pd266-Nov18-mag-web

NOVEMBER 2018 Volume 1. Issue 266 $11.95

European ISSN 1445-3436
renaissance 11

• Australians in Europe 9 771445 343007
• Nickel Conference review
• Northern Territory focus

Page 1 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

WESTERN AUSTRALIA’S

Premier Nickel Company

• Strong safety and environmental culture
• Independent nickel sulphide producer in Australia
• Low cash cost Nickel producer in Australia and is debt free
• Further exploration success at the Cosmos Neptune target
• Mill Recovery Enhancement Project completed and operational
• Strong organic growth pipeline

www.westernareas.com.au

ASX: WSA Perth Office: +618 9334 7777 Email: [email protected]

PAYDIRT (ISSN 1445-3436) 5 NEWS contents
Published by The resurgence of the West Australian
Paydirt Media Pty Ltd. nickel sector continues following Western 19
A.C.N. 063 985 133 Areas Ltd’s decision to start construction 33
of the Odysseus mine at the Cosmos 42
Head Office: nickel complex near Leinster following
Suite 9, 1297 Hay St, West Perth completion of a DFS. Ramp up at
Western Australia 6005 Odysseus is expected to begin at the end
P.O. Box 1589, West Perth of FY2021, ensuring its move into full
Western Australia 6872 production coincides with the expected
Phone: (+61 8) 9321 0355 uptick in nickel demand generated by the
Facsimile: (+61 8) 9321 0426 EV market. Dominic Piper reports
[email protected]
www.paydirt.com.au 19 COVER
Paydirt editor Dominic Piper travelled to
Italy and Scotland and found two Australian
companies at different stages in their
Editorial: European adventures. Alta Zinc has been
Editor: Dominic Piper ploughing away for a number of years at
Deputy editor: Mark Andrews Gorno, northern Italy, and appears to be
Journalist: Michael Washbourne on the development path at the project.
Photography: Picture This Meanwhile, Walkabout is just beginning
Art director: Nick Brown its trek in the Scottish hills. Piper provides
Contributors: extensive coverage from both site visits
Keith Goode (Sydney), Brendan Ryan
(Johannesburg), Ross Louthean 33 EUROPE
Australia’s miners and explorers have
Advertising: established formidable reputations in
Advertising manager: Richa Fuller South America, Africa and Asia, but can
Subscriptions: Mitchelle Matambo they do the same in Europe? There are
Phone: (+61 8) 9321 0355 now more than 40 ASX-listed companies
Facsimile: (+61 8) 9321 0426 with varied interests across the continent
and no doubt their success will see many
Pre-press and printing: more move into the region. Paydirt takes
Vanguard Press 26 John St, a look at some of the players establishing
Northbridge WA 6003 themselves early in Europe
Member of:

Paydirt Media 42 AUSTRALIAN NICKEL
Executive chairman: Bill Repard CONFERENCE
Finance manager: Giovanny Jefferson
Accounts/administration: A 350-strong crowd turned out for this
Heather Melling year’s Australian Nickel Conference. The
one-day event attracted the world’s best
Conferences: Melita Fogarty, nickel miners and explorers to share their
Namukale Nakazwe-Msiska, stories at the Pan Pacific Hotel, Perth.
The sector is thriving on the importance
Christine Oelschlaeger of the base metal to the emerging EV and
battery markets, however, stainless steel
NOVEMBER 2018 VOLUME 1. ISSUE 266 $11.95 consumption still commands the lion share
of global production. Paydirt covered the
European conference from all angles to find out just
renaissance where the industry is heading

• Australians in EuropeISSN 1445-343662 NORTHERN TERRITORY
• Nickel Conference review11 Northern Territory is emerging as
• Northern Territory focus a favourable destination for mining
9 771445 343007 investment. Some of the world’s major
PAGE 1 NOVEMBER 2018 AUSTRALIA’S PAYDIRT gold producers are well positioned, while
there is also an oil and gas boom under
Cover image: The Alta Zinc exploration way. So, how will investors react to recent
and development team underground changes to mining legislation? Paydirt
at Gorno, Italy looks at some of the stories currently
shaping NT’s mining sector
Member of:

Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be re-
produced in any form without the consent of the
publisher. This includes photographs either taken
by Paydirt Media staff or provided by other parties.

Time to control
the narrative

The prevailing “narrative” can be eve- Carpenter Labor Government had been slow to recognise the
rything in the resources sector, par- pressure building on its agencies from the increased volume of
ticularly at the junior end of the market. applications and the entire system was grinding to a halt.
Favourable views on project, ju-
risdiction and commodity are all de- The Barnett Government quickly identified the need to improve
pendent on investor sentiment and processes and set about restructuring agency approach to per-
this doesn’t always mean at times mitting.
when commodity and share prices
are rising. The new McGowan Government has kept this process going
The stories at last month’s Australian Nickel Conference were and it was heartening to hear Minister for Mines and Petroleum
prime examples of this. Bill Johnston at the Australian Nickel Conference tell delegates
The markets aren’t great at the moment, the nickel price has the Government would continue to pursue its goal of 80% approv-
come off and share prices aren’t enjoying a stellar run but the tim- als within the allocated timeframe and revisit the mining amend-
ing appears to be right for the sector. The conference enjoyed its ment bill tabled in parliament by the Barnett Government.
largest attendance in nearly a decade and as long as delegates
didn’t check the share prices every hour, they would’ve realised Johnston’s willingness to participate in a Q&A session at the
each of the presenting companies could boast forward momen- conference was also a reflection of the cordial relations govern-
tum in their; this is the “narrative”. ment and the mining sector currently enjoy. An under-fire minister
The nickel narrative is largely driven by another, wider, narra- would have been at best evasive, and at worst absent from such
tive; rising EV production. This narrative has already resulted in a gathering of miners but Johnston, even more so than recent
major interest in the graphite, lithium and cobalt markets and over predecessors on either side of politics, has shown a willingness
the 18 months nickel has joined the battery materials party with to engage with the industry on any topic.
both commodity and share prices showing signs of improvement.
This is testament to just how powerful a narrative can be in Such engagement can be invaluable, particularly in large,
investment markets. The lithium-ion battery market currently only democratic jurisdictions. Europe or the US may be stable and
accounts for 4% of nickel demand but investors are gearing up similarly developed but jurisdictions in these parts of the world
for a rise over the next decade akin to that expected in lithium and often don’t have the regulatory capability to deal with new mining
cobalt. The difference being, lithium and cobalt are much smaller developments. It has been so long since they experienced mining
overall markets and therefore the impact of EV growth is likely to that they are, in many ways, as unprepared as emerging econo-
be much more dramatic. mies of Africa or Asia to regulate new proposals.
But, after several fallow years, it appears nickel is back in fa-
vour with investors. Even if the price hasn’t quite moved yet, there WA has no such issues and as long as government continues
is a level of certainty in the market that a number of nickel pro- to see its role as an enabler, as well as regulator, of mining invest-
jects (some of them long-stalled) will get up as a result of the EV ment the State will retain its pre-eminence in the industry.
trend.
The belief in the new nickel narrative is aided by the location The Nickel Conference also demonstrated another narrative
of most of these assets in Western Australia. Paydirt has been building within the mining sector; change and innovation. This
a champion of emerging and alternative jurisdictions – the major is not just about applying new technology to exploration, mining
focus on Europe in this edition is evidence of that – and while and processing – although that is part of it. Of equal importance
there are plenty of reasons companies and investors should look is the need for cultural change within the sector to ensure society
elsewhere (underexplored geology, undervalued projects, etc.) recognises the narrative of mining as an enabler of future techno-
the fact remains a project in WA is far more bankable than a logical advances, not an ancient and archaic industry.
similar one in Victoria, Peru, Ghana or Spain.
Much of the reason for this can be attributed to the depth of the Projecting this to the wider community is vital if the industry is
WA resources sector with skills, technology and infrastructure to redress the trend of fewer graduates in mining-related disci-
readily to hand. However, some credit must also go to the WA plines. Mining needs an image which will encourage young, dy-
State Government. namic thinkers to it, in which they see mining as worthy of their
I know it’s not usually the done-thing to praise a sitting gov- interest. If it doesn’t, its economic importance to the nation will
ernment but other than the aborted royalty increase policy, the wane, just as it has in Europe.
incumbent government has provided a steady hand for the sector
at a time when jurisdictional stability is so important in the face It was a topic raised not only at Nickel but also the Swedish-
of market volatility. Australian Mining Initiative held in Perth the day prior. The Swed-
Resources sector policy in WA should be largely bipartisan ish industry is finding similar challenges in attracting the people
and for the main part it has been, at least since the mining boom it needs.
began in earnest in 2005. The election of the Coalition Gov-
ernment in 2008 was probably well timed. The former Gallop/ The collaborative approach taken by industry, service provid-
ers, government and academia in Sweden has seen it establish
a 2030 target for it to become renowned for playing a leading role
in social, economic and environmental sustainability.

The Australian industry will need similar collaboration if it is to
retain its relevance with future generations.

[email protected] @DominicPiper

Page 4 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

news

Western Areas shafts and it is in magnificent condition, having
nickel doubters been built in 2004.

The resurgence of the West Australian Dan Lougher Mining will consist of conventional sin-
nickel sector continues following West- gle-lift long-hole open stoping with paste
ern Areas Ltd’s decision to start construc- “From a capital deploy- fill.
tion of the Odysseus mine at the Cosmos ment perspective, this project has a very
nickel complex near Leinster following good development profile,” he said. “For Odysseus will be accessed via a new
completion of a DFS. the first three years capital deployment will single ramp decline starting from the ex-
just be ticking along with low-cost works. isting AM5/AM6 decline development.
Announced on the eve of the Australian So, we won’t be looking for convertible Lougher said rehabilitation of the decline
Nickel Conference – see page 42 – the bonds or anything like that for this project.” would begin in January 2019 and could
positive DFS and subsequent decision-to-
mine marks another realisation of Western The development structure will allow “present opportunities to enhance Odys-
Areas’ growth plans after the company Western Areas to fund at least the first few
switched on its mill recovery enhancement years of the project internally but Lougher seus’ production profile.
project (MREP) at its Forrestania opera- didn’t rule out third party funding in later
tions earlier this year. years. Shaft is forgotten
technology in
The go-ahead for Odysseus also follows “Whilst funding is not a short or medi-
BHP Nickel West Ltd’s decision to expand um-term matter to be addressed, we have Australia but based
its Leinster operations, Independence fielded expressions of interest in providing on the operating costs
Group Ltd’s first year of full commercial offtake finance, unsolicited, non-binding versus trucking analysis,
production at Nova, Panoramic Resourc- and incomplete interest in purchasing a di- the absolute right thing
es Ltd’s decision to restart its Savannah rect minority stake in Odysseus and other to do at Odysseus is put
mine early next year and Black Mountain funding mechanisms. No decision has
Metals’ acquisition of the mothballed Lan- been made in this regard given it is not an in a shaft.”
franchi mine in Kambalda from Panoramic. immediate priority for the company.”
“We will start looking at AM5 and AM6
Western Areas’ plans for Odysseus Among the major capital items is a $36 access points from now [ahead of the de-
came just three years after it acquired million revamp of the existing Cosmos cline development],” he said. “We believe
Cosmos for $25 million from Glencore SA. processing plant, construction of a $3.4 we can do a better job at defining those
million 13km lateral gas spur line to feed orebodies than Xstrata [Glencore] did.”
The DFS confirmed a robust 10-year increased power requirements and, most
operation could be built at Odysseus, pro- intriguingly, a 1,000m deep air intake/pro- Identifying further tonnes remains a live
ducing 130,000t of nickel-in-concentrate, duction hoisting shaft. exploration option at Cosmos, particularly
a significant increase in both size and with neighbour Nickel West currently en-
scale on a March 2017 PFS. “Shaft is forgotten technology in Aus- joying discovery success.
tralia but based on the operating costs
Pre-production capex for the project versus trucking analysis, the absolute right “In our opinion, the Leinster-Wiluna belt
has risen from $210 million in the PFS to thing to do at Odysseus is put in a shaft,” will end up being a better nickel belt than
$299 million in the DFS but the project is Lougher, who cut his teeth on deep-level Kambalda,” Lougher said.
now considerably more lucrative. Western shaft mines in South Africa, said.
Areas now plans to process 900-940,000 Odysseus is expected to begin ramp-up
tpa (up from 750,000 tpa in the PFS), pro- The company has secured an option to at the end of FY2021, ensuring its move
ducing 13,000 tpa nickel-in-concentrate purchase a 1.1 mtpa headframe and wind- into full production coincides with the ex-
(up from 12,000 tpa) at C1 cash costs of er from Impala Platinum Ltd at a fraction pected uptick in nickel demand generated
$2.65/lb (down from $3.21/lb). Life-of-mine of the $24 million price tag of a new build. by the EV market.
EBITDA will now be $1.24 billion (up from
$840 million) but payback remains at 3.5 “We are not paying anywhere near that “We are positioned to meet that demand
years. kick,” Lougher said.

Speaking at the Australian Nickel Con- Rising EV production has been a shot-
ference, Western Areas managing director in-the-arm for Western Areas and other
Dan Lougher declared himself delighted WA nickel concentrate producers as it rep-
with the results of the DFS and the board’s resents the most cost-efficient way of pro-
decision to pursue development of Odys- ducing the nickel sulphate product needed
seus. for lithium-ion batteries.

“The DFS project team was able to re- Reinforcing the unique position WA
fine the PFS work, which resulted in posi- nickel companies find themselves in is a
tive outcomes on many fronts, delivering a lack of new projects in the sector.
substantially larger and longer life project,”
Lougher said. “We love nickel sulphides because the
share of supply is falling,” Lougher said.
Funding arrangements haven’t been fi- “Even the production coming on line is not
nalised but Lougher sees myriad options additional production, it is just replacement
in front of the company. production. New operations are now stra-
tegic because it is the easiest way to move
into that nickel sulphate market.”

– Dominic Piper

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 5

NEWS

Mo’ mining money for Movember

There was a time when minework- The 2018 Movember campaign’s objec- starting the conversation about health
ers had a moustache as a matter of tive is little different from previous years. because men are not the best at having
course but today you have to wait until those conversations. It is amazing to see,
the Melbourne Cup is run before you can “We want to stop men dying too young. in a workspace where there are many
see a bit of upper lip topiary on Australia’s It is front and centre of everything we do stereotypically masculine mining blokes,
mine sites. and we want as many people as possible how the moustache can break down a
to sign up to help in that fight,” Ryan said. number of barriers.”
The industry has the Movember cam-
paign to thank for bringing facial fashion The numbers are stark. On average Industry support has stretched to cor-
back to the industry. Started in 2003 by Australian men die around four years ear- porate offices with the likes of BHP Ltd,
two friends who had been wondering why lier than women, nearly six men take their Newmont Mining Corp, Rio Tinto Ltd and
the moustache had fallen out of fashion, own life each day, more than 3,452 men South32 Ltd all supporting the foundation.
Movember has grown into one of the larg- will die of prostate cancer in 2018 and
est men’s health movements in the coun- more than 15,000 men are living with a Ryan said Movember’s next aim was
try with 5 million supporters both in Aus- testicular cancer diagnosis. to ensure the conversation spanned the
tralia and across the world. entire calendar.
Ryan said the mining industry had
The campaign calls on Australian men embraced Movember’s fight to improve “We now have programmes across
to raise awareness of men’s health issues these statistics – it has a target of reduc- the year with initiatives for World Can-
ing the number of men dying prematurely cer Day, Testicular Cancer Month, and
“The foundation was born from that one by 25% by 2030 – but he hoped more May 8 which is designed to encourage
conversation and is now in 20 countries involvement would come from within the our community to catch up with a mate.
around the world and has funded more sector. Organisations can use Movember to in-
than 1,200 programmes for men’s health form teams of what’s happening in men’s
projects across more than 20 countries “I think the reason we see miners sup- health across the year,” he said.
focusing on prostate cancer, testicular port Movember is because the mous-
cancer, mental health and suicide pre- tache brings organisations together and For more information on Movember,
vention,” Movember’s head of corporate fun and breaks the monotony of the FIFO please visit www.au.movember.com
development Kieran Ryan told Paydirt. lifestyle,” he said. “We have found that
Movember can act as a Trojan Horse for

Moustaches were once
the height of fashion in

the world’s goldfields

Page 6 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

bush telegraph

Eskom fuels have already been split off into a separate
coal hopes division named South Africa Energy Coal
and have major exposure to both the ex-
So the most attractive segment of South ideological business decision taken by port market and Eskom.
Africa’s failing mining industry to be Eskom management to source greater
in is… wait for it, wait for it… coal; that’s volumes of domestic coal for its power sta- The division consists of four collier-
despite the fact that this much maligned tions on short-term contracts. ies – Khutala, Klipspruit, Middelburg and
commodity is under attack from all sides Wolvekrans – as well as three processing
with some banks now declaring they will The strategy was aimed at supporting plants. South32 owns 92% of these com-
no longer help fund new coal-fired power black-owned junior miners and Eskom panies with 8% held by a broad-based em-
station projects. stopped making required levels of capital powered black economic empowerment
expenditure in the “cost plus” coal mines consortium led by Phembani Holdings.
Export coal prices FOB Richards Bay which it effectively owned but were man-
are back above $US100/t and the benefi- aged by the major coal groups. In the year to end-June, SA Energy Coal
cial impact of the weakening rand – which produced a total of 27.3mt of coal of which
has risen from around R12:$1 to around That strategy backfired on Eskom be- 12.1mt was exported.
R15:$1 so far this year – on revenues is cause it found itself faced with soaring
a cherry on top for the South African coal domestic coal costs because increasing South32 has positioned itself strategi-
producers. volumes were being priced on the spot cally regarding new business still to be
market instead of long-term contracts as awarded by Eskom in terms of supplying
At the global macro-economic level, previously. its new 4,800MW Kusile power station
the main reason is booming demand from which is currently well into construction.
China which is importing more than it has Coal supply also became volatile as pro-
ever done before according to a recent duction from the “cost plus” mines fell off That supply contract should have been
Bloomberg report which also said Glen- – because of the lack of capital investment finalised with Anglo American Coal plc’s
core was “within touching distance” of see- – while production from the new mining New Largo colliery several years ago but
ing coal mining profits exceed its profits operators was erratic. was stalled by negotiations over Eskom’s
from copper for the first time since it went demand that new coal supply had to be
public in 2011. As a result, Eskom is looking to source from companies that were black-con-
more coal from its tied cost-plus collieries trolled.
At the South African micro-economic and is about to invest R1.8 billion for the
level, a huge boost for local coal produc- renewal of coal resources at Exxaro Re- In August, Anglo American sold New
ers has come from state-owned utility sources plc’s Matla operation. Largo to a BEE consortium led by Ser-
Eskom which, you guessed it, is back in iti Resources Ltd and Seriti has subse-
big trouble and running short of coal at a Exxaro chief executive Mxolisi Mgojo quently indicated it is interested in buying
number of its power stations. recently sounded a note of caution on fu- South32’s coal operations.
ture exports to India – currently South Af-
There are some very good reasons why rica’s biggest foreign coal customer – but South32’s Klipspruit colliery is located
Eskom is back in this mess – as I have the group is still spending R3.3 billion on strategically close to Kusile. The group is
pointed out in previous columns – but the building its new Belfast mine which will spending R4.3 billion on a life extension
really good news is that Eskom manage- produce 2.7 mtpa of “good quality ther- project at Klipspruit colliery which will sup-
ment finally seems to be coming to its mal coal” for at least the next 17 years, of ply the export market but also give it the
senses in the wake of the departure of for- which the bulk, about 2.2 mtpa, is destined chance to pitch.
mer chief executive Brian Molefe and the for export.
clamp-down on state corruption launched South32 chief executive Graham Kerr
by president Cyril Ramaphosa follow- Mgojo has also thrown Exxaro’s hat into maintains the decision to sell is based on
ing the ousting of former president Jacob the ring in the bidding for South32 Ltd’s commercial reasons and he, like Mgojo, is
Zuma. South African coal assets which are in worried about the uncertain future of the
the process of being sold off. Specifical- Indian coal market in particular.
All the major South African coal groups ly, he is after South32’s export allocation
have suffered in recent years through an through Richards Bay. Market sources reckon the driving rea-
son is actually South32’s refusal to accept
The coal mines being offered for sale Eskom’s demands that companies supply-
ing coal to its power stations be 50% plus-
1 share BEE (black economic empower-
ment) controlled. Anglo American has
already sold off its domestic coal opera-
tions because of this.

Kerr commented in August: “As a white,
Anglo-Saxon-owned group, we don’t meet
Eskom’s requirements on supply contracts
to be 51% BEE-controlled.”

Whatever the reason Kerr has for get-
ting out its clear South32 has timed its exit
perfectly.

Brendan Ryan is a Johannesburg-based
mining writer

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 7

NEWS

Sayona set to Sayona has a pipeline of exploration projects
charge Authier in Canada and Western Australia

Seasoned mining executive Dan O’Neill mine capital costs totalling $C83.6 million. The recent appointment of former Rio
has travelled the world extensively dur- Authier is projected to generate a pre-tax Tinto Ltd strategic communications execu-
ing his four-decade career developing re- tive Alexis Segal as vice-president, cor-
sources projects, including a diamond mine NPV of $C184.8 million, IRR of 33.7% and porate affairs, of Sayona’s Quebec-based
in Botswana and multiple coal assets in Aus- average annual revenue of $C80 million. subsidiary, is seen as a critical step in the
tralasia. Payback is estimated at 2.6 years. company’s proposed development of the
project.
However, it is the prospect of building a Mine gate cash costs of $C416/t and FOB
new lithium mine in Canada which is driving cash costs of $C482/t ($US366/t) have also “Quebec is a first world province in a
his potential career swansong. been flagged. An average spodumene price first world country, but one still has to take
of $US675/t was assumed in the DFS. into account community expectations and
“I’m in my mid-60s so I’ve worked on a all the other stakeholders involved and so
lot of projects, but what’s good about this Sayona has forecast 150 jobs will be cre- Alexis will be integral in helping us with that,”
project is that we’re producing something ated during the construction phase and up O’Neill said.
that the world, particularly the Northern to 160 personnel required on site during op-
Hemisphere, wants which is clean energy,” erations. First production is slated for 2020, “He’s got excellent communication skills,
O’Neill told Paydirt. pending successful project finance and per- he knows the mining industry, he knows the
mitting. Quebec people. He will be our access for
“They want lithium for their lithium batter- talking to government officials and dealing
ies to power their cars, their phones. It’s per- O’Neill said the company would have no with the locals. As we all know, you need to
haps not as prevalent in Australia with our trouble locking away development capital bring the community with you through this
small population and big areas to drive, but for Authier. process.”
if you go to China or Europe the lithium story
over there is huge. “I just got back from a trip to New York and Sayona will soon begin detailed engi-
Canada and six weeks ago I was in China neering work which O’Neill said will make
“Volkswagen plans to invest $US84 billion and met with a whole range of companies the project metrics “even more attractive” to
to bring on 300 new electric vehicle models there which are very interested in lithium, so investors, while exploration will continue at
by 2030. Volvo, Toyota, all of the major au- I’m quite confident that we won’t have any its Tansim project, about 80km south-west
tomakers are on board because it’s all be- problem financing the project,” O’Neill said. of Authier, where 9km of pegmatite systems
ing mandated by governments, because with good grades and widths have been
ultimately the people they are serving want “There is strong interest from offtakers in identified.
that clean energy.” China and I’ve had discussions with debt fi-
nanciers and royalty companies that want to Feasibility studies on a potential down-
A founding director of Orocobre Ltd, get involved. We’re quite comfortable at this stream option for Authier are also ongoing,
O’Neill is now managing director of Sayona point there’s demand for our product.” with the company exploring opportunities
Mining Ltd which is looking to develop the to produce a lithium carbonate or lithium
Authier lithium project, about 45km north- To date, Sayona has only signed a non- hydroxide product using conventional pro-
west of the mining-focused city of Val d’Or, binding MoU with Chinese battery materials cessing technology.
Quebec. manufacturer Hunan Changyuan Lico Co
Ltd, a subsidiary of Minmetals Group, for A scoping study released in August 2017
The recently completed DFS on Authier the potential purchase of all Authier concen- found downstream production of lithium hy-
found the project could support production trates. droxide would generate a pre-tax NPV of
of 87,400 tpa lithium concentrate over the $C795 million with an IRR of 44%. Cheap
life-of-mine (18 years) for an initial develop- Sayona could also look to strike a partner- available power of 5c/kWh was also high-
ment capex of $C89.9 million, plus life-of- ship with the Quebec Government which is lighted.
understood to be very keen to see Authier
brought to life. “The scoping study indicated this was a
positive way to go,” O’Neill said. “Is it time to
A DFS indicates Sayona can develop the Authier lithium project for just $C90 million be doing it now? Well, it will be a three-year
feasibility-cum-construction timeframe, so
now is the time to be looking at a PFS [on a
downstream option]. That will be out in an-
other 12 months or so and we’ll know then
whether we should spend more money in
doing a full feasibility study.”

Sayona also has several exploration ten-
ements in Western Australia’s Pilbara re-
gion and was awaiting results from a recent
drilling programme at the time of print.

O’Neill said the company had no plans to
divest its Pilbara lithium assets despite the
advanced status of Authier.

– Michael Washbourne

Page 8 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

WA/SA
host biggest

CRC

The world’s largest explo- Celebrating 25 years
ration research collabora-
tion was launched in Adelaide 29a Clayton St, Bellevue WA 6056
www.bostech.com.au 08 9250 4252
last month by South Austral-
AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 9
ian Minister for Energy and Dan van Holst Pellekaan
Mining Hon Dan van Holst

Pellekaan.

In response to the declining rate of world-class mineral de-

posits, the MinEx Cooperative Research Centre (MinEx CRC)

was initiated to develop cutting edge exploration tools as a

means of unearthing the next generation of mines in an ef-

ficient manner.

Federal Government CRC funding worth $50 million has

been secured, while the 34 partners involved, including BHP

Ltd, South32 Ltd, Anglo American plc, Barrick Gold Corp, plus

a range of players in the METS sector, have committed a total

of $165 million cash and in-kind over the next 10 years.

The $218 million MinEx CRC research collaboration is fo-

cussed on unlocking the potential of mineral deposits under

deep rock cover and improving the productivity of drilling at

the same time as collecting data to essentially minimise time

and costs to drill out deposits.

The CRC will be headquartered in both South Australia and

Western Australia.

NEWS

Six go all out in CRC bid

Recognition of Australia’s potential managing director of Future Smart
prominence in the global battery
revolution was emphasised by the Strategies, said in January when
Federal Coalition Government re-
peatedly last month. the report for AMEC on Australia’s

Under the Government’s $731 potential in the lithium battery boom
million new industry-focused CRC
programme, the Future Battery In- was released.
dustries (FBI) CRC was one of six
projects shortlisted and invited to “There is an opportunity in the re-
present a business case and attend
an interview with the CRC Advisory fining process space as well, but un-
Committee.
less we act today the next box along,
The FBI CRC will be competing
against Advanced Medical Biotech- which is electrical chemical process-
nologies, Blue Economy, Future
Cities, Future Food Systems and ing, will remain at zero. We actually
SmartSat as part of the 20th CRC
round. have an enormous opportunity be-

The successful applicant will be cause next to the rest of the world,
afforded up to 50% of the resources,
with no cap on funding available to value by our estimate [in electro-
each CRC. The CRC collaboration
is expected to match the amount of chemical processing by 2025] will be
grant funding.
close to $300 billion. If we go all the
Future Battery Industries (FBI) chair
Tim Shanahan told Paydirt participants way down the lithium value chain [by
in the Perth-based CRC included tal-
ent from universities, industry and state 2025], we can potentially see a $1.3
governments, which had all contributed a
combined $27 million. trillion per annum industry as a con-

“We have requested that the CRC pro- sequence of the value add globally. I
gramme fund and match that money with
another $25 million. If we are successful, think we want a piece of that and will
we will have cash for research activity of
about $10 million for the next five years,” get us to do more than just talking.”
Shanahan said.
The narrative of Australia becom-
Curtin University is leading the FBI na-
tional consortium and the West Austral- ing a Lithium Valley has continued
ian Government has backed it with a $6
million contribution. Tim Shanahan to strengthen throughout 2018, how-
ever, Shanahan emphasised that the
The WA Government’s support is on
the proviso that the CRC is based in “Really, the most exciting part about FBI was more than just a lithium play
Perth and the chief executive stationed this CRC bid is that it is really an oppor- in the future of energy storage and elec-
in the west. tunity to participate in the establishment tric vehicles.
of a new industry here in Australia; those
Shanahan said a second round of na- opportunities don’t come around too of- “Vanadium, nickel, cobalt, graphite
tional workshops with industry around ten. Australia is certainly blessed with – all the elements you require to make
Australia had just been completed and a huge endowment of the minerals and contemporary batteries are in play in the
analysis of the feedback was under way, elements that are required to make bat- CRC bid we are making,” Shanahan said.
as the process to engage international teries and we are very good at producing
partners in the CRC was ramping up. and processing those minerals.” “There are significant battery manu-
facturing industries in South Korea and
“We currently have some, but we are The likes of Tianqi, with its near-com- Japan and we have some South Korean
looking to strengthen our proposal there. plete lithium hydroxide plant, and Nickel companies participating and Korean re-
We have a pretty good idea on how we West’s vision to produce nickel and co- search entities looking to participate in
are going to populate the themes of the balt for cathode manufacture, gives WA the CRC as well.”
research programme – mining, manu- a head start as an ideal home for the FBI
facturing, deployment in society and the CRC. EV manufacturers in Europe and North
economy, and then recycling and reuse America and research houses vested in
of batteries, with the overarching theme A report released by Future Smart the manufacturing of batteries in those
being industry development,” Shanahan Strategies for Association of Mining and jurisdictions are also being targeted by
said. Exploration Companies (AMEC) member the FBI CRC, while there is already some
companies earlier this year, indicated interest from Chinese companies.
that through value-add opportunities in
the lithium sector alone Australia could “Our challenge now is to complete
partake in a global industry worth an es- those discussions and have them ready
timated $1.3 trillion per annum within the to incorporate in our full business plan,
next decade. which we will need to submit by the end
of November,” Shanahan said.
Australia, predominantly WA, produces
most of the world’s hard rock lithium, but Following submission of FBI’s busi-
lags in the areas of refining and electrical ness plan, Shanahan expects an inter-
chemical production which is dominated view with the CRC Advisory Committee
by China, while Korea and Japan are key early next year.
players in the high-end technology spec-
trum of producing cells built from lithium. With a high-level of input from indus-
try and researchers, Shanahan said the
“There is potential for at least $7-8 bil- development of the FBI’s research pro-
lion by 2025 of value for Australia in the gramme was advancing very well and it
lithium industry,” Professor Ray Wills, would be primed to officially launch oper-
ations when CRC funding was available
on July 1 2019, if its bid was successful.

If FBI is deemed worthy of CRC fund-

Page 10 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

ing, it will be fair acknowledgement from incentives is shap-
the Federal Government of one of the
biggest mineral opportunities for Austral- ing as a defining
ia since the 1970s iron ore boom.
moment.
During a visit to Perth last month, new
Prime Minister Scott Morrison gave the The world’s
impression that his government was on
top of Australia’s current position and po- newest rare earths
tential in the battery minerals game.
producer outside
AMEC chief executive Warren Pearce
told Paydirt that after a meeting with of China, Northern Linda Reynolds
government, he was confident there was Minerals Ltd, has
a genuine desire from it to support all relied heavily on
facets of the battery industry in Australia. R&D tax off-sets
just to bring the
“I think the biggest thing they are grap- Browns Range pi-
pling with is the role of the Federal Gov- lot plant in WA’s
ernment in that space. I think the bit they Kimberley region
have latched onto already is that they on-stream.
have a role in trade and investment at-
traction. The trade delegation role is re- “Without that
ally getting it out to the world and making support and that
sure countries know that Australia wants programme, mines
to be in this business. We have the com-
modities, minerals and are into invest- such as these
ing in processing and refining to attract
overseas investment in that space for the might not have got Pearce said it looked as though
development of these projects,” Pearce into production and not only is that mine amendments to R&D tax incentive leg-
said. a major win for WA, but Australia. To get islation would go through as proposed,
a rare earths project, the only one out- however, bodies like AMEC were still
“I think the next piece asks what is the side of China, off the ground is a great pushing parliamentarians on the issue.
role with state governments and how do achievement,” Pearce said.
they work together to support the growth “We have got some significant sup-
of the industry. It is heading in the right “If that [tax off-sets] is taken away then porters in the Parliament, so hopefully
direction, we just haven’t seen anything you lose the ability for Australian compa- that conversation will allow for some
firmed up in terms of a formal commit- nies to develop the R&D needed to get amendment but at this stage it is looking
ment, but Minister [Matt] Canavan has into the refining or value-adding space. very difficult [to stop],” Pearce said.
certainly been incredibly supportive as There are two elements to this: finding
have his colleagues, in particular WA
Senator Linda Reynolds. She is trying partners that can bring in that technol- – Mark Andrews
to impress on her Canberra colleagues ogy and R&D into Australia and partner-
that there is a huge opportunity and I
am pretty confident they understand the ing with Australian
opportunity, have been well briefed on it companies. That
and done their homework.”
is a fantastic op-
While there appears some effort be- tion and we don’t
ing made by government to help industry
develop, proposed curbing of R&D tax want to take away Practical Tenement,
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AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 11

NEWS

Hexagon looking for
power play

The managing director of an up-and- and I don’t think anyone can unpick it.” feasibility under way and to be completed
coming graphite company is finding it Hexagon pulled off a coup this year by by MinRes.
hard to envisage how an effective down-
stream processing industry can evolve un- attracting Mineral Resources Ltd as a part- A 2017 PFS on stage one at McIntosh
der current regulatory systems in Australia. ner at the McIntosh flake graphite project, indicated a seven-year project producing
100km north-east of Halls Creek in West- 2.4 mtpa for 88,000 tpa flake graphite con-
“Graphite is much more involved than ern Australia’s East Kimberley region. centrate grading 98% TGC.
the lithium [processing], but I am struggling
to see the opportunities. We are working in A HoA was signed by the two parties in Assuming a product price of $US1,565/t,
an environment with a cap on R&D fund- March, with documentation to formalise estimated EBITDA was $100 million, post-
ing and uncertainty on power prices. We’d the JV handled in a “relaxed” manner, with tax NPV was $183 million and post-tax
prefer to not have to go overseas, but there execution of the agreement expected at IRR 39%. Start-up costs were estimated
is no policy or framework for power pric- the time of print. at $148 million.
es in place,” Hexagon managing director
Mike Rosenstreich told Paydirt. The McIntosh JV will be 51% MinRes Test work has identified the graphite
owned and 49% Hexagon, if the former at McIntosh to be of “unique, high quality
“The reality is that we are progressing completes a feasibility study through to crystallinity”, with recent drilling results at
with a study in downstream processing in stage one commercial production and op- Mahi Mahi confirming the graphite miner-
Australia and overseas. Stability, in terms erate the project via a life-of-mine mining alisation at McIntosh.
of energy pricing, would be good because services agreement.
we have a really complex energy structure A thick, shallow intersection of up to
Production of graphite concentrate 90m of graphite mineralisation was re-
Mike Rosenstreich could be a reality within three years, with ported from Mahi Mahi last month, while

20m of shallow graphite mineralisation
at the new Threadfin target was anoth-
er highlight from a drilling programme
which was expected to be wrapped up
by the end of October.

Rosenstreich said having new core
to work with fitted nicely with the JV’s
planned test work needed to finalise
flow sheet concentrate optimisation.

“We will have some framework
around the downstream study and
we’re a bit different because of our
purity. We are looking at purification at
the front end, rather than the back end.
That will be the basis of a scoping study
by the end of the year and we look for-
ward to MinRes completing drilling and
tightening the feasibility study into [McI-
ntosh] next year,” Rosenstreich said.

– Mark Andrews

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Page 12 NOVEMBER 2018 AUSTRALIA’S PAYDIRT
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on (+61) 8 9321 0355 or email [email protected]’S PAYDIRT NOVEMBER 2018 Page 13

SITE VISIT

Reward anything
but a disappointment

If long-term uranium bull Greg Cochran Cochran arrived just as the company engineering company had done a lot of
was having any doubts over his move was putting the final touches on a PFS work, but at the last minute lost capability
into the potash space, they quickly evap- for its flagship sulphate-of-potash (SoP) and said ‘actually, we don’t think we can
orated upon arriving in Berlin earlier this project at Lake Disappointment, about deliver the product’ and so they left Re-
year for the annual gathering of the Inter- 340km east of Newman in Western Aus- ward in the lurch,” Cochran said.
national Fertilizer Association. tralia’s Little Sandy Desert.
“That was the point when I came on
“For me that was a real eye opener, With only a few weeks to get up to board. So I guess you could say I was
to see the size of the industry, the pro- speed on all things potash, Cochran was somewhat instrumental in running a bit of
fessionalism, the science behind what’s able to add his two cents to what turned a beauty parade and looking at who can
driving research across the world in out to be a robust set of preliminary eco- finish off the PFS for us, and that’s why
terms of crop growth, fertility, evapora- nomics for the project. we then went for CPC Engineering.”
tive processes,” Cochran told Paydirt.
“What had happened in fact is that one The PFS released in May estimated
“It is rather ironic that the last 12-15
years of my career have been almost Reward is finalising environmental approvals to begin mining operations
cause-driven around certain thematics at Lake Disappointment within the next few years
that are captivating the world – energy,
energy security, clean energy – and obvi-
ously this one when it comes to potash is
feed the world, so global food security.

“It’s something that you can actually
hang on to, you can be passionate about,
you can believe in, you can say you are
making a difference. It’s a fascinating in-
dustry and one I’m really excited to now
be a part of.”

Following a 12-month sabbatical after
stepping down from the helm of Deep
Yellow Ltd, Cochran accepted an offer
to join Reward Minerals Ltd as chief ex-
ecutive late last year despite having no
formal background in potash.

Page 14 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

“It’s something that you can actually Greg Cochran
hang on to, you can be passionate
about, you can believe in, you can
say you are making a difference. It’s a
fascinating industry and one I’m really
excited to now be a part of.

$450.6 million (including contingency) proved to be dry – is one of a handful process slows down. In fact, all pro-
would be needed to develop a 407,500 of emerging potash plays in WA, along- cesses will slow down, but as your so-
tpa operation producing 9mt of SoP over side Beyondie (Kalium Lakes Ltd), Lake dium chloride drops out, the brine that’s
the initial 27-year life at Lake Disappoint- Mackay (Agrimin Ltd), Lake Way (Salt left becomes more and more dense and
ment. Lake Potash Ltd) and Carnegie (Kalium so it becomes more and more difficult to
Lakes/BCI Minerals Ltd). evaporate. And so, you reach the point
Subsequent enhancements to the pro- that if you’re in the middle of winter and
ject economics, in particular the adoption However, according to Cochran, Lake it’s a lot colder, your process can come
of an integrated trucking solution from Disappointment has the optimal geo- to pretty much a grinding halt. We don’t
site to Port Hedland using a single ser- graphical location over the other projects face that problem up here at all.”
vice provider, resulted in the estimated being further north than all but Lake Mac-
total FOB cash operating costs reduc- kay, which is effectively positioned on the Grade is another advantage which
ing from $335/t to $353/t. This in turn same line of latitude. Lake Disappointment may have over
boosted the pre-tax NPV to $517.6 mil- its rivals. Typically, for the same output,
lion (up $57.4 million), the post-tax NPV Reward plans to develop Lake Disap- lower grade operations need a propor-
to $292.8 million (up $40.2 million) and pointment as a brine-based solar opera- tional increase in brine feed and can take
the EBITDA margin to 44.6% (up from tion, which means the evaporation pro- almost twice as long to concentrate to
41.9%). cess can be prolonged if conditions are harvest grade, therefore requiring larger
too mild. For instance, if the project was evaporation ponds than higher grade op-
Cochran, a mining engineer and miner- in WA’s Goldfields, the required pond erations.
al economist, is already eyeing off other evaporation would take up to a year long-
logistical improvements around contrac- er, studies have shown. Lake Disappointment hosts one of the
tor consolidation to be factored into the world’s highest grade brine SoP depos-
full feasibility study due for completion “When you look at the average and its, containing 153mt of drainable SoP
early next year. you say ‘oh well, whether you’re in the with an average grade of 11.4kg per cu-
Goldfields or whether you’re at Lake Dis- bic metre on surface and in sandy sedi-
“I think we missed a trick with viewing appointment, what’s 800mm of evapora- ments down to a depth of about 90m.
the whole project holistically in that if we tion difference?’, that in itself is material,
went to party X, Y or Z and said ‘we want but when you look at evaporation and “It’s amazing that some observers in
you to do this, this and this, can you give precipitation on a month-by-month ba- the industry think that the basics of min-
us a combined number?’,” he said. sis, you will see that those zones change ing and mining economics don’t apply,”
quite dramatically and that Lake Disap- Cochran said.
Lake Disappointment – given the name pointment is the standout in the colder
by pastoralist turned explorer Frank Hann months,” Cochran said. “When I was trying to get my head
in 1897 when what appeared to be a around this space I asked ‘how do you
large fresh water lake from this distance “When your temperature drops, your evaluate what is a good SoP deposit and

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 15

SITE VISIT

Projects director Dan Tenardi
supervises the Probedrill work on
Lake Disappointment, 340km east
of Newman

what is not’ and immediately it became IFA conference in Berlin,” Cochran said. Trial evaporation ponds and trenches
quite clear that it comes down to things “Because you’re part of the club now, have provided Reward with crucial
like grade and flow rates and obviously data and information on changing
evaporative conditions. It was quite stark you get access to all the contact details climates and flow rates
that once I started running the numbers, for all the players in the industry. I’ve
realising first of all how important that is reached out to probably north of 60 sig-
in terms of your capital costs and your nificant players in the industry, be they
operating costs, but also how conserva- traders or producers that do their own
tive Reward had been in terms of their marketing. So, we’ve begun the process,
grade assumption for the PFS, just by but to put a timescale on it would be dan-
virtue of the fact that they didn’t have a gerous because I’d like to do an offtake
detailed hydrogeological model.” on my terms rather than on somebody
else’s terms.”
Identifying and incorporating a new
hydrogeological model into the Lake Reward has earmarked July 1, 2019
Disappointment development plan has as the “official project commencement
been one of the key items on Cochran’s date” after which major construction
agenda since joining Reward, along with works will begin and Cochran will pro-
finalising environmental submissions for gressively look to grow the size of his
both state and federal approval. small but dedicated team.

Advancing marketing and offtake dis- “There is an expectation the market
cussions is also just around the corner, wants to see a bigger team with more
with Cochran setting himself and the depth in the organisation and more depth
company a soft target of placing 50% of at board level, and that’s why in my ap-
the initial planned production within the pointment it was announced the board
next 12 months. looks forward to me building the team
and also towards a process of board
“We’re not running a formal process renewal whereby we bring in new, fresh
either for a strategic partner or for an skills capable of delivering this project.”
offtake partner, but we have been engag-
ing and the springboard for that was the – Michael Washbourne

Page 16 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

Beyondie BFS creates history

Pilbara-based Kalium Lakes Ltd is charg- is also reviewing an option to install a gas sure the water can obviously come out from
ing towards a final investment decision pipeline for $29 million which will reduce all of that.
to develop Australia’s first sulphate-of-pot- operating costs by $31-34/t.
ash (SoP) operation. “We’re doing our best to walk them
Other highlights from the ground-break- through all the detail around how you get
In light of becoming the first SoP devel- ing BFS include pre-tax $575 million, IRR your recoveries and things like that. It really
oper to complete a BFS on an Australian of 20%, average annual EBITDA of $116 just comes down to educating people about
project, Kalium Lakes will spend the next million, EBITDA margin of 61% and free how the process works and the main things
few months finalising binding offtake agree- cash flow of more than $2 billion, based on to look for.”
ments, securing environment approval and a nominal SoP price of $US606/t.
locking down project finance for Beyondie, Hazelden said the company had been
about 160km south-east of Newman, be- Reserves totalling more than 5.1mt, locked in discussions with a number of dif-
fore moving to full construction activities up 90% on the previous estimate but still ferent financial institutions for more than 18
early next year. based solely within the Stage 1 approval months and would seek to finalise a project
footprint, will support a mine life of at least financing package before year’s end.
“Those are the three main steps we need 30 years. Payback is currently estimated at
to tick to make that final investment deci- seven years. Kalium Lakes has already received a pre-
sion, which is due in Q1 next year,” Kalium liminary tick of approval from the German
Lakes managing director Brett Hazelden First production from Beyondie is antici- Government Inter-Ministerial Committee
told Paydirt. pated during 2020. for an export credit agency scheme project
finance application with Euler Hermes Ak-
“Obviously we’ve got December and Jan- Unfortunately for Kalium Lakes, the com- tiengesellschaft for about $42 million of the
uary in the mix there, so that’s why we think pany received little love from the market Beyondie capex.
it’s probably more likely to be February/ following the release of the BFS, with Ha-
March when that final investment decision zelden acknowledging that many investors Negotiations are also continuing with the
is made. There’s still a few hurdles to go, were still wrapping their heads around how Northern Australia Infrastructure Fund for a
but hopefully the last hurdle is that financ- to assess an advanced SoP play without a potential separate debt financing compo-
ing package and that goes as smoothly as peer equivalent to benchmark it against. nent.
everything else.”
“It’s always a difficult one because I think “Having NAIF and the export credit agen-
According to the BFS, Kalium Lakes a lot of people don’t know what they don’t cy in there, they’ve provided a lot of inter-
needs just $159 million to establish an initial know, both peers but also investors, so est for the banks, including some Aussies,”
commercial demonstration-scale 82,000 it’s been an education process,” Hazelden Hazelden said. “What it allows us to do is to
tpa SoP operation at Beyondie, with a fur- said. get some really good, cheap financing rates
ther $125 million required to double produc- with those guys involved. We’re not looking
tion to a full-scale 164,000 tpa, a 10% in- “The key that we always point out is mak- at 10% bond rates, we’re looking at about
crease on the run rate proposed in the PFS. ing sure that people are looking at a drain- half that.”
able resource, because what’s actually
Kalium Lakes has already received pric- extractable out of the ground is the key to Also aiding the company’s case for pro-
ing from contractors and suppliers for more these projects. We have both bores and ject finance is an offtake term sheet with
than 80% of capex costs. The company trenches, so we’re sort of agnostic around German fertiliser producer and distributor
the method, but you’ve just got to make K+S for 100% of Phase 1 production from
Beyondie.
Kalium Lakes has become the first SoP developer to complete a BFS for an Australian
project – Beyondie, about 160km south-east of Newman Native Title agreements are also in place,
along with a recently granted mining pro-
posal and mining tenure, effectively reaf-
firming Kalium Lakes’ position as leader of
the Australian potash space.

“What these allow us to do is get first-
mover advantage in terms of capturing that
Australian market, which is key,” Hazelden
said.

“There’s good client prices in Australia
and New Zealand and some of the South
East Asian guys that we’re working with,
but if you have to rely on going into China,
for example, the pricing isn’t as high, credit-
worthiness for offtake isn’t there, so being
a second mover in town on the Australian
continent is probably a detriment to you.”

Kalium Lakes has been granted an early
works approval by WA’s Environmental Pro-
tection Authority to begin initial construction
at Beyondie.

– Michael Washbourne

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 17

NEWS

Galane finds Andy Well hosts a resource of 1.82mt
Andy Well not so dry @ 8.6 g/t gold for 503,000oz, 45km north

Andy Well was Australia’s hottest gold destined to sit on the junk pile for too of Meekatharra in Western Australia’s
discovery at one point in time, how- long, particularly with PCF Capital in- Murchison region
ever, those days seemed a long way off volved in the process.
when the asset was placed on care-and- axy in Barberton, Mpumalanga province.
maintenance in late 2017 after four years “We were looking at diversifying our- Galane is targeting production from
of operation. selves, having African assets there is a
little bit more security with an Australian Galaxy in the first quarter of 2019, with
Production totalled in excess of asset. We’ve been looking in Australia, 25,000oz gold at less than $US800/oz
300,000oz from first gold in 2013 and particularly Western Australia, which the aim. A successful restart at Galaxy
when Doray Minerals Ltd cut power to is ultimately easier to get to from South will see Galane proceed with a study to
operations at Andy Well, a measured Africa than it is to West Africa. We call expand throughput to 60,000 tpm in or-
and indicated resource of 1.2mt @ 9.7 g/t ourselves a greenstone producer and der to reduce cash costs through “econ-
gold for 371,000oz was left behind. we essentially leveraged off our relation- omies of scale”.
ship with the guys at PCF Capital who
The declining production profile at have been advising. We started looking Current measured and indicated re-
Andy Well and the capital costs associ- around March/April this year, did our due sources at Galaxy stand at 6.2mt @ 3 g/t
ated to extend the life of the underground diligence, went to site and closed the gold for 602,696oz.
were concerns for Doray at a time when deal,” Galane chief executive Nick Brodie
it was also establishing operations at the told Paydirt. Long-hole stoping fully mechanised
Deflector copper-gold mine. mining will be implemented at Galaxy. It
Brodie said Galane was keen to see is a mining method Galane is well versed
Life at Deflector hasn’t been easy but the revival of Andy Well in the near term, in at its Mupane gold mine, north-eastern
operations appear on-song in 2018 and with all approvals for the transaction to Botswana, 30km from Francistown.
even a fire to a remote-controlled loader be satisfied by the end of January 2019.
underground in August has not stopped Galaxy reported 10,090oz gold pro-
Doray’s positive progress at the mine. The transaction includes the 30,000 duced from 214,300t milled at an av-
tpm plant facility at Andy Well, which is erage head grade of 2.18 g/t from Mu-
Mining resumed shortly after the fire comprised of a two-stage crushing cir- pane in Q2, with main output from Tau
incident and no harm was caused to any cuit, single-stage grinding circuit, grav- – 98,400t @ 3.46 g/t.
staff. ity recovery circuit and conventional CIP
circuit. While this year’s Q2 result was the
In its preliminary unaudited financial best since Q4 2013 at Mupane, Brodie
results, Doray reported it was on track Having infrastructure readily available, said it was not without a challenge.
to reach its goal of 100,000 ozpa gold Galane has a sound platform to bring
production with a plus five-year mine life Andy Well back on-line. “Our assets in Africa are more chal-
ahead at AISC of $1,000/oz at Deflector. lenging than Andy Well and that is not
Brodie said the immediate focus would because they are in Africa, it is because
Such has been the success at Deflec- be to produce a NI 43-101 technical re- they are lower grade,” he said.
tor, Doray has reduced its debt to $20.5 port on Andy Well. Subject to other con-
million, which is forecast to be paid off in ditions and the start of a mining devel- “Mupane is about 2.5-3.5 g/t from the
FY2019 on the back of 80-85,000oz gold opment programme, there is potential to underground where we are using long-
production plus copper credits. resume production within six months of hole stoping, mechanised mining and we
the acquisition completion. have had to run a float to get 70-80% re-
Doray’s vision for Deflector of 100,000 coveries. Galaxy is refractory ore, but it
ozpa is also much clearer now that a Of course, one of the factors to be con- is higher grade at about 4.5-5.5 g/t gold,
deal has been struck with TSX-V listed sidered is financing. and is also long-hole stope, mechanised
Galane Gold Ltd over Andy Well. mining.”
“There is a fair bit of vibrancy in the
Galane will pay a total of $10 million Australian gold price, but the rest of the Having the experiences at Mupane
for the project in a sale-and-purchase world is pretty flat,” Brodie said. and Galaxy, Brodie believes “Andy Well
agreement (SPA), which will see Doray will be easier to work with” and is bullish
receive $3 million cash and $1 million in “When we can find the funding, which his team can turn the fortunes of the as-
Galane shares up-front; $3 million cash involves us producing a technical report, set around.
within 12 months of the SPA and $3 mil- hopefully we will be able to raise money
lion cash within 24 months of the SPA. at the start of next year.” In the lead up to Doray making the de-
cision to shutter underground operations
Meanwhile, Doray will retain expo- Prior to the Andy Well deal, Galane at Andy Well, recoveries averaging more
sure to the nearby 322,000oz @ 1.8 g/t sealed a private placement for $C2.7 mil- than 95% were reported with a cut-and-
Gnaweeda project through a proposed lion to fund activities at its Galaxy gold fill mining method used.
farm-in agreement, which is some icing mine, South Africa.
for shareholders now free of the liabilities “We see a lot of opportunity at surface,
accumulated from Andy Well. The placement allows Galane to un- near surface and underground at Andy
dertake refurbishment and commission- Well,” Brodie said.
While Andy Well caused a headache ing of the upgraded processing plant plus
for Doray, high-grade gold assets aren’t the required development work to drive a “The way that we mine, we are confi-
easy to come by and the mine was never restart of underground production at Gal- dent we can reduce costs.”

– Mark Andrews

Page 18 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

COVER

The 40 mtpa Aitik copper mine, Northern Sweden

European renaissance
for Aussie explorers

Australian juniors have made their reputation on the continents of
South America, Africa and Asia but for the most part Europe has

proven a leap too far. Despite boasting a mining history dating
back to Antiquity, European jurisdictions have developed

a reputation among Australian investors as too difficult; too much
regulation, too densely populated, too tough environmentally,
too little interest in primary industry.

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 19

COVER A wealth of historical geological
data is readily available in

countries throughout Europe,
making early-stage exploration

both quick and cost-effective

Now however, the trend is beginning to “Australian “Incentives for mining development re-
turn. More than 40 ASX-listed com- companies duced over the latter part of the last cen-
panies are operating on the continent. In have picked tury but we are now seeing resurgence
addition, well-known executives such as up licences because of new techniques for cheaper
Owen Hegarty and Tolga Kumova have over histori- and less invasive exploration,” Mulligan
backed companies and Gina Rinehart’s cal operations said.
Hancock Prospecting Pty Ltd recently that in some
brought forward a $US250 million invest- cases have Governments are also waking up to
ment in UK potash hopeful Sirius Minerals not had work the opportunity. Europe’s economy has
plc. on them for pulled away from the GFC at a glacial
hundreds of pace and governments across the conti-
For Alta Zinc Ltd executive chairman years. Using nent are beginning to consider rejuvena-
Alex Burns, the present scenario in Eu- modern exploration, they are bringing tion of mining as a potential panacea to
rope shares similarities with Africa at the them back to life and making new discov- growth and employment issues.
beginning of the century. eries on a regional scale.”
“There is real potential to reinvigorate
“There are parallels with what hap- Just as the mining sector’s attention local economies, particularly in rural and
pened in Africa in the early 2000s,” Burns has been focused elsewhere, so has the regional communities, by replacing the
said. “After a few early successes, a attention of European governments and manufacturing industries which in many
whole crop of other Australian compa- investors. The post-war period has seen cases were lost during the 80s and 90s,”
nies entered the continent. They were fol- a consistent slowing of mine development Mulligan said.
lowed by the Canadians with the Chinese in Europe as economies across the conti-
and Indian groups coming behind on the nent turned away from primary industries. Humphrey Hale agrees and has wit-
big infrastructure projects but it was Aus- nessed that willingness first hand at both
tralian investment which led to all that. “Mining and exploration fell into the Wolf Minerals Ltd and Infinity Lithium Corp.
background in Europe as economies
“We are seeing something similar in evolved into first manufacturing and then “Working in Europe can be easier be-
Europe.” services-based economies,” Walkabout cause of the rule of law and the regula-
Resources Ltd director Allan Mulligan told tory framework,” he said. “You also have
However, where Africa presented un- Paydirt. much easier access to finance from tra-
mapped opportunities, Europe has re- ditional banks, whose risk profile is much
cords which in some cases go back to the Walkabout has recently acquired more comfortable with Europe than other
Middle Ages. Burns believes this histori- ground in both Northern Ireland and jurisdictions. There are also government-
cal element should be seen as a positive, Scotland. Both regions demonstrate the backed guarantees you can secure. At
not a drawback, for Australian explorers. forgotten opportunity on offer in the UK. Wolf, we received German Government
They are littered with historical workings, guarantees on our senior debt because
“There has been no attention paid to ex- many dating back to the Industrial Revolu- we were proposing to process concen-
ploration in Europe in the past 30 years,” tion. While in Australia such occurrences trate production in Germany.”
he said. “All the lights have been shone would have been extensively picked over
on Latin America, Africa and Australia. It at regular intervals down the years, the To attract new mining investment, Euro-
has only been in the last five years that UK’s exploration scene has wilted. pean jurisdictions must overcome a repu-
there has been a resurgence of interest in tation for being unwelcoming. However,
the historical operations in Europe. such perceptions are far from universal.

Cultural indications of mining’s deep history are scattered throughout Europe The Fraser Institute Survey of Mining
Companies – recognised as the league
table on investment attractiveness –
placed Finland top of its investment at-
tractiveness survey, while Ireland was
fourth and Sweden 16th. All three have
appeared in the top 20 jurisdictions for
investment attractiveness for five years
or more.

Other countries such as Serbia, Portu-
gal, Russia, Greenland and Spain were

Page 20 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

in the Fraser Institute’s Top 40 and above in the domestic market with smelters and took more than a decade to gain approval
the likes of New South Wales, Victoria traders’ warehouses being dotted across for its Connonish gold mine near Loch Lo-
and Tasmania. the continent. mond in Scotland.

Pursuit Minerals Ltd is one of more than “From a marketing perspective, it is Mulligan said the issue of social licence
a dozen ASX-listed explorers currently right in the heart of things,” Burns said. could be a confused one in Europe, par-
active in the Nordic countries. Managing ticularly the UK.
director Jeremy Read told Paydirt inves- Battery minerals companies such as
tors’ naivety about operating in Finland Talga Resources Ltd and European Met- “In Africa, community concerns largely
and Sweden was akin to attitudes shown als Ltd are finding advantages in being centre on the need for employment and
to Africa or Latin America 15 years ago. close to end-users in the burgeoning economic contributions while in Northern
European EV market and Talga manag- Ireland the issues are more focussed on
“People don’t understand just how ing director Mark Thompson is finding the environmental issues and are more emo-
strong the mining culture in both countries low-risk nature of Europe is resonating tive,” he said.
is,” Read said. “Not everyone appreciates with customers who are keen to ensure
the ease of building projects here. There ethical supply chains for their products. “There are some large misconceptions
is a process but it is no more arduous about the nature of exploration and mine
than in Australia. But that is Talga is developing graphene and co- development in the modern era and we
not the view investors have.
balt projects in northern Sweden and have found resistance to our
“Investors regularly ask Thompson believes his company is ben- attempts to provide clarifica-
about environmental approv- efitting from this risk perception. tion on this,” he said.
als and timelines; what about
reindeers; you can’t work in “When companies look at ways to pro- In these instances, com-
winter. None of those things duce graphene, they see a supply chain panies have to rely a robust
are true. which is very long,” Thompson said. regulatory environment. Hale
“Sweden is a stable long-term investment said Europe had obvious ad-
“You can work throughout jurisdiction, with clean, sustainable hy- vantages in this regard.
the year, there are already dropower, best practice and an advanced
large open pit mines operat- economy. There are very few companies “There is a process to be
ing all year round. The rein- which make graphene that have supply done and lots of it but that is
deers are here and you have under control like that. because these are democrat-
to work with the Saami people ic countries,” he said. “But, it
and account for their migra- “It is similar in cobalt where both the is not ambiguous regulation.
tion but it is all manageable.” ethical nature of production and the po- If your project has wings and
litical situation in DRC [the world’s largest if you don’t do anything silly
For Read, the wealth of ar- producer of cobalt] is a worry. It is a fairly environmentally or socially,
chival documents will allow risky supply chain, doesn’t have great your permits will come.
Pursuit to move quickly in de- history of long-term supply to Asia and is
veloping its Nordic assets. in hands of relatively few people. So, the ‘If you are going to build
long-term potential for mining cobalt in a mine close to people, you
“You have access to historical data Scandinavia becomes compelling. must get those people onside
which has been kept and stored very but that is true of anywhere.”
well,” Read said. “We have been going “These deposits have those character- Kieron Hodgson, executive director of
through this data and have defined an istics; first-class jurisdiction, hydropower commodities and mining research at UK
exploration target based on the historical and a very low-emission place to oper- broking house Panmure Gordon doesn’t
drilling and should be able to convert that ate.” agree with the allegation of excessive bu-
into a JORC-compliant resource and run reaucracy being an impediment to invest-
a scoping study without drilling a hole.” Obstacles remain for a number of Eu- ment.
ropean-focused juniors. Walkabout has “I’m not sure the red tape argument
Infrastructure access always plays a struggled to win community backing for holds up as well now, given the changes
big role in defining project economics and its low-level exploration plans in North- to policies seen in more established ge-
the European explorers are finding the ern Ireland while Scotgold Resources Ltd ographies,” Hodgson told Paydirt. “For
ledger is stacked in their favour. While de- me, the issue for many European coun-
velopers in Africa and Latin America have tries is the limited remaining world-class
to factor in a severe lack of services and operations when compared to say Aus-
human resources, their European peers tralia/Africa/US/Canada now so many
have numerous options, including world- have closed.”
class transport routes and port facilities. However, Hodgson does not discount
further exploration success on the conti-
“Everything is on your doorstep here, nent.
including water and power,” Burns said. “I think plenty of opportunities lay in
“In Mauritania, we had to spend $6 mil- wait, especially in base metal and tech-
lion in the middle of the desert just to find nology metals, it’s just that there will have
water. In Italy, we simply turn the tap on or to be a longer education process in my
plug into the mains. You can fly or drive view to make communities and govern-
to most projects within a few hours and ments comfortable [with mining] once
in many cases even walk through the ore. again.”

“There is a strong rule of law, a skilled, – Dominic Piper
educated workforce and almost all the re-
quired services on your doorstep.”

Developers are also finding benefits
from having a ready-made customer base

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 21

COVER

Alta prepares its
Italian feast

For a time, Alta Zinc Ltd’s Gorno project in northern Italy appeared set to live
up to all the stereotypes about European mining projects. But, 16 months
after looking terminally hampered, the project has taken on a different hue with
Alta now ready to demonstrate quick, successful project developments on the
continent are achievable.

As you travel through the mountain scenery espresso in the centre of Oltre il Colle. “I’ve
of Gorno, north of the historic city of Bergamo, never encountered the amount of support and
it is easy to imagine widespread community op- enthusiasm we have had here and we’re fortu-
position to a new mining project. Here is a part nate that the Government has been very sup-
of southern Europe in which the residents would portive of work and approach being taken. And,
be unwilling to allow heavy industry to impact on the community is proud of its mining history and
the picturesque landscape. want to see it returned to the glory days.”

However, as you get closer to the small town Those glory days ended in 1980 when the Gor-
of Oltre il Colle, host to Alta Zinc’s regional of- no mine was closed by state miner SAMIM (part
fice, the evidence of previous generations of of the ENI group) following a government directive
mining grows. to focus on oil and gas.

“The region has a mining history going That political decision saw SAMIM leave the
back 2,500 years,” Alta ex- mine – as well as numerous exploration projects
ecutive chairman around the globe – with development in ore and
Alex Burns tells in the near-40 years since, mineral exploration in
Italy has been almost non-existent.
Paydirt over
Alta’s entry 10 years ago was designed to re-
verse this trend and give the communities around
the project new employment opportunities.

“The local community and regional government
are very supportive of the project coming back on-

stream,” Burns says. “They are waiting
for us to get started.”
Having a mining tradi-
tion should minimise the

difficulties-

Page 22 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

“The Australian market
doesn’t understand all the
benefits of this project but the
majors do, the banks do and
the offtakers do.”
AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 23

COVER

in gaining social licence. which means it is easy to differentiate
“We are just reopening an old under-
through first-pass ore sorting without
ground mine, there is nothing new in
what we are doing,” Burns says. “The costs.”
most sensitive issue was probably the
plant location because everything else Once at surface, the Zorzone ore will
is underground and above the watert-
able. Stakeholders were keen for us to be processed via a conventional flow
use the existing plant site so we have
addressed those concerns.” sheet at a plant placed on the original

The onus is now on Alta to deliver on Gorno concentrator site.
those promises it has made to its hosts.
“Study manager Sergio Di Giovanni
The company has spent most of
2018 trying to disprove the perception and Lycopodium are very comfort-
that European projects, and Gorno in
particular, are just too difficult for jun- able with the processing site and flow
iors to make a success of.
sheet; it is probably the easiest part of
The reputational damage had come
from a resource downgrade and sub- the development,” Burns says. “The
sequent postponement of a DFS at
the beginning of 2017. The downgrade fact we have historical records of the
saw Gorno’s overall indicated-inferred
resource reduced from 3.87mt @ 7.7% ore producing a top-end concentrate
zinc-plus-lead and 25 g/t silver to 3.3mt
@ 6.1% zinc-plus-lead and 27 g/t silver. and can achieve it using simple flota-
Given that outcome, continuing with the
DFS as it was made little sense. tion processing is very beneficial to the

“When we drilled from underground project.”
between Zorzone and the southern ex-
tension zone we found the mineralisation Simplicity is fundamental to the deci-
had pinched out much more than we had
assumed,” Burns told Paydirt earlier this sion to start operations at Zorzone but
year. “That reduced the overall resource
by 20% and meant it didn’t match up with Burns knows the longer term success
the DFS, which was based on a large-
scale development.” of the project could be reliant on ad-

It was a classic case of “back to the vancing other deposits around Gorno,
drawing board” for Alta with Burns relo-
cating to Italy and installing an all-Italian starting with Pian Bracca.
management team to reconfigure Gor-
no’s development plans. “Stage 2 of this project will come

The re-jigged strategy will see Alta Alex Burns on site at Gorno from converting Pian Bracca to JORC-
tackle Gorno via a staged approach with compliant resource,” Burns says of the
Stage 1 comprising exploitation of the
well-defined Zorzone deposit and utili- for building a processing plant. If not for wider opportunity at Gorno. “In hind-
sation of the existing underground infra- those elements, we perhaps wouldn’t be sight, it is such an obvious target.”
structure at Gorno. so focused on Zorzone but it allows us The discovery of Pian Bracca’s poten-
to quickly get into cash flow and we can tial is typical of the opportunities on offer
“We did lose time and credibility be- then grow the resource in parallel.” at historical mine sites around Europe
cause of the way the deposit was drilled where surveying the library records can
before but we now have the opportunity Such is the integrity of the existing de- be as important as surveying the rocks.
to make up for lost time,” Burns says. velopment at Gorno, Alta has been able “We knew there was some previous
“We need to graduate the project from to complete much of the refurbishment mining there but in studying the archives,
exploration to development and we have work prior to release of the DFS. the geologists found new information
that opportunity with a phased approach. which led the team back underground
We could’ve drilled more holes and in- Alta will rehabilitate adits to enable and we found multiple drives and a thick
creased the resource but that won’t get both room-and-pillar and long-hole open [8-14m] stratabound sequence of sul-
us into cash flow to start operations. We stoping mining methods at Zorzone and phides, samples taken underground re-
chose to get into cash flow and grow the will then use the 12km-long Riso-Parina turned assays of 10-20% zinc-plus-lead,
resource in parallel. tunnel to transport ore from underground making it an obvious follow-up target,”
to the processing site. Burns says.
“We want to demonstrate that off just The plan now is to drill Pian Bracca
one deposit, we could underwrite a low The DFS will include numbers on un- from underground in 2019, providing Alta
capex restart of Gorno. Zorzone isn’t derground crushing and ore sorting. with a second, easily accessible source
necessarily the strongest deposit we of feed.
have but we can move quickly because “The mining method will be room-and- “It presents a great opportunity,” Burns
we have got access to it through the Riso pillar at the top of the orebody, moving says. “We can walk through the middle
Parina tunnel and have a site suitable into long-hole open stoping for the plung- of this thick massive sulphide mineralisa-
ing mineralisation,” Burns says. “AMC tion, sample it and, later, drill it. It is next
is trying to stitch together the mining door to Zorzone and we can use all the
schedule now and we should have pre- same infrastructure. All we have to do is
liminary numbers out in early November rehab the tunnel and we have already
which will determine whether we have to started that process. Once we have a re-
re-jig cut-offs and so forth in the mining source, it will be easy to bring back into
scenario.” the mine plan and we can use the Risa-
Parina tunnel to transport material.”
Lycopodium Ltd has been charged Burns expects expansion into Stage
with process engineering design on Gor- 2 to cost less than 20% of the original
no and has identified ore sorting as hav- capex for Gorno.
ing potential to reduce volumes hauled “We can use all the same underground
through Riso-Parina. infrastructure and it is then just adding a
modular upgrade to the plant, which is
“Ore sorting is one of the big pluses for already being built into the process de-
the project this time around,” Burns says. sign.”
“It will reduce ore from a ROM of 240,000
tpa to a processing rate of 140,000 tpa
and is only possible because we have
got a dense, very different ore from the
surrounding limestone country rock

Page 24 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

The carvings on the door frame of
the original Gorno site office are
another reminder of the area’s
rich mining history

The abandoned processing plant.
Alta plans to build a new plant on

the same site

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 25

COVER

Once Pian Bracca is defined, Alta into Alta’s hands. The church in Oltre il Colle, Lombardia
plans to move onto at least two other tar- “The concentrate is of a very high
gets identified from its archival search. “The period 2008-2016 in zinc was
quality, very high-grade zinc compared characterised by a sub-$US2,000/t
The first, Colonna Fontanone, was dis- to Australian projects, and there has al- price,” he says. “So, the price didn’t in-
covered just before Gorno was closed ready been an enormous amount of met centivise exploration or extensions to
in 1980. Recent sampling returned min- work done. With the likes of Lisheen [in mine life. This trend coincided with major
eralisation of up to 54% zinc from the Ireland] closing, the smelters are very mines all coming to the end of their lives,
exposed massive sulphides inside Fon- keen on having something on their door- all of which caused a 500,000 tpa drop in
tanone. step which is high-grade to blend and is a 13 mtpa market. As a result, the price
expandable. And, the offtakers know the rose past $US3,000/t.”
As with Pian Bracca, Fontanone is project better than equity markets do be-
readily accessible from the Risa-Parina cause they’ve previously been custom- The spot price may have since come
tunnel, making its addition to the mining ers of it.” off – it was trading at $US2,525/t at the
schedule relatively simple. time of print – but LME warehouse stocks
Distribution of the concentrate will also continue to dwindle.
Before Alta considers such exten- benefit from Gorno’s location.
sions, however, Zorzone’s development “That is why it is so important to get the
must be complete. “From a marketing perspective it is right project into development,” Burns says.
in the heart of things,” Burns says. “You
“The objective is, in Stage 1, to show can have it anywhere in Europe within a Project financiers will also reserve final
that there’ll be quick payback on the capi- few days or export it through Genoa, one judgement until the feasibility study is re-
tal outlay,” Burns says. “The extensions of the biggest ports in Europe.
will provide the cream. If Zorzone is the
primi [first course], these other targets “Getting to the next stage of market-
will be the secondi [the main course].” ing discussions is another incentive to
complete the feasibility study, they are all
Achieving payback requires delivering waiting on the results.”
to active offtake contracts. Alta opened
discussions with potential buyers last Burns will also be hoping the timing of
year and Burns believes even here, Gor- marketing arrangements plays into Alta’s
no’s history will be an advantage. hands during a period in which zinc mar-
kets remain volatile.
“All the majors are keen on the material
because of its historical reputation as a LME zinc hit an 11-year high of
high-metal, low impurities concentrate,” $US3,595.50/t in February but crashed
he says. over the ensuing six months to touch a
two-year low of $US2,283/t in August.
Several potential offtakers have al- Burns, however, sees potential in such
ready visited the project and Burns is volatility.
confident timing and location will play

The entrance to the 12km-long
Risa-Parina access tunnel through

which ore will be delivered to
the processing plant

Page 26 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

Exploration manager Fabio Granitzio
and AMC’s David Lee underground
at Pian Bracca

leased. Alta is looking at various funding lead items so the project can achieve its Granitzio at one of the face samples
scenarios, including offtake finance, roy- timetables,” Burns says. underground at Pian Bracca
alty streams and accessing traditional
debt markets. It is a world away from the false starts
of 2016-17 which the Australian market
“Two of the major European banks punished so heavily. Burns, though, re-
have been following the project closely,” mains undeterred and is convinced the
Burns says of interest in Gorno’s future. project will find backing.
“I think the likelihood is that the first piece
of funding will come from a combination “The Australian market doesn’t un-
of streaming and private equity funding. derstand all the benefits of this project
We are looking at the least dilutionary but the majors do, the banks do and
way forward.” the offtakers do,” he says. “They know
it because they have bought the Gorno
The first capital injection will be used concentrate before and have also had
to complete Gorno’s permitting – includ- to deal with problems in Africa or Latin
ing renewal and expansion of the mining America every day.
licence – start early works on the mine
development and drill Pian Bracca. “That is why I am confident that we’ll
receive backing when we complete the
“We will then keep all guns blazing on study, receive the permits and restart op-
development next year with the objective erations and begin to grow.”
of having all permitting completed by the
end of 2019. By then, we will have drilled – Dominic Piper
Pian Bracca and started ordering long-

A statue of St Barbara,
patron saint of miners,
stands outside the
Pian Bracca adit

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 27

COVER

Page 28 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

Walkabout journeys
from African bush
to Scottish hills

Over the course of three years, Walkabout Resources Ltd built
a hard-fought reputation for itself as a junior with a clear
strategy for its major African asset. Its rapid development of the
Lindi Jumbo graphite project was travelling well up until July 2017

when the Tanzanian Government’s new mining policy saw the
country’s resources sector hit the buffers. As events in Tanzania

unfolded, Walkabout’s tightknit executive team recognised the
need to diversify the portfolio.

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 29

COVER

Walkabout is working closely with local and form an idea about the prospects on have found resistance to our attempts
stakeholders to explain the minimal offer. to provide clarification on this,” Mul-
impact exploration will have on the ligan said. “A lot of management time
relevant ground “We are highly competent explorers. has been used on this, communicating
We can move quickly to assess projects, across all stakeholder groups, and ap-
Its first move was to acquire lithium ex- advance them or move them onto some- peasing concerns about the work we are
ploration ground in another African juris- one else.” licensed and authorised to conduct.”
diction, Namibia, but then 12 months ago
it expanded its horizons north, picking up In February, Walkabout extended its Issues of social licence are present in
licences in the unlikely setting of North- relationship with Koza, entering an earn- any jurisdiction but Mulligan has been
ern Ireland. in agreement to acquire at least 75% of surprised by the dynamics of the opposi-
the Slieve Gallion licence. The prospect tion in Northern Ireland.
The acquisition saw Walkabout pay has already returned rock chip samples
$US100,000 to secure 100% of South of up to 2.7% copper and 58.5 g/t gold “We quickly learned it is a completely
African platinum miner Lonmin plc’s and sits 20km from the 4.4 moz gold Cur- different environment from what we are
Northern Ireland exploration portfolio raghinalt project, recently sold for more used to in Africa. The factors which most
and its 50% interest in the Dalradian gold than $US400 million by AIM-listed Dalra- often prove obstacles in Africa – infra-
belt JV with Koza UK Ltd. dian Resources plc. structure, access to ground and compe-
tent services – are not present in Europe
For Walkabout, the purchase delivered Walkabout moved quickly on the but stakeholder engagement and public
a “ready-to-go” exploration package at a ground, with soil sampling and mapping interest is critical,” Mulligan said.
time when Lindi Jumbo was moving from campaigns identifying potential for VMS
exploration into development phase. mineralisation. A SkyTEM electromag- “In Africa, community concerns largely
netic survey was completed in May over centre on the need for employment and
“One reason was for the diversification the County Tyrone licence. In Septem- economic contributions, while in North-
of the portfolio,” director Allan Mulligan ber, Walkabout announced four walk-up ern Ireland the issues are more focused
told Paydirt. “We have a very strong drill targets had been derived from the on environmental issues and are more
skillset in early-stage exploration and if results of the survey and geochemical emotive.”
we had just focused on Lindi Jumbo and sampling.
not the future of the company, we would Walkabout is far from naïve about its
lose that skillset. “We have copper, cobalt, lead-zinc ability to undertake work in the face of
and gold targets according to our VMS community displeasure. The company
“Also, with the legislative challenges exploration model based on the SkyTEM, has already chosen to focus its attention
imposed on us in Tanzania, we felt it geology, structural setting and soil anom- away from the most sensitive areas and
prudent to diversify our asset base away alies,” Mulligan said. “Mineralisation in Mulligan recognises the need to continue
from being an Africa-only one. Northern Ireland is very structurally con- to inform and educate the local popula-
trolled along the Dalradian Trend and tion on what can be expected from the
“The other reason came from the op- its offshoots. This trend runs from New- exploration process.
portunity presented by the Lonmin port- foundland through to Ireland and onto
folio, available at a reasonable price. Ac- Scotland. “There is a perception that we’ll be ru-
quiring that portfolio allowed us to look ining the environment,” he said. “There
around, form a relationship with Koza “If these targets don’t hold much prom- are areas of declared natural beauty and
ise we will assess our options. If they do, we don’t want to inflict any activity – inva-
we will seek guidance on the next phase sive or not – on those areas. So, we have
of development.” relocated exploration to semi-industrial
areas where there are active quarries
The challenge may be on getting those and farms, etc.
targets to a point of evaluation. While
Walkabout conducted its early explora- “In Northern Ireland there is a huge
tion work unhindered, it is now running quarry industry and there are multiple
up against community opposition to its un-rehabilitated quarries in the area. In
plans to drill. comparison, we will conduct non-inva-
sive, early-stage work.
“There are some large misconceptions
about the nature of exploration and mine
development in the modern era and we

Walkabout director Allan Mulligan and It is far removed from its African roots
consultant geologist Richard Belcher but Walkabout is quickly finding its feet

Page 30 NOVEMBER 2018 AUSTRALIA’S PAYDIRT amongst the Southern Highlands of
south-west Scotland

Northern Ireland boasts a vibrant quarrying
industry yet local communities remain
suspicious of exploration projects

“We will go through the application ducted stream sediment, pan concen- el early-stage work such as stream sedi-
process for permission to drill – it re- trate sampling and soil sampling in the ment sampling.”
quires local development approval – for licence area in the 1970s and 1980s,
each prospect. We need environmen- identifying numerous gold and copper The early-stage nature of both UK ac-
tal approval for that and will then move anomalies. However, drilling was sparse quisitions meant neither was ever likely
quickly in 2019 and mobilise a drill rig and sporadic with no concerted effort to to set the market alight but Mulligan be-
from there.” test the economic potential of the ground. lieves their presence in the Walkabout
portfolio will eventually bring benefits.
Despite the frustrations, the geological The lack of exploration in the region –
potential of the Dalradian Belt remains al- 100km south-west of Glasgow – is em- “I think the Australian investor reaction
luring for Walkabout, so much so that it blematic of a wider malaise in UK explo- has been muted,” he said. “It is of interest
has recently moved to put its foot on ex- ration over the past four decades. but the market is ascribing little value to
tensions of the belt in western Scotland. the diversification strategy at this stage,
Walkabout believes by applying 21st probably because more has to be done
“Since we have an operating base in century technology and techniques, new and access to further investment oppor-
the UK, it was important to create a larger economic deposits could be found in the tunities needs to be achieved in Tanza-
platform to support the G&A spend and country. nia. The Australian investor base is, like
management time,” Mulligan said. “We the company, very focused on delivery of
noticed the trend extended into Scotland “By applying modern exploration phi- the Lindi Jumbo graphite project in Tan-
and began looking. losophy and technology we can define zania.”
and explore along and below those
“We came across an opportunity to en- trends,” Mulligan said. “There are zinc- Its progress in Tanzania has already
ter into an earn-in agreement with a local lead deposits in the area with grades of attracted significant attention from a UK
private group with interesting ground for above 20% which haven’t been mined investment market which is seen as a
base metals and gold.” since the 19th century.” natural home for African assets. Could
the injection of domestic projects further
The farm-in agreement covers 746sq With Scotgold Resources Ltd recently entice UK investors?
km over three licences in south-west switching its Connonish gold mine on
Scotland. and at least two other explorers active in “It gives more ballast to the company,”
the region, Walkabout could be entering Mulligan admitted. “Junior explorers with
Like Northern Ireland, Scotland has a Caledonia at just the right time but can it exposure to European assets are well
rich, albeit largely forgotten mining his- expect the same roadblocks as in North- rated in London and elsewhere in Europe
tory. ern Ireland? and we’d like to access some of those
capital opportunities.”
The licences include several historical “Most of the ground is located in a
high-grade lead-zinc-silver mines and Forestry Commission area which means So, from looking like a confusing switch
gold and copper targets. there are fewer stakeholders to negotiate in the first instance, Walkabout’s UK ven-
access with,” Mulligan said. “We are con- ture could see its entire portfolio benefit.
“There is significant evidence of histor- ducting heritage surveys to understand
ic mining operations, conducted on high- the area’s historical value and hope to “We hope so,” Mulligan said.
grade deposits, which were mostly con- conclude those and access agreements
strained by their inability to find depth,” shortly. That will allow us to start low-lev- – Dominic Piper
Mulligan said.

The British Geological Survey con-

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 31

regWionhael rroeuvnedurp we are... trend with us

#paydirtmedia #magazines #conferences

Paydirt editor Dominic Piper underground at Alta Zinc Ltd’s Gorno zinc project, in
northern Italy’s Lombardia region, 2018

Page 32 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

EUROPE

Talga times take off

Talga Resources Ltd has grown from tional interest for exploitation of minerals “Prices are good, interest is high, de-
mineral explorer to advanced materials by the Geological Survey of Sweden. mand is high and it is the right time to look
technology company and is now emerging at getting these assets funded separately
as a potential global leader in the supply of It is fully permitted for diamond drilling, and run separately and developed sepa-
graphene and graphite products. with IP and MLEM surveys under way to rately if that’s the way we decide to go,”
determine priority targets to hit as part of Thompson said.
High-grade graphite deposits in Swe- maiden resource work.
den have been the pillar which has ena- “They definitely have good metrics
bled Talga to develop technologies and Kiskama, the largest undeveloped co- around them on a global scale and there
products for usage in batteries, construc- balt deposit in Sweden, was part of the are not many non-African deposits that are
tion, coatings and polymer composites in- original package Talga acquired from Teck of a scale that are interesting to large in-
house. Resources Ltd in 2012. stitutions and large funds. Electrification of
the world isn’t going away and the outlook
One of the company’s latest advances Thompson said Talga’s cobalt deposits for the investment horizon for these scale
has been successful test work on its in Sweden were “quite big looking” unlike of funds is 20 years-plus. They are not too
lithium-ion battery anode product which many projects that existed outside of Af- concerned about the year-to-year wobble
has demonstrated an ability to charge a rica, which were typically skinny and hard in the markets. They are really looking at
lithium-ion battery from 0% to 100% within to hang together. the potential over that time.”
three minutes.
He said the company had always been Sensing deteriorating conditions in the
The company is moving to trademark keen on its blue-metal assets and despite commodities market, Talga moved to
its range of lithium-ion anode products the cobalt price tailing off in the last six strengthen its balance sheet mid-year and
as Talnode to sit alongside the likes of its months, now was the time to emphasise has $16 million cash to fund its activities
Talphene graphite product, which Ger- their potential, according to Thompson. for the foreseeable future.
man commodities and product distribution
company Possehl Erzkontor GmbH & Co. “I would say it is just the right time. We – Mark Andrews
KG has been granted a non-exclusive right have a vast amount of interest in all of our
to sell and distribute for an initial two years. materials, but it makes sense to split them
up and for the cobalt to have its own life.
“This year has been a lot about business Developing a metal project is very differ-
development and product development,” ent to the carbon, non-metal project.
Talga managing director Mark Thompson
told Paydirt. Surrounded by high quality infrastructure and low cost sustainable hydropower, while
also being in the same district as Europe’s largest copper-gold mine, places Talga’s
“I would say that we are on the verge of cobalt-based assets in a sweet spot
having a major transformation in our com-
munication with investors and the clarity
of message that comes about through an
economic study like a PFS.

“It has been a little tricky to communicate
a simple, clear message and I would say
that is changing a little bit with our product
mix, as far as graphene and all the differ-
ent graphite products we have go. People
have had a hard time getting their head
around it and then we introduce the fact
that we can make batteries as well, with
the anodes from the waste products of the
graphene. Even though batteries are one
of our products, it is one of four and it is not
a common story for a mining company to
have that access to their end market.”

While the company continues down the
path of being a fully integrated pit-to-prod-
uct mining outfit, it is assessing the merits
of having its cobalt assets flying solo.

Thompson said the quality and size
of projects such as the Kiskama cobalt-
copper-gold play, north of Kiruna, gave
Talga’s board impetus to consider the best
way forward for its four cobalt-copper-gold
assets in Sweden.

Kiskama was recently deemed of na-

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 33

EUROPE

Davenport growing fast enced potash developer Gilchrist said he
had no qualms about building a mine in
Germany despite investor misconceptions
the cost of operating in country was too

expensive and the regulatory regime was

Davenport Resources Ltd managing will give Davenport access to its first batch challenging.
director Chris Gilchrist believes his of core from the project. “We’re a very low jurisdiction risk com-

company will soon be sitting on Europe’s “The only thing we didn’t have in order pared to other potash plays elsewhere in

biggest potash resource. to declare an indicated resource right now the world,” he said.

Gilchrist said the company had “leap- was the drill core from those earlier cam- “We’ve got infrastructure coming out of

frogged forward several years” since being paigns, it’s all gone, so without drill core our ears, so we believe we could build a

spun out of West Australian potash hopeful the best we could get was an inferred re- mine quite cheaply. In fact, we’ve started –

Parkway Minerals NL early last year, hav- source,” Gilchrist said. call it a pre-scoping study – with a special-

ing negotiated with the German Govern- “We have to drill in selected places to get ist potash consultancy in Germany to cost

ment to acquire three perpetual mining core so that we can bring those resources out [building] a hypothetical mine on one of

licences in the South Harz Basin. up to the indicated and measured category. our licence areas.

Davenport currently controls 1.7bt @ The beauty is, in discussion with our con- “We’re very close to the regulators in

11.4% K2O across the three licences, sultants, they believe we won’t need to drill Germany, we have frequent meetings with

namely Ebeleben, Muhlhausen and Ohm- any more than three or four holes, so this them and they’re actually very helpful.

gebirge. is the cheapest exploration programme on They’ve helped us put together a road map

A maiden inferred resource of 1.13bt @ the planet. Ultimately the value of that pro- for how you would go about getting regula-

11.1% K2O was announced for the south- gramme has to find its way into the value of tory permission, environmental and social

ern half of Muhlhausen last month, with an our company and the value of the assets.” permission, etc to go forward and build a

estimate for the northern half due at the Following the brief drilling programme mine in Germany. So, I think it would be

time of print. and resource updates, Davenport plans no more difficult than any other European

Resources for Ebeleben (576mt @ to launch into pre-feasibility studies on its country.”

12.1% K2O) and Ohmgebirge (non-JORC most prospective areas at Ebeleben and Gilchrist is also confident his company

149mt @ 13.5% K2O) were previously Muhlhausen. will not be short of potential customers for

announced by the company. All three re- Davenport is also eyeing a secondary its product should Davenport become a

sources are rich in premier potash ores listing on either in London or Frankfurt – or producer in coming years.

sylvinite and carnallitite. possibly both, according to Gilchrist – with “People often ask me where would we

Gilchrist said the company had acquired UK-based advisory firm Bacchus Capital sell the potash and of course we’d sell it in

datasets for 150 historic drill holes across Advisers Ltd appointed to undertake that Europe because invariably the best prices

the three licences which if done today from process, as well as broaden the compa- are the ones on your doorstep, so I’ve got

scratch would cost more than $US150 mil- ny’s European investor base. no concerns about where we could place

lion to undertake. Gilchrist said the company had already our product,” he said.

Davenport paid just $1.5 million for the identified potential cornerstone investors “Western Europe is a net importer of pot-

three licences which have no expenditure for the secondary listing which is planned ash and other mines in Germany will close

commitments and will attract no royalties if for March/April. in the coming years, so that gap will widen

eventually mined. Having been promoted to the managing further.”

“Other companies would have taken director’s chair earlier this year after two – Michael Washbourne
several years and spent up to $200 million years as a non-executive director, experi-

to do all of this, yet we’ve done it for a frac-

tion of that,” Gilchrist told Paydirt.

“In the last 12 months, we’ve brought

Davenport forward about three or four

years probably. Unfortunately it hasn’t re-

ally been noticed because we haven’t been

telling the market about it too aggressively.

Now that we’ve got these JORC resources

we do expect the market is going to sit up

and take notice because when we’ve fin-

ished, we’re going to be able to declare that

we’re sitting on Europe’s biggest potash re-

source.”

Over the next six months, Davenport

plans to upgrade its inferred resources

to the indicated category, which can be

achieved by drilling just four holes into se-

lect parts of the licence areas.

Gilchrist said the company would need

to undertake a small capital raising before

it could begin the drilling programme which Davenport controls a 1.7bt potash resource across

Page 34 NOVEMBER 2018 AUSTRALIA’S PAYDIRT three licences in Germany, including Ebeleben

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regional roundup

Rare boost for
Greenland

Greenland Minerals and Energy Ltd told Paydirt. “They had looked at pretty A group of international engineers
(GMEL) has taken the first step to- much every project through Australia, Af- recently visited Kvanefjeld
wards commercialisation of its Kvanefjeld rica and Canada and Greenland was just
rare earths-uranium project on the southern a very good fit for them. And we needed a The ruling Simuit Party has since struck
tip of the former Danish colony. company of their ilk. an agreement with the Democrat Party,
which was not part of the coalition, to en-
GMEL has entered into a non-binding “Shenghe is the most international of sure key areas such as mining continue to
agreement with its major shareholder the Chinese rare earth companies and re- be progressed for the best interests of the
Shenghe Resources Holding Co Ltd to ex- ally the main supplier to the international country.
plore product offtake and marketing of the industrial end-users. They are technically
rare earths products to be produced from very, very strong and they recognise the “There was this awareness in Green-
Kvanefjeld, including neodymium, praseo- strengths of our project. They have been land that it was really important with where
dymium, dysprosium and terbium, as well working with us to establish this path to they’re at to have stability and a stable
as execution of a strategic development market, to work out how we connect the backdrop to be able to make progress and
plan. project through further processing to end- essentially move forward,” Mair said.
users globally.
Shenghe – GMEL’s single largest share- “Greenland continues to work to provide
holder at 12.5% – has expressed intent to “From early on in their involvement, they confidence in order to be able to secure
acquire Kvanefjeld’s entire rare earths out- highlighted a few key areas where we large-scale investor interest. There are a
put, either as a mineral or chemical con- would be able to make some fundamental number of projects now that have either
centrate product, at “arm’s length pricing” improvements. They’ve been huge in hav- been through the permitting or are going
which reflect published international-traded ing that industry understanding of how to through the final permitting steps. It’s re-
prices. connect a rare earths project to market and ally important for Greenland to actually see
how to get it in its most efficient possible some projects moving into the development
The MoU also entails Shenghe enter- form.” pipeline.”
ing into a supplementary agreement with
GMEL to undertake international market- A MoU around the potential commerciali- Representatives from US-based PND
ing of any rare earths products it does not sation of Kvanefjeld was just one of several Engineers, Canada’s Nuna Logistics,
acquire, as well as terms for a strategic de- key milestones GMEL has ticked off in re- TetraTech and China Communications
velopment plan for Kvanefjeld, including a cent months, alongside submission of an Construction Co visited Kvanefjeld in Sep-
process to secure project finance. environmental impact assessment and an tember as part of an international engineer-
inaugural site visit from the International ing team which is likely to be involved in the
Both parties have agreed to conclude a Atomic Energy Agency (IAEA). project’s eventual construction.
binding agreement on product offtake with-
in three months of “mutual acceptance” of Official acceptance of GMEL’s mining The IAEA, along with representatives
the Kvanefjeld optimised flowsheet, which licence application and public consultation from the Danish Emergency Management
is due early next year. requires submission of the environmental Agency and Government of Greenland,
and social impact assessments, as well as also inspected the project in late August to
GMEL managing director John Mair said the maritime safety study, in both Danish effectively tick off on production of uranium
the agreement signalled Shenghe’s intent and Greenlandic. from Kvanefjeld. According to GMEL’s fea-
to diversify its business outside of China. sibility study, the proposed operation will
Mair said GMEL’s permitting process churn 7,900 tpa rare earths concentrate
“Shenghe is very, very keen to under- was unaffected by this year’s Greenland and 512 tpa uranium oxide.
pin its international growth strategy and so political elections, including the recent exit
they needed to really bolt-in to a significant of Partii Naleraq from the coalition. “This, in essence, is part of what is just
long-life operation outside China,” Mair a standard checklist, but it’s great because
this really only happens when you’re a long
way down the path,” Mair said.

“Really this all goes back to when we first
got involved in Greenland and there was
no regulatory framework to manage the
production and export [of uranium] and this
became further complicated by an uncer-
tainty between Greenland and Denmark
as to who would actually be responsible for
that process because Denmark manages
Greenland’s foreign policy.”

– Michael Washbourne

Page 36 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

EUROPE

Infinite possibilities for San Jose

Europe’s growing demand for lithium hy- said the San Jose project was shaping as Europe vice-president of corporate devel-
droxide has enticed Infinity Lithium Cor- a perfect candidate for lithium hydroxide opment and strategy to lead the company’s
growth plans on the continent.
poration Ltd to prioritise a scoping study on production.
Parkin also succeeded long-serving
potential production of the emerging battery “If you have a look at resource, it’s the managing director Adrian Byass in August,
having joined the Perth-based company
ingredient. second largest [lithium] resource in Spain, earlier this year initially in a corporate de-
velopment role.
Respected forecaster Roskill expects it’s a hard rock resource and there’s a natu-
Byass has remained with the company in
demand for battery-grade lithium hydroxide ral benefit that is enjoyed by hard rock re- an executive capacity focused on the tech-
nical aspects of the project.
to surpass that of battery-grade lithium car- sources, in terms of processing to lithium
“In terms of working together as a team,
bonate by 2024. This year, lithium hydrox- hydroxide, over and above the brines,” Par- it’s very much business as usual,” Parkin
said. “We’re very fortunate to still have Adri-
ide accounted for just 16% of demand for kin told Paydirt. an, who has been with this project since its
inception, still on board and really my role
battery-grade lithium chemicals. “There was a logical progression for us to moving forward is about building on our re-
lationship with our project partners, engag-
Roskill also predicts lithium hydroxide explore that moving forward from our pre- ing strategic investors, seeking offtake and
building a suitable team around that.”
for batteries will grow at 43.2% per year by vious lithium carbonate scoping study and
San Jose is a brownfields site which was
2027, compared to 19% per year for lithium feasibility work that is being undertaken. mined for tin during the 1980s. More than
12km of drilling has been completed across
carbonate. We’re very close to completing this scop- the project area which hosts a JORC-com-
pliant resource of 111.3mt @ 0.28% lithium,
Interest in lithium hydroxide surged ear- ing study, although we’ve further expanded 0.61% lithium oxide and 206 ppm tin.

lier this year when several battery manufac- the scope of the study over the last couple Parkin was attracted to the project be-
cause of its proximity to “world-class” in-
turers were reported to be leaning towards of weeks.” frastructure, in particular the nearby gas
pipeline.
hydroxide-based cathodes for their battery Since the lithium hydroxide scoping
“The introduction of a gas pipeline ad-
technologies. study was launched, Wave has identified joining the project area in 2007 has really
opened up the possibility for this project to
Infinity commissioned a scoping study potential variations in input reagents which be not only a resource project, but an indus-
trial battery chemicals project,” Parkin said.
on potential lithium hydroxide production could help optimise the process flowsheet.
“This makes the project somewhat
from its San Jose project in Spain in Au- Infinity is also exploring a production op- unique not just for Europe, but elsewhere
around the world, by virtue of having this
gust, having just completed an option study tion for lithium sulphate as an intermediate high quality infrastructure immediately
available.
which confirmed it was a pathway which product en route to either battery-grade
“We see that gas pipeline as being im-
warranted further investigation. lithium carbonate or hydroxide. perative in the roasting process, the front
end of our processing flowsheet, which is
Lithium experts Wave International Pty Feasibility work on the lithium carbonate very similar for carbonate or hydroxide.”

Ltd are leading the scoping study which is opportunity remains ongoing and Parkin Infinity has also lodged a mining licence
application and environmental approvals
slated for release this quarter. expects there will be natural synergies be- for the project to the regional government
in the Extremadura region, the only regula-
Infinity managing director Ryan Parkin tween the studies completed on that and tory body the company needs to negotiate
permits with.
the lithium hydroxide option.
“We see this as advantageous for our
“The work that has been under- project as we are not required to go to the
federal level, it is not a uranium project and
taken on the feasibility study to date it is not a project that crosses over regional
boundaries,” Parkin said.
is readily transferrable to continuing
– Michael Washbourne
a pathway of lithium hydroxide and

we are currently working with our

project partners to determine the

most relevant and market-advanta-

geous completion of those works to

an end product that the market de-

mands,” Parkin said.

“I do believe that the brines enjoy

a significant advantage in the lithium

carbonate processing route and it’s

been well documented that the hard

rock resources have a competitive

advantage in the lithium hydroxide

process route in terms of being a

fully integrated producer.”

Completion of a feasibility study

will see Infinity (formerly Plymouth

Minerals) lift its stake in the San

Jose project from 50% to 75%, un-

der an earn-in agreement with JV

partner Valoriza Mineria.

Infinity recently appointed Lon-

don-based battery minerals execu-
Infinity Lithium is considering a lithium hydroxide tive Vincent Ledoux-Pedailles as its
production option for its San Jose project in Spain

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 37

regional roundup

High-speed Pursuit in Finland

Even managing director Jeremy Access to good infrastructure should prove vital for Pursuit’s plans in Scandinavia
Read himself has been surprised
by Pursuit Minerals Ltd’s rapid pro- The company is finding similar joy from wasn’t the first to recognise this potential
gress since entering Scandinavia ear- its archive rummaging in Sweden. In Au- but we have picked what we believe is the
lier this year. gust, the company announced assay of best ground.”
historical drill holes on the Airijoki project
When Paydirt spoke to Pursuit in in northern Sweden had delivered high- The identification of high-grade miner-
May, Read was urging caution about grade vanadium intercept of 178.3m @ alisation on both projects has solidified
the company’s acquisition of vanadi- 1.33% V2O5, including 31m @ 1.4% and Pursuit’s belief in Scandinavia as a pro-
um-prospective ground positions in 16m @ 2.03%. spective vanadium territory, having iden-
Finland and Sweden. tified the steel additive as its preferred
Pursuit has now started the permitting commodity.
“There is a lot of historical informa- process to start drilling this month in an
tion but this is not going to be a case effort to keep Airijoki moving in parallel Vanadium supply is currently domi-
of going into a feasibility study within a with Koitelainen. nated by China, Russia and South Africa
few months,” Read said in May. “There and while a number of opportunities have
is a 70mt resource but it is over a very “It will mean that within a year of picking sprung up across the globe as an inevi-
large area and the other project only up this ground we will have two projects table result of vanadium’s rapid price rise
has 20 holes into it.” at a PFS decision point; that is amazing,” – 300% in the last 12 months – Read is
Read said. “From there, we will ask our- insistent that project economics span be-
Six months on, the company is pre- selves which one is the best and progress yond simple tonnes and grade measure-
paring the path for a maiden JORC- that to PFS next year.” ments.
compliant resource on two of the pro-
jects. That a fresh-faced junior such as Pur- “For any vanadium project, it is vital
suit – the company only listed on the ASX you have access to infrastructure, good
“That is one of the advantages of in August 2017 – could pick up two such grades aren’t necessarily enough,” Read
working in Scandinavia, you have ac- projects in highly credentialed jurisdic- said. “All of our projects were applied
cess to historical data which has been tions was testament to the opportunity on for because they were quite close to in-
kept and stored very well,” Read told offer in that part of the world, according frastructure; power, roads, etc. One of
Paydirt recently. “We have been going to Read. our Finnish projects has a railway within
through this data and have defined an 10km of it. It is a particular advantage of
exploration target based on the histori- “Even we were surprised that there Scandinavia, particularly compared to
cal drilling and should be able to convert were such large bodies of known va- Australia where there are good deposits
that into a JORC-compliant resource nadium mineralisation on open ground but little or no infrastructure.”
and run a scoping study without drilling a waiting to be pegged,” he said. “That
hole.” has changed a bit now as more compa- – Dominic Piper
nies have followed us in. Pursuit certainly
Pursuit’s raiding of the Finnish geologi-
cal archives has centred on the Koitelain-
en Vosa vanadium project in the north of
the country. The exercise saw the com-
pany review 25 historical holes covering
3,742m of drilling and to estimation of an
exploration target of 80-150mt, containing
4-10.5mt of magnetite at 2-2.3% V2O5,
for 80-241,000t of V2O5.

Pursuit plans to continue its review of
historical data with a maiden resource
and scoping study to be completed in the
March quarter.

“We hope to reach a decision point
about a feasibility study on Koitelainen
early next year,” Read said.

The exploration target and Pursuit’s
willingness to up the ante pointed to the
potential for Koitelainen Vosa to host a
world-class vanadium deposit, according
to Read.

“In a short period, we have greatly en-
hanced the Koitelainen project…estimat-
ing an exploration target of 80-105mt with
a vanadium-in-magnetite concentrate
grade range which is in the top echelon of
projects globally, as any magnetite con-
centrate above 2% is [considered] world-
class,” he said.

Page 38 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

EUROPE

Czech EMH plans to drill eight holes for a total duce lithium hydroxide at the right purity
confidence of 2,560m with the stated aim of the pro- and at the right position on the cost curve,
gramme being to convert a sufficient por- as well as carbonate, which we’ve already
restored tion of the existing indicated resource into demonstrated, so that we can provide the
measured status to cover the first two years end product that the offtakers are going to
While the award of drilling permits may of production at Cinovec. want in Europe,” Coughlan said said.
seem insignificant news to some, for
European Metals Holdings Ltd (EMH) it Permits were also awarded for geotech- “There’s no chemical, metallurgical, phys-
means more than the ability to punch holes nical drilling which the company undertook ical reason why we can’t, we just haven’t
into its Cinovec lithium-tin project in the last month at the proposed site of the mine done the work yet. We have developed a
Czech Republic. portal. flowsheet over the last couple of months, in
conjunction with Hatch, and that looks very
EMH has endured a challenging 12 Coughlan is anticipating positive results promising and right now we’re doing the test
months since a hung parliament was de- from both programmes given his company’s work in the labs in Germany to prove that
clared following the October 2017 election history of success with the drill bit. flowsheet.
and Prime Minister Andrej Babiš subse-
quently losing a parliamentary vote of con- “Our confidence is borne out in the con- “I expect to be able to announce our abil-
fidence. sistency of the orebody,” he said. “Every ity to produce battery-grade lithium hydrox-
time we’ve drilled we’ve had excellent re- ide and that will give us some indications of
Babiš struck an agreement with the So- sults and exceeded expectations in most in- the cost profile so that when our offtake dis-
cial Democrats in July to form a coalition stances. We’ve had 100% conversion from cussions mature during the next six months,
government with his ANO party, seemingly target to inferred and 100% from inferred to we’ll be able to tell our offtakers that we can
ending months of political instability in the indicated, so there’s no reason we can see produce the type of product that they want.”
country. why we won’t have a similar result going
from indicated to measured. The question Despite losing traction in the market due
During that period of uncertainty, EMH then will be how many years of production to the political uncertainty in the Czech Re-
was informed that a MoU signed prior to we need to bring into measured to get the public, EMH and the Cinovec project, in
the election with the previous government best possible financing package.” particular, are still resonating with various
to “mutually explore” downstream process- industry players through Europe.
ing opportunities in country was to be ter- While the Czech political situation was in
minated. stalemate, EMH completed a series of off- Cinovec was a well-known tin opera-
site roast optimisation tests which improved tion during the 1980s, having also been
Few other matters which required gov- lithium recoveries, prompting the company mined on and off for several centuries prior.
ernment approval or involvement have pro- to increase its proposed lithium carbonate Coughlan expects interest in the project’s
gressed in the past 12 months, but EMH production to 22,500 tpa. tin credits to heat up as negotiations with
managing director Keith Coughlan believes lithium offtakers progress.
the recent award of permits for DFS-level All leach/roast tests achieved lithium re-
drilling is a step in the right direction for all coveries of 94%, up 7% on the assumptions “They’ve produced tin there for centuries
concerned. used in the PFS released in April 2017. and a lot is known about the met, so we
don’t have too many concerns about it,” he
“We needed some tangible indication EMH is pushing ahead with plans to re- said.
that things were getting back to business as lease a DFS, however, the company has
usual in the country rather than just words, also set its sights on producing lithium hy- “Whilst we’re proposing to mine the north-
so we see the awarding of drilling permits droxide due to its increasing use in lithium- ern part of the orebody to begin with be-
as tangible, a real indication that things are ion batteries. cause the lithium there is higher grade and
getting back to normal and that we can con- shallower, there is actually less tin in that
fidently move forward with what we’re want- Coughlan said the decision to pursue a northern deposit because that’s where it’s
ing to do,” Coughlan told Paydirt. lithium hydroxide option had come off the been mined to a degree. But, in the south-
back of Europe’s growing demand for bat- ern part it’s untouched for tin, so the tin
tery technologies, particularly from car credits in the southern parts are, relatively
manufacturers. speaking, five times what they are in the
northern part.”
“All of this talk around lithium hydroxide
is certainly strong enough that we feel we – Michael Washbourne
need to be able to prove that we can pro-

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 39

regional roundup

Candles on Berkeley
cake on holdhe Spanish Government has decided

Tnot to deliver the permits necessary

to open the European Union’s only open-
cast uranium mine near Salamanca, deal-

“ing a serious blow to Australian mining
will say no,” a government source said The authorisation
on condition of anonymity. to build the mine
is only possible when
Spain’s energy and environment min-
istry declined to comment. The Nuclear
Safety Council had no immediate com-

company Berkeley Energia Ltd’s plans. ment. the nuclear authority
The project was granted preliminary A second source, directly involved in has handed over its
report, which is still a
approval in early 2013 but has since the proceedings, said Berkeley was “liv-
faced local opposition. ing in a parallel universe” when it said the
mine would soon become a reality.
Berkeley requested a trading halt on its

shares on October 17, which fell nearly “The authorisation to build the mine is long way.
29% in Australia, citing media reports only possible when the nuclear authority

that its Salamanca mine would be denied has handed over its report, which is still Berkeley said the mine would run for
permits by the Government. a long way,” the source said, adding he 14 years, generating investment of over
believed the mine would never see the $290 million and more than 2,500 direct
On its return to trading on October 19, light of day. and indirect jobs in the region.
Berkeley said it had received no official
notice from the Nuclear Safety Council The nuclear authority is due to renew In a study presented to Australian in-
or any other government department re- its board and the Socialists and junior vestors, the firm said the mine is capable
garding its plans to open the mine and parliamentary allies Podemos, who both of generating strong, sustainable cash
had contacted the Spanish authorities to oppose the project, will hold a majority flow as a result of recovering demand
seek clarification. in it. and growing appetite for uranium ore
coming from China.
On October 29, the company said it A neighbouring mine run by public
had been advised by the Nuclear Safety company ENUSA was previously in op- Meanwhile, also in Spain, Alcoa said
Council that is was not the source of the eration near the site in Retortillo in Sala- it would close two of its three aluminium
media reports. manca province, but closed in 2000 after plants in the country with a combined
it failed to turn a profit. production of 180,000 mtpa, resulting in
“The company is continuing to work the lay-off of almost 700 workers.
with the Nuclear Safety Council in pro- Berkeley, which has a triple listing in
gressing the necessary approvals for the Britain, Spain and Australia and oper- The Aviles and La Coruna plants were
Salamanca mine,” the company told the ates no other projects, has insisted the two of the least productive due to in-
market. planned mine can be profitable since trinsic structural problems such as inef-
conducting initial studies in 2007. ficient technology and high fixed costs,
Berkeley said it was still confident it Alcoa said in a statement.
would obtain the last two major permits The price of uranium fell heavily fol-
needed for the mine to start operating, lowing Japan’s Fukushima nuclear dis- “Those problems, together with exter-
which were a local building license and aster of 2011 and for years struggled to nal market factors such as overproduc-
an authorisation given by the Govern- recover. tion in China, high raw material prices
ment to handle radioactive waste, though and energy costs, have generated sig-
it would also scale down its existing local This year, however, investors hope for nificant losses in these two plants in the
corporate operations. profits as prices have rallied, helped by last two years,” the company said.
London-listed investment vehicle Yellow
“The Government will wait for the on- Cake, which has been buying and storing

going proceedings to go through but it the element. – Reuters

Page 40 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

EUROPE

Processing at Wolf Minerals’ Drakelands tungsten
mine failed to reach capacity, eventually plunging

the company into administration in October

Financier pack deserts Wolf

Major shareholder RCF has thrown in nate market events and bad timing meant Wolf to miss offtake contract obligations
the towel on Wolf Minerals Ltd, pull- the mine failed to meet Wolf’s ambitions. on several occasions.
ing the punch-drunk junior miner out of
its battle to keep the Drakelands mine in The operation had been slated to pro- The abrasive nature of the ore also
Devon, UK afloat. duce 3,500 tpa tungsten concentrate and took its toll with run time, throughput and
1,000 tpa tin concentrate but problems recoveries all continuing to underper-
ASX/AIM-listed Wolf called in admin- started almost immediately on commis- form throughout 2017.
istrators Ferrier Hodgson on October 10 sioning at the 3 mtpa DMS processing
after failing to reach agreement with RCF plant with tungsten prices plunging 50% The mine started to show signs of life
and other key financial stakeholders over at the same time. in the early months of 2018 with the com-
funding to relieve short-term working pany posting improved throughput and
capital requirements. Commissioning continued to be hin- production numbers for the December
dered by problems with engineer GR quarter and improved throughput for the
RFC had provided an additional £4 mil- Engineering Services Ltd remaining March quarter. The June 2018 quarter
lion to Wolf’s existing bridging facility in on-site throughout 2016 to work on an- saw throughput of 554,605t for produc-
July, taking the total commitment to £69 swers. Those efforts were hampered by tion of 42,314 mtu tungsten concentrate
million but with cash flow problems per- the often restrictive nature of Drakelands’ and 70t tin concentrate.
sisting the lender decided enough was mining licence with a raft of environmen-
enough and refused further support. tal requirements restricting the ability to The tungsten price had also shown
enact. signs of improvement, reaching its high-
UK subsidiary Wolf Minerals (UK) Ltd est levels since 2014. However, despite
was liquidated in mid-October with 200 The relationship between Wolf and GR the improved operating and market
employees expected to lose their jobs as ultimately turned sour over the issue of conditions, Drakelands was still failing
a result of the process. low-frequency noise constraints on the to produce free cash flow and with the
processing plant. In April, the two parties company’s £75 million senior debt facility
The move to administration brings reached settlement in which GR contrib- maturing in late October, RCF made its
to an end Wolf’s chequered history at uted to third-party works to install build- move and closed its book.
Drakelands, 10km north of Plymouth in ing cladding to reduce low-frequency
the south-west of England. noise and Wolf would return all security The question now is whether it will also
held, including a £7.5 million bank guar- mark the end of the British mining revival.
The project was the flag-bearer for a antee.
new generation of British mining, becom-
ing the first new metal mine to open in The Drakelands plant failed to process
45 years when it started commissioning more than 2 mtpa at any time, leading
in 2015 but a series of mishaps, unfortu-

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 41

NICKEL REVIEW

Fickle skills needed to trickle
into nickel

Innovation in the nickel sector was the theme of the panel discussion at this year’s
Australian Nickel Conference. Paydirt editor Dominic Piper was joined by IGO’s Ian

Sandl, Western Areas’ Dan Lougher and GR Engineering’s Stewart Findlay

While sections of the nickel sector la- of science. That is one of the strategies ing industry and those attitudes are hard to
mented the frame in which the min- we have; investing in science in primary change,” Findlay said.
ing sector was presented to children, the schools because that is laying the founda-
West Australian Government announced it tion for the future,” West Australian Min- A deterrent to people entertaining a ca-
was sticking fast with its election commit- ister of Mines Bill Johnston said during a reer in mining has been the boom/bust
ment of focusing on science in schools. Q&A at the Australian Nickel Conference nature of the sector, which Western Areas
(see pages 56-57). Ltd managing director Dan Lougher be-
From as far north as the Kimberley lieves to be “old gossip” now.
down to the Great Southern region of the Ramping up science facilities at primary
State, an additional 100 primary school school level across the State is just one Having enjoyed a stellar 35-year career
classrooms will be converted into science small step towards encouraging the up- in mining, Lougher’s background as a min-
labs in 2020 and 2021. take of subjects applicable to the resourc- ing engineer has seen him travel the world
es sector but industry needs to do more and now as managing director of West-
The purpose of the labs is to give stu- to change the perception general society ern Areas he is aware of the well-paying
dents “hands-on, high-quality science les- holds of it, according to several industry skilled and unskilled opportunities avail-
sons”, suggesting this is an area which has professionals. able in the sector.
been devoid of attention in a state heav-
ily reliant on science-based expertise to GR Engineering Services Ltd project Therefore, he is bemused at why the
drive pillars of its economy; mining and development manager Stewart Findlay younger generation isn’t being pulled into
resources. said his experience visiting schools had the sector, considering a graduate on a
brought to light the enormity of the chal- FIFO roster could command $110,000 a
“There aren’t enough science teach- lenge facing the industry to promote a year.
ers because there aren’t enough high positive image of itself.
school students doing science, as there “The salaries people are earning are
aren’t enough kids leaving primary school “There is a general negative attitude phenomenal,” Lougher said. “I don’t get
with an understanding of the importance from teachers in schools towards the min- the disconnect; it is very worrying and I
think we have left it far too long. We have

Page 42 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

to go way back now and it is going to take world’s largest hard rock 3D seismic survey “One of the joys of my job is seeing the
talent out there, the new generation of de-
a decade or longer [to rebuild the reputa- across the belt and plans to put the high veloping youngsters from graduate level.
In fact, from student level all the way up
tion]. I don’t think the messaging has been powered Spectrum EM survey platform ac- through the organisation; they are young,
enthusiastic, they learn quickly and it is a
as good as it should have been.” quired from South Africa to good use. joy to watch them grow. They do embrace
technology at all levels. It is exciting for me,
Lougher said the adoption of digital tech- “Now we have it, we are not letting go of being in the business for a long time, to see
new tools being employed and seeing the
nology had enabled the mining industry to it and we plan to fly the entire belt along talent coming through using them.”

be at the forefront of innovation in Australia. with other projects we have,” Sandl said. IGO’s preparedness to change, adopt
and move with the times is perhaps an im-
Independence Group NL (IGO) head of ex- “These spectrum surveys are very pow- age the mining industry needs to promote
more.
ploration Ian Sandl believes that is a story erful EM platforms – fixed-wing systems
While IGO is a good example of how
which should be told in schools. – which runs at 25 hertz and we are get- modern mining companies are thinking,
widespread industry change will only be
“We have demonstrated today that min- ting very good penetration, particularly in successful if a collaborative approach is
taken.
ing is an extremely innovative industry. We resistive parts of the belt. We are seeing
Findlay said pioneering technologies in-
have to get the message out to the kids so conductors down to 500m or more, so it is curred an element of risk and therefore one
party shouldn’t be burdened with all of that
they want to study science and engineer- very useful.” weight.

ing, metallurgy and geology instead of Having taken its exploration kit to anoth- “The example we went through with the
MREP process with Western Areas, most
computer science and rocket science and er level, Sandl said IGO had the requisite of that process was developed by them.
We worked closely with them as their en-
robotics and things like that,” Sandl said. skills to maximise its tools efficiently. gineer and I think the level of work done
by both groups has largely underpinned
“It needs to start at school level. We Sandl emphasised the importance of de- where Western Areas has got to in relation
to the success of that project,” Findlay said.
need to be targeting teachers so that the veloping a culture of technical excellence
“When you are talking about innovation,
students are getting that career advice into within the organisation and welcomed the technology metals and developing prod-
ucts for batteries, the battery industry is
high schools and then it flows on. If we can opportunity to utilise new tools alongside moving forward as fast as any of the other
industries we are dealing with. When you
capture those young kids they will carry an emerging crop of industry leaders. are designing processes and projects that
the products from these future facilities are
that through.” Sandl said IGO was building a culture going to be going into the batteries industry
you have to stay abreast of what those par-
Sandl is ideally placed to advocate in- akin to the ones established by WMC in ties are doing with their development.”

“dustry as cutting edge innovators, with the 1970s and 80s and BHP Ltd of the
We have demonstrated today that mining is
an extremely innovative industry. We have
to get the message out to the kids so they want
to study science and engineering, metallurgy and
geology instead of computer science and rocket
science and robotics and things like that.

IGO’s exploration strategy premised on 90s, where technology was embraced and – Mark Andrews
adoption of innovative technologies, par- exploration teams demonstrated a willing-
ticularly in the Fraser Range. ness to push the boundaries.

IGO has consolidated its position in the “It is a real pleasure to work with peo-
Fraser Range and is best placed to unearth ple like that. We’ve put a lot of effort into
the next Nova. recruitment as well as developing a lot of
people,” Sandl said.
In recent times, IGO has completed the

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 43

NICKEL REVIEW

This is a modern world: IGO

This year’s Independence Group Ltd tion about how we attract new entrants to released with the full feasibility study to fol-
(IGO) presentation to the Australian the industry,” he said. “There is a role for low later that year,” Bradford said.
Nickel Conference laid clear the compa- individual companies, industry associa-
ny’s intentions to market itself as a very tions, government, schools and society in “It delivers multiple benefits: increases in
modern kind of miner. general to play. payable metal, increased concentrator re-
covery, there is a premium price attached
IGO is pushing hard to position itself in “We need to change the perception of for nickel as nickel sulphate and it directly
the energy storage materials sector with mining. Mining is an exciting, innovative links the company into the EV thematic.”
its marketing plans for nickel and cobalt and fun industry to work in and it underpins
while its exploration team has built a repu- the WA economy. It can take you all over On exploration, Bradford said the com-
tation as one of the most innovative and Australia, the world and even, in the future, pany had committed $51 million to discov-
tech-savvy in Australia through its use of perhaps into space.” ery in FY2019 to ensure IGO could boast
high-powered geophysics and seismic “best in class” exploration and discovery
technologies. The company’s move into the world capability.
of future energy needs may assist the
At its new Nova operation, the com- rebranding exercise. Like its Australian The company has taken its time to start
pany has plans to install Australia’s larg- nickel peers, IGO is eager to pursue the drilling on its 15,000sq km land package
est diesel-solar farm hybrid power facility new markets flourishing in expectation of a around Nova as it put the geophysical and
and managing director Peter Bradford has major demand increase from EVs and bat- geochemical picture together.
grown into one of the industry’s strongest tery storage.
voices on the issue of attracting the next IGO has completed Australia’s largest
generation of workers to the sector. A PFS has been launched after the suc- ever 3D seismic survey, new AMT and
cessful production of nickel sulphate hexa- Squid EM surveys and the high-powered
Bradford’s presentation at the confer- hydrate crystals from Nova nickel concen- Spectrum EM survey out of South Africa
ence encapsulated the company’s ap- trate earlier this year. – “all the tools and science in the tool kit”
proach and he used his opening remarks according to Bradford – and is now ready
to call on the industry to do more to change “The downstream efforts are progress- to fire up the drill rigs.
cultural perceptions of the mining sector. ing according to plan. The work confirmed “There has been an evolution of the ex-
the technical viability of the process, and ploration we are doing,” Bradford said.
“There is a need for a greater conversa- in the March quarter we will see the PFS “Work by others identified the anomalies

Dawn of a New Nickel Era

Restoring Kambalda’s Pre-eminent Position in Nickel

• Dominant Kambalda land position, a world-class nickel-gold mining district
• High Grade Nickel Mineral Resources of 118,000 tonnes of contained nickel
• Nickel programs underway to re-establish nickel mining
• Gold mining cash flows

Page 44 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

well – apart from challenges in in the measured category. There are very

the paste plant – that IGO was few projects at this level, this early.”

able to consistently achieve At Tropicana, a series of improvements

throughput rates 20% above in the five years since operations started

nameplate capacity towards the has meant production levels have been

end of the year. maintained.

“Without using that extra ca- “Throughput has been increased to 8

pacity, we expect 27,000 tpa mtpa, a 38% increase since 2013 which

at $1.65-2/lb nickel for the next has offset the transition to lower grade

three years, making Nova the ore,” Bradford said. “It now has a similar

lowest cost nickel producer in mine life [10 years] as five years ago with

Australia,” Bradford said. higher production rates [500-550,000oz

Further improvements in cost gold forecast for FY2019].”

Peter Bradford and efficiency can be expected The JV partners plan to commission a

next year with IGO set to com- second ball mill at Tropicana next month

plete almost all underground and will also release details of a PFS into

that demonstrated the Fraser Range was development before the end of the 2018 the Boston Shaker underground resource

fertile. We consolidated more tenements calendar year. ahead of potential development in the

and launched a systematic exploration “The capital development has been ac- June quarter.

programme. It remains a work in progress “celerated and late this year, most of the – Dominic Piper
but we have already identified numerous
targets and will begin testing them this development will be complete,” Bradford
year.” said. “And, all of the Nova resource will be
We need to change the perception of
Underpinning it all is the performance of mining. Mining is an exciting, innovative
IGO’s key assets; Nova and the Tropicana
gold mine JV with AngloGold Ashanti Ltd. and fun industry to work in and it underpins the

“Nova delivers on scale, costs, mine life
and exploration,” Bradford said.

The mine enjoyed its first full year of WA economy. It can take you all over Australia, the
commercial production in FY2018, with world and even, in the future, perhaps into space.
mining and plant performance going so

PROUDLY AN
AUSTRALIAN MINER

Australia’s largest tin producer;

top 10 copper producer;

largest undeveloped
nickel-cobalt project.

www.metalsx.com.au

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 45

NICKEL REVIEW

St George goes mad again

St George Mining Ltd captured the buzz there as well.” Courtesy of a $500,000 R&D rebate, St
at this year’s Australian Nickel Confer- The market responded well to MAD126,
ence by going into a trading halt on the day George has $4.5 million cash to continue
of the event. with St George shares rising from 13c to
16c when the announcement was made. with its campaign at Mt Alexander, in which
By the smile on St George executive
chairman John Prineas’ face, it was clear While the share price spike was nothing Western Areas Ltd has a 25% interest.
to the 350-strong crowd at the conference like the impact of MAD71, which saw St
that the company had hit something pretty George shares triple in value, the positive The high-grade nickel sulphide potential
significant at Mt Alexander. reaction suggests the company remains
one of the preferred nickel explorers and is in greenfields pasture at Mt Alexander has
And, so it did, with the company an- being closely watched by the market.
nouncing the best-ever intercept at the In- certainly attracted the right interest for St
vestigators prospect at Mt Alexander; an “We haven’t tapped into regional explo-
interval of 14.37m of nickel-copper sulphide ration yet and we believe we have turned George. Prineas can now start to whet in-
mineralisation starting from 177.5m down- the corner on the Cathedral’s Belt. We just
hole in MAD126. need to drill that out, which is the plan in the vestors’ appetite with ideas around possible
next 3-6 months,” Prineas said of the next
Lab assaying was under way at the time set of targets likely to catch the eye. mining scenarios.
of print to support spot XRF analysis which
returned readings of 28-37% nickel mas- John Prineas “This won’t be a difficult deposit to mon-
sive sulphides.
etise, this will be easy to process. It will pro-
“It is a very good hit out there and we
are definitely increasing the scale at Mt Al- duce a clean concentrate when we get the
exander. We’re heading for an economic
resource as the nickel price is in recovery,” economic scale we want and I think we are
Prineas said.
going to be very popular,” Prineas said.
“It is a very nice juicy hit [at MAD126].
Not only is it a good hit, but we are seeing “We think this will show some very fa-
strong conductors and continuity around
vourable economics; low-cost drilling be-

cause it is shallow which also means it is

going to be low-cost mining. It is near exist-

ing infrastructure, so I think there will be a

low capex solution there if we want it and

the quality of mineralisation is fantastic, so

the profit margins are going to be extremely

good.”

– Mark Andrews

CASHED UP NICKEL EXPLORER WWW. R OX R ES O U R C E S .CO M .AU

High grade nickel sulphide resources
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91,000t Ni

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Collurabbie
Large mineral systems each over
10km in strike
150km from established
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Improving nickel price
Cash & receivables of $14 million

Page 46 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

Leinster, Mt Keith expansion
plans for Nickel West

From unwanted to growth division, BHP ore from the smaller Camelot open pit 75,000t of refined metal this financial
Nickel West Ltd’s transformation is where Nickel West has begun mining the year. Nickel West now has aspirations to
continuing apace with development plans 15,000t of contained nickel. reach 90,000 tpa refined nickel.
in place for new orebodies at Mt Keith
and Leinster. Both ore sources will feed the Leinster By then, the Kwinana facility will also
concentrator during the period in which be producing nickel sulphate. Stokes
Previously on the chopping block at the company pushes the ramp-up of min- said construction of stage 1 of the nickel
its parent company, Nickel West has re- ing from the high-grade Venus and Lein- sulphate plant had progressed well with
built its image (and value) in recent years ster B11 zones. structural, mechanical and pipework set
thanks to a combination of productivity to start at the beginning of 2019.
improvements, exploration success and Stokes said decline and access devel-
new marketing developments. opment had started at Leinster B11 with “We have proved we can produce bet-
the company intent on using a form of ter product than we first thought which
Such has been the change, head of “block cave” mining into the Persever- is important in a market where quality is
integrated operations Karl Stokes’ pres- ance orebodies when production started king,” he said.
entation to the Australian Nickel Confer- in 2020.
ence clearly had growth as its theme. Nickel West has been boosted by the
“Venus is also a significant new oppor- move into battery materials and the com-
Stokes told the conference the group tunity with more than 200,000t of nickel- pany will continue to pursue other oppor-
had ambitions to return its Mt Keith op- in-ore,” Stokes said. “We will develop tunities.
erations to 50,000 tpa production. While drives from Perseverance with first high-
the Mt Keith orebody continues to supply grade material being moved from next “Last week, we were successful in de-
the bulk of tonnes, Nickel West is hoping month [November]. Pending external ap- veloping a flow sheet for battery grade
the Yakabindie project – set to start min- provals, we expect first stoping produc- cobalt sulphate. The next step is pilot
ing in the first half of 2019 pending ap- tion early next year.” plant testing.”
provals – and Cliffs – where drilling has
started on a near-surface iron-sulphide Together, Venus and B11 will take While its established downstream fa-
rich deposit – will provide the Mt Keith Leinster production back to 40,000 tpa cilities give Nickel West a natural head
concentrator not only with more, but also nickel-in-concentrate in coming years. start in the rush to reach battery precur-
higher quality nickel ore. sor material markets, Stokes believes it
Their longer term contribution will be won’t be the only Australian supplier of
At Leinster, the Rocky’s Reward open vital in maintaining feed to Nickel West’s nickel sulphate.
pit continues to deliver surprises, supply- Kalgoorlie smelter which last year saw
ing 25% more nickel than expected from project life extended out to 2032. “Nickel West remains on track to be-
a second cutback. coming a globally significant battery min-
The company’s other processing ex- eral supplier but I believe there is oppor-
“Mining of Cutback 3 has now started pansion is at its Kwinana refinery. The tunity for all of us to have an impact on
for 26,000t nickel-in-ore and a fourth cut- refinery has posted consecutive record the battery sector,” he said.
back is being considered,” Stokes said. production numbers in FY2017 and
FY2018 following a debottlenecking pro- – Dominic Piper
That supply could be supplemented by gramme and is on track to deliver around

New frontiers exist in Malcolm Cattach
Australian exploration

Despite Australia’s proud mining history deep exploration, I am therefore look- conventional technologies and should re-
and reputation as the premier resourc- ing at 300-1,000m. Exploration depths in ally still be considered quite prospective at
es jurisdiction in the world, there remains Australia have historically been restricted greater depth; we just haven’t been able
another chapter for industry to write, ac- by the technology being used because to explore them at depth, yet. So, I really
cording to Gap Geophysics Australia Pty we’ve had limitations in transmitting power believe deep exploration has become the
Ltd chief executive Malcolm Cattach. and the amount of power you can gener- new frontier for EM technologies.”
ate with your transmitter determines how
The geophysicist, who pioneered the deep you can actually detect something,” As drilling at greater depths is expen-
widely used sub-audio magnetics (SAM) Cattach said. sive, Cattach said geophysics would be
geophysical technique, believes with the heavily relied on the future to pinpoint
onset of more innovations and technologi- “We also have limitations in instrument high quality drill targets so that testing
cal advances in the sector, there is greater sensitivity and, of course, we have a con- could be conducted in the most cost-ef-
capability to explore at depth and therefore ductive overburden in Australia which fective manner.
potential to exploit more resources. makes it difficult as well. There are areas
which have been historically surveyed with – Mark Andrews
“I call the top 300m shallow exploration;

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 47

NICKEL REVIEW

Panoramic strikes sweet deal

Strong demand for nickel sulphides led to though they’re not disclosed, they’re cer- “We think this project will run for well
Panoramic Resources Ltd striking one tainly much higher than we got previously, over 10 years, hopefully 20, and as a re-
of the best offtake deals going around, ac- which demonstrates just how the market sult we’ve given this plant a significant tidy
cording to managing director Peter Harold. has changed,” Harold said. up,” he said.

Panoramic has signed a new four-year “If we had negotiated this deal a cou- “Even though the project has only been
concentrate sales agreement with Sino ple of years ago, we would have got sig- shut for 2.5 years, being a sulphide nickel
Nickel (a JV between Jinchuan Group Co nificantly worse terms. The market has material and being up in the Kimberley, the
Ltd and Sino Mining Pty Ltd) for 100% of definitely tightened up for nickel sulphide plant did suffer a little bit of degradation, so
annual production from the soon-to-be-re- concentrates and as a result our offtake we are giving it a bit of a birthday.”
started Savannah nickel mine in Western agreement, I think, is one of the best you’ll
Australia’s Kimberley region. see in the market.” Harold said the company had about 12
months of production left from the exist-
It replaces the previous agreement with Panoramic confirmed Savannah, which ing Savannah orebody before attention
Sino Nickel that was due to expire in March has been on care-and-maintenance since switches to the unmined Savannah North
2020 and comes into effect as soon as the May 2016, would resume operations after system.
first new shipment of concentrate leaves landing a $40 million loan from Macquarie
the Port of Wyndham early next year. Bank in July. Last year’s feasibility study estimated pro-
duction of 10,800 tpa nickel, 6,100 tpa cop-
“Our payabilities are excellent and al- Almost $10 million has been spent on per and 800 tpa cobalt from current reserves
refurbishing the processing plant, with one which support an eight-year mine life.
Peter Harold of the major capital items in the $36 mil-
lion restart being the installation of a new Operating costs are estimated at $US2.40/
900m ventilation shaft. lb and sustaining costs at $US3.50/lb, with
the project forecast to deliver a NPV of $380
Harold told the Australian Nickel Confer- million and IRR of 200%.
ence the ventilation pilot hole was about
50% complete, with a variable speed drive “I’ve not seen many projects with a
fan from the company’s former Lanfranchi 200% IRR and that’s at a $US6.75/lb nick-
mine to be installed early in the new year. el price,” Harold said.

– Michael Washbourne

NiWest Project: Leading
the way in integrated
production of nickel and
cobalt battery inputs

High value tonnes with scale and life
Premier location next to Murrin Murrin
Low capex, efficient pathway via HL/DSX
Direct production of battery-ready Ni and Co
Technically robust and high returning

WWW.GMERESOURCES.COM.AU ASX: GME
Page 48 NOVEMBER 2018 AUSTRALIA’S PAYDIRT

Nickel Mines fires up

Nickel Mines Ltd expects commission- formally listing on the ASX in August, Justin Werner
ing of its 60%-owned rotary kiln elec- some 11 years after first setting foot in
tric furnace (RKEF) plant in Indonesia to Indonesia. other two-line RKEF plant which will lift
occur before the end of June. the company’s total nickel capacity to
For Nickel Mines managing director 30,000 tpa.
Australia’s newest listed nickel mining Justin Werner, joining forces with Tsing-
company has entered into an agreement shan – which controls 14% of world nickel Most of the fabrication work, including
with Chinese stainless steel giant Tsing- production and 25% of the global stain- the rotary kiln and electric furnace, for the
shan Group to construct the two-line less steel market – was a no-brainer. plant currently under construction was
RKEF plant which will produce nickel completed in China and will be shipped
pig iron (NPI) to be sourced from the for- “There really is no one in the world that to Indonesia early in the new year.
mer’s 80%-owned Hengjaya nickel mine is building nickel units at the cost and
in Central Sulawesi. speed that Tsingshan are doing it,” Wer- Werner predicted the upcoming RKEF
ner said. plant was just the beginning for his com-
The RKEF plant – within Tsingshan’s pany at the industrial park.
Indonesian Morowali Industrial Park “In the deal that we have – and we’re
which neighbours Hengjaya – will pro- paying $US200 million, which is a capex “You look at what’s there in that park
duce 150,000 tpa NPI for a total of guarantee – that’s a capital intensity of and also what’s slated to be built there in
15,000 tpa nickel metal. $US12,000/t NiEq. In fact, they’ve been the future, and we would hope some of
very open and honest with us that they that will find a home in Nickel Mines and
Nickel Mines has a 12-month call op- will build these RKEF lines for a lot lower pretty quickly we become a pretty signifi-
tion from the date of first production to than the $US200 million. cant pure nickel producer,” he said.
move to 100% ownership of the RKEF
plant for an additional $US120 million, “To have a capital intensity that is lower – Michael Washbourne
having just paid $US70 million for its cur- than today’s nickel price, it’s a very good
rent 60% stake. deal for us and we’re completely de-
risked. We’ve paid to move to 60% and
The partnership with Tsingshan was we don’t spend a further dollar until those
the basis for Nickel Mines to undertake lines are finished and delivered.”
a $200 million IPO, with the company
Nickel Mines also has a MoU for an-

AUSTRALIA’S PAYDIRT NOVEMBER 2018 Page 49

NICKEL REVIEW

Cassini recovers the right stuff

Enhanced nickel and copper recoveries ference, Cassini also reported the best-ev- “It is a significant project that needs the
from recent metallurgical test work is er nickel intercept at Nebo – 23m @ 2.91% assistance of a big company to help us get
set to deliver better project economics for nickel, 1.13% copper, 0.09% cobalt and into production,” Bevan said.
Cassini Resources Ltd’s West Musgrave JV 0.47 g/t PGE – from resource infill drilling.
with Oz Minerals Ltd. “We are really in a mining camp here,
Six drill rigs are currently turning at the there’s lots of opportunity to expand that
Testing of samples from over 5,000m West Musgrave project, about 120km east with lots of exploration ongoing and oppor-
of PQ core, representing about 9kg, from of Warburton, with more than 50 people on tunities for success.”
the flagship Nebo-Babel deposits returned site as momentum continues to build on the
average nickel and copper recoveries of rejuvenated nickel sulphide play. Last year’s scoping study flagged a
67.4% and 84.6% respectively, up 8.4% $730-800 million capex to produce 20,000-
and 12% on the results published in last Oz recently met its $22 million expendi- 25,000 tpa nickel, 25,000-30,000 tpa cop-
year’s scoping study. ture commitment to earn 51% of the project per and 700-1,000 tpa cobalt over an initial
and is now progressing towards a final 70% eight-year mine life.
The average copper concentrate grade stake by spending a further $14 million.
was also up 3.7% to 26.4%. Based on those findings and the final JV
Richard Bevan structure, Cassini will need to fund about
Test work remains ongoing and will be $219-$240 million of the capex with pay-
factored into a PFS due in Q2 2019. back achieved within 2-3 years.

“For us to get those sorts of improve- “One of the great characteristics of this
ments in recoveries at this stage I think is deposit is that a lot of the high-grade min-
a great sign,” Cassini managing director eralisation sits on top of the orebody, so the
Richard Bevan said. metal production and cash flow in those
first five years is higher than the life-of-
“The way the financial model works, nick- mine,” Bevan said.
el recovery is probably about the third high-
est sensitivity, so any small improvement in “That lends itself to being geared for debt
nickel or copper recovery has a big impact and for a rapid payback which will assist us
on the economics.” further down the track.”

On the day of the Australian Nickel Con- – Michael Washbourne

Emerging Class 1 Nickel Producer

poseidon

poseidon-nickel.com.au

Page 50 NOVEMBER 2018 AUSTRALIA’S PAYDIRT