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Published by Paydirt Media, 2017-04-10 03:29:23

pd248 April17 mag-web

April 2017 VOLUME 1. ISSUE 248 $11.95

paydirt

front and back cover
supplied seperately

Walkabout
marches on
• Australian Graphite Conference preview
• Queensland focus ISSN 1445-3436
03
• Specialty metals spotlight
9 771445 343007



CONTENTS

PAYDIRT (ISSN 1445-3436) 7 NEWS 20
Published by South African-based columnist Brendan 28
Paydirt Media Pty Ltd. Ryan reports on the deals being done in 80
A.C.N. 063 985 133 the country’s downtrodden platinum sec-
tor, with Sibanye leading the charge. As
Head Office: producers struggle with thin or non-existent
Suite 9, 1297 Hay St, West Perth profit margins and dollar platinum prices
Western Australia 6005 remain depressed, Ryan believes there is
P.O. Box 1589, West Perth clearly more M&A action to come
Western Australia 6872
Phone: (+61 8) 9321 0355 20 COVER
Facsimile: (+61 8) 9321 0426 As the graphite sector has matured some-
[email protected] what, players in the space have formulated
www.paydirt.com.au their own unique strategies to distinguish
themselves from the pack. Michael Wash-
Editorial: bourne visited Tanzania to find out which
Editor: Dominic Piper path Walkabout is taking with its Lindi
Deputy editor: Mark Andrews Jumbo project and found the company was
Journalists: Michael Washbourne, well on track to deliver a high-grade pro-
Jonathon Daly ject, producing a premium graphite product
Art director: Marian Noonan within a quick timeframe
Contributors:
Keith Goode (Sydney), Brendan Ryan 28 GRAPHITE PREVIEW
(Johannesburg), Ross Louthean Paydirt hosted the inaugural Australian
Graphite Conference in 2016 and its suc-
Advertising: cess means a second coming of the event
Advertising manager: Richa Fuller will take place this month at the Novotel
Subscriptions: Mitchelle Matambo Langley Hotel, Perth. While some compa-
Phone: (+61 8) 9321 0355 nies have stagnated, others have forged
Facsimile: (+61 8) 9321 0426 ahead with detailed studies on projects that
could potentially see the light of day soon.
Pre-press and printing: We take a look at the companies moving
Vanguard Press 26 John St, and shaking in a sector still intriguing many
Northbridge WA 6003
Member of:

Paydirt Media 64 QUEENSLAND
Executive chairman: Bill Repard The massive Carmichael coal mine in
Finance manager: Giovanny Jefferson Queensland is close to receiving a green
Accounts/administration: light to construction. However, environmen-
Heather Melling talists have not given up the fight to have
Conferences: Melita Fogarty, the project, proposed to be built by India’s
Namukale Nakazwe-Msiska, Adani Group, scrapped. Led by former na-
Christine Oelschlaeger tional Greens leader Bob Brown the Stop
Adani Alliance has emerged to derail plans
for Australia’s biggest coal mine. Mark
Andrews reports

Cover image: Walkabout executive 80 AMERICAS
director Allan Mulligan on site at Lindi OceanaGold Corp and Alicanto Minerals
Jumbo, Tanzania are making waves in parts of the Americas
not many other ASX-listed entities would
Member of: be familiar with. Through the acquisition
Australia-Africa Minerals & Energy Group of the Haile gold mine, South Carolina,
OceanaGold gained exposure to the US,
Registered by Australia Post PP 643938/0071. while Alicanto has courted Barrick Gold’s
No pages or articles in this publication may be company in Guyana at the Arakaka project.
reproduced in any form without the consent of Dominic Piper visited both projects and
the publisher. This includes photographs either provides a prelude to features in upcoming
taken by Paydirt Media staff or provided by other editions of Paydirt and Gold Mining Journal
parties

A powerful argument

This edition of Paydirt attests to the struc- good for humanity” was wrong; electrification through cheap, re-
tural and generational change the world’s liable sources is good for humanity, whether that is delivered via
approach to energy is undergoing. coal, gas or renewables doesn’t matter.

While on page 64 you can read about the As we have seen in other sectors – most notably communi-
ongoing debate around Adani Group’s cations – rapid technological development gives the develop-
ing world the opportunity to vault over several generations of
$16.5 billion investment in the Car- technology. Any visitor to Africa will marvel at usage of mobile
michael coal mine in Queensland, phones in Africa which has seen penetration increase from
elsewhere in this issue we include 1-in-10 at the start of the decade to around 45% today, allow-
a preview to the upcoming Austral- ing much of the continent to skip adoption of landline services
ian Graphite Conference (Novo- altogether. According to mobile phone industry group GSMA,
tel Langley Perth, April 27) and a mobile’s emergence in Africa is providing the opportunity for lo-
heavy focus on cobalt in the spe- cal global innovators and tech entrepreneurs to deliver unique
mobile-based solutions that directly appeal to local interests and
cialty metals feature. The presence of both features – and an- cultures.
other concerning lithium late last year – is an indication of just
how seriously the Australian resources investment sector is tak- Renewable and battery storage is likely to deliver similar gen-
ing the renewable energy and storage revolution. erational changes in power supply.

It is undeniable that renewable energy and batteries (whether In the US, President Donald Trump last month issued an ex-
in electric vehicles or home storage) will be the largest energy ecutive order aimed to quash President Barack Obama’s Clean
growth sector globally during the 21st Century. The technology Power Plan and also reverse a ban on coal leasing on federal
is still in its infancy and at this stage incapable of replacing tradi- lands, undo rules to curb methane emissions from oil and gas
tional fuels as a source of baseload power feed but it is advanc- production and reduce the weight of climate change and carbon
ing at a rapid rate. emissions in policy and infrastructure permitting decisions.

My fear is that Australia’s role in this evolution may be ham- However, even such a major move appears unlikely to reverse
pered by an ideological debate which sees energy considered the trend in US energy production which has seen reliance on
only in binary terms; either coal (plus other fossil fuels) or re- coal fall below natural gas in recent years.
newables and battery storage.
Speaking to Reuters, former hedge fund manager Jim Cram-
It is the kind of debate that is debilitating the Federal Govern- er said coal’s contribution to power generation in the US would
ment’s energy policy at the moment. Instead of defining how continue to go down despite Trump’s executive order.
Australia’s energy mix may look decades from now, politicians
and environmental groups are displaying only intransigence, “Most of the coal plants were built when Jimmy Carter said
dogmatically defending their corner. Meanwhile, business and we were the Saudi Arabia of coal and they have a 40-year life,”
industry shake their heads in frustration as they attempt in vain Cramer said. “Even though coal may be deregulated it won’t
to work out the future cost of their energy needs. make a comeback because the utility companies are scared of
it. If Trump loses [the next election] and a Democrat comes in,
This ideological debate is one I have found many usually they’re going to have to scrap their plans for building them [coal-
pragmatic members of the resources industry participating in of fired plants]. So, I don’t think you’ll see a renaissance for coal.”
late. Whether it is in solidarity with the coal industry or because
they have failed to recognise the technological advances be- Neither is Trump’s executive order likely to stop developments
ing made, there is a surprising ambivalence among some re- in the renewables and battery storage sector. As has already
sources industry professionals towards renewable and battery been witnessed in other policy areas, undoing pollution stand-
storage and their growing role in the energy mix. ards will be an arduous process and with 23 states already com-
ing out in opposition to the move, it is likely the Trump adminis-
Coal will remain a vital part of the global energy mix for dec- tration will have yet another fight on its hands.
ades to come. Australia, India, China, the US, Europe; all of
these nations will need coal for many generations and the rise The increasing cost-competitiveness and flexibility battery
in thermal and metallurgical coal prices last year is evidence storage is offering is making the sector more compelling each
that the argument from opponents of Carmichael – that coal is year. Most analysts agree that both electric vehicles and home
on its last legs – is far from accurate. battery storage will reach a tipping point in the coming 15 years
where both prove price competitive against traditional fossil fuel
However, it is also true to say that its importance is on the technologies.
wane. The arrival of cheap natural gas and the increasing so-
phistication of renewable technologies and storage have pro- Coal will continue to play a vital role in the energy mix, particu-
vided coal with genuine competition throughout the world. But, larly in Australia, but to dismiss renewable energy and storage’s
we shouldn’t be blinded by this fact because Australia can play growing influence will be to suffer from the same dogmatism
just as important a role in the emerging energy technologies. By industry opponents display all too readily.
creating the binary debate of coal or renewables, we are in dan-
ger of missing the opportunity to provide leadership in this new [email protected] @DominicPiper
sector. Australia boasts some of the world’s largest reserves of
lithium, cobalt and graphite and it would be folly to give up our
natural advantages due to petty ideological positions.

Coal helped create Australia’s economic standing but devel-
oping nations won’t be as reliant on it in future generations be-
cause of the increasingly complex energy mix.

Former Prime Minister Tony Abbott’s assertion that “coal is

PAGE 4 APRIL 2017 AUSTRALIA’S PAYDIRT

NEWS

Sheffield makes some noise
at Thunderbird

Sheffield Resources Ltd appears to be
heating up financing discussions for
its Thunderbird mineral sands project at

the right time.

The company released a BFS on the

project last month, with a funding solu-

tion that delivers at least $355 million in

new capital via debt, equity and/or a JV

agreement a work in progress.

Zircon and ilmenite – two significant

products at Thunderbird – are experienc-

ing strong prices at the moment, adding

further weight to the robust DFS pro-

duced by Sheffield.

Sheffield managing director Bruce

McFadzean said pricing guided by inde-

pendent experts such as TZMI Interna-

tional indicated ilmenite had rebounded

from lows of about $US85/t 12 months

ago to about $US200/t, while zircon is up Sheffield non-executive director Bruce McQuitty and managing director Bruce

from about $US950/t to $US1,050/t. McFadzean at Thunderbird. A BFS on the mineral sands project

Sheffield’s BFS factors in zircon prices indicated EBITDA of $5.1 billion over a 42-year mine life

of $US1,282/t, $US659/t zircon concen-

trate and $US183/t LTR ilmenite. will of course be subject to financing. cased on the international stage for the

“The ilmenite market, in my view, is too Ideally, Sheffield would like to retain first time in November and Sheffield was

hot,” McFadzean said. 100% of Thunderbird or at the least hold preparing to take the BFS on the road at

“People are trying to pick up the pro- a majority stake in the project. However, the time of print.

duction but I don’t think that they can. A the company was open to discussions on Interest from big funds in North

lot of these mines are a little bit older – various forms of ownership at asset level, America and Europe is encouraging for

those [companies] who have deposits McFadzean said. Sheffield, which plans to have project fi-

where they can increase production – but The company is entrenched in the nancing locked away this year and con-

there is still going to be a supply issue as permitting process and deep into Native struction started in Q4.

we move towards 2020 and I think that is Title and environmental work, which are “I don’t want to sound flippant about

the general consensus view. expected to be completed during this the funding side – clearly $350 million is

“The zircon price has stabilised and quarter and next. not an insignificant amount of money –

I think Iluka [Resources Ltd] reported Off-take discussions are well under but the asset is extraordinary and if you

achieving price increases last quarter way and dovetails into financing talks, look at the cash flows and payback peri-

and this quarter and the feedback we which Sheffield has engaged Azure Cap- od, there’s a lot of interest in the funding;

get, again from the independent experts, ital to assist with. there are a lot of legs and options to that

is that this will continue to increase. Our The Thunderbird project was show- funding too,” McFadzean said.

information was that it was down to “It has been all North Ameri-
can and European [interest],
$US950/t, down the bottom, our in- Thunderbird BFS metrics

formation is now that there are sales Mine life: 42 years (estimate) there are a lot of big funds that
want to be a part of a large
around the $US1,050/t mark.

“They are expecting that to continue Pre-tax NPV: $676 million project and I think when Black-
to grow as zircon stockpiles are further Rock came in with 9% of the
depleted. Stockpiles are held at the Pre-tax IRR: 25% company last year, there’s an

mines and not on the consumer side, LOM EBITDA: $5.1 billion, indicator of how a lot of the big

so I think there is a total rebalancing average $123 million per annum funds see this project.”

there. At the TZMI conference in Hong Stage one capex: $348 million At the time of print, Sheffield
Kong, the view was that zircon was go- appointed Stuart Pether as
ing to be in short supply by 2020. We Stage two: $195 million chief operating officer.

come on in 2019, so I think our timing LOM site costs: $US790/t, $US8.55/t ore mined – Mark Andrews
could be right.”
LOM production: 76,100 tpa premium zircon,
Filling the supply void of ilmenite and 68,500 tpa zircon concentrate, 387,800 tpa LTR
zircon and having an impact on the Hi- ilmenite, 20,300 tpa Hi-Ti88, 229,800 tpa titano magnetite
Ti88, and titano-magnetite markets,

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 5

NEWS

Johnston handed WA
mines portfolio

West Australian Pre- New WA Mines Minister Bill Johnston has confirmed previously approved uranium projects
mier Mark McGow- will be able to proceed
an announced a change
to his Cabinet in an at- McGowan said in a statement. of Mineral and Exploration Companies
tempt to avoid a potential “Once Cabinet was made aware of the (AMEC) congratulated Johnston on his
conflict of interest within
the Mines and Petroleum potential conflict it soon became clear appointment.
portfolio. that managing the AMEC chief executive Simon Benni-

Bill Johnston will take
on the portfolio, after it
was revealed first choice
Peter Tinley had a rela-
tive working in the oil and
gas industry.

Tinley will assume the
housing portfolio from
Johnston and retain the
veteran issues and youth
portfolios.

“This is a responsible
change to State Cabinet to ensure minis-
ters can do their job without any conflicts,
potential or perceived,” Premier Mark

issue would be too son said Johnston’s eight years as the
complex, given the shadow minister for mines and petrole-

portfolio responsi- um gave him a grounding of key issues

bilities and there- facing the mining industry.

fore the matter was “The Minister will need to prioritise

dealt with at the ear- reducing the cost of doing business in
liest opportunity,” Western Australia, lifting investment and

McGowan said. promoting growth in mineral exploration
“Although the to discover the mines of tomorrow,” Ben-

conflict could have nison said.

been managed in “The Minister must urgently repeal

an appropriate man- Mining Regulation 28A, a discriminatory

ner, I have made the regulation that provides the State with a

decision to put the mechanism to charge a ‘rental’ of 25c/t

issue beyond any of iron ore obtained from a mining lease
doubt. The change after 15 years of operation.

reflects WA Labor’s “The Minister must reinvigorate the
commitment to run- reform of environmental regulation and

ning a transparent clarify WA Labor’s policy approach to ap-

and accountable proved uranium projects in WA to provide

government.” certainty to the sector’s investors.”

“The Association
The Minister will need to
prioritise reducing the cost of
doing business in Western Australia,
lifting investment and promoting

growth in mineral exploration to

discover the mines of tomorrow.

PAGE 6 APRIL 2017 AUSTRALIA’S PAYDIRT

BUSH TELEGRAPH

Platinum dance

Tis the season to be doing Reason is he intends using
deals in the platinum sector,
with various mines strained as conventional mining methods
the platinum price sticks stub-
bornly below $US1,000/oz. And, when he re-opens the mine.
the canniest dealmaker of them
all is Northam Platinum Ltd chief Dunne says the reason the mine
executive Paul Dunne.
failed was because original own-
He’s pulled off three deals
over the past two years, all to er Xstrata tried to mechanise its
the great benefit of Northam
with the latest – the purchase of operations but the reef dips too
Eland Platinum from Glencore
– being so one-sided in North- steeply for mechanised mining
am’s favour that it amounts to a
steal. to be successfully implemented.

What makes this rampant There’s clearly more M&A ac-
M&A activity by Northam all the
more noteworthy is that it has tion to come as South African
taken place largely under the ra-
dar screen and been carried out platinum producers struggle
by the unlikely combination of a low-key
executive running a low-key company with thin or non-existent profit
which for many years was considered to
be one of the biggest “dogs” in the plati- margins as the dollar platinum
num sector.
price remains depressed while
That dubious accolade is now held
by Lonmin plc – the world’s third largest the rand is making the situation
platinum producer – which has been on
a downward spiral for the past five years worse.
and shows no signs of letting up.
Despite SA’s litany of political
Far more attention has been made to
the mega deals carried out by outspoken Sibanye’s Neal Froneman has shown a willingness to do woes and the continuing state
Sibanye Gold Ltd chief executive Neal deals in the downtrodden platinum sector of investment uncertainty in the
Froneman, who bought the Rustenburg mining sector because of gov-
division from Anglo American Platinum
Ltd (Amplats) and who, in December, an- Gold Fields prided itself on its deep- ernment’s negative attitude and policies,
nounced a $US2.2 billion deal to buy US
PGM producer Stillwater Mining Com- level mining technical expertise but as the rand is actually strengthening against
pany.
the group soon discovered platinum min- the US dollar which cuts mine profit mar-
That’s a huge deal. Sibanye may have
to raise around $US1.3 billion through a ing is very different to gold mining and gins even further.
rights issue to help fund it. In rand terms,
that amounts to around R16.5 billion for Zondereinde ran into serious technical The weakest link in the industry is
a group with a market cap of only R25
billion at present. problems, which hamstrung the compa- clearly Lonmin and what could happen

Northam’s deals have been far more ny for years. to that group – over which the South Af-
modest in scope but have all been
highly accretive – to use a term greatly The turnaround came over the past rican Government effectively now has
favoured by the dealmakers – and have
not strained the group’s finances. decade as Dunne’s predecessor – chain- negative control because of the 29.3%

Dunne joined Northam in 2014 after smoking, hard-bitten industry veteran equity stake held by the state-controlled
leaving Impala Platinum Ltd (Implats),
where he ran the Rustenburg mining Glyn Lewis – got a grip on Zondereinde Public Investment Corporation (PIC) – is
operations after an alleged bust-up with
then chief executive Terence Goodlace. while developing the new, shallow and the subject of intense conjecture.
Northam was originally set up by Gold
Fields Ltd in the mid-1980s through mechanised Booysendal operation in In the midst of all this industry uncer-
development of the Zondereinde mine
which was to be the deepest mine in the Mpumalanga province. tainty Implats continues to invest in a
platinum sector.
Dunne has built on the base Lewis pro- country where the regulatory and politi-

vided, with his first deal early in March cal situation is even worse – Zimbabwe –

2015 bringing in the mothballed Everest where subsidiary Zimplats is the biggest

mine from the troubled and now defunct platinum miner.

Aquarius Platinum for R450 million. Ev- Zimplats is putting in another $US260

erest was contiguous with the southern million to build the new Mupani mine

boundary of Booysendal and is also be- which will replace the existing Rukodzi

ing developed as a mechanised opera- and Ngwarati mines and maintain pro-

tion. It has also been swallowed up by duction at 260,000 ozpa platinum. This

Froneman. is despite the ongoing feud with the Zim-

Dunne followed up with his most ex- babwe Government over the terms of

pensive deal – the purchase of shallow indigenisation requirements for the mine

mineral resources adjacent to the Zon- as well as government’s latest land grab

dereinde mine from Amplats in October attempt to seize about half of Zimplat’s

last year for R1 billion. The resource will existing lease area.

extend Zondereinde’s economic life by The driving reason is the huge blue sky

10 years. potential for Zimplats if the country ever

He compensated for that financial “lar- comes right while Implats is not invest-

gesse” with the purchase of Eland Plati- ing any new capital in the country. All the

num for a mere R175 million from Glen- money for the new mine is being gener-

core but he’s effectively paying around ated by Zimplats itself.

R75 million because the deal includes a Brendan Ryan is a Johannesburg-based

suite of mechanised mining equipment mining write

at Eland, which Dunne says is worth

around R100 million but is non-core and

therefore a disposable asset.

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 7

NEWS

Lepidico rejects takeover offer

Lepidico Ltd was fighting hard to stave mineralisation the two companies are
off a takeover bid from Lithium Aus- looking for.

tralia NL at the time of print. “L-Max is founded on relatively straight-

The target has remained firm in its forward and very robust chemistry. Lithi-

stance that shareholders should reject um Australia’s process technologies are

what it has described as an “opportunis- aimed at cracking spodumene via much

tic” takeover bid of one Lithium Australia more complex hydro-metallurgical pro-

share for every 13.25 Lepidico shares. cesses. They have also not disclosed the

At the centre of the takeover bid is reagents they are using and they are also

Lepidico’s L-Max processing technol- using a mystery catalyst that they haven’t

ogy, which has encouraged the likes of yet made public as to what that is.

Pioneer Resources Ltd, Crusader Re- “We have been extremely transparent

sources Ltd and Latin Resources Ltd to in our public statements, we have pro-

partner with the company. Joe Walsh vided a full suite of project fundamen-

Lithium Australia has its own Sileach tals and costs – opex and capex – in our

extraction technology for spodumene de- Lepidico’s closing price of 1.4c/share on PFS, whereas Lithium Australia has pro-

posits and has also formed partnerships March 28. vided very little definition surrounding its

with lithium hopefuls Parkway Minerals A research note from Breakaway Re- assets and work programmes.”

NL and Pilbara Minerals Ltd. search recommended a “speculative Parkway has sold its 18% stake in Le-

At the time of print, Lithium Australia buy”. pidico into Lithium Australia’s takeover

declared its takeover offer unconditional “The company has access to valuable bid, however, major shareholder Strate-

after receiving acceptances from all par- technology which could create a leading gic Metallurgy Pty Ltd continues to throw

ties pursuant to the pre-bid acceptance position in the lithium market in years to its support behind the target.

agreements. This will make the Adrian come,” it said. “Successful implementa- In its bidder’s statement, Lithium Aus-

Griffin-led company the largest share- tion of its Phase 1 project [a commercial tralia said a combined group, containing

holder of Lepidico at 17.86%. L-Max processing plant] could provide both the L-Max and Sileach technologies

However, Lepidico managing director a 3.4 times share price uplift as it ap- as well as a suite of lithium exploration

Joe Walsh said his company did not per- proaches first production and its current projects, would be better placed to gain

“ceive any benefits for its shareholders to value is underpinned by the Lithium Aus- market support.
accept Lithium Australia’s offer. tralia takeover offer.” “A combined group will have a strong-

“We have been asking the er balance sheet which will

question internally of why ...why has Lithium Australia provide a strengthened fi-
has Lithium Australia chosen chosen to undertake this offer nancial base with which to
to undertake this offer at this attract further support from

point in time and question at this point in time and question lithium consumers, and in
whether it is out of despera- particular battery-makers,”
whether it is out of desperation due to the company said.
tion due to their business

model being something they their business model being something Walsh conceded the take-
are not able to deliver on,” over bid had created a minor

Walsh told Paydirt. they are not able to deliver on. distraction for his company,
“I think it’s highly oppor- but it was still pushing ahead

tunistic. I think Lepidico is with a DFS on a small-scale

streets ahead of Lithium Australia in In its target statement, Lepidico also commercial L-Max plant, processing lith-

commercialising its technology. It’s going argued that a combination with Lithium ium-mica concentrate.

to be fascinating to see how this plays Australia “makes no strategic sense” and A PFS completed in February found a

out.” the scrip offer would expose Lepidico 3.6 tph operation could produce about

Upon learning of Lithium Australia’s shareholders to “substantial risks” asso- 3,000 tpa of battery-grade lithium car-

proposed takeover in early February, ciated with the bidder’s business model, bonate, as well as a suite of by-products,

Lepidico engaged independent advi- which Walsh said had multiple flaws. for $US35-40 million development capi-

sory firm BDO Corporate Finance (WA) “It’s clear that Lepidico and Lithium tal, with nil or negative C1 cash costs af-

Pty Ltd to review the offer, which was Australia have starkly different business ter by-product credits.

deemed to be “neither fair nor reason- models and I think that can be identified DFS work is set to be funded from a

able” by the tax and audit specialists. by looking at a number of different areas; current entitlement offer which Lepidico

BDO rated Lepidico’s fair value be- namely quality, simplicity, focus, trans- hopes will raise up to $5.6 million.

tween 1.6c/share and 2.1c/share, with a parency and risk,” Walsh said. Recent test work from the Pioneer

preferred value of 1.8c/share, and val- “Lepidico is focused on deposits of Dome project, near Norseman, also pro-

ued the 13.25 Lepidico shares between high-quality, high-grade lepidolite. By duced a high specification battery-grade

21.2c/share and 27.8c/share. At the time contrast, Lithium Australia has stated lithium carbonate with 99.7% purity using

of print, Lithium Australia’s stock was that it is seeking stranded, low-grade the L-Max technology.

trading at 14c/share, implying an offer spodumene deposits, so there’s a clear – Michael Washbourne
price of 1.1c/share, a 24.5% discount to difference in the quality of the source of

PAGE 8 APRIL 2017 AUSTRALIA’S PAYDIRT

OPINION

Heat on in aluminum market

The political heat is rising in the alu- lieve the figures supplied to the IAI by is far more extensive than the winter pol-
minum market, with a trio of indus- China’s Nonferrous Metals Industry As- lution measures and it is already affect-

try bodies calling on the G20 to address sociation (CNIA). ing production rates.

global market imbalances resulting from It seems highly unlikely that such a Environmental inspection teams were

China’s burgeoning output. huge amount of capacity simply went of- in Henan province last month and at

“China’s state-sponsored support is fline last month. least one operator, Linfeng Aluminum

contributing to an unsustainable struc- The largest monthly swing in produc- and Power, closed some capacity as a

tural overcapacity that will impact growth tion in the rest of the world over the past result, according to specialist Chinese

and contribute to heightened instability 10 years was a drop of 584,000t in Janu- aluminum consultancy AZ China.

until it is addressed.” ary 2012, a period of falling prices and Capacity closures across the metals

So wrote the heads of the US Alu- multiple capacity closures. production sector are now increasingly

minum Association, its cross-Atlantic Seasoned aluminum hands have happening pre-emptively ahead of in-

peer European Aluminum and the Alu- grown accustomed to this sort of volatil- spections.

minum Association of Canada in a March ity in Chinese production figures, particu- Moreover, environmental inspectors

15 open letter to the Group of 20 leading larly around the end of both calendar and are returning at regular intervals to check

economies. lunar years, as well as the occasional re- on progress. Shandong province will re-

What they want is the sort of global fo- visions to historic production figures. ceive its fourth environmental check next

rum created to discuss steel overcapac- CNIA shocked the market at the start month, AZ China says.

ity at last year’s G20 summit. of 2016 when it added more than 4mt to Beijing is committed to sending in-

“The charges against China’s leviathan the production ledger over the 2011-14 spection teams to every province over
aluminum sector are largely the same period. the course of this year, including key alu-

as those against its equally minum production hubs such as

huge steel industry. China’s dominance of global Xinjiang.
“Both the massive in- production has left the Chinese policymakers’ search

crease in production and the aluminum market highly vulnerable for “blue skies” has injected a new
excess capacity have had level of uncertainty in the world’s
a downward effect on the to shifts in the country’s policy. largest supplier of aluminum.

prices, generating significant And that means a previously un-
economic and employment known degree of uncertainty in a

losses for our respective pro- global aluminum supply chain that

ducers and economies,” the three asso- It has just sprung another little sur- has historically not been prone to the sort

ciations said. prise; this time deducting 154,000t from of disruptions that plague other industrial

As with steel, trade tensions are ris- 2015. metals, such as copper.

ing with the US taking the lead. It has The official monthly figures, in other All this at a time when aluminum us-

launched a broad complaint about Chi- words, should carry a strong health age is growing fast as the metal takes an

nese aluminum subsidies with the World warning. ever-growing materials share in key sec-

Trade Organisation, while the Aluminum Production seems to be trending high- tors such as transport.

Association has filed a petition seeking er. Taking the cumulative net change Its success has in large part been

anti-dumping duties on aluminum foil. over the past four reported months predicated on a global tendency to over-

All of which is somewhat ironic. (November 2016 to February 2017), na- produce, particularly in China, and the

The price of aluminum traded on tional run rates have increased by about resulting relative low level of pricing vola-

the LME is up 14% this year and, at 925,000 tpa. tility.

$US1,930/t, close to two-year highs. That would seem to tally with anecdo- It’s ironic that just as international

This, of course, is also all about China, tal reports of new capacity coming online pressure is rising on China to rein in its

as the market tries to price in the poten- and restarts to take advantage of the im- aluminum smelters, the country is doing

tial for significant anti-pollution produc- proving price environment. precisely that in the form of an environ-

tion curbs next winter. The market is still digesting the impli- mental clampdown.

“Heightened instability”, it appears, cations of Beijing’s anti-pollution meas- But the three aluminum bodies are cer-

works both ways. ures in regions around the Chinese capi- tainly right when they refer to heightened

China has lifted its share of global pri- tal over the winter heating months from instability.

mary aluminum production from about mid-November to mid-March. China’s dominance of global produc-

10% in 2000 to more than 50%, with the A requirement that local aluminum tion has left the aluminum market highly

International Aluminum Institute’s (IAI) smelters cut capacity by 30% puts at risk vulnerable to shifts in the country’s pol-

latest figures showing that China pro- about 1.3mt of production, with poten- icy.

duced 54.4% of the global total in Febru- tial further hits from mandated closures That needs to be addressed and the

ary. of plants producing other smelter inputs G20’s steel forum is as good a template

Give or take a percentage point or two, such as carbon anode and pet coke. as any.

because even the country’s production Affected Chinese producers might be If nothing else, it could start with get-

numbers are unstable. expected to run their smelters as fast as ting a better statistical picture of just how

Annualised output dropped by 1.7mt in they can to compensate. much China is producing.

February relative to January, if you be- But Beijing’s environmental crackdown – Andy Home, Reuters

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 9

NEWS

Chief support for Mount Peake

TNG Ltd’s Mount Peake vanadium-
titanium-iron project has won strong
support from the highest office in the

Northern Territory.

The strategic metals hopeful last

month signed a project facilitation agree-

ment with the NT Government over a

proposed site near Darwin for the TIVAN

metals refinery, providing TNG with cer-

tainty of process over one of the key as-

pects of the project, about 235km north-

west of Alice Springs.

NT Chief Minister Michael Gunner was

present at the signing ceremony with

TNG managing director Paul Burton and

SMS Group head of process engineering

Herbert Weissenbaeck.

SMS has signed a binding heads of

agreement with TNG for the engineering,

design and construction of the TIVAN fa-

cility.

In a statement released to the media,

Gunner said the landmark agreement

secured ongoing employment opportu-

nities for hundreds of people in Central TNG has received overwhelming support from the Northern Territory to develop
Australia and Darwin. the Mount Peake vanadium-titanium-iron project

“This is an $850 million project with the

potential for 500 jobs during construction Minister’s office down,” Burton said. TNG has received all approvals from

and more than 200 jobs during operation “It is a very important milestone for us the Traditional Owners, including author-

of the mine, plus more than 1,200 jobs and it allows us to now fully scope out isation for the construction of causeways

during construction and 400 jobs during that land, get all the studies done and to provide haul road access to the pro-

operation of the refinery,” Gunner said. engage with all the government depart- posed mine site.

Burton told Paydirt his company’s al- ments and the community.” Project financing discussions are on-

most decade-long bid to bring the Mount It has been a busy start to the year for going with the help of independent cor-

Peake project to life was now a major TNG, with the company looking to final- porate advisory house Gresham Advi-

step closer. ise a number of key regulatory agree- sory Partners Ltd and are expected to

“This is an agreement that the NT Gov- ments at the time of print, including a continue into the second half.

ernment doesn’t go into lightly because supplement to the environmental impact TNG and SMS are also assessing po-

it is a sign of full support from the Chief statement. tential changes to the flowsheet for the

TIVAN refinery, with the likelihood of re-

vised opex and capex estimates to be

released later this year.

SMS last year identified potential sav-

ings of up to $50 million per annum in

operating costs based on an innovative

redesign of the vanadium extraction cir-

cuit within the processing facility.

TNG shareholders are backing the

company’s strategy, helping to raise $7

million via a fully subscribed SPP late

last year to guarantee enough funding

for the proposed work programmes at

Mount Peake.

“We did it because our shareholders

are very loyal and we had previously

had offers of capital which we’ve taken

but not offered to shareholders, so we

thought it was the right time for them to

be offered some stock while it’s still at

Mount Peake is tipped to produce 17,560 tpa vanadium pentoxide, 236,000 tpa these relatively low levels,” Burton said.

titanium dioxide and 637,000 tpa pig iron over an initial life of 17 years “Companies always need capital and I

PAGE 10 APRIL 2017 AUSTRALIA’S PAYDIRT

don’t rule out any additional raisings, but Group for the respective vanadium and have a very big role to play in Australia
we’re very well funded for the position iron product suites from Mount Peake. and we want to be part of that business
we’re in. Obviously working capital, as a cycle,” Burton said.
company grows, particularly into pre-de- “We’re also engaging with some of the
velopment, is critical and we’ll keep our “This is a huge value-add opportunity
eyes on that.” key consultants on titanium pigments,” we have here. We know we can supply
Burton said. “There’s various grades of the critical vanadium electrolyte from our
A DFS released in mid-2015 found pigments and we want to produce the TIVAN process.”
Mount Peake could support production best grade to give us the best market
of 17,560 tpa high purity vanadium pen- sector. We’re also engaging with SMS With the 10th anniversary of Mount
toxide, 236,000 tpa titanium dioxide and and their colleagues on this and we’re Peake’s discovery fast approaching, Bur-
637,000 tpa pig iron over an initial life of very, very happy with the progress.” ton said he was thankful his company
17 years. had taken a “cautious, step-by-step ap-
TNG has also signed a strategic MoU proach” towards developing a non-main-
Pre-production capex of $970 million is with Japan’s Sumitomo Electric Indus- stream project.
required for the initial 3 mtpa operation, tries and Perth-based Energy Made
with production revenue to be used to Clean, a subsidiary of ASX-listed Carn- “Our company had a fairly steep learn-
fund the ramp-up of operations to 6 mtpa egie Clean Energy Ltd, to collaborate on ing curve early on and I think it’s fair to
after four years. the promotion, development and growth say that the more work we did, the more
of the vanadium redox flow battery mar- interest we got,” he said.
TNG recently signed a MoU with global ket in Australia.
trader Wogen Pacific for the long-term “This is a big project and we’re now at
sales and marketing of titanium dioxide It comes after successful test work by the pointy end of it. If there are any minor
products to all but secure the third and the company last year confirmed Mount delays, I think everyone will be pretty ac-
final stream of project off-take. The com- Peake could produce high purity, com- cepting of that.”
pany has previously signed binding life- mercial grade vanadium electrolyte us-
of-mine deals with WOOJIN and Gunvor ing vanadium pentoxide from the project. – Michael Washbourne

“We think vanadium storage batteries

River running hot for TNG spin-off

TNG Ltd spin-off Todd River Resources Paul Burton Walabanba copper-lithium projects.
Ltd was set to debut on the ASX at “We have rigs in place ready to mo-
the time of print following a successful $6 and had we not been a relatively small
million IPO. company having to watch our cash very bilise and we also have access agree-
carefully post GFC – which enabled us to ments and approvals in place to get on
The new company had no trouble pull- survive through that difficult period – we the ground,” Burton said.
ing together the maximum subscription, would have loved to be in a position to do
with the TNG shareholders contributing a lot of work on these projects because “We should be expecting some posi-
$1.52 million and the remaining funds they have great, great potential.” tive news flow within weeks of listing.”
raised via a general offer with lead broker
Sanlam Private Wealth. Burton and fellow TNG directors Geof- Other projects in the Todd River portfo-
frey Crow and Rex Turkington will sit on lio include zinc opportunities at Manbar-
TNG decided to spin off its non-core the Todd River board, along with Eddie rum, Stokes Yard and McArthur River.
base metals assets, all in the Northern Fry, who specialises in indigenous and
Territory, last year to focus all of its at- Native Title issues. Burton said if positive forecasts for
tention into developing the Mount Peake base metals, particularly zinc and cop-
vanadium-iron-titanium project. A search for a full-time chief execu- per, held true, it would ultimately justify
tive to oversee the company’s work pro- TNG’s decision to put these non-core
Todd River is the fourth resources grammes is under way, with an appoint- projects into a new vehicle.
spin-off in the past six months and the ment likely to be made later this quarter.
company will be hoping to experience “Everything is about timing and this
the same early success as Horizon Gold Todd River is expected to hit the spin-off has been on the books for a cou-
Ltd (Panoramic Resources Ltd), West- ground running upon completing its ASX ple of years,” Burton said.
gold Resources Ltd (Metals X Ltd) and listing, with drilling programmes planned
Ardea Resources Ltd (Heron Resouces for the Mount Hardy copper-zinc and “I do believe we’re moving into a rather
Ltd). long, bullish base metals cycle. The rea-
sons we feel this is so is because follow-
“Spinning it off like this is the most ef- ing the GFC and the relative collapses
fective way for our shareholders and of the zinc and copper prices, there just
company to realise the potential of these hasn’t been the exploration dollars spent
projects,” TNG managing director Paul looking for new deposits.
Burton said.
“What we’re seeing now is a result of
“Although we call them non-core that. You’ve got depleted mines, you’ve
because Mount Peake has basically got no new mines coming on, so you’re
usurped the size and scale of everything going to need a lot of exploration done
else with the progress we made there, relatively quickly to find some more good
these are very intriguing projects in their value deposits.”
own right.
– Michael Washbourne
“Had we not had low commodity prices

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 11

NEWS

Australians pound the
pavement for UK capital

Risk adverse local in- Accessing capital and
vestors are pushing exposure to international

Australian companies institutional investors are

with international projects some of the other key

offshore to find funding. reasons why Australian

Grant Thornton Austral- companies would con-

ia corporate finance part- sider entering the AIM

ner Holly Stiles told Pay- market.

dirt that more Australian Meanwhile, the po-

companies with projects tential to attract higher

in Africa were looking to valuations is also a lure,

the AIM market to access with the average market

capital. cap of ASX companies

“Australian investors (excluding ASX200 vehi-

are still very risk adverse cles) at the end of 2016

and their preference is for being $18.5 million com-

local projects that they pared to that of an AIM

can understand,” Stiles company which was

said in light of releasing $133.9 million.

the AIM Market report last European and London investors are more receptive to backing Last year there were
month. projects in Africa than Australian investors 43 Australian companies
listed on AIM boasting a
“Through our JUMEX

survey, we have seen in the last couple “What Australian mining companies total market capitalisation of £1.5 billion

of years a shift from people looking off- are finding is that whilst perhaps they are with an average market cap of £35 mil-

shore for new projects to really refocus trying to be understood locally by inves- lion each.

on Australia again and that is really re- tors, their stories are being Aura Energy Ltd was

flecting investor interest. understood easier in Lon- one Australian company

“If there was a real trend a while ago to don.” to list on AIM in 2016 af-

look to Africa for more value out of pro- The AIM market of the ter raising £2.8 million.

jects, the companies that have still got London Stock Exchange is The company has ura-

those projects are finding they are less the most successful growth nium, gold and lithium

attractive to Australian investors now, market in the world and assets in Mauritania and

whereas in London there is a long history while investors in that part uranium in Sweden, yet

of investors investing in mining projects of the world may be more has received a mixed

in Africa. The same would apply more willing to invest in projects in response in the market,

broadly to Europe as well, so those in- Africa and Europe, Austral- reaching a high of 2.8p/

vestors are still there and interested. ian companies with assets share after opening at

in these jurisdictions will Holly Stiles 2.47p. On the ASX, Au-
still need to satisfy cer- ra’s shares have traded
Best performing Australian tain criteria.
between 0.02c and
companies on AIM
It was highlighted in Grant Thorn- 0.05c/share in the past 12 months.

Top 10 by market cap (£million) as at ton’s report that Australian compa- “We are seeing ASX companies go to
December 31, 2016 nies with strong management teams London and raise money from London in-
and good track records, good growth vestors, which they can do with their ASX

£372 SolGold plc (mining) prospects, a proven business mod- listing, but I think once they get to a point
£167 Mysale Group plc (consumer services) el with businesses ideally having and really need or want to refocus their
£138 Berkeley Energia plc (mining) reached profitability, an international investor/shareholder base, then those
flavour to the business, particularly companies can consider a dual listing in

£112 88 Energy Ltd (oil & gas) businesses that have strong growth London,” Stiles said.

£89 Base Resources Ltd (mining) opportunities in the UK and Europe, “Over time, domiciling in London is
£87 Mariana Resources (mining) would be attractive to AIM oriented also an option if they feel that is a more
£59 Coal of Africa (mining) investors. appropriate market for their investors go-
ing forward.”
Resources companies with ad-

£51 Wolf Minerals Ltd (mining) vanced assets are particulary attrac- – Mark Andrews
£51 Seeing Machines (technology) tive propositions for the AIM market
£49 European Metals Holdings Ltd (mining) and European investors, the report
also identified.

PAGE 12 APRIL 2017 AUSTRALIA’S PAYDIRT

Falcon swoops on WA
mining scene

Specialist financier Falcon Group has Steven Webb From an equity perspective, compa-
landed in Western Australia at the nies with the ability to generate favour-
right time. able long-term returns are always popu-
lar with investors, as are companies with
Two of the State’s staple commodities strong off-takers.
– iron ore and gold – are performing ex-
ceptionally well and driving positive senti- “We don’t think that is any different to
ment in the resources sector, and Falcon any other sector,” Webb said.
is looking to capitalise on the prevailing
opportunities. “From a Falcon perspective, similar to
bankers, we like to make sure we have
“Falcon has very progressive aspira- a diversified client base. We like to think
tions for Australia and WA, in particular,” that the companies we support are vi-
Falcon’s Perth-based business develop- able in the market now and also if there
ment director Steven Webb told Paydirt. is a negative track in commodity prices.
From Falcon’s perspective, we would
“Certainly the discussions I had when look to support our existing clients and
I joined was that if we can drive the busi- perhaps target clients that could get ac-
ness and increase our number of clients, cess to capital outside of traditional bank
Falcon was only going to go one way and lines.”
that was a very clear company mandate.
While banks are looking at their own – Mark Andrews
structures and their footprint, this is a
great opportunity for alternative finance Since opening its Sydney office, Falcon
to grow and claim a share of that client
base.” has completed deals ranging from $US1

Following the successful venture of million to $US20
establishing an office in Sydney in 2015,
Falcon opened its Perth office late last million for ASX-list- DR SUNIL
year, with a particular emphasis on serv- ed companies and
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Webb, a former Deutsche Bank direc- turnover totalling
tor of corporate banking coverage, heads
Falcon’s Perth office and is focused on about $US3 billion.
increasing liquidity available to mid-mar-
ket clients in WA. “Falcon sees a lot

Webb has an eye on opportunities in of opportunity here
South Australia and Northern Territory,
however, it is the WA mining and servic- in Australia,” Webb
es sector where Falcon is thriving.
said.
“A lot of the junior players are looking at
investing and that feeds through. Where “We saw a big op-
you have the larger companies, you have
the service providers that support them portunity in the re-
and the businesses that support those
businesses. From my perspective, there source space given
is positive momentum,” Webb said.
that banks are start- FOR IMMEDIATE APPOINTMENT CALL
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AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 13

REGISTER NOW

23 - 24 May 2017

Hilton Adelaide

Image courtesy of OZ Minerals

For sponsorship and exhibition packages please contact
Christine Oelschlaeger on (+61) 8 9321 0355 or email [email protected]

Presenters to date:

Hon Tom Koutsantonis MP, Dr Paul Heithersay,
Minister for Mineral Resources and Energy, Deputy Chief Executive,
Government of South Australia Department of the Premier and Cabinet

John Anderson, Wayne Rossiter,
Managing Director, Chief Executive Officer,
Investigator Resources Ltd WPG Resources Ltd

Steve Johnston, David Christensen,
Managing Director, Managing Director,
Alliance Resources Ltd Renascor Resources Ltd
Kyra Reznikov,
Special Counsel, Charles Moore,
Finlaysons Lawyers Director, Resources, Infrastructure
Barry Goldstein, and Investment Task Force,
Executive Director Energy Resources, Department of the Premier and Cabinet
Department of the Premier and Cabinet
Dr John Parker, Quentin Hill,
Managing Director, Managing Director,
Lincoln Minerals Ltd Carpentaria Exploration Ltd
Tony Belperio, Derek Carter,
Executive Director, Board Member,
Minotaur Exploration Ltd South Australian Minerals and
Petroleum Experts Group (SAMPEG)

Ian Warland,
Managing Director,
Marmota Ltd

Sponsors to date:

saresourcesconf.com

NEWS

Escondida operations to restart

The strike at Chile’s Escon- “Having collective talks in
dida, the world’s largest 18 months ... would require

copper mine, is ending after us to revise our plan, our op-

workers decided to invoke a erating model, our structure

rarely used legal provision in order to allow us to make

that allows them to extend our mining business viable,”

their old contract, the union he said.

said. BHP declined to comment

Talks between the two further on the union’s deci-

sides initially failed, and Es- sion.

condida, which is operated by Throughout the dispute, the

BHP Billiton Ltd, said it would union has said it would not

attempt to restart production. budge on three key points;

The workers said they would giving new workers the same

present their decision to the benefits as existing workers,

Government and return to maintaining current benefits

work. and keeping shift patterns

A swift restart of Escon- Copper prices have soared in light of strike action at Escondida, from becoming more taxing.

dida, which produced about the world’s largest copper mine Both sides see the uniform

5% of the world’s copper last benefits issue as particularly

year, may bring some relief to the Chil- The company is legally obligated to com- important. The new labour law that takes

ean economy after a strike that lasted 43 ply. effect this month requires a company to

days. Returning to their former contract offer the minimum benefits in a previous

But there was little immediate effect on means workers will enjoy existing ben- contract as the negotiating floor.

copper prices, with industry experts say- efits and working conditions and hold the Industry veteran and analyst Juan

ing the two sides will still have to tackle next talks under an upcoming labour law Carlos Guajardo said he thought the out-

major issues in 18 months, when talks that strengthens their hand. But they will come of the dispute was “very bad”.

must resume. also lose out on a bonus typically paid “It just prolonged it for a year and half

The stoppage by the union’s 2,500 when the contract is signed and on any without resolving any major points,” he

workers began on February 9 after initial pay raise. said. “This could affect other negotia-

talks with the company to set new wage “The money is important,” a truck tions.”

and benefit contracts failed. Negotiations worker who requested anonymity said Escondida is majority-controlled by

take place when the former contract ex- outside the union meeting, “but the ben- BHP Billiton, with minority participation

pires, typically every 3-4 years. efits that we have fought for over years by Rio Tinto Ltd and Japanese compa-

The legal provision, Article 369, al- are good for us.” nies, including Mitsubishi Corp. It pro-

lows workers to revert to their previous The use of Article 369 would be “com- duced slightly more than 1mt of copper

contract for 18 months, after which both plex” for Escondida, mine president Mar- in 2016.

sides must try to reach a new agreement. celo Castillo said. – Felipe Iturrieta, Reuters

Reko Diq decision favours
Barrick-Antofagasta

Atribunal of the World Bank’s Inter- impressed by the denial of the Reko Diq with Australia, where Tethyan is incorpo-
national Centre for Settlement of In- project in the Balochistan province of Pa- rated.
vestment Disputes has ruled in favour of kistan, considering it is one of the world’s
Tethyan Copper Company Pty Ltd which largest undeveloped copper and gold de- In late March, the tribunal began con-
filed a case against the Islamic Republic posits, with a potential mine life of more sidering submissions from both parties to
of Pakistan because of an unlawful denial than 50 years. determine the damages Pakistan must
of a mining lease. pay Tethyan. A ruling on the final amount
The project was expected to require of damages is expected in 2018.
Tethyan Copper Company Pty Ltd, a JV an initial capital investment of more than
between Canadian mining heavyweight $US3 billion. Following the ruling, market sentiment
Barrick Gold Corp and Antofagasta plc, towards Barrick rose, with its share price
had its mining lease for the Reko Diq pro- The ICSID tribunal rejected Pakistan’s advancing 1.2% to $C25.76, despite an
ject shutdown in 2011. final defence against liability, and con- otherwise turbulent period for Wall Street
firmed that Pakistan had violated provi- and the TSX.
It is no surprise that the JV was not sions within its bilateral investment treaty

PAGE 16 APRIL 2017 AUSTRALIA’S PAYDIRT

Copper comeback continues

Copper is trading at significantly higher 3.000
prices than 12 months ago and the
value of the red metal appears likely to

remain strong for the foreseeable future. 2.800
Ongoing strike action and uncertainty

at the world’s largest copper mine, Es-

condida in Chile, has added some spice 2.600
to copper pricing a bit earlier than some

would have thought. USD/lb

“There is a definite view that a deficit 2.400
is on the way and that the copper price

is going up a bit further. Some guys are

talking it up significantly higher than this, 2.200

but that is not my view,” Aeris Resources

Ltd chief executive Andre Labuschagne

told Paydirt. 2.000

“Copper is looking at 3-4 years of much

better, returns than we had in the last 12 1.800
Mar16 Apr16 May16 Jul16 Aug16 Sep16 Oct16 Nov16 Dec16 Jan17 Feb17
months or two years, definitely. It might
pull back a little, we have seen it pull

back [recently] but I definitely don’t see it Spot prices for copper have risen sharply since October. SOURCE: Kitco

going back to the lows of 12 months ago.

“There are some of the big majors In the December quarter, Aeris pro- opportunities based on whether it is a

going through wage negotiations and duced 6,024t at C1 costs of $2.48/lb. good business decision or not,” he said.

strikes, and that tends to move the deficit Meanwhile it continues to deal with its – Mark Andrews
around, although the deficit might be a capital structure.

bit earlier than originally forecasted. It all “We are dealing with those prefer-

depends on how long it is going to take to ence shares and

get [production] back on track, but overall looking at ways to

the sentiment at conferences has been clean that up to get

very positive on copper.” a proper structure in

At the time of print, copper was trading place so we can get

at $US2.6/lb, with Aeris working towards proper valuations

FY2017 copper production of 25,000- in the market,” La-

26,000t from its underground operations buschagne said.

at Tritton. “From a growth

The company downgraded its FY2017 position we are ac-

production forecast in its last quarterly tively looking at var-

report due to delays in the start of stoping ious opportunities, if

at the new Murrawombie underground the right one comes

mine. around and there is

“The start of the Murrawombie under- enough support for

ground and the change of the mine plan it that is obviously

going from bottom up, basically has de- something we will

layed production out of Murrawombie by look at. But, our first

6-9 months,” Labuschange said. priority is to try and

“The original plan was to take some work on cleaning

stopes on the way down, so it was re- up the capital struc-

ally a change in the ture.”

mine plan resulting in a Once Aeris is in

delay in those tonnes, a position to take

so we are developing on more assets,

further down before Labuschangne

starting to mine back said he would

up. That said, although entertain options

the production was a outside of copper

bit disappointing, they and gold where

still managed to get the its main skill sets

cost well under control are.

and manage to hold the “Definitely we

position.” Andre Labuschagne will look at other

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 17

NEWS

Western Areas begins
Odysseus journey

Western Areas Ltd has moved quickly Dan Lougher company recently upgraded production
to validate the acquisition of the guidance for Forrestania’s high-grade
Cosmos nickel complex from Glencore Assuming surplus pre-tax net cash flow Spotted Quoll and Flying Fox mines to
subsidiary Xstrata Nickel Australasia Op- of $580 million, payback from the start of 25,000-26,000t mine production and
erations Pty Ltd. production could potentially be achieved 22,000-23,000t nickel-in-concentrate at
in 3.5 years. unit cash costs of $2.35-2.50/lb.
Upon breaking the shackles of debt in
2015, Western Areas purchased Cos- Post-start up annual pre-tax free cash Lougher said improvements to metal-
mos, which included the Odysseus un- flow is estimated to be $100 million, with lurgy, plus huge upside below Odysseus
derground play, for a total consideration Western Areas factoring in life-of-mine and at the adjacent M5 and M6 deposits,
of $24.5 million. C1 cash costs of $3.21/lb, including co- would be compelling reasons behind im-
balt by-products, and AISC of $3.69/lb. provements to the base case scenario of
Within 18 months of the acquisition, the PFS.
Western Areas has delivered a PFS on A cash breakeven price of $6.09/lb (on
re-opening Cosmos and mining Odys- an undiscounted basis) and life-of-mine Lougher also expects circumstances
seus potentially by the end of 2020. First sustaining capital expenditure of $68 in the Philippines and Indonesia to have
concentrate delivery would be set for million are also assumed, with capital settled down in the back half of this year,
early 2021. requirements of $7 million this year and as the company progresses one of the
$34 million budgeted for CY2018. few nickel developments in the world.
Managing director Dan Lougher said
the positive Odysseus PFS was merely The advantage Western Areas de- “Out of Western Australia there is Sa-
a bonus to Western Areas’ overarching rives from acquiring a former operation vannah North and Nova, which has been
strategy for completing the deal. – “which could be switched on tomor- built. I am not aware of any other projects
row” – is having existing infrastructure to coming on line,” Lougher said.
“At the end of the day, we bought Cos- work with, which means it has been able
mos for exploration, mainly that southern to curtail pre-production capital expendi- The company received a mixed reac-
tenement block where we have drilling ture to $190-210 million, including PFS, tion upon releasing the PFS, an indica-
at Neptune happening right now. That DFS and contingency costs. tion that perhaps the market isn’t seeing
programme has been really successful the restart of Cosmos in the same light
in finding nickel which will report to the Commissioning of Cosmos Odys- as Western Areas.
Cosmos mill. So, that is justification for seus would hand Western Areas a sec-
the $24.5 million deal. Additionally, the in- ond production centre to complement “We were using a consensus price
frastructure we have at Cosmos – to buy its flagship Forrestania operations. The deck – pretty much a bit of everybody’s
that today would be a couple of hundred pricing. This is not a today project, given
million dollars,” Lougher told Paydirt. that the breakeven price is basically what
spot is today,” Lougher said.
The company will carry the momentum
from a positive PFS straight into a DFS “We have got the potential now to basi-
costing $5-7 million and scheduled for cally do the capex in instalments. If we
completion in Q1 CY2018. do the DFS by Q1 next year, then we can
start evaporation ponds, dewatering, re-
The parameters Western Areas is habilitation and we can stop at any stage.
working within is a mine life of 7.5 years We are not building a greenfields site; we
for production of 4.9 mtpa @ 2.3% nickel are seeing this project come to fruition in
for 12,000 tpa nickel-in-concentrate to- the next three years. We are not actually
talling 87,000t nickel metal. spending a huge amount of capital, so
we can temper what we are going to do.”
Estimated financial returns include a
pre-tax NPV of $292 million at $US7.50/ Boasting “one of the cleanest” balance
lb, based on an exchange rate of 75c. sheets in the industry – no debt and cash
and receivables of $124.7 million – and
Western Areas Ltd completed a farm-in JV agreement in March with Kidman Re- on track to deliver a full-year dividend,
sources Ltd for lithium and lithium by-product rights over the northern Forrestania tene- there are multiple funding options avail-
ments. able for Western Areas to consider to de-
velop Cosmos.
Western Areas retains all the rights to the non-lithium tenements.
By spending $5 million over three years (minimum $1.5 million in first 12 months), Kid- “We have cash at bank, cash flow from
man can earn 50%, while Western Areas can co-contribute to further exploration on a operations, equity markets [are open
50:50 basis at the end of stage one. to us]. We can do convertible bonds,
If Western Areas decides not to participate at the end of stage one, Kidman can earn which are really cheap. We haven’t re-
70% by spending a further $4 million over two years. Should stage two be completed, ally opened up that book [on funding]
Western Areas remains free-carried to a decision-to-mine. because it is not really a problem for us
Initially, Western Areas will receive 6.3 million Kidman shares to be escrowed for six to generate money to pay for it,” Lougher
months and has the right to appoint a non-executive director to the Kidman board within said.
three months from the date of the agreement.
– Mark Andrews

PAGE 18 APRIL 2017 AUSTRALIA’S PAYDIRT

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COVER

Walkabout tears
along graphite track

PAGE 20 APRIL 2017 AUSTRALIA’S PAYDIRT

Lindi Jumbo is in the same Tanzanian graphite province as Nachu (Magnis Resources) and Chilalo (Graphex Mining)

Allan Mulligan has never been afraid to walk a different path. So, Nachu and Graphex’s Chilalo project,
when he injected a graphite project into Walkabout Resources Ltd but nothing could be guaranteed until the
in late 2014, the chances of it following a familiar and traditional route first drilling campaign in September 2015
to development were slim at best. confirmed its presence.

“We knew we were entering the [graph- Walkabout could take heart from the pro- “We had no doubt and the preliminary
ite] sector quite late, compared to others, gress made by Magnis at the neighbour- report had indicated there was graphite
and therefore we knew from the outset ing Nachu project. on our ground,” Mulligan said.
we would need to differentiate the project
and ourselves somewhat,” Mulligan told The probability of finding graphite on “We received some chip sample re-
Paydirt. its tenements was always high for Walk- sults from surface and among them were
about, given Lindi Jumbo’s proximity to some 30-40% results that indicated to us
Walkabout’s acquisition of the Lindi there was an opportunity to find a higher-
Jumbo project, about 200km east of Mt- Walkabout executive director Allan Mulligan grade deposit.”
wara in Tanzania, came several months
after the graphite sector bubbled and a With Mulligan, technical director An-
host of ASX-listed hopefuls entered the drew Cunningham and consulting ge-
space. ologist Rickard Taljaard on the ground
to oversee the programme, Walkabout
Replicating what the likes of Syrah struck a high-grade zone within the first
Resources Ltd, Magnis Resources Ltd, two holes drilled.
Kibaran Resources Ltd and another rela-
tive newcomer, Graphex Mining Ltd, had What followed next was the implemen-
done in the preceding months and years tation of a three-pronged strategy to fast-
meant Walkabout faced an uphill battle track production, which would underpin
to catch up to its peers, if at all. the company’s rapid progress over the
next 16 months.
At the time of the acquisition, very lit-
tle exploration work had been carried out “Once we hit the high-grade zone, we
on the Lindi Jumbo property. However, decided not to spread the programme
over the original planned area and to fo-
cus on that particular zone as far as we
could identify it,” Mulligan said.

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 21

COVER

The proposed locations for the pit (top), process plant (middle) and tailings dam (bottom) “Being on site and being able to see
the high-grade chips directly and trans-
ferring that to instant decisions on site, as
opposed to waiting for assays, unlocked
that strategy of being able to high-grade
the deposit and keep it to a modest size.

“When we went to infill and upgrade
drilling we knew exactly what we were
looking for and structurally where it
should go, so we were able to focus on
delineating three or four discreet high-
grade zones that will actually provide a
very high mill [head-grade] feed and give
the project a huge advantage in its early
years.”

Most graphite companies have typi-
cally built up large resources at their pro-
jects, but Mulligan knew that approach
would only see Walkabout fall further
behind in the race to become a producer.

A simple strategy was proposed – de-
velop the project around a high-grade,
premium product that could be one of
the first to market. To achieve that, the
company had to constrain the initial mine
development to something that was both
manageable and reasonable in size.

“By far the most significant risk as-
sociated with this project is the market,
but that is something associated with all
graphite projects,” Mulligan said. “We
wanted to bullet-proof this project against
that risk through executing a three-tier
strategy of grade, product and time.”

Completion of the drilling programme
led to a maiden inferred resource of
15.3mt @ 10.1% TGC for 1.542mt con-
tained flake graphite in January 2016. A
scoping study was to be released mid-
year, but ASIC changes to reporting reg-
ulations dictated a higher resource clas-
sification was required before the results
of the study could be made public.

It turned out to be a blessing in disguise
for Walkabout, which after punching
more holes into the project, announced
an upgraded resource of 29.8mt @
10.9% TGC for 3.25mt contained graph-
ite, including a higher-grade domain of
4.7mt @ 22.8% TGC for 1.073mt con-
tained graphite.

“We ended up with a 165% larger re-
source, a higher grade and the entire
scoping study and DFS calculated or
modelled on measured and indicated re-
sources only,” Mulligan said.

“In terms of the drilling, the entire
measured, indicated and inferred re-
source of 29mt has been defined off
3,500m of drilling, whereas some of our
peers have done up to 20,000m. It’s not
necessary to do that, in our view.

“When you compare our quarterly
cash flow expenditures against our peer
group, we are the cheapest by a long
way for the last two and a half years and

PAGE 22 APRIL 2017 AUSTRALIA’S PAYDIRT

Walkabout has built up a resource of 29.8mt @ 10.9% TGC for Walkabout chairman Trevor Benson is interviewed on site by
3.25mt contained graphite, including a higher-grade domain of marketing and public relations consultant Thomas Murrell,
who also sits on the company’s board
4.7mt @ 22.8% TGC for 1.073mt, at Lindi Jumbo

we have now reached the same position Walkabout’s peer group. life, with on-mine cash costs of $US292/t
in concentrate proposed for delivery at
with respect to project development, but Other key highlights of the study in- the mine gate.

we’ve been able to do it cheaper because clude a pre-tax NPV of $US323 million High-end markets are the target ben-
eficiary of Walkabout’s products, with
we’re fast-tracking.” with IRR of 97%, average annual free 8,000 tpa of super jumbo (+500 microns)
and 14,000 tpa of jumbo (+300 microns)
The scoping study was finally released cash flow of $US35.8 million, payback likely to be suitable for the expandable
natural flake markets.
to the market in January, just one month within 22 months, average annual EBIT-
Walkabout’s DFS trigged a share price
prior to the publication of a robust DFS, DA of $US47.7 million and LOM revenue lift to 13c in mid-February before coming

based on production of 40,000 tpa of four of $US1.26 billion, based on a 20-year

different graphite concentrates. mine life.

According to the DFS, Lindi Jumbo The mining plan is based around a

can be developed for an upfront capex high-grade plant feed of 17% TGC during

of just $US38.7 million (plus $US5.6 mil- the first three years of produc-

lion sustaining capital), making it one of tion and at least 16% TGC over
“the lowest capital intensive projects in the remaining 17 years of mine
When you compare our quarterly cash
flow expenditures against our peer
group, we are the cheapest by a long way…

Technical director Andrew Cunningham explains the flow of Cunningham has become a key member of
mineralisation from the Lindi Jumbo discovery hole the Walkabout executive team

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 23

COVER “If we can procure just some of
the funding required for this
early start, then we can procure some
of the long-lead items and shorten our
potential timeline considerably.

off to just below 10c at “However, the graphite market on the
the time of print. ASX is currently under stress and we
think investors are smartening up and
“Historically we have realising many of these projects are not
struggled to get recogni- going to necessarily be successful.”
tion in the market for our
deposit and for our strat- Mulligan has always had the best in-
egy, while other compa- terests of shareholders at heart since he
nies have market caps vended Walkabout, then a private com-
and valuations that have pany, into struggling ASX-listed Nimrodel
leapt way ahead of ours,” Resources in 2011. He cited a $50,000
Consulting geologist Rickard Taljaard Mulligan said. capital raising at 0.001c/share in 2015
as the low point in the company’s history
and has spent much of the past two years

striving to restore investor
confidence through Lindi
Jumbo’s development.
Perhaps the best
example of Mul-
ligan’s com-
mitment to
shareholders
and the pro-
ject was his

PAGE 24 APRIL 2017 AUSTRALIA’S PAYDIRT

selfless decision to step down as man- Walkabout directors – Murrell, Cunningham, Mulligan and Benson – will shoulder
aging director of Walkabout just weeks most of the workload as the company pursues development of Lindi Jumbo
after the DFS was completed to allow
non-executive chairman Trevor Benson
to take the lead management role with
the company.

Mulligan remains an executive director
and will spend more time in Africa over
the next year to focus solely on project
development, with Benson driving the fi-
nancing and marketing strategies.

“The key for us is not to stall during
fundraising,” Mulligan said. “When we
look at our peers, many of their projects
have stalled during fundraising and this
indicates that there is some price uncer-
tainty in the marketplace, both on the
funding side and on the operational side.

“In our view, that funding uncertainty
means it is becoming more and more dif-
ficult for companies to procure their de-
velopment funds, even with off-takes, or
partial off-takes, in place.”

Benson, an investment banker who
has held senior roles at The Wood Group
and UBS Australia, spent most of March
meeting with potential project financiers
in the eastern states, Asia and London.

Speaking to Paydirt from London,
Benson said he was growing more confi-
dent “by the day” of securing that funding
from “intrigued” investors.

A population relocation plan was being completed at the time of print
AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 25

COVER

Finance specialist Benson has taken the reins of Walkabout from founding director and mining engineer Mulligan

“They’re definitely interested and they awaiting approval of an environment im- “During the last drilling campaign, An-
want to know more about Walkabout,”
Benson said. pact assessment before it can submit a drew Cunningham, Rickard Taljaard and

“I think some of the small-cap funds, mining licence application. myself spent six weeks on site and that
when they get an opportunity, will want to
come on board because it doesn’t have Directors typically shouldered man- close attention to detail is now driving the
the liquidity or size at the moment to get
into the market.” agement responsibilities under Mulli- rest of the project development, including

Walkabout’s plan is to develop Lindi gan’s tenure, with the mining engineer’s the metallurgical test work.
Jumbo in parallel to securing project
funding rather than complete both se- “running lean” ethos set to continue even “These things come from experience.
quentially as is typically the case for
most resources companies. though he is no longer at the helm. If you’ve built mines and you’ve devel-

Early development moves have al- “When you develop a specific project oped mining projects, you learn that the
ready been made with ADP Marine and
Modular, a Cape Town-based metallurgi- strategy, it’s key that strategy is main- philosophy behind the early stage set-up,
cal specialist which is majority-owned by
Lycopodium Ltd, named as the preferred tained by all of the participants in the pro- or the project charter, is key to its suc-
partner/supplier for the design, deliv-
ery and construction of the flotation cess chain,” Mulligan said. “If we stepped cess. And, that it must be maintained
plant and other key infrastructure.
back and handed the project over to a throughout the process.”
A Tanzanian mining contractor has
also been appointed, subject to final project manager or a consulting compa- Thomas Murrell, whose background
negotiation of an operating agree-
ment, as well as a local camp and ac- ny, there’s a high risk they would lose that is in marketing and public relations, re-
commodation services provider, un-
der the same terms and conditions. strategy, or it would be diluted or watered mains the only non-executive director on

“If we can procure just some of down, and you end up with increasing the four-person board.
the funding required for this early
start, then we can procure some of costs and lower efficiencies. Benson, who has acted as a corpo-
the long-lead items and shorten our
potential timeline considerably,” Mul- rate adviser to Chinese state-owned
ligan said.
enterprises, said his own impres-
Walkabout was in the throes of
completing its population relocation sions of Walkabout, which has a
plans at the time of print, while also
market cap of about $12 million, had

changed significantly since his ar-

rival.

“I made sure I did my due diligence

and not only did I find the people in-

volved to be extremely professional

and highly technically capable, they

had discovered this very high-grade

graphite project in the graphite cen-

tre of the world in Tanzania,” Benson

said.

“From early on, I could see this

was going to be a good opportuni-

Lindi Jumbo’s premium product is likely to attract ty to get involved in what is still an

interest from the expandable graphite markets unknown company for all the right

PAGE 26 APRIL 2017 AUSTRALIA’S PAYDIRT

Walkabout has developed strong ties with the land owners and local community groups in Tanzania

reasons. When I came on board, it didn’t “We are targeting a substitute product Some have referred to Walkabout

have a DFS, it didn’t have a scoping market, we are targeting the expanda- as a “disrupter” to the graphite industry

study, it didn’t have a measured and in- bles market and any other traditional because of its tendency to do things dif-

dicated resource, but due diligence gave uses that have and will be growing in de- ferently, particularly through its bid to de-

me a good indication it was possible and velopment,” Mulligan said. velop a smaller mine and not head down

the high-grade resource potential had “Graphite is being used in so many the battery minerals path.

enormous upside. more applications and we think the focus If Mulligan is concerned what others

“I think it also hit a sweet spot in po- on one application by the industry miss- think about him and his company, there

tentially being able to take a company es a lot of the other opportunities being is no hint of that peeking out from beyond
“that I have confidence in to China to look created out there.
his steely gaze.

for potential off-take part- “We don’t follow the rest of

ners.” Graphite is being used in so the sector, in terms of strat-
Walkabout has prom- egy,” Mulligan said.

ised to be “aggressive” many more applications and we “We have the opportunity
in its pursuit of project fi- think the focus on one application by to be one of the first to mar-
nance, with a stated aim ket, of a very premium prod-

of locking down at least the industry misses a lot of the other uct and of very low cost, as
a portion of the funding opportunities being created out there. a result of the grade. This is
by the end of this month, where our key differentiators

keeping the company on are important because, from

track to produce first con- our perspective, the Lindi

centrate from Lindi Jumbo in early 2018. “Being one of the lowest cost produc- Jumbo deposit represents the lowest

With several graphite hopefuls turning ers means that we have the highest flex- technical and financial risk profile of any

to the battery-grade spherical markets ibility to market our product into a range of our peer group.”

for off-take and financial support, Walka- of different price and value scenarios – Michael Washbourne
bout intends to focus on other opportu- without spending a lot of money on high

nities in the sector which are now being risk, chemical and mechanical upgrades

neglected. which can often reduce your yield.”

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 27

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Path to market becomes
clearer but no easier

Ahead of the second annual Australian Graphite Conference – to be held at the Novotel Langley
Perth on April 27 – Paydirt takes a closer look at a market which continues to confuse investors

It may still be a difficult sell to tradition- The differences have led to confusion managing director Cherie Leeden said.
al resources investors but the market and even disillusionment among inves- The resounding message out of the
picture has become much clearer for tors who are otherwise eager to partici-
graphite sector participants in the last 12 pate in the battery storage revolution. In- first Australian Graphite Conference was
months. stead, such investors have thrown their that investors should stick to companies
weight behind lithium and cobalt stories, who had clearly defined markets for their
Paydirt’s hosting of the inaugural Aus- where markets and products are more products, and 12 months on, there are
tralian Graphite Conference in March clearly defined. signs many sector participants are closer
2016 highlighted the fledgling nature of to achieving this.
the industry as nearly 200 delegates lis- Enhancing the confusion around
tened to presentations from a variety of graphite is the competing, and often con- The initial blooming of graphite pro-
budding graphite players, each using dif- flicting, assertions made by companies. jects came with increased assumptions
ferent metrics to extoll the virtues of their Where some companies promote the around demand for lithium-ion batter-
individual projects. importance of flake distribution to project ies. However, as knowledge develops,
economics, others claim graphitic purity graphite companies and investors are
These differences are at the heart of holds primacy while others still declare beginning to understand that the battery
the market’s confusion around graphite. grade to be most relevant. market is not the only one available or in-
While projects in traditional commodi- deed suitable for every new project.
ties such as gold, copper or iron ore can Even the graphite players themselves
be readily assessed on a tonnes times admit they have added to the general Market segmentation is starting to be-
grade equation, graphite assets are sub- confusion. come apparent.
ject to myriad additional variables includ-
ing flake size, purity and product speci- “The market has been confused be- Companies such as Battery Miner-
fications. cause the graphite companies have been als, Kibaran Resources Ltd and Talga
learning as we go,” Battery Minerals Ltd Resources Ltd are working hard to de-
fine downstream processing options,

PAGE 28 APRIL 2017 AUSTRALIA’S PAYDIRT

a better quality product that’s socially would be the key to the company’s suc-
and environmentally to a higher stand- cess.
ard,” Kibaran managing director Andrew
Spinks said. “All these emerging markets “Being one of the lowest cost produc-
are looking for more sustainable, certi- ers means that we have the highest flex-
fied products and that bodes incredibly ibility to market our product into a range
well for us, once we’re in production, to of different price and value scenarios
secure more market share.” without spending a lot of money on high
risk, chemical and mechanical upgrades
Other companies, such as Walkabout which can often reduce your yield.”
Resources Ltd, Cougar Metals Ltd and
Sovereign Metals Ltd, prefer to focus on In Australia, Lincoln Minerals Ltd is
being the first and cheapest to market in keen to participate in the emerging mar-
order to carve a niche for themselves. kets such as batteries but managing di-
rector John Parker is conscious of the
Sovereign managing director Julian difficulty of finding definitive off-take part-
Stephens told Paydirt his company’s ners in such sectors.
strategy of aiming for low-cost supply
into traditional markets would allow it to “It could take four years to get the
move quickly. product qualified by specialised manu-
facturers,” Parker said. “We want to pro-
“Low costs and high quality products duce graphite before that; our target is
will enable profitable entry by Sovereign to produce graphite one way or another
before the end of the year.”
believing that vertically in-
Some companies prefer to forge new
tegrated businesses will be markets. Graphex Mining Ltd has dis-
tanced itself from the crowded battery
best-equipped to win and re- space, choosing instead to focus on the
emerging expandable graphite sector in
tain market share in emerging China.

graphite markets, particularly However, the major challenge for all
graphite companies – regardless of their
in their focus areas (lithium- chosen market segment – remains in se-
curing off-take and financing to develop
ion batteries for the former ASX-listed companies are still defining precisely projects.
two, graphene for the latter). how they can get their high-grade graphite
resources into suitable markets New Volt Resources Ltd managing di-
The “green energy” story is rector Trevor Matthews admits it is still
a compelling one, particularly the biggest hurdle.

as the vast majority of current “The industrial minerals space is
opaque; generally the marketing and
graphite supply for the battery market into established traditional markets, dis- pricing arrangements are between the
supplier and end-user,” he said. “There
comes from environmentally question- placing higher cost and lower quality are no terminal markets, no spot pricing
and there is no clear way for investors or
able sources in China. Kibaran and Bat- material… entry into traditional markets financiers to understand what the pricing
is for your products at any point in time.
tery Minerals believe they can use their – i.e. for use in steelmaking and other Consequently, it is more difficult to get
support from equity and debt markets
status in Tanzania and Mozambique industrial applications – represents the due to this market opaqueness.”

respectively to further enhance their greatest opportunity for natural graphite Hexagon Resources Ltd managing di-
rector Mike Rosenstreich agreed, saying
“ethical supply” credentials in an industry in the short to medium term.” companies had to essentially reverse-
engineer their projects to suit customers.
which is still reliant on government grants Walkabout is undertaking a similar
“It is not like we are making a bar of
in the US and Europe. strategy and speaking in this month’s gold that we can put on the shelf and sell
to anybody, we actually have to link our
“Our strategy is focused on sharing cover story (see page 20) executive specs for our product to our customer, so
we need to have that backward feedback
and that is what our marketing person
will help us achieve that.”

The landscape may have become
more defined in the last 12 months then,
but the main challenges remain the same
for all graphite companies; defining a
market, finding an off-take partner and
securing finance.

– Dominic Piper

the growth of that demand and having director Allan Mulligan said simplicity

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 29

GAURSATPRAHLIIATNE

27 April 2017 - Novotel Perth Langley

Conference Sponsors:

To present, exhibit or attend as a delegate please contact Namukale
on (+61) 8 9321 0355 or email [email protected]

GAURSATPRAHLIIATNE

22 March 2016 - Novotel Perth Langley

Session One Thursday 27 April 2017
09:00
09:05 Welcome: Bill Repard, Executive Chairman, Paydirt Media Pty Ltd (5)
09:25 Keynote: Andrew Scogings, Principal Geologist, CSA Global (20)
09:45 Andrew Spinks, Managing Director, Kibaran Resources (20)
10:05 Cherie Leeden, Managing Director, Battery Minerals Ltd (20)
10:25 Trevor Matthews, Chief Executive Officer, Volt Resources Ltd (20)
10:35 Questions (10)
Morning Tea, sponsored by Ardiden Ltd (20)

Session Two Andrew Cunningham, Director, Walkabout Resources Ltd (20)
10:55 Dr John Parker, Managing Director, Lincoln Minerals Ltd (20)
11:15 Phil Hearse, Managing Director, BatteryLimits (20)
11:35 Bruce Richardson, Managing Director, Anson Resources Ltd (20)
11:55 Mike Rosenstreich, Managing Director, Hexagon Resources Ltd (20)
12:15 Questions (10)
12:35
12:45 Lunch, sponsored by BatteryLimits (60)

Session Three

13:45 Peter Canterbury, Managing Director, Triton Minerals Ltd (20)

14:05 Brad Boyle, Executive Director, Ardiden Ltd (20)

14:25 Peter Adamini, Senior Metallurgist, Independent Metallurgical Operations Ltd (20)

14:45 Tom Revy, Managing Director, BlackEarth Minerals NL (20)

15:05 David Christensen, Managing Director, Renascor Resources Ltd (20)

15:25 Questions (10)

15:35 Afternoon Tea (25)

Session Four Chair: Dominic Piper, Australia’s Paydirt
16:00 Panel Session (60)

17:00 Closing Drinks

* This programme is subject to change without prior notice

www.australiangraphiteconference.com

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Talga sharpens its graphene
cutting edge

Talga Resources Ltd continues to forge Talga has signed two joint development from its Vittangi graphite project in Swe-
a unique path to commercialisation of agreements to co-develop and commercialise den, it was immediately catapulted into
its graphite assets, having signed several the centre of this emerging industry.
new development agreements since the graphene-related products
start of the year. Talga’s most recent moves were to
sign two joint development agreements
While the majority of ASX-listed graph- to co-develop and commercialise gra-
ite players have chosen the traditional, phene-related products.
battery or expandable sectors for mar-
keting, Talga was the first to head down In March, the company announced an
a fourth road, the commercialisation and agreement to collaborate with Zinergy
application of graphene, the graphite UK Ltd over development and trialling of
derivative which has been touted as the graphene-based conductive ink formula-
most exciting materials discovery of this tions in components of the patented Zin-
century. ergy ultra-thin printed battery.

Graphene is graphite which is less Zinergy is targeting low-cost, mass
than 100 atoms thick, making it almost production of printed power which can
the world’s first 2D material. First iden- be used in a range of electronic products
tified at the University of Manchester in within fast-growing markets associated
2003, its commercialisation has been re- with smart packaging, portable electron-
stricted due to a lack of material. ics, wearables, radio frequency identifi-
cation devices and sensors, broadly de-
However, when Talga identified a sim- scribed as the “Internet of Things”.
ple process to create graphene using ore
“The [agreement] with Zinergy dem-

PAGE 32 APRIL 2017 AUSTRALIA’S PAYDIRT

onstrates growing demand Talga has extracted 5,000t from two trial mining campaigns at Vittangi, northern Sweden
by industry to harness the
properties of graphene, and nounced, Talga entered into a similar joint ise graphene-enhanced metal surface
supports the confidence development agreement with Chemetall, coatings.
held by others in our ability a global business unit of BASF Coatings
to functionalise graphene Division, to co-develop and commercial- Talga said the development pro-
and create cost-effective gramme aimed to “set new industry
high performance formu-
lations,” Talga managing
director Mark Thompson
said. “This further validates
Talga’s commercialisation
approach and follows our
other product development
success in battery miner-
als.”

Thompson said the alli-
ance would expand Talga’s
growth potential in energy
storage, with the company
already involved in a bat-
tery test programme with
the University of Warwick’s
Energy Innovation Centre.

While printed batteries
are among the most pub-
licly vaunted potential ap-
plications for graphene products, Talga
is also enjoying development success on
more prosaic applications.

A week after the Zinergy deal was an-

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 33

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

standards for eco-friendly, high “We will use this partnership
performance, corrosion resistant as a model to develop long-
surface treatments”. term supply opportunities to
other industry end-users within
“The programme will see co-de- Talga’s other target markets.”
velopment of graphene-enhanced
metal surface coatings that pro- While commercialisation of
vide high performance,” the com- its graphene product streams
pany said in an announcement. remains the priority, Talga must
“The programme has the potential also ensure the traditional min-
to expand the pre-treatment prod- ing aspects of its Vittangi pro-
uct range, including pre-treatment ject are executed correctly.
coatings for steel.”
The company completed its
The deal will involve the sale of second trial mining programme
Talga’s graphene formulations but at Vittangi, in northern Swe-
prices for the graphene were sub- den, during the December
ject to “commercial in confidence” quarter. The second campaign
restrictions, according to the com- extended and deepened the
pany. company’s 2015 open pit trial
mining exercise, cutting whole
Thompson said the deal was blocks of graphite ore, each
pleasing because it had started weighing around 7t, from the
both a partnership commitment project area. Talga has extract-
with Chemetall and validated Tal- ed 5,000t over the two trial min-
ga’s product and corporate strat- ing campaigns.
egy.
The company said the cam-
“The collaboration presents op- paign had provided further feed
portunity for Talga’s value-added material for its pilot test plant in
graphene products to access the Germany, but also allowed it to
global protective treatments mar- gather “critical data” for future
ket and is a major commercial full-scale production.
milestone for Talga’s technology,”
he said. Mark Thompson

PAGE 34 APRIL 2017 AUSTRALIA’S PAYDIRT

Syrah ready to break
ground at Balama

Syrah Resources Ltd remains on track Syrah reports the capital to build Balama unhindered and 1.2 million hours of work
to start commissioning at its Balama remains at $US193 million has been completed with no injuries or
graphite project in the Cabo Delgado significant incidents reported. Further-
province of northern Mozambique in Q2 mtpa plant at Balama which was 70% more, the first group of 20 local people
2017. completed at the time of print. Significant earmarked as haul truck drivers have
progress has also been made on mine been trained successfully.
Mine developments at Balama are on support infrastructure.
schedule with the construction of mining Meanwhile, Syrah has been working
facilities, such as a warehouse and wash Supporting infrastructure being estab- on potential off-take agreements within
down pads, complete. lished includes a 15.4MW power station, the battery minerals space. The com-
a 700,000L diesel fuel storage facility, a pany has signed a MOU with BTR New
Following the completion of topsoil re- product storage building and main labo- Energy Materials Inc in China and has
moval at Balama West, and subsoil re- ratory. begun further commercial discussions.
moval currently underway, Syrah aims to
start mining in May. Thanks to a fairly mild wet season, BTR is the world’s largest manufactur-
construction at the site has remained er of battery anode material for lithium-
At Balama, Syrah has the largest ion batteries.
graphite ore reserves in the world, with
resources totalling 81.4mt at 16.2% TGC “We are very excited about the oppor-
for 13.1mt contained graphite. tunity to develop sales and supply op-
tions with BTR, and we look forward to
A feasibility study, completed in May continuing the constructive discussions
2015, confirmed Balama will be a top that have been undertaken to date,” Syr-
quartile producer due to its high-grade ah chief executive Shaun Verner said.
and low strip ratio.

Ore will be processed through a 2

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 35

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Battery Minerals ready for
transfer to anode

The rebadged Battery Minerals Ltd is Battery Minerals’ Montepuez DFS will now incorporate a study on a
set to go full tilt at downstream pro- graphite spheronisation plant
cessing as it looks to carve its own inte-
grated niche in the graphite space. before we finalise things. The battery companies who have our samples and
guys love the material and want to see the final off-take partner will hopefully be
A number of graphite developers have a full demonstration plant by the end of one of those two.”
hit a brick wall when it comes to securing the year. Right now, we are down to two
definitive off-take agreements for their Japan currently dominates the battery
product but Battery Minerals is hoping Battery Minerals managing director anode market, producing the material for
to circumvent those difficulties by adding Cherie Leeden the likes of Tesla, Hitachi and Panasonic.
downstream capabilities to its project.
Achieving full demonstration size could
Last year, the company was one of five lead directly into full commercial produc-
participants to secure rights to a graph- tion.
ite sphernoisation demonstration plant in
Nevada, US. Battery Minerals has since “Phase 1 is one modular unit so at full
been sending sample material from its scale production we can just add tracks
Balama and Montepuez projects in Mo- from there,” Leeden said.
zambique to the facility to test its amena-
bility to spheronisation. The company believes it could take
two years at full demonstration scale to
“The pilot plant has been such a huge qualify the new material with anode mak-
success, not only in producing spherical ers but according to Leeden “once we
graphite but by doing so using heat only, can produce spherical graphite we can
no chemicals,” Battery Minerals manag- get in the door. The battery makers can’t
ing director Cherie Leeden told Paydirt. change anode supplier simply so we
need to prove we can provide what they
Spherical graphite is used to produce want at the scale they want.”
anode material for lithium-ion batteries
and Leeden believes it will be necessary To achieve that, Battery Minerals will
to produce such downstream products if have to prove it can mine and export its
graphite miners are to successfully ingra-
tiate themselves into the battery market.

“We don’t want to be just a quarry,”
Leeden said. “You need downstream
processing and you need to make sure
all your product can go on to be sold.
That is why the sector hasn’t seen off-
take agreements without spheronisation;
the battery producers have no interest in
flake graphite.”

In December, Battery Minerals chose
to incorporate a PFS into the spheronisa-
tion plant into its DFS for the Montepuez
project. The results were compelling.
The study found a 20,000 tpa micronis-
ing and spheronising plant would cost
$US48 million to build, producing net
revenue of $US4.8 billion over the 30-
year mine life at Montepuez. Project NPV
was estimated at $US377 million, IRR at
76.5% and payback at 1.5 years.

The task now is to find the right product
to sell to anode producers.

“It has taken us two years to take pro-
duction from milligrams to kilograms,
now we have to take it to tonnes,” Leeden
said. “We have given samples from the
plant to a number of battery anode mak-
ers and have been back and forth with
the process. I think it will be another year

PAGE 36 APRIL 2017 AUSTRALIA’S PAYDIRT

Montepuez ore from Mozambique. said. “The Mozambique and Tanza-
Trial mining is set to start this quarter
to provide feed to the demonstration nia projects are in the best position to
plant.
do that. They are in the lowest cost
Leeden believes the mining compo-
nent of the integrated project will have quartile and because of that I think
few challenges. “The mining and pro-
cessing is relatively simple, it is effec- there is room for more than one or
tively a recovery process, not an end
product,” she said. two players from that region.”

The Montepuez DFS emphasised There is much debate in resources
the robust nature of the mining opera-
tion with assumed production capac- circles about just how much graphite,
ity of 100,000 tpa 96% purity graph-
ite capable of being produced for a lithium, cobalt and nickel the lithium
capex of $US126 million with operat-
ing costs of $US444/t. battery market will demand in the

It is the low mining costs, and how coming decade. Leeden has followed
they feed directly into spheronisation
costs which has Leeden convinced the industry closely over the last two
Montepuez and the other East African
graphite projects are the most com- years and believes the West Austral-
pelling for battery makers.
ian resources industry has underesti-
The spheronisation PFS estimated
an operating cost of $US5,506/t for mated how big the impending revolu-
the anode material.
tion will be.
“Tesla is currently paying $US15-
20,000/t for anode material but they “There is a tsunami coming and WA
want to pay $US7,500. If we can pro-
vide anode material at less than that is a bit behind the eight ball. In Syd-
then both of us save money,” she
ney and Melbourne we are already

seeing the adoption of electric vehi-

cles, in fact six of our shareholders

already drive Telsas; it is happening

before our eyes. When you travel to

California the amount of EVs on the

road is amazing. And, I think we will

see the developing world adopt the

technology much quicker than the

West, like it did with mobile phones.”

Battery Minerals believes its Montepuez project in – Dominic Piper
Mozambique offers the kind of cost profile which will

prove most attractive to battery makers

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 37

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Lincoln prepares for big year

The project’s fundamentals “We decided to head back into of the project,” Parker said. “The existing
may be in place but Lin- an area where we first identi- plan is for a seven-year mine life at a pro-
cessing rate of 250,000 tpa and the idea
coln Minerals Ltd will continue fied a large, 4.5km-long airborne was this target may extend that mine
life. However, if we do identify shallow,
to test the limits of Kookaburra EM anomaly in 2012. It extends high-grade resources that can be mined
cheaply, we could look to bring them into
Gully as it moves towards pro- south-west of Kookaburra Gully the mine plan earlier. There is plenty of
potential to cart ore to the plant.”
duction. and we knew of it but never put
While the recent drilling could present
Lincoln’s plans have been any holes into it.” an added bonus to the economics of
Kookaburra Gully, ongoing metallurgical
clearly apparent since dis- With drill rigs already on site for test work will directly affect its viability.

covery of the Eyre Peninsula the upgrade work, Lincoln chose Defining geological and mining eco-
nomics is only part of the challenge for
project in 2012 but managing John Parker to put 100 aircore holes into the graphite developers with the marketing
director John Parker admit- EM target in March. of final products being just as vital. As the
commodity lacks a physical spot market,
ted to Paydirt there was still Parker said the early indica- graphite miners must secure off-take
partners to ensure they can sell material.
scope for further refinement of Kooka- tions were encouraging. With myriad graphite products and appli-
cations across the globe, project devel-
burra Gully, particularly in the areas of “There are no assays yet [first results opers must provide potential customers
with material suitable to their needs.
resource, mine life and marketing. are expected this month] but visually
Lincoln plans to undertake further met-
Lincoln is currently putting the final three quarters of the drill holes intercept- allurgical and marketing work this year.

touches to its PEPR, the most important ed graphite. They’re not all necessarily

remaining element of the South Austral- economic but the intercepts were quite

ian approvals process, but the company shallow, just below the surface in some

continues to hunt for ways of raising the cases, and it is a sub-horizontal band of

project’s status in a crowded graphite graphite.”

market. If results do show economic grades,

In March, the company launched a new Lincoln may be compelled to revisit its

drilling programme designed to both up- mining plans.

grade existing tonnes to measured status “The original target in this drilling was

but also test new areas on the tenement. to give us an idea of the long-term plan

PAGE 38 APRIL 2017 AUSTRALIA’S PAYDIRT

“There is a lot more metallurgy to come Further refinement of Kookaburra Gully, par- tion to mining within the grain-growing
this year,” Parker said. “We are doing a ticularly in the areas of resource, mine life and areas of South Australia but we have an
considerable amount on the downstream active and government-approved com-
value-adding processing. We are confi- marketing is on the cards for Lincoln in 2017 munity engagement programme, part of
dent we can produce concentrate of 95% which involves making regular presenta-
[93-98%] and we are looking at options graphite before that; our target is to pro- tions and updates to communities.”
to improve both grade and purity and duce graphite one way or another before
also micronising of the product for spe- the end of the year.” Lincoln made such a presentation to a
cific markets.” community group in the town of Tumby
Lincoln’s plan is to start Kookaburra Bay in March. Parker said the event was
Lincoln, along with a number of peers, Gully’s processing plant at 100,000 tpa, a success.
is attracted by the value generated from allowing it to be used as both a pilot plant
downstream products – including spheri- and product testing facility. “It was a very good forum for us and
cal graphite, the main material in battery allowed us to update the community on
anodes – and Parker said the company “It will be a flexible approach and as the progress of the PEPR. It is the main
would continue to pursue such opportu- we ramp up the marketing we may even approval in front of us and has to be with
nities as part of a longer term strategy. send ore to be processed elsewhere as the department by June 2.”
we develop and upgrade our material. It
“We are aiming to put some product will be a flexible approach but will cer- He said the company had completed
into traditional markets but also a lot of the tainly be a major focus for this year.” extensive work around the key commu-
special markets for graphite. We have a nity concerns of dust, water and traffic.
couple of specialised graphite marketers Another major focus will be lodgement
working on that, looking at opportunities of the PEPR and despite several cases “We’ve got very strict conditions placed
around the world. The graphite space is of community opposition in SA in recent on us by the regulator and only a very
dominated by China and it is very difficult years, Parker is confident approvals will small amount of dust is allow to leave the
to go and sell direct into China so we are be forthcoming. site. We’ll also upgrade the local roads
looking at other options,” Parker said. where necessary.”
“There is no question there is opposi-
However, Parker said the company Power is another obvious concern for
would continue to court traditional graph- both community and industry in the State
ite users such as the steel industry. but Lincoln will not put undue strain on
local supplies, according to Parker.
“It could take four years to get the
product qualified by specialised manu- “There’s enough spare capacity in the
facturers,” he said. “We want to produce local grid for us. We need less than 4MW
but the issue is reliability and how we
back up is a major challenge.”

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 39

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

No limits on Chinese options

Battery Limits Pty Ltd has struck an Battery Limits has been at the van- there’s definitely opportunity for suc-
agreement with Chinese EPC group guard of Australian-owned graphite cess in graphite. It is going to depend on
Xinhai in a move which should expand developments over the last five years. the scale of project – what’s the optimal
the Perth-based firm’s graphite capabili- Hearse said the sector had advanced in scale of production – and the level of
ties. that period but remained a challenging funding companies are able to get.
one.
Battery Limits has forged a reputation “Funding is difficult and putting off-take
as one of Australia’s pre-eminent graph- “It is a demanding market,” he said. in place is also difficult until companies
ite consultants, working on a number of “It’s opaque and there are a number of can prove they can supply the product.”
projects in Australia and Africa. options on how you make the decision to
get off-take agreements; which is the key The current crop of Australian graph-
Managing director Phil Hearse said the to success. There are different routes to ite companies are looking at a variety of
agreement with Xinhai would add further production and many people are pursu- routes to market, including production of
graphite capabilities to the company. ing different objectives so it can be con- basic concentrate, spherical graphite,
fusing.” expandable graphite and even graphene.
“Xinhai is a very experienced EPC
company, having executed more than Despite being at the heart of lithium- Most of these markets are dominated
500 EPC contracts,” Hearse told Pay- ion battery technology, graphite has lost by China and Hearse said the Xinhai
dirt. “It has its own fabrication facilities some of its sparkle in the Australian mar- partnership would allow Battery Minerals
in Shandong, a metallurgical lab and its ket, with investors instead choosing lithi- to provide technical support.
own engineering and R&D groups.” um and cobalt projects as their leverage
to the emerging energy story. “It gives us exposure to downstream
Graphite production is currently domi- processing through their experience,” he
nated by Chinese sources and Hearse Critics suggest the myriad graphite said. “We are trying to help clients and
said Xinhai’s experience in the sector plays on the market will far outstrip ex- give them guidance on how to develop
would offer clients insight into graphite pected demand for graphite products. their strategy. If they do go the down-
processing techniques. Hearse, however, retains optimism for stream processing route, we can then
the sector. provide technical support and accurate
“[Xinhai] specialises in mineral pro- costing.”
cessing equipment and has lots of expe- “You can’t put a number on it but
rience in graphite plants,” he said. – Dominic Piper

PAGE 40 APRIL 2017 AUSTRALIA’S PAYDIRT

Magnis lands key licence

Magnis Resources Ltd has been In awarding the SEZ, EPZA forward for his company and
granted approval to develop an ad-
vanced graphite processing plant at its director general JL Simbakalia Nachu’s development.
Nachu project in Tanzania.
said Magnis had demonstrated “We have received, and
Tanzania’s Export Processing Zones
Authority (EZPA) last month awarded the its project development work continue to receive, strong
company a special export zone (SEZ) li-
cence, which carries a number of finan- conformed to all of the require- support from the Tanzanian
cial benefits.
ments of the licence. Government and we are
Magnis will be able to apply the SEZ
to a section of land to be excised from “Magnis is the first mining very encouraged to hear that
the existing special mining licence area,
meaning the company does not have to company to achieve these re- Nachu is a project of signifi-
acquire any further ground to operate the
plant on. quirements and the EPZA are cant importance to them,” he

The ASX-listed company said it had especially pleased with their Frank Poullas said.
been actively developing advanced tech- commitment to the develop- “I would like to thank our
nologies which were capable of produc-
ing high-quality graphite products and ment and advancement of Tan- plus-100 strong team in Tan-
suitable for the requirements of the SEZ.
zanian industry, particularly with a tech- zania for their hard work and dedication
Under the SEZ legislation, Magnis will
be required to register a separate com- nology that is focused on environmental in getting Nachu shovel-ready and we
pany in Tanzania – Magnis Technolo-
gies Tanzania Ltd – which will hold the processes,” he said. look forward to reporting on other project
licence. Another subsidiary will operate
the mine and processing plant. Some of the key benefits of the SEZ developments and the solid corporate

include exemption from payment of cor- progress Magnis is making.”

porate tax for 10 years, exemption of Award of the SEZ is the second ma-

taxes and duties for machinery, equip- jor milestone for Magnis in 2017 after

ment and construction materials used to signing a MoU with Russia’s ROSATOM

develop SEZ-related infrastructure and International Network in January for pro-

the exemption from payment of withhold- ject financing and off-take of super jumbo

ing tax on rent, dividends and interest for and jumbo flake graphite from Nachu.

10 years. Discussions around binding off-take

Magnis chairman Frank Poullas said agreements and a formal project financ-

the award of the SEZ was a major step ing deal were ongoing at the time of print.

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 41

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Kibaran closes in on funding

Members of Kibaran’s resettlement working group in Tanzania

Kibaran Resources Ltd is edging closer relief to ourselves, but also create a lot Kibaran completed a BFS on a mine
towards securing debt finance for its of value for the company once it’s final- and flotation project set-up at Epanko in

Epanko graphite project in Tanzania. ised,” Spinks told Paydirt. 2015, estimating a $US77.5 million capex

Epanko’s resettlement policy frame- “It’s a very unique situation for us in was required to build a 40,000 tpa opera-

work and stakeholder engagement plan that we’ll be the only company with a tion carrying a NPV of $US197.4 million.

– a key requirement by Kibaran’s funding completed feasibility study to Equator With more than 100% of its initial

partners – was completed last month. Principles standard that has been signed production from Epanko locked away
“Kibaran’s funding partners – KfW IP- off by an independent engineer.
in the form of binding off-take agree-

EX-Bank and Nedbank ments with Sojitz Corp

– require the documen- It’s a very unique situation for us in (14,000 tpa), Thyssen-
tation, which is also part Krupp (20,000 tpa) and

of the final relocation ac- that we’ll be the only company with an unnamed European
tion plan for the project, a completed feasibility study to Equator graphite trader (10,000
to conform with Equator tpa), Kibaran is looking

Principles and IFC en- Principles standard that has been signed to lift the total output to
vironmental and social off by an independent engineer. 60,000 tpa.
performance standards.
Kibaran is also weigh-

Germany’s KfW IPEX- ing up a downstream

Bank is all but commit- processing option,

ted to providing up to $US40 million “All these emerging markets are with a scoping study on battery-grade

of debt funding for Epanko’s develop- looking for more sustainable, certified production from Epanko indicating a

ment, while Africa’s Nedbank is being products and that bodes incredibly well NPV of $US115 million for a capex of

lined up for a further $US30 million. for us, once we’re in production, to se- $US30 million.

Kibaran managing director Andrew cure more market share.” “The 40,000 tpa case is obviously what

Spinks said the resettlement plan was Spinks said his company had enough has been presented to the banks, but giv-

the final box which needed to be ticked funds in the bank ($7.3 million at the end en this increasing demand we’re seeing

before either group could formally award of 2016) to push ahead with pre-devel- from the battery market, we’re preparing

project finance. opment work at Epanko, including two for that growth,” Spinks said.

“Securing that debt will obviously be feasibility studies. “We will soon report a 60,000 tpa case

PAGE 42 APRIL 2017 AUSTRALIA’S PAYDIRT

Securing debt funding for Epanko will be a relief for Kibaran

in conjunction with the 40,000 tpa. It will which is a major competitive advantage, “Our strategy is focused on sharing
be at the same standard as the 40,000 given that the Chinese supply the en- the growth of that demand and hav-
tpa [case] and it will give us the flexibility tire global battery market for spherical ing a better quality product that’s so-
and the optionality to look at the 60,000 graphite. cially and environmentally to a higher
tpa case soon after we commence pro- standard. We’re doing a lot behind the
duction. scenes to secure that market share. It’s
going to add a lot of value to the com-
“Our strategy is clearly situated around pany going forward.”
selling all of our product. We don’t want
to produce any more product than what Spinks said he was encouraged by the
we can sell and as soon as we can se- appetite for graphite projects after at-
cure interest past 40,000 tpa, we’ll be go- tending recent investment conferences
ing to 60,000 tpa. And I think the signs in Africa, Japan and Germany and he be-
are very, very positive that may happen lieves his company is ideally positioned
sooner rather than later.” to capitalise on that interest.

Recent industrial-scale production of However, he is not concerning himself
spherical graphite from Epanko showed with the progress of other graphite hope-
it had the requisite physical and chemi- fuls, particularly those in East Africa, as
cal properties for use in several high-end several strive to become the first new
lithium-ion batteries. This was confirmed source of production.
from samples sent to battery anode man-
ufacturers in East Asia. “We think we are globally the most ad-
vanced project, given the technical work
Another round of testing at a leading we’ve done and the off-take and debt fi-
German battery testing facility was under nancing, but I think we’re very much fo-
way at the time of print. cused on our own game,” Spinks said.

“We’re really encouraged and excited “We do see it as a race, but you don’t
by the test work that we’re receiving on want to run too fast. Our strategy is to be
our battery grade spherical graphite,” a long-term stable supplier and securing
Spinks said. the right partners now is key to that suc-
cess.”
“The results are really quite outstand-
ing, but they’ve not being recognised to – Michael Washbourne
date. We’ve announced our product is
better than the Chinese specifications, Andrew Spinks

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 43

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Matthews enters the vault
for funding

Trevor Matthews is no stranger to the An IRR of 87% and pre- Graphene Inc has agreed to
industrial minerals sector.
After seeing the Keysbrook mineral tax NPV of $US1.3 bil- take 5,000t of Volt’s graphite
sands operation, south of Perth, into
steady-state production, Matthews de- lion was estimated, while over five years.
parted MZI Resources Ltd as managing
director in November 2016 and has since initial capex of $US173 Although small in amount,
started life in the graphite sector with Volt
Resources Ltd. million for the process- the binding off-take agree-

Matthews steps into the chief execu- ing plant and upgrades to ment is more than any rival
tive position at Volt during a critical pe-
riod for the Tanzanian-focused graphite roads and port warehous- ASX-listed graphite-hope-
hopeful.
ing will be further defined fuls can boast.
Volt is in the early phase of a DFS on
the Namangale graphite project, about in the DFS. Having such an agree-
200km west of the deep water port at
Mtwara. Despite hosting Tanza- ment in place will help Mat-

A PFS on Namangale indicated 3.8mt nia’s largest graphite re- thews negotiate financing
at an average 4.7% TGC for 170,000
tpa graphite over 22 years could be source – 461mt @ 4.9% options and other agree-
produced, with a life-of-mine opex of
$US536/t, FOB Mtwara, assumed. TGC – small-scale mining ments with off-takers and

and processing activities potential partners.

are being planned and “We’re also looking at the

are due to start in early Trevor Matthews funding for the larger devel-
2018. opment planned under the

Therefore, Matthews is PFS. We need to look at dif-

on the move now to lock-in commercial ferent ways of advancing the project at

agreements and off-takes, with Volt hav- the study and construction phase. My

ing a win on that front in March. knowledge around financing and what

US-based graphene producer Nano needs to be done to facilitate that will

PAGE 44 APRIL 2017 AUSTRALIA’S PAYDIRT

help us achieve that,” Mat- outside the box for develop-
thews said.
ment funding.”
“We are looking at fund-
ing during the final study The Middle East capital
phase rather than waiting to
finish it and then going out markets are being targeted
and trying to find our fund-
ing sources. The industrial as a possible pool to source
minerals space is opaque;
generally the marketing and funding from, with Mat-
pricing arrangements are
between the supplier and thews visiting the region last
end-user. There are no ter-
minal markets, no spot pric- month.
ing and there is no clear way
for investors or financiers to “You want to be looking at
understand what the pricing
is for your products at any the different bond markets
point in time. Consequently,
it is more difficult to get sup- as well as a potential fund-
port from equity and debt
markets due to this market ing source. I think you need
opaqueness.”
to be talking to groups that
Matthews is well versed in navigating
through the difficult stages of funding, might be interested in po-
having had to complete development
funding for Keysbrook during 2013 when tential joint ventures where
many financiers were exiting the resourc-
es space. they become a partner in the

Eventually, private equity group RCF funding,” Matthews said.
and RMB weighed in with equal parts of
“If you can structure it

right, you could put in place a

funding structure that means

Volt is in the early stages of a DFS at Namangale in Tanzania you don’t have to issue more

equity to get the project into

equity and debt funding and Matthews is development. That provides a pathway

confident a funding solution for Naman- to construction and operations and prob-

gale will be delivered this year. ably helps with the off-take discussions

“You have to be looking across differ- as well. Making customers comfortable

ent funding sources as well, I don’t think that you can deliver product when they

you can just look at traditional bank fi- need it, is also part of the off-take discus-

nance,” Matthews said. “I’m not sure sions.”

those banks are going to be there for – Mark Andrews
graphite developments, you have to look

Rapidly developing the
Ancuabe Graphite Project in Mozambique

Premium large flake graphite project in Road, power and port infrastructure in close
proven graphite region proximity
Product suitable for both expandable and Strong balance sheet with no debt
battery graphite markets Experienced implementation team with
Project capable of producing exceptional proven track record
grade concentrate (auvpertaog9in7g.59%7.5T%GCT)GC Supportive cornerstone shareholder
aacroossssaalllflflaakekesiszessiz) es
Pre-Feasibility Study due for completion ASX: TON
by late 2017

Ground Floor 10 Outram Street West Perth WA 6005
+61 8 6489 2555 www.tritonminerals.com [email protected]

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 45

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Anson eyes on battery minerals

Australian graphite hope- Voyageur Industrial Minerals Ltd, able the ULI project to become a world-
ful Anson Resources Anson has started work on its flag- class lithium project,” Richardson said.

Ltd has started a drilling pro- ship ULI lithium brine project in Meanwhile, last month, Anson pur-
chased another project in the Mid West.
gramme at its 100%-owned Utah, US.
Initial drill samples from the Hooley
Ajana project in the Mid The project – in Grand County Well nickel-cobalt project, 300km east
of Carnarvon, suggest extensive cobalt
West of Western Australia. Utah, 300km from Salt Lake City – mineralisation over an area of 1.5km.

The programme, which sits on the Roberts Rupture within Anson sees the purchase as a strate-
gic step into the battery minerals market,
started in March, will con- the Paradox Basin, where lithium considering cobalt is a key component
for lithium ion batteries, and has a higher
sist of RC drilling pro- concentrations of up to 1,700 ppm dollar value and weight being used in
the main lithium-ion battery types than
grammes at Walcott and Bruce Richardson have been discovered as close as lithium.
Mary Springs. 800m away.
“The addition of a cobalt project adds
Ajana, 130km north of The ULI project consists of 80 a third key material used in the rapidly
growing battery market, further strength-
Geraldton, is prospective for graphite, mineral claims covering 720.3ha. ening Anson’s strategy to be a material
supplier to the new energy sector. The
zinc and lead. Under the agreement Anson will un- lithium ion battery market is being driv-
en by the demand for electric vehicles
Anson managing director Bruce Rich- dertake exploration activities. and electricity storage from domestic
and commercial electricity generation
ardson said the mineralisation identified Upon earning 70% interest, Anson has throughout the world,” Richardson said.

from the early holes looked promising. the option to purchase the remaining

“The company had already sent the 30% of the project.

first batch of samples to a Perth labora- An aggressive exploration programme

tory for assay,” Richardson said. is under way, which will allow Anson to

Further afield, Anson is looking to in- fast-track the progression of the ULI pro-

crease its presence in the burgeoning ject.

battery minerals market via its new lith- Richardson said the site had known

ium and cobalt-nickel projects. lithium grades and geology that enabled

After signing a JV agreement with easy extraction.

Voyageur Minerals Inc, a subsidiary of “These features are expected to en-

GAURSATPRAHLIIATNE

27 April 2017 - Novotel Perth Langley

The CD-Rom of the 2017
Australian Graphite Conference

will be available soon

CD-Rom – $30 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]

PAGE 46 APRIL 2017 AUSTRALIA’S PAYDIRT

Rosenstreich takes over at Hexagon

Experienced mining project developer TGC for 940,500t of battery-rele-
Mike Rosenstreich has been selected vant contained graphite.

as the managing director to take Hexa- The resource is comprised of

gon Resources Ltd into the next phase. the Emperor, Longtom, Wahoo

Prior to Rosenstreich’s appointment and Barracuda deposits at McI-

last month, Hexagon was close to finalis- ntosh, which is Hexagon’s main

ing a PFS at the McIntosh flake graphite priority.

project, East Kimberley, Western Aus- Rosenstreich said the attraction

tralia. to Hexagon was that McIntosh

However, more time will be taken on was a pre-development opportu-

the PFS as Rosenstreich warms into the nity with good prospects, rather

managing director’s chair at Hexagon. than an early stage exploration

“I am uncertain on the timing of the play.

PFS at this early stage of my career at While Rosenstreich settles in at

Hexagon,” Rosenstreich told Paydirt. Hexagon, he will look to appoint

“I can see there are quite a few op- a marketing manager to help Hexagon has a number of targets at McIntosh

portunities to enhance promote the company’s

the project from the base graphite. are making a bar of gold that we can put

case parameters that the “We’re looking to appoint a spe- on the shelf and sell to anybody, we actu-

guys have achieved so cific marketing manager to really ally have to link our specs for our product

far.” boost that process,” he said. to our customer, so we need to have that

Drilling in the second “The key to our project is to backward feedback and that is what our

half of 2016 delivered really get that feedback from po- marketing person will help us achieve

Hexagon a resource up- tential customers and drive their that.”

grade at McIntosh which requirements back into our pro- – Mark Andrews
is now 20.9mt @ 4.5% Mike Rosenstreich duction process. It is not like we

AUSTRALIA’S PAYDIRT APRIL 2017 PAGE 47

AUSTRALIAN GRAPHITE CONFERENCE PREVIEW

Triton floats a message
from Ancuabe

Twelve months ago it ap- delivered and we are fo-
peared Triton Minerals cused on continuing to de-

Ltd was bound to drift into liver.”

obscurity. Canterbury believes there

The company went into are probably still too many

voluntary administration – graphite players in the mar-

an event which didn’t need ket, however, by targeting

to happen, according to cur- a premium product suitable

rent Triton managing direc- to the expandable graph-

tor Peter Canterbury – in ite sector and backed by a

March 2016, with Ferrier well-resourced sharehold-

Hodgson appointed to help er, Triton has the ability to

preserve and restructure move decisively.

the company and its under- “Triton is based on large

lying operations. flake size, high concentra-

By December, the com- tion levels, a simple tried-

pany had been recapitalised and-tested process with

through a strategic invest- good logistics, positions us

ment from Shandong Tian- very well compared to most

ye Group, underwritten by The final round of drilling ahead of a mine reserve to support a feasibility of the others [competitors],”
Somers & Partners. study will start shortly. In the meantime, a maiden resource from T16 Canterbury said.

Shandong Tianye – recent is expected in April There is a power line run-

purchasers of the Southern ning through Ancuabe and

Cross gold mine in Western Australia for AMG’s graphite mine, where a return to a port about 80km away. Triton can also

$330 million and reportedly in the run- production is imminent – in 2019. leverage off a proven history of graphite

ning to acquire 50% of the Super Pit in “Our belief in Ancuabe is due to the production in the area.

Kalgoorlie – owns 20% of Triton, which location having good quality production The company’s confidence is also

is now considered a potential near-term history, good logistics and a premium growing in the resource, with met test

graphite producer at Ancuabe, Mozam- product from the work we have done. work producing concentrate purity great-

bique. This enables Triton to position ourselves er than 98% on average, while about

Ancuabe – 14.9mt @ 5.4% TGC – in with a premium product able to deliver 60% of the resource sits in the large flake

the heart of Mozambique’s graphite in a niche market in a quick timeframe,” category (greater than 180 microns) and

Cabo Delgado province, is the smaller Canterbury said. 32% jumbo flake (greater than 300 mi-

scale option Triton is pursuing. A scoping study on Ancuabe and re- crons).

Under the previous regime, the larger sources upgrade was expected to be At the time of print, expandability work

1.46bt @ 10.7% TGC Nicanda Hill pro- released in April, with Triton essentially was being conducted in Germany and

ject at Balama North was a focus, how- working towards something in the range further met test work for the feasibility

ever, will remain on the backburner. of 25mt @ 5.6% TGC for 50,000-60,000 study was expected to start shortly.

“We are a company that has gone from tpa over a 27-year mine life. Canterbury, an experienced project

looking at a very large project Capital costs sub-$100 mil- developer in Africa, has met test work re-

which will take a long time lion would be desirable and sults at his disposal which he can show

getting to market and may not more should be known by potential off-take and financing partners,

have a home for its product, the end of the year, as Triton as his attention shifts in this direction.

to a company that is much pushes to have all feasibil- With China recently passing a man-

more agile at Ancuabe, which ity studies completed within a date for the use of flame retardant ma-

can be delivered in a much year of its rebirth on the ASX. terial to be used in the building industry,

quicker timeframe,” Canter- “From an investor perspec- there is potential demand for expandable

bury told Paydirt. tive this looks like a re-carna- graphite to increase between 250,000t

“We have a committed tion from dormant company and 1mt.

board and cornerstone in- to a company that has a very Triton sees this as an opportunity for

vestor in place and we are targeted direction with a fast- its product and will focus its marketing

well funded to fast-track this Peter Canterbury tracked development which strategy to this sector.
through the studies phase we believe is attractive from – Mark Andrews
into an investment decision.”
an investor’s perspective,”

Triton is aiming to have something up Canterbury said.

and running at Ancuabe – adjacent to “We have been determined to fast-

the $550 million specialty metals outfit track this development, so far we have

PAGE 48 APRIL 2017 AUSTRALIA’S PAYDIRT

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Rapid Renascor goes big

Renascor Resources Ltd’s Arno project
in South Australia is now host to the
world’s ninth largest indicated graphite

resource.

An updated resource estimate for

the Sivour deposit was announced last

month, with the indicated resource now

standing at 51.8mt @ 8.1% TGC for 4.2mt

contained graphite.

Sivour’s total resource lifted to 80.6mt

@ 7.9% TGC for 6.4mt contained graph-

ite, including a higher-grade zone of

30.1mt @ 10% TGC for 3mt.

Renascor managing director David

Christensen believes his company now

has a “globally competitive” graphite pro-

ject on its hands.

“We think we’ve got some real advan-

tages, in particular, the horizontal orien-

tation of the orebody is going to turn into

significant savings in the mining costs,”

Christensen told Paydirt.

“We know we can get some good high

purity concentrates and really target the

high-tech growth industries for graphite. Renascor’s Sivour deposit hosts the ninth largest indicated graphite resource in the world

I think we’re climbing up the value chain,

where we previously thought we had outcropping graphite. Our project didn’t is lining up the costs, and we expect to do

something that looked like it was com- have any outcropping graphite.” that within a month.”

petitive in the Australian context, we now Having a large graphite resource is not A scoping study will be completed

think we can compete globally with some necessarily an advantage, with off-takers and released to the market sometime

of the larger-scale production graphite and other end-users typically looking for this quarter, with the company looking

developments coming out of Tanzania, high-grade deposits and purity of prod- forward to comparing the findings with

Mozambique and East Africa in general.” uct. those reported by its peers in the graph-

Renascor has made rapid progress at Christensen believes his company has ite industry.

Arno since picking up the project in late addressed any concerns about grade Despite positive progress over the last

2015, including the discovery of Sivour through the definition of a high-grade 18 months, Renascor’s share price has

early last year. zone, but product testing is still a work in hardly budged and was trading at 2.3c at

Christensen said he was amazed at progress for Renascor. the time of print. However, Christensen

how quickly his geology team had been Test work at ALS Metallurgy in Ad- is hopeful of a turnaround in the near fu-

able to build up a quality elaide late last year ture.

resource in an area of the achieved concentrates of “The space has pulled back across the

Eyre Peninsula not usu- 99% TGC from simple flo- board and we knew as a relative new-

ally known for this type of tation, without chemical or comer we would probably be more nega-

graphite concentration. thermal purification, and tively impacted by overall macro-moves

“It looked very inter- recoveries of 91%. in the graphite sector,” he said.

esting in the Australian Jumbo flake (+300 mi- “That being said, as we push through

context before we drilled crons) graphite concen- some of these developments – we up-

it, but then with each pro- trates at 94% TGC were grade the resource, we get the met re-

gressive drill programme it also produced simultane- sults out and we get our scoping study

started to look better and ously. out – then we can benchmark ourselves

now when we start to look “The initial test work has against everyone else. That will be the

at the types of high-grade David Christensen been very good and within opportunity to see if we stack up from
tonnes we have, it stacks a few weeks we expect a share market perspective against the

up not just in the Austral- to be coming out with up- market capitalisations of some of these

ian context but the global context,” he dated met work on more comprehensive more advanced guys.”

said. samples from 14 different areas within Christensen said his company had

“That was a bit of a surprise because what we think will be the first 10 years of enough cash ($2.4 million at the end of

it’s really quite unique for the region. the mine life,” Christensen said. 2016) to immediately push on with PFS

There’s a lot of historical graphite occur- “The next step for us is whether we work once the scoping study is complete.

rences in the area where we’re located, have the purity in product. If we can put – Michael Washbourne
but all of those were discovered with that together then the next step after that

PAGE 50 APRIL 2017 AUSTRALIA’S PAYDIRT


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