Engineering & Mining Journal

MAY 2017

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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Page 19 of 59

REGIONAL NEWS - AUSTRALIA/OCEANIA 18 E&MJ • MAY 2017 Rio Tinto Deals with Bad Weather In its first quarter production report, Rio Tinto said it shipped 76.7 million metric tons (mt) of iron ore from the Pilbara. The 13% quarter-to-quarter decrease was a attributed to cyclone activity during the period. The company said sections of the rail network were also affected by signif- icant rainfall. Despite the disruptions, shipments were in line with the first quar- ter of 2016 and guidance for 2017 re- mains at 330 to 340 million mt. "Despite challenging weather con- ditions at our West Australian and Queensland operations, we delivered solid production in the first quarter of 2017," said Rio Tinto chief executive J-S Jacques. "Our strategy is unchanged. Our number one priority is safety. We maintain our disciplined approach to capital man- agement and maximizing cash flow, with a focus on managing costs and enhancing productivity across the business." Western Areas Evaluates Odysseus Deposits Western Areas Ltd. has reported positive results for a pre-feasibility study (PFS) of development of an underground nickel mine on the Odysseus South and Odys- seus North deposits below the previously mined Cosmos mine 30 km north of the town of Leinster in central Western Aus- tralia. The PFS demonstrates commercial viability for a project producing 12,000 mt/y of nickel in concentrate over an ini- tial 7.5-year mine life. The Western Areas board of directors has approved advancing the project to a definitive feasibility study. The PFS estimates pre-production capital expenditure for Odysseus develop- ment at A$190 million to A$210 million, including costs for the PFS, the definitive feasibility study, and contingency costs. Low near-term capital requirements of A$7 million for calendar year 2017 and A$34 million for 2018 provide optionality on further commitments. Western Areas currently produces nickel concentrate at it Forrestania oper- ations in southern Western Australia, with production during its fiscal year to June 30, 2017 forecast at 22,000 to 23,000 mt of nickel in concentrate. Development of mining on the Odysseus deposits rep- resents an opportunity for the company to open a second production center. Previous operations at Cosmos pro- duced more than 127,000 mt of nickel in concentrate from 2000 to 2012. The Odysseus South and North deposits are lo- cated 1,000 m below surface and will be accessed via an extension of the existing Cosmos decline, starting at about 600 m below surface. The mined-out Cosmos mine will require dewatering to access the take- off point for the extension of the decline. The existing Cosmos processing plant will be refurbished at an estimated cost of A$6.2 million and is rated at 430,000 mt/y for disseminated ore, which is suffi- cient to handle Odysseus mine output for the first 12 months of operations. During the latter half of the first year of opera- tions, the processing plant will under- go an expansion to accommodate mine output of 750,000 mt/y. The expansion will be achieved by the introduction of a secondary crusher, reconfiguring the ex- isting grinding mills, and adding flotation capacity at a total cost of A$21.5 million. Planning for development of the Od- ysseus project is based on 7.3 million mt of indicated and inferred JORC-compliant resources at a grade of 2.4% nickel, for 174,000 mt of contained nickel. Mining Contract at Mount Morgans Awarded to RUC Dacian Gold said it would award its under- ground mining contract for the Mount Mor- gans gold project in Western Australia (WA) to WA-based underground mining con- tractor, RUC Cementation Mining (RUC). The agreement covers underground de- velopment and production stopping from the Beresford and Allanson underground mines, which together comprise the We- stralia Mine Area. Dacian said this agree- ment will eventually be replaced by a for- mal underground mining services contract, which will have an initial term of 3 years with two discretionary 1-year extensions, to establish a new portal for Beresford; rehab and existing portal and decline for Allan- son; all decline and level development; all ore driving; and all stope production. Dacian Gold's Executive Chairman Ro- han Williams said: "We are rapidly ticking the boxes on the path to becoming Aus- tralia's next significant mid-tier gold pro- ducer," said Rohan Willaims, executive chairman, Dacian Gold. "With a Letter of Intent issued last month to GR Engineer- ing to build the new 2.5 million [metric ton per year] treatment plant and now to experienced WA-based underground min- ing services group RUC Mining for the un- derground mining contract, we now have two of the key contracts in place which are required to bring Mount Morgans into gold production in less than 12 months." Con- struction of a new treatment facility and mobilization of RUC to Mount Morgans was expected to begin in April, with under- ground mining set to commence in May. Despite weather related interruptions, Rio Tinto said its iron ore shipments from the Pilbara (above) were in line with expectations.

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