Paydirt May 2015

However, 10 years on and Daniel Zavatierro Stephen Biggins
with the uranium spot price
in a four-year slump, only brings conversation to the front.” Australia, the wait may be a little longer.
one new mine, Four Mile, Zavatierro agreed, pointing to one of Aus- “The opportunity that lies at the end of this
has been built as companies
have battled a lack of urani- tralia’s uranium rivals as an example of how Royal Commission remains to be seen. It is
um experience quickly a uranium industry can take hold. perhaps a 20-30 year opportunity but it cer-
tainly has the potential to be transformative,”
Guthrie, however, remains “Have a look at Kazakhstan; they went from Heard said.
confident the Australian nothing to the world’s largest uranium pro-
uranium sector is far from a ducer in short time. We could do that. The key – Dominc Piper
spent force. is to be in a position to go when the market
goes,” he said.
“We recently looked at the
history of the uranium price For a wider embrace of nuclear fuels in
and what happened follow-
ing the Three Mile Island
accident and the Chernobyl
accident to see if we could
forecast what would happen
post-Fukushima,” Guthrie
said.

“After Three Mile Island,
the market took three or four
years to come back; after
Chernobyl it was 20 years. I
think the situation post-Fukushima looks more
like post-Three Mile Island because we are in
now, as we were then, an era of nuclear re-
naissance. Coupled with this there are pro-
duction constraints around the world.

“We have not missed the window because
the opportunity is there and we are now in
the right policy environment. I think we have
a very bright future. The opportunity is right
here, right now. And the Royal Commission

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 51

SAREIC REVIEW

Discovery can still
inspire: Carter

Junior explorers can still win market and the whole situation changes,” Carter
support in these tough times but they said. “Without a discovery, junior explor-

will only do so by making a decent discov- ers are not going to get access to finance.”

ery, one of Australia’s most respected ex- Neither does he believe that investors

ploration executives has declared. alone should shoulder the blame for the

Derek Carter has a long history of suc- current pain in the junior mining sector.

cess in the junior resources game, in- “The industry itself has a lot of blame.

cluding the establishment of the likes of Many companies should never have listed

Minotaur Exploration Ltd so it was heart- in the first place. We are always forgetful

ening to hear him say the current dark of booms and busts and there were a lot of

clouds were not wholly pervasive. ordinary IPOs in the last boom that should

And Carter should know with another not have been supported. The industry

company he is associated with; Highfield has to be very careful.”

Resources Ltd, leaping from less than With some 18% of ASX-listed min-

34c/share a year ago to $1.75/share in ers reporting cash reserves of less than

early April on the back of exceptional $200,000 last year, Carter said the busi-

“drilling results from its potash project in ness was doing it tough but held hope that

Spain. Derek Carter change would come.
Carter said Highfield’s suc-
“There is a future. We just
cess was an example of how
exploration success could buck You get one big discovery in a have got to get past this current
market trends. certain geological environment hurdle,” he said.
and the whole situation changes.
“You get one big discovery in – Dominic Piper
a certain geological environment

PAGE 52 MAY 2015 AUSTRALIA’S PAYDIRT

Valence ships first graphite

Valence Industries Ltd has signed MoUs with four other customers for export base in Port Adelaide
waved goodbye to its first volumes exceeding 29,000 tpa in the second would have several advantages.
export shipment from the Uley and third years of production, while negotia-
graphite mine on the Eyre Pen- tions are continuing with four other parties to “By having our foundation
insula. move to sales contracts upon certain stages grades available in Adelaide,
of the ramp-up phase. we can then decide on the final
Managing director Chris Dar- blending, the final packaging and
by told the SAREIC audience Production will ramp up to 39,000 tpa next the final sizing of that material to
an export of about 20t of flake year and then 64,000 tpa from 2018 in line meet a particular customer’s or-
graphite had left Port Adelaide with forecast demands. ders,” Darby said.
on the second day of the con-
ference, bound for an overseas Uley Pit 2 has a resource of 261,305t @ “By having it at the port, we
customer in the Asia-Pacific re- 12.9% TGC, although Valence has set an ex- can achieve maximum agility in
gion. ploration target of 9-12mt @ 9-12% TGC for the shift between one product
an updated resource to be confirmed later this line to another product line or
It comes less than four months quarter. between customers, depending
after Valence restarted produc- on what their requirements are.”
tion at the historic mine site, Valence is also reviewing a number of sites
about 23km from Port Lincoln. near Port Adelaide for its proposed advanced The final phase of Valence’s
materials handling facility as part of its expan- expansion plan is an advanced
Valence has been processing sion plans. The company hopes to begin con- manufacturing facility to be built
existing ROM stockpiles at Uley struction and commissioning on the new facil- during 2016. It will be designed
since late December and ex- ity shortly so operations can begin in 2016. to deliver advanced end-prod-
pects to hit full run-rate capacity ucts for specific customer needs
of 14,000 tpa at the refurbished Darby said housing the facility close to its that require high purity graphite
plant in the next quarter. levels in the range of 99.5% to
Chris Darby 99.95%.
Mining from the new Uley Pit
2 adjacent to the plant is expect- “The greatest interest over
ed to begin in the fourth quarter as existing the last few weeks from customers has been
stockpiles deplete. around getting material from this facility so
having locked away a majority of that tradi-
Valence has also been actively signing up tional capacity, the real focus from custom-
customers to purchase its graphite, success- ers is now when they can get this high purity
fully securing six sales contracts during the material from the advanced manufacturing
last quarter. plant,” Darby said.

“Sales qualification in the graphite industry Valence was also close to finalising a fund-
is very important because we don’t have a ing arrangement for the Uley expansion plan.
general trading market, so what we have to A feasibility study released late last year es-
do is go through that process of qualification,” timated the total cost of the expansion to be
Darby said. about $50 million, including $37 million for
the development of Uley Pit 2 and expanded
“It involves our customers actually taking a plant.
sample product to confirm suitability for their
specific industrial, chemical or electronic pro- Valence’s projected production and rev-
cesses and that can take three, six, nine or 12 enue forecasts look strong over the next five
months, depending on the application.” years, with the company tipped to churn out
almost 50,000 tpa and generate sales of
Valence has shipment orders for the six about $97 million per annum in the fourth year
customers arranged for the next six months, of production when the expanded operation is
accounting for 8,000t, equivalent of the first in full swing.
full year of production.
“The valuable part here is the customers
The Adelaide-based company has also we have qualified for our traditional graphite
product lines are customers who are going to
be there to buy our advanced manufactured
product lines,” Darby said.

“Once we move into the graphene sales,
they’ll be there for the graphene sales so
we’re actually moving along with qualified
customers who understand your business,
understand the way you do things and you
bring them on board for the next round of what
you’re doing as well.”

– Michael Washbourne

Valence has shipped its first export of Uley graphite to an overseas customer

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 53

SAREIC REVIEW

The future is copper

This year’s SAREIC gave Heithersay discussed during the ration Technologies Collaborative Research
the clearest indications conference’s closing panel. Centre (DET-CRC) and two explorers; Mino-
taur Exploration Ltd and Kingston Resources
yet that the South Australian “The challenge actually came from Ltd is attempting to map entire mineral sys-
tems in the hope of giving explorers greater
Government is determined to the Premier,” Heithersay explained. understanding of the geological make up of
copper-prospective regions.
ensure it becomes one of the “He said ‘I can see what you’re try-
DET-CRC’s David Giles told conference
world’s preeminent copper ing to do here but how is the general delegates the centre’s research programmes
– including coiled tube drilling, lab-at-rig tech-
exporters. public going to have any understand- nology and the autosonde process – repre-
sented a “massive opportunity” to aid the dis-
Although the base metal ing of what you are doing?’” covery of the millions of tonnes of copper still
to be found in SA.
is already the State’s biggest “That set us thinking that if we
“The missing inventory in South Australia is
mineral export earner thanks could develop a copper strategy from very large and the DET-CRC offers an oppor-
to the output from Olympic David Giles which people can start to understand tunity to get to it,” Giles said.

Dam – and to a much lesser what copper is and why it is impor- “It is very expensive and difficult to map
mineral systems in their entirety on the Gawl-
extent the likes of Prominent Hill and Kan- tant and why we have a potentially leading er Craton, much more so than the Yilgarn or
the Andes. To explore under cover you need
mantoo – Jay Weatherill’s Government has role in its future. That way you can include a to go in with more samples of what’s down
there and you must have a certain level of drill
launched a new copper strategy designed to lot more people in the conversation.” density to make a discovery.”

further develop SA’s copper capabilities. The strategy is designed to show that the Giles said the DET-CRC was based on the
notion that there were potential technology
Minister for Mineral Resources and Energy, likelihood of finding major copper orebodies in solutions to this problem.

Tom Koutsantonis, said during his opening SA is statistically very high given the gap be- “We want to take away the idea that you
have a massive field programme with sam-
address to the conference that a copper sum- tween the size of Olympic Dam and the likes ples prepped and then sent off somewhere
else for assaying. Eventually, you could assay
mit to be held in Adelaide this month would of Prominent Hill and Carrapateena. drill samples and have results within one day,
not six months,” he said.
present an opportunity for industry, govern- He said the strategy would not only look at
Heithersay is confident the copper strategy
ment and community to come together to dis- exploration but also processing, infrastructure can eventually be translated to other com-
modities.
cuss the future of copper exploration, devel- and marketing.
“Let’s start with copper and look at iron ore
opment and mining in the State. “When we talk overseas we put the pitch and if we get those right maybe we can move
on to mineral sands and zinc and other things
“Australia has the second largest econom- that it is a statistical certainty there must be down the track.”

ic demonstrated resources of copper at 13% other copper deposits out there, the question – Dominic Piper

after Chile’s 28%, and of the national total, is how do we find them? The next question is

SA hosts 68%. And yet while Chile produces how do we make sure we develop the ones

more than 5.8 mtpa of copper, South Austral- that are there. We know we have orebodies

ia produces just 300,000 tpa,” Koutsantonis like Carrapateena that has constraints but

said. what is needed to bring that project to market?

“Our aim must be to translate our world “It is about looking at the thing holistically,”

class resource potential into a step-change he said.

in copper production. I want to encourage Among the initiatives already in train is the

the industry and stakeholders to engage with partnership between DSD and Oz Minerals

us so that together we can develop a copper Ltd on a hydrometallurgical study designed

strategy that helps us realise this State’s full to improve copper concentrate grades out of

potential.” deposits such as Oz’s Carrapateena.

The summit will be the next step in the pro- The South Australian Geological Survey’s

cess that started last year, as Department of Mineral Systems Drilling programme, under-

State Development deputy executive Paul taken in collaboration with the Deep Explo-

Renascor readies itself for discovery

It is far from the only junior hoping to snag a Christensen said. “It averages less than 50m IOCG deposit.
major IOCG system in the Olympic Domain of cover.” “We have done a single drilling programme
but given the widespread acceptance further
large copper deposits will be found there, Re- While making it easier and cheaper to ex- and hit alteration from 120m and it’s up to
nascor Resources Ltd can be as confident as plore, a lack of cover does not equate to eco- 0.45% copper. That is a large anomaly which
any of its peers. nomic mineralisation but Christensen pointed remains open.”
to further geological evidence which support-
Renascor controls 1,500sq km of ground in ed Renascor’s quest. Christensen said Renascor had proved up
the south of the Olympic Domain and man- the “discovery phase” drill targets with the
aging director David Christensen said the “Its geological signature is consistent with focus this year to be on two large-scale high
company had recently made a “major break- Prominent Hill, Carrapateena, Olympic Dam density zones at around 200m below surface.
through” in the area revealing the potential to and the others. It has the right location, ge-
host a major IOCG system. ology, rock age, metals, setting, geophysics, The company also has a pipeline of other
mineralogy and mineralisation. The question targets along the same Roopena-Angle Dam
Christensen said the company’s Eastern is whether we can drill and find some copper, fault structure as Extension Tank, among
Eyre project was particularly attractive be- something of grade?” them the Highway prospect to the north-west.
cause it did not suffer from extensive cover,
something which frustrates many explorers in The Extension Tank gravity anomaly is There, Renascor will be targeting a high
the Olympic Domain. the standout target on the project. A gravity amplitude, 2km wide gravity target which has
anomaly adjacent to a magnetic zone, Renas- shown coincident plus-50 ppm copper soil
“Eastern Eyre has among the shallowest cor believes Extension Tank is directly com- samples.
cover sequences on the Olympic Domain,” parable to Oz Minerals Ltd’s Prominent Hill
– Dominic Piper

PAGE 54 MAY 2015 AUSTRALIA’S PAYDIRT

High cost pressures still not over

The problems of high costs and ple to liaise and communicate with
wages have not gone away de- when faced with hostile elements

spite the mass redundancies and in communities.

contract renegotiations that have “As an industry we need to come

occurred in the mining industry to the realisation that some sectors

over the past six months, accord- of the community who will oppose

ing to a panel of South Australian a project, come what may. We

mining experts. need to distinguish those agents

The experts – Derek Carter from people within the community

(SAMPEG), Greg Hall (Hillgrove that have serious and well-justified

Resources Ltd), Lachlan Ruther- Paul Heithersay Lachlan Rutherford George McKenzie concerns about the project. We

ford (Taylor Collison), George Mc- need to engage with the latter to

Kenzie (Finlaysons) and Paul Heithersay (De- risk element of salary that is usually reserved ensure the project gains the confidence of the

partment of State Development) – all agreed for the senior people needs to be pushed right community. The former group we will never

that high costs and productivity remained a down to equipment operators,” Dowd said. reach agreement with.”

challenge for the local resources sector. “That goes to the heart of the matter; pro- Hall said it was imperative that companies

Panel convenor Carter posed the question ductivity. If we are getting the right skills and of any size had people with the right skills

of how the industry could drive down costs, the productivity is there, does it matter what in place to engage with opponents and con-

particularly wages, and Hillgrove managing we pay?” cerned residents.

director Hall was quick to place the imperative Department of State Development deputy “At Hillgrove our effort is aimed around total

on miners themselves. executive Heithersay agreed. engagement,” he said. “It is not easy to en-

“It is up to us, as individual companies, to “We went to Scandinavia recently and in gage at times; you need an excellent temper-

manage and to influence,” Hall said. Sweden they have the Kiruna underground ament and it is a skill set you have to have in

He said things had got out of hand three or magnetite mine,” he said. “That is a mine your company. If you don’t have it, employ it.

four years ago but with the boom over, some which wouldn’t be able to operate anywhere The big companies can employ specific peo-

costs were coming back to competitive levels. in the world but because it is fully automated ple to that role but in smaller companies you

However, he said the hard decisions needed they can keep costs down and productivity up. must ensure the people you employ to run the

to be made. “The technology they use and have devel- mine have that skill set as well.”

“If we have a situation where we have to oped there is the technology the likes of Atlas – Dominic Piper
manage costs downwards and have to ap- Copco and Sandvik go

proach people about their salaries then it has and export. There is a

to be done. You must make those hard deci- lot we can learn from

sions and make them quickly. the Nordic countries

“It is tough for those service providers who in this regard because

grew during the boom and they are hard con- they have higher costs

versations to have but if we are to make the structures than us.”

money we need to then we have to reopen Manufacturing was

these contracts.” another sector Aus-

Taylor Collison analyst Rutherford said a tralian mining could

recent visit to Spain had shown how much learn from, according

disparity there still was between Australian to Heithersay.

wages and those in Europe. “You’d think China

“It was quite a stark contrast to what is hap- has taken most of that

pening here,” he said. “For a mining engineer, market but there are

the salary is about €60-80,000 [$80-110,000] companies here in

so there is a bit of catching up we still have South Australia that

to do.” are competing with

He said investors were increasingly con- China and elsewhere

scious of how companies were managing in the world in manu-

their cash reserves. facturing by using au-

“There is that tag of lifestyle companies and tomation; things that

given the diminishing pool of funds you have are not in the mining

to be pretty careful about how you market industry yet. They are

yourself.” coming but I still think

Former Newmont Australia executive Paul there is a long way to

Dowd told the panel there was little to stop the go in learning what

situation happening again once momentum other industries are

was back in the industry. doing.”

“In last 10 years the poach-and-pay men- Elsewhere, the

tality has got away from us and it should never panel discussed the

happen again but all the hallmarks are there continuing challenge

again and we are doing nothing to stop that.” of community engage-

He said that instead of unsustainable wage ment.

levels, companies should employ more per- Finlaysons part-

formance-based incentives for all levels of ner McKenzie said

employees. companies needed to

“The structure needs to be different. The at- identify the right peo-

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 55

SAREIC REVIEW

New foreign investment laws
to affect mining

Mining companies must see the screening threshold Dyda said FIRB, which acts as an advi-
be aware of proposed for foreign investment deals sory board to the Treasurer on deals which
changes to foreign invest- reduced from $252 million to fall above the threshold, gives one of three
ment review legislation that $15 million for rural land. It recommendations; no objection, no objection
could leave them requiring is widely seen as a move to with conditions set and outright rejection.
approval for smaller foreign counter the fear many Austral-
investment deals. ian farmers have of increased “There have been few outright rejections
foreign acquisition in the agri- however,” Dyda said. “The most recent high
This was the view of Fin- cultural sector but Dyda said profile examples have been the Singapore
laysons partner Andrew changes would also “bring Stock Exchange’s takeover bid for the ASX
Dyda who said mining com- many more resources deals and Shell’s bid for Woodside Petroleum Ltd.”
panies showed little under- under scrutiny”.
standing of Australia’s for- Deals over exploration licences generally
eign investment laws. Currently, investments in don’t need FIRB approval, unless the deal
the resources industry also involves a foreign government in which case
“We are currently in an require approval if they in- approval is needed regardless of the value of
extremely difficult environ- Andrew Dyda clude the right to occupy Aus- the deal.
ment for capital raising so tralian urban land for more
opportunities for foreign than five years, are subject to profit-sharing Dyda said the proposed changes on the
investment are becoming increasingly impor- of urban land. horizon included; application fees for all FIRB
tant,” Dyda said. Acquisitions of Australian businesses or applications, broader penalty provisions, fun-
corporation require approval if they result in a damental changes to definitions regarding
“But foreign investment laws, particularly 15% or more interest (40% or more in aggre- land, foreign ownership register for agricul-
the actions of the Foreign Investment Review gate) with other foreign investors or the deal is tural land and new monetary thresholds for
Board [FIRB], remain mysterious to those valued at more than $252 million. investments in “agribusiness”.
who are desperately in need of funding.”
– Dominic Piper
The proposed changes to legislation will

PAGE 56 MAY 2015 AUSTRALIA’S PAYDIRT

Chinese approval for Central Eyre

Ahighly respected research facility has Larry Ingle mine in Tasmania during January and Febru-
validated the use of the proposed product ary as the 62% CFR price equivalent dropped
from Iron Road Ltd’s Central Eyre project in feedstocks, such as that from the Central below $58/t.
Chinese sinter plants. Eyre iron project,” Ingle said.
The iron ore price slipped more than 60%
New environmental standards in China are “The high iron content will increase iron last year and many market commentators are
targeting cleaner sinter, pellet and iron pro- burden and reduce energy use, pollutants tipping a slow and prolonged recovery ex-
duction in a bid to reduce the pollution levels and slag production and that is very desirable tending into at least 2017 as the majors con-
which have plagued the country for many in the current situation.” tinue to flood the market.
decades.
Ingle expected iron ore projects which of- Central Eyre carries a $US3.98 billion
Restrictions are now so tight that China’s fered premium concentrates to prosper in capex – one that seems unlikely to progress
particle emission limits of 20-100 mg/cu m the current market, highlighting a recent an- in the current market – but Ingle was confident
are now lower than South Australia’s 100-500 nouncement from ASX-listed Grange Re- the recent changes in China would aid Iron
mg/cu m allowance. sources Ltd. Road in the longer run.

The regulations came into effect in January Grange reported it had received $105/t for “We expect the demand for premium qual-
and there are heavy penalties for non-compli- high-grade iron pellets from its Savage River ity products will increase to enable steelmak-
ance, including imprisonment. ers to improve their efficiencies, reduce pow-
er consumption and meet new environmental
Bulk samples from Central Eyre were re- standards,” Ingle said.
cently tested at the China Iron and Steel In-
stitute and it was found the concentrate from “Interestingly, in replacing Pilbara ores with
the SA project could be used immediately in our premium South Australian concentrate,
Chinese sinter plants without modification. steelmakers can expect to see their sinter
plants increase in productivity and decrease
Iron Road general manager Larry Ingle in fuel use.
said the testwork results placed Central Eyre
amongst the world’s leading iron ore projects “Our nearest competitors are premium con-
because of its unrivalled environmental ben- centrates, however, they normally require pel-
efits. letisation at extra cost and as a consequence
may not survive during periods of low pricing.”
“The trend of enforced compliance is ex-
pected to accelerate the Chinese preference – Michael Washbourne
towards the future use of high-quality iron

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 57

SAREIC REVIEW

Investigator focused on drilling

Investigator Resources Ltd managing director John Anderson soil sampling programme on a number of tar-
John Anderson believes the best way to beat gets at the time of print, including the Argos/
the market malaise impacting so many junior build on that discovery.” Ares North silver-lead-gold-copper prospect.
explorers is to simply drill the most obvious tar- Fortunately for Investigator, the company
gets and see what can be learned from them. Other targets such as Alexander, Diome-
has a healthy cash position of $3.4 million af- des and Helen East may also be drilled in the
The Brisbane-based company will drill a ter receiving $2.1 million courtesy of an R&D near future if the results of a recent pathfinder
series of targets around its Paris silver dis- rebate last year. study justify the respective exploration pro-
covery in the coming months in a bid to learn grammes.
more about the geology in the northern Eyre Anderson was hopeful his company would
Peninsula. receive another $1 million grant later this year “There’s a number of interesting targets
for its research efforts around the Paris-Nan- there with limited drilling, some targets with
Those targets include the Helen South- kivel mineral system. no drilling and some of those targets will be
West copper-gold-silver skarn, the Nankivel tested in the upcoming round of drilling,” An-
Central copper-gold porphyry/breccia and the Investigator was awaiting the results of a derson said.
Nankivel West silver-lead-gold target, all in
the Paris corridor. “We have got to go back to the geology and
start integrating all the data and concepts we
A maiden resource of 5.9mt @ 110 g/t silver have at our disposal to see if we can work out
for 20 moz was established at Paris in Octo- what our target priorities are.”
ber 2013, but Anderson bemoaned the fact
his company had been unable to make any Land access has been an issue for Inves-
returns on the discovery since. tigator in previous years and Anderson said
his company would need to complete heritage
“We’ve spent about $20 million on this re- surveys over some of its tenement package to
gion over the last five years and that repre- clear some of the targets.
sents about 5-20% of the State’s mineral and
metals expenditure,” Anderson told SAREIC Investigator recently drilled a handful of
delegates. IOCG targets on its ground in the Yorke Pen-
insula and was also awaiting the assay results
“We consider ourselves leaders in South of that exploration at the time of print.
Australian exploration, but we can’t rest on
our laurels. Paris has 20 moz silver, but we – Michael Washbourne
haven’t yet got a return on that so we need to

PAGE 58 MAY 2015 AUSTRALIA’S PAYDIRT

Hillgrove seeks mine extension

Hillgrove Resources Ltd has tasted explora- Greg Hall business for shareholders. One is reducing
tion success just 200m north of its Kan- costs…the other is trying to manage price.”
mantoo copper mine in South Australia. The company also reduced its debt from
$40.8 million to $18 million and saw revenue Hall, the former managing director of ura-
RC drilling returned one encouraging hit of rise 20% to $166.8 million at an average re- nium hopeful Toro Energy Ltd, has been with
28m @ 0.61% copper, 0.14 g/t gold and 26 g/t alised price of $3.62/lb ($US3.31/lb) copper. Hillgrove for more than two years and in the
silver – including 10m @ 0.88% copper, 0.18 past 17 months has overseen a number of op-
g/t gold and 3.2 g/t silver and 1m @ 2.86% “Running any mining project or any busi- erational improvements at Kanmantoo.
copper, 0.8 g/t gold and 9.4 g/t silver – at a ness is about sustaining your business in a
0.2% copper cut-off and depth of 300m below variety of climates,” Hall said. These include a 48% reduction in mining
surface. unit costs, an 81% increase in mining produc-
“We’re in a climate where we can have a tion, a 24% increase in trucking efficiency,
The discovery hole was contained within fluctuating price of commodity and there are a a 17% increase in drilling efficiency, a 17%
a broader mineralised zone of 39m @ 0.47% number of things we can do to help protect our decrease in blasting powder factor, a 24%
copper, 0.11 g/t gold and 2.1 g/t silver at a decrease in fuel consumption and a 75% de-
0.1% copper cut-off from 324m downhole. crease in dilution.

Hillgrove managing director Greg Hall A new rougher cell in the processing plant
made the announcement on the opening day has also helped increase float capacity and
of this year’s SAREIC event and expressed residence time by 40% while a new screen
confidence the discovery would lead to an ex- between the primary and secondary crushers
tension of the main orebody. increased throughput from 2.8 mtpa name-
plate to over 3.3 mtpa.
The Adelaide-based company is looking to
extend the life of Kanmantoo to 2021 and has “We have a lot of good infrastructure ad-
set aside $1 million for a regional exploration vantages, but it is still about operating the
programme to be completed this calendar plant as efficiently and as effectively as we
year. can,” Hall said.

Hillgrove’s discovery success comes as the “You really have a number of levers you can
company toasts a fruitful 2014 in which Kan- pull to help manage your business and we try
mantoo produced a record 20,693t of copper and do all of them if we can.”
in concentrate and the underlying EBITDA
reached $53.4 million. – Michael Washbourne

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 59

SAREIC REVIEW

Niche gold South
Australian-style

Duncan Chessell Martin Jacobsen Dr Chris Giles

The changing economics and funding mod- distressed miner Mungana Goldmines Ltd in ing free coarse gold, Havilah managing direc-
els for gold discoveries could unlock a new 2014. Earlier this year it consolidated Tunkil- tor Chris Giles is confident the company can
generation of gold mines in South Australia. lia, paying Helix Resources Ltd $500,000 and recover much of the resource through gravity
10 million shares for its 30% interest. separation means.
For all its exploration expenditure, SA has
delivered little in the way of gold develop- WPG managing director Martin Jacobsen The company has also conjured a unique
ments over the last decade, with precious said the two projects had been targeted be- funding model which will minimise its capital
metal production largely restricted to by-prod- cause they offered an early start-up opportu- requirements, allowing it to avoid shareholder
uct from Olympic Dam and the once prolific nity. dilution.
but now very deep Challenger mine in the re-
mote west of the State. “Both had a completed PFS and we saw The model will see Broken Hill contract
targets could be brought into production mining and civil contracting group Consoli-
However, an improved Australian dollar cheaply and quickly,” Jacobsen told confer- dated Mining & Civil Pty Ltd (CMC) take on
gold price and recent developments in the ence delegates. financial responsibility for all mining services.
State have spurred interest in the sector.
He said the company was targeting the first “They had some spare equipment and
The SAREIC conference played host to two quarter of 2016 for first gold at Tarcoola. people and they approached us looking for a
near-development stories this year in opposite deal,” Giles said. “They will mine the gold and
sides of the State. In the west, WPG Resourc- “The plan for Tarcoola is to start in 12 bring it to surface at their own expense and
es Ltd is pushing forward with development of months. We have got a mineral plan and will then we split revenue from gold production
its Tarcoola gold project, based on a JORC- soon be submitting our mining licence appli- 50/50. If all goes well CMC do better out of
compliant resource of just 90,000oz gold. cation.” that than a normal mining contract.”
Meanwhile, in the State’s east, just across the
border from Broken Hill in New South Wales, A previously completed PFS investigated a Giles said the deal could see Havilah gen-
Havilah Resources Ltd has agreed a 50/50 heap leach flow sheet and while the company erate $39.1 million from its 50% share within
revenue sharing agreement with a local min- will continue to follow that path, Jacobsen 18 months.
ing contractor in order to fund development of said more detail was needed as it headed into
its 67,000oz @ 2.9 g/t gold Portia project. a DFS. “To put that in perspective, it is more in cash
flow than what our current market cap is.”
Explorer Endeavour Discoveries Ltd is also “We want to verify that PFS work so we are
targeting more modest start-ups and manag- doing more metallurgical test work and will Giles said first gold was planned for July
ing director Duncan Chessell told SAREIC then start a DFS in the next few weeks,” he 2016.
delegates, the likes of WPG and Havilah were said.
proving such projects were feasible in modern Endeavour is further down the develop-
times. At Tunkillia, the company is targeting a 2018 ment curve with its Theseus gold project near
start-up for the larger, 800,000oz project. Tarcoola but Chessell said recent drilling at
“WPG believes it can get a standalone op- the Minos prospect had delivered some en-
eration into play at Tarcoola based on a re- The project was originally explored by Mt couraging results.
source of just 90,000oz. When MIM [Mt Isa Isa Mines in the 1980s but with that company
Mines] was in the area in the 80s, its corpo- chasing multimillion ounce orebodies, its drill- The company produced a hit of 56m @
rate target was 5 moz gold; that gives us an ing patterns were widely spaced. 1.2 g/t gold last year and was completing a
idea of the economics of gold discovery and second hole underneath that intersection as
success has changed.” “There has been limited previous drill- Chessell presented at SAREIC.
ing and they were drilling on 6km spacing,”
WPG returned to the gold space last year Jacobsen said. “For instance, in 1988 MIM hit “We are drilling now at Minos and it is look-
following a five-year focus on iron ore assets. 6m @ 2.3 g/t gold but never followed it up.” ing pretty good. Our principal geologist was
It acquired 100% of Tarcoola and a 70% in- out there today, finishing off the last holes and
terest in the larger Tunkillia gold project from Meanwhile, in the State’s east Havilah is he was excited about what was coming out of
preparing to start mining on its Portia gold the ground. We are logging some very wide
project. alteration zones,” he said.

At just 67,000oz, Portia is event smaller – Dominic Piper
than WPG’s Tarcoola but with this compris-

PAGE 60 MAY 2015 AUSTRALIA’S PAYDIRT

Minotaur back on home turf

Minotaur Exploration Ltd is set to return to Tony Belperio including drilling, on Minotaur’s tenements in
work in South Australia later this year after the southern GRV is expected to begin in July.
a long absence. ern side of the Gawler Craton are also present
on the southern and western sides,” Belperio Ground magnetic surveys and real-time
The company has projects in all six Austral- told the SAREIC audience. vectoring will also be applied to 12 basement
ian mainland states, but has remained largely targets on EL4776 as well as five targets on
inactive on its home turf in recent years as it “We see biomodal mafic and felsic volcan- EL5232, including key structures and path-
focused on exploration around Cloncurry in ics, lower Gawler Range volcanics, we see ways for hydrothermal and epithermal fluids
Queensland. intense iron replacement and alteration, but and potential mineralisation.
what hasn’t worked on the southern and west-
But a new partnership with the State Gov- ern sides is the gravity and magnetic toolbox Belperio said one of the other reasons the
ernment and Deep Exploration Technologies which worked so well on the eastern side.” company had been coerced into returning to
CRC has enticed Minotaur back into the SA SA was so it could apply some of its explora-
fold to continue exploration work in the south- Field testing and other exploration work, tion concepts from Cloncurry on the ground
ern Gawler Range Volcanics (GRV) of the where successful trials of VTEM and electro-
Eyre Peninsula. magnetic technologies had also taken place.

About $1.2 million of drilling is expected to Similarities in the mineralisation of both
take place on Minotaur’s tenements over the Cloncurry and Prominent Hill had also
coming months under the Mineral Systems sparked some interest.
Drilling programme unveiled by the SA Gov-
ernment and Department of State Develop- “Cloncurry is clearly an IOCG terrain, but
ment late last year. we see a much greater variation in sizes and
in style of IOCG mineralisation,” he said.
Minotaur is credited with helping make the
discovery which led to the Prominent Hill mine “We’ve been building up our tenement po-
being established many years ago and execu- sition there progressively over the last five
tive director Tony Belperio said the company years and updating our exploration toolbox as
had persuaded the SA Government for finan- we go.”
cial assistance so it could take a closer look at
the similarities between the known volcanics – Michael Washbourne
and what exists on its tenement package.

“All the ingredients that we see on the east-

13 – 14 April 2015 15 April 2015

Adelaide Convention Centre Adelaide Convention Centre

The CD-Rom of the 2015
South Australian Resources and
Energy Investment Conference

will be available soon

CD-Rom for conference delegates – $115 (inc. GST)
CD-Rom for non-conference delegates – $175 (inc. GST)
Phone (+61) 8 9321 0355 or email [email protected]

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 61

SPECIALTY METALS

Stellar tin project lights
up dull market

Tasmania is Australia’s tin capital. Production of the specialty metal from the State could be important in future global supply

Myanmar’s supply of tin to the market has $US25,000/t. ble, while average recoveries across all de-
been the major factor behind prices for So while current tin producers are now posits improved by 4.5% to 72.8%.

the specialty metal dropping to lows last expe- faced with low commodity prices and rising An increase in recoveries has also boosted

rienced in 2009. costs, the next wave of potential players are production potential to 4,520t, while assuming

At the time of print LME tin prices were preparing for the upswing. an exchange rate of 78c to the US dollar, the

$US14,750/t, about 20% down on prices from Stellar Resources Ltd is one potential rising PFS valuation for Heemskirk is $160 million.

the start of 2015. star in the tin game. Stellar managing director Peter Blight

“It is not known how long, or if supply from Earlier this year the company dressed up its said the metallurgy work completed so far

Myanmar can be sus- had been a success

tained at current levels. There is growing interest within the for the company, while
The uncertainty stem- tin industry itself as to where the next high-grade tin hits and
tightening of the geo-
ming from Myanmar is logical model will further
another challenge for tin

producers and explorers sustainable production is going to come enhance Heemskirk’s
already battling negativity from. There is Myanmar and artisanal stuff credentials as Australia’s
in the resources sector. best emerging tin play.

However, many are that has its moments but people don’t see “We are going to have
prepared for the fight and that as sustainable supply. What the industry a good story to tell once
remain bullish that the we complete this exercise
sector will bounce back, is looking for is investable projects and I which isn’t too far away
with history suggesting and then we will be fol-

a tin price recovery is on think we stack up pretty well on the list. lowing it up with a drilling
the cards. programme,” Blight said.

According to Germa- Refining and optimis-

ny’s geological survey in- ing the 2013 Heemskirk

stitute BGR, there are few projects worldwide Heemskirk project, north-west Tasmania, by PFS – 600,000 tpa @ 1.06% tin over 6.75

poised for production between now and 2020. delivering a metallurgical optimisation study. years at estimated pre-production capital

Therefore, forecasters are still bullish on The study, conducted by WorleyParsons, costs of $127 million – while completing a

the prospects of tin prices surging in the revealed better tin recoveries (up 7.4% to scoping study on the satellite St Dizier project

next few years ranging from $US23,000 to 79.5%) from the Severn deposit were possi- are focuses.

PAGE 62 MAY 2015 AUSTRALIA’S PAYDIRT

Metallurgical optimisations has boosted the NPV at Stellar’s Heemskirk tin project
in north-west Tasmania

However, the big play for Stellar is starting dustry itself as to where the next sustainable pressure given the age of the assets, declin-
a DFS at Heemskirk this year. production is going to come from. There is ing grades and rising costs. It makes oppor-
Myanmar and artisanal stuff that has its mo- tunities to grow their businesses quite limited.
Blight said the company hoped to secure ments but people don’t see that as sustain- This means they have to look at other oppor-
about $10 million to complete the DFS, which able supply. What the industry is looking for tunities and new regions,” Blight said.
will include about 50 drill holes to convert is investable projects and I think we stack up
more of the 6.3mt @ 1.14% resource into pretty well on the list,” Blight said. Case in point is China’s Yunnan Tin, he
measured and indicated categories. said.
Blight’s positivity perhaps stems from a
“That is an estimate at the moment but it is supportive share registry which includes new- “For over 100 years they have only operat-
a pretty do-able exercise,” Blight said. comers and the company’s largest backers ed in China where they are established to be
Capetown S.A. (21%), Bunnenberg (15%) and one of the world’s biggest producers. Yunnan
“A big chunk of the capital will be for the Resource Capital Funds (12.1%). Tin has now invested in Tasmania in Renison
drilling in the DFS and we hope to complete Bell, which tells you what the industry is think-
the DFS in 12-18 months if we are fortunate “We have a good register which is fairly ing,” he said.
enough to have the money in the middle of tight and I think smaller shareholders should
this year. If so, we could probably be in con- take comfort in the fact that we have quality While Yunnan Tin’s involvement at Renison
struction mode in the second half of 2017, with people on the register,” Blight said. Bell is a JV with Metals X Ltd, Blight is encour-
production early in 2018.” aged by the presence of other major compa-
The value proposition its current investors nies in Tasmania, including India’s Vedanta
Conjuring enough cash for the DFS will be are seeing is Australia’s highest grade unde- plc at Mt Lyell (copper) and the Avebury nickel
done in a challenging environment for the tin veloped tin deposit nearing the start of a DFS, mine acquired by QCG Resources from MMG
sector. with a clear pathway to production. Ltd.

Although forecasters are predicting $US25- Furthermore, Stellar has few peers on the With Heemskirk in close proximity to some
30,000/t future tin prices, at the time of print ASX, with only Moroccan-focused Kasbah of these mines, no doubt the big hitters will be
tin continued its decline from $US19,500/t in Resources Ltd being in a more advanced po- keeping a close eye on Stellar’s progress in
January to $US17,000/t by the end of March sition having a completed DFS at its Achm- the tin space.
and $US14,750/t by mid-April. mach project.
– Mark Andrews
Therefore, further metallurgical improve- “The other point to make is that the tradi-
ments and resulting cost optimisations will no tional sources of ore supply are under a bit of
doubt help Stellar’s pursuit for cash as uncer-
tainty on supply to market, particularly Myan- 35000
mar’s role in the chain, remains unknown.
30000
“There is growing interest within the tin in-
Price US$ per tonne 25000

20000

15000

10000 23 Sep 2011 12 Jun 2013 2 Mar 2015
3 Jan 2010

Date

Tin price curve since 2010. Source: LME

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 63

SPECIALTY METALS

JV Vital for Watershed

It’s been almost 10 years in the for the Government, it was of
making, but Vital Metals Ltd’s
Watershed tungsten project is immeasurable value to the
as close to construction as ever,
according to managing director Queensland-based miner.
Mark Strizek.
“There is also a great amount
Vital’s flagship project has a
more interesting history than of aftercare that comes from the
most; discovered by mining
heavyweight Utah Development JOGMEC deal,” he said.
Company in 1979, the tungsten
play was acquired by Vital in “JOGMEC can provide fund-
2005.
ing to Japanese companies, like
Over the next three years,
the gung-ho IPO injected close our future JV partner. There’s a
to $80 million into Watershed;
securing mining leases, kick whole raft of support that comes
starting an EIS and aboriginal
land agreement in addition to from the Government. As capital
extensive drilling and metallurgi-
cal programmes to prove up the becomes hard to come by and
budding project.
equity markets are more risk
Vital was tempted to sell the project when
its priced soared to 86c in November 2007 averse you need strong partner-
(having listed at just 18c in 2005); instead it
pushed on with hopes of continued growth. ships, and I think that’s going to

But in 2009 the project ground to a halt fol- become a common thread in the
lowing the GFC and Watershed “was put on
ice”, according to Strizek. mining industry in general. It will

After two years in the wilderness, Water- be partnerships that get projects
shed got a shot of life in May 2011 when Vital’s
board was approached by the Japan Oil, Gas up and running.”
and Metals National Corporation (JOGMEC),
which proposed an earn-in agreement worth Watershed tungsten scheelite under UV Vital was pushing JOGMEC
$5.4 million for 30% of the project.
to find a partner by year’s end so
JOGMEC was established in 2004 by the
Japanese Government to secure Japan a sta- A 2.5 mtpa, 10-year operation producing a it could capitalise on the favourable resetting
ble supply of oil, natural gas and non-ferrous
metal and mineral resources, while also im- $178 million pre-tax NPV, 28% IRR, project- of the Australian mining industry and the dip in
plementing mine pollution control measures.
ed EBITDA of $526 million and post-tax free the Australian dollar.
Strizek told Paydirt JOGMEC was now
nearing the end of its journey with Vital, hav- cash flow of $255 million. Strizek also believed the timing was right
ing helped the company turn in a DFS for Wa-
tershed last September. However, JOGMEC has one final job to do: given an imminent shift in the tungsten mar-

The DFS boasted impressive numbers: find Vital a Japanese business partner. ket.

“They came on board to help fund the DFS Vital predicts global tungsten supply will

and all the other ancillary areas. That’s now drop by at least 3% from now until 2017 and

completed,” Strizek said. expects demand to grow by 6% over the same

“JOGMEC’s charter is to provide metals for period.

Japan but also funding … for Japanese com- Strizek said the rise of the Chinese middle

panies. By their charter they are not able to class would only strengthen the metals’ fun-

go into production with Vital Metals, because damentals in time.

we’re an Australian company. But one of the He said increased consumption and car

great things is they are a Japanese Govern- sales, in particular, by the growing Chinese

ment agency with very good connections into demographic would bolster the tungsten car-

Japanese industry.” bide market.

Those connections include the likes of China’s changing industrial landscape

Japanese giants Mitsubishi Corporation and would also help Vital and Australian miners

Sumitomo Corporation, which have already to compete with the Chinese, who dominated

been engaged by JOGMEC as potential part- the tungsten scene, according to the manag-

ners. ing director.

Strizek said although JOGMEC’s invest- “Everything that has happened in our econ-

ment in Vital was “like a drop in the ocean” omy is happening in the Chinese economy,”

Strizek said.

“They’ve gone from their industrial revolu-

tion … to a relatively fantastic standard of liv-

ing in a short period of time. The Chinese are

also catching up in terms of that high standard

of practice that’s prevalent in our mines and it

is being transferred to Chinese mines. They

are investing and paying for the environmen-

tal care more. Their costs are beginning to

ratchet up and become more similar to ours.

The cost of labour is already going up … so

you are going to see that levelling of price. We

are seeing that already in the manufacturing

industry where stuff is coming back to the US.

“People, as always, tend to focus on the

negatives. There’s always this end of nigh

thing and people are so fearful about min-

ing just now. But once you start stripping that

away and look at the fundamentals you can

see the opportunities.”

A proposed 3D layout of Vital Metals’ Watershed project – Rhys Dickinson

PAGE 64 MAY 2015 AUSTRALIA’S PAYDIRT

Base metals boost for tin hopeful

Consolidated Tin Mines Ltd is poised Consolidated Tin has grand plans for the 1 mpta Mt Garnet concentrator after
to release a DFS on the Mt Garnet recently acquiring the asset from Snow Peak Mining
tin project in the coming months after
completing a seamless acquisition of tap into constrained capital markets for devel- has been extracted and more than 380,000t
Snow Peak Mining Pty Ltd’s neigh- opment funds which so many other juniors are of zinc, lead and copper concentrates with sil-
bouring assets. desperately seeking. ver co-products have been processed.

The Queensland-focused junior “We’ve had to come up with some pretty Banning said the various base metals mar-
claimed full ownership of Snow Peak’s creative ways in the current market to pro- kets had been kind to his company in recent
base metals projects and associated gress our cornerstone tin project and the times despite fluctuating commodity prices
infrastructure in January and has suc- only way to do that was to get into a position over the past two years in particular.
cessfully maintained production at the where we are a business in production with
Surveyor mine. revenue,” Banning said. “A lot of analysts are talking some pretty
high numbers over this next year for zinc and
Consolidated Tin plans to leverage “Going out to the market and asking for we’re pretty excited about that because right
the cash flow from its newly acquired money right now isn’t a favourable place to be now we’re making money on our zinc produc-
base metals operations to develop the if you’re a junior explorer, even with a great tion,” Banning said.
Mt Garnet tin project, about 180km project in your possession, so we just had to
south-west of Cairns, later this year. get a bit creative and find a way to leverage “Everything else is going to be upside for
ourselves into a position where we could have us. Even silver is starting to come back and
First tin production is slated for early revenue and also offset the capital cost of the show a bit of life.”
2016. tin project.”
As for where the tin market might be head-
Surveyor has continued to operate A PFS completed in late 2013 found the Mt ed, Banning said he would keep a close eye
24/7 since Consolidated Tin assumed Garnet tin project could support a 1 mtpa op- on production out of Myanmar to see if speci-
control of the mine on January 13, eration producing almost 3,000 tpa @ 68% tin ality metal prices would lift to the $US24,000/t
following shareholder approval, with in concentrate and 235,000 tpa @ 65% iron level assumed in the PFS.
mining rates maintained at 30,000 tpm in concentrate.
of polymetallic ore. The company’s stocks were trading at 4.1c/
Mt Garnet has a total tin resource of share at the time of print with the LME tin price
The 1 mtpa Mt Garnet concentra- 12.05mt @ 0.4% tin (0.58% tin equivalent with sliding to $US14,500/t.
tor – a key item in Consolidated Tin’s iron and fluorine by-products), including 1.2mt
development strategy – has also @ 0.86% tin in the measured category at the Other assets acquired by Consolidated Tin
maintained production of 2,500 tpm of Gillian deposit. include the Maitland and Einasleigh projects,
zinc in concentrate, 700 tpm of lead in the Baal Gammon mineral rights agreement
concentrate and 180 tpm of copper in The initial tin production target is expected and all associated mining tenements and in-
concentrate since the change of ownership. to be reduced from 1 mtpa to about 300,000 formation.
tpa (2,000 tpa tin in concentrate) in a bid to
Operations at the Mt Garnet base metals lower the initial capex estimate for the project. Consolidated Tin will issue 580 million fully
mine will restart this month after being placed paid ordinary shares and a $16.5 million con-
on care-and-maintenance in December to Snow Peak acquired the Mt Garnet base vertible note to Snow Peak as well as some
coincide with the wet season. More than metals projects from Kagara Ltd in 2012 after predetermined milestone payments to finalise
100,000t of high-grade zinc was mined from the latter went into administration. Since the the transaction.
the site during the second half of 2014. restart of operations in November 2013, more
than 450,000t of copper and polymetallic ore – Michael Washbourne
Consolidated Tin managing director John
Banning said the first three months of base
metals production suggested his company
would make another seamless transition to
tin production when the time was right and he
expected this to be reflected in the upcoming
DFS.

“As you do with any DFS, you refine, you
optimise, you improve and you make sure
you’re looking at the right production profile
while managing your risk, your exposure and
your capitalisation into that project,” Banning
told Paydirt.

“It’s painting a pretty interesting picture, but
I can’t talk too much more about it other than
to say I’m pretty excited about wrapping it up
in the next few months and putting our posi-
tion out to the market.”

Consolidated Tin first flagged a partnership
with Snow Peak – a subsidiary of Consolidat-
ed Tin’s major shareholder Snow Peak Inter-
national Investments – in early 2013.

Over the next two years, it became clear
the best outcome for both companies was to
combine all assets into one publicly listed en-
tity which could use positive cash flow from
one operation to fund the development of oth-
ers.

More importantly, there will be no need to

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 65

SPECIALTY METALS

Elementos on steady path
to production

Elementos Ltd managing director between the tailings project and the
Calvin Treacy is a lot more re- rehabilitated underground mine.

laxed than he was this time last year. “A mining project essentially has

The junior tin hopeful was forced three areas of risk – metallurgical,

to retract a PFS on its Cleveland mining and geological,” Treacy said.

project in Tasmania last May after “In the tailings, all the risk sits around

the economics were found to be the metallurgical side of things. Then

non-compliant with the necessary we bring on the open pit where the

mining codes. risk sits more around our geological

But the Brisbane-based compa- understanding and the metallurgy.

ny’s fortunes appear to have turned Finally we move into the under-

following a series of encouraging ground where all three risk factors

announcements over the past few are applicable.”

months, including the launch of a Elementos has also lodged a min-

new PFS and two separate scoping ing lease application, a development

studies. proposal and environmental man-

“I think we’ve really turned the agement plan with the respective

corner and we’re now seeing the Elementos could start producing tin from the rehabilitated government bodies in Tasmania in
fruits of our labour,” Treacy told Cleveland project in late 2016 a clear sign the company is serious
Paydirt. about restarting production at the

“It’s been a good last six months or so. or not, the market is what it is and I think we’ve former Aberfoyle Ltd operation.

We’ve basically been improving our under- all got to be very realistic about that. For a Treacy is confident his company will be

standing of the asset and looking at how we small company like ours to say that we’re go- able to raise the funds needed to return the

can go through a staged development pro- ing to spend $100 million to create a mine that Cleveland mine to its former glory, but is not

cess with a clear strategy which shows why produces 4,000 tpa tin in concentrate from a counting on a larger entity coming in over the

we’re doing what we’re doing.” standing start is pretty ambitious to say the top of his small business and taking control

Elementos expects the PFS for the tailings least.” of the asset.

reprocessing project at Cleveland to be com- The first signs Elementos was back on “The strategy junior miners typically have

pleted towards the end of this quarter, along track after sheepishly being forced to retract is to take a project to a certain point and then

with scoping studies for the reopening of the the earlier PFS took place just a few months hope someone comes along and buys it, but

underground mine and the proposed new later when the company raised $2.1 million via in the tin space there’s not those types of

open pit at the rehabilitated site. a placement and rights issue. acquirers out there and there’s no real pure-

First tin production It also coincided play, listed tin companies either,” Treacy said.

is slated for late 2016 with the appointment “Our strategy has to be a bit different and

from the tailings project of Tim McManus as our view is that we actually have to build a

while open-pit and un- chief operating of- development pathway that actually takes in

derground operations ficer – a former chief production and generates revenue before we

are expected to begin in geologist with Xstrata move on to the next phase.”

early 2018. Coal – which Treacy Treacy expected the next 18 months to be

Treacy said the deci- described as a “vital an important period for the tin market, which

sion to initially pursue acquisition” for the is still to fully bounce back from the 1984 price

development of the tail- company. collapse.

ings project was a sim- Elementos sparked “At some point it’s going to catch up with

ple one in the current some market interest us because you can’t not do exploration and

market, especially with in early March when development and just expect the supply to be

LME tin prices slipping it completed a review there,” Treacy said.

in the past month. of the Cleveland min- “There’s this misconception that tin is an

“We’ve typically said ing inventory and de- abundant mineral like copper or some others,

the tailings project is fined a new resource but the fact is tin is actually quite a rare ele-

not particularly sexy, of 828,000t @ 0.81% ment in the Earth’s crust and at some point its

but it really is the per- tin and 0.27% copper scarcity is going to have an effect. When that

fect starter project be- (at a 0.35% tin cut-off is I don’t know, but the outlook is interesting to

cause it’s low risk, low grade) at the open pit. say the least.”

capital and it allows us The company also Treacy said he also shared a similar view

to build our expertise in confirmed the main tin to his Metals X Ltd counterpart Peter Cook in

tin processing and then and copper lenses ex- that he believed tin should not be traded on

logically move into open tend more than 700m the LME because he categorised it as a spe-

pit and underground deep and initial inves- ciality metal rather than a base metal.

mining,” Treacy said. tigations had deter- – Michael Washbourne
“It is also a reflection mined an open pit re-

on the current market Elementos is looking at a three-stage source would provide

and whether you like it path to production a key development link

PAGE 66 MAY 2015 AUSTRALIA’S PAYDIRT

Thomson snaps tin buy in NSW

Thomson Resources Ltd has “They are planning to restart
found the right address for tin the mine. It already has a re-

exploration in New South Wales. source and could be quite inter-

A search for tin prospects in esting down the track. What we

the State led Thomson to ground want to do is start up our own

near the historic Ardlethan mine operations at Bygoo,” Rothery

in the Lachlan Fold Belt. said.

For the issue of 8 million shares “We hope to get a substantial

at 1.8c/share to Riverston Pty Ltd deposit outlined and then it is a

plus a further 5 million shares question of funding that devel-

upon defining a resource over opment. Open cut cassiterite tin

10,000t contained tin @ 0.4% tin, is a well understood mineral, it

Thomson will become owner of doesn’t take a lot of investment

two exploration licences. capital to develop one of those

One of the licences – EL 8260 projects, so we would be look-

– hosts the Bygoo North pros- ing at [production] in 4-5 years.”

pect which surrounds the Ardle- The simplicity and cost-ef-

than mining leases. fective nature of potential op-

“The Ardlethan tin mine was erations was one attraction for

NSW’s biggest tin producer. We Thomson, despite the current

had that ground [near Ardlethan] lull in tin prices due to uncer-

on the radar and the guys ap- tainty in supply stemming from

proached us in January to do a Myanmar.

deal which we have been work- Nevertheless, in Australian

ing our way through,” Thomson dollar terms, Rothery said tin

chief executive Eoin Rothery told Thomson Resources has found no love for drilling deep targets in NSW. It is hoped prices had remained stable giv-
Paydirt. near-surface, open cut potential at Bygoo will serve the company better ing the company impetus to get

Upon receiving regulatory ap- field activities going.

provals Thomson plans to start drilling the Private group Australian Tin Resources Pty When the path is clear for Thomson, Roth-

griesen zone at Bygoo. The programme is Ltd currently owns Ardlethan, with a restart to ery said, the company would look to capitalise

expected to start in mid-May, with a total of operations on the cards, according to Roth- on the opportunities missed by previous own-

seven holes for 750m set to be carried out. ery. ers at Bygoo.

With a number of mineralised drill in- “The drilling that has been done there

tercepts to work with, including 46m @ was too far east and too far north, they

0.6% tin, Thomson is looking to confirm missed the potential of following that

and extend mineralisation. around.”

While extracting funds for drilling Thomson believes north, west and

would have been difficult in today’s mar- south of the magnetic anomaly remain

ket, Thomson has the support of Austral- untested, with one hole – 15m @ 0.5%

ian Mineral & Waterwell Drilling Pty Ltd tin – last drilled in the late 1970s not fol-

to conduct the programme. lowed up, presenting the company with

Australian Mineral is a shareholder in an obvious first up drill target.

Thomson, with the former to be afforded Meanwhile, Thomson is also lining up

3.5 million shares when drilling is com- a drilling campaign at its polymetallic Mt

pleted. Jacob project in NSW’s New England

“The existing drilling is quite old, and Fold belt.

the holes we’re interested in date back to The company has attracted govern-

the 1980s,” Rothery said. ment support through the New Frontiers

Pending a successful drilling cam- Co-operative drilling grant scheme.

paign, follow up resource drilling is in line While multiple copper, tin, tungsten,

for Thomson. zinc and silver anomalies have been

“It will take a number of holes to get identified, indications are for potential

to that JORC status but ultimately that is intrusive-related gold (IRG) deposits in

what we intend to do. It is relatively easy the area.

terrain, very accessible and we think the Drilling results reported at Mt Jacob

land owners are on board. There doesn’t in January 2014 included 88m @ 0.4

seem to be any difficulties in carrying out g/t gold, while the deepest hole at the

drilling to JORC status and ultimately we Basin One tin skarn at Mt Jacob was

like to think we can do it by the end of the 100.7m which included 6.5m @ 0.22%

year,” Rothery said. tin and 2.3% copper from 90.5m.

Records of historic workings show – Mark Andrews
that about 3,500t @ 1% tin has been ex-

tracted near surface, while Aberfoyle Tin

NL reportedly produced 25,000t of tin in

concentrate from open cut and under-

ground operations from 1964 to 1986 at

Ardlethan. Bygoo surrounds the biggest tin occurrence in NSW; Ardlethan

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 67

Case histories of discovery

The world’s pre-eminent
gold exploration event

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November 17-18

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Presentations will include:

Gruyere (Australia) – Gold Road Ltd Haile (USA) – Romarco Minerals Inc.
Didipio (Philippines) – OceanaGold Corp Amaruq (Canada) – Agnico Eagle Mines Ltd
Pegasus (Australia) – Northern Star Resources Ltd
Invincible (Australia) – Gold Fields Ltd Coffee (Canada) – Kaminak Gold Corporation
Kiaka (Burkina Faso) – B2Gold Corp Borden Gold (Canada) – Goldcorp Inc.
Petowal (Senegal) – Toro Gold Ltd Cukaru Peki (Serbia) – Reservoir Minerals Inc./
Freeport McMoRan Inc.
Galat Sufar South (Sudan) – Orca Gold Inc.
Salares Norte (Chile) – Gold Fields Ltd

Aurora (Guyana) – Guyana Goldfields Inc.

Pan Pacific Perth
November 17-18

Jointly organised by:

Keith Yates & Associates Pty Ltd

Sponsors to date:

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

REGIONAL ROUNDUP AFRICA

PFS propels Cradle’s Panda Hill

Cracking the metallurgy puzzle was the key Cradle expects to announce an updated resource for Panda Hill this month
to Cradle Resources Ltd’s Panda Hill PFS
success, according to managing director Grant two-stage flotation. We think we can process “The feedback we’re having as to why an
Davey. cheaper than they can. So our opex is signifi- off-taker would want our product is for geo-
cantly lower than Niobec and hence our mar- graphic reasons,” Davey said.
A total of 165 batch flotation tests and 17 gins will be quite a bit wider.”
locked cycle tests can be credited for Cra- “Ninety-two per cent of all production
dle achieving an impressive $US55.64/t and Other key PFS results include: comes out of one country, Brazil and 7-8% per
$US18.77/kg niobium operating cost for the • an initial payback expenditure of $US158 cent comes out of Canada. We are African-
first 10 years at Panda Hill, in Tanzania, and a million over 1.5 years; based … so it gives the market geographical
$US50.47/t life-of-mine cost. • working capital requirements of $US37 diversity. We can access the European and
million; Asian markets a lot easier than the Brazilians
“A real highlight was that we managed to • NPV post-tax and royalties of $US470 and Canadians just from a transport and lo-
optimise the metallurgy, sort out the reagent million; gistical point of view. That’s an advantage.
suite, managed to reduce the processing • IRR of 56% Another reason why we would be attractive to
cost …and counterbalance the mining costs. • Life-of-mine EBITDA of $US103 million an off-taker is there’s more diversification of
Those mining costs had gone up slightly be- per year and $US133 million for the first 10 supply. Off-takers don’t want to rely on one or
cause of the higher strip due to taking out the years two big players.”
weathered component of the orebody. That Davey said Cradle had engaged experi-
will now be stockpiled and treated through enced ferroniobium marketer and former Ni- Not resting on its laurels, Cradle was al-
different methods, possibly at a later stage,” obec employee Claude Defresne to investi- ready working towards defining a new re-
Davey told Paydirt. gate Panda Hill’s off-take options. source for Panda Hill’s DFS, which is in de-
velopment.
The Panda Hill PFS also confirmed one
of the project’s almost prophesised shining The company was also on the verge of pi-
lights; the grade. loting the milling and flotation circuit at SGS’s
facility in Lakefield, Canada.
Cradle’s study forecast an average grade of
0.68% niobium for the first 10 years of mining A 75t sample has already been collected
and 0.54% niobium for a 30-year mine life. from Panda Hill and was bound for the facility
at the time of print.
Davey said the ubiquitous nature of the
orebody coupled with a strategy targeting The concentrate produced from the pilot
the project’s Angel zone would help Cradle campaign will be used as the feed for the con-
achieve high grades from the word go. centrate cleaning piloting, which will also be
carried out by SGS.
The production schedule has been devel-
oped to target carbonatite mineralogy in the The clean concentrate will be used for con-
first 10 years and utilise only the indicated verter test work if necessary.
mineral resource in the first five years, as-
signed as the company’s “payback” period. Denham Capital-backed Pangea had also
initiated project finance discussions, Davey
Davey said the study was based on a 2 said.
mpta processing rate, as it compared well
with niobium peer Niobec. Should everything go according to plan,
construction at Panda Hill would start in either
“They mine at 2 mtpa and our advantage is late 2016 or early 2017, with an aim to start
we are an open pit, whereas they are 600m production at the beginning of 2018, accord-
underground,” he said. ing to the managing director.

“Our processing is very similar, though we’ll
be a one-stage flotation, whereas they use

– Rhys Dickinson

Panda Hill’s Tanzanian location will offer diversity to the global niobium market,
according to Cradle Resources’ Grant Davey

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 69

REGIONAL ROUNDUP AFRICA

Metals of Africa sidesteps tax hikes

Asignificant hike in the cost “From surface to 50m we
of operating in Mozam-
bique has forced Metals of have a grade of about 14.75%
Africa Ltd to revise its African
strategy. TGC. Targeting a shallow near

On January 1 the Mozam- 15% TGC deposit is highly at-
bique Government enforced
its new mining tax law, intro- tractive and the economics
ducing a new framework for
the sector which included a look sensational. Unlike our
significant increase to surface
tax, making Mozambique one neighbours Syrah [Resources
of the most expensive mining
jurisdictions to hold a mineral Ltd] and Triton [Minerals Ltd]
exploration licence, according
to Cherie Leeden. we’re not going to attempt to

The Metals of Africa man- develop the world’s largest
aging director told Paydirt the
surface tax increase –intro- resource. We don’t really feel
duced to offset Mozambique’s
ballooning budget deficit – would hit its largest like resource size is important
Mozambique project, Rio Mazoe, the hardest,
taking its annual rent from roughly $200,000 when it comes to graphite.
to almost $1 million.
The global demand isn’t as
“Now they are seeing a mass exodus, as
you would suspect,” Leeden said. such that you require 1bt of

“There’s a new mines minister who’s only resource in the inventory. So
been in the job for a couple of months and he
is already saying that he wants to change this we’re only drilling to a maxi-
because he doesn’t want to be known as the
guy who killed exploration in Mozambique. Al- mum depth of 60m at the mo-
though he didn’t make the change, he inher-
ited it a month into the job. I do think they are Coarse flakes from Metals of Africa’s Montepuez project ment and that will define the
going to roll it back or modify it, but exactly
when that happens, we do not know.” oxide resource at Buffalo over

Until it received some clarity, Leeden said “The increase in licence rent doesn’t affect the next couple of months.”
Metals of Africa had decided to divert its at-
tention from Rio Mazoe to its smaller Mozam- (Montepuez) so severely because the tenure Montepuez also had upside potential at its
bique graphite play, Montepuez, and budding
lead-zinc project in Gabon, Kroussou. is much smaller than our Rio Mazoe pack- Lion and Elephant prospects, which Leeden

If its maiden drilling campaign’s results are age,” Leeden said. said justified more work this year.
anything to go by, Montepuez might soon
steal the flagship tag from Rio Mazoe anyway. “The licence rent is based on a combination Metals of Africa had already recorded a

An initial investigation of the project’s prom- of the age of the tenure and also the surface bulk intercept of 45.72m @ 7.15% TGC from
ising Buffalo prospect netted an intersect of
145.59m @ 9.6% total graphitic carbon (TGC) area. Our graphite project is very young in 4.28m at Lion, including 15.72m @ 9% TGC
from 35m, including 1m @ 33.8% TGC and
0.26% vanadium. age– it was only granted last year – and it is in its oxide zone.

quite small in size, so it’s not really going to Leeden said although a seven-hole cam-

be a hindrance at this stage for us. Now the paign in late 2014 was almost good enough

plan is to fast track this project. We’re skipping to define a resource at Lion, the company

the scoping study and going straight to a PFS. wanted to hone in on its oxide potential.

Most of our funds and our resources will be fo- “We feel that by looking at the oxide it could

cused on our Montepuez central projects. We easily accommodate a 100,000-150,000t

feel like the graphite that we’ve intersected to mining operation at the surface and next few

date looks like it’s in the right range to become metres for 10 years,” she said.

an economic deposit.” Elephant boasted a new, recently discov-

Although it had only received assays for ered EM conductor which the company in-

three of the 21 holes drilled in the maiden pro- tended to drill later this year.

gramme, Leeden said Metals of Africa was al- By steering away from Rio Mazoe, the com-

ready planning another assault at Montepuez pany has a chance to take a closer look at its

at the time of print. Kroussou project in Gabon, where its licenc-

She said the company’s immediate goal ing rent is a mere $5,000 per year.

was to define a resource at Buffalo. A six month geological mapping campaign

“The Buffalo prospect, we really like it be- produced standout surface samples of 9.69%

cause the oxide zones … extend to about zinc and 33.1% lead with elevated copper and

50m, which is quite deep in that region,” silver also returned from the first batch of rock

Leeden said. chip samples.

Leeden said the samples are the highest

known zinc and lead grades ever reported in

Gabon.

“We’ve been blown away by the amount of

mineralisation that’s actually sticking out of

the ground,” she said.

“There are another half dozen prospects

we have identified along a mega strike length

and they are just begging for drill holes. We

are now working on road construction to get

tracks there so we can get drill rigs out there.

It will be drill ready by the second half of this

year. Whether we do that this year or next

year will depend on the market conditions and

appetite for lead and zinc.”

– Rhys Dickinson

Core exhibiting high grade graphite near the base of oxidation from 35m

PAGE 70 MAY 2015 AUSTRALIA’S PAYDIRT

REGISTER NOW

www.africadownunderconference.com

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

REGIONAL ROUNDUP

Miners to pay for Africa’s
mineral wealth: Mugabe

Zimbabwe’s President Rob- Impala Platinum Holdings South Africa for jobs.
ert Mugabe defended his Ltd, Anglo American Platinum During an hour-long, unscripted speech,

government’s drive to take ma- Ltd and London-listed Aquarius Mugabe attacked the “reckless and brutal ap-
proach of the West” towards Africa and the
jority control of foreign owned Platinum Ltd are among foreign Middle East, lampooning former British Prime
Minister Tony Blair and describing the United
mining companies, saying in- firms operating in Zimbabwe, Nations as a “circus”.

vestors must pay for exploiting which has significant reserves Mugabe also drew raucous laughter from
the South African delegation with jokes about
Africa’s mineral wealth. of platinum, diamonds and gold. protests by Cape Town students for the re-
moval a statue of Cecil Rhodes, a British im-
In his first state visit to neigh- Mugabe, Zimbabwe’s only perialist who is buried in Zimbabwe.

bouring South Africa in two leader since independence from “We are looking after the corpse, you have
the statue,” Mugabe said. “I don’t know what
decades during April, 91-year- Britain in 1980 and one of Af- you think we should do? Dig him up? Perhaps
his spirit might rise again.”
old Mugabe was scathing of rica’s most divisive figures, was
Rhodes, regarded as one of the main pro-
mining firms that criticised a also defiant on the seizure of ponents of white colonial domination, used
his colossal diamond wealth to pursue his
law obliging foreign owned Tony Blair has been white owned commercial farms dream of expanding Britain’s empire, annex-
firms to sell at least 51% to lampooned by Zimbabwe’s for redistribution to blacks. ing Mashonaland – present-day Zimbabwe –
black Zimbabweans. and naming it Rhodesia after himself.
Robert Mugabe Land is an emotive issue also
“You’re leaving holes in my in South Africa, where most of – Joe Brock and Stella Mapenzauswa,
Reuters
country and you want to say it remains in white hands since

the capital is more valuable?” Mugabe told apartheid ended two decades ago despite the

reporters after trade talks with South African ruling party’s efforts at redistribution.

President Jacob Zuma. Western countries have withheld financial

“The gold that I have, God given gold, is aid to Harare in protest over Mugabe’s poli-

much more beneficial to my country,” he add- cies and charges he has rigged elections to

ed, drawing applause from Zimbabwean and stay in power, worsening an economic crisis

South African government ministers. that has driven millions of Zimbabweans to

PAGE 72 MAY 2015 AUSTRALIA’S PAYDIRT

AFRICA

Spitfire sees limestone future

Limestone production in mediately, the guys are al-
Zambia is the leftfield
business Spitfire Resources ready in position and we are
Ltd is hoping will capture in-
vestor attention. just waiting for the go-ahead.

“We are always looking Then it is a case of drilling
for a point of difference in
our stories, not just for local which will be a short and
investors but those in the ce-
ment industry and those that sharp programme to gener-
have deeper capital pools
offshore,” Spitfire manag- ate tonnage rather quickly.
ing director James Hamilton
said. “There are a lot of com- Concurrently, we will put to-
panies selling the same sort
of stories, albeit at different gether a team to start review-
points in the project cycle but
this is something completely ing the limestone market,
different – perhaps a little bit
out there.” what infrastructure is needed

Spitfire’s interest in the and where this product can
White Lion limestone project,
100km from Zambia’s capi- potentially go,” Hamilton
tal, Lusaka, means its South
Woodie Woodie manganese said.
project in Western Australia is up for grabs.
With a growth rate of about
Potential suitors for the project will be alert-
ed to Spitfire’s latest assay results from RC 6.5% per annum, Zambia is
drilling late last year – 6m @ 22.2% manga-
nese from 43m, 10m @ 21.3% and 14m @ one of Africa’s fastest grow-
15.9% – and a potential new area of explora-
tion potential. ing economies.

“That moves to a definite second,” Hamilton Therefore, demand for
said of South Woodie Woodie.
housing and infrastructure is
“We have had discussions with groups
about perhaps joint venturing or someone increasing, providing Spitfire
buying it. We are going to continue with that,
so it is definitely up for sale and we are open with the opportunity to tap
to some arrangement if it comes up.”
into the domestic market.
In the meantime, Spitfire is expected to
complete the $2.1 million all-scrip acquisition White Lion is 100km west of Lusaka Selling this story to the
of White Lion by mid-June, subject to share-
holder approval. Australian investment com-

Additionally, a further $4.2 million is due to resources being established and completion munity will be challenging however it appears
White Lion Group Ltd upon 80mt of limestone
of a scoping study demonstrating economic Spitfire has already sparked some interest

viability of the White Lion project. abroad.

A 25-year mining licence was granted at “In discussions in London with institutions,

White Lion in 2011, with early assumptions by brokers and those in the business, they cer-

Spitfire alluding to a potential project produc- tainly recognise that Zambia is a great loca-

ing 1 mtpa limestone over 30 years. tion and Africa is absolutely the spot to be for

“I think it is still early days but I think the limestone and cement businesses. Thirdly,

next 12 months will really be make or break for there is a lot of money sitting on the side wait-

the project,” Hamilton said. ing for these emerging market opportunities

“The deposition of the area is huge – 60sq to arise,” Hamilton said.

km – which sits on a mining lease which is Furthermore, limestone has been left out

very valuable. We think we can sample it and of discussions around proposed new royalty

drill it plus do some high level scoping on it for schemes which could see rates for open pit

about $1 million.” operations lifted from 6% to 20%.

The project acquisition will include staff, – Mark Andrews
equipment and offices which paves the way

for Spitfire to start working when its takes

ownership of White Lion.

“The sampling team will hit the ground im-

IMF backs end to copper tax row in Zambia

The International Monetary Fund has ap- second-largest copper producer. withstand falling global copper prices and a
plauded Zambia’s efforts to resolve tax is- “The IMF welcomes President Zungu’s di- declining kwacha currency.
sues in its copper mining industry but warned
that only further tightening of fiscal and mon- rectives calling for a review of the mining tax “We remain confident that despite exter-
etary policies would contain the country’s large regime that came into effect in the beginning nal and internal factors...we will still continue
deficits. of this year,” the IMF’s mission chief to Zam- positive real GDP growth in the region of 6%,”
bia, Tsidi Tsikata, told a news conference. Yamba said.
President Edgar Lungu directed Zambia’s
finance and mining ministers to change roy- “We hope a resolution of the impasse will Zambia’s kwacha sank to its lowest ever
alties on mining firms by April 8, saying the result in a transparent system applicable to against the dollar in March and has fallen
copper-producer could consider temporarily all the mines rather than mine by mine agree- more than 20% in 2015, hit by lower copper
reverting to the tax regime of 2014. ments,” Tsikata said at the end of the team’s prices and weak demand for the metal from
two-week visit to the southern African coun- big importer China.
The decision to increase royalties in Janu- try.
ary for open pit mines to 20% from 6% per- – Reuters
cent, and those for underground mines to 8% Secretary to Zambia’s Treasury, Fredson
from 6%, rattled unions and miners in Africa’s Yamba said at the same event that the Gov-
ernment was confident the economy would

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 73

REGIONAL ROUNDUP

Waratah breaks into Asia
trading business

Waratah’s commodities division was kick-started in 2014, with 50,000t of thermal coal from South Kalimantan in Indonesia bound for Shanghai

Waratah Resources Ltd is perhaps one of Mandeep Bhandari as a non-executive direc- IronRidge managed a £9.7 million IPO at
the more unique ASX-listed companies tor. 10p/share in February, largely on the back of

on the bourse. SMI represents BlueScope Steel and potential for an early start to DSO production

The company offers investors exposure to Bhandari has extensive knowledge of com- from the Tchibanga project.

a commodities trading business out of Asia, modity trading throughout Europe, Middle “We are a lot more advanced on the work

while the second arm of its value proposition East, Asia and Africa, and will be invaluable in in Gabon [than IronRidge] and we have spent

is iron ore in Gabon, West Africa. Waratah’s ambitions to source, manage and $10 million in the ground since 2010. We have

In April, Waratah signed a JV agreement trade commodities from Indonesia to Asian been in Gabon a long time and while it was

with Amanie Holdings Ltd to form an incor- customers. fantastic for IronRidge to get away, I think we

porated vehicle to be called Ausmal Synergy Last year Waratah started trading Indone- are more than just an iron ore play,” Kirkpat-

Ltd. sian thermal coal and buoyed by that suc- rick said.

Ausmal, to be housed in Malaysia, will be cess, will now look to expand activities into “We talk a lot about copper, certainly nickel

focused on developing and integrating a glob- coal trading in the Middle East. as well and other minerals we will have on our

al commodity trading business. Therefore, to maximise value from its four leases over there. I think that will put us

Amanie, a Shariah advisory and investment iron ore projects in Gabon, Waratah has an- in a pretty good spot for somebody to take a

group, will provide the necessary expertise nounced its intentions to spin its African as- position either on AIM or via a trade sale.”

and connections to make Ausmal a success, sets into an AIM-listed vehicle or work to- Kirkpatrick said Europe would provide a

particularly in the next short while as fund- wards a trade sale. better home for its African assets, given the

ing arrangements to launch the JV group is While investors have cooled on iron ore same time zones between the continents.

required. stocks, Kirkpatrick pointed to IronRidge Re- “I also think people over there have a

Waratah executive chairman Ben Kirk- sources Ltd’s successful IPO on AIM earlier clearer view, I think Australian investors are

patrick said there was no other local com- this year. very narrow in their search in the commodity

pany listed which compared to space,” he said.

Waratah. The assets Waratah is look-

“I think we offer a hugely dif- ing to split include its flagship

ferent play on the market and Mekambo-Est iron ore project

I think investors will be very plus the three new licenc-

much focusing on where we es which recently received

are going in the next couple of presidential decree – Ma-

years,” Kirkpatrick said. kokou (nickel, chromium, rare

“If you take Africa out of the earths), Waka (gold, niobium,

equation, Noble Group [Ltd] tin) and Tchibanga (gold and

and I think Macquarie Bank’s copper).

mineral division is what I see Mekambo-Est is the most

us as a smaller version of. advanced, with Waratah

There are a lot of other trad- granted the licence covering

ing companies in the market 1,224sq km in 2011.

but not really in Australia, cer- The company has com-

tainly not listed.” pleted 34 drill holes for a total

Waratah has concentrated depth of 1,441m, with grades

on building its team before as high as 66.9% iron report-

its business and recently ed.

added Steel Masters Interna- Waratah is looking to split its African assets into an AIM-listed company – Mark Andrews
tional (SMI) managing director

PAGE 74 MAY 2015 AUSTRALIA’S PAYDIRT

ASIA

Axiom adds to Isabel

Axiom Mining Ltd bolstered its Suma Ridge target.
the credentials of its Solo- Drilling at Suma Ridge

mon Islands Isabel nickel pro- (100m by 100m grids) are ex-

ject with a list of impressive pected to wrap up by mid-May

intercepts last month. and will finalise the orientation

A 29-hole, 100m by 100m and twinning programme on

programme at the project’s the Isabel project.

Havihu Ridge prospect con- Further drilling programmes

firmed the continuity of high- designed to facilitate mining

grade nickel mineralisation operations will start in June,

over a 700m strike, including according to Mount.

intercepts of 15m @ 1.67% Axiom was also recently

nickel from surface, 15.8m @ granted a prospecting licence

1.41% nickel from 1.2m, 10.5m for the San Jorge tenement on

@ 1.53% nickel from 2.5m and its Solomon Islands project.

11.3m @ 1.41% nickel from The San Jorge tenement is

3.2m. 36sq km and located less than

Axiom hopes an upcom- 5km from the company’s Ko-

ing infill drilling campaign – losori prospect.

spaced at 25m and 50m – will Mount said the tenement

provide information for the cal- approval spoke volumes of the

culation of a maiden resource Axiom recently added the San Jorge tenement to its Isabel nickel project Solomon Island’s desire to get

at the prospect. Isabel up and running.

Chief executive Ryan Mount said the re- Encouraging drilling results demonstrating “The second tenement almost doubles our

sults improved the company’s confidence in high-grade saprolite mineralisation will allow exploration footprint in the southern Isabel

its geological model and potentially foreshad- Axiom to focus on assessing the geological province and further enhances the commer-

owed the significant potential of the Havihu and mineable parameters of the mineralisa- cial potential of the project,” he said.

Ridge target. tion required for a resource evaluation, he “We will investigate opportunities to de-

“Not only is the thickness and grade of said. velop San Jorge in parallel with our first ten-

the mineralised zone better than previously Separate from work at Havihu Ridge, Axi- ement, which will allow for increased econo-

thought, the strike length remains open to the om was in the process of repairing roads con- mies of scale for our DSO operation.”

south, north and west,” he said. structed by previous explorer Inco to access

Metallurgy boosts 150’s prospects

Prospective Cambodian GeoPacific managing di-
copper-gold miner Ge-
oPacific Resources Ltd has a rector Ron Heeks described
reason to smile following ini-
tial metallurgical test work on the results as “exceptional”.
core from its burgeoning Kou
Sa project. “The project has produced

A recent metallurgical trial above average results from
was aimed at producing a
float concentrate of copper, day one, with size, geochem-
gold and silver from 36kg of
core from Kou Sa’s Prospect istry, drilling and now metal-
150 mineralisation.
lurgy all pointing to the pres-
Five flotation tests were
completed testing grind ence of a major new mineral
sizes, collector concentra-
tions and pH, with a goal to province generated from a
optimise recovery of all eco-
nomic metals into the highest deep source,” he said.
grade concentrate.
“The presence of telluride
GeoPacific’s second round of testing
proved to be the most successful, includ- minerals associated with
ing recoveries of 98.4% copper, 94.1% gold,
91.1% silver and a 22.8% mass recovery. gold and silver is responsible

Prospect 150’s precious metals’ perfor- for the very high recoveries,
mance can largely be attributed to its asso-
ciation with tellurides, which was confirmed in as the tellurides float and
the company’s previous mineralogy studies.
report to the concentrate.

These high recoveries sug-

Prospect 150 has been GeoPacific’s primary focus of late gest that a standard flotation

process is all that will be re-

Tellurides are often indicators of deep min- quired to extract all economic metals from the

eralisation and are important in several major Prospect 150 mineralisation. The test work is

goldfields worldwide, including Kalgoorlie, another important milestone on advancing the

Cripple Creek in Colorado and Emperor in Fiji. Kou Sa project.”

Prospect 150’s chalcopyrite mineralisa-

tion also produces a very clean concentrate,

which is highly sought after by downstream

processors.

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 75

REGIONAL ROUNDUP

Looking past commodities
slump, Sweden moves a

town for iron

Undaunted by falling commodity prices, a Expansion at the Kiruna underground magnetite mine in northern Sweden is
Swedish company will start dismantling forcing the relocation of its residential town
and moving the historic Arctic town of Kiruna
this month to make way for the expansion of down a neighbourhood closest to the mine, industry’s highest costs as it lifts ore from over
Europe’s biggest iron ore mine. where tremors from underground blasts can a 1,000m below the surface.
be felt in the early morning.
The northernmost town in Sweden, famed Consuming almost 2% of Sweden’s power
for its ice hotel and a red wooden church that As waste rock fills the cavities left by ex- with 70t ore elevators that move at 60 kph, un-
was voted the country’s most beautiful build- tracted ore after each blast, the ground shifts, derground rail lines and electric trucks, LKAB
ing, is inhibiting the expansion of state-owned causing land deformities that inch ever closer also has to pay Swedish wages, among the
LKAB’s mine, once the backbone of Scandi- to the town as mining extends under Kiruna. highest in the world, and could end up paying
navia’s industrialisation. $US2 billion for moving Kiruna.
Operating the world’s deepest underground
Moving the town just 3km away at an es- iron ore mine that includes 400km of roads in- But the high costs made LKAB, which pro-
timated cost of over $US2 billion comes de- side the mountain, LKAB also has some of the duces 90% of European iron ore, one of the
spite an iron ore price that has slumped by
around two-thirds in the past two years. most disciplined producers.
It used profits from the boom years to
But LKAB’s plan, conceived in 2004, has at
least two factors in its favour; it has the sup- pay for an expansion of production to 37
port of Kiruna’s 18,000 inhabitants and the ore mtpa by next year from 26 mtpa in 2014
from its mine is among the best in the world. and has already set aside $US1.5 bil-
lion in cash and provisions for moving
“We have to move past the grief because Kiruna.
we’ve made a decision and 96% of the peo-
ple supported it,” Kiruna deputy mayor Niklas Its ore grades 70%and it processes
Siren told Reuters. “The town and the mine the rock into pellets, a premium product
live in symbiosis: there is no town without the preferred by blast furnace operators,
mine and no mine without the town.” which pay $US30-40/t above ore prices.

LKAB is well placed to survive the price “We sell everything that we produce
downturn, analysts say. Besides the premium so with fixed costs, volumes are cru-
category pellets it produces, it has no debt cial,” Aaro said. “We’re ramping up and
and has a patient owner in the Swedish Gov- with new customers coming, that’s the
ernment. It has also operated for 125 years, strongest support I can get.”
instilling a culture of long-term thinking.
The new Kiruna will be compact,
“This is not a fun time to be in the busi- keeping less mineral rich land occupied
ness,” LKAB chief executive Lars-Eric and hopefully avoiding another move in
Aaro acknowledged, but added: “This is a a 100 years.
cyclical business and you know, after the
rain, the sun will shine again.” “In a perfect world, downtown, all the
shops and restaurants, will shut down on
Most of the town’s 1,100 buildings, a Friday, sometime in 2018 or 2019 and
apart from a few structures including the open up again the next Monday in a new
church, will be demolished and rebuilt in place,” Stenqvist said.
the new town.
– Balazs Koranyi, Reuters
“The church will be taken apart, piece
by piece, then rebuilt in exactly the same
way 3km to the east,” vicar Lars Jarlemyr
said.

“A town is not just buildings but also
people. So when you tear it down, you do
the same with a community. People move,
get new neighbours, new everything and
because everything will be new, it will also
be more expensive,” Jarlemyr added.

LKAB will either pay owners 125% of
their property’s value or provide a new
home.

“Cities have been moved before, even
bigger ones, but not in a democratic way,”
lead architect Mikael Stenqvist, said. “So
the scale is big and the process is unique.”

In April, bulldozers started tearing

PAGE 76 MAY 2015 AUSTRALIA’S PAYDIRT

EUROPE

Highfield bullish on Spanish
inquisitions

Prospective Spanish potash producer High- Highfield’s Muga-Vipasca and Sierra del Perdon projects are located in the Ebro potash
field Resources Ltd has hit the ground run- producing basin of Northern Spain
ning in 2015.
and IRR of 51.9% Hall said construction for the project re-
Not only did the company release a new re- Pre-production capital costs were esti- mained on track for Q4 this year.
source and DFS for its flagship Muga-Vipasca
project, Highfield has also managed to pro- mated at $US256 million and the mine’s total Last month Highfield announced a maiden
duce a maiden resource for its budding Sierra capital cost close to $US345 million. resource – 41.8 mt @ 10.7% potassium oxide
del Perdon play. indicated and 40.3 mt @ 10.5% potassium ox-
“The DFS builds on a compelling PFS and ide inferred – for its Sierra del Perdon project.
In late February, Highfield released an up- reconfirms Muga’s potential to be a very low
dated mineral resource of 302mt @ 11.5% capex, high margin potash mine,” Hall said. “Whilst our focus remains on our flagship
potassium oxide for Muga-Vipasca – repre- Muga potash project we are in a fantastic to
senting a 52% increase in the measured and “We believe Muga has the potential to be have a second potash project that we believe
indicated resource from its previous resource the highest margin potash mine globally in is also likely to be very compelling,” Hall said.
released in May 2014. production and this is very exciting for every-
one involved in the company.”
Highfield managing director Anthony Hall
said the upgrade, resulting from an additional
25 diamond drilling holes on site, was an im-
portant step in de-risking the project.

“Significantly, within the larger resource is
a higher grade component of 232mt @ 11.3%
potassium oxide that includes 178mt of meas-
ured and indicated categories,” he said.

“When dilution is included this totals 256mt
@ 12.3% potassium oxide and will be used
for the mine design for the DFS, suggesting
a longer life, larger mine than was estimated
in the PFS.”

The DFS came through in late March,
boasting an initial 24-year mine life based
solely on a 146mt ore reserve with an average
grade of 12.73% potassium oxide.

The study proposed a conventional un-
derground operation, with reduced risk and
improved efficiency via twin decline access,
producing 1.123mt granular K60 potash per
year at $US135/t which is expected to deliver
a post-tax, unlevered NPV of $US1.42 billion

Uranium snub offers rare opportunity

Forte Energy NL’s application for an exten- the by-product credits of the uranium pros- is keen to explore the rare earths elements
sion to its Slovakian Kuriskova uranium pect, including the potential for a rare earths potential of Kuriskova through the new licence
exploration licence has been knocked back by element. application,” Riley said.
the Slovak Ministry of the Environment.
Historical exploration of the project site European Uranium has already invested
Managing director Mark Reilly said the Min- has documented the presence of rare earths, more than €25 million in Slovakia, including
istry of Environment was reluctant to grant a which the European Union recently classified the completion of a PFS for Kuriskova and
further extension to the 10 years previously as “critical and strategic minerals”. Reilly said Forte would take “all measures
awarded for exploration of uranium, despite necessary to protect their interests in Slova-
the country’s Geology Act allowing exten- To date, the quantity and grade of the po- kia”.
sions for site work to be completed. tential rare earths at Kuriskova are unknown.
He said Forte had met its obligation to
Reilly said Forte had sought legal advice Despite the uranium hurdle, Forte has filed fund the first year’s expenditure of $350,000
regarding the decision and the company was for a new exploration licence at Kuriskova under the JV arrangement and following the
confident there was no legal reason for the covering 14.73sq km to search for rare earths. decision by the Ministry of Environment not
extension not to be granted. to extend the Kuriskova uranium exploration
Reilly said Forte expected the license to be licence, Forte would review its JV structure
Together with JV partner European Ura- granted for an initial four-year period, with an with European Uranium in the near future.
nium Resources Ltd, Forte had previously ex- option to extend for a further four years and
plored an option to add value to the Kuriskova then two more for a total of 10 years.
project by evaluating the possibility of adding
“While disappointed with the decision not to
extend the uranium exploration licence, Forte

AUSTRALIA’S PAYDIRT MAY 2015 PAGE 77

SIGNED, SEALED AND DELIVERED

Iron Ltd’s Nullagine JV iron ore operations in
the Pilbara.

The two-year contract to provide mining,
crushing and screening of about 2 mtpa of
Warrigal ore began last month and includes
an option to extend, pending further explora-
tion success.

Primero nears end of
Wheatstone contract

Wärtsilä will service the power plants at Newcrest’s Lihir gold mine for the next three years Primero Group has almost completed a
$2.5 million contract to build the Domestic
Wärtsilä returns to Dual contract wins lift Gas (DomGas) Meter Station for the Chev-
service Lihir Viento ron-operated Wheatstone project.

Wärtsilä has signed a three-year agree- Viento Group Ltd has been awarded the The engineering consultancy company,
ment with Newcrest Mining Ltd to service the contract for the construction and commis- which has facilities in Perth, is in the final
power plants at the Lihir gold mine in Papua sioning of the tailings facility at Rio Tinto Ltd’s stages of testing and commissioning the pro-
New Guinea. Hope Downs project. ject, about 12km from Onslow.

The agreement, signed in February, covers The contract has been awarded to the com- Primero undertook design, procurement
the major engine services and spare parts for pany’s Koodaideri Viento JV entity, KVG JV and project management works at its facility
the three power plants – diesel power station, Pty Ltd, and is valued at about $7.2 million, in Osborne Park, while fabrication of the me-
interim power station and oil cubes – at Lihir. excluding GST. ter station took place at its Bibra Lake facility.

In total, the three power plants have 22 Contract work will begin on June 5 and is The meter station will connect and monitor
Wärtsilä engines with a combined output of expected to run for five months. The scope the flow of gas from the 200TJ per day do-
172MW. of work includes the bulk and detailed earth- mestic plant via a pipeline to the Dampier to
works of the embankment lift for the waste Bunbury natural gas pipeline.
Wärtsilä provided the first diesel power sta- fines storage facility.
tion to Lihir in 1996 before gold production Wheatstone is expected to start flowing in
began the following year. Meanwhile, Viento Contracting Services 2018.
Pty Ltd has been awarded a crushing and
CITIC agrees to potash screening contract for the Warrigal hub at BC GR Engineering steps
mine build up at Nova

GR Engineering Services Ltd has been ap-
pointed the preferred tenderer for the design
and construction of the processing and paste
fill plant for Sirius Resources NL’s Nova nickel
project in the Fraser Range.

The Perth-based contractor has been ap-
pointed on the basis of a fixed price EPC ten-
der and is expected to start work at the site
this quarter, pending a formal contract being
signed.

Construction is scheduled for the fourth
quarter of 2015.

Kazakhstan Potash Corp Ltd’s subsidiary GR Engineering has won the race to design and construct the Nova nickel
Batys Kali LLP has signed an EPC turnkey processing and paste fill plant
agreement with China’s CITIC Construction
Co Ltd for the mine development and build of
the Zhilyanskoye potash project.

CITIC will be responsible for the project
design, planning, procurement, construction
and subsequent transfer to the ASX-listed
potash hopeful.

The EPC agreement is the result of a previ-
ously signed framework co-operation agree-
ment between Kazakhstan Potash, CITIC, In-
dustrial & Commercial Bank of China Ltd and
the Ministry of Investment and Development
of the Republic of Kazakhstan.

Kazakhstan Potash and CITIC have agreed
a provisional amount of $US550 million for the
initial contract work.

The project’s design production capacity
under the EPC agreement will be 1.2 mtpa of
potassium chloride fertilisers.

PAGE 78 MAY 2015 AUSTRALIA’S PAYDIRT