Engineering & Mining Journal

JAN 2019

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

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NEWS-LEADING DEVELOPMENTS JANUARY 2019 • E&MJ 5 vious record of 187.7 carats held by the Diavik Foxfire, recovered in 2015. The Diavik mine is owned 60% by Rio Tinto and 40% by Dominion Diamond. Rio Tinto is the operator. The gemstone was recovered while passing through the initial screening pro- cess at the Diavik recovery plant. As the diamond is still undergoing evaluation, it is too early to determine its ultimate value. Measuring 33.74 mm x 54.56 mm and weighing exactly 552.74 carats, a diamond of this size is completely unexpected for this part of the world and marks a true mile- stone for diamond mining in North America. US May Lift Sanctions Against Rusal The U.S. Department of Treasury told Congress in December it will remove sanctions imposed on three Russian com- panies tied to Russian businessman Oleg Deripaska, United Co. Rusal (major baux- ite miner and aluminum smelter), its par- ent EN+ Group and JSC EuroSibEnergo (a Russian energy company). Rusal said it welcomes the Treasury's decision and will continue to do every- thing that is necessary to return the com- pany to regular working conditions. Deripaska will remain under sanc- tions, but the companies agreed to a deal that severs his ties with them, which will result in them being removed from the Treasury's blacklist. The matter is expect- ed to be resolved in the next 30 days. The agreement requires Deripaska to reduce his ownership stake in EN+ to 44.95% from 70%, and he is prohibited from increasing his stake. He has little or no direct ownership in Rusal or EuroSibEnergo. Deripaska's voting rights in EN+ will also be limited. The company will create a 12-person board mostly independent of him and he will be bound to commitments severing his ability to control the company. Newmont Provides Longer-term Outlook Newmont Mining announced its 2019 outlook with attributable gold production guidance of 5.2 million ounces (oz) at all-in sustaining costs (AISC) of $935/oz. Newmont's outlook reflects steady gold production and ongoing investment in its operating assets and most promising growth prospects, the company said. Gold costs applicable to sales (CAS) guidance is $710/oz for 2019 and $750/ oz for 2020; CAS is expected to be be- tween $690/oz and $740/oz longer-term through 2023. AISC for 2020 is predict- ed to be $975/oz; AISC is expected to be between $875/oz and $975/oz lon- ger-term through 2023. Total consolidated capital guidance for 2019 is $1.070 billion and $730 million in 2020. Capital is expected to be between $500 million and $600 million longer-term through 2023. Development capital includes the Ahafo Mill Expansion in Africa, Tanami Power in Australia and Quecher Main in South America, as well as expenditures to advance studies for fu- ture projects. Sustaining capital guidance is $680 million for 2019 and $660 million for 2020; longer-term sustaining capital is expected to be between $450 and $550 million through 2023. "Our proven strategy will deliver stable gold production at competitive costs over at least the next five years as we continue to deliver value-accretive projects across our four regions," said Gary J. Goldberg, CEO. "Our investment-grade balance sheet and ample liquidity means we are well-positioned to invest in pro fi table growth and simultaneously return cash to shareholders through our industry leading dividend. Newmont remains focused on leading the gold sector in profitability and responsibility through the next generation of mines, technology and leaders." Gold production is expected to total 4.9 million oz in 2020 and longer-term production is expected to remain stable at between 4.4 million oz/y and 4.9 mil- lion oz/y through 2023, excluding devel- opment projects, which the company has yet to approve. Strike at Sibanye-Stillwater Disrupts Operations By Gavin du Venage A protracted strike at the gold operations of Sibanye-Stillwater by a holdout union con- tinues to disrupt operations, in defiance of a settlement signed with most employees. In late November, Sibanye-Stillwater signed a wage agreement with three unions, including the National Union of Mine- workers (NUM). However, the Association of Mineworkers and Construction Union (AMCU) has led its 15,000 members in a strike at Sibanye's Beatrix, Kloof and Driefontein operations since November 21. As AMCU is a minority union, Sibanye is not legally obligated to recognize the strike. The NUM has the majority of more than 50% of workers as its members, so an agreement with them is legally binding over all Sibanye employees, according to South African law. This has not stopped AMCU from press- ing ahead with the strike, that has led to violent protests at its Beatrix mine in the free state province. Dozens were injured during clashes with police in early Decem- ber, Sibanye said. "The safety and well-being of all Sibanye-Stillwater employees and their families is our first priority and management has been concerned about the timing of the strike," Sibanye CEO Neal Froneman said in a statement. "The financial hardships that employees who have been on strike, or not at work, will suffer due to the 'no work, no pay' principle, which still applies." AMCU itself has a history of vigorous strikes that have led to deaths, injuries and damage to equipment. Most notably, it was AMCU that led the protests that be- came known as the "Marikana Massacre" in 2012 at the Lonmin platinum mine. During this action, armed AMCU mem- bers charged a police picket line, and were met with a hail of bullets. Thirty-four mineworkers were killed and scores in- jured. Recently, Sibanye acquired Lonmin, which has struggled to return to profitabil- ity in the years since the fatal protest. AMCU initially built its membership in the "platinum belt" of mines operat- ing in the northeast, but has since begun recruiting in the gold sector. AMCU Pres- ident Joseph Mathunjwa said at a news conference in mid-December that the union would not accept "slave wages" and that the strike would continue. "The success of Sibanye has been an - chored by a strong gold price and gilded by poor salaries to its workers," Mathun- jwa said. "Major profits go overseas from South African labor." For now, Sibanye enjoyed a short re- prieve as mines countrywide shut down for the annual Christmas break. Most employ- ees are recruited in the rural hinterland of southern Africa, and will make the journey home to their families. However, their return in the New Year is likely to see a recom- mencement of AMCU's industrial action.

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