17

December

2018

First Quantum to cut 1,000 jobs at Kalumbila mine in Zambia

Canadian metals and mining firm First Quantum Minerals is reportedly planning to cut more than 1,000 jobs at the Kalumbila copper-nickel mine in Zambia.

Quoting Zambia Labour Minister Joyce Simukoko, Reuters reported that the company is looking to enforce the cuts next month when the government’s proposed tax hikes will come into force.

The management at Kalumbila mine has reportedly written to the minister’s office disclosing its intention to lay off workers.

Simukoko was quoted by the news agency as saying: “We received the letter last week informing us that they want to lay off more than 1,000 workers starting in January, but we think these are arm-twisting tactics.”

The development comes after the Chamber of Mines warned that mining companies operating in Zambia may cut more than 21,000 jobs due to reduced capital expenditure over the next three years if higher taxes are levied on the firms.

Zambia intends to raise taxes and increase royalties to garner greater revenues from the companies in the country in an effort to reduce mounting debt.

The planned tax changes as envisaged in the government’s 2019 budget include the introduction of new mining duties and replacement of value-added tax with sales tax. The measures also include capital expenditure cutbacks of more than $500m.

Under the new mining tax regime, the government will increase mineral royalty rates by 1.5%.

Simukoko added: “They should explore other areas where they can cut cost because, as far as we are concerned, redundancies should only come in as a last resort.”

Zambia’s Finance Ministry is pushing ahead with the implementation of the new taxes in January.

17

December

2018

Mineral Resources and Albemarle sign $1.15bn binding lithium deal

Mineral Resources (MRL) has signed a binding agreement with Albemarle to divest a 50% stake in the Wodgina lithium project in Western Australia for $1.15bn.

The companies have also set up a lithium joint venture and signed an exclusivity agreement for the deal.

The transaction will allow Albemarle to purchase a 50% interest in the Wodgina project that comprises tenements, assets and related infrastructure.

Interest will cover all mineral rights within the Wodgina tenements, except iron ore and tantalum.

Under the terms of the agreement, MRL and Albemarle will form a 50/50 JV to produce spodumene concentrate and lithium hydroxide. The JV company will also own and operate the Wodgina mine.

Mineral Resources managing director Chris Ellison said: “Our proven local Western Australian capability is extremely well-complemented by Albemarle’s proven technical downstream processing expertise and their international marketing capabilities in lithium.

“Our organisations share the same vision to develop Wodgina, a tier one asset, as a world-class, 30-plus-year integrated lithium operation together.”

As part of the JV, MRL and Albemarle will jointly fund, design, build and operate a plant at Wodgina to produce battery-grade lithium hydroxide.

Development of the plant will be carried out in two stages, which are each expected to produce up to 50ktpa of lithium hydroxide.

Once completed, the JV is expected to produce 750ktpa of 6% spodumene concentrate that will serve as feedstock for the lithium hydroxide plant.

Albemarle will contribute its core lithium hydroxide plant designs to the JV under licence. The company will be responsible for managing the marketing and sales of spodumene concentrate and lithium hydroxide produced by the JV.

Subject to regulatory approvals, the closure of the transaction is anticipated to occur in the second half of next year.

14

December

2018

Indonesia’s Silkroad Nickel signs $291.71m nickel ore offtake deal

Indonesian nickel mining group Silkroad Nickel’s subsidiary PT Teknik Alum Service has signed an offtake agreement to supply nickel ore to PT Transon Bumindo Resources (PT TBR).

The contract is valued at more than S$400m ($291.71m). Under the terms of the agreement, the Silkroad Nickel group will supply 15 million tonnes of nickel ore over a term of five to eight years, beginning in March 2020, to PT TBR.

The agreement requires the group to deliver a minimum of 1.5 million tonnes of nickel ore per annum.

Silkroad Nickel executive director and CEO Hong Kah Ing said: “This agreement with PT TBR, which is building a new rotary kiln electric furnace smelter facility around 2km from the group’s mine site in Sulawesi, Indonesia, gives us the impetus to not only ramp up our production and start the exploration of new areas within our concession, but to also consider the acquisition of new concession areas.”

PT TBR is part of the Qingdao Hengshun Zhongsheng Group that is majority owned by the Qingdao state government. It has investments in Indonesian industrial parks, mining and energy with a focus on electricity.

Silkroad Nickel is currently engaged in talks to appoint an undisclosed Chinese state-owned company as the main mining contractor to ramp up its nickel ore production.

The group has a Production Operations IUP permit to undertake nickel ore mining operations in Morowali, Sulawesi, Indonesia. The mining concession covers an area of 1,301ha.

13

December

2018

Illegal gold mining destroying Amazon rainforest, new study reveals

A research study carried out by non-profit environmental groups revealed that rising small-scale illegal gold mining in the Amazon rainforest is causing significant damage to waterways and forests.

The research maps the extent of the damage caused by illegal mining in the region for the first time.

Using satellite imagery and data available from South American governments, researchers identified that there are at least 2,312 illegal mining sites across six South American countries, including Brazil, Bolivia, Colombia, Peru, Ecuador and Venezuela.

The maps were produced by the Amazon Socio-environmental Geo-referenced Information Project (RAISG), which comprises a network of environmental groups in the Amazon.

RAISG head Beto Ricardo was quoted by Reuters as saying: “The scope of illegal mining in the Amazon, especially in indigenous territories and protected natural areas, has grown exponentially in recent years, with the rise in the price of gold.”

A gold rush triggered by soaring gold prices in the decade to 2010 sparked the rampant illegal mining.

The report stated that the mercury used by illegal miners to separate gold from grit is contaminating the rivers and soil, and is eventually entering the food chain, posing serious health threats to indigenous and local populations near the mine sites.

Agustin Ojeda, an indigenous leader of Venezuela’s Shirian indigenous people, was quoted as saying: “Illegal mining can kill us. The mining wells allow for the reproduction of mosquitoes that bring diseases, such as malaria. The effect of mercury on water isn’t taken seriously either. It not only contaminates water but also the fish we eat.”

Brazil’s President-elect Jair Bolsonaro, who is set to take office in January, said he is planning to stop recognising new native reservation lands.

Bolsonaro is also inclined towards easing environmental licensing processes for infrastructure projects and other businesses.

Environmentalists fear the incoming president’s approach would open up more protected land for mining and other businesses.

12

December

2018

Newcrest and Harmony sign MoU with PNG for Wafi-Golpu project

Newcrest Mining and Harmony Gold Mining Company have entered a memorandum of understanding (MoU) with the Government of Papua New Guinea (PNG) over the development of the Wafi-Golpu gold mine in the country’s Morobe Province.

The project is being developed as a 50/50 joint venture between Newcrest and Harmony. It is subject to the finalisation of the permitting process and the approval of both companies’ boards.

Newcrest noted that the agreement affirms the commitment of the project partners and the government to go ahead with the Wafi-Golpu project.

The parties expect to complete the permitting process for the project and secure a special mining lease by 30 June 2019.

Once approvals are secured, Newcrest and Harmony will begin a work programme, which includes the establishment of underground access for further drilling of the Golpu deposit and the construction of a bridge over the Markham River.

Newcrest Mining managing director and CEO Sandeep Biswas said: “We have been working constructively with the Government of Papua New Guinea to progress permitting of the project and recently achieved key milestones in this process with completion of our Feasibility Study Update in March 2018 and Environmental Impact Statement in June 2018.

“This MoU builds on that progress and captures our joint understanding of the terms and timeline that we are working towards.”

The Wafi-Golpu project development was previously expected to cost around $2.65bn to bring the mine to commercial production as per a 2016 pre-feasibility study. However, in the feasibility study update in March 2018, the expected development cost increased to $2.8bn.

Newcrest reduced the total life-of-project cost estimate by $1bn to $5.3bn.

Deep drilling at the project began in 2008. The Wafi-Golpu project is expected to have an average annual copper production of 161kt and an average annual gold production of 266koz.

11

December

2018

Frieda River copper-gold project to need $7bn capital investment

The Frieda River copper-gold project in Papua New Guinea is estimated to require an aggregate capital investment of more than $7bn, according to a feasibility study completed by project manager PanAust.

The project is owned by a joint venture between PanAust and Highlands Pacific, which hold 80% and 20%, respectively.

Highlands Pacific stated that the new feasibility study adopted a fundamentally different approach to the project when compared to the previous study, which was conducted in 2016.

The study considers the Frieda River project within an inclusive development model that requires significant government or third-party funded regional development as a prerequisite.

According to the new study, a total investment of $739m, funded by government and/or public-private partnerships, is required to undertake road, airfield and port upgrades.

An additional $351m is required to build a 340km slurry pipeline connecting the process plant at the mine site with the Port of Vanimo. The pipeline would be operated by a third party on commercial terms, the study revealed.

The project is expected to require a pre-production capital expenditure of around $6bn, including $2.8bn for mine and process plant, and $3.2bn for a hydroelectric facility.

The plan involves the construction of an integrated storage facility, comprising a power station integrated with a tailings and waste rock storage facility.

Furthermore, the new feasibility study has proposed an increased mine life of 33 years, with average annual production of 670,000t of concentrate containing 175,000t of copper and 230,000oz of gold.

Highlands Pacific managing director Craig Lennon said: “The project, as currently proposed by PanAust, faces significant hurdles, not least of which is the substantial capital cost, but also the need to identify government and other third parties to develop and fund the roads and other regional infrastructure required as a pre-requisite to construction of the project.”

10

December

2018

Dacian Gold on course for commercial production at Mt Morgans

Dacian Gold is set to begin commercial production at the Mt Morgans gold operation (MMGO) near Laverton in Western Australia by the end of December.

The company has started ore development at the Allanson underground production decline. Allanson is the third underground decline at the Mt Morgans Westralia Mine Area, with the other two being Beresford South and Beresford North.

Mining activities are also ongoing at the Beresford South and Beresford North production declines.

Under Dacian’s production plan, each of the three deposits is expected to produce on average 1,000tpd from combined stoping and development activities.

Dacian Gold executive chairman Rohan Williams said: “The start of ore development at our third underground production decline at Allanson marks another important step in the ramp-up with mining activities across all three underground mining centres.

“This, together with continued strong progress at the Jupiter open-pit, means we are confident of achieving commercial production, as planned, by the end of 2018 as we progressively increase production in each of the successive quarters during the year.

“As previously indicated, production is weighted towards the second half of FY2019 as we mine higher grade open-pit ore in the Cornwall Shear Zone at Heffernans within the Jupiter pit and increase the rate of stoping activities at Westralia across the three mining production fronts, including the higher grade Allanson deposit.”

At the end of the September 2018 quarter, the company was producing around 1,900tpd from Westralia, with Beresford South accounting for the majority of ore.

During the 2019 financial year, Dacian is targeting production of 180,000oz-210,000oz.

The company spent around $A200m ($143.89m) on the development of MMGO. The project also includes Jupiter open-pit mining operations, and achieved first gold production in the March 2018 quarter.

10

December

2018

Barrick to sell research unit and cut digital jobs

Barrick Gold is reportedly set to sell its research and development company AuTec Innovative Extractive Solutions and cut jobs related to its ‘digital reinvention’ programme.

The move comes ahead of the closure of the company’s $6bn acquisition of Randgold Resources. The transaction received clearance from the South African Competition Tribunal in November and is expected to be completed in January 2019.

Barrick incoming CEO Mark Bristow stated that he is planning to offload non-core assets, cut costs and downsize head office management to allow regional mining operations to have more authority.

Based in Vancouver, Canada, AuTec specialises in testing mineral samples and processing.

According to a Wall Street Journal (WSJ) report, Barrick has also disbanded or shrunk technology-based teams at its head office in Toronto and at mining operations in Nevada.

According to unnamed sources cited by the WSJ, the teams were set up to work on the development of software for tracking sensors on underground mining staff. Teams were also intended to be responsible for collecting data on processing equipment that could assist in deciding when maintenance was required.

In November, Barrick chief digital officer Sham Chotai severed ties with the company.

An unidentified Barrick spokesperson said technology ‘will continue to be a key driver’.

The miner is also selling its Lagunas Norte gold mine in Peru and has recently appointed bankers to pursue the sale.

The sources added that the company is considering the sale of its Hemlo gold mine in Canada and its 50% interest in the Kalgoorlie gold facility in Australia. Newmont Mining holds the remaining 50% stake in the Kalgoorlie mine.