Fortune Minerals on track with Arctos

 British Columbia (BC) is blessed with a raft of minerals and metals, the main ones being copper, precious metals, zinc, lead, molybdenum and thermal coal. But king of the castle is undoubtedly metallurgical coal, which accounted for $3.5-billion in revenue during 2012, according to professional services firm PricewaterhouseCoopers.

Metallurgical coal is converted into coking coal for use in the steelmaking process, with British Columbia material being renowned for its quality. It also affords Asian steelmakers an additional supply stream from a reliable jurisdiction.  

“BC has several areas of high-quality resources; has some great companies operating coal mines in established areas for a long time; has solid infrastructure; and is well-placed to access the critical Asia-Pacific market,” Fortune Minerals VP of operations and COO Mike Romaniuk told Mining Weekly Online.

FIRST NATIONS FIRST

BC’s main coalfields lie in the east of the province, in East Kootenay and Peace River. But one key area yet to be tapped is Klappan, in the northwest. This region hosts anthracite, which, among its various industrial uses, is the highest-quality metallurgical coal available.

However, the area is also home to several aboriginal bands, including the Tahltan, who have voiced deep concerns about coal mining development. In mid-December, it was announced that the Tahltan Central Council and the provincial government had agreed to a moratorium on granting new coal mining rights in the Tahltan Klappan area for a year.

Pre-existing and authorised projects will not be affected, including Fortune Minerals’ Arctos anthracite project, which has been the subject of opposition from some Tahltan members. For example, the company’s summer 2013 drilling, surveying and monitoring campaign for environmental assessment was voluntarily ended in September after a Tahltan group entered the project’s camp in order to protest.

The company stressed that it is committed to dialogue and is keen to let First Nations stakeholders have their say. “As we move through the environmental permitting process there’s an opportunity for any and all interested parties to voice concerns, opinions or views. Because the project is on their lands, the Tahltan obviously have a strong and important voice,” Romaniuk said.

“You have to work with individuals, the elders, and communities as a whole. It’s also about working closely with the provincial and federal governments to ensure that the appropriate consultation takes place,” he added. “But when you’re dealing with these kinds of investments, in these kinds of locations, you will always have a vocal minority opposed.”

Fortune works within the parameters of the Canadian Council for Aboriginal Business’ progressive aboriginal relations (PAR) programme and has been awarded bronze level status. It has also developed purchasing and employment opportunities with local communities; for example, roughly half of those employed in the summer 2013 campaign were from local aboriginal communities.

“We also have ongoing programmes with the communities, supporting things like hockey tournaments, bike rides and community feasts and festivals. Plus, we are committed to regular community meetings in our operational areas,” Romaniuk said.

THE RIGHT PATH

Fortune Minerals’ first focus is to develop the project’s Lost Fox deposit as an openpit mine. It contains run-of-mine reserves at 125-million tonnes that can be washed to produce 69-million product tonnes of a 10% pulverised coal injection (PCI) sinter material for steelmaking purposes.

Under a 2012 feasibility study, the project will require capital expenditure of C$788.6-million and, at a base case of $175/t ultra-low volatile PCI, it has a 14.7% after-tax internal rate of return.

“Lost Fox will give us a good 25 years of mine life, producing three-million tonnes a year of clean coal. The coal that we’ll be producing is anthracite, the high-quality, premium material that’s highly desired by steelmakers,” Romaniuk said.

“We’ve done extensive engineering studies and we’re on the environmental permitting path. [Progress depends on] getting the data together and having all the inputs from stakeholder groups in terms of their concerns and the issues they want to raise,” he said.

“We’re looking for a decision within the next two years. But it’s an ongoing thing, so the timeframes and things like that – especially early on as you’re seeking inputs – can be a little bit fluid,” he added.

The company already has a strategic partner. Poscan, a subsidiary of the South Korean steelmaker Posco, holds a 20% stake and funds 20% of the capital and operating costs. It will receive 20% coal-in-kind once Lost Fox is operational. 

In the meantime, Fortune is also hoping to tap into the electrical grid as the British Columbia Northwest Transmission Line project approaches completion. “The BC government is extending the grid into this area and that will be a great benefit to our project, enabling us to tie into the electrical grid and take us off diesel generation. Obviously that will have a significant and positive impact on our costs,” Romaniuk said.

Rail connectivity will be critical for sending the project’s output from pit to port. Fortuitously, a railway bed was developed by the provincial government in the 1970s that the company hopes to use.

“The BC government was aiming to open the area up in the 1970s, recognising the significant opportunities in the region for the mining and forestry industries. But the project was halted after significant cost overruns and a change of government,” Romaniuk explained. “So we’ve just picked up the ball where they left it, using the same engineering, same drawings, same route etcetera that they already have in place. All we’ll be doing is completing it.”

The Ridley coal terminal at Prince Rupert has the capacity to accept Fortune’s output, he added.

“So things are going according to plan and the only area where we see schedule risk is during the input phase for the environmental permitting, the critical stage where many voices want to be heard,” he said. “Once we’re past this phase, I’m confident we’ll be able to deliver the project on schedule and to the timeframe we’ve set out.”

GOLD: McEwen gets okay for El Gallo 2 expansion

MEXICO – The Mexican government has granted environmental approval the El Gallo 2 project belonging to McEwen Mining of Toronto. The new mine in Sinaloa is expected to produce 95,000 oz AuEq per year (5.2 million oz of silver and 6,100 oz of gold) at an approximate cash cost of US$750/oz AuEq.

McEwen has shaved an estimated $20 million from the El Gallo 2 project by reducing the number of leach tanks; installing a smaller Merrill-Crowe plant and refinery; using modular crushers; and reducing the number of transformers. The company says about $150 million, including $10 million already spent, will be required to complete the mine.

The final decision to proceed with El Gallo 2 has yet to be made. That decision awaits various optimization studies and financing alternatives.

Hitachi and Wenco embark on cloud-based fleet management Proof of Concept

Hitachi and Wenco International Mining Systems, a Canadian subsidiary of Hitachi Construction Machinery, have announced the beginning of a joint Proof of Concept (PoC) project. The PoC project, initiated by Hitachi and Wenco, and facilitated by Teck, “will combine Hitachi’s highly reliable cloud service and Wenco’s Fleet Management System (FMS) with Teck’s mining operation team to demonstrate how much the efficiency of the system will be improved.” The results of the project is being evaluated for approximately 40 days from the launch date on January 20.

In this PoC project, Wenco’s FMS will be installed at Hitachi’s data centre in North America, and will provide cloud-based FMS service to Teck via the internet. Teck will support the project and provide feedback on the performance and efficiency of the system within one of its facilities located in British Columbia, Canada. “Wenco is very excited about the associated benefits our industry partners can leverage with the combination of fleet management and cloud computing. Minimising learning curves on hardware and software, expanding accessibility, and reducing capital costs will increase system longevity and effectiveness for our clients,” said Phil Walshe, President and CEO, Wenco.

Using on-board computers, the Wenco FMS is installed on dump trucks, excavators and additional equipment. It displays mine-specific instructions for the operators that help increase efficiencies at a mine site. Currently, the FMS is individually maintained and operated on each mine site, but the cloud-based FMS service utilised in the PoC project will demonstrate the ability for mines with multiple sites to manage their mine sites from one facility. The goal of the project is to reduce the initial start-up and operating costs of the FMS in small-scale mining.

Hitachi and Wenco will work together toward the success of the PoC project and its future full-scale application in other mines. Hitachi has positioned the mining-related area as one of the core focus areas of the Social Innovation Business, and will accelerate the global rollout of these business activities. Also Hitachi has organised its smart information related products and services into “Intelligent Operations.” After analysing and evaluating the results of the project, Hitachi will advance the development of an Intelligent Operations for Mining solution as a part of its Intelligent Operations.

“The PoC project that Hitachi and Wenco are starting with Teck is a new chapter in the history of resources development. We will work through this PoC project to promote efficiency of resources development by improving efficiency of the equipment with our advanced IT by the whole Hitachi Group,” said Keiichi Shiotsuka, Vice President and Executive Officer, Chief Executive Officer of Services Business, Information and Telecommunication Systems Company, Hitachi Ltd.

Surprisingly, for junior mood, not so depressing - Cambridge House VRIC 2014 kicks off

Let's get right to feedback on attendance and mood at the Cambridge House Vancouver Resource Investment Conference. Just a half dozen hours after open at presstime and the traffic, it seemed, was respectable for a Sunday, the first day of the two day conference.

It wasn't shoulder to shoulder down the rows of booths and there certainly wasn't a mass of retail investors bustling in to hear the latest stories. An exploration panel headed up by Rick Rule and headlining Brent Cook, Exploration Insights, John Kaiser, of Kaiser Research, Peter Spina, of Goldseekmoney.com, and Lawrence Roulston, of the Resource Opportunities, was about three quarters full in chairs, with a fair number standing at the back.

It was not a teeming crowd, no. But, then it wasn't a depressing showing either. Much like the mood. The junior management I spoke with were generally upbeat Sunday. In context of 2013 - a terrible year for juniors - that is something.

First I caught up with Roland Butler, CEO of Callinan Royalties. He recalled 2002.

It was not a great year for juniors. But it was a year on the cusp of a turnaround after years of a chill from the Bre-X scandal and low gold prices.

Butler vividly remembered a talk at a January Roundup Conference (which is coming up about week from now) in 2002 by Dorothy Atkinson, an analyst with Wolverton at the time, he said.

"I get the sense that something has changed in the past week," Butler recalled her saying.

"Now 2002 wasn't a spectacular year," Butler noted. "But it was the year before 2003." That was the beginning of a turnaround for juniors.

This memory was now on Butler's mind after a good run for a number of junior stock since late December 2013. Could the move have some legs?

Then again Butler added: "It may be just a rebound off such an awful, awful 2013." 

The least impressed person I spoke with about the upbeat mood at VRIC was Greg Davis, Sunridge Resources' vice president of business development. He noted that last year there was also some optimism at VRIC on the back of a new year market uptick, a regular occurence for junior stock. The hope back then was that things would pick up again after an unspectacular 2012 for juniors.

And then we had 2013. In Davis' estimation, the optimism was back again this year and he wasn't reading too much into it.

Next, over at the UEX booth, Sierd Eriks, vice president of exploration, fell decidedly in the more positive camp.

"I'm surprised how busy it is for a Sunday," he said.

For comparison, he recalled the San Francisco Hard Assets conference last year. "That was pretty slow," he said, a description some would consider an understatement.

Like Eriks, Luquman Shaheen, President and CEO of Panoro Resources, pointed to a pick up in conference mood and activity. In terms of vibe he said this year was, so far, a little better than VRIC 2013.

Last year he would have described sentiment as "scared caution," he said. This year he described it as cautious optimism.

US coal demand spiked last year, supply went the other way—EIA

The US coal mining industry saw a modest, but meaningful demand increase last year, driven mainly by higher natural gas prices that caused total consumption in the first 11 months to hit 35 million tons, 4%, more than the same period of 2012.

According to figures released Thursday by the Energy Information Administration (EIA) total coal exports in the first nine months went the opposite way, declining by nearly 8 million tons compared to the same period in 2012.

Continued weakening in the European economy, slower demand growth in Asia, increased output from other coal-exporting countries, and lower international coal prices all contributed to the decrease in US coal exports, said the agency.

But the country also produced less last year. Total coal output fell 0.4% last year compared to 2012, hitting 4 million tons. Inventories also went down, dropping from by 31 million tons from the end of 2012 to 154 million tons at the end of September 2013.

Overall, the increase in domestic consumption more than offset the decline in exports, resulting in higher year-on-year total coal demand.

The EIA expects coal production to stay relatively constant for the next three decades, a forecast experts see as attainable, because regulators continue to be reluctant to let utilities become too dependent on natural gas.

Carabella Resources Ltd announces variation of takeover bid by Wealth Mining Pty Ltd

Carabella Resources Ltd:Says that Wealth Mining Pty Ltd gives notice that it varies the off-market takeover bid for all of the ordinary shares in Carabella Resources (the offer) by extending the period during the offer will remain open.Says the offer period will now close on Jan, 29 (unless further extended). 


Read more: Clermont mine helps Rio reach record thermal coal production

Mining company Rio Tinto says increased production at its Clermont mine in the Bowen Basin has helped it reach record thermal coal production.

During 2013, the company produced 26.8 million tonnes of thermal and semi-soft coal, up 12 per cent from the previous year.

The figures in the fourth quarter were slightly lower than the same time last year, due in part to the closure of the Blair Athol mine in 2013.

Coking coal production was up slightly over the 12 months.

Fortescue Signs Gas Deal to Ease Costs

SYDNEY--Australia's Fortescue Metals Group Ltd. (FMG.AU) signed a 20-year deal to supply its operations with natural gas instead of diesel.

The agreement, with DUET Group (DUE.AU) and TransAlta Corp. (TAC), comes as resources companies scramble to shave costs in the face of a slowing global commodities boom.

Fortescue said the shift to gas from diesel would reduce operating costs at its mines in the remote, resource-rich Pilbara region in Western Australia state. The gas will be delivered through an existing pipeline that runs from near the state capital, Perth, to Australia's northern coastline.

A new 270-kilometer pipeline will also be built to transport the gas to a power station located at Fortescue's main mining hub in the region. The pipeline is expected to be built some time early next year, Fortescue said in a statement Thursday.

The conversion of the 125-megawatt Solomon power station from diesel to a gas platform is expected to save the company about US$20 million a year in costs, Fortescue said.

DUET, in a separate statement, estimated the new pipeline would cost 178 million Australian dollars (US$158 million) to build. The company said it and TransAlta would pay about A$101 million toward the cost.

Mining companies have taken a knife to their operating costs over the past year, as they try to safeguard profits hurt by lower commodity prices. Iron-ore was among the few commodities whose prices held up well last year, but 2014 may be different as more supply comes onstream.