First Gold Poured from Frog's Leg UG Ore (Australia/Oceania)
La Mancha Resources and its Australian joint-venture partner Dioro Exploration reported on May 13 that the first gold had been poured from ore mined underground at their Frog’s Leg project near Kalgoorlie, Western Australia. The ore was processed at Dioro’s 1.2-million-mt/y Jubilee mill south of Kalgoorlie. The Frog's Leg underground project is based on extensions of ore mined from an open-pit that produced 116,600 oz of gold during 2004–2005. Underground access is via a decline from the open-pit.
La Mancha is 51% owner and operator of the Frog’s Leg project; the remaining interest is owned by Dioro. The underground Frog’s Leg mine is forecast to produce an average of 83,000 oz/y of gold over the next seven years, based on reserves of 3.65 million mt grading 5.29 g/mt of gold. This reserve and the related mining plan do not take into account an additional estimated 267,000 oz of resources announced in March 2008. Total measured and indicated resources at the project now stand at 990,000 oz. Mine production at full capacity will average 545,000 mt/y. Capital expenditure to develop the project is budgeted at just over A$71 million.
The initial gold pour from Frog’s Leg ore was accomplished two months ahead of the schedule announced by La Mancha in August 2007, when the decision was taken to proceed with development of the mine. As of mid-May 2008, decline development totaled 3,000 m, and development was proceeding on three horizontal mining levels. A third drill jumbo had been commissioned to increase underground development rates, and a second 50-mt underground truck was increasing haulage capacity. Wherever the mineralization has been exposed to date, orebody widths and grades have been in accordance with resource model predictions.
The Frog’s Leg mine is located 25 km west of Kalgoorlie in the southern part of the Kundana gold field. Production is primarily from steeply dipping quartz lodes. Mining is by longhole open stoping with fill. The high in situ stress environment and the competent rock quality result in a seismically active mining environment. This seismicity risk is being minimized by adopting a ‘bottom up’ mining sequence/retreat front, which systematically pushes the stress field and requires the completion of most of the pre-mining development prior to stope extraction.
La Mancha Resources is a Canadian company based in Montreal and listed on the Toronto Stock Exchange. In addition to Frog’s Leg, the company is 45.9% owner and operator of the Ity gold mine in Côte d’Ivoire, which is expected to produce 24,600 oz attributable to La Mancha during 2008, and 40% owner and operator of the Hassaï gold mine in Sudan, which is expected to produce 40,000 oz attributable to La Mancha during 2008.
Dioro Exploration acquired Harmony Gold's South Kalgoorlie operations, including the Jubilee mill, in 2007. Production from these South Kalgoorlie mines totaled 80,000 oz in 2007, and reserves are sufficient to maintain that production rate for three years. The project’s measured and indicated resource inventory totals 1.55 million oz. Dioro also has an extensive gold exploration land package and interests in uranium exploration projects in Western Australia.
Moly Mines Ltd., owner of the Spinifex Ridge polymetallic deposit located in the East Pilbara district of Western Australia, has awarded an Engineering, Procurement and Construction Management (EPCM) contract to WorleyParsons for construction of the 20-million-mt/y project’s processing plant and related infrastructure.
The estimated value of the reimbursable contract is A$100 million and is based on the project proceeding as currently planned, including the company finalizing its project financing arrangements. According to Moly Mines, the contract for the construction of the project concentrator formalizes the delivery structure and contracting approach for the project. The contract includes an incentive-based compensation scheme that will reward WorleyParsons for meeting key project milestones through to the project’s scheduled practical completion stage. The milestones are based on performance in key areas including safety, scheduling, commitments, budget and cost. WorleyParsons’ association with the project extends back to the initial pre-feasibility study work that commenced in 2005.
The project’s Definitive Feasibility Study, released in September 2007, envisages the deposit will be mined by conventional large-scale open-pit mining methods. An initial 10-year mine life would allow exploitation of approximately 42% of the known resource, with the remainder being available for further development. The initial pit, by the end of the 10-year period, would be approximately 400-m deep with surface dimensions of 1,100 x 1,250 m.
The proposed processing plant will employ two-stage crushing of ROM ore, followed by a High Pressure Grinding Roll and primary ball milling circuit. Molybdenum and copper will be recovered by flotation into a bulk concentrate. Molybdenum will be separated by copper depression and further flotation.
The molybdenum and copper streams will then be treated by separate regrinding and cleaning processes to produce final saleable molybdenum and copper concentrates.
Frontier Assembles Benkala Copper Project Study Team - Asia
Frontier Mining has appointed a technical consultancy team led by Aker Kvaerner Chile S.A. to complete the conceptual study for its Benkala copper porphyry deposit in northwestern Kazakhstan. Frontier acquired a 50% stake in the project from Coville Intercorp Ltd. in November 2007 for $21 million.
The study, according to London, U.K.-based Frontier, will provide a preliminary evaluation of the various trade-off options for development of the project, and will form the basis for a pre-feasibility study that will begin in the second quarter of 2008.
Aker Kvaerner will act as study author to synthesize underlying study components, and evaluate the economics of various mining, processing, and infrastructure options for the Project; NCL Ingenería y Construcción S.A., an international mineral consultancy firm based in Chile, with substantial experience in large copper porphyry projects, will be responsible for mine planning and optimization studies, and; metals economics and price forecasting firm Brook Hunt will provide insight on copper marketing options, including analysis and outlook for the local copper concentrates market.
The Benkala project is focused on a significant porphyry copper deposit discovered in the late 1960s in the Urals gold/copper ore belt, northeast of Aktobe Oblast and 100 km southeast of the Zhetikara Mountains, an area close to the Russian border with a long regional mining history. The district already hosts a developed infrastructure, including a main line railway, an all-weather highway and power supply to the site, according to Frontier.
Harmony Looks at Additional Gold Recovery from Tailings Dams - Africa
Harmony Gold Mining is investigating the feasibility of re-mining old tailings dams at its operations in the Welkom area in South Africa, with the intent of reprocessing the tailings to extract gold and consolidate the residue tailings from the processing plant onto three tailings facilities.
Nine old tailings dams in the Welkom area are being considered as part of this project. The proposed operations would process about 240 million mt of tailings from the dams. In addition to re-mining of the dams, other principal elements of the project would include installing pipelines to supply water to the re-mining areas, and to transport the slurry to the processing plant; recovering gold from the slurry at the existing St. Helena processing plant; and installing additional pipelines to supply water to the processing plant and to transport tailings residue from the processing plant to tailings deposition facilities.
Harmony CEO Graham Briggs said, "The re-mining of tailings presents an ideal opportunity to consolidate tailings facilities spread across the region into three tailings facilities. This will allow for better management of the facilities and the implementation of stricter control on environmental management, which earlier facilities may not have taken into account during design."
The company noted that the main focus of the project is on gold extraction, although potential extraction of uranium also is being assessed.
The St. Helena processing plant, located southwest of Welkom, was mothballed almost three years ago and could be brought into production again, according to Harmony. It may be expanded to allow for the treatment of the required volumes of slurry.
Several regulatory processes are being conducted, including an Environmental Impact assessment. Should the re-mining project be approved by regulatory authorities, Harmony expects construction to begin late in 2008. Harmony’s R41-million ($5.4-million) Phoenix tailings project, near Virginia, was successful enough to warrant an upgrade to process 500,000 mt/month, and the company said it anticipates that the St. Helena plant would also be a profitable business, although capital and working cost estimates were yet to be finalized.
The company also announced that it expects cost-cutting measures instituted in the latter half of 2007 to pay off in 2008. Among these measures were the termination of 2,827 external contract employees, voluntary retrenchments and attrition involving another 2,123 employees, and transfers of almost 5,000 workers to more efficient shafts. The transfers, according to the company, involved mainly service staff from Randfontein central offices and from nonproduction to production areas. Harmony also placed its St. Helena No. 4 and No. 8 shafts on care and maintenance and redeployed 650 workers from those sites to other operations.
Rio Tinto to Spend $2.42B on New Pilbara Mines, Okays Study of Hope Downs Expansion - Australia/Oceania
In a burst of activity during the final weeks of 2007 and the early days of 2008, Rio Tinto announced plans to make significant additional investments in its iron ore export capacity in the Pilbara region of Western Australia, with the approval of the new Mesa A/Warramboo mine in the Robe Valley and Brockman 4 mine near Tom Price; as well as approval of a feasibility study to expand the Hope Downs 4 project. In addition, the company added 3 billion tons of iron ore to its Pilbara resource base, and disclosed plans to spend at least $315 million on new ore carriers to bolster its transportation capabilities.
The two new mines being planned, at a total cost of $2.42 billion, are scheduled to begin production in 2010. Sam Walsh, chief executive of Rio Tinto Iron Ore, said the new mines were integral to the Pilbara production platform underpinning Rio Tinto’s rapid expansion of its global network of assets. "Brockman 4 will bring on a new, high-volume long-life source of Brockman ore, a key component of the Pilbara Blend product successfully introduced to the market in July this year. Likewise, our Robe Valley pisolite product has consistently proved to be competitively attractive for our customers."
The Mesa A/Warramboo mine, about 50 km from Pannawonica, will have an initial production of 20 million mt/y, increasing to 25 million mt/y by 2011.
Donlin Creek Drill Results Favorable, But Project Cost Will Increase
NovaGold Resources Inc. in mid-December released final drill results from the 2006 Donlin Creek infill drill program and the majority of results from the 2007 program, and said the drill data continue to indicate resource expansion potential beyond the 2006 Preliminary Economic Assessment pit limits. These drill results, according to NovaGold, will be included in a resource update and a final feasibility study for the project, and are expected to convert a significant amount of the previously reported inferred resources to the measured and indicated category.
However, a news service report in mid-January indicated that overall project costs for Donlin Creek could increase significantly. According to Reuters,NovaGold’s 2006 estimate had Donlin costing C$2.1 billion, but project partner Barrick Gold said last year it could cost C$4 billion. Barrick’s plan calls for the use of on-site diesel and wind co-generation, while NovaGold prefers building a lower-cost power line. Speaking at a conference in Toronto, NovaGold Vice President Greg Johnson said the company will soon release an updated cost and resource estimate which will take into account cost inflation and higher resource prices. "We feel that the power line approach could be somewhere around C$3 billion," he said.
MMX Starts Amapá Operations, Acquires AVG, Looks at Asset Sale to Anglo American (Latin America)
Brazilian iron-ore producer MMX Mineração e Metálicos S.A. announced in December that an operating license has been issued by the Amapa State Environmental Secretariat, authorizing operations by subsidiary MMX Amapá Mineração which include the project’s ore-processing installations and infrastructure such as the Amapá Railway and Port of Santana. The railway is operated under a 20-year concession agreement with the State of Amapá signed in March 2006. The Port of Santana, rebuilt and modernized by MMX Amapá, is reportedly now in its operational phase, equipped to receive, unload, stock and load ships with MMX Amapás iron ore. MMX also reported that it has concluded the purchase of 100% of the shares of AVG Mineracao S.A., for US$224 million, following an MMX-AVG shareholders agreement announced on July 5, 2007. MMX said the first installment of the purchase price, in the amount of $44 million, has been paid and the remaining four installments of $45 million each will be paid on August 30 of the next four years.
New Zealand Underground Mine Commissioned (Australia/Oceania)
OceanaGold Corp. on January 17 reported successful commissioning of the Frasers Underground mine at its Macraes operation on the South Island of New Zealand. This is the second new gold mine that the company has commissioned in the past 12 months, following startup of the Reefton mine; and according to OceanaGold, was completed on schedule, at a capital cost net of gold revenue of NZ$33.4 million. The company also plans development of two additional mines in the near future.
Frasers Underground has been developed on the down-dip extension of the orebody currently being mined via the Macraes open-pit. This new underground mine is scheduled to produce approximately 900,000 mt of ore in 2008 which will be processed through the Macraes processing plant. Frasers Underground concentrate represents about 16% of the total throughput for the Macraes autoclave with
the remainder coming from Macraes and Reefton concentrates. Underground development to date totals 6.5 km and will continue simultaneously as mining progresses. Exploration is ongoing and the company reports that results at depth continue to demonstrate strong continuity with numerous higher-grade areas defined.
Kolwezi Tailings Project to Proceed in DRC (Africa)
First Quantum Minerals announced that the board of Kingamyambo Musonoi Tailings SARL (owned by First Quantum, 65%; Gecamines, 12.5%; Industrial Development Corp. of South Africa, 10%; International Finance Corp., 7.5%; and the Government of the Democratic Republic of Congo, 5%) has committed to proceed with the development of the Kolwezi tailings project. First Quantum with support from its contributing equity partners of KMT (specifically IDC and IFC) will finance or procure third party debt project financing totaling up to $593 million. This satisfies the obligations of First Quantum, the IDC and the IFC to complete feasibility studies, carry out an environmental impact assessment, prepare an environmental management plan, and to obtain commitments with respect to the financing of the Project.
The base case for the Kolwezi project with a capital cost of $553 million is for a plant capable of treating 2.5 million mt/y of tailings throughput potentially producing 35,000 mt/y of copper cathode with the corresponding production of 7,000 mt of cobalt hydroxide. Tailings will be recovered utilizing high-pressure water monitors and will be pumped to the SX/EW treatment plant. The copper circuit will be based on proven SX/EW copper operations at Bwana Mkubwa and Kansanshi and the cobalt circuit will be based on plant processes similar to those operating at Mopani's Nkana cobalt plant.
Project construction completion is targeted for the third quarter of 2009 with commissioning taking place during the fourth quarter of 2009 and commercial production in the first quarter of 2010. The plant, which is targeted to initially produce 35,000 mt/y copper and 7,000 mt/y of cobalt hydroxide, will be designed and constructed such that plant capacity can be doubled at a capital cost of $40 million. Mine life is expected to be 22 years at an annual rate of 70,000 mt/y. Development of a cobalt metal facility and the expansion of copper and cobalt capacity are options that will be considered in the future.
OceanaGold on Track for 2009 Startup at Didipio Copper-Gold Project (Asia)
Oceana Gold Philippines Inc. (OGPI) is on track in the Didipio copper-gold project development in Nueva Viscaya, Philippines, with a road upgrade that has enabled it to transport mining equipment to a plant that will reportedly start up in early 2009. "We are on schedule with our development timeline. The road upgrade now allows us to get in large mining equipment and large infrastructure components to construct the plant," said OceanaGold CEO Steve Orr.
Before commissioning the plant, OGPI will begin pre-strip operations for the open-pit this year. "We will construct the process facility and do the pre-strip for the open-pit in 2008 before starting the commissioning phase in early 2009. The capital cost is expected to be about $5 million although we are still to complete the final engineering at which point we’ll be able to lock down definitive bids from suppliers," said Orr.
The company, listed with the New Zealand, Australian and Toronto stock exchanges, is bankrolling the project with a capital raised from at least these three countries.
The copper-gold project will have a yearly throughput of 2.5 million mt of ore from open pit and underground mining. Metal production is placed at 227,000 gold equivalent oz yearly during the first 10 years of production consisting of 142,000 oz of gold and 15,000 mt of copper concentrate.
OceanaGold, which has three mines in New Zealand believes its Philippine operation is important with the cost reduction results from here. "In 2008, we anticipate cash costs will be around $320/oz to $340/oz. By 2009 when Didipio is ramping up, we expect that to fall to around $215/oz to $235/oz due to the copper byproduct credit and the high-grade nature of the Didipio gold deposit," he said.
This will further go down to $175/oz to $195/oz when the local project runs at design capacity in 2009. "By 2011, we expect to generate $100 million in free cash flow based on a gold price of $500/oz and copper price of $1.90/lb."
The company is also spending $5 million in 2008 for exploration, particularly in Manhulayan in northern Surigao and in the Papaya prospect which is within its Nueva Vizcaya mining permit.
The copper production has a significant impact in cutting the company’s cash cost from the 2007 cash cost of $575/oz of gold "although this year is a redevelopment year for Macraes and we’ve been processing a significant amount of low-grade stockpile material, resulting in high cash costs. When Didipio is operating at full run rate, it’s going to be making about 50% of the gold-equivalent contribution to the company," Orr said.
The company earlier awarded engineering, procurement, construction and management works at Didipio to Ausenco Ltd.
Anglo American Taps Bechtel for Los Bronces Expansion (Latin America)
Bechtel Corp. announced on December 7 that it has been awarded an engineering, procurement and construction contract to execute Anglo American’s Los Bronces development project. Work on the $1.7 billion project started immediately following the announcement, according to Bechtel, and the project is scheduled to be completed in December 2010 with production commencing in January 2011. The project is expected to result in a mine life of more than 30 years.
The Los Bronces mine is located 65 km from Santiago, Chile, and the existing operations comprise a mine, a 58,000 metric tons per day (mt/d) copper concentrator, and two solvent extraction and electro-winning plants.
The Los Bronces development project will increase daily throughput by 87,000 mt/d by adding a new concentrator facility at Confluencia and Tórtolas II, both sites nearby the existing plant facilities. The scope of the new plant includes crushing and conveying, grinding and flotation circuits utilizing the largest proven equipment to maximize operating efficiency, plus concentrate regrind and a molybdenum plant.
Project management, engineering and procurement will be executed by Bechtel for 70% of the project and direct hire construction will be executed through a joint venture of Bechtel and Sigdo Koppers (BSK), which will provide the direct hire labor and supervision.
The Las Bronces development is the first stage in Anglo American’s pipeline of copper expansion projects which aims to increase copper production to approximately 1.7 million mt/y by 2016. In addition, Anglo American’s Base Metals division is currently progressing the $1.2-billion Barro Alto nickel project in Brazil which will also double total group nickel production by 2011.
Other Anglo American projects include Collahuasi (four potential projects: two debottlenecking and two sulphide leach, at an estimated total capital cost $3.2 billion); Quellaveco (potential production of 200,000 mt/y Cu over 26 year mine life, capital cost $1.7 billion, revised feasibility study under way, development decision expected in the second half of 2008; Michiquillay (company estimates five years to complete the feasibility study with production commencing 2015); Pebble (a 50:50 partnership with Northern Dynasty for a staged investment of $1.4 billion, potential production levels of more than 300,000 mt/y Cu and 500,000 oz/y Au, ramping up from 2015); Jacare (nickel, capital cost $1.2 billion or more, drilling is ongoing).
Centerra Gets License to Mine Satellite Deposit at Kumtor
Asia- Centerra Gold’s Kumtor mine, located in the Kyrgyz Republic, has received a mining license for its nearby Sarytor deposit, according to a recent announcement by the Toronto, Canada-based company. The Sarytor deposit is approximately 4.5 km southwest of the Kumtor mill and has about 300,000 contained oz of gold in probable reserves which are included in Kumtor's total 4.7 million contained oz of proven and probable reserves. Centerra said total proven and probable reserves comprise 1.9 million contained oz of proven reserves and 2.8 million contained oz of probable reserves.
Len Homeniuk, president and CEO of Centerra, said, “Receiving the mining license for the Sarytor deposit ahead of finalizing our new agreement indicates the willingness and cooperative nature of the government and demonstrates the government's commitment to Centerra and the development of the Kumtor mine. Having the ability to access and mine the Sarytor deposit will give us some flexibility and options for production sources next year at Kumtor.”
In late August, Centerra announced that it had reached binding agreements with the government of the Kyrgyz Republic that would extend the government's commitment and support for continuing long-term development of the Kumtor project. The agreements, according to Centerra, also enlarge the company’s existing concession area by more than 25,000 hectares to include all territory covered by the current exploration license. Centerra and the Kyrgyz government also agreed to replace Kumtor’s existing tax regime with a new tax plan applied to Kumtor’s gross revenue at the rate of 11% in 2008, 12% in 2009 and 13% thereafter. According to Centerra, at current gold prices the revised tax regime is “slightly beneficial” to the project.
The final agreement called for Cameco Corp., which holds a significant interest in Centerra, to transfer 32.3 million shares of Centerra to the Kyrgyz government; 17.3 million of such shares will be held in escrow to be released within four years subject to certain conditions. After completion of the transactions, the Kyrgyz government will own 29.3% of Centerra, Cameco will own 40.5% and 30.2% will be held by the remaining shareholders.
Jubilee Agrees to Xstrata Takeover (Australia/Oceania)
Xstrata plc and Australian nickel miner Jubilee Mines NL announced a bidding agreement intended to provide an all-cash offer by Ithaki Australia Pty Ltd., a wholly-owned subsidiary of Xstrata plc, to acquire all of the issued and outstanding shares of Jubilee through an off-market takeover offer. The offer is for A$23/share, valuing Jubilee at approximately A$3.1 billion (US$2.9 billion). It will be financed through Xstrata’s existing credit facilities and cash on hand.
“This is a great offer to be able to recommend to Jubilee shareholders and an important milestone for Jubilee, representing the culmination of 20 years of exploration success, growth and development,” Jubilee Executive Chairman Kerry Harmanis said. “Jubilee is at an important stage and will benefit from the deeper capabilities and balance sheet of a major mining company such as Xstrata to maximize the potential of its resource base. “Xstrata’s bid offers shareholders a compelling opportunity to realize in cash the substantial growth in value created by their investment at an attractive point in the commodity cycle and equity markets overall, without taking on the risks associated with the next phase of Jubilee’s development.
“We believe Xstrata’s recommended offer is the most attractive option for shareholders and positions our operations and employees as part of a rapidly growing, successful global nickel producer,” said Harmanis. Ian Pearce, CEO, Xstrata Nickel, said, “Jubilee offers Xstrata Nickel immediate access to additional production, geographic diversification and introduces substantial near term growth potential into its portfolio. In particular, the combination of two of the most successful exploration teams in the nickel industry, together with Jubilee’s highly prospective regional land position, offer excellent prospects for significant additional growth in the region. We look forward to optimizing Jubilee’s growth potential, creating additional employment opportunities and increasing capital and community investment in the region, for the benefit of shareholders, employees and the stakeholders in Jubilee’s current and future operations.”
Jubilee owns the Cosmos nickel project in Western Australia, 40 km north of Leinster, and recently announced formal approval to proceed with the development of its Sinclair nickel project located 100 km to the south. The Cosmos project is located in a nickel sulphide district which hosts deposits such as Mt. Keith, Yakabindie, Honeymoon Well, Perseverance and Rocky’s Reward at Leinster.
To date, Jubilee has discovered eight high-grade massive nickel sulphide deposits within the area—Cosmos, Cosmos Deeps, Alec Mairs (AM) 1, 2 and AM5, Prospero, Tapinos and Sinclair along with the large low-grade Anomaly 1 deposit.
Jubilee claims the Sinclair project is evolving as a substantial new production center, and the company recently announcing formal approval to proceed there with a new A$90-million standalone mine and processing facility.
Jubilee has announced an updated production target from the 2007/08 financial year through until the 2014/15 financial year for both its core high-grade nickel sulphide business and for a potential larger scale development of the AM5 nickel deposit. The targeted objective includes high-grade production of nickel-in-concentrate increasing from 12,000 mt in 2007/08 to approximately 17,000 mt in 2008/09 and 22,000 mt in 2010/11 to around 30,000 mt/y thereafter.
Nevsun, Eritrea Reach Development Agreement on Bisha Project
Nevsun Resources announced in mid-December that its Eritrean venture company, Bisha Share Mining Co., concluded a mining agreement with the government of Eritrea which reportedly covers the customary provisions governing future development and operation of the Bisha gold-copper-zinc project. Nevsun also said that BMSC has applied for a mining license that the government advised would be issued soon.
According to Nevsun’s press statement, in October the government of Eritrea indicated strong support for the Bisha project and for the development of a mining sector in Eritrea by acquiring a 30% paid participating interest through the Eritrean National Mining Co. (ENAMCO). The shareholder structure of BSMC is 60% Nevsun and 40% ENAMCO, with the ENAMCO shareholding comprising a 30% paid participating interest and a 10% free participating interest as provided by the country’s mining legislation.
Government Minister Tesfai Ghebreselassie stated that, “The success of the Bisha mining project has a special significance both for its economic benefits and trendsetting effects on the path of the industry we are very eager to develop in Eritrea. Therefore I would like to reiterate our government's commitment to do all within its means to assist Bisha Mining Share Company be a success story.”
Asia - Varvarinskoye Initiates Mechanical Commissioning of Copper/Gold Circuit
European Minerals Corp. (EMC) reported that the president of Kazakhstan, Nursultan Nazarbayev, visited the Varvarinskoye gold/copper project on September 14, 2007, where he initiated a 50,000-mt ore blast in the main pit and started up the milling circuit ready for mechanical commissioning. The operation is being run by EMC’s Kazakh operating company, JSC Varvarinskoye (JSCV).
All the infrastructure necessary to commission and operate the Varvarinskoye mine is now in place and although some deliveries have been delayed the outstanding equipment is expected on site in time to allow staged commissioning of the various components of the process plant during the fourth quarter of 2007. Approximately 700,000 mt of ore has been stockpiled. All tank work is complete and hydraulic testing is scheduled to commence by the end of the month. Tailings dam earthwork is complete together with all delivery and return water pipelines to and from the tailings dam. The process plant building is complete and mine infrastructure is virtually finished.
On January 15, 2007, the company announced independently estimated measured and indicated mineral resources of 3.9 million oz of gold and 450 million lb of copper. Based on these resources and using a gold price of $525/oz and a copper price of $1.30/lb, the pit design contains estimated proven and probable mineral reserves of 60.6 million mt containing 2.2 million oz gold and 254 million lb of copper at a grade of 1.15 g/t gold including 17.1 million mt at a grade of 0.67% copper. Based on this current reserve and plant capacity, life of mine production averages 120,000 oz of gold and 13 million lb of copper. However over the first three full years of mine life average annual production is planned to be 149,000 oz of gold and 26 million lb of copper.
Bert Kennedy, president and CEO of EMC, commented: “We do not underestimate the challenges to come but we believe we have a team in place to overcome these. We expect to complete our evolution to a commercial mining company by the end of first quarter 2008.”
Africa - First Phase of Kamoto Copper Project on Track for Production Start
While the huge greenfield Tenke Fungurume copper project in the Democratic Republic of Congo has been center stage for some time, the brownfield Kamoto project in the Kolwezi district, about 220 km northwest of Lubumbashi, has also been attracting attention lately as the Kamoto Joint Venture is close to starting refined metal production.
Key mine components were ordered a year ago, the construction team build-up began in January 2007, and extraction commenced at the Kamoto underground and T17 open-pit mines in April. The 7.5-million-mt/y-capacity concentrator restarted in July and commissioning of the Luilu metallurgical plant got under way in September. Copper and cobalt output should start in the final quarter of 2007. Total reserves and resources (excluding inferred) are stated as 162 million mt at 3.5% copper and 0.38% cobalt, sufficient to support a mine life of at least 40 years at anticipated production rates. The average site cash costs, net of cobalt credits, are estimated at $0.20/lb copper, placing Kamoto close to the lower end of the global mine cost curve.
Gold producers Anglogold Ashanti, Goldfields and Harmony recently signed a 2007–2009 wage agreement with three trade unions—National Union of Mineworkers (NUM), UASA and Solidarity—negotiating on behalf of gold mining workers at the Chamber of Mines’ offices in Johannesburg. The agreement follows nearly three months of negotiations.
Dr. Elize Strydom, chief negotiator for the Chamber of Mines, said, “Clearly, neither the employers nor the workers got everything they wanted. I am, however, comfortable that the agreement being signed today strikes a balance between employee expectations and the long term viability of the industry while taking into account the cyclical nature of the industry and declining production levels. It goes without saying that we are here today as a result of a joint effort between the unions and the employers and therefore all parties deserve credit. I would therefore like to thank NUM, UASA and Solidarity for the part they played in this process.” In terms of the agreement, which is effective from July 1, 2007, entry level underground workers will now get a minimum of R3,000.00 per month and entry level surface workers will receive a significant increase. Special dispensations have been included for rock drillers and artisans with scarce skills as well as other disbursements made to employees in the gold mining industry. From July 2008, the increment will be calculated on a formula of CPIX (Consumer Price Index excluding interest rates on mortgage bonds) + 1% with a guaranteed minimum of 8%.
Rio Tinto, Hancock Give Green Light for Hope Downs Rio Tinto and joint venture partner Hancock Prospecting will spend $350 million on a fast-tracked expansion of the new Hope Downs iron ore project in the Pilbara region of Western Australia. At the completion of the expansion, expected by early 2009, the mine will have a capacity of 30 million mt/y. Work on the initial 22-million-mt/y project commenced in April 2006 at a cost of $1 billion with first production expected by early 2008.
Rio Tinto Iron Ore Chief Executive Sam Walsh said: “The rapid expansion of Hope Downs is an integral part of our plans to lift annual iron ore production in the Pilbara to 220 million mt by early 2009. Thanks to continued strong market conditions we have been able to bring this highly value accretive expansion forward by one year. We are currently investigating other opportunities to increase our Australian iron ore business to about 320 million mt in the future.”
Hope Downs is a high-grade Marra Mamba type iron ore deposit. It will contribute to the Pilbara Blend, a new product that was first shipped in July and comprises Brockman and Marra Mamba ore extracted from nine of Rio Tinto Iron Ore’s 11 mines in the Pilbara.
Rio Tinto Extends $350 Million in Interim Funds for Oyu Tolgoi Development Rio Tinto said it will provide Ivanhoe Mines Ltd. with a convertible credit facility of $350 million for interim financing for the Oyu Tolgoi copper-gold complex in Mongolia’s South Gobi region. The credit facility is directed at maintaining the momentum of mine development activities at Oyu Tolgoi while Ivanhoe and Rio Tinto continue to engage in finalizing an Investment Agreement between Ivanhoe and the government of Mongolia.
Rio Tinto also said it expects that in the absence of a satisfactory Investment Agreement it is likely that the rate of ongoing investment in the project will need to be scaled down significantly.
Bret Clayton, chief executive of Rio Tinto Copper, said, “The provision of this facility allows Rio Tinto to raise its shareholding in Ivanhoe and the Oyu Tolgoi project while at the same time allowing the project to continue construction as the Investment Agreement goes through final parliamentary approval.
Platmin Okays Multiple Pit Development at Pilanesberg PGM Project Platmin Ltd. recently reported the results of a feasibility study for its Tuschenkomst and Ruighoek properties at the company’s Pilanesberg project, and also announced that its board of directors approved development of the project based on the favorable recommendations contained in the study.
Platmin is a TSX and AIM listed PGM exploration and development company with four advanced projects that host PGM mineral resources and reserves: Pilanesberg, M’Phatlele, Grootboom, and Loskop—of which the first three are now in the development phase. All of Platmin’s projects are located in the Bushveld Complex of South Africa. The Tuschenkomst and Ruighoek properties are located about 60 km northwest of Rustenburg. The Pilanesberg feasibility study, conducted by SRK, is based on treatment of 5 million mt/y of ore mined from two open-pits at Tuschenhomst and Ruighoek, which will be processed through a central concentrating facility on the Tuschenkomst property.
Kinross, Goldcorp to Swap Canadian, Chilean Assets Kinross Gold Corp. has entered into an asset swap with Goldcorp Inc. designed to increase Kinross’s ownership and operating control of its core mines, while strengthening its strategic position in Chile.
Under terms of the agreement, Kinross will sell to Goldcorp its 31.9% interest in the Musselwhite Joint Venture, located in northwestern Ontario, and its 49% interest in the Porcupine Joint Venture, located in Timmins, Ontario. Goldcorp is currently the operator of both mines.
In exchange for these assets, Kinross will acquire Goldcorp’s 50% ownership position in Compañía Minera Mantos de Oro (MDO), thereby giving Kinross a 100% interest in MDO, which owns and operates the La Coipa mine in northern Chile. In addition, Kinross will receive a cash payment of $200 million from Goldcorp.
The transaction strengthens Kinross’ position in Chile, where the company currently operates the Maricunga mine. “This deal increases our strategic presence in the Maricunga District, one of the world’s most important gold producing regions. It adds to the excellent growth and development opportunities for Kinross in Chile, where we have a strong management team in place with proven operating expertise and well-established relations with local communities,” said Tye Burt, president and CEO of Kinross.
Burt explained that the $200 million in cash proceeds from the transaction will be used to help finance Kinross’ development projects currently under way. The company expects to expand its gold production by approximately 60% between 2007-2009 through a major expansion project at Paracatu in Brazil, and new development projects at Kupol in the Russian Federation, and Buckhorn Mountain in Washington State. These new projects are expected to add approximately 1.1 million oz of gold equivalent production annually during the first five years following the commencement of production.
For Kinross, the transaction is expected to result in a reduction in gold equivalent production of approximately 100,000 to 120,000 oz annually, balanced by lower cash operating costs, higher margins and increased free cash flow.
Review Panel Gives Thumbs Down on Kemess North Development Northgate Minerals Corp. reported in mid-September that the Joint Federal-Provincial Environmental Review Panel studying the proposed Kemess North copper-gold project in north-central British Columbia had completed its review and submitted its recommendation report to the federal and provincial Ministers of the Environment. The news, from the company’s point of view, was not good: the panel recommended that the project not be approved as proposed.
Kemess North is located 250 km northeast of Smithers and 6 km north of Northgate’s existing Kemess mine, which is projected to close in late 2008. The project includes development of a new open-pit, modification of the existing mill, and related infrastructure.
The panel report’s executive summary concluded that “development of the Kemess North copper/gold project in its present form would not be in the public interest. In the panel’s view, the economic and social benefits provided by the project, on balance, are outweighed by the risks of significant adverse environmental, social and cultural effects, some of which may not emerge until many years after mining operations cease.”
As part of the project plan, ore milling capacity would be increased from the current 55,000 mt/d to up to 120,000 mt/d. Over the life of the project, Northgate estimates that 397 million mt of tailings and 325 million mt of waste rock would be generated. Due to high sulphide content, much of this material would be prone to metal leaching (ML) and acid rock drainage (ARD) processes if not properly managed. To prevent ML/ARD, Northgate is proposing to place most of the waste rock and tailings underwater in a natural water body—Duncan (Amazay) Lake. The Duncan impoundment would be created by constructing three dams to expand the lake’s storage capacity, and would be managed to ensure a pH that is at least neutral, to minimize dissolved contaminants. The potential risks of possible dam failure along with long-term water management and quality, as well as objections from Aboriginal groups in the area, were high on the panel’s list of concerns regarding the project.
As of the end of October, Northgate said that it was planning to meet with federal and provincial government authorities in late September to discuss the panel’s recommendation.
