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June 2017 VOLUME 1. ISSUE 250 $11.95

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Latin temperament:

How Aussies make their mark

• Latin America Down Under review ISSN 1445-3436
• Australian Graphite Conference review 054

• Services feature • Copper focus 9 771445 343007



CONTENTS

PAYDIRT (ISSN 1445-3436) 5 NEWS 5
Published by Blackouts across South Australia have 24
Paydirt Media Pty Ltd. sparked nationwide debate about the 44
A.C.N. 063 985 133 future of Australia’s energy sector, with
the South Australian Resources & Energy
Head Office: Investment Conference, in Adelaide last
Suite 9, 1297 Hay St, West Perth month, providing the platform to further the
Western Australia 6005 discussion. Leading energy commenta-
P.O. Box 1589, West Perth tor Terry Kallis believes South Australia’s
Western Australia 6872 future will be dependent on gas and has
Phone: (+61 8) 9321 0355 called for the National Electricity Market to
Facsimile: (+61 8) 9321 0426 be reformed. Mark Andrews reports
[email protected]
www.paydirt.com.au

Editorial: 18 COVER
Editor: Dominic Piper Australian companies continue to build
Deputy editor: Mark Andrews presence and establish reputations in Latin
Journalists: Michael Washbourne, America but are doing so without any great
Jonathon Daly traction from home-grown investors. While
Photography: Picture This some companies are prepared to pound
Art director: Marian Noonan the pavement in North America to lure criti-
Contributors: cal funding to advance projects, others be-
Keith Goode (Sydney), Brendan Ryan lieve Australian investors are more savvy
(Johannesburg), Ross Louthean and attuned with the investment opportuni-
ties ASX-listed companies offer in Latin
Advertising: America. A panel of experts convened at
Advertising manager: Richa Fuller Latin America Down Under to discuss the
Subscriptions: Mitchelle Matambo topic. Dominic Piper reports
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 24 LATIN AMERICA
DOWN UNDER
Pre-press and printing: Now is the time for Australia’s business fra-
Vanguard Press 26 John St,
Northbridge WA 6003 ternity to capitalise on the country’s reputa-
Member of:
tion as a trade partner to up the ante on
Paydirt Media
Executive chairman: Bill Repard investment opportunities in Latin America.
Finance manager: Giovanny Jefferson
Accounts/administration: This was an overwhelming theme stem-
Heather Melling
Conferences: Melita Fogarty, ming from Australia’s heads of missions
Namukale Nakazwe-Msiska,
Christine Oelschlaeger in the region at last month’s Latin America

Down Under conference in Perth, attended

by 250 people. The positivity of Australia’s

ambassadors was mirrored by the many

visiting delegations which made the long

haul from Latin America to participate in

another vibrant conference. Paydirt covers

the event in full over 20 pages

Cover image: Argentine lawyer 44 GRAPHITE REVIEW
Ignacio Celorrio speaks during There is no doubt the graphite sector has
Latin America Down Under matured. While some aspects of the sec-
tor still need clarity, it appears Australia’s
Member of: graphite players are clear on their roles
Australia-Africa Minerals & Energy Group in the sector, and have planned accord-
ingly. The next question to be answered is
Registered by Australia Post PP 643938/0071. which players can execute their strategy
No pages or articles in this publication may be first? Paydirt provides full coverage of the
reproduced in any form without the consent of second Australian Graphite Conference
the publisher. This includes photographs either hosted in Perth in late April
taken by Paydirt Media staff or provided by other
parties

Time to visit the co-op

Perhaps it is time the Australian started different flow sheets. But we don’t see all that much toll-treat-
building some miners’ co-operatives. ment. There is still a preference among gold juniors to talk up

After all, the West Australian gold sector their chances of building a standalone plant, even among those

was forged on the state batteries, the last of who have previously stated their intentions to pursue toll-treat-

which – at Meekatharra – closed in 1987. ment.

At a time when juniors are still battling I’d suggest much of the impasse comes down to emotional

for capital, would they do better reasons. Companies claim they want to be in control of their own

pooling their resources? destiny but it is easy to see through that towards the egotism that

The notion came to mind dur- comes into play. Every executive secretly likes spending money

ing this year’s Australian Graphite and if they can tell the boys down the Club, they have built a

Conference, where several com- shiny new plant that will “last for a generation”, all the better.

pany executives – most notably The comments from Mintrex’s Leon Lorenzen in this edition

Andrew Spinks, managing director of Kibaran Resources NL are also worth considering. The processing plant specialist told

– raised the notion of graphite players forming a collective to Paydirt a number of miners were looking to adjust flow sheets

support construction of a spherical graphite or even lithium-ion and refurbish as plants built in the last boom reach an age of

battery facility in Australia or East Africa. seven or more years.

““We, particularly as an East African community, have an op- “A lot of those projects built during the boom... as they go

portunity to bring mines into production, but I think that has to deeper, or find new deposits with different complexities you

be in accordance with fitting need to re-evaluate the flow

product specifications; there is After all, the West Australian sheet and I expect it will be a
no point producing a whole lot gold sector was forged busy time on those mines in the
of graphite,” Spinks said. It is next few years,” Lorenzen said.

like producing salt out of the In- on the state batteries, the last of This could represent an op-
dian Ocean, there is billions of portunity for potential toll-treat-
which – at Meekatharra – closed
tonnes of salt, there is no point ment ore providers to strike

producing all of that salt if you in 1987. At a time when juniors are agreements with mill owners
can’t sell it. over capital and terms, provid-
still battling for capital, would they
“The opportunity for Aus- do better pooling their resources? ing savings in both directions.
tralia to develop its own battery Mincor Resources NL is the
[production capability] is really
latest to move towards a toll-

something that has a lot of inter- treatment strategy. The compa-

est from the Government.” ny recently announced a posi-

The idea makes some sense in the graphite market, which as tive feasibility study for its North Widgiemooltha gold project.

you will read in this edition, has myriad product specifications Mincor has effectively conserved cash since mothballing its

and industry users, none of which a single miner could hope to nickel operations last year and so had the option to build yet

satisfy. another Eastern Goldfields processing plant but as managing di-

Spinks’ comments, and the debate around collectivised down- rector Peter Muccilli explained to Paydirt recently, the economic

stream processing, got me thinking about the local junior gold studies soon put that option to bed.

sector. “Every mill is a little bit different and what we’ve found is there

I’m always amazed when flying over WA’s Eastern Goldfields are trade-offs between recovery and grind and their respective

just how many gold processing plants there are in a small area. costs, but they’re all very much delivering the same net result in

While the sector is enjoying a resurgence at the moment, terms of cash flow,” Muccilli said.

most of these mills are still well under nameplate capacity and it “When you add all the parameters together, the trade-off stud-

makes me wonder why do we not see more toll-treatment agree- ies show they’re pretty much generating the same result.”

ments. Across the border, the Northern Territory Government is reviv-

At a time when investors are demanding almost instantane- ing the idea of the state battery with plans to build its own central

ous payback on capital and minimal risk, the economic argu- processing facility in Tennant Creek. A central mill in Tennant

ment for most deposits must point to toll-treatment. Creek could ensure the economics of the smaller, high-grade

If a company is intent on developing a project of less than resources in the Tennant Creek mineral field.

750,000oz and is within 100km of an underutilised mill, a com- There is also cooperation at work in South Australia. Industry

pelling agreement with the mill owner could surely be made. in the state has been plagued by energy problems and recently

Great Boulder Resources Ltd managing director Stefan Mur- the South Australian Chamber of Mines & Energy won approval

phy told me late last year that his company recognised this op- from the Australian Competition and Consumer Commission for

portunity prior to its IPO. a group of 20 companies to collectively negotiate long-term sup-

“We don’t need a huge resource base to be able to put some- ply contracts.

thing in to production,” Murphy said. Cooperation may sound an unlikely concept in the cut-throat

“I think if you look at the amount of latent capacity of mills in world of mining but there are signs the industry is beginning to

the area, a toll treating option is a pretty sensible approach to warm to the idea.

take when you are talking about returns for capital invested.”

In the Eastern Goldfields, some deposits would have several

mills to choose from, offering both competition and options for [email protected] @DominicPiper

PAGE 4 JUNE 2017 AUSTRALIA’S PAYDIRT

NEWS

Power issues not just a
SA problem

Statewide blackouts in recent “We are now at a time where we have Terry Kallis
times have drawn attention to gone through a building stage of the
South Australia’s inability to se- 1950s to 1980s to the reform stage,” when there remains much conjecture on
cure reliable and affordable energy Kallis said. the future of prices for gas, which Kallis
sources, however, the problem believes South Australia’s future will be
is not limited solely to Australia’s “We are now in a situation where the reliant on.
southern state. market has been tested quite fully and
the issues driving us are reliability and af- “Every part of the NEM has power in-
One of the country’s leading en- fordability. The NEM is a misnomer; it is creases, so it is not just South Australia,
ergy commentators – Terry Kallis a series of loosely connected to regional we are seeing it right across the board [in
from Kallis & Co – has called for a markets. We are particularly different to Australia]. That is why we are seeing the
shake-up of the National Electricity the Eastern States in terms of our load, Federal Government get more involved
Market. large geographic area and high price gas and active with some of their policies,”
has always been the case. We have the Kallis said.
Speaking at the South Australian peakiest demand profile in the western
Resources & Energy Investment world and we also have the highest pen- “Redesigning the NEM, this is the re-
Conference late last month, Kallis etration of wind and solar [power].” form that I think needs to happen with the
posed a number of potential solu- cooperation of Commonwealth and State
tions to counter South Australia’s Kallis said additional interconnector Governments.”
power industry challenges, includ- capacity was required in South Austral-
ing the mining industry assessing ia, with a 300MW connection into New Kallis said good quality technical and
the opportunities available to use South Wales the “only one real option”. commercial advice needed to be pro-
straw-fuelled biomass energy as a vided to the governments during the re-
baseload renewable energy option “It gives you diversification of sources form stage and with this in mind, he was
for remote operations near crop- and is a reasonable cost,” he said. keen to re-establish the South Australian
ping land. Electricity Plan Council and broaden the
“The second [best option] is access to scope to include gas and energy coun-
Plans are in place for a 15MW bi- reasonably priced gas, but that is very cils.
omass energy plant to be built near difficult to do without the co-operation of
Ardossan on the Yorke Peninsula, the incumbent gas companies.” – Mark Andrews
which will be used to demonstrate
the viability of competitively priced and The closure of the 33-year-old North- For a full wrap of SAREIC 2017, grab
unique biomass power supply. ern Power Station in South Australia and the July edition of Australia’s Paydirt
Hazelwood in Victoria, comes at a time
With competing land use issues a
consistent problem, particularly for the
farming communities and the mining fra-
ternity in South Australia, straw or stub-
ble-fuelled biomass energy also offers
farmers the potential to diversify their
incomes into the mining industry.

If it proves to be economically viable
and reliable, straw-fuelled biomass en-
ergy will not only provide miners with
reasonably priced power, the reliance on
grid connection will also be lessened.

The Yorke Biomass Energy project,
modelled on similar plants running in
Spain, is owned by the Kallis Fam-
ily Trust and just one innovative idea to
solve some of South Australia’s power is-
sues, while Kallis believes a combination
of extra wind and solar power generation
coupled with storage capability, such as
battery farms and compressed air en-
ergy storage (CAES), are also potentially
viable solutions.

In addition to diversifying the State’s
energy mix, Kallis called for Australia’s
governments to look at reforming the Na-
tional Electricity Market (NEM).

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 5

NEWS

Fortescue looks for
diversity to grow

Fortescue Metals Group
Ltd has returned to market
darling in the past 18 months

after executing a business

plan that has dramatically cut

debt and increased iron ore

production from the Pilbara.

Not only in Australia has

the company captured the at-

tention; it is now being hailed

worldwide, a fact reflected

with the Metals Company of

the Year honour at the S&P

Global Platts Global Metals

Awards in London last month.

The award came shortly

after Fortescue delivered

another robust quarter in

March whereby a further A day after being named Metals Company of the Year at the S&P Global Platts Global Metals Awards,
$US2.7 billion debt was re- Fortescue hosted delegations from Latin America on site
paid as 39.6mt of iron ore

was shipped and C1 costs were kept to The company has warned there re- cue could take an exotic twist, with a per-

$US13.06/wmt. mains volatility in the iron ore price – manent team set up in Ecuador.

$US60.50/t at the Fortescue has 32 concessions cover-

time of print – but ing 14,000sq km of ground in Ecuador

with gross debt where the potential for low-cost growth

of $US4.3 billion opportunities has been the lure.

and cash on hand To this end, Fortescue welcomed a

of $US1.5 billion, host of government delegations from Lat-

Fortescue is now in America and the respective Australian

better placed to ambassadors to visiting countries on site

cope with fluctua- at Cloudbreak and a tour of its port facili-

tions in the market. ties in Port Hedland.

Fortescue is tar- Many of the Latin American delega-

geting a production tions were from developing countries

run rate of 165-170 where mining sectors remain largely un-

mtpa iron ore, with developed. Some visitors were amazed

95-96% of its prod- at how flat the Pilbara was and there

uct bound for China; was no doubt they were in awe of what

a market it is highly Fortescue had managed to do since pro-

leveraged to. ducing first iron ore in 2008.

Although Fortes- It has taken almost 10 years to deliver

cue is well estab- the platform it now has, allowing Fortes-

lished and strongly cue to gear up for the next phase of

connected in China, growth. While there has been some ex-

there is a realisation citement in Ecuador lately, particularly on

that diversification the back of Solgold plc’s success at the

into other commodi- Cascabel copper gold project, Fortescue

ties and countries is has also undertaken early-stage explo-

needed. ration of prospective copper-gold tene-

Being strongly ments closer to home in South Australia

positioned to look at and New South Wales as it strives for

new opportunities optionality in the future.

beyond core opera- – Mark Andrews
tions in the Pilbara,

the next phase of

growth for Fortes-

PAGE 6 JUNE 2017 AUSTRALIA’S PAYDIRT

Crusader unveils merger plans

Crusader plans to merge with AIM-listed Stratex International in a bid to improve the chances
of development of its gold projects, including Juruena

Crusader Resources Ltd plans to in investing in Brazil,” Stephen told Pay- Stratex chief Marcus Engelbrecht – a for-
merge with an AIM-listed company in dirt. mer chief financial officer for BHP Billiton
a bid to boost the chances of putting its Diamonds Inc and OceanaGold Corp –
Brazilian gold projects into production. “Crusader winds up with a little over and both believe he would be a “good
80% of the newly formed company, so match” for the company.
As delegates from various jurisdictions it’s not really dilutive. At 11c/share, we’re
were mingling at Latin America Down capped at around $33 million, so $12 mil- “He has a very strong history of putting
Under last month, Crusader was hastily lion as a percentage of $33 million, that’s mines into production and running oper-
finalising a non-binding heads of agree- close to 30% dilution. I think it’s a really ating mines,” Stephen said.
ment with Stratex International plc for the remarkable deal for Crusader sharehold-
latter to acquire the ASX-listed junior via ers.” “We’re now funded to push both pro-
an all-scrip transaction. jects forward, and funded in a really clev-
Crusader shares will continue to trade er way that also introduces some new
If the proposed transaction is imple- on the ASX until the transaction is com- mining people to the company.”
mented, each Crusader share will be pleted, but it is the intention of both com-
exchanged for 6.6 Stratex shares. The panies for the combined entity to main- Crusader recently received a key envi-
transaction values each Crusader share tain a dual listing thereafter. ronmental licence for Borborema and will
at 18c, a 56.5% premium on the 11.5c the now look to complete final engineering
company traded on May 17. Stephen said it was his company’s design work and a BFS during the sec-
belief an AIM listing would result in a re- ond half of the year.
Both companies are expected to com- rating for Crusader and its projects, given
plete due diligence shortly, including le- the Australian bourse tended to favour A feasibility study on Juruena is also
gal, tax and other accounting analysis, homegrown resources projects. due in the coming months as the com-
with a binding scheme implementation pany bids to put the project into develop-
agreement tipped to be signed in mid- “It has been a challenge to get Austral- ment later this year before an anticipated
June. ian investors to look at Brazil for a bunch first gold pour in 2018.
of reasons, not the least of which is that
It is anticipated the merger could be many Australian companies have strug- With Borborema and Juruena to domi-
formally completed in September. gled to be successful over the long term nate the focus of the new company, it re-
in Brazil,” he said. “Thankfully, we’ve mains unclear what the future holds for
Crusader executive director Paul Ste- been able to make a go of it.” Crusader’s Posse iron ore mine, 30km
phen said the merger paved the way for from Belo Horizonte.
both the Borborema and Juruena gold Stratex is actively exploring for gold
projects to be developed, largely thanks and base metals in Turkey, Senegal, More than $36 million worth of iron
to Stratex’s healthy cash pot of £9 million Ghana and East Africa and boasts a ore products have been sold to domes-
($12 million). share register featuring the likes of An- tic markets in Brazil since Posse was put
gloGold Ashanti Ltd, Teck Resources Ltd into production in early 2013, with cash
“The biggest thing about this [transac- and BlackRock Group Ltd. flow used to fund development of the
tion] is the ability to access the London gold projects.
capital markets and gaining access to Stephen and Crusader managing di-
larger pools of capital that are interested rector Rob Smakman recently met with – Michael Washbourne

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 7

NEWS

Zinc supply still constrained

There has been no shortage
of activity from Australian
players in the zinc space.

Well known mines – Lish-

een in Ireland and Century in

Queensland – shut last year

and the impact on zinc prices

was seen shortly after.

Prices still remain high and

although supply is expected to

be greater this year, there is a

shortage of new mines coming

on stream.

MMG Ltd has started recruit-

ing people to work at its $1.4

billion Dugald River project,

in north-west Queensland,

which is expected to produce

160,000 tpa zinc and be one

of the top 10 producing zinc

mines when operations start

and first concentrate is deliv-

ered in the first half of 2018.

Not many companies have

projects in the ilk of Dugald Zinc production has been on the rise in a number of countries, including Peru, in the past 12 months

River or the balance sheet of
MMG to deliver a 53mt zinc-lead-silver world; Dugald River is probably the next global merchant of zinc, copper and lead
concentrates – the off-take contract for
project. Nevertheless, a handful of Aus- cab off the rank.
“We can’t compete with those guys in 100% of zinc, copper and lead concen-
tralian juniors are actively seeking to
play a part in the sector and are enjoying terms of scale and tonnes but a small trates produced from the Woodlawn pro-
varying degrees of success around the high-grade deposit is always sought af- ject in New South Wales.
The contract is valid from the start of
world, including Consolidated Zinc Ltd in ter. We have the metals traders all over
us to buy our product, so I am confident production to 2021, with steady-state
Mexico.
Despite its share price softness this that we are going to have something that output in the range of 70,000 dmtpa zinc,
year, Consolidated completed a $2.95 is fairly marketable and be producing 30,000 dmtpa copper and 25,000 dmtpa
million rights issue – fully underwritten in a window where the zinc price is still lead concentrates.
According to preliminary data, pro-
by Patersons Securities Ltd – last month strong.”
At the time of print, zinc was trading duced by the International Lead and Zinc
and managing director Will Dix believes
investors remain hungry for projects like at above $US2,500/t and with demand Study Group, for the first three months of
growing for the base metal, it appears 2017 the global market for refined zinc
its Plomosas asset.
metal was in deficit by 6,000t in the first
Consolidated surged 18% in May on off-takers are moving to secure supply.
Heron Resources Ltd awarded Louis quarter of this year, with inventories go-
the back of preliminary results from drill-
ing at Tres Amigos North, which returned Dreyfus Company Metals – a leading ing down by 18,000t also.
Compared with the corresponding
assays of more than 30% zinc, while
intersections outside the current re- Some of the ASX-listed juniors in the zinc game period in 2016, production increased
by 11.3%, as zinc output from Aus-
source are also encouraging for the Consolidated Zinc Ltd (ASX:CZL) – Mexico tralia, Canada, China, Eritrea, India,

company. Peru and Turkey was all on the rise.
Global usage of refined zinc metal
“We have a real advantage in that Energia Minerals Ltd (ASX:EMX) – Italy
we have a plant on site already and
we don’t have to start from scratch. Ferrum Crescent Ltd (ASX:FCR) – Spain was increased by 2.9% as demand

Pending the outcomes of the scop- Heron Resources Ltd (ASX:HRR) – Australia in the US grew by 49%, which was
ing study, if they are positive, there somewhat offset by declining usage

is going to be a small capex to get it Orion Minerals Ltd (ASX:ORN) – South Africa of 1.2% in Europe and 3.1% in China.

refurbished and up and running,” Dix Longford Resources Ltd (ASX:LFR) – Ireland Meanwhile, imports of zinc con-
told Paydirt. tained in zinc concentrates increased

“We’d like to think that we will be Red River Resources Ltd (ASX:RVR) – Australia by 297,000t (10.8%), compared with

well and truly down that [feasibil- Top End Minerals (ASX:TND) – Myanmar the first quarter of 2016.
ity] road by the end of the year and – Mark Andrews

hopefully producing concentrate Variscan Mines Ltd (ASX:VAR) – France
early next year. There are not a lot
of projects coming on around the Zinc of Ireland NL (ASX:ZMI) – Ireland

PAGE 8 JUNE 2017 AUSTRALIA’S PAYDIRT

BUSH TELEGRAPH

African miners in tax debate

Recent financial reports and $US262 million was related to
trading updates have shown
mining companies are coming un- the Kansanshi mine.
der increased pressure over tax
payments and demands for “in- “Management continues to
digenisation measures” – trans-
ferring minority stakes in their engage in regular discussions
operations to local citizens – from
governments in countries like with the relevant government au-
Zambia, the Democratic Republic
of Congo (DRC) and Tanzania. thorities and considers that the

The DRC Government has outstanding VAT claims are fully
announced it intends reviewing
the country’s 2002 Mining Code recoverable,” First Quantum has
which it last tried to revise at the
end of 2015, but subsequently stated.
dropped early in 2016 after ve-
hement opposition from mining In Zimbabwe, Zimplats was hit
companies.
early this year with yet another
Randgold Resources Ltd chief
executive Mark Bristow has come attempted “land grab” from the
out fighting against the latest pro-
posal although he maintained Government. This time a de-
that all he was doing was “joining
the debate” that was started when the mand to compulsorily acquire
President announced the upcoming re-
view in Parliament. 27,948ha of its existing lease and

Bristow commented the review “could that’s despite Zimplats having al-
be catastrophic to the DRC economy”
but he also said he was confident that ready voluntarily surrendered a
a positive outcome could be reached
through “robust” dialogue with the DRC large chunk of its mineral rights
Government.
more than a decade ago in order
“Unlike South Africa, the DRC is a
country where you can engage in an to secure title to the ground it is
open forum with government and 90% of
the time the commercial logic will prevail. now mining.
But it’s crucial that the mining companies
step up to the plate,” Bristow said. The company is objecting – as

Bristow pointed out the current 2002 Brad Gordon it has done previously over the
Mining Code has worked well for the
DRC and that Randgold built the Kibali past few years to a string of de-
gold mine on the back of it. Changes
proposed in 2015 – but subsequently Worst affected appears to be gold mands from the Government concerning
shelved – included; a drop in the stabil-
ity clause for new mines to five years producer Acacia Mining plc which is cur- indigenisation levels, proposed duties
from the current 10 years; an increase
in mining royalties to 3.5% from 2.5%; a rently reviewing the future viability of its on metal-in-concentrate exports and de-
rise in corporate tax to 35% from 30%;
higher customs duties on fuel and vari- Bulyanhulu and Buzwagi mines, which mands that a smelter be built inside the
ous goods and an increase in state par-
ticipation to 10% from 5%, get 45% and 55% respectively of their country.

The Government of Tanzania has em- revenues from the sale of concentrates. Invariably, despite the intense political
barked on a campaign to stop the export
of metal-in-concentrate from the country Acacia chief executive Brad Gordon rhetoric, the Zimbabwean Government
because it wants it to be smelted locally
and is also forcing companies to sell 30% said: “We have engaged extensively has previously backed off at the last
of their operating mines to local inter-
ests and list them on the Dar Es Salaam with key Government officials in order to minute and Zimplats is continuing with a
Stock Exchange. The deadline to do this
has been set at August 23 this year. come to a resolution that allows for ex- $US260 million investment programme

ports to resume.” to develop two new mines that will re-

Regarding the local listing deadline place the existing operations when they

Gordon said Acacia was negotiating are mined out. Key issue is that money

with government “with a view to finding a is all coming from Zimplats itself because

route forward that is both beneficial and parent Implats is not investing any funds

practical for all stakeholders”. from outside the country.

Also affected in Tanzania is Petra Dia- As of February, there was hope that the

monds plc which owns and operates the Zimbabwean Government would modify

Williamson diamond mine. Petra chief its previous flat demand that foreign min-

executive Johan Dippenaar said he was ing companies must be 51% controlled

in discussions with the Government on by indigenous interests.

the local listing issue but would not pro- Implats acting chief exectuive Gerhard

vide further details because he did not Potgieter said it looked like the 51% de-

want to “get ahead” of the outcome. Pe- mand would be applied to new mines

tra’s position appears a lot simpler than – not existing ones – and that a new

Acacia’s situation because the Tanza- proposal was being considered through

nian Government already owns a 25% which mines that spend 75% of their an-

stake in the Williamson mine. nual free cash flow inside the country

In Zambia, copper producer First would be considered as meeting indi-

Quantum Minerals Ltd is involved in liti- genisation requirements. Zimplats would

gation with state-owned mining compa- easily qualify on that basis.

ny ZCCM as well as a tax dispute with Brendan Ryan is a Johannesburg-based

government over VAT refunds which mining writer

have not been received. As of the end

of March, the total amount of VAT ac-

crued by First Quantum’s Zambian op-

erations was $US285 million of which

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 9

NEWS

Tawana bucks off-take trend

Despite having no resource at Bald Hill, Tawana has secured a binding off-take
agreement with a subsidiary of Hong Kong-listed Burwill Holdings Ltd

Tawana Resources Ltd has secured Prices for the remaining three years of same terms, taking total pre-payment
binding off-take for its Bald Hill lithium the agreement will be based upon pre- available to the project to $25 million.
project in Western Australia for the next vailing market conditions at the time.
five years despite having no resource or Tawana managing director Mark Cal-
a completed feasibility study. Under the terms of the agreement, derwood said both parties had agreed to
Burwill has provided a $12.5 million pre- terms just three weeks after their initial
A subsidiary of Hong Kong-listed Bur- payment, of which $3.75 million has been meeting.
will Holdings Ltd has agreed to a fixed received, to fund development of the pro-
price of $US880/t (FOB Esperance) for ject, 50km south-east of Kambalda. “They knew we hadn’t released a re-
all production from Bald Hill grading 6% source, but they know we’re going to pro-
lithium oxide between March 15, 2018 Tawana’s JV partner, Alliance Mineral duce a good product and can produce
and December 31, 2019. Assets Ltd, has also executed a separate a good product and they were pushing
off-take agreement with Burwill on the hard to tie us down,” Calderwood told
Pilbara Minerals Ltd signed a long- Paydirt.
term agreement with leading Chinese Pilbara will supply Ganfeng with an ad-
producer Jiangxi Ganfeng Lithium Co Ltd ditional 25% of Pilgangoora’s expand- “We knew this party could move fairly
for the first stage of its Pilgangoora lith- ed production. Up to 50% (maximum quickly. They’re a Hong Kong-listed en-
ium-tantalum project last month, paving 150,000 tpa) will be off-take, contingent tity with management that owns a big
the way for the balance of funding for the on Ganfeng’s funding commitments be- chunk of the company, so they can move
2 mtpa operation to be completed. ing commensurate with its final off-take quicker than some of the more conserva-
position. tive off-takers. They used that to their ad-
The agreement comprises 160,000 tpa vantage and within three weeks of meet-
chemical-grade spodumene concentrate Pilbara has also received environmen- ing them, we had signed a contract. It all
over an initial 10-year term, with two five- tal approval for Pilgangoora, clearing the happened pretty quickly.”
year options to extend. path for construction works to begin.
Tantalum concentrates were excluded
Under the terms of the agreement, Meanwhile, Altura Mining Ltd has from the agreement, with separate talks
Ganfeng must participate in no less than awarded major contracts to Civmec Ltd being held with potential off-takers.
$US20 million as an investor in Pilbara’s (process plant), Qube Holdings Ltd (mine
remaining financing for Stage 1. Ganfeng logistics) and Kalgoorlie Power Systems Tawana only started “meaningful drill-
must also commit to provisional debt (power station) for its neighbouring Pil- ing” at Bald Hill in January, having ac-
funding or off-take pre-payment to sup- gangoora lithium project. quired the project in mid-2016. Calder-
port development of the second stage 4 wood said it was unusual for a company
mtpa operation. Site works began at Altura’s project in to sign off-take after only four months of
March, with the company targeting first serious exploration work, but he always
Upon a decision to develop Stage 2, product shipments in early 2018. knew this project would differ from the
norm.

PAGE 10 JUNE 2017 AUSTRALIA’S PAYDIRT

“Before we have finished drilling we’ve Pilbara Minerals has signed a long-term agreement with Jiangxi Ganfeng Lithium Co for
started a feasibility study and before we 160,000 tpa chemical-grade spodumene concentrate over an initial 10-year term
were midway through our drilling we had
finished our metallurgy,” he said. “We will Perhaps the most crucial win for Tawa- easily rejected after first-pass DMS.
have an EPC contract before we have na during the March quarter was confir- “We’ve probably got the best met of
finished our feasibility study and we’ll mation from metallurgical test work that
have finance before we’ve finished our Bald Hill could produce grades above 6% any [lithium] mine in WA and our orebody
feasibility study. lithium at good mass yields with low iron is not as big as some of them,” Calder-
content, with 60-70% of the feed mass wood said.
“Each piece of the puzzle is going in
in an unusual fashion, but it’s all to save Mark Calderwood “Metallurgy is the thing that has really
time basically.” reared its head in the industry over the
last couple of months, with the under-
Calderwood said the resource esti- standing of how every mine is a little bit
mate for Bald Hill would likely be ready different. Metallurgy is what has stopped
in July, but he was unsure of the time- a lot of this extra production coming on-
frame for the feasibility study due to the stream for the off-takers.”
company’s focus shifting more towards
construction. Meanwhile, Tawana has started met
test work on material from its Uis lithium
Tawana’s construction team was ex- project in Namibia, with results due at the
pected to be approved access to site end of the month.
from June 1.
The search also continues for a JV
Less than 24 hours after announcing partner for the company’s former flag-
the off-take deal, Tawana confirmed it ship asset, the Mofe Creek iron ore pro-
had received commitments from domes- ject in Liberia.
tic and offshore institutional investors to
raise up to $15 million, further boosting – Michael Washbourne
the available cash reserves for the con-
struction phase.

“It just shows there’s enough believ-
ers out there, even if Australian lithium
stocks have been a bit weak lately,” Cal-
derwood said.

“Most of it will go into construction. Ob-
viously we will keep drilling aggressively,
but we had some cash for that anyway.”

Tawana reported numerous high-
grade hits from infill drilling during the
first quarter, including 21m @ 1.44%
lithium and 319 ppm tantalum from 61m,
20m @ 1.38% lithium from 59m, 12m @
2.38% lithium from 136m and 12m @
2.09% lithium from 54m.

Recent extensional step-out drilling
also returned some of the best intercepts
to date, including 35m @ 1.35% lithium
from 71m (including 10m @ 1.62% and
6m @ 1.75%) and 28m @ 1.34% lithium
and 343 ppm tantalum from 92m (includ-
ing 12m @ 2.06% lithium and 464 ppm
tantalum).

The CD-Rom of Paydirt’s 2017

LATIN Latin America Down Under

AMERICA Conference will be

29-30 May 2013, Sydney available soon

CD-Rom for non-conference delegates – $50 (inc.GST) CD-Rom for conference delegates – $80 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 11

NEWS

Zenith powered for public life

One of the leading power and we listed on May 9,
suppliers to some of so given the holidays in

the country’s most prolific between, it was a pretty

and remote mining opera- short period to get it

tions has gone public. away.”

Zenith Energy Ltd listed Zenith’s contracts are

on the ASX on May 9 fol- based on either a build,

lowing a $25 million over- own and operate (BOO)

subscribed IPO as part of or manage, operate and

a long-term strategy to fund maintain (MOM) model,

expansion and repay debt. or a combination of both.

Founded by former State- The company’s own in-

West executives Doug stalled capacity is about

Walker and Gavin Great 88MW, with a further

in 2006, Zenith supplies 240MW managed on

power to nine remote sites, Zenith supplies power to numerous remote mine sites, including behalf of its clients.
including Northern Star Re- Northern Star’s Jundee operation in Western Australia Moffat said offering
sources Ltd’s Jundee and both BOO and MOM-

East Kundana gold mines and Independ- due to the strong uptake from investors, based contracts had helped the com-

ence Group NL’s Nova nickel project. including institutions, family officers and pany win contracts it might previously

Other contracts include Barrow Island retail, with 41% oversubscribed when the have been precluded from, including an

(Chevron Australia), Daisy Milano (Silver offer book was shut. Australian-first diesel/solar hybrid model

Lake Resources Ltd), Phosphate Hill (In- Walker (executive chairman) and Great at Nova.

citec Pivot Ltd), Plutonic (Superior Gold (executive director) hold more than 40% “One of our big differentiators is provid-

Inc) and Halls Creek (Pantoro Ltd). of the register. ing bespoke solutions to meet our cus-

Zenith debuted on the bourse with a The decision to go public came after tomers’ needs rather than a standardised

starting price of 60c/share and the com- Zenith investigated private equity options power delivery offer,” he said. “We’re ag-

pany’s stock has remained firm at around with an unnamed party, but the company nostic on the equipment we put into a job,

55c/share since. ultimately decided an IPO was the best we specify and select the equipment to

Euroz Securities Ltd was the lead funding route available. best fit the requirements that the client

broker and underwriter of the IPO, with “Going through the private equity pro- has.

Steinepreis Paganin and BDO Corporate cess made the IPO easier because we “That’s really what’s giving us our

Finance (WA) Pty Ltd acting as the con- already had done the due diligence so competitive advantage, on top of the

sulting solicitors and auditors/account- we had the data room prepared for the fact we’re still an essential service to the

ants respectively. next group of investors,” Moffat said. mine site. We’re a proven operator; we

Zenith managing director Hamish Mof- “The whole process was a bit like a have lots of strong references across the

fat said increasing activity in the mining duck; all calm on the surface, but pad- country.”

sector and growing need for remote pow- dling like crazy underneath. But we did it According to its prospectus, Zenith

er supply and stations had enticed the in a very short period of time. We actually expects to generate net profit of $2.43

company to pursue an IPO. took the decision to IPO on December 16 million (from forecast revenue of $31.8

“There’s no doubt we’re million) for this financial year,

coming off the bottom in re- with $3.52 million (from $35.2

sources because there’s re- million) anticipated in FY2018.

newed activity in upgrading While Zenith’s short-term

established sites or increasing goal was continuing to pro-

capacity at established sites,” vide a reliable, efficient en-

he told Paydirt. ergy supply to its clients on

“We’re also seeing a num- remote sites, including Ok

ber of projects on greenfields Tedi in Papua New Guinea,

sites start to get up now, so Moffat said the company was

to my mind, there’s no doubt also looking to make waves in

we’ve seen a turnaround in new markets, such as fringe

resources. I think there’s a lot grid power.

more diversification too as evi- – Michael Washbourne
denced by the fact we’ve got

projects in everything from

phosphate to oil and gas to

uranium, lithium, nickel, cop-

per and obviously some gold.”

Zenith had to close its IPO Zenith managing director Hamish Moffat and chairman Doug Walker

a day earlier than expected ring the bell to signal the start of trading on the ASX last month

PAGE 12 JUNE 2017 AUSTRALIA’S PAYDIRT

ASX to welcome Bryah

Investors have a new copper-gold player
to consider, with the anticipated ASX list-
ing of Bryah Resources Ltd at the end of

May.

Argonaut Securities Ltd was the lead

manager in the $6 million (maximum)

IPO, which will give punters a look at

prospective copper-gold opportunities in

the Bryah Basin and Gabanintha areas in

Western Australia.

“I have been talking with Argonaut Se-

curities for over six months about this

package of ground and they have been

really quite keen to get on board. Once

the commercial terms of the transac- Neil Marston

tion had been sorted out and I pitched

it to them again early in the new year ings along strike from pits

they were pretty much on board straight of the old Gabanintha gold

away,” Bryah managing director Neil mine and in GRCC1158; 5m

Marston told Paydirt. @ 8.7 g/t gold and 3% cop-

“Argonaut has been very active and I per, to a depth of 31m down

suppose it is a vote of confidence for my- hole,” Marston said.

self and the assets that they have come “Australian Vanadium then basically start doing some field work. We are con-
solidating all the exploration data at the
on board and supported us so strongly.” switched to the vanadium and left that moment to assist in our targeting. There
is a fair bit of smoke around from previ-
With Australian Vanadium Ltd focusing target there. That is an opportunity for us ous exploration which was never really
followed up. A lot of the gold drilling was
on vanadium in WA, Bryah has swooped to go and drill, there are workings over never actually assayed for copper, but
where they did they were at times getting
on the precious and base metals rights at about 300m at least. There is certainly some anomalous numbers.”

Gabanintha, as well as the 100% rights a decent target there and we’re just get- Barrick Exploration completed some
drilling in the late 1980s, however, after it
to Peak Hill. ting the authorisation in place and her- went into administration the encouraging
results produced were surprisingly over-
Australian Vanadium will receive itage clearances sorted out as soon as looked.

shares in Bryah and hold between possible.” Bryah has now had the opportunity
to consolidate ground in the area and is
6.67% and 8.93% in the company, while In addition to the 200sq km pack- working to bring all the data available to-
gether.
also holding a NSR when production is age at Gabanintha, Bryah will work its
“I am sure there will be plenty of oppor-
reached at Gabanintha. namesake exploration package near the tunities for us coming out of that to guar-
antee some initial aircore drilling and if
Despite impressive copper and gold Horseshoe Lights copper-gold mine. we get onto something some deeper RC
drilling and diamond work,” Marston said.
results intersected in 2013, Australian The company has 700sq km of ground
Bryah was expected to debut on the
Vanadium was unable to pursue further in the Bryah Basin and Marston is confi- ASX on May 31 and has a clear strategy
to execute immediately.
investigations due to the low prices for dent of unearthing repetitions of Horse-
Marston said while there was plenty of
the base and precious metals which fol- shoe Lights. ground to work with, there remained ac-
quisition opportunities for the company.
lowed. There has been limited deep drilling
“The big players that vacated the
“There are some walk-up targets, which conducted over the ground, with previ- greenfields space are now starting to talk
to guys who are onto a good thing, so we
are quite appealing and attractive to us. ous exploration focused on shallow gold think it is the right time for us to be listing
Bryah,” Marston said.
There are some holes under old work- targets and not deeper VMS copper-gold
– Mark Andrews
potential, which is start-

Taurus Mining Finance Fund has been selected as the ing to be demonstrated

debt provider to fund Talisman Mining Ltd’s share of the by Auris Minerals Ltd

Monty copper-gold project in Western Australia. (formerly RNI) nearby.

Monty is a JV between Talisman (30%) and Sandfire “Auris did a 400m

Resources NL (70%), with a completed feasibility study in- diamond hole the other

dicating the total capital to bring the Monty underground – day which is generat-

920,000t for 80,000t copper @ 8.7% and 42,000oz gold @ ing a lot of smoke and

1.4 g/t (reserves) – on-stream would be $90 million. that prospective horizon

Talisman’s share of capex for mine development is about that they have mapped

$23 million, with payback in 17 months, pre-tax IRR of 78% swings around and runs

and pre-tax cash flow of $64 million estimated in the com- up into our ground, ac-

pany’s feasibility study. cording to some of the

With a funder in place, subject to final due diligence, final earlier mapping that they

regulatory approvals remain the last hurdle in the way of did,” Marston said.

the Monty development. “We will be getting on

Talisman expected to receive approvals mid-2017, with the ground in June with

first production from Monty scheduled for late 2018. a field crew to go and

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 13

NEWS

Central benefit for
Tennant Creek

Emmerson Resources Ltd stands to A central processing facility could be built in Tennant Creek for use
benefit from the Northern Territory’s by multiple parties, including Emmerson Resources
decision to fund a feasibility study on a
central processing facility in Tennant cial for small explorers like Emmerson, one single drill hole in it,” he said. “Not
Creek. which has a market cap of about $30 mil- only has this provided us with a case
lion. study of Edna Beryl and a way of detect-
NT Chief Minister Michael Gunner last ing Edna Beryl, we now have something
month threw his support behind develop- “If you have over-regulation of some- to help us test and potentially find some
ment of a common-user mine and pro- thing that actually has a very small en- new Edna Beryl-type discoveries in the
cessing facility in the town on the back of vironmental footprint, it creates lots of area.”
a proposal from the junior gold explorer. problems for small companies because
we don’t have a lot of human resources Evolution Mining Ltd will continue to
It comes as the Gunner Government or back office support to jump through all fund exploration at Tennant Creek until at
estimated royalties to the NT would in- these hurdles,” Bills said. least the end of the year after committing
crease by $55 million in its budget for the to a six-month extension of a $15 million
next financial year. “We’re hopeful that a lot of these things farm-in agreement to earn 65% of the
which have been real barriers in the past field. The deal was also slightly tweaked
Emmerson has been active in the will be overcome, or at least sped up, but to include the Rover copper-gold project
Tennant Creek mineral field for almost that only happens if you’ve got the Gov- which Emmerson acquired from Adelaide
a decade and is currently implementing ernment behind you.” Resources (now Andromeda Metals Ltd)
a small mines strategy to put a series of late last year.
stranded gold resources into production. Emmerson signed a tribute agreement
in mid-2015 with a private group to mine “We think there’s great potential there,
This includes the high-grade Edna the Edna Beryl deposit. At the time of it has very similar geology to Tennant
Beryl deposit where the company inter- print, the main shaft had been sunk down Creek,” Bills said. “We’re very familiar
cepted a number of strong hits last year, to 92m and the orebody was cross-cut with the area, we’re very familiar with ex-
including 8m @ 157 g/t gold from 146m on two different levels, with visible gold ploring these types of deposits, so I think
(including 5m @ 251 g/t, 2m @ 613 g/t identified in both faces. it’s a really good bolt-on type project for
and 1m @ 1,043 g/t). both Emmerson and Evolution.”
A mine management plan is currently
Emmerson managing director Rob awaiting approval from NT authorities. Meanwhile, Emmerson was set to drill
Bills said a government-backed process- the first holes into Kadungle – one of its
ing facility was the preferred option for “It’s the first of 10 or 12 small mines five projects in New South Wales – at the
his company over refurbing the moth- we’ve identified,” Bills said. “I think typi- time of print. The company is earning up
balled 300,000 tpa Warrego mill. cally the hardest one is the first one to to 80% of the project from Aurelia Metals
get going, so hopefully we can gain a bit Ltd by spending $500,000 over a five-
“This proposal we put to the Govern- of momentum and do a number of these year period.
ment is all around reinvigorating Tennant other ones in parallel.”
Creek as the mining centre of the NT,” The four other projects were identified
Bills told Paydirt. Emmerson recently identified a new through Emmerson’s alliance with explo-
gravity anomaly to the north of Edna ration data analysts Kenex Ltd.
“I think it will be terrific if it goes ahead. Beryl which appears similar but bigger
We’ll unlock a lot of value. All of a sudden than the flagship orebody. Bills said his – Michael Washbourne
the hurdles to production are lowered, company would drill the prospect later
simply because there’s now a clearer this year.
pathway to milling and getting some dol-
lars back on what you do. “It’s completely undercover, there’s not

“Our proposal is around local business
running that mill in a consortium with
some Traditional Owners. I think it would
be great for the Traditional Owners and
Central Land Council to be involved in
that.”

No timetable has been set for comple-
tion of the feasibility study, but Bills ex-
pects his company, along with others in
the region, will be consulted about the
configuration of the facility.

Emmerson has also proposed the old
TC8 site as a potential location for the
new mill due to its proximity to power, wa-
ter and an existing tailings dam, as well
as a historic plant.

Bills said government support was cru-

PAGE 14 JUNE 2017 AUSTRALIA’S PAYDIRT

Venture heads West

For the last few years, Venture Miner- favourable geochemical results and a
als Ltd has pursued tin and tungsten geophysical gravity high.
at the Mt Lindsay deposit in Tasmania,
but the junior explorer has now turned its While the large anomaly is flagged as
attention to nickel in Western Australia. the main drill target, the survey has also
revealed several other potential targets.
The two assets Venture will focus on
are the Caesar project and Thor pros- It is not just WA that is attracting Ven-
pect, which both host sizable anomalies. ture’s attention.

In May, Venture confirmed it had identi- The company has also set up a re-
fied three new VMS targets, 12km east of gional office in Bangkok, aiming to build
Thor, 240km south of Perth, with a com- a portfolio of exploration targets over the
bined strike of 5km. medium term.

Assay results from surface sampling Pak Yang and Thali are the first of
over the new targets contain significantly these prospects and are located in the
anomalous copper and zinc. prospective Loei Belt, which already
hosts large copper and gold deposits,
The three new targets come straight including Kingsgate Consolidated Ltd’s 5
off the back of another discovery of a moz Chatree gold deposit and PanAust
large VMS style drilling target at the Thor Ltd’s 1.3mt copper/1.8 moz gold Phu
prospect in April. Kham deposit.

Venture managing director Hamish Work at both prospects has begun and
Halliday said the company was pleased will include detailed geological mapping,
to deliver new opportunities for share- rock chip sampling and a first pass soil
holders from its recently acquired south- sampling programme.
west portfolio.
– Jon Daly
“The new discoveries come at a time
when the company is well positioned with Hamish Halliday
walk up drill targets now defined at both
the Caesar and Thor prospects,” he said. “[It is a great op-
portunity] particu-
The VMS target at Thor was identified larly following our
after finding a historic drill core within the recent successes at
the Caesar project,
“Department of Mines and Petroleum’s where the company
is currently finalis-
Perth Core Library. ing a maiden drill
programme. We
The new look forward to fur-
discoveries ther results from the
Thor prospect and
come at a time when anticipate finalising
the company is well a drill target as soon
positioned with walk as possible,” Halli-
up drill targets now day said.
defined at both the
Further north,
Caesar and Thor 200km northeast of
prospects. Geraldton, the Cae-
sar nickel-copper
Several metres of massive sulphides project has recently
were found within the drill core, including been EM surveyed,
sphalerite, galena and chalcopyrite, and with results confirm-
portable XRF testing confirmed the pres- ing a large anomaly
ence of zinc, lead and copper. in the south east
corner of the tene-
The presence of several promising drill ment.
targets has lifted the company’s belief in
Thor’s potential. The anomaly has
been found in an
Halliday said the identification of a area with strong
potential VMS system within the tene- surface samples
ment provided an exciting opportunity for containing cop-
shareholders. per and nickel sul-
phides, as well as

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 15

NEWS

Northern Star’s sky high
quarterly cash-flow

The centre-piece of North-
ern Star Resources Ltd’s
March quarterly results was

undoubtedly the generation

of cash flow.

Executive chairman Bill

Beament believes the com-

pany’s ability to create capi-

tal proves it has a bright fu-

ture.

“One of the ways you view

the success of a mining com-

pany is its ability to generate

consistent cash flow,” Bea-

ment said. “Northern Star’s

March quarterly results are

another demonstration of the

cash flow generation capac-

ity of this business, via its

Tier One assets.

“Our cash on hand and

investments rose by $90 mil-

lion in the three months and

we have no debt.”

In a media teleconference,

Beament said the strong Northern Star executive chairman Bill Beament was happy to report the company had added
performance from Tier One $90 million in cash and investments to its portfolio in the March quarter
assets was complemented

by the strong gold sales and competitive gold mine to the now TSX-listed Superior “Our Kalgoorlie operations’ cost base

production costs of $988/oz. Gold,” Day said. had an impressive sustaining cost of

Throughout the quarter, Northern Star In late February 2016, Superior Gold $850/oz, [which is] nearly the 100% mar-

sold 132,558oz of gold at an average re- successfully completed a heavily over- gin which is key to us extending the mine

alised price of $1,669/oz. subscribed IPO, which provided an op- life at Kanowna Belle.”

Despite the company investing $31 portunity for Northern Star to sell down At the company’s Jundee operation in

million in organic production growth and $10 million of its stock. Wiluna, 55,438oz of gold was mined and

exploration, $90 million of cash flow was “[Currently] the balance of Northern 53,914oz of it was sold.

created, bringing its cash position to Star’s shareholding is just under 20% “Milling throughput was lifted to

$393 million. in Superior Gold [and a] market value of 404,000t for the quarter, and that is al-

“The results provide a valuable insight just over $20 million. ready at that 1.6 mtpa run rate,” Tonkin

into the future performance of this com- “Finally, the Northern Star hedge book said.

pany, and shareholders have every rea- contains 409,000oz at $1,743/oz, ex- Northern Star also began construction

son to be delighted with what they see,” tending out the price for 32 months to the of the new 50,000 ozpa Millennium un-

Beament said. end of calendar 2019. The benefit of this derground mine.

According to Beament, $80 million of hedge book position will flow into North- Tonkin said Millennium remained

that cash could be attributed to its $18 ern Star’s cash flows over the course of ahead of schedule and under budget and

million stake in TSX-listed Superior Gold future quarters.” expected first development ore by the

Inc, which bought the Plutonic mine from On the ground, Northern Star’s end of the September quarter.

Northern Star last year. Kundana and Kanowna Belle operations “Our Millennium development team

Northern Star chief financial officer in Kalgoorlie delivered solid performanc- achieved 1,044m for the quarter which is

Shaun Day said in the 11 quarters since es for the quarter, according to executive accelerating our progress to production,”

this portfolio of assets were put together, director Stuart Tonkin, who referenced Tonkin said.

the company had generated $525 million high production and low costs. “A 450m bore hole was completed and

of free cash flow with $90 million returned “Kundana delivered record [for the commissioned by Ausdrill North-West,

to shareholders in the same period. highest] quarterly gold production in the allowing for rapid dewatering.”

“In the discussion of cash flows I refer- history of the plant, at 95,000oz, beating – Jon Daly
ence the in-flow of cash and shares from the previous record of 88,000oz,” Tonkin

the September 2016 sale of the Plutonic said.

PAGE 16 JUNE 2017 AUSTRALIA’S PAYDIRT

Case histories of discovery

The world’s pre-eminent
gold exploration event

Pan Pacific Perth 7
November 14-15

Pan Pacific Perth 7 $A181aE,vA2aa9ruill5agy.bu0Bls0etiruid2nn0crt1.ai7lGteST
November 14-15

Presentations will include:

Keynote Address: Transforming the business of gold exploration, Dan Wood,
former Executive General Manager Exploration, Newcrest Mining Limited

Alturas (Chile) – Barrick Gold Limited Mount Morgans (Australia) – Dacian Gold Limited
Hot Maden (Turkey) – Mariana Resources Ltd/ Sanbrado (Burkina Faso) – West African Resources
Limited
Lidya Madenulik Sanayi ve Ticaret A.S.
Öksüt (Turkey) – Stratex International Plc
Yaramoko (Burkina Faso) – Roxgold Inc. Federation/Liberator (Australia) – Newmont
Yaouré (Côte d’Ivoire) – Perseus Mining Limited Mining Corporation

Gross (Russia) – Nordgold N.V. Cascabel (Ecuador) – SolGold plc
Hope Bay (Canada) – TMAC Resources Inc. Moose River (Canada) – Atlantic Gold Corporation

Nyanzaga (Tanzania) – OreCorp Limited/
Acacia Mining plc

www.newgengold.com

Jointly organised by:

Sponsors to date: Dinner Sponsor: Keith Yates & Associates Pty Ltd
Proceedings Sponsor: Closing Drinks Sponsor: Lanyard Sponsor: Gold Nugget Sponsor: Presenter Gifts Sponsor: Café Sponsor:

Exhibitors to date:

For all enquiries about exhibiting or attending please contact Melita Fogarty
on (+61) 8 9321 0355 or email [email protected]

COVER

Australian juniors in
Latin America:

A road less travelled

PAGE 18 JUNE 2017 AUSTRALIA’S PAYDIRT

Latin America is still home to the
big deposits but after decades
of North American domination, a
new generation of Australians are
making an impact. The problem is
their domestic market is not really
waking up to the fact.

There can be no denying Latin Amer-

ica is still the resources world’s most

desirable exploration and development

destination. The region accounted for

28% of global exploration expenditure in

2016 and it can boast the majority of the

world’s major capex development over

the last decade.

All the world’s major miners are active

in the region, spending big on the low-

grade, large-tonnage porphyry orebod-

ies Latin America has become synony-

mous with over the last 20 years.

At the smaller end of town, activity in

the region is dominated by North Ameri-

can juniors and there is a widely held

belief that Australians entering the region

can only pick up the scraps left unwanted

by their TSX-V listed peers.

However, recent evidence suggests

this is far from the case. Australian jun-

iors have their hands on some of the

most impressive early-stage projects in

Latin America; from established jurisdic-

tions such as Mexico, Chile and Peru, to

emerging destinations such as Guyana,

Ecuador and Argentina.

The likes of Alicanto Minerals Ltd, Aus-

Quest Ltd, Azure Minerals Ltd, Hot Chili

Ltd and Latin Resources Ltd are all at dif-

ferent stages but all have either discov-

ered or shown potential for large, world-

class orebodies.

Such discoveries are a rarity among Australian juniors have some of the most impressive early stage
Australian juniors but the irony is that projects in Latin America
support for these Latin explorers has

come not from the Australian market “The majors are definitely valuing us In Guyana, Alicanto did enjoy a price

– which has been largely ambivalent higher than the market,” Rovira told Pay- run following the arrival of Barrick Gold

towards their success – but from the dirt. “In the last three years we have Corp into a JV over the Arakaka gold

world’s majors who are eager to stock received $5 million from Rio Tinto and project. However, like Rovira, Alicanto

their development pipeline. $10 million from Teck Resources; there managing director Travis Schwertfeger

Azure is a prime example. The com- is absolutely no way we could’ve raised believes the deal with Barrick, in which

pany has been operating in Mexico for 12 that kind of money by ourselves on the the Canadian gold major can earn 65%

“years and during the last five it has re- market.” of Arakaka by spending $US10 million

ceived JV funding, firstly from over four years, highlights the

Rio Tinto Ltd and now Teck In the last three years we greater value ascribed to the

Resources Ltd. However, it company outside Australia.

hasn’t broken the 5c/share have received $5 million from “At the time of acquiring
barrier since April 2017. the funding for the project,

Managing director Tony Rio Tinto and $10 million from Teck the transaction gave an 8-10
Rovira believes there is a se- Resources; there is absolutely no time multiple on the value of
vere disconnect between the the company,” Schwertfeger

values ascribed to Azure’s way we could’ve raised that kind of said. “Raising the same level
assets by the market and the money by ourselves on the market. of funding in the market would
industry. have been far more dilutive to

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 19

COVER

“Raising the same level of funding in the
market would have been far more dilutive
to the company than the dilution at the project
level from the transaction with Barrick.
Panellists during the closing discussion of Latin America Down Under debate Australian companies’ progress in the region.
Panellists (sitting down from left): Azure’s Tony Rovira, Alicanto’s Travis Schwertfeger, PCF Capital’s Liam Twigger and Venezuela

vice minister for exploration and eco-mining investment HE Victor Cano

the company than the dilution at the pro- lars would have equated to 30% of the portance they have attached to further
Tier 1 discoveries in the region.
ject level from the transaction with Bar- company.”
“Latin America’s continued attraction
rick.” Drew believes much of Latin America’s is evidenced by the fact the majors are
moving in or expanding their presence in
AusQuest managing director Graeme geology necessitates such JV structures. the region,” he said. “There are definitely
more majors and mid-tiers playing in that
Drew shares a similar sentiment. His “I think working with majors is almost part of the world; even Australians such
as Oz Minerals [Ltd] and Newcrest Min-
company has struck a strategic alliance a must, particularly in southern Peru,” ing [Ltd and Fortescue Metals Group Ltd]
who haven’t previously been there.
with South32 Ltd over projects in West- he told Paydirt. “We are in an area of
“We know BHP [Ltd] is out looking for
ern Australia and southern Peru which elephants but it takes time to find them more copper projects as well. The pre-
vailing point-of-view is that Latin America
has already seen the junior receive $1.5 and define them. Look at SolGold [plc]; is still very prospective, still underex-
plored and the perceptions around safety
million of a $2 million funding package. it has produced some amazing intersec- and sovereign risk have improved.”

“For us to go to the market would have tions but it took a long time for the market He said the investment timeframe of
majors was also very different to the av-
meant diluting our shareholders dramati- to recognise that fact. erage junior investor.

cally,” Drew said. “To raise $2 million dol- “Smaller, high-grade deposits have “Majors have a long-term view and are
looking for opportunities in countries and
been a lot more workable for are prepared to back the longer term ex-
ploration projects whereas the market is
juniors. The low-grade, large- a short-term beast,” Rovira said.

tonnage deposits you tend to The increasing desire of the majors to
enter Latin America is proving a blessing
find in Latin America tradition- for Australian juniors who have contin-
ued to battle negative perceptions in the
ally don’t get investors excited.” domestic market.

Schwertfeger attributes the During the closing panel session of
Latin America Down Under, Rovira said
above-market value interest Australian investors still lacked in-depth
knowledge of the region.
of majors to a realisation in-

side the world’s biggest mining

houses that the development

pipeline is running empty.

“I think the majors recognise

the need for grassroots explo-

ration within the industry to fill

production profiles in the next

5 to 10 years and beyond, and

now, and in recent history the

market has had no appetite for

that level of risk,” he said.

For Rovira, recent activity

Graeme Drew among majors portrays the im-

PAGE 20 JUNE 2017 AUSTRALIA’S PAYDIRT

Travis Schwertfeger

The slow uptake of Azure’s Mexican 80% of the merged company,
strategy among Australian investors has
seen some 25% of the company’s regis- which intends to list on the
ter head into North American hands.
ASX as well as AIM.
Rovira would gladly spend more time
talking to local investors instead of TSXV-listed companies
spending much of his time flying to the
United States and Canada, but as one of may have better access to
only four ASX-listed companies in Mexi-
co, he is beating a lonely drum. pro-Latin American capital

“We have been on the ASX for 14 but both Rovira and Schwert-
years,” Rovira said. “We have struggled
to get traction. What comes first? Does feger argue Australian explor- Tony Rovira
the company go into country first and ers have many advantages.
then investors follow or do the investors
go up there and encourage the compa- “I think there is a lesson in spending America Down Under – said the increas-
nies?
money and as an industry Australian- ingly mobile nature of capital made the
“What we need to be doing is talking to
investors here in Australia. It is very easy listed companies are more effective at influx of northern hemisphere money
for a Canadian company to work down
into South and Central America and that applying their bucks and having better onto the ASX more likely.
also comes down to informing investors
of the benefits of being in that part of success,” Schwertfeger said during the “Juniors are pretty flexible [in striking
the world. They understand Mexico well;
Australians don’t.” Latin America Down Under panel. “I deals], so as one door closes, another

The lack of Australian enthusi- think a continuation of that trend will see opens. I think put a pretty good explora-
asm for Brazil has led to Crusader
Resources Ltd seeking its future investors start to recognise that fact. It is tion team together and a good business
away from the ASX by accepting a
takeover offer from AIM-listed Stra- starting to happen in the northern hemi- plan and go knocking on the doors of
tex International plc.
sphere and should see broader invest- majors. I reckon that is where you’ll get
Crusader Executive director Paul
Stephen said the opportunity to tap ment into Australia, outside of Australia some funding and then maybe some of
the London pool of capital made
the Stratex deal attractive. as well, and I think the ASX is a good the retails and instos will follow you as

“It has been a challenge to get place to be.” well.”
Australian investors to look at Bra-
zil for a bunch of reasons, not the PCF Capital Group managing director While Canadian explorers may have
least of which is that many Austral-
ian companies have struggled to Liam Twigger – another panellist at Latin arrived in the region first, they haven’t
be successful over the long term in
Brazil,” he said. “Thankfully, we’ve necessarily tied up all the best
been able to make a go of it.”
ground.
Crusader shareholders will retain
“I can’t speak for all of Latin

America, but in the Guiana Shield

the Canadians have been and

gone,” Schwertfeger said. “Also, I

do not think the full extent of the

potential in the Guiana Shield has

been recognised yet, so there is

a strong likelihood that many pro-

jects have not seen a drill bit yet

and will take a round of generative

exploration work to identify that

the market does not yet have the

appetite for.”

Rovira claims Australian com-

panies have many qualities their

North American peers cannot

match.

Liam Twigger “It is definitely not the case that

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 21

COVER

Palmarejo Silver and Gold Corp.

Two years later, Andean Resources

Ltd was subject to a bidding war among

North American gold majors over its

5 moz gold Cerro Negro project in Ar-

gentina. Goldcorp Inc eventually paid

$US3.76 billion for the ASX-listed com-

pany.

While most of the ASX’s offshore M&A

success stories have been limited to

West Africa since then and Azure, Ali-

canto, AusQuest and Latin Resources –

through a JV with First Quantum Miner-

als Ltd – have all attracted investment at

the project level.

Perhaps the best recent example Aus-

tralians in Latin America could hope to

emulate is SolGold. The Brisbane-based,

London-listed junior shot to prominence

last year after it reported intercepts from

drilling into its Cascabel porphyry copper

target in Ecuador of 1,312m @ 0.67%

copper and 0.63 g/t gold, 1,050m @

0.68% copper and 0.92 g/t gold, 772m

The increasing desire of majors to enter Latin America is a blessing for Australian juniors @ 0.8% copper and 1.19 g/t gold and

1,088m @ 0.66% copper and 0.89 g/t
TSX-listed companies have picked up all moz gold Palmarejo silver-gold project gold.
the best opportunities,” he said. “They in Mexico, which was controlled through
SolGold shares have gone from 3.3p
“tend to focus on brownfields exploration its 74.9%-owned, Toronto-listed vehicle, to 46p in the last 12 months with BHP
around existing opera- and Newcrest making

tions. There remains Juniors are pretty flexible [in striking rival equity offers be-
deals], so as one door closes,
a big opportunity in fore the ASX’s largest
greenfields and that is gold miner won a 10%
why the majors are pre- stake in the junior.

pared to back the re- another opens. I think put a pretty good Both Azure and Ali-
gion. North Americans exploration team together and a good canto are now looking
have certainly had a for further project level

monopoly in terms of business plan and go knocking on the investment for other
numbers but not in the doors of majors. I reckon that is where you’ll assets and Rovira and
volume of discoveries.” Schwertfeger believe

Rovira also refutes get some funding and then maybe some of the fashion for majors
suggestions that the the retails and instos will follow you as well. investing in Australian
entire region is only juniors will continue.

prospective for large, “I think the trend will

low-grade orebodies. continue in the near

“There are a lot of porphyry term, particularly on high qual-

systems in the Americas but ity projects, and in jurisdictions

with those come the epithermal where consolidating a large land

deposits, the carbonate replace- package can be done more cost

ment deposits, etc.; all of which effectively by a junior explorer,”

are attractive to smaller miners,” Schwertfeger said.

he said. “You’ve still got orebod- “Recently Australian compa-

ies sticking out of the ground in nies haven’t had success in big

the region. Look at our Alacran takeovers in Latin America but

project; we found two orebodies they have had exploration suc-

sticking out of the ground within cess,” Rovira said. “Certainly,

10km of one of the world’s larg- there is a lot of M&A activity

est copper mines.” among the North American ma-

There is evidence to suggest jors; they are all trading between

Australian companies can still each other in the space and also

find and progress new depos- taking interests in juniors.”

its in Latin America. In 2008, – Dominic Piper
ASX-listed Bolnisi Gold was

sold to Coeur Mining Inc for

$940 million. Bolnisi’s flagship

asset was the 77 moz silver, 1 Paul Stephen

PAGE 22 JUNE 2017 AUSTRALIA’S PAYDIRT

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LATIN AMERICA DOWN UNDER REVIEW

Aussie know-how in vogue
Australia’s reputation as a
trade partner has never
been higher in Latin America and
industry should take advantage
and invest in the region now, the
country heads of mission told
Latin America Down Under.

A panel comprising Australia’s five am- tina, said Mauricio Macri’s Government range of areas including placing a cap on
bassadors to the region (John Pilbeam, was looking to Australia as an example government spending and reform in the
Ambassador to the Caribbean was ab- of sound mining development. areas of education, infrastructure priva-
sent), agreed that despite the sidelining tisation, the pensions system, the labour
of the Trans Pacific Partnership, Aus- “I echo my colleagues’ comments market and the tax regime.
tralia found itself with the opportunity to about Australia being perceived as a
dramatically increase its ties with Latin model and its expertise being worth em- Richardson said the reform agenda
America. ulating,” he said. stretched into the natural resources sec-
tor with a restructuring of the mining code
“Australia’s brand has never been The region’s two largest mining econo- set to be launched along with a new slid-
stronger in Mexico,” Australia’s Ambas- mies – Chile and Brazil – have not en- ing royalty regime.
sador to the country, David Engel said. joyed the smoothest of progress in recent
“The country welcomes Australian inter- times and Australia’s representatives in “The [mining] Minister has said he will
ests in mining and METS. Our presence both countries gave their assessment of become actively involved with attracting
is growing but not at the rate commensu- the relative situations. foreign investors. He has indicated inter-
rate with the market.” est in coming to Australia.”
Chile’s mining sector is being debilitat-
Engel pointed to BHP Ltd’s recent suc- ed by strike action, particularly at BHP’s All five heads of mission agreed the
cessful bid for offshore acreage in Mexi- Escondida copper mine. Ambassador to stalling of the Trans Pacific Partnership
co’s first oil tender to the private sector as Chile Robert Fergusson said the strike (TPP) should not prevent Australia in-
evidence of the growing success of the was part of a wider battle surrounding creasing its ties with the region.
relationship. reform.
“The TPP’s demise was unfortunate
“The BHP deal was remarkable,” Engel “Escondida is at the forefront of all but we can look at alternatives to put
said. “It is not often you get the President discussions about wages, conditions, agreements in place that we would’ve
tweeting about the extraordinary change mining safety, etc. It sets the standards,” had through the TPP,” Engel said. “There
of direction a deal will lead to in the econ- Fergusson said. “A lot of what is happen- is an opportunity to pursue a free-trade
omy. ing at Escondida is against a backdrop of agreement [FTA] with the Pacific Alliance
labour reform across the country. It will [a trade block made up of Mexico, Peru,
“This is by far the biggest deal to have an impact about how mines are run Colombia and Chile]. I think a FTA agree-
emerge from Mexico’s energy reforms and negotiated. The debate over produc- ment should be looked at seriously from
and indicates the appreciation and at- tivity came to the fore at the recent Cesco both sides.
tractiveness of Australian investment copper conference in Chile. The Govern-
and Mexico’s desire to diversify away ment recognises the need for Chile to be- “My sense is that Mexico is very keen
from the US.” come more productive and a report into to diversify its trading partners.”
productivity is coming out soon.”
Ambassador to Peru Nick McCaffery McCaffery said the demise of the TPP
agreed, saying MMG Ltd’s development Ambassador to Brazil John Richard- had led to Australia and Peru pursuing
of the Las Bambas copper mine had el- son said the widespread economic and further economic links, including a visit
evated Australia’s reputation in the An- political turmoil of recent years had led to by the Peruvian Vice President.
dean country. changes in Brazil’s investment policies.
“Australia’s relationship with Peru is
“Everyone in Peru has said what a “The economic crisis has forced gov- heading in the right direction,” he said.
great job MMG has done, particularly ernment and business to re-examine the
around its approach to community, gov- inward looking model and recognise the Richardson said he would spent part of
ernment and environment,” McCaffery need for the economy to open up and in- this year talking to the Australian Treas-
said. “The feedback is always the same; ternationalise,” he said. ury about moving Brazil up the list of
‘Australian mining companies do a good priority countries to negotiate a double
job’. Peru wants Australian companies The reform agenda covers a wide taxation agreement with.
much more involved in the development
of its mining sector. It is also important – Dominic Piper
for the Embassy, because that image
is something we leverage off. I’m hope-
ful MMG’s model of Australian expertise
and Chinese money will be replicated
across the Latin American region.”

Noel Campbell, Ambassador to Argen-

PAGE 24 JUNE 2017 AUSTRALIA’S PAYDIRT

Boundless potential for
Australia-Latin America

Fresh from official visits to Argen-
tina, Brazil, Chile, Mexico and
Uruguay last year, Australian Gov-

ernor-General, General the Honour-

able Sir Peter Cosgrove has urged

Australian and Latin American coun-

terparts to capitalise on the opportu-

nity to forge greater relationships in

the world of business.

Governor-General Cosgrove –

Australia’s first serving Governor-

General to visit Latin America –

was the keynote speaker on day

one of the Latin America Down

Under conference.

Having visited Latin America in

2016, the Governor-General was

struck by the interest and attention

in mining from the presidents of

countries, diplomats and business

people alike and now feels a sense

of duty to ensure Australia and

Latin America continue to enjoy a

strong connection in the sector.

“The potential and possibilities

that exist for us to work and do Australian Governor-General, General the Honourable Sir Peter Cosgrove

business together, potentially, we

talk about what might be, what could be in Latin America and the Governor-Gen- tralian-operated exploration and mining

and today, this optimism and boundless eral said there was a clear intent from properties across Latin America with

potential still holds true,” the Governor- governments to welcome more Austral- close to $US2.5 billion invested in the re-

General said. ian companies to their countries. gion in the last five years by ASX-listed

“We know that greater interaction “There was an appetite for tapping into companies.

can boost our trade and deliver mutual the mining and engineering technical Trade between Australia and Latin

benefit. We know that we have comple- services, one of the great strengths of America now exceeds $10 billion, which

mentary skills and interests that we’ll the Australian miners. The other broader is reflective of the economic benefits of

capitalise on, and of course, we will message we received on the visit was open trade, the Governor-General said.

continue to have exceptional goodwill the desire to trade, cooperate and work “I think that the Australian and Latin

“required to build strong productive and together is as strong as it has ever been,” American mining sectors has trusted
profitable partnerships.” he said. friends and partners committed to work-

The Governor-General ing together for the wellbe-

said the presence of the Let arrangements be made, let ing of your people, your
Latin American delegations nation and all Australians

at the conference con- relationships be built today and of this nation,” he said.
firmed the determination let our continents grow closer together. “You at this conference
and desire to work together
are part of broadening

and all the goodwill shared relationships and busi-

had created a positive mo- ness ties that will keep our

mentum. “This is not surprising given our shared countries close and prosperous and build

Fortescue Metals Group Ltd in Ecua- values and common respect for the rule that closeness and prosperity, month on

dor and lithium producers in Argentina of law and democratic principles. Simply, month, year on year. Let arrangements

– Galaxy Resources Ltd and Orocobre our entrepreneurial instincts are soundly be made, let relationships be built today

Ltd – and First Quantum Minerals Ltd in based in the same sort of values and and let our continents grow closer to-

Panama, were some of the Australian- directed by an energetic and very am- gether.”

managed companies the Governor-Gen- bitious leadership in every case. There – Mark Andrews
eral used as examples for more compa- was a genuine appreciation that our fu-

nies to follow. tures and prosperity are intertwined.”

Australian mining expertise is growing Currently there are about 400 Aus-

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 25

LATIN AMERICA DOWN UNDER REVIEW

Solgold helps build
Ecuador momentum

Leading Ecuadorian economics expert the Fruta del Norte gold project
Walter Spurrier suggested investors and the Mirador and Panantza-

should not be concerned about a return San Carlos copper deposits.

to a harsher investment climate under The Ecuadorian Govern-

newly elected president Lenin Moreno. ment instead relied on oil rev-

Moreno was sworn in as Ecuador’s enues but the oil price crash of

President on May 19 following a recount 2014 sent the economy into a

in April and will succeed outgoing Presi- tailspin, forcing Correa to seek

dent, Raphael Correa who belongs to the more business-friendly legisla-

same PAIS Alliance coalition. tion.

“The new President was handpicked A new ministry of mining

by President Correa, who also drew the was established and under the

new Government’s plan,” Spurrier said. lead of undersecretary Minister

“It is a safe bet to say there will be conti- Javier Cordova – who visited

nuity in mining policy.” Latin America Down Under in

Spurrier’s comments would have been 2015 – a new regulatory and

welcomed by the international mining tax structure made mining in-

community which has steadily increased vestment more attractive.

investment in the equatorial nation over The results have been almost

the last 15 years. immediate with Fruta del Norte

Correa was part of the widespread left- and others back on the devel-

ist movement which washed across Latin opment table. Spurrier said the Walter Spurrier

American in the early 2000s and created exercise had convinced the Newcrest and BHP, with the former even-
tually securing a 10% stake in Solgold.
investment policies which eventually led Government there was no turning back.
Maclean said the company would have
to the sale of world-class assets such as “Ecuador comes from trying during a 10 rigs drilling over 95,000m at Cascabel
over the next two years.
full decade to attract investment in min-
The drilling would test the extents of
ing in terms extremely favourable to the 15 porphyry centres identified at Cas-
cabel before defining a maiden resource
governments, and found there were no at the priority Alpala prospect, Maclean
said.
takers,” he said. “The authorities are now
Spurrier said Solgold’s discovery had
convinced that current terms are the best preceded a surge of interest in Ecuador’s
mineral prospectivity.
they can get. Therefore, no reversal of
When the Government opened the
legal framework or policies should be bid process for new concessions in
May 2016, there were 300 applications
expected.” and when it reviewed requests for con-
cessions in the northern region of the
A question remained whether new country, it granted 22 deeds including
to Australian iron ore miner Fortescue
exploration projects would be worked. Metals Group Ltd which was awarded
32 concessions covering 14,000sq km of
The answer came in mid-2016 when ground.

Brisbane-based, AIM-listed Solgold plc Maclean said Fortescue’s entry and
the interest of Newcrest and BHP was
sparked a bidding war between New- proof Ecuador was heading in the right
direction.
crest Mining Ltd and BHP Ltd following
“You are seeing FMG come in and I
a series of stunning intercepts from its have heard First Quantum [Minerals Ltd]
and BHP are hunting around as well,”
Cascabel copper-gold porphyry project she said.

south of Quito. – Dominic Piper

“After just 22 holes assayed, this pro-

ject has some of the world’s best porphy-

ry intersections,” Solgold business devel-

opment manager Pru Maclean said. “It is

a phenomenal achievement to have in-

tersections averaging 1% copper equiva-

lent. It has taken a while to develop jun-

gle exploration techniques but we think

we may have found the next Escondida.”

The intercepts – which have so far

included 1,312m @ 0.67% copper and

0.63 g/t gold, 1,050m @ 0.68% copper

and 0.92 g/t gold, 772m @ 0.8% copper

and 1.19 g/t gold and 1,088m @ 0.66%

Pru Maclean copper and 0.89 g/t gold – enticed both

PAGE 26 JUNE 2017 AUSTRALIA’S PAYDIRT

Chile’s new dimension

Anew dimension to Chile’s mining ing sector which will not only benefit
and exploration potential is cur-
rently being unearthed, according to mature destinations such as Chile to
the country’s vice minister for min-
ing, HE Erich Schnake. garner greater interest from the in-

“We think we have big geological vestment community, but the region
potential, and also if you see our
country, most of the exploration has as a whole.
been developed in the north. We
see our exploration has been mov- “In terms of percentage of the
ing south where there has not been
much exploration [to date], even exploration budget, for all the listed
though there are big mines,” he said.
companies around the world, Latin
Chile remains the premier copper
producer in the world with more than America secures 28% of the global
5.5mt of the red metal produced in
2016 – almost a third of world pro- pool of exploration money, Australia
duction.
14%, Canada 14%, and Africa is
Chile has estimated that $US49
billion will be invested in the cop- coming off the boil with 20%, so it
per sector between 2016 and 2025,
while 66% of all exploration dollars is still a great destination and popu-
spent last year was dedicated to the cop-
per space. lar destination,” PCF Capital Group

About $US443 million was spent by managing director Liam Twigger
exploration companies in Chile last year,
with Australia’s contingent in country said.

“Attention has been on the pro-

duction companies, the ones that

are in development, and exploration

is still a battle, but when you look

Vice Minister for Mining, Chile, HE Erich Schnake at Latin America, its performance

against the world – it is still the num-

contributing 10% of that sum. ber one destination for project capital,

Commodity prices have not encour- Latin America is number one.”

aged explorers to get too excited about – Mark Andrews
undertaking high-cost activities but there

is some momentum building in the min-

Paraguay joins Australian-Latin party

As well as featuring the region’s min- ond largest hydropower east of the Paraguayan
ing powerhouses, Latin America plant in the world. Para-
Down Under has developed a reputation guay uses only 22% of capital, Asuncion.
for taking delegates off the beaten track its capacity with the rest
and into jurisdictions rarely considered by being sold to Brazil but Paraguay’s other
Australian companies. we want mining compa-
nies to take advantage most active company
This year was no different with maid- of this very cheap en-
en appearances from Venezuela and ergy source.” is TSXV-listed Latin
Paraguay. While Venezuela is equally
well known for its prospectivity and chal- Broadening the low- American Minerals,
lenging political and investment climate, cost nature of the coun-
Paraguay would rarely leap to the front of try are, according to which has produced
explorers’ minds when they contemplate Bernal, the region’s low-
Latin America. Nestor Bernal, director of est labour costs, a 10% 3,100oz gold from a
Paraguay’s vice ministry of mines used income tax rate and
the Latin America Down Under platform 10% VAT rate. pilot plant at its Paso
to urge Australian companies to recon-
sider his country. Bernal said there were a variety of geo- Yobai gold project west
logical settings in Paraguay which would
There are only two operating mines be attractive to Australian explorers. of Asuncion. It now has
and a handful of exploration projects
active in the country, none of which are “There is a lot more potential to un- plans to move into vat
owned by ASX-listed companies. earth,” he said.
or heap leaching.
However, Bernal said the country – Of the current known mineral occur-
which borders Brazil, Bolivia and Ar- rences, 13 gold prospects and one urani- Nestor Bernal Bernal said other ge-
gentina – had a number of competitive um prospect are sandstone-hosted while ological environments
advantages, chief among them its abun- US company Uranium Energy Corp has
dant sources of cheap power. defined measured-indicated resources with exploration poten-
of 7.83mt @ 0.055% uranium oxide at the
“We own, along with Brazil, the sec- Yuty in situ leach project, 200km south- tial included basalt/igneous complexes

and magmatic/limestone settings with

potential for gold and copper porphyries.

He said renowned US geologist David

Lowell had recently discovered a 500mt

@ 7% titanium dioxide deposit and a

1.6mt @ 22% iron hematite deposit in

the country.

– Dominic Piper

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 27

LATIN AMERICA DOWN UNDER REVIEW

Sweet spot for Latin lithium

Lithium is tipped to hit a sweet spot in Galaxy Resources managing director Anthony Tse took part in a panel
the next five years and companies discussion on lithium at Latin America Down Under
with projects in Australia or Latin America
stand to be the major beneficiaries. and trucks and that’s why we probably Gale citing the shorter time to production
shouldn’t focus just on the lighter vehi- as the reason behind the decision.
According to an expert panel at Latin cles because buses and trucks actually
America Down Under, Australian hard have substantially larger batteries.” “I believe you need to be in production
rock lithium projects are in a race with by 2018/2019 to really take advantage of
brine projects from countries such as Argentina, along with Chile and Boliv- these high prices,” Gale said.
Chile and Argentina to be first to mar- ia, is part of Latin America’s aptly named
ket as demand for electric vehicles and Lithium Triangle, home to the world’s “Hard rock projects take about 1-3
home storage batteries heats up. largest reserves of lithium. Galaxy, SQM, years to develop. Brine projects are 5-10
Abermale Corp and Orocobre Ltd are years, no question about that. There are
Patersons Securities Ltd senior re- among the key players in the region. plenty of opportunities in Argentina for
source analyst Juan Pablo Vargas de la hard rock lithium production, that’s why
Vega said the world had reached an in- Buenos Aires-based lawyer Ignacio we’re in Argentina. We’ve pegged and
flection point where cleaner living – driv- Celorrio, a partner at Quevedo Law Firm, staked just about every known hard rock
en in part by lithium-ion battery technolo- said recent changes to the country’s le- project in Argentina. We’ve been very
gies – had become essential. gal framework for mineral exploration fortunate to be the first mover in Argen-
had helped put Argentine lithium on the tina for hard rock pegmatites.”
“You see things changing, for instance, map.
in Germany, indicating that by 2030 no Asked if Australian and Latin American
more light vehicles with combustion “While it is not necessarily an attrac- lithium projects were in a race to be first
engines will be produced, and that will tive prospect for investors to take advan- to market, Vargas replied: “Every busi-
be preceded even earlier by Holland in tage of a lithium boom, the basis of our ness is in a race to come to market.”
2025,” Vargas said. legal system means we’re much more
competitive than our immediate competi- “Are juniors trying to win the race? I’d
“China has got a very high target as tors in Bolivia and Chile,” he said. say yes. The race is in the back of their
well and lately India has also come out heads, but the way it comes to market
and said they want 100% non-combus- “Argentina took advantage of the first and how they put more lithium out there
tion engines for light vehicles. Things boom in regards to a comparison with will depend on which company and the
have no doubt changed dramatically and Chile and Bolivia and that materialised time to get to market,” Vargas added.
it’s been happy days for all brownfields even further when there was more sus-
explorers and lithium companies.” tainable interest in lithium in this second “We need to remember lithium is not
wave.” part of an open market, it’s based on
According to Galaxy Resources Ltd contracts and supply and demand. There
managing director Anthony Tse, the ASX-listed explorer Latin Resources is a risk there, but the positive for lithium
world was in the midst of a second lith- Ltd was one company to pounce on is there is no obvious replacement for
ium boom in the last five years after first heightened interest in the lithium sector lithium-ion batteries.
making the connection to mobile phone last year, picking up ground in Argenti-
batteries. na’s Catamarca and San Luis provinces. “I’m very positive on lithium, prices are
going to be sustaining…but things are
More than 60 ASX-listed companies Latin Resources bucked the trend by still very tight and will continue to be tight
have declared interests in lithium, rang- opting to acquire hard rock lithium pro- for the next few years.”
ing from a single prospect to a fully jects over a traditional brine asset in
charged operation, with a majority of pro- Argentina, with managing director Chris – Michael Washbourne
jects in Australia or Latin America.

Galaxy owns the operating Mt Cattlin
spodumene mine in Western Australia
and the Sal de Vida brine project in Ar-
gentina, as well as the James Bay peg-
matite project in Canada.

Tse said increasing noise from China
since late 2015 had provided the “turbo
charge” for lithium’s second coming and
put several projects from Australia and
Latin America on the radars of key inves-
tors.

“China spoke for about 570,000 vehi-
cles last year, so most of the growth in
the sector at the moment is coming out of
China, but more importantly 80% of the
vehicles sold in China are actually pure
electric vehicles and about two-thirds of
those vehicles are actually passenger
vehicles.” Tse said.

“The other third is what we call buses

PAGE 28 JUNE 2017 AUSTRALIA’S PAYDIRT

New surveys designed to
open up Guyana

The Guyanese Government hopes a active explorers in Guyana and speaking
new series of mapping and sampling directly after Broomes, managing direc-

surveys will incentivise explorers to invest tor Travis Schwertfeger welcomed the

in the South American country. Government’s policy focus.

Guyana is widely considered to be “We like the way the Government is

highly prospective for gold thanks to the going with the syndicates,” Schwertfeger

presence of greenstone belts along the said.

Guiana Shield but the country has largely He was also supportive of the Gov-

failed to attract the same level of invest- ernment’s efforts regards licensing and

ment as other jurisdictions due to a lack CSR initiatives and support for foreign

of geological information and challenges investors.

regarding infrastructure and logistics. “For us, community relations are ex-

Guyana Minister of Natural Resourc- cellent,” he said. “The Government is

es, Simona Broomes, said the new map- always supportive and our land position

ping and sampling surveys would allow Simona Broomes very prevalent.”

explorers and miners to overcome the Explorers and miners in other jurisdic-

information gap currently in the country. “We would encourage smaller Aus- tions can struggle with artisanal mining

“For investors, the reason we are look- tralian miners to work with smaller small activity but Schwertfeger said that the
ing at quantification is because we want scale mining groups,” Broomes said.
Guyanese sector was willing to work with

to have our doors open. We have more Foreign investors have previously commercial-scale operators.

than 40 minerals but currently we don’t been put off by Guyana’s patchwork of “There have been a lot of discoveries

have the relevant information on them. licences but Broomes said the new poli- made by small scale miners in Guyana
“In the future, when investors come, the cies would ensure there was no confu- and they can be useful in exploration.
data will be there and well sion. This is particularly useful

provided.” here because the explora-

Broomes said the map- We are looking to make sure the tion footprint in the country
ping and sampling would licences don’t overlap because is not large given there has
start in July with initial been so little modern ex-

focus being North West this was a challenge previously faced by ploration,” he said.
province. To support miners. The land rights commission will Alicanto has been ex-
the exercise, Broomes
ploring on its Arakaka gold

is planning to add more make it a safer place for investors. project for four years with
geologists to the Guyana Barrick Gold Corp last year

Geology and Mines Com- entering the project as JV

mission. partner. Schwertfeger said

The Government is also intent on “We are looking to make sure the li- Barrick’s arrival has allowed Alicanto to

tightening safety within its prolific small- cences don’t overlap because this was begin spending its own money on the re-
scale gold mining sector. Small-scale a challenge previously faced by miners. cently acquired Ianna gold project, 30km
miners produce more than 700,000 The land rights commission will make it south of Arakaka.
ozpa gold and while the industry is regu- a safer place for investors.”
“Ianna is open at depth and along
Alicanto Minerals Ltd is one of the most strike,” he said. “There is good continu-
lated, Broomes said safety was still an

issue. ity within the diorite but we haven’t as-

“Guyana has a challenge in safety sessed the margins – which is where

in small-scale mining,” she said. “The we’ve had success finding high-grade

Government has established wardens to mineralisation at Arakaka. Our under-

enhance safety and reduce and eventu- standing of the shape and dimensions of

ally eliminate fatalities in the sector. We the diorite have changed so we are keen

have received support from companies to test an area where we have soil sam-

such as [ASX-listed] Troy Resources ples of plus-5 g/t.

[Ltd] because we have taken note of “We intend to test the margins of the di-

Australia’s safety laws and regulations orite where there are plus-5 g/t soil sam-

and would like to replicate them.” ples. We also have magnetics and with

The Guyanese Government is also auger drilling changed our understand-

planning to organise the smallest of the ing of the shape of the diorite.”

artisanal miners into syndicates, allow- – Dominic Piper
ing them to negotiate more effectively

with foreign investors. Travis Schwertfeger

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 29

LATIN AMERICA DOWN UNDER REVIEW

Azure to size up in Mexico

Azure Minerals Ltd main projects in Mexi- Alacran and the Promontorio copper-
is in the market for gold-silver projects both have an estab-
a new flagship project co, Alacran and Prom- lished resource and completed PFS, with
in Mexico. the latter previously funded by Rio Tinto
ontorio, has attracted until the company withdrew from a JV
On the back of the earlier this year.
company’s explora- the attention of majors
tion success in Mexico “They spent $5 million over two years
over the past 12 years, Teck Resources Ltd and they found more evidence of copper
Azure continues to be mineralisation, but at the end of the day it
presented with several and Rio Tinto Ltd in re- didn’t meet their standards so they with-
new project opportuni- drew,” Rovira said.
ties elsewhere in the cent years.
country. “But within a week we had two other
Teck is now earning major copper mining companies ap-
“Some of these as- proach us about having a look at the
sets are truly outstand- back into the Alacran project. We’re seeking a new partner and
ing and as a result of that we are actually we’re currently engaging with some com-
in the market to buy or acquire some new silver-gold project, four panies at the moment.”
projects,” Azure managing director Tony
Rovira said. years after exiting Mex- Rovira said his company was also con-
sidering a number of early-stage projects
“We’re looking for a well advanced ico, with the Canadian- with strong exploration potential.
project, something that has already got
resources and a clear pathway to pro- Tony Rovira based miner exercising “There’s opportunities everywhere,”
duction. We’ve looked at 60-70 projects an option last year to he said. “Our geologists are like kids in a
in the past few months and we’ve been lolly shop; they don’t know what to grab
weeding through them, getting rid of a lot fund a $10 million ex- first.”
of the chaff. We’re down to the last few at
the moment.” ploration programme to acquire 51%. – Michael Washbourne

Azure’s success at its two current “Our exploration was so successful

that Teck wanted to come back into the

project,” Rovira said.

“If Teck hadn’t elected to come back

in, we think we would have been able

to take this thing through to production

in the next one or two years. We’re look-

ing forward to see how Teck go with their

exploration.”

Confirmation of Teck’s initial explora-

tion plans for Alacran was due at the time

of print.

Argentina welcomes mining with open arms

Since his election in 2015, Argentine been welcomed by for- Argentina’s mining in-
president Mauricio Macri and his eign miners interested dustry has a gross value
Government have strived to make the na- in buying a piece of this of $US2.2 billion a year
tion more attractive to foreign miners. resource-rich nation. and accounts for 40% of
exports.
Argentine Republic Undersecretary Capello said Argentina
of Mining, Mario Capello, told the audi- was a country divided “We estimate that to be
ence at Latin America Down Under that in two; on one side the able to proceed with min-
regulatory stability, a skilled workforce, economy was driven by ing we need an invest-
abundant natural resources and strong agriculture, while the oth- ment of about $US300-
leadership had opened the doors for er, near the Andes, had 400 million per year.
overseas investment. untapped potential for In 2017, we will reach
miners. $US200 million in explo-
“Any mining project will have tax and ration in various places,”
fiscal stability that will last 30 years. That Capello said the prov- Mario Capello Capello said.
means the taxation burden on the pro- ince of Catamarca in par-
ject cannot be changed once it is set up,” ticular was very prospec- The country has a
Capello said. tive for lithium resources. capable workforce, ac-
cording to Capello, with 120,000 young
“Sending any activities overseas is “Two mines are already producing… graduates from universities and 400,000
free and the export duties have been three mines are under construction in students of technology waiting to take
wiped out. Any minerals discovered, like 2017 and five advanced projects are go- the jobs garnered by foreign investment.
gold, lithium, silver and any poly-metals, ing from exploration to feasibility stud- “We [also] have a strong mining cul-
belong to the person or the entity that ies,” Capello said. ture. There are geologists, economists
discovers them. and all sorts of technicians that are high-
As for gold, nine mines are in produc- ly qualified to carry out all of these mining
“There are no differences between tion, two are under construction and nine projects,” he said.
rights of national companies and foreign projects are in advanced exploration
companies, and the rights can be negoti- working towards feasibility studies, in- – Jon Daly
ated.” cluding Dark Horse Resources Ltd’s Los
Domos project.
The Macri Government’s moves have

PAGE 30 JUNE 2017 AUSTRALIA’S PAYDIRT

Hot Chili chasing the
missing Tier 1

Hot Chili Ltd has withstood some test- ment space will be a second phase of growth.
ing times in the copper sector but
there appears to be blue sky ahead for done against a back- This reset in funding and
both company and commodity.
drop of higher copper balance sheet is all in prep-
Not so long ago Hot Chili was among a
crowd of about 40 ASX-listed companies prices, according to Hot aration for what we see as
with copper projects at the development-
ready stage, however, poor sentiment in Chili managing director a very bright future for the
the resources sector and low prices for
the red metal have seen that group dwin- Christian Easterday. commodity price over the
dle down to 13.
“We have seen a cop- coming 12-18 months.”
It is testament to the quality of the Pro-
ductora project in Chile that Hot Chili re- per price environment The copper price is the
mains in the game today, with the likes
of Sprott, CAP and Taurus Funds Man- one year ago where key sensitivity behind mak-
agement supporting a $13 million fund-
ing package, subject to shareholder ap- people were ready to ing a project such as Pro-
proval this month, and Murray Black’s
Blue Spec conducting RC and diamond jump off buildings. We ductora – 1.5mt contained
drilling (at no cost to Hot Chili), which will
see a second phase of growth entered. are past that now and copper at a grade of 0.5%

Hot Chili’s relaunch in the develop- in a very short time we with 1 moz gold – and other

saw the copper price Christian Easterday assets in the peer group vi-
rerate from $US2/lb to able.

$US2.75/lb and settle Productora sits within a

back down at $US2.50/lb, that has hap- copper camp in Chile which hosts giant

pened very quickly,” Easterday said. deposits and Hot Chili hopes to distin-

“The supply/demand fundamentals for guish itself from its peers by elevating the

this commodity space have not changed project into Tier 1 status.

dramatically over the medium to long – Mark Andrews
term and I guess Hot Chili has moved for

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 31

LATIN AMERICA DOWN UNDER REVIEW

The new face of Argentina

Speaking at Latin Ameri- Cristina] Kirchner froze all already announced plans for $US14 bil-
ca Down Under Capital the tariffs on the utilities. lion of investment into the country’s min-
ing sector over the next three years.
Agroindustrial S.A. manag- Gas, power, telephone,
“That is also in line with the importance
ing director Diego Temper- everything was in the same Macri gave to mining since the beginning
of his mandate.”
ley said there was no better value as 2002,” Temperley
Marci also created a ministerial posi-
time to invest in Argentina. said. tion for mining, giving the nation its first
Ministry of Power and Mining.
Temperley said his coun- “Macri [also] launched
“[Argentina] is on the list of Morgan
try had seen significant a huge fiscal amnesty Stanley to be changed from a frontier
market to an emerging market, which will
economic and political plan that generated about increase the amount of money that inves-
tors can pump into Argentina,” Temper-
changes since the elec- $US115 billion of undeclared ley said.

tion of President Mauricio assets. That created an im- While presidential elections are set to
take place in 2019, Temperley believed
Macri in 2015. portant inflow of money to the people would once again give their
support to the incumbent president.
“Macri received a coun- Diego Temperley the fiscal accounts because
try that was tied in the eco- of the fines that had to be “The majority of people in Argentina
wanted a change in regime, not only in
nomic centre. You had lots paid by those taxpayers. the manners but also in the way to con-
duct the country and the destiny of Ar-
of restraints in the economy,” he said. “But also it generates a new flow of gentina. We are pretty confident that in
the upcoming election they will vote… to
The new Government set out to revive money that was declared and brought keep this new face of Argentina,” he said.

Argentina’s economy by lifting controls back to the country by those people in – Jon Daly

and removing taxes on mining and agri- order to invest in real economy and real

culture imports and exports, but it didn’t business.”

stop there. Temperley considered Macri’s key

In 2016, the Government devalued the economic successes to be the elimina-

currency by 100% in one day, in an effort tion of all foreign restrictions and the in-

to stabilise the economy and rebalance dependence given to the Central Bank,

the tariffs on utilities. which has since boosted its reserves

“You have to think for 12 years, since from $US18 billion to $US55 billion.

2001, [former presidents Nestor and Temperley said the Government had

Dark Horse gallops ahead with coal

Dark Horse Resources Ltd refers to sitioned if you wanted to underground mine devel-
itself as a diversified resources and develop a reserve to ex- opment,” he said.
energy company and this is especially port.
true of its Argentinian portfolio. “We are looking to tar-
“There is existing rail get in the order of 75mt of
The company has an interest in the Las infrastructure but it is very thermal coal reserve. That
Cueves and Las Tapias lithium mines in old and it would take a lot will give us approximately
San Luis province and the Los Domos of work and effort to up- 25 years of a 1,200MW
gold project in the Santa Cruz province grade that. The best way power station.
but it is the company’s new Pico Que- to commercialise this par-
mado coal project, 1,400km south-west ticular coal resource, in “Argentina currently has
of Buenos Aires, which has Dark Horse our belief, is to convert it an expensive and insuffi-
energy advisor Boyd White excited. into electricity.” cient generation base and
tired, undercapitalised
Speaking at Latin America Down Un- White said the mining Boyd White transmission infrastruc-
der, White said the combined Pico Que- project and power station ture.”
mado mining project and proposed 600- would require around $2 billion to get The Argentinian Government wants
1,200MW thermal power station was started. $US35 billion of investment to create
shaping up as the company’s flagship. about 21,000MW of new power gen-
“The exploration and resource defini- eration by 2025 – 10,000MW of this is
“The coal resource and the proposed tion has started, so the first round of drill- through renewables.
power station are not far from an existing ing has just been completed,” he said. “[Wind and solar] is intermittent, so the
transition line,” White said. “Site grid selection and approval studies Government needs to also include ther-
have all commenced.” mal energy. That is thermal which is dis-
“There is about 6,000MW of 500kV patchable and with high efficiency. This
high voltage transmission lines that White said the resource had good coal is the niche where the Pico Quemado
run into the greater Buenos Aires area, characteristics, with high calorific value, project is going to fit in,” White said.
where the majority of the electricity load moderate ash and low sulphur.
in Argentina sits. – Jon Daly
“The four seams are up to 12m of ag-
“It is very well positioned in terms of gregate thickness and fairly steep dip-
access to transmission. It is not well po- ping, so it will probably have to be an

PAGE 32 JUNE 2017 AUSTRALIA’S PAYDIRT

Latin sources lithium in Argentina

Latin Resources Ltd is no stranger to San Luis to start develop- define a JORC-compli-
South America, spending $20 million ing drill targets for those
and eight years exploring for copper and projects.” ant lithium resource in
iron sands on the continent.
At Catamarca, Gale the third quarter of this
But now the company has set its sights said, the team had found
on the burgeoning lithium market, secur- about 15 old spodumene year.
ing the largest lithium hard rock holding mines.
in Argentina. The company is also
“What we’ve done is
Speaking at Latin America Down Un- focus on those old lithium assessing a new cobalt
der, managing director Chris Gale said spodumene mines and
two-thirds of the world’s lithium came drilled those projects over project in the La Rioja
from brines in Bolivia and Argentina. the last three months.
We’ve come up with province.
“Our model was to go out and secure some very good grades,
most of the known hard rock lithium pro- some up as high as 2-4% Gale applauded the
jects in Argentina; we’ve managed to do lithium,” Gale said.
that,” he said. Argentinian Govern-
“We find that we have lots of smaller
The company has identified projects deposits here, rather than what we find ment for its swift pro-
in three key districts of Catamarca, San in WA, which is larger and lower grade
Luis and Salta, giving Latin Resources a deposits, so we’re very happy with what cesses at Catamarca.
concession with over 100,000ha of lithi- we’ve found.
um-bearing pegmatites. “We had our environ-
“Our move now is to go down to San
“We’ve finished carrying out the work Luis and drill those projects. Once again, Chris Gale mental report and our
at Catamarca. We’ve got a team up at we’ve found a host of old lithium mines.” drill permit approved
Salta now to do some due diligence on
our project up there,” Gale said. Latin Resources aims to start drilling in six weeks,” he said.
at San Luis this quarter and is hoping to
“Then the team [is moving] down into “That to me was incredibly important that

we could get that environmental and that

drill permit through as quick as we could.

“Try that in any other country, try that in

Australia; it is not going to happen. So I

am very pro-Argentina at the moment, in

respect to how quick they move.”

– Jon Daly

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 33

LATIN AMERICA DOWN UNDER REVIEW

MMG focused on leaving
sustainable legacy

It was a case of “damned if you communities – I’m not saying
do, damned if you don’t” for that was the case – but three

MMG Ltd in building a heavy different ownerships in the

haul road to service its Las space of the construction phase

Bambas copper mine in Peru. often can lead to uncertainty in

MMG acquired Las Bambas communities and sometimes

from Glencore in 2014 and has not an entirely efficient passing

been producing copper con- of that engagement relationship

centrate from the 2 mtpa op- that is so important to build up,”

eration since early last year. Patterson said.

During the construction “On the whole, we’ve really

phase, MMG was required to just had to stick to the location

upgrade a haul road linking and the route that was estab-

the mine to Espinar and two lished and I’m sure it will ulti-

other Glencore assets, Tintaya mately work well.”

and Antapaccay, about 200km MMG has identified a num-

away. ber of measures to control risks

The haul road between Las on the Las Bambas transport

Bambas and the port of Mata- Andrew Patterson route, including speed monitor-
rani services 250 trucks daily ing, further road upgrades, dust

and traverses three regions, four prov- things we can’t alter is the geography of suppression and local contractor involve-

inces, 14 districts and more than 60 com- where the minerals are located. ment.

munities. “It is just inevitably a very, very long A feasibility study assessing the viabil-

Most communities welcomed the up- supply line. There were probably alterna- ity of paving the Las Bambas-to-Espinar

grade, however, some protested due to tive routes and it could be those alterna- stretch is being undertaken by the Peru-

the trucks creating “excessive” amounts tive routes took us through fewer com- vian Government, with MMG contributing

of dust in their towns and subsequently munities…but there was also a whole $US4 million of funding.

blocked the road on at least two occa- lot of communities on the road between “Sustainability is largely about ad-

sions in the past 12 months. the two Glencore assets and Las Bam- dressing stakeholder expectations,” Pat-

Three people were killed in separate bas, along which a group of communities terson said.

incidents in 2015 during protests over were located, through which the con- “To carry on business sustainability in

changes to environmental plans and struction materials had gone up to the a country and the communities that it op-

dwindling jobs as the construction phase mine, from which communities a number erates in, a miner has to be a welcome

wound up. A local farmer was also shot of people were employed and it benefit- guest. Adequately responding to key

dead by police in October last year dur- ted a number of businesses which were stakeholder expectations about how we
“ing a protest about 50km from the mine.
already up and going.” behave, about the impacts and sharing

During a panel session of benefits from the non-

on sustainable mining at Not many would want to admit it, renewable resources that
Latin America Down Un- we dig out of the ground is

der, MMG international but there would be many a mine absolutely vital.
affairs chief adviser An- planner or strategic planner that wishes “Host countries want to
drew Patterson said some
be satisfied that their net

things were beyond a they had taken a different course several benefits from mining are
company’s control. years down the track. fair, so we need to look at
what we’re doing not just
“I have to say it’s almost

a case of you’re damned if today to help our communi-

you do and damned if you ties and the countries we’re

don’t with a lot of these things, but I think Shipments were again halted in Feb- in, but where we’re actually heading at

one of the things you’d like to avoid – and ruary due to another protest, but fortu- the end of the mine life because ultimate-

it’s not something that with hindsight that nately there were no casualties this time. ly we are judged by the legacy we leave

you could say you do better – is change,” Las Bambas underwent three owner- behind, just as much as by our actions in

Patterson said. ship changes during a lengthy construc- going through the operations.”

“Not many would want to admit it, but tion phase, with Xstrata initially holding – Michael Washbourne
there would be many a mine planner or control of the project before that com-

strategic planner that wishes they had pany was acquired by Glencore and then

taken a different course several years the subsequent sale to MMG.

down the track. However, one of the “That is something that can unsettle

PAGE 34 JUNE 2017 AUSTRALIA’S PAYDIRT

Peru chases exploration dollar

The Peruvian Government is courting HE Ricardo Labo industry, Peru can approach the global
almost $US40 billion in foreign invest- investment community with some confi-
ment by 2021, according to Vice Minister than that 8%,” Labo said. dence and establish its sector as one of
for Mining, Peru, HE Ricardo Labo. “Exploration has been going down but choice in Latin America.

“Our goal is to secure $US14 billion in we are still capturing almost the same Helping its ploy to attract more invest-
investment in new developments plus in amount of the global exploration budget. ment will be the outcomes of the current
many other investments. By 2020/21, we Our second main objective is to make review of mining legislation, with the pub-
may have at least $US37 billion in invest- those [exploration] projects feasible and lic submission period closing at the end
ments. Most of our pipeline is in copper thirdly, we want to guarantee the continu- of May.
projects, so our goal is to increase, by ity of operations.”
2021, copper production by 30% and Whether or not major changes are
cross the 3 mtpa mark exceeding last Having a clear vision for its mining made to Peru’s mining legislation, Labo
year’s 2 mtpa,” Labo told delegates at said minimising and streamlining pro-
Latin America Down Under. cesses would be closely looked at, while
paying great respect to the social issues
Having only been in the position as around mining is at the top of the agenda.
vice minister for three months before
the conference, Labo said his initial dis- “Every relationship has its issues, per-
cussions with the Prime Minister were sonal or otherwise, this is nothing differ-
focused on delivering stated objectives, ent,” Labo said.
which included promoting exploration in
Peru. “You build reputations based on rela-
tionships and giving information but most
The country currently captures about importantly by being consistent and de-
6% of the global exploration spend, livering on your promises. I believe hav-
with a target of increasing that to 8% by ing good results comes from having a
2020/21. good strategy.”

“This is conservative, we want more – Mark Andrews

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 35

LATIN AMERICA DOWN UNDER REVIEW

Explorers urged not to rush

Australian resources compa- become established in places
nies need to respect the time
it takes to do business in Latin such as Chile, Peru and Colom-
America, according to prominent
lawyer Harris Gomez. bia, six weeks in Brazil and up to

Gomez, managing partner of 12 weeks in Argentina.
Harris Gomez Group, likened
foreign explorers entering Latin Bank accounts can take any-
America to the “first white man
in Africa” syndrome, warning that where between one and two
perception did not come without
its consequences. months to establish in most of

“They get to a place like Latin those countries.
America where they’ve never re-
ally explored, never really done “Unlike in Australia where
their homework, but say ‘back in
Melbourne we do it this way’ or everyone has an account, bank
‘back in Perth we do it that way’,
so they will do it their way,” Gomez accounts in Latin America are
told Latin America Down Under.
seen as more of a privilege than
“I think it’s a little bit arrogant to
do that because what I’m trying a right,” Gomez said.
to highlight here is it takes time to
understand a culture. You can ar- Gomez also warned incoming
rive in a place like Santiago and
you’ll soon discover the dynamics companies not to underestimate
are different [to Australia].
the importance of an individual
“So, I guess the message is,
from the last 15 years of seeing country’s labour laws, with many
the journeys that have succeeded and
those that have not, make sure you send considered pro-worker, plus the
you’re A-team – you can’t drive it out of
your Brisbane office – and give it the rules and regulations surround-
importance it needs. Make every effort
to travel there, on average, four or five ing foreign-appointed person-
times a year and make yourself avail-
nel.

He added it was crucial those

companies understood their fi-

nancing options before commit-

ting to a particular jurisdiction.

“It’s a little bit harder to raise

structured finance in that part

Harris Gomez of the world…it can be a little

bit more costly in that regard,”

able, too. Don’t rush into it and give your- Gomez said.

self some time.” “Deal structures in Latin America also

Gomez said many clients had come to tend to be more complex and require

him seeking advice on setting up a com- longer lead times for approvals.”

pany in Latin America “yesterday” when – Michael Washbourne
such a plan was unrealistic, pointing out

it typically takes two or three weeks to

Venezuela seeks mineral investment

Foreign companies can only earn up to rying out all of the operational activities,
45% of a project in Venezuela under including costs.
current ownership laws.
Venezuela is known for its oil and pe-
One of two ownership models outlined troleum industry, but Cano’s presence at
by Venezuela’s Vice Minister for Explora- Latin America Down Under suggested
tion and Eco-Mining Investment HE Vic- the country was eager to lift the profile of
tor Cano requires a company to finance its mineral opportunities.
the project and pay for its shareholding to
claim a 45% stake in the asset. “We have more than 40 minerals in
Venezuela and we encourage you to visit
The State of Venezuela retains the re- us in our country and invest in the min-
maining 55% interest. eral potential,” Cano said.

Both parties are responsible for explo- Venezuela’s mineral potential is split
ration, extraction and processing of min- into four areas – ranging in size from 10
erals under the terms of the JV. million sq km to 40 million sq km – which
are said to be prospective for gold, dia-
The second business model allows monds, iron ore, bauxite and coltan.
the State of Venezuela to retain 100%
of an asset, while the private company is HE Victor Cano
tasked with financing the project and car-

PAGE 36 JUNE 2017 AUSTRALIA’S PAYDIRT

First Quantum goes large
in Panama

One of Panama’s most capital- there was enormous opportuni-
intense projects in its history –
the Cobre Panama copper project ties for under cover exploration
– is 50% completed.
in Chile and southern Peru, while
First Quantum Ltd owns an 80%
equity interest in the project which reiterating the company’s excite-
is on track for plant ramp-up in
2018. ment about moving into Argentina.

The company will spend a further “We look forward to moving
$US1 billion on the project build
this year, with total capex required into Argentina and I was also im-
to bring the 3.7bt @ 0.37% copper
orebody to fruition $US5.5 billion. pressed to see the presentation

“We cut back about $US1 billion from Paraguay because I believe
in the original capex of the project
and upped the prospective produc- they are doing all the right things,
tion rate to 320,000 tpa copper;
right up there with the Cerro Verdes in terms of collecting government
and Las Bambas of the world, in
terms of a substantial new pro- data and making it public to poten-
ject and one of the very few around the
world,” First Quantum global exploration tial explorers,” he said.
director Mike Christie said.
“That for us is an impediment in
With almost 4bt of measured and in-
dicated resources and several billion places like Chile where multiple
tonnes of open pit inferred resources
sufficient for 40 years of production, pro- companies collect data but it nev-
ject development rather than drilling is
the priority for First Quantum at Cobre er reaches the public domain and
Panama.
you basically end up doing all the
“It is enormous but very low grade, it is
a deposit that is all about scale in terms Mike Christie same things again and that is not
of the economics of making this work. It
also has a remarkably low strip ratio of efficient for company or country.”
1:1, which really helps in terms of eco-
nomics,” Christie said. is a destination that is going to improve – Mark Andrews
as an investment destination of the future
The company is setting up to be a sig-
nificant contributor to Panama’s econo- and we have been
my for a long time, with Cobre Panama at
construction stage requiring 7,000 peo- proven right,” Chris-
ple while providing 2,500 jobs over 40
years once in operation. It is estimated tie said.
$US2 billion in exports over 40 years will
also come from the mine. The company is

“That, combined with the very attrac- completing environ-
tive tax regime in Panama makes this
a place you can do business,” Christie mental studies and
said.
trying to identify
Christie’s bullishness on Panama ex-
tends more broadly to other parts of Latin fresh water sources
America, particularly Peru and Argentina
where First Quantum has advanced cop- at Taca Taca, as it
per projects Haquira and Taca Taca, re-
spectively. works towards a de-

“We purchased this project [Taca cision on which pro-
Taca] before the new government came
in on the basis that Argentina certainly ject is triggered next

in the pipeline.

“We haven’t made

a decision yet, a lot

of it comes down

to fiscal and a lot

comes down to the

permitting of these

two projects which

are not going to be

small,” Christie said.

Beyond the com-

pany’s Haquira and

Taca Taca assets,

First Quantum has

about a dozen pro-

jects around the

Latin American An-

dean porphyry belt,

varying from green-

fields environments

into more mature

districts in Chile.

Christie said

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 37

LATIN AMERICA DOWN UNDER REVIEW

The continued success of Latin America Down Under has been in showcasing the resources opportunities
across the region and this year was no different, with Paraguay and Venezuela joining the conference for the
first time. Australian Governor-General, General the Honourable Sir Peter Cosgrove, welcomed delegations
from the region in his keynote address to the conference. West Australian Minister for Mines Bill Johnston ex-
tended the warm welcome at the Ministerial Dinner hosted at the State Reception Centre, Kings Park. On the
conference floor, about 250 delegates attended the two-day event at the Pan Pacific Hotel, Perth. Professional
photographer Bryan Charlton was on hand to capture all the conference action, as well as a special trip to the
Pilbara organised for the visiting Latin American government delegations, journalists and Australia’s heads
of mission in the region by Fortescue Metals Group Ltd. Paydirt would like to thank all sponsors, exhibitors,
speakers and delegates. Gracias

PAGE 38 JUNE 2017 AUSTRALIA’S PAYDIRT

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 39

LATIN AMERICA DOWN UNDER REVIEW

Austral looks to
high-grade option

TSX/ASX-listed gold pro- rial proposed to be processed
ducer Austral Gold Ltd
hopes to be an intermediate through the new agitation plant.
sized producer of precious
metals in Latin America one Brown told delegates at Latin
day.
America Down Under Aman-
The company has proper-
ties in Chile and Argentina caya was fully permitted, with
and part of the expansion
strategy is to be active in the the technical study – due Q2
M&A space.
2017 – to determine the project’s
In the meantime, improve-
ment to Austral’s flagship future.
Guanaco gold project, 230km
from Antofagasta, is providing “We plan to bring in the high-
a good footing for Austral to
achieve its ambitions. grade ore from the Amancaya

Over the last four years, project, which is 76km away
production has been consist-
ent at 50,000 ozpa with AISC from a public open road to Gua-
of $753/oz.
naco. There are no communi-
Austral – which also owns 70% of the
Casposo gold project in Argentina – is ties, there are no rivers; it re-
believed to be one of the only companies
to build a new plant in Chile in the last ally is an ideal place to do work.
year with the construction of an agitated
leach Merril Crowe plant at Guanaco There is no traffic, there is a new
costing $18.5 million.
transmission line, and as a pro-
“The significant uplift from that immedi-
ately is that we can get 73% to 95% gold ject it is an ideal location,” Brown
recovery. I’m sure we will get up to 89%
and we will get a significant uplift from Mike Brown said.

“Amancaya has given us the

Guanaco production which is currently resource-reserve profile for the invest-

heap leach,” Austral vice president cor- ment in the new plant. Previously at

porate development Mike Brown said. Guanaco, the large inferred resource

Justifying the capital spend at Gua- couldn’t justify investment in a new plant.

naco has been the success achieved at But we have built a 1,500 tpd agitation

the Amancaya gold-silver deposit where mill for $18.5 million with some in-house

indicated resources total 64,000t for engineering and finance from equipment

21,000oz gold at 10.19 g/t and 67,600 oz leasing, so as a cost it is probably one

silver at 32.72 g/t. of the cheapest plants of that size being

The existing resource is subject to a built in the world.”

PFS which combines operations of Gua- – Mark Andrews
naco and Amancaya, with all the mate-

Argentina on the right path

There has been widespread praise for lot has happened in Argentina, I will say analysed particularly,” Heredia said.
Argentina’s Government under the not for good or for bad, I would say that “It is more a matter of restrictions be-
presidency of Mauricio Macri since he we are a more mature country and now
took office in 2015. a country with certain mining projects; I cause this is also up for constitutional de-
wouldn’t say we are a mining country. We bate in terms of how powerful the prov-
One of the hallmarks of Macri’s term still need to do a lot of work and move inces can be or not because the reality is
has been willingness and openness to forward in that direction.” that they own the resources and set the
engage with the foreign investment com- conditions of the development of mining
munity and the country is set to take an- While the Government and indus- projects.”
other step forward, this time in the mining try have work ahead to shape a mining
sector. framework conducive to attracting invest- One of the aims of the new legal
ment in mining and exploration, Heredia framework is to reach consensus from
“Today, in 2017, a draft for a new fed- said it was important that each province the provinces and work towards a com-
eral mining agreement [is under way] be attended to according to their own mon mining policy, while harmonisation
and we intend to create better conditions situations. of conditions for mining investment, roy-
and harmonise among all the provinces,” alties, environmental issues and local
leading Argentine lawyer Florencia Here- Currently, the Santa Cruz and Salta development obligations will come under
dia, partner at HOLT Abogados, Argen- provinces are the most favourable for scrutiny in the new mining law.
tina, said. miners and explorers.
– Mark Andrews
“After almost 20 years of this policy, a “Each province has to be seen and

PAGE 40 JUNE 2017 AUSTRALIA’S PAYDIRT

Community benefits the only way

Companies should concen- services – and we then send
trate on non-transactional people in advance to talk to

benefits when trying to win communities. We find out

community support for their what the communities want

projects, according to Chilean and ask community leaders to

Vice Minister for Mining Erich provide candidates for work.

Schnake. “However, it can be diffi-

Speaking on the People cult to satisfy expectations. In

Puzzle panel at Latin Amer- Panama, which is not really

ica Down Under, Schnake known for mining, there was

said miners should be careful expectation from community

not to set an unrealistic prec- to start skills training straight-

edent with communities. away but it’s not always pos-

“A small to medium-sized sible even though it is our best

company doesn’t have the Chilean Vice Minister for Mining Erich Schnake makes his point during intentions to generate work for
same capability to compen- the People Puzzle panel session at Latin America Down Under the community.”

sate community [as large Solgold plc’s Pru MacLean

companies],” Schnake said. “Companies were experienced in negotiating with agreed that managing and balancing

should work on compensation that is not companies but the Government was also the expectations of various stakeholders

transactional. If it is transactional, future working on a policy which would formal- was of primary importance to miners in

projects will have problems reaching ise the negotiation process. Latin America.

agreements with community.” “It is a way of giving a broad view of “You have to manage all stakeholder

Schnake’s comments were in re- what a project is going to be,” he said. expectations,” she said. “Ultimately, you

sponse to a question posed by Globe 24- “We don’t want local communities to be are working for shareholders but trying

7’s Jamie Alvarez about how companies paid with money in simple terms. They to get the best outcomes out of the com-

should ensure economic benefits are want and we want to see other kinds of munity and environment in the right way.”

shared with host communities through compensation, including employment Hot Chili Ltd managing director Chris-

employment opportunities. opportunities.” tian Easterday said an economic return

Argentine lawyer Ignacio Celorrio said Having local employment strategies for shareholders had to be a priority.

every company should have a plan in alone is not enough, according to Marco “There is no point being there if you

place for employment and training in lo- Garrido of drilling firm Energold, particu- don’t make a return,” he said. “But from

cal communities. larly in countries where mining experi- the first drill hole, the first employee hires

“There is not a federal law in Argentina ence is thin on the ground. and the first community project there is

[regarding local employment require- “As a drilling company we are the very a tangible benefit of community relations

ments] but I don’t see any company that first onto a project where you might find being established which will carry right

doesn’t have a programme to support its there is nothing in the way of relevant through the project’s life.”

own base of local employment,” Celorrio skills,” Garrido said. “Our strategy is to – Dominic Piper
said. scope out what we have access to – re-

Schnake said Chilean communities gards people, infrastructure, goods and

AusQuest working hard for South32

AusQuest Ltd managing director Grae- concepts. For our Australian projects, vide $US500,000 to bring the project to
me Drew hopes to be drilling in Peru we hope to be [drilling] several areas in drilling stage.
by the end of the year. the second half of 2017.”
An initial $US1.5 million has been re-
“In Peru, we estimate possible drilling AusQuest earned some recognition ceived by AusQuest from South32, with
at the end of this year or early 2018 after in the market earlier this year when it at least five projects to be tested this
we have completed the drilling permit- announced an “innovative strategic al- year, including two porphyry targets in
ting process. All up we have an active liance” with the globally diversified Peru.
programme for this year especially as a South32 Ltd.
junior explorer,” he told delegates at Latin Drew said that by mid-year drilling for
America Down Under. “We’re hoping for their support, both nickel at the Fraser Range and Jimber-
financial and technical, and we are work- lana projects are being targeted in West-
“Over the next six months we have ing hard to secure them as our strategic ern Australia in addition to a 3,100m pro-
very active programmes, both in Aus- partner,” Drew said. gramme at the Blue Billy zinc JV under
tralia and Peru. The timing of drilling in the strategic alliance.
Peru remains an issue, especially in an AusQuest has the task of generat-
early reconnaissance stage where we ing projects and if South32 accepts at – Mark Andrews
are looking for early interpretation of our pre-drilling stage and programme and
budgets are agreed, the latter will pro-

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 41

LATIN AMERICA DOWN UNDER REVIEW

Gold driving Colombia’s revival

Low commodities prices have hit Co- David Gonzalez Despite having favourable investment
lombia hard in recent years but the ratings from the likes of Standard &
country is poised to bounce back, accord- Another two promising projects – Soto Poor’s, Fitch Ratings and Moody’s, Co-
ing to its National Mining Agency. Norte and San Matias – could start pro- lombia is still largely viewed as a risky
ducing gold by 2021. destination for mining investors.
Mining’s contribution towards Colom-
bia’s GDP has slipped from 4.5% a dec- “We will move our ranking from 15th More than 96% of the country remains
ade ago to just 2.1% last year on the back [largest gold producer] in the world to unexplored due to security issues dating
of the resources downturn, particularly in possibly ranking 9th in 2020,” Gonzalez back more than 30 years, but officials
the coal sector. said. are determined to change perceptions
of Colombia in a bid to lift its investment
Colombia is home to the world’s sec- Gold and other precious metals cur- profile.
ond largest open pit coal mine, Cerrejón, rently account for 18% of the country’s
in the country’s south. mining GDP, with total gold exports up Australia appears on board with this
28% last year. and is set to open an embassy in Bogota
“Coal is about 65% of the total [min- later this year. Furthermore, 25 of the 37
ing] GDP of Colombia,” National Mining Australian companies currently operat-
Agency promotion manager David Gon- ing in the country are from the resources
zalez said. sector.

“It is important to remember that Co- “We still have a lot to prove, a lot of
lombia is the fourth largest thermal coal people are still worried about investing
exporter in the world and also [hosts] there, but this is the mining sector so you
46% of the total reserves in Latin Ameri- can’t expect everything to be perfect,”
ca. Coal is very important to us.” Gonzalez said.

However, coal is set to be challenged “My suggestion is take the risk. If you
by gold as the premier resource in Co- don’t take the risk and invest now, prob-
lombia, with four new gold projects – Cis- ably in two years you’re going to be too
neros, Santa Rosa, Buritica and Gra- late.”
malote – set to come online in the next
three years. – Michael Washbourne

Trade ties firmer than Trump’s wall

Mexico’s ties with the the US economy and the in the Asia-Pacific region, including Aus-
US remain strong tralia.
despite Donald Trump’s Mexican economy are
pre-election threat to Garza pointed to BHP Billiton Ltd’s
build a physical wall be- very strongly integrated partnership with state-owned Pemex
tween the two countries, to develop an $US11 billion deepwater
according to ProMexico and the value chains oil project as an example of the invest-
Trade Commissioner ment opportunities open to Australians in
Esau Garza. between our countries Mexico.

Canberra-based Garza depend very strongly on “There’s a growing number of Aus-
said his office had fielded tralian companies coming into Mexico
many questions since each other. and there are other companies already
Trump’s presidential vic- considering doing business in Mexico,”
tory late last year about “To change this from Garza said.
a potential breakdown in diplomatic rela-
tions between the neighbouring nations. one day to the next is “We also have companies from Mexico
doing business in Australia and hopefully
However, the partnership between going to be really, really we’ll see this number grow as well.”
Mexico and the US was a two-way street,
Garza told delegates at Latin America complicated and this is Mexico, the world’s leading silver pro-
Down Under. ducer, has been identified by a number
Esau Garza one of the reasons why of firms, including Deloitte, KPMG and
“Changing the trade scheme with not only the wall, but the PwC, as a top 10 globally competitive
Mexico will be very difficult for the US destination for manufacturing, tax and
because it will interrupt the value chains destruction of NAFTA investment.
and the production chains that are cur-
rently in place,” Garza said. has not taken place yet, because the A total of $US4.6 billion was invested
in Mexican mining projects in 2015,
“We have a deficit of $US61 billion mainly border states depend strongly on with 2016 numbers to be confirmed this
with the US, but this represents only 11% month.
of the total deficit that the US has. So, Mexico as a trading partner.”
– Michael Washbourne
More than half (52%) of Mexico’s total

mining exports end up in the US, com-

pared to China (12%), South Korea (7%),

Switzerland (5%), Canada (3%), Belgium

(3%) and the UK (3%).

In contrast to the US tensions, Mexi-

co’s relationship with Australia has never

been better, according to Garza, with

Mexican President Enrique Pena Nieto

recently outlining plans to boost bilateral

commercial agreements with countries

PAGE 42 JUNE 2017 AUSTRALIA’S PAYDIRT



AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Graphite
questions remain

Arebound in commodity prices in the past 12 months has bright- tinually field questions around Balama’s
ened the mood in parts of the sector however clouds linger over likely impact, forcing them to take the
the graphite fraternity. lead in helping investors and analysts
understand the intricacies of a sector
Graphite companies on the ASX have “The opaqueness of the market is one in which Syrah is likely unable to supply
struggled for market attention, as com- of the biggest things to deal with. Getting every product specification.
panies in more traditional spaces of a project up to do studies is really easy,
base metals and gold return to favourit- doing off-take and [selling] the product Instead of attempting to match Syr-
ism with investors. side of it is a real challenge. It is still ah’s forecast production figures, other
something that you have to spend time graphite players have opted to slim
Gold and base metals projects, which on and you need an understanding of down production targets from hundreds
are primarily driven by geology, are un- the markets and how you are going to of thousands of tonnes to more “realis-
derstood in the market and while graph- produce it.” tic” volumes. The global flake graphite
ite companies have made great strides market is still supposedly very small,
in demystifying the sector for investors, Not helping graphite companies in the with estimates of between 375,000t to
it appears more education and clarity past three years has been the failure 800,000t for annual demand.
needs to be delivered. of graphite miners, including Valence
Industries Ltd’s restart and hasty moth- Getting a gauge on actual annual
Triton Minerals Ltd managing director balling of the Uley mine in South Austral- production and demand numbers is dif-
Peter Canterbury argues that metallurgy, ia and a similarly quick retreat at Woxna ficult, but what graphite companies are
not geology, is the driver behind graphite in Sweden. certain of is the growing demand for dif-
projects and is the point of difference not ferent graphite products, such as those
entirely grasped in the market. Such examples have only fuelled in- that will feed the battery market and in-
vestor scepticism and while the stand- dustrial sector.
“People now have more of an under- out in the graphite market – Syrah Re-
standing but it is still a complex market sources Ltd, which is getting started at “I think there is going to be an increas-
to understand, even for sophisticated in- the Balama project in Mozambique – is ing demand coming from end-user mar-
vestors. JP Morgan said to us: ‘We don’t proof that projects can be developed kets. There are not many new projects
understand this, you [graphite] guys are and funded, the sheer size of Balama coming on-stream in the next 12 months
telling different stories about where the (350,000 tpa) leaves question marks and I don’t think Syrah has the graphite
target [market] is and it is hard for us to about the viability of up-and-coming to suit every market,” Volt Resources Ltd
get our head around it’,” Canterbury said projects and where they fit in the supply/ chief executive Trevor Matthews said.
during the panel discussion to close the demand equation.
second Australian Graphite Conference Canterbury believes the emergence of
in Perth last month. Graphite players have had to con- a two-tiered market will continue apace,
with a lot of supply headed for the bat-
tery market.

PAGE 44 JUNE 2017 AUSTRALIA’S PAYDIRT

“The finer material will struggle for efficient good products... there are a lot ther in breaking down the specifications

a while, the higher quality material will of aspects to the business and really of their product so it was clearly under-

probably increase and then be dragged people struggle to find an entry into that stood in the market.

down by over supply. In the near term, market.” “I think the industry has failed in the

I think there will be an uptick in the flake Should there be a swathe of new last 12 months in the concept where

size pricing,” Canterbury said. graphite projects coming online within a you actually need to provide a high spec

In terms of pricing, China’s lifting of an similar timeframe, there is a risk of over- product to your end customer – what

export tax in January, which immediately supply in the market, and potential for does that actually mean in terms of costs

resulted in a 10% drop in graphite prices producers to be played off against each and how long is that actually going to

worldwide, isn’t expected to have a nega- other, according to DMP Asset Manage- take?” Cator asked.

tive impact on long-term pricing, accord- ment Ltd executive chairman Harry Ca- “We all now know about flake sizes

ing to Kibaran Resources Ltd managing tor. and the difference between the geology

director Andrew Spinks. Cator likened the current state of the and metallurgy, but where people are up

“The outlook from year-to-year is more graphite sector to the iron ore industry in in the air is the concept of ‘how do I actu-

positive,” Spinks said. “We are going to Australia during the 1980s, where Japa- ally get the buyer to buy my product and

see prices increase in the second half nese customers pitted local producers what do I need to do to get them to ac-

of this year. I don’t think the Chinese are against each other. cept it before I go into production?’ Get

making any money out of their produc- “History doesn’t repeat, it tends to the specs out and show why your mine is

tion.” “ rhyme and it feels like the Chinese and going to deliver and how much it is goingto cost.”
Kibaran’s Epanko pro-
There are so many elements to The issue facing compa-
ject in Tanzania is one of nies is that customers are
the most advanced graph-
ite projects on the ASX. the graphite market; it is battery happy to take products once
Spinks believes there demand, friction, expanded graphite produced, however, many
is real demand outside, end-users are reluctant to
and also within, China for
graphite, however, infiltrat- and thermally efficient good products... stomach the risk associated
with mine development.
there are a lot of aspects to the
ing the desired markets is business and really people struggle to BatteryLimits director Phil
tough going. Hearse encouraged com-
panies to continue with pilot
Nevertheless, Spinks ex-

pects there will be two or find an entry into that market. plant demonstrations as a
three new projects in pro- means of entry to market.

duction soon. “There are some damn

“That is a challenge for good projects that haven’t

industry and ourselves; it does take the people that strategically need graph- even got that backing, but I think there

time,” he said. “We have spent the last ite are doing the same thing that was is an opportunity for those companies to

12 months finalising a feasibility study done to the Australian iron ore miners in grow, regardless of what their value is,”

that we were expecting to be financed the mid-80s,” Cator said. Hearse said.

mid-last year. Everything takes a little bit “If you actually look around the graph- “Right now you have got a lot of graph-

longer than you expect. We have seen ite industry and see who is doing what, ite hopefuls going to customers and cus-

Syrah come into production, so we will at the bottom of the queue the Chinese tomers telling them to come back when

have to wait and see how that plays out, keep popping up and I’d suggest that something is in the offing; that is one of

but there is certainly room for other pro- consolidation is really needed.” the fundamental challenges for the in-

jects and I think the market is just waiting Cator has closely observed the sector dustry.”

and looking for some results. for the last five years and said compa- – Mark Andrews
“There are so many elements to the nies boasting to have completed off-take

graphite market; it is battery demand, deals by presenting customers with high-

friction, expanded graphite and thermally end graphite products needed to go fur-

While graphite players have many tential collaboration within the industry, is no point producing a whole lot of
questions to answer, there is a prevail- particularly in East Africa, in an effort graphite. It is like producing salt out of the
ing maturity in the sector with investors to compete with the dominant Chinese Indian Ocean, there is billions of tonnes
beginning to understand graphite’s prop- graphite sector. of salt, there is no point producing all of
erties and its uses. that salt if you can’t sell it.
“Every graphite application that we use
Discussion has now advanced to the is produced by the Chinese,” Kibaran Re- “The opportunity for Australia to de-
various products these projects are ca- sources Ltd managing director Andrew velop its own battery [production capa-
pable of generating and the markets to Spinks said. bility] is really something that has a lot
which they are suited. The concept of of interest from the Government. The
downstream processing – including the “We are going up against the Chinese synergy between Africa and Australia,
development of graphite anodes for the and the Chinese have a lot of installed we are both sundrenched, the solar en-
lithium-ion battery market – is now being capacity in both processing and down- ergy opportunity is enormous and I think
openly discussed, showing the level of stream processing. We, particularly as there is no reason why Western Australia
sophistication emerging in the sector. an East Africa community, have an op- couldn’t develop a battery industry.”
portunity to bring mines into production,
The question of downstream process- but I think that has to be in accordance
ing is also fuelling debate around po- with fitting product specifications; there

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 45

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

New government gets
the ball rolling

Early into his tenure as West Liquidators of Kimberley
Australian Minister for Mines failed to pick up the $28 million

and Petroleum, Hon Bill Johnston clean-up bill which could now

has reforms to the Mine Reha- be covered under the MRF.

bilitation Fund (MRF) high on the Johnston said it was not ap-

agenda. propriate for such costs to be

Approaching the first 100 days in collected by the hard-working

government, Johnston has identi- contributors to the mining sec-

fied a list of top priorities, includ- tor who have the industry’s

ing engagement with the mining long-term best interests in

sector, quick action on decisions mind.

made by the previous government “The industry is being scru-

to ensure certainty in the industry tinised all around the country.

and reiterating its rejection of the Fortunately here in WA we

WA Nationals’ plan to increase have a strong industry that

costs on miners through taxes. works very hard to keep up

However, what has caught the high environmental standards

industry’s attention is the Govern- WA Minister for Mines and Petroleum Bill Johnston and the Labor Government

ment’s move to ensure the integrity wants to work with industry to

of the MRF. good environmental procedures,” John- ensure that that continues into the fu-

Addressing delegates at this year’s ston told reporters on the sidelines of the ture,” Johnston said.

Australian Graphite Conference, John- Australian Graphite Conference. “Which is again why we are keen to en-

ston said progress had been made on “What has been exposed is that com- sure the MRF operates strongly because

this front in the WA Department of Mines’ panies, of course, are required to provide that is the guarantee that the community

submission to the Federal Senate, as for their rehabilitation obligations, but has; that environmental issues will be

part of a review into Commonwealth re- what was exposed was that a company dealt with [properly] here in WA.”

sponsibilities. could pay out those funds and leave the The Environment and Communica-

WA’s submission to the Senate has obligation to the State. I don’t want to tions References Committee has until

been referred to the Environment and describe exactly how that occurred, be- August 23 to conduct its inquiries and

Communications References Commit- cause that is effectively a handbook for produce a report on the issues referred

tee, along with a host of other matters bad practice, but clearly the Government by the Senate. In the meantime, John-

related to the rehabilitation of mining and recognises those bad practices and ston and his department will continue to

resources projects which fall under the there are steps to be taken to overcome connect with industry, particularly those

Environment Protection and Biodiversity them.” players in the uranium sector.

Conservation Act 1999 (EPBC Act). An example of where the MRF – a WA Labor has long been opposed to

The two main recommendations in pooled fund WA mining operators con- uranium mining, a stance to remain un-

WA’s submission regarding reforms are tribute to which was enacted in 2012 – der the current government.

for accounting procedures to be upgrad- could potentially be exposed is Kimber- Prior to the WA State Election, four

ed to include transparent reporting on ley Diamonds Ltd’s abandoned Ellendale proposed uranium mines – Toro Energy
“environmental liability and updating of mine in WA’s north-west.
Ltd’s Wiluna, Vimy Resources Ltd’s Mul-

the Commonwealth Corpo- ga Rock, Cameco Corp’s

ration Act regarding treat- One of the opportunities to deal Yeelirrie and Kintyre pro-
ment to mine site rehabilita- jects – had been given the

tion obligations in the case with this may be improving the green light to proceed by
of insolvency. accounting standards by ensuring the previous Liberal Gov-
ernment.
“One of the opportuni-

ties to deal with this may be that the accounting standards Approvals for the pro-
improving the accounting properly acquire provisioning for the posed mines will not be
standards by ensuring that revoked, however, in light

the accounting standards environmental obligations. That may of current uranium prices,
properly acquire provision- be one step in improving the MRF Johnston was unsure if all
ing for the environmental four would be funded in the
obligations. That may be operations to ensure that companies foreseeable future.
one step in improving the
don’t take advantage of WA’s very “People should under-
good environmental procedures.
MRF operations to ensure stand that no new uranium
that companies don’t take mining projects will proceed
advantage of WA’s very in WA, other than the four

PAGE 46 JUNE 2017 AUSTRALIA’S PAYDIRT

that were dealt with by the former gov- Johnston outlined the WA Labor Government’s immediate priorities for the mining sector
ernment,” he said.
coming into play here in WA, and lithium high-grade, flake graphite accelerating
“There were four mines given primary is obviously the clear leader in those new exponentially in the last five years. His-
approvals by the former government, opportunities.” torical graphite production in the State
and we are still working through, with the totals 220t, with deposits in WA’s south-
industry, the implications of that. Our po- Currently there are 17 graphite projects west providing the main source of graph-
sition has always been that projects ap- in play in the State, with three advancing ite extraction.
proved by the former government will be to resource status, including Hexagon
able to proceed, but no new projects will Resources Ltd’s McIntosh project, East – Mark Andrews
be able to proceed. Kimberley, which hosts WA’s largest
graphite resource of 20.8mt.
“It will be interesting to see whether the
four projects that received approval from There are no graphite mines currently
the former government are able to pro- operating in WA despite exploration for
ceed in a financing sense. There is not
much that the Labor Party or any state
government can do about market condi-
tions and the most important issue for
any mining issue is market conditions.”

Johnston is bullish on other commodi-
ties, particularly the likes of lithium, co-
balt and manganese which are part of
the “battery bubble”.

Graphite can also be added to the mix
and Johnston hopes the industry can
take off much in the same way the lithium
sector has in recent times.

“Graphite is a very niche product in
WA, but hopefully we can develop a bit
of an industry out of our resources,” he
said. “It’s another example of the way
this whole new range of minerals that are

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 47

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Study to scope out Siviour

Renascor Resources ing against a number of lurgical work, including concentrate sam-
Ltd is welcoming the the other more advanced ples of 99% TGC from a conventional
flowsheet, with Christensen predicting
chance to “benchmark” graphite developments in his company would see improvements in
both purity and flake size through optimi-
its Siviour project against the world and we’re look- sation processes similar to those under-
taken by others in the graphite space.
more advanced graphite ing forward to that.”
Downstream processing test work is
assets. Christensen flagged under way, particularly the suitability of
Siviour material for lithium-ion battery
A scoping study on Siviour as a potential tier anode production and use in the expand-
able graphite markets.
Siviour, on South Aus- one graphite mine on
“Siviour seems to be well positioned to
tralia’s Eyre Peninsula, the back of the latest up- enter some of the premium-priced, val-
ue-added graphite groups,” Christensen
was due at the time of grade – 80.6mt @ 7.9% said.

print, with a PFS to follow TGC for 6.4mt, including “We know we can produce ultra purity
graphite at Siviour and from our concen-
and be completed before David Christensen 51.8mt @ 8.1% TGC for trate we’ve been able to achieve 99%
the end of the year. 4.2mt classed as indicat- TGC by adding one initial regrind and flo-
tation circuit. We’re somewhat of a late-
Siviour was recently ed – to the resource. comer to the industry, but we see a real
opportunity to climb up the ladder pretty
confirmed as host of the world’s ninth Siviour – discovered early last year – quickly.”

largest indicated graphite resource, also hosts a higher-grade zone of 30.1mt – Michael Washbourne

but Renascor managing director David @ 10% TGC for 3mt.

Christensen said the market would judge “At Siviour, we’re looking at one ore-

the project on study and test work results. body. I think some of these other projects

“We’re in the final stages of complet- might be different orebodies pulled to-

ing a scoping study and we think that will gether,” he said.

be a key barometer of where Siviour sits “We think that is going to translate to

in this globally competitive argument of significant cost savings on the mining

graphite projects,” Christensen said. cost side to help us deliver a competi-

“We think we have a real opportunity tively priced project.”

to benchmark what we’re going to be do- Renascor has completed initial metal-

PAGE 48 JUNE 2017 AUSTRALIA’S PAYDIRT

Walkabout’s competitive edge

Walkabout Resources Ltd is confident of large, jumbo and super advanced discussions with
of delivering a competitive graphite
product to China for as low as $US450/t. jumbo flake products also potential financiers.

A DFS released earlier this year on described as “best in class” Metallurgical test work
the company’s Lindi Jumbo project in
Tanzania estimated an operating cost of by independent experts. has previously confirmed
$US352/t in concentrate FOB Port of Mt-
wara, 200km east of the proposed mine. Other highlights from the the project demonstrates

Walkabout technical director Andrew DFS include life-of-mine flake size distribution above
Cunningham said only robust projects
capable of producing products which revenue of $US1.259 billion, 180 microns, including ex-
were “bulletproof” against a downturn
could compete with runaway industry pre-tax NPV of $US323 mil- pansion ratios up to 590
leader China.
lion with a 96% IRR, pay- times. Typical Chinese ex-
“It was our belief from the start that
we needed to have a product which was back within 22 months and Andrew Cunningham pandability is about 250
competitive with the Chinese prices to average annual EBITDA of times.
make it through any downturn in the mar-
ket,” Cunningham said. $US50.2 million. “Numerous people we’ve

“Our bigger flakes will certainly attract Walkabout is focusing on a small been speaking to say there’s going to
a higher premium, so we think we can get
it to China or elsewhere in the world for 40,000 tpa start-up operation with a life- be quite a growth in the expandable or
about $US450-500/t.”
of-mine mill feed grade of 16.1% TGC, a flame-retardant markets and it’s widely
Lindi Jumbo’s opex and capex
($US38.7 million) are the lowest of concentrate grade above 95% TGC and known that China is looking at regulating
Walkabout’s peer group, with the range
a mine life of at least 20 years. use of flame-retardants in building mate-

“We could easily expand this if needed, rials,” Cunningham said.

but we think 40,000 tpa is a good number “This is certainly part of where our

to get into and there’s a better chance of product specs fit because of our high

being able to sell that product,” Cunning- flake ratios above 180 microns, but we

ham said. also have some smaller stuff – about

Walkabout has flagged development of 10,000t – which will probably go into the

Lindi Jumbo within nine months of secur- traditional or battery markets.”

ing project funding, with newly installed – Michael Washbourne
executive chairman Trevor Benson in

AUSTRALIA’S PAYDIRT JUNE 2017 PAGE 49

AUSTRALIAN GRAPHITE CONFERENCE REVIEW

Flanagan searches for rounded
graphite approach

David Flanagan showed consistent product we a spherical graphite plant JV in the US
balance and bravery but is now testing different flow sheet
when riding Atlas Iron Ltd can cut out the mid- designs in China to ascertain which can
along the iron ore wave to- produce suitable material for end-users.
wards a $1.5 billion market dle man and get right
cap. Now, he is hoping to “We’ve been running test work on
repeat the feat, only this through to the battery three different spherical plants,” Flana-
time in graphite. gan said. “We have bought concentrate
producers,” Flanagan off the market and pushed it through the
Flanagan took on the plants and given it to our customers blind.
executive chairman posi- said. “That will result in From there, they can tell us which one of
tion at Battery Minerals those products they like the most and we
Ltd at the end of March a much more stream- will feed that into our final selection.”
and used the Australian
Graphite Conference to lined business and Once Battery Minerals has its pre-
launch the company’s up- ferred design, it will build the plant in
dated strategy which will much more demand for Nevada and begin processing of bulk
see it attempt to disrupt the prevailing samples from its Montepuez project in
graphite order. batteries, which in itself Mozambique.

“We can see, in the future, a scenario will create more de- “Initially, we will only mine 2,000t in a
where, if the graphite market opens up bulk sample, have that toll-treated and
and we saw lots of high-quality produc- mand for graphite.” concentrated and then spheronised
ers producing really good, high-quality to give us 50-100t of spherical graph-
Battery Minerals must ite which will be purified and possibly

David Flanagan ensure it is vertically
integrated to access

the burgeoning battery

market and the Mozambique-focused

junior is perhaps the most advanced

graphite company in this regard, hav-

ing already mapped out a plan to build a

spherical graphite facility in the US.

The company is already involved in

PAGE 50 JUNE 2017 AUSTRALIA’S PAYDIRT