pd267-Dec18-mag-web

4 - 6 September 2019

Perth,Western Australia

Africa Down Under (ADU) continues to deliver the leading forum for Australia-Africa business relations.
The conference was introduced to raise awareness of Australia’s interests in African mining and energy,

and has grown to form the central pillar of Australia’s “Africa Week”.

Since the inaugural conference in 2003 ADU has assembled the best success stories from across Africa,
and continues to demystify the notion that doing business in Africa is “too hard”. ADU has since become

the MUST ATTEND event for those planning to invest in projects in Africa, who already have projects in
Africa; or those interested in doing business in Africa.

Join us on 4-6 September 2019 when Perth once again asserts its position as a global capital for
African mining, as well as the driving force of Australian-African relations.

SNAPSHOT: ADU 2018

1400+ 72 90 180+ 16

delegates from Presenters ExhibitION investor AFRICAN
45 countries BOOTHS meetings GOVERNMENT
SOLD OUT DELEGATIONS

Interested in presenting or sponsoring? Contact Namukale Nakazwe-Msiska [email protected]
Interested in exhibiting? Contact Christine Oelschlaeger [email protected]
For all queries phone +61 (0)8 9321 0355

SGS Ghana The world’s leading inspection, verification, testing and
certification company, SGS, is recognised as the global
The current flux in global equity benchmark for such quality and integrity. It has more than 60
markets and geopolitical concerns commercial and dedicated on-site mine laboratories across
across the region has led West African Africa. In Ghana, the group has been active since 1960 and
miners and explorers to demand now boasts offices and laboratories in Accra, Tema, Takoradi,
service providers deliver reliability Tarkwa, Damang, Ahafo, Akyem and Obuasi, making the
and transparency. group easily accessible to clients, whether they are at the
exploration, development or operational stage.

SGS Ghana’s Mineral Services division’s geochemical
expertise ensures it delivers trusted, quality data on a
consistent basis, allowing companies to manage risks,
enhance the value of their projects and get to the
market quicker.

The group’s Environment, Health and Safety (EHS) services
in Ghana is a one-stop-shop for managing environmental
needs across West Africa. SGS EHS works with clients
to develop environmental monitoring plans, carries out
field data collection for baseline studies, provides stack
emissions monitoring, field sampling and industrial hygiene
risk assessments. It can also undertake audit-type work on
environmental due diligence and regulatory compliance.

Paydirt spoke with the SGS Ghana team to find out how the
industry could use its services to successfully navigate the
course between investors, governments and community.

Page 52 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

Paydirt: The rate of innovation in today’s mining industry is PD: West Africa has seen several waves of gold
rapid. How is SGS keeping pace with this speed of change? exploration and development investment in the last two
decades. Where does the region currently stand? Is SGS
SGS: SGS upholds a culture of continuous learning building up for another big West African gold boom?
supported by investing in the latest equipment and tools.
Our SGS laboratory in Tarkwa, Ghana, will have the first SGS: West Africa is a large and resource rich region and
microwave plasma atomic emission spectrometer for SGS aside from gold, there are strong prospects for a range
in Africa installed by January 2019 and adds automation to of minerals. Stable political and economic markets are
the equipment list. This technology will add value to the local seeing an increase of investment in the gold and mineral
skills of on-site chemists plus improve safety and reduce sector in West Africa while improvements in technology are
energy usage. SGS is also looking at other technology to accelerating exploration. SGS’s network of laboratories and
automate current methodology which will be introduced technical staff across West Africa ensures strong presence
in 2019 to ensure a more competitive and comprehensive on the ground. SGS works closely with all stakeholders to
service to clients to improve production, turnaround time support resource diversification and growth within the local
and safety. Additionally, the digitalisation of results with SGS markets. Aside from standard laboratory services, SGS is
Engage tool, allows authorised users to get results instantly on-hand to provide clients with access to the global support
even from their phones. This helps clients also better team when issues arise. A valuable example is how SGS
monitor their results over time as well as provide a central goes a step further to assist clients to control and optimise
and accessible data storage solution. their process operation by auditing and offering a solution to
their findings.

PD: How important is it for miners in West Africa to PD: What is your advice to mining and exploration
have reliable, respected and ethical service partners companies coming into West Africa for the first time?
whether in assaying or environmental analysis?
SGS: Stay hungry, don’t be foolish. There are strong
SGS: It is essential. The stakes are high when miners invest opportunities in the region and its great so many companies
so much on all the stages of exploration that protection of are ready to seek them out, however the importance of
information is priceless. A Swiss-established company, SGS dealing with local communities and ensuring protection of
operates with strict principals of security and anonymity. the environment cannot be underestimated.
When handling samples, at every step, technicians must
pass bio-data security verification and our coded tracking Managing the impact of exploration and mining not only
system means that samples themselves do not display any protects workers and company reputation but also reduces
client information. SGS invests heavily on training, security the potential risk of costly clean ups when environmental
measures and monitoring so that all work is carried out with monitoring systems are established early on.
the utmost respect for clients’ data protection.
SGS has a wealth of experience from work in the minerals
and environment, health and safety standpoint to provide
clients with a one stop shop for all their needs, from
sampling to data management both on the field and in
SGS’s accredited network of laboratories.

AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 53

INDABA PREVIEW

Danakali drilled 110 holes in defining a Eritrea future opens
1.1bt reserve at its Colluli project after sanctions dropped

Colluli’s near-surface, solid mineral Lifting of long-standing United Nations pace of their investment and there is a
composition makes it amenable to sanctions should pave the way for a greater degree of enthusiasm for Eritrea
open pit mining new era of resources development in Eri- and concerns about the political environ-
trea and an Australian junior will be at the ment are dissipating.”
heart of it.
From Danakali’s perspective, the tim-
The U.N. Security Council unanimous- ing of political change could not be bet-
ly voted on November 14 to lift a nearly ter. The company started debt finance
decade-old arms embargo and targeted negotiations for Colluli’s development
sanctions on Eritrea after a rapproche- earlier this year, having completed a
ment with Ethiopia and thawing of rela- FEED study in January.
tions with Djibouti.
“Hopefully, financiers will begin to look
The British-drafted resolution also at Colluli as a normal project rather than
urged Eritrea and Djibouti to work to- one with baggage,” Cornelius said.
wards normalising ties and settling a bor-
der dispute. It asks Secretary-General Colluli may be “normal” now yet it is
Antonio Guterres to report to the coun- anything but “run-of-the-mill”. A 1.1bt @
cil on progress by February 15 and then 18.5% potash reserve is hosted in solid
every six months. salts, meaning product will be mined via
conventional open pit rather than under-
The measures against Eritrea – which ground or solution mining, giving the pro-
include a travel ban and asset freeze ject distinct capex and opex advantages
on certain people and entities – were over peers in both the Australian and
imposed in 2009 after U.N. experts ac- London markets.
cused it of supporting armed groups in
Somalia. Eritrea has denied the accusa- Danakali head of corporate develop-
tions. ment William Sandover is confident the
company will secure at least 60% of the
The resolution also removes a require- $US305 million needed for development
ment for countries to ensure that people via debt markets.
or companies working in Eritrea’s min-
ing sector prevented funds from being “We are very confident and it is looking
diverted and used to undermine peace like it will play out at the $US200 million
and security in the region. mark,” Sandover told Paydirt. “There is
interest from development finance cor-
Among those taking a keen interest in porations, export credit agencies and
the U.N. vote were shareholders of Dan- traditional bankers but it is certainly the
akali Ltd. The ASX-listed junior manages development banks/export credit agen-
the Colluli potash JV in the Horn of Africa cies leading the charge.”
country and executive chairman Seamus
Cornelius said lifting of sanctions would Sandover said it was clear that the
have a positive impact on foreign invest- easing of U.N. sanctions had created im-
ment, including Colluli. petus among lenders.

“This significant step should have a “It gives us a lot more leverage,” he
positive impact on foreign investment said. “Previously, we weren’t a must-
and enhance international trade oppor- have in the debt portfolios but now that
tunities, leading to improved economic Eritrea is shining, people want in.”
outcomes for the people of Eritrea,” Cor-
nelius said. Such eagerness is reinforced – par-
ticularly for development banks – by the
The UN resolution confirmed a grow- commodity.
ing acceptance in world markets that
Eritrea would be welcomed back into the “There is something attached to being
international fold. the first potash project because enthusi-
asm to develop world-class fertiliser pro-
Speaking to Paydirt ahead of the reso- jects in Africa is strong,” Cornelius said.
lution, Cornelius said the company had “One of the issues in Africa is that in
noticed “significant change” in attitudes developing natural resources, local peo-
towards Eritrea since the Government ple don’t see direct benefit. However, a
signed a peace deal with Ethiopia in July. fertiliser such as potash can have direct
benefits to the population. Eritrea has 4
“The changes have been mainly million people and Ethiopia has 100 mil-
around the pace of activity,” Cornelius lion so that is a huge market right on our
said. “Banks are interested in lifting the doorstep. We won’t be giving it away but

Page 54 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

“Eritrea is known to be highly
prospective and I think you’ll see
people in there now the UN sanctions
are lifted. The major companies don’t
need everything that comes with the
association of sanctions.”

The lifting of UN sanctions against Eritrea should
smooth the development path for Danakali’s
472,000 tpa SoP project in the country

can offer some product at much cheaper to concentrate on funding.” Fraser Institute [Annual Survey of Min-
prices than imported fertiliser.” “All the key permits are in,” Cornelius ing Companies] survey,” he said. “Its
prospectivity has never been in doubt; it
The company has already signed a 10- said. “If the money was in the bank, we is people who’ve never been there that
year take-or-pay offtake agreement with could start construction tomorrow.” shout loudest about it.”
global fertiliser producer EuroChem for
up to 100% of Colluli’s Module 1 472,000 The advanced nature of permitting However, if Australian companies are
tpa production but Danakali and its JV speaks to the strength of Danakali’s going to take advantage of the loosen-
partner retains an option to sell up to in-country associations. Colluli is held ing of sanctions, they will have to move
13% through alternative channels. under a 50/50 JV between the Austral- swiftly.
ian junior and sate-owned mining group
“That clawback allows us to test the ENAMCO. “One of the noticeable things is that
market price,” Sandover said. “Euro- there is a lot more international interest,”
Chem was not the only party which got “We have a good relationship with the Cornelius said. “The Chinese interest
close to signing offtake so the clawback Government – it is very clear what we was always there – they own the three
allows us to keep other parties’ interest need to do – and that has always been mines in production – but there are other
ahead of Module 2 expansion [944,000 the case during my five years as chair- African interests, Russian interest, Mid-
tpa].” man,” Cornelius said. “The people who dle Eastern interests. It is all very notice-
sit on the board of the JV vehicle are very able on the ground, yet I haven’t bumped
For now though, Danakali must ensure experienced mining executives who have into too many Australians.
Colluli Module 1 is ready to go when fi- been through all the stages of project de-
nanciers sign up. velopment. They bring a lot of in-country “Eritrea is known to be highly prospec-
knowhow.” tive and I think you’ll see people in there
“We are making sure we are construc- now the UN sanctions are lifted. The ma-
tion-ready,” Sandover said. “We have On the future of mining in Eritrea, Cor- jor companies don’t need everything that
done the FEED, we have the offtake nelius said he expected interest to con- comes with the association of sanctions.”
agreement and are on final terms for tinue to grow.
contracts such as mining. Now we have – Dominic Piper
“Eritrea always ranks highly in the

AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 55

aelminingservices.com

Page 56 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

AEL:

An intelligent approach
to blasting

As mining practices go, blasting appears as basic as it gets conversion, i-Mining productivity
but as innovation and modernisation takes hold across programmes and blasting consulting
the entire operational chain even this most antediluvian of services to providing training in basic
mining practices is providing technology solutions to miners. blasting principles.

Earlier this year, AEL Mining Services (AEL), a member of the Van den Berg says the company’s innovations
JSE-listed AECI Group in South Africa, has announced its have achieved the cost, efficiency and safety
official rebrand to AEL Intelligent Blasting to reflect its focus outcomes clients are increasingly demanding.
on the technological revolution in the explosives and mining
industry. “We spend a lot of time investigating how our
products and services couple to ensure we are
The company offers the latest generation of products and getting the best outcomes for clients,” she says.
services for blasting operations, including bulk explosives,
packaged explosives, electronic and conventional initiating Every part of the mining production cycle is monitored
systems, blasting accessories and delivery systems as well and analysed but miners are still struggling to interpret the
as technical services via its technical arm; Blast Consult. swathes of data they are now producing. AEL’s intelliBlast™
allows the Blast Consult team to trace the impact of blasting
AEL’s innovation push is displayed in its product and strategies across an entire operation.
service range and summed up by its holistic and flexible
AEL intelliBlast™ platform, which enables it to tailor smart “It is a big problem in the industry,” van den Berg says. “We
blasting solutions for optimal mining outcomes. have monitoring on everything from the blast to the plant
but all this different monitoring equipment is not talking to
AEL’s Meagan van den Berg says intelliBlast™ and AEL’s each other in unison; there is no way of tracking whether
entire product suits allows it to keep pace with the downtime in the plant can be traced to an original problem
innovation advances being demanded by its mining clients. in the blasting.”

“Mining is often criticised for being a laggard in innovation Having responsibility for the first link in the mining
but in the last few years there has been an intense focus production chain, AEL has taken on the challenge of
on embracing technology,” van den Berg says. “While the providing such a solution itself.
depths of the commodity price cycle provided a huge
incentive to pursue innovative solutions, concerns over “We pride ourselves on our ability to collaborate,” van
safety and productivity have also driven the trend. den Berg says. “We don’t like the drop-off-and-go model.
We want to be part of the integrated team on each site
“We find clients are not just looking for cost savings but and we ask what the customer wants and what suits their
increasingly ways of making their operations safer and operations, future plans, etc.”
more efficient. Global miners have arrived in Africa with
expectations of adhering to world’s best practice. By its The company had struck a technology partnership which
nature blasting is a dangerous exercise but the entire will see it create a digital twin of a client’s operation.
industry is realising it doesn’t have to be done in the same
way it was done 100 years ago.” “This allows us to build algorithms for all aspects of the
mine, from drill-and-blast to load haulage, ground handling
AEL is already a leader in blasting technology, having and into plant processing. From there we can play through
introduced new products spanning the blasting spectrum different scenarios and see how blasting may impact
from automated and remote-controlled blasting to efficiencies in other parts of the operation. We can then look
monitoring as well as innovative packaging such as fit- at different outcomes. The entire process becomes proactive
for-purpose pumped emulsion formulas for underground rather than reactive.”
operations.
AEL’s efforts also incorporate the changing cultural
Through its in-house engineering division, AEL designs landscape in mining. The South African mining industry in
and builds Mobile Processing Units (MPUs) for surface and particular is experiencing massive structural change and
underground mining, bulk emulsion manufacturing plants AEL sees its innovation programme as a way of engaging
and modular initiating systems assembly plants. with other stakeholders.

In addition, AEL offers underground mobile and fixed “We must understand the drivers of the regulator and the
emulsion pumping systems. Through IntelliBlast™ total local communities and work out how we can assist in getting
value proposition, this holistic and flexible approach deploys our customers compliant. Being a responsible supplier is not
blasting services that extract optimum value from any just about high quality, safe products and services. It is about
blasting operation, with its combination of products, services investing in local stakeholders and building development
and solutions. These include prime, load, tie and shoot (PLTS) opportunities for communities.
as well as Rock-on-Ground contracting.
For more information on AEL Intelligent Blasting,
AEL’s Blast Consult team offers expert technical services visit www.aelminingservices.com or contact the team at:
across a wide range of related disciplines such as blast
monitoring, design, timing, 1 Platinum Drive, Longmeadow Business Estate,
fragmentation analysis, technology Modderfontein, Johannesburg, Gauteng, South Africa 1645
Tel: +27 11 606 0000 Fax: +27 11 605 0000

AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 57

INDABA PREVIEW

Celamin set to make
Tunisia tick
If Simon Eley was having doubts about pressive, and having now seen it for the along with metallurgical test work and
taking on the chief executive’s role at
Celamin Holdings Ltd, they quickly evap- first time, I can see exactly why share- engineering design.
orated upon setting foot in Tunisia and
running his eye over the company’s pro- holders are supporting the company. It’s Celamin will also devote some attention
jects.
an asset worth fighting for.” to developing drill targets at its Djebba and
Eley, an experienced corporate and
resources lawyer, travelled to the North With the litigation now all but finalised, Zeflana lead-zinc projects. Both permits
African nation in early November to visit
the company’s Chaketma phosphate Celamin’s in-country team has begun were acquired in July and a historical re-
project and newly acquired Djebba and
Zeflana lead-zinc permits. It was his third devising plans to realise the full value of source of 2.7mt @ 6.1% zinc and 3.3% lead
trip to Tunisia, but first look at Celamin’s
projects since being appointed chief ex- Chaketma, which is comprised of six de- has already been announced for Djebba.
ecutive in July.
posits over a total area of 56sq km. The company has also lodged appli-
Celamin has been stuck in
the resources wilderness for the Only two of the prospects have been cations with Tunisia’s Ministry of Energy,
best part of three years, having
endured a bitter legal dispute drilled in any meaningful sense, accord- Mines and Renewable Energy for four ad-
with its JV partner Tunisian Min-
ing Services (TMS) over the ing to Eley, but the key focus for Celamin ditional exploration permits contiguous with
fraudulent transfer of Celamin’s
51% shareholding in the oper- right now is getting the Tunisian Govern- the Zeflana and Djebba tenements.
ating company which holds the
Chaketma permits. ment on side and outlining just what is re- “We originally got granted just very small

The arbitrator ruled in favour of portions of what is quite a signifi-
Celamin in November 2017, or-
dering TMS to return Celamin’s cant geological system in both
51% interest in Chaketma and
pay costs and damages in ex- Djebba and Zeflana and to see
cess of $US4 million plus inter-
est. them up close and personal was

TMS recently attempted to important for me when I’m obvi-
have the final award annulled,
but the Swiss Supreme Court ously going to be on the road pro-
declared the application inad-
missible. No further appeals or moting the company,” Eley said.
challenges are available against
the final award before the Swiss “It was great to actually see
courts, paving the way for Cel-
amin to finally sink its teeth into some of the outcropping that I’ve
Chaketma upon either enforce-
ment of the arbitral award in the read about and the ease of ac-
Tunisian courts or by settlement
negotiations with TMS. cess up there is pretty straightfor-

Speaking to Paydirt as he made his ward as well.”
way back from Tunisia, Eley said it was
not hard to see why the company fought Soil sampling and geophysics
so hard for Chaketma, which hosts an
inferred resource of 130mt @ 20.5% is planned for the Djebba-Zeflana
P2O5.
area with a view towards identify-
“This is one of the better phosphate
projects going around at the moment, ing new targets for drilling towards
the technical background for Chaketma
is very compelling,” Eley said. the end of 2019.

“The grade is strong and while it’s not During his trip to Tunisia, Eley
the highest of phosphate grades, the ton-
nage and the consistency are quite im- met with the Mines Minister

and left very encouraged by the

country’s enthusiasm for enticing

more foreign direct investment,

particularly through mining and

resources.

“Having met with him and

looked him in the eye when he

said, ‘we want you guys to be
Celamin is looking to make the most of promising working in country with us’, for me
phosphate and lead-zinc opportunities in Tunisia was very, very encouraging,” Eley

said.

quired to complete a DFS on the project. “Tunisia is one of these African coun-

“There’s some pretty sensible people tries that is really embracing foreign direct

that are involved already in helping us investment and looking for more interna-

with that,” Eley said. tional companies to come in.

“We think it will be about a 12-month “There’s a number of aspects that make

process to complete a BFS, assuming Tunisia really, really appealing. The ease

we get clear access and everything is in of which you can get to decision-makers is

good order. We’ve communicated that to actually quite interesting, compared to oth-

the authorities and been received well. er places I’ve worked. They’re quite wel-

They’re actually quite glad we’re giving coming and open to meeting with private

realistic time expectations to get busy.” companies to develop their mining and

Drilling to increase the size of the re- mineral resources. I think, as an invest-

source and conversion to reserve is high ment destination, it’s relatively untouched.”

on the agenda for Celamin at Chaketma, – Michael Washbourne

Page 58 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Mod targets LSE for 2019

Mod Resources Ltd’s arrival on the main Resources at T3 successful on exploration,” Hanna said.
board of the London Stock Exchange now stand at 60.2mt “We’ve had significant mineralisation from
is intended to deliver the kind of boost the @ 0.98% copper the first hole at A4 Dome, hitting both
company needs ahead of a big 2019. and 13.9 g/t sil- high-grade veining and NPF contact. It is
ver with 36.6mt @ the most exciting regional target I’ve seen
Mod listed on the LSE on November 26, 1.14% copper and as the NPF hosts all other deposits in the
assuaging the AIM board in order to tap 15.8 g/t silver in the region.
into what it perceives is a renewed appe- indicated category.
tite for copper stocks among UK investors. “We’ve used geophysics to target the
Hanna said ongo- NPF contact and have found it mostly
“There are very few copper companies ing metallurgical test preserved and mineralised as a flat-lying
on the London main board,” Mod manag- work had confirmed blanket underlying the dome 450-500m
ing director Julian Hanna told Paydirt. the company’s belief below the surface.
“We feel that with our regional scale and that T3 would pro-
the success of the T3 project there should duce a high-quality “It requires more drilling but it shows the
be a lot of serious attention in London concentrate. scale of this district. If you can find enough
which is for copper and for African stories.” volume of NPF contact tonnes there is an
Met test work re- underground concept to consider and it
Mod didn’t accompany the London list- sults released in has given us encouragement to drill fur-
ing with a capital raising but its presence Julian Hanna October showed ther. We will settle on a resource pattern
there should provide a base once more rougher flotation re- drilling programme next year.”
funds are needed. That could be as soon coveries exceeding
as mid-2019 as the company pushes for- 97% copper and 95% silver with concen- At the A1 prospect, 22km east of T3, six
ward with development plans for its T3 trate grades of 30-35% copper achievable widely space holes also hit NPF contact-
copper discovery in northern Botswana. over the life-of-mine. style mineralisation. Hits included 130m @
“The outstanding metallurgical test work 0.52% copper and 3.5 g/t silver from 590m
The company is currently working on response means that we can target a far and 52m @ 0.61% copper and 4.6 g/t sil-
a feasibility study into a 3 mtpa operation coarser grind size and potentially deliver ver from 624m.
at T3 – near the town of Ghanzi – having significant benefits of reduced power con-
produced a PFS which identified annual sumption and operating costs,” technical “A1 is at least 12km long and 2km wide,”
free cash flow of $US85 million (pre-tax) director Steve McGhee said. Hanna said. “It is a deeper target and re-
over 8.8 years from a 2.5 mtpa operation Hanna said the concentrate grades quires deeper drilling but shows the scale
in March. achieved were particularly pleasing given of the district. If drilling shows mineralisa-
the current lack of high-quality product in tion extends beyond what we have found;
Hanna said work was progressing well the copper market. who knows what the future holds.”
ahead of a March 2019 deadline. “Everyone talks about copper grades
dropping but it is actually at the smelter While A1 and A4 would form extensions
“Our highly talented team has been where it is really being felt,” he said. “Cur- to the T3 project, Mod is also stepping fur-
working on everything,” he said. “And, that rently, concentrate grades are averaging ther out on its 12,000sq km of ground.
is not just the mining, the plant and the in- 20-24% copper against our target of 30-
frastructure but also on environmental and 35%. It is one of the standout benefits of The company recently received environ-
social aspects as well. this copper belt.” mental approval to begin drilling on 700sq
While Mod’s development team will km of ground on the T20 project, 100km
“We’ve had a recent resource upgrade keep its high temp efforts over the next west of T3.
– increasing contained copper by 44% few months, the company’s exploration
– which will be included into the revised group will use the Christmas period to take “There are numerous targets there,”
reserve estimate next year ahead of the stock. The last six months has seen Mod Hanna said. “The central feature is a large
feasibility study and the recent met work step away from the T3 deposit for the first copper-zinc soil anomaly, actually it is sev-
has confirmed the excellent quality of T3.” time in more than two years as it tries to eral anomalies, in a 60km-long zone. We
come to grips with the wider potential of have started drilling on the northern edge
the Ghanzi district. of the T23 Dome target, based purely on
In August, the company began reporting magnetics, trying to find the NPF contact
results from drilling on its A4 Dome pros- at shallow depth.”
pect which is 8km from the proposed T3
plant site. That Mod can step out 100km and find
Ten holes at A4 have intercepted both similar mineralisation is proof of the excep-
vein-hosted high-grade mineralisation tional opportunity in front of it in Botswana
similar to T3 and, perhaps more intrigu- but Hanna knows it has to deliver on the
ingly, the Ngwako Pan Formation (NPF) promise.
contact-style mineralisation which hosts
many of the Botswana copper belts larg- “We want to see if we can demonstrate
est deposits. that we have a dominant land position on
“The last three months have been very an entire copper belt,” he said.

Those efforts have been aided by a sup-
portive government which has allowed the
company to retain its wider landholding via
a two-year licence extension.

– Dominic Piper

Page 60 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

Vector closes in on DRC target

Vector Resources Ltd is on the verge Vector is ready to sink its teeth into about viously purchased equipment on site,
of moving into development mode $US70 million worth of equipment already including items such as crushers, com-
at the 3.2 moz Adidi-Kanga gold project pressors, pumps, screens, a ball mill,
in the DRC after securing vital funds to purchased for the build of Adidi-Kanga Knelson concentrator and mobile min-
close its 60% acquisition of the former ing equipment. Historical records sug-
AngloGold Ashanti Ltd asset. ecutive Simon Youds told Paydirt. gest about $US70 million was spent on
“It’s a complete re-rating of the com- the equipment which AngloGold bought
At the time of print, Vector was waiting for initial mine construction activities in
for its JV partner, state-owned SOKIMO, pany and there’s a lot more to this story. 2013.
to approve the transaction. Once the fi- You don’t get a company like AngloGold
nal sign-off is complete, the company will spending that much time and effort over Youds is confident his company can
jump immediately into delivering a DFS. 15 years without it being a world-class complete a DFS within nine months of
project.” the transaction closing.
It comes after Vector accepted a
$US35 million committed offer of funding Youds and other senior members of “If there’s an earlier option we’ll inves-
from Dubai-based FT General Trading the Vector team were in country last tigate that, but currently the agreement
LLC to complete the acquisition and un- month finalising the remaining conditions with the vendor is that we’ll have nine
dertake DFS work programmes. precedent for the acquisition, as per the months to deliver a DFS and then we
terms of the heads of agreement with will fund that and construct the plant,” he
Vector has also executed a committed project owners Fimosa Capital Ltd and said.
debt facility for $US20 million with Me- Mongbwalu Goldfields Investment Ltd.
dea Future Materials Funds LP that will AngloGold is reported to have estimat-
primarily be used to satisfy potential re- From there, Youds was planning to ed a $US200 million construction capex
payments of existing debt at Adidi-Kanga head to Adidi-Kanga to evaluate the pre- for an underground mine at Adidi-Kanga.
which is due to a local DRC bank upon a Vector believes an open-cut approach
positive decision to mine. is a future option for the project, which
hosts a resource of 15mt @ 6.6 g/t gold
Completion of the transaction has for 3.2 moz and is permitted for under-
been almost 12 months in the making for ground development.
Vector, which was presented the oppor-
tunity to move on Adidi-Kanga – about “For whatever reason, AngloGold
84km north-west of Bunia, the provincial made a choice to go underground, but
capital of Ituri – following the ASX-listed it’s still a permitted mine and that’s a
junior’s early success at the Maniema huge benefit for us,” Youds said.
gold project during 2017.
“What was even more apparent to us
“I don’t think a project this advanced, was this large outcropping section of
which hasn’t been constructed, has ever mylonite known to host gold mineralisa-
been for sale like this,” Vector chief ex- tion that had been drilled but hadn’t been

Adidi-Kanga is a former AngloGold Ashanti asset

Page 62 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

incorporated into resource. It’s nearly Gold Corp, with most of the for- Adidi-Kanga hosts a resource
16km of strike of outcropping mylonite mer’s reputation leveraged off its of 15mt @ 6.6 g/t gold for 3.2 moz
that is of a lower grade than the 6.6 g/t, success in the DRC, particularly at
but is eminently open-cuttable and yet Kibali, Africa’s largest producing gold into your mill,” Youds said. “There’s
that’s usually where you would start. It’s gold mine. an opportunity here where if we can drill
the easy stuff, from a mining perspective.” it out and put it into a measured and indi-
“Fundamentally, Randgold is cated category, then we can convert that
Vector intends to have lined up drilling 70% Kibali, so you could say that 70% into reserve and Kibali may well want to
contractors to hit the ground hard from of that investment is a DRC gold invest- feed that into the mill as a back-up to the
February following the end of the upcom- ment,” Youds said. underground production, because I know
ing elections in the DRC. Youds does most underground mines are always hun-
not expect his company’s study timeline “Sure, there’s people who will be happy gry for tonnes.”
to be impacted as most of the in-house that they’ve had a good experience in
planning can be completed through that the DRC because it’s a high risk jurisdic- Vector is awaiting assay results from
period. tion and there will also be people who recent drilling at Maniema, having com-
are looking for the next Randgold. We’re pleted more than 2,000m of diamond
Youds also believes his company has not there yet and hopefully I’m not being holes into key exploration targets during
benefitted from the recent proposed too boastful in saying that we’re position- the last campaign which wrapped up in
merger between gold heavyweights ing ourselves exceptionally well in some October.
Randgold Resources Ltd and Barrick ways to follow in their footsteps.”
Youds said the company remained
Vector chief executive Simon Youds with Vector also optioned the Kibali South committed to Maniema and would need
his team of geologists at the Maniema and Nizi gold projects last year, with the to review how best to manage and allo-
gold project former known to be contiguous with Kiba- cate resources to all three projects once
li, of which AngloGold is Randgold’s 30% the transaction for Adidi-Kanga was final-
partner. ised.

Youds believes it could offer potential – Michael Washbourne
third-party feed for Kibali should the new
Barrick-Randgold group want it.

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Page 64 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

Resolute delivers
autonomous Syama

Resolute has stuck to its time schedule The decision to fully automate the Syama underground mine
for Syama with the first sub-level cave has already delivered Resolute Mining Ltd an additional
to be started this month three years of mine life but managing director John Welborn
believes the lasting benefits will be much further reaching.

Resolute is due to start the first sub-level cave at Syama this
month, using a fully-automated mining fleet supplied by Sand-
vik. The operation will become the first custom-built, fully auto-
mated underground gold mine in the world. It is set to produce
250,000 ozpa over a 16-year mine life at AISC of $US746/oz.

Those numbers were ratified in an updated DFS in the June
quarter which incorporated the move to automation. The study
found adopting autonomous mining would not only reduce
AISC from $US881/oz to $US741/oz but also increase reserves
by 28% to 3 moz and add three years to Syama’s mine life.

“We’re confident, having made the decision and imple-
mented it in the mine plan and updated DFS this year – which
included the increased reserve and the impact of lower cost
power – that it would deliver. In fact, it has added two years to
the mine life and brought down the AISC,” Welborn told Pay-
dirt.

Sandvik’s autonomous fleet includes Sandvik TH663 trucks
and Sandvik LH514E electrical loaders and a range of devel-
opment, production and bolting rigs and rock tools. The fleet
will be controlled by the AutoMine and OptiMine systems for
analysis, process optimisation and automation.

“Ultimately, it was an easy decision to partner with Sandvik.
It is the best manufacturer of underground automated equip-
ment and the only one capable of providing a full suite of op-
erations within one software package,” Welborn said.

“The most important part of the automated space in any in-
dustry is the interface between the various parts; with differ-
ent manufacturers and operators that becomes more compli-
cated.”

The move underground has dramatically altered Syama’s
course. The mine has had an often troubled and precarious
existence since BHP Ltd first discovered it in the south-east
corner of Mali in the 1980s. Metallurgical problems stymied
both BHP and Randgold Resources Ltd before Resolute took
the project on in 2004.

It eventually solved the refractory challenge and in 2016 with
open pit reserves on the wane Resolute chose to commit to
underground development.

“The original DFS on the Syama underground was a sig-
nificant value-changer for the company because it identified a
long-term future for Syama and made clear the decision on the
underground,” Welborn said.

If the move underground is a “value-changer” for Syama,
the move to automation could have equivalent benefits across
operation, company and even industry.

Resolute began investigating ways to improve on the 2016 DFS
results.

“We identified automation as an opportunity for cost reduction
and safety improvements,” Welborn said. “The technical team and
I spent 18 months looking at automation innovation across the in-
dustry, visiting places such as Northparkes and the Finch diamond
mine in South Africa, and explored various equipment providers.”

The potential benefits quickly became obvious, according to

Page 66 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

Welborn. we will work with Sandvik to continue that the investors followed. Companies using
“In the underground operations we training and development. new technology need to do the same.”

looked at where automation was successful “I think politically it is going to be a very Resolute has already begun its drive in
and it delivered a 30-40% direct saving on powerful argument that this technology will this regard at its Australian operation. It has
mining costs,” he said. “And remember, that allow us to deliver higher value labour op- introduced tele-remotes into mining opera-
is when the automation is retrofitted. I am portunities for Malians. tions at its Mt Wright gold mine and benefi-
convinced there will be downstream and ciation into processing at its Ravenswood
other ongoing benefits for cost, safety and “Our global experience from many mines operation. Welborn is confident Syama’s
other aspects of operation as we continue around the world has shown that automa- upgrade will convince shareholders further.
on the journey.” tion is not about cutting on labour,” Rullo
said. “It is much more about increasing the “If you can demonstrate new technology
“Automation increases equipment utili- mining productivity and safety. This in turn works and you can deliver on it – as we
sation and overall productivity significantly makes the mines run more profitable allow- have been doing at Mt Wright and Raven-
and it also transforms the old batch process ing them to run the mines longer and make swood – then the next natural step is Sy-
into a much more continuous one with full new expansion investments. At the end the ama. And, we will build a world-class mine
capability for real-time monitoring, control impact on labour is actually the other way that the Syama orebody always deserved.
and optimisation,” Riku Pulli, Sandvik vice around.”
president of automation said. “That will give us confidence to look at
If Welborn is comfortable he has per- other technologies, whether that is ore sort-
The spectre of machines replacing hu- suaded employees, government and com- ing, fast gold assaying or something else.”
man workers has long-been a dystopian munity of the opportunity presented by
science fiction trope and is increasingly automation, one stakeholder remains to be Having board and management teams
becoming reality as computer processing, convinced. willing to pursue innovation has been key to
robotics and AI industrial use intensifies. It pushing Syama along the automation path,
has the potential to be an even more con- “Everyone in the industry is speaking according to Welborn. Board members
tentious issue in Africa where employment about innovation but there is great resist- include Mark Potts, former chief technol-
opportunity is a constant battleground. ance to adoption and it is being driven by ogy officer at Hewlett Packard and Sabina
investors who’ve had poor previous experi- Shugg, director of the Kalgoorlie-Boulder
Welborn doesn’t see Syama’s introduc- ence with miners who seek to adopt innova- Mining Innovation Hub.
tion of automation as a dilemma for Reso- tions. The investor says: ‘that’s interesting,
lute’s relationship with employees, govern- good luck and I will follow your progress,” “The people we have brought in at a
ment or community. but they certainly don’t pile in,” he said. board and executive level are innovators
and have joined us because they want to
“None of our automation journey we are The reluctance of investors to back min- work with a miner who gives opportunities
on has anything to do with labour efficien- ers willing to be early-adopters of new to use technology,” he said.
cies, particularly as it is not retrofitted,” he technology may come down to a long his-
said. “This is not a case of underground tory of failure across technologies and com- Resolute should probably get comfort-
workers getting tapped on the shoulder and modities but Welborn counters this with evi- able with peers looking to its innovation
told they are being replaced by a Robbie dence of recent achievements. programmes as other gold miners become
the Robot who is cheaper.” emboldened by the opportunities unfolding.
“One of the great modern success sto-
On the contrary, Welborn believes auton- ries, Fortescue [Metals Group Ltd], was “The mining industry has to go looking for
omous mining will deliver more of the kind driven by the willingness to adopt surface the right technology but we have to be care-
of jobs Resolute’s hosts are seeking. mining techniques and new ways of build- ful. We haven’t been inundated but there
ing railways,” he said. has certainly interest from other groups
“It is counter-intuitive to look at Mali and who want to consider possibilities. I think
consider automation as it is usually asso- “As a mid-tier company, if you are seek- Syama will be a mine people want to visit
ciated with high labour costs, which isn’t ing to be competitive, innovation is abso- and Resolute will be the first of many gold
necessarily a problem in West Africa,” he lutely essential.” miners which will use the capacity Sandvik
said. “Our labour challenge at Syama is have.”
in limiting the amount of highly paid expat Key is convincing investors you know
workers we have. The Government wants what you’re doing. Before that happens, Resolute has to en-
to see locals trained to do high-value job sure underground operations are running
themselves and this intuitive technology “If you look at companies like Randgold, successfully. The company anticipates hit-
enhances our ability to do that. We have Evolution [Mining Ltd] or Northern Star [Re- ting commercial rates by June 2019, ending
already got all-Malian crews running long- sources Ltd], they developed investor con- an extended transition period at the mine.
hole drillers and underground bogging. And fidence about their strategy; on the type of
mine they acquire and the way they operate “We are in a difficult transition period be-
them. They delivered on that strategy and tween open pit and underground and we
are relying on low-grade, metallurgically dif-
ficult ore to keep the mine running and the
team has done a great job to buy time while
we move underground,” Welborn said.

Struggle is a common theme throughout
Syama’s existence but Welborn is more con-
vinced the asset is now in the best shape of
its plus-30 year existence.

“We have only started the journey to mak-
ing Syama the world-class mine BHP al-
ways envisaged,” he said. “Historically, it has
been challenging but now we get the oppor-
tunity to get it right.”

– Dominic Piper

Page 68 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 69

INDABA PREVIEW

Teranga gets Teranga has enjoyed a standout year
confident in at its Sabodala gold mine in Senegal
West Africa

An outperforming flagship asset and top of Niakafiri which will allow us to drill it Faso as part of its acquisition of ASX-listed
ahead-of-schedule development pro- out and to the reserve and the mine life.” Gryphon Minerals Ltd.
ject has Teranga Gold Corp chief executive
Richard Young buoyant about the compa- Mine life extensions will cement Teran- The project – recently renamed Wahgn-
ny’s medium-term future. ga’s position as Senegal’s pre-eminent ion – is now in construction with first gold
gold company. Senegal has failed to keep planned for 2019. An updated technical
The TSX-listed junior miner’s third quar- pace in recent years, seeing exploration report released in September increased
ter results highlighted just how much pro- expenditure flow out of the country and Wahgnion’s reserve by 40% to 1.6 moz
gress it has made in 2018. Record third into neighbouring countries such as Mali, gold, completing the rejuvenation of a pro-
quarter and year-to-date gold production Burkina Faso and Cote d’Ivoire. ject which appeared to have lost its lustre.
at its Sabodala gold mine in Senegal of
56,376oz and 185,788oz gold respectively Toro Gold Ltd joined Teranga as a Sen- Young is bullish on Wahgnion’s likely im-
has the company on track to achieve full egalese miner earlier this year when it pact on Teranga.
year production of 235-240,000oz, up from switched on its Mako gold mine but the
its original guidance of 210-225,000oz. country still lacks a fully stocked develop- “Gryphon had been forced to look at a
ment pipeline. heap leach operation when the gold price
Young told Paydirt the company’s focus dropped in 2013,” he said. “When we
on grade control had allowed it to con- “When we IPO’d there had been three came in, we asked the Gryphon team: ‘If
sistently outperform reserve modelling in exciting discoveries in the country but you had the balance sheet and were not
2018, despite the heavy rainfall which af- since then the only success has been Toro constrained, what would you do?’ They
flicted most West African gold operations. Gold,” Young said. “The country has not immediately said a CIL plant so we took it
Total ounces mined over the 15 months to kept pace with the likes of Burkina Faso; in back to that original concept and now be-
September 30 reconciled 26% higher than fact it’s taken a step backwards. lieve it is ready to be everything Gryphon
the reserves models. thought it would be.”
“We’ve spent a lot of money on regional
“This has not been a throughput issue, exploration and you only need one high- Wahgnion is forecast to produce
it’s been more about grade,” Young said. grade discovery that is mined for three 132,000 ozpa at $US761/oz ASIC in
“As we moved into the satellite pits, we years to make it worthwhile but there has the first five years and 114,000 ozpa at
needed to improve our grade control so been nothing more of a material nature. $US904/oz AISC over its 13-year mine
we brought in a new mining team, includ- life. However, Teranga has begun efforts
ing a number of Australians and as a result “It is a mining friendly government – in to fill out both annual production and the
we are producing at grades better than the fact, the president was a geologist – but it life-of-mine.
original estimates.” needs a discovery.”
“The costs rise in later years but we
The recent results have Sabodala al- One opportunity potentially lying in wait believe with continuing exploration along
ready outperforming its redrawn mine plan is the Massawa gold project in the coun- strike we can bring the strip ratio down and
which forecasts identifying 213,000 ozpa try’s south-east. The project is controlled by improve that. What grades we achieve
for the next five years at AISC of $US885/ Randgold Resources Ltd but its 2.7 moz @ remains to be seen but it is similar to the
oz. 3.6 g/t gold reserve has so far failed to meet Sabodala orebody so hopefully we find we
the company’s investment criteria. have been conservative with the resource
Young believes both production and estimate and will see better grades.”
mine life will continue to be extended. With Randgold’s merger into Barrick
Gold Corp likely to tighten the development The company’s Burkina Faso plans ex-
“When we IPO’d in 2010 we had 1.4 moz scope, Massawa could be up for sale. tend to a second potential production cen-
in reserves,” he said. “We’ve produced tre at Golden Hill.
more than 1.5 moz since then and still “It depends what the two companies do
today we have 2.7 moz in reserves, a 13- with their non-core assets but it might be “We are very confident it will be a mine
year mine life and a large resource base something we could apply for,” Young said. – we’ll have a maiden resource next year
from which to grow.” – it just isn’t clear how big it will be,” Young
“Randgold is putting a feasibility study said. “I don’t know if it will be equivalent to
The company’s immediate growth plans on a standalone operation but it is close Wahgnion or Sabodala or something more
involve the Niakafiri orebody, the largest enough to toll-treat at Sabodala. If we de- but we do believe it will be a third mine and
deposit on the Sabodala mining licence. veloped it jointly, it would mean us being in if it can average 150,000 ozpa it puts us
Senegal for a long time.” into that 500,000 ozpa category.”
“That current 13-year mine life doesn’t
include Niakafiri,” Young said. “We are cur- Teranga has already shown a willing- – Dominic Piper
rently moving the local village that sits on ness to participate in corporate activity in
West Africa. In 2015, the company picked
up the Banfora gold project in Burkina

Page 70 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

West Wits has been successfully mining on a small,
open pit scale but is now pursuing underground
options on the Witwatersrand Basin project

Wits winning opportunity.
SA battle “The global resource grade [3.4 g/t]
West Wits Mining Ltd’s ambitions for permit applications expected to be grant-
its Witwatersrand Basin gold pro- ed in February-March but the increased may look too low for an underground
ject continue to grow on the back of in- geological and regulatory certainty ap- operation but increasing the cut-off grade
creasing confidence in the future of South pears to have emboldened the company. from 2 g/t to 3.5 g/t still keeps 450,000oz
Africa. @ 5 g/t in the resource [from 1.2 moz @
In particular, the Kimberley East area 3.4 g/t],” Tunks said.
The company has been undertaking on the historical DRD ground is proving
modest mining operations on the old alluring. The focus is on the K9A reef Adding to the low-cost nature of de-
Rand Lease and DRD leases to the west which sits above the K9B. The K9A was velopment is the presence of extensive
of Johannesburg since last year but with mined extensively on Rand Leases but underground infrastructure on the histori-
a global resource of 3.65 moz gold, the has been largely left intact on the DRD cal DRD ground. DRD Gold Ltd had in-
company has plans to expand far beyond ground. tended to develop the area before walk-
the current monthly production rate of ing away in 2000.
730oz. West Wits intends to prove up a re-
source for the K9A as well as K9B in an “There is already a shaft and the start
Those plans rely on West Wits receiv- effort to define a genuine underground of a decline there,” Tunks said. “We can
ing a mining right from the South Afri- be back underground for $20-30 million,
can Department of Mineral Resources Andrew Tunks which includes rehabbing the top 200m
(DMR), a seemingly impossible task un- and opening up level development that is
der the leadership of former President in but has never been mined. That is a
Jacob Zuma. huge advantage for us,” Tunks said.

Zuma was removed from office in Feb- “There is no resource risk to this pro-
ruary and new President Cyril Ramapho- ject and we are very confident about the
sa has vowed to clean up bribery and sovereign/political risk.”
corruption in government – “state cap-
ture” in the Government’s parlance – in- Permitting still has an intangible quality
cluding in the DMR. given the unfolding debate over the fu-
ture of the much-criticised Mining Char-
The change in attitude under new Min- ter 3 however West Wits director Hulme
ister of Mineral Resources Gwede Man- Scholes said he expected the company’s
tashe has resulted in West Wits reinvig- mining right to be granted by mid-2019.
orating its development plans.
“The scoping study has been submit-
“We are now looking seriously at the ted and the DMR is waiting for agree-
Kimberley Reef underground project,” ment with property developers, three
West Wits director Andrew Tunks told of four of which have been completed,”
Paydirt. “We completed a review of the Hulme said. “This area will see mining
K9B reef which resulted in a 428,000oz and property development to take place
[to 1.2 moz] increase in gold resources together to produce low-cost and medi-
and now have an exploration target of um-cost housing.”
650,000oz-1 moz gold for the whole Kim-
berley East reef package.” With the DMR now sorting through its
backlog, Scholes expects West Wits’
West Wits plans to expand its open pit mining right to be granted in June 2019.
mining into two further areas with mining
“The hard yards have been done via
the public participation,” he said, “Com-
munity opposition is the main reason why
this area has not been mined since the
80s. But, West Wits has got the commu-
nity on board.”

– Dominic Piper

Page 72 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT



OPINION

Africa, Australia and China:
Squaring the investment circle

When it comes to investment in Africa Phil Edmands is partner at Gilbert + ment be the only game in town.
the elephant in the room is China. Tobin. He is a former MD Australia, Nor is that in China’s interests. Better
Recent growth in Chinese investment in Rio Tinto Ltd, and director of the
Africa has dwarfed growth in Western in- Business Council of Australia and regimes can be win-win – more balance in
vestment. Once trade is factored in, China the Minerals Council of Australia investment source, greater investment gen-
is now Africa’s biggest economic partner. erally (including enhanced opportunities for
must navigate a symbiotic relationship countries like Australia) – and less of an un-
Strategically, China needs to secure with a behemoth. welcome spotlight on China (meaning less
sources of raw materials but it also needs likelihood of regulatory or political backlash
future markets for its products. Both Australia and Africa also need to against China).
leverage their resource wealth in a way
And that is where Africa is the elephant. that maximises state benefit. And although Australia and African coun-
By 2050 Africa’s population will be 2.5 bil- tries compete for mining investment, you
lion – nearly double China’s. No one will be This is where Australia could increase don’t move forward by holding others back.
able to ignore it. bilateral engagement significantly, and at As Africa develops, so its requirement for
low cost. It could work with African coun- mineral resources will ultimately outstrip do-
The world needs China to invest in Africa. tries on regulatory and fiscal regimes mestic supply, and it will grow as a consum-
We have seen how recent movements of and add a twist by enrolling private in- er market for Australian resources exports
economic migrants, and of refugees, have vestors in the process through a “hub” that and exports generally.
disrupted recipient countries, and some- mediates their involvement.
times led to alarmingly reactive political Africa and Australia share the twin objec- A “hub” concept also allows investors to
responses. Yet these movements will in- tives of ceding just enough resource rent be brought in. But this is not a hub in the
crease exponentially if Africa does not suf- to incentivise mineral development and traditional sense, which is often about net-
ficiently develop to satisfy the aspirations of (through greater investment certainty) re- working, collaboration and skills develop-
its burgeoning population. ducing investment cost by lowering the risk ment.
premium investors require. They both also
But investment diversity and balance is need to maintain their sovereignty. Here, I imagine a hub that enables Aus-
also important. Australia offers a unique proposition to tralian governments to work closely with
Africa in assisting it to achieve these objec- African governments in refining and devel-
Australian engagement with Africa has tives. Australia is one of two of the world’s oping regulatory and fiscal regimes, as well
been decreasing as funding has reduced. developed “commodities economies” as their implementation, and then loading
Australian bilateral aid to Africa is now very (along with Canada), and is the most inte- the work product onto the hub portal as an
small. Much of the current engagement be- grated Western economy into Asia. Aus- “exposure draft” for member investor com-
tween Australia and Africa is private and tralia is as reliant now on trade with China ment.
commercial. as it was on trade with the UK in 1944-1945.
Indeed, Australia is further down the path Comments would be tested by the Afri-
But whilst Australia cannot hope to match of engagement with China than any other can and Australian government members.
Chinese financing and aid commitments to major or commodities-based economy. And as the hub built up expertise and prec-
Africa – particularly in infrastructure – there Improvements in the design and im- edent, relevant principles might be more
is a low-cost, high-return, way to ramp up plementation of investment settings will generally applied, meaning investor mem-
bilateral engagement. expand the pool of potential non-Chinese bers should comment even if the particular
investors in mining, and in non-Chinese jurisdiction is not relevant to them.
Australia’s economic future is closely tied mining equipment, technology and services
to China. In managing this it needs to re- providers, including from Australia. No doubt the idea requires refinement.
inforce friendly ties between the two coun- Regulatory uncertainty narrows this field. But it is a way to enable low-cost, deeper
tries, be respectful of China’s strategic in- Chinese investors are often more able to Australian engagement with Africa.
terests, but also require respect from China cope with uncertainty. They often have
for its own. Like African countries, Australia different financing costs, may benefit from Historically, through the Commonwealth,
Chinese government subsidies, may enjoy Australia was a strong voice for the self-de-
sovereign risk cover through China’s strong termination and empowerment of the peo-
bilateral relationships and active support, ples of Africa. It was considered a strong
may have different investment criteria, and friend of Africa.
may be able to link into Chinese aid pro-
grammes. Africa is clearly reaching a new stage of
African countries should and do wel- its development. But the importance of re-
come their investment. But it is not in Afri- lationships endures.
can countries’ interests that Chinese invest-
I worry that Australia’s has turned its at-
tentions elsewhere. Africa will rise. It is no
good trying to reinforce friendship once
someone is rich. Everyone wants to be a
rich person’s friend. Australia needs to be
strengthening connections now. And be-
cause it cannot match the purse of others,
it should look to soft skills to make that
happen.

Page 74 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

South Africa’s chance to
wind back the clock

Any junior contemplating a move into He said investors would soon come to re- The next major announcement from
South Africa’s rich mining abode can alise that the framework needed for discov- Prieska – release of measured and indi-
take some inspiration from budding zinc- eries to be made were now in place in SA. cated resources – was expected at the
copper player Orion Minerals Ltd. time of print. A maiden resource estimate
“It is only once it is decided to go to min- from Prieska totalled 29.4mt @ 3.8% zinc
There are few, if any, junior companies ing and proven through the bankable study and 1.2% copper.
of Orion’s market cap – $50 million – which that you need to bring in a partner, but now
can boast completion of 85,000m of drilling you have the ability for the exploration “That will be a material game-changer
in 14 months. That Orion has achieved the company to be a fully-funded entity. That for us and I think in general Mining Indaba
feat amid heavy clouds over the country’s is a huge change for SA that the market will be positive. Base metals have been
Mining Charter and governance deserves hasn’t got its head around. For us, we were lifting this year and there is still a strong
some recognition, but it is yet to come from always in a good position in how we struc- outlook for copper and nickel. For zinc, the
the market. tured ourselves very strongly with good question mark is still out there for industry,
black partners in SA,” Smart said. particularly around the two new players
“We have had a fantastic 12 months, the and whether they will deliver to expecta-
market hasn’t given us as much love as we Orion has already taken advantage of tions or deliver at all,” Smart said.
would have liked because I think there has the more conducive conditions prevailing
been a little bit of a lack of understanding of in SA’s mining environment by locking in New Century Resources Ltd switched
the South Africa situation,” Orion manag- $23 million worth of funding in mid-2018. back on MMG Ltd’s former Century zinc
ing director Errol Smart told Paydirt. mine in Queensland in 2018, but is still
“For a company like Orion it is a much convincing some that the project stacks
“Last year, there was an expectation of a better working space now, international fi- up, while Vedanta Zinc International was
new mining law and for the mining minister nancing institutions and the SA banks are six months behind in firing up the mill at
to be replaced and a lot of that has come very keen to get involved in a financially Gamsberg, Northern Cape.
good. It is not all done and dusted yet, but stable project like ours,” Smart said.
it is reaching completion. We do have a “Gamsberg could have a big impact on
much more user-friendly mining law, cer- The money will see Orion through BFS the supply side for zinc, so there are a cou-
tainly for new entrants into the SA mining completion of the historic Prieska zinc- ple of interesting things happening in zinc
and exploration industry.” copper mine, Northern Cape. at the moment,” Smart said.

Smart expects an air of vibrancy to Subject to all licences and rights being No doubt there will be questions for
sweep through the SA’s mining sector, as granted, including a mining right which is Smart to answer once economics and
exploration companies lap-up the opportu- expected to be granted sometime in 2019, methods around making Prieska work are
nity to operate free of BEE requirements. production from Prieska has been ear- made public.
marked for the end of 2020.

Orion could be breaking ground at Prieska,
Northern Cape, in 2019

Having exited Niger, Vital can spend more time entertaining
potential projects, while also focusing on the new and
existing opportunities it has in Burkina Faso

Page 76 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

However, at this point in time, Smart Errol Smart appear to be showing renewed commit-
appears to have the answers, particularly ment to the country which could also be a
on bringing modern techniques to Prieska labour force and of that 490,000, certainly boon for the junior sector.
which was last operated by Anglovaal from 10% are at the top end of professional
1971 to 1991. skills. So you have 50,000 top quality peo- “Anglo American [plc] are spending
ple in SA and numerically that is probably more in SA in all of their arms – Anglo
The Anglovaal era saw 4,000 people as many as what you have got in Australia Plats and Anglo Coal obviously leading it.
employed and 430,000t copper and 1mt or Canada.” AngloGold Ashanti [Ltd] is also increasing
zinc produced. spending, while companies like Harmony
With the latest mining technology and [Gold Mining Co Ltd] are doing some re-
Smart said the community understood skilled labour force to apply modern tech- ally interesting exploration and the Wit-
Prieska would be a different proposition niques, Smart has done well to identify watersrand gold project is starting to look
this time around, and while not as many more tonnes at Prieska and is equally con- interesting,” Smart said.
people would be employed, the mine fident of overturning the mining inefficien-
would be safely run. cies which led to the mine’s closure and “There are a lot of companies in SA sit-
rehabilitation in 1991. ting on balance sheets and treasuries and
“The new mine will be completely dif- are looking to reinvest, which is quite im-
ferent to the mine 30 years ago, with it A lot of the infrastructure can be refur- portant. We are seeing more and more for-
employing 20% less people than before. bished, giving Orion every opportunity to eign juniors and I think there is going to be
But, they see it as a big positive because lead a new dawn in mine developments in a sudden rush of foreign juniors coming in
there will be substantial, well-paying jobs; SA. as people start to realise the opportunity.
not these dangerous low-paid, unpleas- As an exploration company with prospect-
ant working conditions and then there is While Orion is certainly drafting a blue- ing rights you don’t have any BEE [require-
all the ancillary development opportunities print for juniors to follow in SA, the majors ments]. Also, you don’t have all the other
around that,” Smart said. sector compliance like the employment
equity stuff and all of that is way reduced.
“That is where SA is failing to sell itself. That is really what is going to be the game-
I regularly come across people, particu- changer for SA. I think there is going to be
larly Australian fund managers, who say a whole new industry around exploration,
‘how can you build a high-tech mine in with the chance for exploration companies
SA from a low-tech industry?’ Maybe that to explore, discover and then sell on into
is the case on average, but people forget established mining companies.”
how big the SA mining industry is. We
employ 490,000 people. I think the whole – Mark Andrews
Australian mining industry only employs
120-130,000 people. We have a massive

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AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 77

INDABA PREVIEW

Tando to reveal vanadium details

If there is one advantage of being a va- “While the price is running like it is, we “We have been focused on the ground
nadium player it is that there aren’t many have to ask ‘how do we take advantage?’ and it was only last week [mid-November]
competitors in the space haggling for atten- You have to chase down any opportunity for that we did any road-showing since the
tion. production.” acquisition. The message we were getting
was that they [investors] were excited by
Tando Resources NL is looking to capi- The acquisition of SPD was completed the near-term production potential, but they
talise on such sparsity with its SPD va- in late September and Tando has since hit want to see the detail and we will provide
nadium project in South Africa’s Gauteng the field hard with three rigs – one diamond that.”
region. and two RC – with numerous high-grade
results in the region of 1% vanadium pen- The changes of vanadium content in
The company can earn 73.95% of the toxide demonstrating the resource poten- steel and the use of vanadium in vanadium
project, which is in a region well supported tial ahead of a maiden estimate in the near redox flow batteries are reasons behind the
by existing infrastructure and continues term. significant increase in price.
to attract investment from the likes of ac-
tive players in South Africa such as Anglo With $3 million cash, the company is fully For Tando, it appears to be a good time
American plc, Glencore and Bushveld Min- funded for its proposed activities, including in its chosen field, which also applies to ju-
erals. infill drilling and met test work, and expects risdiction.
to release a scoping study in Q1.
Access to infrastructure is key for Tando The South African Government and its
as it positions itself in the market as a near- Tando first announced its interest in ac- mining industry appear to be on the same
term producer of vanadium pentoxide or quiring SPD in March and since then has page concerning matters pertaining to the
precursor products. focused its efforts in the field to build confi- Mining Charter, which many believe will see
dence in the project. a renaissance of the junior exploration sector.
There is a live mining right application on
SPD, potentially providing options for mine Oliver is convinced SPD will stack up, but After former SA Minister of Mines Mo-
gate or DSO operations from the 500mt bringing investors along for the ride will be sebenzi Zwane ruffled many feathers in
@ 0.78% vanadium pentoxide SAMREC- another story. introducing the proposed new charter, Oli-
compliant resource. ver welcomed how the current regime had
However, investors aren’t really spoiled engaged industry and looked forward to
Vanadium pentoxide prices surged 200% for choice when it comes to exposure to va- participating in the country’s mining sector.
in 2018 to over $US30/lb and while a happy nadium projects, which offers Tando a point
medium in pricing is yet to be reached, Tan- of difference in the market. “There are Africa specialists in Australia
do managing director Bill Oliver believes who understand risk, London understands
wherever it settles will be encouragement “Everyone wants to see a production Africa and people have seen Africa in a dif-
enough for more SPD-like projects to come story and the detail behind the story. They ferent way in the past 10-15 years. Jupiter
on-stream. want to see some real rigour around a [Mines Ltd], South32 [Ltd] are listed on the
production story and at the end of the day ASX and are bulk commodity plays there
“Even if all the greenfields projects get investors want to see where the money is that are understood,” Oliver said.
developed that won’t fulfil [current] de- going to come from otherwise why would
mand,” Oliver told Paydirt. they invest?” Oliver said. – Mark Andrews

Tando is in a prime location to host
a vanadium play in South Africa

Page 78 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

All in at Tulu Kapi

Tulu Kapi – Ethiopia’s first commercial The remaining $US21-29 million is and artisanal workers,” he said.
modern mine in waiting – has been expected to be accessed at the start of Government and local institutions are
re-shaped, tinkered with and whet the construction by the end of Q1.
appetite of different investors and stake- covering just under 50% of project costs
holders over the years. Having both government and local in- and their backing has also meant the
stitutional support for Tulu Kapi indicates debt component of funding requirements
Kefi Minerals plc received develop- the level of interest in the project and es- can be kept on track.
ment, environment, social and opera- sentially a new industry in Ethiopia.
tional approval in 2015 and has since Anagnostaras-Adams said with equity
continued on a course to establish a Property, breweries and cement busi- at project level for Tulu Kapi in place, debt
country-building gold operation. nesses propping up the construction funding “can be worked on more mecha-
boom in Ethiopia have seen a surge in nistically through government approvals
The $US160 million Tulu Kapi project investor interest, but with little exposure and other regulatory requirements”.
is government-backed to the tune of to hardened mining developments to
$US20 million, which will be drawn-down consider, there has been little interest in Through their service expertise Aus-
over 2019/2020 for the construction of the sector until now. drill Ltd and Lycopodium Ltd are part
off-site infrastructure. of the equity finance structure driving
Therefore, a successful Tulu Kapi op- Tulu Kapi, which will produce 140,000
Meanwhile, in the latter part of 2018, eration will be a template for Ethiopia’s ozpa gold over seven years at AISC of
Ethiopian financial institutions via ANS mining sector and an important vehicle $US8,00/oz from open pit operations.
Mining Share Company have also sup- demonstrating the profitability of the sec-
ported the Tulu Kapi Gold Mines (TKGM) tor to local investors constrained to sup- “The first side of the equity at project
consortium and with $US30-38 million in porting domestic enterprises only. level is due at the end of this year in order
funding. to fund the resettlement in the first quar-
“Local investors or citizens are not al- ter [2019]. At the same time planning,
Subject to government consents and lowed to invest outside of Ethiopia, so surveying, drilling and other important,
receipt of indicative term sheets from the from an investment portfolio point of view but fairly low-cost, construction-related
providers of secured finance, an initial it is quite restrictive in the country,” Kefi things will be ongoing,” Anagnostaras-
$US9 million was expected to become executive chairman Harry Anagnosta- Adams said.
available to TKGM in December. ras-Adams told Paydirt.
“With the institutions putting in $US30-
“Whilst they are 38 million we’re able to carefully get the
investing in the ball rolling whilst the debt side falls into
local currency of place with all the government procedures
birr in Tulu Kapi, involved. The timetable is the same, but
their investment in the sources of capital and the sequenc-
us is actually un- ing of funding has changed around the
derpinned by our entry of these Ethiopian businesses.”
currency being
gold. Therefore, In the meantime, Kefi has expanded a
they are getting an working capital loan facility – £2 million
indirect exposure plus an optional second £2 million – with
to a hard currency a longstanding institutional supporter.
business while
investing locally The funds allow Kefi to move ahead
in their own cur- quickly with project financing, develop-
rency. ment and exploration scheduling.

“There are not The company has a bit more to con-
many institutional- sider on the exploration front now that it
grade industrial has been granted access to a wider area
investments to of the Tulu Kapi gold district.
choose from. They
[Ethiopian institu- In November, Kefi announced the Ethi-
tions] were pleas- opian Ministry of Mines, Petroleum and
antly surprised Natural Gas had given the go-ahead to
with the amount expand its exploration tenements around
of due diligence, Tulu Kapi seven-fold to 1,900sq km.
detail and rigour
done on Tulu Kapi. Anagnostaras-Adams said it was an
It is quite different indication of how the Government was
to what they had viewing the long-term prospects around
been exposed to Tulu Kapi and the potential for a gold dis-
in the domestic trict to emerge in the region.
gold sector, which
was dominated by “There is a bit of activity there, New-
private companies mont [Mining Corp] is exploring in the
north and there are three other serious
exploration projects in the west and the
north however, it is fair to say it is really
only scratching the surface of the geol-
ogy,” he said.

Page 80 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

Kefi is on track to commission Tulu Kapi in the second half of 2020

“The Government is trying to kick-start Kefi has a half a dozen areas boast- see if they are of a satellite deposit size
the sector because Tulu Kapi is getting ing mineralisation from drilling intercepts or if it is something different or bigger,”
itself lined up to start construction. They which need to be followed up, with the Anagnostaras-Adams said.
are becoming quite comfortable with company’s priority in exploration being
the concept of putting aside the district satellite deposits. “That then becomes a different story
exploration around Tulu Kapi so we can and if it is a much bigger play and needs
give it the best shot of turning it from one “We’re not starting from scratch, but a standalone project assessment then
mine into a number of deposits being the initial focus is on satellite deposits we will have to go in as a different prob-
processed through a central facility. That which can see the plant extended or in- lem of success.”
is not unusual anywhere in the world, but creased. The cash flows out of the mine
it has just not been done in Ethiopia.” will be set aside for base level explora- – Mark Andrews
tion to follow through those targets to

Community resettlement, along with detailed engineering
and procurement at Tulu Kapi, Ethiopia, is expected to
start on January 1, 2019

AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 81

INDABA PREVIEW

Baraka Energy & Resources Ltd (ASX: BKP) Brewing up an Tao Commodities Ltd (ASX: TAO)
African storm
Focus: Vanadium in South Africa/Philippines Focus: Base metals in the US
Projects: Under application Projects: Milford

Brewer says: “Baraka is a company we’ve Brewer says: “The attraction for me to get
recently taken control of and one which really involved in Tao was to work alongside Mark
hasn’t had a clear direction or focus for a Connelly. He’s had some incredible successes
number of years. It’s had an asset up in the in Africa in the gold space and what he’s
Philippines, a vanadium-magnetite project, achieving at the moment with West African
which technically looks very good, but is in Resources Ltd is tremendous. We’ve got some
a challenging jurisdiction. We’re hoping to good results coming out of the US, but I think
leverage off that commodity focus into South to complement that with something out of the
Africa, a country I’m very comfortable with, African continent would be a real bonus for
being one of the dominant countries in terms shareholders. I’m sure people who invested
of production from a vanadium perspective.” in Tao in the first place would have looked
at both Mark and myself and thought Africa
Force Commodities Ltd (ASX: 4CE) Well-travelled mining executive Jason would ultimately be a destination that we
Brewer has a natural tendency to drift would consider.”
Focus: Lithium in the DRC towards Africa. After all, he began a career
Projects: Kanuka, Kitotolo which now spans three decades working Vector Resources Ltd (ASX: VEC)

Brewer says: “We’re very close to AVZ in the South African goldfields. Focus: Gold in the DRC
Minerals Ltd which has defined the world’s Projects: Adidi-Kanga, Kibali South,
highest-grade, hard rock lithium deposit and For the past three years, Brewer has Nizi, Maniema
attracted a lot of attention internationally, spent more time on the African continent
particularly from some of the Chinese groups than he does at home in Perth, Australia. Brewer says: “A company that has a great
looking to secure a long-term strategic supply With board positions on five ASX-listed opportunity to advance a number of gold
of lithium and spodumene mineralisation. companies looking to exploit untapped projects which have been stalled in the DRC
We’ve got two projects there, in particular one resources in the DRC, South Africa and for an incredibly long period of time. Stalled
which is already an established tin-tantalum not because of their technical merits, but
operation where we benefit from a lot of Botswana, it’s not hard to see why his because of the ability for people to go in there
the existing mine-related infrastructure and passport is quickly running out of pages. and source the necessary capital to take
allows us to move very quickly towards a them forward. Adidi-Kanga is a world-class
development decision.” Of course, he wouldn’t have it any project which AngloGold Ashanti Ltd invested
other way. over $US500 million into and committed to
Metalsearch Ltd (ASX: MSE) development before walking away.”

Focus: Copper-gold in Botswana Winmar Resources Ltd (ASX: WFE)
Projects: Kraapian
Focus: Cobalt in the DRC
Brewer says: “The results from our recent Projects: Luapula
exploration programmes weren’t as
encouraging as we anticipated and to really Brewer says: “Winmar is just a mind blowing
develop that project you need quite some opportunity. To be in a position where you’re
significant capital. We’re now looking for an able to secure some very attractive exploration
opportunity which will give us the platform and mining licences within several kilometres
to reinvigorate that company, give it a fresh of a plant which in a very short period of
focus, I hope somewhere within Botswana time, has the potential to be producing a
because it’s a very good jurisdiction to high-grade concentrate; I find it incredible
operate. those sorts of opportunities still exist.

“It’s a continent where if you’re involved in take “any day of the week” over something could have been drilling there the next day if
a junior company, your ability to secure and on offer in Australia. For the mining engineer the rig had got there on time.”
advance a truly world-class project is there,” who has worked for some of the world’s top
Brewer says. investment banks, the ability to find and Brewer’s destination of choice in Africa
advance mineral-rich projects in Africa is far is the DRC where he leads lithium explorer
“You have to be on the ground, you have easier than in his own backyard. Force Commodities Ltd. He is also chairman
to be willing to put in the time and the effort of near-term cobalt producer Winmar
of getting out there and meeting people. “We’re in Africa because you’re actually Resources Ltd and is a non-executive director
It’s a place which you can’t operate out of in an environment which is conducive to get of aspiring gold miner Vector Resources Ltd.
an air-conditioned office in West Perth or projects moving,” Brewer says. More recently, Brewer has joined the boards
Subiaco. You’ve actually got to get there, of Metalsearch Ltd (Botswana) and Baraka
get out on the ground, meet a lot of people, “With one of our [Australian-focused] Energy & Resources Ltd (South Africa/
wear out a lot of leather walking down the companies it took us over a year to get a Philippines).
streets meeting government officials and permit to start drilling which I find incredible.
local companies and having meetings which How is that going to assist in growing a A sixth company, Tao Commodities Ltd,
you think may not come to anything, but resources industry in Australia? could soon join them given Brewer and
invariably do.” chairman Mark Connelly’s affection for the
“In the Congo, we signed a JV on one of our continent.
The African opportunity is one Brewer will projects and the very next day we executed
a drilling contract and started mobilising. We – Michael Washbourne

Page 82 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

NEW DEVELOPMENTS

at Copper Project in Botswana

Largest licence holder and explorer in Botswana ( ~11,678 km2) | Planned UK listing during Dec Q 2018

Flagship T3
Project

• Feasibility Study due March 2019 for +10 year open pit mine
• 3Mtpa process plant, 30Ktpa Cu
• Resource upgrade (July 2018) 60Mt @ 0.98 Cu
• 590Kt Copper and 27Moz Silver in current resource
• Well-funded and significant global investor interest
• Target first production from T3 by end 2020
• Mining licence and decision to mine targeted by Q2 2019
• Satellite projects support T3 expansion potential

Exploration

• Tshukudu Metals founded as Botswana operating company
• Significant potential for new discoveries in Kalahari Copper Belt
• Copper Soil and EM Anomalies extend 140km along

Central Corridor
• Major drilling campaign underway
• Two copper belt scale targets (T3 Expansion Project~950km2

and T20 Exploration Project ~3,350km2)
• Strong management and technical team
• All operations based in Ghanzi, with in-country management
• Local employment and training key to success

www.modresources.com.au | ASX: MOD

MOD Resources Ltd Australian-listed copper company actively exploring in the Kalahari Copper Belt, Botswana.
First Floor, 1304 Hay Street, West Perth, Western Australia 6005 | (61 8) 9322 8233 | FollAoUwSuTsRoAnLIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 83

INDABA PREVIEW

Controlling the controllable

Lycopodium recently delivered Perseus’ Sissingue gold project in Cote d’Ivoire

In a region with numerous variables out- Ltd’s Sanbrado gold project, the FEED West African gold developments and
side a miner’s control, getting develop- for Perseus’ Yaoure project and Teranga didn’t baulk at appointing Lycopodium for
ment right is absolutely essential if West Gold Inc’s Waghnion project. WAF’s Sanbrado project.
African projects are to be successful.
De Leo said the firm had been able to “If you do all the technical stuff well,
While government policy, security and refill its book by sticking to a methodolo- you de-risk the project and add value,”
health crises must be managed, they can gy which has served it well through more he told Paydirt. “That’s why we hire the
never be controlled but miners can en- than two decades. likes of Lycopodium. It is particularly criti-
sure project fundamentals are delivered cal in West Africa; you have to have guys
precisely. “We don’t take it for granted, because who’ve done it before because it is so
it is still competitive, but we have a tried- dynamic. There are changes every two
“There is nothing worse than when and-proven methodology of being a tech- years. You want to work with someone
decisions you may have made around nically-focused business,” he said. “As who understands that but is also in your
minor things don’t work when you push far back as Golden Pride [built for Reso- own backyard. You have to pay fair mon-
the button to start operations; that can be lute Mining Ltd in 1997], I realised one ey but Perth is a centre of excellence for
disastrous for junior miners because it is of the most important parts is propping mining, why wouldn’t you work with peo-
when they are most vulnerable,” Lycopo- up the soft spots for the client. It may be ple from here. ”
dium Ltd managing director Peter de Leo something that is not in our scope, or
told Paydirt. “In West Africa, you know dealing/helping contractors, particularly De Leo admits Lycopodium is lacking
there’s going to be challenges around on things like admin, safety, industrial re- the mining engineering expertise but be-
logistics, isolation, security, health, local lations, etc. It is the same thing no matter lieves the firm can deliver on every other
content, etc. So, the last thing you want the size of the project.” aspect of project development.
to do is have start-up problems which
were under your control.” The need to conserve capital is always “It is very important for a junior to find
acute for junior developers but de Leo a partner who has done it many times
De Leo speaks from experience. Ly- believes Lycopodium’s reputation could before and dealt with other groups and
copodium has grown into one of Africa’s actually deliver companies additional a group which is strong in the areas they
leading project builders since arriving benefits during the precarious process of aren’t.
on the continent in 1994. Today, its Af- project financing.
rican project book bulges with study “Juniors are typically strong in explo-
and project construction work. In West “For some clients capital raising can ration, marketing and capital raising but
Africa alone it has delivered more than become easier if we are involved be- when it comes to the hard, on-ground
a dozen studies and projects in the last cause funders have a level of confidence stuff, we can do, not only the plant, but
three years including the EPCM services as we have delivered so many times in everything else, including things like re-
for Perseus Mining Ltd’s Sissingue gold the past,” he said. “Having the Lycopodi- location and mine-related infrastructure.
mine, the Ahafo North expansion for um brand attached to your project can be
Newmont Mining Corp and the Agbaou a gold star from a funding perspective. I “We don’t have mining expertise but
and Hounde projects for Endeavour Min- hope we can make a difference for com- we can deliver all the big picture project
ing Corp. panies negotiating for project finance.” things for juniors who perhaps only have
six out of 10 required skills.”
As well as Ahafo North, it is currently West African Resources (WAF) chair-
working on West African Resources man Mark Connelly certainly thinks so. – Dominic Piper
Connelly has been involved in several

Page 84 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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AUSTRALIA’S PAYDIRT DECEwMBwERw20.1p8 -fJwANaUA.RcYo2m019.aPuage 85

INDABA PREVIEW

Walkabout treads cautiously

Walkabout Resources Ltd is not An updated resource is due in De-
rushing to sign offtake agree-
ments for its premium graphite prod- cember following recent drilling and
ucts despite finally being awarded
a mining licence for its Lindi Jumbo trenching which returned several
project in Tanzania.
high-grade hits, including 36.1m @
Development of Lindi Jumbo is
back on the agenda after Walkabout 23.5% TGC from 3m (including 7.1m
became the first graphite-focused
company to be issued with a mining @ 32.9% TGC from 28m) and 27.6m
licence under Tanzania’s new min-
ing legislation. @ 16.9% TGC (including 5.9m @

Until late August when Tanzania’s 18.7% TGC from 13.5m and 12.4m
Ministry of Minerals began issuing
licences, Walkabout had been reluc- @ 22.3% TGC from 34m).
tant to progress offtake and project
financing given the uncertainty sur- Engineering consultants will then
rounding the changes to the mining
code. undertake a revision of the mine de-

“We found that without a min- pletion plan for Lindi Jumbo.
ing licence, there was no point in
discussing either offtakes or fund- “The upgraded resource allows us
ing with any industry participants,”
Walkabout executive director Allan to confidently consider an expansion
Mulligan told Paydirt.
plan in the early years of the opera-
“Everyone, investors alike, said to
us ‘come back to us when you have tion, should the market need us to ex-
a mining licence and we’ll talk’. Now
that we have a mining licence, there pand our production,” Mulligan said.
is a lot more interest in our product
and in partnering with us, but we “We now have a much better han-
need to be prudent with that and not un-
necessarily sign documentation that will dle on the controls around the high
bind us to a potential disadvantage with
stakeholders.” grade and the extensions of them and

Mulligan acknowledged there was being able to sweet spot the orebody,
some market pressure for his company
to sign offtake deals given many in Walk- particularly in the early years, which
about’s peer group had locked away
agreements for their graphite products. will significantly reduce the mining

However, he pointed to the fact first- risk. We expect it will be a near-sur-
mover Syrah Resources Ltd only last
month signed its most significant offtake face operation in the first 5-10 years
agreement – Qingdao Taida-Huarun
New Energy Technology Co Ltd has and we will at least be able to main-
agreed to purchase 20,000t of natural
flake graphite before August 31, 2019 – tain our 16% TGC reserve grade.”
despite it’s Balama mine in Mozambique
being in operation for almost 12 months. Walkabout last month also rat-

“It’s a bit unrealistic to expect little tled the tin for $3 million via a SPP
companies like ours to be signing bind-
ing offtake agreements when the largest which was underwritten by Paterson
producing company takes a year before
it signs its most significant one,” Mulligan Allan Mulligan Securities Ltd. Funds will be directed
said. towards brokering project finance for

“Binding offtakes really are condi- Lindi Jumbo over the coming months.
tionally binding because until you have
product in a bag ready to ship on a fre- some certainty in the market and accept- Mulligan is confident there are no
quent basis, your offtake really has no
binding capacity. However, we acknowl- ance of our product by the industry and further impediments standing in the com-
edge that investors need to see there is
the relationships we’ve continued to form pany’s way of landing project finance from

over the last year and a half from our po- a legislative viewpoint.

tential offtake partners. “We still find there is a bit of resistance

“Discussions have continued and we to the concept of Tanzania, but when you

are now embarking on a very strong look in isolation at our project and its plan

product marketing drive to cement those moving forward we quickly overcome

relationships and others into a more that,” Mulligan said.

comprehensive market strategy. “Working in Tanzania now, I’m confident

“We’re confident our product will be that although there are unanswered ques-

sold – we’re more than confident – be- tions which remain, these will be resolved

cause it’s such a premium product, but it over time through dialogue and discussion

will come down to the price, the competi- between industry and the Ministry. We

tion, the size of the market and the state modelled these changes very early after

of the market.” the amendments [were announced] and

With the legislative issues in Tanzania we found none of them were game chang-

largely settled, Walkabout is now clear to ers, so we’re confident we can move for-

revisit plans to develop an initial 40,000 ward.

tpa mining operation at Lindi Jumbo. The “In terms of the local ownership, we are

small-scale start-up approach will attract now moving into the process of finding our

a capex of $US29.7 million, according to local 5% partner and striking a deal with

the revised DFS. them. We don’t find any of the other issues

Lindi Jumbo is one of the highest- so onerous that we can’t work with them.”

grade graphite projects going around, – Michael Washbourne
with an average life-of-mine feed grade

of 16.2% TGC, allowing for low operating

costs of $US349/t FOB.

Page 86 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

Syrah sizes up its graphite opportunity

To say Syrah Resources Ltd has en- at Balama. During the repair period, the However, Syrah appears to have won
dured a challenging first year of opera- company operated a bypass and brought back favour with the investment community
tions at its Balama graphite mine in Mozam- forward planned maintenance and produc- – shares traded above $2 in November –
bique would be a massive understatement. tion optimisation works to reduce future after landing binding sales contracts with
planned downtime incidents. key customers in China.
If lower than expected recoveries which
impacted the company’s ability to fulfil its Verner expected recoveries would quick- Qingdao Taida-Huarun New Energy
sales contracts wasn’t enough of a blow, ly lift towards the targeted 88% soon after Technology Co Ltd has agreed to purchase
fire damage to the primary classifier screen operations resumed due to the improve- 20,000t of natural flake graphite from Bal-
unit of the Balama processing plant stripped ment work completed on the back end of ama by August 31, 2019. Based in Shan-
the graphite trailblazer of $US500,000 and the plant. Syrah reported average recover- dong, the group is focused on research and
an estimated Q4 production loss of 30,000t. ies of just 47% in July and 57% in August, development and produces carbon materi-
although the exit rate was about 70% by the als, including spherical graphite for battery
Balama was down for five weeks as re- end of the month. anode inputs.
pairs to the primary classifier were under-
taken following the early October fire inci- Balama produced 38,700t in the Sep- Syrah also struck a deal with expand-
dent, which was reportedly due to hot work tember quarter, up 83% on the June quar- able graphite manufacturer Qingdao
being carried out below the unit in contra- ter and accounting for more than half of the Freyr Graphite Co Ltd for 6,000t of coarse
vention of standard operating procedures. 71,100t churned by the operation to date in flake natural graphite from Balama over a
2018. Mill feed also increased 64% over the 12-month period.
However, Syrah used the downtime last reporting period.
wisely to address Balama’s recovery is- Verner said it was pleasing to see the
sues and secure crucial sales contracts “Obviously we’ve had some challenges company convert some of its spot contracts
with key Chinese customers, both of which with achieving the recoveries through flota- into longer term agreements.
will hold the company in good stead for a tion that we had initially targeted, but most
better 2019, according to managing director of that has been around process control “Over the last six months in particular,
Shaun Verner. and optimisation,” Verner said. we’ve been focusing on building a reputa-
tion in terms of product quality, delivery
“It’s obviously disappointing to have an “So, the finished product grade has been consistency, etc and we’ve had a number of
outage caused by a fire and over the life very good, product quality has been very spot contracts,” he said
of the asset it’s really only a short period, good and the progress that we’ve made
but in the grand scheme of our ramp-up it’s on improving our recoveries has been very “Our volumes have been building nicely
actually a significant outage,” Verner told positive, albeit interrupted by the fire. on the sales side of things, so to see that
Paydirt. start to convert into term contracts of these
“We’ve run throughput very close to ca- sizes and in these areas is really quite grati-
“The main issue that became apparent to pacity at the front end of the plant…but fying. Hopefully there are many more to
us was that it just interrupted the great mo- the challenge at the back end of the plant come.”
mentum we had around the ramp-up and meant that we hadn’t run at full capacity
the improvement in recoveries. But, we feel because we hadn’t been achieving those According to Verner, Syrah has 120,000t
very confident as we come back online that recoveries.” placed under term contracts plus multiple
we will pick up that momentum very quickly. spot contracts still in play. At its peak, Bala-
Verner cannot escape the negative im- ma has a reported capacity of 350,000 tpa.
“We’ve actually been able to do a lot pact poor recoveries during the first six
through the outage period to continue months of production had on his company’s Syrah’s customer base is also split
looking at our process control and some ability to sell product and it fell behind on evenly between those in the industrial
optimisation efforts that we had under way some contracts. markets and those in the growing battery
around the plant to ensure we can come space. Verner said this had been a delib-
back online with an even better recovery Syrah investors also reacted angrily to erate ploy by the company, although he
rate than we had previously.” the results with the company’s share price acknowledged the long-term plan was to
plunging from almost $5/share at the start have a 70:30 split favouring the battery-
Syrah confirmed in early November the of 2018 to as low as $1.36/share during Oc- powered segment of the marketplace.
replacement primary classifier unit had tober, making it the second most shorted
been installed and commissioned ahead stock on the ASX for the calendar year be- “We see very much that the current vol-
of schedule and production had resumed hind retailer JB Hi-Fi. ume base in the market is still driven by
industrial customers, particularly the steel-

Syrah has flagged improved graphite
recoveries much closer to its 88% target

AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 87

INDABA PREVIEW

making and refractories industry, but in the ma, we felt that without further capital sup- Shaun Verner
long term – and it’s building at the moment port we couldn’t move ahead as quickly as
– battery demand is going to be much more we wanted to in Louisiana, so that was one tracts and positive experience in Mozam-
significant than the existing industrial mar- of the two main catalysts for the equity raise,” bique so far means it will always have one
ket,” he said. Verner said. ear to the ground for any future growth op-
portunities.
“So, we felt that as we entered the market, “There are different views in the mar-
it was really important that we satisfied both ket about where value lies in the company. “We’ve found both the Government and
of those key market segments and we’ve Some people see the very high-grade, long- the community very supportive of the devel-
been very pleased with how that’s evolved life nature of the Balama asset as the key opment of the Balama operation and they
to this point. But, in the long term, our prod- to long-term value in Syrah, others see the are both very keen to see natural resources
uct split will be about 70% fines graphite and potential exposure to the downstream bat- development in Mozambique,” Verner said.
that’s most strongly suited to the battery in- tery anode material market and the differen-
dustry, so it was important we established tiation from Asian production as a key value “We’ve been really pleased with the level
that position early.” driver. of support at the district level, the provincial
level and the national level and certainly the
Just prior to the fire incident at Balama, “We actually see them as being equally recent finalisation of the administrative court
Syrah unveiled a $94 million capital rais- important. So, the market reaction to the approval of our mining agreement gives us
ing which was intended to shore up the raise depends, to some extent, on which val- greater certainty around the stability of our
company’s working capital position during ue lens people look at the company through. operations in Mozambique for the coming
the ramp-up of production in Mozambique, 25 years.
while also advancing its downstream battery “For whatever views that are out there in
anode plant in Louisiana, US. the market about the company, in the end “Graphite is, of course, not something
it is about production, safety, cash flow and many of the larger mining companies around
Some sections of the market queried the profitability that people will assess the suc- the world have looked at, so it’s a really excit-
raise, but Verner urged investors to look at cess of the company by in the longer term. ing space for us to be in right at this moment.”
the bigger picture opportunity the company From our perspective, as a leadership team
was seeking to take advantage of given its in Syrah, that’s what we focus on.” – Michael Washbourne
first-mover status in the non-Chinese graph-
ite space. With operations at Balama yet to achieve
consistency and the Louisiana battery plant
Syrah was targeting production of unpu- only just firing up, Syrah is not likely to be in
rified spherical graphite at the time of print, the market for additional project opportuni-
with the first purified material to follow in ties anytime soon, according to Verner.
early 2019.
However, the company’s exposure to the
“Given where the ramp-up was at Bala- battery minerals industry via its sales con-

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Page 88 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Sovereign sizzles with saprolite

Sovereign Metals Ltd has portion of additional resource has not
emerged as potentially the low- yet been converted to reserve.

est cost graphite producer of its With the wet season approaching at

peer group in East Africa. the time of print, Sovereign was look-

A PFS on the company’s Malin- ing to quickly wrap up a geotechnical

gunde project in Malawi found graph- drilling programme with some addi-

ite concentrate could on average be tional waterbore monitoring holes.

produced for just $US323/t over the “That will pretty much be the end of

life-of-mine (16 years) and as low as all the drilling we have to do because

$US284/t after the seventh year of the deposit is totally drilled out and

production. we’ve done most of the other techni-

Mine-gate LOM costs are expect- cal, waterbore and geotechnical drill-

ed to average $US257/t and could ing,” Stephens said.

also drop as low as $US218/t after Soft saprolite ore at Malingunde means no drill Sovereign has already rolled into

the seventh year of production. and blast or primary crusher is required a DFS which it hopes to complete by

Sovereign managing director Ju- May/June, with the company to soon

lian Stephens attributed the expected – to access the Nacala deep water port on begin a pilot plan run aimed at produc-

low operating costs to the soft saprolite ore Mozambique coast via the group’s rail lo- ing 4-5t of graphite concentrate from pro-

which hosts the main Malingunde deposit, gistics corridor. cessing a 50t sample. Material produced

resulting in a low strip ratio, free-dig mining “The line capacity is 25 mtpa and 5 mtpa from the pilot plant run will then be sent to

and no drill and blast required. of that is allocated to Malawi export freight, potential customers for assessment and

The saprolite ore also offers a number of which would include us,” Stephens said. marketing purposes.

cost benefits on the processing side with “The other key point is electricity infra- Stephens said his company was looking

no primary crusher or grind required to pro- structure. We don’t have power to site at to sell its products into both the traditional

duce an average 52,000 tpa over the life- the moment, but there’s significant invest- refractory markets as well as the emerging

of-mine. ment going on right now into power and battery technology space.

“This is not some sort of new style of min- infrastructure in Malawi and that will culmi- “I believe a good graphite project has to

eralisation or anything like that,” Stephens nate in 2024 with a substation being built be able to sell material into the traditional

told Paydirt. within 10km of the site. We just have to run industrial market which is dominated by re-

“Graphite has been produced from Mad- a 10km line into that substation and we’ll fractories and into the growing battery mar-

agascar, in particular, out of these sapro- have available power to site and we expect ket,” he said.

lite-hosted deposits for decades, almost a that will reduce our operating costs even “We’ve already had a number of cold

century in fact, so it’s quite well understood. further.” calls from battery makers and electric ve-

There was a reason they were producing Sovereign’s PFS was based around Ma- hicle makers seeking to source supply or

out of saprolite in Madagascar previously lingunde’s current reserve of 9.5mt @ 9.5% future supply for their battery packs.”

and even currently and that’s because it’s TGC, of which 32% is classed as proven. With the PFS now out in the market, Sov-

simple and relatively low cost.” Stephens expects his company will easily ereign has welcomed the opportunity to

The PFS estimated just $US49 million add to the existing mine life given a large discuss offtake arrangements with a suite

would be needed to build a 600,000 of potential customers.

tpa plant and related mining infra- “The graphite market is in a struc-

structure at Malingunde, about 20km tural change at the moment and that

south-west of Lilongwe, Malawi’s structural change is being paused by

capital city. the emergence of the lithium ion bat-

Key financial estimates from tery technology and we’re seeing a

the PFS include a pre-tax NPV of number of potential offtakers going

$US201 million, IRR of 56% and av- straight to the producer now,” Ste-

erage life-of-mine EBITDA of $US42 phens said.

million, assuming a basket price of “Traditionally graphite has been

$US1,216/t graphite concentrate. sold under very short-term contracts

Stephens said the project’s prox- and not long-term offtake contracts,

imity to key infrastructure was also a hence it’s been difficult to finance

factor in the low operating and capi- graphite projects, but that appears to

tal cost estimates. Sovereign is not be changing. We appear to be at an

planning to build a camp as workers inflection point in the market where

will be transported to site from Lilong- large offtakers are seeking to go

we via bus. straight to the primary producer.”

Malingunde is also within 20km of – Michael Washbourne
an operating railway and Sovereign

has signed a MoU with rail provider

Central East African Railways – con- Sovereign has flagged low operating costs of $US323/t

trolled by Vale SA and Mitsui & Co Ltd for its Malingunde graphite project in Malawi

Page 90 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

Castlelake funds flow into Graphex

Graphex Mining Ltd’s proposed devel- legal due diligence and of course project was a positive step for the country. Graphex
opment of the Chilalo graphite project technical due diligence which is where our was granted mining approval for Chilalo in
in Tanzania is back on track after landing updated PFS came from a month or so early 2017 before the new legislation came
a lucrative $US80 million funding package ago.” into effect later that year.
from US-based private investment firm
Castlelake L.P. The updated PFS found a staged pro- “There’s no doubt those mining licences
duction scenario of initially about 58,000 being granted is a positive because prior
Castlelake has signed a term sheet to tpa for two years would require $US43.6 to that there was a significant backlog of
provide up to $US40 million in equity and million of capital, before operations ramp licences building up and them now being
up to $US40 million from the issue of senior up to 104,000 tpa in the third year for an ad- granted shows that the Ministry and the
secured loan notes, effectively guarantee- ditional $US32.5 million, to be funded from Mining Commission are actually process-
ing Graphex will be fully funded through to free cash flow. ing the day-to-day side of things more ef-
the start of production from Chilalo. fectively,” he said.
Key highlights of the updated financials
An interim $US5 million loan has been include a post-tax NPV of $US347 million, “What still needs to be addressed, wheth-
offered to Graphex to satisfy the condi- post-tax IRR of 131% and payback of just er it’s for us or any of those companies
tions precedent for the funding package, 0.84 years. An average LOM operating cost that have just been recently granted min-
including completion of a BFS, execution of $US500/t FOB Port of Mtwara is also es- ing licences, are the clarifications required
of material contracts and the resolution of timated, assuming a forecast basket price around certain legislation to free up project
some issues relating to Tanzania’s mining of $US1,777/t. finance for development. It doesn’t matter
legislation. what commodity or project you have, the
An infill drilling programme targeting an financiers are going to have generally the
Castlelake’s funding package is undoubt- increased reserve life (6.3 years) was wrap- same issues regarding the legislation.
edly welcome relief for Graphex after the ping at the time of print.
company’s previous project financing plans “We feel the Government are open to mak-
with a Chinese group were scuppered by Hoskins said the company was expect- ing changes, but just need the right tools and
the prolonged uncertainty which followed ing the BFS to closely mirror the staged ap- the right information to be able to do that.”
the announcement of the changes in July proach and cost outcomes outlined in the
2017. updated PFS. – Michael Washbourne

“We’ve always said the value of this pro- “Our original PFS was concluded in late Graphex has secured up to $US80 million
ject is unlocked by its funding,” Graphex 2015 and between then and now we’ve of funding for its Chilalo graphite project
managing director Phil Hoskins told Paydirt. spent a substantial amount of time in China
understanding what end-users want for in Tanzania
“The economics are extremely compel- particular size graphite flakes,” he said.
ling and even with the cost of debt and
expected dilution from this transaction, the “We’re very glad we spent
potential upside to our share price is ex- that time because through
tremely strong and that’s why it was a no the strategic investors we
brainer to work alongside an experienced were dealing with at the time
resources investor like Castlelake to devel- in China, we were introduced
op this project. We expect we’ll deliver very to people that were able to
strong shareholder value.” dramatically improve our flake
size distribution, targeting a
Castlelake, which has $US13.7 billion of slightly different product to the
funds under management, was introduced majority of our peers, and that
to the Graphex story through the junior’s was the driver behind the very
chairman, Stephen Dennis, who also coarse flake graphite we can
heads up zinc developer Heron Resources now produce, which in turn
Ltd. The private investment group quizzed is the driver behind the really
Dennis about Graphex following a visit to strong margins in our project.”
Heron’s Woodlawn project in New South
Wales last year, having also expressed a Graphex has also provided
desire to add an advanced graphite play to a submission to the Tanzanian
its investment portfolio. Government detailing how the
changes to the country’s min-
One of the most active resources fi- ing legislations will impact fu-
nanciers over the past 18 months, Castle- ture operations at Chilalo. This
lake also provided funding for Heron at included evidence from inde-
Woodlawn, Altura Mining Ltd’s Pilgangoora pendent experts from project
lithium project and Image Resources Ltd’s finance, political risk insur-
Boonanarring mineral sands project. ance and legal backgrounds,
with no vested interest in the
“Throughout this year Castlelake con- graphite hopeful.
ducted desktop due diligence on our peer
group before deciding they wanted to work Hoskins said the recent
with us,” Hoskins said. “They have then award of mining licences to
spent the rest of this year undertaking some ASX-listed companies
graphite market due diligence, Tanzanian also operating in Tanzania

AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 Page 91

INDABA PREVIEW

Kasbah heads for Japanese
debt markets

Russell Clark

Japan has emerged as Kasbah Re- with financial benefits. Mediterranean region) and reduction of
sources Ltd’s most likely source of “At a $US21,000/t tin price, the IRR for the project schedule.
funding thanks to the tin junior’s JV part-
ners opening dialogue with Japanese in- Achmmach is 23% but with Japanese “Ausenco will take the feasibility study
dustry agencies. funding where interest rates are Libor- and tighten everything up,” he said. “The
plus-1% – versus Libor-plus-4-5% else- FEED will test if the plant can actually be
A June DFS indicated Kasbah needed where – gearing is 70% [against 50%] built and will strip out some costs.”
$US96.4 million to build its Achmmach and the loan term is 10 years [against
tin project in Morocco. With Japanese 6-7 years from traditional banks] the Kasbah has already made advances
groups Toyota Tsusho Corp (20%) and IRR becomes 46%. It therefore makes it on capex reduction. The updated DFS
Nittetsu Mining (5%) as project partners, cheaper and reduces the amount of eq- saw the introduction of high-pressure
Kasbah managing director Russell Clark uity Kasbah needs to raise.” grinding rolls and ore sorting into the flow
expects to receive strong interest from sheet. Clark believes the ore sorting in
financiers from the Asian nation. Reducing capital raising requirements particular will make a difference to capex
could prove vital to the project’s chance and opex numbers.
“Since we completed the feasibility of development. Kasbah’s market cap
study in July we have been talking to was just under $11 million at the time of “We are eliminating a third of the mate-
banks and offtake partners and firming print, making Achmmach’s near-$US100 rial before it gets to the plant, down from
up opportunities with our 25% JV part- million price tag a tough proposition for 750,000 tpa to 500,000 tpa which means
ners in Japan,” Clark told Paydirt. “We funding. we can eliminate the third crusher,” he
are keen to get Japanese debt into the said.
project, particularly from export credit “The equity component has always
agencies because groups like Toyota are been a hurdle,” Clark said. “The market Once the FEED study is completed
big users of tin. looks at our market cap of around $11 and if project financing is forthcoming,
million and says: ‘there’s no way they are Kasbah is confident of beginning con-
“Morocco has a good reputation going to raise $50 million’.” struction in 2019.
among the Japanese groups and the
Government wants to attract more min- The higher gearing available through “If the Japanese finance comes
ers.” Japanese agencies would reduce the through – and we are pretty confident it
equity component of project finance and will – we could have this project funded
Toyota Tsusho is currently JV partner Clark is hopeful the company can also by the end of Q1 2019 and be in produc-
and equity holder in ASX-listed lithium eat away at the capex numbers. tion in the second half of 2020,” Clark
producer Orocobre Ltd and Clark is ea- said.
ger to strike a similar deal. In November, the company announced
it had appointed Ausenco to run the “We are talking to the Government
“That model of 25% project equity, FEED programme for Achmmach. Clark about an investment agreement which
15% shareholding and access to Japa- said the FEED’s scope would include would lock in a corporate tax rate, VAT
nese debt would suit us,” he said. optimisation of the process plant layout exemption and other things.
and design, reduction of project costs
As well as providing a funding source through efficient design and effective “The real trick is the funding but that is
close to potential markets, Japanese ex- sourcing of materials (including from the what is holding everyone up at the mo-
port agency debt would also likely come ment.”

– Dominic Piper

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INDABA PREVIEW

Celsius stays
on course

Brendan Borg Celsius plans to release
an updated scoping study
for Opuwo in late Q1 2019,
followed by a PFS about
six months later

Celsius Resources Ltd managing di- substantiate those numbers.” PFS work programme at all,” Borg said.
rector Brendan Borg is adamant Borg confirmed to Paydirt the ASX’s “It’s just that we actually will be pausing
there will be no interruptions to his com- part way through that work programme
pany’s PFS work programme after the co- queries related to the base case pro- and updating the market with the latest
balt hopeful was forced to go back to the cessing option for the project. Celsius is information that we have for the scoping
drawing board following a lukewarm re- looking to produce refined products such study.”
sponse to a scoping study on its Opuwo as cobalt sulphate (or hydroxide/metal),
project in Namibia. copper metal and zinc sulphate by either Celsius has also opened talks with po-
autoclave or roasting methods, with the tential offtake partners for Opuwo, having
ASX restrictions prevented Celsius latter used as the base case in the scop- previously received interest from groups
from releasing any financial or produc- ing study which was released last month. in Europe, Japan and South Korea.
tion numbers on Opuwo, something
which prompted several shareholder in- Celsius began the scoping study with “We’ve signed confidentiality agree-
quiries, according to Borg. the low pressure, low temperature auto- ments with a lot of those groups and now
clave as its preferred processing option. that we’ve got this scoping study avail-
Due to the restrictions, Celsius was However, as the study neared comple- able, we’ll be able to provide all the in-
only able to confirm the potential for a tion, the company undertook some work formation that we have gathered up until
large-scale, long-life operation at Opuwo on the traditional sulphating roast pro- this point to those groups and advance
and that there were no technical or logis- cess and found it to be marginally cheap- those discussions, despite the fact that
tical impediments standing in the way of er than the autoclave. we haven’t been able to release all of the
project development. information to the market,” Borg said.
Test work on both processes will be
Following the release of the scoping carried through to the PFS. “The aim is to have some non-binding
study, Celsius immediately launched into offtake agreements in place by the time
a work programme for a PFS due in Q3 “We think there’s still a lot more im- we report the PFS and then look to con-
2019. However, the company now in- provement to come out of the autoclave vert those non-binding offtake agree-
tends to publish production and financial process by virtue of the fact we’re still ments into binding agreements during
metrics in an updated scoping study in developing that process and working out the final feasibility study, assuming the
late Q1 2019 following further metallurgi- the parameters to get it to work as well as project continues to stack up.”
cal and resource work. it can, in terms of that operating cost and
reagent consumption,” Borg said. Despite LME cobalt prices losing al-
“We had intended to put that informa- most half their value in the second half
tion out with that release of the scoping “At the moment the more traditional of 2018, Borg remains convinced his
study, but we had to deal with several tried-and-true tested sulphating roast company is in the right space given the
ASX inquiries around some of the in- process is probably our base case, but outlook for the emerging battery mineral.
formation that was within the scoping we’re keeping both of those options open
study,” Borg said. as we move through the PFS and ulti- “We are extremely bullish as to where
mately work out what the best metallurgi- the world will be in 3-4 years time in
“We got to a point where, as a board, cal processing will be.” terms of the adoption of electric vehicles
we had two choices; we could argue the and the adoption of storage options for
toss with ASX and try and get that in- Celsius has re-engaged its metallur- renewables,” Borg said.
formation released to the market or we gical consultants to undertake that pro-
could take what we ultimately think is a cessing test work and only has a small “Assuming the demand for cobalt re-
more prudent approach and make sure amount of drilling left to complete as part mains strong, assuming the uptake of
we properly address those queries relat- of its PFS work programme. electric vehicles and energy storage
ing to the metallurgical flowsheet and the continues to gain momentum like we’re
resource categories and then come back An updated resource estimate – cur- seeing it doing already, we’re confident
to the market with an updated scoping rently 112.4mt @ 0.11% cobalt, 0.41% Opuwo has a role to play in this cobalt
study, with those financials and produc- copper and 0.43% zinc, based on a story for the years ahead.”
tion data in there, once we’re able to fully 0.06% cobalt cut-off grade – for Opuwo
is due in December. – Michael Washbourne

“There will be no interruptions to the

Page 94 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

DRC banks tipped to
plate up Kalongwe

Nzuri Copper Ltd appears to have found prefer to secure debt funding before tap- ing on the cake, we’re more copper with
a potential source of debt finance for ping the equity markets to round out its great cobalt grades.”

its Kalongwe project only a stone’s throw financing solution for Stage 1 develop- Hudson said the company was con-
tinuing discussions with potential financi-
away from the copper-cobalt resource it ment of Kalongwe. ers based outside of the DRC, insisting
only those who would not invest in the
is seeking to develop in the DRC. According to the updated DFS re- country before the Mining Code changes
came into effect have not returned to the
With the wet season halting con- leased last April, Stage 1 development negotiating table.

struction works at Kalongwe, Nzuri has will entail a conventional open-pit mine In the meantime, Nzuri has undertak-
en several early construction activities
stepped up its efforts to piece together and on-site 1 mtpa DMS plant churning at Kalongwe to ensure it is in the best
possible shape to become a mine when
a financing solution for the $US53 mil- 18,657 tpa copper and 1,370 tpa cobalt project finance hits the company’s bank
account.
lion project, about 60km south-west of over an initial eight-year operating life for
The entire Kalongwe permit is now
Kolwezi. C1 cash costs of $US0.85/lb. fenced around the perimeter and the
new camp accommodation and core
Multiple DRC banks have expressed Cash flow from Stage 1 operations is shed facilities are in operation. Designs
for an access road to site have also been
an interest in providing debt finance for then to be directed towards development completed, with its construction the first
item on Nzuri’s agenda post the wet sea-
the project, leaving the Nzuri manage- of a $US220 million SX-EW circuit for son.

ment team with plenty to consider as it processing of DMS-generated mineral- Nzuri finalised a FEED study during
the September quarter with project en-
weighs up the ideal mix of funding for de- ised rejects and cobalt-only ore. gineering now at 35% design completion
and capital accuracy improved to within
velopment. Nzuri may well have landed project fi- 10%.

“Getting our financing in country would nance by now if not for the fallout from “We’ve issued construction earth-
works drawings for pretty much every bit
the changes to of infrastructure on the project, so all the
roads, process plant, the camp, we’ve
Nzuri is seeking to develop a conventional open-pit and the DRC Mining got ready-to-build drawings for,” Smits
said.
on-site 1 mtpa DMS plant at its Kalongwe copper-cobalt Code which drew
“We’ve got the plumbing designed for
project in the DRC the ire of some of the camp all ready to go and all the equip-
ment taken to a purchase stage. We’ve
the world’s leading almost finished the full design for the tail-
ings dam, including the build manual, so
miners, including we’ll be able to do all of the earthworks
from day one. I don’t think many compa-
Randgold Resourc- nies in our position would have designed
drawings for their tailings dam.”
es Ltd, Glencore
Brisbane-based test work on DMS
and MMG Ltd. samples – some of which will be distrib-
uted to potential customers – was due to
One of the big- wrap at the time of print, while the ap-
pointment of an EPC contractor is also
gest criticisms from understood to be imminent.

that group – all of Exploration budgets were also being
finalised with the company looking to fol-
which have major low up on promising results from the last
field season at the Kalongwe SW and
operations in the Monwezi 2 prospects.

country – was the – Michael Washbourne

increase in royal-

ties, in particular

a potential 10%

tax on cobalt if the

obviously cover us from a sovereign risk DRC Government deems the key battery

point of view,” Nzuri chief financial officer mineral to be a “strategic substance”.

Hannah Hudson said. “I think it’s always “Certainly the Mining Code affected

a good look to try and source as much as our discussions [with potential financi-

you can internally. It keeps that funding ers], we were well advanced on other

in country and it shows your support for routes until that Mining Code kicked in,”

the country as well.” Smits said.

Nzuri executive director/chief operat- “There’s no doubt our share price was

ing officer Adam Smits added: “The Min- impacted by the perceptions around the

ing Code has got revisions where you changes because the actual project dy-

now don’t get the tax relief for interest namics, as we published back in April,

over and above the rate of country of ori- aren’t really that affected by the Mining

gin, so there are huge advantages from Code in terms of if the royalties kick in.

a tax point of view to get that funding in “It is a bit frustrating, but we’ll just have

country.” to wait and see what happens. Cobalt

Nzuri’s unofficial target date for final could potentially become a bigger part of

sign-off on a debt finance provider is our income stream – our split is roughly

the start of the new dry season in April. 85:15 at the moment – but it’s too early

Hudson indicated the company would days to say. The cobalt is really just ic-

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INDABA PREVIEW

Roxgold drills for growth

Roxgold Inc president and chief execu- next year is find something where we’re just reminding people that this a plus 0.5
tive John Dorward has described find- looking internally at a possible extension moz resource that’s got depth extensions
ing additional feed for his company’s ex- of mine life or something that would sup- well below 1,000m and should be mining
panded processing plant at Yaramoko in port another expansion. I think that would for many years to come.
Burkina Faso as a “tasty problem to have”. be a really tasty problem to have to tackle
and deal with.” “I think people get a little bit wrapped up
The unheralded TSX-listed gold pro- in your reserve statement and think that
ducer is set to churn at least 150,000 ozpa Roxgold has invested $US30 million on you come to a hard stop at the end of your
from Yaramoko in 2019 with the final works the Bagassi South expansion as well as a reserves. Most mines continue beyond
to increase milling capacity by nearly 50% further $US22-26 million on other under- that, they’re hard to kill, they want to keep
on track to be completed at the time of ground development work at Yaramoko. living. Sometimes you just need time and
print. The company also increased its explora- money to keep unlocking the secrets.”
tion budget mid-year from $US9 million to
First development ore from Bagassi $US12 million. Roxgold reported a record 78,537t –
South – Yaramoko’s second mining centre 15% above nameplate – was processed at
alongside the principle 55 Zone deposit – The drill bit delivered in spades for Yaramoko during Q3 2018, helping to pro-
was delivered to the ROM pad in late Oc- Roxgold during 2018 with headline hits of duce 30,532oz for cash operating costs
tober. Stoping ore is slated for delivery in 10.1m @ 19.5 g/t gold from 576.6m, 2.1m of $US454/oz and AISC of $US788/oz.
Q2 2019. @ 34.1 g/t from 604.2m, 16.5m @ 6.9 g/t Operating costs per tonne produced were
(including 1.1m @ 33.9 g/t) from 600m and down 7% for the quarter and 6% for the
With operations at Yaramoko continu- 5.4m @ 9.2 g/t (including 0.4m @ 80.3 g/t) first nine months of 2018.
ing to exceed most expectations, Roxgold from 907.2m within the 55 Zone.
will put more time, money and effort into Yaramoko has delivered 106,812oz to
exploration in 2019 in a bid to extend the Roxgold recently appointed experi- date in 2018 and is on track to hit the upper
mine life beyond the current nine years. enced West African geologist and former end of the revised guidance of 120,000-
Newmont Mining Corp exploration director 130,000oz (up from 110,000-120,000oz)
“The real focus of the company now be- Paul Weedon as its new vice-president of for cash operating costs of $US450-475/
comes looking for additional deposits in exploration to lead the company’s push oz (down from $US450-500/oz) and AISC
and around where we are,” Dorward told for additional discoveries. Seven drill rigs of $US740-790/oz (previously $US780-
Paydirt. were turning at 55 Zone and Bagassi 830/oz).
South at the time of print.
“We’re pretty motivated to extend the Roxgold also achieved a higher EBITDA
contribution from Bagassi South, either “The 55 Zone, the principle deposit, is of $US16.9 million and EBITDA margin of
through extending the two zones that we wide open at depth and we’ve got some 45% for the September quarter, compared
have there to date, which we’re working of the widest intercepts we’ve ever hit at to $US14.3 million and 40% respectively
on and I think we have good prospects depth and we are following up on those,” for the corresponding period a year earlier,
for, or finding additional zones to main- Dorward said. with operational cash flow of $US18.6 mil-
tain that higher production rate around the lion in Q3 2018 and $US75.1 million for the
150,000oz mark. Then there’s extensions “We’ve got some deep holes in pro- year-to-date.
to the 55 Zone at depth and we’re also gress, some of which are aimed at con-
looking for other structures. verting inferred to indicated and also trying Cash on hand at the end of the quarter
to extend the inferred envelope, and really was $US71.2 million, with operations gen-
“What I’d like to be able to do sometime erating a strong return on equity of 22%.

Roxgold is set to expand its milling capacity at Yaramoko by almost 50% Dorward said one of the unrecognised
highlights of his company’s year was its
ability to fund the Bagassi South expan-
sion entirely from operational cash flow.

“One of the tasks that we set ourselves
was not to be just another gold company
that always has a nice story to tell, but
needs to go back to its shareholders to pay
for it,” he said.

“We had good support through 2012 to
2014/2015 and we’d like to be able to show
them that the money which has gone in
actually shows a return. Bagassi South,
for example, has a plus 50% IRR, a re-
ally solid brownfields organic opportunity
we’ve been able to fund ourselves. So, in
terms of return on equity, which is metric
we use and look at quite closely, we think
we can maintain that plus-20% return on
equity that we’ve shown for the last couple
of years.”

– Michael Washbourne

Page 98 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT

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INDABA PREVIEW

AUMS sprouting sunny outlook

The team behind African Underground for major African projects were a com- Sessions said.
Mining Services (AUMS) has every petitive process. “At the moment we’re on the preci-

reason to be optimistic about the future. “There’s still contracts awarded with- pice of another uptick in the industry as

With estimated month-to-month rev- out the genuine competitive tender pro- a whole, but especially in Africa with a

enue growth of about 25% for the past 12 cess by relationships and associations, number of quality people required as

months, AUMS has well and truly estab- potentially more in the southern and mines expand and grow and more green-

lished itself as the leading underground maybe eastern regions, but for a Tier 1 fields jobs come on stream.

contractor on the African continent. mining company or even a mid-tier West- “With a lack of graduates coming out

That reputation was reaffirmed re- ern stock exchange-listed company, of schools and just a simple, smaller

cently with the award of a $US375 million generally the mines are put out for tender pool of expatriate workers to pick from,

underground mining services contract at rather than as an owner-operator, espe- there’s some obvious restrictions, but

AngloGold Ashanti Ltd’s Obuasi mine in cially in an underground environment,” in saying that, if we have the right

Ghana. Sessions said. training systems and mechanisms in

According to AUMS chief operating “That tender process is obviously country and we use our simulators and

officer Blair Sessions, it was one of only driven to Western standards, as you up-to-date equipment, which is produc-

two African-based tive and offers us a

underground con- competitive advan-

tracts up for tender tage, then I think we

in the past year. The can easily train an

other – a $US211 mil- African workforce

lion contract at Se- to counteract that

mafo Inc’s Siou gold problem.”

mine in Burkina Faso Sessions is not

– was also awarded expecting work to

to the group, a 50:50 slow down anytime

JV between Ausdrill soon with AUMS

Ltd and Barminco also assisting on

Holdings Pty Ltd. several potential fu-

“We like to think ture mines in Africa

that we’re the pre- currently subject to

ferred nominated feasibility studies.

contractor within that The merger of

business space in Af- parent companies

rica, based on our de- Ausdrill and Barmin-

liverables to our other co had minimal im-
clients and the refer- AUMS has cemented its reputation as the leading underground contractor in Africa pact on the AUMS

ences we get from business, according

them,” Sessions told Paydirt. would expect an AngloGold Ashanti to Sessions, who said operations were

“It’s been a pretty full-on year for us, or a Newmont [Mining Corp] or a TSX- unaffected both before and after formal

we’ve had a pretty big growth spurt in the listed business to do so.” completion of the friendly union.

last 12 months, picking up two jobs and About 550 people are expected to be “What it does is free us up in terms of

expanding another by almost 100%. employed at Obuasi during AUMS’s five- size and opportunity,” Sessions said. “It

“Africa has its ups and downs, but year term with the workforce expected to delivers a higher capital ability within the

we’re certainly in an up phase at the be predominantly Ghanaian, with some business and will obviously give us the

moment and there are a lot of projects expats providing training and specialist opportunity to drive further growth on the

coming on-stream with a fairly big growth skills. continent.”

pipeline over the next 2-3 years as well.” Sessions said most African countries AUMS continues to boast an impres-

The services contract at Obuasi is which AUMS was currently operating in sive safety record of zero LTIFR in Af-

a 70:30 JV with local Ghanaian mining were pushing for more local participa- rica and the lowest TRIFR of any under-

contractor Rocksure International. While tions at the mines. However, he conced- ground mining contractor in the world.

not yet in law, Ghana is verbally encour- ed that was presenting some challenges Only one LTI has been recorded in the

aging foreign entities to incorporate a lo- due to the lack of skilled workers avail- business over the last 4.5 years, despite

cal partner on projects such as this. able in some areas. AUMS having a workforce of more than

AUMS rounded out a big 2018 with an “Both Tanzania and Ghana are push- 1,000 people.

extension of its existing contract at Rox- ing heavily into local participation, which “Anyone who visits our mines will see

gold Inc’s Yaramoko gold mine in Burkina we’re happy to participate in obviously an operation that would look no different

Faso. The revised award includes mining because it engenders not just the right 10km out of Kalgoorlie as it does 300m

services at both the principle 55 Zone attitudes for our people and what we in- from any coast in Africa,” Sessions said.

deposit and the upcoming Bagassi South tend to do with the business in Africa, but – Michael Washbourne
underground mine. it also transfers skills and the ability to

Sessions said most contract tenders educate people within those countries,”

Page 100 DECEMBER 2018 - JANUARY 2019 AUSTRALIA’S PAYDIRT