pd258-March18 mag-web

“We have had contact from small to tion of the Petroleum Exporting Coun- Joao Lourenço
large companies asking if the environ- tries, and it must limit output in line with
ment has genuinely changed in Angola; OPEC’s commitment to cut output by diamond trading to foreign traders. Un-
that shows the excitement being gener- about 1.2 million barrels per day (bpd) as der current legislation, all diamonds pro-
ated,” he said. part of a deal with Russia and others. duced in Angola are sold and exported
via state-owned firm Sodiam.
Lourenço is seeking to win credibility “We will not go above our OPEC quo-
with investors and draw a firm line be- tas,” Azevedo said, adding that he did not Wetherall said such barriers would
tween his administration and his prede- see OPEC imposing any deeper cuts this need to be removed to ensure significant
cessor’s, which was accused of squan- year. Angola produces just over 1.6 mil- foreign investment was forthcoming.
dering and siphoning off the nation’s oil lion bpd, providing it with over 90% of its
wealth, leaving most of the population in export revenue. “The majors are asking for at least
abject poverty. 51% ownership [foreign companies can
However, diamonds remain the most currently only hold minority interests]
Angola is the world No.4 diamond pro- likely to kick-start Angola’s mining sector and they also object to selling through
ducer and Minister Azevedo told Reuters but if it is to reach its stated objective of Sodiam. So, if they are to be lured back,
the former Portuguese colony aimed to doubling production to 14 mctpa by 2022, Angola would have to relax these two
begin gold production next year, while in- it needs to attract foreign investors. To requirements and the Government has
viting companies to explore for iron ore achieve this, Lourenço must lower some already suggested it is working on a new
and copper. of the country’s investment hurdles, in- ‘commercialisation policy’,” he said.
cluding restrictive ownership and mar-
“We are just producing diamonds and keting laws and access to ground. Wetherall is confident the Government
stuff like marble and granite at the mo- will make the required changes but con-
ment. We are expecting to start gold pro- The task has already begun with tinues to urge progress in Luanda.
duction soon; we expect to have two or Lourenço having reportedly cancelled
three gold mines operating next year but by decree a raft of diamond-prospective “These are the best noises I’ve heard
at a small scale,” he said. concessions previously controlled by Is- out of Angola in the 10 years I’ve been
abel dos Santos, daughter of the former operating there,” he said. “Their task is
Azevedo said there were 10 explora- president. now to follow through. In our meeting
tion projects in the country focused on with the minister, he asked if we could
gold and involving junior mining compa- The Mining Indaba seminar also saw grow our exploration effort in the coun-
nies, which typically take the prospecting Azevedo hint at changes to diamond try; we said we could but needed govern-
lead in new frontiers. He did not name marketing laws which would open up ment support in promoting foreign direct
them. investment.”

“We want to promote the mining sector – Dominic Piper with Reuters
beyond diamonds ... we have had good
meetings here with the major mining
companies,” he said.

Azevedo said there were also explora-
tion opportunities for iron ore and copper.
Angola borders Democratic Republic of
Congo and Zambia, Africa’s top copper
producers.

Much of Angola remains unexplored,
not least because the former Portuguese
colony was embroiled in a civil war from
its birth in 1975 until 2002.

Critics have also said the elite of the
ruling MPLA party under former Presi-
dent Jose Eduardo dos Santos had little
incentive to reduce the economy’s reli-
ance on the opaque oil sector.

Angola is a member of the Organiza-

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AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 51

INDABA REVIEW

Sibanye stays calm but not still

Changes at both corporate and politi- The Kloof operations have been vital to Sibanye-Stillwater’s performance but the
cal level mean 2018 is likely to be a company is wary of the challenges a strong rand presents for its gold business
year of consolidation for one of African
mining’s most active corporate players. On completion of the Lonmin merger, Sibanye-Stillwater will employ a quarter
of all mineworkers in South Africa
Neal Froneman has spent the last five
years building a diversified precious met-
als miner out of Sibanye-Stillwater Ltd
but is now intent on regrouping in an ef-
fort to prepare the company for the next
stage of growth.

Froneman cemented his reputation
as an arch dealmaker through a series
of M&A moves which brought both com-
modity and geopolitical diversity to a
company initially spun-out of Gold Fields
Ltd to be a domestic South African gold
producer.

The bout of corporate activity culmi-
nated in December when the company
agreed to the acquisition of troubled
PGM miner Lonmin plc. Under the terms
of the deal, Sibanye-Stillwater will issue
£285 million worth of shares to Lonmin
shareholders, a 57% premium on the
London-listed company’s market value.

The Lonmin acquisition will turn
Sibanye-Stillwater into what Froneman
describes as “a mine-to-market producer
of PGMs”, giving it both influence in the
market and flexibility in its portfolio “to
withstand volatile PGM prices and ex-
change rates”.

It is a far cry from the three-mine gold
producer the company was when it listed
on the JSE in February 2013.

Since listing, the company has ac-
quired further gold assets in South Africa
and built the third largest PGM business
in the world thanks to the acquisitions of
Aquarius Platinum, Stillwater and Anglo-
Plat plc’s Rustenburg operations.

Froneman still labels Sibanye-Stillwa-
ter a “low-cost South African gold pro-
ducer” but its diversification into PGMs
has cut out the unpredictability associ-
ated with single-commodity miners and
allowed for greater flexibility.

“If we’d just been a gold company we
would’ve had severe margin squeeze be-
cause of the growth in the rand,” Frone-
man told Paydirt. “The diversity of the
PGM business has been beneficial to
us.”

The Lonmin deal will see Sibanye-Still-
water become the world’s second largest
palladium producer and second largest
platinum producer but the years of ac-
quisitiveness have taken their toll on the
company’s balance sheet.

Sibanye-Stillwater suspended cash div-
idend payments for the first time in 2017

PAGE 52 MARCH 2018 AUSTRALIA’S PAYDIRT

and with a nine-month timeframe for the Sibanye is hopeful a change in South Africa’s political climate will lead to
Lonmin transaction in front of it, the com- greater investor confidence in its portfolio
pany has marked 2018 as a year in which
its $US1.69 billion debt can be attacked is,” he said. “The plan is about protecting group strategy of building a position of in-
and value built back into the company’s those high margins while the palladium fluence in its chosen fields.
share price. prices are what they are because when
you have those margins you can become “It is about being influential in the sec-
“This year will see us close the Lonmin complacent.” tors you operate in,” Froneman said. “It
deal and regroup as a company,” Frone- is about being responsible and doing
man said. “The primary focus is on delev- Performance over the first eight months the market development in that sector. In
eraging the company and getting back to of integration reinforced Froneman’s ar- PGMs, we will be No.2 in both platinum
EBITDA-net debt equality [the net debt- gument with the Stillwater assets produc- and palladium but in gold we will be No.10;
to-earnings ratio currently sits at 2.6:1] in ing 376,300oz (palladium+platinum) at that isn’t big enough to influence the sec-
1-2 years.” AISC of $US650/oz against 1.19 moz 4E tor properly.”
at AISC of $US775/oz from the South Af-
Not only will an internal focus allow the rican operations. Such comments suggest that despite
company the chance to repair the balance taking an enforced sabbatical from M&A,
sheet, it will give it opportunity to fulfil the The Stillwater and Lonmin deals will Froneman can’t resist thinking about the
promises it made about its acquisitions, allow Sibanye-Stillwater to deliver on its company’s next step.
particularly in the PGM sector.
“We do need to do something
The company’s move into PGMs raised more in the gold sector,” he admit-
eyebrows given the industry’s parlous ted. “We are a top 10 gold producer
state but Froneman has always insisted but that doesn’t feature in our market
the assets were strong performers which cap. We need to address that profile
would benefit from integration. because the strategy is not about
becoming a PGM company.”
“In the PGM business, it is very much
about ensuring the integration is sustain- Froneman has long argued that
able and that we are pursuing the next the company and its peers suffer
level of synergies and efficiencies,” he from a “South African discount” but
said. the problem may be finding suitable
assets at reasonable prices.
Sibanye-Stillwater anticipates R1.5 bil-
lion of annualised cost and operational “Being a truly international com-
synergies from the Lonmin deal by 2021, pany will change the discount in the
the year when it is also expected to be share price,” he said. “We are open-
cash flow accretive on a per share basis. minded to where that may take us
but the premiums in places such as
The company is locked out of imple- Australia and even continental Africa
menting those savings until the transac- are high.
tion is complete but Froneman said the
PGM division still had plenty of other op- “We do have a management team
tions for improvement, most notably at based in the US so that would be a
Stillwater. logical place to grow.”

The $US2.2 billion acquisition of – Dominic Piper
Stillwater was the company’s most
startling move to date and caught Neal Froneman
many investors and analysts by
surprise. More than 12 months on,
Froneman is adamant the deal made
sense for Sibanye-Stillwater.

“Not only was Stillwater underval-
ued in the market but we recognised
that palladium was in deficit with the
fundamental outlook still robust.”

If the Rustenburg and Aquarius
acquisitions gave Sibanye a hedge
against gold, the Stillwater deal gave
additional hedges against platinum,
South Africa and the rand.

The palladium price has doubled
since merger talks began in Janu-
ary 2016 and Froneman hopes the
upcoming year of consolidation will
allow the company to convince the
market of the Stillwater assets’ Tier
1 credentials.

“In the US assets, we have op-
erations which are high margin; a
lot of investors and analysts forget
about how profitable a business it

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 53

INDABA REVIEW

London eyes for small caps

London Stock Exchange view and pathway to a larger
head of international busi-
ness development, primary company size,” Bendon said.
markets, Tom Attenborough,
did his best to dispel myths “We are finding at the mo-
about the lack of interest in
small caps by big pocketed ment, that if we can move
investors in London.
those liquidity thresholds and
While the LSE houses
some 600 companies, includ- we can give them a pathway
ing the world’s three largest
companies, there is a percep- through to being a larger com-
tion the London investment
community goes large and pany in the $50-100 million
leaves little change for jun-
iors or explorers in the mining range there is really an open
sector – which is not the case.
mind for companies from all
According to LSE statistics
provided by Attenborough, areas.”
there are 173 metals and min-
ing companies worth a com- In the past six months, Ben-
bined $US600 billion listed on
the LSE of which 100 have don said, there was also a real
a market cap of less than
$US50 million. change in attitude towards Af-

“One of the things I often rica and felt there was strong
hear around marketing is we [the com-
pany] are a little bit too small for London. momentum building towards
Well, you actually might not be and a lot
of the capital raisings we have done re- the continent’s mining sector.
cently have been in the smaller space, so
London serves the small end all the way “I get the feeling that we are
to the big end,” Attenborough said.
about to see a lot of action in
In 2017, a total of $US2.5 billion was
conjured by mining-focused IPOs on the Africa at the very junior end,
LSE, and while two transactions alone
accounted for the lion’s share, Attenbor- the exploration plays and also
ough said risk appetite had returned to
London. in the institutional end looking

“I think part of the message today is to crack this space,” he said.
that the IPO market is open and that is
great, but also there is an opportunity Of the 100 generalist funds
for secondary listings to open up that
shareholder base in more detail,” Atten- Tom Attenborough in the UK, about 50 mining
borough said.
groups had aggressively sold
London’s appetite for greater risk in the
mining sector is also demonstrated by ferent audience and market needs to be down mining stocks pre-2016 and were
the type of investments made in recent
times, Attenborough said. tapped for backing and Attenborough now cashed up to reinvest in the sector,

“The geographical diversity of the min- said London was the venue. Bendon said.
ers that London supports [moves from]
precious stones in Israel [rubies and sap- “Of all the issuers that are dual-listed However, there are currently limited
phires], to Rainbow Rare Earths – a com-
pany with a rare earths project in Burundi either on the TSX and LSE, 12 of the 14 company options in $US50-100 million
– to open pit copper in Idaho and gold
and platinum in Brazil,” he said. have greater liquidity in London; JSE market cap range for LSE focused inves-

Such early stage and more speculative and London-listed where 10 of the 11 tors to consider.
companies and projects are traditionally
better supported with initial raisings on have greater liquidity in London and it is “The real prize here is the UK general
the TSX-V, ASX and JSE. However, in-
variably there comes a time when a dif- the same for ASX-listed businesses that funds; I can’t think how many billions are

come across to London,” Attenborough under management in these 50 mining

said. groups,” Bendon said.

The LSE is a $US7.5 trillion market – “They [UK general funds] are very

four times as size of the ASX – however, open to mining. They are not as sophis-

the weighting of AIM-listed mining vehi- ticated as the resource specialist inves-

cles is sub-5% compared to 22% on the tors so you do have to change your mes-

ASX. sage a little bit. But, the people coming

The breadth of the LSE and the abil- on the back of their experiences in the

ity to weather cyclical conditions in the sector, I think they are generally looking

mining sector is an attractive proposi- for more exposure because they look

tion for companies, particularly those in outside mining and at the moment some

the junior space where there is a lack of of the valuations are quite eye-watering.

competition. Mining is coming through and evening

Tamesis Partners LLP senior team out, even after the seven or so quarters

member Charlie Bendon said it had tak- of very good performance.”

en London a little longer than Australia or Bendon added that the resource and

Canada to grasp the junior space, how- Africa specialists were also back in the

ever, he felt the tide maybe turning and hunt for mining stocks at the smaller end

the offer of increased liquidity could be of town and he urged companies to build

the fillip for encouragement. relationships with these groups to court

“In the interim, it is where [those com- investment.

panies] can really feel relevant [as to – Mark Andrews
where they list], so it is really in those

companies in the $50-100 million range.

We have the ability to get liquidity and

can give them the feeling like they have a

PAGE 54 MARCH 2018 AUSTRALIA’S PAYDIRT

T3 just the start of
Mod’s Botswana

ambitions

The Mod Resources Ltd man- said the company was pleased by the A glance at Mod’s exploration ground
agement team headed to
PFS results but remains committed to on the Kalahari copper belt indicates why
Cape Town armed with a posi-
testing the project’s wider potential. the company is so confident it can add to
tive independent assessment of
“With the PFS Mod has demonstrated T3’s base.
its T3 copper project in Botswa-
it is sitting on a very robust project,” Mc- The company first entered Botswana in
na. The task now is to make it a
Gee told Paydirt during a visit to the pro- 2012 in the footsteps of ASX-listed Dis-
sure-fire thing.
ject. “If you look at geometry of the ore- covery Metals, which had made the initial
The study, released just days before
the start of the annual Mining Indaba body, the metallurgical results we have copper finds on the belt and taken its Bo-
week, highlighted that T3 was capable
of producing annual free cash flow of and the engineering, there is a lot of rea- seto copper project into production.
$US85 million (pre-tax) over 8.8 years
from a 2.5 mtpa operation. However, sons to believe it will be a success. But, Soon after operations began at Boseto,
with a string of targets along its ground
on the Kalahari copper belt, Mod is in- “the PFS is just a base case of what could Discovery ran into processing problems
tent on pushing the economics of T3 having failed to correctly define the depth
further. eventually be a much larger project.”
If you look at geometry of the orebody,
Mod technical director Steve McGee the metallurgical results we have and the

engineering, there is a lot of reasons to believe it
will be a success. But, the PFS is just a base case
of what could eventually be a much larger project.

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 55

INDABA REVIEW

Mod executive chairman Mark Clements and country manager Gaba Chinyepi with bringing in AIM-listed Metal Tiger plc as
part of a recent donation Mod has made to a local Ghanzi school 30% JV partner to help fund the deal at
a time when cash was short for junior ex-
of the oxidised zones of the orebody. Mod’s subsequent success has come plorers.
The company was eventually placed on ground it acquired from the adminis-
trators of the company it had set out to Mod immediately set about testing
in administration and it is ironic that some of the existing targets on the new
emulate. ground, starting with the easily acces-
Mod already con- sible T4 prospect which returned an en-
couraging intersection of 2m @ 6% cop-
trolled 4,000sq km of per. It quickly moved onto T3 – another
ground in the Ghanzi target ranked largely on accessibility
district and had defined – and produced one of the most impres-
a 2.7mt @ 2% copper sive hits on the belt to the point; 52m @
and 50 g/t silver un- 2% copper.
derground resource
at the T1 deposit but As Mod stepped up drilling on T3, it
acted opportunistically began to uncover a different style of min-
to pick up the 8,000sq eralisation to the narrow vein, steeply-
km Discovery ground, dipping orebodies at the eastern end of
the belt such as Boseto and T1.

“It quickly became apparent T3 was
something a bit different,” McGee said.
“It wasn’t on a tight fold nose, it appeared
to be on something of a shallow dome
and the geochem signature of 28 ppm
and 27 ppm zinc was an order of magni-
tude less than previous discoveries.”

The differences in geochem response
and the mineralisation encountered dem-
onstrated to Mod that different styles of
geology were present on the belt and
that geochem – the primary targeting tool
to date – had had left much of the belt
underexplored.

Mod moved quickly following the Feb-
ruary 2016 discovery hole, taking just six
months to define a maiden resource of
28.36mt @ 1.24% copper and 15.7 g/t sil-
ver with a high-grade core of 8.48mt @
2.16% copper and 30.6 g/t silver.

A positive scoping study followed be-
fore the end of 2016 with Mod and Metal
Tiger immediately approving a PFS for
T3.

The PFS confirmed T3’s viability but

Drill core is prepared at Tshukudu’s core farm on the A sample of mineralisation from Mod’s T3 copper deposit
outskirts of the town of Ghanzi

PAGE 56 MARCH 2018 AUSTRALIA’S PAYDIRT

“The information SITE VISIT
gleaned from
T3 will be used on the Sample bags are prepared at the Tshukudu core farm
wider landholding and
The Tshukudu team get ready for the day ahead
I can’t understate the
excitement we have Mod is building a sample prep lab on site at Ghanzi. The lab will be run by ALS
about exploration AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 57

and we are in a
fortunate position to
demonstrate that the
belt has a lot to offer.

the JV is now working on making the pro-
ject more robust. The first target is ex-
pansion of the existing reserve to include
tonnes currently sitting outside of the pit
shell.

The PFS announcement included de-
tails on an expansion case which would
see throughput lifted to 4 mtpa from an
increased reserve of 353,000t copper
and 12.3 moz silver.

“We are already looking at expanding
the pit,” McGee said. “Reducing the cut-
off grades moves the in-pit reserve from
21mt to 40mt. So, we are now starting to
think about staging production; starting
at 2.5 mtpa before moving onto 4 mtpa.
That would lift copper production from
the T3 open pit from 23,000 tpa copper
to 28,000 tpa.”

Infill drilling will aid this work but the
economics of T3 could also be changed
by an underground scoping study cur-
rently being undertaken.

A number of holes drilled in the De-
cember quarter intercepted up to four
shallow-dipping high-grade veins below,
down-dip and along strike from the PFS
pit. Mod believes the same veins are
associated with wide zones of dissemi-
nated copper mineralisation within the
T3 open pit resource. Deeper holes have
also been drilled to target the Ngwako
Pan contact, the same contact which
hosts T1 and the other orebodies in the
eastern part of the belt.

“We really want to see what impact the
underground mineralisation can have on
T3’s economics,” executive chairman
Mark Clements told Paydirt.

The company is also returning to its
original discovery at T1, 20km east of T3.
Although sub-economic as a standalone
deposit, T1 could be incorporated into
an expanded regional play, according to
Clements.

“It is fairly typical of what you see at the
eastern end of the belt but as we found

INDABA REVIEW

Mod currently has six rigs on site in Botswana with its exploration plans to be further expanded this year

more and more ore at T3 we thought Work on the T3 and T1 underground 140km of the central structural corridor
there was an opportunity to also bring T1
into the production schedule.” deposits will coincide with exploration of the Kalahari copper belt.

Identification is one thing but suc- on the array of targets Mod has along Targets include the 50km-long T3
cessful development is a separate
challenge, particularly given the Dome structure which hosts the
failure of Discovery and others to
establish Botswana as a sustain- T3 deposit and an interpreted
able copper producer.
60km-long anomalous soil
The Boseto, Mowana, Thakadu
and Phoenix copper mines have zone within the T20 Dome. An
been shuttered in the last five years,
all without ever achieving consist- airborne EM survey conducted
ent production, and there has been
a general failure to follow-up on last year lit up numerous targets
the early encouraging discoveries
along the Kalahari copper belt. along the corridor and Mod will

Much of Boseto’s problems came undertake a second survey this
from poor recoveries but McGee
– a well-travelled metallurgist – is year to better define and rank
confident T3 is different enough
to succeed where other orebodies opportunities.
failed.
Mod re-interpreted the origi-
“There is a calcrete cap over T3
which appears to have preserved nal T3 Dome EM data during
the orebody from oxidation; that is
something you don’t see in the east- the December quarter, defining
ern part and it was the oxidisation
which affected the processing of the 3D geometry of the T3 host
those orebodies.”
sequence down to 500m below

surface, potentially a break-

through for understanding the

structure of the T3 Dome and

subsequently further high-

grade veins.

Some 100km west, Mod also

intends to drill the T20 Dome

where soil sampling has pro-

duced copper and zinc anoma-

lies higher in value than the T3

deposit in areas previously un-
Mod technical director Steve McGee tested by drilling.

PAGE 58 MARCH 2018 AUSTRALIA’S PAYDIRT

McGee is confident the exploration “As we gain momentum and
picture will continue to widen for Mod. have gone from scoping
study to PFS and onto DFS, the
“The open pit at T3 is just the start of potential institutional support
things,” he said. “We’re keen to demon- for equity and debt funding has
strate the belt has the potential for us to become strong.
become a mid-tier copper producer. We
are intent on testing the geophysical tar-
gets to help us realise that ambition.

Clements agreed that Mod’s ambitions
were greater than simply bringing T3 into
production.”

“The information gleaned from T3 will
be used on the wider landholding and I
can’t understate the excitement we have
about exploration and we are in a fortu-
nate position to demonstrate that the belt
has a lot to offer,” he said. “The explo-
ration play will continue into the regional
areas around the T20 Dome and T7 and
beyond the T3 licences we want to en-
sure we meet our exploration commit-
ments.”

Mod had a healthy bank balance of
$10 million at the end of December but
with such an aggressive drilling cam-
paign ahead, it is apparent more cash
will be needed.

Both Clements and McGee admitted
further corporate activity was likely.

“We do have a very aggressive explo-
ration campaign but we are generating a
lot of interest,” McGee said. “As we gain
momentum and have gone from scoping
study to PFS and onto DFS, the potential
institutional support for equity and debt
funding has become strong.”

Paydirt witnessed evidence of the
growing institutional interest in February
with several international banks joining
private fund managers and Australian
and international brokers on site at T3.

“We have to contemplate all that as we
will be looking to raise [the $155 million
capex] by the end of the year,” McGee
said.

Clements said the company had ac-
tively started discussions.

“It may be through our DFS discussion
that we need to consider further capital
raisings, either in Australia or in other
markets,” he said.

The company has 1.9 billion shares on
issue – a legacy of more than 30 years
as a listed company – but Clements said
the board and management were dis-
cussing strategies for tidying up the cor-
porate structure.

With copper set for a bull-run in the
next 18 months and international inves-
tor interest returning to the African re-
sources space, the Mod register could
take on a very different look over the
course of 2018.

– Dominic Piper

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 59

INDABA REVIEW

Short-termism
destroying value: Bristow

Aseventh consecutive year of thing that materially impacts on
increased production was not the value of our company? The

enough to stave off a Randgold Re- answer is no.”

sources Ltd sell-off in London and The current impact of the pro-

New York as concerns about the posed new mining code may be

new DRC mining code reverberated negligible but during a Q&A ses-

around the African mining sector. sion on the main stage at Mining

Randgold reported a 5% increase Indaba, Bristow was clear in his

in production to 1.315 moz for 2017 thoughts on the impact the policy

with cash costs also decreasing by would have.

3% to $US620/oz. The result was “When you run a model of the

a 14% increase in profit to $US335 proposed new code versus the old

million but the strong operational code, the old one had 65% of cap-

performance was clouded by po- ital going to the Government, the

litical events in the DRC which saw new model has 100%,” he said. “It

Randgold shares shed 7% on the is a strange concept to think any-

day of the quarterly release. body would invest in a country for

Randgold owns the Kibali gold no return.”

mine in JV with AngloGold Ashanti The DRC Government’s latest

Ltd in north-east DRC. Production policy shift is part of a wider trend

from Kibali increased by 2% year- towards resource nationalism in

on-year in 2017, to 596,225oz gold, parts of Africa. Bristow said the

following successful commission- trend would lead to investment into

ing of underground operations. the continent drying up altogether.

Kibali now accounts for 45% of “How will hard-pressed com-

Randgold’s annual gold production. panies, still struggling to recover,

During the company’s quarterly cope with these demands?” he

presentation in Cape Town, Rand- Mark Bristow asked. “By high-grading more and

gold chief executive Mark Bristow investing less, and that is not good

railed against the sell-off, saying the “People are always complaining that for anyone, let alone the future genera-

company was already subject to many of this is an expensive stock,” he said. “I tions of our great continent.”

the proposed conditions of the new min- have always told them that if you fol- Bristow noted that when African coun-

ing code. low us carefully – and you want to be a tries started liberalising their economies

“One of the big embedded changes shareholder – you can get in at a reason- in the mid-90s, they immediately attract-

is an increase in royalty to 4.5% which able time because, given the vagaries of ed foreign investment, and their fledgling

Kibali is already paying under duress,” Africa, there’s always some bad piece of mining sectors began to grow to substan-

“Bristow said. “The state already owns news that will affect our stock price over tial proportions. This trend was now re-versing.
10% of Kibali which is what is proposed; time.

they have not changed “As long as African

the tax rate of 30%; During the boom, industry spent a lot countries offered min-
they have introduced of money on assets that were never ing codes and fiscal
a windfall tax but if regimes that were
you look at the year viable. Government benefitted from this reasonably investor-
we made the decision friendly, companies

to invest in Kibali the windfall but then somebody switched the were prepared to take
gold price was about music off and there weren’t many chairs. the risks of limited or
$US1,600/oz average non-existent infra-

so that would not trig- Australia attempted to change legislation structures and skills
ger any excess taxes because its whole economy fell apart, and bases, as well as po-
for Kibali.” litical volatility. Start

Instead, investors we also saw similar policy shifts in Ghana, making unreasonable
should look at the 7% Zambia, Cote d’Ivoire and South America. demands, however,
fall as an opportunity and investors will vote

to buy into a stock with their feet,” he said.

which has consistently Not that Bristow be-

outperformed the gold sector in the last “The key here is that you have to be lieves investment codes can never been

10 years, according to Bristow. clear in your head – have we done any- changed. He pointed to Tanzania as an

PAGE 60 MARCH 2018 AUSTRALIA’S PAYDIRT

example of a mining code which needed about the revenues they were capable of flow of cash to host countries.

readjustment to reflect modern realities. raising. “No-one measures cash flow associat-

“It is a much more complex situation “Today, most feasibility studies are not ed with mines,” he said. “Miners have to

in Tanzania,” he said. “Tanzania was credible and 60% of the global gold in- ensure cash flows into your host country.

the first government on the continent to dustry is unprofitable,” he said. “During If you are not making an impact on the

introduce a mining code designed to at- the boom, industry spent a lot of money greater economy, you stand to be criti-

tract foreign direct investment. Those in- on assets that were never viable. Gov- cised of exploiting the country.

vestors didn’t yield any tax for 20 years ernment benefitted from this windfall but “If you are coming to Africa, you must

because their operations were badly run. then somebody switched the music off employ Africans. That is the best invest-

The debate has been going on for some and there weren’t many chairs. Australia ment you can make but we fail to do that.”

time and some companies engaged attempted to change legislation because It may take legislation to fix.

with the Government to start paying tax, its whole economy fell apart, and we also “In the 60s and 70s, legislation drove

some didn’t.” saw similar policy shifts in Ghana, Zam- investment decisions. When South Africa

“Bristow said the short-termism of both bia, Cote d’Ivoire and South America.” led deep-level mining, there was a struc-

governments and industry had ture in place preventing com-

led to the current prevalence of Since the 1980s, the panies exploiting reserves
industry [mindset] has
resource nationalist policies in that would compromise the
Africa. long-term management of that
orebody.”
“Since the 1980s, the industry

[mindset] has become shorter become shorter term and based Bristow remains optimistic
term and based on a bet on the on a bet on the market; it has about Africa’s future, particu-
market; it has forgotten that min- larly as democratic move-

ing is about long-term gains,” he forgotten that mining is about ments across the continent
said. long-term gains. gather pace.

“It is a dilemma because “Africa is on the march as

shareholders and even politi- people become the power in

cians also want short-term gains politics and politicians have

from what is a long-term investment.” Instead, industry and governments to consider people not themselves,” he

He said the construction of economi- should be focused on building assets ca- said. “Nobody can stop that momentum.”

cally-questionable projects had raised pable of sustaining throughout the com- – Dominic Piper
false expectations among governments modity price cycle, ensuring a consistent

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 61

OPINION

Major changes leave
uncertainty hanging

Concerns regarding resource nation- • Covenant to comply with the social • Creation of a special 10% royalty on
alism reforms are a regular topic at responsibility undertakings given to local minerals deemed by the Government to

the Mining Indaba, the only changing ele- communities be “strategic substances”, the list of such

ment in any given year being the name of • Increased obligations regarding lo- substances to be determined by future

the countries concerned. cal processing and local contents application texts

Whilst Tanzania’s recent legislative • Obligation to repatriate funds in- • Creation of a special 50% tax on

changes will be much discussed this creased from 40% to 60% and to 100% excess profits, defined as profits made

year, by voting a major revision to its once the investment has been depreci- when a commodity exceeds by 25% the

mining code on January 27, the DRC’s ated, with no possibility of using repatri- price used in the bankable feasibility

Parliament has seen to it that the country ated funds to pay external debt study

may, once again, take centre stage on • At least 40% of the development • Validity of assignment of mining ti-

“this subject. costs to be contributed by way of equity tles subject a 1% registration fee based

The DRC mining code revision pro- rather than debt. on the price, which may itself be subse-

cess which started in 2015 had quently reviewed by the au-

ended in confusion in Septem- Mining companies and thorities
ber of last year with the Parlia- • Capital gain tax on sale of

ment and the Senate approv- investors will also be direct or indirect interests in a
ing two different versions of concerned about the economic and DRC mining company
the revision bill. On December
• Direct and indirect change

27, President Joseph Kabila practical impacts of the changes. of control of an exploitation ti-
summoned an extraordinary If promulgated “as is” the bill will tle holder subject to the prior
session to work on a unified approval of the State

bill. This bill was finalised and not only increase future investors’ • Uncertainty as to whether
approved by both houses on obligations but might also be read the revision is immediately ap-
January 27. plicable and overrides exist-

The bill is ambitious and chal- as immediately impacting current ing rights and stability provi-
lenging. operations and existing rights. sions or whether the current
tax, customs and exchange
The text is supposed to be control benefits of existing ti-
“tidied up” before being put to

President Kabila for promulga- tle holders are kept whole for

tion. Such clarification would be useful as • Registration fees of mortgages another five years

some provisions seem at this stage un- charging exploitation permit increased These are only a few of the changes

practical, unclear or possibly inconsist- from a modest flat fee to a percentage of which the revision is introducing. Given

ent. Mining companies and investors will the secured amount its complexity further analysis of the

also be concerned about the economic • Mining Code tax benefits extended text and its impact on individual opera-

and practical impacts of the changes. If to mining companies’ subcontractors tions will be needed and we have already

promulgated “as is” the bill will not only only if they are controlled by Congolese started doing so. However, to lawyers

increase future investors’ obligations but shareholders who have been involved in address-

might also be read as immediately im- • Royalties increased from 2% to 3.5% ing the consequences of the previous

pacting current operations and existing for non-ferrous and base metals and changes made to the DRC mining code,

rights. from 2.5 to 3.5% for precious metals and of the subsequent mining revisitation

Some of the key changes to the mining calculated on the gross market value of or of similar recent pieces of legislation

code would include: the products in other African mining jurisdictions, it

• Exploitation licences re- Christophe Asselineau is Partner at Norton seems already clear that
duced from 30 to 25 years, Rose Fullbright Paris. He has more than 25 significant efforts on the
exploration licences renew- years’ experience advising on projects and part of the Government,
able only once M&A transactions worldwide, with a particular mining companies, fi-
focus on Africa. He is recognised as one of the nanciers and their advi-
• State free carry non- most experienced lawyers for African M&A sors will be necessary
dilutable equity stake in- and Projects transactions particularly in the to address the conse-
creased from 5% to 10% and energy, natural resources and infrastructure quences of this bill if it is
increased by 5% on each industries. He has advised investors in more not to give rise to a spate
renewal of an exploitation than 20 countries in North and Sub-Saharan of international arbitra-
licence Africa including in relation to many of the larg- tion proceedings and a
est and most complex or politically sensitive negative impact on in-
• 10% share capital stake investments made on the African continent. vestors and the DRC.
to be held by Congolese pri-
vate citizens for creating a
mining company

PAGE 62 MARCH 2018 AUSTRALIA’S PAYDIRT

INDABA REVIEW

New code threatens DRC industry

The Congolese mining indus- ephant in the room. Or we can
try has formed a united front find a real, proper solution for

as it aims to convince Joseph the DRC and its people.”

Kabila’s Government that the Pressed by reporters on the

country’s proposed new mining possibility of a new compro-

code will strangle foreign invest- mise, Kabwelulu would only say

ment in the sector. that the code had gone through

Speaking at Mining Indaba, all the necessary stages and

Randgold Resources Ltd chief was now with the president.

executive Mark Bristow said the DRC has been toying with in-

country’s mining industry cre- troducing a new mining code for

ated a formal group to raise is- six years having seen revenues

sues with the Government. from the sector fall dramatically

“There’s no one that’s inter- since the GFC. Bristow said

national and has significant in- stakeholders had found a work-

vestment in the mining industry able outcome for the “draconi-

[in DRC] that has declined the an code” in 2016 but had since

invitation [to join],” Bristow said. Joseph Kabila seen negotiations neglected,

Bristow expected President resulting in the legislation being

Kabila to agree to amend the code, very high, ultimately. The question is: brought back without consultation.

which was passed by the Senate in Janu- Does this have to get into a confrontation The country’s previous mining code

ary and raises royalties on gold, copper to get there?” Bristow said. had been introduced in 2002 and led to

and cobalt, increase corporate tax rates “We’ve seen him [Kabila] take stock unprecedented levels of foreign invest-

and remove stability clauses present in of decisions in the past. Our strong rec- ment as miners flooded to one of the

the old code. ommendation is that this should happen world’s richest sources of copper and

He said international miners had or- with this legislation.” cobalt.

ganised a formal lobby group aimed at DRC Mining Minister Martin Kabwe- Randgold built the Kibali gold mine in

convincing Kabila of the potential nega- lulu would not reveal whether Kabila had JV with AngloGold Ashanti Ltd under the

tive impact of the code. signed off on the new code. 2002 code and Bristow admitted there

“We are engaging with everyone from “Journalists ask me whether the presi- was room for renegotiation in the right

the top to every ministry – prime minister dent has promulgated the code. I won’t circumstances.

to ministers of mines, ministries, civil so- answer that question here. The code is “Industry engaged in a revisit of the

ciety, senators, parliamentarians, foreign with the President,” Kabwelulu said in code because it was quite dovish in order

“lenders, the whole nine yards,” Bristow Cape Town. to attract investors. However, if you run

said. a model, in the old code 65%

Asked whether he consid- of capital goes to Government,

ered the new code illegal, … if you run a model, in the in the new code it is 100%. It
Bristow said: “It’s attempting to old code 65% of capital goes is a strange concept to think
disregard a law approved and that anybody would invest in a

passed by the House and the to Government, in the new code it country for no return.”
Senate. If the new code is at- He said the onus was now
is 100%. It is a strange concept to on government and industry to
tempting to ignore the previous

laws then it is.” think that anybody would invest in find a “win-win” outcome.
Ivanhoe Mines Inc chairman a country for no return. “We have a responsibility

Robert Friedland said his com- to the country and history will

pany expected the Govern- judge us,” Bristow said. “Will

ment would respect and pro- legislation deliver any benefit

tect the spirit and the letter of to the people or will we look

the existing mining code. State mining company Gecamines back and ask what each of us did wrong?

“However, there remains the distinct said in February that it intended to start There is no doubt we’ll find a solution but

possibility of unified, industry-led actions renegotiating contracts with its interna- are we going to sit down and discuss like

if the proposed changes do become law,” tional partners to boost its share of rev- grown-ups?

he said. enues. “DRC has so many things going for it

Randgold, which gets 45% of its gold Kabwelulu likened the new code to a and is such an important place for Afri-

production from DRC, is asking for the “bush fire”, saying: “The fire is not going ca’s future development. So, we should

code to be returned to the Mining Minis- to destroy everything. There are plants all be worried and start finding solutions.”

try for further consultation with miners. If that will keep their roots. New plants will – Dominic Piper
this does not happen, the company will grow.”

mount a challenge through international Bristow urged the Government to re-

arbitration, it said. turn to the negotiating table: “We can

“I believe the chances of success are dance around, we can ignore the el-

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 63

INDABA REVIEW

Friedland’s spiritual journey
in the DRC

Ivanhoe Mines executive chairman Robert Friedland said he would channel the spirit of Nelson Mandela to deal with changes
under way in DRC’s mining code

Ivanhoe Mines Ltd executive chairman the heart about more important issues Draft legislation to amend DRC’s 2002
Robert Friedland has welcomed a re- and will defer the release of the scale of Mining Code was believed to have been

fresh of the DRC Mining Code and told this discovery to a later day,” Friedland approved by the National Assembly and

delegates at Mining Indaba he was happy said. Senate. However, the President was yet

to pay more taxes and royalties, provided Ivanhoe was expected to announce an to sign off on the proposed legislation for

the local Congolese were the main ben- updated resource estimate at Kamoa- the law to be enacted.

“eficiaries. Kakula, however decided to put the an- Proposed changes to the mining code

The Ivanhoe group of companies has nouncement on ice for the time being. include increasing royalties on cobalt,

been active in DRC for more while removing a clause

than 20 years and is current- Ore is just a rock that we can which sees mining compa-
ly developing the Kamoa- nies exempted from fiscal

Kakula copper project in the take out of the earth and sell at and customs changes for 10
Central African Copperbelt. a profit. What we do with that profit, years.

Kamoa was discovered “We will find a way; it’s a

nine years ago, with Kamoa- who owns that profit, how should that marathon, not a sprint. I call
Kakula now one of the five profit be used; well, I invite all of you upon the spirit of Madiba,”
largest copper deposits in Friedland said in reference to

the world. to help us to understand what the working on negotiations with
“I think we are moved by right thing to do is and how to do it. the DRC Government.

recent events to speak from Friedland said the mining

PAGE 64 MARCH 2018 AUSTRALIA’S PAYDIRT

Friedland also expressed his admiration for China’s President Xi Jinping during his address at Mining Indaba

sector required stability to operate effec- nine years on from a grassroots discov- first copper ore from the Kansoko mine,
tively and was confident of a “good out- ery. Oyu Tolgoi is looking at being No.2 which is in the Kamoa area, was deliv-
come” with government. and there are very good lessons to be ered to surface so it is not an abstraction
drawn from the $US14.5 billion we have anymore, we can see the ore,” Friedland
“Ore is just a rock that we can take out invested in the Oyu Tolgoi discovery for said.
of the earth and sell at a profit. What we governments. But, actually it’s our inten-
do with that profit, who owns that profit, tion in working with the Congolese peo- While there is a bull market for cop-
how should that profit be used; well, I in- ple to have Kamoa- Kakula knock on the per on the horizon, Friedland said much
vite all of you to help us to understand door of Escondida as No.2. With suffi- higher copper prices would be needed
what the right thing to do is and how to cient faith and sufficient dedication and in the next decade for the top 10 copper
do it,” he said. with sufficient wisdom, there is no reason projects in the world to be developed.
with our Chinese partners and our Con-
“We have to have this dialogue every golese partners that we can’t make the A 2017 PFS on Kakula-Kamoa indi-
10-20 years.” Kamo-Kakula discovery the greatest on cated initial production of 6 mtpa at 7.3%
the surface of the earth.” copper for the first four years before
Despite potential changes to the DRC dropping to 6.4% for 284,000 tpa copper
Mining Code, Ivanhoe and partners Zijin Friedland said there was currently over the first 10 years.
Mining Group Co. Ltd continue to devel- nothing that could compete with Kamoa-
op Kamoa-Kakula at a rapid rate. Kakula and Ivanhoe had “a new spiritual Ivanhoe and Zijin expect 385,000 tpa
long-term responsibility with the Congo- copper production from year four, while
The plan is to have three 6 mtpa shal- lese people to make sure that we leave average cash costs for the first 10 years
low, flat-lying mines at Kamoa-Kakula, nice footprints in the sand in our legacy”. have been estimated at $US1.14/lb cop-
with underground development pro- per.
gressing to the heart of Kakula. The company has started adding to
that legacy, with drilling at Kakula West Capex is estimated at $US1.2 billion,
“The Kamoa discovery is already open providing encouragement for Ivanhoe including contingency, for an after-tax
and you can go underground and touch that the mineral endowment is endless. NPV of $US4.2 billion.
it. As we ramp these mines up, you can
see it is a mining district that is going to “I can assure you that there is no end – Mark Andrews
grow and grow until all of us in this room in sight for this particular discovery and
are long gone,” Friedland said. to a geologist that is very exciting. It is
also important that in the last year the
“It’s extremely conservative to say that
with our continued efforts this will be the
fourth largest copper mine in the world,

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 65

INDABA REVIEW

Zinc surges on fundamentals

The zinc shortage is per-
haps not as severe as Cape
Town’s water crisis but by the

time of Mining Indaba total zinc

stocks, including concentrates,

had reached critical levels with

supply estimates of only seven

weeks.

Zinc prices are at 10-year

highs but industry insiders be-

lieve the spike has substance.

“I think demand is very strong, Discussing zinc was Brunswick Group co-head of metals and mining Carole Cable, Vedanta chief
it is not driven by speculation, it financial officer Pushpender Singla, Ivanhoe executive head of marketing Fraser King, Trevali
is driven by supply and demand.
Stocks are declining; there is Mining Corp chief executive Mark Cruise and BMO Research managing director Colin Hamilton

no stock. If you ask me there is
about 180,000t of stock and it is going things to definitely make sure we are do- end of the cost curve they go up more,
with pricing better for those at the bot-
down. The US dollar has impacted [zinc] ing the right things,” Singla said.
Ivanhoe, which is developing the Ki- tom-to-mid cycle.”
prices also and it will be two calendar
Zinc – an “old school metal which is
years before the supply and demand pushi underground copper-zinc mine in
can be neutral, so we feel there is an- DRC, is also wary of the impact of infla- not as exciting as the battery metals at
other good couple of years of zinc prices tion and other cost pressures prevailing the moment” according to Hamilton – is

ahead,” Vedanta Zinc International chief in a resurgent mining sector and will fo- largely used in the building, infrastructure

financial officer Pushpender Singla said. cus its energies on optimising the project and auto industries.

Inadequate supply in the market is a from the onset. About 80% of zinc is consumed by

product of negligible exploration for zinc “We are looking at optimising mining these markets, with 75% of the metal

over the preceding decade as other com- methods and making sure we get as used for galvanising purposes.

modities were prioritised by mining com- much of that 35% zinc [from Kipushi’s Big Demand for zinc in the battery sector

panies. Zinc Zone – 10.2mt @ 34.9% zinc] from has been superseded by other battery

The result has been 10-year price surface and get it through the plant with technologies, while the popularity of light

highs ($US3,470/t mid-February) and high recoveries. That’s our main focus vehicles has seen a small shift in the die-

bullish prospects for further rises in value and I think we will be mining down from casting industry.

for the base metal. 1,220m to 1,700m from sub-level open Nevertheless, traditional uses remain

Ivanhoe Mines Ltd executive head of stope which has been geared and max- strong and Vedanta is also undertaking

marketing Fraser King predicted zinc imised to get every last ounce or pound research projects with the likes of the

would be trading at $US4,250/t on the of that 35% of the orebody,” King said. International Zinc Association (IZA) and

LME by the end of March. High-grade zinc projects like Kipushi groups within UNICEF to define a role for

While high prices are being welcomed are rare and BMO Research managing zinc in the agriculture sector, Singla said.

by producers, the battle to contain costs director Colin Hamilton sees few green- “[Research] clearly says the traditional

is never-ending, with “slowly creeping fields projects emerging in the near fu- zinc battery system can still be more cost

inflation” another factor to contend with. ture. efficient and operationally efficient for

“We can see 5-8% increase cost infla- However, zinc prices have attracted energy storage against lithium [ion bat-

tion starting from people and consuma- new players to the market, such as New teries],” Singla said.

bles,” Singla said. Century Ltd with the restarted Century “We will look into the overall market

“As a fast growing company we are mine in Queensland, which six months with the IZA and the Zinc One Initiative,

looking to spend around $US8 billion of ago wasn’t considered part of BMO’s which is more focused on the efficiency

capex over the next to 2-3 years as a modelling on zinc. of zinc in the human body. In some coun-

group. The numbers are quite big and as Hamilton expects zinc projects to gar- tries around the world, zinc is very defi-

a fast growing company we can’t accept ner more interest now and despite good cient in the human body. So, if we add

inflation year-on-year.” money being made, he encouraged pro- zinc into the fertilisers we can really im-

Making productivity and efficiency ducers to keep an eye on the cost curve. prove people’s health or another option is

gains through the adoption of innovation “If we go back a few years, we knew to really work with IZA and apply zinc into

and technology across its operations are that mines were going to close in this the human body or something.”

among the initiatives Vedanta is pursu- industry and we had potential mines to Being deficient in zinc can have harm-

ing. offset them, but of course the big capex ful impacts on diarrhoea, pneumonia and

“We are looking at whole-of-mine de- spend we had from 2003/04 onwards other infectious diseases, particularly on

signing, plant design to make sure re- was not concentrated on zinc,” Hamilton children for whom zinc is a critical ele-

coveries can be optimised or throughput said. ment in growth and proper functioning of

increased. In addition, we are looking at “The oil price is up from where it was the immune system.

how we can consolidate across mining, and steepens the cost curves. Even for – Mark Andrews
logistics...we are looking into all those good assets costs go up, but at the top-

PAGE 66 MARCH 2018 AUSTRALIA’S PAYDIRT

Orion shines in the
night sky

When all was crumbling around it, Orion Minerals Ltd valiantly Orion’s register which also includes Tar-
held its ground on the ASX, courtesy of a maiden zinc-copper ney Holdings (7.98%), Hargreave Hale
resource from the historical Prieska in South Africa’s Northern Cape. Ltd (6.46%) and Silja Investment & Alex-
ander Haller (5.36%).

Meanwhile, Anglo American plc’s

Global markets were being smashed couraged by the level of interest in Orion. AASMF $1.4 million loan will see it also

in early February and the ASX was on In the 12 months leading into Mining become a shareholder in Orion, which

the way to losing $60 billion of value in Indaba 2017 there were few investors had a market cap of $58 million, $4.6 mil-

one day due to some anxious selling by willing to give Prieska the time of day, lion cash and was trading at 4.5c/share

investors. except for Tembo Capital’s Peter Rux- in mid-February.

However, as most companies were ton, who Smart deems as the best in the “A year ago today we were at 1.8c/

seeing red, it was all green for Orion world when it comes to understanding share and had just found an investor to

on the back of the release of a global VMS deposits. back the company,” Smart told investors

resource estimate at Prieska of 24.2mt With a scoping study to go by, Ruxton and analysts during a pre-Indaba site

for 874,000t zinc @ 3.47% and 297,000t found Prieska compelling enough to sup- visit.

copper @ 1.23%. port and now Tembo is a 19.99% share- “We put together a team that has deliv-

“It was great we outperformed the mar- holder in Orion. ered success; we have some old knowl-

“kets, but I think we were still very nega- Tembo is the major shareholder on edge combined with youthful enthusiasm

tively impacted. On num- and modern technology to

bers like that, people were work with. Technically, the

expecting that we should It was great we outperformed the project is going right and
have doubled our share markets, but I think we were still the South African geopo-
price on a normal market litical de-risking has been

day,” Orion managing direc- very negatively impacted. On numbers great for us, perfect timing,
like that, people were expecting that we just when you want to build
tor Errol Smart told Paydirt. a major project to remove
Smart viewed reaction to

the resource estimate as should have doubled our share price that big sovereign risk dis-
somewhat glass half full, on a normal market day. count over your head is
however, he has been en- very important.”

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 67

INDABA REVIEW

Orion managing director Errol Smart has worked tirelessly to convince investors about the potential for re-opening Prieska

Investment interest in South Africa’s comed in South Africa, with the mining and the talk is that there will be a very
mining sector has been on the wane for fraternity expected to be a beneficiary inclusive discussion and negotiation with
several years and in the past two years of the new President’s political persua- the Department of Mineral Resources
the sector’s reputation has been further sions. [DMR] going forward. Ramaphosa made
tarnished with rumblings around new his money in mining, and specifically in
legislation. Furthermore, Orion has the chance to SA mining, so he knows the shortcom-
play a part in shaping the mining sector ings in the legal framework,” Smart said.
The tide is turning, however, with Ja- with Smart invited to join a committee
cob Zuma resigning as South African mandated to help the Chamber of Mines “He has specifically made the state-
president last month, replaced by Cyril formulate a proposal for a new Mining ment that if the regulatory framework is
Ramaphosa. Charter. an impediment to investment, that then
needs to be addressed and cleaned up
Ramaphosa’s initiation will be wel- “There will be a negotiation process urgently. He sees it as an early driver
and magnet for foreign direct investment
Orion exploration executive Louw van Schalkwyk was responsible for discovering in South Africa.
most of the resources Vedanta is now mining in the Northern Cape
“South Africa needs to desperately
claw itself outside of a financial mess so
I think we are going to be in a very good
position. The Chamber of Mines is very
positive about it and they are looking to
broad-based consultation and have ap-
proached a number of junior miners, in-
cluding ourselves to serve on a commit-
tee to draft a concept document.”

Smart said the “lights have now gone
on” and the DMR recognised the critical
need to liaise and consult with industry
for better outcomes.

The open dialogue comes at an oppor-
tune time for Orion given it has a BFS led
by DRA on Prieska due for completion
in Q4.

Infill and step out drilling to increase
and upgrade the initial resource estimate
was in play at the time of print, while met-

PAGE 68 MARCH 2018 AUSTRALIA’S PAYDIRT

SITE VISIT

Orion geologist Loni Gallant is part of an exploration team
delivering success at Prieska

allurgical test work was advancing nicely, 1991, with Orion esti-

Smart said. mating that the surface

Documentation for a mining right and and underground infra-

environmental authorisation was also be- structure left behind has

ing prepared and lodgement targeted for given it a $200 million

the end of March. and two-year head start

“That triggers the start of the min- in terms of cost savings

ing right applications process which we and time to production.

foresee running through to next year. Significant time has

Then we will be able to break ground and been spent on assess-

hopefully build an exceptional operation,” ing the usability of the

Smart said. main hoisting shaft.

“I think the project is financially robust Despite consider-

at the moment, we are listening to and able exposure to wa-

investigating all options for financing, but ter, detailed visual and

straight vanilla finance might be the best mechanical inspections Orion hosted three site visits to Prieska during Indaba,
solution for us at the moment.” have exceeded expec- reflecting the change in the levels of interest the
tations on the standing company is receiving
A major advantage for Orion during condition of the shaft
the development phase will be leverag-

ing from the infrastructure left in place by concrete lining and steelwork and the ers are there for it as we continue to do

Anglovaal. shaft deemed amenable to refurbish- more drilling,” Smart said.

Anglovaal operated Prieska from 1971- ment and re-use. “We plan on just keeping with what we

1991 employing 4,000 people and pro- Further inspections were being are doing and delivering good results, I

ducing 430,000t copper and 1mt zinc. planned to obtain video footage to 200m think the market will digest it and when it

The mine site was rehabilitated in below the shaft water level at the time of does, eventually something will click and

print. our stock will go. The fact that we are

More positive re- trading at such a discount, the potential

sults will enhance is becoming very obvious to a number of

Orion’s prospects at people now, we have a lot of interest and

Prieska, as it also there are analysts taking note, so every-

looks to answer more thing is going right for us.”

questions relating to So far, Smart and the Orion team have

the potential size of controlled what has been possible, while

the resource. the zinc and copper markets have played

“We are very com- into the company’s hands.

fortable that the tar- Trading at $US3.21/lb, copper is almost

get size has doubled at five-year highs, while zinc – $US1.63/

or trebled from what lb – is proving to be a commodity just as

we were originally ex- sexy as any of the emerging battery met-

pecting. On the num- als.

bers we have, our as- “All the elements are coming together

pirations are to find at very nicely,” Smart said.

least double as much “That’s exactly why we went after

The geology at Jacomynspan has been likened to that of in close proximity. All Prieska at what we thought was the bot-
Western Australia’s Fraser Range the geological point- tom of the market, and fortunately we got

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 69

INDABA REVIEW

“ Prieska’s closure was not due to lack of ore, but rather the worsening political situation in late-apartheid South Africa
That’s exactly why we went after Prieska own a refrigerator, freezer and a televi-
at what we thought was the bottom of the sion set. Well, those freezers, etc weren’t
properly galvanised and a lot of them are
market, and fortunately we got that one right. We rusting through and need to be replaced.

also hoped that the political situation, which cast “In addition, some of the producers
coming on-stream are also highlighting

a cloud over South African mining for so long, the importance of zinc in agriculture,
would likely resolve itself and it has. which is a net consumption, it is not re-
cyclable use and that is important con-

sumption. Across the board there are a

that one right. We also hoped that the po- the fleet that was basically purchased in number of sectors where it is quite obvi-

litical situation, which cast a cloud over the last 10 years is ageing, rusting and ous that zinc consumption is likely to in-

South African mining for so long, would falling apart. Replacements are needed crease. The whole electric vehicle drive

likely resolve itself and it has.” and they are likely to be replaced with and roll out also creates a whole lot more

Many believe the run on zinc prices to better quality steel,” he said. new opportunities for zinc producers.”

10-year highs has largely been due to a “Equally, five years ago, a major driver With a BFS in the making and the po-

lack of supply coming on-stream and de- was that everyone in China wanted to tential for a quick turn into production in

clining physical stocks. 2020, Orion is emerging as a

However, Smart expects op- significant player in the zinc-

erations in the pipeline to ac- copper space.

count for most of the current The size of Prieska has

shortfall and the zinc market to caught the eye of investors

be back in balance by 2019. and the company is confident

He said many commentators more will be unveiled.

were fixated on the short-to- “When you have a big dad-

medium term supply side nar- dy VMS, there’s bound to be

rative, while another story was big children nearby. Prieska

unfolding relating to growing is now starting to

demand. shape into a giant

“Nobody has been watching VMS on one of the

how the demand side is likely biggest single mas-

to move. The demand side is sive sulphide lens-

moving because of the grow- es,” Smart said.

ing use of zinc in galvanising in Prieska is the

China and India. only mine on a belt

“Historically, both China and stretching 200km

India haven’t used galvanised The integrity of an existing shaft at in the Northern

steel in their motor cars and Prieska has been confirmed Cape where Orion

PAGE 70 MARCH 2018 AUSTRALIA’S PAYDIRT

SITE VISIT

Investors and analysts visited the 294 level underground at Prieska

has 1,790sq km of ground secured. One project of great interest to Smart to have found in the Fraser Range five
Orion’s tenure has been severely un- is the Jacomynspan magmatic nickel- years ago and indeed a lot of the geos
copper deposit. coming to look at the project are people
derexplored, with two short-lived explo- that have been intimately involved in the
ration booms in the 1970s and 1980s “In the coming weeks we hope to be Fraser Range; they are very struck by the
being the last time any great attention putting some announcements out around similarities.”
was paid to the resource potential in the that project. That is a project that we will
Areachap Belt, Northern Cape. definitely be elevating attention to this – Mark Andrews
coming year as we step out our regional
Smart said Orion would intensify re- exploration. It has all the
gional exploration activities this year, fundamentals that a per-
which have started with one of the larg- son looks for in a major
est SkyTEM airborne EM surveys South nickel-copper-cobalt-
Africa has seen in more than a decade. platinum province sitting
on the edge of the conti-
The survey was completed over 962sq nental margin and it is in
km and covered the Masiqhame and the right belt,” Smart said.
Disawell permits, north of Prieska, with
AEM anomalies detected over known “It has everything that
zinc-copper VMS’s and nickel-copper we would have dreamt
intrusives.

A maiden resource of 24.2mt for 874,000t zinc @ 3.47% and 297,000t Walter Shamu celebrated one year with Orion as mining
copper @ 1.23% was announced from Prieska last month and development executive on site in February

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 71

BATTERY MINERALS CONFERENCE PREVIEW

Battery minerals
all the rage

Paydirt’s inaugural Battery Minerals Conference comes at an apt time in the battery, energy and EV
revolution. Companies have started to position themselves to take advantage of the burgeoning battery
minerals market as narratives around cobalt and lithium demand, in particular, intrigue the global invest-
ment community. Paydirt has tracked the sector – and the Australian companies carving their niche in it –
for much of this decade. Following on from the highly successful Australian Graphite Conference, Paydirt’s
Battery Minerals Conference – to be held at the Pan Pacific Hotel, Perth, March 14-15 – will allow investors
the opportunity to build their understanding of this most captivating of commodity sectors

In a further boost to juniors scouring the “Copper is very relevant to this whole prefer to shy away from.
globe for opportunities in the battery story and copper is of enormous interest “In the context of Rio Tinto Ventures,
minerals sector, mining giant Rio Tinto to Rio Tinto. Deposits in Africa are well
Ltd has established an open door policy known and are in jurisdictions that we re- we are certainly interested in looking at
to discuss potential synergies with pro- gard as challenging, but not impossible,” opportunities and again the distribution
spective players in the sector. Fox said during a discussion on battery of cobalt is so biased in a couple of ju-
minerals at Mining Indaba. risdictions in Africa we would be very
Rio Tinto’s exposure to emerging bat- pleased to look at those elsewhere in Af-
tery minerals currently comprises its “Part of the Ventures group [mandate] rica outside of DRC,” Fox said.
MoU with the Serbian Government to is to look at interests in copper in some
progress the Jadar lithium-borate pro- of those jurisdictions where we are not The DRC Government is preparing to
ject, 140km from Belgrade, which could present or are keen to look at opportuni- replace the 2002 Mining Code, essential-
potentially be in production in 2023. ties. Obviously, nickel and cobalt are also ly meaning increased royalties and taxes
very relevant and again I think the nickel with an emphasis on gaining more from
Upon steady-state production, it is opportunities in particular are especially strategic minerals such as cobalt, which
possible that Jadar could provide 10% of challenging because of the geological has soured relationships between gov-
global lithium demand based on the cur- rarity of decent nickel deposits. The op- ernment and mining companies.
rent resource of 200mt, which makes it portunities in Africa; I can probably count
one of the largest deposits of its kind in them on one hand. [But] in terms of desir- Such are the complications in the bat-
the world. ability those opportunities are very high tery mineral supply chain, end-users
and in terms of availability they are very such as Apple Inc – one of the world’s
Development of similar sized depos- low, which is always the reality for nickel. largest consumers of cobalt – intend to
its are expected if future lithium demand source future cobalt supply direct from
is to be satisfied, but Rio Tinto also has “That has to be good news for juniors miners; a potential catalyst for adven-
eyes for other projects bearing battery who have encouraging prospects and we turous companies to consider taking on
minerals, according to Kevin Fox, man- would certainly like to talk to people who risks not usually considered.
aging director of its Ventures division. have those projects in the nickel space.”
Many juniors have struggled to lock in
And, there appear no barriers as to DRC is unquestionably the host of the project funding from traditional sources
where the iron ore heavyweight is willing world’s greatest known cobalt resources due to the opaque nature of marketing
to conduct its search for battery miner- but it is a jurisdiction some companies in commodities such as graphite, cobalt,
als. lithium and nickel sulphate.

PAGE 72 MARCH 2018 AUSTRALIA’S PAYDIRT

“For us as investors, we cobalt market at present,

can only invest in listed expert opinion was unani-

companies and it is quite mous that traditional base

difficult to find companies metals had bullish pros-

that give us the right up- pects in the revolution un-

side for, in example, co- der way.

balt,” founder of Commod- “Vanadium may be of

ity Discovery Fund Willem interest in the future, but

Middelkoop said. there is no real market yet

Therefore, deals such as for those speciality met-

the one struck by Austral- als,” Middelkoop said.

ian Mines Ltd with Korean “You should also be

company SK Innovation for aware that we are in the

100% of cobalt and nickel first phase of these new

production from Sconi, batteries which, if you

Queensland, will serve in- believe the hype, it is all

dustry well. about lithium but lithium

Australian Mines report- supply is not a concern.

ed that potential end-cus- There is plenty of lithium

tomers in Asia and Europe around, there is just a

had taken to the Sconi shortage of production ca-

story well, with discussions pacity. We can double the

relating to off-take for the production capacity world-

scandium oxide compo- wide with $5 billion worth

nent of the project also Rio Tinto Ventures managing director Kevin Fox of investment but to open

continuing. one new copper mine re-

In the meantime, SK – a leading global the more junior end of the market, where quires $5 billion investment alone. I think

EV battery manufacturer which produc- we think some of the more exciting in- copper and nickel will be the real big win-

es $US120 billion per year in revenue vestment propositions reside [but with ners of this revolution.”

– has signed an initial seven-year off- commensurate higher risk]. A great ex- David Twist, partner at African Mining

take agreement (six-year extension op- ample of these types of companies is Development Fund, echoed similar senti-

tion also included) for 12,000 tpa cobalt Aeon Metals Ltd. Aeon is exploiting a ment about nickel and copper.

sulphate and 60,000 tpa nickel sulphate Queensland-based copper project with “We also think copper and nickel will

from Sconi. relatively high tonnage cobalt,” Barbarc- be the big winners. There is a lot of op-
“Sconi is the most advanced project of zy said in a client note.
portunity in other things, especially co-

its type in Australia, with balt, and vanadium seems

SK engaged with Austral- ... in terms of desirability those to be seeing its day now,
ian Mines to optimise the opportunities are very high and but in the big picture it is
BFS. SK also has an op- copper, nickel and lithium.
tion to acquire 19.99% of Above all else finding a
in terms of availability they are very low, good nickel and copper
Australian Mines’ ordinary

shares. which is always the reality for nickel. project will be worthwhile,”
“Now that Australian Twist said.

Mines has secured an off- That has to be good news for juniors Despite Lynas Corpora-
take partner for the Sconi who have encouraging prospects and we tion Ltd pulling itself from
project, we are the only the brink of receivership to

company that is in a posi- would certainly like to talk to people who rare earths powerhouse –
tion to align the technical have those projects in the nickel space. once again by demon-
production and process- strating the importance

ing parameters of the BFS of magnets to the battery

with the demands of its story – investors are still

end-user partner who will also be our key “Another company we like is Jervois feeling the burn from the last bust in rare

strategic partner in the construction and Mining Ltd which has a project in New earths.

financing of the overall project,” Austral- South Wales that is near other listed Therefore, the uptake in rare earths

ian Mines managing director Ben Bell peers, but Jervois trades at a fraction of stories is expected to be slow, according

said. their price. The company is also actively to Cobalt27 Capital Corp chairman An-

To accommodate the SK agreement, looking for growth via acquisition, which thony Milewski.

Australian Mines has pushed out the re- may lead to further value accretion. We “The bust of rare earths has left a bad

lease of a BFS on Sconi to the end of genuinely believe that this is a sector that taste in the mouths of investors. I don’t

June. will continue to grow and have strong see it attracting the amount of investment

While Australian Mines might be the fundamental drivers for many years to going into copper and nickel mines. Even

forerunner in the space, Australia’s over- come.” if that is unfair I just don’t see it because

all cobalt sector “remains a very nice sec- LME cobalt prices were $US80,000/t so many people lost a lot of money in the

tor”, according to Regal Funds Manage- late last month and few could predict last cycle,” Milewski said.

ment portfolio manager Julian Babarczy. when the ceiling would actually be hit. – Mark Andrews
“Our preference currently resides at So, while there is due attention to the

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 73

BATTERY MINERALS CONFERENCE PREVIEW

Bigger Pilgangoora likely

Pilbara Minerals Ltd has been a market “Some people’s view on whether the “That is going to become the most
darling on the ASX for a while now, lithium raw material supply base is go- important material for the battery indus-
however, even it could not escape recent ing to over-supply the market comes to try as a function of its quality and being
volatility in global markets. surface from time to time, and in more able to be mined in a stable jurisdiction
recent times it has been commentary like here in Western Australia,” Brinsden
The company did receive an uptick in about SQM and their potential for brine said.
appreciation on the back of positive PFS expansions in Chile,” he said.
results from the 5 mtpa stage two expan- Pilbara expects first concentrate from
sion of the Pilgangoora lithium-tantalum “We understand that everyone wants Pilgangoora sometime mid-year, with
project in the Pilbara. to pay attention to the lithium raw mate- Brinsden wishing summer rains and cy-
rials supply base, but honestly, the one clonic conditions, which swept through
Pilbara’s shares rose almost 10% on that relates to the brines and sources parts of WA’s north, stay at bay while
the day of the PFS announcement to of supply is grossly overstated; there development and construction activities
about 87c in mid-February. The com- is just no way that SQM is going to ex- progress.
pany had been trading at over $1.00/ pand those mines in the short term. Then
share during January, but tailed sharply there is a question mark about the cost Stage one of operations at Pilgangoora
as global markets suffered the jitters in base for the brine operations, especially will start at a rate of 2 mtpa, with Pilbara
early February. for entry into the battery materials world reacting to the “exponential growth which
and the amount of capital that needs to is occurring across the lithium ion sup-
SQM subsequently announcing its in- be invested to realise that resource. For ply chain, as the industry in China and
tentions to increase lithium brine supply all those reasons and more, we feel that elsewhere gears up for transformational
in Chile also spooked investors following line of commentary was way over played growth to meet demand from the auto-
the sector. by the market.” motive and energy storage sectors is
now becoming better understood” to run
Pilbara chief executive Ken Brinsden Brinsden said people really needed to a PFS on a 5 mtpa operation.
told Paydirt the company had to contend pay attention to the hard rock raw materi-
with a combination of factors at the same als supply coming out of stable jurisdic- Factored into stage two expansion
time, however, he felt some of the com- tions. plans is the ability for Pilbara to leverage
mentary around SQM’s position in the from stage one facilities. The combined
lithium sector was over the top.

PAGE 74 MARCH 2018 AUSTRALIA’S PAYDIRT

output of stage one and two will be 5 mines like what Pilgangoora pre-
mtpa for 800,000 tpa high quality spo-
dumene concentrate costing $207 mil- sents to continue to support the
lion in development capital.
growth in raw material supply and to
The estimated life of mine at 5 mtpa
is 17 years, with revenue of $11.5 bil- fundamentally build more batteries
lion expected to be generated, EBIT-
DA of $6.5 billion and a post-tax NPV that support the roll out of renewa-
of $2.1 billion.
bles and electrification of the trans-
A DFS is underway and on track for
completion in the September quarter, port industry,” Brinsden said.
with additional RC drilling to expand
resources and reserves also con- “Pilgangoora will be a big mine
tinuing this year. Pilgangoora is al-
ready endowed with spodumene-rich and absolutely of global significance.
lithium, however, Brinsden said peo-
ple would be surprised at how much That is ultimately the direction the in-
growth there is to come in demand for
lithium raw material, especially from dustry is going to take because we
within China.
are talking about a market that has
He said China was setting up to
dominate the lithium ion battery sup- the potential to grow three, five, sev-
ply, both domestically and potentially
for export. en to 10 times over the next decade

Of course, Pilbara has Great Wall or so, depending on your views on
Motors and Gangfeng Lithium as off-
take partners to underpin sales of where demand ultimately gets to.
product from stage two, while also
providing debt linked off-take to fund With that comes the requirement of
the expansion of Pilgangoora.
industry to grow out the scale of the
“You will probably need more big
supply base and I think that is what

Pilgangoora represents; one of the

big new mines that ultimately has to

boost the lithium raw material supply,

so we feel that we have an important

role to play in that regard.”

In addition to exploration on its

own ground, Pilbara is earning into

Pilbara chief executive Ken Brinsden accepts the the Mt Francisco project in the North

2018 Craig Oliver Award for excellence in exploration, Pilbara, which the company believes

mining, corporate, market results, environmental and is one of the most significant lithium-

community relations at the 17th annual RIU Explorers tantalite assets outside Pilgangoora.

Conference in Fremantle – Mark Andrews

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 75

BATTERY MINERALS CONFERENCE PREVIEW

WA powers on in lithium

Australia is estimated to nity in the refining process
have supplied as much
as 60% of the global lithium space as well, but unless
market in 2017, according to
a report prepared by Future we act today the next box
Smart Strategies.
along, which is electrical
The figure was based
upon estimated shipments chemical processing, will
in 2017 and the contracted
supply of 24,300t contained remain at zero. We actually
lithium against general glob-
al consumption forecasts of have an enormous oppor-
40,000t.
tunity because next to the
The report was commis-
sioned by the Association rest of the world, the value
of Mining and Exploration
Companies. by our estimate [in electro

Australia, and predomi- chemical processing by
nantly Western Australia, is
well endowed with hard rock 2025] will be close to $300
lithium for which demand is
expected to exponentially billion.
grow to satisfy battery mak-
ers. “If we go all the way down

As a top tier mining ju- the lithium value chain [by
risdiction, WA can expect
more attention on its lithium 2025], we can potentially
sector as the demand for lithium-ion bat-
teries to power EVs grows, presenting see a $1.3 trillion per an-
the State with a once-in-a-lifetime op-
portunity to take advantage of the value- num industry as a conse-
add opportunities downstream, including
battery manufacturing. quence of the value-add

“The reason that we are able to pro- globally. I think we want a
duce lithium at a price our customers
want is because we are a technology piece of that and [hopefully
play and now we need to keep that tech-
nology play going so that we can add val- it] will get us to do more
ue to the lithium products that we have.
We are fortunate that we do have all the than just talk,” Wills said.
components, or almost all the compo-
nents to make batteries,” WA Minister of According to Future
Mines Bill Johnston said.
Strategies’ forecasts, an
“The only way that is going to happen
in Australia is because of the innova- WA Minister of Mines Bill Johnston eight-fold increase in the
tion capacity, the technology capacity,
the high skills of our workforce; they are volume of lithium metal is
the things that are going to make a dif-
ference. I hope that people read this re- AMEC chief executive Warren Pearce expected to be delivered to market by
port. I hope the Federal Government has
a look at it. The State Government is cer- said the report was a call-to-action for 2025.
tainly going to keep this on the agenda.
We see battery technology, battery met- governments and industry to collaborate WA can potentially be a source of bulk
als as being a key component of WA’s
future.” and ensure Australia benefited from the supply and the State shouldn’t be con-

Johnston urged industry to continue estimated $2 trillion lithium value chain in cerned with its capacity to deliver, Wills
discussions and build on the technology
story unfolding in WA so that the State the next two years. said.
could enhance its position in the lithium
value chain, ensuring maximum value “We have a window of roughly two “That represents a whole bucket load
was extracted from its natural resources.
years before it is set where battery com- of thousands of tonnes of lithium but, just

ponents and batteries will be manufac- remember that we mine 800 mtpa iron

tured and by whom,” Pearce said. ore. Even with this exponential growth of

“If we work collaboratively, Australia lithium, the challenge isn’t that great in a

could take a leading role in one of the sense of scale. We have done it before

breakthrough energy technologies. The and if someone is going to do it again

time to act is now.” surely it should be us,” he said.

As it stands, China is the dominant While encouraging greater participa-

player in lithium refining, electrical chem- tion by all players up and down the lithi-

ical production and is also at the smart um value chain, Johnston said the sector

end of the technology spectrum of pro- shouldn’t bank on being afforded subsi-

ducing cells built from lithium, where the dies from the State Government.

likes of Korea and Japan are also promi- “State Governments can’t get into the

nent. business of subsidies, we simply don’t

“Then we move beyond that and, in have the resources,” he said. “It is a los-

fact, start to see the really strong value ing game because there is going to be

adding is not done here, but it is not done someone else in the world that is going

in China either, it is being done in other to provide a bigger subsidy. What we

countries,” Future Smart Strategies man- can do is genuinely facilitate this indus-

aging director Professor Ray Will said. try by providing the proper environment

“There are grand opportunities here, for the long-term investment decisions.

right now, in terms of lithium value. We The reason WA has been so success-

are actually pulling out the majority of ful in the mining sector amongst others

world [lithium] value in 2017. is because we are a stable investment

“There is potential for at least $7-8 environment.”

billion by 2025 of value for Australia in – Mark Andrews
the lithium industry. There is an opportu-

PAGE 76 MARCH 2018 AUSTRALIA’S PAYDIRT



BMAINTETREA2R0LY1S8

14 -15 March – Pan Pacific Perth

graphite cobalt

nickel

lithium rare earths

Sponsors and supporters to date:

www.batterymineralsconference.com

REGISTER TODAY
Presenters to date:

Adrian Griffin Sean Gregory
Managing Director Managing Director and CEO
Lithium Australia NL Barra Resources Ltd

Tom Revy Jon Dugdale
Managing Director Managing Director
BlackEarth Minerals NL Peninsula Mines Ltd

Alex Otto Scott Williamson
Principal Research Scientist Managing Director
CSIRO Mineral Resources Blackstone Minerals Ltd

Ben Van Roon Humphrey Hale
Chief Operating Officer Non-Executive Director
Battery Minerals Limited Infinity Lithium Corporation

Daniel Hastings Tom Dukovcic
Business Development Manager Director Exploration
Mineral Commodities Ltd Lepidico Ltd

Trevor Benson Presenter TBC
Executive Chairman Ardea Resources Ltd
Walkabout Resources Ltd
Presenter TBC
Dempsey Minerals Ltd

Limited speaking and sponsorship opportunities still available.
Contact Namukale Nakazwe-Msiska [email protected] to discuss you participation

BATTERY MINERALS CONFERENCE PREVIEW

Tawana sticks to the script

As Tawana Resources Ltd Tawana is poised to flick
prepares to feed first ore the lights on at Bald Hill just

through the process plant 14 months after completing its

at its Bald Hill lithium mine due diligence on the project,

this month, managing direc- capping a remarkable turna-

tor Mark Calderwood cannot round for the former West Afri-

help but wonder where his can-focused iron ore explorer

company might be today if which saw its share price tum-

not for unprecedented de- ble to just 0.2c less than two

mand in the battery minerals years ago.

sector. “It’s really bizarre to have a

Calderwood said the project come on that quickly,”

importance of a $25 mil- Calderwood said. “In the end,

lion funding package from the sense of urgency we had

German company Weier at the start wasn’t really need-

Antriebe und Energietech- ed, but it’s still good that we

nik GmbH could not be over- can come to market and es-

stated as it was largely used tablish ourselves during 2018

to underpin development of as a good supplier of product.”

Bald Hill, about 50km south- Once mining and process-

east of Kambalda. ing activities are comfortably

“Given that the lithium chugging along, Tawana plans

industry doesn’t get bank Commissioning of the DMS plant at Tawana’s Bald Hill lithium to ramp up exploration work at
loans typically, we had to mine began last month Bald Hill and the neighbouring

be funded by our off-takers Cowan project in a bid to grow

and related parties,” Calderwood told this year. We all committed probably six the available resource inventory.

Paydirt. or more months ago. We’ll probably de- “We’ve got about 1,500sq km and

“It’s a lot harder than financing a gold liver our first shipment on the anniversary we’ve explored about 10sq km, so only a

mine, we couldn’t use a traditional bank- of our first off-take agreement.” small fraction of the ground,” Calderwood

ing system to fund these operations. Commissioning of the DMS plant at said. “There are quite a lot of known lithi-

However, our product was committed Bald Hill began last month ahead of the um-bearing pegmatites that haven’t been

and the off-takers now have a vested in- first scheduled shipment of concentrate drilled, either at all or we haven’t touched

terest in our success.” during March. for more than a year. There’s a lot of work

Weier is a 100%-owned subsidiary Bald Hill is forecast to produce 150,000 ahead of us, there’s a decade of drilling

of major lithium player Jiangte Special tpa of spodumene concentrate and ahead of us.”

Electric Motor Co Ltd. 260,000 tpa of tantalum pentoxide over Tawana recently signed an off-take

Tawana also used a $12.5 million pre- an initial 3.6 years of mine life, based on agreement with an unnamed tantalum

payment from off-take partner Burwill a resource of 18.9mt @ 1.18% lithium group for at least 600,000lb of tantalum

Holdings Ltd to fund its share of the con- and 149 ppm tantalum. concentrate from Bald Hill until the end

struction. Bald Hill is a 50:50 JV between It will mark the second major mine Cal- of 2020. Discussions are continuing with

Tawana and Singapore-listed Alliance derwood has put into production within other third parties for the sale of excess

Minerals Assets Ltd. the last decade, having overseen devel- tantalum concentrate.

Hong Kong-listed Burwill has commit- opment of the Edikan gold mine in Ghana Calderwood, who co-authored a book

ted to taking the first two years of off- while at the helm of Perseus Mining Ltd. on WA pegmatites, is bullish on the fu-

take from Bald Hill for a fixed price of Calderwood, who joined Tawana in ture of the burgeoning battery minerals

$US880/t. July 2016 following its acquisition of the industry, but is not anticipating huge

Calderwood said his company was still Bald Hill project, said the availability of price rises for the main commodity his

fielding inquiries about available concen- contractors had ensured a smooth con- company will produce.

trate as various lithium end-users contin- struction period. “Spodumene prices might go up a bit,

ue to vigorously hunt down potential new “It’s had its challenges, but at the end then down a bit, but it’s not going to take

sources of supply. of the day it was a good time to build a off. They’re not going up 50% in a year or

“If we were coming on now, if we were mine in WA, when things were quiet for anything like that,” he said.

still uncommitted, it would be a fantastic the constructors and right now we’re “The pricing has only been incremen-

position to be in, because the amount of quite capable of absolving more work,” tal, which is good for the industry. You

incoming inquiries is just tremendous,” he said. don’t want raw product prices going up

he said. “Everyone just got on with the job and 30% a year because it just damages the

“What we’re finding is the bigger com- built it. It was just a matter of getting the end-user markets. A 10% increase or

panies are the last to come knocking and right people on the team. Finding the drop is reasonable and the market can

the more conservative entities are the right people in 2017 was certainly a lot handle that, but big jumps are not ideal.”

ones missing out on a slice of the pie easier than it was during the peak of the – Michael Washbourne
from the three Aussie mines coming on boom.”

PAGE 80 MARCH 2018 AUSTRALIA’S PAYDIRT



BATTERY MINERALS CONFERENCE PREVIEW

Peninsula sails a different way

Like many in the graphite into, whether it’s through an
class, Peninsula Mines intermediary or directly from

Ltd has designs on producing our own projects in Korea or

large flake graphite. However, offshore.”

Peninsula’s approach to the Peninsula is starting to

graphite game is slightly dif- establish some deep roots

ferent to many of its peers. in Korea, with a MoU also in

As Peninsula managing di- play with expandable graph-

rector Jon Dugdale explained ite producer Graphene Ko-

to Paydirt, there are multi- rea for co-operation in min-

ple prongs in the company’s ing, processing and off-take

strategy, which includes ad- of graphite concentrate.

vancing its own projects in Peninsula and Graphene

South Korea plus sourcing Korea are also teaming to

graphite to supply end-users identify graphite supply from

in country. projects suited to the latter’s

The company, through expandable graphite prod-

100% owned subsidiary Ko- uct.

rea Graphite Co Ltd, took a Dugdale said it was a

step towards achieving the credit to the company’s in-

latter in January with a bind- Peninsula managing director Jon Dugdale (left) with Graphene country team for making

ing agreement to supply Korea’s expandable graphite product such strong contacts thus

Korean graphite users with far, which extends to a good

24,000 tpa flake graphite from DNI Met- the likes of Korean battery manufactur- rapport with government agency KO-

als Inc’s Madagascan projects. ers and builders, while a co-operative RES.

The deal is subject to Korea Graph- MoU signed in August also gives Korea “There is a lot of encouragement for

ite organising off-take agreements with Graphite and DNI the opportunity to dis- the graphite industry and the South Ko-

cuss potential co- rean Government is very supportive of

operative develop- foreign investment offering low taxes and

ment of DNI’s flake royalty rates, while KORES will back up

graphite projects in to 70% of funding for certain exploration

Madagascar. projects,” Dugdale said.

“Our ultimate goal Peninsula has six graphite projects and

is to get involved at the Tonggo lithium play to entice inves-

the project level as tors seeking exposure to battery miner-

well as being the als in South Korea, while drilling was set

conduit in relation- to restart at the Ubeong zinc-polymetallic

ships with the off- project at the time of print.

takers,” Dugdale The company has the hottest com-

said. modities of the moment covered and is at

“We are advanc- the feet of one of the biggest consumers

ing our own projects of battery minerals in the world.

in Korea, but also Dugdale said Korea imported most of

that supply agree- its products from Japan, China or the US,

ment with DNI gives but was looking at a change in strategy

us exposure to pro- and paying more attention upstream and

jects that might help closer to the primary product.

us get into produc- In doing so, Korean companies will

tion in the shorter benefit from not having to pay big im-

term and it might port tariffs and potentially sourcing bet-

also lead to part- ter quality minerals from its own natural

nerships offshore resources.

as well. It also ena- “Korean companies who are manufac-

bles us to take our turing the lithium-ion batteries are look-

preliminary agree- ing to process the spherical graphite in

ments and discus- country and they need supply. We are on

sions to off-takers the ground floor for that and that is why

in Korea through we are so keen to get that supply agree-

to binding off-take ment initially and then we can add to that

agreements that we through our own project development,”

can deliver supply Dugdale said.

PAGE 82 MARCH 2018 AUSTRALIA’S PAYDIRT

“We are right in the mid- Peninsula executives Jon Dugdale and Danny Noonan with Peninsula Mines investors at
dle of discussions with ma- the Yongwon graphite project in South Korea
jor groups wanting to move
to the point where they can in some more partnerships offshore all money taking things through to devel-
take graphite directly from have potential for us. But, a bit differently opment once we have the binding off-
suppliers, whether it is on on- we are looking to establish off-take de- take demand. From there, we can target
shore or outside Korea. Ko- mand at the same time,” Dugdale said. the quality and scale that the off-takers
rea is the biggest lithium-ion demand and create a bit of a feedback
battery manufacturer in the “A lot of companies are proving up big loop.”
world and has very big steel- projects in the middle of Africa and so
makers. And, they’ll be get- forth, but we’d rather spend our bigger – Mark Andrews
ting into expandable graphite
products for fire retardant
building materials. They get
most of their products value-
added already or processed
to a certain point.”

Peninsula is targeting large
flake graphite – which at-
tracts a premium price and
can be fed into the expand-
able graphite industry – and
graphite that is amenable to
a high purity concentrate for
the lithium-ion battery anode market.

While the products and target markets
are in line with its peers, Peninsula is
banking on its alternative strategy as a
point of difference to the competition.

“Finding some supply, moving our own
projects and maybe even getting involved

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 83

BATTERY MINERALS CONFERENCE PREVIEW

Panoramic raises restart cash

While nothing is official, Panoram- The wheels are in motion for a potential restart of Panoramic’s Savannah
ic Resources Ltd has given the nickel mine in WA’s Kimberley region
strongest indication yet it is preparing to
restart the mothballed Savannah nickel “When you look at it all, you think further price rises for nickel in 2018 as
mine. ‘crikey, there’s quite a bit to get done’, but more information comes to hand about
we’ve got a good team of people in here the role of the traditional stainless steel-
At the time of print, the company and everyone’s really excited,” he said. making ingredient in battery technolo-
closed an oversubscribed one-for-seven “The nickel price is at a two-year high gies.
pro-rata renounceable entitlement offer and pretty close to a four-year high, so
to raise $20.9 million (before costs) at an I think that’s helping a lot to get people Nickel sulphate has been identified as
offer price of 34c/share. confident that we can restart this project. a desirable product for some of the bat-
When you look at the numbers, it makes teries which will power many of the elec-
Up to $12.9 million of those funds are good money at these prices.” tric vehicles slated to come online over
flagged for restart activities such as pro- the next decade.
cess plant refurbishment and the Savan- An updated feasibility study released
nah North ventilation project. last October indicated Savannah could Harold said while he remained bull-
be rebooted for an upfront capex of $36 ish on the supply-demand dynamics for
Panoramic’s share price was 38.5c million, with a further $204 million re- nickel in the stainless steel industry, he
when the offer was announced and hit quired over the life-of-mine. was particularly buoyant about the new
50c just before the record date on Feb- opportunities emerging.
ruary 1. Using a base case nickel price of
$US5.50/lb, Savannah is forecast to “There is an interesting dialogue going
It is the first raising the company has produce 10,800 tpa nickel, plus copper on in the industry at the moment because
undertaken since pocketing $10.7 million and cobalt credits, over an estimated 8.3 clearly nickel sulphate is a product that
in April 2016, one month before officially years of mine life for an average operat- the battery market needs,” he said.
shuttering Savannah in Western Austral- ing cost of $US2.40/lb.
ia’s Kimberley region. “Down the track we will look at whether
Other key numbers from the updated there is a viable process route to take our
Panoramic managing director Peter feasibility study included a pre-tax NPV concentrate straight the way through to
Harold said the raising would allow his of $210 million, IRR of 100% and reve- nickel sulphate. The technology definitely
company to “keep moving forward” while nue of $1.47 billion over the life-of-mine. exists, there’s just not a lot of commercial
waiting for rising nickel prices to demon- plants around the world right now. But,
strate long-term stability. Harold said excitement was building over time that will change.
inside the company’s Perth office after
“We can progress the things that need a tough two-year slog which also saw “We’re moving into an age where the
work and that will help to minimise the re- Panoramic place its Lanfranchi opera- growth for nickel has historically been
start time when we do actually press the tion, near Kambalda, on care-and-main- limited to stainless steel – and I think
button,” Harold told Paydirt. tenance. that’s still a very robust area of demand
for nickel – but in terms of growth from
“We could have done a smaller raising “It’s been a great team effort by a very a low base, nickel in batteries is where
or we could have done a larger raising, small and dedicated team,” Harold said. you’re going to see some big upticks.
but because we haven’t decided to press “The flipside is people have hung around
the button on the restart yet we figured because they can see there is a future. “I’ve seen some numbers where cur-
this was a reasonable number. At times it’s been a challenge to keep rently it’s about 60,000 tpa, but by 2025 it
that positive focus, certainly when you could be anywhere between 200,000 tpa
“When you look at the use of funds, have some sort of price rise and then it and 600,000 tpa, depending on which
we’ve got some money going towards pulls back again.” forecasters you believe.”
the plant refurbishment, some money to-
wards some of the longer lead items like Market commentators are anticipating – Michael Washbourne
the debt raise and some of the other bits
and pieces that allow us to basically de-
risk the project and keep moving forward
while we don’t have a full crew of people
on board and the mining has started.”

Other key restart activities set to be
allocated funding include off-take and
financing discussions and tendering of
major contracts.

The remaining funds will be divided
between exploration and business de-
velopment initiatives, including regional
drilling and EM surveys over the Savan-
nah project area, plus general corporate
expenses and working capital.

Harold said his company had “a bit of
work to do” before it would be able to of-
ficially push the button on a restart, par-
ticularly on the marketing, financing and
contracting side of things.

PAGE 84 MARCH 2018 AUSTRALIA’S PAYDIRT

wherever we are
trend with us

#paydirtmedia #magazines #conferences

Orion Minerals Ltd’s Prieska copper-zinc mine,
South Africa, 2018

BATTERY MINERALS CONFERENCE PREVIEW

Cracking the cobalt code

Cobalt Blue Holdings Ltd is ready mid-2018 with ongoing bulk metal-
to carve its own place in Broken
Hill folklore. lurgical test work, environmental,

Spun out of Broken Hill Pros- geotechnical and hydrogeological
pecting Ltd a little more than 12
months ago, Cobalt Blue was one studies to be factored into the final
of Australia’s first movers on the
latest battery mineral to captivate document.
the market. Now, the company has
set its sights on developing a large, “Thackaringa has the potential
low-cost cobalt sulphate refining
operation in the outback town. to become one of the biggest low-

Bulk metallurgical test work re- cost cobalt sulphate refining op-
sults are supporting the company’s
bid as it prepares to release an erations in the world,” Kaderavek
upgraded resource for the Thacka-
ringa cobalt project, 23km from the said.
Broken Hill town centre, as well as
a PFS over the coming months. “Cobalt sulphate, used for bat-

Investors also appear to be con- tery making, will become the larg-
fident Cobalt Blue can deliver on its
promises with the company’s stock up est growth segment within the
more than 200% since October, having
peaked at 89c/share in November. cobalt market over the next 10-15

“The test results have created consid- years. It will be lucrative but chal-
erable excitement in the market,” Cobalt
Blue chief executive Joe Kaderavek told lenging, as specifications evolve
Paydirt.
to make batteries for tomorrow’s
“We upgraded the ore to a 0.4% co-
balt concentrate, whilst recovering 92% electric vehicles and renewable
of the cobalt, with a simple coarse crush
and gravity circuit, and this was achieved Cobalt Blue is seeking to unlock the cobalt potential storage.”
while deporting only 17% of the ore to the of the Broken Hill mining district Cobalt Blue last month signed a
refinery. MoU with fellow Broken Hill-based

“Think about that for a moment; refin- “The scoping study [reported in July] junior Havilah Resources Ltd to carry out
ing is where the bulk of the costs and a
large portion of plant capital is commit- identified a broad range of develop- due diligence on the latter’s Mutooroo
ted. Our refinery will be a fraction of the
size of the mining operation as a result.” ment options. In particular, we assessed copper-cobalt deposit by the end of April.

Subsequent testing has seen Cobalt whether established metallurgical pro- Mutooroo and Thackaringa are believed
Blue treat 40kg of concentrate through
a calcine furnace and 8kg of calcine cesses currently used globally to unlock to have similar pyrite-hosted cobalt ores.
through a leach circuit. Calcining the
gravity concentrate – and thus eliminat- other metals from pyrite ores, such as Havilah will provide a representative
ing the need for acid production – re-
moved about 35% of sulphur from the py- gold, could be used to unlock cobalt.” 10kg sulphide ore sample from Mutooroo
rite, with the resulting elemental sulphur
condensed from the gas phases averag- Cobalt Blue is aiming to deliver a 40mt for laboratory test work. If successful,
ing 97.5% sulphur and 1.5% silica as the
main contaminant. indicated resource for Thackaringa by both parties could join forces to com-

Cobalt Blue expects improved engi- the end of this month following a recent mercialise cobalt from the region west of
neering design of the off-gas handling
to boost the quality of the sulphur in fu- drilling programme which returned hits Thackaringa.
ture test work. There were no losses of
cobalt to the gas phases in the thermal of 75m @ 1,207 ppm cobalt, 11.9% sul- Kaderavek said access to established
treatment step. Leaching of the calcine
achieved cobalt recoveries of up to 96%. phur and 11.8% iron from 149m and 99m facilities and experienced mining person-

“It’s important for investors to under- @ 1,185 ppm cobalt, 10.7% sulphur and nel in Broken Hill were a “game changer”
stand that the Cobalt Blue team is a fresh
set of eyes on Thackaringa,” Kaderavek 10% iron. for his company.
said.
Thackaringa’s current resource stands “Experienced investors understand

at 54.9mt @ 910 ppm cobalt for 49,986t, that people, power/energy, road/rail

with only 6.5mt @ 951 ppm cobalt for transport, water and consumables form

6,182t classed as indicated, using a 500 the key cost lines for most integrated

ppm cut-off. mining operations,” he said.

A PFS and maiden reserve are due “Broken Hill and surrounding infra-

structure provide low-cost utilities and

resources that will enable the Thackar-

inga project to thrive.”

With cobalt prices up 126% in 2017

and continuing to rise this year, Cobalt

Blue is bracing for another big 12 months

which could culminate in the start of a

BFS if all goes to plan.

“A key feature of the next 12 months

will be large-scale proof of our innovative

metallurgical processing, which will con-

siderably de-risk the project,” Kaderavek

said.

“Our focus remains to prove up a long

life, world-scale operation capable of

operating through the next cobalt cycle.

Shareholders will enjoy the journey.”

A resource upgrade for Thackaringa – Michael Washbourne
is due this month

PAGE 86 MARCH 2018 AUSTRALIA’S PAYDIRT

Barra bites early

While some companies have just
started to flirt with cobalt, Barra Re-
sources Ltd has followed the blue metal

for quite some time.

Mt Thirsty, a JV between Tasman Re-

sources spin-out Conico Ltd and Barra,

has been marinated on for the best part

of a decade, making it one of the more

advanced cobalt plays on the ASX – a

fact Barra is determined to promote this

year.

“Our projects are in the stable West

Australian goldfields close to significant

existing infrastructure. Mt Thirsty is sig-

nificantly advanced compared to many

other cobalt projects still in exploration

phase. This solid base will enable us to

rapidly move along the project develop-

ment curve,” Barra managing director

Sean Gregory told Paydirt.

“Barra has been a long-term believer

in the cobalt story for more than a dec- A scoping study on the Mt Thirsty JV was completed in mid-October

ade. We have significantly progressed

our Mt Thirsty project through to a scop- assumption of an average life-of-mine “The ‘scoping’ title of the study really

ing study announced to the market in Oc- cobalt price of $US72,000/t based on a belies the quality of the drilling, resource

tober 2017.” number of long-term forecasts from lead- estimation, metallurgy and plant design

As the market starts to digest the op- ing global banking and broking houses,” over many years and many iterations.

tions available for investment in the co- Gregory said. The results are robust and provide a very

balt space, Barra may well appear front “The spot price [as at January 31] is solid base case to launch into the next

of mind given there are some numbers higher at $US80,000/t. When you look stage,” Gregory said.

on Mt Thirsty – 20km north of Norseman forward at the fundamentals of the elec- “The input assumptions are appropri-

– to consider. tric vehicle market, the scarce nature of ately conservative. The next phase of

Using a cut-off grade of 0.06% co- cobalt, and the fact that cobalt is only a detailed studies will further improve the

balt, an indicated and inferred resource small proportion of battery costs, it is not study economics in all areas. For ex-

of 31.9mt @ 0.13% cobalt, 0.55% nickel hard to see an environment for unbridled ample, further metallurgical test work of

sulphide and 0.86% manganese is the price appreciation in cobalt. I expect that alternative, yet still simple, flow sheets

current estimate at Mt Thirsty. cobalt will emerge as a strategic metal will target higher cobalt and nickel metal

Mt Thirsty looms as a potentially viable where auto makers and battery manufac- recoveries.”

source of cobalt for 21 years, with scop- turers will be seeking to secure long-term Amid rising nickel and cobalt prices,

ing study numbers indicating a through- supply.” Barra and Conico will be in the thick of

put of 1.5 mtpa could produce about Mt Thirsty’s role in the cobalt market the action at Mt Thirsty, with the former

6,000 tpa of a mixed sulphide product. will become clearer as planning for a also embarking on gold exploration pro-

Atmospheric agitated leaching engag- PFS was well under way at the time of grammes at Burbanks and Phillips Find

ing sulphur dioxide as a reagent was the print. in WA.

preferred mode of processing “That is consistent with our

used in the scoping study to dual commodity strategy,”

extract 73% of the cobalt and Gregory said.

21.5% of the nickel. “We have planned a multi-

Development of Mt Thirsty channel marketing programme

would command an estimated for 2018 with presentations at

capital cost of $212 million, with the Battery Minerals Confer-

operating costs of $43/t of feed. ence and other industry leading

A cobalt price of $US72,000/t, conferences every month in the

nickel price of $US15,500/t and first half of 2018. This market-

exchange rate of 74c to $US1 ing will of course be backed up

was used to produce a NPV with fundamental work ramp-

of $290 million in the scoping ing up our studies to progress

study. the project through the various

Since October, spot cobalt milestones.”

prices have increased again. PFS work at Mt Thirsty, near Norseman, will start this year – Mark Andrews
“The scoping study used an

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 87

BATTERY MINERALS CONFERENCE PREVIEW

MetalsTech seeks
strategic partners

MetalsTech Ltd is gearing up ness by them to invest in early-
for an aggressive 12 months
of drilling across its suite of stage projects in an effort to
lithium projects in Canada after
electing to pursue a separate list- secure potential future supply,”
ing for its cobalt assets.
Moran said.
The Cancet and Adina lithium
projects in Quebec were central “It is important to understand
to MetalsTech’s IPO in February
2017, but with cobalt emerging as that lithium is not actually a
another key battery mineral, the
newly listed company was en- rare commodity – there’s a lot
ticed to add to its already promis-
ing portfolio. of it – there just happens to not

MetalsTech acquired the Bay be enough production to keep
Lake cobalt project in March
and made a move on the former up with the current rapid de-
Rusty Lake cobalt-nickel-silver
mine in November. Both assets mand growth. This imbalance
are located in neighbouring On-
tario. will change with time and by

With cobalt prices continuing to soar, building our business around
the company announced late last year it
would spin out its cobalt projects via an a beneficiated product model
IPO into upcoming float iCobalt Ltd (see
page 89). with strategic partners we will

MetalsTech executive chairman Rus- be able to maximise our suc-
sell Moran said shareholders had wel-
comed the decision to chase dedicated cess and insulate ourselves
funding for the cobalt assets without di-
luting the capital structure. from a potential cooling of the

“We believe in the case of the com- MetalsTech has high hopes for its Cancet market in later years.
pany’s cobalt and lithium assets, the lithium project in Quebec, Canada “We’re seeking to bring in
sum of the parts is actually greater than partners with the expertise to
the whole, and shareholders will receive
significantly more value through devel- drilling mid-year following an extensive not only help us finance the production
opment of the two [commodities] through
separate vehicles, each with focused field mapping programme. of spodumene concentrate, but also pro-
management and dedicated funding,”
Moran told Paydirt. “We’ve had tremendous exploration vide us with the technical expertise and

“The share structure of the new cobalt success at Cancet to date,” Moran said. funding to deliver a beneficiation strategy
venture is very tight and MetalsTech will
retain its exposure as its largest share- “Initially it was all about confirming a whereby we would essentially use our
holder.”
high-grade shallow deposit, which we projects as a spodumene concentrate
MetalsTech’s decision to focus solely
on lithium is also justified by explora- have done, but now we’re firmly focused feed for a centralised lithium hydroxide
tion results returned from Cancet during
2017. Some of the better drill intercepts on extending strike and identifying areas and/or lithium carbonate facility.”
were 18m @ 3.71% lithium oxide from
8m, 21.5m @ 2.24% lithium oxide from to grow tonnage.” MetalsTech has already struck a stra-
5m, 17m @ 2.06% lithium oxide from 6m
and 15.9m @ 1.82% lithium oxide from A maiden diamond programme com- tegic agreement with Shenzhen-listed
18m.
prising 15-25 holes for about 2,000m of leading chemicals manufacturer Wuxi
An exploration target of 15-25mt @
1-2% lithium oxide and 100-250 ppm drilling began at Adina last month, with Baichuan Chemical Industrial Co (BCC)
tantalum pentoxide has been estimated
for Cancet, with the company to resume the initial focus being a 350m by 2km to take a circa 10% stake in the company.

outcropping pegmatite where up to 3.2% The deal is expected to deliver $1.8

lithium oxide has been assayed from sur- million in funding to MetalsTech, which

face. reported a healthy cash position of $2.1

Maiden exploration of the company’s million at the end of 2017.

other lithium projects – Terre des Mon- Moran said landing a strategic partner

tagnes, Kapiwak and Wells-Lacourciere so early in a company’s lifecycle was a

– is also on the agenda for 2018. huge advantage for an emerging explor-

MetalsTech is the brainchild of Perth- er.

based businessmen Moran and Gino “Strategic investors are not looking to

D’Anna, with the pair initially looking to trade equity; they’re looking to use their

establish a company which would ul- equity position to garner a seat at the ta-

timately produce a spodumene con- ble when it comes time to work out who

centrate on site and on-sell that to an gets to buy the product,” he said.

end-user who would complete the ben- “It’s about striking a win-win deal with

eficiation process. someone who wants to see a project de-

As excitement continues to build in the veloped just as much as you do.

battery and electric vehicle industries, “Strategic equity, as opposed to retail

MetalsTech is looking to produce its own equity, promotes a tight, stable register

lithium chemicals and has started engag- where everyone is rowing the boat in the

ing with potential strategic partners to as- same direction.”

sist with this revised strategy. – Michael Washbourne
“There is genuine panic amongst end-

users and this has translated to a willing-

PAGE 88 MARCH 2018 AUSTRALIA’S PAYDIRT

iCobalt set to spin new tune

Battery minerals enthusiast David Upcoming float iCobalt will begin serious exploration of the Bay Lake
Riekie has dabbled in graphite and cobalt project in the coming months
lithium plays in recent years, but it is the
opportunities emerging in cobalt which ship and has assayed up to 15.36% co- and scratch a few channel samples and
are driving his latest career move. balt, with 1.17% cobalt and 7.7 g/t silver rock chips to find out what might be there.
recovered from a surface “dump” pile at We already know it’s there, it’s just a mat-
“I think people are starting to realise the Van Chester (Last Chance) prospect. ter of building on that knowledge and try-
that of the commodities in lithium-ion bat- ing to interrogate how big and how good
teries, cobalt is a bit of a magic ingredi- MetalsTech moved on Rusty Lake in it could be.
ent,” Riekie told Paydirt. November before announcing its inten-
tions to spin out its cobalt assets the “It’s a good place, not too many peo-
“I’m very, very bullish about it. I don’t following month, with iCobalt to inherit ple there – yet – but I reckon that might
think the sleeping giant in China has the option to acquire 100% of 52 mining change with any increased level of activ-
emerged yet, because when they start claims, including the historic mine which ity and interest around it.”
to change over the cars, the trucks, the operated across three separate incarna-
scooters and everything else that goes tions last century. Riekie said the opportunity to source
with it, there’s going to be this massive a “conflict mineral” from an established
demand that won’t be able to be fed by Grades of up to 15.36% cobalt have mining region was also driving strong in-
current outputs. been assayed at Bay Lake vestor interest.

“Having seen what the Chinese require Recent surface sampling at the Rusty MetalsTech founders Russell Moran
and desire, it needs to be high quality, Lake mine, 15km south of Gowganda, and Gino D’Anna will join Riekie and
low cost and there needs to be lots of it.” yielded assays of up to 11.85% cobalt Qingtao Zeng on the board of iCobalt,
and 8.64% nickel and more than 10,000 with respected geologist Cherie Leeden
Riekie – the former managing director g/t silver from stockpiles off the main recently appointed vice-president of ex-
of Avonlea Minerals (now AVZ Minerals shaft, as well as angular boulders. ploration.
Ltd) – is heading upcoming float iCobalt
Ltd, a spin-out of Canadian lithium ex- “There aren’t too many enterprises op- Riekie and Leeden have worked along-
plorer MetalsTech Ltd’s non-core cobalt erating out of the ASX that have an op- side each other for many years, most re-
assets. portunity like this in a Tier One jurisdic- cently at Mozambique-focused graphite
tion like Canada,” Riekie said. hopeful Battery Minerals Ltd (formerly
iCobalt plans to list on the ASX via a Metals of Africa).
$4.5 million IPO, with a priority offer for “Juniors normally have the task ahead
eligible MetalsTech shareholders. Upon of them to actually scratch a few holes “Cherie has demonstrated time and
listing, the new company is expected to time again her ability to explore, discov-
have an undiluted market capitalisation er, uncover, optimise and go through the
of $9.1 million and an enterprise value of whole process of resource definition to
$4.6 million. very positive feasibility study outcomes,”
Riekie said.
A prospectus is set to be lodged with
the ASX sometime this month. Alto Capi- “She’s come on board on the basis of
tal has been appointed lead manager of what she sees as a really unique oppor-
the IPO. tunity in cobalt, just like I did. We’re both
very excited about getting boots on the
Riekie said he had been “bowled over” ground in the next couple of months.”
by some of the early investor inquiries for
iCobalt. – Michael Washbourne

“I’ve been quite astounded by the level
of interest for a relatively small market
cap opportunity,” he said.

“The interest has been quite extreme.
I think people are realising we’ve got a
lot of upside and we’re going to have a
very modest market cap on a fully diluted
basis of about $9-10 million.

“If you’ve got some near-term explora-
tion opportunity and potential emerging
like we have, you can quickly re-rate and
command a much higher market cap.
That’s what I like about it.”

The two projects central to iCobalt’s
IPO are the Bay Lake cobalt project (ac-
quired by MetalsTech shortly after its
own listing early last year) and the former
Rusty Lake silver-cobalt-nickel mine.
Both projects are in Ontario.

Bay Lake is 10km south-southwest of
a historic cobalt mining camp and town-

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 89

BATTERY MINERALS CONFERENCE PREVIEW

Talga deepens its
commercialisation ties

Talga is returning to exploration on its Swedish ground, this time on the hunt for cobalt

Away from the science fiction-like pre- Thompson said the graphene en- with brand name car companies and
dictions of graphene’s future applica- hanced resins could dramatically change major industrial groups is unusual, most
tions, Talga Resources Ltd continues to the 2.5 mtpa global epoxy market. other companies are doing deals with
make headway in more prosaic sectors. traders, and I think it has been massively
“If we can replace a lot of the zinc underestimated by the market.”
Talga has been at the vanguard of with a small amount of graphene, it will
graphene development since identifying lower the cost per litre and improve per- Regardless of market response, Talga
a low-cost processing flowsheet for the formance, which will lead to the amount will plough on with research and devel-
ultra-thin material in 2014. And, while it of zinc galvanising needed reducing,” opment associations as it attempts to de-
is still investigating a number of “space- Thompson said. “It then becomes a mar- fine the most appropriate of the nascent
age” uses for the carbon product, the ket where we take over from traditional graphene applications.
company’s route to commercialisation base metals applications rather than
appears to be heading towards tradition- new ones.” “Companies are still coming to us, usu-
al industries such as coatings, compos- ally via conferences or open channels,”
ites and concrete. In the battery space, Talga continues Thompson said. “We want to grow a lot
to pursue breakthroughs in the use of larger, so we are growing the sales and
Talga managing director Mark Thomp- graphene in lithium-ion anodes while it marketing team and employing experi-
son told Paydirt the company’s research has also struck a non-binding MoU with enced people to handle customers and
continued to prove graphene could be- German engineering giant Bosch over a grow new ones.”
come a sought-after material in a num- development project in the field of utilis-
ber of different applications. ing graphene in the synthesis of macro- Taking its graphene product to end-
scopic structures. users is a deliberate part of the Talga
“We are very happy with how existing strategy.
applications can be positively enhanced Like a number of its joint development
with graphene,” Thompson said. agreements, Talga’s association with “We are not trying to be a raw materi-
Bosch is shrouded in commercial confi- als producer. We want to be a graphene
In the December quarter, Talga made dentiality, making it difficult for the junior producer so customers can engage with
advances on the use of graphene in large to express to the market precisely how its us directly. That will give us time to build
volume epoxy resin products used in the story is developing. and implement the right size of operation
global coatings industry. Performance for everyone.”
testing displayed a 160% increase in ten- “We have joint venture development
sile strength, 80% increase in abrasion agreements with an affiliate of BASF, The aim, therefore, is to become fully
resistance and two orders of magnitude with Jaguar-Land Rover through the Far- vertically-integrated, meaning the mining
decrease in corrosion rates over zinc- aday Challenge funding and with Bosch,” story remains integral to Talga’s com-
rich epoxy. Thompson said. “Being in programmes mercialisation strategy.

“When companies look at ways to pro-

PAGE 90 MARCH 2018 AUSTRALIA’S PAYDIRT

duce graphene, they see a sup- down the graphene rabbit war-
ply chain which is very long; there
are few companies who make ren, how does the company
graphene that have their supply
of raw material under control,” incorporate a new exploration
Thompson said.
story?
“Our strategic point of differ-
ence is that we will have the min- “We have many choices and
ing, processing, production and
the final product under our con- are looking at a range of options
trol; we could even retail products
to the average consumer but that for the commercialisation of the
isn’t a leap we want to make at
this stage.” Thompson said. assets,” Thompson said. “The

Not only does Talga have the company could spin them out or
advantage of controlling its own
source of raw material, it can also demerge them or we could keep
boast of its Vittangi project being
located in a premier mining juris- doing work and set some signifi-
diction.
cant value for them.”
“Being based in Sweden, we
can rely on what is a long-term Cobalt’s recent surge has
investment jurisdiction with sus-
tainable, clean hydropower, best prac- been fuelled by its use in lithium-
tice and a developed economy; there
are very few companies which can offer ion batteries and Thompson is
that.”
keen to remind everyone of Tal-
Talga has been operating a test facil-
ity in Germany for three years, having ga’s origins in Sweden.
completed a scoping study on Vittangi
in 2014. Thompson said mining feasibil- “It is going back to the original
ity studies continued with the company
working together with customers to find Talga strategy; that is a long-
the most suitable volumes and econom-
ics for the operation. term view of the EV market,” he

“We feel comfortable that we are max- said. “That hasn’t changed and
imising our opportunities,” he said.
Mark Thompson while there are sure to be ups
Talga’s move to Sweden was predicat-
ed on an impending EV revolution and and downs in the cobalt price
while the battery market is only one of
several applicants Talga is investigating from 33.75m, including 22.8m @ 0.34% why should we ask for $10 million for
for its graphene product, its secondary
project remains wedded to the emer- cobalt and 0.13% copper from 54m. these assets now if we could do some
gence of EVs.
Thompson said the company planned work on them and get their value up to
In October, the company announced
new drilling results from the 100%-owned to step up work on Ahmavuoma during $50 million?
Ahmavuoma cobalt project in northern
Sweden. The drilling returned hits of 2018. “We will make a decision in our own
73.1m @ 0.16% cobalt and 0.24% copper
“These could be significant cobalt as- time. Cobalt demand is not going away

sets and we are not far away from con- any time soon and the people we speak

verting them into resources,” Thompson to in the car industry know there are

said. growing issues with supply so if they

Cobalt exploration has mushroomed could avoid those issues, they would.”

across the globe as explorers aim to DRC undoubtedly has the best cobalt

take advantage of soaring prices. While deposits in the world but issues of con-

admitting deposits in the DRC remained flict minerals and the current political

geologically the most attractive, Thomp- situation in the country mean doubt con-

son believes Ahmavuoma could prove tinues to be cast on its ability to supply

more attractive than other European and regularly to the booming EV market.

North American cobalt finds. “DRC has a fairly risky supply chain;

“The mineralisation is quite wide com- it doesn’t have great history of long-term

pared to the Canadian and European co- supply to Asia and the cobalt assets

balt deposits; 30-60m in some parts,” he are in hands of relatively few people,”

said. “There is also copper and gold as Thompson said. “So, something it is to

sellable by-products, and it already has be strategically dealt with and that means

good infrastructure and is within trucking the long-term potential for mining cobalt

distance of a cobalt smelter in Finland in Scandinavia becomes compelling.”

and Boliden’s smelter in Sweden.” – Dominic Piper
With Talga’s time increasingly spent

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 91

BATTERY MINERALS CONFERENCE PREVIEW

No rest for Northern Cobalt

Northern Cobalt Ltd has barely on stream really quickly.”
come up for air since listing Further metallurgical test

on the ASX in late September. work is also likely to see the

Within a fortnight of complet- company upgrade portions of

ing a $4.21 million IPO, the the Stanton resource to indi-

company was on the ground at cated status by mid-year.

its Wollogorang cobalt project, Northern Cobalt’s confidence

about 870km south-east of Dar- in Wollogorang recently saw

win in the Northern Territory, for the company expand its tenure

resource drilling of the Stanton from 1,131sq km to 4,986sq km

deposit. following the addition of five

“We had a lot of pre-organi- new tenements surrounding the

sation to do prior to listing, but initial three permits which made

we managed to get that done up the project.

because we had a window of “Not long after we formed

opportunity to drill up in North- the company and decided to

ern Australia before the oncom- Northern Cobalt drilled more than 7,000m during its take it to an IPO, we had a look

ing wet season,” Northern Co- initial campaign at Wollogorang around the vendor’s tenements

balt managing director Michael and realised there was a lot of

Schwarz told Paydirt. sediment-hosted mineralisation system ground that was still vacant but had really

“It was quite a successful drilling pro- which has the potential for low capital good potential,” Schwarz said.

gramme. We’ve done in excess of 70 drill and operating costs due to the non-re- While the original premise of the com-

holes within the resource and then an- fractory and cobalt-dominant nature of pany was based around exploiting the

other 57 drill holes in the local area look- the orebody. cobalt potential of the Northern Territory,

ing for further extensions of that deposit.” Northern Cobalt is aiming to finalise a Northern Cobalt made the strategic deci-

Some of the best drill hits from the scoping study by mid-year, with Schwarz sion to add a lithium project to its portfo-

campaign – which covered more than keen to get the ball rolling on several lio shortly after the IPO.

7,000m – were 37m @ 0.28% cobalt, long-lead items which allow for the com- The company finalised its acquisi-

18m @ 0.33% cobalt, 20m @ 0.33% co- pany to take advantage of a buoyant co- tion of the Arunta lithium project, 180km

balt, 15m @ 0.21% cobalt and 19m @ balt market. north-east of Alice Springs, last month

0.29% cobalt, as well as several individ- “There’s some long lead team items and will soon undertake exploration work

ual metre grades of up to 2.13% cobalt. such as environmental baseline stud- in conjunction with its activities at Wol-

An update of the current inferred re- ies, negotiating with landholders and a logorang.

source at Stanton – 500,000t @ 0.17% number of other factors which if you don’t “Lithium is part of the battery met-

cobalt, 0.09% nickel and 0.11% copper – address quite early can lead to lengthy als group – the same market sphere

is due in early March. delays down the track,” he said. “We we’re planning with cobalt – so we think

Results from scout drilling of regional want to address those early so that if and it’s a good fit,” Schwarz said. “It’s also

targets will be combined with recent geo- when the scoping study proves positive a chance for us to get some early runs

physics to define the next drilling pro- we can move full steam ahead towards on the board while we’re precluded from

gramme, slated to begin in April at the development. doing exploration up north when the wet

end of the wet season. “We really want to capitalise on the season is on.”

Northern Cobalt is one of several new position of the cobalt market at the mo- Few companies are exploring for

cobalt plays to have developed an im- ment. Even though it’s a relatively small battery minerals in the Northern Terri-

pressive following, with its share price resource, it’s still a high-grade project tory and that is one of the reasons why

comfortably sitting above the 40c mark and we think we have the potential with Schwarz believes his company can be a

since debuting on the bourse. the metallurgy here to be able to bring it frontrunner in the sector.

“I think it reflects the quality of “It’s a cheaper entry into the

the assets we’ve got, the explo- ground because it’s not strongly

ration success and also the very, contested, which is always good

very tight capital structure we’ve value for shareholders,” he said.

had since the IPO,” Schwarz said. “Northern Territory is a very fa-

“The results we’ve put out have vourable exploration and mining

shown that we’ve got a relative- jurisdiction, there is nowhere near

ly high-grade resource on our the bureaucracy that there can be

hands, which is more than a lot of in other states. It’s a lot easier to

other companies toying in the co- undertake the style of exploration

balt sphere have at the moment.” that we’re looking to do. That was

Following the release of the a critical factor in choosing this

final results from the drilling pro- area.”

gramme last month, Northern Co- Grades of up to 2.13% cobalt were intersected at Stanton – Michael Washbourne
balt confirmed the project was a

PAGE 92 MARCH 2018 AUSTRALIA’S PAYDIRT

Siviour’s sphere of opportunity

Renascor Resources Ltd Renascor is aiming to final-
has been given the tech- ise PFS-level economics on

nical green light to rigorously the various development op-

pursue downstream process- tions for Siviour by the end of

ing options for its Siviour the month, with the company

graphite project in South to then step up its ongoing

Australia. negotiations with potential

A scoping study released end-users.

last month confirmed the Chinese-based commod-

viability of building a down- ity marketing group Master-

stream facility in SA to pro- mines has been contracted

duce spherical graphite us- by the company to assist with

ing a portion of the graphite developing commercial rela-

concentrate to be produced tionships around off-take and

from Siviour. project finance.

Spherical graphite is a key “We’ve produced customer

input in a lithium ion battery samples and this puts us in

anode, with almost all of the a good position to start hav-

current global production ing more serious off-take dis-

coming from China. cussions with respect to not

Renascor managing direc- Renascor has flagged the likely production of spherical graphite only the concentrate, but we
tor David Christensen said from its Siviour project in South Australia can now start thinking about
the scoping study results that spherical plant as well,”

supported the “natural leverage” he al- Some of the key financials from the in- Christensen said.

ways suspected his company had in the tegrated operation were a post-tax NPV “We want to understand, both from a

graphite game. of $704.5 million, IRR of 53.5%, net reve- potential customer and strategic partner

“People have been looking for addi- nue of $5.6 billion, EBITDA of $3.1 billion base, whoever it may be, how best to fi-

tional exposure to the new energy story, and payback within 1.9 years. nance this project. So, over the next few

in particular lithium ion batteries and how “Assuming the Siviour graphite mine is months we expect to complete the PFS,

spherical graphite fits within that context, up and running, the idea here is to take get the mining lease application in, con-

in terms of going downstream and get- a portion of that output – the portion that tinue on with the metallurgical test work

ting a higher value-added product that would sell at the lowest price – use down- to get customer material verified under

gives you that more direct exposure,” stream processing and sell it as a higher the various markets, and then go out and

Christensen told Paydirt. value-add product,” Christensen said. see if we can get customers interested in

“We can produce a high quality con- “The other option involves potentially it by showing them the results and giving

centrate at Siviour at a low price and building a customer base. The one thing them samples.

that’s really what makes this spherical we’ve seen from some of the more ad- “Completion of the PFS is what opens

study work. If we can feed low-cost feed- vanced developers is it’s very difficult the door to getting ourselves in front of

stock into it, then it’s cheap to make the to get binding off-take contracts. You these customers.”

spherical graphite. It’s that simple.” can get some degree of MoUs, you can Graphite stories have been somewhat

Renascor assessed two development get some degree of contracts, but these shunned by the market in recent times

options in the spherical scoping study. aren’t bankable, which means it’s difficult as investors salivate over the opportuni-

Both cases assumed a projected spheri- to finance construction of a large-scale ties in other battery minerals, particularly

cal graphite sales price of $US3,250/t. project. lithium and cobalt.

The first was a standalone operation “One way you could untie this knot While Christensen acknowledged that

producing 30,000 tpa of spherical graph- is if you can’t get binding off-take con- graphite was “somewhat difficult to get

ite, requiring $77.1 million of start-up tracts from the market because they de- your head around”, he said its impor-

capital and attracting average operating mand that you’re in production first, we tance to the overall new energy narrative

costs of $2,199/t. might be able to build our own customer could not be underestimated.

Key financials from that scenario were base by producing a product – a spheri- “Graphite looks like it’s going to be

a post-tax NPV of $307.5 million, IRR of cal product by going downstream – that needed, based on the numbers we’re

59.9%, net revenue of $2.5 billion, EBIT- needs the graphite concentrate. We have seeing today and it’s increasing in de-

DA of $1.246 billion and payback within a couple of ways of dealing with it.” mand, for the anode,” he said.

1.7 years. Independent testing recently con- “It’s a more complicated story, but what

The second development option is an firmed Siviour could produce spherical has changed over the last six months is

integrated operation producing 123,000 graphite at “ultra-high” purity of 99.99% the price of graphite has picked up as

tpa of graphite concentrate, of which carbon, with the product meeting or ex- Chinese production has gone down and

60,000 tpa is processed into spherical ceeding industry specifications across all the demand for spherical graphite has

graphite, with the balance sold as graph- parameters tested, including BET (sur- increased.”

ite concentrates. A capex of $221 million face area), impurities, tap density, frac- – Michael Washbourne
was estimated for that model. tion size and ratio.

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 93

REGIONAL ROUNDUP LATIN AMERICA

Bright start for Oro Verde

Oro Verde Ltd has launched a gua, currently hosts a resource
fresh diamond drilling cam-
paign over its Topacio gold project of 2.71mt @ 3.9 g/t gold for
in Nicaragua after the final phase
of a recent trenching programme 340,345oz, using a 1.5 g/t cut-off,
returned the best grades to date.
but is only compliant with the Ca-
Drilling is being undertaken on
six gold-rich quartz veins – Mico nadian NI 43-101 reporting stand-
West, Mico Central, Topacio, Dos
Amigos, Dispute, Lone Star – and ard.
is expected to be completed early
next month. It is understood more than

Large quartz veins were inter- 100,000t of gold has been mined
sected in 38 of the 40 trenches
recently dug at the project to test from the areas which Oro Verde
15 distinct zones or subdivisions
of major gold-bearing veins in the is currently targeting and Bright
central Topacio district.
hopes a new approach and fresh
Among the best results returned
from the trenching were 5.25m @ set of eyes will help crack Topa-
11.75 g/t gold at the Su Majestad
vein, 4.45m @ 11.6 g/t gold at To- cio’s geological code.
ronto, 2m @ 14.15 g/t gold at Topa-
cio East, 20.5m @ 4.83 g/t gold at Topacio is proximal to B2 Gold
Mico Central and 3.6m @ 7.18 g/t
gold at Su Majestad. Corp’s 1.8 moz La Libertad mine

New Oro Verde chief executive and shares similar structural quali-
Doug Bright joined the company dur-
ing the back-end of the trenching pro- ties to Condor Gold plc’s 2.9 moz
gramme, but said he was pleased to
have inherited such promising results. La India project and B2 Gold’s 3.5

“They covered 15 separate quartz moz El Limon mine.
reefs and all of them are consistent
along strike as far as we can tell,” “A lot of these old workings are
Bright told Paydirt.
very overgrown and you don’t re-
“We haven’t tested this with drilling
yet, but we’re obviously about to em- ally know what’s in there, so it’s
bark on that and we’ll try to go a bit
deeper than they have in previous drill going to take a very careful pro-
programmes. From what we know in
the existing historical workings, there gramme to actually get back into
is remarkable persistence at depth.”
Oro Verde is embarking on a new diamond drilling those workings and map them
Bright said the diamond drilling was campaign at Topacio in Nicaragua properly,” Bright said.
likely to cover no more than 500m in “There’s a very high rate of du-
total, with individual holes going no
deeper than 50-60m. times the time spent moving a rig almost plication of grade here and the fact you

If this short drilling campaign re- exceeds the cost of time spent doing the can duplicate these sorts of grades when
turns more positive results, Oro Verde
will investigate mobilising a larger rig drilling, so we’re trying to put the money you go back to the trench and take an-
to site which is capable of traversing
across the tricky terrain at Topacio. where it really matters at present.” other sample from the same place is a

“We’re going for the targets which Topacio, in the south-east of Nicara- very positive sign.
present the most favourable surface
indications to begin with,” Bright said. “We have a high level of confidence

“Because the logistics are tough, in those grades which are being ex-
we don’t want to spend a lot of time
trying to move the drill rigs through posed, but whether or not that trans-
dense rainforest, so the particular tar-
gets we’re looking at are those which lates into something at depth, we
are more readily accessible. It’s a
fairly laborious exercise and some- don’t know yet. We want to see what

the vertical distribution is and that’s

why we’re doing this current drilling

programme.”

With less than $1 million currently

in Oro Verde’s bank account, Bright

knows he will soon have to tap the

market or find a new JV partner for

exploration work to continue at Topa-

cio.

Newcrest Mining Ltd withdrew from

a lucrative JV last August after almost

two years of providing crucial explora-

tion funds.

“It strikes some people as being

rather bizarre that you actually raise

money and put it straight into the

ground, but that’s how junior explora-

tion works,” Bright said. “It’s always a

bit of a gamble, but of course the re-

turn will come down the line, particu-

larly if you can strike something with

these sorts of grades.”

Recent trenching work at Topacio has returned – Michael Washbourne
the best gold grades to date

PAGE 94 MARCH 2018 AUSTRALIA’S PAYDIRT

LATIN

AMERICA

16-17 May 2018

Pan Pacific Perth

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REGIONAL ROUNDUP

Centaurus strikes rare double

Centaurus Metals Ltd has taken ad- Centaurus has acquired the Itapitanga nickel-cobalt project in Brazil’s highly
vantage of a rare double chance to acclaimed Carajás mineral province
grab a project prospective for trending
commodities, hosted in a region where cobalt and 1.63% nickel from rock chips. gets at Salobo West.
the company is trying to build a solid foot- A short RC drilling campaign is set to fol- “You can’t underestimate or downplay
print. low once that work is completed.
the quality of this project,” Gordon said.
Last month the company acquired the “We’re not expecting too many sur- “Whilst we’re doing work at Itapitan-
Itapitanga nickel-cobalt project in Brazil’s prises in terms of grade, simply because
acclaimed Carajás mineral province from we think what we see sitting up the road ga now, we still think Salobo West is
a private vendor for a total consideration at Jacarѐ is going to be fairly consistent a cracker of a project. In my mind, it’s
of up to 3.3 million real. coming down on to our ground,” Gordon an opportunity that a junior company
said. doesn’t usually get, to have that sort of
Itapitanga is at the southern strike ex- quality ground in close proximity to other
tent of Anglo American plc’s Jacarѐ nick- “From a grade point of view, we’re major mines.”
el-cobalt deposit, which hosts a 307mt @ hopeful we can demonstrate it’s fairly
1.3% nickel and 0.13% cobalt resource, consistent, but the main thing will be try- Centaurus is likely to send the RC rig
including a high-grade cobalt resource ing to prove the depth of the profile, and which is about to start drilling into Itapi-
containing 185mt @ 1.2% nickel and that’s obviously going to require some tanga over to Pebas, which is also not
0.18% cobalt. RC drilling.” impacted by heavy rainfall in the region,
once the work at the former is completed.
Brazilian behemoth Vale SA also hosts Preliminary work at Itapitanga will keep
an array of nickel-cobalt resources in the Centaurus busy until it can move across As the company prepares to mark the
region. to Salobo West, which is largely off-limits 10th anniversary of setting up base in
from December until April due to heavy Brazil, Gordon acknowledged it was still
Centaurus geologists have confirmed rainfall in that part of the Carajás. a challenge to win over the Australian
the presence of the same nickel-cobalt investment community due to “misguid-
mineralisation hosted at Jacarѐ across Centaurus acquired the northern tene- ed” perceptions of doing business in the
multiple locations at surface over a ment at Salobo West last June and was South American country.
4.5km strike extent at Itapitanga. granted access to the southern permit in
November. It is considered by the com- “There’s no doubt that Brazil, as a
Itapitanga is the third project Centau- pany to be the “priority” project in its port- country, has gone through a pretty tough
rus now holds in the Carajás, alongside folio. time of it in the last 3-4 years, just from
the Salobo West IOCG and Pebas cop- being in recession, high interest rates
per-gold project. Geophysical work, including IP and and inflation, all sorts of things,” he said.
EM surveys, was completed over Salobo
Centaurus managing director Darren West last year. Initial drilling also returned “There’s a bunch of things happening
Gordon said his company was constant- a number of promising cobalt hits at the at the political level now; they now have
ly reviewing new opportunities emerging Serendipidade target, including 10m @ a president who can make decisions and
from the region. 0.09% cobalt and 0.14% copper from actually try to push through reform agen-
18m (including 3m @ 0.18% cobalt and das, so I think that all bodes well for the
“We’re not hung up on commodity fo- 0.31% copper), 4m @ 0.16% cobalt and country and for us being there at this par-
cus so much, but we like the area,” Gor- 0.94% copper from 13m, 6m @ 0.07% ticular point in time.
don told Paydirt. cobalt and 0.3% copper from 23m and
124m @ 0.021% cobalt from 53m. “We’ve still got to get the runs on the
“Our skillsets are really all about ex- board though and show everyone that
ploration. We can do exploration well Gordon is eager to punch some dia- Brazil is a good jurisdiction to operate in.”
and we can do all the approvals works mond holes into several drill-ready tar-
well. We feel we can add a lot of value – Michael Washbourne
in this area, knowing there is a reason-
able chance of making a discovery here
because of what’s up the road.

“Holistically it’s about trying to build a
land position in the Carajás. There are
a lot of very big operating mines in that
region, so it’s very difficult to get ground.
Now that we’re there, we want to try to
pick up us as much as we can, but we’re
only going to do it when we can get deals
on sensible terms.”

In conjunction with the acquisition of
Itapitanga, Centaurus raised $2.35 mil-
lion via a heavily oversubscribed place-
ment to fund its planned exploration work
in the Carajás for 2018.

Centaurus has begun initial soil sam-
pling and auger drilling work at Itapitan-
ga, with grades of up to 0.19% cobalt re-
turned from channel sampling and 0.52%

PAGE 96 MARCH 2018 AUSTRALIA’S PAYDIRT

LATIN AMERICA

Crusader enlists new investors

Crusader Resources Ltd is seeking months, with a BFS expected to be
to raise $US10-15 million as part
of its imminent secondary listing on finished within the next 12 months.
London’s AIM exchange.
Crusader is also looking to refine
Institutional investors from the UK,
Australia and elsewhere are the pri- specifications for the dry tailings fil-
mary targets of the raising, with a
majority of the funds collected to be tration and the milling power require-
directed towards feasibility work on
the Borborema gold project in Brazil. ments, as well as further heap leach

Crusader expects to have complet- gravity work to optimise the project
ed all of the requirements for an AIM
listing by the end of the month. flowsheet.

It comes after the company teased “Out of the first 20mt that we mine,
the market with a set of optimised
numbers for Borborema – the first we generate around 8mt of waste
serious economics released for the
project in more than six years. rock that actually grades around 0.3

Highlights of the study included g/t gold,” Stephen said. “This mate-
a pre-production capex of $US93.4
million, AISC of $US908/oz, NPV of rial has been leached historically, so
$US117.8 million and IRR of 31%,
based on a $US1,300/oz gold price. we think we can put it back on a heap

“The plan that we’ve put forward leach, as opposed to a waste dump,
in that optimisation study is the first
step in seeing a gold bar poured out and that will give us some extra ounc-
of Borborema,” Crusader executive
director Paul Stephen told Paydirt. es at a very, very low cost, which will

“That capital cost of $US93 million be a big win for the project.”
is substantially below the market’s ex-
pectations and a lot of that is due to the Funds from the raising will also be
low-cost nature of capital in Brazil. It’s a
great project and it’s a great opportunity tipped towards some aggressive ex-
to build it at the right price.
ploration of the Juruena gold project,
“We’re going into a very positive cycle
for gold economics and our aim is to get as well as a geological review of the
into production and be pouring gold bars
in the shortest possible timeframe.” neighbouring Novo Astro ground.

The optimisation study is based on “Juruena is a very exciting project
processing 2 mtpa of an initial 20mt of
the upper lens of the deposit – less than and we see some really exciting po-
half of the overall 42mt @ 1.18 g/t gold
reserve – over a 10-year period. tential to grow the resources there,

A draft feasibility study on process- An optimised study indicates Borborema can be but we think the best value for share-
ing 4.2 mtpa was completed in 2012 by
TetraTech Brazil, but its planned pub- developed for $US93 million holders is firstly to get Borborema
lic release for early 2013 was aborted
due to the falling gold price. into cash flow so that we’re a cash

Crusader first floated the prospect oxide material has already been mined, generative business and secondly to
of a smaller start-up operation at Bor-
borema in May 2016. meaning there is very little pre-strip and have a really good look at Juruena,” Ste-

“We did a scoping study on this we can start mining immediately. phen said.
some time ago and we recognised
there was a real opportunity to get “These numbers show us that we can “My expectation is that we will make a
Borborema into production quicker
and for an optimal capital cost without build this and put it into production for world-class discovery at Juruena whilst
contaminating the much larger pro-
ject,” Stephen said. under $US100 million, but I think as we we’re building at Borborema and the

“It’s quite unique in that it was initial- go through a feasibility study we will see company will then be in a really excit-
ly mined as a heap leach project, so
the first 15-20m of transitional ore and the operating costs come down further. ing phase where we have a pipeline of

We’ve already identified internally a num- projects to develop. Certainly that’s what

ber of substantial savings.” we’re hoping to achieve.

Crusader has shipped a 6t sample “We’re not going out there and explor-

from Borborema to Perth for testing at an ing and hoping to get lucky. We’re de-

ALS laboratory as part of its initial feasi- veloping on what is a pretty fast track to

bility works programme. cash flow and I think that’s a great oppor-

Further engineering and technical as- tunity for all investors.”

sessments are planned for the coming Crusader managing director Marcus

Engelbrecht, who joined the com-

pany late last year, is spearheading

the AIM listing process, which has

also seen Andrew Vickerman and

Michael Jones added to the board as

non-executive chairman and senior

independent non-executive director

respectively.

Meanwhile, the company has

flagged the likely divestment of its

lithium projects in Brazil and Portugal

into a separate vehicle to ensure its

focus does not detract from develop-

ment of its gold assets.

Crusader has sent samples of Borborema – Michael Washbourne
core to Perth for testing

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 97

REGIONAL ROUNDUP

Geopacific puts its
stamp on Woodlark

Geopacific Resources Ltd is on the Woodlark Island – about 500km east and optimisation test work programme,
cusp of finalising its development of mainland PNG – is a fully permitted under the guise of an EPC contract, for
plans for the Woodlark Island gold project project with mining, processing, envi- incorporation in the DFS.
in Papua New Guinea. ronmental and social approvals already
signed off by the relevant authorities. With the main resource and reserve
Having assumed control of the project drilling campaigns now complete, Ge-
from Kula Gold Ltd last October, Geopa- Geopacific managing director Ron opacific’s geological team – headed by
cific is set to announce updated resource Heeks said his company was primed to exploration manager Warrick Clent – has
and reserve estimates this month. deliver a robust gold project over the next turned its focus to regional exploration,
few years. with the company confident of adding
The first project economics calculated to the project’s gold inventory in due
by Geopacific will also be unveiled this “We made sure that the 2017 work pro- course.
month ahead of the scheduled release of grammes were completed thoroughly, to
a DFS in Q3 2018. achieve resources and reserves that we Geopacific recently confirmed a new
are confident about and a development- discovery – Boscalo – originally thought
Geopacific has undertaken an ex- ready project,” Heeks said. to be an extension of the mineralisation
tensive review of more than 260,000m at Kulumadau East. Some of the better
of historic drilling as well as punching “We are comfortable that the pro- intercepts from recent drilling were 12m
30,000m of its own holes into the project. ject development elements are running @ 7.45 g/t gold, 20m @ 1.77 g/t, 20m @
The company inherited a $150 million da- smoothly and now have the opportunity 1.71 g/t and 7m @ 5.25 g/t.
tabase as part of its acquisition of Kula to evaluate the considerable exploration
via an off-market takeover. upside which is apparent right across the – Michael Washbourne
Woodlark project area.”
Kula previously defined a 45.1mt @ 1.5 For the full story on Geopacific’s plans
g/t gold for 2.1 moz resource, based on Geopacific has engaged respected en- for Woodlark Island see the April-June
a 0.5 g/t cut-off, across the Kulumadau, gineering firm Lycopodium Ltd to design edition of Gold Mining Journal
Busai and Woodlark King deposits. and manage a metallurgical variability

PAGE 98 MARCH 2018 AUSTRALIA’S PAYDIRT

ASIA

Bawdwin back in vogue

Experienced mining professional “This drilling programme will
John Lamb has managed some allow us to re-run the scoping

of the world’s best zinc operations, study and publish the numbers in

including Century and Rosebery. accordance with the ASX guide-

However, there is sincere convic- lines, then we can follow on with

tion in his voice when he describes a PFS in due course as well as a

the Bawdwin lead-zinc-silver-cop- reserve.”

per project in Myanmar as a “de- Results of the study were pre-

posit that comes around only once sented to Myanmar’s Ministry of

or twice in a mining career”. Natural Resources and Environ-

Bawdwin was the single big- mental Conservation in Decem-

gest producer of silver and lead ber.

in the world during the 1920s and Independent research from

1930s when the country was part benchmarking firm Terra Studio

of the British Empire (then known placed Bawdwin in the top tier of

as Burma), but activity at the mine zinc-lead mines and development

has been scarce since opera- projects globally for tonnes and

tions ceased soon after the end of grade, with the likely low operat-

World War II. ing costs also noted.

Local company Win Myint Mo Lamb is becoming increasingly

Industries Co Ltd took ownership confident that Bawdwin will live

of the project – 60km from Lashio, up to its “world-class” potential as

the capital of the northern Shan each day passes, particularly with

State – more than a decade ago, his team yet to conduct any of its

but last June began a process to own formal exploration work.

vend the unloved asset into strug- “It’s worth mentioning that this

gling junior Top End Minerals. deposit is really just the historical

Top End was subsequently Myanmar Metals is gearing up for a 5,000m infill drilling deposit that was mined pre-World

renamed Myanmar Metals Ltd, campaign at the Bawdwin lead-zinc-copper-silver project War II in a large commercial way,”

with Lamb appointed chairman of Lamb said. “There’s never been

the new-look board, initially as a non- group about the number of things we had any geophysics done on the site, there’s

executive before agreeing to a full-time done, up to that point in time, in less than never been any diamond drilling done

role in early October following a candid six months,” Lamb said. outside of the recent drilling that’s been

conversation with close confidant and re- “We retired all of the company’s debt, done on the deposit itself. I’ve got high

nowned prospector Mark Creasy. we rebadged and renamed the company hopes we will see repeated lenses up

“I’ve been in the mining industry for and gave it a new direction and we’re and down the fault line, which appears

more than 30 years and to have an op- now about to embark on a new drilling to be the structure that is controlling the

portunity to bring a truly world-class as- programme which is going to open lots mineralisation.”

set like Bawdwin back to life is something of doors for us.” With Myanmar still heavily reliant on

not to be missed because it really only Less than three weeks after reporting tin production to prop up its economy,

comes around once or twice in a career,” a revised inferred resource of 75.9mt Lamb said the potential rebirth of Bawd-

Lamb told Paydirt. @ 4.6% lead, 2.3% zinc, 0.25% copper win loomed as a major boon for a country

“It’s been an outstanding first six and 119 g/t silver (containing a “primary” looking to exploit other minerals.

months. It’s been a hell of a lot of work, resource of 41.4mt @ 7.5% lead, 3.5% “To the Government’s credit, the coun-

but we’ve set a cracking pace.” zinc, 0.33% copper and 178 g/t silver), try is modernising the way its economy

Lamb’s comments about the speed of Myanmar Metals confirmed the CSA works, the way its legal system works,

the company’s progress since he took Global Pty Ltd-led scoping study sup- the way in which the various depart-

charge are also not an exaggeration of ported a long-life operation at Bawdwin, ments govern the activities that happen

the facts. Since October, Myanmar Met- both technically and financially. in their portfolios,” Lamb said.

als has reported a new JORC-compliant Lamb and his team were so compelled “Myanmar is seeing some major in-

resource for Bawdwin, released a scop- by the study findings they immediately vestment from major companies around

ing study, completed a new set of met- signed off on a 5,000m infill drilling pro- the world now and I think the minerals in-

allurgical test work and kicked off a key gramme aimed at upgrading a portion of dustry will start to follow. To some extent

environmental works programme. the resource to indicated status. we’re trailblazing here at Bawdwin, as

In among those major milestones the “I wanted proof that an open-pit devel- this is the first time an Australian-listed

company also collected $10 million from opment would rapidly pay back its capital company has come in and partnered

two separate capital raisings to ensure and would allow us to get in there on the with a local company to bring a produc-

no momentum would be lost as the clock ground and start producing viable con- ing mine online. I don’t think we’ll be the

ticked over to 2018. centrates for sale on the market,” Lamb last.”

“We had a function just before Christ- said. “It ticks all of those boxes, it’s a very – Michael Washbourne
mas and I was talking to an assembled compelling scoping study indeed.

AUSTRALIA’S PAYDIRT MARCH 2018 PAGE 99

RDREIGLLIOBINTSAL ROUNDUP Safely Exploring Your Future bostech.com.au

Dacian’s gold discovery new 2.5 mtpa CIL treatment plant, which cial position to undertake significant ex-
hat-trick is over 95% complete, with the first gold ploration programmes.
pour scheduled for the end of the month.
At the Fisher East nickel project,
Dacian began drilling at 2,500m of diamond drilling will look to

Cameron Well in September test strong down-hole EM anomalies

2016. Some 855 holes have with the aim of expanding the Musket and

since been drilled to confirm Camelwood deposits. Drilling will also

the prospect as a large, 6sq test another strong 1km long EM conduc-

km near-surface oxide gold tor, detected from surface, at Corktree.

anomaly. Up to 5,000m of aircore drilling at the

A 16,000m RC programme nearby Collurabbie nickel project and a

targeting a maiden oxide re- further 1,200m at Fisher East will help

source at Cameron Well be- the company continue to define geo-

gan last month. Dacian has chemical trends for targeting of deeper

also started collecting feasi- drilling and the potential discovery of new

bility study data to be used in nickel sulphide orebodies.

assessing the potential for ox- Recent aircore drilling at the Mt Fisher

Dacian has confirmed a third significant gold discovery ide reserves, with the target of gold project returned strong results at a
at its Mt Morgans project, near Leonora announcing a maiden reserve number of prospects over a 10km strike
by the middle of the year. length that warrant follow-up work for

The latest round of RC drilling has con- Cashed-up Rox hits the possible growth of the current resource
firmed Cameron Well as the third signifi- ground hard base.
cant gold discovery for Dacian Gold Ltd at
its Mt Morgans project, about 25km south- Rox Resources Ltd will drill more than RC drilling is planned to test targets
west of Laverton. at Dam, Dam North, Damsel, Damsel
South, Dirks and Shiva.

“RC drilling has now intersected good 10,000m across its suite of nickel and Intermin gears up for
widths and grades of shallow oxide min- gold projects during the first half of 2018.

eralisation over an area of 1.5km by up to With more than $12 million of cash re- big round of drilling
1km, confirming the mineralisation seen serves plus further receivables of $3.75

in our original aircore drilling programmes million, the company is in a strong finan- Intermin Resources Ltd is set to roll out

laying the foundations for a its biggest drilling campaign

maiden oxide mineral re- ever.

source,” Dacian executive A total of 55,000m will be

chairman Rohan Williams drilled on a budget of $4 mil-

said. lion funded from cash flow

“With the additional discov- produced from the company’s

ery of at least four bedrock Teal gold mine, about 12km

structuresbelowtheextensive north-west of Kalgoorlie.

oxide gold mineralisation, we Half of the programme will

are confident that Cameron be focused on new discover-

Well has the potential to be- ies at the Blister Dam, Anthill

come the company’s third sig- and Teal project areas, with

nificant mining complex at Mt the company also looking to

Morgans.” grow its resources beyond the

Cameron Well is situated 1 moz gold mark.

midway between the Wes- Resource extension drilling

tralia and Jupiter mining are- will focus on Teal, Jacques
as at Mt Morgans and is only Up to 5,000m of aircore drilling will be carried out at Find, Peyes Farm and Anthill
9km north-west of Dacian’s
Rox’s Collurabbie nickel project in 2018 both along strike and at depth.

Celebrating 25 years

PAGE 100 MARCH 2018 AUSTRALIA’S PAYDIRT