May 2018 VOLUME 1. ISSUE 260 $11.95
paydirt
front and back cover
supplied seperately
Australians bridge
the Pacific divide
• Latin America Down Under preview ISSN 1445-3436
• FIFA World Cup 2018... A miner’s guide 04
PAGE 1 MAY 2018 AUSTRALIA’S PAYDIRT 9 771445 343007
CONTENTS
PAYDIRT (ISSN 1445-3436) 5 NEWS
Published by Jupiter Mines was reintroduced to the ASX
Paydirt Media Pty Ltd. last month courtesy of the largest mining
A.C.N. 063 985 133 IPO Australia has seen for some time. The
$240 million float was opened and closed
Head Office: within three months, a true indication of the
Suite 9, 1297 Hay St, West Perth rebound in sentiment for commodities and
Western Australia 6005 the appetite of deep-pocketed investors for
P.O. Box 1589, West Perth resources stocks. Mark Andrews reports on
Western Australia 6872 the bang for buck investors will be getting
Phone: (+61 8) 9321 0355 from Jupiter this time around
Facsimile: (+61 8) 9321 0426
[email protected] 24 COVER 5
www.paydirt.com.au The last 12 months have seen some of 24
the ASX’s most prominent mid-tier min-
ers open up to Latin America. The likes
of Newcrest Mining, Oz Minerals and
Editorial: Fortescue have ventured over the Pacific
Editor: Dominic Piper to capitalise on some of the most prospec-
Deputy editor: Mark Andrews tive, but largely untouched, mineral explo-
Journalist: Michael Washbourne ration ground in the world. Of course, the
Photography: Picture This mid-tiers’ interest has been heightened by
Art director: Marian Noonan the success of SolGold at Cascabel in Ec-
Contributors: uador. Dominic Piper talks to companies,
Keith Goode (Sydney), Brendan Ryan analysts and investors on why Australian
(Johannesburg), Ross Louthean mid-tier interests will continue to grow in
Latin America
Advertising:
Advertising manager: Richa Fuller 30 LATIN AMERICA
Subscriptions: Mitchelle Matambo DOWN UNDER
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 The seventh coming of Latin America
Pre-press and printing: Down Under at the Pan Pacific Hotel in
Vanguard Press 26 John St,
Northbridge WA 6003 Perth, May 16-17, promises to tighten the
Member of: bonds governments, mining and services
Paydirt Media companies, analysts and investors from
Executive chairman: Bill Repard
Finance manager: Giovanny Jefferson both sides of the Pacific have nurtured
Accounts/administration: since the inception of this conference in
Heather Melling
Conferences: Melita Fogarty, 2012. An indication of the level of activity
Namukale Nakazwe-Msiska,
Christine Oelschlaeger of Australian mining companies in Latin
America is clear in our 33-page preview to
the conference
64 WORLD CUP
It is that time again and for much of our
readership it is time to get patriotic and get
behind the Socceroos as they prepare to
partake in the biggest sporting event on
the planet – FIFA World Cup 2018. Paydirt
takes the opportunity to embrace the event
and provide a light-hearted look at each
country’s prospects in the tournament and
in the world of mining
Member of: 30
Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be
reproduced in any form without the consent of
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
parties
Traditional metals plead with
investors: forget-me-not
Looking through back issues of Pay- I’m not suggesting I’m able to pick the winners and losers in this
dirt often provides a window into the scenario and I sincerely hope shareholders are rewarded for
industry mood of the relevant period. their enthusiasm for the EV and battery boom because the revo-
A decade from now, when I look lution is evidently here to stay. I just can’t envisage a time when
back on the early issues of 2018, the ASX will boast 30 cobalt producers, 60 lithium producers and
there will be little doubt that our re- 20 vanadium producers.
cent coverage of the battery miner- There is also nothing wrong with juniors switching between
als of lithium, graphite, cobalt and projects, commodities and jurisdictions; sometimes you do what
now vanadium will be stark. is needed to survive. But, in the case of some companies they
So, what will this coverage say about the market in 2018? One are doing nothing more than surviving. There is no long-term
“of the major surprises will be how strong investor support was strategy to build a sustainable business out of their newest ven-
for battery minerals projects while ture; the vision only extends as far
companies focused on traditional I just can’t envisage a as being able to undertake the next
metals such as copper, zinc, nickel capital raising.
and even gold failed to inspire the time when the ASX will This is where the strategy begins
market. boast 30 cobalt producers, to be a problem for the rest of the
sector. While investor attention is
I will find evidence of a strong
rebound in base and precious met- 60 lithium producers and 20 dragged towards these upstarts,
als prices over the course of 12 vanadium producers. explorers undertaking genuinely
months leading into 2018 but as I progressive work on unfashionable
flick through the pages, I will no- metals are ignored.
tice those companies focused on The capital raisings of are suck-
the traditional metals being outperformed by the battery mineral ing oxygen out of a market which isn’t in a healthy enough state
upstarts; in many cases, on the back of little or no compelling to support everyone.
exploration or development data. Aussies a step ahead in LatAm
For instance, last month saw Breaker Resources NL announce
a decent maiden resource of 11.8mt @ 1.6 g/t for 624,000oz gold Paydirt’s major feature this month is our preview to the Latin
from its Bombora discovery on the Lake Roe project in West- America Down Under conference, to be held in Perth on May
ern Australia. The market response was savage, with Breaker 16-17.
shares sold down 34% on the day of the announcement. After six years of the conference, we are beginning to see a
Admittedly, the size and grade of the resource were a bit lower genuine switch in momentum for Australian companies in what
than expected and well short of the magical 1 moz mark that usu- remains the world’s most popular exploration investment destina-
ally has the market gushing but given it is a maiden resource for tion.
a greenfields discovery, it could be expected that the market cut There are now 68 ASX-listed companies exploring, developing
Breaker a bit of slack, particularly as gold is predicted to continue and operating in the region and recent activity suggests this only
its upward trajectory in the face of global political and economic set to increase in coming years.
uncertainty. The commitments from Newcrest Mining Ltd, Oz Minerals Ltd
However, it appears instead that the market prefers to back and Fortescue Mines Group Ltd point to a new appreciation of
blue sky battery minerals stories of indeterminate value over any- the opportunities on offer in the region.
thing with tangible numbers at the moment. For too long, Aussies assumed the North Americans had Latin
The market’s predilection for such stories has left the ASX lit- America wrapped up; they are beginning to realise this isn’t the
tered with companies who have abandoned base and precious case.
metals projects in favour of boasting about battery mineral po- So, as the TSX companies battle against the rising tide of can-
tential. nabis and cryptocurrencies, the ASX-listed mid-tier companies
Of course, we have seen this all any number of times before. have the chance to bring their superior valuations to bear while
A decade ago there were some 60 iron ore juniors listed on the Australian juniors can show that, for once, they are ahead of
ASX. Today, we see less than a dozen and of those only Fortes- their TSX-V rivals in securing the best ground and the right lev-
cue Metals Group Ltd and Atlas Iron Ltd (and then only just) els of funding in Latin America.
made it through to production.
There is no doubt an iron ore boom took place in Western
Australia, it was just that very few of the juniors who rode that
boom ever contributed to the State’s iron ore production or to
their shareholders’ overall wealth particularly.
It was a similar situation in the uranium boom which followed. I
visited dozens of uranium projects across Australia and Africa in
the mid-2000s but only a handful ever came to fruition.
The same will undoubtedly happen with the battery minerals. [email protected] @DominicPiper
PAGE 4 MAY 2018 AUSTRALIA’S PAYDIRT
NEWS
Jupiter takes to the sky
Australia’s largest mining IPO in five the longstanding Mining Charter issue
years was welcomed across the
sector when Jupiter Mines Ltd re-listed a priority.
on the ASX last month.
“[Since December there has been] a
In completing the $240 million IPO at
40c/share – equating to a market cap very material regime change in which
of about $779 million – Jupiter also ful-
filled a pledge made to shareholders a new president, Cyril Ramaphosa, re-
when it deregistered from market back
in 2014. placed Jacob Zuma. Ramaphosa has
“That was right in the middle of a ter- made very positive noises about the
rible five-year bear market, which saw
the share prices of the great, big, pow- importance of resolving the stalemate
erful mining companies of commodi-
ties collapse,” Jupiter chairman Brian in the mining industry,” he said.
Gilbertson told media.
“Mantashe – who is a very experi-
“We watched the value of Jupiter de-
cline from $1 billion at the start in 2010, in enced tough, trade unionist and is not
line with everyone else. That didn’t give
us any satisfaction seeing everyone else going to be a pushover for anyone –
suffering the way you are suffering.
Jupiter chief executive Priyank Thapliyal and has made statements that they hope to
“We were trying to build a mine and we chairman Brian Gilbertson get it [Mining Charter] resolved some-
had shareholders suddenly getting very time in May, which would imply con-
worried about what the future was. At
that point, we were down to $300 million sold at an average benchmark price for sensus between the Government, trade
[market cap] or something and I think we
were then at risk of being taken over; a 37% manganese of $US4.74/dmtu. FOB unions, communities and industry and so
very fine asset at Jupiter into something
very cheesy. We debated and discussed cash costs were $US2.09/dmtu. on. That seems to me to be an abnor-
with shareholders and they agreed to
delist. We said: ‘OK, trust us. We will fin- Guidance for FY2019 is 3.3 mtpa, with mally tight timetable, but it is clear that
ish the mine and then we will [relist], as
times improve’, which no-one believed spot prices at the time of print $US7.21/ the objective of the new government is to
would ever improve when you’re down in
the trough. That was the pledge that we dmtu. make South African mining an attractive
made to shareholders.”
“I think for the next 6-12 months the home for capital which it hasn’t been in
Times have changed for the better in
the manganese market and, with all nec- story is very simple; we focus on what we recent years.”
essary capital already sunk at Jupiter’s
49.9%-owned Tshipi operation in South did over the course of the last financial Despite the tardiness of SA’s min-
Africa, the company re-enters the bourse
on a promise to investors to pay out 70% year,” Thapliyal said. ing sector, Tshipi has been built and is
of profits in dividends.
“That is frankly the business plan for making money, a point Thapliyal keenly
According to the company’s investor
presentation, 28.7% of Jupiter is held by the foreseeable future, if we can deliver pointed out.
institutions – 14.8% Stichting Pensioen-
fonds ABP and 13.4% Investec Bank Ltd, that we will make lots of money and there “We have two iron ore projects in
both of which were not selling sharehold-
ings in the IPO – 12.2% by high net worth is only one place where that money is Western Australia which were about to
and/or retail shareholders (including IPO
participants), while Pallinghurst Steel destined for and that is the shareholder’s go when the iron ore price was above
Feed (Dutch) BV has 7.5% in escrow.
pocket. As Jupiter, we have no desire $100/t. It would have made as much
“The rest of the shareholders who also
believe in the story and want to be part of to build an empire, we have no desire money as Tshipi is making now, but it
the stock going forward have agreed to
hold the rest of their stake and even com- to do any acquisitions, we have no debt is still on a piece of paper because we
mitted to an 18-month escrow,” Jupiter
chief executive Priyank Thapliyal said. at Jupiter; we have no debt at the asset could not get the support or approval, ei-
In FY2018, EBITDA was $331 million level. Whatever is made at Tshipi, half of ther from the port authority or from the
for after-tax profits of $202 million from
Tshipi where 3.34mt manganese ore was that will come to Jupiter and half into the government which was running WA at
shareholders’ pockets.” that time,’ he said.
The simplicity of such a story made “They [WA Government] lost out on the
the IPO attractive to investors who now royalties and taxes, we definitely lost out
have exposure to a 100-year long asset because that could have been another
– among the top three in terms of scale Tshipi, definitely not in the same league
in the world – and one of the lowest cost in terms of life, but in terms of prospec-
manganese projects in the world. tivity and potential to make that kind of
“There is a lot of low hanging fruit in the money.”
Kalahari,” Thapliyal said. Jupiter is no longer lamenting the lost
“In terms of the consolidation, which is opportunity in WA and is revelling in the
largely in our backyard, that is largely go- success of completing a $240 million IPO
ing to be the focus for Brian and myself, – led by Hartleys Ltd and co-managed by
and if we can deliver that there is a lot of Foster Stockbroking Pty Ltd and Aitken
potential value to be unlocked.” Murray – in just three months.
Jupiter’s listing brings some positive “It’s great for the resources market and
light to the South African resources sec- tells us beyond any doubt there is signifi-
tor which, on top of poor sentiment for cant liquidity available to the industry. I
commodities, has suffered at the hands suspect, though, it might have drained a
of a Government which has done its best bit of that, so maybe the mining market
to alienate it. tightens up for the next little while as a
However, with new president Cyril result,” Lion Selection Group Ltd’s Hed-
Ramaphosa and new mining minister ley Widdup told Paydirt.
Gwede Mantashe leading the country, – Mark Andrews
Gilbertson believes substantial progress
is being made in SA with resolution to
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 5
NEWS
Vedanta names Venkat
Diversified miner Vedanta Resources After 18 years with AngloGold Srinivasan Venkatakrishnan (Venkat) will move
plc named AngloGold Ashanti Ltd’s on and start as Vedanta chief executive in August
Srinivasan Venkatakrishnan as its new
chief executive. shares of the company fell nearly 34% in Shares in Vedanta fell almost 20%
the period. while Albanese held the top job and have
Venkatakrishnan’s appointment comes moved down about 3% since his depar-
as a rebound in metals prices has Kaura was named as Vedanta’s interim ture.
prompted Vedanta to expand production chief executive in August as the compa-
of zinc and aluminium, enabling it to con- ny hunted for a new head to replace Tom – Arathy S Nair, Reuters
tinue its recovery after being particularly Albanese, who was asked to delay his
hard hit by the commodities slump that departure by five months.
ended in 2016.
However, the company has been fac-
ing protests against a proposed expan-
sion of the company’s copper smelting
plant in southern India and said in March
that it would take charge of up to $US600
million due to the closure of its iron ore
business in the country.
Venkatakrishnan, who worked with An-
gloGold for 18 years and led it for five, will
succeed interim chief exectuive Kuldip
Kaura, in the top job effective August 31.
Under Venkatakrishnan’s leadership,
AngloGold beat or met market expecta-
tion for five years with AISC falling 16%
and production rising 26%. However,
Celebrating 25 years
29a Clayton St, Bellevue WA 6056
www.bostech.com.au 08 9250 4252
PAGE 6 MAY 2018 AUSTRALIA’S PAYDIRT
BUSH TELEGRAPH
On track but Zimbabwe can’t
get ahead of itself
This month I am back on the topic of Zimbabwe Mines Minister Winston Chitando really like the split between the current
Zimbabwe – which I last addressed in mine reserves and the total deposit es-
my March column – because the ramifi- investment to the country, garnering sup- timates because what it tells you is that
cations of Zimbabwe’s mining industry port from voters ahead of next year’s cru- Zimbabwe is punching way below its
“coming right” are becoming clearer and cial elections. weight from where it should be in terms
there are huge, potential negative impli- of production.
cations for South Africa’s platinum sector A lot still has to happen on the regula-
if that upbeat scenario ever plays out. tory and fiscal fronts in Zimbabwe before “There are early signs of a more posi-
any sane investor is going to pump that tive, business-friendly environment.
I commented in March that the Zim- kind of money into the country given the The problem is that on the top level it all
babwe platinum miners could “eat the problems experienced by the existing sounds great – ‘We are open for busi-
South African platinum industry’s lunch platinum producers there over the past ness, come and invest’ – but there’s still
given the chance” and I also expressed 15 years. a requirement for 51% indigenisation in
the hope that the new Zimbabwe Gov- platinum and diamonds. It’s very hard to
ernment would provide them with that And I stand by my March assessment, get a decent return if you are going to put
chance. new Zimbabwe Mines Minister Winston in 100% of the capex and only own 49%
Chitando does not have a convincing of the asset.
Just what is potentially at stake was story to tell at this stage of the game.
outlined at a conference – the Joburg In- “There’s still the requirement for local
daba Platinum Industry Seminar – held A snap poll of the 150-odd delegates beneficiation and then, a week ago, they
recently in Johannesburg at which some at the Platinum seminar showed only said they wanted all mining companies in
analyst opinions were that the Zimbabwe four believed Zimbabwe had the poten- Zimbabwe to list on the local stock ex-
producers could put the ageing, deep- tial to add new production in the next five change.
level platinum mines clustered around years. Eight believed it would not happen
Rustenburg out of business. and the rest were undecided. “It feels like Zimbabwe is putting the
cart before the horse here. They are
Reasons are working costs and pro- Stephen Forrest, chairman of UK con- looking at the potential for the mining
duction efficiencies with most of the sulting firm SFA Oxford, commented he sector and saying: ‘We are 15% of global
Rustenburg mines currently losing was “bullish on Zimbabwe” but added: reserves so we need our own refinery
money because of their high costs and “Government must engage with the and own local market’.
the low production efficiencies of their professionals that are there and look to
labour-intensive operations, which are encourage investment for the [platinum] “It would be more beneficial for them to
running at levels below those that ruled sector to grow. allow the mining to develop first and grow
20 years ago. into that. If they are going to continue to
“There is huge expertise and retained give a challenging regulatory and policy
Zimbabwe’s existing mines are shal- skills in this region but I am not con- environment to the mining industry, then
low, mechanised operations run by vinced that what I have seen in the public it’s very hard for a miner to inject capital
small, well-trained and motivated work- domain is all-conducive. It all seems to into Zimbabwe.”
forces not riven by the toxic and highly be a bit of a fanfare and there is indeed a
politicised industrial relations environ- great deal of scepticism.” The company which is best placed to
ment that rules on the South African benefit from a resurgent platinum sector
platinum mines and their surrounding But the country’s potential to boost its in Zimbabwe has to be Impala Platinum
communities. platinum output is certainly there and Ltd through its 80%-held – and ASX-
was highlighted by Deutsche Bank eq- listed – subsidiary Zimplats Ltd which is
But let’s not get ahead of ourselves. uity analyst Patrick Mann who said: “I the largest and most successful platinum
There are plenty of “ands, ifs, buts and producer in the country.
whatevers” involved in these scenarios
and, so far, the sceptics hold the high Implats chief executive Nico Muller is
ground in the developing debate. upbeat and optimistic about recent de-
velopments in the country but he remains
That’s despite reports such as those cautious and says his top priority is for
from Reuters that Karos Resources – a Zimplats to start paying dividends to its
company associated with SA mining shareholders. Until now all the profits
entrepreneur Loucas Pouroulis – has made by Zimplats have been re-invested
signed an agreement with the Zimba- into the operation.
bwe Government to build a $US4.2 bil-
lion platinum mine and refinery which will Interviewed at the Platinum seminar,
produce 1.2 mozpa of PGMs by 2023. Muller said he had not yet seen the
changes needed to create a more robust
According to platinum industry sourc- investment environment but commented:
es, that announcement probably has “I am hopeful we are heading in that di-
plenty to do with new Zimbabwean Presi- rection.”
dent Emmerson Mnanagagwa’s desire to
show his government is attracting new Brendan Ryan is a Johannesburg-based
mining writer
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 7
OPINION
Executive pay trends in Australia
Consumer Consumer Energy Energy Finance Finance Healthcare Healthcare Industrials Industrials
TAR TR TAR TR TAR TR TAR TR TAR TR
Quartiles (000’) (000’) (000’) (000’) (000’) (000’) (000’) (000’) (000’) (000’)
P25th $275 $316 $172 $177 $267 $313 $266 $313 $315 $338
Median $615 $691 $266 $295 $545 $668 $396 $470 $469 $546
P75th $1,106 $1,164 $486 $579 $1,409 $1,778 $527 $705 $987 $1,146
IT & TC IT & TC Materials Materials Mining Mining Utilities Utilities Real Estate Real Estate
TAR TR TAR TR TAR TR TAR TR TAR TR
Quartiles (000’) (000’) (000’) (000’) (000’) (000’) (000’) (000’) (000’) (000’)
P25th $224 $253 $291 $405 $146 $174 $450 $689 $382 $399
Median $335 $370 $727 $871 $249 $301 $824 $895 $735 $801
P75th $544 $667 $2,174 $3,251 $372 $487 $1,575 $2,107 $2,097 $2,441
Chief executive officer Total Annual Remuneration and Total Remuneration Pay Levels as defined by The BDO Board
and Executive Remuneration Report
For chief executives across Australia, performance-based pay is the com- est levels of remuneration broaden out
fixed executive remuneration levels bination of annual cash incentives, from materials to include utilities and
have remained generally static. deferred bonuses, and long-term real estate. This can possibly be ex-
However, forecasts for the Australian (share-based) payments. It is generally plained by the volatility of the utilities
economy in 2018 are cautiously optimis- recognised that guaranteed pay should sector, and the ‘pay for performance’
tic driven by higher commodity prices, be set at the requisite level to attract culture and longer executive tenure in
increased employment and business in- and (in part) retain and develop the the real estate sector.
vestment. These factors have resulted in skills required of executive talent. Again, the difference between total An-
notable improvements in the Australian However, ‘at risk’ performance-based nual remuneration and total remunera-
economy, which include: variable pay, by its very nature and name, tion is not as significant as policy posi-
• A GDP increase of 2.8% for the year should be designed to reward the perfor- tions taken may infer, indicating a year of
to September 2017; mance of the individual/team over differ- fewer awards of such incentives.
• strengthening employment, antici- ent time periods in achieving corporate We suggest that one of the reasons for
pated to improve further, with declines in objectives. It should also serve to align this may be poorly crafted incentive pro-
unemployment and an Australian Wage shareholder and executive interests, en- grammes with insufficient or unclear per-
Price Index rise of 2% for the year to Sept suring that executives make formance hurdles. These
2017 and 0.5% in the June to Sept 2017 money with rather than from are often coupled with
quarter; shareholders. poorly executed or unclear
• increasing business confidence and In essence, variable pay performance management
conditions, with a historically low cash should drive executives to processes that do not ena-
rate of 1.5% and low inflation; and strive to enhance company ble the board to ‘gate keep’
• relatively higher terms of trade from financial and operational incentives to agreed levels
higher commodity prices performance and share- for achievement of specific,
General consensus is that interest holder value. Practically, it defined business results.
rates will increase in 2018, as will in- would appear that outper- Allan Feinberg Further called into ques-
flation, encouraging investors to shift formance is handsomely re- tion are whether such
more capital into growth stocks and warded, but that with a few schemes, on balance, gen-
away from yield stocks. The require- exceptions, underperformance is not pe- uinely achieve the purpose of executive
ment for higher returns and invest- nalised. It is almost as if executives are and shareholder alignment or of enhanc-
ments into higher growth and cyclical entitled to expect a reasonable perfor- ing executive motivation to achieve cor-
companies will result in a higher de- mance bonus even when not necessarily porate goals.
mand for executive talent and there- warranted by performance. The full BDO Board and Executive Re-
fore higher rates of pay in these sec-
When all remuneration elements are muneration Report 2018 is now available
tors. accounted for, industries with the high- for purchase, and covers remuneration
In particular, pay 2018 trends across Australia
growth has started im- Company Size: Mining & Metals 2017 % Change by state, sector, and non-
pacting smaller organi- Tier 1 – over $3 Billion $2,015,000 $1,976,000 -2% executive and executive
sations as the economy Tier 2 - $600M to $3B $755,000 $720,000 -5% roles.
improves, particularly in Tier 3 - $125 M to $600M $437,000 $448,000 3%
the mining and metals Tier 4 - $25M to $125M $272,000 $276,000 1%
sector with commodity
price improvements. Percentage change to chief executive-level fixed remuneration packages
Variable or ‘at risk’ for mining and metals over the last 12 months
PAGE 8 MAY 2018 AUSTRALIA’S PAYDIRT
NEWS
Progress in Tanzania
Tanzanian President John Magufuli evasion by mining companies and has full-year guidance of 435,000-475,000oz
has appointed a chairman and com- powers to suspend and revoke mining gold at an AISC of $US935-985/oz. The
missioners for the country’s new Mining exploration and exploitation licences and switch to stockpile processing at Buzw-
Commission, paving the way for the issu- permits. agi and the move to reduced operations
ance of new Mining Licences (MLs). at Bulyanhulu in late-2017 were effec-
It will also monitor and audit both the tively executed and we are pleased to
Africa’s fourth-largest gold producer quality and quantity of minerals pro- report an increase in our cash balance
is seeking a bigger slice of the pie from duced and exported by large, medium to $US107 million. This was driven by the
its vast mineral resources by overhaul- and small-scale miners to determine delivery of our operational plans and the
ing the fiscal and regulatory regime of its their tax liabilities. sale of a non-core royalty that completed
mining sector. in January 2018.
The Commission will be required to
Magufuli has sent shockwaves through audit capital investment and operating “We continue to take measures to
the mining community with a series of expenditures of large mines, sort and as- further stabilise our balance sheet and
actions since his election in late 2015, sess values of minerals produced for tax continue to provide support to Barrick in
which he says are aimed at distributing purposes. its ongoing discussions with the Govern-
revenue to the Tanzanian people. ment of Tanzania.”
It will also produce indicative prices of
In July last year, he suspended the is- minerals with reference to local and in- While there is still some water to pass
suance of all new MLs until the new Min- ternational markets for the purpose of as- under the bridge between miners and
ing Commission was in place. sessment and valuation of minerals and the Government, ASX-listed mineral
assessment of royalties. sands hopeful Strandline Resources Ltd
Last month, the President appointed welcomed the positive move forward for
Idris Kikula, a former vice chancellor of Passage of the legislation for the Min- industry.
a state university as chairman of the new ing Commission followed months of
Mining Commission and also named wrangling between the Government and “The formation of the Mining Commis-
eight commissioners to serve under him. the country’s biggest gold miner, Lon- sion, as foreshadowed in our announce-
don-listed Acacia Mining plc, over min- ment of 17 April 2018, is a clear state-
A statement from the Tanzanian presi- eral exports. ment by the Government of Tanzania
dency said these appointments would of its determination to facilitate mining
take effect immediately. Tanzania accused Acacia of massive investment in Tanzania,” Strandline man-
tax evasion in 2016. Acacia, which de- aging director Luke Graham said.
The appointment of the Mining Com- nies all allegations, said it was seeking
mission and new regulations published an adjudicator to resolve its dispute with “On behalf of Strandline, I congratulate
in January mean the country can now the Tanzanian Government. Professor Idris Suleiman Kikula on his
resume issuing new MLs to investors. appointment as chairman of the Com-
The Government launched talks with mission, and to all the other commission-
Under legislation passed in July last Barrick Gold Corp, Acacia’s majority ers on their appointments. Strandline
year, the Mining Commission has been owner, last year to try to resolve the dis- looks forward to working closely with the
given extensive powers to regulate and pute. Commission to secure its Mining Lease
monitor the mining industry and mining for the Fungoni mineral sands project, for
operations in Tanzania. In the meantime, Acacia released its the benefit of all stakeholders.”
results from the first quarter of 2018.
The legislation which created the Com- – Paydirt staff with Reuters
mission says one of its key objectives is “Acacia continued to demonstrate re-
“to advise the Government on all matters silience during the first quarter, delivering
relating to the administration of the min- solid production of 120,981oz [gold] at
eral sector with the main focus on moni- AISC of $US976/oz sold,” Acacia interim
toring and auditing of mining operations chief executive Peter Geleta said.
to maximise government revenue”.
“Production at all three of our assets
The Commission is also charged with was in line with our mine plans and puts
curbing smuggling of minerals and tax us in a good position to deliver against our
YTGOOEUDTRASY Past and present Conference Proceedings
7 and CD-Roms are available for sale
For details or to download an order form visit
www.newgengold.com
Phone (+61) 8 9321 0355 or email [email protected]
Jointly organised by:
Keith Yates & Associates Pty Ltd
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 9
NEWS
Amsterdam’s navigation tips
for miners in Africa
Australian mining companies the local states, which should be
have been urged to persist avoided if possible, Amsterdam
with their African dreams despite a said.
wrath of legislative changes on the “The mining companies have
horizon. to get to know the political play-
The message was delivered by ers themselves, they have to get
leading law expert on Africa, Bob their own government relations
Amsterdam, founding partner of people providing the other side
Amsterdam & Partners LLP, to of the vision; not only in-country
Perth’s mining fraternity last month but further afield and the indus-
in light of the proposed Crimes try has to develop its own indus-
Legislation Amendment (Combat- try groups to speak for them and
ting Corporate Crime) Bill 2017. advocate for them,” he said.
The bill was referred to the Sen- “NGOs are unaccountable,
ate Legal and Constitutional Af- they have no accountability, and
fairs Legislation Committee late to some extent they literally be-
last year, with a report expected lieve that aid will solve Africa’s
on the bill at the time of print. problems. It is the investor, the
If passed, Australia’s enforce- Bob Amsterdam’s Amsterdam & Partners LLP visit to Australia Australian investor and foreign
ment standard would be on par was sponsored by Clifford Chance. Amsterdam sees an investor along with the finance,
with the UK Bribery Act, according municipal support for indigenous
to Amsterdam & Partners. opportunity to leverage work in Africa in conjunction with [groups], industry in extraction in
Australian advisors and partners Africa that will lead to the future
“One of the negative trends in
this is the whole-scale adoption in Aus- pects on the continent can ill-afford to be of Africa beyond aid.
tralia, with some really abstract changes ignored by Australian companies, Am- “To use a quote from the Ghanaian
to the law here which will make it more sterdam said. president who said that Africa has had
and more difficult for Australian miners “There is an extraordinary opportunity 60 years of aid and it has done nothing.
to understand what they can and can’t for Australian companies in Africa de- For someone that has been in Africa for
do in African countries,” Amsterdam told spite what you are hearing out of coun- about as long, I can only endorse whole-
“tries like Tanzania right now,” he said.
Paydirt. heartedly what he said.”
“All that might inadvertently
In reference to the new
put them offside with this new
bill. There are two big asks of NGOs are unaccountable, they mining code in the DRC, Am-
the Australian Government; have no accountability, and to sterdam said it “literally gave
one is to simplify the anticor- the country’s leaders impu-
ruption law and bright line it nity to continue to oppress
so that the compliance cost
don’t make the investment some extent they literally believe that their masses and raise mining
aid will solve Africa’s problems. levies on bona fide investors,
making them literally sub-
in Africa too expensive. The ject to a greater rip off by the
second is to have the Austral- creep in power”.
ian Government become an advocate for Therefore, he called upon the Govern- “It’s really the reverse predation, pre-
Australian investors who go up against ment to provide better advocacy for the dation by the African leaders, the Kabi-
governments, the present one being the mining industry and help guide Australi- las, in Congo, not the western miners,”
government in Tanzania.” an companies engage in not only extract- he said.
At the time of print, the establishment ing minerals, but in the growing trend of “There’s got to be an industry-spon-
of a Mining Commission, in accordance beneficiation of ore in Africa. sored response to this new narrative
with the Mining Act, was announced by Additionally, the Australian Govern- involving the illicit containment clause
Tanzanian President John Magufuli in a ment could also assist in fostering better and much of that, which was sponsored
positive development for the country. relationships between miners and ex- by UNCAD in terms of false invoicing.
The Mining Commission is the body plorers with NGOs, Amsterdam said. Much of the logic and analysis is bogus
empowered to regulate the effective im- Many of Africa’s mineral hotspots are and has been swallowed up by govern-
plementation of the provisions of the Min- also developing nations, with NGOs of- ments, both without analysis and without
ing Act, including the granting of Mineral ten a conduit between companies and a thought of how to protect their own min-
Rights such as Mining Licences. governments. ers.”
While investors will still caution their However, mining companies have de- – Mark Andrews
next moves in places such as Tanzania veloped an overreliance on using NGOs
and DRC, the mid- to long-term pros- as their representative to government in
PAGE 10 MAY 2018 AUSTRALIA’S PAYDIRT
NEWS
Aussies lap up zinc deficit
While zinc prices tailed off last Heron’s Woodlawn zinc project was 40% constructed at the time of print
month from the decade-long highs
achieved earlier this year, new and up- the Shanghai Exchange.” maining sources of available new zinc.
coming Australian producers are ready Construction of Woodlawn was about Taylor confirmed his company had
to take advantage of strong forecast de-
mand for the base metal. 40% complete at the time of print, with fielded inquiries about product beyond
the project on track for commissioning in its current three-year term with Louis
LME zinc was trading at $US3,115/t late 2018 ahead of first concentrate pro- Dreyfus.
at the time of print, having nudged duction early next year.
$US3,600/t in early February, as econo- “They come in slightly different forms,
mists from across the board tipped pric- Heron recently awarded contracts for but people are quite interested and just
es to crack $US4,000/t in the ensuing underground mining, water treatment tend to know that things are not locked
months. and port services and is expected to con- up forever,” he said.
firm the successful bidders for the supply
It came as the International Lead Zinc of the tailings mine equipment and spe- Heron’s share price has hovered
Study Group announced its final pro- cialist design, commissioning and train- around the 70c/share mark for the past
duction numbers for 2017, headlined by ing services this month. six months, however, Taylor expects
a metal supply deficit of 495,000t, with to see the company’s stock rise once
supply over the last four months of the Permanent accommodation facili- the lights are officially switched on at
year consistently below demand. ties will also be established on site this Woodlawn.
month as the Heron team watches the
Leading global producer Teck Re- dream of a fully-fledged mining operation “People would probably like to see our
sources Ltd also declared in late Febru- at Woodlawn unfold before their eyes. share price higher, so would we, but cer-
ary that current producers and commit- tainly we’re not seeing the sort of support
ted projects would not be able to meet Taylor said his company would be con- you’re seeing flow into everything related
demand, with the list of unfunded devel- tent with zinc prices remaining at current to batteries, even though we’ve got a
opments pushing the supply deficit out to levels as Heron makes the transition market which is as transparent as it can
2025. from developer to producer. be, where supply-demand fundamentals
suggest there should be a greater level of
Australia welcomed its newest zinc op- “We’ve seen zinc come off its absolute investor interest,” Taylor said.
erations – Dugald River (MMG Ltd) and peaks, but it’s at a level that we’re not
Thalanga (Red River Resources Ltd), uncomfortable,” he said. “We think it’s “We keep plugging away, we keep try-
both in Queensland – late last year, with a great price and we’d be very happy to ing to educate people on the story and
New Century Resource Ltd set to reopen see this sort of pricing as we venture into why Heron should be something of inter-
the Century mine in Q3 2018 and Heron production. I think the fundamentals are est to people, given the exposure to zinc
Resources Ltd on track to start commis- there for it to go quite a bit higher, but I and the fact we’re funded and not too far
sioning the Woodlawn project in New guess only time will tell.” away from production.”
South Wales before the end of the year.
While Louis Dreyfus Company Metals Heron recently announced a fresh
Heron managing director Wayne Taylor has snaffled the base metal concentrate drilling campaign targeting expansion
said the reason his company took on the to be produced from the first three years of shallow resources at the Lisa Lens
Woodlawn project, 250km south-west of of operation at Woodlawn, other inter- discovery, which is adjacent to the main
Sydney, was mostly due to encouraging ested parties are likely to start lining up mining precinct at Woodlawn.
forecasts for zinc. at Heron’s door if the strong forecast de-
mand for zinc continues to hold true. Previous drilling by the company re-
“We take the opportunity to remind the turned intercepts of 12.4m @ 20% zinc
market where we can that there is a very New Century managing director Pat- equivalent from 222m (including 9.5m
real reason why zinc prices should be rick Walta detailed the aggressive nature @ 26% zinc equivalent from 223m) and
supported and that is there is simply not of bids for concentrate from the rejuve- 4.2m @ 15.1% zinc equivalent from
enough of it around,” Taylor told Paydirt. nated Century mine during an interview 242m.
with Paydirt in February, as hungry cus-
“Going back several years, the reason tomers hurriedly snapped up the last re- – Michael Washbourne
we got involved in this project was we
could see where the market was head-
ing. It’s now come to fruition, so it’s not a
surprise to us at all.
“What’s been a little bit surprising is
there hasn’t been necessarily the reac-
tion I think the market expected. China
was the one expected to turn the tap
on, but they’re producing less zinc this
year than they did last year. They simply
haven’t reacted and the thinking there is
strongly driven by increased regulation
and environmental constraints.
“The dynamics in the zinc market re-
main really favourable and we’ve seen
quite a few deliveries into the LME and
PAGE 12 MAY 2018 AUSTRALIA’S PAYDIRT
NEWS
MinEx receives $215m boost
Australia’s exploration com- among those to publicly
munity has welcomed a applaud the Federal Gov-
$215 million research funding ernment’s financial sup-
boost from the Federal Gov- port for MinEx CRC.
ernment and some of the in- Denise Goldsworthy,
dustry’s biggest players. who chairs both afore-
In late March, the Federal mentioned groups, also
Government announced the welcomed the Federal
MinEx Cooperative Research Government’s decision
Centre was successful in se- to undertake a “snap re-
curing $50 million of research view” of Australia’s mining
funding as part of the 19th industry.
CRC selection round. “The changes that have
Furthermore, 34 companies been happening in the in-
– including BHP Ltd, South32 dustry, where more of the
Ltd, Anglo American plc and exploration is being left
Barrick Gold Corp – will com- with the juniors, means
mit $165 million (cash and in- that the funding to do ex-
kind) over the next 10 years. ploration and to invest in
Several research institu- Coil tube drilling is one technological initiative poised for greater research research and explore new
tions such as the CSIRO, Ge- funding following the recent $215 million injection for MinEx CRC technologies is a lot more
oscience Australia and major limited now than it was 20
universities will be involved in MinEx example, one of the ways is by advanc- years ago,” Goldsworthy said.
CRC, along with the geological surveys ing the coil tube drilling rig which has “You combine that with the fact that
of New South Wales, South Australia and come out of the DET CRC – we certainly all the easy things have been found,
Western Australia. will facilitate more exploration. it’s now a challenge and the technology
MinEx was established in response to “Companies like Barrick signing up to problems can only been solved in a col-
the declining rate of new discoveries in the CRC, even though they’re currently laborative way. There had to be a delay
Australia over the last 20 years, which not active in Australia, is actually a great to create enough of the burning platform
correlates with a downward trend in ex- sign that they’re interested in the tech- for the industry to really get the motiva-
ploration spending in the country. nology and they’re still interested in Aus- tion they needed to work collaboratively
“We used to have 12% or so of global tralia. We hope to attract companies like to change this. It’s a bit overdue, but
funding, but it’s probably down to 8% that back and attract more companies hopefully something really great is going
now and more and more funding is go- like BHP which don’t have a significant to come out of it.”
ing offshore,” MinEx chief executive elect greenfields exploration spend in Aus- Speaking to Paydirt following the Fed-
Andrew Bailey told Paydirt. tralia.” eral Government announcement, Golds-
“One of the reasons is it is just so dif- MinEx is also set to launch the Nation- worthy urged the snap review to critique
ficult to explore in Australia because al Drilling Initiative (NDI) which brings the industry’s delay in reacting to ongo-
almost all the current exploration and together each of the state geological ing concerns about the lack of major new
even all the current known deposits are surveys, researchers and various indus- discoveries.
already exposed at surface. There’s such try participants, including those from the “Most of the industry thinks reactively
a significant area, probably 70%, of Aus- METS sector, to collaborate on drilling in and waits until somebody else has de-
tralia which is under cover and one of the underexplored areas of potential mineral veloped the technology or until we’re
key aspects is to be able to better ex- wealth. no longer cost-competitive as a country
plore under that significant area of cover However, Bailey has tempered expec- or until the price of a commodity goes
in Australia to make new discoveries and tations of an immediate impact from the through the roof before we start looking
to bring in exploration dollars from both initial MinEx proposals. for it,” Goldsworthy said.
Australia and overseas.” “We have 10 years of funding which “We need to work out how to be more
Bailey said the $215 million funding in- we’re effectively breaking down into proactive collectively and how to share
jection would enable MinEx CRC to ad- three-year blocks,” he said. “None of it pre-commercial information, which is
vance technologies and concepts which is for immediate commercialisation be- why it is important for the geological sur-
would improve exploration efficiency and cause if that was the case, we could get veys because that’s going to allow more
reduce drilling costs. a commercial company to go and build organisations, more companies, more
The average cost of drilling in Australia a new rig, for example. It is important to local governments, more communities,
has ballooned from $89/m in 1997 to remember that this is R&D and one year to know what potentially exists in which
$207/m last year. is a very short timeframe for any mean- parts of Australia and to get themselves
“Many companies have pulled out of ingful research.” ready instead of just being reactive.”
Australia because of expensive explora- Independent organisations such as – Michael Washbourne
tion and the difficulty in exploring through the Australian Academy of Technology
cover,” Bailey said. “By being able to bet- & Engineering (ATSE) and the Minerals
ter drill through areas of thick cover – for Research Institute of WA (MRIWA) were
PAGE 14 MAY 2018 AUSTRALIA’S PAYDIRT
Junior Minerals Exploration
Incentive: Round one
The push to secure Australia’s The application period for the first round of JMEI was April 16 to May 15
mining future continues with the
implementation of the Junior Miner- penditure in Australia increased by 23% back on the agenda.
als Exploration Incentive (JMEI). year-on-year in 2017 to $1.7 billion. Expenditure for the base metals, which
The Government-backed pro- Gold exploration accounted for 44% of are critical elements in the unfolding bat-
gramme, worth $100 million over total exploration expenditure and rose by tery and electric vehicle stories, almost
four years, will be provided by the 21% in 2017 to $750 million, with highest tripled year-on-year to $48.9 million in
Australian Tax Office via a tax gold mineral exploration expenditure in the December quarter.
credit arrangement allowing ex- two decades recorded in the December
ploration companies with no min- 2017 quarter. “The Office of the Chief Economist’s
ing income to renounce and pass latest statistics show that mining is the
future tax deductions (losses) to Western Australia attracted almost engine room of the Australian economy,”
their Australian resident investors three-quarters of the country’s gold ex- Pearce said.
for greenfields exploration. ploration expenditure in 2017, with over
half a billion dollars committed to extend- “These numbers contain good news
Exploration credit allocations ing mine lives. for Australian communities. The rise in
will be made on a first-come, first- mineral exploration in 2017 will underpin
serve basis until the credit cap for While exploration in WA’s gold sector, the discovery of future mines. Each new
each income year is fulfilled. which provides 25,000 jobs, was a high- mine means more jobs, royalties, and
light, nickel and cobalt exploration was revenues for local businesses.”
Association of Mining and Ex-
ploration Companies (AMEC) has
been a strong advocate for such
an initiative and has worked close-
ly with the Government to see it to
fruition.
AMEC chief executive Warren Pearce
said the JMEI would encourage green-
fields exploration in Australia and essen-
tially help to create more jobs.
“Australia needs to increase invest-
ment in greenfields mineral exploration
to discover future mines. Each new mine
means more jobs, royalties and reve-
nues in local community. Australian min-
eral exploration companies should look
closely at the JMEI and decide whether
it is an opportunity appropriate for their
business,” Pearce said.
In light of the application period for the
first round, JMEI was launched on the
back of news minerals exploration ex-
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 15
NEWS
Hexagon shapes up
MinRes will build, own and operate the entire pit-to-customer mining, processing and logistics supply chain under a life-of-mine,
mining services agreement concerning Hexagon’s McIntosh graphite project
Few graphite companies have a de- behind the project,” Rosenstreich told MinRes already has an agreement
finitive pathway to production and Paydirt. with Perth-based tech company Hazer
while there are still some boxes for Mike Group Ltd for the rights to use the latter’s
Rosenstreich to tick, Hexagon Resourc- The agreement on the table with Hexa- synthetic graphite technology, which was
es Ltd is poised to leap well ahead of its gon offers MinRes further exposure in established at UWA.
peers. the graphite space and overall battery
minerals market. MinRes will fund and finalise the devel-
Hexagon has signed a heads of agree- opment of the Hazer process and in the
ment with $3.2 billion multifaceted mining Mike Rosenstreich next 12 months will trial a continuous 1t
house Mineral Resources Ltd (MinRes) pilot scale plant with a view to expanding
for stage one production at the McIntosh into commercial production to more than
graphite project in Western Australia. 10,000t down the track.
By committing to exploration and de- Meanwhile, MinRes is now the world’s
velopment, MinRes can earn a 51% largest exporter of lithium through Wod-
interest in McIntosh where it will also gina and its 30% stake in Neometals
complete a feasibility study and fund all Ltd’s Mt Marion project.
development costs through to stage one
commercial production and operate the With the necessary capabilities to run
project via a life-of-mine mining services pit-to-port operations, including provi-
agreement. sion of processing facilities, MinRes
is the ideal partner for a junior such as
At the time of print, Rosenstreich was Hexagon.
putting the proposal to Hexagon share-
holders. “I think when people look carefully at
the difference between diluting at the
“My job is to make sure I explain the top coat and diluting at the project level
deal carefully and in detail. In my opinion, and they understand the risk issues they
once people get across the risks that we are now avoiding, if they understand it in
are avoiding, the capital dilution we are the right context they should view it as
avoiding and the skill set, energy and en- a tremendous transaction,” Rosenstreich
thusiasm not only from us, but also what said.
MinRes brings, I am hopeful they will get
Should the proposal proceed, a Min-
PAGE 16 MAY 2018 AUSTRALIA’S PAYDIRT
Res (51%) and Hexagon (49%)
JV will be incorporated, with
the partners targeting com-
mercial production of graphite
concentrate within three years.
During that time, as Min-
Res takes charge of feasibil-
ity studies, Hexagon will focus
on downstream processing
and looking for potential other
opportunities in specialty ma-
terials projects, while a joint
marketing company will be es-
tablished to sell all stage one
product from McIntosh.
Test work results released in
March confirmed the “unique,
high quality crystallinity of McI-
ntosh graphite”.
The testing was conducted
independently by US outfit
Argonne National Labora- China National Building Materials – General Technology Co Ltd has signed a non-binding MoU with
tory (ANL) using an Advanced Hexagon to purchase 30% of production from McIntosh. Discussions for project finance,
Photon Source synchrotron pre-payment and other debt facilities for project construction are also on the table
facility.
ANL stated that McIntosh material is what our project looks like from our cus- pre-payments, so quite often it pops up in
“HOPG-like” highly oriented pyrolytic tomers’ eyes. We came out with a series an overall funding package.
graphite, a rare form of natural graphite of announcements that really highlighted “To debt fund an industrial minerals
potentially amenable to value-added ap- to people that the McIntosh project is an project is very challenging when you
plications, from advanced battery sys- exceptional project in real terms.” don’t have any other asset to sit along-
tems to friction, nuclear, thermal man- Scope Australia completed a PFS on side it as collateral; not impossible but it
agement and electrical applications. McIntosh stage one in May 2017, based needs really strong off-take with a cred-
In a statement to the market, Hexagon on reserves of 11.9mt @ 4.3% TGC con- ible partner and I’d like people to ap-
said HOPG was characterised by the taining 511,000t graphite (probable). preciate there are some hurdles that we
highest degree of 3D atomic ordering, Mining and processing estimates were jumped to get to this point.”
which is a high-value synthetic graphite 14.3mt @ 4.3% TGC with production of While there are still hurdles to over-
product worth about $US30,000/t and 2.4 mtpa for 88,000 tpa of flake graphite come, Rosenstreich said Hexagon had
with 30,000-40,000 tpa traded globally. concentrate grading 98% TGC over an real “sail in the wings” from the interest
Hexagon hopes to build on the results initial seven years. shown by MinRes, which is keen to get
and further understand where its graph- A product price of $US1,565/t, with McIntosh going in the near future.
ite sits in the market place, while tenta- EBITDA of $100 million, post-tax NPV Aside from Valence Industries’ attempt
tive planning around establishing a pilot of $183 million and post-tax IRR of 39% to reinvigorate the Uley mine on South
processing and technology facility in estimated from a start-up cost of $148 Australia’s Eyre Peninsula, there are few
Australia is being considered. million. graphite projects in Australia approach-
Rosenstreich has steered Hexagon Feasibility study work had started, ing the starting line like McIntosh.
down this path since March last year, which can now be taken through to com- “There have been operations that have
with Charles Whitfield coming on board pletion by MinRes. been up and then closed, historically
as chairman shortly after to execute a “The challenges of a junior company there have been some minor bits and
new company strategy. with a sole key asset in an industrial min- pieces around the place, but I think it is
“We have changed the strategy from eral – in other words there is no hedging fair to say McIntosh is one of the most
being entirely focused on battery anode – is to be able to de-risk the project like advanced graphite plays in Australia,
material towards a more diverse product we have where we don’t need to find the which is supported with the financial and
range and a more valuable or premium money to finish the feasibility study, we technical input of MinRes,” Rosenstreich
priced product range,” Rosenstreich don’t need to find money to build the pro- said.
said. ject and we don’t run the operating risks “It is one of the very few funded graph-
“The key thing which has driven us and the potential working capital issues ite developments anywhere. I am not
from day one was when I realised that in terms of commissioning and ramp up,” sure what is happening with projects in
China completely dominates that battery Rosenstreich said. Canada, I know there are companies in
anode material market, so why would you “In some ways, it solves all of those re- Africa and one of them is funded, but that
be trying to make stuff that China makes ally fundamental issues that junior com- hasn’t got going yet, so we join a rare
and is completely focused around price? panies might else face. Some people say group of projects that have got funding
“That was the driver to find out what why didn’t you debt fund it or go for off- behind them.”
our project was really capable of and I take finance, but those comments aren’t – Mark Andrews
think through the latter part of last year, really valid. Off-take finance isn’t neces-
once we got on top of the technical attrib- sarily about the other party funding the
utes and did the test work, we could see entire project. It’s quite often a system of
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 17
NEWS
MinRes merger pulls breaks on
Atlas’ rollercoaster run
The rollercoaster jour- shareholders, includ- iron ore business is sustainable in the
ney of Atlas Iron Ltd ing retained exposure new environment of lower global prices
has come to an end after to Atlas, the opportu- for low-grade iron ore,” Ellison said.
the former market dar- nity to benefit from po- “Creating a sustainable iron ore opera-
ling was snapped up by tential synergies driv- tion enables us to protect WA jobs and
Mineral Resources Ltd en by the combination ensures that our consolidated iron ore
last month in a deal val- and greater diversifi- operation in the Pilbara continues to de-
ued at $280 million. cation of revenue and liver a range of social and economic ben-
Under a scheme of ar- commodity exposure.” efits to WA.
rangement, Atlas share- In a statement to the “The increase of our iron ore produc-
holders will receive one ASX, MinRes man- tion in the region is also a key part of our
MinRes share for every aging director Chris strategy to ensure our 50 mtpa Pilbara
571 shares they hold in Ellison said the Atlas infrastructure initiatives are fully utilised
the iron ore junior on the Cliff Lawrenson acquisition was “on and in turn forming a key pillar of the Min-
record date. strategy” for his com- Res business over the next 20-30 years.”
The deal values Atlas pany. Atlas expects the scheme implementa-
at a 59% premium to its closing price “The culture that has been developed tion deed to be finalised by August.
on April 4. A merger ratio of 8.2% Atlas, within Atlas is an exceptionally good fit The merger brings down the curtain on
91.8% MinRes is implied in the combined with what has been fostered in MinRes,” a classic boom-or-bust story that began
“Ellison said.
business. in 2004 when David Flanagan founded
Atlas directors, including chair-
the then-gold focused company
man Eugene Davis, have unani-
mously recommended sharehold- The culture that has just as Chinese demand for steel
ers vote in favour of the scheme. was taking the corporate world by
“The proposed business combi- been developed within storm.
nation with MinRes provides Atlas Atlas is an exceptionally Atlas turned its focus to iron ore
the following year upon discovering
shareholders with the opportunity good fit with what has been Pardoo and rode on the coattails of
to gain exposure to a diversified fostered in MinRes. the WA mining boom over the next
commodities and services busi- few years as its market capitalisa-
ness, with a strong balance sheet tion soared above $3 billion.
and multiple revenue streams,” Da- Having brought its fourth mine
vis said. “The majority of the Atlas senior lead- online in 2014, Atlas insisted there was
“The combined operating expertise ership team have been running the busi- no need for panic as the iron ore price
of the expanded organisation is likely to ness for many years and their skillset, began to fall dramatically. However, in
facilitate the exploitation of a number of experience and intimate knowledge of April 2015, the company said it had no
opportunities that currently exist within the Atlas business will be an extremely choice but to suspend operations as
the Atlas portfolio, transforming the valuable asset within Flanagan returned as
combined operations into a diversified the consolidated At- managing director,
commodity business. As a result of its las-MinRes business. having handed over
strategic positioning, and diversified rev- I look forward to them the reins to his chief
enue streams, the combined business is integrating into the operating officer Ken
uniquely placed to prosper throughout MinRes team over the Brinsden three years
commodity price cycles.” coming months.” earlier.
Atlas managing director Cliff Lawren- Ellison pointed to Atlas underwent a
son said the combination with MinRes the 13 mtpa export ca- major restructure of
would “not only protect, but also en- pacity allocated to At- its debt repayment
hance” the company’s business strategy las at Utah Point as a plans before Flana-
for its Pilbara iron ore mines and lithium strategic benefit for not gan stepped aside for
and manganese projects. only his company, but Lawrenson and a new
“The combined organisation will have Western Australia’s David Flanagan board of directors in
the scale and financial security to sup- broader iron ore and mid-2016. Over the
port current operations, as well as pro- resources community. next 12 months, im-
viding access to capital to contemplate “The amalgamation of MinRes’ existing proved iron ore prices helped the compa-
further development opportunities,” Law- Pilbara iron ore assets with those of Atlas ny post a profit of $48 million for FY2017.
renson said. will enable us to exploit greater synergies – Michael Washbourne
“The scrip nature of the scheme also and economies of scale which will drive
delivers a number of key benefits to Atlas down costs to ensure the consolidated
PAGE 18 MAY 2018 AUSTRALIA’S PAYDIRT
Galena lead foots Abra
Much has been made tpa lead.
about the sudden im-
pact electric vehicles are ex- Demand for lead is ex-
pected to have on the roads.
pected to remain healthy
Futurists such as Future
Smart Strategies managing until then, with Wood Mac-
director Ray Wills believe
the combustion vehicle will kenzie’s forecast in late
be “dead” by 2021 and only
EVs will be produced by 2016 indicating a 3.1%
2026.
compound annual growth
There is evidence of more
EVs hitting roads around the rate for lead over five years.
world, however, others hold
the view that the popularity In the period 2004-2015,
of EVs, and therefore de-
mand for new age batteries, demand for lead increased
will take more time to grow
than forecasts suggest. 45% from 7.3mt to 10.6mt,
“I don’t think the EV mar- with lead acid batteries for
ket is going to take over as
quickly as people assume,” cars the primary use.
Galena Mining Ltd chief ex-
ecutive Ed Turner told Paydirt. “Over the last six years
While many junior companies have or so, even over the long-
turned their attention to flavour-of-the-
month commodities, namely cobalt, er term, lead prices have
lithium and vanadium, on the back of
growing interest in EVs and energy stor- been treading up and that
age technologies requiring new age bat-
teries, Galena appears to be in a sweet is because supply is not
spot in the lead space.
keeping up with demand.
The company is focused on the
Abra lead-silver deposit, which it Demand continues to in-
believes compares favourably to the
world-class DeGrussa and Nova Galena Mining has a resource of 11.2mt @ 10.1% lead crease worldwide despite
mines in terms of size and depth, and 28 g/t silver at Abra the EV market [growth] due
high payability potential, ability to to the increasing middle
produce a concentrate and ship to
port for export, and potential 10-year 11.2mt @ 10.1% lead and 28 g/t silver class population around the world. [Lead]
plus mine life from mechanised un-
derground operations. within 36.6mt @ 7.3% lead and 18 g/t acid batteries are still in demand and will
“We are not aware of any [lead] silver. be for some time to come,” Turner said.
deposits that are in the same class
as this and we are not aware of any A PFS is expected to be completed at “There is a shortage of lead concen-
other deposits like this that are com-
ing into production, so that is anoth- Abra in Q3 and Galena is anticipating trate, treatment costs are down and we
er reason why we are well situated at
this point in time,” Turner said. production by 2020. The company hopes expect prices to be steady for years to
“We have gazetted roads going to supply about 1% of global demand, come, so it is a good time to be coming
straight into site. It is easy for us to
get the concentrate on the road and which equates to about 50,000-100,000 into production.”
to port. It is not in some remote loca-
tion in the Third World, so it is pretty Turner said investors had taken
straightforward from that point of
view.” kindly to the story at Abra in the
Abra, 110km north-west of Sand- short time Galena has been listed.
fire Resources NL’s DeGrussa mine,
is considered a high-grade, world- “We have been very well support-
class lead-silver resource which has
been thoroughly drilled and boasts ed, we only listed in September last
year and effectively we have gone
from 20c to $1/share, but we did the
5:1 share split recently and we are
back to 20c, but effectively that is a
500% increase in share price since
September,” he said.
“That is based on drill results and
our recent resource estimate which
proves Abra is a high-grade de-
posit. It certainly has a high-grade
component within a larger medium
grade deposit. We are looking at
getting that into production as soon
as possible, with a few years worth
of feasibility studies to be complet-
ed, but we believe that we can be in
production within three years. Peo-
ple like that story and there is a high
profit margin on that high-grade re-
source.”
– Mark Andrews
Geraldton Port has the capacity to export
concentrate from Abra
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 19
NEWS
Discovering success
It has been a quick ascent for While much of the North Amer-
West Perth-based Discovery ican risk money which would
Capital Partners co-founders usually find a home in junior
Adam Miethke and Adam Santa metals and mining is parked in
Maria. blockchain and medical marijua-
Just over a year ago the pair na opportunities, a vibrant jun-
operated from a mate’s base- ior resources sector in Australia
ment with little more than a lap- stands to benefit from investors
top and biro. Now, they are forg- yearning for exposure to com-
ing ahead with ventures backed modities.
by the world’s biggest miners. “These types of products
Discovery – an independ- [blockchain, medical marijuana]
ent merchant banking and cor- have attracted a lot of risk capital
porate advisory services firm, in the last 12 months and prob-
which also runs the Discovery ably outperformed the general
Horizon Fund – has revitalised mining sector. So, for people try-
ASX shells and delivered Raid- ing to find reasons to come back
en Resources Ltd, Calidus Re- to junior mining it has probably
sources Ltd, Kopore Metals Ltd been a bit hard because the up-
and the soon-to-be listed Adri- side in these other products has
atic Resources Ltd. been so big,” Miethke said.
The suite of plays cover cop- “You might see a flight of capi-
per and gold opportunities in tal to some assets that might be
hotspots such as the Pilbara better suited to the North Ameri-
and Botswana’s Kalahari cop- can market come to Australia to
per belt, while Raiden’s licences access capital. Things like Bra-
in the Western Tethyan metallo- zilian gold projects or a cobalt
genic belt, Serbia, has caught project in Ontario, which might
the eye of Rio Tinto Ltd. make sense for it to be listed in
In March, an earn-in and JV Canada, might make its way to
agreement on Raiden’s Zapadni Australia. You have seen some
Majdanpek, Majdanpek Pojas of those turn into success stories
and Donje Nevlje projects was in the last 12 months, certainly in
agreed, whereby Rio Tinto has the cobalt space and others.”
the option to spend $US31.5 Discovery Capital Partners co-founders Adam Miethke and Miethke made such observa-
million for a 75% project level Adam Santa Maria at their West Perth headquarters tions in light of attending PDAC,
interest over three stages. Rio where it was also noted that com-
Tinto is manager of the JV, giving Raiden the mining sector. petition for broking products was very
a clear run at four other projects it has The deal makers branched out into the high and expected to see more syndicat-
bearing similar styles of mineralisation in cryptocurrency blockchain space earlier ed deals in the Canadian space.
Serbia. this year where the lure of turning small “They tend to work pretty well together,
“Rio Tinto’s involvement validates the investments into large returns is whetting but to get deals away in Canada, to ex-
project and speaks volumes about the the appetite of investors, particularly in ecute them you probably need to share
jurisdiction, which is easy to operate in,” North America. more so now than you would have to in
Miethke told Paydirt. Recognised as a high-value growth the past to access that capital pool,” Mi-
Miethke is no stranger to Rio Tinto, sector, crytpocurrencies will no doubt ethke said.
having started his career in the major’s continue to appeal to investors, how- Miethke expects risk capital and liquid-
iron ore division before joining Snowden ever, that does not mean capital will be ity to revert back into Canada’s resourc-
Mining Consultants and grafting his way stripped from emerging mining compa- es sector at some point, as major mining
across the world to cover all commodi- nies in Australia. houses start to enthusiastically engage
ties in Australia, Africa, Eastern Europe “People want to be involved in that with juniors.
and South America. [cryptocurrency] space because they “People from BHP [Ltd], First Quantum
Many would be familiar with Miethke’s know that even though the risk is higher, [Ltd] and Rio Tinto have really made an
more recent role as a director of the cor- similar to a junior mining play, the upside effort to talk to us. They are now show-
porate finance team at Argonaut Capital in that space can be very good. In Aus- ing a genuine interest in the junior space
Ltd, leading the metals and mining divi- tralia, there is still a very strong appetite and are realising the upside junior com-
sion. for quality junior mining plays and there panies can bring by diligently working
Along with Santa Maria’s law and cor- is lack of that same appetite in the North through projects and making discover-
porate finance experience, former Credit American side of things, with the influ- ies. It makes sense for them to look at
Suisse investment banker Aaron Kidd is ence tech plays are having,” Santa Maria JVs or corporate deals which gives them
part of the Discovery outfit well versed in said. access to deals early on,” Miethke said.
PAGE 20 MAY 2018 AUSTRALIA’S PAYDIRT
“Finding really good, quality assets els of larger corporate deals may well be however, one thing is for sure; Discovery
that will appeal to the majors and then on the horizon. appears to be in the right business at the
having a strategic plan in place that al- right time in the mining cycle.
lows them to see where we are going to “Equity values are relatively high. We
add value to the project by implementing have seen a lot of project-level acquisi- “From Discovery’s perspective we
the exploration programme that we want tions as opposed to corporate level ac- have been very lucky in terms of timing,
to do is vital.” quisitions and that is purely because no question,” Santa Maria said.
companies have had non-core assets
Major mining companies have operat- that can be picked up at a competitive “We are very thankful for that, but the
ed on thin exploration budgets for some price relative to having to buy the whole fact we have a background in Tier 1 min-
time but are realising the value nimble the company,” Miethke said. ing, Tier 1 legal, Tier 1 investment bank-
explorers have created through infinite ing; bringing that skill set together does
attention to understanding small scale “There is no question that to enable position us well to qualitatively assess
data and reinterpreting that into a bigger some companies to achieve the growth opportunities and then execute them in
picture. that the market probably expects of them a sensible way. Taking something that is
that in time they are probably going to very early stage all the way through the
Rio Tinto’s interest in Raiden is an ex- have to look at more corporate level M&A cycle is a skill set that is not as common
ample of that and while similar types of activity.” as you think.”
deals have been replicated elsewhere in
the market at project level, increased lev- Just how Discovery’s client companies – Mark Andrews
fair in the wash-up remains to be seen,
Done deals by Discovery
Calidus Resources Ltd (ASX:CAI) Harris (chief executive), Paul Cronin, Ju-
Well-known gold wheeler and lian Barnes and Eric de Mori (non-exec-
utive directors) part of the Adriatic team
dealer Mark Connelly recently joined looking for success in Bosnia & Herzego-
Calidus as non-executive chair- vina. Upon an anticipated ASX listing in
man. The company is focused on late April, 15,000m of drilling is planned
the Klondyke deposit – 654,000oz for Rupice, Veovaca (4.4mt zinc-lead-
@ 2.06 g/t gold – part of a global re- silver resource). A maiden resource esti-
source at the Warrawoona project, mate from Rupice – drilling includes 64m
East Pilbara, of 712,000oz. Recent @ 8.5% zinc, 5.1% lead, 374 g/t silver,
metallurgical test work returned ex- 2.3 g/t gold, 1% copper and 43% barite
cellent gold recovery characteristics – is targeted for Q1 2019.
with greater than 96% cyanide leach
recoveries and high gravity recov- A maiden resource from Rupice, Bosnia &
erable gold of 63%. Results were Herzegovina, is scheduled for early 2019
in line with Caldius’ expectations
as PFS work continues at War-
rawoona.
Kopore Metals Ltd (ASX:KMT)
Kopore was the former Metallum
Ltd vehicle concerned with copper
in Chile and Philippines. Company
name and jurisdiction may have
changed, however, commodity fo-
Rio Tinto has the option to earn a 75% interest in cus is the same. This time though,
three of Raiden’s copper-gold projects in Serbia Kopore is one of three dominant
for total consideration of $US31.5 million players in the Kalahari copper
belt, Botswana, holding ground
Raiden Resources Ltd (ASX:RDN) once explored by MOD Resources
Raiden, formerly Subzero Group Ltd, Ltd before it made the T3 discovery.
drew the attention of Rio Tinto shortly af- “Exploration will target high-grade
ter entering the ASX in early 2018. The zones there. There has been a lot of
deal with Rio Tinto in Serbia came on knowledge built up in that region of
the back of extensive discussions, with the Kalahari in the past five years and
stage one of the potential $US31.5 mil- we’ve had a lot of majors interested in
lion earn-in requiring Rio Tinto to commit speaking about it,” Miethke said.
$US2.5 million within three years (effec-
tive from the date it elects to proceed) Adriatic Resources Ltd (ASX:ADT)
for a 51% interest. Minimum expenditure A $10 million IPO was launched in
of $US500,000 is required in the first 12 March, with the likes of Peter Bilbe
months. (non-executive chairman) Geraint
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 21
NEWS
Hylea boards NSW cobalt train
Hylea Metals Ltd has begun drilling at Hylea Metals has started drilling at its namesake cobalt project in New South Wales
its namesake cobalt project in New
South Wales in a bid to emulate the suc- of shares, while also appointing former then you can’t have the orebody. We al-
cess of Clean TeQ Holdings Ltd, Austral- Gold Fields Ltd geologists Darren Glover ready know we’ve got the laterite profile
ian Mines Ltd and Platina Resources Ltd and Ben Harper as exploration consult- and we already know we’ve got high-
in the emerging Fifield “battery metals” ants. grade cobalt from the work Rimfire did.
district. Now it’s just a question of drilling it out
Berrie said the company was looking and finding out how much of it we’ve got.
A 50-hole RC programme covering forward to the initial results of the drilling
about 3,000m kicked off late last month, and aerial surveys. “This round of drilling is not going to
as well as an aerial magnetic and radio- give us a JORC resource, but it will give
metric survey, as the company looks to “This is pretty easy exploration, we’re us a pretty good foundation for moving to
prove up the known cobalt potential of just looking for that flat-lying, shallow- one really quickly. And one of the good
the Tiger’s Creek prospect. dipping orebody which we know is either things about being relatively easy explo-
just below the surface or 10m below the ration is that you should be able to do
Previous exploration at Tiger’s Creek surface,” he said. that relatively quickly.”
targeted platinum but returned a number
of high-grade cobalt intercepts, includ- “Obviously the drilling combined with Berrie, a lawyer who cut his teeth in the
ing 7m @ 0.32% cobalt (including 1m @ the mag survey will be a pretty powerful resources industry with Western Mining
0.64%) and 8m @ 0.27% cobalt (includ- tool and once we’ve digested those re- before being a key player behind Fusion
ing 1m @ 0.85%). sults we’ll be in a position to decide how Resources and Summit Resources Ltd
to move on. We already know there’s during the uranium boom, is confident
The Hylea project is less than 50km high-grade cobalt from the Rimfire re- the global cobalt craze has a sustainable
north-west of Sunrise (Clean TeQ), Flem- sults, so we’ll be chasing a repeat of it. future.
ington (Australian Mines) and Owendale
(Platina). “You only have to remember that the “With uranium, everyone was counting
Hylea intrusive and the Bulbodney in- on there being more and more reactors
Hylea managing director David Berrie trusive are the only two intrusives left built, and that’s kind of happened, but
said there were benefits to being a rela- in the Fifield complex that don’t have a the problem is that was never going to
tive latecomer to the cobalt space, espe- cobalt-nickel-scandium-platinum JORC be enough to sustain the price, whereas
cially in NSW. resource, and there’s no reason why we with cobalt you’re looking at a metal that
won’t have that as well.” battery makers are going to need for a
“One of the great things about being very long time,” he said.
at the back of the cobalt train, not at the Clean TeQ, Australian Mines and Plati-
front, is you get the benefit of all the work na have all defined impressive resources “My view is that lithium and cobalt
that Clean TeQ, Australian Mines and for their respective projects and Hylea is [markets] are real and they will continue
Platina have done,” Berrie told Paydirt. hoping to soon add one for Tiger’s Creek to be real because renewable energy
to the mix. is going to require battery technology
“For instance, Platina announced late to continue to improve, and while there
last year they were using a new method Tiger’s Creek is considered the lowest- will also be some issues around replace-
of assaying and that’s resulted in a 10% hanging fruit for Hylea to chase, espe- ment and substitution, I think the benefits
uplift in their cobalt numbers. So, if you cially with the aerial surveys expected to of cobalt and its qualities in batteries will
look at the numbers that Rimfire [Pacif- only enhance his company’s understand- mean it’s a sustainable business.”
ic Mining NL] got on our ground, up to ing of the laterite profile in the region.
0.32% cobalt, well if you get a 10% uplift – Michael Washbourne
on that, all of a sudden you’re at 0.35% “In the Fifield region, you have this lat-
cobalt and that’s extremely high-grade. erite profile which varies from 10-70m
thick and is the host of all the known ore-
“Whether that will be repeated, we bodies,” Berrie said.
don’t know yet. We’d expect that we’ll be
very much like the rest and we’ll end up “If you don’t have the laterite profile,
with a grade across the board of 0.1% or
upwards.”
The Hylea project is the company’s
second crack at a cobalt play after its
predecessor Riva Resources came un-
stuck at the Tabac project in Western
Australia early last year.
Former Euroz Securities Ltd and Pat-
ersons Securities Ltd broker Tim Kestell
joined the company’s board in Septem-
ber and was responsible for vending
the Hylea project into the Riva shell and
bringing in Berrie to oversee the corpo-
rate restructure.
Hylea acquired the project from private
consortium Providence Metals Pty Ltd
for $4 million cash and $4 million worth
PAGE 22 MAY 2018 AUSTRALIA’S PAYDIRT
COVER
Australian mid-tiers take
their Latin opportunity
The last 12 months have seen expected to cost $US684 million to build. Newcrest etched its reputation on de-
some of the ASX’s most
The Newcrest deal also included a velopment of large porphyry and epither-
prominent mid-tier miners open
binding exploration heads of agreement mal deposits in Australia and the Pacific
up to Latin America.
for the Australian gold miner to earn up Islands and for much of its existence re-
Newcrest Mining Ltd and Oz Miner-
als Ltd have built their reputations on to 50% direct interest in eight separate sisted the temptation to spread its geo-
domestic portfolios but both have now
made major commitments to Ecuador exploration concessions in Ecuador by graphic risk.
and Brazil, respectively.
spending up to $US20 million over five However, coming just two months after
Another mid-tier miner, Fortescue Met-
als Group Ltd, is taking an early-stage years. it chose to sell its only operating asset
entry approach to the region, acquiring
the largest exploration landholding in Ec- Newcrest managing director Sandeep in the world’s other gold hotspot, West
uador and showing increasing interest
in Colombia and Argentina. Meanwhile, Biswas said the investment and explo- Africa, the Lundin investment is a major
Hancock Prospecting Pty Ltd is pursuing
its own Ecuadorian strategy. ration farm-in were consistent with the statement about the Melbourne-based
Newcrest’s was perhaps the most company’s strategy of “securing expo- gold miner’s global intentions.
eye-catching move, given the nature of
the company’s existing portfolio and its sure to high-grade potential orebodies”. The Lundin investment is Newcrest’s
focus on Ecuador, a country which
has struggled to attract foreign in- “The Fruta del Norte epithermal ore- second Ecuadorian equity move. In June
vestment in the past.
body has many similarities with our Gos- 2017, it lifted its stake in AIM-listed junior
Under the terms of its arrange-
ment, Newcrest will invest $US250 owong operation and we look forward SolGold plc with $US40 million, increas-
million (at $C5.50/share) to secure
a 27.1% interest in TSX-listed Lun- to sharing our experience with Lundin ing its holding to 14.54% in a junior which
din Gold Inc, owner of the Fruta del
Norte gold-copper project in south- Gold to further develop this high-quality has shot to prominence following its dis-
east Ecuador.
deposit,” Biswas said. “This equity in- covery of the Cascabel copper-gold por-
Kinross Gold Inc had paid more
than $US1 billion for the 9.89 moz vestment aligns with our aspiration of be- phyry project.
@ 9.61 g/t gold deposit in 2008
but abandoned it four years later ing exposed to five Tier 1 orebodies by To the east, in Brazil, Oz surprised
after failing to negotiate relief over
a 70% windfall tax imposed by the 2020.” many market observers in March by an-
Ecuadorian Government.
nouncing a plus-$400 million takeo-
Lundin paid Kinross $C240 mil-
lion in 2014 for a project which is ver bid for ASX-listed copper junior
Avanco Resources Ltd.
The offer consists of 8.5c in cash
plus 0.009 Oz shares for every Avan-
co share. At 16.8c/share, it repre-
sented a 118% premium on Avanco’s
closing price.
The company has been operat-
ing its Antas mine in Carajás for 19
months, producing 14,100t of cop-
per and 11,400oz of gold in the 2017
calendar year. In addition to Antas,
it is conducting a feasibility study at
the 17.7mt @ 2.4% copper and 0.7
g/t gold Pedra Branca project and
recently signed an option to acquire
100% of the 20.8mt @ 1.7% copper
Liam Twigger and 0.2 g/t gold Pantera exploration
PAGE 24 MAY 2018 AUSTRALIA’S PAYDIRT
project. It also controls the 2.2 moz The company’s reasons for taking
CentroGold gold project in Mara- a major stake in AIM-listed SolGold
nhão State. were similar.
Avanco is also the second largest “The Cascabel project and sur-
exploration landholder (behind only rounding region, generally, appear to
Brazilian giant Vale SA) in Carajás be prospective and we are pleased
with 1,800sq km of tenements and to have increased our interest in the
controls a further 1,300sq km of region as SolGold continue to in-
ground on the Gurupi greenstone crease their drilling activity,” Biswas
belt in Maranhão State. said.
For Argonaut Ltd analyst James Wilson said accessing such strate-
Wilson, the moves by Newcrest and gic positions was virtually impossible
Oz to secure interests beyond the in Australia.
flagship assets demonstrates a wid- “In Australia, a takeover target
er strategy at play. may have 95sq km but if you look at
“It does gel with what these com- Avanco, it has a 100km-long pack-
panies are chasing. They are after Nick Mather age so you can see why Oz went
belt-scale plays and they can’t get there,” he said.
that in Australia where there are few in this prospective part of Ecuador and SolGold managing director Nick
belt-scale opportunities left,” Wilson told we see potential for new discoveries to Mather has welcomed Newcrest’s sup-
Paydirt. be made through the combined experi- port and advice at Cascabel where his
“If you look at Newcrest in Ecuador; ence of both companies in exploring for company has already defined a resource
the flagship assets don’t necessarily fit epithermal gold and deep gold/copper containing 5.2mt of copper and 12.3 moz
“with its current profile but it gives it ac- porphyry deposits,” he said.
of gold.
cess to the ground. Companies “They love our exploration
like Newcrest want to lock up a It does gel with what team and the innovative drilling
these companies are
package like that for 30 years.” techniques we are pioneering
Biswas’ comments on an- there and they are also attract-
ed to our extensive exploration
nouncing the Lundin investment
supported Wilson’s view. chasing. They are after belt-scale portfolio,” Mather told Paydirt.
“This new joint venture forms plays and they can’t get that in In April, Oz managing director
part of our strategy of building Andrew Cole confirmed to Pay-
a high-quality exploration port- Australia where there are few dirt his company’s first big in-
folio. We are pleased to part- belt-scale opportunities left. vestment outside Australia was
ner with Lundin Gold to explore based on belt-scale possibilities.
Newcrest will bring its vast underground mining experience to Lundin’s Fruta del Norte mine in Ecuador
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 25
COVER
“We launched a strategy three years ration concession landholder in Ecuador “In Ecuador, we have commenced
ago and identified a number of geologi- and it is understood to be stepping up its preliminary exploration and community
cal districts worldwide we were inter- activity in countries such as Argentina engagement on 32 granted concessions
ested in and Carajás was one of the top and Colombia as well. and 64 exploration concession applica-
ones,” Cole said. “We have a very strong tions have been submitted in Colombia.”
province focus with the Gawler Craton [in “We have world-class exploration ex-
South Australia] being one focus and the pertise and will build on our operational It all adds up to a distinctly Australian
Musgraves [SA and Western Australia] reputation to harness the skills and capa- flavour to recent activity in Latin America
being the other. The Avanco deal gives bility of our team members to drive future which is surprising given the region has
us a really strong entry point to Carajás growth through product diversification been the domain of North American min-
as it has a very good portfolio.” and asset development,” Fortescue chief ers for so long.
executive Elizabeth Gaines told Paydirt.
Both Oz and Newcrest also bring a “In line with this strategy, Fortescue is PCF Capital chairman Liam Twigger
weight of development experience in currently assessing exploration and de- is not surprised the balance has tipped
the relevant deposit styles they have se- velopment opportunities in South Amer- towards Australian companies in recent
cured access to. ica, including Ecuador, Colombia and times given the relative performance of
Argentina. TSX and ASX mining stocks.
“The other support we bring is our ex-
pertise in IOCG resources – developed Diego Temperley “The impact from the huge run in Ca-
at Prominent Hill and Carrapateena – al- nadian cannabis IPOs and cryptocurren-
lowing us to provide technical expertise,” cies has seen a significant fall in North
Cole said of Oz’s move into Brazil. American capital raised for junior and
mid-tier miners and this in turn has re-
Mather said Newcrest had already pro- sulted in reduced exploration activity in
vided assistance at Cascabel. Latin America,” Twigger told Paydirt.
“Latin America has been the ‘backyard’
“We are happy to receive Newcrest’s and preferred destination for many of the
comments, guidance and advice but, companies on the TSX and TSX-V but
they have no contractual rights over the the vacuum in activity has created op-
project. They are investing because of portunities for Australian companies to
the likely upside from exploration and secure major ground positions literally
mining points of view.” under the noses of their North American
counterparts.”
While Newcrest and Oz have chosen
to establish their Latin American footing If geology and market conditions have
through company and project-level ac- given Australians a reason to look at
quisitions, other Australian companies Latin American investments, a change
are taking an earlier stage approach. in political mood has encouraged them
to stay.
Fortescue has been engaged in a
global hunt for new projects for several “The mining codes have also changed
years, eventually alighting in Latin Amer- across the region, moving away from the
ica last year. It is now the largest explo-
PAGE 26 MAY 2018 AUSTRALIA’S PAYDIRT
“Latin America has been the ‘backyard’ and
preferred destination for many of the companies
on the TSX and TSX-V but the vacuum in activity has
created opportunities for Australian companies to
secure major ground positions literally under the
noses of their North American counterparts.
very rapacious codes to something more Ecuador. money out of big, long-term programmes
investible because governments have re- “I think Ecuador can turn into a great based on exploring for commodities that
alised such policies get them nowhere,” have long-term demand fundamentals.
Wilson said. copper-producing nation and the indus- For Andrew Forrest, copper is the new
try can transform the macroeconomics of iron ore and that’s why he followed Sol-
Ecuador is a prime example of the will- Ecuador,” Mather said. “I expect interest Gold into Ecuador. It makes sense from a
ingness of the region’s governments to in the country to intensify as this project macroeconomic point of view; the majors
court foreign investment. [Cascabel] gets significantly bigger.” have neglected copper for too long.”
Former president Raphael Correa – He pointed to the growing interests of Twigger said Ecuador was re-emerg-
part of the widespread leftist movement Fortescue and Hancock Prospecting in ing as a preferred exploration destination
which washed across Latin American the country as evidence Ecuador was after the false starts of the early 2000s
in the early 2000s – was unapologetic being viewed as a potential home of a increased its political risk profile.
when Kinross walked away from Fruta new generation of Tier 1 copper projects
del Norte in 2013, insisting the country at a time when the global supply/demand “The new government in Ecuador is
could rely on oil revenues. fundamentals for the red metal appear to focused on attracting foreign investment,
be tipping in the miners’ favour. as seen by Fortescue, SolGold and now
However, the 2014 oil crash left him no Newcrest joining the rush,” he said.
choice but to establish more business- “Hancock and FMG have always made
friendly policies. A mining ministry was
established in 2015 with mining conces- The relatively untouched potential of Ecuador has attracted a number
sion applications opened again. The of Australian heavyweights
Government has also watered down its
windfall tax policies and Correa’s suc-
cessor, Lenin Moreno, appears intent on
reaffirming the country’s commitment to
foreign mining investment.
Mather said SolGold’s performance in
the country demonstrated Ecuador was
“very much open for business”.
“We have a close working relationship
with the Government and the ministry,”
he said. “It has a very consistent and
positive approach in liaising with us and
with their advisor Wood Mackenzie on
the responsible mining industry frame-
work.”
The combination of economic and po-
litical stability with geological prospec-
tivity could prove a successful one for
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 27
COVER
Twigger said that Oz’s move for Avan- ject in the country in 2010, Argentina has “This is correct,” Australian-Argentin-
co showed that among Ecuador’s neigh- been largely avoided by Australian com- ian Chamber of Commerce president
bours, Brazil remained a preferred des- panies. However, halfway through Presi- Diego Temperley told Paydirt. “New-
tination. dent Mauricio Macri’s first term, a more crest and OceanaGold [Corp] have al-
welcoming investment environment is ready funded exploration here and in
“The recent takeover announcement beginning to resonate with ASX-listed November, in the same week, four mid
of Avanco by Oz Minerals is a reflection miners. to large-cap mining companies were in
of the appetite to secure advanced de- Argentina at the same time looking for
velopment projects in good jurisdictions,” SolGold’s exploration progress at Cascabel projects.”
he said. has attracted the attention of industry majors
Argentina’s position in the Lithium Tri-
Australian companies have had a angle has enticed the likes of Orocobre
vexed relationship with Brazil. Well- Ltd and Galaxy Resources Ltd to devel-
known for a complicated and unwieldy op battery minerals projects there and a
regulatory framework, the country is also host of juniors have followed those es-
currently embroiled in a major bribery tablished miners into the province. How-
and corruption scandal. However, Cole ever, Bennett Jones LLP partner Sander
emphasised his company’s comfort with Grieve said Argentina’s progress under
the political risk profile of its new acquisi- Macri highlighted the greater transpar-
tion. ency and clear commitments being made
by governments in the region.
“Brazil has a long-established stable
mining code and some of the world’s “There have been really encouraging
largest mining companies are operating developments, particularly in Argentina
there, so that points to a very good oper- where they have really taken an inter-
ating environment,” he said. est in long-term, stable tax regimes and
the tax courts have upheld those long-
Australian companies have largely term stable tax regimes as being binding
stuck to the tried-and-tested jurisdictions commitments to the Government where
of Chile and Peru since starting the Aus- some of the states have sort to challenge
tralian rush to the region a decade ago them,” Grieve told Paydirt. “Some of that
but the growing confidence is reflected in development is quite exciting in terms of
a willingness to move elsewhere. setting the conditions for a very stable in-
vestment climate.”
Since Andean Mining built itself into a
multibillion dollar takeover target on the
back of its Cerro Negro gold-silver pro-
PAGE 28 MAY 2018 AUSTRALIA’S PAYDIRT
Temperley believes Aus- ASX-listed companies
tralian interest in Argentina have traditionally found
extends beyond battery Africa a more comfort-
minerals. able fit than Latin America
“This is a clear evidence but ongoing political un-
of renewed interest in cop- certainty in major mining
per-gold projects in addi- economies such as Tan-
tion to the already known zania, Zambia, Ghana,
lithium potential, which South Africa and DRC had
was the primary object of led to investors growing
Australian investment,” he more wary about investing
said. in that continent, accord-
The one segment of the ing to Grieve.
Australian mining sec- “Some of the uncertain-
tor yet to push into Latin ties around the DRC are
America is the gold mining probably unhelpful to the
mid-tiers who have signifi- African piece,” he said. “It
cantly outperformed their would be hard to pick be-
North American peers in tween the two but I would
recent years. say that the balance is
Sprott Global Resource shifting to Latin America
Investments Ltd invest- only because of some of
ment executive Steve To- the more challenging ac-
doruk told Paydirt gold miners such as the cryptocurrency markets should see tors in the African space.
Northern Star Resources Ltd and Evo- a return to normal trading conditions in “Latin America has been cleaning up
“lution Mining Ltd had yet to make major the second half of 2018 and a renewed its approach to the sector and the DRC is
moves abroad but could be unfortunately creating a bit of
considering it. an overhang on Africa.”
“Some of the Austral- Newcrest and OceanaGold Mather believes the fron-
ian/New Zealand producers have already funded tier nature of countries such
have already started looking as Ecuador should play to the
elsewhere away from Aus- exploration here and in November, in benefit of Australian compa-
tralia and New Zealand be- the same week, four mid to large-cap nies.
cause all of the low hanging “The spirit of global re-
fruit has disappeared,” To- mining companies were in Argentina sources entrepreneurialism
doruk said. at the same time looking for projects. was born in Australia. The
Australians run at it big and
“OceanaGold took over hard because we see the
Romarco Minerals a few
years ago to acquire the opportunity. After we found
Haile gold deposit in the USA. That mine focus and interest in Latin America and Alpala at Cascabel we realised this belt
is nearing production. OceanaGold has more competition for Australian explora- could yield some big orebodies.”
also done some significant private place- tion and mining companies active in the – Dominic Piper
ments in another Canadian junior called region,” he said.
Gold Standard Ventures
Corp becoming a significant
shareholder – along with
Goldcorp [Inc], to get expo-
sure their Nevada project.
“For the time being,
most of the Australian gold
miners are content doing
brownfields exploration
looking for more ounces of
gold right near their produc-
ing mines but if they keep
making strong profits we
will very likely see more of
them acquiring projects in
other countries.”
They may need to move
quickly with Twigger ex-
pecting the North Ameri-
cans to eventually reassert
their traditional advantages.
“The end of the pot boom
in Canada and cooling in
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 29
LATIN AMERICA DOWN UNDER PREVIEW
Aussie juniors key to
Latin regeneration
The political winds and market conditions are blowing in the right ed at next month’s Latin America Down
direction for a major upturn in Latin American exploration budg- Under (LADU) conference where Min-
ets over coming years but increased activity from juniors to drive a ister for Mining and Energy, Juan Jose
new wave of discovery is becoming a pressing issue for the region. Aranguren will deliver a keynote address.
After four years of declining explora- try while in Argentina, President Mauricio Argentina does, however, have some
tion investment, global exploration ex- Macri’s reform programme continues to way to go before emulating Chile, Peru
penditure rose by 15% in 2016 and budg- turn around the country’s appeal to min- and Mexico which continue to dominate
ets for 2017 were up 14% year-on-year, ers. In the recent Fraser Institute Annual the Latin American exploration budget,
according to S&P Global Market Intelli- Survey of Mining Companies, Argentina accounting for 68% in 2017 compared to
gence data. was no longer the least attractive region Argentina’s 5% and Brazil’s 11%.
in the world for mining investment.
Latin America remains the world’s Chile’s budget increased by 30% year-
most active exploration region – a posi- Despite having two provinces – on-year in 2017 based on higher alloca-
tion it has held since 1994 – according Chubut and Mendoza – in the bottom tions to late-stage and feasibility work.
to S&P, accounting for $US2.384 billion 10 jurisdictions for policy attractiveness, The same was true for Mexico, whose
(30%) of the global exploration budget in Argentina’s median policy perception in- late-stage budget has jumped by 50%.
2017. This was a 20% increase ($US401 dex (PPI) and investment attractiveness Peru’s 18% growth was driven by in-
million) on 2016. At 19% ($US175 mil- scores increased dramatically (by 23 creased near-mine exploration, despite
lion), Australia boasted the second larg- points in the latter’s case), making it the weakness in late-stage allocations.
est increase in exploration budgets. fifth most attractive region in the world
based on government policies. Other countries to show sharp budget
The election of several right-leaning, increases included Ecuador (92%), Nica-
pro-business governments across the The change in perception is reflected in ragua (56%) and Suriname (93%).
region should ensure Latin America the country’s share of exploration budg-
continues to see exploration increases ets with S&P data showing its 2% share Ecuador is emerging as the new dar-
in coming years. In Chile, newly elected in 2017 took it into the top 10 countries by ling of the exploration sector with the
President Sebastian Pinera has already exploration budget for the first time ever. likes of Newcrest Mining Ltd, BHP Ltd,
promised to lure more foreign investment Fortescue Metals Group Ltd and Han-
into the country’s dominant copper indus- Argentina’s growing interest in attract- cock Prospecting Pty Ltd all eager to
ing foreign investors will be demonstrat- capitalise on the Fruta del Norte gold
development and Cascabel copper-gold
discovery.
PAGE 30 MAY 2018 AUSTRALIA’S PAYDIRT
Exploration budgets by country percentage share in 2017 (1,535 companies’ budgets totalling
$US7.95 billion). Source: S&P Global Market Intelligence
President Lenin Moreno has continued there should be growing concerns about “There is no question that Latin Amer-
the reform work of predecessor Raphael
Correa and Ecuador’s new Minister for Latin American nations’ ability to replace ica is one of the world’s great mining
Mining, Rebecca Illescas Jimenez will of-
fer her government’s perspective on min- depleted reserves. regions but Australians were perhaps a
ing’s role in the national economy during
her address to LADU. The answer, it appears, would be en- little late in arriving at the party,” Repard
The majors continue to account for the ticing juniors back to the region. said. “However, with the current turna-
lion-share of Latin America’s exploration
spend and in fact have increased their “All day long, the best way to find an round in action, Aussies have a fresh
share of the Latin American exploration
budget over the last decade. orebody is via a junior,” SolGold plc man- chance to make an impact in the region.”
In 2008, majors spent $US1.31 billion aging director Nick Mather told Paydirt. The number of ASX-listed companies
on exploration in Latin America, a 41.7%
share of the region’s overall budget. Ten Evidence from Africa, where countries operating in the region has risen to 68
years later, majors’ commitments for
2017 reached $US1.7 billion, represent- such as Burkina Faso and Mali have in the early part of 2018 and Repard be-
ing 71% of the overall Latin American
exploration budget. burst from negligible gold production to lieves they can have a significant impact
In the same period, junior explo- the world’s top 20 producers in the last on the rate of discovery in the region.
ration budgets in the region slipped
from $US1.49 billion (a 46.8% share) decade would indicate the balance on “Australian juniors are famed for their
to $US354 million (14.9% overall).
that continent – juniors accounted for entrepreneurialism. They are prepared
In contrast, Australian juniors have
retained a greater share of explora- 30.2% of exploration budgets in 2017 – is to tackle difficult terrains and testing ge-
tion budgets, accounting for 42.4%
($US457 million) of expenditure in more favourable to making new discov- ology in jurisdictions others hesitate to
2017 compared to 57.1% ($US1.13
billion) in 2008. eries. go. Whether established or just entering
Africa, the world’s other perceived Latin America, these companies are
exploration hotspot, has also wit-
nessed an increased slant towards well placed to lead the new genera-
exploration by majors with Tier 1
companies accounting for 51% of ex- tion of discoveries the world so des-
ploration budgets in 2017, compared
to 39.8% in 2008. perately needs.”
The majors’ share in Latin Ameri- The state of Latin America’s ex-
can exploration budgets is under-
standable given its geological pro- ploration sector and Australian com-
pensity to host large tonnage, lower
grade Tier 1 porphyry and IOCG de- panies’ role in it will be a major topic
posits. However, with budget allocation
to early-stage exploration in the region of this year’s Latin America Down
falling from 33.8% ($US1.079 billion) in
2008 to 26% ($US620.3 million) in 2017, Under conference, to be held at the
Pan Pacific Perth on May 16-17.
Joining a range of Australian junior
and mid-tier miners will be senior
ministerial delegations from Argen-
tina (Juan Jose Aranguren, Minister
for Mining and Energy), Ecuador
(Rebecca Illescas Jimenez, Minis-
ter for Mining), Panama (Eduardo
Palacios, Deputy Minister of Internal
Trade and Industry) and Peru (Ri-
cardo Labo, Vice Minister for Min-
Ricardo Labo ing) as well as the Geological Sur-
vey of Brazil and the National Mining
Agency of Colombia. For more infor-
Paydirt chairman and LADU convenor mation on LADU, please contact Melita
Bill Repard said Australian junior and Fogarty on +61 8 9321 0355 or melita@
mid-tier companies could play a key role paydirt.com.au
in redressing the exploration balance in – Dominic Piper
Latin America.
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 31
LATIN AMERICA DOWN UNDER PREVIEW
Sprouting portfolio gives
Azure clear run
Azure Minerals Ltd has managed to at-
tract a host of majors to its Mexican
portfolio in the past decade but its latest
acquisition appears to be ready-made for
the junior to develop itself.
Azure’s Mexican strategy has been
largely built on advancing early-stage as-
sets prospective for the kind of Tier 1 de-
posits majors are interested in. In doing
so, it has attracted the likes of Rio Tinto
Ltd and Teck Resources Ltd to earn-in
agreements but managing director Tony
Rovira believes the size and scale of its
Oposura project mean the company has
found a project it can move ahead with
alone.
“We see this project as transformation-
al for Azure with the ability to move us
from a junior explorer to a mining com-
pany,” Rovira told Paydirt. “It is a very Oposura’s access and geometry make it highly amenable to fast-tracked development
achievable goal for technical and finan-
cial reasons. Oposura is of a size that is by late Q3 this year and from there we Azure’s drilling results to date have
sustainable for a company in our position can roll straight into a DFS to be com- confirmed its early expectations for Opo-
to fund, develop and build. All the stud- pleted by mid-2018.” sura.
ies have had positive outcomes and the That Azure could acquire such an ad- “We drilled 156 diamond holes for
future looks very positive.” vanced project in one of Mexico’s most 10,000m and all the results received
Oposura – in the northern Mexican prolific mining states points to the ex- have confirmed the historical outline of
state of Sonora – was acquired in mid- ulted reputation the company enjoys af- mineralisation; there have been no sur-
2017 following a review of Azure’s port- ter more than a decade operating in the prises,” Rovira said, adding the company
folio. country. was on target to match or exceed its 2.5-
“We had Teck moving into the second “I think it does say a lot about the repu- 3mt @ 10-12% zinc equivalent explora-
year of spending at Alacran [the compa- tation we have built. We approached the tion target.
ny’s other major project] so we wanted an family after identifying the project and While most of the drilling has twinned
advanced project we could take towards because we have built that strong repu- historical holes, since the turn of the year
development ourselves,” Rovira said. tation we are seen as the foreign com- Azure has been able to extend high-
Azure paid private Mexican family pany of choice for locals to deal with. We grade mineralisation both south and
company Grupo Minero Puma $US1.5 are good at exploration and at advanced west of the main mineralised zones with
million for the project with an additional projects and we will do a fair deal, so the hits of 2m @ 42.6% zinc-plus-lead and
2.5% net smelter royalty included in the local people understand Azure is an hon- 2.65m @ 10.4% zinc-plus-lead respec-
deal. ourable company to deal with.” tively. And, a series of mapping and soil
Previously explored between the sampling campaigns conducted in
1940s and 1970s, Oposura has January and February has suggested
been subject to 500m of mine tun- further exploration upside to the north
nels, small-scale trial stoping and and west of the resource drill-out area.
60 surface and 24 underground The company is also planning to drill
diamond holes. out the Mina Blanca Ranch prospect
Rovira said a review of the histor- in the western part of the project area
ical data made it apparent the pro- after soil sampling showed similar sur-
ject could be quickly advanced to a face anomalism to Oposura and sam-
development decision proposition. pling of historic mine dumps returned
“We are very comfortable and assays of 1.71 g/t gold, 1,568 g/t silver,
confident of what we have there but 4.63% copper, 2.81% zinc and 1.6%
we have had to repeat the drilling lead.
to bring it in line with JORC stand- Those targets will be tested later
ards,” he said. “We expect to re- in 2018 in parallel with development
lease a resource in May-June and studies. Rovira is confident the devel-
anticipate a scoping study, or PEA, Azure plans to retain 100% management of Oposura opment schedule can be tight thanks
PAGE 34 MAY 2018 AUSTRALIA’S PAYDIRT
to the nature of the deposit. back a 65% interest in the
“The intention is to have a project which it sold to Azure
DFS completed by mid-2019,” in 2015.
he said. “The mineralisation, the While Azure made good
mining method, processing and progress on the Mesa de
metallurgy, all the infrastructure, Plata and Loma Bonita silver
land access; it is all coming back prospects at Alacran, Teck
positive and we are yet to see has been focused on pursu-
anything that could be a speed ing the project’s Tier 1 epith-
bump or road block.” ermal and porphyry deposit
The deposit’s geometry also potential.
lends itself to the kind of devel- “We are very happy with
opment expenditure a company Teck’s work at Alacran, they
of Azure’s size (market cap at have been getting some posi-
time of print: $30 million) can tive results, enough to contin-
handle. ue with the earn-in into Year
“It is very shallow, starts at 2,” Rovira said.
surface, is flat, horizontal and After undertaking a series
sits under a hill,” he said. “We of geophysical surveys in
are looking at having a propor- the early part of 2017, Teck
tion of the mining via open pit Old world and new as Azure undertakes exploration via donkey launched an 11-hole diamond
and as the terrain rises go un- programme in December. All
derground via room-and-pillar methods $US150,000 cash deal. assay for the programme had been com-
using mechanised mining equipment. “I sent our geologists out to look for pleted by March, leaving the JV anticipat-
“It is of a size and scale which we know Mexican cobalt assets and they came ing first results.
we can turn into a lucrative operation.” back with Sara Alicia,” Rovira said. For Azure, the prospects at Alacran
Early metallurgical work has also been “There had been some cobalt and gold appear rosy.
positive with concentrate grades exceed- mined on the property in the 30s but no “It is a great situation to be free-carried
ing work since then.” given our portfolio,” Rovira said. “If Teck
55% in the zinc concentrate and 55% A six-hole drill programme was com- is successful in finding something worthy
lead (with more than 300 g/t silver) in the pleted before Christmas, returning a best of taking its full earn-in rights to 65%, it
lead-silver concentrate. Recoveries have gold hit of 26.2m @ 9.5 g/t gold (including means Azure will have 35% of a Tier 1
been in excess of 70% for zinc and 80% 12.6m @ 16.8 g/t gold) and best cobalt deposit. If they are not successful and
for lead. hit of 26.2m @ 1.26% cobalt (including would like to withdraw, Azure can restart
“That has been along with miniscule 6.35m @ 3.57% cobalt) from the same development of the Mesa de Plata silver
contaminants,” Rovira said. “And, we hole; DSA-03. deposit. So, from an Azure point-of-view
have already entertained visits from A second campaign was launched in it is a win either way.”
various smelters and refiners and po- March, starting with 10-12 diamond holes The current shape of Azure’s oft-
tential offtake partners [traders]. Those for 1,000m of drilling, de- changed portfolio looks
discussions will continue, with potential signed to test along-strike balanced but Rovira is will-
avenues for project funding also being and down-dip extensions ing to continue with acqui-
discussed.” of the previously inter- sitions.
Rovira will be hoping such discussions cepted mineralisation. “Azure’s objective is to
also fuel market interest again. Azure Despite its early-stage have a portfolio of projects
shares enjoyed a good run on the ASX nature, Sara Alicia could at various stages of ad-
following the acquisition, jumping from be moved along quickly in vancement,” he said. “With
22c/share last May to 75c in November. 2018 according to Rovira. Oposura at feasibility study
The price has drifted back down to 29c at “We will be in a position stage, Sara Alicia at ad-
the time of print, highlighting the difficulty to generate robust ex- vanced exploration stage
non-battery minerals stories have had in ploration results or even and Alacran being covered
the early part of 2018. early-stage resource work Tony Rovira by Teck we have that but
“There has been a muted reaction from this year,” he said. “We we still continue to evaluate
the market since the start of the year,” he have more drilling cur- other opportunities.
said. “It has been taking a while for the rently planned to follow-up and are car- “We are not satisfied with this current
potential value to be absorbed by the rying out met work. It appears the body of portfolio, we continue to evolve, evaluat-
market and we need to continue to ex- mineralisation is 300m by 150m by 10m ing projects and acquiring projects with
plain that Oposura is a very good project and is of a compact enough size that we great potential. We recently completed
for the company.” could fast-track a development study. an $8 million capital raising and that is a
If zinc stories are still struggling to gain “With cobalt being all the rage and this strong financial position to be in for look-
prominence amid a market rush for bat- being so high grade, a near-term devel- ing for other projects. Our modus operan-
tery minerals, Azure may have an anti- opment strategy is very feasible.” di is high-grade, near-surface base and
dote in its second project acquisition of Less near-term is the company’s JV precious metals projects. These things
2017. with Canadian base metals major Teck are still there in Mexico, we don’t need to
The company picked up the Sara Alicia at the Alacran project in Sonora. look for the big porphyries at depth.”
cobalt-gold project – also in Sonora – a Teck is into the second year of a mul- – Dominic Piper
week after the Oposura transaction in a ti-year deal which could see Teck claw
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 35
LATIN AMERICA DOWN UNDER PREVIEW
Purity powering Maricunga
Lithium Power International Ltd is hold- the box, get all the permits in place and Ltd at Olaroz, as having the best chemis-
ing fire on signing any lucrative off- then we’re going to be in a very strong try out of any lithium project he had seen
take deals for its Maricunga lithium brines position to maximise shareholder value,” to date.
project in northern Chile, despite further Holland told Paydirt.
confirmation of its economic viability. “These projects are not mining pro-
“We have been approached by many jects, they’re actually chemical projects
Recent test work from chemical pro- groups from around the world – from and understanding the chemistry is key,”
cessing group Veolia Water Technolo- China, Japan, Korea, battery groups and Holland said. “If you’re investing into
gies produced lithium carbonate samples car manufacturers, even Tier 1 mining a lithium brine project, what investors
of 99.9% purity, more than exceeding companies – so we are in a very interest- should really look at is understanding
battery grade lithium carbonate specifi- ing position. that the flowsheet and the process has
cations and requirements, from the Mari- been optimised to a point and who has
cunga concentrated brine. “From a marketing point of view, it is done that and where it has been done.
the second-highest grading lithium pro-
It comes less than three months after ject on the planet. It has scale and that “We’ve now completed the optimisa-
German-based company GEA produced scale is large enough for a lot of these tion of our flowsheet and we actually
a 99.4% lithium carbonate sample for LPI end-users to really want it.” completed it at under $US3,000/t, which
from similar test work. puts this project on the bottom of the
LPI now has to decide whether GEA or global lithium cost curve. I think that’s re-
Leading producer SQM typically rolls Veolia will engineer the processing plant ally important for investors to understand
out 99.3% lithium carbonate from its for Maricunga, however, Holland was as we are now one of the only projects
brine operations in South America. happy for the concurrent test work pro- that have actually proven this process.
grammes to create a competitive pricing
The impressive test work results are tension between the two groups. “More interestingly; SQM, Albemar-
sure to have caught the eye of end-users le, FMC [Corp], Orocobre and Lithium
hungry for high-purity lithium concen- Maricunga’s high-purity samples were Americas [Corp], all their off-take is dealt,
trate, but LPI managing director Martin also described by respected brines con- so it’s all been signed up, and we’re sit-
Holland is not quite ready to push the sultant Peter Ehren, who spent nine ting here now with the only advanced
button on any such deals. years as a process engineer at SQM lithium brine project in the market that
before building a pilot plant for Orocobre
“Our goal is to put a red ribbon around
PAGE 36 MAY 2018 AUSTRALIA’S PAYDIRT
has proven a process and impact assessment to the
being the one of the only Chilean Government.
lithium brine projects that LPI was recently award-
can actually offer off-take ed a key regulatory export
to potential partners.” licence from the Chilean
LPI will look to complete Nuclear Energy Commis-
a DFS – led by Worley- sion (CCHEN) for the pro-
Parsons – on Maricunga duction and marketing of
by year’s end, building on lithium for up to 30 years.
the results of a preliminary “We are one of only four
feasibility assessment re- companies in Chile ever to
leased late last year. get it after SQM, Albemarle
According to the as- and Codelco, and they said
sessment, which fell short we had submitted one of
of PFS standard due to the best applications they
not enough resources be- had ever received,” Hol-
ing converted to reserves land said.
and an incomplete hydro- “To do all this work and
geological model, Mari- get that permit to export
cunga’s estimated con- Lithium carbonate samples of 99.9% purity were recently produced from 480,000t of lithium carbon-
struction capex is $US360 Lithium Power International’s Maricunga project in northern Chile ate over a 30-year period
million. is a huge de-risk for this
However, completion of the assess- take us to FID and around $25 million in project. A lot of off-takers were looking at
ment did help the company lift its project our Australian account. We are in a very us and saying, ‘you’ve got the resource
stake to 50%. strong position and there are ongoing and the high grade, but you can’t export
“One of the goals from the start was to discussions as to how LPI can own more it so there’s no point having an off-take
raise $US27.2 million into LPI to fund our of this project going forward, which will agreement if you can’t export the com-
50% earn-in which we have now complet- ultimately attract more investment from a modity’, but now we can.”
ed,” Holland said. “We still have around project financing point of view.” – Michael Washbourne
$US9.7 million in our JV account which In parallel to the DFS, LPI will look to
will be spent over the next 12 months to complete and submit its environmental
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 37
LATIN AMERICA DOWN UNDER PREVIEW
WA welcomes Latin partnerships
The global resources and the materials that build these technolo- WA Minister of Mines Hon Bill Johnston
commodity sectors have gies continues.
experienced a challenging WA is a mature jurisdiction that has
period in the past five years, One of the McGowan Government’s been able to continue to attract invest-
with downward pressures challenges is securing more of that value ment in its resources sector.
on prices and difficulties in chain for WA in a globalised world.
obtaining financing for new It’s not just our mineral endowments
projects. WA shares the challenges of capital- that are attractive, but also our WA en-
ising on the world’s growing demand for trepreneurial spirit, our willingness to
Thankfully, 2017 showed battery and new energy materials with embrace technological solutions and in-
signs of improvement for many of the countries in Latin America. novate, and our stable regulatory frame-
the industry and 2018 has work that provides security for the indus-
already shown encouraging Consequently, this year’s Latin Ameri- try and community.
signs that this trend is con- ca Down Under conference is a wonder-
tinuing. ful opportunity to discuss and collaborate The work of DMIRS continues to be
on those challenges with visiting repre- regarded across the world as a gold
The traditional commodi- sentatives. standard for regulating the mining indus-
ties of iron ore, gold and try, and it continues to be involved in co-
LNG have underpinned the The relationship between Australia, operating with other jurisdictions across
performance of the West Australian companies and our counter- the globe on matters of mining regulation
Australian resources sector parts in Latin America continues to grow, and policy.
through 2017 and into 2018. and the McGowan Government is ac-
tively looking at opportunities to further Thank you to Paydirt for the opportu-
The gold price has re- develop cooperation. nity to discuss the WA resources sector
turned to near-record highs, and the work that the McGowan Gov-
which is evident by the in- There are opportunities for investment ernment is doing to strengthen it. I look
crease in gold exploration and cooperation on both sides of the Pa- forward to attending Latin America Down
expenditure – from $450 cific Ocean, as demonstrated by SQM’s Under conference and being able to
million in 2016 to around investment in Kidman Resources Ltd’s showcase all that WA, and our industry,
$550 million in 2017. Mt Holland lithium project – the first in- has to offer.
vestment in WA by a Chilean company.
The Department of Bill Johnston MLA is Member for Can-
Mines, Industry Regulation Many Australian resource companies nington and Minister for Mines and Petro-
and Safety (DMIRS) grant- are also actively pursuing opportunities leum in the West Australian Government
ed 762 programme of works in a range of countries across South and
applications in the first quarter of 2018, Central America.
just short of the record 765 applications
from the first quarter of 2011, which indi-
cates a strong potential pipeline of pro-
jects for WA.
Diversification, and the need to ensure
economic security, has been a com-
mon theme around the world for not only
governments but also many companies
across industry sectors.
The drive towards diversification is
most noticeable in the development of
the battery and new energy materials in-
dustries, where new resources are gain-
ing prominence and new technologies
are rapidly becoming standard in day-to-
day life.
The push towards electric vehicles and
battery storage will result in a constant
demand for nickel, lithium, manganese
and ethically-sourced cobalt among
many others for some years to come.
We’ve had policy changes all around
the world. India, China, France and the
UK are all trying to move towards EVs,
creating a new demand to replace exist-
ing technologies.
Decisions made by many of the auto-
motive manufacturers and governments
to preference EVs will ensure demand for
PAGE 38 MAY 2018 AUSTRALIA’S PAYDIRT
Chile to get busy
Copper mining industry leaders meet- generate activity.” committed to Chile, though they are
ing in Santiago last month called on Though the country still attracts nearly spending some of their exploration dol-
Chile’s month-old government to open up lars elsewhere.
exploration or risk losing investment as 8% of global exploration dollars, many
companies hunt elsewhere for new pro- concessions remain dormant, he said. State miner Codelco has a project in
jects. Ecuador and has said it is interested in
Large miners that hang on to conces- Mongolia.
Chile produces around a third of the sions they do not exploit do not face sig-
world’s copper, making it by far the big- nificant financial penalties, elbowing out And Antofagasta, whose core identity
gest exporter of the base metal. But, it juniors eager to develop them and creat- is Chilean copper and which takes its
faces declining productivity and rules ing a bottleneck, Juan Carlos Guajardo name from a Chilean mining town, has
that some say exclude newcomers. of consultancy Plusmining said. been looking across the Americas for
opportunities, chief executive Ivan Arria-
At the CRU/CESCO World Copper “We’ve reached the point that the sys- gada told Reuters.
Conference in Santiago, miners and in- tem is just not working for anyone,” he
dustry leaders urged conservative Se- said. Arriagada made clear his interest in
bastian Pinera’s Government, which took Peru, the world’s second biggest produc-
over from a centre-left administration in Pinera, who oversaw a booming econ- er after Chile and traditionally considered
March, to jump-start exploration. omy during his prior term as president a rival for investment, where Anglo Amer-
between 2010 and 2014 – an era of peak ican plc says it is close to a development
Exploration has stagnated as large copper prices – took office on March 11 decision on its Quellaveco project.
miners hold on to concessions that they with promises of luring investment into a
are not exploiting, while a complex web sector central to Chile’s economy. Abandoning Chile, however, is unthink-
of permits deter new entrants, they said. able.
New Mining Minister Baldo Prokurica
“There is effectively little movement said Chile needed to do more, especially “Chile is still absolutely solid,” Anglo’s
on mining concessions,” head of state for smaller miners. Copper chief executive Hennie Faul said.
trade body Sonami, Diego Hernandez,
said. “But ... there are ways that taxes “We want to reduce the number and – Dave Sherwood and
and mining licenses could be utilised to complexity of permits that are required of Barbara Lewis, Reuters
the sector,” he said.
Major companies say they remain
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 39
LATIN AMERICA DOWN UNDER PREVIEW
Hot Chili draws a crowd again
Copper explorers, rather revising its strategy for Pro- story at Productora was well known.
than more advanced de- ductora. Productora, an 80:20 JV between Hot
velopers, are on-song with “We have a very large Chili and Chile’s Compañía Minera del
Pacífico S.A. (CMP), is billed as a 10-
investors keen on the red asset in Productora and a year open pit mine capable of producing
66,000 tpa copper and 25,000 ozpa gold
metal, despite a supply prob- critical element of our strat- from a resource of 237mt @ 0.48% cop-
per, 0.1 g/t gold and 135 ppm molybde-
lem seemingly looming. egy is to demonstrate ad- num. Annual EBITDA over life-of-mine is
estimated to be $US185 millio at $US3/lb
Pressure on copper sup- ditional mine life and the copper price.
ply is escalating but the ability to tap into high-grade The addition of the El Fuego suite of
assets – all of which are within 20km
high capex requirements for blend feed. That strategy is trucking distance of Productora – has
sweetened Hot Chili’s proposition as an
meaningful projects to be all about building a project, emerging copper developer, as the red
metal continues to rebound strongly.
built is of concern so hopeful Christian Easterday with a target NPV well over
producers must find a point of $US1 billion if successfully Spot prices in the past 12 months have
risen from below $US2.60/lb to about
difference in the market to at- executed.” $US3.10/lb at the time of print.
tract a band of deep-pocketed investors. To achieve those goals, Hot Chili has With minimal large-scale projects com-
ing on line and forecasts of severe supply
“We still sit in a market where copper set about picking up additional assets in shortages to 2020, copper prices above
$US4/lb won’t shock many.
explorers are valued higher than copper the Productora district, earning into 90%
“I just don’t see the copper sector hav-
developers,” Hot Chili Ltd managing di- interests in three high-grade mines – San ing the ability to have an elastic response
rector Christian Easterday told Paydirt. Antonio, Lulu and Valentina comprising
Hot Chili was a market darling during the El Fuego project – in November 2017.
the exploration phase at its Productora “We are on the acquisition path, we’re
copper project in Chile. However, interest gearing up to drill the first of the assets
in its story has waned since release of a we have secured next to Productora with
PFS in March 2016, with the company’s more to come. All of the foundations
market value falling from $250 million to have been laid and obviously financing
$30 million at the time of print. will be rolled out in due course.”
The downturn has led to the company Before entering El Fuego, Hot Chili’s
PAGE 40 MAY 2018 AUSTRALIA’S PAYDIRT
to pressure on supply,” Easterday said. having the benefit of all three mines be- g/t gold] is to be determined and Valen-
“The biggest hurdle [for new projects] ing privately held and lacking detailed at- tina is obviously very encouraging with
is the pure capital intensity and the time it tention for the past 50 years. its end-of-hole hits [11m @ 2% copper].
takes to build large new supply and what “We have been doing a lot of the lead- But, certainly San Antonio has grown
the pipeline looks like. We have heard a up work to get ourselves into a position to into something that we are looking to be
lot of recent discussions coming out of drill and it has revealed quite a few sur- a bit over 1km long, along the main de-
CESCO commenting on just how limited prises, particularly San Antonio, which posit setting.
the supply of large new development pro- for us probably represents the prize as- “We are starting to pull together a lot
jects is, so one would think Productora, set at this stage,” Easterday said. of this historical information that we are
and Hot Chili in general, with what we “Lulu [average grade 6% copper and 3 finally getting our hands on and we also
have already put together 1 Year Copper Spot have the benefit of lease
in addition to a very rich 3.400 miners mining in front
growth pipeline in front of of us. All of those things
us would start to look very 3.200 combined have given us
a nice flavour that San
attractive very soon.”
Easterday said the Antonio in particular has
market had a fair under- the makings of something
standing of Hot Chili’s 3.000 with some size in addition
multi-source production to fantastic grade.”
strategy, with the El Fue- Hot Chili will continue
go projects delivering in 2.800 drilling the high-grade po-
spades for the company tential in its portfolio, while
so far. assessing other acquisi-
With historical produc- 2.600 tions in Chile as well.
tion of 2mt @ 2% copper www.kitco.com “No doubt we are not
and 0.3 g/t gold mined to finished in that area ei-
130m vertical depth over 2.400 ther,” Easterday said.
400m strike and with de- Apr17 May17 Jun17 Jul17 Aug17 Sept17 Oct17 Dec17 Jan18 Feb18 Mar18
velopment widths of 7-30m, – Mark Andrews
San Antonio is the pick of In 2013, when copper was trading between $US3-3.30/lb, Hot Chili was
the bunch, with Hot Chili market capped at $250 million. At the time of print, the company had a
market cap of $30 million with copper at $US3.09/lb. SOURCE: Kitco
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 41
LATIN AMERICA DOWN UNDER PREVIEW
SolGold brightens Cascabel’s
high-grade case
SolGold plc is pressing on with us at all. The company is well-
exploration at its Cascabel funded [it had $US90 million in
copper-gold project in Ecuador as the bank at December 31] and can
it chases the additional high-grade weather short-term storms. We
sweetener to the massive Alpala know where it’s going, resource
deposit. and value-wise.
Dual-listed SolGold produced “There is little doubt the copper
a maiden resource of 1.08bt @ price is going up and combined
0.68% copper equivalent for the with the growing resources, the
Alpala deposit on January 3 this economics will continue to im-
year. Managing director Nick prove.”
Mather said at the time it was a Release of the maiden resource
“tremendous start” but with 11 rigs also marked the start of the first
still turning at Alpala, emphasised detailed economic studies into
it was only the beginning. Cascabel.
“[It] by no means represents a While not essential to project
final size or grade because the de- SolGold’s use of man-portable rigs has been just one of economics, further definition of
posit is still growing,” Mather said a number of technical innovations it has found success the high-grade core should lead to
in January. with at Cascabel early lower cost development op-
Four months on, Mather’s con- tions for SolGold.
fidence in the size and grade at Alpala cluding 478m @ 1.02%) while Hole 42, a The company is already pursuing a
has only solidified and focus has now step-out hole from Alpala Central, report- block caving model to reduce capex and
switched to increase the size and grade ing 846m @ 1.02% copper equivalent. the environmental impact of operations
of the high-grade core, which currently Results from the Alpala Northwest but the early years of operation could see
boasts a resource of 120mt @ 1.8% cop- zone included hits of 1,100m @ 0.54% other methods employed on the high-
per equivalent. copper equivalent, 824m @ 0.8% copper grade sections.
“I have been very happy with recent equivalent (including 576m @ 0.96% and “The high-grade core is likely to sup-
progress,” Mather said. “We have got 11 262m @ 1.15%) and 604m @ 0.73% cop- port sub-level caving methods which will
rigs operating at Alpala at the moment per equivalent (including 146m @ 1.71% man a lower start-up, making it easier for
and the intersections have been very and 106m @ 2.13%).With the Alpala por- us to fund,” Mather said.
promising. We continue our definition phyry system highly oxidised and incor- Ultimately, though, block caving will
of the high-grade core which makes the porating multiple phases of late aleration, deliver unmatched capex and opex ben-
biggest difference to the upside value of SolGold’s exploration team is confident efits across the life-of-mine.
“ the high-grade results will continue.
this project.” “Block caving is without doubt the
Mather was quick to point
cheapest operating cost
out that while drilling was
largely focused on expand- option. Done through-
ing the high-grade compo-
nent of the deposit, Alpala Companies are approaching us all out a big, vertically elon-
already had the economic the time but we are not interested gated orebody like this, it
in entering into a JV where we give away has been demonstrated
to be the best technique.
legs to be developed. all the upside of this project to a major It means low capex be-
“As the capital costs are and we are not interested in dealing on cause you are employing
conventional terms.
already included in every- gravity as the main mining
one’s valuation of the pro- method and you are not
ject, we don’t ‘need’ any- worrying about strip ratios.
more high-grade material The late-stage alteration
to make this project work. It softens the ore meaning it
will simply make it even more spectacu- The company’s shares shed 50% on also has autogenous milling potential. It
lar,” he said. the LSE and TSX in the month follow- all makes block caving a very attractive
SolGold plans on undertaking ing the resource statement but Mather mining technique.”
120,000m of drilling during 2018, with remains unmoved by what he sees as Mather said Alpala also boasted a
Mather expecting to produce an updated market fickleness. 900m topographic advantage which
resource during the year. First results “The market is never satisfied,” he would further reduce costs.
from this year’s drilling have already said. “If we’d put out a resource of 100bt “In the global competition for develop-
added confidence with Hole 43, an infill @ 100% copper the market would’ve ment capital, we have some fantastic lo-
hole at the Alpala Central zone, return- been disappointed! gistical features over other parts of the
ing 974m @ 0.71% copper equivalent (in- “But the market response didn’t shake Andes. At Escondida [BHP Ltd’s Chilean
PAGE 42 MAY 2018 AUSTRALIA’S PAYDIRT
copper operation], they spent $US3 bil- Newcrest’s comments, guidance and ad- bornite mineralisation from 295.3m being
lion just getting water to site. We are vice”. encountered.
100km from the Pacific Ocean and have
fresh water adjacent to us. There is hy- “But, they have no contractual rights A second hole was starting at the time
dropower within 30km of the project and over the project. They are investing be- of print with assay results from the first
elevation is 600-1,800m. We feel bless- cause of the likely upside from explora- hole expected this month.
ed when it comes to infrastructure and tion and mining points of view.”
topographical advantages.” Mather said the abundance of targets
There are few examples in modern at Cascabel – the company has defined
Mather’s references to development times of junior explorers finding, develop- 15 to date – meant SolGold would be ex-
capital reinforce SolGold’s commitment ing and then building notoriously capital- ploring the district for decades to come
to taking the project through develop- intensive copper-gold porphyry projects
ment itself. The company has been the but Mather believes SolGold is well-posi- The company’s presence in Ecuador
subject of intense interest from most of tioned to break the mould. spreads even further, with some 77 con-
the world’s major diversified and gold cessions covering 3,200sq km now un-
miners over the last 12 months but it con- “All day long, the best way to find an der its control.
tinues to go it alone, save for Newcrest orebody is via a junior but now you are
Mining Ltd’s 14.54% stake in the com- also seeing that the available pool of ex- SolGold has been joined in Ecuador
pany. pertise and funding is more diverse and by the world’s majors in recent times but
deeper than ever before and we probably Mather believes the junior retains the
“Companies are approaching us all the have faster, more nimble access to that first-mover advantage it eked out for it-
time but we are not interested in entering capital than the majors,” he said. self since 2013.
into a JV where we give away all the up-
side of this project to a major and we are “We’ve had lots of approaches from “We have put a lot of effort into care-
not interested in dealing on conventional banks and development financiers and fully researching what was good and
terms,” Mather said. “We had the BHP expressions of interest. We will get into what wasn’t over the last four years.
proposal last year and we have signed it in the next year by which time we will From there we have put together a list of
a number of confidentiality agreements have a revised resource out.” priorities which informed our portfolio se-
and there has been plenty of speculation lection. We are the most active explorer
but we haven’t entered into anything.” By the end of 2018 the company could in Ecuador with 86 geologists and have
also be pushing forward with a second a significantly greater exploration pres-
The relationship with Newcrest has discovery. ence than any other company and great-
so far been cordial with Mather saying er than many majors have globally.”
the explorer had been happy to “receive In April, SolGold completed the first
drill-hole at the Aguinaga prospect, with – Dominic Piper
373m of porphyry-style veins, visible
chalcopyrite and trace molybdenite and
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 43
LATIN AMERICA DOWN UNDER PREVIEW
Inca spins with South32
A geophysical survey will target a series of important mineralised structures on Inca’s Riqueza project in Peru
From the beginning it was clear to Inca miners. Subject to a number of terms and con-
Minerals Ltd that a big pocketed part- “It has grown to be a much larger pro- ditions, which are still to be determined,
ner would be needed for the full potential South32 can potentially take full owner-
of the Riqueza zinc-silver-lead project in ject and once we realised that we thought ship of Riqueza, earn into the project or
Peru to be realised. this was definitely in the sphere of a large acquire majority ownership as stated un-
company. At about the same time, BHP der the exclusive option agreement.
Inca managing director Ross Brown Ltd pegged ground next to us and then
said that when Riqueza was first present- I started talking to South32 Ltd,” Brown Initially, South32 will fund a
ed to the company, all that was evident told Paydirt. $US275,000 geophysical survey at the
was six veins and one mantos. Greater Riqueza project, which will cover
BHP did express an interest in partici- aeromagnetic, radiometric and a digital
Now there are “countless veins, many, pating at Riqueza, however, it was little terrain model survey, including interpre-
many mantos’, additional epithermal gold brother South32 which took the initiative tation and target generation (AMAG-
and silver and skarn and intrusive po- and entered an exclusive option agree- RAD).
tential” at Riqueza, which has drawn the ment with Inca concerning Riqueza last
attention of some of the world’s biggest month. The survey had been given the go-
PAGE 44 MAY 2018 AUSTRALIA’S PAYDIRT
ahead at the time of print and in essence A plan showing the South32 survey area and BHP’s ground adjacent
initiated the first steps of South32’s
phase one interest, whereby it can earn July at Riqueza, where Inca has been 4% zinc, 60 g/t silver and 3% lead, pro-
60% of Riqueza by funding work. successfully exploring for the best part of viding encouragement for the company
two years. to produce a maiden resource from Ras-
Brown said South32’s funding obliga- trillo.
tions would be commensurate with the Drilling completed to July 2017 had
number and nature of the targets gener- totalled 11 holes for over 2,000m, while “The beauty of Riqueza is that there
ated by the geophysical programme. half of all surface samples at Riqueza are large company targets and there are
average 13% zinc, 311 g/t silver and 16% small company targets,” Brown said in
“We strongly believe that there are al- lead. reference to Rastrillo.
ready targets there and they will have a
geophysical signature. There could be Furthermore, the company confirmed “We announced the new concentration
new targets that could be discovered, so a new deposit – Rastrillo – at the project of mineralisation at Rastrillo that has po-
the more targets there are, the likelihood in February this year. tential to have a maiden resource for us.
is that the budget will have to be large It’s too small for South32, but certainly
enough to test those targets. We are Inca reported multiple plus-10% zinc something we could aspire to produce
talking about a significant investment,” samples in the Callancocha area, with from.”
Brown said. peak zinc of 13.38%, 350 g/t silver and
16.93% lead. About a quarter of the new – Mark Andrews
“We have left out some of the key channel sample results returned about
terms and conditions, which allows flex-
ibility for both companies. Potentially, the
amount we spend over a period of time
is what we fill in and that is commensu-
rate with the geophysics. South32 is par-
ticularly interested in exploration projects
and is recognising the benefit of getting
in early and being flexible in terms of ex-
penditure. That flexibility, I think, eases
the tensions in a strategic partnership.
Expenditure will increase if there are
more targets and that bodes well for both
companies under that partnership.”
The survey was expected to take a
couple of weeks to fly and for data to be
collated, with Perth-based geophysics
specialists Resource Potential chosen
by South32 to do the targeting.
“Resource Potential is highly regarded
by South32. South32 will have a look
at the targets and if they like them they
will commit to a double phase earn-in
process whereby they spend a certain
amount of money over a certain amount
of time to acquire 60%. If they want to
keep going by funding a PFS they earn
up to 70%, but there is also an option to
form a JV – 60:40 or 70:30 – so it is quite
good for Inca as well,” Brown said.
The way forward for the South32/Inca
partnership will become clearer before
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 45
LATIN AMERICA DOWN UNDER PREVIEW
AusQuest/South32 take it to 10
Peru’s reputation as one of were expected to be granted at Chololo least initial test drilling done
Latin America’s premier this month, paving the way for AusQuest [at Balldonia and Jimber-
mining investment hubs was to build an access road through some lana, nickel] within the next
endorsed in Fraser Institute’s low-lying hills to help with drill rig mobi- six-month period. We are
2017 annual survey on mining lisation. in the process of getting
companies, with the country all the work done in terms
rising from 28th in the world for Drew said he hoped drilling at the po- of clearances and access.
mining investment attractive- tential large-scale copper porphyry Cho- We got the OK in March so
ness in 2016 to 19th last year. lolo project would have started post Latin we are working on Native
America Down Under, while permitting Title clearance and various
“The Government is keen for for the Cerro de Fierro copper project other things that need to be
us to be active, no question. was also in the pipeline. done. Sometime in May that
When we first started there, should all come to fruition
there were a few Australian “We are expecting to have that done for us so we can get started
juniors, which appear to have by the middle of the year so we can fol- here and in Peru.”
fallen off now. The big guys are low on and keep the drill rigs turning for
still there and we are one of the the next 4-6 months. Hopefully we will be The new opportunities
few that has maintained a fairly testing two of our big projects under the generated by AusQuest for
active position in-country,” alliance South32 is funding,” Drew said. South32 triggered a second
AusQuest Ltd managing direc- bonus of $US500,000 for
tor Graeme Drew told Paydirt. “We will be drilling in Peru and also the former, to be invested in
Australia [Blue Billy zinc] where we have ongoing project generation
AusQuest’s commitment to three projects and we hope to have at studies.
Peru and the encouraging plat-
form for doing business set out “We are actively explor-
by government is matched by ing, doing the geophysical
the mineral endowment, which activities that you need to
is proving to be motivation for do – mapping and sampling
South32 Ltd to increase par- – now we have sustainable
ticipation in-country. funding through South32
and the projects are meas-
South32 recently took an uring up to what they are
interest in Inca Minerals Ltd’s looking for. Technically, if
Riqueza zinc-silver-lead pro- South32 is happy with the
ject in Peru, while its strategic projects then we will get the
alliance agreement (SAA) with sustained funding for the
AusQuest appears to be flour- near term and then every-
ishing. thing will depend on results
etc,” Drew said.
The SAA, established in
2017, now includes 10 projects “If they are any good, the
in Peru and Australia, with funding will continue, if not
about $6 million to be spent on Graeme Drew we will move on to other
drilling and other activities dur- projects. We have quite a
ing 2018. number we are working on; two that are
drilling, one that we have completed IP
Five projects – two in Peru and three in on and another one that is ready for IP
Australia – have been identified for drill- work. Potentially there are another two
ing under the SAA this year. that could be opportunities and one
that had been subject to inspection by
Under the SAA, South32 has the ex- South32.
clusive rights to AusQuest’s projects by “We are confident we will end up with
providing funding for selected projects half a dozen or more projects in Peru that
up to drilling stage. To earn a 70% inter- will be funded. We like having pot shots
est, South32 can choose to spend a fur- at elephants and hopefully one of them
ther $4 million and by committing to pre- will be an elephant and we will be away.”
feasibility studies can earn an additional
10% stake in selected projects. – Mark Andrews
“Ten projects is quite a number, with
more to come,” Drew said.
“South32 want to see activity and we
are moving towards getting activities
started. We have a couple of fairly siz-
able projects we are permitting in Peru
at the moment which we are expecting to
get under way this quarter.”
Government approvals and clearances
PAGE 46 MAY 2018 AUSTRALIA’S PAYDIRT
LATIN AMERICA DOWN UNDER PREVIEW
Pacifico plays new tune
Pacifico Minerals Ltd’s technical follow later this year pending the suc-
team could not believe their luck
when they stumbled upon the Violin cess of the ongoing auger sampling
gold-copper project in Mexico earlier
this year. activities.
The multi-jurisdictional explorer “We continue to hold a strategic po-
was looking to add to its portfolio and
identified Mexico as a destination sition in Colombia and we continue to
which would complement its seven-
year focus in Colombia. like the opportunity there,” Noon said.
Violin, about 250km south-west of “We’ve rationalised the Berrio pro-
Mexico City and hosted on the pro-
lific Guerrero gold belt, was quickly ject considerably over the last few
flagged by Pacifico’s geologists as a
project with unwavering upside. years and we have some very inter-
“Our technical team was really excited esting copper-gold projects in Co-
about this one,” Pacifico managing direc-
tor Simon Noon told Paydirt. lombia which have scale potential,
“It’s something with real scale poten- but they’re all in application at this
tial. It looks very, very interesting at sur-
face and it’s not been drilled. To have stage. Once they’ve progressed and
anomalies that size and that high is pretty
unusual and we’re really looking forward Simon Noon become titles, that’s when exploration
to getting stuck into exploration.”
will accelerate in Colombia.”
Pacifico has identified major intrusive,
skarn-related mineralisation at the pro- and copper soil anomalies and coinci- Pacifico has also been busy on the ac-
ject, along with extensive, strong gold
dent magnetic highs. quisition front in Australia with the com-
Several multimillion ounce gold mines pany picking up three ELAs prospective
and projects with similar mineralisation for “economic concentrations” of cobalt-
styles are hosted on the Guerrero belt. bearing minerals in South Australia.
Having acquired the rights to the pro- “Like a lot of explorers, we’ve followed
ject from a private group via a binding op- the battery metals sector with great inter-
tion and terms to purchase agreement, est,” Noon said.
Pacifico has wasted no time getting “One thing that appears evident at this
boots on the ground at Violin. stage is that there has been no cobalt-fo-
“One could argue there’s immediate cused exploration done here in the past
drill targets, but we want to fine-tune and the interesting grades that we’ve
those over the next already announced come out of explora-
few months and get tion for other commodities.”
a rig out there as While cobalt will be the main mineral
soon as we can,” pursued on the ELAs in South Australia,
Noon said. the company is also upbeat about the
“There’s a fair bit manganese potential.
of available data “I think you’ll see the manganese story
– magnetics and evolve over the coming years and come
IP – but we want to into picture with the battery market a bit
interpret that our- more than it has,” Noon said. “If you can
selves and make find high-grade manganese, particularly
sure we’re comfort- battery-grade manganese, there’s a
able with that and strong market for it.”
get some additional In the Northern Territory, Pacifico and
mapping done, ex- JV partner Sandfire Resources NL are
tend some of the this month expected to begin a new drill-
soil geochemis- ing campaign at Borroloola West, target-
try and make sure ing the Lorella oxide prospect.
that initial drill pro- An exploration target of 5-10mt @ 0.8-
gramme targets the 1.1% copper has been declared for Lo-
most prospective rella.
areas.” Noon said his company, which has
Despite the addi- seen its market cap grow from $5 mil-
tion of Violin to the lion to $12 million in recent months, was
portfolio, Pacifico well funded to manage all of the planned
has no intention of work across its portfolio for the foresee-
parking up its Co- able future.
lombian interests, “We’ve got $1.4 million in cash and we
including the Berrio think we can add real value to a number
gold project, where of our projects with those cash reserves
infill soil sampling is before we need to raise further funds,”
currently under way. Noon said.
A diamond drilling – Michael Washbourne
programme could
PAGE 48 MAY 2018 AUSTRALIA’S PAYDIRT
Colombia still tough
The end of 52 years of Colombian legislation and
fighting between the Gov-
ernment and FARC rebels the different international
was meant to signal a new
dawn in Colombia. agreements signed, aiming
However, the presidential for the protection of its rights
election to be contested this
month between leftist Gus- and those of its sharehold-
tavo Petro and FARC rebel
leader Rodrigo Londono has ers, since the decision from
brought a halt to government
spending and a general lag in the High Court disregards
the economy as the country
decides its preferred leader. the fundamental principles
“There is a lot of uncertain- of legitimate trust and legal
ty around still,” export adviser
on international trade with security under which the
Austrade, Ryan Butta, told
Paydirt. company operates in the
“It looks like Petro, an country,” South32 said in a
ex-guerilla fighter from the
1980s with the M-19 move- statement.
ment, is polling very well. I think that has
a few people concerned, so how that It has not been smooth
goes, who knows at this stage.”
sailing since BHP Ltd spun
Before starting with Austrade and
South Australia’s now abolished Depart- Cerro Matoso into South32,
ment of State Development a year ago,
Butta spent over 15 years based in Bogo- with workers threatening
ta as managing director of Mining Capital
Resources (MCR), a private deal-making to strike over pay in 2016,
group focused on infrastructure, energy
and mining. while nickel prices have al-
Therefore he is well-versed in the prob- ways proved challenging.
lems associated with Colombian mining.
In addition to tensions between FARC Progress in Colombia’s mining sector has stalled Payable nickel production
and the Government, he said, drought
and the lengthy time taken for approv- from Cerro Matoso in the
als to be processed in the mining sector
had been deterrents for investment in the “I think a lot of people have been burned December 2017 half-year was 21,800t,
country.
and drifted away, but the underlying thing with South32 guiding total FY2018 pro-
Nevertheless, the Colombian National
Mining Agency last year reported that of was people kept coming back because duction of 41,600t.
37 Australian companies operating in the
country, 25 were connected with the re- the geological resources are there. You – Mark Andrews
sources sector. talk to any geologist and they get very
More than 90% of Colombia remains excited about what
untouched from an exploration perspec-
tive, despite the potential for coal and is there, but it has
gold deposits.
always been a mat-
However, as the peace process is in its
infancy and the election to come, inves- ter of whether it can
tors will remain cautious about Colombia
with Latin America jurisdictions exposure be accessed or not.”
likely to focus on more desirable Chile,
Peru, Argentina, Brazil and Mexico. Colombia’s min-
“If you had $10 to invest where would ing sector was in
you put it? Probably $6 in Chile and $3 in
Peru and $1 in Colombia, which is quite the headlines last
sad because things were quite positive in
Colombia 5-6 years ago,” Butta said. month following the
decision handed
down by the Con-
stitutional Court de-
termining South32
Ltd’s Cerro Matoso
nickel mine had
adverse effects on
people in the sur-
rounding communi-
ties.
South32’s in-
country subsidi-
ary – Cerro Matoso
S.A. – was ordered
to pay damages;
a ruling which has
been appealed.
“In addition to
the appeal filed,
the company is as-
sessing the scope
of the decision and
will make use of
the different legal
actions granted by
AUSTRALIA’S PAYDIRT MAY 2018 PAGE 49
LATIN AMERICA DOWN UNDER PREVIEW
Barrick expands its
Alicanto horizons
The geological picture continues to Alicanto chief geologist Marcus Harden (left) has had more than 10,000m of drill core to
widen for Alicanto Minerals Ltd in examine in the last 12 months on the company’s Guyanese projects
Guyana with project partner Barrick Gold
Corp increasingly interested in the Araka- the highest ranked of the plus-500 ppb Xenopsaris brought up to a similar level
ka gold JV. targets at Xenopsaris, with Barrick now of knowledge.
keen to see an understanding of the
Barrick began earning into Arakaka – prospect brought to a similar level as the “We will know in the next few months –
350km north-west of the capital George- Arakaka main trend where the JV drilled following this diamond drilling campaign
town – in March 2016 and can take a 7,500m in 2017, following up on more – if one or the other becomes the prior-
65% interest by spending $US10 million than 10,000m of historical drilling. ity.”
over four years.
“Last year saw us bring forward the The first indications of the future direc-
The major’s initial interest had been Concorde prospect on the Arakaka main tion of exploration came in March when
over the shear-hosted mineralisation on trend because we see multimillion ounce assays from Concorde returned hits of
the main Arakaka trend but in recent potential there but before we dive any 9.35m @ 2.7 g/t, 9.72m @ 1.44 g/t and
months its attention has widened follow- further into that Barrick wanted to see 5.1m @ 3.97 g/t gold.
ing encouraging results from drilling and
trenching on the Xenopsaris trend to the What is certain is that Barrick remains
south of Arakaka.
Alicanto’s exploration team, led by
managing director Travis Schwertfeger
and chief geologist Marcus Harden, had
always been keen on the Xenopsaris
area and worked hard to convince its
partner the prospect’s structural setting
made it worthy of attention.
The Xenopsaris trend is a plus-17.5km
long anomaly of near-continuous plus-
100 ppb gold with Alicanto’s exploration
focused on numerous plus-500 ppb tar-
gets within the corridor.
“Xenopsaris was always an earlier
stage proposition with only soils and au-
ger drilling completed as part of previous
expenditure commitments,” Schwert-
feger told Paydirt. “But when it produced
trenching results of 6m @ 8 g/t gold and
20m @ 2 g/t gold, Barrick’s interest be-
gan to increase.
“We then started some reconnais-
sance drilling, not targeting mineralisa-
tion but geology. The drilling confirmed
the gold anomalism is associated with a
high-strain, regional scale antiformal fold
hinge, a similar structural setting to Gros
Rosebel [13.7 moz gold] and Meriam [6
moz gold] deposits over the border in
Suriname. Arakaka is shear-hosted and
therefore its own beast but Xenopsaris is
analogous with those multimillion ounce
deposits elsewhere on the belt.”
Alicanto began a follow-up 2,500m
trenching programme in January. Re-
sults had been received for 65% of the
programme at the time of print, including
intercepts of 3m @ 16.4 g/t gold, 9m @
1.8 g/t and 3m @ 5.1 g/t.
A 3,500m diamond drilling programme
was launched in late March targeting
PAGE 50 MAY 2018 AUSTRALIA’S PAYDIRT
The words you are searching are inside this book. To get more targeted content, please make full-text search by clicking here.
Discover the best professional documents and content resources in AnyFlip Document Base.
Search