GMJ132-July-Sept-web

July – September 2018 VOLUME 1. ISSUE 132
$11.95
Registered by Australia Post PP 643938/00057

Beauty of Bellevue:

Draig chases high grade

AFRICA FOCUS DIGGERS & DEALERS PREVIEW

ISSN 1324-4396
03

9 771324 439005



GOLD MINING JOURNAL (ISSN 1324-4396) COVER 16
Published by Paydirt Media Pty Ltd.
A.C.N. 063 985 133 Despite its expertise in greenfields exploration, the Steve Parsons-led

EDITORIAL Draig Resources is revisiting the historic Bellevue gold project, near
Editor:
Leinster in Western Australia. Nestled in nickel-rich territory, Bellevue was
Dominic Piper
one of Australia’s highest grade mines at its peak, with Draig believing it
Deputy editor: has more to give. Mark Andrews accompanied a group of investors and
Mark Andrews
analysts on site with Draig to find out how
Journalist:
Michael Washbourne DIGGERS 22

Art director: The annual Diggers & Dealers Mining Forum is upon us again and
Marian Noonan
GMJ will be in full force in Kalgoorlie in early August. This year’s forum
Contributors:
Keith Goode, promises to be one of the biggest events in recent years, with companies
Brendan Ryan (Johannesburg)
in other commodities starting to feel the buzz gold players have
ADVERTISING
Advertising manager: experienced for some time

Richa Fuller AFRICA 40

Subscriptions: Gold exploration is back in vogue and there is no hotter region than West
Mitchelle Matambo Africa. The region’s potential has always been known, but funding hasn’t
always been forthcoming. Amid a bull market for gold, positive sentiment
PAYDIRT MEDIA is returning to explorers chasing elephants in West Africa, with Ivory Coast
Executive chairman: high on the radar
Bill Repard
Cover image: Draig Resources executive director Steve Parsons at the
Finance manager: Bellevue project, 40km from Leinster
Giovanny Jefferson
CONTACT US
Accounts/administration:
Heather Melling Suite 9, 1297 Hay St, West Perth, P: (+61 8) 9321 0355
Western Australia 6005 F: (+61 8) 9321 0426
CONFERENCES E: [email protected]
Melita Fogarty P.O. Box 1589, West Perth, W: www.paydirt.com.au
Western Australia 6872
Namukale Nakazwe-Msiska
Christine Oelschlaeger

PRE-PRESS AND PRINTING:
Vanguard Press

26 John St, Northbridge WA 6003

Member of:

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

EDITOR’S LETTER

Time for dealers to take
centre-stage

After several years of domination by the former side of the equation, this
year’s Diggers & Dealers Mining Forum in Kalgoorlie (August 6-8) should
see the latter attributes come to the fore.

The Australian mid-tier gold sector has proven its digging capabilities, building
up strong balance sheets and sizeable cash reserves in the process.

However, the M&A rumour mill is, somewhat inevitably, beginning to turn and
the word “discipline” is being replaced by “growth ambitions” in company
presentations. For now, the Australian mid-tiers are offering a conservative
public persona, claiming all their growth ambitions are achievable organically
through their existing portfolios but it doesn’t take much for strong balance
sheets to become lazy balance sheets and shareholders have rarely shown a
willingness to back long-term exploration strategies when there is money to be made.

So, who are the prey and predators in the 2018 Australian gold M&A dance?

Those mid-tier miners are an obvious place to start, particularly as their share registers have taken on an
increasingly North American feel.

Companies such as Northern Star Resources Ltd, Evolution Mining Ltd, St Barbara Ltd and Saracen
Mineral Holdings Ltd have the cash and the credit to be active participants.

The one thing they don’t have – apart from Evolution – is long reserve lives. All the mentioned companies
have done a fine job replenishing their reserve base but the character of their deposits is such that they
are unlikely to ever define 10-year mine lives.

The problem is, the North American investors who increasingly dominate their registers are used to seeing
genuine mid-tier companies able to boast long reserve lives in the nature of the big Nevada and Canadian
deposits.

Of the above mentioned companies, St Barbara and Saracen appear the most likely to pull the trigger first.

Both companies have recovered from dicey situations at their flagship assets and while they have
performed consistently for more than two years, their portfolios remain mature. They would benefit from
the injection of development assets with sizeable resources and growth opportunities.

The problem is, there are few such assets around, particularly in Australia. It may be time for these
companies which have built their businesses on the certainty delivered by a WA portfolio to begin looking
offshore.

It is the classic risk/reward scenario. If they are to acquire the kind of project which provides greater
geological certainty, they must trade some of their political stability.

At the other end of the market, the proposed merger between Spitfire Materials Ltd and Excelsior Gold Ltd
is an intriguing one, bringing together two companies who alone struggle to garner much market attention.
Together, they become a sizeable gold developer with a 2.1 moz resource, the likes of which are rare on
the ASX.

Excelsior managing director Rowan Johnstone summed it up well on the announcement: “Essentially, this
merger will result in one project, one office and one board with over 2.1 moz in resource and the critical
mass to potentially generate a meaningful production profile.”

It has the potential to be incredibly value accretive for shareholders. The only remarkable thing about the
merger is we don’t see it often enough in a sector which is currently dominated by management teams
desperate to justify their own existence.

[email protected] @DominicPiper /dominicpiper /PaydirtMediaAustralia

Page 4

NEWS

The Catalyst in Victoria

by Mark Andrews

Kirkland Lake Gold Ltd is receiving deserved 1.5
attention for its stunning run of production and
growth plans at Fosterville, however, there is an 1.0
equally impressive exploration story emerging in

Victoria. 0.5

Catalyst Metals Ltd has rights to claim Australia’s

best greenfields hit in the gold sector so far this 0 Oct 2017 Feb 2018 June 2018
year – 16m @ 63 g/t gold, including 12m @ 84 g/t
Catalyst’s one-year share price performance from June 2017 to June 2018
in hole FERC222 – from the Four Eagles project, 70km

north of Bendigo. includes a potential JV with Navarre Minerals Ltd.

A single assay from the RC drilling programme also returned Catalyst’s subsidiary Kite Operations Pty Ltd informed
a 1m interval at 810 g/t gold at Four Eagles. Navarre that the $3 million expenditure obligation to earn

The company’s share price received a nice kick-along in 51% in the Tandarra gold project had been completed, with

light of the announcement on June 25 and at the time of print confirmation that all earn-in obligations to move forward to

Catalyst was trading at $1.47c/share and boasted a market an unincorporated JV pending at the time of print.

cap of $105 million. “A lot of people think that has all been explored before, but

“It has far from been an overnight success, it is a technical once you get north of Bendigo it is all under cover, younger

success and [potentially] another major gold discovery and barren sediment,” Kay told GMJ.

a real feather in the cap for technical director Bruce [Kay]. “Bendigo has been mined for over 150 years now and no
Bruce put this together eight years ago and people are one can explore it until you get the geophysics, it is almost
backing him in,” Catalyst chairman Steve Boston told GMJ. pristine territory similar to what you find in Western Australia.

Kay used to head worldwide exploration for Newmont Mining What we are doing is not trying to get in around old mines,

Corp before retiring from the gold heavyweight in 2003. Prior but we are doing reconnaissance exploration over big areas

to that he was managing global exploration for Normandy. the same that anyone would do in WA.”

Kay is now building a following at Catalyst and in a tightly Kay said exploration would continue with heavy exploration
held register, supporters of the company include none other campaigns across its interests with Catalysts share of
than Hancock Prospecting Pty Ltd wholly-owned subsidiary funding annually likely to be in the range of $3-4 million.
Gold Exploration Victoria Pty Ltd
(GEV), while St Barbara Ltd is a major Meanwhile, with diamond drilling
shareholder with 16%. completed at Boyd’s Dam and
Hayanmi, logging and sampling of
In 2015, GEV and Catalyst entered core was in progress and results
terms to formalise a JV agreement over expected to filter through in July.
Four Eagles whereby the former could
earn 50% in the project by committing In addition to the outstanding result
$4 million towards exploration. in FERC222, other significant
intercepts included 21m @ 5.5 g/t
Those terms have since been satisfied, gold, 10m @ 10.5 g/t, 14m @ 10.1
with Catalyst managing exploration g/t, 5m @ 36.2 g/t, 13m @ 8.5 g/t
and both parties contributing to further and 8m @ 10.2 g/t from the other
exploration spend. 20 RC holes at Boyd’s Dam.

Catalyst owns a dominant position in The high-grade intersections of
“reasonable” width continues
the Whitelaw Belt which, which covers to provide encouragement
for Catalyst that open pit and
an entire area 75km long and 5-10km underground potential exists at
Boyd’s Dam and Hayanmi.
wide starting north of the outcropping

Bendigo Goldfield.

The company has interests in Catalyst has a dominant
eight exploration licences in land position in Victoria’s
the Whitelaw Belt, which also
Whitelaw Belt

Page 5

OPINION

A typical South African
gold mine

by Keith Goode

This column is inspired by the spectacular statements
being made by companies associated with the Pilbara
gold-bearing conglomerates story and their potential
similarity to South Africa’s Witwatersrand Basin given they
were formed around the same time; 2.4-2.8 billion years ago.

The initial theory was that the Pilbara and Wits were

adjacent to each other. That theory suffered a major blow

in November 2017, due to a new paper on the formation of

Gondwanaland, which showed that India had been between The watermelon seed nuggets of the

South Africa and the Pilbara. Pilbara conglomerates have drawn

In my experience, most people have no idea what a South comparisons to the Witwatersrand

African gold mine looks like other than a lot of gold was @ 10 g/t within a 30m thickness of conglomerate at a depth
mined from conglomerates. This column is based on the of 2.7km. After this, the team was reportedly told to stop
knowledge gathered over 11 years as a gold analyst in South wasting money.
Africa from the late 70s. I visited most of the gold mines in

the Wits during that time and saw almost all of the different If Australian gold companies do still think that they have a

types of gold in conglomerate reefs that had been or were Wits goldfield after reading this, then they should be drilling

being mined. conventional holes up to 3-4km deep on 500m spacing, as

An added advantage was my Mine Manager’s Certificate of that was the norm in South Africa.

Competency, which meant that I was invited to the monthly In the 70s and 80s, it took around six years to drill usually

Mine Manager “group” mine visits at which I could ask any 12-20 holes (often with up to three wedges/deflections per

mine manager, general manager or consulting engineer hole – the highest I saw was 13) to a depth of 3-4km, and

what was happening at any of their gold mines (platinum then take another six years to sink the required shaft down

details were mostly a state “If Australian gold companies do to the reef to be mined.
secret). still think that they have a Wits
goldfield after reading this, then they Mines and deeper
I don’t dispute there mine extensions were
is gold in the Pilbara based on a 10-12 year
in quartz veins or timeframe, as many of
watermelon seed gold the reefs to be mined
nuggets but the question only started from a sub-

has always been one of should be drilling conventional holes up outcrop around 2km
economic distribution, as to 3-4km deep on 500m spacing, as that below surface.
described by Maitland in
So, why drill to 3-4km?
1919 over Beatons Creek was the norm in South Africa.
Because, there are up to
with an estimated ~0.7g/t
20 different reefs in that
distribution (based on trial
geological time interval
mining and treatment). It was also questioned by Metana in
as shown in the 3D schematic. They are not all payable, the
the 80s and Dominion in the 90s who had high expectations
payability depends on the perceived depositional feed entry
in one quarter, halved their annual gold production targets
points into the 320km long by 160km wide NW (Wits) basin
from there in the next quarter, and thereafter never discussed
for each particular reef. The basin is updomed, punctured
it again.
and locally overturned near the centre due to the Vredefort

CRAdid drill the Pilbara area to a depth 3km with a programme Dome, otherwise it forms a cereal bowl-like shape on the

of six holes in the 70s, following up the conceptual Wits left-hand side that flattens at around 5km deep.

theory out of which the best intersection was reputedly 0.5m Examples include the Kimberley reefs mined mostly in the

Page 6

Far East Rand of Evander, the Main Reef
and Main Reef (Carbon) Leader through
Johannesburg, to the Bird and Upper Elsburg
Reefs west of Jo’burg in the West Rand, VCR
and Carbon Leader in the West Wits, Vaal Reef
at Klerksdorp, and mostly Basal Reefs in the
Welkom Goldfield of the Free State.

It should be noted that even if the grade was

measured on all four sides for the ore block to

be contained in ore reserves, the distribution

of the gold in the block varied according to

the different type of reef, as measured by the Plan, section, 3D

mine call factor (MCF), being the percentage of schematic and reef

gold accounted for/gold called for. Typical reef specimens from a typical

MCFs were: Kimberley (98%), Basal (92%), South African gold mine

Vaal (90%), Carbon Leader (89%), VCR (86%)

and Elsburg (75%). Ore reserves usually used stope width are blue, that usually infers uranium (in South Africa).

or height (mostly 1-2m). However, when it came to treatment It is widely accepted by sedimentary theorists in South
or mill throughput, then mill width was used (which basically Africa that the gold in the Wits basin was derived from the
included all the development), while channel width was the Archaean greenstone belts older than 3.25 billion years,
reef thickness. while the uranium was drawn from granites that intruded the

I never saw the watermelon seed-sized visible gold nuggets greenstones between 3.05 billion and 3.2 billion years ago

described by the Pilbara explorers throughout my entire time with the Wits basin itself containing sediments and volcanics

in South Africa. They were not even referred to in museums up to 14km thick, deposited between 2.5 billion and 2.75

or on display in various display cabinets of the then eight billion years ago.

mining houses. Buffelsfontein – in the Klerksdorp Goldfield – could be

The discovery of the conglomerate reefs in South Africa viewed as a typical Wits mine. Some 9km long on strike and

is well-documented and bears no resemblance to the 6km on dip, spread over a 9km by 8km area when projected

discovery of gold in the outcrops in the Pilbara. Australian to surface. It had shaft pillars in which nothing was allowed

George Harrison stumbled over an outcrop of weathered to be mined (to protect the shaft) that fitted into a 500m by

conglomerate in 1886. On crushing, the conglomerate 500m area since its Vaal Reef depth was mostly only 2km

produced a long tail of gold in the pan. Alas, as with most to 2.5km below surface (its later Strathmore shaft went to

discoveries, who found what changes with time, and George’s 3.7km). Western Deep Levels had shaft pillars that were

mate George Walker claimed he discovered it while looking 1km by 1km, for its two shafts around 5km apart, going

for material to build the cottage and it was the richer Main down to 3-4km for its (Ventersdorp) Carbon Leader and VCR

Reef (carbon) Leader, not the Main Reef. The conglomerate (Ventersdorp Contact Reef) reefs.

was often called banket, due to its resemblance to a type of The typical labour force for a mine like Buffelsfontein or
nutty toffee that was being made at Hartebeestfontein was around
that time. 16,000 employees. The shallow

For quite some time, academic platinum mines had even

papers argued the Wits derived as higher labour rates with 46,000

a sedimentary formation deposited mineworkers on Impala Platinum

into a sluggish basin. However, Ltd’s 12 mtpa hoisting shafts on the

over time other geological theories Bushveld Complex.

have emerged, despite most of However, drilling on such wide gaps
the reefs being contained within carried its own levels of high risk,
a sedimentary sequence of even if the orebody was tabular and
quartzites, etc. the grade distribution in cm by g/t for

The closest correlation that still 500m by 500m sided blocks could

fits for the Wits, in my opinion, be predicted through applying Sichel

appears to be quartz-rich placers t, Kriging or Shaparov, as shown in

with generally small pebble sizes the image of Buffelsfontein. Buffels

as seen in the image (the pebbles sank the Strathmore shaft with the

are often angular implying close to The Witwatersrand Basin was the most prolific intention of bringing production on

source). When the quartz pebbles goldfield in the world for more than 100 years as other shafts ran out of production

Page 7

OPINION

but the orebody was extensively faulted, like a deck of cards, only resembled a 1mm-thick, almost horizontal, pencil line
which restricted its planned life. on a face underground which reputedly contained visible
gold within it.
I recall another gold mine, JCI’s Joel in the Orange Free
State, where the main shaft was sunk and drove out to the So, where do the Pilbara conglomerates fit into the
supposed sub-outcrop position of the reef, only to find it was geological column? Although there is a barren cobble-sized
not there. There were faults on either side of the shaft that conglomerate under the Libanon Reef in the image with a
had moved the sub-outcrop more than 200m further away. quartzite hangingwall and footwall and a shale horizon higher
On other occasions, shafts were sunk to find the reef had up, one of the numerous formation schematic diagrams
been completely faulted off ahead of the shaft, as Wit Nigel for the Wits basin does have boulder conglomerates at
discovered. significant depth below the Wits reefs (possibly another
6km or so). And eventually (4km deeper still) the geological
Only one reef, the VCR, had a dark andesitic lava or basaltic column overlies Archaean gold deposits (similar to WA), for
hangingwall, the others were mostly quartzite hangingwalls, the 14km-thick “sedimentary” package.
or occasionally shale, or a different conglomerate. The gold
in the conglomerates was mostly not visible in the matrix The Pilbara conglomerates were possibly eroded along
between the often small angular quartz pebbles as shown in with the Archaean and other gold-in-quartz veins into the
the Figure, in complete contrast to the large mafic boulders Wits basin. In which case, the Wits basin may not exist in
of the Pilbara. the Pilbara – possibly either because the Pilbara was a
landmass at that time, or it has already been eroded.
Some South African reefs unconformably overlie other
reefs, for example the Libanon conglomerate reef in the However, it can be seen in the table just how large the South
West Wits goldfield has a shale footwall and is overlain by a African gold mines were in area, depth and gold production.
quartzite that becomes the floor of the Kloof conglomerate So, the question is do the Pilbara conglomerate companies
reef, whose hangingwall consists of a sequence of Elsburg still insist that they have a mega-ounce Wits-like goldfield?
quartzites, and then the whole package has been tilted to Disclosure and Disclaimer: This article has been written by
become unconformably overlain by the VCR which has the Keith Goode, the Managing Director of Eagle Research Advi-
andesitic Ventersdorp lava/basalt as its hangingwall. sory Pty Ltd, (an independent research company) who is a Fi-
nancial Services Representative with State One Stockbroking
There have been comments that some of the Pilbara (AFSL 247100).
conglomerates resemble the Carbon Leader, however, the
Carbon Leader I recall seeing at Western Deeps sometimes

Page 8



NEWS

Striking gold

by Dominic Piper

When the next generation of West Australians
follow in the footsteps of this year’s WA
Socceroos Trent Sainsbury and Josh Risdon, they
may have a quiet word of thanks for the State’s
largest gold miner.

Gold Fields Ltd’s recent commitment to a three-year
sponsorship will see the miner’s logo carried on the
shirts of all 21 WA state football teams during their
involvement in national and international competitions.

Football West chief executive James Curtis said the
sponsorship was a major milestone for the game in
WA.

“It is a three-year partnership and the largest private
corporate sponsorship in Football West’s history,”
Curtis told GMJ. “To have an iconic name on the
WA state teams’ shirts as they travel interstate and
overseas is going to be a real signal of the strength
of WA football.”

Gold Fields Australasia regional vice president
Stuart Mathews told GMJ the company’s alignment
with football was natural given the values the two
organisations shared.

“We have been in WA for 17 years and decided our

presence needed increasing; our branded needed Football West chief executive James Curtis with Perth Glory Womens’ team
a lift,” Mathews, a former New Zealand provincial member Tash Rigby and Gold Fields Australasia regional vice president Stuart
rugby player, said. “We thought about a major Mathews celebrating the latter’s three-year sponsorship deal with Football West
sponsorship of a senior team but didn’t think that

was really us. But, two weeks later by coincidence our presence in WA. Gold Fields is investing $100 million a
I was talking to [Football West chairman] Liam Twigger at year in exploration. No-one is even close to spending that in
a social function and quickly recognised the high levels of Australia,” Mathews said.
cultural compatibility and alignment. Football West’s whole
approach and attitude to diversity and accessibility is very “Gold Fields has been in Australia for 17 years and for the
much aligned to how we want to operate in the community.” most part has been flying under the radar. We now want
to talk it up because we have performed exceptionally well
Regional WA is one of the biggest growth areas for Football during that time and in the last five years we’ve taken it to
West, which is changing perceptions about the world game another level.”
being a metro-based sport.
Meanwhile, Football West hosted the Persebaya Under 19s
One of the key projects for Football West is the Regional Indonesian football team in WA in July.
Football Festival which was held in Geraldton last year and
Kalgoorlie-Boulder this year attracting 1,500 kids to clinics, It was the first leg of a two-way exchange with the Football
while the Perth Glory versus Sorrento NPL match in the city West Gold Fields State team travelling to Indonesia in 2019.

was a highlight. The visit was a result of months of co-operation between

Football’s reach in WA is 250,000 people and its regional Football West and the WA State Government, with the tour
reach is growing in communities, with Mathews keen to the first of many undertaken by teams from Asia.

engage more people in the game in areas such as Leonora, The visit by Persebaya was the latest development in

Laverton, Kalgoorlie and smaller communities, while also Football West’s Asian Engagement Strategy designed to

enhancing the Gold Fields brand in WA. strengthen ties between WA football and Asia.

“There is a link between us, we have got a long-term view of

Page 10

OPINION

Old mines find resuscitation

by Brendan Ryan

Despite widespread predictions that “peak gold” He commented: “We went out two and a half years ago to
production has been reached and the global supply of raise money for this project and could not do it. Thirty-five of
newly-mined gold should start to decline, a drop in output the funds we approached turned us down because Galaxy
has just not happened. was in South Africa; four turned us down because we were
only looking for $US5 million and the last one made us an
One of the reasons is that miners keep resuscitating gold offer at 36%.”
mines that are on their last legs and one of the latest
examples of this trend is from South Africa where the former Terms of the Barak secured loan facility are a three-year
Agnes mine is about to be brought back into production by term from the date of the first draw-down at an annual
TSX-listed junior Galane Gold Inc. interest rate of 14%. Galane will pay Barak 0.75% of the net
proceeds accruing to Galaxy under an off-take agreement
Agnes – situated near Barberton in Mpumalanga province covering the annual gold concentrate production from the
– has been around for more than a century and for most of Agnes mine after taking into account various costs and
that time was owned and run by the former Anglovaal group. royalties.

It was eventually shut down, only to be bought by black Brodie’s plans for Agnes are far more cautious than the
mining entrepreneur Mzi Khumalo in 2004. Khumalo had expanded mining operation planned by Skeat.
hugely ambitious plans for the mine but they didn’t eventuate
and the Agnes mine came back on to the market when Brodie said Galane would start production at 15,000 ozpa
Khumalo walked away from it. gold which was the capacity of the existing, refurbished
processing plant. He added once this first step had been
Agnes was bought in an auction in 2008 by well-known South proven then he believed it would be possible to find the
African mining entrepreneur Peter Skeat, who renamed finance needed to scale Galaxy’s output up to 30,000 ozpa
it Galaxy Gold and also had hugely ambitious plans for and then eventually 60,000 ozpa.
the operation. He intended scaling it up using large-scale
mechanised mining methods and he also wanted to list it on Galane also owns the Mupane gold mine near Francistown
the JSE. in Botswana which it bought from IAMGold Inc in 2011. The
mine was originally developed by the now-delisted Australian
Again, it all came to naught because Skeat ran into a string junior Gallery Gold.
of problems which resulted in the listing being cancelled and
then he fell out with partners. All of this underscores recent comments by Gold Fields Ltd
chief executive Nick Holland.
If any of that sounds familiar to Australian readers it’s because
Skeat was formerly partners with Aussie entrepreneur Bryan “Overall production profile forecasts are predicated on mines
Frost in Mintails, which tried to re-open the former ERGO falling off the bus but the one thing about old mines is that
gold dump retreatment operation near Springs in South people find a way to just keep them going,” Holland said.
Africa.
“Look at our former Darlot mine in Australia. We had six
Skeat and Frost fell out and, while ERGO was successfully months of reserves and we said that’s the end because we
redeveloped, it was largely thanks to DRDGold Ltd’s had spent a lot of money trying to find more.
backing. ERGO is now wholly-owned by DRDGold which
was a minority partner in the beginning but built its stake up “So, we on-sold it to a small company called Red 5 [Ltd].
as Mintails imploded. They have an old, defunct operation just up the road. They
are putting the two together and they will get the final crumbs
Skeat, by the way, is currently trying to resurrect another failed out of it or, who knows, maybe they will find a new system
“golden oldie” in South Africa – the former Blyvooruitzicht that none of us saw and in 5-10 years you may find that
mine. Darlot is still going.”

Galane Gold bought Galaxy from Skeat and – all going to Holland also pointed out: “$US1,300/oz is not a bad gold
plan – should have the mine back in operation by the first price. All the mines that were previously dying now have
quarter of 2019 after raising $US5 million from a South more oxygen and can breathe a little longer so I do not
African backer, the Barak Fund SPC. believe that we are going to find old mines falling off the bus
as quickly as expected.”
Galane chief executive Nick Brodie said he approached 40
overseas funds looking for backing before finally reaching
the agreement with Barak.

Page 11

OPINION

Digitally healthier mines

by Emeritus Professor Odwyn Jones AO. FIMM

Atlas Copco’s recent commitment to accelerating its The second report, which is directly relevant to the situation
development of electric-powered equipment is revealing in Western Australia, was completed in 2016 and involved a
of an industry-wide trend. study of the Department of Mines and Petroleum’s recorded
CONTAM data from 1996 to 2013. The researchers led by
Comments by Andreas Nordbrandt, Atlas Copco’s president Dr Susan Peters modelled the average levels of exposure
of underground rock excavation division, that “our customers’ among workers in a range of occupations and estimated the
future is electric” indicate it becomes realistic to visualise number of deaths due to lung cancer as well as highlighting
“zero-emission electric equipment” replacing diesel-powered that underground personnel such as diesel loader operators
mobile equipment sooner rather than later. (boggers) and shotcreters faced the highest risk.

As Nordbrandt said: “The company’s immediate plan is to It also indicated that the rate of lung cancer among miners
expand its current portfolio of electric-powered equipment exposed to 44 micrograms of elemental carbon (EC) per
including loaders, drill rigs and haul trucks”. While having cubic metre of air, while working for 45 years, was 38 times
higher up-front costs, this will result in lower mining costs and higher than in the general population; a risk level far too
potentially considerable savings in ventilation and cooling. high, according to Dr Peters.

One of the major advantages of an all-electric underground Other potential long-term effects include bladder cancer,
mine is the elimination of the health hazard to mineworkers respiratory illness, impairment of the immune system and
where diesel-powered mobile equipment predominates. cardiovascular diseases.
This hazard is known to increase the risk of lung cancer
and other likely illnesses such as cardiovascular diseases Health issues alone provide very strong reasons for removing
and respiratory conditions. Diesel engine exhaust fumes diesel-powered mobile equipment from underground mines
are particularly hazardous to mineworkers in restricted and the most attractive option currently lies with electric
underground conditions where the provision of adequate vehicles.
supplies of fresh air is difficult.
One of the earliest users of battery-electric technology
The health challenges of diesel exhaust fumes to the in underground mines was Kirkland Lake Gold Inc which
general public are also of rising concern to public health introduced such machines to its Macassa gold operation in
authorities worldwide with Britain’s largest trade union last Ontario five years ago. These machines have maintained
year establishing a diesel emissions register for employees consistently high performance and currently account for
to record their exposure to toxic air. more than 70% of the mine’s production.

Countries around the world are also taking urgent action in Goldcorp Inc has tested machines for several years and last
developing clean air plans, including targets for removing month announced its new Borden Lake operation would be
diesel-powered vehicles from busy public thoroughfares. all-electric.
Therefore it is surely time for the mining industry and its
regulators to develop a “clean air plan” for underground Having also tested the technology extensively, Glencore
mines, including guidelines for the replacement of diesel- intends making its Onaping Depth project in the Sudbury
powered mobile vehicles with electric-powered equivalents Basin fully electric, due largely to high ambient rock
as soon as is practicable. temperatures and increased ventilation required to cope
with the health hazards of fumes.
Two fairly recent scientific studies provide incontrovertible
evidence of the hazards faced by underground miners The Global Mining Standards and Guidelines (GMSG) Group
exposed to diesel engine exhaust fumes. The first was was formed as a consortium including the Canadian Institute
the National Institute for Occupational Safety and Health of Mining, Metallurgy and Petroleum (CIM), supported by
(NIOSH) and the National Cancer Institute’s (NCI) “20- the Australian Institute of Mining and Metallurgy (AusIMM),
Year Diesel Exhaust in Miners Study” (DEMS) published the South African Institute of Mining and Metals (SAIMM),
in 2012. It included the study of 12,315 workers from eight and the Surface Mining Association for Research and
non-metal underground mines in the US, and reported a Technology (SMART).
strong relationship between the level of exposure and risk
of death from lung cancer. Indeed, it reported the mortality This Guideline Group’s “Recommended Practices for Battery
rates were about three to five times greater for those with Electric Vehicles (BEVs) in Underground Mines”, provides
highest exposures compared with those having the lowest recommended practices for use in planning underground
exposures. mines for EVs and can be used in tender documents to
original equipment manufacturers. It is a detailed 39-page

Page 12

document and is essential reading for any Mining professionals of the future will
mining company considering investing in EVs. need to develop different skill sets

Among the advantages of EVs, as detailed in deal with higher in-situ rock temperatures of 40-50°C and
the report, are reduced airflow and refrigeration doing so without having to also cope with the extra heat and
loads – a significant advantage in deeper humidity of diesel engines and their toxic exhaust fumes is
mines, especially those encountering high in- a major blessing.
situ rock temperatures, due primarily to the
removal of exhaust fumes and heat produced Goldcorp’s Borden mine “will also rely on smart controls,
by diesel engines – and healthier working including ventilation on demand (VOD) and tele-remote
environments – particularly in development mining to maximise equipment usage”, making it a truly
headings with no diesel fumes being generated digital, safe, healthy and miner-friendly operation.
and much reduced noise levels.
Omitting health care costs and premature illnesses
The major advantage of diesel fuel is its high associated with the long-term exposure to diesel engine
energy content (50 MJ/kg), more than 80 times exhaust fumes would greatly reduce the integrity of any
greater than the most dense lithium-ion battery costly benefit analysis.
(0.61 MJ/kg) currently available.
Rio Tinto Ltd’s “Mine of the Future” programme involves
EVs also present a number of challenges to advancing the technologies associated with surface and
mine operators and planners because of the underground mines and in many ways defines an ideal
specialised infrastructure required for battery charging and template for modernising the curricula of mining-related
maintenance, not to mention the importance of equipment undergraduate and postgraduate programmes.
scheduling to take account of the current limited battery life
between charges, etc. It is increasing productivity in the Pilbara with its fleet of
autonomous trucks and more recently autonomous blast-
Battery-charging systems involve adopting either on or off- hole drilling, as well as using drones to measure stockpiles
board charging or battery swapping. These decisions form and help with its environmental activities.
the basis of planning EVs, with each system requiring its
own infrastructure and mine design features. Its underground programme includes developing a new
breed of tunnelling machines such as the Aker Wirth’s Mobile
The ultimate future of fully-electric underground mines relies Tunnel Miner – capable of extracting 75-100,000t of ore from
on EV technology but as the industry waits on improvements deep-lying tunnels in preparation for block caving extraction
to energy density, there are interim solutions including – and the use of novel systems such as the Herrenknecht’s
hybrid-powered options and tethered and/or trolley assist Shaft Boring System, which is capable of twice or three
electric-powered equipment. times the normal rate of sinking.

Reduced ventilation infrastructure in fully electric mines has This exemplar mining company demonstrates its global,
major cost savings resulting from reduced requirements scientific and technological philosophy in its wide-ranging
from primary and auxiliary fans and fewer raises and “Centres of Excellence” established within the last decade,
transfer drifts. However, the reduced ventilation airflow and covering topics such as mine automation, materials and
air velocities could result in unwanted delays in clearing sensing, mineral sorting, mineral recovery, emerging
blast fumes. This issue needs careful consideration and may technologies and underground mine construction. It also has
require “ventilation on demand” (VOD) systems to provide its Data Analytics Excellence Centre in Pune, India, where
increased airflows after a blast in affected areas. predictive mathematics, machine learning and advanced

Atlas Copco’s Erik Svedland stated: “Mines are designed
around the machines of today and as machines change
mines can change.” He added that EVs were “a key that will
open the doors to new, more efficient ways of underground
mining”.

Cost benefit analysis extends for health and safety ALARP
determinations, with the United Kingdom’s Health and
Safety Executive stating that cost benefit analysis could not
“be used to argue against the implementation of relevant
good practice such as replacing diesel-powered equipment
with the cleaner electric-powered alternative”, neither can it
justify intolerable risks or what is obviously poor engineering.

From an energy cost standpoint, it is the deep and ultra-
deep hard rock mines that will be the major beneficiary of
EVs. Extracting ores at depths of 2-3km involves having to

Page 13

OPINION

modelling is used to address a wide range of issues to of mining as well as sound knowledge of information and
improve efficiency and reduce cost etc, throughout its global communications technology.
operations.
It’s encouraging to see that some universities are moving
As the digital revolution gathers pace in the mining sector, rapidly to meet this challenge as highlighted in the University
there is growing concern regarding lack of adequately of South Australia’s “Digital Learning Strategy 2015 -2020”
educated and trained technicians and professionals. document.

Whereas a digital mine is basically an ordinary mine using Mining industry employers are increasingly seeking industry-

digital technologies, the skill sets required of its technicians engaged professionals with the ability to integrate information

and professional engineers are quite different to those and operational technologies using cloud computing to

required to operate and manage traditional mines. Post- optimise performance and enhance productivity.

school tertiary institutions must therefore re-tool and upgrade Mining companies are increasingly applying digital
their curricula while ensuring they also have suitably qualified technology to all aspects of their operations and Rio Tinto
and experienced trainers and academics. collects 2.5 terabytes of data each day from its Pilbara

This requires, in the short-term, re-training and upgrading fleet of 80 or so autonomous trucks alone. The “internet

programmes for existing trainers and academics so that they of things” ensures all equipment will be digitally connected

can deliver high-quality digitally focused programmes. This and centrally monitored, data driven and model-based. It

“is no mean feat, bearing in mind the speed at which digital follows therefore that mining professionals will need to be

mining is progressing. comfortable working within this

As Dr Steve Hall, Director One of the earliest users of digital environment with the
Mining Education Australia battery-electric technology knowledge and skills to manage
has stated, vocational and contribute to its design and
training centres and operation.

universities need to quickly in underground mines was Kirkland There are barriers to gaining

change the way their Lake Gold Inc which introduced maximum advantage from
programmes are structured digital technology including
such machines to its Macassa gold cybersecurity,
to take account of these variable

technological advances. operation in Ontario five years ago. commodity prices and, in
These machines have maintained the short term, lack of data
Rio Tinto’s iron ore chief management skills and
executive Chris Salisbury
recently highlighted its consistently high performance, and ICT ability among current
commitment to ensuring currently account for more than management and supervisory
that education and training personnel. However, this can
“stays on the cutting edge
of the advancements in the 70% of the mine’s production. be overcome through well-
mining industry, such as
automation”. designed work-integrated

learning programmes

embedded in undergraduate and postgraduate courses.

The new VET curriculum being developed by Rio Tinto in Working in partnership with forward looking mining
partnership with South Metropolitan TAFE and the WA companies such as Rio Tinto and BHP Ltd is by far the best
Government will be developed in 2018 ready for the first way to design undergraduate and postgraduate curricula
post-secondary students and mining trainees in 2019. These for educating and training industry-engaged engineers to
courses will include robotics, data analytics and digital service the needs of the increasingly digital mining sector.

inclusion education. Digital mines become easier to design and operate when

In the university sector, there are similar concerns regarding electricity is the main energy source. Apart from its ease of
the ability of institutions to reorganise their curricula, retrain distribution and its enhanced safety and cleanliness, it has
their staff, and establish appropriate services and facilities the great benefit of reducing the ventilation requirements; an
etc, to educate and train future graduates to cope with the issue of immense importance in the design and operation
specialised technological requirements of digital mines. of deeper mines with high ambient rock temperatures. Such
mines are also much easier to monitor and record and
These mines will see machines making real-time decisions transmit data from, since sensors deliver electrical outputs.
using artificial intelligence and machine learning using neural
algorithms, based on data collected from all relevant items of It must be borne in mind that the technology of battery
equipment and plant. storage is still in its relative infancy particularly in the area of
energy density. Nevertheless, the technology is advancing
To operate effectively in this world, mining professionals will rapidly, as evidenced by those major mining companies
need to have a sound knowledge of data analytics, in-depth operating and/or committing themselves to using existing EV
knowledge of the relevant applied sciences and technologies technology in their new mining projects.

Page 14



COVER

Draig’s deep secrets
at Bellevue

Page 16

by Mark Andrews

Using well-known high-grade underground gold mines in Western
Australia as comparisons, Draig Resources Ltd is confident of breathing

life into the long-forgotten Bellevue mine.

Page 17

COVER

“Everyone is excited about
the new [Tribune] discovery
and its high grade. I think people
are looking to see how that Bellevue

extension drilling goes and to see
if we do have that extension of
Bellevue going down.

Part of the old band, Sam Brooks is back on the back of deep-level ounces at the Gwalia mine. Gold
with Steve Parsons-led Draig Resources Fields Ltd also continues to plough away at Agnew which
has produced 3.5 moz gold and currently boasts 2.1 moz @
Until Draig’s intervention in 2016 when it announced 5.31 g/t to a depth of 1,300m.
intentions to acquire the project, there was only fleeting
interest over the past 20 years in a historic gold mine which, The willingness of Northern Star, St Barbara and Gold Fields
in its heyday, produced some 800,000oz gold @ 15 g/t and to invest more in deeper drilling has paid off; catching the
was one of the highest grade gold mines in Australia. eye of globally recognised investors and proving the maturity
of WA’s Eastern Goldfields is no barrier to further discovery.
The lack of recent attention offers Draig the opportunity to
replicate the success of some of its much larger peers in Draig’s journey is only beginning, as its $70 million market
the gold space by demonstrating Bellevue remains alive at cap suggests, however, in a strong gold price environment,
depth. the company’s growth trajectory could escalate with a
potential game-changing resource estimate on the horizon.
Prior investigations into the Bellevue underground mine,
40km from Leinster, stopped at 450m depth, relatively Following a recent site visit to Bellevue, executive director
shallow in comparison with some current day operations. Steve Parsons told GMJ that with $11 million cash (to the
end of the March quarter) Draig was fully funded through to
WA’s established miners have displayed a preference for early 2019.
deeper brownfields over greenfields exploration and have
enjoyed some success. Northern Star Resources Ltd has A resource estimate is expected in the September quarter,
demonstrated profitable ounces exist at depths much with deep targets also to be drill tested at Bellevue.
greater than 450m at Jundee, Paulsens and Kanowna Belle
while St Barbara Ltd has turned its entire business around Therefore, Draig will emerge with key announcements at a
time investors are traditionally bright-eyed.

“Last year was a really big year for exploration companies,
a lot of money was raised and there was a lot of fairly good
success out there and Draig was one of those with the
Tribune discovery on the back of raising money in a good
market. We were rewarded in good appreciation in share
price on the back of that drilling in December,” Parsons said.

“We’re here at the end of the tax year and markets are a bit
soft for exploration, but also as we all know markets go in
waves and July to September is traditionally a good, strong
time of the year for explorers in Australia to get investor
attention. The market has changed in the last few months,
but I also think exploration has come off the boil a little which
is a function of such a big year last year for commodities,”
Parsons said.

Parsons hopes to feed the appetite of investors with further
information on the Tribune lode in the coming months. Recent
test work by ALS Metallurgy on three composite samples
from Tribune returned total gold extractions of up to 98.8%
through a combination of gravity and 48-hour cyanide leach
bottle rolls, along with gravity recoveries of up to 82.5% of
total gold recovered by the Knelson Concentrator prior to
cyanide leaching.

Page 18

An $8 million placement in March has Draig fully funded through to 2019

To date, Tribune is bearing resemblance to the historic “Investors and analysts are certainly starting to take a lot of
Bellevue lode, with results from diamond drilling targeting interest in Draig and the Bellevue project now. Everyone is
extensional, infill and new high-grade mineralisation in the excited about the new [Tribune] discovery and its high grade.
pipeline. I think people are looking to see how that Bellevue extension
drilling goes and to see if we do have that extension of
The Tribune lode discovery, within the Western mineralised Bellevue going down.”
corridor, was confirmed late last year via hits of 7m @ 27.5 Draig now has a keen audience, including Cannacord
g/t gold from 92m, including 5m @ 37.5 g/t; 5m @ 22.9 g/t Genuity (Australia) Ltd which led an $8 million institutional
from 25m; 12m @ 12 g/t from 68m; 15m @ 6.8 g/t from placement in March, and is defining its own space in a
79.5m, including 0.3m @ 284.4 g/t and 2.5m @ 29 g/t from market which has had some unique stories in the last 12
147.5m. It is currently defined from surface over a strike of months.
550m and remains open. “Last year when we first started on this property and at the
beginning of this year, we were often asked if we were a
Geophysical down-hole EM surveying at Bellevue was the conglomerate gold story,” Parsons said.
lead into the diamond drilling programme with further high-
grade intersections revealing mineralisation remains open at Nickel explorers
depth, while new high-grade gold shoots have emerged for have worked
further testing. all around

Drilling has also focused on the Bellevue underground mine Bellevue but left
extension known as the Gap. any remnants
of gold at the
Results from drilling targeting offset and extensions of historic high-
Bellevue in late May included 3.4m @ 10.4 g/t gold from grade mine
576.2m within 4.3m @ 8.8 g/t from 575.3m down-hole and untouched
5.9m below the main zone and secondary zone of 0.3m @
44.4 g/t from 584.3m.

Abundant fine-grained visible gold was seen in the interval
which was struck 500m below surface and 190m west of the
Bellevue underground.

“We believed this was a potentially significant mineralised
zone and immediately started with a step-out drilling
programme,” Parsons said.

Page 19

COVER

Executive director Steve Parsons loves the thrill of

greenfields exploration but at Draig his focus is on a quick

turn into production from a brownfields project

“Here we are now 20 years on and Having previously accomplished every gold explorer’s
it has been wrapped up by the dream – a virgin discovery ultimately bearing multiple
nickel companies and this is the first time millions of ounces – with Gryphon Minerals, Parsons
someone has had a proper go at it. can concur with the excitement building for the
prospective Pilbara conglomerate players.

However, exploration in greenfields pastures is a
long game and demands patience and persistence

and while the Draig team has proven ability to stick

“It is an exciting time for those companies in there and I hope tough through the vagaries of early-stage exploration,
they come up with a big world-class discovery. This year will the strategy at Bellevue is aimed at a quicker turn into gold
be a defining year for some of those stories, a lot of money production.

is being spent up there by a lot of companies and I hope they “For us, it is very much about drilling it out and proving up

are successful.” as big a resource as we can in the shortest amount of time

possible and then do the economic studies on it and get it

into production quickly,” Parsons said.

“There has been a little bit of a pull-back in the Australian
dollar gold price, but I think for the second half of this year it
should be strong.”

Since arriving at Draig in March 2017, Parsons has started
putting the “band back together”, with former Gryphon
colleagues Sam Brooks and Marcus Harden, who was
most recently with Guyana-focused Alicanto Minerals Ltd,
returning down under to Draig.

High-grade Brooks (chief geologist) and Harden (head of regional
mineralisation exploration) were key players behind Gryphon’s 3.6 moz
continues Banfora gold project, which Parsons sold to North American
at depth gold producer Teranga Gold Corp.
for Draig at
Bellevue Unlike its more recent adventures in West Africa and Latin
America, the worldly team at Draig have more than a blank
sheet to work from at Bellevue, plus the benefit of the latest

Page 20

trends in deep exploration techniques at Marcus Harden has returned to Australia after a stint with Alicanto
its disposal. Minerals Ltd in Guyana. Harden will take care of the wider regional

Despite the project being left untouched package Draig has accumulated in the Wiluna-Norseman belt
for 20 years, Draig has complied valuable
geological data and has mountains of drilling them – high-grade gold is the company’s main game.
drill core to re-log from a project which Nevertheless, with a plethora of big nickel mining companies
passed through the hands of Barrick in close range, Draig could potentially find a suitor to
Gold Corp after the mine was shut in offload its base metals projects onto, allowing it to focus on
1999. showcasing the “beauty of Bellevue”.
“We certainly don’t have our eyes on anything else at the
Advances in geological knowledge and moment because we have our hands full with what we are
structural understanding of deposits doing at Bellevue,” Parsons said.
continue to be made and Draig has “The beauty of Bellevue is that for 20 years no-one has done
partnered with the right consultants any work on it, which is quite remarkable. There may be a
to help apply geophysical techniques few other projects out there that people haven’t looked at for
most effectively to help with structural a bit of time, but to find something hidden away for that long
evaluations. is quite special.”

Parsons says applying modern
exploration techniques will be the key
to unlocking the treasures left behind at
Bellevue.

Despite being located under the nose of blue-chip nickel
companies, dramatic nickel price fluctuations over the
years has meant the likes of Norilsk Nickel, BHP Ltd and
Western Areas Ltd have concentrated on survival and left
the Bellevue gold project alone.

“Here we are now 20 years on and it has been wrapped up
by the nickel companies and this is the first time someone
has had a proper go at it,” Parsons told GMJ in light of a
recent visit to site.

Draig could also have meaningful base metals potential
across the 4,500sq km ground package it has accumulated
in one of WA’s most prolific minerals districts.

Despite having the expertise to deal with base metals
prospects – Parsons said the company would consider

Down-hole diamond drilling results at Bellevue have included 4.4m @ 13.5 g/t gold from 305.5m down-hole; 9.5m
@ 5 g/t from 324.5m including 2.6m @ 12.7 g/t; 2.3m @ 8.2 g/t from 53.7m and 0.3m @ 31.8 g/t from 64.9m and

2m @ 9.3 g/t from 92m; 4.1m @ 6 g/t from 92.5m; 4.2m @ 3.6 g/t from 313m and 2m @ 6.7 g/t from 198m

Page 21

DIGGERS & DEALERS PREVIEW

Time to stir the gold pot

by Mark Andrews

This year’s Diggers & Dealers Mining Forum in Kalgoorlie promises to be as vibrant
as ever after a solid 12 months for the mining sector.

There was no end in interest for the dedicated 48 true reflection of where the mining industry is at present.
presentation slots, with 106 applicants vying for a spot
on the biggest stage in Australia’s mining conference circuit. “People are making profits, they have very strong balance
sheets; it is in a wonderful spot to be in I think,” Giorgetta
The uptake of booths in the exhibition space was also said.
strong with the Diggers’ committee moving to add a second
marquee for emerging companies to showcase their stories. “There are fewer gold presentations than last year and
traditionally about 40% of presenters are gold. I think there
“We are ahead of the numbers from last year which was is a sense of security in the mining industry now and I think
about 2,200-2,300 which is really good. Everyone is positive, that the commodity prices are serving iron ore and coal
there is plenty of money available and exploration success miners well as they have costs under control.”
has also been good across the board, with the likes of lithium
and base metals strong, so it is going to be a really good While the major iron ore and gold producers are flush with
year,” Diggers chairman Nick Giorgetta told GMJ. cash, attention turns to the next phase of growth for some
of these companies, as evidenced by the large capital
There are a number of lithium and potash hopefuls on the investments being made in the Pilbara.
programme, while 34% of the companies presenting this
year were not on the stage in 2017. Meanwhile, M&A action in the gold space has been a little
subdued despite the war chests of the likes of Northern Star
And, for the first time Diggers’ has added services companies Resources Ltd, Evolution Mining Ltd and St Barbara Ltd.
– Ausdrill Ltd and NRW Civil and Mining – to the agenda.
However, without highlighting where the plays would come
The services companies add variety to the programme from, EMR Capital managing director Jason Chang said the
which will feature stories across 14 different commodities. gold space would be one to watch.

Having such a broad range of commodities presented is a “I think over the last 24 months there has been a few

Page 22

transactions and my guess, and it is only a guess, but I Former Prime Minister of Portugal José Manuel Barroso will
think in the next 12-18 months we’re going to see a bit more deliver the key note presentation at Diggers & Dealers
activity in that space. Everyone will be chasing gold and
everyone will be chasing good quality gold assets of scale Such feats were not replicated in the Australian gold space
and they are not easy to get,” Chang told GMJ. last year, and while big deals have not regularly transpired to
St Barbara managing director Bob Vassie told GMJ’s sister the end many anticipated, the wider exploration space has
publication Australia’s Paydirt that finding opportunities certainly provided the market with food for thought.
was becoming increasingly harder and the company has
instead opted to make small investments in the likes of Peel The Association of Mining and Exploration Companies
Mining Ltd and Catalyst Metals Ltd. (AMEC) reported that the second round of the Junior
“...we are finding it hard to find valuable opportunities; or Minerals Exploration Incentive (JMEI) was over-subscribed,
you can find valuable opportunities but they are unavailable with 46 companies successful in applying for the available
to you for whatever reason. But, we are still very busy on credits for FY2019.
that front and rest assured we are focused on diversifying
the production portfolio,” Vassie said. A total of 23 companies were accessed about $8.5 million
“There is not a lot of M&A happening in Australia’s gold of exploration credits in FY2018, with the $15
space and the consolidation that people thought might have million balance remaining from that period
happened hasn’t happened. It’s probably not due to a lack of added to the $25 million exploration credits
thinking and trying, but the Australian gold space is enjoying available for the 2018/19 round.
some good multiples on values.”
Giorgetta said that while the established gold producers Meanwhile, the WA Government has reported a
were doing well, junior equities had been a little slower to surge in activity in the State.
respond.
“The explorers and would-be producers are not responding The WA Government reported a 50% increase
yet, there are a lot of companies that want to come into in Programme of Work (PoW) applications since
production but their share prices are low and they are finding the start of the year.
it hard to raise money. You might see the big companies
taking the little ones out, but it is a difficult question to So far this year, the Department of Mines,
answer. Some of the junior companies are struggling to raise Industry Regulation and Safety (DMIRS) has
money might have to find a big brother to help them along, received an average of 300 PoW applications
a little bit like Gold Road [Resources Ltd],” Giorgetta said. per month, up on the usual average of 20.
Gold Road was awarded the Dealer of the Year award at
Diggers in 2017 for its $532 million deal to develop the In May alone, a total of 366 applications were
Gruyere project with Gold Fields Ltd. received, with DMIRS targeting to process 80%
of applications received within 30 business
Nick Giorgetta days, despite the increase in demand.

Page 23

DIGGERS & DEALERS PREVIEW

Territory’s missing link

by Michael Washbourne

Emmerson Resources Ltd managing satisfactory in terms of treating the ore
director Rob Bills believes his because it’s 100-year-old technology and
company has found the key to unlocking so the recoveries haven’t been very good.
a series of stranded gold resources in
the Tennant Creek mineral field. “The disappointing thing from
Emmerson’s point of view is the ore that
Having championed the push for a has been going to the Stamp Battery
centralised processing hub in Tennant has got a head grade of 60 g/t, which is
Creek for many years, Emmerson cracker grade, but unfortunately they’ve
has agreed to sell its Warrego mining just not been able to process it. So, the
lease to Territory Resources Ltd for idea now is that they will continue on with
the primary intention of revamping the their mining, but now the processing is
existing but mothballed mill into a new separate with the modern mill.”
300,000 tpa facility.
Rob Bills The Northern Territory Government
It is envisaged first gold production recently granted approval for Black
from the refurbished mill will take place Snake, 70km south-east of Warrego, to
later this year. become Emmerson’s second small mine.
Drilling at the deposit earlier this year
Emmerson’s small mines – including produced a mouth-watering intercept of
Edna Beryl and Black Snake – will be 14m @ 60.9 g/t from 15m, including 9m
afforded priority to the Warrego plant, @ 92.8 g/t from 18m.
which has been on care-and-maintenance since 2005, on
a profit share or royalty basis over potential third party feed. Cash flow from the processing of these small mines will gift
Emmerson vital funds to pump back into exploration around
“This really is the missing link for us,” Bills told GMJ. Tennant Creek, particularly at the Mauretania discovery
where a hit of 26m @ 8.9 g/t gold, 85 g/t silver, 0.49% copper
“I think the template we’ve used around Edna Beryl is a really and 0.13% bismuth from 53m, including a higher grade zone
good one, but as you know when you go from discovery to of 8m @ 23 g/t gold, 219 g/t silver, 0.72% copper and 0.26%
production, that’s a pretty big step and fraught with a lot of bismuth, was reported in late June.
risk in terms of funding to get to commercial production,
JORC resources and all those sorts of things. It has been a big first six months of 2018 for Emmerson
following a restructure of its JV with Evolution Mining Ltd,
“The missing link has always been that processing option with the prolific gold producer claiming rights to an area
and now we’ve got that nailed down I think it’s a step change which hosts the Gecko, Goanna and Orlando copper-gold
for Tennant Creek. We’ve solved that issue and it unlocks a deposits. Emmerson retained some 94% (about 2,600sq
lot of stranded resources up there.” km) of the previous JV area which Evolution was tracking
to earn 65% of.
Emmerson and Territory Resources remain in discussions
for a potential exploration and processing JV over the “It’s a great outcome for the NT Government because they’ve
former’s southern tenements and the latter’s Nobles Nob now got Emmerson, Evolution and Territory Resources all in
and Juno projects. Tennant Creek,” Bills said. “I think that goes a long way to
realising the vision that the Minister of Mines Ken Vowles
Confirmation of a centralised processing hub in Tennant has put out in the media about reinvigorating Tennant Creek
Creek is a huge boon for Emmerson following mixed results and making it the mining centre of the NT.”
from Edna Beryl since the start of production late last year.
Emmerson has also tasted success in New South Wales
Mining of the high-grade Edna Beryl deposit – via a tribute from first-pass field work at its suite of copper-gold plays on
agreement with Edna Beryl Mining Company (EBMC) – has the acclaimed Lachlan Fold Belt.
delivered three gold bars to date, but Bills conceded the
lack of modern processing infrastructure in the region was Bills said he was especially excited about the Whatling
slowing progress. Hill discovery – part of the Fifield project – which recently
returned rock chips samples of up to 0.25 g/t gold and 2%
“EBMC have done a really good job with the mining side of copper.
things, but they haven’t had the cash to establish a mill,” Bills
said. “What they did as an interim measure was refurbish
the Tennant Creek Stamp Battery, but that really hasn’t been

Page 24



DIGGERS & DEALERS PREVIEW

Blackham back in game

by Mark Andrews

After the hard graft as an explorer for 10 years, the start Blackham is back on track with production
to life as a gold producer has not gone according to plan from the Matilda-Wiluna gold project
for Blackham Resources Ltd at its Matilda-Wiluna mine.
production, Blackham believes in its value proposition of a
The company celebrated first gold pour at the project in large 6.5 moz gold resource grading 3.1 g/t, 50% of which is
October 2016 however the party was short-lived as the in the indicated category.
strategy behind a big capital investment made to access
high-grade ore affected gold production last year. Monetising these resources and executing the long-term
strategy of becoming a 200,000 ozpa gold producer will
Poor weather and other issues severely impacted Blackham’s require another 1.5 mtpa plant to treat sulphide ore to be
plan to strip waste and start mining high-grade ore at Matilda- added alongside the biox plant.
Wiluna which saw costs blow out above $2,200/oz in 2017.
A DFS on the Wiluna expansion is well under way, with the
With only a small amount of capital committed to stripping bulk of capital already sunk.
waste this year and high-grade ore available, Blackham has
made a sound comeback at Matilda-Wiluna. “We believe we can drop processing costs and that will open
up a lot of these pits, with $114 million to be invested. It is a
“We just need to keep hitting production targets and keep very cost-efficient project and by unlocking these open pits
building confidence in what we are doing. Our competitive we are getting mine life beyond nine years in the existing
advantage is that we have 6.5 moz in defined geology and operation,” Dixon said.
eventually we will commercialise it,” Blackham managing
director Bryan Dixon told GMJ. Gold production over the initial nine years of the expansion
is estimated at 1.5 moz at an average 207,000 ozpa in the
“The December quarter last year was a real tough quarter first six years.
for us with a lack of ore being supplied to the plant. We have
our mine sequencing back on track and the plant is running The open pit inventory of 15mt @ 2.3 g/t for 1.1 moz gold
nicely and full of high-grade ore and producing strong cash will be paired with underground material of 4mt @ 4.7 g/t for
flows.” 608,000oz, with an IRR of 123%, NPV of $360 million and
life-of-mine AISC of $1,058/oz, according to an expansion
Since December 2017, Blackham has reported record PFS released in August 2017.
production in successive months with output for the March
quarter totalling 20,631oz gold at AISC of $1,092/oz. The
performance in March was a marked improvement on
December – 14,922/oz gold at AISC $1,882/oz.

Blackham’s grasp on production has enabled it to reduce net
debt to $10.4 million (secured debt of $40 million) with $29.6
million in cash and bullion on hand.

Blackham was trading at 7.2c/share and had a market cap
of $91.2 million at the time of print, a position executive
chairman Milan Jerkovic said the company would improve
on.

Jerkovic told GMJ feedback from investors in London and
New York that the bottom of the 10-year mining cycle had
been hit and now was the time to be standing out from the
crowd.

“Currently there is no support for the emerging and junior
equities out there. There is support for physical gold, the
funds are not buying and you have to stand out. In the next six
months we are going to be in a position to stand out, we have
been reducing debt from where we were, our production has
improved and we can’t do much more than keep producing
consistently and reducing debt,” Jerkovic said.

On the back of consistent 20,000oz per quarter gold

Page 26



DIGGERS & DEALERS PREVIEW

No distraction for Williams

by Dominic Piper

He may be an old-hand at gold sector Dacian’s
consolidation but Dacian Gold Ltd chairman drill-out of the
Rohan Williams will not be distracted by M&A Mt Morgans
talk while he still has an operation to get sorted.
project was
Dacian joined Western Australia’s gold producer one of the
ranks on the pouring of first gold from its Mt biggest of the
Morgans gold operation on March 29 and with last decade
a dearth of developers behind it, the plus-$500 in WA’s gold
million market capped company is emerging as
a prime takeover target for cashed up mid-tier sector
producers.
it, Dacian set a modest forecast of 30-40,000oz for FY2018.
Williams, however, will not be led on his “That’s when commissioning really started,” Williams said.
company’s likely response to interest. “From here we expect to hit that FY2019 forecast of 190-
210,000oz.”
“I am not interested right now in the M&A Assisting its pursuit of plus-200,000oz production next year
landscape and we have had zero levels of is improved metallurgy which has seen actual recoveries
inquiry,” Williams told GMJ. “We, and the rest of the market, outstrip feasibility study forecasts by more than 2%.
are waiting to see this operation work and we are too busy That the operation is in good shape just three months into
with other things to worry about M&A.” production fills Williams with confidence.
“No-one has a completely seamless ramp-up,” he said. “We
Williams was at the centre of the last major bout of have got a big open pit, a new plant and a new underground
Australian junior gold consolidation during his time as chief with new contractors and new employees. But, we haven’t
of Avoca Resources and although not dismissive of the seen any major bottlenecks yet and we have had quite a few
likelihood alliances will be formed again, he is in no mood days above 3 mtpa.”
for distraction from the task of getting Mt Morgans to steady- The company expects to post its first full set of production
state production. numbers before the end of July, a move which Williams
hopes will inspire the market to return to the stock.
A target of year’s end has been set for steady-state production “We will have production numbers out in July and once
but Williams is sounding increasingly confident of reaching the market knows we do what we have said we would do,
the milestone early. Speaking to GMJ at the end of June, he hopefully we get some support.”
said the 2.5 mtpa Mt Morgans plant was “performing well”. Dacian’s share price has drifted in recent months, seemingly
afflicted by the gold developer curse. Making matters worse,
“We have seen plus-2.5 mtpa on some days already and producers have posted stellar gains in the first half of 2018.
there is a lot to like,” Williams said. “We are increasing the “It doesn’t bother me but it does frustrate seeing the mid-tier
number of days when we are exceeding our open pit and miners at all-time highs and we can’t wait to join that party,”
underground capacity. Now, we just get through the next six Williams said. “I do understand it though and the market has
months to get all the ore sources up and running to be in the no reason to treat us differently. So, once we prove that we
place we want to be.” can deliver I think they’ll stay.”
In an effort to fuel further investor interest, Williams took the
Mt Morgans was up and running on time and to its $197 Dacian story back to North America at the end of June. The
million budget. The challenge now is to ensure the Beresford last 18 months have seen big US and Canadian investors
underground mine can provide the requisite feed for the 2.5
mtpa mill.

“Individually, the three elements have all had many days
exceeding capacity. The pit and plant have been fine and we
always thought that would be the case,” Williams said. “The
nature of the orebody is such that we have to develop all the
way to the end and then start sequencing stopes from there
and we need to do that on multiple levels. More development
means more flexibility in optimising the stope cycle and we
are looking for 6-8 stopes to be available.”

With little more than three months of production in front of

Page 28

fall for the high-margin plays currently on display
on the ASX.

“Only 16% of the Dacian register is North American
and I am on a plane Saturday [end of June] to
rectify that,” he said. “All the Aussie producers, and
some of the developers, have much larger North
American representation on their registers.”

Williams headed to North America with the added
advantage of further exploration results, including
hits of 26.1m @ 3.1 g/t, 6.6m @ 9.8 g/t and 8m @
4.4 g/t from inferred material below the Beresford
North reserve and 24m @ 5.3 g/t, 2m @ 6.5 g/t and
4m @ 3.7 g/t from Cameron Well which is looming
as a potential third mining centre at Mt Morgans.

Williams said Dacian’s primary exploration strategy Dacian expects to declare steady-state processing
was to demonstrate the Laverton district was still from its 2.5 mtpa mill before the end of the year
a highly endowed field, one capable of hosting 10
years of reserves.

“If we delayed exploration we would never get to a Dacian’s success in reinvigorating Mt Morgans has inspired
10-year reserve [eight-year current reserve life] and our view other juniors to reconsider historical WA gold mining
is the quicker we get through the 12 months it takes to get to centres and Williams believes there is plenty of opportunity
a reserve the better. remaining.

“Cameron Well looks interesting in that regard. There is a “I am a big believer in more gold being found around WA,”
lot of gold and we would like to see if we can get 30-40,000 he said. “It takes the same classic exploration approach; drill
ozpa from it; I think we could.” lots of holes.”

Page 29

DIGGERS & DEALERS PREVIEW

Nullagine set to burst

by Michael Washbourne

More than two years of hard option, along with significantly lower
work to boost production operating costs.
and lower costs at the unheralded
Nullagine gold operation is about “This option essentially allowed us
to come to fruition for Millennium to keep the gold on site to be able to
Minerals Ltd. treat those sulphide ores and then
put it back through the CIL plant
While the company is set to report for only a $15 million capital cost,
lower than usual output for the but more importantly the operating
Pilbara-based project for the June costs are significantly lower,” Cash
quarter, Millennium has set the said.
wheels in motion to become the
newest member of the 100,000 “When we plugged that all back
ozpa producer’s club. through our cash flow models, the
difference in free cash flow from the
It comes as the now Belmont- two options was significant, so it
based company prepares to open Peter Cash was a really key breakthrough and
Nullagine’s sixth mining centre, one of the most important things
Twenty Mile Sandy, while also returning to the scene of its that’s happened to the Nullagine gold project, certainly since
original feasibility, Golden Eagle. my time here.”

Millennium chief executive Peter Cash said his company’s Overall recoveries from processing of the sulphide ores are
shareholders were in for an exciting finish to the calendar expected to average at least 85%, with metallurgical test
year. work also pointing towards increased recoveries in the oxide
ores above 90%.
“I think all the hard work that we’ve been doing over the
course of the last 2.5 years has all been building towards Commissioning of the expanded plant is scheduled for Q1
this point,” Cash told GMJ. 2019. Millennium has put in orders for several long-lead
work items, including a high intensity grinding mill and
“We’ve got a four-pronged expansion attack that’s all gravity concentration spirals.
happening in parallel; the Bartons underground, the plant
expansion, the cutback at Golden Eagle and maintaining the Internationally recognised Investec Australia Ltd is
rage on the exploration front. It’s a very bold strategy for a underpinning the plant expansion with a $17.5 million
company of our size. working facility plus a gold hedge of up to 40,000oz.

“It’s not for the faint-hearted, but for us we believe this is the “It’s a two-year facility which we think we’ll only use for the
best value proposition for our shareholders to build up to that next 12 months, so we expect whatever we draw down we’ll
critical mass of 100,000 ozpa.” have paid back by June 30 next year,” Cash said.

Cash, who was appointed Millennium’s chief executive “They saw what we saw and they have backed us in. It’s
18 months ago, identified a robust feasibility study on good to see that Millennium has that kind of support from
modifications to the Nullagine processing plant to recover the financial markets to be able to get some really good
gold from its growing sulphide inventory as the “key financing away.”
breakthrough moment” for his company earlier this year.
Millennium’s first underground mine at Bartons continues to
The study, which was the culmination of nearly year-long track to schedule, with initial development beginning in April
assessments from Ausenco Ltd and MineScope Services, and first underground dirt set to be delivered to the plant in
supported the addition of a gravity sulphide scavenging late Q4 2018.
circuit on the CIL tails stream, coupled with ultrafine grind
and intense cyanidation. Cash said the company was reviewing a number of other
deposits for underground potential, with Redbeard at the
Similar processes are used at the Super Pit and Granny soon-to-be-minted Twenty Mile Sandy shaping as the likely
Smith mines. second cab off the rank.

Original assessments were based around the addition of a First production from Redbeard is scheduled for late July,
flotation circuit which attracted a capex in the order of $50 only eight months after the first holes were drilled into the
million, compared to $15 million for the tails scavenging high-grade oxide deposit.

Page 30

“If you look at Redbeard, it’s running nearly at 3 g/t in the that’s without treating the sulphide ores, which doesn’t come
oxide, it’s got the width and grade profile that’s given us the in until Q1 2019. Then through 2019, as we start to bring
absolute confidence to start lining up the drill rigs and drill higher grade and potentially two or three undergrounds on,
it at depth and to focus on that as potentially our second the world’s our oyster.
underground mine,” Cash said.
“If we can start kicking above 110,000 ozpa, we think that we
“With Bartons coming on stream at the back end of this year, can bring our cost profile down towards that magical $1,000/
we’re aiming to have at least one other underground mine oz AISC mark.”
not just drilled out but approved before Christmas, so that if
we choose to, we can actually start sinking that development Millennium’s AISC is currently about $1,300/oz, but the
into a second underground.” company expects that to fall to around $1,100/oz by year’s
end.
Millennium has also started a cutback at Golden Eagle,
which represented 5.5 years of the initial seven-year mining Cash and other members of the Millennium management
reserve in the original Nullagine feasibility study, and has team took the company’s story on the road to North America
been on care-and-maintenance for the past three years. and the UK last year and will continue to do so again during
the second half as it looks to raise awareness of the future
Cutback efforts will see Millennium’s output for the June opportunities at Nullagine.
quarter slip back to about 14,000oz, but Cash is confident
higher-grade ores to be mined and processed during the “What we found was there was very little awareness of
second half will help the company crack 100,000oz for the Millennium and this is why these roadshows are important,”
2018 calendar year. Cash said.

“It’s been a massive last six months, we’ve got another “You go through the evolution of Millennium over the last
massive six months ahead and it’s all built towards raising couple of years and people are just staggered. They’re
our production profile by the end of this year to that 100,000 going, ‘we missed this, we didn’t see it, but well done, what
ozpa run rate,” Cash said. a great job’. We’re on the radar now and really the key for
us is that now we’ve demanded they watch us, we’ve got to
“Step one is to build up to that 100,000 ozpa production profile, execute on what we told them we’re going to do, and that’s
which we’ll be doing come Q4, I think, very comfortably and something we’ve always prided ourselves on.”

Page 31

DIGGERS & DEALERS PREVIEW

In the Cue for cash flow

by Michael Washbourne

Musgrave Minerals Ltd is end-of-hole and 33m @ 1.2 g/t from
contemplating putting some 116m to end-of-hole reported from

of its growing resource base at the the initial RC programme over the

Cue gold project into production prospect.

within the next 12 months. At the time of print, Musgrave was

Having built up a healthy 440,000oz sourcing a larger rig for deeper

inventory in the Murchison over drilling to follow up on some holes

the past 2.5 years, Musgrave is which ended in mineralisation.

now assessing how to best extract “We’re really only just touching on

some cash from its ground so it can Musgrave is chasing a big discovery that fresh rock boundary,” Waugh
pursue a host of other promising under the salt lakes at Cue said.
exploration opportunities on the “These are halo-type gold anomalies
nearby salt lakes.
that are continuing through to the fresh rock contact and
“The intent is to generate cash flow through short, near-
really the big test now will be below that into the fresh rock.
term production so we can put some of that money back
We’re seeing a similar geologic setting to the Granny Smith
into ground and really make the big discovery that would be
deposit in the Eastern Yilgarn and keep in mind that Granny
company-making and company-changing for us,” Musgrave
hosts about 2.3 moz, so these are quite big systems, and
managing director Rob Waugh told GMJ.
Granny is a deposit within a field that hosts over 8 moz.

“We think there’s definitely opportunity to do that out on “The opportunity we think is much bigger on the lakes. We’re
the lakes where there is plus-20km of strike, significantly seeing the right rocks, the right alteration and big gold halos.
underexplored ground in a region that has some significant It’s a really good start for us.”
deposits in Great Fingall [2 moz] and Big Bell [4 moz].”
Waugh said exploration around established resources at
Feasibility work on near-term production options began Break of Day (868,000t @ 7.15 g/t for 199,000oz) and Lena
last quarter, albeit in the background to major drilling (2.68mt @ 1.77 g/t for 153,000oz) would also continue,
programmes being carried out over priority targets such as including at the Joshua target where first-pass drilling
Lake Austin North. intersected 6m @ 3.9 g/t from 54m down-hole.

Toll treatment is likely to be preferred over standalone “Joshua could be an analogue to Break of Day,” Waugh said.
development. Musgrave’s Cue project is within 120km “And if that mineralisation is starting from 3-4m below, it is
trucking distance of three mills, including Westgold quite convenient and easy to build a resource base around
Resources Ltd’s Tuckabianna and Bluebird operations and that to help with near-term production.
Ramelius Resources Ltd’s Checkers processing plant.
“Historically, once companies have made a discovery, it
Westgold recently injected $3.3 million into Musgrave to really brings new information into the system and then you
become the junior’s new major shareholder with a 14.7% can potentially make multiple discoveries because you’re
stake. suddenly opening up new search bases and new windows

“There are obvious synergies between the parties there,” of opportunity.”

Waugh said. Westgold’s interest in Musgrave continues a recent trend that

“We’re having in-depth discussions with a number of players has seen prolific mid-tier gold producers such as Northern

in the region about processing options for our dirt and Star Resources Ltd, Evolution Mining Ltd and St Barbara Ltd

obviously Westgold have three operating mills in the region stake equity position in junior explorers.

and capacity to take additional feed. Waugh said it was a sign that cashed-up operators are

“There are a number of opportunities, it’s just a matter looking for the next growth opportunity.

of bedding down schedules and optimisations on the “Share prices for gold explorers in Australia have come off
development story before we can commit to a timeframe, probably a little bit in the last 3-4 months in the range of
but we’re definitely talking near-term, within 12-24 months.” 10-15%, so there’s an opportunity there I think for investors

Recent drilling at Lake Austin North has delivered very while that divergence is happening because sooner or later

encouraging results for Musgrave, with headline intercepts those divergences will stop and suddenly the juniors will be

of 13m @ 4.3 g/t gold from 120m, 42m @ 1 g/t from 112m to getting a better deal within the market.”

Page 32



DIGGERS & DEALERS PREVIEW

Barra nibbles away
at Burbanks

by Mark Andrews

The amount of gold mined by Barra Resources Ltd at the Sean Gregory
Burbanks mine might only be small, but the ounces are
of extreme value to the company. The 50/50 Mt Thirsty JV with Conico Ltd hosts a resource
of 32mt @ 0.13% cobalt and 0.55% nickel within 16km of
“It has really been the lifeblood of the company, we have Norseman.
been able to get our money out of the ground rather than
having to go out to market and raise it in the share market,” A PFS on the potential 21-year cobalt project is under way,
Barra managing director Sean Gregory told . with consultants Amec Foster Wheeler Australia (Wood
Group company), Snowden, Golder Associates and Talis
Late last year Barra reclaimed a mining lease at Burbanks Consultants Pty Ltd appointed in May.
worth 55,000oz gold, as it looks to define a critical mass in
excess of 500,000oz gold at the historic mining centre before “Our Mt Thirsty project is getting a lot of investor support and
implementing a mining strategy. we don’t want the management distraction of a gold mine at
this point in time,” Gregory said.
An exploration target at the brownfields Burbanks project
was increased from 223,000oz to 564,000oz gold, as drilling “We have really selected the A Team there. When we look at
of the Main Lode continued to grow and mineralisation our peers around Australia who enjoy a much higher market
remained open in all directions. capitalisation, the difference we can see in those [cobalt]
projects on pure technical metrics is that our project stands
In June, it was reported that 17 out of 23 RC holes up head and shoulders above the rest. The real difference
completed (3,588m) had intersected at least 1 g/t gold, with is that they have progressed their studies. We are in a real
mineralisation continuous for at least 650m strike length and position now to do that rapidly because of the work that has
250m depth. been done over the last 10 years, albeit at a scoping study
level and with the engineers we have selected we think we
“We can see the true potential is for a much larger system can catch them pretty quickly,” he said.
and that we can add a lot of value just by growing our
resource base,” Gregory said. Gregory said whatever value opportunities arose in the Mt
Thirsty PFS would be chased down for the benefit of Barra
“We will build that story up and within that exploration target shareholders.
we said we want to define a critical mass of 500,000oz
before we go mining. The Burbanks mill right over the “Obviously we want more traction and certainly we have the
edge of our tenement holding is owned by a third party best commodity mix you can get – gold, copper, cobalt – that
and we have a good relationship with those guys. Also our is certainly at the top of most people’s list. What investors
largest shareholder’s private investment company owns want us to do now is knuckle down with our PFS,” Gregory
the Greenfields mill which is 9km away. There are plenty said.
of options to develop the orebody and they will be available
when we want to pull the trigger on that one.”

At the time of print, the focus of drilling was 1,500m of RC at
Kangaroo Hills, 1.5km from the Burbanks mill, following up
on an aircore programme in 2011 which produced hits of 3m
@ 22.9 g/t gold, 2m @ 12.79 g/t and 1m @ 5.91 g/t in 2011.

Results are expected this month, with the Phillips Find
project the next port of call for drilling.

Barra believes there is greenfields potential at Phillips Find,
with an aircore programme scheduled at the Truth prospect.

Gregory said drilling results from its gold projects could
be expected throughout the year, while there was much
excitement building within the camp about the progress
being made with the PFS at Mt Thirsty.

Page 34



DIGGERS & DEALERS PREVIEW

Kirkland Lake has inspired a new generation of
mining and exploration activity in Victoria

Appetite returns to Big V

by Mark Andrews

Companies have rushed back to Victoria’s goldfields in decade when it acquired fellow Canadian outfit Newmarket
large numbers since Kirkland Lake Gold Ltd’s successful Gold in 2016.
revival of the Fosterville mine.
Since the acquisition of Newmarket, which included the
“I wouldn’t be surprised if we are at the tip of a new gold Cosmo mine in Northern Territory, Kirkland has altered the
boom in Victoria,” Kalamazoo Resources Ltd managing view that Fosterville is a challenging mine to operate and has
director Peter Benjamin told GMJ. doubled production, recording 263,845oz @ 15.8 g/t gold
(95% recoveries) in 2017. Guidance for 2018 is production
While some other Australian states cashed in on the most of 260,000-300,000oz gold at AISC of $270-290/oz, using a
recent mining boom, Victoria struggled to generate any real US to Australian dollar exchange rate of $US1:1.27.
traction, with the failure of the likes of Unity Mining at the
Bendigo project not helping. Kirkland’s inspired transformation at Fosterville, which is
poised to reach about 400,000 ozpa gold production by
Unity’s troubles and then the mining downturn left Victoria 2020, has won it many admirers and in many ways helped re-
off the radar as a mining destination, with many prospective introduce Victoria to the mining sector beyond the abundant
projects left on the shelf and largely forgotten about; a minerals sands space in the Murray Basin.
situation which is rapidly changing on the back of Kirkland’s
low-cost underground Fosterville mine. “Kirkland has had a fantastic geological team intact for the
last 10-15 years which has allowed them to continually
Kirkland became the fifth owner of Fosterville within a

Page 36

build on their knowledge. The work of
the Fosterville technical team can’t be
underestimated and we have found great
co-operation in Victoria with the likes of
Kirkland and the Castlemaine Gold team,”
Benjamin said.

Benjamin’s Kalamazoo recently picked up
a 70sq km exploration licence in Victoria
which includes the Wattle Gully gold
project and surrounding Castlemaine
Goldfield, while an application for an EL
covering 218sq km at Wattle Gully South
is pending.

Benjamin believes there is potential to
apply the modern exploration techniques
successfully used by Kirkland at
Fostervillle and Catalyst Metals Ltd at the
Tandarra project north of Castlemaine on
its own ground.

Prior to dusting off Wattle Gully,
Kalamazoo was Western Australia-centric
and listed in early 2017 with the Snake
Well gold and base metals project in the
Murchison and the Cork Tree copper play
in the Doolgunna region.

However, such is the potential within
the Castlemaine Goldfield, which has
historically produced over 5.5 moz gold,
with 1.1mt of material mined underground
for 411,000oz @ 11 g/t from Wattle Gully
between 1934 and 1969, Kalamazoo is
now paying full attention to its interests in
Victoria like a lot of other aspirants in the
same space.

“I think the bonanza craze a Fosterville

and what Kirkland Lake has done has

woken a few people up and exploration

has definitely got going,” Carawine

Resources Ltd managing director David

Boyd told GMJ. Kalamazoo is positioned in a goldfield
which historically produced 5.6 moz
“There has been a healthy increase
in interest in Victoria, but it hasn’t

gone over the top and there are still high-grade mineralisation beneath the gold rich zone – 37m
opportunities there. Navarre [Minerals Ltd], Stavely [Minerals @ 4.91 g/t gold and 0.4% copper from 177m, including 10m
Ltd], Catalyst and others are all very active and it is good @ 5.66 g/t and 0.9% copper and 5m @ 24.1 g/t and 0.4 %
to see gold activity. Victoria has always been known for its copper.
mineral sands potential in the Murray Basin, but we are

starting to see some good gold results from first and second At the time of print, Carawine had drilled 15 holes and had

drilling programmes from companies.” received results from the first three.

Carawine listed on the ASX last December with the Hill 800 “Assays will continue to come in and we will assess them to
prospect, north eastern Victoria, and the Jamieson base design the next programme and we are pretty certain we will
metals project, north of the A1 mine. go ahead with phase two drilling in the spring,” Boyd said.

In June, the company reported a new high-grade gold-copper By that time, there may well be more boots on the ground,
zone at Hill 800 with a second diamond hole intersecting with Boyd saying that the Victorian Government had shown

Page 37

DIGGERS & DEALERS PREVIEW

Historical underground production from Wattle Gully Creek was 411,000oz @ 11 g/t

its support for the sector through initiatives like geological operations. I worked at Kundana and at one point that
surveying, while a co-funded drilling initiative ($15 million was three pits and little three underground mines now
TARGET Minerals Exploration Initiative) is available. there is 3km of strike of very high-grade underground gold,
everything was found to join up and there’s potential to take
“There are projects that remain unknown and unwanted in that knowledge to Victoria.”
the database, and you don’t find those types of numbers
in the ground anymore like at Hill 800 and Jamieson as Despite mining in Victoria coming off the boil in more recent
examples,” Boyd said. times, the legacy of 160-odd years of mining in the State
remains and Kalamazoo is leveraging from the vast amount
“There was plenty of work in the 1990s, but when gold of local expertise on hand.
dropped in the 2000s people lost interest, left and never
returned. There are a lot of things waiting to be discovered, “We are using two Bendigo-based consultants, Bendigo
there are greenfields things there in terms of other gems in to Castlemaine is half an hour drive and there are lots of
the database that people haven’t looked at, but with gold technical people to tap into in Bendigo. This will be our priority
now four times the price they become attractive again. We’ll No.1 project and will get the majority of funding and budget.
assess anything that comes our way.” That’s why we will have a management and technical team
based over there. We see having Kalamazoo people on the
Modern exploration techniques and advanced geological ground there as an important part of being able to engage
data is helping the new generation of Victorian mineral with the community and people as well,” Benjamin said.
explorers, while Boyd believes WA-born ideas can also
potentially resonate on the East Coast. “We have Baillieu Holst as our new broker and there are a
lot of investors in Melbourne who love their gold. There is
“The reward of parallel lodes and things that weren’t a lot of momentum building in the State and Castlemaine
explored for back then I think is now being recognised and Goldfields [Ltd] will like us to be successful because they
worth chasing. There are opportunities along strike and have a plant nearby which is only at 50% capacity. There
the undercover type of work Catalyst is doing has been are about three more plants in the area also and we have
successful,” Boyd said. had very pleasant interactions and cooperation with the gold
players there.”
“I think it is recognised now that there are real opportunities
for greenfields sites or along strike away from existing

Page 38



AFRICA FOCUS

Ivory Coast awash
with explorers

by Mark Andrews

Reasons are aplenty for why there remains untapped gold potential in Ivory Coast, however,
with another West African gold exploration boom looming activity in the country is heating up.

Ithink Ivory Coast is now No.1 for exploration at the moment endorsed by none other than Randgold Resources Ltd’s
in West Africa,” Exploration and Mines Suppliers (X&M) chief executive Mark Bristow, has seen a steady increase in
managing director Stanislas de Stabenrath told GMJ. permits being granted and investment from new companies
in Ivory Coast.
After a couple of lean years in the exploration sector, de
Stabenrath is witnessing a major turnaround in sentiment On the ASX alone, the likes of Mako Gold Ltd (assays of up
towards gold exploration in West Africa, particularly in Ivory to 51 g/t gold from maiden RC drilling campaign from Napie)
Coast which has long lagged behind neighbouring Burkina and Manas Resources Ltd have entered Ivory Coast recently,
Faso. while Steve Parsons was at the starting gate with African
Gold Ltd and the Agboville project, which is surrounded by
“X&M was established about six years ago with €60,000 Randgold and Newcrest Mining Ltd assets.
and last year we had over €3 million [worth of business]
and we have had some success in West Africa. It has been “I think it is definitely becoming tighter [to access good
tough though and we have had to persevere and faced ground] without a doubt, Agboville has been sitting there for
some trouble for about the two years when exploration went a number of years now and not been tested,” Parsons said
quiet, but we have managed our business and adapted,” de earlier this year.
Stabenrath said.
Agboville is the type of project which has been waiting for
“During the last boom Burkina Faso progressed a lot and attention in Ivory Coast where its abundant greenstones
is moving fast. There are a lot of advanced projects and remain under explored, according to Manas chief executive
brownfields activity with many mines and new mines coming Philip Reese. (see page 46)
into production.”
“I think there has been a lot of ground locked up by the majors
Burkina Faso’s gold industry is as strong as ever with 12 – Newcrest, Randgold, Endeavour [Mining Corp], Resolute
active gold mines and just as many funded and in various [Mining Ltd] – have all had pretty large land packages. They
stages of development. end up doing high-level evaluation over ground that may
have potential if worked further, but if nothing shows up
“Burkina Faso progressed a lot during the last boom, while quickly they tend to drop it or bank it and a lot of cases they
there were no permits granted in Ivory Coast, so there was have held on to ground and that hasn’t been accessible,”
not much work on the ground but now it is changing,” de Reese said.
Stabenrath said.
“A lot of that is coming free now and there’s ground which
A welcome change of mining code in 2014, which was

Page 40

has high potential being freed up for other explorers like “It is good to see Mako getting success on their project
us who are more likely to do more intensive first-principle although they didn’t get much traction in the market, but it
exploration. That is one reason why there has been a change is those type of results which we can feed from each other
in activity in Ivory Coast. It has forced companies to rethink from. The likes of Apollo [Consolidated Ltd] are also in there
their portfolios and is one of the reasons why we were able exploring in Ivory Coast which has suffered from [the lack]
to access some pretty interesting ground by the transaction of exploration success because of the fact that a lot of the
that we have done.” ground has been tied up for various reasons,” Reese said.

As more ground becomes available to juniors like Manas, “I think that also the geology is a bit different to other parts
Ivory Coast is preparing to welcome more participants to its of the shield. There is some quite complex faulting through
exploration sector, which bodes as a win-win for everyone the region which has chopped things up a bit more in some
involved. areas, so it is a little bit harder to understand.

“You have to understand where the prospective areas maybe
in the country as well. It is underexplored for a number of
reasons, there is a bunch of areas which are too hard to
access because they are jungle areas and deep lateritic
profiles so it is not easy to explore in a lot of places.”

Although challenging, there appears big rewards for
persistence in Ivory Coast’s gold sector not only for mining
companies but also those like de Stabenrath’s X&M which
serve the industry.

De Stabenrath is well versed in the West African gold sector,
particularly Ivory Coast, with X&M headquartered in Abidjan.

X&M started as a geological supply business, however,
the company has adapted to the changing nature of the
exploration cycle and in its current shape is a well-rounded
business ready to capture the opportunities on its door step.

“We had to open up our portfolio which now includes safety
supplies, chemicals and other things tied into the mining
sector plus added other things we can also sell into other
industries, such as oil and gas,” de Stabenrath said.

Ivory Coast is the No.1 exploration
hotspot in West Africa

Page 41

AFRICA FOCUS

Sanbrado arrives at
development table

by Dominic Piper

West African Resources Ltd has launched itself into West African will continue drilling at
the developer sphere – and potentially the M&A field Sanbrado as it looks for resource extensions
– with release of a reinforced DFS for its Sanbrado gold
project in Burkina Faso. and begins a regional exploration push

The DFS was an update on the company’s 2017 original rig at M1 South stepping down and I think we will find another
study, this time including the high-grade M1 South deposit, year of reserves just from the infill drilling.”
discovered in early 2016. M1 South’s impact is obvious with
average annual production pushed to 211,000 ozpa gold over Exploration is currently in hiatus for the wet season but will
the first five years (up from life-of-mine average production return with vigour in October with a focus on upgrading
of 93,000 ozpa) and a post-tax NPV of $540 million and IRR inferred resources currently outside the M5 pit shell.
of 49% (up from $100 million and 21% respectively in the
original). Once that work is started, WAF will also begin
its hunt for further M1 Souths.
Capex was increased from $US131 million to $US185 million
but capital payback has been reduced from two years to 16 “We have 1,000sq km surrounding Sanbrado
months while AISC has been brought down from $US759/oz and now we have got to the milestone of a
to $US640/oz over the life of mine. feasibility study, we can turn our attention to
regional targets,” Hyde said.
West African (WAF) managing director Richard Hyde
said the release of the DFS demonstrated that Sanbrado Richard Hyde The commitment to exploration will not distract
had “developed into a world-class project”, a remarkable WAF from the business of becoming a miner
turnaround from three years ago when the company with Hyde saying the company had already
underwhelmed the market with a PFS based on 49,000 ozpa started discussions with contractors. He
gold production over seven years. expected a banking syndicate for financing
to be announced before the end of 2018.
WAF’s commitment to further drilling led to the discovery of
M1 South and Hyde is confident the company can continue
to add ounces during the development phase.

“We have hit more mineralisation that is not included in the
resource or the mine plan,” he said during a conference call
to announce the DFS results. “The DFS doesn’t include any
inferred material and we have already hit mineralisation
directly beneath the resource at M5 and to the south-west.”

The results have continued since the company called a cut-
off for resource purposes with infill
drilling completed in May returning a
best hit of 14.5m @ 27.93 g/t gold,
including 3m @ 64.9 g/t, from M1
South. That result followed hits of 11m
@ 10.5 g/t and 6m @ 24.4 g/t from
the deepest holes drilled to date at M1
South, suggesting WAF has further
work to do on the deposit.

“Those hits demonstrate that
mineralisation is still open at depth,”
Hyde said. “We will always have one

Page 42

“We have started those discussions with both debt The high-grade nature of the M1 South deposit
providers and the traditional resource banks,” he has transformed the economics of Sanbrado
said. “This project could take 100% debt but we
want to get the right balance and we have certainly All the plant kit will be new, with Hyde saying there was little
had a lot of interest.” incentive to buy second-hand equipment.

The project itself now has the appearance of the “Given the robust nature of the resource there is no benefit
most robust among West African development to going second-hand. Instead, we want to get new kit which
assets. is going to last 20 years,” he said.

The DFS included a 76% increase in reserve with The project’s environmental permits are in place with the
the probable reserve now standing at 20.4mt @ 2.4 company now awaiting a mining permit, which it anticipates
g/t gold for 1.6 moz. Global resources stand at 2.35 to be issued in the next three months.
moz (indicated) and 550,000oz (inferred).
A formal investment decision is slated for the September
Mining will be based on two open pits at M5 and quarter with financing completed and detailed design work
M1 South with the latter also incorporating an launched before the end of 2018.
underground decline. Processing will be via a conventional
2 mtpa CIL plant with SAG and ball mill with 15-40% of the Major works, including establishment of the portal and
gold recovered through gravity separation. decline development is expected to start at the beginning
of 2019 with first gold and commercial production expected
Hyde said the decision to include SAG and ball milling was from the middle of 2020.
the major flowsheet deviation from the original DFS.

“Having both the SAG and ball mill has improved recoveries,”
he said. “It also allows, on the very high-grade material at
M1 South (20-100 g/t) to grind down to 75mm. In testing on
these high-grade composites, we found the potential to grind
finer had economic benefits because a 5% better recovery
means 1 g/t at those high grades. Grind size, [there is] not a
lot of benefit on grinding the M5 further.

“The two-stage circuit gives us flexibility to slow down the
processing if we need to.”

METRIC FEB 2017 JUNE 2018 DESCRIPTION

Mining OP OP & UG Following continued drilling success at depth on M1 South, a new study

determined that concurrent OP & UG mining of M1 South was optimal for

exploiting the deposit

Mine Life 9yrs 11yrs Increased LOM production as a result of incorporation of M1 South UG ore

LOM Production (kozpa) 93 133 As Above

Year 1 – 5 Production (kozpa) 1501 211 As above

LOM AISC ($US/oz) 717 618

Year 1 – 5 AISC ($US/oz) 6721 541

Capex ($USm) 131 180 Includes additional preproduction underground mining costs

LOM Recoveries 91% 93%

LOM Ore Milled 16.8Mt 20.4Mt Increased ore as a result of M1 South underground material and
additional ore tonnes from M5


LOM Average Head Grade (g/t) 1.7 2.4 Increase to grade, incorporating high-grade material from M1 South
underground


LOM Contained Gold Reserves 893 1,557 Increase to gold reserves as a result of additional UG ore from M1S
(koz)

Gold Price Assumption ($US/oz, 1,200 flat 1,300 flat Increase in gold price to reflect current higher spot gold price
real)

Process Circuit Design 1 SAG mill 1 SAG mill, Metallurgical test work on high-grade material resulted in SABC circuit.
New processing regime sees P80 grind of 90um for bulk tonnage,
1 ball mill 75um for higher grade M1 South ore



Page 43





AFRICA FOCUS

Manas lands in Ivory Coast

by Mark Andrews

Manas Resources Ltd was
preparing to hit the field in
Ivory Coast at the time of print.

The well-travelled company has
taken the opportunity to build
a significant portfolio covering
over 2,100sq km of prospective
Birimian greenstones through
farm-in and option agreements
in Ivory Coast.

The first project in the pipeline is
Mbengué, which is subject to a
farm-in with Perseus Mining Ltd
whereby Manas can earn 70%
by spending $US2 million within
three years.

“We are about to do an initial Manas has built a portfolio comprising
pass of exploration work over 2,100sq km of ground in Ivory Coast
the Mbengué licence that we are

in the process of picking up from

Perseus,” Manas chief executive Corp’s 2.9 moz Ity gold project, while Eburnea was formerly
Philip Reese told GMJ. part of Newcrest Mining Ltd’s regional package in Ivory
Coast.
“That will initially be more of a due diligence and understanding
activity rather than just diving into a full on programme. We “There has been other examples of companies picking up
are going to do a reasonably small programme, which will ground from other companies, Mako [Gold Ltd] for instance
also be driven by weather as we are coming into the wet has picked up ground from Perseus. The situation is a bit
season. The relatively modest programme will hopefully fluid at the moment, with companies moving in and out of
help us to better understand the main K1 prospect area that focus in Ivory Coast,” Reese said.
Perseus identified.
“I think there was a hell of a lot of licences granted to local
“We’ll also do some further targeting on some other areas that players 4-5 years ago which have not been worked at all or
Perseus picked up in geochemical work and subsequently worked very minimally by companies who didn’t have the
identified through reinterpretation of the geophysics over the capacity to do the work. There are opportunities to come in
permit area.” and do deals on permit areas that have been tied up for so
long.”
Perseus has already conducted airborne geophysics,
extensive soil sampling plus RAB, aircore and 10,000m of Manas is well placed to make a good go of its projects given
RC drilling at Mbengué. it has $US7 million cash.

Mbengué was identified through RC drilling, with significant The company banked $US10 million from the sale of its
intercepts including 28m @ 8.1 g/t gold and 25m @ 4 g/t Kyrgyz assets in 2016 at which point the Victoria gold project
ending in mineralisation. in Tanzania became the focus.

Mbengué is 8km west of Randgold Resources Ltd’s Tongon The Victoria project has now been exited and Manas now
mine which has produced 2.7 moz gold since 2010 and on fixed on Ivory Coast. “We have $US7 million which should
track to deliver 290,000oz this year. cover us for several years and the permits that we have
under application [in Ivory Coast] we are confident that they
Randgold has another 3.5 years mine life remaining at will be granted which is the feedback we are getting,” Reese
Tongon, in which time Manas hopes to have had an impact said.
at Mbengué and its other two projects, Eburnea and Gonsan.

The 1,000sq km Gonsan ground under application comprises

three permit areas to the north and east of Endeavour Mining

Page 46

Oklo has it auger in hand

by Mark Andrews

Oklo Resources Ltd is increasing The company plans to continue
its land position in western Mali drilling at Seko to define oxide

at a time the African gold market is mineralisation and diamond

apparently open. drilling for metallurgical test work,

“RFC Ambrian released a report while working towards identifying
recently – African Gold M&A: The vectors to chase high-grade
market is open – and it lists all shoots of prima mineralisation.

the potential acquirers and all the Taylor said auger drilling had

potential companies to be acquired. proved successful at Dandoko

Most of them are at development and would be used by the

stage, however, Oklo got a mention company at its regional plays

in the report as one explorer to be such as Kouroufing, 20km south-

watching,” Oklo managing director east of Dandoko.

Simon Taylor told GMJ. At the time of print, a 15,000m

GMJ has followed Oklo for some auger drilling programme was

time as interest has grown in under way at Kourfoufing.

the company to the extent its “At Kourfouring we are really
share registry includes the likes doing a geochemcial programme.
of BlackRock Group, 1832 Asset We had a lot of success a year
Management, Hawkestone Group, and a half ago doing auger drilling
Resolute Mining Ltd and Ack Pty at Dandoko which highlighted
Ltd. the Seko anomalies and the

At the time of print, Oklo had a Auger drilling rather than soil sampling Dandoko gold trend,” Taylor said.
market cap of $112 million and has proved effective for Oklo in Mali
share price of 32c/share which is “Our preferred geochemical
indication of the high regard in which technique is auger rather
its prospective land package is held.
than using soil sampling. That

programme is very cost-effective and we are not going to

In May, the company announced it had fulfilled all conditions madly run off there and drill a whole heap of deep holes. We

for the 100% acquisition of the Kandiole project, 10km south- are just having a look at the surface stuff to try and start to

east of B2Gold Corp’s 5.15 moz Fekola gold mine. move some of those smaller projects through the pipeline.

“We have taken the opportunity to pick up a bit more ground We are doing 5-10m holes and taking [samples] off the top of
and have picked up the Kandiole project which is a nice big the saprolite which has been very effective for us.”

116sq km permit. At some stage we will go down there and Further exploration success for Oklo will only see its status

do some additional geochem reconnaissance sampling. We in the West African gold space enhanced, particularly from

are just coming to the wet season, so we probably won’t get an ASX perspective given there have been few companies

down there until early next year,” Taylor said. outside of Cardinal Resources Ltd and West African

Kandiole is one of four projects Oklo has in west Mali, with Resources Ltd [WAF] to have made significant strides during
the company first making headlines with the Seko discovery, the downturn.

30km east of Fekola, within the Dandoko project. “We need those sorts of stories to show that exploration

The company has identified a 12km-long trend along the plays can move forward to scoping studies and into
Dandoko corridor, with five auger trends covering a strike feasibility stage, that is what we need in the sector,” Taylor
length of about 7km. said in reference to WAF’s updated DFS last month. (see
pages 42-43)
A combination of shallow aircore, RC and diamond drilling at
Seko since March 2017 has returned 79m @ 2.17 g/t gold, “Hopefully that will keep getting bigger and bigger and it all
42m @ 6.14 g/t, 30m @ 4.47 g/t, 52m @ 2.23 g/t, 33m @ helps the earlier stage projects like ours to put a focus on
4.97 g/t, 28m @ 3.38 g/t, 17m @ 4.04 g/t, 40m @ 3.85 g/t, West Africa.”

59m @ 2 g/t and 20m @ 5.72 g/t.

Page 47

AFRICA FOCUS

Randgold to decide
on Senegal mine

Randgold Resources Ltd chief executive Mark Bristow 3 moz minimum requirement, the project’s other metrics
said a decision on the development of the Massawa are positive,” Randgold general manager exploration Joel
gold project in Senegal was on the cards this year. Holliday said.

A feasibility study on Massawa is nearing completion, with An inter-ministerial government commission has been
Bristow and his executive team visiting site recently to appointed to oversee the project’s licensing and development
provide the Senegalese Government with an update on its protocols, and a public consultation process was scheduled
progress. to start in July.

Latest test work had shown that 75% of Massawa’s ore A draft environmental and social impact assessment study
reserves could be processed through the simple, low-cost was also scheduled for submission in July.
gravity and leach method, overcoming the obstacle initially
presented by the project’s complex metallurgy, according to Ahead of the development decision, Randgold has already
Bristow. been investing in local community projects, with the
emphasis on improving educational and healthcare facilities
The remaining 25% would be produced at the end of the and providing potable water.
mine’s life, either through the BIOX process or sold as
concentrate to a specialised process facility. In line with its policy of local employment, 70% of the project’s
workforce has been recruited from surrounding villages.
“Continuing exploration is focused on expanding the
Massawa reserve and while it is still short of Randgold’s Massawa was discovered by Randgold in 2007 and is one of
the larger undeveloped gold deposits in West Africa.

Page 48

Tanzania to offer
tax amnesty

by Paydirt staff with Reuters

Tanzania aims to amend its tax bill to grant Tanzania has proposed a 100% amnesty on interest and penalties
amnesty on interest and penalties for the next for six months from July 1 to December 31 2018
six months, hoping to improve compliance and
ultimately boost revenues, Finance Minister Philip Acacia Board of Directors.
Mpango told parliament in his budget speech in mid-
June. “The company further notes from the statement that Barrick
is not providing a timetable for the completion of Barrick’s
The change could have big implications for the East discussions with the GoT at this time, in order to allow its
African nation’s largest gold miner, Acacia plc, which process to continue in an orderly manner and without an
has been hit hard by sweeping changes to the tax arbitrary deadline. The company will continue to engage
regime for mining firms. with Barrick to seek to understand Barrick’s expectations for
the future conduct and a timetable for the completion of its
The new laws have slowed fresh investment discussions with the GoT.”
in what has long been seen as one of Africa’s
brightest mining prospects as companies assess Meanwhile, revenue collection for the 2017/2018 fiscal
the consequences of government efforts to claim a year to the end of June is at 21.9 trillion Tanzanian shillings
bigger slice of the pie. ($US9.65 billion), just below 70% of the target, Mpango said.

“The proposed 100% amnesty on interest and penalties In another move the Minister said is intended to boost
will exist for six months, starting from July 1 2018 up to investment, the Government will cut corporate income tax
December 31 2018,” Mpango said. from 30 to 20% for new investors in the pharmaceutical and
leather industries for five years, starting from the new fiscal
“This measure is expected to improve tax compliance year that begins in July.
by 10% and hence enable the Government to collect the
outstanding principal amount.” “The measure is expected to promote investment in the
manufacturing of pharmaceutical and leather products,
It was not immediately clear, however, exactly how much create employment opportunities and increase government
impact the amnesty would have on the Government’s revenue,” he said.
dispute with London-listed Acacia, which is majority owned
by Barrick Gold Corp. Tanzania will raise spending by a slim 2.4% in the 2018/19
fiscal year, most of it earmarked for infrastructure, education
The Government says Acacia owes $US190 billion in tax, and water projects.
penalties and interest for the period between 2000 and
2017. But, miners say it would be impossible for listed and The minister forecast economic growth to increase to 7.2%
independently audited companies to hide billions of dollars in the year from 7.1% in 2017.
in extra revenue.
Another priority for the next fiscal year, he added, was
In a statement to market at the time of print, Acacia said it had moving the main functions of the Government from Dar es
noted that discussions between Barrick and the Government Salaam to Dodoma, the country’s official capital since 1974.
of Tanzania (GoT) were reportedly “constructive”.

“...and that progress has been made on the drafting of
definitive agreements necessary for the implementation of
the proposed framework agreed between Barrick and the
GoT in October 2017,” the statement said.

“The company has been supporting Barrick in its discussions
with the GoT, but has not been directly involved in those
discussions to date. Any proposal received by the company
in the future that might be agreed in principle between
Barrick and the GoT as a result of those discussions will
be subject to review by the Independent Committee of the

Page 49

REGIONAL ROUNDUP

MMG off-loads Sepon

MMG Ltd has sold its 90% interest in Lane Xang The Sepon copper project has potential
Minerals (LXML), which owns the Sepon mine in to be a primary gold operation
Lao PDR, to Chifeng Jilong Gold Mining Co Ltd (Chifeng)
for $US275 million. The operation has contributed over $US1.4 billion in direct
revenue to the Lao Government and hundreds of millions
Sepon’s current copper operation has a projected mine of dollars in local procurement, community development,
life to around 2020, however, the mine has the potential education and training since production commenced. LXML
to be extended as a primary gold operation. Accordingly, will continue to maintain its closure and rehabilitation fund
MMG initiated a strategic process in relation to its interest and community projects close to the mine.
in Sepon in October 2017, with a view to transferring the
mine to a gold-focused company better suited to realising MMG engaged Standard Chartered Bank as its financial
Sepon’s future as a primary gold operation. advisor and Linklaters as its legal counsel on the transaction.

“MMG is pleased to be able to transfer our interest in Completion of the transaction is expected in the second half
LXML to Chifeng. They are an experienced gold miner of 2018.
who is well suited and focused on extending the life of
Sepon through the transition from copper production to
primary gold operations. We look forward to supporting
them through a smooth ownership transition and watching
with interest as they develop the next phase in the life of this
great mine,” MMG chief executive Jerry Jiao said.

“We are very proud of Sepon’s achievements and we are
confident that Chifeng will continue the strong history of
economic and social development that this operation has
provided in Laos.”

LXML Sepon produced its first oxide gold in 2003, with large
scale copper operations following in 2005. To date the mine
has produced over 900,000t of copper and over 1.2 moz of
gold.

Polyus to decide on 60 moz

Russian gold mine

by Polina Ivanova, Reuters

Russian gold miner Polyus said it planned to make a final the range of $US2 billion to $U2.5 billion. Around $US30
investment decision on Sukhoi Log, one of the world’s million will be spent on geological and engineering studies
largest untapped gold deposits, by 2020-2021, when it would per year in the run-up to the investment decision at Sukhoi
also begin capital spending on construction. Log, in the Irkutsk region of eastern Siberia.

Should a positive investment decision be made, production Polyus said the Sukhoi Log processing facility would use a
would start around 2026, the company, Russia’s largest gold conventional gravity/flotation process to treat an average of
producer, said in its statement. 30 mtpa ore. It said it expected average annual production
of around 1.6 moz with a total cash cost of $US420-470/oz.
“We have made serious progress in the development of
Sukhoi Log during the last 14 months following the acquisition Polyus said on its website that the Russian State Commission
of the licence,” Polyus chief executive Pavel Grachev said. on mineral reserves had estimated Sukhoi Log’s gold
reserves at 930.3mt ore @ 2.1 g/t gold for 62.8 million troy
“We see it as a cornerstone of the future development of ounces of contained gold.
Polyus,” he added.

The company said it expected construction capex to be in

Page 50