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Published by Paydirt Media, 2016-10-03 21:41:11

2015 Dec Paydirt

2015 Dec Paydirt

Keywords: 2015 Dec Paydirt

That is when the company hopes to receive A resource is being modelled from 1,400m drilling
a mining licence and Mulligan will spend the
early part of 2016 in Dar es Salaam to drive keen to prove to potential customers they can tionship with the client, a closed loop supply
the beginning of that process. produce graphite products to specification. chain if you like. If a partner comes on early,
they can determine what specs they want and
By then, Mulligan hopes the company will “A lot of the off-take contracts signed so we can design the plant and project accord-
be officially on the development path with Lin- far are with traders but we would prefer to ingly.”
di as it looks to vault to the front of the graphite achieve an ownership partnership with an off-
race, something the company has identified taker,” Mulligan said. “Once the met work is It appears a sensible option in a market full
as vital to its success. done we can test the process amenability and of speculation and rumours and might just
flake distribution. From there we can take the give Walkabout the opportunity to pick up the
“The risks are oversupply in the market,” product sample to potential customers. pace.
he said. “As soon as Syrah [Resources Ltd]
starts mining in Mozambique and hits the “We’d actually prefer to have a close rela- – Dominic Piper
market with 300,000 tpa, it will change the
supply-demand equation.

“But, we plan to streamline the project to
a standard graphite contract size [around
30,000 tpa] and provide a different, higher
quality material.”

Like its neighbour Nachu, Lindi has already
shown signs of a greater distribution of jumbo
and large flakes which fetch a premium in the
graphite market.

Metallurgical test work was ongoing when
Paydirt spoke with Mulligan in November
but he expected as results flowed through to-
wards the end of 2015 that the company could
begin its marketing in earnest.

“We have appointed Robert Sills who is a
product marketing specialist and he is already
speaking with off-takers and end-users,” Mul-
ligan said.

Graphite marketing is opaque – “a very dark
world” as Mulligan describes it – and with no
spot market the new generation of miners is

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 51

INDABA PREVIEW

Bannerman doubles
down at Etango

Mark it down; make a note to acquire the remaining 20% opportunities for all of the parties involved,”
of it – November 11, Jubber said.
2015 will be remembered as of Etango from current own-
a landmark day for Namibian “Clive’s ownership of the project has gone
junior Bannerman Resources ers – represented by Clive to circa 20% of the company; he’s taking a
Ltd. long-term view on the project. RCF have now
Jones – for payment of ap- converted the debt that was owing to them in
In what might have been September next year into equity in the com-
commonplace during the proximately 123 million new pany. It’s been a situation where all of the par-
boom, Bannerman’s bid for ties have looked at how to put this company
100% control of its flagship Bannerman shares and $1 in a position to be attractive to both investors
Etango uranium project and at the project level and at the parent company
release of an updated DFS million cash. level.”
optimisation study on the
same day sticks out like a It would also extinguish Bannerman’s Etango DFS optimisation
sore thumb in today’s de- study proved to be pleasant reading for the
pressed market. $12 million convertible notes company too.

A gleeful Len Jubber told through the conversion of $8 The study improved Etango’s NPV by
Paydirt should sharehold- $US350 million to $US419 million and in-
ers approve the transaction million convertible notes held creased its IRR to 15% (previously 9%).
terms, Bannerman would not
only secure complete opera- by major shareholder, RCF, It also increased the project’s average an-
tional control of the project, but also clear all nual production to 7.2 mlb uranium over an ini-
of its existing debt. into Bannerman shares and tial 15.7-year open pit mine life, while reducing
its average cash operating cost to just $US38/
The chief executive said Bannerman hoped the sale of a 1.5% royalty over lb, 17% lower than the company’s previous
study.
the Etango project to RCF for

$6 million, comprising $2 mil-

lion in cash and extinguish-

ment of the residual convert-

Len Jubber ible notes held by RCF.
Bannerman also pitched a

$3 million capital raising via

an equity placement of approximately 63.3

million new Bannerman shares to RCF.

“If you look at the transaction, there were

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PAGE 52 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

It also reduced Etango’s pre-production Bannerman’s heap leach demonstration plant played a big part in the success of
capital by 9% to $US793 million, which includ- its updated DFS optimisation study
ed mining fleet expenses, and forecast peak
annual free cash flows of $US392 million for into a rising uranium price environment, we about putting us in a competitive position to
the project. have to keep our eyes open to opportunities be able to present shareholders with maxi-
to progress the project now. It’s a balancing mum leverage to a rising uranium price en-
“We’ve been strong believers in the project act. We’re looking at finding that balance of vironment.”
because of what was defined in the DFS re- minimising shareholder dilution, yet mov-
leased in 2012,” Jubber said. ing forward to achieve company-changing – Rhys Dickinson
outcomes like we have done recently. It’s all
“We’ve continued to pursue opportunities
in a diligent way, largely to do with our inter-
nal resources, and when the time was right
we pulled that into a study outcome. The
optimisation study has strongly repositioned
Etango, demonstrating project economics
that are highly competitive at consensus in-
centive long-term uranium prices. Important-
ly, the work has also confirmed the technical
robustness of the DFS. When coupled with
the success of the heap leach demonstration
plant, the optimisation study clearly places
Etango at the forefront of the global develop-
ment pipeline of projects likely to produce at
or above 2 mlbpa.”

Jubber said Bannerman’s challenge now
was to work on securing capital for the pro-
ject.

He said the company would also consider
staged development of the project, which ap-
peared to be more feasible for funders in the
current market.

“We are not getting ahead of ourselves,”
Jubber said.

“We recognise the uranium price is where
it is and although we are looking to move

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 53

INDABA PREVIEW

A pocket full of private equity

African projects remain on the radar of private equity funds, but only the good ones will attract investment

Acomforting thought for hopeful miners is very limited risk capital out there and frankly, eye for.
that private equity exists. The headache there are not as many good management “Our money flows into one out of every 200
though is just where funds will be deployed. teams out there to back. In the past cash was
easily available and it was very easy to get projects that we see and the ratio for manage-
“Right now is a great entry point, the market money, maybe we are not in a crisis, maybe ment [teams] is one in 50 or 60, maybe a little
is starting to realise that a lot of projects out it is a return to the norm. We won’t touch any- less,” Koth said.
there are not viable. It is the best entry point thing that won’t make money at these prices.”
for a decade or so,” Denham Capital (Perth) Koth’s remarks are candid but in his mind
managing director Bert Koth said. Koth was clear that companies with ener- warranted with the belief that 80% of investors
getic management teams with projects prov- lost money when the commodities cycle was
“There is a limited pool of private equity en to make cash at current commodity prices last spinning favourably.
money for mining, maybe there is $8 billion were the type of prospects Denham had an
globally not invested or committed. There is Disconcerting for investors pinning hopes
on recurring lost capital when sentiment

With a severely limited pool of money avail- as they are the only ones with a chance of often comes in waves, starting with a shock,
able, Commodity Discovery Fund (CDF) gaining in value.” and a subsequent multi-year recovery. The
founder Willem Middelkoop says only the shocks are what scare investors away, though
best projects and management teams will be Companies could generate some value at these could be seen as a buying opportunity
backed in this current market. the moment by riding on the coattails of Rand- as they hardly ever have any impact on ac-
gold Resources Ltd’s and Ivanhoe Mines’ suc- tual mine production, though there may be
“Most explorers that do not fit the world- cesses in the DRC, while CDF believes West consequences for things like permitting and
class criteria and have no management with Africa to be prospective for investment. fuel availability. All parties involved in conflict
access to capital, now have no choice but to in Africa see the merits of mining operations.
go into partial hibernation,” Middelkoop said. “In western Africa, Burkina Faso is host to The chances of Latin American style expro-
two small start-up gold mines, which, despite priations are very slim.”
“The current under-exploration will cause the political turmoil, will both become produc-
supply issues further down the road. Any ing mines in the near future. The same can be Based in the Netherlands, CDF is primarily
company still around with at least a decent said of Mali,” Middelkoop said. a precious metals fund, with 50% of its invest-
project in a few years’ time, once the sector ments in gold and 25% in silver.
returns to its cyclical peak, will benefit greatly. “Although we get stung by western African
Obviously, we love following companies that conflict every so often, we are quite comfort-
have large exploration budgets in this market, able investing in the region, contrary to a lot of
Canadian investors. African political conflict

PAGE 54 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

changes for the better in

the resources sector, is

that there is no medium-

term catalyst for a swing

in momentum, accord-

ing to Koth.

“Significant money

was spent on things that

weren’t viable and risk

capital doesn’t neces-

sarily have to flow back

into the [resources sec-

tor]. I’d go as far to say

that we are close to the

bottom [of the commod-

ity cycle], but the argu-

ment that money has to

flow back into the sec-

tor – I don’t agree with.

It will flow where there

Bert Koth is best opportunity,” he

said.

What investors ap-

pear to be warming to at the moment is anything non-mining.

EMR Capital managing director Jason Chang said market valua-

tions for mining equities indicated what opportunities investors pre-

ferred at the moment.

“There is still a really big gap between the mining and non-mining

sectors; the non-mining sector is up 20% over the last 18 months and

mining has been down 20%. The gap is increasing, not decreasing

and I think that is a reflection of market sentiment,” Chang said.

General market sentiment aside, Chang said, EMR was still on the

lookout for projects to support, which included prospective plays in

Africa.

“I think Africa will always be an important destination for countries

looking for resources, there is no question about that. I think [coun-

tries] should be quite well placed, there is quite a bit of investment

going into Africa from places like China, and other countries, so I

think when the uptake turns and the demand for commodities has a

more positive headline I think African nations will benefit from that,”

he said.

“There are a lot of good pro-

jects out there that require fund-

ing that we are very keen on.”

EMR Capital corner-stoned

Highfield Resources Ltd’s $101

million placement to develop

the Muga potash mine in Spain

in 2015, with Chang saying the

fund, chaired by Owen Hegarty,

was open to the junior sector.

He said there was a percep-

tion that private equity funds

were opportunistic houses in-

tent on capitalising on under-

valued or distressed assets.

“I think junior companies with

good projects should be looking Jason Chang
around for good funding part-

ners in the private equity sector.

Our view is that if you have a good project then waiting is not always

the best result. If you can get funding at the right price with the right

partner then everyone wins. We hope that junior companies get to

know more about the private equity sector as a means of funding;

EMR is about building assets where everyone can benefit.”

– Mark Andrews

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 55

INDABA PREVIEW

Long-stalled West Wits
ready to act

It seems a long time ago now but there issue in South African mining circles
was a period in the mid-2000s when struck.

the ASX became a popular destination “We came embroiled in a dispute

for South African junior gold plays. with the Government over the mining

Mintails Ltd, Vantage Goldfields Ltd rights, which is not unusual,” Quinert

and Gold One International Ltd all list- said. “It took us a long time to resolve

ed on the ASX last decade with simi- and it did lead us to picking up our

lar plans; revitalise a series of historic Indonesian project but we never lost

gold mines, tailings dumps and pros- faith in the assets. We know the gold

pects in the hope of creating a junior is there and we remain committed to

miner capable of thriving among the South Africa.”

feet of the country’s majors. The dispute lasted several years be-

Most of these companies have fore West Wits finally received its new

since either stalled in their develop- order prospecting rights in April this

ment, moved on from the ASX or year, freeing it to begin exploration of

packed up and left South Africa en- the Soweto Cluster project.

tirely. Like much of the Witwatersrand

As recently as 12 months ago, Basin, the Soweto Cluster has been

West Wits Mining Ltd appeared likely mined extensively at depth. Although

to follow this trend. Having listed on not JORC 2012-compliant it contains

Christmas Eve, 2007, with a portfolio 12 moz of historical (JORC 2007) re-

stocked by Mintails and South African sources which West Wits plans to fo-

producer DRDGold Ltd, West Wits’ cus on.

strategy was to consolidate a group West Wits’ plan is to first target near-

of historic mining rights on the West surface mineralisation capable of be-

Rand and reassess them using mod- ing exploited through an open cut op-

ern exploration techniques. West Wits chairman Michael Quinert next to an officially closed shaft eration, before investigating unmined

“I had previously been involved with on the company’s Soweto Cluster gold project in South Africa reefs, and remnant pillars in the histori-

the Mark Creasy-backed, AIM-listed cal underground mines.

Central Rand Gold plc and we had done very infrastructure both below and above ground “We are looking at the shallow ounces,”

well out of that with a similar strategy and we and there is lots of gold still there.” Quinert said. “Our target is 1-1.2 moz gold

realised there was further opportunity on the West Wits went some way to proving the down to 400m, which is down to where we

Witwatersrand,” West Wits chairman Michael belief correct, selling two projects to Mint- think the water level is.”
Quinert told Paydirt. ails for a combined $9.9 million. However, as Quinert said the simple geology and wealth

“If you can pull all the ground together, the it recalibrated its exploration sights onto the of information available to the company meant

geology is well understood, there is a lot of Soweto Cluster of mining rights, a familiar exploration would be neither difficult nor ex-

pensive.

“In No. 11 Shaft, for example, we have

6,000 data points so this is not a speculative

project. It is well understood and we can ad-

vance quite quickly.”

A rights issue and placement in the Sep-

tember quarter raised $2.1 million, enough to

restart the exploration programme.

The first test of this strategy is the No. 11

Shaft project, which forms a large part of the

previous mined Bird Reef.

“The target was left unmined as a crown pil-

lar. They left an 800-1,000m stretch unmined

even though it was historically producing 5-7

g/t gold,” Quinert said.

“We plan to put 14 holes in during Novem-

ber, targeting a JORC-compliant resource of

around 140,000oz.”

Once it has established a resource, West

Wits will build a case for a rapid, low capex

restart.

“We think we can slot mine it with a small

open pit and could get those ounces out in six

months,” Quinert said. “We would go ahead

Despite the Government closing a number of dangerous shafts, illegal miners under contract agreements; using contract

(or zam zams) continue to open up abandoned shafts across the Rand mining and then toll-treatment at one of the

PAGE 56 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

mills and plants available on the Rand.” Quinert said.
Quinert is conscious of the difficulty in
“If we can bring them back into commer-
starting new projects in the Johannes-
burg area. cial operation we can go some way to solv-

“The challenge then will be to navigate ing the problem.”
the environmental and political issues.
We have to prove we can operate in Jo- West Wits is also close to solving an ar-
hannesburg, in a highly populated area,
with the related social challenges. But, if tisanal mining problem at its second asset,
we do that we have a great project.”
across the Indian Ocean in Papua Prov-
Not only could it be a great project for
West Wits, it could be an example to the ince, Indonesia.
entire South African gold industry of just
what is achievable with historical opera- Like Soweto, the Dewero gold project
tions.
was stalled for several years but with a new
Although Central Rand Gold proved
successful with its own rejuvenation strat- local partner having recently delivered a
egy, the travails of the likes of Mintails and
DRGold have left many in the industry safe and secure mining site, West Wits is
sceptical of such plans.
preparing to start alluvial operations.
Quinert thinks a successful implemen-
tation of the strategy at No. 11 Shaft could “We expect to generate enough gold
put West Wits in the shop window.
from the placer deposits to run the whole
“We have got a further 14 similar pro-
jects on our leases and if we can make a operation, get a profit and mount an explo-
success it could become enticing to larg-
er companies,” he said. “Under a bigger miner ration programme,” Quinert said.
such as Harmony [Gold Mining Company] or
Sibanye [Mining Ltd], these leases could turn Although only 110km north-west of Free-
into a 100,000 ozpa producer over 10 years;
that could be quite an attractive proposition port McMoRan Inc’s massive Grasberg
for them. But first we need to prove that it can
be done.” complex, Dewero remains a greenfield

If executed well, such redevelopments proposition and one which West Wits will

take some time to explore.

“The alluvial gold is likely coming from

the nearby mountains but we will have to

Ore bags recently filled by illegal zam zam operators helicopter in all equipment,” Quinert said.

“Initially, we will drop geologist in and they

could answer some of the social and environ- will take some rock chip samples and hope-

mental questions which haunt Johannesburg. fully we get lucky and find it early.”

“If we do it properly, we can convince the From brownfields projects in densely popu-

Government and the community that we are lated Johannesburg to grassroots work in re-

helping to improve the area. A lot of these old mote Papua Province, it appears West Wits

shafts have been sealed up but there are oth- has finally found the momentum it was looking

ers still open and zam zams [illegal artisanal for.

miners] are risking their lives to get in there,” – Dominic Piper

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 57

INDABA PREVIEW

Witwatersrand’s elephant
lurking in White Rivers

The world’s largest privately- A JORC-compliant resource and scoping study on the as many profitable ounces as
owned gold project is set to White Rivers/Harmony JV is expected soon it can.
be unveiled, with a strong Aus-
tralia-Africa connection. So far, the company has
spent about half of its initial $5
White Rivers Exploration million obligation under the JV
Pty Ltd, a wholly-owned com- agreement and should have a
pany of the Creasy Group, is resource and scoping study in
one part of the exploration joint hand by mid-January 2016.
venture (EJV) at the Beisa pro-
ject; the other is South African At times it has been hard
gold giant Harmony Gold Min- graft collecting datasets and
ing Co. Ltd. information from before Har-
mony’s time on the ground,
The 65/35 JV in favour of however, White Rivers has
White Rivers was formed in managed to build an initial re-
September 2014 over ground source model, signed off by
adjacent to Harmony’s Target SRK Consulting, based on 25
mine in South Africa’s Wit- reefs.
watersrand Basin, Free State
province. For the money spent, War-
burton said the discovery cost
White Rivers executive was about 25c/oz.
chairman Neil Warburton told
Paydirt a resource estimate “There is a large amount of
was imminent. information available we just
have to locate it, so we have
“We have spent considera- been getting in contact with
ble time and money on the EJV previous exploration manag-
and we have recently complet- ers, even before Harmony
ed the first stage of the JORC days. There is about 100km of
resource and we are now into diamond drilling done under-
the second stage. We’re look- ground, all the information was
ing at 8-10 moz @ 7-9 g/t gold, in hard copy, which is about
with significant amount of ura- 20-40 years old, which is now
nium credits, which lies close modelled,” Warburton said.
to Harmony’s Target No.1 and
Target No. 2 shafts, Warburton Potential investors will get
said. a glimpse of what the Beisa
project has to offer in January
“Mark Creasy said we have with the release of the scoping
the largest privately owned study which could be game-
gold project in the world and he changing for White Rivers.
is probably right.”
At some stage, the com-
With some of the world’s pany intends to go public with
deepest underground mines, an IPO and a robust scoping
South Africa is a prolific gold study at Beisa could be the
producing jurisdiction and trigger.
White Rivers is out to capture
However, like many gold

PAGE 58 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

players, market conditions will be assessed Neil Warburton ground mining experience, perfectly tailored
thoroughly before White Rivers is opened up to operating in South African conditions.
to the investment community. “It’s a bit like Australia was with the ma-
jors wanting to get out – Barrick [Gold Corp], While some of South Africa’s gold mines
“We are reviewing London, ASX, Hong Newmont [Mining Corp] – and Northern Star are notoriously deep, Warburton said reinter-
Kong, subject to market conditions early in [Resources Ltd] and Evolution [Mining Ltd] pretations of parts of the Witwatersrand Basin
2016, of course,” Warburton said. buying the assets and doing well. It is exactly concerning the EJV were revealing some gold
what is happening here and I hope we can to be uplifted to within 300m of surface.
“The ASX is not first choice, I don’t think have the same sort of success.”
South African projects are given true value in “White Rivers is one of the largest tene-
Australia, whereas in London and Europe in- White Rivers’ board is stacked with under- ment holders in the Basin and a lot of our ten-
vestors understand the risk profile a lot better. ements are near or adjacent to infrastructure,
In Hong Kong there is the Chinese factor we so we don’t have to sink any new shafts or
have to consider. We are very excited about anything. And, if orebodies are uplifted, we
the projects and will look to put some more can use declines,” Warburton said.
resources out on other projects in 2016.”
Therefore a path to production within 18
There may be a bearishness on South Af- months is envisioned and cash flow following
rican projects right now, but not from Warbur- soon after.
ton.
Getting to production is the focus, while
The former Barminco chief executive sees other assets in its portfolio are also attracting
opportunities in the country, while others are some attention to White Rivers.
looking to flee.
In mid-2015, the company welcomed South
He sees the South African gold sector un- Africa’s Windfall Energy – a major player in
dergoing a similar sea-change to what has the country’s only current onshore production
transpired in Australian gold circles upon the of petroleum – into its Helibron and Kroonstad
departure of international heavyweights from gas assets in the Witwatersrand Basin.
the sector.
Windfall’s participation affords the gas as-
“South Africa is not a destination of choice sets a fast-tracked path to development, in
for many at this point in time, but we are cer- which it can earn a 51% interest in the pro-
tainly looking at opportunities there all the duction right and first right of refusal to pro-
time. A lot of people have gone back to Aus- cure any gas produced on normal commercial
tralia where projects have been well priced, if terms.
not starting to get a little over priced now, but I
believe South African projects are discounted – Mark Andrews
at the moment and for a nimble and qualified
board there is opportunity,” Warburton said.

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 59

INDABA PREVIEW

Harmony feeling quite nice

A revised annual life-of-mine assessment across Harmony’s portfolio led to impairments totalling over $US303 million in FY2015

The eyes of the resources world will be set us up well for, in looking how to bring on we operate,” Briggs said.
firmly fixed on South Africa’s third largest communities, how to treat people and so on. A member of the Harmony outfit for over 20
gold producer Harmony Gold Mining Co. Ltd in
December with the company set to complete “It is not an easy jurisdiction to work in, but years, Briggs was appointed chief executive
the highly anticipated Golpu stage one feasi- we think it is actually ideally suited to the way in 2008 and was in the thick of the action dur-
bility study. ing construction of Hidden Valley (2007) and
Graham Briggs the start of commercial production in 2010.
A robust study result will perhaps be the
lasting legacy of outgoing chief executive Hidden Valley, which in Harmony’s revised
Graham Briggs, who will be replaced by for- FY2016 business plans resulted in a $US174
mer Harmony chief operating officer, Peter million impairment following the reduction in
Steenkamp, on January 1. life of mine, produced 94,619oz @ 1.61 g/t
gold in FY2015 for the company.
Harmony’s roots in the Papua New Guinean
mining industry have been sowed through the Probable reserves of 12mt @ 1.79 g/t for
gold-silver Hidden Valley open pit mine – an 693,000oz gold are likely to give Harmony a
equal partnership with Newcrest Mining Ltd further mine life of three to six years.
under the Morobe Mining JV (MMJV) – and
with the on-stream of Golpu, Harmony will no Within this timeframe the gold-copper Gol-
doubt have an indelible footprint in country. pu mine, also a JV with Newcrest, is sched-
uled to come on line, with Briggs declaring it
“I am predicting a good future for Harmony a “principal growth” project for the company.
in PNG,” Briggs told Paydirt late in 2015.
An updated PFS completed in 2014 was
“I first started in PNG in 2003, so we have based on resources of 20 moz gold and 9.4mt
been there now for many years and our copper, with Harmony targeting 500,000
guys know the ground, know the people... ozpa of attributable gold equivalent ounces in
but it takes a while to get used to PNG. You 2024-2029.
just can’t rely on one particular person who
thinks he knows [everything] because he’s Stage one operations, expected to last 27
been there many years and looks like he has years, will target the higher grade portions
made good. You have to actually be able to of the orebody and start at 3 mtpa in 2020,
take some things, which I think South Africa increasing to a steady state of 6 mtpa from
2024.

By 2025, annual production is expected to

PAGE 60 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

peak at 320,000 ozpa gold and 150,000 tpa Harmony operates nine underground mines in South Africa and has forecast
copper. 810-970,000oz gold production in FY2016

Total stage one capex requirements are es- Briggs is happy to spruik the prospects of encouraged Harmony to up its exploration
timated at $US2.3 billion, with Harmony’s tip its 100% owned Kili Teke project in PNG’s budget by $US4 million and send a second
in comprising $US785 million. Hela Province, and is confident the minimal rig to Kili Teke.
drilling done so far is leading to a solid maiden
Harmony wants to fund its capital commit- resource. “I think when it comes to the copper space
ments for the first three years from operating PNG is the place to be and right now we have
cash flows. From FY2018, when a forecast Adding to the company’s excitement was an a fair amount of exposure in Golpu and we
$US205 million expenditure is due, the com- intercept at hole KTDD013: 186m @ 1.02% are increasing that exposure [to copper] at Kili
pany will need to look at financing strategies. copper and 0.72 g/t gold from 256m, which Teke,” Briggs said.

It is anticipated that from FY2021 stage one
will be cash flow positive after expenditure.

On the surface Golpu appears to be a cash
strain, considering Harmony’s headline loss
of R523 million in the September 2015 quarter
due to the weakening rand against the US dol-
lar, culminating in total borrowings of $US250
million outstanding.

Fortunately, Harmony’s bank balance of
nearly R1.5 billion affords the opportunity to
address its current debt, while weighing up
the possibility of taking on more to fund Golpu.

“Our commitments to Golpu in the next two
years are not that high,” Harmony finance di-
rector Frank Abbott said.

“Our intention is to repay our debt over the
next two years, so that when the bigger fund-
ing starts at Golpu we are sitting with a bal-
ance sheet without debt.”

A breakdown of projected capital costs at
Golpu sees Harmony up for $US55 million in
FY2016, $US105 million (FY2017), $US205
million (FY2018), $US250 million (FY2019)
and $US155 million (FY2020).

Being cash flow positive from FY2021, and
with mining and processing infrastructure set
up in stage one, stage two capex require-
ments won’t be as demanding for Harmony.

A PFS on stage two is expected to be deliv-
ered in accordance with the feasibility study in
December 2015.

“The Golpu feasibility results are due for
completion in December, [we’re] not quite
sure when we will release those but hopefully
it will be shortly after that and everything is
looking good on that front,” Briggs said.

If Briggs’ gets to hand down the Golpu fea-
sibility study before retiring, it will be a fitting
swansong given his longstanding association
with Harmony, which has its fair share of crit-
ics.

“The critics have been talking about how
we can’t make money in South Africa and I
think we have demonstrated that we can,”
Briggs said.

“Critics have also been saying that we can’t
afford to drill Golpu, well, I think with this sort
of cash on hand where we are waiting to go
[drill] and if someone is waiting for us to de-
fault on Golpu; then I think it is a bad day for
them.

“On top of it, we have an excellent strategy
of exploring and doing the right things. We are
able to explore where other people can’t, we
have found things where other people haven’t,
we have demonstrated at Golpu...we have in-
creased the resource there tenfold from 2005
to 2014. We are also finding things like Kili
Teke where others haven’t, I think there is a
great future and I have no problem that Har-
mony is going to be on the big stage there for
years to come,” he said.

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 61

INDABA PREVIEW

Kili Teke offers Harmony further exposure to the copper sector in Papua New Guinea

“We are moving towards trying to put a Harmony proved its exploration credentials could do worse than allow others to look at
maiden resource together [at Kili Teke] for De- with the Kili Teke discovery what else is around.
cember and I hope we get there. It is starting
to look good and the reason we can talk about “We could probably look more at what one
maiden resources is because it is all hanging can do in that space where we have either un-
together. The drilling density isn’t great after derutilised or not utilised areas that have po-
just 15 holes, but it seems to be hanging to- tential resources. Those sorts of JVs may be
gether. PNG has certainly got a lot more ex- putting themselves in to a nice position when
ploration possibility.” the tide turns and gold prices improve. I think
now is certainly the time one can afford to do
With its exploration efforts on-song and those investigations in to exploration [JVs],”
Golpu potentially on the cusp of development, he said.
Harmony is comfortable with its exposure in
the copper space at the moment. Maximising value from its asset base while
gold prices remain soft (about $US1,100/oz
Therefore, it would be surprising to see at the time of print) will compliment inroads
Harmony actively pursuing any major M&A made into lowering costs of production.
activity in the copper space as it continues to
rein in costs amid a restructuring programme Labour costs during the September quar-
aimed at rectifying its debt burden. ter were slightly higher as a result of a new
labour agreement being triggered during the
Cash generation is one avenue Harmony is period, however, it did not severely hamper
trekking to pay down its debt, while it remains Harmony’s costs structure.
open to doing deals within its portfolio.
From its open pit and nine underground
“From [an asset] disposal point of view, we mines in South Africa, Harmony increased
obviously look at those things and try and do gold production by 17% to 246,790oz in the
deals where we can do deals,” Briggs said. September 2015 quarter at an average under-
ground grade of 4.99 g/t, 8% better than the
In 2014 Harmony entered a JV with private- previous quarter.
ly backed Creasy Group company, White Riv-
ers Exploration Pty Ltd, over ground near its Production profit was also up over 10% to
Target mine in South Africa’s Witwatersrand $US54 million, revenue grew 7% to $US319
Basin (see pages 58-59). million, while $US10 million free cash flow
was generated during the quarter.
Briggs said similar small deals were a pos-
sibility and with White Rivers believing a re- Across its underground mines, Harmony
source of 8-10 moz gold is a real chance on is operating at AISC of $US1,040/oz, which
ground covering the exploration JV, Harmony is within the cost parameters of $US1,060/oz

PAGE 62 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

most South African gold miners are op- Peter Steenkamp Peter Steenkamp will start as Harmony
erating in. Gold Mining Company Ltd chief executive of-
profitability in FY2016, after successful re- ficer on January 1, 2016, completing a search
Briggs said there wasn’t a need, in the structuring efforts at the mines. Harmony started upon Graham Briggs’ an-
current gold price environment, to curtail nouncement in July 2015 of his intention to
production particularly with most of the Despite a steely resolve to turn its fortunes retire.
company’s costs measured in rand per – the NYSE notified Harmony its trading price
kilogram terms. had fallen below compliance requirements of Steenkamp is no stranger to Harmony, with
$US1/share in September 2015 which has to the 55-year-old previously serving as chief
As in Australia, South African produc- be addressed within six months of date of re- operating officer four years ago.
ers have benefitted from the rand to US ceipt – safety will not be compromised by the
dollar exchange rate, however, Briggs company. With a degree in mining engineering,
said there was more to Harmony’s turna- Steenkamp was most recently senior vice
round in performance. Unfortunately, Harmony couldn’t celebrate president of mining at Sasol Mining Pty Ltd.
a fatality free FY2015, with eight workers in Prior to this he held executive positions at Af-
“Despite the gold in [US] dollar terms South Africa and one in PNG passing away rican Rainbow Minerals (ARM) and Pamodzi
going down and the exchange rate weak- on the job. Gold.
ening a little bit, we have been protected
to some extent from the exchange rate. It is no easy task protecting a large work- “Returning to the gold sector and to Har-
But, our last quarter production results force, particularly when there are more than mony is like coming home,” Steenkamp said
were not due to the gold price. It is due to 35,000 people to consider, some of who oper- upon his appointment in November 2015.
the production and improvements in pro- ate at dangerous underground levels in South
duction,” Briggs said. Africa to capture gold. “The company has demonstrated its re-
silience during recent challenging times and
“I think South African production even at Nevertheless, it was through great effort has been positioned for profitability by the
$US1,000/oz is not a problem right now, so and persistence that Harmony achieved its management team. I am committed to en-
it would have to drop below that and I don’t best safety performance – in terms of fatali- suring that Harmony creates value for all its
know even if the real bears in the market are ties – in 14 years in FY2015. stakeholders and is a globally competitive
looking at those prices right now. We have ba- company.”
sically done all the changes that we need to The company was recognised with a series
do to be able to withstand lower gold prices.” of MINESAFE 2015 awards, including first Harmony chairman Patrice Motsepe warm-
places for best year-on-year improvement for ly welcomed Steenkamp back into the fold.
After recording a net loss of $US396 mil- total injury frequency rate at Bambanani and “The board is very happy to welcome Peter
lion in FY2015 courtesy of total impairments best in class for total injury frequency rate at back to Harmony. Peter worked for Harmo-
of $US303 million stemming from an annual Target 1. ny for four years and his last position at the
life-of-mine reassessment, how Harmony company was chief operating officer. He has
handles gold price volatility in the near future Awards were also claimed at its Tshepong more than 30 years’ experience in the mining
is critical. and Joel mines, demonstrating Harmony’s industry and should lead Harmony to greater
safety message is not being lost on its em- heights.”
Continued improvement in grades and pro- ployees.
duction is the key, with the company on track again, but it really needs to be embedded,”
to deliver FY2016 guidance of 810-970,000oz “You can react to poor safety quickly and Briggs said.
@ 5 g/t from its South African operations. try to put in place things that won’t happen
“That’s what we have been trying to do in
Total group production targeted, which in- the past; look at all the factors and look at
cludes Hidden Valley (80-95,000oz), Kalgold what we do and try and embed that in the
(30-40,000oz) and various surface opera- people who operate. We have a large work-
tions (50-55,000oz), is 1.1 moz @ $US1,080/ force in South Africa and we have now just
oz, including capital costs, based on a gold over 30,000 people and every one of them
price of $US1,230/oz and an exchange rate of needs to be focused on safety, because if one
R11.38 to the US dollar. of them isn’t you have an event.

“There are improvements that are going “We have worked hard, not only on the sys-
to come out of Kusasalethu [FY2016 170- tems and practices and standard procedures
190,000oz @ 6.5 g/t gold], but all the other and those things, but really trying to embed
operations are doing close to what they the behaviour. That is really starting to show
should be doing. It is looking good on most results.”
operations and our prediction for the year of
5 g/t is what we are right on at the moment,” – Mark Andrews
Briggs said.

It is hoped that Kusasalethu, Doornkop,
Masimong and Hidden Valley will return to

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 63

INDABA PREVIEW

India steps up Africa story

India hosted its biggest-ever Africa summit in challenge Beijing in a head-to-head contest coal mines producing up to 90 mtpa tonnes of
late 2015 as Prime Minister Narendra Modi for the African market. coking coal to feed its growing steel industry.
seeks to challenge China’s dominance on a South Africa is already a major coal supplier
continent that is blessed with vast natural re- “We can’t match the Chinese in terms of to India.
sources and has the world’s fastest-growing resources, but any engagement we do with
population. the Africans at least gives them a choice,” C. Still, India wants its involvement in Africa to
Raja Mohan, a foreign policy commentator at be less transactional than China’s, seeking a
New Delhi wants to project its soft power the Observer Research Foundation in New development partnership for two regions that
and historical ties to Africa, in contrast to Chi- Delhi. said. account for a third of the world’s people, but
na’s focus on resource extraction and capital seven in 10 of those living in poverty.
investment that has sparked a backlash in The India-Africa Forum Summit is the third
some countries against Beijing’s mercantilist of its kind and, since the first was held in 2008, “Our partnership is not focused on an ex-
expansion. two-way annual trade has more than doubled ploitative or extraction point of view, but is
to $US72 billion. one that focuses on Africa’s needs and India’s
India’s trading ties with Africa date back to strengths,” Vikas Swarup, spokesman for the
antiquity and both found common cause in the That lags trade between China and Africa, Indian Ministry of External Affairs, said.
struggle against colonial rule. Yet India’s influ- which has exploded to $US200 billion as the
ence faded over the course of the Cold War world’s No.2 economy sucks in oil, coal and Trade ministers from India and Africa were
as it withdrew into non-aligned isolation. metals to feed its industrial machine. looking to make common cause at a World
Trade Organization ministerial meeting in Nai-
Now Modi, self-styled chief salesman of a The world’s largest democracy has been robi late in 2015, Commerce Minister Nirmala
“Make in India” export drive, wants to capi- criticised by human rights groups for invit- Sitharaman said.
talise on an economic slowdown in China to ing Omar al-Bashir, the president of oil-rich
highlight India as an alternative partner for Sudan wanted by the International Crimi- Although India dropped its veto against a
trade and investment. nal Court on charges of war crimes, crimes WTO deal to streamline customs procedures
against humanity and genocide in Darfur. a year ago, it remains uneasy over Western
“India is the fastest-growing major econo- pressure on food stockpiling it says is vital to
my. Africa is experiencing rapid growth too,” For India, business comes first. ensure its 1.25 billion people don’t go hungry.
Modi told African journalists on the eve of the State-run oil company ONGC, which has
summit. fields in Sudan and South Sudan, is on the “India and Africa are on the same page,”
hunt to buy $US12 billion in foreign assets Sitharaman told reporters.
Although India’s headline economic growth over the next three years and has identified
has overtaken China’s, its economy is one- Africa as an investment target. – Douglas Busvine, Reuters
fifth the size and it lacks the financial heft to India is also in talks with South Africa to buy

PAGE 64 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Lucapa bucks junior and
diamond trends

Lucapa took delivery of new Caterpillar equipment in September, allowing it to ramp up production at Lulo by opening a second mining area

Alow capex, early start-up operation with a our shareholders day by day. Our top 40 ing. Lucapa shares rose from less than 17c
longer term, potentially world-class explo- shareholders are very supportive and not go- in September to a high of 61c in October as

ration story behind it; it is an asset all juniors ing anywhere.” investors warmed to the potential of the com-

dream of, so, why then, is Lucapa Diamond The education process is obviously work- pany’s Lulo project in Angola. The share price

Company Ltd still capped at less than run highlighted the two-speed strat-

$100 million? egy Lucapa is currently employing at

It could be because the ASX-listed Lulo; mining of the alluvial gravels on

company is mining diamonds in An- the project – which had already gener-

gola; both a commodity and country ated $15.8 million in diamond sales this

most Australian investors are unfamiliar year – and exploring for the kimberlite

and even uncomfortable with. But, with source of the high-quality diamonds it

a board which reads like a who’s who has been recovering.

of the Australian diamond sector and a The share price had come back to

managing director (Stephen Wetherall) around 40c by the end of October but

and chief operating officer (Nick Selby) Wetherall remains confident the com-

with a combined 50 years of diamond pany’s double strategy will continue to

operating experience in Africa, Lucapa gain support in a tough market.

is seemingly in good hands. In September, the company signed

Wetherall, who joined the company an agreement with a group of high

from Gem Diamonds plc in December net-worth individuals, raising $3.5 mil-

2014, admits it can often be a challenge lion. This followed on from a $4 million

explaining a diamond story to Australian placement in July.

investors more used to gold, copper or “We had approaches from this group

iron ore. of high net-worth individuals who loved

“Certainly in comparison to UK in- the project,” Wetherall said. “They said

vestors there is a very different level of to us: ‘Forget the blue sky of the kim-

understanding,” Wetherall told Paydirt. The opening up of Mining Block 8 is not only delivering the berlite exploration, just the merit of the

“But education of the Australian market highest value diamonds seen thus far at Lulo but is also leading alluvials makes it a company worthy of

is key and we are learning more about it to the potential kimberlite source of diamonds investment’.

PAGE 66 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Lucapa’s DMS plant is now running at 20,000 tpm capacity. The company is confident it could expand this to 40,000 tpm next year

“It then took time to educate them on the not only achieved its mining rates but has re- averaging $US4,500/ct. Global sales average
company, the project and the diamond indus-
try. They said ‘would X amount of dollars allow covered “special” diamonds at an average of $US120/ct.
you to mitigate the alluvials risk?’ That is how
we secured $3.5 million.” one every 1.2 days, a remarkable rate. The average price achieved almost im-

The cash raised in the two placements was These “specials” have included diamonds mediately justified Lucapa’s decision to head
used immediately to acquire new earthmoving
equipment for the company’s alluvial diamond of 131ct, 90ct, 74ct, 58ct, 56ct and 50ct. into the Mining Block 8 area even though its
operation. The company had started mining
gravels at Lulo – 520km east of the Angolan In October, a 1,621ct parcel which included average grades are lower than many African
capital, Luand – in January from
Mining Block 31 and by June was some high value specials from Mining Block diamond operations.
hitting its 20,000 bcm/month min-
ing target but the cash injection has 8, netted the company $5.1 million. The aver- “We are not chasing hundreds of carats per
allowed the company to open up a
second mining area, Mining Block 8. age price of the parcel was $US3,132/ct with bank cubic metre,” Wetherall said. “We are

Selby said the opening up of Min- the Mining Block 8 diamonds in the parcel chasing dollars per bank cubic metre.”
ing Block 8 had given Lucapa more
flexibility heading into the Angolan With mining set to continue
wet season.
through the wet season thanks
“In the wet in Angola you usually
have to reduce your throughput but to the company having improved
opening up a second area means
we can mitigate that,” Selby said. “It both wet front-end processing
results in slightly less efficiency from
the mining perspective but means and back-end recovery at its 150
you are achieving steady output
throughout the season.” tph DMS processing plant, Weth-

Not only has the opening of Mining erall is confident Lucapa is set
Block 8 delivered operational flexibil-
ity, it is proving to be financially lu- to enjoy strong cash flow in the
crative as well.
coming year.
Since mining on Mining Block 8
began in August, the company has “Before we set out to raise

capital we asked ourselves:

‘What will trip us up in the ramp-

up and heading into the wet sea-

son?’ We identified the areas

which needed addressing and

the funds generated from the

capital raising allowed us to miti-

gate against those issues.

“We now believe we are above

break-even level and the prices

we are getting are very high end.

By March, we will be in a position
Lucapa chief operating officer Nick Selby and chief executive to decide whether to expand op-

Stephen Wetherall at the company’s Perth offices erations to 40,000 bcm/month.”

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 67

INDABA PREVIEW

The expansion into Mining Block 8 has wid-

er ramifications for Lucapa’s strategy.

While the alluvial gravels at Lulo are prov-

ing robust, the greater prize is, like on most

diamond projects, held in their primary source

and the move into the new area has the com-

pany believing it is narrowing in on the kim-

berlite pipe which originally deposited the dia-

monds near the Earth’s surface.

“The large diamonds, with their rough edg-

es and the amount of garnets and ilmenite be-

ing recovered all point to Mining Block 8 being

close to the kimberlite source,” Wetherall said.

Lucapa has identified almost 200 targets at

Lulo with five already confirmed to be diamon-

diferous kimberlite pipes. One of the identified

kimberlites, L259, is adjacent to Mining Block

8, and has become the focus of Lucapa’s ex-

ploration programmes.

“During our pitting on Mining Block 8 we

began to recover RVK [resedimented vol-

caniclastic kimberlite]. That alerted us to the

fact we were very close to the kimberlite even

though none showed up on the aeromag. We

extended our pitting into the tree lines and into

the higher ground and hit RVK and identified

the L259 kimberlite.” A 90ct diamond recovered from Lucapa’s Lulo project

L259 has now become the focus of Lu-

capa’s kimberlite hunt with the exploration thirds of the costs would still have been there trolling the remainder. All diamonds recovered

team pitting around L259 in an effort to find now the alluvial operations are covering all must also be sold to Endiama at market value.

its edges. costs on site.” Wetherall retains confidence in a structure

“Once we get to the edges we can take out Revenue, and more specifically the repatri- in which foreign miners have often thrived de-

a sample and put it through the plant,” Weth- ation of revenue, remains a sticking point for spite the lack of majority stakes.

erall said. investors unfamiliar with an Angolan diamond “Most people ask if we get our revenue out

To aid targeting, the company is set to sector which requires state diamond company ok, my answer is ‘no, why would you take 40%

launch a ground-based gravity survey this Endiama to hold a major stake in all projects. of the revenue out when 100% of the costs

month. Under the current structure, Lucapa holds are still in country?’” he said.

Drilling may follow that and Wetherall said 40% of Lulo’s alluvial concessions and 39% “Endiama and our local partner allow us to

he was confident a JORC-compliant resource of the kimberlite rights. Endiama holds 51% of operate the mine on a day-to-day basis. In all

could be swiftly built. He did, however, preach each with local partner Rosas & Petalas con- ways we operate like a traditional JV, Lucapa

patience. doesn’t dictate terms and neither

“Unfortunately, kimberlite explo- do Endiama.”

ration doesn’t allow you to release He said change was also afoot

information every day. Shareholders with the Angolan Government

have to show patience now, allow us preparing to ease investment laws

to do the work so we can bring the and allow foreign companies to

information to the market,” he said. take majority stakes.

The opening up of Mining Block “So, we’ll see if we can increase

8 will also aid Lucapa as it looks to our stake in the kimberlite when

move L259 at pace. the renewal of licence comes up.”

“If we hadn’t found L259 and were Regardless of changes to own-

still looking we probably wouldn’t ership law, Wetherall said Lucapa

have gone into this area during the remained comfortable operating

wet but now we are there we have in Angola.

to ensure we can get in,” Selby said. “Things do take longer in Af-

“In that regard, having the mining rica but we understand that and

fleet close by is a massive advan- are comfortable with it,” he said.

tage.” “There is no prescription for down-

And logistics are not the only as- stream processing in the country

sistance Mining Block 8 is offering and we hope the Government

the exploration team with some of doesn’t go down the path of others

the revenue produced from diamond and legislate for it. Whatever the

sales going back into exploration. country’s development strategy is

“Some shareholders wanted all we will have to develop our com-

the money to be spent on the kim- pany in line with that.”

berlite exploration but that is playing – Dominic Piper
a dangerous game if you miss the

pipe,” Wetherall said. “Developing

the alluvials operation has allowed

us to become a self-funded explorer.

“It is the cheapest form of kim- Angola has shot to prominence as a diamond producer in the last 20 years

berlite exploration you can do. Two- with some of the world’s most valuable operations established there

PAGE 68 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

SAVE THE DATE

7 - 9 September 2016

Perth,Western Australia

www.africadownunderconference.com

For all enquiries please contact Tammy Caldwell on (+61) 8 9321 0355
or email [email protected]

INDABA PREVIEW

Burey covers all Giro bases

Burey Gold Ltd is expanding Burey has now turned its at-
its exploration programme
at its flagship Giro gold project tention to testing the potential
in a bid to find the Democratic
Republic of Congo’s next big of regional targets identified
deposit.
from previous soil sampling pro-
The last time Paydirt checked
in with Burey Gold Ltd it was grammes and by tracking his-
halfway through a 39-hole,
4,000m drilling programme at torical artisanal mining.
Giro.
The regional prospect that
Standout intercepts of 47m @
4.13 g/t gold from 25m, includ- has Burey most intrigued is
ing 29m @ 5.93 g/t, 16m @ 3.95
g/t from 15m, 13m @ 4.17 g/t Adoku, just 4km south of Giro.
from 103m and 30m @ 2.36 g/t
from 37m prompted managing Eckhof said artisanal min-
director and former Moto Gold
Mines founder Klaus Eckhof to ers had been recovering “sub-
tempt fate and suggest Giro was
showing early signs of becom- stantial gold quantities” from a
ing another Kibali.
3m-thick laterite profile, which
Giro is just 30km from Kibali,
the DRC’s largest gold mine, extended over 400m by 200m.
which boasts a resource of 11.6
moz. “Two pits have exposed a li-

Burey’s confidence in Giro monitic saprolite with prominent
strengthened on the back of an
IP survey over the project in July quartz veins and stringers sub-
which delineated a 3km-long
chargeability anomaly along the parallel to the east-northeast
Kebigada shear.
trending granite contact imme-
Eckhof said the survey, which
was designed to better under- diately to the south,” he said.
stand Giro’s orientation, its
depth potential and potential Burey embarked on a chan-
new drill targets, confirmed the
company’s assumptions that nel sampling programme at
Giro was oriented in a north-
northwest direction. Adoku in late September, which

He said several narrow north- returned high-grade intercepts
west striking chargeability
anomalies at Giro appeared to of 3m @ 8.06 g/t gold, 4m @
be related to high-grade quartz veins within
the prospect, leading Burey to think Giro might 2.6 g/t, 3m @ 2.9 g/t and 2m @
be more extensive than previously suspected.
9.67 g/t.
“The Giro-type veins have been the main
focus of historic and recent mining and can “The grades are very good,”
contain erratic, but very high-
grade gold mineralisation,” Eck- Eckhof said.
hof said.
“The alteration is also good
“The IP survey basically con-
firmed what we thought; the and it’s on the same trend [as
structural control and also the
size. It actually narrowed it in so Giro]. We haven’t done any IP
we can better focus on it.”
there, but we know where the
Burey wrapped up its RC
drilling programme testing po- targets are.”
tential bedrock mineralisation
underlying its standout 200 ppb Burey was also investigating
gold soil anomaly at Giro’s Main
Zone in September. two other regional plays; Douze

The programme, which was and Peteku.
expanded to 103 holes for
9,823m, confirmed the Main Zone’s miner- A previous sampling pro-
alisation was associated with Giro’s domi-
nant north-northwest trending chargeability gramme at Douze had delivered

channel samples of 5m @ 24.3

Burey will pay more attention to its regional targets after g/t gold, including 2m @ 60.4
it tests Giro’s depth potential g/t, and Burey’s latest channel
sampling programme again net-

anomaly, itself associated with the Kebigada ted high-grade hits, including 1m @ 6.31 g/t

shear zone. gold and 1m @ 5.26 g/t.

Burey also defined more than 1.4km of con- At Peteku, 2km south-west of Giro, channel

tinuous gold mineralisation from surface with samples from granites had also produced in-

widths ranging 250-450m in the Main Zone. triguing intercepts in the past, including a best

The programme achieved best hit of 4m @ 21.7 g/t gold.

hits of 30m @ 1.14 g/t gold from Eckhof said all three regional targets war-

12m, 1m @ 7.53 g/t from 90m and ranted drilling.

70m @ 1.11 g/t from 35m. “The company has commenced infill soil

Eckhof said Burey’s exploration sampling around anomalies defined at Adoku,

team would now be tasked with Douze and Peteku to better understand the

testing the Main Zone’s depth po- true potential of the three target areas,” he

tential. said.

“Because we have only drilled “New targets defined from sampling and

down to 100m maximum in some mapping will be drill tested with diamond drill-

areas, we will do a couple of deep- ing on the completion of the initial (depth) drill-

er holes to see if the grades go up ing programme planned at Giro. We intend to

at depth and also to see if it con- focus on the new areas in the next three to

Klaus Eckhof tinues at depth with three or four six months.”

holes,” he said. – Rhys Dickinson
“We will refrain from drilling out

the complete resource because everybody

knows what it will be, roughly, at the end of

the day.”

PAGE 70 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

PwC lays down tax challenge

Greed, stubbornness and mistrust concessions to make miners’ decision
is handcuffing the potential of Af-
rica’s mining industry, according to PwC to mine more palatable.
Australia-Africa practice leader and re-
sources sector assurance partner Ben “Our analysis shows that if the return
Gargett.
is not sufficient there will be no mine,
PwC recently compiled a report,
Over taxed? Does the tax regime en- and a larger portion of zero taxes is still
courage new mines?, to investigate the
influence African tax and fiscal systems zero,” Gargett said.
had on a company’s decision to mine.
Burey Gold Ltd managing director
PwC used a case study to highlight
the challenges faced by African explor- and Moto Gold Mines founder Klaus
ers, analysing the impact of taxation
and fiscal regimes in four African coun- Eckhof said he empathised with African
tries with a history of mining; Tanzania,
Burkina Faso, Namibia and Ghana. governments looking to get a leg up by

PwC narrowed its focus solely on the way of mining taxes.
tax’s influence by casting aside other
factors, including stability, contractual Sadly, many African nations were
certainty, rule of law and infrastructure,
and modelling the impact of each of the undone by their dreams of becoming
four country’s systems on a standard-
ised gold mine. developed countries, Eckhof said.

The report concluded that Namibia “The international community looks
was the only country of the four where
it was economically viable to develop a at these countries and if it issues state
mine.
bonds or loans money to these coun-
Gargett said although the report’s
findings were troubling, he believed tries they want to see some revenue,”
increased collaboration between gov-
ernments and industry could resolve a Eckhof said.
majority of problems.
“As a result, the countries are almost
“The case for collaboration is very
strong, and this is where we see the forced to raise taxes to repay these
opportunity for different thinking and in-
novative ideas that can drive a different loans and all of the debt that they have.
outcome for both the Government and
the miner,” Gargett said. It’s a tricky situation.”

“So often we see that parties are sitting on African governments were cognisant
opposite sides of the table and negotiating
positions. We see no reason why they can’t of the harm demanding tax regimes
sit alongside each other to drive outcomes
that are beneficial to both the Government had on industry, but Eckhof said they
and the miner. If a government can work
with a miner to reduce a mine’s operating took longer than most to implement
costs, it has a flow-on positive effect; they
benefit directly from that in their share of change.
taxes and royalties. They could potentially
benefit in a big way, as that might lead to “I guess when one country an-
expansions and everything that goes with
increased activity.” nounces that it is reducing its tax the

Gargett said the biggest to impediment next country will reduce it too to attract
to collaboration in Africa at present was
mistrust. capital,” he said.

He said governments and miners “To be competitive you need to be
scorned had failed to find peace with the
past, which only added fuel to the fire in in line with everybody else. History
the present.
proves that once African nations raise
“Governments would say they have not
been treated right by mining companies Out of four African countries analysed, Namibia was the only their taxes they had to reduce it shortly
and mining companies would say they
have not been treated right by govern- place considered economically viable to build a mine after because everybody moved out.”
ments,” he said.
Metals of Africa Ltd managing direc-
“Transparency has to be a big part of it.
We call on the mining sector to lead the with them on that part. Be transparent with the tor Cherie Leeden echoed Eckhof’s senti-
charge on that and bring the governments
returns you are going to make. Take a risk by ments, telling Paydirt she believed some of

showing them what you are going to recover Africa’s worst tax and fiscal policies were not

from your project because, in many cases, I born out of ill will or greed, but poor govern-

bet it’s less than what the host government ment function.

has in its own mind.” “In some cases during the boom times in

Similarly, governments needed to consider Africa, we had governments which started to

implement new laws and many times they

took so long to come to fruition that they

were implemented during the depressed

times,” Leeden said.

“They got the timing really wrong in a

lot of cases, but for the most part I think

they have recognised that and they are

reversing policies.”

Gargett said governments and miners

needed to challenge their way of thinking

to achieve win-win outcomes in the future.

“To both miners and governments, are

you willing to work together collabora-

tively to identify areas where efficiency

can be obtained or costs decreased, such

that profits generated by the project for

both company and government are in-

creased?” he said.

– Rhys Dickinson

Ben Gargett

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 71

INDABA PREVIEW

DRC copper draws CYU interest

Paul Williams was appre- down and deferral of invest-
hensive about entering the
DRC for copper opportunities ment in the Mopani concen-
and he knows it will take some
time to find his feet in country. trator, Zambia, the plan is to

However, some solace for reduce mined copper produc-
the Chinalco Yunnan Copper
Resources Ltd (CYU) manag- tion by 455,000t by the end of
ing director comes in the long-
term vision Williams has for 2017.
the company in one of Africa’s
richest copper countries. Glencore suspended pro-

“I am quite impressed with cessing of operations at Ka-
the ‘real Africa’ and in terms of
opportunity it is quite breath- tanga in September and there
taking, that may be overstat-
ing it a bit but there are sig- are no plans for incremental
nificant opportunities in the
DRC,” Williams said. copper production for 2016,

CYU is a well established with a phased restart planned
explorer in Mt Isa, north-west
Queensland, however its am- for early 2017.
bitions to become a mid-tier
copper producer will most Despite heavy cutbacks
likely be realised in the DRC.
from the majors, Williams said
While it is new territory for
Williams, CYU’s largest share- there was still mounting inter-
holder China Yunnan Copper
(Australia) Investment and est from companies to enter
Development Co Ltd, a wholly
owned subsidiary of Yunnan Copper Indus- the copper space in DRC.
try Group Co Ltd (YCI), knows Central Africa
well. “There are many, many

YCI is participating in a copper smelting JV more companies, especially
at Chambesi, in neighbouring Zambia, and
after scoping similar activities in DRC it has from North America, that are
found one for CYU to lead.
now looking seriously at the
The project identified is a proposed 10,000
tpa SX-EW copper smelter to be built near DRC. Without the support
Kolwesi in south-east DRC.
of Yunnan Copper and the
Subject to all necessary approvals and fi-
nalisation of commercial arrangements, CYU overall influence of Chinese
is expected to complete a feasibility study for
the smelting facility by April. companies in the DRC, CYU

“A 10,000 tpa SX-EW smelter is not large simply would not be able to
by normal smelting standards, but it will es-
tablish a strong presence for CYU in the Kol- The heart of Africa is where CYU hopes to realise its ambitions of compete. However, with that
wesi region of the DRC, where we see plenty becoming a mid-tier copper producer support, we are in a very
of future activity,” Williams said. strong and unique position to

“The smelter will also be designed and con- “The primary issues to be resolved as part create a strong, long-term presence in the
structed in such a way that future expansion
will be possible. In addition, we are looking at of the feasibility study will be securing a suit- DRC,” Williams said.
the processing of oxide copper ores. At some
future time, additional smelting capacity will able site for the plant and ensuring adequate Helping CYU’s future prospects will be an
be required to treat the deeper, sulphide cop-
per ores. This operation has the potential to copper ore supplies are available. Both of improvement in copper prices which fell from
be a very profitable one over a long term.”
these matters are already advancing. I can almost $US6,500/t at the start of 2015 to just
Study activities will be based on other SX-
EW smelters recently established by Chinese see no real impediment to the feasibility study over $US5,000/t later in the year.
companies in DRC, with China Nerin Engi-
neering Co. Ltd (Nerin) having undertaken being delivered on time in April next year and Higher copper prices would help protect
scoping studies for YCI leading in to the Kol-
wesi acquisition. that will be a key priority for CYU,” Williams jobs and garner more investment in the sector,

Nerin will be engaged to provide a full fea- said. which is an important part of DRC’s economy.
sibility study for smelting activities which will
be driven by ore sourced locally to produce The proposed site for the smelter is 25km The Government has fought hard to stabi-
copper cathodes and cobalt hydroxide.
east of Kolwesi near existing copper mining lise the country since after the civil war ended

operations where future ore will potentially be in 2002 and its pro-mining stance has been a

sourced from. contributing factor in this.

Although operations are expected to be on While there will continue to be operational

a small scale, CYU’s entry into copper pro- and political risk issues attached with operat-

duction comes at an interesting time in the ing in DRC, Williams said there was high ca-

sector. pacity to do business.

Big producers such as Glencore have noti- “However, there are a couple of key things

fied their intent to cut copper production. With to bear in mind – firstly, the DRC Govern-

Glencore’s Katanga operations already shut ment recognises the essential contribution

that mining makes to the local economy – in

terms of royalties and other government rev-

enues, but also the employment opportunities

for its people. The other point is that China

and Chinese companies have spent many

years working with the DRC Government and

there is a strong relationship there. CYU is in

a unique position, as an ASX-listed company,

to be able to benefit from this,” Williams said.

– Mark Andrews

Paul Williams

PAGE 72 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Ghana’s Cardinal of gold

Cardinal has had outstanding exploration success at Namdini, Ghana

Cardinal Resources Ltd is looking to ride the we wish, have a look at the results and then While much of the sting of a decade ago
wave of exploration success in Ghana in return to the most positive locations and fol- has come out of the West African gold explo-
ration sector, Cardinal has marched on and
2016. low them up.” garnered enough investor support to do so.

The company experienced a steady and at Towards the end of 2015, a maiden dia- In the September 2015 quarter, a success-
ful capital raising – $5 million placement to
times spectacular year on the drill bit in 2015, mond drilling programme had started on sophisticated and $1 million to institutional
investors – was completed in Australia to fund
which resulted in market attention and ensu- the back of pre-collar exploration drill holes drilling at Namdini.

ing gradual share price appreciation. drilled to depths of 80-120m. “Investors in Cardinal are backing the prov-
en success of the board and management
Not many West African explorers can attest The purpose of diamond drilling was to pro- and their ability to find and develop a quality,
West African gold asset. We have discovered
to the same feats encountered by Cardinal at vide Cardinal with structural data relating to some exciting potential to date and now we
are really focused on following that up and
Namdini, northern Ghana. orientation of mineralisation, as well as lith- when we are confident that it is the right time
and have all the knowledge we need, we will
Significant recent drilling results included ologies and hydrothermal alteration. progress with our ultimate aim of developing
and announcing a resource,” Koimtsidis said.
99m @ 1.21 g/t gold from surface, including Cardinal hopes its drilling programme will
While the attention is currently on Namdini,
35m @ 2.5 g/t, 83m @ 1.41 g/t from 14m and extend the strike length of mineralisation at Cardinal also has the Bolgatanga and Subra-
num gold projects in Ghana.
67m @ 3.1 g/t from 3m, while initial cyanide Namdini to 1.1km.
Bolgatanga, in the Upper East region of
leach testing returned average recoveries Koimtsidis said he hoped the campaign Ghana, consists of the Kungongo, Bongo and
Ndongo licences which make up the Namdini
of 91% from low-grade and 99% from high- would reveal more about what Namdini had to mining license covering about 660sq km.

grade oxides. offer before Cardinal contemplated putting a Meanwhile, Subranum, 240km north-west
of the capital Accra, is a former Newmont
Furthermore, recoveries from low-grade resource together. Mining Corp asset near the 3.8 moz Bibiani
gold mine.
fresh rock were 93% and the 84% achieved “At the moment determining a resource
Cardinal sees potential at both Subranum
from high-grade fresh rock has also been at Namdini is not our focus. We are really and Bolgatanga, but the immediate task is
nailing the Namdini project.
promising. focusing on finding out just what we have at
“Our focus is on the job at hand and to get
Drilling and met test work results have Namdini and the new exploration areas we that right. We really like what we have found to
date. Cardinal also holds a much larger land
combined to help Cardinal build momentum are currently testing. We believe that there is package within Ghana which is also prospec-
tive, so we are very happy where we are. We
at Namdini, which will be maintained in the significant potential to expand on the success love Ghana,” Koimtsidis said.

near future, according to we have had to date and are At the time of print, Mark Connelly was ap-
pointed chairman of Cardinal.
managing director Archie excited about the gold poten-
– Mark Andrews
Koimtsidis. tial along strike,” he said.

“At the moment it really “Really, at the moment we

is about keeping drilling, want to put our money into ex-

about keeping the drill bit ploration drilling and growing

spinning,” Koimtsidis said. shareholder value that way,

“The drilling we are do- rather than putting our money

ing will really go a long way into resource drilling and stud-

to helping us understand ies. It’s too early yet.”

the parameters of the ore- Cardinal’s share price

body; just how far does it dipped in the latter part of

go along strike, how wide 2015, however, the company’s

and deep is it? We should supporters can be relatively

get a clearer understand- happy with the bang for buck

ing in the next three to six received during the year.

months of drilling. Starting the year at 4.5c/

“We have the advan- share, Cardinal reached a

tage of having our own drill high of 17c in October before

rig so we can drill to our coming back to 12.5c/share at

schedule. We can stop if Archie Koimtsidis the time of print.

PAGE 74 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Enjoying Burkina Faso
like it’s 2005

The Sarama exploration team discuss the exploration strategy on the company’s South Houndé project in Burkino Faso

Having weathered the gold storm which has Faso and chief executive Andrew Dinning told market cycle presents opportunity and this
engulfed Burkina Faso in recent years, Paydirt the company was seeing the opportu- was a good time to reweight our portfolio and

Sarama Resources Inc is beginning to enjoy nity to grab ground it previously couldn’t. work out the best place to put our energy and

a level of opportunity unseen in West Africa for “We began to see companies rationalising resources. We have been rerunning our tar-

at least a decade. their non-core assets or switching focus out geting programme across the country and it is

At the end of the last decade, Burkina Faso of Burkina Faso and even West Africa com- a good time to freshen up the portfolio and get

was the undoubted hotspot for Australian gold pletely,” Dinning said. “Every moment in the into areas we previously couldn’t.”

explorers. At one stage, more Dinning said vendors had also

than 20 juniors were hoping to lowered their valuations, making

emulate the early success of negotiations easier. The lower-

Ampella Mining and Gryphon ing of values, combined with the

Minerals Ltd in what had been paucity of investor support for

identified as a severely under- exploration, means that in many

explored country. cases acquiring ounces is cur-

However, under-explored rently cheaper than finding them.

doesn’t necessarily mean easy- “Our discovery costs are about

to-find and as the gold price be- $US10/oz but at the moment you

gan its descent and most juniors can buy it for $US2-3/oz,” Dinning

failed to replicate the first excit- said.

ing but low-grade discoveries, Sarama has itself undertaken

investors and companies began portfolio rationalisation, dropping

to drift away. projects in Liberia and Mali in fa-

For those who have toughed vour of focusing solely on Burkina

it out, opportunity is now begin- Faso. And, while its peers con-

ning to knock once again as tinue to struggle to spread rapidly

companies look to divest their decreasing exploration budgets

West African portfolios. across their portfolios, the TSX-

Sarama itself has stripped listed junior also has the advan-

back its West African portfolio Sarama is managing exploration on the South Houndé JV with Acacia Mining. tage of its flagship project, South
to focus exclusively on Burkina The current annual exploration budget for the project is $3.5 million Houndé, being funded by a JV

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 75

INDABA PREVIEW

partner.

Sarama agreed to an earn-in deal with Aca-

cia Mining plc in November 2014. Under the

agreement, Acacia made an immediate $US1

million payment and is now earning an initial

50% interest in South Houndé by spending

$US7 million on exploration within the next

two years. Its holding will increase to 70% fol-

lowing a further $US7 million of exploration

expenditure in the following two years and

can reach 75% once a reserve of 1.6 moz gold

has been achieved.

Dinning said while Sarama’s preferred op-

tion would have been to continue developing

South Houndé solo, the vagaries of the mar-

ket meant other funding options were essen-

tial.

“We looked at the market and had two

choices; dilute at a company level or dilute at

a project level. We decided the project level

was best,” he said.

The deal also offers the junior “optionality”,

according to Dinning, with potential for at least

three different size projects within the South The Sarama team with managing director Andrew Dinning meeting with

Houndé project. “ local community representatives
“We just don’t see much downside We just don’t see much downside to the deal.
If we find something which suits Acacia then
to the deal. If we find something which we are happy to have 30% of it; look at Independence
suits Acacia then we are happy to have [Group NL]’s 30% interest in Tropicana. If we don’t find
30% of it; look at Independence [Group
NL]’s 30% interest in Tropicana. If we
don’t find something that size, we have
still got all that work on the project; a

regional picture of what is happening.”

South Houndé – 260km west of Oua- something that size, we have still got all that work on
gadougou – comprises 1,000sq km of

ground and has already been found to the project; a regional picture of what is happening.
host an inferred resource of 29.13mt @

1.6 g/t for 1.5 moz gold but Acacia is

after an asset which can stand alongside its at South Houndé. The second quarter of 2015 ised horizon to 10.3km with hits including 18m

suite of plus-200,000 ozpa Tanzanian opera- was spent targeting strike extensions to ex- @ 2.2 g/t from 25m at the Obi prospect, 5m @

tions. isting oxide lodes within the main mineralised 6.78 g/t gold from the Phantom prospect and

With Sarama managing exploration, the JV horizon at the Obi, MM and Phantom group of 8m @ 3.49 g/t gold from the Phantom East

has focused on building the regional picture prospects. The drilling extended the mineral- prospect.

While highly satisfied with the results of the

drilling programme, Dinning admitted much of

the work undertaken in 2015 had been “un-

glamorous” but required.

“In this climate, unless you get really stellar

results, the market is not rewarding you. The

Acacia money is funding work which is neces-

sary but not always headline-grabbing. There

are no really exciting drilling results coming

out of this work but it needs to be done so for

Sarama, the Acacia deal at the very least acts

to bridge a few years of tough markets.”

Whether the exploration work uncovers the

kind of project attractive to Acacia or not, Din-

ning remains convinced South Houndé will

eventually produce an operation.

“The minimum value driver there is a mod-

est heap leach project,” he said. “There is a

lot of oxide material, it leaches very well and

we had done near-PFS level work on a heap

leach project before Acacia came in so we are

comfortable with that. Beyond that, it could be

a 100-120,000 ozpa operation or, ultimately,

a plus-200,000 ozpa Acacia-sized operation.”

Dinning envisages a regional camp in the

Houndé region and Sarama is intent on being

involved at the heart of it. It is in a 35/65 JV

The heat may have come out of Burkina Faso’s gold exploration sector but with Savary Gold Corp over the Karankasso

the country remains a fertile land project which is adjacent to South Houndé. In

PAGE 76 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

September, Savary announced a companies but there are dozens

maiden resource of 9.2mt @ 2.3 g/t of others out there looking and the

for 670,000oz for Karankasso. challenge is trying to find the right

“If you put the two JVs together, thing before it goes on the market.”

Sarama has a footprint in two big That search has led the company

systems. There will be a mine there to consider projects in East as well

at some point but it is a question of as West Africa, but Dinning said

what size it will be and what owner- Burkina Faso would likely remain

ship it will be under. the focus.

“We see it eventually as a bunch “Cote d’Ivoire is probably the

of satellite pits feeding into a cen- only other country we’d go into at

tral processing facility. That is why this stage because we could lever-

the Savary JV is important to us, age off our Burkina Faso base.”

particularly the grade. To the north, Sarama’s commitment to the

Orezone has defined 430,000oz @ landlocked West African nation

2.6 g/t at Boni. I think they will even- comes despite political upheaval

tually all be in the conversation.” in the country. Former president

While the Houndé projects are Children from a local school Sarama built. The school has increased Blaise Compaoré resigned in Octo-

yet to show standalone potential, enrolment in the area from 80 to 150 and recently celebrated the ber 2014 in the face of a popular up-

Dinning believes once up and run- community’s first ever senior school graduation rising and the country has suffered

ning, the area will be producing for turmoil in the lead up to November

decades. Slow and methodical it may be but Sara- elections.

“Once mining has started, you are just ma has no desperation for the pace to pick The country’s gold industry, however, has

going to keep finding ounces here because up thanks to Acacia’s backing. Instead, it can been largely unaffected.

there is so much smoke. I worked at Agnew keep its own cash reserves for other ventures. “The political situation in Burkina Faso is

[in Western Australia] 20 years ago and we The last 12 months has seen a rash of deal- manageable,” Dinning said. “We always an-

were scratching around for mill feed then...20 making in African gold circles as distressed ticipated there would be some issues this year

years later it is still going. As you develop your juniors try to find exit strategies and majors leading up to it but the Burkinabe people are

understanding of the local geology you can drop exploration ground in favour of getting very pragmatic and this was not a tribal issue,

manage the exploration better. It is particu- operations right. nor a coup. It was a popular uprising and I

larly relevant for this region where there is a Dinning said Sarama had been actively think that makes a difference.”

lot of cover, no outcrop and it has complicated looking in the gold marketplace but wouldn’t – Dominic Piper
regolith. You need slow, methodical explora- move unless the deal was right.

tion to find the gold.” “We have had conversations with a lot of

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 77

INDABA PREVIEW

Market fails to floor Azumah

There has never been a better time to de- Azumah’s feasibility review of Wa is focused on reducing capital costs wherever possible
velop a mining project, but there has never
been a worse time to finance one, according Stone said his company had been speak- process, the environmental permitting, has
to Azumah Resources Ltd managing director ing with several international groups, some of surpassed the halfway mark and the company
Stephen Stone. which have signed confidentiality agreements was hoping to confirm the terms of reference
and are completing due diligence following re- for the draft EIS before the end of 2015.
Azumah has spent more than $80 million cent site visits, about financing or partnership
on exploring and developing the Wa gold pro- arrangements for project development. The company has already been granted the
ject in Ghana over the past decade, but each necessary mining licences.
release of robust project economics has co- “We’re looking at a number of different
incided with poor market sentiment towards ways they can participate, either as financi- Azumah completed a small raising of
both precious metals and West Africa in gen- ers, in conjunction with the traditional banks, $860,000 in November to fund a first-pass
eral. as providers of equipment, engineering and RC drill programme at the Duri and Piiri pros-
contracting services, in return for equity in pects, about 30km north of the proposed gold
The most recent feasibility study – com- the project, or maybe just buying a share of plant adjacent to the flagship Kunche deposit.
pleted in March 2015 – confirmed the project the project and looking at joint development,”
could support a 1.2 mtpa CIL operation pro- Stone said. Stone said his company was looking for-
ducing 90,000 ozpa gold for $830/oz AISC ward to drilling again after being restricted to
over an initial seven-year mine life. The es- “We’re open to looking at any one or a com- mostly auger-based programmes in recent
timated capital required for start-up came in bination of those. Five years ago a number of times.
at $168 million, plus $27 million for a mining companies got similar projects away reason-
fleet. ably easily, but that’s just not the case now “It’s obviously been frustrating not being
because the equity funds just aren’t there so it able to hit the targets as hard as we have
Like most ASX-listed gold juniors in the cur- requires a bit of lateral thinking.” done in the past, but we’ll just see what hap-
rent market, Azumah has found it difficult to pens with these drilling programmes,” Stone
lock in project funding and Stone said it was Another critical part of the pre-development said.
“absolutely essential” to be seen to be reduc-
ing capital and operating costs where possi- Stephen Stone “We’ve got some terrific local geologists
ble. there and as a board we made a decision to
keep that group of people together and ac-
“You can sit on your hands and wait for the tive. So it’s about time we drilled some decent
gold price to go up, but really it is what it is holes.”
and you have to make your project hum at the
current gold price and exchange rate,” Stone With reserves of 624,000oz @ 2.14 g/t gold
told Paydirt. plus another 28,500oz in the mining inventory,
Azumah has worked the 2,800sq km project
“My view is there has never been a better up to a point where it can be developed into a
time to actually develop a project, but there’s robust mining operation, pending finance.
never been a worse time to finance one, so
we’re looking at anything which way we can “To me that smacks of value, packed into
just to give this project more legs than it has.” a very small market cap [of $10 million at the
time of print],” Stone said.
A feasibility review has been under way
since March, with a particular focus on the “The real challenge is trying to unlock that.”
capital cost structure, although Stone ac-
knowledged there were also opportunities to – Michael Washbourne
improve the operational forecasts.

“The real impediment to developing pro-
jects in this market, not just for us but for other
companies in a similar position, is the lack of
available capital so anything you can do to
bring down the capital costs is really impor-
tant,” Stone said.

“We know we can reduce the cost of the
mining fleet quite considerably. There’s a lot
of parked-up equipment sitting around the
world. Whether you go EPCM or EPC, there’s
obviously an opportunity to sharpen the pen-
cil there.

“Some of the companies we’re talking to
about participation in the programme also
believe that, with their input, they can reduce
them even further, so we believe we can re-
duce the costs quite considerably.”

Azumah has also been negotiating with
government authorities in Ghana about de-
ferring or removing some VAT payments typi-
cally charged during development, potentially
saving the company about $10-15 million.

The Ghanaian Government is currently
reviewing its royalty rates and Azumah was
equally confident of a favourable outcome on
that front.

PAGE 78 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Bass heads straight for
Madagascan graphite

Former Tasmanian miner Bass It is planned that Tirupati and
Metals Ltd has entered the
graphite space with producing StratMin operations will be cen-
outfit StratMin Global Resources
plc. tralised, with reporting made to

Bass’ 25% interest in the Lo- Tirupati’s Shishir Poddar who
harano mine comes as StratMin
ventures beyond the realms of has over 20 years’ experience in
the AIM exchange to garner sup-
port for its graphite operations in the graphite industry.
Madagascar.
“We won’t be large producers
Australian graphite companies
have managed to woo ASX in- but we need to have a plan of
vestors however peers in London
are struggling to extract any real where our product is going and
value from the market. The lack
of graphite activity on AIM means Tirupati has been instrumental,
there are no parameters for
graphite investment for investors technically and commercially,
to consider, StratMin chief exec-
utive Brett Boynton told Paydirt. having made sure that we are

“We looked at a dual listing in Australia be- being introduced to the right
cause there is a lack of following for graphite
in London,” Boynton said. people,” Boynton said.

“We are the only listed graphite company in Currently, Tirupati is locked
London and it is hard to find investors, there
is some retail [interest] and general investors in to take all StratMin’s sub-
but we are trying to build a more considered
investment base and immediately we are find- 94% carbon-in-graphite finished
ing a reasonably sophisticated register at the
top end [in Australia].” product.

For $4.3 million Bass can claim a quarter Madagascan graphite producer StratMin is well positioned Boynton said StratMin would
(with an option to increase to 35%, subject to
additional funding conditions) of the Loharano near the country’s largest port, Tamatave look to extend its off-take ar-
natural graphite mine, 100km from Madagas-
car’s primary shipping port at Tamatave. rangements with Tirupati, how-

The Loharano plant was successfully graphite,” Boynton said. ever, diversifying revenue streams with other
modified and optimised in mid-2015, meaning
commercial operations are now running 24 Next project in line for StratMin is the customers was also on the cards.
hours a day, six days a week. However, there
remains further improvement to be made. 12,000 tpa Mahefadok mine. StratMin’s projects are not large in scale

The goal of the optimisation process was With the expertise and knowledge gained but there remains exploration upside.
to replicate pilot phase operations where 94%
purity flake graphite was produced at a from Loharano, Boynton said StratMin was “We haven’t drilled anything out yet but we
sustainable rate of 6-8,000 tpa.
well positioned to tackle Mahefadok. will on the back of cash flow. However, we
“We have produced volume and
grade and now we have to demon- But perhaps the biggest enhancement know we have the quality of flake and flake
strate consistent [production] of vol-
ume and grade together,” Boynton made in recent times has been aligning with size distribution. We have de-risked our de-
said.
private Indian-based graphite miner Tirupati velopment which puts us ahead of some of
Bedding down Loharano opera-
tions, where mining of soft clay type Carbons & Chemicals Group (P) Ltd. our competitors. The approach taken by some
rock means less energy demands and
minimal degradation in flake through Tirupati, a noted local graphite producer, is others [graphite hopefuls] has been on scale
processing and producing cash flow
are also part of StratMin’s plan to ex- aiming to expand beyond local borders and and some might get a reality check when it
pand its graphite business.
has acquired the 10-year Vatomaina project, comes to proving the operation to get fund-
“The next stage is a 12,000 tpa
operation which will come 12 months 20km from Loharano. ing,” Boynton said.
on from pulling the trigger on funding,
with 2017 being the time when we will A 12,000 tpa mine and processing facility “There is a lack of technical skill in the
be looking at operations of 20,000 tpa
will be jointly funded by Tirupati and Strat- graphite market and we’ve had to go out and

Min, with the former bringing highly valuable get that skill from a private Indian company.

graphite expertise and the latter providing in- Other companies and industry will benefit

country knowledge to the JV. from further investment in the graphite sector

An estimated $US4 million will be required for sure.”

to build Vatomaina, with a similar amount It remains to be seen how much room there

needed to bring Mahedfadok to fruition. is in the market for the throng of graphite play-

ers emerging in Africa, but it is fair to

say with a producing asset and off-

take secured, StratMin is ahead of the

pack.

Nevertheless, Boynton believes

there is an appetite for African pro-

jects, including Madagascar, from the

London investment community.

Despite a lack of domestic energy

generation proving a sticking point for

some investors, the graphite, gold,

base metals, exotic and peculiar

stones may compel people to look at

Madagascar as a fertile investment

destination.

– Mark Andrews

Graphite in Madagascar is now Bass Metals’ main game

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 79

INDABA PREVIEW

Mozambi tunes into
Tanzanian graphite

Graphite exploration in Tanzania continues much as we can before the wet season in
to purr along, with Mozambi Resources December,” Armstrong told Paydirt.
Ltd claiming another discovery at its flagship
Namangale prospect. It has been a quick graduation for Mozam-
bi in Tanzania’s graphite space, with stage
Investors were quick to jump on board, with one exploration only getting going in June
Mozambi receiving commitments to raise following the signing of a term sheet for the
$1.75 million to continue RC and diamond option to acquire 18 graphite tenements in
drilling at Namangale where large intercepts the Lindi and Mtwara provinces.
up to 100m thickness of graphite mineralisa-
tion (and several drill holes remaining open at The company has since taken possession
depth) have been reported. of 12 tenements to have well over 2,000sq
km of ground which includes the Namangale,
At the time of print, 12 RC holes for 665m Chiwata, Chidya and Massai prospects.
had been drilled at Namangale, within Mo-
zambi’s Nachingwea project area, with 10 Additionally, Mozambi has options to ac-
holes intersecting graphite schist mineralisa- quire graphite licences in Mozambique’s
tion. Balama-Montepuez region which hosts the
likes of fellow ASX-listed companies Syrah
Mozambi executive director Alan Arm- Resources Ltd, Triton Resources Ltd and
strong was impressed by the results, but not Metals of Africa Ltd.
surprised.
However, its immediate focus is in Tanza-
“Being just south of Magnis [Resources Ltd] nia where Mozambi hoped to have a better
we knew there was a possibility of large-scale gauge on its prospects by the end of 2015.
graphite potential and we are really impressed
with results to date. We are looking to follow “We are pushing towards having a cou-
up drilling at Namangale with the enticing hits ple of JORC resources [at Namangale and
we have already and we will look to drill as Chiwata] by Christmas and looking further
at what else we have on our ground,” Arm-
Mozambi is among a host of emerging Australian
strong said. graphite hopefuls in Tanzania
Investors have re-
and reinvent the wheel.”
acted warmly to ex- Armstrong is also wise enough to under-
ploration feats to date,
with Mozambi’s share stand there is limited room for the plethora
price going from 1.2c/ of emerging graphite hopefuls, particularly in
share to 4.4c since East Africa, in the market.
getting busy in Tan-
zania. “I would say at one stage or another, con-
solidation is going to be inevitable,” he said.
The company man-
aged to raise $3.2 mil- “It will come down to which companies fit
lion during the quarter together, both from a company operations
ended September 30 and cultural point of view. You are not going
and put the money to to see five or six graphite companies all go-
good use. ing alone, even in the Mahenge area with the
likes of Kibaran [Resources Ltd] and Black
Mozambi taken [Rock Mining Ltd], there will no doubt be talks
note of what those be- of consolidation.”
fore them, particularly
Magnis at its 156mt @ Just who dances with who will keep market
5.2% TGC Nachu pro- observers intrigued in the evolving graphite
ject, have achieved in scene and Mozambi cannot be discounted
the area. from such discussions.

“Magnis are the “The biggest thing we have over many other
front runners and it is graphite companies the world over is connec-
because of companies tion with infrastrucutre,” Armstrong said.
like them that compa-
nies like us are start- “Mtwara Port has about 400,000 tpa ca-
ing to get a following,” pacity and only about 34% is being utilised at
Armstrong said. the moment. They are looking at expanding to
750,000 tpa with the activity happening, par-
“We have watched ticularly in the graphite space.
Magnis closely and
they have really set a “We have a sealed road that runs right
path for other compa- through our tenure and our resource is start-
nies to follow and we ing to discover coarse flake graphite potential
are not silly enough, and large scale tonnage at Namangale,” Arm-
especially for a com- strong said.
pany like us, to go out
– Mark Andrews

PAGE 80 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

AAMEG’s practical
anti-corruption policy

Australia-Africa Minerals and Energy the Criminal Code.
Group’s (AAMEG) Trish O’Reilly feels
like she’s been dragged across the coals. In its submission to the inquiry’s stand-

The NGO’s chief executive was recent- ing committee, Transparency International
ly put through the media wringer follow-
ing AAMEG’s submission to the Federal said the necessary moratorium should be
Government’s Senate Economics Refer-
ences Committee Inquiry into Foreign permissible provided companies demon-
Bribery which called for the phasing out of
facilitation payments in African business strated their commitment to zero tolerance
transactions.
towards such payments.
O’Reilly told Paydirt AAMEG’s submis-
sion caused a stir because of its practi- Transparency International said compa-
cal and progressive vision for a staged
approach to the eradication of facilitation nies could demonstrate their commitment
payments.
to zero tolerance by issuing a clear policy
“The press jumped on our statement
because it appeared to say that we want- prohibiting facilitation payments, training
ed to keep facilitation payments until you
got to the end of the submission where we staff in and enforcing procedures neces-
clearly stated that they had to go,” O’Reilly
said. sary in the event of being asked to make a

“It’s been really misconstrued by the facilitation payment, documenting all facil-
media. What we are saying is that facili-
tation payments need to end, but there has itation payments and notifying appropriate
to be a process of knowledge and capacity
building around that and there has to be a authorities of the demand for facilitation
process for them to go.”
payments in countries attempting to ban
O’Reilly said while AAMEG understood
facilitation payments were an inappropriate the practice.
method of securing government services its
members were legally entitled to, its experi- O’Reilly said AAMEG was working with
ence in Africa shaped the tenor of the sub-
mission. Transparency International and Australia’s

She said ideologists often painted Africa arm of the United Nations Global Compact
with a broad brush, disregarding the fact it
comprised 54 nations with different levels of to plan seminars on facilitation payments
governmental, economic and social develop-
ment. Trish O’Reilly in 2016.

They also overlooked the number one rea- It was also engaging in discussions with
son for the existence of facilitation payments
in Africa – crippling poverty. some public servants adequately, or some- the Federal Government and Department of

“The governments of many impoverished times at all, particularly in those countries re- Foreign Affairs and Trade to explore possible
countries in Africa lack the resources to pay
cently emerging from conflict,” she said. programmes to support African governments

“This had led to a tendency for public of- and discourage the use of facilitation pay-

ficials to often need some additional, modest ments.

support to satisfactorily complete their work, O’Reilly said a measured approach to the

hence the facilitation payment. Regrettably, eradication of facilitation payments would en-

until the economic well-being of such coun- sure they were a thing of the past in the near

tries improves sufficiently so that govern- future.

ments are adequately resourced to be able “It’s about identifying those steps and doing

to pay their public servants properly, and they something about it, because if you just turn

themselves implement practices and foster a switch, where will it all go? It will go under-

a culture in which facilitation payments are ground and there will be more corruption,” she

not accepted, the demands and requests for said.

these payments are likely to continue.” “How can you make a positive difference?

O’Reilly said AAMEG had found an ally in By looking at the foundations of the issue and

Transparency International Australia, which working on it with governments and business.”

called on the Australian Government to con- – Rhys Dickinson
sider a 12-24 month moratorium before re-

moving the facilitation payment defence from

8 October 2015 The CD-Rom of the 2015
Pan Pacific Perth Australian Nickel Conference

is available

CD-Rom for conference delegates – $60 (inc.GST)
CD-Rom for non-conference delegates – $85 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 81

INDABA PREVIEW

Côte d’Ivoire excites Predictive

Predictive Discovery Ltd manag- A stream sampling programme Toro identified the largest cluster of anoma-
ing director Paul Roberts says at Boundiali also caught fire, with lous gold values in the north-east part of the

Côte d’Ivoire is back on the mining nine samples exceeding 6 ppb permit, which coincided with two strong BLEG

map. gold – four of which were from a stream sediment gold values of 10.5 ppb and

Once considered the jewel of single 30sq km catchment area. 24.2 ppb gold.

West Africa’s mining crown, Côte The company’s good work in That zone extended over eight lines and

d’Ivoire was cast into the “too hard Côte d’Ivoire caught the attention 5.6km, covering an area of 4.5sq km and in-

basket” at the turn of the millennium of London-based Toro Gold Ltd, cluded a peak value of 790 ppb gold, or 0.8

following violent demonstrations in which signed a Heads of Agree- g/t.

the lead up to the 2000 election of ment deal to explore Predictive’s Roberts said there also appeared to be

President Laurent Gbagbo and the budding permits. north-northeast trends within the greater

ensuing civil war of 2002. Paul Roberts “The deal was slightly unu- anomaly, which suggested the presence of

The country’s 2005 elections sual in that it is an incorporated higher grade structures.

were abandoned as the Govern- JV, which means Toro is putting Predictive’s share price almost doubled off

ment and rebels negotiated a peace accord, money into the ground,” Roberts said. the back of the October announcement.

which was signed on March 4, 2007. “Once they spend $US1 million they will “The Boundiali soils got the market going,”

Unfortunately, armistice did not last long, have 51% and at that stage we have the op- Roberts said.

with civil war resuming shortly after the na- tion to contribute or not, which will depend on “Our share price is very low, but neverthe-

tion’s tumultuous 2010 election. their results. If we decide not to contribute, less, when 40 million-plus shares change

International press reported numerous hu- then they will earn another 14%, but they’ve hands there is a reasonable amount of money

man rights violations by both the Government got to spend another $US2.5 million to that is changing hands. It also means there is

and rebels; in the city of Duékoué, hundreds achieve a 65% shareholding. We may contrib- a greater number of people who are paying

of people were reportedly killed and in nearby ute at 49%, but I would say we are highly likely attention to the company.”

Bloléquin, dozens were killed. to contribute when they are at 65% because Predictive upped its Côte d’Ivoire interest

To say the country was in dire straits is if they have got that far clearly it means they later in October when it signed an agreement

an understatement, as United Nations and had some very good results.” to finance local company XMI SARL’s explo-

French forces took military action against Toro gained first access to Predictive’s per- ration efforts at its Bobosso permit in coun-

Gbagbo, taking him into custody after a raid mits in March and embarked on an ambitious try’s north.

on his residence on April 11, 2011. geological mapping and surface sampling Previous explorers, including Newcrest

Just one month prior to Gbagno’s arrest campaign. Mining Ltd, had recorded intercepts of 5m @

and the start of now President Alassane Working through Côte d’Ivoire’s wet sea- 20.6 g/t and 7m @ 9.5 g/t at Bobosso and the

Ouattara’s formal rule, Predictive increased son, Toro targeted areas of historic artisanal 7sq km Wendene prospect boasts consistent

its presence in neighbouring Burkina Faso by workings at Kokoumbo in September and re- soil values of more than 100 ppb gold.

acquiring its Bangaba gold play. covered rock chip and quartz samples grad- “Some people have said, ‘Newcrest have

Predictive recognised Côte d’Ivoire’s explo- ing 98 g/t gold, 54 g/t and 44 g/t and wide- been there already, surely they didn’t leave

ration potential, but was scared off investing spread, strong gold geochemical anomalies anything behind?’ Large companies leave

in the country due to its political volatility. with peak values of 5.6 g/t gold, 3.4 g/t and many things behind, a lot of the time because

“Cote d’Ivoire had some real positives go- 3.3 g/t. their hurdle is so high. That’s not a criticism of

ing for it,” Roberts said. “Certainly the most interesting thing about Newcrest and other companies, but we have

“It’s got a huge amount of prospective those high grades is they are not all from the got the capacity to come in there and … find

ground, but the amount of gold mines is es- workings; some are from areas where there 1 moz that might not have met their targets.

sentially less than anywhere else in the area. were no workings at all,” Roberts said. That would make us very happy.”

It’s got less than Burkina Faso, less than Mali Roberts said Toro’s most exciting work to Roberts said Predictive was focused on

or Senegal. The reason for that is all the in- date was at Boundiali; a soil sampling pro- reinterpreting the permit’s geology by re-log-

stability when an exploration boom was going gramme covering the entire permit on 800m ging historical rock chips and core.

on everywhere else. Cote d’Ivoire is clearly spaced lines uncovered anomalous gold val- That would be followed by preliminary met-

underdone.” ues in excess of 20 ppb gold in several loca- allurgical test work and, hopefully, diamond

As stability was cultivated under Ouattara’s tions. drilling by Q1 2016.

presidency, Predictive saw an op- Roberts hoped Predictive would

portunity to finally invest in the un- soon be rewarded for staying com-

derexplored country. mitted to its West African cause.

Using the same Predictore tech- “I think the way it is going to

nology employed to find its Burkina change is people who have kept

Faso assets, Predictive identified moving will start reaping the re-

several areas worthy of the time and wards,” he said.

money, which eventually led to the “The mood in the market has got

acquisitions of its Kumbo explora- to change. There are a number of

tion permit in May 2012, Kokoumbo people who have come back into

and Ferkessedougou permits in July gold and said this is the space I

2013 and Boundiali and Kounahiri want to play in. That is the begin-

permits in January last year. ning of the turn. There is reason for

Predictive’s Côte d’Ivoire story being optimistic.”

started to take shape last June when – Rhys Dickinson
a review of historical data at Kok-

oumbo revealed the presence of a

strong 1.4km by 800m gold-in-soil

anomaly. Toro’s Boundiali results sent Predictive’s share price skyward in October

PAGE 82 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Tawana stands by Mofe Creek

Tawana Resources NL remains committed Tawana still harbours a strong ambition to develop the Mofe Creek iron ore project in Liberia
to developing the Mofe Creek iron ore pro-
ject in Liberia despite flagging interest in ac- Brockman Resources, said most of his com- Goehn last June shifted the company’s fo-
quiring an advanced Australian gold play. pany’s shareholders recognised the potential
economic value of Mofe Creek, even while cus to a 120km strike zone of DSO hematite
A recent review of the company’s strategic prices and forecasts remained grim.
business plan recommended following up on mineralisation averaging 62.8% iron and up to
some promising project acquisition apprais- “As much as the propaganda will try and tell
als, especially those which leverage off a you the only companies who are going to sur- 66% iron.
buoyant Australian gold sector. vive the next 2-5 years are the three iron ore
majors, it’s just not true because the little idi- The discovery, about 6km from a bitumen
External factors such as the iron ore price osyncrasies of a project like Mofe Creek won’t
slump and last year’s outbreak of the deadly change,” Richards said. highway running directly to Monrovia, has
Ebola virus have conspired against Tawana
despite a string of good news flow over the “The ore is at surface, it’s free dig, it’s close presented the company with a potential early
past two years, including a robust scoping to the coast, it’s supported
study and the high-grade DSO discovery at by existing roads and infra- and low capital intensity development oppor-
Goehn. structure, there’s a working
gold mine next door, plus tunity.
Tawana stated in mid-September its deci- you’ve got highways and
sion to consider available gold projects would working ports within Liberia As a result, all other development plans for
not detract from its ongoing development and companies like Arce-
plans for Mofe Creek and any acquisition lorMittal and WISCO op- Mofe Creek (inferred resource of 61.9mt @
was designed to reduce the potential corpo- erating in the country. You
rate risk associated with being a single-asset can’t fundamentally take 33% iron) are on hold.
company. away the salient facts of
geology, location, proximity “The advantage of this
Executive chairman Wayne Richards said to infrastructure and a final
his company was seeking a low-cost acquisi- product grade of 65% iron.” DSO material is there’s no
tion which capitalised on the current investor
interest and support for Australian gold pro- Tawana was pursuing beneficiation required, so it’s
jects. a PFS on the project, par-
ticularly around the Gofolo much simpler to mine, crush
“While the Mofe Creek project is and will and Zaway deposits, after
remain highly viable and economic in a low- a mid-2014 scoping study and screen to produce a mar-
pricing environment, the company has strat- supported a 2.5 mtpa oper-
egised to diversify its technical, corporate and ation over 14 years for $US280 million staged ketable product, thereby re-
commodity risk by considering dual or multi- over the first four years of production, includ-
ple commodities within its portfolio,” Richards ing start-up capital of $US52.9 million. sulting in your operating and
told Paydirt.
Operating costs of $US40.60/t were slated capital costs being very low,”
“We’re actively seeking to acquire Austral- to churn out a 65-68% premium fines iron
ian gold assets via a corporate arrangement product and generate a NPV of $US435 mil- Richards said.
which creates shareholder uplift and minimis- lion, pre-tax revenue of $US2.5 billion and an
es both the associated geographic and fiscal IRR of 55.8%. “This fact, combined with
risks associated with a single-commodity
business. An Aussie gold project will have However, a game-changing discovery at a short haulage distance for
positive exposure to the Australian-US dol-
lar exchange rate, as and when the US com- our product to a working iron
mences interest rate rises, thereby potentially
maintaining gold sale pricing in the range of ore port with latent capacity,
$1,500-1,600/oz.”
provides the company with
In a sign of both its immediate and long-
term commitment to Mofe Creek, the compa- an end-to-end logistics solu-
ny was finalising a six-hole drilling campaign
at Goehn to be completed before year’s end tion.
while awaiting a formal response to its draft
mineral development agreement (MDA) sub- Wayne Richards “Once the MDA confirms
mission. our principle commercial

Negotiations with Hong Kong-based WIS- terms reflective of the DSO
CO CAD Mining Company Ltd around poten-
tial access and use of its port facilities at Free- start-up and the location of our new port and
port, Monrovia, have also progressed since
an initial MoU was signed in May. haul road facilities, we’ll be in a strong com-

Tawana also received approval from the mercial position to expand our engineering
Environmental Protection Agency (EPA) of
Liberia in November to progress its environ- design with definitiveness.”
mental and social impact assessment (ESIA)
studies as it ultimately seeks to obtain an en- – Michael Washbourne
vironmental permit and mining licence for the
project.

Richards, a former senior executive with
BHP Billiton Iron Ore and Pilbara-focused

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 83

INDABA PREVIEW

Australia assists African
skills development

The speed of Africa’s emer- take the framework reins.
gence as a global resources She was also confident it would

and energy leader has far exceed- be held to account by Australian

ed the continent’s ability to satisfy explorers and miners operating in

the demand for its minerals, oil country.

and gas. “I think Australia’s representa-

Lacklustre infrastructure and tion in Mozambique is very strong

mining policy are often pointed and that momentum and sustaina-

to as shortfalls of Africa’s extrac- bility will be championed by those

tives sector, but too often the organisations,” she said.

foundation of the industry – the “There will be some continuity

workforce – is overlooked in the in that regard.”

conversation. SkillsDMC is also halfway

Fortunately for Africa, Australia through a similar project in Zam-

is investing in the cogs that turn bia, in which it was engaged in

the continent’s mining machine. March to build the capacity of

LNG hopeful Rubicon Re- Zambian Technical Education,

sources Ltd recently announced Vocational and Entrepreneurship

its on-site skills training business, Training Authority (TEVETA) to

Futuro Skills, had partnered with Danika Bakalich develop skills competency frame-

Australian-based industry skills works aligned to the specific op-

council SkillsDMC to design the implemen- the Mozambican Government develop a bet- erating requirements of the mining and civil

tation of holistic workforce development pro- ter understanding of industry and what it had infrastructure industries.

grammes in Mozambique. to offer, particularly to the vocational educa- Bakalich said Zambia was hungry for eco-

Rubicon chief executive Richard Carcenac tion system. nomic growth and ready to extract full value

said the Futuro Skills and SkillsDMC part- She said it was critical Mozambique em- from its resources sector, but the Govern-

nership would offer a “turnkey solution” to braced its changing economy and did every- ment’s relationship with industry was weak.

the “design and delivery of skills forecasting thing in its power to seize the countless op- “The key challenges have been in under-

analysis, workforce plans and implementa- portunities afforded to it from the resources standing the value of industry in this context,

tion of strategies, mapping and design of a and energy sector. but more importantly how to communicate

task-based matrix, verification of competency “Activity is increasing exponentially and the and how to identify what is needed to achieve

services, recruitment, medical screening of operations are in regions where communities the end game,” she said.

candidates, comprehensive vocational train- haven’t experienced this rapid growth by any “They are seeking to learn how we in Aus-

industry or sector,” Bakalich said.
“It’s not only about the technical skills, it’s
ing and labour hire”. tralia do things so they can apply it to their
Despite recently joining forces with Futuro own markets, which is a terrific compliment

Skills, SkillsDMC has been hard to Australia. It’s been a terrific ex-
at work in Mozambique since perience to understand some of
the challenges faced in markets
Skills policy harmonisationSeptember last year, developing where that relationship is not as
strong as it is here.”
a skills competency framework
The resources boom clearly un-
across Africa is the prioritythrough industry engagement and
covered several deficits in Africa’s
“and I certainly know that economiccapacity building of the country’s mining workforce, but Bakalich
National Authority for Professional communities are focused on that.
Education (ANEP) staff.

SkillsDMC deputy chief execu- said the continent, with the help of

tive Danika Bakalich told Paydirt experienced mining nations, was

although the discovery of potentially world- about the flow-on impacts of operations in re- now on a path of improvement.

class coal orebodies and natural gas reserves mote regions and any cross-industry skilling “Skills policy harmonisation across Africa is

made Mozambique attractive to investors, the that might be sourced out of that. It’s about the priority and I certainly know that economic

enabling environment for doing business re- leveraging the investments that operating communities are focused on that,” Bakalich

mained challenging. companies are making in these regions and said.

“At the moment the greatest need for skill- showing that the flow-on impacts are benefit- “There are a lot of groups that are key to

ing is work entry,” Bakalich said. ing regional communities. I think that this is establishing skills frameworks and to allow

“People who may have never had a job really about generational change in Mozam- and support the movement of workforces.

before, their language and literacy skills are bique.” Extractives is really the sector that defines

quite low. The strongest educational and train- SkillsDMC’s involvement in the project con- how these multilateral relationships can take

ing outcome of need is called work prepara- cludes in March, but it was designed with a shape. The sector has a real influence over

tion and foundational skills. It is simple things, long-term objective to provide ANEP with the the politics and the community. It will be tre-

like understanding what it means to work in model, tools and skills to develop and main- mendous to see what comes out of this over

a shift-based environment or operating within tain skills standards for the mining and oil and the next five years.”

a management supervised environment. It’s gas sectors to support Mozambique’s rapid – Rhys Dickinson
about setting expectations with that cohort.” economic development.

Bakalich said SkillsDMC’s work had helped Bakalich said ANEP was almost ready to

PAGE 84 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Orion sees red in
South Africa

Orion Gold NL has broadened its Historical production from Prieska is 430,000t copper and 1mt zinc Orion’s option is to acquire 73.33% in
portfolio by acquiring an interest the project – one of the world’s largest
in the Prieska copper mine, Copper- VMS base metals deposits with historical
ton, in South Africa’s Northern Cape production of 430,000t copper and 1mt
province. zinc – by taking over unlisted South Afri-
can company Agama Exploration & Mining
Orion has large landholdings in Pty Ltd.
Australia, particularly in the Fraser
Range, and Prieska offers its share- Included in the option is prospecting
holders diversity and exposure in rights over the Marydale project, a virgin
commodities and country. epithermal gold discovery, 60km from
Prieska.
Initial project due diligence defined
an exploration target of 3-4.5mt @ Orion sees near-term production po-
1-1.6% copper and 1.3-2% zinc, near tential at Prieska, with mine infrastructure;
surface oxide, supergene and prima- regional power grid feed, bitumen roads,
ry sulphide open pit material potential landing strip, and bulk treated water sup-
to 100m, and a deeper sulphide ex- ply available.
ploration target of 7-11mt @ 1.2-1.8%
copper and 3.9-5.9% zinc. Access to an extensive database of
geological, engineering and metallurgical
The projections were compiled information also provides Orion the path-
from available drilling data and hard way to quick production.
copy information, with Orion eyeing
a start to feasibility studies within 10 “The option represents a low-cost,
months of exercising the acquisition counter-cyclical opportunity for Orion to
option. expand its existing resource portfolio be-
yond greenfields exploration projects.

GABON

Commanding, quality land position in an emerging iron ore province

Privately oowned GGeennmmin GLirmouitpedhahsasacaqcuqirueirdedcocnotnrotrlloinllginigntienrtesretstisn ifnivefivireoniroonreopreropjerocjtescts
in Gabon, wwitithhaannaaggggrereggaatetelalnanddhholodldininggofoaf papprporxoimximatealtyel4y,140,100s0qusaqrueakreilokmiloemtreest.res.
The key projects in soutthh--eeaassttGGaabboonnaarreecclolosseettooeexxisistitninggraraililininfrfraasstrturucctuturereaannddsshhooww
strongg ppootteenntitaial ltotosuspupoprot rntenaerater rtmermdiredcirteschtipshpipngpinorgeo(DreS(OD)SoOp)eoraptieornast.ions.

NMeawjorsshhaarerehhooldldeerrwelcomed

GGeennmmiinn hhaass preacrtennetrlyedpawrittnhepreridvawteitheqpuriitvyaftuenedq,Tueitmy bfuonCda,Tpeimtabl,o
Cfpwuohanropdtfsiiotnealgilo,infowtvoreh2sbo0tems1ed4een-in1ftiv5naeenasddct.mtsiveuitnpietpsoininrttGwheaillbGeonnroa. ubple wthilel evanlsuuereofatdheequate

Genmin Group Suite 7, 1297 Hay St, West Perth WA 6005 • Ph: +61 8 9200 5812 • Fax: +61 8 9200 5813 • [email protected]

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 85

INDABA PREVIEW

Listen, learn, engage: Blakiston

The Cameroon Govern- “The Government devel- and then looked to spin those off,” Blakiston
ment has received wide- said.
spread praise since taking oped a significant degree of
on the responsibility of sourc- Despite the malaise which has engulfed the
ing capital to develop key trust in Sundance and that market for the past three years, Blakiston re-
infrastructure for one of the mained confident investor interest in African
country’s major resources changed the way their rela- mining projects remains.
projects.
tionship was being viewed; Blakiston urged countries and financial in-
The challenge now is for stitutions to look at how an infrastructure de-
other African governments to not as government and velopment could service a number of projects
follow Cameroon’s lead, al- and industries before committing to any large
though the question on eve- company, but as partners and long-term funding schemes.
ryone’s lips is whether those
jurisdictions are financially for developing a project.” “It’s far better for money to be invested into
mature enough to participate a country through a robust project that’s going
in similar infrastructure de- In a wide-ranging inter- to create a long-term economic outcome and
velopment partnerships. is going to improve the capacity within that
view with Paydirt, Blakiston country as opposed to straight donations,” he
According to Gilbert + Tobin Lawyers part- said.
ner Michael Blakiston, an outspoken advo- urged all African govern-
cate for African resource development, the “I’ve visited a number of countries that sur-
answer to that burning question is simple. ments to listen and engage vive purely on donor money, and that’s not the
alternative. I don’t see any alternative but to
“Governments are in a particularly com- with those in industry in a have development. There are people in our
plex position because a lot of them are cash- world who want to see responsible develop-
starved, lacking depth in capacity and de- bid to overcome the many ment, so why not tap into them?”
pendent upon funding from the World Bank
and IFC, which have their own agendas,” Michael Blakiston development challenges Deciding on what is the best course of ac-
Blakiston said. currently confronting a de- tion for infrastructure development is one
challenge, however, attracting investment for
“So I think the answer to the question on pressed resources sector. such a strategic growth plan is an entirely dif-
funding is ‘no, not enough’ because a lot of ferent game.
them are struggling. When subsistence econ- The Perth-based lawyer was also highly
omies don’t have the capacity to support de- Blakiston said the onus was on a host gov-
velopment, the question then becomes ‘what critical of some African delegations for failing ernment to make the country as attractive to
can the world do about that?’, and therein lay the investment community as possible and
some challenges.” to take up offers of legal advice and related “disincentive” tax policies were not helping
that cause.
The Cameroon Government is hopeful of assistance.
nailing down a funding solution for port and “Mozambique was a very attractive coun-
rail infrastructure, valued at $US3.5 billion, to “Often what happens is they come along try for investment and there was potentially a
service Sundance Resources Ltd’s Mbalam- lot of very significant mine and hydrocarbon
Nabeba iron ore project, on the border of and present their country, which they’re very developments to be made there, but they
Cameroon and the Republic of Congo, within amended their laws – both the Mining Law
the next 12 months. proud to do, as they should be, but they’re not and what they call their Mega Projects Law –
and that’s really impacted upon the attractive-
Development of Mbalam-Nabeba, about there for anyone else so they’re not seeing the ness of that location,” Blakiston said.
510km from the Cameroon coast, has long
been viewed as a catalyst for others to follow comparative,” Blakiston said. “Namibia passed some tax changes a cou-
– and now no longer just from an operational ple of years ago which were diabolical, but
perspective. “What fascinates me is I get no follow up. they backed down once they realised what
the impact was. I think that was done without
While other projects and industries will look I’ve had it once in the five years I’ve presented engaging with industry, they didn’t understand
to tap into the proposed port and rail facilities, the impact of what they were doing.
companies and governments now have a de- at platforms like Africa Down Under. I’m there
velopment partnership model to emulate, par- “This current climate will certainly see peo-
ticularly in these trying economic times. as a genuine advocate to try and see change ple gravitating to environments which are
investor-friendly, but that’s the challenge we
Blakiston said at the heart of this deal was and support change and support people face; getting people to step up to make it an
Cameroon’s eagerness to develop a success- attractive environment.”
ful minerals industry and a professional rela- learning about the industry, all while not pass-
tionship with Sundance built entirely on trust. Blakiston said foreign embassies – Aus-
ing judgment. Because of what I do I’m in a tralian, US, UK and the European Union – in
“Sundance has invested a significant Africa could also have a critical role to play in
amount of time and money into working with fortunate position where I can say it. It doesn’t jurisdictions which are not yet mature enough
the Government to help them understand the to fund large infrastructure developments.
project, the fiscal and economic environment affect my ego, but it’s disappointing.
in which it operates and what’s required to “Some of the embassies have a broader
establish a world-class platform for develop- “I wouldn’t criticise the government for it; it agenda which is not just representing their
ment,” Blakiston said. own country interests but also ensuring the
might well be that they’ve been fed a line by a host countries are being developing in a way
“This was done over four years and was a that’s responsible,” he said.
very intense process before that then all cul- particular sector that governments are easily
minated in the company and the Government “They can offer and lend support which
reaching these very complex set of agree- persuaded by. Yet there are people who do people don’t realise could be available – and
ments. they can also put pressure on governments of
have experience and knowledge, and in my host countries to be open.”

case, across a range of African countries.” – Michael Washbourne

Blakiston also queried whether any African

governments had taken up repeated offers of

support from West Australian Premier Colin

Barnett given the State’s celebrated history of

natural resources development.

“Interestingly a lot of Western Australia was

developed using exactly the same formula [as

Cameroon] where the Government took re-

sponsibility of building stuff and paying for it,

such as the Ord River [Irrigation] Scheme and

Dampier to Bunbury [natural gas] pipeline,

The Cameroon Government will source funding for
the $US3.5 billion infrastructure requirements of
the Mbalam-Nabeba iron ore project

PAGE 86 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Meet the
team

at Mining Indaba

Bill Repard Dominic Piper Tammy Caldwell Tony Mwarey
EXECUTIVE CHAIRMAN EDITOR AFRICA DOWNUNDER ADVERTISING EXECUTIVE

M: (+61) 418 768 578 M: (+61) 424 934 494 M: (+61) 413 085 536 M: (+61) 451 280 482
E: [email protected] E: [email protected] E: [email protected] E: [email protected]

Come see us at booth #421 8–11 FEB 2016

7 - 9 September 2016
Perth,Western Australia

www.paydirt.com.au

INDABA PREVIEW

Paladin set for recharge

Whoever is installed as the next Kayelekerra will remain on care-and-maintenance, with Paladin to provide information
chief executive of Paladin En- on the future of the mine in the first half of 2016
ergy Ltd will start with a degree of
optimism. in processing costs, have been reduced by “We now see some big years of growth
about 35%. ahead of us from China and other players.
Three months after long-serv- Using our own numbers we believe 2016 will
ing chief executive John Borshoff “BRP cost reductions are sustainable and see 6-8% growth in nuclear power generation
stepped down from the role, in- not temporary, we see it as a change that has over 2015. [Then] 2017 will be a record year
terim chief executive Alexander effectively reset our sustainable C1 cash cost for nuclear power generation with even more
Molyneux said the management base in the order of $US4-5/lb at the Langer global nuclear power generation [than there
transition had been “seamless” Heinrich mine,” Molyneux said. was] in 2010 before the Fukushima accident;
and the pool of talent to choose a that would represent 5-7% growth over 2016.”
new leader from was excellent. Molyneux said the full impact of the BRP
would be seen in the December quarter re- Longer-term, Moylneux said, China’s
Furthermore, the company didn’t sults, with potentially record lows in C1 cash commitment to accelerating its nuclear pro-
foresee the need for anymore re- costs to be reported from Langer Heinrich. gramme in the next five years and new in-
dundancies, Molyneux said. vestments in nuclear power stations in South
Paladin is on track to deliver on guidance Africa, UK and Romania would drive uranium
“Speaking as someone involved of 5-5.4 mlb uranium @ $US25-27/lb for demand.
in the transition, I would say that it FY2016, with 1.083 mlb uranium produced in
has happened fairly seamlessly. the September quarter. “Nuclear will outgrow the energy sector and
We have had some redundancies, global growth for the next 5-10 years. Paladin
but otherwise we haven’t lost any Forecasting prices of about $US39-41/lb is significantly leveraged to this, with our pure
senior personnel and everybody for the full year, with $US4/lb above the aver- play [uranium], we are industry leaders and
has been well aware of the task age spot price received, Molyneux said Pala- we are relatively exposed to [increasing] spot
ahead of Paladin and has got down din was on track for a breakeven year, with prices,” Molyneux said.
to business without any major dra- cash of $US110-120 million expected to be
mas,” he said. reported in the December quarter. With a bullish outlook on uranium prices for
2016 and 2017, Molyneux said Paladin would
“We are making good progress Long-term contract referencing remains at make more information on the status of the
on the CEO recruitment. I can also $US44/lb, however, Molyneux believed the Kayelekera mine in Malawi available to the
say that, from my personal opinion, uranium industry was at an inflexion point and public in the first half of 2016.
there are some excellent candi- growth in the nuclear sector was approach-
dates out there. ing. Kayelekera, which would make “substantial
margins” at a $US70/lb uranium price, was
“It has progressed substantially; He said growth in nuclear power generation placed on care-and-maintenance in mid-2014
we are not changing anything. We for 2015 would be 2.5-3% higher than 2014, and would remain that way until market driv-
are not saying that I am anything other than while spot market uranium prices have broad- ers demanded investment in the mine, Moly-
interim when we originally said I would have a ly stabilised and were also slightly higher than neux said.
tenure of around six months.” in 2014.
– Mark Andrews
The incoming chief executive will inherit a “Now it gets interesting with the Japanese
uranium company that has made inroads into restarts already happening, and there will be
remedying its debt problems. To the end of another 6-12 in the 2016 calendar year,” Moly-
September 2015, outstanding debt for Paladin neux said.
to repay was $US465 million.

During the September 2015 quarter, Pala-
din repurchased $US20 million of the $US274
million convertible bond due in 2017 for
$US18.5 million.

Since June 2012, the company has re-
duced its debt by about $US450 million, with
the next debt maturity of $US254 million con-
vertible bonds due in April 2017.

“We have approximately 18 months remain-
ing until debt maturity which provides us with
ample time to address the convertible bonds.
The expected improvement in operating cash
flow will also assist in our efforts to reduce
debt and strengthen our balance sheet,” Pala-
din chief financial officer Craig Barnes said.

“Strategic initiatives are currently being
addressed, with a view to refinance or repay
the April 2017 convertible bonds. Based on
Paladin being cash flow neutral, we now see
the funding gap required to repay the 2017
convertible bonds reduced to $US150-180
million.”

A key plank in improving its debt position
has been the Bicarbonate Recovery Project
(BRP) at Langer Heinrich, Namibia, which is
now operating at 200% of its design capacity.

Costs of reagents, the single largest item

PAGE 88 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Perseus starts winding
back the clock

Today’s gold price will be taken into Perseus’ immediate outlook stems from
consideration when Perseus Mining September 2015 quarterly results head-

Ltd mulls over development of its Siss- lined by quarter-on-quarter reductions

ingue gold project in Cote d’Ivoire, but it of 45% in unit mining costs and 15% in

will not be the overriding factor, manag- processing costs.

ing director Jeff Quartermaine said. All-in site cash costs were $US1,060/

Speaking to Paydirt shortly after the oz, 4% below the bottom of cost guid-

release of a solid September 2015 quar- ance ($US1,150-1,300/oz), while gold

terly report, Quartermaine said Perseus production of 44,267oz has Perseus

was due to review all opportunities in on track to meet half year guidance of

front of it, including where Sissingue 90,000-105,000oz.

stood in the portfolio. Renegotiating various supply con-

A Mining Convention is in place, with tracts helped rein in processing costs,

DFS numbers indicating Sissingue is vi- where Quartermaine expects to “see

able at AISC of $US632/oz for 75,000 some incremental improvements as

ozpa over a current reserve life of about we move forward”, while locking in new

5.5 years. Everything went exactly to plan at Edikan during the contracts with African Mining Services
“What the gold price does at the mo- September 2015 quarter and a local Ghanaian outfit led to mate-
rial benefits in mining costs.
ment is create a level of uncertainty and

that has to be factored into your thinking, but build, a large portion of which could be funded As foreshadowed, there was a delay in

we are ready to move forward [with Sissingue] through debt. getting environmental approvals for access

if that is the decision we make,” Quartermaine Should Perseus commit to taking on debt into the new mining area in the Eastern Pits,

said in mid-November. for Sissingue, it will be done so against an meaning stockpiled ore was processed during

“We will be choosing initiatives that are go- impressive balance sheet comprised of $132 the quarter.

ing to generate the best outcomes for share- million cash and bullion on hand and no third Quartermaine said the company would be

holders, so whether Sissingue is at the top of party debt. into fresh ore well before the end of the year.

the pile or whether there are other things to Perseus’ corporate situation is courtesy of “In anticipation of this happening [process-

focus on, that is something that will be deter- the recent smooth running of its flagship Edi- ing stockpiled ore], we did two things; we en-

mined in the next couple of weeks. kan mine in Ghana. couraged our mining contractor to accelerate

“But, if it is the decision [to go ahead], we Country-wide power issues forced Per- mining in the new area, so they brought some

are ready to go and we will be in production seus, like many other businesses, to adapt to surplus equipment on site and accelerated

about 12 months after we push load shedding scenarios in 2014, their mining rate,” Quartermaine said.

the button but that is something while a fire in the cyclone nest of “Secondly, we initiated change to the

that we need to look at very care- the plant during scheduled main- scheduling of accessing various pits and we

fully because there are no prizes tenance resulted in a seven-day brought forward a piece of work that will ac-

for making bad decisions. shutdown of ore processing op- cess some high-grade ore pretty quickly. It is

“The gold price is material in erations early in the year. not an ideal sequencing, but it does bring the

decision making, but it is not the While unfortunate circum- higher grade material to bear sooner rather

gold price today that matters as stances emerged, valuable les- than later. Those two things combined mean

far as Sissingue is concerned. It sons were learnt and with 100% that by the end of this calendar year we will be

is the gold price when we come of power requirements at Edikan pretty much back on line and then next year

to sell the gold that does [mat- drawn from the national grid as of [2016] will become quite a good year again.”

ter] but what that is going to be, April 2015, plus standby capacity Keeping costs down will be critical to Per-

I don’t know. on hand, Perseus looks to be in seus’ success in 2016 and Quartermaine is

A recent European marketing Jeff Quartermaine good shape. confident of maintaining processing and min-

venture filled Quartermaine with There is still some uncertainty ing costs low.

confidence that if the company concerning extra capacity being The focus of running a tight ship at Edikan

decided to trigger development of Sissingue, implemented in Ghana, however, with gen- won’t detract from exploration, with Quarter-

organising finance wouldn’t be a problem. erators commissioned and ready to go, op- maine’s mind open to spending money on tar-

Investors appear to be more positive on the erations at Edikan are expected to continue gets justifying expenditure.

outlook for gold, while a turnaround in Per- uninterrupted in any event. “We are evaluating datasets and generat-

seus’ performance had Quartermaine bullish With Edikan performing reliably, Perseus is ing targets and the guys that can present a

about the future. hitting its targets and picking its share price clear case for exploration we will make that

“We need to present ourselves as a com- up along the way. money available,” Quartermaine said.

pany that has worked very hard over the last Late in 2014, the company was trading at “We have a very positive view of explora-

12-18 months to get our house in order and just above 20c/share which it improved to al- tion. We are quite good at it, it is something we

that is clearly demonstrated by our balance most 50c/share by mid-2015. have done well in the past and will do well in

sheet. The next task for us is to demonstrate At the time of print, Perseus was 35c/share, the future, but we won’t waste money.”

to investors that we can use the funds and de- however, Quartermaine is predicting a good – Mark Andrews
ploy in the right places to generate superior 2016 which could see the company’s stock

returns for shareholders,” Quartermaine said. rise once again.

Sissingue will command $106 million to Quartermaine’s positive assessment of

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 89

INDABA PREVIEW

Future looks bright for
African nutrients

Africa stands to benefit from predicted Avenira has rapidly progressed the Baobab phosphate project in Senegal
growth in the nutrients sector over the since picking up the asset in April
coming years as the world’s rising population,
changes in consumption habits and limits on als Ltd (potash in the Republic of Congo). development in today’s market and all plans
arable land all cross paths. However, the resources downturn has seen are now on hold.

Nutrient minerals, namely phosphate and a number of new companies drift across the The company began searching for a near-
potash, have held firm in the wake of the Indian Ocean in search of something more term development asset earlier this year and
downturn that has crippled most of the in- economic, including Avenira Ltd (phosphate ultimately picked up the Baobab phosphate
dustrial commodities. Phosphate rock prices in Senegal), Plymouth Minerals Ltd (potash in project in Senegal in April. The progress
were trading at a 12-month high of $US123/t Gabon) and African Phosphate Pty Ltd (phos- made since that point has been remarkable.
at the time of print, while potash prices were phate in DRC).
also tracking steady at $US300/t. At the time of print, Avenira – taken from
Avenira (formerly Minemakers Ltd) had fo- the French word ‘avenir’, meaning future or
“There are no substitutes for these nutri- cused its efforts on the Wonarah phosphate forward-looking – was preparing to turn first
ents,” Agrifos vice chairman Tim Cotton told project in the Northern Territory for many dirt at Baobab after receiving the final ticks of
Paydirt when asked why the nutrients sector years, but logistical issues – the project is approval for a small mine permit. First produc-
was performing while other commodity types 1,300km from Darwin port – no longer justify tion is slated for the second half of 2016.
were floundering.

“In your diet, you need phosphate or you
wouldn’t be alive. The same goes for plants
and animals. It’s an essential ingredient in the
food chain, literally.

“You can’t put more nitrogen in and some-
how compensate for phosphate. Similarly,
phosphate doesn’t compensate for an ab-
sence of potash.”

Cotton, whose company is involved in three
major fertiliser development projects, includ-
ing one held by an ASX-listed junior in Sen-
egal, said phosphate and potash had less
direct exposure to China than other commodi-
ties and that was also helping to drive growth
in the both markets.

However, according to Cotton, the biggest
contributing factor to growth in the nutrient
sector centred around modern agricultural
practices.

“Every ear of corn, every grain of wheat,
every kernel of rice; all of that is taking nutri-
ents out of the soil which have to be replaced
and if you don’t replace them yields can fall
dramatically, over 50% in some cases,” Cot-
ton said.

“When you combine a growing population,
improving diets and limits on arable land,
which means there is fairly steady demand
relative for phosphates and potash of roughly
2% a year.

“It’s relatively steady because people eat,
more or less, every day of the year and so you
don’t have the swings on the demand side that
you do on some of the other commodities.”

Africa has some of the richest and largest
sources of phosphate and potash in the world
and several countries can expect to receive
more attention if pricing trends continue up-
ward in the nutrients space – and downward
in metals such as gold, copper and iron ore.

Some Australian companies have been es-
tablished on the continent for several years in
search of major deposits, including Danakali
Ltd (potash in Eritrea), Minbos Resources Ltd
(phosphate in Angola) and Elemental Miner-

PAGE 90 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Danakali was due to release a DFS for its Colluli potash project in Eritrea at the time of print

Avenira managing director Cliff Lawren- terial now because that would be a mistake,” in Eritrea was due in December and the com-
son said his company’s move to Senegal had
been validated. Cotton said. pany was striving to present a lower capex to

“It’s everything we’d hoped for and then “One advantage of the project is the volume the market than the $US442 million flagged in
some,” Lawrenson told Paydirt. “Senegal’s
mining code is very transparent and we got a is small enough and the quality of the product the PFS for an initial 425,000 tpa operation.
mining permit in nine weeks, from application
to approval.” is good enough in a market where there is a Danakali is anticipating the first five years

Further vindicating the company’s renewed need for this product and so we can take our of production at Colluli will help fund a ramp-
focus on West African phosphate was its abil-
ity to raise money and execute a series of time to really optimise the commercial mix. I up in production to 850,000 tpa for an addi-
MoUs, including a non-binding deal with
a Senegalese equity partner, Mimran think the fact we were able to get some good tional $US282 million.
Natural Resources.
MoUs fairly quickly has just reaffirmed that The company has already hinted at a num-
Mimran is investing $US11.25 million
to earn a 20% stake in the Baobab pro- strategy.” ber of successful optimisation strategies that
ject. Global institutional investor JP Mor-
gan Asset Management UK Ltd is also Avenira has estimated the pre-production will enhance the economics of the project, in-
chipping in $3.1 million.
cluding substantial reductions in process
“It’s difficult to raise money in today’s
market, but if you’ve got a quality project water requirements and identification of
and you’ve got a quality team you can
raise money…I think other juniors should subsurface water on site which negates
take note of that,” Lawrenson said.
the need for a 75km seawater deliver
“We’re making excellent commercial
progress. We’ve started talking to poten- pipeline.
tial buyers and the appetite appears to
be outstanding. It’s all going ‘boringly’ to “We are confident the optimisation
plan, but that’s what you want when you
do project development. work completed over the past eight

“It’s a cracking project and we’re very months will materially enhance the pro-
happy with where we stand. We’re looking for-
ward to the next steps.” ject and are looking forward to bringing

Avenira has also signed a number of vol- the DFS to its conclusion, initiating the
ume-based MoUs, as opposed to pricing
MoUs. mining approvals process and working

Cotton, who recently joined Avenira as a with the Eritrean National Mining Com-
non-executive director, warned of the dangers
of entering into pricing contracts too early. pany (ENAMCO) to secure the funding

“We don’t see a need to jump into a fully requirement for project construction,”
binding, heavy duty contract to sell the ma-
Danakali managing director Paul Don-

aldson said.

“The Colluli resource is world-class in

Cliff Lawrenson every way. The 1.3bt potassium-bearing
resource is shallow, in close proximity to

coast and to the key markets of the fu-

capital required to develop Baobab at $US15 ture, and comprises a variety of potassium-

million, predominately involving water drilling, bearing salts suitable for the production of

overburden removal and the cost of modular potassium sulphate (SOP), potassium mag-

wet screening plant. nesium sulphate (SOP-M) and potassium

It makes Baobab one of the cheapest phos- chloride (MOP).”

phate projects in the world to develop and – Michael Washbourne
places it way ahead of a number of budding

potash projects which typically attract capex

requirements above $US1 billion.

A DFS for Danakali’s Colluli potash project

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 91

INDABA PREVIEW

Elemental attracts
strategic partner

Elemental Minerals Ltd appears perspective and what the driv-
to have found the strategic part-
ner it has been seeking to provide ers are in the market and in the
financial and technical assistance
for the company’s potash projects in project. The penny drops very
the Republic of Congo.
quickly so we don’t really have
Indian conglomerate Shapoorji
Pallonji Group, via its subsidiary an issue in terms of educating
Shapoorji Pallonji Infrastructure
Capital Company Pvt Ltd, has shareholders.”
signed a non-binding term sheet
with Elemental for an equity injec- An upgrade to the resource at
tion of $19.3 million.
Dougou (1.1bt @ 20.6% potas-
The funds will be used to com-
plete a BFS on the Kola sylvinite sium chloride) is on the cards
project and a concurrent PFS on
the adjoining Dougou carnallite pro- for early 2016 following the suc-
ject. Both studies were progressing
on schedule at the time of print. cessful completion of testwork

Engineers from Shapoorji will also be drillhole ED_05 where 36m of
embedded into Elemental’s project team to
provide technical assistance up until the pro- carnallitite was intersected with-
posed start of construction at Kola, slated for
Q2 2017. in the four main potash layers.

Shapoorji boasts an annual turnover of Mineralisation appears to be
$US3.3 billion, a successful 150-year track
record in construction and infrastructure de- similar to previous drill-hole in-
velopments and holds a strong presence in
Africa. Shapoorji Pallonji will provide financial and technical assistance, tersections at Dougou and the
including advice on how to develop port facilities hangingwall seam is 10.21m
Elemental managing director John Sanders thick and comprised of about
said the partnership was a “significant mo-
ment” in his company’s short history and he requirement by 51% to $US908 million on the 90% carnallitite.
was confident of executing a binding agree-
ment in the near future. back of introducing a phased strategy to lift Core from drill-hole ED_05 has also been

“We’ve been searching for a strategic part- production from 1 mtpa to 2 mtpa after four sent for dissolution and geotechnical testwork
ner in earnest for over a year now while at the
same time positioning our projects in a way years. to provide data for the mine design.
that would make them attractive and also
fundable to a partner,” Sanders told Paydirt. Capital costs in the hundreds of millions are The shaft site at Kola, which hosts proven

“For a company of our size, we needed to nothing new for potash projects and Sanders and probable reserves of 152mt @ 31.7% po-
get the right partner on board and really the
trick was not just looking for a company that has no doubt most investors, including his tassium chloride, was being drilled at the time
has the balance sheet, but also a company
that has a history of building large infrastruc- company’s own shareholders, understand of print in order to collect data for hydrological
ture projects, including ports because obvi-
ously we need to build one of those. that. and geotechnical testwork for the BFS shaft

“If you look at the credentials of Shapoorji, “A large percentage of our shareholders design.
they definitely fall into that category and we’re
really quite chuffed that we’ve been able to at- have been with us right from the start so they Sanders said the company had no con-
tract a company with Shapoorji’s reputation.”
recognise the long-term value of being in pot- cerns with concurrently taking multiple pro-
Sanders insisted his project team was on
track to complete the Dougou PFS before the ash,” Sanders said. jects through the study phase. Elemental is
end of FY2016 and the Kola BFS by Septem-
ber/October. “As for any potential shareholders you talk also working up a third project, Yangala, on its

A scoping study completed on Dougou in to, it doesn’t take long once you can dem- 1,400sq km Sintoukola property.
early 2015 found the project could support a
400,000 tpa phased operation for an unlev- onstrate what it is you are doing from a cost “We’ve got three projects within 20km of
eraged capex of $US430 million, with operat-
ing costs of $US68/t and a post-tax NPV of each other, which is very unusual, and they’re
$US880 million.
all very high grade,” Sanders said.
An updated PFS on Kola, completed in late
2014, successfully reduced the initial capital “It gives us the strategic optionality to enter

the market with what is a very attractive pro-

ject with a large pipeline of production – and a

quality one at that – and the flexibility to actu-

ally produce.

“We are of the opinion that Kola is still the

flagship of the company and that will go into

production first [in 2018]. We still maintain this

is potentially the lowest-cost potash opera-

tion out there once we get into production and

there’s huge capacity for really good profit

margins.”

Elemental is also completing ESIA docu-

mentation for Dougou in parallel with the PFS

so the project is eligible for a mining licence

application in the second half of 2016.

Detailed soil and biophysical baseline stud-

ies are planned for early 2016 after the initial

terms of reference are submitted to the na-

tional regulator.

– Michael Washbourne

Elemental says economic studies on the Kola and
Dougou potash projects are tracking on schedule

PAGE 92 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Plymouth pounces on
Gabon potash

Plymouth Minerals Ltd is set to be- “We have absolute confidence we
come the newest member of the have the network and the skillset to take

Australian-African potash stable after an asset from this level to the construc-

entering into a binding heads of agree- tion phase, by which time I hope I’m re-

ment to acquire two projects in Gabon. placed by people with more experience

Low tungsten prices have forced and competency in the areas of construc-

Plymouth to shelve plans to develop tion and operations,” Byass said.

the Morille project in Spain, although “The fact we all have experience in

the company will retain exposure to non-LME commodities I find is an ad-

the asset through minimum expendi- vantage because there tends to be less

ture commitments. people looking at them, yet you can still

Having watched the potash market make just as much money and in terms of

hold firm over the last two years and shareholder returns I think that’s critical.

dipped his toe in the fertiliser space You can’t afford to overlook the non-LME

through a non-executive role with stuff.”

phosphate hopeful Fertoz Ltd, Plym- Plymouth began negotiating with

outh managing director Adrian Byass Equatorial and its wholly owned subsidi-

had a clear vision of what he wanted ary Mayumba Potasse SARL in June be-

for his company, and so he set out to Modern infrastructure, such as this four-lane concrete bridge, fore announcing to the market its inten-

find it. is in abundance around Banio tions to acquire the projects.

Pending successful due diligence The company has set out to complete

and shareholder approval, Plymouth will take work, Mamana can have a JORC resource extensive due diligence on both projects and

control of the Banio and Mamana projects in within months, soon followed by a scoping so far it likes what it sees, according to Byass.

south-western Gabon from Equatorial Potash study, and it can be embarking on a PFS be- “I’ve met with the Minister of Mines, I’ve

Pty Ltd via a scrip-based transaction. fore the end of 2016,” Byass said. met with the director-general of minerals and

“Over the last decade there has been vola- “If you give me two years, I can bring Banio resources, I’ve met with people from the en-

tility in both the phosphate and potash price, to the same level, but it has the potential to be vironmental department and national parks,

but in the last 18 months there has been sta- 10-20 times bigger because the landholding I’ve travelled to the project areas, I’ve trav-

bility against a backdrop of instability in other there is six times larger and it has a proven elled the infrastructure pathway that will take

commodity classes,” Byass told Paydirt. basin. the product out of those areas,” Byass said.

“It was therefore attractive for Plymouth to “Initially, we thought we had a standout and “I want to see that we can operate in coun-

embark upon this and give confidence to both a secondary project. Now we have two com- try…I’m very comfortable with what I’ve seen

investors and shareholders. That’s the key to peting assets.” so far. In fact, I was so happy that I did some-

what we’re doing here in the mining game and Plymouth had not considered Gabon as a thing that I’ve never done before and that was

I think the underlying fundamentals of supply potential location for new potash projects until put out an infrastructure presentation to the

and demand dictate that.” it was brought to the attention of Byass and market [in early November].”

If Plymouth elects to proceed with the his business partners Jonathan Downes and Byass is also exploring potential markets

transaction following the 90-day due dili- Humphrey Hale. for the sylvite and carnallite-based products

gence period, Equatorial will receive 50 mil- Experienced mining executive Eric Lilford likely to be mined and processed from Banio

lion shares in Plymouth, split into 25 million recently joined the company as its chief oper- and Mamana, including exports to Brazil and

ordinary shares and 25 million performance- ating officer and will transition to the manag- Asia but also within Africa.

based shares which vest upon completion of ing director role post-transaction, while Byass “Gabon basically imports all of its food…

certain milestones. will become executive chairman. the food production in Africa generally is quite

The initial share issue to Equatorial will poor, given the population, so it’s inter-

be subject to a 12-month voluntary es- esting that they have such assets in the

crow period. phosphate and potash spaces, yet they

Banio, 450km south-east of Libreville, haven’t been able to translate that into an

is only 20km north-west of Elemental agricultural industry,” Byass said.

Minerals Ltd’s extensive Sintoukola prop- “I’m sure it’s been discussed by many

erty – hosting the advanced Kola and non-government and UN organisations

Dougou potash projects – and has report- for a long time, but it always strikes me

ed grades of up to 32% K2O. as interesting that you’ve got potential

Mamana, 100km south-east of Libre- markets there and yet you’re sending

ville, runs along the Ogooue River and it internationally. These assets tend to

boasts a number of promising historical work for decades so who knows what it

intercepts, including 4.35m @ 29% K2O will be later on in the project’s life.”

from 384m and 9.5m @ 16.5% K2O from Byass also welcomed proposed

433m. changes to Gabon’s mining act, includ-

Byass said the two projects had differ- ing the introduction of an online system

ing levels of potential, depending on the for granting tenements.

work timeframe given. Plymouth managing director Adrian Byass on site in Gabon – Michael Washbourne
“Because of its previous drilling and

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 93



INDABA PREVIEW

Africa set to sparkle
for Barminco

Australian-based underground mining con- Barminco has been established in West Africa for many years and remains optimistic
tractor Barminco Ltd is bidding to enter about the future of the industry in Africa
Africa’s lucrative diamond industry.
in the same way we’ve done at Barminco in recently came down to single digits.
Up until now, Barminco has been focused
on mostly gold operations in West Africa and Australia and I think we’ve had much higher Local employment is also booming and
Egypt, but the company is sensing an oppor-
tunity to transition into a new commodity as productivity per person and better equipment expats now account for less than 10% of the
several major diamond mines in southern Af-
rica consider digging underground. availability,” Stokes said. total workforce in Africa and Barminco is striv-

“Despite all the doom and gloom around “Those things have really given us the ing to bring that number down to no more than
commodities, there continues to be new
mines coming on and a number of them are ability to be quite a bit more efficient on the 5%.
going underground,” Barminco chief execu-
tive Peter Stokes told Paydirt. ground in Africa and then we’ve had a bit of a A number of local operators now command

“Some of the big diamond mines are start- fortunate windfall on some of the Aussie dol- junior management positions in the business.
ing to go underground in Botswana and north-
ern parts of South Africa and certainly the lar reductions and I think that’s probably con- “Not many Aussies are fluent in French or
gold mining space continues to be very strong
for us.” tributed 20-30% benefit for us.” the local dialects so that’s been quite a chal-

Deals around diamonds are not the only Barminco’s strong focus on safety for its lenge, but we’ve found good ways to over-
contract awards the company is hoping to
win in Africa over the next few months, in a Australian operations is also having a ripple come that,” Stokes said.
positive sign for the future of mining on the
continent. effect across the Indian Ocean. The company “We’ve had teachers and other people who

Barminco has put its hand up to extend or has not had a lost time injury at Sukari or any we have been able to build into safety leader-
enhance contracts with existing clients, both
under the African Underground Mining Ser- AUMS operation in more than a year and the ship roles or shift bosses and the like by shad-
vices (AUMS) JV with Ausdrill Ltd and at the
Sukari gold mine in Egypt for Centamin plc. total recordable injury frequency rate (TRIFR) owing our guys and watching what they’re do-

The company is also assessing contract- ing and then doing a lot of translation
ing opportunities in Botswana, Namibia and
surrounding countries where a number of big for our management in the operation
copper mines have flagged potential under-
ground operations. and thereby learning a lot of the tools of

New contract work in Ghana, where AUMS the trade first-hand.”
is headquartered, is also on the cards.
Barminco recently finished contract
“Over the last six months or so, we’ve re-
ally started to see a number of big contracts work for Randgold Resources Ltd
coming back on the market, particularly gold
is where we’ve seen most of the op- in Mali after helping the prolific gold
portunity,” Stokes said.
producer transition to owner-operator
“There’s also quite a lot of activity
in exploring around current orebodies status following six years of working
with some of our existing clients and
we’re bidding on a number of big pro- together.
jects that are coming up there over the
next little while.” Stokes was upbeat about the future

Barminco’s fortunes in Africa of mining in West Africa, including
also appear on the rise after report-
ing strong financial returns from the Burkina Faso where the company has
AUMS division in FY2015.
two existing contract operations, de-
The company’s 50% share in AUMS
generated EBIT of $58.4 million in spite the sting seemingly gone from the
FY2015, up 15.4% from the $50.6 mil-
lion reported in FY2014. The JV also region’s once buzzing gold sector.
generated strong cash flow in the re-
porting period and Barminco received “It’s slowed down, but it really seems
$25.1 million in dividends and loan re-
payments, having collected none from to be picking up again in that part of Af-
the previous financial year.
rica,” he said.
“We’ve certainly been driving the
productivity with Ausdrill in AUMS “My sense is generally pretty positive

on what’s starting to happen up there.”

Barminco’s share in AUMS generated EBIT of $58.4 million – Michael Washbourne
in FY2015, up 15.4% from FY2014

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 95

INDABA PREVIEW

IMX dispels graphite myths

Graphite hopeful IMX Resources Ltd is Chilalo boasts the highest-grade graphite resource in Tanzania
gearing up for a big finish to 2015.
A PFS on the company’s Chilalo graphite sation work continues and we expect further still learning about graphite and so we hope
project in Tanzania was due at the time of over the coming months, through the engage-
print, just 14 months after the company joined improvements,” Hoskins said. ment of Benchmark Mineral Intelligence, our
the East African graphite party. technical advisors and several trips to China,
“Our geologists have confirmed that no fur- we’d like to play a role in making sure inves-
“We expect it will be a highly compelling tors are as informed as possible when trying
economic story in terms of lower capital and ther drilling will be required to convert the indi- to decide which of the graphite companies out
operating costs compared to the peer compa- there are the real deal.
nies with similar-scale projects,” IMX manag- cated portion of the resource to measured, we
ing director Phil Hoskins told Paydirt. “That’s why we’ve spent so much time in
just need to do a little bit more metallurgical China this year. The Chinese have been pro-
A likely robust PFS was just one of three ducing 70% of the world’s graphite for the last
early Christmas presents Hoskins and his testwork on our oxide zone.” 30-40 years, so surrounding ourselves with
team expected to deliver investors. people that know the commodity and know
IMX has provided a bulk sample to Wuhan the markets has been important in helping us
IMX was also awaiting the receipt of its understand graphite.”
environmental certificate for Chilalo from the for testwork to confirm the suitability of the
National Environment Management Council Meanwhile, IMX continues to seek out an
of Tanzania at the time of print, while a formal graphite from Chilalo for the company’s in- alternative partner for its Ntaka Hill nickel
mining licence is due sometime in December. project, also on the large 5,400sq km Nach-
tended applications and target markets. ingwea property which hosts Chilalo and the
Post-Christmas, the company was expect- Kishugu gold prospect.
ing further promising metallurgical testwork The company’s relation-
results from China’s Wuhan Technology Insti- Mauritius-based mining private equity fund
tute and hoping to execute a number of formal ship with Wuhan – an entity Fig Tree Resources Fund II was unable to pay
off-take agreements with potential end-users. the second tranche of $US4 million in Sep-
recognised by a number of tember as part of a JV arrangement with IMX
“I don’t anticipate we would spend any over two tenements at Ntaka Hill.
money on feasibility studies beyond our PFS potential Chilalo graphite
if we don’t have off-takers lined up,” Hoskins “We remain committed to monetising Ntaka
said. end-users – is also shaping Hill via a sale or JV transaction which would
defer the need to further dilute shareholders,”
“It’s critical before doing detailed engineer- as critical not just for pro- Hoskins said.
ing on your plant and infrastructure to un-
derstand how big the scale of your project is ject development, but also “However, it is a tough environment for
going to be, and that’s entirely driven by the nickel at the moment with Western Areas [Ltd]
demand for your product. for educating shareholders reporting 60% of current nickel production un-
der water at these prices.”
“With the current state of the graphite mar- and investors about the
ket being depressed like a number of other – Michael Washbourne
commodities, it’s honed our focus towards emerging commodity.
those companies which place a strategic im-
portance on the commodity rather than the Hoskins said one unin-
financial investors, who have tended to fall by
the wayside this year. formed view his company

“We’re quite advanced with a few groups was looking to dispel was
and we’re hoping we can
formalise those discussions that jumbo flake graphite is
into something binding. The
PFS is an important piece ideally suited to the manu-
of the due diligence puzzle.”
Phil Hoskins facture of lithium-ion batter-
Infill drilling completed in ies for electric vehicles.
mid-2015 recently helped
convert 62% of the re- “Whilst jumbo flake can
source at Chilalo’s flagship
Shimba deposit into the in- be used in spherical graphite production, it
dicated category. Shimba
(5.1mt @ 11.9% TGC for just doesn’t make economic sense to do that
613,00t indicated and 4.1mt
@ 9.1% TGC for 370,300t right now,” he said. “Fine and medium flakes
inferred) is now classed as
the highest-grade graphite are the only flake sizes used in spherical
resource in Tanzania.
graphite.
In terms of flake size dis-
tribution (large and jumbo flake classification), “I don’t profess to be an expert yet, but
Chilalo (67.6%) is second only to Magnis Re-
sources Ltd’s Nachu project (73%). Chilalo is there are a lot of things like that the invest-
5km west of Nachu.
ment community aren’t aware of. People are
“We always anticipated we would be able
to improve our flake size distribution to be up
there with the best on the ASX, so none of
this has come as a surprise, but the optimi-

PAGE 96 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

New numbers for Ngualla

Peak Resources Ltd plans to spacing for future operations
release revised capital and
operating cost estimates for its and geotechnical drilling and
Ngualla rare earths project in
Tanzania in early 2016. test pits at the proposed sites

A BFS on the project is due for the processing plant, tail-
in late 2016, but the company is
looking to publish some updat- ings dam and ROM pad.
ed economics well before then
to show the market just how Peak has also registered
much progress has been made
in the past two years. Ngualla with the National En-

No financials have been an- vironmental Council (NMEC),
nounced since the March 2014
PFS, which forecast develop- signalling the start of the formal
ment capex of $US367 million
(including 30% contingency) permitting process for the pro-
and cash costs of $US11.74/
kg to produce 10,000 tpa rare ject with proven and probable
earths.
reserves of 20.7mt @ 4.54%
Other key economics includ-
ed an NPV of $US1 billion, an rare earth oxides.
IRR of 39% and operating free
cash flow of $US121 million. Paulsam Geo-engineering
Payback would be achieved dur-
ing the third year of full production at Ngualla, Company Ltd and Align Envi-
about 150km north of Mbeya and 800km west
of Dar es Salam. ronmental and Risk were con-

However, successful and ongoing benefi- tracted by the company in early
ciation work has meant the PFS financials no
longer reflect the direction the project is head- 2015 to assist with the process.
ing, according to Peak managing director Dar-
ren Townsend. At the time of print, Peak

“We’ve made a number of modifications to technical director Dave Ham-
the flowsheet since the PFS and we need to
get an update to the market on the opex and mond was in Tanzania with the
capex for the project to show the results of our
hard work from the last year or so,” Townsend company’s in-country manage-
told Paydirt.
ment team conducting stake-
“The BFS will be completed by the end of
2016, but we think it’s important to give some Results from the beneficiation pilot plant are due in early 2016 holder briefings with the af-
sort of indication prior to the end of the year
given we’ve made quite a few changes and fected communities.
improvements to the flowsheet.
on with the actual engineering and cost analy- Funding will not be an issue for Peak as it
“We’re not quite sure what the catego-
risation of them will be. They won’t be BFS sis for the BFS,” Townsend said. approaches the finish of the BFS, having re-
numbers. Whether we will call them scoping
or PFS-level [economics] we haven’t yet de- “One of the big advantages of the project is cently closed the first tranche of a $31.8 mil-
cided.”
our ability to get very high concentrate grades. lion facility from collaborative partners IFC
Peak began piloting a beneficiation plant,
using a 66t bulk sample of weathered bast- In the PFS we were only getting a 17% con- and Appian Natural Resources Fund.
nasite mineralisation collected from eight
trenches, in early November at a lab in Perth centrate grade [from feed grade of about 5%] “They really are excellent partners to have
run by ALS Metallurgy.
but we’ve now been able to achieve over 50% because they’re not just a source of financing
That work is expected to be completed dur-
ing December and first results from the pilot concentrate grade in some of our testwork. and they have substantial other things they
testing will be announced in February. Pi-
lot testing for an acid leach plant will follow “There’s always a trade-off in grade recov- bring to the table in terms of their extensive
in early 2016, with results due in the second
quarter. ery so I think the dust will settle somewhere network and contact base,” Townsend said.

Peak has made huge strides in beneficia- around 35-40% and that will have a huge im- “We’ve gone from a situation where if I
tion over the past 18 months, including suc-
cessfully producing a rare earths concentrate pact on downstream processing costs. Not wanted to talk to people from the banks, they
more than triple the grade achieved in its PFS.
many other rare earths projects are able to wouldn’t return your call to now having the
“These are very important programmes be-
cause what they do is allow us to lock down successfully beneficiate their product like we endorsement of Appian and the IFC and the
all the design criteria so the engineers can get
can so that gives us a huge advantage.” banks are now actually chasing us to find out

Peak wrapped an extensive drilling cam- about the project and potentially getting in-

paign – 1,313m of diamond and 3,919m of volved. That’s the kind of horsepower Appian

RC drilling – in late October to ensure all the and IFC bring.”

necessary field work for BFS design and en- Like many other commodities, rare earths

gineering could begin. prices remain subdued but Townsend is op-

Infill drilling of two areas of high-grade min- timistic about Ngualla’s future given its expo-

eralisation previously defined by wide spac- sure to magnet metals neodymium and pra-

ing returned encouraging hits of 18m @ 7.16% seodymium.

rare earth oxides from surface, 12m @ 5.46% “The underlying demand remains strong for

from surface and 74m @ 7.05% from 12m. these magnet metals because they’re used in

Other work completed included two trial a lot of exciting applications like electric and

grade control patterns to determine optimum hybrid vehicles and direct-drive systems for

wind turbines,” Townsend said.

“Even though economically things are a bit

slow, the growth rates of those sectors are

very, very strong and there is still a want by

Western end-users to diversify their supply

chain so they don’t have everything coming

from China where the bulk of production has

been coming from.

“We have this slogan, ‘it’s all about the

magnets’, and it’s true – this is where the

money is.”

– Michael Washbourne

Darren Townsend

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 97

INDABA PREVIEW

Stalemate in IchorCoal’s
Universal bid

IchorCoal N.V.’s proposed $80 to have your bid out in the mar- paring for “a difficult few years ahead” where
million cash takeover of ASX- ket place before the IchorCoal small companies would struggle to overcome
the stiffening headwinds building in global
listed Universal Coal plc hung in bid closes because people may markets.

the balance at the time of print. decide by then that the bird is in “I think the companies that will do well in the
down cycle are the large companies, which is
IchorCoal owns 29.99% of hand and I am going to keep it,” why we want to get large pretty quickly and
therefore resilient to what could become a re-
Universal and initiated proceed- IchorCoal chief executive Non- ally long down cycle,” she said.

ings in September by offering kululeko Nyembezi-Heita told IchorCoal was not prepared to compete
with the 25c/share offer, so if its bid failed,
to buy all remaining shares in Paydirt. Nyembezi-Heita said the company would en-
act Plan B and look elsewhere to increase its
Universal for 16c each (a 61% She said the rumoured bids current production from 2 mtpa to 15 mtpa by
2017.
premium to the trading price at at 25c had made the process
“If someone is offering 25c/share should we
the time), valuing the latter at difficult for IchorCoal to acquire even think of putting our shares up for sale? I
say that comment very flippantly and it is not
$US80 million. Universal but she was not with- in our minds right now. What is on our minds is
that we have called on the Universal board to
IchorCoal’s offer was due to out hope of a successful resolu- name the bidder, name the terms and then we
can make up our own minds about how cred-
expire in early December. Nonkululeko Nyembezi-Heita tion. ible the offer really is,” Nyembezi-Heita said.

However, since IchorCoal’s “I am still quite optimistic,” – Mark Andrews

proposal – which would see the Netherlands Nyembezi-Heita said.

incorporated coal producer reach its stated “It is a good offer, it is a compelling offer

15 mtpa production ambitions by 2017 if suc- at the upper end of the market metrics. It re-

cessful – Universal has claimed superior of- ally talks to what is the long-term intent of

fers have been tabled for the company. individual shareholders. If they want to stay

Names behind the company or companies the course for five years-plus and stick to the

targeting Universal at 25c/share were still to story or if in fact you have no taste for what

be revealed by mid-November. Universal was could be a very choppy five years in the com-

contacted for comment, but no reply had been modity sectors. IchorCoal’s offer is really the

received at the time of print. only offer you can accept cash for.”

“If you were a rival bidder, you would want Nyembezi-Heita said IchorCoal was pre-

IchorCoal and Sapinda Rainbow hit the high seas

CSR initiatives are essential to any mining The 2015/16 Clipper Round the World Race was participate],” Nonkululeko Nyembezi-Heita
business and IchorCoal N.V. and its major headed to Western Australia at the time of print told Paydirt.
shareholder Sapinda have stayed true to their
commitments, while nurturing the next genera- sored 10 South Africans – eight crew and two “In order for their application to be accept-
tion of South African leaders. reserves – for the race. ed, it needed to be endorsed by members of
their community first.”
The Clipper Round the World Race has Such an extreme challenge is a great op-
been the avenue for a very luck handful of portunity to show one’s wares, however, it is According to Nyembezi-Heita, the concept
disadvantaged young South Africans to real- not an opportunity granted to everyone, there- is most appealing to young people in the back
ise ambitions which otherwise may not have fore the select few chosen in 2015 had to earn blocks of South Africa “where nothing hap-
been possible. their stripes before setting sail. pens and unemployment in the area eclipses
50%”.
The Sapinda Rainbow Foundation was set “Applications this year were much high-
up in 2014 by Dirk van Daele who saw first- er because the first lot of kids who made it “It is for kids who don’t have much of a
hand how the race could be used to promote through talked about it a lot and told their future ahead of them and I think all of them
leadership and life skills in disadvantaged friends about the idea. It is at the top end come from what was previously considered
young people. of challenging races in the world, so we are black areas, black townships or black rural
trying to find people who are potentially the areas where there isn’t much in the way of
Sapinda and IchoCoal have backed the leaders of tomorrow for their communities [to economic opportunity,” she said.
event as a CSR programme by sponsoring
a number of young (18-23 year-olds), under- “It is a way for a few very lucky individuals
privileged South Africans to participate in the to get a life line into restarting their lives or
event, which passed through Western Aus- reinitiating a slightly brighter future than they
tralia in late November. would otherwise have.”

In 2015, more than 200 applicants regis- One participant from the 2013 crew has
tered interest in taking part in the challenge gone on to start a degree in law in South Af-
which sees 12 amateur teams, led by profes- rica, and it is hoped the initiative can help en-
sional yachtsmen and women, circumnavi- hance new skill development in the country.
gate the globe in about 238 days.
“That is why there is only one South African
The first leg, which started in August, was kid per leg, so that they can maximise their
from London to Rio, racers then headed on to exposure [to different scenarios] through in-
Cape Town. teracting with the crew,” Nyembezi-Heita said.

IchorCoal and Sapinda Rainbow spon- – Mark Andrews

PAGE 98 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT

Montepuez resource opens doors

Metals of Africa Ltd will inves- from the project’s Lennox pros-
tigate the possibility of be-
coming Africa’s first dedicated pect averaging 9.05% TGC
spherical graphite producer after it
released a maiden resource for its and 0.15% vanadium.
Montepuez Central graphite pro-
ject in November. At the time of print the com-

The company’s long-awaited pany was drilling the Lennox
and highly-anticipated maiden re-
source delivered an exciting 61mt prospect to delineate an in-
@ 10.3% TGC and 0.26% vana-
dium, 27.6mt @ 10.4% TGC and ferred resource at Balama
0.23% vanadium in the indicated
category and 34mt @ 10.2% TGC Central.
and 0.30% vanadium inferred.
“Drill lines will be spaced on
Managing director Cherie
Leeden said the resource official- 400m sections, with hole spac-
ly put Metals of Africa on Mozam-
bique’s graphite mining map. ing 50-100m,” Leeden said.

“A resource of 61mt will enable “Should drilling confirm
the company to meet the growing
demand of end-users and is ample for our geological and mineralisation
proposed mine design,” Leeden said.
strike continuity…further infill
“Our flake size and quality is exceptional
and our deposit clearly boasts the best ratio of drilling on 200m sections will
large and jumbo flake of graphite deposits in
Mozambique. Large flake sells for a premium be conducted to generate an
and gives us optionality with respect to any
end users.” indicated resource.”

One of those options is spherical graphite, Interestingly, Metals of Af-
an expandable product produced from 99.9%
graphite that currently sells for $US3,000- rica diverted its focus from
4,000/t, or three times the price of high quality
flake graphite. An example of cut and raw Mozambican rubies graphite for a brief moment in

Leeden told Paydirt Metals of Africa had October to sign a JV agree-
initiated investigations to determine the vi-
ability of building a spherical graphite plant in ah Resources Ltd’s Balama graphite project’s ment with Mozambican Ruby Lda to advance
the US.
product was the catalyst for Metals of Africa’s its non-core Montepuez ruby project.
“It’s something that we haven’t looked at
until recently, but the feedback we get from recent return to Balama Central. Leeden said she pegged the ruby licence in
the end-users indicates they are interested in
vertical integration from the explorer, to the “There are end-users that are interested in 2012, which she believed could be the biggest
miner to the producer of the spherical graph-
ite,” she said. Syrah’s product and we think it would be ad- ruby field in the world.

Montepuez Central’s maiden resource is vantageous for us to prove that we have got Under the agreement Ruby Lda will acquire
the result of almost a year-long definition drill-
ing campaign at the project’s Buffalo, Lion a similar product at Balama Central,” Leeden a 75% stake in the project in exchange for
and Elephant prospects.
said. $US400,000 worth of exploration, which must
The drilling programme comprised more
than 60 diamond holes for 6,450m. “I think it’s actually advantageous for that be completed within the first two years of the

Metals of Africa is now in a position to move region to have multiple suppliers of a similar JV.
quickly at Montepuez and Leeden said the
company hoped to complete a concept study product. From an end-users perspective they “I had been looking for a JV partner for
in the near term, which would be followed by a
PFS for the project. don’t want to be reliant on one producer, so about six months and we had three parties

The PFS would consider the viability of ex- I think it bodes well for us and them that we interested,” Leeden said.
porting product from the Mozambican ports of
Pemba and Nacala. are defining something that has similar char- “Initially we saw Metals of Africa as being a

At the time of print Metals of Africa had acteristics. We believe that it’s likely that our project generator, or incubator, that would get
commenced off-take negotiations for Mon-
tepuez Central’s graphite with a host of par- Balama Central project will be the most simi- this project to a decision to mine and then we
ties.
lar to Syrah’s specifications.” would spin them out or sell them. But given the
Simultaneously, the company will continue
work at its Balama Central graphite project, An October rock chip sampling campaign state of the market we’ve had to demonstrate
which had been put on the backburner during
Montepuez’s resource development. at Balama Central returned high-grade hits of focus, so we have focused on the projects

Leeden said the burgeoning interest in Syr- up to 17.55% TGC and 0.364% vanadium. that we believe we can get into production and

Metals of Africa also conducted a two- the greenfields assets have been somewhat

phase pitting programme to test a VTEM neglected. This one has been neglected given

conductor anomaly at Balama Central and the state of the market.”

received encouraging mineralised samples Metals of Africa has already flown geophys-

ics over the 50km strike, which Leeden said

revealed an intriguing paleo channel.

She was also encouraged by the consist-

ent presence of illegal miners on the licence,

which Ruby Lda monitored with drones.

“Work has commenced and Ruby Lda is fly-

ing drones over the license to map where ex-

actly the illegal miners are operating so they

can pinpoint where the most, presumably,

fertile areas are. [Ruby Lda] is firstly going to

map out where they all are and then they’re

going to bulk sample the existing workings

and adits. That will be followed by ground

geophysics. From that point they will define

our drill hole locations and the plan is to do

wide diameter auger. They are aiming to drill

this year, but I’ve suspect it will probably hap-

pen next year.”

– Rhys Dickinson

Cherie Leeden

AUSTRALIA’S PAYDIRT DECEMBER 2015 - JANUARY 2016 PAGE 99

OPINION

Helping METS companies
access export opportunities

While the downturn in the mining sector Other strategies include focused missions February 8-11, 2016 will provide another plat-
has increased the challenges in numer- to key markets, often in partnership with Aust- form for Australian miners and METS provid-

ous international markets, it has opened op- mine, to meet procurement managers, opera- ers to connect with key decision-makers and

portunities for Australia’s mining equipment, tional managers and site visits to scope out regulators from Africa.

technology and services (METS) sector. solutions. Over the past year, a number of Mining Indaba, entering its 21st year, at-

Australia’s METS sector exports about $15 Australian mining initiatives have been held in tracts miners, explorers, project developers,

billion each year in services and technology ASEAN markets, Kazakhstan, Latin America mining analysts, fund managers, investment

products. The sector has grown significantly and the Middle East. specialists and other professionals who are

in recent years and is an established supplier Onshore, Austrade has held capability interested in investing or have operations

of sophisticated and innovative technologies seminars to bring together Australian compa- within the African mining sector.

nies and key players from each of the targeted
that service the Australian minerals industry The Australia Lounge at Mining Indaba
and export markets. will provide participating com-
panies access to an exclusive
The strength of this sector meeting space, access to net-
has helped Australian firms working and information events
and a dedicated Austrade busi-
Opportunities still exist acrossbecome world leaders across ness development manager to
maximise delegate participa-
the supply chain, which in-

markets in South America (Chile,cludes exploration, engineer-

“Peru and Colombia), the Associationing, minerals processing, envi-
ronmental management, mine of Southeast Asian Nations (ASEAN), tion in the event.
safety, R&D and training. including Indonesia and the Around 150 ASX-listed Aus-

Australian METS compa- tralian companies are currently

nies are increasingly focused Philippines, across Africa and new pursuing more than 500 pro-
on offshore markets to main- markets like Mexico, Kazakhstan and jects in 38 African countries.
tain growth, diversify business This represents the largest
risks and access international potentially post-sanctions Iran. number of Australian resourc-
supply mining chains. es projects in any region out-

Opportunities still exist side Australia; it is clear these

across markets in South Amer- companies are well positioned

ica (Chile, Peru and Colombia), the Associa- markets to discuss opportunities and show- to provide innovative tools, technologies and

tion of Southeast Asian Nations (ASEAN), in- case Australian METS capabilities. services to the projects they are undertaking

cluding Indonesia and the Philippines, across Likewise, events such as Africa Down Un- internationally.

Africa and new markets like Mexico, Kazakh- der, held in Perth, are used to assist compa- Australian METS companies lead the way

stan and potentially post-sanctions Iran. nies to understand and access opportunities in many areas and can provide cutting-edge

Australian expertise is in demand across across Africa. technologies and services to maximise min-

these markets, especially where the focus is Australian METS capabilities are also being ing efficiency, productivity and safety, and

on improving the productivity, safety and sus- promoted through high profile international represent a complete supply chain solution.

tainability of local mine operations. events such as Mining Indaba in South Africa It is this expertise which is in demand in Af-

Austrade’s resources and energy team, (February 2016) Expomin in Chile (April 2016) rica, as it struggles with a lack of adequate

which is supported by an international net- and Ozmine in Indonesia (October 2016). power and infrastructure while striving to im-

work of more than 80 offices in 48 markets, Participation in the Australia Lounge at prove the productivity, safety and sustainabil-

works with Australian METS suppliers to ac- Mining Indaba, to be held in Cape Town on ity of local mine operations.

cess these opportunities and enter the global METS firms involved in the design and con-

supply chain of major multinational compa- struction of infrastructure, such as SMEC and

nies. WorleyParsons enjoy a solid pipeline of work

The entire Austrade network works collabo- across Africa’s mining regions.

ratively with key stakeholders to help increase While Kefi Minerals plc recently appointed

the number of Australian METS companies African Mining Services, a wholly owned sub-

selling into the value chains of global mining sidiary of Ausdrill Ltd, as its preferred contrac-

companies and major tier one suppliers. tor for mine establishment and operation. Kefi

This involves targeting and then working in turn appointed Sedgman as its preferred

with major multinational corporations (MNC) contractor for plant construction and startup

to diagnose and prioritise particular gaps or for its Tulu Kapi gold project in Ethiopia.

needs in relation to their value chains. For more information and to learn more

Austrade is then able to use its international about the mining opportunities contact Aus-

network to reach out to multinational mining trade on 13 28 78 or email info@austrade.

corporations and engage with them to show- gov.au.

case ways in which Australian expertise can

provide solutions.

This global value chain strategy has al-

ready been piloted in Latin America, with ap-

proaches made to global mining players in Grame Barty is Austrade Executive Director

Africa, India and China. International Operations

PAGE 100 DECEMBER 2015 - JANUARY 2016 AUSTRALIA’S PAYDIRT


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