pd238 May16 mag-web_Neat

LATIN AMERICA DOWN UNDER PREVIEW

Back into the fold

Cuba’s re-entry into the international With Cuba increasingly being wel-
fold has garnered plenty of headlines
in recent months; the question now is comed back into the international trade
whether the Caribbean island has any-
thing for Australia’s intrepid exploration to fold, Australian companies must move
sink its teeth into.
quickly if they are to secure a position in
Despite being largely isolated from in-
ternational investment since Fidel Cas- the country’s future.
tro’s rise to power in 1960, Cuba does
retain a positive reputation in the global “Australia has to push itself before the
mining sector, thanks to nickel laterite op-
erations which currently produce around US comes in. Companies already there
60,000 tpa.
also need to work hard to keep their
One of those operations – Moa Bay in
the island’s east – is part-owned by Sher- market share,” Prior said. “Cuba’s new
ritt International Inc but the Canadian di-
versified miner remains the only foreign Ambassador to Australia, Jose Manual
resources company to find its feet in the
country. Galego Montano, is very dynamic and

Given the US sanctions and Austral- has a brief for trade development so the
ia’s own disputes over sovereign debt
through the Paris Club, Australian invest- opportunity is there.”
ment in Cuba has been difficult and trade
between the two countries was only $14.1 Rodwell said that despite the transfor-
million last year. However, when former
Australian Trade Minister and now Spe- Australian Special Envoy Andrew Robb with mation of the US relationship garnering
cial Envoy Andrew Robb led the first ever
Australian business delegation to Cuba Kim Prior of Prior Industries and Rodrigo the recent headlines, Cuba’s economic
in March, it heralded a potential new era
for trade and investment between the na- Malmierca Díaz, Cuban Minister of Foreign transformation has been ongoing since
tions.
Trade and Foreign Investment the collapse of the Soviet Union, previ-
“It has never been a huge strategic
relationship but there are a number of ously the country’s most important ally
significant opportunities related to indus-
tries Australia has proven itself in; min- Australian states.” and trading partner.
ing, oil and gas, agriculture, tourism and
even retail,” Austrade Trade Commis- Prior and the Business Council ar- “There has been an opening of the
sioner – Mexico, Central America and
the Caribbean, Chris Rodwell, said. ranged the trade mission and found fur- economy and improved productivity, par-

Prior Industries chief executive Kim ther support when Robb expressed his ticularly in some industries such as tour-
Prior was instrumental in arranging the
trade mission and after nearly 30 years interest in joining the mission. ism,” he said. “More recently, the Cuban
operating in Cuba, she said her company
was beginning to see more interest from “Minister Robb saw the value of the Government has allowed for wider op-
fellow Australians.
mission and we worked to develop a pro- portunities for foreign investment across
“Over the last 18
months I had been get- gramme for the entire mission,” she said. infrastructure, energy, manufacturing, oil
ting more and more
referrals of companies “It was a great success with participants and gas and mining.”
interested in Cuba who
required consultants from agriculture, infrastructure and en- In resources, Cuba is known as hav-
and information,” Prior
told Paydirt. “It became ergy among others.” ing prospective geology but Australian
clear there needed to
be a proper vehicle for Prior believes ample opportunities explorers have been largely locked out of
informing Australians
of the opportunities so await Australians willing to show inter- the country. However, a few have made
we have established
the Australian Cuba est in Cuba but success will only come the journey.
Business Council with
board members in four through commitment over time. One is Cazaly Resources Ltd joint

“It is a very different country to work managing director Clive Jones, who vis-

in and there are probably only 6-12 Aus- ited Cuba several years ago to ascertain

tralian businesses operating there,” Prior its prospectivity before diplomatic rela-

said. “It is mainly companies from Eu- tions thawed.
Jones told Paydirt he was impressed
rope, Brazil, Venezuela and Canada but

there is no reason why Australia can’t be by the opportunities on offer.

competitive with them. There are huge “There is certainly potential in the

areas for synergy particularly in indus- place and it is interesting to see the cur-

tries where we have expertise such as rent political situation,” he said. “The

agriculture, tourism, biomedicine, mining problem we encountered was that you

and infrastructure.” couldn’t get more than 50% ownership

of an asset, which was

a real showstopper for

investment but if they

change that legislation it

may be enticing.”

Prior said the Cuban

Government had ad-

dressed the full foreign

ownership impediment

by passing Law 118.

“The passing of Law

118 is good legislation

regards foreign invest-

ment,” Prior said. “It is

very clear and positive

In March, Robb led Australia’s first ever trade mission to Cuba for foreign companies

PAGE 52 MAY 2016 AUSTRALIA’S PAYDIRT

and shows the Government is the Cuban Government an-

doing a lot more to make Cuba nounced plans for rebuilding of

more attractive for foreign invest- the incomplete Las Camariocas

ment both directly and through plant as a ferronickel smelter

established companies.” in a JV with the Government of

As well as granting foreign Venezuela, at a cost of $US700

companies 100% ownership of million. The plant, with a capac-

assets – although still subject to ity of 68,000 tpa [21,000 tpa

foreign investment approval by nickel] was to be completed in

government – the new law pro- 2013, but there is scant informa-

vides tax incentives including tion regarding its progress.”

no tax on dividends, no income Away from nickel and cobalt,

tax for the first eight years and a the US Geological Survey iden-

15% tax rate thereafter. tifies prospectivity for copper

“There is also a reduction in The Moa Bay nickel-cobalt-potash operation is Cuba’s largest and gold but, again, data is dif-

duties for the importation of capi- resources project. In the December quarter, the JV sold 4,237t of ficult to access.

tal goods in the start-up phase,” finished nickel, 559t of cobalt and 60,461t of fertiliser product “A number of small to medi-

Prior said. “In many ways, Law um-size copper and gold de-

118 is a lot more attractive for foreign and opportunities still existed for further posits are known but production status

investment than legislation in other Latin development. is unclear,” Elias said. “The Delita gold

American countries.” Jones observed both laterite and sul- deposit is the largest of several on the

Rodwell said while the Australian Gov- phide nickel prospects and also spied Isla de la Juventud (the Island of Youth)

ernment didn’t want to get “caught up in some gold opportunities. with some 53t of contained gold. Small

the hype” of Cuba’s economic liberalisa- “The rocks are good and I would en- copper deposits are known in Cuba with

tion, it wanted to make sure opportunities courage explorers to have a look but Mantua, in Pinar del Rio province, the

were not overlooked. because it has been closed for so long most attractive with a grade of 3.4% cop-

“We already have companies such as and the geological survey had no money, per.”

Prior Industries and previously Worley- there has been literally no work done so Jones said he identified laterite and

Parsons who have worked in the nickel any explorer would be starting from a sulphide nickel potential and some gold

industry there for more than 15 years. very low base,” he said. “Although, per- prospects while visiting the island and

I think Australian companies can take versely, having closed regimes like this still remains interested, if the fiscal re-

heart and learn lessons from that,” he is perhaps good for global exploration; gime is encouraging.

said. “But companies do need to take it means their jewels are only released “It is as good a place as any and will

into account that although there has slowly over time.” attract reasonable investment if it gets

been reform it is still a heavily centralised Prior said the Ministry of Mines and the regime correct. But it is only a small

planned economy and the Government Energy was welcoming of foreign explor- country so there isn’t going to be a flood,”

will have a significant role in any major ers. he said.

project, particularly because of their role “Cuba is interested in companies hav- Raoul Castro’s more liberal economic

in labour markets. ing a look but there are some things to be outlook and the end of the US blockade

“The role for Austrade is clear because aware of,” she said. “One of the obvious would suggest the fiscal terms are be-

relationships with government are ab- things it that the process is slow, so you coming more favourable.

solutely necessary and we have a very can’t just turn up and expect to be grant- Prior thinks those investors who are

productive relationship with the Cuban ed ground. Companies have to make the early movers into Cuba will be surprised

Government which was borne out in the necessary preparations and have a rea- by the level of technical capacity within

trade mission.” sonable idea of what they want. the country.

So, if foreign ownership is now pos- “The mines department has a list of “They are such well educated people,

sible, where do the opportunities lie? projects that are a priority but that doesn’t whatever technical person you want, you

Jones, Prior and CSA Global principal mean they wouldn’t find other projects for can find them,” she said. “They want to

consultant – nickel, Mick Elias, all point- you if requested.” see skills and technical development and

ed to the stainless steel additive as the Jones was impressed by the capabili- longevity in what they’re committing to.”

most obvious place to start. ties of the mines department. In a country that has been suspicious

“Cuba’s mineral economy is over- “The bureaucrats were excellent and of free market trade for so long, commit-

whelmingly dependent on nickel and they are very keen to attract investment ment to investment would appear to be a

cobalt produced from its huge lateritic and they want to do things,” he said. crucial component of successful Cuban

deposits located mostly in the Oriente Rodwell said juniors could find oppor- ventures.

region in the east of the island,” Elias told tunities but would have to be willing to “You have to do what you say you
Paydirt. “These deposits, which com- speak with government. are going to do,” Prior said. “You need

prise more than 800mt, have fed three “If junior miners are interested I would to show your face a few times because

processing plants of which two are still urge them to look at how the relationship there are plenty of companies that have

operating.” with government works because they come in and then failed and disappointed

Prior Industries first headed to the Car- would likely have to build projects in part- because it is high risk, high return. Cuba

ibbean island in the late 1980s to refur- nership with the Government.” is not unsophisticated economically

bish one of the nickel laterite plants and Elias said accessing reliable data was speaking.”

remains a consultant to the sector. the most difficult. – Dominic Piper
Prior said there was a surprising level “The Cuban resources industry is

of technological sophistication in-country somewhat opaque,” he said. “In 2009,

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 53

LATIN AMERICA DOWN UNDER PREVIEW

Plomosas resource to be
unveiled mid-2016

In a fickle market such as the one cur- More than 90% of the holes drilled at Tres Amigos and Level 7 Deeps
rently being experienced, it will take have intersected mineralisation
something special to trigger a response
from investors. zinc, 12.66% lead, 70.73 g/t silver from py that it keeps on keeping on,” he said.

Therefore, Consolidated Zinc Ltd has 57.15m, including 1.55m @ 37.18% zinc, “It is now all about getting to under-
decided to delay the release of a re-
source from its Plomosas zinc project in 17.25% lead and 101 g/t silver from Level stand, with some level of detail, the ge-
Mexico, managing director Will Dix told
Paydirt. 7 Deeps. ometries of the swells and pinches of

Initially, a date in April/May was being More than 90% of the holes drilled to the orebody; can we map out where it is
targeted to announce a resource from
the project which Consolidated owns date have intersected mineralisation, 5-6m thick and can we map out where it
51% of through its subsidiary Minera Lat-
in America Zinc CV SAPI. with wide intercepts in excess of 50% is 0.5-1m thick?”

“We have decided to do quite a lot combined zinc plus lead and zinc grades In better times, Consolidated would
more drilling in the short-to-medium term
to give us a level of confidence that lets up to 47% keeping Consolidated happy perhaps be appreciated more than the
us put a resource out a little later than
we had hoped, but with a higher level of with progress to date. 4.3c/share it was valued at the time of
confidence with some tonnes in the indi-
cated category, hopefully,” Dix said. While keen to keep on drilling, Dix said print. However, Dix knows the current

“That will let us go and talk more about there would be a point where a resource environment is difficult to function in and
production scenarios and what the future
potential might hold. It is not going to be would need to be released with drilling to attracting funding for Plomosas, in Chi-
April or May, but we are going to get it out
as soon as we can once the drilling pro- continue thereafter. huahua State, has been challenging, but
gramme we have put in place is finished.”
“The grades are fantastic, we are work- he believes good projects will be backed.
Mining at Plomosas from 1945 to 1974
saw 2mt @ 22% zinc-lead and over 80 ing in an environment that is continually Late last year, sophisticated inves-
g/t silver extracted, but since then only
small-scale operations have been run. returning mineable widths at north of tors and Singapore trading house Funan

Nevertheless, Plomosas comes with 20% zinc. For any mining company in the Group Pte Ltd participated in a capital
a plant which can be dusted off and
switched on quickly should a robust mine world that is a great result and we’re hap- raising which was oversubscribed and
plan demand it.
netted Consolidated $3.5 million.
“Alternatively, we can look at a much
bigger exploration programme and we Funan’s proposed $2.2 million
can look at trying to build a 3, 4 or 5mt
resource in the next couple of years and drawdown facility remained subject
that changes the economics and
the baseline of what we want to do to due diligence at the time of print.
from a production scenario. Both
these options are alive and well,” Meanwhile, in March, an interim
Dix said.
funding package of $550,000 was
At the time of print, two rigs were
in operation; one drilling the footwall completed to keep momentum in
zone at Tres Amigos and the other
underground at Level 7 Deeps. drilling going.

Most recent results included “Mining companies need funding
6.85m @ 14.44% zinc, 6.88% lead
and 42.58m from 68.45m, includ- going forward, so we are always
ing 1m @ 30.59% zinc, 16.9%
lead and 127 g/t silver; 3.15m @ talking to people, we’re always talk-
37.86% zinc, 4.18% lead, 48.96 g/t
silver from 67.5m, including 2.15m ing to groups, we are drilling with a
@ 47.92% zinc, 5.09% lead and
63.03 g/t silver and 4.1m @ 25.2% couple of rigs and that’s expensive.

We want to be able to keep drilling

so we need to be well funded to do

that,” Dix said.

Historical production from Plomosas was 2mt @ 22% – Mark Andrews
zinc-lead and 80g/t silver

PAGE 54 MAY 2016 AUSTRALIA’S PAYDIRT

AusQuest JV close to drilling

AusQuest Ltd manag- main a desired metal
ing director Graeme
Drew said drilling per- for a long time to
mits in Peru are taking
longer than expected to come.
be approved.
“The type and size
“In general, there ap-
pears to have been a of resource we are
slowing of the permit
process [and others] looking for is likely to
over the past few years,
but this probably applies have a development
across the board to
many different types of lead time of 5-10 years
permits. We have heard
that both candidates for in any case, so the
the run-off presidential
elections to be held on current copper price
June 5 want to reduce
administrative delays trough is only a short-
within the mineral and
other industries, so we term concern for com-
will have to wait and see,” Drew told Pay-
dirt. panies with adequate

Drew said he expected to have permits funding, but it does af-
in hand soon and was keen for drilling to
start in the near future. fect funds available for

It was last year that AusQuest pulled the junior end of the
off a major coup by negotiating JVs with
Peruvian heavyweights Zahena SAC market. My sense is
and Southern Peru Copper Corporation
Sucurs del Peru worth up to $37 million, that some larger com-
including $13 million cash.
panies are starting to
A total of 25,000m diamond drilling
or expenditure of $US4 million must be shop around for new
completed this year, while 80,000m drill-
ing plus $US10 million cash is to be spent Explorers are experiencing delays to drill permit approvals in Peru projects/exploration
over four years for the Peruvians to earn
a 70% interest in five large-scale porphy- opportunities which
ry copper-gold targets as outlined under
three separate JV agreements. other juniors who don’t have the funds at they hope to be able to get at a better

The JV projects include Lana (South- present to drill-test their prospects,” he price, but there does not appear to be
ern Peru Copper) and Cardonal and Pu-
ite-Colorada (Zahena). said. any rush to make a purchase.”

First drilling at Lana (5,000m) was be- AusQuest may have significant oppor- – Mark Andrews
ing wrapped up at the time of print, with tunities tied up in JVs to capitalise on and
AusQuest reporting that as cover se-
quences – 500m – were much thicker it also has more to
than expected drilling did not penetrate
far enough to test the target and there- offer other potential
fore no assays were expected.
suitors.
While permitting of Cardonal and Pu-
ite-Colorada were still pending mid-April, The Cholo copper
AusQuest was not taking its position for
granted at this point in the cycle. porphyry and Cerro

“Ausquest is in a very fortunate posi- de Fierro IOCG are
tion because of the JVs we have nego-
tiated with four porphyry copper-gold also on the table for
prospects and 20,000m of diamond drill-
ing expected between now and the end companies to con-
of the year. This is in contrast to many
sider.

“They are two

prospects that we

have advanced to

the drilling stage

and we are actively

looking for a JV

partner to fund the

next stages of ex-

ploration, including

drilling. [It is a] little

harder [to attract at-

tention] than before

given the current

state of the copper

industry and copper

price, but we are still

hopeful of a JV out-

come,” Drew said.

Despite market

conditions, Drew

said companies

had copper high on

their list of priorities,

which suggested

copper would re-

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 55

LATIN AMERICA DOWN UNDER PREVIEW

Antofagasta aims to protect margins
while Codelco chops spending

Chile-based copper miner Antofagasta in January, bankers said that some of mine, which is still in its ramp-up phase,
Minerals plc will focus this year on the world’s most coveted copper mines will come down as the project reaches
lowering costs and protecting its margins, could become available as indebted its design capacity of 85,000 tpa around
but would look at potential acquisitions if miners such as Anglo American plc and June, Arriagada said.
attractive mines came on the market, its Freeport-McMoRan Inc face unprec-
chief executive said. edented strain. Development work on the Encuentro
oxides project and the new molybdenum
However, despite all the talk that a pro- Antofagasta bought a 50% stake in plant at Antofagasta’s Centinela copper
longed rout in metals prices would create Barrick Gold Corp’s Zaldivar copper operation was extended by eight months
opportunities to snap up mines, no qual- mine in Chile for $US1 billion in cash in and will now not be completed until the
ity copper assets have been put up for July last year. second half of 2017.
sale, according to Ivan Arriagada, chief
executive of the operational division of “If there are interesting opportunities Arriagada said extending the work time
Antofagasta plc. out there we will look at them but that’s table there was done in order to slow the
not our main focus,” Arriagada said pace of spending and to reduce costs on
“After the Zaldivar mine was put on the ahead of the annual CESCO/CRU min- some construction contracts. Antofagas-
market we haven’t seen other quality as- ing conference in Santiago. ta is spending around $US760 million on
sets going up for sale, as much as there those projects.
was talk that now was the time when “Our focus today is working to reduce
there should be more consolidation in our costs, improve our efficiencies and “We don’t want to increase our debt
the industry and more copper assets for protect our margins.” in 2016 so we’re concentrating on our
sale,” Arriagada told Reuters in an inter- costs,” he said.
view. The company is aiming for direct cash
costs of $US1.35/lb in 2016, from the Meanwhile, Chile’s state copper min-
As copper prices fell to a six-year low $US1.50/lb it averaged last year. er, Codelco, plans to slash spending by
$US6 billion over the next five years in
Cash costs at the Antucoya copper

PAGE 56 MAY 2016 AUSTRALIA’S PAYDIRT

the wake of a steep fall in the price. Lowering costs and protecting margins are the focus for
The world’s largest copper miner has Antofagasta as copper prices test $US2/lb

previously said it would trim some $US4 ernment financing and debt issuance. said. When asked if the shortfall would
billion of budgeted spending from its key Pizarro said that 2016 was already fi- be made up with a debt issue, he replied
investment plan. nanced and no more funds were needed, “yes”.
but that there remained a gap for 2017.
Added to other cost cuts, that implied – Anthony Esposito and Fabian
around $US6 billion spending cuts over “Next year we have an investment plan Cambero, Reuters
the next five years – meaning a loss of of around $US3 billion and probably we
13% of planned output over the next 25 will need an additional loan injection,” he
years, chief executive Nelson Pizarro
said at the annual Cesco/CRU copper
conference in capital Santiago.

The cumulative effect of cuts in global
copper production would likely lead the
market to a deficit from 2018, according
to Pizarro.

But for Codelco, the copper price fall
has come just as it was seeking to im-
plement an ambitious investment plan
to open new mine projects and revamp
older ones.

Its spending cuts would mean 70,000t
fewer of refined copper between 2015
and 2019, rising to 600,000t less in the
next five years, Pizarro said.

Over 25 years, that would add up
to 4mt, about 13% of the 44mt it had
planned. Last year, Chile overall pro-
duced around 5.76mt of copper.

Codelco returns its profits to the state
and is funded by a combination of gov-

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 57

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Contracts,
not grade key to
graphite success:

Patersons

Paydirt hosted the inaugural Australian Graphite Conference on March 22. More than 170 del-
egates joined 16 presenters and exhibitors to discuss the opportunities, challenges and miscon-
ceptions surrounding this confusing sector.

As keynote addresses go, Jason The array of answers to the question “The graphite market is opaque with
Chesters’ opening refrain to the first is, of course, where market speculation sales contracts negotiated between buy-
Australian Graphite Conference was bru- ferments but Chesters did his best to ers and sellers on products that have to
tally honest. chart a course through the demand side meet predetermined specifications de-
of a sector even he admitted remained signed specifically for its intended end
With a roomful of graphite hopefuls opaque. use,” he said.
and keen investors in front of him, the
Patersons Securities senior resource Jason Chesters Demand for graphite is still dominated
analyst did not seek to “pump the tyres” by the refractories (36%) and metallurgy
of graphite. Instead, he laid bare the cur- (25%) sectors which have softened with
rent supply/demand balance. the weakening of steel demand over the
last 18 months. However, it is the new
“The combined stated projected pro- growth sectors of lithium-ion batteries
duction of all the new projects around and expandable graphite to which the
the world is more than 2 mtpa,” Chesters new graphite players are pinning their
said. “That is a significant number when hopes.
you consider the current market for flake
graphite is 550-650,000 tpa. So, the po- “The growth in demand for lithium-ion
tential supply reaction from all of current batteries – for electric vehicles and bat-
projects is many times greater than the tery storage – and applications involving
current market. expandable graphite currently hold the
key to the successful growth in graphite,”
“The question, therefore, is about the Chesters said.
expected growth in the new sectors of
batteries and expandable graphite and The rise of Tesla, the electric vehicle
whether that growth is enough to counter market and home-based battery storage
projected supply.” systems has already ignited interest in

PAGE 58 MAY 2016 AUSTRALIA’S PAYDIRT

ters pointed to the importance of flake

size distribution, product purity, location,

infrastructure and timeframe to produc-

tion to graphite developments but placed

strong marketing above all other consid-

erations.

“Size and grade are not the be all and

end all of success in graphite,” he said.

“There is just one real question; ‘Can you

sell what you produce?’. Can your project

produce a range of graphite products to

a required specification and sell these to

long-term quality customers for a rea-

sonable market price while simultane-

ously keeping costs lower than those of

most competitors?”

Answering such questions should be

done up front, Chesters said.

“Companies should do test-work to

identify potential value of the product to

end-users and they shouldn’t wait too

long.”

Patersons’ own analysis found the

strongest correlation between company

announcements and share price appre-

ciation had come following the reporting

of off-take agreements.

“This points to the importance of strik-

ing commercial agreements. They may

act as a signal to the market; that the off-

take partner – which is assumed to have

knowledge about the sector’s growth – is

rubber stamping the project.”

Graphite companies have exploded on

the ASX in recent years, rising from just

seven in 2012 to more than 35 in 2016.

However, they have failed to experience

the price rises enjoyed by lithium devel-

opers over the last 18 months and Ches-

ters said investors still had doubts about

lithium, however, there is four times as “The Chinese Government is increas- the future of the sector.

much graphite as there is lithium in a ingly requiring the use of flame retardant “Graphite is not well understood by the

lithium-ion battery. building products in construction,” Ches- market but knowledge is increasing,” he

Lithium-ion battery manufacturers ters said. “The potential growth in the said. “The combined scale of projected

currently get about 55% of their 70,000 market is a function of the growth in the production has led to a perception of

tpa of spherical graphite from the natu- electronics, manufacturing and construc- oversupply; and the recent project and

ral graphite market. Panasonic’s recent tion industry, but is limited by the avail- corporate failures [Triton Minerals Ltd

estimate of compound annual growth of ability of suitable feedstock.” and Valence Industries Ltd] have given

16.5% for electric vehicle batteries and The demand for different flake sizes investors pause as the market comes to

72% for storage batteries over the next and levels of purity means graphite better understand the added complex-

five years implies demand for natural projects cannot be judged on the tradi- ity and additional attributes required in a

flake graphite in 2020 would be 165,000 tional metrics of size and grade. Ches- good graphite project.” However, Ches-

tpa, an 88,000 tpa in- Graphite markets ters’ outlook was not en-
crease on 2015 levels. tirely bleak.

Expandable graphite Applications “Raising capital will
demand is also forecast Product type Benchmark pricing be challenging but good

to increase. Already used Amorphous (fine) Steelmaking/industrial $US385-395/t quality projects will at-
as an insulator in electron- Small/medium flake Lithium-ion batteries $US450-550/t tract investor attention,”
ics and manufacturing, he said.

expandable graphite – Large/jumbo flake Expandable graphite $US700-850/t – Dominic Piper
which is made from large Vein
and jumbo flake graphite Uncoated spherical Steelmaking/industrial/batteries $US1,550/t
– is now being adapted
Lithium-ion batteries $US2,500-3,000/t

for use as both an insu- Graphene Emerging technologies N/A

lator and fire retardant in (dependent on individual flake size and grade)
building materials.

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 59

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Graphite laid bare

Whether or not all the graphite sec- A crowd of about 170 packed the mezzanine level at Perth’s Novotel Hotel for the inaugural
tor’s unknowns were revealed at Australian Graphite Conference. The programme included 14 presentations and an
the inaugural Australian Graphite Confer- insightful panel session to round out proceedings
ence in March, one thing is for sure; the
conference has found a place on the min- volving CSA Global principal geologist graphite is created equal” and all compa-
ing events circuit. Andrew Scogings, Patersons Securities nies face different propositions.
resource analyst Jason Chesters, Metals
“I think there will be a hell of a lot more of Africa Ltd managing director Cherie Should more brownfields operations
people here [in 12 months time], people Leeden, Kibaran Resources Ltd manag- fall in a heap due to technical difficul-
will be more educated and a hell of a lot ing director Andrew Spinks and Talga ties and companies fall apart through
more people will be talking about expand- Resources Ltd managing director Mark mismanagement, companies would, of
able graphite next year,” IMX Resources Thompson. course, feel more pressure to prove the
Ltd managing director Phil Hoskins said. viability of their business cases.
No doubt investors would have con-
If Hoskins’ predictions ring true, he cerns about the graphite industry con- This is nothing unusual for mining
may well be the lynchpin behind the 2017 sidering the plight of both Triton and Va- companies, however, the intricate nature
conference. lence and while graphite sceptics remain of the graphite sector, which is character-
wary, aspiring developers and producers ised by its many categories, makes sell-
“From a company point of view, we now have fair warning about the potential ing a graphite story all the more difficult.
would have completed our funding, off- pitfalls ahead.
take and finance deals with the Chinese, But, if not all graphite is created equal
we will have completed our DFS, which “The issues they [Valence] faced not all graphite stories are the same
would have only taken six months and we highlighted a number of risks and those which hopeful companies can use to
would be looking to commence construc- risks can create a number of failures and segregate themselves in a space seem-
tion based on peer comparisons of simi- learnings for graphite hopefuls,” Ches- ingly set to become overcrowded.
larly staged projects,” he said. ters said of Valence’s attempt to rejuve-
nate the historic Uley mine. China is the major producer of graph-
Hoskins is leading the proposed IMX ite, producing about 74% of the 1.1mt of
spinout, Graphex Mining Ltd, which is “Operational expertise, particularly in global natural graphite in 2014 and has
due to list this month upon raising $4.25 graphite, is vital and getting that in as capacity to fulfil its needs in the foresee-
million (up to $7 million). early as you can is a key advantage. able future.
The second element which applies to
Making the task hard for Hoskins is both companies [Valence and Triton] is However, the growing pollution prob-
that participants in the graphite sector that graphite is a small, niche market. It lem in China has seen Europe and the
are experiencing the same pain as their is entrepreneurial and I think you have US introduce new legislation which en-
counterparts in other commodities; poor to maintain a small sector, small com- forces the use of material compliant with
pricing courtesy of oversupply in the pany mentality through this phase. I think strict environmental standards can be
market. you need to be careful that you don’t get sourced from China.
ahead of yourself and I think that is what
It will be interesting to see the attention has tripped up a few of these compa- Thompson said graphite – a key ingre-
garnered by Graphex, particularly as the nies.” dient in battery manufacturing – was “be-
oft-maligned graphite sector continues to coming very political” and any material
divide opinion. The shortcomings of Triton and Va- rejected from China wouldn’t be wasted
lence have cast more doubts about the in-country.
Not helping the graphite enthusiasts at industry, however, it is important to note
the moment is the failure of Triton Miner- – and a point emphasised at the Austral- “I am seeing from my travels that they
als Ltd in Mozambique and Valence In- ian Graphite Conference –that “not all [China] are going to get very, very paro-
dustries in South Australia. chial and their own materials are going to
be kept which would then starve the rest
The demise of Triton and Valence, for of the world,” Thompson said.
different reasons, is not ideal for a sector
which remains misunderstood.

“We are out there at the moment try-
ing to raise money for an IPO and it has
no doubt put a dent in marginal investors
in their decision on whether they want to
pop into graphite or not,” Hoskins said.

“But I don’t think Triton and Valence
have anything to do with the graphite
industry per se or any of their projects.
From an industry perspective, if it chang-
es anything from an individual compa-
ny’s point of view, it doesn’t eliminate but
it slows down one of the competitors, but
from an overall industry point of view it is
a problem.”

Hoskins’ comments were made dur-
ing the closing panel session chaired
by Paydirt editor Dominic Piper and in-

PAGE 60 MAY 2016 AUSTRALIA’S PAYDIRT

The influx of companies into graphite race and will be first over the line to pro- four and five producers, so I think com-

around the world suggests an abun- duction, but this is not seen as a deter- petition is helping the market,” Leeden

dance of graphite – in all flake sizes – ex- rent for the cluster of ASX hopefuls in its said.

ists and consumers won’t have to rely on wake. Leeden’s thoughts on M&A were

China for material. Sticking with the mantra that “not somewhat duplicated by her East African

“Clearly what we are seeing is that all graphite is created equal”, Hoskins peers – IMX and Kibaran in Tanzania.

there is going to be two graphite markets; knows where Graphex fits into the global Hoskins is concentrating on launching

domestic supply for the Chinese and the graphite equation and is comfortable that a new company and said consolidation in

rest of the world,” Spinks said. there is not only room for his new vehicle graphite was meaningless if it was about

“Clearly, that is what we have expe- but also others. having the most tonnes, while Spinks

rienced around the world and clearly “With graphite being an industrial min- believed tie ups now would be difficult

that is the opportunity for us to com- eral you should not force your material and problematic because the market is

pete. I agree with Andrew’s [Scogings] down any particular route, your mate- so small.

comments that China has an enormous rial should really drive you to the sort of “I think there is more chance of multi-

amount of spherical graphite and enough characteristics about which markets it’s ple operations coming in on diversifica-

of their own domestic demand, but really amenable to,” he said. tion rather than consolidation in the tra-

the opportunity is graphite for the rest of “Fortunately, our expandability results ditional market where the opportunity for

the world. have been exceptional to date. That is consolidation means new technologies,”

“They want qualities that are of an not to say we are forcing our way down Spinks said.

environmentally high standard and we there, it’s a way to differentiate ourselves “The strength in supply and having a

are going to see more closure of their and more so for the different flake size supply chain out of Tanzania for the bat-

[China’s] mines; the ones that are envi- categories. It is a market that we will get tery market and other emerging markets

ronmentally unsustainable and toxic,” he more for our large flake or smaller-medi- is what we are seeing for graphite supply.

said. um flake which we’ll get paid more for go- That is another opportunity and I think

Diversity of supply away from China is ing into expandable graphite – that goes this is a fantastic forum to explore that as

plausible for environmental reasons plus into a flame retardant building material well.”

tapping other supply sources will also – than we would for spherical graphite With many companies also boasting to

create competition in the market. for batteries. I think we have to be very have the best graphite on the block, egos

“When it comes to price negotiation [it careful to throw a blanket on graphite may play a hand in preventing M&A for

is important] that there are alternatives prices; there are different prices for dif- the time being.

and you’re not held to the current Chi- ferent markets, as they’re all different If graphite prices are currently near the

nese supply chain,” Chesters said. flake sizes.” bottom that would suggest a good time

“Panasonic are making battery packs Hoskins agrees that China can cater for consolidation but neither Scogings or

and are sourcing their anodes from Hi- for additional demand for graphite in the Chesters saw any uplift in graphite pric-

tachi which is getting spherical graphite battery space, with Syrah providing a es in the short-term. Spinks is optimistic

from a Chinese company using Chinese good foil for battery makers. that prices would rise 10-15% by the time

flake from a Chinese mine. This supply Leeden, whose Metals of Africa graph- the Australian Graphite Conference rolls

chain is clearly through China, so having ite plays in Mozambique abut Syrah’s around again in 2017.

diversification of supply is a key commer- project, said the latter’s elevation to pro- A lack of new mines coming on stream

“cial aspect.” ducer status would “put a lot of existing in the next year or so could trigger a price

China produces the lion’s share of producers out of business because their spike, but that is unlikely.

global natural graphite at One thing which is like-

ultra-low prices which can I think there will be a hell of a lot ly in the next 12 months
be matched in places such though is that the sector

as Mozambique and Tan- more people here [in 12 months and investors will have
zania, where Australia is time], people will be more educated and much more data to inter-
well represented. pret in terms of growth

In the short-to-medium a hell of a lot more people will be talking rates and development,
term, ASX-listed Syrah about expandable graphite next year. technological development
Resources Ltd is shaping in the battery sector and

up as one of the players expandable graphite.

about to have an imminent “From a pricing per-

impact on the global graphite sector. opex is so cheap”. spective I am not that optimistic on price

Many believe the introduction of Syr- “I think they are creating a mine with recovery, other than the recent sharp

ah’s graphite from the Balama project, a view that once they are in production movement down which may be cyclical in

Mozambique, will cancel out much of the they are going to put people out of busi- nature and we may see a recovery from

competition in the space. ness by building their mine,” she said. these lows,” Chesters said.

Syrah recently signed a three-year off- Being in close proximity to Syrah, the “In general, I don’t see much of a price

take agreement with Marubeni Corpora- prospect of M&A is something Metals of rise in the next 12 months. The oversup-

tion to supply 20,000 tpa of flake graphite Africa can’t ignore. ply situation still has a way to go, so we

for traditional applications in Japan and “It is in their best interest not to take are in a bit of a difficult environment from

Korea. us out because a lot of the end-users we a pricing point of view in the short term

The Marubeni deal is just one of a num- are seeing on site are requesting multiple anyway.”

ber of agreements Syrah has in place for producers of a similar product. Some are – Mark Andrews
its graphite. looking for exact Syrah product and most

Syrah is certainly leading the graphite battery producers are looking for three,

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 61

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Fresh start for Chilalo

IMX Resources Ltd managing director hanging over IMX at the IMX has started nego-
Phil Hoskins expects his company to moment,” he said.
tick off a number of key milestones be- tiations with China Gold
tween now and the end of July, including “The enterprise value of
the spinout of its flagship Chilalo graphite the pro-forma is $5.7 mil- Group Investment Co Ltd
project. lion. I think that’s an abso-
lute steal for a project as and CN Docking Joint In-
Having completed a robust PFS in advanced as we are. It’s
November and receiving environmental probably 20% of the valu- vestment and Develop-
approval on the eve of the Australian ation for other companies
Graphite Conference, IMX is anticipating at a similar stage.” ment Co Ltd over binding
the award of a mining licence later this
quarter and is confident of announcing The PFS confirmed off-take, having previously
formal off-take deals early in Q3. Chilalo could support pro-
duction of 69,000 tpa over signed MoUs with both
The biggest milestone in that time- a 10-year mine life, gener-
frame could be the successful spinout of ating revenue of $US838 companies.
Chilalo into a new ASX-listed company, million and an average annual EBITDA
Graphex Mining Ltd, which is slated to of $47 million. Hoskins said expand-
begin trading on the bourse this month.
Other key economics include an ini- able graphite from Chilalo
Hoskins said Chilalo compared fa- tial capex of $US74 million, operating
vourably with other emerging graphite costs of $US490/t and payback within 19 was in high demand fol-
projects, particularly among its peers in months.
Tanzania, but he felt that was not being Phil Hoskins lowing a recommendation
recognised under the IMX banner. “A lot of graphite projects have excep- from the Chinese Govern-
tional economics on paper, but we’re all
“A lot of this is due to a sub-optimal about converting that into reality now ment that all future con-
corporate structure, a multi-commodity with binding off-take and financing – and
asset mix and also a threatened litigation we’re on the cusp of that,” Hoskins said. struction in country use flame-retardant

building materials.

“The size of that market is 5 mtpa and

uses anywhere between 5% and 50%

expandable graphite,” he said.

“There currently isn’t enough supply to

fill that market…this is the opportunity I

see for our graphite and it’s the reason

for the Chinese interest in our graphite.”

– Michael Washbourne

PAGE 62 MAY 2016 AUSTRALIA’S PAYDIRT

Kibaran flaunts off-take advantages

Sales agreements with major groups tpa project with pre-tax NPV of $US197.4 guarantee fixed prices.
in Germany and Japan have Kibaran million and payback within 2.7 years of “It only gives you a pricing guide,”
Resources Ltd managing director An- the 25-year mine life. Crucially, the finan-
drew Spinks convinced his company is cial assumptions excluded the lithium-ion he said. “Achieving saleability involves
the African graphite company best placed battery and expandable graphite mar- sending material to customers in order
to move into development. kets, leaving the company potential fur- for them to conduct their own test-work
ther improvements to project economics. and there is an enormous amount of it.”
Kibaran has off-take commitments for
75% of its proposed 40,000 tpa produc- Kibaran’s strategy is to access tradi- Kibaran has chosen to deliberately
tion from the Epanko project in Tanza- tional markets before expanding produc- seek agreements with companies out-
nia. Spinks said the off-take agreements tion to take in emerging markets. side of China.
– with a European trader and German
industrial giant ThyssenKrupp – plus a “The cost of doubling the production “The graphite market has two oppor-
MoU with Japanese group Sojitz Corpo- once up and running is $20-30 million tunities; supply China or supply the rest
ration allows Kibaran access to current which could be funded through cash of the world and we made the decision
and future graphite markets. flow,” he said. early to go with the rest of the world.
Every market outside China is looking for
“Our plans have always been based Kibaran plans to fund construction on strategic supply and we think we can re-
on 40,000 tpa production because we a 70/30 debt-to-equity mix. German bank place some of the Chinese supply going
think we can sell into that traditional KfW is completing due diligence on a into Europe.”
markets,” Spinks said. “Germany, Japan $US40 million project debt facility with in-
and Korea are leaders in battery technol- principle German Government support Kibaran will continue to keep an eye on
ogy and having partners in these regions through a loan guarantee while African the battery and expandable graphite sec-
puts us in the best position to access bank Nedbank has filed an expression of tors. It is completing a scoping study on
these markets.” interest for a further $US30 million. construction of a spherical graphite plant
in Tanzania but Spinks said the company
Kibaran plans to start mining at Epanko Spinks said ThyssenKrupp and Sojitz was waiting to witness sure signs of elec-
in 2017. A BFS released last year identi- had been attracted by Epanko’s high tric vehicle demand growth before com-
fied a capex of $77 million for the 40,000 carbon purity but he warned delegates, mitting to such ventures.
reaching sales agreements did not
– Dominic Piper

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 63

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Volt seeks market support

The pathway to produc- important in that race to tion and flotation test work to follow up
tion for Volt Resources these results began in March.
Ltd hinges on the compa- production and we’re cer-
ny’s ability to win market “We are very much focused on the
support, according to ex- tainly very keen to start large flake size,” Hunt said. “We believe
ecutive chairman Stephen we have the basis to be able to produce
Hunt. pushing our product not large flakes from what we’ve seen so far
in all of our test work and we expect our
Volt, formerly Mozambi only into the traditional next lot of met test work to also confirm
Resources Ltd, boasts the that situation for us.”
largest graphite resource Chinese market where
(179mt @ 5.1% TGC) in Volt restarted drilling last month, fol-
Tanzania and recently we believe we have to be lowing the end of the wet season in Tan-
kick-started a PFS at its zania, to follow up a series of promising
Namangale project, hav- present given their very intercepts recorded late last year, includ-
ing raised $4.6 million in ing 73m @ 5% TGC, 67m @ 5.2% TGC
February. strong, historical posi- (including 9m @ 8.6%), 61m @ 5.1%
TGC and 69m @ 5.6% TGC (including
Namangale is situated among a host of tion within the graphite 16m @ 8.2%).
emerging graphite projects in Tanzania,
but Hunt knows his company needs more space, but also of course “This is a little bit different from the oth-
than just a large resource to get its flag- er companies where the grade is a little
ship asset over the line. to the Japanese, Koreans, bit higher than 5% TGC, but it’s certainly
not unusual to be around that level,” Hunt
“We’re under no illusion whatsoever Americans and Europe- said.
that this is largely a marketing game and
if we can’t get that right, we won’t sur- Stephen Hunt ans in the market.” “For us the more than compensating
vive,” Hunt said. A key focus of the PFS – factor is our flake size.”

“Market support is going to be vitally due before the start of the – Michael Washbourne

fourth quarter – will be retaining the large

flake sizes achieved during recent metal-

lurgical test work.

Super-jumbo flakes (+600 microns)

comprise 38-47% of the resource, while

jumbo flakes (+200 microns) account for

76-85%.

Recent test work also indicated the

graphite flakes can be liberated using

coarse particle sizes. Additional libera-

PAGE 64 MAY 2016 AUSTRALIA’S PAYDIRT

Spherical plant for Metals of Africa

Metals of Africa Ltd (MTA) has taken Montepuez Central and Balama Central spherical graphite fetches much more.
another step in its graphite vertical graphite projects in Mozambique. C-SPG Leeden believes the low-cost potential of
integration strategy, with the acquisition is processed into battery-ready anode MTA’s projects means the margins for up-
of a spherical graphite mill in the US. material for end users. Material will then grading product to spherical graphite will
be provided to battery manufacturers for be considerable.
MTA announced in late March that technical verification and testing of other
it would acquire the micronising and key supply chain metrics such as environ- “Because of our low costs in coun-
spheronising mill to produce spherical mental best-practice, which is currently try, Mozambican graphite can produce
graphite in partnership with three TSXV- being legislated in the US and Europe. spherical graphite much cheaper than
listed companies – Elcora Advanced Chinese flake graphite can. The value-
Materials Corp, Northern Graphite Cor- Prior to the acquisition, managing di- add for spherical graphite is huge; we
poration and Nouveau Monde Mining rector Cherie Leeden said MTA spied are looking at opex of $US3,000/t but the
Enterprises Inc – energy storage consult- great opportunity both in the value-adding price is $US10-15,000/t,” she said.
ants Coulometrics LLC, as well as a pri- potential of producing spherical graphite
vate industry partner. and the political advantages of having a To reach that stage, MTA will have to
closed supply chain. ensure it has sales agreements in place,
The production of spherical graphite is a reality Leeden is all too aware of.
a critical step in the production of material “Policy is important in relation to supply
for use in the anodes of lithium-ion bat- chains,” Leeden said. “Increasingly, bat- “It is all about off-take for us at the mo-
teries. tery companies have to prove where their ment,” she said. “We have had discus-
material has come from and you can’t do sions with end-users for the supply of an-
The company said the acquisition – that with product out of China. So, we are ode-ready material and that process will
the commercial terms of which have not proposing to build a spherical graphite fa- be ongoing over the next few months. We
been revealed – would allow the four re- cility in the US to take advantage of these have focused a lot so far on Japan and the
source company partners to produce and requirements.” US but we are moving onto China, Hong
test coated spherical purified graphite Kong and Taiwan in coming months.”
(C-SPG) from “end-to-end” within North Producing a spherical graphite product
America. MTA will provide flake graph- is also a margin play. While flake graph- MTA plans to release a PFS on Mon-
ite concentrate to be produced from the ite prices average less than $US1,000/t, tepuez Central in the September quarter.
based on a 62mt @ 10.3% TGC resource.

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 65

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

The inaugural Australian Graphite Conference was held on March 22 at the Novotel Perth.
Along with lithium, graphite has been a commodity of choice for investors in what has been a tumul-
tuous time for the resource sector.
As such, Paydirt was unsure what to expect in launching such a unique conference at this point in
the cycle.
However, with a jam-packed programme comprised of industry experts and Australian companies
on the rise in various parts of the world in the graphite space, whatever expectations Paydirt had for
the conference were exceeded, with the 170-strong crowd filling the plenary from the very first pres-
entation to the customary closing panel discussion.

PAGE 66 MAY 2016 AUSTRALIA’S PAYDIRT

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 67

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Big strides for Walkabout

Walkabout Resources Ltd is the modular plant route for pro-
ready to push the button cessing, with mobilisation to site

on a mining licence application scheduled for Q4 ahead of con-

for its Lindi Jumbo project in struction and production in early

Tanzania. 2017.

Managing director Allan Mul- “Our investment case and our

ligan said it would not take long high-grade resource is providing

for the licence to be granted, a very good foundation for lower

as the company looks forward capex, low operating costs, im-

to a quick start to operations at proved metallurgical recoveries

Lindi. and evidence of the potential to

“Key to success is early pro- expand the resource,” Mulligan

duction which will mitigate risk; said.

get in first, sell first,” Mulligan “We are in a very good infra-

said. structure area and there are a

“Don’t try and go too big too number of developers around us.

soon and this modular, low-risk, Walkabout managing director Allan Mulligan made a strategic We see a pipeline being moved up
move into lithium in Tanzania last month the coast in Tanzania from Mtwara
low-tech approach we’re taking

is suited to our ambitions. It is a to Dar Es Salaam. Infrastructure

graphite mine; there is nothing scientific enveloped by domain 1 with 6.9mt @ is going to be improving and there is a

or fancy about it.” 8.9% TGC is being targeted. very real possibility of grid power in the

The focus for Walkabout is the 11.7mt Based on these assumptions, Walka- future where we were planning locally

@ 11.9% TGC Lindi project, near Mtwara bout will have enough material to pro- generated power and, of course, there is

port, Tanzania, where a starter pit with- duce 25,000 tpa graphite for in excess of further potential for low-risk expansions.”

in a discrete section of 2.6mt @ 20.6% 15 years. – Mark Andrews
TGC for contained graphite of 526,500t The company has opted to go down

PAGE 68 MAY 2016 AUSTRALIA’S PAYDIRT

A First [for] Graphite in Sri Lanka

It is understood Australian graphite First Graphite managing director Craig McGuckin and executive director
company First Graphite Ltd has been Peter Youd with graphite from Sri Lanka
awarded the first new underground min-
ing licence in Sri Lanka in 25 years. at this another way, in gold speak this in- create a very solid business,” McGuckin
tercept is the equivalent of about 180 g/t said.
The Geological Survey and Mines Bu- dirt,” McGuckin said.
reau granted First Graphite an industrial First Graphite is also working hard on
mining licence for the Pandeniya pro- Aluketiya and Pandeniya are among the graphene side of its business which
ject, within the Warakapola project area, a suite of vein graphite projects First could be extremely lucrative.
north of Colombo. Graphite has in Sri Lanka, which include
Pujapitiya, Palinda Nuwara and Hikkadu- Graphene prepared from First Graph-
“We have two shafts, they will both wa. ite’s Sri Lankan material compares fa-
come into production in the next 3-6 vourably against graphene prepared
months. We continue to explore prior- “Our projected vision is to get to a through synthetic routes.
ity areas and are having great success 5,000 tpa run rate in two to three years.
beyond our expectations with some of Each of these mines is only budgeted on Graphene produced at the University
the results we are getting to date. There a modest production, single shift opera- of Adelaide has confirmed this and First
should be more news from further drilling tion, 250t per shaft. We will have multiple Graphite is taking samples to industry
as well,” First Graphite managing director small scale, seven men per shaft, single participants to progress potential com-
Craig McGuckin told Paydirt. shift [operations] some of which will han- mercial agreements.
dle two to three shifts. Initially it will be
“We have been told by the Geologi- 5,000 tpa, but it will be DSO and that will Agreements with two separate Euro-
cal Survey of Mines Bureau that this li- pean groups and South Asian-based
cence, will be the first licence of its kind parties have been made, whereby First
in 25 years. We are very well respected
[in-country] now. We have put a lot of Graphite will supply graphene sam-
time into our geological crews as well; ples for performance testing.
we have actually lectured at the univer-
sity, and sponsored their main geological “We are working very hard on the
events, so we are putting back into the graphene side and we are counting
country as well.” in our business model should we
start to sell some of our product in
With the licence granted, First Graph- the coming years in graphene,” Mc-
ite can move on with mining activities Guckin said.
and with the successful installation of the
shaft liner boxes at Pandeniya, under- “We are doing this because of the
ground mining operations were expected very high conversion rate of 90%,
to start last month. we can convert it very quickly and it
is selling for $2,500/t and potentially
Initially, a focus would be on develop- we can sell it for $50,000/t. The eco-
ment drives with mining and hoisting of nomic viability could change dra-
high-grade graphite. matically and we hope to have solid
news flow all year on that as we also
Meanwhile, Aluketiya, north of Galle, get into production.”
was developing on schedule and is shap-
ing as a major deposit for First Graphite. The high conversion rate of graphite to graphene – Mark Andrews
could be very lucrative for First Graphite
Latest drilling results from Aluketiya re-
turned possibly the most significant
reported graphite intersection in Sri
Lankan modern history, according
to First Graphite, with 1.72m of high-
grade vein graphite over 2.81m.

Areas tested recently by First
Graphite at Aluketiya have not been
investigated before and the results
build on assays which have re-
turned grades up to 99.3% TGC.

“This is an excellent result for First
Graphite, confirming our confidence
in the quality of the graphite veins
on the Aluketiya licence. The real
significance is the mining width that
quality of intercept will support. The
wider the orebody, the lower the unit
cost of vein graphite mined. This
width greatly exceeds any of our
modelling or expectations. Looking

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 69

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Renascor the late bloomer

Interest in the graphite sec- Of the total resource, coln Minerals Ltd (market cap $10 million)
tor has been building for 6.8mt @ 8.1% TGC is in and Archer Exploration Ltd ($6 million).

some time and Renascor the indicated category. Joining the peer group will elevate Re-
nascor’s status in the graphite space as
Resources Ltd has finally “It is a very impressive it looks to increase its market cap of $5
million.
decided to take notice. resource based on very
While it looks to be recognised as an
The South Australian- limited drilling,” Chris- emerging developer in SA graphite, Re-
nascor believes it has significant advan-
focused junior may have tensen said. tages over its rivals.

arrived at the party late but “Within the indicated Unlike Lincoln’s Kookaburra Gully and
Archer’s Campoona deposits, which are
it has hit the dance floor resource portion we more vertical in nature, Siviour’s flat-ly-
ing, shallow orientation will make mining
quickly. have done 20 holes and a breeze.

“The company picked up we are looking at very “We have a whole lot of distinct ad-
vantages from a mining perspective.
the project three months shallow mineralisation Our strip ratio will be significantly more
favourable, we’ll have less waste and
ago and we think we are David Christensen starting somewhere be- mining will be more efficient. And, we’ll
have a lot better environmental footprint.
making good progress,” Re- tween 10-25m of sur- It should be relatively easy for us to ex-
pand the resource by going along strike,
nascor managing director David Chris- face. Where we go next we think it will be we’re open and we’re really adding to this
resource and making it more competitive
tensen said. fairly easy for us to expand the resource on a global scale,” Christensen said.

Christensen was referring to the Arno by pushing into the exploration target – Mark Andrews

graphite project, north of Port Lincoln, zone. The indicated and inferred portions

which was acquired from a private com- remain open and we can potentially push

pany in December. south into Paxtons.”

Siviour is the jewel in the Arno crown Drilling to expand the resource and

and is currently the biggest graphite de- processing testing is the immediate fo-

posit in Australia boasting a resource cus for Renascor as it aims to have a

of 16.8mt @ 7.4% TGC for 1.24mt con- scoping study completed in Q3.

tained graphite. Perhaps a successful scoping study

Within the resource there is a high- will be the trigger for Renascor to move

grade portion of 5.9mt @ 10% TGC for up the value chain and sit on par with its

590,000t graphite. graphite counterparts in SA, such as Lin-

Clause 49, a must read: CSA Global

When Andrew Scogings returns to are four categories and infill to demonstrate con-
the Australian Graphite Conference 212 grades in which tinuity of the geological
in 2017, he hopes to be presenting to a graphite can be classed. structure and the gener-
room full of people clued up on clause 49 This shows how var- al grade, so that’s fine as
of the JORC code. ied the graphite sector long as they do the DD
is and emphasises the [diamond drilling] and
Clause 49 states: “For minerals that obligation graphite com- metallurgical test work,”
are defined by a specification, the min- panies have in explicitly he said.
eral resource or ore reserve estimation defining resources in an-
must be reported in terms of the mineral nouncements. “Indicated mineral re-
or minerals on which the project is to be sources have to allow for
based and must include the specification “It is insufficient to the application of modi-
of those minerals.” rely solely on assays for fying factors to be ap-
graphite content for min- Andrew Scogings plied in sufficient detail
Scogings, principal geologist at CSA eral resource reporting. to support mine planning
Global, implored explorers and inves- Specific market group and evaluation of the
tors to understand clause 49 so that an- testing is required in reporting to reflect economic viability of a graphite deposit.
nouncements could be divulged properly that graphite deposit and what it is going “Therefore, an indicated mineral re-
when released. to be [in terms of] float size and purity of source cannot be based solely on graph-
the liberated product,” Scogings said. ite content in situ flake size. The flake
Coming to terms with the clause is criti- size and purity of the liberated product
cally important, particularly in the graph- “Different products, as we have seen, have to be understood or estimated to
ite sector which can be confusing. command different prices and that af- the project to be able to use that as a
fects the basket price.” modifying factor.”
Many graphite companies attest to
having the world’s best graphite, which For graphite, RC sampling alone will – Mark Andrews
may be true in their particular case given not suffice for metallurgical testing.
there are numerous classifications and Scogings said a combination of RC and
uses for different types of graphite. diamond drilling was more acceptable.

For instance, according to Chinese “You mainly use the RC drilling as an
flake graphite national standards, there

PAGE 70 MAY 2016 AUSTRALIA’S PAYDIRT

Anson hedges on iron ore nous

Having moved an iron ore project in in China for over 15 years “We will drill a
Western Australia from exploration and has served as Australian
to production in three years, Bruce Rich- Trade Commissioner at the hole right next door
ardson is confident the Ajana project will Australian Embassy in Beijing.
bear fruits for Anson Resources Ltd in to it [historic graph-
equally quick time. During his government stint,
Richardson developed a sharp ite hole] and then we
The Anson managing director is bank- skill for harnessing trade and
ing on his knowledge of WA’s resources investment opportunities be- will drill some closer
sector and the historic mining area of tween Australia and China.
Ajana, 130km north of Geraldton, to to surface and map
bring the graphite project on-stream by Richardson’s contacts and
the end of 2017. understanding of China will be how it comes up to
critical in finding Anson’s place
Capital requirements won’t be oner- in the graphite sector. the surface. Our
ous, given Ajana’s close proximity to
Geraldton where infrastructure, including Firstly, the company will need to define metallurgical test
a port, is well established. what it has at Ajana where a heritage
clearance programme was scheduled to Bruce Richardson work will continue.
In his presentation to Australian Graph- start in April, Richardson said. Once we have the
ite Conference delegates, Richardson
said the majority of the $US56 million “Then we should be able to start drill- material from the
capex would be needed to build a plant. ing in May,” he said.
drilling and the core we will take that for
While the company has what it deems Drilling will focus on areas CRA had
a prized asset in Ajana, where rock chip previously drilled in the early 1990s. additional metallurgical test work. We are
sampling has returned 18.15% TGC, per-
haps the key to the project is Richard- “They were looking for lead or zinc also having some work done on the pro-
son’s extensive knowledge of China. and they found graphite. We have all that
information and have sort of mapped duction process to work out what is the
Richardson has managed companies where the graphite will come to surface,”
Richardson said. best production process for us”

The WA Department of Mines and Pe-

troleum has approved a RC and diamond

drilling programme which Anson hopes

to confirm width, grade and flake size of

the graphite logged from CRA’s drilling

almost 25 years ago.

– Mark Andrews

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 71

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Graphite rules battery technology

Vast global resources of graphite are “We need to substitute – tions (or substitutions) in
never likely to inhibit the supply of completely if we can – for
lithium-ion batteries, according to Lithium cobalt,” Griffin said. “The cobalt use, along with ma-
Australia NL managing director Adrian lithium sulphur battery
Griffin. promises to gives us about jor advances in the lithium
five times the performance
In a break from the main focus of the of most other lithium-ion processing technology.
programme, Griffin informed delegates batteries.
of the relationship between graphite and Recycling to reduce the
lithium in the manufacture of emerging “What we’ve got to do
battery technologies. to get the batteries a lit- reliance on primary feed
tle more affordable and
Lithium is the cathode and graphite the relying less on by-product materials will also have an
anode in a typical lithium-ion battery. credits is to get the graph-
ite concentration down and get the cobalt impact on the future of the
Griffin presented figures which showed levels down.”
more than 2,000 g/kWh of graphite is battery industry, he said.
needed for a lithium-ion battery, com- Griffin also highlighted the indicative
pared to less than 100 g/kWh of lithium demand for the lithium-ion battery miner- “Ultimately the cheap-
and about 1,450 g/kWh of cobalt. als in 2020, estimating about 15,000t of
lithium, 165,000t of graphite and 40,000t Adrian Griffin est source of these met-
Attempts to phase out the high levels of cobalt would be required. als is going to be in the
of cobalt – usually obtained as a by-prod-
uct of copper and nickel production – and “The lithium cobalt oxide batteries will waste material which is
adopting a more efficient use of graph- be gone and as a consequence we’ll be
ite has seen those mineral compositions using less cobalt, but we’ll still be using rejected by the industry,” Griffin said.
drop to less than 1,000 g/kWh of graphite the same amount of lithium,” he said.
and about 200 g/kWh of cobalt in more “At the moment only 2% of lithium-ion
recent battery technology. The amount of Griffin said the lithium-ion battery in-
lithium remains unchanged. dustry would not survive without reduc- batteries on a global basis are recycled

and that’s because the market is not sat-

urated. We’ve got to saturate the market

first and let these run a full cycle, which

in some cases is 20 years before you can

get the benefit of very high levels of re-

cycling.”

– Michael Washbourne

PAGE 72 MAY 2016 AUSTRALIA’S PAYDIRT

Spherical study favours jet mill

Research by Perth-based consultancy sion with our clients has tation is the best way to
group Independent Metallurgical Op- indicated it’s the lack of
erations Pty Ltd (IMO) has found jet mill- flake being supplied from upgrade graphite and de-
ing is the only realistic option for spherical China, balanced with flake
graphite production. demand, which is the rea- termine the flake content
son for the higher jumbo
Speaking at the Australian Graphite flake prices, compared to and concentrate grade.
Conference, IMO senior metallurgist Pe- finer flake prices.”
ter Adamini gave a brief overview of the “Graphite itself is natu-
processing requirements for the spheri- Several graphite hope-
cal and expandable graphite markets. fuls feature on IMO’s cli- rally hydrophobic, mean-
ent list, including Kibaran
Spherical graphite is manufactured Resources Ltd (Tanza- ing it does not like water,
from flake concentrates and is often used nia), Talga Resources Ltd
as the anode in lithium-ion batteries. (Sweden) and Sovereign Metals Ltd (Ma- but it still needs a bit of
Products typically require coarse or fine- lawi), as well as Sayona Mining Ltd and
sized flakes and a concentrate grade of Anson Resources Ltd. help in terms of recovery,”
at least 98% TGC.
IMO helped Kibaran achieve an im- Adamini said.
“It’s interesting a lot of the current pressive concentrate distribution from its
company classification is based around Epanko project in June 2015, including Peter Adamini “Oxide floatation, which
the final concentrate flake distribution, a final product comprising 20% jumbo, graphite is characterised
however, the largest growth industry for 35% large and 30% medium flake size.
graphite, the lithium-ion battery market, into, is often difficult as
requires fine graphite that is faradised in “All that should remain in the final con-
a jet or planetary mill,” Adamini said. centrate is graphite and gangue metal the collectors used will attach to and re-
oxides, either adhering to or within the
“Our research has led us to conclude graphite matrix,” Adamini said. cover some of the gangue. With graph-
that jet milling is really the only option to
produce spherical graphite…the discus- IMO has also found that traditional flo- ite, it’s fortunate that the collectors used

will generally only attach to the graphite,

enabling a high-grade concentrate at ex-

cellent recoveries to often be achieved,

providing the graphite is liberated.”

Adamini also backed use of the LECO

carbon analyser technology over the in-

dustry-standard double loss-on-ignition

method for graphite assaying.

– Michael Washbourne

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 73

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Leading grade, leading jurisdiction

For Lincoln Minerals Ltd managing di- John Parker To realise Kookaburra Gully’s poten-
rector John Parker, the fundamental tial, Lincoln must first receive its mining
advantages of the company’s Kooka- tiveness’ for mining investment [accord- lease, an approval Parker said was “im-
burra Gully graphite project are simple to ing to a recent Fraser Institute survey].” minent”.
grasp; it is high grade, close to infrastruc-
ture and in a sound jurisdiction. The project itself is also enticing with “We have gone through 12 months
its 2.2mt @ 15.1% TGC resource mak- of permitting and we are now only days
Lincoln’s involvement on the Eyre Pen- ing it Australia’s highest grade graphite away from the mining lease offer,” he
insula predates the recent graphite rush project. said.
in South Australia and Parker believes
the company’s singular focus puts it in Lincoln is aiming for a production start-
the best position to become SA’s first up in early 2017 for the $50 million pro-
consistent graphite producer. ject and granting of the mining lease will
allow financing and off-take negotiations
“As a company we are focused and to start in earnest.
Kookaburra Gully is the priority,” Parker
said. “We have been in graphite through Parker believes the Chinese influence
the highs and the lows of the industry but in the company will stand it in good stead
Kookaburra Gully remains our prime fo- in this regard.
cus as it is a world-class deposit.”
“We are now effectively a Chinese
While fellow SA graphite company company with 50% of our shareholders
Valence Industries Ltd has encountered Chinese,” he said. “Our chairman, Jin
difficulties in the restart of its Uley mine, Yubo, has set up an international graph-
Parker remains confident the Eyre Penin- ite exchange in China with Lincoln as a
sula is a world-class address. 25% part owner, giving us direct expo-
sure to the graphite market.”
“The Eyre Peninsula has more than
60% of Australia’s graphite resources – Dominic Piper
and SA is in the world’s Top 10 for ‘attrac-

PAGE 74 MAY 2016 AUSTRALIA’S PAYDIRT

Great scope at Mahenge

Black Rock Mining Ltd’s sense of occa- ter demonstrating the best “Finishing off all of the
sion was perfect with a scoping study economics.
on its Mahenge project unwrapped at the technical studies and
Australian Graphite Conference. A PFS was immediately
commissioned, with Black coming back with some
Managing director Steve Tambanis Rock keen to review larger
was pleased to tell conference delegates throughput options in the valid off-take agreements,
Mahenge’s potential to produce 52,000 economic case.
tpa graphite concentrate for over 25 which actually mean
years equated to a NPV of $US285.7 mil- Meanwhile, detailed
lion and IRR of 62%. metallurgical test work will something, will help in
continue, with additional
A pre-production capex of $US57.3 metallurgical samples to getting funding to pro-
million has been estimated, which could come from a final drilling
be paid back in two years assuming cash programme (in progress at ceed,” Tambanis said.
costs of $US458/t and a sales price of the time of print) to upgrade
$US1,236/t FOB Dar Es Salaam. the resource of 131.1mt @ 7.9% TGC. “We are well down the

“We will have a look at a slightly larger As a PFS is not expected to take long, path with metallurgical
operation and the key thing for us is op- Black Rock is busy matching its graphite
timising and refining mining costs and attributes to customer requirements and test work and the PFS and
the processing flow sheet. I think in four aligning planned production – 52,000 tpa
months, possibly five months, we’ll have @ 10.5% TGC – with off-take. Steve Tambanis this year we will be com-
our PFS done and dusted,” Tambanis pleting the environmental
said. Therefore, Rob Sills, a specialist com-
modity marketing specialist, has been studies and applications
Three production scenarios – 31,000 locked down to help Black Rock secure
tpa, 42,000 tpa and 52,000 tpa on long-term off-take agreements with po- to obtain a mining licence in Tanzania
throughput of 500,000 tpa – were as- tential customers in Asia, Europe and the
sessed in the scoping study, with the lat- US. and we don’t see any issues with that. We

do have a second mover advantage giv-

en that our next door neighbour [Kibaran

Resources Ltd] has been through a lot of

these steps and didn’t have any issues.

It is very straightforward in Tanzania and

we have found the Mines Ministry there a

very good group of people to deal with.”

– Mark Andrews

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 75

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Thin end of the graphene wedgeWhile the rest
of the sector
boasts about how
large their flake

“sizes are, Talga Re-
We are not about spherical
[graphite]. We are about

thin and how expensive it is to
make something which is thin.
sources Ltd manag-

ing director Mark

Thompson is more

inclined to champion how thin the com- at a fraction of the weight and ab-

pany’s graphite products can be. sorbs only 2.3% of the light passing

Talga’s favour of micro over jumbo through it.

comes down to the ability to produce, at As such, it has been hailed as a

low costs, the new wonder material of revolutionary material but to date it

graphene. has only been produced syntheti-

First isolated by Andre Geim and Ko- cally and in small quantities. How-

stya Novoselov at the University of Man- ever, Talga believes it has defined

chester in 2003, graphene has been a processing path using ore from its

hailed as the first ever two-dimensional high-grade Vittangi graphite project

material. It consists of single atomic lay- in Sweden.

ers of carbon (around 0.3nm thick) while “We are not about spherical

extending many hundreds of nanometres [graphite],” Thompson said. “We

in the lateral dimension. Its properties are about thin and how expensive it Mark Thompson

are remarkable; it is thinnest and strong- is to make something which is thin.”

est material ever discovered (breaking Using what appears a simple exfo- the pilot facility was now working on scal-

strength of 42 Nm-2, 100 times greater liation process Talga has been able to ing up to 10kg and eventually 50kg sam-

than steel). It shows electrical and ther- cheaply produce graphene and micro- ples.

mal conductivity greater than copper graphite from Vittangi ore. The company “There is no high pressure, there is no

has now built a test- change in temperature so it should be at-

GAURSATPRAHLIIATNE ing facility in Ger- tainable,” he said.
many from which Graphene is technically only a single
it is sending large-
scale samples of atom thick but Thompson has discov-
product out to in- ered slightly thicker material (2-50 layers
thick) is also intriguing researchers.

dustry. “Ten layer thick graphite has different

“We have been qualities to flake graphite and a number

22 March 2016 - Novotel Perth Langley sending out the of end-users want that product because
samples to get third- there is more to ‘hang onto’,” Thompson

party validation said. “We are beginning to discover that

which is a lot easier micro-graphite is a whole other world

if you have a stand- of industrial applications and can fetch

ard flake product,” more than $75,000/t.”

Thompson said. While the media has latched onto the

With bulk trial science fiction-like possibilities for gra-

mining complete, phene, Talga is more focused on more

this year Talga is established applications.

focused on expand- “What we are looking at is not futur-

ing processing and istic; we are talking about using current

commercialisation. production lines,” Thompson said.

“We are in Ger- Talga is targeting four key markets;

many because there coatings, energy (batteries, fuel cells,

The CD-Rom of the 2016 is a huge amount of solar panels, printable circuits, etc), con-
customers there. struction and composites (plastics, 3D

Australian Graphite Conference We can scale up the printing, etc).
is now available samples and show
customers what we – Dominic Piper
can produce and

they will begin to

CD-Rom – $30 (inc.GST) believe us.”
Phone (+61) 8 9321 0355 or email [email protected] Having already

completed test work

on 0.5kg samples,

PAGE 76 MAY 2016 AUSTRALIA’S PAYDIRT

20 October 2016

Perth, Western Australia

Register now for Australia’s
only nickel event

australiannickelconference.com

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

Image courtesy of Western Areas Ltd

REGIONAL ROUNDUP AFRICA

Cradle ready to rock niobium

Cradle Resources Ltd will $US41.50/kg over the last five
embark on an “aggres- years.

sive” marketing campaign to “It’s a remarkably stable mar-

further educate investors about ket, prices have been stable for

niobium following the release many years,” Burton said.

of a robust DFS on its flagship “There’s no new producers

Panda Hill project in Tanzania. coming on. We’re the only one

The DFS found the project in 40 years and we’re the only

could support a 1.3 mtpa op- one in the foreseeable future,

eration, ramping up to 2.6 mtpa so we’ll come on gently. We

in the fourth year of production, see an ongoing stable market

for an initial capex of $US196 price-wise, it’s got good growth

million. because niobium is a high-

Other key financials from the quality, new age steel product

study included pre-tax NPV of and it’s growing at 3-4% a year.

$US796 million ($US542 mil- Cradle intends to aggressively market its Panda Hill project “We’re going to bring that

lion post-tax), pre-tax IRR of on over the next seven years

32% (27% post-tax) and average EBIT- “It’s definitely a hard sell because peo- and capture just a portion of the ongoing

DA of $US112 million per annum over the ple aren’t familiar with niobium and with growth, so we don’t see ourselves hav-

30 years of mine life. the market,” Burton said. “You have to ing a material impact on that stable, dis-

The standout result for Cradle chair- explain the whole marketplace and then ciplined supply structure of the industry.”

man Craig Burton and his board of di- explain the project and then explain the Cradle’s 50%-owned subsidiary, Pan-

rectors was the large boost in NPV once company. da Hill Tanzania Ltd, will soon begin

production ramps up to 2.6 mtpa, ris- “Because of that lack of familiarity, further detailed engineering and design

ing to $US1.408 billion before tax and people are more conservative in jump- work in a bid to fine-tune some of the

$US1.022 billion after tax. ing on board. We haven’t marketed the costings and other aspects of the pro-

“The NPV pretty much doubles from its project strongly, we have been quite pas- ject. The DFS flagged operating costs of
current size,” Burton told Paydirt. “Basi- sive. We’ve just focused on drilling up the $US24.85/kg in the first four years and

cally we can bring this project on at 1.3 orebody and doing a full DFS because $US21.34/kg over the life of mine.

mtpa and then reinvest the cash flow to it’s better that we just get on with the job. “That will give us even higher confi-

increase it to 2.6 mtpa. “With this DFS out, we have actually dence levels by the time we reach a de-

“Once we expand the project to its full got a strong and credible study to back cision to mine, hopefully late this year,”

size, we really get a project that has sub- up what we’ve been saying about the Burton said.

stantial value around about $US1 billion, project. We can now go out and start to “It doesn’t have to be done in order to

which is a lot more than we were expect- market it a little bit aggressively. make a decision to mine – the DFS is suf-

ing.” “It’s not an easy sell and therefore we ficient – but we’re going to do this front-

The DFS also revealed average LOM believe we are trading at a very substan- end engineering work because we’ve

production of 5,400 tpa contained niobi- tial discount to the underlying project as got to overlap the debt financing period

um (8,200 tpa ferroniobium) would churn a result of that.” which will give us an even stronger deci-

out an average grade of 0.54% niobium Only three mines in the world – two sion to mine.”

pentoxide at 61% recovery based on a in Brazil and one in Canada – currently Burton said the company was also ad-

1.5:1 strip ratio. extract niobium as their primary prod- vancing off-take and debt financing dis-

Mining will be focused on the high- uct. Annual demand is between 90,000- cussions and said shareholders should

grade Angel zone for the first 10 years 100,000t, with the price averaging expect to hear news about the former

and will produce an average grade of within the next 3-6 months.

0.68% niobium pentoxide at 61% re- “We’ve got every reason to believe

covery based on a 2.5:1 strip ratio. we’ll get a successful outcome on

Cradle received no love from the in- both off-take and finance based on

vestment community when it released the work we’ve done to date,” he said.

the DFS results to the market on April Burton said a new management

20, slipping almost 4% to 25.5c/share. team would soon be unveiled to re-

Burton said the DFS numbers place the one previously led by Grant

“spoke for themselves”, but conceded Davey, who spearheaded the acquisi-

investors were still coming to terms tion of Panda Hill in April 2013.

with niobium and the company had Two experienced mining execu-

some work to do to win them over. tives are also expected to join the

Niobium is used with iron and other company’s board.

elements in stainless steel alloys and – Michael Washbourne
is a key ingredient in the construction

of gas pipelines, jet engines and heat- A robust DFS revealed Panda Hill could be developed

resistant equipment. for $US196 million

PAGE 78 MAY 2016 AUSTRALIA’S PAYDIRT

SAVE THE DATE

7 - 9 September 2016

Perth,Western Australia

www.africadownunderconference.com

For all enquiries please contact Tammy Caldwell on (+61) 8 9321 0355
or email [email protected]

REGIONAL ROUNDUP

WA takes on African
mentorship role

Recently voted the best
mining jurisdiction in the
world, Western Australia is

now exporting its regula-

tory expertise in the hope

of benefitting emerging Afri-

can mining economies.

In March, WA polled top

for investment attractive-

ness in the Fraser Insti-
tute’s Annual Survey of
Mining Companies 2015/16

report – widely acknowl-

edged as being the league

championship of mining

jurisdictions – and in the

same month, senior figures

within the State’s Depart-

ment of Mines and Petro-

leum (DMP) were holding

workshops in Nairobi and WA Department of Mines and Petroleum deputy director general, Dr Tim Griffin, and tenure and native
Addis Ababa to help offi- title general manager Tony Bullen with the Kenyan delegation during a recent workshop in Nairobi
cials in Kenya and Ethiopia

better understand the pitfalls, challenges hope to generate the kind of royalties it can generate. It provides economic ac-

and opportunities mining offers national WA enjoys. tivity and that is where the real benefits

economies. “Obviously, the size of the WA mining come from; economic activity and ser-

DMP deputy director general, Dr Tim industry got their attention but we have vices provided by local groups.”

Griffin, and tenure and native title gen- to remind people – both in Australia and Griffin and Bullen also advised govern-

eral manager Tony Bullen hosted the Africa – that you have to attract a lot of ments to ensure there was collaboration

workshops which were organised as part exploration investment initially before between departments.

of the WA Government’s MoU with the you can generate a multibillion dollar in- “Collaboration is very important and

Common Market of Eastern and South- dustry,” he said. “So, there was a focus we suggested it was probably useful to

ern Africa (COMESA), signed at Africa on the exploration stage.” have one senior person act as a lead

Down Under in 2014. Kenya and Ethiopia A former WA Geological Survey ex- contact on specific projects. If a compa-

are two of 19 COMESA members. ecutive Griffin said the importance of ny is showing an interest in investing in
Griffin told Paydirt the workshops providing geoscience data was high- the country, you need a senior person to

were designed to explain to government lighted during the workshops, as was the walk them through the process and pro-

officials in the two countries how to run a need for a clear process to getting on the vide guidance,” Griffin said.

successful resources sector. ground and security of tenure. The workshops were run in partnership

“The mining sector in both countries is “We explained that exploration, even in with the Australian high commissions in

at a fledgling stage and they are strug- more densely populated areas, was gen- Nairobi and Addis Ababa and Griffin said

gling to attract investment,” Griffin said. erally low-impact and could be managed it was hoped they could be rolled out in

“The workshops offered advice on how in coordination with other activities. We other COMESA countries.

to manage private investment and regu- also impressed upon them that explora- “Australia’s High Commissioner in Ad-

late the industry but also how to attract tion did not generate a lot of money but dis Ababa, Mark Sawers, said the idea

private investment in the first place.” could bring benefits to local communities was a good fit with what the Federal Gov-

Kenya only welcomed its first com- by way of employment, skills training, ernment was trying to achieve in building

mercial-scale mine last year – the Kwale services, etc.” capacity and we have been able to build

mineral sands project owned by Perth Revenue, and how a mining industry it from there.

company Base Resources Ltd – while could contribute to a national economy, “We’ve had interest from other heads

Ethiopia is still awaiting its maiden com- was also a topic of keen interest in the of mission and we think we can expand it

mercial operation. Governments in both sessions. in the future,” he said.

countries have highlighted the potential “The royalties generated by WA was “Opening these lines of engagement

economic opportunities mining devel- another eye opener for many of the par- gives our companies – whether miners,

opment could bring but Griffin said the ticipants,” Griffin said. “We had to em- explorers or service providers – a better

workshops emphasised the work that phasise that mining is not a cash cow for opportunity to build industries in partner-

needed to be done before they could the Government because of the royalties ship with governments.”

PAGE 80 MAY 2016 AUSTRALIA’S PAYDIRT

AFRICA

Outstanding returns for Nachu

The Nachu graphite project centrate with a further 160,000 tpa
could produce exceptional from lower grade stockpiles.

returns, according to a BFS com- The Nachu graphite project is

pleted by Magnis Resources Ltd. located in south-east Tanzania ap-

Estimated cash-flow from the proximately 200km to the port of

operation – which has a 15-year Mtwara. The Mtwara Port has a

reserve – is $US1.69 billion. capacity of 400,000 tpa with a cur-

The pre-production capex of rent utilisation at 130,000-140,000

$US269 million could be paid tpa, with existing plans to upgrade

back in 14 months. Operating to 750,000 tpa.

costs are estimated at $US502/t In October, Magnis finalised a

for the first five years and Mineral Development Agreement

$US559/t across life-of-mine. (MDA) with the Tanzanian Govern-

The BFS also highlighted the Nachu is supported by existing infrastructure in Tanzania ment for a period of 10 years. The

low technical risk of the Nachu agreement provides the Nachu

graphite project, the company said. standing projected financial returns,” project with necessary fiscal stability in-

All necessary infrastructure has been Houllis said. “Today’s announcement cluding a 30% tax rate and 3% produc-

identified and any required construction coupled with ongoing discussions with tion royalty.

will be incorporated in the BFS planning, potential off-takers is set to support the The environmental studies were done

including roads, water and grid power case for significant investment to be to IFC standards. The Nachu project de-

sourcing. made into Nachu via debt markets.” livers a post-tax NPV10% of $US1.69 bil-

Magnis chief executive Frank Houllis The BFS was based on a resource lion and an internal rate of return (IRR)

said the BFS was an important milestone of 174mt @ 5.4% TGC, making Nachu of 98%.

towards the development of the Nachu one of the largest (large) flake graphite – Brendon Shilling
graphite project. in the world, Magnis said. The company

“It confirms that the project has out- expects to produce 240,000 tpa con-

Deferment saves Perseus $US31.5 million

Perseus Mining Ltd will require 42% and a reduction in capital expenditure,” Perseus is expected to reinvest some
less sustaining capital for its Edikan Perseus managing director Jeff Quarter- of that cash into its other development
gold mine in Ghana following a strategic maine said. projects, including Yaouré (Cote d’Ivoire)
decision to defer development of the Es- and Baomahun (Liberia), both recently
uajah South open pit. “The forecast cash flow profile en- added to the company’s portfolio fol-
hances our capacity to finance our pro- lowing its merger with AIM-listed Amara
An update life-of-mine plan released ject pipeline, which will be developed as Mining plc.
last month revealed the company had re- part of our strategy to transform from a
duced its sustaining capital requirement single-mine, single-country company to “We’re delighted that Amara’s share-
from $US75.4 million to $US43.9 million a multi-mine, geopolitically diverse, mid- holders voted so comprehensively in fa-
by omitting Esuajah South from its pro- tier gold producer.” vour,” Quartermaine said.
duction profile.
The revised life-of-mine plan will also “The acquisition of Amara Mining, and
The decision had a number of other see a 22% reduction in the amount of with that the Yaouré gold project and the
positive commercial impacts, including a waste mined (193.3mt down to 151.4mt) Baomahun gold project, has upgraded
revised NPV of $US287 million (or 46c/ and a 20% decrease in the strip ratio (4:1 the quality of our asset portfolio and po-
share) at a $US1,200/oz gold price after down to 3.2:1). sitioned us for material growth in produc-
applying a 10% real discount rate. tion, cash flow and earnings in the short-
Operating efficiencies achieved over to-medium term.
Production will now average 220,000 the last three years will be maintained
ozpa over the remaining 7.5 years of and further works are planned to deliver “By bringing the two companies to-
mine life at Edikan, including estimated incremental improvements, including gether, the enlarged Perseus group will
production of 258,000 ozpa for the next progressive removal of bottlenecks in have the financial capacity, quality of as-
five years from July 1. the processing plant and installation of a sets and depth of operating experience
diesel-fired power station. to deliver strong returns for all of our
All-in site costs will average $US920/ shareholders, both old and new. This is
oz over the next five years and $US865/ FY2018 has been identified as a highly a transformational time for Perseus, as
oz over the life-of-mine, representing re- cash generative year, with an additional we begin the next phase of our corporate
ductions of 10% and 8% respectively on $US43 million net cash flow (after tax) development into a multi-asset, multi-
the previous mine plan estimates. now expected following deferment of country producer.”
about $US45 million of development
“Our updated life-of-mine plan at Edi- capital which had been set aside for Es-
kan shows a lower cost profile for the uajah South.
remaining years of Edikan’s mine life

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 81

REGIONAL ROUNDUP

Australia-India to bat
on same track

An Australian-Indian consortium wants Australian miner Citigold Corp Ltd, before operations ceased.
to restart gold mining in a district that which has been conducting field visits to India last year launched a “Gold Mone-
helped symbolise former British rule in In- the Kolar sites since 2006, has agreed to
dia and produced some 25 moz over 150 partner with Indian conglomerate Essel tisation Scheme” to mobilise gold hoard-
years before being abandoned due to low Group to tender for the assets from the ings. The scheme has so far collected
bullion prices. Government. about 3t of gold in four months.

Mining in the Kolar gold field in Kar- “India can be a challenging place to India plans to auction at least three
nataka state in Southern India ended work and partnering up with a solid lo- gold mines this year, including Kolar,
in 2001 as gold prices slumped. But a cal partner is key to making this happen,” Mines Secretary Balvinder Kumar told
government tender could lead to mining Citigold executive chairman Mark Lynch Reuters in February. Kumar said sev-
leases held by Bharat Gold Mines Ltd told Reuters. “We made sure we did our eral local and multinational companies
sold to the highest bidder and operations homework.” had shown interest in the mines, without
resume. naming them.
In the early years, the gold mine
A restart would come amid resurgent sported a sprawling estate for its opera- Lynch said the Bharat project would re-
gold prices and steps by India to mon- tors, with its own golf course and tennis quire new infrastructure and mine equip-
etize some of the estimated 20,000t of courts. British engineers also construct- ment but that potential existed to get an
gold held by its citizens and slow imports ed the world’s longest transmission line early leg up by processing 32mt of mine
to free up capital to strengthen its econ- with the highest voltage at the time to waste at the site, as well as open pit and
omy. meet the hydropower needs of the mine. shallow underground extraction.

India is one of the world’s largest im- By the 1920s, 24,000 workers were Gold prices rose by 17% in the first
porters of gold, but mines only a pittance employed, with Europeans holding most quarter, the best performance in almost
on its own. National demand reached of the top jobs. The mines were national- three decades.
654.3t gold in the second half of last ised in 1956 – nine years after the end of
year, the third highest year on record, ac- British rule – and by 1980 were running “At today’s prices, this project would be
cording to the World Gold Council. at a loss, though it would be two decades making money,” Lynch said.

– James Regan, Reuters

Batangas turns green for Red Mountain

Red Mountain Mining Ltd has we have the green light to deliver
been given the green light to the key milestones we have been

complete its long-awaited DFS on working towards at the high-grade

the Batangas gold project in the Batangas gold project in the Philip-

Philippines after its JV partner Blue- pines,” Red Mountain managing di-

bird Merchant Ventures Ltd finally rector Jon Dugdale said.

achieved admission to trading on the “We’ve been chafing at the bit to

London Stock Exchange (LSE). complete the feasibility study, drill

Bluebird, previously a private fi- test our high-grade gold targets and

nancial services company registered complete the development permit-

in the British Virgin Islands, was due ting inputs, so it’s an exciting few

to list on the LSE in mid-March, how- months coming up.”
Red Mountain hopes to soon finish the Batangas DFS Stage 1 funding of up to $US1.7
ever, its public float was delayed until

April 13, forcing Red Mountain to ex- million under the Batangas JV

tend the timeframe for its strategic fund- Bluebird was to repay $US1.2 million of agreement will earn Bluebird 25% of Red

ing partner to complete its IPO. loans to Red Mountain, paving the way Mountain Mining Singapore Ltd and allow

Red Mountain first struck a deal with for the outstanding geotechnical and re- for the completion of the DFS, which was

Bluebird in December 2014 to pro- source drilling at Batangas to be com- previously slated for release in late 2015.

vide funding for the completion of the pleted. Initial study results have confirmed

Batangas DFS and other working capi- Results from those programmes will be Batangas will have low capital and oper-

tal. The agreement was restructured last incorporated into the DFS, along with the ating costs for the recovery of more than

October, with Bluebird to fork out up to final permitting inputs so development of 100,000oz gold during the first 5-6 years

$US5.5 million to earn a 50.1% interest Batangas, about 120km south of Manila, of the proposed 10-year production plan.

in Red Mountain’s operating subsidiary in can begin. Batangas has total indicated and in-

the Philippines. “Now that Bluebird’s admission to the ferred resources of 6.19mt @ 2.2 g/t gold

Following its admission to the LSE, LSE and their IPO have been achieved, for 444,000oz.

PAGE 82 MAY 2016 AUSTRALIA’S PAYDIRT

ASIA

Siana set to sizzle underground

Philippines gold pro- ana project following the
ducer Red 5 Ltd
could start mining un- completion of the current
derground at its Siana
operations in the second open pit phase of opera-
half of this year, pending
the successful outcome tions,” Williams said.
of an impending feasibil-
ity study. “The delivery of this

A feasibility study as- updated feasibility study
sessing the potential to
extract resources below will provide an important
the current Siana open
pit (about 180m below blueprint for the proposed
surface) is due for re-
lease later this quarter underground develop-
and a decision to mine
could soon follow. ment.

Mining One Pty Ltd is “We are also very
overseeing the feasibil-
ity study – an update to pleased to have secured
the original version completed in 2009
– and has advised Red 5 that the eco- Steve Tombs as under-
nomic assessment has entered its final
stages. ground project manager

Aspects of the study still to be com- at Siana. Steve has the
pleted include a detailed mine design
and schedule, geotechnical modelling of right experience for Siana
the resource below the current open pit,
paste-fill test work and cost estimates. and his expertise will be

In February, Red 5 announced a re- invaluable as we consider
source estimate of 3.8mt @ 5.8 g/t gold
for 704,000oz based on a 2.4 g/t cut-off a proposed transition to
for the Siana underground, comprised
of an indicated resource of 3.3mt @ 5.2 Red 5 is contemplating underground mining at Siana underground mining.”
g/t gold for 551,000oz and an inferred
Red 5 was due to re-

resource of 0.5mt @ 9.3 g/t gold for lease its production results for the March

153,000oz. quarter at the time of print, with the com-

The company also recently appoint- pany anticipating an output of 7,000-

ed Steve Tombs, a former AngloGold 10,000oz gold, in accordance with the

Ashanti Ltd employee at the Sunrise Siana mine plan.

Dam gold mine in Western Australia, as Siana produced 14,431oz gold in the

the underground project manager. December 2015 quarter, down on the

Red 5 managing director Mark Wil- 17,737oz gold recovered in the Septem-

liams said completion of the updated un- ber 2015 quarter.

derground feasibility study would repre- Sales for the December 2015 quar-

sent a key milestone for the Siana mining ter totalled $23.3 million from offloading

operation. 14,762oz gold, down slightly on the $23.8

“The transition to underground min- million earned from selling 15,281oz gold

ing represents a core component of our in the September 2015 quarter.

strategy to extend the mine life of the Si-

BHP Billiton reviews Indonesian coal assets

BHP Billiton Ltd is considering quitting Peter O’Connor said. from the 1 mtpa Haju mine, where BHP
its coal assets in Indonesia, where it BHP Billiton, the world’s largest export- Billiton has come under fire from environ-
recently started shipping steel-making mental groups. The mine made up less
coal from a small mine, amid uncertainty er of metallurgical coal, is considering a than 2% of BHP Billiton’s metallurgical
over Indonesian regulations and a weak range of options for IndoMet, a spokes- coal output in the first nine months of this
outlook for coal. woman said. She declined to comment fiscal year.
on whether the company has entered
BHP Billiton owns a 75% stake in the into talks with any potential buyers for its BHP Billiton has held off approving
IndoMet coal project, having sold the stake. larger developments in Indonesia, await-
rest to Indonesia’s Adaro Energy in 2010 ing more certainty on government regu-
for $335 million. Coal asset prices have “BHP Billiton is conducting a strategic lations.
collapsed since then, and analysts said review of the long-term future options
BHP Billiton would be lucky to fetch $200 for its Indonesian coal interests, Indo- Adaro says the IndoMet assets hold at
million now for its stake in a largely unde- Met Coal, which comprises seven coal least 1.27bt of coal resources.
veloped resource. contracts of work within the provinces of
Central and East Kalimantan,” the global Indonesia’s director of coal mining at
“Does it move the dial for BHP? No. But miner said in its quarterly review. the Energy and Mineral Resources Min-
it’s a really high quality met-coal property istry, Agung Pribadi, said he was una-
and potentially a fantastic opportunity for Adaro spokeswoman Febriati Nadira ware of BHP Billiton’s review of IndoMet.
an Indonesian company with the right said the company had no plans to buy
connections,” Shaw & Partners analyst BHP Billiton’s stake. – Sonali Paul, Reuters

IndoMet started producing last year

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 83

REGIONAL ROUNDUP

Successful start at Skellefte

S2 Resources Ltd has intersect- Bennett said the results confirmed
ed VMS-style mineralisation the validity of his company’s strat-

from the first two holes drilled at its egy to use the VTEM technique

Skellefte project in Sweden. as a means of identifying base

Two diamond holes were metal sulphide mineralisation in the

punched into the Svan Vit prospect Swedish terrain.

last month to test the first of a num- “We have said from the start that

ber of EM targets identified dur- the Skellefte project represents

ing last year’s VTEM survey – the a significant opportunity for S2,

first of its kind to be undertaken in which is why we moved to 100%

the highly endowed mining district ownership of Sakumpu Exploration

which hosts Skellefte. Oy last December,” Bennett said.

The two holes both intersected “Having identified so many strong

sulphide mineralisation at pre- conductors in our district-scale

dicted target depths, with hole VTEM survey, it was important for
SSVA160001 clipping the upper-
us to test the validity of these, so

most edge of the target zone and when our team had an opportunity

hitting a narrow zone of breccia to do just that before the spring

and disseminated sulphide miner- thaw we took it.

alisation. “Our main objective was to iden-
Hole SSVA160002 hit the con-
tify a conductive body to prove that

ductor about 90m down-dip from the VTEM works, so to not only

the first hole and intersected a prove this but to confirm minerali-

broad poly-thermal alteration zone sation with our first two drill holes

containing several sub-zones with into our first conductor is a pleasing

variable amounts of zinc and cop- bonus. It bodes well for the project

per sulphides. as a whole.”

The 4m-wide alteration zone S2 hopes to drill another one or
from 85.75m in hole SSV160001
two holes at Svan Vit before the

returned 0.55m of variable sulphide Massive sulphides were intersected in hole SSVA160001 at northern spring thaw prevents rig
mineralisation from 85.75m and the Svan Vit prospect at S2’s Skellefte project in Sweden movement.
1.65m of variable sulphide miner- The company said drilling would

alisation from 88.1m. 167.7m, 2.9m of variable sulphide miner- resume as soon as possible once the
At hole SSV160002, the 30m-wide al- alisation from 170.5m and 8.1m of varia- ground refreezes later in the year.

teration zone from 164.4m returned 1.6m ble sulphide mineralisation from 183.3m.

of variable sulphide mineralisation from S2 Resources managing director Mark

Alacer awarded key permits for Ḉöpler

Alacer Gold Corp has received ap- “We can now progress the sulphide ceived and the company continues to
proval from Turkish authorities for a project to board approval and expect to evaluate opportunities to optimise and
number of permits for its Ḉöpler mine, provide a comprehensive project update extend oxide production beyond the
including the forestry permit required to in May. current reserves, including a new heap
construct a sulphide plant. leach pad site to the west of the mine.
“The permits also allow us to complete
Other permits awarded to the company the expansion of the heap leach pad on The Ḉöpler sulphide project is expect-
were for supporting infrastructure and schedule.” ed to add 22 years of production and will
the tailings storage facility. lift the life-of-mine production to 3.7 moz
Canada-based Alacer has an 80% gold at average AISC of $C637/oz. An
The permits will allow for the comple- interest in Ḉöpler, which is operated by EIA and all required land permits have
tion of the remaining 30% of the heap Anagold Madencilik ve Ticaret AS. The been received and approved by Turkish
leach pad expansion. remaining 20% is held by Lidya Madenci- authorities.
lik Sanayi ve Ticaret AS.
Alacer also received a number of ex- Alacer is also exploring a number of
ploration permits to continue drilling in Alacer is pursuing a number of ini- regional targets around the Ḉöpler dis-
and around the Ḉöpler district. tiatives to enhance the value of Ḉöpler trict, including Yakuplu and Bayramdere,
beyond the current mine plan, including as the dual-listed company seeks to be-
“Today is a landmark day in Alacer’s expansion of the existing heap leach pad come a sustainable, multi-mine producer
history, with the approval of various im- to 58mt. focused on Turkey.
portant land use permits,” Alacer presi-
dent and chief executive Rod Antal said All required land use permits for the
in an ASX release on April 21. heap leach expansion have been re-

PAGE 84 MAY 2016 AUSTRALIA’S PAYDIRT

EUROPE

Ferrum moonlights in Spain

With a number of projects BVI/Ovation is the JV part-
to choose from, the To-
ral and Lago lead-zinc projects ner which is funding BFS ac-
in Spain stood out for Ferrum
Crescent Ltd. tivities at Moonlight for a 43%

“We looked at a number of interest in Ferrum’s South Afri-
assets but we sensed it would
be extremely cheap to do a can holding company.
major upgrade on its [Toral]
resource. Also, in small com- “I think that has now been
panies you are guided by the
skill sets, experiences and achieved, so we will be pro-
connections of your board and
management team. We happen ceeding soon with that [BFS].
to have good connectivity with
the background to the story The intriguing thing to note is
so we know what we are deal-
ing with, we know the previous that in the last few months iron
owners, we like the metal, we
like the various metallurgical ore has had a nice sort of re-
aspects and we think that we have got
some skills to take it up the value chain,” covery and our potential prod-
Ferrum executive chairman Justin Tooth
told Paydirt. uct, with regard to the high-

Tooth and the new-look Ferrum outfit grade ore that we have suitable
(see page 88) still have to finalise the
Spanish acquisition from GoldQuest for pellets and direct reduction
Iberica S.L., with the option to secure
100% of the projects covering 2,024ha processes, has actually stayed
in the Province of Leon, northern Spain,
valid until the end of July. the same – it never really sank

Ferrum wil take control of the assets as low as the benchmark 62%
for a consideration of £460,000, totalling Ferrum has dipped its toes into zinc in Spain Fe product that most people
£320,000 cash and the rest in 100 million
fully paid ordinary shares. quote,” Tooth said.

Once the deal is done, Ferrum will rein- is also finding some relief in South Africa “But, with a number of investors and
terpret a load of available historical data
and hopes to quickly monetise Toral. which hosts its flagship Moonlight iron mining firms looking round the bend and

In March, the Government renewed ore project. starting to think about the next cycle in
relevant licences at Toral and Lago for a
further 12 months. Tooth said Moonlight remained Fer- resources and mining, we are starting

“Among the set of near-term objectives rum’s lead project. to get genuine interest from a number of
is to reinterpret the data because broad-
ly we are running with a theory there,” The company plans to produce a high players in Moonlight. It feels like the cy-
Tooth said.
quality concentrate from which direct re- cle we were stuck in trying to find finance
“There is quite a lot of historic data on
the lead asset, which is Toral. It is in a duction and blast furnace grade iron pel- has come to an end and we can look
fantastic situation with railway, roads,
power and water all running adjacent to lets can be manufactured for export and forward to an extremely large and well
it. We hope to pull together an updated
JORC resource on that and at the same potentially local consumption at a rate of understood and well regarded orebody
time we want to commence some of the
environmental and social permitting pro- 6 mtpa. Capital costs are estimated at and move it up the development curve.
cesses, those are long lead items. We
also want to keep our heads up and eyes about $US1.5 billion. At the same time we are looking to take
out for some of the neighbouring assets
which are still really looking for proper The recent uptick in iron ore prices advantage of the low cost out in the as-
leadership.”
– $US60.48/t at the time of print – has set space and that is why we have taken
Having spied a good near-term oppor-
tunity it hopes to produce some viable helped projects like Moonlight look bet- up this option on the zinc asset in Spain.”
economics on this year in Spain, Ferrum
ter, while the price spike has also coin- – Mark Andrews
cided with BVI/Ovation Capital reen-

gaging with engineering consultants to

kick-start the BFS.

Despite its European motivation, Ferrum is firmly entrenched in South Africa

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 85

SIGNED, SEALED AND DELIVERED

Capital Drilling and PYBAR will join forces to win more underground mining work in Africa

Capital and PYBAR pany with an established reputation on a JSW will complete on-mine grade con-
team up continent which was seeing a transition trol drilling services for Ramelius at the
towards underground mining. Mt Magnet gold operation for the next
A new agreement will see Capital Drill- two years, having been on site since Au-
ing Ltd and PYBAR Mining Services co- “With a large number of projects seek- gust 2011.
market services in an attempt to win a ing to move underground in the region
bigger share of the African underground there is an opportunity to transfer our The works will continue to use one of
mining market. capabilities and best practice safety sys- JSW’s specialist multi-capacity RC drill
tems to a market which can benefit great- rigs.
Capital is well-established in Africa ly from our expertise.”
where it is among the leaders in com- JSW will also provide blast hole drilling
plete drilling solutions while PYBAR is Dual WA contract win services for South32 at the Boddington
Australia’s third largest underground for JSW Australia bauxite mine for 18 months, having been
mining contractor. on site since March 2013.
Hughes Drilling Ltd’s West Australian
Capital said combining PYBAR’s broad division JSW Australia Pty Ltd has won South32 operates the Worsley Alumi-
underground capabilities with its own un- new contracts with Ramelius Resources na bauxite mine in Boddington and alu-
derground exploration drilling services Ltd and South32 Ltd. mina refinery near Collie.
and 10 years of operational experience
in Africa would benefit both com- Meanwhile, JSW recently finished sec-
panies. ond in the WA Training Initiative 2015 and
was one of only three non-government/
“The agreement is a positive
outcome for Capital and PYBAR private sector companies to have
been awarded entry into the finals
across seven categories.

and I am confident our comple- Watpac accepts
mentary strengths will enable us majestic award
to increase revenue and earn-
ings,” Capital managing director

Brian Rudd said. “Importantly, from Silver Lake
our companies are also an ex-

cellent cultural fit. We have an Watpac Ltd has been awarded

uncompromising focus on safety, a $38 million contract to provide

a solutions-focused approach mining services for Silver Lake

and a commitment to providing Resources Ltd at the Imperial/Ma-

customers with the most efficient jestic project, about 50km south-

and professional service. We east of Kalgoorlie.

look forward to working closely Works will include the clear-

with PYBAR to provide our cus- ing of vegetation and stockpiling

tomers with integrated solutions of top soil to allow for the start of

for underground mining projects mining operations at Majestic, fol-

throughout Africa.” lowed by similar activities at Impe-

PYBAR chief executive Paul rial.

Rouse said the company was JSW Australia has won blast hole drilling services for South32 Watpac will also provide drill
at the Boddington bauxite mine for the next 18 months and blast services.
excited to be working with a com-

PAGE 86 MAY 2016 AUSTRALIA’S PAYDIRT

A total of 6.4 million cubic metres of ore in Fortescue’s development of our world- end engineering and design (FEED),
and waste will be mined over 25 months. class facilities in the Chichester Hub,” engineering assessment and review, de-
An anticipated workforce of about 50 Power said. tailed engineering and production sup-
personnel was due on site at the time of port across all of Woodside’s operated
print. “Our adoption of an owner-operator onshore and offshore producing assets.
model will further reduce Fortescue’s
Watpac currently has other mining and costs through ongoing improvement Clough chief executive Peter Bennett
civil contracts with Hanking Gold Pty Ltd of the efficiency and productivity of our said the company was “delighted to be
and Iluka Resources Ltd. Christmas Creek mining operations.” selected as an engineering partner”.

EPC door opens for Downer EDI said in a statement to the “Over the past two years, we have
Decmil market that it did not expect the move to worked hard to lower our cost base and
“have an impact” on its 2016 financial re- increase productivity by investing in our
Decmil Group Ltd has officially en- sults. engineering and project management
tered the EPC market following its ac- systems and talent development. This
quisition of design engineering business contract award sees this investment
Scope Australia Pty Ltd. come to fruition, and reinforces Clough’s
capability to work across asset life-cy-
The acquisition, priced at $1.68 million cle while building upon our established
on a cash-free and debt-free basis, will brownfields engineering credentials,” he
allow Decmil to deliver turnkey process said.
infrastructure solutions to the minerals
sector and EPC contracts in the utilities Nev Power Swick start to drilling
and government sectors. Decmil has at Nova, Jaguar
a successful history as a construction Clough signs up with
contractor to these sectors. Woodside panel Independence Group NL has awarded
two underground diamond drilling con-
Scope Australia specialises in the Clough Ltd has been awarded a new tracts to Swick Mining Services Ltd.
delivery of study, project management, engineering services contract by Wood-
engineering and design consultancy side Energy Ltd. Swick deployed rigs at Independence’s
services to a range of industry sec- Jaguar nickel zinc-copper-silver-gold
tors, including mining, government and Clough has been selected to work as mine and Nova nickel-copper project last
construction. In FY2015, the company part of an engineering panel to provide month.
generated about $7.3m in revenue and multidisciplinary engineering services for
posted a normalised EBITDA of about Woodside. The contract covers the full The contract tenure is for 12 months,
$1.5 million. spectrum of engineering services includ- with an option to extend for another year
ing concept and feasibility studies, front- based on mutual agreement.
About 40 engineering professionals
will transfer to Decmil and will continue Swick’s global rig utilisation now
to trade under the established name of stands at 76% (59 contracted rigs out
Scope Australia. of a possible 78), including the recently
signed contract with Newmont Mining
Decmil Group managing director Corp for work at KCGM.
Scott Criddle is the major shareholder
of Scope Australia. The acquisition was The drilling company’s total order book
considered by a committee of independ- consists of about $130 million of con-
ent non-executive directors and the tracted work.
price was determined based on an inde-
pendent external valuation. Independence Group has awarded Swick an underground drilling contract at Nova

FMG has Christmas on
its own

Fortescue Metals Group Ltd has end-
ed its association with Downer EDI Ltd
and will now transfer to an owner-opera-
tor model at its Christmas Creek iron ore
operations.

The company said the change would
take full effect from September 30 when
the current mining services contract ex-
pires. Production from Christmas Creek
is not expected to be impacted during the
transition.

Fortescue chief executive Nev Power
thanked Downer EDI for its contribution.

“The Downer team has been involved
with mining at Christmas Creek since the
outset and has played an important role

AUSTRALIA’S PAYDIRT MAY 2016 PAGE 87

COMINGS AND GOINGS

Alara Resources Ltd has chairman. Senior will remain Ltd. Sennitt’s appointment ter for Mines and Petroleum.
appointed Vikas Jain as as a non-executive director. paves the way for chairman L’Estrange takes over from
a non-executive director. Jain Nic Limb to relinquish his ex- Bill Marmion, who is now han-
is also serving as managing Blackham Resources Ltd ecutive role and resume as dling the portfolios of State
director of Indian company has appointed Bruce Ken- non-executive chairman. Development and Finance.
South West Pinnacle Explo- dall as chief geologist. Kend-
ration P/L. all has over 20 years’ experi- Gerard Anderson OreCorp Ltd has ap-
ence in managing greenfields, pointed Robert Rigo as
Tony James brownfields and near mine Gerard Anderson has re- a non-executive director. An
exploration in gold and base signed as managing di- engineer with more than 35
Carbine Resources Ltd has metals and has spent time rector of Archer Exploration years’ experience, Rigo pre-
revamped its board and with Independence Group Ltd. Anderson’s contract with viously worked with OreCorp
management team with John NL, Jabiru Metals Ltd and An- the company expires on June chairman Craig Williams at
Hastings to take on the role of gloGold Ashanti Ltd. 30. Equinox Minerals where he
non-executive chairman and was responsible for develop-
Tony James as managing di- Andy Haslam has joined Antofagasta plc has an- ment of the Lumwana copper
rector. They will be joined on emerging uranium player nounced that Diego project in Zambia.
the board by Graham Brock Vimy Resources Ltd as a Hernández will retire as chief
as non-executive director and non-executive director and executive and will be suc- Acting Tiger Resources Ltd
Chris Newman as geology Mal James has replaced Aar- ceeded by Iván Arriagada, chief executive Michael
manager. Stephen Dobson, on Hood as non-executive. the current chief executive of Griffiths has been appointed
Tom Bahen and Partick Walta Antofagasta Minerals. Iván to the role on a full-time ba-
have resigned from the com- Justin Tooth has stepped has been chief executive of sis. Griffiths has been in the
pany’s board however Walta into the role of executive Antofagasta Minerals since acting role since August 2015
will remain a consultant to the chairman at Ferrum Crescent February 2015. when Brad Marwood depart-
company. Ltd. Tooth leads a swathe of ed. Tiger has also appointed
changes at Ferrum upon en- Nick Giorgetta has retired Ian Kerr as an independent
Hastings Technology Met- try into the lead-zinc space in as a director of Regis Re- non-executive director.
als Ltd has appointed Spain. Evan Kirby joins the sources Ltd. Giorgetta served
Dr Philip Heckley as project board as a non-executive di- as chairman of Regis from Michael Griffiths
manager, production. Heck- rector, Merlin Marr-Johnson May 2009 until November
ley has spent the past three has been appointed as ad- 2015 when he announced his Dalton Gooding has retired
years as part of the Lynas Ad- viser to the board, while Tom intention to progressively step as a non-executive di-
vanced Materials Plant com- Revy has resigned as manag- down from public company rector of Sipa Resources Ltd
missioning team in Malaysia. ing director. Bob Hair has re- life. He remains chairman of to focus on his other board
signed as company secretary the Diggers & Dealers mining roles. Gooding has been in-
Ian Kemish will start as ex- with Grant Button, an existing forum. volved with Sipa and its sub-
ecutive general manager, non-executive director, as- sidiaries for the past 13 years.
public affairs and social per- suming his duties. Nick Giorgetta Karen Field has filled his posi-
formance, at Newcrest Mining tion on the company’s board.
Ltd this month. Kemish will Tom Revy Sean L’Estrange is the new
join the executive committee West Australian Minis- Wolf Minerals Ltd has ap-
at Newcrest. Gordon Barnes has pointed Alan Fearon
stepped down as Clancy general manager at its
Gary Letheridge has Exploration Ltd managing Drakelands tungsten mine in
stepped down as man- director. David Scoggin has south-west England. Fearon
aging director of Talisman been appointed as non-ex- – who was most recently gen-
Mining Ltd. Company chief ecutive while the company eral manager at Barrick Gold
financial officer Dan Madden transitions from its base in Corp’s Cowal gold mine in
will fill the role in the interim. Orange to Perth. New South Wales – will re-
Meanwhile Jeremy Kirkwood place long-serving operations
will join the board as a non- Robert Sennitt has been manager Jeff Harrison who is
executive director, with Alan appointed managing di- retiring from full-time employ-
Senior stepping down as rector of Mineral Deposits ment.

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LEFTFIELD

UWA ARC-ed up

Two new $20 mil- ment and will provide “We will be working over the next few
lion hubs to be a highly skilled work- years with our industry partners, includ-
ing those from Korea, China, and the
used for international force with the expertise USA, to make a micro scale LNG plant in
WA dedicated for training and research.
research and training to unlock Australia’s
“Our close working relationship with
in offshore oil and gas energy resources and our partner organisations is highlighted
by the fact that the PhD students fund-
were launched at The strengthen our contri- ed through the training centre will each
spend 12 weeks a year working in the
University of Western bution to the global en- industry.”

Australia in April. ergy engineering busi- The ARC Research Hub for Offshore
Floating Facilities, to be led by the Uni-
The hubs are ness,” she said. versity’s Shell EMI Chair in Offshore
Engineering, Professor David White, will
part of the Austral- With $9.6 million in help ensure Australia plays a leading role
in future offshore energy developments
ian Research Coun- combined funding from across the globe.

cil’s (ARC) Industrial ARC and nine indus- With $10 million in combined funding
Transformation Re- UWA Professor Susan Gournevic try partners, the ARC from the ARC and four industry partners
search Programme, – Shell, Woodside, Lloyd’s Register and
with a Beam Centrifuge Training Centre for Bureau Veritas – White said the centre
will address the critical engineering chal-
with two of the nine LNG Futures will be led lenges associated with Australia’s next
generation of offshore oil and gas pro-
centres announced by the Federal Gov- by UWA’s Chevron Chair in Gas Process jects, which will require innovative float-
ing facilities.
ernment in May last year coming to UWA. Engineering, Professor Eric May.

UWA Deputy Vice-Chancellor (Re- He said the centre will focus on cost

search) Professor Robyn Owens said effective LNG production, at all scales,

the timing highlighted Perth’s role as an in remote or deep-water locations, with

energy city and that the new hubs would 11 industry-driven research projects

add to the world-leading nature of Aus- planned across a five year period and

tralia’s energy expertise. training for 12 PhD students and five re-

“The hubs will be powerful tools for search fellows.

connecting research and industry with “The centre’s legacy will be a globally-

the partnership providing a competitive unique LNG research and training facil-

edge for products, processes and ser- ity, designed for future integration into a

vices,” Owens said. micro scale LNG plant,” Professor May

“They will be a unique training environ- said.

INDEX

Adaro Energy 83 Elcora 65 Lithium Australia 72 Sherritt 52
African Rainbow 7 Endeavour 14 Silver Lake 30, 86
Alacer Exxaro Magnis 81 Sipa
Alara 84 7 Marubeni 61 South32 88
Amara 88 Metals of Africa 60-61, 65 South West 86
AngloGold 81 Ferrum Crescent 85, 88 Mineral Deposits 88 Southern Copper 88
Anglo American 83, 88 First Graphite 69 MZI 18-20 Sovereign 55
Anson 7, 28, 56-57 Fortescue 8-9 Syrah 73
Antofagasta 71, 73 Freeport Newcrest 88 61
Archer 56-57, 88 56-57 Newmont 87
Arrium 70, 88 Northern Graphite 65
AusQuest 5-6 Galaxy 37, 39, 41-43 Northern Star 30 Talga 60-61, 73, 76
Avanco 55 Gold Fields 49 Nouveau 65 Talisman 11, 88
44-45 Goldcorp 39 Tiger 88
GoldQuest 85 OreCorp 88 Tintina 11
Gryphon 14 Orinoco 29-33 Triton 59, 60
Orocobre 39, 42 Tri-Coastal 20
Barrick 56-57 Hanking 87 Troy
Base 80 Hot Chili 46-47 Perseus 81 True Gold 28, 31, 36
Beadell 28 14
Bharat Gold 82 Ramelius 30, 86
BHP Billiton Iluka 86 Red 5 83 Vale 4, 8-9, 28, 45
Blackham 4, 83 IMX 60-61, 62 Red Eagle 50 Valance 59, 60, 74
Black Rock 88 Independence Red Mountain 82 Vimy 88
75 87, 88 Regis 88 Vital 10
Renascor 70 Volt 64
Carbine 88 Jabiru 88 Rio Tinto
Cazaly 52 4, 9
Citigold 82 Kibaran 60-61, 63, 73, 75 S2 Resources Walkabout 68
Clancy 88 Kingsgate 48-49 Sandfire 84 Wengsheng 20
Codelco 56-57 Kinross 49 Sayona 11 Western Areas 12, 13
Consolidated Zinc 42 Kumba Iron 7 73 Woodside 4, 87
Continental 50 Wolf 88
Cradle 78
Crusader 22-28 Lago Dourado 25, 26 Zahena 55
Lincoln 70, 74

PAGE 90 MAY 2016 AUSTRALIA’S PAYDIRT



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