Tag Archives: Red Chris

Mark Norwell on the Perenti mining services differentiator

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Perenti continues to make inroads across the mining value chain, reflected of late with the recent acquisition of DDH1, record 2023 financial year results and deployment of some of its initial artificial intelligence-backed solutions from the idoba technology business.

Against this busy backdrop and a keynote address at IMARC in Sydney, IM caught up with Mark Norwell, Managing Director & CEO of Perenti, to talk technology in the mining services space.

IM: The contract mining and mining services business is a very competitive space (especially in Australia). How are you readily leveraging technology for your mining clients as a competitive advantage?

MN: The industry has always been competitive, and that global competition continues to evolve.

I would say Barminco has been at the top of the game for three decades. Having that technical competence, the process, the scale and the people drives competitive advantage in its own right. As we have seen some shift in technology and new technology initiatives, the adoption has added to productivity and, therefore, our competitive advantage has grown again.

In terms of how we are adopting technology, there are a couple of areas to mention.

To come back to Barminco, one aspect has been through deploying point solutions for productivity improvement. This has been ongoing and part of our DNA.

More broadly, when we launched the idoba technology division a few years ago, we took the view that as we see greater shifts and acceleration of technology opportunities in mining, we needed the internal capability to drive that change from the inside out; not from the outside in.

We have the deep domain expertise in mining that, when combined with our technology business, further improves our existing contracting services, as well as creates new potential lines of business.

The differentiator for idoba is the ability to develop products and trial them within our own captive ‘sandpit’. A lot of technology companies don’t have this option. They develop solutions and go to mining companies with a great idea that lacks the evidence of trial data needed for many mining companies to implement the solutions. As a result, the trials never get off the ground. We don’t have that problem given we have operations – and supporting clients with matching values – to allow us to trial products in the field. This has been witnessed of late where we are rolling out some products to test across our underground mines in Australia (idoba recently announced that its Mine Performance Navigator AI-powered decision-support and analysis tool had been rolled out to a dozen underground Barminco-operated mine sites).

IM: In terms of automation, digitalisation/digitisation and electrification, where are you looking to take the lead for your mining clients?

MN: They are all interconnected to some extent. Digitisation, for example, really drives the value from deploying automation and electrification. That digital platform is imperative for mines of the future and is where idoba comes into play.

We want to be at the forefront with digitisation and the digital platform; likewise with electrification.

With our Barminco business, we are one of the world leaders in hard-rock underground mining, and electrification just makes sense for underground hard-rock mines – there are so many benefits. What’s also important is the collaboration associated with that. We heard this week from Perenti, ABB and IGO on the IMARC panel discussion that no-one has all of the capabilities to effectively electrify a mine, so choosing partners is crucial to execution.

Under an agreement between mine owner AngloGold Ashanti, Barminco and Sandvik, the Sunrise Dam gold operation in Western Australia began trialing the prototype 65 t Sandvik TH665B on September 14

When it comes to automation, it is an area we are working through. We have established teleremote and remote operating centres in the recent past – operating multiple machines at remote mine sites from Perth, for example – but, at this stage, we are not accelerating these developments at the same pace as electrification and digitisation due to timing really being of the essence for these two.

Saying that, our work with Sandvik and Newtrax on Level 9 collision intervention is related to this, being a building block of automation more broadly as well as a major game changer from the safety perspective. Once we nail that with a digital platform, we will continue to advance automation more broadly. We are closing in on that with Level 9 collision intervention trials expected to take place in the near term.

When we look at idoba and the work we are doing on DiiMOS (Distributed, Intelligent, Integrated Mining Operating System), we are agnostic to the equipment, the mine planning software and the broader mining processes at play. If we are not agnostic, we could end up locking our clients into one route that potentially ends up destroying value. We are also building out a capability where some clients can pick and choose, or take the full suite, from idoba.

The focus is on providing solutions bespoke to the mine’s needs.

IM: How are you balancing your close relationships with the technology vendors and your own internal technology developments through idoba? Who are the most obvious first customers for the idoba platform?

MN: There is always going to be some overlap and crossover, but we come at this with an operator mindset, where technology can augment this. The OEMs come at it from an equipment mindset with associated technologies to bolt on. The combination and partnership of these two approaches makes sense as you have the equipment, technology and operations covered.

There will be areas where we still have some competition but, ultimately, it is limited.

The full value is going to be generated through how we partner and collaborate with all the companies within the value chain. We have a long history of collaborating with Sandvik, for instance, as well as recent history with ABB, and everyone brings something different to the table. Without that combination of capabilities, we are not going to see the industry shift at the rate it needs to.

Our starting point for idoba will be servicing our current customers as we develop new products and support them on their journey. We will see some clients want more of our solutions than others. As we service our current clients with these, we can take what we have learnt to service new clients. The new clients might be mine operators themselves, where we provide digital solutions as a software-as-a-service. This opens up new potential markets to us, which goes to the broader strategy we set in 2019. This recognises the deep domain expertise we have in mining – which has served us extremely well and is not something everyone has. The plan back then was to leverage this and build out the services beyond that current offering; technology being one of those.

As we develop this new technology, we have learnt that we have the ability to offer lower capital intensity solutions that can serve us well throughout the mining cycles.

IM: Looking at decarbonisation and, more specifically, the agreement you have in place with ABB to ‘reduce the risk and uncertainty of electrifying both green and brownfield operations’; could you talk me through what risk mitigation processes you will be using as part of this? How do you tackle the uncertainty associated with making investments in infrastructure, people and technology against a very ‘fluid’ technology backdrop?

MN: There are a couple of areas that need to be front and centre through that journey. The digital integration platform is one of those – the complexity of what we’re solving for these days is far greater than what we were used to. Whether you are putting in a point solution, or a whole mine to electrify, having a digital platform is critical to making the right decisions at the right time.

As the technology evolves, this digital platform is even more integral to reinforcing decision making. If you go straight to the hardware without the digital backbone and the distributed network of energy needed to electrify, you are setup to fail in the long term.

idoba recently announced that its Mine Performance Navigator AI-powered decision-support and analysis tool had been rolled out to a dozen underground Barminco-operated mine sites

The other aspect that needs consideration from a risk mitigation perspective is having the leadership and culture in place to see these projects through. Leaders have to be ready to unlearn and relearn throughout this process.

Not only that you need to try to engineer out risk wherever possible through critical trials, a strong operational methodology and an assessment of the causal factors of what can go wrong and where those points are within the design. This could be through a traditional engineering methodology or technology adoption.

IM: You set up the Denver office a few years ago now. Outside of Hemlo and Red Chris, what does the pipeline of opportunities look like in North America? Does this client base require a different type of offering to what you traditionally have in Australia?

MN: We’re currently about A$100 million ($64 million) of revenue between those two agreements. We are looking for that to grow to A$400-500 million over the next three to four years. We see the pipeline in Canada and the US as significant. We have also installed the former head of AUMS in this business, looking to replicate the success we had in Africa over eight years in North America.

It’s fair to say the contractor model for Barminco is well understood in Australia and Africa; more so than in North America. In North America, they have a contract model that tends to be based on a charge-by-the-hour type of agreements, whereas we are looking to bring a technical approach to all our contracting.

At the same time as looking to grow this business, we are conscious of growing too quickly. Bringing in a new mining methodology takes a lot of change management. We don’t want to go too quick and have a misstep.

IM: What about ongoing M&A? Are there still gaps in the portfolio you are looking to fill?

MN: In terms of our strategy, we have said we will continue to build our portfolio to leverage our core competency in mining and adjacent areas to add value. We ultimately want a complete portfolio of businesses that have adjacencies to our core businesses.

We are still open to further M&A as long as it leverages our core capabilities and makes sense to our investors.

Barminco wins A$90 million contract extension at Newcrest’s Red Chris mine

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Perenti subsidiary, Barminco, says it has been awarded a 12-month contract extension at Newcrest Mining’s Red Chris mine in British Columbia, Canada.

Since June 2021, Barminco has continued to progress the development of an underground exploration decline, an essential first stage of works that will provide a platform for future underground exploration activities, and which may also be used to support access to potential block cave workings.

This contract extension enables Barminco to continue underground development works and is expected to deliver approximately A$90 million ($60.4 million) of revenue over the 12-month contract term.

Mark Norwell, Managing Director and CEO of Perenti, said, “Our strategy in North America is to partner with Tier-One operators and long-life assets, where we can add value over the long term. We continue to diligently progress our North American growth strategy and have key executive management personnel based in the region to ensure we develop the right relationships and become engrained within the sector while remaining disciplined in the execution of our strategy.”

Paul Muller, President of Contract Mining, said: “Since mid-2021 our team in North America has worked closely with the Red Chris JV as it transforms the mine into a long life, tier-one underground operation. We have developed very strong relationships with the local communities including a partnership with the Tahltan Nation Development Corporation and are very pleased to be on site at Red Chris for at least the next 12 months.”

An October 2021 prefeasibility study on the Red Chris block cave outlined an initial reserve estimate of 8.1 Moz of gold and 2.2 Mt of copper, with average annual gold production of 158,000 oz and copper production of 48,500 t over the 31-year life of mine.

Newcrest to expand presence in BC’s Golden Triangle with Pretium buy

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Newcrest Mining Ltd has entered into an agreement to acquire all the issued and outstanding common shares of Pretium Resources that it does not already own by way of a Canadian Plan of Arrangement.

The Pretivm Board of Directors has unanimously recommended that shareholders vote in favour of the transaction, which valued Pretivm equity at $2.8 billion, and have entered into voting support agreements with respect to all the Pretivm shares that they own or control. The transaction is targeted for completion in the March quarter.

Pretivm is the owner of the Brucejack operation in the Golden Triangle region of British Columbia, Canada. Brucejack began commercial production in July 2017 and is one of the highest-grade operating gold mines in the world, according to Newcrest. The Pretivm Technical Report of March 9, 2020 estimated gold production of 311,000 oz/y at an all-in sustaining cost of $743/oz of gold over a projected 13-year mine life.

Brucejack is some 140 km from Newcrest’s majority-owned and operated Red Chris mine, located on Tahltan territory.

Newcrest’s Managing Director and Chief Executive Officer, Sandeep Biswas, said: “We are delighted to be expanding our presence in this highly prospective region in British Columbia. Brucejack is a Tier 1 mine in a Tier 1 jurisdiction and will deliver immediate production, free cash flow and earnings diversification to Newcrest and will fit seamlessly into our long life, low-cost portfolio.

“Following this transaction, Newcrest will have exposure to six Tier 1 orebodies and a portfolio of organic growth options of unrivalled quality.”

The combination of Newcrest and Pretivm will create the leading gold miner in British Columbia’s Golden Triangle, operating both the Brucejack and Red Chris mines, according to Biswas.

“Following due diligence, we believe that as the owner and operator of Brucejack we can build on the strong foundations established by Pretivm and deliver significant additional shareholder value by leveraging our experience in operating epithermal gold mines and applying our exploration and innovation expertise to realise potential resource and reserve growth. Resource and reserve growth and our commitment to investing in the area will underpin the success and longevity of mining in the region for the benefit of the First Nations people, host communities, British Columbia and Canada.”

Pretivm’s President and Chief Executive Officer, Jacques Perron, said: “With this acquisition, Brucejack will join Newcrest’s portfolio of Tier 1 assets, mitigating the inherent risks associated with ownership of a single-asset mining company. Moreover, Newcrest has the financial means and the intention of maximising the long-term potential of the Brucejack mine and the district-scale opportunities in the surrounding Brucejack property.”

Newcrest believes that its concurrent operation of both Red Chris and Brucejack mines will provide enhanced opportunities for both workforces, allow for aligned and optimal engagement with the First Nations and the broader community, and will provide the foundation of ongoing future investment in the region, it added.

Newcrest looks to new FMS, haul truck trays for Red Chris improvements

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With gold and copper production dropping and costs increasing, the Red Chris mine, in British Columbia, Canada, is set for a number of improvement initiatives, according to 70% owner Newcrest Mining.

In the company’s September quarter results, Newcrest said Red Chris gold and copper production came in at 12,636 oz and 7,050 t, respectively, during the three-month period. This was down from the 15,440 oz of gold and 8,401 t of copper registered in the June 2020 quarter.

Newcrest said the circa-3,000 oz drop in gold output reflected a higher proportion of lower-grade stockpile material being fed to the mill due to unseasonal rainfall hitting the availability of higher grade ex-pit material.

This lower-grade mill feed adversely impacted recovery rates, partially offset by a 13% increase in mill throughput following process control improvements and a higher proportion of stockpiled material with “characteristics that enabled increased processing rates”, it said.

Red Chris’ all-in sustaining cost of $2,621/oz in the September quarter were significantly up on the $1,536/oz seen in the previous quarter. This was driven by increased sustaining capital expenditure, higher operating costs due to “seasonal benefits allowing increased activities to be scheduled”, together with the impact of a strengthening Canadian dollar against the US dollar and lower copper sales volume, it said. These factors were only partially offset by the benefit of a higher realised copper price.

With one quarter of Newcrest’s 2021 financial year down, the company said it is planning to put in place a number of additional improvements across the site. Included in this is a new fleet management system, the replacement of the conventional Cat 793 truck trays with “high-performance trays” to realise payload benefits, and several throughput and recovery-related projects.

The company has 45,000-55,000 oz of gold and 25,000-30,000 t of copper production slated for Red Chris in its 2021 financial year.

Upon announcing the acquisition of a majority stake in the asset in 2019, Newcrest Managing Director and CEO, Sandeep Biswas, said there was potential to turn the Red Chris orebody into a Tier 1 operation.

It also outlined a two-stage plan to deliver value from the $806.5 million acquisition. This included applying its “Edge transformation approach” to the existing Red Chris open-pit mine and processing plant, and potentially leveraging industry leading mining methods and technology such as block caving, coarse ore flotation and ore sorting.

Gold price rise revealing exploration deficit, Wood Mackenzie says

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Even though the resurgent gold price has garnered a renewed sense of optimism in the gold industry, a lack of exploration spend from miners means it is facing a potential period of secular decline over the long-term, according to Wood Mackenzie’s gold team.

Exploration budgets were slashed following the fall in the gold price from the highs that were reached in 2011/2012 and they have since failed to recover, according to Wood Mackenzie.

“The slight rebound in exploration spend we have seen over the past couple of years has largely been focused on brownfield projects and near-mine development,” the analysts said. “This has not been sufficient to replenish mined ounces and, as such, peak gold supply is now a very real possibility.”

Over the past couple of months, with gold breaking through $1,500/oz, it seems that exploration activity may be turning a bit of a corner.

The analysts provided evidence:

  • In late June, Agnico Eagle Mines started an exploration drilling program at its Amaruq site in an effort to convert underground indicated resources;
  • On September 4, Polyus announced the completion of an exploration drill program at its Sukhoi Log project (pictured) that totalled 203,647 m and is planning 30,000 m of infill drilling in 2020; and
  • On September 10, Newcrest reported that its exploration program on the Havieron project, located 45 km east of Telfer in Australia, has four operating drill rigs, which have cut 6,166 m and a fifth drill will begin in September.

It will be some time, however, before this activity translates into reserves and ultimately into production.

Proposed exploration budgets for the largest producers in 2019 remain fairly conservative compared with the levels reached in 2012, according to the analysts. It would therefore seem unlikely that the trend in declining reserves will be abated this year.

Producers have been very vocal in reaffirming their strategy of cost control, portfolio management and capital discipline, particularly since the run up in the gold price, ensuring they do not get criticised for the same type of costly M&A and marginal project spend they carried out in the previous gold price highs.

“How steadfast miners will be to this strategy into 2020 and beyond, if prices continue to remain well supported, remains to be seen,” the analysts said.

Due to insufficient exploration spend, gold reserves have depleted significantly with the global average mine life falling from 16 years in 2012, to an estimated 11 years in 2018, they said. However, the largest producers are not facing quite such an acute situation, with their collective average mine life still over 16 years. “It is perhaps therefore not so surprising that they can afford a more calculated approach to replenishing reserves.”

To secure their longevity as pillars of the gold industry, Wood Mackenzie said it has seen heightened M&A activity and miners focusing on their core assets. While this may help to bolster balance sheets through improved operational performance and realised ‘synergies’, it seemingly does little to address the problem the industry is facing with regards to how to sustain current production levels.

“We have, as of late, noticed an uptick in some majors opting to increase their footholds in a select few juniors with promising exploration opportunities,” the analysts said.

Agnico Eagle, AngloGold Ashanti, Kinross and Newcrest are actively investing in, or entering into joint-ventures with junior gold companies to create long-term value.

Agnico Eagle announced a proposal on June 24, 2019 for an all-share acquisition of Alexandria Minerals Corporation at a $0.05 per share premium to the Chantrell Ventures Corp offer; however, O3 Mining acquired Alexandria on August 1, 2019.

AngloGold Ashanti upped its stake in Pure Gold Mining to 14.3% on July 16, 2019, which owns the Madsen gold project in Red Lake, Ontario.

Kinross purchased the near-surface, early-stage Chulbatkan project in Russia from N-Mining Limited for a total consideration of $283 million on July 31, 2019.

And, Newcrest entered into a 70-30 joint venture with Imperial Metals on August 16, 2019, where Newcrest will be the operators of the Red Chris mine, a potential ‘Tier One’ asset in British Columbia, Canada, the gold miner has said.

The analysts said: “We expect to see this trend of increased M&A activity to continue, particularly amongst the more mid-tier gold producers as they look to solidify their own positions in the industry. This will likely encompass mergers with peers to unlock shareholder value and the acquisition of assets that majors have determined to be non-core.

“This may help to progress some later stage projects into production that have been sitting on the shelf for a number of years, but we are not anticipating a knee jerk reaction to current prices. Smaller projects which have a short payback period, in a low sovereign risk jurisdiction, are an attractive proposition and we could see a number of these projects being fast tracked into production.”

And, going forward, to address the predicament of declining reserves, if prices remain elevated miners may be inclined to review their reserve and resource price assumptions, the analysts said.

Newcrest to apply ‘unique technical capabilities’ to copper-gold mine in BC, Canada

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Newcrest Mining has entered into an agreement to acquire a 70% joint venture interest in Imperial Metals’ Red Chris copper-gold mine and surrounding tenements in British Columbia, Canada, for $806.5 million.

The deal will see Newcrest become Red Chris operator, in charge of deciding how to exploit the copper-gold porphyry open-pit mine.

Newcrest said the acquisition of Red Chris was “a measured entry” into North America and aligned with its stated strategic goals of building a global portfolio of Tier 1 orebodies where Newcrest can “deliver value through application of its unique operating capabilities”.

Red Chris comes with a mineral resource of 20 Moz of gold and 5.9 Mt of copper. The acquired property comprises 23,142 ha of land with 77 mineral tenures, five of which are mining leases, and sits within the traditional territory of the Tahltan Nation.

Newcrest Managing Director and CEO, Sandeep Biswas, said: “We are delighted to add this asset into the Newcrest portfolio. Following due diligence, we believe we can bring our unique technical capabilities to unlock the full value potential of this orebody in one of the premier gold districts in the world.

“We have identified a clear pathway to potentially turn this orebody into a Tier 1 operation. The geology of Red Chris is similar to our Cadia orebodies in Australia and we will be applying our considerable experience in exploration, open-pit mining, caving and processing to maximise the value of Red Chris and the opportunities in the surrounding region. We look at this opportunity in the same way as we do with Cadia, where we have proven we can create significant value from deep underground porphyry orebodies.”

Following the intensive due diligence process Biswas mentioned, Newcrest said it has a two-stage plan to deliver value from the acquisition:

Stage one will see the company apply its “Edge transformation approach” to the existing Red Chris open-pit mine and processing plant.

“Newcrest believes it can add significant value to Red Chris by applying the same Edge mind-set and approach that has led to significant operating improvements across all Newcrest operations over the last five years,” the company said.

Examples of where successful changes have been implemented to safely accelerate cash maximisation include process plant optimisation (debottlenecking, recovery uplifts, process control, improving concentrate quality), mine optimisation (improving orebody knowledge, grade control, fleet management system, mine planning) and supply chain cost reduction, according to Newcrest.

As part of this stage, Newcrest said it will initiate an extensional drilling programme.

“Newcrest intends to optimise the current open-pit mine plan and pursue initiatives to improve operational productivities and milling recoveries,” Newcrest said.

The current open-pit mine has an existing 11 Mt/y processing plant and associated infrastructure which allows ‘brownfield’ expansion options in the future, it added.

Stage 2 will see the company apply “industry leading technology”.

The company said: “Newcrest believes it can add significant shareholder value by applying technology to Red Chris that it has successfully applied at its other operations.”

Examples include block caving – “Newcrest believes the orebody has the potential to become a high margin bulk underground block cave. Newcrest will accelerate the necessary drilling and studies. Newcrest intends to conduct studies and review the ore reserve of the Red Chris operation to allow for reporting in accordance with JORC 2012 to take into account the potential transition to a future block cave operation.”

Coarse ore flotation could also be considered, the company said.

“Having demonstrated the recovery benefits of coarse ore flotation at Cadia, Newcrest will look to apply this technology to Red Chris,” Newcrest said.

And, then there is the application of one of the most popular technologies today: ore sensing and sorting, of which Newcrest said: “Positive results from trials underway at Telfer may lead to this technology being deployed at Red Chris.”

In terms of exploration, Newcrest said it would apply its experience in deep underground brownfield and greenfield exploration on the existing orebody and the broader land package to potential uncover more tonnes of copper and ounces of gold.

“Newcrest has identified opportunities to expand Red Chris’s mineral resources along strike and at depth in areas where there has been limited deep drilling to date. Historical shallow drilling indicates that there is also potential for further deep discoveries to be made in the larger tenement package.

“Newcrest will be targeting prospective regions beyond the current mine looking for further porphyry centres including small footprint, higher-grade gold-rich porphyry systems leveraging knowledge gained from Cadia which has similar geological features,” Newcrest said.

Red Chris, on the northern edge of the Skeena Mountains, commenced construction in 2012 and was completed in November 2014 for a total cost of C$661 million ($492 million). Commercial production commenced in July 2015 and, in the first nine month of 2018, the mine produced 20,320 t of copper and 29,569 oz of gold.