Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
In late 2010, North American Palladium (NAP) commenced a major expansion of its Lac des Iles (LDI) mine to increase underground production and reduce cash costs per ounce. The mine expansion consisted of transitioning underground operations to shaft haulage while utilizing a high-volume bulk mining method. The mine site is located 85 km northwest of Thunder Bay, Ontario, Canada.
Phase I of the expansion included sinking a shaft to the 825-metre level to transition underground operations from mining via ramp to mining via shaft, and setting up underground and surface infrastructure to mine the offset zone using a high-volume bulk mining method. The mine was targeting production via shaft by the beginning of Q4, 2013 and within a 2013 capital budget of C$ 71 million.
In May, 2013, Phil Du Toit, CEO of North American Palladium, invited Hatch to visit the Lac des Iles mine, in order to complete a high-level assessment of its offset zone project. The surface infrastructure was essentially complete. The headframe, the main substation, the hoist house building, the service hoist, and the auxiliary hoist were all fully operational and complete. The focus of the work was the remaining shaft sinking, and ore and waste handling system in preparation for handover to operations.
Hatch was subsequently engaged by NAP to help complete phase 1 of the project. The objective was to improve project governance, engineering interface management, contracting strategies, project controls, and pre-operational testing to ensure the start of production by the beginning of Q4 2013. The team structure was dynamic with an integrated owner’s team with a distinct responsibility matrix for such items as safety management, and detail engineering, all of which was not under Hatch’s care and control.
By the end of May 2013, Hatch had mobilized a site team to start planning the transition from construction to operational readiness. Sudbury was the principal project office, with support from Calgary, Saskatoon and Vancouver.
In September 2013, Dumas (the underground mining contractor) had sunk the shaft to the 825-metre level. Dumas was instrumental in the installation of the loading pocket system as part of the ore/waste handling system. Wayne Mohns, Vice President Operations of Dumas said “The Hatch team from our perspective was great and the work would not have been done in such an orderly and timely fashion without Hatch.” Many investors and dignitaries attended the October 22 grand opening and ribbon-cutting ceremony for the new handling system. Phil Du Toit, CEO of NAP, stated “The Hatch contribution was a key to the successful completion.”
