TABLE OF CONTENTS
Rio Tinto Moves to a Majority Stake in Ivanhoe Mines
Vale Budgets $21.4 Billion for Capital Spending in 2012
FLSmidth in Negotiations to Acquire Ludowici
FLSmidth to Supply Equipment for Copper Mine Expansion in South America
Pan American to Acquire Minefinders
Kinross Sees 2012 Gold Production Increases, Rethinking Project Sequences
KGHM Extending Reach with Offer for Quadra FNX
North American Palladium to Shut Down Sleeping Giant, Starts Up Vezza
Rio Tinto Doubles Stake in Richards Bay Minerals
Cluff Gold Expands Mining Operations in West Africa
SAIL Planning 15 million tone/ annum Iron Ore from Chiria
Benkala Copper Project, Kazakhstan
KBR Awarded Major Rio Tinto Fuel Infrastructure Project
Metals and mining company Xstrata confirmed recently that it been approached by and is in discussions with Glencore International plc regarding a possible merger of equals which may or may not lead to an offer being made by Glencore for Xstrata. Both companies are headquartered in Switzerland. Glencore launched a $10 billion IPO last year and is listed on the London and Hong Kong Stock Exchanges.
The IPO provided Glencore the capital it needs make an acquisition of this magnitude. The combined company would have a market capitalization of more than $100 billion, placing it in a No. 3 position behind BHP Billiton and Vale, and just above Rio Tinto. Glencore, which currently owns 34% of Xstrata, has until March 1 to announce whether it will make an offer. This is the first time that formal merger talks have been confirmed publicly. In 2010, a privately-held Glencore proposed a merger with Xstrata and was rebuffed.
Xstrata was formed in 2002 when it purchased Glencore’s coal assets. Today, Xstrata is one of the world’s largest metals and mining companies. It mines coal, copper, nickel and zinc, and other metals, such as ferrochrome and vanadium. The company also provides technical services to the mining business. Xstrata has more than 100 mines and operates in 20 countries, employing more than 70,000 people. Last year, the company mined 85 million metric tons (mt) of coal, 889,000 mt of copper, 106,000 mt nickel and 738,000 mt zinc.
Founded in 1974, Glencore has evolved from purely marketing commodities sourced from third parties into a diversified natural resources group. The group also provides financing, logistics and other supply chain services to producers and consumers of commodities. Directly or through its subsidiaries, Glencore holds significant stakes in publicly-listed mining companies including Xstrata Plc (UK), Century Aluminum (USA), Katanga Mining (Canada), Minara Resources (Australia) and UC Rusal (Hong Kong). Its trading operations employ more than 2,700 worldwide in 40 countries. The company’s industrial installations employ more than 54,800 in 30 countries. The group trades much of Xstrata’s commodities and is the sole distributor of its nickel and cobalt production. Integrating Glencore’s trading business and mining assets with Xstrata’s mining assets could be an interesting mix.
Rio Tinto has taken a majority stake in Ivanhoe Mines Ltd, having purchased shares that take its interest to 51 per cent.
Rio Tinto chief executive Copper Andrew Harding, said, "Rio Tinto's move to a majority stake in Ivanhoe further demonstrates our commitment to the safe and successful development of the Oyu Tolgoi mine for the benefit of all stakeholders. We are approaching a very important phase in the development of the Oyu Tolgoi mine, with 70 per cent of the construction now complete. The lead-up to first ore in the second half of 2012 will mark an important milestone in the path towards commercial production of copper concentrate, slated for the first half of 2013."
Rio Tinto purchased an additional 15.1 million common shares of Ivanhoe, representing 2 per cent of Ivanhoe's outstanding common shares, from two sellers in a privately negotiated share purchase transaction. The shares were purchased for an aggregate of C$302 million at a price per share of C$20.00. After the completion of the share purchase, Rio Tinto will own 377,397,658 common shares of Ivanhoe representing 51 per cent of Ivanhoe's outstanding common shares.
Vale has budgeted $21.4 billion for capital expenditures in 2012, including $12.9 billion for project execution, $2.4 billion for research and development (R&D), and $6.1 billion for sustaining existing operations. Vale has 20 major projects under construction to implement organic growth, and these projects account for 75% of the project execution budget.
Geographically, 63.7% of Vale’s 2012 capital spending will be in Brazil, with the remainder going 6% to South America outside Brazil, 11.7% to Canada, 9.1% to Africa, 5.7% to Asia, 3.3% to Australasia and 0.5% to others. By business area, the spending will go 46.7% to ferrous minerals, 21.6% to base metals, 9.6% to fertilizers, 8.9% to coal, 3.6% to power generation, 2.9% to steel, 2.4% to logistics for general cargo, and 4.3% to others.
Vale’s 2012 R&D budget includes $918 million for its global mineral exploration program; $848 million for conceptual, prefeasibility and feasibility studies; and $591 million to be invested in new processes, technological innovation and adaptation. Exploration spending will include $282 million for iron ore, $202 million for nickel, $156 million for copper, $75 million for coal, and $50 million for potash and phosphate rock.
Vale’s investments in corporate social responsibility in 2012 will reach $1.647 billion, of which $1.354 billion will be invested in environmental protection and conservation and $293 million will be invested in social projects.
The Vale announcement made note of the fact that the mining industry worldwide faces a number of challenges to project execution, including environmental licensing, human capital constraints, cost pressures and longer lead times. Steps Vale has taken to deal with environmental licensing include stronger integration between environmental and project development teams, development of a “Best Practices Guide for Environmental Licensing and the Environment,” assembly of teams of specialists, closer interaction with environmental regulators, and creation of an executive committee to expedite internal decisions.
Actions to deal with longer lead times have included increased procurement intelligence, strengthening of long-term relationships with suppliers, anticipation of purchases, and diversification of the company’s suppliers base. “So far, these actions have dealt successfully with the pressures, and procurement lead times have not impacted the execution of the project pipeline,” the Vale announcement said.
FLSmidth recently entered into an agreement with Ludowici Ltd. to acquire the company for approximately A$267 million ($280 million). Headquartered in Brisbane, Australia, Ludowici is a leading provider of coal centrifuges, vibrating screens and complementary wear resistant products and services for the minerals industries.
Acquiring Ludowici will allow FLSmidth to complete its coal processing flowsheet and improve its copper and iron ore offerings with leading technologies and brands. With some 450 employees and approximately 65% of its turnover in Australia, the acquisition of Ludowici will significantly expand FLSmidth's presence in this important mining region. Furthermore, the acquisition will support FLSmidth’s aspiration to expand its customer service offering as approximately 60% of Ludowici’s turnover relates to customer service activities, including spare parts and consumables.
“FLSmidth is proud to have been given this opportunity to continue Ludowici’s 154 year history of providing leading innovative minerals technology to its customers. What GL&V Process was to FLSmidth in copper, Ludowici would be for FLSmidth in coal. Coal is equal in size to all other minerals segments combined in terms of material handled, and with the addition of Ludowici's products we would be able to offer coal customers a unique One Source solution,” said Jørgen Huno Rasmussen, Group CEO, FLSmidth.
Subject to satisfactory completion of due diligence and agreement on the final terms of the acquisition, FLSmidth and Ludowici anticipate executing the Scheme Implementation Agreement within seven weeks, with the scheme of arrangement being considered by Ludowici's shareholders in May 2012.
FLSmidth has been awarded contracts worth a total of approximately $85m (approximately DKK500m) for equipment supplies to a copper producer in South America.
The equipment contracts for the copper mine include the delivery of gyratory crushers, apron feeders, cyclones, flotation cells, concentrate thickeners, and tailing thickeners. The equipment supplied by FLSmidth will improve production efficiency and enable higher recovery of valuable metals.
The global demand for copper continues to grow. Both in industry and in households, copper is essential for construction, power generation and transmission, electronics and computing, machinery, heating and cooling, communications, motors and more, making copper an essential mineral for economic development.
"The winning of these orders demonstrates FLSmidth's strength as supplier to the global copper industry. Latin America is the largest producer of copper, but there is also growing activity in Asia, Africa, North America and Australia. FLSmidth sees opportunities in the upgrading and expansion of existing plants as well as in being able to provide for new plants, such as our recent announcement of an order for a complete copper concentrator plant in Mongolia", Group CEO Jørgen Huno Rasmussen said.
Pan American Silver Corp. has entered into a definitive agreement to acquire Minefinders in a deal valued at approximately $1.5 billion. The transaction would create a geographically-diversified silver producer with combined market capitalization of $4 billion.
The company’s combined 2011 pro forma production would be 26 million oz of silver and it’s expected to reach more than 50 million oz by 2015. The combined company will consist of eight operating mines and an extensive portfolio of development and exploration projects in jurisdictions throughout the Americas where Pan American currently operates. Based on 2011 data, approximately 52% of combined production will be from mines in Mexico, 21% from Peru, 15% from Argentina and 12% from Bolivia.
"Given the location of Minefinders' assets, we believe this acquisition is logical and consistent with Pan American's vision to become the largest, low-cost primary producer of silver in the world,” said Geoff Burns, President and CEO of Pan American. “Silver production from Minefinders' Dolores mine has increased almost 200% over the last year and we expect to see further increases into the future. As a producing, long-life, low-cost mine, Dolores will not only add to Pan American's production, but will help balance our entire portfolio of producing and development assets.”
The combined company will have a significant reserve base consisting of 350 million oz of silver reserves and 3 million oz of gold reserves with additional resources of 742 million oz of silver and 2 million oz of gold
The proposed transaction is subject to certain customary conditions. The boards of directors of Pan American and Minefinders have each unanimously determined that the proposed transaction is fair and in the best interest of their respective companies and recommend that their respective security holders vote in favour of the proposed transaction. If approved by security holders of Minefinders and shareholders of Pan American, the proposed transaction is expected to be completed by the end of March 2012.
Kinross Gold expects 2012 to be a good year. Gold production should increase with the planned acceleration of Fort Knox Alaska heap leach capacity, expected full-year operation of the third ball mill at Brazil’s Paracatu, and increased production at Tasiast, West Africa.
These expected gains are anticipated to be partially offset by a planned decline in grades, particularly at Kupol and Kettle River-Buckhorn. The company anticipates capital expenditures in 2012 of approximately $1.3 billion related to growth projects, primarily for Tasiast. It will also spend $220 million on exploration.
In 2011, Kinross produced approximately 2.6 million gold equivalent ounces. The company’s average 2011 production costs were approximately $600/gold equivalent ounce. In 2012, the company expects to produce approximately 2.6-2.8 million gold equivalent ounces from its current operations. Production costs are expected to be in the range of $670/oz-$715/oz for 2012. Higher consumable and labor costs, and an expected decline in grades at certain existing mines will increase costs.
The company’s three major growth projects at Tasiast, Fruta del Norte (FDN) and Lobo-Marte will require significant capital expenditures over the next several years. In light of cost escalation, and a better understanding of the Tasiast orebody and potential for alternative mining and processing rates and sequences, Kinross has elected to conduct a comprehensive optimization process with the aim of improving capital efficiency, project sequencing and investment returns. As a result, previously-disclosed scoping and pre-feasibility level assumptions and forecasts could be revised, including those related to project sequencing and start-up dates. The company expects the timetables for the Lobo-Marte, FDN and Tasiast feasibility studies will be extended.
As far as original Tasiast scoping study, various ore processing options have emerged following a recent infill drilling program, which provided a better understanding of the geology and distribution of the gold mineralization. The drilling program identified a higher-grade core and significant amounts of lower-grade halo material which may be better suited to a heap leach. Some of the near-surface lower-grade material may be more profitably developed with less capital intensive heap leaching in combination with carbon-in-leach (CIL) milling. Engineering analysis indicates that heap leaching may offer significant benefits if developed early in the Tasiast expansion sequence.
Based on these preliminary assessments, the company believes that approximately six to nine months of additional analysis and planning are required in order to determine the optimum processing mix for the Tasiast deposit, and the timing for developing those processing alternatives.
Polish copper producer KGHM Polska Miedź and Canada-based Quadra FNX Mining signed a binding conditional agreement in early December 2011 whereby KGHM will acquire Quadra FNX in a transaction that values Quadra FNX shares at C$2.87 billion. Inclusive of outstanding Quadra FNX debt, the total transaction value is approximately C$3.5 billion. KGHM will fund the acquisition from existing cash resources. The Canadian headquarters of the combined company will oversee its mining operations throughout the Americas.
KGHM is listed on the Warsaw Stock Exchange and has a market capitalization of about $8 billion. The company’s integrated production facilities are centered on the City of Lubin in western Poland and include three underground mines and associated concentrators, three smelter/refineries, a precious metals plant and a wire rod plant. The company is the world’s ninth largest producer of copper and third largest producer of silver.
In 2010, KGHM’s production included 937.8 million lb of mined copper, 1.2 billion lb of refined copper, 37.3 million oz silver and 24,949 oz of gold. Acquisition of Quadra FNX would increase the company’s resource base from 29.3 million mt to 37.4 million mt of contained copper.
Quadra FNX produced 253.5 million lb of copper in 2010. Its operations include the Robinson and Carlota mines in the United States, the Franke mine in Chile, and the McCreedy West, Levack (with the Morrison deposit) and Podolsky mines in Canada. Development projects include Sierra Gorda in Chile (the company’s major development project, involving one of the largest copper and molybdenum deposits in the world), Victoria in Canada and Malmbjerg in Greenland. Sumitomo owns a 45% stake in Sierra Gorda. Quadra FNX exploration projects include the Kirkwood, Falconbridge and Foy projects in the Sudbury region in Canada. The company also owns a minority stake in Capstone Mining.
The Sierra Gorda project hosts 1.3 billion mt of copper-gold-molybdenum ore in proven and probable reserves. Production from the project is scheduled to begin in 2014. The project feasibility study calls for production of 483 million lb/y of copper, 25 million lb/y of molybdenum, and 64,000 oz/y of gold in concentrates over a 20-year mine life. In 2010, Quadra FNX produced 253.5 million lb of copper in concentrates.
KGHM CEO Herbert Wirth said, “This carefully prepared transaction is in line with KGHM’s strategy of focused development and value creation. KGHM will benefit greatly from Quadra FNX’s high-quality management team and employees, and we plan to make Canada our base for further growth in the Americas. Quadra FNX has a proven track record and ambitious future development plans. Coupled with KGHM’s strong balance sheet and substantial positive cash flow, this transaction will provide a solid financial foundation and improve prospects for securing necessary financing for projects in Canada and abroad.”
Closure of the transaction is contingent on approval by two-thirds of Quadra FNX shareholders at a general meeting of Quadra FNX and regulatory approvals. If a competing offer arises, KGHM is entitled to alter currently proposed pricing terms. Should Quadra FNX withdraw from the transaction, KGHM will be paid a break fee of C$75 million.
Subsequent to the KGHM/Quadra FNX agreement, KGHM and Abacus Mining & Exploration announced December 21, 2011, completion of a positive feasibility study for their Ajax copper-gold project located southwest of Kamloops, British Columbia. The project is being developed through KGHM Ajax Mining Inc., owned 51% by KGHM and 49% by Abacus. KGHM holds an option to increase its interest in the project to 80% within 90 days of its receipt of the feasibility study.
The Ajax feasibility study describes a 60,000-mt/d open-pit mining operation producing about 50,000 mt/y of copper and 100,000 oz/y of gold in concentrate over a 23-year mine life. Capital cost to develop the project is estimated at $795 million. Measured and indicated mineral resources total 512 million mt of ore grading 0.31% copper and 0.19 g/mt of gold. Proven and probable reserves of contained metal are estimated at 1.34 million mt of copper and 2.75 million oz of gold.
North American Palladium announced in mid-January 2012 that it is discontinuing production at its Sleeping Giant gold mine, located 80 km north of Amos in the Abitibi region of Quebec. However, the Sleeping Giant mill will continue to operate to process ore trucked approximately 85 km from the company’s new Vezza gold mine. The mill began processing a bulk sample of Vezza ore in January.
Of the shutdown at Sleeping Giant, North American Palladium President and CEO William J. Biggar said, “We have been unable to achieve our objective of returning to profitability by mining from three new levels at depth. While early on we had great encouragement with high-grade drill results that supported the shaft deepening investment, as we conducted infill drilling we encountered a lack of continuity in the narrow vein structure such that we were unable to devise an economic mine plan. Despite our best efforts to improve the profitability of the mine, we are disappointed with the outcome and wish to express our gratitude to our employees at Sleeping Giant for their hard work during a very challenging period.”
North American Palladium expects to begin commercial production at Vezza at a mining rate of 750 mt/d at the beginning of the second quarter of 2012. For the nine-month period to December 31, 2012, the company forecasts the mine will produce about 30,000 oz of gold at a cash cost of approximately $1,150/oz, including trucking costs of approximately $80/oz.
Vezza production will come from a blend of long hole and Alimak mining methods. North American Palladium has entered into a contract with Promec Mining, a Val d’Or mining contractor, to provide the mining workforce. Beginning in 2013, the company expects to increase Vezza’s daily mining rate to 850 mt/d, yielding approximately 43,000 oz/y in gold production at cash costs of around $1,000/oz. Vezza is expected to have a mine life of nine years.
Santa Fe Gold’s Summit silver-gold mine in southwestern New Mexico is expected to achieve commercial production soon. Mechanized long-hole mining of the ore body began in December 2011 and has proved to be very successful. At the targeted production rate of 400 tons per day, output during 2012 is anticipated to increase by 400% from 2011 levels.
Annual revenues over the life of mine are projected to approximate $40 million at recent gold and silver prices. Operating costs are estimated to be $364/oz of gold equivalent produced. Ore reserve grades over the life of mine are estimated to average 10.78 oz/ton silver and 0.143 oz/ton gold.
“The production ramp up has been aided significantly by the $25 million debt financing completed in December,” said Dr. Pierce Carson, president and CEO. “In particular, we have been able to acquire additional underground equipment, which will help in the mining and removal of ore from the mine. Currently awaiting removal there are about 10,000 tons of drilled and blasted broken ore underground.
“We are continuing to operate the Lordsburg mill two 8-hour shifts per day, five days a week, and the Summit underground mine two 10-hour shifts a day, seven days a week. We have added to our operating staff and instituted an aggressive training program with a strong emphasis on safety. Currently our work force totals 56, the majority employed at the mine and the mill,” said Dr. Carson.
“With the present environment of attractive silver and gold prices, we expect 2012 to be a good year for Santa Fe,” Dr. Carson said. “Looking to the future, our flotation mill has significant extra capacity and an important priority will be to step up both our exploration and acquisition programs for additional mill feed.”
Rio Tinto will increase its stake in Richards Bay Minerals (RBM) to 74 per cent through the acquisition of BHP Billiton's 37 per cent interest.
The acquisition has been triggered by BHP Billiton's decision to exercise a put option agreed between Rio Tinto and BHP Billiton as part of RBM's restructuring in 2009. The final consideration for the acquisition will be determined through a previously agreed valuation process. Completion is subject to regulatory approvals.
RBM is a South African mineral sands mining and processing operation that was established in 1976. Rio Tinto manages RBM and markets its products, including titanium dioxide feedstocks, high purity iron, zircon and rutile. In line with South Africa's Broad-Based Black Economic Empowerment legislation, the remaining 26 per cent of RBM is owned by a consortium of local communities and businesses (24 per cent) and RBM employees (two per cent).
Rio Tinto Diamonds & Minerals chief executive Harry Kenyon-Slaney said "RBM is an important part of Rio Tinto's world-class titanium dioxide portfolio. Doubling our stake in the business solidifies our position at a time when the long-term outlook is strong and demand for higher grade titanium dioxide is growing, driven by urbanisation and rising environmental standards."
Rio Tinto's global titanium dioxide business, Rio Tinto Iron & Titanium, includes RBM, its wholly-owned Rio Tinto Fer et Titane operation in Quebec; and its QIT Madagascar Minerals (QMM) operation (80 per cent interest).
Cluff Gold (TSX:CFG) (AIM:CLF), a gold miner focused mainly in West Africa, announced recently that it will buy Orezone Gold’s Sega gold project mining licenses and property in Burkina Faso for 11-million shares and $15-million in cash.
Located about 20 km by road from Cluff Gold’s Kalsaka project, the Sega project includes an indicated gold resource of 450,366 ounces and 8.3-million tons of ore at 1.69 g/t, and 147,344 ounces inferred resources in 2.9-million tons of ore at 1.58 g/t.
Cluff Gold said the acquisition would help the company increase the Kalsaka mine life significantly with limited upfront capital expenditure, with detailed metallurgical test work already completed by Orezone, indicating average heap leach recoveries of 85% for oxide and transitional ore, with favourable agglomeration properties.
“A preliminary economic assessment will start immediately to confirm the feasibility of a heap leach operation processing Sega’s oxide and transitional resources, while maintaining a throughput at Cluff Gold’s Kalsaka plant, in line with existing capacity of 1.6-million tons a year,” the company said in a statement.
Cluff Gold will pay Orezone $15 million (c£9.5 million) in cash along with 11 million new Cluff Gold ordinary shares. The company confirmed the acquisition would be financed from Cluff Gold’s existing cash resources. As at 31 December, Cluff Gold had $28.9 million in cash.
Completion of the transaction remains conditional on standard closing conditions, including the approval of the government of Burkina Faso and the approval of the TSX.
“The acquisition enhances the potential for our Burkina Faso operations to continue to provide significant cash flow through the development and early production from our flagship development asset, Baomahun, in Sierra Leone,” said Cluff Gold chief executive Peter Spivey.
According to Orezone’s CEO Ron Little, the transaction adds significant value for both companies and will provide more immediate cash flow for the government of Burkina Faso.
“The sale provides Orezone with a significant nondilutive financing to advance the development of its Bombore gold project, while still allowing the opportunity to participate in the upside at Sega through an equity interest in Cluff Gold,” added Little.
The Telegraph reported that Steel Authority of India Limited’s mining consultant Hatch has devised a strategy for a massive 15 fold jump in iron ore output from its Chiria mines.
Hatch’s plan, submitted to SAIL, envisages production from Chiria to reach 15 million tonnes per annum from 1 million tonnes now, which will make it the most productive ore mine in the country.
Hatch has proposed that output be raised in phases first to 7 million tonnes per annum and then to 15 million tonnes per annum.
The INR 5,000 crore investment proposal on mining facilities and an ore beneficiation plant will lead to Chiria meeting a third of SAIL’s ore requirements. With reserves of 2.2 billion tonnes, Chiria has Asia’s largest deposits of high grade ore.
Officials said SAIL had obtained stage 1 forest clearance from the forest and environment ministry for 595.075 hectares of Chiria covering the Ajitaburu, Budhaburu, Sukri-Latur and Dhobil leases. Separate environment clearances have been obtained in March for Chiria’s Budhaburu and Ajitaburu leases. The Indian Bureau of Mines have approved the mining plans for Chiria’s Ajitaburu, Budhaburu, Dhobil and Sukri-Latur leases.
SAIL executives said the development of Chiria is crucial to tits long term plans. They said “It’s the only deposit in India capable of sustaining up to 30 million tonne to 50 million tonne of mechanized mining annually. Over the next half a century, around 40% of SAIL’s iron ore requirement will be met from this one single field.”
Once the ore in the other mines in eastern India gets depleted, Chiria will be the sole supplier to it’s four integrated facilities at Bokaro, Burnpur, Durgapur and Rourkela and to the new unit being built at Burnpur.
Key Data
Producer: Frontier Mining
Location: Kazakhstan
Mineral: Copper and associated gold and molybdenum
Reserve Base: The measured and indicated resources of 194,147kt grading at 0.45% of Cu (November 2010)
Production Start: 2012
Annual Production: 20,000t
Mine Method: Open pit
The Benkala project is a porphyry copper mine located in northwest Kazakhstan in the Ural mountain range. It is 100% owned by Frontier Mining and operated by its wholly owned subsidiary KazCopper.
Benkala was discovered in 1968 and is being developed as an open pit operation. The mine area has a flat landscape and the water table lies about 25m below the surface, making it ideal for heap leaching.
Frontier officially commissioned the solvent extraction (SX) and electrowinning (EW) (SX-EW) plant at the mine in December 2011. Production at the mine is expected to commence in 2012 and reach 20,000t in 2013.
The mine features good infrastructure, including a new two-lane highway and the Aktobe-Kostanai railway line. New 550kv power lines will provide electricity for the mine.
In January 2012, Sberbank Kazakhstan provided $29m for the development of the mine. The funds will be used for expansion of the mine and to carry out further drilling activities.
Geology and reserves
Benkala mine is made of granodiorite intrusions in a volcanosedimentary sequence containing tuffs and sandstones.
Wardell Armstrong International, an independent consultant, estimated Benkala to contain 1.56mt of copper, associated gold and molybdenum reserves.
The measured and indicated resources of the mine as of November 2010 were estimated at 194,147kt grading at 0.45% of Cu. Inferred resources are estimated at 133,521kt grading at 0.42% of Cu.
Mineralisation
"Frontier officially commissioned the solvent extraction (SX) and electrowinning (EW) (SX-EW) plant at the mine in December 2011."Copper mineralisation at Benkala is contained in the granodiorite and is tightly connected with quartz-sericitic metasomatism. The mineralised zone occurs in the form of a truncated cone and is 800 x 1,200m in size.
The Benkala mine has been explored during the Soviet era between 1976 and 1979, with 21,800m of drilling. The drilling activities identified a main mineralised zone including a 30m thick near-surface secondary zone (oxide zone). It contains chalcocite and small amounts of bornite below 40m of surficial cover.
In 2006, the mine's previous operator Coville Intercorp carried out a confirmatory drilling programme which confirmed the mineralised zone identified during the Soviet era drilling.
Below the secondary zone, there is a sulphide zone containing chalcopyrite at a depth of 700m. There is also a transition zone between these two, with properties similar to the secondary zone.
Frontier carried out drilling in the oxide mineralisation between 2008 and 2010. About 61 holes were drilled totalling 7,729m.
Mining and processing
Mining will be carried out through a 270m wide open pit. The pit is 950m long and 25m deep. Ore will be extracted by three hydraulic excavators.
Extracted ore and waste rock will be transported by 45t Belaz trucks. Waste rock will be transported to a dump site about 1.5km from the open pit.
Hitachi loaders, Komatsu dozers and a Caterpillar grader will be used at the mine.
Ore processing
Initial mining activities will target the oxide zone of the mine.
"The Benkala project is a porphyry copper mine located in northwest Kazakhstan in the Ural mountain range."The oxide ore will be processed through heap leaching and floatation, while the sulphide ore will be processed using floatation. Tests conducted at the mine have revealed a recovery rate of 63% for the oxide ore. Recovery rates for the sulphide ore have been estimated at 85%.
The extracted ore will be first crushed in two stages to a size of 20mm using a jaw crusher and VSI crusher. Ore will then be agglomerated using sulphuric acid and sent to the heap leach pad for leaching. The heap leach pad is located to the west of the pit and is 1km by 3km in size. Ore will be stacked in 6m lifts on the pad.
Following leaching, the ore will be sent to the SX-EW plant for processing. The plant has a capacity of 7,000t and includes crushing and grinding facilities, a laboratory, leaching pads, a workshop and communication and power cabling. Frontier is planning to expand capacity of the plant to 10,000t and to 20,000t by 2013.
KBR has been awarded a contract to upgrade Rio Tinto’s fuel assets as part of the mining company’s investment in power and fuel supply projects for its iron ore mines in the Pilbara region of Western Australia.
KBR’s minerals division will provide engineering, procurement and construction management (EPCM) services to install fuel assets and storage in five locations: port facilities at Cape Lambert and Dampier, mines at Brockman and West Angelas and a maintenance yard located near Dampier. The infrastructure will help provide certainty in meeting Rio Tinto’s fuel requirements.
Once the project is complete, Rio Tinto’s fuel network in the Pilbara region will use the company’s rail network to transport diesel to hubs for storage and further distribution to mines and power generation facilities. This will reduce the requirement for road trains to transport fuel on public roads from Port Hedland, 400 km to the north.
“KBR is glad to have this opportunity to expand our support to an important customer,” said Mark Read, president, KBR Minerals. “We will draw on our global network of people to provide the resources to complete this project, which will be an integral part of Rio Tinto’s 333 expansion program.”
KBR has been involved in projects in the remote Pilbara for more than 30 years. The fuel infrastructure project follows KBR’s completion of a definitive engineering study for Rio Tinto that defined the diesel storage and transfer facilities required to support the company’s expansion in the Pilbara.
McIlvaine Company
Northfield, IL 60093-2743
Tel: 847-784-0012; Fax: 847-784-0061
E-mail: editor@mcilvainecompany.com
Web site: www.mcilvainecompany.com