Highland Valley Copper Mine, British Columbia, Canada

Highland Valley copper/molybdenum mine is located 75km southwest of Kamloops, British Columbia, Canada. The Valley pit has yielded more than 1,100Mt of ore in its lifetime.

Highland Valley Copper was created as a partnership between Rio Algom and Cominco in 1986 to combine the Bethlehem and Lornex mines. Following the merger between Teck and Cominco in 2001, the 2000 takeover of Rio Algom by Billiton and Billiton's subsequent merger with BHP, the mine was then majority owned by Teck Cominco (63.9%) and BHP Billiton (33.6%). At the beginning of 2004, Teck Cominco exercised its pre-emptive rights over BHP Billiton's holding when the latter put it up for sale, and is now 97.5% owner of Highland Valley.

Production at the mine has decreased significantly the last few years due to an increased reliance on the lower-grade Lornex pit in line with a $C300m mine expansion project designed to push its life expectancy out to 2019. All of the mining equipment required for this work is now on site and commissioned. Highland Valley’s total copper production for 2007 was 136,000 tons, compared to 167,000 tons for the previous year. Molybdenem was just under 4 million pounds compared with just over 4 million for 2006.

Geology and reserves

Highland Valley is a low-grade (0.4% Cu) porphyry copper-molybdenum deposit associated with the younger intrusive phases of the early to mid-jurassic, calc-alkaline Guichon Creek batholith.

As of the end of 2005, proven and probable ore reserves totalled 318Mt grading 0.43% copper and 0.008% molybdenum. Mineral resources added a further 151.9Mt at 0.37% copper and 0.005% moly.

Reserves have been drill defined at 60 to 115 metre centres and resources at 125 metre centres. In 2007, a positive geotechnical study at Lornex added 197 million tons of indicated resource at a US$1.65/lb copper price and US$9.50/lb molybdenum price.

Open-pit mining

Open-pit mining is used in both the Lornex and Valley pits, with around 90% of the ore coming from the Valley pit. Three computerised Bucyrus 49R drills prepare blast hole patterns while nine P&H 4100A 37 yd³ electric shovels load ore into a fleet of Komatsu haul trucks for transport to in-pit crushers. In 2001, eight of the 170t-capacity trucks were replaced by six new 215t haulers. Further support is given by three water trucks, eight road graders, eight tracked bulldozers, three rubber-tyred bulldozers and one front-end loader.

The mine uses two semi-mobile in-pit crushers to minimise haul distances. Several kilometres of conveyors carry up to 12,000t/h of crushed ore to three stockpiles at the Highland mill. Pit operations are monitored and controlled by a Modular Mining Systems computerised dispatch system designed to maximise mine production. In addition minute-by-minute mapping is achieved by combining GPS navigation and survey with GIS mapping techniques.

Ore processing

The Highland mill, the world’s third largest copper concentrator, was constructed in the late 1980s by combining the original Lornex and Highmont mills. The complete Highmont mill was moved by road 10km from its former site to a new position adjacent to the Lornex plant.

The crushed ore enters two grinding stages in five parallel grinding lines incorporating two fully-autogenous mills, and three semi-autogenous (SAG) mills grinding a total of 5,400t/h. The second stage consists of eight ball mills reducing ore to sand-sized particles which feed the flotation circuits. The primary flotation stage extracts copper and molybdenum from the slurry before copper and molybdenum are separated. The molybdenum concentrate is mixed with a leaching brine in sealed, pressurised, heated vessels where residual copper is dissolved, leaving a high-grade molybdenum concentrate. Lastly, the copper and molybdenum concentrates are filtered and dried in gas-fired driers for shipping. Three 1m-diameter pipelines take the tailings 7km overland from the mill to the Valley tailings pond.

Concentrate transport

Copper concentrate is transported in bulk 40km to the rail yard at Ashcroft, then by rail to north Vancouver and finally by ship to overseas smelters. The molybdenum concentrate is packaged on site for shipment.

Environment

In 1997, Highland Valley Copper was presented with the 1996 British Columbia Reclamation Citation Award in the metal mining category for its outstanding achievement in reclaiming 1,000ha and planting 700,000 native trees and shrubs. Work to establish fish stocks in different water bodies on the property is continuing to be successful.

Production

As noted in the overview above, production at Highland Valley has declined significantly the last few years. Teck Cominco recently downgraded its production guidance for the 2008 full year from an initial 122,000 tons to 113,000 tons. Highland Valley’s total copper production for 2007 was 136,000 tons, compared to 167,000 tons for the previous year. Molybdenem was just under 4 million pounds compared with just over 4 million for 2006. Total ore mined fell also to 42.6Mt.
Teck Cominco has stated that mining of areas with higher clay content will continue throughout 2008 and 2009. Just over half of the total ore mined for Q3 2008 came from the lower grade Lornex mine compared with only 41% for the 5% to 30,500 tons.

The future

Waste stripping for Highland Valley's $C300m mine life extension is continuing with the pushback of the east wall in the Valley pit progressing well despite a minor geotechnical failure in the third quarter which is currently being rectified.

All the equipment is on site, permits received and contractors arranged. The pushback of the west wall necessary to extend the mine life to 2019 is scheduled to commence in early 2009 after the mine permit amendment received.

Ezulwini Uranium and Gold Mine, South Africa

The Ezulwini project involves the recommissioning of an underground uranium and gold mining operation located about 40km southwest of Johannesburg, on the outskirts of the town of Westonaria in Gauteng Province, South Africa. The mine is currently operating on a care and maintenance basis.

The mine was built in the 1960s and eventually reached production of 200,000tpm. In 2001, production at Ezulwini was halted primarily because of capital constraints compounded by weak gold and uranium prices.

The US$280m project is wholly owned by First Uranium through its local subsidiary Ezulwini Mining Company (Proprietary) Ltd. Existing infrastructure at the site includes two shaft headframes and four hoists, fans, compressors, generators, and underground equipment, as well as the necessary surface freehold required to operate the mine.

The capital expenditure for the project has been raised in three ways: through an IPO in December 2006, a convertible debenture in May 2007 and through proceeds from initial production. Payback is calculated at 5.2 years.

Geology

The project lies within the Witwatersrand Basin, an Archean (about 2.7 billion year-old) sedimentary basin that contains a stratigraphic sequence about 6km thick which consists mainly of quartzites and shales with minor intermittent volcanic units. Gold is hosted by the Upper Elsburg and Middle Elsburg Reefs underlying the mine. Uranium is found only in the Middle Elsburg Reef.

Mineralisation

Gold in the Upper Elsburg is found in the form of native gold and is associated with sulphide minerals, especially various forms of pyrite. Historically, 30-40% of the gold has been recovered by gravity processes, suggesting a high nugget effect.

In the Middle Elsburg Reef, gold is most commonly associated with pyrite, although some gold occurs in small blebs in arsenopyrite and cobaltite. Uranium is found in the form of uraninite. Mineralisation in the Middle Elsburg Reef has less of a nugget effect than the Upper Elsburg Reef.

Resources

At May 2007, there were no mineral reserves as defined by NI 43-101; the total Measured, Indicated and Inferred resources are put at just over 200Mt of about 32Moz contained gold and about 218 million pounds of contained U3O8. Reserves figures and revised resources estimates are expected in mid-2009.

Development

Part of First Uranium’s plans for developing the Ezulwini project has been to rehabilitate and re-engineer the main mine shaft by installing a floating steel tower, de-stressing the area where the shaft pillar intersects the shaft barrel, and building the uranium and gold processing facilities.

The company believes the rectification programme will enable the project to reach a production output of about 130,000 tpm by 2009 and 180,000 tpm by 2012, as the Upper Elsburg shaft pillar is developed and the Middle Elsburg uranium and gold section stopes are opened and expanded.

Production

The project is a conventional underground mine with breasting of the Upper and Middle Elsburg reefs. The ore is broken in the stopes and moved by slushers for loading into rail cars for transportation to the shaft. From the shaft and through the balance of the handling, the gold ores and the gold/uranium ores are kept separate. The ores are then hoisted to the surface for processing.

Ezulwini began gold production in July 2008, with uranium recovery starting in October 2008. Gold production is put at about 288,000 ounces a year while the average U3O8 production is expected to reach 2.1 million pounds a year. Full production will be attained in the fourth year and the mine has an expected life of about 19 years.

Processing

The choice of process is based on those previously used on the site. The ore is crushed and ground, then subjected to gold recovery by gravity and cyanidation. The uranium will be extracted by hot acidic leaching followed by solvent extraction and precipitation to form a concentrate (yellowcake). The uranium tailings will then be leached for gold recovery. Leaching will occur in a carbon in leach (CIL) process, after which gold will be electrowon and refined into doré bars.

Based on previous operating history, recovery rates of 95.5% for gold and 80% for U3O8 are expected.

Water comes from dewatering the mine, which the company says more than meets its needs.

Power comes partly from South African utility Eskom. In June 2008, Eskom agreed to increase its power commitment to Ezulwini from 40MW to 55MW. But in January 2008, Eskom had said it could not guarantee power supplies, so by July 2008, agreements had been finalised to obtain 10MW diesel generators to supplement the power from Eskom, and secure a steady supply of owner-generated electrical power with a total capacity of 24MW, inclusive of 14MW of existing standby units at the mine.

In September, First Uranium struck an exclusive deal with the Traxys Group to market all Ezulwini uranium.

The EPCM contractor for the project is MDM Engineering, of South Africa. The value of the contract is about US$200m.

TauTona, Anglo Gold, South Africa

In 2006 AngloGold Ashanti commenced a project to extend its South African TauTona gold mine to 3.9km. This was completed in 2008 making it the world’s deepest mine, surpassing the 3,585m deep East Rand Mine by a good distance. The name TauTona means "great lion" in the Setswana language.

The TauTona mine exists within the West Witts area not so far from Johannesburg in South Africa, near the town of Carletonville. TauTona neighbours the Mponeng and Savukamines, and TauTona and Savuka share processing facilities. All three are owned by AngloGold Ashanti.

Production at TauTona fell to 409,000 ounces in 2007, down from 474,000 ounces in 2006, due to increased seismic activity.

This required a review of the practice of mining of shaft pillars and high-grade remnants, and delays to the build-up in volume caused by opening up of the sequential grid. Capital expenditure in Siguiri was R2.5bn ($US71m) in 2007, with 56% committed to the development of ore reserve.

TauTona accounted for 7% of AngloGold Ashanti’s total 2007 gold production.

The mine was originally built by the Anglo American Corporationwith its 2km deep main shaft being sunk in 1957, with operations starting in 1962.

Since its construction two secondary shafts have been added bringing the mine to its current depth. The mine today has some 800km of tunnels and employs some 5600 miners. It is an extremely dangerous environment, with five workers losing their lives in 2007.

The mine is so deep that temperatures in the mine can rise to dangerous levels. Air conditioning equipment is used to cool the mine from 55°C down to a more tolerable 28°C. The rock face temperature currently reaches 60°C.

The journey to the rock face can take one hour from surface level. The lift cage that transports the workers from the surface to the bottom travels at 16 meters a second. The mine has also been featured on the MegaStructures programme produced by National Geographic.

Geology and reserves

The TauTona mine exists within the West Witts area slightly South West of Johannesburg in the North West of South Africa.

Two reef horizons are exploited at the West Wits operations: the Ventersdorp Contact Reef (VCR), located at the top of the Central Rand Group, and the Carbon Leader Reef (CLR) near the base. Owing to nonconformity in the VCR, the separation between the two reefs increases from east to west, from 400m to 900m. TauTona and Savuka exploit both reefs while Mponeng only mines the VCR. The structure is relatively simple with rare instances of faults greater than 70m.

The CLR consists of one or more conglomerate units and varies from several centimetres to more than 3m in thickness. Regionally, the VCR dips at approximately 21°, but may vary between 5° and 50°, accompanied by changes in thickness of the conglomerate units. Where the conglomerate has the attitude of the regional dip, it tends to be thick, well-developed and accompanied by higher gold accumulations.

Where the attitude departs significantly from the regional dip, the reef is thin, varying from several centimetres to more than 3m in thickness.

Total resources 2,615,000 ounces Measured resources 510,000 ounces Indicated resources 8,106,000 ounces

Mining and processing

Mining operations are conducted at depths ranging from 1.8km down to 3.9km following the recent expansion.

The mine consists of a main shaft system supported by secondary and tertiary shafts. The main mining method is longwall. TauTona shares a processing plant with Savuka. The plant uses conventional milling to crush the ore and a CIP (carbon in plant) to further treat the ore. Once the carbon has been added to the ore, it is transported to the plant at Mponeng for electro-winning, smelting and the final recovery of the gold.

Production

Gold production declined by 14% to 12,714kg (409,000oz) (2006: 14,736kg (474,000oz)), owing to a higher-than-expected fall in the volumes of ore mined. This was due to increased seismic activity in the vicinity of the CLR shaft pillar which is being mined, and at several highgrade production panels, where production was halted for limited periods during the course of the year. Both face length and face advance were negatively affected by seismicity during the year. The increased geological risk from this seismic activity necessitated re-planning regarding mine layout and mining methods.

Worsley Alumina Refinery, Australia

The Worsley Alumina Refinery is named after the historic timber settlement of Worsley, near Collie in the south west corner of Western Australia. The history of the project goes back to the early 1960s when a group of local entrepreneurs formed a firm to explore, develop and sell deposits of bauxite ore on the eastern side of the Darling Range, near Boddington.

Construction of a mine site and refinery began in 1980 and the first alumina was produced in April 1984. These days Worsley Alumina is a joint-venture partnership between BHP Billiton (86%), Japan Alumina Associates (Australia) (10%) and Sojitz Alumina (4%).

In May 2000, Worsley completed a $1bn expansion increasing annual production to 3.1 million tons.

The Worsley Alumina Development Capital Project (DCP), which commenced in 2004, was completed in 2007 at a cost of US$ 235m (US$ 188m our share), resulting in a 0.25 mtpa increase in alumina production (0.215 mtpa our share) to 3.5 mtpa.

In 2008 the partners announced a US$ 2.21bn ‘Efficiency & Growth’ expansion project at Worsley Alumina. This includes approximately US$ 70m of sustaining capital.

BHP says that the expansion project will lift capacity of the Worsley refinery from 3.5 million tons per annum (Mtpa) of alumina to 4.6 Mtpa (100% capacity) through expanded mining operations, additional refinery capacity and upgraded port facilities. Production is expected to commence in the first half of calendar year 2011. Worsley is currently the world’s fifth biggest bauxite mine.

BHP Billiton Aluminium President Jon Dudas said, "Worsley is one of the largest, lowest cost and most efficient alumina refineries in the world. This decision to invest in further production capacity underlines our confidence in the future of the alumina market. It also reflects our confidence in Worsley Alumina's ability to continue its excellent track record of production growth."

Alumina is carted by rail and exported through the Port of Bunbury. More than 1200 people are employed at the mine site and refinery. Many more jobs have been created through the employment of sub-contractors and through the support of local businesses and suppliers.

Geology and reserves

The Bunbury basalt has been dated at 135 and 128 Ma and overlies an erosional surface, thus marking the breakup of unconformity and volcanism in South Western Australia. It has been traced in the subsurface southwards and also offshore to the North East. Seismic evidence under the continental shelf between Perth and Bunbury shows that the Basalt flowed down an odd valley incising the continental margin. The Worsley mine has estimated reserves of 400mt.

Mining

Bauxite is mined from reserves mainly within State forest on the eastern edge of the Darling Range, near Boddington. The bauxite is crushed and carried 51km by a two-flight cable belt conveyor system to the refinery site at Worsley. It is then processed, and the separated alumina is carted by rail and exported through the Port of Bunbury.

Ore processing

The Worsley alumina refinery uses the Bayer process to produce metallurgical grade alumina, which is used as feedstock for aluminium smelting. Power and steam needed for the refinery are provided by a joint venture-owned onsite coal power station and a non-joint venture-owned on-site gas fired steam power generation plant.

Production

The partners have stated that the US$ 2.21bn ‘Efficiency & Growth’ project at Worsley Alumina will lift capacity of the Worsley refinery from 3.5 million tons per annum (Mtpa) of alumina to 4.6 Mtpa (100% capacity) through expanded mining operations, additional refinery capacity and upgraded port facilities.

Martabe, North Sumatra, Indonesia

Following review of the recently completed Definitive Feasibility Study (DFS), Oxiana's Board approved development of the Martabe gold and silver project in December 2007. The Board approval is subject to the receipt of final permits from the Government of Indonesia, which are expected by April 2008.

The Martabe project is seen as one of the more promising undeveloped mineral deposits in Asia, containing extensive proven reserves of gold and silver.

The Martabe Contract of Work (CoW) covers a 2,500km² area, the most significant part of which is the Purnama deposit.

It is a sulphidation epithermal deposit, which was discovered in 1997 through regional stream sediment sampling by Normandy Anglo Asia Ltd. Since then other deposits have also been discovered and resources at Martabe now stand at 6 million ounces of gold and 60 million ounces of silver.

Oxiana became the owner of the Martabe project through the acquisition of Agincourt Resources Limited in early 2007.

The Martabe project is located close to existing infrastructure and facilities and is bisected by the Trans-Sumatra highway. Supplies of grid power and process water are available, and the port of Sibolga is approximately 30km from the site.

Subject to approvals the Martabe project will move into construction in 2008 and then into production at the end of 2009.

GEOLOGY AND RESERVES

Martabe's high sulphidation gold deposits exist within a sequence of tertiary volcanic and sedimentary rocks near a fault splay which is part of the Great Sumatran Fault complex. Episodic fault activity has been responsible for pulses of high-level magmatism and development of multi-stage phreatomagmatic breccias, flow dome complexes, hydrothermal alteration and gold mineralisation observed in the district. Gold mineralisation occurs in a number of deposits over a strike length of 7km.

The most significant and best defined of these is the Purnama deposit, where a resource of 66.7 million tonnes containing 1.74g/t Au and 21.5g/t Ag for a total of 3.7 million ounces of gold and 46 million ounces of silver has been defined by diamond drilling.

Two adjacent deposits, Baskari and Pelangi, plus primary gold potential at depth and other virgin targets are expected to provide upside. Total resources are 6Moz of gold and 60Moz of silver. Reserves are 2.3Moz of gold and 30Moz of silver.

MINING

Mining of the Purnama deposit will be undertaken by conventional open-pit methods with a low average strip ratio of 0.7:1. The processing plant will be a large-scale ore processing plant. The plant and infrastructure will be designed to allow for future expansion.

ORE PROCESSING

Oxiana expects to be treating 4.5 million tonnes of ore per annum using proven SAG and ball milling, and carbon-in-leach (CIL) technology. Recoveries are expected to average 76% for gold and 55% for silver.

Production on average will be 250,000oz of gold and approximately 2Moz of silver per annum over an initial nine-year production life.

Martabe's development cost has been put at $310m and mining cash costs are estimated at $270/oz. First production is expected to start in December 2009.

THE FUTURE

The potential to discover mineralisation elsewhere in the CoW area is considered high and exploration is ongoing at a number of other prospects. Two adjacent deposits, Baskari and Pelangi, plus primary gold potential at depth and other virgin targets are expected to provide upside.

A 5% interest is held in trust for local Indonesian stakeholders.

Kaltim Prima Coal Mine, Indonesia

Kaltim Prima, one of the new generation of Indonesian thermal coal producers, is located in north-eastern Kalimantan. It is operated by PT Kaltim Prima Coal (KPC), which from the project's inception up to late 2003 was jointly owned by BP and Rio Tinto. The Indonesian government receives a royalty equivalent to 13.5% of the revenue. The operation is self-contained and employs some 2,700 people.

Although BP and Rio Tinto's Contract of Work required the companies to divest part of their holding to local interests, up until 2003 no Indonesian purchaser was able to raise the finance needed to buy them out.

In mid-2003, the companies announced the sale of their holdings in KPC to PT Bumi Resources for a cash price of $500m, including assumed debt. PT Bumi Resources already owned PT Arutmin Indonesia, another major Indonesian coal producer, and has interests in oil, natural gas and mining, amongst other commercial sectors.

In 2006, PT Bumi announced the sale of all its coal holdings to PT Borneo Lumbung Energi for $3.2bn. However, the deal subsequently failed, although PT Bumi later indicated that it still intends to divest a proportion of its holdings.

PROJECT DEVELOPMENT

BP and CRA (now Rio Tinto) successfully tendered for a 7,900km² licence area in eastern Kalimantan in 1978. Exploration from 1982–86 indicated reserves of 112Mt of export-quality thermal coal. Construction began in 1989 and the mine was commissioned in 1991 as a 7Mt/y operation at a cost of $570m.

The mine has subsequently been expanded, with a sales target of 20Mt/yr by 2005. PT Bumi is planning further expansion to 30Mt/yr, plus the development of the Bengalon reserve, some 25km from the existing Sangatta operations.

In mid-2004, PT Bumi awarded the Australian contractor, Henry Walker Eltin, a $1.2bn, ten-year contract for infrastructure development and mining services at Bengalon, which will have a 6Mt/yr initial capacity.

GEOLOGY AND COAL QUALITY

Pressure and heat associated with an igneous intrusion has increased the rank at Kaltim Prima to high-volatile bituminous coal. A total of 13 seams range in thickness from 1m to 15m; typically in the range of 2.4m to 6.5m. Seam dips vary from 3° to 20° at the outcrop. The seams are very clean in terms of mineral matter and sulphur and, at 4–8% in some areas, the in-situ moisture content is low.

As of the end of 2005, PT Bumi cited reserves at Sangatta at 621Mt, plus 165Mt at Bengalon. The company also has measured and indicated resources of some 3,700Mt.

As of mid-2004, PT Bumi cited reserves at Sangatta at 462Mt, plus 157Mt at Bengalon. The company also has measured and indicated resources of some 2,200Mt.

The operation produces two main export products. Prima Coal is a high-volatile bituminous steam coal with high calorific value, very low ash, low sulphur and low total moisture. Pinang Coal is similar but has a higher moisture content. Quality parameters are:

Product ***********PrimaCoal **********Pinang Coal

Moisture (total) *******9.5% ***************14%
Ash ***************** 4% ******************6%
Volatiles **************39%*************** 39%
Fixed carbon********** 52% ***************46%
Total sulphur********* 0.5% **************0.5%
Heating value (adb) **30.1MJ/kg ********27.6MJ/kg
Heating value (gar) **28.5MJ/kg *********26.0MJ/kg

adb = air-dried basis

gar = gross, as received
KPC blends run-of-mine coal from its various pits to ensure product consistency.

As of end-2001, Kaltim Prima had mineable reserves totalling 462Mt, plus measured and indicated resources of nearly 2,200Mt.

MINING TECHNOLOGY

KPC operates six to 12 individual open pits at any time, the average stripping ratio being 7.5bcm (bank cubic metres) of overburden per tonne of coal. The overburden material degrades quickly on exposure to the atmosphere and generally provides easy digging.

Some overburden rock requires blasting to ensure adequate fragmentation for the shovels. KPC carries out its own mining in most of the pits, but also contracts out a smaller proportion of its mining requirements.

The mine's loading fleet consists of over 20 large hydraulic shovels and backhoes with bucket capacities of up to 34m³. Leading suppliers include Hitachi, with nine EX3500 machines and six EX1800s, and Liebherr, which has six R996 Litronic shovels/backhoes on site.

Overburden haulage involves a fleet of 137 trucks, including Caterpillar 785s and 789Bs with capacities of 135–185t, Cat 777s (85t) and Komatsu HD785s (also 85t). Truck scheduling is carried out using a GPS-based Mincom dispatch and management system.

COAL PROCESSING

With selective mining, over 90% of the run-of-mine coal only needs crushing and blending to give export-quality Prima Coal. Coal from the seam roofs and floors contains more mineral material, and so has to be washed. This 'dirty Prima' and Pinang material is handled separately from the 'clean Prima', with individual streams for the different raw materials.

After crushing to –50mm in Gundlach rolls crushers, the washing plant uses dense medium cyclones for 0.5mm to 50mm feed, and spirals for the –0.5mm material, products being dewatered in centrifuges before blending into the Prima Coal stockpile.

OVERLAND TO THE PORT

The mine site contains separate stockpiles for the Prima and Pinang products, holding 60,000t and 35,000t respectively. Coal is reclaimed and transported by a 13km-long, 2,100t/h-capacity overland conveyor to Kaltim Prima’s dedicated port facilities at Tanjung Bara.

Further stockpiles hold a live capacity of 350,000t of Prima and 150,000t of Pinang coals. Coal is transferred directly from mine to ship whenever possible.

Vessels of up to 220,000dwt can be handled by the port, with loading facilities at the end of a 2km-long jetty. Twin quadrant loaders can each handle up to 4,700t/h, the normal loading throughput.

PRODUCTION

Since production began in 1992, Kaltim Prima has increased its output year-on-year, from 7.3Mt in its first year to some 17Mt in 2002 and 2003. PT Bumi is now expanding the Sangatta operation to 30Mt/yr, with a further 6Mt/yr to come from Bengalon.

The operation produced 27.6Mt in 2005, with a target for 2006 of 36Mt of coal and some 700Mt of overburden.

Argyle Diamond Mine, Kimberley, Australia

The Argyle mine, located in the Kimberley region in the far north east of Western Australia, is the world's largest single producer of diamonds. The mine lies some 550km south west of Darwin by air. The region is remote, rugged and hot, with temperatures of over 40°C during the wet season from October to March.

When production began in 1985, most of the workforce was Perth-based and operating on a two-week 'fly-in, fly-out' basis – requiring the construction of a complete camp infrastructure to support the operation. In recent years, however, a programme of localisation has been underway to base workers in East Kimberley.Article Continues

Argyle is operated by the Argyle Diamond Mines Joint Venture, wholly owned by Rio Tinto since 2002. The initial mining lease expired in 2004 and has been renewed; the current open-pit operation is scheduled to conclude in 2008, with underground developments underway to extend the life of the mine to 2018.

GEOLOGY AND RESERVES

The discovery of the Argyle orebody marked the first time that a commercial diamond occurrence had been identified that is not hosted in kimberlite. The AK1 pipe at Argyle instead consists of olivine lamproite, from which diamonds had been eroded to form placer (alluvial) deposits nearby.

The deposit was discovered in 1979 by the Ashton joint venture, following some 12 years of exploration by various companies in the area. The discovery of alluvial diamonds led directly to their source, the AK1 pipe.

At the end of 2005, total measured, indicated and inferred resources in the AK1 pipe were 83Mt at a grade of 2.7ct/t, with a further 28Mt at a grade of 0.2ct/t in residual alluvial material. Proven and probable reserves totalled 111.7Mt grading 2.2ct/t, and containing 247.1Mct.

MINE DEVELOPMENT

Development of Argyle was a two-stage process. Alluvial diamond mining took place between 1983 and 1985, when the AK1 pipe came into production. Since then, this has been the principal source of ore, supported by lesser amounts of alluvial material.

Argyle operates as a conventional open-pit mine, with both lamproite and waste rock being drilled and blasted before being loaded out in a shovel-and-truck operation. The mine operates Bucyrus, P&H and Tamrock Driltech rotary drill rigs, O&K RH 200 hydraulic excavators and a fleet of Caterpillar 789B and Unit Rig MT4400 haul trucks, supported by Caterpillar wheel loaders, bulldozers and other ancillary equipment. The mine operation is monitored and vehicle movements are controlled using Modular Mining Systems' dispatch system, which uses a global positioning system (GPS) for accurate location of drills and other plant. Contract mining is used for the alluvial ores.

Much of the waste rock is highly abrasive quartzite, and Argyle has been a long-term user of the Skega dump body system in its haul truck fleet. This uses a suspended, reinforced rubber liner in place of conventional steel plating in the hauler body.

ORE PROCESSING

Argyle's processing plant uses a crushing, screening, heavy-medium separation (HMS) and X-ray sorter diamond recovery flowsheet. 3mm ore forms the feed for the heavy-medium separation circuit while -1mm material is rejected to the plant tailings.

Two-stage heavy medium cyclones with a specific gravity of 3.0 form the heart of the separation process, with material denser than the cut point forming the diamond-bearing concentrate. X-ray sorting separates the diamonds from residual waste in the HMS concentrate, the recovered stones being acid washed before sorting for shipment.

PRODUCTION

Since coming into operation, Argyle has produced over 670Mct of diamonds, with an average stripping ratio in the open pit of around 7t of waste being moved for each tonne of ore mined. Peak production was in 1994, at 42.8Mct. The pit is now so deep that the lack of manoeuvrability in the bottom has come to hinder mining operations.

In 2005, the mine processed 9.0Mt of lamproite ore to recover a total of 30.5Mct, its output having virtually regained the level achieved in 2003. 2004 production was markedly lower, with lower-grade and stockpiled ores being processed. In 2006, the operation treated 8.4Mt of ore to recover 29.1Mct. Argyle's production consists of 5% gem and 70% near-gem stones, with the remaining 25% being industrial diamonds. The mine also produces between 90% and 95% of the world's pink diamonds.

THE FUTURE

With the AK1 open pit scheduled to cease production in 2008, since by this time a point will have been reached where the lamproite 'pipe' narrows and continues at greater depth, making continued access to the ore by open methods uneconomic. Back in 2001, the company began looking at the option of developing an underground mine – launching a pre-feasibility study to investigate all of the possible alternatives and transition strategies.

The results of this led, in early 2003, to the approval of funding for a full feasibility study for a block cave underground mine and the construction of an exploratory decline. Both were completed during 2005 and in December of that year the decision was made to go ahead with the underground mine.

Work on the A$1.6bn development began on schedule and production from the new mine should begin in mid-2009; a low-grade open pit expansion is also planned which will help extend productive mine life until 2018.

Production capacity is predicted to average around 20Mct/y, compared with the current long-term average of 34Mct/y – and the high costs of the redevelopment have led some in the industry to speculate that the mine might ultimately be put up for sale.

In addition to the shift to underground working, the company is also in the process of localising most of its workforce in East Kimberley, aiming to have 80% based there by 2010 – and half of them Aboriginal. This forms part of major corporate step-change, described as 'reassessing Argyle's relationship to the area in which it mines'.