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Published by Paydirt Media, 2017-08-02 00:18:36

pd252-August17-web

Tensions continue to rise between government
and industry in South Africa following the release
of the country’s new Mining Charter.

Under the revised Charter, the minimum thresh-
old for black ownership of mining companies has
increased from 26% to 30% and the question of
whether companies must maintain the threshold
permanently is still in the air.

The South African Chamber of Mines has reacted
angrily to the Charter’s release, saying it was unlaw-
ful and would serve as a disincentive to investment
in South Africa’s once thriving mining sector. As a
result, South African Minister for Mineral Resourc-
es, Mosebenzi Zwane, delayed implementation until
court proceedings are concluded.

In an exclusive one-on-one interview ahead of this year’s Africa Down Under, Paydirt asked Minister Zwane whether more
discussions would take place over the Charter’s implementation and how the Government expected it to alter the course of
South Africa’s mining industry.

Paydirt: You have taken the decision to stop implementa- Paydirt: Will the suspension of implementation open the
tion of the Mining Charter until legal proceedings are com- door to more discussions with industry? Do you plan to
pleted. Why was the decision taken? meet with industry leaders in coming months?

Minister Zwane: One of the industry stakeholders, the Minister Zwane: We have listened to the people of South
Chamber of Mines, approached the courts seeking an urgent Africa, hence the Charter which was gazetted on June 15 is
interdict, and gave [me] an unreasonable timeframe in which to reflective of the views of a wide range of stakeholders. We have
file his answering affidavit. an open-door policy, and we encourage any stakeholder to ap-
proach us where they have concerns on any aspect of our leg-
[I am] of the firm view that this matter must be handled in islation. However it must be noted that the Charter, as is, is law.
a responsible and reasonable manner, and thus the undertak-
ing was given not to implement or apply the provisions of the Paydirt: What are the key elements of the Mining Charter?
2017 Mining Charter until that application has been heard and Minister Zwane: The Charter is based on ownership, em-
judgement given, which is anticipated to take place in Septem- ployment equity, procurement, beneficiation, housing and living
ber 2017. conditions, human resources development, mining community
development and sustainable development.
Paydirt: South Africa’s economic future is uncertain.
How does the Government believe the Charter and MPRD Paydirt: Has the Government been able to make any as-
Act will affect economic change in the country? sessment as to whether the new legislation will affect for-
eign investment in South Africa’s mining sector?
Minister Zwane: The current global economic climate re-
quires government to remain resilient in addressing the ever- Minister Zwane: As part of the legislation and policy drafting
growing economic challenges, posed by a number of factors. process, a socio-economic impact assessment is done prior to
South Africa is not immune to the challenges facing many other passing of any legislation or policy. The same process was fol-
countries, both in emerging markets and in more developed lowed in the development of the Charter.
economies.
We have been engaging with both local and international in-
The 2017 Mining Charter is a key instrument for the realisa- vestors since the Charter was gazetted. They have expressed
tion of radical economic transformation, which is intended to ad- a keen interest to invest in South Africa’s mining industry, be-
dress the country’s triple challenge of poverty, inequality and cause we have given them the policy and regulatory certainty
unemployment, which are more pronounced in South Africa be- they had requested. It is unfortunate that the views of one stake-
cause of our apartheid past and its exclusionary policies. Imple- holder are chosen to paint a negative picture, and overshadow
mentation of the MPRDA and the Mining Charter will benefit the the views of the majority.
country’s economy, and ensure the meaningful and sustainable
inclusion and participation of all South Africans in the economy. Paydirt: Where do you see South Africa’s mining industry
in five or 10 years’ time? What role will it be playing in the
Paydirt: There has been vociferous opposition to the national economy by that time?
Mining Charter from industry, why do you think that is?
Minister Zwane: The South African mining and minerals sec-
Minister Zwane: Contrary to what has become the popular tor remains a pillar of the South African economy. It remains a
narrative, there has been overwhelming support for the Min- significant job creator and contributor to the country’s GDP. It is
ing Charter. Only one stakeholder, the Chamber of Mines, [has the foundation of much of the country’s economic infrastructure
been opposed]. network which underpins jobs in many other sectors.

It is our view as Government that anyone who opposes the Government will continue to do its part by ensuring an enabling
Charter is in opposition to the Government’s goal of transform- environment for investment to take place. Given mineral reserves
ing the sector. The Chamber has approached the courts, and in situ across the country, South Africa will remain a preferred in-
we have confidence in the judiciary to deal with this matter in a vestment destination for mining, for decades to come.
fair and just manner.

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 51

AFRICA DOWN UNDER PREVIEW

Gold energising West Africa
but iron on the rise

Drilling outfit Energold is seeing signs Projects in Cote d’Ivoire are keeping Energold busy
of life in the iron ore sector.
With one base in Sierra Leone, En- highest level of activity in the region at diverse skills of the wider Energold Drill-
ergold Group EMEA managing director the moment,” Thomas said. ing Corp which operates 230 rigs in more
Richard Thomas said there was poten- than 22 countries.
tially some work arising in the bulk com- “The company’s we are working for
modity in 2018, while a government- there are strongly-backed Australian com- “We have tried to use experiences
backed project in Gabon provided the panies – Newcrest [Mining Ltd], Perseus from different parts of our groups in vari-
best sort of encouragement for iron ore ous regions, so I have looked at trying
seen in a while. [Mining Ltd] – com- to develop the alternative sources of in-
panies like that. The come stream over the last 2-3 years and
At the time of print, the iron ore price Australian compa- we have had some success,” Thomas
had hit a three-month high – $US70/t – in nies are investing a said.
striking distance of the $US75-80/t mark lot into West Africa.
which smaller iron ore players can start to In addition to drilling for minerals, oil
feel comfortable at. “We expect a con- sands, seismic work, geothermal drilling
tinuation of ongo- and customised mineral and water rig
Early signs of a return to form in the ing projects and we manufacturing products and services are
iron ore sector bode well for Energold, have new contracts the niches offered by Energold.
which has had its rigs predominantly oc- expected to start in
cupied in the gold space, particularly in Africa and Europe Energold is currently the largest oper-
West Africa. in the second half of ator of portable exploration drilling rigs,
the year. We see a ideally suited to be transported through
“The bulk of our rigs are still in West gradually improving often hard to reach places in Africa.
Africa and Cote d’Ivoire is showing the picture as we head
out of 2017 and into The company is constantly modifying
2018.” and looking at ways at improving its fleet,
with upgrades to the mast, foot clamps
Energold was far and rod breakout equipment taking place
from immune to the to ensure the highest levels of safety and
global resources productivity on the drilling rigs are ad-
downturn and used hered to.
the period to good
effect by scoping “We have an in-house manufactur-
out ways to expand ing company, Dando, based in the UK
its Energold EMEA where we work on these improvements
brand. and modifications, so we don’t necessar-
ily have to go out to the market for that,”
Afrocentric Ener- Thomas said.
gold EMEA made
the move into other “We focus very strongly on safety
markets, namely standards across the board. That is
Europe, where pro- where we will attract the big guys like
jects in Germany Newcrest and blue chip clients that have
and the UK have operating mines.”
been landed. It has
also tapped into the – Mark Andrews

PAGE 52 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

Strandline lines up Fungoni

Despite legislative changes governing Luke Graham products, further strengthening free cash
Tanzania’s mining sector, Strandline flow from the project. Recent price in-
Resources Ltd will stick to script and re- finalisation of the DFS,” Graham said. creases in zircon and Iluka’s [Resources
lease a DFS on the Fungoni heavy min- “There is growing evidence that we will Ltd] plans to reopen their South Austral-
eral sands (HMS) project in Q3. ian mine later this year bodes well for the
be bringing Fungoni into production at a sector.”
The high-value, zircon-rich project is time of elevated prices for mineral sands
touted to be of modest scale, requiring a Funding for the Fungoni DFS was final-
small capex to get off the ground. ised in July when tranche two of a share
placement was approved by sharehold-
“The DFS relating to the Fungoni ers, giving Strandline $5.2 million cash to
heavy mineral sands project remains spend on exploration.
on track for issue during the September
quarter. The Fungoni project is based on Fungoni – 21.7mt @ 2.82% HMS at
a low capital cost, fit-for-market operat- 40.7% ilmenite, 4.3% rutile, 16.9% zir-
ing model to produce high-quality zircon, con, 1.2% leucoxene (measured and in-
rutile and ilmenite mineral sands prod- dicated) – is viewed as the project which
ucts to generate near-term cash flow,” will enable Strandline to become a multi-
Strandline chief executive Luke Graham decade HMS producer in Tanzania.
said.
Fungoni, near Dar es Salaam, is the
In mid-July, the bulk of the techni- most advanced project in the company’s
cal development work in the DFS was portfolio and the simplicity in which it can
largely complete, with refinement of the be taken into production in the near term
commercial aspects of the project taking allows Strandline to cast an eye further
place. afield at potentially higher-value proposi-
tions in Tanzania.
“In the meantime, important project
approvals and stakeholder engagement Rio Tinto Ltd is taking care of explo-
activities will continue in parallel with the ration across the portfolio in southern

PAGE 54 AUGUST 2017 AUSTRALIA’S PAYDIRT

Tanzania under an earn-in/ between the Government and

JV agreement, worth up to miners in-country.

$US10.75 million, with the Speaking to Paydirt before

mining giant committed to leaving for Tanzania, Graham

spending at least $US2 mil- said he was looking forward to

lion over the next 18 months. “proactive engagement with the

Meanwhile, in the north, Government of Tanzania and

resource drilling at Tajiri at the Ministry of Energy and Min-

Tanga South, was under way erals”.

at the time of print. Upon com- “It will be important to re-

pletion of that programme, emphasise our commitment to

Strandline planned to hit pros- development of our heavy min-

pects in Tanga North for the eral sands projects in a manner,

first time. which delivers sustainable ben-

The Tanga region, 100km efits to Tanzania and Strandline

south of Base Resources shareholders,” he said.

Ltd’s Kwale project, is be- “The dust will settle and we

lieved to host a major titani- want to be at the forefront of the

um-dominant resource, which new era of mining in Tanzania.

Strandline is keen to test. We want Strandline to be con-

In addition to the current sidered an opportunity for the

drilling programmes, recently A recent capital raising will ensure exploration and DFS work Tanzania Government, we want
identified soil anomalies close at Fungoni is fully funded. Strandline received an environment to be the good story coming out
to Fungoni are also planned of this. We have a good reputa-
to be drilled which could add certificate for Fungoni in July tion here and we have been po-

mine life to the current resource. promises to be one of the world’s most sitioning ourselves to be a multi-decade

Strandline has added to its package active mineral sands explorers in the producer along the Tanzanian coast.”

near Fungoni in recent times, while also next 12 months. – Mark Andrews
dropping non-prospective land. During that period, Strandline will de-

With a development asset in Fungoni termine the tiers in which its projects be-

at the starting gate, the company also long, while the dust is expected to settle

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 55

AFRICA DOWN UNDER PREVIEW

Azumah looking to land
more punches

With a good development story al- Azumah’s short-term target at Wa is 3 moz in resource and 1 moz in reserve
ready to tell, Azumah Resources
Ltd is intent on adding further chapters to update of a targeting study compiled in revisiting the Wa Lawra belt is also on
its Wa gold project in Ghana’s north. 2013, with the results providing a plat- the company’s agenda.
form for Azumah to launch a new explo-
A feasibility study has highlighted po- ration campaign. Despite difficult times for explorers,
tential for a 90,000 ozpa gold project over Azumah has continued non-stop with au-
seven years from a 2.1 moz resource and “Apart from look- ger drilling, with programmes now being
624,000oz @ 2.14 g/t gold reserve but ing at structural designed to test and extend the recently
the company is now aiming to bulk out work from the re- discovered mineralisation at a pipeline of
the operation. gion, CSA’s work targets at Julie West and in the broader
also enabled a Wa East region.
“While we have a seven-year project number of targets
mine life which pays back bank debt in to be ranked higher Stone said the recent work, particu-
three years and generates good cash and also generate larly at Wa East, provided a number of
flow, we recognise the need to reduce a number of new opportunities to increase the resource in
the capital intensity and we do that by ones,” Stone said. the short term and convert into reserves.
increasing the reserve,” Azumah manag-
ing director Steve Stone told Paydirt. “A total of 140 Returns of 60.9 g/t gold, 37.7 g/t, 26.1
targets have been g/t, 18.8 g/t, 16.9 g/t, 12.3 g/t and 11.4
Stone joined Azumah over a decade generated in the g/t from rock chip sampling at several
ago and since then CSA Global has review, with 18 very targets at Julie West and 2m @ 27.9 g/t
been actively engaged at the Wa project high priority and from a trench at the new JW5 target, in-
and recently completed a targeting and 28 priority targets dicate widespread mineralisation and
multi-element data study. identified, providing good potential for resource increases at
the framework for the 142sq km Julie West licence.
CSA Global’s latest work was a formal a refocus on explo-
ration. In the short Meanwhile, Stone is excited by what
term, the target is 3 CSA can reveal from analysis of the large
moz in resource and amount of multi-element data routinely
1 moz in reserve, up collected by Azumah from geochemical,
from 624,000oz.” aircore and RC drilling.

Currently, the re- It is hoped close examination of such
source is evenly data will provide breakthroughs in identi-
distributed between fying new target areas or finessing exist-
Kunche-Bepkong ing ones by recognising new pathfinders
and Julie, Wa East, for mineralisation other than gold itself
where Azumah has and the commonly used arsenic.
had a lot of success.
With more date and detail in hand, Az-
Wa East will con- umah plans to start drilling in mid-to-late
tinue to be an area October following the wet season.
of focus, however,
– Mark Andrews

PAGE 56 AUGUST 2017 AUSTRALIA’S PAYDIRT

Base lifts a gear

After a near fatal 2015, Base Resourc- Base expects continued strength in the zircon and ilmenite markets
es Ltd is beginning to see its debt
clouds clear thanks to a rebound in min- position by $US24 million in the quarter Speaking during the company’s June
eral sands prices. to $US98.5 million including the closure quarterly results presentation, chief fi-
of its $US20 million debt facility with nancial officer Kevin Balloch said the
Kenya-focused Base was on its knees major shareholder Taurus Management paying down of debt was a milestone for
towards the end of 2015 as it struggled to Fund. the company which had repaid $US23
lift its debt burden amid deflated markets
in its key commodities of rutile, zircon
and ilmenite. However, with prices for zir-
con and ilmenite, and to a lesser extent
rutile, recovering in the last 18 months,
the company is in the midst of a revival.

Base’s share price is reflecting the re-
covery, climbing from lows of 2.1c/share
in October 2015 to a high of 34.6c in April
before settling around 25-30c at the time
of print.

The price improvements and ongo-
ing operational performance has seen
Kwale’s revenue increase with a record
$55 million posted for the June quarter.
The company also posted a revenue-to-
cost ratio of 2.9 against an industry aver-
age of 1.2.

Base has been quick to take advan-
tage of the windfall, reducing its net debt

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 57

AFRICA DOWN UNDER PREVIEW

million in total over the previous three environment for some time to come, but it already begun the process with mining
quarters. is apparent industry underestimated sup- rates increased to a record 3mt in the
ply and demand at end of last year and June quarter thanks to the introduction of
“The cash generation during the quar- inventory levels have fallen away quicker more hydraulic mining units.
ter has resulted in further strong reduc- than anticipated,” Balloch said. “We are
tion in net debt,” Balloch said. “Not so getting a lot more inquiries than anticipat- “The hydraulic mining units – which
long ago, people were concerned by the ed and can’t meet the demands of all our will be a key feature of Kwale Phase 2
level of debt being carried by the com- customers and are rationing our supply.” – assisted in exceeding mining capacity
pany.” of 400 tph. We are now in the process
He said the outlook for zircon was of increasing capacity to 800 tph and
The revenue increase has been fuelled strong for the remainder of 2017. will gradually add more units in Phase 2
by improvements in mineral sands pric- and phase out existing dozer trap units
es, led by ilmenite and zircon and Bal- “The environment for Q4 and beyond through 2018.”
loch said the company expected contin- is fairly positive. There is a huge amount
ued strength in the two markets during of demand and not enough supply so The increased mining rates have meant
the September quarter. there is good chance of further increases greater pressure on the wet concentrate
towards the end of the year.” plant but Balloch said modifications un-
“We continue to see the global pig- dertaken to the circuit in the March quar-
ment industry firm through the coming Rutile has been less robust but mod- ter negated a drop in recoveries.
quarter,” he said. “Plants are now operat- erate increase “bode well for the future”
ing at high utilisation rates, which bodes according to Balloch. “Previously, when we pushed mining
well for high-grade feedstocks, and glob- rates high we found the density could not
al pigment producers announced price “We are hoping there is a good envi- be maintained in the spirals, leading to
increases through July.” ronment for rutile price improvement as recovery losses,” he said. “We have in-
we move forward,” he said. creased pumping capacity and this quar-
Ilmenite spot prices flattened towards ter there was no loss in recovery rates.”
the end of the quarter following a surge The stability in commodity prices has
in prices for Chinese supply in April. Bal- reinvigorated Base’s approach at Kwale In Kwale’s mineral separation plant,
loch said this had led to Chinese sup- with the board giving its approval for the the installation of a new screen in the
pliers losing their competitive margins mine’s Phase 2 expansion in May. June quarter is expected to increase zir-
against Western producers. con recoveries – which are still below the
The expansion is designed to maintain design rate of 78%.
“They are not far from Western pro- production at current levels – 88,000-
ducers which is perhaps a little high to 94,000t for rutile, 400,000-430,000t for On exploration, Balloch said Base
be competitive and that has put pressure ilmenite and 32,000-37,000t for zircon would release a resource update this
on ilmenite prices again but hopefully forecast for 2018 – rather than the reduc- quarter following extensional drilling on
Western producers will increase in the tion seen in the current mine plan. the south-western and eastern margins
second half of this year which will retain of the Southern Dune.
that competitive price margin.” To ensure production levels are main-
tained despite a gall in heavy minerals Further drilling to the north-east of the
Balloch admitted zircon’s perfor- grade when mining moves to the lower high-grade Central Dune will take place
mance had taken Base by surprise with grade Southern Dune in 2019, Base in early 2018 requiring Base’s Tanzanian
the $US50/t increase it secured for the plans to increase mining rates. exploration plans to take a back seat until
June quarter being improved by a further completion.
$US150/t increase in sales agreements “We are well into the planning and en-
for the September quarter, in line with gineering for Kwale Phase 2,” Balloch – Dominic Piper
Iluka Resources Ltd’s pricing standards. said. “The focus is on optimisation of
mining methods so we can maintain pro-
“At start of the year, we were duction levels as they are now.”
expecting a flat price
Implementation is set to begin in ear-
nest at the turn of the year but Base has

Price improvements for zircon and ilmenite have helped Base’s revival in Kenya

PAGE 58 AUGUST 2017



AFRICA DOWN UNDER PREVIEW

Sovereign’s low-risk Malingunde

Legislative changes relevant to the A rare combination of low capex and opex requirements at Malingunde has elevated
natural resources sector have Sovereign’s standing in the graphite development space
jeopardised the viability of some
mining projects in Tanzania. Having such low operating costs grade tonnes to exploit at Malingunde af-
and factoring in a basket price of about ter the initial 17-year mine life, while there
While many ASX companies $US900/t, Sovereign has the ability to is close to 4,000sq km of ground also to
come to grips with a change in own- produce graphite concentrate for the in- be explored.
ership, taxes and the royalty regime dustrial sector, whereas few of its small
in Tanzania, Malawi-focused Sov- scale competitors can. “We have six other saprolite prospects
ereign Metals Ltd is spying the op- and there are many more. It took a few
portunity to be the must-have stock However, the company has not dis- years to know how to find them and using
in the small-scale African graphite counted participating in the battery mar- various databases we now know how to
space. ket at some stage. find them,” he said.

“Some of the Tanzanian projects “Almost all graphite peers are hosted in Sovereign will continue to explore,
were ahead of us and this has given hard rock, we have a substantial advan- however, marketing Malingunde and ac-
us a chance to catch up,” Sovereign tage and we are in the top three of the celerating project development is also on
managing director Julian Stephens product suite of the competition. Mining the cards.
told Paydirt. will be no deeper than 25m, shallow, long
open pits. We can mine lower grades lat- At the time of print, Sovereign was
“It is a natural opportunity for Sov- er on but we are also finding more high- approaching the UK market to gauge
ereign because the East Africa play- grade also. interest in Malingunde, while baseline
ers – smaller scale projects – are environmental studies as part of the fea-
our direct peers. The finance-ability, “A lot of our peers can’t enter the tradi- sibility study had started.
fundability of these Tanzanian pro- tional space because of operating costs.
jects is now thrown into question. We are not waiting for the battery market “We are happy with the flow sheet, but
What debt funder wants to provide and we have no plans to build any spheri- we will do more met testing to produce a
funding in a jurisdiction where con- cal plants or anything like that. There is concentrate to show potential off-takers,”
tracts can be renegotiated and there a unique opportunity for Sovereign to Stephens said.
is no arbitration?” enter existing, high-volume traditional
markets.” “We have high-quality concentrate at
Despite the circumstances in Tanza- the lowest cost; we don’t need large vol-
nia and the impact on companies there, Unlike the hard rock, coarse graphite umes or optimistic price assumptions to
numbers from the Malingunde scoping deposits, which can often stick out at sur- generate cash. The upside is the future
study released in June warranted atten- face for easier identification, it has taken battery market, but we should be able to
tion for Sovereign in its own right. time for Sovereign to find the saprolite get to existing industrial markets pretty
material at Malingunde. easily.”
Malingunde, 20km from Malawi’s capi-
tal Lilongwe, is currently the largest sap- However, having had such success at – Mark Andrews
rolite-hosted deposit in the world. Malingunde, Stephens is confident Sov-
ereign has developed the knack of ex-
The scoping study, conducted by ploring for saprolite deposits.
Amec Foster Wheeler plc, indicated po-
tential for Malingunde to produce 44,000 Stephens said there are plenty of lower
tpa flake graphite at an average operat-
ing cost of $US301/t over 17 years.

Capital cost of $US29 million to build
the project was estimated to be paid
back in two years.

An underutilised railway line is in close
proximity to Malingunde and the soft na-
ture of the saprolite ore means process-
ing costs are kept at a minimum.

“The scoping study exceeded our ex-
pectations on the upside,” Stephens said.

“We are right at the bottom of the oper-
ating cost curve; it is simple mining, free
dig, and simple processing. There is no
crushing or grinding required and we are
not reliant on niche or optimistic pricing.”

In some respects Sovereign is go-
ing against the grain with its strategy,
choosing to supply traditional industrial
markets, which still drive 80% of graphite
demand.

“The battery story is sexy, but it is yet
to materialise,” Stephens said.

PAGE 60 AUGUST 2017 AUSTRALIA’S PAYDIRT



AFRICA DOWN UNDER PREVIEW

THK clears a path for Etango

Bannerman Resources Ltd has wel- Brandon Munro longer be selling 25% of the world’s ura-
comed Kazakhstan’s move to estab- nium production at week-to-week spot
lish a trading house for its state-owned any bright light in the darkness, you don’t prices. The key reason why uranium
uranium production company. know how close to it you are,” Banner- pricing is so poor right now is due to a
man chief executive Brandon Munro told lack of liquidity in the spot market and the
Trading House KazAtomProm (THK) Paydirt. absence of discretionary buying by utili-
was unveiled earlier this year in response ties, traders and financers.”
to a lack of liquidity in the uranium mar- “One of the easily achievable objec-
ket. Yellowcake prices slipped to a 12- tives of THK is to enable KazAtomProm Bannerman is due to release a DFS
year low of $US17.75/lb last November. to start selling term contracts to take that update on Etango, 38km east of Swa-
downward pressure off the spot market. kopmund, by the end of the month. The
KazAtomProm has long been a domi- company previously completed a DFS on
nant player in the uranium industry, how- “THK will enhance the functionality of the project in 2012 and subsequently up-
ever, regulations stipulating that most of the spot market and one of the implica- dated the economics in 2015.
its material must be sold into the spot tions for this is KazAtomProm will no
market is negatively impacting the ura- The DFS update will look to incorpo-
nium price. rate results from the heap leach demon-
stration plant, targeting improvements in
Commentators have speculated the recovery and acid consumption, as well
arrival of THK could be the catalyst to as several technological advancements
move the uranium price upwards, poten- which have emerged in the sector over
tially opening a door for the likes of Ban- the past five years.
nerman to bring new projects online.
“It’s about looking at what areas of
Bannerman’s Etango project in Na- general improvement we can obtain giv-
mibia will be twice the size of the nearby en that we’ve had a lot more time to work
Rössing uranium mine when fully devel- on the project and understand the project
oped. since 2012 when we did the DFS,” Munro
said.
“THK is a very bright light for the ura-
nium sector, but the only question is, like

PAGE 62 AUGUST 2017 AUSTRALIA’S PAYDIRT

“The DFS update is really Namibia First Lady Monica

about capturing the deflation Geingos (nee Kalondo) chairs

we have seen in the industry, One Economy Foundation

whether it’s taking some of the and previously sat on Banner-

frothier aspects of the 2012 man’s board for six years.

thinking out of the project or “They’re closely aligned

starting to look more closely at with our own corporate social

alternative mining equipment responsibility endeavours and

that wasn’t a viable alternative we have a high level of con-

back then. fidence in them in terms of

“When we did the analysis their governance, probity and

of what we could achieve with effectiveness in rolling out so-

the DFS update, I realised it cial change,” Munro said.

was likely we would be achiev- “They’re very well respect-

ing an extraordinary return on ed and highly profiled in Na-

investment where, for a mat- mibia, which obviously has a

ter of hundreds of thousands Results from Bannerman’s heap leach demonstration plant halo effect with Bannerman.”
of dollars, we would expect to will be fed into an impending DFS update on Etango In a further boost for Ban-
add tens of millions of dollars nerman, former Rössing man-

to our NPV.” tionally leveraged” to a rising uranium aging director Mike Leech recently joined

The last project economics Ban- price, having witnessed Bannerman’s the company as a non-executive director

nerman released to the market in late stock jump more than 200% earlier this and will chair its Namibian subsidiary.

2015 flagged a pre-production capex of year when KazAtomProm announced a Leech is widely regarded as the most

$US793 million to build Etango, with pay- 10% production cut, equivalent to 3% of senior uranium executive in Namibia,

back in 4.4 years of first production and world uranium production. having also served as president of the

life-of-mine operating costs of $US38/ Bannerman recently finalised a trans- Chamber of Mines and being awarded

lb. NPV was estimated at $US419 mil- action for Namibian not-for-profit organi- inaugural life membership to the Namib-

lion with IRR of 15%, based on average sation One Economy Foundation to be- ian Uranium Association.

annual production of 7.2 mlbpa over an come a 5% loan-carried shareholder in – Michael Washbourne
initial life of 15.7 years. Etango, as per the conditions of the com-

Munro believes his company is “excep- pany’s licence.

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 63

AFRICA DOWN UNDER PREVIEW

Nzuri’s defining moment

The impending release of a lese Minister of Mines and vari-
potentially robust feasibility ous other parties in the DRC and

study has investors keeping a to the local market. It will be fan-

watchful eye over Nzuri Copper tastic for everyone.”

Ltd. A casual drink with Tembo

Nzuri (formerly Regal Re- Capital’s David Street before a

sources) was wrapping up fea- Rugby World Cup match in Lon-

sibility work on its Kalongwe don two years ago proved to be

copper-cobalt project in the DRC the catalyst for luring finance

at the time of print, with the final guru Arnesen to the company.

results likely to be published to- Arnesen was familiar with

wards the end of next month. the Kalongwe project from his

It will mark the first economics time as finance director at Moto

to be released on Kalongwe, only Goldmines, which developed the

15km from Ivanhoe Mines Ltd’s Nzuri is assessing the cobalt potential of the Kalongwe project Kibali gold mine in the DRC until
the company was taken over by
developing Kakula project, since

a scoping study was completed in mid- where the feasibility would be complete,” Randgold Resources Ltd in 2009. He
2015. However, both the company and Arnesen told Paydirt. was initially brought in as a consultant

project have undergone major changes “I think we’ve come a long way. I’m to help Regal overcome a series of trou-

in the intervening two years. very pleased with where we sit with the bled corporate arrangements with Traxys

Nzuri chief executive Mark Arnesen balance sheet right now. We’ve got cash, S.A. and Afrimines Resources SARL.
expects the feasibility study announce- no debt and we’re making good progress It took several months of intense nego-

ment to be a defining moment in the com- on a lot of fronts. tiations with both parties and the compa-

pany’s recent history. “I’m really looking forward to sitting ny’s Congolese partner GICC, but Arnes-

“Certainly when I first got involved it with our Congolese partner and present- en was eventually able to broker a string
was hard to conceive getting to a stage ing [the feasibility study] to the Congo- of deals and transactions which helped

PAGE 64 AUGUST 2017 AUSTRALIA’S PAYDIRT

tidy up Regal’s balance sheet. that be a heap leach SX or heap
Following completion of a rights
leach SXEW plant option,” Smits
issue which netted the company
almost $10 million, Arnesen was in- said.
stalled as chief executive and he im-
mediately brought in Adam Smits as “We’re already thinking past the
chief operating officer and Anthony
Begovich as chief financial officer to DMS now. The lead time for a heap
continue the company’s revival.
leach test work programme is about
Regal was rebranded as Nzuri
in January and the Kalongwe story 12-18 months. In my experience with
was reintroduced to investors the
following month during the South this phase of delivering a feasibility
African conference circuit, with an
unexpected result. study, funding and then starting de-

Nzuri’s share price surged from 1.5c velopment, everything stops and you
to 42c in February as savvy investors
drew the connection between Kalongwe lose all knowledge in the engineer-
and Ivanhoe’s nearby assets, particularly
those with strong cobalt potential. ing companies and you have to re-

“The scoping study did not include A feasibility study on Kalongwe is due at start. We don’t want to do that.”
cobalt at all, the only reference was that the end of the September quarter Smits said the company was look-
cobalt was potentially an upside to the ing to leverage off the infrastructure
project,” Arnesen said.
serve estimate for Kalongwe in the lead- Ivanhoe plans to develop in the area,
“When I first looked at the project, the
pay-ability on cobalt was north of 2%. It’s up to the feasibility study announcement, particularly heavy duty powerlines re-
now dropped to 0.7%. That means our
cobalt is payable and it will be a fairly big with project financing discussions also quired to power a SXEW plant.
part of our revenue cycle and cash flows
in the feasibility study.” likely to start before its release later this Nzuri also plans to assess the viability

Nzuri plans to release a maiden re- quarter. of reducing the head grade from 3.5% to

Engineering work will continue 2.6% through the DMS plant in a bid to

throughout, with the company progress- extend mine life from 5-8 years. Results

ing test work on a 3,500t sample at the of this study are not likely to be ready un-

time of print, as Smits and his technical til early next year.

team consider how the project will look Exploration work, including RC drilling

beyond its first phase of operations. at a number of regional copper-cobalt

“The feasibility study is purely focused targets on the Western Katangan copper

on a DMS set-up, but we want to do a belt, is set to continue until the wet sea-

heap leach test work programme so we’ll son hits in November.

have all the information to make a deci- – Michael Washbourne
sion on Stage 2 of the project, whether

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 65

AFRICA DOWN UNDER PREVIEW

Merger magic for Minbos

Along overdue merger is set to offer dated, but trying to join a private entity minority partner – near Mucula, while
Minbos Resources Ltd the traction that’s done a lot of infrastructure pro- minimal work has been carried out on
it needs to advance the Cabinda phos- jects and not a lot of mining with a pub- Pedra de Feitico, on the southern banks
phate project in Angola. licly listed mine development company in of the Congo River.
Australia has not been easy,” Reed told
Minbos executed a definitive binding Paydirt. “They’re quite different [to Cabinda]
share sale agreement in May to acquire in terms of their geology, the nature of
100% of project partner Petril Phos- “It’s taken some time, but it’s been well product they would make and the mar-
phates Ltd and finally consolidate owner- worth the while. Clearly when you take a kets they could service, but in the context
ship of Cabinda under the one operating lot of time and have a lot of arguments, of Angola they were competing for atten-
entity. you end up forming the basis of a rela- tion,” Reed said.
tionship that’s functional and can take
Under the agreement, Minbos also the project forward. “Now we can put all of these projects
acquired Petril’s interest in the Lucunga together and have a sensible develop-
(about 70%) and Pedra de Feitico (100%) “To have one entity dealing with all ment plan for a pipeline of projects in a
phosphate projects in Angola’s Zaire stakeholders, customers, suppliers, fi- logical order rather than have them com-
province. nanciers, investors and government is peting with one another.”
a major positive, it will short-circuit the
A merger between ASX-listed Min- decision-making and get things happen- Minbos will look to finalise terms with
bos and privately owned Petril was first ing a lot faster.” an engineering company over develop-
flagged by Lindsay Reed when he was ment of Cabinda in the coming months,
appointed chief executive of the former The Minbos-Petril merger carries with the JV previously preventing the
in September 2014. several benefits, including an ability to company from committing to a contract.
advance the two incoming projects in a
An official merger announcement only timely manner and without impacting the Ausenco Ltd is set to continue its asso-
eventuated last December and the pro- development of Cabinda. ciation with the project, having overseen
cess continued to be frustratingly slow the first phase of a BFS on Cacata – the
thereafter. More than $9 million has been spent lead deposit in the Cabinda project – in-
on Lucunga – a JV with international fer- cluding a trade-off study on the best ben-
“Both parties recognised the project tiliser producer Haifa Chemicals Ltd, the eficiation route for the orebody.
will go much, much better if it’s consoli-

PAGE 66 AUGUST 2017 AUSTRALIA’S PAYDIRT

Minbos has set no definitive time- Minbos is closely following development of Porto de Caio Cabinda, about 60km
table for completion of the BFS, from the Cacata deposit
instead choosing to backend its
schedule against the development minimum number of customers to get it “It’s put a lot of pressure on the Gov-
of new port facilities at Porto de Caio financed.” ernment’s financing for a country that is
Cabinda. only 10-15 years out of a civil war and
Development of Cabinda will be wel- now operating on a stable basis. It’s defi-
Reed also said the company was come news for an Angolan population nitely created some volatility and some
likely to begin “serious talks” with still somewhat reeling from the steep struggles.
project financiers towards the end of drop in the oil price.
the year, with newly appointed sales “From our perspective, it’s helpful in
and marketing manager Mike Erwin Oil and diamonds are the country’s two the sense the drop in the oil price has
to coordinate discussions around biggest exports, with phosphate consid- focused the country on trying to find al-
off-take. Marketing samples will ered an emerging opportunity. ternative sources of revenue and alterna-
soon be sent to potential customers. tive sources of employment, training and
“Angola is actually coming off a very, skills for the population.”
“Getting sales is key to getting fi- very big oil boom which had a little bit
nance,” Reed said. “The great thing of a mini Dutch effect in the country and – Michael Washbourne
about Cacata is it can produce a premi- made everything very, very expensive –
um product, giving us the ability to have way worse than Perth in the boom,” Reed
conversations with certain target cus- said.
tomers that we otherwise wouldn’t.

“However, none of these industrial
markets are very big so you’ve got to be
relatively small and have a good return.
You can’t be relying on needing too many
customers to get your financing. You’ve
got to get your market share down as
small as possible to make it work.

“What we’ll be trying to do with this pro-
ject is build it at a certain size but we’ll
try to make it work at a reduced capac-
ity, not at full nameplate, and having the

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 67

AFRICA DOWN UNDER PREVIEW

Kore’s triple threat on Kola

Kore Potash Ltd will seek to com- 507.7mt @ 35.4% KCL (measured
plete a DFS, sign a fixed-price and indicated).

EPC contract and finalise a second- The resource upgrade produced a

ary listing inside the next 12 months. 7% increase in grade from the pre-

The emerging potash developer vious estimate, despite a 5% reduc-

confirmed it intended to list on Lon- tion in contained potash.

don’s AIM exchange later this year, “I don’t know where else you’ll find

having revealed to Paydirt in Febru- a 35% KCL deposit,” Bennett said.

ary that feedback from its Australian “It’s one of the highest, if not the

investor base had enticed the com- highest, grades out there and obvi-

pany to consider dual trading options. ously at a very shallow depth. This

Canaccord Genuity Group Inc will just reconfirms what a fantastic de-

act as the company’s adviser for the posit we’ve got. It’s always been in-

AIM listing, with Kore hoping to begin credibly high grade – it was original-

trade on the London bourse by year’s Kore is seeking to complete a DFS on Kola by Q2 2018 ly 32-33% KCL – but now it’s even

end. better than it potentially was.”

“With a big project like ours, you want marketing, that it made sense and there Kore is likely to punch a few more drill

to access as much global capital as you was additional appetite in this market for holes into Kola as it pulls together all the

can so being on the London Stock Ex- this type of project.” data required for the DFS, which is due in

change and having access to European Bennett was referring to the company’s Q2 next year.

capital is quite important to supplement 97%-owned Sintoukola project in the Re- A French-based engineering and con-

the Australian capital,” Kore managing public of Congo. struction consortium, led by Vinci Con-

director Sean Bennett said. Kore preceded the secondary listing struction Grands Projets and Technip

“It’s something we had been thinking announcement with a timely resource up- FMC, has been tasked with completing

about for a while and I think we just came grade for the flagship Kola deposit, which the DFS, with a provision for a fixed-

to the conclusion, having done some pre- now boasts a total sylvinite resource of price EPC contract to follow within three

PAGE 68 AUGUST 2017 AUSTRALIA’S PAYDIRT

months of the study’s release. “It was about the fourth derstands the value in
“The team are working flat out at the
largest junior fundraise having two major share-
moment trying to drive down costs and
finalise the design of the mine,” Bennett last year and we were holders like SGRF and
said.
able to bring in an amaz- SQM,” Bennett said. “It
“I think we’ve got over 100 engineers
working through various aspects of the ing set of shareholders in de-risks this business
DFS within that consortium. It’s a huge
amount of work, but it’s very exciting SQM and SGRF,” Ben- hugely, you couldn’t ask
work and we’re very pleased with the
way it’s going. There’s still a lot to do, it’s nett said. for better shareholders.”
relatively early stages.”
“We’ve hired a huge Bennett is also “cau-
Shareholders will not be kept in the
dark as the DFS progresses, with the amount of experience into tiously” upbeat about
company intending to update the market
on current activities and various process- our owners’ team, we’ve the outlook for potash,
es on at least a quarterly basis.
rebranded, we’ve started having seen small but
Drilling and other exploration work will
also continue at the project’s two other the DFS and we’ve al- steady increases in price
key deposits in Dougou and Dougou Ex-
tension, where one of the world’s high- ready identified $US100 over the last six months
est-grade sylvinite seams was previously
reported. million of savings. It’s not following a challenging

Bennett and respected South African been easy – I’m sure my five years prior.
businessman David Hathorn took the
reins of the company, then known as El- hair gets greyer every “The potash price
emental Minerals, in late 2015 and spent
most of last year “tidying up the house” day – but it’s been a fan- Kola is one of the highest-grade hasn’t raced away, but
before rebranding the business and tastic 18 months or so. potash deposits in the world
launching a $US45 million capital rais- the fact it is continuing
ing. “As with all of these to strengthen and the

things, there are huge industry itself is talking

challenges which lie ahead, but I think positively about things is great,” he said.

we’re all incredibly excited about the next “At the end of the day, potash is a

18 months.” commodity so there are competitive ad-

Chilean integrated producer SQM vantages if you’re the lowest in the cost

and Oman-based sovereign wealth fund curve, but the potash price will do what

SGRF have both signed preliminary the potash price will do. What we need to

agreements for 20% of future production. do is make sure our costs are lower than

SQM also provides up to 200 man-hours everybody else’s and then you will make

a week of project and marketing assis- money when others don’t.”

tance. – Michael Washbourne
“I don’t know whether everybody un-

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 69

AFRICA DOWN UNDER PREVIEW

Triton on the charge

Triton Minerals Ltd is on track to catch good thing for Mozambique. There’s lots graphite and, in some cases, was supe-
and possibly overtake some of its of positive things happening there at this rior to Chinese-produced graphite.
peers in the East African graphite com- point in time.”
munity, according to managing director “The expandable graphite market is
Peter Canterbury. Using a basket price of $US1,368/t growing rapidly and there will be a re-
graphite in concentrate, the scoping quirement over time for additional sourc-
After “essentially losing a year” as a study found the Ancuabe project could es,” Canterbury said.
result of entering voluntary administra- support production of up to 60,000 tpa
tion in early 2016, Triton has completed a over an initial 17 years for a development “Everyone was thinking the market
remarkable turnaround since Canterbury capex of $US83 million and life-of-mine would be flooded, but I’m now starting to
took the reins of the company last Sep- operating costs of $US601/t. get the sense that’s not going to be the
tember. case. Changes in legislation in China
Other key outcomes from the study and Europe are now mandating the use
Since recapitalising in December, Tri- included a discounted NPV between of flame retardants and also the banning
ton has released a robust scoping study $US128 million and $US246 million of brominates in those materials.
on its Ancuabe graphite project in Mo- ($US75 million based on indicated re-
zambique along with several promising sources only) and payback of 2.7-4.8 “An opportunity had really been
metallurgical test work results. years. opened for expandable graphite and it’s
a market a lot of the East African projects
“We essentially lost a year by going In the lead-up to the scoping study can supply into.”
into voluntary administration, but we’ve release, Triton announced an upgraded
probably made up six months of that [lost resource of 27.9mt @ 6% TGC for 1.68mt Over the next six months, Triton will
time] in the last six months. With what’s contained graphite, including an indi- look to complete a DFS on Ancuabe as
happening in Tanzania at the moment, I cated resource of 9.2mt @ 6% TGC for well as the environmental and social im-
think we’re well positioned to move ahead 550,000t contained graphite. pact assessment which will run in paral-
of a number of people”, Canterbury said. lel. Off-take and project financing could
Metallurgical test work on the Ancuabe also materialise in that period, with the
“It’s unfortunate for everyone in Tanza- material also demonstrated expansion company hoping to make a final invest-
nia, but my experience is that it will even- rates up to 500 mL/g, which exceeded ment decision during Q1 2018.
tually rectify itself. But that could be a product requirements for expandable
– Michael Washbourne

PAGE 70 AUGUST 2017 AUSTRALIA’S PAYDIRT

Oklo on the go in Mali

Aglut of drilling by fellow Malian gold Drilling at Seko has delivered a diamond with that we recently announced very
player B2Gold Corp has slowed as- pre-collar intersection of 65.6m @ 2.2 g/t gold good visual alteration in the diamond
say results from aircore drilling on Oklo drilling, which is below the oxide. We
Resources Ltd’s Dandoko project but the Six diamond holes had been com- are hitting some nice wide zones of
company is comfortable with those it has pleted to a vertical depth of about alteration and we are eagerly waiting
received. 180m. those results as well,” Taylor said.

Oklo has been returned half of the re- “We are getting very good results “The first two holes have been cut and
sults from the 182 infill and step-out cam- in the oxide from the aircore, coupled sent to the lab. The key is that once we
paign at the Seko prospect, part of the can get all the results out in the next 3-4
wider Dandoko project. weeks, we have also done some IP and
gravity and we will have all the structural
Significant intersections such as 13m work from the logs. We will have a really
@ 2.29 g/t gold from 83m end hole, 17m good dataset combined with the results
@ 4.04 g/t from 16m end-hole and 34m heading into the next drilling programme.”
@ 1.92 g/t from 11m, including 22m @
2.05 g/t, were included in the results Last month, the exercising of listed op-
Oklo had received at the time of print. tions on the back of an $8.7 million capi-
tal raising in May, bolstered Oklo’s cash
“We are happy with the results from position to $14.5 million.
the last round of drilling. We are still on
wide spacing – 100m by 50m – and in Oklo is one of the better funded juniors
the last round we have drilled a com- in the West African gold space and has
bined strike length of over 2km with an- strong support from major shareholders
other 1km or so to come,” Oklo manag- BlackRock Group (14.89%), 1832 Asset
ing director Simon Taylor told Paydirt. Management (8.08%), Resolute Mining
Ltd (5.61%) and Ack Pty Ltd (5.43%).
Taylor hoped to receive the remain-
ing aircore and initial diamond drilling – Mark Andrews
results early this month.

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 71

AFRICA DOWN UNDER PREVIEW

Celsius on top at Opuwo

Battery minerals specialist across the whole zone we’ve
Brendan Borg is convinced delineated of about 0.15% co-

Celsius Resources Ltd’s Opuwo balt,” Borg said.

project in Namibia is an unri- “That’s roughly about a 30%

valled cobalt play. uplift on what would have been

“When I look at all our peers the par score for the cobalt

on the ASX, I can’t find another grade when we first started. The

cobalt project I would rather in- higher grade zones that we’re

vest in,” Borg told Paydirt. defining will make a very big

Borg joined Celsius as a con- difference to this project. It out-

sulting geologist late last year crops at surface across virtually

after helping vend the Opuwo all of that 15km, so we’re talking

project into the company’s port- about something that we will be

folio. He was appointed manag- able to mine from surface.”

ing director in March. A recent $3.5 million place-

Only two holes had been Celsius has identified a strike extent of more than 15km at Opuwo ment will ensure Celsius has

drilled into Opuwo, north-west- enough funds to complete a

ern Namibia, when Celsius took control. the first rig arrived at the project, includ- scoping study, with some funds likely to

Now, following an extensive initial drilling ing 5m @ 0.18% cobalt and 0.55% cop- be carried over to a PFS if the results

campaign, the company has identified per (including 3m @ 0.21% cobalt and come back positive.

cobalt-copper mineralisation over more 0.68% copper), 5m @ 0.13% cobalt and Auralia Mining Consulting has been

than 15km of strike and is charging to- 0.36% copper and 4m @ 0.14% cobalt tasked with evaluating the mining meth-

wards a maiden resource and scoping and 0.51% copper. ods and costs to develop the project,

study before year’s end. “The grades we had in the first two with Celsius’ JV partner Gecko Namibia

Diamond drilling at Opuwo has re- historical holes were about 0.11% cobalt to provide local costing data to optimise

turned a number of high-grade hits since and now we’re seeing an average grade the numbers.

PAGE 72 AUGUST 2017 AUSTRALIA’S PAYDIRT

Perth-based Orway Mineral Consult- consultancy firm Borg the $US60,000/t mark,
ants, a subsidiary of Lycopodium Ltd, will
design and supervise the metallurgical Geoscience Pty Ltd, Celsius also believes the
test work programme, with input from
SGS Australia and Grenvil Dunn of Hy- has cast his eye over operating environment in
dromet Pty Ltd. One of the primary aims
of the test work will be identifying the several graphite, lithium Namibia offers the com-
preferred processing technique for the
Opuwo ore. and cobalt projects in re- pany an advantage very

Borg said his company was focused on cent years as excitement few of its rivals can com-
proving up the metallurgy and some of
the key engineering and costing param- builds in the battery min- pete with.
eters before moving on to the traditional
scoping study items such as resource erals space. However, “We really liked the loca-
drilling.
in his opinion, few stand tion in Namibia compared
“We know we’re going to have a fair-
ly large resource – certainly one large out like Opuwo. to some other African
enough to form the basis of a mining op-
eration – but we first need to address the “A project such as ours countries, in particular the
costs and techniques of mining it,” Borg
said. will have a far less capi- DRC where the majority of

“We think it’s prudent to make sure the tal expenditure require- the world’s cobalt comes
metallurgy looks like it will be acceptable
before we go out and do a lot more work. ment than some of those from, and we saw an op-
These cobalt deposits can vary a lot in
terms of the extractability of the cobalt nickel laterite projects portunity to really differen-
from the ore, so we’re looking to get that
work done as quickly as possible before you see in Australia or tiate ourselves as a much
we commit to the full-blown JORC re- the arsenic-associated High-grade outcropping cobalt more reliable and what the
source drilling.” is a feature of Opuwo market would perceive as
vein deposits in North
Borg, who also runs his own geological
America and Europe, a more ethical source of

which are much more difficult to put a re- cobalt,” Borg said.

source on and a mine plan around,” Borg “Having said that, Opuwo has similar

said. geology to many of those deposits in the

“One of the key things for us will be ex- DRC and I see those as being the best

plaining the differences between our pro- types of cobalt deposits in the world.”

ject and some of the other projects out Opuwo is within 5km of bitumen roads,

there on the ASX. We won’t necessar- 30km of an established township and

ily have the highest headline-grabbing 100km of the Ruacana hydro power sta-

grades, but we certainly have most of tion, with a 66kV transmission line pass-

those projects covered for grade in any ing through the eastern boundary of the

case.” project.

On top of cobalt prices hovering around – Michael Washbourne

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 73

OPINION

Cyber-attack: Are we prepared
to innovate safely?

The global mining industry has been in the event of a system outage. sented by technology.
operating in challenging market con- Cyber risk is one risk which has be- Boards and management need to un-

ditions for some time now. come prevalent, making headlines re- derstand how cyber threats influence

Miners in Africa have not been insu- cently due to widespread disruption from their innovation strategy and recognise

lated from the commodity price volatil- the WannaCry and Petya ransomware that cyber security is not an “IT depart-

ity which has threatened their business attacks. While ransomware activity is ment” problem. It is a key business risk

models. Several have embarked on re- mainly an act of cyber criminals driven which requires support and business

structuring, cost cutting and efficiency by financial motives, there are other mo- mandate so that it can be managed ef-

measures to adapt, with the focus back tivated threat actors which are known fectively and monitored.

to position on the cost curve to allow a to specifically target the mining sector. The industry is already challenged with

company to ride out commodity price Hacktivists motivated by anti-mining en- limited resources and budgets, therefore

volatility. vironmental agendas and threats from knowing which assets are critical to the

Technology innovation in the African competitors and nation state actors business (crown jewels) will help ensure

mining sector has lagged, largely due seeking commercially sensitive informa- limited resources are focused at protect-

to challenges such as unstable commu- tion for commercial leverage and indus- ing the availability, reliability, integrity

nications and power infrastructure, as trial espionage, present the most risk to and confidentiality of those crown jewels.

“well as labour force challenges in certain the industry. Culture and cyber security awareness
play a key role in ensuring your
countries. However, the recent Boards and management investments in technical controls
advancements in network capac- need to understand are not undone. It is the peo-
ity, meaningful reduction in sat- ple element we see most of the
ellite communication costs and how cyber threats influence threat actors exploiting as a vec-
lower costs of implementing re- their innovation strategy and tor into the organisation. Here we
newable energy has presented a could adopt the learnings from
strong business case for African health and safety awareness
miners to adopt the innovations
that have generated efficiencies recognise that cyber security is programmes which have worked
in Australia and elsewhere. not an “IT department” problem. so well in reducing injuries and
incidents within the sector. Driv-
Innovations such as integrated

mining and analytics for produc- ing a cyber safe culture will en-

tion planning, driverless trucks sure that your people become an

for haulage, drones for surveying and Whatever the motivation, the threat is additional line of defence against cyber

safe blasting processes, and the use of real and the impact is not limited to finan- threats.

wearable technology for fatigue manage- cial and/or operational impact. The loss While preventative controls assist in

ment are a few of the opportunities which of control in a mine could have a devas- reducing the likelihood of cyber inci-

African miners could exploit in order to tating impact on safety and environmen- dents, it is critical to prepare for the inevi-

transform into more profitable, safe, ef- tal hazards. table. Making sure your organisation has

ficient and agile operations. These ad- While the cyber threat landscape has a response plan in place to respond to

vances also improve decision making become more complex, it should not de- and recover from cyber-attack is critical.

as they are supported by real-time in- ter the industry from pursuing opportuni- Incorporating proactive cyber risk

formation. Technology-led innovation is ties that technology innovation promises. management strategies will give you the

already being adopted by miners in Af- As with any business opportunity, it is a best chance of building the trust and re-

rica including De Beers’ implementation balance between risk and reward, ensur- silience in your systems and processes,

of driverless truck haulage systems at its ing that we recognise the external factors accelerating your technology adoption

Venetia diamond mine and Anglo Ameri- and prepare our businesses to become and realising the business benefits of ef-

can plc’s use of wearable technology in resilient. The proactive management of ficiency, agility and improved safety. All

caps for fatigue management on its ther- risks will enable miners to innovate with these are critical factors in facilitating

mal coal mines. confidence and fulfil the promises pre- growth in a challenging market.

While the adoption of technology in-

novation promises transformative op- Ben Gargett leads PwC’s Australia- Volven D’Souza is a director in PwC’s

portunities for the African mining sector, Africa Practice and is an Assurance Digital Trust practice based in Perth.

it is prudent to consider and proactively partner based in Perth. PwC’s Austral- Volven has spent over 12 years in Africa

manage the new risks introduced by ia-Africa practice supports Australian delivering internet and security services,

technology into the current operating en- companies operating in Africa. He trav- with active involvement in Tanzania In-

vironment. As the reliance and depend- els regularly to Africa and interacts with ternet Service Providers Association

ency on technology increases, there is a government and business with the goal and African Network Operators Group.

corresponding increase in the severity of of improving the operating conditions for

operational impact and potential hazards Australian companies.

PAGE 74 AUGUST 2017 AUSTRALIA’S PAYDIRT

AFRICA DOWN UNDER PREVIEW

CFE comes round to
production story

The Kipushi cobalt tailings project in DRC could produce $250 million in revenue

Such is the opportunity in front of the “It is a fantastic opportunity and some- to move on this one.”
company in DRC and Zambia, Cape one might want to make an offer for it but Under the deal, Cape Lambert will is-
Lambert Ltd executive chairman Tony if it is simple and easy why not do it our-
Sage is willing to forgo the company’s selves?” sue 90 million shares to secure a 50/50
traditional investment strategy. JV with Paragon on 85% of Kipushi, with
Sage’s confidence in the potential of state miner Gecamines controlling the
Cape Lambert was built around a strat- the two tailings projects has led to the remaining 15%.
egy of realising a project’s value at the company divesting its control of the as-
earliest point, before entering the high sociated Kasombo copper-cobalt project The previous JV had largely completed
risk development phase, but Sage be- to fellow ASX-listed junior Fe Ltd. the build on plant and associated infra-
lieves the unique nature of the two cobalt structure capable of producing 8,000
tailings projects could see the company Of the two projects, Kipushi in DRC is tpa copper and 4,000 tpa cobalt over an
break the habit of a lifetime. the more advanced and will be the com- eight-year mine life at Kipushi, leaving
pany’s immediate focus. Cape Lambert the opportunity to cash in
Cape Lambert has secured control of at low risk.
two cobalt tailings projects either side of “It has everything there; the tailings,
the Zambia/DRC border with everything the plant and the infrastructure,” Sage “At current prices that is $250 million
pointing towards a rapid development said. revenue a year,” Sage said. “There is
timetable. some work that needs to be done on it
The operation was built by a JV com- but when you walk around it feels like you
“We don’t have to go through the ex- prising local company Paragon Mining could just switch it on and get going, it
ercise of a new development,” Sage told SARL and a Chinese investor. However, has everything, even a transport fleet.”
Paydirt. “The exploration is done and when relations turned sour and the Chi-
the mining is simple. It then becomes nese group left, Paragon needed a new Internal studies have suggested
a metallurgical exercise and 70-80% of partner. Sage was already in the country, $US15 million would be enough to bring
the plant is already done. All those risky on the hunt for cobalt opportunities, as the project to life but Cape Lambert is
stages have been avoided; it is really just has often been the case throughout his now engaging an independent engineer-
cleaning up the tailings.” career, and made the most of the seren- ing group to give tighter capex and cash
dipity. cost numbers.
It may be the first time Cape Lambert
has planned to head so far down the de- “If you want cobalt, DRC is the place Processing specialists Mintek have
velopment path but Sage believes both to be but Robert Friedland had most of also been tasked with identifying the best
projects can be de-risked at minimal the best deposits tied up so we began product mix for the project.
cost. looking at tailings opportunities and hap-
pened to be in the area at the right time “They have been looking at the best
flow sheet,” Sage said. “We have done

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 75

AFRICA DOWN UNDER PREVIEW payment to fund the development.”
Sage sees the completion of
50kg tests for a copper concen-
trate, a cobalt concentrate, a offtake and subsequent first pro-
copper-cobalt concentrate and a duction from Kipushi as the cata-
copper-cobalt-zinc concentrate. lyst for a rerating of Cape Lam-
The easiest option for Cape Lam- bert’s stocks but admitted DRC’s
bert is a combined product but political situation meant it may
the question is what price we can take even longer for the share
derive from that compared to what price to achieve full value.
we can attract from the individual
concentrates.” “At the moment, US-based
funds can’t invest in DRC projects
As with the other battery min- but once it is off the black list,
erals, the marriage between flow fund managers will come back in,”
sheet and product marketing is vi- Sage said, pointing to US Presi-
tal to making cobalt projects bank- dent Donald Trump’s proposed
able. executive order to suspend part of
the Dodd-Frank legislation regard-
“The next step will be to appoint ing conflict minerals.
a marketing manager who is an
off-take specialist,” Sage said. The company is not waiting for
“I’ve never done it before and I action in the US and is instead
want an expert operating on our pursuing customers in Europe and
behalf. The off-take companies China.
are all very different and we want
optimum value for the products “Both the EU and China have
we produce.” plenty of lithium battery produc-
tion internally and there are plenty
Potential customers will also be of opportunities we can pursue in
the likely source of capital fund- both those markets,” Sage said.
ing.
US restrictions do not apply to
“The local partner is free-car- the company’s second tailings
ried through construction but we project – Kitwe – 170km across
won’t have to do a capital raising, Tony Sage the border in Zambia.
instead, we will get a small pre-

ADVANCING THE WA GOLD PROJECT, GHANA
2.1Moz Mineral Resource
624,000oz @ 2.14g/t Ore Reserves
~90,000oz/yr; Initial 7 yrs; 92% av. recovery
Mining Leases granted
Feasibility Study completed
Grid power, excellent roads and water supply
2,400km2 of prospective Birimian greenstones
Extensive target pipeline
16.6% of neighbour, Castle Minerals Limited

PAGE 76 AUGUST 2017 AUSTRALIA’S PAYDIRT

Cape Lambert has agreed to acquire Cape Lambert believes the Kipushi concentrate plant can be
70% of the cobalt-copper tailings project started with a $15 million outlay
by spending $US500,000 within the first
six months of exercising the option. Sub-
sequent payments totalling $US150,000
will come when environmental approv-
als are in place and mining and export
licences are secured.

The Kitwe tailings dam has a profile
of 750m by 650m by 15m high. Cape
Lambert’s sampling has indicated cobalt
grades of up to 0.45%.

Sage said the distance between Kitwe
and Kipushi was likely too great to con-
sider a combined operation but with an
operating plant in the vicinity, he was
confident Kitwe could become another
quick-start option.

“We don’t think we will be able to ship
the ore to Kipushi but there is a plant
nearby which is running out of copper
and they have said they will treat tail-
ings,” Sage said.

“If we don’t have to build a plant this
project will be very profitable, very quick-
ly. Zambia is very easy to operate in; the
Mining Act is very clear and simple and
the system is very efficient.”

– Dominic Piper

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 77

Pan Pacific Perth 7
November 14-15

Keynote Address: Transforming the Business of Gold Exploration, Dan Wood AO,
former Executive General Manager Exploration, Newcrest Mining Limited

Project: Alturas Project: Mount Morgans
Location: El Indio Belt; 500km north of Location: 20km west of Laverton,
Santiago, Chile Western Australia
Company: Barrick Gold Corp Company: Dacian Gold Ltd
Resource: 5.5 moz @ 1.25 g/t (inferred) Resource: 3.3 moz @ 2.3 g/t

Project: Hot Maden Project: Sanbrado
Location: 1,050km east of Istanbul, north-east Location: Burkina Faso
Turkey Company: West African Resources
Company: Mariana Resources Ltd/Lidya Madenulik Sanayi ve Resource: 894,000oz @ 1.7 g/t gold (reserves); 1.3 moz
Ticaret A.S. @ 1.4 g/t (resources)
Resource: 3.43 moz @ 15 g/t gold equivalent (inferred)
Project: Öksüt
Project: Yaramoko Location: Middle Anatolia,Turkey; 295km
Location: Balé, 200km south-west of south-east of Ankara
Ouagdougou, south-west Burkina Faso Company: Stratex International plc
Company: Roxgold Inc Resource:1.2 moz @ 1.4 g/t (reserves)
Resource: 738,000oz @ 17.1 g/t (indicated); 567,000oz @
14.31 g/t (inferred) Project: Federation/Liberator
Location: Northern Territory,Australia
Project: Yaouré Company: Newmont Mining Corp
Location: Côte d’Ivoire Resource: 650,000oz @ 6.5 g/t
Company: Perseus Mining Limited
Resource: 5.2 moz @ 1.54 g/t Project: Cascabel
Location: 180km north of Quito, Ecuador
Project: Gross Company: SolGold Inc
Location: Southwestern Yakutia, 125km Resource: Yet to be defined
north-east of Ikabya station, Russia
Company: Nordgold SE Project: Moose River
Resource: Proven and probable gold reserves 4.4 moz Location: 37km from Touquoy, Canada
(reserves); 7.6 moz (resources) Company: Atlantic Gold Corp
Resource: 760,000oz @ 1.44 g/t (reserves)
Project: Hope Bay
Location: Nunavat, Canada Project: Houndé
Company: TMAC Resources Location: 250km south-west of
Resource: 3.5 moz @ 7.7 g/t (reserves); 4.51 moz @ 9.2 g/t Ouagadougou, Burkina Faso
(resources) Company: Endeavour Mining Corp
Resource: 2.55 moz @ 2.09 g/t
Project: Nyanzaga
Location: 50km south-west of Mwanza, Project: Namdini
northern Tanzania Location: Bolgatanga region, Ghana
Company: OreCorp Ltd/Acacia Mining plc Company: Cardinal Resources Ltd
Resource: 2.22 moz @ 3.48 g/t Resource: 4 moz @ 1.2 g/t

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AFRICA DOWN UNDER PREVIEW

Discovery lure tempts Predictive

Recent drilling results Predictive is chasing a major discovery in Cote d’Ivoire
appear to have vindi-
cated Predictive Discovery Exploration focus has since turned to development is high.”
Ltd’s decision to contrib- other projects under the Toro JV as well Exploration work on Predictive’s tene-
ute towards exploration on as some soil sampling at the Ferkesse-
some of its key permits in dougou North and Kokoumbo permits. ments in Burkina Faso could resume in
Cote d’Ivoire. the next quarter, according to Roberts,
“We’re pleased with the results we’ve as the company nears completion of a
Predictive is now funding been getting out of Nyangboue because permit renewal process and closes in on
35% of future exploration it just goes to show there’s a lot more finalising a deal with a new JV partner.
on six granted permits and opportunity on the remainder of the li-
two permit applications in cence,” Roberts said. “We have been in conversations with a
the country, including at potential partner for a long time and we’ll
the promising Boundiali “Certainly what we’re seeing in the be seeking to obtain their commitment
project where a recent hit Nyangboue prospect is quite a lot of vis- as soon as possible,” Roberts said. “It’s
of 30m @ 8.3 g/t gold was ible gold. We’re getting some very high a ‘watch this space’ and I think it’s highly
returned. grades in places and we believe that is probable we’ll have a partner contribut-
an indication the metallurgy should be ing and doing substantial active work
UK-based private group pretty reasonable.” on the Burkina Faso projects in the last
Toro Gold Ltd carried the quarter of this year.”
cost of exploration for al- Predictive also recently finished a
most three years, but Pre- 1,600m drilling campaign at the Bobosso Predictive has been one of the benefi-
dictive announced in April project, also in Cote d’Ivoire, which was ciaries of a revival in West African gold
it planned to contribute funded for the first time by new JV part- over the past 18 months, with Roberts
towards the JV once Toro ner Progress Minerals Inc. confident the spotlight would remain on
had achieved 65% equity. his company and fellow ASX-listed jun-
Assay results were also due at the time iors Cardinal Resources Ltd, West Afri-
At the end of the March quarter, the of print, Roberts saying the drilling had can Resources Ltd and Oklo Resources
company reported $2.1 million cash in produced indications of alteration and Ltd for a little while longer.
the bank and no debt. mineralisation consistent with the com-
pany’s modelling. “There’s been quite a positive vibe over
Predictive managing director Paul West Africa and I think a return to the un-
Roberts said the current arrangement Progress has committed to investing derstanding that it is one of the best – I
was likely to provide the best return for $US1 million in Bobosso to earn a 30% think it is the best – places in the world
his company’s shareholders. stake in the JV company which holds the to make new gold discoveries,” Roberts
permit. The Vancouver-based developer said.
“We’re not seeking to go below 30%, can invest a further $US1.5 million to
so 35% is a good level for us to contrib- earn an additional 25% equity. “It’s been quiet the last few months for
ute and we think we can obtain value for a few different reasons, but I’m very opti-
our shareholders when we have sub- “Progress has a track record in devel- mistic the market will return in force over
stantial equity as opposed to having a oping and managing mines which pro- the next few months.”
small equity,” Roberts told Paydirt. vides a very good complement to Predic-
tive,” Roberts said. “We’re an explorer – Michael Washbourne
“Boundiali is a new discovery, although and they’re a mine developer interested
the size of it is not yet know, and the rest in projects where the prospect of mine
of the Toro portfolio contains a whole se-
ries of properties, all of which have very
substantial gold discovery potential, so
our feeling is that the probability of mak-
ing a discovery you can convert into a
mine is good and therefore it warranted
investing in at 35% of the JV.”

Predictive reported in late May it had
drilled 30m @ 8.3 g/t gold from 39m,
within a broader mineralised interval of
90m @ 3.2 g/t, at the Nyangboue pros-
pect within the Boundiali permit.

Another hit of 6m @ 2.4 g/t gold from
33m has also provided the company with
more evidence of a separate parallel
zone of mineralisation west of the main
outline where drill intercepts of 1.5m @
4.2 g/t, 1.5m @ 1.9 g/t and 1.5m @ 1.8
g/t were previously recorded.

Diamond drilling at Nyangboue con-
cluded in early July, with the company
awaiting assay results at the time of print.

PAGE 80 AUGUST 2017 AUSTRALIA’S PAYDIRT

Simply better with Calsta

As Australia’s mining sector cultural and government require-
contracted a couple of years ments in all countries we operate

ago, business improvement and in are key to our success,” he

project management specialist said.

Calsta looked to Africa to spread “The way we do business is

its expertise. flexible, allowing us to develop a

A little over two years ago, customised solution for a particu-

Calsta had one client in Zambia. lar project. We utilise our mature,

Now, the team has footprints systemised approach to allow na-

in Burkina Faso, Cote d’Ivoire, tional workforces to understand

Mauritania and Senegal where and deploy the defined strategy.

gold and copper plays are de- “We know it is very important

manding attention. to engage at all levels so internal

Of all commodities, gold has and external stakeholders under-

been a sound performer amid Calsta has built on its entry to Africa in Zambia and established stand why Calsta has been en-
the metals plunge, while copper footprints in Burkina Faso, Cote d’Ivoire, Mauritania and Senegal gaged, what the desired outcome
has started to see some better
is by having Calsta involved and

times. business risk to the supply chain. who is responsible on the client team for

While miners find comfort in stability, Instead, Calsta’s model is to implement ensuring a particular task has been com-

they know better than to rely on com- service level agreements where clients pleted. We utilise our 3Ws (what, who,

modity forecasts to make a profit and are afforded enduring benefits; a proven when) system in conjunction with other

appease shareholders. Therefore, pru- strategy reflected by a track record of proven in-house developed method-

dent management of AISC driven by im- 100% client re-engagement. ologies to achieve the desired outcome

proved efficiencies and productivity has Areas Calsta excels in include; mining quickly.”

been the order of the day and is an area and equipment cost modelling, mining Calsta’s in-house global expertise is

in which Calsta has thrived. equipment selection and optimisation, particularly attractive to clients and as

“There is a constant drive across the supply chain, holistic business improve- positive sentiment returns to the min-

board to keep AISC at the right level and ment, mining engineering, strategic ing sector and new projects considered,

we certainly see this drive within our cli- negotiation for high capital items and Butler said now was a good time to be

ents,” Calsta director Peter Butler told services, mobile and fixed plant mainte- in Africa.

Paydirt. nance improvement activities and gen- “New mines are being developed

“Once we start uncovering value for eral project management. meaning our LOM cost models are re-

our clients they will implement the re- By providing native format files of all quired, M&A activities are afoot driving

quired changes to capture and sustain evaluation work in addition to workforce the need for our due diligence services,

improvements. This drive for improve- training, clients can continue to deploy while new and replacement mining fleets

ment and innovative ways to do business Calsta’s way of doing business long after are being purchased leading to our life

in a sustainable manner, which is both project completion. cycle costing models,” he said.

corporately and socially responsible, is Butler said engaging with internal and “Our strategic negotiation services

something which attracts us.” external stakeholders on developing pro- are being required and existing op-

While there is an emphasis on improv- tocols was critical in ensuring operations erations looking to improve operational

ing efficiencies and increasing produc- performed at optimal levels, resulting in performance benefit from our business

tion without onerous amounts of capital the delivery of sustainable benefits. improvement and project management

input, Butler said merely looking at cost- “Knowing how to successfully interact activities.”

cutting strategies usually introduced with national workforces, complying with – Mark Andrews

Perth,Western Australia The CD-Rom for the 2017
Africa Down Under Conference

will be available in October

CD-Rom includes

• Over 50 presentations • Conference media coverage
• Australia’s Paydirt preview and review reports • Conference Sponsors

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

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 81

AFRICA DOWN UNDER PREVIEW

Visible opportunity in the DRC

Vector Resources Ltd chief ex- sation better. There’s a substantial
ecutive Simon Youds continues
to be amazed by the amount of gold amount of surface mineralisation
within the Maniema province where
his company is operating in the which may or may not be associ-
DRC.
ated with that structure, but given
“There’s no doubt we’re in ele-
phant country when it comes to the the nature of gold mineralisation,
geology,” Youds told Paydirt.
there’s a good chance there is and
“I’m not a geologist, but I don’t
think many geologists would stick if that’s the case it’s pretty exciting.”
their hand up and say they’ve got
their head around what the poten- Youds unashamedly admits the
tial of the massive greenstone belt
we’re dealing with is. You just have biggest challenge for his company
to look at what Tanzania has thrown
up in that region south of Lake Vic- is understanding the geology rather
toria and compare it in size to what
we’re dealing with in the DRC. It’s prob- than overcoming the jurisdictional
ably two orders of magnitude larger in
terms of its size and it’s still so underex- issues which typically confront
plored.
companies in the DRC.
“I liken it to what it must have been like
when the first guys went to Kalgoorlie Having endured an extensive
with their wheelbarrows [in the 1890s].
That’s exactly what we’re seeing in the operational career in Africa, par-
DRC at the moment, there’s just so much
gold lying around.” Visible gold has been identified in several of ticularly in Tanzania, Youds is com-
Vector’s prospects in the DRC fortable with the initial inroads his
Youds joined Vector in January, less company has made with the Manie-
than a month after the company complet-
ed its acquisition of the Maniema gold tics of the situation, but we’ve made the ma community and the broader country
project, immediately north of the revered
Kibali mine and adjacent to Banro Corp’s relationships with the local people and landscape.
operations.
we’re on track to get all of the accesses Such relationships will likely hold Vec-
Visible gold has been identified in
many of the key prospects, including Ka- through. Our geologists are already in tor in good stead as the company looks
botshome where a maiden resource of
6.97mt @ 1.9 g/t gold for 421,000oz (20 there as we speak pegging out drill pads to grow its presence in the DRC.
g/t top-cut) was defined earlier this year
following a comprehensive review of the for all that initial work. It’s just a question “We’re progressing a couple of project
project’s geological database.
now of putting those holes in the ground.” acquisitions in country and the relation-
Recent sampling has also confirmed
the prospectivity of Maniema, with a Vector raised just under $800,000 via ships we’ve established have put us in a
high-grade stream sediment assay of
18.8 g/t gold at Namoya West. Historical a placement last month to fund a 4,000m very good position on those,” Youds said.
alluvial and stream sediment samples at
the same prospect from 2010 also re- diamond drilling programme targeting an “It’s about giving a bit of confidence to
turned 71 g/t, 65.1 g/t, 64.1 g/t, 43.4 g/t
and 36.7 g/t. upgrade of the Kabotshome resource. the project holders that we can do the

“This is far beyond our initial expecta- Youds is particularly keen to follow up deals. There are a lot of people looking
tions in terms of the gold endowment,”
Youds said. on a historic intercept which returned to operate in the DRC, but they might not

“What’s clear is the original mineralisa- 20.25m @ 2.5 g/t gold from 319m (in- have access to the investment banking
tion, which is sort of shear-hosted, is not
the only source of gold in the area, which cluding 8m @ 4.03 g/t) and 21.7m @ 3.58 skillset we offer to get these deals across
gives some indication of the gold endow-
ment we’re dealing with. g/t gold from 354m (including 5.7m @ the line.”

“Getting a drill rig there is really the 8.74 g/t), with the last drill metre report- Youds said his company was consider-
next step. There is no doubt the initial
drilling will be an expensive exercise edly hitting 20.3 g/t and finishing in ore. ing selling responsibly sourced gold from
per metre, purely because of the logis-
“Our deepest hole, which is our best its licence for early cash flow, while en-

hole, is not part of the resource at the hancing its ties with the local communi-

moment because it’s too deep,” Youds ties and artisanal miners.

said. – Michael Washbourne
“One swallow is not a summer, but we

need to try and understand the minerali-

Vector chief executive Simon Youds with his team of geologists at Kabotshome

PAGE 82 AUGUST 2017 AUSTRALIA’S PAYDIRT

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REGIONAL ROUNDUP

METS, lithium rise on
Chilean agenda

Last month, Paydirt travelled to the inaugural Mining Cumbre in the Chilean capital, Santiago. Co-organised by
Mining Indaba and the PDAC, Mining Cumbre is designed to offer miners, investors and governments across Latin
America a forum for discussion and debate, much like Cape Town’s annual Mining Indaba. Speaking at the launch of
the event, Mining Indaba managing director Alex Grose, said the timing was right to start such a conference. “After
the years of cutbacks for the industry in this region, things are beginning to turn in Latin America,” he said. Paydirt
was on hand in Santiago to witness the maiden event

Chile is hoping to follow in the footsteps opment of our mining suppliers, as we often a stumbling block for juniors con-
of Australia and build on its strong do- see in them an industry that could be as sidering investment in Latin America.
mestic mining culture to become a global profitable and beneficial as the produc-
METS powerhouse. tion of raw materials. This is the case of “This was created to improve competi-
other mining countries such as Australia tiveness in South America and to attract
Chile is the world’s leading copper min- or Canada, which we are trying to follow.” investment [and] a couple of months ago,
er and its domestic METS sector is well the regulation that controls the delivery
developed and the country’s Minister for The plans are ambitious but Chile will of general information obtained from
Mining, Aurora Williams, told delegates not forget the importance of inbound in- basic geological exploration works was
at the inaugural Mining Cumbre that the vestment to mining’s wellbeing. published so that every information re-
Government was intent on increasing ex- porting entity that carries out the basic
ports tenfold. “We expect mining investment in Chile geological exploration activities, pro-
to continue and even grow,” Schnake vides general information obtained from
“We wish to support the mining in- said. “We believe this can be achieved their work.”
dustry clusters throughout the country,” by highlighting Chile’s comparative ad-
Williams said. “Chile currently exports vantages over other jurisdictions, such The ministry is also working on a web-
$US460 million of mining technology and as our institutional stability, our infra- based platform which investors can use
equipment but we hope for 360 compa- structure level, our extensive mining ex- to access information about mining con-
nies to be exporting $US4 billion worth perience and, above all, our enormous cessions.
of technology and equipment by 2025.” geological potential.
“This project – called ‘open mining’
Speaking to Paydirt on the sidelines of “The Government and the Ministry of – has been developed to increase in-
Mining Cumbre, Vice Minister for Mining Mining are focusing their efforts mainly vestment in mining and bring relevant
Erich Schnake said Chile hoped to emu- on increasing mining investment, and ad- information to all who are interested in
late Australia’s burgeoning METS sector, dressing public policies and institutional knowing about this. We look forward to
turning the arrival of new copper produc- clarity so that Chile remains an attractive launching it later this year,” Schnake said.
tion in countries such as Peru and DRC country in this area.”
to its advantage. Further innovations are also being
Schnake pointed to the new National considered after a series of recommen-
“The fact that new producers are in- Plan of Geology which provides geosci- dations were received from the National
corporated into the copper market opens entific information as well as its produc- Productivity Commission on potential im-
other types of opportunities that can tion and environmental heritage to poten- provements to mineral exploration.
have a significant impact on the develop- tial investors.
ment of our suppliers in mining,” he said. Copper will remain the backbone of
“We are strongly supporting the devel- The plan is part of a wider push to in- Chile’s economy for decades to come –
crease public access to geological data, it currently boasts a 28% share of global

PAGE 84 AUGUST 2017 AUSTRALIA’S PAYDIRT

LATIN AMERICA

supply – but the electric vehicle revolu- from lithium producers, developers and with raising funds for the development
tion is offering opportunity to diversify investors keen to test the potential of the of projects to develop value-added prod-
into lithium. Maricunga and Pedernales salt fields. ucts in Chile that use lithium as an input,”
he said. “This year, CORFO made a call
The country’s north has some of the “Codelco must start a competitive pro- to generate lithium manufacturing, which
world’s largest lithium brines deposits cess of selecting a partner, among those was very successful in terms of partici-
and the Government recently launched stakeholders who present better condi- pation of foreign companies. That will al-
the Committee of Non-Metallic Mining to tions for exploitation of the resource,” low Chile to assert itself as a developer
build an overarching strategy for lithium Schnake said. “Lithium has a great of new technologies, boosting the con-
development in Chile. potential for the future and that is why sumption of copper and lithium.
Codelco, as a state company, is seeing
“We believe that the most important how it should structure its business in the “Our political effort is focused on tak-
thing now is to advance in the process of way that is most convenient for their own ing advantage of the window of opportu-
exploiting of lithium, because we under- interests and the country’s.” nity that is now presented together with
stand that if we do not use this resource demand, to facilitate and promote the de-
now (demand and prices are high) in the The vice minister said the Govern- velopment of a national lithium industry
future, it may be replaced by substitutes ment’s national lithium policy also en- that responds to the current challenges
as a result of technological development couraged the investigation of down- of productivity and growth and that is
and research,” Schnake said. stream processing options for the sustainable and promotes innovation and
domestic lithium industry. the development of productive chains.”
State copper miner Codelco will be in-
tegral to that process and in January the “We have the important management – Dominic Piper
group called for expressions of interest from CORFO that has been concerned

Peru cements its mining trail

If Ricardo Labo’s recent comments are Despite being somewhat in the lap of promises around health and education,”
anything to go by, Peru’s position as a the market gods, the Kuczynski Govern- Labo said. “We have created a new so-
leading mining investment destination is ment is also making sure it has in place cial advancement fund which will bring
secure for some time to come. the policy environment needed to cap- future benefits to the present to meet the
ture mining capital, according to Labo. basic needs of communities near mining
Peru was rated the most attractive Lat- projects.”
in American jurisdiction for mining in the He said a major focus of the Govern-
Fraser Institute’s Annual Survey of Min- ment was ensuring extraneous red tape He said the Government was work-
ing Companies 2016 report and with a was eliminated from the sector. ing on a new strategy to create suitable
goal of securing at least $US14 billion of conditions at the exploration stage but
investment for project development over “We want to make investors’ and our warned new entrants they would have to
the next four years, the Government of lives easier,” he said. “Given the limited take on responsibility themselves.
President Pedro Pablo Kuczynski has set budgets companies currently have, it is
itself the task of wooing foreign investors understandable that every minute counts “Any project you acquire will have a
to achieve its goal. during project development and if the ap- history with the host community and you
provals process takes too long, compa- need to understand that history and the
“By 2021, we want to increase copper nies can run out of money. community’s culture.
production by 30% – with similar goals
in other commodities – and attract 8% “This is not about lowering standards, “A lot of it is about attitude; just because
of the global exploration budget,” Labo, it is about public management. The cur- you are bringing investment doesn’t give
Peru’s Vice Minister for Mining, told Pay- rent legislation is 25 years old and has you the right to do everything. You will
dirt on the sidelines of Mining Cumbre in undergone several modifications.” enter into a lot of negotiations with local
Santiago. people so start thinking early on how you
Among the changes are a more will provide benefits.”
“To do that, we need foreign invest- streamlined environmental approval pro-
ment as 100% of mining investment in cess for exploration projects and a more Peru has largely been the playground
the country as private. The Government efficient VAT recovery process. of mining’s majors in recent years thanks
has a very close relationship with inves- to the high proportion of low-grade, bulk-
tors and our job is to create the right con- One area where Peru’s Government tonnage porphyry copper discoveries but
ditions for investment.” is unlikely to make cuts is social licence Labo said the country retained plenty of
to operate. Several large-scale projects potential for intrepid juniors.
Market sentiment is instrumental to have been disrupted in recent years by
any country’s investment fortunes and community groups, with demonstrations “We need to fill the greenfields explo-
Labo is confident Peru will experience often turning ugly and violent. ration portfolio,” he said. “The system is
increased activity on the back of recent very transparent and available online, or
stable commodity prices, particularly in Kuczynski, promised during his elec- incoming companies can JV; some of the
key commodities copper and gold. tion campaign to ease opposition to min- majors in particular are looking for explo-
ing projects by delivering communities ration partners.
“Investors are looking into venture the benefits of development early on but
capital markets again; the TSX, which at least four people have died in clashes “There is certainly more room for jun-
captures the most funding for juniors, is since he took office. iors in Peru,” Labo said. “But companies
on the rise and funds are also looking to who approach us must be serious about
fund exploration risk once again,” Labo Labo admitted the question of social their investment.”
said. “It is all bringing investors back to issues was a recurring one posed to
the mining sector.” the Government by potential investors. – Dominic Piper
“There needs to be more coordination
between institutions to better deliver on

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 85

REGIONAL ROUNDUP LATIN AMERICA

Argentina signs mining deal
to unify regulations

Argentina’s Macri Government will be hoping new mining regulations attract more foreign investors to Buenos Aires

Anew agreement between Argentina’s es, such as open pit mining and the use for mining policy for the Macri Govern-
Federal Government and its provinc- of cyanide. ment, said the agreement was “a fantas-
es should modernise regulatory and taxa- tic step forward” for mining in Argentina.
tion frameworks in the country. Despite the limit on royalties, the deal
signed in June would allow provinces to “It puts a cap [and floor] on royalties
The new mining deal was announced levy a tax of up to 1.5% of miners’ sales and avoids a race to the bottom,” Biset
in June, with the Government and the for local infrastructure funds. said.
country’s 20 provincial governors sign-
ing on in an effort to harmonise taxes “The agreement is seen as a homog- Development of the country’s min-
and regulations as Argentina looks to enisation of previous additional grants ing sector is a key plank of Macri’s eco-
increase foreign investment in its long- from projects to provinces in excess of nomic strategy. Biset said the country’s
neglected mining sector. the mining investment law regime, which resources industry should be on par with
does not particularly benefit the industry the likes of Chile and Peru.
The agreement, which needs approval but, at the same time, clarifies the mining
from Congress and the 20 provincial leg- legal framework, allow the openness to “Mining is the main opportunity for
islatures, sets a 3% ceiling on royalties. mining in provinces which have enacted economic development in Argentina,”
restricted regulations,” Argentinian min- he said. “Most of our neighbours are far
“It’s an activity that could be one of the ing law specialist Igancio Celorrio told ahead of us in terms of foreign direct in-
pillars of job creation,” President Mau- Paydirt. vestment and catching up would require
ricio Macri said of mining at the signing $US45 billion of investment over the next
ceremony. “We can develop it with per- “It also provides for a modernisation of 10 years.
fect care of the environment.” the cadastre system and the mining and
environmental permits proceedings. It “We know we need to change Argen-
Latin America’s third-largest economy does not grant economic benefits to the tina’s reputation but believe we have
has fallen way behind the likes of Chile industry but it should provide a moderni- a great opportunity because we have
and Peru in attracting mining investment sation of mining proceedings and access been passed over by the strong mining
despite its rich prospectivity. to information in Argentina.” development which has occurred in Latin
America in the last 10 years.
Macri’s centre-right government has The three provinces declined to sign
been trying since last year to unify regu- the deal, including Chubut Pan American “We are low-hanging fruit and could
lations to woo foreign miners. Silver Inc’s Navidad project has been on play leapfrog in terms of investment. We
hold since 2013 due to provincial rules are learning straight from the countries
The Macri Government has already banning the use of cyanide and open pit who know mining best; Chile, Peru, Can-
eliminated export taxes on metals and mining. ada and Australia.”
lifted a prohibition on companies sending
profits overseas, two moves celebrated Speaking at the Mining Cumbre in – Dominic Piper
by the sector. But seven of the country’s Santiago, Dr Juan Biset, sub-secretary
23 provinces still prohibit certain practic-

PAGE 86 AUGUST 2017 AUSTRALIA’S PAYDIRT

AMERICALATIN SAVE THE DATE

16-17 May 2018

Perth,Western Australia

Early Bird rate
$A990.00 inc. GST

available until
16 March 2018

www.latinamericadownunder.com

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

REGIONAL ROUNDUP

PE prepared for entry at last

Chile, with its huge copper and lithium reserves and stable economy, could be a priority destination for private
equity investment in the coming decade

Apanel of high-profile private equity was “extremely bullish” about what lay Hawkes Point Capital portfolio manag-
executives at Mining Cumbre has de-
clared the current market climate ideal for ahead for the mining sector. er, Pim Kalisavaart, said those currently
ambitious companies.
“Things change very quickly,” Daniele in the industry had survived the worst
Private equity firms are estimated to
have a combined $5 billion war chest and said. “A year ago, people were question- markets had to offer and could expect to
their entry into mining markets has been
widely anticipated since the ing Glencore’s future, now it is bidding enjoy a period of success.
formation of several resources-
dedicated funds at the start of against Chinese companies for Rio Tinto “We are not currently at a peak but
the decade. To date, however,
little of this cash has been de- [Ltd]’s coal assets.” if you are still in the industry today you
ployed with firms bemoaning a
lack of reasonably priced op- know you just have to hang in
portunities but comments from
Denham Capital director Caro- and the good times will come
line Donally suggested this
may be about to change. back,” Kalisavaart said. “We

“It is a great time [to invest] are in a very bullish term be-
because we are not at the
peaks; I think we are in a very cause we have got rid of the
nice mid-portion of the cycle,”
Donally said in Santiago. “This jokers and pretenders.”
makes it is a good time to buy
because sellers are getting The ability of the inaugural
good value and are prepared
to talk.” Mining Cumbre to attract 300

CD-Capital founder Carmen participants reinforced Geolog-
Daniele agreed, saying she
ical Resource Partners presi-

dent George Ireland’s short-

term outlook for the sector.

“I am encouraged by the size

of this conference but if there

was 10 times the amount of

people, I would be discouraged

because it would suggest we

were at the peak,” he said.

Welcoming private equity

groups into companies is of-

ten associated with a loss of

Caroline Donally management control but the

PAGE 88 AUGUST 2017 AUSTRALIA’S PAYDIRT

LATIN AMERICA

panel said each firm’s unique pro- Instead, private equity ap-

file meant there was a variety of in- pears to be turning towards

vestment models being applied by commodities associated with

private equity. major 21st Century trends.

While the likes of Denham and “Ten years ago, started look-

CD Capital prefer to take control- ing at metals for renewable en-

ling stakes in companies and as- ergy and we chose lithium as a

sets, Hawkes Point Capital and probable winner,” Ireland said.

Geological Resource Partners are “It will likely grow at two or three

more passive. However, all four times GDP growth rates, so it is

panellists agreed the key attribute an attractive market for existing

in any investment was the quality of producers and new entrants.

management. There is also a lack of projects

“We always look at the people and technical challenges to de-

first in the jurisdictions we like,” veloping those there are.”

Donally said. “But the management Daniele said her firm was

team is the critical component.” particularly keen on copper and

Kalisavaart said management zinc because of their role in the

quality was undoubtedly his main “technological revolution”.

concern but companies had to “The population explosion will

have the requisite mix of skills as see a lot more copper and zinc

the project advanced through de- required as well as other com-

velopment stages. modity such as coking coal and

“We do think management is the phosphate and potash. Unless

one, two and three in importance,” we make more discoveries in

he said. “A great asset can still be copper and zinc there is going

messed up and a decent team can to be a chronic shortage but it is

make a bad asset into money. You very difficult to find high-grade

need the right team for the job. If zinc.”

the team has done projects before, Carmel Daniele On political risk factors, the

it gives investors great encourage- panel agreed Latin America’s

ment and confidence. may not be able to overcome poor com- mining powerhouses of Chile, Brazil,

“As the development moves forward, modity markets and the panel was frank Peru and Mexico remained good bets.

you need a different team to develop the in its assessment of which commodities “We have large investments in Chile,

asset with a different skills set. There are were worthy of investment with thermal Peru and Brazil because we need to see

many examples of developments going coal and diamonds, in particular, appear- multiple opportunities in a country; we

“wrong because they are managed by the ing to be on the blacklist. are unable to do a once-off deal. So, that

wrong team with the wrong tends to lead us to larger

skills.” A great asset can still be messed countries,” Donally said.
Ireland said neutrality CD-Capital is invested

was also essential. up and a decent team can make in Guatemala and Ecua-
“You need to have the a bad asset into money. You need the dor and Daniele said Ven-
ezuela was the only Latin
technical understanding

and but also have direc- right team for the job. If the team has American country it would
tors who are independent not currently consider.
done projects before, it gives investors
in spirit and body and be great encouragement and confidence. “But politics change daily
guardians of our money. A and you must always be
board which is made up of assessing the risk/reward

management’s friends is profile.”

no use to us.” Kalisavaart said rule of

Donally and Kalisavaart also prefer to “We don’t do diamonds, they are too law and a track record of stability were

work with management teams who have difficult, and we don’t do thermal coal vital. However, Ireland said his firm was

“skin in the game”. because we are not seeing the supply/ not averse to entering tougher jurisdic-

“We like to see management investing demand fundamentals and it is a difficult tions, as long as the investment climate

in the company – not options but actually commodity for some of our investors,” appeared to be improving.

money into the ground,” Kalisavaart said. Donally said. “We assess the direction a country is

“We want to see alignment between Ireland has also steered Geological going but no country is stable forever.

the investors and the management,” Resource Partners away from thermal We look at a 5-7 year horizon and how

Donally added. “It may not be big money coal. national politics come into play in min-

they are putting in but it has to be mean- “In 2008, it was clear the gas price ing,” he said.

ingful to them. If Denham does well, we would come down and hit coal prices so – Dominic Piper
make sure management gets a dispro- we took a major short position in coal,”

portionate reward; potentially making Ireland said. “Also, we all have investors

greater returns than their equity position who make their views known to us and it

suggests.” is very clear they prefer not to see certain

Management, no matter how good, things fall into our portfolio.”

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 89

REGIONAL ROUNDUP

Nusantara puts Indonesia
back in spotlight

Contract of Work ownership provides Nusantara with certainty over tenure in Indonesia

Australian mining representation in tive experience there or who are experi- a whole portfolio. We have never sug-
Indonesia has been scarce, with the enced with sovereign risk issues. gested to anyone that you put all your

country’s intrepid miners and explorers “Some of the bigger sophisticated in- eggs in the one basket, but as a diversi-

gravitating towards hotspots in Africa and vestors take a diversified portfolio ap- fied part of the portfolio and a very fertile

Latin America when considering offshore proach and can handle the individual risk province exploration-wise, Indonesia is

opportunities in the past decade. of any particular sovereign nation within regarded universally as being that. It’s a

Issues and challenges great play.”

in developing economies Pyle’s bullishness and

in such regions are well- enthusiasm for Indone-

known, however, Indone- sia has only been fuelled

sia’s reputation as a mining by the support proposed

jurisdiction has been tar- new float Nusantara has

nished to the extent inves- received.

tors have been steeled to The company has gath-

take on risk anywhere else ered subscriptions and

but the South East Asian firm commitments in ex-

country. cess of $15 million, there-

“It is patchy,” Nusantara by meeting one of the

Resources Ltd chairman conditions of the IPO offer

Martin Pyle said in relation (closed July 18).

to investor interest in Indo- A maximum subscrip-

nesian mining projects. tion of $20 million through

“It was always expected the issue of 47.6 million

that a lot of the investors new shares was stated in

would shy away from Indo- the IPO.

nesia because of past is- A subsidiary of Hong

sues. We went far and wide Kong stock exchange

talking to investors, particu- giant Zhaojin Mining In-

larly focusing on investors A PFS has demonstrated potential for open pit production of 100,000 ozpa dustry Company Ltd has

who have had some posi- gold for 10 years at low AISC from Awak Mas, Sulawesi backed Nusantara via a

PAGE 90 AUGUST 2017 AUSTRALIA’S PAYDIRT

ASIA

$1.5 million investment, following the Nusantara chairman Martin Pyle, managing director Mike Spreadborough,
cornerstone commitments of Lion Selec- chief financial officer Craig Smyth, One Asia managing director Adrian Rollke
tion Group of $4.5 million and Australian
Super with $3.9 million. and executive director Boyke Abidin

Strong financial support thus far re- Pyle said there was limited follow-up The bulk of the IPO funds will be used
flects the potential for Nusantara to de- on these prospects and Nusantara would to complete a DFS in the next 12 months.
velop the Awak Mas gold project in the spend part of the IPO proceeds on fur-
near term. ther testing. Pyle said soon after DFS completion
a development decision would be made
In mid-July, a supplementary prospec- “We call these brownfields exploration with an eye to production in 2020.
tus noting the Contract of Work held by targets because there is known miner-
Nusantara had been granted, upgrading alisation. We will be drilling underneath “Zhaojin Mining is a large gold com-
to construction phase by the Indonesian those surface outcrops from trenching pany producing some 600,000 ozpa gold
Government. results or along strike in those diamond and they are a $2.5 billion company,” he
holes in hope of extending the minerali- said. “Companies like that clearly have
“We have gone to length to do the due sation and proving additional resources,” the balance sheet and expertise to assist
diligence in the prospectus review to Pyle said. us with a development decision, so we
demonstrate the ownership structures,” are confident that if our feasibility study
Pyle said. “We have legal reports from “We have three pit shells and in and ticks the boxes – and we expect it will –
Australian and Indonesian lawyers sign- around those we have unclassified min- we will have good quality partners such
ing off on that. More importantly, from eralisation and hopefully with infill drill- as Zhaojin to take the project into con-
the practical perspective the Indonesian ing some of that mineralisation will get struction and development.”
Government is delivering on its obliga- reclassified such that it can be incorpo-
tions. We recently submitted our EIS rated into feasibility studies and thus into – Mark Andrews
last year and that was approved several development.”
months ago.

“There is strong evidence of respect
for title by the Indonesian Government
and it is giving us the appropriate path-
way to production when we meet our hur-
dles and obligations.”

Through a PFS, previous owners dem-
onstrated potential for an open pit mine
to produce 100,000 ozpa gold over 10
years at Awak Mas, Sulawesi. The pro-
ject has an EIS approved and permitting
for development well advanced.

A resource of 1.74 moz gold prepared
by Cube Consulting and audited by CSA
Global is what Nusantara will be working
from upon listing.

Exploration has occurred intermittently
in the region over the past 20 years, with
gold mineralisation confirmed by trench-
ing or diamond drilling at another 10
prospects.

Simple metallurgy, access to infrastruc- has raised more red flags about mining “It is important to recognise that both
ture and potential to produce 100,000 investments in the country. of those were companies that were re-
ozpa gold makes the Awak Mas project in ported to earn an interest in Indonesian
Sulawesi an attractive proposition. The International Centre for Settle- projects by buying into IUPs, which was
ment of Investment Disputes (ICSID) dis- the permitting system held by Indonesian
Proposed new float Nusantara Re- missed Churchill’s request for damages companies. Those Indonesian compa-
sources Ltd appears to have the right and ordered the former to pay $US9.5 nies failed to deliver on their contractual
ingredients to entice investors, however, million in costs and arbitration tribunal negotiations. In the case of Churchill, it
convincing people of the surety of invest- fees. was proven in the international tribunal
ment in Indonesia is the challenge. in the Hague that the documents that the
Churchill believes there are grounds to Indonesian party used to secure the IUP
Australian company Intrepid Mines Ltd have the ruling annulled and is pursuing were fraudulent.
encountered an ownership dispute over the matter further.
the Tujuh Bukit copper-gold project in “The difference with our projects is that
2014, resulting in the company exiting Nusantara chairman Martin Pyle told we own a Contract of Work 100%-owned
Indonesia and walking away with $US80 Paydirt that such “high profile” failures from the Indonesian Government, a bit
million cash. should be looked at in detail before as- like the State Agreements in Western
sumptions are made about investing in Australia which are far more robust titles.”
More recently, London-based Churchill Indonesia.
Mining plc’s efforts to claim in excess of
$US1 billion damages from the Indone- “There have been some high profile
sian Government after the expropriation failures such as Intrepid and Churchill
over rights at the East Kutai coal mine which are two very notable examples,”
he said.

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 91

REGIONAL ROUNDUP

Nothing rare about Greenland

All roads are leading to China
for long-time rare earths
hopeful Greenland Minerals and

Energy Ltd (GMEL).

The company is advancing the

Kvanefjeld project on the south-

ern tip of Greenland, having al-

ready completed a robust feasibil-

ity study and now taking the asset

through the various phases of

permitting.

With rare earth prices strength-

ening on the back of growing sen-

timent towards the electrification

story, GMEL has stepped up mar- Greenland is progressing regulatory approvals for the Kvanefjeld rare earths-uranium project

keting of the project and is look-

ing no further than China to boost the tive working relationship since we first “It’s really emerging from a phase of

Kvanefjeld narrative. opened that dialogue,” Mair said. industry consolidation and restructure at

“We have actively engaged potential “It’s been an important part of the a time when demand outlook is continu-

interested parties in a global sense, but Greenland puzzle. It’s certainly helped to ing to build in accordance with the push

in many respects all paths led to China,” complete the picture, provide confidence towards greater electrification.

GMEL managing director John Mair told in the company’s ability to deliver the pro- “To that end, I think we’re very well

Paydirt. ject and as a conduit to ultimately market placed having an advanced project in

“China is perceived as having, to some off-take. Kvanefjeld for what could be a progres-

extent, a controlling influence, but it re- “The right group will provide a sense of sive upswing in the rare earths sector

ally just comes from their sustained in- project validation and also a high degree over the coming years.”

vestment in research and development of confidence to the market that what we According to a feasibility study update

around rare earth processing technology had considered were strengths were in from April 2016, a 7,900 tpa operation

and continuing to drive the development actual fact strengths in the eyes of so- can be developed at Kvanefjeld for an

of applications which utilise rare earths. phisticated participants in the industry, upfront capex of $US832 million, with op-

“When you look at global end-users for particularly in a sector like rare earths erating costs of $US252.10 million/year

rare earth materials, a lot of them have where there isn’t a great level of technical thereafter.

their manufacturing centres in China understanding from an investment com- Key project financials included a post-

anyway. While a lot of the boundaries be- munity standpoint.” tax NPV of $US1.59 billion, IRR of 43.4%

tween the Chinese system and the inter- China has undergone a number of re- and an average annual cash flow of

national market have dissolved in the last forms relating to its rare earths sector in $US376 million.

few years, we can see through our on- recent years, including the dissolution of GMEL continues to progress the pro-

going engagement that the whole sector a long-standing export controls policy in ject through a series of environmental

will become far more integrated globally.” 2015, as part of a wider country develop- and social approvals, with agreement

GMEL has a long-standing MoU with ment strategy. reached on many areas of the feasibility

potential rare earths developer partner It was expected to be the catalyst design following recent meetings in Co-

China Non-Ferrous Metal for an uptick in rare earth penhagen.

Industry’s Foreign Engi- prices which have been de- Kvanefjeld will also produce 512 tpa of

neering and Construction flated since 2011, however, uranium oxide.

Company Co Ltd (NFC) and improved market dynamics “This is a project that has been sub-

late last year welcomed Le are only now beginning to jected to a lot of public scrutiny over a

Shan Shenghe Rare Earth be reflected in the values of number of years, but at the same time

Co Ltd as the company’s some metals. we have been very active in community

single largest shareholder Since January 1, prices engagement and been very open in the

at 12.5%. for terbium oxide have lifted dialogue surrounding the project,” Mair

Shenghe is also provid- more than 40%, lanthanum said.

ing important technical ad- oxide is up nearly 30% “We’re at the low-grade end when deal-

vice to the company about and praseodymium and ing with things like uranium, so it’s not a

entering an industry that John Mair neodymium oxides have major issue in that respect. It’s more a
continues to be dominated jumped 20%. perceived issue than a fundamental is-

by China. “We’re entering a sec- sue. However, we have a point of respon-

“We’ve had dialogue with a number ond wind of interest in rare earths com- sibility to address perceived concerns

of Chinese groups over the years and mercially and I think the market is going because that has a big impact on how

Shenghe emerged as a very good fit to become a lot more interesting as we local stakeholders view the project.”

in terms of strategy, agenda and timing move forward with a much more struc- – Michael Washbourne
and it’s been a very coherent and posi- tured industry in place,” Mair said.

PAGE 92 AUGUST 2017 AUSTRALIA’S PAYDIRT

EUROPE

Auroch snares project hat-trick

Auroch Minerals Ltd could start drilling Auroch is set to prove up the cobalt potential of the historic Tisová
its new cobalt project in the Czech mining region in the Czech Republic
Republic by the end of the month.
as well as some copper, gold, silver and cerned. What we have to do now is show
Having already snapped up lithium and indium. We thought it was very exciting, that the cobalt is present across that size
copper-zinc projects in Namibia and Por- so we’re going back and re-drilling those potential.”
tugal within the last nine months, Auroch much thicker sulphide zones to see what
jumped on the historic Tisová under- the cobalt content is.” Auroch was in the process of drilling
ground mine in early July. its second hole at Alcoutim at the time
Auroch also picked up three explora- of print, with the first hole falling short of
Tisová has been mined intermittently tion licences as part of the Tisová acqui- the mark. However, it has failed to deter
– mostly for copper – since the end of sition, which will initially cost the compa- Tunks and his team.
the 12th century, however, recent sam- ny just $75,000 with 4.375 million shares
pling of the broader sulphide envelope issued to the project vendors. “These Iberian pyrite belts are mas-
confirmed the project’s prospectivity for sive sulphide, very concentrated bodies
cobalt. Tisová is the third major acquisition for which are not typically as thick as those
Auroch in the past nine months along- in the Czech Republic, but very high
Auroch chief executive Andrew Tunks side the Alcoutim copper-zinc project in grade for copper and zinc in places,”
said he wanted to hit the ground running Portugal and the Karibib lithium project Tunks said.
at Tisová as soon as possible in a bid to in Namibia.
prove up the true size of the project’s co- “Our first target didn’t work well, but
balt potential. Cobalt has emerged as 2017’s min- we’ve moved on and we’re about 400m
eral of choice for many companies, with down the second hole. There’s a big drill-
“We’ve applied for our drilling permits Tunks hoping the project’s relatively ing programme ahead of us here. These
and we hope to be drilling in late August, large scale will separate Auroch from its things are not easy to find, but we’re con-
but realistically it’s more likely to be in peers on the ASX. fident there is an orebody there. What we
September,” Tunks told Paydirt. need now is some patience and good ex-
“These style of deposits are planar, ploration to find it.”
“We’re only drilling four holes initially. two-dimensional and like a blanket,”
We know there’s copper there, so we Tunks said. While its European exploration is tak-
need to find out what the distribution of ing off, Auroch remains grounded in Na-
the cobalt is. Is it all over the sulphide “They’ve identified a very large blanket mibia as it waits for the necessary regu-
blanket? Is it in smaller zones? which is open at depth, along strike to the latory permits to begin drilling and other
north and along strike to the south. It’s regional work at Karibib.
“If it’s thick it could be really significant. got real size potential as far as I’m con-
There’s a lot of little cobalt plays spring- One thing which is certain, with more
ing up all over the world at the moment, than $7 million in the bank, Auroch will be
but they’re all extremely narrow and have one of the most active explorers over the
very few tonnes, particularly if they’re next 12 months.
outside the African copperbelt.
“We would like people to take a punt
“We’re hoping that if this comes up on us on the basis that we’re actually out
with cobalt, this will be potentially a large there doing the work,” Tunks said. “Ex-
tonnage play, which will be quite a bit dif- ploration companies never make a dis-
ferent to the majority of the ones outside covery when they’re not drilling and it’s
of the DRC.” our goal to be drilling all the time.”

Tisová has been on care-and-mainte- – Michael Washbourne
nance since 1973, having churned out
about 560,000t at an average grade of Andrew Tunks
0.68% copper. Previous exploration and
mining was focused on the copper-rich
VMS with sporadic cobalt sampling.

Recent sampling of the broader sul-
phide envelope produced grades of up to
0.68% cobalt and 3.5% copper (with po-
tential gold by-products grading 0.2-3.7
g/t), giving Auroch the impetus to pounce
on the project.

Tunks said a close confidant had iden-
tified the cobalt opportunity from sam-
pling of the Tisová waste dumps.

“What the old timers focused on…to
get to the copper ores they had to mine
through the thick sulphide blanket, so
there is a lot of sulphide material on the
surface in the waste dumps,” Tunks said.

“Our guy resampled that and he came
up with some quite good cobalt grades

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 93

DRA, ABS Africa to vices at Solomon until at least 2020. METS enlisted to test
share study duties Contract works include maintenance of Cobalt Ridge

Orion Minerals Ltd has appointed two the mobile and ancillary plant, autonomy METS Engineering has been engaged
key consultants for BFS and EIA work at solutions and non-process infrastructure to complete detailed metallurgical test
its Prieska zinc-copper project in South management. work on the Cobalt Ridge cobalt deposit
Africa. within Corazon Mining Ltd’s Mount Gil-
Thiess has been operating at the Solo- more project in New South Wales.
DRA Projects SA Pty Ltd will manage mon Hub, currently producing 72 mtpa
the BFS and assume the role of overall from the Firetail and Kings Valley depos- The purpose of test work is to inves-
study co-ordinator and compiler. its, since 2011. tigate the methods required to produce
a high-grade metal concentrate suitable
ABS Africa Pty Ltd has been tasked Sedgman tasked with for outright sale or as a feedstock for
with managing the EIA studies associ- Gabanintha ore review downstream processing.
ated with the BFS.
Australian Vanadium Ltd has engaged Proposed downstream processing
Both work programmes will be under- CIMIC Group subsidiary Sedgman to studies will determine methods suitable
taken in parallel with current activities, undertake a review of the behaviour of for production of cobalt salts for use in
including resource drilling and under- near-surface oxidised ore from its Gab- the rechargeable battery industry or for
ground inspections. anintha project in Western Australia’s sale into traditional markets.
Mid West region.
Thiess extends stay at The metallurgical studies are expected
Solomon Hub Sedgman is expected to use the Ne- to be completed by the end of next month
omet polymetallic low cost, high recovery and will be immediately followed by engi-
Thiess – CIMIC Group’s global min- proprietary hydrometallurgical process neering and processing studies.
ing services provider – has secured a to complete its assessment.
contract extension at Fortescue Metals BGC diversifies into
Group Ltd’s Solomon Hub in Western Australian Vanadium plans to send coal mining at Boggabri
Australia’s Hammersley Ranges. sample materials for testing initially
through a standard Neomet bench-scale BGC Contracting Pty Ltd has been
Generating revenue of about $650 mil- facility in a Montreal laboratory. awarded a five-year contract to deliver
lion, the contract extension will involve mining and equipment maintenance ser-
Thiess continuing to deliver mining ser- Both traditional and non-traditional vices at the Boggabri open-cut coal mine
routes will be evaluated by Australian Va- in New South Wales.
nadium and Sedgman.
Work at the Idemitsu Australia Re-
Thiess will remain active at the Solomon Hub until at least 2020 sources-owned project will begin on De-
cember 1, with the contract estimated to
carry a total value of $700 million over
the five-year term.

BGC Contracting chief executive Greg
Heylen said the contract was the com-
pany’s biggest NSW win in recent years.

“In addition to the size of the contract,
it is a significant strategic success as we
seek to expand nationally into new loca-
tions and commodities, particularly in
coal,” Heylen said.

“I am confident that our collaborative
approach of working closely with our cli-
ents will ensure that Boggabri mine can

PAGE 94 AUGUST 2017 AUSTRALIA’S PAYDIRT

maximise its performance.” Barminco has signed a three-year contract extension at Forrestania
BGC Contracting is expected to source
cluding Michael Hartley as project man- to operational improvements our team
its workforce from local communities. ager and principal hydrogeologist, Laurie has delivered,” Barminco chief executive
Mann as study manager and Gerry Brad- Peter Stokes said.
Gascoyne finalises EPC ley as sustainability manager.
contract award “We look forward to continuing to sup-
Barminco set to pass 15 port Western Areas in delivering consist-
Gascoyne Resources Ltd has awarded years at Forrestania ent and reliable production metrics, and
the EPC contract for the design and con- maintaining an outstanding safety record
struction of processing facilities at the Underground hard rock mining con- at both sites.”
Dalgaranga gold project to GR Engineer- tractor Barminco Ltd will spend at least
ing Services Ltd. another three years at Western Areas Fresh EPC work for
Ltd’s Forrestania nickel operations. GR at Sunrise Dam
Both parties had previously entered
into a LOI in March, with GR Engineering The contract extension covers mining GR Engineering Services Ltd has been
having already started design and con- services and diamond drilling at the Fly- awarded an EPC contract for a brown-
struction of a new 2.5 mtpa processing ing Fox and Spotted Quoll underground fields upgrade to the processing facilities
plant and associated infrastructure. mines, with the total contract value over at AngloGold Ashanti Ltd’s Sunrise Dam
the three years estimated at $236 million. gold mine in Western Australia.
The contract was entered into on a
guaranteed maximum price basis, with It ensures Barminco will go past 15 Under the terms of the contract, val-
the total value estimated at $66.5 million. years of continuous service at Flying ued at $31.3 million, GR Engineering will
Fox, having begun operations at the mine design and construct a new flotation and
GR Engineering is expected to gain ac- in March 2005. Barminco has also been ultra-fine grind processing facility with
cess to the site this month once prelimi- active at Spotted Quoll since May 2011 associated services upgrades to operate
nary earthworks had progressed enough when the underground mine first opened. within the existing infrastructure currently
to allow construction works to begin. in operation at Sunrise Dam, about 55km
“Western Areas and Barminco have a south of Laverton.
First ore is set for commissioning dur- joint stable and successful history at the
ing Q2 2018. Flying Fox and Spotted Quoll operations Work has already begun and is due for
and it is a pleasure to be able to again completion in June 2018.
Agrimin boosts Mackay extend this contract on the back of the
PFS team hard work, persistence and commitment

Advisian has been appointed to lead
the PFS on Agrimin Ltd’s Mackay sul-
phate of potash project, about 540km
north-west of Alice Springs.

Following a competitive process, the
consulting business line of the Worley-
Parsons Group was named as the pre-
ferred engineer and project manager for
the PFS.

It comes as Agrimin’s team of inter-
national consultants – including Global
Potash Solutions, Hydrominex Consult-
ing and Knight Piesold – near completion
of a number of key works to support the
study.

Agrimin has also made several key
appointments to its own study team, in-

AUSTRALIA’S PAYDIRT AUGUST 2017 PAGE 95

COMINGS AND GOINGS

Kibaran Resources Ltd has will continue his role as geol- Julian Ford has stepped Robinson. Italy-based Burns
appointed Howard Rae as ogy manager with Poseidon down as chairman and joined the zinc hopeful as
chief financial officer. Rae is Nickel Ltd. chief executive of Black executive chairman in 2014.
expected to play a key role Mountain Resources Ltd. Si- As part of the management
in finalising the debt and eq- Chris Els has resigned as mon Grant-Rennick has been restructure, chief financial of-
uity funding for the company’s company secretary of appointed interim chairman, ficer Stephen Hills has been
Epanko graphite project in Danakali Ltd to pursue other with Maurice Feilich also join- appointed to the company’s
Tanzania. interests. Melissa Chapman ing the board as a non-exec- board as finance director.
and Catherine Grant-Ed- utive director.
Top End Minerals Ltd has wards will now share the role. Kim Robinson
announced a board re- Rahul Singh and Jan
structure, with John Lamb ap- Piedmont Lithium Ltd has Sloane have joined Sure- Mark Elliott has replaced
pointed non-executive chair- appointed Keith Phillips fire Resources NL as execu- Keong Chong on the
man and Jeffrey Moore and as managing director and tive chairman and non-ex- board of Aruma Resources
Rowan Caren also joining chief executive. Phillips has ecutive director respectively. Ltd. A geologist, Elliott is also
as non-executive directors. a career on Wall Street span- Brett Clark has also been a non-executive director of
Caren will also take on com- ning 30 years, during which appointed an executive direc- HRL Holdings Ltd and Nexus
pany secretary duties. he has coordinated strategic tor following the resignation Minerals Ltd.
and financing transactions of managing director David
Mark Wilson representing more than $US1 Sumich. John Wareing has Spectrum Rare Earths Ltd
billion in aggregate value. stepped down as chairman has appointed Mark Pitts
Mark Wilson has resigned but will continue as a non- as joint company secretary.
as a non-executive of Endeavour Mining Corp executive director.
Tanga Resources Ltd to fo- has promoted Jeremy Blackham Resources Ltd
cus on his full-time executive Langford to the role of chief Roric Smith has appointed Anthony
responsibilities as managing operating officer. Langford, Rechichi to replace the out-
director of Legend Mining Ltd. who was previously executive Saracen Mineral Holdings going Jeff Dawkins. Rechichi
vice-president of projects and Ltd has appointed Roric spent the last 10 years with
Damien Henderson and technical services, replaces Smith as an independent non- Resolute Mining Ltd where
Darcy Wentworth have the retiring Adriaan ‘Attie’ executive director. Smith also he was most recently general
been added to the board of Roux. sits on the board of Sandfire manager of finance.
Kangaroo Resources Ltd. Resources NL and is a prin-
Henderson has been involved Founding chief operating of- cipal consultant with HiSeis. GBM Resources Ltd has
in various senior roles with ficer Lindsay Franker has He has previously held senior appointed mining engi-
the company, including most been elevated to the board exploration roles at Evolution neer Ian Horton to the newly
recently as financial control- of Egan Street Resources Mining Ltd and AngloGold created role of general man-
ler, while Wentworth returns Ltd as executive director, op- Ashanti Ltd. ager of the company’s Mount
the board after a four-year erations. Franker has been Coolon gold project. Horton
absence. involved with the company’s Gary Goh has been ap- has worked for a number of
Rothsays project for several pointed general manager mining services groups, in-
Eastern Iron Ltd has over- years prior to last year’s $6 of project development at Kin cluding Macmahon Holdings
hauled its board, with million IPO. Mining NL. Goh was previ- Ltd, Thiess, HWE and Eltin.
Therese-Marie Taylor and Ed- ously general manager of
die King joining as non-exec- John Nitschke operations at the Paddington Chris Indermaur has joined
utive directors. Steve Gemell, gold mine and has served on Centrex Metals Ltd as a
Michael Giles and Yungang John Nitschke has resigned the boards of Norton Gold- non-executive director. Inder-
Wu have stepped down in as managing director of fields and Avalon Minerals maur has been consulting to
accordance with the terms of Venturex Resources Ltd, with Ltd. the company for the past year
the company’s recent capital non-executive director Antho- as part of a technical review
raising. ny Reilly taking on corporate Alexander Burns has as- of Centrex’s fertiliser projects.
matters and geology manag- sumed the role of chief
Neil Hutchison has been er Angus Thomson assuming executive at Energia Miner-
appointed technical direc- all technical responsibilities. als Ltd following the resigna-
tor of Castillo Copper Ltd but tion of managing director Kim

PAGE 96 AUGUST 2017 AUSTRALIA’S PAYDIRT

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LEFTFIELD

Rock rolls into London

A2.6 billion-year-old rock has made A 2.6 billion-year-old rock made the journey from the Pilbara to
a journey of almost 14,000km from the Natural History Museum in London
Western Australia’s Pilbara region to
London and will go on display at a new Tom Price mine and selected with the as- NHM’s newly refurbished Hintze Hall
exhibition at the Natural History Museum sistance of Traditional Owners, the East- display, opened by the museum’s patron,
(NHM), opened by HRH The Duchess of ern Guruma people, the rock was dia- HRH The Duchess of Cambridge, and
Cambridge. mond-cut to shape before being shipped Sir David Attenborough at a gala launch
to London. It will now form part of the last month.
The colourfully layered 2.5t rock, a
piece of banded iron formation (BIF),
was chosen by the NHM as part of a
wider exhibition to celebrate the wonder
and beauty of the natural world, from the
origins of the universe, to the story of
evolution and diversity in the world today.

BIFs were formed more than three
billion years ago when bacteria in the
planet’s young oceans began to produce
oxygen through photosynthesis. This ox-
ygen combined with dissolved iron in the
sea to form insoluble iron oxide, which
separated out of the water and sank to
the seafloor. As it settled, bands of red
and grey iron-oxide developed between
layers of silica-rich sediment. Without
this process, there may never have been
an oxygenated ocean to support the
eventual evolution of more complex life
on Earth.

Sourced from Rio Tinto Ltd’s Mount



INDEX

Acacia 4, 26-27, 50 Comet 10 Kangaroo 96 Poseidon 96
Corazon 94 Kasbah 48 Predictive 80
Agrimin 95 Kefi Progress 80
Kibaran 5
Amara 32 Kidman 27, 96
Kilo 12-13
Anglo American 74 Danakali 44, 96 Kin
De Beers 42, 74 Kore 36
AngloGold 4, 27, 95, 96 Diatreme 96
15 68-69
Aruma 96 Randgold 37, 64, 71

Asanko 20 Resolute 4, 20, 23, 36-37, 71, 96

Asian Mineral 48 Eastern Iron 96 Rio Tinto 54, 88
Egan Street 96
Australian Vanadium 94 Endeavour 42, 96
Energia 96
Auroch 93 Equatorial 37 Legend 96 Saracen 96
Evolution 96 Leigh Creek 12 Sandfire 22, 96
Avalon 96 South32
Sovereign 26
Azumah 56 Spectrum 60
SQM 96
B2Gold 42, 71 Fe 75 Magnis 27 Strandline 12-13, 69
Bannerman 62-63 First Quantum 42 Manas 36 Surefire 15, 54-55
Banro Fortescue 94 Marindi 12 96
Barrick 82 Minbos 66-67
Base 4
BHP Gascoyne 95 Newcrest 52 Tanga 96
Black Mountain 26, 54, 57-58 Newmont 42 Top End 96
Blackham 14, 37 GBM 96 Nexus 96 Toro Gold 42, 80
96 Nordgold 42 Triton 70
96 Glencore 88 Nusantara 90-91
Nzuri 64-65
Gold Fields 18, 24, 34, 50

Cape Lambert 75-77 Graphex 27

Cardinal 18-24, 26, 34, 80 Greenland Minerals 92 Vector 82
Venturex 96
Castillo 96 Oklo 36, 71, 80
Orion 94
Celsius 72-73 Idemitsu 94 Oz 14
Iluka 15, 54, 58
Centamin 36 Intreprid Walkabout 46
Iron Road 91 West African 26, 80
Centrex 96 Ivanhoe 14 Western Areas
64-65 95
Chubut 86 Paragon 75

Churchill 91 Perseus 26, 30-32, 42, 52

Codelco 84 Piedmont 96 Zhaojin 90

PAGE 98 AUGUST 2017 AUSTRALIA’S PAYDIRT



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