DECEMBER 2018 - JANUARY 2019 Volume 1. Issue 267 $11.95
Golden West: ISSN 1445-3436
West Africa’s return
9 771445 343007
• Cutifani on Anglo’s journey • Automation in Africa
Page 1 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Your source for advanced
mining survey technology
Ultra High-Speed, Non-Stop Gyro Surveying
Available in our next generation
Align The Rig, Survey The Hole
Wireless, Integrated & Automatic Depth Control
Seamless Horizontal Pump In and Rod Pull Surveys
Flexibility to Survey on the Overshot with Champ OSA
Enhanced Rig Alignment Operation
On Cable | On Rods | On Overshot | Pump-in
Adaptive Roll Technology
www.digitalsurveying.co.za DS supports rentals and provides
services using Axis’s leading technology
anywhere, anytime throughout Africa.
Authorised African Distributor
PAYDIRT (ISSN 1445-3436) contents 22
Published by 42
Paydirt Media Pty Ltd. 6 NEWS
A.C.N. 063 985 133 Rio Tinto may not have revealed details
of its Tier 1 copper hunt in the Paterson
Head Office: Province of Western Australia but the
Suite 9, 1297 Hay St, West Perth mining giant’s activity has ignited interest
Western Australia 6005 in the region with a number of juniors
P.O. Box 1589, West Perth already active on the ground and others
Western Australia 6872 keen to mark their patch. Mark Andrews
Phone: (+61 8) 9321 0355 reports on the new exploration hotspot
Facsimile: (+61 8) 9321 0426
[email protected] 22 COVER
www.paydirt.com.au There are few places hotter for gold
prospectivity than West Africa and there
are few better placed to do the precious
metal justice than ASX-listed companies.
Editorial: Dominic Piper was given a first-hand look
Editor: Dominic Piper at West African’s Sanbrado project in
Deputy editor: Mark Andrews Burkina Faso, while across the border, he
Journalist: Michael Washbourne found out how Perseus was rebuilding its
Photography: Picture This reputation through projects in Cote d’Ivoire,
Art director: Nick Brown where junior explorer Exore is starting its
Keith Goode (Sydney), Brendan Ryan
(Johannesburg), Ross Louthean 42 mining indaba
For 25 years, Mining Indaba has been
Advertising: the premier African-focused resources
Advertising manager: Richa Fuller event and this year’s forum is primed to
Subscriptions: Mitchelle Matambo be one of the best yet. While commodity
Phone: (+61 8) 9321 0355 prices trended downwards through the
Facsimile: (+61 8) 9321 0426 back end of 2018, there was general
optimism among the mining fraternity,
Pre-press and printing: particularly those with African assets.
Vanguard Press 26 John St, Paydirt takes a look at some of the
Northbridge WA 6003 companies moving and shaking on the
Member of: continent with over 60 pages dedicated
to African stories
Executive chairman: Bill Repard 106 EUROPE
Finance manager: Giovanny Jefferson Australian mining companies are
Accounts/administration: known for their intrepidness and their
Heather Melling participation is being keenly sought
after in places such as Greenland and
Conferences: Melita Fogarty, Sweden. Dominic Piper spoke to key
Namukale Nakazwe-Msiska, people in both jurisdictions about their
respective geological richness and what
Christine Oelschlaeger Australian companies can expect when
DECEMBER 2018 - JANUARY 2019 VOLUME 1. ISSUE 267 $11.95
derground: Australia’s Paydirt
d’s first, purpose
y automated December 2018 - January 2019 Golden West:
cave gold mine
West Africa’s return
Moz • Cutifani on Anglo’s journey • Automation in Africa
LOM AISC 9 771445 343007
Cover image: Exore senior geologist
Theodore Ehui Koye on site in
Member of: 106
Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be re-
produced in any form without the consent of the
publisher. This includes photographs either taken
by Paydirt Media staff or provided by other parties.
Africa rising: A joy to behold
As part of our research for this edition, I munities in which they operate, guests who must build lasting and
headed up to West Africa to take a look sustainable relationships with their hosts.
at some of the Australian companies ac-
tive in the region. In most circumstances, it is a genuine partnership and the im-
It is a well-trodden path for the portance of such partnerships will only grow as the industry on
Paydirt editorial team. Over my 13 the continent matures.
years with the publication, my col-
leagues and I have visited more The first 150 years of globalisation were cruel to Africa and
than 20 African countries, looking at it suffered greatly as a result. Its people and natural resources
Australian and internationally owned projects spanning the entire were stolen to create the wealth we see today in Europe and
commodity spectrum. North America.
I consider it a privilege to have the opportunity to travel through
a continent with such wonderfully diverse geographies, land- However, the next 150 years should be very different. Africa’s
scapes, environments, cultures and people and I spend a large demographics (a young, growing population which will reach 2.5
amount of my personal time extolling the virtues of Africa to billion by 2060) and the technology-led next wave of globalisation
friends and family who’ve never set foot on the continent. should allow it to form new alliances and partnerships.
When I tell people where my latest adventure is taking me,
they are invariably surprised, shocked even, that Australians are These partnerships will place Africans as equal participants
prepared to venture onto what they still perceive to be a dark, in the globalisation story, not partners reliant on the support of
mysterious continent. benefactors. I hope Paydirt, and indeed myself, will be present
Inevitably, the first question they ask is: “Isn’t it dangerous to witness that play out on the continent for many years to come.
there?” and I must admit, more often than not my answer is: “It
can be” for this is the truth in so much of Africa; the combination The December/January edition doubles as our annual preview
of political instability and poverty can and do create security is- to the Investing in Mining Indaba, to be held once again in
sues. Cape Town on February 4-7.
But, such a response hardly reveals the entire truth.
It is impossible to skate around the security issues which exist This will be the 25th edition of a conference which has grown
in Africa but the instability of the modern world means the same into one of the most important events on the resources industry
could be asked of people travelling to Europe, the UK or North calendar. It attracts companies, service providers, governments,
America. investors and media from around the world.
Instead, I prefer to focus on how such security issues can be
eliminated or dampened. I believe mining can provide the an- Looking back at some of the old photos from Paydirt’s early
swers and I am immensely proud to be associated with an indus- visits, the forum is a world away from the rather home-sprung,
try that offers real opportunity to break the links of poverty and South African-focused events on the mid-90s.
neglect which fuel these security issues.
After more than a decade travelling through the continent, it is Coincidentally, 2019 will mark the 25th anniversary of the first
apparent that mining offers African people unparalleled oppor- edition of Paydirt.
tunity for economic development. Africans, like everyone in the
world, want employment for themselves and education and op- Much has changed in the intervening years since 1994 when
portunity for their kids. Ross Louthean and his team put out Issue 1 of Australia’s Pay-
There is simply no other industry that can provide the pros- dirt.
pects mining does to isolated, economically undeveloped com-
munities and regions. In his introduction, Ross said Paydirt would be the magazine
I have witnessed first-hand, in countries as geographically “that will tell you what is happening out there, where the new dis-
and culturally diverse as Cote d’Ivoire, Lesotho and Eritrea the coveries are being made, what they are shaping up to be, and
economic impact mining can have on host communities yet it is who holds strategic ground near the finds”.
something many NGOs still don’t get when it comes to interact-
ing with miners in Africa. For them, miner is still a substitute for Twenty-five years on, I can’t really argue with that editorial in-
exploiter. tent and Paydirt will continue to pursue the new stories of discov-
Indeed, many friends and acquaintances struggle with the idea ery, the forgotten projects being reinvented and the people who
that Australian companies working in Africa may actually bring make it all happen.
benefit to communities. There is an assumption that they have
chosen to operate there because it is cheaper, less regulated and We are proud to have survived the enormous swings equity
easier to gain favour and influence. and commodity markets have experienced in the last two-and-a-
The reality is there is little chance of success in African mining half decades and our role in documenting them.
if your primary motive is to “make a quick buck”. The vast majority
of miners I have visited understand they are guests in the com- 2019 will see Paydirt celebrate its quarter-century by launch-
ing a series of retrospectives, looking at how we covered the
major events of the 1990s, 2000s and 2010s and talking to the
people who made the news in yesteryear. Not all of us have been
in the mining industry throughout that period so we require the
help of you, our readers and supporters.
If you have memories, stories, tall-tales or anecdotes about
Paydirt, we would love to hear from you. Please drop me a line
at [email protected] or call the Paydirt office on +61 8
[email protected] @DominicPiper
Page 4 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
BLACK ROCK MINING (ASX: BKT)
HAS A 100% INTEREST IN THE
HIGHLY PROSPECTIVE MAHENGE
GRAPHITE PROJECT IN TANZANIA
Mineral Resource Estimate of 212 Mt at 7.8% Rail access to Port of Dar es Salaam
TGC for over 16 Mt of contained graphite. delivers lowest cost logistics’ solution and
Proven high quality multi-generational minimal working capital requirements
Resource demonstrated to deliver the given access to frequent shipping and
highest grade graphite concentrate containers.
available globally through a simple
flowsheet, and a scalable business model. GRID POWER
Allows for sustained lower cost operation.
DFS DELIVERS AND DE-RISKS BEST
IN CLASS UNDEVELOPED GRAPHITE ENVIRONMENTAL APPROVAL IN PLACE
PROJECT Environmental approval received in August
Quality study completed by consultants 2018 with mining licence application
and contractors with real graphite mine expected to be lodged and received in the
building and operations’ experience. short term.
LOW CAPEX AND HIGH MARGIN FINANCING OPTIONS
Lowest peak capital expenditure per annual Strongest project metrics supported
tonne of production of any development by largest pilot plant testwork deliver
stage global graphite project coupled with financing options including the vendor
highest margin due to very low relative costs finance opportunity announced in
to customers and best in class concentrate September 2018.
grade and flake size distribution.
STRONG MANAGEMENT CAPABILITY
LOW TECHNICAL RISK Proven management team focused on
Substantial pilot plant run of 90 tonnes finance and project execution.
has enabled a relatively simple flow sheet
design due to quality of ore. PATH TO MARKET ESTABLISHED
Real partners in place, 8 tonnes of
PRODUCT FLEXIBILITY concentrate produced, and 24 customers
Mine can produce three grades of product working with samples. Progressing with
off the one process circuit to provide sales Offtake.
and marketing options.
Level 9, 190 St Georges Terrace
Perth WA 6000, Australia
(+61 8) 9320 7550
AUSTiRnALfIAo’[email protected] cDEkCrEMoBcERk2m018 -iJnANiUnARgY .2c01o9 mPag.ea5u
What’s in Rio Tinto’s
As kids across the world wait for San- were supposedly none-the-wiser as to know that Havieron is deep. You also
ta to arrive from the North Pole, the when an announcement would be made, know we have Minyari, WACA and Chick-
global mining fraternity is just as restless but one thing is for certain; industry is be- en Ranch, Calibre and Corker and what-
in anticipation of Rio Tinto Ltd delivering lieving the hype. ever Rio Tinto has got. There is a lot go-
a potentially massive copper discovery ing on and this is still very underexplored,”
in Western Australia’s Paterson province, In recent times, Australia has not seen Power said.
East Pilbara. a province bristle like the Paterson since
junior explorer Sirius Resources’ last- “Rio Tinto flew an aerial mag and as
It has been 12 months since the pow- gasp effort landed Nova and Karl Simich’s far as we know they drilled one anomaly.
erhouse miner went into overdrive in the Sandfire Resources NL found DeGrussa. They now have a 60-man camp up there,
Paterson, with the rumour mill exploding building an airstrip. It is very efficient ex-
in the latter part of 2018 when vision of a The exploration rushes which ensued in ploration and that ain’t hard. Aerial mag
60-man drilling camp was circulated. the Fraser Range and Doolgunna-Bryah has worked over Magnum, Calibre and
Basin after Nova and DeGrussa became Corker, we’ve flown it to pick those up
It is believed a Tier 1 copper discovery mining folklore with a swathe of juniors and there are other anomalies in here that
has been made by Rio Tinto in a province hunting look-alikes in both districts. we want to test. We have 11 high-grade
which already hosts Telfer, Nifty and New- anomalies that we want to test at the start
crest Mining Ltd’s emerging O’Callaghan’s Emulating such success hasn’t been of next year. I would find it very surprising
tungsten play. easy, despite the dedication of juniors, in if nothing else was found.”
particular, to repeat the feats.
AIM-listed Greatland Gold plc is also Antipa scoured the Paterson seven
adding intrigue with the first hole in a cur- However, the scenario in the Paterson years ago and has plucked what it be-
rent drilling campaign hitting 275m @ 4.77 will be different, as Antipa Minerals Ltd lieves to be the best ground on the block
g/t gold and 0.61% copper from Havieron. executive chairman Stephen Power ex- within the North Telfer, Paterson and Cita-
plained to Paydirt. del projects.
Rio Tinto had not confirmed anything
at the time of print, and industry insiders “For a start there is Nifty, then Telfer,
then you have O’Callaghan’s and you
Page 6 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 7
Having arrived some time ago after bre which drove Rio Tinto to the project,” its story intimately and managed to rake
picking up tenements from Centaurus in $7 million to ensure the company was
Metals Ltd, Paladin Energy Ltd and Mark Power said. able to “punch through” until Q2 2019.
Creasy, Antipa has persisted with explo-
ration in terrain characterised by sand “We did a JV on this ground because He said the company was in no hurry to
cover. rattle the tin in any time soon, but hoped
we thought the cover was a challenge for funds would be forthcoming if there was
Negotiating the hunt for mineralisation a need.
through cover has provided Antipa with a small company. That is why when Rio
a challenge but not to the extent facing “This doesn’t happen very much, there
others outside the corridor of known de- Tinto came on the scene, we were happy was Nova, DeGrussa, those sorts of
posits. discoveries and Rio Tinto hasn’t even
to farm-out and JV so we could then con- announced what they have. If, when or
Antipa’s 100%-owned projects include eventually when, Rio Tinto makes that an-
Minyari-WACA at North Telfer (11mt @ 2 centrate down at North Telfer/Paterson. nouncement then you will see some ac-
g/t gold, 0.24% copper, 0.7 g/t silver for tion,” Power said.
723,000oz gold, 26,000t copper, 4,000t Telfer can host 20 mtpa and as far as I
cobalt, 233,000oz silver), 40km from Tel- “When an announcement is made,
fer, Chicken’s Ranch and Tim’s Dome at know it can be scaled down or up. They people will get some detail to wrap their
the Paterson project. teeth around and that’s the important bit
are out to 2023 with their reserves, but because it won’t just be rumour. I’d prob-
To the north of its asset suite, Antipa’s ably expect it to be jaw dropping; I’d be
Citadel project, which comprises Corker, grade is an issue so I think there are ob- surprised if it’s not.”
Calibre and Magnum drew interest from
Rio Tinto back in 2015. vious attractions. What we are finding is Had a junior company been onto some-
thing akin to what Rio Tinto is speculated
Rio Tinto can fund up to $60 million of that we have got a better grade, too.” to have, the news would be out and savvy
exploration expenditure to earn up to a investors laughing their way to the bank.
75% interest in the current 1.64 moz gold In addition to its Paterson province drill-
@ 0.8 g/t gold and 0.2% copper Citadel That is not the case and for now the
project. ing 6km away, Rio Tinto recently com- door is open for the likes of Carawine Re-
sources Ltd, which picked up 1,137sq km
Rio Tinto is in phase two of the earn-in pleted a 3,050m RC programme at the of ground adjacent to Rio Tinto, Antipa
and can take its stake to 51% in Citadel by and Metals X Ltd and others to join the
spending $8 million in exploration within Citadel JV and started assessing other party.
the next three years.
copper-gold prospects such as Folly GT1 “I wouldn’t rain on anybody’s parade, I
“We believe it was our exploration think ‘good on them’ and I wholeheartedly
[374m copper-gold mineralisation] at Cali- and MB1, within the El Paso corridor. As- support them and if anyone finds some-
thing good enough, which is absolutely
says were pending at the time of print. possible, it can be mined anywhere. It is
obviously easier if you can open pit some-
“Telfer is not in that El Paso structure, thing,” Power said.
but that structure is a good one for finding
certain things and while it is not a true por-
phyry system, it is like one,” Power said.
“We are waiting on the results for the
drilling programmes [from both the JV and
Antipa’s own ground], which will be out
end of this year/Q1. Then we want to get
out as early as we can because it gets re-
ally hot up there. Maybe in February we’ll
get out and drill some of these aerial EM
targets because you can have a game-
changer, you can
do a Nova easily.”
through a series of
one-to-one meet- – Mark Andrews
ings in 2018, Power
said Antipa had
been able to deliver
Rio Tinto (red) and Fortescue (green) have massively bol- Rio Tinto has gone into overdrive in the Paterson province, East
stered their real estate in the Paterson province since Pilbara. The world is anticipating the announcement of a Tier 1
December 2017. Rio Tinto now has more than 11,000sq km copper discovery in the region
plus 1,760sq km in JVs (from a combined 2,300sq km in
2017), while Fortescue holds 5,310sq km after having
nothing in 2017
Page 8 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Hotter than Ecuador
Independence has the right to enter into a $15 million
earn-in agreement to secure a 70% interest in the Will
Robinson-led Encounter Resources, Yeneena project
Solgold plc’s Cascabel project in Ec- think that will make the Paterson as rival- the southern end of the Laverton tectonic
uador has had majors and mid-tiers ling Ecuador as the hottest place on the zone. I think we are going to go into 2019
aggressively pursuing ground in the planet for copper exploration,” Encoun- with a full plate,” Robinson said.
South American country but one of them, ter managing director Will Robinson told
Fortescue Metals Group Ltd, might find Paydirt. “There is not a major mining company
what it’s looking for right on its doorstep. in the world that doesn’t want to find a
Encounter and Independence will team new copper project at the moment. Ex-
Speculation grew last month about the up at Yeneena, with the former nominat- ploration is the major value creation step
reasons Rio Tinto Ltd had built a 60-per- ing two of its senior personnel as repre- in copper, zinc and nickel. It is not like
son exploration camp in the Paterson sentatives on the technical committee the bulk commodities, where infrastruc-
province of Western Australia. Rio Tinto and Independence likely to do the same. ture and marketing becomes a bigger
and Fortescue have taken significant part of the value chain, so what I think
landholdings in the Paterson over the The committee was due to meet for the we are seeing is a potential renaissance
past 12 months, while a throng of juniors first time as Paydirt went to print, in or- in those areas. I think the mid-tiers and
are now garnering attention for their re- der to start planning 2019 field activities. majors are trying to restock their pipeline
spective parcels of land in the East Pil- and I think that is going to be good for
bara region. “Discussions have been taking place project generators like us.”
for some time and obviously people in
Independence Group NL has had an the companies have been known to each While the exploration plan at Yeneena
eye on Encounter Resources Ltd’s real other through previous roles. We are is yet to be detailed, Robinson said pro-
estate in the Paterson and recently pleased to be working with Independ- ceedings would start with geophysics fo-
moved for greater exposure to the latter’s ence, they are at the forefront of geologi- cused along the Vines corridor.
Yeneena copper-cobalt project. cal thinking in Australia,” Robinson said.
“That major basin-forming structure
Independence’s subscription for 24 Encounter is accustomed to partner- is where we’ve got high-grade copper
million ordinary shares at 7.5c/share ing with bigger brothers, with Newcrest at the southern end of that at BM1 [10m
(60% premium to the 20-day VWAP at Mining Ltd flying with the company in @ 6.8% copper from 32m] and BM7 [5m
the time) to raise $1.8 million made it En- five JVs in the Tanami and West Arunta, @ 2.5% copper from 388m],” Robinson
counter’s newest major shareholder in while it has control of a project covering said.
November and provided further valida- the southern extension of the plus-40
tion of the world-class potential emerg- moz Laverton tectonic zone. “The furthest hole we drilled was 40km
ing in the Paterson province. north of that at Lookout Rocks and hit
Robinson said planned activities at 1% copper and 0.1% cobalt. Being able
“If those rumours turn out to be true these projects and impetus at Yeneena to step back and really systematically
[about Rio Tinto], I think that this discov- meant 2019 was shaping to be a year like explore along that corridor is one of the
ery completely resets the maturity plot no other for Encounter. advantages of having Independence as
for Australia. More generally, if they find a partner; we have the opportunity to do
something at the scope that people are “We are looking forward to 2019. I think that and follow up with a drilling cam-
talking about – under shallow cover, in a it could end up being our busiest year paign to validate what we see.”
known district of a First World country – I ever because of all of the work going on
in the Tanami, West Arunta, Paterson – Mark Andrews
and also our project we are advancing in
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 9
Rio Tinto has Pilbara on red alert
As the world waits for Rio Tinto Ltd including Aranea, Asselli, Vela, NW
to show its hand in Western Aus-
tralia’s copper-gold bearing Paterson Obelisk, Andromeda and four tar-
province in Western Australia, juniors
are wasting no time in the region. gets at or near Obelisk.
At the time of print, Metalicity Ltd Sipa reported a new extensive
was the latest entrant intent on cap-
turing the hype building in the Pater- 2km-long copper anomaly at Ara-
son. Upon completion of a regional
copper prospectivity study in the nea and has applied for an EIS grant
Pilbara, Metalicity swooped on the
Desert Queen and Mandora Beach to test that copper target and Obelisk
projects; the latter covering an area
of 1,487sq km which adjoins tene- South.
ments held by Rio Tinto and Fortes-
cue Metals Group Ltd. Meanwhile, Sipa plans on flying an
Metalicity does not have the lux- extensive airborne EM survey, a key
ury of big exploration budgets like
its neighbours in the Paterson, how- dataset in Rio Tinto’s drill targeting in
ever, the sale of its zinc and lithium
assets in WA could mean staged 2018, at Paterson North in Q1 2019.
payments of up to $35 million to be
banked by the company, starting in “I think we need to do a lot more
the 2019 March quarter.
ground geophysics to follow up the
In its September quarterly, Metalicity
reported a cash and liquid asset balance airborne geophysics we have got. We
of $1.5 million, therefore, any additional
income to fund exploration in the green- need to do a lot more geophysics be-
fields pastures of the Paterson would be
welcomed. fore drill targeting. There is an extra
In the meantime, Metalicity will plough step in there that you might not have
away with data compilation and project
evaluation activities from the geological, where you have outcropping minerali-
geochemical and geophysical datasets
it has at hand, with the aim of targeting sation. You need to be that much surer
priority areas for future exploration work.
of your targeting before you drill,” Bur-
Investors reacted kindly to Metalicity’s
positioning in the province with the com- nett said.
pany’s share price up over 40% to 2.3c/
share when it announced security of the “I think in the Paterson’s case, no
Lynda Burnett work has been done so we have a
An announcement by Rio Tinto re- lot of catch-up to do in terms of un-
garding a major copper discovery in the
Paterson would no doubt create further what’s going to come out of Rio Tinto’s derstanding what’s there and how to
momentum for Metalicity and others in drilling up there that is for sure, but it is explore it best. I think you are going to be
the space. not nothing,” Sipa managing director Lyn- finding a few gems of stories coming out
da Burnett told Paydirt. of there in the next couple of years as we
Sipa Resources Ltd is one such out- work out how to best explore under the
fit dressed for the party in the Paterson, Rio Tinto and Sipa are closely aligned sand cover.”
having just locked in $1.5 million for work with a JV started at the latter’s Kitgum
at its Paterson North copper-gold pro- Pader nickel project in Uganda this year Any breakthroughs for Sipa in the Pat-
ject. but according to Burnett it is too early erson before the end of 2018 will cap off
for any allegiances in the Paterson to be what has been a stellar year for the com-
During the September quarter, Sipa formed – with anyone. pany, highlighted by the deal with Rio Tinto
achieved its 80% equity interest with JV in Uganda.
partner Ming Gold deciding to dilute its “Who knows, we’ll have to wait and
stake in Paterson North. see. There are a lot of options we have at “It has been a watershed year for us be-
the moment,” she said. “We’ve had a lot cause our Uganda project gained credibil-
With FMG and Rio Tinto surrounding of interest from the majors, but it is not in ity by getting a major involved. The cred-
all sides of Sipa’s land position in the our shareholders’ interest to do anything ibility of us being able to generate high
area, the company appears to be in a until we understand the lay of the land up quality projects that attract majors is what
sweet spot and it is not escaping atten- there. We’re pretty excited by our own we have achieved this year,” Burnett said.
tion. prospects and we have just gone through
a capital raise. We’ve got options to do “What we want to project as our brand
“The whole world is really anticipating it ourselves or do a good deal with oth- is that we generate high-value, interest-
ers. That really gives us options to do the ing targets that attract the interest of ma-
right thing by our shareholders.” jor companies. We have done that with
Barbwire Terrace [MVT-style in the Can-
The next thing for Sipa is a review ning Basin], which we pegged a couple
of all activities completed in the last 12 of months ago. We are essentially getting
months, which includes in-depth analy- that to a stage where we could JV it with
sis of the “intense drilling activities by Rio a major, but it will probably be more likely
Tinto less than 10km from Sipa’s western some of the Asian metal traders who are
boundary”. more interested in zinc.
In late November, Sipa was awaiting “As far as the company goes, drilling
assays from an EIS co-funded diamond large projects ourselves is very expen-
drilling hole at the Obelisk prospect, sive. I think you’ll find that we generate
while it had received all assays from a them ourselves rather than do deals, but
29-hole RC/aircore programme. we are definitely interested in looking at all
avenues,” she said.
The RC and aircore drilling totalled al-
most 3,500m and tested regional targets, – Mark Andrews
Page 10 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Eskom finally admits to
It’s amazing. Phakamani Hadebe, the lat- this situation but the damage has been book which is to “blame previous manage-
est chief executive of Eskom, has just ad- done and several major coal suppliers are ment” but in this case that blame is richly
mitted the major strategic blunders made not coming back to supply Eskom despite deserved.
by his numerous predecessors regarding Hadebe’s optimistic predictions. The trouble is – and I repeat myself –
the state-owned utility’s coal supply and Anglo American plc has sold its South that the damage has been done and it’s
black economic empowerment (BEE) poli- African domestic coal business, flogging huge. Not only have three major players
cies. most of its operations to coal entrepreneur bailed out but the involvement of a fourth,
Not only that but he actually apologised Mike Teke and his Seriti Resources con- Glencore SA, has to be viewed as uncer-
for those errors at an Eskom briefing on sortium. tain at best.
the utility’s “system status” held in Johan- BHP Ltd got out of South Africa com- Glencore is the group that Hadebe must
nesburg on November 16. pletely three years ago when it unbundled have made the most grovelling apology to
I, sadly, was not present when Hadebe various “non-core” assets to South32 Ltd because it was the owner of the Optimum
confirmed what I and other commentators which is now in the process of selling off colliery which got caught up in the great
have been saying for the past five or so its South African coal business although Eskom/Gupta imbroglio and was forced to
years which is that Eskom’s coal procure- it will keep the aluminium and ferro-alloy give up ownership not only of the colliery
ment policy was driven by political ideol- operations. but its highly valuable Richards Bay coal
ogy not business principles and would in- South32 chief executive Graham Kerr export quota as well.
evitably lead to disaster. maintains this decision has been made for Glencore executives have kept a “stiff
“So, I nearly fell off my chair when I read purely business and strategic reasons but upper lip” when asked about their feelingson financial newsover those develop-
website Miningmx ments. But, realis-
that Hadebe had Anglo has now walked and Kusile is starting tically, after what
commented: “We operations without a long-term coal supply they have been put
realise that we need through, are they
to engage with the contract in place and is dependent on short-term really going to trust
coal companies dif- contracts with several junior coal miners for its that bunch of clowns
ferently. at Eskom and its
“To some, we initial life. controlling govern-
need to apologise ment department
because some of again? I would not.
the decisions we So, what we have
made spoiled the relationship. We have nobody here believes him. is the return of the “coal supply cliff” – a
made those apologies and some are com- The fundamental reason for the depar- looming shortage of the coal needed to
ing back, even reviewing their own price, ture of these major mining groups was keep several of Eskom’s power stations
because we are all South Africans and Eskom’s insistence that coal companies operating.
what is good for Eskom is good for South supplying its power stations had to be 51% This was predicted by Eskom’s own
Africa. The situation will improve but not black-controlled despite the country’s min- senior staff nearly a decade ago but it was
now. It takes time.” ing legislation requiring only a 26% BEE laughed out of court by Molefe who de-
What a stunning about-face from Ha- stake. clared there was no such thing as a “coal
debe’s predecessor – the incredibly ar- How Eskom got away with this is beyond supply cliff”.
rogant and now disgraced Brian Molefe me. Five years ago, then Eskom chief ex- He then proceeded to make the situa-
– who rode roughshod over the utility’s ecutive Brian Dames told me flatly in a tion worse by stopping Eskom’s invest-
traditional coal suppliers and dismissed press conference that the 51% BEE stake ment in various “cost-plus” collieries which
suggestions that Eskom faced a looming was an absolute requirement for coal com- it owned and were managed for a fee by
coal shortage. panies doing new business with the utility. various mining groups. Those collieries
I could almost get optimistic about the Anglo American at that time – in fact, for were running out of reserves but Eskom
situation, were it not for the fact that Eskom nearly the past decade – had been negoti- would not cough up the investment need-
has just imposed power load-shedding on ating the supply contract for Eskom’s new, ed to develop new reserves so production
the country again because power avail- multi-billion rand Kusile power station. An- from them inevitably declined.
ability had plunged to levels that endan- glo American has now walked and Kusile This year, Eskom has signed new con-
gered the overall electricity supply grid. is starting operations without a long-term tracts to procure 73mt of coal over the next
That’s the first time it has had to do so in coal supply contract in place and is de- few years but it still needs to sign up 116mt.
two years, bar a few days earlier this year pendent on short-term contracts with sev- Hadebe’s assessment is that “it’s going
during a strike, and Eskom management eral junior coal miners for its initial life. to be a journey”. He’s right and it’s a jour-
blamed the situation on “planned mainte- According to Hadebe, the 51% BEE ney that would not be taking place had Es-
nance” and “unplanned events”. target was actually “aspirational”. OK, so kom stuck to rational business principles in
The coal shortage has yet to kick in to he’s using one of the oldest tricks in the the first place.
Page 12 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
graphite tin cobalt
Paydirt’s Battery Minerals Conference will once again showcase the junior mining companies
with the essential ingredients driving Industry 4.0.
It has been estimated that the lithium value chain alone could be a $1.3 trillion per annum
industry by 2025, while it is expected that demand for graphite, cobalt, nickel, copper,
manganese, tin, vanadium and rare earths will surge exponentially in the next decade.
Paydirt’s 2019 Battery Minerals Conference will afford investors the opportunity to build on
their understanding of this most captivating sector, which serves as a melting pot for the battery
minerals sector, involving in-depth discussions on market outlooks, project developments, and
the future of the global battery industry and technology.
To present, exhibit or attend as a delegate please contact Namukale Nakazwe-Msiska
on (+61) 8 9321 0355 or email [email protected]’rStP.AcYDoIRmT .aDEuCEMBER 2018 - JANUARY 2019 Page 13
Chris Reed says it’s time for Barrambie – one of the largest
vanadium-titanium-magnetite deposits in the world – to be given
due recognition. Barrambie will be the key asset in a new entity
scheduled to hit the ASX in Q1 2019.
Adaman Resources has been contracted to provide mining, crushing and
transport studies for Barrambie, while Snowdens will revise ore estimates
and Ausenco will update operating and capital cost estimates for the project
The last 12 months have seen a return to can’t just throw this over the fence and money flies back like in
IPO activity not experienced for some time, the precious metals space. We have to go through that disciplined
however, few debutantes have come to the evaluation and ascertain what the value is to the customers and
ball with a DFS in hand and approvals all give them what they want, which is secure sources of feed from
but secured like Barrambie; an off-shoot stable jurisdictions like Australia.
from Neometals Ltd’s battery minerals “The vanadium market, and most of the world’s production, comes
strong portfolio. out of China, Russia and South Africa, so something coming out of
Australia is going to be attractive,” he said.
Barrambie has been at bay for 15 years, but has been far from idle While Barrambie is geographically located in a premier mining
with $30 million spent on the asset. This capital commitment jurisdiction, the troubled past of the Windimurra vanadium project
means Barrambie – located in Western Australia’s Mid West – has a lingers in the minds of many in the Australian resources community
mature development status and is primed for greater exposure amid and there are still critics that need convincing of the merit of
a bullish vanadium market. vanadium projects down under.
Vanadium pentoxide prices surged 200% in 2018 against a backdrop Reed is not perturbed by the naysayers and nor should he be given
of strong demand for vanadium’s use as a steel additive and the the success his company has achieved ahead of the lithium curve
increasing popularity of vanadium redox flow batteries. Coupled with its Mt Marion mine.
with this, mine closures together with reduced processing of stone “In Perth, vanadium is associated with stalled projects,” he said.
coal and magnetite in China has constrained primary and co- “Investors in Toronto and London have a strong appetite having
production of vanadium feedstocks. had much better experiences backing guys that have gone in with
A handful of producers dominate the vanadium market and even a lower risk, development strategy – i.e. buying and operating a
with new projects entering the equation, it has been forecast that business at a low point in the cycle and then riding it up.”
supply will not satisfy demand in the short to medium term. At an estimated operating cost of $US20/kg, Barrambie has
Therefore, if vanadium prices do pullback from the $US130/kg potential to be one of the lowest cost vanadium projects in the
mark (at the time of print) it is unlikely that the Neometals 2009 world and looks particularly compelling against current record high
DFS operating cost at approximately $US20/kg will be put under vanadium prices of $US130/kg.
pressure. The current $US130/kg price was one that could not be ignored and
“It takes a lot of time and money to get to where Barrambie is and was the catalyst of Neometals’ review of the 2009 Barrambie DFS,
when the new company is ready to go, Barrambie will almost be which is expected to be completed by mid-2019.
shovel-ready,” Neometals Managing Director Chris Reed said. In April, a fresh indicated and inferred resource of 280.1mt @ 9.18%
“In the end, you have to supply what the customer wants and you titanium and 0.44% vanadium at Barrambie was released and will
be factored into the updated DFS. Within that global resource are
high grade subsets including a high vanadium grade band containing
64.9Mt at 0.8% V2O5.
“We drilled to over 300m on select sections and as you’d expect in
Page 14 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
a layered intrusion it is still there and the Government seismic Historical Barrambie DFS 2009
shows that is goes down about 4km. It’s a very unique deposit,”
Reed said. Production: 6,160t vanadium as
Staged development options will be considered for Barrambie, ferrovanadium
including the merits of offshore processing of crushed ore, onsite Resource (indicated and inferred):
production of high-grade concentrate for sale, and refining to 65mt @ 0.82% vanadium pentoxide (0.5%
produce vanadium chemical products. cut-off)
A mining lease with full native title agreement and ministerial Reserves (probable): 39.7mt @ 0.82%
approval for the development of an open cut mine and processing vanadium pentoxide
plant is in place, giving Neometals the opportunity to hit the ground Mine life: 12 years
running with the proposed new company listing. Throughput: 3.2 mtpa
The success of multi-billion dollar market capped companies such Capital cost: $628.9 million
as Largo Resources Ltd in Brazil and Bushveld Minerals in South Operating cost: less than $US20/kg as
Africa will be useful reference points for Reed, particularly given ferrovanadium
the $600 million capex estimated to build Barrambie.
Reed says this will be the company’s biggest hurdle in bringing
Barrambie to fruition.
“At current prices, payback on Barrambie is less than a year,”
Reed said. “We would approach that in the same sort of way we
approached Mt Marion. We’ll do the studies, evaluations, build up
the pie, potentially introduce partners to share the capital outlay
and bring development expertise and when we are ready to turn
the wheel, we’ll have an honest conversation on how can we
The Barrambie story has already been taken on the road and has
piqued interest in China, with Reed keeping an open mind on the
best way forward.
“We have guys who are travelling an awful lot to China and
elsewhere, so offtake is high on the agenda. Just like the lithium,
it is an industrial mineral, you have to get a quality offtake
agreement with a quality offtake partner. That is the only way to
make the spreadsheet real, otherwise it is just 2D and 3D models
and financial spreadsheets for the bankers,” Reed said.
“The original feasibility study looked at mining the ore, making a
magnetic concentrate then going through a salt roast leach, which
is a traditional processing route used by the Russians, Chinese and South Africans
to produce vanadium pentoxide; an intermediate product for further processing into
“Fortunately for us, we have a high titanium section to the orebody where we can make
a magnetic concentrate out of that as well. You could put that in the salt roast leach, but
at this stage we’re looking at putting it into the titanium pigment supply chain by selling
it as concentrate to offshore processors who will turn it into titanium slag,” he said.
Now that Barrambie has commanded a sole focus, Reed expects an expanded mine
life from the updated DFS which will precede an investment decision on the project in
“We are a diversified company and we have had to put a fair bit of time into the income-
producing assets and the immediate downstream processing. That has in part been
why we have been looking at demerging the non-lithium assets into a new vehicle so
we can resource them financially and appropriately with the human capital to capture
the most value out of those projects,” Reed said.
“I think the approach we took with lithium has worked out pretty well in the partnering
process. It is likely that long term offtake will be in place, depending on where they are
from, but it would be easier if they had a little bit of equity in the project.”
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 15
Renascor’s royal statement
Renascor Resources Ltd managing di- to early project works such as metallurgi- David Christensen
rector David Christensen has never cal testing and detailed engineering and
shied away from the fact his company is design work. thing manageable because you probably
still a relative newcomer to the graphite have a significant amount of capital that
space. However, he sees a benefit to being Christensen said the partnership was a you’re putting into things like roads, water
fashionably late to the party. win-win for both Renascor and Royal IHC. and electricity.”
One of those advantages is observing “As soon as we complete the DFS, Other initiatives Renascor has undertak-
how others have struggled to land finance they’re going to have the option to give us en this year to give the company the best
for their graphite projects. Renascor has an EPC proposal and we’ll have the option chance of landing project finance include a
now caught up to many of its peers and is then to accept it,” he told Paydirt. “Should pilot plant run at an independent Chinese
ramping up efforts to fund development of we accept their proposal, we’ll be able to production facility.
the Siviour graphite project in South Aus- work with them in trying to obtain financ-
tralia with a DFS due early in 2019. ing and trying to lean on the parent group The successful pilot plant testing of
Royal IHC and their treasury department 200kg per hour achieved the targeted PFS
Renascor’s rapid progress – the com- to get this project financed. grade of 95% TGC, with improvements in
pany only began drilling at Siviour, 120km recoveries also noted. Results will be fed
north-east of Port Lincoln in early 2016 – “Obviously it’s good for us because we into the DFS.
has caught the eye of many in the indus- want to finance this thing and good for
try, including respected international EPC them because they want to build the mine, Production samples have also been sent
contractor Royal IHC Australia. and it accelerates things by giving us an to potential customers interested in signing
EPC proposal shortly after we do the DFS. offtake agreements for Siviour products.
Both parties last month entered into a Usually, you finish your DFS and then you
strategic partnership to accelerate devel- go out for a competitive tender and it takes “This is all part of the process of trying to
opment of Siviour, with Royal IHC to assist at least three months.” get an offtake agreement that will hopeful-
Australian engineering firm Wave Interna- ly help us achieve some degree of finance-
tional with completing the DFS while sup- Renascor began 2018 at a cracking ability,” Christensen said.
porting Renascor in its mission to obtain pace with the release of a scoping study
project finance. on spherical graphite production as a “We have a potential line-of-sight on
downstream option for Siviour. This was production, maybe by 2020. This really
Royal IHC has also committed $1 million followed a month later by a PFS which allows us to have discussions in earnest
with offtake partners. We’d like to be able
presented cases to contract with somebody who is going to
for both small and be able to help us get over that financing
large-scale produc- hurdle.”
tion of natural flake
graphite. Renascor has also submitted its applica-
tion for a mining licence and was preparing
The PFS estimat- to release an updated resource/reserve
ed $US99 million estimate for Siviour at the time of print.
would be needed
for immediate pro- “When we came up with that initial re-
duction of 142,000 source a couple of years ago, this looked
tpa of natural flake to us like it had the potential to be a com-
graphite for an petitive Australian graphite project,” Chris-
initial 10 years and tensen said.
117,000 tpa over the
30-year life of mine. “It now looks like something that can
This is in contrast to not only be a competitive Australian pro-
just $US29 million ject, but the project economics look like
for an initial 22,800 they can compete with any project glob-
tpa operation which ally in terms of the operating costs and
can be upscaled the capex. I think we stand a really good
to 156,000 tpa af- chance to be in production not too far away
ter three years for from now.”
– Michael Washbourne
“We have the op-
tion to start up on
a small scale and
we think we can do
that because we’re
need a large scale
in order to bring your
opex down to some-
Page 16 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
9 - 10 April 2019
South Australia’s premier mining forum
Sponsorship and exhibition
opportunities now available
For all enquiries please contact Christine Oelschlaeger on
(+61) 8 9321 0355 or email [email protected]
Amid the unmatched digital disruption
experienced by investment markets over
the past 15 years, gold has retained its safe
haven status with one of the world’s few
fully integrated precious metals houses,
The Perth Mint, working hard to ensure
the yellow metal enhances its standing.
The Perth Mint is one of Australia’s
largest exporters, distributing
$16 billion worth of pure gold,
silver and platinum bullion bars
and coins to investors in more
than 130 countries annually.
Perth Mint Fact File...
• Parent company Gold Corporation, trading as The Perth Mint, is wholly owned
by the Government of Western Australia.
• Operating the largest refinery in the southern hemisphere and belonging to a
select group accredited by the world’s five major gold exchanges, it refined
341 tonnes of gold and 505 tonnes of silver in 2017/18.
• Currently manages close to $3 billion worth of precious metals on behalf of
some 35,000 investors from more than 130 countries.
• In 2017/18, sold close to 8 million coins, medallions and minted bars
worldwide, valued at $838 million.
• Home to the Guinness World Record holding Australian Kangaroo One Tonne
Gold Bullion Coin, the Mint welcomes more than 74,000 visitors to its gold
exhibition in East Perth annually.
Page 18 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
It has invested nearly 120 years in ser- than coal and natural gas – and as the first new investment offering.
vicing and promoting the gold industry foreign refiner accredited by the Shang- “Once the retail money starts flowing in,
since being established in 1899 as the gold hai Gold Exchange we are the largest
rush in Western Australia’s eastern gold- non-domestic supplier of 1 kilo bars into the institutions become interested so we
fields began to take hold. Now, as then, China,” Hayes says. are already in discussions with those inter-
Australian gold entices interest from all ested in utilising gold ETFs,” Hayes says.
corners of the globe. Back in Perth, customers – from individu-
als to sovereign wealth funds – use the While the ETF allows The Perth Mint to
“The world used to come to WA for Mint’s depository to securely store their attract established global financial players,
gold, now The Perth Mint is taking Austral- wealth in its network of state-of-the-art its new GoldPass™ smartphone app tar-
ian gold to the world,” Perth Mint Chief vaults. gets a completely different demographic.
Executive Officer Richard Hayes says.
“Our depository allows people to buy Launched in October, GoldPass™
With the capacity to refine 350 tonnes of precious metals without physical delivery. gives retail investors the unique ability to
gold and 700 tonnes of silver per annum, Currently we manage $3 billion worth of securely buy, store and sell gold via digital
The Perth Mint is the largest precious met- metal on behalf of 35,000 customers from certificates. The platform also allows the
als refiner in Australia. It processes almost 130 countries,” Hayes says. instantaneous transfer of gold to other ap-
all Australian gold mine production and proved GoldPass™ app users.
output from regional neighbours includ- “We structure the business so we can
ing Papua New Guinea, New Zealand, Fiji, offer something for everyone. We have a “GoldPass™ effectively tokenises gold
Solomon Islands, Malaysia and Thailand. traditional storage team whom custom- ounces which can then be bought and sold
ers may call to invest and provide various to registered users on the app. Rather than
Hayes says The Perth Mint strives to sup- online platforms.” focusing on traditional investors, the app
port and add value to Australia’s booming targets millennials who use smartphones in
gold mining industry. The Mint’s efforts to find new markets all aspects of their lives.”
are not restricted geographically, with 2018
“We have a world-class refining facility being the year in which two new invest- As with its other offerings, GoldPass™
and assaying services, and we continually ment products were launched – a gold ETF benefits from The Perth Mint’s exclusive
create and develop new markets and new on the New York Stock Exchange and the government guarantee.
demographics of customers for Australian GoldPass™ smartphone app.
gold,” he says. “With the uncertainty and speculative
The Perth Mint Physical Gold ETF (NYSE nature of cryptocurrencies with no asset
Reinforcing The Perth Mint’s standing in Arca: AAAU) is the first ETF backed by backing their value, investors are always
the world of precious metals is the backing physical gold which itself is guaranteed by keen to discover innovative and credible
of the Western Australian government. a sovereign entity. Each AAAU share rep- vehicles through which to safely protect the
resents ownership of 1/100th of an ounce worth of their portfolios,” Hayes says.
“We operate with the world’s only of gold which is 100% secured by physical
government guarantee, meaning we offer gold stored by The Perth Mint. “Many commentators are suggesting
the safest refining, investment and storage that digital gold products are expanding
programmes in the world,” Hayes says. “AAAU is unique because it is the only the market for gold investment, so there
gold ETF where the underlying physical is a distinct rise in the demand for trusted
Its reputation and long history makes gold is government guaranteed,” Hayes modern and contemporary means of
The Perth Mint a revered institution, says. “All the gold which backs the fund is exchange.”
though Hayes recognises the ongoing stored in Perth, so it lessens the exposure
need to adapt and innovate in the face of to the massive concentrations of physical With more than 1,300 users register-
the digital revolution. gold in London and New York. Further- ing to trade via GoldPass™ within its
more, rather than use third party vaults we first month, the platform is expected to
“We have become pretty good at what only store the metal in the seven bank- become one of the Mint’s leading vehicles
we do after 120 years but we are firmly and grade vaults we own. for gold investment.
fully focused on the future,” he says. “We
must stay ahead of the curve by advancing Another key feature of AAAU is that The Perth Mint is also using digital
and harnessing new technologies for our investors may exchange their shares for advances to ensure Australian gold mine
customers.” physical gold at any time, with the Mint production retains its ethical reputation
Developments have included the offering a range
continual pursuit of new markets. The US of gold products “As an active member of the London
and EU are the Mint’s largest markets with from which they Bullion Market Association, we are working
demand from the rest of the world, and in may choose and on several initiatives around the traceability
particular Asia and the Middle East, stead- have delivered of gold from mine to market,” Hayes says.
ily increasing. directly to their
door. “Traceability is becoming increasing im-
“The Perth Mint is Australia’s largest portant and we are a strong advocate for it.
exporter to Germany by value – more Launched in Some of the programmes are blockchain-
August, AAAU based, while others use physical or chemi-
has performed cal fingerprinting. So, we are watching
well in its first the space very closely and have initiated
few months with several in-house investigations into the dif-
a number of ferent technological developments.”
attracted to the Transparency and accountability are
other ways in which the Mint is securing
gold’s importance to international markets.
“The relationships we have with both
miners and consumers are at the heart of
our global success,” Hayes says. “These
connections span the entire spectrum of
the precious metal value chain, from the
mines themselves to the delivery of physi-
cal products and investment solutions to
markets the world over.”
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 19
Flexible working arrangements for em- Gold Industry Group vice chairperson and Gold Fields vice president of legal and
ployees is not a new fad, but the way compliance Kelly Carter moderated the third annual Women in Gold Great Diversity
they are used and by whom can have far Debate at The Perth Mint. Gold Road Resources people and culture business partner
reaching benefits for organisations willing to Samantha Ware, Ausdrill non-executive director Alex Atkins, Newmont Australia group
embrace the concept.
executive of legal services Andrew Kennedy and former National Party politician
At the end of 2017, Gold Road Resourc- Brendon Grylls also participated in this year’s debate. Mining’s great debate – gender
es Ltd reported an employee turnover
figure of 25% and despite industry shifts, diversity in the workplace – will be put in the spotlight in 2019 with the Gold Industry
exploration booming and attempts from Group’s Women in Gold Great Diversity Debate set to be toured nationally
competitors to pry away staff the compa-
ny’s turnover figure to November was 5%. “We have actually had really good take- “But, if companies are able to provide re-
up from male employees which is really en- ally strong articulation as to what it means
“We recognised in order to retain our couraging. People apply for flexible work- for their organisation, I think that issue will
employees and to increase our diversity ing conditions for a number of reasons, become overcome quite quickly. At the end
of thought we needed to change our cul- whether it is because they have caring of the day it comes down to that leadership
ture,” Gold Road people and culture busi- responsibilities for their own children or piece, you have to have people prepared to
ness partner Samantha Ware said in her grandchildren. People who are approach- take a strong position and speak up.”
proposition against targets and quotas at ing retirement and want to scale things
the Gold Industry Group’s Women in Gold back or job share are also pursuing differ- Newmont Australia Group executive of
Great Diversity Debate. ent arrangements,” Carter told Paydirt. legal services Andrew Kennedy, who em-
phasised “what gets measured gets done”,
“We have retained 95% of them [em- “Having that partnership model with told Paydirt that more needed to be done
ployees] this year. Our female diversity is at our employees and inviting them to come to convince people that the mining industry
35% across the entire business with 40% forward with their proposals has actually was no longer a “boys club”.
in scientific technical roles. Every company worked quite well. We are now thinking
can achieve the same without implement- what is possible, rather than having a fixed “Cultural change takes effort and unless
ing quotas. We encourage our employees mindset upfront about what works and a business has clear policies that address
to work the hours that complement their what doesn’t work. I think that is a better the issue and a leadership that genuinely
lives from the locations that suit them.” approach. It is new for us as it is for a lot of values inclusion and diversity, change will
companies.” not happen,” Kennedy said.
The statistics – plus overall productiv-
ity and efficiency improvements – back Above all, a change in workplace culture Kennedy said targets should be com-
up Gold Road’s strategy and won the ap- and acceptance of individual situations is pulsory, along with reporting on numbers
plause of the 300-strong crowd gathered at an area industry can embrace further and and gender composition of the employee
The Perth Mint for the third annual gender while there are small incremental changes group.
diversity debate, a joint effort of Women in year-on-year in diversity in the sector, Cart-
Mining WA and the Gold Industry Group. er said targets and quotas for a period of “This is an indication of a company’s
time might be the way to go to achieve fun- commitment and the transparency forces
Ware’s compelling case ultimately gave damental shifts. the conversation and makes people look
the proposition, which included former Na- for more creative ways to improve. Re-
tional Party leader Brendon Grylls, brag- BHP Ltd has openly stated it wants a search has established that targets are an
ging rights from this year’s debate which 50:50 workforce by 2025 and while it is important part of improving a business’s
was adjudicated by Gold Industry Group driven to get there, Carter called on com- gender balance,” Kennedy said.
vice chairperson and Gold Fields Ltd vice panies to articulate better the reasons for
president of legal and compliance Kelly doing so. “Businesses that do not set targets of-
Carter. ten lag in comparison to those businesses
“Organisations need to explain why they that do set targets, especially at those lev-
Carter does not have a fixed view on tar- are doing this otherwise there’s a real risk els where the tone of the business is set;
gets and quotas, but knows first-hand the that is simply becomes a numbers game board and senior management level.”
positive impact flexible working arrange- and people become very sceptical about
ments can have within an organisation. that and what the real drivers are,” Carter – Mark Andrews
Over the course of 2018, Gold Fields has
welcomed suggestions and proposals from
its staff on different working arrangements,
opening up an array of ideas for the com-
pany to consider.
Page 20 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 21
COVER The experience gained by Sissingue general
manager Merlin Thomas (left) and his team will
be vital when Perseus begins development of
the Yaoure project
turns the spotlight back
on West Africa
The imminent merger Announced in September, the $US6.5 chairman John Thornton and Barrick
of Randgold Resources billion, all-scrip merger between Barrick shareholders are investing, not only in
Ltd into Barrick Gold Corp and Randgold represents the biggest the high-quality assets, but also the cul-
corporate gold deal since Barrick ac- ture which turned Randgold into the gold
will have ramifications quired Placer Dome in 2008. sector’s best performing company for
throughout the international most of the last 15 years.
The merged New Barrick Group will be
gold mining industry but the world’s largest gold miner, boasting “Randgold has proven ability to oper-
nowhere more so than a market cap of $US19.4 billion, annual ate successfully in the most challenging
the vibrant West African production of 6.64 moz gold and a port- environments,” Thornton told an investor
gold sector where a group folio which includes half of the world’s 10 day presentation.
of intertwined, ambitious lowest cost gold mines.
mid-tier and junior miners Given Barrick’s chequered history in
have begun to position The combined group will be headed Africa, the arrival of the Randgold team
themselves to make the by Randgold chief Mark Bristow who will could signal a new chapter for the Cana-
most of any opportunity bring his management team along with dian major on the continent. However, as
the merger presents. him to run the collective portfolio. Bristow comes to terms with satisfying
the demands of a larger organisation, will
Barrick’s suite of Tier 1 gold assets his management team retain their prefer-
is largely restricted to the Americas but ence for African assets?
Bristow and the Randgold executive cut
their teeth in West Africa where the com- He has already hinted that New Barrick
pany grew from private interests into a would not be a Randgold Mk II.
$US7 billion London-listed miner.
“Randgold has been successful over
It is apparent that Barrick executive two decades because of its manage-
Page 22 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
“With the Randgold assets
we need to question if they
are now in the right hands given
the profile of the organisation.
Certainly, the big assets we will
keep and then we have options
ment structure, its approach and its very Guinea and its 50% share of the Zaldivar in the region.
clear focus on Africa. But, to continue to copper mine in Chile. Newmont Mining Corp and Gold Fields
be successful, we have to recreate our-
selves and build a new company,” Bris- However, the future of a number of Ltd each have two operations in Ghana
tow said during an Investor Day presen- Randgold assets remains unclear. While while AngloGold Ashanti Ltd has three
tation on November 16. “We will now be Kibali in DRC and Loulo-Gounkoto in mines in Ghana, two JVs in Mali and the
able to step beyond our African bounda- western Mali are both Tier 1 assets ca- Siguiri open pit mine in Guinea.
ries onto the global stage.” pable of enhancing the Barrick portfolio,
the company’s other West African assets Beneath these, a group of mid-tiers
Thornton has also been open about – Tongon, Massawa and Morila – have have been increasingly jockeying for po-
the need to trim the portfolio within the less certain futures. sition. TSX-listed Endeavour Mining Inc
next year. was the early front-runner, establishing
“With the Randgold assets we need to itself in the region via a string of acqui-
“Ideally, we will have sold certain as- question if they are now in the right hands sitions which have led to it forecasting
sets that don’t fit ... that’s number one,” given the profile of the organisation. Cer- production of 700,000oz gold for 2018.
Thornton said in November, describing tainly, the big assets we will keep and Fellow Canadian group B2Gold Inc fol-
how he wants the combined company to then we have options with others.” lowed with its capture of the Fekola pro-
look in a year. “Number two, we will be ject in Mali which is now producing up
demonstrably more efficient.” Exactly what those options are is al- to 430,000 ozpa gold. Russian miner
ready consuming other players in West Norgold Inc also boasts three operations
The Barrick portfolio has a number Africa. in Burkina Faso and Guinea, with com-
of stated non-core assets including its bined annual production of more than
50% share of the Kalgoorlie Super Pit in While the region has delivered some of 630,000oz gold.
Australia, the Lumwana copper mine in the best gold discoveries of the last 20
Zambia, the Pogera mine in Papua New years, the majors have largely been re- Below those three producers, ASX-
luctant to become too deeply entrenched
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 23
John Welborn the merger will only result in a positive ozpa production
outcome for the region’s juniors. through organic
listed Resolute Mining Ltd and Perseus growth but man-
Mining Ltd have plans to reach 500,000 “I think Barrick and Randgold’s merger aging director Jeff
ozpa annual gold production. has put a bit of a spotlight back on Af- Quartermaine ad-
rica and West Africa in particular,” he told mits the company
So, what then does the Randgold Paydirt. “You’ve got one of the world’s is considering cor-
merger into Barrick mean for smaller largest gold companies effectively re- porate activity.
companies with ambitions? committing to the continent…and I think
that’s generated a lot of favourable com- “We are looking
For many, it is confirmation that West mentary.” for opportunities to
Africa is a place where even the majors grow and we will
are prepared to do business. Teranga president Richard Young also find them,” Quar-
believes the deal will spark North Ameri- termaine told Pay-
“Most importantly, it has focused world can investor interest in West Africa. dirt. “It is theoreti-
attention back onto Africa as a gold in- cally possible that
dustry,” Resolute managing director “Barrick was originally a North Ameri- some opportunities
John Welborn told Paydirt. “This is par- can company which then moved into the will come out of the
ticularly the case in Australia where the Americas so Canadian investors be- merger but we are
successful domestic miners have begun came more comfortable with the Ameri- getting ahead of
branching out into North America. They cas. Hopefully this merger means they ourselves thinking
have been reinforcing North America’s become more comfortable with Africa,” that. And, if they
Tier 1 credentials which points to what Young said. do sell things, Mark
their investors are showing appetite for. Bristow has never
Barrick’s subsumption of the Randgold given anything
“So, the Randgold merger is a great portfolio could have wider ramifications away so there won’t
message because part of the rationale for ambitious West African juniors and be opportunities to
was bringing five of the world’s top 10 mid-tiers, particularly if the major choos- buy good assets on
mines together and two of those five are es to divest assets such as Tongon, Mas- the cheap. There
in Africa and that goes back to what we sawa and Morila. may, however, be
have been saying for a long time: Geo- good value assets
logically, politically and financially, West The Australian gold scene offers available and Per-
Africa is the place to be for any genuine strong precedent for what may happen in seus could partici-
gold miner.” West Africa. In 2013, Barrick decided to pate in that.”
embark on a divestment strategy in Aus-
West African Resources Ltd chairman tralia, selling its West Australian Gold- Bristow’s own
Mark Connelly has been involved in sev- fields portfolio to Gold Fields and North- comments during
eral West African corporate takeovers in ern Star Resources Ltd and its Cowal the investor day
the last decade. He agrees with Welborn gold mine in New South Wales to Evolu- reiterated Quarter-
that the Barrick-Randgold merger will tion Mining Ltd. maine’s belief that
shine a spotlight on the region. he will drive a hard
That strategy shook up the Austral- bargain in any dis-
“The West African opportunity may be ian gold sector, handing Evolution and cussions.
presented to a wider audience as a result Northern Star the assets and balance
of the deal,” he said. “And, it might make sheet clout to grow into genuine mid-tier “Rationalisation
others get on their bike and start doing gold producers. is not panic selling
business and that’s a good thing.” and we have got
Could the same occur in West Africa? the luxury of being
TSX-listed Teranga Gold Inc and “Randgold will put assets up for sale able to sweat these
Roxgold Inc both hold similar ambitions and I do think there is genuine opportu- assets,” he said.
to Resolute and Perseus of achieving nity for a company to repeat what has
500,000 ozpa gold production off the occurred in Australia,” Connelly said. Resolute has
back of West African assets. “There is less resistance to M&A now also been focused
than there was a few years ago and it on its own pipe-
For Roxgold president John Dorward, then becomes a question of who.” line of projects but
Welborn is convinced opportunities will as its Syama un-
arise from Barrick’s acquisition and that derground project
investors, whether in Australia or North reaches fruition, Welborn is priming his
America, would give their backing. business development team to hunt out
“There is absolutely opportunity for more opportunities.
another mid-tier company to emerge in
West Africa; there is always room for “The merger will create asset opportu-
people who want to do things properly,” nities and our success at Syama will al-
he said. “The trick is to get it right. low us to be a leader in the consolidation
“What Evolution and Northern Star and growth opportunities,” he said. “For
have achieved is inspirational and En- a long time we have been focused on
deavour has proven how quickly you can our own assets but we strengthened the
grow a business in West Africa. If you balance sheet in 2015/16 and we have
are successful, investors will be agnos- Syama moving underground and now we
tic about all their previous reservations; are ready to spread our wings.”
Randgold has proven that.”
Perseus has plans to reach 500,000
Page 24 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
A new generation of mines in Cote d’Ivoire
are evidence of the continued prospecitivity
West Africa holds for gold companies
Randgold’s Loulo-Gounkoto mining complex in Mali is likely to
remain a key asset in the merged Barrick-Randgold company
Whoever attempts the leap to the mid- Welborn believes sticking to that mod-
tier, Randgold is likely to prove an inspi- el could pave the way for future West Af-
ration – whether it’s unwanted assets are rican success.
part of it or not. The company built its
reputation on the acquisition of discover- “Gold from West Africa has the same
ies that had previously failed to live up value as gold from Australia or North
to expectations. Through aggressive ex- America,” he said. “It is about your abil-
ploration, sharp development and canny ity to consistently produce it and the cost
management, the likes of Tongon, Morila of mining it, as Randgold has shown it is
and Loulo-Guonkoto have consistently how you do it that you should be valued
delivered profits for the company. on.”
– Dominic Piper
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 25
COVER The experience gained by Sissingue general
manager Merlin Thomas (left) and his team will
be vital when Perseus begins development of
the Yaoure project
West Africa a strength
for resurgent Perseus
Just at a time when the West African gold space appears ripe for a bout of
corporate activity, Perseus Mining Ltd’s defensive barricades and offensive
arsenal are due for major reinforcement.
Perseus is reinventing Yaoure from modest
oxide heap leach to full sulphide CIL operation
Page 26 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Perseus was one of the few Austral- “It is economically attractive in its own Fathym Coulibay in the process plant
ian survivors of the last round of M&A right [the mine boasted all-site costs control room at Sissingue. Some 10% of
moves in West Africa, finding its own suc- of $US462/oz in the June quarter and the current Sissingue workforce is female
cess – the company’s shares hit $3.96 on $US582/oz in September] but is also
the ASX in September 2011 – had priced an important part of our plans for other couragement from the September set-
it out of the game. reasons,” Quartermaine told Paydirt re- back at Sissingue. For him, it confirmed
cently. “It gives us early access to a sec- the need to spread Perseus’ operational
That left development of its Edikan ond source of cash flow and spreads op- risk.
gold project in Ghana as the only sen- erational risk, allows us the opportunity
sible option and while managing director to develop our capacity in Côte d’Ivoire “This proves the point of pursuing di-
Jeff Quartermaine must’ve cursed that – which means the development team is versification,” he said. “If we have a bad
outcome on a number of occasions down match fit when it comes to the develop- month at Sissingue, we make it up at
the years, the company’s relentlessness ment of Yaoure – and it has enhanced Edikan, and vice-versa. We are seeing
appears to be finally bringing reward. our social licence, allowing us to demon- the evidence of not being a single-mine
strate that we are reliable and can deliver company and operating in multiple juris-
Edikan’s development from 2013 was benefits for government, community and dictions is very valid as well because the
far from smooth and with the Ghana- shareholders.” attractiveness ebbs and flows.”
ian Government growing increasingly
Development at Sissingue ran almost The biggest challenge in front of Per-
Cisse Amadou leads the in-country perfectly, with construction achieved seus now is ensuring Sissingue can con-
exploration team on Perseus’ ahead of schedule, first gold poured in tinue to contribute throughout Yaoure’s
Ivorian projects January this year and commercial op- development. The mine has a current
erations declared on April 1, just five reserve life of just 4.8 years and explo-
capricious in its attitudes towards the months after mining began. ration manager Doug Jones has been
gold sector, the move from explorer to charged with adding to that.
producer had only made Perseus more However, a debilitating wet season –
vulnerable to collapse. rainfall was 50% higher than the 42-year “The small mine life is nothing we are
average – left the company behind guid- concerned by and we are hitting explo-
Quartermaine and his management ance by the end of the September quar- ration very hard with aircore and fol-
team knew the company needed to di- ter. Mining rates dropped 36% for the low-up RC drilling,” Quartermaine said.
versify both its production and geopoliti- period with gold production falling from “Based on the historical work, we don’t
cal risk profiles. 26,020oz in the June quarter to 17,882oz think we’ve missed a 1 moz orebody at
in September. Sissingue but neither have we tested
It did so by acquiring the Yaoure pro- whether or not there are a number of
ject in central Côte d’Ivoire as part of its Relief from the weather eventually 100-200,000oz deposits still there. If you
takeover of Amara Mining in February came in mid-October and the operations end up with four of them, it doubles the
2016 and returning to one of its forgot- team now has Sissingue on track once size of the reserve.”
ten exploration projects, Sissingue, also again.
in Côte d’Ivoire. Jones’ experienced eye is also identi-
“It did catch us by surprise but it was fying new opportunities.
Sissingue’s reserve and resource a lot of rain and all of West Africa had a
numbers – 5.8mt @ 2.1 g/t for 380,000oz bad time because of it. It was the cumula- “Three or four years ago we may have
gold and 9.6mt @ 1.8 g/t for 538,000oz tive effect of the rain that led to the prob- thought all the exploration work had
gold respectively – point to a modest lems,” Quartermaine said. “It affected been done, but we are beginning to think
operation but Quartermaine is adamant grade because we couldn’t access areas again,” Quartermaine said.
those numbers are deceiving when it but that was largely offset by recoveries.
comes to the importance the 78,000 We were above budget for October and The exploration horizons are likely to
ozpa mine has in the Perseus portfolio. in the last few days we have been able to expand as Sissingue hits its production
access all areas of the pit again.” straps and cash begins to flow. The mar-
ket was not set alight by Perseus’ deci-
The unusually excessive rain came at sion to pursue such a small development
a bad time in Sissingue’s ramp-up with but Quartermaine is adamant the project
mining still solely in the oxide material.
Quartermaine is confident future rain
events will have nowhere near the same
“The next wet season won’t be an is-
sue,” he said. “We have laid out a spe-
cific plan for the next 12 months and
will be mining fresh ore by then anyway
– Edikan didn’t miss a beat despite the
wet because we have a lot of hard rock
to sheet the roads, etc. At Sissingue we
are going through the cap rock now into
the fresh and we have also instigated a
few other measures; two-ramp access,
an extended ROM pad with two months’
of high-grade material and laying back
of the oxide walls. That will allow us to
overcome the wet season.”
Quartermaine actually took some en-
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 27
makes sense. Perseus drilled more than 60,000m following its ac- mine had gone through several itera-
“Not everyone bought the Sissingue quisition of Yaoure, rebuilding the reserve/resource tions, largely based on low-cost heap
leach operations. Amara (formerly
story but I find it odd to reject a pro- Cluff) had completed two feasibility
ject that can generate a 30% return,” studies on Yaoure’s sulphide resourc-
he said. “There was risk involved in es in 2014 but had failed to get it to
building on the back of a five-year hang together.
mine life and if we’d screwed up the
development we would’ve been hurt Perseus itself found Amara’s vi-
but we have already recovered 30% sion problematic and chose to run
of the capex after two quarters. It has its own optimisation studies based
been well built and designed and is on a review of the entire drill data-
running well. We always believed we base. A further 60,000m of drilling
could extend the mine life with op- was also completed, culminating in
portunities in the district and with the a DFS released in November 2017
plant working efficiently it becomes which showed an 8.5-year operation
an economic proposition to truck ore capable of producing 1.367 moz gold
from some of those prospects.” (including 215,000 ozpa for the first
five years) at all-in costs of $US759/
Ultimately, Perseus’ time in Côte oz. The price tag attached is $US263
d’Ivoire is likely to be defined by the million with IRR of 23%, payback peri-
success or otherwise of Yaoure. Prior od of 35 months and NPV of $US210
to being taken on by Perseus, the
“If we have a bad month at Sissingue, we make
it up at Edikan, and vice-versa. We are seeing
the evidence of not being a single-mine company
and operating in multiple jurisdictions is very valid
as well because the attractiveness ebbs and flows.
Page 28 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
million. A resource of 3mt @ 6.2 g/t for more efficient.”
“In our own eyes, it is now better than 595,000oz gold was defined with the The blossoming of extensions at Ya-
scoping study pointing to its amenability
what we first saw,” Quartermaine said. mechanised room-and-pillar mining. oure highlights the smorgasbord of op-
“We always had our own vision for Ya- portunities Perseus now has in front of it.
oure which was different to Amara’s and “We have defined the underground po- The task for Quartermaine and the board
that vision was confirmed in the DFS.” tential and in sterilisation drilling to the is to ensure priorities are met, beginning
north-west of the CMA pit we have re- with the mine’s initial development.
Successful development of Yaoure will turned a lot of holes with gold,” Quarter-
put Perseus within reach of its 500,000 maine said. “If we can unlock the struc- “The underground resource is a com-
ozpa production by 2022 goal and ce- ture we could have another deposit. pelling target but opportunities must
ment its reputation as a genuine West be weighed up between other uses for
African mid-tier gold miner. “At Sissingue we had mineralisation capital in the business,” he said. “The top
around the pit which was not originally priority is Yaoure’s development but as
“It is important for the company and economic but after we applied operating soon as we generate cash flow from Ya-
the country,” Quartermaine said. “Yaoure data found that it was. It all warrants fur- oure we will be able to come back to the
is a very good project and we haven’t got ther investigation. underground.”
close to defining exactly what its poten-
tial is. “We had HiSeis on site testing the Completing the Yaoure build will de-
project’s suitability to 3D seismic. If pend on finalising financing. Perseus’
Yaoure’s growth potential was further that technology is suited, we will apply current balance sheet boasts cash of
emphasised in November with the re- it sooner rather than later because it is $93.8 million and debt of $US52.4 mil-
lease of an inferred resource and scop- easier to do before development starts lion, leaving the company confident it
ing study for an underground mining op- and it will make exploration targeting can raise the capex without the need to
eration. pursue equity markets.
The 750,000 tpa Sissingue plant has
performed above expectations since Under consideration is a $US200 mil-
lion corporate facility which would incor-
coming on stream in January porate repayment of the existing project
debt and a corporate bond.
“The banks are due to deliver their pro-
posals on November 22,” Quartermaine
said. “All the groups will meet that dead-
line. We will then have a fair idea of what
the funding landscape will be.”
Beyond Yaoure’s start-up, Perseus’
focus is to extend the lives of Sissingue
(4.8 years) and Edikan (6 years).
“We are in the very attractive position
of having more opportunities than we
have capital and mine life extensions at
Sissingue and Edikan take priority over
Yaoure underground and expansion
there,” Quartermaine said. “We have a
strategic planning session starting this
month [November] looking at the macro-
economic and geopolitical environment
as a backdrop to individual assets, hu-
man assets, financial assets and our so-
Edikan has never fully reached its po-
tential but is enjoying its most consist-
ent period of performance. It produced
54,595oz at all-in site costs of $US1,045/
oz in the September quarter, in line with
“We have met quarterly targets for
eight consecutive quarters and that is
the consistency we have been striving
for,” Quartermaine said. “It means we
can think strategically about how we
extract further value. There are some
stranded assets in proximity and there
is the possibility of Edikan as a central
processing facility. We couldn’t consider
such opportunities if we weren’t on an
The same theory applies across the
company’s portfolio. Sissingue is one
“In our own eyes, it is now An example of visible gold from a
better than what we first high-grade intercept of 13m @ 5.28
saw. We always had our own vision
g/t gold which formed the basis
for Yaoure which was different of a recent underground maiden
to Amara’s and that vision was
resource at Yaoure
confirmed in the DFS.
Gold recoveries from oxide
material have been above
estimates and Perseus expects
the trend to hold when fresh
ore is put through the mill
Page 30 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
of only two operations (Randgold Re- board as group general manager busi- Doug Jones
sources Ltd’s Tongon mine in the other) ness development.”
in northern Cote d’Ivoire, a region widely lay their entry. They are happy to pay
acknowledged as prospective but under- A former Macquarie Bank director, more but want less risk around their
explored. Grove has also been tasked with inves- investment.
tor relations and completing the rebuild-
“There are certainly consolidation op- ing of the company’s reputation in the “We have worked hard to de-risk oper-
portunities there,” Quartermaine said, marketplace. ations. We operate to plan consistently.
mostly likely in reference to ASX-listed We have delivered Sissingue ahead of
explorers such as Exore Resources Ltd “We are well advanced on that road schedule and under budget and have de-
and Manas Resources Ltd which have and have established a very credible risked Yaoure’s development. The next
projects within 100km of Sissingue. business that can sustain itself,” Quar- critical step will be to eliminate the finan-
termaine said. “Some people will never cial risk by putting in place a new finance
Any transactions will likely be predi- forgive our fall from the 2011 highs but package. Any investor bullish on gold
cated on Perseus improving its market objectively you can’t ignore the dramatic and gold equities would then be hard
position. improvement in the company in recent pressed not to invest in Perseus.”
“Right now, the answer to corporate – Dominic Piper
activity is no,” Quartermaine said. “The “When I’ve been to Canada recently
share price has performed well relative people have said to me it is a very
to many of our peers but we are still un- different company to that which they
dervalued so would hesitate to use pa- sold out of in 2013. Some said they
per. But, we are looking for opportunities would never invest in Perseus again,
to grow and that is one of the primary others said it was very different and
reasons for Andrew Grove coming on- they would get involved but would de-
The ore bins beneath the ROM pad are scrubbed out. Sissingue boasts a 91%
Ivorian workforce with 55% of workers coming from the local communities
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 31
Sliding doors give Exore
Luck can be everything when it comes to junior mining and Justin
Tremain could be forgiven for thinking his was all out when he
failed to secure access to Novo Litio Ltd’s lithium asset. However,
the mining gods can be both kindly as well as malevolent.
Page 32 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Artisanal workings litter Exore’s
Cote d’Ivoire tenements
The legal wrangling meant Novo Litio Korhogo (271sq km) – and the 180sq km
missed the height of the ASX lithium Korhogo NE application.
boom, rendering its Portuguese project
undesirable. That left the company with Boundiali and Korhogo immediately sat-
$15 million in the bank but no projects isfied Exore’s commodity needs and its
which to apply it to. thirst for multimillion ounce potential was
also easily sated.
Tremain and the Novo Litio board adopt-
ed an open-minded approach. “The project areas both sit near the con-
vergence of two greenstone belts – Sy-
“We didn’t have too many set require- ama and Tongon-Banfora. Geologically it
ments; other than gold as the priority is a good position to be in for large gold
focus,” Tremain told Paydirt. “The next systems,” Tremain said.
criteria was to gain access to a project or
district with significant exploration upside Both belts have proven gold discover-
for multimillion ounce discoveries that was ies with the north-south trending corridor
also stable, both geopolitically and secu- hosting Syama (11.5 moz gold) 90km to
rity-wise.” the north and Sissingue (1 moz) 50km
north and the north-east/south-west
At the same time as Novo Litio began trending corridor hosting Banfora (3.2
its global search, Apollo Consolidated Ltd moz) 100km north-east and Tongon (4.2
was narrowing its horizons. The company moz) 40km to the north-east.
had been running a two-pronged strategy,
exploring for gold in both Western Aus- “These are on the same structures and
tralia and Côte d’Ivoire. Its Ivorian pro- rocks as those large deposits,” Tremain
jects had already shown great promise said.
but when its Lake Rebecca gold project
north-east of Kalgoorlie returned a string Exore immediately set to work. By the
of positive drilling results, Apollo decided time Paydirt visited the projects in early
it couldn’t commit to both assets. November, Exore had already drilled 20
aircore holes as part of an infill aircore
The Boundiali and Korhogo licences in programme.
northern Côte d’Ivoire had already gener-
ated interest from the West African coun- The rapid mobilisation expresses Ex-
try’s established miners, Randgold Re- ore’s willingness to get the project mov-
sources Ltd and Perseus Mining Ltd, but ing. Apollo’s split loyalties meant Boundi-
Apollo wanted to share in any upside a ali and Korhogo could never receive the
partner realised. attention they perhaps deserved. The
four-year work history had seen 4,000
In stepped the fates. Novo Litio had the soil samples across 30% of the projects
cash but needed a project, Apollo had too collected, 34,256m of aircore drilling and
many projects and too little cash. Tremain 3,,034m of RC drilling undertaken.
didn’t hesitate to strike a deal.
As its sole focus, Exore has a board-
“It was a great transaction for both com- approved four-month programme which
panies,” he said. “Apollo had seen its fo- will take in 13,000 soil samples across
cus pulled towards WA but didn’t want to the entire permit area, 22,000m of aircore
divest the Ivorian assets for cash. We of- drilling, a high-res airborne mag survey
fered funding and management while they over the majority of the permit area and
keep a minority project equity and an Ex- 10-12,000m of RC drilling.
“The project already had a lot of early-
Announced in late August, the deal will stage reconnaissance work with a number
see the now rebadged Exore Resources of walk-up drill targets defined; that was
Ltd issue Apollo 90 million shares for an one of the things we liked about it,” Trem-
80% interest in Aspire Nord Cote d’Ivoire
SARL, the local subsidiary which holds
100% of the project. Apollo’s remaining
20% interest is free-carried through to a
decision-to-mine. The transaction deliv-
ered Exore immediate drill-ready targets
on which to deploy its cash reserves.
The shares are only to be issued on re-
newal of the project’s two granted explora-
tion permits – Boundiali (379sq km) and
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 33
Exore senior geologist
Theodore Ehui Koye
ain said. “But, the work done only covers by altered sandstone surrounded and During Paydirt’s visit, Exore made a few
a third of the permit area. The plan is to intruded by diorite dykes. As well as the simple, but well received donations
have a minimum of two rigs drilling ex- surface soil sampling and aircore drill- of footballs to local villages
isting areas and then have soil sampling ing, mineralisation exposed by artisanal
and aircore drilling to produce a strong mining operations suggest Antoinette prospect, 15km south of Antoinette,
pipeline of further targets.” Central has potential for multiple paral- where an 8km-long soil anomaly strik-
lel mineralised zones untested by the RC ing north-northeast is showing similar
The initial focus of Exore’s RC pro- programme. geology to Randgold’s Tongon mine. Soil
gramme will be the Antoinette prospect, surveys returned samples of up to 1,320
the most advanced prospect on the “The immediate focus will be on drilling ppb gold.
Boundiali tenement. out a resource at the Antoinette Central
prospect,” Tremain said. “It is not neces- “Veronique is a much bigger anomaly
RC drilling by Apollo confirmed 600m sarily the best prospect but it is the most than Antoinette,” Tremain said. “It is a
of high-grade strike at the Antoinette advanced; it is the only one with RC drill- very large and high-tenor soil anomaly
Central prospect, which represents less ing on it and has confirmed bedrock gold. which appears in-situ, not transported,
than 10% of the plus-7km geochemi- The 12,000m of RC should be enough to and is open in all directions. It will be the
cal anomaly identified. The 28-hole RC define a maiden resource there.” next prospect to be drill tested with first-
programme produced 25 intercepts with pass aircore drilling to start in December
plus-20 gram metres and nine intercepts Although RC drilling will initially focus with the programme designed to quickly
with plus-50 gram metres and included on Antoinette Central, Exore’s hopes are define an RC target.”
hits of 17m @ 22.52 g/t from 8m, 14m @ not pinned exclusively to one prospect.
11.24 g/t from 12m, 11m @ 9.07 g/t from On the Korhogo licence further south,
50m and 25m @ 2.93 g/t from 65m. In conjunction with the RC programme, Exore has already started work on the
Exore will test other targets along the 20km-long Liberty trend anomaly.
Gold mineralisation is largely hosted 7km-long Antoinette prospect. At Antoi-
nette South-East, Apollo returned air- “There are five discrete zones of high-
core hits of 8m @ 2.42 g/t, 24m @ 1.28 tenor anomalism and previous broad-
g/t and 20m @ 1.72 g/t gold hosted in spaced aircore drilling confirmed that it is
granodiorite while the Antoinette South- an in-situ anomaly with plus-2 g/t in the
West target has active artisanal opera- aircore,” Tremain said.
tions and aircore hits of 4m @ 13.68 g/t
and 4m @ 4.72 g/t. Aircore drilling started at Liberty in Oc-
tober with the Liberty 2 prospect – which
“That RC programme is certainly not has more than 1km of plus-2 g/t gold at
the end of exploration; it is just the first 10m widths defined in aircore – the first
step along the way to defining a plus-1 target.
moz gold resource and there is a lot of
scope to grow,” Tremain said. “A second “The plan is to tighten and extend the
rig will go into untested targets and the strike of the aircore drilling as a precursor
third part of the programme will be to to getting the RC rig in,” Tremain said.
map and geochemically survey other ar-
The expanded soil sampling pro-
eas to bolster the gramme is expected to deliver further
most enticing tar-
get at Boundiali
is the Veronique
Exore managing director Justin Tremain takes brokers
Max Ludowici (left) and Peter Hannah (right) through
the company’s exploration plans
Page 34 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
opportunities but with a healthy bank bal-
ance, Exore is capable of expanding its
horizons still further.
“The company is well-funded but while
there will be aggressive exploration on
the existing ground, our strategy is also to
build up our ground position in northern
Cote d’Ivoire,” Tremain said. “We have
identified and are pursuing opportunities
with the aim of becoming the dominant
landholder in the district.”
Cote d’Ivoire is widely accepted as the
most underexplored jurisdiction in West
Africa. Apart from Sissingue and Ton-
gon, north Cote d’Ivoire is devoid of gold
developments. Randgold has been hit-
ting its Fonondara discovery (adjacent to
Exore’s Korhogo licence) hard in recent
years and if those efforts pay off, the dis-
trict’s strike rate will be impressive.
“There hasn’t been a lot of exploration
undertaken outside of those deposits,”
Tremain said. “Essentially, every explo-
ration project up there has resulted in a
Political instability stymied gold explo-
ration during the height of the last West
African gold boom but now the country
is one of the most secure in the region.
“Cote d’Ivoire has a substantial amount
of the Birimian greenstone belt but has
not been explored as much as neigh-
bouring countries so there has been a
disproportionate amount of ounces dis-
covered; the prospectivity is unquestion-
able,” Tremain said.
“It is stable, has a proactive mining
code, has seen a number of operations
built and of all the West African jurisdic-
tions it is the easiest to operate in. As the
mid-tier West African producers build
up their portfolios, they are all looking in
Cote d’Ivoire and that trend eventually
flows into the market.”
– Dominic Piper
Exore started aircore drilling in
October and plans to have 42,000m
drilled in four months
Communities around Exore
are largely subsistence
farming based but cotton is
also a popular crop
WAF shows no aversion
to Sanbrado conversion
It may have initially been a reluctant miner but West African
Resources Ltd is well on its way to becoming a rare kind
of company, an ASX-listed West African gold producer.
In November, the company awarded the ject capable of producing 211,000 ozpa
EPCM contract for construction of its at $US551/oz AISC for five years and
Sanbrado gold project in Burkina Faso 133,000 ozpa at $US640/oz over a full 11-
to Lycopodium Ltd. The West African- year mine life. It was anticipated the DFS
experienced engineering group has al- would spark interest from larger West Afri-
ready delivered more than a dozen gold can miners but six months on the compa-
projects in the region and its appointment ny is pushing ahead with its development
emphasises just how seriously West Afri- plans and managing director Richard
can Resources (WAF), is taking its move Hyde is more than satisfied with the jour-
from explorer to miner. ney the company finds itself on.
The build will be based on the com- “I’m pretty happy about it, in fact
pany’s June DFS which identified a pro- I’m really enjoying myself,” Hyde told
Page 36 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Paydirt recently. “You are a reluctant Exploration manager Vincent Morel (left) with project geologists Abdou-Rasmone Guire
miner but not once you hire the project and Jonas Namountougou (both centre) and senior geologist Ian Brown discuss the
team. Once you have the experience of geological structure of the Sanbrado gold project
people like [chairman] Mark Connelly
and [chief development officer] Matt Wil- from the M5, M3, M1 North and M1 South who’ve done it before because it is so
cox, your confidence grows.” deposits as well as concurrent under- dynamic. There are changes every two
ground mining from the high-grade M1 years. You want to work with someone
The technical knowhow of Lycopodium South (1.55mt @ 15.9 g/t for 780,000oz who understands that but is also in your
and the in-house team has also been gold). The decision to start underground own backyard. You have to pay fair mon-
bolstered by market support. at the same time has allowed WAF to ey but Perth is a centre of excellence for
compress mine life to 7.5 years. mining, why wouldn’t you work with peo-
“The register now has some of the Aus- ple from here.”
tralia’s and North America’s most astute “Running the open pit and under-
and largest precious metals investors on ground concurrently shoves the ounces WAF’s attitude will continue to serve
it and they have backed us,” Hyde said. into the front end and resizing the mill by it well as it closes in on financing San-
25-30% can get us over 250,000oz in brado.
Such is his confidence, Hyde’s hori- that first year,” Hyde said.
zons are already widening. “Banks will make sure they have done
As chief development officer, Wilcox the due diligence to a much higher level
“We are creating our own templates will lead the owner’s team. He had previ- than in the equity space,” Hyde said. “But
and learning a lot while we are doing it. ously built Nordgold SE’s 4 mtpa Bissa we’re ensuring to apply the same level of
At the end of the process, we will have gold mine and 8 mtpa Bouly gold mine due diligence with our own documents.
a rule book and there is no reason why in Burkina Faso and most recently the 12 It has been a good learning experience.”
we can’t do it again like Perseus [Mining mtpa Gross mine in Siberia.
Ltd], B2Gold [Corp] and Endeavour [Min- The company’s exploration success
ing Corp] have done.” The appointments of Wilcox and Ly- has meant it has charted a safe course
copodium for the Sanbrado build prove through the choppy equity markets of the
WAF may be some years off realising WAF is not prepared to cut corners on last two years and the high-grade nature
such ambitions but Hyde’s assuredness the development. of Sanbrado means it is likely to achieve
evinces the progress his company has the same during project financing.
made in the last four years. When the “When you are building a mine there is
company acquired Sanbrado as part of lots outside of your control – particularly “We expect the finance will be com-
its takeover of Channel Resources, it had in Africa – so you must reduce the risk on pleted by the end of 2018,” Hyde said.
its sights set on a modest 50,000 ozpa what you can control,” Hyde said. “Matt “We received good interest from 14 Tier
heap leach operation. has built projects in West Africa and has One financiers with competitive non-
brought his own team with him and Ly- binding offers ranging from $US160-215
“Channel had identified 750,000oz copodium has got the runs on the board million. We are down to four banks in a
at M5 but our review said there was already in West Africa.” syndicate and one debt fund. They are
250,000oz because a lot of it was in- offering a lot of debt because the project
ferred,” WAF exploration manager Vin- Connelly – who has experienced sev- generates so much free cash flow in the
cent Morel explained during a recent site eral West African developments in the first four years.
visit to Sanbrado. “We put in a new grid last decade – believes it is critical for
and did 100m spaced aircore drilling. companies to do all they can to eliminate “All of them have lent money in West
When we finished that in June 2014, we risk. Africa previously so we don’t have to
had 400,000oz @ 1.2 g/t gold but as the educate them on the geopolitics or any-
permit was about to run out we needed “If you do all the technical stuff well, thing.”
to put something together in order to ap- you de-risk the project and add value,”
ply for the mining licence. So, the focus he told Paydirt. “That’s why we hire the That depth of knowledge will be valu-
became getting M5 into a heap leach op- likes of Lycopodium. It is particularly criti- able for WAF at a time when Burkina
eration.” cal in West Africa; you have to have guys Faso’s international investment reputa-
The company produced a PFS for
the heap leach in February 2015 but 12
months later the project had taken on a
completely different hue after a series of
high-grade hits at the nearby M1 pros-
By June 2016, the company was re-
drawing its feasibility study, abandoning
the heap leach starter project in favour of
a larger, more robust CIL flowsheet. The
June 2018 DFS – based on a reserve
of 20.4mt @ 2.4 g/t for 1.57 moz gold –
showed a capex of $US185 million could
deliver a 11-year, 2 mtpa CIL operation
producing 133,000 ozpa at life-of-mine
AISC of $US640/oz.
Mining will incorporate open pit mining
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 37
Core from WAF’s drilling at Sanbrado. The M1 South
deposit has consistently delivered high-grade results
Page 38 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
number of signifi- alisation to target.
“It didn’t actually deviate as planned but I
said to keep going because if you cased it
including Morila off and went chasing mineralisation else-
where things get more difficult. Then,
and now Sanb- what would you know, we hit mineralisa-
rado,” Hyde said.
Sanbrado also contains a series of
“I’m still involved other prospects which have seen little
drill testing but Hyde and Morel are also
in the day-to- beginning to consider their wider options.
day exploration The merger of Randgold Resources
Ltd into Barrick Gold Corp may have set
because I’m still the M&A wheel turning in West Africa
and Hyde is conscious of the shifting
close to the pro- landscape in front of WAF.
ject and I’m still a “We’re looking for additional projects to
put into construction 2-3 years from now
geologist.” because Sanbrado will be producing by
the second half of 2020,” he said.
The first priority
Other projects are likely to join Sanb-
will be to extend rado then but a more pertinent question
is whether they will do so under the guise
Sanbrado’s exist- of the WAF corporate logo.
ing reserves at West Africa boasts a long list of pro-
jects originally discovered by ASX-list-
depth. The con- ed juniors but eventually developed by
North American groups. Some of these
strained nature of transactions proved profitable for share-
holders with companies being taken
the M1 South de- out at the height of their value, while oth-
ers were snapped up on the cheap having
posit makes this failed to maintain early market success.
a technical chal- When Connelly joined the WAF board
in June 2015 it seemed the company was
Members of the Sanbrado exploration team lenge. looking for a successful exit in the mould of
his previous ventures Adamus Resources
examine core from recent drilling “It is very dif- and Papillon Resources. However, despite
the rapid exploration and development
Project geologist Salifou Koala
tion is wobbling thanks to security issues drilling because it
on the country’s northern and eastern is so easy to miss,” Morel said. “We had
borders with Mali and Niger respectively. to bring in navigational tools and for the
Since former President Blaise Com- technician on the rig, the orientation line
paore’s forced resignation in 2014, the is most important.”
country has become increasingly vul- WAF’s current strategy is to drill deep
nerable to terrorist attacks from Islamist holes and take several wedges off each
groups crossing the Malian border. hole.
Hyde remains conscious of the grow- “It is technically challenging trying to
ing security issue in the country. hit a 10m by 10m square 500-700m be-
“We’ve never had any issues in Burki- low surface,” Hyde said. “In some cases,
na Faso but it is getting testing in the it is going to be cheaper and easier to
north and in Mali. The Mali-Niger border drill from underground, giving another
has long been porous and we do have reason to start the development earlier.”
an increasing focus on security,” he said. Not that WAF is hanging around for
The contradictory nature of West Afri- the underground to open
can politics means that despite the secu- up. In mid-November,
rity concerns, Burkina Faso remains one the company reported
of the region’s most stable investment its deepest hole to date
jurisdictions. at M1 South (1,000.8m
“If you took away the country risk you to the end of hole), had
would see a thriving industry which is hit 25m @ 15.03 g/t gold
serviced by top quality service compa- from 862m down-hole,
nies,” Hyde said. “The mining code was including 5.5m @ 40.42
updated in 2015 so is quite recent and we g/t, 1.5m @ 26.02 g/t and
expect few hurdles in signing the mining 0.5m @ 71.8 g/t gold. The
convention, which we hope to complete step-out hole had been
early in 2019.” intended to intercept min-
Once finance is secured and the build eralisation 200-250m be-
started in earnest, Hyde and Morel will neath the M1 South un-
no doubt turn some of their attention derground reserve (470m
back to what they do best; discovery. below surface), meaning
“Vince has 25 years’ experience in there is now a further
West Africa and has been involved in a 220m of potential miner-
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 39
There are few projects with the consistent occurrences of visible gold
in core which Sanbrado can boast
The WAF management has attributed much of its success to using
experienced West African operators, such as Geodrill
Page 40 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Mark Connelly progress since, no firm bid has been forthcoming.
Hyde remains sanguine about the future.
“We are still not getting fair value in the market but that will come
when we complete the build and start the project,” he said. “Mark
Connelly has said from the start that if we got a good offer, we
would always take it to shareholders and that remains the case.”
Connelly himself has been surprised larger companies haven’t
made a move for WAF.
“It’s been a surprise and, honestly, a bit disappointing,” Con-
nelly said. “I suspect timing plays a big role in it. When we were
ready to be a takeover target, the TSX – the most likely source of
suitors – was depressed. You do ask yourself: ‘Is there something
we are not doing?’ Maybe it is a little bit technically complicated; a
mix of medium-grade and high-grade ounces, open pit and under-
ground. It takes a bit of technical work to understand it.”
Complicated or not, Sanbrado remains a standout among West
African gold development stories and whether it is WAF or another
company which sees the benefit, there is little doubt those ben-
efits are set to flow.
“This mine will make a $US700/oz margin on a $US1,200/oz
gold price,” Hyde said. “There is not another greenfields discovery
on the ASX which can deliver that.”
– Dominic Piper
Richard Hyde WEST AFRICAN GOLD PRODUCER,
DEVELOPER AND EXPLORER
WEST AFRICAN GOLD PRODUCER,
DEVELOPER AND EXPLORER
W W W. P E R S E U S M I N I N G . C O M
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 41
South Africa rebound
Anglo is banking on the EV revolution to
bolster PGM demand in coming decades
If the mood of Cape Town’s annual Investing in Mining Indaba conference
is a reflection of what is going on its host country, the 2019 edition of the
forum should be the most positive in years.
The 2018 conference was caught up in menting the conciliatory tone adopted un- and grown margins and doubled our return.
the maelstrom of political change with der Ramaphosa. But, we are still only halfway there. I think
then-Minister for Mineral Resources Mose- people have long memories and
benzi Zwane dashing for the Cape Town “Regulatory and policy uncertainty is re- they are still unhappy about Mi-
International Conference and Convention moved. We have a duty now to mobilise nas Rio [Anglo’s troubled Brazil-
Centre exit following his opening address investment into mining,” Mantsahe told a ian iron ore operation]. So, we
as news broke of impending impeachment media briefing on release of the revised have halved the discount but
proceedings against his sponsor Presi- charter. there is still a discount.
dent Jacob Zuma. Just a week later, Zuma
was gone, replaced by Cyril Ramaphosa The thawing of South Africa’s invest- “We are on a journey to do
who subsequently installed Gwede Man- ment isolation could not have come at a the same again in the next five
tashe as Minister. Mantashe was given a better time for its largest miner. years.”
mandate to clean the Department of Min-
eral Resources of graft and corruption and Anglo American plc is at the halfway Much of Anglo’s perceived
clear a path for policies which could elevate mark of its own public image rehabilitation discount has been associated
South Africa back to the top of the mining and a rejuvenated South African division is with its heavy weighting towards
investment charts. now playing a fulsome part in the revival. developing economies. While
BHP Ltd and Rio Tinto Ltd have
The Mining Indaba will be one of the Re-establishing the company’s reputa- revelled in investors’ preference
first opportunities for Mantashe to present tion among generalist investors has been for developed economies, Anglo
his progress and plans, having set out the the key objective of chief executive Mark has struggled to convince with
agenda at Africa Down Under in Perth, Cutifani’s four-year reign at Anglo and in its portfolio of largely African
Australia in late August. 2018 the experienced Australian execu- and Latin American assets.
tive sounds more satisfied than ever he is
In October, he released the third version making headway. “Compared to the top two or
of South Africa’s Mining Charter, removing three where they have produc-
the most eye-watering aspects of the black “I think it is still a work in progress,” Cuti- tion out of developed countries,
economic empowerment clauses and ce- fani told Paydirt. “We have shown capi- we still experience a discount on
tal discipline, we are the best performer the certainty of free cash flow of
among the top five miners in the last two
years, we have taken 40% out of our costs
Page 42 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
about 40% versus 20%,” Cuti- “We are seeing an increase in ESG-
fani. “That is attached to Mi-
nas-Rio, our operating perfor- conscious investors, particularly the
mance and South Africa. But,
it is changing. We are getting faith-based investor groups, saying we
Minas-Rio back on-stream
and the perspective on South are doing a better job at delivering sus-
Africa is getting better.”
tainable objectives, which is essential,”
Having reduced its South
African weighting from 50% he said. “Today, real ESG content is
to 25% of its portfolio, Anglo
could be expected to continue 30% versus 5-10% 10 years ago and
its retreat from its birthplace
but Cutifani has become increas- we know there is more we can. They
ingly bullish on the future the divi-
sion will play in the new Anglo. are interested in what we are doing
“South Africa is punching above around water, biodiversity, gender di-
its weight,” he said earlier this year.
versity, etc. So, it is a more holistic ap-
During his July quarterly pres-
entation, Cutifani said the compa- proach.”
ny was committed to “being part of
the dialogue” over South Africa’s After the political turnaround in its host CSR and environmental awards are
future. country, Investing in Mining Indaba is set helpful but Anglo knows its asset port-
folio plays against it with ethical inves-
“The certainty in South Africa is for rebound in 2019 tors keen to embrace a carbon-neutral
pretty robust compared to many
jurisdictions, as some of our col- future. The reduction of its thermal
leagues are finding in the indus-
try,” he said. “I would say we are at the 80km sign- coal division is assisting in projecting a
Speaking to Paydirt, he said post and together we can move on from cleaner image and the company is intent
communication between govern-
ment and industry was the best it that. Investors don’t yet fully understand on doubling down on its “cleaner, greener”
had been during his tenure.
how much better Mining Charter 3 is than image.
“For the first time in four years,
we are now in proper dialogue over Mining Charter 2. As a company, once the “Our thermal coal footprint is now less
the mining framework policy,” he
said. “We’ve had the previous min- detailed wording is sorted, we can take than 10% and that helps,” Cutifani said.
ing charter deals ratified by gov-
ernment and they have said they wouldn’t that out to investors.” “And, people are aware we have got cop-
change it; that is a really important princi-
ple. It has given us is a lot more flexibility Taking the wider Anglo story out to in- per, nickel and PGMs which all supply
of the conditions in the Mining Charter and
it is now about getting to documents out in vestors remains Cutifani’s main driver and clean environment.
order to attract investment.
he believes the company is almost ready “The mix of products positions us in
to make a pitch for the generalist investors electrification and innovation, infrastruc-
which deserted the mining sector following ture, green energy and consumer prod-
the end of the commodity super-cycle. ucts. Diamonds, PGMs and copper are
“We have got more work we can do to part of that world and the generalist inves-
attract the generalist investor,” he admit- tor likes that.”
ted. “That is what we are trying to target – Dominic Piper
and we are already getting questions from
This wider investor pool also includes en-
vironmental, social and governance (ESG)
investment groups. Miners have largely
failed to win favour with ESG groups, but
as Anglo continues to rack up awards for
its environmental and CSR work, Cutifani
believes its profile among ethical investors
FACTBOX: Mark Cutifani
Anglo’s clean, green SA portfolio Anglo American subsidiary Kumba Iron Ore has
plans to extend its Sishen iron ore mine in South
Anglo American has committed more than $US6 billion
to expansion and extension projects in South Africa, Africa beyond the current 13-year mine life
including: AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 43
Iron Ore: Africa’s top iron ore miner is extending the life of its
22 mtpa Sishen mine in the Northern Cape
Diamonds: Diamond unit De Beers has committed to a $US2
billion project to take the prolific Venetia diamond mine
underground, producing 94 mctpa as a result
PGMS: Expansion plans at Mogalakwena include spending
$US1.2 billion to increase palladium production by 270,000
ozpa and platinum by 250,000 ozpa
Charter brings renewed optimism
The new air of conciliation and commu- Gwede Mantashe
nication in South Africa’s mining sector
looks set to continue well into 2019 after a degree of certainty, greater engagement “This could be negative for new invest-
the South African Minerals Council gave its and openness,” Baxter said. ment as well as junior mining companies.”
qualified support for the new Mining Char-
ter. The wider industry has cautiously wel- Speaking at an investor event in Perth,
comed the new charter. Mining lawyer Scholes dismissed concerns that Presi-
Released in early October, the revised Hulme Scholes of Malan Scholes Attor- dent Cyril Ramaphosa would push for-
Mining Charter removes some of the more neys told Paydirt the new charter was a ward with expropriation of property.
stringent conditions established in previ- major improvement on the “disastrous”
ous iterations, giving industry hope the document released by Zwane. “The constitution protects mining and
process will deliver a policy instrument ca- property rights. The Economic Freedom
pable of providing broad-based economic “That would’ve led to the end of the in- Fighters [EFF] want to amend the constitu-
empowerment and an attractive invest- dustry in my opinion,” Scholes said. “The tion but it is not really a plausible outcome.
ment climate. version of the new mining charter finally Ramaphosa needed EFF support for the
gazetted and which is effective, is an im- presidency so had to appease them in
Delivered by Minister for Mineral Re- provement with the major change being some way.”
sources Gwede Mantashe, the updated that existing mining rights holders do not
policy document has redrawn black eco- have to top up their BEE levels to 30% and Scholes, who worked from Ramaphosa
nomic empowerment (BEE) ownership the principle of one empowered, always as the former union official built his own
levels to 26% after the previous charter empowered has therefore been recog- mining interests in the early 2000s, said
released by former minister Mosebenzi nised to this extent. he could vouch for the new president’s
Zwane set it at 30%. credibility.
“The general sentiment is that the indus-
New mining right issues will, however, try can work under Mining Charter 3.” “He is as honest and ethical as politi-
require 30% BEE ownership, including 5% cians get,” he said.
for employees and 5% for local communi- Herbert Smith Freehills partner and Af-
ties. rica co-chair Peter Leon said the relation- Ramaphosa has launched a major in-
ship between the Minerals Council and vestigation into the corruption which flour-
The notion of “once empowered, always government has definitely improved. ished under Zuma and the Department of
empowered” also returns after being de- Mineral Resources has already been sub-
leted by Zwane and there is no mention of “Gwede Mantashe has gone out his way ject to inquiry.
the previously mooted 1% dividend for em- to improve relations between government
ployees and communities. The 5% inter- and the industry and appears to be much There have definitely been changes
ests for employees and communities are more approachable.” within the DMR,” Scholes said. “The Mpu-
described as “carried interests” but it re- malanga and Limpopo offices have both
mains unclear whether companies will be However, Leon warned the BEE re- been closed for investigation and they
able to recover these interests from profits. quirements for new mining rights could still were hives of corruption and a lot of of-
make investment difficult. ficials have been suspended. It has im-
The Minerals Council welcomed the proved and people will be prosecuted”.
charter as a policy instrument that “pro- “The sting in it relates to new rights as
vides a clear and durable framework well as the renewal of existing rights where – Dominic Piper
for securing a transformed industry with the full effect of the new 30% BEE own-
meaningful broad-based economic em- ership requirements will be met,” he said.
powerment within which the critical goals
of growth and competitiveness can realis-
tically be achieved”.
“Nonetheless, the Minerals Council
remains concerned about some key is-
sues, specifically regarding the limited
applicability of continuing consequences
of past transactions on disposal of BEE
shareholding, the treatment of renewals of
mining rights as new rights, the practical-
ity of the Inclusive Procurement provisions
relating to local content targets for mining
goods, the targets for services, and the
turnover threshold for junior miners.”
Minerals Council chief executive Roger
Baxter praised Mantashe for his collabora-
“In the few short months since his ap-
pointment he has brought about rapid
change in the department and the indus-
try, and at the same time moved to instil
Page 44 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 45
Mineral sands expansion for Base
The introduction of hydro-mining has reduced costs and improved
productivity at Base’s Kwale mineral sands mine in Kenya
Eighteen months after flirting with com- ranks. Further uptown, Iluka Resources ly,” he said. “If you’re a player in this space,
modity diversification, Base Resources Ltd’s acquisition of Sierra Rutile and ER- you can’t have a strategy without having a
Ltd now finds itself happily entrenched in AMET’s capture of Mineral Deposits Ltd view on Base. At the same time, we have
a mineral sands market showing signs of has shrunk the mid-tier space, leaving Base the scale and balance sheet to capitalise on
heating up. the opportunity to fill the gap. other opportunities ourselves.”
Base has enjoyed a year and a half of “We have now put together a unique min- Setting Base up for such a scenario has
broadening mineral sands horizons after eral sands company; a mid-cap, pure play been the consistent performance from
settling on expansion plans for its flagship mineral sands miner with growth potential,” Kwale – 30km south of Mombasa, southern
Kwale operation in Kenya and stocking its Carstens said. “The only other company Kenya.
development pipeline by acquiring the Toli- similar is Kenmare [Resources plc] but
ara project in Madagascar. Base has a really profitable operation and a Consistent production from the mine
world-class development asset. Kenmare, allowed the company to post record rev-
“Things have been warming up in mineral for all its operational success, has nowhere enue (up 22% to $US198 million) and net
sands and we are happy in the space,” a to go. After that, there is a big drop to the profit after tax (up 114% to $US34 million)
satisfied Base Resources managing direc- juniors such as Image and MZI and then in FY2018. However, the subsequent Sep-
tor Tim Carstens told Paydirt. “We did have you’re into the developers such as Sheffield tember quarter loomed large as the com-
a good think about other commodities but [Resources Ltd].” pany moved into its Kwale Phase 2 opera-
as we looked at things opening up and then tions.
looked at Toliara as an available project and As investor and customer interest in min-
decided it outmatched anything we would eral sands grows, Carstens is confident Designed to keep production volumes at
contemplate in other commodities.” Base is now in a position to play an active current levels as mining moves into the low-
role in future developments. er grade South Dune from next year, Kwale
The mineral sands sector has opened Phase 2 made a successful start with min-
up to newcomers in the last 12 months as “We are now building a strategic rel- ing rates up 35% in the September period
junior miners such as Image Resources NL evance in a mineral sands sector where and both mining and wet mineral concen-
and MZI Resources Ltd joined the producer there has been a lot happening corporate- trator production have hit nameplate capac-
Page 46 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
ity within six months of the $US32 million the beginning of the Base has been widely lauded for its
project being implemented. resource,” Carstens community engagement and environmental
said. “There are programmes around Kwale. The company
“The focus has been on driving Kwale two geological units has planted more than 20,000 trees in the
hard and getting ready for the next stage of below the resource district and established a cotton farming
its life,” Carstens said. “It was all in prepara- and we will probably
tion for moving to the South Dune pit and update the num- industry which now supports
has included changing from dozer trap min- bers in the next few 3,500 farmers
ing to using hydro-mining units. That result- months. Once we have built the infrastruc-
ed in a 30% drop in mining costs and has ture we could scale up without having to project successfully.
given us more flexibility which will become spend much money at all.” “We get the benefit of the here-and-now
increasingly important in the South Dune
where grades are lower and the overall min- The Toliara resource stands at 857mt @ and a good development path with a team
ing area is smaller.” 6.2% HMS. Its high-grade ilmenite assem- which has done it before,” he said.
blage gives it the potential to be one of the
The wet concentrator plant has also been world’s larger ilmenite producers. Madagascar is desperate to attract for-
expanded by nearly 70% to ensure the min- eign investment after the long capital freeze
eral separation plant is supplied with steady “It is a high-grade resource with very sim- created by political instability. Presidential
volumes of concentrate product. ple mineralogy which leads to technically elections were ongoing at the time of print
simple processing and it is at surface so the but Carstens is comfortable with develop-
The cost savings and consistent levels of strip ratio is virtually zero,” Carstens said. ments.
concentrate production will be increasingly “Because of that scale, grade and simplic-
important as the lower grade South Dune is ity it is looking like costs will be lower than “Having the elections now is important
mined from July 2019. Kwale and the in-ground value is higher to us because it gets them out of the way
[$US15.36/t against $US13.80/t at Kwale].” before financing or construction starts,” he
Carstens said maintaining Kwale’s indus- said. “We have no concerns over the candi-
try-leading revenue-to-cost ratio was vital. A PFS is under way as the company eyes dates; you can’t be in government in Mada-
a decision on development before the end gascar and not be pro-development.”
“That ratio becomes important as new of 2019.
supply comes on. It meant we were able Funding for Toliara will likely come from
to survive and service our debt even in the “It previously had $US50 million spent a combination of free cash flow and debt
bad times so when the market turned we on it so it is in that sweet spot of being able markets.
were in the best possible position to capi- to get into development quickly but not be-
talise.” ing locked into someone else’s design,” “There are a number of debt options and
Carstens said. “We will have the PFS out in we know Toliara can carry a lot of debt,”
Kwale currently has a mine life of around the March quarter, move straight into DFS Carstens said. “Ultimately, the idea is to do
five years but with additional licences being with a view to reaching decision-to-mine in this without a capital raising.”
applied for and an exploration programme the last quarter of 2019. We need to make it
about to restart, Carstens insists this will be as quick as we can because there is a good Base has enjoyed two years of strong
extended. opportunity for new supply for all products, market performance but Carstens remains
particularly sulphate ilmenite, which we can conscious of the need to deliver for share-
“We have still got some work to do to un- catch from 2021.” holders.
wrap the future of Kwale,” he said.
Lycopodium Ltd and Mineral Technolo- “Our market cap of $300 million is still
For now, the Base management team gies are conducting the study. not really representing the value we see but
will be satisfied with Kwale continuing to we understand why,” he said. “We haven’t
provide a sound platform from which it can “They are the perfect match for us. Ly- shown the world what Toliara looks like and
pursue its growth options. copodium has unmatched experience in how we will fund it and what the future of
building projects in Africa and Mineral Tech- Kwale looks like. I think there has been an
Chief among those is Toliara, acquired nologies has been involved in almost every assumption that we are going to take two
for $US75 million (with an additional $US17 mineral sands project in the world.” years of free cash flow from Kwale – which
million in milestone payments) in January. could be given to shareholders – and put it
Base’s expectations place the Malagasy Carstens said similarities with Kwale con- into Toliara but that is not the case.
project on a level pegging with Kwale in fu- vinced the company it could execute the
ture projections. “As we satisfy those queries, I think the
value will be realised.
“It’s a big, 40-year mine life and that is just
“We have a tight top 10 register and there
Phase 2 operations at Kwale have seen both is a standoff between the share price and li-
mining and concentrator production rates quidity; our largest shareholders don’t want
to get out because they see the value and
increase by nearly 70% to ensure the mineral new players can’t get in without that liquid-
separation plant is fully stocked as grades drop ity. So, we are working hard to sharpen the
narrative and bring greater awareness to
– Dominic Piper
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 47
A mong those accomplishments were production of a 99.3% second year and up to 90,000t in the third year. This deal is significant in
that no graphite developer to date has signed a single offtake agreement
concentrate at commercial scale from a ground-breaking pilot for 90,000t.
Chinese battery producer Qingdao Fujin Graphite Company Ltd has also
plant run and a recently completed DFS for Black Rock’s Mahenge graphite signed up for 15,000 tpa of sized graphite concentrate for up to three
years, meaning Black Rock has now placed about 44% of the proposed
project, about 370km south-west of Dar es Salaam. steady-state production of 250,000 tpa from Mahenge.
“We’ve been working in that space for a while now and effectively once the
However, for experienced mining engineer de Vries, the biggest thrill came first lot came in, the phone rang pretty hot for a couple of days,” de Vries
said. “I’m confident there are more offtake agreements we’re going to be
during the compilation of the DFS when his in-country team were unafraid coming up with between now and Christmas.”
Aiding Black Rock’s bid to develop Mahenge is a strategic cooperation
to challenge his thinking on certain points. agreement with major Chinese machinery outfit Yantai Jinyuan Machinery
Ltd, part of the Yantai Jinyuan Group.
“To me, this means barriers to communication don’t exist, our people are Yantai has committed to supplying process plant machinery and related
infrastructure for Mahenge as well as help source $US40 million in project
engaged, they have a ‘fire in the belly’, a hunger to win and feel they can finance from Chinese groups.
Perth-based CPC Engineering, which built Syrah Resources Ltd’s
contribute to a project in their country,” de Vries said. Balama process plant in Mozambique, will also form part of the Mahenge
“Another way of looking at this is the development of our culture. Our
people own and define the culture and are fearless in questioning how we
might make the business stronger for longer.”
Black Rock is now charging towards construction of Mahenge after
releasing a robust DFS for the project in October, followed by the execution
of two offtake agreements with reputable Chinese groups.
Integrated graphite producer Heilongjiang Baho Graphite Company Ltd
has agreed to purchase 30,000t of blended graphite concentrate during
the first year of production before lifting its allocation to 50,000t in the
Page 48 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT
Office: Level 9, 190 St Georges Terrace, Perth, Key people: Richard Crookes (non-executive chairman), John de
Western Australia 6000 Vries (managing director and CEO), Gabriel Chiappini (non-executive
Tel: +61 8 9320 7550 director and company secretary), Raymond Hekima (vice-president
Web: [email protected] corporate, Tanzania), Anthony Hall (head of strategy)
construction team. through the investment community, while opening up a whole new market
“Yantai have built four plants in China in the last 10 years and CPC have for graphite hopefuls.
built one plant for Syrah. Put that together and that’s five plants – more De Vries acknowledged that his company needed to undertake an
than just about anybody else, so we’ve got experience on our side,” de apprenticeship in the battery space – the Fujin agreement is only just
Vries said. the beginning, he says – before it could become the master of its own
“If you’re looking to be an investor in this space, having that experience craft. However, there is no denying the electric revolution is an enticing
of knowing what works and knowing what doesn’t work and why is proposition for Black Rock.
fundamentally important to success and provides a great level of comfort. “Everybody is monumentally excited about EVs, but at the moment I don’t
“Most of us know we would have to go to China to secure the componentry own a Tesla. However, I do own a rechargeable toothbrush, so I get excited
at some point in time, and going with a single source means it just about toothbrushes because more people own toothbrushes than Teslas.
simplifies the execution. Plus, we’re going with a group who has done it a Inside every toothbrush is a Tesla wanting to get out,” de Vries said.
few times before.” “You need to be focused on the mining side and producing the best
Black Rock was recently granted environmental approval for staged possible concentrate you can. So, I’m not going to compromise my mine
development of Mahenge, beginning with 83,000t of product and or my balance sheet to try and run a mine to make a battery plant work. It’s
increasing to up to 250,000 tpa over five years. An application for a mining not the tail wagging the dog here. We’re focusing on the things we need
licence has been submitted to Tanzanian authorities and could be awarded to get right and running a mine is one of them. Again, that’s us playing the
before Christmas. long game.”
De Vries said the company’s “crawl, walk, run” approach to business
would be key to Mahenge’s successful development. Location: 370km south-west of Dar es Salaam, Tanzania
“We’ve deliberately played a long game here and we’ve taken a very Resources: 212mt @ 7.8% TGC
strategic approach to how we’re going to develop the project,” he Reserves: 70mt @ 8.5% TGC
said. “You need to be much more deliberate, much more focused and Reserve life: 23 years
methodical about developing your project, but we’ve got the right people Life-of-mine: 32 years
to do it, we’ve got the right geology which is pretty tough to replicate and Total life-of-mine concentrate production: 6.6mt
we’ve got the right geography which I think is even tougher to replicate.” Average steady state production rate: 250,000 tpa
Black Rock’s “crawl, walk, run” strategy is also applicable to how the Phase one throughput: 83,000 tpa
company is approaching the fledgling battery space which has swept Capex for phase one: $US115 million (including 10% contingency)
Capex for phases two and three: $US153.7 million
(including 15% contingency)
Post-tax NPV, unlevered at 10%: US$895 million
Post-tax, unlevered: 42.8%
Life-of-Mine C1 Costs: $US401/t FOB Dar es Salaam
Life-of-Mine AISC: $US473/t FOB Dar es Salaam
AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 49
Minbos in rare company
Minbos Resources Ltd may not have lish a flowsheet and then go back and Grade was the key attraction for Reed
found the critical mass it was chas- refine that with the other drilling, but if and his team to take on Ambato, hav-
ing from its maiden drilling programme at there’s not enough then there’s not much ing parked up development plans for the
the Ambato rare earths project in Central point working on the flowsheet because Cabinda phosphate project in Angola fol-
Madagascar, but chief executive Lindsay what we find next might not actually be lowing a failed merger with its JV partner.
Reed still likes what he sees. suitable for that flowsheet,” Reed said.
“There’s just not many rare earth de-
Grades of up to 16.5% TREO were “Rather than spend the money on posits around the world that go 4% TREO
returned from handheld XRF analysis of flowsheet and metallurgical development and close to 1% NdPr,” Reed said. “Quite
core collected from diamond drilling at over the next 3-4 months, we figured it frankly, if we had got double the tonnes
the Ankazohambo prospect, one of seven was actually better to pour money into and half the grade, I probably wouldn’t
known rare earth targets on the Ambato a geophysical survey. We think that will have bothered flying the geophysics. We
licence. give us a better feel for whether we’ve got just need to do some more radiometric
something that’s worth doing the met test geology to work out where it is and see if
Best drill intercepts included 17m @ work on.” there’s tonnage potential there.”
4.6% TREO, 5m @ 3.1% TREO, 4m @
8% TREO, 6m @ 3% TREO and 5m @ Lindsay Reed Meanwhile, Angola’s Ministry of Miner-
5.7% TREO. al Resources and Petroleum has put the
Cabinda project partners on notice that
However, Minbos has no plans to send work has fallen behind the commitments
core for assaying due to the tonnage po- made when the licence was renewed.
tential suggested by historical trenching
only representing the extent of the later- “We’ve been pushing on doing one or
ite enrichment layer and not the underly- two little things to progress it, but when
ing aplite dyke, which was narrower than you think you’re at risk of losing your li-
expected and pinches and swells along cence, it’s difficult to continue doing
strike. things,” Reed said.
“If we thought there was enough, what – Michael Washbourne
we would do is bring it home and estab-
Page 50 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT