pd262-July18 mag-web

DIGGERS & DEALERS PREVIEW

Magmatic flows into
easy exploration

Magmatic Resources Ltd’s trusion-related porphyry copper-
focus on near-surface gold targets and three orogenic

mineralisation could be about gold targets on the Parkes East

to bear fruit after the company ground.

received encouraging rock chip “We are now doing soil sam-

samples from undrilled targets pling and will follow up with IP

on its Wellington North project. and drilling to hone in on the tar-

Rock chip samples of 7.7% gets,” Richardson said.

copper and 1 g/t gold were re- The JV with JOGMEC is symp-

ported from Morley and Rock- tomatic of the approach Magmat-

leigh at Wellington North in ic is taking to its NSW portfolio.

early June as Magmatic begins “We are a junior with a big

to tighten its targets for a pro- boy’s portfolio and every JV we

posed drilling programme. sign takes a big chunk of explo-

While its New South Wales ration expenditure off our books,”

land package covers prospec- Richardson said.

tive porphyry targets in the Not only do JV agreements

well-endowed eastern margin provide expenditure relief, they

of the Lachlan Fold Belt, the also allow Magmatic to place val-

junior has chosen a pragmatic ue on projects the market is not

approach to exploration in the always enamoured with.

district. “The problem is about how

“Our strategy from the start you value projects like this held

was to JV the porphyry depos- by a junior,” Richardson said.

its because they are huge and “Gold Fields had spent $13 mil-

require a lot of time and money lion and a lot of time on them be-

and the market doesn’t get ex- fore we took them over so they

cited about them,” Magmatic must be worth something. The

managing director David Rich- East Lachlan is a Tier 1 region.

ardson told Paydirt. “Our fo- It is about 30 years behind the

cus will be on the near-surface Yilgarn in terms of exploration

orogenic targets where we can and there are a number of ma-

add value quickly.” Outcropping quartz reef on Magmatic’s Wellington North project jor companies actively exploring

With historical mine produc- around us.”

tion of 230,000oz @ 26 g/t gold and it needs feed for that mill,” Richardson With all its licences recently renewed,

several other gold-copper intercepts, said. Magmatic can wait for such companies

Wellington North represents an almost- At the Moorefield project, Magmatic to approach it about partnerships.

immediate drilling opportunity. recently completed an aeromag sur- “We have reset the clock on all the ten-

Magmatic has expanded its footprint vey designed to define a reported 15km ements so we can sit on the more difficult

from six to eight tenements since taking long gold trend in the Boxdale-Carlisle targets for a while. But, we are actively

control of the project from Gold Fields Reefs area. talking to four majors over the entire port-

Ltd. Following the rock chip sampling “Soil sampling has shown a strong ar- folio.”

programme, the company is now pre- senic anomaly going south but it’s only To provide a counterbalance to its

paring to drill with southern extensions ever had five RC holes put into it,” Rich- NSW strategy, Magmatic has picked up

of the historical Bodangara mine, where ardson said. “The aeromag should prove additional projects in Western Australia.

rock chips returned 92.8 g/t gold from the up that 15km trend further ahead of drill- “We added those two WA projects – Mt

Dicks Reward mine spoils. ing.” Venn and Yamarna, both within 20km of

“We think there could be 150- The aeromag programme also incor- the Gruyere gold project – because we

200,000oz of high-grade mineralisation porated a 1,900 line-km survey of the needed to get back on the retail market’s

there,” Richardson said. “There is cover Parkes East licence area, part of Mag- radar, Richardson said. “We are not tak-

in this area but it is only 2-4m so it is quite matic’s Parkes project JV with Japanese ing focus away from NSW, rather these

an easy target for a junior to explore.” Government exploration agency JOG- are proper greenfields target generation

Providing Magmatic with extra incen- MEC. projects where we can do some early-

tive is the presence of the Tomingley “It hadn’t has a lot of work on it despite stage work.”

gold mill (owned by Alkane Resources it being only 15km from Northparkes,” – Dominic Piper
Ltd) just 50km away. Richardson said.

“Alkane’s tenements surround us and The aeromag generated eight new in-

PAGE 52 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Cygnus tenders its gold crop

The picture is becoming clearer for Cygnus started drilling on its 8,000sq km South West project immediately
Cygnus Gold Ltd on its big Wheatbelt on listing in January
gold portfolio even if it hasn’t yet repeat-
ed the spectacular numbers it posted in Cygnus eventually pegged 8,000sq km being assayed at the time of print with an
maiden drilling at the start of the year. of land, Kingsgate Consolidated Ltd hav- additional 600m of diamond drilling tails
ing dropped the ground after its acquisi- to complete RC holes which didn’t reach
Cygnus hit the bourse in January tion of Dominion Mining, the last explorer their target.
with an 8,000sq km land package in the to work in the region.
south-west of Western Australia. Impres- “We are cautiously optimistic,” Merril-
sive diamond drilling results came imme- The gravity data has given Cygnus lees said. “Once they come back we will
diately, with hits of 9.5m @ 29.2 g/t gold, new impetus but despite the early drill- follow up with drilling at Brays and Mc-
10.9m @ 15.1 g/t and 6m @ 3.27 g/t re- ing success on Stanley’s Bottleneck Dougall and undertake gravity surveys
ported from the Stanley project. prospect, Merrillees is intent on building on both that 100%-owned ground and
a much deeper understanding of miner- the three JVs we have with Gold Road.”
Six months on, assays are not quite as alisation in the region.
headline-grabbing but no less important The JVs with Gold Road offer Cyg-
to the overall picture Cygnus is building, “It was good to have the early success nus both technical expertise and cash
according to managing director James but the challenge was always going to be backing. Gold Road is earning 75% of
Merrillees. extending the mineralisation to the base- the Wadderin and Lake Grace projects
ment,” he said. “That was achieved with by spending $3.7 million over four years
“Drilling started on the day of listing a hit of 6m @ 3.3 g/t gold from 157m and (with a minimum $1.3 million spend) while
and we had spectacular results straight also 200m along strike of Bottleneck. Un- the Yandina project begins as a 75/25 JV
away,” Merrillees told Paydirt. “But that fortunately, that didn’t resonate with the with Gold Road the majority partner.
early success in some ways created market.”
a rod for our back. It has actually been Merrillees said Gold Road had proven
more of a technical story since then. We The basement rock intercept came a good cultural fit for Cygnus and pro-
did detailed ground gravity which guided from the last of a six-hole diamond drill- vided the status needed to get the IPO
our thinking on structure and geology.” ing programme. Cygnus has since re- away.
verted to aircore and RC drilling as it
A glimpse at the exploration history of builds the district-scale picture. “It was a perfect storm,” he said of the
WA’s Wheatbelt region quickly reveals IPO process. “People liked the story but
why Cygnus is intent on getting its techni- “The key thing is to understand the wanted to see a recognisable partner in
cal approach to the project correct. While structure because these are structur- the stock. Gold Road came in, the mar-
part of the Yilgarn, the district has been ally controlled and there is no outcrop. ket started to tick up and with the seed
woefully underexplored in comparison to Stanley has more than 20km of prospec- capital and RCF’s contribution we al-
the Eastern Goldfields to the north-east. tive greenstone geology but only limited ready had plus-$3 million and raised $6
deeper drilling. In fact, ours were the first million in all. It was a great result.
“The south-west had seen very little basement holes ever drilled there.
exploration in the last 30 years,” Merril- “The problem for a junior is how to han-
lees said. “It is probably as unloved as “Once we had that structural informa- dle 8,000sq km of tenements. Our deci-
the Yamarna belt.” tion we have been able to go back with sion was keep the most advanced pros-
more inexpensive RC drilling and focus pects [Stanley, etc.] for ourselves and JV
The comparison to Yamarna (host to on the structural targets we have identi- out the lesser advanced ones to a group
the 6.8 moz gold Gruyere deposit, see fied.” at Stanley.” with deeper pockets.
page 18) is apt, given Cygnus has struck
three JV agreements with Gold Road Cygnus has since completed 2,975m “We have been applying technical
Resources Ltd which made its fortune on of RC drilling at Bottleneck, Stanley Hill expertise to pick up large swathes of
the belt. and Brays with drilling from Bottleneck ground and our aim is always to drill as
returning a hit of 7m @ 4.9 g/t gold from soon as possible because that’s where
“We have been blessed to have Gold the high-grade zone and 3m @ 1 g/t from you are likely to get success and Gold
Road as a partner,” Merrillees said. an area to the north-west of the mineral- Road shares a very similar ethos.”
“They share the same exploration phi- ised zone.
losophies as Cygnus and are prepared – Dominic Piper
to test underexplored ground.” Final results from the programme were

Cygnus’ opportunity in the Wheatbelt
arose from the release of a gravity sur-
vey conducted over the area by the WA
Geological Survey in 2016.

“The challenge in this region has al-
ways been the cover, as much of it is un-
der crop,” Merrillees said. “There is not
a lot of outcrop so you need geophys-
ics to identify prospects. When the WA
Geological Survey released gravity data
for the region, [non-executive director]
Amanda Buckingham was straight onto it
– it’s her area of expertise – and pegged
the ground.”

PAGE 54 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Kelly’s northern summer
migration

While most of the Austral- leaving the company he turned from ex- Quicksilver area and came
ian mining community plorer to multi-mine producer, he felt the up with two big mag anoma-
is preparing itself for the Dig- time was right to return north. lies. There is a lot of stuff
gers & Dealers nightlife, Allan going on there, there looks
Kelly will be in the more se- Along with the Kisa and Gemuk Moun- to be skarns. There is a simi-
date environs of an Alaskan tain tenements, Luna and Quicksilver lar skarn up the road which
summer. were the key assets in Riversgold’s IPO. is being mined at grades of
The intention had been to complete more than 8 g/t gold.”
Kelly was a permanent fix- Riversgold’s listing earlier in the year
ture at Diggers (and indeed in order to meet Alaska’s summer field Now the company is fully
the Palace Hotel) during his season but delays led to the company established, it can embark on
seven years at the helm of missing the June-September window. It a full summer field season in
Doray Minerals Ltd but this eventually listed in October, leading to a 2018.
year, despite his new com- nine month hiatus on the Alaskan work.
pany, Riversgold Ltd, having “The plan this year at Luna-
West Australian assets in its “The timing of the IPO was perhaps a Quicksilver is to do IP and soil
portfolio, he has chosen to bit early in the market cycle but we want- geochem along the IP and
spend his time getting ac- ed to get in the field last year,” Kelly said. then start diamond drilling at
quainted with exploration “We ended up missing it anyway and Luna, Luna East, Quicksilver
ground in the US state of had to wait nine months. But, when we and the skarns,” Kelly said.
Alaska. realised we would miss the field season “We have got the info in 2D
we decided to fly heli-mag over the Luna- now we need to see what it
It may seem incongruous looks like in 3D as it is mostly
for someone who built his under cover. It will be the first
executive reputation on WA time it has ever been drilled.”
greenstone discoveries to
switch his attention to North The geological model Riv-
America but as Kelly ex- ersgold is working to is the
plained to Paydirt, Alaska is IRG example provided by
a region he is familiar with. Donlin Creek.

“I was sent up there by “The geology is the same
WMC in the 90s following as Donlin Creek, placer gold
the discovery of Donlin Creek occurrences all around two
and the intrusive-related gold big continental-scale slip
(IRG) deposits along the Tin- faults. It is the classic IRG
tina gold belt,” Kelly said. “We model; the granite has in-
did regional work, including truded up, cooks up the sur-
stream sediment sampling rounding sediments and you
looking for IRG deposits, all get some mineralisation in
way across the belt. I actually saw visible the granite but mostly in the
gold in the pan and using a hand auger structures off the granite. There is a
drill got 20 g/t gold intersections from the main fault and secondary structure with
Luna/Quicksilver area before discoveries granites grading 37 g/t gold, 65 g/t and
further south in Canada grabbed all the plus-100 g/t in a large area Donlin Creek
excitement and WMC packed up.” would easily fit within.
“It has all the ingredients for an inter-
Kelly, though, retained his interest and esting story.”
followed the flourishing of Donlin Creek Field work is expected to start this
during the mid-2000s when it grew from month with the IP and soil surveys before
a 2 moz deposit into a 20 moz deposit drilling starts towards the end of July.
by 2010. That means by the time the rest of the
Australian gold community is spruiking in
“Once I saw Donlin Creek reach 20 Kalgoorlie, Kelly will be anticipating first
moz, I pegged the ground at Luna and assay results.
Quicksilver,” Kelly recalled. “By the time “We have finalised a driller, helicopter
that was complete, Donlin Creek had and a ground geophysics crew and I will
grown to 45 moz but no one else was head up in the last week of June,” Kelly
working in the area.” said last month. “The mineralisation is
quite distinctive, lot of sulphides and
Doray’s success at its Andy Well dis- probably no visible gold so we have to
covery meant Kelly kept his Alaskan
venture on ice for several years but after

PAGE 56 JULY 2018 AUSTRALIA’S PAYDIRT

Allan Kelly Riversgold’s 2018 exploration campaign will start with IP and geochemical surveys
over the Luna (pictured) and Quicksilver areas
wait for the assays. But, if we are hitting
the sulphides in the right spot, we are in Pogo, is 8 moz @ 12 g/t. The ultimate aim who spent $350 million to buy into the
with a chance. is to get someone interested in it. All the project.
majors are up there and the ideal scenar-
“Hopefully, the geophysics gives us io would be to do a Gold Road-style deal.” Kelly said investors and potential part-
good information but if not we will start ners had shown interest but also caution
drilling under the outcrop.” Gold Road Resources Ltd is currently since he put Riversgold together.
developing its 5.8 moz gold Gruyere pro-
If the results are positive, Kelly expects ject in WA via a JV with Gold Fields Ltd “We went to PDAC and had people
interest – from both the market and the looking at it,” he said. “There has been an
industry – to quickly increase.

“It is a short field season but a big
prize,” he said. “Donlin Creek is 45 moz
@ 2.5 g/t while the other big mine there,

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 57

DIGGERS & DEALERS PREVIEW

Riversgold will be active for the three months of the brief Alaskan summer field season history of being a federal territory until
the 1950s,” he said.
interesting shareholder reaction, people mine as indicative of the difficulties ly-
have asked about Alaska because they ing in wait for miners in Alaska but Kelly “In actual fact, most of the Native Title
haven’t heard the story before and when believes this just shows a lack of under- issues were resolved in the 1970s and
you start talking numbers like this it is standing. our ground sits on state land, meaning
hard to ignore.” we know exactly what we are up for; no
“Some people have been a bit scepti- claims or royalties to be settled because
Sceptics point to the problems en- cal, particularly with Pebble’s problems, it has been through the process.”
countered by Northern Dynasty Minerals but they don’t realise that there are three
Inc in developing the Pebble copper-gold types of landholding in Alaska due to its Another assumption is that Rivers-
gold’s late arrival to the Alaskan gold
party means it has picked up ground al-
ready discarded by TSXV-listed juniors.
Not so, according to Kelly.

“You’d think there would be heaps of
Canadians up there but they never went
to Alaska because it doesn’t qualify for
flow-through shares. So, there is not a
huge advantage for TSX companies in
working there.”

It all adds up to a rare opportunity in
Kelly’s eyes and one which may lead him
to missing Diggers for a few years in a
row.

“Once you get a decent camp set-up,
you can work all year round,” he said.
“But if you are prospecting, you have to
do it in summer because you want to be
able to see the rocks.”

– Dominic Piper

PAGE 58 JULY 2018 AUSTRALIA’S PAYDIRT

Explaurum returns to drill bit

Explaurum Ltd managing di- sibility study with 485,000oz con-
rector John Lawton has been verting into an initial reserve at a

around too long to fear the ad- grade of 2.09 g/t gold.

verse market reaction to a fea- Lawton said by the time Ex-

sibility study for the Tampia gold plaurum completed its BFS, the

project as a major setback for the resource would be back on track.

company. “We are actually doing the infill

Explaurum shares took a near drilling now,” he said. “Back then

30% hit following the release of it was a cost and time issue. It

feasibility study results which would’ve taken 12 months more

showed a 50,000oz drop in and an extra $6-8 million to drill it

Tampia’s stated gold resources. to 20m by 20m [it was eventually

However, Lawton is confident the drilled at 40m by 40m] but now we

company will bounce back, tell- are doing in-pit infill/grade control

ing Paydirt last month the loss drilling at 10m by 10m to a maxi-

of ounces was largely associ- mum depth of 60m.

ated with the estimation methods “That will upgrade the resource

employed in the feasibility study. and bring at least 35-45,000oz

“There weren’t any surprises A new exploration campaign has also been launched at Tampia, back into the model.”

in the feasibility study but the testing a series of newly identified gravity anomalies Lawton’s confidence is bol-

market has given us a hard time stered by the success of metal-

because of the loss of resource ounces,” it was just the high-grade zone that got lurgical test work.

Lawton said. “That came about largely knocked about.” “We found in the metallurgy that we

as a result of the estimation process and The 695,500oz indicated-inferred re- end up with more ounces than the origi-

the geostatistics methods we used. The source in the September 2017 scoping nal assay results showed,” he said. “In

continuity of the orebody is very good; study fell to 675,000oz in the May fea- the master composite samples for the

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 59

DIGGERS & DEALERS PREVIEW

met recovery work we were getting 3.3 smaller companies and there was little

g/t against 1.5 g/t in the assay. That is a work done,” Lawton said. “Since we start-

positive effect which will ultimately have ed we realised ground gravity worked

its day.” very well and we could actually see the

The reserve and resource figures may high-grade zones in the resource. We

have been underwhelming but the fea- followed by doing airborne gravity over

sibility study still pointed to a robust op- the 400sq km and picked up more tar-

eration at Tampia with a capex of $119 gets that are looking like Tampia. We

million capable of delivering life-of-mine have now defined two new greenstone

revenue of $808 million, NPV of $125 mil- belts.

lion, 47% IRR and payback over just 18 “This area is in a farming district; you

months. don’t see much outcrop so without drill-

The company is now aiming to com- ing you can’t know what’s there. The

plete a BFS by October with Lawton con- June results were from the first drilling

fident further refinements can be made ever outside of the outcropping areas.”

to the project economics. Lawton said all but one of the 24 grav-

“Mintrex did a superb job with the plant ity anomalies returned gold-in-soil anom-

and the other consultants have done alies in auger drilling as well, suggesting

good work but we can sharpen the costs mineralisation was widespread.

in key areas over the next few months “The target those first results came

ahead of the BFS,” he said. “We will look from is actually five times the size of the

at capex, the resource and the mining Tampia gravity anomaly,” he said. “We’re

operating costs, although the processing not talking arm-waving here; there is real

costs are about right.” substance; it is new exploration and it is

One area Lawton is keen to test is as- Explaurum has returned to infill drilling at its exciting.”
sumptions around mining costs. While Tampia project to recover ounces lost in the If Explaurum makes a new discovery,
the feasibility study states dry hire con-
tracting was assumed, Lawton believes feasibility study resource estimation Tampia’s economics could be changed
dramatically.

the model can drive costs lower. Lawton’s mention of regional explo- “We knew from an early stage that

“The advantage of dry hire – which I ration came on the day Explaurum re- the resource could support an operation

used a lot when I ran gold mines in the leased first results from a maiden drilling and provide a decent return but we were

80s and 90s – is that it gives the con- programme on a series of new prospects always looking at the bigger area,” Law-

tractor guaranteed minimum hours each it has generated across its 400sq km of ton said. “The strategy has always been

year for their equipment. That de-risks ground at Tampia, 260km east of Perth to get into cash flow quickly and begin

the project for the contract and means on in Western Australia’s Central Wheatbelt. spending on the regional exploration.

a maximum basis over a typical contract The first-pass RC drilling is testing sev- “Exploration becomes the real story

you can save 25-30%.” eral coincident gold-in-soil and gravity here and that gravity anomaly will be the

Further work will also be done on the anomalies. Best hits from the first set of focus for the next 6-12 months. It’s a very

strip ratio, particularly once the resource results included 7m @ 1.2 g/t from 61m, large target and it’s only had 13 holes so

is redrawn following the infill programme. 3m @ 3.63 g/t from 16m, 19m @ 0.32 g/t it is early days still. But, if we do make

While the market didn’t take a shine to from 22m and 2m @ 3.13 g/t from 92m. a discovery it would be adding years to

the feasibility study, finance options are They are the first genuine exploration the project and the financials would go

still available for Explaurum. results to be generated outside the Tam- through the roof. The market has not ac-

“We have spoken to a number of fi- pia orebody since it was discovered by cepted the exploration story yet but it has

nanciers; both banks and non-banks,” BHP Ltd in the late 1980s. the potential to change everything.”

Lawton said. “There is interest because “After BHP left Tampia was held by Before then, Explaurum needs to build

with the likes of Dacian [Gold a plant to take ore from any new

Ltd] and Gascoyne [Resources discovery. To do that, Lawton

Ltd] now moving into production will have to ensure there are no

there aren’t too many projects further setbacks.

out there at our stage of devel- “The BFS will be out in Oc-

opment. tober and we can then finalise

“Everyone likes the 1.5 year design and financing and press

payback and we will have no the button at the end of 2018,”

problem getting a 70/30 split Lawton said. “We are looking at

debt-to-equity and the indica- a 12-month construction period.

tions are that the big banks will We have gone over many dif-

be involved in that process. ferent options and we are very

“For the equity component, we comfortable that we’ve got the

don’t want to be diluting share- right flowsheet. We just have to

holders at a lower price so it is get the resource back to where it

up to us to get the share price needs to be.”

up and we will do that by making – Dominic Piper
improvements on two fronts; the

feasibility study and the regional With all of the tenements under crop, exploration at Tampia

exploration.” has been restricted to outcropping areas

PAGE 60 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Pantoro starts to wag tail

Pantoro is coming to the end of a major capital project at Halls Creek, which will essentially see increased tonnages
through the Nicolsons processing facility

Success hasn’t always followed those price] trigger,” Cmrlec told Paydirt. project, with some now comparing com-
recognised as the Best Emerging “The production plant upgrade that we pany and operation to the Central Norse-
Company at Diggers & Dealers, however, man outfit which operated high-grade
Pantoro Ltd is bucking that trend. are undertaking is very close to comple- gold mines in Norseman for more than
tion so we are actually commissioning 50 years.
The company received the award in it today [June 7] and should have it fully
2016 on the back of the Halls Creek gold operational starting next week. That is in- “Admittedly, that was a big call, but
project in Western Australia’s Kimberley clusive of ore handling, crushing and ore news this week has the company well ad-
region. sorting; that has all gone well.” vanced along that path,” wrote Far East
Capital’s Warwick Grigor in his weekly
During his Diggers & Dealers presen- Work on the Wagtail underground mine commentary at the end of May.
tation two years ago, managing director was also progressing well, with all the
Paul Cmrlec laid out plans to increase support on the upper benches finished Grigor’s commentary came as Pan-
production from the Nicolsons mine to and the first cut into the underground ex- toro received approvals for underground
50,000 ozpa gold in 2017, while also tell- pected to happen at the time of print. works to start at Wagtail where probable
ing delegates how Pantoro welcomed the reserves total 62,000oz gold at an aver-
opportunity to redraw the reserve grade “With the Wagtail underground and age 5.4 g/t, while indicated and inferred
from the initial 6.2 g/t to 9.9 g/t. Nicolsons underground also ramping up resources are estimated at 574,000t @
from where it has been sitting, that will 6.8 g/t for 126,000oz.
Since then, a major capital invest- see us ultimately deliver roughly twice
ment project has been undertaken at the tonnage we have been to the pro- “What Warwick is getting across there
Halls Creek, which includes is that Norseman started in a similar boat
the Nicolsons and Wagtail cessing plant pre-upgrade,” – quite small and had shown to be a very
mines, and a production run Cmrlec said. large deposit over time. I think we are at
rate of 80,000-100,000 ozpa the beginning of that process,” Cmrlec
gold is targeted to be hit by “We’ll sort the waste and said.
the end of 2018. ore out and based on the
test work we have done, “We have seen the reserves more
As reported in its March which typically excludes 40- than triple from when we first acquired
quarterly, 56,729t @ 7.96 g/t 60% of the total feed, we the project [May 2014]. You’ll see anoth-
gold for 13,385oz at AISC achieved upgrades of 1.5 to er reserve increase coming out before
of $1,183/oz, which includes 2.5 times the grade depend- Diggers on Nicolsons, which will be an-
major project capital of $279/ ing on what material we are other fairly substantial increase. I think it
oz and exploration costs of dealing with. At an average, is similar to what we saw at Norseman,
$141/oz, was produced from hopefully we see ourselves particularly in the early days. There is a
Halls Creek. excluding about half the ma- lot more gold there than anyone allowed
terial and that will see us not for. Hopefully, we are a little bit ahead of
Earlier this year, Pantoro only increase production, the curve in the modern day and we are
managed to clear its out- Paul Crmlec but take about $70-100/oz able to identify things a lot faster then
standing debt obligations, al- off AISC. All of those things was able to be done and hopefully we
lowing the company to now combined will see us gener- see some strong outcomes like at Norse-
budget for an estimated additional $2.6 ating good cash flow into 2019.” man.”
million per quarter in cash flow. To the end of the March quarter, Pan-
toro had about $16 million in cash and – Mark Andrews
“We are a long way through the major gold at hand courtesy of the Halls Creek
capital projects that give us that [share

PAGE 62 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

OceanaGold positions itself
for outside run

OceanaGold Corp’s international fla- OceanaGold is lifting exploration expenditure at Waihi in an effort to define
vour makes it a bit of an outlier on a decade’s worth of reserves
the increasingly busy Australian gold pro-
ducer landscape, the question is whether We have got the structures in place but opportunities in North America but we
that will be an advantage or disadvantage we need to put more meat on the bone have been vigilant. We want a high qual-
when the expected wave of M&A activity to become a really strong, robust mid-tier ity asset; a low-cost producer with long
rolls in. producer. mine life. Not a mega project but a mid-
sized one with modest capital require-
Melbourne-based OceanaGold has “We already have that IP of operating ments.”
90% of its liquidity on the TSX and a across jurisdictions and that doesn’t hap-
530,000 ozpa gold equivalent production pen for a company overnight.” Before pulling the trigger on corporate
portfolio spread across New Zealand, activity, there is a sense OceanaGold is
United States and the Philippines, mak- The company proved with its 2015 ac- hoping its existing portfolio offers oppor-
ing it unique among the ASX-listed mid- quisitions of Haile gold mine in US (via tunity for production expansion.
tiers. a $C856 million all-scrip takeover of Ro-
marco Minerals) and Waihi gold mine At Waihi, on New Zealand’s North Is-
The company shares similar growth in New Zealand (a $US101 million cash land, the company has launched exten-
ambitions to its Australian peers however purchase from Newmont Mining Corp), sive greenfields and brownfields explo-
as managing director Mick Wilkes admit- it is prepared to put its balance sheet ration campaigns to extend the mine’s
ted to Paydirt last month, it faces differ- lifespan.
ent challenges to the others. and cash balance to
use when the opportu- OceanaGold has already committed to
“Equity markets in North American nity presents. However, development of the Martha underground
gold are very flat,” Wilkes said. “There Wilkes doesn’t want to at Waihi which it hopes will extend mine
has not been a lot of interest from inves- confuse talk of new ac- lift beyond 10 years.
tors and there have been a number of ex- quisitions with ideas the
ecution disappointments as well as po- company is unhappy The Martha project comprises two
litical problems in the likes of Tanzania, with its current set of mining areas below the current Martha
Turkey and Greece. assets. pit, including Phase 4 of the Martha open
pit and the Martha underground. The
“Australian gold, though, has captured “We are very com- Phase 4 open pit reserve contains an
the imagination. The miners are gen- fortable with the port- additional 77,000oz with a 2016 maiden
erating lots of cash and this has led to folio,” he said. “Didipio resource pointing to a further 158,000oz
share price runs. Unfortunately, I think – despite the political in the Martha underground zone.
OceanaGold is considered a Canadian risk which the market
company as 90% of our liquidity is on the perceives – is a strong Following further work in 2017, Ocean-
TSX, so we do suffer from that Canadian asset, Waihi is a Tier aGold declared an exploration target of
malaise.” Mick Wilkes 1 asset and at Haile 2.5-5mt @ 5-7 g/t for 500,000-700,000oz
ramp-up is going well gold.
The experience Ocean- and we are above
aGold has gathered in nameplate processing capacity. “We are spending $40 million on explo-
building and operating “Having another asset in North Amer- ration and development at Waihi to prove
mines in three separate ica or Australasia would be great and it up to 10 years of mine life,” Wilkes said.
jurisdictions provides it could come through acquisition or equal- “Current reserves are only until the end
with skills and know-how ly from exploration. There are certainly of 2019 but we will update the market on
lacking among the do- those reserves and resources in the next
mestically-focused Aus- three months.”
tralian miners. With local
assets and companies
apparently fully valued,
OceanaGold’s interna-
tional reputation could be
a clear advantage.

“It has been our strat-
egy for years to build a
company that has inter-
national reach, which can
operate in different jurisdictions efficient-
ly and effectively and that in itself creates
opportunities,” Wilkes said. “We want to
leverage off our established operations
in North America, Australasia and Asia.

PAGE 64 JULY 2018 AUSTRALIA’S PAYDIRT

Drilling in June intersect- caused by maverick presi-

ed two large vein systems dent Rodrigo Duterte.

underneath the Martha pit In October 2016, Du-

and included hits of 5m terte’s Government or-

@ 65.3 g/t gold and 100 dered the closure of 22 of

g/t silver and 9m @ 29.4 41 mines in the country,

g/t gold and 288 g/t silver including Didipio. Opera-

from the Empire vein and tions have so far been un-

42m @ 7.1 g/t gold and 46 affected and the arrival of

g/t silver and 4.4m @ 19.8 a new environmental sec-

g/t gold and 30 g/t silver retary appears to have re-

from the Martha vein. versed the decision.

“We’re getting good “Things have gone quiet

results from Martha with on the political side which

good widths and continu- is very good news,” Wilkes

ity,” Wilkes said. “We have said. “The new secretary

only completed a third of has held multiple forums

the Martha underground with industry and we have

drilling and will continue Political problems in the Philippines have not curtailed production at Didipio had regular contact with

that process over the next where 80-90,000oz gold and 15-16,000t copper is expected this year him and working to clean

18 months.” up the mess. We expect

The results – and OceanaGold’s am- 150,000 ozpa. Permitting has begun for suspension orders to be dealt with and

bitious exploration target – highlight an expanded open pit and construction lifted soon.”

Waihi’s relative neglect during New- of an underground mine and Wilkes ex- Didipio has continued to operate de-

mont’s ownership. Wilkes believes the pects exploration to continue to extend spite the suspension orders and is set

mine still has much to offer a company of the current 18 years of reserves (2.018 to produce 80-90,000oz gold and 15-

OceanaGold’s size. moz gold) and resources (4.039 moz 16,000t copper in 2018 as the company

“It wasn’t an unloved asset, just under- gold). begins the transition to underground op-

capitalised. But we are putting serious “Exploration is going well with a focus erations.

capital into the resources under the pit. on near-mine resources, as a minimum “We are extremely happy with the op-

Previously, it was a small mine in a big to replace reserves. The open pit devel- eration and the way it is run,” Wilkes said.

company so it struggled to get the atten- opment allows us to see the structures “the underground is ramping up with

tion but this is a Tier 1 asset for us so it and geology in real life so we are able to three stopes opened on schedule, more

will get a lot of attention.” formulate our regional exploration plan- infrastructure in place and development

If OceanaGold is using its smaller size ning based on what we see there. progressing to the deeper levels.

to improve Waihi’s future, it is applying its “These are discrete orebodies – there “You have to remember that the politi-

production know-how to improve Haile’s are seven or eight in the pit – but we cal situation hasn’t cost us any produc-

performance. know certain host rocks and where they tion and we have maintained the devel-

The project was acquired with 60% are cut by structures is where the gold opment programme for the underground.

of engineering complete and the new is. There is no reason there is not more The one thing it has slowed is explora-

owner chose not to unsettle progress by of these orebodies on the mining licence. tion. We have withheld exploration that

changing the approach. “Regionally, we have a much better would’ve gone on as we want clarity on

With Haile now at full production – it feel of where to look along the 60km-long future of the mining industry in the Philip-

contributed 37,049oz @ $US952/oz structural corridor.” pines.”

AISC in the March quarter – Oceana- In the Philippines, exploration has – Dominic Piper
Gold is in the process of reshaping the been put on ice while OceanaGold navi-

operation. gates the unfolding political situation

“When we acquired the project all the

design was completed and all equipment

purchased,” Wilkes said. “We were in two

minds about the kit at the time and de-

cided changing it would add another 6-12

months to project delivery.

“Since then, we haven’t achieved the

expected grind size – although the recov-

ery is close to plan. By putting in a new

fine grind circuit we will get the grind to

design and recovery above commission-

ing levels next year. That should bring

down operating costs further.

“Ultimately, we have aspirations to

achieve 4 mtpa throughput but we don’t

want to spend too much on getting there.”

Production sights are also being raised

with a mark of 200,000 ozpa touted for Despite a smooth ramp-up, OceanaGold is redesigning the Haile processing

an operation currently benchmarked at flow sheet to include an additional fine grind circuit

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 65

DIGGERS & DEALERS PREVIEW

Full Chalice thinks big

Chalice recently completed almost 30,000m of diamond drilling in Canada

The opportunity to take the helm of a China’s SFECO Group and Eritrean Na- a war chest of $42 million cash and liquid
cashed-up junior is not being taken tional Mining Corp (ENAMCO) in 2012 investments (end of March 2018) and has
for granted by new Chalice Gold Mines for a combined $114 million. After tax, a solid footing in prolific gold and base
Ltd chief executive Alex Dorsch. the company was left with a net cash metals regions in Canada and Australia.
balance of $82 million, which eventually
Dorsch joined Chalice as general man- became $54 million in late 2012 in light of “In Canada, we are just coming off a big
ager corporate development in October $25 million being returned to sharehold- work programme where we have spent
2017 and rose in the ranks amid a board ers. the best part of $10 million,” Dorsch said.
restructure, which saw Tim Goyder move
from managing director to executive The company disposed of the Camer- “We are now in a consolidation phase
chairman and Tony Kiernan step down on gold project in Ontario for $25 million and are excited by what we have seen
from chairman to become independent in 2016 after picking up the asset three and we are now working towards a sum-
non-executive director. years prior for $8 million and now boasts mer follow-up programme.”

The leadership changes in March re- Alex Dorsch A 27,300m regional diamond drilling
flect a new chapter for the company, programme was recently completed at
however, Dorsch is eager to continue the company’s East Cadillac gold pro-
delivering the strategy which has made ject, Abitibi province, Quebec, with two
Chalice a success. new discoveries expanding the district
scale potential of the project.
“I have the privilege of joining a group
with a solid track record and we continue Hole ECG018-72 at the North Con-
to be driven by our past successes. The tact target intersected a wide mineral-
way the company has performed speaks ised zone of 23.5m @ 1.12 g/t gold from
for itself and we are aiming to emulate 180.5m, including two high-grade zones
and exceed that success. We have our of 2m @ 6.86 g/t and 1m @ 5.71 g/t.
sights set very high and I think expec-
tations from shareholders reflect that,” Meanwhile, hole ECG-18-49 at Lac
Dorsch told Paydirt. Rapides intersected a wide mineral-
ised zone of 20.8m @ 0.74 g/t gold from
Many will remember the Zara gold 316.7m, including a high-grade zone of
project in Eritrea which Chalice sold to 3.1m @ 4.27 g/t.

The purpose of the drilling programme

PAGE 66 JULY 2018 AUSTRALIA’S PAYDIRT

was to test possible extensions to

mineralisation intersected at Nor-

deau West and Simon West. A min-

eralised strike of about 3.5km re-

mains open to the west at the latter.

Dorsch said the first year field pro-

gramme confirmed the prospectivity

of the area and that the company’s

ground consolidation and explora-

tion strategy had been effective.

A follow-up programme was be-

ing planned at the time of print and

summer work expected to start this

month.

The work stream in Canada will

be coupled with a renewed empha-

sis on the Bendigo goldfield in Vic-

toria.

Kirkland Lake Gold Ltd has

trumped many Australian players by

reinvigorating the Fosterville gold

mine near Bendigo and Chalice

hopes to make something of its own

Pyramid Hill project, north-east of

Fosterville.

Chalice has a 3,350sq km land Chalice spent $13 million on exploration last year

holding in the Bendigo Goldfield,

with multiple high-potential structural and lac, Chalice has highly prospective pro- tionally or technically attached. Instead,

gravity targets identified along faults with jects to focus on, however, adding to its we judge them based on what long-term

known gold mineralisation exciting the portfolio remains firmly on the agenda. value there is for the company,” Dorsch

company. Despite its nous in the gold sector, said.

“You only have to look at Fosterville; Chalice has shown a willingness to ex- “In the exploration business you have

that asset was struggling for a number plore opportunities in the battery metals to make a lot of difficult decisions. Our

of years. Kirkland really looked at it dif- space through recent acquisitions of va- decisions will be guided by the assessed

“ferently and now they have a reserve at nadium-nickel projects in Western Aus- potential for a discovery that meets our
over 20 g/t gold. So yes, we definitely tralia and Queensland. value threshold. If that potential still exists

believe that Bendigo is a we hold and stay the course.”

forgotten asset, forgotten We are commercially minded Chalice’s search for the “next
about too early and modern big advanced asset” continues,

exploration techniques are and fairly ruthless with our with Dorsch keen to land some-
particularly useful in explor- projects; we don’t get emotionally thing in the next 6-12 months in
ing under Murray Basin cov- addition to growing the specu-

er there,” Dorsch said. or technically attached. Instead, we lative appeal in its current as-
A Victorian Government judge them based on what long-term set base.

initiative – “Gold Undercov- “I think there is a perception

er” – estimated that there is value there is for the company. out there that the company is
32 moz gold untouched in not spending money and that

the northern Bendigo zone we are just a cashed-up shell.

under Murray Basin cover, Our exploration budget last

adding further impetus for Chalice to get The Flinders River vanadium project year of $13 million is counter to that, so I

moving at Pyramid Hill. covers nine licences and 2,270sq km of think by getting out to the market and in-

“We are about to get on the ground ground in central Queensland, near In- creasing people’s awareness of what we

and start demonstrating the potential termin Resources Ltd’s 2.6bt shale-host- are doing in Australia and Canada, we

Pyramid Hill has, which has recently ed Richmond vanadium asset, while the can really up the ante for shareholders,”

been expanded to over 3,000sq km. We Julimar nickel-vanadium project is just Dorsch said.

have very good indications that the same 80km north-east of Perth. “We are looking at anything from 5-20

mineralised structures which hosted the While bullish on the new additions, major acquisition opportunities at any

high-grade Bendigo Goldfield and neigh- Dorsch said Chalice would studiously one time, so we are very busy on the

bouring deposits extend to the north assess each opportunity and be prudent business development front. We look

through our blocks,” Dorsch said. with its decision making. with an owner’s mindset, so we won’t be

“We are prioritising that as the immedi- “If we demonstrate that the propsectiv- making any rushed decisions, but when

ate area of focus. It is not simple explor- ity is reduced or if we find it will only be we see the opportunity that is right for us

ing under cover, but we believe we can of interest to a junior then we rationalise we will execute quickly.”

draw on our experience in Canada in that and focus on the next opportunity. We – Mark Andrews
regard.” are commercially minded and fairly ruth-

Between Pyramid Hill and East Cadil- less with our projects; we don’t get emo-

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 67

An innovation strategy born out of survival (45-50% nickel content) concentrate. The company will initially
instincts has set Western Areas Ltd on the blend the material with its existing product from the Cosmic Boy
road to a rarity among Australian nickel concentrator, improving overall recoveries by 3-5% over the life-
players; a robust growth story. of-mine, but is also pursuing other options, including selling the
high-grade MREP product separately, potentially for distribution
While Australia’s other nickel players were forced to shutter into the emerging battery market.
operations during the metal’s five-year price trough, Western
Areas applied innovative programmes across its mining, While Forrestania’s existing nickel sulphide production is locked
processing, marketing and corporate divisions to ensure its up in contracted offtake agreements with BHP Nickel West and
Forrestania operations remained robust. And now, with an Chinese stainless steel producer Tsingshan, the 1,400 tpa
electric vehicle-inspired rebound in nickel prices, the innovation MREP is currently unassigned.
programme is set to deliver not just survival but a platform for
growth at the near-$1 billion company. “With significant interest in this new product, including from
parties related to the electric vehicle sector, we have hosted
For the March quarter, Western Areas boasted mill production many site visits in recent months and have also received
of 4,287t of nickel at unit cash costs of $2.71/lb nickel-in- indicative offtake terms,” Western Areas managing director Dan
concentrate. That effort led to positive cash flow of $16.9 million Lougher said.
for the quarter, allowing the company to emerge from the
prolonged downturn in the nickel market with a healthy balance Western Areas has begun construction of a dedicated $3 million
sheet comprising of no debt and $154.1 million in cash and filtration and bagging facility and has already started marketing
receivables. discussions with potential offtake partners.

That performance will contribute to full-year production figures “We will soon commence dispatching samples to a select
of 21,000 tpa nickel-in-concentrate production as the company group of potential customers as part of securing a new offtake
continues to pull away from the depths of the nickel downturn. agreement,” Lougher said.
Since June 2017, Western Areas shares have lifted more than
70% as investors begin to recognise the structural work the Electric future
company has put into all facets of its business. While the company expects the high-grade concentrate to
attract a price premium, it is also eager to pursue opportunities
“Innovation has been key to positioning ourselves for the uplift in the burgeoning EV space.
in the nickel price,” managing director Dan Lougher said. “We
were the first mover into supplying concentrates to the roasting “The MREP produces a plus-45% nickel concentrate which
process – which has paid dividends. We were the first to apply we want to take into the EV supply chain,” Lougher said. “The
bioleaching to improve recoveries and we were one of the first volumes aren’t huge at the moment but we can pursue that
to pursue nickel sulphate opportunities for the battery market. market because the 1,400 tpa doesn’t have a contract currently.”
We are not frightened of doing things differently to our peers.”
Western Areas will be placing its new supply into a market
MREP revitalised by the growing recognition of nickel’s place in the EV
Most prominent among Western Areas’ innovations is its revolution. While lithium, cobalt and graphite have dominated
investment in the mill recovery enhancement project (MREP) the EV discussion to date, nickel – in the form of nickel sulphate
at Forrestania where post-commissioning ramp-up started last – remains the largest component of a lithium-ion battery.
month.
Lougher has been a keen observer of the EV revolution and has
The MREP circuit will recover nickel extracted from Western witnessed a shift from speculative predictions about the global
Areas’ patented BioHeap process, to be used on existing tailings uptake of EVs to a widespread acceptance they will largely
material. The process will produce 1,400 tpa of high-grade replace traditional vehicles over the next 30 years.

“We believe the EV sentiment because there is a lot of positive
language from analysts, banks and investors,” he said. “Instead
of speculating whether EVs would impact on the car market, all
the banks are now making forecasts based on high, low and
mid-range scenarios.”

Australian nickel sulphide miners have the added advantage of
being able to produce the EV-friendly nickel sulphate product

more cheaply than nickel laterite and nickel pig iron (NPI) such that it has already launched a $32 million early works
competitors. programme.

Lougher believes this could lead to a stratification of the nickel Lougher said the acquisition and subsequent development of
market. Odysseus demonstrated Western Areas’ clear commitment to
reinforcing its nickel credentials.
“The sulphide market will be key because it is the main source
into the sulphate market and laterites only come into play at a “We haven’t been distracted by gold or by lithium, our strong
higher cost,” he said. focus is on development of a third mine and Odysseus gives us
that organic opportunity,” he said. “We bought those Cosmos
We think that demand will result in a two-tier nickel price with a assets during the downward part of the cycle but it is a good
floor price for Class 1 nickel sulphides emerging.” project with a 10-year mine life which will produce a good
concentrate product. And, it will come online in 2022-23, just as
Adding further encouragement to nickel players considering the nickel sulphate market is predicted to take off.”
their position in the EV market is growing uncertainty around the
chemistry mix within batteries. The current standard mix of 6:2:2 At Forrestania, exploration is being ramped up in 2018 as
(nickel: cobalt: manganese) could be superseded by an 8:1:1 the company returns to the New Morning and Diggers South
mix in the future as end-users grow increasingly uneasy with prospects. The success of the BioHeap process in the MREP at
higher prices and the ability to source ethical supplies of cobalt. Forrestania has offered impetus to such prospects.

“That transformation hasn’t hit the market yet so there is growth “Using the bioleaching could open up new nickel sulphide
potential still to come,” Lougher said. opportunities at Forrestania and across WA,” Lougher said. “At
New Morning, we can produce a nickel sulphate solution which
Despite the EV market’s rising influence, stainless steel remains can be put through the back-end of the MREP and we will also
nickel’s bread-and-butter and even here supply/demand return to Diggers South.
dynamics are positive.
“This innovation allows for the treatment of lower-grade sulphide
“Many scenarios could play out in the EV market but the stainless material and it works with copper, zinc or any other sulphide.
steel market is still the main indicator of where nickel is at,” In the next 2-3 years we will have both tank and heap leaching
Lougher said. “You have to be sensible and respect stainless so will have the opportunity to demonstrate how it works to
steel’s importance to nickel and there is good projected growth other groups. In this price environment there are a lot of lower
in that sector which will be the main driver of a nickel deficit.” grade projects coming out of the woodwork to which it could be
applied.”
The global nickel supply chain has undergone a number of
structural shifts in the last 15 years as the emergence of NPI Western Areas’ innovative approach goes beyond science.
producers in first China and now Indonesia has flooded the The company had had previously sold 45% of its concentrate
market with cheap nickel products. to Chinese cathode producer Jinchuan but a new contract
with Chinese stainless steel producer Tsingshan which will see
The change resulted in the closure of several nickel sulphide nickel payability increase.
mines however the resurgent spot price has led to some miners
to consider restarts. Lougher is unperturbed by the turnaround. After three years of testwork on the Western Areas concentrate,
Tsingshan is confident it can handle nickel concentrate in its
“As we get into a higher price environment, there are going to roasting plant to produce a high-grade oxidised product which
be operations which are dusted off but the volumes are not big can be blended with low-grade laterite ore and fed directly into
enough to have a structural impact,” he said. stainless steel converters.

Growth opportunities The Tsingshan deal is another example of Western Areas’
Western Areas itself intends to provide the market with more willingness to pursue alternative strategies to maintain its
nickel sulphide concentrate supply of its own via organic growth position in both the upward and downward cycles of the nickel
at both Forrestania and its emerging Odysseus project. sector.

Acquired in 2015 as part of the company’s purchase of “We sit today with a nickel company which is benefitting from
Glencore’s Cosmos mining complex in Western Australia, stable demand and a move towards a higher price environment,”
Odysseus is currently subject of a DFS. Lougher said. “The equation is going to get quite exciting.”

The company’s confidence in the project’s economics is

DIGGERS & DEALERS PREVIEW

Admiral Bay to spin
around Toronto

Metalicity Ltd is to spin out The Admiral Bay IPO will free Metalicity to pursue its battery minerals exploration strategy
its Admiral Bay asset into a
new TSXV-listed vehicle in an ef- zinc market remains strong and the ap- the time and resources to put into them
fort to find a better valuation for petite is still there, it should be a success previously.”
the large zinc asset. on the TSX.”
Metalicity’s battery minerals portfolio
Metalicity announced in late Kimberley is currently raising $C2 mil- spans lithium, cobalt and graphite in WA.
May it would vend the Admiral lion in seed capital and will raise a fur-
Bay, Napier Range and Emanuel ther $C25 million in the IPO. Payments to In the Pilgangoora lithium district, the
Range zinc projects – in West- Metalicity will be staged around comple- company has identified 25km of pegma-
ern Australia’s Kimberley region tion of the seed capital raising and the tites, including four high-priority targets
– into Kimberley Mining Ltd in IPO with the final $C3 million payment close to Pilbara Minerals Ltd’s namesake
exchange for $C12.5 million in coming 24 months after the IPO. project.
cash and 25 million shares. Met-
alicity will retain 40% of Kimber- Such consistent funding will be wel- The company intends to undertake
ley following a proposed $C25 comed by Metalicity as it redirects its ef- more detailed mapping and closer
million IPO and listing on the forts into battery minerals exploration in spaced sampling at both the Pilgangoora
TSX-V by Kimberley. the Pilbara. North and Wodgina South tenements in
the coming months.
Metalicity managing director “That will be the focus for Metalicity
Matt Gauci described the deal now,” Gauci said. “We just haven’t had At the Yerrida cobalt project near
as a “win-win” for both compa- Meekatharra, Metalicity plans to test the
nies, saying Kimberley would be Matt Gauci widespread cobalt-copper mineralisation
well-placed to progress the as- identified over an area of 10sq km.
sets on a board which showed a
greater appreciation of large-scale zinc “There has been limited drilling into
projects. that cobalt horizon but it is clearly coming
from somewhere,” Gauci said. “We need
“We have relationships with a num- to drill 200-300m to test the underlying
ber of North American institutions and it red bed sandstones which host the high-
was apparent zinc projects are valued a grade sulphides in this area.”
lot higher on the TSX; it is clearly a big-
ger and more educated market when it The company’s third project is the
comes to zinc,” Gauci told Paydirt. Munglinup graphite project in the Norse-
man-Esperance region of WA.
Metalicity produced a scoping study
for Admiral Bay in October 2017, demon- “There is a 1.5km EM anomaly with
strating the project – one of the largest graphite intersections in 10 holes 20m
undeveloped zinc projects in the world – below surface which we have to drill
could produce an NPV of $US900 million test,” Gauci said.
based on its 170mt @ 4.1% zinc, 2.7%
lead, 25 g/t silver and 10% barium re- “It is a portfolio which will keep us busy
source. for the next 12 months.”

However, the company’s share price – Dominic Piper
failed to respond and has drifted from
4.8c at the time of the PFS announce-
ment to 2.6c at the time of print. Gauci
believes a zinc project of Admiral Bay’s
scale will find stronger support in To-
ronto.

“It is partly about the scale of Admiral
Bay. On the ASX there are no examples
of funding this size of project but they do
it on the TSX,” he said. “Kimberley will
have a market cap of $50 million follow-
ing the IPO but we have seen companies
with similar sized assets with valuations
of more than $1 billion so we would ex-
pect a significant rerating after drilling
and a feasibility study.

“If world markets stay together and the

PAGE 70 JULY 2018 AUSTRALIA’S PAYDIRT



No modern exploration has been applied to the historic
high-grade Bellevue gold project, near Leinster

A highly skilled technical team and application of modern exploration
techniques is the strategy Draig Resources Ltd is rolling out to unearth the

forgotten treasures at the historic high-grade Bellevue gold project.

For more than 20 years, the Bellevue project in Western High-grade mineralisation remains open at depth, while
Australia’s prolific Wiluna-Norseman gold belt has been new high-grade gold shoots have emerged for further
parked. testing.

Bellevue – 400km north-west of Kalgoorlie – was one Meanwhile, Draig has also delivered from a drilling
of Australia’s highest grade producing gold mines with programme targeting the Bellevue underground mine
output of 800,000oz gold @ 15 g/t reported from the extension in an area defined as the Gap.
underground operation.
Drilling focused on the offset and extension of Bellevue
Hosted within 100km of numerous world-class gold and in late May intersected 3.4m @ 10.4 g/t gold from 576.2m
nickel mines which are operated by some of the industry’s within 4.3m @ 8.8 g/t from 575.3m down-hole and 5.9m
biggest hitters, Bellevue had flown under the radar until below the main zone and secondary zone of 0.3m @ 44.4
Draig’s intervention a year or so ago. g/t from 584.3m.

“I don’t think there are any secrets to it, it is just the simple Draig reported “abundant fine-grained visible gold” in the
fact that it hasn’t been explored for 20 years,” Draig interval which was struck 500m below surface and 190m
executive director Steve Parsons said. west of the Bellevue underground.

“Here we are now 20 years on and this belt has been Draig believes it is a potentially significant mineralised
wrapped up by the nickel companies and this is the zone and immediately started a step-out drilling
first time someone has had a proper go at Bellevue. programme which was in progress during June.
Geological knowledge has come a long way in 20 years,
as has thoughts on high-grade deposits. Geophysics has Parsons said nothing was taking the company by surprise
also come a long way with the structural understanding and it appears the story is finding its way into the market,
of deposits, and all these things are on our side. We are with Cannacord Genuity (Australia) Ltd leading an $8
good at applying these techniques and we have engaged million institutional placement in March which effectively
the right consultants to assist us.” sees Draig funded into early 2019.

Success has been swift at Bellevue, with the discovery of “Everyone likes to have a greenfields discovery, but
the Tribune lode within the Western mineralised corridor greenfields discoveries are very difficult, costly and take a
a nice gift for Draig prior to Christmas 2017. long time to find, while brownfields are an easier sell, so I
think this story will resonate a lot more with the market,”
Tribune – 7m @ 27.5 g/t gold from 92m, including 5m @ Parsons said.
37.5 g/t; 5m @ 22.9 g/t from 25m; 12m @ 12 g/t from 68m;
15m @ 6.8 g/t from 79.5m, including 0.3m @ 284.4 g/t and “The only real surprise is that it is really hard to get your
2.5m @ 29 g/t from 147.5m – is currently defined from head around that no-one has explored it for 20 years, even
surface over a strike of 550m and remains open. the nickel companies didn’t poke one hole in to see if the
Bellevue mine extended deeper. We are just so excited
Draig is drawing similarities in the style and nature of by the geology and the success we had on the first drill
Tribune to the historic Bellevue lode, with recent diamond programme with the new discovery at Tribune and the
drilling targeting extensional, infill and new high-grade recent Bellevue Lode extension drilling. I guess you could
mineralisation also coming up trumps. say that was a surprise but it wasn’t really because you
find gold deposits by putting geological thought into it
Drilling at Bellevue followed a geophysical down- and then drilling holes to find it. You are never going to
hole electromagnetic survey (DHEM), with down-hole find anything unless you are drilling holes.”
diamond drilling results including 4.4m @ 13.5 g/t gold
from 305.5m down-hole; 9.5m @ 5 g/t from 324.5m A key milestone coming up for Draig will be a resource
including 2.6m @ 12.7 g/t; 2.3m @ 8.2 g/t from 53.7m and estimate in Q3, while all eyes will be on whether drilling
0.3m @ 31.8 g/t from 64.9m and 2m @ 9.3 g/t from 92m; proves there are down-dip extensions to Bellevue.
4.1m @ 6 g/t from 92.5m; 4.2m @ 3.6 g/t from 313m and
2m @ 6.7 g/t from 198m. “We will be drilling, stepping out on the Tribune discovery
both to the north and south and at depth and looking

Draig has tied up a large package of ground Draig Resources Ltd (ASX:DRG)
in the prolific Wiluna-Norseman belt
Office: Suite 3, Level 3, 24 Outram Street, West Perth
to expand that. We are looking at coming out with a
resource statement in the July-September quarter and Project: Bellevue gold project, near Leinster, Western
from there we will be looking to grow it from the step- Australia
out drilling,” Parsons said.
Strategy: Reinvigorate the historic high-grade gold
“We will also be drilling the deeper targets which are project
below the old Bellevue mine; they are the key things we
are focusing on. On top of that, the next quarter is about 12 month share price range: 5c-30c
stepping out regionally and testing some of the targets
outside of Bellevue; targeting good grade there as well.” Cash on hand: $11.7 million (March quarter)

Draig has a significant landholding in close proximity to Market cap: $69 million
its flagship Bellevue project covering more than 4,500sq
km in one of WA’s major gold producing districts. @draigresources

While the emphasis for chief geologist Sam Brooks On the board:
will be on Bellevue, Marcus Harden has recently joined
the team to take care of the broader picture for Draig, Ray Shorrocks, chairman
which includes the Yandal, Kathleen Valley, Fisher and
North Jundee projects. Corporate finance background, with over 20 years’
experience advising a diverse range of mining
“We pride ourselves on geology and finding gold and companies during his career at Patersons Securities
that is what we think we are good at,” Parsons said. “We Ltd. Shorrocks is also a director of Estrella Resources
have a very good technical team, which has a good, long Ltd, Galilee Energy Ltd and Pryme Energy Ltd
track record of discoveries around the world. When we
looked at Bellevue and the fact that it was super high- Steve Parsons, executive director
grade and a proven mine – it mined almost 1 moz @ 15
g/t gold – and nobody had looked at it for 20 years; you An experienced geologist, Parsons has underpinned
combine all of those elements with our technical skill corporate growth and shareholder wealth through
set with the view being to find more high-grade gold, world–class discoveries. Parsons grew well-known
near an old high-grade gold mine,” Parsons said. Gryphon Minerals into an ASX200 company before it
was taken over by Canadian outfit Teranga Gold Corp
“Sam is running the near-mine discovery targeting that
we are doing and Marcus Harden, who we have used a Guy Robertson, non executive
lot in the past over a long period of time, is focused on
everything stepping outside of Bellevue looking at the Chartered accountant with extensive experience in all
broader picture of the Bellevue project and beyond.” aspects of the operation and management of ASX-
listed companies, including over 10 years’ experience
Draig’s immediate focus is on the gold potential in the as a director and company secretary of exploration
Wiluna-Norseman belt, as the “walk-up” gold targets companies. Robertson has vast experienced in his
provide an easier opportunity, however, nickel and profession having held senior positions at Jardine
other base metals potential in its ground package will Matheson Group in Australia and Hong Kong
not be underplayed.
Michael Naylor, chief financial officer and company
“The ground is highly prospective not just for gold but secretary
for nickel and base metals and possibly other elements
as well. However, we are very much focused on the gold Well versed in corporate advisory and public company
because it the easier walk-up type targets. There was a management since qualifying as a chartered
historical mine there already for us to leverage from. accountant over 21 years ago, Naylor is currently
company secretary of First Cobalt Corp, Cygnus Gold Ltd
“However, if we do come across other elements such as and Blackstone Minerals Ltd (joint) and is a director of
nickel or base metals that we think look good we will Teranga Gold (Australia) Pty Ltd
evaluate that at the time. It goes back to the fact that
we are very good explorers, so if we do come across On the ground:
some good nickel/base metals targets maybe we will
drill some holes into them. We are not scared to do that Sam Brooks, chief geologist
even though we are focusing on high-grade gold,” he
said. Responsible for taking care of all near-mine discovery
work at Bellevue

Marcus Harden, head of regional exploration

Looking at the wider regional package beyond Bellevue
into Yandal and North Jundee

DIGGERS & DEALERS PREVIEW

BCI adds salt to tasty
project mix

BCI Minerals Ltd man- which falls in the low- cus on the projects we have, continue to
aging director Alwyn est quartile of the cost build value in the iron ore assets and op-
Vorster concedes his curve for Asian suppli- timise those, but then create a new side
company is heading into ers. business which may develop into a main
unchartered territory with business of salt and SoP.”
plans to develop a major Other key highlights
salt project on the Pilbara from the PFS include Iron ore remains the key business pillar
coast. a pre-tax NPV of $335 for BCI, with the company enjoying suc-
million, IRR of 20% cess with the drill bit at its Kumina explo-
A PFS released last and annual EBITDA of ration project during the last quarter. A
month on the company’s more than $100 million, maiden resource for Kumina, part of the
Mardie project, about based on a salt price of overall Buckland project, was set to be
100km south-west of $US30/t FOB and SoP announced at the time of print.
Dampier, confirmed the price of $US500/t FOB.
technical and financial Earlier this year, BCI signed a non-
viability of developing a Following the release binding MoU with the Australian arm of
3.5 mtpa industrial salt of the PFS, BCI’s board China’s Sinosteel Group Corp Ltd over
and 75,000 tpa sulphate approved immediate development of the Buckland precinct in
of potash (SoP) opera- progression to a DFS the West Pilbara, including a proposed
tion for an overall capex Alwyn Vorster on Mardie, with the 20 mtpa multi-commodity, multi-user
of $335 million. company also keen to port facility at Cape Preston East.
identify a strategic part-
However, with no other salt projects in ner for project development. “We’ve recognised publicly that the
its peer group to benchmark against, BCI “I believe that the current investors in existing Buckland reserves of 130mt
will need to think outside the box in order BCI may be somewhat sceptical about would not be enough to underpin a new
to attract the right investment for Mardie. our ability to enter into this fairly niche road/port solution that we were planning
market/niche commodity, so we are ac- through Cape Preston East,” Vorster
“Unlike the traction the SoP players tively considering whether we should said.
have received, where one basically got actually co-operate with an existing in-
the benefit of the previous one telling dustry player who has been in the salt in- “We needed the additional resources
the story, there are no other ASX-listed dustry for many years, who understands and we were brave enough to acquire
companies promoting new salt projects,” the dynamics of the market and so on,” these underexplored tenements from
Vorster told Paydirt. Vorster said. Mineralogy [Pty Ltd] and the initial in-
“I believe that would make us a strong- dications are we have, at a minimum, a
“It does appear to me as though the er proposition and de-risk the DFS fur- medium quality resource there.
salt story will have to be targeted at very ther if there is any existing player in
specific groups of investors, rather than partnership with us, whether that’s as an “I feel that would be very attractive to
the general day traders or short-term investor in BCI or preferably as an inves- many industry players at the moment, if
traders looking for a quick uplift on the tor at the project level.” we could get that resource to 100mt or
capital that they invest because this is a Development of a salt-SoP project more in the next few months, that would
much longer-term story. forms part of BCI’s bid to diversify away be a fantastic addition to the Buckland
from a single focus on iron ore. story.”
“It is basically five years before first Vorster and his team spent most of
production and six years before sales, 2016 and early 2017 assessing oppor- BCI continues to reap the benefits of
but once it starts happening it is relative- tunities in gold and base metals before a royalty agreement over the Iron Valley
ly low-risk and will be operational for the casting their eyes over non-mainstream operation, with the company yielding rev-
next 50-70 years. That makes me believe commodities such as graphite, kaolin enue of $61 million and EBITDA of $16
that we will need a different profile of in- and heavy minerals sands. Ultimately, million from the Mineral Resources Ltd-
vestor with patient capital that wants to the company settled on Mardie which run asset in FY2017.
create long-term, stable annuity earnings had been sitting quietly in BCI’s portfolio
for their investment, and that should be for several years. Mineral Resources has flagged a po-
the focus for BCI to identify those types “We believe that $10 million against the tential doubling of the production rates to
of investors.” Mardie feasibility study may actually pro- 15 mtpa from early next year through its
vide, in the medium term, more uplift to bulk ore shuttle system upgrade.
Western Australia’s salt industry is the shareholders than us paying $50 mil-
dominated by the likes of Rio Tinto Ltd lion for 50% in a small industrial minerals “Obviously for them it’s a major break-
and Japan’s Mitsui & Co Ltd, but Vorster project,” Vorster said. through as it will reduce the cost struc-
believes there is still room in the market “Doing those sums and looking at avail- ture of Iron Valley significantly and we
for a junior such as BCI. ability made us decide that we should fo- will directly get the benefit of higher pro-
duction volumes leading to a higher roy-
Last month’s PFS showed Mardie alty for BCI in that process,” Vorster said.
could produce salt for $19.70/t FOB – a
price competitive with existing WA salt – Michael Washbourne
operations – and SoP for $250/t FOB,

PAGE 74 JULY 2018 AUSTRALIA’S PAYDIRT



Northern Minerals Ltd is It has been an impressive feat by Northern Minerals to
poised to take advantage have proceeded with commissioning to the point of
of rare earths 2.0. completion within 14 months of project approval by the
board.
Rare earths have been
overlooked, as the single “It has been an aggressive timeline we have pursued and
element commodities of the commissioning is going really well. The reason why
lithium and cobalt have we embarked on our process and in a very aggressive
taken centre stage on manner was to convince the market about security of
the back of rising electric supply so that they could see there is an alternative on
vehicle demand. the horizon,” Bauk said.

“We see this as being “Even though we are starting on a small scale, it still gives
rare earths 2.0,” Northern the market confidence that there are alternatives to
Minerals chief executive China.
George Bauk said in
reference to how politically and strategically important “At the moment, it is a matter of turning on pieces of
rare earths are becoming. equipment and everything is working as expected. It is
a daily three wins – one loss thing which happens with
“The Donald Trumps and Malcolm Turnbulls of the world traditional commissioning, but there are no fatal flaws.”
have really started to highlight the criticality of rare earths,
with the only big difference between 2011 and 2018 is As Northern Minerals
that demand is real for electric vehicles, plus we have starts to demonstrate
wind turbines, industrial robotics and other divers for the its importance to the
needs of rare earths.” rare earths sector, the
broader industry, led
Northern Minerals is well placed to becomes the world’s by Lynas Corporation,
most significant producer of the heavy rare earth, currently appears to be
dysprosium, outside of China. in better standing than
in times past.
Pressure remains on existing projects in China, as the
processing of rare earths from the country’s mines are “I think in the last 12 George Bauk
heavy reliant on in-situ leaching methods, which are not months Lynas has
environmentally friendly. succeeded and you
need that success and
Therefore, Northern Minerals’ Browns Range HREs project one with profitability
in Western Australia’s East Kimberley is being shaped as a attached to it in the
viable source of dysprosium production in the first world. rare earths market.
Given Lynas was
A major achievement has been made at Browns Range, struggling for some
with commissioning of the pilot plant performing on- time, MolyCorp was
song and due for practical completion by the end of June.

in administration, we have seen a big turnaround in the aren’t partnering with people that could inflict negative
sector,” Bauk said. opinion of them by being associated with unsustainable
work practices, which is becoming a very big topic.
“Northern Minerals is getting a lot of kudos and respect
by what we have been able to achieve and we are on Bauk said Northern Minerals fits the bill for off-takers at
the cusp of production. We’ve had a number of potential Browns Range and while pilot plant activities are just
end-users start to visit our site and are quite surprised and about to start, he hoped to demonstrate further upside
shocked at how quick we have been able to advance our in shareholder value.
project.”
“We are looking to prove our value proposition and the
One of the benefits Northern Minerals has is that it has a next step is to go downstream,” Bauk said.
different suite of rare earths to Lynas, with both companies
primed to play crucial roles in the rare earths space. “One of the issues we have is that this plant produces rare
earth carbonate that basically only has a market of China,
Northern Minerals’ dysprosium is an essential ingredient so by going downstream you are taking the mixture of
in the production of dysprosium-neodymium-iron-boron carbonate to separated oxides, which opens up more
magnets used in clean energy and high technology markets like Japan, other South East Asian countries,
solutions. Europe, the US, greater number of buyers in China, and
then all of a sudden you have a bigger demand.
It is anticipated that demand for dysprosium will hit
3,500 tonnes per annum by 2030 just for demand from “We have announced that is what we are working on and
Electric Vehices. I think if we just said we were working on the pilot plant
for the next three years, I don’t necessarily see that as a
Currently, China produces 98% of the world’s dysprosium huge attraction or selling point, so we are already talking
production and at full scale operations output from to people about what we are doing next,” he said.
Browns Range is expected to be 300,000 kilograms per
annum over the current 11-year mine life. Exploration will also be a key part of the strategy moving
forward, with a round of drilling at Browns Range to kick-
In September 2018, the company will start a new wave off in the September quarter followed by drilling at John
of heavy rare earths production to the global market as Galt later in the year.
stage one of the pilot plant comes on-stream, with most
of the professional, technical and management roles The company was the beneficiary of a $215,000 EIS grant
already recruited to run Browns Range. from the State Government for drilling.

Production from the three-year pilot plant operations will “The State Government has been extremely important in
be purchased by Lianyugang New Materials Sales Co. Ltd a number of areas and we are working with the State and
(JFMAG), a 51% owned subsidiary of Southern Rare Earth Federal Governments to get some money allocated to
Group. the road and improvements in the region. That will help
with greater access to the project for 12 months of the
Meanwhile, there is growing interest from groups outside year,” Bauk said.
of China hungry to secure supply from outfits such as
Northern Minerals. “We have had open dialogue and that is probably one
of the biggest areas that we require support from
“I was just in Germany talking to OEMs [original equipment the government, which is also very interested in the
manufacturers] and they are talking about 7-14 year life downstream processing side of things.”
cycles and the next model of the car they are designing.
They are looking at all the inputs and are making sure
they are confident inputs won’t be something that will
impact on sales,” Bauk said.

“It is really important for them to see a project like Browns
Range come on stream to give them confidence that we
don’t have to look at parts of the world that are totally
void of dysprosium, for example.

“OEMS and end-users want sustainability and
want to make sure that their supply of rare earths
passes sustainability audit requirements. They want
demonstrations of key principles in mining operations
and production practices are adhered to and that they

DIGGERS & DEALERS PREVIEW

Mincor carrying the can for
Kambalda nickel

Mincor Resources NL looms test during the second half of
as the great white hope of
Kambalda’s flat-lining nickel the year, with programmes for
district.
Bluebush and Republican Hill
As BHP Ltd prepares to
place part of its Kambalda also high on the exploration
concentrator on care-and-
maintenance following the clo- agenda.
sure of Independence Group
NL’s Long mine, Mincor is “When you make a blind
ramping up its nickel explora-
tion efforts in the district on the discovery like Cassini in an
back of recent drilling success
at the Cassini prospect. area which was considered

Mincor has reported enticing not as prospective for nickel, it
intercepts of 11.71m @ 6.13%
nickel and 6.02m @ 9.03% changes things pretty quickly,”
nickel, as well as the pres-
ence of “consistent massive Muccilli said.
sulphides” at Cassini, with a
maiden resource estimate due “We’ve got to keep drilling
later this month.
these regional targets be-
Such is Mincor’s confidence in the nick-
el potential of its now-dominant ground cause I think the key to Kam-
position around Kambalda, the company
rattled the tin for only the second time in balda is showing people we
its long history to raise $10 million for one
of the most aggressive nickel exploration have a 5-10 year sustainable
campaigns seen in the district in years.
mine plan to justify a restart,
Mincor’s plans contrast those of Pan-
oramic Resources Ltd and TSX-listed but we’re only three months
RNC Minerals, with both seeking quick
sales for their respective Lanfranchi and into a one-year programme
Beta Hunt nickel mines to focus on other
operations. A maiden resource estimate for Cassini is due this month hitting the regional targets.

“What an opportunity this is for us to “We think all the ingredients
re-establish a quality resource and re-
serve base in a world-class nickel dis- starts of Miitel and Durkin North were are there; we’re in the right district, we’re
trict,” Mincor managing director Peter
Muccilli told Paydirt. completed following the mine closures, in a high-grade nickel sulphide district

“Mincor has a key piece of the Kam- but Mincor has yet to see long-term sta- and we’re seeing indications of massive
balda story and right now we’re the only
ones who are doing any sort of organic bility in the nickel price to justify switch- sulphides in the ultramafics. We just real-
work. There may be programmes coming
from other parties, but let’s not forget out ing the lights back on. ly need to hit that contact with systematic
of those established producers, most of
them are on care-and-maintenance. Instead, the miner-turned-explorer testing to find those channels.”

“We are the only ones who are going has progressively built up its resourc- While Mincor’s long-term business
hard at regional exploration because we
are the only ones who can.” es (2.73mt @ 3.6% nickel for 99,200t) strategy is focused on nickel, the com-

Mincor placed its Miitel and Mariners and reserves (1.14mt @ 2.5% nickel for pany will soon enjoy the benefits of cash
nickel mines on care-and-maintenance
in early 2016 and has spent the best 28,200t) on ground which has historically flow coming in from mining of its Widgie-
part of the last two years consolidating
and exploring its ground holdings around produced about 740,000t of nickel. mooltha gold project.
Kambalda.
Ongoing exploration success at Cas- First ore is scheduled to be trucked
Feasibility studies for the potential re-
sini has only reaffirmed to Muccilli that 30km to Westgold Resources Ltd’s Hig-

Mincor’s future lies in nickel and within ginsville plant this month, under a one-

Kambalda. year toll treatment agreement to process

“Some of the intersections we’re get- up to 40,000 tpm from Widgiemooltha.

ting are of a quality we only see at very Based on a spot gold price of $1,748/

few places in Kambalda and the amount oz, Widgiemooltha is projected to gener-

of massive sulphide we’re seeing at Cas- ate after-tax undiscounted cash flow of

sini really points to the potential quality of $37.1 million.

that resource,” he said. “Right now we’re nearly at an all-time

“Massive sulphides generate really high in the Australian gold price, so what

special reserve grades and like any high- a time to be mining gold,” Muccilli said.

grade discovery, it re-rates the potential “If we’re going to make this work, there’s

around an area which was considered no better time than in a very strong gold

not that prospective for nickel – it was ac- price environment.

tually the last ground package we picked “We’ve only just started and of course

up in our consolidation of ground hold- we want to see how it goes and what the

ings in Kambalda. mill grades tell us. Spreadsheet mining

“We’re seeing incredibly prospective is one thing, but you always want to vali-

targets around Cassini which are both date it with the mill. We’re very pleased

shallow and under thin cover. We just to have it up and running when we said

feel this has camp-scale potential for we would and in the timeframe we said

finding more new nickel mines.” we would.”

Cassini is the most advanced of sev- – Michael Washbourne
eral prospects Mincor will look to drill

PAGE 78 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Lynas on track for profit

Lynas Corporation Ltd is back a mining company, even though
with a vengeance and primed
to show investors that rare earths our value comes from under the
can be a profitable business prop-
osition, according to managing di- ground at Mt Weld, because min-
rector Amanda Lacaze.
ing is literally a relatively small
Since slumping to its lowest ebb
three years ago when its value part of our overall operations,”
plunged to just $3 million, Lynas
has climbed off the canvas over Lacaze said.
the past 18 months and is now
on track to record its first full-year “The quality of the resource is
profit since FY2000, incidentally
when it was a gold producer. very important to us, it certainly

Lynas returned a half-year profit gives us overall cost benefits
of $78.69 million after tax and re-
ported positive cash flows from because we simply don’t have to
operating and investing activities
during the March quarter. Those process as much material.”
results have been reflected in the
company’s share price peaking For many years, Lynas was lad-
at $2.96 in May, its highest levels
since early 2014. en with heavy debt which almost

While Lacaze admitted her saw the company collapse in
company was not out of the
woods yet, she was confident investors 2015 at the same time US-based
would continue to gravitate towards Ly-
nas and the resurgent rare earths sector. Molycorp Inc went bankrupt.

“In the first six months of this year, However, debt is now at much
we’ve delivered an EBITDA in excess of
$80 million and we’ve actually said to the more manageable levels. Sub-
market that our strategies are about get-
ting repeatability in those results,” Laca- ordinate debt was slashed from
ze told Paydirt.
$US225 million at the start of the
“We’ve acknowledged that we’re not
completely there yet, but everything last financial year to $US15 mil-
we’re doing is to take us down that sort
of track so that we can deliver a repeat- lion by the end of the March quar-
able EBITDA, which puts us very much
firmly in the industrial space rather than ter, aided by the conversion of
the mining space which tends to have a
bit more volatility. Amanda Lacaze bonds to equity. Net debt stood at

“Our shareholder register has trans- $US170 million at the time of print.
formed over the last year. We have a
much better representation of institution- earths processing plant in the world and “I think we were at one stage de-
al investment on our register and I think
that is because they do see that there is a is largely credited with being the vehicle scribed, quite affectionately, as a debt-
strong thesis for our industry, particularly
when all of our materials go into technol- that helped turn Lynas’ fortunes around. ridden basket case, but I’m expecting at
ogy applications.
It currently produces 22,000 tpa, but some time soon people will start to won-
“I think our investors see there is sig-
nificant room for growth and significant that is set to increase to 25,000 tpa from der about our lazy balance sheet, so you
room for profitable growth.”
January, as part of the $35 million Lynas can never get it completely right,” Lacaze
Lynas is the world’s leading producer of
rare earths, in particular neodymium and NEXT programme. said.
praseodymium (NdPr), outside of China.
The company sources its material from “It’s impossible to grow value in any “Our senior secured lender [JARE] is
the Mt Weld mine, about 35km south of
Laverton, and processes it through the other way if you’re not actually producing actually a special purpose vehicle formed
Kuantan chemical plant in Malaysia.
the material,” Lacaze said. in Japan and the partners in that vehicle
Kuantan is the single biggest rare
“The process of making the operations are our commercial partners, Sojitz and

work here is a complex chemical one and JOGMEC, which is part of the Japanese

one of the things which is really impor- Government. We see that partnership as

tant to note is every orebody behaves dif- a key pillar in our success and we expect

ferently. We are treating a naturally oc- that we will continue that relationship into

curring material and our production team the future.”

has developed really significant skills Competing in a Chinese-dominated

and IP in terms of the processing the Mt market against a plethora of Chinese

Weld material. producers has never once fazed Lynas,

“We don’t put our hands up and say according to Malaysia-based Lacaze,

we’re the world’s experts on processing who quipped her company was “quite

rare earths, but do say that we are the famous in the Chinese rare earths mar-

experts on processing our rare earths; ket” and a much larger player than many

that is, the rare earths that come out of would realise.

Mt Weld.” “China’s strength isn’t necessarily a

Total rare earth oxide production dur- problem for us because every problem

ing the first-half of FY2018 was up 17% is an opportunity in disguise,” she said.

on the previous reporting period to “There is significant demand for a non-

8,839t, with NdPr production up 6% and Chinese supplier of rare earths and Ly-

improvements achieved in the finished nas fills that demand. We see ourselves

product quality of lanthanum and cerium. as a key player in the rare earths market

Lynas is currently tipping cash into a and that means we need to be able to

mining campaign at Mt Weld, only its participate in the Chinese market as well

second ever major mining campaign at as outside the Chinese market.”

the operation. – Michael Washbourne
“We don’t really think of ourselves as

PAGE 80 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Rare eyes on Arafura

The anticipated shortfall of kins also joining the team
neodymium-praseodymi- as project manager.

um (NdPr) in China early next Previous feasibility stud-

decade has put the spotlight ies have estimated $US680

firmly on Arafura Resources million is required to devel-

Ltd’s Nolans rare earths pro- op a 14,000 tpa TREO op-

ject in the Northern Territory. eration at Nolans, with op-

China controls more than erating costs of $US6.23/

95% of the world’s rare kg TREO (or $US24.38/kg

earths market, but recent NdPr oxide) ranking Arafura

structural changes targeting among the lowest-cost pro-

illegal and unsustainable op- ducers in its peer group.

erations has some analysts Lockyer said the com-

predicting the country will pany would ramp up project

soon become a net importer financing and off-take dis-

of NdPr. cussions during the second

There is also a strategic half of the year.

push from within China for “We’ve had ongoing cus-

bigger players to consolidate tomer engagement now for

operations. several years, but what’s

Reported losses from different about this year is

the dominant China North- Arafura has been granted environmental approval for its Nolans rare the frequency with which

ern Rare Earth Group early earths project in the Northern Territory we go and visit those poten-

last year sparked a 200% tial customers and potential

increase in the NdPr oxide price to al- porter of this material, there’s very few off-take partners,” he said.

most $US80/kg over the next 12 months. projects other than ours out there that “In previous years, we might go and

While prices tailed off significantly in the are able to feed a significant volume of visit them and provide them with an up-

final quarter of 2017, NdPr oxide traded NdPr into the market.” date of the project maybe once or twice

comfortably around $US50/kg during the Arafura’s ambitions to put Nolans, a year, whereas now we’re pretty much

first half of 2018. about 135km north-west of Alice Springs, visiting them every second month to give

Interest in NdPr remains high due to into development received a huge boost them updates on our progress and make

their requirement in electric vehicle mo- in May when the Federal Government sure they’re comfortable with us as an or-

tors. EVs use an additional 1kg of NdPr granted environmental approval for the ganisation to be a potential supplier.”

per electric drive motor over the 0.7kg project, ticking the final box in the overall Arafura has also started the critical

which goes into a standard vehicle. environmental approvals process. fourth stage of its acid bake continuous

According to current studies and mar- The NT Environmental Protection Au- pilot plant which Lockyer believes could

ket appraisals, the advanced Nolans thority approved the company’s environ- save the company substantial capital in

project is capable of meeting 5-10% of mental impact statement last December. the long run.

global demand for NdPr – a fact not lost “Both the NT EPA and the Federal The fourth stage (of seven) was de-

on Arafura’s managing director Gavin Government go through the project in layed due to the lateness of the equip-

Lockyer. quite a lot of detail, so if there was any ment needed to operate the pilot plant at

“China is expected to become a net im- blaring gaps in our engineering or our a significantly larger scale than the previ-

porter in the early 2020s and our timeline processes then it would be flagged here,” ous three phases.

has us into commissioning by the end of Lockyer said. “We thought it was important to spend

2021, so provided we stick to our sched- “The real significance of this will come a bit more time and do it at a much larger

ule and achieve what we are setting out when we’re having off-take discussions scale than we had previously, but we’re

to achieve, then I think we have a pretty with potential customers because they already very comfortable with the chem-

bright future ahead of us,” Lockyer told will be quite large magnet manufactur- istry and the fact the flowsheet works,”

Paydirt. ers who have reputations they don’t want Lockyer said.

“There’s been a lot of investment over damaged by engaging with organisations “This next phase is about equipment

the last couple of years into the lithium who don’t have a sustainable and social selection and making sure we’re getting

space in particular, and to a lesser ex- licence to operate. We see this as a big the vendors involved so that hopefully

tent cobalt and graphite but I think a lot tick in terms of us now being able to re- they can give us a form of equipment

of the end-users now have their lithium ally advance our potential off-take dis- guarantee for when we build the big

and those other critical metals secured cussions, but also for potential strategic plant.”

in terms of potential off-takes. So, you partners to come in and invest into the Final piloting test work is now due for

would think the next logical step would project.” completion in September, with Arafura to

be looking at the elements which go into Arafura is on track to complete a DFS send subsequent larger samples to po-

the electric motors, of which NdPr are on Nolans before year’s end. Hatch Ltd tential customers.

key ingredients. was recently appointed to manage the – Michael Washbourne
“With China likely to become a net im- engineering studies, with Stewart Wat-

PAGE 82 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Bouncing back, but skills to lack

Recruitment expert HAYS has brought Stuart Tonkin mining and resources. The activity might
music to the ears of mining, resourc- have changed but the workload has been
es, energy and oil professionals, with The phenomenal job growth across there consistently in my 25-year career.”
the release of the 2018/19 HAYS Salary various professions in the resources sec-
Guide indicating that employers are due tor in 2017 can be linked to better com- One thing which has changed since
to loosen the purse strings this financial modity prices and improved confidence Tonkin was enrolled at WASM is the job
year. in general business conditions. prospects upon graduation.

It was determined that 57% of the As an up-cycle in the mining industry Tonkin – a mining engineer with Hon-
3,000 or so organisations surveyed in begins, industry groups are mindful of ours WASM plus a WA First Class Mine
the respective sectors would increase the inevitable skills shortage Australia Manager’s Certificate – said while being
salaries by about 3%, however, the ac- will face. involved in the mining sector was an ex-
tual value was likely to be less. citing proposition, studying engineering
During the last mining boom, there was was seen as a practical path to employ-
Nevertheless, the HAYS Salary Guide a critical shortage of skilled and semi- ment for him.
clearly reflects sentiment and confidence skilled people to take projects through
building in the resources sector, particu- construction, development and opera- “The concept for me was 100% em-
larly in Western Australia. tion. ployment out of the School of Mines, so
if you were going to go and study for four
“Given continued labour market While mineworkers were generously years the sentiment was that you were
strength it is no wonder these profes- compensated during the boom, effects of guaranteed employment and it was true,”
sionals believe the time is right for wage the bust that followed – one of the most Tonkin said.
growth. As a group, they have higher ex- severe in history – remain an ongoing
pectations for a salary increase than they concern for companies trying to attract “You weren’t doing it for the practice
did this time last year. This year, 18% of the requisite talent for their needs. or the academic side of things; you were
those surveyed in Western Australia ex- doing it to get a purposeful job. That was
pected to receive an increase of 6% or Northern Star Resources Ltd chief back in 1993 in a period when mining
more, up from 13% last year,” HAYS sen- executive Stuart Tonkin, who studied at wasn’t booming. I knew nothing about
ior regional director of HAYS Resources the West Australian School of Mines in mining, apart from my high school send-
& Mining Chris Kent said. Kalgoorlie 25 years ago, told Paydirt ing me up there for a couple of days
there needed to be a better understand- which continues to happen today.”
“The biggest industry for HAYS and ing of the mining industry than currently
one of the largest industries in [Australia] to encourage young people to join the In 2016, Perth’s Kent Street High
the mining, resources and energy indus- sector. School started the Centre of Resources
try, was the fastest growing jobs market Excellence (CoRE) a science, tech-
in 2017. According to jobs ad growth on “There is a massive [knowledge] gap nology, engineering and maths-based
SEEK, mining, resources and energy in the community about the resources programme aimed at encouraging par-
sectors saw a 67% job ad growth last sector. If they do have the knowledge, it ticipation in the State’s resources sector
year.” is a very outdated view of what mining through hands-on learning in mining, en-
is about and the application of technol- ergy and earth sciences.
Employment figures for geoscientists ogy. People have visions of mining being
grew strongly in 2017 however the mo- all about people going underground, it is Despite the lure of good compensation
mentum has failed to continue into early very different to what mining actually is in full-time roles, there is forecast to be a
2018. about and it is not until you take people lack of mining engineers available to the
out to see operations that they realise sector once the boom hits full tilt.
“The final quarter of 2017 marked the that,” Tonkin said.
fourth successive quarter of employment Minerals Council of Australia interim
growth, so the decrease in employment “There is a gap in that understanding chief executive David Byers told Paydirt
prospects during the first quarter of 2018 and there are different business cycles, it was concerning that entry and gradu-
is disappointing, particularly for those but I don’t think that has ever changed in ation rates into Australia’s mining engi-
who have been seeking work for more neering schools had fallen to “very low
than a year,” Australian Institute of Geo- levels”.
scientists spokesperson Andrew Waltho
said. “That is partially reflective of the cycle;
you don’t have expansion people leave
Waltho said the recovery in geoscien- and come back when the industry is in an
tist employment, especially in exploration expansion phase. Rather than explicitly
and mining, had some way to go after looking at the intake of mining engineers,
employment cooled 4% in the first quar- we have to look at broader engineering
ter of 2018 following growth last year. degrees as being the foundation stone
and then potentially having a Masters
Unemployment nationally among geo- degree in mining engineering which will
scientists increased from 7% at the end bring you a broader range of people over
of December to 11% at the end of March time,” Byers said.
2018.
Byers agreed with Tonkin’s view that
Meanwhile, underemployment re- assumptions about the mining industry
mained at 12.9% compared to 12.3% needed to be changed, particularly the
during the same period. negative perceptions about the boom/
bust nature of the industry.

PAGE 84 JULY 2018 AUSTRALIA’S PAYDIRT

“I think that has been inhibiting some The West Australian Government launched the first five Jobs and Skills Centres in
graduate intake,” Byers said. Perth in May.

“We have to reform that by educating The centres are billed as one-stop-shops for students, jobseekers and career chang-
people much more comprehensively on ers looking to improve their skills and job prospects, as the Government looks to create
the end uses of mining commodities so an increase in access to job-related services for Western Australians.
people can draw linkages on the impor-
tance of the sector and they don’t just Free professional and practical advice on training and employment opportunities,
see it as something cyclical. It is impor- career advice and apprenticeship and training information are to be provided by staff
tant they see the products the industry at the centres, with engagement with local communities and industries a priority so the
produces are vital to everyday life and we needs of both jobseekers and employers can be determined.
need to draw that comparison.”
They will provide businesses with free assistance to develop their workforce, includ-
Independence Group Ltd managing ing recruiting new workers, apprentices and trainees, and developing the skills of their
director Peter Bradford has frequently existing workers.

raised the issue through his position as Aboriginal people are a key priority client group for the new services. Extensive

a board member of both the WA Min- stakeholder consultation has been undertaken on how best to incorporate and enhance

ing Club and Association of Mining and the services previously provided, to ensure Aboriginal people benefit from the new

Exploration Companies. He told Paydirt service delivery model.

the industry needed to think more deeply The first five metropolitan Jobs and Skills Centres are now open. A further eight

about how it attracted young people to centres as well as a number of outreach services will be established in regional areas

the sector. throughout WA during 2018/19.

“Individuals should take the opportunity

to talk about the industry passionately to Kalgoorlie. From my point of view, there FIFO and it comes up against its chal-

high school students,” Bradford said. “If is a gap in something there because un- lenges when you are dealing with com-

they don’t hear from us, then we are fail- employment in WA is at an all-time high munities. Trying to encourage people to

ing the industry. The cost pressures we and yet there are 1,000 jobs available to relocate is another battle.

are currently seeing rise demonstrates anyone that turns up in Kalgoorlie today.” “There are lots of towns in Australia

the work industry needs to do to proac- It was not only direct mining-related where industries have changed and there

tively attract people. Through the recent jobs Tonkin was referring, rather the is idle labour, but getting that idle labour

downturn Independence didn’t take its flow-on opportunities in retail, hospitality to uplift is another hard thing to do.”

foot off the accelerator when it came to and other sector borne from the pick-up Compounding Australia’s problems to

vacation and graduate programmes be- in mining activity. satisfy its skills requirements was the

cause we knew we would need them as However, people tend to leave mining abolishment of the 457 skilled migration

we came out of the trough. towns like Kalgoorlie as quickly as they visa this year, which had been in place

“As an industry we need to do that all arrived once the cycle turns. Many of for the past 20 years.

the time because if we can’t demonstrate them become reluctant to base their live- The 457 visa programme enabled min-

there are jobs there when they leave uni, lihoods on such boom-bust scenarios. ing companies to apply a quick-fix solu-

high school students won’t even consider “The attitude is changing in mobility tion to finding experienced professionals

mining-related courses in the first place.” as far as where people will go for a job. for roles which otherwise wouldn’t have

Mineworkers in Australia are the best I think there is plenty of work there and been filled.

paid on average of any industry, with sal- plenty of people available, it is their will- With the programme now off the ta-

aries of about $140,000 per year taken ingness to get up and move to where the ble and Australian mine professionals

home. work is,” Tonkin said. increasingly being lured offshore, local

Compensation in the mining sector has “You just can’t get the local talent you mining companies foresee mounting

always been lucrative however not every- need and that is when the local compa- pressure in keeping home-grown talent

one is enamoured by the conditions cer- nies try to compete with money to attract grounded.

tain roles in the mining sector demand. the same pool. That is done through “Globally, there is growth and that is

Issues associated with peeling out Australian skills.

FIFO culture have been So, there is this one-way gate

well-publicised and it re- in Australia where we are

mains an area of contention not allowing migration with

for families weighing up the skills that we need and

participation in the sector. yet we’re allowing our Aus-

Northern Star’s opera- sies to expatriate away. With

tions are largely Kalgoorlie- exchange rates against the

centric and Tonkin is wit- US dollar and other things,

nessing first-hand the lack it is quite attractive and they

of local talent available in can stay here and get a 3%

Australia’s gold capital. increase in their pay or they

“The saturation is just not could go offshore and get a

there anymore,” he said. 40-50% tax benefit by being

“I think Kal has done a non-resident working in Af-

some pro-active stuff like rica; we just can’t compete,”

the Kal Jobs Expo in Perth. Tonkin said.

From that event it was evi- – Mark Andrews
dent that there are 1,000 With automation playing an increasingly bigger role in the mining sector,

jobs available today in a different set of skills will be required by mine workers in the future

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 85

DIGGERS & DEALERS PREVIEW

South America/Africa to
rival Australia

Rising competition from they are going to be forced to
mining friendly jurisdic- revaluate the project. At a time

tions in South America, Can- when we are really trying to at-

ada and Africa is the impetus tract investment that is not a

needed for Australia to ad- good signal to send to overseas

dress national reform policies, investors.

according to Minerals Council “It is true to say that Australia

of Australia interim chief ex- is an attractive province, we

ecutive David Byers. have world leading resources,

Australia benefitted greatly but if we can’t have efficient ap-

from the commodities re- provals processes in order to be

bound of 2017, with more able to monetise that asset then

export revenue – $207 billion we will lose out to international

– coming from the resources competitors.”

sector than all other indus- Byers said reducing the

tries combined. amount of overlap in state and

Iron ore, coal, gold and federal approvals would help re-

LNG provide the backbones duce the time taken for projects

for Australia’s mining exports to proceed and help protect the

and with new industries re- investments made in Australia.

lated to the battery minerals The MCA is not seeking

sector dawning Byers told wholesale changes, just more
Paydirt that improving ef- In August 2017, the Productivity Commission estimated that adopt- efficiencies, particularly in the
ficiencies in approvals pro- ing its 2013 proposals to make major project assessment processes area of environmental approv-
cesses was critical for the more efficient would reduce project delays and save the Australian als.
economy approximately $240 million a year “To give you an idea about the
country to remain the destina-

tion of choice for investment. impact delays in the approvals

“Nothing is ever static, so we need in country was of great concern. process can have, a one-year delay on

to ensure that we maintain our reform He said one lithium developer in West- a $1-2 billion project can reduce the net

agenda and that is one issue on the ho- ern Australia feared having to re-evalu- present value by up to 13% and can cost

rizon where our capacity as an industry ate its lithium oxide project due to delays $1 million a day. We mightn’t tend to think

to reach its potential and create jobs and in starting construction as the environ- of this in terms of the traditional kind of

national prosperity is at risk due to the mental approvals process had lagged. commodities in the mining sector, but it

fact we have a national policy reform “We are in danger of making things is even becoming a concern in the new

agenda which is at a standstill,” Byers very, very difficult for producers, even in areas of growth in the industry, such as

said. that new sector of the industry, to be able lithium,” Byers said.

“It takes far too long for a project to to develop projects. The great concern In addition to regulatory reforms, cor-

be approved in Australia. is our capacity to get projects porate tax reform in Australia is also

We have overlapping state together in a relatively quick required to lure investment and remain

and federal approvals pro- space of time, which is dimin- competitive on the international stage.

cesses and the period over ishing all the time because of Byers said $100 billion in corporate tax

which a project can be ap- all the regulatory approvals was collected by the Government in the

proved is extending all the and regulatory burden. There past 10 years, with a further $80 billion in

time. That is a real issue and seems to be currently little fo- royalties also scooped off the top.

a real challenge, and that cus on being able to reform Last month, the MCA provided a sub-

whole issue of improving ef- those areas,” Byers said. mission to the House of Representatives

ficiency and environmental “The lithium investor I spoke Standing Committee on Economics in-

assessment and approvals with has invested a substan- quiry into the business impediments to

processes is one where we tial amount of money in a business investment in Australia.

have really dropped the ball David Byers lithium processing plant and MCA’s submission set out a compre-
in terms of reform.” came to Australia thinking this hensive reform agenda for consideration

Byers said that while Aus- was going to be an attractive and stated that Australia’s mining sector

tralia boasted a relatively stable political environment – great resources – but their would not achieve its potential to create

regime and there were some exciting op- experience so far has been one of de- jobs and national prosperity while the re-

portunities on the horizon in the battery layed approval processes. The concern form agenda remained at a standstill.

minerals space, particularly in the lithium they related to me was that if they can’t – Mark Andrews
sector, the time taken to develop projects get started within the next 3-6 months

PAGE 86 JULY 2018 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Haoma back in PrimaryMarkets

After reintroducing Gary Morgan’s
Haoma Mining NL to the investment
community, PrimaryMarkets Ltd is target-

ing a host of ASX-listed companies to

join its growing platform of private trading

hubs.

Haoma’s well-publicised exit from the

ASX in February meant the $100 million

company was bereft of options to access

liquidity and investment funds, while a

group of 2,246 investors on the Haoma

register were left with untradeable secu-

rities.

Haoma fell foul of the ASX after a dif-

ference in opinion relating to the com-

pany’s conglomerate gold nugget finds

at Just-in-Time and Tassie Queen during

the height of the conglomerate gold rush Haoma’s shareholders can look forward to trading on the PrimaryMarkets

in Western Australia’s Pilbara region. blockchain platform
With another wave of aggressive ex-

ploration tipped to happen on the Pilbara nies that are market capped at $75 mil- support the unlisted companies and try

conglomerate front, Haoma is expected lion or less on the ASX with not much and make them as healthy, with liquidity,

to be active and its shares will now be liquidity,” Capp said. as we can,” Capp said.

readily available to be traded on Primary- “Some of them don’t have liquidity for Prior to completion of its IPO, the big-

Markets’ Haoma Ecosystem blockchain a very good reason, others just because gest on the ASX for more than decade,

platform. they have gotten smaller, they may have Jupiter Mines Ltd, had been engaged

PrimaryMarkets’ mantra is to deliver li- listed at 20c or whatever and suddenly with PrimaryMarkets over its platform.

quidity for unlisted securities and invest- they are at 1c and no-one wants to know Capp said blue chip stocks in the ilk of

ments, by connecting companies with about them. We are starting to reach out Jupiter were PrimaryMarkets’ target. He

its database of 34,000-strong investors, to them and say: ‘look there is an op- said its blockchain platform was becom-

two-thirds of who are Australian. tion now, you can actually delist, reduce ing increasingly favoured by companies

PrimaryMarkets was established over your huge cost imposition and all the re- looking to delist from official listings and

two years ago and has product trading quirements around it in the public market seek alternative trading hubs.

hubs dispersed across various industries space’.” “We are talking to a couple of compa-

and sectors including retail, agriculture, Capp said PrimaryMarkets could sup- nies at the moment that are seeking to

bio-farm, technology and finance. port companies through offering things delist and named us as their market of

“We are here to support anything be- like independent research or commen- choice because they needed to for ASX

cause it is bloody hard to raise money tary notes to boost their investment cas- requirements. We can’t reveal names,

and very hard to get liquidity, which is es. but they are well-known, and approached

why we started two-and-and-half years “One of the problems for unlisted com- us last year. We haven’t spent much on

ago to address this challenge,” Primary- panies is that no-one knows about them marketing yet but have had a lot of refer-

Markets chief executive Nicholas Capp and there is no official coverage, so we rals. We are looking to expand in this cal-

told Paydirt. do that to support them and we really endar year and get to 50, what we term

Capp said the mining sector had not promote them by saying these compa- blue chip, companies across various in-

been overly targeted by PrimaryMarkets nies are there and there is some good dustries trading on our market place with

yet, however, with strong mining and monies among them. Our job is to try and private trading hubs and then build from

resources experience on there,” he said.

the team in founder Gavin “If you look at the top 1,000

Solomon (former executive private companies and then

chairman of Helmsec) and the 1,100 market capped at

general manager of opera- less than $75 million on the

tions and settlements Joti ASX, we are looking to get

Singh (also formerly at 50-100 of those as a mini-

Helmsec plus Estrella Re- mum and build from there.”

sources Ltd, Carabella Re- Since early 2016, Prima-

sources Ltd and Endocoal ryMarkets has reported 219

Ltd), the company is well opportunities listed with in

positioned to do so. excess of $68 million securi-

“One of the big areas of Haoma delisted from the ASX after a dispute over its conglomerate ties traded.

focus we are targeting this gold nugget finds in WA’s Pilbara – Mark Andrews
year is the 1,100 compa-

PAGE 88 JULY 2018 AUSTRALIA’S PAYDIRT

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SAREIC PREVIEW

SA gathers some pace

Ahead of the South Australian Resources and Energy Investment Conference on
July 30-31 Paydirt looks at the state of SA’s mining rebound.

PAGE 90 JULY 2018 AUSTRALIA’S PAYDIRT

South Australia is yet to expe- Association of Mining and
rience the heightened level
Exploration Companies
of investment and exploration
[AMEC] Convention in Perth
activity of some of its Australian
last month.
peers, however, a momentum
“The Government’s focus
shift is on the horizon.
in their first 100 days has
Rex Minerals Ltd, which has the Hill-
side copper project, has demonstrated been on energy and energy
there is appetite for copper stories in the
State by raising $6 million, while Leigh security. There is no rubber
Creek Ltd (see page 107) found strong
support for its $8.7 million SPP and capi- on the road yet, but that will
tal raising from both institutional and so-
phisticated investors last month. change with an advisor to the

Furthermore, acclaimed explorer Al- minister also being appointed
lan Kelly has shown a desire to unearth
South Australia’s next big IOCG deposit recently.”
by adding the Burt Lagoon exploration
licence to the Riversgold Ltd portfolio in SA was one of the big
June.
achievers of the last minerals
Riversgold already had the Churchill
Dam IOCG project in its keep, with Burt boom, recording the second
Lagoon, 100km south of Oz Minerals
Ltd’s Carrapateena and Khamsin plays, highest level of exploration
an underexplored opportunity for the
company to sink its teeth into. investment in the country.

“It doesn’t take long to peg tenements However, as the sector be-
and get them granted,” Kelly told Paydirt.
gins to bubble again, the Fes-
“The data provided by government is
fantastic, we’re doing a heritage survey tival State is still waiting for
[at Churchill] and are planning a drilling
campaign near Woomera so we are look- the exploration party to re-
ing to do a deep diamond drilling hole in
September once we get the heritage sur- start.
vey out.
“Exploration has been a lit-
“If you are going to looking for IOCG
between the Gawler Craton and Mt Isa is tle slower this time around,”
where you want to be in the world.”
Hill said, “In the last boom
SA’s prospectivity for world-class
IOCG projects is well known, however, uranium exploration was
dealing with thick cover and in some cas-
es competing land uses has been chal- high, but we are not seeing
lenging for miners and explorers.
the level of interest in that
It is hoped that a dedicated Depart-
ment of Mining and Energy will help in- and we don’t have the gold Steve Hill
dustry work through such areas and al-
low the State to capture full worth from and lithium like Western Aus- CRC coming to an end, the start-up of
its valuable commodities. the $218 million MinEx CRC is crucially
tralia for instance. There is important to jurisdictions like SA.
SA chief government geologist and
director of the Geological Survey, Steve no well-established prospectivity for lith- The DET CRC was established in
Hill, hopes industry and government can 2010, with the MinEx CRC somewhat
work together on unlocking the State’s ium, there is enormous copper potential, replacing the programme which includes
true minerals potential once the Steven participation by industry heavyweights
Marshall-led Liberal Government finds but the challenges in SA are the cover such as BHP Ltd, Anglo American plc,
its feet. Barrick Gold Corp and South32 Ltd.
and competing land use.”
“We have lagged as a state but, it is All of Australia’s CRCs are part of the
picking up. The Liberals haven’t been in Hill said pre-competitive geoscience programme, with various SA bodies, in-
for the last 16 years. It is new and excit- cluding the Geological Survey of SA,
ing. Dan Van Holst Pellekaan [new SA data had a big role to play, while the University of SA, University of Adelaide
Mines Minister] was a shadow minister, and affiliates such as Investigator Re-
so he has been keeping an eye on the importance of the Geological Survey sources Ltd, Minotaur Ltd and SA De-
industry and there is much to address,” partment of State Development among
Hill told Paydirt on the sidelines of the should not be underplayed. the key players.

“A key message here is that geologi- “It is about collaboration and work-
ing together, it is not about them and
cal surveys need to ensure that the mes- us where Government does this and in-
dustry does that and having that detach-
sage around science-based decision ment. It really is about getting together,
being collaborative in work programmes
making is revitalised and kept relevant but also in the messaging and making
sure how everyone works together is
for the community. It is our biggest chal- communicated openly,” Hill said.

lenge; getting people to understand that “I think that is something that isn’t there
as strong as it could be. We have been
mineral deposits and mines just don’t the lucky country and it is almost like
these things have been taken for grant-
happen, they require a whole lot of things ed.”

to happen and one thing which starts it – Mark Andrews

off is science-based decisions of where

to explore and how to explore to follow

up on initial exploration; that is absolutely

critical,” Hill said.

“I think people take for granted that

there are always going to be mines

around and once that resource finishes

there will be another one. Yes, there will

be mines, but you have to find them. It

is not easy and if you look at the future

of resources in Australia, if we don’t

start bringing in high-quality, Tier One

discoveries our industry is not going to

continue.”

Of course, access to funding for criti-

cal R&D purposes will be key in defining

Australia’s next set of world-class dis-

coveries and with initiatives like the DET

AUSTRALIA’S PAYDIRT JULY 2018 PAGE 91





SAREIC PREVIEW

Hawsons in high demand

It takes a bold company to declare it has Carpentaria managing director Quentin Hill and chairman Neil Williams with Federal
the “world’s best iron ore product”, but Assistant Minister for Trade, Tourism and Investment, Hon Mark Coulton MP, in Broken
Carpentaria Resources Ltd has a strong
case to justify that claim with its Hawsons Hill last April for the designation of Major Project Status for the Hawsons iron project
project.
bilities and our approach to those permit- operating costs of $US23/t, assuming a
Interest in Hawsons, about 60km ting responsibilities,” Hill said. 62% Fe price of $US63/t and a $US25/t
south-west of Broken Hill, is growing on premium for the “supergrade” product.
the back of recent regulatory changes for “Notwithstanding the integrity we have
China’s steel industry, in particular the shown so far in our dealings with stake- “We compared our project margins
increased focus on clean air and high holders in doing what we say we’re go- to the lowest-cost hematite producers
penalties for polluters. ing to do, they’ve also recognised the because ultimately the material can be
significance of our ‘supergrade’ product substituted for low-cost hematite,” Hill
As a result, iron ore pellets – such as and its benefits in reducing global steel said. “We determined that we are in the
those flagged for production from Haw- emissions as well as Australia’s ability to first quartile on the quality-adjusted glob-
sons from as early as 2021 – are now the produce a product that is very important al supply curve, at the front of the cost
highest growth sector in the iron ore mar- to the rest of the world. curve for the undeveloped high-quality
ket, with pellet producers and direct re- iron ore projects and that we can pro-
duction iron makers scrambling the globe “The ability to feed the direct reduc- duce the world’s best iron ore product.
for any available supply. tion market in the Middle East is incred-
ibly important. They need different geo- “That claim has withstood the great-
Carpentaria has already signed non- graphic sources for that market and they est scrutiny from those in the industry. If
binding LOIs with several blue-chip steel- also need more supply in that market so you’ve been following us for some time,
makers and trading houses across Asia that industry can grow. Significantly, that you will know we don’t overhype things
and the Middle East for 120% of the pro- industry produces steel at half the CO2 and that is indeed the right description
posed initial production from Hawsons. emissions of a typical blast furnace.” for this product.”

Negotiations for binding off-take and Hill said the designation would be Hill told shareholders at Carpentaria’s
additional product sales have stepped “hugely beneficial” for his company as it last AGM the focus for this financial year
up as the project enters the next phase seeks to finalise outstanding regulatory would be securing a strategic investor for
of development, Carpentaria managing approvals, including environmental per- the Hawsons project – and he has every
director Quentin Hill said. mitting, across two states. intention of delivering on that promise.

“The PFS we released last July dem- Carpentaria expects to secure the last “Two years ago I said the support the
onstrated we have the world’s best iron of its approvals and complete the BFS on off-takers had shown us would allow us
ore product and the world’s best pellet Hawsons by mid-2019, paving the way to attract the funding we needed to do
feed, but also the world’s leading high for an 18-month construction period be- our PFS and upgrade the resource, and
quality iron ore project,” Hill told Pay- fore first concentrate is produced in early we delivered on that promise,” he said.
dirt. “Having those results out there has 2021.
opened an incredible amount of doors for “We want to attract a strategic investor
us in terms of the world’s steel industry Work contracts for various compo- or strategic investors to validate every-
and our customers. nents of the BFS were being negotiated thing that we’ve been saying because, ul-
at the time of print. timately, it is the off-takers that will drive
“We are now in negotiations with a the development of the project.”
number of parties for offtake-linked BFS The BFS will build on the results of
and construction funding. We are really the PFS which flagged a $US1.4 billion – Michael Washbourne
at an advanced stage of planning.” capex to build a 10 mtpa operation at
Hawsons, with estimated lowest-quartile
The importance of Hawsons to the
global iron ore industry was recently
recognised by the Federal Government.
In April, the Department of Jobs and In-
novation awarded “Major Project Status”
to the proposed mine, signalling a strong
vote of confidence in its significance to
New South Wales where the operation
will be based and to South Australia from
where product will be exported.

Only 13 other projects nationwide have
previously received the same designa-
tion.

“It’s not a simple thing to achieve, so
the fact we have this speaks volumes for
our strategy, the strength of our custom-
ers, our benefit to the communities in
terms of jobs and royalties, and the way
in which the governments have viewed
our dedication to the permitting responsi-

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Terramin prepares to fly

Terramin Australia Ltd has started a make sure that the govern-
strategic review of its assets which
could signify the beginning of a fresh ments and communities
chapter in the history of the company.
are happy with where we
When Paydirt spoke with new chief
executive Richard Taylor last month, the are with the projects and
company had just started the review into
its key assets; Tala Hamza in Algeria and we are focused on getting
Bird in Hand, South Australia, which are
both currently being dissected by the rel- that right. Part of the stra-
evant authorities through the approvals
process. tegic review is to be able

Navigation of the permitting stage to see how to get the value
rarely grabs the same headlines as ex-
ploration results and project develop- from two parts of our story
ment milestones, leaving Terramin to fly
under the investor radar over the last two – the gold and precious
years.
metals story in Australia
However, Taylor’s appointment in May
and the introduction of former Ramelius and the large undeveloped
Resources Ltd chief financial officer Si-
mon Iacopetta to the business now has Tala Hamza zinc project in
Terramin placed to follow through with
the approvals process and onto project Algeria,” Taylor said.
development in both Algeria and South
Australia. “We are working pretty

“The most important thing for us is to closely with our stakehold-

ers and making sure that

government and commu-

nity are on board with our

environmental permitting

and processes that we

have to go through. It is

a period where you draw

back on activity, but we

are getting runs on the Terramin will look at potential JVs on some of its

board with community. ground in South Australia

We’re looking at the next

phase for the com- study on the ISR extraction of copper

pany with the ap- from Kapunda, 90km north of Adelaide.

pointment of Simon Earlier this year, an inferred resource

and we’re looking at estimate from shallow mineralisation

commencing a stra- only of 47.4mt @ 0.25% copper (cut-off

tegic review of our grade 0.05% copper) for 119,000t was

assets. We have announced.

got Tala Hamza and Meanwhile, there also remains poten-

some great gold as- tial for new discoveries within the wider

sets in the explora- Adelaide Hills project where Terramin

tion area and the owns 3,750sq km of ground.

Bird in Hand project “We have a big landholding in South

which is a near-term Australia [12,000sq km of exploration

production play.” tenements] and undertaking the strategic

Bird in Hand is a review we will take the time to consider

252,000oz @ 13.3 what we can potentially JV on some of

g/t gold (resource) that ground,” Taylor said.

low-cost opportu- The company already has a JV in

nity for Terramin place with the Algerian Government over

to possibly bring Tala Hamza.

online through its Terramin has 65% ownership at Tala

400,000 tpa Angas Hamza which hosts a resource of 68.6mt

processing plant. @ 5.7% zinc plus lead containing 3.9mt

A draft mining zinc and lead.

lease application A DFS is in the final stages of a review,

has been lodged, while an EIS has been finalised, with an

with feedback be- approval for project development pend-

ing received as ing.

Terramin heads – Mark Andrews
towards release of

a PFS on Bird in

Hand this year. The

company is also ad-

vancing a $6 million

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Investigator detects
tide is turning

Loyal South Australian explorer In- like other states mainly because there
vestigator Resources Ltd is sens-
ing the time is nigh for commodities is a lot of greenfields [potential] and it
considered staples to bounce back to
attention after being left in the wake of is therefore reliant on juniors. Copper
the emerging battery minerals wave.
and gold has also been ignored be-
“The battery minerals craze is help-
ing the junior side of things but we cause of the hype around lithium and
are still waiting for that real upturn in
all the bread-and-butter type of com- the like, but we see the high risk, high
modities, with gold the exception. But,
I think it is coming, it is finally starting reward appetite for things like Maslins
to happen,” Investigator managing di-
rector John Anderson told Paydirt. starting to return.”

Investigator is due an ounce of luck, Investigator will continue with its
given its stoic approach to exploration
in SA during the downturn. scientific approach to exploration in

In 2011, the company discovered SA and has moved to reinterpret old
Paris which now contains 42 moz sil-
ver and is subject to a PFS to evalu- workings with new data and concepts
ate potential open pit development
options. Exploration also continues, as it seeks new discoveries and devel-
as Investigator assesses possible exten-
sions and repetitions of the orebody. opment opportunities.

Recent drilling at Paris has showed “With these new ideas on IOCGs,
high silver grades in areas not previously
subject to a lot of drilling in the north and we are actually stepping back and
south.
saying if you can have such differ-
While encouraged by the results and
the success to date at Paris, the real ences in potential deposits at Olympic
boon for both company and state has
been the geological breakthroughs Dam compared with what we have
achieved by Investigator.
down south in our epithermal porphy-
“We have some good ideas flowing on
from the Paris discovery and we have John Anderson ries territory, then what else is going
nurtured it through the downturn to now
boast a silver deposit that is new to South on? Cartarpo and Wiawera are really
Australia,” Anderson said.
the Olympic Dam trend.” spin-offs from that,” Anderson said.
“Also, the copper-gold deposits are a
new style for South Australia and we are Maslins, south of Carrapateena, is Anderson believes younger intrusion
developing those targets and testing a lot
of them for porphyry copper.” emerging as an intriguing target for In- events, potentially repetitions of the

Nankivel is one porphyry copper pros- vestigator to follow-up on. event at Olympic Dam in 1590 which
pect Investigator has identified and could
attract the attention of a bigger company A national magneto-telluric (MT) sur- brought copper, gold and rare earths, are
to help explore.
vey conducted showed that Maslins is the targets at Cartarpo.
Anderson said testing beyond depths
of 200m would potentially require sup- positioned in a highly prospective region, “However, the interest in Cartarpo is
port from a major to carry on with deeper
exploration programmes. with an infill MT survey run by the Gov- the fact that it was a cobalt working, a

“There are all these new ideas flowing ernment in the Carrapateena area also working known to have cobalt and cop-
on from all that as IOCG targeting did for
Olympic Dam styles,” he said. “We have covering Maslins. per. When we assayed with multi-ele-
gone up there and pegged some ground
on the back of new concepts coming out Investigator will also conduct addition- ment techniques we found that it had a
of breakthrough geophysical work done
by the Government which is a remap of al survey points at Maslins. lot of interesting rare earths,” Anderson

“There is renewed interest at Maslins. said.

The big companies, just like the market, “To us, that again starts to smell like a

have been a bit adverse to risk – high much younger, similar event to what hap-

risk greenfields work – but that is starting pened at Olympic Dam where there were

to now evaporate. Both the market and these strange rare earths metals associ-

large companies are starting to show in- ated with copper and gold mineralisation.

terest again,” Anderson said. In this case, it is copper and cobalt.”

SA is yet to experience the rebound Anderson said it appeared an even

in exploration activity other Australian younger intrusive event occurred at

states have witnessed, however, Inves- Wiawera, which also brought in copper,

tigator has been doing its part and is gold, rare earths and cobalt.

welcoming of a standalone mines and “We think that there is an opportunity

energy department to be created under to open up a number of younger geologi-

the State’s new leadership. cal domains in South Australia,” he said.

“It is much better for our industry to “That is what we are looking at and what

have a dedicated mines and energy de- we think is the real opportunity, the real

partment and for it to have one focus,” company makers on the back of new

Anderson said. concepts to follow through on.”

“Exploration spending is still down in – Mark Andrews
the State, although we have been doing

our bit by contributing about 10% of the

State’s spend [on exploration]. Overall,

the aggregate spend hasn’t rebounded

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Renascor’s natural home

Arecent marketing trip to the “home of Christensen told Paydirt. China, particularly with the company also
graphite” has Renascor Resources “There is also plenty of interest on keen to lock in a financing solution for the
Ltd managing director David Christensen project.
confident of landing a Chinese partner for some of the hi-tech aspects – graphene,
the Siviour project, about 120km north- high purity graphite, spherical graphite Those discussions have become easi-
east of Port Lincoln. – and that was a bit surprising, as we er for Christensen and his team following
didn’t expect to see that. So, I’m reason- the release of a PFS on Siviour earlier
Christensen and Mastermines director ably confident we can find some Chinese this year which supported both small and
David Gillam met with several graphite partners that will sign binding off-takes large-scale development scenarios.
end-users in China during April and May with us, that’s actually not going to be as
and were pleasantly surprised to find de- hard as I thought it would be. Capex is estimated at $US99 million
mand for the industrial mineral was far for immediate large-scale production of
greater than either initially thought. “The challenge now for us is to find 142,000 tpa of natural flake graphite for
the right Chinese partners that we can the first 10 years and 117,000 tpa over the
Mastermines is acting as a marketing move together with in a manner that we entire 30-year mine life. For the smaller
consultant for Renascor as the South can convince either the equity market start-up option, only $US29 million is ini-
Australian-focused graphite hopeful or the debt market here [in Australia] to tially required for a 22,800 tpa operation
looks to boost its profile and presence in give us the kind of capital we need to get which can be upscaled to 156,000 tpa
China, particularly on the back of recent started.” after three years for an additional $US91
regulatory changes in the country which million.
are set to disrupt its once unshakable Renascor has signed just one MoU –
supply chain. with China’s Quindao Chenyang Graph- Both options have low operating costs
ite – for the proposed off-take of up to of up to $US335/t over the life of mine,
“What we’re finding is a lot of the Chi- 10,000 tpa for Stage 1 production from with the average feed grade ranging from
nese production facilities for graphite Siviour and up to 30,000 tpa from Stage 9.1% TGC to 12.4% TGC in the early
flake concentrates are closing down be- 2. years of production.
cause of the environmental restrictions
and that has passed to the processors Further off-take deals are likely to “We can produce a very competitive
who are also closing down their capacity,” follow now that Renascor has had the product at an extremely low cost and
chance to test the interest for Siviour in we also have the opportunity to start at

PAGE 100 JULY 2018 AUSTRALIA’S PAYDIRT