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South32:
Out of the shadow

• Nickel Conference review ISSN 1445-3436
• Northern Territory focus • Iron Ore 10

9 771445 343007



CONTENTS

PAYDIRT (ISSN 1445-3436) 7 NEWS 20
Published by Attending Joburg Indaba last month, 26
Paydirt Media Pty Ltd. Paydirt columnist Brendan Ryan reports 60
A.C.N. 063 985 133 that industry participants are no longer
prepared to sit quiet and accept the regu-
Head Office: lations and policies bestowed on South
Suite 9, 1297 Hay St, West Perth Africa’s mining sector by the ruling ANC
Western Australia 6005 party. Nationalisation, black economic
P.O. Box 1589, West Perth empowerment and social licence to oper-
Western Australia 6872 ate are at the heart of issues between
Phone: (+61 8) 9321 0355 industry and government, with a number of
Facsimile: (+61 8) 9321 0426 high-profile miners calling for SA President
[email protected] Jacob Zuma to be removed
www.paydirt.com.au

Editorial: 20 COVER
Editor: Dominic Piper After a shaky start, South32 Ltd has
Deputy editor: Mark Andrews bounced back strongly and is keeping
Journalist: Michael Washbourne shareholders happy – for the time being.
Graphics: Marian Noonan In a rare public outing, South32 Australian
Contributors: region president Ricus Grimbeek recently
Keith Goode (Sydney), Brendan Ryan presented at the WA Mining Club to share
(Johannesburg), Ross Louthean the vision and values driving the company
towards its goals. Mark Andrews reports
Advertising:
Advertising manager: Tony Mwarey 26 NICKEL CONFERENCE
Subscriptions: Mitchelle Matambo The mood at the Australian Nickel Confer-
Phone: (+61 8) 9321 0355 ence was the most positive it has been for
Facsimile: (+61 8) 9321 0426 four years. The upbeat atmosphere at the
conference was not missed by delegates
Pre-press and printing: who heard BHP Billiton Ltd Nickel West
Vanguard Press 26 John St, and Western Areas Ltd talk about their
Northbridge WA 6003 respective growth plans, while the bulls
Member of: in the room pondered a nickel price of
$US17,000/t by October 2017. Paydirt
Paydirt Media brings you all the coverage from the event
Executive chairman: Bill Repard hosted at Pan Pacific Perth
Finance manager: Giovanny Jefferson
Accounts/administration: 49 NORTHERN TERRITORY
Heather Melling Unlike Western Australia and Queensland,
Conferences: Melita Fogarty, Northern Territory’s resources sector re-
Kale Nakazwe, Christine Oelschlaeger mains underexplored. However, a handful
of companies are entrenched in projects
across a number of different commodities.
Paydirt takes a look at some of the emerg-
ing companies with projects in the Top End

Cover image: South32 Australia re- 60 IRON ORE
gion president Ricus Grimbeek spoke Iron ore prices are in much better shape
at a recent WA Mining Club event now than 12 months ago. The heavy-
weights – BHP Billiton Ltd and Rio Tinto
Member of: Ltd – continue to report strong production
Australia-Africa Minerals & Energy Group results and pay down debt, prompting an-
other round of debate on increasing taxes.
Registered by Australia Post PP 643938/0071. Paydirt reports on some of the companies
No pages or articles in this publication may be shaping the sector
reproduced in any form without the consent of
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
parties

Grylls plan shows naivety

The recent policy launch by West Australian He may well be right but it is figure her proof of just how ill-
Nationals leader Brendan Grylls would be prepared the Rudd-Gillard Government was for implementation
amusing if it were not potentially so damaging to of any federal mining tax.
the State’s reputation on the international stage.
To someone with even limited understanding of tax policy
Grylls – only back in the job for a few and economics, it was obvious that a plan which would see the
months – wants to increase the produc- Federal Government repay all state royalties back to companies
tion rental fee paid by Rio Tinto Ltd and from the federal tax receipts would result in a hugely ineffective
BHP Billiton Ltd from 25c/t to $5/t tax, tax, where states could raise royalty rates with impunity because
simply because he thinks they can af- the Federal Government would be picking up the bill.
ford it.
The policy once again shows the It’s true that the major miners were happy to switch from the
willingness of Australian politicians to state-based royalty system to a federal resources rent tax but
they were never going to accept a scenario in which both oc-
adopt populist ideas on what amounts to investment policy with- curred.
out considering the wider ramifications.
The onus was then on the Feds to eliminate the state royalties.
It is true the two companies are now producing many more The moment the Gillard Government showed it did not have the
tonnes of iron ore than when the agreements were put in place stomach for the fight against the states, any chance the MRRT
but such is the State’s reliance on the sector – and government’s had of succeeding was gone.
inability to foster other sectors – any move to impose further
taxes will cast huge clouds over its investment attractiveness. The whole saga will go down as one of the great tax reform
disasters in Australian political history and one Swan is obvi-
There may not be a massive investment boom on the horizon ously still brooding over.
but when investment does return to the sector, WA – given its
remarkable mineral endowment – will be an obvious place for In Paydirt, we often carry coverage and comment about the
major miners to look towards. However, when they look and see debilitating effect new fiscal policies can have on the political
taxes almost arbitrarily applied to individual companies, the in- risk profile of developing countries. Those looking to dissuade
vestment rationale will be skewed. developing world governments from adopting policies which dis-
courage investment are often shown Australia as an example
The problem for BHP Billiton and Rio Tinto is that the public of how stability and consistency in tax and fiscal regimes has
defence of the status quo may be more difficult than in previous turned Australia into the largest mining economy in the world.
tax debates. During those debates – the 2010 RSPT situation However, the pronouncements of Grylls and Swan show Aus-
being the most prominent – the miners could rightly point to the tralia is far from immune from damaging, populist ideas.
jobs they had created and were continuing to create during the
mining boom. Tax reform isn’t a bad thing per se but the launch of new taxes
which have the potential to affect investment decisions must be
The community was still in thrall of the money which was debated in a measured, considered way.
coming from workers “going to the mines” with all the stories of
six-figure salary packages for low-skilled labour. In this environ- Instead, Grylls has given us little more than a “policy brain
ment, the mining companies were able to prosecute an argu- fart” and is hoping to use it to negotiate a position in a coalition
ment which said Kevin Rudd and Wayne Swan’s super tax was government, whichever major party gets the right to form gov-
not an attack on big mining companies but rather on everybody ernment come the 2017 state election.
associated with the industry.
Swan did make some strong points during his recent attack
It certainly resonated in mining states such as WA and on the miners. BHP Billiton and Rio Tinto are on shaky ground
Queensland where regional centres and particularly the WA regarding their tax minimisation/avoidance strategies. There is a
capital were awash with money. global trend towards closing loopholes on tax avoidance and as
a company which has traded off its nickname of the “Big Austral-
This time around, the argument that any new tax will have an ian” for a generation or more, actively avoiding paying domestic
effect on employees is less compelling. Many of the workers taxes is a hard position to defend.
involved in the big mining construction boom left the sector as
the majors completed their expansion programmes and there The Australian public adores the notion of a “fair go” and if
has been a resulting deflation of the WA economy. BHP Billiton is proven to not be pulling its weight, public senti-
ment could quickly turn against it.
The mining companies cannot expect the same level of com-
munity support in the tax debate this time around, particularly as The company may have found a large part of the community
anger grows over WA’s economic position. The mining boom is in support of it during the RSPT battles but the ground support
over and the jobs have dried up and the State is in deficit. this time around will likely be much thinner.

In such circumstances, populist policies such as Grylls can [email protected] @DominicPiper
quickly gain traction.

Meanwhile, in Canberra former Federal Treasurer and archi-
tect of the little-lamented Mineral Resources Rent Tax, Swan
is now claiming the failure of the MRRT is down to the devious
practices of the major miners.

Swan told Parliament in October BHP Billiton had used ag-
gressive transfer pricing to shift profits out of Australian.

He accused the company of shifting iron ore production to its
Singapore marketing hub to avoid paying taxes on the profits,
which totalled $5.7 billion.

PAGE 4 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Saracen and AngloGold
get it done

Saracen Mineral Holdings Ltd “The timing was interesting,
has attracted interest over
ground in Western Australia from had it been two months prior, you
gold major AngloGold Ashanti Ltd.
might have seen people hang-
Subject to conditions, including
FIRB approval, AngloGold can ing off the rafters trying to get in
earn up to 70% interest in Sara-
cen’s Butcher Well and Lake Car- there,” Finlayson said.
ey tenements.
“Gold had come off a bit, sen-
By fulfilling the first milestone
of spending $15 million – $6 mil- timent had come off a bit, but it
lion of which has to be commit-
ted to project expenditure within certainly wasn’t subdued, it was
four years – AngloGold can earn
51% of the Lake Carey tenements probably at the right tempera-
abutting its Sunrise Dam mine.
ment, and equities had done well.
After the first farm-in period,
AngloGold can increase its stake For the Aussie space, the year
to 70% by spending a further $10
million within two years. prior was our big year where there

Despite budgeting $42 mil- was a big disconnect between
lion on exploration this year, only
about $1 million had been set aside for Australian dollar and US dollar
work on Butcher Well and Lake Carey,
Saracen managing director Raleigh Fin- gold price, which was very re-
layson told Paydirt.
warding for Australian producers.”
Assuming the farm-in deal pro-
ceeds in a timely fashion, AngloGold An increase in interest rates
could be hitting Butchers Well and
Lake Carey “hard” early in the New and the outcome of the US elec-
Year.
tion – particularly if Republican
“The AngloGold guys are champ-
ing at the bit and will basically spend candidate Donald Trump suc-
more than $30 million over the next
six years, all going well. It is clearly Raleigh Finlayson ceeds – later this year could see
more than what we would have done, another surge in the gold price in
so from our perspective it was pretty
much a no-brainer,” Finlayson said. coincided with the Denver Gold Forum, the New Year.

Discussions between Saracen and which created a different atmosphere for Any uptick would be timely for Saracen
AngloGold started prior to Diggers &
Dealers this year, around the time the the local contingent that attended this as it looks to hit a run rate of 300,000
gold price was taking off.
year’s show. ozpa gold production from its two oper-
Since then, the gold price has re-
tracted from a two-year high in July of ating centres – Carosue Dam, north-
above $US1,350/oz to $US1,262/oz at
the time of print. east of Kalgoorlie, and Thunderbox,

The recent tailing off has been felt south-east of Leinster.
among Australian gold producers,
with Northern Star Resources Ltd fall- Becoming a mid-tier Australian gold
ing from all-time highs of $5.78c/share
in July to $3.97c/share and Evolution producer is a strategy Saracen has
Mining Ltd $3.06c/share to $2.24c/
share during the same period. been pursuing and with a large chunk

Saracen also felt the correction, of money committed to exploration
with its share price dipping about 40%
to $1.23c/share in mid-October. and growing organically, it is unlikely

The Australian gold stock plunge the market will see the company sign-

off on any big deals in the near future.

“There is only so much manpower

you can put on to that, so what you’ll

find this year is a heavy focus on or-

ganic [growth], but at the end of the

day, certainly this environment we are

seeing right now is better than it was

three months ago to find deals,” Fin-

layson said.

“It probably hasn’t flushed out

completely because of the corporate

transactions or project level deals, so

if gold takes a bit more of a turn down

opportunities will probably be a bit

greater. So, not at this stage but much

further down the track we may turn

our attention to those [M&A] options.”

– Mark Andrews

AngloGold can earn up to 70% of tenements to the
west of Sunrise Dam in a farm-in deal with Saracen

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 5

NEWS

Exploration drives Evolution

Leading gold producer Evolution Mining Evolution tasted success with the drill bit nity to announce an intersection of 71m
Ltd has highlighted the exploration po- at Cowal during the September quarter @ 6.92 g/t.”
tential of its assets, while making another
exciting addition to its portfolio. Marsden hosts a total resource of Klein would not rule out making further
180mt @ 0.2 g/t gold and 0.38% copper plays for exploration projects or forming
In the company’s September quarterly, for 1.1 moz gold and 0.67mt copper, in- JVs with juniors similar to the one his
Evolution announced resource definition cluding an indicated resource of 160mt company has with Emmerson Resourc-
drilling at its Cowal mine in New South @ 0.21 g/t gold and 0.4% copper. es Ltd in the Northern Territory (see page
Wales had intersected 71m @ 6.92 g/t 54).
gold from 572m and 52m @ 4.63 g/t from “The Marsden project provides long-
708m. term optionality to our nearby Cowal Evolution has set aside an exploration
budget of $25-30 million for FY2017 and
Success with the drill bit also extended operation and has Klein was upbeat about the chances of a
to Mungari, near Kalgoorlie, where a nar- the potential to fur- major discovery not just for his company,
row high-grade vein was intersected 1km ther extend the life but rival gold players.
east of the Frog’s Leg deposit, returning of what is already a
a hit of 0.4m @ 34.3 g/t gold from 301m. long-life operation,” “I think you are seeing the emergence
Evolution execu- of some very interesting new mid-tier
Not to be outdone, Mt Carlton in north tive chairman Jake groups in Australia that I think will lead
Queensland produced an enticing inter- Klein said. the way in what I have been saying is the
cept of 11m @ 21.23 g/t gold from 171m, reinvigoration of the Australian gold in-
which has provided confidence to the Other encourag- dustry,” he said.
continuity of mineralisation below the V2 ing intercepts from
reserve pit. the E42 Stage H “Over the last couple of years, you’ve
resource definition seen quite a significant increase in ex-
Evolution also announced the acquisi- drilling programme ploration [in Australia]…obviously it
tion of Newcrest Mining Ltd’s Marsden at Cowal included takes time for exploration results to come
copper-gold project, immediately south- 13m @ 3.7 g/t gold through, but we are optimistic that there
east of Cowal, for $3 million and a fur- from 755m, 20m @ is still plenty of gold to be discovered in
ther $7 million contingent on a decision 3.33 g/t from 722m Australia.”
to mine. and 41m @ 6.46 g/t
from 583m. Evolution enjoyed another strong oper-
ational quarter, churning out 205,307oz
Diamond drilling at an AISC of $1,060/oz during the three
is planned for the months to September 30. Operational
rest of the Decem- cash flow was $169.3 million and net
ber quarter and the mine cash flow was $111.4 million.
results will be incor-
porated into a re- Klein used the quarterly call to spruik
source update early the benefits of his company’s economic
next year. interest in Glencore’s Ernest Henry cop-
per-gold operation.
“These results
clearly demonstrate “Had we owned the interest for the 12
the scale and quali- months to June 2016, it would have de-
ty of the mineralised livered 88,000oz at an AISC of negative
system at Cowal,” $59/oz and produced net mine cash flow
Klein said. “It is rare of $142 million,” he said.
to have the opportu-
“The current mine life is 11 years,
which we are optimistic can be extended,
but it will also be light on capital intensity
and therefore a very good cash genera-
tor for our business.”

However, Evolution has launched a
technical and operational review of its
Edna May mine in Western Australia af-
ter a poor September quarter. While out-
put was up 11.8%, the company stated
the ASIC of $1,472/oz was “unacceptably
high”.

“We’re going to go out and look at
operational improvements that can be
made over the next few months and then
deliver that to the board, either late this
year or early next year,” Klein said. “We
think the operational performance of
Edna May can be improved materially.”

– Michael Washbourne

PAGE 6 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

BUSH TELEGRAPH

Calls for Zuma to be ousted

Finally – at long, long, last “Business is present in every
– the South African mining
industry has decided to stand home in our country in one way
up and be counted publicly in
the struggle between economic or another, yet it is a missing
and social common sense and
the increasingly unacceptable voice in meaningful discourse
policies and actions of the ruling
ANC, in particular President Ja- on the most important issue of
cob Zuma.
the day.”
The turning point came in ear-
ly October at the Joburg Indaba That speech on its own was
– a mining conference held in
Johannesburg annually and or- sufficient to justify attending the
ganised by Bernard Swanepoel
– the former chief executive of conference but it was followed
Harmony Gold Mining Co Ltd.
immediately by a second kick
At that conference AngloGold
Ashanti Ltd chairman Sipho Pit- in the teeth for the Government
yana launched an all-out attack
on President Zuma, calling for – this time from former Finance
his immediate departure from
office and describing him as a man “who Minister Trevor Manuel, who no
cannot be trusted”.
longer holds a post in the ANC
Pityana delivered his attack on Zuma
despite being warned from the podium cabinet.
by the speaker ahead of him – Deputy
Minister of Mineral Resources Godfrey It became clear that Manuel
Oliphant – to tone down his comments.
was speaking out in a classic
In response, Pityana stated flatly: “I
have been asked to behave myself but, case of NIMBY (not in my back-
sorry Deputy Minister, Zuma must go for
the sake of the country. The elephant in yard) over a phosphate mine
the room is a president who lacks integri-
ty; the elephant in the room is a president South Africa’s mining sector is fed up with unacceptable being developed in the West-
who is without honour.” policies introduced by the ruling ANC party ern Cape where he lives but
his attack on the Department of
Such determined action from the coun-
try’s business sector has been absent for what they rightly saw as the South Afri- Mineral Resources (DMR) was still com-
a long time because, until very recently,
South African mining executives were can industry’s supine posture in a busi- pletely relevant because it highlighted
not prepared to challenge the ruling po-
litical party publicly, preferring instead to ness situation which – at best – was the opaque decision-making process
try and negotiate quietly behind closed
doors. complex and uncertain and – at worst – being followed in the granting of mining

While executives complained frequent- was downright hostile. permits.
ly to journalists about the widespread
corruption, inefficiency and general non- Pityana pulled no punches when he He cited “inconsistent application of
sensical regulations they had to deal with
in attempting to get mining permits they finally let fly. He described South Africa regulations” by the DMR with specific ref-
did so “off the record”. Virtually none of
them was prepared to do so on the re- as a country in crisis on several fronts, erence to the Elandsfontein phosphate
cord because of concerns about govern-
ment backlash against their businesses. of which the most pressing was the high mine on the southern edge of the Lange-

That policy of “quiet diplomacy” did level of corruption in government and baan Lagoon, which is about 120km
not work. The mining industry’s silence
allowed government to dominate the do- state enterprises which was now on such north of Cape Town.
mestic debate on such issues as nation-
alisation, black economic empowerment a scale it was being referring to as “state Describing the entire ecosystem
and social licence to operate.
capture”. around Langebaan Lagoon as “environ-
At the same time, foreign investors
became increasingly disenchanted with He described Zuma as “a president mentally sensitive”, Manuel asked: “How

who at best is missing in action and, at was it granted a permit to operate when

worst, he is a leader at the very root of there’s no water licence agreement for

this crisis – one who has abrogated his that mine in that place?

constitutional duties” as well as “a presi- “How do these things happen? What

dent who literally laughs off any sugges- are we to assume about the way in which

tion that government be held to a higher decisions are taken? So, I want to turn

standard – and, is, in fact, the sponsor in to the Department of Mineral Resources

chief of corruption”. and say – you have got to clean up your

Pityana was also critical about the act.

policy of silence on key national issues “You absolutely have to clean up your

such as corruption, which had been fol- act because you cannot deal with the

lowed to date by much of the business absence of policy and depend on the fa-

community. vours accorded by the Minister or the DG

He commented: “We are at a water- (director general) or the regional director.

shed moment for our young democracy. “We must turn to the department as

Many in our leadership – most notably representatives of government; as key

our president – have an agenda that ap- custodians of our environmental re-

pears – to me at least – to be entirely at sources and say – you cannot conduct

odds with addressing the increasingly yourself in this way – because you may

desperate needs of our country. be enriching a few but you are destroying

“It cannot be business as usual. We the industry and livelihood of too many

need to wake up to what our young stu- people. “

dents sense already which is that the Brendan Ryan is a Johannesburg-based

business community has a vital role to mining writer
play in saving South Africa.

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 7

NEWS

Forward looking clarity
to come

The ASX hopes to provide min- there should be no confusion on
ing and resources companies what information competent per-

with clarity around forward looking sons within a company should

statements by issuing an interim be providing to market, and while

guide for reporting standards. there are some finer nuances

Interim guidance was being around IS214, the reporting pro-

prepared by ASIC and ASX at the cess should be pretty straightfor-

time of print, with the Association ward, according to Bennison.

of Mining and Exploration Com- The interim guidance is expect-

panies (AMEC), JORC and the ed to hold everything in balance

VALMIN Committee playing key until a working group is formed to

roles in the revised guidance. construct the framework for possi-

AMEC chief executive Simon ble future listing rules.
Bennison told Paydirt the interim
Bennison said the engagement

guidance would be different in process with ASIC and ASX had

description to what appears in In- been fruitful and he urged com-

formation Sheet 214 Mining and panies to double-check scoping

Resources: Forward looking state- documents to ensure they com-

ments (INFO 214 or IS214). plied with IS214 and the interim

Bennison said he hoped mining guidance.

companies would have better di- “It has just taken a long time and

rection on what could and couldn’t we have tried to argue our case as

be included in scoping studies in to what is acceptable and doable

order to attracting project financ- Simon Bennison for the industry and what is not,”

ing. he said.

“It is really going to be trial and error, ask for assistance from other political “The early expectations out of ASIC

with companies using the ASX guidance quarters. from IS214 were just not doable. But, if

which has also got a checklist – quite an “At the moment we are saying: ‘Right, we can adopt ASIC guidance we will road

extensive one – to make sure they tick off we have got this rebadged IS214, it test that and just see how the regulators

on a variety of aspects that have come doesn’t solve all our problems, but we and markets respond. Frankly, I don’t

up through IS214 and run with it,’ Ben- have got ASX putting out an interim guid- think shareholders have a concern with

nison said. ance which should address the prob- this. Their concern is that it has taken so

“If we start having the same problems lems’. Only time will tell as we run the long that they just want to make sure that

we did previously with ASIC and effec- gauntlet so to speak and companies sub- anything material held by the company

tively instructing the ASX to publish re- mit their scoping docs and we see how is out in the market place. Companies

traction notices and so forth, we are go- they get by ASX and ASIC.” have been too unsure on what material

ing to have to go back to square one and By thoroughly following the checklist to release in case they are whacked with

a retraction notice or whatever.”

Bennison said the new guidelines

Matters clarified in revised INFO 214 could work if they were “sensibly, prag-
matically and consistently interpreted

• Forward looking statements have always under law been required to be based on and applied by ASX and ASIC”.

reasonable grounds, and INFO 214 does not change this position; Conjecture around forward looking

• Production targets and forecast financial information can be published even if statements has not made it any easier
secured funding is not in place – but a company still needs to be able to demonstrate for mining companies to raise money
“reasonable grounds” that it could obtain the requisite project finance as and when amid a difficult financial environment.
required; Therefore, it is critically important that
companies are able to inform investors

• Production targets and forecast financial information can be published, based not across all sectors of the market of all ma-
only on ore reserves but also on mineral resource estimates – provided they have terial matters in a responsible manner,
“reasonable grounds” for that estimated mineralisation, and each of the JORC Code Bennison said.

modifying factors; and – Mark Andrews

• A company that does not have reasonable grounds for forward-looking statements
and therefore cannot make statements of this kind should still disclose reliable and
relevant information of a technical nature (for example, from scoping studies) to
ensure the market is properly informed of the company’s prospects.

PAGE 8 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

BHP Billiton boss’ view on Brexit

The head of major miner BHP Billi- when doing business with the EU.
ton Ltd says what Britain needs is
a “hard-headed Brexit”, which would “One big risk is trade relations with
maintain trade relations with the Eu-
ropean Union and place the focus on our biggest partner. To call that ‘soft’
minimising bureaucracy as much as on
keeping tariffs low. is crazy. Let’s be sensible, pragmatic.

In the run-up to the June 23 referen- What people call ‘soft’, I call ‘hard-
dum, when the British public voted to
leave the European Union, BHP Billi- headed’,” he said, adding that he cared
ton chief executive Andrew Mackenzie
was among the company bosses who about limiting bureaucracy as much as
spoke out in favour of staying in, warn-
ing that Brexit could inflict a decade of ensuring low tariffs.
damaging uncertainty on business.
BHP Billiton and other miners,
Last month, he told Reuters his con-
cern was that the terms “hard” and whose earnings are mostly in dollars
“soft” Brexit, being used in the political
debate, were sending the wrong mes- and whose operations are primarily
sage.
outside the EU, have been relatively
The term “hard” refers to a Brexit in
which Britain, unable to secure a deal in unscathed by the June vote, although
which it would retain a high level of ac-
cess to the EU single market while at the many of them have said any loss of
same time restricting immigration from
economic confidence could damage

them.

So far the share prices of miners

have risen since June as some in-

vestors treat the sector as a hedge

Andrew Mackenzie against the fall in the value of sterling,

triggered by concerns about economic

the EU, would sever preferential trade weakness and uncertainty over Britain’s

terms with the world’s biggest trading negotiations.

bloc. – Barbara Lewis, Reuters
This would leave Britain facing tariffs

SolGold prefers Newcrest

Not many small exploration com- vote on whether to approve the New-
panies would knock back a
multi-million dollar financing offer by crest and Maxit offers.
BHP Billiton Ltd, the world’s biggest
mining company, but Nick Mather, “Barring the arrival of supe-
managing director of Ecuador-fo-
cused SolGold plc said he has bet- rior offer, we will be approving the
ter offers.
Newcrest and Maxit transactions,”
Interest in Solgold’s Cascabel
copper and gold project has already Mather said. “Newcrest and Maxit
led to a $33 million deal with invest-
ment bank Maxit and Australian understand what we want.”
gold miner Newcrest Mining Ltd.
Major mining companies are
“BHP certainly wants the asset,”
Mather told Reuters. spending big to find more copper.

“But it’s not what we are looking Copper is the most sought-after in-
for.”
dustrial metal, as existing mines age
BHP Billiton offered $30 million,
or 22c/share, for a 10% stake in Sol- and new ones are found in increas-
Gold, which SolGold rejected.
ingly difficult locations.
The offer included an additional $275
million proposal, linked with acquiring a Rio Tinto in the past year has un-
much larger stake in the unit managing
the Cascabel project, Exploraciones No- dertaken a $5.3 billion expansion of
vomining (ENSA).
the Oyu Tolgoi copper mine. Anglo
“The deal BHP was offering was very
inadequate because we would lose 70% American plc has designated copper
of the upside,” Mather said.
Nick Mather as only one of three commodities
SolGold holds 85% of ENSA, and
11% of Cornerstone Capital Resources, where it sees a future for the com-

which owns the remaining 15% of ENSA. pany.

Based on early exploration work, SolGold marked BHP Billiton’s first at-

Mather believes SolGold may have made tempt to boost its copper assets via an

a major new high-grade copper and gold acquisition since managing director An-

find to rival some of the largest existing drew Mackenzie unveiled a corporate

mines, such as Grasberg in Indonesia, shift in growth strategy this year away

controlled by Freeport McMoran Inc, and from iron ore mining, with a focus on cop-

Oyu Tolgoi in Mongolia, controlled by Rio per and oil.

Tinto Ltd. – James Regan, Reuters
BHP Billiton’s attempt to take control of

SolGold came ahead of a shareholders’

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 9

BOOK REVIEW

The rush of gold

Some geologists find field- Anybody who has even the remotest mentally I was not well suited
work an inconvenience to sense of small-scale mining will recog- to this particular discipline.
be endured before securing nise many of the challenges Richards’ My impetuous approach did
the cushier role of the desk- subsequently encountered including not yield results with detect-
bound geologist, when the in- life-threatening situations while diving ing where the patient and
tense weather, flies, bad food among the riverbed gravels, equipment assiduous prospector was
and loneliness of remote breakdowns, lack of food and logistics the better man.”
exploration gives way to air- failures.
conditioned offices and long Richards decided to head
lunches. Jim Richards’ auto- But, having chosen the most remote to Australia’s mining capital
biographical account of his location possible, Richards was able to – Perth – in the early 90s.
life in the world of exploration make some decent finds and ended up After a job hunt through the
and mining is proof he is of a making a small, but not life-changing Yellow Pages that a millen-
very different hue. profit from the venture. nial geologist would strug-
gle to understand, he finally
Richards’ book, Gold Only some of his gold lust quenched, landed a job in Meekatharra
Rush: How I Made, Lost and Richards moved to Australia but soon with St Barbara Mines.
Made a Fortune, recounts found that while adventurous spirit and
his journey from a childhood derring-do were valuable assets in Richards’ recounting of
spent in rural Wales to active Guyana’s rivers of gold, they were not the life of the on-site geolo-
service in Northern Ireland so compatible with gold prospecting in gist is good fun and neatly
and onto myriad jobs in the western Queensland. encapsulates the enjoyment
mining and exploration sec- and frustrations which come
tors on three continents. “The metal detecting was again fruit- from being part of an iso-
less, and I was realising that tempera- lated, male-dominated com-
Richards’ course wasn’t munity where the after work
that of the typical exploration drink is the most important
geologist. He didn’t move moment of the day and the
straight from university to a lack of female companion-
graduate geologist position ship is glaring.
on completion of his studies.
Instead, his thirst for adven- On his arrival in
ture and the romance of the Meekatharra he was greet-
19th Century gold rushes led ed with a baffling welcome:
him to embark on an indi- “‘G’day mate, Grahame’s the
vidual quest to make his own name. Drop your stuff in your
gold discovery. donga and come over to the
wettie to drink some piss.’ I
The only problem was had absolutely no idea what
he had little idea of how to he was talking about, but he
achieve that aim other than seemed genuine.”
identifying Central and South
America as prospective destinations. During his time in
Meekatharra, Richards was involved in
Having found his way to Guyana, Rich- the high-grade Great Northern Highway
ards somewhat fortuitously landed him- deposit and despite learning plenty dur-
self a job with Golden Star Resources ing his stint with the company it is appar-
Ltd but he soon realised six weeks in iso- ent from his retelling that he hankered to
lated jungle exploration camps was not be in a position for such discoveries to
for him. Instead, he wanted to get more change his circumstances, not just win
remote! him the respect of his superiors.

He wasn’t even that interested in cor- “I had been in Meeka for nine months
porate exploration work, he wanted to and had learned a lot about the industry,
get in on the gold mining action itself. He but was not really progressing my aim of
resigned from his position with Golden having my own operation… I spent much
Star and set about trying to achieve his of my spare time looking at trade journals
dream. and newspapers, dreaming about how I
could get myself into the position of the
“I finally finished up with Golden Star major shareholders and directors of one
and walked out of the Georgetown of- of the exploration and mining companies
fice, my own man once more,” Rich- I was reading about.
ards writes in the book. “I had saved up
enough of my salary to set up my own “I thought about pegging some gold
dredging operation, and I also felt I had leases myself, raising money to drill them
gained enough technical knowledge to and finding a resource upon which to
have a chance of success.” float a company on the stock market, but

PAGE 10 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

there appeared to be too many obstacles I was the deserving victim of my own arse gold prospector who’d started out

in the way, not least of which was the greed-inspired brain meltdown. So much with nothing in Guyana. Even so, I had

amount of money it would require, and I for diversification!” traded one type of hazardous jungle for

had virtually none.” After struggling during the subsequent another. I was now entering the volatile

His next job, greenfields mapping and downturn, Richards headed to the world world of the Perth junior mining scene…”

“sampling work for Newmont Mining Corp of oil and gas exploration but having at- It was an environment which would

in Laos, did bring Richards eventually net Richards the

the gold rush discovery he discovery and the fortune

desired. But, with his role as Not a bad achievement for a he craved; it just happened
employee of a multinational busted-arse gold prospector to be in iron ore rather than
miner to consider and lo- diamonds or gold.

cal villagers intent on mak- who’d started out with nothing in Richards’ account is an
ing the most of the find, he Guyana. Even so, I had traded one engaging read and a re-
never had the opportunity to minder of the lengths some

claim it. type of hazardous jungle for another. are prepared to go in pursuit
The Laotian discovery had I was now entering the volatile world of geological dreams and/
or gold lust. It also proves
been small but real, however

Richards’ next big gamble of the Perth junior mining scene... those with a willingness to
turned out to be the oppo- continue their journey will

site. Having travelled to In- eventually stumble on some-

donesia in the mid-90s after tended a conference in Perth in 2003 thing worth looking for.
the Busang discovery by Canadian com- – Paydirt’s own World Diamond Con- Gold Rush: How I Made, Lost and
pany BRE-X, Richards decided to invest ference – he changed tack once again Made a Fortune by Jim Richards is
the money he saved in some of the Indo- and pegged some diamond-prospective available through Fremantle Press or
nesian-focused juniors who were follow- any good bookshop

ing in BRE-X’s wake. When the BRE-X ground south of the Ellendale diamond

discovery was revealed as fraudulent, mine in Western Australia.

the bottom fell out of the Indonesian gold That ground was eventually put into a

boom and Richards’ $200,000 invest- $10 million float in 2004 with Richards as

ments with it. chief executive.

“My personal savings were destroyed. “Not a bad achievement for a busted-

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AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 11

NEWS

Cobalt restores Dragon’s fire

Dragon Energy Ltd is ture, it’s going to improve
banking on cobalt our modelling efforts and

becoming the next niche compliance with JORC

metal to run hot on the regulations.”

commodities market. In the meantime, King

Stockbroking and will also endeavour to

wealth management further educate himself

firm Morgans introduced about cobalt’s role in the

Dragon – a junior ex- burgeoning battery mar-

plorer with dormant iron ket.

ore projects – to the Ta- One thing that has be-

bac cobalt-gold project in come clear to King since

August and the company taking on the top job at

immediately pounced on Dragon is that the current

the available asset, about supply of cobalt does not

30km west of Wiluna. factor in the expected fu-

Dragon’s acquisition ture demand for electric

of Tabac comes as co- vehicles.

balt prices edge closer “It’s no surprise guys

to $US13/lb and research like Elon Musk and War-

groups such as CRU ren Buffet have exten-

forecast demand for the sively invested in electric

metal to exceed 100,000t Only two holes have been drilled into Dragon Energy’s new Tabac vehicle technology, in
as early as next year. cobalt-gold project, about 30km west of Wiluna particular battery tech-
nology, because they
Cobalt is the preferred

cathode in lithium-ion batteries and neighbouring ground. recognise the significance of the lithium-

prices are tipped to rise sharply for at No exploration has been carried out cobalt battery,” King said.

least the next decade to match the grow- on the project, adjacent to the former “Elon Musk is making 500,000 electric

ing demand for the anodes; lithium and Magellan lead mine, since its initial dis- vehicles from this point on. He could lit-

graphite. covery in 1983 when drilling returned en- erally consume all of the world’s lithium

Some 94% of global cobalt supply is a ticing intercepts of 80m @ 0.77% cobalt supply and if he’s consuming all of the

by-product of nickel and copper produc- (including 10m @ 1.47% cobalt and 40m world’s lithium supply, he could also

tion, however, depressed base metals @ 0.73 g/t gold) from 170m and 30m @ consume all of the world’s cobalt supply,

prices in recent years has led to a drop 0.3% cobalt (including 10m @ 0.86 g/t considering you need essentially equiva-

in cobalt output. gold) from 358m. Both holes – 7.3km lent amounts of cobalt to lithium in the

About 65% of the world’s cobalt is also apart – end in mineralisation. battery. And then you’ve got two other

sourced from the DRC where question- Dragon is hopeful of being granted the players looking to do the same.

able labour and environmental practices two exploration licences which make up “Warren Buffet and Elon Musk have

have recently become the focus of inter- the project sometime this month in a bid both said, primarily based on ethical

national scrutiny. to start drilling at Tabac before the end of reasons, they’re not prepared to buy

““We really do see a crunch coming – the year or in early 2017. any product out of the DRC. For those

a substantial crunch – it’s reasons, I think there is

a matter of when, not if,” definitely an opportunity for

Dragon managing director If you look across the ASX, there an Australian-focused co-
Jonathan King told Pay- are only a handful of cobalt- balt explorer, especially for
dirt. someone with a big, high-

“If you look across the exposed companies and none of them grade deposit like what we
ASX, there are only a really have what we potentially have. have potentially. The scale of

handful of cobalt-exposed this thing is enormous.”

companies and none of Dragon is looking to divest

them really have what we its Pilbara iron ore projects

potentially have. We really liked the idea King said his company would complete as it shifts the focus to Tabac and, poten-

of having a cobalt-focused company, some non-invasive work on the project tially, other cobalt-related assets.

based in Western Australia, listed on the until the necessary exploration permits “We really are setting ourselves up to

ASX and rebadged to appeal to Austral- are granted. be a cobalt player, so if we are to broaden

ian investors.” “We’re going to do some geophysics, our horizon we will remain in that com-

King’s appointment coincided with probably some shallow seismic, looking modity space, whether it be cobalt-nickel

Dragon’s acquisition of Tabac in Septem- at the contrast between the overlying or cobalt-lithium-copper,” King said.

ber. An experienced geologist, he is fa- shale and the carbonate unit,” he said. – Michael Washbourne
miliar with the project, having previously “If we can prove categorically the drill-

explored for gold and base metals on ing links directly to a geophysical signa-

PAGE 12 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Scandium’s lightweight
presence entices AUZ

Australian Mines Ltd is the payment of $250,000 before
latest junior to secure ac- earning 50% by funding and

cess to material deemed to be completing a DFS and a fur-

the future of vehicle technol- ther 25% by securing funding

ogy but unlike its lithium-ob- for project development.

sessed peers, it is focusing on At Flemington – near Fifield,

the outside, rather than inside 450km east of Sydney – Aus-

of the car. tralian Mines plans to release

In October, the company a scoping study on the 3.14mt

announced it had reached @ 434 ppm resources in the

agreement to acquire interests first quarter of 2017.

in two scandium projects on “It is one of the highest

Australia’s Eastern seaboard. grade scandium deposits in

Scandium is increasingly the world and is the northern

sought-after in the automo- extension of CleanTeQ [Ltd]’s

tive industry as manufacturers Syerston orebody,” Bell said. “

look to produce lighter vehi- CleanTeQ, a company

cles while retaining the same backed by well-known Cana-

power-to-weight performance. dian mining magnate Robert

Combined with aluminium in Friedland, announced a posi-

an alloy, 1kg of scandium has Scandium demand is on the rise thanks to the increasing adoption tive PFS for the Syerston nick-
the ability to deliver a weight of lightweight aluminium-scandium alloys in the global automotive el-cobalt-scandium deposit in
saving of 200kg and, unique August. The area is also host
among aluminium alloys, it is and aerospace sectors to another scandium develop-

able to be welded like conventional steel. market you need to get the best projects ment, Platina Resources Ltd’s Owendale

According to Australian Mines man- out there and from there you can dictate PGM-scandium-nickel project which is

aging director Benjamin Bell, the big- terms; that is what we have done. The set to move into feasibility study this year.

gest obstacle to wider adoption of the typical scandium mine has a head grade Both companies have raised money to

aluminium-scandium alloy is availability of 70 ppm but Flemington has a grade support their feasibility work and Bell is

of material. of 434 ppm and Sconi has 177 ppm. So, confident Australian Mines will be able to

“A lot of the major car manufacturers payback will be shorter and there will do the same.

are looking at scandium as a replace- be less input costs. That means when it “Over the last 12-18 months there has

ment material and indeed Russia has comes to selling we can undercut others been money flowing back into resourc-

been using aluminium-scandium alloys and dictate the market.” es,” he said. “We have got enough cash

in their aircraft for decades,” Bell told Sconi – near the mining centre of to get through to the end of 2016 but will
Paydirt. “But to date, scandium has al- Greenvale, 250km east of Townsville – is have to raise funds next year. We have

ways been a by-product of nickel mining the more advanced of the two assets fol- not determined how yet but will do in the

so nobody can guarantee supply and lowing completion of a PFS for the 7.2mt next few months.”

that has been holding its use back.” @ 177 g/t scandium project by Metallica A week after the acquisition announce-

However, by securing two primary Minerals Ltd in March 2013 and granting ment, the company released details

scandium deposits, Bell believes Austral- of a mining lease in May 2014. of an entitlement offer which netted it

ian Mines can place itself at the centre of “The PFS showed a $60 million pa $840,000, almost doubling its cash posi-

an expanding scandium market. profit on 50 tpa production,” Bell said. “It tion.

“Given the projected growth demand has been taken to the pilot stage and our Bell said he had been pleased by the

[some estimates put scandium demand job is to make sure it scales up. We have level of interest shown in the acquisi-

growth of 800% over the next decade] started the two-year DFS and aim to be tions, with the Australian Mines share

we began looking at projects which were in production by 2020.” price jumping 54% on the day of the an-

primary scandium deposits and ask how Bell said scandium processing was nouncement.

we could optimise them on the back of similar to traditional nickel laterite and “Shareholders have certainly shown

scandium demand. If we can do that, it cobalt processing, with the only changes an appetite for the project but we do ex-

will put us way ahead of everyone else.” coming at the back-end of the plant. pect a period of education,” he said.

The strategy led, in October, to deals to “Through a typical nickel-cobalt plant – Dominic Piper
acquire interests in the Flemington scan- you get scandium purity of 97%. We just

dium project in New South Wales and the have to finetune that to get 99.99% pu-

Sconi scandium project in Queensland. rity.”

“The projects were cheap and avail- Under the terms of the JV earn-in,

able,” Bell said. “If you are going into a Australian Mines will make an upfront

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 13

NEWS

Price is right for Intermin’s Teal

Intermin Resources Ltd things are “hotting up” in
is set to deliver first gold
from its Teal project next the region once again and
month.
believes several juniors,
The company’s board
last month approved the including Intermin, could
$3.9 million Stage 1 devel-
opment of Teal, about 12km soon find themselves in
north-west of Kalgoorlie, in
conjunction with RM Con- play.
tracting.
“I can see the next 12
Based on a gold price of
$1,665/oz, Teal Stage 1 is months being pretty active
forecast to generate $9.3
million in free cash flow for in the M&A space because
Intermin in FY2017.
there are so many of us
Production from Teal
Stage 1 is expected to be junior explorers and small-
15,567oz at an average
88% gold recovery for an er developers that really
all-in cost of $905/oz over
its nine-month mine life. should be thinking about

RM Contracting will conduct mining coming together and build-
operations and fund half of the develop-
ment capex for 25% of the project’s free ing a new mid-tier because
cash flow after Intermin recovers $2.15
million in exploration costs. that’s what is needed out

Intermin will manage all geology, haul- there,” Price said.
age and ore processing activities and
has a toll treatment agreement with Nor- “Attracting funds is still
ton Gold Fields Ltd’s Paddington mill,
about 22km from Teal via a private haul quite difficult at the junior
road.
end, but as you grow and
With all of the required approvals now
in place, Intermin managing director Jon Mining activities have begun at Intermin’s Teal gold project build critical mass and be-
Price told Paydirt the
timing was right to start come a little bit more rel-
developing the most ad-
vanced project in his com- However, it will be nothing new for Price evant, attracting investment becomes
pany’s portfolio.
and his team. significantly easier.”
“We did a bit of extra
drilling to de-risk the pro- Price was previously general manager Intermin has already moved to team
ject as best we could and
the mining alliance [with of the Paddington and St Ives gold op- with other Goldfields players, recently
RM Contracting] was
something we felt was erations before founding Phoenix Gold in forming a JV with the Michael Fotios-
quite innovative to de-risk
the project as well from a 2010 and putting together an attractive chaired Eastern Goldfields Ltd.
capital development point
of view,” Price said. package of tenements along the Zuleika Eastern Goldfields will inject up to $7

“A lot of work has gone and Kunanalling shears. million, including $5.5 million on explora-
into getting it ready and obviously operat-
ing costs have come down a lot over the Phoenix pushed the Castle Hill project tion and development work, to earn 65%
last year or so and the Aussie dollar gold
price is in pretty good shape. We think into development in 2014 before the com- of Intermin’s Menzies and Goongarrie
it’s the right time and we’re pretty excited
about it.” pany was subjected to a bidding war the projects as well as claim an 8% stake of

Teal will be the first mine to be devel- following year and ultimately acquired by Price’s company.
oped by Intermin, which assumed 100%
control of the project in 2012 when Bar- Evolution Mining Ltd. Intermin also has provisional access to
rick Gold Corp opted out of a stalled JV.
Price, who joined Inter- the 1.2 mtpa Davyhurst mill, currently be-

min in January, can see ing recommissioned for toll treatment of

similarities between Phoe- Goongarrie ore.

nix and his new company “Eastern Goldfields is committing to a

and said his team’s expe- significant expenditure – more than we

rience and connections in can afford to spend – on an area that re-

the region were a boon for ally hasn’t had a lot of modern explora-

shareholders. tion on it,” Price said.

“We’ve all spent a lot of “What this can lead to is working to-

time up in the Goldfields gether on a milling solution in the Men-

and we know it very, very zies region that can service both of our

well,” he said. assets.”

“We like to stick to our At the time of print, Intermin kicked off

Jon Price knitting and Teal is going a 12,000m resource drilling programme
to be a great start for us. at Teal to test multiple high-grade oxide

Hopefully we can build a and primary gold targets down to a maxi-

pipeline of projects after Teal Stage 1, mum depth of 350m.

but first we need to execute on Teal and Previous intercepts to follow up include

demonstrate that it will deliver the grade 10m @ 7.55 g/t gold from 66m, 3m @

and cash we have predicted and then 14.08 g/t from 73m, 5m @ 17.8 g/t from

move on to projects two, three and four, 269m, 5m @ 29.1 g/t from 102m and

acquire as much ground as we can on 25m @ 4.22 g/t from 128m.

the major shear zones and start looking Drilling funds will be partially sourced

for that next big discovery.” from a recent placement and SPP which

Having spent most of his career netted the company more than $5 million.

working in the Goldfields, Price senses – Michael Washbourne

PAGE 14 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Aus Tin jumps on tin and cobalt

There are very few listed tin mining eyeing an 800m target.
companies in the world and with
prices for the metal edging towards A 600m RC drilling programme
$US20,000/t, it is shaping as a good
sector to be in at the moment. targeting down-dip extensions of his-

Having started production at the toric workings was in progress at the
Granville mine in Tasmania in Au-
gust, Aus Tin Mining Ltd joined Met- time of print.
als X Ltd as one of only two tin pro-
ducers on the ASX – a fact not lost in Records accessed by Aus Tin
the market.
show rock chip samples of 1.66%
Although coming from a low base,
Aus Tin’s share price more than dou- cobalt and 0.67% nickel, while data
bled when Granville was brought on
stream. from the Smith mine report revealed

Despite the attention garnered, a lode 7m in true width to a depth of
Granville is just the starter piece of
Aus Tin’s greater puzzle, which in- 25m at 7.5% cobalt, 2.5% nickel and
cludes the highly prospective Mt Co-
balt project in Queensland. 18% manganese.

For the moment, Granville will de- “The share market has been a
liver cash for Aus Tin to use at Mt
Cobalt and what chief executive Pe- barometer for us and reality is that
ter Williams considers to be the com-
pany’s flagship; the Taronga tin play when we announced the cobalt, the
in New South Wales.
stock appreciated – it basically dou-
“What we have said to the market is
that we will be producing around 550 bled on some pretty good volumes
tpa of tin concentrate [from Granville]
and we have also said that we are tar- and we have seen a lot of those in-
geting second quartile cash costs. If you
go to a curve you will see that cash cost vestors stick around,” Williams said.
is around $US10-12,000/t, so at current
prices that is a margin conservatively of “When we announced the com-
$US8,000t, ball park numbers $US4-5
million in operating cash flow,” Williams mencement of production at Gran-
told Paydirt.
ville, we saw again an impressive
“Granville is not about cash flow, it is
about generating cash to fund our other First dispatch of tin concentrate under the Traxy’s uptick. On the back of the cobalt [an-
projects. There are a whole a lot of an- off-take agreement was expected last month nouncements] and production news,
cillary benefits as well. We are learning our share price went over 2c/share.
every day on how to improve our tin op-
erations at Granville and we’d anticipate “There is a significant amount of work We are about 1.2-1.3c/share and I think
that there will be lessons learned down at
Granville that we can apply at Taronga.” that needs to be done. We have done a the market is now waiting to see what

The resource at Taronga is 57,000t huge amount already but there is still a happens at Mt Cobalt and Granville.”
contained tin, 28,000t copper and 4.4
moz silver. fair amount to do.” – Mark Andrews
In addition to tin at Taronga, lithium
Aus Tin has proposed a trial mine and
pilot operation to produce 340,000t to mineralisation has been
demonstrate the type of premium grade
concentrate which can be extracted from identified in the area and at
Taronga.
the nearby Torrington pack-
Aus Tin has started the approvals
process for the Taronga pilot operation age.
which is set to cost $2.5 million, with the
opportunity to leverage from equipment Williams said the company
used at Granville, Williams said.
was far from declaring being
“We still need to go through the ap-
provals process in NSW, particularly as a lithium player, however, the
it is a greenfields operation,” he said.
geology at Taronga and Tor-

rington in the New England

region compared with prov-

en hotspots at Wodgina and

Greenbushes in Western

Australia.

For now, lithium sits a few

rungs below Aus Tin’s high-

est priorities, which is beef-

ing up production at Gran-

ville and studies at Taronga,

while exploration at Mt Co-

balt, west of Gympie, will

be keenly watched by the

market.

Cobalt prices continue to

rise this year and at time of

print was trading at about

$28,000/t, due to concerns

about the sustainability of

supply from the DRC.

Historic grades mined at

Mt Cobalt were in the vicinity
of 7.5% cobalt, with Aus Tin Mt Cobalt in Queensland has attracted market attention

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 15

NEWS

Location, location, location
for Great Boulder

New float Great Boulder Re- “There are four or five discrete
sources Ltd is assuaging the pockets of high-grade mineralisa-

usual explorer IPO model in fa- tion already identified,” he said.

vour of defining a clear and quick “Basically, we have got mineralised

path to production. stacked shear zones and where

While the portfolios of newly list- the cross-cut comes in you get the

ed companies usually comprise a high-grade shoots.

suite of earlier stage exploration “We will do some pattern drill-

assets capable of giving investors ing around the shoots and get the

the “ten bagger” return they hope orientation and once that is sorted

for, Great Boulder is focused on we can follow along the 300m-plus

taking advantage of gold’s current strike.”

standing and heading straight for The company has a 3,500-

production. In an effort to achieve 4,000m drilling programme planned

this, it has acquired a number of for this month on the northern part

smaller projects in prolific gold of the project and will then move to

mining regions around Western the more thinly explored southern

Australia’s Eastern Goldfields. portion in 2017.

“It is probably not a traditional If this early work proves fruitful,

approach,” Great Boulder man- Great Boulder plans to use the

aging director Stefan Murphy told area’s abundant infrastructure op-
Paydirt. “This is not just about
tions to press ahead with develop-

exploration or even development ment.

but commercialisation of these “The project is on the Bulong

assets. We like the idea of hav- road and there is a power line close

ing opportunity to bring some- by which makes it much cheaper

thing into production sooner in a and much quicker to develop,” Mur-

manner which doesn’t dilute our phy said. “Plus, within a 25-50km

shareholders by forcing us to go radius there are six mills with spare

back to the market.” capacity. It has got all the ingredi-

Having raised $6.1 million at ents to make the most of the pre-

IPO, the first application of the vailing gold price.”

quick-to-production strategy will The presence of so many mills

be at the company’s Balagundi Great Boulder listed last month on the back of a portfolio in the region means Great Boulder
gold project, 20km east of the of well-located, long neglected gold assets will not be tied to only developing a

Kalgoorlie Super Pit. standalone discovery.

Great Boulder can earn a 75% inter- from 99m downhole and 12m @ 15.2 g/t “Unless we find something very large

est in Balagundi by spending $1 million from 36m but the area remains underex- it doesn’t make sense to throw more mill

on exploration over a five-year period. plored, according to Murphy. capacity into the area. Our focus is on

However, Murphy thinks the company “The 2009 drilling did get onto some- identifying high-grade opportunities of

will satisfy the terms over a much shorter thing and there several historic gold around 5-8 g/t gold which can be mined
“mines around the project area,” he said.
period. at around 250,000 tpa,” Murphy said.
“We expect to be making a de-
In Broadwood – on the western
velopment decision on Balagun-
di within 18 months. In an ideal We expect to be making side of the Kalgoorlie township –
world, it would be in production Great Boulder has a project even
within two years,” he said.
a development decision more underexplored than Bala-
It is both Balagundi’s location on Balagundi within 18 months. gundi.

The project is situated between

in the heart of the Eastern Gold- In an ideal world, it would be in the Super Pit and the 1.9 moz
fields and the remaining poten- Binduli mining centre and has

tial of the area which has Great production within two years. the evidence of the same north-
Boulder committed to the ag- east trending fault sets which

gressive development plan. are the controlling structures for

The project has been in private hands Geochemical work has identified four both nearby deposits. Great Boulder –

for nearly 30 years. The last major drilling arsenic-gold trends which highlight the which will earn 75% in a JV by spend-

campaign in 2009 returned hits of 24m @ main mineralised trends. Murphy said ing $500,000 over five years – will tar-

19.1 g/t gold from surface, 4m @ 40.4 g/t these would be of initial drilling interest. get these structures with drilling once a

PAGE 16 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

geochemical programme is com- Balagundi is just 20km from the Super Pit
pleted there.
“So, we know there is a hydrothermal Ltd’s Melanie Leighton (non-executive di-
The company also plans to un-
dertake drilling at the northern footprint and we have got the right geolo- rector) and Christian Easterday (advisor;
end of the Eastern Goldfields at
its Jundee South project. gy and picked up 5.14 g/t gold at surface. corporate and strategy) are also actively

Located 10km from the Jundee We’ll do auger drilling and multi-element involved with the company.
gold mine, Jundee South is de-
scribed by Murphy as “something analysis and see if we have got a hydro- In junior explorer terms it is a high-class
of an oddity”, given it sits between
the main Jundee orebody and thermal system there.” team and, Murphy be-
satellite deposits such as Elliots
and Area 7. Murphy’s mention lieves, one capable of

Having also been privately held of both Halley and delivering on the com-
for two decades, Jundee South
has not experienced the same Beeson highlights the pany’s strategy.
level of systematic exploration as
its neighbours but Great Boulder high-quality nature of “Our land position
has already identified four targets
worthy of testing. the team behind Great is not massive but it is

“It is clear it has all the right Boulder. As well as the all in the right spot,” he
characteristics for gold miner-
alisation in the area where the geochemical and struc- said. “Having a large
best deposits occur on the con-
tact between the dolorite and the tural experts, the com- position is quite often
granite. The Jundee dolorite goes
right through the Jundee South pany has former Placer difficult for a junior but
project area,” Murphy said.
Dome chief geologist we can get in and do
The strategy is similar at the company’s
Tarmoola project in the Leonora district. Greg Hall as non-ex- the work.”
The district has undergone somewhat of
a renaissance in recent years thanks to ecutive chairman and – Dominic Piper
the success of Saracen Mineral Holdings Blue Spec Drilling
Ltd and St Barbara Ltd. Murphy is confi- owner Murray Black as Hot Chili’s Christian Easterday is an
dent Tarmoola could continue this trend. non-executive director. advisor to newly listed gold hopeful
In addition, Hot Chili
“Historically, Tarmoola has been over- Great Boulder
looked but the mineralisation sits on the
same geochemical trend as King of the
Hills and Gwalia,” he said. “Scott Hal-
ley [chief geochemist and company co-
founder] really likes this area because it
has workings and a large arsenic anom-
aly. It was left unpegged because of the
interpreted large granite on the ground
but since John Beeson [chief structural
geologist and founding shareholder] has
mapped it the host granite-greenstone
contact is now interpreted to lie within
the project.

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AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 17

NEWS

Exploring at the speed
of the internet

Anew era of technological ad- they have to get a third-party geo-
vances in the drilling space
continue to reduce the delay be- physics contractor. Gamma log-
tween the drilling of a hole and
analysis of its results, opening up ging is a very basic but very useful
new possibilities for the junior sec-
tor. technique but previously it hadn’t

Where once company execu- been particularly accessible.”
tives and exploration managers
had to wait days or even weeks A field trial for the memory-
to find out information about the
latest drilling campaign, new tech- based, driller operable gamma
nology is allowing information to
be captured and shared in almost logging device, EZ-Gamma,
real-time.
was successfully completed at
“In exploration, particularly at
the junior end, the key is to keep Kalgoorlie’s iconic Super Pit early
everything happening in a short
timeframe to ensure the budget this year, down what is acknowl-
is managed appropriately,” Reflex
Instruments chief geoscientist, Dr Dave edged as the deepest diamond
Lawie, told Paydirt. “The infield tools
and software we are developing allows drill hole ever drilled in Australia at
explorers to capture good quality geo-
logical information in near real-time. 3011.5m.

Reflex’s new suite of products, includ- “Being able to look at the gam-
ing its IQ Logger core orientation tool
and EZ-GYRO, are providing explorers ma logs while still on site was very
the opportunity to collect data which was
previously expensive or difficult to attain. useful,” KCGM senior geologist

“We want people to acquire as much Reflex’s new IQ Logger can speed up the David Nixon said. “It would usu-
information as they can while the drilling structural logging process tenfold ally take days for this data to be
is happening or immediately afterwards,” available.”
Lawie said. “Most companies would have
to get service providers to produce the “I think it will encourage people to want Other projects being developed by
gyro-based data,” he said. “Reflex has
the ability to make it driller-operated. It to acquire more drill core to get structural Reflex to increase efficiency in the field
makes it cheaper and means you are
able to get the information at the rig; information as soon as possible.” include an infield sample preparation kit
there is no reason to not know where the
hole is going and you shouldn’t have to Lawie said the company was working which can be used in conjunction with a
wait a few shifts to find out it is off course.
The geologists can get the information on other services which would allow ex- handheld XRF machine to give samples
straight away and remedy any mistakes.
It is efficient and translates into cost sav- plorers to glean even more information which are almost lab quality.
ings for the explorer.”
from recently drilled holes. Data from all of these technologies
As well as savings on costs, the new
products are allowing exploration teams “For example, we are working on a will be automatically stored in the Reflex
to undertake more intricate work at an
earlier stage of the exploration process. gamma logging tool which is operated by HubIQ, Reflex’s contribution to mining’s

“The IQ Logger is a new tool we have the driller. It makes a lot of sense but cur- “internet of things”.
developed to speed up structural log-
ging,” Lawie said. “It speeds up the rently if explorers want that information The Reflex HubIQ allows information
process by ten times and allows geolo-
gists to visualise results straight onto a from myriad sources to be gathered in a
screen, upload them to the cloud and mix
with other data to create 3D models. secure chain of custody.

“Exploration information has tradi-

tionally been gathered myriad ways but

this is highly valuable information and

it needs a secure chain of custody at-

tached to it,” Lawie said.

“All that data is now captured auto-

matically and stored in the Reflex HubIQ.

That means there are no transcription

errors and no waiting on results. The ge-

ologists don’t have to drive to the rig to

get the information and the head office

can receive it straight away.”

As the quality and quantity of data

available at the drill site continues to

grow, successful explorers will be in-

creasingly defined by their ability to cap-

ture and analyse information effectively.

“It is about the ability to acquire data

and then give it context to be able to

make decisions swiftly,” Lawie said.

– Dominic Piper

Reflex is developing a new sample pellet press
to allow for more accurate infield sampling

PAGE 18 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

SAVE THE DATE

23 - 24 May 2017

Hilton Adelaide

Image courtesy of OZ Minerals

saresourcesconf.com

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

COVER

South32 spins into
tech revolution

BHP Billiton Ltd spin-out, many shareholders – who had ques- ters in the mining industry starts to
South32 Ltd, was less tioned whether BHP Billiton’s decision thaw, investors appear to be warming to
than convincing in its first few to package its Australian, African and South32.
months on the bourse. South American aluminium, bauxite,
coal, manganese and nickel operations At the time of print, South32, which is
Starting life on the ASX priced at into South32 was simply an attempt to split into Australian and African divisions
$2.05/share in May 2015, the company dump failing assets. and is also listed on the JSE, LSE and
slumped through the rest of the year, fall- NY American Depositary Receipts pro-
ing to 87c/share by January this year. The volatility in commodity markets gramme, was trading at $2.46/share on
placed further pressure on a company the ASX, almost $1 better than the cor-
The fall appeared to justify the con- which never got the chance to enjoy a responding period 12 months ago.
cerns of the naysayers – which included honeymoon period.
For those keeping score, South32 has
However, as one of the harshest win- managed to outperform big brother BHP

PAGE 20 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

After 10 years of negotiations, Traditional Owners have agreed to let GEMCO conduct
exploration on the southern leases of the operation in the Northern Territory

Billiton in the same timeframe, with the GEMCO Currently, the underground operations
latter treading water at $23.51/share in have a six-year mine life but studies are
October 2016, down from $25.36/share. The GEMCO operation on Groote Ey- under way to assess the potential of con-
landt, Northern Territory, is possibly the verting to open pit methods.
Outdoing BHP Billiton is not a driving best manganese mine in the world, ac-
ambition for South32, however, it may be cording to Ricus Grimbeek. “Five to six years from now we will be
a while before onlookers can fully appre- building a brand new mine, if the studies
ciate both companies as single entities. The company has managed to nego- work out; I’m pretty sure they will. Then,
tiate exploration access to the southern we can do it in a way that is so much
While outsiders continue to monitor leases where it is believed there is any- more technologically advanced than to-
how BHP Billiton and South32 match-up, thing from two to 45 years worth of ore to day’s operations,” Grimbeek said.
the latter knows it has its work cut-out to be discovered.
keep delivering on the sweeping chang- Forecast production for FY2017 is
es it has made to the business in order “I’d like that [estimate] to be narrower, 3.1mt @ $US1.66/t.
which we are working on and we need
an exploration programme to kick start it
and now we have the ability to do that,”
Grimbeek said.

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 21

COVER

Worsley is one of the most technologically advanced refineries in the world of the Australia region, which includes
the Cerro Matoso nickel asset in Co-
South32 has environmental approval to build a bridge that would help lombia, Ricus Grimbeek, said the result
access another mine at Cerro Matoso, Colombia reflected the huge amount of effort dedi-
cated to implementing the company’s re-
to deliver more cost savings this financial cash flow of $US597 million, with con- gional model.
year. trollable cost savings totalling $US386
million. “It is core to how we want to run our
The company ended FY2016 with net business. We have restructured our busi-
cash of $US312 million and generated South32 president and chief executive ness dramatically, we have taken out so
many layers of management and it is all
Worlsey Alumina operation now ramped up from 3.5 mtpa part of creating a business that is far bet-
to 4.6 mtpa. Last year was the first year ter connected from top to bottom,” Grim-
Grimbeek says the Worsley Alumina the integrated bauxite mine and alumina beek said.
operations, near Boddington in Western refinery ran at full capacity.
Australia, is an asset the State should be “In the Australia region, we have saved
proud of. The focus is now on optimising the about $US158 million and about $358
operation and keeping the two mines op- million [across the company]; that is just
“The fact that we are competing erating for the next 10-15 years, as op- on controllable costs. We pulled anoth-
against everyone in the world and still posed to building another mine. er $306 million out of sustaining capital
making good profits at Worsley...it is one spend and people get nervous when I
of the most technologically advanced op- Production of 4mt alumina at $US204/t say that, but we still ended up with three
erations/refineries in the world,” he said. has been forecast by South32 for of our operations having production re-
FY2017. cords in the last year as well; GEMCO
In the last six months, South32 has was one, Worsley was one and we have
spent $150 million at Worsley, with the record zinc production out of Canning-
ton. We pulled sustaining capital out, but
we didn’t break the business.”

A major improvement and cost saver
for South32 has been utilising synergies
across a number of operations.

The old model of asset presidents for
each operation has been replaced by a
regional model and all matters pertaining
to human resources, finance and other
non-operational functions are run out of
the company’s headquarters in Perth.

Grimbeek said implementation of the
regional model was continuing and after
a busy 12 months converting from the
asset model, more focus was now be-
ing placed on bettering operational func-
tions like engineering and maintenance
programmes in an effort to deliver better
outcomes across the business.

“We started doing a lot of work in the
first 12 months in supply and getting the
benefits of running a region, because if
you are buying conveyor belts for Can-
nington, you are buying similar conveyor
belts for Worsley, GEMCO and Illawar-
ra,” Grimbeek said.

“One contract means you have the
benefit of scale in buying that and the
next phase is about the logistics; how do
we find a way to optimise warehouses
and logistics chains for supplying those.”

Throughout his presentation to the
WA Mining Club earlier this year, Grim-
beek reiterated the importance of main-
taining and fostering relationships with
local communities. However, South32
has also needed to embrace the tag of
a truly global company, meaning con-
tracts will not necessarily be awarded to
local companies. Grimbeek welcomed
the challenge of finding the right balance
between what is best for South32 and its

PAGE 22 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Cannington South32’s Australian operations account for 62% of group EBIT

Remodelling has added another year our diversity across the board, especially males and that is not a diverse enough
of reserves at Cannington. Ore reserves of the basic ethics of the male/female organisation at all,” Grimbeek said.
at June 30 totalled 21mt @ 225 g/t silver, split. The Australian region has 12% fe-
5.9% lead and 3.82% zinc. “A lot of people think it is the softer
Illawarra things that you try and fill, but across the
The mine life at Cannington is estimat- Metallurgical Coal board we make sure we get the best peo-
ed at eight years with forecast production ple to run our business and a lot of those
of 163,000t lead, 19.05 moz silver and Gains in metallurgical coal prices this are females. I want to make sure that the
80,000t zinc. year have been welcomed by South32. rest of the organisation transforms to that
in the next five years.”
“It is one of those operations that I think At the time of print, met coal was trad-
anyone would just give their front feet to ing at $US213.35/t. Grimbeek would not At the Worsley Alumina mine, near
find. It makes a lot of money, it’s quite be drawn on whether sustained coal pric- Boddington, Western Australia, a fully
small and [requires] pretty low equipment es would encourage South32 to increase female staffed drilling crew forms a sig-
as well,” Grimbeek said. production, which is forecast to reach nificant part of the operations, while
9.5mt with production costs of $US71/t in changes to access points and layout of
shareholders against satisfying commu- FY2017. the control room has enabled South32 to
nity obligations. hire a person with physical disabilities at
the mine.
A mining engineer by trade, Grimbeek
was formerly executive vice president of “That is the first of many because we
mining at Lonmin Platinum and his expe-
riences working in Africa have proved in-
valuable from a community engagement
perspective.

“We want to be known as the company
that is more than just safety,” Grimbeek
said. “It is about communities, care for
communities, care for the environment,
care for people’s health and care for peo-
ple’s safety. It also needs to be a place
where people enjoy coming to work
again because we spend so much time
at work, why must it be a drag?”

Addressing conditions in the workplace
through engagement, inclusion and di-
versity are core concerns to South32’s
care strategy.

When Grimbeek was compiling his
management team for the Australia re-
gion, he deliberately appointed an even
split of male and female managers and is
looking to increase female participation
across the company.

“As an industry we are not known for

2.50
2.25
2.00
1.75
1.50
1.25
1.00
Oct’15 Jan’16 Apr’16 Jul’16 Oct’16
South32’s 12-month share price performance
AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 23

COVER

Grimbeek said South32 was looking to grow the business through acquisitions, but anything brought into the
portfolio would need to compete against internal capital

really want to be able to reflect the demo- Grimbeek forecasts the mining indus- how best to re-skill its people to operate
the mines of the future.
graphics of the community in which we try will look very different in 5-10 years
For example, the impact of disruptive
operate,” Grimbeek said. from the male-dominated playground it technologies is making it possible for
driverless trucks to be used on sites,
“If you want to be a winning mining used to be. providing an opportunity to remove truck
drivers from site into safer roles, such as
company in the next 5-10 years, you will In addition to the growing participa- control room operations.

have to find the best people to work for tion of women in mining, another step- A review of fatal accidents by the Mines
Safety Department of WA released last
you, not the best people in mining neces- change for the industry will be the use of year, found that tradesmen and opera-
tors, which included truck drivers, ac-
sarily, but the best people in the world to technology. counted for 70% of the fatalities on mine
sites in WA during the period 2000-2012.
work for us. So to have a very small pool “The way that technology is disrupting
“Yes, we won’t have truck drivers but
to decant from, that is not going to [pro- the world is fascinating,” Grimbeek said. we’ll have many other jobs,” Grimbeek
said.
vide] the best people.” Technology and innovation are buzz
Africa region
words in the industry as
South32 has four operations in Africa,
miners and explorers look run by president and chief executive, Af-
rica, Mike Fraser.
outside the box to operate
SA Manganese production for 2016
more efficiently and safely. was 1.7mt at $US2.01/t, with costs for
FY2017 estimated to be $US1.71/t. Pro-
Grimbeek is aware of the duction will be subject to demand and no
forecast has been made. The SA Alumin-
consequences of moving ium smelter business produced 697,000t
at an operating unit cost of $US1,430/t
towards change too quick- in FY2016.

ly and on the flipside, not

changing at all. South32 is

trying to anticipate what its

future looks like and working

backwards, so as technol-

ogy starts to take over the

workforce is ready and will-

ing to adapt.

Incorporating technology

into operations will not mean

job losses and reduced

workforces, rather roles will

Remodelling has added another eight years of change and South32 is in

reserves at Cannington the process of mapping out

PAGE 24 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Cerro Matoso South32 will not carry any assets that are loss-making

Part of the Australian division which Grimbeek’s prediction is that there will ogy is being used in other industries; it
accounts for 62% of South32’s EBIT, be an “Uber” of mining to come in the is going to dramatically transform the
Cerro Matoso in Colombia is forecast to next 5-10 years – a technology compa- mining industry in the next 5-10 years,”
produce 36,000t nickel at $US3.87/lb in ny that mines – and it won’t surprise if Grimbeek said.
FY2017. South32 is driving the charge.
– Mark Andrews
South32 has received environmental “The thing that I have seen in practice
approval and community consent to build in other industries; the way that technol-
a bridge across a river to access the pro-
posed La Esmeralda mine.

“That project, when I took over, was go-
ing to cost $50 million because we were
going to build a big double-lane bridge
over the river. It is now going to cost $10
million; we just need a single bridge, we
don’t need to buy new equipment and we
have become a lot more efficient in the
current mines,” Grimbeek said.

“It is a world-class operation that is go-
ing through a bit of a midlife crisis, but it
has pulled through.”

“We will be employing so many more
data-scientists, robotics engineers, ar-
tificial intelligence engineers, software
engineers, etc. Those jobs will be higher
paid and I think more meaningful, not
that truck drivers aren’t meaningful, but
it is a hard job.

“I was a coal miner and know what it
is like to do menial tasks for 12 hours a
day, it can be mind-numbing. These jobs
will be far more meaningful and in terms
of the community I think there is a lot of
thinking for us to do around communities,
universities, colleges in regards to how
we are going to get these people to do
higher level jobs that are there. When I
talk about consummation, I am not talk-
ing about tomorrow, it is going to be
different over time and we are going to
transform.”

24

23

22

21

20

19

18

17

Mar 2016 Apr 2016 May 2016 Jun 2016 Jul 2016 Aug 2016 Sep 2016 16
Oct 2016

BHP Billiton’s 12-month share price performance

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 25

NICKEL REVIEW

The nickel rebound
starts here

Delegates to the Australian Nickel Conference could not have supply side which is giving Australia’s
missed the increased optimism at this year’s forum. The feeling nickel sector most encouragement.
was across the board; the mood at the conference the most positive
Indonesia’s ban on exports of raw nick-
el ore remains in place despite murmurs

it had been for at least four years. from acting Energy and Mineral Resourc-
es Minister Luhut Panjaitan it would be

The more inconsistent answers came of which – such as tin and lead – were dropped.

from the question of exactly why senti- above 10-year averages. Meanwhile in the Philippines, the

ment had swung into positive territory. Instead, the optimism appeared fuelled Government of newly elected President

The spot price has certainly helped. by a forecast of structural change in the Rodrigo Duterte has undertaken a strin-

After hitting a 12-year low in February, market. Demand is up, thanks to in- gent environmental audit that has cut a

nickel rebounded strongly in the next few creased Chinese stainless steel produc- swath through the country’s mining sec-

months, hitting multi-year highs in Au- tion (particularly of the high nickel con- tor. Environment and Natural Resources

“gust. The price had come off somewhat tent 300 Series stainless) but it is the Secretary Regina Lopez is an avowed
by the time of the Australian opponent of mining and her de-

Nickel Conference on Octo- partment’s audit has already

ber 20 but was still up 17% for Inventories are dropping closed seven or eight nickel later-
the year-to-date. and there is now less than ite operations. There is a general
sense that after years of teetering
However, nickel is still trad-

ing close to those 12-year half a year’s demand in stockpiles. on the brink, the investment cli-
lows and as Alto Capital Historically, 13-14 weeks [of mate for mining in the Philippines
analyst Carey Smith pointed is definitively dark.

out, was significantly under- stockpiles] is when the pinch in Both geopolitical situations
performing in comparison the market occurs. mean serious trouble for China’s
to other base metals, some nickel pig iron sector, which has

PAGE 26 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

been the bane of Australia’s nickel sul- Company Year-to-date “Inventories are dropping and there is
phide producers for nearly a decade. performance now less than half a year’s demand in
stockpiles,” Lougher said. “Historically,
Nickel pig iron grew rapidly in the mid- Buxton Resources Ltd 37.9% 13-14 weeks [of stockpiles] is when the
dle of the last decade in response to the pinch in the market occurs.”
Chinese steel sector’s desire for an alter- Cassini Resources Ltd 76%
native source of nickel feed following the Impact Resources Ltd 0% Even BHP Billiton Ltd Nickel West –
nickel price’s spike in 2007. Independence Group Ltd 62.2% which just 18 months ago was being
offered to buyers at a discounted price
It has since effectively placed a ceiling Legend Mining Ltd 25% by its parent company – is now speak-
on the nickel price, however, with access Mincor Resources NL 56.8% ing about growth. In his presentation
to high-grade Indonesian ore restricted Panoramic Resources Ltd 29.7% during the opening session, Nickel West
and the Philippines’ shutting down mines asset president Eduard Haegel said the
– its own high-grade reserves were al- Poseidon Nickel Ltd 13% company was now pursuing options that
ready on the wane – Chinese nickel pig Rox Resources Ltd 25% would see mine life across its asset port-
iron producers are struggling to source St George Mining Ltd 97.2% folio pushed out to 2038.
feedstock. Imports of laterite ore have re-
portedly fallen from 70 mtpa in 2013 to 30 Western Areas Ltd 26.5% “Thera are signs that this year could
mtpa last year. final be the turning point for nickel,” Hae-
pendence Group NL are beginning to get gel said. “Last year at this conference we
Such has been the drastic switch in excited about where the nickel market said we were working on pushing the life-
supply/demand dynamics, the Interna- may head in the next few years. of-asset plan out to 2023. We are now
tional Nickel Study Group is forecasting looking at developing a 2038 life-of-asset
a 70,000t supply deficit for 2016, the first Stockpiles are still high but Smith and plan.”
in five years. Western Areas managing director Dan
Lougher can both see an inflection point The prolonged downturn has forced
This comes as LME and SHFE stock- ahead. smaller producers such as Panoramic
piles continue to shrink and producers Resources Ltd and Mincor Resources
such as Western Areas Ltd and Inde- NL to place operations on care-and-
maintenance. The two companies have
turned to gold exploration in an effort to
generate some momentum but the pres-
entations of Peter Harold and Peter Mu-
cilli indicated both could see light at the
end of the long nickel tunnel.

For investors of junior companies, the
question may be who is best placed to
take advantage of this turn and the Aus-
tralian Nickel Conference displayed the
variety of options they now have.

Some, such as St George Mining Ltd
and Cassini Resources Ltd are receiving
mid-tier backing – Western Areas and Oz
Minerals Ltd respectively – while Rox Re-
sources Ltd is expanding its nickel port-
folio after divesting of zinc assets.

Elsewhere, Legend Mining Ltd is turn-
ing itself into one of the most active ex-
plorers on the Fraser Range – home to
the Nova-Bollinger mine – while both
Metals X Ltd and Poseidon Nickel Ltd
are considering development options for
their more mature assets based on in-
creasing nickel prices.

Conference delegates were even giv-
en the option of supporting a possible so-
lution to China’s laterite ore supply prob-
lem through Axiom Mining Ltd. In the
last corporate presentation of the con-
ference, Axiom managing director Ryan
Mount said his company could be mining
DSO laterite ore from its Isabel project in
the Solomon Islands by mid-2017.

– Dominic Piper

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 27

NICKEL REVIEW

Nickel West looks long term

BHP Billiton Ltd Nickel West asset Eduard Haegel Haegel admitted Yakabindie would be
president Eduard Haegel’s presenta- unlikely to support standalone develop-
tion was similar to his debut appearance improving revenues,” he said. “But, we ment but said its open pit reserves of
last year, only his ambition is now wider still need to debottleneck the Kwinana 96mt @ 0.61% nickel could be consid-
and his confidence in the company’s as- refinery. In the last 12 months, the refin- ered an extension to Mt Keith operations.
sets even deeper. ery has set and reset new records and
as such we are raising our objective for “Treated as a simple satellite pit and
Haegel surprised many delegates to the programme to 77,000 tpa. This week extension; requiring no changes at the
last year’s conference by declaring Nick- at Kwinana we have a number of debot- concentrator and therefore services,
el West, until recently the asset BHP Bil- tlenecking projects going on during a maintaining the existing fleet and hauling
liton couldn’t get rid of, was ready to push planned minor shutdown and will com- the ore by road train to Mt Keith means
the life of its assets out to 2023. Haegel’s mission the third mill.” the capital investment is low and there-
return in 2016 saw him announce plans fore we have been able to convert 96mt
to extend that life to 2038 as the group The company is also investigating its of resource to reserve which provides
grows increasingly confident about the potential involvement in the growing elec- additional confidence of the period out to
future of the nickel market. tric vehicle market. Lithium-ion batteries 2032,” he said.
use considerable amounts of nickel sul-
“We are now looking at developing a phate and Haegel said Nickel West was At Leinster, mining has restarted at
2038 life-of-asset plan,” Haegel said. “I considering ways to produce and market Perseverance and Nickel West has re-
believe we are on the right path. When the product. invigorated the long-held plan to access
the market turns our investment should the deep Venus orebody.
allow us to take the opportunity.” “We are keeping a watching brief on
the market as a potential one for Nickel “I announced that five months ago and
Haegel’s appointment coincided with a West and we believe we are well placed,” we are progressing well and expect to
change in strategy for Nickel West, which he said. reach the orebody this time next year,”
has limped throughout more than five Haegel said. “Once in position, we will
years of low nickel prices. The division Nickel West’s turnaround has been drill the deposit with the view to increas-
was deemed not even worthy enough to publicly praised by Andrew Mackenzie. ing the size and confidence of the re-
place into the South32 Ltd spin-out ve- source.”
hicle and BHP Billiton spent two years “In many ways, this is the business
shopping the asset around on the inter- that has led the charge on making things The project is an ambitious one but
national stage. more efficient, despite a very difficult Haegel believes its completion will give
market,” the BHP Billiton chief executive Nickel West a unique opportunity.
Unable to find a buyer, the major said at the full-year results in August.
brought Nickel West back into the fold “The access to Venus is expected to
but gave Haegel and his management Haegel said Nickel West would con- provide an unprecedented 2km of ac-
team more autonomy. tinue its pursuit of new opportunities, cess for underground drilling between
including further mining development at Perseverance and Venus and will allow
“Last year, I said Nickel West had been both Mt Keith and Leinster. us to attain a rich knowledge of resource
given licence to operate with a junior potential from underground drilling.”
company mindset; searching for innova- He described Mt Keith as retaining a
tive solutions; commercial, financial or “rich source of opportunity” with recent Among the deeper opportunities is the
operational,” he said. “Now we are build- efforts focusing on the Yakabindie target. almost-forgotten Perseverance Deeps
ing on this foundation to create a busi- target, which is now being reassessed.
ness with a long-term, profitable and “Yakabindie is the next key develop-
sustainable future. We will look to unlock ment opportunity through the Six Mile “Not unlike Yakabindie, it was deemed
further resource potential and down- Well and Goliath orebodies located not viable,” Haegel said of Perseverance
stream opportunities.” about 20km south of Mt Keith.” Deeps. “The project plan was to block
cave in the levels below the sub-level
The transformation has been appar- cave but that would’ve consumed the
ent. Production fell by 10% in FY2016 existing drives, levels and shafts; the re-
but this was largely a result of planned placement cost of which was significant.”
major maintenance outages at both the
Kalgoorlie smelter and Kwinana refinery The company asked consultants to
and the reduction in third-party ore deliv- come up with alternative plans based on
ered to the Kambalda concentrator dur- “a no compromise approach to safety,
ing the December quarter. low capital, high-value solutions which
leveraged as much of the existing infra-
The group has forecast a 10% increase structure as possible.
in nickel production for 2017, with higher
grade ore from its Mt Keith mining opera- “We are currently evaluating the alter-
tions and a ramp-up in production at the natives for what we are now calling Lein-
Leinster mine. ster B11,” Haegel said.

The company is also seeing cost im- – Dominic Piper
provements, according to Haegel.

“Our transformation programme is
alive and we have made tremendous
progress on lowering the cost base and

PAGE 28 NOVEMBER 2016 AUSTRALIA’S PAYDIRT



NICKEL REVIEW

Cosmos exploration the start
of Western growth

Western Areas Ltd managing director we have now worked with local indig- management time into costs,” he said.
Dan Lougher is confident the prime enous groups and we hope we can start “Now we have a good hold on where

exploration ground the company picked drilling late this year or early next year.” we are heading with capital we can start

up as part of its Cosmos acquisition will Talk of exploration expansion indicates opening up capital deployment in the

be available for drilling before the end of the changing mood within a Western growth areas.”

the year. Areas management team consumed by With the Cosmos acquisition bringing

Western Areas paid $25 million for the cost savings and capital discipline over Western Areas’ resources and reserves

Cosmos Nickel complex last year and the last there years. While not apologis- to more than 1mt, it is unlikely immediate

while the Odysseus development pro- ing for the savings focus during a woeful growth will come from outside the current

ject was the most obvious growth asset period in the nickel market, Lougher said portfolio.

in the package, the company sees the the company was now in a position to “This is a good time to buy but you

“wider tenement package as having even switch to a growth focus. must make sure you can buy good qual-

greater potential. “It sounds tedious but we put a lot of ity stuff. Exploration and the Cosmos

“Odysseus didn’t acquisition; that’s where

come free but really we It sounds tedious but we put a lot our growth will come
purchased Cosmos for from,” Lougher said.

the exploration ground,” of management time into costs. While the company
Lougher said. “Half of Now we have a good hold on where we are may rate the Cosmos
the southern tenements exploration ground even

have not been drilled at heading with capital we can start opening higher, there is little
all because of heritage up capital deployment in the growth areas. doubt Odysseus’ 7.3mt
clearance issues, but @ 2.4% for 174,000t

PAGE 30 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

nickel resource remains attractive. in the same style as Nova. Spending
Western Areas plans to complete a
PFS for the project before the end of $2-2.5 million and that won’t stop.”
2016.
Away from exploration, Western
“I can say we will almost certainly
drop the flag on a full feasibility study Areas is also planning to restart its
by the start of 2017 and it could be
producing 20,000 tpa by 2020.” mill enhancement programme at

Part of that feasibility push will also Forrestania after it deferred the study
see follow up exploration on deeper
intersections previous owners Jubi- last year in an effort got conserve
lee Mines and Glencore failed to add
to. capital.

“If you look at the deeper intersec- Lougher said the programme,
tions [including one of 5.4m @ 12%
nickel] we need to get down there once restarted, would look more
and we will do.”
closely at the potential to produce
At the company’s mainstay For-
restania operations, development nickel sulphate from the Cosmic Boy
and growth is focused on the New
Morning project. Lougher said stud- concentrator.
ies into development of New Morning
would continue with particular focus “The current programme has the
on treatment of the lower grade 5.1mt
@ 1.3% nickel resource. mill producing a nickel sulphate liq-

“We are looking at innovative technol- uor which is the preferred product
ogy to extract low-grade nickel. This pro-
ject is not for today’s market but for the for lithium-ion battery producers,” he
future,” he said.
said.
There is a similar outlook on the com-
pany’s greenfields Western Gawler JV Nickel sulphate is one of several

markets Western Areas is consider-

ing as it nears the end of its current

nickel sulphide concentrate contracts

with Nickel West and Jinchuan.

Dan Lougher “We are looking at the roasting

market which takes nickel sulphide

with Strandline Resources Ltd. to blend with laterite ores. It is a growing

“This is an area of 4,000sq km which market,” Lougher said.

had been ignored because of the sand – Dominic Piper
cover in the area. This is a five or seven-

year exploration window. There is no rea-

son why we won’t discover an intrusive

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 31

NICKEL REVIEW

300 to be nickel’s Trojan
horse back into steel

Increasing Chinese production of high tion had done little more than flat line over rechargeable battery market to nickel de-
quality stainless steel could hold the the last few years but there is a large per- mand.

key to a continuation of nickel’s recent centage share increase from 300 Series Demand growth can only be inter-

rebound. stainless. That 300 Series stainless uses preted as positive news for the nickel

Most market observers have been fo- 10-12% nickel which equals more nickel sector but Smith warned more structural

cused on the supply side shocks coming demand.” change was needed before such growth

“out of Indonesia and the Philippines, but Smith said Chinese nickel consump- is reflected in pricing.

Alto Capital analyst Carey After five years of surplus

Smith believes the demand It will take a few years to supply, nickel stockpiles on
work our way through those
side of the nickel market is the LME and Chinese SHFE
also showing signs of change. exchanges had built up to re-
cord levels. LME stockpiles
Chinese stainless steel pro-

duction was up 9% in the first stockpiles but historically, once LME surpassed 450,000t in mid-
half of 2016. Even more en- stockpiles get below 250,000t you 2015 and were still above that
couraging for nickel produc- mark by January this year.

ers is increased production of see a huge change in sentiment. Since then, stockpiles have
300 Series stainless steel. steadily reduced and were at

“I’m not sure whether the 361,278t during the confer-

massive jump in the June ence.

quarter was just an aberration or part of tion was also trending up, with imports Smith said although the LME numbers

a longer term trend,” Smith said. “Before of unwrought nickel on the rise. He also were encouraging, there was still transfer

this year, Chinese stainless steel produc- pointed to the growing significance of the between the two metals exchanges and

PAGE 32 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

other unknown stockpiles. Alto Capital’s Carey Smith gave the Australian ments in the nickel pig iron market,” he
“The LME stockpiles have been slowly Nickel Conference another thorough assess- said. “Chinese nickel pig iron has fallen
more than 200,000 tpa over the last
[depleted] this year but in that period the ment of the global nickel market. His research three years to 300,000 tpa but that has
SHFE imported 110,000t which offsets led him to forecast a nickel price of $US8/lb in been partly offset by Indonesian domes-
the LME drop,” he said. tic nickel pig iron production of 100,000
October 2017 in a wider range of $US7-14/lb tpa.”
Smith said the last six months had wit-
nessed declines in all stockpiles and with an anchor to the nickel price for the last Indonesia’s 2013 decision to ban the
the supply deficit (forecast at 70,000t for eight years – Smith believes a slowdown export of raw laterite ore had a major
2016) set to bite, numbers would contin- is in progress. impact on China’s nickel pig iron sector,
ue to shrink. with laterite imports falling from 70 mtpa
“For the first time in years, the nickel to 20 mtpa over the last four years.
“It will take a few years to work our way sector can look positively on develop-
through those stockpiles but historically, The policy was designed to encourage
once LME stockpiles get below 250,000t the establishment of a domestic nickel
you see a huge change in sentiment,” pig iron and steelmaking sector and with
Smith said. a number of Chinese firms establishing
plants in Indonesia, it has been widely
Cost pressures on the supply side of deemed a success.
the market may also increase the fore-
cast deficit. According to Smith, the nick- However, in October, Indonesia’s act-
el price “rarely stays below the 90th cost ing Energy and Mineral Resources Min-
percentile for very long but now we are in ister, Luhut Panjaitan, raised the pros-
the fourth year of such a trend”. pect of easing the ban but Smith doubted
the Government would follow through
Smith admitted, however, the major with the suggestion.
problem in this equation was the atti-
tudes of some miners. “I can’t see Indonesia lifting the ban
because if they dropped the ban it would
“For the major miners, the integrated increase the cost for their own nickel pig
users, it is cheaper to run at a loss rather iron producers,” he said.
than trigger the various liabilities which
are attached to their assets. In these cir- – Dominic Piper
cumstances, price is not a major driver.”

On the future of China’s nickel pig iron
sector – which has effectively proved

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 33

NICKEL REVIEW

Ravensthorpe ready to rumble

First Quantum Minerals no production and then sub- a big cost associated with that, so we’re
Ltd’s Ravensthorpe nickel sequently reduced production looking at an opportunity to take mois-
ture content out of the tailings and to ac-
operation is bouncing back due to the low nickel price… cept rejects and then to involve them in
the backfill of the pits,” Coggin said.
from the atmospheric leach but we’ve still been able to
“We know it’s been done successfully
tank failure which forced a run pretty effectively around elsewhere, but it requires significant test-
ing and a pilot plant and additional work
halt in production nearly two the 23,000-25,000 tpa mark,” which we’re committed to doing. We’re
pushing on with getting approval to do
years ago. Coggin said. that so we can implement it.”

Ravensthorpe produced a “We’ve been refurbish- Coggin said Ravensthorpe, about
550km south-east of Perth, was a valued
record 3,791t in November ing and recommissioning asset in First Quantum’s portfolio.

2014 before a structural fail- aspects of that atmospheric “First Quantum is really a global cop-
per player, but our expertise and the
ure saw output drop to 3,167t acid leach circuit. Bits of it are heart of the company is really all about
engineering and taking on projects that
the following month and oper- in use already and in the com- require special engineering approaches,”
Coggin said.
ations were suspended while Dave Coggin ing months we’ll bring further
a significant clean-up job was tanks and further elements “We’ve got a lot of in-house engineers
and in-house project managers and
undertaken. back online and production we take on difficult projects around the
world. This was one of those.”
No nickel was produced in Janu- should increase as that happens.”
– Michael Washbourne
ary 2015 and output has not surpassed Other upcoming development activi-

3,000 tpm since operations resumed 20 ties include the Hale-Bopp pit expansion

months ago. and an improved infrastructure corridor

However, First Quantum external af- to Shoemaker-Levy.

fairs manager Dave Coggin believes a TSX-listed First Quantum is also final-

series of planned developments will help ising plans to dewater the tailings and

lift Ravensthorpe’s production levels mixing them with rejects to save on work-

back near the 2014 levels. ing capital.

“It was a really tough time after that tank “With the tailings, we need to build sig-

failure because we had the challenge of nificant civil works and there’s obviously

PAGE 34 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Cassini/Oz Minerals
JV under way

The reality of the West Mus- mit minimum expenditure of $8
grave nickel-copper project
becoming a mining operation is million on regional exploration.
likely to be realised much quicker
with the involvement of Oz Min- There are numerous targets
erals Ltd.
which have been formed from
Andrew Cole, Oz’s chief ex-
ecutive, believes it is feasible for historical work and while Oz is
production to start in four years’
time at West Musgrave, owned not obliged to invest in explo-
by Cassini Resources Ltd.
ration at this stage of the JV, it
A scoping study released in
2015 identified potential for a has been decided some of the
4 mtpa operation producing
12,300t nickel and 14,300t cop- planned work to test high-grade
per over 15 years for a pre-pro-
duction capex of $435 million. nickel and copper hits in the area

“When we released the scop- be brought forward.
ing study in April 2015, we were
very cognisant in terms of the A programme was expected
size of the plant and we were
very sensitive about the capital to start by the end of October,
expenditure,” Cassini managing
director Richard Bevan said. with exploration drilling at Suc-

“We are a small junior explorer coth and One Tree Hill being
and that really determines the
strategy about the sizing of the targeted.
project. That is much less of an
issue [now]. There are signifi- Bevan said he expected that
cant options – with the grunt of
Oz Minerals – to add value to first phase to last about 12
the project. We can reduce some of our
costs, perhaps around power and other months.
improvements.”
“Oz is keen to progress
A hybrid power solution of wind and
diesel is an area where potential cost through as quick as possible,
savings can be made, however, the first
order of business under the Cassini/Oz so we will be working fairly hard
West Musgrave JV will be further scop-
ing study work around the metallurgy. over the next 9-12 months to en-

The initial programme under the JV will sure that we do that. We have a
see Oz spend $3 million over a maximum
of 12 months, whereby drilling in the tran- good mix of development work
sition zones of the Nebo-Babel orebody
will be a priority alongside improving the and exploration work happen-
understanding of the geometallurgical
model, metallurgy plus further mining ing,” Bevan said.
and infrastructure studies.
When the temperature in the
Despite Oz’s substantial buy-in – sole
funding $36 million on development and West Musgrave region cools off
exploration and free-carrying Cassini to
a decision to mine Nebo-Babel – the lat- Richard Bevan somewhat next year, resource
ter will remain operators through to the
DFS. extension drilling at Nebo-Babel

Prior to entering the deal with Oz, aligned with the strategy in place. will also start.
Cassini had spoken to other compa-
nies, however, Bevan said Oz was best “Andrew Cole has stood up and said “The resource is currently open in

this is going to be one of their mines [po- many areas and that drilling will focus

tentially as early as 2020] and that the on the massive sulphide zones that form

goal is getting to production,” he said. part of the early mining schedule. The

“There are some great opportunities exploration piece of this work also says

right now, the opportunity to develop something about what Oz Minerals adds

projects at the low point in the commod- to this project,” Bevan said.

ity cycle is a significant benefit. We be- Meanwhile, Cassini will also pay some

lieve it gives us the opportunity for cash attention to its own projects – the Mt

flow into the project and it minimises the Squires gold and West Arunta zinc pro-

treadmill of trying to hold these projects jects – in the New Year.

and running the risk of withering on the At the time of print, a SPP remained

vine by trying to raise smaller amounts open at 4.5c/share to raise $2.5 million

of capital to sustain this project. It gives to help Cassini fund exploration activities

us a much more defined time line going such as flying an EM survey over West

forward.” Arunta in Western Australia.

By retaining Cassini’s technical team – Mark Andrews
as operators, Oz can leverage from the

knowledge built by the likes of Greg

Miles, Jon Hronsky and Zoran Seat, who

all have a great understanding of the

West Musgrave.

It is likely a DFS will be completed on

the project in two-and-half years and

while Oz is funding that, it will also com-

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 35

NICKEL REVIEW

Axiom to set sail in 2017

Axiom Mining Ltd has put the last five around financing. We anticipate mine de- the first few years of production.
years behind it and is preparing for velopment cost to be no more than $20 A camp has been established and
nickel laterite production from the Solo- million; that is a conservative cost and
mon Islands in 2017. we aim to have that paid by the end of Axiom was conducting an EIS and com-
December.” munity social programmes, with the hope
Axiom won a legal battle in the Solo- of finishing a PFS by the end of the year.
mon Islands’ highest court of appeal this Gunvor, one of the world’s largest com-
year against Japanese powerhouse Su- modities trading houses, has agreed to “The mining process will be quite sim-
mitomo. take an initial 500,000 wmt of material ple and we don’t anticipate producing too
and has afforded Axiom the option to much detail after PFS,” Mount said.
Sumitomo was found to be land off-take four years of production for the
banking and should never have been provision of $10 million in debt finance. The biggest issues faced by mining
awarded rights to the Melanesian nickel companies in the Pacific are not techni-
tenements, including Kolosori on Santa Mount said the initial off-take deal was cal or geological, instead it is following
Isabel island and San Jorge on the island structured in light of what was happen- the right protocol regarding social and
opposite. ing in Indonesia and the Philippines and environmental issues, Mount said.
with limited high grade nickel ore coming
Axiom chief executive Ryan Mount to the market, Axiom is ideally placed to “In particular, if you surround villages
said the company has reapplied for capitalise on the situation in the Pacific. with people living on site or downstream.
the prospecting licences and has been We have no one living on the mineralised
through due course with the traditional “We deliberately did that to provide land and we have no one living down-
land owners. flexibility because we could see what stream. We can’t contaminate clean
was happening in Philippines and Indo- drinking water if there was some be-
“We aim to be in production in the sec- nesia. Clearly, there is a limit to the high cause we don’t have any chemicals on
ond quarter of 2017, subject to permitting grade ore in the Pacific, so we intend to site to process. The only chemical we
and licensing,” Mount told delegates at maximise that,” Mount said. have on site is diesel. Also, we are dig-
the Australian Nickel Conference. ging 10-15m deep on average, we are
A drilling programme at San Jorge was hauling 2km, we’re barging 500m and we
“We are currently funded for our initial under way at the time of print, with the get paid FOB,” he said.
programme and we are currently working aim of defining a resource to underpin
with our off-taker and some customers – Mark Andrews

PAGE 36 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Exploration turn at Nova

Commissioning at Nova started in mid- cess plant earlier has been anomalies on the Nova
October and Independence Group done in an environment mining lease Independ-
NL has the project on track for first con- of favourable contracting ence is keen to assess,
centrate production in December. rates. while after an exploration
hiatus at its Long nickel
Over the first half of 2017, Independ- As is it enters the im- mine in Kambalda, work
ence will be focused on ramping up Nova portant phase of bedding will start to replenish re-
to full production capacity and by July it down operations at Nova serves, with $2-3 million
is hoped the run rate of 27,000-30,000 during the first half of 2017, budgeted for exploration
tpa nickel concentrate, 12,000-13,000 the company will also em- in FY2017.
tpa copper concentrate and about 1,000 bark on an aggressive ex-
tpa cobalt will be hit at $1.50-2/lb nickel ploration programme. “Long has already been
for FY2018. running for 40 years, deliv-
“We will start explora- Peter Bradford ering just under 4% nickel
“On the cost curve it makes Nova one tion on some of the near- and we’re mining about
of the lowest cost nickel producers in the mine exploration targets, 1km down,” Bradford said.
world,” Independence managing director specifically Conductor 5, “Three years was the mine life when
Peter Bradford said. which we will start drilling in the next few Long was first bought and in the 14 years
weeks,” Bradford said. we have owned it we have done signifi-
Since acquiring Nova from Sirius Re- cant exploration at Long to replace pro-
sources in 2015, Independence has put “Conductor 5 is very important be- duction with reserves. We have about 1.5
its stamp on the project by improving cause it sits beside the Bollinger decline years left and in the September quarter,
NPV by 51%. that we are currently developing and that exploration started targeting three con-
allows us to easily drill that from under- ceptual targets close to existing infra-
Independence has also improved the ground. If we are successful in identify- structure.”
mining schedule and sequencing to pri- ing an additional resource, then we can
oritise higher-value ore earlier in the easily start exploiting that additional re- – Mark Andrews
mine life, while accelerating ramp-up source from that existing infrastructure.”
– including the fast-paced development
of the Bollinger decline – to fill the pro- There are also other untested EM

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 37

NICKEL REVIEW

Savannah restart decision looms

December is shaping as nickel sulphide resource be- liton Ltd Nickel West for Lanfranchi ore
a defining month for hind Nova-Bollinger. runs until 2019, however, drilling at Lan-
Panoramic Resources Ltd. franchi, particularly around the Lower
A recent resource upgrade Schmitz orebody, is dependent on avail-
A feasibility study on the at Savannah North lifted the able funds.
combined Savannah and combined project resource
Savannah North projects to 226,000t nickel, mean- Harold believes an “enormous amount
is due for completion in the ing Panoramic now has 3.5 of value” in his company is still to be un-
next month and a favour- times more metal to mine locked.
able outcome could prompt than when operations at Sa-
Panoramic to make a de- vannah launched in 2004. “Two assets, which have been parked
cision about restarting its up but ready to restart when the nickel
East Kimberley nickel op- “This is a big system,” price hits the right number and is sustain-
eration as early as Q1 2017. Panoramic managing direc- able, along with the gold and the PGMs,
Peter Harold tor Peter Harold said. “What is all valued in our business at about $70
Panoramic put Savannah we don’t know is the extent million,” he said.
on care-and-maintenance in May, just six this orebody goes to the east and to the
months after the company’s Lanfranchi west. The existing mineralisation has “We’ve been in this situation before
mine, near Kambalda, was mothballed been drilled out over about 1km of strike and we’ve unlocked the value and we
due to the low nickel price. and we believe there’s probably another believe we can do it again. We want to
1km east and west – and we’ve not even make good money for our shareholders,
The feasibility study on the combined sure of the north and south extent either.” go back to being a dividend payer and
projects will assess mine design, geo- Panoramic has an off-take agreement get the capital appreciation in our share
tech work for the underground schedul- with Jinchuan Group at Savannah until price that should reflect the value of
ing and the potential to increase the con- 2020, but Harold expects the length of those assets.”
centrate grade above 10%. that contract to increase upon a decision
to mine at Savannah North. The proposed spin-out of Panoramic’s
Drilling is continuing at Savannah and An off-take contract with BHP Bil- Gum Creek gold project, via a $15 million
Savannah North, which collectively is IPO, was imminent at the time of print.
shaping as Australia’s second largest
– Michael Washbourne

20 October 2016
Pan Pacific Perth

The CD-Rom of the 2016
Australian Nickel Conference

will be available soon

CD-Rom for conference delegates – $60 (inc.GST)
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PAGE 38 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Rox finds reward in Collurabbie

The market is yet to ascribe Rox The company is committed to
Resources Ltd any value for its spending about $90,000 on 123sq

recent dealings. km of tenure at Collurabbie, which

Despite inking a deal worth up to Mulholland described as a “cheap,

$20.6 million with former JV part- counter-cyclical, quality acquisi-

ner Teck Australia Pty Ltd over the tion”.

Reward zinc-lead project in the “We got this at the right time,”

Northern Territory, Rox’s share Mulholland said of Falcon’s deci-

price remained flat at 1.8c/share sion to leave the mining industry for

at the time of print, while its market the 3D printing space.

cap was $22.5 million. “There is widespread nickel, cop-

Offloading its 49% interest in Re- per and PGE mineralisation over

ward to Teck will see Rox receive about 15km of strike. This has the

a cash injection of $8 million cash copper and PGE credits we don’t

and unescrowed shares worth have at Fisher East. There is high

$3.6 million. The company will also cobalt in this and even zinc. Previ-

be eligible for a promissory note of ously when WMC was operating

$5.25 million in three years and a this, they got quite excited about it

deferred payment of $3.75 million and said there were similarities to

upon completion of a BFS or ex- Raglan in Canada. There are walk-

piry of a six-year term, whichever up targets for not only the nickel,

comes first. copper, PGEs but also gold. We see

At the time of the Australian that there is quality datasets that we

Nickel Conference, Rox had $1.5 can use and we are just starting to

million in the bank, with the sale get our teeth into that now.”

of Reward improving its cash bal- Mulholland said Collurabbie

ance. perked the interest of Rox as a po-

The environment in the resourc- tential satellite project for Fisher

es sector is still dictating miners East.

and explorers be prudent with their There is scope for Rox to increase

cash and despite money coming in, Ian Mulholland resources at Fisher East, which is

the situation is the same for Rox. comprised of the Camelwood (2mt

Nevertheless, the current environment ey together and do some more drilling in @ 1.9% nickel), Cannonball (260,000t @

is also presenting great opportunities for 2010/11. But since 2011, there has not 2.8% nickel) and Musket (1.9mt @ 1.7%

companies to capitalise on unloved pro- really been any work done on this pro- nickel) deposits, totalling 4.2mt @ 1.9%

jects and Rox believes it has snapped up ject and there is a really big gap between nickel for 78,000t nickel.

a bargain in the Collurabbie nickel-gold 2005 and 2010. The work done was Another prospect – Sabre – has been

project. deep RC and diamond drilling. We can identified, however, cash constrains has

Ten years ago, Collurabbie was a see that the regional exploration is quite prevented Rox from conducting sufficient

much-hyped project, with an intersection underdone and there is an opportunity resource work.

of 5.8m @ 3% nickel, 2% copper and 5.3 to do some regional aircore drilling and Mulholland said there was potential for

g/t PGE encouraging the likes of Kerry chasing up some new targets in what is Sabre to host 30,000t nickel.

“Harmanis to take a 16% interest in then- obviously an endowed belt.” Following the sale of Reward, Mulhol-

owners Falcon Minerals land said the company

for some $23 million. was freed up to revisit Sa-

Preceding that eye- There is widespread nickel, copper bre in detail, plus a host of
catching intercept, explo- and PGE mineralisation over about other targets across 25km
ration ran hot on the pro- at Fisher East.

ject throughout 2004 and 15km of strike. This has the copper and “The other prospects we
2005 under the WMC/ have got at the likes of Mt
PGE credits we don’t have at Fisher East. Tate and Horatio are at RC
Falcon Minerals JV.

BHP Billiton Ltd’s take- There is high cobalt in this and even zinc. drilling stage. We have got
over of WMC in 2005 then some aircore results there

stymied any momentum so they are ready for RC

built at Collurabbie. drilling from those pros-

“There was certainly no intense drill- Collurabbie appears to be a perfect fit pects. Further to the south we also see

ing going on,” Rox managing director Ian for Rox. It was purchased on the cheap – the potential to increase the resource

Mulholland said. $25,000 cash and 7.5 million Rox shares base,” Mulholland said.

“The project pretty much lost momen- (about $150,000) – and is 70km east of – Mark Andrews
tum until eventually BHP pulled out in its flagship Fisher East nickel project,

2009. Falcon managed to get some mon- 500km north of Kalgoorlie.

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 39

NICKEL REVIEW

Alternative options for Wingellina

Metals X Ltd is reviewing a number of Warren Hallam low strip ratio and the ability to excavate
alternative processing technologies ore without blasting.
in a bid to lower the $2.5 billion capital ren Hallam said. “We started to get that
hurdle which is stalling development of equity together, but then the nickel price Metals X took that information to Kore-
the Wingellina nickel project. got in the road, so we continued on with an steelmaker POSCO and the two com-
long-lead time items. Now we’ve got EPA panies are working on alternative pro-
Reducing the development capex is approval, we’re in the box seat ready for cessing options for the Wingellina ore.
the main priority for Metals X at Wingel- that nickel price improvement.”
lina, in the Central Musgrave region of “What this could do is allow us to
Western Australia, after obtaining EPA Wingellina differs from other nickel lat- modulise the processing, get away from
approval in September. erite deposits in Australia in that its ore HPAL and reduce that capital hurdle sig-
style is a limonite, or tropical laterite, with nificantly,” Hallam said.
A 2008 feasibility study on Wingel- iron oxide content above 45% and mag-
lina put forward a number of attractive nesium content below 2%, as well as a “We can use local water sources, so
financials, including operating costs of we don’t have to go and chase a water
$US3.34/lb, average annual EBITDA of source 120km away. We use a lot a more
$US483 million and NPV of $3.4 billion, gas, meaning we won’t have to bring
based on production of 40,000 tpa nickel sulphur into the site, so transport costs
(and 3,000 tpa cobalt) over at least 40 come down considerably. We can start
years of mine life. off with a modest 20,000 tpa and build
up to 40,000 tpa or 60,000 tpa using this
The study assumed a nickel price of process.”
$US20,000t and an exchange rate of 85c
to the US dollar. Wingellina will be one of three major
projects, alongside the Nifty copper mine
With the project essentially develop- in WA and the Renison tin operations in
ment ready, pending an improved nickel Tasmania, in the new base metals-fo-
price, Metals X must now find a way to cused Metals X, which is set to spin off
finance Wingellina after a previous fund- its gold assets into Westgold Resources
ing plan fell through. Ltd on November 25.

“We had been working in a consor- – Michael Washbourne
tium, with the objective to finance $1.5
billion and bring in $1 billion worth of
equity,” Metals X executive director War-

Mincor waits for green light

Mincor Resources NL bank, Mincor will not be short earlier this year when the company moth-
will drill new holes into of funds when it decides to balled the Mariners and Miitel mines.

exciting prospects such as revive its nickel exploration Key financials included a $20 million
capex to restart Durkin North and $12.4
Republican Hill, Cassini plans, including resource million for Miitel/Burnett, returning NPVs
of $24 million and $15 million over their
and Voyce as soon as the expansion drilling at Voyce, respective four-year and three-year pro-
ject lives, based on flat nickel prices of
nickel price warrants it. which hosts 64,000t @ 5.2% $20,000/t and $22,000t.

Nickel exploration has nickel containing 3,400t and is “There’s quite a bit of work to do to es-
tablish Durkin North, but this is a start-
been on hold for Mincor only 2.5km south of Mariners. ing point and anchoring producer for us,”
Muccilli said.
since February when the An exploration target of
“Durkin North is still open both down-
company put its two oper- Peter Muccilli 400,000-500,000t @ 3-4% plunge towards Long and up-plunge to-
ating mines in Kambalda nickel has been set for Cas- wards Otter [Juan], but it’s not the right
time to drill it because it’s quite expensive
on care-and-maintenance sini, based on a number of with the nickel price where it is.”

due to unsustainable base metal prices. encouraging initial intercepts, including A key recommendation from the Dur-
kin North DFS was to incorporate about
Gold exploration is now the company’s 6.09m @ 7.25%, 4.88m @ 6.45% and 12,000t which sit outside the resource,
particularly Ken/McMahon and Gellatly,
near-term focus, but Mincor chief ex- 4.17m @ 6.08%, into a greater restart study.

ecutive Peter Muccilli insisted his team Republican Hill is a greenfields target, – Michael Washbourne

was champing at the bit to follow up on but has shown evidence of a series of

its “superb suite” of regional exploration fertile ultramafics associated with mag-

targets. netic highs, with basal contact positions

“We can restart exploration in nickel as along strike still untested.

soon as we think the time is right,” Muc- Results from Mincor’s last nickel-fo-

cilli said. “I genuinely think we have a su- cused drilling programme in 2015 were

perb suite of nickel targets, both green- fed into two separate DFS-level studies

fields and advanced.” on the Durkin North and Miitel/Burnett

With about $18 million cash in the projects. Both studies were completed

PAGE 40 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

St George happy with
EM consistency

Its exploration focus is on traditional Alexander. Prineas said the Preliminary metallurgi-
commodities in traditional environments belt continued to prove fertile.
and St George Mining Ltd executive cal work has indicated
chairman John Prineas hopes it will de- “The three EM targets we
liver a traditional multiplier return to his have drilled have yielded economic recoveries of
shareholders. three discoveries,” Prineas
said. “We have now defined the other elements could
There have been times during the mineralisation over 3.5km
year when the company has looked of strike, although this is not be possible. The first
like delivering on that hope. In May, the continuous and we still need
company’s shares hit 20.2c on the ASX to do infill drilling.” round of met test work
and reached as high as 25c in July. St
George shares had tailed off to 12.5c by Mt Alexander was first dis- produced recoveries of
the time of the Australian Nickel Confer- covered by BHP Billiton Ltd
ence, but Prineas is confident the com- in 2008 and acquired by St more than 99% of nickel
pany can build on the early-stage explo- George and Western Areas
ration achievements which caused the Ltd in a 75/25 JV earlier this and copper and concen-
initial spike. year. Prineas said the pro-
ject’s location in the world-class Agnew- trate grades of 18% nickel
St George has enjoyed a string of Wiluna belt made it an obvious target,
discovery successes in 2016, the lat- but it has been the early-stage explora- and 32% copper.
est being mineralised intersections from tion work which had most encouraged
maiden drilling at the Investigators pros- the company. “That is higher than
pect, part of the company’s Mt Alexander
project in Western Australia. “Along the Cathedrals Belt we defined those of the Nova optimi-
three initial targets from EM and all three
Hits from that programme included targets have yielded discoveries,” he John Prineas sation study and the PGE
1.57m @ 6.26% nickel, 2.71% copper, said. “The mineralisation is shallow, 25- and cobalt results indi-
0.18% cobalt and 4.91 g/t PGE, 1.92m 170m, and the mineralised ultramafics
@ 4.58% nickel, 1.52% copper, 0.14% are up to 15m thick, which is a massive cated we would get good
cobalt and 3.83 g/t PGE and 2.79m @ bonus.”
1.63% nickel, 0.53% copper, 0.05% co- by-product credits as well,” Prineas said.
balt and 1.24 g/t PGE. Each of the prospects – Cathedrals,
Stricklands and Investigators – have also St George will now turn to further ge-
The results from Investigators repre- shown high copper and PGE values,
sent the third successive mineralised which Prineas said was unusual for the ophysical work as it looks to complete
intercepts on the Cathedrals Belt at Mt Agnew-Wiluna region.
the picture across the Cathedrals belt.

Prineas said a conversation with for-

mer Sirius Resources managing director

Mark Bennett had led him to approve a

high-powered SAMSON deep search

EM survey.

“This programme will see below 500m

and will cover the entire belt,” he said. “If

we find something at depth we should all

get excited because of the 100% suc-

cess rate we have had on all the shallow

EM conductors completed to date.”

– Dominic Piper

Legend sticks with strategy

Taking the podium at the Australian 2015. “All I can say is that Legend did a the way to Rockford, 120km north-east
Nickel Conference, Legend Mining moving loop [survey] and found conduc- of Nova and 100km south of Tropicana.
Ltd managing director Mark Wilson cra- tors down to 500m. We drilled them, we
dled a piece of core from the Nova nickel- explained the conductors, we reconciled The 80-hole aircore programme for
copper project in the Fraser Range. the down-hole EM and there is no doubt 5,000m was scheduled to be completed
in our mind about the system we are us- by the end of the year.
“This is what gets me out of bed in the ing,” Wilson said.
morning,” Wilson said. “That programme is designed to basi-
“And, because it is innovative it enti- cally give us depth of cover lithology and
“We are in the Fraser Range and we tles us to 45c in the $1 tax rebate, which geochemical signature of the basement
believe there is every reason that there is a very important part of our business rock. That rig is due to arrive tomorrow
are more Novas in the Fraser Range and plan. It is the best way that we know for [October 21] which will get us through
we are hell bent on finding them.” first pass exploration at the moment. We to Christmas and we are hoping that will
modified what we did earlier, we are do- generate the next iteration of RC and dia-
With $11 million in cash and receiva- ing broader line spacing which enables mond targets,” Wilson said.
bles, Legend is well placed to execute its us to hopefully cover more territory,
exploration strategy in the region. hopefully, just as effectively as we go on – Mark Andrews
the regional scale.”
Wilson said there was some “chatter”
around whether Legend’s tactic of EM At the time of print, Legend had a rig on
from surface was the right way to go at its
Rockford project acquired in September

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 41

NICKEL REVIEW

One hit to drive nickel exploration

Investment in the nickel sector appears right now they are not seeing a return in and money will be coming left, right and
to be light on in the near-term, according nickel exploration. centre, but until that happens it’s going

Alto Capital senior analyst Carey Smith. “It is a sad fact that they are not go- to remain fairly quiet, unless the nickel

However, the upside for nickel players ing to invest in what is going to happen in price rebounds strongly.”

is one good drill hit will change sentiment two, three or four years’ time, they want a Western Areas Ltd is perhaps one

“in the market. result in the next couple of months. All it company with the balance sheet to

“All it takes is one intercept like Nova [the nickel sector] needs is one discovery fund extensive exploration campaigns,

and then you will have however, its standing

money pouring into It is a sad fact that they are not as Australia’s highest-
nickel exploration com- going to invest in what is going to grade and low cash cost
happen in two, three or four years’ time,
panies, but there hasn’t nickel producer means it
been a decent discovery faces other day-to-day
in three or four years,” pressures other than just

Smith said. they want a result in the next couple of exploration concerns.
“St George [Mining months. All it [the nickel sector] needs Nevertheless, West-

Ltd] is doing a very good ern Areas managing di-

job, they have managed is one discovery and money will be rector Dan Lougher said
to raise money every coming left, right and centre, but until that the company would not
year to fund their nickel refrain from pursuing

exploration, but the aver- happens it’s going to remain fairly quiet, targets with gusto when
age punter out there is unless the nickel price rebounds strongly. significant mineralisation
interested in a return and is identified.

PAGE 42 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

Paydirt Media editor Dominic Piper put a variety of questions to a panel of nickel experts before RC and diamond drilling targets
at the Australian Nickel Conference in October. Panellists included Alto Capital’s Carey were identified.
Smith, Western Areas managing director Dan Lougher, Axiom Mining chief executive
Ryan Mount and Legend Mining managing director Mark Wilson “I’d like to put as much money as I can
into exploration – it is not a bad thing, it
“While we are conservative in terms of restania, with near-mine resource exten- is good thing – but for us it is part of a
the budget, if we do hit something and sion work at the likes of New Morning a capital budget and we have to control the
we like it, it will get money,” Lougher said. priority. whole budget, not parts of it,” Lougher
said.
“But, as I said to my managers, ‘if you Further afield, Western Areas will
put your hand in that bucket and take out spend about $2-3 million on greenfields “We like to keep the Gawler because
dollars somebody else is going to come exploration in the Gawler, where it be- it is a 5-7 year window for us and the
and ask you why are you taking my dol- lieves it has a first-mover advantage in a brownfields at Cosmos needs money and
lars?’ There is only a net sum, but you region bearing similar intrusive and geo- that will get money. As an operator, the
do try and split the pie, depending on the logical similarities to Nova. exploration budget is an easy cut. The
pressure of the day.” first thing to go is exploration because it
With Western Areas holding 4,000sq doesn’t necessarily add value to the op-
As an operator, Western Areas is cog- km of ground in South Australia’s West- eration right there and then, but it even-
nisant of the fact it needs to maintain ern Gawler, Lougher said there was a tually catches up with you. Gawler and
reserves across the portfolio in addition lot of “foot work” that needed to be done Cosmos are very critical to our growth
to allocating money to sustaining opera- platforms, so they will get money.”
tions and growing the company, as well Price predictions for October 2017
as exploration. It was not so long ago the nickel sul-
Carey Smith $US17,000/t phide market was said to be “dying” and
Western Areas’ current exploration some would argue that with only Vale’s
spend is the lowest since the GFC, with Dan Lougher $US14,000/t Voisey’s Bay and Nova being genuine
Lougher saying $12 million was the least discoveries in recent times, the nickel
it had spent on exploration in one year Ryan Mount $US17,000/t sector is on death’s door.
compared with a high of $37 million.
Mark Wilson $US11,600/t However, the alternative nickel laterite
Exploration has slowed down at For industry has had its fair share of prob-
lems, with high capex requirements and
complex HPAL processing technology
deterring people from investing in the
sector.

Some laterite projects requiring HPAL
processing can cost billions of dollars to
build, as opposed to several hundred mil-
lions of dollars to get a sulphide project
into production.

Axiom Mining Ltd is not faced with
such problems in the Solomon Islands
where it is aiming to have a DSO nickel
laterite operation in play next year.

The total development cost is estimat-
ed to be $20 million.

“It looks way too difficult,” Axiom chief
executive Ryan Mount said about devel-
oping a HPAL-reliant operation.

“The ones that are in production are in
developing nations and that comes with
a whole suite of other issues. You have
social, government issues and in some
areas you don’t have police. So to come
and build a HPAL plant is difficult enough
itself, then you have to police the com-
munity and then deal with the govern-
ment who aren’t experienced. It was very
clear to us that if we could make some
good money with DSO we will stick to
that.”

– Mark Andrews

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 43

NICKEL REVIEW

Impact steps up unicorn hunt

The next instalment of metals often occurring end of a 9km arc which Impact is model-
Impact Minerals Ltd’s ling on the Voiseys Bay-style of minerali-
quest to find a “nickel- together with nickel-cop- sation.
platinum coated unicorn”
at its Broken Hill project per deposits, the most “The aim was to look at the minerali-
in New South Wales is sation style and do some down-hole EM
about to begin. common ones being and get some structural measurements,”
Horn said.
Although Impact has platinum and palladium,
been mainly focused on “We’re gearing up for some aggressive
its Commonwealth gold but also the really rare exploration. We’re planning a VTEM sur-
project, also in NSW, vey across this area and some detailed
through 2016, the junior metals rhodium, iridium, mapping and drilling in early 2017.”
explorer has been lin-
ing up priority targets for osmium and ruthenium,” Geophysical work recently completed
drilling early next year. at Impact’s Mulga Tank nickel-copper-
Horn said. PGM project, about 200km north-east of
Maiden drilling at the Kalgoorlie, includes almost 1,000km of
Red Hill prospect last “They’re primarily used detailed magnetics, nearly 100km of He-
year returned the highest-grade PGM in- li-EM and SAM surveys and more than
tercept ever recorded in Australia, strik- for auto-catalytic conver- 4,000 soil samples.
ing 3.5m @ 2.9% nickel, 2.3% copper, 5
g/t platinum, 144 g/t palladium, 6 g/t gold, tors, also hard-wearing Impact boasts a healthy cash posi-
1.7 g/t rhodium, 2.6 g/t iridium, 2 g/t os- tion of $3 million and could soon receive
mium and 1.1 g/t ruthenium. metal alloys which are a $2.5 million cash injection from the
Andrew Forrest-backed Squadron Re-
Impact chief operating officer Leo Horn increasingly becoming sources Pty Ltd for work at Broken Hill
said PGMs had become the focus of drill- and Commonwealth.
ing at the project, which also hosts the Leo Horn more important and they
Platinum Springs prospect. have a very high value – Michael Washbourne

“There are essentially six precious per ounce, so this has

significant implications for any deposit

that we might find in this district.”

Historic drilling at Platinum Springs

intersected 2m @ 6.1% nickel, 4.5%

copper and 34.5 g/t PGM. Impact also

followed up this hole last year, hitting a

massive magmatic sulphide which re-

turned 0.6m @ 7.4% nickel, 7.6% copper,

11.5 g/t platinum, 25.6 g/t palladium, 1.4

g/t gold and 44.3 g/t silver.

Platinum Springs sits at the southern

Poseidon seeks gold opportunity

Poseidon Nickel Ltd is looking to estab- serve will coincide with “The board has just ap-
lish a central gold processing hub at
its Black Swan project, about 50km north- the DFS release. proved some more fund-
east of Kalgoorlie.
“We’ve done some ing in order for us to go
Although Poseidon’s focus is restart-
ing the Silver Swan underground mine geotechnical work and back into that area and to
– part of the Black Swan project – when
the nickel price recovers, the company numerical modelling and expand on that because
wants to take advantage of the abun-
dance of precious metal on its tenements we’ve optimised our min- we believe that particular
while gold remains in favour.
ing method and we’re now anomaly has a huge up-
“There’s a lot of refractory gold in and
around the Kalgoorlie bulb which doesn’t in the process of updating side.”
have a home or a processing facility,”
Poseidon chief operating officer Michael our mine plan in order to Poseidon also has a
Rodriguez said.
get ready to restart,” Rod- budding partnership with
“These are the ideas we have about
how we can reinvent ourselves and make riguez said. Kidman Resources Ltd
these assets work for us.”
“We want to be ready for lithium exploration
Black Swan was acquired from Norilsk
Nickel in late 2014 and Poseidon expects to take advantage when around Lake Johnston,
to complete a DFS on the project before
the end of the year. the market turns. We are Michael Rodriguez 117km west of Norseman.

Silver Swan hosts a 136,000t @ 9.08% looking for stability in the Rodriguez said the
for 12,400t contained nickel resource,
making it one of the world’s highest- market before we restart company remained on
grade nickel orebodies. A maiden re-
because we certainly need to be able to the lookout for additions to its portfolio,

make a profit.” which still includes its original corner-

Lake Johnston, also a former Norilsk stone asset, Windarra, about 300km

asset, will be the second cab off the rank north of Black Swan.

for Poseidon. Until the nickel price im- “When the market is in a downturn,

proves, near-mine and regional explora- that’s where there is a great opportunity

tion work will continue, including at the to do M&A, JVs or similar things which

Abi Rose discovery. are opportunistic,” he said.

“We put that out about 12 months ago, – Michael Washbourne
but we were unable to get a great deal of

traction,” Rodriguez said.

PAGE 44 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

SAVE THE DATE

GRAPHITEAUSTRALIAN

27 April 2017 - Novotel Perth Langley

www.australiangraphiteconference.com

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

NICKEL REVIEW

After a lean four-year period, there was a renewed sense of optimism at this year’s Australian Nickel
Conference.

Despite nickel trading at close to 12-year lows and the stainless steel ingredient not performing as well
as other base metals, a pending supply shortage and events in the Philippines has seen the nickel price –
$US9,960/t – improve 17% year-to-date.

Furthermore, some experts in the field believe there is only more upside to come, with predictions nickel
prices could rise as high as $US17,000/t by the time of next year’s conference.

With that in mind, delegates were upbeat and enthusiastic about the future of the sector.
Once again Paydirt captured the event from all angles.

PAGE 46 NOVEMBER 2016 AUSTRALIA’S PAYDIRT

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 47

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NORTHERN TERRITORY

Opening up
the Territory

According to the Northern Territory De- Fields Ltd duo Matt Briggs and Tommy tential investors by extending the time
partment of Mines and Energy, the McKeith have no doubt the Tanami is one between renewals from two years to six
mining and petroleum industry accounts of the hottest addresses in Australia. years.
for more than 20% of gross state product.
“In my last role – long-term planning To monitor compliance and ensure
The mining and petroleum sectors and also feeding into the strategy at Gold proposed activities are undertaken, it has
have endured great pain in the past few Fields and providing support to the cor- been proposed that the mineral authori-
years and investment dollars hard to porate development team – I have looked ties still be reviewed every two years.
come by. at dozens of exploration and mining and
resource projects around the world and By extending the renewals format,
Despite ranking seventh overall as the been keeping an eye on ABM for the last NT hopes to be aligned with the likes of
most attractive jurisdiction in the world four years,” newly appointed ABM man- Queensland where some rents can be in
for exploration and mining investment in aging director Matt Briggs tells Paydirt existence for as long as 10 years.
the 2015 Fraser Institute Annual Survey on pages 56-57.
of Mining Companies, NT remains heav- Making such changes will hopefully
ily under explored. “It [Tanami] hasn’t had that spend. It help the department fulfil its mandate of
has the same rocks, the same structures, promoting exploration in NT in accord-
In a mining context on home soil, NT you see the same anomalism and min- ance with stringent regulations and ap-
faces stiff competition in attracting in- eralogy, but it just hasn’t had the same provals processes already in place.
vestment in the Top End from power- intensity of exploration or spend or the
house resources jurisdictions Western focus of the other [Yilgarn/East Lachlan] “The Northern Territory’s resource po-
Australia and Queensland. areas.” tential is vastly under-explored. Active
exploration programmes provide much-
However, there appears to be a hive of While ABM will hit the ground running, needed data to help us better understand
activity in the Territory’s resources sec- the NT Government is showing a willing- the geology of the NT and its resource
tor across a variety of commodities at the ness to support companies with interests potential,” the department said in state-
moment. in the Territory and recently announced ment earlier this year.
a proposal for mineral authorities to be
One company looking to exploit the established for coal in Central Australia. “Issuing titles compliant with the legis-
gold resources on offer – ABM Resourc- lation in a way that encourages greater
es NL – is being headed by a team with The NT Department of Mines and En- exploration provides greater incentives
a reputation of being associated with ergy is of the view mineral authorities for industry while maintaining regulatory
world-class assets. may improve the investment attractive- control on behalf of all Territorians. The
ness of the exploration projects to po- Territory must compete globally to attract
While some may be surprised at their minerals exploration investment.”
interest in the Territory, former Gold

AUSTRALIA’S PAYDIRT NOVEMBER 2016 PAGE 49

NORTHERN TERRITORY

TNG yet to hit its Peake

Recent test work has vanadium producer WOOJIN
opened up a potential new
market for strategic metals – a key supplier to Hyundai
hopeful TNG Ltd.
Steel – as an off-take part-
TNG revealed last month
it had successfully produced ner for 60% of the vanadium,
vanadium electrolyte using
vanadium pentoxide from its while Gunvor Group has
flagship Mount Peake vana-
dium-titanium-iron project, signed a binding LOM agree-
about 230km north of Alice
Springs. ment for 60% of the iron, pro-

Vanadium electrolyte is a duced as 99.9% iron oxide.
key component of the vana-
dium redox batteries which “WOOJIN wanted to take
are rapidly emerging as the
preferred form of grid energy 100%, but we deliberately
storage in regional areas and
developing countries. kept 40% for addressing

TNG’s test work at the SMS other markets, which is the
Group laboratories in Vienna indicated it
could produce vanadium pentoxide with potential for vanadium redox
at least 99.5% purity, which is currently
among the highest globally. batteries we’re starting to

“The existing vanadium redox produc- see emerge,” Burton said.
ers need high quality vanadium electro-
lyte, which through our alignment with TNG is close to landing
SMS, we have managed to produce as
another business sector to our overall off-take for arguably its most
strategy,” TNG managing director Paul
Burton told Paydirt. TNG’s Mount Peake vanadium-titanium-iron project valuable of the commodities
could be in production in 2019 – titanium – accounting for
“It could be potentially a very interest- 60% of the Mount Peake rev-
ing side business for TNG and gives us
the ability to really utilise all our vana- market for TNG,” Burton said. “In fact, enue stream, based on DFS estimates.
dium pentoxide in addressing all of the
different potential vanadium sectors.” there’s a need for new vanadium depos- “We have two approaches that we’re

Current demand for vanadium is about its to come on stream. If that vanadium following at this stage,” Burton said. “One
140,000 tpa, with 90% of that claimed by
the steel industry. Vanadium is typically redox battery market tends to get more is to approach the existing titanium pig-
used to improve the quality and strength
of steel production. in favour – and we think it will because ment producers and the other side is to

Although steel production has tapered these big storage batteries are going to approach the existing titanium pigment
off in recent years, the
amount of vanadium be a necessity in the future – almost all end-users, which are the very large paint
used to make that steel
has increased 6% over a of our annual production could be used producers, cosmetics, chemical compa-
similar period.
up in that sector alone. There certainly nies, a whole range of sectors.
Concerns around
high-cost production in is a big structural shortage of vanadium “We’re being very careful about how
South Africa and uncer-
tainty around mines in ahead.” we approach this. I’m sure it will get done
Russia and China has
put Mount Peake firmly Mount Peake has come a long way very quickly once we move on a particu-
in the frame as the next
key global vanadium since TNG made the initial discovery in lar direction, but these are our crown jew-
producer.
2008. A DFS released last year found els, if you like.
“Not one mine at the
moment can satisfy total global produc- the project could support production of “Titanium dioxide has been in a bit of
tion – we’re only going to be doing 12,000
tpa, which is about 15% of annual pro- 17,560 tpa high purity vanadium pen- an oversupply over the last couple of
duction – so there’s plenty of room in the
toxide, 236,000 tpa titanium dioxide and years, it is correcting now and prices are

637,000 tpa pig iron over an initial life of starting to move up again. It’s the right

17 years. time for us to start pushing the buttons

The DFS estimated a pre-production on off-take and pursuing the discussions

capex of $970 million for stage one min- we’ve already started. I’m hoping we’ll

ing rate activities of 3 mtpa. Production see something sorted in the next few

revenue can then be quarters.”

used to ramp up opera- TNG recently appointed independent

tions to 6 mtpa after four advisory house Gresham Advisory Part-

years. ners Ltd to assist with project financing

TNG has struck key options, titanium off-take discussions

agreements with plant and other corporate matters.

supplier SMS over the Burton said his company expected to

TIVAN refinery process receive a mining licence and other ap-

and engineering firm provals in the coming months, paving the

Downer Group as a po- way for first development works to begin

tential developer of the at the proposed mine site.

Mount Peake mine. “We’re at the pointy end of project de-

Paul Burton SMS has already iden- velopment,” Burton said. “Big projects
tified potential operating probably need a 24-month build time to

cost savings of up to $50 get into production, so based on that we

million per annum based on an innova- should be in production by 2019.”

tive redesign of the vanadium extraction – Michael Washbourne
circuit for the TIVAN refinery.

TNG has also secured Korean ferro-

PAGE 50 NOVEMBER 2016 AUSTRALIA’S PAYDIRT