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One belt strategy: ISSN 1445-3436
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Yamarna’s ascension to the top
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• Diggers & Dealers… full conference preview
• SAREIC Preview… South Australia looks for renewal

PAGE 1 JULY 2018 AUSTRALIA’S PAYDIRT



CONTENTS

PAYDIRT (ISSN 1445-3436) 6 NEWS 16
Published by BHP and partners have green-lit their 24
Paydirt Media Pty Ltd. next major iron ore project in the Pilbara – 90
A.C.N. 063 985 133 South Flank. More than $4.6 billion will be
sunk into developing the open pit opera-
Head Office: tion, which is expected to run with all mod
Suite 9, 1297 Hay St, West Perth cons available. BHP Minerals Australia vice
Western Australia 6005 president planning and technical David
P.O. Box 1589, West Perth Ruddell highlighted some of the innova-
Western Australia 6872 tions the company is using across its
Phone: (+61 8) 9321 0355 business at the ECU Education Series, a
Facsimile: (+61 8) 9321 0426 partnership with the WA Mining Club, last
[email protected] month. Mark Andrews reports
www.paydirt.com.au



Editorial: 16 COVER
Editor: Dominic Piper Paydirt was recently hosted on an exclu-
Deputy editor: Mark Andrews sive site visit to Gruyere alongside Gold
Journalist: Michael Washbourne Road Resources executive chairman Ian
Photography: Picture This Murray. Dominic Piper found construc-
Art director: Marian Noonan tion on the $532 million project one-third
Contributors: complete and a JV partnership which could
Keith Goode (Sydney), Brendan Ryan prove a force in the Australian gold sector
(Johannesburg), Ross Louthean for decades to come. He spoke to Mur-
Advertising: ray and Gold Fields regional chief Stuart
Advertising manager: Richa Fuller Mathews about the JV partners’ respective
Subscriptions: Mitchelle Matambo view on Gruyere and their future in Austral-
Phone: (+61 8) 9321 0355 ian gold
Facsimile: (+61 8) 9321 0426
24 DIGGERS & DEALERS
Pre-press and printing: Kalgoorlie will be bursting at the seams
Vanguard Press 26 John St, as the mining community gathers for the
Northbridge WA 6003 annual Diggers & Dealers Mining Forum at
Member of: the Goldfields Arts Centre from August 6-8.
Once again interest in presentation spots
Paydirt Media was high, with a programme featuring 14
Executive chairman: Bill Repard different commodities a true sign of the
Finance manager: Giovanny Jefferson times. Paydirt will be in full force at this
Accounts/administration: year’s event and providers readers with the
Heather Melling most comprehensive preview available
Conferences: Melita Fogarty,
Namukale Nakazwe-Msiska, 90 SAREIC
Christine Oelschlaeger A new government and a new wave
of enthusiasm appears to be sweep-
Cover image: Stuart Mathews of Gold ing through South Australia’s resources
Fields and Ian Murray of Gold Road and energy space. While players on the
Resources ground have lamented how the sector has
lagged behind more popular jurisdictions
in Australia, they are also positive that the
tide is turning. The time is right then for the
annual South Australian Resources Energy
& Investment Conference at Adelaide’s
Hilton, July 30-31. Paydirt takes a look at
the stories emerging in the State

Member of:

Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be
reproduced in any form without the consent of
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
parties

Diggers to deal,
but what’s been learned?

As the industry prepares for its annual – as Sandfire managing director Karl Simich points out on page
pilgrimage to Kalgoorlie for Diggers 40: “It’s difficult for them [Talisman] to extract full value [for their
& Dealers, the indicators are clear – share of Springfield] because the market doesn’t give you full
boom conditions are back. value.”
On the ASX, mid-tier miners are
enjoying all-time high share prices, This stratification between established miners and the juniors
labour and construction costs are battling to make headway only points to one thing and by the
increasing and the M&A drum is be- time Diggers & Dealers rolls around at the start of August, the
ginning to be beat again. M&A hype is likely to have stepped up another notch.
It all suggests a period of avarice is upon us but perhaps the
sector’s established players have remembered their missteps For all the fiscal discipline, the increased margins are begin-
from the last boom and are unwilling to share the spoils with the ning to make balance sheets look fat and lazy. Investors will not
upstarts. put up with the situation for long. And, just as they demanded
It appears to be the case in iron ore at least. companies restrain themselves as the market turned sour, they
The period 2005-2008 saw a steady supply of iron ore juniors will soon be demanding companies extend themselves and de-
hit the Australian bourse. They had watched the majors expand ploy the vast amounts of cash they have been accumulating
to meet Chinese demand decided to have some of the action. through a bout of expensive M&A activity.
This year has already seen Rio Tinto Ltd and BHP Ltd commit
to major new capital projects in the Pilbara but no junior iron ore The other major impact of the boom is the re-emergence of a
company is entering the market. Indeed, the one that did make it skills shortage.
all the way to production last time, Atlas Iron Ltd, is now subject
to a billionaire bidding war designed to ensure the status quo. From our interviews with industry leaders over the last few
Last month, Gina Rinehart’s Hancock Prospecting Pty Ltd months, it is apparent the mining industry is taking its duties
launched a 4.2c/share bid for Atlas, topping Chris Ellison-led more seriously this time around, particularly as the quick-fix of
Mineral Resources Ltd’s 3.02c/share made in April. the 457 visa is now out of reach.
MinRes immediately withdrew, leaving Hancock free to nego-
tiate with Andrew Forrest’s Fortescue Metals Group Ltd over its During the last boom, there was complacency among com-
own 19.9% interest in Atlas. panies of all sizes that simply paying superior wages would at-
Ultimately, it will result in either Hancock or Fortescue absorb- tract enough employees to the sector. Now these companies
ing Atlas’ high-quality ore into their existing portfolios and per- have stripped the wage inflation out of their cost profiles, they
haps negate MinRes’ intentions to build its own iron ore export are loath to reintroduce them.
business.
The established mid-tier iron ore miners, especially Twiggy, Instead, they must come up with new ways of ensuring the
have learnt from last time around. Then, the rhetoric was about labour pool doesn’t shrink on the back of industry demand and
a new era of junior iron ore miners in Western Australia utilising the next generation of workers are attracted to the sector for
multi-user infrastructure. more than the money.
However, when prices began to fall Fortescue recognised the
threat juniors posed to its own business and is in no mood to “The cost pressure we are already seeing demonstrates the
allow it to happen this time. work we need to do as an industry to proactively attract people
It is an example of the current stratification of the sector, an to the industry,” Independence Group Ltd managing director Pe-
element missing in the last boom when Warren Buffet’s adage ter Bradford told me recently. “As an industry, we can’t afford to
about a rising tide lifting all boats was clearly adhered to. Com- take our foot off the accelerator when it comes to graduate and
panies of all hues enjoyed unprecedented share performance. vacation programmes because if we can’t demonstrate there
The current resources uplift is much more discerning. The es- are jobs there when they leave university, high school students
tablished gold miners have enjoyed the greatest benefit, revel- won’t consider mining-related courses in the first place.”
ling in record share prices. This is applicable even to the small-
est producers however on the next rung down, developers such Gold Fields Australasia Ltd regional vice president Stuart
as Dacian Gold Ltd and Gascoyne Resources Ltd appear stuck Mathews shared a similar sentiment.
in purgatory, unable to attract the same level of attention until
they break into the producer class. “We need to make the industry more sexy and attractive
The situation is similar in copper where Sandfire Resources again,” he told me. “We have to reach down the primary school
NL is enjoying all-time highs on the ASX but the next wave of level and we are not talking just about mining engineers and
developers are struggling to generate the market interest which geologists. We need to show that if you want to be in computing,
will allow them to follow Sandfire into production. data analysis, biology, community relations, indigenous studies,
To emphasise the point, Sandfire paid JV partner Talisman there is a career for you in mining. And, we have to use the
Mines Ltd $73 million for its 30% share of the Springfield pro- younger talent in our company to project that because they have
ject. Talisman shares jumped 10% on the news, demonstrating the vibrancy to communicate it.”

PAGE 4 JULY 2018 AUSTRALIA’S PAYDIRT It is a valid point. The industry can be its own worst enemy in
projecting a public image which is more readily associated with
the 19th century than the innovation we see in the 21st century.

[email protected] @DominicPiper



NEWS

Smarting from tech in mining

On the morning BHP Ltd and
partners announced project
go-ahead on the $4.6 billion South

Flank iron ore project in Western

Australia’s Pilbara, BHP Minerals

Australia vice president planning

and technical David Ruddell was

lauding technological advance-

ments made in the industry.

“We have seen some critical

breakthroughs over the last dec-

ade and even more recently over

the last few years and the evolu-

tion and innovation we are seeing

widely developed in mining has

been fantastic to witness,” Rud-

dell said.

First ore from South Flank –

which will utilise the latest mining

technology – is expected to be de-

livered in CY2021 and is primed to

replace the 80 mtpa currently ex- BHP Minerals Australia vice president planning and technical David Ruddell was a panelist at the

tracted from Yandi at Mining Area ECU Education Series, a partnership with the WA Mining Club. The topic last month was Smart

C (MAC). Technology in Mining

While existing infrastructure

at MAC will be expanded and used, 2,500 people, with 600 operational jobs face was also paying dividends and key

construction of South Flank will require thereafter needed to ensure BHP’s de- to future operations like South Flank.

sired run rate of 290 “Technology is leading to safer and

mtpa iron ore. better outcomes across a range of indus-

The company an- tries,” Ruddell said.

ticipates reaching “The implementation of autonomous

group output of 290 haulage at out Jimblebar operation –

mtpa by the end of which at the end of last year went fully

FY2019, with record autonomous in terms of our hauling fleet

production from – has led to a step change in the reduc-

MAC and Jimble- tion of potential incidents of heavy ve-

bar reported for the hicles and light vehicles. We no longer

March quarter. Total have the risk of operators having micro

production for the sleeps, we no longer have the risk of

March quarter on interactions where people may get too

a 100% basis was close to a vehicle or otherwise.

203mt with FY2018 “The technology is pretty game-chang-

guidance reduced ing in terms of how that autonomous

to 272-274mt (100% system works. We have zones around

basis). heavy and light vehicles, which to me

As BHP drives is a huge game-changer and a massive

towards record pro- step change for what is a critical risk in

duction rates, the the resources industry – heavy vehicle/

implementation of light vehicle interaction. The second one

technology will see is where we have operations with drivers

it get there safely. in trucks we are using smart technology

Ruddell said to measure fatigue. The ability to actually

front-end geosci- look at and monitor in real time some-

ence tools such as body’s eyes in what they are doing, their

down-hole assaying head position, it is a game-changer,” he

and 3D seismic had said.

been game-chang- – Mark Andrews
ing technologies for

industry, while the

shift to autonomy in

certain areas at the

PAGE 6 JULY 2018 AUSTRALIA’S PAYDIRT



BUSH TELEGRAPH

Mining Charter killer
blow for juniors

An extremely harsh assessment While some executives would
about the future of junior min-
ers in South Africa – essentially, they voice their concerns “off the record”,
don’t have one – was sounded by
former Nedbank mining investment virtually none were prepared to go
executive Paul Miller at the Junior
Indaba mining conference held re- “on the record” because of fears that
cently in Johannesburg.
their businesses would be victimised
Miller was sounding off because
he no longer works for Nedbank and by the ANC Government which has
was able to tell it like it really is in his
new position as managing director shown itself time and again to be
of mining investment trust Concen-
trate Capital Partner. highly sensitive to criticism.

The underlying truth in Miller’s Minerals Council executives fre-
presentation was highlighted barely
a week later when the Minister of Mineral quently fobbed off pointed media
Resources Gwede Mantashe made pub-
lic the revised draft of the country’s third questions by maintaining that things
Mining Charter which he had been nego-
tiating with the Minerals Council South were “just fine” because negotia-
Africa (the new name for the Chamber of
Mines). tions “behind the scenes” were on-

That draft requires that any new mine going and encouraging.
starting up in South Africa has to bring
in a 30% black economic empowerment Gwede Mantashe That façade finally fell apart last
(BEE) partner (the current requirement is
26%) and, on top of that, allocate a free year when former mines minister
equity carry of 10% (current requirement
– nil) split between workers and nearby even when they have unbundled in South Mosebenzi Zwane unilaterally imposed
communities.
Africa, they have gone and bought as- the first version of Minng Charter 3 upon
Effectively, that means any mining en-
trepreneur has to give away 40% of his sets abroad. the mining industry.
new project up-front to non-contributing
shareholders because potential BEE “They are gone. They deny that they That led to on-the-record attacks on
partners invariably claim poverty and the
mining entrepreneur usually has to spon- are not interested in the future of South Zwane and the Government by several
sor their funding.
African mining but they are being disin- mining executives and culminated in le-
That puts the required return on a pro-
ject into the stratosphere in a situation genuous.” gal action by the Minerals Council.
where junior miners and explorers battle
to raise funds at the best of times. Turning to “big labour” Miller said the The Minerals Council is now objecting

Miller’s standpoint was that juniors unions were only interested in their mem- to various aspects of Mantashe’s latest
just don’t stand a chance and the Min-
ing Charter 3 process is not going to help bers who were currently working for “big version of the Mining Charter which is
because of the nature of the groups in-
volved in those negotiations – the parties mining” and not “people who might get open for public comment until July 27 af-
he terms “big mining”, “big labour” and
“big government”. a job in the future on a diamond digging ter which it goes to Cabinet for approval.

He pointed out that the Minerals Coun- site in the North West Province”. It remains to be seen whether the Min-
cil South Africa – “big mining” – repre-
sents the interests of “sunk capital” in the Finally, Miller attacked the ruling ANC erals Council will re-instate the legal ac-
industry.
Government in South Africa stating: “Our tion it voluntarily put on hold after Zwane
“These are people who have money
stuck in the ground and have already big government is fundamentally and was removed and replaced by Mantashe.
left. They have either sold down in South
Africa or unbundled in South Africa and, ideologically opposed to free enterprise”. It would appear the Council is loath to go

“Junior mining is fundamentally about that route because of the political impli-

free enterprise and it only succeeds cations. It only took action against Zwane

when you have sanctity of contract, you because it had no other option.

have security of tenure, you have con- Still underway is a separate legal ac-

sistent regulation and you have high trust tion by mining lawyer Hulme Scholes to

societies with low corruption. scrap the Mining Charter in its entirety

“We have very few of those in our cur- which the Department of Mineral Re-

rent environment. We are all very grateful sources (DMR) tried and failed to have

we now have a minister [Mantashe] who thrown out of court last year.

is probably not a crook. But, he probably Scholes has been highly successful

is a socialist. in challenging the DMR over the past

“You cannot have people representing few years and won case after case for

sunk capital arguing with people repre- his mining clients. His advice has always

senting existing labour arguing with peo- been “use the courts, they work because

ple who are fundamentally opposed to they apply the law.”

free enterprise and think that they can fix Frankly, if Mantashe proves intransi-

our junior mining sector.” gent on his new requirements I think the

I think he’s right and I have written be- Minerals Council should combine forces

fore that top South African mining indus- with Scholes – something they have

try executives should have been making maintained up till now that they will not

these kinds of assessments in public a do.

long, long time ago. Instead, they kept Brendan Ryan is a Johannesburg-based

quiet and allowed the Government to mining writer

dominate the public debate.

PAGE 8 JULY 2018 AUSTRALIA’S PAYDIRT







GOODE NEWS

Soil sampling works
at Sandstone

On June 13 and 14, Alto in the interpreted direction
Metals Ltd reported the of the mineralisation, and ul-

progress of its soil sampling timately the discovery of the

programme at its mostly orebody. More importantly,

wholly-owned Sandstone it showed that soil sampling

goldfield and discovery of in the Sandstone goldfield

a 1.3km by 1.3km anomaly worked in delineating and

south of the Bull Oak open- producing mineralisation.

pit. Let’s face it; geology ap-

Some 30% of the assays pears to be all about trying

from the sampling had val- to find a correlation between

ues of more than 30 ppb one of the possible method

gold. The actual distribution layers that can be applied,

reported included 42 as- and a deposit. For Sand-

say samples of 31-100 ppb stone, that appears to be

gold, 17 of 101-300 ppb and soil sampling.

three of more than 300 ppb. In the Alto presentation to

The plus-300 ppb result and the AMEC Conference re-

the cluster in the plus-200 leased on June 14, there is

ppb area shown in the im- a reference to a 3km by 3km

age are significant because, gold-in-soil anomaly also

from what I recall, a 300 ppb south of Bull Oak, and the

gold-in-soil anomaly usu- Alto’s soil assays from its Hancocks mining area south of the 2km diameter Stingray area.

ally inferred that exploration Bull Oak open-pit at Sandstone Stingray is a completed

could or even should result undrilled (by any means)

in a gold mine. This is illustrated by the ally a not too dissimilar an approach to area north of an excised alluvial mining

Plutonic gold mine, which was based the work Gold Road Resources Ltd un- area, and was probably ignored because

on exploration following a 300 ppb gold dertook for two years on its Yamarna it is demagged (demagnetised) probably

anomaly. project leading up to the discovery of the due to a pole-swap period. However, de-

Soil sampling for gold is not new of Gruyere deposit. magged areas are increasingly coming

course but new methods are much low- Initially, Alto produced its own geologi- under the spotlight by various explorers

er-cost and faster. Alto required around cal plan of the Sandstone goldfield, as and producers, possibly because the

3,000 samples to be collected on varying the original plan that Troy Resources Ltd Jundee gold deposit lies in a demagged

grids (depending on perceived geology was using did not appear to even cor- area. At Stingray, extensive BIF outcrop

and structures) of mainly 100m by 200m relate with Google Earth (admittedly the (possibly parasitically folded) can be

and 200m by 400m in its 800 sq km gold- freely available Google Earth was still in physically seen, but it is effectively “in-

field, a target it achieved in just 30 days. its infancy when Troy closed its plant in visible” in mags because it is demagged,

As described in the JORC 2012 notes 2010). and probably lends itself to soil sampling

with Alto’s June 13 announcement, sam- That resulted in five main camp-style (where practical).

ples were taken from 20-50cm below target areas, and the initial focus on the It has been remarked by international

surface at the designated grid spots Vanguard-Indomitable “Mafic-Terrane”. geologists that the standard of geology

by XM Logistics Pty Ltd (using people The extensive soil sampling programme and geological techniques and new ad-

on two quad bikes at the rate around then completed the gaps in the patch- vanced equipment (MinAnalytical/Chrys-

$1,500-2,000/day). The samples were work quilt of historic soil sampling and os’ new photon analyser for example) ap-

then screened in field (using sieves) to was followed by the current aircore and plied in Western Australia is the highest

achieve a 1kg sample of the 0.9-1.6mm then follow-up RC drilling. in the world, well ahead even of Canada.

fraction, which was bagged, labelled, Most historical owners (starting with It could well be that soil sampling may at-

photographed and logged together with WMC) of the Sandstone goldfield have tain a revival now that it is simpler, faster

its GPS position. The labelled sample undertaken some soil sampling of parts and less costly than it was historically.

bags were then sent in bulker bags to Mi- of the goldfield, but were often thwarted Disclosure and Disclaimer: This article

nAnalytical’s labs for mass spectrometry by not holding a neighbouring tenement. has been written by Keith Goode, the Man-
As part of the gradual review, Alto’s aging Director of Eagle Research Advisory
analysis, with the results then entered

into excel spreadsheets. chief geologist, Changshun Jia, pro- Pty Ltd, (an independent research compa-
Alto came up with this approach after duced a presentation on the discovery ny) who is a Financial Services Represent-
of Troy’s Bulchina deposit, highlighting ative with State One Stockbroking (AFSL
two years of rebuilding its understanding its discovery from soil sampling. Further 247100).
of Sandstone’s geology and what had soil sampling by Troy caused a change
and hadn’t been explored. It was actu-

PAGE 12 JULY 2018 AUSTRALIA’S PAYDIRT



NEWS

New era for CME

Political allegiances will not tralia and founder and manag-
stand in the way of Paul ing director of lobby firm GRA

Everingham strengthening what Everingham Advisory.

he believes is one of the best CME president Jeroen Buren

advocacy groups in Australia – said after casting the net wide

The Chamber of Minerals & En- to find a suitable replacement

ergy of Western Australia. for Howard-Smith, the organi-

Everingham will assume the sation was proud to have ap-

role of CME chief executive pointed Everingham.

when long-time servant Reg CME deputy chief executive

Howard-Smith steps down in Nicole Roocke was a natural

mid-July after 15 years (10 as contender for the top job. Prior

chief executive) with the organi- to Everingham’s appointment,

sation. Roocke tendered her resigna-

Born into a political family in tion from the CME.

the Northern Territory in the “At this point in time, as a re-

1970s, Everingham has well- sources industry we are coming

bound ties in state and federal out of the boom period and into

political circles and not just in more stable operations, there

the WA Liberal Party where he are a lot of challenges as to the

formerly served as an executive image of the resources indus-

director and chief executive. try, particularly with the young-

Despite his political per- er generation,” Buren said.

suasion, Everingham said he “They will be the future of

maintained a number of close the industry, there is work to

relationships with members of be done to get ourselves in a

various political parties and did stronger position so there is

not choose friends based on probably a change of direction

the way they voted. needed and therefore we cast

“I have been working in or the net wide and we are very

working with governments of proud that we actually man-
all colours and all persuasions CME president Jeroen Buren with the advocacy body’s incoming aged to secure Paul with his
for 25 years. I like to think of
government as a partner and chief executive Paul Everingham. Everingham sees an exciting background.
10 years ahead for the mining sector “Those links with government

obviously a key stakeholder,” circles throughout his career,

Everingham said. increases on industry from government, he has the respect of both side of the

“They are all different and they all have Everingham intends to bunker down in benches – Liberals, Nationals and Labor

different objectives, but it is a very criti- his role as CME chief executive by ad- alike – so we’ll have good feedback in

cal stakeholder and working closely with dressing the image of the resources sec- that space, but also his qualifications in

them and treating it as a partnership is tor. terms of social media engagement and

a productive way. A partnership isn’t al- “Part of how I will be judged will be how communication, that is also very strong

ways totally agreeable, but ideally people we can better engage with students in so I see him as the perfect candidate to

can be adult enough to have objections primary, secondary and tertiary educa- move us forward.”

inside the room or tent. I think my experi- tion, definitely,” Everingham said. Everingham’s appointment was en-

ence will help me navigate both state and “I have been looking at some data on dorsed by Rio Tinto Ltd Iron Ore manag-

federal governments in this job and I cer- university and TAFE numbers around ing director, rail, port and core services,

tainly hope to continue the relationship at mining and chemical engineering, which Ivan Vella: “Rio Tinto welcomes the ap-

all levels of government.” is the big one for mining. They’re sober- pointment of Paul Everingham as the

Despite WA Treasurer Ben Wyatt not ing. I definitely think it is one of my key next CEO of the CME. Rio Tinto believes

ruling out another attempt to impose a objectives and it is a challenge, but it is Paul’s background and experience will be

royalty hike on the State’s gold sector, a challenge I look forward to, telling the invaluable in helping to position Western

Everingham wasn’t anticipating another story about how critical mining and oil Australia’s multi-billion dollar resources

stoush between government and indus- and gas is to your everyday life. industry now and into the future,” he said.

try. “Everything you touch and do in Aus- “On behalf of Rio Tinto I’d also like to

However, he applauded the way indus- tralia and around the world has some- thank Reg Howard-Smith for his service

try banded together in staunch opposi- thing that has come from mining or oil and dedication to the Chamber during his

tion to the proposed gold royalty increase and gas from the minute you wake up to tenure and wish him all the best for the

from 2.5% to 3.75% last year and added the minute you fall asleep; I think that can future.”

that such short-term fixes for budgetary help tell a big part of the story.” – Mark Andrews
repairs were not best practice. Prior to joining the CME, Everingham

Rather than having to fend off royalty was chief executive of Marketforce Aus-

PAGE 14 JULY 2018 AUSTRALIA’S PAYDIRT



COVER

Gruyere:
Start of the next
golden generation

Five years ago, the Australian gold industry was beginning to look tired. Among the established miners,
the desperation of the North American majors Newmont Mining Corp and Barrick Gold Corp to tidy
up their balance sheets and resurrect their growth profiles saw them choose to divest the vast majority of
their West Australian portfolios while Newcrest Mining Ltd increased its offshore focus. On the exploration
front, the rate of discovery was languishing with no major gold finds since the unearthing of the Tropicana
deposit nearly a decade before.

Into this environment emerged Gold and production; remote location, no out- When Paydirt visited Gruyere –
Road Resources Ltd and its Yamarna crop, little previous exploration but host 1,000km north-east of Perth – in May,
gold project at the eastern margin of to the country’s next major gold mine. construction was one-third complete with
Western Australia’s Eastern Goldfields. all the major parts for the 7.5 mtpa pro-
While the wider resources industry cessing plant already delivered to site.
A forgotten corner of the Yilgarn Cra- continues to lament the lack of major ex-
ton for the previous 30 years, Yamarna ploration success over the last two dec- Having overseen the company’s pro-
quickly grew from neglected district, to ades and a seemingly shrinking search gress from $5 million microcap junior to
small but uneconomic curiosity, onto space, JV partners Gold Road Resourc- developer of a world-class mine, Gold
sizeable greenfields discovery and even- es Ltd and Gold Fields Ltd get on with Road managing director Ian Murray
tually into the largest gold development the business of turning the $532 million could be forgiven for getting overly com-
in Australia of the last decade. Gruyere gold project at Yamarna from fortable. Instead, the South African-born
greenfields oddity into a 250,000 ozpa accountant is eager for the project to hit
Yamarna is now an outrider for a new operation. the major milestones.
generation of Australian gold exploration

PAGE 16 JULY 2018 AUSTRALIA’S PAYDIRT

Drilling on the Orleans prospect at Yamarna. Gold Road is spending $22 million on greenfields exploration at Yamarna this year

“I am happy with the progress; it is a cost pressures are beginning to return Amec Foster Wheeler and Civmec – may
big project being built and we are a third because the resource sector is on the be locked in but Murray is already keep-
of the way through the EPC construction move and projects which were stalled ing a close eye on demand for production
but I’m an impatient man so would like us two years ago are all on again.” specialists.
to be further ahead than we already are.
There is still a lot of work to do,” Murray The EPC contract – a JV between “If we’d been six months earlier in the
declared.
Ian Murray with senior exploration geologist Lucy Saliba in the Yamarna exploration office
“Safety remains my biggest concern,
particularly given it’s such a big project
with so many people and so much ma-
chinery and equipment coming in and
out of site. But, Gold Fields and Gold
Road both have great safety systems in
place, as do our contractors.”

Safety issues become even more rel-
evant when the construction workforce
includes employees new to the industry.
This wouldn’t have been a problem at the
end of 2016 as the industry languished
in the tail-end of the Great Mining Down-
turn but 18 months on and with the iron
ore majors ramping up expansion plans,
Gold Fields and Gold Road are beginning
to feel the tightening of labour markets.

“We probably got the main contracts
– the EPC, the bulk earthworks and the
power line – at the right time, 12 months
ago,” Gold Fields vice president Austral-
asia Stuart Mathews told Paydirt. “The

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 17

COVER

“ The Gruyere tailings storage facility is 22sq km with a maximum wall height of 40m
build we could’ve built a pro- Gold Road did a great job in the new-build cost.
duction team when the mar- a frontier landscape to find a The camp is just 50m from
ket was soft,” Murray said. “It project of Gruyere’s quality and to
is a hot market now because Gruyere’s new, jet-capable air-
there are multiple commodi- strip, giving contractors and staff
ties where things are hap- an altogether better experience,
deliver on it. And, that’s why Gold according to Mathews.
pening. Fields was attracted to it. For Gold “The biggest thing was actually
“I don’t think the market Road, I think we provided a great getting that camp and airstrip op-
erational,” he said. “Having jets
will get as hot as 7-8 years funding opportunity. land and the camp so close to
ago when we had a lot the airstrip reduced the travelling
of capital expansion pro-

grammes under way in iron time by up to four hours. That is a

ore and then the oil and gas construction The Gruyere JV has, however, stolen a big boost to the morale of the workforce.”

boom. The next phase of iron ore expan- march on other developments in attract- Staff morale is usually a clear indicator

sion has started but the oil and gas boom ing employees, not only by starting ear- of the harmony in JV construction pro-

has come to an end, although this time lier but by supplying superior facilities, jects with suspicion and caginess obvi-

you also have gold and lithium projects including a 500-person camp purchased ous when relations are strained.

getting up and running.” from Roy Hill Holdings Ltd at a fraction of At Gruyere, however, it is difficult to

distinguish between Gold Road, Gold

Ziggy Starfin – a tribute to founding Gold Road director Ziggy Lubieniecki – was Stuart Mathews
purchased in The Big Splash WA auction for Perth Children’s Hospital Foundation

PAGE 18 JULY 2018 AUSTRALIA’S PAYDIRT

All the major plant equipment had been delivered to site when Paydirt visit-
ed Gruyere in May, including the ball mills (above) and seven CIL tanks (right

and below). The 8.5 mtpa circuit is designed to deliver 270,000 ozpa of gold

Fields and EPC employees, something The agreement eventually netted Gold the best JV we’ve ever seen’ and trying
both Mathews and Murray attribute to Road the Dealer of the Year award at last to buy into the stock.”
the cultural alignment between the two year’s Diggers & Dealers and Murray
owners’ teams. rails at any suggestion Gold Road broke Without shopping the project around,
the cardinal rule of juniors not “giving any Gold Road’s willingness to partner-up
“We have got more and more comfort- of the project away”. over Gruyere’s development was gold
able with the relationship because we mining’s worst-kept secret throughout
meet regularly and see eye-to-eye as “The thing is we didn’t give anything 2016. Gold Fields was just one of a num-
both of us have a vision for what Gruyere away,” he said. “We sold 50% of the pro- ber of suitors but Mathews is comfortable
can deliver and both of us understand ject for NPV and we haven’t really faced both parties got value for money.
the hard work we need to put in to reach any heat from our shareholders over it.
the end point,” Murray said. In fact, we have had instos who didn’t “There were all sorts of financing op-
like the concept when it was announced tions in front of Gold Road but we came
Mathews agrees and told Paydirt the coming to us since and saying: ‘this is in with the 50/50 option, which provided
relationship between the two companies them with the funding to build the project
was “very strong”.

“On both sides you are dealing with
people who want to do the right thing.
There is mutual respect,” he said. “Gold
Road did a great job in a frontier land-
scape to find a project of Gruyere’s qual-
ity and to deliver on it. And, that’s why
Gold Fields was attracted to it. For Gold
Road, I think we provided a great funding
opportunity.”

The funding aspect will one day be
remembered as the defining moment in
Gold Road and Gruyere’s history. There
is a long-held belief that juniors should
never sell-off part of their project and
Gold Road undoubtedly faced criticism
for striking a deal which saw Gold Fields
pay $350 million plus a 1.5% net smelter
royalty (on production over 2 moz) for
50% of Gruyere.

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 19

COVER

The primary crusher at Gruyere – capacity 1,500 tph
PAGE 20 JULY 2018 AUSTRALIA’S PAYDIRT

The deal was just as important to Gold curred in the last few years.”

Fields as a means of retaining that Top It may have successfully eased some

10 status. Having spun-out its South Af- of those concerns but what Gold Fields

rican assets (excluding South Deep) into truly needed was a freshly minted as-

Sibanye Gold Ltd as part of its post-gold set to appease investor concerns. When

price high restructuring, the company’s the opportunity was presented to take

development pipeline was bare. on Australia’s largest gold discovery of

Initial restocking took place near the recent years, Gold Fields moved asser-

head frame with Gold Fields embarking tively.

on a major near-mine exploration pro- “It is the biggest development in Aus-

gramme around its existing WA assets tralia, maybe the world,” Mathews said.

(St Ives and Agnew) as well as at three “It’s a long life mine [13 years] and we

operations newly acquired from Barrick are already growing extra reserves and

(Granny Smith, Darlot and Lawlers) in a there is potential beyond that. It can be

$283 million deal. a backbone for the company and helps

“Barrick divesting provided an opportu- the message about the group’s long mine

nity for us to pick up those assets but we life.”

were criticised for doing so at the time,” The JV sees Gold Fields take control of

Mathews said. “Critics were saying: ‘they exploration in the Yamarna Central Hub

are old, there’s not much left’ but actually area. Mathews admitted it was only a

they were a good fit into the portfolio any- change in strategy four years ago which

“way. Lawlers became part of Agnew im- had given Gold Fields the requisite skillsmediately, Darlotto take on such a

contributed for With money challenge.
from Gruyere we
three years and “We didn’t
never cost us a have the right
cent, and as for set-up in our ex-

Granny Smith, will become the first ploration team to
I have no idea genuine self-funded support that big
how we got it lift in spending

at the price we explorer ever. The cash we were about
did. It is a world- flow from Gruyere to go through,”
class asset with he said. “But,

no end in sight.” means we can plan our we beefed up
The acquisi- exploration programmes the specialists
and we now
tions coincided

with a major lift- two years in advance. have a new vice
ing in explora- president of ex-

tion expenditure, ploration and

with Gold Fields world-class geo-

now ploughing $100 million a year into physicist, structural geologist and geo-

its WA exploration campaigns. However, chemist. They provide the quality to sup-

the nature of the orebodies means Gold port the exploration teams on site.”

Fields’ Australasia division will never be The new team was handed an explo-

able to boast decade-long mine lives, an ration budget increased twofold, making

and allows them to get on with their pri- issue which has had a negative effect Gold Fields Australian gold’s most active
mary business – exploring that Yamarna
belt.” on-market. explorer.

Gold Fields’ arrival also allayed any “The company has often received criti- “That isn’t production drilling; that is
fear Gold Road’s inexperience in project
development would see it run aground. cism from our big North American inves- genuine extensional and new target drill-

“We have the construction and project tors for the lack of mine life in Australia ing,” Mathews said. “We said it would take
management experience in Australia to
tackle this kind of project because they and delivery at South Deep,” Mathews a few years to realise the value for that.
are always a challenge for any company,”
Mathews said. said. “These investors are used to the big After one year we had put the team in

Murray doesn’t deny the entrance of a mine life operations on the Carlin Trend place and in the second year the smoke
major partner added a level of credibility
to the Gruyere development story. and the like but the WA assets are not began to emerge. By the third year we

“The JV makes us a low-risk proposi- the same. were starting to generate projects and
tion for instos. It also allows us to focus
on what we do best, exploration, at the “Agnew is a classic example. It has had now we have no plans to drop that spend
same times as getting into production. It
also gives us cash flow from a mine man- 2-3 years of reserves since 1991. The because we are getting reward with re-
aged by one of the Top 10 gold produc-
ers in the world.” only time it dipped to 1.5-2 years was placement of depleted ounces and ex-

when we dropped the exploration ball. tensions to mine life.”

Now we have the right level of investment The WA assets now represent 46-47%

– $20-25 million a year. of group production and 55-60% of group

“We have managed the mine life ques- revenue for Gold Fields and Mathews is

tion. We have invested for the long haul adamant the company will be resident in

and will incrementally grow reserves the state for some time yet.

over time. That rhetoric goes away with “We have got a long-term view of our

consistency of delivery and that has oc- presence in WA,” he said. “Gold Fields

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 21

COVER

is investing $100 million a year in explo- of greenstone strike. drilling returned 2m @ 17.45 g/t and 1m
ration. No-one is even close to spend- Gold Road’s exploration strategy is @ 17 g/t gold.
ing that in Australia. Why? Because we
know we’ll get the reward.” a simple one. In the Central Hub it will Gold Road has already enjoyed ex-
work with Gold Fields to unlock margin ploration success in the Northern Hub
The wealth of mature assets under its by identifying extensions and satellite where drilling on the Ibanez prospect
control could also be an advantage as it deposits which can be trucked to the 7.5 last year produced hits of 10m @ 28.67
aims to find the next generation of ore- mtpa processing plant. g/t, 8.2m @ 11.63 g/t, 9m @ 4.56 g/t and
bodies. 19m @ 2.52 g/t.
In the other two hubs, the goal is to
“We haven’t made the leap into pure replicate the success of Gruyere by find- “The Corkwood camp [host to Ibanez]
greenfields at the moment. We think the ing deposits capable of supporting stan- has proven very interesting,” Murray
tenements we already have around the dalone operations. said. “At Ibanez, we had some great
globe are of really good quality and we results last year and we have two new,
have got plenty on our pate and plenty of Gold Road is drilling 165,000m this undrilled, targets at Bloodwood and Ro-
good opportunities. year to get it started along that road. mano which will be subject to first-pass
aircore drilling this year.”
“We are looking at all sorts of innova- The Southern Hub is the major focus of
tive stuff, particularly around our use of 2018, having been locked up in JV with Gold Road’s greatest challenge is
data. Some of our data goes back 60 Sumitomo since 2015. perhaps the shear wealth of targets it
years but is not digitised. There are al- has across 12,000sq km of prospective
most definitely mines just sitting within Gold Road paid $7 million to revert ground. Murray admitted it was a balanc-
that data. I believe it will be people who to 100% ownership of the 2,400sq km ing act to ensure the systematic explora-
have nothing to do with mining who will package and has already begun drilling tion of the tenements was complemented
be the ones to come in and unlock that as it bids to build its understanding of the by market-pleasing discoveries.
value for us.” underexplored area.
“There is a lot of pressure on us to
If the wealth of historical data is an Drilling this year will focus on the make that next discovery because we
advantage for Gold Fields, Gold Road Wanderrie, Smokebush and Toppin Hill believe we have the best team and the
is banking on the lack of information to camps in the Southern Hub. best tenement package going around,”
drive its push towards mid-tier producer he said. “I’m bloody impatient myself but
status. “There is smoke all the way along that exploration is not a straight line. We will
shear zone,” Murray said. discover a lot of smaller deposits along
While the Gold Fields JV has seen it the way that are not economic today but
cede control of the Central Hub to its The exploration team has already once we find the big one, they will be-
partner, Gold Road remains highly active enjoyed early success at Smokebush come so. It is all building the inventory.”
on both the Northern and Southern hubs – among the highest ranking targets
at Yamarna where it still controls 180km across the entire belt – returning a hit of Murray regularly boasts about Justin
56m @ 1.96 g/t gold from quartz dolerite
structures synonymous with large depos-
its throughout the Yilgarn. At Wanderrie,

PAGE 22 JULY 2018 AUSTRALIA’S PAYDIRT

Osborne, executive director – explora- The 648-room Gruyere camp includes driving range, cricket nets, basketball
tion and growth, having Australia’s “best courts and gym. It was acquired from Roy Hill Holdings
exploration team” but how does Gold
Road attempt to translate from that to ac- discoveries but Murray can look to former explorer pushed to the margins of WA’s
tual discovery? colleagues in South Africa for inspiration. gold sector but Murray is determined to
keep some of the DNA from those days
“Choose the best people and give them “The Randgold [Resources Ltd] model as a $5 million company.
what they need, rank the prospects and is one we have always tried to emulate,”
test them using the best tools available. he said. “I worked with Mark Bristow dur- “We’re fortunate that Russell Davis
And, at last those tools are coming along ing the Rand Mine days. Randgold’s first pegged the ground that led to the Elekra
in the exploration industry; it is much project was Morila, a JV with AngloGold Mines IPO,” Murray said. “We are for-
more innovative than it was 10 years ago. Ashanti [Ltd] but after that it built its own tunate we control an entire greenstone
projects. The difficulty Randgold has belt, it would be difficult to emulate that
“We also give the exploration team the faced is the African country risk. We face again but we still have the same field-
thinking time it needs. Twice a year, we the much more benign WA political risk. ies on site who worked with Russell and
give the teams a complete break and Ziggy in the early days. They overcame
bring them to the office to assess wheth- “We want to become a mid-tier global every challenge thrown at them then, al-
er they are using the best technology, producer, producing 500,000 ozpa at ways found ways to innovate and think
techniques and are looking at the best good margins. I think we can do that from on their feet.
targets.” three production hubs but exploration of
that sort takes time. This is a 5-10 year “We look for opportunities to expand
Cash is also necessary and in this re- strategy.” into new areas but we are not going to
gard revenue from Gruyere will provide a step outside our comfort zone. We won’t
welcome injection of funds. It is an enviable position to be in given buy a producing asset, there is no point
the company’s humble beginnings as an when we are currently undervalued com-
“With money from Gruyere we will be- pared to our producing peers. We will
come the first genuine self-funded ex- find value through the drill bit and clever
plorer ever. The cash flow from Gruyere JVs.
means we can plan our exploration pro-
grammes two years in advance.” “The essence of Gold Road is about
being smart, thinking on our feet and
There are also advantages to be modifying our exploration approach de-
gained from the arrival of infrastructure pending on the results we get. If you ex-
at Gruyere, meaning Gold Road should pect stability, find work somewhere else
derive further value for each of its $22 because we’ll change the strategy to
million exploration dollars this year. maximise the opportunity.”

The efforts will be worth it because dis- Gold Fields and Gold Road; two com-
covery of another Gruyere-sized deposit panies with differing backstories but who
will place the company among Australia’s could be the major protagonists on the
mid-tier miners. And, next time around WA gold scene for the next decade or
the company could be in a position to more.
keep the project for itself.
– Dominic Piper
“A combination of half of Gruyere and
the value of a new project and the market
cap should be big enough for us to self-
fund a project development 100%. If a
very good JV deal came along we would
look at it but the focus is on our work.”

There are few examples in Australia of
companies building themselves into mid-
tier producers off the back of greenfields

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 23

DIGGERS & DEALERS PREVIEW

The mining fraternity will descend upon Kalgoorlie again for the annual Diggers & Dealers Mining Forum from August 6.
It has been a stellar 12 months for the industry, with commodities performing strongly, producers revelling in healthy
cash flows and the exploration sector enjoying a new vigour. It can be expected that there will be many smiling faces seen
around Kalgoorlie as punters anticipate the next major deal to be done or game-changing announcement to be made.
Amongst the serious stuff, Diggers is an opportune time for comrades to catch-up to tell a few tales and down a few ales.
Paydirt surveyed some delegates about their expected highlights.

THE EDITOR Dominic Piper, editor Australia’s Paydirt Who are your tips for the Digger, Dealer, Emerging Com-
What are you looking forward to about pany and GJ Stokes awards? Saracen (Digger), Avanco for
this year’s Diggers & Dealers? The dealer courtesy of Oz Minerals transaction in Brazil, Antipa Min-
slightly adjusted format will be interesting erals Ltd as emerging company and GJ Stokes to Mark Connelly
as will the international attendance. We
keep hearing about how Aussie miners are THE EXECUTIVE Steve Parsons, Draig Resources Ltd
on the Northern Hemisphere investor’s ra- What are you looking forward to about
dar, will they come this far south? this year’s Diggers & Dealers? Catching
What do you expect to be the main up with old friends from the mining and in-
trends of the conference? With the strong vestment community
balance sheets of so many of the mid-tier gold miners, talk about What do you expect to be the main
M&A is sure to raise its head. I’ll also be interested to hear just trends of the conference? This year I
how buoyant the WA nickel miners are think gold will be a hot topic, especially the
Which commodities will be in vogue at this year’s Diggers? success and continued strong outlook for
Gold, as always, but most of all this year it will be nickel. Mines ASX gold companies.
are being switched back on and a number of new exploration Which booth do you always make sure to visit? The coffee
stories are beginning to emerge booth!
Which presentation do you never miss? Any presentation I Which presentation do you never miss? The key note ad-
am supposed to cover for the magazine, unless of course it is dress is always a must
early in the morning, or late in the afternoon, or at lunch time Where do you spend most of the daytime during Diggers
Where do you spend most of the daytime during Diggers week? At the Draig Resources booth showcasing the recent
week? Day 1 wandering around the tent talking to people. Day discovery we have made
2 talking to people at the Paydirt booth. Day 3 in the auditorium Where do you spend most of the night time during Diggers
trying desperately to make up for two days of doing nothing but week? There are a number of corporate & investor dinners &
talking to people functions throughout the week that I will be attending
Where do you spend most of the night time during Diggers Who are your tips for the Digger, Dealer, Emerging Com-
week? The usual trek between The Palace and The Exchange pany and GJ Stokes awards? There have been some great
will be done a few times but I do like a few pints in Paddy’s as winners over the years and I’m sure this year will be no different,
well however I’m not the best at picking these things, the last time I
Who are your tips for the Digger, Dealer, Emerging Com- picked right was Oxiana back in 2006!
pany and GJ Stokes awards? One of the gold miners must
win Digger (Saracen Minerals Holding Ltd perhaps). For Dealer THE DEBUTANT Sydney-based analyst (name withheld)
I would say Red 5 Ltd for the Darlot acquisition or Avanco Re- What are you looking forward to about your first Diggers &
sources Ltd for its Oz Minerals Ltd tie-up. Emerging Company Dealers? Sinking a million cans of Emu Export and checking out
may have an international flavour so West African Resources the local establishments. Not really, I will be on best behaviour
Ltd and the GJ Stokes award will go to Mark Creasy and look forward to hearing the new growth stories of tomorrow
What do you expect to be the main trends of the confer-
Mark Andrews, deputy editor Australia’s Paydirt ence? A continuation of the electric vehicle thematic and the
What are you looking forward to about implications for battery minerals
this year’s Diggers & Dealers? Keith Which commodities will be in vogue at this year’s Diggers?
Goode’s customary three questions to each Lithium, cobalt, nickel, mineral sands and rare earths
speaker after their presentation; at least six Which booth will you make sure to visit? Paydirt’s, of course
hours sleep every night; a Boost juice under Which presentation do you think will be the must-see? Ly-
the tent in the morning and a round of golf in nas Corp for its rare earths recovery, Sheffield Resources to
the exhibition area find out about Thunderbird’s progression and Argosy Minerals
Which commodities will be in vogue at to hear about the Rincon lithium JORC-compliant resource and
this year’s Diggers? Nickel and mineral technical updates
sands Where do you expect to spend most of the daytime during
Which booth do you always make sure to visit? Australia’s Diggers week? Wide awake in the theatre listening to presenta-
Paydirt’s at some stage tions… if not I expect to be picking up the pieces at the caravan
Which presentation do you never miss? I can’t say which park
ones I never miss, but I try and avoid Peter Cook’s so I don’t Where do you expect to spend most of the night time dur-
have to listen to the North Melbourne Football Club theme song ing Diggers week? Hopefully not too far from The Exchange
Where do you spend most of the daytime during Diggers Hotel
week? In between getting fresh air, coffee and juices, mostly in Who are your tips for the Digger, Dealer, Emerging Com-
the Gold Fields Art Centre pany and GJ Stokes awards? Digger: Tawana Resources NL;
Where do you spend most of the night time during Diggers Dealer: New Century Zinc Ltd; Emerging Company: Argosy Min-
week? Palace and The Exchange Hotel erals Ltd; GJ Stokes: Dan Lougher of Western Areas Ltd

PAGE 24 JULY 2018 AUSTRALIA’S PAYDIRT

THE AWARD WINNER Ian Murray, Gold Road Resources Ltd What do you expect to be the main trends of the confer-
What are you looking forward to about ence? Battery metals consumption (overstated in my view)
this year’s Diggers & Dealers? Our site Which commodities will be in vogue at this year’s Diggers?
visit on Sunday, August 5 to Gruyere and to Copper, cobalt and gold
Gold Field’s Granny Smith. Also, for the first Which booth do you always make sure to visit? All of them
time returning to Perth after Diggers without Which presentation do you never miss? I am indiscriminate
having lost my voice, nor got a cold with my tardiness, so no one is spared
What do you expect to be the main Where do you spend most of the daytime during Diggers
trends of the conference? I expect EV week? In the tent
minerals to be the focus with gold “boring”. Where do you spend most of the night time during Diggers
I am happy to be boring if we are producing gold at a $700/oz week? Functions or the Palace
profit margin Who are your tips for the Digger, Dealer, Emerging Com-
Which commodities will be in vogue at this year’s Diggers? pany and GJ Stokes awards? Digger: Dacian; Dealer: Pilbara
EV metals. This has been the vogue at all conferences I have Minerals
attended this year
Which booth do you always make sure to visit? The fresh THE VETERAN ANALYST James Wilson, Argonaut
juice stand – every morning for the “pick me up” and Vitamin C What are you looking forward to about
Where do you spend most of the daytime during Diggers this year’s Diggers & Dealers? Four days
week? At the Gold Road booth or in meeting rooms in a shared accommodation with 12 of my
Where do you spend most of the night time during Diggers closest work mates! I hear Steinert will be
week? Safely at home watching TV … putting a Diggers ore sorter at the front door
Who are your tips for the Digger, Dealer, Emerging Compa- to separate out the good from the bad qual-
ny and GJ Stokes awards? Digger: Gruyere JV Team; Dealer: ity attendees
Gold Road for doing a JV with Sumitomo; Emerging Company: What do you expect to be the main
Cygnus Gold Ltd (with Gold Road as shareholder); GJ Stokes: trends of the conference? Technology.
Tim Netscher (did I mention he is Gold Road chair?) From Hi-Seis to Swick’s OreXplore to Steinert ore sorters…it’s
all about how we do it cheaper, faster and better
THE PR EXPERT Jill Thomas, Independence Group Ltd Which commodities will be in vogue at this year’s Diggers?
What are you looking forward to about Lithium, potash and base metals are gaining lots of traction, gold
this year’s Diggers & Dealers? This is my is the mainstay though
7th Diggers & Dealers. Everything about Which booth do you always make sure to visit? Saracen’s to
the conference is enjoyable, but I particu- see if they have chocolate covered gold coins (again)
larly enjoy the Westrac Gala Dinner – how Where do you spend most of the daytime during Diggers
the marquee is transformed in only a few week? In the forum seeing companies and mates
hours, the awesome live entertainment, the Where do you spend most of the night time during Diggers
awards, delicious meal. Always a fantastic week? Um….the Palace, upstairs of course….ahem
way to finish the event Who are your tips for the Digger, Dealer, Emerging Com-
What do you expect to be the main trends of the confer- pany and GJ Stokes awards? GJ Stokes: Tony Kiernan (BCI
ence? A reinvigorated WA mining sector – with pats on the back Minerals Ltd, Pilbara Minerals Ltd and a million others); Digger:
and saying ‘we’re back in business, baby’! as well as that M&A Northern Star for the massive turnaround at Jundee, Dacian
is heating up – who’s predator and who’s prey? Gold Ltd, Gascoyne Resources Ltd, Roy Hill Holdings Pty Ltd,
Which commodities will be in vogue at this year’s Diggers? Pilbara Minerals or Pantoro; Dealer: Aurelia Metals Ltd; Emerg-
Nickel, copper, cobalt and lithium – commodities aligned to the ing Company: MOD Resources Ltd
energy storage/electric vehicle thematic. I also think that potash
and uranium are on the cusp of a comeback (that’s my Sas- THE THREE-PART INQUISITOR Keith Goode, Eagle Advisory
katchewan bias coming through!) What are you looking forward to about
Which booth do you always make sure to visit? Does the this year’s Diggers & Dealers? You al-
coffee booth count? ways learn something at Diggers
Which presentation do you never miss? The one being given What do you expect to be the main trends
by my boss! of the conference? Possibly the changes
Where do you spend most of the night time during Diggers and innovations occurring in exploration
week? Different events hosted by the investment market; but I Which booth do you always make sure to
always make sure to attend the WASM/Women in Mining party visit? Northern Star, Dacian and whoever
Who are your tips for the Digger, Dealer, Emerging Com- else I cover or has adjacent tenements
pany and GJ Stokes awards? Digger: Independence Group Which presentation do you never miss? The opening key-
–now two world-class producing assets in Nova (first year in full note address and company clients of mine
commercial production) and 30% of Tropicana – both generating Where do you spend most of the daytime during Diggers
significant value for the company; Dealer: Oz Minerals; Emerg- week? In the auditorium or on a mine site
ing Company: Pilbara Minerals; GJ Stokes Award: Gina Rine- Where do you spend most of the night time during Diggers
hart. Love her or loathe her, there is no denying her success week? The Palace bars or Exchange
and influence in the mining sector and a woman has yet to win Who are your tips for the Digger, Dealer, Emerging Compa-
this award ny and GJ Stokes awards? Digger: Dacian for commissioning
its plant; Dealer: Pilbara Minerals; Emerging Company: Draig
THE INTERSTATE BROKER Robbie Joseph, Bell Potter Resources; GJ Stokes: someone who has done great things for
What are you looking forward to about this year’s Diggers the industry, possibly Jake Klein or Bill Beament
& Dealers? Catching up with friends and colleagues

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 25

DIGGERS & DEALERS PREVIEW

Kalgoorlie goes downstream

Kalgoorlie is one step closer to Neometals is weighing up a lithium hydroxide refinery in Kalgoorlie as a
hosting its own lithium hydroxide downstream option for its part-owned Mt Marion operation
refinery after the local council signed
a MoU with Neometals Ltd over a maximised the value. Then we will bring and other contingent payments upon sat-
proposed 40ha location last month. in a partner to make sure that you have isfaction of certain milestones.
take-or-pay offtake – potentially an oper-
The City of Kalgoorlie-Boulder ating agreement – so you take the risk Reed said the project offered more
has entered into a two-year option out of it and minimise the amount of cash than just potential additional lithium feed
agreement to sub-lease a site in a that Neometals has to put in to the pro- for the Mt Marion concentrator.
new industrial estate about 5km ject.”
west of the Kalgoorlie township and “We bought it for the lithium, but we
70km by road from Neometals’ part- Neometals holds a 13.8% stake in Mt think we can define more than 100,000t
owned Mt Marion lithium operation. Marion, with the remaining interest split of contained nickel and it’s also prospec-
between Chris Ellison’s Mineral Re- tive for cobalt,” Reed said. “It’s a mas-
Neometals is currently undertak- sources and Ganfeng, China’s largest sive package, 240sq km, and we’ve got
ing due diligence and FEED studies lithium producer. the strike continuation from Mincor’s
as part of a broader feasibility study [Resources NL] Cassini project, which is
for the proposed lithium hydroxide Reed said the lithium hydroxide refin- probably one of the best two nickel ex-
refinery which is set to have an initial ery had the support of both partner com- ploration discoveries in recent times.”
capacity of 10,000 tpa. panies and would be a boon for the bur-
geoning Kalgoorlie lithium district which Neometals is also awaiting feedback
Results from the FEED study – led also includes Tawana Resources NL’s from testers in China, having sent a 53t
by engineering firm M+W Group – are newly minted Bald Hill operation. bulk sample from its Barrambie titani-
due in the March 2019 quarter, with the um-vanadium project, halfway between
full feasibility outcomes and a final in- “It’s like when the Western Mining Meekatharra and Sandstone, for analy-
vestment decision to follow in the ensu- guys built an integrated operation in sis.
ing months. Kambalda; they had a number of nickel
mines, they had a concentrator, they had Barrambie has a defined indicated-in-
Neometals managing director Chris a smelter and then they put a refinery ferred resource of 280.1mt @ 9.18% tita-
Reed said housing the refinery in down at Kwinana,” Reed said. nium dioxide containing more than 25mt
Kalgoorlie was a more logical option and 0.44% vanadium oxide containing
for his company and its partners, Min- “We’re trying to extract the maximum more than 1.2mt, to a depth of 80m.
eral Resources Ltd and Ganfeng Lithium value closest to the mine head before
Co Ltd, than the current arrangement shipping the highest value-add product. “Not only is it the world’s second-high-
of trucking concentrate some 700km to It makes good sense to do so when you est grade titanium deposit, it’s one of the
Kwinana. have a world-class resource to base it off world’s largest vanadium deposits as
and Mt Marion is the world’s third larg- well, depending on which part of the ore-
“We’re looking at saving many millions est source of lithium units at the moment, body you want,” Reed said. “In essence,
of dollars a year by being in Kal,” Reed so it will always be a globally significant they’ve got international telephone num-
told Paydirt. operation.” ber values in situ.

“The City of Kal are the most proactive Production at Mt Marion continues “The market for titanium is probably 10
local government I’ve ever come across to ramp up. During the March quarter times as big as the lithium market. If you
– not that I’ve operated in many jurisdic- 104,505t of concentrate – 56,065t grad- have a look at titanium revenues, profit-
tions – but I can tell you they’re dinkum. ing 6% lithium oxide and 48,400t grading abilities and costs, they’re all coming to
They gave us the option to lease the land 4% lithium oxide – was produced. Ship- convergence and there’s been no new
and a plot that will enable us to grow. We ments for the period totalled 83,949t. titanium mines built outside China, aside
couldn’t get a similar-sized block in Kwi- from one in Mexico, in the last 10 years.”
nana, so that tipped the scales in Kal’s Neometals recently added the nearby
favour.” Mt Edwards lithium project to its portfolio – Michael Washbourne
for a cash consideration of $2.5 million
Under the terms of the MoU, the City
of Kalgoorlie-Boulder will assist Neomet-
als with the supply of reclaimed water as
well as shoring up other utilities such as
power, rail and road access.

Reed said his company would take a
“low-risk attitude” into developing the
lithium hydroxide refinery, similar to the
approach taken to build Mt Marion.

“What we try to do is get the highest
value for a given level of capital contribut-
ed and we try to front-end as much as we
can, and we’ll take the same approach
into the downstream project,” Reed said.

“We’ve built up the value, we can as-
certain it, we’ve got site approvals, utili-
ties, all of that will be lined up, so we’ve

PAGE 26 JULY 2018 AUSTRALIA’S PAYDIRT



The firm’s global reach may be impressive but it is Canaccord Genuity’s depth of knowledge
of the Australian market which is paying dividends.
At a time when Australian mining stocks, particularly gold and lithium, are outperforming
North American peers, the domestic experience of the Canaccord Genuity (Australia) team
– led by Marcus Freeman – is a clear advantage, particularly when it is coupled with the
firm’s global reach.

Canaccord Genuity has 12 publishing metals Reg Spencer Marcus Freeman
and mining analysts across the global
group, covering nearly 180 companies success provides further incentive for this, according to
across Australia, Canada and the UK. Spencer.

That global element has obvious benefits “We’ve been expecting M&A for some time because
for domestic corporate and investing production has grown strongly, which places more
clients, providing an insight into the trends, pressure on reserve replacement,” he said. “Some of the
thoughts and perceptions of the global companies have been very good at replacing ounces
metals and mining sector. organically but if you are producing 600,000 ozpa, it
becomes increasing difficult to do this. On this basis, we
The international investor’s current shine for think some of the significant cash balances being built up
Australian gold stocks is unsurprising given by the Aussie gold miners could start to flow into earlier
their operational performance in recent stage projects.”
years.
However, instead of taking on the increased risk of
“Many of the more established Australian earlier stage exploration, the mid-tier companies have
gold miners have done an amazing job in shown a recent tendency to support junior explorers and
building globally significant businesses developers.
over the last three or four years,” Canaccord
Genuity’s (Australia) Reg Spencer said. “They have “Most of the mid-tiers – St Barbara, Northern Star, Evolution,
grown their production bases, pulled costs out of their Resolute, Oceana – have taken equity investments in
operations, improved productivity dramatically, while juniors. Instead of building out their own greenfields
remaining disciplined in terms of capital management. exploration teams and taking on the considerable risks
This has resulted in very strong businesses with healthy of early stage exploration and development, many have
free cash flow and balance sheets, and is reflected in their chosen to investment in junior companies, effectively
respective share price performances. We now have six or taking an option on new resource discovery.”
seven mid-cap gold miners with plus-$1 billion market
caps, in and our view, this group has now arguably Spencer believes this could have flow-on effects for junior
become a global benchmark” ” explorers.

Such is the nature of markets, many investors are “That interest shown by the bigger gold companies could
predicting the end of this stellar Australian gold run but be a leading indicator for capital flowing back into junior
Spencer preaches caution at the moment. stocks. Investors begin to look at these investments and
think: ‘If it’s good enough for Northern Star, it should be
“Many are saying Australian gold equities are fully valued good enough for me.”
at the moment. It’s funny, because we all came to the
same conclusion 12 months ago and since then many
have doubled in price.”

Gold’s apparent deleveraging from traditional price drivers
such as political instability, US economic performance
and interest rate hikes makes the job of forecasting future
gold price movements more complicated.

Currency has been an equally important driver for the
Australian gold miners, with the Australian gold price
trading in a relatively tight band over the past 12 months.
This has afforded Australian gold producers some of the
best margins globally.

The big inflow of cash onto Australian gold company
balance sheets has many analysts predicting a wave of
corporate activity ahead. The lack of recent exploration

“The problem for investors is that there are not many high role in the EV revolution and the well-known problems
quality junior stories to choose from because very little on the supply side have led to Canaccord Genuity
has been spent on exploration in the last 5-6 years. So, maintaining favourable outlooks for the short, medium
any emerging explorers and developers with half decent and long term.”
assets automatically become M&A candidates.”
Nickel, meanwhile, is experiencing five-year high prices
If one of Australian mining’s most established sectors on the LME thanks in part to its use in lithium-ion
has provided Canaccord Genuity with solid foundations, batteries. While stainless steel will continue to account
the firm’s understanding of the most nascent, battery for the majority of nickel demand, EV and energy storage
minerals, is setting it apart from peers. demand is expected to increase its share.

“Canaccord Genuity has undertaken extensive research “Nickel is the most interesting of the base metals,” Spencer
into the battery minerals sector, and as an example of said. “Historically, it has been a very volatile market but
this, we now research more lithium companies than any is now probably the best example of how other sectors
other firm globally,” Spencer said. can also benefit from the EV story. Some 70% of global
nickel supply is used in stainless steel but our research
Canaccord Australia has been covering the lithium sector suggests nickel’s use in batteries will grow by +400% by
for almost 7 years, initially through its long relationship 2025, capturing a market share of 10% from less than 3%
with lithium producer Orocobre, but more recently in 2018. This has likely implications for the nickel market
through a continually expanding stable of emerging as not all nickel is suitable for use in batteries”
lithium producers and developers in Australia, Canada
and the UK. This plays into the hands of Australian nickel sulphide
producers such as Independence Group and Western
The increased focus has been well-timed as the Areas who are now pinning their masts to the EV
electric vehicle and energy storage revolution grips revolution.
manufacturers, utilities, carmakers and governments
around the world. Spencer expects investors to warm to nickel’s battery
connection.
“It has been amazing how rapidly the sector has grown
and how the growth of the lithium-ion battery market “The advantage nickel has is that it is a well-known,
is affecting so many other sectors,” Spencer said. “Our transparent and tradeable commodity with well-
research points to EVs and energy storage as one of established companies mining it. So, for investors
the most disruptive trends to enter the mining sector wanting to play the EV market, the likes of Independence
since the iron ore boom of the early 2000s. There are Group and Western Areas – which have good operating
differences, however. The iron ore boom was based in track-records – could provide a lower risk alternative to
the most part on a three-fold increase in Chinese steel more volatile lithium stocks.”
production. The electrification of transport and the rise of
energy storage is a much larger, global thematic, which
in terms of scale has the potential to impact many of the
key metal markets.

“Notwithstanding the success we have had for the firm
and our clients in recent years in the battery materials
space, we remain positive on the long term outlook for
the sector.”

The result of Canaccord’s research is a belief in the
longevity of a market trend some observers still believe
could be fleeting.

“This is not a flash-in-the-pan narrative, it is a 15-20 year
story,” he said. “We see a lithium market suffering from
undersupply for the next 18-24 months, following which
there will likely be some meaningful supply responses
underway from the early 2020s. Interestingly, however,
by the mid 2020’s you begin wondering where the all
lithium will come from again.”

Recent market valuations of lithium stocks belies this
assessment but Spencer points to Galaxy Resources’s
US$280 million sale of lithium brine exploration ground
to POSCO as evidence of the industry’s bullish outlook.

The last 18 months have seen other battery-associated
minerals follow lithium with cobalt, vanadium and even
manganese taking flight. However, Spencer believes the
battery revolution could also have a major impact on two
traditional base metals.

“Copper’s association is not so much for its use in batteries
but more for its use in infrastructure for EVs and energy
storage. Rio Tinto and BHP have already raised copper’s

DIGGERS & DEALERS PREVIEW

Rise of the Aussie mid-tier

Focus on cash generation and margins, cash flow of $53.8 million.
not production. Invest in high-quality
assets, but don’t get distracted by growth Cowal continues to be the biggest con-
for growth’s sake.
tributor in Evolution’s portfolio, account-
Those are the wise words of Evolu-
tion Mining Ltd executive chairman Jake ing for 61,749oz of the 191,474oz pro-
Klein on what it takes to lead one of the
world’s premier gold companies. duced across the company’s six assets

Evolution is the envy of many produc- during the first three months of 2018.
ers and aspiring miners across the globe,
having grown from modest mid-cap into Both Ernest Henry and Cowal were
an almost $6 billion company over the
past three years on the back of carefully acquired after Evolution picked up the
considered M&A, coupled with disciplined
approaches to production and explora- Mungari operations, near Kalgoorlie,
tion.
from Naguib Sawiris’ La Mancha Group
“We see operational success as being
a foundational part of the business, as in early 2015 when the company’s mar-
we do discovery and then counter-cycli-
cal M&A that improves the quality of our ket cap was less than $600 million.
portfolio,” Klein told Paydirt.
“Mungari gave us the platform on
“If we can do well at all three of those
things, which is what you have to do to be which to buy Cowal and Ernest Henry,”
a very good gold company, we know we’ll
be recognised for that.” Klein said. “It was a very important trans-

Evolution now ranks among the low- action which brought in La Mancha as
est-cost gold producers in the world,
with a company record AISC of $768/oz our major shareholder, helping us es-
($US604/oz) for the March quarter not
headed by anyone in its peer group. tablish a very important position in the

At the end of each quarter – noting that Kalgoorlie region and allowing us to ac-
Evolution has never once missed guid-
ance since its inception in 2011 – Klein quire these other two transformational
reminds his team they will be judged on
the next reporting period rather than the assets. In fact, La Mancha corner-stoned
success just achieved.
that equity raising with $100 million, re-
“We want to continue to live by the
mantra of ‘what we say, we do, we de- membering that when we bought Cowal,
liver’,” Klein said.
our market cap was less than the value
“The next quarter is as important as
the last, if not more important than the Jake Klein we paid for Cowal.”
last. We know we’re going to be judged
on what we deliver next quarter, so we The challenge ahead for Evolution at
focus on that and make sure we build on
our success.” Evolution continues to set new quar- Mungari is finding a replacement for the

Evolution’s rise to global prominence terly records across its portfolio, includ- depleting Frog’s Leg deposit which is ex-
has correlated with the resurgence of
Australia’s gold sector, with a number of ing the unheralded Mt Carlton, Mt Raw- pected to run out of high-grade ore and
aspiring mid-tiers pouncing on unwanted
and unloved assets previously held by don and Cracow mines in Queensland, be shuttered within three years.
North American groups such as Barrick
Gold Corp. something Klein attributed in part to the Klein said exploration work around the

Klein and his supporters were among overall strength of the local gold industry. operation was focused more on a new
those to recognise this growth opportu-
nity and that forward-thinking saw Evo- “We’re one of the lowest-cost gold high-grade discovery to replace Frog’s
lution make a move on Barrick’s Cowal
mine in New South Wales and stake an producers in the world today, but I’m not Leg, than adding low-grade ounces to the
economic interest in Glencore’s Ernest
Henry operation in Queensland, to be- sure that should surprise many people mining inventory.
come Australia’s second largest gold
producer. because Australia is a great mining des- “We’re not as concerned about length

tination,” Klein said. of mine life, we’re more concerned about

“It was the reason why in the early discovering a high-grade source of ore

2000s so many international companies like what we currently have Frog’s Leg,”

thought of Australia as a critical, impor- he said.

tant and strategic part of their global “As a base case, we see Mungari as a

business and I think the re-emergence of 120,000-130,000 ozpa operation with a

the Australian mid-tier sector and com- long life. As an upside case, if we were

panies in that space are demonstrating able to discover another Frog’s Leg de-

the attractiveness of Australia as a min- posit, we see that it could be a 150,000

ing destination. We have low geopolitical ozpa, very cash generative, low-cost op-

risk and some of the lowest-cost gold in eration, and that’s our objective.

the world.” “We’re putting in a drilling platform to

Evolution is on track to be in a net cash drill into the deeper areas of Frog’s Leg

position by year’s end, having paid down over the next few months and we’re

$687 million of debt since finalising the spending up to $15 million in the Mungari

acquisitions of Cowal and Mungari in region. We have over 20 prospects that

September 2015. Just $187 million re- we’re intending to test and we’re optimis-

mained outstanding on the company’s tic we will find another source of high-

balance sheet at the time of print. grade ore.”

The addition of Ernest Henry to the – Michael Washbourne
portfolio – Evolution has 100% of the gold

rights and 30% of the copper production

– has proven to be a masterstroke. In the

March quarter, the operation generated

a negative AISC of $510/oz and net mine

PAGE 30 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

St Barbara keeps options open

It may be late in the piece for St Barbara Bob Vassie outside its portfolio and has committed
Ltd to back up last year’s Digger of the $21 million for interests in Prodigy Gold
Year award with recognition as Dealer we are still very busy on that front and NL (formerly ABM Resources, gold in
of the Year in 2018, however, it is not rest assured we are focused on diversify- Northern Territory), Catalyst Metals Ltd
through a lack of effort. ing the production portfolio. (gold, Victoria), Peel Mining Ltd (base
metals, New South Wales) and Duketon
The company’s Gwalia and Simberi “There is not a lot of M&A happening Mining Ltd (gold, WA), while it has a farm-
operations are performing exceptionally in Australia’s gold space and the con- in agreement with Newcrest Mining Ltd in
well, with cash generated from the re- solidation that people thought might have PNG.
spective gold mines in Western Australia happened hasn’t happened. It’s probably
and Papua New Guinea positioning it to St Barbara has showed great faith in
pay taxes, dividends and mull over po- not due to a lack of the exploration sector, however, the posi-
tential acquisitions. thinking and trying, tions taken do not reflect all that the com-
but the Australian pany is in the market for. Thanks to the
“We are still going hard on our organic gold space is enjoy- consistency in performance at Gwalia –
opportunities because that makes a lot ing some good mul- where life-of-mine now extends to 2031
of sense. There are things that you can tiples on values.” – and production from Simberi – which
make a lot of value out of in your own has trebled since the end of FY2014 –
backyard, but we do want to diversify our To the end of the war chest is loaded to fire on more
production portfolio and finding opportu- March, St Barbara mature assets.
nities out there is exceedingly hard,” St had $262 million
Barbara managing director Bob Vassie cash, no debt and “We have started to look at develop-
told Paydirt. was on track to ment opportunities as well,” Vassie said.
meet FY2018 guid- “In the past, if we had a chance at a de-
“Apart from the small investments we ance of 250,000- velopment opportunity we wouldn’t have
have made, we are finding it hard to find 260,000oz @ AISC been able to afford it, now we can as we
valuable opportunities; or you can find of $840-880/oz have a strong balance sheet. We might
valuable opportunities but they are una- from the Gwalia want to do a transaction using our paper,
vailable to you for whatever reason. But, underground and then if we need to fund the building of a
125,000-132,000oz mine we would be in a good position to
@ AISC of $1,070- do that.
1,130/oz from Sim-
beri. “The problem is, though, if it is not per-
mitted you have to wait a couple of years
“We are on track for permitting, a couple more years to
to meet our guid- build it and then a couple of years for it to
ance which will be produce cash flow,” he said.
another extremely
good year for us While waiting for the ideal opportunity
in terms of perfor- to prevail, like its peers in the Australian
mance and cash gold sector St Barbara has triggered or-
generation, while ganic growth options.
money is mounting
up in the bank,” Vas- The Gwalia Mass Extraction project is
sie said. headed for an investment decision by the
end of the calendar year, and $45-50 mil-
St Barbara has lion was spent on the Gwalia Extension
demonstrated a project in FY2018, which is currently on
willingness to invest track for completion between September
2019 and March 2020.

“We are investing in our own oppor-
tunities like the extension at Gwalia and
looking for opportunities in PNG,” Vassie
said.

“We are not rushing to do anything
silly, there are plenty of things we could
do but they just wouldn’t add any value.
We would want to have a bit of produc-
tion diversity to be less reliant on Gwalia,
which is fantastic and is doing really well
and makes lots of money, but you don’t
want to have all your eggs in one basket.”

– Mark Andrews

PAGE 32 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Now that Nova is at nameplate capacity IGO is investigating the
potential for increasing performance on the 1.5 mtpa operation

IGO harnessing battery
sector’s positive future

The sale of its Jaguar copper-zinc mine disproportionate effort, on both explora- in 2016,” Bradford said. “The question
is a clear sign that Independence tion and management, versus our other has always been how we leverage that;
Group Ltd is doubling-down on its com- assets. For the discretionary dollar of do we go further downstream to create a
mitment to Nova and nickel’s role in the expenditure, we think we can get better product readily used by the battery-mak-
electric vehicle revolution. bang for our buck elsewhere.” ers? There is also potential to collaborate
with other nickel sulphide producers to
Independence (IGO) announced in late IGO’s sale of a producing asset is the make something bigger – which would
May it was selling Jaguar – just north of manifestation of its organic growth strat- make the economics more appealing.”
Leonora, Western Australia – to Wash- egy, one based on a long-term commit-
ington H. Soul Pattinson and Company ment to Nova and the Fraser Range. The company has already completed
Ltd subsidiary CopperChem Pty Ltd for a scoping study to define the economic
$73 million. “Our whole posture as an organisation argument for a downstream nickel sul-
is about setting ourselves up for organic phate processing option, it is now work-
It was the two companies’ second exploration success,” Bradford said. “We ing on testing the technical assumptions
deal in the space of six months following have built a best-in-class exploration it made in that study.
IGO’s sale of the Stockman base metals team with our Fraser Range boffins and
project in Victoria to CopperChem for the leadership of Ian Sandal as head of “By early 2019 there will be a bunch
$47.2 million in December. exploration and we want to utilise that.” of work programmes coming together
on that,” Bradford said. “It then becomes
IGO managing director Peter Bradford The sale also reinforces IGO’s increas- about selecting the right site and things
told Paydirt the Jaguar sale was in line ing commitment towards energy storage for processing facilities.”
with the company’s strategic focus on minerals with nickel at the heart of that
“high-quality assets of scale and longev- strategy. Like other WA nickel sulphide It appears Bradford is comfortable
ity”. producers, IGO has set a course for de- about financing with the interest already
veloping the nickel sulphate product re- shown by nickel sulphate users enough
“Jaguar has not been unloved,” Brad- quired by battery-makers. to convince him options will be numer-
ford said. “We have been operating and ous.
exploring there to see if we could make “We have spent a lot of time talking
the step-change discovery it needed but about the alignment of Nova to the EV “We can use our own balance sheet or
increasingly there was an associated space, probably since Diggers & Dealers use an EV company who’ve come to us

PAGE 34 JULY 2018 AUSTRALIA’S PAYDIRT

and want to collaborate on the nickel and others believe there is a distinct
sulphate plant; by providing either opportunity for WA to compete with
all or part of the capital. That would other countries rather than sending
be a fantastic outcome for IGO,” he unprocessed material overseas.
said.
“Too often we see value shifted
IGO is not alone among WA nickel offshore but here is an opportunity
companies considering the best en- to bring value back to WA,” Bradford
try point to the EV market and Brad- said. “It is true that we have not had
ford supports a recent report by the a great track record but I wonder
Association of Mining and Explora- how hard we have actually tried.
tion Companies (AMEC) calling on In fact, you could argue that the
the WA Government to lead a bat- one commodity where downstream
tery minerals strategy which would processing has been a success is
see the State become a leader in nickel. WMC maximised the value
the production of battery precursor with a fully integrated business here
and even battery assembly produc- in WA comprising mines, concentra-
tion facilities. tors, smelters and refineries. That
is a great example of what can be
“That would be a great outcome achieved.”
for WA,” Bradford said. “We want
a regulatory environment that sup- The dynamic EV market is already
ports investment and will get plenty beginning to place pressure on nick-
of money wanting to invest in this el prices but Bradford sees IGO’s
space. But WA needs the right fiscal EV opportunity extending beyond
and regulatory framework for that to purely cash margins. Instead, he en-
happen.” visages it attracting new investors to
the stock.
Australian mining has traditionally
struggled with downstream process- “This is also an opportunity to
ing, in most cases because of cost increase the visibility of IGO as an
competitive pressures, but given Nova’s mix of nickel, copper and cobalt production fits investment,” he said. “The under-
precursor and battery facilities do ideally with IGO’s preference to pursue greater exposure standing and interest in IGO from
not rely on low labour costs, AMEC to the battery minerals sector generalist investors is pretty limited

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 35

DIGGERS & DEALERS PREVIEW

ous tenement packages, a clear frustra-

tion to Bradford.

“That is a conversation we are having

with the State Government, explaining to

them that we are trying to get a big pic-

ture view on this district,” he said. “Mak-

ing the next discovery will deliver the best

value to the State and no-one can dispute

the investment we’re making and we need

to think about a strategy for that with the

State Government.”

The increased exploration effort coin-

cides with a shift in mining focus at Nova.

IGO received criticism for falling behind

in underground development towards the

end of 2016 but Bradford said with much

of the hard work completed, the compa-

ny expected performance to be consist-

The Long nickel mine in Kambalda, the foundation of IGO’s later successes, ent from the turn of the financial year.
was placed on care-and-maintenance at the end of May “The first year of production was about

mining what we could and getting the

at the moment but if you plugged into the those targets on the mining lease gener- development done to access the larger

EV space and collaborated with the EV ated from the 3D seismic survey,” Brad- stopes,” he said. “We are getting there

companies and carmakers, suddenly that ford said. “We have planned for 20,000m now and some of the stopes we are min-

universe has the potential to widen. Cer- in FY2019 but if we get a discovery hole ing now are 65,000t, so you only need

tainly, Pilbara Minerals [Ltd] has done an we will certainly ramp-up that work.” to nibble away at a few of them during a

excellent job of that.” FY2018’s $30 million exploration budg- month to get your tonnes up.

The move towards the EV sector rein- et will be replicated in FY2019 but with “Now that we are in that position, the

forces the sense that IGO is pinning its drilling a more immediate priority. pace of development drops; you don’t

future on the Nova nickel mine and sur- “The work we did in the last 18 months have people scurrying around every-

rounding exploration ground. is like what the Geological Survey did where to get the tonnes and it becomes

Nova achieved commercial production [prior to the Nova discovery] and now in far more methodical.”

in July 2017 – just five years after Sirius the next two years we have to hone in Nova produced 5,961t of nickel and

Resources drilled the discovery hole – on those targets. Reality says it will be a 2,472t of copper in the March quarter at

but for Bradford the project is still in its couple of years before we make the dis- cash costs of $2.68/lb nickel (inclusive of

infancy. covery.” copper credits). Bradford said he expect-

IGO spent the two years immediately The exploration strategy is split into ed the June quarter would show Nova

after the headline Nova acquisition in three distinct areas – near-mine targets would outstrip guidance for the year of

2015 consolidating the rest of the Fraser around Nova, targets within a truck-able 17,250-20,250t nickel.

Range belt and only in the last 12 months distance of the Nova mill and more re- “It is going very much to plan, despite

has it started systematic exploration over gional targets requiring standalone facili- some bumps along the road. We are

the 14,300sq km of ground it now con- ties. three quarters in since first production

trols. “It is broken into priorities with the first and we are at nameplate run rate. In the

Sceptics question whether, after five being on the mining licence where we June quarter we will be above nameplate

barren years, the Fraser Range district can quickly bring to bear anything we for tonnes and contained metal of 26,000

will ever turn up another discovery but find,” Bradford said. tpa nickel, 10,000 tpa copper and just un-

Bradford is comfortable playing a longer Work will also be predicated on ex- der 1,000 tpa cobalt.”

game. penditure commitments across the vari- Achieving or exceeding the 1.5 mtpa

“To put it in perspective, look at the

evolution of the Nova discovery. The WA

Geological Survey was doing a broad-

based geochemical survey and picked up

one anomaly. Mark Bennett [Sirius man-

aging director] recognised that anomaly

and was doing geochem and geophysics

for another two years before Sirius drilled

Nova. That is the journey we are starting

on, only over a much wider area.”

Having consolidated the tenement

package and built the exploration team,

IGO has spent FY2018 putting together

that grassroots geochemical and geo-

physical data.

“This year has been all about the sci- Tropicana (IGO: 30%) continues to provide solid cash flow to the company,

ence to generate the targets, working out producing 103,603oz at $1,093/oz ASIC in the March quarter

the plumbing and now we start testing

PAGE 36 JULY 2018 AUSTRALIA’S PAYDIRT

nameplate capacity on a consistent basis Peter Bradford Minority interests continue to appeal
will set the scene for a re-assessment of to IGO. In May, the company announced
Nova’s longer term outlook. mines to be placed on hold, adding fur- a $5 million placement in Orion Minerals
ther fuel to rumours that mergers in the NL, handing it 11.1% of the ASX-listed
“The aim is to move the capacity and district is imminent. Bradford said IGO South African explorer.
the mine life upwards by mining and would be a keen participant in any Kam-
processing faster,” Bradford said. “We balda amalgamation strategy. While Orion’s main focus is develop-
are doing a lot of work to see what the ment of the Prieska zinc-copper project
maximum rate is and the capital needed “We’re aligned on the idea of consoli- in South Africa’s Northern Cape, IGO’s
to deliver on that rate consistently going dation around Kambalda; it would be a investment is focused on the Jaco-
forward. great outcome for the town to allow a mynspan nickel-copper-cobalt explora-
single operator to do the greenfields tion project.
“The June quarter has been a suck- exploration on the brownfields licences
it-and-see period so we know what the needed to find the next orebody,” he said. “We’re in there for the nickel,” Bradford
goal is and then we can work out what “We would be 100% supportive of that; said. “The belt has similar characteristics
can be achieved on a consistent basis.” whether we drive it ourselves or back to the Fraser Range so we are there for
someone else and continue with a minor- the magmatic sulphide opportunity which
While Nova is only just beginning to hit ity interest.” is yet to be recognised.
its mining straps, the asset on which the
company made its name, the Long nickel “It is essentially a pre-emptive right on
mine at Kambalda, is entering a lower that and we believe the money we have
key period after being placed on care- paid for it is actually underwritten by the
and-maintenance at the end of May. zinc-copper project but that is not what
we have bought in for.”
Bradford insisted that despite the sus-
pension of operations, IGO remained It is another example of IGO’s willing-
committed to Long and Kambalda. ness to back an exploration story, par-
ticularly one associated with the battery
“We are still spending on exploration minerals market. If Jacomynspan deliv-
because we can still visualise how this ers to the same extent Nova has, the
mine will deliver the step change and company could find itself at the heart
give us bang for our buck,” Bradford said. of the battery revolution for decades to
“The idea is to find another plus-100,000t come.
orebody and we have the untested space
there where it could be hiding.” – Dominic Piper

Long is the last of the Kambalda nickel

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 37

DIGGERS & DEALERS PREVIEW

Capricorn banks on hard work

An optimisation study at Karlawinda has increased NPV to $243 million and reduced payback to 2.5 years

Timing can sometimes be cruel to pro- “We have had a really strong response The deposit currently covers a strike
ject developers in the mining game, on that side of the equation and obvi- length of 2km, with deep diamond drilling
however, occasionally companies hit ously our aim is to get debt sorted and to 800m at Bibra Deeps intersecting sig-
their mark on cue. announced and then on the back of that nificant mineralisation 1,000m down-dip
to tackle the equity component of financ- from the nearest drilling.
Capricorn Metals Ltd appears to be in ing.”
that boat as it nears completion of debt Best results from that programme was
financing for the 3 mtpa, 100,000 ozpa With Dacian Gold Ltd and Gascoyne announced in April and included 33m @
Karlawinda gold project, 60km south- Resources Ltd moving into the ranks of 1.42 g/t gold from 697m, including higher
east of Newman, Western Australia. Australia’s newest gold producers, there grade intercepts of 5m @ 4.5 g/t from
are few companies emerging in the de- 708m and 3m @ 4.6 g/t from 725m.
Capricorn completed a feasibility study veloper space, which creates an oppor-
on the 6.5-year project (AISC life-of- tunity for Capricorn to capitalise on a Despite Capricorn focused on a new
mine costs of $1,025/oz), late last year, number of fronts. financial model and project financing,
with plant and infrastructure capex esti- Hellewell said exploration into new areas
mated to be $127 million (plus $4 million “The banks are looking at what busi- was underway.
contingency). ness to write the next cheque for and
there is not a lot out there, lithium pro- “It’s always a challenge when you are
However, since the base case feasibil- jects aside,” Hellewell said. “Gold is a in that construction phase to keep the ex-
ity study was released in October, Cap- different business, it is lower risk and ploration ticking along, but we are very
ricorn has reported a 25% increase in you don’t have to rely on doing off-takes. excited by the exploration upside at Kar-
probable and proven open pit reserves to Banks are very keen to get involved with lawinda, which is a focus of ours moving
27.5mt @ 1 g/t gold for 892,000oz gold gold projects, but there are no new gold forward,” he said.
and extended mine life to in excess of projects on the horizon in the next 12
eight years. months and they are looking for things to “We are drilling extensions to Bibra, so
fund. In our view, banks are keen to pro- incremental resource growth is the target
Therefore, an updated financial model vide funding, engineers are keen for the and we will be stepping out regionally for
was being worked on at the time of print work, steel is still cheap and there is a the first time as up to now the focus has
and expected to be completed in the strong labour pool not being fully utilised, been doing feasibility work and drilling
near future. so things couldn’t be better.” Bibra.

In the meantime, project financing dis- Announcing a partner to provide debt “We are doing some first-pass regional
cussions focused on a 55-65% debt to financing will de-risk the Karlawinda pro- work. It is important to remember that
35-45% equity ratio has continued, with ject further and put it right on course to this is a new gold camp only discovered
Capricorn executive chairman Heath achieve first production from the 1.5 moz in the last decade. Essentially, we will
Hellewell reporting great interest from Bibra deposit in Q3 2019. be the first movers here, particularly in
potential debt financiers for Karlawinda. the regional stuff, so we are keen to get
A stern focus on feasibility study work started on that.”
“The traditional banks’ appetite on the has meant exploration outside of Bibra
debt side is very strong. They are obvi- has been limited. – Mark Andrews
ously keen to back investments in low-
risk jurisdictions like WA,” Hellewell said.

PAGE 38 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Sandfire takes command

Paydirt picked a good time to catch up A draft EIS at Black Butte is expected in the next 3-4 months
with animated Sandfire Resources NL
managing director Karl Simich. smaller players, such as Auris Minerals “This is not for the faint-hearted in
Ltd, Enterprise Metals Ltd and Great terms of exploration but just exactly what
The company’s share price had just Western Exploration Ltd, who lack the might be the difficulties may well be the
reached an intra-day peak of $9.70/share clout to demystify exploration best prac- opportunities,” Simich said.
on June 7 – Sandfire’s highest ever share tices in Greater Doolgunna.
price – on the back of a surging copper Discoveries of both DeGrussa and
price stemming from Chile’s production Despite Simich and the Sandfire team Monty were not helped by outcropping
problems. setting the region alight with the DeGrus- material, so rest assured Sandfire isn’t
sa find in April 2009 and subsequent expecting to just trip over the next major
Following such events, Sandfire access to the latest and most advanced find. Instead, it is hoping that its due dili-
hooked the fish it had intended to lure exploration tools, replicating that initial gence in effectively re-logging 350,000m
– the remaining 30% ownership of Talis- success has been a slog. of diamond core four times over will
man Mining Ltd’s interest in the Spring- eventually pay dividends.
field exploration and mining JVs in West- Karl Simich
ern Australia’s Doolgunna region. Whatever insights Sandfire’s 35-strong
team of geologists can muster from its
Sandfire will fund the $72 million acqui- fine-tooth combing of the region will not
sition from its cash reserve of $188 mil- be taken for granted, as the likes of EM is
lion (to end of March) plus pay an ongo- proving to be hit-and-miss.
ing 1% NSR royalty on future discoveries
at the Springfield JVs. “Monty was discovered 423m below
surface, but we have traced it back to
Springfield includes the Monty copper- now being around 90-100m below sur-
gold deposit, 10km from DeGrussa. face, yet we can’t see it from surface. We
are baffled by that, we’d expect a good
With DeGrussa winding down, incor- high-powered EM to see down that far,
porating the Monty underground opera- but it is not working,” Simich said.
tion into mine planning extends produc-
tion from Sandfire’s flagship operation “Therefore, I wonder how many inter-
into CY2022. esting things we have looked at over the
last eight years using ground EM expect-
Earlier this year, numbers in an updat- ing that to give us an early stage idea and
ed mine plan from DeGrussa and Monty we have no idea. To some extent, pos-
totalled 6.6mt @ 5% copper for 332,000t sibly airborne EM might not have picked
and 1.7 g/t gold for 354,000oz, all of it up either.”
which will be consolidated under Sand-
fire’s ownership, subject to all approvals One area EM has proved fruitful has
and conditions met under the Talisman been at the Morck’s Well farm-in with Au-
acquisition proposal. ris and Fe Ltd, 22km from DeGrussa.

“Sometimes different assets in differ- Shortly after penning the deal with Au-
ent hands can extract more value, some
can’t. We believe by owning 100% of that
asset we can extract all the value, rather
than a minority junior partner holding
30% waiting for us to pay them some-
thing every now and then,” Simich told
Paydirt.

“It is difficult for them to extract full val-
ue because the market just doesn’t give
you full value. So, if you can crystallise
full value we say ‘that is cool by us’, then
that is a win-win.”

Monty alone is estimated to have
about $1 billion of contained metal in the
ground at “knock your lights out grades”,
furthermore, tying up the Talisman acqui-
sition will also place Sandfire in position
to counterpunch in the Greater Doolgun-
na area.

The company has turned the mere
470sq km of ground it pegged as a pri-
vate concern into 6,276sq km, in the pro-
cess becoming the dominant player in
the region.

Much of the territory is under JVs with

PAGE 40 JULY 2018 AUSTRALIA’S PAYDIRT

ris, two airborne EM surveys identified Simich has touted the geology at Morck’s Well as the best he’s ever seen
seven interesting features.
sion [ROD] and a mining licence can be Simich said opportunities in other
Follow-up aircore drilling intersected granted. commodities would be entertained, but
narrow zones of sulphide and supergene copper-gold-zinc plays were the focus,
copper mineralisation at a potential new Simich expects the milestones at Black with its $2 million investment in Bosnia-
VMS corridor at Morck’s Well – 11m @ Butte to be received in early 2019, with focused Adriatic Resources Ltd an ex-
3.5% copper from 73m including 3m @ production possible within two years of ample of what Sandfire was willing to
9.5% copper from 81m; 6m @ 1.3% cop- breaking ground. consider.
per from 112m including 1m @ 4.5% cop-
per from 113m and 9m @ 2.3% copper “We can’t get this wrong, if this project “We are interested in economic oppor-
from 146m including 3m @ 5.7% copper doesn’t go into mining there will never, tunities that can produce 10% IRR [using
from 149m. ever be a new mining permit in Montana,” consensus commodity prices as a base
Simich said. number] and have a production profile of
“Morck’s Well is the best geology we 30,000 tpa copper or equivalent,” Simich
have seen, it has a bigger strike of about “I have no interest at the moment in said.
4-6km in that corridor which includes doing any further drilling work to either
Homestead, Vulcan and Vulcan West, enhance the 600,000t resource or in- “The project has to have a real pros-
coming down on the diagonal from Mon- crease it or potentially do more explora- pect of being a mine with a five-year
ty,” Simich said. tion along strike to find that I have a big- minimum mine life plus regional potential
ger resource, but difficulties permitting which gives you a commanding position.
“I was on site and we were looking at the project.” We don’t mind starting small, as long
core trays of volcanogenic material and there is good potential to expand on the
there was a tray that came out adjacent Permitting a project in Montana is said prospectivity. The project has to sit in the
to DeGrussa, one adjacent to Monty and to take twice as long as in Australia, a 50% or lower part of the cost curve and,
one adjacent to Vulcan; you couldn’t tell clear frustration for Simich. generally speaking, we have to have a
them apart. They weren’t sulphide miner- clear path to control.”
alisation, but the mineralisation adjacent “While we are frustrated, people are
in two of the instances is a big massive saying that we are moving through it fair- And once in control, there appears
sulphide orebody. It is looking really ex- ly quickly,” he said. to be very few limitations in the way of
citing.” Sandfire being a commanding figure in
“There is significant potential in the re- the mid-tier copper-gold space in juris-
Landing another Monty or DeGrussa gion and we have the commanding posi- dictions where the rule of law was “up-
at Morck’s Well would be the single big- tion in it, just as we have at DeGrussa. held to the nth degree”.
gest wealth creator for Sandfire, which We want to control provinces and the
has established $400 million worth of best way to make money is to control Simich said its customers on the trad-
infrastructure to make the most out of provinces, have an operating facility in a ing and smelting front, which included
resources from the Greater Doolgunna province and find more in the province. some of the world’s biggest names –
region. LG, Samsung, Nippon, Yunnan Copper,
“We’d like to replicate what we have at Trafigura, Glencore – would back the
To accommodate more recovery ca- DeGrussa at Black Butte and have two company in its future endeavours if re-
pacity, the DeGrussa plant is being up- operating centres where we find more quired.
graded and while now in its sixth year of material and then cover our operat-
production remains in “Rolls Royce con- ing costs to make an economic return,” “Around the world, we are open for
dition”, according to Simich. Simich said. business and are looking for value ac-
cretive opportunities. A number of our
DeGrussa’s $7 billion worth of con- Despite having committed to the Talis- partners said if you have something and
tained metal in the ground has given man acquisition and with the time near- need some horsepower they would part-
Sandfire the necessary firepower to ing to consider funding the $US220 ner with us. They’d love to get in on the
command a dominant position in the re- million capex to build Black Butte, the ground floor,” Simich said.
gion. The company is using its strategic cheque book remains open at Sandfire.
expansion in WA as somewhat of a tem- – Mark Andrews
plate for its approach at the Black Butte Simich said he liked the idea of the
project, Montana, US. company’s in-house “Sandfire Ventures”
strategy, whereby small investments are
With a cornerstone investment (78.1%) made in highly prospective regions for
in North American outfit in Tintina Re- copper-gold-zinc projects.
sources, now known as Sandfire Re-
sources America Inc, Sandfire has expo-
sure to both another near-term producing
asset and potentially significant copper-
gold bearing jurisdiction.

Black Butte ticks the benchmark cri-
teria for Sandfire’s involvement, with the
underground operation estimated to pro-
duce 30,000 tpa copper-in-concentrate
over an initial 11 years at a throughput
of 11.8 mtpa and average head grade of
3.1% copper.

A capex of about $US220 million (in-
cluding contingencies) has been esti-
mated and will be worked on as an EIS is
being assessed before a record of deci-

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 41

ChrysosTM PhotonAssay provides a unique, chemistry-free approach to material analysis. It hits samples with high-
energy X-rays, causing short-lived excitation of atomic nuclei of targeted elements. These excited nuclei then give
off a characteristic signature that can be detected and used to calculate metal grade.
The X-rays are produced using a device called an electron accelerator. Similar accelerators are commonly used in
hospital radiotherapy units, and for industrial sterilisation of products such as medical supplies. The PhotonAssay
X-ray source contains no radioactive material.
Unlike the low-energy X-rays used in conventional assay methods like XRF, the X-ray beam used to excite the
samples and the resulting elemental signature gamma-rays are very penetrating, meaning that large samples
can be measured. A true bulk reading is returned, independent of the chemical or physical form of the sample.
Rock chips, powdered or crushed samples, and solutions or slurries can be directly analysed.

Nearly 500 years after it was first demanding quicker access to data clients to review their processes to
documented in De re metallica, the in order to speed up the response take advantage of the accessibility to
fire assaying technique for gold time between results, assessment results, which ultimately will deliver
sampling is about to have some and application. cost savings to their business.
serious competition from a faster
alternative. The fully automated system uses “This is game-changing technology,
high-powered X-ray technology and it has certainly generated a lot
Ausdrill Ltd subsidiary MinAnalytical to activate the gold atoms with the of interest within the mining industry,
will launch the first commercial subsequent signals being counted with several major companies
Chrysos Corporation PhotonAssay by sensitive detectors. supplying samples for the validation
machine at its facility in Canning process that we are currently
Vale, Western Australia this month, Commercial-scale testing has working through.”
becoming the first company to offer proven the technique to be as
the technique to the mining industry. accurate as traditional fire assaying MinAnalytical general manager
and can reduce assay processing Gary Wheeler said the group had
Developed by CSIRO and brought to times from more than 48 hours to worked closely with both Chrysos
market by Chrysos Corporation, the less than 1 hour. Corporation and industry clients
PhotonAssay instrument is a faster, to ensure the machine delivered
safer and more environmentally- Ausdrill chief operating officer immediate benefits to gold miners. “I
friendly alternative to the Andrew Broad said the Chrysos had been following this technology
conventional fire assay technique machine has the ability to for a number of years and when
for gold analysis. revolutionise the way assaying is the opportunity to get involved was
done in the Australian gold industry. presented we were quick to take
The development comes at a He believes that: “This opens up a it up,” Wheeler said. “Ausdrill and
time when the gold industry is whole range of possibilities for our

The ChrysosTM PhotonAssay machine, Andrew Broad
newly installed at MinAnalytical’s
Canning Vale facility in WA “We will have a hub-and-spoke set
up, feeding samples into the two
MinAnalytical’s years of mining NATA accreditation is expected units in Kalgoorlie with the ability
industry experience has proved this month with MinAnalytical to process 3,200 samples a day
invaluable in helping with the showcasing the machine at and turnaround within 12 hours,”
logistics of getting the samples Diggers & Dealers and Gold18@ Wheeler said. “We are looking
from the field to the lab ready for Perth with keynote presentations of at providing a service for grade
analysis. We have engaged a the technology. control and resource development
number of senior geologists from Ausdrill’s confidence in the work to complement our existing
industry to discuss how best to do potential of this technology is fire assaying offering which will
the sampling process. We have further evidenced by its approval continue to service the exploration
looked at different sample sizes for the installation of the next two sector.
and particle sizes to determine the units in Kalgoorlie, underlining its
best way to utilise automation for commitment to satisfying customer Wheeler believes that ultimately
the process.” need for quality results delivered the PhotonAssay instrument could
quickly and is looking to further change the way the gold industry
The validation process saw streamline the process by designing approaches drilling and sampling.
MinAnalytical test the PhotonAssay ways to produce samples ready for
instrument against traditional analysis directly from the drill rig. “This process offers a level of speed
fire assay across a variety of ore The Chrysos machines are in turnaround that the industry is not
types and particle sizes. The ideally suited to grade control currently getting,” he said. “There
new technique has ultimately and reserve conversion drilling, are obvious benefits in handling
proved quicker, more reliable and allowing companies to speed and reduced freight costs because
as accurate as the established up their response to drilling. For of the sample sizes and there is
process. MinAnalytical, the new service will even potential to reduce drilling
allow it to increase its assaying diameters.
Wheeler recognises that capabilities to the gold sector.
“However, I think the real benefits
improvements in turnaround speed The Chrysos techniques allows will only come as the industry starts
rock chips, powdered or crushed using the technology and finds for
are the PhotonAssay machine’s samples, and solutions or slurries itself ways in which analysis can
change from the field onwards.
most immediately obvious benefit. to be directly analysed There will, I believe, be a ripple
effect beyond the cost savings of
“This first machine has the capacity sample size and speed of assay.
to analyse up to 50,000 samples People will start thinking up the
per month because not only is chain beyond just the assay and
the analysis quicker, but the will likely change their entire
preparation time is reduced,” he processes. It will encourage people
said. to think outside the square.”

“Multiple stages of the traditional
fire assay technique are no longer
required significantly reducing
the number of staff required.
Additionally, the non-destructive
nature of the process also means
samples can be re-assayed multiple
times, allowing companies to review
processes to take advantage of
accessibility of results.”

DIGGERS & DEALERS PREVIEW

Galileo: Norseman’s central figure

Backed by some of the big- room for new cobalt players,
gest names in Australian
mining, Galileo Mining Ltd has particularly those in developed
solid foundations to build suc-
cessful cobalt and nickel busi- economies, to make an impact
nesses.
in the sector.
The company floated on the
back of a Bell Potter-led $15 Galileo’s entry into the cobalt
million IPO in May, with Mark
Creasy (31%), Independence field will initially be focused on
Group NL (4.9%) and Mineral
Resources Ltd managing direc- increasing the resource base
tor Chris Ellison (4.2%) the larg-
est shareholders. at Norseman and completing

After spending half his 15- early-stage metallurgical test
year mining career closely
aligned with Creasy, Brad Un- work, with the speed of project
derwood is geologist-cum-
Galileo managing director and development dependent on the
is supported at board level by
chairman Simon Jenkins and outcomes of this initial work.
technical director (metallurgist)
Noel O’Brien. “If the metallurgy lends itself

While Galileo has some big to beneficiation we will certain-
hitting investors with high expectations,
Underwood said they were at grips with ly look at that as a possibility. If
Galileo’s strategy and weren’t expecting
overnight success. there are characteristics of the

“The professional investors get the ore which suggest it is suited to
medium to long-term potential and have
largely left us alone to get on with work, one kind of leaching over an-
while some of the early [short-term] in-
vestors have already left,” Underwood other – i.e. atmospheric leach-
told Paydirt.
ing over high pressure leach-
“Our major investors understand what
they are getting into – Mark Creasy, Chris ing – then we will be guided by
Ellison – the investments made aren’t
huge for them. They know it is high-risk, Mark Creasy holds 31% of Galileo Mining of which what the results are telling us,”
high-reward exploration and we could Brad Underwood is managing director Underwood said.
hardly ask for better investors. They will “The completion of a BFS
ask the hard questions, no doubt, but not
from day one, they understand it will take gets and planned a 15,000m drilling pro- would be the point at which a robust
time.”
gramme at Norseman, which was sched- development timeframe could be envis-
The long game Creasy and Ellison are
entering concerns battery minerals pro- uled to start at the end of last month. aged. If we were to have a BFS complet-
jects such as cobalt in Norseman and
Nova-style nickel-copper-cobalt plays in Underwood said there was a notice- ed within two years I believe that would
the Fraser Range.
able shift in drill rig availability and up- be a substantial value-adding achieve-
Galileo has a dominant tenement hold-
ing west of the 5 moz Norseman gold wards trajectory in associated costs, ment for Galileo.”
mine and has a 20mt resource from the
Mt Thirsty and Mission Sill deposits total- however, such factors would not slow the Following up with a nickel-copper-
ling 20.2mt @ 0.11% cobalt for 22,500t
and 0.52% nickel for 106,000t (cut-off company from potentially catching up to cobalt discovery in the mould of Nova
600 ppm).
its cobalt peers on the ASX. would then be the cherry on top for
An exploration target of 10-20mt @
0.1-0.12% cobalt has been set at Norse- “Galileo came to the market with a Galileo. Despite heavy investment in the
man, where an intersection of 20m @
1.3 ppm palladium and 0.8 ppm platinum JORC-compliant 20mt resource in a de- wake of Sirius’ initial discovery, a Nova
from 30m has also been reported.
veloped part of Western Australia. We look-a-like has yet to emerge. Under-
The company has identified six tar-
are not in a remote location by mining wood has spent eight years in the Fraser

standards, we are in a First World coun- Range with a level of funding which has

try and a stable, pro-mining jurisdiction,” supported both “bread-and-butter geol-

Underwood said. ogy as well as cutting-edge exploration

“Our Norseman cobalt project has techniques”.

good cobalt grades compared to other “There is no other possibility but the

projects and we have excellent poten- discovery of new mineable deposits,”

tial for the discovery of more resources. Underwood said.

Some peers on the ASX may currently “It has taken some people time to real-

have more tonnes on their books, but ise that this [Fraser Range] is new and it

with Galileo’s 10-20mt exploration target will inevitably take time to unlock. Nickel

we are confident of quickly building re- in Australia is mostly Kambalda-style, so

sources. When it comes to development, it is difficult to come into a new province

I don’t see many ASX-listed cobalt pro- and some people have taken the Ar-

jects that have advanced much past the chean model to a Proterozoic belt, so it

completion of a scoping study. I believe has taken them a little bit longer to under-

we can be in a similar position within stand. The Galileo tenements [Yardilla

6-12 months, a timeframe which is rela- and Kitchener areas, both within 80km

tively inconsequential given the forecast of Nova] are positioned in prospective ar-

increase in cobalt demand over the next eas of the Fraser Range and are virtually

5-10 years.” untouched by modern exploration. We

Underwood said cobalt demand was believe if there is a discovery to be made

only going to increase due to electric ve- we will make it happen.”

hicle demand in China and other coun- – Mark Andrews
tries. He believes there is still a lot of

PAGE 44 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Steinert offers to sort out industry

Industry uptake of new ue from uneconomic stock-
ore sorting technology is piles.

occurring at such a rate “There are many eco-

the process is likely to be nomic benefits when intro-

industry standard within a ducing the process. Reject-

decade, according to one ing waste material frees up

of the method’s leading capacity in the plant and

proponents. allows operators to increase

Ore sorting technology mining rates. There is also a

has made considerable direct cost benefit resulting

advances since Rio Tinto from less tailings, less en-

Ltd’s first tentative steps ergy consumption and less

in the process during the haulage, especially if you do

1970s and leading ore in-pit sorting at satellite de-

sorter provider Steinert posits.”

Australia sees widespread “We have developed a

adoption as inevitable. tool to help customers cal-

“Unfortunately, those culate the financial benefit

early attempts at ore sort- they can receive from in-

ing were unsuccessful and troducing the ore sorter.

it put people off so it has Johan van Zyl We will go through existing

taken a long time for peo- models, find out what sort

ple to come around again. But, we have “We have just commissioned a 90 tph of upgrade we can get and include cash

seen a huge uptake in the last 24 months, machine at Pantoro’s Nicolsons gold flow generation to show the savings and

especially in high-value commodities mine. This is not a low-grade stockpile; what increased mining rates would do to

such as gold but also in tin and copper it is run-of-mine material going through projected cash flow.”

as well,” Steinert Australia managing di- the sorter.” Steinert has made tremendous ad-

rector Johan van Zyl told Paydirt. Pantoro managing director Paul Cmr- vances in sensing technology and is

“At Steinert, we have gone out to edu- lec said the ore sorter was a major driver already applying it to waste and metals

cate the industry on what can and can’t for attaining increased production rates recycling. Van Zyl said the company was

be done with this technology and what at Nicolsons. at the forefront of R&D in the sector.

benefits it can bring. Once people realise “Early results have demonstrated the “Our sensing technology is well known

you can drive down the costs, low prices ability of the system to accurately differ- and we can sort using a combination of

or low grades become economic and the entiate between ore and waste from our sensors in one machine – using NIR,

realisation is starting to spread.” operation,” he said. “The ore sorter will induction, x-ray transmission, x-ray fluo-

Low-grade stockpiles have been the come into its own as we ramp up produc- rescence and 3D detection. It is a signifi-

most logical entry point for ore sort- tion from both Nicolsons and Wagtail.” cant advantage of the Steinert machines.

ing technology with companies such as Van Zyl said the benefits of using ore “We have gone back to samples from

Western Areas Ltd receiving financial sorters extended beyond unlocking val- 6-7 years ago using the multiple sensor

and environmental ben- technology and haven’t

efits from processing un- found an ore yet that we

economic stockpiles using can’t process. It opens up

Steinert ore sorters. lots of possibilities for cus-

The ore sorter installed tomers.”

at Western Areas’ Flying While mining industry

Fox mine provided a low- adoption has so far been

cost ore feed for the mill restricted to companies

from 170,000t of previous- looking for marginal gains,

ly disregarded low-grade van Zyl expects larger op-

material and allowed the erators to follow suit.

company to achieve its “Initially it was small

blended grade of 4-5% miners looking to unlock

nickel. latent value who adopted

However, the latest the technology but as the

ASX-listed miner to apply larger miners see its suc-

the technology, Pantoro cess they take interest.

Ltd, is taking the process a I think within 10 years it

step further. will be standard technol-

“Ore sorting is not only ogy in all new processing

applicable to low-grade flowsheets.”

stockpiles,” van Zyl said. Steinert’s ore sorting technology now allows for multiple sensor detection – Dominic Piper

PAGE 46 JULY 2018 AUSTRALIA’S PAYDIRT







DIGGERS & DEALERS PREVIEW

Nifty turnaround for Metals X

During Diggers & Dealers two years replacement of the underground
ago, Metals X Ltd was receiving
flak in the market over its pursuit of conveyor.
the Nifty copper mine in Western Aus-
tralia’s East Pilbara. The company is still confident of

“The market hated it,” Peter Cook achieving a production run rate of
said during his presentation in 2016.
40,000 tpa by the end of the year,
“We were a gold company and this
lunatic Cook decided to go and buy with the September quarter fore-
a copper play. But, we weren’t just
buying a copper company; we were cast to hit 35,000 tpa copper in
buying another mine we believed we
could make significant improvement concentrate.
in and money for our shareholders as
we have done 25 times before.” Metals X has “high geological

Post Diggers, Metals X cleaned up confidence in the mine plan”, with
what was a messy affair in taking over
Aditya Birla, therefore claiming total stope production moving from the
control of Nifty.
“historic checkerboard area and
Furthermore, Cook spun Metals X’s
gold assets into Westgold Resources into the previously undeveloped
Ltd, of which he is managing director,
while Warren Hallam took over the re- western and eastern extensions of
maining base metals division, includ-
ing the Wingellina nickel-cobalt pro- the orebody”.
ject (Central Musgrave) and Renison
tin mine in Tasmania. Dilution from the tertiary stopes,

From its 50% share in Rension, where most of the ore is being
Metals X reported next cash flow of
$3.7 million during the March quarter, sourced, is proving a challenge to
as construction of a new crusher plant
and ore sorter was on track for comple- handle and is expected to have an
tion in the June quarter. Meanwhile opti-
misation work on a potentially lower cost, impact of grade and production un-
higher grade nickel-cobalt start-up option
at Wingellina continues. til more ore can be sourced from

With a handle on long-time Metals “outside of the checkerboard”, Met-
X plays in Renison and Wingelina, the
company is also now demonstrating its als X stated.
vision for the Nifty underground.
Nevertheless, Strachan is bullish
At the time of acquisition, Nifty was
dead on its feet with one year in reserves Metals X can rise above the prob-
remaining and existing plant and equip-
ment frittering away. With the copper lems and deliver on what the previ-
price hovering just above $US2/lb in Au-
gust 2016, the operation had a big ques- ous owners couldn’t.
tion mark over it.
Regional prospects for Metals
“Metals X bought Nifty very cheaply,
[Aditya Birla] had run it into the ground Peter Cook X to consider around Nifty include
and it only took Metals X about 18
months to extend the mine life from two Warrabarty, Grevillea/Stirling,
years to six years of mineral reserves
in the ground. They are slowly undoing Despite the improvement, the March Rainbow and Dromedary where down-
the mess they were left,” Peter Strachan
from Strachan Corporate told Paydirt. quarter also demonstrated the slim mar- hole intersections of 5m @ 9.56% zinc

During the March quarter, Metals X gin Metals X is dealing with, as the cop- from 124m, 5m @ 15.35% from 136m
produced 5,000t copper @ 1.44% for
C1 cash costs of $6,906/t, a marked per price achieved for sales of 7,316t and 12m @ 1.93% from 175m have been
improvement on the previous quarter
– 4,726t @ 1.32% for C1 cash costs of was $8,842/t against all-in costs, which reported. The sulphide mineralisation at
$7,812/t.
includes project and exploration costs at Dromedary is said to be skarn-related.

Nifty, of $8,631/t. Additionally, Metals X has the 43mt @

“They are making cash, they are spit- 0.91% copper and 391 ppm cobalt Ma-

ting enough cash to cover the cost of the roochydore deposit, 85km south-east of

capital they are investing in the project. Nifty, where additional targets continue

They are bringing in new equipment un- to appear for the company, while near-

derground, they are bringing in new rises, mine drilling at Nifty has also been fruit-

they are cleaning up the old stopes that ful.

were left behind so they are mining 1.3- “I just think this [Nifty] orebody goes to

1.4% copper from an orebody that is re- the centre of the earth and it is a very

ally 1.8-2%,” Strachan said. persistent system. They have got a lot of

“I think by the end of this year once exploration around Nifty which the Indi-

they have cleaned it up, they will achieve ans [Aditya Birla] didn’t know how to ap-

their goal of expanding the copper pro- proach,” Strachan said.

duction from 20,000 tpa to 40,000 tpa “The other reason why I like Metals

and that should see their cash costs well X is because they have Wingellina and

below $2/lb. I mean, that won’t halve their they have recently focused in on that and

costs but they will really drop those costs found 64mt of quite high-grade nickel

back dramatically.” and cobalt, which I think would stand up.”

At the time of print, copper was trading – Mark Andrews
at $US3.25/lb and Metals X had reported

that no more significant capital expendi-

ture was required at Nifty.

Ore mined in the June quarter was

expected to be in-line with March, de-

spite 45,000t production lost due to the

PAGE 50 JULY 2018 AUSTRALIA’S PAYDIRT