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August 2017 VOLUME 1. ISSUE 252 $11.95

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Cardinal belief

6Sp-e8ciSael pprteevmiebweerd2it0io1n7 • Zwane defends Charter ISSN 1445-3436
• Tanzanian disruption 07
Perth,Western Australia • Perseus reborn
9 771445 343007



CONTENTS

PAYDIRT (ISSN 1445-3436) 12 NEWS 18
Published by The world-class potential of Western 26
Paydirt Media Pty Ltd. Australia’s lithium sector was confirmed 84
A.C.N. 063 985 133 last month with global specialist in the
field, Chile’s SQM, entering a JV agree-
Head Office: ment with Kidman Resources over the Mt
Suite 9, 1297 Hay St, West Perth Holland project. In its first foray into hard
Western Australia 6005 rock lithium, SQM will spend $110 million
P.O. Box 1589, West Perth to earn a 50% interest in Mt Holland. Mark
Western Australia 6872 Andrews reports
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 18 COVERCardinal Resources has courted global
[email protected]
www.paydirt.com.au investor attention since posting a 4 moz
gold resource for its Namdini gold project
in Ghana. The company is now on its way
towards 6 moz and believes Ghana’s un-
Editorial: derexplored Upper East region could hold
Editor: Dominic Piper further deposits. Ahead of a busy second
Deputy editor: Mark Andrews half of 2017 for Cardinal, Mark Andrews
Journalists: Michael Washbourne, accompanied managing director Archie Ko-
Jonathon Daly imtsidis to West Africa to witness first-hand
Photography: Picture This progress at the potentially game-changing
Art director: Marian Noonan deposit
Contributors:
Keith Goode (Sydney), Brendan Ryan 26 AFRICA DOWN UNDER
(Johannesburg), Ross Louthean Legislative changes in Tanzania and South
Africa may be overshadowing the progress
Advertising: being made in other African jurisdictions
Advertising manager: Richa Fuller but Australians continue to plough ahead
Subscriptions: Mitchelle Matambo throughout the continent. Ahead of the
Phone: (+61 8) 9321 0355 world’s largest offshore African-focused
Facsimile: (+61 8) 9321 0426 conference, Paydirt examines the issues
facing mining companies in the troubled
Pre-press and printing: spots as well as looking at the Australian
Vanguard Press 26 John St, companies revelling in better times for min-
Northbridge WA 6003 ing on the continent
Member of:
84 MINING CUMBRE
Paydirt Media More than 300 delegates attended the
Executive chairman: Bill Repard inaugural Mining Cumbre – sister of Mining
Finance manager: Giovanny Jefferson Indaba – in Santiago, Chile, last month.
Accounts/administration: Paydirt’s Dominic Piper attended the con-
Heather Melling ference to find out why the timing is right to
Conferences: Melita Fogarty, launch such a forum
Namukale Nakazwe-Msiska,
Christine Oelschlaeger

Cover image: Cardinal Resources 90 REGIONAL ROUND-UP
managing director Archie Koimtsidis at High profile failures in Indonesia’s mining
the company’s Namdini project, Ghana sector have scared companies and inves-
tors from considering projects in the South
Member of: East Asian destination. However, new float
Nusantara believes it is going about its
Registered by Australia Post PP 643938/0071. business in the right way in the country.
No pages or articles in this publication may be Mark Andrews spoke to chairman Martin
reproduced in any form without the consent of Pyle about Nusantara’s ambitions for the
the publisher. This includes photographs either Awak Mas gold project in Sulawesi
taken by Paydirt Media staff or provided by other
parties

Tanzania comes out swinging

Apreview to Paydirt’s annual Africa sector – but he has recognised and fuelled this animosity, ac-
Down Under conference dominates this cusing miners of owing his Government up to $US190 billion in
month’s edition of our magazine and, as is unpaid taxes.
always the case with our African coverage,
Much of the enmity stems from the original mining conven-
the feature includes stories of progress tions signed by the gold majors at the beginning of Tanzania’s
and development but also frustration development. When establishing a new mining industry, the
and political missteps. pendulum must inevitably be slanted in the investor’s favour.
It is undeniable that the mood With no international reputation to rely on, the government of
among African-focused compa- the time had to make the investment climate as attractive as
nies on the ASX is much improved possible with low tax rates and generous levies.
in 2017, a change certain to be
reflected at Africa Down Under. The problem was the conventions were designed around the
mine lives of operations which have operated for nearly two dec-
However, there is no avoiding the fact political instability contin- ades beyond original plans.
ues to exasperate throughout the continent.
Many Tanzanians are now looking at the benefits the miners
The conference has always presented the winners and losers have received over extended periods and believe them to be
of African mining and while the likes of Cote d’Ivoire, Botswana too generous and are demanding a greater share of the returns.
and Ghana are among this year’s winners, thanks to their in-
vestment attractiveness, it is apparent that Tanzania and South So, Magufuli is swinging the pendulum back in favour of the
Africa are creating most of the negative headlines. state. The challenge is for him to get the pace of the swing right
to ensure investment attractiveness is not eroded too much. So
In South Africa, the ANC Government’s new Mining Charter far he has failed but Tanzania is not the only country to do this
is proving highly controversial and its implementation is being – even in a “stable” country such as Australia similar debates
held up by legal challenges from the South African Chamber of linger – and it will be far from the last.
Mines.
All of which makes the ASX’s reaction to the news from Dar es
The circumstances are unique. Once the world’s leading min- Salaam even more surprising.
ing jurisdiction, the South African industry is now a shadow of its
former self with the problems spanning culture, politics, history Following the passing of the new legislation, the exchange
and operational performance. insisted on all Tanzanian-focused companies going into a trad-
ing halt until they could provide guidance on how the legisla-
Its lack of technological innovation has meant it has fallen be- tive changes would affect them; an almost impossible task while
hind rivals Canada and Australia as an industry leader and the regulations are still being drafted.
development of other, previously neglected, African jurisdictions
has drawn investors away from the country. All relevant companies have now come out of their trading
halts but there is still a lack of clarity on the affect the laws will
The case of Tanzania is an intriguing one and could be read as have on individual companies.
an allegory for African mineral development over the 15 years of
Africa Down Under; the pendulum of government policy swing- One Tanzanian-focused executive said to me: “There could
ing sharply between investor-friendly and resource nationalism. never be expected to be clarity in the time available to settle a
trading halt or a short suspension. Once the changes were out,
Earlier this month, the East African country passed new leg- what was the point of maintaining trading halts and what right
islation which will see mining agreements cancelled without does the ASX [as the regulator] have in enforcing trading halts
arbitration and a 16% free-carried interest handed to the Gov- in this situation?”
ernment. The move comes after 20 years of investment-friendly
policies. The move was without precedence and while a number of
companies had gone into voluntary suspension anyway, I think
Tanzania burst onto the international mining scene in the mid- the ASX was too quick to impose itself on the situation. In Cana-
1990s when, after four decades of socialist and semi-socialist da, there was little disclosure from relevant companies about the
policies, the country opened its mineral sector to foreign direct changes, AngloGold Ashanti gave the shortest of statements
investment. and in London not even Acacia Mining plc went into a halt.

That decision proved an enviable success with Tanzania rap- Although the exchange denies any precedent is being set, I
idly growing into one of Africa’s largest gold producers with six think its heavy-handed approach has only served to exacerbate
operations opened by the Resolute Mining Ltd, Barrick Gold the impact of the legislative changes at a time when everybody
Corp and AngloGold Ashanti Ltd. is unsure how they will play out.

Two decades on from the start of that process four mines are It could also have considerable ramifications for companies
still in from the initial burst of development. From the start of this operating in any jurisdiction where mining laws change. What
decade Tanzania found itself at the centre of an African graphite will ASX’s approach be the next time royalty rates are debated
boom. The boom was in part facilitated by a robust and stable in Western Australia? Imagine the disarray if the uncertainty
regulatory environment, much of it designed on Australian mod- required every company active in the State to be placed into
els regulators had studied during several trips to Africa Down suspension.
Under.
[email protected] @DominicPiper
The legislative changes have placed those plans in doubt.
The problem is that despite the thousands of jobs created by
resource development in the country, animosity has never
been far from the surface. President John Magufuli is far from a
pure populist – indeed much of his reform agenda, particularly
around anti-corruption measures, was welcomed by the mining

PAGE 4 AUGUST 2017 AUSTRALIA’S PAYDIRT

NEWS

This is Africa

In a tough capital market and amid po-
litical uncertainty in some parts of Africa,
evidence that investors are still looking to

the continent for lucrative opportunities is

in Oryx Management Ltd’s $US135 mil-

lion backing for Tulu Kapi in Ethiopia.

In July, a mandate letter and heads of

terms agreement was signed for infra-

structure specialist Oryx to operate and

lease-finance all on-site infrastructure at

Kefi Minerals plc’s Tulu Kapi gold project.

There remains residual financing of an

estimated $US20-30 million to get the

120,000 ozpa Tulu Kapi gold project off

the ground, with Kefi stating a variety of

sources are being considered to com-

plete the balance.

Working capital facilities with the De-

velopment Bank of Ethiopia, project-level

equity with a mining and engineering

group and further equity from Kefi in the

project company, Tulu Kapi Gold Mines

Ltd (TKM), are funding options currently

on the table.

It is estimated that Kefi’s holding in Harry Anagnostaras-Adams

subsidiary TKM will be about 75%, with

the Ethiopian Government committed to dium Ltd and Ausdrill Ltd have backed tractors want to be part of that scene and

providing $US20 million for off-site infra- Tulu Kapi and their commitment provides the mining sector as well.”

structure in return for 20% of the project. Kefi with the impetus to align with a fi- Kefi’s deal comes at a time when legis-

The Government has a 5% free-carried nancing structure which included them. lative changes in Tanzania and proposed

interest in Tulu Kapi. Anagnostaras-Adams said two very amendments to the Mining Charter in

A DFS released in May outlined Tulu experienced Chinese syndicates pro- South Africa have cast serious doubts

Kapi could deliver 980,000 tpa @ 2.1 g/t posed to replace the Australian contrac- about the investment attractiveness of

gold at 115,000 ozpa over an initial eight tors and bring in their own financing for these two jurisdictions.

years at AISC of $US777/oz ($US933/oz Tulu Kapi. “Africa has never changed, what is

including initial capex). “The selection we made a couple of changing is that it is opening up more

At a gold price of $US1,250/oz and op- years ago with Ausdrill and Lycopodium and more to international investment and

erating cash flow of $US61 million a year, stood up at the end with the customised interaction and people are seeing more

Kefi is confident of a quick debt payback. structure for our projects, so we went and more of the continent,” Anagnosta-

“Kefi executive chairman Harry Anag- with them,” he said. ras-Adams said.

nostaras-Adams told Paydirt “For instance, Ausdrill and

that after a year of designing Africa has never changed, Lycopodium have been operat-
the current funding structure, it ing in Africa for over 20 years,

was a relief to get to this stage. what is changing is that and what I see through them is
“It unleashes jobs that we people taking it in their stride.
it is opening up more and more
can now get on with,” he said. “That is part of doing busi-

“In the next 3-4 months, to international investment and ness. There is political insta-
agreeing detailed terms to ex- bility and you have to man-
interaction and people are seeing
ecuting government-approved more and more of the continent. age yourself accordingly. You
documentation and financing have to take extra security
with Oryx will be done partly in precautions and one does that

parallel with the start of reset- as well, but certainly it is just

tling the nearby community. part of active management.

“We will achieve both of them by the “At the end of the day it really came Perhaps it is the things that you take for

end of the year.” down to the Australian contractors ver- granted in Australia or Canada that you

Adhering to that timetable would pave sus two sets of Chinese contractors and actually have to manage as part of your

the way for development of Tulu Kapi, financing designed around other contrac- management processes in Africa.”

which has attracted investment of $US60 tual arrangements. Ethiopia is expanding – Mark Andrews
million already, to start by the end of the so rapidly; it has been one of the world’s

year. top 10 growth countries for 15 years

Australian services providers Lycopo- straight now, so the Chinese mining con-

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 5

NEWS

IR expert calls for harmony

Expert in labour relations and social li- Unions have marched onto the doorstep of Minister for Employment
cense to operate Clark Herman has Michaelia Cash’s offices in West Perth frequently in recent times
called for harmonious engagement be-
tween trade unions and companies in high skill levels and high levels of voca- union mergers can only proceed where
Australia. tional training – generally have some de- they are consistent with expectations of
gree of harmony between employers and the broader Australian community, just
Herman spoke to Paydirt in prepara- trade unions. In the US, we really strug- like the standard that corporate business
tion of delivering a master class on indus- mergers are held to,” Mansini said.
trial relations at AMMA’s 2017 Resource gle with that and I
Industry Employer Forum in Perth to be think in Australia “This would not be an anti-union law.
held on August 22. there is a real strug- Unions that honestly and lawfully repre-
gle in that area.” sent their members and always comply
Given the CFMEU, MUA and TCFUA with Australian workplace laws should
have formally started the process of AMMA has ex- easily pass such a merger test.
merging as a “super” union with an appli- pressed its concern
cation submitted to the Fair Work Com- about the potential “AMMA is concerned the risk of these
mission, Herman’s visit to Australia is impacts a super un- particularly militant unions combining
well timed. ion could have on to hold a monopoly of the supply chain
all aspects of the re- would translate to millions of dollars of
“I think there is an emerging recogni- sources and energy foregone revenue for both State and
tion that at some level there has to be supply chain and Federal Governments, in turn affecting
some degree of cooperation on attempts the wider Australian all Australians,” she said.
to work together between unions and community.
companies, because at the end of the Herman said it appeared that Austral-
day they should recognise ultimately AMMA’s Work- ia’s Fair Work Place legislation needed
they do have things in common,” Herman place Relations modification, however, he couldn’t iden-
said. director Amanda tify an example worth replicating.
Mansini said there
“Countries in the world that tend to was no doubt the The US has had the same labour
have the most competitive economies – stability of the sup- laws since 1935, which Herman labelled
in addition to the high levels of education, ply chain, from pit “hopelessly out of date” and “a joke to be
to port, was at risk honest”.
if the merger was
approved and has “I think that anything which discour-
called on Minister ages strike activity, encourages coop-
for Employment eration, increases productivity in the
Michaelia Cash to workforce and uses high levels of em-
follow through on a ployment; any labour legislation that
commitment to in- can be underpinning those objectives is
troduce a public in- where we will need to go,” he said.
terest test.
– Mark Andrews
“Industry calls on
Minister Cash to
act now to ensure

PAGE 6 AUGUST 2017 AUSTRALIA’S PAYDIRT



BUSH TELEGRAPH

Clouds over mining in SA

The worm finally turned associated suppliers through
when the South African
Chamber of Mines “found the economic multiplier effect.
its collective spine” – as one
observer called it to do – and The damage done so far is ir-
moved to interdict the latest
draft of the Mining Charter, reparable in the case of South
which the ANC Government
had sought to impose on the Africa’s gold sector. That busi-
mining industry.
ness was shrinking fast anyway
The sequence of events
has been dramatic since that for fundamental economic rea-
move to interdict was taken in
June. Government is looking sons as the country’s ageing
to renegotiate a revised draft
of the mining charter after mines got deeper and more
Minister of Finance Malusi Gi-
gaba intervened in mid-July expensive to operate. South
setting a target of the end of
this year to achieve this. Africa has huge gold resources

But the damage has been left underground which will nev-
done and the extent of that damage is
huge with the South African mining in- er be mined because they are
dustry effectively becoming “un-investa-
ble”, according to one analyst who was just too deep and too expensive
quoting the reaction of overseas inves-
tors and fund managers. to get at.

The best description of the South Afri- The great danger is the coun-
ca mining scene is that it has descended
into a state of “lawfare”. try’s platinum sector – its one

“You need capital to achieve growth remaining powerhouse mining
and in order to grow you need to be prof-
itable. This Mining Charter chases away South Africa’s Chamber of Mines has moved to interdict business – could be about to
those profits. It is the last nail in the cof- the Government’s draft of the Mining Charter go the same way as the gold
fin,” Chamber of Mines vice president mines and be pushed prema-
Steve Phiri said.
Mining Charter which had been finalised turely into decline by a combination of
Reason is not just the fact that the Gov-
ernment has once again changed the without input from the Chamber of Mines. the current downturn and a hostile politi-
goalposts – creating more uncertainty
about the conditions for doing business Among its key requirements which cal environment.
here – but that it has finally confirmed its
true feelings towards the sector. were anathema to the Chamber were According to a press release from the

The ANC actively dislikes the mining that black economic empowerment Department of Mineral Resources, the
industry for deep-rooted ideological rea-
sons believing it to have benefitted hand- (BEE) ownership in mining companies Mining Minister met a delegation of plati-
somely from the apartheid system for
which it must be punished. be increased to 30% from the previous num mining company chief executives on

That has been apparent to me for at 26% as well as rejection of the “once em- July 14 to discuss “the current state of
least the last five years and I have writ-
ten about it in these columns before. But powered, always empowered” principle. the platinum sector and proposed possi-
the Chamber of Mines has kept its collec-
tive head in the sand, maintaining it was That means mining companies must ble solutions and areas for collaboration
making good progress in behind-the-
scenes negotiations with government always have a 30% BEE partner, so if with the Department in order to support
towards establishing a workable relation-
ship which would meet government’s po- their current partner sells out, they have the platinum industry moving forward”.
litical and social demands while allowing
the industry to develop. to replace that partner all over again at No specifics were given, but you don’t

That all came to an abrupt end in mid- their own cost. It also means the ANC is have to be a rocket scientist to work out
June when Minister of Mines Mosebenzi
Zwane published the third draft of the refusing to recognise the validity of early what was being discussed. The platinum

BEE deals done back in the late 1990s companies are on the brink of a series of

and early 2000s where BEE partners shaft closures accompanied by massive

had moved on after agreed contractual retrenchments of mineworkers because

periods. more than half of their output is being

It has to be admitted there is a con- produced at a loss at prevailing market

siderable amount of truth in the ANC’s prices.

standpoint. The mines did benefit from So far they have held off cutting back

the apartheid system and there is plenty on production and retrenching workers

to be ashamed of in history of the migrant under severe political pressure. Instead,

labour system. The industry is reforming they have raised equity and increased

but, by its own admission, has plenty debt to keep production going. They

more to do. have reached a point where they cannot

But, does that justify actively destroy- keep doing that and their situation has

ing an industry which offers one of the been made infinitely worse by the latest

very few growth options to an economy draft Mining Charter.

in deep economic trouble as South Af- If nothing changes dramatically in

rica is currently? In my humble opinion, short-order, then the smelly stuff is about

the ANC is “cutting off its nose to spite its to hit the fan big time on South Africa’s

face” with a vengeance. platinum mines.

It seems incapable of comprehending Brendan Ryan is a Johannesburg-based

the economic and social consequences mining writer
of its actions or of recognising the huge

financial benefits that flow to the State

from a successful mining sector in direct

taxes and employment, as well as, from

PAGE 8 AUGUST 2017 AUSTRALIA’S PAYDIRT



NEWS

Comet to time landing in Nigeria

Comet’s unique find in Nigeria comprises small balls of nickel, 0.1mm to 5mm in diameter and containing up to 3 weight percent nickel

Comet Minerals Ltd’s Titan nickel dis- is between the capital of Abuja and the from the foreign investment community.
covery is unusual and extraordinary regional centre of Jos. Infrastructure development to support
in many ways.
Detailed community profiles have al- mining projects will also be crucial in the
Titan – first brought to the world’s at- lowed Comet to establish solid and posi- country’s future prosperity.
tention at Africa Down Under last year – tive relationships with the nearby com-
is a rare find, with Comet reporting small munities. “In particular mining will induce growth
balls of native nickel averaging 86-92% in the north, an aspect of Nigeria’s eco-
nickel in the colluvium. “[We’ve] been able to lay the founda- nomic framework that has long been
tion for sustainable community develop- lacking, plus railway and port facilities to
The nickel balls are believed to be the ment through the provision of potable wa- export ore,” Davis said.
closest thing to nickel metal you can get ter to communities who would otherwise
straight from the ground and, as you be buying water to sustain themselves “The mining sector has always been
would expect, Comet has spent time try- through the dry season,” Davis said. one of the early investors in emerging
ing to understand the geology and de- economies bringing the development of
terming the genesis. “Comet is working with the communi- roads, railways, towns and port facilities.
ties and government to finalise a regional But this does not happen overnight. The
Of greater importance to the company sustainable community development relatively long lead time for the develop-
is engaging with country and community plan that will provide a framework for ment of mining projects is unfamiliar to
to ensure hopes and expectations are participation of all parties in a well coor- many African nations more familiar with
managed currently and that all Nigerians dinated strategy to build and sustain an oil and gas development.”
prosper from what could be a new nickel improved quality of life for local commu-
jurisdiction. nities. Davis said Nigeria’s Minister of Mines
and Steel Development, Dr Kayode Fay-
Despite its oil riches, there is no his- “When the community development emi, recognised the need to put in place
tory of large modern mining projects in plan is finalised, Comet will increase its a framework which will deliver benefits
the West African nation. exploration programme to better define for his country’s mining sector long after
the extent of the colluvium nickel balls his tenure as Minister has finished.
“The community has no familiarity with which at this point is open on all sides, as
modern mining,” Comet director Dr Ste- well as better defining the source body.” “We have to recognise that the long
phen Davis told Paydirt. time to establish major mining enter-
Just as Titan is a work in progress, so prises means a need to recognise that
“Comet has been faced with the practi- is Nigeria’s mining legislation. benefit from these developments may
cal need to educate the local community not occur during the period of office of
and various tiers of government about Davis said if current sector conditions the Minister,” Dr Fayemi was quoted as
mining in general and the possibilities for were maintained, with some “minor” im- saying at The National Mining Summit,
the Titan nickel project. The challenge provements to mining laws and regula- Abuja, in June.
has been for the project to proceed with- tions, then projects such as Titan were
out leaving the community behind requir- bound to entice international investors to “This is unusual and to be lauded as
ing a high degree of consultation and Nigeria. the current Federal Government of Ni-
openness with all parties.” geria looks to the future of Nigeria rather
Heavily dependent on its oil exports, than ensuring its control of government
Davis said the Federal Department of Nigeria has longed for diversity in the beyond its current term,” Davis said.
Mines and Steel Development had been economy, with mining identified as a po-
a willing and enthusiastic partner, par- tentially lucrative industry for the country. – Mark Andrews
ticularly in compiling all landholder inter-
est over the entire Titan project, which Mining will bring funds and the influx
of experience and knowledge brought in

PAGE 10 AUGUST 2017 AUSTRALIA’S PAYDIRT

REGISTER NOW

17 October 2017
Pan Pacific Perth

Image courtesy of Western Areas Ltd

Presenters to date:

Hon. Bill Johnston, Minister for Mines and Petroleum, Government of Western Australia
Jim Lennon, Consultant, Macquarie Group Limited
Eduard Haegel, Asset President, BHP Nickel West

Dan Lougher, Managing Director & CEO, Western Areas Ltd
Peter Bradford, Managing Director & CEO, Independence Group NL

First Quantum Minerals Ltd, Speaker TBA

Warren Hallam, Managing Director, Metals X Ltd
John Prineas, Executive Chairman, St George Mining Ltd

Mark Wilson, Managing Director, Legend Mining Ltd
Ian Mulholland, Managing Director, Rox Resources Ltd
Jamie Sullivan, Managing Director, GME Resources Ltd
Peter Muccilli, Managing Director, Mincor Resources NL
Richard Bevan, Managing Director, Cassini Resources Ltd

Carey Smith, Senior Analyst, Alto Capital
Brighton Gwavava, Managing Director, Suntech Geometallurgical Laboratories

Conference Sponsors:

australiannickelconference.com

To present, exhibit or attend as a delegate please contact
Christine Oelschlaeger (+61) 8 9321 0355 [email protected]

NEWS

Kidman outstands with SQM

Kidman general manager Chris Williams, SQM vice president development & planning Pablo Altimiras, SQM chairman Luis Eugenio
Ponce Lerou, SQM chief executive Patricio de Solminihac Tampier and Kidman managing director Martin Donohue

Western Australia’s emerging lithium Prior to SQM’s engagement, Earl Grey mine and concentrator will be released
sector received the highest of en- had attracted interest from other leading this quarter, followed in the near term by
dorsements with Kidman Resources Ltd global players in the lithium sector, with a feasibility study into a refinery in WA.
landing Chile’s SQM as a JV partner at Kidman carrying out a “deliberate and
the Mt Holland project. careful process” in choosing an ideal It is estimated 200 jobs will be created
suitor. during mine construction phase and 200
For a total of $US110 million – $US30 full-time jobs once operating, while 200
million cash to Kidman and $US80 mil- SQM’s involvement delineates a clear jobs will be created to build the refinery
lion in staged payments to fund initial de- path to production in the near future for with180 full-time operational jobs.
velopment costs for Mt Holland – SQM Mt Holland.
can earn a 50% share of the project, “A key for us, being a relatively small
which hosts the 128mt @ 1.44% lithium Production from Mt Holland is targeted company, was being able to participate
for 1.84mt lithium oxide Earl Grey de- for 2021 and while Kidman is a fair way in and the value-add delivery of a world
posit. down the path assessing studies on that class project, but also help set a bench-
front, an ambition to participate in the mark in Australia’s emerging lithium in-
It represents SQM’s maiden voyage to downstream side of the lithium business dustry,” Kidman managing director Mar-
Australia and the global producer’s first means information on the mine and refin- tin Donohue said during a conference
foray away from salar brines and into the ing operations will be greatly anticipated. call.
hard rock lithium space.
A feasibility study on the Earl Grey “Equally important to Kidman was a
desire to participate in the downstream
Kidman Resources Ltd’s JV with SQM at the Mt Holland lithium project was the icing [side] of lithium to try and break down the
on the cake for the company in July. cycle of simply digging it up and shipping
it out to China, which has been dominat-
Earlier in the month, Supreme Court Justice Kenneth Martin ruled in favour of Kidman ing Australia’s mining industry for dec-
over the Earl Grey lithium rights. ades and to add another vital layer to the
make-up of Australia’s mining economy.
The plaintiff, Marindi Metals Ltd, claimed rights to Mt Holland based on an exchange
of emails and texts. “With the support of our JV partner
SQM, we will now be in a position to
Justice Martin found there was the need for a binding and enforceable heads of develop a world-class lithium mine in
agreement to be first signed off between these parties as a condition precedent to the Southern Cross, Western Australia, and
companies perfecting a binding agreement. also progress to a lithium refinery opera-
tion also in Western Australia, which will
Judgement was handed down five days before Kidman’s transaction with SQM was not only create much needed new mining
announced, however, Kidman managing director Martin Donohue said the situation jobs, but also contribute positively to the
with Marindi had not impacted SQM’s decision or due diligence which covered “every
single angle” during an intense last 3-4 months.

PAGE 12 AUGUST 2017 AUSTRALIA’S PAYDIRT

local West Australian economy.” A JV committee lead by its own
SQM’s interest in the Mt Holland JV
chief executive will be established,
signals the first time a Chilean com-
pany has invested in a mining project with Kidman likely to oversee min-
in WA, with the State Government
welcoming the landmark agreement. ing operations, SQM in charge of the

“I welcome the JV between Kid- refinery and a joint effort to run the
man Resources and Sociedad Quim-
ica Minera de Chile [SQM], and the concentrator.
confidence shown in WA. SQM is a
world leader in lithium and chemical It is estimated 180 people will be
production, and we look forward to
the expertise and skills they will bring required to operate the refinery at a
to our state,” WA Minister of Mines
Bill Johnston said. steady state, with current resources

Three WA Government-owned in- at Earl Grey are sufficient for a mine
dustrial sites have been shortlisted as
potential hosts for the refinery, with life in excess of 50 years.
government engagement expected
to intensify now clarity is prevailing At the time of print, reserve status
for the JV to fast-track production.
drilling was being undertaken at Mt
“Both companies are aiming to beat
that significantly [2021 production tar- Holland ahead of the feasibility study,
get]; investment decisions will be made
by 2018. At this preliminary stage we will with Donohue confident of finding
be aiming at better than 2021,” Donohue
said. more resources across the project.

To support a carbonate plant a pro- Verifying the size of the project will
duction scenario of 1.5 mtpa for about
250,000-300,000 tpa concentrate and increase interest from parties want-
40,000 tpa LCE from the refinery is be-
ing targeted. ing quality product and, with SQM on

In a statement, SQM chief executive Bill Johnston board, there is no doubt the JV will be
Patricio de Solminihac said global de-
mand is currently about 200,000 tpa LCE getting bang for its buck.
and growing at nearly 14% annually.
Argentina and Mt Holland. “It is a good thing we haven’t signed
“We believe it is highly probable that
worldwide demand will exceed 500,000t “SQM’s entry into the ownership of any off-take agreements, is the message
by 2025. The use of lithium batteries in
the automotive industry marks a trend Cauchari and Mt Holland is the result of we are getting off SQM,” Donohue said.
that will revolutionise global demand in
the coming years,” he said. work done by a SQM multidisciplinary “They sell lithium products all over the

“Our experience as a leader in the in- team that has been studying various lith- world, in over 100 countries; they under-
dustry for more than 20 years puts us in a
privileged position to capture the oppor- ium projects around the world for many stand what each one is after and have
tunities that arise in the lithium market.”
years,” de Solminihac said. told us in many instances that customers
SQM will consolidate three lithium
production plants worldwide – Salar de Project financing for Mt Holland will be themselves don’t know exactly what they
Atacama in Chile, Salar de Cauchari in
delivered pro-rata and while SQM has want; they just want a product that works.

big pockets and access to large sums of “We see probably a 6-12 month win-

cash, definitive documentation – particu- dow where concentrate might be avail-

larly around the refinery – will determine able out of the ore grade concentrate be-

Kidman’s position. fore the refinery is ready and we will have

“There is enough funding in the JV to to decide in conjunction with SQM as to

advance [the projects] a significant way whether that con gets sold or whether it

down the road to where we are today,” is stockpiled and goes through the refin-

Donohue said. ery. That will all come out with the study

“The refinery is absolutely something that we do together over the next period

that we want to pursue at this stage and of time.”

the option for up to 50% of that is be- Kidman’s deal with SQM came shortly

cause we want to be able to know we can after Elon Musk struck a deal with the

fund that. The intent is to stay 50%; also South Australian Government to assem-

SQM’s preferred structure when they do ble the largest battery project in the world

business overseas.” in that state and therefore confirming

Donohue said there was no “poison Australia’s place in the emerging tech-

pill” or “out clauses” whereby a third par- nology sector.

ty could disrupt the formalisation of the – Mark Andrews
JV, subject to FIRB approval.

LATIN The CD-Rom of Paydirt’s 2017

AMERICA Latin America Down Under
Conference is available
ORDER NOW!

29-30 May 2013, Sydney

Phone (+61) 8 9321 0355 or email [email protected]

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 13

NEWS

Syngas future for Leigh Creek

Leigh Creek Energy hopes to convert coal from its solid state into a gaseous form called syngas; a composite gas
comprised predominantly of methane, carbon dioxide, carbon monoxide, nitrogen and hydrogen

Key contracts for the fabrication of a There is no shortage of interest from reliable power source stemming from
gas plant at the former Leigh Creek mining companies in what Leigh Creek Leigh Creek.
coalfield in South Australia have been is doing, with early stage discussions in
awarded, paving the way for the pre-com- progress with the State’s most prominent “The Central Eyre iron project needs
mercial demonstration (PCD) stage of the players. somewhere in the vicinity of 500MW of
Leigh Creek energy project to begin. power, which is something that will be
The power supply constraints in SA very difficult to achieve without a reli-
Flaring of the demonstration gas plant have been well publicised and Leigh able base load, fossil fuel supply. Their
is expected in Q4 after SA-based com- Creek hopes to offer a viable alternative options are fairly limited, they have a
panies Ottoway Engineering and ATSys for users and alleviate some of the pres- massive project approved... we are not
were handed contracts for the final de- sure from main grid. counting our chickens with that group but
sign and on-site construction and com- it is a big demand centre if it gets up,”
missioning of the plant and equipment Leigh Creek corporate development Harrington said.
required for PCD. manager Andrew Harrington told Pay-
dirt the project will produce electricity Coal mining at Leigh Creek, 550km
Leigh Creek Energy Ltd is behind the at a very low cost, which is desperately north of Adelaide, came to an end in
project, which aims to develop deep coal what SA needs right now. 2015, with methane, ammonium nitrate
resources inaccessible by open cut min- products (fertilisers and industrial ex-
ing. “We will be able to be part of that solu- plosives) and electricity the high-value
tion, we will need electricity for whatever products now being targeted from the
The company will use in-situ gasifica- we do and any surplus electricity will go remnant coal resources.
tion to target these deep reserves, ulti- into the grid. We are exploring options
mately converting coal into syngas suit- where we are talking to a lot of customers “There are plenty of other places in the
able for quality natural gas for electricity in that region to be an off-grid supplier; world where you can apply the gasifica-
generation. there are a few options for us. Either way tion; it is done in many places, but what
the Leigh Creek energy project is going sets Leigh Creek apart is the geological
The project was supported by a $22 to help stabilise the system for that very location and government benefits you
million capital raising through corner- remote, end of the line, section of the get. We are in a very good location geo-
stone investor China New Energy Group grid,” Harrington said. logically, economically and also jurisdic-
Ltd and sophisticated and professional tionally, all of those things don’t come to-
investors in March. “The potential customers want to see gether in many places,” Harrington said.
gas before they commit to anything, but
Subject to gaining necessary approv- we have been talking to all of the miners “There is a cloud on underground
als, demonstration gas will be made in in the region – BHP [Ltd] at Olympic Dam gasification and from the perspective of
Q4 and if testing proves successful and and Oz Minerals [Ltd] for both Prominent what has happened in Queensland, we
further approvals granted, construction Hill and Carrapateena are potential large need to prove this project technically and
of a commercial plant will start. It is ex- customers.” legally. We are ploughing all of our re-
pected to be operational by 2019/20. serves into clearing any doubt.”
Harrington said discussions with in-
With the PCD not being a pilot model, dustrial customers had also started, – Mark Andrews
commercial scale operations will be a while the likes of Iron Road Ltd in the
replication and therefore no equipment mining sector could also leverage from
scale-up is required.

PAGE 14 AUGUST 2017 AUSTRALIA’S PAYDIRT

Sands shifting north again

Leading mineral sands producer Iluka Iluka plans to restart mining at Jacinth-Ambrosia in December
Resources Ltd is basking in the glory
of rising zircon and rutile prices. “We’ve been very encouraged by our look at us since that final environmental
conversations with the concentrate pro- approval and said, ‘OK, they are serious
An improved mineral sands market cessors and we see the reason for them about getting this project up and going’,”
was evident in the first half of this year, engaging with us, quite candidly actually, McIntyre said.
with the company reporting 43% higher is because they feel they will potentially
sales volume and 46% more revenue be squeezed out again from access to “We’re getting to the pointy end now in
than the same period in 2016. supply,” McIntyre said. terms of a true timeline to production. We
still have to lodge the final mining plan,
It comes as Iluka prepares to restart “I think they’re reaching out to ensure but that’s fairly routine at the end of the
mining activities at its flagship Jacinth- they do get access to product to keep DFS process.”
Ambrosia operation in South Australia their businesses and their customers
from December following an almost two- supplied and we take that as being very A mining lease has also been granted
year hiatus. encouraging for the medium-term out- for Cyclone, which hosts a measured
look for the industry. There’s definitely and indicated resource of 203mt @ 2.3%
“Iluka is of the view that, in the absence room for other players and other suppli- heavy minerals containing 4.7mt, based
of a deterioration in global economic con- ers and we want to be part of the mix.” on a 1% cut-off grade.
ditions, the demand outlook for zircon in
2017 and 2018 is for moderated growth,” Six Chinese-based firms – all with While Cyclone may be the lead project
the company said in its latest quarterly mineral processing operations – have in Diatreme’s portfolio, McIntyre is look-
report. expressed interest in progressing dis- ing to up the ante at the company’s Cape
cussions with Diatreme over Cyclone, Bedford silica project, 200km north of
“In Iluka’s assessment, it remains the which the company declared “completely Cairns, North Queensland.
only zircon sand supplier with significant de-risked” in January upon receipt of the
inventories and is well positioned to meet final environmental approval. Diatreme received approval to explore
the demand recovery for zircon.” the tenements which border Mitsubishi
Formal MoUs are expected to pave the Corp’s Cape Flattery mine – the world’s
Iluka’s decision to bring Jacinth-Am- way for the company to finalise a DFS largest silica operation – earlier this year
brosia back online amid an improving and assemble the required debt funding following a lengthy cultural heritage ap-
zircon market has been welcomed by a for the project. proval process.
number of hopefuls, including Strandline
Resources Ltd and Diatreme Resources “I think the market has taken a different Drill rigs mobilised to site in early July
Ltd. ahead of a drilling programme of up to

Diatreme has attracted interest from 3,000m kicking off at the time of
potential Chinese off-take partners over print.
zircon-rich products from its Cyclone
project in Western Australia’s Eucla Ba- “We have a pretty good un-
sin, with formal MoUs tipped to be signed derstanding of the high quality
this quarter. silica content contained in the
area where we will be explor-
“It’s been discussed openly that the ing,” McIntyre said.
industry is facing a looming shortfall in
supply, particularly on the zircon side, “We’re particularly interested
within a couple of years,” Diatreme man- also in looking at the heavy
aging director Neil McIntyre told Paydirt. mineral content contained in
the sand. We’ve obtained some
“It was not unexpected that Iluka would RAB samples at various points
reopen. I think they took the opportunity within the licence area and they
to reorganise their on-site oper- seem to indicate there is heavy
ations, get it more efficient and minerals contained in very inter-
now they’re looking at bringing esting quantities.”
some of that supply back on.
Diatreme’s zircon-rich Cyclone project has attracted – Michael Washbourne
“The feedback we’re getting interest from potential Chinese off-take partners
from Chinese processors that
we’re engaging with, who were
somewhat squeezed by Iluka
when they shut down that op-
eration, is they’re looking to
diversify supply so that they’re
less reliant on some of the ma-
jor suppliers like Iluka.”

Zircon prices have jumped by
as much as $US200/t during the
last 6-9 months and McIntyre
has seen enough to be confi-
dent of further increases before
2017 comes to a close.

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 15





COVER

“There was never a time
we felt like walking away;
we have got over 20 years’
history here.

– Cardinal managing director
Archie Koimtsidis

PAGE 18 AUGUST 2017 AUSTRALIA’S PAYDIRT

A time to fly for Cardinal

Having spent time traversing
Namdini, Cardinal Resources
Ltd’s determination and passion to
see its maiden 4 moz gold project
move towards production was
clearly evident.

And, given the company’s stoicism Even through tough times in the gold sector, Cardinal has drilled non-stop at Namdini
in Ghana during the global resources
downturn, cutting the ribbon at Namdini tive explorers on the ASX during the re- “You know that the gold is there, it is
in the next couple of years would be a sources slump, Cardinal’s form has con- all virgin ground, new territory and we
fitting result for the team. tinued and its stock is rising in a market are opening up a new district here, so it
once again bullish on gold. requires more patience and understand-
However, expectations in the invest- ing with a smarter work programme.
ment community are such that Namdini “There was never a time we felt like More calculated planning has also been
could grow into a plus-6 moz gold depos- walking away; we have got over 20 years’ required, especially throughout the last
it and with that foresight, there has been history here,” Koimtsidis told Paydirt on downturn of in the gold sector.”
no end in interest in Cardinal. a recent visit to Namdini.

1832 Asset Management – Dynamic
Fund, Gold Fields Ltd, Van Eck – Gold
Fund, Commonwealth Bank of Australia,
Royal Bank of Canada, Macquarie Bank,
US Global and Swiss-based Precious
Capital Global Mining and Metals Fund;
all are significant shareholders in Cardi-
nal. And, attention from the big gold min-
ing houses is likely to intensify as Nam-
dini is further de-risked later this year.

Cardinal’s current relevance has been
earned the hard way since Namdini was
first drilled and discovered in 2015.

Despite a scarcity in green-
fields successes – a growing
headache for industry – the
Namdini discovery, seemingly
fell on deaf ears, ultimately
leaving Cardinal to its own de-
vices to fund exploration.

Back then, with the world
closed to gold stories – let
alone new ones in unproven
districts – it was sink or swim
for many juniors in the gold
space. Fortunately for Cardi-
nal, managing director Archie
Koimtsidis was prepared to
dive in against the tide with his
Ghana-based management
team and financial assistance
from Hartleys in Perth.

Not being one to sit and
wait for the phone to ring or
an email to arrive, Koimtsi-
dis took a chance by spending
$US800,000 on a drill rig and
from there Cardinal’s destiny
was in its own hands.

Clearly one of the most ac-

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 19

COVER

During Cardinal’s formative years, can override priorities and sway the way these financiers and companies forget
Koimtsidis and executive director Malik boards think and make decisions, Koimt- about what happens on the ground
Easah used their own cash to finance sidis has been on a promise to the com- because they are so driven to yield
exploration activities to keep the “dream munity from day one: “If we discover a a financial result only. A ‘result’ can
alive” at Namdini. gold mine, we will pour gold together as be measured in many forms and is
a team.” vastly improved if you work in with
Tipping into the dream meant spend- your people on the ground, the
ing every cent wisely, with Koimtsidis “Finance is such a crucial part of all of community and also if you work
even operating the drill rig himself, while this, and fair enough, to a certain degree smarter and with respect. Doors
also teaching locals from Bolgatanga because you need to pay back money, open and resistance is knocked
how to use, what was, until now a tool no problem, but companies should not over – you can knock brick walls
lose focus on where they’re working and over with a feather. It needs a
unfamiliar to many in the region. what they are trying to achieve on the genuine clean heart, and a real
While defining mineable ounces ground,” Koimtsidis said. desire to understand people and
is the main game, there is no their cultural traditions,” he said.
doubt the manner in which “Companies should not ignore any of
that is done and the that because without the local interac- With vast experience in the
legacy to be created is tions, social responsibilities and more country, having helped steer PMI
valued just as high- importantly the relationships, you will Gold, now Asanko Gold Inc, Ko-
ly by Cardinal. struggle to make any serious money and imtsidis has spent much of the
In today’s you will always be in constant dialogue last decade in Ghana and now
mining game, with your financiers. splits his time between there
where financ- and Perth with his development
ing projects “What has gone wrong [in the mining team.
sector] is that everyone is beholden to
Having accompanied Koimtsi-
dis to site, it is fair to say Bolga-
tanga is like home for him, such
is his connection with the peo-
ple in the region.

“Doors open and resistance is
knocked over – you can knock
brick walls over with a feather. It
needs a genuine clean heart, and a
real desire to understand people and

their cultural traditions.

PAGE 20 AUGUST 2017 AUSTRALIA’S PAYDIRT

Koimtsidis is a passionate, hard task “Archie leads from the front by his fan- “The fact that people thought there
master, but is also very happy to be chal- tastic enthusiastic example. His tireless was zero potential for big deposits to be
lenged and encourages his team from dedication to the Namdini project from discovered here has been proven wrong
the bottom up to challenge each other as the very start of the discovery can only by Cardinal. Cardinal is the first serious
a means of personal and team develop- be admired,” newly appointed principal company to explore this region and there
ment. geologist, Richard Bray, who spent the is massive potential for growth. Archie is
last 22 years with Resolute Mining Ltd, forthright in his approach; a hard task-
A real appreciation for Koimtsidis’ said. master who wants to see us and the
personal style of management was wit-
nessed during Paydirt’s recent visit and “His rapport with the local communi-
its effectiveness is measurable by the ties is second to none. His aim is to bring
great strides taken by the company in prosperity to the Upper East Region of
Ghana’s north. Ghana, which he is very familiar with,
from his early prospecting days. As he
Historically, almost all of Ghana’s has built up the deposit and the compa-
commercial-scale gold has been ny, he has surrounded himself with a
extracted from the southern parts high-quality board and technical
where Koimtsidis and doyen of team. I do feel that Archie has
West African gold prospecting, Car- so far put his heart and soul
dinal exploration manager Paul Abbott, into it, as have Malik Easah,
were key players behind the 240,000 Paul Abbott and the entire
ozpa Asanko gold mine. Ghanaian team on site.”
Asanko is in Ghana’s Asankrangwa
belt and while highly prospective, Such heart-warming
the gold endowment is perhaps bet- sentiment would be de-
ter known in the Sefwi-Bibiani and flected by Koimtsidis,
Ashanti belts. but the fact he, Easah
Whether Koimtsidis and Abbott and Abbott have been
can repeat the dose again in a new instrumental in writ-
district is what the world is waiting to ing a new chapter in
see. Ghana’s geological his-
tory should be etched in
stone forever.

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 21

COVER

“You know that the
gold is there, it is all
virgin ground, new territory

and we are opening up
a new district here, so it
requires more patience
and understanding with a
smarter work programme.

Nine rigs were in action at Namdini when Paydirt was on site

community achieve our as early as I did, but the geology up here
collective goal – to pour is interesting and such a great opportuni-
gold,” Cardinal senior ty. Having worked with Sandfire, I do see
exploration geologist similarities between Karl [Simich] and Ar-
Ernest Opoku Boamah chie; they are charismatic, energetic and
said. if you give them the information, they will
seriously work with it to maximise share-
One of Africa’s mod- holder value,” Taylor said.
ern day elephants,
Namdini has inspired Now that gold is back in favour, Car-
many local geologists dinal’s value proposition is clearly seen
and even given some in the market, with further exposure to
which ventured off- cashed-up North American investors in-
shore to ply their trade light of the recent TSX main board listing.
impetus to return home
to Ghana. It has been a natural progression, rath-
er than an ambition, to list on the TSX,
Having left Sandfire with Cardinal’s North American share-
Resources NL after do- holding growing substantially in the last
ing the resource mod- 18 months.
elling for the Monty
deposit, principal ge- “As it turns out, 30% of our stock is held
ologist Ekow Taylor is by institutional investors. Of course, the
the type of talent Cardi- scale of the project – a Tier 1 deposit –
nal is now attracting full warrants deep capital markets and West
time on site. Africa/Africa is Canada’s domain. They
understand the environment, the geol-
Taylor, a Ghanaian ogy and know exactly how it looks on the
national who had just ground,” Koimtsidis said.
arrived at Namdini pri-
or to Paydirt’s visit in Cardinal, which officially listed on the
June, said the oppor- TSX main board in early July, has re-
tunity to join Cardinal at bounded strongly this year to be consid-
this stage of develop- ered flavour of the month in gold circles.
ment was too hard to
Cardinal senior exploration geologist Ernest Opoku refuse. The company did suffer a setback late
Boamah with samples ready to be sent to the “I didn’t plan to leave last year when first pass metallurgical re-
SGS laboratory in Tarkwa Australia and Sandfire sults of 76% released upon the maiden
resource announcement – 110mt @ 1.2
g/t gold for 4.1 moz (0.4 g/t cut-off) –

PAGE 22 AUGUST 2017 AUSTRALIA’S PAYDIRT

failed the pass mark for investors. “Respect your leaders, but do not fear them”, is a motivational message Koimtsidis
The metallurgical situation has been
“ uses so Cardinal staff challenge each other for greater rewards
optimised, with interim metallurgical Cardinal is the first serious company
updates indicating overall gold recover- to explore this region and there is
ies greater than 84% are easily achiev- massive potential for growth. Archie is
able with a conventional crush-float-fine- forthright in his approach; a hard taskmaster
grind-CIL flow sheet emerging as the
preferred processing option. who wants to see us and the community
achieve our collective goal – to pour gold.
Cardinal will have further clarity on
processing and mining soon, with Lyco-
podium Ltd and Golder Associates Ltd
engaged in studies due for completion by
late Q3.

“For Namdini, we are working towards
completing our first external, independ-
ent study on processing and mining
sometime in September,” Koimtsidis
said.

“We will incorporate a resource up-
grade, metallurgy upgrade and final
metallurgical results, which will be used
for future studies. Hopefully we can ac-
cumulate all the current drilling results
in time so we can release a decent re-
source upgrade by then as well. Our first
pass maiden resource has caught inves-
tor attention and yet we haven’t found the
geological boundaries; it is still growing.”

Cardinal recently confirmed minerali-
sation had been intersected to a vertical

Principal geologist Richard Bray is a new The “Grandfather of West African gold exploration”,
addition to the company. Bray spent the Cardinal exploration manager Paul Abbott
last 22 years with Resolute Mining Ltd
AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 23

COVER depth past 600m. That means miner-
alisation has been encountered 250-
Cardinal Resources Ltd (ASX:CDV TSX:CDV) 350m below the maiden resource, with
Cardinal also reporting a 200-300m
Market cap: $196 million wide mineralised corridor which was
Share price (July): 56c intersected over a 600m strike length.
52-week share price range: 19c-77c
Board/management: Kevin Tomlinson (non-executive chairman), Archie Koimtsidis Namdini was recently granted a 15-
(managing director), Malik Easah (executive director), Mark Connelly (non-executive year renewable mining license, which
director), Simon Jackson (non-executive director), Robert Schafer (non-executive di- covers an area of about 20sq km in
rector, North America), Derrick Weyrauch (chief financial officer, Canada), Alec Row- Ghana’s Upper East Region of Ghana.
lands (investor relations, Canada), Charlotte May (company secretary, Canada) The question now to be answered: is
Major shareholders: 1832 Asset Management – Dynamic Fund, Gold Fields Ltd, there another deposit within the license
Van Eck – Gold Fund, Commonwealth Bank, Royal Bank of Canada, Macquarie Bank, along strike?
US Global and Swiss-based Precious Capital Global Mining and Metals Fund
During Paydirt’s visit in early June,
nine rigs were in action – six diamond
and three RC – operating 24/7. Even
as the sun disappeared and the skies
opened against a backdrop of thunder
and lightning, the commitment from the
drilling teams was unwavering.

While the market is engrossed in the
potential size of Namdini, Cardinal is
bracing for the next challenge; finding
Namdini No.2.

If Cardinal is right – that there could
be several more Namdinis to be dis-
covered – Bolgatanga will rise as one
of the hottest gold-bearing regions in
the world.

The company has about 800sq km of
ground in the region to prove its theo-
ries and turn prospects like Kungongo,
Bongo and Ndongo into elephants just
like Namdini.

“We hope to have generated drill tar-
gets towards the latter part of the year,
which requires a separate budget, so
perhaps in Q4 2017, we will kick explo-
ration off on a district scale,” Koimtsidis
said.

“Old timers have said that what we
are doing here is pioneering work.
They have come in from Western Aus-
tralia and North America and they all
say this is a district play and the op-
portunities here are similar to what
Kalgoorlie and the Carlin Trend had to
offer before they were opened up many
years ago.”

Koimtsidis and the Cardinal team
may have the drive and modern day
tools at their disposal, however, time
will tell if they have land as prosperous
as Paddy Hannan, Tom Flanagan and
Dan Shea did in Kalgoorlie back in the
1890s.

– Mark Andrews

PAGE 24 AUGUST 2017 AUSTRALIA’S PAYDIRT

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 25

AFRICA DOWN UNDER PREVIEW

A world of
opportunity and crisis

The world’s largest Australian-African business forum, Africa Down Under, takes place at the Pan Pacific
Perth on September 7-9. With market conditions improving, momentum has been building throughout the con-
tinent and this year’s event is set to be the most vibrant in several years. However, as always when it comes to
African resources development, obstacles arise in the most unlikely locations with political change in Tanzania
and South Africa setting alarm bells ringing.

For African-focused companies, 2017 remains Africa’s major attraction, bet- risk profiles. While legislative conjecture
has been marked by resurgence. The ter copper prices and greater interest in has been common in South Africa for the
ASX’s largest African miner, South32 lithium and cobalt is fuelling a new gen- past decade, developments in Tanzania
Ltd has enjoyed a near 50% share price eration of project development and ex- have come as a greater surprise.
improvement over the last 12 months ploration.
thanks to record production at both its The country vaulted from no mining
aluminium and manganese operations The solid base provided by commodity output to one of Africa’s most prolific gold
on the continent. prices has been reinforced on the politi- miners from the late 1990s thanks to in-
cal front in many countries. In West Af- viting concessions for foreign investors
Meanwhile, smaller ASX-listed miners rica, Cote d’Ivoire continues to receive but an ongoing tax dispute with Acacia
are finding the resources revival their do- plaudits for its proactive approach to Mining plc has led President John Magu-
mestic peers have been experiencing for foreign investment and neighbour Ghana fuli to adopt a more aggressive tone.
18 months is beginning to filter offshore. appears to be having second thoughts
about its more stringent mining and tax The Tanzanian parliament passed
Mineral sands miner Base Resources policies. three new laws in early July designed to
Ltd has experienced a remarkable turna- increase the country’s share of mining
round, putting 70% onto its share price This progressive approach will be re- profits. The laws include a mandatory
since July last year, and Perseus Mining flected at this year’s Africa Down Un- 16% state ownership in projects, the right
Ltd has dragged itself out of two years der. Conference organiser Paydirt has to tear up and renegotiate mining and oil
of underperformance to post strong pro- already confirmed eight African minis- and gas contracts and the removal of the
duction numbers and positive growth terial delegations will travel to Western right for international arbitration.
developments from operations in Ghana Australia for the forum, including Ghana,
and Cote d’Ivoire. Botswana, Nigeria and South Africa. The bills were passed unanimously
and their wording left room for further
Among juniors, the likes of Cardinal However, as is always the case, Afri- increases to the free-carried interest up
Resources Ltd and West African Re- can jurisdictions can move swiftly from to 50%. Magufuli has long-pledged to
sources Ltd have reignited investor ap- market darling to investor enemy. In make gold miners pay what his govern-
petite for West African gold exploration 2017, two of the continent’s largest min- ment believes is billions of dollars in back
and in East Africa graphite continues to ing jurisdictions – South Africa and Tan- taxes and despite the negative reaction
prove attractive to Australians. zania – have become the latter after both from international investors and Acacia’s
launched potentially anti-investment poli- moves to arbitration, the President has
The rebound has been precipitated by cies which have ratcheted up sovereign shown no signs of backing down.
stronger commodity prices. While gold

PAGE 26 AUGUST 2017 AUSTRALIA’S PAYDIRT

“I have launched an economic war,” changes have led to an entire sector set a precedent for companies operating
he told a cheering crowd at a public rally being put into a trading halt. With trad- in politically sensitive jurisdictions, Lewis
in the north-western town of Kigoma. ing in relevant companies continuing in said specifics mattered less than the
“We have asked them to come for talks both London and Toronto, management general principle.
... they have agreed to come. But if they at some of the affected ASX-listed com-
delay those talks, I will close down all the panies have privately expressed their “It is the obligation of all ASX-listed
mines,” Magufuli told the crowd. frustration with the regulator’s actions. companies to keep the market properly
One executive told Paydirt the decision informed about material and price sensi-
The legislation sent the dozen ASX- to halt trade only served to create greater tive developments,” he said.
listed companies operating in Tanza- uncertainty, amplifying the situation rath-
nia – the centre of the battery-inspired er than allowing companies to give their Perth-based boutique law firm, Bellan-
graphite revolution in the last five years own judgement. house said the ASX would likely adopt a
– into a tailspin. similar position if legislation was amend-
Kevin Lewis, ASX’s chief compliance ed in other emerging markets.
The question is how the Australian jun- officer said the decision to halt trad-
iors approach the issue. With the Gov- ing was necessary given the legislative “This is particularly the case where
ernment clearly targeting Acacia, other changes were likely material to the af- there are material movements in the
industry participants may have an oppor- fected companies. share price of a company as a result,”
tunity to differentiate themselves from Bellanhouse said in a statement to Pay-
the country’s largest miner. “There was a risk to the market [and dirt. “In light of this, companies with op-
the companies] of uninformed and dis- erations where sovereign risk is an issue
The Australian-African Mining and En- orderly trading,” Lewis said. “Indeed, ini- need to be mindful of the extent to which
ergy Group (AAMEG) has established a tially there was some unexplained price any proposed legislative changes will af-
Tanzania Working Group comprising 20 movement. Suspending trading was an fect their projects in the future.”
Australian companies to define a united appropriate mechanism to manage the
approach to the legislation. uncertainty and is in line with significant After their initial response, Australia’s
precedent.” graphite companies are cautiously op-
“Changes to the Tanzanian mining law timistic about their ability to proceed.
have had a serious impact on the op- Lewis said there was “general agree- Kibaran issued a statement on July 12
erations of many Australian companies, ment” between the affected companies saying its debt providers, KfW IPEX-
however, currently many aspects of the that a trading halt was appropriate “… Bank and Nedbank, intended to progress
legislation and its resulting regulatory to enable each company to assess the with their debt financing programme.
framework lack certainty and therefore impact and make an informed announce-
the totality of its implications are yet to ment”. “Nedbank is the largest mining finan-
be determined,” AAMEG’s Skye Gilligan cier in Africa and has debt-financed pro-
said. Spinks believes ASX “reacted quite jects before during changes of govern-
ment or legislation; it is not uncommon in
“AAMEG looks forward to working with “sharply”. Africa,” Spinks said.
the Tanzanian Government to devel- There is no doubt
op transparent guidance materials for the Government is “Free-carried interests are not unu-
the implementation of its new fiscal targeting a reshaping of sual in Africa and 16% is a workable
regime so that we may assist in mini- the industry but we don’t number.”
mising the impacts to the conduct of buy into the idea Tanzania
commercial activity.” Graphex managed to raise $2.65
is not a good investment. million through a private placement
Kibaran Resources Ltd managing following the Tanzanian announce-
director Andrew Spinks said the com- “As a comparison, AIM-listed compa- ment and also reasserted its JV with a
pany was waiting for the laws’ regu- nies put out one paragraph and on the syndicate of Chinese investors.
lations to be written before passing TSX there was very little disclosure at
ultimate comment but had so far seen all,” he said. “I think the ASX reaction cre- “Tanzania has always been a fa-
nothing which would hinder develop- ated a heightened sense of uncertainty. vourable investment destination for
ment of its Epanko graphite project. We are very confident we are going to be mining in Africa and we hope there
able to work through the regulations and will be some flexibility in the interpre-
“The legal interpretation we have re- have a project which is bankable under tation of the legislation moving for-
ceived is that we are largely unaffected the new regime.” ward to ensure this remains the case,”
by a lot of the changes because the Hoskins said.
Government’s target was mainly metallic Graphex Mining Ltd managing direc- “To have reached this position [with the
concentrate production,” Spinks said. tor Phil Hoskins said his company, which Chinese syndicate] less than two weeks
had voluntarily suspended trading, had since the announcement of the proposed
He believes the new legislation is de- been surprised by the ASX’s actions. legislative changes in Tanzania is testa-
signed to target the major gold mines ment to the strength of the relationship
owned by Acacia and AngloGold Ashanti “The proposed legislation was pub- between Graphex and the CN-Docking-
Ltd. licly available. It would be like asking all led syndicate built over the last two years.
Australian companies to go into trading Spinks also remains confident the Gov-
“The legislation is clearly targeting the halt following each Federal Budget an- ernment will bring clarity to the situation.
special licences and agreements grant- nouncement until the changes are quan- “There is no doubt the Government
ed in the late 1990s; those mines are still tified,” Hoskins said. is targeting a reshaping of the industry
getting the same tax concessions they but we don’t buy into the idea Tanzania
received at the start of their life,” Spinks When asked whether the decision had is not a good investment. The Magufuli
said. Government is strong in its anti-corrup-
tion principles and hopefully, it moves
Kibaran went into voluntary suspension as swiftly to bring certainty through the
as it tried to make sense of the changes regulations as it did in implementing the
but by July 10, the ASX had directed all legislation,” he said.
affected companies to suspend trading.

It was the first occasion political

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 27

15 YEARS OF ADU

6 - 8 September 2017

Perth,Western Australia

Australian Government Highlights

Hon. Julie Bishop MP Hon. Mark McGowan
Australian Minister for Foreign Affairs Premier
Government of Western Australia

Country Highlights

Hon. Mosebenzi Zwane H.E. Dr Jean-Claude Brou
Minister of Mineral Resources Minister of Industry and Mines
Republic of South Africa Republic of Ivory Coast

Speaker TBC Hon. John-Peter Amewu
Ministry of Industry and Mines Minister of Lands and Natural Resources
Republic of Senegal Republic of Ghana

H.E. Prof Tiémoko Sanagare Hon. Dan Kazungu
Minister of Mines Cabinet Secretary for Mining
Republic of Mali Republic of Kenya

Hon. Dr Kayode Fayemi Hon. Christopher Yaluma
Minister of Mines and Steel Development Minister for Mines and Mineral Development
Federal Republic of Nigeria Republic of Zambia

Interested in presenting or sponsoring? Contact Namukale Nakazwe-Msiska [email protected]
Interested in exhibiting? Contact Christine Oelschlaeger [email protected]
For all queries phone +61 (0)8 9321 0355

Conference Sponsors

www.africadownunderconference.com

AFRICA DOWN UNDER PREVIEW

Perseus: From Greek tragedy
to African odyssey

Perseus expects first gold pour from its Sissingue project in March next year

Jeff Quartermaine is ready to shed Perseus Mining Ltd’s apolo- An extended shutdown at Edikan as
getic tone in favour of the bright, confident outlook he believes the part of a mill improvement project saw
company has earned the right to project. production guidance for the half-year
missed and costs blow out to $US1,600/
It feels like Perseus has rarely had it we turned the corner late last year and oz, a familiar tale for a mine which had
easy since moving into production on that has continued, we have performed largely failed to break even during its
its Edikan gold mine in Ghana in 2013. very well with the development of Siss- existence. Meanwhile at Sissingue, con-
The company was the leading light in the ingue, the DFS into Yaoure is going well taminated drill holes forced Perseus to
new generation West African gold set of and corporately we are in good shape.” strip 200,000oz gold out of the resource
2005-2011 and was one of the few ASX- estimate.
listed companies in the region to attain The company’s June quarterly sug-
producer status but has largely failed to gested a junior with forward momentum. Perseus’ share price dropped nearly
rediscover the lofty heights of $4/share it Gold production was up 6% to 51,562oz 40% as a result of the setback, leaving
reached in 2011. (and 37% to 100,218oz for the half-year) shareholders understandably disgrun-
at all-in site costs of $US1,112/oz. It was tled, and there were plenty of questions
However, with the company’s flagship the second successive quarter of im- from market commentators about the
mine generating improved margins, con- proved performance from Edikan but company’s very existence.
struction on its second development 60% Quartermaine knows the company still
complete and a DFS for a third project has some way to go before its reputation The timing of the announcement was
due out this year, Quartermaine thinks is restored. unfortunate. Perseus was about to enter
Perseus is a company renewed. the Van Eck GDXJ ETF and Quarter-
In December last year, an activities maine was conscious of the impact that
“The June quarterly results presented update laid bare nearly three years of would have on trading.
further solid evidence that Perseus has production woes experienced at Edikan
put the past behind it,” he said during a and then added problems with resource “We wouldn’t have done it but Van Eck
quarterly report presentation. “At Edikan, estimates at Sissingue. was about to buy 140 million shares and
I didn’t want the price to pop,” he said.
“Some shareholders took me to task

PAGE 30 AUGUST 2017 AUSTRALIA’S PAYDIRT

about releasing the information, but we One of the main lessons learnt from Edikan was how important it is to be tuned
had no choice. If you are going to be con- up for the start of operations once commissioning is complete
sistent with continuous disclosure you
have to do it all the time.” “It comes back to the people,” he said. African explorers – including the likes of
“There has been a dramatic change in Adamus, Gryphon and Ampella – which
With reputations on the line, Perseus attitude and altogether we are doing reached remarkable share price highs
revised its plans – both operational and things smarter and the workforce is during the 2005-2011 gold rush. How-
financial – and Quartermaine sees the striving hard to take advantage of those ever, unlike its peers, Perseus negoti-
June quarterly results as evidence the mechanical improvements.” ated the transformation from explorer to
plan is working. miner. Its peers – with the notable excep-
Operational improvements in place, tions of Adamus, Orbis Gold and Papil-
“This situation has come about the hope for the company now is that lon – were gobbled up for far less than
through careful execution of a very spe- the market will eventually recognise the their boom years highs while Perseus
cific financial plan,” he said. “A number of turnaround. remains on the market, struggling to fulfil
commentators have doubted our ability the expectations created during the West
to do this but through prudent financial “This turnaround is not a flash in the African gold bubble.
management we have put ourselves into pan, this is part of a long-term trend of
a very good position financially; we are strong performance brought about by “It is easy to be critical about the com-
not overladen with debt, we don’t have a some very material changes to the way pany’s performance because if you look
lazy balance sheet and we are not totally we do our business,” Quartermaine said. at its history, it was heavily marketed in
exposed to the gold price [thanks to a “It might be time for those who have been those early years,” Quartermaine said.
150,000oz hedge book].” doubtful to reassess this situation rather “But actually, for a few years we were
than dwell on the past.” living in a shoebox and the market prob-
At Edikan, the reversal of fortunes has ably didn’t expect Perseus to be around
come from a combination of operational Perseus’ reputation is a topic Quar-
and cultural changes, according to Quar- termaine often returns to. The company for long.
termaine. was a standout among a group of West “We’ve come a long way from the jun-

“We have invested heavily in infrastruc- Jeff Quartermaine ior explorer that we were and yes, we
ture at Edikan in the last year; improving probably didn’t live up to all those early
the plant and it is now running well,” he expectations but we are now perform-
told Paydirt. “Over time we have worked ing well. We got through the [production]
hard to get the cost base down and that gate when others didn’t but then had to
will definitely continue as we get more adjust rapidly to being a miner in West
ounces.” Africa.”

Improved stripping ratios and less Perseus listed on the TSX-V during
capital intensity from the end of 2018 will that successful period but as the tide
provide further efficiencies, as will the turned against both gold and the com-
recent move into higher grade material, pany, many of the North American insti-
in the eastern pits, giving Quartermaine tutions which warranted that move aban-
confidence Perseus can maintain cash doned the register.
margins which averaged $US160/oz in
the June quarter. Such is Quartermaine’s current con-
fidence he is once again prepared to
“As we moved into the three new pits make the trip north.
there were distinct changes in geology
and metallurgy. We should’ve anticipat- “Last year, I went back to Canada and
ed those changes but didn’t. We’ve now a lot them were prepared to talk to me
been through that and adjusted grade once again. Most said Perseus was a
controls measures, etc. and our working very different company to the one they’d
behaviour. We are getting smarter about
how we do business.”

The mine is also on a much firmer cul-
tural footing, both within the workforce
and within its host community.

“We invested in the relocation of hous-
ing [building 184 new houses and 12 in-
stitutional structures at a cost of $US30
million] and that has enhanced our cred-
ibility in the community. You might ask
how that can affect anything operation-
ally but the community and workforce is
one and the same and that credibility is
reflected in the productivity on site.”

Better relations between site man-
agement and the Perth-based techni-
cal services team has also improved
performance and Edikan’s new general
manager, Ghanaian Stephen Ndede, has
engendered a new mentality in the work-
force, according to Quartermaine.

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 31

AFRICA DOWN UNDER PREVIEW

Once Sissingue is up and running, Perseus will be free to turn attention to plc, Yaoure’s 3.4 moz gold reserve/5.2
its next development; Yaoure moz resource makes it one of the larg-
est undeveloped gold projects in West
sold out of but they would not be buying spite mining activity not scheduled to Africa.
yet. They are now watching us but want start until November – as an example of
proof we can deliver on our plans. the company’s preparedness. However, like its new owner, the pro-
ject has some reputational damage to
“We have done that for two quarters “That will give us plenty of time to un- overcome. Amara struggled to get the
but delivering for three and four quarters derstand the nature of the orebody and economics to hang together but Perseus
will be even better. We need to win the make sure we get the right material to has revisited the drilling and resource es-
argument through weight of numbers.” the mill. We are giving ourselves every timates to formulate its own strategy.
opportunity by doing the right amount of
Edikan alone is unlikely to sway too homework.” Quartermaine is well aware of Yaoure’s
many institutions to come back but by reputation.
March next year it should be joined in the A general manager is expected to be
operational portfolio by Sissingue in Cote appointed in the next few months ahead “I know there are a number of corpo-
d’Ivoire. of handover from contractor Lycopodium; rates who’ve looked at it in the past and
not that Quartermaine anticipates too have made observations around it,” he
Located between the Morila (7 moz many problems. said during the quarterly call. “But, bear
gold) and Tongon (4.3 moz gold) depos- in mind; unless they’ve worked on it with
its on the border with Mali, Sissingue has “I am confident in Lycopodium’s abil- us, they don’t know what the situation is.
a reserve of 409,000oz and a resource ity to deliver a plant that’ll work because I can tell you it is an excellent project.”
of 900,000oz gold. Perseus plans to pro- they have done it so many times before,”
duce 70,000 ozpa (80,000 ozpa in the he said. He told Paydirt a full review of Amara’s
first three years) over a five-year mine life drilling data had led Perseus back to the
at all-in site costs of $US628/oz. Given the teething problems with la- drill rig.
bour at Edikan, a full labour and training
By the end of the June quarter, Per- plan will also be in place prior to opera- “It is a very different approach to Am-
seus was 61% of the way through the tional handover. ara,” he said. “We got the entire drill da-
$US68 million construction with first gold tabase and from that we estimated a re-
pour scheduled for March 2018. “It is critical to get your training right source, did the optimisation studies and
from Day 1; that was a real lesson from got an internal reserve, went through the
Quartermaine said the lessons learnt Edikan.” metallurgy and decided we could make a
at Edikan were being applied to the ben- lot of money out of it. But, we had made
efit of Sissingue’s development. One problem a successful ramp-up a lot of assumptions so first thing we did
will not overcome is Sissingue’s lack of was a major drilling programme. We have
“When I look back, the developments mine life. since drilled 60,000m, more than 60% of
have been chalk and cheese,” he said. which has been resource definition and
“One of the main lessons learnt from Edi- “It only has five years but we would like that has given us good indication about
kan was how important it is to be tuned it to be 10 and I do think there will be in- the orebody.
up for the start of operations once com- cremental reserve growth because our
missioning is complete. Our technical exploration team, led by Doug Jones, is “We are very confident Yaoure will be
services and human resource teams very confident it will find more ounces.” a mine. We can’t yet say publicly what it
have put readiness plans together to en- is because it isn’t JORC-compliant but I
sure ramp-up to full scale is as efficient By the time gold is being poured at can say there will be less tonnes, higher
as possible.” Sissingue, Perseus will likely be consid- grades and more ounces than we antici-
ering its construction options for a sec- pated.”
He pointed to an early start to grade ond Ivorian project, Yaoure.
control drilling – from September 1 de- A DFS is due out in October, meaning
Acquired in February 2016 as part of Perseus will enter 2018 with a relatively
its merger with AIM-listed Amara Mining simple growth pipeline. For Quarter-
maine, that means beginning to look at
the next opportunities.

“Once Sissingue is operation, then
we’ll need to start looking over the hori-
zon at projects No.4 and No.5. No.4 is
likely to be an acquisition – probably at a
similar stage to Yaoure – but I’m hopeful
No.5 will be our own discovery,” he said.

That is the words of a genuine mid-tier
gold miner and it could be Perseus is
about to finally break free of its past.

“We have built up the capacity to de-
velop and build projects and we can use
those skills to make each project better
than the last,” Quartermaine said. “We
are trying to build a mid-tier company
which has multiple assets and income
streams which spreads the risk.”

– Dominic Piper

PAGE 32 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

Golden future for Damang

Gold Fields Ltd will pour you’re left the optionality open
$US1.4 billion into its Da-
mang gold operation in Ghana to do a series of other cuts,
over the next eight years.
similar to what the Super Pit
Work on the Damang Re-
investment Project (DRP) – in Australia has gone through.
aimed at extending the life of
the operation out to 2024 – be- That for me is a much better
gan last December, with two
key mining contractors mobi- way to mine this.”
lising in the main complex and
satellite pits. Gold Fields was one of

Gold Fields has forecast a the first runners in Ghana,
$US120 million spend on DRP
activities throughout 2017, with having first set foot in the
$US20 million tipped in during
Q1. country more than two dec-

A 2.5m lift on the existing ades ago. One of the main
East tailings storage facility was
commissioned during Q1, with reasons the company pro-
the facility to remain open until it reaches
its 2.2mt capacity, most likely during Q4. ceeded with DRP was its

Construction of the Far East tailings strong ties with government.
storage facility began later in Q1 and is
on track to be functional from Q4 to meet In March 2016, Gold Fields
life-of-mine tailings capacity require-
ments. entered into a development

agreement with the Ghana-

ian Government whereby

Nick Holland the company would receive

tax incentives in return for

DRP’s $US1.4 billion price tag includes long-term investment in both Damang

$US341 million of development capital, and the nearby Tarkwa mine.

with the balance accounting for opera- These incentives included a reduction

tion expenditure over the new eight years in corporate tax rate from 35% to 32.5%

of mine life at Damang. and a change in royalty rate from a flat

According to feasibility studies, 165mt 5% of revenue to a sliding-scale royalty

will be mined over the life-of-mine, with based on the gold price.

32mt to be pro- Gold Fields paid $US86 million in di-

cessed at an aver- rect taxes, royalties and dividends to the

age head grade Ghana Government last year, making

of 1.65 g/t gold, the company the highest taxpayer in the

resulting in produc- country.

tion of 1.56 moz at Holland said his company remained

$US700/oz AISC. committed to operating in Ghana.

During Q1, 9.61mt “The one thing that has given us a

was mined, above of measure of success is we run it with

the forecast 7.34mt. Ghanaians,” Holland said.

Gold Fields chief “Our expats in Ghana are about 4%

executive Nick Hol- of the total workforce. If you look at the

land told Paydirt other companies in Ghana, they are not

earlier this year he localising to the extent we are. I’m very

was excited about proud we have a Ghanaian executive

what the future held in our Gold Fields group executive who

for Damang. runs the region and has come through

“This is a big ore- the ranks. He’s highly respected and

body, but we’re tak- been with us for a long time. He’s helped

ing it in cuts and to reshape the whole culture there, that’s

by doing that we been a really big plus for us.”

de-risk the techni- No large-scale investment projects are

cal and financial pa- planned for Tarkwa at this stage.

rameters, whereas Gold Fields said it remained open to

previously the idea other opportunities in Ghana. The com-

was ‘big is beautiful, pany is a major shareholder of ASX-

let’s have a massive listed Cardinal Resources Ltd, which is

pit’, but you end up developing the Namdini gold project in

with massive com- the country, having acquired just over

mitment to stripping 10% of the junior last year.

before you see the – Michael Washbourne
ore,” Holland said.

“It’s going to cost

less to get there and

PAGE 34 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

Resolute spreads its wings

Resolute Mining Ltd managing director Resolute’s success at Syama in Mali has opened doors for the company
John Welborn has compared the op- elsewhere in Africa, including Egypt
portunity awaiting his company in Egypt
to the gold producer’s humble beginnings Egypt’s production sharing model, “Don’t forget, there’s a reason why the
in Tanzania two decades ago. under which concession holders pay a Ancient Egyptians built the pyramids – to
production share as well as a royalty to store and hide all their gold artefacts –
Last month, Resolute was one of the Government, has posed problems for so it’s an area that has to be prolific and
the first companies to be awarded gold explorers and potential developers in the we’d like to continue that tradition in the
exploration concessions as part of a past, hence why Centamin remains the modern era.”
new international tender offered by the only international producer in the coun-
Egyptian Mineral Resource Authority try. Resolute is yet to confirm how muc h
(EMRA). of its $38 million exploration budget for
Centamin did not participate in the FY2018 would be set aside for work in
Resolute successfully bid for two large bidding process for the concessions Egypt, however, Welborn insisted Sy-
exploration blocks – Um Samra and because the proposed terms were not ama and Bibiani were higher priorities
Bokari – totalling more than 2,400sq km deemed commercial. Sukari’s cost re- for the company.
of prospective ground in the Sinai and covery model differs from the aforemen-
Eastern Desert. tioned arrangements. Development of the underground
at Syama is continuing, with Resolute
Bokari (1,583sq km) is 30km west of Welborn said his company was com-
Um Samra (819sq km), a further 70km mitted to working with the Egyptian Gov- hopeful of operating at full capacity from
north-west of Centamin plc’s 15 moz Su- ernment to establish an investor-friendly the underground by December 2018.
kari gold mine, Egypt’s lone commercial mining law which benefitted all parties, Stockpiled ore and some satellite feed
hard rock mining operation. while urging his own company’s share- continue to be processed through the ox-
holders to have a longer-term outlook on ide and sulphide circuits.
Resolute’s decision to peg ground in the Arabian-Nubian Shield.
the largely underexplored country is part According to a DFS released in June
of a wider strategy to grow its African “We recognised the current legislation 2016, the Syama underground will pro-
portfolio, comprising the Syama opera- there is very difficult for miners – it works duce 250,000 ozpa at $US881/oz AISC
tion in Mali and the mothballed Bibiani for oil and gas deposits, not so much for over at least 12 years. Welborn said his
project in Ghana. hard rock miners – but we also recognise team was constantly reviewing those
that the journey from exploration/discov- numbers.
The company also holds substantial ery through to project development and
stakes in ASX-listed pair Oklo Resourc- operation can take a long time,” Welborn “We’re looking at a number of really ex-
es Ltd (Mali) and Manas Resources Ltd said. citing optimisation projects, most notably
(Tanzania) and Canada’s Kilo Goldmines the work we’re doing on innovation, au-
Ltd (DRC). “We’re playing a long game in Egypt, tomation and electrification for what will
this is not something that will be an over- be a very modern underground mine in
Resolute first set foot in Africa in 1996, night success. It was something like a Africa,” he said.
successfully exploring and then develop- 20-year journey for Centamin and they’re
ing Golden Pride before putting the mine a single-project focused company with “One of the opportunities we have
on care-and-maintenance and handing plenty of Egyptian connections in their with a greenfields site is not getting
the rehabilitated land back to local au- management team. caught up in some of the restrictions
thorities in 2014. that, for example, some of the South
African miners have had in terms of
Golden Pride’s development occurred
almost in parallel to that of Sukari, albeit
at a much faster rate. Sukari was eventu-
ally commissioned in 2009, with first gold
poured the following year.

With current production nearing
500,000 ozpa, Sukari is now one of the
20 largest gold mines in the world and
Welborn is seeking similar success for
Resolute in coming years.

“There is no geological reason why
there are not more modern gold mines in
Egypt,” Welborn told Paydirt.

“Sukari is a great achievement for its
largely Australian management team
and an ASX-listed story now very much
focused on the UK markets [Centamin
delisted from the ASX in early 2010].”

Resolute will spend much of the next
six months negotiating with the EMRA
to finalise conditions to explore the two
concessions, with formal exploration
work a possibility by year’s end.

PAGE 36 AUGUST 2017 AUSTRALIA’S PAYDIRT

automation where it reduces existing John Welborn utive chairman and Yasmin Broughton
workforces. and Mark Potts joining the board as non-
recommission that mine – it has to com- executive directors.
“There are some underground mines pete for capital with our existing projects
in Mali, but we’ve never operated under- and it has to make sense – but I’ve al- A healthy (unaudited) cash position
ground so it’s a new skillset for us and ways been a believer that we’re the right of $290 million at June 30 has set the
therefore we can focus on both the safe- owner of Bibiani,” Welborn said. company up nicely for FY2018, with Sy-
ty and the productivity advancements of ama and the Ravenswood gold mine in
automation.” “This is a 3 mtpa mill that has proven Queensland set to churn out 300,000oz
it can produce gold, at $1,280/oz AISC.
Welborn, who has not shied away there’s a lot of ex-
from implementing change since being isting underground “I still feel like we’re beginning a jour-
installed as managing director in July workings and I’m ney, even though the company has been
2015, was quick to dismiss any sugges- confident we have around for 25 years and been a producer
tion technology would replace the tradi- the team to be able for so long,” Welborn said.
tional mine worker. to successfully re-
commission it, but “We’ve set an ambition to make a fairly
“Automation has never been about we need to prove fundamental and significant increase in
reducing workforce, it’s about working that first and that the scale and the success of our opera-
safer and working more productively,” he decision will be tions and that’s something that requires
said. “I don’t see innovation as a threat to made once the work excellent people, clarity of strategy and
our African workforce. In fact, it is an op- we’re doing now is strong systems.
portunity for us to develop new skillsets completed.”
in an African context, where we’re tak- “Cultural change within an organisa-
ing people who have huge potential and This year marks tion is not simple, it requires relentless
technology actually allows you to unwrap a decade since for- focus, but I’m pleased to say I think we’re
that. mer rugby player turning that corner and you can see that
Welborn first ven- in the quality of the people we’ve been
“We’ve always been very proud of our tured into the Af- able to attract to the company and the
corporate social responsibility and we’ve rican resources increasing diversity of those people. It’s
done a good job of training the workers industry, initially as one thing to talk about technology, but
we have in Africa to work in our mines. investment banker if you’re going to be a smart miner you
What we’re now focusing on is a different before later taking need to bring really smart people in to do
approach to training, which is to advance the reins at iron ore work.”
and develop technically sound, manage- hopeful Equatorial
ment-level, local employees and not look Resources Ltd. – Michael Washbourne
to perpetuate the FIFO expat workforce
that has become the mainstay of Austral- Resolute has
ian operations in Africa, generally.” undergone major
changes since Wel-
Resolute will also look to advance the born arrived two
Nafolo discovery, just 250m south of the years ago, both op-
limit of mining at Syama, over the course erationally and cor-
of the next 12 months. Recent high-grade porately, with Martin
hits, including 14m @ 3.5 g/t gold from Botha recently ap-
251m, 19m @ 3.7 g/t from 407m, 33m @ pointed non-exec-
3 g/t from 405m and 10m @ 8.3 g/t from
394m, have confirmed the company has
a major find on its hands.

Other optimisation work – including
Project 85, Project Reprise and Project
Phoenix – also has Welborn confident
about the long-term future of a mine both
BHP Ltd and Randgold Resources Ltd
walked away from.

“Syama has massive potential beyond
the 12 years that we’ve already identi-
fied,” he said.

Resolute is expected to make an in-
vestment decision on Bibiani by Decem-
ber, with permitting work, including the
EIA, ongoing while the company reviews
the economics from a recent feasibility
study.

For an upfront development capex of
$US72 million, Bibani is forecast to pro-
duce around 100,000 ozpa at $US858/
oz AISC over an initial life of five years,
potentially lifting Resolute’s group pro-
duction beyond 500,000 ozpa.

“It’s not a foregone conclusion we’ll

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 37





AFRICA DOWN UNDER PREVIEW

Business time for Ghana

Ghana’s economy is posing great health risks
showing signs of life, for people relying on such

with the landscape for waterways for day-to-day

growth more positive than living.

it has been in “many, many Meanwhile, it has been

years”, according to Accra- argued the alluvial gold

based Australian High Com- exploited by the galamsey

missioner Andrew Barnes. sector is not being captured

President Nana Akufo-Ad- by the Government in taxes

do was elected in December and revenues, which risks

and the new Government undermining confidence in

has pledged to promote the the management of the min-

private sector and new de- ing sector at large in Ghana.

velopments in the country. Small-scale mining pro-

Reuters reports a $US10 vides a livelihood for many

billion MoU has been signed Ghanaians and the sec-

with China to develop the tor has taken off in recent

country’s bauxite industry, years on the back of good

with China Development gold prices.

Bank funds used to build The introduction of heavy

mine and rail infrastructure Paydirt’s Mark Andrews caught up with Australian High Commissioner machinery has only exac-
to connect other mines, as to Ghana, Andrew Barnes, in Accra recently erbated the problem, with
well as establish a link into illegal miners turning small-

Burkina Faso. investors willing to help bring these pro- scale operations into large-to-medium

Full terms of the MoU are yet to be dis- jects to fruition. sized projects which are wrecking the

closed and while Ghana is wary of taking “Now is a very good time in Ghana for environment.

on too much sovereign debt, Barnes said business,” Barnes said. Barnes praised the current govern-

such deals reflected the dynamism and “However, it is a very competitive envi- ment for stepping up to tackle the prob-

ambition to get things moving. ronment and you have to go in with your lems, which have been “dodged” by pre-

“This sort of ambition by the Govern- eyes wide open and be aware that it is vious governments, associated with the

ment will translate into opportunities for not a simple place to do business.” galamsey sector.

the private sector, including Australian Australia’s mining fraternity has been “We are working quietly in the back-

businesses, so it is an economy worth successful in Ghana over a long period ground with the Government, with the

watching closely,” Barnes said. and Barnes is working hard to ensure Minister and Ministry to support them in

“The new Government is very pro-pri- those relationships remain strong, rais- tackling this issue; it has been described

vate sector, pro-development and they ing issues such as VAT impositions on as one of the biggest policy challenges

are looking right across the spectrum at exploration and delays in approvals with for the new Government,” Barnes said.

developing Ghana. They have big ambi- senior government officials. “To its credit, this new government is

tions there for the railway sector and I “That [issuing of licences] is going to really tackling it with sincerity and vigour

think they are hoping for a lot of it to be be looked at, as it is an unnecessary and it has a real commitment to get on

developed under TPPs. burdensome step in the process, which top of the problem. In reality, the Gov-

“They are very keen for Australian in- causes unnecessary delays,” Barnes ernment doesn’t have any choice, it has

volvement in the bauxite sector. There are said. been a problem dodged in the past.

two major deposits here that they want to In addition to improving conditions for “It is a very difficult issue to tackle be-

develop, even to the extent of developing companies on the ground, Australia is cause 1 million people are involved in it

an aluminium and alumina industry here, also helping tackle a more complex is- and it becomes a livelihood issue, so to

complete with its own power generation sue in Ghana at the moment; handling take away the livelihood of 1 million peo-

system and railway infrastructure linking the galamsey sector. ple is a very difficult political step for the

the mines to the ports,” he said. A moratorium on all small scale min- Government. Credit must go to [Lands &

While Chinese money is forthcoming, ing, both permitted and illegal, is in place, Natural Resources] Minister John Peter

Barnes said Australian mining services while the use of all heavy equipment to Amewu for his sincerity and commitment

companies could play an important role run operations has been shutdown. in not shying away from the issue be-

in construction of railways and general Of Ghana’s 27 million people, it is es- cause there are a lot of vested interests

development. timated 1 million make or are trying to and a tough issue to tackle.”

An election pledge from the Govern- make livelihoods from small to medium – Mark Andrews
ment to push the “one region, one fac- scale gold mining, which is having a neg-

tory and one village, one dam” policy is ative impact on the environment.

also attracting interest from financiers in The impacts of dredging and the use

China. of chemicals such as mercury and arse-

However, the Government appears nic during the extraction process means

open to viable financial proposals from rivers and waterways are being polluted,

PAGE 40 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

Lycopodium toasts 25

There are worrying signs emerg- value. As an extension to this, one
ing for miners and explorers in
some quarters of Africa which will of our key principles remains ‘put
certainly test an industry finding its
feet after two downbeat years. the project first’ and we have I be-

“Obviously, it is important for the lieve, demonstrated an unwavering
mining industry and mining invest-
ment that rules of engagement are commitment to delivering on our
clear; that has been a real asset to
many African countries. But, when promises and obligations.
these change unexpectedly or
there is any uncertainty, it becomes “The predominance of our work
detrimental to a sector,” Lycopodi-
um Ltd managing director Peter De at this time is repeat business from
Leo told Paydirt.
existing clients. This is evidence
In Lycopodium’s 25-year history,
the engineering and project man- that our focus on them and their
agement consultancy has delivered
its wide ranging skills set across project’s needs is recognised.”
the continent, and despite the chal-
lenges it remains firmly entrenched Repeat business for clients is not
in the region.
taken for granted and across every
As well as surprise changes to
government legislation, the grow- division – minerals, process indus-
ing pressure to maximise the use
of local and in-country labour and a tries, infrastructure and subsidiar-
heightened security threat are day-
to-day issues many businesses ies Orway Mineral Consultants Pty
would rather not deal with in Africa.
Ltd and Lycopodium ADP in Cape
Lycopodium, though, has thrived
in Africa for the past 23 years and Town – tackling convention is en-
continues to be the group many mining
companies turn to when appointing ser- couraged.
vice providers.
“Over 25 years we have never
De Leo said safety and security of per-
sonnel was paramount and a factor taken stepped back from challenging con-
into account in every decision. And, while
there are some no-go zones, a quick vention. We have delivered over
look at its African capability statement
shows Lycopodium’s wealth of experi- 300 projects and thousands of stud-
ence across the continent.
ies across the world,” De Leo said.
“We have always been comfortable
in Africa and that really hasn’t changed “We have often not felt confined
however of late, security aspects have
become a greater consideration and we to follow convention and because
have been trying to effectively manage
that,” De Leo said. “For us it is about hav- of this we have over the years ac-
ing a plan in place and being prepared.
It’s what we do and it is what we are com- complished some pretty remark-
fortable doing.
able things. We have often found
“We try to develop a thorough under-
standing of the general security condi- Peter De Leo ourselves competing and achieving
tions, in and around proposed locations.
Based on that understanding if we con- above our weight class, working for
sider the risks can be reasonably miti-
gated, we develop a plan.” staying flexible and lean has allowed it to some of the world’s best emerging min-

Volatility in commodity prices since successfully navigate through the chop- ers as well as many of the world’s majors
2014 has left many feeling uneasy about
doing business anywhere in the world py waters. and groups in between.”
with the overwhelming focus on cutting
and managing costs. For Lycopodium, “It was a very difficult time in the market Players in the gold sector, like Toro

and the fact we were able to successfully Gold Ltd at Mako in Senegal, promise

deal with it really reflects the quality of to keep Lycopodium busy while a lust for

our people. I am really proud to say that diamonds on the back of improving eco-

right throughout the organisation people nomic conditions in China, US and Eu-

stood up to the tasks asked of them,” De rope would serve Lycopodium ADP well.

Leo said. De Beers is one of ADP’s biggest

In a highly competitive field, Lycopodi- clients and with a return in appetite for

um is well regarded for its technical abili- the sparkling rock, Lycopodium – which

ties and prowess, which is verified by its recently completed a small ruby project

record of having all of its projects meet or in Mozambique – can fully showcase

exceed specification. its wide array of offerings in the mining

Lycopodium’s plants have the reputa- services sector for some time to come;

tion for hitting full tilt in quick time and whether in Africa or wherever duty calls.

with ease, and that form of delivery is “We have been delivering projects in

what has attracted repeat business from Africa for over 23 years,” De Leo said.

an impressive list of clientele over a long “In all that time we have set the same

period of time. safety, environmental, community rela-

“In an African context, we have done tions and quality standards as we would

six projects for Endeavour [Mining Corp], anywhere in the world – we have one

three consecutive projects for B2Gold standard, which I believe our clients and

[Corp], five consecutive projects for First staff respect. We always strive to oper-

Quantum [Minerals Ltd], two for Nord- ate with integrity and respect and leave

gold [N.V], two for Perseus [Mining Ltd], a positive legacy and this fundamental

and two large projects for Newmont [Min- tenet has served us well in Africa.”

ing Corp] over the years,” De Leo said. – Mark Andrews
“We have always strived to deliver real

PAGE 42 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

Danakali makes further
inroads at Colluli

Danakali’s Colluli potash project in Eritrea could be the first of a new generation of potash developments

The refinement of Danakali Ltd’s Col- “We are very pleased with the positive nobody has done a greenfields SOP
luli potash project has continued, with outcomes of the optimisation work on the agreement before and we have to live
the company finding greater capacity and recovery ponds and expect that there will with it for 10 years so we need to ensure
cost savings during a recent optimisation be flow-on benefits to the construction we get it right.”
study. earthworks,” Donaldson said. “The Col-
luli DFS demonstrated evaporation pond Project finance can only follow once
Danakali completed a DFS on Colluli – sizes significantly smaller than SOP off-take arrangements are in place.
177km south-east of the Eritrean capital brine projects as a direct consequence of
of Asmara – in late 2015 which confirmed the potassium salts being extracted from “Part of the reason for going through
the economic potential of a 425,000 tpa the resource in solid form.” the heads-of-agreement stage was to
sulphate-of-potash (SOP) operation. keep the debt providers engaged in the
However, ongoing optimisation work be- Donaldson told Paydirt the company process.”
ing conducted in parallel with Colluli’s and its engineers continued to work on
front-end engineering design (FEED) other cost reductions in the areas of pre- Other key milestones for financiers will
has indicated a further 47,000 tpa SOP stripping, water and the mine’s access be the awarding of the EPC and mining
production could be attainable. road. He said it was vital the optimisation contracts and the power agreement.
work was fed into Colluli’s FEED.
Danakali managing director Paul Don- SOP prices have remained resilient in
aldson said the increase in capacity “You should be optimising your project recent years in the face of faltering wider
came as a result of a debottlenecking of throughout the process but we are not fertiliser market and Donaldson is confi-
the plant configuration. endlessly in study mode; there is an end- dent the trend will continue.
point. Once we have optimised the plant,
“The optimisation work was about that’s what we are building; we won’t get “SOP prices are stable and the pre-
looking at the DFS and the equipment another opportunity.” miums are much higher over MOP [mu-
capacity we had in the plant to identify riate-of-potash, a cheaper product] than
potential bottlenecks,” Donaldson said. With engineering progressing under has traditionally been the case,” he said.
“Increasing the scale of the compactor the stewardship of Fluor, much of Don- “Even in MOP, the market is starting to
was identified as having the biggest im- aldson’s time has been taken up by recover with the first price increases for
pact on debottlenecking and we found offtake and financing negotiations. five or six years.”
by putting extra capital into that without
increasing overall capex we could get Colluli will likely be the first of a new SOP developments have been a rarity
improved results. So, it was decided to generation of SOP greenfields develop- despite fertiliser groups actively seeking
scale the plant design around that,” Don- ments and as such, Danakali is treading new supply. Donaldson believes this of-
aldson said. cautiously through the off-take process. fers Danakali clear advantages.

The optimisation process also identi- “We have got an off-take strategy and “We are in that rare position of being
fied a number of cost reductions which it is progressing well,” Donaldson said. ready to go,” he said. “The mine is fully
will be included in the final FEED, includ- “We have factored in moving progres- permitted, we are at the FEED stage and
ing the plans for Colluli’s recovery ponds sively from MoU to HoA to contracts and we are getting on with funding. There has
which have seen the footprint reduced by it is all on-track. never been a greenfields development
20% despite the increased processing outside of the majors and that is a big
capacity. “We are not trying to do anything clev- positive for this project.”
er with this; we are talking with highly
respected, established customers but – Dominic Piper

PAGE 44 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

Walkabout stands tall

Changes to Tanzania’s Min- many years. This industry is
ing Act have failed to take
the gloss off an impressive not new to them. It may be
first half for graphite hopeful
Walkabout Resources Ltd. new to the rest of the world,

After teasing the market but it’s certainly not new to
with the long-awaited release
of a scoping study on its Lindi China.”
Jumbo project in January,
Walkabout announced its ar- Walkabout had flagged its
rival as a serious player in the
graphite space with confirma- intentions to avoid traditional
tion of a robust DFS a month
later. banking methods to finance

Walkabout has continued to development of the project,
build momentum in the graph-
ite world, recently securing with the company fast-track-
sales and purchase agree-
ments for 75% of planned an- ing an application to access
nual production and signing a
landmark EPCM contract with funds from the Chinese Gov-
a private mid-sized, China-
based engineering group. ernment’s $US1 trillion Silk

An environmental certifi- Road – One Belt, One Road
cate was also awarded to the
company before Tanzania’s parliament initiative.
stunned the global resources sector by
passing three supplemental bills amend- The company was expect-
ing the Mining Act.
ing to receive initial approval
Walkabout executive chairman Trevor
Benson said the company was conduct- for funding at the time of print,
ing its business as per normal despite a
cloud now hanging over future mining in- with final approval targeted by
vestment in Tanzania.
October.
“We don’t know how these changes
are going to pan out, but we’re not going “We were able to fast-track
to stop moving,” Benson told Paydirt.
that application because of
“The market is obviously nervous
about the whole situation, but we’re just the interest from our EPCM
working through our model and seeing
how it will affect our overall returns. It’s Allan Mulligan contractor,” Mulligan said.
material, but we have a robust project
that’s very economic and we know the “It’s perfect for a project of
pricing mechanism in China for our prod-
uct, so it’s going to remain profitable.” tracked strategy to production at Lindi our scale. It’s a soft loan, it’s low interest

In the week prior to the changes being Jumbo. and repayable two or three years after
implemented, Walkabout appeared on
Cloud Nine after first announcing it had “It comes back to the strategy and the the project has commenced. Importantly,
reached agreement with trading houses
from China and Europe to sell at least things you put in place, those tactical we’ve come to an arrangement with the
30,000 tpa of natural flake graphite prod-
ucts from Lindi Jumbo. moves, to make that all happen,” Mulli- EPCM contractor for 20% of the design

This was soon followed by confirma- gan said. costs so they can start the engineering
tion Yantai Jinpeng Mining Machinery Co
Ltd will engineer, manage and build the “We’ve been very fortunate it has been and planning process.”
process plant and shared project infra-
structure via a deferred payment option. the directors dealing directly with the de- Walkabout’s DFS found a 40,000 tpa

Walkabout’s progress over the first cision makers on the other side of the op- operation could be developed for a low
half of 2017 has come as no surprise to
company founder and executive director eration and therefore we’re able to make upfront capex of $US38.7 million (plus a
Allan Mulligan, the architect of a fast-
important decisions on the run and form sustaining capex of $US5.6 million), with

relationships.” on-mine cash costs of $US292/t in con-

Negotiations for sales of the remaining centrate.

10,000 tpa of production from Lindi Jum- Other key highlights from the DFS in-

bo are continuing after Walkabout signed cluded a pre-tax NPV of $US323 million,

heads of agreements with Jixi Puxiang IRR of 97%, average annual free cash

New Material Co Ltd and Qingdao Ad- flow of $US35.8 million, payback within

tech Technical Consulting and Engineer- 22 months and revenue of $US1.26 bil-

ing Co Ltd for the sale of 7,500 tpa and lion, based on a 20-year mine life.

10,000 tpa respectively. A MoU has also Benson visited China during the first

been signed for the sale of 12,500 tpa to half and left confident Walkabout’s prod-

a German-based trading house with ac- ucts will fill a key void in the growing ex-

cess to European expandable markets. pandable graphite market.

The agreements were struck after “Most people we spoke to indicated the

Walkabout technical director Andrew growth rate was probably 20% per an-

Cunningham visited China and pro- num in the expandables,” Benson said.

vided product samples to potential end- “Our products are recognised in China

users, with test work at the state-owned and there is actually a pricing mechanism

BGRIMM laboratory in Beijing proving to for grades of product, which is something

be the major fillip for the deals which fol- way beyond my expertise. It’s actually a

lowed. very open market.”

“They said it was undoubtedly the high- – Michael Washbourne
est quality graphite they had ever tested

in terms of grade,” Benson said.

“We are dealing with people in China

who have dealt in graphite for many,

PAGE 46 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

Kasbah ready to rock again

Richard Hedstrom has al-
ways been interested in tin,
however, finding prospective

projects that make the grade is

not easy.

Hedstrom is the new chief

executive at Kasbah Resourc-

es Ltd, which has long been

focused on the Achmmach tin

project, central northern Mo-

rocco.

“I’ve always liked this pro-

ject and tin, but there are lim-

ited ways that you can play tin

in Australia or anywhere else,”

Hedstrom told Paydirt.

“There are a few companies

producing tin but they are also

diversified in other commodi-

ties.”

In Achmmach, Kasbah tin-

only play in a unique location. A DFS on a small scale start-up at Achmmach, Morocco, is expected to be released later this year

“We are comfortable in Mo-

rocco, the history and proximity to Eu- the people coming into Kasbah,” Hed- project that is capable of being financed.

rope is an advantage [compared to other strom said. Morocco is a great part of Africa, tin looks

parts of Africa]. It has been politically sta- “The reinvigoration will continue and good and there already has been a huge

ble for a long period of time, it has a very we will look to expand. When a project amount of effort put into this project.”

good mining code and culture, which is hasn’t been looked at for a while and you A non-renounceable rights issue to

helpful as we progress the project. The look at it again and see the changes; that raise $5.2 million was being completed at

commercial banks are comfortable lend- is the exciting part.” the time of print, with funds to be used for

ing there as well. All that allows you to Since the original DFS was produced the final technical work on Achmmach.

focus on the project rather than the other at LME spot prices of $US23,000/t tin, Major shareholders Pala Investments

issues that tend to crop up in other parts the project has undergone various en- (19.9%) and African Lion (12.6%) com-

of Africa.” hancement studies, with a DFS on a mitted to taking their full entitlements in

Under the previous management team, small start-up option released in August the raising.

a DFS was produced at Achmmach in 2016. Other significant shareholders include

2014, but like many projects the com- From an ore reserve of 6.56mt @ the World Bank (14.2%), Thaisarco

modity downturn stymied development. 0.85% tin for 55,500t, a mine life of 10.5 (4.6%) and Traxys (4.3%), while a suc-

And, just as sentiment started to turn years producing about 3,970 tpa at AISC cessfully executed block trade in June

in the mining sector last year, a failed of $US11,507/t was estimated from a saw the International Finance Corpo-

merger with Canadian company Asian capital cost of $US61.7 million. ration’s stake in Kasbah acquired by a

Mineral Resources Ltd, appeared to put Based on a tin price of $US17,830/t, range of new institutional and other in-

the brakes on Kasbah and the develop- the study showed NPV of $US51 million vestors, including leading Australian fund

ment-ready Achmmach project again. was indicated ($US38 million for Kas- manager Acorn Capital.

However, with Hedstrom at the helm bah’s 75% stake), IRR of 20.6%, payback “The rights issue gets us through to

alongside Evan Spencer (chief operat- of about four years and $US120 million the completion of DFS and allows us to

ing officer), Keith Pollocks (chief financial life of mine free cash. start discussions on financing the con-

officer) and new board members John AMC Consultants undertook an inde- struction of the project. It allows us to

Gooding, Graham Freestone, Hedley pendent review of the latest DFS and progress the project and obtain ancillary

Widdup (African Lion) and Stephen Gill reported “no fatal flaws” for Achmmach. support for the project. What we want

(Pala Investments), there is a new dawn “We are absolutely confident that we to see, and the Government and share-

for Kasbah. will have the DFS out sometime in Q4 holders is getting this project into con-

The team will benefit from a rising that gives us enough time to do the work struction and then we will start to see the

tin price, which has improved from just that is required. The DFS will incorporate potential of the project,” Hedstrom said.

above $US14,000/t in January 2016 to some of the recommendations AMC pro- “There’s been a great take-up from in-

$US20,000/t in mid-July. vided. This project has undergone a lot stitutions and a fair bit of stock is in new

“The new board and senior manage- of studies and drilling. There is nothing hands. We see Acorn’s participation as

ment team have bought into the project inherently wrong with the project, it is a good vote of confidence in the project

and commodity. As we progress with the more or less optimising the study,” Hed- and the team’s strategy going forward.”

new team and the existing staff on site strom said. – Mark Andrews
we will also look to significantly increase “Our aim is to have a company and

PAGE 48 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

RSA Mining Charter
causes chaos, confusion

Leading African mining law ex- Responding to claims South African “The perceptions around
pert Peter Leon believes the mining stocks could be re-rated and South Africa’s mining industry
proposed Mining Charter III in companies forced to consider their ex- have been negative for a long
South Africa will not see the “light posure in country, Holland was quoted time and quite frankly this is a
of day any time soon”. saying the company would “fight for our further blow to investor confi-
rights” and “not throw in the towel” at dence,” Leon said.
Leon, partner and co-chair South Deep.
of the Africa Group at Herbert “I think the industry is pretty
Smith Freehills LLP, told Pay- The MRPDA Amendment Bill, which unanimous that this is a step
dirt, that while there was a great amends the Mining Code, has been too far and what it has basically
deal of concern around the Re- stuck in parliament for more than two done is galvanise the industry
viewed Mining Charter 2017, years after it was referred back to the in united opposition. I think the
decisive intervention from the President, adding to the lingering uncer- industry collectively is going
South African Chamber of Mines tainty in South Africa’s mining sector. to stand firm against these is-
against the Charter would freeze sues.”
its implementation. Leon said the Mining Charter and MR-
PDA Amendment Bill debates needed to Changes to mining legisla-
At the time of print, the Cham- be viewed in context of South Africa’s po- tion have also caused ruptures
ber’s request for an injunction litical landscape in which there is a “huge in other African jurisdictions
against the Charter succeeded, political contest” within the ANC over the recently, Tanzania in particu-
with South Africa’s Department presidential succession. lar but Leon said the situations
of Mineral Resources (DMR) should not be blanketed across
granted additional time to file its “There could potentially be a new the rest of Africa.
answering affidavit to the injunc- President next year, so however difficult
tion. things look currently we could be having He said the Tanzanian situ-
a different discussion in six months’ time; ation was emblematic of re-
A hearing on the Chartertook everything could change and all bets Peter Leon source nationalism and con-
place on July 18, with the Cham- could be off,” Leon said. cerning for the industry there.
ber and DMR requesting a date to be set “The Tanzanian Government is saying
in the Pretoria High Court in September. Leon backed the country’s independ- that it wants to amend existing mine de-
ent judiciary and its strong rule of law to velopment agreements, change the rules
“I don’t see this Charter coming into resolve the dispute between the Cham- of the game and in the cases of Acacia
effect for a number of years or possibly ber and DMR appropriately. [Mining plc] and other gold producers,
ever,” Leon said. stop them from exporting concentrate
In the meantime, South Africa’s mining [since March] and compel them to ben-
“I am hoping for reconsideration by the industry once again faces an uphill battle eficiate domestically,” Leon said.
Government about the wisdom of this to win investors. “The mining companies are saying this
Charter. Even some senior members of is not economically feasible, while the
the ANC have expressed very strong Government is effectively accusing them
reservations about it and urged the of dishonesty and they are amending the
Chamber and DMR to negotiate a more law accordingly; including prohibiting re-
sensible document.” course to international arbitration.
“This does not send an encouraging
A chorus of South Africa’s biggest message to investors, but I don’t think
miners has stood vehemently opposed the pattern in Africa is universal. Zam-
to the Reviewed Mining Charter, which bia for example, after a difficult spell in
proposes applicants for new prospecting terms of changing royalty and taxation
rights must have a minimum 50%-plus- rates, has since reversed course while
one black person shareholding with vot- the Government has admitted to making
ing rights attached. In relation to mining mistakes, so I don’t think all countries are
rights, applicants must have 30% black taking the same approach.”
person shareholding which must be held
in a separate entity from the holder of the – Mark Andrews
right.

Gold Fields Ltd chief executive Nick
Holland said despite the shockwaves
the new Charter had sent through the in-
dustry disposing of the South Deep gold
mine was not an option for the company.

Gold Fields is preparing to spend R2
billion on South Deep over the next five
years, having already invested R29 bil-
lion on the mine.

PAGE 50 AUGUST 2017 AUSTRALIA’S PAYDIRT