Miles of serendipitous stakes

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 13 Dec 2012   Posted by admin


MOUNT Isa is a city built on mining. It owes its very existence to the discovery of a rich mineral deposit in 1923, and today the area’s mines produce a stream of wealth that shows no signs of drying up.
The northwest Queensland city encompasses a civic area of 43,310 square kilometres and is home to Mount Isa Mines (MIM), a spectacularly productive holding that bears lead, silver, copper and zinc. Now owned by Xstrata, it has been in production since 1931.
The region also hosts projects owned by Altona Mining, MMG, Aditya Birla, Ivanhoe Australia, BHP Billiton and FMR Investments.
The existing mines produce a whopping $8.5 billion in gross domestic product for the region. According to one estimate, Mount Isa has about 11 per cent of the world’s zinc, 5 per cent of its silver and 1 per cent of its copper; other sources maintain those figures are too conservative.
“We are proud of our mines and the significant contribution we make to the state and national economies,” Mount Isa deputy mayor and Chamber of Commerce president Brett Peterson said.
“We are a mining city; we have more opportunities and a great work hard, play hard lifestyle.
“Mining is who we are; not all we are, but it is the reason we have a city here.”
Miners agree that it is an advantageous place for projects, despite some concerns about the high cost of power and labour. Altona Mining managing director Alistair Cowden said that Mount Isa offered a mature setting for sector activities.
“The exploration opportunities are fantastic and the skills in the area are terrific,” he said.
“We view the exploration potential very, very highly.”
In the beginning
Mount Isa’s foundation was serendipitous. En route to the Northern Territory nearly 90 years ago, lone gold prospector John Campbell Miles stumbled upon one of the world’s richest deposits of copper, silver and zinc.
While camping on the banks of the Leichhardt River, Miles saw yellow-black rocks in an outcropping that reminded him of the ore found in the Broken Hill mine in NSW at which he had once worked. The rocks were weighty and heavily mineralised, and a sample sent to an assayer in Cloncurry confirmed that the 40-year-old Miles
had made a momentous discovery: lead carbonate assaying between 49 and 73 per cent lead with rich silver content. Miles and four farmers-turned-miners staked claims, and he named his Mount Isa after the famed Mount Ida gold mines in WA.
According to biographer KH Kennedy, the options to Miles’s leases soon passed from the prospector’s hands, but the site of his discovery became the foundation of MIM.
Xstrata
Nine decades later, MIM is a massive operation encompassing five mines. Xstrata, which purchased MIM Holdings in 2003 for $2.9 billion, operates two separate streams: copper and zinc-lead-silver. “Mount Isa has a unique and proud relationship with Xstrata,” Mr Peterson said.
“The mines support our city through commercial and employment opportunities, and the city provides the mine with the essentials to operate in a community: a social licence, a workforce, a supply chain and service industries.”
Mr Peterson said MIM gave back to the community in turn, supporting events including a rodeo and fishing derby, and building amenities such as parks.
“Their employees live in the community; participate on committees and boards; they raise families here – that’s what makes Mount Isa different,” he said.
The Enterprise and X41 underground copper mines have a combined ore capacity of 6.2 million tonnes per annum. They share a 7mtpa concentrator and a copper smelter that can produce 300,000tpa. Enterprise is Australia’s deepest mine, with an internal shaft of 1900m.
Xstrata has three zinc-lead-silver operations: the open pit Black Star and Handlebar Hill mines, and the underground George Fisher mine.
Bench mining and open stoping are used to excavate the Hilton zinc-lead ore bodies, which were discovered in 1946 and first developed in 1969. The three holdings generate zinc concentrate, and lead and silver in bullion form.
In February 2005, Xstrata commissioned the $19.3 million, 2.3mtpa Black Star pit, which lies above the old Isa lead mine and is beingdeveloped in stages.
Mining at Black Star and Handlebar Hill currently targets the upper reaches of the ore bodies.
Xstrata recently announced it intended to invest more than $11 million to complete two major feasibility studies on the possible expansion of Black Star and George Fisher. The latter, 20km north of the city, is expected to boost production to 4.5mtpa.
Altona
Altona is a company with promising holdings in the region and a growing relationship with Xstrata. Presently, it is the 100 per cent owner of the Roseby copper project, where exploration is yielding ever-better future production projections.
Altona is in negotiations with Xstrata regarding a joint venture in which the mining giant would receive a 51 per cent stake in Roseby.“It will probably come to a head towards the end of the year,” Mr Cowden said of talks to cement the deal.
“To be in a JV with Xstrata – and they give you money – what a great outcome.”
While Xstrata obtained the option to purchase the stake in 2005, negotiations between the two companies stalled around the June 30 deadline for an agreement. However, Mr Cowden said that both companies were still interested, and Altona was seeking an independent expert to determine a fair market value for the 51 per cent.
Altona expected to begin mining in mid 2014, although it could start production sooner by reaching an agreement with Xstrata in the near future, he said.
Since drilling began in 2010, projections of what exists at the holding have repeatedly been revised upwards.
Mr Cowden said that there was an estimated 252mt of ore grading 0.6 per cent copper for 1.5mt of the metal, but exploration could raise that total to 2mt. In addition, a recent discovery in the Turkey Creek area indicated a deposit of between 5mt and 10mt.
MMG
MMG is becoming a bigger player in the Mount Isa region with one operating mine, Century, and another gearing up for production at Dugald River.
The Melbourne-based company is exploring options to extend production at its Century operation beyond 2016.
The mine produced 497,251t of zinc in concentrate in 2011, and production guidance for this year is between 495,000t and 505,000t of zinc in concentrate and between 22,000t and 25,000t of lead in concentrate.
An aggressive drilling program has been under way throughout 2012 as part of work to evaluate a number of small, vein-style deposits within the Century lease and adjacent tenements.
MMG also holds several leases in the area with known phosphate deposits. A study that began in 2011 to determine the potential for these deposits as an alternative feed source for Century’s infrastructure was continuing, a company spokeswoman said.
The company’s Dugald River holdings are in one of the world’s largest undeveloped high-grade zinc deposits, and MMG is continuing with pre-commitment activities there including engineering design and the finalisation of agreements for gas, power generation, access and infrastructure.
MMG received environmental approval for the project, about 65km northwest of Cloncurry, in August.
The development of two exploration declines is proceeding on schedule, and MMG reported that it expected to intersect the main ore body before the end of the year.
Once operational, the underground mine is expected to produce about 200,000t of zinc, 25,000t of lead and 900,000g of silver in concentrate annually for more than 22 years.
Project capital costs for Dugald River are expected to be between US$1 billion and US$1.25 billion.
Aditya Birla
Aditya Birla announced best-to-date intercepts at Mount Gordon in the September quarter as follows: 11m grading 5.50 per cent copper from 345m (including 2m grading 12.25 per cent from 350m) at Mammoth North;81m grading 0.99 per cent copper from 599m (5m grading 2.30 per cent from 671m) at Esperanza South; and 19m
grading 1.97 per cent copper from 708m (2m grading 10.16 per cent at 719m) from Mammoth.
Mount Gordon is at peak production following an underground collapse last  year. On March 11, 2011, the company closed the operation when heavy rains damaged a vent shaft. After remedial work to the shaft collar, Aditya Birla received approval to reopen the mine about two months after it shut.
The ramp up at Mount Gordon saw a total of 321,240t ore grading 2.44 per cent copper mined as of June 30, 2012: the best quarter since operations restarted last year.
In its report for the quarter, Aditya Birla stated that it was focussed on improving the effectiveness of itsenvironmental compliance at the mine.
The company was fined last year for failing to comply with orders for it to take actions to improve environmental management problems.
Ivanhoe Australia
Ivanhoe Australia has several holdings in the Mount Isa region, including the Osborne copper-gold operation, which it acquired from Barrick Gold in September 2010. The project, about 50km south of Mount Dore, comprises mining, processing and exploration facilities. Ivanhoe began production there in February.
Declared JORC-compliant mineral resources for Osborne included 3.1mt grading 1.5 per cent copper and 0.9 grams per tonne of gold (measured and indicated), and 1.7mt grading 1.7 per cent copper and 1.3g/t of gold (inferred).
Incitec Pivot
Incitec Pivot’s operations are different from those of other miners in the region: it mines, but also manufactures the finished product, ammonia phosphate fertilisers, on site.
With an annual capacity of 975,000t, Incitec’s Phosphate Hill operation has its own phosphate mine and ore processing facility in addition to beneficiation, ammonia, phosphoric acid and granulation plants. The mine is complemented by a sulphuric acid plant at Mount Isa, from which the company sends its products to its export
and warehouse facilities in Townsville.
CST Mining Group
CST Mining Group’s Lady Annie open pit lies within an extensive tenement package that is being explored for near-mine and regional copper targets.
Its target production for 2012 was between 22,000t and 25,000t, up from 20,000t from last year. Its reserves are estimated at 11.2mt grading 1.10 per cent copper, with resources of 65.2mt grading 0.71 per cent copper.
The mine utilises a heap leach with solvent extraction and electro-winning technology to produce London Metal Exchange Grade A equivalent copper cathode.
BHP Billiton
One of the world’s lowest-cost producers of lead and silver, BHP Billiton’s Cannington mine still has the capacity for significant expansion. Commissioned in 1997, it also has a metallurgical processing facility on site.
Last year, Cannington contributed US$1.19 billion to the company’s earnings before interest and tax from a net operating asset base of US$202 million. The single underground operation has a processing capacity of more than 3mtpa, but that could grow to 5mtpa with the expansion of near-surface resources.
BHP is well into the environmental approval process to extend the mine’s life, a company spokesman said. The plan would reportedly only add a couple of years, bringing it to 20 or 21, but the mine’s output made the strategy worthwhile.
Silver production was up slightly according to figures for the last quarter: 7.69 million ounces for the year ending September 30 as compared to 7.56moz for the same period a year earlier.
However, lead production was down to 51,929t in payable metal concentrate in the past year from 55,557t the year before, which the miner attributed to lower head grades.
FMR Investments
The main deposit at FMR Investments’ Eloise mine was discovered by BHP in 1987. Since then, the project has changed hands several times and FMR purchased it in 2004. The holding was mined from 1995 through to late 2008, when it was placed under a care andmaintenance program until mining recommenced in January 2011.
FMR is upgrading its processing plant to increase throughput to 720,000tpa to offset the declining head grade. Improvements include installing an additional crusher and a larger screen to move to tertiary crushing to produce a less-than-12mm product;
putting in additional flotation cells to offset the increased throughput rate; and recommissioning of a 200-kilowatt ball mill. Until now, the mill has been capable of sustaining 600,000tpa. The mine produces a high-grade copper concentrate with gold and silver credits.
Future growth
All of this mining activity has had a profound impact on the Mount Isa area. A report by Bankwest identified the city, which services a region comparable in size to Victoria, as having one of the two most resilient economies in Australia.
Mr Peterson said that the city had long-term plans in place to facilitate future growth in the mining sector. While that placed obvious demands on the region’s infrastructure, he said, Mount Isa needed to maintain a good working relationship with its neighbours.
Mr Peterson cited the Mount Isa to Townsville corridor as being of particular importance.
“We are currently in the process of implementing the outcomes of a 50-year infrastructure plan that was developed collaboratively with government and industry,” he said, acknowledging that the city and its mines needed to share the responsibility for Mount Isa’s future success.


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