Mining Global Magazine - October 2015

TOP10 Most Profitable Companies Of 2015

October 2015 • www.miningglobal.com

A Diamond Story CEO SPOTLIGHT

Newmont Mining’s Gary J. Goldberg

EDITOR’S COMMENT

IN THIS ISSUE

“I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful.

And you try to be fearful when others are greedy” – Warren Buffett W I T H Q 4 F I N A L LY U P O N us, the landscape

of the mining industry looks significantly different than it did this time last year. A purge in commodity prices incased the sector for most of 2015, pushing miners to the brink financially as well as forcing an aging industry to adapt to the times.

In the October edition of Mining Global, we interview Newmont Mining’s CEO Gary J. Goldberg to find out how the gold producer is acclimating to current conditions of the market and their plans going forward, including insight on recent acquisitions, leadership initiatives, future trends and what separates Newmont from other gold mining companies.

Also this month, we take a look back in history at ALROSA’s Udachny mine, which has enjoyed over 50 years of open-pit diamond mining. As the company prepares to transition operations underground, we tell the story of how it all began.

And because profits are what matter most, we explore the financials of the top mining companies in 2015 and rank the leaders based on the almighty dollar.

Enjoy the issue!

Robert Spence Editor robert.spence@wdmgroup.com

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CONTENTS

Features

6

O P E R AT I O N S

CEO spotlight: Gary Goldberg, Newmont Mining

MINE SITES

TOP10

Profitable Mining Compaies of 2015

14 4

ALROSA’s Udachny Mine A Diamond Story

October 2015

20

EUROPE

AUSTRALIA

Mines Rescue Service Ltd

Jetcrete

28

62

AFRICA

38

A M E R I C A L AT I N A

Konkola Copper Mines

AUSTRALIA

50

Lynas Corporation

72

Ă­a. Minera Pangea C (McEwen Mining) 5

LEADERSHIP

Gary J. Goldberg,

One of the world’s largest gold prod

Writ ten by: RO

Newmont Mining

ducers opens up about their future.

OBE RT SPE N C E 7

LEADERSHIP COLORADO-BASED NEWMONT MINING Corporation has enjoyed over 90 years of history in the mining industry, becoming one of the world’s largest producers of gold in the process.

In this interview, Chief Executive Officer Gary J. Goldberg opens up about the current status of Newmont and where the company is headed. Goldberg also provides insight on recent acquisitions, leadership initiatives, future trends and what separates Newmont from other gold mining companies.

Q: Tell me the current status of Newmont and where the company is headed?

A: I’m proud to say that we’re executing our strategy to lead the gold sector in value creation. One of my first actions as CEO was to recalibrate our strategy to focus on value over volume.

That strategy has three parts. The first is to improve the underlying business, and we’ve been successful in reducing total injury rates by 50 percent and costs by 20 percent over the last two years. The second is to strengthen the portfolio. We’ve generated $1.7 billion by divesting non-core assets, and 8

October 2015

are reinvesting in lower-cost, longerlife mines like Cripple Creek & Victor in Colorado, Merian in Suriname and Long Canyon in Nevada. The final part of our strategy is to create value for shareholders. We’ve reduced our net debt by 35 percent since 2012, generated positive free cash flow for the last five quarters running, and maintained our dividend despite the lower gold price environment. In short, we’ve made great progress toward making Newmont a more profitable and reliable business, but we’re not resting on our laurels. Our goal is to build on that momentum to take our performance to the next level, and I believe we have the right people, discipline and strategy to do that.

C E O S P O T L I G H T: G A R Y G O L D B E R G , N E W M O N T M I N I N G

Q: Let’s discuss recent acquisitions and their role in achieving your longterm future for Newmont A: Taking our performance to the next level includes improving the value and risk profile of our asset portfolio. We weigh all opportunities – operations, projects and acquisitions – on the same scale and only fund those that offer strong returns, acceptable risk and are a good strategic fit. Cripple Creek & Victor, our most recent acquisition, was an unparalleled opportunity to add immediate cash flow, and to improve portfolio mine life and costs in a favorable jurisdiction.

Q: Company culture is typically the unsung hero for most businesses. Tell me about the company culture at Newmont.

A: Our success to date is the result of our people, and they have made safety, accountability and continuous improvement a way of life at Newmont. That culture translates to good discipline in how we manage our portfolio and our balance sheet, and a sharp focus on delivering value over volume.

Q: Where is Newmont in terms of automation? What lies ahead for the company 9

LEADERSHIP in terms of technology?

A: We use semi-autonomous equipment where it makes sense to improve safety and efficiency, particularly in our underground mines. We also leverage proprietary exploration, metallurgy and resource modelling technology for competitive advantage. Looking ahead, I can see an increasing role for technology to aid faster and better decision making, and to support a more efficient and integrated approach to how we manage our operations.

Q: How does Newmont approach sustainability?

A: Sustainability is integrated into every part of our business, and we’re honored to have been named the mining sector leader in overall sustainability by the Dow Jones Sustainability World Index.

Our approach to sustainability translates into safe working conditions and good opportunities for employees; sustainable economic development for our host communities; and strong returns and prospects for our shareholders and other stakeholders.

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October 2015

C E O S P O T L I G H T: G A R Y G O L D B E R G , N E W M O N T M I N I N G

Q: What are the top initiatives being worked on under your leadership? What plans are being made for the future?

A: Our top priority is to continue delivering our strategy, which is to improve the underlying business, strengthen the portfolio and create value for shareholders. Specific initiatives include our Full Potential program – a structured approach to improving costs and efficiency at our operations – which has netted about $1 billion dollars in cash flow improvements since it was launched in 2012. We’re also working to build the next generation of Newmont mines – Merian and Long Canyon – on time and on budget, and the next generation of Newmont leaders.

Our development and succession programs are geared to maintain a robust and diverse talent pipeline, and our engagement and inclusion programs are designed to help us attract and retain the best and brightest.

Q: What do you believe separates Newmont from its competitors? How does your leadership play a role in this?

A: My job is to bring the right people, resources and focus to the business

– and our people are our primary source of competitive advantage.

They deliver industry-leading safety and sustainability performance, and have some of the strongest technical capabilities, including mine planning, resource modeling, processing and exploration. Our people have also built one of the best growth pipelines in the gold sector. We’ve been able to differentiate Newmont based on these accomplishments, and by delivering sector leading total shareholder returns.

Q: What trends do you see in the mining industry, either right now or on the horizon?

A: The only thing that’s constant is change. Our ability to manage change – from economic slowdowns and price volatility to Ebola outbreaks and social activism – will continue to be critical. Closer to home, I see gold fundamentals strengthening on the back of declining mine supply and rising consumer and central bank demand for gold. While that will certainly be a welcome change, we’re not counting on it and will continue to run our business to thrive in all cycles.

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MINE SITES

ALROSA’s Udachny Mine A Diamond Story

The Udachny mine has enjoyed over 50 years of open-pit diamond mining. As ALROSA prepares to transition operations underground, we go back in time to tell you its story.

W R I T T E N B Y: R O B E R T S P E N C E

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MINE SITES RUSSIA-BASED ALROSA IS the world’s largest diamond mining company, enjoying over 60 years of diamond exploration, mining, manufacturing and sales. In July the company commenced with plans to end open-pit operations at the Udachnaya pipe, one of the oldest and largest diamond pipes in Yakutia, in order to transition operations underground.

The open-pit mine, which was established in 1971, hit its peak in the early 1990s, producing more than half of the company’s rough diamonds with 12 million tons per year. At depths of more than 630 meters, the Udachny mine is one of the 10 deepest open-pit mines in the world.

From the very beginning The very first Yakut diamond was discovered in 1949 in the Soviet Union. It wasn’t until five years later on August 21, 1954, when geologist Larisa Popugaeva and Natalya Sarsadskikh discovered the first kimberlite pipe, Zarnitsa—ALROSA’s first primary diamond deposit.

A year after the Zarnitsa discovery—and coincidentally two days after the unearthing of 14

October 2015

The very first Yakut diamond was disc the legendary Mir mine—young Soviet geologist Vladimir Shchukin found another potential deposit.

It was during exploration works that Shchukin found a fragment of metamorphic rock that usually undelays at depths of 2,000 meters. Typically, this rock can only be brought to the surface by kimberlite pipes—subterranean igneous rock structures best known as sources for diamonds.

Shchukin immediately realized they were onto something big.

“We found two diamonds in first

A L R O S A’ S U D A C H N Y M I N E A D I A M O N D S T O RY

covered in 1949 in the Soviet Union two prospecting holes,” Shchukin recounted. “One of them was a perfect octahedron with 4 mm facets. This is important to notice that we made 200 prospecting holes at Zarnitsa pipe and no diamonds were found. As for Udachnaya pipe, we took a small sample, transported it to the base and extracted further 43 crystals. The grades were high – about 3 carats per cubic meter. It was clear the pipe was very large.”

Going underground With a name that means “lucky” in

Russian, the Udachnaya pipe has lived up to its namesake not only because of its quick discovery, but because it consists of two parallel kimberlite pipes that meet each other near the surface. Udachnaya is the richest Yakut primary deposit by grades and reserves.

Today the Udachny mine is in the final stages of closure, transitioning into a more cost effective and profitable underground operation.

Shchukin, now 86, remembers the unusual circumstances surrounding the pipeline’s discovery.

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MINE SITES

During almost 50 years of operation (1967 to 2015), the company has mined more than 350 million tons of ore “In 1955, my exploration team had to trot around 1,000 kilometers of routes in search of diamonds,” Shchukin said. “However, we discovered the Udachnaya pipe just in one day, in a matter of one hour and a half. This is why we named it that way (Udachnaya) because with other diamond pipes everything was much more complicated.”

Even though the above ground operations are ending, the importance of Vladimir Shchukin’s discovery has never been clearer: the mine has become 16

October 2015

Vladimir Shchukin

the company’s flagship diamond mining operation, producing more than half of Western Yakutia’s diamonds, as well as becoming the largest open pit mine in terms of size and diamond production.

During almost 50 years of operation (1967 to 2015), the company has mined more than 350 million tons of ore containing roughly $80 billion worth of diamonds. At the peak of its career, the Udachny mine yielded roughly 13 million tons of ore per year, annually producing tens of millions of diamond carats.

A L R O S A’ S U D A C H N Y M I N E A D I A M O N D S T O RY

Today, the Udachny open-pit encompasses 1,600 meters by 2,000 meters on the surface and 640 meters in depth. The length of the quarry totals 10 kilometers and takes trucks more than 30 minutes to reach the bottom.

“Udachny boggles the mind,” Andrei Zharkov, President of ALROSA said at the ceremony dedicated to the closure of the open-pit mine. “It is a true example of engineering and mining art.

The mine lives up to its name. It is unique on a global scale by volume of diamonds and ore mined, by dimensions and ore body structure.”

‘We discovered the Udachnaya pipe just in one day, in a matter of one hour and a half.

This is why we named it that way (Udachnaya) because with other diamond pipes everything was much more complicated’

Zharkov said the closure of the open-pit operation represents an important milestone in the history of the company. “We feel confident about the future. The Udachny underground mine successfully ramps up capacity and its indicative planning horizon is 50 years,” Zharkov said.

The next chapter With underground operations currently in progress, the story of the Udachnaya pipe has just begun. According to ALROSA, the reserves of Udachnaya have been explored to a depth of about 1,400 meters and there are still 800 meters for underground mining.

This equates to roughly 150 million tons of ore, which is expected The reserves of Udachnaya have been explored to a depth of about 1,400 meters

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MINE SITES to last for the next 50 years.

The first phase of the Udachny underground mine was put into operation in summer 2014. The mine will reach its design capacity of four million tons of ore in several steps by 2019. After that it will become the largest diamond mine of ALROSA bringing the company more than five million carats of diamonds annually. In the meantime, the company’s miners are focused on construction and preparatory works planning to produce a total of about 480,000 tons of ore in 2015.

ALROSA has currently performed

Video: A view into the depths of Udachny Mine

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October 2015

the final series of blasting works at Udachny but will detonate one final explosion at the end of the year in order to destroy the spiral road leading to the bottom of the ore cushion, which will now take up the production baton.

With the closure of Udachny, ALROSA aims to build new quarries at more complicated deposits nearby.

The long-term program intends to boost diamond production to more than 41 million carats a year with Udachny Mining and Processing Division playing an important role.

Lucky future One of the primary deposits for ALROSA to develop in the future is the Zarnitsa pipe, the very first diamond deposit discovered by the company. According to the company, the development of Zarnitsa has long been delayed because the Udachny mine was much larger with richer diamond grades.

In comparison with Udachny, the Zarnitsa open-pit mine is small, measuring only 80 meters in depth.

However, it has potential to grow upwards of 800 meters in diameter and at least 200 meters in depth.

A L R O S A’ S U D A C H N Y M I N E A D I A M O N D S T O RY

‘ALROSA plans to ramp up production at Zarnitsa to produce more than three million tons of ore per year’ While smaller mining operations at Zarnitsa have existed since 1998— only yielding about one million tons of ore per year—now is the time for Zarnitsa to step it up. Starting next year, ALROSA plans to ramp up production at Zarnitsa to produce more than three million tons of ore per year. The workforce and equipment of Udachny are being currently transferred to Zarnitsa.

ALROSA also plans to develop

its Verkhne-Munskoye deposit, which was discovered in 2007 and is located 160 kilometers from the Udachny Mining and Processing Division. The site consists of four kimberlite pipes and should add another three million tons of ore per year. The mine is expected to start development in 2018.

Although the above ground operation is closing, the work for ALROSA has only just begun.

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Profitable Mining C

2015 is shaping up to be a rough year for mining compan stellar results, with slumping commodity prices continuin many experts believe the second half of 2015 will tell a di

We break down the top 10 mining companies based off o

TOP 10

Compaies of 2015

nies. The first six-months have witnessed less than ng to ravage profit margins for miners. And while ifferent story, the numbers don’t lie.

of 2015’s first-half net earnings.

Written by Robert Spence

TOP 10

09

ALCOA

Alcoa’s net income of $195 million in the first-quarter of 2015, combined with $140 million in the second quarter, gives the aluminum miner a first-half total of $335 million.

$335 MILLION

$331 MILLION

10

FORTESCUE METALS GROUP

The Australian miner’s net profit for the first half of 2015 was $331 million, down 81 percent compared to the previous year of $1.7 billion.

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October 2015

M I N I N G C O M P A N I E S B A S E D O N F I R S T- H A L F P R O F I T S

07

SOUTHERN COPPER

Global mining company Southern Copper reported a net income of $577.1 million in the first half of 2015, down 12.6 percent from the previous year of $660.6 million.

$557.1 MILLION

$361 MILLION

08

NEWMONT MINING

Gold miner Newmont Mining has raked in $361 million in the first half of 2015, compared to $210 million the previous year.

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TOP 10

05

RIO TINTO

Weak commodities prices have caused a whirlwind of havoc for Rio Tinto as the mining giant reported net earnings of $806 million in the first-half of 2015, a significant drop from the previous year’s net income of $4.4 billion.

$806 MILLION

$714 MILLION

06

ALROSA

Russian diamond mining company ALROSA saw revenue grow 26 percent in the first half of 2015, with net profit hitting $714 million.

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October 2015

M I N I N G C O M P A N I E S B A S E D O N F I R S T- H A L F P R O F I T S

03

ANGLO AMERICAN

After posting a net income of $1.46 billion in last year’s first half, Anglo American reported a disappointing $904 million for the first half of 2015.

$904 MILLION

$882 MILLION

04

GLENCORE

Commodities trader and miner Glencore reported net earnings of $882 million in the first-half of the year, falling 56 percent from the same period in 2014.

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TOP 10

$1.49 BILLION

02

NORILSK NICKEL

Norilsk Nickel has done well in 2015.

The world’s largest mining company of nickel posted first-half net earnings of $1.49 billion, a three percent increase from the previous year.

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October 2015

M I N I N G C O M P A N I E S B A S E D O N F I R S T- H A L F P R O F I T S

01

BHP BILLITON

$4.26 BILLION

Despite claiming the number one spot, BHP Billiton’s profits fell significantly in 2015. The world’s biggest miner saw a 47.4 percent slump in the first-half of 2015, compared to the previous corresponding period, which saw profits reach more than $8.1 billion.

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Sharing A Century Of Knowledge Written by: Nye Longman Produced by: James Pepper

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MINES RESCUE SERVICE LIMITED (MRSL)

The employee owned company has adapted to a changing industry through diversifying revenues and focusing on quality while implementing a solid plan for future growth

M

ines Rescue Service Limited (MRSL) was originally established at the turn of the 20th century to respond to emergencies from the UK mining industry. The company was part of the National Coal Board and later the British Coal Corporation until its privatisation in 1996. Since then it has been able to secure long term operational and financial success by leveraging its expertise to create new revenue streams, driving these gains straight back into the company. This work has also culminated in the company being in a confident position to double its turnover in the next five years.

Aside from its individual on-site activities, the company has six facilities spanning the UK mainland

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October 2015

MINING

MRSL has been able to develop as a tried and trusted operator over the years, branching out from underground mining into providing its services to a large range of different industries

Operations Alongside its unique rescue services, the MRSL provides specialist equipment (some of which has been designed using practical expertise gathered on the job), consultancy and a range of specialised, accredited training courses to a variety of industry sectors, as well as confined spaces training. Aside from its individual on-site activities, the company has six facilities spanning the UK mainland, as well as a number of mobile training rigs. It employs some 140 people across its various operations and last year had a turnover of ÂŁ11.5 million.

MRSL has been able to develop as a tried and trusted operator over the years, branching out from underground mining into providing its services to a large range of different industries, including nuclear, aerospace, manufacturing

140 Number of staff employed by Mines Rescue Service

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MINES RESCUE SERVICE LIMITED (MRSL) and utilities. It also provides services to clients who work in the petrochemical, renewables, chemicals, maritime and food and drink sectors.

Growth MRSL’s Commercial and Operations Director, Andrew Watson, explained that the source of the company’s fortuitous growth actually began when its operating costs could not be covered by its traditional industry, underground coal mines. He said: “The decision was taken to diversify the skills and expertise of the company’s employees into other industrial areas. The strategy was that, as the mining

MRSL also provides rescue cover

Coal Mining Contractors/Consultancy, Project Management & Processing Specialists

Co ntr

act

ing

• Mine development and production • Coal washing and coal handling plant operation and maintenance • Surface mining • Planned preventative maintenance schemes • Strata control solutions, remedial bolting and roadway repair/refurbishment • Infrastructure development, face replacement drivages, installation, production and salvage • Services: ventilation, electrical, mine water pumping and treatment

ent

• Competent persons reports

• Safety and process audits

gem Ma

• Design of ventilation systems, electrical/mechanical infrastructure and systems

jec t

• Mine layout design and planning

na

• Life of mine design

• Mine access, incline drivage, development drivage • Longwall, continuous miner operations and optimisation • Face equipment installation, salvage, maintenance

Pro

Co

nsu lta

ncy

• Feasibility studies

UK’s largest coal producer, mine owner/operator and mining services provider

T. +44 (0)1226 730440 (UK & Europe) www.hsgplc.co.uk

T +91 (0) 11 4212 4100 (India)

hisenquiries@hsgplc.co.uk

MINING

industry declined, we would increase our income from these new sectors of work, bringing with it new “learning opportunities” resulting in even higher individual and team skill levels.

“Key to all of that was the introduction of the Confined Space Regulations at about the same time. We undertake practical, hands-on health and safety training, including fire awareness and first aid training; but the really big thing has been confined spaces training and the provision of specialist teams in high risk areas.”

“We are planning for increasing turnover to some £20 million by 2020, achieved by further expanding the services we provide. We do not compromise on quality and intend to continue to innovate and develop our services. We particularly target all aspects of confined space training, especially the provision of rescue cover for the high risk categorised work. Unfortunately accidents still occur in confined space working being undertaken and awareness of the hazards still needs to be communicated better.”

The focus for MRSL therefore has shifted away from mining (although some mines remain) towards new areas for growth.

Confined space rescue cover has grown to become the largest source of revenue, while the company now provides a range of nationally accredited training courses for those who work in a variety of industries.

He said: “We began by developing our own training courses and providing general services

“We are planning for turnover to be £20 million by 2020, achieved by further expanding the services we provide” – Andrew Watson, Commercial / Operations Director

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MINES RESCUE SERVICE LIMITED (MRSL)

Confined Space Training

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October 2015

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to industry. However, we decided to get ahead of the game and really emphasised quality within everything we do. We helped to establish national occupational standards, working with award bodies, and attained an understanding of how we could create our own standards.”

The company has a history of more than a century of working in the mining industry.

Implementing long standing control measures became particularly valuable when it came to considering alternate revenue sources, since this background could be directly applied to training in any organisation, including the mining industry.

Watson said: “We have traditionally worked closely with the Health and Safety Executive (HSE); we created a range of mining related qualifications in conjunction with them. We identified the vocational route and created standards and qualifications appropriate to mining in order to establish and improve competence.”

“Universities and colleges were no longer providing these courses; there had to be an alternative in place so the HSE set up competence groups. There are 57 job descriptions within an underground coal mine and we developed a national standard for each of these. Everything from a mineworker to the technical side; the mechanics, electricians, supervisor grades, right through to management.”

Having built up a strong business alongside a well-developed range of expertise, MRSL

Key Personnel

Andrew Watson Commercial/Operations Director Andrew Watson has worked in the mining industry for over 40 years , beginning his career as a miner at Barony Colliery in Scotland. He has been an operational mines rescue officer for 35 of these years. He is the Centre Co-ordinator for Mines Rescue Service Ltd, which offers confined space training and assessment to the National Occupational Standard. He is a Fellow the IOM3 and was awarded the Medal for Excellence in 2010. He is now Commercial/ Operations Director.

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MINES RESCUE SERVICE LIMITED (MRSL)

Fire Fighting Training

“There are 57 job descriptions within a coal mine and we developed a national standard for each of these” – Andrew Watson, Commercial/Operations Director

is now also delivering its services to the oil, gas and marine industries. Furthermore, the prospect of growing substantially (and into new territory at that) prompted a rethink into how the company will grow in future. Watson explained: “Bear in mind that while this is an employee owned company, we have changed our approach and are now considering opportunities for investment, demonstrated by the creation of a wind renewable energy training facility at our site in Scotland.”

International standards During preparation for the privatisation of British Coal, Mines Rescue identified that in its new format it would need to adhere to best

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October 2015

MINING

practice standards in the form of the ISO 9001. This became a trend that has shaped MRSL both internally and externally. Since then, it has achieved both the ISO 14001 (for environmental management) and OHSAS 18001 (for health and safety management).

Having been involved in the development of quality training systems for UK industries, the company was then able to use these standards to offer services internationally.

Watson said: “We’ve been to South Africa, China, Ukraine, India and Russia. The Russian government is actually going to present us with an award for the work we have been doing on sharing best practice.”

In short, MRSL, faced with the decline of the industry it previously relied upon for both its service provision and revenue, decided to branch out while still providing the service needed by the mining sector.

By focusing on quality throughout all of its operations, the company has also been able to help define the meaning of safety generally across the country’s industrial sectors.

Watson concluded: “We haven’t undertaken a lot of marketing, but find work via reputation and word of mouth. We don’t have a sales or marketing team; we’ve got recognised skills and expertise. It’s never about selling a product to somebody, it’s mainly about going out and solving a problem for someone.”

Company Information INDUSTRY

Mining HEADQUARTERS

Nottinghamshire, UK FOUNDED

1996 EMPLOYEES

140 REVENUE

£11m PRODUCTS/ SERVICES

Training, Equipment, Rescue Cover, Consultancy

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Zambia’s Fifty-Year Copper Future Written by: John O’Hanlon Produced by: Kiron Chavda

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KONKOLA COPPER MINES PLC

The bold decision was made to go below with the objective of expanding the production of copper ore at the Konkola mine

Following $3 billion of investment by its majority shareholder, Vedanta and from internal resources, Konkola Copper Mines plc (KCM) wants to extend profitable operation for at least half a century: CEO Steven Din tells us how

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October 2015

Z

ambia has been heavily dependent on copper for decades, and its Copperbelt is probably still the best-known deposit.

Today the country is internationally recognised as a premier producer of this product, and is ranked as the world’s eighth lar gest producer of copper. One of the largest mining operations in the country is the Konkola Copper Mines plc (KCM). Indeed KCM is the largest integrated copper producer in Zambia. It is a subsidiary of Vedanta Resources, a company with its roots in India, though now headquartered in London where it is listed on the LSE. KCM produces finished copper in cathode form which is then sold on the London Metal Exchange (LME). “That is what differentiates us” explained

MINING

Steven Din, the company’s CEO. “Many other operations in Zambia don’t take production all the way from the mine to the finished product.”

This was Vedanta’s vision when in November 2004, it became the majority shareholder in KCM, increasing its share to nearly 80 percent in 2008.

Over this period, Vedanta invested close to $3 billion, with part of the financing raised by KCM to realise that vision, installing assets that included a state of the art smelter with a capacity of 311,000 tonnes per annum (tpa) and t hree concentrators (two at the Nchanga mine in Chingola and one at Konkola mine in Chililabombwe) with a combined concentrating capacity of 15.5 million tonnes.

When Steven Din took over the leadership of the mine in May 2014, he faced a much changed market for the mine’s products. It’s well known that there had been a slump in world copper prices, and that many projects were stalled or mothballed. However that is a short-term situation, and with the big investments out of the way, KCM was much better placed than most of its peers.

Din took the long view. “We are building our vision for the next 50-100 years around the Konkola ore body.” With the open pit at Nchanga virtually mined out, the bold decision was made to go below with the objective of expanding the production of copper ore at the Konkola mine from two million tonnes per annum to 7.5 million tonnes per annum by accessing the rich ore body that lies below. To achieve this the company sank

16,000

Number of staff employed

by Konkola Copper Mines

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KONKOLA COPPER MINES PLC

“Last year we mined just under 1.5 million tonnes of ore and this year we expect over 2 million tonnes” – Steven Din, CEO

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October 2015

a new mine shaft to a depth of 1,500 metres, making it the deepest new shaft sinking project in Africa. The Konkola Deep Mine Project (KDMP) started to bring copper ore from its mid-level in 2010 and from the bottom of the shaft in 2014.

Now the deep mine is ramping up to full production, he said. “Last year we mined just under 1.5 million tonnes of ore and this year we expect over 2 million tonnes.” It’s a busy place with 6,000 people working there. Apart from extracting ore, this mine has the distinction of being one of the wettest mines in the world, and every day 350,000 cubic metres of water is pumped out into settlement beds for purification, and then to the Kafue River. This is equivalent to

MINING

the volume of water consumed daily by the 3.5 million populace of Zambia’s capital city Lusaka.

The turnaround of KCM from a high volume, low cost mining operation to a long term sustainable business is well under way, with a new management team in place. Knowing the surface deposits were almost exhausted, when Vedanta came to Zambia 10 years ago it had the foresight to assess the Konkola ore body for the next 50100 years, building the assets and investing for the future, Din said. “The main thing we have been able to achieve over the past year is that we have been able to take away some of the complexity associated with moving from the legacy operation into a new construction and operation phase.”

Konkola’s Deeps headgear and conveyor. The turnaround of KCM from a high volume, low cost mining operation to a sustainable business is well underway

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KCM’s Nchanga smelter, part of its operations as the largest integrated copper producer in Zambia

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October 2015

Under his watch, three distinct business units have been set up. One is the Konkola mine and its surface facilities (the six million tonne capacity concentrator was built to accompany the 1.5 kilometre deep shaft and the backfill plant unit).

Another is the new smelter at Nchanga, together with the Nkana refinery. “We decided this should be operated independently: to the extent that we are unable to fill the smelter with ore mined from our own captive mines we will buy concentrate of appropriate grades on the market,� he explained.

The third unit comprises the Nchanga operations, including a profitable reclamation business. The cheapest copper KCM is currently producing is from the old tailings, in which there remains a significant amount of metal.

MINING

This is being extracted using a leach process, solvent extraction and electrowinning.

Each of those businesses thus has a different profile. “By setting them up separately under dedicated leadership, we have given them a lot of discipline and focus into how they should be managed today and into the future.”

So most of his first year was spent in setting this new direction and aligning 16,000 employees into a new vision. The next phase, he said, will be one of systematisation, through IT and through human capital. “We are very much focused at present on our people, identifying talent, getting the right talent in the right place, the right skills in the key areas and making sure people are communicated to effectively and rewarded as they expect, both in terms of pay and in career development.”

Energy is a big issue in the Copperbelt, where all the operators struggle to cope with erratic, and increasingly expensive, supply from an over-stretched national grid. Now there is a suggestion that load shedding, planned outages, will be introduced. KCM has a very large (220MW) energy requirement to keep its mining, smelting, beneficiation and dewatering operations going continuously, and is the largest power user in the country. It has diesel generation, 24MW at Konkola mine in Chililabombwe and a further 10MW at Nchanga, that can be brought into use if there’s a power cut. But backup power is expensive power.

Vedanta’s portfolio includes 9,000 MW of

“We have been able to take away some of the complexity associated with moving from the legacy operation into a new construction and operation phase” – Steven Din, CEO

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45

KONKOLA COPPER MINES PLC

Konkola’s new East mill concentrator

baseload generation in India, so it made sense to start looking at the possibility of utilising coal deposits in the area. It might make good sense to build a power station that would not only meet its own needs going forward but also generate a surplus that could be offtaken by the national power authority ZESCO. In 2013 KCM started exploration in Sinazongwe near the Zimbabwe border. If the right quantity and quality is established it hopes to build a power station to generate as much as 300 megawatts and transmit it on the network that currently feeds the Copperbelt from the Kariba generation on the Zambezi.

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MINING

A coal fired power station would benefit the whole country, however in its own backyard KCM is very much more than just a large employer and consumer of goods and services. It supports no fewer than two fully equipped hospitals, eight township clinics and eight mine clinics reaching out to over 63,000 people. That’s in addition to the education system it runs; primary and secondary schools at both Chililabombwe and Chingola, between them serving 2,200 pupils.

Steven Din was very proud of KCM’s community work. “We have upgraded the secondary schools to A-level, because the Zambian education system normally relies on universities to deal with that level of preparation in a foundation course. We wanted to give our students the

Konkola’s concentrator. In 2013 KCM started exploration in Sinazongwe, near the Zimbabwe boarder

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KONKOLA COPPER MINES PLC

Trucking is nowhere as efficient as rail for bulk transport

48

October 2015

opportunity to go abroad for tertiary education, and for that they need an entry qualification that’s recognised internationally. We have previously sent 42 students to India, South Africa or Namibia studying mainly engineering and medicine.”

This energetic CEO is now finding time to revive a former Vedanta policy that has stagnated – getting group companies to second some of their top trainers to Zambia to assist with technical training. “We also want to send Zambians out to our Indian operations.”

What else would he like to do? Well he’s working with government and Zambia Railways Limited (ZRL) to reintroduce the benefits of the old inter-mine system that used to

MINING

link the mines and carry ore to the coast at Dar es Salaam. Trucking is nowhere near as efficient as rail for bulk transport.

But his number one priority is safety. Things were not going well, so following a number of fatalities, in November last year KCM launched The Chachilamo safety initiative. Chachilamo means ‘enough is enough,’ in the local language and it aims to entrench a culture of safety awareness and to introduce practical safety standards to the company’s 16,000 employees. “That really inspired the workforce,” he enthused. “It includes all the contractors and the Mines Safety Department too, and we decided to make it a highly visual campaign.”

Chachilamo was featured on TV, to popular acclaim, but he still wasn’t satisfied. “We have 100 people working in safety already, but we said we need to take 20 of the best people out of the business and turn them into Chachilamo champions; that was difficult, precisely because they were the best guys!” The Chachilamo champions were taught mentoring skills and set about spreading the safety message in the mines. Shortly, however, they came back and said that teams would be more effective than individuals, so each was given a further five people. Now there are 120 safety ‘evangelists’ throughout the business, workplace mentoring as they do their regular jobs. It has, he says with satisfaction, made a big difference to the company’s safety record this year.

Company Information INDUSTRY

Copper Mining HEADQUARTERS

Chingola, Zambia FOUNDED

1957 EMPLOYEES

16,000 REVENUE

Not Disclosed PRODUCTS/ SERVICES Reclamation, Refining, Smelting, Exploration

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Lynas Corporation The Comeback Kid

As an integrated source of rare earths from mine to customer, Lynas has experienced highs, lows and everything in between. With a new CEO at the helm, the company is now positioned for long-term success.

Written by: Robert Spence

Produced by: Jeffrey Bailey

51

C O M PA N Y N A M E

Bagging plant at Mt Weld

F

or Lynas Corporation, rare earth elements continue to create huge opportunity, and challenge.

The Australian-based company is putting the finishing touches on a considerable corporate turnaround, traveling a tough road of repositioning itself as a major player in the rare earths market, which has been historically dominated by China.

Driving the turnaround is Amanda Lacaze, appointed CEO in June 2014 . With Lacaze at the helm, 52 October 2015

Lynas is poised for a breakout year.

Back story Originally formed in 1983, Lynas has gone through a whirlwind of changes in recent years. The company undertook its first mining campaign in 2008, developing the Mount Weld mine in Western Australia, one of the largest and highest-grade known deposits of rare earths in the world. “In 2010, rare earths looked like a runaway market with the price spiking at more than six times

SECTOR

the current prices,” said Lacaze.

“Lynas raised significant funding and accelerated construction of the LAMP facility in Malaysia seeking to take advantage of this boom.”

According to Lacaze, when the rare earths bubble burst in late 2011, the company’s corporate structure and style of operations weren’t adjusted to the new market settings. In addition, ramp up of production at the LAMP facility was delayed by both operating challenges and legal challenges.

The result by the middle of last

year was a business that had consumed a huge amount of debt and equity funding in developing both the mine and the larges processing plant, but was yet to show a return on that investment.

“When I joined, production was unstable. We had high costs and were very cash consumptive. We had to reset our cost base and improve our operating performance while dealing with a market that was significantly less profitable than before.” w w w. l y n a s c o r p . c o m

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LY N A S C O R P O R AT I O N

MINING GLOBAL

Rebirth of Lynas Appointed CEO in June 2014, Lacaze’s first plan of action was to establish a strategic framework to put its financial house in order.

“When I first started, Lynas had corporate offices in Sydney, KL and Perth as well as the facilities in Mt Weld and Kuantan. We decided it was best to ensure our people were co-located at our production facilities with a small number in Perth. This improved teaming and business efficiency and also deliver lower costs,” said Lacaze. “Shutting down some of the offices proved significant savings for us.”

Another critical component in the turnaround was reducing the company’s headcount.

According to Lacaze, the unpopular move can actually spark improvement.

SUPPLIER PROFILE

Amanda Lacaze, CEO and Managing Director

SIBELCO GROUP

Founded in 1872, the Sibelco Group has grown into a multinational business with more than 245 mining and production facilities worldwide. In 2012, Sibelco acquired QMAG Limited, one of the world’s most trusted producers of high grade Caustic Calcined Magnesia (CCM).

Sibelco has partnered with Lynas from early 2014 to provide our Caustic Calcined Magnesia (CCM) and is helping Lynas effectively stabilise their production process and maximise RE recoveries. At Sibelco we pride ourselves on our capabilities in operations management, process engineering and research and development. We have a team of highly qualified and experienced technical experts in the hydrometallurgical industry, who work closely with Lynas staff to improve process efficiency and increase the value in use of our magnesia.

Sibelco has a global portfolio of customers and our magnesia products are sold and delivered to over 30 countries worldwide. We provide tailored logistics solutions through our global network of service providers and the global Sibelco presence. Through our QMAG product range, Sibelco Australia is well positioned to deliver further growth and support our magnesia customers long into the future.

Website: www.sibelco.com.au w w w. l y n a s c o r p . c o m

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LY N A S C O R P O R AT I O N

A shift supervisor turns on pumps at LAMP 56 October 2015

MINING GLOBAL

VP of Production Kam Leung stands next to concentrate ready for shipment to Malaysia

“My experience is there are many times when reducing your headcount improves your results.

When you start, people find it counterintuitive; however, when you have many people working together and they’re not fully utilized, they become accustomed to not doing their best work every day. It’s also not at all satisfying for staff to feel they don’t have productive work to do,” Lacaze said.

“We worked really hard to create a culture of performance. Quality of action is something we focus on and I’m a big believer that there is no substitute for hard work.”

With the framework for a concentrated workforce in place, production is now profitable and sales revenues continue to grow.

“As CEO, one of the most important aspects of my job is getting everyone in the Lynas team to do the best job possible,” Lacaze said.

As a sign of the good times to come, Lynas recently announced a restructure and debt agreement with its 2 lenders. The deal, according to Lacaze, is a natural next step for the company.

“We’ve come a long way: We’ve fixed production issues, we’ve improved engagement with our w w w. l y n a s c o r p . c o m

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LY N A S C O R P O R AT I O N

MINING GLOBAL

customers, and now this new debt restructure puts us in a position to complete the turnaround.”

Driving the change For Lacaze and her team, diversity is a large contributing factor to drive positive change.

“My executive team comprises three women and 6 men. We have Australians, Malaysians and others from various European countries.

It’s a good combination with varying backgrounds,” said Lacaze. “I want diversity in our company whether it’s gender, experience, age, ethnicity. It is my experience that

SUPPLIER PROFILE

varied experience leads to richer discussions on issues and new and different ways to address business challenges.”

As surprising as it sounds, Lacaze had no prior experience in the mining industry, having spent the majority of her career focused on marketing.

“Over the past 15 years, I have primarily worked in the IT&T industry.

When I took this job many people in the industry wondered how I would run a rare earths business.

My approach is that I knew how to manage performance, and I knew how to run a profitable business. I

FM GLOBAL LOGISTICS PTY LTD

Employees: 13 Established: 1st August, 2005 Management: • Brad O’Donnell – Managing Director • Mike Fairnie – Business Development Manager • Tania Stamboulakis – Project Manager Website: www.fmgloballogistics.com.au

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LY N A S C O R P O R AT I O N

Administration staff at Mt Weld

A shift supervisor instructs a tunnel furnace worker

60 October 2015

MINING GLOBAL

did need to learn about rare earths – and I made it my business to learn as much as I could from the experts in our company and at our business partners as quickly as possible,” said Lacaze.

Company Information INDUSTRY

Setting the tone For Lacaze, the job of the CEO is to cultivate the energy and spirit of the organization.

“I update all my staff every quarter on all important aspects of business performance. I do this in small groups so we can talk in detail and I can be sure that everyone knows what’s going on with the business and we build trust in each other.

People in this organization are working harder than they’ve ever done in their lives and I want them to be successful,” said Lacaze.

“The result is we bring the sum total of our experience from all those areas and therefore we’re able to have rich conversation.”

Lacaze remains very positive about the future for rare earths and for Lynas.

“Rare earth minerals are used extensively in growing markets including environmentally significant segments such as energy efficient cars and the new technology in wind turbines,” said Lacaze. “ Lynas offers users environmental assurance from mine to finished product and this will become increasingly important as the market grows.”

With the right pieces in place, Lynas Corporation is now poised to become a fully-integrated provider of rare earths for the long-term.

Mining Global HEADQUARTERS

Level 1, 7 Tully Road East Perth Western Australia Australia, 6004 FOUNDED

1983 EMPLOYEES

650

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Jetcrete Strength from within

Even after growing into the largest specialised shotcrete contractor in Australia, Jetcrete stays true to its small family business values Written by: Eric Harding Produced by: Jeffrey Bailey

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JETCRETE

J

etcrete has risen up the ranks over the years to become Australia’s largest shotcrete contractor in Australia, but not much has changed within the company.

Despite growing to over 300 employees during its 35 years of existence, Jetcrete is still run like a small, family-owned business that sticks to its core values of honesty, safety and completing tasks in a safe and cost-effective manner.

The company’s system of promoting from within ensures the management team at the top were once the workers It’s one of the main reasons Jetcrete has maintained its 64

October 2015

core values and continuity within its workforce throughout its almost four-decade history.

“Everyone all senior people in the organisation have come from the ground level up,” said Jetcrete operations manager Scott Johnston.

“The managers have a good understanding of what it’s like to be at the forefront, doing the most difficult of tasks. We’ve all had our hands in it, getting dirty at some stage.”

Jetcrete rewards its employees through promotion, and several staff members have been with the company for over 10 years.

The majority of Jetcrete’s senior

MINING

employees started off as entry level workers before working their way up to supervising and managing one of Jetcrete’s many sites or one of its global offices, and Johnston acknowledged that job satisfaction is a big factor in retaining personnel.

“The key to any successful company is you really want to maintain your key personnel,” said Johnston, who is in his fourteenth year at Jetcrete.

“We try our best to do that and it’s working for us.”

Improving on Excellence A company that provides the unique service of shotcrete in several major mining operations, Jetcrete employs the latest techniques and specially adapted placement materials to maintain best industry practice, to ensure a totally

“Everyone from general manager and all senior people in the organisation have come from the ground level up.”

– Scott Johnston, Jetcrete operations manager

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FOR TOUGH JOBS UNDERGROUND Expertise in customer processes: > Ground Support - Lateral & Shaft · Sprayed concrete · Scaling · Surface support liner · Ground consolidation · Bolting > > > > > > > > > >

Explosives Charging Equipment Life Cycle Management Groundwater Control Services Installations Backfill Caving Hangup Removal TBM Operation Lining Waterproofing Life Time Care

Normet Asia-Pacific Pty Ltd. 10 Ashwin Parade | Torrensville, SA 5031 | Australia Tel. +61 8 8152 7700 | Fax +61 8 8152 0667

www.normet.com

JETCRETE

MINING

safe environment, and to minimise disruption to the ongoing mining operations.

Shotcrete, a special type of concrete, is sprayed through a hose at high velocity onto a surface as a construction technique.

Working hand-in-hand with its major fibre supplier Sika has seen Jetcrete be able to offer lower cost alternates to it clients for the production of Fibrecrete. Jetcrete supplies shotcrete services to mines and several different companies in Australia. Since being introduced and widely accepted in the mining industry, shotcrete allows for quicker advancement and ground preparation to complete projects.

But as a leader in continuous improvement, Jetcrete constantly tests new products to increase efficiency. Some of Jetcrete’s

SUPPLIER PROFILE

NORMET ASIA PACIFIC PTY LTD

NORMET Group is among the Market Leaders, with 50 years of experience in the development, production and sales of specialised equipment and vehicles for underground mining and tunnel construction. We pride ourselves in providing advanced solutions and developing strong working partnerships with customers such as Bynecut and Jetcrete.

Normet Australia is developing rapidly and strengthening the positioning of our products and services to better meet the needs of our partners. We have also strengthened our management team with the recent commencement of a new Managing Director – Neil Fitzmaurice together with a new Business Manager, Ground Control and Construction Technologies – John Gelson.

To further demonstrate our commitment to the Australian market, Normet Australia recently inaugurated a new facility in Sydney which houses state-of-the-art local production for a range of products for Sprayed Concrete, Ground Control and Injection, Concrete Admixtures, w w w. j e t c r e t e . c o m . a u

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JETCRETE innovations include the teleremote application of shaft lining it incorporated in early 2000 as well as the introduction of hydro-scaling to the Australian Mining industry Other forms of new technology Jetcrete plans to introduce include a new mapping system with a scanner that will take thousands of points, download the data to an on-board computer and map the thickness for clients. The company has already done a few preliminary trials with this mapping system, and looks to launch it within the next couple weeks.

In addition, Jetcrete introduced two 3D simulators last year that it sends from site to site for training purposes. Employees must do a number of training modules to maintain their status and make sure they’re up to date on the latest improvements to this advanced technology.

This training also helps with new employees, allowing them to gain confidence using the machinery the company uses underground without having to put them in a real time situation.

“We try to be a leader and not a follower,” said Johnston. “Some

MINING

things work and some don’t, but if you don’t try it and you’re not looking to improve on the past, you won’t grow as a company and you’ll fall behind.

If you’re just happy with what you’ve got, someone else will come in and go past you.

“These are things we brought to the industry so we could do the work on a safer and more efficient basis. Wherever we can remove direct human interaction and error from a task and have it performed by someone on a machine or on controls working remotely, we’re all for it.”

Working Smarter Jetcrete uses several different types of equipment in its projects, working with Normet as its top supplier for underground mining equipment, as well as a number of units from MacLean Engineering.

While the company has worked on several different projects throughout Australia, Johnston believes each has a high degree of importance in an industry that has been slowed from both a contractor and principal mining point of view.

It also makes Jetcete’s new w w w. j e t c r e t e . c o m . a u

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JETCRETE

innovations such as the mapping system that much more vital for efficient production.

“Everyone wants to tighten their belt buckles, so to speak, to try to save a dollar,” said Johnston. “If we can review our efficiency and turn it into dollars, we can pass those dollars on to our clients. Obviously, 70

October 2015

it gives us a competitive edge over other standard forms of ground support, as well as our major competitors as service providers.”

As the company keeps safety and quality at its forefront, Jetcrete has a number of procedures, inspections and audits in place. Jetcrete completes independent safety

MINING

audits twice a year and looks to remedy any shortfalls identified to ensure that the company is up to date with the latest industry and Australian standards.

“Our whole Safety Management System is reviewed on an ongoing basis to make sure there aren’t any shortfalls,” said Johnston. “This has enabled us to attain Australian and ISO quality standards.”

Future Goals With a home office in Perth as well as other offices throughout Australia, and its joint ventures for international expansion in North America, Jetcrete is among the industry’s leaders in diversification.

Johnston said when he began Jetcrete North America in 2009, it was one of the worst times to start a business. Despite this, Jetcrete was able to survive its expansion in the United States and Canada and add more business to its portfolio.

“The mining industry goes in cycles,” Johnston said. “Obviously, it all comes down to supply and demand.”

Jetcrete is tied into several long-term contracts in Australia, and there are some major civil works and oil and gas projects looming that the company is considering for the future.

“Business in Australia is about maintaining what you’ve got, and making the most of your opportunities when they come along,” said Johnston.

Company Information INDUSTRY

Mining HEADQUARTERS

1 George Wiencke Drive Perth, WA Australia, 6105 FOUNDED

1980 EMPLOYEES

250 REVENUE

$100 million

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Compañía Minera Pangea continues to create synergies to local companies and entrepreneurs.

Written by: Mateo Rafael Tablado, Associate Editor Interview by: Rebecca Castrejon, Editor Produced by: Taybele Piven, Director of Operations for WDM Group-LATAM Interviewee: Euridice Gonzalez, Country Manager for Cía. Minera Pangea / McEwen Mining (Mexico)

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o empower

C O M PA Ñ Í A M I N E R A PA N G E A

S

inaloa in Mexico, is known for its rich agriculture and farming, but recently, the mining sector has gained prominence in this State due to Cia. Minera Pangea, a subsidiary of McEwen Mining, whose local operation includes the productive mining site “El Gallo” in phases II and I. Before being acquired by McEwen, Pangea had already exploited the project “El Magistral” from 2002 to 2006.

El Gallo Project in phases I and II (Sinaloa, Mexico)

By 2007, Euridice Gonzalez was appointed country manager for McEwen Mining Mexico, standing as one of the few women in mining.

Being a mining pioneer in Sinaloa, has not been easy to Minera Pangea. To change the overall view of the sector, the company -through Gonzalez- founded CONMIMEX (Mining Business Council of Mexico), as a support institution for small, medium and large-scale enterprises.

Since they became affiliates of the international corporation McEwen Mining, Minera Pangea has noted important improvements in the development of El Gallo and its production of gold and silver. The conglomerate has invested around US$200 million in recent years, which has benefited the exploitation of the area with scanning technology. These upgrades in machinery have optimized costs, time and

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October 2015

L AT I N A M E R I C A

processes, certifying Minera Pangea as a clean industry, for its environmental care to the treatment of soil and the efficient use of natural resources.

El Gallo complex has exceeded expectations, generating more than 40 million ounces of silver and 600,000 ounces of gold for its reserves. By the end of 2014, the total production, together with other projects, resulted in 84,363 ounces of gold and more than 3 million ounces of silver.

This year, Pangea expects to surpass predictions, generating 96,500 ounces of gold and 3.12 million ounces of silver by the end of 2015.

National entrepreneurship “We had a very pleasant surprise because the

State-of-the-art equipment for exploration

Key People

Euridice Gonzalez Country Manager of McEwen Mining Mexico Before her foray as the first highlevel executive female in mining in Mexico, Gonzalez served as an English teacher in both basic and university level education.

Believing in constant improvement, she is now studying Law at Tec de Monterrey, and has completed management programs such as Innovation in Economic Development at John F. Kennedy School of Government at Harvard University, and COTE (Certificate for Overseas Teachers of English) at the University of Cambridge (England).

Her experience in the mining industry started when she was an executive assistant in the company, shining so that McEwen Mining considered her as the right person to develop its operations in Mexico, naming Gonzalez country manager. She is also president and founder of the Mining Business Council of Mexico, bringing together various entities of all sizes.

Gonzalez was recently named Manager of Global Corporate Social Responsibility to McEwen Mining.

Recientemente fue nombrada Gerente de Responsabilidad Social Corporativa a nivel global para McEwen Mining.

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TA C OC MHPA I-S Ñ ÍM A ÉM XIIN CE OR A PA N G E A

Aerial view of Pangea’s mining operations

mine resulted more splendid than expected,” said Euridice Gonzalez, Country Manager for McEwen Mining Mexico. Gonzalez is a certified English teacher by COTE, a diploma given by the University of Cambridge (England).

Information generated by new sensors and mining equipment

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October 2015

Her foray into the mining sector has been significant. She initially became an administrative assistant, carrying out tasks that allowed her to developed directive skills. Now, as country manager for McEwen Mining Mexico, Gonzalez has faced unusual challenges, surpassing them by building strong ties with the communities were they operate.

L AT I N A M E R I C A

Technology for mineral exploration

To integrate common interests, Gonzalez cofounded CONMIMEX, a representative association in charge of improving the mining sector in Mexico. More recently, McEwen Mining appointed Euridice as Manager of Corporate Social Responsibility worldwide, after her successful work in this aspect in Mexico.

Investments in machinery to optimize

“We have taught people to develop their capabilities, our training and programs have been constant,� said the executive, and female pioneer in mining in Mexico.

costs and productivity

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C O M PA Ă‘ Ă? A M I N E R A PA N G E A

Surpassing expectations Based on studies and explorations, the company predicted a productivity of 50,000 gold ounces for El Gallo mine in Sinaloa; and the results have been so far above these expectations. Forecast for 2015 rose to 62,000 ounces of gold.

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L AT I N A M E R I C A

These unexpected figures did not alter production plans for the mine, allowing it to work on other aspects of the process. “After reaching this production goal, we were able to use the rest of our time in maintenance, restructure projects and analysis of exploration information,� explained Gonzalez. w w w. m c e w e n m i n i n g . c o m

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“As companies we must join forces to keep looking for new strategies to strengthen the industry in Mexico” – Euridice Gonzalez, Country Manager of McEwen Mining Mexico

Exploration efforts One of Pangea’s most important activities is the tireless effort to explore in current mining sites. McEwen Mining has allocated considerable resources for this cause and for its positive turnaround. “We look for all possible strategies that are available to us and for this area to continue its course,” said Gonzalez.

Finished product:

SUPPLIERS: Upgrading the mining sector

Minera Pangea predicts an output of more than 50,000 ounces in the El Gallo gold mine in Sinaloa

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October 2015

The mining operation depends on the use of current technology and industrial innovations for its success, and always taking into account key factors such as security and productivity. Minera Pangea benefits from those companies providing technology, these suppliers have presence in

L AT I N A M E R I C A

Sinaloa, Mexico. “They keep launching cuttingedge upgrades for the mining industry,” said Gonzalez.

Balancing automation and labor In today’s world, there is a special value of being capable in transmitting and obtaining data through the use of technology in the mining industry, a precision task that can hardly be done by the human eye. However, Minera Pangea approaches this issue through a balance between technology and labor, considering that the information generated by new sensors and equipment is evaluated by the miner, who has experience, judgment and the right knowledge to interpret this information, choosing what changes to accept under the conditions which the machine operates.

Euridice Gonzáles, county manager of McEwen Mining Mexico

“The employee is the one who analyzes this information and will be responsible for the modification or restructuration of parameters used in computers,” said the country manager.

CONMIMEX: Mexico’s collaboration platform CONMIMEX is one of the top local initiatives Euridice Gonzalez has introduced and shaped in Sinaloa. Entitled “Consejo Minero Empresarial”,

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C O M PA Ñ Í A M I N E R A PA N G E A

CONMIMEX: Mining association that integrates entrepreneurs and other related small companies. Based in Sinaloa, Mexico.

this association brings together around 17 mining companies, and other small, medium and large entities, and even independent professionals and State authorities. CONMIMEX has established a continuous dialogue with the government to work together in improving the industrial sector and institutions. For example, they are promoting the participation of suppliers to train technicians on the use of new technologies and machinery. In the education aspect, they set up an agreement with the Technical Training Institute of Sinaloa -ICATSIN- so that they can specialize and certify miners and prepare future professionals.

Sinaloa’s government signed an agreement with the association to facilitate the creation of a mining cluster, as well as to provide more security guarantees and loans to small players in the industry.

CONMIMEX has achieved many success stories in just two years of operation. “Every member adds up our efforts and resources,” said Gonzalez.

Social initiatives Minera Pangea has endeavored to obtain resources to provide continuity to their social responsibility activities. The company recently joined the Mexican Philanthropy Center and

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the Global Reporting Initiative measurement, so that the efforts in this regard attend welldocumented necessities.

Mine El Gallo

“We have been in the area for thirteen years, but this year we decided to formally structure the work we are doing in the community,” explained the executive.

FUTURE: exploration projects and productivity The production target of 62,000 ounces of gold that Minera Pangea proposed this year will change during 2016. The company is planning to develop an exploration pit that was recently authorized after verifying its environmental impact. Additionally, Pangea will be working on extension pits located in the mining site Sagrado Corazón and Lupita.

On the other hand, McEwen Mining has confidence in a future rise of the price of gold, and there is a strong desire to focus McEwen Mining Mexico’s efforts, while continuing to join forces with other companies in mining.

“As companies we must join forces to keep looking for new strategies to strengthen the industry in Mexico”, concluded Gonzalez.

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“We must continue working responsibly to continue growing our industry” – Eurídice González, Country Manager de McEwen Mining México

Company Information NAME

Compañia Minera Pangea INDUSTRY

Mining HEADQUARTERS

Guamuchil, Sinaloa, Mexico FOUNDED

2007 (acquisition by McEwen Mining) EMPLOYEES

350 REVENUE

US $120 million WEBSITE

www.mcewenmining.com

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