Personal copy; not for onward transmission WMC in expansion mode WMC Ltd, the world’s third largest lion. Proven and probable reserves at nickel producer, said this Tuesday that that time amounted to 342 Mt at an it is considering a major capacity average grade of 0.65% Ni. The expansion at its Mount Keith open-pit expanded operation would have a mini- Georgian House nickel mine in Western Australia that mum mine life of 25 years. Mr Johnson Loeb Aron &63, Company Coleman Ltd. Street would raise output from the current said the expected capital cost for the London EC2R 5BB Tel :+44 (0)20 7628-1128 45,000 t/y to 70,000 t/y of metal. It is expansion represented US$4.50/lb of REGULATED BY THE SFA only a week ago that the Australian annual nickel capacity and he estimates producer announced that it is expand- that the equivalent for Western ing capacity at its Kwinana nickel Australia’s new generation of lateritic refinery near Perth, by 10% to 67,000 nickel mines is nearer US$10.00/lb. t/y by July next year, and that a further The new nickel laterite mines have Inside expansion to 70,000 t/y is planned been beset with technical problems eventually. Built in 1970, Kwinana was causing significant production delays, • Uranium missing an upgraded to a nameplate capacity of and WMC, which retains its faith in opportunity? (p.186) 42,000 t/y in 1994, and over the past mining conventional sulphide ore, has, • Miners die in mystery four years output has risen by 35% at a from the outset, been sceptical about capital cost of just US$0.20/lb of annu- some of the more extravagant claims aircrash (p.190) al nickel capacity. made for the new laterite projects • BHP’s Indonesian coal A decision on the expansion at which are heavily reliant on largely plan (p.196) Mount Keith is expected by the middle untested technology. of next year and a firm commitment The company has not doubted that • Gold producers shy from early in 2002. Speaking in Perth this the technology employed by the new exotic hedging (p.198) week, WMC’s executive general man- lateritic nickel producers will succeed ager for nickel, Peter Johnson, said that but it remains unconvinced that the • Bank withdraws a team of 12 people were working on the mining costs will be as low as some endorsement for Kroondal study, which would have to satisfy a within the industry have forecast. Mr merger (p.201) 25% internal rate of return and a two- Johnson said that the numbers “still year payback period. Mr Johnson said don’t stack up”, and he referred to mas- that the project is still at the prefeasi- sive cost overruns for some of the pro- bility stage but looks “very very attrac- jects, and very high maintenance costs. tive”.The expansion would cost around Also, he said that evidence was now Howards Pass A$300 million and would require new emerging that mining costs are much milling facilities, increased tankage higher than originally planned and he agreement and expanded mining operations which strongly suspects that the operators are could be supplemented by mining the having to mine high-grade ore. Mr Vancouver-based Copper Ridge JOURNAL nearby Cliffs nickel deposit. Johnson said that WMC believes that Explorations Inc. has signed a letter of Mount Keith is a low-grade, high- within two years all of the laterite intent with Billiton Metals Canada London, throughput, open-pit nickel sulphide mines will encounter grade reductions Inc. for the joint evaluation and possi- September 8, 2000 mine. It came on stream at the end of and will be forced to reconfigure their ble development of the Howards Pass Volume 335 1994 at an initial rate of 28,000 t/y and plants to handle lower-grade feed. zinc deposit in northwest Canada. The No. 8599 was developed at a cost of A$450 mil- Continued on p.187 letter of intent follows the recent sign- ing by Copper Ridge of a letter of intent with Placer Dome and Cygnus Mines (a subsidiary of US Steel Group) which allows it to purchase 100% of Howards Pass for C$10 million in staged payments over four years (MJ, July 14, p.26). The deposit is situated on the Yukon-Northwest Territories border and was discovered by Placer Dome in 1972. The latter subsequently outlined a resource of some 110.5 Mt at an aver- age grade of 7.7% combined zinc and lead, plus silver and cadmium, but chose not to go ahead with develop- ment because of the remote location In 1995, the A$450 million Mount Keith project was producing 28,000 t/y of nickel in concentrate. and lack of adequate infrastructure. Established 1835 Output is now 45,000 t/y and there could be an expansion to 70,000 t/y. Continued on p.187 ISSN 0026-5225 http://www.mining-journal.com COMMENT Editor Roger Ellis B.Sc., C.Eng. Deputy and Finance Editor Light and dark Richard Morgan M.Sc., DIC, C.Eng.

t a time when there is worldwide con- how safe the industry is – 3,000 MW went Assistant Editor: Mineral Markets cern about global warming, and fossil out of control without casualties or any sig- Andrew Thomas M.Sc., DIC Afuels are in the dock because of their nificant off-site contamination. For the anti- Assistant Editor: Industry in Action major contribution to emissions of CO2, the nuclear side, though, it presents an example Dominic Mercer M.Sc., DIC, FGS nuclear industry should be a major bene- of the dangers of the technology, and it is a ficiary. Nuclear power produces the least fact that there has been no construction of Production Susan Roberts amount of CO2 emissions per unit of power new nuclear power plants in the US for sev- generated and is comparable to geothermal eral years. Eileen Smith and hydro power in this respect. For those It would be wrong to infer that de-nucleari- Advertising countries possessing it, nuclear power also sation in the US is under way, however. Last Michael Bellenger reduces reliance on oil and gas – of consid- year, the 103 US nuclear plants were operat- Frank Gordon erable long-term importance given the finite ing at 87% of capacity, power output rose by Shelley Hannan resources of hydrocarbons. Unlike fossil 8% and this was the main reason for a 3.8% fuels, the reprocessing of spent fuel and the increase in global nuclear energy use. The Marketing use of fast-breeder reactors make the recy- increase was well above the ten-year trend Gareth Bowers cling of uranium as fuel possible. and significantly more than for oil and gas. Carole Hoy However, every scientific technology has Nuclear advocates believe that new plants risks as well as benefits – the dark side and will eventually be built in the US, and they Executive Director the light side – and for the nuclear industry note that power consumption continues to Chris Hinde Ph.D., C.Eng. the dark side predominates in the public are- grow rapidly, not least because of the Mining Journal, published weekly, is available only as part of a na. There are three main areas of concern – growth of computer and internet-related subscription with Mining Magazine and Mining Annual Review. potential accidents, waste disposal and the uses of electricity, which now account for Annual Subscription: proliferation of nuclear weapons – and it is 14% of US demand. £247 (US$440) these risks with which the general public Nuclear power as a percentage of total © Mining Journal Ltd 2000 (and consequently politicians) are preoccu- power supply amounts to 24% in the OECD, pied, and which are preventing the uranium and the region accounts for 87% of world Member of the Audit Bureau of Circulations industry from making hay. consumption of nuclear energy. However, At last week’s 25th Annual Uranium although most of the future growth in world WORLD GOLD Symposium in London, the case for nuclear energy demand is likely to be in the undevel- Paul Burton ACSM, M.Sc., MBA power was presented with considerable oped countries, the degree to which nuclear Helen Payne M.Sc., DIC energy but, as numerous speakers readily power will feature is uncertain. MINING MAGAZINE acknowledged, the task that the industry In a wide-ranging enquiry into the long- John Chadwick B.Sc. faces, as it has done for the past two term future of nuclear power that takes into Des Clifford B.Sc. decades, is to convey its message to a account the diversity in attitudes in differ- SUPPLEMENTS/REPORTS wider audience. Tokio Kanoh, a member of ent regions, the RIIA concludes that the Austin Wheeler B.Eng. the Upper House of the Japanese Parliament nuclear option should “in some sense” MINING ENVIRONMENTAL MANAGEMENT and previously an executive director of remain open. The RIIA says that this means Tracey Khanna M.Sc., MCSM Tokyo Electric Power Co., referred to the that it must be acceptable to the public and CONSTRUCTION PUBLICATIONS ‘spiral of silence’ whereby in a debate one the decision-makers; that its economics Ian Clarke B.Sc. side becomes increasingly vocal, over- must be favourable; that a workable and Alan Kennedy B.Sc. whelming the other side into silence, to the acceptable approach to waste management Mike Smith HND (Min.) extent that there is no longer fair represen- is in place; and that novel reactor designs RESEARCH SERVICES tation of the two sides. are developed to address current problems. Iris Moncrieff It is also the case, as pointed out by There is little doubt that nuclear power is Editorial Consultant & Chairman Malcolm Grimston of the London-based returning to the international political agen- Michael West B.Sc., F.Eng. Royal Institute of International Affairs da in response to concerns about climate (RIIA), that the same ‘facts’ can be inter- change (this issue, p.189) but, as the RIIA Managing Director & Publisher Lawrence Williams B.Sc., C.Eng. preted very differently, according to view- observes, if sound decisions are to be made, point. Thus, for the nuclear industry, the impartial information will be essential. Three Mile Island accident demonstrates Therein lies the problem. MJ LEADING INDICATORS THE MINING JOURNAL LTD Change High- 52-week Change High- 52-week 60 Worship Street on week Low Max/Min on week Low Max/Min Share Indices Sep 6 (%) (%) HSBC Indices Sep 6 (%) (%) London EC2A 2HD FT 30 3,667 –0.6 27 4,066-3,521 (100 on 31/12/88 except*†) Tel: +44 (0)20 7216 6060 US Dow Jones 11,311 1.9 86 11,551-9,857 Global Mining 124 2.1 40 146-109 FTSE Gold Mines 759 4.4 7 1,232-722 Global Diversified Mining 159 2.0 34 198-139 Fax: +44 (0)20 7216 6050 Australian All Mining 721 0.3 71 771-597 Smaller Mining Companies 48 1.4 34 59-43 E-mail: [email protected] South African Gold 1,002 3.2 16 1,358-937 Global Base Metal Index 159 2.4 30 204-140 Toronto Met/Min 3,651 0.6 26 4,749-3,266 North American Base Metal 368 2.6 28 489-322 Subscription Dept: PO Box 10 Nikkei Dow 16,400 –3.0 8 20,833-16,035 Global Gold Index 52 3.8 7 78-50 Hang Seng 17,605 3.0 91 18,096-12,476 Global Gold Ex S Africa 57 4.5 9 85-55 Edenbridge, Kent TN8 5NE, UK North American Gold 66 5.4 12 97-61 Tel: +44 (0)1732 864333 Commodity Prices Sep 6 Global Coal Mining† 167 –1.7 75 181-124 Gold (London) $274.10 0.3 27 $324-255.7 Other Metals/Minerals† 310 1.2 100 310-219 Fax: +44 (0)1732 865747 Copper (LME) $1,935.50 2.2 100 $1,936.50-1,640 Latin American Mining* 266 3.7 79 286-190 E-mail: [email protected] Aluminium (U.S. prod.) 64.50c 0.0 25 69-63 Latin American (Ex CVRD)* 155 2.2 51 184-125 Brent Blend (dated) $36.63 6.9 100 $36.66-20.98 *100 on 31.12.89 †100 on 31/12/85 Web Home Page: www.mining-journal.com

186 Mining Journal, London, September 8, 2000 MINING WEEK

C$5.5 million by November 15, 2002 Howards Pass towards the completion of a prefeasibility Supplement with agreement study. The partners in the joint venture can then spend an additional C$7.0 million this week’s issue: Continued from p.185 (including the required payments to Placer Dome and US Steel), to bring total expendi- Copper Ridge believes that modern min- tures on the project to approximately ing and metallurgical technology should C$15.5 million. JOHANNESBURG enhance the prospects for the project’s suc- Thereafter, Billiton has an option to earn cessful development, and Billiton’s explo- a further 20% interest in the project by ration director, David Whitehead, is hope- financing all further work through to com- ful that a further evaluation of the deposit mercial production. Copper Ridge’s pro WMC in expansion will demonstrate that it may be large rata share (30%) of these costs would be enough to underpin the infrastructure nec- repaid from its share of cash flow from the mode essary to support substantial mining devel- project. Continued from p.185 opment in the sparsely-populated region. Commenting on the agreement (which Under the agreement with Billiton, requires approval by the boards of both The company remains singularly unper- Copper Ridge will commit C$3.0 million, companies and the Canadian Venture turbed by the new generation of laterite comprising a C$2.0 million concept study Exchange, and acceptance by Placer Dome mines and sees little prospect of them flood- and an initial C$1.0 million payment to and US Steel), the president of Copper ing the market with low-priced nickel. For Placer Dome and US Steel. For its part, Ridge, Gerald Carlson, has described it as its own operations, WMC now claims to be Billiton will subscribe for a private placing an important step forward for his company the lowest-cost producer, with average cash in Copper Ridge totalling C$200,000, to be and for Howards Pass as it brings Billiton’s costs for its operations of only US$1.12/lb. used by the latter to initiate a drilling pro- credibility to one of the world’s largest The company has reported earnings of gramme which is scheduled to begin shortly. undeveloped zinc deposits. It will also be A$333.7 million from its nickel operations Billiton will take a second placing of able to benefit from Billiton’s proprietary during the first six months of the current C$200,000 on completion of a successful metallurgical processing techniques, and calendar year (MJ, August 18, p.141), and due diligence review, to be completed by metallurgical samples are already being Mr Johnson described the past 12 months October 15. tested in this regard. Copper Ridge believes as “brilliant”. He said that demand for On completion of the concept study, that the deposit has the potential to become nickel is “powering ahead” and that WMC Billiton can elect to earn a 50% interest in one of the largest and lowest-cost zinc pro- is now expecting the nickel market to show the Howards Pass property by contributing ducers in the world. a small supply deficit this year of 5,000-

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15,000 t, with a return to balance in 2001. It transfer emission reduction units to another global warming. It argues that nuclear pow- is only two years ago that WMC announced party in return for projects carried out by er is not a sustainable energy resource, and the closure of some of its small high-cost the second party in the first party’s coun- thus does not meet the criteria set out for mining operations at Kambalda because of try; and the clean development mechanism the CDM. There is also an argument that poor market conditions (MJ, September 18, (CDM). The CDM would apply to projects the inclusion of nuclear power could reduce 1998, p.214) . carried out in developing countries but as the opportunities for other projects, includ- developing countries are not signatories to ing renewable energy projects. France and the Kyoto Protocol they would not, under the UK are leading the lobby for nuclear Climate debate hots up current arrangements, be able to transfer power to be included as an acceptable tech- emission credits to a party in an industri- nology that can be used in CDM projects. This week, representatives from 180 coun- alised country seeking to carry out a CDM At last week’s Uranium Symposium in tries are meeting in the French city of Lyon project. London (this issue, p.186), the influence of in a bid to thrash out an international Thus far, after three years of negotia- climate change policy on the future of agreement that will curb the worldwide tions, the Kyoto signatories have yet to nuclear power was examined at length by emissions of greenhouse gases, held to be agree on whether there should be sanctions Dr Jonathan Cobb, policy manager for responsible for global warming. The negoti- imposed on those countries that fail to meet British Nuclear Fuels. He included in his ations between experts from signatory their targets, or on how the proposed mech- presentation an insight into the financial countries to the Kyoto Protocol (climate anisms would operate. Environmental impact of assigning a value to carbon emis- treaty) in 1997 are seen as a crucial prepara- groups want recourse to these flexible sions and how this might change the eco- tory step ahead of ministerial-level talks on mechanisms to be kept to a minimum. nomics of nuclear relative to fossil fuels in climate change scheduled to take place in Otherwise they fear that governments will power generation – one of Greenpeace’s November. fail to take the necessary action to cut arguments is that the inclusion of nuclear The Kyoto Protocol commits industri- greenhouse gas emissions which are gener- power in the clean development mechanism alised countries to cutting greenhouse gas ated mainly by the consumption of oil, gas would provide a ‘new nuclear subsidy’. emissions, principally CO2, to around 5.2% and coal. For a 700 MW coal-fired power station, it below 1990 levels by 2008-12. In order to do The environmental groups also want the has been estimated by Greenpeace that CO2 this, three mechanisms were established: Kyoto rules explicitly to prevent countries emissions would total some 4.5 Mt/y. If, emissions trading, whereby a proportion of earning emissions credits by building instead, a nuclear power station was built one party’s quota of emissions can be pur- nuclear power stations abroad. The non- the carbon offset could be traded. Dr Cobb chased by a second party (in effect, ‘buying’ governmental organisation, Greenpeace, is estimates that likely CO2 permit levels the right to pollute); the so-called joint especially vocal in its opposition to the would be of the order of US$10-30/t of CO2. implementation, whereby one party can inclusion of nuclear power as a solution to On this basis, the carbon offset earned by

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Mining Journal, London, September 8, 2000 189 MINING WEEK the nuclear power station would be worth then lost with the pilot and an emergency the US with no one at the controls before between US$450 million and US$1.35 bil- declared. At first, a light aircraft from crashing in South Dakota after running out lion (ignoring the discounting of future Perth, and then two planes from Alice of fuel. credits). Accepting the Greenpeace esti- Springs shadowed the King Air but were mate that a new 700 MW nuclear power sta- able to report no signs of malfunction. A tion would cost US$2.5-3.0 billion, the val- senior investigator with the aviation divi- Greenland looks ue of the trade in emission credit futures sion of Australian Search and Rescue, forward to gold mine would reduce the capital cost by 15-40%. Michael Lawton, said that as the planes Dr Cobb argues that, in some cases, the use tracked the King Air it travelled in virtually Greenland could have its first commercial of nuclear power instead of fossil fuels may a straight line across three states before los- gold mine by early 2002, based on the well be the best option for combating cli- ing altitude and eventually flying into the Nalunaq deposit in the south of the island. mate change. ground. Crew Development Corp. of Vancouver is The authorities suspect that depressuri- developing the project in partnership with sation caused the pilot and passengers to state-owned Nunaminerals A/S. Although Miners in air tragedy lose consciousness and that the aircraft flew relatively small in world terms, the initial on autopilot until it ran out of fuel. Air safe- first phase as currently envisaged, of around A light aircraft has crashed in Australia ty officials are now at the scene of the crash US$19.8 million capital expenditure for an killing the pilot and all seven passengers – to carry out a thorough investigation in operation treating 500 t/d of high-grade ore gold miners returning to the Sons of Gwalia order to determine whether the plane to yield 148,000 oz/y, would have important mine in Western Australia after a fort- depressurised after takeoff or if it failed to implications for the economy of the self- night’s leave in Perth. The Beechcraft King pressurise from the outset, and whether governed Danish territory and particularly Air 200 twin-engine turboprop set out on oxygen masks failed to function. According for the economy of the part of southern the one-hour charter flight from Perth this to Barry Sargeant from the Australian Greenland where it is located. The nearest Tuesday to the remote mining town of Transport Safety Bureau, at 34,000 ft, the settlement is Nanortalik, with a population Leonora, but crashed five hours later in height which the aircraft reached at one of 1,500. Crew is hopeful that the project northeast Queensland just south of the Gulf stage, the average person would probably be may receive some infrastructural support of Carpentaria having flown a distance of able to maintain consciousness for about from the Greenlandic Government, such as some 3,000 km. one minute if the cabin was depressurised. a road from Nanortalik which is about 30 The alarm was raised 32 minutes into the In October last year, the champion US km away. flight when authorities noticed that the golfer Payne Stewart and five others died in The work programme for this summer plane was climbing to an altitude well above similar circumstances after their Lear 35 season has a total budget of US$7.2 million, its assigned height of 25,000 ft. Contact was twin-engine jet flew for several hours across which is being contributed US$6.1 million

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190 Mining Journal, London, September 8, 2000 MINING WEEK by Crew and the balance by Nunaminerals. Research in Canada for assaying. The Laboratory Testing As part of the programme, a 6 km access unused portions of the sample material will road has been constructed to link the pro- be held in stockpile as measured resources. Pilot Plant Testing ject site to an ice-free, deep-water fjord. Crew hopes this year to establish a mea- Funding the programme will increase sured and indicated resource containing Consulting Services Crew’s interest in the project from 50% to around 400,000 oz. The work will then move 67.5%. Crew’s interest may increase fur- up to a full feasibility study, which Crew ther, depending on the proportional contri- hopes to have finished by the end of this butions of a further US$1.5 million which year having done all of the necessary field Crew hopes to add to the budget by the end work this summer. The full feasibility study of October. will have some changes from the prefeasibil- LakefieldResearch As reported earlier this year when in the ity study, including moving to development planning phase (MJ, April 14, p.287), two in ore and a reduction in the planned stop- INNOVATIVE THINKING FOR PRACTICAL SOLUTIONS additional adits are being driven, 50 m ver- ing width to 1.0-1.2 m from 1.5 m. John tically above and below the existing adit Darch, Crew’s chief executive, expects these driven by Mindex ASA of Norway before it changes to bring down the dilution, and merged with Crew. Each adit will have a thus to raise the expected mining grade final length of about 400 m. The adits follow from around 27 g/t envisaged in the prefea- the strike of the vein structure which is sibility work, and to help reduce the antici- Tel +1 705 652 2000 hosted in metavolcanic rocks within the pated cash operating cost from US$160/oz. Fax +1 705 652 6365 Ketilidian mobile belt. He also expects some reduction in the capi- [email protected] A series of raises are being developed at 80 tal cost. www.lakefield.com m intervals up dip (25-35o) to link the adits. Mr Darch said that the company has had The raises are designed to yield material for discussions with a number of banks regard- bulk sampling, to try to establish the grade ing possible debt funding for the project, of the deposit accurately despite its high and hopes to make an announcement short- degree of variation in grade at relatively ly. The debt would be non-recourse once the short intervals (nugget effect). Jon Steen project has passed its commercial-produc- Petersen, Crew’s vice president for explo- tion tests. Assuming all goes according to ration, told Mining Journal that the gold schedule and results are positive, Crew occurs almost entirely at the contact of the hopes to make a development decision at quartz veins in the structure and the host the end of this year, and to start construc- Canada • Argentina • Brazil • Chile • Peru • South Africa rock. The work covers just a small portion tion next spring. Construction would take of the possible full size of the vein structure, about nine months. Although the project but it is designed to establish an initial has access to the sea year-round, actual resource of sufficient size on which to devel- commissioning would be scheduled for the op a first phase of production. following spring, in 2002. Your Mining Information Source Thus far, the work, which is being carried Subsequent expansion and detailed out by contractors Procon of Vancouver exploration of other targets in the region www.infomine.com under the supervision of the consultants would then be funded from project cash Strathcona Mineral Services, has mined flow. Crew recently moved to secure licences The most accessed mining about half of the 20,000 t (gross) of sam- on other prospective areas in the locality infinformation site on the internet pling material. Bulk samples of about 70 t (MJ, August 11, p.109), but current work is each are obtained by mining for a selected restricted to early-stage activities, such as 10 m interval along a raise. The sample is stream sampling, in order to focus on mov- Daily News crushed (95% <17 mm) and then fed ing Nalunaq forward. The next likely drill Investor Newsletters through a 250 t/d sampling tower to reduce target is the Lake 410 prospect, which lies its size but keeping it properly representa- close to the probable route of any future Technology News tive of the whole. Each 70 t sample is finally road between the project and Nanortalik, Company Database reduced to 35 kg of ground material (850 and ore could then be trucked the 15 km to microns), which is sent to Lakefield Nalunaq. Property Database Supplier Database Careers

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Mining Journal, London, September 8, 2000 191 FOCUS

he Uranium Institute’s 25th Annual The two new mines, McClean Lake and Symposium held in London last McArthur River, both started operations in Tweek attracted in excess of 400 dele- Uranium: 1999, the former in June and the latter in gates from 30 countries. The public percep- December. McArthur River represents a tion of the nuclear industry and the need for Saskatchewan resource of 483 Mlb at an average grade of better communication were high on the 17.3% U3O8 (185,000 t U), and annual pro- agenda, as was nuclear power and environ- miners duction is scheduled to reach 18 Mlb (6,900 mental policy, and the future of nuclear t U). McClean Lake possesses a 50 Mlb energy (this issue, p.189). There was also resource at an average grade of 3.3% urani- debate about the management of plutoni- undeterred um oxide. It will be mined by open pit ini- um derived from military programmes, the tially, and annual production is scheduled at safe transport of nuclear fuels, nuclear in the Athabasca Basin of northern 6 Mlb/y of U3O8 (2,300 t U). waste disposal and, not least, the impact Saskatchewan are estimated at more than Further ahead, Cigar Lake could begin that secondary supplies of nuclear fuel are 365,000 t U. production in 2003, based on a resource of having on the uranium market in terms of Over the past 20 years, the industry there 332 Mlb at a grade of 16.1% U3O8. Annual prices, and the effect this is having on pri- has spent in excess of C$3.1 billion on explo- production would be around 18 Mlb of ura- mary producers. ration and pre-development capital and nium oxide (6,900 t U). At the Midwest pro- Coverage of the actual business of mining more will be committed in the next ject, technical studies are continuing and uranium was largely confined to the few years for the new projects such as Cogema has indicated that in the current keynote address on the second day of the Cigar Lake (Cameco Corp. 50%, Cogema market climate, there is no rush to proceed symposium delivered by Saskatchewan’s Resources Inc. 37%, Idemitsu 8% and to production. There is a resource of around

Minister of Energy and Mines, the Hon. Tepco Resources 5%) and Midwest 35 Mlb averaging 4.5% U3O8, and ore would Eldon Lautermilch. Saskatchewan is the (Cogema 70.5%, Denison 25% and the be treated at the McClean Lake mill located fourth-largest mineral-producing province Japanese consortium OURD with 4.5%). about 12 km from Midwest. in Canada, and mining, together with agri- These two projects, along with McClean Mr Lautermilch estimates that when the culture, is one of the most important con- Lake (Cogema 70%, Denison Mines new generation of mines is completed, tributors to provincial GDP. The province 22.5%, OURD 7.5%) and McArthur River Saskatchewan’s annual production capacity is the world’s leading producer of potash (Cameco 69.8%, Cogema 30.2%), both of will increase by more than 30%, from and uranium, providing more than 25% of which are now in production, represent a around 32 Mlb U3O8 to nearer 42 Mlb annual production of each of these com- new generation of mines. The latter repre- (16,000 t U). He anticipates that this level modities. There is only a modest base met- sent an investment of around C$1.0 billion, will be reached in 2005. Emphasising “the als and gold sector but the province has and Cigar Lake and Midwest could add a impressive magnitude” of the new deposits, been underexplored for these metals, and further C$500 million when they are Mr Lautermilch noted that McArthur exploration is being stepped up. There has brought into production. River and Cigar Lake, in order to achieve also been a revival of diamond exploration their annual production of 6,900 t U, will (this issue, p.195). need to mine and process approximately At the present time, uranium prices on Current status only 100-150 t/d of ore – less than the the spot market are near historic lows as a amount that can be produced in one shift result of an abundance of secondary sup- With the move towards new high-grade each day at each mine. plies such as utility and government inven- mines, Saskatchewan’s uranium industry is In terms of the in-ground value of the ore, tories of uranium, and the supply of highly very much in transition, and output last McArthur River resources at current, low enriched uranium from dismantled nuclear year slumped by 27%. At Key Lake spot-market prices are worth more than weapons. As a consequence of low prices, (Cameco 83.33%, Cogema 16.66%) C$6.0 billion. By comparison with other development and production of new urani- reserves are exhausted and 1999 production Canadian mineral deposits, Mr um resources are being delayed worldwide, was 3,715 t U. The mine yielded more than Lautermilch said that for the Ekati dia- even though existing primary production 73,000 t U over a 15-year life. The mill has mond mine the contained value per tonne of meets no more than 50% of world consump- now been adapted to treat high-grade ore ore is about C$149/t, and around C$334/t tion. Nevertheless, secondary supplies are from McArthur River which will be shipped for the Voisey’s Bay nickel-cobalt deposit, finite and in Saskatchewan, where there is a in slurry form. whereas McArthur River exceeds C$4,700/t recognition that the market will rebound as At Cluff Lake (Cogema 100%) produc- and Cigar Lake is in excess of C$4,400/t. perceptions of abundant uranium supplies tion last year dwindled to 916 t U. The oper- change, optimism amongst uranium pro- ation has produced more than 19,000 t U ducers remains high, according to Mr over 20 years, and there is a remaining Leading edge technology Lautermilch. underground resource of some 6,900 t but Moreover, the minister says that the the mine had been expected to close this The new mines also highlight the leading- provincial government is well aware of the year because of a combination of low urani- edge technologies that the uranium-mining long lead times involved in finding and um prices and insufficient tailings capacity. industry employs. At McClean Lake, the developing new uranium deposits, and is However, Cogema has since outlined some new mill design incorporates concrete actively promoting the development of its high-grade underground reserves and has shielding of tanks to limit radiation expo- resources in order that it will be in a posi- told Mining Journal that it now expects to sures from processing solutions, state-of- tion to take advantage of market opportu- continue a modest mining operation into the-art computerised control of the mill nities that will eventually exist. The gov- 2001, subject to the necessary approvals. process and an air-circulation system ernment, he says, is committed not only to At Rabbit Lake (Cameco 100%), pro- designed to limit exposures to radon. At maintain but to strengthen Saskatchewan’s duction last year decreased to 2,705 t U, McArthur River, the focus is on remote position as the world’s primary producer. mining has been suspended and the mill is operation of virtually every component of World output last year fell by 9% to 30,834 processing stockpiled ore on a part-time the mining process. Not only is the ore t U and Saskatchewan, now Canada’s sole basis. However, the facility is now likely to mined remotely, but the mine also incorpo- producer, contributed 7,896 t. The total stay open following a proposal to mill some rates an underground grinding circuit that uranium reserves and resources contained of the Cigar Lake ore there. allows the ore to be pumped to surface in

192 Mining Journal, London, September 8, 2000 FOCUS

slurry form. The freezing plant used to publication independent The freeze the orebody prior to mining has the The regulatory framework capacity to provide enough ice for 16 skat- for the international the for ing rinks. Commenting on the regulatory environ- gold community gold The grade of the ore from the McArthur ment for uranium mining in Saskatchewan, River deposit (and from Cigar Lake when Mr Lautermilch said that the industry had production begins) is so high – around 14% been very successful in meeting stringent U3O8 compared with a world average closer environmental and worker health and safe- to 0.2% – that the ore slurry has to be dilut- ty standards. The government actively sup- ed with waste rock and low-grade ore in ports uranium mining and does not see it as order to bring the grade down to about 4%. a political issue, with a poll showing that Otherwise the slurry cannot be safely 70% of the people in the province support processed in the mill. This is probably the the industry. The mining sector as a whole first time in the world that an ore stream (including oil and gas), provides direct and has had to be diluted for processing! indirect employment for around 18,000 peo- It had previously been envisaged that ple. Of the 6,000 directly employed, about Cigar Lake, the world’s second largest ura- half are from the ‘north’, including 56% of nium deposit, would be brought into pro- aboriginal descent. Mining is an important duction in late 2001 or early 2003 but the fiscal contributor, providing the province start-up date has now been deferred – it with some C$1.0 billion in 1999 – about makes no sense to rush to complete develop- 20% of total revenues. ment at a time of market oversupply – and The minister drew attention to problems Mr Lautermilch regards the project as the stemming from the regulatory overlap and “knock-out punch” to other deposits seek- duplication between the provincial and fed- ing to compete with Saskatchewan for mar- eral governments relating to the uranium- ket share. mining industry. The financial impact is Although low uranium prices have cause for much concern within the industry deterred exploration, the search in the and Mr Lautermilch noted the signature of Athabasca Basin continues, albeit at a recent Memorandum of Agreement ol Gl gvs o atoiaie oeae f h atvte and activities the of coverage authoritative you gives Gold World efrac o gl mnn cmais n mres hogot the throughout markets and companies mining gold of performance world. The subscription comprises two publications: the monthly

between the province and the Canadian Gold

reduced levels. The key players are the two Analyst Gold prtn ad iaca rsls f h wrds 0 ags gold largest 80 world's the of results financial and operating biggest producers, Cameco and Cogema. Nuclear Safety Commission. Under the producers.

Recent drilling by Cameco in the vicinity of agreement, the parties commit to the incor- 6050 7216 (0)20 +44 Fax: 6060 Tel:7216 (0)20 +44 delivers news, analysis and comment, while the quarterly the while comment, and analysis news, delivers La Rocque Lake, part of the Dawn Lake poration of provincial legislation in the fed- joint venture (Cameco, Cogema and PNC eral regulations under the Nuclear Safety www.worldgold.net [email protected] www.worldgold.net

Exploration Canada), has encountered and Control Act, which will be administered UK 2HD. EC2A London Street, Worship 60 For further information please contact us: contact please information further For intersections with grades of up to 30% U3O8 by provincial regulators. This should Gold, World Department, Marketing The

at a depth of 280 m – shallower than the streamline the regulatory environment and the of analysis comprehensive a presents McArthur River and Cigar Lake deposits. thereby result in cost-savings. Additional drilling there began in June. In terms of the investment environment, Elsewhere, Cogema is having some suc- the provincial government is reviewing the cess with its exploration at Shea Creek, 15 full range of taxes that apply to the indus- km south of Cluff Lake. Drilling has try, and the Department of Energy and encountered massive pitchblende minerali- Mines has initiated an in-depth review sation in thicknesses of up to 6 m at a depth of the uranium royalty regime. Mr of 700 m. The company is employing ‘navi- Lautermilch believes that this could result gational drilling’ whereby up to six deflec- in fundamental changes to how royalties are tion holes are drilled at depth from a central determined and the rates at which they are pilot hole in the centre of the target area. As assessed, and says that maintaining the well as the cost savings, a single drilling site industry’s competitiveness is a primary rather than six or seven has obvious envi- motivating factor in these review proces- ronmental benefits. ses. World World

Source: Uranium and Radioactive Waste Division, NRCan.

Mining Journal, London, September 8, 2000 193 INDUSTRY IN ACTION

drilling of the Tenacity kimberlite, 60% by making staged payments and northern Zacatecas, about 90 km part of the Hood River property, has exploration expenditures prior to July from the town of Fresnillo. High- Exploration recovered 218 diamonds measuring 15, 2005. The 16 km2 exploration grade silver mineralisation was first greater than 0.15 mm. Of these, 24 are property is located 110 km from the found there by the Spanish in the larger than 0.5 mm in one dimension, city of Tunis and within 50 km of the 16th Century, and there was sporadic Ashton reports more seven did not pass a 0.5 mm square Bougrine lead-zinc deposit. The production there until the Mexican mesh, and one did not pass a 1 mm Djebba deposit has been defined over Revolution. Work to date by potential at Merlin mesh. The total size of the sample was a strike length of 1,000 m. It is up to Quaterra and Minera Kennecott (Rio The Australian diamond producer about 558 kg. The Tenacity 200 m wide and varies from 3-25 m in Tinto) indicates that a large Ashton Mining Ltd, the subject of a kimberlite, located roughly 110 km thickness. The mineralised belt is hydrothermal system could exist with takeover battle between the Rio north of Tahera’s wholly-owned believed to extend for a total of 4 km. minimal erosion. Three blind and Tinto and De Beers groups (this Jericho project (MJ, June 23, p.487), Previous work at Djebba, including locally high-grade silver vein systems issue, p.202), has established that the has a surface expression of 80 x 100 m. eight shallow holes drilled in 1970, have been identified, and at the most Palomides and Sacramore kimberlite The diamonds were recovered at returned assays of up to 15% Zn . advanced target, the San Gregorio pipes at its Merlin project, in the the laboratory of Kennecott Canada International Bravo is assembling vein, drilling suggests that an Northern Territory, join at depth to Exploration Inc. in Thunder Bay. all historical exploration data prior to extensive silver stockwork exists form one pipe. The two pipes had Kennecott, a wholly-owned selecting drill targets. It expects to beneath Cerro San Gregorio. This is hitherto been believed to be separate subsidiary of the Rio Tinto group, is fund the programme in part from the believed to represent manto-style occurrences. The interpretation is the earning a 50% interest from Tahera exercise of 3 million warrants for the mineralisation that has migrated result of a deep drilling programme in the Hood River, Rockinghorse and purchase of 3 million shares of the laterally from the San Gregorio vein started in April of this year. Ice Claims properties, located in company at C$0.15/share, prior to near its junction with the Arroyo The two pipes join at a depth of Canada’s Nunavut Territory and warrant expiry on October 4, 2000. Fault. A drill-hole within 250 m of about 120 m below surface, forming Northwest Territories, through this fault encountered 7.6 m carrying one, larger pipe. Ashton notes that expenditure of C$50 million by 2008. Snap decision for 230 g/t Ag beginning at 67 m from the the discovery has possible Thus far, Kennecott has spent C$17 collar. implications for the life of the Merlin million. Mackay Lake project. Work will now move to Tahera notes that preliminary SouthernEra Resources has secured a studying whether or not an expanded results indicate that Tenacity drilling rig for the purpose of . . . and lead and zinc open pit is feasible, combining the probably does not have sufficient completing one hole on its Mackay Separately, Hochschild has signed existing pits of the two surface grade or size to justify development Lake diamond prospect before the definitive agreements with another expressions; and later to the on a stand-alone basis, and that onset of winter. The project is located Canadian company, Western Copper evaluation of the underground Kennecott’s future programmes will in the Northwest Territories, and Holdings, in respect of the Penasquito mining potential. Production from concentrate on exploring for SouthernEra believes that the and San Jeronimo silver-lead-zinc- the Merlin project, which comprises additional kimberlites in the area. property could host an extension of gold properties, also in Zacatecas. At five kimberlite pipes (including Winspear Resources’ Snap Lake Penasquito, Hochschild has made a Palomides and Sacramore), totalled Bravo cool on diamond project. The Snap Lake US$500,000 land-purchase payment, 100,812 ct during the first half of this kimberlite is shallow dipping and if it and may earn a 68% interest by year. Sales of Merlin diamonds during Pogo . . . does extend into the Mackay Lake spending US$1.75 million on the period averaged US$113/ct. The junior exploration company area it would be at an estimated exploration and development over International Bravo Resource Corp., depth of 900-1,200 m. However, the three years, whereupon Western Anaconda listed on the Canadian Venture reported grades for Snap Lake are Copper may elect to have a 32% Exchange, has completed a two-hole high and the diamonds are of high participating interest or a 20% consolidates nickel diamond-drilling programme at its value, and SouthernEra believes, carried interest through to resources East Divide property in the Pogo gold therefore, that it would be economic production, again with Hochschild district of eastern Alaska, one of three to mine even at those depths. providing all financing. Anaconda Nickel Ltd of Australia properties in the district held under Drilling is scheduled to begin very Penasquito covers 3,255 ha in the reports that the nickel laterite option from a subsidiary of North shortly and, because the drilling Concepcion del Oro district. The mineral reserves and resources under Star Exploration Inc. The drilling initiative is not included in the mineralisation extends within an area its management total more than programme, designed to intersect current exploration programme, the of 9 km2 beneath 30 m of alluvial 2,100 Mt. This figure includes the projected depth extensions of board of directors of SouthernEra is cover. Previous work by Western ground held by Anaconda in and previously discovered, gold-bearing considering a small private placement Copper and Minera Kennecott around its Murrin Murrin and Mount sheeted quartz occurrences, has of equity. outlined a mineralised zone at Chile Margaret projects; that held by proved disappointing. Colorado, plus two large mineralised Centaur Mining and Exploration One of several parallel zones Hochschild interest breccia pipes with high-grade Ltd, including the Cawse project; previously sampled by an intersections of silver, lead, zinc and plus ground included in the independent consultant had yielded a in Mexican silver . . . gold. Hochschild plans a 12-hole, exploration alliances that Anaconda weighted average of 5.67 g/t Au over Vancouver-based Quaterra Resources 3,700 m core-drilling programme. has forged with Goldfields Ltd and 20 m but the drilling failed to Inc. has signed a definitive agreement The San Jeronimo prospect, Homestake Gold of Australia Ltd (a intersect the mineralised quartz veins with Mauricio Hochschild & Cia located 20 km south of the city of wholly-owned subsidiary of as observed at surface, with assays Ltda, the Peruvian mining company, Zacatecas, lies in the heart of the Faja Homestake Mining Co. of the US). returning gold values not exceeding whereby Hochschild can earn a 68% de Plata, a mineralised district which Anaconda’s announcement follows 1.0 g/t and over intervals of only 1-2 interest in the Nieves silver property was an important silver-producer last week’s deal with Goldfields, m. The company notes, however, that in Mexico by spending US$1.75 until 1911. Drilling by Western under which the two companies have with only two 100 m holes drilled to million on exploration and Copper has identified high-grade each gained the right to explore for date, potential still remains at East development over three years. The silver mineralisation along the Loreto and mine their respective target Divide, and that a proposal for Peruvian company has a 90-day vein, plus a bulk tonnage target in the metals (base for Anaconda and additional work is under period to give Quaterra notice that it footwall. Also volcanogenic massive precious for Goldfields) on the other’s consideration. It intends to relinquish intends to proceed. During this time, sulphides were discovered late last ground (MJ, September 1, p.174). its option on the West Pogo and a programme of detailed geological year. Hochschild has 90 days to give Last month, Anaconda also made a Central properties. mapping and trenching is planned to notice of its intent to proceed on both deal to take a 14.99% shareholding in evaluate existing vein structures and properties, during which time it will Centaur (MJ, August 25, p.160). The . . . warming to to locate new structures. If carry out geological mapping and company already has an agreement to Hochschild proceeds and earns its geophysical surveys. earn a 60% interest in Centaur’s Tunisia interest, Quaterra may then elect a Cawse nickel laterite project. With the lack of success in Alaska, 32% participating interest or a 20% International Bravo is now directing interest carried through to Kisladag assays Diamondiferous most of its attention to a winter production, with Hochschild Eldorado Gold Corp. has received exploration programme at the providing all the financing. assays results from a drilling kimberlite for Tahera Djebba stratabound, carbonate- The Nieves project covers 32 km2 programme at the Kisladag gold Tahera Corp. of Toronto reports that hosted lead-zinc property in Tunisia, and is believed to host a Fresnillo- property in Turkey. The company has sampling of kimberlite from core where it can earn an interest of up to type silver deposit. It is located in recently received a scoping study of

194 Mining Journal, London, September 8, 2000 A regular Mining Journal The year of living transparently supplement Explaining, or trying to, his role in the arms to Iraq affair, the UK prime minister at the time John Major suggested: “Something that I was not aware had happened turned out to have happened.” On Sunday, September 26, 1999 the head of the European Central Bank Wim Duisenberg stunned the gold market by pre-announcing sales by 15 central banks of 400 t/y over the following five years, and a limit on their gold lending to then current levels. In any anniversary review Mr Duisenberg can justifiably claim the ‘Major’ defence for his part in the affair. As the table shows, the outcome has been transparently not quite what was supposed to have happened. MITSUI GLOBAL PRECIOUS METALS •The spot gold price is 2% up. But then so are most commodities over the same period, without official help. Major moves Sydney l Hong Kong l Tokyo l London l New York include oil (+53%), platinum (+59%), palladium (+99%). •Gold lease rates have collapsed as major gold borrowers stood back, waiting for spot gold prices to rise. Signatories to Mr Duisenberg’s statement have seen revenues from leasing gold fall by perhaps $400 million. •Market activity, on any measure, is more minor, through inertia in gold miner hedge books and smaller dealer option books. •Gold mining companies have seen their market capitalisation shrink.

Major moves Sept 24, 1999 Sept 5, 2000 Change Gold price ($/oz) 270 276.2 2.3% (pm fix) (am fix) Lease rate (%) 1 month 3.40 0.46 PRECIOUS 6 month 3.80 0.94 METALS COMEX open interest (contracts) 216,200 124,100 -42.6% MONTHLY LBMA clearing turnover (tonnes/day) 1154 (Sept) 647 (July) -43.9% MONITOR XAU gold share index 71.5 52.8 -26.2% AUGUST 2000 In review, Mr Duisenberg might do worse than recall another famous Major-ism: “that part of it is behind us now… I’m drawing a line under the sand.”

Mitsui Global Precious Metals For data definitions see over AUGUST 2000

GOLD SILVER Data definitions August 2000 2000 Q3 August 2000 2000 Q3 Average High Low Average High Low Average High Low Average High Low

London fixing price $/oz 274.5 277.6 272.0 277.9 287.7 272.0 4.88 4.98 4.76 4.93 5.02 4.76 Fixing prices London pm - gold, platinum, palladium. London lease rates 1 month % 0.49 0.58 0.44 0.53 0.68 0.44 0.68 0.74 0.64 0.73 0.82 0.64 London midday - silver. 3 month % 0.64 0.71 0.58 0.68 0.87 0.58 1.10 1.29 1.00 1.21 1.42 1.00 12 month % 1.39 1.49 1.25 1.40 1.50 1.25 3.25 3.63 3.04 3.40 3.65 3.04 London lease Gold: US$LIBOR minus Price volatilities GOFO rates 1 month % 7.6 8.5 7.0 9.5 16.2 7.0 9.1 11.0 7.7 10.0 16.3 7.4 Silver: US$LIBOR minus 12 month % 19.1 19.2 19.1 19.1 19.2 19.1 17.9 18.2 17.6 18.3 18.9 17.6 SIFO rates NYMEX/COMEX Platinum: Mitsui indicative Open interest contracts 126,893 134,217 111,188 129,707 150,096 110,415 91,088 100,213 77,857 83,900 100,213 72,072 quotes Volume contracts 16,279 36,273 6,219 21,593 54,956 6,219 16,119 38,167 3,562 12,999 38,167 3,562 Palladium: Mitsui indicative Philadelphia Gold Jan 1979 51.6 54.5 49.6 52.6 57.4 49.6 quotes Share index = 100

Price volatilities 20 day and 261 day PLATINUM PALLADIUM standard deviations August 2000 2000 Q3 August 2000 2000 Q3 of daily percentage changes in price series Average High Low Average High Low Average High Low Average High Low London fixing price $/oz 577.6 608.0 564.0 569.2 608.0 532.0 764.0 852.0 715.0 734.5 852.0 616.0

NYMEX/COMEX Gold: contract = 100 oz London lease rates (Data supplied by Silver: contract = 5,000 oz 1 month % 16.5 19.8 11.8 21.2 36.8 11.8 8.5 10.8 6.8 8.1 10.8 6.8 New York Mercantile Platinum: contract = 50 oz 3 month % 17.4 20.0 11.8 20.9 37.0 11.8 9.6 11.0 6.8 9.2 11.0 6.8 6 month % 17.6 20.1 12.1 20.8 33.1 12.1 11.5 13.1 9.1 10.9 13.1 9.1 Exchange) Palladium: contract = 100 oz Price volatilities 1 month % 26.1 28.1 21.6 26.5 29.8 20.4 43.8 50.8 34.4 39.0 50.8 27.2 TOCOM Platinum: contract = 0.5 kg 12 month % 31.7 31.8 31.3 31.4 31.8 30.9 37.6 38.0 36.6 36.6 38.0 34.8 Palladium: contract = 1.5 kg NYMEX/COMEX Open interest contracts 9,730 10,410 9,420 9,629 10,410 8,759 1,970 2,247 1,748 2,010 2,247 1,748 Philadelphia Index of North American Volume contracts 641 2,229 258 744 2,769 258 227 494 43 197 548 26 gold share index gold mining stocks (XAU) TOCOM Open interest contracts 240,996 258,052 221,732 221,166 258,052 190,037 14,887 15,813 13,245 15,826 17,672 13,245 Volume contracts 67,354 144,872 27,903 54,807 151,474 14,144 311 1,576 97 315 1,576 97

Mitsui Global Precious Metals. Andy Smith Tel: +44 (0)20 7246 8907. E-mail: [email protected]. Web: www.mitsui-gold.com INDUSTRY IN ACTION the property, compiled by Micon about 120 km north of Ulaanbaatar, despite record production levels, and study for the development of the International, which considers a and is estimated to contain indicated the disposal of the Big Bell gold mine Novoleningorsk and Obruchevsky 20,000 t/d open-pit heap-leaching and inferred resources of 25.5 Mt at a in Western Australia (MJ, May 12, deposits. The Novoleningorsk deposit operation producing about 185,000 grade of 2.80 g/t Au, with an p.381). Normandy’s commitment to is thought to contain around 1.8 Mt oz/y of gold. Better results from the estimated further 160,000 oz of gold exploration remains undiminished for of zinc at a grade of 4% Zn. Mr recent drilling programme are as contained within an alluvial resource. the coming year. Kluyev anticipates that production follows: Reserves at Boroo are estimated at from the new deposits will start in 10.7 Mt at a grade of 3.34 g/t Au. HZL opportunity 2004 or 2005, and he expects that the Hole Interval Au The feasibility study envisages an development will ensure the future of (m) (g/t) operation producing 150,000 oz/y It is reported from New Delhi that the Kazzinc. GR-82 65.0-250.0 1.65 over the first three years, at a cash Indian Government is seeking to At present, the company operates incl. 65.0-187.5 1.95 operating cost of US$164/oz. The complete the sale of a portion of its the Maleyevsky mine which opened GR-88 2.5-332.5 2.08 company plans to relocate the equity interest in state-controlled last year (MJ, August 13, 1999, incl. 2.5-125.0 2.73 Bullabulling gold plant in Western Hindustan Zinc Ltd (HZL) to a p.126) and contains around 2.7 Mt of GR-93 2.5-300.0 1.42 Australia to Boroo, transporting it strategic partner within six months. zinc at a grade of 7.84% Zn. The incl. 37.5-110.0 2.03 through the Gobi Desert, a survey of During the early 1990s, the government company also operates the Tishinsky GR-94 0.0-300.0 2.16 the route having been conducted. relinquished 24% of its holding, and the mine which contains around 2.3 Mt of incl. 112.5-177.5 4.74 Initial plant throughput is planned at latest proposed disinvestment of 26% of zinc at a grade of 6.2% Zn. The two 1.32 Mt/y, although studies on a 1.75 government equity will dilute the operations produced 245,000 t of zinc The drilling programme was Mt/y throughput model are in government’s holding in HZL to less in 1999. designed to test and expand the limits progress. The capital cost of the than 50%. The move has been of the known mineralisation, and to Boroo project is estimated at US$39 recommended by the Cabinet . . . new aluminium provide in-fill information. Eldorado million, US$34 million of which is Committee on Disinvestment which considers that the results indicate planned to be financed by debt, and recognises that, although HZL smelter? that the mineralisation has been the rest by equity. The remaining possesses world-class open-pit zinc Mitsui and SNC-Lavalin are also expanded considerably in three 15% of Boroo is held by a Mongolian mines, it is badly in need of capital to considering a major investment in directions, and remains open. The company. expand and upgrade its technology. Kazakhstan. According to the results of the drilling programme are India’s zinc production capacity is Interfax news agency, the companies to be incorporated into a new resource Huaron around 180,000 t/y, comprising are part of a consortium that is model. 149,000 t/y operated by HZL and the conducting a feasibility study into the reconstruction balance operated by privately-owned development of a new aluminium Saskatchewan begins Binani Zinc Industries. Annual smelter near the alumina refinery at production is close to 170,000 t Pavlodar. A feasibility study for the diamond interest Pan American Silver Corp. has whereas domestic demand is now in project is under way and scheduled revives completed the financing for the excess of 240,000 t. HZL’s facilities for completion by the end of 2001. It reconstruction of its 72%-owned are located in Rajasthan and Andhra is expected to produce some 240,000 Diamond exploration in Huaron silver mine in Peru (MJ, June Pradesh, and in the former there has t/y of aluminium and will cost around Saskatchewan is reported to be 2, p.439), and work has begun. been a proposal for a new Rp8 billion US$800 million to build. perking up, with annual expenditure Production is expected to be achieved (US$1=Rp45.75), 100,000 t/y Other members of the in the favoured Forte à la Corne area in about six months, at a rate of 4.3 capacity smelter at Udaipur. consortium include Evraziisky now running in excess of C$5.0 Moz/y of silver and 18,000 t/y of zinc. Bank of Kazakhstan and million. Junior companies such as Huaron contains an estimated 6.16 Kazakh investment Aluminium of Kazakhstan (the Shore Gold Inc. and Kensington Mt of reserves at an average grade of company that controls the Resources Ltd are active, and the 252 g/t Ag, 3.95% Zn, 2.44% Pb and slump . . . Pavlodar alumina refinery, and the latter’s joint venture with Cameco 0.43% Cu. According to Maksat Mamashev, the Torgai and Red October bauxite and De Beers (through its Canadian Pan American acquired its 72% deputy head of Kazakhstan’s mines). The project is said to have exploration subsidiary, Monopros), interest in Huaron earlier this year investment agency, Kazinvest, foreign the backing of the Kazakh Prime covers an area containing over 70 (MJ, March 10, p.198), and the investment in the country’s mining Minister, Kasymzhomart magnetically-defined pyroclastic mine’s forecast production will nearly and metals sectors slumped to a mere Tokayev. crater-facies kimberlite bodies, double the company’s silver US$67 million last year. By contrast According to Yosinori Tukanada, comprising one of the largest production in 2001 from Peru to foreign investment in the country as a Mitsui’s regional representative, kimberlite fields in the world. almost 7 Moz. The redevelopment of whole totalled US$1.1 billion. Mr investors need confirmation that the Previous work has been the mine will provide synergies with Mamashev described the low level of Kazakh Government will maintain its disappointing as regards the number Pan American’s Quiruvilca mine in investment in mining and metals as present policy of support for foreign of diamonds recovered but according the north of Peru. catastrophic, and blamed investments and that its tax to Jay Fredericks, at Saskatchewan’s unfavourable global market legislation will be improved. Energy and Mines Department, Normandy raises conditions and what he described as interest has revived because it is now stringent state policies with regard to believed that some of the original reserves the tax obligations of metallurgical Grapes of wrath assay work using x-ray fluorescence Normandy Mining Ltd has increased enterprises. Trans Hex International Ltd (THI), may have significantly its estimated resources and reserves Over the past few years, several a subsidiary of the South African- underestimated the diamond content for the tenth consecutive year – to companies that have invested in the based diamond producer Trans Hex of the samples because many of the 53.8 Moz and 21.8 Moz respectively. Kazakh minerals sector have become Group Ltd, reports that progress at Forte à la Corne diamonds exhibit Reserves were estimated using a gold embroiled often in acrimonious legal its Northbank project in Namibia is poor fluorescence. It is suspected that price of A$450/oz, a level similar to battles over ownership and other being held up by legal action in the as much as 45% of the diamond that used over the past three years. issues. Windhoek High Court. A local population may have been missed The company is at pains to point landowner, Aussenkehr Farms, has when the samples were assayed. out that 22% of the reserve estimate . . . Glencore to refused the project operating comes from an initial inclusion of a company access for exploration work, reserve for the Boddington develop mines . . . claiming that dust from bulk- Expansion, which was derived using a Although the levels of foreign direct sampling activity is affecting the Development gold price of A$425/oz, and a pit investment in Kazakhstan may be marketability of its grapes. The design which excluded inferred low overall, some companies are dispute goes back to 1998. category material. At the Callie willing to develop projects. This During earlier hearings before the operation, the company recently week, Kazzinc, a zinc producer owned Mineral Ancillary Rights Boroo go-ahead moved to full ownership, but the by Swiss-based trading house Commission (MARC), which found AGR Ltd reports that a feasibility reserve was reassessed using the Glencore, said that it is to develop against the landowner, expert study of its 85%-owned Boroo gold A$450/oz gold price, having two new zinc deposits over the next witnesses testified that bulk project in Mongolia has indicated previously been estimated using five years. According to Kazzinc’s sampling is unlikely to add to the that it would be economic at current A$500/oz. The company notes that vice-president, Gennady Kluyev, the normal levels of dust in the area. The spot gold prices. Boroo is located the increase in reserves was achieved company is working on a feasibility landowner appealed, but the MARC

Mining Journal, London, September 8, 2000 195 INDUSTRY IN ACTION ruling was later nullified by a infrastructure, and a long-term nickel other operations, 2,900 workers will expectations, with metal procedural error. The latest legal concentrate offtake agreement. remain at Libanon, and no workers reconciliation exceeding forecasts. action by the landowner, seeking a It is envisaged that Emily Ann will will be laid off. Cash operating costs for the project definitive ruling in its favour, be developed as an underground mine Last month, Gold Fields said that have been estimated at A$1.45/lb challenges the relevant section of the utilising an on-site conventional it planned to restructure the Libanon (excluding copper and cobalt credits). Namibian Minerals Act, questions nickel sulphide concentrating facility division and that this may include the the validity of the Northbank licence, capable of treating 250,000 t/y of ore sale of a portion of the operation. In BHP signs Borneo and alleges bias by the Ministry of to produce 6,700 t/y of nickel over five the June quarter, cash operating costs Mines and MARC. The latest action years. LionOre estimates total project at the division rose to US$453/oz from coal deal commenced on August 15 and is costs at A$42 million and forecasts US$375/oz in the previous quarter. Broken Hill Pty Co. Ltd has signed a expected to continue during October. total average cash operating costs at 30-year deal with the Indonesian Northbank is a 50:50 joint venture US$1.55/lb of nickel produced. This Fatal accident at Big Government in respect of plans to between THI and Namorco, a includes smelting, transport and mine coal in Borneo. Under the company held by Stocks & Stocks refining costs, and by-product credits. Bell . . . agreement, the government will (Namibia) and Lazare Kaplan The resource at Emily Ann is New Hamptons Goldfields has receive 13.5% of production revenues, International of the US. The project estimated at some 2.2 Mt averaging suspended underground mining and BHP will manage and operate covers 2,950 ha on the northern bank 3.7% Ni. operations at its Big Bell gold mine in three production areas covering a of the Orange River, which forms the Western Australia. The decision total area of 390,000 ha in the border between South Africa and follows an accident over the weekend provinces of Central Kalimantan and Namibia. Trans Hex Group is in which a miner was crushed to East Kalimantan. actively mining diamonds on the Production death. Commenting in Jakarta this southern bank. The managing New Hamptons acquired the mine Wednesday, Indonesia’s Mines and director of Trans Hex Group, Peter from Normandy Mining, and has Energy Minister, Purnomo Danchin, says that the delay in the expanded mine reserves to 860,000 oz, Yusgiantoro, said that the agreement sampling work, which would involve a Crotone sold sufficient to extend the mine life from demonstrated that Indonesia is still 100 t/h dense-media separation plant, Italy’s Enirisorse has sold its Crotone three to five years. attractive for mining investors, and is preventing development that would zinc smelter in the south of the his director-general of mining, Surna create 50 new jobs in local country to Zincocalabra SpA. . . . Bronzewing Tjahya Djajadiningrat, said that the contracting, and initial capital According to Enirisorse’s parent government is working on incentives expenditure of N$30 million (US$1 = company ENI, its subsidiary is in returns to normal to encourage investment and boost N$6.96). liquidation and the 100,000 t/y Meanwhile at Normandy Mining’s production, possibly through tax smelter is the latest asset to be Bronzewing gold mine in Western relief. San Simon bulk divested. The terms of the sale were Australia, operations are gradually Indonesian coal production is not disclosed. It follows the sale of the returning to normal after an accident expected to fall by 5 Mt this year, to sampling Porto Vesme lead-zinc complex to earlier in the year which caused three 65 Mt, mainly because of reduced Eaglecrest Explorations Ltd of Glencore last year (MJ, June 18, fatalities (MJ, June 30, p.507). The output by PT Kaltim Prima which Canada has engaged Amtrac Ltda of 1999, p.460) accident caused some 8,000 m3 of operates mines in East Kalimantan. La Paz as the contractor to carry out The new owner of Crotone, backfill to flow into the mine and the The company, jointly owned by Rio underground development of its San Zincocalabra SpA, plans to develop a lower levels of the operation remain Tinto and BP Amoco, has had to Simon gold project in Bolivia. The new operation on the Crotone site closed. According to Colin Jackson, contend with a prolonged labour development work is designed to which will produce some 180,000 t/y Normandy’s group corporate dispute over the past year, and in facilitate bulk sampling of gold- of electrolytic zinc. executive, mining is gradually August it estimated that the dispute bearing targets identified by earlier returning to normal and the accident had cost it at least 2.2 Mt in lost drilling. Analysis of the drill results will result in around 30,000 oz of production. indicated a pronounced ‘nugget Emperor lay-offs delayed production. effect’ (MJ, August 4, p.89). Emperor Mines Ltd reports that it Falconbridge to meet The development contract covers a has had to make 90 of its 1,700 minimum programme of 1,000 m of employees redundant at the MIM idles smelter commitments adit, with a vertical cross-section of Vatukoula underground gold mine in MIM Holdings has idled its copper Despite the continuing strike action 2.8 m2, commencing early next Fiji because of the recent “below-plan smelter at Mt Isa for routine by the 1,260 workers at its Sudbury, month. The programme has a budget performance of its low-grade maintenance. According to the Ontario, operations (MJ, September of C$4.0 million, and is scheduled to production sections”. The company, the scheduled shutdown 1, p.176), Falconbridge has said that be completed by next April. redundancies will affect surface-based should last for 28 days from August it will meet all of its nickel services, and it is hoped that the 21, and is necessary in order for the commitments until the end of next action will assist in “enhancing the company to replace furnace bricks for month. According to Craig Crosby, a Emily Ann expectant performance of the Philip Shaft and the first time in two years. As a result spokesman for the company, a partial LionOre Australia (Nickel) Ltd Decline sections”, where geological of the smelter’s temporary closure, force majeure is being maintained on reported this week that it is close to a data indicate that there could still be output from the company’s copper, and inventories of finished development decision for its wholly- a positive future. The company says Townsville copper refinery will be products are being used up at the owned Emily Ann nickel project in that a separation package has been reduced during the period. company’s Nikkelverk refinery in Western Australia. Preliminary site negotiated with the employees’ Norway, but customer commitments works are to begin within a fortnight representative body. First nickel from up to and including October will be as a prelude to a formal Vatukoula provides Fiji with its met. Previously, the company had announcement and, following this, fourth largest source of foreign RAV8 indicated that it would consider Emily Ann could be operating at full currency and has yielded an Tectonic Resources NL has delivered declaring force majeure on nickel capacity within 18 months. estimated 6.0 Moz of gold, with the the first shipment of nickel deliveries from Norway at the end of The company, a subsidiary of remaining resource estimated at 3.5 concentrate from its small, high- September. Falconbridge produces LionOre Mining International Ltd of Moz. However, the low price of gold grade RAV8 nickel deposit near 35,000 t/y of nickel in concentrate Canada, has already reached has taken its toll and in the financial Ravensthorpe in Western Australia to and 41,000 t/y of copper in agreement in principle with N.M. year to June 30, Emperor reported a WMC Ltd. The open-pit project is concentrate at Sudbury, and the Rothschild & Sons (Australia) Ltd on net loss of A$27.1 million. expected to produce 45,000 t of matte is shipped to Norway for project financing terms. These concentrate containing 8,690 t of refining. include a A$17 million project debt nickel over a two-year period. This Monday, the company said facility, a A$3.0 million cost overrun Libanon agreement However, recent exploration has that its latest proposals to resolve the facility, a A$2.0 million guarantee South Africa’s Gold Fields Ltd has boosted the reserve base by 17% to dispute, which centres on the terms of facility plus various hedging facilities. reached agreements with all unions 206,400 t at an average grade of a new labour contract, had been In addition, a financing arrangement and associations at its loss-making 5.49% Ni. All production for the rejected by the Canadian Auto is already in place with Inco Ltd, Libanon division (MJ, August, 11, initial two-year mine life has been pre- Workers Union, which declined to put including a A$25 million non-recourse p.111). As a result of the agreements, sold to WMC. Tectonic reports that the offer to its members for a vote. facility for the construction of a the company plans to redeploy 1,700 in the first two months of operations, According to Falconbridge, talks have concentrator and necessary of the workers from the division to its mining performance has been above not been rescheduled.

196 Mining Journal, London, September 8, 2000 TECHNOLOGY TODAY

treated soils contain extremely bottom. This is then pumped as a stable metal-phosphate compounds, slurry to the DRA plant, where and that the effectiveness of the spirals are used to separate the coal. Hatch stabilisation has been verified using Deep cone thickeners built by the EPA’s Toxicity Characteristic Ukprodshipnik are used for water Leaching Procedure and its Multiple clarification. The plant was Extraction Procedure tests. The commissioned in April and is Expansion proprietary binding agent can be operating at the rate of 300 m3/h. applied in situ or ex situ in wet or dry The effluent is pumped back into the Ontario-based metallurgical the resulting solution, a forms, and stabilisation of heavy lake to minimise water loss. engineering specialist Hatch has supersaturated solution of calcium metals is reported to be achieved According to DRA, although the acquired the mining, metallurgy and sulphate, is contacted with gypsum within 24 to 48 hours. The project is unusual in that it is based industrial businesses of Kaiser crystals which catalyse the application of the binder leads to a on a lake, there are other places in the Engineering. According to Ron precipitation of the supersaturated 3-5% increase in volume, compared world, notably Indonesia and India, Nolan, Hatch’s chief executive, calcium sulphate (gypsum). The with 15-30% in other processes. that have the potential to host “Kaiser has an excellent strategic precipitate is thickened and filtered In addition to its heavy metal similar projects. and operational fit for Hatch’s light which leaves the process as waste or stabilisation process, MT2 has a Dowding Reynard & Associates, metals business”. The acquisition by-product (depending on the process for the treatment of acid DRA House, 3 Inyanga Close, will add 440 employees to Hatch’s situation). In the third stage of the mine drainage. The product MT2 Sunninghill 2157, South Africa. Tel: Australian operations and 160 in the process, aluminium hydroxide is ARD can be landfarmed into the +27 (0)11 807 1282. Fax: 807 1281. US. The company says that the added to the solution, and this surface of acid generating mine Website: www.drasa.co.za acquisition will ensure the cost- causes the formation of the insoluble waste or sprayed onto mine waste effective delivery of excellent salt ettringite, which removes using a hydromulch canon. MT2 says engineering design and innovative calcium and sulphate. The solution that the material halts the oxidation Ruggedised process, systems and construction from this stage is then treated with of pyrite and reduces the formation services to its clients around the carbon dioxide to lower the pH, and of ferric iron thereby stopping acid fibre-optic cable world. the resulting pure calcium carbonate mine drainage at source. Hatch is organised through seven is removed from the water by Under the terms of the strategic Chromatic Technologies Inc., a US- business units: Light Metals, Non- filtration. The final stage of the alliance with MT2, Macmin will have based fibre-optics specialist, has Ferrous, Iron and Steel, Industrial process is the recycling of the the exclusive right to use these launched a new ruggedised field- Minerals, Mining and Mineral ettringite which is treated with technologies in Asia and Japan. In deployable fibre-optic cable. The Processing, Engineering and Hatch sulphuric acid to regenerate addition, it will be able to pursue cable, which has received approval Beddows (strategic business and aluminium hydroxide. other opportunities elsewhere in the for use from the US Army systems consulting). Excluding Mintek says that the process can world (excluding North America) in Communications and Electronics Kaiser, Hatch’s fees for the fiscal effectively remove heavy metals joint ventures with MT2. Command, is highly flexible and year ending September 30 will surpass from mine drainage to levels well Macmin NL, PO Box 7996, Gold features a tight buffered construction C$300 million. below those required for potable Coast Mail Centre, Queensland 4217, with an abrasion-resistant Hatch, 2800 Speakman Drive, water, and remove 99% of the Australia. Tel: +61 (0)7 5595 2274. polyurethane jacket that is capable Sheridan Science and Technology calcium, 100% of the magnesium Fax: 5595 2275. E-mail: of withstanding crush forces of over Park, Mississauga, Ontario, Canada and 98% of the sulphate from the [email protected] 1,724 kPa. It conforms to the IEEE L5K 2R7. Tel: +1 905 855 7600. water. Mintek notes that univalent Website: www.macmin.com.au 802.3Z Gigabit Ethernet standard. Fax: 855 8270. Website: ions such as sodium, chloride, Chromatic says that the cables are www.hatch.com potassium and fluoride are not offered in sizes with outside removed by the process. However, DRA supplies diameters ranging from 4.7 mm to these are not usually a problem in 7.49 mm, providing up to 273 kg of SAVMIN mine drainage. plant to Ukraine pull strength. The cables include Based on its pilot-plant tests at single and multi-mode fibre-optic launched the Grootvlei gold mine and South Africa’s Dowding Reynard & designs and are decribed as ideal for extensive laboratory tests of various Associates (DRA) has supplied and critical video broadcast systems. The South African research mine waters, Mintek says that commissioned a processing plant for Giovanni Tomasi, Director of organisation Mintek has formally SAVMIN offers a viable solution to a waste coal project in the Ukraine. Product Marketing, Chromatic launched Project SAVMIN, its the problem of mine drainage and The project is being undertaken by a Technologies Inc., 20 Forge Park, revolutionary process that converts produces potable water. local Ukrainian company, Franklin, MA 02038, US. Tel: +1 508 mine drainage into potable water. Dr J.P. Smit, Hydrometallurgy Ukprodshipnik, at a man-made lake 541 7100. Fax: 528 9950. E-mail: The process has been developed over Division, Mintek. Tel: +27 (0)11 709 near the city of Lugansk in the [email protected] Website: the past few years by Mintek, 4536. E-mail: [email protected] southeast of the country. The lake www.drakausa.com Australia’s Savannah Mining and has been used by a number of coal The Wren Group primarily as a mines as a dump for coal fines waste response to South Africa’s twin Macmin forms for many years. The waste coal processing plant in the problems of sulphate-polluted mine Ukprodshipnik uses a dredger to Ukraine supplied by Dowding waters and constrained water alliance recover the fine coal from the lake Reynard & Associates. supplies. According to Mintek, the Soon-to-be silver producer Macmin Witwatersrand area produces NL has diversified its activities around 240 million litres of mine through the formation of a strategic drainage every day, a similar amount alliance with US-based Metals is produced in the Witbank area, Treatment Technologies LLC and some 120 million litres are (MT2). Under the terms of the produced daily in the Secunda area. alliance, Macmin will take an 80% If purified, this would be sufficient interest in a new entit – MTT to meet the needs of six million Australia – with MT2 holding the people or could be used to irrigate remaining interest. In addition, tens of thousands of hectares of Macmin will take a 10% equity under-utilised farmland. interest in MT2 and will have an The SAVMIN process uses option to acquire a further 10%. precipitation reactions to purify According to Macmin, MT2 has sulphate polluted water. The first developed a method of stabilising stage raises the pH using liquid lime, heavy metals using a US and this precipitates heavy metals Environmental Protection Agency- and magnesium as hydroxides. The approved phosphate-based chemical hydroxides are then separated, and binder. Macmin says that the

Mining Journal, London, September 8 , 2000 197 MINERAL MARKETS

1999), compared with 3,048 t a year earlier not being fully covered, point to a particu- and 3,908 t in June 1999. However, Dr Cross larly challenging future for the mining Copper warns that these figures are misleading in industry, both with respect to its attitudes that they over-emphasise the net impact of towards hedge books and in the flexibility it hedging – when the deltas of the various has to remodel its hedging portfolios. options positions are taken into account the surge totals are reduced. In terms of how effective hedging was for Oil price threat This week, copper prices on the London the world’s gold producers, the report found Metal Exchange continued their upward a surprising result in that forward sales by Until recently, the economies of the US and surge. The price for three-months metal the South African industry covered 100% of the EU have not shown any sign of slowing. touched US$1,967/t at one point, its highest total costs, compared with 80% for the However, in recent weeks economic data level for almost three years, before profit North American and Australian industries. from these regions point to a slowing in the taking knocked the impetus out of the rally In terms of put options written, there was rate of growth. The reasons are not clear but and prices fell back towards US$1,945/t. also a difference. Once again the South one factor may be the price of oil. This Dealers believe that in the short term the African industry did well covering some week, the price of Brent crude for October price may drift lower, but the long term out- 90% of its total costs, Australia covered delivery rose to a fresh high of over look for the metal remains positive. Total 80% of its costs, but only 50% of total costs US$34/bbl. At such levels the price of oil is exchange stocks are now down to 600,000 t were covered by the average strike price at not only threatening to erode global growth and this, coupled with strong demand and which puts were written by North and as a consequence reduce metal demand, production shortfalls, has led Jim Lennon, American producers. but is also placing all mining companies minerals strategist at Macquarie Bank, to While the ability to cover costs by hedg- under considerable operating cost pressure. forecast that the price will rise to ing is a significant benefit, hedging is not Over the past 18 months the price of oil US$2,205/t next year and move higher in without its risks, and the difficulties experi- has tripled from around US$10/bbl to over 2002 and 2003. Aluminium also had a good enced by Ashanti Goldfields and Cambior US$32/bbl, and depending on which analyst week with prices for three-months metal in the wake of the Washington agreement you listen to there is a real danger that oil breaching resistance at US$1,600/t and have prompted mining companies to change shortages in the coming Northern advancing briefly as high as US$1,647/t. their attitudes towards the hedging prod- Hemisphere winter may push prices as high ucts that they use. Dr Cross found that min- as US$50/bbl. According to Standard Bank, ing companies are now moving away from the rise in the oil price this year is compara- Gold miners the highly leveraged and complex derivative ble to the oil price shocks of 1973 and 1979. prefer vanilla products toward ‘vanilla’ products. The Whether the latest rises will have similar original move to complex derivatives was in results to those of the 1970s is unclear as the This week the World Gold Council pub- order to generate additional income, and Dr pressures that such high oil prices exert typ- lished ‘Gold Derivatives: The Market Cross believes that some of these alterna- ically take around 18 months to make them- View’, a special report written by indepen- tive ways of generating additional income selves felt. dent gold and precious metals analyst are not particularly promising. Other fac- While oil is a much less important compo- Jessica Cross. As a result of her year-long tors are also changing the nature of produc- nent of the global economy than it was in investigation Dr Cross has posed as many er hedging; a combination of lower levels of the 1970s, its price is still significant and as questions as she has answered about the exploration and pressure to revalue reserves the Economist Intelligence Unit noted in its complex and opaque world of gold deriva- in the ground will limit the ability of some recent World Commodity Forecast, sharp ris- tives. Perhaps the most significant finding mines to hedge a greater proportion of gold es in oil prices have been a major contribut- is that after twice doubling in size over the in the ground. Also the impact of the ing factor in seven out of the eight US reces- past decade the gold derivatives market has Washington agreement is likely to lead sions since the Second World War. probably peaked and, prompted by the commercial banks to levy an increased Pessimists believe that, if prices stay impact of the Washington agreement to hedging premium, especially for companies around US$30/bbl, they will be sufficient to limit gold sales and lending by a number of deemed to be greater credit risks. Further trigger rises in inflation and unemployment central banks (MJ, October 1, p.268), is changes are likely with the introduction of in the US and Europe and adversely affect being forced to restructure and alter its FAS133. This US accounting regulation will metal demand. products and behaviour. force a greater level of disclosure associated Whether or not high prices will be sus- As one might expect, by far the greatest with price-risk management and it will also tained is very much dependent on the out- users of lent gold have been gold producers. influence the choice of derivative product, come of next week’s meeting of the Their use of gold derivatives for price-risk depending on how they are defined for Organisation of Petroleum Exporting management has expanded over the past accounting purposes. According to Dr Countries (OPEC) in Vienna. In April, the two decades, not just in terms of volume but Cross, these and other factors, together initial surge in oil prices prompted OPEC to also in terms of the complexity of the vari- with the fact that the costs of marginal pro- increase daily production by about 1.7 ous derivative products employed. In her ducers in North America and Australia are Mbbl/d; the move provided only a tempo- report Dr Cross not only investigated the rary respite and the price subsequently London Metal Exchange official averages statistical details of the ‘global hedge book’ for August were: surged higher in June. The consensus held by the world’s gold producers but also Cash Three months Settlement amongst oil traders is that OPEC is likely to explored their attitudes, practices and con- COPPER Grade A $1,855.51 $1,883.20 $1,855.86 announce that it will boost output by a fur- cerns pertinent to hedging and price-risk TIN $5,301.59 $5,338.18 $5,304.77 ther 500,000 bbl/d at the forthcoming meet- management. Dr Cross found that all but a LEAD $472.73 $485.41 $473.09 ing. However, there are growing concerns handful of gold producers now have some ZINC that this will be “too little, too late” and form of hedging in place; at the end of Special high grade $1,169.36 $1,169.13 $1,169.80 will not be sufficient to allow consumers in December 1999, the total nominal value of ALUMINIUM HG $1,527.63 $1,552.44 $1,528.02 the US to rebuild severely depleted stocks of gold associated with the various price risk Alloy $1,176.92 $1,217.86 $1,178.52 oil before the winter. As a result, the rise in management products was 4,038 t (equiva- NICKEL $8,006.70 $7,831.36 $8,010.45 oil prices is unlikely to be halted in the short lent to 158% of physical production in SILVER $4.85 $4.90 $4.87 term.

198 Mining Journal, London, September 8, 2000 LME PRICES & STOCKS MINING FINANCE

Prices (a.m.) Sep 7 Aug 31 Tonne basis Buyers Sellers Buyers Sellers COPPER Grade A Cash...... $1,930 $1,931 $1,899 $1,900 Three months ...... $1,954.5 $1,955 $1,927.5 $1,928 TIN Antofagasta reaps Cash...... $5,500 $5,505 $5,365 $5,375 Three months ...... $5,535 $5,540 $5,410 $5,415 LEAD Cash...... $472 $473 $466 $467 Three months ...... $484 $485 $479 $479.5 copper profits ZINC Special high grade Cash...... $1,228 $1,229 $1,192 $1,193 Three months ...... $1,205 $1,206 $1,181 $1,182 The financial results for London-listed US$92.1 million from just US$3.2 million in ALUMINIUM Higher grade Antofagasta plc for the six months to June the first half of last year, and pre-tax profit Cash...... $1,617.5 $1,618 $1,577 $1,578 Three months ...... $1,643.5 $1,644 $1,602.5 $1,603.5 30, 2000 demonstrated the quantum leap totalled US$100.0 million compared with Alloy forward that the group has made in the past US$18.2 million. Los Pelambres con- Cash...... $1,204 $1,205 $1,195 $1,197 Three months ...... $1,240 $1,245 $1,235 $1,240 12 months in its ambitions to become a tributed 55% of this pre-tax profit, at NICKEL major South American copper producer. US$54.6 million, and Mr Luksic said that Cash...... $8,370 $8,380 $8,685 $8,690 Three months ...... $8,290 $8,300 $8,470 $8,475 Turnover rose more than four-fold com- this contribution would have been US$15 SILVER pared with the first six months of 1999, to million higher (revenue effect US$30 mil- Cash...... $4.83 $4.88 $4.83 $4.88 Three months ...... $4.88 $4.93 $4.88 $4.93 total US$316.2 million. The increase was lion) but for bad weather which delayed due almost entirely to Antofagasta’s 60%- concentrate shipments from the Punta LME warehouse stocks on September 6 owned Los Pelambres copper mine in north- Chungo port facility at Los Vilos. These and turnovers for the month of August ern Chile, which shipped its first concen- shipments were made in July and August, Stocks Stocks Turnovers trates last November and entered commer- and will thus boost the second half results. (t) (Aug. 30) (t) cial production at the start of this year. Pre-tax profit also includes the dividends COPPER 442,225 448,150 32,445,425 The commissioning of Los Pelambres received (in May) from 33.6%-owned TIN 12,705 12,620 728,040 coincided with rising copper prices (the Quiñenco SA, an industrial group listed in LEAD 117,025 122,200 6,050,525 average market price for the first half of this Santiago and New York, which totalled ZINC SHG 213,600 214,425 14,882,050 year was US$0.80/lb compared with US$31.3 million compared with US$5.6 mil- ALUMINIUM HG 392,400 403,725 41,956,525 Alloy 97,540 97,240 1,377,940 US$0.65/lb in the first half of last year), lion in the first half of last year. The NICKEL 12,318 12,588 2,352,060 which not only boosted revenue from the Quiñenco shareholding, which Antofagasta SILVER –– –new mine but also improved the perfor- used as loan security before Los Pelambres mance of Antofagasta’s existing, much passed its completion tests (MJ, July 14, smaller 74%-owned Michilla operation. p.34), had a market value of US$329 million Revenue from mining thus rose to US$282.3 at prices on August 29. LONDON PRICES million (89% of the total) from US$45.1 The passing by Los Pelambres of its com- million (64%) in the first half of last year. pletion tests also means that the project Metals Sep 7 Antofagasta’s consolidated copper produc- debt is now non-recourse to Antofagasta, Aluminium (US producer) 63.00-66.00 c/lb d/d tion totalled 167,700 t, of which 141,200 t and US$133 million in cash has been Antimony $1,780-$1,850/t cif Arsenic (Rotterdam 99%) $0.35-$0.45/lb came from Los Pelambres (100% basis) and released from escrow for general use. The Bismuth Bismuth $3.10-$3.30/lb cif Cadmium (99.99%) $0.18-$0.23/lb cif the balance from Michilla. group’s total debt stood at US$1.16 billion .. (99.95%) $0.13-$0.18/lb cif The rest of Antofagasta’s turnover came at June 30, 2000, of which 84% was related Chrome (UK 99%) $9.00-$10.00/lb Cobalt (99.8%) $14.80-$15.50/lb net mainly from its railway operations in Chile, to Los Pelambres and 15% to El Tesoro. .. (99.3%) $13.80-$14.50/lb net Germanium $580-$640/kg at US$28.1 million 9.8% more than in the Total cash at June 30 amounted to US$344 Gold £190.50($272.95)/oz first half of 1999, and its newly-consolidat- million. The increase in debt for Los Indium $90-$110/kg Iridium (J Matthey price) $415/oz ed Andino railway operations in Bolivia, at Pelambres meant that pre-tax profit also Magnesium (Norsk Hydro Euro. prod.) 2.33/kg* .. (US Free mkt, 99.8%) $2,000-$2,050/t* US$5.8 million. Andino, in which included net interest charges of US$27.4 Manganese Antofagasta now has a 50% controlling million, compared with net receipts of metal (99.7%) $950-$1,000/t Mercury (99.99%) $145-$155/flask interest, connects directly with the Chilean US$8.5 million in the first half of last year. Nickel $3.80-$3.81/lb Osmium $400-$450/oz railway network. The rise in the revenue Given the improvement in profits, tax Palladium (J Matthey price) $748.00/oz contribution from Chilean railway opera- naturally rose, roughly tripling to US$10.4 .. (Free market) $742.00-$757.00/oz Platinum (J Matthey price) $618.00/oz tions was also a function of the improving million, and, after deductions for the minor- .. (Free market) $608.00-$616.00/oz Rhodium (J Matthey price) $2,125.00/oz fortunes of the copper industry, as the com- ity interests (mainly in Los Pelambres), net Ruthenium (J Matthey price) $170/oz cif pany carries sulphuric acid and copper profit for the six months totalled US$71.9 Selenium $2.80-$3.20/lb cif Silver $5.01/oz products, to and from copper mines in the million, compared with US$15.2 million Tellurium (UK lump & powder 99.95%) $4.00-$6.00/lb net hinterland of the northern port of previously. The interim dividend declared Tin (Kuala Lumpur) RM20.55/kg Antofagasta. Tonnage carried rose by 7%, was raised by a more modest 44%, to Ore & Oxides Sep 7 to 1.6 Mt. Discussing the results this week, £0.0325/share, which Mr Luksic said is sus- Antimony (60%) $9.00-$9.50/t unit, cif nom* the chief executive of Antofagasta’s mining tainable and allows for the group’s capital Beryl (10% BeO) $75-$80/s ton unit BeO cif* arm (Antofagasta Minerals SA), Jean-Paul expenditure programme. Chrome (Transvaal, Friable 40%) $48-$70/t, fob* .. (Turkish, concs 48%) $65-$70/t fob* Luksic, said that the railway operation is Capital spending is now focused on Columbite (min. 65% comb. oxides) $3.10-$3.80/lb cif* further set to benefit from expansions at Antofagasta’s next copper project, 61%- Ilmenite (54% TiO2) A$100-A$115/t fob Lithium ores (Petalite 4.2% Li2O) $180-$270/t fob* several of its client mines, such as El Abra, owned El Tesoro, which lies east of (Spodumene>7.25% Li2O) $385-$395/t fob* Manganese ore (48-50% Mn, Escondida and Chuquicamata. Antofagasta. Mr Luksic said that construc- max. 0.1% P) $1.81-$1.90/t unit fob* Molybdenum The importance of Los Pelambres is illus- tion was 50% complete by the end of last oxide (conc 55-57%) $2.58-$2.65/lb trated not only by its 76% contribution to month. First production is scheduled for Rutile (Aust. 95-97% TiO2) A$760-A$885/t fob (bulk) total turnover, but also by its low operating May 2001, building up to full capacity of Tantalum oxide (60% cif N. Euro port) $50-$60/lb Uranium (Nuexco unrestricted/restricted costs. Cash operating costs for the first half 75,000 t/y of copper cathodes, at a cash U3O8) $6.80/$7.80/lb were US$0.354/lb and total costs were operating cost of US$0.40/lb (total cost Vanadium (98% V2O5) $1.60-$1.75/lb cif Wolframite (65%) $40-$45/t unit US$0.607/lb, and the project thus had a US$0.68/lb) over the subsequent eleven Zircon sand (std 66-67% ZrO2) A$560-A$660/t fob (bulk) dramatic impact on Antofagasta’s prof- months. The projected mine life of El * Source: Metal Bulletin itability. Total operating profit rose to Tesoro has also been increased, from 18 to

Mining Journal, London, September 8, 2000 199 www.gmexpo.com.au www.TheThegmexpo vision.vision..com.au www.gmexpo.com.

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21 years. Meanwhile, Antofagasta has that shareholders in KPM other than these properties, and plans to put Everest established resources at the nearby Aquarius were unhappy with the terms of South into production in 2002 at 175,000 Esperanza deposit of 150 Mt of sulphides, the proposed merger, even before the deal oz/y of PGM. This week, Aquarius also at 0.81% Cu and 0.46 g/t Au, and 10 Mt of with Amplats was revealed. announced that, following relogging and oxides, at 0.62% Cu. Mr Luksic said that Meanwhile, Aquarius reports that there reassaying of drill-core, the resource esti- the latter resource might be treated at El has been a delay in finalising the nature of mate for Everest South has been increased Tesoro. the specific equity-instrument in Aquarius by 1 Moz of contained PGM. Resources Work at Los Pelambres is concentrated that the company plans to list on the now stand at 36.3 Mt, at an average grade on optimising the throughput rate, which is Johannesburg Stock Exchange in order to of 4.7 g/t combined PGM and an average the key to the low operating costs, with cur- complete its all-share merger with KPM. width of 2.1 m. The latest resource, calcu- rent efforts focused on the grinding circuit. Once this delay has been resolved, the circu- lated by Snowden Mining Industry The mine operated at an average daily lar detailing the scheme of arrangement will Consultants, comprises 23% categorised as throughput rate of 87,400 t during the first be posted to shareholders in KPM to enable measured, 47% indicated and the balance half of the year, and Mr Luksic said that the them to assess the terms of the scheme prior inferred. group believes a capacity of 100,000 t/d by to voting. Aquarius notes that the scheme the end of the year is achievable. This com- circular will incorporate the results of the pares with an original design capacity of report of the ‘competent person’ engaged to Inco to buy in 85,000 t/d. review the joint venture with Amplats. Voisey’s Bay shares The old Michilla operation continues to This week, Aquarius reported a maiden make a contribution, its 26,500 t of first- profit of US$3.8 million for the year to June The Canadian nickel producer Inco Ltd half production coming at a cash cost of 30, 2000, after tax and abnormal items announced this Wednesday that it will US$0.594/lb and a total cost of related to corporate restructuring. The make an offer of C$7.50 cash plus 0.45 of a US$0.788/lb. (The copper price is currently restructuring moved the company’s regis- warrant to purchase a common share in around US$0.88/lb – this issue, p.198.) Mr tration to Bermuda (the corporate office Inco for each of the outstanding ‘Class Luksic noted that Michilla has no debt, and remains in Perth) and added the London VBN’ shares. The VBN shares have aver- its ongoing capital costs are low. A push- AIM listing to that in Australia. Aquarius’ aged C$8.06/share over the past 30 trading back of the open pit is under way, to extend next project after Kroondal, Marikana, is days. Full acceptance will cost Inco C$195 mine life to 2007 as previously indicated. at the financing stage. Construction of million in cash and the issue of 11.7 million Marikana will start in the coming months, warrants. One whole warrant is exercisable with production scheduled for late 2001. at C$36/share in Inco, 33% above Inco’s Aquarius-Kroondal Output of 160,000 oz/y PGM is planned. closing price this Tuesday (September 5). merger under review Marikana is not held through KPM, but The VBN shares were created as part of is owned by Aquarius Platinum SA, in Inco’s takeover of Diamond Fields HSBC Investment Services (Africa), the which Impala Platinum Holdings Ltd has a Resources Inc., the discoverer of the independent financial adviser engaged by 25.5% interest. Impala acquired this inter- Voisey’s Bay nickel deposit in Johannesburg-listed Kroondal Platinum est in exchange for the Everest South, Newfoundland in 1996. The holders of the Mines Ltd (KPM), has withdrawn its ‘fair Everest North and Chieftains Plain proper- shares are entitled collectively to 25% of and reasonable’ opinion with respect to the ties. Aquarius has completed evaluations of the “adjusted net income” from the Voisey’s proposed acquisition by Aquarius Platinum Ltd, KPM’s major shareholder with 44%, of the balance of shares in KPM. Aquarius, SHARE PRICES AND EXCHANGE RATES listed in Australia and on London’s Company Sept 6 Change Local US$ mill. Company Sept 6 Change Local US$ mill. Alternative Investment Market (AIM), Local 5-day % % hi-lo Mkt cap. Local 5-day % % hi-lo Mkt cap. announced on July 24 plans to acquire the Alcan Aluminium (C$) .....48.35 30.2 8.5 00.0022 6,916 485 Norilsk Nickel (Rb)...... 287.21 74.664.5 13 00.0085 1,924 00 56% of KPM that it does not already hold, Alcoa ($) ...... 33.81 00.003.6 0.000.0024,9691140 29,282 Normandy Mining (A$) ... 00.001.05 2.9 0.0 00.0034 1,039 00 Anglo Amer. Plat. (R)...... 265.00 00.00–4.3 0.7 00.0089 8,104 00 Norsk Hydro (NK) ...... 00.003.78 –3.6 0.0 0060078 10,788 00 via a merger under a ‘scheme of arrange- Anglo American (£)...... 39.85 3.2 82 23,548 Outokumpu () ...... 10.90 –2.3 22 1,192 ment’, in which shareholders would receive AngloGold (R) ...... 277.60 0.0 00.004.8 17 00 4,199 Pasminco (A$) ...... 00111.00 2.0 0.0 00.0023 636 00 Anglovaal Mining (R) ...... 24.10 00.00–0.2 0.0 00.0050 373 00 Pechiney ‘A’ ()...... 00.0050.45 –3.3 0.0 00.0022 3,614 00 one share in Aquarius for each in KPM. Antofagasta Holdings (£) 4.87 10.7 93 1,391 Phelps Dodge ($)...... 00.0046.69 13.7 0.0 00.0029 3,675 00 Arch Coal ($) ...... 00.008.19 13.9 0.0 00.0050 312 00 Placer Dome (C$) ...... 00.0013.55 4.2 0.0 00.0016 2,986 00 Less than a month later, KPM Ashanti Goldfields ($) ...... 3.10 21.6 17 348 Potash Corp. of Sask. (C$) 00.0078.35 –1.1 0.0 00.0060 2,770 announced a major joint venture with Ashton Mining (A$) ...... 00.002.14 0.0 00.0098 390 00 PT Tambang Timah (Rp)2,275.0 00.000 3.2 0.0 00.003 137 00 Asturiana de Zinc ()...... 10.95 00.004.3 0.0 00.0039 388 00 Rio Algom (C$)...... 28.60 –0.3 0.0 00.0097 1,170 00 Anglo American Platinum Corp. (Amplats) Barrick Gold (C$) ...... 23.85 00.001.1 0.0 00.009 6,368 00 Rio Tinto plc (£) ...... 00.0011.87 4.1 0.0 00.0049 18,274 00 BHP (A$) ...... 19.36 00.000.1 0.0 00.0060 19,501 00 RJB Mining (£) ...... 00.000.65 –1.5 0.0 00.0087 136 00 with respect to the Kroondal mine, KPM’s Billiton (£) ...... 2.90 9.1 38 8,980 Stillwater Mining (US$) ... 33.63 –0.9 45 1,295 main asset. Under the joint venture, Boliden (C$) ...... 00.001.38 10.4 0.0 00.005 199 00 Sumitomo Met. Min. (¥) .607.00 00.003.8 0.0 00.0092 3,284 00 Caemi Mineracao ...... 258.00 0.4 86 556 Teck ‘B’ (C$) ...... 00.0011.25 4.7 0.0 00.0031 832 00 Amplats will contribute mineral rights Cameco (C$)...... 20.35 00.00 0.060016.0 44 00 760 WMC (A$) ...... 00.008.15 –0.6 0.0 00.0072 5,166 00 Cleveland-Cliffs ($)...... 26.63 255 001110.6 41 00 280 Xstrata (SF) ...... 437.00 00.003.3 0.0 00.0081 1,464 00 adjacent to the Kroondal mine and the two Cominco (C$) ...... 22.00 00.004.8 0.0 00.0027 1,270 00 companies will expand the operation from CVRD (BR) ...... 47.00 00.000.4 0.0 00.0078 10,423 00 Share prices and exchange rates are intra-day Wednesday. De Beers (Linked Uts) (£) 0.000.019.78 0.004.6 10,244100 11,464 100 in the high/low column indicates that the share is trading its current capacity of 170,000 oz/y of plat- Eramet (Eur)...... 47.90 5.7 26 1,027 at a high, 0 that it is at a low, based on local prices over the Falconbridge (C$)...... 19.25 2.7 29 2,298 past 52 weeks. inum group metals (PGM) to 510,000 oz/y Freeport-Mc. C&G ($) ..... 00.009.75 9.9 0.0 00.0012 1,476 00 24.95 –0.2 32 1,599 (MJ, August 25, p.148). Aquarius notified Gold Fields Ltd (R)...... 00.00 0.0 00.00 00 Currencies September 6 Grupo Mexico (MP)...... 40.75 00.000.6 0.0 00.0046 2,761 00 the market at the end of last week that Hindalco (Rs) ...... 814.75 00.001.4 0.0 00.0043 1,330 00 Value of £ $(US) HSBC Investment Services (Africa) “con- HZL (Rs)...... 10.10 00.009.8 0.0 00.0018 0094 $ (US) ...... 1.481.45 1.00— Iluka (A$)...... 00.004.40 –5.2 0.0 00.0063 556 00 $ (Australian)...... 0.2.5122.56 0.051.77 siders that the joint venture may represent IMC Global ($) ...... 14.56 00.00–4.1 0.0 00.0029 1,672 00 $ (Canadian)...... 0.002.15 0.001.48 Impala Plat. (R) ...... 328.80 00.001.5 0.0 00.0095 3,070 00 Ringgit (Malaysian) Fixed official rate .. 5.50 3.80 a change in circumstances affecting its opin- Inco (C$) ...... 27.10 00.007.3 0.0 00.0041 3,322 00 Franc (Swiss) ...... 0.002.55 0.001.76 ion on the terms of the scheme ... and has Industrias Peñoles (MP) ..14.16 20.80 –0.32.110 440606 00 Krona (Swedish) ...... 0.0013.87 0.009.58 Iscor (R) ...... 16.25 14.80–1.5 0.0 00.0030 593 00 Yen ...... 153.12 0.00105.71 0.00 accordingly withdrawn its fair and reason- KGHM (Zt)...... 29.90 32.30–5.1 0.059 001,366 00 Rand (SA) ...... 0.0010.25 0.007.08 8.90 1.8 91 2,287 able opinion ... in order to review the effect Lonmin plc (£)...... 6.65 0.0 00.001 11, (Euro) ...... 0.001.65 0.001.14 MIM Holdings (A$)...... 1.21 86 00.000.0 43 00 1,175 Markka (Finnish) ...... 1=Mk5.94573 0.00 0.00 6.15 –2.4 50 459 of the joint venture thereon”. Minsur(PS)...... 00.00 0.0 00.00 00 Franc (French)...... 1=FF6.55957 0.00 0.00 Mitsui Min. & Smlt. (¥)...899.00 00.006.4 0.0 00.0097 4,591 00 The withdrawal of the fairness opinion Newmont Mining ($)...... 18.56 00.006.1 0.0 00.0012 3,120 Deutschmark ...... 1=DM1.95583 0.00 0.00 14.95 3.1 13 2,483 Source: Bloomberg follows press reports from Johannesburg Noranda Mining(C$)......

Mining Journal, London, September 8, 2000 201 MINING FINANCE

Bay project. The gold producer and royalty production through De Beers’ Central of the Gordonsville operations of Savage. specialist Franco-Nevada Mining Corp. has Selling Organisation. Ashton now states Pasminco’s 100%-owned Century mine in established a 37% interest in the Class that it has been informed by Rio Tinto that Queensland moved into commercial opera- VBN shares (MJ, January 29, 1999, p.67), “any right Ashton had to terminate the tion on March 1, and contributed to the which it has agreed to tender to Inco’s offer. marketing arrangements during the life of higher mine production. The deal follows the planned merger of the current open pit may have been exclud- Franco-Nevada with Gold Fields Ltd of ed by the 1996 arrangements. Ashton does South Africa, which is still awaiting not agree with this belief”. Market news approval from the South African exchange control authorities. The managements of The special committee of directors of Rio these two companies have shown a clear Pasminco higher but Algom Ltd of Canada has delayed the imple- intent to focus on gold, and earlier indicated not happy mentation of the company’s shareholders’ that non-gold assets were likely to be sold rights plan from this Wednesday (MJ, June 23, p.478). Amidst surging profits and increased divi- (September 6) “to a future date to be deter- dends from most mining companies (driven mined by the special committee”. The by higher commodity prices generally sup- rights plan, which comes into action ten Argyle partners differ ported by the benefits of cost-cutting when business days after a relevant hostile offer, as De Beers posts prices were down), the financial results from was triggered by the unsolicited offer made Pasminco Ltd of Australia for the year to by Noranda Inc. two weeks ago. Noranda’s offer June 30, 2000 struck a somewhat subdued bid was immediately followed by a higher note. Despite a move to net profit of A$35.0 offer from London-listed Billiton plc, with The world’s largest diamond producer, the million before abnormal items from a loss of the agreement of Rio Algom’s management De Beers group, duly posted its cash A$8.3 million in 1998/99, the company’s (MJ, September 1, p.179). takeover offer of A$1.62/share to sharehold- chief executive, David Stewart, described The world’s largest private-sector coal ers in Ashton Mining Ltd of Australia this the result as “by no means an acceptable producer Peabody Group, controlled by the Wednesday (September 6), despite the fact outcome”. Mr Stewart’s disarmingly frank US investment bank Lehman Brothers, has that the Rio Tinto group has announced a assessment continued with the acknowl- completed the sale of its Citizens Power cash offer of A$1.85/share, plus a edgement of the “need for substantial fur- subsidiary to Edison Mission Energy. A$0.05/share dividend prior to completion, ther improvement in results and returns to Peabody will use the US$100 million in pro- since De Beers opened proceedings (MJ, shareholders”. However, he expects ceeds to reduce its corporate debt. September 1, p.181). Moving ahead with its Pasminco’s financial results to improve Peabody’s net debt position stood at about documentation serves two purposes for De “markedly” in the current financial year, as US$2 billion at the end of June. Beers: the group can increase its offer using its investments and acquisitions during the Johannesburg-listed gold producer the same documentation (the offer closes on past two years bear fruit. Avgold Ltd has released details of its October 13 unless extended), and it will Final net profit was A$23.4 million, after planned rights offering (MJ, September 1, prompt Ashton to release its ‘Target’s an abnormal charge of A$11.6 million relat- p.183). Shareholders will be offered 45 new Statement’ which will contain further infor- ed to the reduction in the Australian corpo- ordinary shares in Avgold, at R2.43/share, mation relevant to the offer. rate taxation rate from 36% to 30%. Unlike for every 100 shares currently held. The Meanwhile, Ashton has released a state- most other companies, which have booked rights offering, if fully subscribed, will raise ment regarding the marketing arrange- abnormal gains from the tax change, R500 million. Two major shareholders, ments for its 40.1%-owned Argyle diamond Pasminco has reported a charge, because Anglovaal Mining Ltd with about 60% and mine in Western Australia, which is at the the change has resulted in a reduction in the Anglo American Corp. of South Africa Ltd centre of the battle. Rio Tinto holds a value of the company’s tax loss (established (a wholly-owned subsidiary of Anglo 59.7% interest in Argyle. De Beers’ bid is in earlier years) carried forward. American plc) with 12%, have committed to conditional on its being able to market Pasminco’s sales revenue for the financial follow their rights. A third party, Allan Ashton’s share of Argyle production from no year rose by 20%, to A$1.88 billion, as the Gray Ltd, representing clients who own col- later than January 2002, and on Ashton not company realised an average of US$1,138/t lectively a 5% shareholding, has also com- making any material change to its existing for its zinc, 14% more than in 1998/99, and mitted to follow their related rights. Avgold marketing arrangements. Ashton now notes sold 17% more zinc metal, at 669,800 t will pay a commitment fee of 1% of the sub- that the joint-venture partners in Argyle (including 14,700 t of purchased metal). scription price. Avgold has also secured an have been revising their marketing arrange- The increase in sales revenue from zinc was underwriting agreement with these three ments, and have reached the stage of circu- offset by a 10% fall in Pasminco’s average parties plus Deutsche Bank Securities lating ‘2000 draft agreements’. Meanwhile, realised price for lead, to US$465/t. Lead under which the three shareholders will col- the original, 1985 agreements remain in sold totalled 251,900 t (including 16,700 t of lectively underwrite 8% of the rights offer- force. In view of De Beers’ bid condition of secondary lead), 14% more than in 1998/99. ing, in proportion to their existing holdings, no change to the marketing arrangements Silver sales totalled 404,800 kg (13.0 Moz), and Deutsche Bank will underwrite a fur- (and presumably in anticipation of a higher a rise of 41%. The rise in metal sales was ther 5%. Avgold will pay an underwriting offer from De Beers), Ashton “does not mainly a result of Pasminco’s acquisition of fee of 2% (of the subscription value of the intend to execute the 2000 draft agree- Savage Resources Ltd midway through the amount underwritten) to the existing share- ments”. preceding financial year (MJ, February 12, holders and 4% to Deutsche Bank. These Ashton further notes that both sets of 1999, p.109), which added the Gordonsville commitments and agreements guarantee agreements (1985 and 2000) allow for 12 mining and Clarksville smelting operations that at least 90% (R450 million) of the tar- months’ notice of termination, although in Tennessee to the company’s portfolio. get will be raised. Avgold plans to use the any revised marketing arrangements would Metal production from Pasminco’s own proceeds to repay a short-term loan of R300 be subject to the approval of the Australian mines contributed 479,900 t of zinc-in-con- million advanced by Anglovaal Mining and Minister for Resources Development. centrate, a rise of 35%, 165,900 t of lead-in- to put the balance towards development of Changes were made to the marketing concentrate (4.0% less) and 187,200 kg of its 330,000 oz/y Target gold project in Free arrangements in 1996, with the Minister’s silver (2.3% less). The increase in mined State Province. The offer and renounceable approval, when Argyle stopped selling its zinc was also largely due to the acquisition letters of allocation will be posted to share-

202 Mining Journal, London, September 8, 2000 MINING FINANCE holders on September 29. The additional Tahera, at an average price of C$0.125, in end of this year, and the 80%-owned shares are due to be traded from October 27. stages, and will also receive 52.0 million Tamdykol oil project in northwestern London-based Anglo American plc has con- ‘Series A’ share-purchase warrants in Kazakhstan. Funds from the placing are to tinued its disposals of non-core assets by Tahera, exercisable for C$0.15/share for be used to drill four to twelve wells at agreeing to sell its shareholding in King Lun four years. The deal will result in Edensor Tamdykol, with the aim of producing 90 Holdings Ltd to Dr Victor Fung and taking a shareholding of around 36% in bbl/d from each well. As part of the placing, William Fung, the other shareholders in the Tahera, potentially increasing to some- subscribers will also receive one warrant for company, for an undisclosed price. King Lun where under 50% if the warrants are exer- every three shares bought. One warrant will is the main shareholder in the Li & Fung cised (other dilution notwithstanding). Mr entitle the holder to buy one additional share group of companies, a Hong Kong-based Gutnick will become non-executive chair- in Celtic for £0.15 until December 31, 2001. consumer-goods trading group. Anglo’ man of Tahera as part of the deal. Tahera Tertiary Minerals plc, listed on London’s sholding in King Lun represents a 4% inter- plans to use the proceeds of the financing to Alternative Investment Market, has placed est in Li & Fung. As part of the deal, Anglo help develop its Jericho diamond project, 4 million shares at £0.13/share to raise has also placed a 5% interest in Li & Fung located 420 km northeast of Yellowknife, for £520,000 (gross). The net proceeds will be Ltd with investors to realise about US$300 which a positive feasibility study was used to advance the company’s new explo- million. Anglo will retain a beneficial inter- received three months ago (MJ, June 23, ration projects added last month. These est of about 5% in Li & Fung Ltd, through a p.487). Tahera has also reported positive include a tantalum-caesium project in company held jointly with the Fung broth- exploration results from its Tenacity joint- Finland (MJ, August 25, p.153), and a per- ers, for a period of at least three years. venture project, 110 km north of Jericho mit to explore for platinum group metals, Shareholders in Broken Hill Proprietary (this issue, p.194). nickel and copper at Kukkola in northern Co. Ltd (BHP) of Australia will be invited to Dublin-listed Celtic Resources Holdings Sweden announced last week. vote on the distribution of shares in the plc, recently refinanced and strengthened The initial public offering of 40 million group’s steel long-products division, with the addition of new projects (MJ, shares in Austminex NL, at A$0.20/share, OneSteel Ltd (MJ, June 30, p.513), after August 11, p.119), plans to place 21.74 mil- closed last Friday (September 1) fully sub- BHP’s annual general meeting on October lion new shares at £0.094/share. The net pro- scribed. The net funds raised will be used to 17. Assuming that the schemes of arrange- ceeds of about £2 million will be used to advance the Benambra base metals project ment are approved, shareholders in BHP advance its various projects, in particular in Victoria (MJ, September 1, p.169). will receive one share in OneSteel for every the 50%-owned Nezhdaninskoye gold pro- Austminex expects its shares to begin trad- four fully-paid shares in BHP. The latter’s ject in the Russian Republic of Sakha, which ing on the Australian Stock Exchange next book capital will be reduced by A$1.18 bil- is scheduled to start production before the Tuesday (September 12). lion (A$0.66/share) as a result of the distrib- ution, which is expected to be completed at CSIRO, Exploration & Mining the end of October. Toronto-based Tahera Corp. has reached agreement with Edensor Nominees Ltd of Australia, part of the interests of the family Charting of Joseph Gutnick, for a C$13 million (gross) staged financing. Edensor will CSIRO acquire a total of 104.0 million shares in New Directions in the Old Economy Worldwide Career The minerals industry presents some of the most complex and demanding scientific, engineering and technological challenges in the world today. Australia’s Opportunities CSIRO Exploration and mining is the world’s largest and most successful provider , recently refinanced and strengthened of R&D solutions to the minerals industry. It is a world leader in applied research withVisit the www.miscojobs.comaddition of new projects ( across the whole spectrum from exploration through discovery, mining and rehabilitation. Do you have what it takes to lead this vibrant and successful UNDERGROUND PRODUCTION MINING PERSONNEL organisation? Due to increasing development activity by a number of our clients, we would like to hear from experienced If you have underground production Shiftbosses, Mine Captains, ¥ an outstanding record of research leadership, business sense and modern management skills Managers and maintenance personnel. We are currently filling vacancies throughout Africa, Europe, the Middle East ¥ a vision of the future of science and of the Australian and global minerals industry and former Soviet countries. ¥ highly developed strategic planning, communication, negotiation and influencing skills Please send an up-to-date CV, quoting Ref No 497X to: ¥ extensive experience in interacting with industry and State and Federal Governments Dennis Thomas, Thomas Mining Associates, P.O. Box 2010, Lancing, West Sussex BN15 8HZ, UK. Tel: +44 1903 753511. ¥ a proven commitment to apply research outcomes to industry problems to improve the Fax: +44 1903 753510. E-mail: [email protected] competitive advantage of the Australian exploration and mining industry ¥ a desire to continue an active research role Mining or Civil Engineer then visit our website at www.dem.csiro.au for more information about the organisation and Degree qualified and good working knowledge of open pit mining. Must have experience on large earth moving operations, heavy plant this challenging opportunity. As a first step in applying for this role you should contact and machinery, costing etc. Excellent opportunity to join a well Greg Thill, telephone +61 3 9662 7418, E-mail: [email protected] for a copy of our established company – permanent position. recruitment kit. For further information you can also contact Bruce Hobbs, telephone Mechanical Engineers, Engineering Geologists, Health and Safety +61 8 9333 6361, E-mail: [email protected] Engineers required for forthcoming short term contracts. Applications must be made in writing and submitted no later than 16 October, 2000. Please email c.v.’s to Sandie Fforde or Dick Sanders Visit www.hunterpersonnel.com FOR THE COMPREHENSIVE LIST OF CSIRO promotes a diversified work environment VACANCIES AND THE FULL RANGE OF SERVICES THAT WE OFFER Hunter Personnel Contracts Ltd Abchurch Chambers, 24 St Peters Road, Bournemouth, BH1 2LN, U.K. Tel: +44 (0)1202 298322. Fax: +44 (0)1202 298383 Australian Science, Australia’s Future Email: [email protected]

Published by The Mining Journal Ltd, 60 Worship Street, London EC2A 2HD, England. Typeset and printed in Gt. Britain by Pensord Press Ltd, Gwent. Registered as a Newspaper with the Post Office. Solo - Rock Solid Performance for Production Drilling

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