Engineering & Mining Journal

JUN 2014

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/325596

Contents of this Issue

Navigation

Page 31 of 147

30 E&MJ; • JUNE 2014 www.e-mj.com REGIONAL NEWS - ASIA Newmont to Suspend Mining at Batu Hijau Due to Export Restrictions PT Newmont Nusa Tenggara (PTNNT) announced on May 7 that the Batu Hijau copper and gold mine on Sumbawa Barat, Indonesia, would ramp down production on or about June 1, unless ongoing discus- sions with the government led to comple- tion of the process to secure an initial export permit. In April, PTNNT obtained registered exporter status from Indonesia's Ministry of Trade, a necessary milestone prior to receiving the export permit. Batu Hijau's copper-concentrate stor- age facilities were due to be filled to capac- ity by late May. Once they were filled, PTNNT would cease mining and milling, along with significantly scaling back con- tracted services, purchasing, and capital expenditure, with corresponding adjust- ments in employee work schedules and reductions in overtime. To minimize expenses and preserve the ability to return to normal operations in a timely fashion, most of PTNNT's employ- ees would be placed on leave at reduced pay starting in early June. The mine would maintain appropriate controls to protect the safety and security of people, water resources, and the environment. PTNNT President Director Martiono Hadianto said, "While our contract of work explicitly guarantees our right to export cop- per concentrate and establishes all the taxes and duties PTNNT is required to pay, we have taken numerous steps to support the government's desire to increase in-coun- try smelting. This is a very unfortunate and difficult situation for all of us, as it will dis- rupt the lives of our 8,000 employees and contractors and impact thousands more people in the Sumbawa Barat area who derive their incomes from our operation." Batu Hijau will continue shipping and selling copper concentrate to PT Smelting in Gresik, Indonesia, through the remain- der of 2014; however, the Gresik smelter has capacity limitations and cannot pur- chase sufficient quantities of PTNNT's copper concentrates to allow for ongoing normal production at Batu Hijau. Batu Hijau produced 161 million lb of copper and 48,000 oz of gold in concen- trate in 2013. Norilsk Developing $1.1B Chita Copper Project Norilsk Nickel reported during an investor- day presentation in London, England, on May 19 that its corporate investment com- mittee has approved development of its open-pit Chita copper project in southern Siberia, approximately 300 km from the Russia-China border. Development will be based on a mining reserve of 294 million metric tons (mt) of ore, grading 0.7% cop- per, 23% iron, and 0.8 g/mt gold, with startup scheduled for 2017. Capital expenditures to develop the Chita project are estimated at $1.1 billion. EBITDA margins are estimated at about 50%, with an asset IRR of about 30%. Mine life will be more than 30 years. Chita project ore will be processed through a 10-million-mt/y concentrator to produce 66,000 mt/y of copper in concentrate, 3.1 million mt/y of magnetite concentrate, and 219,000 oz/y of gold in concentrate. Infrastructure development includes construction of a new, approximately 600- km rail line, which is being financed 25% by Norilsk and 75% by the Investment Fund of the Russian Federation. Polymetal Acquiring Large Kazakh Gold Project Russia-Kazakhstan gold producer Polymetal International has entered into binding agreements with Sumeru Gold B.V. and Sumeru LLP for the acquisition of Altynal- mas Gold Ltd., the holding company for the Kyzyl gold project in northeast Kazakhstan. The Kyzl project comprises the Bakyrchik and Bolshevik gold deposits and has 6.7 million oz of JORC-compliant gold reserves at Bakyrchik at a grade of 7.5 g/mt. The acquisition will increase Polymetal's gold equivalent reserves by approximately 50% with a single, large, high-grade property. Initial consideration for the transaction is $318.5 million in cash and the issue of new Polymetal shares with an aggregate value of $300 million. Deferred additional cash consideration could reach up to an agreed cap of $500 million, contingent on certain conditions being met and depend- ent on the relative dynamics of the gold price and the price of Polymetal's shares over up to the next seven years. Polymetal envisages the following devel- opment timeline for the Kyzyl project: 1) revised feasibility study with updated reserve estimate, fourth quarter 2015; 2) start of construction, first quarter of 2016; and 3) first production, 2018, to be confirmed upon completion of the revised feasibility study. Failure of current discussions with the Indonesian government to obtain an export permit was expected to result in the suspension of production at the Batu Hijau copper-gold mine in early June. EMJ_pg04-45_EMJ_pg04-45 6/4/14 9:00 AM Page 30

Articles in this issue

Links on this page

Archives of this issue

view archives of Engineering & Mining Journal - JUN 2014