MINING UPDATE

The iron ore price roared ahead at the end of 2014 with Northern Chinese import prices surging nearly 5% on an improving outlook for the Chinese economy.

The 62% Fe benchmark import price including freight and insurance at the port of Tinjian tracked by The SteelIndex added $3.30 or 4.9% to $71.20 a tonne, the highest since November 18. The price of the steelmaking raw material has now climbed back 8.5% since hitting levels last seen May 2009. Despite the slowest growth rate since 1990, China would still be adding some $700bn to GDP in 2015.

Iron ore's resurgence is thanks to stimulus measures announced by the People's Bank of China over the weekend that is set to free up some $800 billion in funds available for loans at commercial banks.

On top of the new lending and bank deposition rules, interest rates in the world's second largest economy is also on course for further cuts in the new year while the scrapping of housing purchase limits targets the troubled property sector directly.

China imports more than two-thirds of the global seaborne trade expected to hit 1.4 billion tonnes in 2015 and forges nearly as much steel as the rest of the world combined.

The country's decades long urbanization push and construction boom has made it the driving force behind commodity price rises over the last decade or more.

But growing fears of a property bubble and overinvestment in infrastructure, coupled with a flood of new iron ore supply, have seen prices slide 47% since the start of the year.

Beijing is attempting to accelerate the slowest GDP growth rate in decades, expected to hit 7% in 2015. Despite the tepid economy, the country would still be adding some $700 billion to gross domestic product in 2015 (excluding Hong Kong).

Mining Industry 2014 Review

An economic slowdown in China along with an oversupply of iron ore and metallurgical coal caused metal and mineral prices to drop. Companies’ stocks sank to decade lows and cost cutting became the critical part of every miner’s strategy, Globe and Mail reports.

Iron ore lost 50 per cent of its value in 2014, falling below $67 (U.S.) a tonne because of weak demand from China and a supply surplus. The world’s biggest producers, Rio Tinto Group, BHP Billiton Ltd., Vale SA and Fortescue Metals Group continued to increase production, despite the low prices for the steel-making ingredient. Their strategy has taken a toll on smaller, higher cost producers, such as Cliffs Natural Resources Inc. and Labrador Iron Mines Holdings Ltd., which both have suspended operations at iron ore mines.

Metallurgical coal, which is also used to make steel, saw the same scenario. Too much supply and tepid demand from China left markets oversupplied in so-called coking coal. Prices for the mineral have dropped 60 per cent over a three year period to $110 a tonne. The weak price has prompted companies to suspend projects and mothball mines.

Barrick Gold Corp. and Newmont Mining Corp. canned their merger talks in April. The deal between the world’s two largest gold producers would have consolidated their overlapping operations in Nevada and cut as much as $1-billion in annual costs. According to both Barrick and Newmont, merger talks are completely dead.

In the first quarter of the year, gold rose 15 per cent to $1,387 an ounce. That was the high point of 2014 – and nowhere close to the $1,900 peak that gold touched in 2011. Bullion then proceeded to fall as low as $1,140 an ounce, after the U.S. Federal Reserve halted quantitative easing and Japan’s Abenomics stimulus sent the U.S. dollar soaring. The weak gold price put pressure on higher cost producers such as Canada’s Iamgold Corp. and South Africa’s Harmony Gold Mining Co. Ltd. Shares of gold miners like Barrick, Iamgold and Kinross Gold Corp. sank to decade lows.

Ontario’s Liberal government vowed to spend $1-billion (Canadian) to build a road to the “Ring of Fire” mineral belt in Northern Ontario. The promise comes at a particularly rough time in the mining industry. There is little demand for chromite, the most prolific mineral in the ring, and investors are not interested in funding new mines. Cliffs Natural Resources, which halted work on the Ring in 2014, is trying to sell its chromite properties and wants no part of the project. Among the players, from the miners to the federal and provincial government to the First Nations communities that surround the area, there is no consensus on the best path forward.

COMPANY NEWS

BHP and Rio Tinto Move to Dominate in Copper

Rio Tinto and BHP Billiton are amassing vast copper holdings in a push to capture a greater chunk of the $140-billion world market, apparently aiming to squeeze out high-cost producers just as they did in the global iron ore business, Reuters reports.

Separately and in joint ventures, Rio and BHP intend to mine millions of additional tonnes of copper, despite seeing an oversupplied market for the next few years.

There have been no suggestions that BHP and Rio are working in concert to seize overriding control of global copper supply.

A worldwide supply surplus of 300,000 t is forecast in 2015 by Australia's Bureau of Resource and Energy Economics, equivalent to half a year's output by South Korea.

Rio's copper division head, Jean-Sebastien Jacques, told investors in December a shift back to a deficit in the market was unlikely before 2018 and that the company was now striving to "gain a clear advantage" against competitors and "build a business model that creates value through the economic cycles".

BHP sees copper usage growing sharply in the next decade, partly on the back of a shift to renewable energy sources requiring copper-intensive apparatus. The metal has been designated a core pillar of growth by BHP's board.

The strategy of mass output introduced this year aimed to flood the world with cheaply mined iron ore and drive prices down. The result in iron ore so far, where Rio and BHP now control half the sea-traded market, has been the elimination of some 125-million tonnes of annual capacity - a tenth of world demand - by higher-cost producers.

The drive in copper could give BHP and Rio an advantage over rival Vale of Brazil, whose exposure to the red metal is less than half that of BHP and Rio and stagnating as it concentrates on its main iron ore business.

In regions as diverse as North and South America, Australia and Mongolia, BHP and Rio are digging new mines or expanding old ones, some requiring billions of dollars of investment, others hardly anything.

In Arizona, the jointly owned Resolution project could produce more than 1 billion pounds of copper a year at its peak, which would make it the largest copper producer in North America and one of the biggest in the world. The U.S. Congress has cleared the way for Rio Tinto and BHP to swap land with the government, which will allow them to build the long-delayed $6 billion copper mine. The bill will now be sent to President Barack Obama to sign it into law.

BHP Chief Financial Officer Peter Beaven said $4-billion in construction work at the Escondida joint venture with Rio in Chile, plus expansion of the wholly owned Olympic Dam mine in Australia, could yield hundreds of thousands of additional tonnes of copper annually within a few years.

On its own, Escondida will be able to produce one-million tonnes of copper a year - nearly 5% of world output - for at least a decade, with little ongoing capital costs, Beaven said.

Rio Tinto is allocating $6-billion to extend the Oyu Tolgoi copper mine in Mongolia and is in the early stages of developing its La Granja mine in Peru, regarded as Latin America's largest unexploited copper deposit.

Weir Acquires Trio Engineered Products

Scotland-based Weir Group PLC announced in mid-October that it had entered into an agreement to acquire Trio Engineered Products, a manufacturer of crushing and separation equipment for the mining and aggregates markets, for about $220 million from majority owner Navis Capital and the company's management team.

Weir is a major global supplier of pumping equipment for mill circuits that separate rock from ore. The acquisition of Trio will build upon Weir’s recent entry into applications for other segments of mill processes. Trio is based in Shanghai, China, where it has two manufacturing plants, and also has facilities in the U.S. In 2013, 31% of its revenues were generated in North America, primarily in the growing aggregates sector; 25% were in China, mainly serving the domestic mining industry; the balance was broadly spread across Australia, South America, Africa and Europe. In 2014, Trio is expected to generate revenues of $120 million with operating profit margins broadly in-line with Weir’s Minerals division.

Weir will acquire 100% of Trio Engineered Products (Hong Kong) for $133 million with the balance of the consideration relating to the acquisition of 100% of Trio Engineered Products in the U.S.

Alcoa Selling Jamalco Stake to Noble Group

Alcoa and Noble Group Ltd. have signed a definitive agreement that will result in Alcoa World Alumina and Chemicals (AWAC) selling 100% of its ownership stake in the Jamalco bauxite mining and alumina refining joint-venture in Jamaica to Noble for $140 million. AWAC will continue as the managing operator for three years under a compensated service agreement. The sale was expected to close by the end of the fourth quarter of 2014.

The Jamalco joint venture is owned 55% by Alcoa Minerals of Jamaica (AMJ) and 45% by Clarendon Alumina Production Ltd., a Jamaican government company. AMJ is part of the AWAC joint venture, which is owned 60% by Alcoa and 40% by Alumina Ltd.

Jamalco’s bauxite mines, alumina refinery, and port facility are located in south-central Jamaica. The refinery has capacity to produce 1.425 million mt/y of alumina.

“The decision to sell AWAC’s stake in Jamalco is in line with Alcoa’s global strategy to reshape its upstream portfolio and lower the cost base of our commodity business,” Bob Wilt, president of Alcoa Global Primary Products, said.

Noble Group manages a portfolio of global supply chains covering a range of industrial and energy products. The company sources bulk commodities from low-cost regions such as South America, South Africa, Australia, and Indonesia and supplies high-growth markets, particularly in Asia and the Middle East.

Mark Hansen, head of the group’s Metals Division, said, “This transaction will provide Noble with an additional 778,800 mt/y of alumina off-take while the Jamaican government retains its 45% ownership of the joint venture.”

DuPont Says Belts with Kevlar Can Run Faster, Longer

DuPont Protection Technologies recently announced that the inclusion of its Kevlar material in mining conveyor belts has demonstrated increased productivity and reduced annual maintenance costs. Data collected in a field trial hosted by Chilean copper producer Codelco’s Andina Division, said DuPont, demonstrated a capacity increase of more than 18%, with a 60% reduction in annual maintenance costs.

In the test, Andina replaced a 48-m-long conveyor belt containing a 5-ply conventional nylon/polyester (EP) cord carcass with a comparable belt containing a single-layer DuPont Kevlar

Advanced Performance (AP) fiber. DuPont said throughput increased 3,000 t/d, while required belt maintenance time fell significantly and yearly maintenance costs dropped from $0.14/t to $0.05/t.

“The lightweight strength, durability and performance of this advanced material in extreme conditions make it an ideal choice in this application,” said William F. Weber, vice-president, Kevlar, DuPont Protection Technologies. “The belts can run faster with less wear and tear, enabling mining companies to break boundaries—to ‘Dare Bigger’ in terms of their capacity.” (Dare Bigger is the new brand platform for DuPont Kevlar.)

DuPont said Kevlar fiber enables conveyor belt manufacturers to offer lighter, more flexible, and longer life solutions to mining applications, increasing throughput and reducing operational costs associated with installation, maintenance, replacement and energy consumption. Claimed advantages include:

•Ease of installation—Belts made with Kevlar fiber are easy to integrate into an existing setup because, unlike polyester/nylon or steel, belts made with Kevlar can go on almost any size pulley or system without reconfiguration.

•Productivity improvements—Belts made with Kevlar fiber are lighter and can run at higher speeds, are stronger and therefore help reduce maintenance downtime, and are more flexible so they allow a greater trough angle preventing materials from sliding off, even at higher speeds.

•Energy savings—Kevlar can provide cost savings in terms of decreased

•power consumption. DuPont has developed an energy calculator to help belt manufacturers and mining companies evaluate the benefits of adding Kevlar fiber for lower energy per ton of material conveyed.

•Reduced maintenance—Despite their flexibility, belts made of Kevlar fiber exhibit very low creep. Since they hardly stretch, once installed, belts containing Kevlar rarely require re-splicing, a process that typically consumes a whole day. This stability helps reduce maintenance outages.

ABB Unveils Smartventilation System for Mines

Power and automation technology group ABB has unveiled its SmartVentilation system, which supplies fresh air and vents toxic gases from subterranean mines.

As the new system has the ability to work 'on-demand' it is expected to reduce a mine operator's electricity costs by up to 50%.

SmartVentilation is divided into SmartBasic, SmartMid and SmartPerfect implementation levels, each providing different degrees of control over the operation of the mine's intake as well as exhaust fans.

Mine operators can install one implantation level and then upgrade it at their own pace.

Available in modular form, the fans and their drives are controlled with ABB's System 800xA, an industrial automation platform.

The SmartVentilation system can provide a real-time analysis and control system to ensure working conditions are safe and energy efficient, the company claimed.

Using the technology, operators, engineers and mine managers can easily supervise and control the ventilation system, either from a central location or using mobile devices.

ABB global product manager for integrated mine automation Patrik Westerlund said: "The SmartVentilation is a state-of-the-art control solution for mine ventilation that was built to be easy-to-use and maintain during the lifetime of the mine."

AMERICAS

Coeur Acquires Paramount

Top silver miner Coeur Mining Inc. has announced its acquisition of Paramount Gold and Silver Corp., creating a $146 million spin-off for Paramount’s subsidiary-run Nevada assets and its Mexican San Miguel operation, through common stock.

CEO Mitchell J. Krebs said the agreement allows Coeur assets “well-positioned with higher grades and lower costs,” enhancing “long-term viability and growth,” in particular, through the low-cost San Miguel project in northwest Mexico’s Palmarejo District.

The new subsidiary, Paramount Nevada Gold, will hold interests in the Sleeper Gold, Mill Creek and Spring Valley operations, while benefitting from a $10 million Coeur cash infusion, according to officials. Paramount shareholders will hold a 95.1% interest in the unit; Coeur will own the remainder.

Paramount CEO Christopher Crupi expressed similar enthusiasm. Moreover, the deal empowers “the major producer best able to maximize value,” he said. “Our plan is to continue developing and partnering assets with established producers.”

Coeur will invest $5.25 million in Paramount for 0.7% in smelter royalty returns from San Miguel, officials added. Covering 299,000 acres surrounding Coeur’s Palmarejo Chihuahua complex, San Miguel’s Don Ese deposit lies 800 m from Coeur’s Guadalupe deposit, where development is under way. Don Ese represents the southeast extension of Coeur’s Independencia structure, officials noted, containing high-grade silver and gold mineralization and is free of nongovernment, third-party royalties or obligations. Coeur forecasts recovery rates of 80% in silver and 95% for gold reserves.

Coeur plans to further Don Ese by $15 million pending a Q4 2015 first pour before ramping up to 2,500 tons per day (t/d) by Q4 2017. Palmarejo’s 6,000 t/d processing facility, meanwhile, is pending capacity as open-pit production ends in 2015, as activities transition to Guadalupe.

Don Ese and Guadalupe could produce up to 6 million silver oz. and 110,000 gold oz. annually through 2023, according to company representatives.

NorthMet Project, MN, in Permitting Stage

PolyMet Mining's NorthMet copper nickel platinum group metals (PGMs) project, located in northeastern Minnesota, US, will be the first ever mining project to commercially extract metals from Duluth Complex.

Duluth Complex is one of the world's largest known undeveloped deposit containing copper, nickel and other precious metals.

The definitive feasibility study for the polymetallic mine was completed in September 2006. The project is still in permitting stage with construction works anticipated to begin in 2015.

The mine is expected to produce 72 million pounds (mlbs) of copper, 15.4mlbs of nickel, 720,000lbs of cobalt and 106,000 troy ounces of precious metals a year over an estimated mine life of 20 years. It is expected to create 360 jobs during operational phase.

NorthMet project is located within the Partridge River intrusion along the northern margin of Duluth Complex, a geological formation near the Mesabi Iron Range, which is known to contain abundant amounts of copper nickel platinum group metals (PGMs).

The mine is estimated to contain 249.2 million tonnes (Mt) of proven and probable reserves grading 0.284% copper, 0.082% nickel and 0.38 gain-to-noise-temperature (g/t) precious metals.

Conventional drill and blast mining method followed by truck and shovel operation will be employed for the NorthMet mining project.

The mine is divided into three open pits known as West Pit, East Pit and the Central Pit. Mining will start in the East Pit, followed by the West and the Central Pits.

Approximately 32,000t of ore a day will be extracted from the mine, which will be loaded onto diesel-powered haul trucks and transported to a nearby rail transfer hopper.

The ore from the hopper will be loaded onto 100t side dumping railcars and transported to the processing plant located at former Erie processing facility, which was bought by PolyMet in 2005.

NorthMet ore is planned to be processed in two phases. The first phase will involve the production and marketing of copper, nickel, cobalt and precious metal concentrates.

Under the second phase, the company plans to process the nickel concentrate through a single autoclave, and produce high-grade saleable product.

In the first phase, the material will pass through four stages of crushing in the fine crusher building. It will be first crushed in a primary crusher, followed by the second stage of crushing using three gyratory crushers.

From the fine crusher building, the ore will be transported to the concentrator building, where it will be grinded using a series of rod and ball mills. The grinded material, after undergoing flotation, will be filtered and dewatered, resulting in a powdery concentrate containing 28% copper.

Second phase involves the installation of a hydrometallurgical facility for further refining nickel concentrate from the flotation circuit.

Glencore will purchase concentrates, metal or intermediate products produced at the NorthMet project for a minimum period of five years, under an agreement made in September 2008. Glencore agreed to invest $50m in the project through a convertible loan, of which $25m will be available immediately with the additional $25m to be provided upon publication of the final environmental impact statement (EIS).

Major construction works for the project include a rail hopper, 10,600ft of track including the installation of 1,600 new ties and 3,000ft of new rail on the existing track.

The mine site facilities include a field service and refuelling facility comprising storage tanks, mine mobile equipment facilities, offices, change house facilities and other buildings.

Power supply for the mine will be sourced from the nearby Minnesota power grid via 138kV transmission lines.

The definitive feasibility study (DFS) for the multi-metal project was prepared by Bateman Engineering. BNP Paribas was engaged to provide advisory services to PolyMet for NorthMet project's construction finance.

Minnesota Pellet Project on Track for 2015 Production

Essar Steel Minnesota reported in late October that construction of its 7-million-mt/y iron-ore mining, crushing, and pelletization project near the town of Nashwauk on the western end of the Mesabi Iron Range in northern Minnesota was 50% complete and remained on schedule to start pellet production in the second half of 2015. When completed, the $1.8 billion project will include an open-pit iron ore mine; crushing, concentrating and pelletizing facilities; and a rail line and train-loading system.

Essar Steel Minnesota is a subsidiary of Essar Steel, a multinational steelmaker headquartered in Mumbai, India. The Minnesota project has an aggregate of approximately 2 billion mt of measured, indicated, and inferred magnetite iron resources, of which approximately 1.7 billion mt are classified as proven and probable reserves.

Essar Steel Minnesota stated that it expects to be the lowest-cost producer of taconite pellets in North America and will be the only pellet producer in the United States to have the flexibility and production capability to produce standard blast furnace pellets as well as fluxed and DR grade pellets. Through firm long-term off-take agreements in place with ArcelorMittal USA and Essar Steel Algoma, Canada, Essar Steel Minnesota already has customers committed over the long-term to purchase its entire 7 million mt/y of planned production.

The Essar Steel Minnesota project has access to rail lines serviced by Burlington Northern Santa Fe Railway and Canadian National Railway. In addition, the project has the option to export to customers in the future via the Atlantic Ocean by transshipping through the St. Lawrence Seaway to the ocean-loading port of Quebec City.

The Essar Steel Minnesota project area totals approximately 19,000 acres, of which 4,360 acres are mineral lease land. Environmental permits are in place for construction and operation of the project.

McClean Lake Mill Begins Processing Cigar Lake Ore

Areva Resources Canada and Cameco announced in early October that the McClean Lake mill had begun producing uranium concentrate from the high-grade Cigar Lake mine in northern Saskatchewan, Canada. The McClean Lake mill is owned by Areva (70%), Denison Mines (22.5%), and OURD Canada (7.5%), and is operated by Areva. The Cigar Lake mine is owned by Cameco (50.025%), Areva (37.1%), Idemitsu Canada (7.875%), and TEPCO Resources (5%), and is operated by Cameco.

The mill is located about 70 km northeast of mine. Areva recently completed modifications to the mill required to process the high-grade Cigar Lake ore.

Cameco mines the Cigar Lake orebody using a jet-boring mining method operated from tunnels in the basement rock below the orebody. Mined ore is ground and thickened in underground processing circuits and pumped to the surface as a slurry. At the surface, the slurry is loaded into special containers and transported by truck to the McClean Lake mill for processing.

As of early October, Cameco had delivered about 1,400 metric tons (mt) of ore to the mill.

Mining began at Cigar Lake in March, but was suspended in July to allow the orebody to freeze more thoroughly. Mining resumed in the first week of September, and ore deliveries to

McClean Lake are now ongoing. The mill is expected to produce up to 1 million lb of uranium concentrate from Cigar Lake ore in 2014 and to ramp up to its full production rate of 18 million lb/y by 2018.

Canadian Zinc Starts Underground Work at Prairie Creek

Canadian Zinc Corp. announced on October 7 startup of the underground development program at its Prairie Creek zinc-lead-silver mine in Canada’s Northwest Territories. The project is located in the South Mackenzie Mountains, approximately 500 km west of Yellowknife. A mine was largely constructed at the site in 1982 but was placed on care and maintenance due to declining metal prices. The current project benefits from an existing 1,000-mt/d mill and related infrastructure.

Procon Mining and Tunnelling has been awarded the contract for mine rehabilitation, exploration, mine development and initial production at Prairie Creek. The first stage of development will be to re-open and access underground workings by dewatering and re-installing electrical and ventilation services to the 650-m-long decline tunnel, which is located at the end of the mine’s 870-m underground level. The 870-m level portal is located at the mine site adjacent to the mill building. Two other existing underground levels have been developed on the 930-m and 970-m levels.

Canadian Zinc plans to conduct an exploration diamond drill program from underground stations located at the end of the decline tunnel, with the objective of upgrading part of currently inferred resources to the indicated category. An underground drilling rig and other equipment will be mobilized to the site by Procon.

During dewatering of the decline, hydrological monitors will be installed in the 870 tunnel bedrock walls to measure groundwater aquifer flows.

At the same time as the underground program is proceeding, Canadian Zinc will also continue to upgrade and repair existing surface facilities. This work will include completing further site testing and engineering design work for the proposed water storage pond and the waste rock pile. Additional rehabilitation work will be completed on the existing camp to upgrade the trailers to more efficient standards for winter accommodations.

Continued demolition of the old mill powerhouse generators and switchgear will be carried out to prepare the powerhouse for proposed new power generating equipment. Further upgrades of workshops and the sewage treatment plant also will be completed.

A June 2012 Prairie Creek prefeasibility study estimates production at 60,000 mt/y of zinc concentrate containing 76 million lb/y of zinc, and 60,000 mt/y of lead concentrate containing 90 million lb/y of lead and 2.2 million oz/y of silver. Mill throughput is planned at 1,000 mt/d. Mine life is estimated at 11 years. Initial capital expenditures are estimated at C$193 million.

The current Prairie Creek resource represents a small portion of a significantly larger 16-km mineralized system that could, over time, extend the mine’s life.

Cliffs Closes Bloom Lake Iron Ore, Sells Coal Assets

Cliffs Natural Resources (NYSE:CLF) announced recently that active production at its Canadian Bloom Lake iron ore mine has completely ceased as the firm continues its plans to exit Eastern Canada.

The company, which is the U.S.’s biggest iron ore miner, also said it has conclude the sale of part of its struggling coal division for $174 million, in cash, to Coronado Coal II LLC.

The Cleveland-based miner's move aims to fully exit higher-cost operations to focus only on its iron ore business in the U.S. As most of its peers, Cliffs has been struggling as a consequence of tumbling prices for iron ore and metallurgical coal, triggered by a slowdown in the Chinese steel industry.

Since becoming chairman and chief executive officer in August, Lourenco Goncalves has started unloading some of Cliffs’s previous acquisitions.

“As we approach the final steps of our exit from Eastern Canada, we have brought to an end the flawed expansion that has cost Cliffs and its shareholders billions of dollars," Goncalves said in a today’s statement.

He added he believed Cliffs was better positioned than any other iron ore mining company in the world to deliver profits in 2015.

In October last year, Cliffs took a $6bn charge related mainly to the ill-timed purchase of Bloom Lake, which was supposed to supply the then-booming Chinese steel market.

Rare Earths Discovered in Peru

U.S.-based rare earth explorers RioSol and its Peruvian mining arm Compañia Minera Rio Sol announced Tuesday a significant rare earth element and poly-metallic claim discovery in the South American nation.

Third-party geology and geochemical analysis indicates the 10-kilometer claim is the largest in Peru, but further exploration will be necessary to delineate its size and scale.

According to the firm, the discovery — located approximately 95 km northwest of Cusco— contains both light rare earth elements (LREEs) and heavy rare earth elements and metals (HREEs).

The geology consultants leading the project were Rildo Oscar Rodriguez and a Peruvian rare earth expert, both of Lima. According to Rodriguez, the claim is one of the newest rare earth finds in all of Latin America that contains both light-‐ and heavy rare earth elements and metals, as well as copper, zinc, aluminum and other base metals.

"It proves that the potential for rare earth elements exists outside of China with significant opportunity for development of new production in a mining-friendly country,” he added.

Having a supply source in the Americas for commodities used today and in the future will be important for geographic diversity and commercial competition, said the company in a statement, as China currently accounts for 90% to 95% percent of global rare earth mine production.

Peru Environmental Agency Gets Tougher on Miners

Peru’s environment agency OEFA, which fined and shut down major mines over pollution concerns this year, is setting up three specialized courts to hear cases for the mining, energy and fishing industries.

The move aims to expedite the processing and sanction of cases found by the Court of Environmental Control, said the OEFA in a statement published by the state-owned news agency Andina.

Companies such as Glencore (LON:GLEN) and Volcan were charged for excessive emissions while Chinalco’s $3.4 billion Toromocho copper mine was shut down in March over a tailings leak.

Peru’s mining sector has sometimes proved complex for foreign investment because of local conflicts, often over land and water rights.

Peru is the world's third biggest producer of copper and silver and a major producer of gold, zinc, lead and other minerals.

Stornoway to Add Large Diamond Recovery Circuit to Renard Plant Setup

Stornoway Diamond Corp. recently announced the results of plant-design optimization at the Renard diamond project that is expected to allow the immediate addition of a large diamond recovery capacity to the plant for no additional net capital cost. The project is located in north-central Quebec, Canada.

The Renard diamond plant is being designed and constructed under an EPCM agreement between Stornoway and SNC-Lavalin Inc., with subcontracted services being provided by AMEC Americas Ltd. and DRA Americas Inc. (DRA) for the specialized engineering and field support services relating to the plant’s crushing, material handling, and diamond recovery circuits. Detailed plant engineering is ongoing, with the first concrete pour for the plant’s foundation scheduled for April 2015.

However, the work completed to date has already indicated that sufficient design efficiencies and cost savings can be implemented to allow for a Large Diamond Recovery circuit (LDR) to be fully integrated into the plant’s primary flow-sheet within the existing capital budget and with no change of scope in the existing ore processing capacity of 2.2 million mt/y.

Nameplate ore processing capacity will remain at 6,000 mt/d (2.2 million mt/y) at an overall plant utilization (OPU) of 78%, expandable to 7,000 mt/d (2.6 mt/y) assuming an OPU of 83% and further operational optimization. The Renard mine plan contemplates 6,000 mt/d of ore feed from the Renard 2 and Renard 3 open-pit and underground mine, supplemented by 1,000 mt/d from the Renard 65 open-pit.

AFRICA

First Quantum Kicks Off Operations at Zambian Copper Mine

Canada’s First Quantum Minerals (TSX:FM) has began operations at its Zambian Sentinel copper mine, which will feed an $850 million U.S. smelter despite the government has announced it will push ahead with plans to more than triple royalties.

The Vancouver-based company is aiming to produce 300,000 to 350,000 metric tons of copper a year from its Kansanshi Smelter, while it expects to generate 270,000 to 300,000 tons of the metal a year from its Sentinel mine, according to Bloomberg.

The company, Zambia's largest foreign investor, had originally intended to double the size of the smelter, but the government’s decision to keep the tax hike in place, has made it postpone those plans indefinitely, Zambia’s Daily Mail reports.

The paper quoted First Quantum government affairs manager, John Gladston, saying that while suspending the smelter expansion was a decision based on Zambia’s “fiscal uncertainty,” the new tax regime reinforced such choice.

“The decision leaves the country with a continued deficit in copper smelting capacity,” Gladston said.

First Quantum had warned in October that the new tax system would “inevitably” lead to fewer new jobs and dissuade entrepreneurs from investing in the country. Earlier in the year, the miner delayed investment projects worth $1.5 billion.

Zambia Won’t Reverse Mining Royalty Hike

Zambia is pushing ahead with its plans to more than triple royalties on open-pit mines in a move that will leave up to 12,000 jobless and which is likely to sour the already fractious relationship between the government and mining companies, mining.com reports.

Mines minister Christopher Yaluma said recently it would raise rates from 6% to 20% for open pits and from 6% to 8% for underground operations on Jan.1 as planned, because it was in the best interests of what is Africa’s second largest copper producer.

"It will be negligent of the government to undo what we did. We applied our minds when coming up with the new rates and can't just change because of an outcry," Yaluma told Reuters.

The move, which has prompted warnings of closures and thousands of job losses, underscores a growing trend across the continent, where governments from Tanzania to Guinea are changing tax regimes and adjusting ownership structures to get a larger share of natural resources.

Gold giant Barrick (TSX:ABX) has already announced it is halting its Lumwana copper mine, which provides nearly 4,000 direct jobs in the area.

Fellow Canadian miner First Quantum Mineral (TSX:FM), Zambia's largest foreign investor, warned in October that the new tax system would “inevitably” lead to fewer new jobs and dissuade entrepreneurs from investing in the country. Earlier in the year, the company had already delayed investment projects worth $1.5 billion in Zambia due to uncertainty over the fiscal regime.

Meanwhile, the world’s third-largest miner by market value Glencore (LON:GLEN) has said it is halting over $800 millions worth of copper projects in the country and idling operations at its Sable Zinc Kabwe mine.

Centamin Doubles Sukari Gold Throughput Capacity

Centamin’s Sukari gold operations in Egypt’s Eastern Desert achieved a plant throughput rate of 10 million mt/y during the third quarter of 2014, completing a project to double capacity that was approved for development in the first half of 2011. Total gold production for the quarter was 93,624 oz, and full-year 2014 production is forecast at 420,000 oz.

Centamin Chairman Josef El-Raghy said, “The ramp-up in productivity from the process plant continued during the quarter and achieved the expanded 10-million-mt/y nameplate capacity in September with a record 882,443 mt milled, in line with our expectation. Underground mining rates remain strong, and ore grades have returned to expected levels. With scope for further increases in plant throughput during the coming quarters, and with average grades set to further increase in Q4, we maintain our full-year production guidance and continue to look forward to delivering Sukari’s long-term target of 450,000 to 500,000 oz/y from 2015 onward.”

The 160-km2 Sukari tenement area is located in southeast Egypt, approximately 700 km from Cairo and 25 km from the Red Sea. Sukari operations include a large-scale open-pit mine, an underground mine, and the processing plant. The mine site is served by tarmac roads, a 35-MW power station, and a 25-km water pipeline from the Red Sea, which Centamin built during the construction phase of the project.

Sukari’s combined open-pit and underground reserves totaled 8.2 million oz of gold as of September 30, 2013. The total measured and indicated resource as of June 30, 2013, was 13.4 million oz, comprising 12.6 million oz of open-pit resource and 800,000 oz of underground resource. Total inferred resources were 1.9 million oz.

Makhado Coal Mine, South Africa, to Commence Production in 2016

Makhado is a coking and thermal coal project located in Vhembe District, the Limpopo province, South Africa. It is situated to the north of Soutpansberg, about 65km south-west of Musina and 35km north of Makhado town. The project is set to be the largest coking coal facility in South Africa, and is being developed by Coal of Africa (CoAL).

A Class II definitive feasibility study (DFS) on the project was released in June 2013 and environmental authorization was granted in August 2013. The project is scheduled to commence production by the end of 2016 and is expected to produce 2.3 million tonnes (Mt) of coking coal and 3.2Mt of thermal coal a year, processing approximately 12.6 million tonnes per annum (Mtpa) of run-of-mine over an estimated mine life of 16 years.

Makhado is CoAL's first project within the Greater Soutpansberg coalfield area. The total capital expenditure on the project is estimated to be R3.96bn ($406.3m).

The mine is estimated to contain probable reserves of 188Mt, containing 25.63Mt of hard coking coal and 44.53Mt of thermal coal.

Conventional truck and shovel mining methods will be applied at the Makhado open cast mine. The operation will have three open pits, East Pit, Central Pit and West Pit. East pit will hold plant and infrastructure components and the capability to handle production volumes from the other pits.

Under the initial box-cutting and ramp-building stage, the overburden waste material will be pre-stripped to establish an in-pit coal inventory.

The coal processing plant to be built to the south of East Pit will feature a double-stage dense medium separation (DMS) plant for both de-stoning and beneficiation of the hard coking coal and the thermal product.

The plant will also be fitted out with fines and ultra-fines circuits; the fines circuit will use a low-gravity reflux classifier process to produce coking coal and a high-gravity reflux classifier to produce thermal product. The ultra-fines circuit of Jameson column flotation cells will produce coking coal, and has the potential to produce thermal product.

Venmyn Deloitte was engaged to review the Makhado definitive feasibility study report and prepare an independent and updated competent persons report (CPR).

A group of consultants participated in the preparation and verification of the Makhado DFS, including Venn & Milford, MCC Contracts, VBKom Consulting Engineers, DRA and Semane Consulting Engineers.

Venn & Milford prepared the capital cost estimates, while MCC Contracts was engaged as the mining contractor specialist. VBKom Consulting Engineers was the mine design specialist and DRA was the design consultant for the coal-handling process plant. Semane Consulting Engineers was the civil, structural and infrastructure engineering consultant.

ASIA

China Abolishes Rare Earth Export Quotas

China has dropped its decade-old quotas limiting exports of rare earths, as it moves to comply with a WTO ruling last year that the country's tariff and quota system was discriminatory and gave unfair advantage to domestic consumers. Rare earths are a group of 17 metals used in high tech sectors such as defense and renewable energy.

China has about 30% of global deposits of rare earths but accounts for more than 90% of production.

Under the new guidelines, rare earths will require an export license but the amount that can be sold abroad will no longer be covered by a quota.

It has also raised environmental and production standards and encouraged big state firms to take over smaller private producers.

NMDC to Develop New Iron Ore Reserves in Central India

After a six-year wait, India’s largest iron ore miner, NMDC Ltd., has gained access to new iron ore reserves in the central Indian province of Chhattisgarh, an official in the ministry of mines said. The deposit covers approximately 317 ha and is known as Bailadila 13, containing proven reserves of about 300 million metric tons (mt).

Final approval for NMDC to start mining at Bailadila was granted by the Ministry of Environment and Forests (MoEF) earlier this month for early-phase operations to produce 1 million mt of ore per year.

NMDC has operated two mines in close proximity to the new Bailadila 13 deposit for more than 50 years. In 2008, NMDC floated a joint venture company with Chhattisgarh Mining Development Corp. (CMDC), a company controlled by the provincial government, but has been unable to implement new projects in the absence of the mandatory approvals, the official said.

Officials in the provincial government of Chhattisgarh said that a few formalities were yet to be completed following which leases for land and mining would be transferred to NMDC, which in turn would transfer it to the joint venture company.

The project was expected to commence within 15–18 months, officials said. However, they cautioned that the region posed severe challenges to efficient and timely project implementation due to the presence of armed extremists; projects there require the security of trained paramilitary forces.

NMDC achieved iron ore production of 30.18 million mt during the 12-month period ended March 31, an increase of 11% over the corresponding previous period.

A NMDC official said that the access to new reserves at Bailadila 13 would be critical to its goal of ramping-up total ore production to 50 million mt/y within the next five years, for which the company had earmarked $2.93 billion in capex for new projects.

AUSTRALIA/ OCEANIA

Anglo American Submits Third Plan to Expand Coal Mine in Australia

After two failed attempts to obtain permission to expand its Drayton South coal mine in Australia’s Hunter Valley, Anglo American (LON:AAL) has submitted a revised proposal for the project aimed to replace the current mine.

The new plan will see the company mine 75 million tonnes over 17 years instead of 97 million tonnes over 20 years, as it had originally proposed.

According to Anglo, the Drayton South mine is essential to protect 500 jobs at the existing mine, in operation for more than 30 years, which is due to run out of coal in 2017.

Locals, particularly horses breeders and wineries owners, argue the project may have major consequences for both the regional economy and the environment in the same way Rio Tinto’s Bengalla mine is said to have ruined the wine industry in the 1990s.

Official figures show that more than 4,000 jobs have been lost at NSW mining operations over the last two years, with over 2,500 coal jobs gone in the Hunter alone.

EUROPE

Agi Dagi Gold-Silver Project, Turkey, Expects 4Q 2016 Gold Production Start

The Agi Dagi gold-silver mine owned by Alamos Gold is located in the Çanakkale Province, Biga Peninsula, in the north-western region of Turkey. It is developed to be a stand-alone, open-pit, heap-leach operation that will produce gold and silver doré bars.

The pre-feasibility study for the project was completed in 2012 and the Environmental Impact Assessment (EIA) was approved in August 2014. First gold production from the mine is expected in the fourth quarter of 2016.

Annual average production during the mine life of seven years is expected to be 143,000oz of gold and 271,000oz of silver.

The Agi Dagi mine is divided into five main zones, namely Baba, Ayi Tepe, Ihlamur, Fire Tower and Deli zones. The Baba, Fire Tower, and Deli zones are located in the south-eastern basin, while the Ayi Tepe and Ihlamur zones lie in the north-western basin.

The mine is estimated to contain measured and indicated resources of 88.20Mt of ore containing 1.6Mt of gold and 11.35Mt of silver as of 31 December 2013.

Initial mining at Agi Dagi will be conducted at the Baba and Deli pits, based on the ore exposure and gold grades.

The open pit will be mined using conventional drill and blast method, which will be followed by loading and hauling method. The ore will be transported to the primary crusher while the waste will be delivered to the waste dumps.

The mining fleet will consist of DM25-SP DHD drillers, Cat 992 loaders, Cat 777 haul trucks, Cat D9T track dozers, Cat 824 wheel dozers, an Atlas Copco ECM 590 drill and a Cat 324E excavator.

The processing plant will process 30,000tpd of ore and will be equipped with a multiple-lift, single-use leach pad. The run-of-mine ore will be processed using the primary crusher, followed by an open circuit secondary crushing to a nominal size of one inch. The ore will be mixed with cement in an agglomeration drum and stacked on the heap leach pad by conveyor stacking.

Stacked material will be processed at the single heap leach facility to be constructed on the northern side of the mine site. The ore will be heap leached using dilute cyanide solutions and producing precious metals, which will pass through carbon adsorption-desorption-recovery (ADR) plants to produce gold/silver doré bars.

Access to the gold-silver mine is by forestry roads from Sögütalan in the north, Karakoy in the west and Kizilelma in the south.

Power supply will be provided from a substation at the Çan coal-powered generating station. Approximately 20km of new power line will be constructed to transfer power to the mine. The mine will also include a 1,500kW diesel-fired generator as a backup, in case of a power failure.

Water required for the project will be supplied through a pipeline from the Altin Zeybek reservoir.

GW4 Alliance Project to Produce Clean Water from Cornish Tin Mine

GW4 Alliance has initiated a new research project that uses algae to harvest precious heavy metals and produce biofuel while cleaning up water at a Cornish tin mine.

GW4 consists of South West and Wales' research-intensive universities, Bath, Bristol, Cardiff and Exeter.

Researchers from the four universities have joined Plymouth Marine Laboratory (PML) on work with the Coal Authority and Veolia to collect untreated mine water samples from Wheal Jane tin mine in Cornwall and grow algae in them under laboratory conditions.

The effectiveness of algae in removing materials such as arsenic and cadmium from the mine water will be revealed in the research.

Algae will be converted into a solid, which researchers plan to extract heavy metals from and recycle it for use in the electronics industry. Biofuels will be made using the remaining solid waste.

McIlvaine Company

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