest consistently in its operations. “Once the major investment stage during the construction of the plant complex was complete we immediately began the process of undertaking important improvement works

elsewhere around the complex, including the construction of our water treatment plant,” Delgado continues. “By the end of 2012 investment in the mine and its associated infrastructure had exceeded €80 million .” While CLC does indeed work with many of the most qualified international suppliers, especially when it comes to the innovative technology used at the mine, it is a preference of the company to work with local suppliers

“In 2012 alone we produced 58,000 tonnes of copper cathodes, with a resulting turnover of €425 million” BE Mining | 95

who it considers to be every bit as valuable to the mine’s success. Similarly CLC has, since the start of the construction phase, given particular priority to the training of local professionals who join the business. “Today there are many individuals from this region that carry out functions in the business for which they have been specifically trained.” Delgado highlights. “Providing employment is however just one

way that our operation positively impacts the local economy. With many of our employees, as well as contractors, being residents in neighbouring areas around the mine it has helped create a large number of indirect jobs in all manner of services including hospitality and transport.” The concept of sustainability also exists as a high priority within CLC’s ethos. “As is the case with work safety,” Delgado says,

“First Quantum Minerals have already made it clear that they intend to invest more than €100 million into this project in the coming years”

96 | BE Mining

Cobre Las Cruces (CLC)

“with regard to the environment our belief is that prevention is better than cure. As such there are three key themes that we continue to work towards. These involve the progressive environmental restoration of the area in which we function, the total care of the water resources in said area and the absence of tailings ponds, which completely eliminates the well-known risks associated with such facilities.” Happily for Delgado, CLC’s employees and the suppliers and communities which benefit from the mine’s presence, the future of the development looks very healthy indeed. “Our owners, First Quantum Minerals, have already made it clear that they intend to invest

more than €100 million into this project in the coming years,” Delgado explains. “Furthermore, if the feasibility of additional mineral resource exploitation is approved, this would require additional investment to carry out such a project. However, if the current estimates are confirmed, we could be talking about expanding the mine activity between 10 and 15 years longer than currently planned, which will be great news for everyone.” For more information about Cobre Las Cruces (CLC) visit: www.cobrelascruces.com

BE Mining | 97

company in brief Cobre Las Cruces, S.A. (CLC) operates a copper mining complex with an open pit mine and hydrometallurgical process plant. Although the production phase started in June 2009, the project itself began in 1992 when exploration started. The project site straddles the municipalities of Gerena, Guillena and Salteras in the province of Seville, in southern Spain, and occupies 946 hectares including both the mine pit and the process plant. The local town of La Algaba also shares land with CLC for the purpose of water supply pipelines. The expected annual production averages 72,000 tonnes of copper, equivalent to 25% of Spanish internal demand. The total for the entire 15-year operating period is estimated at 1 million tonnes of copper. The mining-hydrometallurgical

complex is the only copper producer in Spanish since national demand is currently met with imported copper. Spain is the fourth largest consumer of copper in the European Union and ranks 14th in the world. Cobre Las Cruces, S.A. is wholly owned by First Quantum Minerals Ltd., a Canadian metals company focused on copper, nickel, gold, zinc and platinum group metals.

mission

vision

To reach optimum premium copper production in a safe and sustainable way, maximizing return on investment, ensuring the satisfaction of stakeholders.

To be a benchmark standard in mining operations in the 21st century.

98 | BE Mining

Cobre Las Cruces (CLC) stock watch (FQM)

Office Head Office Cobre Las Cruces S.A. Carretera SE-3410 – Km. 4,100 41860 Gerena – Sevilla – España Tel: +34 955 657 950 Fax: +34 955 783 241 Email: comunicacionclc@cobrelascruces.com

Exchange TSE

Shares 590.84M

Symbol FM

Market Cap. 10,020.58M

Currency CAD

Div/yield 0.06/1.02

outlook In 2013, Las Cruces is expected to produce between 68,500 tonnes and 72,000 tonnes copper cathode. The plant will be tested at higher ore throughput and lower grade to assess the effects on plant performance before entering into lower copper grade areas of the mine that are expected in 2014.

www.cobrelascruces.com

products • Five Nines Copper

operating territories • Spain

Key stats and ratios (FQM) Q2 (Jun ‘13) 2012 Net profit margin 9.87% 63.36% Operating margin 17.74% 74.19% EBITD margin - 39.07% Return on average assets 2.24% 29.13% Return on average equity 3.73% 39.37%

Financial information from Google Finance and Thomson Reuters

BE Mining | 99

Rich in resources and resolve

In the last twelve months Levon Resources has worked ha consolidate and progress its assets, gaining 100 percent o the Cordero Project, one of the largest silver resources on

written by: Will Daynes research by: James Boyle 100 | BE Mining

Levon Resources

ard to ownership of n the planet

BE Mining | 101

Drilling the porphyry zone at Cordero

Levon Resources

n an age where negative stories seem to supersede positive news the vast majority of the time, it is always refreshing to hear an optimistic voice or opinion. We have all been privy to the damaging effects that have come in the wake of the sharp fall in metal prices and economic activity in the mining sector, a prolonged event that has seen a lot of company’s share prices plunge as they fail to raise much needed capital, however if you search around you will find people that are much quicker to speak of the opportunities that do exist today. One such individual is Ron Tremblay, president and chief executive officer of Levon Resources. “For us, the downturn in the metals industry presented an opportunity to channel our efforts on securing the last piece of the puzzle when it comes to the Cordero Project.” The puzzle piece Tremblay speaks of is the Aida mining claim, located in a central part of the Cordero Project, itself found in northwest Mexico. “Prior to purchasing the Aida claim we had spent the better part of the last five years trying to strike a deal under extremely difficult circumstance,” he states. “As luck would have it, the market conditions allowed us, with a lot of effort and hard work on our team’s part, to finally come to an agreement to purchase the claim at a cost of $2 million.” With a complete package now in place Levon Resources recently set about conducting a drilling program on Aida. Should drilling prove successful it will allow the company to re-evaluate its resource calculation. These latest developments represent the next phase in the growth of what is one of the world’s largest silver resources. In less than four

BE Mining | 103

years Levon Resources has amassed a resource at Cordero containing 364 million ounces of silver indicated and a further 91 million ounces inferred. Additional indicated resources of 945,000 ounces of gold, 6.1 billion pounds of zinc and 3.3 billion pounds of lead have helped establish Cordero as one of Mexico’s premier polymetallic porphyry targets. Having successfully cut back on expenses in the last 18 months or so, a process which the company intends to continue while metal prices remain low, Levon Resources also carries with it the knowledge that it retains considerable dollar value in the form of its underground assets. With Tremblay confident

View of Cordero dome

104 | BE Mining

that we will see a new high in terms of silver prices in the future, as well as increases in the value of gold and zinc, it stands to reason that the company’s aforementioned assets will only appreciate over time as the economics improve. “I am one of those people who seek out opportunities before they happen, not after,” he says. “I am also a believer in the fact that one can’t fight against the tide of change and therefore one must deal with the things that can be dealt with during challenging times in order to be best equipped to take advantage when good market conditions return and deal from a

Levon Resources

“The market conditions allowed us to finally come to an agreement to purchase the Aida claim at a cost of $2 million” position of strength. This is precisely what we have done by continuing to advance the Cordero resource in a key area, in a responsible, cost effective way.” With the company in an extended period of exploration and development it can also look forward to an IVA tax refund that could exceed

$4 million in total. Of course such a large sum of money does not simply get handed over in one go. The company has had to carry out a great deal of due diligence and complete a large volume of paperwork to ensure that everything is carried out in accordance with Mexican and international regulations. “To date we have met all of the qualifications necessary to receive these funds, while a recent audit also indicated no issues therefore we expect to begin receiving our tax refund in the coming months,” Tremblay highlights. “In line with our policy of reinvesting back into the company, a proportion of this will then most likely be used to cover the cost of our latest drilling program.” The company’s operations schedule, as estimated at the time of writing, indicates that the drilling program on Aida should be complete by the end of January 2014. Once this has happened Levon Resources will be able to provide its Tucson, Arizona based engineers with the assay information and data that will be required to model and optimize the pit design for future recovery to take place. This information will also help give the company a clearer picture of what Cordero has to offer in terms of its total resources. “Early indications suggest that we could be looking at an asset containing somewhere

BE Mining | 105

Team Geology

“The company’s operations schedule, as estimated at the time of writing, indicates that the drilling program on Aida should be complete by the end of January 2014” north of 600 million ounces of silver,” Tremblay explains. “In terms of the pit itself we are potentially looking at a pit design of over three kilometres long, two and a half kilometres wide and up to one kilometre deep. Based on the information we have to hand at present we could be looking at anywhere between a 60,000 to 125,000 tonnes per day operation with a 25-plus year lifespan.”

106 | BE Mining

While a great deal of Levon Resources’ efforts are understandably focused on Cordero, it has not prevented the company from evaluating the possibility of securing further growth outside of Mexico. “We continue to look at different opportunities all over South America, Central America and North America,” Tremblay enthuses. “What we are specifically looking for are highly

Levon Resources

Core drilling at Cordero

Commercial water well drilling rig for high velocity wells

prospective properties that have the potential to support a large scale mining operation in a good jurisdiction. It also needs to be an opportunity that we can earn into at a reasonable cost, much like Cordero.” Despite the excellent progress made by the company in the last few years, Levon Resources, and the Cordero Project in particular, remains an extremely undervalued opportunity for investors. Now, with 100 percent ownership of the Aida claim obtained and with signs of an upturn in the metals market beginning to appear, the time could not be better for interested parties to get on board. “What Cordero represents is the perfect opportunity for investors to get involved,

basically on the ground floor, with a well advanced project backed by a company that has enough capital in place to carry out work for at least the next ten years without having to go back to the market to raise extra finance,” Tremblay concludes. “There is no doubt in my mind that it is because of these factors that the big boys out there continue to watch us closely and that it is only a matter of time before one or more of them puts their cards on the table and gets involved.” For more information about Levon Resources visit: www.levon.com

BE Mining | 107

company in brief Levon Resources Ltd. (Levon) is an explorationstage company. The Company is engaged in the acquisition, exploration and development of natural resource properties in Mexico. The Company is focusing on silver and gold exploration. The Company owns approximately 50% leasehold interest in certain claims in the Lillooet Mining Division, British Columbia. It also owns approximately 50% interest in certain mineral claims in the Gold Bridge area, Lillooet Mining Division, British Columbia. The Cordero Sanson Property (Cordero) is located near Hidalgo Del Parral, Chihuahua, Mexico. Levon

holds approximately 50% interest in certain lode mining claims located in Lander County, Nevada. It owns certain mineral claims in the Lillooet Mining Division, British Columbia.

MANAGEMENT AND DIRECTORS Ronald D. Barbaro

William C. Glasier

Independent Chairman of the Board

Independent Director

Ron M. Tremblay

Robert Aaron Roberts

President, Chief Executive Officer, Director

Independent Director

Annie Chan

Gary R. Robertson

Chief Financial Officer

Independent Director

C. Victor Chevillon Vice President - Exploration, Director

Dorothy Chin Corporate Secretary

Carlos H. Fernandez Mazzi Independent Director

108 | BE Mining

levon resources stock watch

Office Head Office Suite 900, 570 Granville Street VANCOUVER, BC V6C 3P1 Canada Tel: +1-604-6823701 Fax: +1-604-6823600

Exchange TSE

Shares 199.85M

Symbol LVN

Market Cap. 41.97M

Currency CAD

Div/yield -

Investment Value Part of silver’s appeal is its affordability compared with gold. At current prices, the gold/silver ratio is about 60:1. Over the past 20 years, the ratio has ranged from over 90:1 in 1993 to just over 30:1 in 2011. But historically the ratio has dipped as low as 15:1 (1840 and 1980) to nearly 100:1 (1940 and 1990). The longterm historical average is around 27:1. Bullish silver investors point to the current high ratio as a strong indication that silver prices will rise further in the coming years.

www.levon.com

products • Silver

operating territories • Canada • United States

• Mexico

Key stats and ratios Q2 (Jun ‘13) Net profit margin - Operating margin - EBITD margin - Return on average assets -1.09% Return on average equity -1.09%

2013 -3.72% -3.73%

Financial information from Google Finance and Thomson Reuters

BE Mining | 109

Finning South America

Equipment and services which drive the economy Finning is the most important partner in the distribution of Caterpillar equipment and services worldwide. Today, its focus is on delivering an excellent service, which includes expert advice, and the constant innovation of products with the highest safety standards

Edited by: Will Daynes research by: Richard Halfhide 110 | BE Mining

Finning South America

roviding service for what we sellâ&#x20AC;? is the formula which has endured for eight decades and managed to consolidate Finning as the most important partner in the distribution of Caterpillar equipment worldwide. This is stated by Marcello Marchese, CEO of Finning South America, who has led the company since June 2012, taking command of the Argentina, Bolivia, Chile and Uruguay branches, where the company is positioned as the major CAT equipment and services distributor for the mining, construction, energy, forestry and oil & gas industries. With more than a decade promoting the growth of the locations in which it operates, Finning has committed to deliver value to its customers and their industries, as well as to the local economy by generating employment, creating more than 7,800 jobs and counting and more than 100 facilities spread throughout the region. With the acquisition of the distribution of the former Bucyrus brand, Finning completed its range of solutions for the mining market, allowing it to provide the broadest line of solutions to the customers in this sector. The product offering ranges from mining trucks, hydraulic and cable shovels, loaders and drilling rigs, as well as a portfolio of services including, condition monitoring, training of operators, technicians and skilled mechanics, consulting, and an effective range of available spare parts. In the construction industry, this company offers a powerful line of Caterpillar equipment. Among them it is worthwhile mentioning

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the wheeled and tracked tractors, loaders, excavators, graders, rollers, compactors, skid steer loaders, material handlers, pavers and other equipment for public works and infrastructure projects. Regarding the power systems area, Finning is specialized in delivering solutions to those seeking power systems for the different industries, applications, mining projects and support equipment, thereby covering power requirements from 13 kVA to 3,000 kVA in one generation unit. For larger power, it also develops projects for generation plants with facilities and multiple interconnected equipment. The forestry equipment Finning sells is designed for all types of forestry work, from thinning, harvesting, loading, field management and forest road construction. For the oil & gas market, Finning has a wide range of drilling, gas compression, well maintenance, pumping and power generation products, for emergencies or continuous power generation for oil extraction fields. Relying on a team of experts provides clients with a broad portfolio of solutions as well as the best technology and is part of the seal of this Canadian company. They differ from other competitors in the efficiency and support that as a dealer is provided for each one of the CAT

pieces of equipment that are sold in different industries where CAT is present. For Finning, the sale of equipment is only the beginning of a high-level commitment and the beginning of a relationship of loyalty which is sustained by experts and by cuttingedge technology in comprehensive services. In this context, a range of technological solutions which Finning has for equipment and fleet management is inserted.

â&#x20AC;&#x153;With more than a decade promoting the growth of the locations in which it operates, Finning has committed to deliver value to its customersâ&#x20AC;? 114 | BE Mining

Finning South America

From its Technology has better availability Solutions center, which boasts of its fleet and therefore, better productivity. state of the art technology and is managed by high standard T his new system specialists, the company equally offers specific Jobs created by Finning conducts assessments, online plans for equipment in South America tracking and diagnosis of the control, productivity and condition of the equipment. support, according to the Thus, for example, a client needs of each individual can detect in real time the exact moment of customer, including the ability to know the possible failures, which contributes to prevent location, fuel consumption and operating incidents and maximize productivity. It also times, among other parameters. allows for the implementing of preventive Advisory services, technical support measures, because the system advises and diagnostics of customer value are also components replacement and maintenance. provided. This is cooperative and collaborative Marchese, the highest executive of the work, which allows access to this information company at a South American level, ensures from a computer or mobile device. This is that the customer saves time and money, one example of how the company is working

7,800+

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“Marchese believes that these tough times are an opportunity to adjust and allow the organization to be more efficient and innovate with its customers” to combine world class technology and the know-how of the Finning experts. Another service which is most valued by customers is the “online specialists and technicians,” program, which is essentially a contact center assisted by experienced technicians and is available to address concerns and help customers to identify potential failures in their equipment, delivering step by step recommendations to solve any problem.

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They also provide technical advice to Finning technicians who are on site, by means of a video camera system which sends live images to online specialists, enabling timely and effective assistance. Although Finning South America has not been indifferent to the slowdown in mining and the swings in construction, Marchese believes that these tough times are an opportunity to generate adjustments and

Finning South America

allows the organization to be more efficient and innovate with its customers. The company has focused on training in order to have available professionals who are better prepared for the industry. This new value proposition, materialized with the Finning Technical Institute, FIT. A modern building located in the most important mining area of Chile, Antofagasta, it has been supported through an investment of $12 million, with high-tech equipment spread across more than 13,000 square meters, allowing for teaching and training under a system of learning, using competences for the Finning mechanics and technicians, maintainers and operators of its customer portfolio. The FIT also supports young people in the region who the company

also provides access to apply for available degrees, with the aim of giving them better future employability. Finning continues to take an optimistic view when faced with an uncertain outlook for the mining and construction markets, betting on offering the most comprehensive portfolio of equipment and services of the sector. This will allow it to provide continuity to the different lines of training and specifically consolidate a history of loyalty to their customers which began over 80 years ago in the world of large industrial suppliers. For more information about Finning South America visit: www.finning.com

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company in brief Finning International Inc. provides sales, rental, parts and support services for Caterpillar Inc. (Caterpillar) equipment and engines and equipment on three continents. Its operating units include Canadian operations, South American operations, the United Kingdom and Ireland operations, and Other. The Canadian operating segment includes Finning (Canada) and its interest in OEM Remanufacturing Company Inc. Finning (Canada) sells, services and rents Caterpillar mobile equipment and engines in British Columbia, Northwest Territories, and a portion of Nunavut. Its South

American operation sells, services, and rents Caterpillar mobile equipment and engines in Chile, Argentina, Uruguay and Bolivia. Its United Kingdom and Ireland operations sell, service and rent Caterpillar mobile equipment and engines in England, Scotland, Wales and Northern Ireland. On February 3, 2012, it acquired Damar Group Ltd. In October 2012, it acquired Bucyrus distribution and support business from Caterpillar.

MANAGEMENT AND DIRECTORS Douglas W. G. Whitehead

Rebecca Schalm

Non-Independent Chairman of the Board

Chief Human Resource Officer, Senior Vice President

L. Scott Thomson President, Chief Executive Officer, Director

Neil R. Dickinson

David Stewart Smith

Executive Vice President - Global Power Systems, Managing Director - Finning (UK)

Chief Financial Officer, Executive Vice President

Andrew S. Fraser

Marcello Marchese

Executive Vice President - Customer and External Relations

President, Finning South America

Juan Carlos Villegas Chief Operating Officer, President, Finning Canada

David W. Cummings Senior Vice President, Chief Information Officer

Anna P. Marks Senior Vice President, Corporate Controller

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Finning international inc. stock watch

Office Head Office Suite 1000, 666 Burrard St VANCOUVER, BC V6C 2X8 Canada Tel: +1-604-6916444 (Phone) Fax: +1-604-6916440 (Fax)

Exchange TSE

Shares 172.00M

Symbol FTT

Market Cap. 4,336.11M

Currency CAD

Div/yield 0.15/2.42

Investment opportunities •O ur financial performance reflects solid business model and successful execution of our strategy. •O ur extensive product support capabilities, strong customer relationship and exclusivity of the Caterpillar brand give us a solid competitive edge. •W e are focused on improving profitability, driving operational excellence and pursuing growth. •O ur strong financial flexibility enables us to take advantage of new business opportunities.

www.finning.com

services • Caterpillar dealer

operating territories • Western Canada • South America

• UK & Ireland

Key stats and ratios Q3 (Sep ‘13) 2012 Net profit margin 4.84% 5.10% Operating margin 7.62% 6.29% EBITD margin - 10.79% Return on average assets 6.63% 7.34% Return on average equity 20.07% 23.19%

Financial information from Google Finance and Thomson Reuters

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Innova think and insi

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ative king ight

BDO

With more than 100 offices from Vancouver to St. Johnâ&#x20AC;&#x2122;s, BDO is one of the leading accounting and advisory firms in Canada, and an invaluable service provider to the countless mining companies that call the country home

written by: Will Daynes research by: Peter Rowlston

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BDO

t was almost 350 years ago that the seeds of Canada’s mining sector were sown with the discovery of coal on Cape Breton Island, Nova Scotia. Three and a half centuries on and there are more than 800 mines across the country providing direct employment for more than 363,000 workers. Today Canada ranks first in the world for the production of potash and uranium, and among the top five for the production of nickel and diamonds, with its mining industry contributing approximately five percent of its gross domestic product. Present in Canada for more than 90 years, BDO has been a witness to much of the mining sector’s development during that time period, in the process becoming one of the country’s leading accounting and advisory firms in its own right. A member firm of the international BDO network, which boasts over 1,000 offices in 135 countries, the company has worked with thousands of clients in exploration, production and service companies, developing its services to address key industry issues such audit and assurance, domestic and international taxation, risk management, business valuations, technology solutions and transaction services. “Recent years have certainly seen the firm focusing on industry expertise when it comes to our service offering,” states National Energy and Natural Resources Leader, Michael Madsen. “Historically the bulk of our work has been audit or tax related, however much of our growth is now stemming from speciality service areas such as valuations, risk advisory, transaction services and IT solutions, which are tied directly to the mining sector.”

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Historical services they may be, but audit and tax related offerings remain an allimportant speciality of BDO. “From an audit perspective,” explains Energy and Natural Resource Partner, Tammy Thompson, “our clients understand the benefits that come from our extensive understanding of the industry here in Canada. This experience helps us in identifying key issues and helping businesses of all sizes, from juniors to larger producers, navigate through them.”

As Madsen goes on to highlight, the firm has worked hard in recent times to emphasise the need for clients to demand more from their audits in times of economic uncertainty than they may have done so in the past. “What these clients should be demanding today is a service that provides input and advice of how to control costs, how they can better access global markets and how to do business in these unfamiliar environments. I think that is where we have been able to deliver a cohesive strategy around

“Going forward BDO plans to stay in tune and evolve with Canada’s mining sector as well as the players operating within it”

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BDO

what we offer to companies situation where the country is playing host to somewhat of a in the middle market that they maybe haven’t been able waiting game where there are to access in a cost efficient those who possess assets but manner before now.” no capital, and others with Years that BDO has been Prior to the economic crisis, capital who are looking for present within Canada at a time when metal prices good, long-term prospects. reached record highs and “Despite the changes that have occurred in recent years, rapid growth was a priority of virtually every major mining player in the significance of Canadian involvement on the market, Canada’s mining industry was the world mining scene should by no means be experiencing the same flurry of activity as downplayed,” Madsen continues, “what with most of the other leading regions in the world the country remaining home to a rich resource were seeing at the time. This unfortunately based economy and two of the world’s strongest meant that the country was not immune to mining exchanges in the form of the TSX and the subsequent effects of the global downturn TSX Venture exchanges.” which resulted in metal prices softening, One of the major areas expected to be the investor confidence worsening and activity focus of future Canadian mining investment decreasing at pace. What this created was a will be the Northern Ontario Ring of Fire, the

90+

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National Energy and Natural Resources Leader, Michael Madsen

“One of the major areas expected to be the focus of future Canadian mining investment will be the Northern Ontario Ring of Fire” name given to the massive planned chromite mining and smelting project in the James Bay Lowlands which has been described as one of the most promising mineral development opportunities in Ontario in more than a century. “Attempts have been made to develop this area for some time now,” Thompson says.

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“On-going efforts of the Ontario Ministry of Northern Development and Mining will continue to position Ontario for future success and to highlight the long-term importance of the Ring of Fire. Meanwhile, BDO already has offices based in the northern areas meaning we are well positioned to help in creating the jobs

BDO

Energy and Natural Resource Partner, Tammy Thompson

and infrastructure that the region will require. This presence has also allowed us to forge excellent relationships with local communities which we expect to serve us well in the future.” “While the Ring of Fire represents a massive area of untapped potential, with that comes a host of challenges,” says Business Development Manager, Carlos Lobo. “Fortunately these are challenges that can be overcome with the use of new technologies and Canada is very much at the forefront of innovation.” Becoming one of Canada’s most important service providers has been neither a quick or simple journey therefore it goes without saying that, in order for the firm to retain its standing

with the country, going forward BDO plans to stay in tune and evolve with Canada’s mining sector as well as the players operating within it. “In order to achieve this,” Madsen concludes, “we see ourselves not only continuing to offer the types of service that got us to where we are today, but continuing to strengthen our delivery of non-audit type services as we expand our suite of speciality service offerings to all sizes of mining companies.” For more information about BDO visit: www.bdo.ca

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company in brief At BDO, we believe that delivering exceptional client service is the foundation of our being a trusted advisor. With more than 100 offices from Vancouver to St. Johnâ&#x20AC;&#x2122;s, our 3,000 empowered professionals are committed to providing clients with practical advice and insight, tailored to their industry, unique priorities and ambitions. Through clear and open conversations, and

with a focus on delivering value for money, we strive to exceed the expectations of our more than 50,000 business clients.

MANAGEMENT AND DIRECTORS Keith Farlinger

Jeffrey Smith

Chief Executive Officer

National Partner, Risk Management

Russ Weir

Peter Snelling

Chief Operating Officer

National Partner, Marketplace

Ron Watts

Richard Payette

Chief Financial Officer

National Partner, Practice Development

Cindy Ditner

Janet Stockton

National Partner, Accounting & Audit Standards

National Partner, Quality Assurance

Travis Leppky

Emree Siaroff,

National Partner, IS Audit

Managing Director, Human Capital

Armand Capisciolto

Kim Watt,

National Partner, Accounting Standards

National Director, Technology

John Wonfor

Rose Marie Clarke,

National Partner, Tax

National Director, Professional Development

Bruce Ball National Partner, Tax

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bdo services

Industries

Assurance & Accounting • Assurance • Accounting and other services • Bookkeeping, Payroll & CFO Services

• Agriculture - Wineries • Consumer Business - Food and beverage • Energy & Natural Resources • Financial Services • Manufacturing • Not-For-Profit • Professional Services - Health care and sole practitioners - Professional firms • Public Sector - Aboriginal • Real Estate & Construction • Technology, Media & Telecommunications

Tax • Domestic Tax • Indirect Tax • International Tax • U.S. Tax Advisory • BDO Solutions • Business Transition • Financial Advisory • Financial Recovery • Planning & Performance • Risk Advisory • SR&ED • Transaction Advisory • Transformation & Change • Debt Help Public Companies

Office locations • Alberta • British Columbia • Manitoba • New Brunswick • Newfoundland • Northwest Territories • Nova Scotia • Ontario • Prince Edward Island • Quebec • Saskatchewan • Yukon www.bdo.com

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A provi possib

The mining sector has alwa centre of Ontarioâ&#x20AC;&#x2122;s growth. Ontario Mining Association ( provinceâ&#x20AC;&#x2122;s future will only c

written by: research by: Pe

130 | BE Mining

Ontario Mining Association (OMA)

ince of bilities

ays existed as a pillar at the Thanks to the efforts of the (OMA) its role in defining the continue to gain importance

Will Daynes eter Rowlston

BE Mining | 131

Ontario Mining Association (OMA)

ining has been a fundamental province and is one of the longest serving part of Ontario’s economic trade organisations in Canada. While a great fabric for centuries and is now deal has changed in the 90 plus years since seen as an integral component its founding, the fundamental mission of the of its future. Ontario’s native OMA remains the same and that is to improve population is widely credited with being the the competitiveness of the industry while first to tap into the province’s mineral wealth, consistently promoting safety and sustainability. while major discoveries and mine development By maintaining its core commitment to in the 20th century helped to underpin these ideals the OMA has helped create a Ontario’s rise to the status of Canada’s mining jurisdiction revered for being one of most populous and wealthiest province, the safest in the world. Indeed, over past 30 and supported Canada’s development as an years the sector’s lost time injury frequency industrialised and globally has improved by 90 percent competitive nation. and it is now at a level of 0.5 Today, mining in Ontario is per 200,000 employee hours. The OMA puts its success a multi-million dollar industry with a total of 38 mine sites in advocating for industry operating throughout the advancement down to province, which collectively its ability to harness the are bringing to the surface a collective strength its highly range of metals and minerals engaged members. It is proud Average revenue including nickel, gold, copper, to serve as a focal point for produced from mining in Ontario per year zinc, platinum, salt, calcium discussions on the issues and opportunities facing the carbonate, gypsum, talc, and mining community and to since 2008 diamonds. A key contributor to Ontario’s economy as well offer its members a unified voice on matters as being an engine for regional development, of public policy and opinion. mining in the province produces revenues A goal of the association is to overcome the of around $10 billion per year on average. challenges that impede the competiveness Furthermore, given that 90 percent of the inputs of responsible operations and to foster an to production are Canadian and 75 percent of environment that bolsters mining’s potential to mineral output is exported to markets in the be the cornerstone of Ontario’s new, innovationUnited States, Europe and Asia, the industry also oriented green economy. With this goal in contributes immensely to improving Ontario’s mind, the OMA offers its members support international balance of trade. in a number of areas such as navigating the Established in 1920, the Ontario Mining provincial policy network, gaining valuable Association (OMA) is the body tasked with insights and building important relationships representing the mining industry of the by joining OMA committees and developing

$10

Billion

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â&#x20AC;&#x153;...we work as strategic partners with our clients...â&#x20AC;?

Irwin Lowy LLP is a Toronto, Ontario law firm focused on corporate and securities law, including public and private debt and equity financings, stock exchange listing matters, continuous disclosure and mergers and acquisitions.

IRWIN LOWY LLP 365 Bay Street, Suite 400 Toronto, Ontario M5H 2V1 (416) 361-2515 www.irwinlowy.com

inspired Your weekly digest of business news and views www.bus-ex.com

Ontario Mining Association (OMA)

Pure wire gold in granite and quartz

industry positions, strategies and initiatives programs, and of course, championing and helping to shape legislation, policies, the long-term viability of the industry. guidelines and best practices. One of the things the OMA has always Further OMA support comes in the form been keen to highlight is the fact that the of coordinating industry initiatives and impact of mining goes far beyond mineral offering opportunities for extraction and processing, expert practitioners to with it being linked to many collaborate on innovative other industries and sectors solutions, networking with in the economy, including industry colleagues, nontransportation, construction, governmental organisations, equipment manufacturing, communities of interest, civil environmental management, servants and elected officials, geological services, education Invested in mineral furthering public awareness and research. It also provides exploration and and support of the mining a major boost to the regionâ&#x20AC;&#x2122;s deposit appraisal in financial sector, what with the industry and delivering Ontario in 2011 Toronto Stock Exchange (TSX) innovative communications

Billion

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being the leading global mining exchange, listing more of the worldâ&#x20AC;&#x2122;s public mining companies and raising more mining equity capital than any other. A recent study by the University of Toronto, commissioned by the OMA, highlighted the fact that the benefits from opening a single new mine include millions of dollars of tax revenue for government and the creation of a number of highly skilled, high paying jobs.

These benefits are shown to be worth $277.8 million per annum in direct, indirect and induced benefits; 2,280 employment-years of direct, indirect and induced opportunities; and $83.8 million in taxes to all levels of government each year. Meanwhile, the construction and building phase of one mine has the potential to increase GDP by $130 million and to offer as many as 2,000 employment opportunities. Further

â&#x20AC;&#x153;The OMA puts its success in advocating for industry advancement down to its ability to harness the collective strength of its highly engaged membersâ&#x20AC;?

Mine with railroad track - underground mining

136 | BE Mining

Ontario Mining Association (OMA)

economic gains can also be made through the construction of infrastructure to support the opening, operation, closing and rehabilitation of said mine. In 2009 the value of mineral production in Ontario was recorded as $6.3 billion. This increased to $7.7 billion in 2010 and again to $10.7 billion in 2011, before coming in at $9.2 billion in 2012, despite global economic uncertainty and weakened demand for commodities. The financial year of 2011 also saw $1 billion invested in mineral exploration

and deposit appraisal, the highest level ever achieved. With a multitude of opportunities yet to be explored across the province and an increase in activity expected with the demand for commodities slowly increasing, expect this record level to be broken again in the not-too-distant future. For more information about Ontario Mining Association (OMA) visit: www.oma.on.ca

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A land of op

Monica Gichuhi, Chief Executive Offi (KCM), discusses how the country is Africa one of the most exciting new

written by: Will Daynes | r 138 | BE Mining

The Kenya Chamber of Mines (KCM)

pportunity

ficer of the Kenya Chamber of Mines s playing a vital role in making East w frontiers for mining on the planet

research by: David Brogan BE Mining | 139

The Kenya Chamber of Mines (KCM)

t is fair to say that until recently Kenya and all service providers that wanted to was not generally renowned for being become involved with mining. This has led a destination for mining investment. to a situation where today we have gone from However now, with the world’s eyes having a membership portfolio that was once focused firmly on Africa as an epicentre home to exploration companies and mine for mining activities, Kenya is emerging as operators, to one that caters for those in the a location of particular interest in the wake legal, financial, consultation and equipment of developments that have proven that supply fields. This in turn has helped the country does indeed hold significant bring added value to the aforementioned mineral-based potential. explorers and operators, as well as any With the industry taking on ever greater foreign owned entities looking to enter the significance and the country receiving more marketplace, as they now have direct access and more interest from international investors, to a list of all manner of service providers that the creation of a dedicated can cater for their needs.” Proof of the rapid Chamber of Mines became development of the mining a necessity. “The Kenya sector in Kenya can be seen Chamber of Mines (KCM) throughout the country, from was established in the year the major breakthroughs 2000,” explains Chief The year that KCM being made at the Kwale Executive Officer, Monica was established Mineral Sands Project to the Gichuhi, “with its key purchasing of licences by mandate being to act as a representative for the private sector companies the likes of Barrick Gold in the last year, an operating in Kenya’s mining sector.” event which marked the entry of one of the At first KCM existed mainly as a lobbying best known global players into the country. body, pushing for more favourable working Such events have also resulted in an influx conditions for miners and private stakeholders. of junior miners coming into Kenya seeking However, in line with the growth in their own opportunities. These developments have clearly not prominence of the sector, the Chamber’s role has continued to evolve to take on a gone unnoticed and have helped lead to the number of core roles including the marketing Kenyan government establishing a dedicated of the industry locally and internationally Ministry of Mining for the first time in its to promote investment opportunities, history. “In the past mining had always been drive awareness of the industry amongst banded together in government with other local communities and be a source of natural resources or as part of environmental information for its members. discussions,” Ms Gichuhi states. “It is of huge “Over time,” Ms Gichuhi continues, “we significance therefore that it now has its own began opening up our membership to any docket within government, something which

2000

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kengas group Kengas Group Limited started with bulk petroleum products before moving into supply and delivery services within the Great Lakes Region including Southern Sudan. The company has over 25 yearsâ&#x20AC;&#x2122; experience and operates in some of the most demanding locations.

Distinguishing characteristics of the business stem from a combination of management experience, service experience and quality of service. Above all else, Kengas Group treasures the corporate values of integrity, teamwork, communication, achievement, compassion and understanding, in the people it employs.

Kengas Group firmly believes in putting customersâ&#x20AC;&#x2122; needs first, promoting equity within its ranks and re-investing its profits on tangibles that make a difference to customers. Bringing together the best minds and the best technologies, Kengas understands that having high standards is the driving factor of change in life. By bringing greater synergy to daily business, maximizing the efficiency of businesses and providing specialized services across countries, Kengas integrates continuous improvements to bring changes for the better.

Much in the same way as its employees, Kengas itself endeavors to always conduct itself according to a set of core values. These include its desire to operate its businesses safely and remain good guardians of the environment, and comply with environmental regulations. Integrity in the form of being honest and open with its employees, customers and stakeholders is another core value, as are trust and respect.

Kengasâ&#x20AC;&#x2122; vision is to become the regions leader in providing specialized services in remote environments based on sound success in the oil industry. In its quest to do so the company strives to efficiently and reliably provide services that fuel the national economy, improve quality of life, create maximum value for its shareholders and stakeholders, and empower its employees.

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The Kenya Chamber of Mines (KCM)

Kengas Group is committed to fairness in the rewarding of employees on the basis of their performance and contribution to the organization. It recognizes diversity as a key strength, and works hard to foster an inclusive environment that will enable everybody to fully participate and contribute. Last but not least is competitiveness. Kengas aims to be competitive through efficient and reliable operations, superior customer service, the adoption of best practices, seeking innovation and applying technology as a competitive advantage.

Kengas Group today boasts a wide range of capabilities. These include fuel logistics and supply, cargo logistics, catering services, procurement, camp designing, construction and management, fleet management and ICT services. In addition to all of the above it is also able to provide warehousing, laundry services, consulting, contract logistics and other specialized services.

T +254 20 2225445 www.kengasgroup.com

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The Kenya Chamber of Mines (KCM)

“Kenya is emerging as a location of particular interest having proven that the country does indeed hold significant mineral-based potential” very clearly highlights the confidence it has in the positive benefits the industry can bring to Kenya in the future.” What is happening within government does not mean however that the role of KCM has diminished in any way. In fact it is perhaps more important now than ever before that the Chamber maintains the pressure it places on the powers that be to ensure that the proper legislation and regulations are in place to

properly support the growth of mining and attract investment. In addition to its lobbying for the legislation reform process to be speeded up and for the introduction of better tax conditions for the industry, a topic that is high on the Chamber’s agenda at present is the gathering of comprehensive geological data for the whole of Kenya, an act that will prove invaluable when it comes to attracting

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POWERING AFRICAN MINING For a mining operation to be viable, a number of factors must be in place. Sustained demand for the commodity, a market price that offers profitability, once extraction, refining and transportation costs are subtracted and a licence to operate are three such factors. Access to a robust, high-quality power supply is another. Without reliable power, mines simply cannot operate. Traditionally mine power has been supplied from accessing the local power grid or through independent power plants owned and operated by mining companies. Typically when relying on grid power, a fleet of back-up generators are also located on site to step in when grid power goes down. Another option for powering mines that is becoming increasingly popular is the rental of power plants for either primary or backup power. Mining companies are starting to recognise the clear benefits of outsourcing this vital, yet non-core activity to specialised suppliers. Rental power offers flexibility in capacity and avoids tying up large amounts of capital in the purchase and maintenance of power infrastructure. Further, it allows miners to concentrate on what they do best, while leaving the supply of power in the hands of dedicated power experts. “Over the course of a mine’s lifespan, power demands will increase incrementally and then decrease as the mine is scaled back,” commented Charly Wittgenstein, Area Sales Manager, Aggreko East Africa. “By renting power, miners can opt for exactly the power capacity they need and then grow or decrease this as and when required. This avoids the

costly situation of having either unused or redundant capacity or potentially worse, an insufficient power supply.” Aggreko is the world’s leading supplier of rental power to mining operations across the globe. From providing small generators to power initial exploration camps to powering entire mining operations with multi-megawatt power plants, Aggreko is recognised as the industry leader. With a network of eight depots across Africa, supported by regional hubs in Europe and the Middle East, Aggreko has the unique ability to service practically any power requirement, in any geography across Africa. “From our depot in Nairobi we can rapidly mobilise fleet to support our customers when emergency situations arise,” continued Wittgenstein. “Yet we also have the capacity and proven experience to supply large–scale and longer term power installations. Aggreko are an excellent partner for mining companies as we can support them at each and every stage of their operations.” Aggreko supplies temporary power and temperature control solutions across Africa and throughout the world to a wide array of heavy industries, government utilities and to international major events. With a local African depot network encompassing Nairobi, Johannesburg, Port Elisabeth, Cape Town, Durban, Walvis Bay, Luanda and Lagos, backed up by regional hubs in Europe and the Middle East Aggreko has an unrivalled ability to support our customers across the entire African continent. Africa.aggreko.com

The Kenya Chamber of Mines (KCM)

investors to take up licencing the reaction to the increase opportunities. “As of today we in mining activities and are still waiting to conduct operations from Kenyans a full airborne survey that themselves, particularly will map out the country’s local communities around Number of current resources,” Ms Gichuhi says. which said operations are members in KCM “This is something that we beginning to take shape. want carried out as soon as As KCM is well aware such possible and we continue to push hard for it to events can open the door to misinformation take place. In truth I believe the government of the positives and negatives of the is now starting to realise, thanks to the development of the industry spreading ever-growing amount of licence applications amongst local people, therefore it is one of it is receiving, the importance of such the Chamber’s key tasks to act as an accurate an undertaking, but we will continue to source of information and advice. lobby for it until it happens.” Of course the buck doesn’t stop there with It would be remiss to not also consider the Chamber. It also falls upon the mining

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TAITA TAVETA UNIVERSITY COLLEGE VOI KENYA Taita Taveta University College (TTUC) was established in 2007 as a campus of the Jomo Kenyatta University of Agriculture & Technology (JKUAT) but was upgraded to a Constituent College of JKUAT in 2011. With a student population of over 2,000, the University College currently has five schools. The flagship programme of the University College is the BSc in Mining and Mineral Processing Engineering (MMPE). In addition SEMTECH also runs short courses in Gemology. The importance of the BSc in Mining and Mineral Processing Engineering Programme continues to rise dramatically in Kenya following discoveries of commercially viable deposits of titanium minerals, iron ores, niobium and rare

earths, among others, and prospects of a major gold find soon on the heels of intensified exploration efforts. Shortage of engineering workforce to service the mining, oil and gas industries will continue to bite for many years to come not, only in Kenya but in the whole region of eastern, central and southern African nations. To enhance its educational training capacity, both in terms of academic staff as well as in terms of engineering infrastructure, TTUC has entered into partnerships with other reputable mining universities in Australia, Europe and Africa. principal@ttuc.ac.ke www.ttuc.ac.ke

TAITA TAVETA UNIVERSITY COLLEGE - THE HOME OF IDEAS

Taita Taveta University College is increasingly recognized as the Centre for the training of University level engineering workforce for the oil, gas and mining industries in Kenya. Our graduates come out having acquired competence and basic skills in design of both surface and underground mines, mine surveying, blasting with explosives in quarries, mines, civil engineering works, design of mineral processing flow sheets and Computer-Aided Design, among others. Services/programs • Technical advice to investors on mine design, mineral processing and extractive metallurgy • Research and Technological Innovation, including innovation geared at creating indigenous industries in the minerals, oil and gas downstream activities

• Offering Short Courses on Gemology, Gem Cutting, Jewelry Manufacture Marketing and other Value Addition processes • Community Outreach Programmes Other Courses offered at TTUC include the Following • Bachelor of Science in Information Technology • Bachelor of Science in Mathematics and Computer Science • Bachelor of Commerce • Bachelor of Purchasing and Supplies Management • There are also various Certificate and Diploma programs on offer For more information please visit: www.ttuc.ac.ke

The Kenya Chamber of Mines (KCM)

“Anyone wanting to become a member of KCM must be in full compliance with the laws and regulations that govern the environment” companies themselves to build and maintain a positive image for the sector. Where the Chamber does play a role in this is by constantly promoting the concepts of responsible, ethical and sustainable operations. “First and foremost,” Ms Gichuhi says, “anyone wanting to become a member of KCM must be in full compliance with the laws and regulations that govern the environment. Further to that, part of our own strategic

objective has been to develop a code of ethics for our membership which will see them ensuring their full compliance with issues surrounding environmental protection, community relations and corporate social responsibility initiatives.” When asked to look ahead to what the future holds for KCM, and the mining sector in Kenya as a whole, one of the first things on Ms Gichuhi’s agenda is the third annual

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“Kenya is undoubtedly one of the foremost reasons why Eastern Africa is now regarded as a new frontier for mining in the developing world” Mining Business and Investment (MBI) Conference taking place in October at the Safari Park Hotel in Nairobi. “The MBI Conference is one of the significant events on our calendar,” she enthuses. “It is here that we draw in a whole host of current and future investors, all of whom are keen

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to get a better understanding of mining in Kenya, what opportunities exist here, the challenges that we are working to overcome and what the government’s position is when it comes to supporting the industry, all of which makes for a hugely important event for all parties involved.”

The Kenya Chamber of Mines (KCM)

Kenya is undoubtedly one of the foremost reasons why Eastern Africa is now regarded as a new frontier for mining in the developing world. With the countryâ&#x20AC;&#x2122;s relatively unexplored land playing host to a wealth of mineral based opportunities there is unlikely to be any slowdown in the near future when it comes to investors seeking out new projects for exploration and development. With that in mind Ms Gichuhi is keen to emphasise that there are long-term plans for the KCM to evolve and grow alongside the mining sector so as to continue fulfilling its mandate and obligations. â&#x20AC;&#x153;As well as positioning ours for the expected growth in membership that

the Chamber will receive going forward, we are also planning for the possibility of one day becoming part of an integrated Chamber of Mines and Energy. The bringing together of these two separate entities would bring Kenya in line with international standards and will help give both fields a larger platform for dialogue and one collective voice to represent the hugely important extractive industries in the country.â&#x20AC;? For more information about The Kenya Chamber of Mines (KCM) visit: www.kenyachambermines.com

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SEAMIC

Promoting responsible mineral development in Africa The Southern and Eastern African Mineral Centre (SEAMIC), an international organisation under the umbrella of the United Nations Economic Commission for Africa: its sphere of influence continues to widen as does the relevance of its services to both public and private sector interests

written by: John Oâ&#x20AC;&#x2122;Hanlon research by: Candice Nice

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The Director General of SEAMIC

SEAMIC

EAMIC traces its origins back through the next phase of its development. to the late 1970s with the He explains the changes he has seen so far as establishment of the Eastern follows. “In the late 1990s, thanks to the well and Southern African Mineral advanced restructuring programmes in Africa Resources Development Centre and the privatisation of the minerals sector by (ESAMRDC), supported by UNDP and African states, the role of governments with various bilateral support programmes from respect to the mineral sector was changed the UK and Japan. Its headquarters were to become a regulatory body, and because of established in Dodoma in central Tanzania, this the role of SEAMIC was also changed. and in those days its remit was principally to SEAMIC was reorganised with a new role to carry out regional geological surveying and provide mineral related services and trainings to provide consulting services for programs and hence started to draw in the private sector of its founding member states, Ethiopia, as well as public institutions. The new role of Tanzania and Mozambique. These were later the Centre was realigned to become a mineral joined by Uganda, Angola resource services provider”. and the Union of the Comoros The Centre has a Governing followed by Kenya in 2006 Council, made up of the and Sudan in 2010 bringing Ministers responsible for the total membership to mineral resources from the eight. The name ESAMRDC member states. It is supported African states currently was also changed to the more by a standing committee members of SEAMIC pronounceable SEAMIC, and of the Ministers’ advisers. moved its operations to an The Board of Directors extensive new site at Kunduchi, to the north supervises the activities of the Centre and of Dar es Salaam. In 2007, at a meeting reports to the Governing Council which meets in Maputo, Mozambique the organisation once a year to approve the work programme announced that it was now open to all and budget of the Centre. SEAMIC is now an ISO 9001:2008 African states, with a mandate to provide mineral related quality services and testing certified institution, with state-of-theas well as consultancy work for the private art laboratories. “The facility provides and public sectors. The mission of the the member states and the private Centre is to “Promote socio-economic and sector, including small and large scale environmentally responsible mineral sector mining operations with geoinformation development in Africa.” and associated data processing services, The Director General Ketema Tadesse, who particularly geochemical and airborne served as Chairman of the Board of Directors geophysical data processing and mineral from 1997 until he took over the executive analytical laboratory services, for the entire leadership in 2006 to lead the organisation region,” he says.

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The work of the Centre is distributed across two major departments providing five technical services. These are: 1. Testing of chemical and environmental samples is carried out in the laboratories under the Chemical & Environmental Service, whose capabilities include whole rock analysis, X-ray fluorescence (XRF) and AAS/ICP-OES techniques, fire assay gold analysis and purification. 2. M ineralogical, Petrological and Gemmological Service conducts analyses including X-ray diffraction technique; to name only a few of the techniques at its disposal. 3. Then thereâ&#x20AC;&#x2122;s the Minerals Processing and Small Scale Mining Service that serves

big mining companies and small scale mining operations in processing and upgrading of different types of minerals and conventional bench scale operations; 4. Industrial Minerals Applications Service for bench scale industrial minerals product development mainly ceramic assay crucibles, tableware and other products; and 5. Geoinformation Services for geoscience data management and dissemination. There are 35 permanent members of staff, with a core of nine professionals, five technicians and seven laboratory assistants. The Kunduchi site covers a large area, Tadesse points out, and it needs its large warehouses to house all the rock samples it is sent for

A gem cutting training course practicing faceting of gemstones

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SEAMIC

“Our principal activity is making high tech analytical services available to major companies, to small scale enterprises, and also to our member states” archiving and sample preparation prior to analysis. The laboratories themselves are fully equipped and certified. Work on mineral processing, chemical and environmental analysis, gemmology and petrology (including a separate lapidary unit for working on grinding and polishing gemstones) all have their own separate sections, and there is another for industrial minerals. On the one hand these facilities are working laboratories, providing services to clients – at cost (without any profit) both to member governments and the private sector clients, making this undoubtedly the best value-for-money resource available in Africa. “Our principal activity is making these high tech analytical services available to major companies, to small scale enterprises, and also to our member states with a view to provide an incentive to developers and thereby accelerate mineral resources development in the member states,” says Tadesse. “And within the technical departments we also provide training in instrumental analysis, sample preparation, assaying gold and precious metals and a whole range of other specialisms for university students and the private sector.” On the other hand this is a training facility, unique on the continent of Africa and possibly one of its best kept secrets. Demand for its

services will grow significantly as more states join SEAMIC, and the proposed students’ hostel at Kunduchi, for which the land has been set aside, will be built. Training is a significant source of funds for the Centre, though no fees are charged to universities and students sent by member governments and private companies are charged at cost. Among the courses on offer are a three week gemstone cutting course for miners, dealers and other interested parties, mineral laboratory management, environmental analysis, ore beneficiation testing methods, geophysics and geoscience data processing, The lion’s share of SEAMIC’s income which is up to 60 percent comes from the US $62,000 annual contribution paid by each member state, while the remaining income of 40 percent is derived from the sale of other services and training activities, notably chemical and environmental analysis and the work done on samples by the minerals processing laboratory. A further source of income is consultancy work, gem cutting and identification, and ceramics. The last is a growing capability: the ceramics laboratory has produced low tension electrical insulators and fire clay crucibles for the regional markets, and now makes a range of tableware that is sold to support the work of the Centre.

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The geoinformation department deals with data processing and management as well as documentation and archiving data. This important work contributes to the mapping of geological data for the whole of Africa, and SEAMIC co-ordinates the submission of the survey data from different states to the One Geology portal, which aims to create dynamic digital geological map data for the whole world. The information for Tanzania, Uganda, Kenya and Ethiopia has already been uploaded. SEAMIC has achieved much under Ketema Tadesse but he has a number of other pressing objectives in his sights. One is to pursue capital projects through joint venturing – an example would be to establish a gold refining plant on the Dar es Salaam site. Another is to advance the goals of the African Mining Vision (AMV), which was adopted by Heads of State at the February 2009 African Union summit following the October 2008 meeting of African Ministers responsible for Mineral Resources Development. “It aims to make better use of Africa’s mineral wealth in ways that will benefits population and help them rise out of poverty,” he says. The AMV is a first and foremost developmental mining approach that insists that the road to growth is through building economic and social linkages that benefit Africa itself. The African

Mineral Development Centre (AMDC) an implementation body for AMV has been established by the African Union through the support of the United Nations Economic Commission for Africa (UNECA) and the African Development Bank (AfDB) which will make use of the services of SEAMIC’s Geoinformation facilities and expertise in realising this vision. This programme for the coming five years will be funded by the World Bank and the governments of Australia and Canada with the aim of collecting geoscience data and process the same; and analyse samples generated from explorations activities from all African countries. SEAMIC has the capacity to receive and analyse this data, and the Director is keen to see the agreement finalised. A further goal is to set up a regional minerals analytical ‘fingerprinting’ laboratory for the eleven member states of the International Conference on the Great Lakes Region (ICGLR), headquartered in Burundi. Its main objective will be to install a high tech laser ablation mass spectrometry (LA-ICP-MS) analytical technique to pinpoint where particular minerals come from with the view to avoid exportation from conflict zones. The program is designed to stop illegal mining activities that are fuelling conflicts in the Great Lakes

“All the ore deposits in the Great Lakes region will be analysed and entered into a database” 158 | BE Mining

SEAMIC

Environmental samples analysis using Inductively Coupled Plasma (ICP) technique

Region. “All the ore deposits in the Great Lakes region will be analysed and entered into a database. Anyone wishing to sell a commodity will be obliged to send it to the laboratory for analysis to be established at SEAMIC. Once the samples are analysed by the LA-ICP-MS analytical technique the results are sent to Burundi to be matched against their master database. The benefits to these governments will be incalculable, and it will be a useful source of revenue for SEAMIC too.” As set up, and as defined by its name, SEAMIC is a regional body. However as soon as it concretises its pan-African initiative and as other countries outside of the eastern and southern African region join the organisation, SEAMIC will have to drop its S and E and align itself with the new agency being set for

the whole of Africa, “... to create equitable, transparent and optimal exploitation of Africa’s mineral resources.” The African Minerals Development Centre’s creation by the AU and UNECA that was announced in March this year, is envisaged to benefit SEAMIC in the very near future as the data processing work that will result from the setting up of this new body will be allocated to SEAMIC. To make use of the expertise and the already installed laboratories invitations have been sent by SEAMIC to all mineral rich African nations to join the Centre. For more information about SEAMIC visit: www.seamic.org

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WHERE THE WORLD’S MINERAL INDUSTRY MEETS

ONLY GOING TO ONE MINING INVESTMENT SHOW THIS YEAR? MAKE IT PDAC. March 2 – 5, 2014 International Convention, Trade Show & Investors Exchange Metro Toronto Convention Centre Toronto, Canada convention.pdac.ca/pdac/conv/

Prospectors & Developers Association of Canada