For a large international company like U.K.-based Lonmin PLC, strong local partnerships add value to the search for new mines. In Sudbury, Ontario, Lonmin not only found an area endowed with platinum-group metals (PGMs) nickel and copper, but a community steeped in the spirit of innovation and collaboration. This is the story of how a joint venture with Wallbridge Mining is helping Lonmin to establish a foothold in the prolific mining camp.

The challenge

International mining company, Lonmin PLC, wanted to tap into the exploration potential of the abundant PGM deposits in the Sudbury basin. However, in order to efficiently leverage their own managerial and financial strengths, they needed access to local companies that had both geological expertise and operational capabilities.

Vale's smelter complex, Clarabelle mill complex, North Mine, and South Mine
Sudbury has a long history of mining, established infrastructure, and a world class service supply sector. Shows Vale's smelter complex, Clarabelle mill complex, North Mine, and South Mine.

Background

The Sudbury basin of northern Ontario is known as one of the largest producers of nickel in the world. What is less appreciated is that Sudbury is rich in copper and PGMs too. Since about 80% of the world's PGMs are produced in South Africa and Russia, this alternative supply has both economic and strategic value.

From their operations in South Africa, U.K.-based Lonmin is one of the world's largest primary producers. These metals are essential for many industrial applications, especially catalytic converters for internal combustion engine emissions, as well as their widespread use in jewellery.

Wallbridge's Broken Hammer open pit project
High grade Cu-PGE sulfide exposed at Wallbridge's Broken Hammer open pit project in Sudbury.

Wallbridge Mining is a junior mining company that recently made the exceptional leap from explorer to producer with the opening of the Broken Hammer polymetallic (Cu-PGM) mine near Sudbury. During its 14-year history, Wallbridge has spun off – and maintains an equity interest in - two separate ventures to advance projects in B.C. and Minnesota, including Duluth Metals, the target of a $96 million takeover offer by Chilean copper miner Antofagasta.

Wallbridge Mining manages the risk inherent in exploration by positioning itself as a project generator and partner of choice in the Sudbury basin. This approach has allowed the company to attract significant financial backing for its projects from multinational companies. Wallbridge's joint venture partners include Lonmin, South Africa's Impala Platinum Holdings and Switzerland's Glencore (formerly Xstrata).

"The project generator model has allowed us to maintain levels of exploration and diamond drilling over the years and is a lot less dilutive to shareholders because it is project specific," says Joshua Bailey, VP Exploration, Wallbridge Mining. In other words, Wallbridge – unlike most of its peers – can minimize the financial risk created by issuing new equity to support exploration.

Solution

It turns out that Sudbury not only has bountiful geological prospects, but a number of experienced companies with which to develop partnerships. In this case, Lonmin entered into joint ventures with both Wallbridge and Vale, a major mine operator, because it could see the potential to find new PGM deposits in the region.

Wallbridge holds one of the largest land packages in the Sudbury basin, including dozens of projects covering more than 600 square kilometres in areas on the periphery of the basin that have polymetallic PGM, copper and nickel potential. The strength of this land position coupled with the company's operating experience and depth of expertise concerning local geology made working with the junior company attractive to Lonmin.

"We are a good example of a company that has local knowledge of the geology, ore deposits, regulatory framework and operational requirements so we can work quickly and efficiently," says Bailey. "From a larger company perspective, that's an opportunity to have a hand in exploration projects that require less active management on their part."

Geologist Keith Seidler and Student Geologist Marshall Hall
Wallbridge Senior Production Geologist Keith Seidler and Student Geologist Marshall Hall at the Broken Hammer open pit project.

In 2014 Lonmin reaffirmed its enthusiasm for the Sudbury basin by pledging to spend another $5.5 million in exploration capital on Wallbridge's landholdings.

"Lonmin believes that the Sudbury Igneous Complex has considerable exploration potential for PGMs. In addition, the area has excellent infrastructure and a knowledgeable mining community. This endowment, along with a strong working relationship with our experienced local partners, has ensured that Sudbury has become an important part of Lonmin's PGM exploration effort outside of South Africa's Bushveld Complex," says Lonmin's CEO, Ben Magara.

Why Ontario?

There are numerous reasons why Ontario is a mining hotbed.

The world's mining finance capital

About 1500 mining companies are currently listed on the Toronto Stock Exchange (TSX) and Toronto Venture Exchange (TSX-V), including more than half of the public mining companies in the world. You'll have access to markets and capital, whether you're in mining finance or looking for capital to grow your business.

Prospective geology

Estimates indicate that an average of one million ounces of PGMs, along with copper and nickel, have been discovered in the Sudbury basin annually over the past two decades and many more deposits remain to be found.

Supportive and knowledgeable mining community

Sudbury welcomes mining and exploration. The area is home to a highly trained workforce and a world-class mining supply and services sector with an ever growing international reach.

Excellent infrastructure

The Sudbury region has extensive and reliable sources of water, power and transportation thanks to its 130-year mining history.

Stable regulatory environment

If you make a discovery, there's a transparent and predictable process to explore, finance and eventually bring the deposit into production if it proves to be economically feasible.

The business environment in Ontario is conducive to building mutually beneficial partnerships.

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January 20, 2015

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