Engineering & Mining Journal

JUL 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

Issue link: https://emj.epubxp.com/i/1003184

Contents of this Issue

Navigation

Page 5 of 75

NEWS-LEADING DEVELOPMENTS 4 E&MJ • JULY 2018 www.e-mj.com BHP Initiates South Flank Iron Ore Project in Western Australia BHP Billiton has announced plans to de- velop the South Flank iron ore project in the central Pilbara region of Western Aus- tralia and has awarded a contract worth about $260 million to CPB Contractors for construction of bulk earthworks, concrete and underground services at the project. BHP has an 85% interest in Mining Area C, where the South Flank project is located, with Itochu Minerals and Energy of Australia Pty and Mitsui Iron Ore Corp. collectively owning the remaining 15%. Total capital expenditure to develop the project is estimated at $3.4 billion, with BHP's share being $2.9 billion. The South Flank project will replace production from the 80-million-metric- ton-per-year (mt/y) Yandi mine, which is reaching the end of its economic life. BHP President Operations, Minerals Australia, Mike Henry said, "South Flank is a capital efficient project that offers attractive returns. The project will cre- ate around 2,500 construction jobs and more than 600 ongoing operational roles and will generate many opportunities for Western Australian suppliers. It will en- hance the average quality of BHP's West- ern Australia Iron Ore (WAIO) production and will allow us to benefit from price premiums for higher-quality lump and fines products." The South Flank project expands the existing infrastructure at Mining Area C and involves construction of an 80-mil- lion-mt/y crushing and screening plant, an overland conveyor system, stockyard and train loading facilities, procurement of new mining fleet, and substantial mine development and pre-strip work. The project is forecast to produce ore for more than 25 years, with first ore targeted for 2021. South Flank ore will contribute to an increase in WAIO's aver- age iron grade from 61% to 62%, and the overall proportion of lump ore from 25% to approximately 35%. WAIO is an integrated system of four processing hubs and five mines, connect- ed by more than 1,000 km of rail infra- structure and port facilities in the Pilba- ra region of northern Western Australia. At each mining hub — Newman, Yandi, Mining Area C and Jimblebar — ore is crushed, beneficiated (where necessary), and blended to create high-grade hema- tite lump and fines products. Production attributable to BHP totals about 230 million mt/y. CPB Contractors is a member com- pany of the CIMIC group of companies. Its contract for work at South Flank is scheduled to begin in July and conclude in September 2020. Osisko Commits $180M to Falco Horne 5 Project Falco Resources Ltd. announced a financ- ing transaction with Osisko Gold Royalties Ltd. where Osisko has agreed to commit $180 million through a silver stream to- ward the funding of the development of Falco's Horne 5 Project. Osisko will also purchase a secured debenture having a principal amount of $7 million from Falco. "The funds will be instrumental as Fal- co looks forward to building a high-quality, profitable and environmentally safe project that will deliver significant economic bene- fit to all of our stakeholders," said Luc Les- sard, president and CEO. "The partnership with Osisko and its cornerstone investment further demonstrates its commitment to supporting the next significant mine build in Québec, a leading mining jurisdiction." Osisko will provide Falco with staged payments totaling $180 million, payable as a first deposit of $25 million on clos- ing of the transaction; a second deposit of $20 million upon the company receiving all necessary material third-party approvals, li- censes, rights of way and surface rights; a third deposit of $35 million following re- ceipt of all material permits required for the construction of a mine on the project, a positive construction decision for the proj- ect, and raising a minimum of $100 million in equity, joint venture or any other non- debt financing for the construction of the mine; a fourth deposit of $60 million upon the total projected capital expenditure for the project having been demonstrated to be financed; and an optional fifth deposit of $40 million at the sole election of Osisko to increase the stream percentage, payable concurrently with the fourth deposit. Under the terms of the agreement, Osisko will purchase 90% of the pay- able silver from the project, increasing to 100% of the payable silver from the project in the event the optional fifth de- posit is paid. In exchange for the silver delivered under the stream agreement, Osisko will pay Falco ongoing payments equal to 20% of the spot price of silver on the day of delivery, subject to a maximum payment of USD$6 per silver ounce. The South Flank will replace the 80 million mt/y from the retiring Yandi mine.

Articles in this issue

Links on this page

Archives of this issue

view archives of Engineering & Mining Journal - JUL 2018