TABLE OF CONTENTS
Rio Tinto Reviews Three Projects
Xstrata, Glencore Merger to Become Effective on May 2
Barrick Sees Profits Fall with Slowing Market Demands
Black Warrior Riverkeeper Sues Drummond, CWA Violations at Shannon Mine
BHP Billiton Sells Pinto Valley Copper Mine for $650m
Vale Launches New 13 Million Canadian Dollars TUS Processing Plant
K+S Increases Capital for Legacy Potash Project in Saskatchewan
Kinross Reports Results of Pre-Feasibility Study on Tasiast Expansion
Revolution Signs to Sell the Concepcion Property to Minera Rio Tinto for US$4,000,000
Southern Copper Reports Production, Profit Declines in 2013
Guyana Goldfields Awards Engineering Contract for Early Works at Aurora Gold Project
Koniambo Nickel on Track to Achieve Full Production Rate by End of 2014
Rio Tinto, Chalco, Glencore Vie to Mine Bauxite in Australia
Rio Tinto Opens Underground Diamond
Tropicana Project Heading for Q4 2013 Production
Frontier Mining to Expand the Benkala SX-EW Plant in Kazakhstan
Rio Tinto Reviews Three Projects
Rio Tinto PLC is reviewing the schedules and budgets for three expansion projects, in the latest move by new Chief Executive Sam Walsh to cut costs and focus on the mining company's most profitable assets.
The review involves a $600 million molybdenum facility being built in Utah, a $500 million nickel-and-copper mine in Michigan and the $500 million modernization of an aluminum smelter in Iceland, according to a report by Rio Tinto on its operations released recently.
Rio Tinto is considering selling a number of assets but continues to push ahead with the expansion of its core iron-ore operations in Australia and the development of a giant copper-and-gold deposit in Mongolia.
Rio Tinto said another $800 million in approved capital remains to be spent on the three projects.
The modernization of Rio Tinto's smelter in Iceland to lift production to 230,000 metric tons of aluminum from 190,000 a year was approved in September 2010. The company last year said the expansion was due by the third quarter of 2014, but Rio Tinto's latest report only states that the project's costs and schedule are under review.
The two U.S. projects are due to begin output next year. The estimated capital cost has risen and the completion date has been pushed back for the Utah facility.
The Moly Autoclave Process plant, designed to process up to 30 million pounds of molybdenum in the first phase of development, was previously due to come on stream in the second quarter of this year and cost $100 million less. It is located at Rio Tinto's Kennecott Utah Copper operation, where the company already produces molybdenum.
Construction of Rio Tinto's Eagle mine in the U.S. was approved in mid-2010 and is expected to produce an average 16,000 tons of nickel and 13,000 tons of copper annually over seven years.
The all-share merger between diversified mining companies Xstrata and Glencore is expected to become effective on May 2, Xstrata said recently.
The merger will see the creation of the $90-billion natural resources group Glencore Xstrata. This followed an announcement by the High Court of Justice of England and Wales that it had sanctioned the new share scheme.
Brazilian mining giant Vale has reported an 18 percent decline in net profit for the first quarter of fiscal 2013 to $3.11 bn, compared to profit of $3.79 bn in the corresponding quarter a year ago.
The company attributed the fall in the quarter's profits to decreased sales, high tax payments and weak currency gains.
Net operating revenues for Q1 2013 were $10.94 bn, down 5.34 percent, from $11.55 bn in the first quarter of fiscal 2012, primarily due to seasonally lower shipments driven mainly by iron ore, pellets and fertilizers.
Vale, which is primarily involved in iron ore mining, said that the output of iron ore dropped in the first quarter by 3.5 percent to 67.54 million tonnes, compared to a year earlier period amid operational and permitting concerns.
Despite the fall in iron ore production, Vale reiterated its estimated production target of 306 million tonnes of iron ore in 2013.
However, the company's production of other important products such as copper, coal and nickel increased in the quarter.
During the first three-month period of fiscal 2013, Brazilian mining giant Vale has obtained final environmental clearance for its CLN 150 programme, which involves building a port in north-eastern Brazil, a move which will boost logistics support for the company's Carajás iron ore mine.
Despite robust 2013 Q1 financial and operating results, officials at Barrick Gold have reported a net and adjusted earnings decrease to $847 million from $1.04 billion year-on-year attributed to falling market demands. In particular, Barrick, the world’s top gold producer, cited lower realized gold and copper prices, lessened gold and copper sales volumes, and higher sales costs applicable to gold and copper, though partially offset by lower income tax expenses.
Barrick CEO Jamie Sokalsky, nonetheless, credited a “high quality portfolio of mines” with “sharp focus on cost management” as forces behind 2013’s otherwise strong results. And “while we remain positive on the long-term fundamentals for gold and copper, we don’t rely on higher metal prices to be the only driver of shareholder returns,” he added.
Suspension at Barrick’s Pascua-Lama gold-silver project in Chile was also an important development, noted Sokalsky; with 18 million proven gold oz and an estimated 4.7 billion silver oz, Pascua Lama is forecast to produce 850,000 gold oz and 35 million silver oz at the outset of a 25-year life cycle.
“We are working to address the environmental and other regulatory requirements on the Chilean side,” Sokalsky added; this month, a local appeals court ordered suspension of activities pending an environmental compliance hearing.
Alleging 758 violations of the Clean Water Act and Alabama mining laws at the Shannon coal mine in Jefferson and Tuscaloosa counties, Black Warrior Riverkeeper filed suit against a subsidiary of the Drummond Company recently in U.S. District Court.
The suit comes on the heels of a pending consent decree between the Alabama Department of Environmental Management and Drummond-owned Shannon LLC over violations at the mine. In the consent decree, ADEM found "96 discrete violations" within the last year and fined the company $36,200.
Black Warrior Riverkeeper, a clean water advocacy group, sued over violations acknowledged by the mine dating back to February of 2010.
ADEM water monitoring records show the discharges from the mine were routinely two to five times higher than permitted levels for a variety of regulated compounds, such as total suspended solids and elements including selenium and iron.
The ADEM report documents 26 instances where monthly averages for the discharges exceeded permitted levels. There were 47 instances where the company failed to monitor its discharges as required for months at a time. And 18 episodes where the company failed to report that it had exceeded discharge limits for at least a month at multiple outfalls.
"The Department has proposed the issuance of a Consent Order with a $36,270 civil penalty. We have just completed a 30 day public comment period to allow citizens an opportunity to comment on this proposed enforcement action," said Scott Hughes, with ADEM. "We are reviewing comments that were submitted and once that process is complete the Department will make a final decision on the issuance of the Consent Order."
Under state law, the mining company could be subjected to fines of $25,000 per violation.
The mine covers more than 6,000 acres, according to the suit, and has 76 discharges for mining wastes. Those discharges flow into Bankhead Lake via multiple tributaries of the Black Warrior River, including Blue Creek, Lick Branch, Little Blue Creek, Mud Creek, Rockcastle Creek, and Valley Creek.
“Shannon Mine is polluting tributaries to Valley Creek in violation of its Clean Water Act permit, upstream of where thousands of people recreate each year," read a statement from Nelson Brooke, with Black Warrior Riverkeeper. "That’s not the way it is supposed to work, so we aim to hold Shannon, LLC accountable to the law.”
The transnational miner has agreed to sell the Pinto Valley copper mine and a railroad in Arizona to Capstone Mining.
BHP Billiton has agreed to sell its Pinto Valley copper mine and a railroad in Arizona to Capstone Mining Corp for $650 million, reaping far more than expected as the top global miner tightens its belt in a weaker market.
BHP and its global mining peers have put billions of dollars worth of mines, projects and aluminium operations up for sale as they look to slash costs, cut debt and focus on their highest returning assets as commodity prices slump.
Pinto Valley takes BHP's total asset sales over the past 12 months to $5 billion.
The deal gives Vancouver-based Capstone its third producing mine. With forecast production of 130-150 million pounds of copper in concentrate and about 10 million pounds of copper cathode a year, the mine will more than double the company's current output.
Vale kicked off production at its new Tower Underflow Solids (TUS) processing facility in a ribbon cutting celebration at its Precious Metals Refinery in Port Colborne on April 17.
This investment allows Vale to process TUS for enhanced mineral recovery. TUS is a black mud-like material comprised of precious metals, copper, selenium, bismuth and tellurium.
“This investment is a clear indication of Vale’s commitment to our operations in Port Colborne,” said Kelly Strong, Vice-President of Vale’s Ontario and UK Operations. “The new TUS processing facility offers substantial return on investment and strengthens our market position for many years to come.”
The main product produced from TUS is tellurium dioxide (TeO2). This product provides feedstock for other industries in the manufacturing of solar cells. With its unique characteristics, tellurium dioxide can also be refined for use in optical refraction applications such as fibre optics.
The TUS project also includes a 1.25 million Canadian Dollars investment in Vale’s electrowinning facility in Sudbury, Ontario. This investment allows TUS to be transported from Sudbury to Port Colborne by slurry truck, rather than by barrel, which improves material handling efficiency and reduces environmental disposal requirements.
The TUS Project broke ground in February 2011 and commissioning began in October 2012. The project involved more than 50,000 person hours of work, boosting the local economy in Port Colborne during the 20 month duration of the project. Importantly, there were no recordable injuries during this time.
“We are very proud of the safety record on the TUS Project,” said Strong. “The project team’s dedication to the principles of Vale’s SafeProduction model and success in achieving zero harm are to be commended.”
The K+S Group, one of the world's leading suppliers of fertilizers and salt, has increased its capital expenditure for a new potash plant in Saskatchewan.
The German company announced today the supervisory board has approved a decision by the board of directors to increase the budget for the new plant north of Regina to $4.1 billion from $3.25 billion.
The new plan includes investments into the company’s infrastructure, modification of plant components along with increased material and labour costs. Basic engineering and cost analysis of the project is now at the advanced stage.
“Legacy strengthens the K+S Group’s competitiveness and opens attractive prospects for many decades,” said Nobert Steiner, chairman of the executive board of directors.
“In the future, the new plant will be the main source for distributing to emerging regions in Asia, South America and as well as to North America.”
Production is expected to start at the end of 2015 with commissioning in the summer of 2016.
The company expects to reach two-million-tonnes production capacity at the end of 2017 with a gradual extension of annual capacity to 2.86 million tonnes of potash.
When completed, Legacy will be the first new greenfield potash mine in Saskatchewan in nearly 40 years.
Company proceeding to feasibility study for 38,000 tonne per day mill
Kinross Gold Corporation (TSX: K; NYSE: KGC) recently announced the results of its pre-feasibility study (PFS) for its Tasiast expansion project. Based on these results, the Company has decided to proceed with a feasibility study on an expanded Tasiast operation with a 38,000
tonne per day (tpd) mill.
The PFS was based on constructing a new 30,000 tonne tpd mill at Tasiast utilizing heavy fuel oil as an energy source. It assumed a $1,500 per ounce gold price for overall project economics and, consistent with the Company’s year-end mineral reserve estimates, a $1,200 per ounce gold price for pit design purposes.
The PFS estimates are based on a pit design mineral resource estimate of approximately 10 million recovered gold ounces, which does not include additional known resources estimated using a gold price assumption above $1,200 per ounce. In addition, the PFS estimates do not include potential district exploration upside. The study found that during the first five years of production, a 30,000 tpd mill would be expected to have average gold production of approximately 830,000 ounces per year, with average cash costs1 of approximately $500 per ounce, and average all-in sustaining costs2 of approximately $735 per ounce.
The expected initial capital cost would be approximately $2.7 billion. The PFS indicated an estimated IRR for the project of approximately 11% and an estimated NPV of approximately $1.1 billion. In addition, the PFS incorporated trade-off studies which considered utilizing the existing 8,000 tpd mill capacity at Tasiast in addition to a new 30,000 tpd mill. These studies concluded that a single new 38,000 tpd mill would be expected to provide the optimum economics for an expanded project.
Therefore, based on these results, the Company is proceeding to a full feasibility study (FS) on an expanded Tasiast operation with a 38,000 tpd mill. The FS work process will begin immediately, and is now scheduled for expected completion in the first quarter of 2014.
Following completion of the FS, the Company will make a decision on whether to complete engineering and proceed with construction.
Revolution Resources Corp. (TSX:RV) is pleased to announce it has entered into an agreement to sell the Concepción property, totaling 117 hectares to Minera Rio Tinto, S.A. DE C.V. for US$4,000,000. Concepción is located within Revolution's 26,000 hectare Montaña de Oro property, in Sonora State, Mexico.
Revolution's focus in Mexico is gold, silver and copper. Given that the Concepción property is primarily a zinc exploration property, it was deemed a non-core asset for Revolution.
"The sale of the Concepción property to Minera Rio Tinto will provide the Company with non-dilutive capital to advance additional deals within our Mexican project generator model," states President and CEO Aaron Keay, "We will continue our capital preservation plan in these challenging markets, while focusing our efforts on executing additional joint venture or property sale agreements."
Completion of the transaction is subject to completion of the previously announced purchase by Revolution of Lake Shore Gold Corp's interests in the Mexico property portfolio, which includes the Concepción property, and is also subject to a 60 day due diligence period. The Lake Shore Gold transaction is expected to close early in May.
Southern Copper Corporation aims to increase copper production capacity by 84% from 640,000 tons to 1.175 million tons by 2017.
Southern Copper Corporation reported a 2.2% drop in copper mine production and a 7.9% decrease in silver output for the first quarter of the year.
Copper mine production decreased by 3,421 tons from 152,906 tons for the first-quarter 2012 to 149,485 tons for the first-quarter 2013, due to lower ore grade and recovery at the Toquepala Mine and lower ore grade at the Buenavista Mine, partially offset by higher ore grades and recoveries the Cuanjoe and La Caridad Mines.
Total silver production declined from 3,420,000 ounces in the first-quarter 2012 to 3,149,000 ounces in the first quarter 2013.
However, molybdenum output rose 4.1% during the same period from 4,623 tons during the first-quarter 2012 to 4,810 tons, while zinc production increase 3.8% from 22,592 tons during the first quarter of last year to 23,457 tons during the first-quarter 2013.
In a statement, Southern Copper Corp. Chairman German Larrea said, “We strongly believe that our company’s best potential for growth and enhancement of shareholder value is in copper which currently represents about 80% of our sales. With stable, low-cost and growing production from our existing mines and continued success in advancing our growth pipeline, we are optimistic that we will see a period of sustained high performance for Southern Copper in 2013 and beyond. A good example of this is the expansion of our Buenavista unit, where our projects should increase production capacity from 180,000 tons to 488,000 tons of copper by 2015.”
The company reported net income in the first quarter of 2013 of $495.4 million or 59-cents per year, a 20.3% decline over the net income of $621.4 million or 73-cents per share reported during the same period of last year.
Guyana Goldfields Inc. (TSX:GUY) is pleased to announce that it has awarded its detailed engineering contract for early works at the Aurora Gold Project.
The Company has engaged Tetra Tech Inc., the leading author of the Updated Aurora Feasibility Study, for detailed engineering and design of early works at Aurora. Detailed engineering of the early works will be completed over the next 2 months and will include the construction drawings for the tailings storage facility, river dike, and water diversion dams.
In addition, GGI has carried out direct discussions with various potential consultants and contractors for EPCM or EPC contracts that have recently designed and/or constructed mines of similar size, scope, geographical, and climatic conditions to Aurora. The EPCM and EPC contracts will be awarded upon the completion of all site visits in the second quarter.
Guyana Goldfields Inc. is a Canadian based company, focused on the exploration and development of gold deposits in Guyana, South America.
Xstrata Nickel’s Koniambo Nickel project has gone into production with first metal tapped.
Production marks a key milestone for this complex $5 billion greenfield project in New Caledonia, which has been under construction for the past six years and has been a flagship component of Xstrata’s organic growth programme. At the height of its construction more than 6,000 people were employed in building the project and its associated infrastructure.
First metal production signals the start of Koniambo Nickel as a multi-decade, tier one asset with long-term cash costs at the bottom of the second quartile. At peak production the mine will further cement New Caledonia’s position as one of the most important nickel producers in the world and provide steady employment for approximately 800 workers, with a focus on local employment, and indirect employment for thousands of others.
Ian Pearce, Chief Executive of Xstrata Nickel, said: “All components of the mining and smelting process have now been successfully tested, leading to production of metal from Line 1. The production of first nickel metal at Koniambo after six years of complex design and construction is a huge achievement and a source of great pride for all of our employees. We are on track to deliver the full production rate of 60,000 tonnes per annum by the end of 2014 as scheduled, while maintaining excellence in terms of environmental and safety performance at this world-class industrial complex.”
Xstrata Nickel is a 49% joint-venture partner in the development of the massive Koniambo ore body in New Caledonia. Société Minière du Sud Pacifique, the development arm of the North Province of New Caledonia, is the 51% partner. Koniambo is a world-class resource. Nickel is contained in both saprolite and limonite with grades that compare favourably with other laterite deposits in the world. Konimabo will be a life-long, low-cost asset with a resource base currently comprised of 75.6 million tonnes of measured and indicated saprolite resources at 2.47% nickel, and 83 million tonnes of inferred resources at 2.5% nickel. Nickel would be extracted using a smelting process to produce ferronickel, utilizing an updated version of the process used at our Falcondo operations, called nickel smelting technology (NST). Initially, nickel will be extracted from the saprolite part of the orebody. In future expansions, there are plans to extract nickel from the limonite orebody, an undiluted inferred resource of 100 million tonnes of 1.6% nickel, using a hydrometallurgical process.
Anglo-Australian miner Rio Tinto, China's Chalco and Swiss-based Glencore are among five companies short-listed by Australia to mine vast bauxite deposits in the country that have been left dormant for decades.
The three firms have each applied for leases to exploit bauxite deposits in the Aurukun district of Queensland state, where reserves are considered sufficient to support production of 6.5 million tonnes per year, the Queensland state government said.
The candidates, which also include Australian Indigenous Resources and Cape Alumina Consortium, have until mid-September to submit detailed mining proposals, according to a statement by Jeff Sweeney, Queensland's deputy premier.
Alcan of Canada, acquired by Rio Tinto in 2007, was stripped by the state government of leases on the Aurukun deposits in 2004 after failing to develop a mine over a 29-year period.
Chalco in 2007 agreed to develop the Aurukun reserves as part of a $2.5 billion alumina and aluminium-making project being considered at the time, but later scrapped it after the global financial crisis spread to commodities markets.
Bauxite imports into China have climbed to more than a third of consumption, driven by rapid growth in domestic alumina production and limited domestic supplies. It takes four tonnes of bauxite to make two tonnes of alumina and one tonne of aluminium.
Fiji, Jamaica, Guyana, Brazil, Guinea, Ghana, India and other parts of Australia already supply China with bauxite.
Aurukun is a predominantly Aboriginal community of about 1,000 people in the remote area of Cape York, near similar deposits currently mined by Rio Tinto.
Rio Tinto Opens Underground Diamond
Rio Tinto has opened its $US 2.2 billion Argyle underground diamond mine in Western Australia's East Kimberley region. The move from open pit mining to an underground operation will extend the life of Argyle until at least 2020. The average annual production over the life of the underground mine is likely to be 20 million carats per year.
The Argyle mine has produced some 800 million carats of rough diamonds over the past 25 years, including a small but consistent supply of the world's rarest pink diamonds.
Argyle Diamond Mine managing director Kim Truter said the Argyle Diamond Mine is a world-class resource, which has been strongly supported by Rio Tinto since exploration began in the 1970s.
Rio Tinto is one of the world's major diamond producers through its 100 per cent control of the Argyle mine in Australia, 60 per cent of the Diavik mine in Canada, a 78 per cent interest in the Murowa mine in Africa and 100 per cent interest in an advanced diamond project in India.
AngloGold Ashanti reported in late January 2013 that the Tropicana gold project located 330 km east-northeast of Kalgoorlie, Western Australia was on schedule to begin production during the fourth quarter of 2013. Construction was 55.6% complete at year-end 2012. Engineering design and procurement activities were complete, and all major equipment items had been delivered to the site.
The Tropicana project is a joint venture between AngloGold Ashanti (70%) and Independence Group NL (30%). Project construction was approved in November 2010. Since that time Tropicana’s mineral resource has grown by 2.8 million oz to 7.9 million oz, and the potential for extensions to the known ore zones and the discovery of additional ore within trucking distance of the processing plant remains high.
Tropicana gold production in its first three years of operation is planned at 470,000 to 490,000 oz/y at cash costs of between A$590/oz and A$630/oz, compared to a forecast of A$580/oz to A$600/oz at approval. The increase is largely due to higher fuel prices.
At approval, Tropicana had a life of 10 years. Exploration success has extended this to more than 11 years. Life-of-mine production has increased slightly to 3.6 million oz from 3.45 million oz at approval, while cash costs remain in the original range of A$710/oz to A$730/oz. Life-of-mine production is expected to increase as more of the mineral resources are converted into ore reserves.
Capital expenditure to complete the project is now estimated at between A$820 million and A$845 million, about 11% higher than the estimate at the time of project approval.
AngloGold Ashanti CEO Mark Cutifani said, “The West Australian construction market is overheated, and this, along with extreme skills shortages, has impacted labor productivity and subsequently costs.
“Progress to date has confirmed our confidence in the strength of Tropicana, and exploration continues to deliver the upside we believed was present at approval. Pre-commissioning will begin in the third quarter, leading to the commencement of production and production ramp-up in the fourth quarter.”
Mining at Tropicana is based on conventional drill-and-blast, truck-and-excavator, open-cut mining methods carried out by mining contractor Macmahon Holdings. The 5.8-million-mt/y process plant is designed for water and energy efficiency, with the comminution circuit comprising two-stage crushing, high-pressure grinding rolls, and ball milling, followed by a carbon-in-leach circuit for gold recovery.
The Tropicana joint-venture partners have approved an exploration budget of A$20 million for near-mine and regional exploration in 2013.
Officials at Frontier Mining Ltd., a private copper producer in Kazakhstan, announced further $17.9 million in financing from Sberbank Kazakhstan, allowing for expansion at its Benkala solvent extraction/electro-winning (SX-EW) plant via a 100%-owned unit KazCopper LLP. A further $6 million in capital expenditures will bring capacity to 10,000 metric tons per year.
Frontier CEO Yerlan Aliyev said he is “keen” to resume operations at Benkala in the former Soviet Republic. “Continued development of the site offers considerable benefits to the company and our shareholders,” he added.
In 2013, work will bring Benkala’s exploration activities to Baitemir, a possible copper gold porphyry deposit with associated molybdenum in the northeast of Kazakhstan, a former Soviet Republic. Frontier has a 100% stake in Baitemir via its 100%-owned subsidiary FML.
Frontier Mining is a copper company with production, development and exploration operations in Kazakhstan and primary activity at Benkala, an open-pit mine and SX-EW production facility in the Urals copper gold ore belt in northwest Kazakhstan. With a technical office in Almaty, the former Kazakh capital city, it also maintains offices in Aktyubinsk and Semipalatinsk, near Benkala and Baitemir operations.
McIlvaine Company
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Tel: 847-784-0012; Fax: 847-784-0061
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