2015 Nov Paydirt

Mine closures likely for Mincor

Mincor Resources NL will be forced to sus- David Moore Mincor expects to deliver BFS’s for Burnett
pend production and mothball its Miitel and Durkin North before Christmas.
and Mariners mines if the nickel price doesn’t on the capital development and re-energise
improve soon. both mines and build our production back up.” The company is also committed to finishing
an infill drilling programme at its greenfields
Managing director David Moore said Min- While the strategy has stemmed Mincor’s Cassini project.
cor had performed admirably in a tough mar- bleeding for now, Moore admitted the com-
ket until the September quarter when the pany was fighting an uphill battle against a An accumulation of high-grade intersec-
company encountered lower than expected relentlessly pessimistic nickel price. tions along a plunge of more than 600m
grades at its Mariners mine. helped Mincor define an exploration target
For that reason, Mincor cast an eye to the of 400,000-500,000t grading 3-4% nickel at
The low grade feed coupled with a de- future and ramped up exploration at its bud- Cassini earlier this year.
pressed nickel price resulted in Mincor’s first ding Burnett and Durkin North projects.
loss-making quarter in the company’s history. “We want to complete the feasibility stud-
ies on our two new growth projects and finish
“On the back of that we moved very swiftly the Cassini drill out so we can restart produc-
to change what we were doing and really bul- tion, whether it’s next month, in six months’
letproof the mines and bunker down to get time or 18 months’ time, when profits are to
them into shape to survive what is shaping up be had again and then grow production for up
as a pretty severe downturn,” Moore said at to three, possibly four, new mines into a rising
this year’s Australian Nickel Conference. price environment,” Moore said.

“What we’ve done is put in place a very “The strategy is to simply survive for the
successful strategy to unify both mines. We moment, but then to thrive as the nickel
basically now have one work crew and one price starts to recover. We have to manage
management team operating two mines. Ob- ourselves through this terrible downturn and
viously production has come down, but pro- optimise our cash flow by all means possi-
ductivity has shot through the roof. We are ble. If that means shutting mines, we will shut
currently producing around 500t of nickel in mines. We are in the business to make mon-
ore per month at an AISC of $5.70/lb. There is ey, not to mine.”
a little bit of a cash margin there and the mine
is doing quite well. We are in a position now – Rhys Dickinson
that if the nickel price turns up we can switch

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 51

NICKEL REVIEW

Nickel is just misunderstood:
Marmion

West Australian Minister for Mines active policy for encouraging the nickel
and Petroleum Bill Marmion said
his Government would continue to back exploration sector.
the State’s junior nickel sector through
tough market conditions. The latest round of EIS funding

Delivering the opening address was due to close on October 16 with
to the Australian Nickel Conference,
Marmion suggested the State Govern- programme having already commit-
ment stood side-by-side with the min-
ing industry, saying: “We are all in this ted $50 million to drilling of more than
together. WA’s future depends on it”.
550 projects. Co-funded drilling grants
Marmion was referring to the se-
vere downturn brought about by falls were used by Sirius Resources NL
in commodity prices. Not only has the
fall precipitated reduced earnings and during its discovery of the Nova nickel
valuations for mining companies but
has also blown a series of large holes project and Marmion said uncovering
in the State Budget.
such deposits was at the heart of the
Marmion said the Government was
doing its part in addressing the chal- EIS strategy.
lenges facing the industry.
A recent independent economic im-
“Times are tough and the Government un-
derstands that and we are doing all we can pact study suggested the EIS gener-
to help companies navigate through this,” he
said. “We are continually improving the State’s ated $10.3 million in exploration activ-

ity and more than a dozen fulltime jobs

over three years, for every $1 million

invested.

“But when it resulted in mine devel-

Bill Marmion opment, the study found the long-term

contribution to WA’s gross state prod-

approvals process and I decided against any uct could be up to $23.7 million per $1 million

changes to the royalty rates.” invested,” he said.

He also pointed to the Government’s Ex- – Dominic Piper
ploration Incentive Scheme (EIS) as the most

PAGE 52 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

Drilling delivers sizzle to Cassini

Cassini Resources Ltd has recorded the Richard Bevan ramp up to 4 mtpa after eight years. Initial
best nickel sulphide intersection outside capex for that production scenario is forecast
of its flagship Nebo-Babel deposit within the from 10-plus years of exploration work from at $264 million, plus $55 million contingency.
West Musgrave project area. BHP Billiton [Nickel West] and Western Min-
ing to work our way through.” Bevan said the scoping study showed his
In the lead-up to the Australian Nickel Con- company had a project with favourable geol-
ference, Cassini reported a massive nickel- The scoping study released in April found ogy, strong scale and low operational costs.
bearing sulphide of 1.1m @ 0.7% nickel and Nebo-Babel could support life-of-mine pro-
0.95% copper from 360.3m at the regional duction of 12,300 tpa nickel in concentrate “Once this project gets up and running we’ll
Esagila prospect. and 14,300 tpa of copper in concentrate, have a shot at some very high nickel price en-
based on a resource of 203mt @ 0.41% nickel vironments, but also we’ll be able to weather
Massive sulphides also occur at the base and 0.42% copper for 830,000t nickel and better than 65% of our peers in terms of oper-
of a broad zone of disseminated and stringer 852,000t copper. ating and making a profit margin through the
chalcopyrite-pyrrhotite mineralisation return- lower points of the cycle,” Bevan said.
ing 15.7m @ 0.12% nickel and 0.61% copper Cash costs of $2.61/lb have been estimated
from 346m. for an initial 1.5 mtpa operation which would Cassini raised $7.1 million in May to ensure
it will have more than enough funds to com-
Cassini has also tasted varying degrees plete a number of proposed exploration pro-
of exploration success at the Succoth and grammes, including further work at Esagila,
One Tree Hill prospects in recent months as Succoth and One Tree Hill to supplement the
the company looks to add value to the project PFS on Nebo-Babel.
economics.
“A lot of people have got sizzle and a lot of
A PFS on Nebo-Babel is under way after a people have got steak and we believe we’ve
robust scoping study was released earlier this got both in this project,” Bevan said.
year, but Cassini managing director Richard
Bevan said that was not the only focus for his “We have a really solid development asset,
company. but also exceptional upside in terms of explo-
ration and the added benefit of having both
“We still fundamentally believe that value of those within the same project is the oppor-
is generated through the end of the drill bit,” tunity to leverage off existing infrastructure,
Bevan said. expertise and knowledge.”

“We’ve got a lot of exploration upside within – Michael Washbourne
the project area and we’ve got a lot of data

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 53

NICKEL REVIEW

Legend gets first look
at Rockford

Legend Mining Ltd man- “It took an awful long “The most powerful, unstated asset that
aging director Mark Wil- we have is the knowledge that is within the
son says the company’s ge- time for us to tease and Creasy Group,” Wilson said.
ologists “are up and about”
after finally stepping foot on negotiate this asset out “Creasy has been out there with this bee in
the Rockford project for the his bonnet for more than 30 years. His team
first time recently. of his clutches, because I have been very active looking for Nova, both
pre-Nova and post-Nova, and the benefits
Legend first entered the think fresh from the Nova they bring to us as a new kid on the block is
nickel race in late 2013, ap- just really unquantifiable.”
plying for a 356sq km tene- discovery he understood
ment in the Fraser Range. On September 24, Legend green lit a mov-
the potential that was ing loop EM survey over selected targets at
In early 2014, the compa- Rockford.
ny commissioned an aero- locked in this area.”
magnetic survey over the “The geologists are up and about; they are
prospect, which identified On July 2, Legend an- pretty excited about this,” Wilson said.
seven priority targets pro-
spective for nickel-copper. nounced it had entered “I sit there and think the fact that they have
targeted these magnetic lodes, the fact that
Unfortunately for Legend, a subsequent into a tenement sale and it’s supported by gravity interpretation and
moving loop EM survey and ground EM pro- the fact that these guys looking at bottom of
gramme later that year failed to define a single exploration JV with the hole chips supported by petrology and tell us
conductor at the targets. that we are in an intrusive rock environment…
Creasy Group to secure I can’t wait to get these EM survey results
It was at that point the company set its and start poking a hole into these things. It
sights on a sizeable plot of land owned by its the 2,530sq km con- is 3,000sq km and we are determined to treat
biggest shareholder, Mark Creasy, which it this area with respect and we are going to
considered to be in the Fraser Range’s most Mark Wilson tiguous ground holding, treat it as a province and build our story as
promising zone. which was just 120km we go.”

“My nickname for Creasy is ‘Speedy’ be- north-east of Nova and – Rhys Dickinson
cause he moves at the speed of 1,000 snails,”
Wilson said. covered a 100km spine across a regional

gravity high.

Despite agreeing to terms in July, the deal

was only settled on September 22.

Wilson said Legend used that waiting time

to digest the transaction’s second biggest

coup – the Creasy Group’s full exploration da-

tabase on the tenement, which included high

resolution aeromagnetic and gravity data,

reconnaissance aircore drill traverse informa-

tion and comprehensive geochemical sample

data.

Active Impact reaps rewards

Impact Minerals Ltd managing director Mike rest, who has committed pact was anticipating a flood
Jones believes his company’s decision to to invest up to $7.3 million of results from project over
remain active across its three projects has al- in the versatile junior via the next six months.
lowed it to raise capital and maintain a market his private investment ve-
cap of $20 million. hicle Squadron Resources A HeliSAM survey to map
Pty Ltd. black shales was also due to
Several juniors have closed ranks around be flown over the 420sq km
exploration in the wake of the malaise current- Squadron’s initial cash project following the confer-
ly engulfing the resources industry, but the injection of $3 million com- ence.
team at Impact stayed true to its instincts and prises a $2 million con-
continued its push for a discovery at Mulga vertible note and a $1 mil- “We’re going to take a dif-
Tank in Western Australia and Broken Hill and lion placement. Impact will ferent approach and we’re
Commonwealth in New South Wales. also have access to un- actually going to map the
listed options of up to $2.3 black shales first and then
The decision appears to have paid off given million and a further $2 Mike Jones we’re going to do the geo-
Impact’s market cap has held firm over the million worth of JV funding physics and the EM around
past six months and the company has twice as part of Squadron’s investment pledge. it,” Jones said.
gone to the market in the last year to raise a “It’s a bit of an innovative approach to try
total of $4.4 million. Impact must spend $2.5 million over the and solve the problem. It remains to be seen
next three years on exploration at Broken Hill what happens…but it’s only a matter of time
“For us it’s almost been like there hasn’t and Commonwealth. The company will direct and money before we’re going to find a major
been a crash and that’s because we’ve had its other funds towards the Mulga Tank nickel discovery here.”
a philosophy…to continue putting money into project, east of Kalgoorlie. Drilling at the Broken Hill PGM-copper-
the ground,” Jones said. nickel project began in September. Impact is
A field camp was set up at Mulga Tank on also preparing for another round of drilling at
“We’ve been fortunate that the projects we the eve of the Australian Nickel Conference the Commonwealth gold project in early 2016.
have [in our portfolio] have returned results on ahead of a proposed drilling campaign to pos-
which we’ve then been able to raise money sibly start as early as next month. – Michael Washbourne
and continue on our quest.”
Soil geochemistry and geophysical surveys
One person who has been keeping a close were in progress at the time of print and Im-
eye on Impact is mining magnate Andrew For-

PAGE 54 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

Australia still global nickel leader

Australia was the lead- malaise would have a Despite Australia’s commitment to nickel
ing region for nickel exploration, global exploration budgets for
exploration for the third positive flow-on effect the base metal are trending at 20-year lows,
consecutive year in 2014, down from 30% of all base metals exploration
according to research data when there is an uptick in the mid-1990s to just 13% last year.
from SNL Metals & Mining.
in the cycle. SNL Metals & Mining senior product man-
Despite falling com- ager Stuart Ferguson believed the lack of new
modity prices, Australia “When you consider grassroots exploration was a contributing fac-
accounted for 29.5% of tor.
the global nickel explora- all that with the fact there
tion spend, ahead of Can- “While companies, especially juniors, have
ada (15%), Russia (11%), is a really innovative, en- spent proportionally more on late-stage pro-
Indonesia (7%) and China jects to move them towards production or to
(5%). trepreneurial spirit in this make them attractive for acquisition, mine site
work has been perceived as a less expensive
BHP Billiton Ltd was country and we have, and less risky means of replacing and adding
Australia’s top nickel ex- reserves,” Ferguson said.
plorer in 2014, forking out on average, the highest
$US24 million on discov- “This reduced focus on early-stage and
ery activities. Russia’s Norilsk Nickel had the grade nickel sulphide generative work has led to concern that many
largest nickel exploration budget globally with companies – and perhaps the industry in gen-
$US50 million. resources in the world, eral – may be sacrificing long-term project
pipelines in favour of near-and-medium-term
Glencore ($US16.5 million), Anglo Ameri- this gives us a lot of con- growth.”
can plc ($US16.5 million) and TSXV-listed
Noront Resources Ltd ($US10 million) also fidence for the future, Base metals accounted for 34.5% ($US3.71
afforded large nickel exploration budgets last billion) of the total $US10.74 billion global ex-
year. even if we’re in a difficult ploration budget in 2014, including $US470.1
million on nickel (4.4%) and $US2.67 billion on
Poseidon Nickel Ltd managing director Da- Stuart Ferguson period,” Singleton said. copper (24.9%).
vid Singleton said Australia’s commitment to Australia also led the
base metals exploration in the current market – Michael Washbourne
way in each of the grass-

roots, late-stage and mine site nickel explora-

tion classifications in 2014.

MMG Ltd was the leading grassroots nickel

explorer last year with a budget of $US14 mil-

lion, while BHP Billiton was the top mine site

nickel explorer spending $US30 million.

Sirius Resources NL – recently taken over

by Independence Group NL for $1.8 billion –

tied with Brazil’s Vale SA on $US16 million

as the premier late-stage nickel explorers of

2014.

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 55

NICKEL REVIEW

Nickel outlook
still unclear: AMEC

One of Australia’s leading industry Australian Nickel Conference. which eligible companies can give up a pro-
lobby groups hopes a new research “When we went lobbying to portion of their tax losses from exploration
report will provide a clearer production expenditure and distribute tax offset credits to
outlook for the country’s nickel hopefuls. Government to get the Explo- shareholders.
ration Development Incentive
The Association of Mining & Explora- (EDI) in place, about half of The association is also a major driver of en-
tion Companies (AMEC) has commis- Australia’s non-bulk commod- suring some drilling programmes continue to
sioned new research into Australia’s ity mines were tracking to be be co-funded by Australian state and territory
likely production and revenue estimates exhausted in 7-18 years. governments.
over the next 40 years. The report will
cover a wide range of commodities, in- “Obviously there’s a clear “We’re in there fighting on behalf of industry
cluding nickel and other base metals. need for us to be developing and we’re in there to some degree fighting on
Graham Short the mines of tomorrow.” behalf of the investment community as well
AMEC is looking to have the report to protect your value and your investments,”
finalised “in the very near future”. Short said more than 50% Short said.
of capital from Australian fi-
The research was prompted by concerns nancial institutions was being invested in “We’re engaged in just about every poten-
Australia’s global exploration expenditure overseas projects. tial policy issue you could think about, rang-
has declined sharply over the last few years. This coupled with constant threats of tax ing from legislations and regulations to tax
According to SNL Metals & Mining, Australia and public policy changes which impact do- issues, safety and infrastructure and the ap-
accounted for just 12% of the 2014 global ex- mestic resources projects presented a major provals process.”
ploration budget, behind Latin America (27%), concern for the industry, he said.
Africa (16%) and Canada (14%). Established in 1981, AMEC is lobbying gov- Other initiatives AMEC is looking to imple-
ernment authorities to introduce new polices ment include reductions in shire rates, partic-
AMEC national policy manager Graham and change outdated framework to improve ularly in Western Australia, as well as stamp
Short said more needed to be done to help exploration efforts while striving to reduce the duty attached to the transferal of exploration
junior exploration companies. cost of doing business within Australia. licences.
AMEC initiated the EDI scheme last year in
“Discovery of new deposits in Australia has – Michael Washbourne
not kept pace with depletion,” Short told the

PAGE 56 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

OPINION

Adjusting to life after
the supercycle

Thank heavens for Glencore. ing from a cyclical That’s in large part because everyone is
The Swiss trading and downturn whilst waiting for the demise of China’s nickel pig
iron sector, which is trapped between rising
mining giant’s announce- managing structural costs and falling raw materials supply.

ment of massive production change”. CRU’s And while they hang on in there, stocks
are steadily rising to the point that even if the
cutbacks just ahead of LME view is that the world does move into a supply deficit this year,
as many expect, the feed-through to higher
Week did at least lighten the cyclical is about prices will be dampened by high inventory.

otherwise decidedly downbeat to turn more posi- At least Glencore’s announcement of zinc
and lead cuts gave those two markets a lit-
mood among the great and the tive but still within tle cheer last week, but there is widespread
concern that China, a major supplier of both,
good of the metals business the context of “the might simply lift its own production levels to a
point where the cuts are negated.
meeting in London last month. overriding story” of
Or as Alistair Ramsey of Metal Bulletin
The industrial metals sector fixed asset invest- Research told the LME Seminar, “for every
shortfall China will find a supply solution”.
is collectively reeling from the ment slowdown.
unexpectedly sudden end to About 55% of the global nickel production He highlighted Copper, by the way, remains polarised be-
the so-called commodities su- sector is cash negative right now, accord- the more positive tween bears and bulls, or maybe that should
ing to an analyst at Wood Mackenzie signals currently read between super- and not-so-super bears.
percycle.
It’s been a long time since the metals mar-
“No-one could have fore- emanating from the kets experienced such a dramatic downturn
in prices. No-one counts the Global Finan-
cast the extent of the slowdown in China,” Rio services sector, citing a spectrum of “lower cial Crisis of 2008-2009 because of China’s
shock-and-awe infrastructure programme,
Tinto Ltd’s head of copper and coal, Jean Se- profile consumer indicators” ranging from air which boosted both usage and prices across
the metallic board in double-swift time.
bastien Jacques, told a Bloomberg seminar. passenger numbers to movie box office rev-
And analysts’ traditional toolkit of using
“We are no doubt facing tough times”. enues, and suggested that rising consumer production cost-curves to help define price
troughs is looking decidedly rusty.
And there was no shortage of industry confidence would eventually help refire the
Not only do costs move in real-time with
executives and analysts agreeing with that struggling housing market. prices, meaning any cost curve calculation is
by definition a “rear-view mirror”, in the words
gloomy warning. Throw in catch-up spending by the met- of CRU’s Vanessa Davidson, but the cost-
curve doesn’t mean much if a large part of the
Just how tough will depend first and fore- als-intensive energy grid and new targeted supply base doesn’t react to lower prices.

most on China, which is a problem since no- infrastructure spend by central government And that’s the problem this time around.
China is no longer simply buyer of imported
one seems to have any clear idea as to what and some sort of short-term bounce in usage metal as it has been in the past but is now
major producer as well and there is growing
exactly is happening in the country. is likely, albeit one diminished by the bigger evidence that it is playing by different rules.

Moreover, as the industry relearns what structural shifts underway. A Chinese supply response to current low
prices, is “one of the great unknowns and
an old-fashioned non-supercycle looks like, Which may all be cold comfort for produc- may be a reason why history might not repeat
itself,” conceded CRU’s Colin Pratt.
China’s own metals production capacity is ers wrestling with metal prices that are trading
Pratt did, though, describe the current
injecting a new uncertainty principle into how into industry cost curves. gloom and doom as a case of “irrational de-
pression”, arguing that based on long-term
supply should respond to low prices. Chinese “slowdown “ has hit different met- marginal costs, several metals are trading
at levels which have defined previous cycle
China was the core driver of the commodi- als in different states of supply readiness. troughs.

ties supercycle, not least in terms of the in- At one extreme is aluminium, where the Or as one banker more pithily put it: “if
things were really that bad, we’d all be out of
dustrial metals needed to build all those new outlook is “awful”, CRU director Paul Robin- jobs”.

cities and associated infrastructure. son told the Bloomberg seminar. Amid the dazed confusion that character-
ised last month’s events, though, one thing is
And it is China that has this year dowsed Nickel is possibly just as bad with Andrew certain.

any remaining supercycle flames. Mitchell of Wood Mackenzie vying with Jorge The supercycle is now history. And boom
and bust has returned with a vengeance.
The whole world, it seems, is fixated with Vasquez of Harbor Aluminium for just which
– Andy Home, Reuters
the China slowdown story but for metal mar- metal had the worse fundamentals during one

kets “slowdown “ doesn’t capture the severity session of the LME’s seminar.

of what has actually materialised. The problem with both is the lack of supply

And that may be down to the fact that response to current low prices.

metals usage has been rocked by a triple- The aluminium market is profoundly scepti-

whammy of negative structural, cyclical and cal that China, which is now the world’s larg-

destocking hits. est producer of the light metal, has the will or

The nexus of this bear cocktail has been even the desire to cut production in sufficient

the construction sector, previously a pillar of quantities to rebalance the market.

metals demand growth in the country. Resi- For aluminium you could also read steel,

dential construction in particular is suffering another sector in which Chinese capacity has

from a combination of all three trends. grown massively over the course of the last

Disentangling shorter term drivers from decade.

structural shifts in China is proving extreme- “There has been absolutely no reaction to

ly tricky and may help explain why, to quote falling (steel) prices,” noted Ken Hoffman of

Rio’s Jacques, “both industry and investors Bloomberg Intelligence. “The market can’t

are finding it difficult to read the market”. seem to clear” and rebound to margin positive

The best attempt at an answer came from territory, he added.

CRU Group’s Grant Colquhoun, speaking It’s not all China’s fault.

at the research house’s breakfast meeting, Around 55% of the global nickel production

which was, as ever, one of the week’s more sector is cash negative right now, according

thought-provoking seminar sessions. to Wood Mackenzie’s Mitchell but the supply

China, Colquhoun argued, is “suffer- response has to date been anaemic.

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 57

IRON ORE

Playing the Ball: BC Iron
buckles down in FY16

A change of mine plan and major contractor at Nullagine helped BC Iron navigate through a tricky 2015 for iron ore players

Australia’s iron ore sector has been dancing Morgan Ball on site at the Nullagine JV “The fact that we’ve seen it dip into the
to the beat of a sombre drum for the best $US40s a couple times recently and then
part of three years. come back quite quickly into the $US50s
would seem to indicate that volatility in this
The scourge of the metal’s fall from grace market will continue. We are running our busi-
has forced its producers to duck, dive and ness on the assumption that we have to make
weave their way to places never fathomed in money at those kinds of prices.”
an effort to just break even.
Notwithstanding iron ore’s spot price, BC
And while companies have managed to Iron faced a raft of challenges at its Nullagine
hold their place on the dancefloor, there is one JV, the most pressing of which was the pres-
concerning, if not downright irritating fact; the ence of clay pods in its Outcamp and Warrigal
commodity’s song has remained the same. orebodies.

BC Iron Ltd is among a long list of produc- BC Iron encountered excessive clays in
ers that has tip-toed its way through the sec- discrete areas of Outcamp 2 and Warrigal 3
tor’s toughest period to keep its feet. from August to October last year, which hurt
its production and operating costs during the
In FY15, the company changed its mine three-month period.
plan and major contractor at its flagship Nul-
lagine mine, acquired West Pilbara compa- Ball said the company was forced to hit
triot Iron Ore Holdings to reduce its risk profile the “reset” button and credited a change in
and continued work on its burgeoning Buck- its mining plan for getting the project back on
land project. track by the end of November.

BC Iron managing director Morgan Ball told From December to June, Nullagine’s pro-
Paydirt companies needed to be nimble be- cessing facility ran above its nameplate ca-
cause the market malaise wasn’t going any- pacity of 6 mtpa.
where anytime soon.
If the spot price fallout was to have a silver
“What we saw during the last quarter was lining for miners, it would be the misfortune
the price hit all-time lows in July around the of the mining services sector, which BC Iron
mid-$US40s and then in the last two months took advantage of in April.
of that quarter we saw it average in the
$US50-60/t price range,” he said. The company broke ties with inaugural

PAGE 58 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

Nullagine JV mining, crushing and screening

contractor Watpac Ltd and signed a two-year,

$40 million contract with Viento Contracting

Services Pty Ltd, cutting short the Watpac

contract by three months.

“Watpac were our inaugural and incumbent

mining and crushing contractor, but with the

price doing what it was we just needed to do

whatever we could to reduce costs,” Ball said.

“With their contract coming up in the sec-

ond half of 2015, we were able to test the mar-

ket in relation to another area of the mine that

we were opening up and the tenders received

were reflective of the softening contractor

market such that we were able to introduce a

new contractor under a different structure and

at lower rates.

“The upshot is a material reduction in our

C1 costs. Our guidance for FY16 is $42-45/

wmt and our June FY15 costs were in the low

$50s/wmt. The fact that we’re guiding $5-6/

wmt below last quarter’s reported figure is

positive, but we need to keep getting it down.

Iron ore prices for the quarter just gone have

averaged about $55/wmt and that guidance

we’ve forecast has given us some wriggle

room at those prices.”

BC Iron was also investigating the creden- BC Iron increased its West Pilbara footprint last year by acquiring Iron Ore Holdings’

tials of a new target north-east of Nullagine, Iron Valley project

Mulla Mulla, which Ball hoped would offer the

company a lower strip ratio than Outcamp and the way through and receive a small royalty capital in the play.

Warrigal. for that. As an added bonus the transaction Part of that review entailed a joint study

If drilling at the prospect proved there was also brought more cash onto our balance with API Management Pty Ltd – manager of

viable DSO to be had, BC Iron would likely sheet.” the Australian Premium Iron JV between Aq-

shift its attention to the area. Mineral Resources achieved first exports uila Steel Pty Ltd and AMCI – to assess the

“We are trying to minimise the strip ratio at of Iron Valley product in October 2014 and potential for co-operation regarding the con-

our current mining areas and therefore mini- shipped 2.83 dmt for FY15, which generated tiguous mining of Buckland’s Bungaroo South

mise the amount of tonnes we actually move revenue of $18.8 million and EBITDA of $4.6 and Buckland Hills deposits.

to produce ore without compromising the fu- million for BC Iron. Discussions centred on options to maxim-

ture mine life of the operation,” Ball said. Ball said Mineral Resources had bigger ise mineable inventory and possible syner-

“It’s all about mine planning and running plans for Iron Valley. At the time of print it was gies in extracting the ore.

the operation as efficiently as possible in con- investigating the economics of beneficiating BC Iron is also continuing to advance the

junction with our contractor.” the project’s product and developing a bulk approvals process for its Cape Preston East

With all that’s happening in the here and ore transport system. venture, but at the same time is monitoring

now, trepidation struck Paydirt when it dared “If they are successful with that then Iron the progress of alternative infrastructure so-
to ask Ball whether or not BC Iron would have

acquired Iron Ore Holdings (IOH)

last year if management knew the

tumult that would ensue in the

We are making sure we aremarket.
doing everything as efficientlyWithout hesitation, Ball said, on

balance, it would.

as we can to keep costs down, but“With the iron price at the time,

“not at the expense of looking atwe thought the market was under-
Valley will be more profitable for us,” Ball said. lutions, including Aurizon’s proposed railway
to a new deep water port at An-
ketell.
“Clearly it is public knowledge
that Aquila, Aurizon and Baos-
teel are all working together on
the Anketell port solution de-
velopment and subject to what
they come up with in the next six

valuing the assets IOH had,” he other opportunities as well. months we may revisit where that
said. all fits with the Buckland project,”

“One of the key strategies be- Ball said.

hind the acquisition, notwithstanding the op- “It may also be that the technology is of Those hoping for a positive spot price fore-

tion value and future in the West Pilbara, was interest for our Buckland project in the West cast would be best to look away now – Ball is

that we bought into the Iron Valley project, Pilbara. We are pleased we have Iron Valley predicting more of the same next year.

which is a low-risk, long-life cash flow asset. because it spreads the risk and brings in cash He said FY16 would be about continuing to

Mining inherently carries risk and when you’re flow. But potentially it might have greater cash grind through the tough times; but that’s not to

a one project operation, if something goes flow after some of these initiatives are looked say he won’t be listening for the commodity’s

wrong, you’re exposed. at.” tune to change.

“With the IOH deal not only did we get our- On Buckland, Ball said BC Iron was review- “We are making sure we are doing every-

selves a seat at the table in the West Pilbara, ing IOH’s feasibility study on the project, ap- thing as efficiently as we can to keep costs

which Aurizon Holdings Ltd and Shanghai Ba- plying current numbers to devise an appropri- down, but not at the expense of looking at

osteel Group Corporation are seriously look- ate plan to tackle the 134.3mt @ 57.6% iron other opportunities as well,” Ball said.

ing to develop, but we brought in a 15-year project. – Rhys Dickinson
mine life operation in Iron Valley at relatively The managing director said BC Iron would

low risk. It is run very well by Mineral Resourc- “hold fire” on Buckland until that review was

es Ltd and, essentially, we clip the ticket on complete and justified investing significant

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 59

IRON ORE

Australia’s bullish iron ore view

It’s a brave analyst these days The department is therefore en months of 2015 and the number of mines
who would call a bottom in the expecting iron ore to be 5.9% reporting losses rising to 29% from 22%.
iron ore price, which makes the weaker in 2016 than it is cur-
call for better times by 2017 from rently, before gaining to be However, the department also acknowl-
the normally cautious Australian 11% higher in 2017 than the edged that one of the key risks in its forecast
government forecaster all the present spot price. is the viability of China’s domestic iron ore
more interesting. industry.
While the improvement
While any forecast for iron ore by 2017 is not that dramatic “If the Government implements market
prices to rise is worth more than in percentage terms, it still based reforms, China’s domestic production
just a glance, there are a few makes the department a bit of of iron ore is likely to fall, which will increase
things to note about the Aus- an outlier among iron ore fore- import requirements and provide support to
tralian Department of Industry’s casters. the seaborne price of iron ore over the me-
Resource and Energy quarterly, dium term,” the report said.
published in September. Major Australian bank ANZ
expects iron ore to average While this certainly is logical, it’s by no
The most important is that just $US55/t in 2016 and 2017, means assured with Chinese miners showing
the government forecaster isn’t while Morgan Stanley is only a willingness to keep producing at a loss for
calling for a dramatic rebound slightly more optimistic at extended periods, given that keeping jobs is
in iron ore, rather for modest $US58 for both years. often viewed as more important than profits.
gains.
And even these institutions The department also expects China’s steel
The second is that the recov- are more bullish than the wid- output to remain fairly constant in the coming
ery isn’t expected until 2017, er market, with a Reuters poll years at around 802 mtpa, down slightly from
with next year expected to show further loss- of 17 analysts published on September 23 the 823mt reached in 2014.
es for the steel-making ingredient. showing iron ore expected to average just
$US50/t in 2016 and 2017. This is also a forecast that runs the risk of
The report projected that iron ore will rise to The question then becomes why is the Aus- being too optimistic, as it assumes that China
average $US60.40/t in nominal terms in 2017, tralian Government expecting improvement can successfully export its surplus produc-
up from $US51.20 in 2016 and $US52.90 this when others are more sceptical? tion, which is likely to be at least 50 mtpa.
year. The bearishness on prices for this year and
next is driven by increasing supply, mainly Domestic steel consumption is likely to be
By way of comparison, the department’s from top exporter Australia and No.2 Brazil. slightly less than 750 mtpa, and even that as-
June quarter report forecast iron ore would Australia’s exports are expected to rise sumes a relatively strong economic growth
average $US54.40/t in 2015 and $US52.10 in from 717mt in 2014 to 762mt this year, 824mt profile with all the promised infrastructure
2016, but didn’t provide forecasts for further in 2016 and 886mt by 2017, the department spending being realised.
out years. said.
Those from Brazil will increase from 363mt Such is the nature of forecasting that as-
What has effectively happened is that the last year to 390mt in 2015, 412mt in 2016 and sumptions have to be made, and the ones
department has become slightly more bear- 435mt in 2017. done by the Australian Government aren’t
ish on the view for this year and next, before The rising exports from the top two produc- unreasonable.
expecting a modest recovery from 2017 on- ers will be enough to keep prices weak for this
wards. year and next, but climbing global steel output However, while not assuming a best-case
and the closure of high cost iron ore mines will scenario, they are assuming ongoing eco-
Just how modest is the recovery expected allow prices to rise by 2017. nomic growth of around 6.5% in China’s the
to be? The department said that domestic Chi- buyer of two-thirds of seaborne iron ore, and
nese iron ore producers are struggling, with that this growth will include a strong infra-
The spot price of iron ore in Asia was output falling 9% year-on-year in the first sev- structure component.
$US54.40/t late in September, down about
24% from the end of last year, but up from the While iron ore producers will no doubt be
$US44.10 reached on July 8, which was the pleased to see even a cautiously bullish fore-
lowest since spot assessments started in No- cast, the risks to the department’s views still
vember 2008. seems to be biased to the downside.

– Clyde Russell, Reuters

Roy Hill behind but not delayed

Roy Hill Holdings has batted away claims Hancock Prospecting – is set to supply 55 and that when Roy Hill commences shipments
its namesake iron ore mine had missed its mtpa at full capacity. in the last two months of this year, these initial
first shipment, saying the maiden voyage was shipments will only represent a small portion
“imminent”. With iron ore prices continuing to languish of its capacity of 55 mtpa. They have also ig-
and a number of other Australian producers nored the significant increases from now to
“The first shipment is imminent in the com- under debt pressure, some analysts are wary end 2017 from other companies which will
ing weeks, but will occur after 21 October about the impact Roy Hill’s introduction could significantly exceed shipments from Roy Hill.”
2015,” the company said in a statement on have on an already flat sector.
October 14. Watroba also argued that with more than
However, Hancock Prospecting executive 90% of Roy Hill’s production secured under
Chief executive Barry Fitzgerald had previ- director Tad Watroba has dismissed sugges- long-term contracts “very little ore will actually
ously said he expected the maiden shipment tions Roy Hill would have a negative impact enter the spot iron ore market.
to occur on October 21 but the company said on prices.
such delays were normal occurrence. More than 50% of Roy Hill’s output will
“Some media have got it wrong and are be delivered to Hancock’s project partners;
“For projects of this scale and complexity overstating the impact on the iron ore price South Korean steelmaker POSCO, Japan’s
it is not unusual for minor slippages such as from the Roy Hill project,” Watroba said in Marubeni Corp and Taiwan’s China Steel
this.” a statement. “They ignore that the prices Corp.
dropped last year, pre-Roy Hill even shipping,
The mine – 70% owned by Gina Rinehart’s

PAGE 60 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

Debt down for Fortescue

Recent market volatility has A total of 41.9mt of iron ore was shipped by Fortescue in the September quarter
played into Fortescue Metals
Group Ltd’s hands, according to the Efficiencies in mining practices and OPF looks towards achieving production of 165mt
company’s finance team. upgrades have complemented Fortescue’s for FY2016 and sustaining capital expenditure
strategy of contractor consolidation and roster of $US330 million (or $US2/wmt).
Since July, the company has changes, with the full impact of these initia-
been able to buy back $US384 mil- tives seen in C1 costs during the September “We maintained our FY2016 guidance at
lion of debt at an average of 80c in quarter. $US18/t and we will formally up date that at
the dollar and could continue down the half year. Based on our current targets,
this path to further reduce its out- Shipments for the quarter totalled 41.9mt, we expect to exit FY2016 with a production
standing net debt of $US6.6 billion. with a realised price of $US50/dmt received, cost of $US15/t. These results have firmly
compared to average 62% Platts price of established Fortescue as a low-cost global
“We will continue to look for op- $US55/dmt, allowing Fortescue to report cash producer and we are continuing to see strong
portunities to reduce our debt levels of $US2.6 billion at the end of September. support from our customers across Asia,”
as we accumulate cash from opera- Power said.
tions in accordance with our strat- “This fairly simply reflects the strong under-
egy. We will balance costs, interest lying cash from operations; that is we have a Demand remains strong for Fortescue’s
savings and maturity profile as we stable iron ore price in the mid-50s which im- product and there are good signs this will con-
work through that debt reduction proved realisation and lowered costs,” Pearce tinue, with the Chinese Government rediscov-
programme,” chief financial officer said. ering its appetite for infrastructure investment,
Stephen Pearce told media during Fortescue head of sales and marketing David
Fortescue’s September quarterly At the time of print, iron ore was trading at Liu said.
presentation. $US55/t, a price which reflected a supply/de-
mand balance in the market, Fortescue chief “Despite the strong September iron ore in-
The company’s on-market debt executive Nev Power said. put of 86mt into China, total input from Janu-
buy back resulted in a pre-tax gain ary to September is almost at the exact same
of $US68 million and annual interest Fortescue expects to see 85-90% price level compared with the same period as last
savings of $US33 million. realisation target against the main index as it year at around 700mt,” Liu said.

Pearce said Fortescue would “Steel exports from China remain solid,
assess a number of options to fur- running at 83mt to date, a 27% increase over
ther improve its debt position, but the same period last year.
in the meantime, with no debt due
until 2019, the company wouldn’t be “[The] Central Government in China has
“compelled” to and “won’t do” asset sales. lifted further on infrastructure investment,
these are expected to drive steel demand in
Instead, the focus will be on sharpening up the near term and somehow help to cushion
operations and amplifying cost reductions in a the impact of poor profitability and credit re-
similar vein to previous quarters. strictions currently facing the Chinese steel
industry.”
The September 2015 quarter was the sev-
enth consecutive quarter production costs – Mark Andrews
had been driven lower by Fortescue, with C1
costs of $US16.90/wmt reflecting a 66% im- Nev Power
provement ($US49.44/t) from the correspond-
ing quarter two years ago.

“The realised and ongoing cost reductions
include, but are not limited to OPF [ore pro-
cessing facilities] throughput and fixed asset
liability improvements and OPF upgrade im-
provements and yield recoveries,” Fortescue
director operations Nick Cornetta said.

“Improved upgrades through our OPFs fa-
cilitate a lower iron feed cut-off grade and a
higher grade feed cut-off for alumina trans-
lating directly into lower strip ratios. Blended
optimisation from pit sources and products
optimisation also play strongly into this equa-
tion. In addition, our mine operators continue
to drive down the unit cost of activity and total
material mined through initiatives that deliver
higher productivity from our assets and peo-
ple and improved efficiencies through con-
sumable price reductions, technology devel-
opments and most recently automation at our
Solomon mines.”

The cost reductions which have worked
effectively in the past 12-18 months are ex-
pected to be sustainable, however, with the
wet season pending, Fortescue will closely
manage ROM and port inventories as protec-
tion against any potential impact from weather
conditions.

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 61

IRON ORE

Red Hill plays waiting game

Red Hill Iron Ltd expects to tal costs and trying to get this
know by the end of the year
whether it can pursue develop- project up and running in hard
ment of its share in the West Pil-
bara iron ore project. times,” Pitt said.

Rail freight operator Aurizon “It’s either a great little me-
Holdings Ltd is due to com-
plete a scoping evaluation on dium-term cash flow asset for
proposed rail and port infra-
structure in the region by late me and my shareholders or it’s
December. The outcome of the
study will undoubtedly have a wonderful longer-term asset
huge implications for a number
of fledgling iron ore projects, for our children because it’s
including the Red Hill Iron Ore
JV (RHIOJV), within the West definitely going to be mined and
Pilbara project area.
it’s definitely going to have huge
Red Hill owns 40% of RHIO-
JV, with the remaining interest cash flow through it.”
held by API Management Pty
Ltd. This year marked Red Hill’s

A positive outcome from the 10th year on the ASX and the
scoping evaluation has Red Hill
confident of completing a DFS company has endured both the
by July 2016. A decision on pro-
ject development could be made best and worst of the fluctuating
before the end of next year.
iron ore pricing cycle.
API has been quietly working
in the background on an update Red Hill’s stocks peaked
to the feasibility study released
in 2010, including resource and at $7/share in May 2008 be-
reserve upgrades, but for the
most part it has been a frustrat- fore the GFC and subsequent
ing waiting game for Red Hill.
downturns in the iron ore sec-
“It’s all hanging on what Auri-
zon come up with, it’s a bit of the tor brought the company back
unknown at this point,” Red Hill
non executive director Joshua down to about 40c/share at the
Pitt told Paydirt.
time of print.
“If we can get over the trans-
portation hurdle – and admit- Fortunately for Pitt and his
tedly it’s a big hurdle – we can
beat anybody. We are extremely fellow directors, the nature of its
competitive against anybody on
the ground in the Pilbara.” partnership with API has meant

Red Hill and API bucked the trend of most the company has avoided going
iron ore hopefuls this year by continuing to
pursue development options for RHIOJV de- to the market and rattling the
spite the precipitous fall in iron ore price in-
dices. tin to maintain its interest in the

The RHIOJV proven and probable ore project.
reserves are now 537mt @ 57.2% iron, up
86% on the 289mt @ 57.3% iron estimate an- “If we had to go to the market
nounced in February 2011. RHIOJV boasts a
total resource of 813mt @ 56.5% iron. right now to fund our share of

The reserve update coincided with the end the project, we would be dead,”
of a 10-year dispute between Red Hill and
API over the position of the Kens Bore East Pitt said.
deposit. Red Hill had argued a portion of the
two exploration licences which covered Kens “We did a really good deal in
Bore East were part of the RHIOJV.
the first place where the money
As part of the settlement, Red Hill has
agreed to reduce its participating interest in is loaned ad infinitum and we
the RHIOJV to 19% if it elects to participate in
ongoing mining operations. Red Hill can still can cancel those loans by go-
elect to revert to a 2% gross royalty on all ores
mined. ing to a royalty.

“It’s a pretty negative scene

out there – and our share price

reflects that – but you can see

Red Hill Iron is awaiting the outcome of Aurizon’s scoping evaluation all the negatives or you can en-

of proposed rail and port infrastructure in the Pilbara visage the positives from here
on in. We haven’t had to put our

Pitt said Baosteel Group Corporation’s hands in our pockets yet so we can afford to

$US1.3 billion takeover of Aquila Resources be patient…we have no reason not to be.”

Ltd last year has tempted API to review its With API taking care of any future iron ore

stance on Kens Bore East. exploration and development, Red Hill is plan-

“The settlement was a great relief to us be- ning its own return to the ground in 2016 to

cause it’s added about 20% to our share of work up a series of promising gold targets.

reserves,” Pitt said. Red Hill has spent about $3 million on gold

“About two-thirds of the total resource and and base metals exploration and is now seek-

reserves are now on agreed JV ground and, ing a JV partner to continue exploration of its

more importantly, the early mining royalty will tenements, immediately north of the Paulsens

be dominated from our deposits because on gold mine.

average they’re better grade and closer to the “We’re doing some drilling at the moment

mill.” to clear any conflict between the iron ore and

Red Hill and API are targeting a 40 mtpa gold targets,” Pitt said.

operation at the RHIOJV over at least a 20- “Once the mine leases are in place for the

year mine life, including a two-year ramp-up iron ore, we can explore elsewhere that we

to full production. want for gold.”

Pitt said the company had no qualms about – Michael Washbourne
attempting to develop an iron ore project while

the market still looked unfavourably at the

bulk commodity.

“We’re working hard on reducing the capi-

PAGE 62 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

Bulk upgrade puts Hawsons on top

Carpentaria Exploration Ltd’s “We are advancing our work pro-
flagship Hawsons iron project
has emerged as a potential new in- grammes as fast as possible in a
dependent supplier to the direct re-
duction and blast furnace markets in way that is making a positive differ-
Asia and the Middle East.
ence to the project’s ongoing devel-
Bulk upgrade test work complet-
ed last month showed Hawsons, opment,” Hill said.
about 60km south-west of Broken
Hill in New South Wales, was ca- “While the iron ore market is a dif-
pable of producing a product with
above 70% iron and less than 2% ficult one at the moment, the results
silica.
we’re getting demonstrate that our
According to research data from
LFJ Consulting, the Hawsons prod- project would be profitable in a mar-
uct will be the highest-graded ore to
be traded on the market. Carpen- ket like this and over the long term
taria also believes its “super-grade”
magnetite concentrate can be will be sustainable in low parts of
mined and processed at low costs.
the cycle and make very good prof-
Carpentaria Exploration manag-
ing director Quentin Hill said the its in the high part of the cycle.”
Hawsons product had attracted
strong interest from a new wave of global Low iron ore prices ($US55/t at
steelmakers seeking high-quality pellet feed.
the time of print) continue to cause
“Some magnetite projects, because of the
nature of their geology, can never get that problems for many producers how-
sort of grade, so we are very lucky with the
deposit we have and these results will serve ever Carpentaria has not been put
us well for the programmes to come,” Hill told
Paydirt. off by the downturn and is charging

“We have the highest quality magnetite ahead with development plans.
concentrate in Australia, without question,
and we will have the highest grade ore to be “The World Steel Association has
traded on the seaborne market. This has fed
into our current marketing programmes very Recent test work has confirmed Hawsons can churn out a forecast 30mt of new steel demand
nicely.” high-grade product containing more than 70% iron every year for the next 15 years and

A 500kg bulk concentrate was produced that will mean 30mt of new iron ore,
at the ALS Iron Ore Centre in Perth to dem-
onstrate how the project can produce direct planning an upgrade of the inferred resource, but there will be no new iron ore coming on
reduction feed on a commercial scale using
gravity and magnets instead of chemicals. which stands at 1.77bt @ 14.9% magnetite stream – or very little – post-2017,” Hill said.

Carpentaria has sent a bulk sample of for contained 263mt grading 69.7% iron and “We will have our feasibility studies com-
the current forecast shipping ore, compris-
ing 70.3% iron and 1.99% silica, to the China 2.9% silica. pleted by then and we will be in a great posi-
Iron and Steel Research Institute for a series
of pelletising and steelmaking performance “Now that we have great confidence in the tion to gain financing for our project and move
tests. Results are not expected until early
2016. quality of the material able to be produced at towards production.”

Hawsons was discovered in 2009 – two a commercial scale, we can reasonably en- – Michael Washbourne
years after Carpentaria listed on the ASX – gage significant off-takers and cornerstone
and the company has been 100% focused on
the project since 2013, despite the falling iron investors to support the project through to
ore price.
completion of the BFS and beyond,”
Carpentaria is targeting a 10 mtpa pellet
feed operation at Hawsons with a potential Hill said.
mine life of beyond 25 years. Detailed project
economics have yet to be released to the mar- “We’ve commenced our product
ket.
marketing campaign with the first
Central to the company’s business strategy
is the fact magnetite is often favoured over phase of discussions with interest-
hematite for pelletising because productivity
is higher and requires less energy and fewer ed steel mills and end-users. While
emissions. Magnetite is typically $10/t cheap-
er to pelletise than hematite ore. agreements take time, the initial

Carpentaria has all engineering aspects feedback has been very, very posi-
of the Hawsons project at a PFS level and is
tive for our super-grade product.”

In another sign Carpentaria will

continue to put all of its efforts into

Hawsons, the company recently

signed a conditional term sheet with

Faraday Resources Pty Ltd to divest

up to 90% of its interest in two gold

exploration licences on the Lachlan

Fold Belt.

Faraday must spend $200,000,

including $100,000 within six months

of agreement, over a 12-month pe-

riod to acquire a 90% stake in the

Combaning and Barellan licences.

Carpentaria will then have the option

to contribute to the expenditure or

convert to a 1% NSR.

Carpentaria has about $2.5 million

in the bank despite not going back to

the market for exploration funds for

more than two years. Timely R&D

rebates and contributions from JV

partner Pure Metals Pty Ltd (32%

owner of Hawsons) have helped off-

set the challenge of raising money in Carpentaria managing director Quentin Hill
the current investment climate, espe- with chairman Neil Williams
cially for an iron ore junior.

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 63

IRON ORE

Coziron costs itself into the market

Abit of forward thinking could be the making ed a round of infill drilling on Robe Mesa and
of iron ore hopeful Coziron Ltd in the com- we have announced preliminary results, es-
modity’s darkest hour. tablishing further credibility that the geology
is consistent and we hope to upgrade our re-
Company chairman Adam Sierakowski source calculation,” Sierakowski said.

told Paydirt Coziron prioritised location over “To eventually come up with 100mt of
JORC resource on the Robe Mesa target
proven geology when it entered into a JV with that’s only one of five current targets that we
believe could potentially host similar quanti-
Creasy Group Pty Ltd to acquire 85% of the ties; we think is a very nice starting point for
the company.”
Yarraloola project in January 2012.
On July 17, 2014 Coziron also announced
Of course, geology wasn’t completely dis- the discovery of a 12km-long magnetic anom-
aly which confirmed the presence of a mag-
regarded; Sierakowski emphasising “nearol- netite schist and quartzite in the Ashburton
trough.
ogy” played a big part in Coziron’s decision to
Coziron assumed the previously over-
buy into the JV. looked area would host run-of-the-mill Brock-
man-style magnetite, but surface samples
Yarraloola, 120km south-west of Karratha, suggested it actually contained unique char-
acteristics.
is adjacent to Rio Tinto Ltd’s Mesa A and
Coziron drilled three RC holes into the Ash-
Mesa J iron-ore mines, which produce a com- burton project in February which intersected
magnetite hosted in chloritic and schistose,
bined 32 mtpa. intermediate to rhyolitic volcanics and carbo-
naceous phyllite.
Despite a favourable $US150/t spot price at
Standout intersects included 91m @ 25.4%
the time of its buy-in, Coziron aspired to be a iron, 29m @ 31.9% iron and 55m @ 31.8%
iron.
low-cost operator from the outset.
“It looks like a style of magnetite that can
“Mark [Creasy] had this land footprint up in be beneficiated very easily,” Sierakowski said.
“It looks like it could be a much coarser grain
the west Pilbara that we thought was very in- The Yarraloola project is flanked by Rio Tinto’s material with low impurities that has a pretty
teresting, mainly because of its location,” he Mesa A and Mesa J iron ore mines strong magnetic signature. It has no asbesti-
form, which is significant too.
said.
“Brockman magnetite is a very hard ma-
“It’s very close to port and a lot of embed- roads and financial feasibilities, which helps terial; CITIC Pacific Mining has world-class
crushing stations built to try and deal with that
ded infrastructure. We never knew what was the investment case for Coziron. That takes product. This looks like it is going to be some-
thing that is far more economic.”
going to happen in the iron ore world, but the us through to the next evolution of the com-
Coziron’s most recent drilling programme
one thing we liked about the project from day pany’s development where you’ve got Shang- at Ashburton last month reaffirmed interest in
the prospect, with all 16 RC holes intersect-
dot was that it was a unique opportunity. We hai Baosteel Group Corporation actually run- ing intervals with elevated iron content. The
programme’s best hit – 156m @ 28.3% iron –
thought if we could put a lot of the resources ning their railroad alignment right through the ended in mineralisation as have deeper holes
stretching beyond 400m.
on the canvas there we could be a low-cost Yarraloola project. These were the things we
“We plan to go out there and do another
producer. That’s actually working in our favour looked at first before we put a lot of drill holes round of extensive drilling soon,” Sierakowski
said.
now.” into the project.”
“The most recent programme has really es-
In late 2012, Coziron galvanised its vision Sierakowski said Coziron was beholden to tablished that there is something worth pursu-
ing in the Ashburton schist.”
when it engaged engineering firm Engenium completing a Creasy-devised exploration pro-
Sierakowski said Coziron’s progress at
Pty Ltd to conduct a preliminary scoping study gramme in its first 12 months, but shortly af- Robe Mesa and Ashburton was heartening
and vindicated the company’s left-of-centre
on a variety of mine-to-port options that would ter went its own way, focusing on Yarraloola’s thinking during their acquisition.

reduce transport costs. promising Robe Mesa prospect. And, although the iron market was still de-
pressed, he believed the company was in the
While Engenium was hard at work compil- “Once the first drilling programme that the box seat to move forward when the situation
changed.
ing its scoping study – which identified four company inherited was finished we decided to
“We have been watching it and thinking of
realistic transport scenarios – Iron Ore Hold- become much more focused on the iron ore ourselves as more relevant than ever at this
dark hour for iron ore projects generally” Sier-
ings Ltd announced the targets that were right akowski said.

results of its Buckland next to the existing Rio – Rhys Dickinson

project PFS, which ad- discoveries,” Sierakows-

vocated the construc- ki said.

tion of a new shipment “Our Robe Mesa tar-

facility at Cape Preston get was the first one

East and a haul road to the company focused

be developed through on and we were proud

the Yarraloola project. to achieve stand out ex-

“We always thought ploration results there

the company had the straight away.”

potential to be an ex- Coziron initiated Robe

plorer that came up with Mesa’s maiden RC drill-

a resource base in an ing programme in No-

attractive location and vember 2014, with most

follow in the comet trail of the campaign’s 25

of other iron ore compa- holes returning inter-

nies established in the vals of sub-horizontal

area with existing and pisolitic iron stone ex-

planned infrastructure” ceeding 50% iron.

Sierakowski said. In January, Coziron

“Even if proposed used that maiden pro-

infrastructure didn’t gramme to piece togeth-

get developed there’s er the prospect’s maiden

a precedent for envi- Coziron sees Ashburton’s unique volcanic- resource, which totalled

ronmental approvals, hosted magnetite mineralisation 73mt @ 53.9% iron.

plans for ports, haul as an ace up its sleeve “We’ve now complet-

PAGE 64 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

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REGIONAL ROUNDUP AFRICA

Two bids for Universal Coal

ASX-listed Universal Coal plc has urged
shareholders to take no action regarding a
takeover offer from IchorCoal N.V.

IchorCoal’s 16c/share bid values Universal

at $80.9 million, and was at a 46.5% premium

over Universal’s 60-day VWAP of 10.9c/share

on the ASX.

At the time of print, Universal was trading at

17c/share and had indicated to the market a

rival bid of 20c/share was on the table.

IchorCoal chief executive Nonkululeko

Nyembezi-Heita told Paydirt the company

would not increase its offer for Universal.

“We have no appetite for making a higher

offer, we believe 16c/share fairly reflects the

value of Universal to IchorCoal. Clearly, other

companies that may come on board with an-

other bid may have another profile for syner-

gies and costs and rationalisation and maybe

in a position to pay more, but we certainly are

not,” Nyembezi-Heita said.

“The only bid today that is open for ac-

ceptance by Universal shareholders is Ichor- Universal Coal’s assets will help IchorCoal reach its targeted ambition of
Coal’s. We have heard that another bid is in becoming a 15 mtpa coal producer in 2017
the offing. [Universal] management has made

it known in their ASX announcement that they In addition to its large stake in Universal, more than 2bt of measured, indicated and in-

have a bidder potentially interested in launch- IchorCoal is also a significant shareholder in ferred resources.

ing a bid at 20c an offer, but that bid currently Mbyuelo Coal (45%), which has assets near Nyembezi-Heita said adding Universal’s

has not been lodged so at this point ours is the Universal’s in the Witbank coalfield. assets to IchorCoal’s production profile would

only bid on the table.” “If we were successful in [the] Universal alleviate the pressure of reaching its target-

IchorCoal is a 29.99% shareholder in Uni- [bid], and because we have a substantial mi- ed attributable coal production of 15 mtpa in

versal already and requires a minimum 50% nority position in Mbyuelo, it will give us an 2017.

acceptance before the offer closes on De- opportunity to sit back and rationalise things, Should the Universal bid stall, IchorCoal

cember 3. streamline operations and see where we can could potentially be “on the prowl for one

In the meantime, IchorCoal has scheduled take out costs. A big part of the drive is to more acquisition” with now the perfect time.

an EGM for its shareholders on November 4 scale up in order to manage costs in a more “Valuations right at this minute are the low-

regarding a private placement to fund the ac- sustainable way in a very low point in the cy- est that we have seen for a while, reflecting

quisition. cle,” Nyembezi-Heita said. the difficulty in the sector,” Nyembezi-Heita

“There is a nice little gap between the [of- Universal is currently operating its Kangala said.

fer] close, so by that time there will be even operation in South Africa at 2 mtpa and first “I would say that for long term investors

better certainty on funding than today,” Ny- coal from its NCC project is set to come on this is the time to buy. On the other hand, if

embezi-Heita said. “We have gone out with a stream by the end of 2015. your investment horizon is short even to me-

fully underwritten offer, we have the majority Phase one is primed for 2 mtpa while un- dium term it would be questionable whether it

of our shareholders supportive of the bid and derground operations during phase two will would make sense.

the bid will be funded.” see NCC ramped up to 2.8 mtpa. “IchorCoal is in it for the long haul, so from

Nyembezi-Heita also said Universal’s Overall, Universal’s coking and thermal our perspective this is a good time to make

workforce would be maintained. coal portfolio in South Africa includes proven sure the profile and the footprint of the com-

“The future of the current Universal employ- and probable reserves of 72.7mt, while it has pany is as we want it to be once recovery

ees will be made safe, for those who comes, because believe it or not

wish to remain with the group there recovery will come, we just don’t

will be accommodation. So, it is not know when.”

one of those takeover bids where At the time of print, coking

we are going to rip apart employees coal ($US82/t) and thermal coal

and management, we see this very ($US53/t) prices remained sub-

much as a combination which very dued and with the steel industry

easily accommodates everybody.” in the doldrums, Nyembezi-

IchorCoal is a €310 million coal Heita said it was difficult to see

producer, which was incorporated in what the catalyst would be for an

the Netherlands and trades on the uptick in coal pricing.

German exchanges of Hamburg, Therefore, IchorCoal re-

Frankfurt and Berlin. mained focused on playing the

Focused on coal production in domestic coal sector and supply

South Africa, the company’s stated chain in South Africa where coal

ambition is to increase output from for power is high in demand.

its current 2 mtpa to 15 mtpa by – Mark Andrews
2017 through organic growth and

acquisitions. Universal Coal has been valued at $80.9 million in a takeover bid by IchorCoal

PAGE 66 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

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REGIONAL ROUNDUP

Sunshine over
Ferrum’s Moonlight

Amajor breakthrough at the about scope of work and the rest of it. We are “It [capex] depends on so much
Moonlight iron ore project in not starting from a zero base; there has been on the quantum, the product be-
South Africa has been made, with a lot of work done over the last three months. ing produced and the quality of the
ASX-listed Ferrum Crescent Ltd We will be starting sooner rather than later on product being requested as part of
courting a partner to help it com- the recommencement of the feasibility and signing some domestic off-take.
plete a BFS. focusing on a smaller starter project as op- Once we have the quantum and
posed to the larger project which has always product type, we have some good
A full legally binding farm-in been on the cards,” Revy said. inkling on costs because we have
agreement was signed off by been talking to some domestic off-
Business Venture Investments Earlier this year, Revy told Paydirt $US1.5 takers and we will be able to calcu-
Pty Ltd (BVI), a sister company billion would be roughly enough to get a 6 late an indicative capital cost a lot
of South African BEE investment mtpa pellet project into production. better,” Revy said.
house Ovation Capital.
The BFS will provide more clarity on capi- “That is why we are doing the
The agreement with BVI tal costs on Moonlight, which hosts resources project in two phases. Phase one
trumps a MoU previously in place of 52.6mt @ 31.3% iron (measured), 83mt @ is to finalise product specs and
with Principle Monarchy Invest- 27.4% (indicated) and 172.1mt @ 25.3% (in- quantum of product as well as fi-
ments Pty Ltd and ensures com- ferred). nalise domestic off-take and to do
pletion of a full BFS on Moonlight. a rough capex/opex number on
Tom Revy that scenario. Phase two will be
The BFS is to be undertaken finer detail around that from which
in two phases, with phase one to we get plus or minus 15% capex/opex num-
be completed within 12 months of bers.”
restart. Moonlight is 360km north of Johannesburg
in the Limpopo province and is close to iron
Phase one will focus on updating and com- ore-related infrastructure at Thabazimbi.
pleting full capital and operating costs to pro- Revy said discussions would continue with
duce high-grade concentrate for eventual pro- governments and groups regarding move-
duction of direct reduction and blast furnace ment of its product, with Ovation’s clout ex-
iron ore pellets. pected to be helpful during these talks.
“It is a company that is well connected and
Satisfactory completion of phase one will we will be working with them in terms of tap-
earn BVI a 14% interest in Ferrum. BVI then ping into their networks at provincial and high
has the opportunity to increase its stake to government level which is advantageous,”
43% by completing phase two of the BFS. he said. “They are connected to a multitude
of equity and debt providers which is useful,
Ferrum managing director Tom Revy said more so when we go towards final construc-
a contractor would be appointed to run the tion. And, of course, having them on
study before Christmas. board means we more than surpass the
minimum 26% BEE requirement within
“They [BVI] are legally committed, so they the project,” he said.
are in now. We have been doing work and Revy was appointed Ferrum manag-
talking to their preferred engineering group ing director in early 2014 to carry the
company through the BFS stage.
A flat resources market has not
helped his cause of attracting interest in
the project, but the fruits of his labour
will be seen once the BFS starts later
this year.
“It is a market that isn’t conducive to
seeing any deals flowing through and
still remains largely pessimistic to the
junior mining end,” Revy said.
“Although, we are starting to see
moves counter to that and I guess ours
is an example. It has been 10 months in
the making, and I think all parties will do
well out of it. Over the last 12 months, we
have probably had interest from maybe
10 different groups of which about three
were serious.”

A BFS on Ferrum Crescent’s Moonlight iron ore project in South Africa should restart by the end of the year – Mark Andrews

PAGE 68 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

AFRICA

CPC Engineering locked
in for Balama

Perth-based CPC Engineering has landed project. They were looking at the Chinese as it complex as Syrah plans to produce about six
the detailed engineering and design con- was the Chinese that did the feasibility study,” different graphite products, including jumbo
tract for the prestigious Balama graphite pro- Windsor said. flake and spherical graphite.
ject in Mozambique.
Graphite is the commodity of the moment Screening and drying procedures are ex-
Balama, owned by Syrah Resources Ltd, and since sinking its teeth into Balama, CPC pected to challenge CPC Engineering’s skills,
hosts the world’s largest reserves of flake Engineering has built a knowledge base un- however, it is confident commissioning will
graphite – 13.2mt. matched by its competitors in the industry. start as expected – at the end of 2016.

The overall ore reserve at Balama is 81.4mt Therefore, it is in good position to tender for Earthworks have already started at Balama,
@ 16.2% total graphitic content (9% cut-off other potential graphite developments in the with civil works on track to begin in January.
grade), with Syrah planning production of 2 burgeoning sector, particularly in East Africa.
mtpa of filtered graphite concentrate for ex- CPC Engineering’s contract award win with
ports of 380,000 tpa concentrate at 95% gra- “We have learnt so much in 12 months and Syrah is just one of handful of high profile pro-
phitic content. we are learning daily about the specifics of jects on its books at the moment.
graphite that others just wouldn’t,” CPC Engi-
CPC Engineering will provide detailed engi- neering project development manager Gavin The company recently completed First
neering design services for Balama, including Nowrojee, who is in charge of the Balama Quantum Minerals Ltd’s 4 mtpa nickel plant at
the process plant and associated infrastruc- graphite project, said. Enterprise in Zambia, while it is working on
ture, procurement support, raw water supply OceanaGold Corp’s Macraes gold-tungsten
and tailings storage pumping systems. “No-one has done a graphite project in DFS in New Zealand and the Tanami gold
a long time, so there is no base line to go expansion DFS for Newmont Mining Corp in
CPC Engineering project manager for Bala- from. For instance, gold plants can be turned Northern Territory.
ma, Harry Windsor, told Paydirt the company around in six months, but there is no base line
beat off a number of rivals to win the contract. here and you can’t get information from China – Mark Andrews
and Brazil; it is a closed shop.”
“Obviously in this market...it is a large
chunk of work for us and it is good to get in While the front-end plant operations are
the door, there were many competitors for this fairly standard, the back end will be more

The Australia-Africa Mining Industry Group (AAMIG) is the peak
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Our Primary Roles
• To create a forum for AAMIG members to
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of our members; and

• To assist Australian companies to engage
with Australian and African governments
and relevant institutions and organisations.

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AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 69

REGIONAL ROUNDUP LATIN AMERICA

Metminco dresses up Los Calatos

Metminco Ltd has stepped up Metminco has revised its plans for the Los Calatos copper project, offering up a higher grade,
its search for a project part- less capital-intensive proposition
ner to support development of
its Los Calatos copper project in tractive in view of the lower pre-production prices rebound.
Peru, with LinQ Group appointed capital spend, the higher head grade and While Metminco has finally got some mo-
to assist the search. competitive C1 cash operating costs,” Tainton
said. “In recent non-deal roadshows in both mentum back into Los Calatos, the company’s
LinQ will provide support in Australia and London, the general consensus Chilean assets continue to frustrate. With the
the identification and evaluation has been that the decision to re-visit Los Ca- Loica copper-moly and Vallecillo polymetallic
of the most suitable partner for latos as a high-grade, lower capital, develop- projects on care-and-maintenance, the com-
Los Calatos’ development and ment option is appropriate in the context of pany’s attention has been on the Mollacas
will also assist in evaluation of global trends in the commodity sector. copper leach project, 108km from the coastal
financing options for the project. town of La Serena and 450km north-east of
“With the release of the results for the new Santiago. However, due to a legal dispute
LinQ’s appointment comes plan, there has been considerable interest in over mining access rights, development has
a month after a mining study the project from a spectrum of parties includ- been suspended.
review, completed by Runge- ing mining companies, private equity and off-
PincockMinarco (RPM), rec- takers.” “It is anticipated that the Supreme Court of
ommended a scaled-back Chile will hand down its ruling on the case be-
approach to Los Calatos’ devel- The lowering of upfront capex requirements fore the year-end. Should the result of the rul-
opment based on a higher cut- also means a widening of the type of compa- ing be in Metminco’s favour, we will proceed
off grade for the massive copper ny willing to consider the project. with the planned feasibility study,” Tainton
porphyry deposit. said.
“Key to this renewed interest has been the
The study found the project – reduction in capital, which opens Los Calatos However, Metminco will not necessarily
in the remote Atacama Desert to Tier 2 and 3 type mining companies, as op- look to push the development of Mollacas it-
of southern Peru – could be built posed to Tier 1 type companies as was the self.
for $US655 million and would case with the August 2013 mining study.”
have a NPV of $US477 million, “A number of companies have confirmed
IRR of 16.6% and a payback pe- Once a project partner is secured, Metmin- their interest in acquiring the project,” Tainton
riod of less than five years. co will subject Los Calatos to a PFS and begin said. “It would be a case of deciding what is
exploration of two further targets in the area. in the best interest of the Company and their
RPM had originally devised shareholders.”
a mining plan for the project in “If successful, [they] would enhance the
2013 indicating a 24 mtpa cop- already positive economics of the envisaged – Dominic Piper
per concentrate operation could mining operation at Los Calatos,” Tainton
be built for $US1.3 billion. How- said.
ever, Metminco has since failed
to attract a development partner The massive global resource at Los Ca-
for the project and the company asked RPM latos – 1.4bt @ 0.46% copper – also offers
to revise the plan based around a 6.5 mtpa the company upside potential should copper
operation producing 50,000 tpa copper con-
centrate (with gold, moly and silver credits).

As a result, RPM increased head grade
from 0.47% copper to 0.75% copper, in the
process changing the mining method from
block caving to the more selective sub-level
caving method.

Metminco executive director Steve Tainton
told Paydirt the results of the study indicated
the options available to Metminco.

“The company was happy with the results,
particularly in light of reduction of the pre-pro-
duction capital spend,” Tainton said. “The new
plan provides for a milling rate of 6.5 mtpa
producing 50,000 tpa copper-in-concentrate;
[compared to] 24 mtpa producing 100,000 tpa
[in the previous plan]. Hence, the new plan
generates 50% of the annual metal produc-
tion whilst milling 27% of the annual tonnes.”

Tainton said the reduction in capex had
also eliminated a key concern of potential pro-
ject partners.

“Having previously endeavoured to secure
a strategic partner for Los Calatos in 2013, it
became clear that one of the concerns raised
by the then interested parties was the extent
of the pre-production capital spend,” he said.

Metminco is now putting the revised project
back to the market place.

“We believe that the new plan is more at-

PAGE 70 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

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AMERICA

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The two-day conference will provide prime opportunity for governments, companies, service providers,

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REGIONAL ROUNDUP

Consolidated Zinc could be an ideal feed for the Las
hits right note Lagunas plant,” PanTerra said in a
statement in September.
Drilling continues to deliver
encouraging results for Consoli- The Las Lagunas operation is
dated Zinc Ltd ahead of an im- based on retreatment of refractory
pending resource estimate for the tailings with the company hopeful
Plomosas zinc-lead-silver project it can achieve 85% recoveries.
in northern Mexico.
Marengo expands
First drilling of the Tres Amigos into Mexico
footwall below the historic Main
Monto Horizon has intersected Former ASX-listed copper de-
wide zones of high-grade sulphide
mineralisation, including bonanza veloper Marengo Mining Ltd has
grades of up to 60% combined
zinc-lead. expanded its geographical spread

Some of the best hits included by acquiring the La Cobota copper
4.7m @ 42.28% zinc, 4.61% lead
and 32.78 g/t silver from 39m in project in Mexico.
hole LV5DD001 and 4.45m @
19.34% zinc, 1.67% lead and Marengo – which is listed on the
15.25 g/t silver from 21.8m and
4.15m @ 21.71% zinc, 0.05% TSX-V having withdrawn from the
lead and 7.72 g/t silver from 36.5m in hole
LV5DD003. ASX in June – has spent its en-

Consolidated Zinc said the drilling results tire 12-year history in Papua New
had confirmed its expectations for high-grade
zinc in the Tres Amigos mineralised zone as Consolidated Zinc is heading towards a resource estimate for the Guinea, primarily developing its
well as the potential for additional mineralised
zones in the limestone-rich units above and Plomosas zinc-lead-silver project, northern Mexico Yandera copper-gold project.
below the Main Monto Horizon.
While the company continues to
Drilling at Tres Amigos was continuing at
the time of print and is expected to wrap up Managing director Trevor Woolfe said the tinker with Yandera’s economics, the acquisi-
later this month.
results were particularly encouraging be- tion of La Cobota represents a first serious
The company is looking to delineate a re-
source estimate for the footwall zone as early cause the prospect had previously only re- stab at building a multi-jurisdiction portfolio.
as next month while concurrently running a
scoping study to be finalised during the next turned lower grade results. “La Cobota represents an exciting oppor-
quarter.
“A new zone up to 21.3 g/t gold on the Isa- tunity for Marengo as the company seeks to
Consolidated Zinc managing director Will
Dix said the initial drilling results from Tres bella vein elevates this area to a higher prior- diversify its project portfolio,” chief executive
Amigos had provided his company and its
shareholders with plenty of confidence that ity for a detailed review and possible drill-hole Pieter Britz said. “A number of highly experi-
massive sulphides existed in the system.
targeting,” Woolfe said. enced managers have recently been appoint-
“Our job is to now quickly understand the
geometry and continuity of this footwall zone ed to execute the company’s global growth
while ensuring we continue to push ahead
with our exploration efforts within and below PanTerra gets Las strategy.”
Level 7,” Dix said. In La Cobota, Marengo has acquired

“The next few months will be an exciting Lagunas humming ground in the Laramide metallogenic belt host
period of time for shareholders as we further to several world-class porphyry deposits and
evaluate this mineralisation and the short-
term opportunities it presents.” PanTerra Gold Ltd is closing in on produc- iron oxide mineralisation.

Ore Verde increases tion goals for its Las Lagunas gold-silver tail- The project itself has reported copper-silver
Topacio targets
ings retreatment project in the Dominican mineralisation at surface and also contains
Oro Verde Ltd’s push to build its Topacio
project into a sizeable epithermal deposit has Republic. the historical La Cobota underground mine
gained further momentum after the company
reported high-grade surface samples from The company reported in October that where up to 460m of development work has
the project.
quarterly gold production in the September been completed to a depth of 52m.
Oro Verde acquired Topacio, in the south
of Nicaragua, earlier this year and is hoping period had increased 21%, thanks largely to Marengo said historical assays, recent rock
to expand the 340,000oz gold project into a
multi-million ounce epithermal deposit. greater throughput delivery to, and improved chip sampling and extensive smelter slag at

The latest results came from the Isabella recoveries from, the 200,000 tpa Albion/CIL the site indicated both high-grade oxidised
prospect and included samples of 21.3 g/t
gold and 18 g/t silver from a brecciated quartz circuit. and primary copper-silver mineralisation was
vein.
PanTerra is retreating 3mt @ 3.6 g/t gold selectively exploited from the mine.

and 35 g/t silver of tailings from the Pueblo In the modern era, geological mapping, ge-

Viejo mine, 105km north of the Dominican Re- ochemistry (stream, soil and rock sampling)

public capital of Santo Domingo. and ground geophysics surveys have been

Overall recoveries for the September quar- completed on the ground but Marengo will be

ter improved during the quarter increasing the first company to drill the project.

from 40.7% in the month of July to 48.4% in A maiden drilling programme will test the

September. The company had forecast 49.8% known copper sulphide mineralisation at the

recoveries for the period. historical mine before stepping out along

Las Lagunas’ current mine life extends to strike and down-dip. The company will also

2019 but the company is keen to find new undertake structural and alteration mapping

sources for the unique Albion/CIL circuit. In across the broader concession.

September, it announced it had applied to Ge- Marengo paid $US242,600 for surface

oMinera SA, the national mining company of property rights and under the option agree-

Cuba for 2,000ha of exploration concessions ment for the mineral concession will spend

on the Caribbean island with a view to ship- $US500,000 on exploration until July 2016

ping gold concentrates to Las Laganus. and then have the exclusive right to acquire

The company is also in discussions with 100% of the project for $US275,000

GeoMinera over the possibility of purchasing Exploration of La Cobota will be led by La-

high-grade arsenopyrite concentrate from its chlan Reynolds, Marengo’s newly appointed

Delita mine in western Cuba, if it is reopened vice president business development. Reyn-

as planned in 2017-18. olds was previously managing director of Na-

“GeoMinera has advised the Delita con- mibian Copper NL.

centrate is expected to grade 45 g/t gold,

22% arsenic and 25% sulphide sulphur, which

PAGE 72 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

LATIN AMERICA

Hot Chili and CMP
firm relationship

Productora project part- on finishing a PFS at Produc- strengthen the resource used in the PFS
ners, Hot Chili Ltd and tora. and also highlights the exploration potential
at Productora, which hosts an entire mineral
Companía Minera del Pací- “While Hot Chili’s focus is resource of 1mt copper, 675,000oz gold and
29,000t molybdenum.
fico S.A. (CMP), have sig- the development of Produc-
Probable ore reserves are 90.5mt @ 0.48%
nalled intent to extend their tora, Frontera has the potential copper, 0.11 g/t gold, 172 ppm molybdenum
containing 433,000t copper, 308,000oz gold
relationship in Chile’s cop- to deliver further critical mass and 15,500t molybdenum.

per-bearing III Region. and diversity to our production It is likely Hot Chili will have a different re-
source to work with in the DFS as exploration
A non-binding letter of hub while generating cost re- continues to identify more targets to be fol-
lowed up.
intent was executed last ductions associated with infra-
Recently, the company ran a cutting-edge
month for a JV to be formed structure sharing,” Black said. geophysical survey which highlighted another
four large copper porphyry targets.
at the Frontera project, “We look forward to work-
It is believed these targets are the likely
50km south of Productora. ing with CMP over the coming sources of a copper porphyry stretching more
than 6.5km at Productora.
Terms of the JV were be- months toward finalising the
Hot Chili managing director Christian East-
ing negotiated at the time of terms of a formal JV agree- erday said the results had the potential to sig-
print, with both parties keen Christian Easterday ment and adding to our grow- nificantly increase the copper inventory and
therefore production rates and mine life at
to formalise an agreement ing relationship.” Productora.

in the near-term and focus on exploration and The Hot Chili/CMP engagement at Frontera “Targets of these sizes have strong poten-
tial to transform Productora into a Tier 1 pro-
resource growth activities in 2016. is complimentary to the partnership in place ject of global significance,” Easterday said in
a statement.
Hot Chili has already established a re- at Productora, where a PFS is nearing com-
“The impact of this breakthrough could
source at Frontera consisting of 187,000t cop- pletion. have on the project’s economics and mine life
is substantial.”
per and 356,000oz gold. CMP’s 17.5% stake in Productora has been
Planning is now under way to drill the new
Hot Chili chairman Murray Black said com- attained by providing Hot Chili with access to targets, with any potential resources to be
added into DFS calculations next year.
bining the skillsets and assets of both compa- infrastructure and some mining rights relevant

nies would help maximise the value inherent to the project.

at Frontera. There is an option for CMP to take over half

While Frontera is the next part of the Hot of Productora, with Hot Chili due a tranche

Chili/CMP partnership, there is room for more one payment of $US26 million should CMP

links to be added to the chain. Hot Chili has choose to exercise its option.

the early stage Banderas copper project A drill programme of 38,000m RC and

which could also come into consideration to 3,350m diamond, run in parallel with PFS

be added to the Productora production hub. studies, proved to be successful for Hot Chili

However, more work needs to be done to with the discovery of the Alice copper por-

define a resource at Banderas and remains phyry in 2014.

a project in the wings, while Hot Chili focuses Alice, 400m west of the central pit, will

Azure continues upward trajectory

The market continues to be enamoured by with the announcement Azure is finding great success by significant gold potential.
Azure Minerals Ltd’s new Mesa de Plata that gold mineralisation targeting outcropping vuggy silica in “Expanding our ex-
discovery with silver and now gold surface had also been encoun- its sampling campaign at Mesa de Plata.
samples sending shares in the junior up fur- tered with assays of This picture is of vuggy silica on the ploration out from Mesa
ther in October. samples from the nearby de Plata has identified
Lome Bonita zone return- company’s Promontorio project extensive high grades of
Azure announced the discovery of the ing grades of up to 2.44 silver in soil and outcrop,
Mesa de Plata prospect – part of the recently g/t gold and 104 g/t silver. with coincident significant
acquired Alacran project in northern Mexico gold values. These results
– in September following hits 9m @ 1,235 “The high precious have increased the over-
g/t silver from 3m within 39m @ 347 g/t sil- metal values in the soil all area of surface min-
ver from surface in the company’s first drilling samples are a major de- eralisation, highlighting
campaign there. velopment,” Azure man- the potential for a large,
aging director Tony Rovi- strongly mineralised, epi-
Those results have been followed by a ra said. “The silver grades thermal system.”
series of surface sample assays which have are generally more than
both expanded the extent of the mineralised double those that were Rovira said close-
area and shown that the prospect contains recorded from the soil spaced RC drilling at
gold as well as silver mineralisation. sampling at the nearby Mesa de Plata was set to
Mesa de Plata discovery, start in October with addi-
On October 16, Azure announced outcrop and the high gold assays tional surface exploration
sampling had returned assays of 369 g/t, 181 indicate, for the first time, to delineate future drill tar-
g/t, 148 g/t and 136 g/t silver from an area that this system may have gets at Loma Bonita and
350m north-east of the original discovery. further north ongoing.”

Further good news came on October 21

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 73

REGIONAL ROUNDUP

Mariola suits
maverick Balamara

Balamara Resources Ltd managing di- TAURON Wytwarzanie S.A’s Siersza Power Station is 2km from Balamara’s burgeoning Mariola project
rector Mike Ralston says differentiation
will be the key to his company’s success in a pre-production and production phase where Ralston said the company hoped to publish a
a crowded coal market. similar study for Mariola 2 by the end of the
we were going to be raising a lot of capital… year.
Being different is something not foreign
to Balamara, which has played by its own we could sense that there was going to be Permitting was also under way for a final
rules in the global coal race since acquir- four-hole programme at Mariola 1, designed
ing its first Polish asset in 2013. some huge dilution if we carried on watch- to upgrade resources into reserves as well as
provide critical geotechnical, hydrology and
While the rest of the market appeared ing our share price erode. The only winners coal quality information required to develop
transfixed by the traditional coal centres of a DFS.
Australia, Indonesia, South Africa, Colom- were going to be the people that came in at
bia and South Africa, Balamara cast its The same process would ensue at Mariola
eye to Europe, which demands upwards the last minute and put in that money. The ma- 2 within the next six months, according to
of 180 mtpa of coal. Ralston.
jor shareholders, together with the board and
Guided by its executive chairman and He said he saw a bright future for Balamara
Polish national, Derek Lenatowicz, Bala- management, decided it was best to de-list. I in Poland.
mara acquired the Nowa Ruda coking coal
project on July 24, 2013, and followed it believe it was the best thing we ever did.” “The key for us is differentiation,” Ralston
with the purchase of the Sarwin North said.
thermal coal project one year later. With less weighty shoulders and newfound
“Lots of people are spinning different sto-
The company rounded out is Polish tri- optimism, Balamara acquired an 11sq km ries all over the world today, but no one can
fecta in October last year when it secured dispute that there is a macro opportunity here.
100% of the advanced Mariola thermal coal concession just 4km from Mariola on July 27. We can be the lowest cost coal producer with-
project, which will likely be the company’s first in Poland by adopting modern technology and
mine. Mariola 2, as it would become known, modern mining practices. The incumbent coal
producers in Poland are government-owned
Ralston said Balamara “cherry-picked” Ma- boasted multiple coal seams of medium qual- organisations that are very inefficient and
riola because of its location in the Upper Sile- slow to change and react to the market condi-
sian basin, which he described as the “heart- ity coal; 62 holes for 23,825m providing Ba- tions of today. We sense that we can really
land of Poland’s thermal power stations”, and undercut them in terms of cost, particularly in
the composition of its 77mt resource. lamara with significant insight into the pros- labour, equipment and technology. We can re-
ally get in there and prove that low cost coal
“Mariola’s first coal seams occur at 40m pect’s potential. production can be achieved in Poland. And
underground; it’s going to be the shallowest the fact is we can be producing the cheapest
underground mine in Poland and as a result “The opportunity for us at Mariola 2 was coal in Poland and putting it into that Europe-
of that a low capital and operating cost mine,” an market at a lower cost than anybody else
Ralston said. to expand the overall Mariola around the world because they need to ship
coal to Europe.”
“Mariola’s coal has also got very low chlo- project, which incorporates
rine levels, which is hugely impacting in terms – Rhys Dickinson
of the European emissions standard. Also, it the two concessions, into a
is only 2km away from an existing power sta-
tion.” larger mining operation that

As it was considering expanding its Mariola can essentially spin out 4 mtpa
foothold in late April, Balamara
made one of its toughest calls instead of 2.5 mtpa,” Ralston
to date; de-listing from the
ASX. said.

Ralston said Balamara sim- “If you are making $20-30/t
ply lost faith in the market.
obviously doubling your pro-
“It’s very difficult when you
are sitting there with a macro- duction capacity is going to be
economic market picture that
keeps on telling you that the quite critical. The opportunity
world is about to fall over, all
resources are wrong and eve- to utilise synergies by putting
rything is going pear-shaped,
while at the microeconomic Mike Ralston them together was very attrac-
level you’re trying to push your tive too.”
story and tell the market you’ve got something
very unique and special,” he said. Last month Balamara an-

“Despite all the good progress we made nounced a maiden resource estimate of
over 18 months we were getting battered on
the ASX. Our share price went from 14c to 2c 66.4mt for Mariola 2, taking the greater Ma-
and we realised as we were moving towards
riola project’s indicated and inferred resource

to 187mt.

At the time of print Balamara was about

to release a revised PFS for Mariola 1 and

PAGE 74 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

EUROPE

Link could bring more zinc
to Zorzone

Italy’s temperatures might be on the
decline, but Energia Minerals Ltd is
continuing to set the market on fire with

high grade hits at its flagship Gorno zinc

project.

The latest round of underground re-

source diamond drilling at the prized

Zorzone deposit last month produced a

standout intersect of 6.1m @ 9.1% zinc,

2.3% lead and 24 g/t silver from 6.6m,

including 3m @ 15.7% zinc, 3.8% lead

and 39 g/t silver.

The success of Energia’s infill pro-

gramme was foreshadowed by its first

hole in July, which intersected 8.25m of

zinc sulphide from 9.2-17.45m, includ-

ing a total of 2.35m of semi-massive

to massive zinc sulphides in several

zones.

Further confirmation of the deposit’s

potential was received by the company

with 9m @ 13.5% zinc, 4.2% lead and

75 g/t silver and 4m @ 32.3% zinc, 7.9%

lead and 74 g/t silver hits in September.

Although it appears high grade hits

have become the norm at Gorno, man- High-grade stratabound zinc sulphides from hole GDD011

aging director Kim Robinson said he where GDD024 is to define the extent of that the company’s exploration target prediction.
was taken aback by what was being offered

up to date. mineralisation,” he said. “We haven’t really defined the total strike

“I’m surprised as a lot of the historical data, “It’s a really exciting hit that one. If every- length here and we are not saying all of that

because it was percussion drilling, showed thing goes according to plan it may well join 500m of strike length is going to persist at

the broader zones of mineralisation had a up with the main Zorzone zone that we have depth, as we just don’t know what happens

lower grade,” Robinson said. been focusing on.” down there,” Robinson said.
“Most of the mineralisation we tend to be Another recently drilled hole, GDD022, in- “By the time you get down to the 600 level

hitting is quite high grade, which is obviously tersected a strongly mineralised zone approx- we are seeing a single zone, because there’s
a good thing. It’s been really good getting to imately 50m north-west of GDD018 which quite a bit of drilling along the 600 level that

actually see some of the rocks, because there produced a hit of 2.3m @ 8.7% zinc. hasn’t picked up a 500m strike length down
was no data that was retained from the previ- Robinson said GD022 and GD024 had po- there. What it really means for the project if

ous operations. The grades have been really tentially increased Zorzone’s strike length to we can get more tonnes per vertical metre up

great and the continuity of the mineralised more than 500m, which was 300m more than in the 940-990 level then that gives us a really

zone has surprised me a good start on low cost pro-

little bit.” duction. We should get to

Last month’s drilling our upper limit of our explo-

delivered another pleas- ration target fairly comfort-

ant surprise to Robinson; ably if that persists to any
diamond hole GDD024, depth at all.”

well east of Gorno’s main Robinson said although

Zorzone mineralisation, drilling was ongoing, the

encountered approximately programme was on track to

13m of very high grade deliver Gorno’s maiden re-

material within the same source early next year.

Metallifero stratigraphic “That, in turn, will pro-

unit as the mineralisation at vide the foundation for us to

Zorzone. move ahead with the next

Robinson said follow-up stage of our development

work at GDD024 was a pri- plans, a scoping study lead-

ority, as it could establish ing to production towards

a link to Zorzone and blow to end of 2017,” Robinson

the project wide open. said.

“We’ve got a series of – Rhys Dickinson
holes that are going to be

drilled up into that area Gorno’s infill drilling campaign is now well advanced between Zorzone’s 940 and 990 levels

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 75

REGIONAL ROUNDUP ASIA

Red Mountain re-jigs
funding strategy

Red Mountain Mining Ltd has be split according to both parties’
struck a new financing agree-
ment with its strategic funding part- respective interests.
ner to complete the DFS and final
permitting inputs for its Batangas Bluebird will have two options
gold project in the Philippines.
to increase its stake in RMMS to
London-based financial firm
Bluebird Merchant Ventures Ltd 50.1%, including a sole-funding
has agreed to increase its Stage
1 funding contribution from $US1 option to spend another $US1.7
million to $US1.7 million to earn
a 25% interest in Red Mountain’s million which can be exercised
wholly-owned operating subsidi-
ary, Red Mountain Mining Singa- prior to the completion of the
pore Ltd (RMMS).
DFS and permitting inputs for
Part of the funding will also
be directed towards an upcom- Batangas, about 120km south of
ing drilling programme to test the
South West Breccia (SWB) Ex- Manila.
tended and Tamarind targets.
If that option is not exercised
The new deal replaces the original strate-
gic financing agreement signed between Red or expires before September 30,
Mountain and Bluebird in December 2014.
The plan was to have the DFS and permitting 2016, Bluebird must pay $US3.8
finalised during the last quarter.
million before December 31,
“We needed to increase the Stage 1 fund-
ing so we could complete the feasibility study 2016, as per the conditions prec-
and permitting inputs due to increased costs
around that so we went to Bluebird and re- Red Mountain is looking to complete the DFS and final permitting edent for the Stage 2 funding ar-
negotiated their commitment,” Red Mountain inputs for Batangas before the end of the year rangements.
managing director Jon Dudgale told Paydirt. “It’s a bit equivocal, but either

“We’re looking to finish all the key bits and before February 29 will increase Bluebird’s way Bluebird are paying for what they get,”
pieces before the end of this year and then
we would likely report it all in the first quarter stake to 25%. Dugdale said.
next year.”
Red Mountain was making preparations “Basically they pay less for a pre-permitting
Under the revised agreement, Bluebird
must pay $US1 million (including the $US5 for the drilling campaign at the time of print, interest or they pay more for a post-permitting
million previously paid) on or before Novem-
ber 27 to earn an initial 15% interest in RMMS. but Dugdale said his company would hold off interest. We would like them to be paying all
An additional $US700,000 to be paid on or
punching any holes into the ground until after the bills and carrying it through to permitting

the first tranche of money reached its bank so that’s why we’ve given them two different

account. options and made one of them less expen-

The gold hopeful is also set to be returned sive.

$US850,000 of loan repayments from an “They are taking the risk permitting could

agreement it had in place to cover any short- be delayed, but they do get 50.1% for a lower

fall in funding by Bluebird between June and price if they go for the sole-funding option.”

November. Dugdale said he expected the results from

“We’ve basically been providing inter-com- the upcoming drilling programme to be fed

pany loans totalling $US850,000 to our sub- into the DFS, which would also incorporate

sidiary to keep the project going while Blue- an upgrade to the 6.19mt @ 2.2 g/t gold for

bird were planning their listing on the London 444,000oz resource, including 2.97mt @ 2.4

Stock Exchange,” Dugdale said. g/t gold for 227,000oz in the indicated cat-

Red Mountain and Bluebird will form a 75:25 egory.

incorporated JV on completion of the Stage 1 – Michael Washbourne
funding and project expenditure thereafter will

Philippines nickel miner pursues $22m IPO

Philippines nickel miner TVI Resource De- nickel miners seeking to raise funds for ex- representing 10% of its projected outstanding
velopment Inc is planning an IPO to raise pansion via share sales. But the timing of a common share capital after the IPO, at an of-
up to 1 billion pesos ($US22 million) to fund a planned follow-on offer by the second miner, fer price of up to 3.71 pesos per share, which
domestic gold and silver mining project. Global Ferronickel Holdings Inc, remains un- could raise up to $US22 million.
certain amid a drop of nearly 60% in its stock
Braving a slump in nickel prices chiefly due price this year. A secondary offering of up to 136.01 million
to weak demand from top buyer China, the shares could raise $11 million.
company, in which Canadian miner TVI Pa- Shares of other Philippines nickel miners
cific Inc has an equity interest of about 31%, is have slumped this year following stellar per- Proceeds from the primary offer will finance
seeking a December 18 listing on the Philip- formances in 2014, with top producer Nickel the company’s Balabag gold and silver pro-
pines Stock Exchange. Asia Corp down more than 50%. ject in the southern province of Zamboanga
del Sur.
The Philippines has 27 nickel mines and Before embarking on nickel mining last
was last year’s biggest ore supplier to Chi- year, the 21-year-old company previously Subject to regulatory approvals, the final of-
nese nickel pig iron producers after previous produced copper, gold, silver and zinc at the fer price is to be set on November 26.
top supplier Indonesia banned exports of now-closed Canatuan mine in southern Phil-
some unprocessed minerals. ippines. – Erik dela Cruz, Reuters

TVI Resource is one of two Philippines It plans to sell up to 272.02 million shares,

PAGE 76 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

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SIGNED, SEALED AND DELIVERED

and nickel-based superalloys which The acquisition builds on Clough’s North
improve fatigue life, enable lightning American presence. The company estab-
strike protection and improve wear lished an engineering team in Houston,
and reusability on conventional and Texas, in 2014 and recently acquired LNG
composite aircraft. engineering and consulting specialists CH-IV,
based in Baltimore, Maryland.
Contractor found
for mineral sands Evolution awards dual
plants drilling contracts

Astron Corporation Ltd subsidiary Mitchell Services Ltd has started work un-
der a formal notice of award of a two-year
Donald Mineral Sands Pty Ltd (DMS) contract with gold producer Evolution Mining
Ltd.
has entered into an EPC contract with
The scope of work includes both under-
China Machinery Engineering Corpo- ground and surface drilling services at the
Pajingo and Cracow mine sites in Queens-
Kefi has nominated Sedgman as the preferred ration (CMEC) at the Astron Donald land. The contract is valued at about $27 mil-
contractor for the proposed Tulu Kapi plant titanium and zirconium project in the lion over two years.
Murray Basin.
Drill rigs recently acquired from Nitro Drill-
Sedgman wins Kefi’s The $US135 million contract sets out the ing will be used for surface work. Under-
process for supply and installation of equip- ground work will be conducted using newly
sourced specialist underground drill rigs.
Ethiopian job ment for the mining unit plant and wet concen-
tration plant as well as financial assistance for Newmont contracts
indigenous supplier
Kefi Minerals plc has appointed Sedgman the project.
Ltd as the preferred contractor for plant con- CMEC will be responsible for equipment Newmont Asia Pacific has begun work with
struction and start-up at its Tulu Kapi gold pro- Aboriginal-owned stationery and office prod-
ject in Ethiopia. procurement and funding the first phase of ucts supplier Kulbardi.
the project. DMS is required to contribute 15%
The scope of work under the proposed (about $US18 million) towards the costs of the The three-year deal is valued at $1.1 mil-
contractual arrangements will cover detailed project. lion. Under the agreement, Kulbardi will pro-
equipment specification and procurement, in- vide office supplies to all of Newmont Asia
cluding FEED to begin this quarter, construc- The contract includes all design, procure- Pacific’s Australian Operations and corporate
tion under a fixed-price lump sum contract ment, civil engineering, construction, installa- offices, including Boddington, Tanami, Subi-
and start-up management. tion, training, commissioning and other tech- aco and Welshpool.
nical services for the project.
Kulbardi is a JV between the Kooya Group
The estimated cost for the 1.5-1.7 mtpa and Quick Corporate Australia.

plant is $US63 million. Clough acquires Newmont has a long-standing partnership
During 2016, Kefi will initiate a drill-out of with the Kooya Group and its owner, Kim Col-
lard, holds a 51% interest in Kulbardi.
potential satellite deposits to identify any op-
DRA chosen for
Enercore for $C10 millionportunities to expand production. Platreef feasibility

Kefi has already revised its plans to lift Clough Ltd has acquired privately owned International engineering firm DRA Global
will complete a feasibility study on the Pla-
production from the 80,000 ozpa to 105,000 Canadian-based engineering services com- treef project for Ivanplats, the South African
subsidiary of TSX-listed Ivanhoe Mines Ltd.
ozpa, based on Sedgman’s proposal. pany Enercore Projects Ltd for $C10 million.
Award of the feasibility study follows the
The new group will be co-branded Clough successful completion of a PFS, also man-
aged by DRA, last January. DRA’s role will
Alcoa lands $1 billion Enercore and established as Clough’s Cana- be to manage and coordinate the feasibility
dian EPC project delivery arm. study as well as provide a range of engineer-
ing services to the project.
Airbus contract Established in 2006, Enercore specialises
in the provision of EPCM services to the Ca- The Platreef project includes the under-
ground Flatreef deposit of PGMs, gold, nickel
Alcoa Inc has signed a $1 billion contract nadian oil and gas sector and currently em- and copper and is located in the Northern
Limb of the Bushveld Complex, about 28km
with Airbus SAS for high-tech, multi-material ploys about 70 engineering and technical northeast of Johannesburg.

aerospace fastening systems. personnel. The scope to be covered by DRA includes
the highly mechanised underground mine
The deal is Alcoa’s largest ever fastener design, processing facilities and associated
project infrastructure.
contract with the aircraft manufacturer. Al-
A full suite of infrastructure will be covered
coa’s fasteners fly on every Airbus platform. in the feasibility study, including bulk power
supply, bulk water supply, internal and exter-
Alcoa’s fasteners will be used to assemble nal roads and on-site buildings and systems.

some of Airbus’s latest high-growth airplanes,

including the A350 XWB, Airbus’ newest com-

mercial airplane, and the A320neo. In addi-

tion, Airbus will use Alcoa’s fastening systems

for longer running platforms including the

A330.

Alcoa’s fasteners will be used to assemble

some of Airbus’s latest high-growth airplanes,

including the A350 XWB and the A320neo.

Airbus will also use Alcoa’s fastening systems

for longer-running platforms, including the

A330.

As part of the agreement, Alcoa will supply

advanced fastening systems such as those

which enhance the assembly of aircraft pan-

els and engine pylons on newer airplanes with

sophisticated design features. Enercore president Greg Roemer and Clough

Alcoa’s fasteners are made using a variety managing director Kevin Gallagher shake hands

of materials, including stainless steel, titanium after signing the merger deal

PAGE 78 NOVEMBER 2015 AUSTRALIA’S PAYDIRT

Ausdrill has deployed its innovative salt lake-walking machines at places such as Lake Carey and Lake Lefroy

Ausdrill unveils new China and a key global supplier of hafnium, additional conveying capacity. Work started in
lake exploration vehicles used in superalloys. late September and up to 270 people are ex-
pected to work on the contract during its peak.
Innovative technology developed by Aus- Hafnium is expected to generate at least
drill Ltd is opening up previously inaccessible $100 million in annual revenue for Alkane. Including Civmec’s share of this project,
salt lakes for exploration drilling. the unincorporated JV’s order book stands at
DZP has an estimated mine life of more circa $260 million.
Custom-built drill rigs, nicknamed lake- than 70 years.
walking machines, allow drilling for potential DDH1 drills into Red
mineral deposits to be carried out in lakes and Arrium sticks with Cap
other locations with deep mud covering. K&S for transport
DDH1 Drilling has been contracted by nick-
The lake-walking machines are designed Arrium Mining Ltd has extended its inter- el hopeful Boadicea Resources Ltd to com-
and manufactured by Ausdrill subsidiary Drill state transport services contract with K&S plete drilling of the Red Cap strong off-hole
Rigs Australia at a facility in Canning Vale. Corporation Ltd for another four years. conductor at Symons Hill in the Fraser Range.

Ausdrill has deployed the machines on The contract runs until June 2019 and is for The drill rig arrived on site last month and
salt lakes in the West Australian Goldfields the cartage of finished goods from Arrium’s is currently testing an EM conductor consid-
for major clients such as Gold Fields Ltd and South Australian iron ore operations to other ered to be shallowly dipping, relatively large
AngloGold Ashanti Ltd. To date, exploration Australian states. and deep.
has taken place at both Lake Carey and Lake
Lefroy. The scope of work generates estimated an- Based on geophysical modelling of the con-
nual revenue of $33 million. ductance target, a drill hole was designed to
Designed to “walk” on water, the lake-walk- intersect the modelled plate conductor locat-
ing machines have 2.2m wide tracks which Following extensive negotiations, K&S has ed 450-500m below surface.
stop the rigs sinking into the mud. Each vehi- also successfully retained several existing
cle weighs up to 25t. parcels of work for Arrium in the Melbourne DDH1 is drilling into an off-hole conductor for
metropolitan region as well as several Boadicea Resources in the Fraser Range
Alkane appoints new parcels of work, with combined
Outotec for DZP estimated annual revenue of $9 million.

Alkane Resources Ltd has appointed Ou- Those parcels of work carry a mini-
totec to oversee early contractor involvement mum three-year term.
for the development of its Dubbo zirconia and
rare earths roject (DZP) in New South Wales. Jimblebar contract
in Civmec-Sedgman
Outotec, a global minerals and metals tech- hands
nology supplier, will also attempt to find ad-
ditional value in the project design. A JV between Civmec Ltd and Sedg-
man Ltd has been awarded a contract
The $1.2 billion project received final de- for civil, structural, mechanical, piping,
velopment approval from the NSW Planning electrical and commissioning works at
Assessment Commission in May. Financing by BHP Billiton Iron Ore’s Jimblebar
discussions are in progress. mine in the Pilbara.

First production is slated for 2018. The scope of work includes the in-
Alkane is looking to become the world’s stallation of a new primary crusher and
largest producer of heavy rare earths outside

AUSTRALIA’S PAYDIRT NOVEMBER 2015 PAGE 79

COMINGS AND GOINGS

of Independence Group NL for board. McMaster will be replaced plc and previously held the posi-
the past two years, roles he as- by Mark Reilly, who has more tion or equivalent position of chief
sumed after seven years as com- than 15 years’ experience as a financial officer at Century Drilling
pany secretary at Atlas. Walsh public company director and ad- and International Contract Manu-
replaces Yasmin Broughton, who viser to the mining, banking and facturing Ltd. He is also currently
has resigned. financing industries. a director of Copper Strike Ltd
and Jacana Resources Ltd and is
Barrie Parker has resigned as Bligh Resources Ltd has ap- company secretary of VU Group
a non-executive director of pointed Bill Yang as executive Ltd.
Saracen Mineral Holdings Ltd. director of the company. Yang
Parker has been a non-executive has been a non-executive direc- Richard Newstead has a re-
director of the company since De- tor of the company since Septem- signed as a director of Mirab-
cember 2007. ber and has more than 10 years’ ela Nickel ltd.
experience in the business and
Phil Hoskins Spitfire Resources Ltd has finance sector. Ian McMaster has resigned as
appointed Maximillian Ver- chairman of Intreprid Mines Ltd.
IMX Resources Ltd has appoint- morken as head of corporate de- Chris Darby has resigned as McMaster will be replaced by
ed Phil Hoskins as managing velopment. Vermorken was most managing director and chief Mike Oppenheimer. Non-exec-
director. Hoskins has been IMX’s recently a strategic adviser with executive of Valence Industries utive director Alan Roberts has
chief executive since 2014 and the world’s biggest construction Ltd. Darby has stepped down to also retired from the board. The
prior to that spent almost three materials group, LafargeHolcim, accept an executive strategy and changes have been effected fol-
years as the company’s chief fi- and prior to that he worked with customer-focused profile within lowing a board renewal process
nancial officer. Luxemborg-based private equity the company. Valence’s chief op- initiated by the company earlier
group Genii. erating officer Robert Mencel will this year.
Horseshoe Metals Ltd has take over the managing director’s
appointed Brian Rear to its Tiger Resources Ltd has ap- role on December 1. Artemis Resources Ltd has
board as a non-executive direc- pointed Mark Connelly as an appointed Edward Mead as
tor. Rear’s experience has ranged independent non-executive of the Chris Darby managing director of the compa-
from plant operator to chairman company. Connelly is currently ny. Mead has been a consultant
of the board with companies in- the executive director of B2 Gold Huang Zhen has resigned from to the company for more than a
cluding Rio Tinto Ltd, Anglovaal Corp and was principally respon- Enterprise Uranium Ltd’s year and was appointed as a di-
Ltd and CopperCo Ltd, Millen- sible for the company’s merger board of directors. Huang has rector on December 31, 2014.
nium Minerals Ltd. He was also with Papillion Resources in Octo- stepped down to concentrate on
the founding director and chief ber 2014. He also facilitated Ada- other professional ventures. Alara Resources Ltd has ap-
executive of Straits Resources mus Resources and Endeavour pointed Atmavireshwar
Ltd. Neil Marston has stepped Mining Ltd’s merger in 2011. Range Resources Ltd has ap-
down as managing director. pointed Yu Wang, the nomi- Sthapak to its board of directors.
Mark Connelly nee of Beijing Sibo Investment
MMG Ltd chief executive An- Management LP, as a non-ex- Sthapak joined Alara in 2011
drew Michelmore has been José Martins has resigned as ecutive director of the company.
appointed chair of the Interna- Ausdrill Ltd’s chief financial The appointment was made as an exploration manager and
tional Council on Mining and officer. He will be replaced by pursuant to Sibo’s contractual
Metals (ICMM). Michelmore was Theresa Mlikota, who has previ- right to appoint up the three non- study manager based in Muscat.
elected to the position at ICMM’s ously held leadership roles with executive directors to the board
bi-annual members meeting in Woodside Petroleum Ltd, Zinifex following its $US30 million invest- Prior to Alara he worked at ACC
London last month. and Alinta Energy and was more ment in Range earlier this year.
recently chief financial officer of Wang is currently a senior invest- Ltd and Rio Tinto Ltd, where he
Frank Terranova and Phillip Fulton Hogan, Thiess, Macma- ment manager at Shanghai Anjin
Amery have resigned from hon and Barminco. Investment Co Ltd and previously was awarded a Rio Tinto Discov-
the board of Chesser Resources worked as an investment man-
Ltd. Upon their departure, Ga- David Lamont has resigned as ager at Weihai International Eco- ery Award in 2009.
briel Radzyminski was appointed chief financial officer and ex- nomic and Technical Cooperative
as the company’s non-executive ecutive director of MMG Ltd. La- Co Ltd. Peter Sullivan
chairman. mont is leaving to take up a chief
financial officer role with an ASX- Red River Resources Ltd has Panoramic Resources Ltd has
Mining Projects Group Ltd has listed company. appointed Mark Hanlon as appointed Peter Sullivan as
appointed internationally ac- a non-executive director of the a non-executive director of the
claimed komatiite nickel sulphide Brian McMaster has resigned company. Hanlon was most re- company. Sullivan is currently the
specialist Robin Hill as a consult- from Paradigm Metals Ltd’s cently the finance director of ENK non-executive chairman of Zeta
ant to the company. Hill headed Resources Ltd, non-executive
up the CSIRO’s Magmatic Ore director of GME Resources Ltd
Deposit Group for more than 30 and non-executive chairman of
years, establishing the models Pan Pacific Petroleum NL. He
and methodologies that led to was previously the managing di-
the discovery of numerous West rector of Resolute Mining Ltd for
Australian nickel sulphide depos- 14 years.
its over the past 20 years.

Tony Walsh has re-joined Atlas
Iron Ltd as company secre-
tary and head of corporate. Walsh
has been the company secretary
and corporate general manager

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LEFTFIELD

Perth Mint wins top export prize

The Perth Mint won the top prize at diversifying our service offerings,” El-
last month’s West Australian Indus- liott said.

try and Export Awards, securing the “I am very proud of the team we have

Premier’s Award for Excellence as well at CSA Global and thank everyone for

as the Marketing and Design Excel- their contribution towards our success.”

lence Industry Award. CSA Global will go on to compete in

Other winners from the resources in- the national finalist awards held in Mel-

dustry included CSA Global (Minerals, bourne on November 27.

Energy and Related Services Export WA Commerce Minister Michael Mis-

Award) and Trimble Mining Informa- chin said the 27th year of the awards

tion Systems (Small Business Export had showcased the State’s enterprising

Award). spirit.

WA Premier Colin Barnett paid trib- “These awards show that WA indus-

ute to all winners across the 12 catego- try is world-class when it comes to ex-

ries, highlighting the Perth Mint’s im- The Perth Mint took home the Premier’s Award for Excellence ploring new products, technology and

portant and long-standing contribution at the 2015 West Australian Industry and Export Awards markets in an increasingly competitive

to the local economy. world,” Mischin said.

“The Perth Mint is a leading example of ex- said his company’s award was a testament “It’s vital we encourage our businesses to

cellence with its reputation for product inno- to the organisation’s resilience and worldwide strive for excellence through these awards.

vation, advanced manufacturing capabilities collaboration. Winners of the export categories will now

and marketing excellence through traditional “Due to our agile business model, we have automatically become finalists in the national

and digital promotion of its products in a high- been able to sustain a profitable business Australia Export Awards and I wish them well

ly competitive global industry,” Barnett said. through each mining downturn by pursuing in this further opportunity to gain recognition

CSA Global managing director Jeff Elliott opportunities in new geographic regions and for their hard work.”

INDEX

Aditya Birla 5 Doray 19, 20, 23 Legend 54 Range Resources 80
Aeon 80 Duketon 49 Lonmin 7
Alara 80 Lucapa Diamonds 4 Red Hill 62
Alcoa 78
Alkane 79 Red Mountain 76
Alligator Energy 39
Altura 26 Emmerson 33 Red River 80
Antipa Empire Oil 22
Anglo American 5 Encounter Marengo 72 Regis 49
AngloGold Ashanti 7, 55 Endeavour 5
Anglovaal 32, 38, 79 Energia 80 Metals X 5 Resolute 19, 80
Antofagasta Enterprise Uranium 75
Aquarius Platinum 80 Evolution 80 Metminco 70 Rio Tinto 5, 21, 31, 57 64, 80
Arrium 5 9, 33, 78
Artemis 7 Millennium 80 Rox 50
Astron
Atlas Iron 79 Mincor 9, 40, 51 Roy Hill Holdings 60
Azure 80
78 Mineral Resources 59 Rum Jungle 35
80
4, 73 Mining Projects Group 80

Faraday 63 Minotaur 6 Sandfire 38
Ferrum Crescent 68 Saracen 80
Finders 19, 21 Mirabela 80 Sibanye Gold
First Quantum 69 South 32 7
FMG 61 MMG 8, 10, 38, 55, 80 Spitfire 11-13
St George
Monax 32, 42 Straits 80
Strandline 44
Mbyuelo Coal 66 Syrah 80
42
MZI 20, 21 69

Glencore 9, 42, 55, 57

Global Ferronickel 76 Namibian Copper 72
Newcrest 5
B2 Gold 80 GME 80 Newmont
Balamara 74 Nickel Asia 69, 78
Baosteel 59, 62, 64 Gold Fields 9, 79 Norilsk 76
Barrick Noront
BC Iron 9 Hancock Prospecting 60 Northern Star 40, 55 Talison Lithium 25, 26
BHP Billiton 58-59 Harmony Gold 7 Norton 55 Tiger 80
12-13, 43, 44, 45, Horseshoe 9 TNG 32
Boadicea 53, 55, 79 Hot Chili 80 9 TVI 76
Bligh 73
79
80 Universal Coal 66

IchorCoal 66 OceanaGold 69
Origin Energy 22
Impact 54 Oro Verde 72 Vale 40, 55
Oz Valence 80
Cameco 39 Impala Platinum 7 6
Carpentaria 63
Cassini 23, 53 IMX 80
Chesser 80
CITIC 64 Independence 9, 18, 21, 47, 55, Walkabout 4
Cliffs 38
CMP 73 80 Pacifico 38 Waterberg Coal 7
Consolidated Zinc 72
Copper Strike 8, 80 Intrepid 80 Pan Pacific Petroleum 80 Western Areas 9, 21, 40-41, 42,
Coziron 64
Ivanhoe 9, 78 Panoramic 9, 80 44

PanTerra 72 Windward 46

Jacana 80 Paradigm 80 Wolf 20, 21

Phosphate Australia 10 Woodside 80

Kefi 78 Pilbara Minerals 24-28
KGL 34
Kibaran 19, 22 Primary Gold 36 Zeta 80
Korab 37 Zijin 9
Dacian Gold 4 Poseidon 4, 40-41, 45, 55
Danakali 49
Pure Metals 63

PAGE 82 NOVEMBER 2015 AUSTRALIA’S PAYDIRT



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