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Published by Paydirt Media, 2018-03-09 04:20:43

pd258-March18 mag-web

March 2018 VOLUME 1. ISSUE 258 $11.95


front and back cover
supplied seperately


Mining’s new prospect

• Mining Indaba… Winds of change sweep through Southern Africa

• Battery Minerals Conference preview ISSN 1445-3436

PAGE 1 MARCH 2018 AUSTRALIA’S PAYDIRT 9 771445 343007


Transport Warehousing Project Management Procurement
Johannesburg-based Nucleus Mining and Africa Logistics is a well-
established African logistics business having provided supply chain solutions
from greenfields to developing and operating mining projects for 14 years.

+27 (0)71 6788184 [email protected]


PAYDIRT (ISSN 1445-3436) 6 NEWS 20
Published by The zinc sector is flourishing at the mo- 26
Paydirt Media Pty Ltd. ment, which has been the impetus for 72
A.C.N. 063 985 133 companies like New Century Resources
to dust off former mines such as Century
Head Office: in Queensland. Construction activities are
Suite 9, 1297 Hay St, West Perth ramping up ahead the planned operational
Western Australia 6005 restart in Q3, while the company has
P.O. Box 1589, West Perth locked in first off-take contracts. Michael
Western Australia 6872 Washbourne spoke with New Century
Phone: (+61 8) 9321 0355 managing director Patrick Walta about an
Facsimile: (+61 8) 9321 0426 exciting few months ahead
[email protected]

With Robert Mugabe gone, a new Zimba-
Editorial: bwe is being hailed and the mining sector
Editor: Dominic Piper is being looked upon to lift the country’s
Deputy editor: Mark Andrews dire economy. While the PGM and gold
Journalist: Michael Washbourne potential along the Great Dyke is well
Photography: Picture This known, Zimbabwe’s lithium opportunities
Art director: Marian Noonan are flying under the radar. Mark Andrews
Contributors: sat down with Zimbabwe Minister for the
Keith Goode (Sydney), Brendan Ryan Ministry of Mines and Mining Development
(Johannesburg), Ross Louthean Hon Winston Chitando to see what inves-
tors can expect from supporting the mining
Advertising: sector, before visiting Prospect Resources’
Advertising manager: Richa Fuller Arcadia lithium project, near Harare
Subscriptions: Mitchelle Matambo
Phone: (+61 8) 9321 0355 26 MINING INDABA
Facsimile: (+61 8) 9321 0426 The feeling among delegates was that the
2018 coming of Mining Indaba was the
Pre-press and printing: best in many years. Positive macro eco-
Vanguard Press 26 John St, nomic conditions, which are driving many
Northbridge WA 6003 commodity prices upwards, has been the
Member of: pillar for mining companies of all sizes to
thrive. Paydirt brings full coverage of the
Paydirt Media conference, plus detailed insights from four
Executive chairman: Bill Repard site visits attended in and around Indaba
Finance manager: Giovanny Jefferson
Accounts/administration: 72 BATTERY MINERALS
Heather Melling The battery minerals sector is in full bloom
Conferences: Melita Fogarty, and a number of Australian companies are
Namukale Nakazwe-Msiska, making headway in the various commodi-
Christine Oelschlaeger ties critical to the 21st century revolution
under way. Paydirt’s inaugural Battery
Minerals Conference – March 14-15 at the
Pan Pacific Hotel in Perth – is the perfect
platform for industry participants to explain
their potential role in the dynamic battery
minerals sphere. Ahead of the conference,
Paydirt looks at some of the companies
making waves in the space

Cover image: Zimbabwe Minister for the
Ministry of Mines Hon Winston Chitando

at the Westin Hotel, Cape Town

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

Mining’s new best friend?

The winds of change are definitely ration has occurred in the last 20 years and the country’s majors
blowing through Southern Africa but remain disinclined to conduct any. Even Sibanye-Stillwater Ltd
what can we expect from the upheaval – perhaps the biggest success story the country has witnessed
and what is actually needed from an in the democratic era – has shown no interest in exploration.
industry perspective?
You will read in this edition about If Ramaphosa’s Government can find a way to incentivise ex-
how presidential changes in Angola ploration, particularly at the junior end, it could lead to a fresh
and Zimbabwe have created fresh appraisal of South Africa’s prospectivity and a new generation
impetus in the resources sectors of those countries while in con- of both local and foreign investors.
trast, new mining codes in Tanzania and DRC have sent foreign
investors running. The overarching problem the industry faces – as admitted by
Alas, even South Africa is set for significant change. Sibanye-Stillwater chief executive Neal Froneman – is public
There is no argument that the mood in Cape Town during Feb- opposition; the wider South African public still sees the mining
ruary’s Mining Indaba was the most optimistic it has been in industry as a symbol of the apartheid era.
eight years. President Jacob Zuma had not yet left office but ru-
mours swirled around the Cape Town International Conference “There is a perception that because the industry never voiced
and Convention Centre, the Waterfront, Camps Bay and every its admissions of the past mistakes during the apartheid era, it
taxi in the city that change was coming. didn’t care,” Froneman said during Mining Indaba.
It finally did of course, on February 14 when Zuma was re-
moved and immediately replaced by Cyril Ramaphosa. The Above all else, it is this perception and the trust deficit which
former union boss and successful businessman has the per- it creates which holds the key to mining’s future in South Africa.
sonality and requisite skills to lead South Africa out of its current However unfair the industry may say it is, public perception still
predicament but the task in front of him is immense. has it that mining is the modern face of the old order. That is
South Africa’s troubles are myriad and nowhere are they more why Zuma could act against it with impunity in changes to rules,
obvious than in its once mighty mining industry. spouting ideological rhetoric and ensuring his own pockets and
Ramaphosa does have the advantage of knowing the sec- those of his cronies were lined first; all while retaining resound-
tor intimately, both as a union leader for the National Union of ing public support for his “attacks” on the miners.
Mineworkers and as a mine boss himself, including a stint on the
board of Lonmin plc. It does not mean, however, the challenge The industry must accept this public perception and work to
will be any easier with the new president facing labour issues, a overcome it otherwise it will remain an easy target for populism.
corrupt and inept regulator and general hostility to mining’s role
in the economy. It is a problem the industry faces outside South Africa as well
Perhaps the biggest challenge will come in introducing much- as witnessed recently in the DRC and Tanzania but also in Gha-
needed modernisation into the industry while at the same time na, Zambia, Australia and Latin America.
ensuring job losses are kept to a minimum. It is an almost im-
possible task. South Africa’s mining sector is labour intensive, During his session on the main stage at Mining Indaba, former
lacking in productivity and in many cases highly dangerous. It UN deputy secretary general Lord Tim Malloch Brown argued
is screaming out for reform but Ramaphosa and the industry that the forces driving resource nationalism in Africa were the
have an enormous task convincing thousands of mineworkers same as those driving Brexit in the UK and Trump in the US –
to sacrifice their own jobs for the long-term health of the sector. a feeling of disillusionment and being left behind in the era of
There appears to be no easy solution. globalisation.
Neither should the industry expect immediate results from a
regulatory perspective. Ramaphosa will surely target the De- Many South Africans have this feeling. The end of apartheid
partment of Mineral Resources (DMR) which fell into disrepute was supposed to bring prosperity to all but for the average South
over the course of Zuma’s presidency. Corruption and incom- African little has changed. Black economic empowerment legis-
petence are rife in the DMR with many experienced senior civil lation was implemented but the redistributed wealth has come
servants leaving the department over the last decade, to be re- concentrated in the hands of the few and for mineworkers in
placed by people ill-equipped to meet the challenges it faces. particular opportunities for economic advancement appear to be
While there are still many competent people within the depart- shrinking rather than increasing.
ment, it will take more than just a spring clean to restore both
ability and reputation in it. Unless the industry can prosecute an argument that shows it
The industry itself also needs new life pumped into it. The end is genuinely good for national development, the push for nation-
of apartheid was meant to signal the end of the Randlords era alisation will always be near the surface.
and the birth of a new South African junior mining sector but that
narrative has failed to materialise. [email protected] @DominicPiper
If South Africa is to turn around its ailing mining industry, it
needs a vibrant junior exploration and mining sector. Little explo-



New Century, new customers

New Century Resources Ltd has Construction activity at the Century mine is ramping up ahead of the
locked away its first off-take contracts planned operational restart in Q3 2018
as the rebirth of the famed Century zinc
mine in Queensland gathers pace. ties were being progressed at the same “We’re hoping in the near future to be
rate, but it’s very difficult to get MDs and able to announce a few more off-takers
Established traders Mercuria Energy CEOs from all over the world to sign on and get to our targeted contractual com-
Trading SA and Transamine Trading SA the dotted line at the same time. mitment on that 1.5mt of concentrate.”
last month agreed to commercial terms
for about half of the 1.5mt of zinc concen-
trate put up for tender.

Eleven parties reportedly submitted
indicative offers for what New Century
described as an “extremely competitive”
tender process.

As this edition went to print, New Cen-
tury confirmed it had executed a binding
term sheet with Nyrstar NV for 600,000t
of zinc concentrate over 5.5 years, de-
spite an earlier threat of arbitration pro-

New Century managing director Pat-
rick Walta said his company was seeking
to finalise further off-take deals over the
coming months ahead of the planned re-
start of operations at Century in Q3 2018.

“In an ideal world we would have
signed more than two contracts at the
one time,” Walta told Paydirt. “All par-

Celebrating 25 years

29a Clayton St, Bellevue WA 6056 08 9250 4252


Patrick Walta

Mercuria and Transamine have signed New Century has secured all required regulatory permits to restart the Century zinc mine
up for about 3.5 years of zinc concen-
trate supply from Century, which was cast to return a post-tax NPV of $1.3 bil- tight east coast domestic market was
shuttered by MMG Ltd in early 2016. Ac- lion, IRR of 270% and total free cash flow seen was one of the biggest hurdles to
cording to a feasibility study released last of $1.764 million. project development.
quarter, the rejuvenated mine will have
an initial life of 6.3 years. Estimated operating costs of $US0.38/ The only negative in an otherwise
lb (C1) and $US0.50/lb (C3) place Cen- flawless year for New Century was the
Nyrstar has put its hand up for 250,000t tury among the lowest cost primary zinc request for arbitration by Nyrstar regard-
in the first 3.5 years and 350,000t in the operations in the world. ing the purchase of zinc concentrate
subsequent two years, representing 15% from Century under legacy supply agree-
and 35% respectively of the scheduled New Century secured the last of the ments.
production. regulatory permits required to restart
operations in October, while concur- A claim emerged after the Swiss mul-
Walta said his company was still con- rently completing a $53 million fully un- tinational missed out on the first tender.
templating how much off-take to lock derwritten placement and bedding down
away prior to the restart. a $US45 million conditional debt facility Nyrstar has since agreed to suspend
from Sprott Resource Lending to fund arbitration proceedings relating to the va-
“The board is yet to make a formal de- development. lidity of historical Century mine off-take
cision on how much we will lock away, agreements dating back to 2007. With-
but I would envisage somewhere in the “We’re in a very good position,” Wal- drawal remains subject to documentation
order of 90% of the 1.5mt we’ll look to ta said. “It’s a fantastic time in the zinc of a formal off-take agreement with New
lock away on long-term contracts,” he price cycle to be bringing on large scale Century and the deed of settlement and
said. supply. We’re fully permitted, we’re fully release confirming all historical contracts
funded with the inclusion of the condi- have been terminated.
“We’ve fundamentally had demand for tional Sprott facility which should be fi-
probably 200% of what we could supply nalised by the end of February. Walta said the dispute was an example
from the mine. Leaving 10% available of the desperation in the zinc market.
gives us some operational flexibility and “All of that really allows us to just focus
ultimately it can then be applied to the in on execution, hitting delivery timelines “It just goes to show how far the mar-
spot market or offered to one of our off- and ultimately be a global scale producer ket has progressed. Prices are high be-
take partners if it is available.” in the second half of this year.” cause people are looking a couple of
years ahead of any of these larger, new
New Century has made rapid progress In another coup for New Century, San- projects coming on. There is a shortage
since Walta and his team first took the tos Ltd will supply about 9PJ of gas direct and people are obviously worried about
idea of processing tailings from Century to the mine for the first four years. Valued riding out these next few years with what
to market early last year. After vending at more than $100 million, the contract is supply is available.”
the project into a listed vehicle on July the largest awarded by the company to
20, the company wasted no time building date. – Michael Washbourne
on the existing but small resource as well
as starting a feasibility study and chasing Securing gas supply in the currently
the all-important development funding.

Fast-forward to today and construc-
tion activity on site has begun after the
company ticked off all of the above mile-
stones inside just six months.

A robust feasibility study found Cen-
tury could be restarted for $50 million
to run an initial throughput of 8 mtpa.
Once in production, $63 million of opera-
tional cash flow will be put towards lifting
throughput to 15 mtpa.

Based on production of 507,000 tpa of
zinc concentrate and a conservative zinc
price of $US1.25/lb, the project is fore-



Resources sector pumped
with adrenaline

A crowd of 520 attended the year’s first WA Mining Club lunch in Perth. Sharing their outlook for the sector in 2018 were Hartleys
chairman Ian Parker, South32 head of corporate development Simon Collins, Independence Group non-executive director Debra
Bakker and PCF Capital managing director Liam Twigger. Hosting the panel discussion was WA Mining Club president Kirsty Danby

Global markets experienced a wobble ago], but there were some green shoots have seen three or four major booms or
in early February, but that was not and there were a few more nibbles and busts and it is hard to remember some-
enough to stymie the tidal wave of invest- some money coming back into the in- thing that has been quite as exciting as it
ment flowing back into the mining sector. dustry. It has been a tsunami since then; has been now.”
it has been quite an extraordinary 18
The first green shoots of a positive months,” Parker said. There is no clearer indication of the
rally in the mining sector appeared some appetite for resources stocks than a will-
18 months ago, with battery minerals in “In the last year, just in Western Aus- ingness from investors to back specula-
particular following gold on a positive tralia, us and our competitors have tive prospects in the form of exploration
trajectory. Now the more traditional base raised $2.5 billion or something for min- IPOs.
metals have joined the party. ing companies, both large and small. The
momentum is quite extraordinary, I have Pre-2010, there was an average 30-40
“Nickel is even going fantastic and the been doing this for 28 years now and I new exploration floats hitting the Aus-
fundamentals on nickel and all the bat- tralian bourse every year, however, the
tery commodities are really exciting and Debra Bakker fallout from the GFC and other economic
positive,” Hartleys chairman Ian Parker factors caused nervousness among in-
said. vestors.

“There are some naysayers on the bat- Therefore, exploration IPOs were
tery commodities, but they are starting to culled as investors went into their shells
come around. If you are looking at the and tightened the belt straps.
electric vehicle sales and at the lithium,
cobalt, graphite and nickel markets, PCF Capital Group managing direc-
some of the numbers are pretty scary. tor Liam Twigger said exploration floats
Zinc is extraordinary; it is at a 10-year were the key barometer for risk in the
high. Lead; who would have thought to market and the bounce back in IPOs last
make money on lead, there’s even po- year had indicated investors were warm-
tential of refloating an old lead mine up ing to risk again.
the Pilbara way.”
“Once the GFC came through, [IPOs]
With almost 30 years experience in dropped down to three. In January 2016,
the industry, Parker is accustomed to the bottom of the market [had been
the booms and busts of mining, however, reached] and we have seen the ASX200
what is occurring now is unlike anything Resources Index market go up 100%
he has seen before. since then. We had 18 IPOs in 2016 and
24 last year and this year we have come
“It was a fairly scary time [18 months out the gate like a bull,” Twigger said.


“Sherif Andrawes from BDO said there Liam Twigger “What I am seeing though is a lot
had been 20 IPOs this year at BDO of boutique investment houses where
[alone], so we are back in the 30-40 erating in foreign jurisdictions has per- there’s no money, but they are trying to
[range]. It is a fantastic time. haps compelled punters to get on board get their snouts in the trough and broker
ASX mining stocks while there is a good deals between Chinese money, Austral-
“We have really picked up, this is our spread of commodities trading at high ian money, US private equity firms for a
moment. It is going very well, the market prices. mining company flogging a moose pas-
is well positioned, and there is a pile of ture in Sierra Leone because they might
money around.” Despite the good value and opportuni- have some cobalt in tailings somewhere,”
ties in resources, it appears to be taking Bakker said.
Traditionally, through the sheer weight time for London investors to hear the bell
of numbers and volume in North Ameri- ringing. “They filter projects that are absolute
ca – 40% of mining capital raised on the rubbish, but there are stupid people out
Canada exchange comes from south of Independence Group NL non-execu- there that put money in and when people
the border – the TSX has outperformed tive director and Auramet Tradding LLC put money in, people make money. We
the ASX in raising money by about $2-3 WA representative, Debra Bakker, said are seeing a lot more of that.
billion a year, according to Twigger. traditional London-based banks weren’t
interested in small to medium caps re- “I think the conservatism of the big
Twigger was happy to report that in quiring substantially long and big project lenders and the big investors has com-
2017, the Australian market “shot the financing. pressed, I think they are more conserva-
lights out” and bridged the gap signifi- tive than they ever were. I think the niche
cantly in raising money for mining IPOs If anything, the larger end of town in boutique lenders, investors, streaming
and secondary placements compared to the resources sector would possibly ap- companies and royalty companies ex-
its Canadian peers. peal to the London bankers, Bakker said. ploded and that is partly to do with the
amount of funds in the private equity
It appears cryptocurrencies and me- market, particularly in North America.”
dicinal cannabis stocks are resonating
more than miners and explorers with Bakker said she was yet to see the im-
North American investors at the moment. pact of big Chinese investment, but felt it
wasn’t far away.
“The difference between us and Can-
ada is not only that the majors and mid- “I think we are seeing a lot more mon-
caps are going well, but the junior sector ey in Shanghai and Hong Kong for ex-
is vibrant,” Twigger said. ample, that is already approved to go. I
haven’t see that come to fruition where
“The junior market [in Canada] is really the cheque has actually been written, but
struggling, but they have the big names certainly we are all hearing that there is
and big weight of capital coming out of money, it is real and it is ready to go,” she
the USA. I am so proud that for the first said.
time in living memory the Australian mar-
ket has taken it up to the Canadians.” – Mark Andrews

Australia’s abundant mineral wealth
and the success of its companies in op-

South32 Ltd will spend $US30 mil- more on good projects.”
lion on exploration this year, with
head of corporate development Simon Additionally, the company is bull-
Collins saying there was certainly an
appetite to spend more on good pro- ish on its investment in Arizona Min-
ing Inc which has the Hermosa zinc-
Approaching its third birthday as
a standalone after being spun out of lead-silver project in Santa Cruz,
BHP Billiton Ltd, South32 remains re-
luctant to become an “all singing and Arizona.
dancing exploration group” and had
adopted another strategy for expo- Collins said South32 viewed the
sure to exploration and development
projects, Collins said. 100mt @ 10% zinc equivalent pro-

“We have gone and built a team ap- ject as the best base metals discov-
proach, which is owned and operated
by others so we can leverage from ery since Cannington was discov-
the good people and projects to really try
and see if we can create some options ered by BHP in 1990.
for ourselves,” Collins said.
Therefore, on top of the $US80
“Unashamedly we are focused on
copper, zinc, nickel sulphide and all the million invested in Arizona last
associated metals. In terms of geog-
raphy, I think we have a few opportuni- year, South32 did not hesitate in
ties and options here in Australia and
we have put a few more flags down in subscribing for $US3 million more
the Americas. We have done that on a
Simon Collins worth of shares to maintain its 15%

ownership in Arizona in February.

suite of projects, we have an option over “We are not there to make a quick

a copper-gold project in Alaska and also buck,” Collins said. “We see a lot of par-

some alliances in the generative space. allels to the Cannington mine that is part

With AusQuest Ltd in Peru, we get first of the South32 portfolio. We can see

look at projects they develop and we re- compatibility in what that mine might be-

cently put together a similar alliance with come and the operations that we’d like to

a private group in Queensland to look at run, but not at any price. We are main-

some concept targets under cover there. taining a running brief; we are watching

We’re spending $US30 million this year our position.”

and there is certainly appetite to spend



Here’s cheers to Foster in WA

With a good market for
commodities on the hori-
zon for at least the next 12-18

months, Foster Stockbroking is

marking its territory in Western


Former LinQ Resources

Fund executive Rob Telford

will drive Foster’s WA-based

corporate finance business,

which has particular interests

in emerging companies dab-

bling in the fields of tech, in-

dustrials and resources.

“We are well positioned, we

are a small mid-sized firm with

25 years of history, we have

a broad offering in terms of

research, corporate, principle

investment and equity. I think

people know the name and

market, both on the east and

west coast, so it makes a lot

of sense to have an office in

Perth to capture that deal flow,”

Telford told Paydirt.

WA is emerging from one of Perth-based Rob Telford (left) will drive Foster Stockbroking’s corporate finance business in WA.

the most severe commodity Telford is pictured alongside head of investment Mark Hinsley and executive chairman Stuart Foster

cycle downturns in history, pro-

viding further impetus for Foster to add aged to get it to come here,” Foster said. big guys, there’s quite a vacuum in the

a Perth office to its bases in Sydney and “It could have gone to the UK, even middle there. Jupiter will be capped at

Auckland, New Zealand. Johannesburg because that is where the just under a billion dollars [$800 million]

Foster executive chairman Stuart Fos- asset is, but they have made the decision and there are not many decent resources

ter, who founded the company over 25 to list in Australia for a number of reasons capped at a billion dollars. You then have

years ago, said the tide started to turn af- which I think is also good for the Austral- to come down to the junior companies,

ter Donald Trump was elected US Presi- ian stock market.” which a lot of the big funds won’t do and

dent and while commodity prices did not Some have questioned the timing of a they tend to migrate back up to the big

immediately take off, they certainly have raise as large as Jupiter is intending, be- guys. Jupiter has been well received.”

now. lieving it too early in the commodity cycle An abundance of IPOs – albeit a great

Foster said the oil space would be in- upswing. deal smaller than Jupiter – are expected

teresting to watch, while the narrative The formal Jupiter IPO road show was to hit the bourse this year, while activity in

behind all things battery minerals-related scheduled to start in Hong Kong on Feb- the M&A space is also tipped to heat up.

would continue to grow. ruary 26, with the prospectus to follow. “The big guys have a lot cash and are

While cobalt and lithium opportunities It is expected the book will close in not paying out on dividends; they are

have captured the market’s imagination, March, with Jupiter tipped to arrive on building, paying off debt and now they

manganese has not received similar the board of the ASX by mid-April. Foster can use paper for M&A. It is a lot faster

hype despite its importance to the bat- also hopes to introduce a helium com- and quicker to buy something already

tery sector. pany from South Africa to the Australian near development,” Foster said.

However, manganese players may market soon after. While there is an appetite for compa-

start courting some attention in light of “This [Jupiter raise] is something that if nies to spend and investors to punt, Tel-

the upcoming Jupiter Mines Ltd IPO. we tried to do it this time last year I think ford believes the resources sector has

Foster has been appointed alongside there would have been a mixed appetite learnt valuable lessons from past booms

Hartleys and Aitken Murray Capital Part- for it,” Foster said. and doesn’t expect opportunities to be

ners to help Jupiter raise in excess of “We are just starting it now and so far squandered this time around.

$200 million to reinvigorate the Tshipi the reception has been positive. The big “In the last five years companies have

project in South Africa. funds, a lot of them are underweight in focused hard on cost-cutting and are op-

The Jupiter build will be the biggest re- resources and their go-to stocks tradi- erating probably as low as they can go.

sources IPO since the South32 Ltd float tionally have been BHP [Ltd] and Rio Tin- Many companies are now running high

three years ago. to [Ltd] and the likes, but there is not a lot margin businesses and have learned

“I think the positive thing out of Jupiter of options when you come down the lad- their lessons,” Telford said.

is that the Australian market has man- der. When you move away from the great – Mark Andrews



Zim outlook still unclear

There’s been a lot of interest from Chitando replied that “there have
mining companies over involve-
ment in Zimbabwe since last year’s been discussions in the past to re-
removal from office of former president
Robert Mugabe and his replacement by lease ground for allocation to other
Emmerson Mnangagwa.
players. As to the question of wheth-
The new president is making all the
right noises about opening up Zim- er that amounts to expropriation that
babwe for investment but the perfor-
mance of new Zimbabwe mining min- gets technical and I don’t want to be
ister Winston Chitando at the Mining
Indaba held in Cape Town in February too technical.”
was not impressive.
Nice one Winston!
It became clear that Zimbabwe’s 51%
indigenisation shareholding require- I interviewed Chitando after the
ment for platinum and diamond mines
was still in force while Chitando’s an- presentation and he told me that the
swer to a critical question concerning
future protection of mining rights grant- 51% local ownership, or indigenisa-
ed in the country was unsatisfactory.
tion, requirement for platinum and
Mining companies taking a renewed
look at Zimbabwe include UK and JSE- diamond mines was not going to be
listed chrome and platinum group metal
producer Tharisa Minerals plc, JSE-list- lifted.
ed diversified mining group Pallinghurst
Resources plc and London and JSE-list- He said these were classified as
ed gold producer Pan African Resources
plc. “strategic minerals” and “the implica-

Pan African announced on January tion of that is they have to operate
28 that it had entered into exclusive ne-
gotiations with ASA Resources plc over Emmerson Mnangagwa in a manner in which government
acquiring “certain assets and liabilities”
of the group. wants in order to ensure 51% local

ASA – the former Mwana Africa – ness”, he had little to say on specific participation. That is going to stay.”
owns the Freda Rebecca gold mine as
well as Bindura Nickel in Zimbabwe but critical issues and those specific com- But there was a subsequent story on
was suspended from London’s AIM mar-
ket in July. ments that he did make were not exactly Bloomberg quoting Chitando saying that

Pan African announced on February encouraging. Zimbabwe might consider applications
7 that it had terminated the negotiations
but provided no reason. The structure of that “dialogue” also from platinum and diamond companies

Asked for more details at the Pan Af- left a lot to be desired. The event had to be exempted from the 51% require-
rican interim results presentation held
in Johannesburg on February 14, chief clearly been paid for by the Moti Group ment.
executive Cobus Loots replied: “There’s
definitely opportunity in Zimbabwe. It’s – which runs a chrome mining operation According to Bloomberg, Chitando
an area that we like. It’s got a stable op-
erating environment and a great work- called African Chrome Fields in Zimba- said the Zimbabwe Government wanted
force although you must be careful you
don’t have rose-coloured glasses on bwe – and most of the two-hour event companies to show they had a plan to
when you look at these things. We came
quite close to doing a transaction there was taken up by public relations “bumf” achieve compliance before it would con-
some years ago.”
about Moti, its executives and its associ- sider granting waivers.
Loots’ views are widely shared among
junior miners, so there was understand- ates. So, it’s all as clear as mud at this stage.
ably a lot of interest in Chitando’s presen-
tation in Cape Town at what was called a Chitando was the fourth speaker on Chitando told me that the Zimbabwe
“Zimbabwe mining dialogue”.
the agenda after three Moti executives Government was working on coming up
But while Chitando made a lot of posi-
tive general statements around the con- and two company corporate videos. with a mineral development policy for
cept that “Zimbabwe is open for busi-
There was a 25-minute “panel discus- each mineral.

sion” but 20 minutes of that was taken up He added: “The policy, once crafted,

by the compere putting “soft” questions will be discussed with mining industry

to the panel. representatives to determine what policy

When the compere eventually threw it interventions are required to promote the

open to the floor, Chitando was hit with growth of that particular mineral.”

a question about what protection would I really hope that this all works out be-

be offered to investors by the Zimbabwe cause Zimbabwe’s mining industry – in

Government against the possibility of fu- particular its platinum mines – offer huge

ture expropriation of mineral rights. growth potential and the ability to rapidly

Chitando replied he was “unaware of earn what the country needs the most at

any such expropriations having taken this stage; greater foreign currency in-

place in Zimbabwe in the past”. flow.

He should have known better given Zimplats and Mimosa have been con-

his former position as managing direc- sistently the most profitable contributors

tor of Mimosa – the platinum producer to Impala’s revenues over the past few

owned as JV between Impala Platinum years despite all the difficulties of operat-

Ltd and Aquarius Platinum – now part of ing in Zimbabwe.

Sibanye-Stillwater Ltd. Frankly, the Zimbabwe platinum min-

There was an immediate follow-up ers could “eat the South African platinum

question: “How would the minister de- industry’s lunch” given the chance. Let’s

scribe the actions taken by the Zimba- hope the new Zimbabwe Government

bwe Government to force Anglo Ameri- provides them with that chance.

can [plc] and Zimplats to surrender large Brendan Ryan is a Johannesburg-based

portions of their mineral rights over the mining writer

past decade?”



Vimy chases sales contracts

Vimy Resources Ltd will spend the rest possible for something like this,” Young
of this year boldly chasing sales con- said. “The beauty about this is that, not-

tracts for its Mulga Rock project in a bid withstanding the secondary licences and

to establish Western Australia’s first ura- permits we’re still working through, by

nium mine by 2021. middle of the year we’ll be mine-ready.

A DFS released in late January con- So, if a bucket load of money suddenly

firmed Mulga Rock – about 240km north- fell out of the sky, we’d be ready to go.”

east of Kalgoorlie – could be developed With mining accounting for 42% of the

for $493 million to produce 3.5 mlbpa of overall operating costs, Vimy has opted

yellowcake at $US27.95/lb over a 15- for an owner-operator fleet and will also

year life-of-mine. look to produce its own acid on site in or-

Other key financials from the study der to keep ongoing costs down.

were a pre-tax NPV of $530 million, IRR Mike Young A base metals extraction plant pro-

of 25%, free cash flow of $134 million per posed in earlier studies was scrapped in

annum and payback of 3.1 years. Oper- American and European markets – the the DFS for economic reasons.

ating costs for the first five years of oper- world’s two largest consumers of ura- Young said while the level of detail in

ation are estimated at a lower $US25.11/ nium – for sales contracts. the DFS was impressive, he conceded

lb. “They also represent lower counter- the only way to win over the investment

A uranium contract price of $US60/ party risk in terms of financing,” Young community was to explain – and explain

lb was assumed in the DFS, based on said. again – how the uranium supply-demand

extensive market research compiled by “The main focus for 2018 is going to be dynamic worked.

Vimy executive director Julian Tapp. contracts. Once you have those in place, “We talk about a $US60/lb contract

Vimy managing director Mike Young is at some point the bank will say you’ve got price in 2021 and people are talking

under no illusion of the mighty challenge sufficient contract coverage output for us about a spot price in 2018, but they are

ahead to secure sales contracts, but he to give you debt financing and then you two very different things,” Young said.

remains optimistic yellowcake prices will can go to the market and finish off the “The spot price is actually a misnomer

recover over the next three years to a rest of the financing with equity and debt because it is not a true clearing house

level that will justify bringing Mulga Rock or whatever other wonderful, magical market like a spot gold market or LME

into production. things you need.” nickel and copper. If it were a true clear-

“There’s a real disconnect between Vimy ensured no stone was left un- ing house price, every mine in the world

where the price is now and where it turned when completing the DFS so very would be under water except perhaps

needs to be to not only sustain current little further technical work would be re- Olympic Dam and secondary suppliers.”

demand but future demand,” Young told quired once the 118-page final document Young, who founded Pilbara upstart

Paydirt. was released to the market. BC Iron more than a decade ago, said

“We’re in this funny ‘no man’s land’ As part of the DFS process, the com- there was room in the sector for Vimy if

right now because basically the spot pany dug two test pits, put yellowcake the likes of Cameco and Areva Inc main-

price, which is an artificial price created through a comprehensive piloting pro- tained their supply side discipline.

by an arbitrage market, drives sentiment gramme and exported product to poten- “We’re not a 20 mlbpa producer, we’re

and everybody asks us how can you jus- tial customers for further analysis. not going to be disruptors,” he said.

tify a $US60/lb price if the spot price is “In any study there’s always assump- “Provided there is the demand, we can

$US20/lb? Well, the $US60/lb price is a tions and risks, but we believe we have squeeze some of the marginal cost pro-

contract price in 2021 and today’s spot done as much de-risking as humanly ducers out of the [cost] curve and nestle

price doesn’t sustain produc- in there. You add capital on

tion anywhere in the world. Paladin back in business top of that and you’re look-
“Julian has probably done ing at a $US44/lb breakeven

more work on the market than Embattled uranium miner Paladin Energy Ltd made a positive cost.

pretty much anyone on Earth, return to the bourse last month following its near-death experience. “How we fund it and how

so we have a fairly good un- Paladin’s recapitalised stock opened at 15c – more than three we get our contracts is go-

derstanding of where the price times what it last traded hands before entering voluntary adminis- ing to be a major contributor

needs to go to sustain future tration eight months ago – when reinstated to the ASX on February to how soon we can get to

demand. We’re pretty optimis- 16. market. We’ll get to market at

tic the price will recover.” Shares in the world’s eighth largest uranium producer jumped some point, but you’d rather

Following the release of as high as 26c that day before settling at 17c at the time of print. do it sooner than later.”

the DFS, Vimy appointed US- Paladin shareholders lost as much as 98% of their investment Vimy has both State and

based former Cameco Inc when the company collapsed last June. The operator of the Langer Federal approval to develop

executive Scott Hyman as its Heinrich mine in Namibia appeared headed for the scrapheap until and mine Mulga Rock, sub-

new vice-president of sales it was handed a lifeline when $US115 million was raised via the ject to conditional manage-

and marketing. issue of new notes and outstanding debt of $US740 million was ment and environmental

With Young, Tapp and now wiped clean. plans.

Hyman driving negotiations, Control of the company now rests with bondholders and credi- – Michael Washbourne
Vimy will target the North tors under a debt-for-equity swap.



1 - 2 May 2018

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What about tin?

Leading tin expert group, the Interna- in 2017, the tin price broke through the
tional Tin Association (ITA) is conduct- $US22,000/t mark in January.

ing early stage R&D into the metal’s fu- At the time of print, tin was trading at a

ture amid the growing electric vehicle and two-year high of $US21,450/t (cash) on

battery storage markets. the back of positive macroeconomic fac-

Tin is widely used in lead-acid batter- tors, Mulqueen said.

ies and while demand will remain strong “A lot of the Indonesian exporters are

for traditional batteries for the foresee- renewing their export licences this year,

able future, ITA manager, markets Tom so eventually when the export data is out

Mulqueen told Paydirt there was good you will see that export volumes have

progress being made into the role tin been a lot lower in January and I think

could play in the EV market. that has also contributed to the price

“I would definitely say that tin has a moving a bit higher,” he said.

role to play in the EV market. I think they “I think the other factor is a lot of tin

are saying demand for a lot of the [bat- International Tin Association manager, has come out of Myanmar in the last few
tery] metals is not a few years away but markets Tom Mulqueen years but I think the consensus is that

a decade away until the impact is really there could be quite a significant decline

seen,” Mulqueen said. conventional vehicle, while the two most in production from there this year.”

“For tin in lead-acid batteries, if we are significant uses of tin in an EV are ex- LME tin stocks hit new lows in late Jan-

talking in the energy space, we are still pected to be for solders to fuse contacts uary which has also impacted prices and

seeing some growth until 2025, making it in the electronics and tin alloy addition while China’s volumes remain a mystery,

quite a strong contributor to tin demand for the battery. Mulqueen doesn’t expect big movements

over the next five or so years. The ques- As the versatility of tin increases, posi- in tin prices in 2018.

tion after that is, as lithium-ion batteries tive news flow will be most welcomed by “In China, the stocks generally held by

start to take up the market share, what is industry players who struggle for atten- producers were quite high last year and I

the impact on demand for lead-acid bat- tion in the market. think the hidden stocks in China are still

teries?” Nevertheless, like most commodities, quite, we think, significant, so that could

Mulqueen said more R&D and patents there is a bull run in the tin sector and af- moderate any big increase in price,” he

using tin in the anode materials of lithi- ter trading between $US19,000-21,000/t said.

um-ion batteries was being assessed. “I think the supply side

“I think at the moment we are not of the market is still quite

sure what the market potential of determined by what’s hap-

that could be in terms of ton- pening in Myanmar and

nage for tin, that is some- Indonesia. I think even if

thing we are working on in we see this decline in My-

the next few months to get anmar production that we

some figures,” Mulqueen are anticipating, we have

said. some new mines com-

While still at an early ing on in China and Inner

stage, there have been Mongolia. I think the do-

breakthroughs in a sili- mestic supply in China will

con-tin anode which could pick up a bit and partially

potentially prolong and en- offset some of any decline

hance reliability in the life in supply coming out of

span of lithium-ion batteries. Myanmar.

Currently, tin alloys, coat- R&D into the versatility of tin “While there is a lot of
ings, additions and solder use beyond traditional uses is underway uncertainty around Indo-
are important to the make-up of a nesian production, exports

and production tend to

ITRI has changed its name to the International Tin Association Ltd. change quite rapidly to reflect the change

The change has been adopted to build on the association’s heritage as the former in price. If tin prices are a lot higher and

International Tin Research Institute, but to also recognise its evolution towards tin in- stronger, it will be moderated by Indone-

dustry leadership with a more diverse range of activities. sian production being a bit stronger and

ITRI was established in 1932 in London, and for the first 70 years tin-producing gov- if the prices are lower then there is a lot

ernments and producers were brought together to focus on the promotion of tin and the of uncertainty around the supply side.

research and development of new tin-based technologies. Overall, I think things will be stable this

Such advances have included the technical foundations for development of tin as year, or we will see a small decline based

solder for electronics, as tinplate for food cans, and as chemicals used in plastics. The around Indonesia,” he said.

association has now grown to recognise a broader range of tin industry issues and has – Mark Andrews
expanded activities in areas such as market analysis, conferences, sustainability and

regulatory affairs.


LME aims to ban metal
sourced with child labour

The London Metal Exchange could mining areas in Africa. approved LME cobalt brands, could be
remove companies from its list of ap- The LME declined to comment on the banned if the company has not shown
proved metal suppliers if they fall short good progress by the end of the year
of industry standards following an outcry survey responses or whether approved in applying the principles the exchange
about cobalt mined by children in Africa. metal brands could be removed from its plans to announce.
The exchange will issue principles for Liu said any talk of a ban was irrespon-
responsible sourcing in coming months “The LME is committed to facilitat- sible and not grounded in fact.
and producers will have to show their ing the implementation of recognised
metal meets industry standards that con- responsible sourcing standards for its The LME has not approved any spe-
form to the new LME guidelines, three listed producers and expects to issue cific industry standards on responsible
sources familiar with the matter said. further guidance on this topic over the sourcing as yet.
coming months,” the exchange said in a
“The LME has to be policeman. It can statement. The OECD’s framework was devel-
do that by making sure industry stand- oped by both member and non-member
ards on child labour and conflict minerals Rights group Amnesty International countries as well as the United Nations
are being met; that there is auditing and brought the issue to a head with a 2016 Group of Experts for DRC.
certification,” a source on an LME com- report detailing the use of child labour
mittee said. in artisanal cobalt mines in DRC and in The OECD also said on its website that
2017 it said some major electronics and it had worked with China’s Chamber of
The responsible sourcing of metals car companies were not doing enough to Commerce for Metals and the Ministry of
such as cobalt has come into focus as clean up their supply chains. Commerce to develop Chinese due dili-
manufacturers scramble to secure sup- gence guidelines.
plies of the key component in recharge- In December, Nanjing Hanrui Cobalt,
able lithium-ion batteries ahead of an the main provider of raw material to LME- China’s Responsible Cobalt Initiative is
expected surge in electric vehicle sales. approved cobalt supplier Yantai Cash, calling on companies in the cobalt supply
said some of its cobalt came from arti- chain to recognise the OECD and Chi-
Carmakers such as Volkswagen have sanal mines in Congo and it couldn’t rule nese guidelines and align their policies
asked suppliers to ensure cobalt does out child labour may have been used. with them.
not come from child labour and concern
some of the metal in LME-approved Worries about metal from Yantai Cash “The LME won’t set standards; that will
warehouses may be tainted has led first emerged last June and prompted be done by bodies like the OECD and
some consumers to shun its contracts. some in the cobalt industry, including the Cobalt Institute, but they can try to
sources on the LME’s cobalt committee, make sure standards on the environment
While there is no single industry-wide to call for it to be suspended from the are met and human rights are protected,”
standard for responsible mineral supply LME list. one cobalt trader said.
chains, the Organisation for Economic
Co-operation and Development (OECD) Yantai’s inclusion in the LME-approved The Cobalt Institute is working on what
has a five-step framework and the Cobalt list at that time created a discount for the it calls the Cobalt Industry Risk Assess-
Institute is developing its own standards. price of LME cobalt against prices gath- ment Framework.
ered by Metal Bulletin, a trade publica-
To make progress on responsible tion, sources said. “We expect to be able to roll it out later
sourcing, the LME sent a survey to pro- this year,” president David Weight said.
ducers in November asking about the Yantai Cash joined China’s Responsi- “The idea is to identify the risks for mem-
sourcing, auditing and certification of ble Cobalt Initiative (RCI) in December, bers and their customers and provide a
metal that can be delivered against LME which was formed by the China Cham- framework that gives guidance on how to
contracts. Responses were due by De- ber of Commerce of Metals, Minerals & respond to risks.”
cember 1. Chemicals Importers & Exporters and
also includes major end users of cobalt The International Tin Association last
Most have now responded though such as Apple Inc and Samsung SDI. year published a code of conduct for its
stragglers will be given a new deadline, members and the International Council
possibly the end of the third quarter, Liu Xiaohan, manager of the interna- on Mining and Metals also has guidelines
or risk being named and shamed, the tional trade department at Yantai Cash, on responsible sourcing.
sources said. told Reuters the company realised the
importance of building a responsible co- – Pratima Desai and Tom Daly,
They said the process of establishing balt supply chain and was taking active Reuters
the principles, the adoption of specific measures to address the challenges.
standards that have to be adhered to and
time to allow producers to meet the re- Besides joining the RCI, Yantai Cash
quirements could take up to two years, or was developing a responsible purchas-
possibly longer. ing policy, carrying out third-party audits,
preparing annual progress reports and
The spotlight has also fallen in recent making necessary information disclo-
years on tin, another metal traded on the sures, Liu said.
LME that is used in electronics and can
come from conflict zones or artisanal One source familiar with the matter
said Yantai’s metal, which is one of nine



WA embraces battery buzz

Nickel and cobalt were the big and ways of the past,” he said.
movers during the opening
month of 2018 as excitement con- “Mining companies have started
tinues to build around the battery
revolution, with a number of West to embrace more strategically their
Australian-based companies tak-
ing advantage. innovation portfolios. Educating

Five companies with connec- shareholders on the merits of in-
tions to the battery sector – In-
dependence Group NL (nickel), novation programmes has been a
Pilbara Minerals Ltd (lithium), Gal-
axy Resources Ltd (lithium), Lynas challenge, but where that has been
Corp Ltd (rare earths) and Western
Areas Ltd (nickel) – occupy top 20 done properly and in a structured
positions in the latest Deloitte WA
Index, ranked according to market portfolio, we’ve seen the benefits
Eighth-ranked Independence
was among the biggest movers Visiting Perth from London,
with its market cap increasing by
5.7% to $2.95 billion on the back Chopra highlighted the importance
of the company meeting guidance for the
December half at its Nova nickel mine. of sustainable growth in the mining

Panoramic Resources Ltd was another industry and its links to new tech-
bolter, rising eight places to 64th overall
with a market cap of $196 million as it un- nologies.
veiled plans to raise $21 million for early
restart activities at its mothballed Savan- “Sustainable growth is very im-
nah nickel operation.
portant now,” he said. “It’s becoming
Nickel jumped 4.8% to $US13,317/t
in January due to tight supplies and de- more important every year, it’s not
mand in China, while cobalt soared 6.2%
to $US79,868/t over the first month of the just how you’re developing your ex-
year amid supply concerns stemming
from legislative changes in the Demo- David Cormack isting portfolio.
cratic Republic of the Congo.
“Technology is quite interesting.
January marked the fourth consecu-
tive quarter of growth in the Deloitte WA Deloitte Access Economics) and Berna- Is it hype or is it reality? And how do
Index, which lifted marginally to a collec-
tive $181.83 billion. dette Cullinane (Deloitte national oil and you delineate between the two? It’s re-

“It was a busy month for investors sift- gas leader). ally comes down to how you use existing
ing through quarterly reports and results
announcements,” Deloitte WA clients Cormack said there was strong merit technology and the new ones which are
and markets partner Tim Richards said.
for companies to consider going down- coming in. There is so much data, but
“In the midst of the ASX slipping
slightly, [January] has seen some of the stream in the wake of China rushing to what’s most important is how you use
resources-focused heavy-hitters on the
Index announce strong production re- clean up its air pollution issues. the data.”
sults. Investors have reacted favourably
to these companies meeting, or in some Upcoming lithium producers Pilbara With the domestic economy finally
cases exceeding, consensus expecta-
tions.” Minerals and Altura Mining Ltd are bouncing back after a barren four-year

Battery minerals and downstream pro- among those exploring downstream op- period of negative growth, investors are
cessing opportunities in the emerging
sector were among the topics discussed tions. on the lookout for new exploration plays
at a media roundtable event hosted by
Deloitte last month. Key speakers in- “Those commodities [graphite, lith- to tip funds into.
cluded Rajeev Chopra (Deloitte global
leader for energy and resources), Da- ium, cobalt, nickel and rare earths] all “It creates the pipeline for those new
vid Cormack (Deloitte Consulting min-
ing leader), Matt Judkins (WA leader of lend themselves well to integrated value projects coming online,” Judkins said.

chains, much the same way as Russian “Without that pipeline of activity, there

steel producers had integrated value are none of these projects.

chains with their own coal, iron ore and “We’re seeing more [exploration] activ-

others to produce a variety of steels,” ity, not a heap more, but it’s definitely on

Cormack said. the rise. I think there’s still a level of con-

“There is fairly complex processing in- servatism around people actually putting

volved, but the companies which demand large amounts of money down.

those products need security of supply, “Our view around commodity prices at

both from a quality and from a consist- the moment is they’re pretty good, but

ency point of view. We’re starting to see what I think most people are concerned

large electronic companies interested in about is how they might play out.”

securing that via off-take agreements, Cullinane expressed her concern at

etc in early stage projects and then even the current state of exploration in the oil

co-funding and raising their equity stake. and gas sector when compared to its

“I think there’s a number of financing mineral peer group.

models and creative innovative business “Oil and gas exploration is probably

models that enable that integration to not as rosy as it might be for mining,” she

take place, based on the need to secure said. “Exploration spending is at a 25-

those value chains.” year low in Australia. If we’re not replac-

Cormack said mining companies were ing reserves, our companies will eventu-

also becoming more open to embrac- ally start to contract and that’s certainly

ing new technologies through innovation not what we want. It is definitely a future

practices at their operations. challenge that needs to be addressed.”

“We’ve seen the mining industry tradi- – Michael Washbourne
tionally being quite risk averse, not willing

to change rapidly and relying on methods



23 October 2018

Perth,Western Australia

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S2 settles on Scandinavia

S2 is stepping up its exploration focus in Sweden, with diamond drilling kicking off at the time of print

Mark Bennett’s S2 Resources Ltd will bigger prize.” from Sirius, so they would like to see us
look abroad for the next big compa- Under the terms of the sale agree- find a Nova or something better, rather
ny-making discovery after divesting of the than a few hundred ounces of gold here
West Australian gold projects the cashed- ment, S2 will receive $3 million cash and there near Kalgoorlie.
up explorer was primarily founded on. plus 4 million Westgold shares, at an
assumed price of $1.50/share, leaving “But, if we’re going to go hunting big
Spun out of Sirius Resources in 2015 Bennett’s company with $25 million cash game, you’ve got to go where the big
post the $1.8 billion takeover by Inde- and investments to splash on exploration game is and there’s a lot of competition
pendence Group NL, S2 was under im- across Scandinavia and the US. in Australia for what is usually a smaller
mense pressure from day one to repli- prize, which is why we went over to Swe-
cate the discovery success of its famous S2 retains the nickel rights over the den where we thought a bigger prize is
predecessor. WA gold projects, including the Taipan waiting and with less competition.”
and Halls Knoll nickel sulphide prospects
Bennett and other former members discovered by Sirius during the explora- Just days before finalising the sale of
of the Sirius team who crossed over to tion campaign that unearthed Nova-Bol- its Australian assets, S2 struck a major
S2 were heavily backed to find another linger. breakthrough at its Skellefte project in
Nova-Bollinger among the suite of non- Sweden, with base of till drilling defining
core assets acquired from the spin-out, Bennett said shareholders supported two adjacent coherent zones of gold-
specifically the Polar Bear gold project, the divestment decision, although he ad- silver mineralisation at the Storgroven
about 50km north of Norseman. mitted it did take some convincing. target.

However, within a year of arriving on “It’s funny because when we first start- Seven holes ended in mineralisation
the bourse, the company’s focus shifted ed we had Polar Bear in Australia and grading more than 1 g/t gold and 20
to the Scandinavian tenure considered this stuff overseas and the top 30 inves- g/t silver, with peak end-of-hole assays
a sweetener in the original prospectus, tors were saying ‘why are you overseas, grading 2.5 g/t gold and 60 g/t silver in
while Polar Bear received less attention. you should be in Australia’,” Bennett said. the southern zone and 2.3 g/t gold and
“As we explained the situation to them, 42 g/t silver in the northern zone.
With exploration in Sweden and Fin- they did a 180 and it was then ‘what are
land returning encouraging results you doing in Australia, you should be S2 also reported encouraging results
throughout 2017 and the company add- overseas’. from earlier drilling at the Bjurtraskgru-
ing prospective ground in Nevada to a van target where massive sulphides
burgeoning international portfolio, S2 “The reason being is most of those grading up to 7.14% zinc were intersected
last month sold its WA gold projects – in- guys inherited their shareholding in S2 170m down plunge of a previous drill hit.
cluding Norcott and the Eundynie JV – to
Westgold Resources Ltd for a total con- Mark Bennett “Where we are in Sweden, there’s no
sideration of $9 million. shortage of targets to drill. We have got
more targets to drill than drill metres to
“There’s nothing wrong with our WA drill them with,” Bennett said.
projects, but we can’t do everything,”
Bennett told Paydirt. “Our attitude is we have plenty of tar-
gets, but only a few of them will be of
“Polar Bear has 300,000oz of re- substance, so we’re just knocking them
sources and I’m sure we could find a off as we go and being quite surgical
few 100,000oz more, but that’s not going about it so that we don’t get distracted.”
to do it for our shareholders. So, rather
than spend money on that for less return, Storgroven is just 5km along strike to
particularly because it’s under a salt lake the south-east of the Holmtjarn mine op-
and it’s not cheap to drill, we just felt that erated by Boliden AB for nine years until
we could get a bigger bang for our buck 1992. No prior drilling or prospect pitting
with drilling elsewhere for a potentially has been documented for this area.

A diamond rig was mobilising on site


at the time of print ahead of an extensive However, with the group focusing more too late to be looking for big gold depos-
winter drilling campaign. on smelters and refineries in recent its in Nevada, but when I went there I
years, S2 quietly pegged 50% of the was absolutely staggered how focused
“We just wanted one of those targets to VMS-rich Skellefte belt. the companies are around the mines and
provide us with sufficient encouragement how little exploration there was outside of
to start drilling more intensively, and this “We were basically able to pick up half that,” he said.
one has done it in spades,” Bennett said. of Boliden’s home turf whilst they were
distracted,” Bennett said. “The thing “Most of the ground is still open and
“The focus [during March] will be on they do least is exploration, so it will be the few small companies that exist there
that first stage of diamond follow-up and quite interesting if this or one of the other have very little money to explore with, so
then depending on what comes out of things we’re chasing turns into a discov- that’s why we were able to get our foot in
that, we’ll continue drilling here for as ery, given we plucked it from under their the door over there. We’re a junior rather
long as we need to. The beauty of this noses.” than a big boy, but we’ve got money to
particular one is it’s an area we can drill do stuff.
year-round, so we’re not confined until Bennett is equally buoyant about the
next winter to continue.” prospectivity of the company’s ground in “Again, we’re looking for the big mon-
neighbouring Finland. ster gold deposits. We’ve got one bit of
Prior to 1994, foreign companies were ground that is surrounded on two sides
not permitted to explore in Sweden, giv- Despite hosting Europe’s biggest gold by Barrick and one side by Newmont and
ing government-owned Boliden a mo- mine – Agnico Eagle Mines Ltd’s 8 moz three gold mines that have a combined
nopoly on the country’s mining industry. Kittilä deposit – and Anglo American plc’s 50 moz gold between them.”
Sakatti nickel-copper-platinum project,
which is twice the size of Nova-Bollinger, Bennett acknowledged his company
Finland remains largely underexplored flew under the radar last year as it re-
territory. defined its corporate strategy. However,
with plenty of targets to drill and deep
“We’ve quietly pegged about a third pockets to fund that work, the team which
of that belt, but we’ve not done a lot be- discovered Nova-Bollinger could make a
cause we’ve been busy in Sweden,” Ben- welcome return to the spotlight in 2018.
nett said. “We’ve positioned ourselves
to start doing more there this coming “As a number of shareholders have
summer. That will be the next wave of described it, we’re target rich and each
targets with drilling flowing on from that. one is a high risk, high reward proposi-
It’s maybe 12-18 months behind what is tion and a potential company-maker,”
happening in Sweden.” Bennett said.

Expect S2 to make more noise about “We’ve got 20 targets or thereabouts
its US ground package this year after that we’re going to have a crack at, but
picking up three gold projects in Nevada we only need one of those to come in.
last August. We’ve got 20 swings of the bat, and unu-
sually enough money to actually have 20
Bennett said few juniors had set foot swings, unlike most companies of our
in the region despite the presence of size.”
majors Barrick Gold Corp and Newmont
Mining Corp. – Michael Washbourne

“I went there thinking we were 30 years

Base of till drilling is helping S2 prioritise a number of promising targets at the Skellefte project in Sweden


The new Zimbabwe

In a clear statement to the world prise open Zimbabwe’s doors to the in- Meetings with the UK Government
that it is open for business, Zim- ternational community in the meantime. have also been fruitful as Zimbabwe also
attempts to rejoin the Commonwealth.
babwe’s new leadership has been “Zimbabwe is open for business,” Zim-
babwe Minister for the Ministry of Mines In further encouraging news for the
quick to relax laws pertaining to and Mining Development Hon Winston country, it has been reported that the
Chitando told Paydirt. US Government is considering Zimba-
indigenous ownership of mining bwe for trade benefits under the Africa
“The new political dispensation led by Growth and Opportunity Act.
projects. HE Mnangagwa has taken the deliber-
ate attempt to improve the investment “At a global level we want to re-engage
While majority indigenous ownership climate through a number of initiatives.” with the global community because Zim-
still applies to the country’s rich and babwe has been on its own for a long
abundant diamond and platinum sectors, Easing the approvals process required time,” Chitando, former executive chair-
foreigners can enjoy full control of pro- for investment, changing the indigenisa- man of platinum miner Mimosa Mining
jects hosting other minerals. tion ownership policy and providing clear Pvt Ltd, said.
and consistent terms for investment are
Change has been swift in Zimbabwe key policy planks the new Zimbabwe re- “I accompanied the President to Zu-
since Robert Mugabe’s resignation in gime is promoting. rich, which was a hectic time, where we
November, with great hope returning to a had many closed-door meetings with
land sodden by dictatorship for 37 years. At the time of print, Mnangagwa was potential investors and a public meeting
visiting Botswana on a mission to start which was covered on public television.
The first democratic elections in the mending ties with its Southern African The whole point is to re-engage with the
country since the end of Mugabe’s reign neighbour, while a trip to Davos, Switzer- international community and make good
are scheduled for the first half of this land, during the World Economic Forum with the likes of the World Bank, IMF and
year, with President Emmanuel Mnan- in January proved to be on point for Zim- all other development institutions. All of
gagwa’s current cabinet mandated to babwe.


Prospect executive chairman Hugh Warner with Zimbabwe Minister for the Ministry of
Mines and Mining Development Hon Winston Chitando and executive director of
Examiz Paul Chimbodza

attention when the time beckons. terms with the operating environment in

“We have to learn from what is happen- Zimbabwe, having first stepped into the

ing in other countries and try to improve country upon acquiring two gold projects

and learn lessons from that,” he said. in 2013.

A corporate tax of 25%, which drops to It was then that the company negoti-

15% when a mining lease is granted, and ated 70% ownership of Zimbabwe com-

2% royalty (lithium) is the current deal in pany Hawkmoth Mining and Exploration

Zimbabwe; fair and equitable, according Pvt Ltd. The deal was struck with the

to ASX-listed Prospect Resources Ltd. Zimbabwe Investment Authority and fully

“The Government will obviously look to complied with indigenisation legislation

extract further value as the industry ma- at the time.

tures,” Prospect executive director Harry The structure remains in place, with

Greaves told Paydirt. 70% of Prospect in the hands of offshore

Prospect is developing the Arcadia investors and 30% held by locals, includ-

lithium project, 38km from Harare, and ing Greaves and fellow executive director

has applied for a Special Economic Zone and original vendor of the Arcadia lithium

around the licence. If granted, Prospect claims, Paul Chimbodza.

this will help Zimbabwe’s standing as a will receive a zero percent tax rate for the “Part of Prospect’s success is the fact
good investment destination.”
first five years of operations at Arcadia. that we have teamed up with key lo-
The economy remains convoluted and
will need to be deeply understood by any “It definitely suits. The key for us is to cal people in the country like Paul and
investor considering pursuing opportuni-
ties in Zimbabwe. ensure that we have a tax rate equivalent Harry and have always had strong local

With idyllic conditions for farming, the to Australian corporate, which it does. content. It is not a foreign company par-
agriculture sector is being primed as the
backbone of Zimbabwe’s economy. The other is to make sure we are pay- ticipating in Zimbabwe, it is very much a

Mining exports are also extremely ing our tax in the country and in Australia Zimbabwe company listed in Australia,”
valuable to the economy, with the sector
employing a large number of Zimbabwe- to make sure we are contributing to both Warner said.
ans directly and downstream.
economies, so I think we have a good “Zimbabwe is such an opportunity
“In economic terms, the mining sector
contributes over 60% of exports and is balance,” Prospect executive chairman for us in the sense that there is such a
very key to the Zimbabwean economy.
There is a deliberate attempt to see the Hugh Warner said. well-educated group of local people, but
mining sector grow,” Chitando said.
“Prospect has had time to come to also as a country as a whole. It is easy
As other African nations like South Part of Prospect’s success is the fact that
Africa and Tanzania wobble through a we have teamed up with key local people
round of legislative changes on the min- in the country like Paul and Harry and have
ing front, Chitando is taking note so that always had strong local content. It is not a foreign
Zimbabwe is set up to capture investor company participating in Zimbabwe, it is very
much a Zimbabwe company listed in Australia.



There are some 3,000 small stamp mill-type operations in Zimbabwe

to team up with local guys and everyone for success,” Chitando said. Zimbabwe to shake the stigma accrued

is contributing, which is fundamentally “I am sure they will confirm the ease over the past 37 years.

important; turning up in country with a in which they received their licences, the From a mining perspective though, in-

fundamental knowledge base and edu- ease in which they received their approv- vestors will need little convincing of the

cation base.” als and find that the Government is very geological richness inherent across the

Chitando said it was absolutely critical receptive and supportive of investment country’s 390,757sq km landmass.

to identify local partners to work with and initiatives like this. They can come see Zimbabwe is landlocked by South Afri-

applauded Prospect for the manner in me as the minister even without an ap- ca, Mozambique, Botswana and Zambia;

which it had gone about its business. pointment; we are there to support. all countries well endowed with various

“Certainly Prospect can be a template “We are happy to have investors like resources.

Prospect which has taken the bold move Zimbabwe has healthy platinum,

to come on the ground and lead the way. chrome and diamond industries, while

That will help the process for other in- there are some 3,000 small-scale stamp

vestors to improve their perceptions,” he mill gold mining operations in play, with

said. the vast majority of projects occurring

Changing people’s perceptions, partic- along the Great Dyke.

ularly when it comes to African govern- In addition to an expected increase

ments, has historically been difficult and in the 30t gold produced in 2017, Ch-

time will tell how challenging it will be for itando expects beefed up asbestos and

coal production in the next 12-24

months, while diamond, platinum

and chrome output will also rise in


“We are expecting very signifi-

cant diamond production this year

compared to last year. There are

people also talking about alumini-

um sulphate, gold is looking good

and there is massive interest in

platinum. There are discussions

with some players to ensure that

they kick-start some expansion or

Large-scale pilot plant testing was scheduled A 99.8% lithium carbonate has been produced work on [platinum] projects which

to start at Arcadia by the end of March from Arcadia petalite ore may take time to come to fruition


because the lead time is slow, but the A thriving platinum industry in Zimbabwe means the Government is unlikely
good thing is that we will have it tied up to sway on its indigenisation policy for the sector
in the next few months,” Chitando said.
standing. With the capex around $US52 ish,” Silver said.
“There is big interest in chrome in million, you are talking about free cash Silver’s Sydney-based Hunter Capital
terms of people wanting to put in smelt- flow of $21 million a quarter. Economi-
ers and we are also hopeful that we will cally, I think it is amazing and there’s was the sole lead manager in an over-
have some interest in local cement pro- scope for them to upsize it. There is also subscribed $10 million placement con-
duction. It is looking very good and we a natural first-mover advantage for them ducted at 5c/share last month.
hope mining production this year will take into the economy. You are going to see
a major leap forward.” with guys like Hugh and Harry that this Funds raised will go towards acceler-
is the start of multiple opportunities they ating the development of Arcadia, which
Zimbabwe is the world’s second larg- will find in Zimbabwe. They have obvi- has been granted priority status by the
est producer of platinum, with Zimplats ously taken the DRC cobalt stuff, but I Zimbabwean Government, in addition to
Holdings Ltd mining a record 7mt during also imagine they will acquire more stuff exploration at the Good Days lithium pro-
2017, while the world’s largest PGMs pro- in Zimbabwe. ject and assessing potential other lithium
ducer Anglo American plc is also present and cobalt plays.
along the Great Dyke, as is the world’s “The flipside to this is that the company
third largest PGMs producer Sibanye- is in play now. If you look at Sinomine, The appetite for lithium and cobalt is
Stillwater Mining Ltd. they have taken out Tiger [Resources] well known around the world, but per-
for $US260 million; they are not scared haps Zimbabwe’s potential to host sig-
The heavyweights of the platinum in- to write big cheques. If they were pre- nificant battery minerals resources is
dustry offer employment for thousands pared to offer the company $US150 mil- not and those brave enough to enter the
of Zimbabweans and the Government lion and then they put in $US52 million country now could be handsomely re-
hopes that expanding its mining indus- in capex spending that brings them up to warded.
try will mean further opportunities for its $200 million in spending to produce $85
people. million annually in free cash flow. That is “To me, Zimbabwe is one of the great
a pretty good IRR even for someone that opportunities,” Silver said. “Hunter ex-
The Government has thrown its sup- wants buy it outright. I am extremely bull- pects to do a lot more business there.
port behind the lithium sector and made We are in talks with other parties and I
the fact known at Mining Indaba by an- think Zimbabwe is going to open up. The
nouncing a deal with a company which Government is receptive and the Prime
is expected to generate $US1.4 billion in
revenue over eight years. Prospect general manager of operations Lee John at the
company’s pilot plant facilities in Kwekwe
There is a firm belief that Zimbabwe
can become one of the prominent lithi-
um producing countries in the world and
early indications are that the investment
community is on side.

Less than two years ago, Prospect
swooped on the chance to acquire the
Arcadia lithium project which was inter-
mittently mined between 1954 and 1972.
Thereafter, two holes were drilled in 1969
and 1981 confirming that the pegmatite
extends at least 1,500m along strike.

Prospect has run just as fast as the
lithium market since it acquired Arcadia,
producing a PFS highlighted by ore re-
serves of 26.9mt @ 1.31% lithium and
128 ppm tantalum to produce 75,000 tpa
spodumene (6% lithium oxide LOM aver-
age), 155,000 tpa petalite (4.1% lithium
oxide LOM average) and total lithium car-
bonate equivalent production of 26,000
tpa in excess of 20 years from a through-
put of 1.2 mtpa.

Pre-tax NPV (at 10%) was estimated
to be $US319 million, IRR 189%, life-
of-mine revenue $US2.3 billion, opex
$US1.4 billion, and net cash flow $US775
million, meaning project payback on the
$US52 million project would be achieved
in about two years.

“It is a world-class asset, just the size
of it alone,” Hunter Capital Advisors man-
aging director Stephen Silver said in ref-
erence to Arcadia, which boasts resourc-
es of 43.2mt @ 1.41% lithium oxide.

“The economics of the project are out-



A hillside view of Prospect’s core yard at Arcadia

employing people. I think the time and lithium hydroxide.
Lab scale production by Prospect, and
is now [to invest in Zimbabwe], we
assaying by CSIRO Australia in Perth,
are here now. We are going to be has proved fruitful with a 0.8kg sample of
Arcadia petalite ore purified to an ultra-
doing other deals in the area; that high purity 99.8% lithium carbonate.

is for sure. We are actively looking The result eclipses the 99.5% lithium
carbonate required for battery-grade ma-
at other opportunities in country.” terial, with any rise above this benchmark
increasing the scope for more potential
Prospect executive director Harry Greaves at Hunter Capital’s support is time- product applications and higher pricing.
Arcadia, 38km from Harare ly, with Chinese outfit Sinomine re-
questing an extension to decide on While bench-scale testing has been
on-song, a lithium carbonate pilot plant
Minister is the sort of guy that is open for a $10 million at 5c/share placement and set up in Kwekwe by Prospect is expect-
ed to be in full flight by the end of March,
business. He had to bide his time, get- framework agreement signed with Pros- allowing for larger scale testing.

ting rid of Mugabe wasn’t easy but I think pect in November. “We can start producing larger sam-
ples and it will be 99.5% battery-grade
now he is in control he couldn’t be more Sinomine has until March 31 to com- lithium that we will be producing so it is
great that we have been able to produce
forward thinking with the business struc- plete the placement, as it mulls over the 99.8%. Now we have to then send proper
samples out to customers in Europe, Chi-
ture. definitive build and transfer contract and na, Singapore, Japan and South Korea
and US. It was interesting at Indaba, on
“I wouldn’t be surprised if you see a the definitive facility agreement, while the back of the new government, there
was an incredible amount of people from
special tax or other incentives for Pros- also contemplating an offer to acquire a alternative jurisdictions who were in-
terested to speak to us – from the US,
pect to advance this project faster be- minimum 51% in Prospect or an offer to Europe, Asia. There was no country not
prepared to speak to us this time. It has
cause from my understanding from the purchase 100% of Arcadia. only been a matter of a couple of months
and we have seen a huge change in the
people on the ground, it’s all about getting The off-take agreement in place is perception of the country,” Warner said.

employment. He just wants young people for phase one of production over seven The same production techniques
which produced the 99.8% lithium car-
employed and to grow the economy. The years, with Prospect selling 390,000t of bonate result will be used by Prospect
during the pilot plant stage, which is a
Government is not trying to hold onto spodumene concentrate and 1.097mt of critical element of the project for a few
any assets and milk assets, they want petalite concentrate suitable for conver-
Under the off-take agreement with
companies to come in and it is all about sion to battery-grade lithium carbonate Sinomine, Prospect has the option to
process half of the petalite concentrate
Arcadia hosts one of the largest hard rock lithium resources in the world from Arcadia through its planned first
train, 6,500 tpa lithium carbonate plant.
Prospect can elect to build its own plant
at any time and supply lithium carbonate


direct to Sinomine.

Taking on the downstream opportunity

would be a boon for both company and

country as the operation would show-

case the level of technical capacity ac-

cessible within Zimbabwe.

“We have a very well-educated and

motivated workforce, particularly on a

comparative basis with other African

countries. There is very high unemploy-

ment in Zimbabwe, so a project like this

is going to require a lot of manual labour

and some high level skills; it is a very ex-

citing opportunity for a lot of Zimbabwe-

ans,” Greaves said.

“We are having good interest from Zim-

babweans in the diaspora who want to

come back to Zim. You have to remem-

ber that each person working here sup-

ports 5-10 family members, so if we can

create 500-600 jobs total that will have

a massive ripple effect on the economy.”

With 868,000t of lithium carbonate

equivalent of proven reserves, Arcadia is

one of the largest hard rock lithium de-

posits in the world and appears ripe to

have an impact on Zimbabwe’s economy.

The Arcadia project alone will be a job

creator in-country and while in the hands

of Prospect, will allow Australian inves-

tors in particular exposure to doing busi-

ness in Zimbabwe.

“We are way ahead of the game and

there is certainly a lot of interest from

the junior miners coming in. I think there

are going to be a lot of Aussies coming

to play, but they will face the challenges Zimbabwe’s idyllic farming conditions means it has long been touted as

and we are way ahead of the curve. That a potential “food bowl of Africa”

is one of the key points; Prospect is ex-

traordinarily well set up to take incoming Americans. But, I would think it would be essentially giving investors more confi-

investment and develop other projects Australians first because we are demon- dence on the ground.

with other interested parties,” Greaves strating success,” Warner said. “The skills base now and over a dec-

said. Australia’s involvement in Zimbabwe ade or two has been continually drained

Warner agreed and said the onus was should not only be limited to equity in- from Zimbabwe. The main institutions

now on Prospect to deliver. vestments in the mining sector, with which are our universities that frame our

““We are getting tremendous support Chimbodza calling for greater interaction youngsters certainly need a framework
from the Government,” he said. “We at an educational level. and historically we find that government-

need to be able to match that to-government cooperation

support and be as fast as we We are having good interest has played an important role
can to get into production. in training our institutions,”

“I think Australians will be from Zimbabweans in the Chimbodza said.
the first to come into Zimba- diaspora who want to come back to “There is no capacity in
bwe because Prospect has
our institutions to develop

done well and is achieving Zim. You have to remember that each our geologists or metallur-
results, so it will be easy for person working here supports 5-10 gists at our universities as
Australians to follow that for a long time there has not

form-line in a way. In my family members, so if we can create been the right resources to
view, mining is not really a 500-600 jobs total that will have a train. Our school of mines is
competition, and the more basically funded by the local

Australian and international massive ripple effect on the economy. mining industry but external
companies can be success- help in supporting the train-

ful in Zimbabwe, the better ing institutions of our indus-

for all of us. We would cer- try is needed.”

tainly be more than willing when the guys Chimbodza said government-to-gov- – Mark Andrews
come through to help them, whether it ernment initiatives would be helpful in

is the Australians, Europeans or North developing the workforce in Zimbabwe,



End the bickering:

As the winds of political change swept through Southern Africa, nia’s falling reputation – a result of new
former Nigerian President Olusegun Obasanjo used his keynote mining policies which have stripped for-
address to the Mining Indaba to urge governments and industry to eign investors of their rights – has seen
form development partnerships which would benefit the continent. foreign mining companies freeze invest-
ment in the East African country.
“We need to bring an end to the bicker- down in 2017 after a combined 75 years
ing; it will only lead to the downsizing of in office with foreign investment almost Mining Indaba often highlights govern-
the industry,” Obasanjo said. “You need non-existent in their countries, while in ments’ willingness to engage with inves-
long-term investment to create the as- South Africa, the ruling ANC Govern- tors.
sets which create jobs. The mining in- ment ousted its own scandal-riddled
dustry needs to be seen as a long-term president, Jacob Zuma, whose cronyism In the past, Angolan and Zimbabwean
development partner of the Government, and populism had seen foreign investors ministers at the conference made almost
not an enemy.” flee a once dominant mining industry. no public bid to attract investors and were
generally unapproachable, surrounded
After varying periods of unpopularity The South African rand spiked to two- by surly handlers.
with investors, South Africa, Zimbabwe year highs on Zuma’s removal, indicat-
and Angola are finding a new wave of ing investors already see his successor, However, this year saw participation
interest thanks to changes or expected Cyril Ramaphosa, as a more business- from the two countries increase, includ-
changes in government. savvy leader. ing a three-hour investment seminar
hosted by Angolan Minerals and Oil Min-
All three countries enjoy huge mineral In contrast to the advances made in ister Diamantino Azevedo.
endowment and while each can boast South Africa, Angola and Zimbabwe,
active extractives industries they are DRC is on the verge of reverting to a Investors said they were encouraged
widely regarded as not having made the more isolationist climate with its pro- that the Angolan and Zimbabwean min-
most of their opportunities. posed new mining code anticipated to isters were from the industry.
strangle foreign investment in its bur-
Angola’s Jose Eduardo dos Santos geoning minerals sector. Equally, Tanza- “I can’t tell you how encouraged I am
and Zimbabwe’s Robert Mugabe stepped to see a man from us, a man from the
industry heading that ministry; that is the
single most encouraging thing, for me,”
Wilfried Pabst, chairman of African Met-
als Management Services Ltd, said in


Olusegun Obasanjo

reference to Zimbabwe. industry, government and community how emerging market economies can

Pabst, whose company has lithium and which was frustrating development. turn their fortunes around.

tantalum assets, has had business inter- “Policy instability, fears of nationalisa- “In 1972, Chile had the second worst

ests in Zimbabwe since 1992. tion and labour problems have resulted economy in Latin America. In the last 30

Stephen Wetherall, managing director in a fall of South Africa’s position in years, its turnaround, due to free market

of Lucapa Diamonds Ltd – which oper- global mining,” he said. “By 2011, South reform and democracy, has made it into

ates the Lulo diamond mine in Angola Africa’s share of global greenfields pro- the largest copper producer in the world.”

– said the attitudes of both governments jects was 5% and the number of people To emulate Chile, African countries

“appeared positive. employed by the sector had halved since must change course, Obasanjo said.

“If the governments follow through on the 1980s.” “There comes a time to end business

what they have suggest- as usual and that is right

ed you will certainly see There comes a time to end now. We need a new nar-
growth in the diamond in- business as usual and that is right rative; one which involves
now. We need a new narrative; one which
dustry in both countries,” political stability, benefici-
he said. ation and minimal but fair
Meanwhile, the DRC

Government was not pre- involves political stability, beneficiation “Governments
sent in Cape Town and and minimal but fair constraints. shouldn’t get in the way of
the Tanzanian delegation future prosperity of indus-

failed to show for Africa’s try and the nation.

largest mining investment “It won’t be easy to

conference, following changes to their Obasanjo said only an end to the argu- achieve but if we do we can make Africa

respective investment and mining codes. ments and short-sightedness of govern- the continent of the 21st Century.”

Obasanjo pointed to South Africa’s de- ments and industry would allow African – Dominic Piper and Reuters
caying mining sector as proof of the need mining economies to drive development

for new conversations on the continent, on the continent.

saying it was a lack of trust between He pointed to Chile as an example of



Hope for change of
climate under Ramaphosa

South Africa is at yet another political resolve the impasse over the Mining been informal consultation with business
crossroads following the removal of Charter and to facilitate a process of de- which is very pleasing. There is dialogue
Jacob Zuma from the presidency but this veloping a New Mining Charter that all and there have been very obvious and
time there is genuine hope the country is stakeholders can support and defend,” visible things we can all see occurring.”
about to receive an economic boost after Ramaphosa’s office said in a statement
enduring more than a decade in a down- on February 18. It is perhaps ironic that South Africa’s
ward spiral. largest miners are viewing Ramaphosa
The mining group agreed to postpone as a bearer of hope given he forged his
Jacob Zuma stepped down as presi- its High Court challenge to the new rules, career as a grassroots activist during the
dent on February 14 after a week of which was set to be heard from Febru- apartheid era, instigating the National
intense pressure from within the ruling ary 19. Union of Mineworkers, black South Afri-
ANC party. The 75-year-old was re- can mineworkers’ first organised union.
placed by his deputy Cyril Ramaphosa, “The postponement serves to allow
who had already usurped him as ANC parties the space to engage and find an He later became general secretary of
party president in December. amicable solution,” the Presidency said. the ANC and was its chief negotiator dur-
ing the transition to democracy. He stood
It brought an end to a week of intrigue “We welcome the President’s interven- in the presidential elections in 1999 but
that had dominated discussions at the tion, and his commitment to engaging after being defeated by Thabo Mbeki he
annual Mining Indaba in Cape Town as meaningfully with stakeholders in the in- walked away from politics and into busi-
delegates from around the world specu- dustry – and others – on a New Mining ness where he used his previous experi-
lated on the longevity of Zuma’s contro- Charter,” Chamber of Mines president ence in both the mining sector and nego-
versial nine-year reign. Mxolisi Mgojo said. tiating to become one of South Africa’s
richest businessmen, owning a string of
The international mining community is The once all-powerful South African assets in media, finance and mining.
now trying to ascertain what Zuma’s de- mining industry withered under Zuma’s
mise and Ramaphosa’s elevation means leadership but the industry holds hope Such was his shift from union firebrand
for the ailing South African extractives Ramaphosa’s anointment will bring op- that in 2012 Ramaphosa attracted criti-
industry. portunity. cism for describing the actions of striking
workers at the Marikana platinum mine
The early signs were positive with Neal Froneman, chief executive of as “dastardly criminal”. He was a direc-
Ramaphosa moving quickly to bring a Sibanye-Stillwater Ltd, South Africa’s tor of Marikana’s owner, Lonmin plc, at
halt to the acrimony which had built be- largest precious metals miner, said the time.
tween government and industry over Ramaphosa had already shown a great-
proposed changes to the Mining Charter er willingness to engage. Despite serving as Zuma’s deputy for
and the country’s mining code. the last four years, Ramaphosa – whose
“There are obvious green shoots al- net worth is estimated at around $US450
“The Presidency has been in dis- ready emerging,” Froneman told Paydirt. million – is seen as a business-savvy
cussion with the Chamber of Mines to “We saw it before he was elected and
since he became president there has

The many scandals of Jacob Zuma

Jacob Zuma resigned as South African late 1990s when he was deputy president. emerged that millions of dollars of pub-
president on February 14, under pres- The charges were set aside in 2009, lic money had been spent on upgrades to
sure from allies of Deputy President Cyril Zuma’s Nkandla home, including a swim-
Ramaphosa, who replaced him as leader of paving the way for Zuma to run for presi- ming pool that one minister justified as a
the ruling African National Congress (ANC) dent, but were re-instated in 2016 by the fire-fighting resource.
in December. Supreme Court.
Zuma weathered a no-confidence vote
The 75-year-old’s resignation caps the RAPE ACCUSATION in parliament over the upgrades and paid
end of a tumultuous decade in which Zuma While deputy president of the ANC, Zuma back more than $500,000 after unsuccess-
has survived several no-confidence votes was charged with raping Fezekile “Khwezi” fully trying to argue his case in the Consti-
in parliament, a string of corruption allega- Kuzwayo, the HIV-positive daughter of a tutional Court.
tions and street protests against his rule. friend who had been imprisoned on Rob-
ben Island with Zuma during the apartheid ‘CLEVER BLACKS’
Below are some of the main scandals in- era. Zuma caused controversy in 2012 for
volving Zuma. Some date from before he Zuma was acquitted in 2006 but was ridi- scolding black people “who become too
became president in 2009. culed after saying he had showered after clever” in an address to South Africa’s Na-
sex to reduce the risk of contracting HIV. tional House of Traditional Leaders, saying
ARMS DEAL “they become the most eloquent in criticis-
Zuma is still fighting 783 counts of cor- NKANDLA UPGRADES ing themselves about their own traditions”.
ruption over a 30 billion rand (now $2.5 bil- Soon after becoming president, it Zuma, who received no formal schooling,
lion) government arms deal arranged in the


Cyril Ramaphosa is sworn in as South Africa’s new president

reformer, who is capable of reversing be addressed and cleaned up urgently. ment of Mineral Resources, but I think
South Africa’s economic decline, steer- He sees it as an early driver and magnet the lights have gone on. Everyone real-
ing it away from corruption scandals and for foreign direct investment into South ises that you need to have a fully collabo-
making it an attractive foreign investment Africa.” rative system that works for both the in-
destination once again. vestor and state and that is the only way
Smart said the SA Chamber of Mines you actually get improvement.”
So, does Ramaphosa represent hope was very positive about the leadership
for the beleaguered South African mining change and was looking towards “broad- There is hope Zuma’s removal will
sector? Errol Smart, managing director based consultation”. result in a more equitable playing field
of Orion Metals NL, believes so. for investment. Investor perceptions of
“[The chamber] has approached a South Africa fell dramatically over the
“Remember, Ramaphosa made his number of junior miners, including our- course of Zuma’s presidency as he dis-
money in mining, and specifically in SA selves, to serve on a committee to draft played policy inconsistency and abrupt
mining, so he knows the shortcomings in a concept document. cabinet changes.
the legal framework,” Smart told Paydirt.
“He has specifically made the statement “We have experienced a very intense Accusations of corruption grew in the
that if the regulatory framework is an im- period over the last two years, there has
pediment to investment then it needs to been a deteriorating relationship with the To page 30
Minister and office bearers in the Depart-

has a loyal following in rural areas but has nas that Zuma’s son Duduzane invited him with unknown parliamentary backbencher
tended to receive less support in urban ar- to the Gupta family home where he was of- Des van Rooyen. Zuma was forced to sack
eas where education levels are higher. fered the job of finance minister and a bribe van Rooyen and re-appoint a previous fi-
of 600 million rand. nance minister, Pravin Gordhan, four days
SONONO KHOZA later after the rand collapsed.
Zuma apologised to South Africans in The Guptas and Zuma have denied any
2010 after fathering a child out of wedlock wrongdoing. The Public Protector recom- ELECTORAL DEBACLE
with his friend Irvin Khoza’s daughter, Son- mended a judicial enquiry be set up to in- The ANC lost its grip on local govern-
ono Khoza. vestigate grand-level corruption involving ment in three metropolitan areas in 2016,
Zuma, a polygamist, had promised the Zuma and the Guptas. the ruling party’s worst election result since
ANC’s leadership he would not engage in the end of white minority rule in 1994. Un-
extramarital sex after the Khwezi episode. WATERKLOOF LANDING employment, economic stagnation and
Zuma’s friends, the Gupta brothers, used scandals around Zuma were among rea-
“STATE CAPTURE” the top-security Waterkloof air base to fly in sons the ANC lost voter support.
In 2016, the Public Protector, South Af- 200 wedding guests from India for a fam-
rica’s main anti-corruption watchdog, pub- ily member’s wedding in 2013, sparking a MIDNIGHT RESHUFFLE
lished a report entitled “State of Capture” public outcry. Zuma fired Gordhan as finance minister
alleging the Guptas had tried to influence The ANC called the landing reckless and and Jonas as deputy finance minister in a
the appointment of cabinet ministers and a breach of national security. midnight reshuffle in March 2017. South
were unlawfully awarded state tenders. African financial markets plummeted, with
Central to the report was the claim by NENEGATE senior ANC officials expressing anger at
then-deputy finance minister Mcebisi Jo- Zuma fired finance minister Nhlanhla the lack of consultation.
Nene in December 2015, replacing him



later years of Zuma’s term in office as Jacob Zuma “Without this step [withdrawal of the
questions about his relationship with the Mining Charter], there can be no turna-
influential Gupta family became the fo- weeks ahead, starting with another ap- round in the industry,” Lorimer said. “The
cus of several government inquiries. pearance before the Parliamentary Port- bill is a bad one and will ensure there is
folio Committee on Mineral Resources to little new investment. It is also so proce-
The Indian-born billionaire Guptas answer allegations relating to state cap- durally flawed as to almost guarantee it
were accused two years ago in a 350- ture, will only get him in deeper.” will not pass constitutional muster.”
page report by a corruption watchdog
of using their influence to gain control of Lorimer’s urgings to Ramaphosa went Lorimer also argued for greater trans-
state companies and contracts. further, calling on him to withdraw the parency with the Department of Mineral
proposed new Mining Charter “without Resources which has experienced a
A full inquiry into “state capture” has reservation” and redraw the much-de- chorus of bribery and corruption allega-
now been launched with Zuma’s relation- layed MPRDA amendment bill. tions in recent years.
ship with the Guptas at the centre of in-
vestigations. “All appointments of senior person-
nel in the Department of Mineral Re-
For the mining fraternity, there is hope sources must be re-examined,” Lorimer
recent policy changes around empow- said. “There’s been a wholesale change
erment laws and mining rights can be at deputy director general level with of-
wound back, adding greater certainty for ficials with years of experience leaving
investors. the department. Together with attempts
to shift regional managers around this
James Lorimer, shadow Minister of has given rise to grave suspicions about
Mineral Resources for South Africa’s offi- the probity and ability of top officials to
cial opposition, the Democratic Alliance, deliver an efficient and honest mining ju-
told Paydirt one of President Ramapho- risdiction.
sa’s first acts should be to remove Min-
ister for Mineral Resource Mosebenzi “All of these would be easy to an-
Zwane from office. nounce and relatively quick to execute.
They would go a long way towards bring-
“Mr Zwane is widely assumed to be ing about a positive change to attitudes
facing imminent arrest for corruption… towards mining and investing in mining.”
[and] must be replaced,” Lorimer said.
“The industry needs a minister who it be- – Dominic Piper
lieves can work with it and, even more
importantly, is untainted by scandal. Min-
ister Zwane is up to his neck in it, and the

Ramaphosa: A voice to be reckoned with

Neal Froneman believes the political Froneman admitted the industry re- couldn’t be done in the toxic, corruptive
changes in South Africa offer the tained a trust deficit from the apartheid environment which had been created.
country’s mining industry an opportunity era but said it had been difficult to ad- Now, we can start having those discus-
to redefine its position in the country’s de- dress the issue when dialogue between sions and we can develop social and
velopment. industry, government and community economic compacts and a common vi-
had been so antagonistic. sion. We know what to do but we haven’t
Speaking to Paydirt just days after previously had the environment in which
Cyril Ramaphosa replaced Jacob Zuma “There are a lot of legacy issues and a to do it.”
as South African president, Froneman huge amount of mistrust associated with
said the mining industry had reason to be the industry in South Africa,” he said. He urged all stakeholders to work to-
optimistic about its role in the country’s “We need to improve and eliminate the gether in order to modernise a South
economy. trust deficit between industry and society African mining sector often accused of
and the Government must do work to re- living in the past.
He said after Zuma’s reign had been pair trust as well.
marked by suspicion and antagonism, “All stakeholders have to come to the
Ramaphosa’s nascent premiership had “There is a perception that because party,” Froneman said. “Industry has to
already been defined by a more inclusive the industry never really admitted the modernise; extracting and beneficiating
approach. wrongs of the apartheid era that we resources with zero harm, procuring lo-
thought it was alright,” he said. “I can cally and becoming a preferential em-
“We have seen green shoots already tell you that we don’t think it was alright ployer. From governments, taxation must
and they are real,” Froneman said. but we have not had the correct environ- be consistent and transparent and recog-
“There has been engagement at many ment politically in South Africa to actually nise mining as a driver of growth.
different levels about problems the coun- launch that initiative.”
try and the industry face and what needs “The biggest thing we can do is to be
to change; it is something we haven’t The appointment of Ramaphosa – a part of the transformation. Some of the
seen for many years.” man well-known for his negotiating and things our international shareholders
communication skills – fills Froneman have seen in the last year had them very
Mining is South Africa’s most politi- with hope that a common vision can be concerned but they are asking us to tell
cally charged industry and Zuma earned adopted. them what we are seeing. So, being sup-
much political currency among voters by portive of the changes is vital.”
frequently attacking the sector during his “Under the previous president, we
nine-year presidency. couldn’t break down that mistrust. It



WA commits to Africa

With almost 200 Australian WA Minister of Mines Bill Johnston at Mining Indaba
companies operating across
Africa, many of which are mining Secretary General Sindiso Ngwenya. mineral and petroleum resources, agri-
and resources outfits based in The MoU has been extended for a fur- culture, vocational training and capacity
Perth, West Australian Minister of building.
Mines Bill Johnston was a keen ther five years, with the pact providing a
participant at Mining Indaba this framework for co-operation between the – Mark Andrews
year. 26 COMESA member states and WA in

“I’ll be highlighting the skills and
capacities that WA has in the min-
ing sector and it is a great oppor-
tunity to present the WA technol-
ogy story, skills story to Africa so
that our capacity is better known
over there,” Johnston said prior to
the conference.

“We are very keen to continue
the very good work that has been
done in our relationship with Af-
rica over the last few years. The
Federal Government has pulled
out of that funding, so we will be
looking at co-operating with the
World Bank and the like to con-
tinue that capacity building.”

While in Cape Town, Johnston took
the opportunity to extend the WA Gov-
ernment’s MoU with Common Market for
Eastern and Southern Africa (COMESA)

Acacia, China miners talk gold in Tanzania

China’s Shandong Gold Mining Co Ltd stock, which is down some 30% in the holiday. The transaction under discus-
and Zijin Mining Group Co Ltd are in past year. sion is similar to deals Barrick has struck
separate talks with Acacia Mining plc to in recent years with Shandong and Zijin,
form a JV for the London-listed compa- Acacia, which has all its operations in where Chinese groups have become
ny’s gold mines in Tanzania, three sourc- Tanzania, confirmed the Reuters report, partners in mines owned by the Cana-
es familiar with the matter told Reuters. saying that in response to expressions of dian gold miner, the people said.
interest from Chinese companies it has
Acacia’s majority shareholder, Barrick begun a process to explore the sale of It is understood Shandong’s execu-
Gold Corp is involved in the discussions, a stake in some or all of its operations. tives were in Tanzania last month doing
the sources said. It said the process was at a very early due diligence on Acacia’s mines.
Acacia, caught in a near year-long tax Getting a Chinese partner for its mines
dispute with the Government of Tanza- If successful, the discussions could could help Acacia smooth relations with
nia, has also has held talks with state- lead to a JV agreement between Acacia Tanzania after they fell apart last year
owned China National Gold Group about and a Chinese company that would own over tax and the government crackdown
such a partnership, two of the people Acacia’s three mines in the East Afri- on the mining sector.
said, although it was not clear if those can country – Bulyanhulu, Buzwagi and
talks are ongoing. North Mara, the sources said. Tanzania wants to attract more invest-
ment from China, which is already one of
Shares in London-listed Acacia, which The talks are aimed at forming a 50:50 its five top foreign investors and whose
were down around 3%, rebounded after JV, one of the sources said. But the final clout has grown across Africa. China is
the Reuters report in mid-February to deal structure is being negotiated, and also the world’s biggest consumer and
trade up as much as 3.4%. They closed questions remain about who would end producer of gold.
down 0.9%, at 162.95 pence. up operating the asset.
– Nicole Mordant and John Tilak,
Its shares have fallen around 70% in Barrick, the world’s biggest gold pro- Reuters
the past 12 months due to the tax dispute ducer by output, declined to comment.
as well as an industry-wide export ban Shandong, Zijin and China National did
on minerals not processed in Tanzania. not respond to requests for comment
Its woes have also weighed on Barrick’s over the week-long Lunar New Year


29 - 31 August 2018

Perth,Western Australia

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Miners must avoid the rocks of
political risk: Malloch Brown

Choppy waters lie ahead for the global years. Europe – particularly Germany
economy in 2018 and miners must and France – have tried to fill some of

be careful to navigate their way through that space but there is the arrival of new

them according to one of the world’s lead- actors to contend with as well.

ing diplomats. “We have seen extremism take hold in

Lord Mark Malloch Brown – a former parts of Mali, South Sudan and Somalia

UK Foreign Minister and UN deputy sec- but the risk I see is instability in more

retary general – warned Mining Indaba mainstream societies in Nigeria, Kenya,

delegates increased nationalism, pro- Uganda and Ethiopia,” Malloch Brown

tectionism and security concerns would said.

ratchet up pressure on miners, particu- The terrorist threat has also been en-

larly in emerging jurisdictions. hanced from the US’s gradual withdrawal

Malloch Brown is now playing a lead- from Africa.

ing role among the “remainers” who are “There has been an obvious depar-

trying to reshape the Brexit vote. Mal- ture of US from Africa and there is no

loch Brown said Brexit and other politi- evidence of serious African strategy

cal events in recent years highlighted the within the Trump administration,” Malloch

fractured nature of globalisation in the Brown said.

modern world. However, China’s filling of the gap left

“Overall poverty is down since 1990 by the US was “a good thing”, according

as a result of globalisation but inequality Lord Mark Malloch Brown to Malloch Brown and was a trend that

is up and there is a crisis of not enough could be expected to continue.

“good jobs”,” Malloch Brown said. “The whether they were committed to being “China loves a vacuum and one has

greatest beneficiaries of globalisation long-term partners of community or “sim- been created by US policy incoherence.

have been the top 1% and the Asian ply visitors”. As a trading nation it is building institu-

middle-class. In the West, the lower “If you’re the first, your ‘visa’ will be tions and physical infrastructure to make

middle-class has made almost no gains; revoked as nationalism is increased,” he for China-centric trade. US-China trade

this disparity shows in Brexit and Trump’s said. conflicts will increase.”

election victory.” But, if miners show genuine commit- He said China’s capitalist model built

Africa has witnessed a series of new ment to active participation in national around modern protectionism rather than

“mining policies based on a similar senti- development, they have a unique oppor- free market globalisation was proving in-
ment and designed to extract greater rev- tunity. creasingly popular with emerging econo-

enues from foreign inves- my governments.

tors. Proposed changes Political/economic disparity will “It is Protectionism 2.0,
in DRC, Tanzania, Ghana mean more resource nationalism. less visible than traditional
and Zambia have prov- So, the industry needs to have tariffs. It comprises such
en popular with voters things as state subsidies
across the continent. and state-backed financ-

Malloch Brown said companies acting as good corporate ing.”
miners must understand citizens, deeply rooted in community. Be Malloch Brown also an-
the cause and impact re-
ticipates investment from

source nationalism and engaged locally and ensure transparency China and other Asian
protectionism was having and avoid the rocks where you can. countries propelling the
in the countries in which nascent green revolution

they operate. which could prove a boon

“Miners have to un- for African countries with

derstand the politics of their host juris- “Mining has real anchors to speak to abundant reserves of battery minerals

dictions,” he said. “Political/economic the issues driving nationalism, etc. It can such as graphite, lithium and cobalt.

disparity will mean more resource na- produce the ‘good jobs’ and ‘good rev- “The next global revolution will be the

tionalism. So, the industry needs to have enues’ countries are seeking.” Asian development of clean technolo-

companies acting as good corporate citi- Security is another area of rising signif- gies and the transport sector. China is

zens, deeply rooted in community. icance on the African continent and Mal- now the world leader in recognising cli-

“Be engaged locally and ensure trans- loch Brown expects extremism to spread mate risk and is spreading this across

parency and avoid the rocks where you on the continent in 2018. Asia. It will become the green centre of

can. This will allow companies to resist South Africa and Nigeria used to be the world.”

rapacious governments.” essential parts in conflict management in – Dominic Piper
He said companies had to question the region but have withdrawn in recent



More than just African Gold

African Gold will hit the ground running “I think it is definitely becoming tighter
in Cote d’Ivoire upon listing on the [to access good ground] without a doubt,

ASX next month. Agboville has been sitting there for a

“Glenn Edwards [exploration manager] number of years now and not been test-

is on site as we speak getting ready for ed,” Parsons said.

that first exploration programme. We “I have been wanting to get this project

will literally be starting the day that we up and running for a little while and now

become live on the ASX in early April,” the time is right for this project. There

African Gold executive technical director has been huge demand on the prospec-

Steve Parsons told Paydirt. tus raising side of things, so there will

“The first programme will be a RAB be no shortage of interest when we go

programme. The soil anomaly is already live. I think the market will probably be

defined over 20km, so it really is now surprised at some of the big investors we

about getting into that and drilling a re- have lined up for it as well.”

connaissance RAB programme which Parsons was one of the first movers

will be the initial focus.” with Gryphon Minerals in Burkina Faso, a

Joining Parsons at African Gold will be country which is now seeing gold mines

non-executive chairman Evan Cranston, developed.

non-executive director Tolga Kumova He said Cote d’Ivoire was about eight

and chief financial/company secretary years behind Burkina Faso in terms of

Mike Naylor. Experienced African campaigner Glenn Ed- gold sector maturity, however, the West
The experienced campaigners who wards is exploration manager at African Gold African nation is experiencing an influx of

have raised in excess of $600 million new players right now.

in the past 15 years are not expected to ville in north-east Cote d’Ivoire has been Centamin plc has entered Cote

face many hurdles in reaching the target- untapped. d’Ivoire, while fellow ASX-hopeful Mako

ed IPO amount of $4.5 million and while In addition to Agboville, African Gold Gold Ltd is also at the starting gate.

supporters will be exposed to gold op- has the Sikensi and Azagui permits giv- The wave of interest in Cote d’Ivoire will

portunities in West Africa, the team has ing the company a total of 1,200sq km of no doubt attract attention from investors

a wealth of knowledge in other commodi- ground in Cote d’Ivoire. looking to participate in the re-emerging

ties to leverage from. All permits have granted decrees so resources sector.

Kumova was, of course, behind graph- exploration work can start when African “There is certainly the huge superan-

ite behemoth Syrah Resources Ltd and Gold is ready and with Randgold occupy- nuation-type money in Australia which

the Balama discovery in Mozambique. ing a large landholding surrounding Ag- is pretty much looking at the bigger cap

Edwards is expected to spend some boville, it is no wonder Parsons is eager resources companies and doesn’t look

time in the battery minerals-rich region of to get on the ground. down to the smaller companies as often,”

East Africa. Parsons said.

“We are open to ideas,” Parsons “Having said that, there are a lot

said. of high net worths and sophisticat-

“We are starting with the gold pro- ed investors looking to get into the

ject, but are open to all other com- resources sector as we speak and

modities. Tolga’s success at Syrah there are also a lot more smaller

has probably dictated graphite prices funds starting up in the $10-50 mil-

for the next 10 years. We’re not scared lion type money that you wouldn’t

to step out, particularly with Glenn’s have seen a few years ago. They

good depth of geology in Africa.” are active in the junior space which

In the meantime, the Agboville pro- is great to see.”

ject will be front and centre for African Despite renewed vigour from in-

Gold. vestors in mining stocks, Parsons

Agboville is characterised by a ma- said some companies may struggle

jor 14km gold-in-soil anomaly and to tap capital markets, an area of

5km strike length which has not been strength for African Gold.

drilled despite strong surface geo- “I think that is the advantage we

chemical anomalies of 4.5 g/t gold, might have and also the ability to

2.2 g/t and 2.76 g/t. offer opportunities to other compa-

The project was in the hands of a nies that can’t focus on doing work

Canadian outfit, which carried out ge- on all their ground. We might be

ochemistry work and collected 5,589 able to come in and JV or enter a

samples sometime ago. purchase agreement or something

Despite being present in a region like that,” he said.

dominated by Randgold Resources – Mark Andrews
Ltd and Newcrest Mining Ltd, Agbo- Agboville presents a walk-up drill target for African Gold



Making things happen
in Cote d’Ivoire

The environment is ripe for junior com- The Mako Gold team was on the way to an ASX listing at the time of print. The
panies on the ASX, with Mako Gold company will be headed by chairman Mark Elliott, managing director Peter Ledwidge
Ltd set to capitalise and join the bourse in
the near future. and general manager exploration Ann Ledwidge

“We did consider an AIM listing briefly drilled and if we raise the full $6 million We have got 25km of the coincident
but neither it or the TSX-V is not that re- we will put over 11,000m of drilling into it, anomalies, which is a really good place
ceptive to junior companies at the mo- starting with a diamond drill programme to look and you can picture one or more
ment and not ones looking in the West to figure out what the orientation is that multimillion ounce deposits there.”
African space. The ASX is really vibrant is carrying the gold. In reality [over] 18
for juniors right now, which is somewhat months, we figure we have a better than Rock chip samples up to 59.4 g/t gold
of a challenge trying to differentiate your- average chance of making a discovery, and intersections from RAB drilling of 5m
selves from other companies,” Mako so within 18 months we will be looking to @ 3.66 g/t gold, 4m @ 8.49 g/t, 9m @
managing director Peter Ledwidge told raise $10 million or more to move what- 3.76 g/t, 16m @ 2.08 g/t and 6m @ 3.12
Paydirt. ever we find to resource stage.” g/t are indications of the potential at Na-
Ledwidge said it was an “annoyance” Drilling will start immediately after list-
for genuine companies with real pros- ing, with Mako having a 300sq km permit A self confessed “bush rat”, Ledwidge
pects having to compete with some of the and four prospects at drill-ready stages has longed for the opportunity to get
lesser lights coming to market, however, in Cote d’Ivoire. stuck into Napie and the time has arrived.
through the Napie gold project in Cote
d’Ivoire he was sure investors would get Mako also has title in Burkina Faso – Ledwidge likens Cote d’Ivoire to what
on board with Mako. Niou and Tangora – which will receive at- Burkina Faso was 20 years ago and in-
tention in due course. vestors appear to be up to speed with the
The company launched its $6 million story now.
IPO at Mining Indaba and following on However, Napie is simply too hard to
from Africa’s largest mining and invest- ignore right now. “West Africa is a good place to be and
ment conference, road shows in Mel- Cote d’Ivoire is the new Burkina Faso and
bourne, Sydney and Perth proved fruitful. “It sounds cocky, but as I have said it the new Ghana, with over 35% of West
is the best project that has come across Africa’s greenstone in Cote d’Ivoire,” he
At the time of print, “money was just my desk in well over five years. We have said.
starting to trickle in” with supporters four prospects on there and six coinci-
extremely receptive to the success the dent anomalies and a 23km soil auger “People are opening their eyes to
Ledwidges – Peter is joined in the man- anomaly and coincident with that an the opportunities there now, having not
agement team by wife Ann – have had 11km RAB anomaly,” Ledwidge said. known about Cote d’Ivoire previously.
in taking projects like Bongou for Orbis We couldn’t have done the IPO back
Gold from grassroots to feasibility stage. “They did 1,000 RAB holes at average then [in late 2016], we had to build the
depth of about 20m vertical and anything portfolio and get something substantial.
Even before setting foot in Perth this over 0.5 g/t, Ann logged it. That is the We don’t intend to be miners, we hope to
year, Mako had Resolute Mining Ltd mineralised corridor – 11km anomalous, do something similar to Orbis; sell Napie
subscribed for $2 million of the IPO and with values up to 4m @ 8.5 g/t gold and and keep the pipeline of projects.”
depending on the breakdown of the rais- 16m @ 2 g/t, so there is width and grade.
ing, the John Welborn-led West African – Mark Andrews
gold producer will hold between 12-14%
of Mako.

Resolute’s support demonstrates the
potential at Napie, where Mako can earn
51% in the permit by spending $US1.5
million over three years and 75% by sole
funding completion of a feasibility study
under terms agreed with Perseus Mining

Perseus has its hands full bringing
Sissingue, also in Cote d’Ivoire, into play
while also trying to move forward with
Yaoure, which has ultimately paved the
way for Mako’s participation in Napie.

“Napie is the flagship without a doubt,
that is the project which is allowing us to
do the IPO,” Ledwidge said.

“Perseus has done what I would have
done with Napie; it is begging to be


Thor wins the battle

TSX-V listed Thor Explorations While there was only one win-
Ltd proved a hit with inves- ner, junior companies should

tors, claiming the honours in the take heart from the genuine

Investment Battlefield competi- interest shown by investors for

tion at Mining Indaba. the likes of M2Cobalt in the im-

Twenty-one junior companies mature mining jurisdiction of

were afforded the chance to pre- Uganda and Kibaran’s Epanko

sent for five minutes in front of graphite project in Tanzania; a

potential investors who respond- country grappling with a prohibi-

ed with tips and questions for the tive new mining legislation.

companies. The ability of such companies

It was evident from the final to garner attention also dem-

four – Thor (gold in Nigeria), onstrates how far and wide the

runner-up Algold Resources Ltd world’s top investors are willing

(gold in Mauritania), Kibaran Re- to go to back the next up-and-

sources Ltd (graphite in Tanza- coming junior mining stock.

nia) and M2Cobalt Corp (cobalt Current commodity markets

in Uganda) – that gold in West may be encouraging investors

Africa and battery minerals sto- Thor Explorations chief executive Segun Lawson impressed to expand their investment ho-
ries are resonating with inves- investors with his presentations rizons, however, Thor’s cost-

tors at the moment. effective, potential near-term

Also evident was the cut-throat field behind it and the company’s outlook. gold producing project in Nigeria demon-

junior companies play in, with a high level Nevertheless, all 21 participants would strates some of what investors find most

of scrutiny faced by the junior companies have learned from their experience given appealing.

questionable given the allotted time to the feedback provided by a host of inves- “The mining licence was actually given

present a project, its history, the team tors throughout the competition. on a mine plan, which was developed by



JP Morgan Asset Management portfolio manager Neil Gregson, Colonial First State head of global resources Todd Warren and
Anglo Pacific Group plc chief executive Julian Treger put finalists in the Investment Battlefield through their paces

RTG [Mining Inc], and a BFS has also that we are refining as well.” after a dispute between RTG and its Ni-
been done. We have since got a lot more The Segilola project in Osun State is gerian JV partner, with the former shift-
knowledge through drilling and under- ing focus to Masbate in the Philippines.
standing the geology. We completed a between Abuja and Lagos and came into
PFS and think we can optimise it over the the stable of Thor in 2015. A total of $19 million had been spent
next nine months to get to a DFS that we under the former ownership, giving Thor
like,” Thor chief executive Segun Lawson With gold projects in Burkina Faso, in a headstart in oil-rich Nigeria.
said. which it has Acacia Mining plc as 51%
partner at Central Hounde, and Senegal Lawson said a gap analysis had been
“We are also investigating the open at Doute, Segilola was added to the port- conducted on the Segilola BFS, which
pit/underground transition. We believe folio at a time when exploration was hard had confirmed the viability of the project
we will be moving earth at the end of this to fund. thus far.
year and 15 months after that we will be
aiming for first gold pour. There has been Lawson said he was looking for some- “The project wasn’t stalled for fund-
a huge amount of work done on this al- thing more tangible than grassroots pro- ing reasons or technical reasons, a third
ready. There have been 170 diamond jects and, after a complicated process, party came along to buy it but didn’t have
holes drilled and an engineering design Segilola – previously owned by ASX-list- the money,” Lawson said.
ed RTG – was landed as Thor’s flagship.
“I knew of this project in Nigeria simply
Thor was afforded a crack at Segilola by going on to Google and finding a con-

M2Cobalt chief executive Simon Clarke Algold president Francois Auclair

Kibaran managing director Andrew Spinks

tact at RTG in Perth. I called them and then followed through
with the same process in Nigeria. It took 15 months to untan-
gle this; it was a painful 15 months and we ended up acquiring
100% of this in cash and shares, so they [RTG] are also now
shareholders in Thor.”

An independent PFS on Segilola released last October high-
lighted the potential for a seven-year project producing 81,000
ozpa in years 1-3 and 47,000 ozpa thereafter from probable
reserves of 3.34mt @ 4.2 g/t gold containing 448,000oz (0.64
g/t cut-off).

Based on a $US1,250/oz gold price, life-of-mine AISC of
$C682/oz were estimated with a pre-production capital cost
of $US71.4 million. A NPV discount of 5% was applied with a
post-tax outcome of $US138 million.

“Looking around a lot of West African projects, they have
used an NPV 5% discount,” Lawson said in reply to Colonial
First State head of global resources Todd Warren’s question
on the reason for the 5% discount used.

“Nigeria is the largest recipient of foreign investment in Af-
rica outside of Egypt and is the largest economy in Africa and
very well advanced. They have projects with higher capital
intensity that get delivered on budget and on time. I think a
$US72 million project, which is the total capex for this, is ac-
tually a soft landing for a commercial project in gold mining.

“We own the project 100%. We don’t have to displace the
village and the country wants to see this project succeed. The
Nigerian Minister of Mines wants to see this project succeed;
there is a zero percent tax for the first year of mining, which is
extendable for two years.”

Nigeria has been pushing to diversify its economy from the
oil and gas industries and has been supported by the likes of
the World Bank affording the Nigerian ministry $US150 mil-
lion to kick-start its mining sector.

“I genuinely believe we are in the right place, at the right
time,” Lawson said.

“I am also in two other countries in West Africa and I can
honestly say the mining code is extremely progressive and
the ministry is doing what they can to boost the sector.”

A private placement to raise $4.25 million was being com-
pleted by Thor at the time of print.

Proceeds from the raising will be used for further explora-
tion at Segilola and working capital purposes.

– Mark Andrews



Diversity: A diamond
miner’s best friend

Unexpected diamonds in February can be a dream of many a start of the bulk sampling plant and to
romantic but for Stephen Wetherall, the surprise had much more get diamonds so early in the campaign,”
pragmatic consequences. Wetherall said.

Lucapa Diamonds Ltd chief executive stones being recovered, the largest of The bulk sample campaign is the start
Wetherall received his early St Valen- which was 6.6ct. of Lucapa’s reimagining of Mothae. The
tine’s Day gift during his February visit to project had been taken to a similar stage
the company’s Mothae diamond project Of course, Lucapa knew there were by Lucara Diamonds Inc (no associa-
in the mountain Kingdom of Lesotho. diamonds on the Mothae project, having tion) but as the London-listed company
inherited a NI 43101-compliant resource saw its attention increasingly dragged
Lucapa had started its maiden bulk and bulk sampling results when it ac- towards its Karowe project in Botswana,
sampling campaign at Mothae just five quired the project 12 months ago. How- energy and resources were drained from
days earlier and despite little more than ever, given the diamonds came from ma- Mothae.
1,000t of kimberlite material having been terial not currently included in the Mothae
processed, Wetherall and the rest of the resource, Wetherall was understandably Having failed to find a buyer for the pro-
Lucapa management team were treat- delighted by what he witnessed on site. ject – one suitor was chosen but failed to
ed to the sight of more than two dozen get its financing in order – Lucara allowed
“We have been very happy with the its licence to lapse. The Lesotho Govern-
ment ran a competitive tender process



has risen to prominence

on the back of its prolific

Angolan operations where

the Lulo alluvial mine (a

JV with Angolan state

miner Endiama and local

firm Rosas & Petalas) pro-

duced 18,706ct at an aver-

age price of $US1,669/ct

in 2017. Lucapa remains

committed to both Ango-

lan alluvial operations and

the search for a hard rock

source but with investors

(institutions in particular)

wary of both Angola and

alluvial diamond projects,

the company recognised

the need to add other ele-

ments to the portfolio.

Mothae delivers on both

accounts with Gem’s suc-

cess in the country restor-

ing faith in Lesotho as an

investment destination

and Mothae’s defined hard

rock, high value resource

offering operational pre-


“Following a number of

international roadshows,

we learned that many in-

vestors have certain in-

vestment criteria. Some

Lucapa chief executive Stephen Wetherall inspects the discount single-asset
first diamonds recovered from the Mothae bulk
sampling programme diamond miners, some

look for geographic diver-

sity and others look only at

hard rock mines because

ous destination for ambitious diamond alluvial assets are considered more ad

companies. hoc – although we are proving that a

“When we launched our strategy we misconception through our performance

decided to stay in the premium high-val- over more than three years at Lulo.”

ue diamond area because we see prices Lesotho also provides an arguably

as being more robust in that segment. more stable investment track record than

And, if you want high-end diamonds, Le- Angola currently enjoys. Despite several

sotho is undoubtedly the best place to be. changes of government in the last five

Concurrently, the Lesotho Government years, the country’s mining code has

launched the Mothae tender process and remained in place since 2005 although

with Lucapa eventually emerging as the as most of the Lucapa team had worked Wetherall said discussions were under

preferred bidder in January 2017. at Letseng, we knew Mothae would be a way to enhance the code.

Lucapa now controls 70% of Mothae natural fit for our company.” “The Government is in discussions

“which is situated within 30km of three For Lucapa, the development of Moth- with the industry about updating the code

other diamond mines in Liqhobong, Kao ae also offers much-needed variety. It to fit with its policy of growing the sector,”

and Letseng. Owned by Gem he said.

Diamonds Ltd, Letseng is the When we launched our To prove the merits of the
highest value dollar-per-carat acquisition, Lucapa must

diamond mine in the world strategy we decided to stay in get Mothae up and running.
and in January produced a the premium high-value diamond area Construction has already
910ct stone, the fifth largest started on a 150 tph pro-

diamond ever found. because we see prices as being more cessing plant inclusive of
Wetherall and much of the robust in that segment. And, if you XRT technology vital to the
recovery of large diamonds.
Lucapa management team

are familiar with Lesotho from want high-end diamonds, Lesotho is Before that, Lucapa is
their time with Gem and re- undoubtedly the best place to be. keen to assess the residual
gard the country as an obvi- opportunities on site. It has



“Lucapa spent $1.5 million to refurbish the Mothae bulk sampling plant, allowing it to test material currently
not included in the resource and mine plan
spent $1.5 million on re- If the Neck zone is diamondiferous… of material but stopped
furbishing Lucara’s bulk it will also result in a change to activity when it reached
sampling plant and is 600,000t as it shifted
using it to treat material the mine plan, making other areas of the funding and energy to its
Lucara left when it de- resource more accessible than they were Karowe acquisition.
Lucapa’s own bulk
“It was refurbished
with the intention of previously, allowing for a further 8mt of sampling programme
is designed to pick up

growing the existing re- material to be processed which is around where Lucara left off, in
source by processing 30% more life-of-mine and cash flow. the process growing the
untested areas and also overall Mothae resource.

areas which were insuf- The first mineralised

ficiently tested,” Wetherall said. area to be sampled will be the

“We have started the plant by pro- Neck zone which sits between

cessing stockpiles which cannot the well-defined South zone

be included in the resource and and the North zone.

when we are satisfied the plant “If the Neck zone is dia-

is performing consistently, we will mondiferous – and we are

begin the bulk sample campaign confident it is – it will change

in earnest.” the value of Mothae,” Weth-

When Paydirt visited Mothae in erall said. “It will also result

early February, the bulk sampling in a change to the mine plan,

plant was running on 12-hour making other areas of the re-

shifts, processing the 300,000t source more accessible than

of stockpiled material Lucara left they were previously, allowing

when it closed its own bulk sam- for a further 8mt of material to

pling campaign early. One of the first diamonds recovered from Mothae under be processed which is around

Mothae’s former owner had Lucapa’s stewardship. The company plans to eventually 30% more life-of-mine and

planned to bulk sample up to 1mt extract 497,000ct from the mine cash flow.”



The view north across the South zone towards the Neck and North zones. Lucapa hopes to take advantage of the lack of
bulk sampling on the Neck and North zones to expand its resource at Mothae

The bulk sampling campaign will be Chief technical officer Neil Kaner explains the Mothae mining plan to a
Lucapa’s first step on disproving doubt- visiting group of investors
ers who saw Lucara’s withdrawal as an
indication of Mothae’s difficulties.

Wetherall said both external and inter-
nal factors had led to Mothae’s improved
prospects since Lucara’s divestment, in-
cluding 50-60% depreciation in the Leso-
tho Maluti [which is pegged to the South
African Rand] and an undervaluation of
the diamonds recovered.

“The market probably doesn’t under-
stand how to value Mothae,” Wether-
all said. “The bulk sampling will show
the quality of the diamonds coming out
ahead of commercial operations starting.
We are also planning to scale down the
size of the operation,” he said. “It will be
a phased development with lower capex
requirements and therefore lower risk.”

Commercial production is scheduled
to start in the second half of 2018. Lu-
capa has already changed its plans for
Mothae, with Phase 1’s processing ca-
pacity increased from 100 tph to 150 tph.
Phase 1 will run for 34 months before



Looking south across the South zone towards the existing office facilities at Mothae. The South zone will
be the cornerstone of mining operations at Mothae

Phase 2 is initiated, doubling capacity to With this in mind, the company will in- helping us at Lulo in Angola where we
300 tph. vest heavily in XRT recovery technology have installed a large diamond recovery
which is being widely adopted across the circuit and we will have a similar circuit
Above all, it will be Lucapa’s ability diamond industry. at Mothae.”
to recover high-value larger diamonds
which will build Lucapa’s investment “The XRT technology is a game- The XRT sorting technology – which
case. changer for the industry. It is already uses Carbon 6 detection rather than the
traditional fluorescence or luminescence
Wetherall and executive director operations Nick Selby inspect the – is proving to be invaluable in identify-
performance of the bulk sampling plant at Mothae ing large diamonds before they reach the
secondary crushing circuit.

The new XRT circuits are proving their
worth across the industry with operations
using the circuits having reported some
of the largest diamonds in history; includ-
ing the 1,109ct Lesedi la Rona and 813ct
Constellation from Lucara’s Karowe mine
in Botswana and the 910ct stone recov-
ered by Gem at Letseng in January.

Wetherall said XRT technology was
unavailable during Lucara’s ownership
of Mothae, giving his company a further

“If you can recover those larger dia-
monds, instead of recovering diamond
pieces from the secondary circuit you
can increase the overall value signifi-
cantly as Lucara has done at Karowe,”
he said.

“Tomra [developer of the XRT technol-
ogy] continues to make advances and
can now recover smaller diamonds, down



to 3mm fractures, at commercially viable “ Recovery support Veronica Molapo explains Mothae’s recovery process
rates. This may also lead to lower water Angola is an extremely diamondiferous
consumption rates because circuits may country which is underexplored. As a growing
no longer need DMS components. It is company it is natural we would seek to increase our
very significant for the industry and is
changing by the month.” footprint when there is opportunity there.

By the time Mothae is up and running Lucapa was the only company invited asked if we could grow our exploration
at the end of 2018, Lucapa will be hoping to appear alongside the Angolan delega- commitment and I said we would be
it is onto a second hard rock source, this tion during a packed investment seminar would need the Government’s support by
time in Angola. at Mining Indaba and Wetherall appears promoting foreign investment,” he said.
comfortable the company is seen as a
The company has been in Angola for preferred investor. Majors such as De Beers, Rio Tinto
10 years and has been producing from Ltd, Ivanhoe Mines Inc and Anglo Ameri-
Lulo for more than three but the ultimate “The Minister [Diamantino Azevedo] can plc are showing interest in testing
prize, finding the hard rock source of the Angola’s wider mineral wealth; a far
high-value alluvial diamonds, has so far cry from the lone furrow Lucapa has
remained elusive. ploughed for most of its decade in the
country. However, Wetherall welcomes
“All of our major objectives at Lulo have the interest.
been ticked off; we are at nameplate ca-
pacity, we are recovering large diamonds “These are the best noises I have
regularly and we are generating strong heard coming out of Angola for the 10
cash flow. Now, the focus is on explora- years I’ve been operating there and my
tion. We are systematically drilling the phone has not stopped ringing in recent
targets prioritised from the TDEM geo- days with companies large and small
physical survey. We are also taking the asking if the environment is actually
mineral chemistry and focusing on the changing and whether there are oppor-
pipes we should be.” tunities there. That shows the excitement
which is building.”
A change in president in Angola
has created a rush of interest in the If government follows through with its
mineral wealth of a country which has promises and the world’s mining majors
relied almost entirely on oil revenues do return to Angola, Lucapa could see a
for the last two decades. dramatic shift in its own risk profile; from
single-asset high-risk junior, to multi-
While larger players are hovering, mine, multi-jurisdictional producer in the
Lucapa is confident its efforts in the space of a few years.
country will allow it to expand its in-
terests. – Dominic Piper

“Angola is an extremely diamondifer-
ous country which is underexplored. As
a growing company it is natural we would
seek to increase our footprint when there
is opportunity there,” Wetherall said.

Like most of the Lucapa management team, Mothae general manager Jan Venter
has extensive experience in the Lesotho diamond industry



The traditional Paydirt and Friends dinner prior to the start of the Mining Indaba week set the scene for one of the
most vibrant conferences experienced in years.
Located on the iconic V&A Waterfront, Cape Town, Paydirt welcomed some 120 guests, which included Australian
government diplomats, mining and services companies plus West Australian Minister for Mines and Petroleum; Com-
merce and Industrial Relations; Electoral Affairs and Asian Engagement Hon Bill Johnston.

It was Johnston’s first taste of the camaraderie of a Mining Indaba, and while dinner at the Ginja Restaurant was a
relaxed affair, it was down to business come conference time at the Cape Town International Conference Centre.




Angola’s new dawn

Lucapa Diamonds’ Lulo alluvial JV gives the junior an enviable foothold in a country opening up to foreign investment

At a time when politics in Southern Afri- Mines Inc, highlighting the intrigue An- ducing 18,706ct at an average price of
ca is shifting at a rate unprecedented gola holds for miners. $US1,669/ct in 2017.
even for this dynamic region, the Angolan
resources sector could emerge as an un- This is not the first time Angola has Lucapa managing director Stephen
likely winner. risen to the mining sector’s attention. Fol- Wetherall told Paydirt he had been
lowing the cessation of civil war in 2002, buoyed by Lourenço’s investment poli-
Angola’s prospectivity has long been the world’s largest diamond companies cies.
understood but with decades of civil war entered the country and while De Beers
being followed by an oil boom which saw retains an office in Luanda, its interests “Foreign direct investment is a major
corruption grow and wealth concentrated were allowed to lapse in 2012. objective as they look to grow the re-
in the hands of former president Jose sources sector to reduce the reliance
Eduardo dos Santos’ closest allies, the Even smaller diamond miners such on oil,” Wetherall said. “We had one-on-
country has never attracted significant as Gem Diamonds Ltd and Lucara Dia- one meetings with the minister at Min-
foreign mining investment. monds plc have withdrawn their interests ing Indaba and they are going through
due to Angola’s “difficult” reputation. a review of investment framework to un-
That looks set to change, however, derstand how they can open the taps of
with dos Santos’ replacement, Joao “We operated there and it was ex- investment.
Lourenço, vowing to open up the min- tremely difficult. It was soul-destroying
ing sector to foreign investment. The and heartbreaking,” Petra Diamonds Ltd “Lucapa has insight into how to operate
country’s new minerals and oil minister chief executive Johan Dippenaar told and what investors are looking for from
Diamantino Azevedo – who has a PhD Reuters. stable jurisdictions and we will share that
in mining engineering – wooed investors with the Government.”
during a three-hour investment seminar One junior who has thrived in Angola’s
at Mining Indaba. harsh investment climate has been ASX- Lucapa was the only private sector
listed Lucapa Diamonds Ltd. company to present during the three-
Present among the seminar’s full hour seminar in Cape Town and Wether-
house were representatives of De Beers, Lucapa has been operating its Lulo all said other investors were already tap-
Rio Tinto Ltd, MMG Ltd and Ivanhoe alluvial diamond mine (a JV with Ango- ping into the diamond junior’s operating
lan state miner Endiama and local firm experience in the country.
Rosas & Petalas) for four years, pro-


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