gmj124-July-September16mag-web

July – September 2016 VOLUME 1. ISSUE 124
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Nullagine
flowing again

• Diggers & Dealers preview ISSN 1324-4396
• Evolution puts its stamp on Cowal 03
• Granny Smith’s power regeneration
9 771324 439005



CONTENTS

16 18 28

5 NEWS 18 COVER

M&A in the Asia Pacific region has not played out to Like a lot of juniors, Millennium Minerals Ltd was on its
market expectations in recent times, with the sum of knees not long ago. However, unlike other struggling
transactions in the mining sector plunging close to 70% juniors, Millennium has been able to turn its fortunes
in FY2016, according to Mergermarket data. While it around in the Pilbara to become a profitable gold pro-
may take until the end of the year for companies to get ducer. Michael Washbourne travelled to the company’s
active in the M&A space, it will happen and Ashurst Nullagine operations and spoke to chief executive
M&A partner Antonella Pacitti tells Gold Mining Journal Glenn Dovaston about Millennium’s future ambitions
why

16 GRANNY SMITH 28 DIGGERS & DEALERS
Gold Fields Ltd has turned Granny Smith into the Gold companies which have escaped the mire of the
group’s most profitable Australian asset. The com- resources sector will be front and centre at Diggers
pany has made significant changes at the mine since this year. With Australian gold prices breaking through
it was acquired from Barrick Gold in 2013, boosting $1,800/oz, there are many local producers riding the
productivity and efficiencies. One of the most notable crest of the wave at the moment and many up-and-
improvements made has been power supply to site, comers are looking to join them. In this edition of Gold
which is provided by Aggreko. Dominic Piper toured Mining Journal, we preview some of the stories which
Granny Smith to find out just what impact Aggreko’s will be talked about outside and under the big tent in
power schemes are having on Gold Fields’ bottom line Kalgoorlie

COVER PHOTOGRAPH:

The sun sets on Millennium Minerals Ltd’s Nullagine gold project in the Pilbara

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EDITORIAL

Gold show hits town

What a remarkable start to the year share offer from Teranga Gold Inc in June.
for the Australian gold industry. I am not suggesting blame for such downward spirals should
Just as gold’s bull run was seemingly
grinding to a halt in January, political be laid at the door of management. The companies highlighted
uncertainty, a weakening US dollar and presented shareholders with strong returns during the good
the growth in negative yield bonds (now times and it would have been impossible – even if they did be-
lieve it – for company executives to declare their companies fully
$US9 trillion) means the precious met- priced and advise shareholders to take money off the table.
al has recovered its safe-haven status
and is currently providing a better re- However, many of this generation’s companies were caught
turn than any other safe asset class. out; they didn’t accept takeover offers during the boom but nor
did they build businesses capable of thriving when the market
But, the Australian gold industry’s turned for the worst.
rise in 2016 (the S&P Gold Index is
up 102% for the year) is about more than sim- Three years on, the current crop of gold miners, developers
ply being leveraged to the gold price. It is also a reflection of and explorers appear to have a more robust future, regardless of
the sector’s ability to take maximum advantage of the buoyant the prevailing gold price.
spot price; a situation which has not always been prevalent in
the sector. The ASX’s largest gold miner, Newcrest Mining Ltd, is lead-
In hindsight, gold’s last bull run didn’t actually deliver the kind ing the renaissance, having finally put its house in order after a
of success stories one might assume. A number of companies turbulent five-year period.
made it to production and there was a rash of corporate activ-
ity but enduring success stories were few and far between. A Further down the food chain, plenty has already been said
glance at Gold Mining Journal’s Miner and Explorer of the Year about Northern Star Resources Ltd and Evolution Mining Ltd but
award winners in that period (July 2005 to September 2011) re- it is telling that the group of companies behind the market lead-
veals a distinct lack of longevity among Australian gold stories. ers have not only enjoyed strong support this year but have in
In the first three years, the Miner of the Year award went to the main managed to drive down costs and build resources and
Dominion Mining. Dominion was successfully built on the back of reserves.
the high-grade Challenger mine and was eventually taken over
by Kingsgate Consolidated Ltd in February 2011. For Dominion Even among the international majors there is a discernibly dif-
shareholders, it was perhaps the ideal time to get out. By the ferent attitude. While Barrick Gold Corp was content to let its
time of Kingsgate’s acquisition the mine was already struggling Yilgarn South assets drift during the period of ascending gold
to maintain its low-cost status, the mine having already fallen prices, Gold Fields Ltd has invested in their future and driven
from cash costs of sub-$300/oz to more than $900/oz. cash costs down since acquiring them in 2014. A recent visit to
Kingsgate limped along at Challenger through another five the Granny Smith mine highlighted this, with the 20-year old op-
years of rising cash costs until it placed the mine on care-and- eration having received a facelift thanks to a new gas-powered
maintenance and sold the deep underground mine to WPG Re- generation facility and a refurbished mill which have resulted in
sources Ltd earlier this year for just $2 million. lower AISC and greater production.
Silver Lake Resources Ltd was another multiple Miner of the
Year winner during the period but having played the role of ac- Even Newmont Mining Corp, which itself divested some Aus-
quirer during the M&A merry-go-round, it finds itself battling to tralian assets in 2014, is redoubling efforts in Australia. Having
win back market support. taken over sole management of the Super Pit JV from Barrick
With Daisy Milano performing well, Silver Lake went on an ac- last year, it has approached the mine with vigour, driving AISC
quisition spree in 2011/12 which saw it pick up neighbour (and down 29% in the March quarter while lifting production 50% in
fellow Miner of the Year) Integra Mining and the Murchison gold the same period.
operations in an effort to give its portfolio diversity.
However, as the gold price turned, the failure of the new opera- The difference between the current generation and the previ-
tions to deliver low cash costs impacted on the company’s mar- ous one is that the current crop appears to have clear, achieva-
gins and Silver Lake has since struggled to regain a foothold. Its ble growth plans with few of the companies relying on ambitious
shares have since fallen from more than $3.70/share in October price projections or the continuing performance of single assets.
2012 to a low of 12.5c/share earlier this year.
Gryphon Minerals Ltd and Ampella Mining both won the Ex- The current generation also enjoys an enviable operating en-
plorer of the Year award on the back of exploration success in vironment. In the mid-2000s, the gold industry was competing
Burkina Faso, West Africa, but the subsequent performance of with increasingly confident sectors such as iron ore and oil and
both portrayed just how difficult it is to maintain market momen- gas for capital, labour, services and materials which resulted in
tum. Ampella’s market cap reached $800 million but when Cen- higher cost structures.
tamin plc made its ultimately successful takeover bid in Novem-
ber 2013, it valued the explorer at just $40 million. In 2016, gold is the only show in town and gold companies are
Gryphon’s trajectory has been similar, with the company – subsequently enjoying competitive pricing from service provid-
which boasted a plus-$2 share price in 2011 – accepting a 20.6c/ ers desperate to ensure work.

[email protected] @DominicPiper

Page 4 GOLD MINING JOURNAL July – September 2016

NEWS

A breakout of M&A in FY2017

In hindsight, it was no Transactions in Australia’s mining sector totalled $2.59 billion in driven by soft commodity
surprise that the val- FY2016 compared to $19.38 billion in the previous financial year prices.
ue of M&A activity in
the Asia Pacific’s min- some value for their existing Ashurst, Pacitti is privy to “It is going to take a cou-
ing sector fell close to ple of big deals to kick off the
70% in FY2016, ac- investors by diversifying their seeing the early stages of momentum or even deals that
cording to data from make sense from a valuation
Mergermarket. platform and tapping the eq- companies’ strategies and is point of view and then I think
we will see others follow,” she
Mining stocks were “uity markets,” she said. confident that any uptick in said.
weighed down heavily by low
commodity prices – except It is going to take a couple of big “I think people will be able
for gold – and adding to poor deals to kick off the momentum to get around valuations a
sentiment towards resources or even deals that make sense from a bit more readily as they have
companies was volatility in valuation point of view and then I think had time to see gold move
global economic conditions. we will see others follow. in response to the big shock
events. The trend in recent
A total of 87 mining deals “I think around the time of M&A activity would likely oc- times probably makes people
worth $9.53 billion, down the US election [November cur in Q1 and Q2 FY2017. feel there is a bit of over-val-
from 121 transactions which 8], which is traditionally a uation [in gold stocks] at the
amounted to $29.71 billion time of the year companies She said there were defi- moment, but it might be time
in FY2015, were completed look to lock away some IPOs nite greenshoots starting to to make a move [anyway].”
in the Asia Pacific region in before the Christmas period, appear in the mining sec-
FY2016. you might see gold have a tor, despite lingering uncer- It has been a long time
focus in new entrants to the tainty in commodity prices. since investors have been so
The situation in Australia ASX. In the broader markets Pacitti, however, did declare willing to back mining stocks
alone was worse, with $2.59 in the Asia Pacific region, I that Western Australia had and the confidence instilled
billion worth of transactions think that’s something you reached the bottom of an in the market, particularly
in the mining sector com- see after a period of positivity economic dip which had been in gold, may be the trigger
pleted, compared to $19.38 around a particular commod- needed for companies to hit
billion worth of deals done in ity and when M&A activity Antonella Pacitti the dance floor.
FY2015. starts then you get the IPOs,
which have been on the back- “There seems to be quite a
Overall, the value of M&A burner for the last couple of bit of [positive] investor sen-
activity in the Asia Pacific years, launching.” timent behind gold, which
region’s natural resources could drive confidence in
sector, including oil and gas, While the dust begins to deal making, particularly
was $53.37 billion in FY2016, settle on Brexit, the aftermath through the mid-caps,” Pacitti
compared to $104.4 billion in of Australia’s Federal election said.
FY2015. and the US presidential race “There has been some op-
remain the intangibles likely portunistic M&A in recent
The figures make for glum to affect the gold sector. times in terms of buying up
reading, but on the back of assets and increasing market
gold’s continued resurgence Nevertheless, as an M&A share and you would think
an air of confidence has re- practitioner with law firm that would position some of
turned to sections of the min- the mid-caps well.”
ing sector and some compa- Pacitti said she expected to
nies are loosening up, while see an uptake of M&A in the
new ventures are heading local gold space, however,
for the starting line again, she was confident that activ-
Ashurst M&A partner An- ity would flow on into other
tonella Pacitti told Gold Min- jurisdictions.
ing Journal. “Africa still has almost lim-
itless potential, although it
“This period of fun in the doesn’t take much to spook
sun for gold miners has re- people in that space, but I
sulted in a bit more potential do see a little bit happening
for IPOs to come through, there and can’t imagine why
particularly for companies that wouldn’t expand into Lat-
that are either spinning off in America,” she said.
an asset or looking to extract
– Mark Andrews

July – September 2016 GOLD MINING JOURNAL Page 5

NEWS

Tyranna challenges WPG

Dialogue between The restart of operations at Challenger has attracted companies back to the area
WPG Resources
Ltd and Tyranna 6103 – does not form part of Tyranna stated such as- sition of Challenger from
Resources Ltd has the longstanding Challenger sertions were incorrect and Kingsgate Consolidated Ltd
started in relation Gold JV. has initiated a formal dispute in March and has since suc-
to tenements at the process in order to protect its cessfully poured first gold
Challenger Gold JV in ownership position. from the project, which is
South Australia. subject to a JV with Diversi-
Speaking to Gold Mining fied Minerals Pty Ltd.
The Challenger Gold JV Journal, WPG executive
was formed between South- chairman Bob Duffin said he WPG is the manager of the
ern Gold Ltd and Dominion hoped the matter would be Challenger JV, while PYBAR
Gold Operations Pty Ltd back resolved amicably. Mining Services Ltd is provid-
in 2010, with the asset now ing mining services.
in the hands of Tyranna 59% “We, of course, hope it will
and WPG 41%. sort itself out,” Duffin said. Operations at Challenger
“We are in the early stages of – 945,000t @ 9.11 g/t for
However, Tyranna has trying to negotiate a commer- 277,000oz gold (reserve) –
grown increasingly unhappy cial outcome, but if it does go were suspended while the
with market releases made to litigation we are pretty con- handover from Kingsgate
by WPG which give the im- fident we have a strong case. was completed with crush-
pression that EL 5661 – the ing and milling of low-grade
part which surrounds the “There has been a long- stockpiled ore and under-
original Challenger Gold ML standing relationship [under ground mining restarting in
the original JV], but in terms late May.
of our own relationship we
have only owned Challenger The first gold pour fol-
for a few months and Tyran- lowed shortly after, with Duf-
na is born from Trafford and fin reporting that a run rate
IronClad, so the principals of of 30,000 tpm was hit almost
WPG and Tyranna have not from day one of the restart of
had a longstanding relation- operations.
ship.”
“That [low-grade stockpiled
Tyranna, through the Traf- ore] is being replaced by ore
ford and IronClad links, and from the underground. It has
WPG have both endured taken about four weeks for
long histories in SA’s iron ore ramp-up of ore produced
space, with Duffin and Tyran- from the underground, but we
na chairman Ian Finch well- are almost there and as time
known to each other. goes by it will all be under-
ground ore and that stockpile
WPG finalised the acqui-

Page 6 GOLD MINING JOURNAL July – September 2016

will simply be a re- forded WPG another

serve in case of emer- processing option.

gency or something,” “We will be bringing

Duffin said. Tarcoola on from a re-

WPG’s activities serve of about 1mt at

at Challenger have a little over 3 g/t gold

sparked a resurgence and we will be pro-

in exploration near the cessing that at about

mine, with the likes 250-300,000 tpa. The

of Tyranna achieving current reserve base

some success. has a life of about

Tyranna has report- four years and we are

ed a new discovery at pretty confident that

its Jumbuck gold pro- with exploration we

ject, which comprises will extend the life of

over 8,000sq km of both [Challenger and

ground surrounding Tarcoola] of those pro-

Challenger, between jects well beyond what

the Mainwood and is currently indicated

Camp Fire Bore pros- by the reserves posi-

pects. Tyranna is looking to clarify ownership details at the Challenger Gold JV with WPG tion,” Duffin said.

Results from a 21- Mining from Tarcoola

hole RC drilling programme “We will be putting 30,000 tion potential in that area,” is scheduled to start in Q3,

included 2m @ 7.94 g/t gold tpm of ore from Challenger Duffin said. with production initially slated

from 41m (including 1m @ through the mill and another While it continues to ex- at 20,000 ozpa gold.

14.1 g/t), 3m @ 2.45 g/t from 20,000 tpm from Tarcoola. plore, WPG has some near- Additional growth pros-

31m and 2m @ 2.36 g/t from That equates to 600,000 tpa, term opportunities it can pects for the company out-

30m over a 75m strike extent, but the mill has the capacity delve into. side of Challenger and

which remains open ended, to do up to 850,000 tpa. If oth- Tarcoola is one project Tarcoola include Tunkillia,

and could potentially extend er people come up with ore- WPG is committed to devel- acquired in 2014 alongside

the Mainwood strike length bodies in that area we’d be oping and on track to start Tarcoola when WPG exited

by over 800m. There is also delighted to discuss toll treat- producing from later this year. the iron ore game after selling

the possibility that Mainwood ing arrangements with its assets to OneSteel Ltd

may link to Camp Fire Bore them. In the meantime, in 2011 for $320 million.

mineralisation. we will be continuing RC drilling at the Tunkil-

At the time of print, Tyranna our own exploration pro- lia 223 deposit earlier this

was completing drilling of the gramme in the area and year returned results such

remaining 21 holes at Main- also within the new mine as 14m @ 0.88 g/t gold

wood. Once done at Main- environment as well.” and 4.9 g/t silver from

wood, the drill rig was sched- WPG has a second 42m, including 2m @ 3.28

uled to be moved to Camp recently granted mining g/t gold and 23 g/t silver

Fire Bore to complete the lease (ML 6457) which from 54; 84m @ 0.48 g/t

overall 6,200m programme in adjoins ML 6103 into an gold and 1.9 g/t from 40m,

the first phase of drilling. area below the 215 shear including 4m @ 2.87 g/t

Although it may be a while known as Challenger gold and 2.9 g/t silver

before Tyranna pulls a re- Deeps. from 42m and 8m @ 0.97

source together, the rising For the past four years g/t gold and 7.3 g/t silver

gold price and the fact the mill Challenger has produced from 86m and 2m @ 1.19

at Challenger can be tapped 80,000 ozpa gold from a Bob Duffin g/t gold and 13 g/t silver
into may encourage the likes reserve of 80,000oz and from 158m.

of Tyranna and others to the company is confident There is plenty of work

move a bit quicker. it can continue to mill and re- The company’s ML 6455 still to do for WPG at Tunkil-

Duffin welcomed the op- place reserves consistently tenement, which was granted lia and its other gold-bearing

portunity to discuss potential for some time yet. in March, is being revised to assets, however, one thing is

toll treating scenarios with “We don’t need to discover include the Challenger pro- certain; the company is in the

companies t with deposits in one more ounce of resource, cessing option, while a PEPR right commodity.

the area. we simply have to move part was expected to be complet- “We sold our iron ore busi-

“We wish all those compa- of the resource that is not in ed by the end of June. ness at the right time and we

nies the best of luck [in explo- reserve and I am confident Original DFS assumptions have got into gold with the

ration] because if they find an we can do that. I am also had Tarcoola poised for a right acumen,” Duffin said.

orebody we have a mill which confident that we will, in time, conventional open pit heap – Mark Andrews
will have some excess capac- increase the resource base leach operation, however, the

ity,” he said. too; there is a lot of explora- addition of Challenger has af-

July – September 2016 GOLD MINING JOURNAL Page 7

KEITH GOODE

Horse Well:
A forgotten gold mine

Originally discov- start-up of a 100,000 ozpa continued to be encouraging October 1997, Joseph Gut-
ered in the early standalone plant fed by multi- but two subsequent diamond nick’s Great Central Mines
1990s, the Horse Well ple ore sources being achiev- holes disappointed and Eagle had acquired Eagle in a $235
project – 50km north able within four years. became distracted by its pro- million deal and the last ref-
of the Jundee mine gress at Nimary. erence to Horse Well was in
in Western Australia Doray is targeting 1 moz at a post-merger analysts’ site
– has never quite Horse Well and was attracted The focus at Horse Well visit in mid-October that year.
reached production by its presence in the same switched to Bronco and Filly
status. However, a Yandel greenstone belt which with RC drilling intersect- Great Central Mines had
new JV appears to has already delivered mines ing 10m @ 4 g/t and 4m @ been banned from takeovers
be closer than ever to such as Bronzewing, Mt Mc- 15.9 g/t (at Bronco) and 10m by the institutions that sup-
realising its potential. Clure and Jundee. @ 24.3 g/t and 8m @ 7.2 g/t ported it, telling Gutnick there
(Filly). must be none of that 1980s
It is junior miner Doray Min- Finding Horse Well is easy behaviour or they would sell.
erals Ltd leading the charge. – even from space – as it is In 1996 – with Nimary now While the Eagle takeover
It is currently earning into represented by an almost producing 120,000 ozpa @ 5 was a logical move given the
the project from JV partner perfect circular feature next g/t – sterilisation drilling was shared boundary between
Alloy Resources Ltd. Doray to it, a 25-30km diameter im- undertaken at Filly and Bron- Jundee and Nimary, the sub-
secured 60% by spending $2 pact caused by a meteor, that co and a number of refer- sequent acquisition of Wiluna
million over the last 18 month altered the geology around ences in reports and presen- was not and resulted in Great
and can reach 80% ower- it, either 570 or 1,630 million tations were made that Eagle Central Mines’ downfall.
nship by spending another years ago. regarded Horse Well as its
$2 million by the end of 2016. next gold mine based on the The company overextend-
However, Alloy can maintain The prospect was originally Horse prospects. ed itself to acquire Wiluna,
the 60/40 split by contributing discovered by Orpheus Geo- taking on loans from Nor-
40% of ongoing expenditure. science using geochemical Comments referred to mandy and Plutonic because
Given the company recently surveying over a hill in 1992. “gold everywhere”, with some the banks refused to lend.
raised $1.3 million, this is a The Wiluna JV was subse- of the very high (plus-1 oz/t) By the end, it closely resem-
possibility. quently formed in March 1993 grades at Filly SW. bled another notorious gold
by the sole tenement holder group – Bond International
The Horse Well agreement Alastair Hunter with Matlock The Horse prospects ap- Gold – with its classic pyra-
is an example of the increas- and Eagle Mining earning a pear to mostly be contained mid where the value of one
ingly common JV structure. A combined 71% by gradually in a north-west/south-east el- stock depended on the value
company executive recently spending $5 million. liptical “pod” of mostly basal- of another in the stable.
told me they recognised JV tic rocks between two north-
farm-ins as great opportu- Orpheus continued to cover west/south-east structures, The institutions kept their
nities because (based on a exploration with some Eagle possibly underlain by a deep- word and dumped Great Cen-
60/40 structure): “the JV part- personnel and the Wiluna JV seated granitoid dome. tral Mines following the Wilu-
ner has to finance their 40%; took over Nimary (southern na acquisition, beginning the
we only have to finance 60%”. Jundee) where Hunter had In late 1996, Eagle re-inter- company’s downward spiral
Should the partner be unable been exploring since 1990, preted Palomino with an un- which culminated in its takeo-
to finance, it has to further di- with Eagle managing Nimary tested down plunge compo- ver by Normandy.
lute its share; a far better sce- from 1994. nent. Subsequent RC drilling
nario than paying a premium at Palomino in 1997 identified The corporate activity con-
to take over the company. Further geochem work at lineation-controlled, east- tinued with Newmont Mining
Horse Well in 1993 focused dipping, northerly-plunging Corp acquiring Normandy
In response to a question on the Bronco, Filly and Pal- ore shoots, characterised in 2002 before Jundee was
during its March quarterly omino prospects, followed by intense silica-carbonate- eventually sold to Northern
presentation, Doray said by RAB and RC drilling. The sericite-pyrite alteration with Star Resources Ltd in May
Horse Well was its favourite best lag was 4.7 g/t rock chip better intercepts such as 12m 2014 for $85 million.
regional exploration play and in a quartz vein breccia at @ 7.6 g/t from 152m.
had the potential to become Bronco, while the RAB drill- By this time, Horse Well
the company’s third mine with ing returned 6m @ 4.7 g/t and Eagle established a had been in Alloy’s hands
8m @ 5.3 g/t at Palomino, 240,000t @ 4.3 g/t for for eight years having been
with RC drilling at Palomino 33,000oz oxide deposit at largely forgotten in the cor-
intersecting 24m @ 5.2 g/t, Palomino and worked up a porate machinations, or so I
19m @ 3.6 g/t and 15m @ 2. series of other targets follow- thought until earlier this year
4g/t. ing ultra-detailed aeromag when I had it confirmed to me
and aircore drilling in 1997. that although Great Central
The RC drilling at Palomino
However, that was it. By

Page 8 GOLD MINING JOURNAL July – September 2016

OPINION

Mines had ranked at Warmblood South
in March 2016 and
the Gourdis-Vause expected to drill
under some of the
prospect above higher grades at
Warmblood in the
Horse Well back in June or September
quarters depending
1997, it did so only on permitting.

because it wanted The 75,000oz of
resources at Horse
oxide feed for its Well have slipped
form indicated to in-
planned expansion ferred status under
JORC 2012 stand-
of its Jundee and Ni- ards due to drill
density. The top cuts are also
mary plants. In June quite conservative with an al-
most halving of the resource
1998, a review of at Palomino from 31,000oz to
16,000oz.
Eagle’s original ex- The depth of the resource
has also been limited to 130m
ploration prospects due to the drilling, so Palomi-
no’s down plunge ore shoot –
upgraded Horse which had intercepts of 10m
@ 7.4 g/t, 9m @ 5.3 g/t and
Well to No.3 priority, 12m @ 7.6 g/t – has been ex-
cluded, even from an inferred
well above Gourdis- resource. The resources at
Horse Well are possibly so
Vause. north-plunging shoots which Further encouraging in- low because it has been com-
passed close to one another tersections were made at pared to Jundee but Horse
Great Central Mines be- at the prospect but did not in- Warmblood – including 8m Well’s drilling does not com-
tersect. A hole was also going @ 5.5 g/t from 93m – and an pare with the (peppered) den-
gan relogging Eagle’s holes to test the Filly South model, increasing supergene zone in sity of drilling that occurred
targeting the higher grade November 2012 with drilling at Jundee between 1994 and
and identified mistakes. The shoot at around 110m below starting at Crack o’ Dawn in 1997 at a cost of around $50
surface. December 2012. million. Even then, Jundee
company intensified explora- still needed open-cuts to un-
In June 1999, the depth A detailed aeromag survey ravel and interpret its numer-
tion in early 1999 and pro- continuation of Palomino’s was flown in early 2013 and ous structures.
mineralisation was regarded RC drilling later that year pro- So, is it third time lucky
posed to test the Horse Well as proven with RC intersec- dived further encouragement under the Doray/Alloy JV
tions of 3m @ 9.7 g/t from at Warmblood and Dusk ‘til for Horse Well to become
mineralised system which 170m, 1m @ 8.1 g/t from Dawn before Doray arrived in a standalone gold mine? It
245m and 1m @ 4.2 g/t from May 2014 in search of Jundee didn’t happen under Eagle or
now appeared to be similar 312m. Great Central Mines lookalikes. Great Central Mines although
said in its June 1999 quar- both of them appeared to
to the 2km by 2km Jundee terly report that the best inter- Dusk ‘til Dawn appears to be heading in that direc-
section of 3m @ 9.7 g/t from be possibly most similar to the tion. Interestingly, the former
system. A revised aeromag- 170m was associated with Jundee limb; although some senior geologists of the vari-
quartz veining and carbon- comparisons have also been ous companies at one stage
netic interpretation showed ate-pyrite alteration in a me- made with Granny Smith. responsible for Horse Well,
tabasalt/dolerite sequence; Dusk ‘til Dawn has dacitic all individually bought Alloy
the Horse Well prospects ap- the only reference to dolerite porphyries in the west and shares soon after its acqui-
at Horse Well. ultramafics (Django prospect) sition of Horse Well in 2006,
peared to be connected by to the east, plus the general and still hold them today.
Further hits of 3m @ 5.3 g/t broadly north/south-striking
structures that paralleled the from 144m, 120m to the north Celia shear zone – which re- Keith Goode is the managing di-
at Palomino and 6m @ 5.4 g/t putedly extends south-east rector of Eagle Research Advisory
mineralised directions shown from 233m at Bronco encour- past Dacian Gold Ltd’s Mt
aged Great Central Mines to Morgans project – apparently
by drilling. One of the main undertake further RC work traversing across the Millrose
but when Normandy took greenstone limb from Django
advances was the recogni- over the company in April in the east through the Horse
2000, all its planned explora- Well prospects and Warm-
tion that the greenstone belt tion was shut down. blood to the west.

could be divided into a num- Alloy took over the project Doray expects to drill at
shortly after listing in 2006 least 18 RC holes to a depth
ber of structurally bounded but was largely distracted by of around 180m at Django
the rest of its portfolio until of which the first five were
domains, and that all the 2011 when executive chair- focused on the higher air-
man Andy Viner joined the core anomalies. Django, at
main gold mines appeared company and re-examined T-06, was the largest of the
the Horse Well prospects, 18-20 anomalies determined
to be situated well away from including the Warmblood tar- in 2013. After Django, there
get, possible south-easterly were still at least another 12
the domain-boundary shear extensions and the Dawn anomalies to test.
prospects.
zones. The Horse Well JV drilled

In March 1999, Great

Central Mines confirmed

the presence of a number of

high-grade structures similar

to Jundee and announced it

would begin a RC drilling pro-

gramme.

By April 1999, a sigmoidal

quartz vein was found in the

shear which linked Filly and

Palomino at Horse Well. The

2m-long vein was Z-shaped,

implying dextral shear on the

zone. Although its signifi-

cance was not clear, a paral-

lel could be drawn with the

shapes of veins and direction

of shear at Bronzewing. Addi-

tionally, a 3D interpretation of

Filly South in Vulcan resulted

in a new interpretation of two

July – September 2016 GOLD MINING JOURNAL Page 9

NEWS

London to remain gold trade hub

The London Bul- banks, which are also The need to make the $5
lion Market As- involved in the trading trillion a year over-the-coun-
ter market more transpar-
sociation (LBMA) of bullion. ent, profitable and liquid led
the LBMA to formally ask
has taken steps to But a majority of exchanges and technology
firms in October last year to
help to preserve members, including bid for services such as a
gold exchange or a clearing
London’s role as a banks, refiners and platform.

major global gold dealers, voted in late A decision on the winning
bidder should be known in
trading centre by June to create an in- September.

making its manage- dependent board of di- The LBMA is the owner of
the intellectual property of
ment more open rectors comprising two the gold and silver bench-
marks, run by part of the In-
and independent, bank market makers tercontinental Exchange and
a CME/Thomson Reuters
documents seen by and three LBMA mem- JV respectively. The LBMA
will also take on ownership
Reuters showed. bers. of platinum and palladium
benchmarks, run by the Lon-
London currently The LBMA’s chief don Metal Exchange.

dominates the glob- executive Ruth Crowell The benchmarks are widely
used by producers, consum-
al over-the-counter and two employees of ers and investors to trade and
value the metal. Gold and
gold trade but is the association would silver are among the eight
major market benchmarks
facing increasing also be on the board. that are regulated by Britain’s
watchdog Financial Conduct
competition from “The new structure Authority (FCA).

China. There are is congruent with new – Clara Denina, Reuters

also more regula- market conditions, so

tory demands after we will now have an

scandals over at- independence and

tempts to rig inter- oversight governance

est rate and cur- that is needed,” Sharps

rency benchmarks. Pixley chief executive

Several banks have Steps have been taken to ensure London remains Ross Norman told Reu-
run into trouble with a major gold trading centre ters.
regulators over mis- “The LBMA don’t hide

demeanors in their precious is increasing also because from the notion that the deci-

metals trading business. China, the metal’s largest sion-making process current-

Greater regulatory scrutiny consumer and producer, is ly can sometimes be slower

has already forced changes competing with London to than they would like and with

in how precious metals prices increase market share as a a new board in place they will

are set but more are expect- price setter with a yuan-de- be able to push through and

ed to increase transparency nominated gold benchmark. make quicker, better deci-

of the London market, which Currently, the LBMA has sions,” Norman said.

can trace its roots as far back a management committee Bullion dealer Sharps Pix-

as the 17th Century. made up of representatives ley is an ordinary member of

The pressure for change from eight firms including six the LBMA.

AngloGold commits to Guinea

South Africa-based gold and is also seeking to expand tion of anonymity. AngloGold’s operations are
producer AngloGold its gold production. This latest AngloGold announced the at the Siguiri mine in the east
deal with AngloGold extends of Guinea. Its affiliate Societe
Ashanti Ltd plans to boost another agreement that had deal but did not give details Aurifere de Guinee produces
been set to expire in 2019. on the breakdown of invest- about 300,000 ozpa.
gold output in Guinea by in- ment.
“Initially, they will invest This new deal is expected
vesting over $400 million in $117 million and they will add “Older areas are depleted. to maintain output and fund
an additional $294 million They promised to change new exploration in the area.
the next eight years, accord- during this period,” a sen- the operating method by go-
ior official at the ministry of ing deeper, instead of being – Reuters
ing to an agreement reached mines told Reuters on condi- confined to the surface,” the
source said.
with the West African country

in June.

Guinea is a significant pro-

ducer of bauxite and iron ore

Page 10 GOLD MINING JOURNAL July – September 2016

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NEWS

Brexit hands gold further impetus

As gold continued gested in the immedi- “Sterling is one of the
its rise during the ate aftermath, the pro- world’s few reserve
first half of the year, longed shockwaves of currencies, but has
there were plenty of the decision are likely fallen to a 31-year low.
to make gold’s status Moreover, S&P Global

gold watchers prepar- even more secure in Ratings said UK bonds

ing themselves for a coming months. could lose their AAA
“black swan” event. “Once Article 50 of credit rating.”
The surprise was
the Treaty on the Euro- And, in a double
pean Union has been boost to gold’s outlook,

that it came from the invoked, a two-year David Cameron there is growing evi-

Brexit referendum and negotiation process will eron, former London Mayor dence that market and
would deliver an enor- begin,” the Council’s director Boris Johnson and UK Inde- economic turmoil will lead
mous boost to gold’s of investment research, Juan pendence Party leader Nigel central banks to intervene
Carlos Artigas said following once again.

outlook. the vote. “In the meantime, Farage – all announcing their “If central banks are forced

the UK’s decision could trig- intention to walk away from to implement supportive

There have been few sin- ger referendums in other Eu- politics, the uncertainty driv- measures they will likely

gle political events in the ropean countries. We could ing gold upwards appears to come in the form of further

post-war period which have see Scotland, in the words of show no sign of lessening. extraordinary actions, new

shaken up global markets as Nicola Sturgeon, ‘unequivo- “We expect to see strong rate cuts or delays in planned

much as the decision by the cally vote to remain in the and sustained inflows into hikes,” the Council reported.

British voting public on June EU’ calling for another [inde- the gold market driven by the “Worse-than-expected US

23 to choose to leave the Eu- pendence] referendum. Also, intense market uncertainty labour market data and a

ropean Union. International Northern Ireland and the that now faces the global downgrading in economic

equity markets plunged as Republic of Ireland will start markets,” Artigas said. “Gold growth forecasts in June had

investors digested the result emergency talks with the UK ETF holdings have also been already seen expectations of

while gold renewed its safe and EU to manage the border increasing sharply, a trend a US Federal Reserve inter-

haven status by putting on situation. [This] result could we expect to see accelerate, est rate hike pushed out to

6% on June 24. also spur populist parties in as both retail and institutional the end of the year.

“Gold is fulfilling its classic countries such as France and investors re-allocate funds to “Some central banks may

role as a safe haven asset Germany, which have elec- gold.” push interest rates further

and performing exactly as the tions next year.” Britain’s position as a key into negative territory, in-

many investors that bought Debate around Britain’s financial centre is also threat- creasing the investment

it in the run up to the refer- future in the EU has contin- ening to destabilise markets. challenges for buy and hold

endum will have hoped,” the ued and with the main pro- “We could also see an in- investors like pension funds.

World Gold Council said. tagonists of the referendum crease in central bank pur- Indeed, Brexit could see an

And, as the Council sug- – Prime Minister David Cam- chases of gold,” Artigas said. entirely new class of gold in-

vestor emerge.”

However, Artigas has dis-

missed any suggestion Brexit

could have a negative impact

on gold trading.

Speaking to Kitco News,

Artigas said while it was too

early to tell what impact Brex-

it would have on London’s

status as a gold hub, wider

trends meant any structural

changes would not have a

dramatic effect.

“Gold is a global market

and the infrastructure of gold

trading is expanding glob-

ally,” he said. “Various parts

of the market will continue to

strengthen as gold grows.”

Gold reached two-year highs early in July as the fallout from Brexit continued

Page 12 GOLD MINING JOURNAL July – September 2016

Dacian lights the exploration fuse

In a decade from Recent drilling from underneath the Westralia pit at Mt Morgans the Morgans underground
now, when analysts included hits of 13.2m @ 14.1 g/t, 12.3m @ 4.5 g/t and 6.4m @ 12.1 g/t prospects, the new Jupiter
are charting exactly resource will form the basis
where the junior min- now stands at 3.01 moz gold jay pit. They will contribute of the company’s feasibility
ing boom started, it across two areas; Jupiter and to increasing the size of the study, due out before the end
could be that Dacian Westralia. resource and the production of the year.
Gold Ltd is seen as profile. In fact, they will prob-
some sort of signpost. A positive scoping study ably change the economics Williams said the second
on a 220,000 ozpa project of the project.” half of 2016 would be a busy
The Rohan Williams-led was released in September period for Dacian with the
company listed on the ASX in 2015 but recent results have Westralia was able to de- company hopeful of also hav-
late 2012, just as atrophy was Dacian confident the project liver its own deeper results in ing its project finance plans in
beginning to take hold in the scope could be expanded late June with hits including place.
junior sector. It corralled $20 further. 3.3m @ 84.3 g/t, 12.3m @
million out of shareholders for 4.5 g/t and 13.2 @ 14.1 g/t. “We will hopefully under-
its IPO and while other juniors The 2015 scoping study The company said three sub- stand the debt/equity make-
have since struggled to gain was based on four concep- parallel mineralised surfaces up of the project finance by
any traction on a difficult lo- tual open pits – one at Wes- had now been identified at Christmas and there will be
cal market, Dacian has grown tralia and three at Jupiter – Westralia with the possibility an opportunity to raise the
into a $350 million company but some of the results from of combining all three into an funds before Christmas,” he
despite not yet releasing a 90,000m of RC and diamond underground bulk stoping op- said. “We think it is a low-
BFS for its Mt Morgans pro- drilling embarked on in May eration. risk project. We are essen-
ject in Western Australia. and June suggest both de- tially building a bigger version
posits could increase in size Dacian expected to release of the original Mt Morgans
Such performance is proof with the Jupiter deposits po- an updated resource for Ju- mine.”
that the market is once again tentially combining into a sin- piter in July with a maiden
warming to the junior sector gle, 1.8km-long open pit. reserve to follow in August. With a lack of gold devel-
and while Dacian’s success Together with an updated opment projects available,
could in part be attributed to The results from Jupiter resource for Westralia and banks are showing keen in-
the reputation Williams and included hits of 87.1m @ 1.7 terest in the Mt Morgans sto-
the rest of the Dacian man- g/t and 38m @ 1.5 g/t from Rohan Williams ry, according to Williams.
agement team built during the Heffernans deposit and
their days at Avoca Resourc- 45.3m @ 1.5 g/t from Dou- “We’ve had a lot of interest
es, the clear strategy is also blejay. from banks because there
helping win investor support. is not a lot of debt funding
Deeper drilling at Double- opportunities out there pro-
“The market has been a jay also returned hits from be- jects,” he said.
little bit more fickle in recent neath the base of the existing
months as the gold price open pit, including 133m @ Dacian’s rapid escalation
has bumped around but the 2.4 g/t, 186.7m @ 1 g/t and of activity at Mt Morgans
market clearly understands 87.3m @ 0.9 g/t. has also seen it flagged as
what we are doing,” executive a potential takeover target
chairman Williams told Gold “Jupiter is becoming very for miners devoid of new op-
Mining Journal recently. interesting,” Williams said. portunities. Despite showing
“We were surprised about a penchant for both inbound
The strategy at Mt Morgans how thick the intervals were and outbound M&A activity
– 20km west of Laverton in from beneath the Double- during his Avoca days, Wil-
Western Australia’s Eastern liams for now remains coy on
Goldfields – is similar to the Dacian’s corporate future.
one enacted at Higginsville
during the Avoca days; find “If corporate stuff happens,
a once prolific historical gold- it happens but we haven’t
field that has been neglected thought about it that much
by modern exploration and and we haven’t had any ap-
test it at depth. proaches,” he said. “Once we
are in production we can start
Dacian’s initial exploration looking at M&A, just as we
efforts were so successful it did at Avoca, but we have to
was able to add 2 moz gold be methodical about how we
to a resource base which grow the company.”

– Dominic Piper

July – September 2016 GOLD MINING JOURNAL Page 13

NEWS

Gold Fields’ Australian
adventure paying dividends

In late 2001 a multi-
million dollar deal
was struck between a
large Australian com-
pany no longer enam-
oured with gold and
a South African com-
pany almost totally
focused on the metal
and wanting new in-
vestments offshore.

The talks involved WMC The St Ives gold mine on Lake Lefroy gave Gold Fields its first Australian gold production and
Resources managing director continues to make a healthy contribution to group volumes
Hugh Morgan and his finance
director Don Morley and then Mandela had stood down two While Gold Fields may be that if he was running WMC
chief executive of Johannes- years earlier as President coy on the issue, it joined at the time he too would have
burg-based Gold Fields Ltd, and his replacement, Thabo other South African min- opted for sale of the Kam-
Ian Cockerill. Mbeki was perceived as un- ing majors in finding a major balda gold interest to invest
inspiring and that man’s suc- international bourse as an in the expansion of Olympic
At the turn of the century, cessor Jacob Zuma was con- alternative to the Johannes- Dam.
the jewel in WMC’s crown sidered to have completely burg Stock Exchange. Its
was the 100%-owned Olym- tarnished the image Mandela prime listing is now the New Cockerill remained in
pic Dam mine in South Aus- had created in transitioning York Stock Exchange. charge of Gold Fields until
tralia and money was needed the country out of the repres- 2008 when he took over An-
for planned development and sive apartheid era. At the time of the St Ives glo American plc’s coal divi-
expansion. buy, Cockerill told this writer sion and he now consults to
industry groups and environ-
WMC had already fallen Exploration has been a key focus of Gold Fields throughout its WA mental and park manage-
out of love with the nickel tenement holdings with the 1 moz Invincible discovery its best to date ment groups in southern Af-
mines which for decades had rica.
provided it cash flow and im-
petus for growth, spiced with Bringing a sharp focus on
some downturns and severe gold, Gold Fields Australia
retrenchments. Its gold op- was able to expand the St
erations – centred on a gold Ives operation and built a
plant at St Ives linked by a new gold plant – the 4.8 mtpa
causeway over Lake Lefroy – Lefroy mill – three years after
were considered a more sale- the takeover.
able asset.
With a hungrier mill to feed,
The deal struck for St Ives exploration was ramped up
was $US180 million in cash and new discoveries were
and $US52 million in Gold made around Kambalda in-
Fields shares. For WMC, the cluding; Cave Rocks, Bel-
deal accelerated its exit from leisle, Athena and Hamlet.
the Kambalda region while The mix of open pit and
for Gold Fields it provided a
springboard into new terri-
tory at a time when the South
African gold industry’s global
dominance was fading rap-
idly. Not only were the mines
on the Witwatersrand Basin
heading ever deeper, Nelson

Page 14 GOLD MINING JOURNAL July – September 2016

underground operations

showed why there was still

life in the Kambalda region

for both nickel and gold. It is

the area’s mix of precious and

base metals potential which

has allowed it to negotiate the

many highs and lows of the

mining business.

Two to three decades ago,

WMC saved its corporate

skin at Kambalda by having

both nickel and gold opera-

tions, the latter being a re-

gional renaissance helped

by the fact it started with gold

untaxed.

Today, the struggling nickel

miners are looking at the re-

gional gold potential. Mincor

Resources NL and Pano-

ramic Resources Ltd both

mothballed their nickel mines

earlier this year and are pur-

suing gold projects, Mincor A miners’ meeting before the start of shift at St Ives

regionally and Panoramic

elsewhere. ence behind exploration by ducing gold from Agnew- mines in the company ex-
WMC. On a visit to the farm Lawlers and has given a ceeding planned production
Canadian nickel company in the 1990s, this writer asked new lease of life to the Dar- with AISC 16% lower than the
if all the core was placed end- lot mine, both acquired along previous quarter.
Royal Nickel Corporation on-end, how far would it go? with Granny Smith as part
of the Yilgarn South deal in In June, the South African
Inc this year took control of The WMC official said it 2013. parent said it had success-
would extend from Kambalda fully refinanced its $US1.44
the Beta-Hunt nickel mine to Perth, back again and then In the March quarter, the billion credit facilities due in
halfway back to Perth – about Australian operations pro- November 2017. The new
at Kambalda; a mine with 2,100km in total. Weston sug- duced a total of 225,400oz facilities amount to $US1.29
gested recently the core farm with St Ives (87,000oz) out- billion and comprise three
known high-grade gold zones could now extend from Perth stripping Granny Smith tranches.
to Sydney and back. (67,500oz). However, Granny
as well as a significant gold had an impressive $US759/oz The new facilities were
The company is now one AISC to St Ives’ fair $US852/ concluded with a syndicate
resource. of the big gold producers in oz. Australian group AISC for of 15 banks. On average, the
Australia and St Ives, while the quarter was $US904/oz. interest rate on the new facili-
Royal Nickel took out pri- a big contributor, is no longer ties was similar to the interest
the production flagship. That The South African parent’s rate on the existing facilities.
vate operator Salt Lake Min- role has been taken by the total gold production in March
Granny Smith mine at the was 515,000oz with all eight The company said it had
ing which has Derek Fisher northern end of the Eastern reduced its net debt by about
Goldfields. $US150 million following the
as a principal, and now the tender offer on the bonds and
Acquired by Gold Fields the accelerated equity rais-
gold factor would be domi- from a backpedalling Barrick ing.
Gold Corp in 2013, Granny
nating life for Royal Nickel, Smith now produces around Moody’s Investors Ser-
300,000 ozpa. It was named vice and Standard & Poor’s
particularly as the outgoing after the affectionate title revised the outlook on Gold
given to the wife of prospec- Fields’ long-term credit rat-
Fisher was able to strike a tor Raymond Lovi Smith, who ing to stable from negative in
had been a catalyst in the March and April, respectively.
more realistic deal with Gold mine’s discovery in 1978 for
Delta Gold and Placer Pa- – Ross Louthean
Fields’ Richard Weston on cific.

treating the gold ore. Beta The springboard provided
by the St Ives purchase now
Hunt is on a licence owned by sees the company also pro-

Gold Fields.

Weston, an Australian, is

executive vice president for

Gold Fields Australia and a

seasoned mining man who

before joining the South Afri-

can company helped manage

mines in North America and

in New Zealand.

Kambalda has one of the

biggest core farms in the

mining business, an open-

air endless collection of core

trays for nickel and gold, set

up in the early days when Roy

Woodall was driving the sci- Richard Weston

July – September 2016 GOLD MINING JOURNAL Page 15

SITE VISIT

Granny Smith conversion
first of its kind

Nearly three years
on from its acqui-
sition, Gold Fields Ltd
continues to find fresh
impetus at its Granny
Smith gold mine in
Western Australia’s
Eastern Goldfields.

There was plenty of scep-

ticism in the industry when

Gold Fields paid $US270 mil-

lion for Granny Smith, Darlot

and Lawler (collectively the

Yilgarn South assets) with

an assumption Barrick Gold

Corp was divesting tired as-

sets. However, the South Af-

rican gold mining major has

dispelled any doubts, driving Aggreko is providing 24MW of gas-generated power for the Granny Smith mine,
production up from 230,000 using modular 1.5MW engines

ozpa to 300,000 ozpa and

keeping AISC below the Granny Smith CIP plant and which runs through to Tropi- power generating system to

$1,000/oz mark. has also added a new gravity cana, Aggreko has built a the mine. The Granny Smith

Gold Fields vice president circuit which is already paying state-of-the-art modular sys- power station is modular with

Australasia, Richard Weston, its way with 30% of gold re- tem to fully service Granny each 60l engine providing

told Gold Mining Journal covery coming from the low- Smith. 1.5MW of power to the Wal-

it had been the company’s cost process. Weston said the move to laby underground mine and

focus on both production ef- In June, it unveiled its latest gas power would bring cost Granny Smith processing

ficiencies and exploration cost-saving measure when efficiencies and reliability plant.

which had turned Granny power provider Aggreko benefits as well as reducing Aggreko has operated in

Smith around. switched on its high-speed the mine’s carbon emissions the WA gold mining space for

“Gold Fields made imme- reciprocating engine power by 85,845t over the 10-year more than 20 years, providing

diate improvements and has station at the mine. Taking contract with Aggreko. short-term power solutions to

since invested in other oppor- feed from APA Group’s East- “We took advantage of the a number of miners. Howev-

tunities,” he said. “The plant ern Goldfields gas pipeline Tropicana pipeline to upgrade er, managing director George

needed some at- a 25-year old Whyte said the Granny Smith

tention and we have diesel-generated power station was the first

done that and we power station and example of its move to longer

have had a big up- reduce our carbon term power projects.

tick in reserves last emissions, making “Traditionally, we have

year.” Granny Smith eli- been onsite for two to five

Granny Smith’s im- gible for the Aus- years and our service to the

provement can be at- tralian Emissions mining sector has been built

tributed to both Gold Reduction Fund,” around the unpredictability of

Fields’ willingness to he said. mine life; either at the start-

back its exploration Aggreko is us- up or shutdown phase but

team and its ability to ing new genera- we are now looking at long-

drive down costs in tion reciprocating term opportunities. This kind

the processing plant. engines, a piston of modular power station is

The company has Aggreko managing director George Whyte and head of combustion gas more flexible and is a saving

invested heavily in operations Adam Hentschel in front of the company’s engine, which will on the capex of a permanent

refurbishment of the new gas power station at the Granny Smith gold mine deliver a 24MW power station.”

Page 16 GOLD MINING JOURNAL July – September 2016

Gas-generated power can Since acquiring the project from Barrick Gold in 2013, Gold Fields has been a lot of talk about
also have operating cost sav- has overhauled Granny Smith’s operations, turning it into the renewable energy but for in-
ings, according to Whyte. group’s most profitable Australian asset dustrial applications they are
still very risky and don’t pro-
“Mining is currently going generated power to continue towards cleaner energy and vide the required flexibility.”
through a lot of challenges in WA. that means conversion from
and the industry is looking diesel to gas,” he said. “There Whyte anticipated more
for ways to reduce operating “There is a definite trend gold miners to follow Gold
costs. Power accounts for Fields’ lead.
more than 30% of operating
costs but in WA there are a “We are doing very similar
lot of older assets which suf- set-ups with other clients in
fer from inefficiencies.” Australia but this is the first
long-term set up and the first
Aggreko’s modular plant to use this new technology,”
could overcome many of the Whyte said. “I think now such
inefficiency problems associ- a respected miner as Gold
ated with diesel plants, Whyte Fields has adopted the tech-
said. nology, others will follow.”

“Rather than the engines Access to gas is still the
going up and down, a control- most obvious challenge for
ler on site switches individual other miners but Whyte said it
engines on and off depend- could provide long-term plan-
ing on requirements. If one ning to meet various stages
engine is offline for mainte- of project development.
nance, another can start up
immediately,” he said. “We can put in diesel early,
particularly for juniors start-
APA’s gas pipeline is yet ing up, but still retain the op-
to deliver the kind of return portunity down the track to
investors were anticipating replace the diesel with gas.”
but Whyte expects the trend
of moving away from diesel- – Dominic Piper

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July – September 2016 GOLD MINING JOURNAL Page 17

COVER

Millennium back
in full flight

Page 18 GOLD MINING JOURNAL July – September 2016

Millennium’s management team at the Shearers deposit on the Nullagine mine. Shearers is one of the main deposits
in the current Nullagine mine plan

Glenn Dovaston’s first day as chief executive of The additional $5 million were actually ready to close
Millennium Minerals Ltd was far from memora- helped Millennium resched- us down and take the keys,”
ble, but it quietly marked the start of one of the most ule its bank repayments for Dovaston said.
remarkable turnaround stories of recent times. the next three months, how-
ever, it was only a short-term Fast-forward 12 months
Dovaston joined Millenni- Newcrest Mining Ltd, knew solution and the company and Millennium is now debt-
um in early 2014 as site gen- time was of the essence and still had to scramble a quick free after repaying $37.1 mil-
eral manager of operations instead of easing gently into sale of its Beatons Creek lion during that period, head-
at Nullagine, about 300km his new role, he immediately tenements at the end of the lined by a $21 million capital
south-east of Port Hedland, placed a call to the compa- March 2015 quarter to avoid raising late last year, and has
before being promoted to ny’s major shareholder, IMC disaster. close to $20 million in its bank
head office on December 18 Group. account.
that year. “We were running around
“My first day in the job and I on that final day trying to cash A turnaround on the corpo-
At the time, Millennium had to go to IMC and ask if we a cheque because the banks rate side of the business also
was struggling to stay afloat. could increase our subordi- were pretty fed up and they coincided with a reversal of
Gold production at Nullagine nated debt level to pay down fortunes operationally. Millen-
had picked up slightly, but the the banks,” Dovaston recalled Glenn Dovaston nium churned out 91,462oz
company was barely break- to Gold Mining Journal. gold at an AISC of $1,175/
ing even on the cost front oz from Nullagine in 2015,
and the Pilbara producer had It was a conversation even generating $28 million of free
just 18 months left to repay the most seasoned of chief cash flow before financing
$21.4 million of debt, having executives would have been costs.
returned less than $10 million uncomfortable having, but
to its banking syndicate in the Dovaston emerged success- Production of 23,166oz at
preceding 12 months. ful from his mission and IMC $1,195/oz AISC for the March
agreed to increase its existing quarter has the company
Dovaston, a mining engi- subordinated working capital well on track to exceed guid-
neer who has worked for the facility with Millennium from ance of 80,000-85,000oz at
likes of Barrick Gold Corp and $7 million to $12 million. $1,180-1,220/oz AISC for the
2016 calendar year.

“It’s all a little bit strange be-
cause we were on death row

July – September 2016 GOLD MINING JOURNAL Page 19

COVER

Nullagine general operations manager Peter Manton

(mining manager), “We’ve had people come
into the business more re-
Myfanwy John cently and when they go up
to site they’re amazed at how
(senior mine ge- people from across depart-
ments are so willing to help
ologist) and Chris them in their roles,” Cash
said.
Doyle (senior pro-
“Everyone’s aligned to the
ject exploration success of the company and
wants it to succeed. We’ve
Millennium has turned its attention to mining smaller, higher-grade pits at geologist). An- heard stories of operators
Nullagine, including Roscoes Reward other key appoint- dropping what they’re doing
ment was that of to help with geology and ex-
ploration. Everyone has their
there for a long time and then they’ve got the people, but I’ll former Talisman Mining Ltd roles and reporting lines, but
the success of the company
all of a sudden we’ve started tell you ours are pretty damn executive Peter Cash as gen- crosses over all of those and
we have people who are will-
to generate cash,” Dovaston good. Being able to turn a eral manager, corporate de- ing to kick in and help in shut-
downs.”
said. “I think our expectations business around from effec- velopment.
Operations at Nullagine
were ‘yes, we will survive and tively $37 million in debt to Cash, often referred to as began about 14 months
before Dovaston joined
we will get through this’, but having $20 million in the bank Dovaston’s right-hand man, Millennium and the initial
focus was on the Golden
definitely it has been much, in just over 12 months is tes- said a change of culture Eagle deposit. However,
production dropped below
much faster than we thought. tament to that.” among the workforce on site

“We brought some pretty The people Dovaston is re- was one of the key drivers

high-quality, passionate peo- ferring to include Peter Man- behind the turnaround in op-

ple into the business and that ton (general manager op- erational performance at Nul-

effort of turning it around was “erations), Asareh Mansoori lagine.
truly remarkable. It’s testa- It’s all a little bit strange because
ment to the effort everyone is we were on death row there for
putting in to make this all hap- a long time and then all of a sudden
pen, from here at head office we’ve started to generate cash.
all the way down to our opera-
tors up on site.

“I know everyone tells you

Page 20 GOLD MINING JOURNAL July – September 2016

15,000oz in the December Mining manager Asareh Mansoori (left) and senior mine
2013 quarter as the company geologist Myfanwy John were instrumental in the
experienced issues with dilu- turnaround of operations at Nullagine
tion and geological control.
cally what was going on in to retire all of its outstanding phase of our business and
Sustaining cash costs bal- this goldfield and we were not debt in February, one month that business was to increase
looned out to almost $1,500/ mining it correctly.” ahead of schedule, while also mine life.”
oz in late 2014 and, along setting the scene for the next
with some poor mining prac- Millennium achieved record chapter of Millennium’s re- Millennium ended 2015
tices, contributed immensely production of 21,664oz gold markable turnaround story. with a solid year of production
towards Millennium’s inability for the June 2015 quarter behind it, but only enough re-
to repay its bank debt. before bettering that achieve- “With this raising, we were serves to continue mining at
ment with output of 27,238oz also able to start exploration,” Nullagine until September
Mining activities at Golden in the September 2015 Dovaston said. “Previous to 2017. However, no one within
Eagle ceased in the March quarter. AISC also fell from that, the banks wouldn’t allow the internal walls of the com-
2015 quarter and attention $1,281/oz to $1,020/oz over us to spend anything outside pany was concerned given
was shifted to a number of the six-month period, allow- the mining plan because they the untapped nature of the
satellite deposits, including ing the company to prepare were pretty worried about Pilbara goldfield.
Golden Gate and Bartons. for a capital raising that would getting their cash.
Initially, output improved 11% mark another major turning The drill rigs arrived on site
and operating costs fell 12%, point in its history. “We had over 30 targets in December and by the end
prompting a look at several at that point in time that we of March, Millennium had lift-
other smaller, higher-grade The $21 million capital rais- wanted to look at, but we ed the reserves at Nullagine
pits. ing was underwritten by IMC couldn’t drill any holes, so by 27% to 159,000oz.
and Millennium’s contractors [the $21 million capital rais-
For Dovaston, it was a “slid- and enabled the company ing] really started this next Drilling continues to deliver
ing doors” moment for his encouraging results for the
company in an operational
sense.

“I think the click was our
understanding that geologi-
cally the ore was there, but
our models weren’t correct,”
Dovaston said. “We were us-
ing models created by exter-
nal consultants that the for-
mer teams were just putting
on the ground and expecting
them to be correct.

“Going into Bartons was
really the start of change in
not only the guard of people,
but also in how we did things.
We now understood geologi-

July – September 2016 GOLD MINING JOURNAL Page 21

COVER

Millennium owns the only gold processing plant within a 200km radius of Nullagine Wedgetail Exploration (later
Wedgetail Mining), pieced
company, headlined by hits of resources from it, straight up, 3m @ 9.9 g/t). The best inter- together the ground in 2002.
12m @ 8.54 g/t gold (includ- so potentially eight reserves. cepts below Shearers include Prior to that, the Nullagine
ing 4m @ 24.2 g/t) at All Na- We’ve got 30 of these over 41m @ 4.2 g/t (including 3m goldfield was broken up into
tions, 4m @ 43 g/t (including 40km of strike just to start @ 29.5 g/t), 14m @ 6.57 g/t 30-40 separate tenements
1m @ 171 g/t) at Anne de Vid- with – and that’s without look- and 5m @ 7.5 g/t. held by small-time prospec-
ia and 6m @ 10 g/t (including ing at anything else.” tors.
1m @ 55 g/t) at Golden Eagle “Geologically there is no
South. At the time of print, Millen- reason why these zones Dovaston, who oversaw
nium announced it was start- won’t continue, but we don’t development of the Mt Dove
“We’re now at a point where ing a maiden deeper drilling know yet because we haven’t project for fellow Pilbara jun-
we’re very confident – and programme at Nullagine, tar- drilled them,” Dovaston said. ior Atlas Iron Ltd before mov-
bullish – that what we’ve set geting mineralisation beneath “We’re pretty confident that ing to Millennium, said the
in place, in terms of increas- several existing shallow open they do extend at depth.” region’s potential for minerals
ing mine life and focusing on pits, including Bartons and other than iron ore was start-
the oxide pits in our region, Shearers. Nullagine, about 200km ing to be recognised.
will give us the mine life that west of Telfer and 400km
we need to, at least, continue Previous drilling below the east of Paulsens, is one of “Obviously the focus has
going for another three years, Bartons pit returned 10m @ only a small handful of es- been on iron ore for a very
maybe four,” Dovaston said. 4.88 g/t gold (including 5m @ tablished gold operations in a long time, but you’re starting
8.84 g/t), 7m @ 7.73 g/t (in- region universally recognised to see lithium come through
“We’ve drilled eight pros- cluding 4m @ 5.54 g/t) and for its iron ore potential. now and there’s plenty of
pects now and we’ve got eight 27m @ 1.97 g/t (including copper and plenty of man-
Millennium’s predecessor, ganese around as well,” Do-
vaston said. “The Pilbara is
actually underexplored for a
lot of minerals and gold is one
of those.

“We’re on a different for-
mation to the iron ore forma-
tions...it has been an interest-
ing challenge, compared to
the big boys and they seem
to get a lot of the credit, but
I’ve got a feeling now that,
over time, a lot of these other
minerals will start to step up
and while they’ll never take
over, I’m confident we’re go-
ing to be part of the Pilbara
for a long time yet.”

Millennium has flagged
a potential upgrade to the
Nullagine processing plant,
which runs at just under 2

Senior project exploration geologist Chris Doyle Dovaston discusses operations with his right-hand man, Millennium general
explains the mineralisation in the Junction pit manager corporate development Peter Cash

Page 22 GOLD MINING JOURNAL July – September 2016

“ Golden Eagle was the initial focus of Millennium’s plans, but has since been placed on the backburner
...there were points where
maybe we didn’t think we
would pull through, but we did
and here we are now.
mtpa, but a decision on the our chances of be-
appropriate modifications
or how it will be funded is at ing a mid-tier gold
least six months away.
producer,” Dovaston
One thing clear is that Mil-
lennium owns the only com- said.
mercial gold processing fa-
cility within some distance; “Is there upside
a position the company be-
lieves it can leverage off in at Nullagine? Defi-
the years to come as produc-
tion ramps up at Nullagine. nitely, but we’re

“We don’t believe it’s going also looking at other
to be replicated in the region,
as the capital expenditure to opportunities, ei-
replace such a plant would
be at least $100-120 million, ther in Australia
so we think it’s unlikely that
any major project out there or elsewhere, to
will put up that sort of money,
which really puts us in the be able to build on Gold pours are now a regular occurrence at
box seat,” Cash said. our business and I Nullagine and (inset) gold room supervisor
think we’re in a very
With operations steadily strong position to at Stefan Mysko with the resultant product
ramping up and the corporate
side of the business running least have a look at those op- million and everyone thought
smoothly, Millennium has en-
tertained the idea of entering portunities. we were going under. And to
the M&A space for the first
time. From a company on death’s be totally honest, there were

“We’re quite upbeat about door a little more than 12 points where maybe we didn’t

months ago, Millennium is think we would pull through, “We’re on the map now.

now fielding calls from advis- but we did and here we are We’re a producer and we’re

ers to much bigger gold com- now. in the top 10 gold producers

panies potentially looking to “It’s amazing what happens in Western Australia. We’re

divest assets. when you’ve got money in the being recognised and we

“People are now starting bank who starts ringing you. like that people are starting

to look at Millennium when When you’ve got no money, to ask, ‘Millennium, what are

beforehand we were just a no one wants to know you, they up to?’.”

penny dreadful,” Dovaston but when you’ve got cash in – Michael Washbourne
said. “We were processing, the bank all you hear is, ‘have

but we had a market cap of $5 we got a deal for you’.

July – September 2016 GOLD MINING JOURNAL Page 23

SITE VISIT

Confidence a
wonderful thing at

Evolution

Confidence is high at Evolution Mining Ltd – so since Evolution was formed, Evolution was expected to
high, the prolific gold producer has released whilst also giving us the op- post record gold production
a three-year guidance at a time when others are portunity to deliver meaning- of about 213,000oz for the
ful growth.” June quarter, at an average
AISC of about $1,075/oz, tak-
barely able to look more than a week ahead. Speaking at a forum for in- ing the company’s full-year
vestors, analysts and media output beyond 800,000oz,
well above the 437,750oz pro-
in Sydney in late June, Klein duced in FY2015.

Following the acquisitions “We believe this sized port- was assured that FY2017 Full-year AISC and C1
cash costs were estimated
of Cowal and Mungari in the folio gives the critical mass would be an even better year to be $1,000/oz ($US728/
oz) and $740/oz respectively.
last 12 months, Evolution is to deliver a more predictable for Evolution after his com- Sustaining and major capital
expenditure for the past fi-
now the second largest gold outcome, as reflected in the pany broke every internal nancial year will total just un-
der $200 million.
producer on the ASX which it fact we have not missed guid- business record possible in
The estimated net cash
will confirm on July 21 when ance in any of the 18 quarters FY2016. flow is $405 million, up from
$138 million in FY2015, and
it announces that 800,000oz Evolution did not have control
of either Cowal or Mungari for
gold was churned out across the full 12 months of the an-
nual reporting period.
its seven Australian opera-
By June 30, Evolution had
tions in FY2016. repaid $322 million of debt ac-
crued from the acquisition of
Evolution executive chair- Cowal, with only $285 million
still outstanding and the compa-
man Jake Klein took the unu- ny finding itself in the enviable
position of being able to stra-
sual step of unveiling a three- tegically manage its remaining
payments to the banks.
year guidance of at least

800,000 ozpa in late June,

declaring there was no point

being conservative when

his company boasted such

a strong portfolio of assets,

coupled with a bullish long-

term outlook for gold.

“We want to be a gold com-

pany with a portfolio of 6-8

assets that generates supe-

rior returns for our sharehold- Evolution executive chairman Jake Klein with finance

ers,” Klein said. director Lawrie Conway

Page 24 GOLD MINING JOURNAL July – September 2016

Seven drill rigs were turning at Cowal in late June

boasts a market cap of close were going to get there,” Klein

to $4 billion. The company’s said.

stock is also trading at its best “We think there is an op-

ever levels, peaking at $3.02/ portunity to build a company

share at the time of print. that’s recognised by global

Klein, who spearheaded gold investors as delivering

the development of the first superior returns in the model

foreign-owned gold mine in of Randgold [Resources Ltd].

China in the late 1990s, told “I think the best returns

Gold Mining Journal he to shareholders [in recent

continued to be amazed by times] have come from mid-

And in a move that is sure staff on the company’s books Evolution’s rapid rise. tier gold companies. We look
to have delighted sharehold-
ers, Evolution doubled its and a failed feasibility study “It’s exceeded my expec- at a company like Randgold
dividend payment to 4% of
revenue. on Mt Carlton, which Evolu- tations, albeit if you look at and view them in some ways

“We think the increase in tion subsequently developed the first presentations we put as the gold standard of gold
dividend is very affordable,”
Klein said. “Obviously gold into Queensland’s first new out as Conquest, we said we miners. They have been, over
is $200/oz higher than the
numbers from the last finan- gold mine in a decade. wanted to be a globally rel- more than a decade, very fo-
cial year, so if you extrapolate
that we will be able to pay Evolution now employs evant mid-tier gold company, cused and very consistent in
down debt materially, which “more than 1,500
is still a priority, having built in people but we had no idea how we their strategy and I think they
this 4% dividend. across its seven
operations – We think there is an opportunity to build
“We’re 15 months ahead Edna May, Cra- a company that’s recognised by global
on our fixed term debt, as to cow, Pajingo, Mt gold investors as delivering superior returns
our repayments…so doubling Carlton, Mt Raw- in the model of Randgold [Resources Ltd].
the dividend is where we are don, Mungari
at but clearly if we get an op- and Cowal – and
portunity post the pay down
of debt, that can be revisited.” Operations at Cowal are permitted until 2024, but Evolution is seeking to extend approvals beyond 2032

It would be an understate-
ment to say Evolution has
come a long way since ar-
riving on the Australian
bourse in 2011 following the
$1.2 billion merger of Klein’s
Conquest Mining with Bruce
McFadzean’s Catalpa Re-
sources.

Conquest had floated only
a year earlier with just five

July – September 2016 GOLD MINING JOURNAL Page 25

SITE VISIT

Cowal is expected to produce 245-260,000oz at an AISC of
$885-945/oz in FY2017

Evolution has added 1.29 moz of reserves in just 11 months and Mt Carlton as very close “So we walked in and their
of ownership at Cowal and very good performing as- head of business develop-
sets, and Mt Rawdon has got ment shook my hand and
would be the best performing lion of sustaining capital. The a long life as well. said, ‘congratulations, you’re
gold stock over a long-term mine generated almost $150 the owner of Cowal’. At that
period, so that’s really our as- million net cash flow for Evo- “The other three have got point I was concerned we had
piration.” lution in FY2016. shorter mine lives, but are potentially overpaid.
operating well. If we had left
Undoubtedly, the jewel “We knew we needed bet- it as the original five, I think “Clearly in hindsight, that’s
in the crown for Evolution ter quality assets if we were we would have still been lev- not been the case. There
was Cowal, the former Bar- really to become a genuine, eraged to the gold price, but were a lot of people who,
rick Gold Corp asset located globally relevant, mid-tier we wouldn’t be in the space when we announced the
about 40km north-east of gold company,” Klein said. we’re in today.” deal, said, ‘you’ve overpaid
West Wyalong in New South for this asset’, so there were
Wales. “I think for the first four Evolution swooped on plenty of sleepless nights.”
years of our life as Evolu- Cowal after welcoming Egyp-
Evolution has not wasted tion, people regarded us as tian billionaire Naguib Sawiris Investors are now asking
an opportunity to express its pretty good operators, with on to its share register in April what is next for Evolution
love for Cowal, increasing its an A-grade location but with 2015 following the takeover and whether the company re-
reserves by 83% to 2.85 moz B-grade assets. I think they of La Mancha Resources mains open to further M&A,
gold in less than 12 months of were wrong about Mt Carlton Australia Pty Ltd, specifically but Klein is cautious of fall-
ownership. The current Stage and potentially Mt Rawdon, the Mungari operation, near ing into the same trap that
H cutback of the main E42 but that was the general per- Kalgoorlie in Western Aus- has seen Barrick and several
pit is expected to add anoth- ception. tralia. Sawiris then provided other majors exit Australia in
er 1.4 moz to the inventory, Evolution with a $100 million recent years.
equating to about six years of “If we really wanted to move cash incentive to pursue oth-
extra mine life. into the next league, we knew er portfolio growth opportuni- “We have consistent-
we needed to change the ties. ly looked at acquisitions
Cowal is expected to pro- quality of our portfolio. If you through the lens of whether
duce 245-260,000oz in look at our asset base now, Klein had been keen on it will improve the quality of
FY2017 at an AISC of $885- clearly Cowal is a standout Cowal since Barrick started our portfolio, but growth for
945/oz, with up to $45 mil- and then you’ve got Mungari divesting its Australian assets growth’s sake has been tried
in 2013, but even he couldn’t and tested and doesn’t work,”
believe it when Evolution Klein said.
trumped three other bidders
in May 2015 to take control of “As the gold price goes
the mine. higher, capital markets be-
come more easily available,
“Barrick rang us up on the shareholders want to see
Saturday after the bids had more growth and you go back
closed on the Friday and said down the path of potential
they wanted to see us on the value destruction, which is a
Sunday,” Klein recalled. “We well-trodden path for the gold
thought we were going in to industry because everyone
have a discussion and nego- says, ‘OK, that’s great, but
tiation about price and they what next?’.
were going to say, ‘you need
to pay a bit more’. “We’re determined not to go
down that path and that’s why

Page 26 GOLD MINING JOURNAL July – September 2016

Evolution hosted several investors, analysts and media at Cowal in late June

we keep saying 6-8 assets is time,” Klein said. “I don’t think you can do M&A is when you and pay a premium on a
the right number. Investments you can choose one or the really understand the value of company and hope the mar-
and M&A are all on the table, other, so we’re going to keep your assets, and the market ket hasn’t understood it, so
provided they improve the doing all three of them, rec- understands that. unless we can see the value
quality of our portfolio.” ognising that the best time that we can bring to the asset
“We’re not going to go out and it improves the quality of
Pajingo is one asset which our asset base, which is more
has been placed on the table, One of Evolution’s longer-term goals is to upgrade the plant difficult to do now that Cowal
however, Klein declined to throughput at Cowal to 9 mtpa is in it and Mungari is in it, we
comment on any specific di- won’t do it.
vestment case. Should a sale
go ahead, Evolution may not “But standing still also isn’t
necessarily look to replace it. an option in a gold company.
These are finite life assets
Like fellow leading gold and we’re going to treat it as
producer Northern Star Re- a portfolio of assets.”
sources Ltd, Evolution is tip-
ping cash into regional explo- With almost 2.5 moz gold
ration around its mines and predicted to flow from Evo-
had seven drill rigs turning at lution’s assets over the next
Cowal at the time of print. three years and the strong
possibility of further improve-
Further exploration of the ments to his company’s
ground acquired from last portfolio of assets, Klein has
year’s takeover of Phoenix every reason to be confident
Gold, bordering the Mungari about the long-term outlook
tenements, is also planned, for his booming business.
as well as drilling campaigns
at the Tennant Creek JV with “This year has been a great
Emmerson Resources Ltd in year, and next year is planned
the Northern Territory and at to be even better,” he said.
the Puhipuhi project in New “This is sustainable, as re-
Zealand. flected in our three-year guid-
ance. We have great upside
“Organic growth is the low- in our core, quality assets and
est hanging fruit in terms of we have the people to make it
value creation, but I think gold happen.”
companies need to be able
to do discovery, M&A and – Michael Washbourne
organic growth at the same

July – September 2016 GOLD MINING JOURNAL Page 27

DIGGERS & DEALERS PREVIEW

A Diggers of gold

2015 2014 2013

2012 2011 2010 2009

2008 2007 2006

2005 2004

Gold diggers: A lot has changed for gold companies at Diggers & Dealers in the last decade

Page 28 GOLD MINING JOURNAL July – September 2016

After allowing other commodities their moment exploration could generate Familiarity is also an ad-
in the limelight at various times in the past two further momentum for the in- vantage for gold developers
decades, Diggers & Dealers is very much a gold dustry. hoping to attract project fi-
nance.
“It is welcome because

show again this year. there have not been too many “Financiers can get their
exploration success stories head around gold projects;

in the last five years; Doray they are simple mining, sim-

Some 35 of the 46 compa- best performers in terms of [Minerals Ltd], Gold Road ple processing and the Mint

ny presentations at this year’s absolute market cap appre- [Resources Ltd] and Dacian will take all of the gold every

forum are gold-focused and it ciation, 18 companies were [Gold Ltd] are among the few time.”

is certain there will be dozens from the gold sector. but the industry needs suc- Many of the conversations

more gold juniors promoting Report author and PCF cess stories because that at this year’s Diggers & Deal-

their projects in the exhibition Capital executive director builds confidence in the mar- ers will inevitably revolve

tent. It is a change from sev- Darren Martin said the report ket. around rumoured M&A activ-

en or eight years ago when highlighted just how success- “You’ve also got Gold ity and Martin expects some

iron ore, uranium and copper fully ASX-listed gold miners Fields [Ltd] spending $65 mil- companies to be gearing up

came to dominate the Dig- had tapped into the positive lion this year in WA. The gold for a bout of corporate deals.

gers schedule. market sentiment for gold. sector has not had that level “It would be a surprise if

The trend is hardly surpris- “The likes of Saracen of exploration in a very long companies didn’t start to use

ing. While other commodities [Mineral Holdings Ltd], Re- time.” the value of their scrip to acti-

have struggled to pull away gis [Resources Ltd], North- Given Western Australia’s vate acquisitions,” he said.

from multi-year lows, spot ern Star [Resources Ltd], long history of gold mining Timing is everything in

gold has recovered from its Resolute [Mining Ltd]; their and exploration there are such all-scrip deals but Mar-

January bump to hit two-year performance over the last also any number of projects tin believes the current gold

highs in July on the back of 12 months has been remark- that have been forgotten. The run has some time to go yet.

political uncertainty (Brexit able,” Martin said. “The sec- likes of Dacian and Doray (at “If you look at the current

and the US presidential race) tor’s average enterprise value Horse Well) are proving size- outlook for gold it appears

and the US Federal Reserve’s per resource ounce is now able resources are still to be sustainable,” he said. “With

unwillingness to push interest around $380/oz versus just found on mature ground and Brexit and all the other un-

rates upwards too quickly. over $200/oz 12 months ago. Martin expects other projects certainty in international poli-

The share prices for ASX- “It is, of course, leveraged to re-emerge. tics, we certainly don’t see it

listed gold companies have to the gold price and the Aus- “Another example is Cap- changing in the near term.”

reflected spot gold’s surge. tralian dollar gold price in par- ricorn [Metals Ltd, see page And, in comparison to their

The S&P All Ordinaries Gold ticular but also because the 46],” he said. “It will be inter- North American cousins, the

Index is up 102.4% since the performance of other com- esting to see whether there Australian gold stocks still

start of 2016, meaning gold modities has been so poor.” are other assets which be- look undervalued.

miners are outperforming all While the established pro- gin to receive more love and “The TSX gold stocks are

other market indices, includ- “ducers garnered the majority come back to market.” at a completely different lev-
ing the ASX200 (up 2.02%)
and the All Ordinaries (up of market support in el,” Martin said, point-
2.6%).
the back end of 2015, ing to one TSX-listed
PCF Capital Group’s Re-
sources Thermometer report, investor enthusiasm The industry needs company, Newmar-
released in July, highlighted has begun to filter success stories ket Gold Inc, set to
down to the juniors in take to the podium in
2016. There has been because that builds confi- Kalgoorlie.

the strength of the gold sec- a flurry of gold junior dence in the market. Newmarket – for-
tor’s performance. While the capital raisings in the
merly Crocodile

PCF Group 150 – a ranking last three months as Gold Inc – controls

of the top 150 ASX-listed re- investors attempt to find the The lack of alternative in- the Fosterville and Stawell

sources companies by mar- next success story. vestments is also making gold mines in Victoria and

ket cap – shed $49.3 billion “The juniors are in for a gold more attractive to debt the Cosmo gold operation

or 17% in value over the 12 good run over the next period financiers, according to Mar- in Northern Territory. It pro-

months to June 30, gold min- I think,” Martin said. “The likes tin. duced 222,671oz at $US987/

ers within the group saw their of Gascoyne [Resources Ltd], “It is the perfect storm for oz AISC from the three oper-

market cap grow by an aver- Kidman [Resources Ltd] and gold,” he said. “The traditional ations in 2015 and is capped

age of 103%. Primary Gold [Ltd] are enjoy- sources of finance, the banks, at $C687 million.

The charge was led by the ing good support and when are nervous about other met- “Compare that to Doray

ASX’s largest gold miner, you look at where a company als and are saying ‘show us [which is set to produce

Newcrest Mining Ltd, which like Blackham Resources gold because anything else 150,000 ozpa from this year]

added $7.65 billion to its mar- [Ltd] has come in the last 12 will be very difficult to source and its $368 million market

ket cap during the year. The months you realise the extent credit for’. So, the appetite is cap and you can see the TSX

Melbourne-based miner was of that market support.” there, especially when they valuations are eye watering.”

far from alone and of the top Martin said the spate of re- can put some hedging in – Dominic Piper
30 of the PCF 150 Group’s cent capital raisings to fund place.”

July – September 2016 GOLD MINING JOURNAL Page 29

DIGGERS & DEALERS PREVIEW

Drilling starts on next
of Kin targets

Trial mining started at Kin’s Lewis pit at the Leonora project in June

Aclear strategy and of capital; our strategy has to feed it and water it’. The ounces at Leonora and it has
the possibility of been aimed to lift ourselves board threw down the chal- given us a real value for the
early cash flow have to the top of that group. We lenge of finding a near-term ounces and an indication
elevated Kin Mining have a defined plan for the cash flow opportunity and of our ability to mine them,”
NL towards the front next four years and so in- we identified Lewis.” Dixon said.
of the junior gold vestors can see where we
throng, according to are taking the business and Dixon said with the six- “It has also given us a pic-
the company’s ex- have reacted strongly.” month permitting process ture of what we need to do to
ecutive director Trevor now complete, the company take the project forward. It
Dixon. The strategy has included was well into excavation and told us more work was need-
taking the Lewis open pit hoped to sign a toll-milling ed; to generate more ounces
Like many of its peers, Kin prospect at the Leonora gold agreement for processing overall but specifically more
has enjoyed a strong start to project in Western Australia through the Lakewood mill in near-surface ounces to im-
2016 with shares rising from through the permitting pro- Kalgoorlie before the end of prove the payback period.
7.5c in April to as high as 29c cess in order to begin trial July. The current gold price is do-
in July. However, Dixon be- mining. ing some of that work for us
lieves the company’s longer- Toll-milling of the Lewis ore [pit shells were designed on
term strategy means it has First ore was mined at is set to give Kin the cash flow a $1,500/oz gold price] but
set itself apart from competi- Lewis in late June, with Kin boost it needs to pursue wider we don’t want to rely on price
tors. effectively testing a high- exploration around Leonora. to get us there.”
grade portion of the Bruno-
“The market is looking at Lewis Cardinia supergene A scoping study completed Dixon said the scoping
gold but in particular at com- resource of 3.4mt @ 1.3 g/t in May indicated free cash study had been rigorous in
panies that did all the nec- gold for 139,400oz. flow of $142.7 million could an effort to give the clearest
essary work to push them- be generated from resources indication of what would be
selves up the tree,” Dixon “The real driver for that in excess of 315,000oz gold. needed to fund development.
said. “There is a big group came in February last year Dixon said the study had giv-
of junior gold companies when times were too tough en Kin an indication of what “We did the scoping study
competing for the same pool to raise money on the mar- further work was needed. from the financier’s point-of-
ket,” Dixon said. “The board view and that was our objec-
said: ‘Trevor, you have de- “We were happy with the tive take on the scoping study
livered the company this scoping study results be- results: ‘If I have to wait half
great asset but we now need cause it was Kin’s opportu- the mine life to get my money
nity to put its brand on the

Page 30 GOLD MINING JOURNAL July – September 2016

back, I’m not sure it is worth “I think the Mertondale 3/4 placement to a high-net worth look at the financial situation
the risk.’” pit, which is just 300m north individual who liked the story clearly and see how Lewis is
and produced 180,000oz @ and that is an example of the performing,” Dixon said.
The main target for the 4.3 g/t from open pit in the changing nature of the finan-
near-surfaces ounces is the modern era, probably took cial world; he was prepared to The ultimate objective at
Merton’s Reward prospect the spotlight away from Mer- buy in at market price.” Lewis – which comprises a
at Leonora. The company ton’s Reward,” he said. supergene blanket – is to
started a 2,000m RC drilling The company has a $1 mil- build a vat or heap leach
programme in June to follow “But, we have 6-8km of lion loan – linked to the pur- operation to reduce upfront
up on earlier results of 27m strike along that trend with chase of Leonora from the capital costs.
@ 2.65 g/t gold from 66- a number of deposits and it administrators of Navigator
93m, 1m @ 16.7 g/t from 84- contains the bulk, 398,000oz, Resources Ltd – which ma- “We have received a 45c
85m and 1m @ 10.7 g/t from of our resource ounces. That tures in November and Dixon in the dollar R&D rebate from
9-10m. is why we are focusing on said it was likely the company the ATO and I think we are
that corridor; it gives us the would go back to the market into technology which could
“We believe the Merton- best opportunity to build the to repay the debt. help the entire industry,” Dix-
dale area is our premier ounces we need.” on said. “I did a lot of work
areas, particularly around “We will probably ask in the 80s on developing an
Merton’s Reward. It is a bit of Kin’s ability to fund the shareholders to clean up the improved carbon tank and we
an anomaly because I have 2,000m RC programme was balance sheet so it will likely intend to apply that technol-
seen a lot of old mines rede- boosted by a $1.68 million be a rights issue,” he said. ogy at Lewis.
veloped as open pits in the placement undertaken in
Eastern Goldfields over the May. Dixon said the raising By then the company ex- “The gold industry has
last 30 years but this one has was an indication of the cur- pects to have informed the been very good to me over
been left behind.” rent sentiment towards gold market on the potential of the last 30 years and Kin is
juniors. Merton’s Reward to offer ad- an opportunity for me to give
Dixon said Merton’s Re- ditional ounces and the pro- back to the industry and the
ward had been a solid pro- “I think the market condi- gress of mining at Lewis. State.”
ducer at the start of the 20th tions are good, there is cer-
Century, offering up 90,000t tainly a light being shone on “We are still drilling Mer- – Dominic Piper
@ 21 g/t from an open pit, Australian gold at the mo- ton’s Reward so there will
but had been largely ignored ment,” he said. “We had a be a lot of news coming out
since. nice pick up in May through a in the run up to Diggers &
Dealers and after that we can

July – September 2016 GOLD MINING JOURNAL Page 31

DIGGERS & DEALERS PREVIEW

Beament hungry for
more success

Northern Star Australian gold producers Bill Beament to trickle out into the market
Resources Ltd such as Northern Star have now – and we’ve still got a
managing director Bill never looked more attrac- Star’s share price cracked few more announcements to
Beament is ready to tive to international investors $5/share for the first time in come in that respect.”
feed the world’s grow- when you pit a rising gold June and looked set for an-
ing appetite for gold. price against a depreciat- other run at the time of print. Northern Star was prepar-
ing local currency. However, ing to release its financials
Beament closed FY2016 Beament believes Australia is Trading at an all-time high for FY2016 at the time of
with a whirlwind three-week still trailing key global markets would have been cause for print, but there was no doubt-
trip around the world, speak- in their longer-term views on celebration in years past, ing the company would post
ing to several major global gold. but for Beament and his col- numbers at the higher end of
investment funds about their leagues the milestone gar- production guidance (535-
views on the precious metal “We don’t really have spe- nered nothing more than a 570,000oz) and lower end of
for the coming financial year cialist resource funds in Aus- few quiet pats on the back. the cost guidance ($1,050-
and beyond. tralia, so most of the funds on 1,100/oz), along with other
the east coast are more gen- “We never have time to encouraging economics.
Speaking to Gold Mining eralist in nature,” Beament reflect on where we’re going
Journal upon his return in said. “They’ve been chipping because we’re running at 100 The company expects
late June, Beament could not away over the last six months, mph,” Beament said. “What I more than 1.5 moz of re-
be more upbeat about the so I’m not saying they’re in can say is the visibility of the sources will be unlocked for
outlook on gold and where the distance, but I just think company is the best it’s ever future mining from spending
Northern Star was placed to in general in Australia we’re a been and it’s getting better $74 million, having added 2.7
meet the expected demand. little bit insular to what’s hap- every day. moz to its mining inventory in
pening outside of here. FY2015, despite depletion of
“The real key, common “Our visibility across our 600,000oz in that period, for
theme to come out of those “There is a big, big appetite portfolio of assets really a discovery cost of just $19/
three weeks was just how for gold around the world and changed about six months oz.
bullish people are on gold it was really encouraging to ago, or maybe even nine
– and that isn’t just from the see. We were in Toronto and months ago. Internally, we Northern Star reported re-
specialist resource funds we talked to a few people who knew that as a management cord operating cash flow of
which own most of the re- said it was the busiest they’d team and as a company, $103 million for the March
sources stocks around the seen in M&A in the gold but externally to the market quarter from the sale of
world,” Beament said. space in five years. Things and shareholders we’ve only 143,469oz at $985/oz AISC,
are hitting a really interesting started to articulate that in down 5% on the previous
“We’re starting to see the position.” the last three or four months three months. Gold sold dur-
generalist funds that haven’t and that’s probably helped ing the first three quarters of
been in resources for a long With all contributing factors the share price, as well as the FY2016 totalled 427,042oz at
period of time, for years and aligning nicely for established gold price. $1,036/oz AISC.
years and years, and they’re Australian gold producers
the ones who are caught na- during the first half, Northern “People now understand Beament said consistency
ked in exposure to gold and that we’ve got huge longevity of production was now the
they’re scrambling to get in across these big, world-class “name of the game” for min-
on it. systems and that’s starting ing companies following sev-
eral years of underwhelming
“These are very large gen- results.
eralist funds, much larger
than what we see here in “It all comes back to not
Australia, and they have a falling into the trap of what
very different feel of where happened four or five years
gold equity is and where the ago when the resources in-
gold price is going. When you dustry was a perennial un-
see generalists wanting to derperformer, and investors
take large positions into gold hated that,” he said.
equities, that’s telling you a
little bit about what they think “They don’t like any surpris-
about the macro-environ- es, they just like consistency.
ment.” You don’t want to shoot the
lights out one quarter and be
a villain the next. I think we’ve
only had one bad quarter the

Page 32 GOLD MINING JOURNAL July – September 2016

market wasn’t expecting in Kanowna Belle is the lowest-cost operation in Northern Star’s portfolio
the six years we’ve been in
existence, which is pretty ex- someone else or taking over body stops”. bouncing back after a hor-
traordinary. a company. The best growth Northern Star is transi- ror March quarter in which
in Northern Star at the mo- 138mm of rain fell in just two
“Most companies are get- ment is organic growth.” tioning to contract mining at hours, causing “absolute cha-
ting better at their forecasting Kundana, which is also about os”. However, the company is
and maybe under-promising Beament could not be hap- to lift production to 250- continuing ahead with a di-
but over-delivering so you pier with how his operations 260,000 ozpa. Beament said vestment process which “may
don’t [want to] surprise share- are tracking, particularly at he could not fault any aspect or may not result in a sale”.
holders. I reckon we’ve reined Paulsens, the company’s of that operation.
that in over the last four or five original mine, and Jundee, Northern Star recently
years and just put out realistic where 10 diamond drill rigs “Our productivity there completed an infill drilling
targets which analysts and in- are currently turning ahead have been just unbelievable, programme at Central Tan-
vestors can model easily.” of a production ramp-up later they’ve even surprised the ami and has started seeking
this year. senior management group,” quotes to refurbish the ex-
After rising to prominence Beament said. “We had the isting plant which produced
through M&A in late 2013 and Kanowna Belle continues ‘a-ha’ moment on Kundana 610,000oz @ 4.13 g/t gold
early 2014, Northern Star has to be the lowest-cost opera- about three months ago when over four years until opera-
turned to organic growth in tion in the company’s portfo- we told the market the three tions ceased in 2005.
a bid to lift its production to- lio, returning cash margins of main lodes were linking up at
wards 700,000 ozpa over the close to $1,000/oz, but Bea- depth. We’ve now got a 2.2- “Our organic production
next few years. ment said he was most excit- 2.3km strike orebody at depth growth is looking really great
ed about the mine’s potential and it will take us over a dec- and that means our cash flow
The company’s success at depth because “there is ade to get down there.” is set to go to a whole new
with the drill bit has been just nothing to suggest the ore- level,” Beament said.
as positive as its production Beament said Plutonic was
outputs. Recent intercepts “I’m very happy with how
of 24.5m @ 30.6 g/t gold Northern Star is looking to increase production to 700,000 ozpa the business is tracking. Re-
(including 8.8m @ 79.9 g/t), across its suite of assets gardless of the gold price or
42.7m @ 13.4 g/t (including your share price, when you
12.1m @ 37.1 g/t) and 36.3m have such a low cost base
@ 13.7 g/t (including 22m @ you’re always going to make
18.5 g/t) from the Velvet de- an excellent cash flow.
posit at Kanowna Belle has
helped silence some of the “To be frank, I’m happy with
critics who questioned the anything over $1,350-1,400/
longevity of Northern Star’s oz gold price. We’re playing a
operations. much longer-term game and
it will be really interesting to
“The good thing about the see how the company is go-
exploration results we put ing to look in the next 12-18
out on a reasonably regular months.”
basis is they really just un-
derpin that visibility we now – Michael Washbourne
have across our portfolio,”
he said. “We might not get an
instantaneous benefit there,
but it gives comfort to our
shareholders and potential
investors of the visibility and
longevity of our assets.

“We’ve gone a long way in
the past 12-18 months, to the
point where mine life used to
be an issue for Northern Star
up until about six months ago.
Now, after going around the
world for three weeks, not a
single one of my major share-
holders talked about mine life.

“Exploration is going to
continue to motivate capital
in Northern Star while we get
those sort of returns. We think
that’s far better than going out
and buying another asset off

July – September 2016 GOLD MINING JOURNAL Page 33

7 - 9 September 2016

Perth,Western Australia

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

People of ADU 2015:

2016 sponsors to date:

www.africadownunderconference.com

DIGGERS & DEALERS PREVIEW

Matilda’s last laugh

It’s a dog” was one Mining at the Matilda gold project was expected to start in July. At new era in mining for Wiluna],
punter’s reply when the time of print, resources totalled 48mt @ 3.3 g/t gold for 5.1 moz it has been a mining centre
quizzed about Black- for a very long time and has a
ham Resources Ltd’s (48% indicated) very long mining history. The
Wiluna gold project in town itself is very pro mining
Western Australia. Mining was expected to start lion options in Blackham, and they want to see it done
at the Matilda open pit some- which is poised to deliver in a smart way.”
That was at Diggers & time in July. 25,000oz gold in the Decem-
Dealers 2014 when board- ber 2016 quarter from the Historically, metallurgical
room tensions appeared to Now gold is in vogue, it Matilda mine. challenges had made Wiluna
be rising at Blackham upon appears Blackham paid a a miner’s graveyard but while
the request to have Joseph pittance for the Wiluna plant In June, Blackham had all previous owners had leant to-
Gutnick, whose private com- and infrastructure, with the necessary approvals and wards underground ore feed,
panies had interests in the company forecasting an- funding in place to start min- Blackham believes it has up
soon-to-be gold miner, re- nual EBITDA of $63 million ing, with the refurbishment of its sleeve an ace which was
moved as a non-executive and payback of the $32 mil- the Wiluna mill and the 350- formerly neglected.
director. lion capex within 11 months man camp on-song. Further-
of first production, which is more, the company awarded “What we’re doing up there
Gutnick’s response was to anticipated in the September a host of contracts, including is different from what has
call for a board spill which quarter. the open pit mining contract to been done in the past,” Dixon
history shows failed and the MACA Ltd and underground said.
entire episode became just Life-of-mine C1 cash costs mining contract to PYBAR.
a small hurdle for Blackham are estimated at $850/oz for The tailings dam construction “We have got close to 6mt
to overcome in reaching its over 100,000 ozpa gold for an work went to Cape & Crush- of open pittable soft free mill
prime objective; rejuvenating initial eight years. ing Earthworks and the pow- ore. The mine life has always
the storied Wiluna gold pro- er station contract to Contract been a bit skinny up there for
ject. Since early 2014, when the Power Group. the last 10 years, so having
Wiluna acquisition was made, that base load of 6mt coming
With Gutnick’s attempted Blackham has not been dis- “The plant closed down out of the open pit really gives
coup behind it, Blackham has tracted from realising its vi- there three years ago and it us a competitive advantage
studiously worked towards sion for the project and in the has really hurt the town with it over the previous operators.
its goal and along the way process it has convinced sec- not running. We’ve had appli-
changed the negative stigma tions of the investment com- cations for up to 20 positions “That allows us to look at the
attached to Wiluna. munity to jump on board for out of the town itself, includ- underground mine and really
the ride. ing the local Martu people replace the high-grade dirt. In
While there are probably and non-Martu people as the underground mine we are
a few naysayers still in exist- Orion Fund JV Ltd, whose well. We’re trying to hire lo- very focused on the shallow
ence, Blackham can hardly recent sell down of about 10% cally where we can and a lot material. Historically, the best
be beaten down for its efforts of Blackham’s total shares on of our contractors have been deposits at Wiluna were close
in bringing a project back to issue were taken up by an in- very proactive in trying to to surface and we’re chasing
life after a three-year spell. stitutional client of Petra Cap- hire locally which should re- them along strike, rather than
ital, has made $23 million in ally help the town,” Blackham chasing them to the centre of
Blackham managing direc- project financing available, of managing director Dixon told the earth.”
tor Bryan Dixon knows all too which Blackham had lodged Gold Mining Journal.
well the problems the project a drawdown notice for $15 Since the release of the Ma-
has encountered, with no less million at the time of print. “Hopefully [it’s the start of tilda DFS in February, Entech
than 15 companies having a Pty Ltd and Intermine Engi-
crack at it, the last of which Orion still retains 16.7 mil- neering Consultants have
– Apex Minerals NL – spent helped Blackham add 1mt @
$140 million on the plant, in- 3.3 g/t gold for 106,000oz to
frastructure and exploration the mining inventory which
before falling into administra- now totals 9.3mt @ 2.9 g/t for
tion. 873,000oz.

Fortuitously, Blackham, un- Reserves at Matilda have
der the chairmanship of Gut- also increased by 17% to
nick, swooped on the plant for 7mt @ 2.5 g/t for 560,000oz,
an upfront commitment of $2 which is part of the total 46mt
million (and deferred capital @ 3.3 g/t for 4.8 moz Matilda
of $2.6 million) to compliment resource package spread
the $1.4 million Matilda gold over 860sq km.
project purchase in 2011.
The DFS outlined aver-
age production from Mat-
ilda over the first five years

Page 36 GOLD MINING JOURNAL July – September 2016

from the 1.7 mtpa plant to 370,000t @ 5 g/t for 59,500oz sional drilling programmes at areas.
be 101,000oz from an initial gold adjacent to the Wiluna Matilda, where mining at the “With a brownfields opera-
mine life in excess of seven gold plant was acquired by M10 pit was expected to start
years, however, exploration Blackham from Intermin Re- in early July followed by the tion you always have a few
success has Blackham bull- sources Ltd. M3/M4 pit. little surprises that jump out
ish it can outperform its initial at you, but we have managed
estimates. “We have to keep growing,” Underground mining from to deal with them very nicely.
Dixon said. “Traditionally, in Golden Age – 206,000oz @ The mine plan is a lot longer
“We set ourselves the goal the WA gold space you are 5.8 g/t for 38,000oz over the than if you had asked me this
of getting to 1 moz in the mine either predator or prey and first two years – was also ex- time last year; we would have
plan by this time next year Wiluna has had a rich his- pected to start in July. had less than what we have
and it looks like we are track- tory of being taken over, but today. In our view, we have
ing very well to getting there,” our primary goal is to turn this The current resource esti- outperformed on the explora-
Dixon said in late June. into a cash generating asset mate at Golden Age, where tion and mine planning and
and that is our primary focus. 5.1m @ 198 g/t gold has been this project is all about the
“Ultimately, we are now Either way, shareholders will intersected, is 1.3mt @ 3.8 g/t mine planning; you need to
looking at having close to 5 be rewarded.” gold for 158,000oz. have a sensible mine plan
moz of resources with less that allows you to generate
than 20% of that in the mine To some extent share- Golden Age is within the cash.”
plan so far. We’re looking at holders who have supported Wiluna project area which
ratcheting up production to Blackham in reaching its hosts a resource of 3.4 moz Projected cash flow from
do well over 100,000 ozpa.” goal have already been re- gold, including the open pit the current life-of-mine is
warded with the company’s Galaxy deposit (600,000t @ expected to be $271 million,
With a spate of M&A ac- share price improving from 2.9 g/t for 51,000oz), while with Blackham taking advan-
tivity in WA’s gold sector in 21c/share at the time of the Lake Way (360,000oz) and tage of the Australian dol-
the last three years, Dixon Wiluna acquisition to 49c in Matilda (724,000oz), within lar gold price rally to hedge
said Blackham would con- late June. 20km of the Wiluna plant, are 20,000oz at $1,701/oz and a
sider projects within trucking camps Blackham is focused further 20,000oz of puts at an
distance of the Wiluna plant Further upside in Black- on. exercise price of $1,575/oz.
which might add to what the ham’s stock lies within its ex-
company is already doing. ploration story. “Everything is progressing – Mark Andrews
Earlier this year, a stockpile nicely,” Dixon said of the pro-
of calcine tailings totalling In June, five drill rigs were grammes to expand resource
completing infill and exten- and reserves at its project

July – September 2016 GOLD MINING JOURNAL Page 37

DIGGERS & DEALERS PREVIEW

Regis not game for M&A just yet

Regis Resources 300,000 ozpa. company by looking
Ltd has joined the Evolution Mining
debt-free club, but ap- at the next one or two
pears unlikely to join Ltd, Northern Star
rival gold producers in Resources Ltd and smaller guys in your
the M&A space any- Metals X Ltd are just
time soon. some of the mid-caps peer group, I think
which have taken
Continued strong cash flow advantage of larger you’d have to argue
from the company’s Duketon companies divesting
operations, including $56.5 quality gold assets in that you’re buying
million in the March quarter, recent years.
allowed the West Australian ounces for the sake of
gold producer to repay $20 Investors have
million of outstanding debt on been keeping a close buying ounces.
June 14. eye on Regis to see
whether the company “All the gold stocks’
With no further debts to pay will join the M&A party now
off and $129 million of unau- that its Duketon operations paper has appreci-
dited cash and bullion in the are humming again following
bank, Regis is ideally posi- the horror rain event which ated very strongly, so
tioned to look for another pro- led to a disastrous 2014 cam-
ject to add to its portfolio and paign. I can’t see any M&A
lift its production well beyond
Speaking at a breakfast jumping out, either
event hosted by stockbroking
firm Morgans in June, Regis Mark Clark for us or potentially
executive chairman Mark
for others. And I sus-

Clark poured cold water on pect there’s probably not any-

any murmurings his company one coming for us tomorrow,

was about to pounce on an equally. That’s why I think

unloved asset. our intention is growing very

“Probably the best M&A we strongly towards McPhilla-

can do already sits within the mys if we can unlock the rid-

company,” Clark told an au- dle of some of the infrastruc-

dience of brokers, analysts, ture challenges there.”

media and mining executives. McPhillamys, about 27km

“If you want to grow your south-west of Bathurst in

Page 38 GOLD MINING JOURNAL July – September 2016

New South Wales, was ac- available, and looking at your underlying AISCs,” Clark 1 g/t gold for 226,000oz) and
quired by Regis in 2012, but is own portfolio and saying ‘how said. “Our three projects are Baneygo (3.6mt @ 1.16 g/t
considered a secondary as- can we make something that all in the third and fourth quar- for 136,000oz) into the min-
set in the portfolio and there wasn’t a mine a year ago and tiles for grade, so we don’t get ing inventory. First dirt will
was no mention of the project turn that into an operation’.” any free kicks. be turned at Gloster later this
in the company’s March quar- quarter.
terly report. Duketon churned out “You often hear the term
75,656oz during the March grade is king. Well, in our Recent drilling at Tooheys
Infrastructure challenges, quarter – the fourth consecu- view, what’s more critical is Well, about 2.5km south of
particularly those relating tive quarter of more than the mine management and Garden Well, also returned a
to a process water supply, 75,000oz – keeping Regis on how you run the operations. number of encouraging inter-
have stymied Regis’s efforts track to meet the upper end of I think there’s no doubt we’re cepts, including 75m @ 2.27
to advance the project to full its FY2016 production guid- moving towards economies g/t from 165m, 57m @ 2.05
feasibility, but Clark said his ance of 275-305,000oz of scale, giving great advan- g/t from 139m, 46m @ 1.59
company was assessing a tage to gold projects. Grade g/t from 261m, 32m @ 2.02
number of options and hoped AISC of $856/oz were be- is just one of the many factors g/t from 181m, 34m @ 1.98
to make an announcement on low the lower end of $970- that goes into a successful g/t from 167m and 21m @
the matter soon. 1,070/oz guidance, also operation.” 2.57 g/t from 232m.
marking the fourth consecu-
“If we can bring that into re- tive quarter of reduced oper- Clark said his company “This is probably some-
serve, we’d most likely have ating costs at the Rosemont, was delighted to be able to thing that Regis doesn’t get a
1.5-1.7 moz so there’s a great Moolart Well and Garden return value to shareholders lot of credit for because we’re
opportunity for something Well mines. via dividends. Regis backed not seen in the industry as an
that basically costs you noth- up a $30 million dividend pay- aggressive explorer,” Clark
ing to have a material impact The average grade pro- ment last October with a $20 said. “Maybe that’s because
on the company going for- duced across the three mines million bonus to shareholders we don’t trumpet exploration
ward,” Clark said. during the March quarter was in February. all that aggressively.”
just 1.02 g/t gold, with Rose-
“I think, at this point in the mont delivering the highest Regis continues to enjoy – Michael Washbourne
cycle, most people would grade (1.5 g/t) and recovery success with the drill bit, add-
be thinking about organic (92.5%). ing 361,000oz to its reserve
exploration or bite size ac- base earlier this year by in-
quisitions, if there are any “We don’t have the advan- corporating Gloster (7mt @
tage of grade to deliver those

July – September 2016 GOLD MINING JOURNAL Page 39

DIGGERS & DEALERS PREVIEW

Emmerson plans more drilling at Edna Beryl to follow up on high-grade
intersections reported in July

Edna Beryl hits high note intersected with infill diamond drilling. West African is one of the ASX’s standout
Within the section, gold mineralisation explorers in Burkina Faso
Emmerson Resources Ltd and Evolu-
tion Mining Ltd have reported high-grade including 80m @ 1.06 g/t, 79m @ 1.34 West African getting
gold intercepts at the Edna Beryl JV, Ten- g/t and 42m @ 3.37 g/t were among re- real at Tanlouka
nant Creek, Northern Territory. sults received. At the time of print, results
from 16 diamond and five RC holes were Burkina Faso-focused West African
Results included 6m @ 13.2 g/t gold, pending. Resources Ltd is on track to deliver a
including 3m @ 15.7 g/t from 120m, 3m maiden resource from the M1 deposit at
@ 11.2 g/t from 126m and 9m @ 5.33 g/t, GME free to develop the Tanlouka project in Q3.
including 3m @ 10.4 g/t. Devon
Resource drilling has been focused
Further results from the 3,900m drilling GME Resources Ltd has reported it is on open pit resources at M1 South and
programme were expected during July/ debt-free and positioned to develop the North, while metallurgical work was near-
August, with Emmerson planning another Devon gold mine, south of Saracen Min- ing completion at the time of print.
campaign at Edna Beryl in August. eral Holdings Ltd’s Red October mine in
Western Australia. In line with resource work, West Afri-
The company was also planning to drill can was also progressing permitting and
the Susan prospect as part of that pro- A $1.5 million standby facility provided feasibility studies.
gramme. by Zeta Resources Ltd to GME has been
repaid by the latter. The National Commission of Mines
Meanwhile, production from the Edna has been presented with the project and
Beryl East mine is expected later this GME has enough money to see Devon, is believed to be impressed with West Af-
year. where the focus has been on removing a rican’s proposal. The company expects a
large section of waste from the western mining licence to be granted in Q3.
Recent underground drilling returned wall of the pit, through to completion.
1.8m @ 140 g/t gold, 1.8m @ 309 g/t and
1.8m @ 93.4 g/t. So far, over 26,000 dry tonnes has
been processed through Saracen’s Caro-
Edna Beryl East is subject to a small sue Dam plant, with a further 34,500 wet
mine tribute agreement, whereby Edna tonnes @ 6.3 g/t remaining to be treated.
Beryl Mining Company will mine the
high-grade deposit and deliver a royalty
to Emmerson and Evolution until it com-
pletes its earn-in.

Cardinal continues Ore from GME’s Devon project is being processed at Saracen’s Carosue Dam plant
form in Ghana

Cardinal Resources Ltd continues to
be one of the most active and successful
ASX-listed explorers in West Africa.

The company is confident that a very
large gold system is present within the
900m by 300m area at Namdini, Bolga-
tanga, Ghana.

An exploration target is expected to
be revealed in Q3, with Cardinal recently
confirming it potentially has a “world-
class” project on its hands as indicated
by a wide gold mineralised zone of 310m

Page 40 GOLD MINING JOURNAL July – September 2016

Gum Creek will be better suited in a vehicle that can solely focus on its development, and Vivien mines) of 28,000-32,000oz @
according to Panoramic $1,175/oz.

Panoramic to find a If the trend of increasing grade at depth, Meanwhile, the company continues to
driver for Gum Creek which has been reported at the Plutonic have exploration success at the Milky
Well Greenstone, can be repeated at Way project, about 3.6km from the pro-
Metallurgical test work has revealed a Dixon, Australian Mines is confident it cessing plant at Mt Magnet.
potential oxidisation processing route for can intersect higher grades at depth and
flotation concentrate from Panoramic Re- hit consistent gold along strike. The latest high-grade gold mineralisa-
sources Ltd’s Wilsons gold project. tion reported was 20m @ 5.85 g/t, which
Pantoro charges ahead suggests the deposit remains open to the
Wilsons is part of the Gum Creek pro- at Nicolsons north.
ject which Panoramic is aiming to drive
hard in light of current strong gold prices. A series of high-grade drill results A maiden resource of 241,000oz gold
from the Nicolsons gold mine, near Halls was revealed at Milky Way earlier this
A scoping study in March focused on Creek, has seen Pantoro Ltd’s share year, while Ramelius has been encour-
free milling open pit material whereby a price continue to improve. aged by step-out drilling at Stellar West
gold concentrate will be produced via flo- (19m @ 4.5 g/t from 65m) and Brown
tation and low intensity magnetic separa- The company was trading at 13.5c/ Cow (7m @ 7.36 g/t from 47m).
tion. The concentrate will then be finely share at the time of print, with the mar-
ground and pre-conditioned under acidic ket excited by results from Hall: 1.7m @ Silver Lake looks under
conditions at moderate temperature be- 258.8 g/t gold, including 0.8m @ 548 g/t; at Maxwells
fore the CIL process. Johnston lode extension: 1.9m @ 9.54
g/t, including 0.9m @ 17 g/t; Anderson Development of the Maxwells under-
Panoramic is currently assessing op- lode extension: 2.1m @ 11.21 g/t, includ- ground mine will start in August, Silver
tions to reduce processing, operating ing 0.9m @ 22.4 g/t. Lake Resources Ltd has reported.
and capital costs through optimisation of
the mining schedule and updated pricing. Gold production from Nicolsons start- Successful drilling programmes have
ed in September and with proven and seen Silver Lake upgrade the resource
Earlier this year, Panoramic indicated probable ore reserves of 109,220oz (af- at Maxwells by 400% to 1.68mt @ 5.67
the value of Gum Creek would be better ter mine depletion), Pantoro will look to g/t for 307,000oz gold, including 891,000t
realised through a trade sale or IPO. add more ounces when it can. @ 6 g/t for 172,000oz (indicated) and
794,000t @ 5.28 g/t for 135,000oz (in-
Australian Mines takes The company has had a win with grade ferred).
to Dixon with diamond estimations at the Halls Creek project
with reserves upgraded from 6.17 g/t gold Production from Maxwells for FY2017
Australian Mines Ltd will use its to 9.81 g/t. will be about 15,000oz, with development
$105,000 co-funded drilling grant from ore produced in August and stope pro-
the West Australian Government to con- Ramelius rocks at Mt duction starting in January 2017.
duct diamond drilling at the Dixon project. Magnet
GBF Number 4 Pty Ltd has been
Dixon, 50km from Northern Star Re- Ramelius Resources Ltd has extended awarded a two-year contract to conduct
sources Ltd’s Plutonic mine, is a JV with Watpac Ltd’s contract at the Mt Magnet underground mining services.
Riedel Resources Ltd. Results from RC mine in Western Australia.
drilling this year confirmed lithological Silver Lake will look to increase produc-
control of primary gold mineralisation The $45 million contract extension will tion from Maxwells to 30,000-40,000oz
which improves Australian Mines’ chanc- see Watpac deliver drill and blast servic- in FY2018.
es of targeting higher-grade gold zones es, load and haul of waste and ore plus
in future programmes. shaping of waste dumps at the Black- Development ore from the Maxwells under-
mans, Titan and Brown Hills pits. ground will start being extracted in August
In May, a six-hole RC campaign re-
turned 4m @ 1.31 g/t gold from 170m and Ramelius targeted a contribution of
3m @ 1.13 g/t from 140m, revealing that 12,500oz gold production from Mt Mag-
grades and widths of mineralisation at net in the June quarter for total group
Dixon were potentially in line with those production (including the Kathleen Valley
seen at Plutonic and Marymia.

July – September 2016 GOLD MINING JOURNAL Page 41

DIGGERS & DEALERS PREVIEW

Excelsior fits for GWR

Junior gold producer sis of being that cornerstone
Excelsior Gold shareholder that Excelsior is
Ltd has won backing looking for,” he said.
from GWR Group Ltd,
which could emerge “The numbers are some-
as the Kalgoorlie what hard to pin down be-
miner’s largest share- cause part of it is related to
holder. the underwriting of Excel-
sior’s rights issue. Clearly it
GWR chief executive Craig is dependent on assumptions
around take up and what we
Ferrier told Gold Mining would receive, but certainly
those numbers are about
Journal the group had been right. Our desire is to take a
cornerstone stake of up to
scouring the Australian gold 19.9%, that certainly is what
our mandate was and we’re
and base metals sectors for trying to work through a deal
structure that gets us as close
new investment opportuni- Excelsior started mining at Zoroastrian, which is a to that as possible.”
ties, with Excelsior’s cash 40 minute drive from Kalgoorlie, in November last year
generating ability from its Mining investors have felt
the full brunt of a volatile mar-
Kalgoorlie North gold project deposits in the vicinity of Zo- Meanwhile, the company ket in the last 2-3 years and
GWR has certainly not been
proving to be the most com- roastrian online. has strategic stakes in the immune, however, Ferrier
was glad to report there was
pelling. “Ideally, what we were likes of Tungsten Mining NL a positive change in market
sentiment on the horizon.
“We have been identifying looking for was something and now Excelsior.
However, this did not mean
new investment opportunities that was either in production The GWR cornerstone investors would be freely
throwing money at mining
and we have certainly been or certainly very much near funding package will see it companies.

reviewing a number of pro- term and they are definitely provide staged investments “There is less panic in the
industry as a whole. We have
jects over the last 18 months the former,” Ferrier said about up to $6.87 million, with the seen costs and availability of
people have both moved sig-
or more as we look to move Excelsior. immediate provision of $2.75 nificantly in the right direction
in the last 18 months,” Ferrier
away from directly being in- “When we looked at rea- million giving the company said.

volved in the iron ore game,” sons for perhaps having a about a 7% equity interest in “We have looked at a lot of
assets and this is not the first
Ferrier said. closer look at Excelsior, cer- Excelsior. one we have jumped at. We
have been through a fairly
“Excelsior had been on our tainly it was the model that Part of the deal includes a extensive and rigorous re-
view process – on this occa-
radar for a little while and cer- they had moving forward; partially underwritten non- sion we have kept our focus
on Australian assets which
tainly our attention had been low capex and we saw the renounceable one-for-six we have been quite specific
about – and Excelsior has
drawn to them as a cash pro- fact that they had a relatively rights issue to raise $5.1 mil- one of the better assets that
we have had the opportunity
ducing company.” modest level of overheads lion, meaning Excelsior can to have a closer look at.”

Through an ore treatment and their operations were potentially raise up to $11.35 Excelsior managing direc-
tor David Hamlyn welcomed
agreement with Norton Gold small. I guess we saw a com- million of new funds at an av- GWR’s involvement in the
company and looked forward
Fields Ltd, Excelsior will send plimentary fit to ourselves erage issue price of 5c/share. to leveraging from the techni-
cal and commercial capabili-
750,000t of ore from the that if we were to become a Shareholder Farrah Prop- ties the latter could provide at

Zoroastrian Central pit, 30- cornerstone [investor] then erty Securities Pty Ltd has

55km from Kalgoorlie, to be perhaps there was an oppor- loaned Excelsior $500,000

processed through tunity for us to add and, subject to shareholder

the former’s Pad- some value or be approval, will take up its full

dington mill. more involved with entitlement of $200,000 and

The agreement the project.” underwrite 40 million shares

was for 650,000t GWR – an inde- (about $2 million) in the rights

ore to be provided pendent Australian issue.

for processing resources house Ferrier said GWR had the

through the mill – has a portfolio of capacity to take its interest in

this year, however, projects held in its Excelsior further and would

refinements made own right, including aim to do so.

to the Zoroastrian the Hatches Creek “The way that this has been

Central mining Craig Ferrier tungsten play in structured is certainly well
programme has Northern Terri- suited to GWR to initially get

enabled Excelsior tory and the Wiluna about a 7.3% equity stake

to bolster its production and West iron ore and gold pro- and then have the capacity to

contemplate bringing other jects in Western Australia. move up to 17-18% on the ba-

Page 42 GOLD MINING JOURNAL July – September 2016

board level and in the field. so while we are 8m, 25m @ 2.45 Therefore, there is scope
Processing of the Zoro- for more tonnes to be sent
mining it is also g/t from 25m, 33m to the mill and Excelsior is
astrian Central pit ore at the evaluating the possibility of
Paddington mill started in De- an exploration ex- @ 2.4 g/t from 3m, resources at Lochinvar, Park-
cember 2015, with reserves erville and Nerrin Nerrin as
of 3.21mt @ 2.72 g/t for ercise as well.” 28m @ 3.07 g/t additional feed for the plant.
281,800oz gold sufficient for
about six years of operations Mining at Zoro- from 2m and 11m Navan, 1.2km north-west
at Kalgoorlie North. of Zoroastrian Central, is one
astrian is sched- @ 4.06 g/t from deposit Excelsior has been
However, with over 90 gold granted approval to develop.
occurrences on Excelsior’s uled to continue 18m – providing
block of ground covering Although small – 91,000t
22km of strike in the Bar- through to the Excelsior with @ 1.08 g/t for 3,200oz (indi-
doc tectonic greenstone se- cated and inferred) – Navan
quence, Hamlyn is confident end of next year, impetus to forge can supplement ore from Zo-
the company can offer inves- roastrian Central, while other
tors much more. with Excelsior ex- ahead with explo- prospects are being defined.

“The current mine plan ploring possible ration. Excelsior is committed
gives us almost six years to supplying a minimum of
from the open pit and un- extensions to the David Hamlyn “The funding al- 500,000 tpa to Paddington,
derground, but we have 22 open pit in the lows us to up the which is being met at the
resource areas and only five moment and is an important
of them developed on the cur- meantime. tempo on explora- benchmark to maintain, par-
rent mine plan,” Hamlyn said. ticularly when higher grade
Since mining started at tion of the other areas and we underground operations start
“Zoroastrian hosts large in 2019.
gold mineralisation and the the Zoroastrian Central pit in want to be mining other open
best way to learn about it is – Mark Andrews
by mining the open pit and February, Excelsior has re- pits as well. We think Zoroas-
understanding the minerali-
sation and structures more, ported it expects improving trian is going to get larger and

production levels as mining we are looking to spend some

reaches the top of ore zones, more money,” Hamlyn said.

with mined to reserve recon- “Historically, discovery costs

ciliation delivering 54% more have been around $15/oz and

high-grade ounces in the top we are looking to run small,

20m of the pit. but targeted programmes on

Grade control drilling at a budget of $2-3 million.”

Zoroastrian has also defined Since Excelsior started

more tonnes at similar or supplying ore to Paddington,

higher grades, with the Birth- Norton has been requesting

day Dream lode structure additional tonnages to keep

– 34m @ 3.63 g/t gold from the 3 mtpa mill full.

July – September 2016 GOLD MINING JOURNAL Page 43

DIGGERS & DEALERS PREVIEW

Musgrave on Cue with gold

Musgrave Minerals one of the nearby pliant resource of
Ltd has made a
promising start to its mills. 400,000oz gold and/
foray into gold explo-
ration. Musgrave has sev- or 80,000t copper.

Previously a base met- eral gold-producing Waugh said the
als specialist, Musgrave has
recorded a number of high- neighbours at Cue, company’s decision
grade gold hits at the Cue
project in Western Australia’s including Doray Min- to try its hand at
Murchison region.
erals Ltd, Metals X gold exploration had
Musgrave entered into JV
with major shareholder Silver Ltd and Ramelius been well received
Lake Resources Ltd late last
year to earn up to 80% of the Resources Ltd. by shareholders.
project.
“Ideally we would “The majority of
The first holes punched
into the ground at the Break like to follow what shareholders are
of Day prospect delivered a
positive result for the junior Allan Kelly has done happy with what
explorer, intersecting 3m @
24.3 g/t gold from 158m, 2m with Doray in getting we’re doing and sup-
@ 25.2 g/t from 96m and 2m
@ 22 g/t from 137m. to a point where we port our focus on

Musgrave managing direc- can define a high- Musgrave is putting its expertise in exploration to gold,” he said. “They
tor Rob Waugh said the early grade resource that good use at the Cue project understand that the
drilling success highlighted gives us the ability opportunity to obtain
the potential for a high-grade
resource at Break of Day. to make a decision whether moz is found, then another 5 cash flow gives us a further

“That prospect was known, we toll treat or standalone,” moz and it just continues on.” opportunity to put money
but the high-grade compo-
nent was something that Waugh said. Musgrave’s share price has back into the ground and con-
we particularly focused on,”
Waugh told Gold Mining Break of Day is one of four jumped almost 700% to 7c tinue to explore over a longer
Journal.
prospects within the Moya- since finalising the JV for Cue period of time.
“We got some nice high-
grade results and continuity gee resource (1.93mt @ 2 earlier this year. Under the “Our expertise is in explo-
on the drill section, so when
we can get the drill rig back g/t for 126,900oz gold) at terms of the agreement, the ration…and the work we’re
out there, hopefully in late
July, we’ll be in a position to the south-western end of the company must spend a mini- doing integrates well with
test the strike continuity of
that gold mineralisation.” project. Lena, Liviticus and mum $900,000 on explora- Silver Lake’s strategy at the

Waugh said the near-sur- Numbers are the other three tion within the first 12 months. moment. It’s a good relation-
face mineralisation at Break
of Day was likely to extend prospects. Musgrave can earn a 60% ship and one we’re more than
further at depth and was po-
tentially amenable to both Waugh said he was some- interest in the project with a happy to continue.”
open-pit and underground
mining. what surprised this part of the further spend of $1.8 million Heavy rain cut short Mus-

Should a future resource Murchison region remained over a subsequent two-year grave’s last drill campaign,
prove economic to mine,
Musgrave will weigh up build- underexplored given the likes period and may elect to in- but once conditions improve
ing its own processing facility
at Cue against entering into a of Silver Lake and Rio Tinto crease its interest to 80% with in the region the company
toll treatment partnership with
Ltd have either worked on the another $1.8 million spend intends to get back on the

ground or very close to it. thereafter. ground as quickly as possible

“You’ve got to remember With just over $2 million in to continue the extensional

that gold is historically not the company’s bank account, programme at Break of Day.

always that easy to find,” Waugh does not foresee any Work will also continue on

Waugh said. “Nuggets have issues with meeting the JV the northern tenements, in-

been found in Cue for nearly expenditure requirements. cluding the Hollandaire West

a century, so the indications “We try and get as much and Mt Eelya prospects, to

are there, but obviously no money into the ground with prioritise more than 30 tar-

one has gone into any great our exploration dollar as pos- gets identified from an air-

detail. sible and while it’s difficult to borne VTEM survey carried

“Once you’re in a mineral- find that balance, we think out earlier this year.

ised field like Cue, there’s ob- we’ve done a reasonable job Musgrave has been award-

viously more to find and that’s of it,” Waugh said. ed a $150,000 co-funding

what we’re seeing now, that “The goal of an exploration grant from the WA Govern-

there is more to be found and company is to explore, so it’s ment Exploration Incentive

I think over the next decade not our view to go completely Scheme (EIS) for the next

there will continue to be more back into your shell, although phase of exploration at Mt

found. it is important to be very cost Eelya, where the company in-

“Kalgoorlie is case in point. sensitive.” tersected a massive sulphide

There are periods where the Silver Lake is also entitled (8m @ 1.6% copper and 0.6

industry thinks no more can to milestone payments of g/t gold) earlier this year.

be found there, then a decade $250,000 in either cash or – Michael Washbourne
later some new ideas come shares if Musgrave defines

out and suddenly another 5 an additional JORC-com-

Page 44 GOLD MINING JOURNAL July – September 2016

20 October 2016

Perth, Western Australia

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only nickel event

australiannickelconference.com

To present, exhibit or attend as a delegate please contact Melita Fogarty
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DIGGERS & DEALERS PREVIEW

Capricorn fast-tracks Karlawinda

Capricorn Metals Capricorn recently boosted the Bibra resource by 40% Kerry Harmanis and Regis
Ltd expected to Resources Ltd to its register
release a scoping hopefully release that study drill campaign being complet- as strategic shareholders.
study on its Karlawin- at the end of July. ed, Capricorn reported a new Doray Minerals Ltd co-found-
da project by the end shallow zone of broad miner- er Heath Hellewell also joined
of July. “There will be a lot of infor- alisation had been identified the company’s board as a
mation around the total costs 20m below surface at Bibra, non-executive director.
It will be the first time a of operating, capital and pro- headlined by an encouraging
company has released a set duction levels which will be of intercept of 19m @ 1.33 g/t Thompson said his compa-
of economics on the project, great interest and we’re ex- gold from 20m. ny planned to follow a devel-
which was previously housed pecting the institutional inves- opment model similar to the
in Independence Group NL’s tors to sit up and take notice.” According to Capricorn, one adopted by Regis.
portfolio for a number of it was the first time miner-
years. Thompson did not expect alisation of this quality had “Regis does this end of the
the stricter rules for scoping been intersected in the up- business best; low-grade,
Private company Green- studies and forward-looking per hangingwall position and open-pit gold mining and we
mount Resources Pty Ltd statements to prevent his suggested the full size of the see [Karlawinda] as being
acquired the project, about company from releasing cer- Bibra deposit was yet to be very similar to their projects,”
65km south-east of Newman, tain project economics before defined. Thompson said.
from Independence last year completing a DFS.
before merging with Mala- “It’s certainly the one the “If you look at their last two
gasy Minerals Ltd in February The resource upgrade at market has reacted best to quarters, they’re producing at
to form Capricorn. Bibra follows a 10,000m ex- and that’s probably because around 1.1 g/t, strip ratio of
tensional drilling campaign at it’s shallow and it extends about 4.5:1 and with plants of
Capricorn raised $12.6 mil- the project, which reportedly outside of the current pit de- 2-4 mtpa throughput. That’s
lion in late April to fast-track intersected mineralisation in sign,” Thompson said, refer- what we want to do. We’ve
a development plan for the each of the 47 holes drilled. ring to the 50% share price got the same grade, same
project and announced a spike his company enjoyed strip ratio, we’ve got them
40% lift in the resource size Some of the best hits from after announcing the shallow on our register, they’ve been
of Karlawinda’s flagship Bibra Capricorn’s maiden pro- hit on May 31. very helpful to us and we un-
deposit in early July. gramme included 18m @ 1.1 derstand their plant designs,
g/t gold from 129m (including “Also in a previous release which are a very simple mod-
Bibra now boasts an in- 3m @ 6.17 g/t from 163m) we announced some deeper, el.”
ferred resource of 25.5mt @ and 11m @ 1.12 g/t from higher-grade material which
1.1 g/t gold for 914,000oz, 152m (including 2m @ 7.45 is outside of the pit design, Thompson said his compa-
based on a 0.5 g/t cut-off g/t from 177m). but shallower material is ny expected to have sold its
grade. always more attractive be- Madagascar assets, includ-
“The drilling certainly went cause you get to it earlier and ing 5 acres of “prime real es-
Capricorn managing di- better and faster than we it’s cheaper to access.” tate” in the country’s capital,
rector Peter Thompson said planned and that’s probably Antananarivo, before the end
his company had worked the only surprise we got,” Upon raising $1.5 million to of the year.
swiftly to upgrade the Bibra Thompson said. “We budg- complete the Greenmount-
resource so it could soon put eted for 100m/day and we Malagasy merger, Capricorn “There was basically no
some project numbers out to averaged 170m/day.” welcomed mining identity value attributed to that [when
the market and take advan- in Malagasy’s portfolio] and
tage of strengthening investor Subsequent to the maiden we should get $3-4 million
sentiment towards Australian from a sale,” he said.
gold assets.
“By the end of this calen-
“Fortunately we benefit dar year, we’ll be a single
from all the good work that project gold company. That’s
Independence did, having our intention, so investors
spent $12 million on drilling know they’re just investing in
and scoping studies, so that’s a quality gold project. Keep-
to our advantage,” Thompson ing it simple is all part of our
told Gold Mining Journal. plans.”

“We’re able to update their Thompson said his com-
scoping study, which they pany was also progressing a
never released, with our re- mining lease application for
source numbers and all their Karlawinda.
metallurgical, geotechnical
and environmental work and – Michael Washbourne

Page 46 GOLD MINING JOURNAL July – September 2016

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DIGGERS & DEALERS PREVIEW

OceanaGold: From ugly
duckling to turbocharged swan

The GFC had a Askew, were at the heart of
profound effect on the turnaround.
the Western World
Wilkes had come through
and while it also cre- the great mine-training
school of Mt Isa, had been
ated peptic ulcers involved in project develop-
ments in Asia and his last role
in Australia, the key before joining OceanaGold
was commissioning of Oz
pillars of our banking Minerals Ltd’s Prominent Hill
copper-gold mine in South
system were shown Australia.

to be sound and the Askew was a principal of
Climax Mining, which owned
commodity price crisis Didipio and merged with
OceanaGold in 2006, and
was to be short-lived. The Frasers open pit and underground mines at Macraes have remained an advocate for
the project against naysay-
been the cornerstone to OceanaGold’s resurrection ers. He had run the James
Askew mining consultancy
Australia’s then-Prime Min- that became Australian Min-
ing Consultants (AMC), was
ister Kevin Rudd started the winds brought about on the be above 1 g/t but the com- an Australian pioneer on gold
mining in Ghana with Golden
country’s debt bomb by con- TSX by the GFC and Cana- pany languished on the TSX, Shamrock and remains on
several other boards includ-
sidering a consumer-driven dian investors’ wariness of ASX and NZX, not helped by ing Evolution Mining Ltd and
aspiring graphite miner Syrah
recovery via billions of dollars the Philippines. The country’s a feral hedge book with some Resources Ltd, which at Dig-
gers & Dealers last year an-
thrown at the population. parliament was making dis- of the forward sales denomi- nounced a raising of $211
million.
Meanwhile, among the gold couraging noises about direct nated in Kiwi dollars which at
While relatively fresh in the
miners feeling the pain was interests in foreign-owned the time was unkindly dubbed management chair Wilkes, in
late 2009, told veteran min-
Melbourne-based Oceana- mines and a number of Ca- the Pacific Peso. ing journalist Barry Fitzgerald
that Didipio was going to be
Gold Corporation, then just nadian juniors had hit the wall So, why a company on the transformed from a heart-
breaker into a winning opera-
mining only in New Zealand due to questionable manage- nose in 2008 should, in 2016, tion.

on low grades that would ment which had led to some be feted by North American The mine had good open-
cut gold grades that contin-
daunt other Australian gold mining of money and rash and Australian stockbrokers? ued at depth but the strong
copper by-product made its
miners dealing with rising decisions. Certainly being awarded the cash operating costs the
envy of other global gold min-
costs, skill shortages and With projected costs for prestigious Diggers Award at ers, and that was during the
quarters when it wasn’t actu-
erratic metal and currency Didipio soaring, the project Diggers & Dealers Forum last ally cash cost negative.

prices. was mothballed, leaving year helped OceanaGold’s This was similar to what
Newcrest Mining Ltd achieved
To spread its risk, Ocean- OceanaGold once again de- ascendancy. at Cadia in New South Wales
with the Ridgeway gold-cop-
aGold had moved into the pendent on gold mining at Despite low-grade and per mine that funded regional

Philippines through its ac- Macraes in New Zealand’s complex ore from open cut

quisition of the multimillion Otago province and the mining at Macraes, the oper-

ounce Didipio gold-copper smaller Globe-Progress mine ation had been through three

project. To help fund the pro- at Reefton on New Zealand’s corporate name changes

ject’s development, the com- west coast. and developed a mining cul-

pany moved onto the TSX but In a good month, gold re- ture despite issues such as

was soon caught in the chill covery from Macraes would retrenchments and a lack of

exploration. The closure in

2010 of its toxic hedge book

eventually allowed for better

performance from Macraes.

However, it was Didpio –

commissioned in late 2012

– which took OceanaGold

out of thin-ice on costs, gen-

erated strong cash flow and

allowed it out into the world

looking for new projects.

Newly installed chief ex-

The company has already spent $US178 million of the $US380 ecutive Mick Wilkes and the

million capex at the Haile gold project in South Carolina worldly new chairman, James

Page 48 GOLD MINING JOURNAL July – September 2016

expansion of generally low- the Martha open pit – driving Karl Simich, chief executive Mick Wilkes
grade gold developments and Waihi’s immediate future – in- of Sandfire Resources NL.
acquisitions elsewhere in the cluded 4.8m @ 17.5 g/t gold acy which has the Iceberg de-
world. and 20.1 g/t silver. Ongoing exploration at posit in the Cortez Trend.
Haile has expanded the up-
By 2014, OceanaGold was Shareholders were told per zone of the Horseshoe A more grassroots venture
a stronger bleep on the radar exploration in 2015 had in- deposit, with intersections is the El Dorado gold project
for stockbrokers, particularly creased group reserves by taking in multiple drill hits, in San Salvador, acquired
in North America following 80% to 5.46 moz gold, in- including 58m @ 17.5 g/t fol- from a struggling Canadian
the cashless takeover of TSX creased mine life at opera- lowed by 41.9m @ 22.3 g/t; junior and now operated by
company Romarco Minerals tions in New Zealand and 13.4m @ 2.8 g/t, 50m @ 18.7 OceanaGold subsidiary Min-
that saw through the scrip encouraged the company to g/t then 4.8m @ 8.7 g/t; and erales Torogoz.
distribution the North Ameri- initiate exploration in 2016 to 5.6m @ 6.1 g/t then 3.9m @
can shareholder dominance cover a total of 100,000m of 125.9 g/t gold. Guidance for 2016 is 385-
grow. Romarco chief execu- drilling. This would include 425,000 ozpa gold, copper
tive Diane Garrett joined the 34,000m of drilling at Waihi. On strategic investments, production of 19,000-21,000t
board as part of the deal. advances made on two com- of metal, cash costs of
At Macraes, new drilling at panies in the gold mining $US460-500/oz and AISC of
This June, at the compa- the higher grade Coronation state of Nevada saw Oceana- $US700-750/oz.
ny’s annual meeting in To- North mine included 4m @ Gold’s holding in TSX-listed
ronto, shareholders absorbed 8.87 g/t, 21m @ 2.92 g/t, 15m Gold Standard Ventures Inc At the 25th anniversary of
data including finishing @ 1.67 g/t and 40m @ 3.6 grow in value from an outlay Macraes in Dunedin last De-
2015 with group revenue of g/t. At Frasers underground, of $C30.3 million to a current cember, Wilkes told the work-
$US508 million and net profit there were true width inter- value of $C80.6 million, while force the many challenges
of $US53.1 million despite cepts of 15.3m @ 4.04 g/t the more recent investment in had bred a team and culture
lower commodity prices. The and 78.5m @ 2.4 g/t. Nu Legacy has gone from an that saw the operation with-
company achieved AISC for investment of $C6.7 million to stand adversity that opera-
the year of a “sector low” of The Haile mine develop- a value of $C12.9 million. tions elsewhere in the world
$US709/oz. ment in South Carolina is would not have.
now half completed in capital OceanaGold holds a stake
The global exploration terms, with $US178 million of 19.1% in Gold Standard Wilkes said given Mac-
budget for 2016 was set at spent and $US202 million which has the Railroad-Pin- raes was commissioned late
$US30 million, and drill re- remaining. OceanaGold has ion deposits on the Carlin in 1990 with a seven-year
sults were detailed from on- been able to apply the same Trend, and 19.9% in Nu Leg- mine life, it was a remarkable
going development of Ro- skills in developing Haile as it achievement that the opera-
marco’s Haile gold project in did at Didipio where some of tion was not only going, but
South Carolina, new regional the New Zealand team over- going strong.
exploration at Waihi on New saw plant and mine develop-
Zealand’s North Island (pur- ment. Outsiders have often won-
chased from Newmont Min- dered how money was made
ing Corp in 2015), regional Leading the Haile mine out of Macraes, with chal-
targets near Didipio and high- project is chief development lenges such as low grades,
er grade finds at Macraes, officer Mark Cadzow who, complex ore, large pre-strip-
including potential extensions in the professional team, is ping exercises and recov-
to the Frasers underground the veteran having started at ery problems such as preg-
mine where a high-grade sys- Macraes in the formative days robbing. But it is because of
tem had been developed. when the operating company all those challenges that the
was Macraes Mining, led by workforce developed a clear
Macraes provides pre- Miles Kennedy now chairing understanding of all the hur-
dominantly bulk, low-grade Lucapa Diamonds Ltd and dles and now, Wilkes said,
mining whereas Waihi has Macraes was the leading
high-grade epithermal gold- Haile was acquired via an $C856 million all-scrip takeover mine in the world for efficien-
silver. OceanaGold has also of TSX-listed Romarco Minerals cy, productivity and costs.
released the brake Newmont
had put on regional explora- – Ross Louthean
tion in the time leading up to
its departure.

One new find at Waihi is
the Daybreak prospect where
new hits detailed at the To-
ronto AGM included 2.9m @
21.3 g/t gold and 14.8 g/t sil-
ver at a depth of 221m, and
4.8m @ 10.1 g/t gold and 19.4
g/t silver, from 111m depth.

Ongoing drilling at the Cor-
renso mine development near

July – September 2016 GOLD MINING JOURNAL Page 49

REGIONAL ROUNDUP

Newcrest plays big brother

Newcrest Mining $254 million, while
Ltd has bounced net debt has been
reduced by $1.33

back in a big way. billion since April

2014.

Trading at five-year lows Under Biswas’s

– under $7.50/share – late rein, the ramping

in 2013, the diversified gold up of Cadia (New

producer is revitalised and re- South Wales), turn-

warding shareholders hand- ing around of Lihir

somely. (Papua New Guin-

At the time of print, New- ea) and optimisa-

crest was worth $23.51/ tion and delivery at

share, courtesy of Sandeep Golpu (PNG) has

Biswas’s astute performance rescued Newcrest

as chief executive since July from the dire straits

2014. it faced two years

With his second financial ago.

year in charge complete, As the company

Biswas will be hoping to de- regains control of its

liver a profitable outcome destiny, M&A, albeit Having put its house in order, Newcrest has seen its share price soar from
for the company and eclipse on a small scale, $7.50 in late 2013 to $23.51 in June
FY2015 results which includ- has emerged as a

ed statutory profit of $546 mil- talking point for growth. ship and which might other- tribution will be to fund and

lion, underlying profit of $515 Since the start of 2015 wise remain locked without explore at Topacio, where

million and free cash flow of Newcrest has made a num- the major’s influence and Oro Verde has an option to

$1.1 billion. ber of farm-in/JV transactions cash. purchase 100% of Topacio

Newcrest has guided pro- in different parts of the world In North Queensland, to be exercised by February

duction for FY2016 of 2.4-2.6 with a focus on early stage Newcrest took a stake in the 2018.

moz gold, 80-90,000 tpa cop- opportunities with low entry Chillagoe project last year. By sole funding $6.1 million

per and 2-2.4 moz silver, with costs ($1-5 million). In Cote d’Ivoire, where of exploration and expendi-

AISC reported to March 31 of Essentially, Newcrest has Newcrest has the Bonikro ture, including the cost of ex-

$753/oz. targeted junior explorers’ pro- mine, a heads of agreement ercising Oro Verde’s option,

Free cash generated for jects where it sees a pathway with Taruga Gold Ltd will al- Newcrest can earn an initial

the first half of FY2016 was to potential majority owner- low the company to earn 51% interest in Topacio.

75% of a proposed By increasing funding by

JV by spending another $4.9 million over the

$US1.7 million following three years, New-

within three years. crest’s stake can be taken to

Meanwhile, a non- 75%.

binding heads of “Their goal and our goal is

agreement with to find something that can be

Apollo Consolidat- developed and turned into a

ed Ltd sees New- mine eventually,” Oro Verde

crest with an option chief executive Trevor Woolfe
to earn 80% of the told Gold Mining Journal.

Seguela permit, “There are really only ben-

250km north-west efits being involved with a

of Bonikro. company like Newcrest in-

In Latin America, volved. The Topacio project is

Newcrest has sided a low sulphidation epithermal

with Oro Verde Ltd gold deposit and they have

in an $11 million plenty of experience with

farm-in arrange- those types of epithermal

ment at the Topacio deposits throughout different

project, south-east parts of the world, particularly

Nicaragua. with the Gossowong mines

Newcrest’s expertise in epithermal deposits is ideal for exploration at Topacio Newcrest’s con- and in Cracow before, which

Page 50 GOLD MINING JOURNAL July – September 2016