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Ajax Project

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by

YiRan Zhang

on 13 January 2014

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Transcript of Ajax Project

MINING PROJECT EVALUATION FOR INVESTMENT DECISIONS
Consultant Team 9
MINE 291
Mining Method
Pit Design
Proposed Mining Operation
Project scheduling
Mineral Processing
Infrastructure
The Community Advisory Group
Cultural Transformation
Kamloops is known as a suitable place for seniors to relocate
Appealing outdoor reputation at risk
In 2010 the Tournament Capital of Canada generated 11.7 million dollars in revenue due to tournaments held in Kamloops
Owned Jointly by: -KGHM Polska Miedź S.A. (KGHM SA) (80%)
-Abacus Mining and Exploration Corporation (20%)
Operated by: -KGHM International Ltd.
Mine Type: -Open pit cooper-gold mine
Location: -Historic Ajax mining site on the southern downtown
of Kamloops(BC)
-Within the Thompson Nicola Regional District
Environment: -Semi-arid climate
- Winter: 0 degree Celsius to -20 degree Celsius
- Summer: up to 30 degree Celsius
- Exploration activities can operate year-round with appropriate equipment




Environmental Impact & Waste Management
Formed by the B.C government to represent the general public's interests and concerns
Social & Culture
The Community Advisory Group (C.A.G)
Cultural transformation
First nations right and title
Community involvement
45 members in total, 36 represent government agencies, and the remainder are either municipality officials or they represent First Nations Indian Bands and the City of Kamloops
Bomoh
Weekse
Simon
Wildsmith
YiRan
Zhang
Andrew
Prost
Prithvi
Khanna
AJAX PROJECT

Dr. M. Scoble
Consultation Plan includes the following:
the projects scope
which components of the projects proposal are to be assessed
the effects to be taken into account for in the assessment
which action and activities Ajax is responsible for in the assessment
Community Involvement
KGHM has made donations to the following organizations:
United Way
Farm Kids Scholarship Fund - which raises money to support post secondary education for youths amongst rural communities
The local universities baseball program and Title sponsors for the Canada Collegiate Baseball Championship

Project Overview
Information Distribution
Project Overview----------------------------------Ran Z.

Mining Method---------------------------------Prithivi K.

Social & Culture-------------------------------Andrew P.

Environmental Impact-------------------------Bomoh W.

Economy-------------------------------------Simon W.

Conclusion-----------------------------------YiRan Z.


-Important point of consideration

-Mines generally have a bad reputation when it comes to waste management

-Environmental impacts include, dust, noise and chemical pollution
Dust
Inevitable part of mining operations
Residents at high risk: The young as well as the elderly

Mitigating Dust
-watering and applying binding agents to roads
-watering and applying binding agents to waste rock piles
-enclosing stockpiles
-Using water sprays where necessary

First Nations right and title
Noise
Noise generated by the mine will be going on 24 hours a day, for 365 days a year

"No person shall make or cause, or permit to be made or caused, any noise in or on any public or private place which is liable to disturb the quiet, peace, rest, enjoyment, comfort or convenience of individuals or the public." (Noise Control By-Law No. 24-42,2007).

Managing Noise
-Elimination of noise source
-Purchasing equipment with improved noise characteristics
-Suppression of noise at surface
-Shielding Sources of noise

Chemical Pollutants

Methyl Isobutyl Carbional (MIBC) -
Creates Stable Floating process
Potassium Amyl Xanthate (PAX)-
Allows for Separation of valuables
Lime-
Correct level of acidity
Flocculent
Clarifying agent in liquid/solid separation

No Cyanide or Mercury
4 safe chemicals generally used:
Waste Management
Zero Discharge Facility- All water that comes in contact with the mine is captured on-site, then recycled back into the mine or milling process.
“Once a mine is in operation water protection must remain the highest goal of the company,
even if it means reduced mineral productivity. Adopting this common-sense ethic is the only
way we can ensure that the golden dreams of mining do not turn into the nightmare of poisoned streams.”

(Carlos De Rosa & James Lyon, Golden Dreams, Poisoned Streams. Mineral
Policy Center, Washington DC, 1997).
Economic Prospectus
1) Mining Costs

2) Net Smelter Return

3) Net Present Value and NPV Sensitivity Analysis

4)Price Projections

5) Final Economic Outlook and Recommendation
Work in coordination with KAPA (Kamloops Area Preservation Association), IHA (Interior Health Association) and the EAO (Environmental Assessment Office)
Recent development

No examples of precedence with high scale copper mines in such close proximity to urban area
IHA lacks ability to judge health, requested EAO to contract third party expert consultation
With KGHM data no need?
Exercising right to confidentiality? or making it more difficult for IHA to evaluate health risk? both?
Mining Costs
Total Initial Estimated Capital: $795 M
Including $87 M contingency
Operating Costs
Costs direction related to mine production:
1.34 $/t for mining
additional 3.46 $/t for mineral processing
Indirect Costs
Costs indirectly related to mine production:
0.53 $/t G&A / Overhead
includes maintenance, grade control etc.
Net Smelter Return (NSR)
An amalgam of costs:
Ore is freighted to smelter as concentrate - Freight costs, insurance
Anode Cu - Smelting Cost
Penalty for gangue
Ajax mine first in B.C history required to prepare a First Nations Consultation Plan
"the net revenue that th owner of a mining property receives from the sle of the mine'smetal/non-metal products"
NSR = Credit for metal - Smelting Cost - Gangue Penalty
First Nations participation
Secwepemc, Skeetchestn, Ashcroft and Nicola indian bands
Allowed to participate in the environmental component of the Ajax proposition.
Each group presents their own version of effects to be considered
Cu: 0.31%, Au: 0.19g/t
resource estimates done by Tetratech have calcualted an expected NSR of 15.71 $/t
Net Present Value (NPV)
"The sum of the present values of the individual cash flors of a mining operation"
The present-time net sum of all project cash flows. Takes into account interest rates on loans / investments
Commonly used a measure of overall value for a mine project
Discount rate used in AJAX economic evaluaon was 8% - This is fairly standard.
Multiple scenarios were evaluated:
Base case pre-tax NPV at 8%:
$416 Million
NPV Sensitivity Analysis
Other Financial Analyses
Three Scenarios outputting Describing NPV, Payback Years, and Internal Rate of Return:

As presviously stated, Base Case Scenario NPV of $416 million
Alternate Cases highly dependant on exchange rates and Price Fluctuations
Our Overall Opinion on its Economic Viability
The KGHM SA Ajax Project is an economically viable investment.
Copper & Gold Price Projections:
Price drop for both commodities projected going into 2020
Related to a recent Cu surplus, expected to increase in coming years.
Gold prices very speculative, conflicting reports found
Local Resources
Transportation: Hwy 1, Hwy 5 , Airport with daily scheduled flights to Vancouver, Calgary, Kelowna and
Prince George.
World Bank Group
Recent development
CAG and KAPA pressing KGHM to release mineral assay data for two years
KGHM executed a 20 element scan for every 3m interval - over 200km of drill core (approx. 66,666 sets of assay data)
Company says they aren't obligated to do so
Average measured grade: Cooper: 0.31%
Gold: 0.19 g/t
Project Fact
Annual production of
109 million pounds
of copper and
99,000 ounces
of gold
60,000 tonne-per-day (TPD)
processing capacity
23-year
mine life
Approximately
500 full-time
positions ranging from
Year 1
Year 15
Year 23
History
1855:The exploration started
1994-1997: Teck
2002: Abacus Mining & Exploration Corp.
options Afton Ajax properties from Teck
2010: KGHM Ajax Mining Inc. Established
Currently

References

September 2013: Environmental Assessment
Application submitted
Still in Progress

Conclusion
Thank You
http://www.ajaxmine.ca/
https://www.ceaa-acee.gc.ca/050/details-eng.cfm?evaluation=62225
http://www.amemining.com/s/Afton-Ajax.asp
http://www.amemining.com/i/pdf/160785-NI-43-101-Technical-Report.pdf
http://www.safewater.org/PDFS/resourcesknowthefacts/Mining+and+Water+Pollution.pdf
http://www.safewater.org/PDFS/resourcesknowthefacts/Mining+and+Water+Pollution.pdf
http://www.kamloops.ca/ajax/pdfs/13-04-13-KGHM-LetterOfResponse.pdf
http://www.tourismkamloops.com/the-geography-of-kamloops-british-columbia
http://www.canada.com/story_print.html?id=b13e318a-9e47-4895-80ca-9a0c54679ea5&sponsor=

AJAX MINE LAYOUT
7 Stages of the Proposed Mining Operation
Main Problems
Air pollutions
Water Contamination
Life Style changes to the local community
Decrease of cooper price
General Message
No sever risk
Good investment
Project Scheduling
Infrastructure
Road Access
Water Supply
Power and Communications
Land access road
Main power line
water system from the Kamloops lake
All surface buildings constructed
Start of the open pit mine and waste dump
Infrastructure and footings are removed
Waste dump are sloped and planted
Taillings are reclaimed
Full transcript