BE.Mining by Business Excellence Magazine

BUSINESS EXCELLENCE Issue No.17 | www.bus-ex.com

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contents

responsible mining

Combating conflict minerals

We talk to Lina Villa-CĂłrdoba, Executive Director of the Alliance for Responsible Mining, about the threat to Artisanal and Small-scale mining (ASM) operations and how it can be combatted?

interview

Climbing back to the summit

Recent times have not been kind to junior miners but, as John Gravelle, Partner and Global Mining Leader at PricewaterhouseCoopers (PwC) explains, there is plenty of optimism that the worst is over in this sector

Executive Insight

Danie Otto â&#x20AC;&#x201C; Director, Digby Wells Environmental Danie discusses his biggest achievements, learning from past mistakes and who inspires him professionally.

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BE Mining [ Issue 17 ]

regional focus: chile

20 KGHM Polska Miedź - Sierra Gorda Project

Strength in numbers As the Sierra Gorda Project enters an exciting new phase of its life, Senior Vice President of the project, Joseph Tis reflects on how the collective efforts and achievements of its workforce made 2013 such an important year.

34 Codelco - Chuquicamata Mine

48 Anglo American - Los Bronces

Bigger is better The mineral wealth of Chuquicamata, now the world’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.

Champions of copper The Los Bronces mine in the Chilean Andes is continuing along a path to becoming the fifth largest copper mine in the world and one with several decades of productivity still ahead of it.

60 Barrick South America

The jewel in the crown Barrick had a significant investment programme for South America in 2013, much of which was targeted to advance the construction of Pascua-Lama, the world’s first bi-national mine, expected to be operational in the second half of 2014.

BE Mining [ Issue 17 ]

contents

Cover story

68 Eurostar Diamond Traders

Hard rocks One of the world’s leading diamond wholesalers and diamond manufacturers, a passionate and principled family business that has made a serious impression on the world market: we spoke to its founder Kaushik K Mehta

minerals

De Beers Debswana

Enriching a nation The world’s largest diamond producer by value, Debswana is Botswana’s largest private employer and arguably the biggest contributor to the country’s economic growth.

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Resource Generation

Steady going at Boikarabelo One of the most strategically important coal resources in South Africa, the Boikarabelo project owned by Resource Generation Ltd is on track to produce its first coal in 2015.

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122

service provider

Aggreko

Power in place The world leader in temporary power solutions, Aggreko helps governments in meeting the needs of entire populations and keeps industry growing through all contingencies.

106 Rainstorm Dust Control

Taking the professional approach The last 18 months has been an exciting time, the next 18 could well be the best yet in the company’s 30 plus year history. metals

114

Pyhäsalmi Mine Oy

Bringing ore to the surface The Pyhäsalmi mine is one of the deepest and oldest mines in Europe and has been producing vast amounts of copper and zinc for over 50 years.

122

Barrick Gold – Lumwana

Concentrating on copper A combination of a large resource, impressive cost savings and a recently updated mine plan means that the future looks very bright indeed for the Lumwana copper mine.

114 130

Nordgold

Growth on a global scale One of the most geographically diversified companies in the mining industry, Nordgold is looking to follow up a prosperous 2013 with further growth.

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ÂŠ ARM Segundo Pantoja

Combating conflict minerals With new light being cast upon the issue of conflict minerals, we talk to Lina Villa-C贸rdoba, Executive Director of the Alliance for Responsible Mining, about the threat to artisanal and small-scale mining (ASM) operations and how it can be combatted Words by

Will Daynes

BE Mining [ Issue 17 ]

responsible mining

egrettably, the issue of conflict minerals is not a new one. Even more regrettable is the fact that minerals mined in conditions of armed conflict and human rights abuses continue to find their way to market. This is a fact that also appears to be playing on the minds of global financial and regulatory officials as well, resulting in the recent introduction of new regulations and guidelines from the likes of the Organisation for Economic Co-operation and Development (OECD), the US Government, the European Union and several of the world’s major banking institutions. On the face of things this shedding of light on a complex problem that blights the minerals sector can only be a positive thing, however there are those that have drawn attention to the potentially negative effects of such broad regulations on those at the lower end of the mining pyramid, namely Artisanal and Small-scale mining (ASM) operations. “The majority of the regulations we are seeing introduced are primarily market driven and have been drawn up in such a way that they address the major refineries and multinational players in the market,” explains Lina Villa-Córdoba, Executive Director of the Alliance for Responsible Mining (ARM). “Well intentioned as the

“The reality on the ground is much more blurred, making it virtually impossible for anyone to be able to draw a straight line that separates what constitutes mineral that is legally or illegally sourced”

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regulation is, we believe that it creates a risk of further marginalising ASM’s and excluding them from global supply chains.” So why do new regulations appear to be so narrowly focused on large scale miners and refineries? Well, as VillaCórdoba explains, the reality on the ground is much more blurred, making it virtually impossible for anyone to be able to draw a straight line that separates what constitutes mineral that is legally or illegally sourced. “In a number of countries, Colombia for example, you will often find that mining operations of varying sizes actually operate in what you could call an informal context. Of course this creates a scenario where criminal organisations can utilise all kinds of creative ways to become a part of the business. While legitimate ASM’s have learnt to survive and operate in such a scenario, what they are finding now is that with the introduction of new regulations they are in fact being banded in the same category as the criminals themselves. These individuals are now among those suffering most from the situation. So while it is of course important to recognise the important effects being made by the international community to tackle conflict minerals, there is clearly still much work to be done to create a safety net for the ASM’s affected.” Where Villa-Córdoba and ARM are concerned their work is to ensure that the debate surrounding conflict minerals does not become detached from the issue of making the ASM sector a formalised, organised and profitable one. With criminal groups known to be using the informality prevalent within the sector in order to permeate it, ARM is focused on bringing the concept of formalisation to the fore and establishing it as the best way to protect those victims of conflict minerals that are perhaps less recognised than others.

Panning gold in Llanada, NariĂąo, Colombia ÂŠ ARM Anibal Morales

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Women mineral sorters in Cuatro Horas Peru © Cedric Faimali

“I believe we are a long way passed the point of trying to simply understand the problem of conflict minerals, rather we are at the stage now where we have to ask, what are we going to do about it”

As we have documented in the past, one of ARM’s solutions to the problem has been the establishing of its FAIRMINED Standard. ARM uses this as a tool to demonstrate that given the right incentives ASM’s can indeed be convinced of the benefits of formalisation, a process that will ultimately lead to them being recognised as small-scale entrepreneurs running safe operations, as opposed to criminals.

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Nevertheless, the FAIRMINED Standard is a demanding certification, one which boasts criteria comparable with guidelines set out by the likes of the OECD or the World Gold Council. In recognising this, ARM is currently in the process of developing a blueprint for all ASM’s whereby FAIRMINED could exists as an end of journey certification. Such a scenario would call for the introduction of

responsible mining

a standard of compliance that enables a larger part of the ASM sector to access ethical and responsible markets, and progressively improve its social and environmental performance. It’s clear that the underlying goal for ARM, and other bodies that share its views, is to see miners of all shapes and sizes, particularly ASM’s, integrated into the wider sector where they can share the same rights and obligations. “In truth I believe we are a long way passed the point of trying to simply understand the problem of conflict minerals, rather we are at the stage now where we have to ask, what are we going to do about it,” Villa-Córdoba concludes. “One of the things giving us great encouragement is the level of interest coming today not just from refineries and

operators, but from the larger brands in areas such as the jewellery and electronics sectors. From the discussions we have had with these brands the impression we have is that people have a better understanding of the reality of conflict minerals, that they want to find ways of tackling the issue and that the way to do this should be with a view towards where we collectively want to see the ASM sector of the industry in ten or more years from now.”

About us

Fairmined For more information about Fairmined and the Alliance for Responsible Mining visit: www.communitymining.org

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Climbing back to the summit Recent times have not been kind to junior miners but, as John Gravelle, Partner and Global Mining Leader at PricewaterhouseCoopers (PwC) explains, there is plenty of optimism that the worst is over in this sector Words by

Will Daynes

“

et’s put it this way, junior miners have had quite the challenging time over the last two years.” Those are the words of John Gravelle, Partner and Global Mining Leader at PricewaterhouseCoopers (PwC), when questioned about what life has been like for the junior mining sector, both in Canada and beyond. As Gravelle goes on to tell me, the seeds of said challenging time were laid at the beginning of 2012 when a number of senior producers experienced substantial write-downs. This event was repeated at the turn of 2013 and this, coupled with the subsequent fall in metals prices, was enough to convince those investors who had considered leaving the sector the year before to do so altogether. “The simple fact is,” Gravelle continues, “the write-downs of the seniors gave people a bad taste for the sector overall and when investors in senior producers leave the sector they are not going to stick around to invest in the juniors. With many of these investors having been gone for the best part of two years now it has left a number of juniors without a source of income; and having a situation where these producers have no income or ability to raise immediate capital tells you all you need to know about how tough things have been in recent times.” While it may appear to the outside world that the fate of the junior mining sector appears something of an afterthought for investors, the reality is that this area

of the mining world remains a vital piece of the bigger picture, a fact that it is all the more important to re-emphasis during challenging times. “When it comes to the seniors, while they do tend to do some exploration this is often carried out around or close to their existing deposits,” Gravelle explains. “Where the juniors differ is that they will go out and conduct what you could call grass roots exploration where they identify and examine new territories in new mining areas. This is understandably a hugely important role to have, what with this new mining areas being needed to replace the reserves that producers currently use, which only have a finite lifespan. The role of the juniors is integral to the overall mining cycle and the Toronto Stock Exchange (TSX) is largely made up of these grass roots exploration companies that are targeting new areas and new mineral occurrences that they hope to ultimately sell to the senior miners and producers.” Looking at the TSX in more detail offers considerable optimism in the sense that it provides proof that even in the face of difficult financial conditions, there are junior miners out there that have managed to buck the negative trend over the last several years and continue to do so now. “The juniors that tend to stand out during challenging times are more often than not those that possess an economic deposit located in a low-risk area geographically, had a strong balance sheet heading into the downturn and boast an experienced

“The simple fact is, the write-downs of the seniors gave people a bad taste for the sector overall and when investors in senior producers leave the sector they are not going to stick around to invest in the juniors”

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interview

management team that retains the confidence of the market,” Gravelle states. “These are the types of company that investors will always be attracted to. What you have to remember is that there will always be some money going into the mining sector and even if this only represents ten percent of what it was five to ten years ago this ten percent will find its way to the aforementioned type of miner.” Analysts and market experts are almost united in the belief that the issues of 2012 and 2013 stem from the impairments to seniors and the fact that for too long these seniors allowed costs to spiral out of control. If anything, the events of recent years have acted as something of a wake up call for these companies and the thought process now is that the vast majority are starting to live up to their promise to rein in costs, the results of which are starting to filter through to the wider industry. This trend has certainly given Gravelle cause for greater optimism about where the industry is heading in the short term. “I expect that by the end of this year confidence will have started to return to the sector bringing investors back to the table, first to the mid-tier and seniors, and then the juniors. I also think we could soon see people taking more chances on the junior sector, which has always been a high risk – high reward arena.” Gravelle is also keen to stress that those in the sector never truly lost confidence in the long term demand for minerals and metals, much of which continues to come from China, where growth projections for the economy remain in excess of seven percent. “In many ways I feel that as an industry we have hit the bottom during the last two years and are now starting to crawl our way back out. It will be a slow crawl of course but it is one buoyed by the positive outlook for the sector this year and beyond.”

Profile

John Gravelle John is the Global and Canadian mining leader for PwC, based in Toronto. John assists several large mining companies with operations in the Americas address their business issues. He is also a Tax services partner and provides tax advice to numerous large- and mediumsized producers as well as junior exploration companies. With more than 20 years experience, John advises both domestic and foreign multinational mining clients on a full range of tax matters. Such matters include: • • • • •

Cross border financing Capital restructuring Repatriation techniques Mergers and acquisitions Mining tax planning.

John has written several articles and made presentations on various mining industry issues. He has also written tax articles and presented tax topics relevant to mining companies at various seminars including Insight and the Canadian Tax Foundation and is an editor of and contributor to the Canadian Resource Taxation Journal.

For more information about PricewaterhouseCoopers (PwC) www.pwc.com/mining

BE Mining [ Issue 17 ]

Danie Otto Director, Digby Wells Environmental

Executive insight

Nobody’s perfect. What quality or ability do you wish you had?

Who or what do you think is overrated?

“Being able to predict the future more accurately.”

“The Prius hybrid car. Many other vehicles give better fuel consumption at efficiencies and power ratios significantly better than this car.”

What is the best business book you have ever read, and why? “Mind of a Fox, by Clem Sunter and Chantell Illbury. Through scenario planning they predicted the 9/11 disaster. The book talks about enabling one to have vision to the point where one can predict specific future events.”

Someone you would most like to have met, living or dead, and why? “Sir Richard Branson, in order to to learn from his entrepreneurial skill and ability. Also to learn from and discuss his vision to expand the Kruger National Park through ecological rehabilitation at his nature reserve, Ulusaba.”

What do you consider to be your major achievement (in life or business)? “Being able to assist with major environmental projects as mediator for the environment for 20 years, without being in the spotlight. It’s like a soccer or rugby match, the game is not about the referee. If people talk about the game and not the referee, he has done his job well.”

What mistakes have you made (professional or otherwise), and what did you learn from them? “The opening and closing of various regional offices, from which I have learned to better read the market, keep overheads low, and stay flexible and mobile.”

Which one piece of wisdom would you pass on to your successor? “To mentor and train people not to take over from you but to overtake you.”

Who has been your inspiration professionally? “Dr Niels Jacobson, the retired parks board ecologist who I have had, and still have, the opportunity to work with and learn from. His immense knowledge and hunger to learn that never diminishes even after retirement, together with thorough systematic and scientific methods, has been a constant source of inspiration.”

How would you like to be remembered after your retirement? “As a mentor, not only on a professional level promoting biogeomorphology and ecological restoration, but on a life skills level as well.”

Do you have a quote or motto you live (or work) by? “My motto is to work hard, play hard and follow your passion.”

Learn more about Digby Wells Environmental www.digbywells.com

BE Mining [ Issue 17 ]

KGHM Polska Miedz -

Strength i

As the Sierra Gorda Project enters an exciting new phase reflects on how the collective efforts and achievement words by

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Will Daynes

- Sierra Gorda Project

in numbers

e of its life, Senior Vice President of the project, Joseph Tis ts of its workforce made 2013 such an important year research by

Abi Abagun BE Mining [ Issue 17 ]

Secondary crusher & HPGR

s Joseph Tis, Senior Vice President, explains, 2013 was an important year for the Sierra Gorda open pit copper mine project. “In February of last year the project budget, valued at $4,000 million was updated. In the months that followed the project went on to complete a consolidated advance of 52.9 percent, reaching 91.2 percent in February 2014.”

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Located within Northern Chile’s Atacama Desert, the Sierra Gorda Project is a joint venture between KGHM International Ltd., Sumitomo Metal Mining and Sumitomo Corporation, and possesses deposits that total up to 2.2 billion tonnes of measured and indicated resources, and reserves amounting to some 1.3 billion tonnes. In addition to completing detailed

KGHM Polska Miedź - Sierra Gorda Project

“We have made a number of great advances in the construction plant over the last year or more”

engineering and locking down the purchasing of equipment, 2013 also saw Sierra Gorda benefit from the completion of infrastructure works designed to supply the site with electricity and water. Both 110Kv and 220kV electricity lines are now positioned on site, with the 110kV line going live during March of this year and the 220kV being brought into action the following month. In addition

BE Mining [ Issue 17 ]

We work with the

BEST! With over 400 knife gate valves in Sierra Gorda, Scancontrols with our partner RF Valves keeps providing high quality for the mining industry. RF Valves for Heavy Duty operations, are designed to control abrasive fluids, specially for adverse conditions where common valves are no good. Scancontrols is also in other large mining projects in Chile, continuing contributing to the quality of the processes with our represented brands. Email: info@scancontrols.cl www.scancontrols.cl

KGHM Polska Miedź - Sierra Gorda Project

“Particular milestones achieved during 2013 included the delivery of the Truck Shop to operations” to the completion of these power lines, the assembly and welding of the project’s sea water aqueduct has also been finished. A particularly striking example of the progress made at Sierra Gorda over the last 12-18 months comes in the form of the project’s processing plant. “We have made a number of great advances in the construction plant over the last year or more,” Tis agrees, “going from eight to twelve percentage points during the months between August and December 2013 alone. Particular milestones achieved during 2013 included the delivery of the Truck Shop to operations, delivery of shovels 4 and 5, and the delivery of 17 haul trucks for use in Prestripping extraction operations.

Conveyor belts

scancontrols Scancontrols, control valve specialists, provides and advise our clients in Chile, on all matters relating to valves and fluid control. This, seen as the core of our development, has made us leaders in the industry, thanks to our fast response, performance and reliability. Founded in 2001 with the aim of providing the market with the best solutions for handling fluids via control valves, including engineering for selecting the type and size of valve, actuators and materials for each case. Our company has a full line of control valves and on / off valves, as well as manual valves for all types of processes. Also we offer diagnostic, maintenance and repair services of the valves in the city of Antofagasta. This service has allowed Scancontrols

to make a difference and obtain a good position in the local market as one of the few companies able to offer integral solutions for fluid handling with valves. Scancontrols represents in Chile top brands such as SOMAS (Sweden), RF VALVES (USA) and Ringo Válvulas (Spain), which added to our Help Desk, Maintenance and Repair Team, leads to excellence and guaranteed results. Our services cover all industries including Mining, Pulp & Paper, Refineries, Petrochemicals, Power Plants, and others. “With a sustained growth in over 10 years of existence, Scancontrols is in a very strong position to continue expanding the services and products to new projects and markets” www.scancontrols.cl

BE Mining [ Issue 17 ]

What makes that a certain company has been selected as a support in the development of a great mining project in Chile?

SCM Sierra Gorda

has chosen Ingeniería de Transportes Javier Cortés S.A. as his support for the transport of all their necessary supplies for the construction and start up of the SIERRA GORDA project located in the Antofagasta region. No doubt this is a great recognition for Ingeniería de Transportes Javier Cortés S.A. a company of a large and historical trajectory in the movement of oversize and overweight transport in the Chilean mining. The history of the company is certainly confusing with the growth of the Chilean mining after it started as a transport company for general cargo it is now specialized in the transport and operation of special cargo according to the development of the Chilean mining beyond of the 70’s. Ingeniería de Transportes Javier Cortés S.A., with more than 50 years in this business, has been stand out to transport the most heaviest and difficult cargoes in Chile, and that the transport on off-road trails to locations at 5,000 m.o.s.l. hasn´t been an obstacle to his successful career. For the construction of the Sierra Gorda project it was necessary to perform more than 5.000 voyages with import cargoes and domestic supplies. In order to address adequately this project, Ingeniería de Transportes Javier Cortés S.A. increased its fleet of modular equipments and trucks in order to fully meet the expectations of the client. With the result of this project we are very optimistic to keep and strengthen a long-term relationship with Sierra Gorda in order to participate in their upcoming projects in Chile. We take this opportunity to wish Sierra Gorda the best of success in the start up of the mine. Ingeniería de Transportes Javier Cortés S.A. is also actively involved in the development of wind farm, photovoltaic, thermoelectric, hydroelectric, cellulose, refineries and others projects as well in the consulting prior to project implementation phases.

www.javiercortes.com

KGHM Polska Miedź - Sierra Gorda Project

Sea water pond

“As of January 2014, we have calculated that more than 44,000 people have directly contributed to the construction of the project and its various elements”

Furthermore, 2013 saw the installation of all critical plant equipment.” Tis is keen to add that all of the achievements already mentioned have been as a result of the tireless work of the project’s workforce performed in the field. During the month of October, 2013, employment activity on site reached a peak of 9500 workers, while 2013 as a whole saw a total of 11,236,934 man hours earned. “As of January 2014, we have calculated that more than 44,000 people have directly

contributed to the construction of the project and its various elements,” Tis states. “Each and every one of these people have at all times remained committed to our “Zero Harm” ethos, our most fundamental value which enforces our commitment to the health and safety of our employees and the communities in which we operate, and in doing so have not only met, but often exceeded expectations.” As a company KGHM has long been proud of the fact that it acts as a major contributor towards employment generation, regardless

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KGHM Polska Miedź - Sierra Gorda Project

of where it is based. This is very much the case with the Sierra Gorda Project, what with a great many of the 44,000 people who have contributed to its development coming from regions surrounding it. The largest contributor to date has been the VIII Biobío Region, from which the project has employed some 9,557 people, or 21.6 percent of the 44,000. Other major contributors have been the II Antofagasta Region, the Santiago Metropolitan Region XIII and the V Valparaíso Region, with 7,505, 7,085 and 6,306 residents employed on the project respectively. On top of these figures, no fewer than eleven other regions, from the XV Region of Arica and Parinacota, through to the XII Region of Magallanes have also contributed employees to the project. In addition to the creation of jobs, the Sierra Gorda Project has also contributed in

Stock pile

“In addition to the creation of jobs, the Sierra Gorda Project has also contributed in other vital ways to the local and national economies of Chile”

hatch Hatch supporting Sierra Gorda from the beginning Sierra Gorda retained Hatch since mid 2012 to develop the detail engineering of their Molybdenum plant. The project has been a success from the engineering and procurement stand point and is currently well under way in construction. Hatch has not only done detail engineering to the Sierra Gorda Molybdenum plant but has supported Sierra Gorda as a key client and continued helping Sierra Gorda with the Moly plant Field Engineering Services, Pre-Commissioning & Commissioning support services for the entire Copper-Moly Concentrator,

procurement support services and has as well reviewed the Basic Engineering of their concentrator future expansion. For Hatch, Sierra Gorda has been an excellent client, and one very good example of client engagement and commitment of our core values, all required to create and enhance a long term relationship adding the best possible value to our clients. The multidiscipline capabilities available at Hatch and the global availability of our experts have given us the strength to commit with Sierra Gorda in one of the largest mining projects of the continent. www.hatch.cl

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Instruvalve Ltda

Quality at your disposal

“Instruvalve”, a Chilean Company with ten years of experience when it comes to the control of fluids and automation, supplied a package of electric actuators from Limitorque USA to the Sierra Gorda Mine project. The Limitorque actuators are used to operate ball and gate valves in the raw water sea pumping stations of the mine’s plant. Instruvalve also assisted in the implementation of the system. Instruvalve is grateful and thankful for the confidence shown by Sierra Gorda and is

proud of be a technological partner of the mine, wishing it great success in its future operations. In its portfolio of products, “Instruvalve” also offer hydraulic/electric actuators, valve positioners, field instrumentation and heat exchangers. (55) 2944 369 ventas@instruvalve.cl www.instruvalve.cl

Valves – Automation – Instrumentation • Control Valves • Positioners • Hydraulic / Electric Actuators • Field Instrumentation • Heat Exchangers

QUALITY AT YOUR DISPOSAL

Instruvalve, dedicated to providing quality products and services to the Mining, Energy, Oil & Gas, and general processes industries, provides its clients with world-class brands, excellent after-sales service and a highly qualified team. POST-SALES SERVICES: Technical Services: Branch offices with highly qualified workshops for the maintenance and configuration of equipment.

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Field Services: Visits projects to make preventive check-ups to avoid halts in the productive processes.

Technical Consultancies: Highly qualified professionals who advise and guide the purchase of equipment and/or services.

Training: Technical and usage training orientated to obtain better performance of the equipment.

KGHM Polska Miedź - Sierra Gorda Project

Primary crusher

“The existence of this project has not only helped strengthen the local mining industry, but also will contribute to the increased supply of copper on a national and international scale”

other vital ways to the local and national economies of Chile. “The existence of this project has not only helped strengthen the local mining industry, but also will contribute to the increased supply of copper on a national and international scale,” Tis says. “In doing so we have also played our part in ensuring that the country remains a leading global player when it comes to the production of copper, and in showcasing

the professional quality and expertise of workforce, taking a massive development project from start to finish, we have helped send out a message to investors that Chile is a country worth taking notice of.” Giving back to the community is a trait that in many ways has characterised the project since its inception. To this day it arguable remains best reflected in the development, construction and

BE Mining [ Issue 17 ]

â&#x20AC;&#x153;In the short term our efforts are very much focused on completing the construction and pre-commissioning phases of the processing plantâ&#x20AC;?

Did you know? Progress on construction (at 31 December 2013) Project will be completed on time, planned completion of construction and commissioning in mid-2014 Total project progress is 86% complete Construction of sea water pipeline 94% complete, final hydraulic testing in progress Construction of tailings pond approx. 86% complete and processing plant approx. 80% complete Pre-stripping at 81% of the amount required before commissioning Around 96% of the CAPEX committed

Process plant

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Around USD 3.4B of the committed amount has been incurred

KGHM Polska Miedź - Sierra Gorda Project

Tailings thickener

implementation of numerous infrastructure projects that have helped improve quality of life within the region. Such projects include the construction of a wastewater treatment plant, the expansion of security checkpoints and the installation of CCTV to provide a safer environment, and the implementation of programmes designed to protect native flora and fauna. While 2013 was certainly an important year for the Sierra Gorda, 2014 could prove to be an even greater milestone, what with production at its processing plant due to commence this year, thus ushering in a new phase for the project. “In the short term our efforts are very much focused on completing the construction and pre-commissioning phases of the processing plant, and

subsequently bringing it online, all the while fulfilling our Zero Harm commitments” Tis concludes. “Throughout the remainder of the year we will be bringing several other projects online and by December 2014 we expect to have completed the ramping up of production to bring it up to 110,000 tonnes per day.”

KGHM Polska Miedź Sierra Gorda Project

562-336-5200 info@kghminternational.com www.quadrafnx.com www.kghminternational.com

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Bigger is better Codelco - Chuquicamata Mine 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 Will Daynes research by Candice Nice words by

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Air extraction tunnel which is 11 meters in diameter

[ Issue 17 ] BE Mining

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 been made which have confirmed that beneath the pit exist 4,200 million tonnes of resources.” This figure translates into around 1,700 million tonnes of copper ore reserves and molybdenum (512 ppm), which represents over 60 percent of all mined resources in the last 100 years. It has subsequently been

BE Mining [ Issue 17 ]

Codelco - Chuquicamata Mine

cainsa

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

CAINSA, with headquarters in Chile, has specialized in the development of polymeric solutions for abrasion, corrosion and impact in the largest mine plants operation worldwide. A significant investment in equipment and technology, together with a highly trained and skilled work force, has been the source of these developments, which meet the highest standards of quality at competitive pricing. Our experience and productivity at CAINSA’s plants in Chile, have positioned us in the mining industry as one of most prominent suppliers in this field. Products, which stand out, Trommels, Wear Plates, Pipe Lining, Mill Lining Pulp lifters and Sump rubber curtains. www.cainsa.cl

The access tunnel is approximately 7.5km long

BE Mining [ Issue 17 ]

Codelco - Chuquicamata Mine

mintec MINETEC, with headquarters based in Chile, is currently manufacturing new costeffective, designs in large mining truck dump trays and dipper buckets, with great results in different mine sites around the world. Recently, Minetec designed and manufactured ten dump tray’s for Rio Tinto’s coal mine Hail Creek, based on it’s proprietary designs (US patent 12/901719 and 13/598190). These dump trays are operating on Komatsu 960 E trucks, and have increased the payload capacity by over 15%. Another technological breakthrough achieved by Minetec is it’s proprietary “reptile wear pack” for shovel buckets, increasing the buckets campaign in hard rock mining. www.mintec.cl

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 having two sections of approximately three kilometres of belt each. Elsewhere, technical operations on the early stages of the mine’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. “Underground operations are due to commence from

Entrance to tunnel number 12

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Codelco - Chuquicamata Mine

2019. After that will be a ramp up period that will take about seven years to reach a production level of 140,000 tonnes of ore per day which converts into 366,000 tonnes of fine copper a year.” As the home of both the largest open pit mine and the biggest producer of copper in the world, it really goes without saying that Chile is a hugely important location when it comes to the 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 such as health, education, public services and infrastructure projects, all for the benefit of the Chilean people, particularly those classed as being the most deprived. This makes the fact that the industry is continuing to grow rapidly and robustly a hugely positive one, with a least five structural projects in different stages of development presently underway under the Codelco banner alone. As well as supporting Chileans on a national scale, Codelco’s Chuquicamata mine has long been a vital source of support for the

“This pit has successfully delivered wealth and prosperity to Chile for the better part of 100 years”

siemens Direct drives equipped with synchronous motors are a proven drive solution. These gearless drive systems are often found in steel rolling mills, but also in mining applications, such as hoists and mills. Direct drives are now being increasingly used for belt conveyors requiring high power. Conveyor drives must be reliable and efficient – that’s why ThyssenKrupp and Siemens partnered up to develop a simple drive solution with few components. The drive train consists only of the pulley, two bearings, the rotor and stator. The availability of the drive increases as a result of the low number of components installed. Direct drives are more efficient and represent the best choice for power ratings of several Megawatts. www.siemens.com/mining

Work platform for air extraction

BE Mining [ Issue 17 ]

[ Issue 17 ] BE Mining

Codelco - Chuquicamata Mine

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

“The next five to ten years are arguably going to be this project’s most vital period of time”

sandvik Sandvik Mining is a business area within the Sandvik Group and a leading global supplier of equipment and tools, service and technical solutions for the mining industry. The offering covers rock drilling, rock cutting, rock crushing, loading and hauling and materials handling. Every product is preceded by extensive R&D and backed with application expertise and a worldwide service network offering onsite service, training and round-the-clock support. We have a tradition of localization and conviction that there can be no substitute for direct service and contact with our customers. Our service-oriented, organization is welldeveloped and we have technicians located strategically around the world. www.sandvik.com

Jumbo rig working in the transport tunnel

BE Mining [ Issue 17 ]

Building personnel separating different areas of construction

[ Issue 17 ] BE Mining

Codelco - Chuquicamata Mine

“In recent years further explorations have been made which have confirmed that beneath the pit exists 4,200 million tonnes of resources” challenges for Codelco when it comes to 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.”

Codelco Chuquicamata Mine

+562 690 3000 info@codelco.com @CodelcoChile www.codelco.com

BE Mining [ Issue 17 ]

[ Issue 17 ] BE Mining

Champions of copper Anglo American - Los Bronces The Los Bronces mine in the Chilean Andes is continuing along a path to becoming the fifth largest copper mine in the world and one with several decades of productivity still ahead of it words by

Will Daynes

research by

Robert Hodgson

BE Mining [ Issue 17 ]

Confluencia from above

pproximately 65 kilometres away from Santiago, in the Metropolitan Region, and 3,500 metres above sea level, one will find the Los Bronces division of Anglo American. Managed by a team of executives, the head of which is General Manager, Christian Thiele, the Los Bronces division boasts a workforce of more than 1,700 people, including company employees and operation and project contractors. Collectively they are responsible for implementing the Los Bronces

[ Issue 17 ] BE Mining

Development Project, the objective of which is to boost the mine’s production capacity. An open-cut copper and molybdenum mine, Los Bronces produced 221,762 tonnes of fine copper in 2011, including highpurity cathodes and copper concentrate, as well as 948 tonnes of molybdenum concentrate. The ore extracted from the mine is crushed and transported down a 56 kilometre long ore slurry pipeline to the Las Tórtolas flotation plant, where copper and

Anglo American - Los Bronces

“With a total start up capex of $2.8 billion, the project produced its first concentrate in November 2011”

molybdenum concentrates are produced. In November 2007 the board approved an expansion plan aimed at increasing the mine’s annual copper output by some 278,000 tonnes in its first three years and by around 200,000 in the first ten years. Construction of the project started up in 2007 and includes the introduction of new grinding facilities in the Confluencia sector, a flotation plant at Las Tórtolas in Colina, and new piping and pumping stations. Molybdenum output is expected

BE Mining [ Issue 17 ]

Anglo American - Los Bronces

to rise to some 5,400 tonnes annually. With a total start up capex of $2.8 billion, the project produced its first concentrate in November 2011. An environmental impact study for the project, carried out in 2006, was also given formal approval by Chile’s National Environmental Agency (CONAMA) in 2007. The study itself considered the use of areas intervened to date and will therefore not affect other environmental assets. Most of the additional water will come from greater recirculation from the Las Tórtolas tailings dam to the mine. The quantity of fresh water used per tonne of copper produced will therefore drop by around 40 percent. Production at Los Bronces is fairly traditional, being as it is an open-pit mine where ore is transported by truck to a bank of two crushers and later by conveyer to grinding facilities, for a total processing capacity of 148,000 tonnes per day. The mine’s SAG mill uses modern gearless drive technology, where the axis of the mill is mounted with induction windings and becomes the motor drive rotor, while the grinders bristle with sensors and circuits to control speed, flow and lubrication.

“Los Bronces produced 221,762 tonnes of fine copper in 2011”

Inspecting the copper sheets

enaex With a history of 92 years operating in the market and more than 25 years supplying and providing services to Anglo American, Enaex is the leader of integral rock fragmentation services and ammonium nitrate production in Chile. The company is also present in more than 40 countries, supplying explosives and ammonium nitrate. Thanks to the teamwork between Anglo American and Enaex, various successful initiatives have been carried out in the Los Bronces division, such as Hidrex®, a variable density product that is specially designed to be used in controlled blasting, and wall control. The Milodón®, explosives mixer truck will also soon start operating in the same company division. This truck is the largest of its kind in the world, with capacity for 30 tons in situ.

Milodón® represents significant benefits in terms of both productivity and safety. On the other hand, the Air Blast Monitoring service implemented in the El Soldado division also stands out, as it allows Anglo American to measure the impact that air blasts caused during mining operations may have in the community, and then search for mitigation strategies. In terms of innovation and new products, Energex® highpower explosive should be highlighted, with its fragmentation power that lowers the ore “work index” aiming to reduce electricity consumption in crushing and grinding, improving the processing capacity of the crusher. www.enaex.com

BE Mining [ Issue 17 ]

Anglo American - Los Bronces

Maintenance workers

At its peak of output, Los Bronces will become the fifth largest copper mine in the world. Based on the latest expansions, despite having mined there for the best part of 150 years, Anglo American estimates the mine will be productive for roughly a further 30 years whether or not further deposits are discovered. Los Bronces is just one of five operations Anglo American operates in four regions of the country with shareholding in a sixth, all managed from a head office in Santiago. In fact, Anglo American is one of the most important copper producers in Chile. Being such an important part of the Chilean economy, it should come as little surprise that Anglo American recognises and honours its social responsibilities. In addition to their individual corporate initiatives each division of the group is responsible for implementing their own community engagement plans, which are based on Anglo American’s Good Citizenship Principles and the results of its socio-economic assessment toolbox (SEAT) process. In the case of the Los Bronces division its community engagement plans are focused on four work areas, these being education, health, the environment and social development, with the districts directly benefiting from its work being Colina, Lo Barnechea and Til-Til

“Despite having mined there for the best part of 150 years, Anglo American estimates the mine will be productive for roughly a further 30 years whether or not further deposits are discovered”

BE Mining [ Issue 17 ]

Anglo American - Los Bronces

cainsa CAINSA, with headquarters in Chile, has specialized in the development of polymeric solutions for abrasion, corrosion and impact in the largest mine plants operation worldwide. A significant investment in equipment and technology, together with a highly trained and skilled work force, has been the source of these developments, which meet the highest standards of quality at competitive pricing. Our experience and productivity at CAINSAâ&#x20AC;&#x2122;s plants in Chile, have positioned us in the mining industry as one of most prominent suppliers in this field. Products, which stand out, Trommels, Wear Plates, Pipe Lining, Mill Lining Pulp lifters and Sump rubber curtains. www.cainsa.cl

and the town of Riecillos in the district of Los Andes. In 2009 alone, more than $2.3 million was allocated towards these community engagement projects, 85 percent of which was directed specifically towards education and academic infrastructure programmes. In addition to the contributions made to these programmes, the division donated $32,516 to hold local celebrations and processes and

Did you know? 1,700+ Size of Anglo Americanâ&#x20AC;&#x2122;s Los Bronces workforce

Routine cleandown of the exploration access tunnel

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â&#x20AC;&#x153;In 2009, more than $2.3 million was allocated towards community engagement projectsâ&#x20AC;? support the work of the fire department. In the year ahead Anglo American will also be utilising and leveraging the knowledge and experience gained at Los Bronces to develop a significant high quality copper prospect at Los Sulfatos, six kilometres south of its current activities. Based on 22,000 metres of drilling, the current Inferred Mineral Resources are estimated at 1.2 billion tonnes at 1.46 percent copper and 0.02 percent molybdenum, containing an estimated 17.5 million tonnes of copper. The deposit is open in various directions and in terms of overall potential for the Los Sulfatos exploration target, the tonnage is expected to be between four and five billion tonnes at grades of between 0.8 percent and 1.0 percent copper. Located within and under high mountain ridges at altitudes between 4,000 and 4,500 metres, the Los Sulfatos prospect poses unique environmental challenges, however, considering Anglo Americanâ&#x20AC;&#x2122;s track record within Chile and similar sensitive geographic regions the smart money is on Los Sulfatos emerging into a development of equal importance to that of Los Bronces.

Anglo American - Los Bronces

1234 556 7889 info@headerfolio.com @headerfolio www.headerfolio.com

[ Issue 17 ] BE Mining

General view of the open pit at Los Bronces

Anglo American - Los Bronces

BE Mining [ Issue 17 ]

Barrick Sou

The jewel in

Barrick had a significant investment programme for South A construction of Pascua-Lama, the worldâ&#x20AC;&#x2122;s first bi-national m edited by

[ Issue 17 ] BE Mining

Will Daynes

research

uth America

n the crown

America in 2013, much of which was targeted to advance the mine, expected to be operational in the second half of 2014

research by

Robert Hodgson BE Mining [ Issue 17 ]

Barrick Goldâ&#x20AC;&#x2122;s Veladero mine in San Juan province, Argentina

[ Issue 17 ] BE Mining

Barrick South America

ith the acquisition of Placer Dome in 2006, Barrick Gold Corporation became the largest gold mining company in the world. Barrick’s holdings in South America include the Pierina and Lagunas Norte gold mines in Peru, the Veladero gold mine in Argentina, the Cerro Casale project in Chile, and the world class Pascua-Lama project on the Chile/ Argentina border. With a mine life estimated at 25 years, Pascua-Lama is the current jewel in the crown, but as the world’s first bi-national mine it has required a complex series of negotiations with two national governments. At an elevation of up to 5,200 meters, this is also the highest altitude project Barrick has ever tackled, and it raises many unique logistical challenges.

that currently stand at a massive 23.2 million ounces, but exploration is still in progress and there may be even more. Cerro Casale was originally a 50/50 exploratory joint venture between Barrick and Kinross Gold Corporation, but early in 2010, Barrick acquired an additional 25 percent interest from Kinross, increasing its interest in the project to 75 percent. The construction phase will last about three years and the life of the mine is estimated at approximately 20 years, with average annual production expected to reach one million ounces of gold and 110,000 tonnes of copper. Now with a controlling interest, Barrick is keen to use the lessons learned in PascuaLama to good effect and where possible, leverage synergies in the design and

“Construction has advanced steadily, with production expected to commence in the second half of 2014” Nevertheless, it is destined to become one of the most important mines in Barrick’s global portfolio, with proven and probable reserves of 17.8 million ounces of gold, and an additional prize of 671 million ounces of silver. Construction has advanced steadily, with production expected to commence in the second half of 2014. At the end of November 2012 the tunnel to transport the ore between Argentina and Chile was approximately 60 percent complete, and 90 percent of the materials and equipment required for the process plant had already been committed. During the first five years of production, Barrick expects an average of 800,000 and 850,000 ounces of gold per annum. Another project in development is Cerro Casale, 130 kilometres north of the PascuaLama project in the Maricunga district of Chile. This project holds estimated gold reserves

construction of Cerro Casale. This is one of the largest undeveloped gold-copper deposits in the world and it is envisaged that it will one day exceed the production anticipated at Pascua-Lama. As well as these two stellar development projects, Barrick can also count on a solid portfolio of mines already in production. The Veladero mine, located in the San Juan Province of Argentina, is immediately south of the Pascua-Lama property in the highly prospective Frontera District. Veladero has two open pits, Filo Federico and Friendly and has an estimated life of 14 years. The mine has been in production since 2005 and in 2011 produced 957,000 ounces of gold at a total cash cost of $353 an ounce. The proven and probable mineral reserves at 31 December, 2011 were 10.6 million ounces of gold.

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corplab For those of us in charge of managing ALS Corplab in the region, it is a satisfaction to be considered Barrick Gold´s “strategic partners” in Latin America. On this concept, today we have the possibility of providing our environmental services in different countries of the region. In Argentina, we started performing specific services back in 2001. Since 2004, we have provided services in Chile, being the first relevant contract the Veladero and Pascua Lama, done in 2008. From San Juan, Argentina and since 2010, from Chile, we have serviced Casale and Zaldívar projects. Later, in 2011, we had the opportunity of replicating our service standards in Peru, in Lagunas Norte and Pierina facilities. Since 2013, we are participating with Barrick in the Pueblo Viejo Project in Dominican Republic. On a more than ten years continuous interaction, we have succeeded in identifying the mystic of their work style, interpreting the required excellence standards to meet their needs that enable Barrick´s operations in Latin America to be environmentally sustainable. We pride ourselves on this. www.corplab.net

Moving to Peru, Barrick has the Pierina mine, located in the Andean Cordillera in the Department of Ancash. This mine has proven and probable mineral reserves of 791,000 ounces of gold, and although it is relatively more expensive to produce than in other mines, rising gold prices have recently seen the mine’s life extended to the end of 2014. This is a standard open-pit, truck-and-loader operation, similar to Veladero. Also in Peru is the Lagunas Norte mine, located on the Alto Chicama property in north-central Peru and 175 kilometers north of Pierina. The property lies on the western flank of the Peruvian Andes at an elevation of 4,200 meters above sea level. The open pit mine began operations in the second quarter of 2005, ahead of schedule, and involved an investment in construction of $340 million. In 2011, Lagunas Norte produced 763,000 ounces of gold at an attractive total cash

[ Issue 17 ] BE Mining

Barrick South America

The Pierina mine is located in the Andean Cordillera

â&#x20AC;&#x153;Barrick is guided by a vision to lead the industry in finding, acquiring, developing and producing quality reserves in a safe and socially responsible mannerâ&#x20AC;? cost of $269 per ounce, and had proven and probable reserves of 6.2 million ounces of gold at 31 December 2011. In all its operations in South America, Barrick is guided by a vision to lead the industry in finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner. The company wants to see the regionâ&#x20AC;&#x2122;s natural resources play a key role in supporting longterm sustainable economic development and facilitating this process is a corporate priority.

Barrick is already a signatory to a number of voluntary codes and initiatives that address a range of economic, social and environmental issues. These include the Carbon Disclosure Project, the International Cyanide Management Code, Transparency International (Canada) and the Voluntary Principles on Security and Human Rights. The company has also been an active member of the UN Global Compact (UNGC) since 2005. This is an initiative which directly involves business in tackling some of the

BE Mining [ Issue 17 ]

“Although its primary focus is on gold, Barrick also has significant interests in copper in South America”

Jamie C. Sokalsky President & Chief Executive Officer

The Pascua-Lama project zone

[ Issue 17 ] BE Mining

Jamie C. Sokalsky was appointed President and Chief Executive Officer of Barrick Gold Corporation on June 5, 2012. He is also a member of the company’s Board of Directors. Mr. Sokalsky joined Barrick as Vice President and Treasurer, rising to Senior Vice President and Chief Financial Of ficer in 1999, and Executive Vice President and CFO in 2004, leading Treasury, Tax, Controllership and Financial Reporting, Internal Audit, Investor Relations and I n fo r m a ti o n Technology.

Barrick South America

Lagunas Norte is located on the Alto Chicama

major social and environmental challenges that arise from globalization. Barrickâ&#x20AC;&#x2122;s achievements were publicly acknowledged yet again in 2012 when it was ranked as a global leader in corporate social responsibility for the fifth consecutive year by the Dow Jones Sustainability World Index. The DJSI World Index independently evaluates 2,500 companies using rigorous criteria in the areas of corporate, economic, environmental, and social performance to identify the top 10 per cent of performers. Although its primary focus is on gold, Barrick also has significant interests in copper in South America. The Atacama desert has some of the largest porphyry copper deposits ever found, a geological

legacy that has made Chile and Peru the first and second largest exporters of copper in the world. In 2011, Barrickâ&#x20AC;&#x2122;s ZaldĂvar copper mine in Chile produced 292 million pounds of copper at a total cash cost of $1.50 per pound. The proven and probable mineral reserves at 31 December 2011 were 6.6 billion pounds.

Barrick South America

(56 2) 340 2022 info@barrick.com @minerabarrick www.barricksudamerica.com

BE Mining [ Issue 17 ]

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Hard Rocks Eurostar Diamond Traders One of the worldâ&#x20AC;&#x2122;s leading diamond wholesalers and diamond manufacturers, a passionate and principled family business that has made a serious impression on the world market: we spoke to its founder Kaushik K Mehta words by

John Oâ&#x20AC;&#x2122;Hanlon

research by

Jeff Abbott

BE Mining [ Issue 17 ]

iamond and adamant are two words coming from a common Greek root meaning unalterable, an appropriate name for the hardest substance in the natural world. It’s their resistance, their durability, that has made them the ultimate jewel. Rough diamonds as mined are unprepossessing, but once they have been cut and polished to refract light from a myriad facets their beauty is breathtaking. But cutting and polishing is no easy matter as the only substance hard enough to impress diamond is – more diamond. Cutting is performed by highly trained craftsmen with years of experience, since it is a very technical process that involves assessing the qualities and structure of each stone. Polishing is a laborious and time consuming task that also needs special training. For centuries India has been the undisputed centre of the world diamond trade and until recently more than 90 percent of diamonds were cut and polished there. And India is where Eurostar has its origin. “Both my father and my grandfather were in the diamond business,” says Kaushik Mehta, who co-founded the company at Antwerp, Belgium, in 1978 and is today its Chariman and CEO. Mehta began his career in 1966 in Tamil Nadu India, where he simultaneously managed a jewellery retail store and a small diamond cutting and polishing plant at Coimbatore. “So the diamond trade is a family enterprise and our family never knew any other business!” Though India remains the home of the industry, by the 1970s the home market

“The diamond trade is a family enterprise and our family never knew any other business!”

[ Issue 17 ] BE Mining

Polishing the pavilion facets

Eurostar Diamond Traders

“Since Antwerp is really the rough diamond trading centre of the world I came there to buy rough diamonds to ship them to my company in India to be cut and polished there”

started to move from cutting and polishing to consumption – today India is the third largest consumer of gemstone diamonds after the USA and China, he says. “Since Antwerp is really the rough diamond trading centre of the world I came there to buy rough diamonds to ship them to my company in India to be cut and polished there.” At that time he started to differentiate his business by buying the best quality rough diamonds, cutting and polishing them in Belgium, and then supplying them to the retail trade in India. He must have got a lot of things right. The company grew exponentially. In 1994 the company established its main diamond cutting and polishing centre in China, where it now operates from three locations. In 2001, Eurostar completed the acquisition of a significant stake in The Hearts on Fire Company, making it the leading producer of Hearts & Arrows diamonds, a cut unmatched in precision, beauty and perfection, offering edge-to-edge ‘electric’ brilliance with white and coloured highlights, even in low light conditions. “The Eurostar Hearts & Arrows diamond is a brilliantly beautiful, ideal-cut diamond that exhibits a distinctive, perfectly symmetrical pattern in the table,” he stresses. “The secret is perfect facet alignment along all of the diamond’s angles so that

BE Mining [ Issue 17 ]

“The secret is perfect facet alignment along all of the diamond’s angles so that each stone refracts light to the maximum” each stone refracts light to the maximum,” he adds. To achieve this Eurostar gemmologists are trained in the use the most sophisticated testing equipment such as refractometers, spectroscopes and microscopes to identify and analyse the stones. They evaluate precious stones with confidence and prepare

[ Issue 17 ] BE Mining

special identification and appraisal reports and have all been trained either at HRD Antwerp, the largest diamond laboratory in the world which adheres to the rules set by the International Diamond Council for grading polished diamonds, or the prestigious GIA, the leading source of knowledge, standards, and

Eurostar Diamond Traders

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

education in gems and jewellery founded in New York in the 1930s. In 1981 he acquired a factory in Belgium employing 135 people: just over ten years later, in 2002, Eurostar’s annual turnover exceeded $1 billion for the first time. In the same year Eurostar Diamond Traders Shanghai was founded and the company, already a De Beers Sightholder (a company licensed by De Beers’ subsidiary Diamond Trading Company (DTC) to purchase rough diamonds from the world’s largest diamond mining company) was awarded a second DTC Sight in Botswana. More recently, in 2010, the group has established both Eurostar Diamond Traders Hong Kong Ltd. and Eurostar Diamonds India Pvt Ltd, the

latter run by Paresh Mehta, brother of Kaushik. Today Eurostar employs 5,000 skilled people in China, India and Belgium. 2013 was a difficult trading year in the diamond industry – unsurprisingly in light of the global recession which was not kind to luxury goods. 2014 is already promising to be a better proposition, he predicts, with demand rallying. The downstream industry is demonstrating demand from non-traditional sources, well outside the jewellery trade for example the Rolls-Royce car shown in Dubai last year with no fewer than 446 diamonds hand-set into the door panels, centre console and cabin privacy partition. The pinch point in the value chain will

BE Mining [ Issue 17 ]

â&#x20AC;&#x153;Seven or eight mining companies mine and sell rough diamonds: maybe a thousand manufacturers compete to buy them and polish themâ&#x20AC;?

Kaushik K. Mehta Founder

Sawing quality control

[ Issue 17 ] BE Mining

From the very first moment when I founded Eurostar Diamond Traders in 1978, we have applied passion to everything we do. A passion for excellence, a passion for innovation, a passion for purity, a passion for servicing our clients, and above all, a passion for the p e r fe c t dia mon d masterpiece.

Eurostar Diamond Traders

Sorting diamonds

continue to be on the supply side. “The problem is we have got seven or eight mining companies mining and selling rough diamonds, and maybe a thousand manufacturers all competing to buy them and polish them.” Around 50 percent of the diamonds his company buys come from DTC, the remainder from a variety of open market sources, he adds. “We procure a lot of these goods from Russia and a growing quantity from Angola.” Cutting and polishing, beneficiation in other words, is the core business of Eurostar Diamond Traders, and will remain so. With the truly unique skills base it has built up over decades the company is unlikely to reduce its cutting and polishing capabilities. However Kaushik Mehta’s eyes are now fixed on the consumer. It has always retained teams made up of highly experience professionals whose job it is to remain in direct contact with

its key retailers in the important sales and marketing centres it has established in places like China and the USA. However he now wants to expand the company’s presence at the sharp end. “One of my visions is to go downstream more in to the retail business. We have a retail company in Chennai and about ten stores right across South India – and we are looking to expand those stores.” With a presence in nine Indian cities he wants to target the main centres of population in India, he says.

Eurostar Diamond Traders

+32 (0)3 213 77 77 info@eurostardiamond.com www.eurostardiamond.com

BE Mining [ Issue 17 ]

[ Issue 17 ] BE Mining

Enriching a nation De Beers Debswana The world’s largest diamond producer by value, Debswana is Botswana’s largest private employer and arguably the biggest contributor to the country’s economic growth words by

Will Daynes

 research by

Peter Rowlston

BE Mining [ Issue 17 ]

he mining industry has been an integral part of Botswana’s national economy since the early 1990s. At the heart of the industry for the better part of 25 years has been the country’s diamond sector, whose gem quality findings have seen Botswana solidify its position as the world’s leading producer of diamond by value. Debswana is an important figure within this vital part of Botswana’s economy, producing in excess of 70 percent of the country’s export earnings, 30 percent of its Gross Domestic Product and 50 percent of government revenue. The originals of the company date back to 1969, when De Beers entered into a 50/50 joint venture with the government of Botswana to unlock the country’s rich diamond resources. The joint venture, Debswana, is now the largest non-government employer in the country, employing approximately 6,300 people, 93 percent of them local. Debswana today operates some of the world’s richest diamond mines. The mines in question are the Jwaneng Mine, the world’s leading producer of diamonds by value, the Damtshaa Mine, the Letlhakane Mine, and the Orapa Mine, which is the second largest open pit mine on the planet. Together these mines were responsible for producing 22.8 million carats in 2011 alone. The flagship of the company, due to the substantially higher dollar per carat

“Debswana maintains that at the heart of its operations is its regard for the safety and wellbeing of its people and the environment”

[ Issue 17 ] BE Mining

Debswana values its local employees

De Beers Debswana

“De Beers has continued to identify ways to maximise the sustainable benefits of Botswana’s natural resources through the process of beneficiation” obtained for its gems, is its Jwaneng Mine, which became fully operational in August 1982, when it was officially opened by the then President of Botswana. Currently being mined to a depth of 350 metres, the resource itself consists of three separate volcanic pipes and vents. Production normally varies according to mining plans of approximately 12.5 to 15 million carats per year. As is the case with all of Debswana’s mines, the Jwaneng Mine is an open pit operation, one which is currently playing host to a landmark expansion project, which will see the pit elevated to the status of a superpit. The scope of the project, dubbed Cut 8 involves the delivery of an indicated resource estimated down to 850 metres below surface. This project will take a total of 14 years to complete and will ensure continuous production from the mine until at least 2024. The youngest of Debswana’s mines is the Damtshaa Mine, which began operating in 2003. Damtshaa has been forecast to yield five million carats from 39 million tonnes of ore that are to be mined over the 31 year projected life of mine. The mine has been incorporated to the Orapa & Letlhakane Mines safety and environmental programmes, and hence it is ISO 14001 certified. It has thus far been audited twice by the SABS Surveillance Audit Team and confirmed to be compliant to ISO 14001 requirements.

BE Mining [ Issue 17 ]

De Beers Debswana

The aforementioned Letlhakane Mine can be found 190 kilometres west of Francistown, in Central Botswana. First discovered during the sampling and evaluation process at the Orapa Mine, which we will come to momentarily, the Letlhakane Mine officially became the company’s second mine when it opened in 1975. In 2006, the mine broke records for diamond recovery when 1.089 million carats were recovered. Lastly we come to the Orapa Mine, a conventional open pit development. With production dating back to July 1971 it is Debswana’s oldest running operation and one that continues to contribute significantly towards the company’s total carat output. To this day the Orapa Mine remains among the largest open cast mines found anywhere on the planet. Across each of its mines Debswana maintains that at the heart of its operations is its regard for the safety and wellbeing of its people and the environment, with all of

Employee at the mine site

DEBSWANA MINING AND ISOMETRIX GROW TOGETHER IsoMetrix’s involvement with Debswana Mining began in April 2012 when IsoMetrix was awarded the contract for the replacement of the company’s existing Safety, Health and Environmental (SHE) system with the IsoMetrix SHE Software Solution. The completed system, used by close to 1000 employees, has been implemented at Debswana Head Office in Gaborone as well as at their Jwaneng and Orapa Mines. The system was designed around existing company processes that were well thought through, which resulted in a world class SHE solution that matched their requirements precisely. Good relationships were formed in particular with the Projects, IT and SHE Departments, resulting in a continuous symbiotic partnership. The flexibility of the IsoMetrix Agile Application Framework means that as Debswana’s requirements grow, the solution can be modified and developed to incorporate other processes. Currently, additional enhancements to

the existing system are being discussed as well as the incorporation of other processes encompassing Environmental Monitoring and Sustainability as well as Management Review. Stephen Simmonds, Executive Head: Business Development at IsoMetrix, says, “Debswana are to be congratulated on the way they have internalised the system and ensured its utilisation to the fullest capacity. The company has also made a large investment through the training of all its employees that make use of the system thereby ensuring that the system is not only utilised but optimised to the fullest. This investment will continue to ensure a maximum return.” Metrix has recently expanded the IsoMetrix solution beyond SHE to include suites for enterprise risk management, compliance, controlled self-assessments and full sustainability management and reporting. www.isometrix.com

BE Mining [ Issue 17 ]

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[ Issue 17 ] BE Mining

its efforts in these areas geared towards its ZERO HARM vision, one that calls for it to remain a sustainable and responsible miner. In 2004 the Orapa and Letlhakane Mines were awarded some of the highest international accolades, which came in the form of a five star rating from National Occupational Safety Association (NOSA), with a score of 91.5 percent, and ISO 14001 re-accreditation. In addition, the Orapa and Letlhakane Mines achieved two million fatality free shifts. It is also at Orapa where the company maintains a 100 bed hospital that caters for employees and acts as a referral hospital for the region. Employeesâ&#x20AC;&#x2122;

De Beers Debswana

Sunset on the Orapa mine

children also have access to pre-primary and primary schools run by Debswana. Debswana’s recognises that its responsibility towards the nation of Botswana extends to future generations and as such it ensures that it conducts business in such a way that it minimises any impact on the environment. This, it achieves in partnership with the communities that live around its mines who it realises possess valuable input that can transferred to its environmental management programmes. In recent years, De Beers has continued to identify ways to maximise the sustainable benefits of Botswana’s natural resources

through the process of beneficiation. Beneficiation seeks to ensure that beyond mining, as many of the diamond processing stages as sustainably possible take place in country. This will continue to be a core driver of the business going forward.

De Beers Debswana

 +267 361 4200  info@debswana.com @DeBeers www.debswana.com

BE Mining [ Issue 17 ]

Resource G

Steady going at

One of the most strategically important coal res owned by Resource Generation Ltd is on words by

[ Issue 17 ] BE Mining

John Oâ&#x20AC;&#x2122;Hanlon

Generation

t Boikarabelo

sources in South Africa, the Boikarabelo project n track to produce its first coal in 2015 research by

Jeff Abbott BE Mining [ Issue 17 ]

One of the rail link sites

he Boikarabelo field in South Africaâ&#x20AC;&#x2122;s Waterberg region, to the north of the country and close to the border with Botswana, is an outstanding coal asset by any standards. An extensive coal seam, between 120 and 130 metres in depth and containing zones of varying quality thermal and soft coking coal, lies only 20 metres below the surface in terrain that is flat and easy to get at. It is the ideal site for an open pit mine: the shallow overburden means that a small fleet of equipment can produce a lot of

[ Issue 17 ] BE Mining

coal. Costs will be relatively low, and multiple mining benches will provide the flexibility to extract the coal quality required for a variety of markets, from thermal coal used in power stations in Asia where capacity is confidently expected to continue rising over the coming decade to South Africa itself where there is an insatiable demand. Nevertheless, with the international coal market currently more nutty slack than briskly blazing, this is a time when only the most outstanding new projects can attract funding.

Resource Generation

“We hope to complete our funding by June of this year and we are concentrating on funding the coal handling and preparation plant (CHPP)”

When we last reported on the Australian and JSE joint listed mining company Resource Generation (ResGen) its focus was on locking down its funding arrangements, and this remains its principal challenge today despite solid progress to date. “We hope to complete our funding by June of this year,” says Managing Director Paul Jury. “We are concentrating on funding the coal handling and preparation plant (CHPP). If we can achieve that we will be able to stick to the development programme and start producing coal at the end of 2015.”

BE Mining [ Issue 17 ]

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At around $200 million the CHPP is the largest capital item for the Boikarabelo project. In November the company took a major step when it agreed to terms and the design and supply of the plant. Earlier this year it put another piece of the jigsaw in place with the agreement of a $65 million infrastructure loan facility from Noble Resources International, a subsidiary of Singapore-listed global agricultural and mining supply-chain manager Noble Group, which as part of the agreement has undertaken to purchase three million tonnes of domestic middlings coal every year, for eight years after production commences. This loan is repayable by 31 March, 2016, by which time the mine is expected to be in production and generating cash flow, and is in addition to a $55.3 million loan from Noble, agreed in July 2013, for the construction of the rail link from Boikarabelo to the existing Transnet Freight Rail network. The CHPP will crush, screen and grade the coal, stockpiling it into two main categories. Coal for export will be loaded onto rail trucks

“We will be extending the camp over the coming six months to accommodate 1,300 persons”

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BE Mining [ Issue 17 ]

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for transportation to the ports, while thermal coal for domestic use in the power generating stations of Eskom in Mpumalanga will be supplied direct, also by rail. Jury is hoping to resolve the remaining funding issues sooner rather than later so he can concentrate on the work of building the mine, the processing plant and the associated infrastructure, including road and rail links. The project itself is one of the soundest on the planet, which is evidenced by the fact it has continued to remain buoyant at a time when others have been mothballed or abandoned. Boikarabelo is of strategic importance to

the economy of South Africa. The mine is only 40 kilometres by road from an existing rail system that provides access to domestic markets, and Transnet is making all efforts to ensure that its lines have the capacity to transport the coal to the ports of Durban, Richards Bay and Maputo, which all have potential to expand their coal capacity, for export shipments. The proposed new transKalahari railway (TKR) from Walvis Bay to Botswana will give access to the Atlantic though that is an early stage project that was only given the go-ahead by the partner governments in March.

â&#x20AC;&#x153;By mid-February we had worked 300 shifts without a lost-time injury (LTI) â&#x20AC;&#x201C; more than 135,000 hours!â&#x20AC;?

ResGen employees

[ Issue 17 ] BE Mining

Resource Generation

Digging out the route for the rail link

The 40 kilometre rail link that persons. In addition to that we Did you know? ResGen is building to connect have started the earthworks Boikarabelo with the main line for our major roads. As part is also a long lead item, like the of the work we have to put in $200 million CHPP, however the ground work the provincial road bypass and Capital cost is well under way says Jury. In upgrade the main road going of the CPP fact the site is a hive of activity up onto the mine and prepare already, and that activity will a new access road for the mine. 300,000 tpa increase right up to the start of Those things are going forward Boikarabelo peak mining at the end of next year. and also we are starting the production “We have a lot of construction foundation works for the coal going on on site,” he says. “Apart preparation plant.” from the rail link, we have already The CHPP is scheduled to built the first stage of our construction camp. come on stream in the first couple of months By May there will be a good 200 people living of 2016, ready to receive the coal that will there and we will be extending the camp over be flowing from the mine – initially at a the coming six months to accommodate 1,300 rate of five million tonnes per annum (tpa),

BE Mining [ Issue 17 ]

“Construction of the mine, and ultimately the mining of the coal, will not be possible without the support and assistance of the local communities around the mine” rising to more than 30,000 tpa by 2030. There’s no denying that the mine will have a massive impact on the local community over many years – the mine life is estimated at over 100 years. That being so, ResGen is keen to ensure that impact is seen as a positive one, and not just for South Africa’s

[ Issue 17 ] BE Mining

economy and its energy industry. From two employees on site in February 2013 there are now 250 employees and contractors on site, and their safety is a priority Jury insists. “By mid-February we had worked 300 shifts without a lost-time injury (LTI) – more than 135,000 hours!”

Resource Generation

Aerial view showing the route of the rail link

And it is not just the direct employees that are benefiting. The management of the Boikarabelo coal mine holds regular rounds of community engagement meetings. An Executive Community Engagement Forum consisting of representatives from each community as well as members of the Boikarabelo mine management has been formed. Using the existing, traditional communication structures in each community the partners work together to keep each other informed of developments not just at the mine site but throughout the local community. One of the early priorities was to encourage and support the process by which local entrepreneurs and existing

businesses from Lesedi village and other local communities can supply the mine. Community engagement remains a priority for everyone at Boikarabelo. â&#x20AC;&#x153;Construction of the mine, and ultimately the mining of the coal, will not be possible without the support and assistance of the local communities around the mine,â&#x20AC;? Paul Jury acknowledges.

Resource Generation

+61 (2) 9376 9000 info@resgen.com.au www.resgen.com.au

BE Mining [ Issue 17 ]

Aggr

power in

The world leader in temporary power solution needs of entire populations and keeps ind words by

[ Issue 17 ] BE Mining

John Oâ&#x20AC;&#x2122;Hanlon

reko

n place

ns, Aggreko helps governments in meeting the dustries growing through all contingencies research by

Gareth Hardy BE Mining [ Issue 17 ]

ggreko was founded in the Netherlands in the early 1960s to provide temporary power generation to local companies. In 1973 it moved to the UK, establishing its headquarters at Dumbarton in Scotland, the first step in an expansion programme that has brought it to where it is today, present in 47 countries and employing around 6,000 people. The London Stock Exchange-listed company, a member of the FTSE-100 index, provides power and temperature control solutions to customers who need them either very quickly, or for a short or indeterminate length of time. Examples would be the supply of power to a mining or industrial site which needs to service its permanent power supply, supplying a whole city in times of power shortage, or providing a major sporting event with power and cooling systems. The key being that power can be delivered anywhere, anytime. Now we should make it clear from the outset that we are not just talking about providing gensets for pumps, traffic management, individual manufacturing units or the many other uses in general construction. That is an important business, and is comprehensively covered by local service centres around the globe. Larger projects calling for much more complex solutions, are also delivered globally through

â&#x20AC;&#x153;When it comes to large scale power needed in remote parts of the world, whether the need is short or long term, Aggreko is the company to go toâ&#x20AC;?

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[ Issue 17 ] BE Mining

Banro Resources, DRC - 8 MW power project

Aggreko

“Aggreko’s power solutions are rapid, flexible, and highly reliable” Aggreko’s Power Projects business. When it comes to large scale power needed in remote parts of the world, whether the need is short or long term, Aggreko is the company to go to. It supplies multi-megawatt temporary power solutions to companies in the electric utilities sectors, oil & gas (O&G) and mining amongst other key sectors. With more than 117 locations across North, Central, South America and The Caribbean, and 194 globally, it boasts the world’s largest generator rental fleet. “Aggreko’s power solutions are rapid, flexible, and highly reliable,” asserts Asterios Satrazemis, President of the Americas Region, where Aggreko lists among its customers every major mining and exploration company as well as most governments and national power grids. In this region the Power Projects division handles large scale projects, defined as anything from 10 MW to over 200 MW. Its client base is primarily utilities, mining and O&G companies. In many South American countries, he explains, hydro power accounts for up to 60 percent of the matrix. “During periods of drought or an El Niño event these sources drop off and we often get asked to provide an interim power solution for anywhere from a few months to several years on a large scale basis to meet the shortfall.” Until hydro-generated levels recover, the national power company needs to put in an interim solution to keep the lights on, and the only way to do that is to call in a specialist who can deploy equipment quickly. “We can effectively deliver a complete

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power solution within weeks,” says Satrazemis. “The Power Projects business is conceived around a modular design, where all the equipment is packed in 20-foot ISO containers. It is a plug and play approach so we can deliver assets very quickly with minimal civil works required. We can connect into virtually any voltage they need on the grid, and supplement power to major cities as well as in hard to reach remote areas.” Aggreko has implemented single projects in Latin America in excess of 100 MW, he adds. These are not always in the easiest locations. In Peru Aggreko was recently able to supply a total of 30 MW of power 3,423 metres above sea level to two separate electricity generating companies. This equipment, comprising both generator units and transformers, provides partial cover for the power which the Machupicchu Hydroelectric Power Station will be unable to supply during construction of the Santa Teresa Hydroelectric Power Station. This is a turnkey solution for these clients, adding to the supply of equipment the preparation of ground and civil engineering works, installation of the fuel system including the storage tanks, and maintenance and operation of the power plant. In this industry, for every thousand metres of altitude, a generator loses on average ten percent of its power. However thanks to the advanced technology of Aggreko’s generators the total loss above sea level will not be 35 percent, but just ten percent over the entire 3,423 metres. As we frequently note in this magazine,

many large scale mining projects are in the high Andes. Others are in remote parts of the Amazon Basin where the grid will perhaps never reach. In these places localised power generation is the only solution either for communities or for mines, where reliable, cost-effective power has to be secured to make them viable. “We do a lot of work in

“The Power Projects business is conceived around a modular design ... a plug and play approach so we can deliver assets very quickly”

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Aggreko

CP Mining, Australia

Colombia, for their onshore O&G projects. Aggreko can come in and provide turnkey power, including all the manpower they need as well as the equipment and its maintenance. Many mining projects in more accessible regions, where power lines can be built, get delayed through civil unrest or simply because the local power utility does not have the funds,” says Asterios Satrazemis. “We can go ahead and provide interim power until that line arrives and not affect the schedule of production at a multi-billion dollar mining complex. It is an excellent long or short term solution to maintaining schedules. Our modular system allows us to increase or decrease capacity very quickly.”

If any single factor has played into Aggreko’s success it is the ease with which its equipment can be moved to the site. A 20-foot container can be shifted by train, truck, boat or aeroplane. Each unit can be kept below 40 tons, which means it is unlikely to be affected by weight restrictions or snaking roads. However, as some of the examples given above show, a site does not have to be inaccessible to benefit from the flexible power generation available from Aggreko. “We are working on heavy fuel oil (HFO) solutions as well to get lower fuel cost for our clients.” HFO is the fuel of choice in many island countries says Asterios Satrazemis, and Aggreko’s modular HFO packages are making a big impact on the market.

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Aggreko power plant, Ressano Garcia, Mozambique

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Aggreko

“In those cases, where power has to be delivered reliably we are often the first to meet that gap” In other situations liquefied or compressed natural gas (LNG or CNG) stand out as solutions that allow companies in the hydrocarbons industry to reduce their power generating costs and guarantee seamless operations. In Colombia Aggreko’s economical CNG-based solutions don’t demand high investment in energy supply services like equipment purchase. Aggreko’s affordable rental services include the installation, operation and maintenance so helping push forward production and boost the oil industry with less capital expenditure. For example a Colombian oil company turned to Aggreko to generate power in three of its exploration blocks in the country and improve its production and operating costs. The most widespread fuel source there is diesel, but Aggreko was able to provide this client with a gas solution resulting in considerable savings and an improved carbon footprint. In March of last year the company announced an ultra-efficient 1 MW engine that will provide its customers with 14 per cent more power at 12 per cent lower cost. The G3+ is the product of a three–year, £6 million development programme and it is the first time Aggreko has moved into developing its own engine technology. The G3+HFO variant of the new engine is also the first of its kind that can run on HFO, producing power at around half the cost of traditional diesel alternatives. Unlike many businesses, the recession has not been hard on Aggreko which recorded revenues of approximately $2.5 billion in 2012 and an operating profit of $612 million. Delays have dogged power

schemes and projects that depend on them have depended increasingly on temporary power. “In those cases, where power has to be delivered reliably we are often the first to meet that gap.” It’s a trend seen all over the world, he observes, and a strong driver for the Power Projects business which is growing rapidly in every part of the world, from Africa to the Americas region that he leads. The company has offices serving all of Latin America, the United States and Canada: from these any and every problem relating to temporary power can be solved quickly and reliably. Satrazemis, who has been in his present post since 1 January 2013 was formerly Aggreko’s Managing Director responsible for the Australia-Pacific Region. In his current role as President of The Americas he is enthusiastic about the flexibility of the service available across the region. “On any given day we will be running base load power for a number of mines, large or small, around the country, where if the power goes down they could potentially start losing millions of dollars in revenue. While the emergency and high profile projects get the headlines, providing businesses with power security on a day to day basis is just as important.”

Aggreko

+ 44 (0)141 225 5900 info@aggreko.com @Aggreko_Intl www.aggreko.com

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Rainstorm D

Taking the profess

The last 18 months has been an exciting time for Rainst manager, Mason Trouchet explains, the next 18 could w words by

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Will Daynes

research

Dust Control

essional approach

torm Dust Control and, as technical sales and marketing well be the best yet in the companyâ&#x20AC;&#x2122;s 30 plus year history

research by

James Boyle BE Mining [ Issue 17 ]

107

Rainstorm bucket at Jandakot

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Rainstorm Dust Control

think it’s safe to say that business has changed dramatically over the last 18 months,” states Rainstorm Dust Control’s technical sales and marketing manager, Mason Trouchet, when I ask him what life has been like for the Australian company since we last featured them in September 2012. Headquartered in Maddington, the company, as you may have already gathered, specialises in dust control. Since 1983, Rainstorm has successfully developed and fine-tuned a suite of products designed to stop the large volume of dust created during the various stages of a mining operation from becoming airborne. Whether used on roads, stockpiles, railways, plants or warehouses, its locally-manufactured dust suppression

“

a half have also come as a result of greater use of connotative data and technologies that are able to quantify the performance of dust suppression products against costs. This has resulted in businesses looking at dust control from a business case point of view, something that was less prevalent in years gone by. “Dust control covers a number of areas, including roads, transportation, open areas and materials handling,” Trouchet explains. “What the large mining companies are realising now is that there is little point in tackling just one of these areas independently, after all dust you pick off the roads will ultimately just land on open areas and vice versa. So what they are doing now is identifying who can provide

“The change in business has come as a result of a number of factors, not least of all the mining booms experienced in key markets” products have proven time and again to increase efficiency, reduce hazards and make processes simpler, cleaner and safer. “The change in business has come as a result of a number of factors, not least of all the mining booms experienced in key markets including Australia, Colombia, Mongolia and South America, which have resulted in increases in production and thus increases in dust generation,” Trouchet continues. “Meanwhile, attitudes towards environmental responsibility and water conservation have only grown stronger, with the mining community acknowledging that it can’t simply bulldoze through villages and areas and leave them choking on dust.” Changes within the company and the industry as a whole, over the last year and

a package service that deals with all the aforementioned areas where dust generates and who can do so at the best cost.” Roads remain the biggest area of interest when it comes to dust control, with studies highlighting that more than 50 percent of all dust generated within a specific project originates from roads and vehicle traffic movements. “Vehicle traffic volumes, particularly in the form of trucks increase during boom periods,” Trouchet points out. “What this means is we have to look at ways to keep the roads pliable, making them moulded rather than stiff and rigid. With increases in road usage customers are also looking for dust control products that are much more performance orientated than ever before. This means applying a solution

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“Recent studies have cast light on the loss of product and amount of dust generated from the use of rail cars by the coal and iron ore sectors”

that stays effective for a matter of months rather than days or weeks.” The other two main issues of importance come in the form of open areas and materials handling. In the former Rainstorm carries out what it calls veneering, where it sprays

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a thin coat of solution over stockpiles and open areas. “This process of veneering has been practised for many years, however the interesting development to emerge from this has been the idea of rail car veneering,” Trouchet says. “Recent studies

Rainstorm Dust Control

Gluon treated (left) and untreated (right) stockpile

have cast light on the loss of product and amount of dust generated from the use of rail cars by the coal and iron ore sectors, a loss that more often than not exceeds the cost of veneering itself. What we have taken to doing in response is start to veneer the rail cars themselves, thus creating a whole new business positive example of how our technology can not only save our customers cost but also create environmental benefits for the wider community.” When it comes to the materials handling chain, the biggest topic in recent times for the company has been the issue of dust extension moisture, where moisture is

mixed into an ore body to counteract its dusty nature. What Rainstorm has found is that in many instances companies have been using large amounts of water to get the correct moisture content, an action that in itself can cause problems that direct impact upon the productivity of plants, crushing circuits or throughputs. “By adding certain additives into that water stream to make the material in question less dusty with lower moisture content we also found that we were seeing improvements in throughput and flow, and this in turn was improving things in terms of money gain,” Trouchet enthuses. “So where

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Did you know? The three strengths of Rainstorm 1. We only use environmentally friendly products.

Untreated ore - a bad dust day

“We are reaching the point where what we have been preaching for the better part of 30 years is now being qualified”

we were trying to manage dust in the first instance, that was just a cost plus, but the impact we were having on input and flow meant that our customers could in turn increase the capacity of their plants and that has a direct dollar relationship, which meant that these materials created a cost benefit that they didn’t foresee in the first instance.” The fundamental task of dust control is one that in itself carries environmental benefits, however as Trouchet goes on

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2. We consider the client’s total end cost, and ensure that we, not the customer bear the onus for a successful outcome to the customer’s satisfaction. We provide total solutions. Rainstorm has always chosen to provide all equipment and application services along with the best products so can gladly shoulder the onus for making things work. In other words, we don’t blame the customer for “not putting it out right”. 3. We are continuously striving to improve equipment, methods, products and training.

to tell me, Rainstorm possesses a much more comprehensive attitude towards responsibility and sustainability than just that. “We have always taken a view towards looking at how we can take the by-products or waste materials of other industries and utilise them as a way of supressing dust.” While boom periods in mining are a blessing to all involved in the industry, it is important to remember that the issue of dust control is constant. Inevitably this means

Rainstorm Dust Control

Veneering in process

that regardless of market conditions there will always be a demand for the services that Rainstorm provides. Even with that in mind the company still faces a need to evolve and adapt to changes in the marketplace, something that Trouchet appears well aware of. “When it comes to taking the company forward there are several on-going changes that will determine how we grow and develop. The first is the way our customers are increasingly putting their site-wide dust control contracts out to tender. This is a big shift in approach and is one being seen mostly amongst the larger players in the market. Winning these long-term contracts is of great importance as they allow us to embed our crews and equipment with these customers, and service their needs for extended periods of time.” The other big change is coming from the development of various technologies that are able to provide detailed breakdowns of where

surfaces are being treated, how much product is being used and what the cost benefits of that usage are. “In the case of road treatment, the use of 2D and 3D models is giving us a better detailed cost and performance per square metre overview than ever before,” Trouchet concludes. “This gives us clear data that we can present to potential customers that has been shown to encourage their uptake of our products and services. This is very exciting for us because it essentially means that we are reaching the point where what we have been preaching for the better part of 30 years is now being qualified.”

Rainstorm Dust Control

08 9452 0235 info@rainstorm.com.au www.rainstorm.com.au

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Bringing ore to the surface Pyh채salmi Mine Oy The Pyh채salmi mine is one of the deepest and oldest mines in Europe and has been producing vast amounts of copper and zinc for over 50 years. As Managing Director, Kimmo Luukkonen explains, even as it approaches the end of its life the mine has much still to give words by

Will Daynes

research by

Abi Abagun

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View of the Pyhäsalmi Mine Oy from the east

ocated in the town of Pyhäjärvi in the south of Oulu province, in central Finland, the Pyhäsalmi mine is an underground copper and zinc mine, owned by Canadian mining corporation First Quantum Minerals. With a depth measuring 1,444 metres, or 4,738 feet, it is the deepest metal mine in Europe and among the continents oldest. It origins date back to 1958, when a local farmer came across gossan ore during a well construction. A sample of this ore was soon

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delivered to Outokumpu Corporation, which, following analysis of the sample ordered a more thorough geological survey to be conducted on the area. Said survey revealed a rich volcanogenic massive sulphide (VMS) deposit rich in copper and zinc, and come 1959 the decision was taken to open up a new mine at the site of the ore discovery. The Pyhäsalmi mine opened on 1 March 1962. For the first five years it existed as an open cast pit, before underground mining operations commenced in 1967. Outokumpu

Pyhäsalmi Mine Oy

was responsible for designing an underground development plan for the mine and in 2001 completed the construction of a 1,450 metre deep automated hoisting shaft. A year later the mine was acquired by Inmet Mining, who continued forward with the underground development plan. Fast forward to 2013 and the company found itself being acquired by First Quantum Minerals as part of its purchase of the Inmet Mining group. “Throughout the history of operations here more than 50 million tonnes of ore has been

successfully mined,” states Managing Director, Kimmo Luukkonen. “Based on the most up to date information available we estimated that we have approximately five years of mine life ahead of us which will take our mining operations into 2019. During this time we anticipate an additional seven million tonnes of ore will be mined, taking the recovered ore from the deposit to around 60 million tonnes in total.” Pyhäsalmi Mine Oy, a fully owned subsidiary of First Quantum Minerals, charged with operating the mine, today uses non-entry,

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

www.bus-ex.com/mining

Nordkalk and Pyhäsalmi Mine have co-operated for a number of decades. Nordkalk provides Pyhäsalmi with special quicklime, matched to the requirements of existing equipment. Lime is used in: • underground mine filling • ore dressing to adjust pH • water treatment to neutralize and reduce metal content Nordkalk is the leading producer of high quality limestone-based products in Northern Europe. The products are used in the metals and mining, paper, and building materials industries as well as in environmental care and agriculture.

www.nordkalk.com

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bulk open-stope mining methods in a primarysecondary sequence. On average, stope size varies from 50,000 tonnes for narrow primary stopes to over 100,000 tonnes for wider secondary stopes. Meanwhile, milling at the mine involves crushing, three-stage grinding, conventional flotation using three separate circuits, and water removal to produce copper, zinc and pyrite concentrates. “Looking back over the history of the mine one can clearly see that it is a development that has always prospered from the use of the latest technologies, and best practices and processes,” Luukkonen continues. “For its part, Outokumpu has always been recognised for employing cutting-edge technologies, many of which originated from its own in-house research and development division, which was a rare thing to have during the 1970s and 80s. What we have done since taking over operations at the mine is continue to utilise

Pyhäsalmi Mine Oy

Mill control room

“Throughout the history of operations here more than 50 million tonnes of ore has been successfully mined”

new techniques and tools to get the most from the mine, an approach which extends to every area of operation. For instance, years ago the mine employed what was the first Sandvik cable bolter. Today we continue to strengthen our partnership with suppliers and contractors like Sandvik in order to retain our leading position in areas such as automated production drilling and automated loading.” During 2013, the mine was responsible for producing 14,900 tonnes of copper at an average grade of 1.1 percent, and 21,700 tonnes of zinc at an average grade of 1.9 percent. “Our

figures for last year were very much in line with what we would consider normal for the mine,” Luukkonen says. “Annual tonnage figures have remained fairly stable for the better part of decade now, averaging some 1.4 million tonnes in total per year. Of course, when it comes down to it, you can only mine what you have in front of you, however our processes and methods of operating have always been strong and we feel this is reflected in our results.” In the 52 years that the mine has been in operation it has been has a massive impact on the region in which it operates, an impact

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Did you know? 1,444 metres The depth of the Pyhäsalmi mine 14,900 tonnes Of copper produced by the mine in 2013 21,700 tonnes Of zinc produced by the mine in 2013 1.1% Average grade of copper Mine surveyor

1.9% Average grade of zinc

“Our job from here on out is to utilise the time we have left here to get the most out of an incredible asset which has already delivered so much”

driven by the fact that when it comes to the town of Pyhäjärvi’s tax income alone, the mine is responsible for contributing one third through the payment of corporate taxes and other associated costs. Meanwhile, it is estimated that another third of the municipality’s tax income comes as a result of indirect effects of the mine. This of course poses a question as to how the municipality will adapt when operations at the Pyhäsalmi mine does come to an end.

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6 years Current estimated mine life 210 Number of employees

Understandably, the end of the mine’s life is an event that the operators are well prepared for, perhaps all the more so as the mine faced a similar scenario in the mid1990s when, faced with only a few years of operations remaining, a new ore body below one kilometre in depth was discovered. “When it comes to the end of mining operations here, we have to consider the fact that what we have here is an extraordinary asset which is not only among the deepest

Pyhäsalmi Mine Oy

Workers consult manual

mines in Europe, but also one of the only ones to possess access ramps that all vehicles can use to reach the very bottom of the shaft,” Luukkonen explains. The unique size of the asset and its logistical strengths has already seen it earmarked as the potential base for a number of exciting future ventures. These include being a candidate for future pan-European particle physics research projects. Another potential future use of the mine could be to support pumped-storage hydroelectricity projects. “While talk of what the future may hold for the mine site is interesting, it is equally as important to consider the future of our skilled, experienced and dedicated work force,” Luukkonen enthuses. “They are the individuals who have contributed most to the success of the mine and as such we are hard at work developing a retention plan. Although we have no doubt that there will be no shortage of opportunities offer

to our employees once the mine ceases operations, we want to do all we can to recognise their contributions and retain their skills and knowledge.” Turning back to today and the mine’s outlook for 2014 looks bright, what with production levels of copper, zinc and pyrite all looking to remain in line with previous years. “We are certainly on the right path when it comes to this year,” Luukkonen concludes. “Our job from here on out is utilise the time we have left here to get the most out of an incredible asset which has already delivered so much.”

Pyhäsalmi Mine Oy

+1 416 361 6400 info@fqml.com www.first-quantum.com

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Barrick Gold

Concentratin

A combination of a large resource, impressive means that the future looks very bright words by

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Will Daynes

research

d - Lumwana

ng on copper

cost savings and a recently updated mine plan t indeed for the Lumwana copper mine

research by

Robert Hodgson BE Mining [ Issue 17 ]

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Barrick Gold - Lumwana

ocated within one of the most prospective copper regions in the world, Barrick Gold’s Lumwana copper mine is one of Zambia’s best examples of a prosperous mining operation. Situated within a stable jurisdiction with a long history of mining and boasting established infrastructure, Lumwana possess a large, high potential copper deposit and a multi-decade reserve life. Ore from Lumwana, which is predominantly sulphide, is treated through a conventional sulphide flotation plant, producing copper concentrate for smelting. On site, an extensive mining fleet and array of equipment can be found at work. This includes ten Sandvik DK45 drills, three Cubex DR560 drills, ten D10 track dozers, six CAT 16M motor graders, three 777

This concentrate is only sold on a domestic basis and is not subject to the ten percent duty imposed on all copper concentrate sold internationally. Furthermore, the longterm agreements the mine has in place help ensure that its fill production can be processed, meaning smelter capacity is not an issue for Lumwana. Production at Lumwana in 2014 is currently projected to reach similar levels to that experienced in 2013. Meanwhile, the mine is pursuing a number of initiatives to further improve on cost reductions it has achieved to date. The mine has made significant cost savings through the optimising of its mine plan to smooth our annual stripping requirements, by rationalising contractor requirements and headcount, by in-sourcing maintenance labour

“Average concentrate grades for 2013 were recorded at 31.5 percent, while the processing cost was calculated at $3.53 per tonne” water trucks, three CAT 994/993 front end loaders, 31 Hitachi 4500 dump trucks and six Hitachi 5500 hydraulic shovels/excavators. A 20MTPA design copper concentrator has been optimised to 24.5MTPA at the mine site. In 2013 Lumwana was responsible for producing approximately 260 million pounds of copper at an average copper recovery rate of 93.4 percent. Average concentrate grades for the year were recorded at 31.5 percent, while the processing cost was calculated at $3.53 per tonne. As of 31 December, 2013 proven and probable copper reserves at the mine were put at 6.6 billion pounds. Copper concentrate from the mine is sold under long-term sales agreements to three smelters based in Zambia, Chambishi Copper Smelters, Konkola Copper Mines and Mopani.

and by renegotiating various key contracts. At the same time Lumwana’s management team have successfully improved fleet productivity by increasing LMC tonnage by 18 percent compared to 2012 and achieved efficiency improvements by reconfiguring the mine’s organisational structure and launching an improved Management Operating System. In total management believes that the aforementioned focused improvements all contributed to a $100 million cost reduction in 2013. Today, approximately 90 percent of Lumwana’s workforce is Zambian, a figure that means that the mine falls in line with not only the country’s local employment plan, but also Barrick’s Community Relations Management System. Indeed Lumwana has a long history

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The GIANTS of mining Hitachi has developed an ultra-reliable and durable range of EX-6 excavators and AC drive dump trucks. They are working 24/7 to deliver higher levels of power, performance and productivity. Hitachi is setting new standards in comfort and safety, and for ease of access and maintenance. The giants of mining offer lower running costs and a higher return on investment.

Hitachi Construction Machinery Zambia Co., Ltd. www.hitachi-c-m.com/za

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Barrick Gold - Lumwana

â&#x20AC;&#x153;Management believes that the focused improvements all contributed to a $100 million total cost reduction in 2013â&#x20AC;?

of working together with local communities in order to foster sustainable, long term success. Examples of initiatives taken by the mine can be placed into three categories, those being health and safety awareness, education development and community infrastructure. In the first category the mine has provided vital support to the Lumwana Community HIV and AIDS Task Force, and has contributed towards road safety education, community-led water

and sanitation, and gender-based violence awareness programmes. On the educational side of things Lumwana supports countless community schools and public libraries, funds primary and tertiary education scholarships and has successfully maintained the on-site Lumwana Mine School since 2009. In recent years the mine has also provided assistance in the drilling of boreholes for clean water, the

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Barrick Gold - Lumwana

“Today, approximately 90 percent of Lumwana’s workforce is Zambian”

commissioning of by-pass roads for haul trucks, road safety awareness campaigns and population influx management. Lumwana is also well regarded for its efforts towards fostering wealth creation. It has done so to date through the creation and support of enterprises promoting literacy in the community and the empowerment of women as earners and savers. Lumwana also supports several Agri-Food Innovation Partnerships as well as small and medium business development. In the latter it has put in place the Lumwana Business Incubator Programme as well as facilitating international joint venture investor brokering and Access to Finance partnerships. Long before the turn of the year the mine identified a number of growth opportunities for 2014 which it continues to pursue as we speak. Again it has placed these opportunities into three separate categories, which are enabling people, process initiatives and what it calls its business improvement pipeline. In the first instance the mine plans to ensure its people are well supported through a combination of training and capacity building, and communications and change management. In order to embed significant process improvements the mine has been working hard to streamline the shift handover process and enhancing the daily mine planning and review processes. It also plans to launch detailed project management best practices, which will assist in planning, delivering and tracking key 2014 priority projects, and identify the mine’s next wave of longer-horizon initiatives.

The new mine plan that Lumwana is working under is designed to maximise free cash flow in the current economic environment and preserve optionality. The goal of Lumwana’s management is to continue to improve the mine’s productivity at a time when the outlook for long term copper prices remains strong thanks to continued demand growth and supply-side challenges. What this collectively means for the mine is that it is very well positioned for what the future may bring.

Barrick Gold - Lumwana

+1 416 861-9911 info@barrick.com @barrickgold www.barrick.com

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Nord

Growth on a

One of the most geographically diversi Nordgold is looking to follow up a prospe words by

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Will Daynes

research

dgold

global scale

ified companies in the mining industry, erous 2013 with further growth this year

research by

Robert Hodgson BE Mining [ Issue 17 ]

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stablished in 2007, when Severstal Group, one of Russia’s most successful metals and resources corporations, decided to move into the gold market, Nordgold has since become recognised as one of the industry’s fastest-growing gold mining companies with operations based in West Africa, Kazakhstan and Russia. It was in 2008 that Nordgold, which until then had only been operating in the CIS, acquired a controlling stake in High River Gold Mines Ltd, a Canadian company which held a number of assets in Russia as well as in Burkina Faso. The Taparko mine and Bissa exploration project, both in Burkina Faso were among these assets. Following the positive results Nordgold achieved with turnaround project at Taparko the company decided to proceed with the development of Bissa. The secret to Nordgold’s rapid rise has been a combination of acquisitions and organic investment. Today the company operates nine mines, has one development project, five advanced exploration projects and a diverse portfolio of early exploration projects and licences. Together these assets not only provide employment for over 10,000 workers but also contributed to Nordgold’s gold production increasing to 924,000 ounces in 2013 from 717,000 ounces in 2012. Nordgold’s mission, which clearly it has taken great strides towards achieving already,

“The company insists that success for Nordgold is about more than just gold and that its values run much deeper than effective gold production”

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Lefa Mills

Nordgold

“One of the company’s major targets for this year is for all of its operating mines to be free cash flow positive by the end of 2014” is to create consistent growth throughout its operations, thus delivering value to its shareholders and all other stakeholders. Nevertheless, the company insists that success for Nordgold is about more than just gold and that its values run much deeper than effective gold production. In addition to this, it constantly strives to ensure that its employees know that their safety is the company’s utmost priority, that it earns and retains the trust of the investment community, that it contributes to the communities in which it operates and that it does its part in looking after the environment. While it is a young company, Nordgold has grown very rapidly and in doing so has been forced to meet the challenges that any expanding mining company would face head on. In the time that it has done so, Nordgold has embraced the realisation that, in order to truly fulfil its potential and reach the next stage of its development, it needed a clear vision as to how it honours the values it is committed to. As the employer of thousands of men and women, Nordgold understands all too well that it bears the responsibility of ensuring their safety and providing a good quality of life for them and their families. Nordgold states that one of its aims on a daily basis is to provide an environment in which its people can realise their potential in conditions that are both comfortable and safe. The company seeks to

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BUILD YOUR NEXT PROJECT WITH WEST AFRICA’S LEADING EPCM CONTRACTOR Together with Nordgold, Lycopodium delivered the Bissa Gold Project in Burkina Faso Lycopodium’s reputation for successful project delivery to world class safety and environmental standards makes Lycopodium the ‘first choice’ partner for any mining project. We work globally with our clients to provide fit-for-purpose engineering solutions in mining and mineral processing. • • • • • •

Feasibility Studies Process Design Engineering Project Management Construction Procurement

For more information contact:

Karl Cicanese Group Manager - New Business E: minerals@lycopodium.com.au T: +61 8 6210 5222

www.lycopodium.com.au

Nordgold

be an employer of choice in the communities in which it operates and to hire the very best people in the industry. The hiring of individuals, particularly those from within local communities, plays its part in Nordgold’s aim to support community development. Being a responsible member of the local communities in which the company operates is a central merit of the way it does business. Indeed, it sees it as a vital part of its role to invest in those communities and help them develop. As part of its efforts Nordgold brings in electricity, water, infrastructure and transport. In many areas, it also assists the local population in gaining access to education and health services. The company is focused on mutual respect and dialogue with local communities and government organisations, and meets all of its legal and tax obligations. Last, but by no means least, is the company’s commitment to taking care of the environment. Nordgold’s recognises the fact that it operates within a hazardous industry, however in doing so it makes every effort to take the utmost care in ensuring that it causes little if any damage to the environments in which it works.

Burkina Faso - support of local business initiatives - Weaving

lycopodium Lycopodium has a significant success record in the development and commissioning of projects, often pioneering the introduction of modern process plants and associated technologies to remote and logistically challenging locations. The company has an international reputation for delivering projects which consistently meet or exceed all project criteria and performance targets. Lycopodium’s experience in Burkina Faso and the West African region comprises over 30 projects, including the Bissa Gold Project for Nordgold. This provides Lycopodium with the advantage of recent and relevant project development experience in West Africa, including knowledge of logistics, contractors, and community. The company has been active in the mineral processing industry for

over 20 years and has designed and built processing plants starting at throughputs from 350,000 tpa to 55 Mtpa. Their history in mineral processing and mining, coupled with the proven capabilities of their low cost value-adding design and drafting, provides the ability to offer their client a cost effective project outcome. Lycopodium has also produced a unique and successful model for the execution of projects in Francophone Africa, which has been developed over a number of projects. Lycopodium employs dual French/English translators with local capabilities and connections, ensuring the smooth delivery of information and clear communications to facilitate the successful delivery of projects. www.lycopodium.com.au

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Mining

Drilled piles

Since 1992, FTE Drilling maintains a constant and active presence in the mining sector in Canada and West Africa. Whether it is for exploration projects or for mines already in exploitation, FTE Drilling offers services ranging from core sampling (RAB – RC – DD) to grade control to help mines increase their productivity.

The economic development of Canada involves the construction of infrastructure in very difficult places, sometimes. That’s why, over the years, our clients are asking us to meet challenges. FTE Drilling has developed an enviable expertise in vertical and angle piling or caissons in small and large diameters. From the new construction to the maintenance of existing infrastructure, in coastal environment as in the heart of the most major centers, FTE Drilling is proud to contribute to the expansion and maintenance of Canadian work.

Sherbrooke :

Montreal :

Nova Scotia :

Quebec :

Burkina :

Senegal :

Togo :

Mali

Newfoundland

www.ftedrilling.com

Nordgold

Vegetable production at Bissa community

“A very significant key to our success over the last 15 years has been the renewed partnerships with aboriginal communities” One of the company’s major targets for this year is for all of its operating mines to be free cash flow positive by the end of 2014. It intends to achieve this by applying a forensic approach to cost management, diligent capex spend and working capital optimisation. Despite significant recent gold price volatility, Nordgold consolidated operations remained FCF-positive in 2013 with consolidated all-in sustaining costs reported at US$1,062 per ounce for the same period. A combination of Nordgold’s flexible capex, estimated to be US$200 million

in 2014, reduction of general and administrative expenses, improvements in operational efficiency, as well as the on-going implementation of Nordgold’s Business System, which is expected to add US$55 million to 2014 EBITDA, are keys to ensuring the company remains focused on driving down costs. Nordgold’s efficiency programmes are also showing positive results with growing plant and fleet productivity at key mines, while the company has also successfully reduced consumption of key materials and

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Bissa Crashing

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Nordgold

â&#x20AC;&#x153;Going forward the company will seek to develop the existing pipeline of high quality greenfield and brownfield projects through focused exploration expenditureâ&#x20AC;? administrative expense. Furthermore, it has significantly strengthened its senior operational management team, making new hires with proven expertise. This is expected to help Nordgold to progress with its on-going efficiency improvement initiatives. Nordgold has an extensive pipeline and a proven track record of greenfield development. A perfect example of this would be the Bissa mine, which was launched on time and on budget and has significant exceeded initial production forecasts. Going forward the company will seek to develop the existing pipeline of high quality greenfield and brownfield projects through focused exploration expenditure. To supplement the organic growth pipeline, Nordgold will also seek to capitalise on other opportunities through the evaluation of potential purchases of premium-quality reserves and resources, which comply with its project criteria, to further enhance its reserve base.

Nordgold

+31 20 406 4480 va.bogomolova@nordgold.com www.nordgold.com

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