2. Opportunities in the Saskatchewan Mining Supply Chain
Northern Opportunities Forum
La Ronge, SK
November 21, 2013
Monique Lischynski
Manager, Supply Chain Development
Ministry of the Economy
Good morning: ladies and gentlemen:
Thanks to ABMEC, the organizer
Very excited to be back to England and to tell the opportunities in SK
You may wonder why this Chinese guy was sent here, but not a native English-speaking person?
No one else in the office have lived in England longer than me although some of them are British.
My personal link with the UK: Southampton , 1st return trip since 1996
My roots in mining: Daye County, Hubei Province, my ancestor land, mined iron ore 226 AD (1780 yrs history), with the largest open mine pit in Asia.
My ancestor home village is located right above iron ore mine.
Minerals are in my blood, and give me passion for my job.

3. Safety Moment

4. Ministry of the Economy
Mission to: “advance economic growth to generate wealth and opportunity in Saskatchewan.”
It has three core lines of business:
To advance and regulate responsible resource development
To develop, attract and retain skilled workers
To enhance economic growth and competitiveness in the province.
Provide a more integrated approach to the province's economic growth.

5. Economy – Supply Chain Overall:
To increase local goods and services content in resource industries including mining, energy and value added agriculture industry.
To assist local companies to understand supply opportunities
Team of three: Michele Grella, Shelley Kent, Monique Lischynski

6. Outline Overview of minerals exploration and production
Overview of supply chain opportunities
Examples of goods and services required
What is important to buyers
Strategies for market entry
Resources
ECON’s roles and services

7. Overview
Between , mining companies in SK will have invested over $15 B in projects
From 2008 – mining companies in SK will invest over $50 B in new projects
>30,500 employed in industry
Over $2.5 billion annually on wages, goods, services

8. Overview Industry Drivers: Expanding global population
Growing middle class in developing countries
Increase need for food quality, power and industry
Increased energy consumption
Increased crop production

9. Saskatchewan Rich Endowment of Minerals
REE
Saskatchewan Rich Endowment of Minerals
Athabasca Basin
Uranium
Gold & base metals
World’s largest potash producer and 2nd largest uranium producer
Canada’s 2nd largest oil producer and 3rd largest natural gas producer
Oil Sands
Precambrian Shield
651,036 km2
Diamonds
Oil
Western Canada Sedimentary Basin
Natural Gas
When it comes to mineral endowment Saskatchewan has truly been blessed geologically with a rich and diverse mineral endowment.
The northern 1/3 of Saskatchewan, which is underlain by rocks of the ancient Precambrian Shield includes the Athabasca Basin, which contains the largest, highest grade uranium deposits in the world.
Also in the Precambrian shield ancient volcanic belts, shown in green, contain base metals and gold (cross hatched pattern).
There is also significant rare earth element potential in the Precambrian Shield, particularly to the north of the Athabasca Basin
large potash deposits which account for account for about 45% of the world’s potash reserves.
southern part of the province as deposits of diamonds, coal, clays and sodium sulphate.
The rocks in the southern part of the province also host substantial resources of oil and natural gas. Saskatchewan is second in oil and third in natural gas production in Canada.
In terms of mineral potential, assuming the current regulatory environment and current land use restrictions, which is considered the best measure of investment attractiveness, Saskatchewan ranked 5th out of 96 jurisdictions surveyed and first out of Canadian jurisdictions in the Fraser Institute’s survey of mining companies.
Potash
Oil
Clay
Coal
Ranked 1st in Canada and 5th overall out of 96 jurisdictions in terms of Mineral Potential, assuming current regulations and land use restrictions (ie investment attractiveness ) in 2012/13 Fraser Institute Mining Survey.

10. Saskatchewan Value of Mineral Production
2012
Production: Potash, uranium, coal, gold, silver, salt, sodium sulphate, potassium sulphate, bentonite, silica sand and kaolin;
Position in Canada (value of production):
In top 3
1 in 2008;
3 in 2012
Value of mineral production:
2012: ~ $7.4 B, largely from potash and uranium
down from $ 8.1 in 2011 value
better than 2009 and financial crisis
near record $9.5B realized in 2008.
$ Cdn Billion

11. Mineral Exploration: 1984 – 2013
Saskatchewan
Mineral Exploration: 1984 – 2013
Exploration spending:
record $474 M in 2008
range of between $275M and $323M.
~$2.8 B spent has been spent between 2004 and 2011.
~$1.2 B on uranium ref in later in the presentation.
new discoveries have been made; and several projects are advancing towards production,
bodes well for the future of our mining sector.
Of the just under $300M in exploration in 2012 about 50% ($150 M) would have been spent in the North.
Overall $1.2 B in overall spend in Northern Goods and Services of which 30% is goods and 70% services
Of this overall spend of only $150 is Exploration
*2013 Expenditures are a preliminary estimate

12. Saskatchewan Uranium: Exploration and Development Activity
2014:
Mining of high grade Cigar Lake deposit begins
2013:
McClean Lake Mill restarts
3 Projects at Feasibility/Prefeasibility
7+ Advanced Stage Projects
Exploration :
$1.2 Billion spent
16+ new discoveries from 100’s of projects
Production by 2017 could
climb to 17,000 t/U
short to mid term prospects for uranium look very good
a number of projects in development, feasibility/prefeasibility and at the advanced stage of exploration.
estimate that by 2017 production could be at 17,000 t/U

13. Saskatchewan Potash Mines
Cory
Vanscoy
Patience Lake
Colonsay
Allan
Lanigan
Esterhazy K1 + K2
Belle Plaine
Agrium
PotashCorp
Mosaic
Rocanville
This map shows (colour coded by company) 10 producing mines.

14. Saskatchewan Potash Production
8 conventional underground mines
2 Solution mines
Each of the potash mines have recently increased, or plan to increase their production capacity.
Planned expansions of 15.9 Mt KCl by 2020
This represents a 90% increase over 2004
Total estimated cost of expansions: $13.9 B
Some work from the Potash Mining Supply Chain Requirement Guide
2 MTPY Conventional about $4B while Solution $3.2 B – prices have elevated from here (recent quote is K+S for 2 MTPY solution mine is $4.1 B)
Annual operations and repair:
$160 M for conventional
$234 for solution.

15. Saskatchewan Gold
~1.63 M oz Au produced since 1986 from 7 gold mines (primary) in LaRonge Gold Belt
Current Operations :
Seabee Gold Operation (Claude Resources)
2 mines (Seabee, Santoy 8,)
produced 1 millionth oz in August 2012
2012: 49,570 oz Au
La Ronge Gold Project (Golden Band Resources):
production at three mines over past year (Roy Lloyd, EP, Komis) at Jolu Mill
41,932 oz Au produced in 2012 fiscal year (year ended April 30, 2012;
After operational restructuring production has recently resumed
Komis
La Ronge Gold Belt)
Jolu Mill
Roy Lloyd
Seabee
Gold Production:
Claude Resources Seabee Operation (Seabee and Santoy 8 deposits)
1 M ounce last August
Golden Band’s 3 mines over last year Roy Lolyd, EP and Komis
The Seabee Gold Operation currently has a Proven & Probable reserve of 311,100 ounces of gold, an Indicated resource of 344,200 ounces and an Inferred resource of 603,400 ounces in National Instrument category. Current exploration programs are focused on near mine targets at Seabee and Santoy.

16. Gold
Developer:
Brigus Gold Corp. Goldfields Project, Uranium City area
Others:
Wescan Goldfields
Fuhua Mining
Brigus: production in SK in 2013 (?)

17. Saskatchewan Coal Mining and Exploration
2012 (2011) Coal Production in Mt, Sherritt International
Bienfait: 0.5 (0.6)
Boundary: 5.6 (5.8)
Poplar River (3.5)
Total = 9.7 Mt:
2011 Production = 9.9 Mt
Coal Exploration
Hudson Bay area
Dispositions
Mineral
Potash
Coal (Issued/ Applied For)
Hudson Bay area
Last year, Saskatchewan lignite coal production was 9.9 Million tonnes from Sherritt International’s 3 mines in the south and southeast part of the province near the American border.
Limited exploration for sub-bituminous coal continued in the Hudson Bay area along the east central side of the province.
Producing Mines

18. Other Mineral Production
Saskatchewan
Other Mineral Production
and Exploration
Production:
sodium sulphate
high-value silica sand
potassium sulphate
limestone
salt
bentonite and other clay products
aggregate.
Exploration:
base metals
diamonds
rare earth elements
graphite
Saskatchewan also had production of a variety of industrial minerals as listed on this slide; in addition there was exploration for diamonds, rare earth elements and graphite.
Sask Minerals Chaplin Sodium Sulphate Mine – photo by Lilypon (Google Earth post).

19. Saskatchewan Mineral Sector in Fall 2013
Outlook is fairly positive, however, still uncertainties:
direction of global markets
pace and scope of uranium recovery
Commodity prices are down
Many mining companies are in cost control mode
Need to appreciate how that impacts current procurement focus
companies have existing supply chains
will be working with them to reduce costs
extra challenge for new suppliers and/or start-up suppliers

20. Supply Chain Opportunities
Exploration
Projects (new mines/expansions)
Establish Infrastructure
Construct Underground
Construct Surface
Operations

21. Exploration Supply Chain Opportunities
Geology (geologists, technicians, prospectors)
Transportation
Camp/lodging
Drilling
Geochem Analysis
Field Supplies and Equipment
Communication and Freight

22. Projects Supply Chain Opportunities
Opportunities exist in both new mine and mine expansion development
Key manufactured goods required:
Concrete
Steel and fabrication
Electrical
Pumps and piping
Valves and fittings
Equipment
Miscellaneous

23. Surface Construction Overhead cranes Compressors Agitators Belt scales
Heavy civil construction
Mechanical rotating equipment
Mill/product storage/flotation buildings
Electric, instrumentation, controls
Concrete
Scaffolding
Cyclones
Grinding equipment
Scrubbers
Pumps & piping
Dryers
Thickeners
Tanks and storage bins
Conveyors
Bucket elevators
Boilers
Centrifuges
Overhead cranes
Compressors
Agitators
Belt scales
Transformers
Fire protection systems
Process control equipment
Process chemicals
HVAC equipment
Feel free to mention just a few – they will get the presentations which will provide them with the detal.

24. Underground Construction
Walking/drill rigs and drill bits
Ultrasound measurement equipment
Hoist rope/wire rope
Winch
Pumps
Electrical equipment
Hydraulic motor
Conveyor and conveyor components
Fans
Scoop trams
Limit switches
Cranes
Crushers
Screens
Rock drill lifts
Instrumentations
Shovels
Load and hauling machinery
Raise bore systems
Specialized mine vehicles
Rock tools
Explosives and suppliers
Rock drills

25. Operating Mines (Potash)
Chemicals – potash flotation, water conditioning for heating systems
Fuels and Lubes
Dedust oil for potash
Mobile equipment-trucks, dozers, front end loaders, etc.
Conveyor belting for underground
Bearings, seals and power transmission parts
Electrical consumables such as breakers, fuses, switches and fixtures
Pipes, valves and related fittings (ie. steel, PVC, copper)
List of examples of materials and equipment required in a operating potash mine.

26. Operating Mines (Uranium)
Computing and telecom (hardware, software and services)
Nuclear materials and process equipment, mechanical components, tooling, maintenance components
Boilers, piping, forged components
Electronics and instrumentation
Logistics, handling and storage
Reagents and environment
Production services (waste management and cleaning, decommissioning)
General service
List of examples of materials and equipment required in a operating uranium.

27. Site Services Water Security on site Waste disposal Medical on site
Catering
Camp Accommodation
Janitorial Services
Pest Control
Security on site
Medical on site
Transportation
Internet and phone
Storage shelters

28. Understanding the Supply Chain

29. Project Supply Chain EPC Example
Mining Company
EPC
Tier 1
Tier 2
Tier 3
Customer
Project
Suppliers
(OEM)
(Parts or Service Provider)
(Raw Material)
This is a graph of the supply chain in the case of a new project – the Project folks are the EPC – Engineering Procurement Consulting company (Engineers) In this case the Engineering company may be buying the equipment for the project. In other cases (EPCM ) the engineering company will make a recommendation but the Mining Company actually purchases the equipment.
EPC – Consulting company which provides engineering, procurement and construction support to mining company. Used extensively in new projects/expansions.

30. Project Perspective Engineering view: On-time, on-budget, reduced risk
Prequalification systems
Supplier experience and know-how critical
New Supplier:
Not long term
Projects in different locations

31. Operations Supply Chain
Mining Company
Tier 1
Tier 2
Tier 3
Customer
Suppliers
(OEM or Established Vendor)
(Parts or Service Provider)
(Raw Material)
This is just an example of a supply chain with the Mining Company as the customer
OEM is an Original Equipment Manufacturer for example Prairie Machine who makes boring miners.
Suppliers would supply directly to him and so on.

32. Operations Perspective
Mining view:
Long term
What do you offer that adds value
New Supplier View:
Consistent location
Potential for market growth

33. Strategies for Market Entry
Direct to mining companies
Partnering with other suppliers of goods and services
Work with existing OEM or suppliers to mining companies – supply to the supplier
Saskatchewan Manufacturers Guide
Companies often want to sell direct to mining companies and that is certainly possible depending on the project/service you have.
It is important to understand the mining companies have well established relationships with suppliers and your will need to demonstrate value added to be considered.
Mining companies also prefer to work with local suppliers when possible. That can be one of the advantages of developing a Join Venture or project or a supply agreement with a local company.

34. Preparing for the Market
Do your homework:
market research – understand your potential customer
Understand what your good at (core competency)
Think through the 4 P’s
product, place, price, promo

35. Practical Advice Know your customer Know your competition
Know your product

36. Making the Pitch Review procurement policies and procedures
Make an appointment
Conduct a “lunch & learn”
Provide product literature, catalogs (electronically), web site address
Request to be added to the bidders list
Complete prequalification process
If not added to the bidders list, ask why, constructive feedback and adjust

37. Making the Pitch What buyers like: Become a qualified bidder
Tailor your offering to the business
Ask customer what they are interested in
Offer how your product is different from your competitors

38. You Get the Order Now What? Supplier evaluations: Product quality
Delivery
Price
Health, Safety, Environment
Experience
Spec compliance
Turnover packages A

39. Becoming a Preferred Supplier
For the long term:
Safety
Service
Quality
Technical competency
Relationships

40. Resources used in this presentation
How to Successfully Access the Mining Supply Chain - Source of information for this presentation. Detail on potash and uranium including company background, contracts, existing supply chains, procurement methods, contacts
Potash Mining Supply Chain Requirement Guide - goods and services required to support the development/ operation for conventional and solution mine.
Mining Supply Chain Forum - Presentations from
mining and engineering companies.

41. Other Events 44th Annual Saskatchewan Geological Survey Open House
December 2-4, 2013, Saskatoon
PDAC 2014 – Prospectors and Developers Association of Canada (PDAC)
March 2-5, 2014 Toronto
Canadian Institute of Mining (CIM)
May 11-14, 2014, Vancouver

42. How we can help…
Information on the mining industry and supply chain opportunities
Information on the Saskatchewan business environment and related business costs tailored to individual business case
Connections to mining and supply companies

43. Saskatchewan Industrial and Mining Suppliers Association (SIMSA)
Promoting Saskatchewan solutions for the global resource industry
Phone:
Web site: simsa.ca

44. Go Riders!!!!!!

45. Monique Lischynski, M.Sc.
Questions???
Monique Lischynski, M.Sc.
Manager, Productivity and Supply Chain Development
Phone: (306)
Cell: (306)