Engineering & Mining Journal

JAN 2019

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REGIONAL NEWS - U.S. & CANADA 6 E&MJ • JANUARY 2019 www.e-mj.com Alberta Initiates Oil Production Cuts The Alberta government has mandated a short-term reduction in oil production that started on January 1. Under the mandate, production of raw crude oil and bitumen will be reduced by 325,000 bar- rels per day, an 8.7% reduction. Premier Rachel Notley announced the temporary measure in response to the historically high oil price differential that is costing the national economy more than $80 mil- lion per day, her office said. After excess storage is drawn down, the reduction will drop to an estimated average of 95,000 barrels a day until De- cember 31, 2019, when the rules sup- porting this action will end. Alberta is currently producing 190,000 raw crude oil and bitumen barrels per day more than can be shipped by pipelines, rail or other means. The amount of oil that is being diverted to storage is at record highs and storage is nearing capacity. "Every Albertan owns the energy re- sources in the ground, and we have a duty to defend those resources. But right now, they're being sold for pennies on the dol - lar," Premier Notley said. "We must act immediately, and we must do it together." The price gap is caused by the federal government's decades-long in- ability to build pipelines, according to Notley's office. Her office believes curtailment will re- duce volatility, narrow the differential by at least $4 per barrel relative to where it would have been and add an estimated $1.1 bil- lion of government revenue in 2019-2020. The Alberta Energy Regulator will ad- minister the reduction using the existing Responsible Energy Development Act. The reduction amount will be reviewed each month to make sure production is in balance with transportation and storage capacity. A 10,000 barrel per day exemp- tion will ensure the smallest oil producers are not unduly affected. The level of cur- tailment for each company will be based off its six months of highest level of pro- duction over the past 12 months. Minnesota Issues Last Major Permits for PolyMet Mine Poly Met Mining Inc., a wholly-owned sub- sidiary of PolyMet Mining Corp., has re- ceived the final remaining state approvals for PolyMet to construct and operate the NorthMet copper-nickel-precious metals project in northeastern Minnesota. The Minnesota Pollution Control Agency is- sued the water quality (NPDES/SDS) and air quality permits and the Clean Water Act Section 401 water quality certification for the NorthMet mine. This follows the De- partment of Natural Resources' issuance in early November of the permit to mine, dam safety, water appropriations, takings, and public waters work permits, along with the Wetlands Conservation Act approval. In total, the MPCA and DNR have issued 17 permits and other approvals. "This represents the culmination of many years of hard work to allow the building of Minnesota's first copper-nick- el mine," said Jon Cherry, president and CEO. "We look forward to the opportunity to responsibly develop the NorthMet mine and produce those metals that are criti- cal for our society while creating value for our shareholders and the communities in which we operate." As with the DNR permits, the MPCA permits were issued after the company demonstrated that its project designs meet strict state environmental standards and at the conclusion of an extensive public input process. PolyMet will be the first to commercial- ly produce copper and nickel, in addition to platinum, palladium, gold and cobalt, from the world-class Duluth Complex in the Iron Range's historic mining district. The permits authorize the company to build and operate open pit mining oper- ations that are expected to yield approx- imately 1.2 billion pounds (lb) of copper, 170 million lb of nickel, 6.2 million lb of cobalt and 1.6 million ounces of precious metals over a 20-year mine life. The 225 million tons of ore permitted for extraction represent roughly one-third of the North- Met 649-million-ton measured and indi- cated resource as described in the com- pany's 2018 National Instrument 43-101 Technical Report, which is filed under the company's SEDAR and EDGAR profiles. "The permits pave the way for a final decision from the U.S. Army Corps of Engineers on its wetlands (Section 404) permit, the only remaining federal per- mit," he said. "That decision is expected soon. The permits also will provide cer- tainty for the financing process over the next few months as we prepare for the 2019 construction season." Northern Vertex Secures Refinancing Deal Northern Vertex Mining Corp. has complet- ed the $28 million refinancing announced on December 6. It consists of a $20 mil- lion upfront payment from Maverix Metals to the company's subsidiary Golden Vertex Mining Corp., which holds the Moss mine, based on a silver streaming agreement and a private placement of $8 million. A portion of the proceeds was used to pay down debt and Northern Vertex said it intends to use the balance of the pro- ceeds to fund the continued ramp up of mining operations at the Moss mine in northwest Arizona, the newest gold pro- ducer in the U.S. Maverix made the upfront payment for the right to purchase, initially, 100% of An excavator loads overburden at the Fort Hills oil sands mining operation. (Photo: Suncor Energy)

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