Silver Wheaton Buys into Barrick Silver Production
Barrick Gold and Silver Wheaton closed a transaction on September 22, 2009, whereby Silver Wheaton will acquire 25% of the life-of-mine silver production from Barrick’s cross-border Pascua-Lama gold-silver project in Chile and Argentina (E&MJ, June 2009, p. 4). Silver Wheaton is also acquiring 100% of the silver production from Barrick’s Lagunas Norte and Pierina mines in Peru and its Veladero mine in Argentina until project completion at Pascua-Lama. Silver production from these three mines is expected to average about 2.4 million oz/y over that period of time.
First Quantum Minerals suspended construction at the Kolwezi tailings project in the Democratic Republic of the Congo (DRC) as of September 16, 2009, following issuance of an order by the General Prosecutor of Katanga to seal the facilities of Kingamyambo Musonoi Tailings SARL (KMT). KMT holds the exploitation permit for the Kolwezi project under a Contract of Association and is owned 65% by First Quantum; 12.5% by Gecamines; 10% by Industrial Development Corp. of South Africa; 7.5% by the International Finance Corporation; and 5% by the government of the DRC.
BHP Billiton and Mitsubishi Corp have pulled out of a bauxite-mining concession in Mondulkiri province following exploratory drilling and have cancelled plans to build an aluminum refinery in the region. The companies have informed the Ministry of Industry, Mines and Energy that they will not use their exclusive right to mine the area under the terms of a 2006 mineral-exploration agreement signed with the Cambodian government, a source inside the ministry said.
Rio Tinto Reaches 3 Billion Ton Iron Ore Shipment Mark
Rio Tinto announced recently it had reached the historic milestone of exporting 3 billion mt of iron ore from Australia, highlighting the exponential growth of the nation’s iron ore industry since its first shipment in 1966.
The 3 billionth ton was loaded on to the Pacific Ruby, a Cape-size vessel berthed at Rio Tinto’s recently expanded Cape Lambert Port. The 240,000-mt cargo consisted of iron ore from the Yandicoogina and Mesa J mines, and was bound for Posco, the largest South Korean steel producer.
Anglo American has reported a JORC-compliant inferred resource of 1.2 billion mt grading 1.46% copper and 0.02% molybdenum for its Los Sulfatos copper prospect 6 km south of its existing Los Bronces copper operations in central Chile. The Los Sulfatos porphyry copper and breccia complex is located within and under high mountain ridges at altitudes between 4,000 and 4,500 m approximately 50 km northeast of Santiago. The deposit is open in various directions, and Anglo American expects to develop it into a resource of between 4 billion and 5 billion mt at grades of between 0.8% and 1.0% copper.
Commander Resources has signed a farm-in and joint-venture agreement with AngloGold Ashanti whereby AngloGold may earn a 51% participating interest in Commander’s Baffin Island gold project in Nunavut, northern Canada, by funding $20 million in exploration expenditures over a six-year period and completing a $1.2-million private placement in Commander shares. The agreement includes a firm commitment by AngloGold to fund $5.5 million in exploration expenditures within the first two years and to complete a minimum of 3,000 m of diamond drilling.
Commander, a Vancouver-based Canadian junior company, will act as project manager for the initial two years. Once AngloGold has vested a 51% interest in the property, a 51:49 joint venture will be formed. AngloGold may then elect within 60 days of vesting to increase its interest in the property to 70% by sole-funding all on-going expenditures to complete a feasibility study within four years on at least one of the prospects on the property.
Randgold Resources and Moto Goldmines announced on August 5, 2009, an agreement whereby Randgold will acquire Moto for a combination of cash and Randgold shares valued at about $500 million. Moto’s primary asset is its 70%-owned Moto gold project in the far northeast of the Democratic Republic of Congo (DRC). A DRC company, L’Office des Mines d’Or de Kilo-Moto, holds the remaining 30%.
At the same time, Randgold announced an agreement with AngloGold Ashanti, whereby AngloGold will fully fund the cash element of the Randgold-Moto transaction in partial payment for an indirect 50% interest in the project. AngloGold will be jointly responsible with Randgold for funding project development. Randgold will be the project operator. The announcement commented that Randgold and AngloGold, together, will bring the scale and the access to capital needed to develop the Moto gold project to production. The companies have been joint-venture partners at the Morila mine in Mali since July 2000, and they both have extensive mine development and operating experience in Africa
Citadel Strikes Share, Copper Offtake Agreements with Transamine
Citadel Resource Group announced that it has entered into a A$25 million share subscription agreement and copper concentrate off-take arrangement with Transamine SA, a global non-ferrous trading house, for the sale of 50,000 dry mt/y of copper concentrate from the Jabal Sayid mine at market terms for five years from 2011.
These arrangements, according to Melbourne, Australia-based Citadel, represent an important milestone, underpinning the company’s share price at a premium to current market prices and providing Citadel with the additional funding to enable the ongoing development of the Jabal Sayid copper-gold project, where first production is targeted for 2011.
At full production, the Jabal Sayid project is expected to produce approximately 240,000 mt/y of copper concentrate containing 60,000 mt/y of copper with payable gold and silver. The off-take arrangement agreed with Transamine represents a sale of just over 20% of the project’s forecast annual production at what Citadel described as “attractive commercial terms.”
Flinders Greenlights Pilbara Iron Ore Pre-Feasibility Study
A pre-feasibility study into development of a 500-million-mt iron ore project in Pilbara, Western Australia, has been given the go-ahead by project owner Flinders Mines.
The company said work would begin immediately on an additional resource definition drilling campaign on the Blacksmith tenement, which together with the Anvil tenement comprises the company’s Pilbara iron ore interest. Flinders Mines’ Chairman, Robert Kennedy, said the decision to move to the next evaluation stage for the project followed the release of the new scoping study.
Mirabela Nickel Ltd., an Australian company headquartered in Perth, Western Australia, announced in early August 2009 that it had begun owner-operated mining at its 100%-owned Santa Rita open-cut nickel sulphide mine in Bahia state, Brazil. Concentrator construction was nearing completion, and commissioning was expected to begin in late September. Pre-stripping of the Santa Rita open cut was completed by contract miners, who stockpiled about 170,000 mt of run-of-mine ore as part of their work.
Gold Fields Ltd. reported on July 24, 2009, that it had made an agreed-to offer for Dublin, Ireland-based exploration company Glencar Mining valued at £28 million. The companies anticipated that the transaction would close in late September.
Glencar’s principal asset and only defined resource is its Komana project in southern Mali, West Africa, which has an indicated and inferred mineral resource of 1.25 million oz of gold within 150 m of the surface. Komana is one of five Glencar concessions in southern Mali, totaling 1,250 km2. Glencar holds a 95% interest in four of the concessions, including Komana. Gold Fields owns a 51% interest in a joint venture with Glencar on the Sankarani project, which is adjacent to the Komana project. Initial drilling of three shear-hosted orogenic targets at Sankarani has broadly defined extensive mineralized trends, with economic gold grades over significant drill widths.
Glencar also has exploration properties in Ghana and Uganda. Its Asheba concession in southwest Ghana is located about 20 km south of Gold Fields’ Tarkwa mine. In Uganda, Glencar holds three license areas on the northern margin of the Lake Victoria greenstone belt. www.goldfields.co.za and www.glencarmining.ie
Highlands Pacific reports continuing deep-hole drilling success at the Frieda copper project in northwest Papua New Guinea, where Xstrata Frieda River is the project operator. Project ownership is 76.2% Xstrata Frieda River, 16.9% Highlands Pacific, and 6.9% OMRD (a Japanese consortium). Recent significant drill intercepts at a 0.2% copper cutoff have included 312 m grading 0.72% copper and 0.26 g/mt gold from 38 m down hole and 434 m grading 0.60% copper and 0.35 g/mt gold from 162 m down hole. The current work program at the Horse-Ivaal-Trukai copper-gold porphyry deposit within the Frieda project area has 220 people on site, with four drill rigs drilling approximately 2,400 m per month. The 2009 exploration budget for the property totals $36 million.
A revised resource statement for the Frieda project is scheduled for completion in December 2009. The updated resources will be used to prepare a mining plan for a pre-feasibility study that is due for delivery in mid-2010. A scoping study released in early 2009 envisaged 40 million mt/y of plant throughput, with production over an initial seven-year mine life averaging 160,000 mt/y copper and 240,000 oz/y gold. Xstrata has indicated that current and future studies are considering larger production options. www.highlandspacific.com
Minefinders reports that step-out drilling has encountered a significant new zone of gold and silver mineralization 200 m east of the current resource at its La Bolsa property in Sonora, Mexico, 30 km west of the border city of Nogales.
Drilling results from the 78 reverse-circulation holes and 84 core holes completed to date at La Bolsa were to be incorporated into an updated resource model and reported in a NI 43-101 compliant technical report that Minefinders expected to file during the third quarter of 2009. Minefinders also has initiated a pre-feasibility study of the potential economic viability of a mine at La Bolsa and expects to have results available in another NI 43-101 compliant technical report by the end of 2009.
Gold mineralization at La Bolsa occurs within a shallow, east-dipping oxidized blanket that is sub-parallel to the topography, approximately 900 m in length, and nearly 600 m in width, with thicknesses ranging from 10 to 50 m. The mineralization remains open both down-dip and along strike. The shallow dip of the majority of mineralization in close proximity to the surface and favorable metallurgical characteristics suggest a mine plan that will incorporate low-cost, open-pit mining in combination with simple heap-leach recovery of gold and silver, Minefinders said. www.minefinders.com
First Nickel Inc. and Pacific North West Capital report discovery of a new zone of platinum and palladium mineralization and confirmation of nickel and copper mineralization on their Raglan Hills joint-venture property 32 km east-northeast of Bancroft, Ontario, Canada. The mineralization has been identified in two separate areas within a previously unexplored mafic intrusive body. First Nickel is the project operator of the 50:50 joint venture.
Between February and May 2009, 29 diamond drill holes totaling 4,616 m were drilled on the Raglan Hills property to test seven airborne electromagnetic targets. The targets were selected based on the presence of coincident magnetic and electromagnetic anomalies and known nickel-copper sulphide mineralization. Assay results for 19 of the 29 drill holes had been received as of August 5, 2009. Drill intercepts included 5.05 m grading 0.762 g/mt platinum and 1.216 g/mt palladium and 2.7 m grading
0.659 g/mt platinum and 1.052 g/mt palladium. A follow-up exploration program will be designed after receipt of the remaining assays and a review of borehole UTEM geophysical surveys. www.firstnickel.com
Sino Gold has formed a joint venture with Jilin Non-Ferrous Metals Brigade 602 covering an exploration license immediately northeast of Sino Gold’s White Mountain mine in Jilin province, northeast China. Sino Gold will initially acquire a 75% equity interest in the joint venture for total payments of $2.25 million over three years, with an initial payment of $1.4 million. The joint venture agreement also includes an option for Sino Gold to increase its equity interest to 95% at a later date at a price established by an independent valuation. The exploration license is along strike from the White Mountain mine and covers an initial area of 29 km2. The White Mountain mine poured its first gold in October 2008 and is currently ramping up to design capacity of 65,000 oz/y of gold.
Previous exploration on the joint-venture area by Brigade 602 has included mapping, geochemical surveys, trenching, and limited drilling. High-grade gold mineralization has been identified in adits at the Dongdapo prospect on the license. The best channel sampling intervals are 5.9 m at 4.1 g/mt gold and 5.7 m at 3.8 g/mt gold.
Mineralization at Dongdapo is hosted by a silicified marble breccia similar to the rock that hosts the White Mountain orebody. The mineralized zones have been intercepted in three cross-cuts and have a known strike length of about 100 m. The vertical extent of the mineralization has not been tested. Sino Gold is currently planning an exploration program for the prospect and anticipates that drilling will begin in the spring of 2010. www.sinogold.com.au
Iamgold to Acquire Orezone’s Essakane Gold Project (Africa)
Iamgold Corp. reported in mid-December that it was planning to acquire, through a plan of arrangement, all of the outstanding common shares of Orezone in an all-share transaction valued at approximately $139 million.
“This transaction represents excellent value and takes us a large step toward our stated goal of 1.8 million ounces annual gold production by 2012, while lowering our average cash cost by $40 to $50 per ounce,” said Joseph Conway, president and CEO of Toronto, Canada-based Iamgold.
Under the terms of the transaction, Iamgold will acquire and finance development of the Essakane project, one of West Africa’s largest undeveloped gold reserves. Orezone exploration assets will be distributed pro rata to Orezone shareholders to create an entity known as “New Orezone.” Each Orezone shareholder will receive 0.08 of an Iamgold share and a pro rata share of New Orezone for each Orezone share held. Upon completion of the transaction, Iamgold will become a 16.6% shareholder of New Orezone.
In addition, Iamgold will provide Orezone with immediate C$20 million equity financing at C$0.28/share, subject to regulatory approvals. Iamgold also will open a corporate African operations office based in Dakar, Senegal.
Orezone’s main asset is the 4-million-oz Essakane gold project, located in Burkina Faso, West Africa. Construction commenced in September 2008 on the mine, which is expected to produce more than 300,000 oz/y over a minimum nine-year mine life at an average cash operating cost of $358/oz, using a $600/oz gold price and $85/bbl oil price. Full production is anticipated in late 2010, requiring a remaining capital expenditure of approximately $350 million.
Ron Little, CEO of Orezone said, “New Orezone will be well financed through this transaction and [will] host three advanced gold projects including Bombore, the second largest gold resource in Burkina Faso with 1.7 million ounces of measured and indicated resources.”
Assuming Orezone shareholders approve the transaction at the special meeting, and final court approvals are obtained, the transaction is expected to close by the end of February 2009.
When in production in late 2010, Essakane will contribute more than 25% of Iamgold’s gold production, bringing the company’s annual production to more than 1 million oz/y. “With this transaction, we are able to achieve a significant production increase in the near-term, a cost reduction of $40 to $50 per ounce and a 32% increase in reserves, with modest share dilution,” said Conway.
Iamgold currently has interests in two gold mines in Mali, two in Ghana, and one in Botswana. In 2008, about half of the company’s global gold production was from these African operations.
Rio Tinto has further strengthened its presence in South Africa with the discovery of a open-pittable coal resource of more than 1 billion metric tons in the Limpopo Province. The coal is bituminous, and is suitable for generating electricity. The discovery at Chapudi came through Rio Tinto’s coal exploration program in the Limpopo (Soutpansberg) coal basin of South Africa. The exploration work has been conducted in conjunction with Rio Tinto’s BEE partner, Kwezi Mining. Exploration rights over the resource are held by two JV companies; Chapudi Coal PTY Ltd. (Rio Tinto 70%) and Kwezi Mining Exploration Pty Ltd. (Rio Tinto 49%). Rio Tinto and Kwezi are continuing with exploration activities for thermal and coking coal east of the Chapudi project.
"This is a significant find in an area that has previously been viewed as having little geological potential," said Chief Executive of Energy & Minerals, Preston Chiaro. "The project’s potential to produce thermal coal for electricity generation comes at a time when South Africa needs to rapidly increase its generating capacity. In addition, the basin offers the opportunity to produce a range of products, from thermal to hard coking coal for the export markets. We are currently planning the next phase of the project by beginning our pre-feasibility studies."
The newly discovered Chapudi Resource lies within the Limpopo coal basin, in the northern part of South Africa. The coal is hosted in sediments of the Karoo Group, similar to other coalfields in Southern Africa. The coal seams at Chapudi occur in mudstones that can be correlated to the Upper Ecca formations of the Main Karoo basin.
Rio Tinto and Kwezi Mining began exploring for coal in the area in 2003, when the first borehole was drilled on the farm Chapudi. This borehole intersected significant thicknesses of coal. Since then, the Rio Tinto-Kwezi JV has drilled about 90 boreholes in the project area, and conducted geophysical surveys to aid the geological interpretation. A total of 12,400 m have been drilled to date. The central part of the project now has sufficient drilling coverage to define a measured and indicated resource. The rest of the project area has been drilled to inferred resource status.
The coal has been demonstrated through test work to be suitable for combustion to generate electricity. Rio Tinto and Kwezi Mining are currently investigating the feasibility and economics of establishing a mining operation to feed coal into a power station. They are currently engaging with Eskom, and a number of Independent power providers to this effect.
Norway’s Aker to Invest in Pioneering Carbon Capture Facility
Aker has decided to build what is likely to become the world’s first and largest CO2 capture facility of its kind, designed to capture 100,000 tons of CO2 from the gas powered energy plant and the Kaarstoe gas processing plant, The Norway Post reported. The facility could be in operation as early as 2009. Aker said that in recent years the company has worked intensively on developing new CO2 capture technology. It says the primary purpose of the new facility is not primarily further technology development; the objective is the development of construction methods and effective execution models that make carbon sequestration so inexpensive that it becomes cheaper to clean emissions than to pollute.
Hwange Colliery in Zimbabwe Resumes Production After Flooding
Hwange Colliery Co. Ltd. has resumed mining at its underground mine a week after it had closed down due to flooding. According to The Herald, the banks of Kamandama River, adjacent to the mine burst following heavy rains and poured into the mine prompting the coal mining giant to suspend production. Open-cast has been affected although production has been going but at reduced levels. On average, the underground mine produces about 2,000 metric tons per day. Water from the underground mine was drained and production was ready to resume.
PSG International will build an €200 million (about Kc5 billion) coal-fired power plant near Kurgan, Russia, and it will be one of the largest construction deals of the Czech company in the Russian Federation, Czech News Agencyreported. As a general contractor, PSG supervises the construction as well as supplies and installation of boilers and equipment made by the companies Turbomach, Siemens, Alstom and Bresson.
