Engineering & Mining Journal

JUN 2014

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10 E&MJ; • JUNE 2014 www.e-mj.com REGIONAL NEWS - U.S. & CANADA deposit, where drilling and baseline per- mitting programs are in progress. Midway Selects Ledcor CMI as Pan Project Contract Miner Midway Gold has announced two scope changes for its open-pit Pan gold project in White Pine county, Nevada, 50 miles west of Ely: utilization of a contract miner for early years of mining and leaching of the South Pan ore body by run-of-mine methods. Midway has awarded the Pan project mining contract to Ledcor CMI Inc. During the early years of operation, Ledcor will provide all mining-related services, includ- ing manpower and equipment, and will be directly responsible for drilling, blasting, loading and hauling ore to the leach pad for processing by Midway. The term of the agreement between Midway and Ledcor is five years. Midway President and CEO Ken Brunk said, "We have been working hard to reduce initial capital costs at Pan to achieve an improved return on capital for our shareholders. Entering into this con- tract with Ledcor goes a long way toward bringing down our pre-production capital, as we no longer need to purchase a mine fleet and the ancillary facilities associated with an owner-operated mine. Our new partnership with Ledcor will provide the highest return to our shareholders and to the local community as we build out the company. Midway and Ledcor look forward to a long and prosperous relationship." The 2011 Pan feasibility study had budgeted $29.5 million for mine equip- ment, mostly for the mine fleet, as part of the $99 million initial capital estimate. Construction at Pan remains on track for startup before year-end 2014. The mine is expected to produce a total of 864,000 oz of gold over a mine life of nine years. The project is based on a low-cost, oxidized, Carlin-style gold deposit mine- able by shallow open-pit methods and treatable by heap leaching. Midway is also deferring purchase and installation of crushers for the first two to three years of the mine life at Pan. The fea- sibility study had included a two-stage crushing circuit at South Pan. However, detailed metallurgical tests have confirmed that this ore responds favorably to run-of- mine leaching, and initial production will be based on this processing route. On May 22, Midway announced the signing of a binding commitment letter with Commonwealth Bank of Australia for a $55 million, three-year senior secured project finance facility for the development of the Pan project. Closing is expected to occur by the end of June. Spring Valley 2014 Budget: In other news from Midway, the company reported in mid-May that Barrick Gold has budget- ed $13.3 million ($8.3 million for project development and $5 million for explo- ration) for the Spring Valley gold project in Pershing County, Nevada, in 2014. Spring Valley is a 70% Barrick, 30% Midway joint venture, with Barrick as the operator. Barrick has mobilized one reverse circulation drill rig and two core rigs to Spring Valley for further in-fill drilling, primarily focused on upgrading the cate- gories of the resource. Augusta's Rosemont Project Encounters Permitting Delays Augusta Resource Corp., which is develop- ing the Rosemont copper project 50 km southeast of Tucson, Arizona, reported on May 23 that the U.S. Forest Service (USFS) had formally requested that the U.S. Fish and Wildlife Service (USFWS) re- initiate permitting consultation on the Rosemont copper project. The request was prompted by documented evidence of the presence of ocelot, a species of wild cat, within or near the project area. Consulta- tion is required under the Endangered Species Act to ensure that the effects of a proposed project on listed species are avoided or minimized. Conferencing will take place on the potential listing of species that were not considered in the original Rosemont pro- ject biological opinion. Additional informa- tion related to the effects of groundwater drawdown on aquatic and riparian species near the project area will also be included as part of this process. The USFS will prepare a supplemental biological assessment to incorporate the additional information. In preparation of the supplemental biological assessment, the Coronado National Forest will work with Augusta subsidiary Rosemont Copper Co. and the USFWS to identify any further con- servation measures needed to mitigate for effects on endangered species, if any are determined to be required. Formal consultation and publication of the new biologic opinion by the USFWS could take 135 days to complete once con- sultation is initiated. In other news related to Augusta, the company has been battling a hostile takeover bid launched by Hudbay Minerals in February. Augusta maintains that the offer greatly undervalues the Rosemont project. At that time of the initial offer, Hudbay owned about 16% of Augusta, and the offer valued Augusta at about C$540 million. On May 16, Hudbay announced that it was extending its offer to acquire all of the outstanding shares of Augusta that it did not already own to May 27. The Hudbay announcement also said that Hudbay con- tinues to monitor developments with respect to Augusta's applications for per- mits required for the Rosemont project. Preliminary site layout plan for Midway's Pan open-pit gold mine project. EMJ_pg04-45_EMJ_pg04-45 6/4/14 9:00 AM Page 10

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