Engineering & Mining Journal

JUN 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 JUNE 2019 • E&MJ 5 www.e-mj.com President and COO Chris Stewart said, "The Gold Bar mine is performing as de- signed. This summer we will be making modifications to the ore crushing and stacking system to mitigate the impact of challenging winter weather like we had in 2018/2019, which was the wettest win- ter ever recorded in the United States. "Under the leadership of our new General Manager Jack Henris, our team at Gold Bar is focused on identifying and implementing operational enhancements to increase our daily throughput. I'm pleased to see that the mine has operat- ed at 125% of our planned 7,200 tons per day production rate on several days during the past month." Henris recently joined McEwen to drive operational improvement, the company said. He has more than 30 years of expe- rience, most recently as the vice president of mining and geotechnical at Goldcorp. Barrick Proposes Deal for Acacia Barrick Gold Corp. recently presented a proposal to the directors and senior man- agement of Acacia Mining to acquire all of the shares it does not already own. The proposal assumed that no further divi- dends will be paid by Acacia. This implies a value for Acacia of US$787 million and total consideration to the minority share- holders of Acacia of US$285 million. Barrick currently owns a 63.9% interest in Acacia. Barrick has been negotiating with the government of Tanzania for the last two years to reach a settlement regarding Acacia's ongoing disputes with the gov- ernment and to establish a viable frame- work under which Acacia could resume its full operations in Tanzania and rebuild its relationships. Barrick said a basis for a settlement has been developed, but not finalized. It added that the government wasn't pre- pared to enter into a settlement directly with Acacia. Acacia has been kept out of discussions between Barrick and the government. The proposal is subject to the satis- faction of a number of customary con- ditions, including recommendation from the Acacia Board. "Since the proposal is in Barrick shares, the Acacia minority shareholders will be able to benefit from any future po- tential upside in both the Acacia assets and Barrick's broader portfolio of assets," Barrick said in the statement. In related news, Acacia confirmed it is working with Tanzanian government offi- cials to rectify alleged discharges with its North Mara tailings storage facility (TSF). The company has been fined $2.4 million for the alleged pollution. In the meantime, operations at the mine remain unaffected. (Continued on p. 8) Zambia's government has filed notification of its plans to take over Vedanta Resourc- es domestic copper assets, President Ed- gar Lungu said. The Lungu administration has ratcheted up tensions with the local mining industry, especially with large op- erators such as Indian firm Vedanta and Swiss-based Glencore. Lungu has previ- ously threatened to "divorce" the country from the major mining houses over dis- putes relating to taxes and royalties. In May, he said a new non-refundable sales tax in place of Value Added Tax (VAT) would go ahead, despite objections from mining companies that it would push up operating costs. Other mining companies operating in Zambia include Canada's First Quantum Minerals and Barrick Gold. Bloomberg reported that on a recent visit to the copper belt, Lungu said, "I want to make it very clear that I have come here to sanction, if it's the will of the Zambian people, that we divorce these mines … My position is that enough is enough. The attorney general is here, the lawyers are here. They will guide us how to proceed with this divorce." For its part, Vedanta, which operates in the country through Konkola Copper Mines (KCM), appears to have been tak- en by surprise, and said it would seek an urgent meeting with the Lungu gov- ernment. "KCM is yet to receive formal communication from the government of Zambia on this, although it has sought an urgent meeting with the president and/or the minister of mines," the firm said in a statement. In August last year, Vedanta Chair- man Anil Agarwal said the firm would invest US$700 million to raise output to 400,000 metric tons per year. However, the relationship with the government has deteriorated marked- ly since then. Vedanta's troubles stem in part from the technical challenges it faces that have weighed on the financial viability of its operations. KCM's flagship mine at Chililabombwe is regarded as the world's wettest, as the local geology is rid- dled with water-bearing aquifers. The main shaft needs to pump around 450 million liters per day, the equivalent of 180 Olympic-size swimming pools to prevent flooding. Vedanta said that pump- ing alone comprises 40% of KCM's ener- gy costs. In recent months, contractors have gone unpaid and in April, KCM instituted a total hiring freeze and promotions were put on hold. KCM is also the country's largest employer. By the end of last year, the Zambian mining ministry accused KCM of owing local and international contractors $80 million in outstanding invoices. In January, KCM halted operations at its Nchanga mine near the Democratic Repub- lic of Congo's border, in response to Zambia adding a 5% tariff to copper concentrate it was importing from its neighbor. Without the DRC production, the Nchanga smelter and mine became unviable, KCM said. As a result of its poor financial perfor- mance, KCM's day-to-day operations have been affected, said Sishuwa Sishuwa, a Zambian political analyst. "KCM's machinery is infrequently ser- viced," he said. "It hasn't been investing in new reserves. It's as if Anil Agarwal keeps KCM for strategic reasons." Almost certainly, Lungu will approach one of the Chinese operators in Zambia, which is heavily indebted to Beijing. Lungu may be hoping that China will offset some of the debt if one of its firms gets KCM. However, it's unclear whether new owners will fare any better with KCM's troubled assets. Vedanta acquired KCM in the mid-2000s, after its former owner Anglo American walked away. Anglo, like Vedanta, found the technical challenges of keeping KCM afloat during a downturn in the copper price overwhelming. Meanwhile, even if Vedanta is kicked out of the country, its troubles won't end at the Zambian border. A group of Zambian villag- ers has won the right to sue Vedanta in a U.K. court, where it is listed on the London Stock Exchange. The complainants allege that fields and water sources around Nchan- ga are contaminated with sulphuric acid and other toxins, depriving them of farmland. Zambia Plans to Seize Vedanta Copper Assets

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