pd271-May19-mag-web

MAY 2019 VOLUME 1. ISSUE 271 $11.95

Oil and gold:

Guyana’s development mix

• Latin America Down Under preview
• South Australian conference review

• Fertiliser Spotlight

ISSN 1445-3436
04

9 771445 343007

PAYDIRT (ISSN 1445-3436) CONTENTS
Published by
Paydirt Media Pty Ltd. 5 NEWS
A.C.N. 063 985 133 It was Budget time in April ahead of Australia’s
Federal election on May 18. As always,
Head Office: promises have been made, but will they stick?
Suite 9, 1297 Hay St, West Perth Michael Washbourne takes a look at what is
Western Australia 6005 on the table if the Government wins re-election
P.O. Box 1589, West Perth
Western Australia 6872 20 COVER 5
Phone: (+61 8) 9321 0355 Gold-rich Guyana flies under the radar in the 20
Facsimile: (+61 8) 9321 0426 context of the Latin American mining scene,
[email protected] however, the country is encouraging Australian
www.paydirt.com.au miners and explorers to get on board as its
oil sector starts to flourish. Dominic Piper
spoke exclusively with Guyana’s Minister for
Natural Resources Raphael Trotman in his
Editorial:
Editor: Dominic Piper Georgetown office
Deputy editor: Mark Andrews
Journalist: Michael Washbourne 30 LATIN AMERICA
Photography: Picture This DOWN UNDER
Art director: Nick Brown
Contributors: North American investor’s infatuation with
Keith Goode (Sydney), Brendan Ryan marijuana companies has seen capital dry up
(Johannesburg), Ross Louthean for Canadian explorers. Australian companies
don’t have such a problem and while deep-
Advertising: pocketed North American investors are
Advertising manager: Richa Fuller distracted elsewhere, there is an opportunity
Subscriptions: Mitchelle Matambo for companies from down under to corner
Phone: (+61 8) 9321 0355 an end of the market and embrace the
Facsimile: (+61 8) 9321 0426 opportunities forthcoming in Latin America.
No doubt this will be theme at Paydirt’s Latin
Pre-press and printing: America Down Under Conference, May 15-16
Vanguard Press 26 John St, at The Westin in Perth
Northbridge WA 6003
Member of:

Paydirt Media 62 SAREIC
Executive chairman: Bill Repard South Australia’s mining amendments bill was
Finance manager: Giovanny Jefferson defeated prior to SAREIC last month leaving
Accounts/administration: Mines Minister Dan van Holst Pellekaan bereft
Heather Melling of a key piece of legislation and questions
to answer. Despite the political footballing,
Conferences: Melita Fogarty, there is an enthusiasm brewing in the State’s
Namukale Nakazwe-Msiska, exploration sector in light of BHP’s Oak Dam
discovery. Paydirt covers SAREIC from
Christine Oelschlaeger all angles

MAY 2019 VOLUME 1. ISSUE 271 $11.95

Oil and gold:ISSN 1445-3436 92 REGIONAL ROUNDUP
04 Mod Resources has been in the spotlight this
Guyana’s development mix year after Sandfire Resources made a play for
9 771445 343007 the company. The offer was knocked back and
• Latin America Down Under preview shortly after Mod demonstrated what Sandfire
• South Australian conference review was chasing by producing a robust DFS on 30
the T3 copper project in Botswana. Dominic
• Fertiliser Spotlight Piper reports

Cover image: An unnamed artisanal
miner in the Amazon, Guyana

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.

Complex problems require
innovative solutions

Much of our May edition is dedi- cluding, as well as grade, deleterious elements, seismic risks
cated to a preview of the upcoming associated with tailings, ore variability, social challenges such
Latin America Down Under confer- as poverty, access to water and land pressures, environmental
ence to be held at the Westin Perth challenges and infrastructure challenges.
on May 15-16.
For Valenta, these factors are changing the ways mining com-
It is the eighth instalment of Latin panies need to approach developments. No longer is it enough
America Down Under since Paydirt to wait for commodity prices to turn before a project becomes
started the event in 2012. viable; that may be enough to compel the company to take the
Part of the rationale behind the creation of LADU was to decision to proceed but it is unlikely to make for a sustainable,
examine the challenges (both real and perceived) which exist stable operating scenario if other factors remain in play.
around mining investment in the region.
Paydirt initially felt the conversations would be similar to In Latin America, these factors most often include competing
those at Africa Down Under where the debate largely surrounds land use, access to water and, increasingly, the use of tailings
how mining development can best provide economic upliftment dams. Changes in economics will do little to alter the percep-
for host communities. However, we quickly recognised that while tions of opposition groups in these cases; they care about the
some of the same issues span both sides of the Atlantic, many impact activity will have on their way of life. These are not “inner-
others are unique to Latin America. city greenie” types we hear so much about, these are people
For one, opposition groups hold more sway in Latin America with genuine concerns.
than in Africa. This is not to say host communities in Africa do
not protest against mining developments but in Latin America How will the impasse be overcome? Interestingly, Valenta
the activity is highly organised and often militant. sees technological innovation – so often the saviour of an un-
The subject of the opposition is also different to Africa. In Latin economic orebody – as being vital. Until now, innovation has
America, the debate is not over sharing of the economic ben- been applied to challenges around exploration, mining and pro-
efits but how mining’s footprint will affect host communities. No cessing but Valenta argues it will also need to be applied to the
amount of jobs, local enterprise opportunities or social invest- price insensitive factors as well.
ment programmes will change attitudes in certain parts of Chile,
Peru, Brazil, Colombia or Mexico. These communities simply do He pointed to innovations in dry stack tailings as an example
not want mining operations which will change their way of life of industry applying technological solutions to a non-economic
and no economic argument will change that stance. problem.
A recently published research paper by Rick Valenta at the
University of Queensland’s Sustainable Minerals Institute (SMI) “The industry is working actively on coarse grinding technol-
says much about the obstacles facing the sector, particularly in ogy from which it is easier and cheaper to produce dry stack tail-
the developing world. ings. It may be that companies have to sacrifice a bit of recovery
Valenta and his colleagues examined 308 undeveloped cop- but it will likely mean the difference between getting the project
per orebodies around the world, identifying the factors which approved or rejected,” he said.
have thus far prevented their commercial development.
For most industry insiders – Valenta included – the obvious Already we are seeing companies embrace renewable en-
answer to a failure to develop would be fairly uniform; econom- ergy, not necessarily because it is lower cost, but because it
ics. However, the research showed that economic factors such improves a company’s image as a good corporate citizen.
as grade were influential in only a quarter of cases.
Instead, a series of non-economic factors – “price insensitive” Addressing these price-insensitive factors is already becom-
is the phrase used in the paper – play a much greater role in the ing a key component of a number of major developments around
stifling of development. the world. It is inevitable, as mining moves into more sensitive
“You could assume that further innovation would be needed to (whether environmentally or culturally) areas, that all develop-
offset any decline in price and grade but the research showed ers will have to address these factors by applying technological
75% of the 308 copper orebodies we looked at had price-insen- solutions.
sitive risks attached to them and that low copper grades was the
sole challenge in only 3-4% of the undeveloped orebodies we These are not problems which will be solved by presenting a
analysed,” Valenta told me. better public face through clever use of social media and a few
Instead, the SMI team identified a mix of 12 risk categories community investment programmes. It will require the applica-
affecting the viability and accessibility of complex orebodies in- tion of innovative technology solutions.

The industry has done it before, often changing the entire face
of the industry (see the introduction of carbon-in-leach gold re-
covery in Western Australia in the 1980s) and the current rate of
technological innovation leads me to believe it will do so again.

Without it, the number of undeveloped orebodies will only in-
crease.

[email protected] @DominicPiper

PAGE 4 MAY 2019 AUSTRALIA’S PAYDIRT

Fortescue bullish on bearish Budget

Abearish outlook for iron ore in last month’s Federal Budget has failed to
deter Fortescue Metals Group Ltd from pressing ahead with plans to
develop the next phase of Australia’s largest magnetite resource.

Just hours before dmt, for Iron Bridge,
the finer details about 145km south

of the pre-election of Port Hedland.

Budget were re- Five binding

vealed, Fortescue offtake agreements

announced its for 5.3 mtpa of pro-

$US2.6 billion ($3.6 duction have been

billion) Iron Bridge executed with more

project had been expected to follow

given the green light. now Iron Bridge’s

Fortescue and development is con-

JV partner For- firmed.

mosa Steel IB Pty About 3,000 peo-

Ltd (31%) have ple are expected to

already invested be employed during

$US500 million into construction of Iron

large-scale pilot Bridge, with about

and demonstration 900 full-time posi-

plants at Iron Bridge tions required once

which validated the operations begin to

key equipment and exploit the 5.45bt

magnetite produc- resource.

tion processes re- Fortescue has unveiled plans to develop a full-scale 22 mtpa operation Fortescue chief

quired for full-scale at Iron Bridge in the Pilbara executive Eliza-

development into a beth Gaines said

22 mtpa operation. dressed,” the Budget said. she was confident the project would deliver

Construction will begin in the coming “As such, the iron ore price is assumed to growth in earnings and cash flow “through

months with first concentrate expected to decline over the year to reach $US55/t FOB all market cycles”.

be delivered in mid-2022. Operations will be by the end of the March quarter 2020.” “Our focus has been to create the most

ramped up to nameplate capacity within 12 Analysis of the iron ore price by Treasury energy and cost-efficient ore processing fa-

months. officials highlights the comeback the raw cility, tailored to the specific ore we will mine,”

Due to the high-grade nature of the de- material has made since slipping below she said. “We are now ready to build this

posit, products from Iron Bridge will likely $US40/t in late 2015, forcing the closure of plant and develop this mine, and are con-

attract a premium to the benchmark 62% several mines in Australia and abroad. fident that our early work will support rapid

Platts Index, as well as the Platts 65% Index. It also highlights just how important iron progress to full production.

Penalties are also expected to be negligible ore is to the national economy. “The Iron Bridge project will deliver a

because of the low alumina and phosphorus “If the iron ore price was to fall immediately premium product with iron content of 67%,

impurities. to $US55/t, four quarters earlier than as- further enhancing the range of products

Fortescue’s confidence in the long-term sumed, nominal GDP could be around $5.8 available to our customers through our flex-

iron ore price contradicts what the incum- billion lower than forecast in 2018-19 and ible integrated operations and marketing

bent Liberal Federal Government is fore- $10.6 billion lower in 2019-20,” the Budget strategy. When combined with the Eliwana

casting. Ahead of this month’s election, said. development, it will increase Fortescue’s

Treasury officials budgeted for the iron ore “This would result in a decrease in tax average product grade and provide the abil-

price slipping back down to $US55/t over the receipts of around $500 million in 2018-19, ity to deliver the majority of our products at

next 12 months. $2.6 billion in 2019-20 and $1 billion in 2020- greater than 60% iron, consistent with our

At the time of print, iron ore was nearing 21. long-term goal.

$US95/t – effectively a 52-week high and “By contrast, if the iron ore price was to “We are confident in the long-term de-

up almost 50% over the period. Prices have remain elevated for four quarters longer than mand for this premium product, supported

surged over the last four months on the back currently assumed, before falling immedi- by market fundamentals, including global

predicted shortages following the fatal tail- ately to $US55/t FOB, nominal GDP could supply conditions, investment in higher effi-

ings dam collapse at Vale SA’s Corrego do be around $800 million higher than forecast ciency steelmaking capacity, as well as the

Feijao mine in Brazil. in 2018-19 and $15.5 billion higher in 2019- competitive advantage of proximity of the Pil-

“Consultation by Treasury highlighted a 20. This would result in an increase in tax re- bara to key markets in China and the region.”

relatively common view that the iron ore ceipts of around $100 million in 2018-19, $2 With such big projects like Iron Bridge in

price will remain elevated over the next four billion in 2019-20 and $2.1 billion in 2020-21.” the pipeline adequate skills will be needed to

quarters and that the spot price is expect- Fortescue has estimated AISC of $US45- accommodate operations.

ed to decline as supply side issues are ad 55/dmt, including C1 costs of $US30-35/ To this end, AMMA director of operations

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 5

NEWS

Around the states... WA Mines Minister Bill Johnston

The West Australian Labor Government has accused the scenario, we would have at least expected $88 million.
incumbent Federal Liberal Government of being too “east coast-
centric”. “The SAFC is disappointed that the Morrison Government appears
to have no intention of starting to deliver the final sections of the
In light of no WA-based project being included on a shortlist of 12 North-South Corridor in its next term if re-elected in May.”
eligible for reduced energy costs and improved reliability under the
Federal Government’s “Underwriting New Generation Investments” Much of the $7.1 billion surplus in the Federal Budget can be
programme, WA Energy Minister Bill Johnston came out swinging. attributed to the Queensland’s resurgent coal sector, according to
Queensland Resources Council chief executive Ian Macfarlane.
“Once again the Federal Morrison Government has failed to
consider WA, indicating just how east coast-centric they are,” “Strong global demand for Queensland’s high quality resources
Johnston said. has enabled the industry to get on with creating jobs – more than
one new job an hour for the entire year,” Macfarlane said.
“It’s unfair that West Australians could be missing out on an
opportunity to reduce their power bills. “Queensland is supplying the building blocks of economic growth to
the fast-growing economies who are our regional neighbours.
“The Underwriting New Generation Investments programme
intends to run for four years, the McGowan Government urges the “It’s important to note that this growth includes the important
Federal Government to not discriminate against WA projects in the opportunities that will come from the rapid growth of renewable
future.” energy, as well as the steady demand for Queensland’s traditional
energy sources like gas and coal.”
The South Australian Freight Council was also disappointed a
series of pre-budget announcements had again not made it into
forward estimates.

“None of the $2.7 billion for future North-South Corridor works has
made it into the forward estimates – not the $1.2 billion promised last
year or the additional $1.5 billion promised in the past few weeks,”
SAFC executive officer Evan Knapp said.

“Only $48.2 million of the promised $220 million of Roads of
Strategic Importance funding for the Eyre, Sturt and Goyder
Highways is made available. Even under a 10-year funding

Tara Diamond has welcomed increased funding for TAFE, VET and
other training initiatives announced in the Budget.

Diamond said funding support for the mining, oil and gas and con-
struction sectors would go a long way to helping address a looming
skills shortage in the industry.

“Resources and energy employers are proud to see record earn-
ings from our industry have delivered a $20 billion boost to the 2019
Federal Budget, as well as contributed about 20% of all company
tax revenues,” Diamond said.

“To underpin further resources and energy earnings growth, more
investment and more industry-government collaboration is required
to address skills shortages and better meet the future needs of em-
ployers and the wider industry.

“Investing in the skills of the future is vitally important for a globally
competitive Australian resources and energy industry, and sustain-
ing the significant value such an industry delivers to our nation.”

Association of Mining and Exploration Companies (AMEC) chief
executive Warren Pearce welcomed the Federal Government’s plan
to grow the Australian economy, but bemoaned the lack of targeted
funding towards developing the minerals industry.

“Skilled workers are critical in positioning Australia as leaders in
technology and industry, but we need to continue to increase explo-
ration,” Pearce said.

“There is also a need for regulatory reform and the funding of
exploration incentive schemes and co-funded drilling programmes
to encourage greater mineral exploration and mining in Australia,
which will continue to generate significant economic returns.

“Each new discovery that leads to a mine creates jobs, royalties
and a wide range of economic and community benefits.”

Minerals Council of Australia chief executive Tania Constable said
the Federal Government’s decision to retain the Biosecurity Import
Levy would penalise the mining industry and other sectors that cre-
ate jobs in regional Australia, by increasing costs on imported ma-
chinery and other goods.

– Michael Washbourne

PAGE 6 MAY 2019 AUSTRALIA’S PAYDIRT

BUSH TELEGRAPH

Froneman locks horns with AMCU

You seldom get an all-out corporate age to Impala Platinum, Anglo American Neal Froneman
mining brawl breaking out in public in Platinum and, in particular, Lonmin and
South Africa – as you do more frequently in established AMCU as a union to be reck- was groomed and brought up under those
Australia – because the protagonists usu- oned with. circumstances.”
ally try to keep the action behind closed
doors. This latest conflict was ignited when Swanepoel, who has reinvented him-
Froneman in late 2017 struck the deal to self in a second career as an extremely
There have been exceptions, such as take over Lonmin, which would see some effective and witty investment conference
the punch up between the Chamber of 12,000 jobs lost and then in 2018 an- host, happily stoked the fires comment-
Mines (now the Minerals Council) and for- nounced a restructuring with further job ing: “Joseph’s official CV should say shit-
mer Mines Minister Mosebenzi Zwane that losses on Sibanye-Stillwater’s gold mines. stirrer of note; kicked out of the NUM by
took place in 2018 and right now there’s Gwede Mantashe. When you get kicked
another one under way. AMCU organised a strike on those gold by Gwede out of a bunch of shit-stirrers
mines which lasted five months until April you must be a world class shit-stirrer.”
This latest bout of corporate fisticuffs 17 when Mathunjwa finally backed down
has pitted Neal Froneman, chief executive taking the terms previously accepted by As an aside – IMHO – the biggest shit-
of Sibanye-Stillwater and a vice-president the other union. That is a setback for Mat- stirrer on the stage was Swanepoel him-
of the Minerals Council, against Joseph hunjwa despite the considerable financial self and it made for a riveting conference.
Mathunjwa who is the firebrand leader of losses sustained by Sibanye’s gold mines
the Association of Mineworkers and Con- but Mathunjwa is now targeting Sibanye Mathunjwa then lived up to Froneman’s
struction Union (AMCU). Stillwater’s platinum mines. accusation of having a political agenda by
accusing “the State, Cyril Ramaphosa’s
Both are formidable opponents. Frone- So far he has been unsuccessful as the government” of having a toxic relationship
man came to prominence in the late 1990s mines have brought court actions to block with Sibanye-Stillwater and trying to break
as the “Mr Fixit” that then Harmony Gold such a secondary strike. But that’s far from the AMCU strike.
Mining Co. Ltd chief executive Bernard the end of it. Mathunjwa also brought le-
Swanepoel employed to sort out the vari- gal action seeking to block the takeover of So the scene is set for a turbulent few
ous marginal gold mines that Harmony Lonmin in terms of South Africa’s compe- months as the platinum wage negotia-
took over. tition legislation while the platinum mines tions get underway. The stakes are huge.
have to renegotiate wage terms with their Lonmin’s existence hangs in the balance
After leaving Harmony, Froneman workforces this year. pending completion of the takeover by
worked for Gold Fields Ltd and then the Sibanye without which the group will not
late Brett Kebble before branching out to Mathunjwa has vowed to “bring the plati- survive and more than 30,000 workers will
create his own mining empire via compa- num belt to its knees”. Froneman is tak- find themselves out of a job.
nies like Uranium One and Gold One. ing him seriously and, in April, moved to
strengthen Sibanye-Stillwater’s balance For Mathunjwa, this looks like a make or
He got his major break some five years sheet by placing shares to raise R1.8 bil- break situation calling his continued lead-
ago when Gold Fields unbundled all its lion and then pulled in an additional R1.75 ership of the union into question should
South African gold mines bar South Deep. billion through a gold forward-sales deal the AMCU strike fail to deliver results for
Froneman took them over, renamed them with Citibank. its members.
Sibanye and set out on a breathtaking di-
versification and acquisition trail. The two have traded verbal blows in Brendan Ryan is a Johannesburg-
public in recent weeks at investment based mining writer
In short-order he acquired the Rusten- events hosted by Bernard Swanepoel who
burg Platinum Mines division of Anglo is chairman of the Joburg Mining Indaba.
American Platinum followed by junior
miner Aquarius Platinum and then US pal- Froneman got the first digs in when
ladium producer Stillwater before striking a he declared that we’re not intimidated by
deal to take over Lonmin PLC, the world’s AMCU’s threats over the upcoming wage
third largest platinum producer. negotiations. He accused Mathunjwa of
having a political agenda and comment-
Mathunjwa, who belongs to the Salva- ed: “Don’t try and force our hand with the
tion Army and is prone to making Biblical threat of a strike because, quite honestly,
references in his various speeches, is a we’ll take a strike. We’re not intimidated by
former lab assistant who got involved in those types of things.”
union work becoming the chair of a local
branch of the National Union of Minework- Mathunjwa came back swinging and
ers (NUM). despite claiming the AMCU-Sibanye Still-
water bust up was not a personal dispute
He was chucked out of the NUM by then between him and Froneman and then
NUM boss (now Minister of Mines) Gwede proceeded to compare Froneman to arch-
Mantashe and promptly formed his own imperialist Cecil John Rhodes.
union, AMCU. Since then he has been
involved in a battle on two fronts; against He told delegates: “Neal Froneman and
the NUM and the mining industry and has his mafia are the last battalion of exploit-
more than held his ground. ers. When they unbundled at Gold Fields,
Froneman came up with Sibanye. He nev-
Mathunjwa made his mark in the ex- er left the learnings of Cecil Rhodes. He
tended 2014 strike which did huge dam-

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 7

NEWS

Diamonds set to flow at Blina

The impending sale of its Highland Plains go,” Richards told Paydirt.
phosphate project will provide Gibb Riv- “It is a pretty modest

er Diamonds Ltd with a timely cash injection amount and one of the

of $2.5 million, but executive chairman Jim advantages of doing an al-

Richards is hastily chasing other avenues to luvial operation is it is very

immediately fund construction of a trial min- simple and you can run it

ing operation at Blina in the West Kimberley. with about 8-9 guys.

Canadian outfit ILS Resources Inc (for- “You’re never there un-

merly P2O5 Resources) has an option to til you’ve got the money in

acquire Highland Plains, Northern Territory, the bank, of course, but we

which expires next month. The company do have quite a bit of inter-

has already paid Gibb River $200,000 in est that we’ve taken out of

option fees to continue its due diligence of Canada and Hong Kong.

the project. Things can take a bit of

If ILS exercises its option before the June time in Asia, they don’t al- fident that we can improve on the grades
that were previously found due to the use of
14 deadline, Gibb River will receive $2.5 ways fall in your lap, but we’re moving those a ground penetrating radar and more mod-
ern geophysics.”
million plus GST, which coincidentally is the things forward diplomatically and I’m opti-
Richards said shallow or no cover over
same amount needed to establish a trial mistic we’re going to get the money in.” the main targets ensured low operating
costs, along with the minimal trucking dis-
mining operation at Blina in the Ellendale Gibb River has budgeted $1 million for tance to the alluvial treatment plant just a
few kilometres away.
diamond field. capital works such as laterite sheeting of
The plant will initially treat 100-300 cubic
However, Richards is keen to see that existing roads, camp purchase and con- metres per day, but is scalable and can be
upsized to treat 1,000 cubic metres per day.
modest sum in Gibb River’s bank account struction of a tailings storage facility, and
Gibb River is also bidding for the former
sooner rather than later so the company $1.5 million for operating costs once up and Ellendale mining lease given its Blina ten-
ements surround the gazetted area up for
can make the most of the dry season for running. tender.

construction and operations. Richards described the project as “shov- “We’ve got all the alluvial ground and the
hard rock ground surrounding that lease, so
el-ready” given all it would make an awful lot of sense for us to
be the winner of that lease,” Richards said.
major plant equip-
“We’ve also got a granted miscellaneous
ment has been pur- licence to access that lease, and that’s no
small matter either, because to get access
chased and regula- you need a miscellaneous licence and to
get a miscellaneous licence granted you
tory approvals for need to go through Native Title, so we feel
we’re very well placed to get control of that
mining are in place. lease.”

At the time of print, While a basket of diamond mining stocks
were down 28.9% last year on the back of a
project geologist Mi- 17.3% decline in 2017, according to leading
diamond analyst Paul Zimnisky, Richards
chael Denny was on is adamant the high-grade nature of the
diamonds Gibb River will produce should
site conducting final offset any pricing weakness.

sampling and test- “Our screen size of 3.15mm won’t be
collecting less than 0.35ct, so the prices
ing work along the for that material which at the moment are
weaker don’t affect us,” he said.
5km mining lease
“The prices for the larger goods and the
zone which is the better quality goods are holding up very well
and that will help us. So, providing we get
target area of initial into and mine high-grade deposits it won’t
matter because our margin is so high.”
operations.
– Michael Washbourne
Gibb River executive chairman Jim Richards shows “The target area
Blina samples and discusses investment options with is a well-known
diamond-bearing al-
interested parties in Hong Kong earlier this year luvial terrace called

Terrace 5 which has

Gibb River (formerly POZ Minerals) is been trial mined in the past,” Richards said.

planning to undertake at least four months “Nearly 1,500ct of diamonds were mined

of bulk sampling operations, including trial from two cuts back in the 1990s and that

mining of the best sampled grades, before really is what has given us the confidence

the wet season hits in January and slows that the channel is a potentially commercial

progress on site. channel.

While R&D funding from the Federal “Due to the nugget effect with diamonds,

Government could account for some of you pretty much have got to trial mine or

the development capital required, Richards bulk test to get a commercial answer as to

wants to add a strategic investor to the mix whether the thing works. There’s no point

to lock down a more immediate financing trying to go for a JORC resource because

pathway. by the time you’ve got that, the thing has al-

“We are looking for that strategic investor ready been mined out.

to lock in maybe $1-1.5 million of that final “We’re very confident this channel has

lick of capital and then it will be away we got the diamonds in it and we are also con-

PAGE 8 MAY 2019 AUSTRALIA’S PAYDIRT

Cobre starts Fortescue retains a 2% royalty on any copper
in Kal, looks produced within the area by Cobre in the future

to Chile

Aprivate West Australian company is
looking to do good with a copper asset
in the Eastern Goldfields formerly held by
Fortescue Metals Group Ltd. Martin Holland,
who founded Chilean-focused Lithium Power
International Ltd, is now steering Cobre P/L
which is getting cracking on 350sq km of
pure copper tenure, north-west of Leonora.

When Holland spoke to Paydirt, Co- ploration, despite historical RC drilling Cobre is entitled to a government grant
bre had secured stage one funding from the 1970s – 6m @ 2.78% copper of $80,000.

commitments to acquire 80% of the ten- and 6.43% zinc from 30m and 4m @ Holland said the company had about
$1 million to get the company going
ement package from a local Kalgoorlie 4.6% copper and 2.12% zinc from 92m – ahead of a proposed ASX listing next
year.
technical team. indicating copper prospectivity.
“We are doing this privately, drilling
Fortescue relinquished the asset in Perhaps if the drive for copper was around the middle of April once the rigs
arrive on site so we can develop it further
2015, having undertaken minimal ex the same back then, Fortescue may before taking it to market and listing next
year. Fortescue held on to it for quite a
have looked at while and did mapping and stuff, but no
real exploration. I think this was first sold
the ground differ- back in 2015 and it may not have hap-
pened if they still owned it today,” Hol-
ently given it is now land told Paydirt.

searching far and Cobre’s horizons stretch further than
WA, however, with the company keen
wide in Latin Amer- to mix the high-grade potential of its
Kalgoorlie project with the low-grade,
ica for exposure large tonnage offerings of Latin America.

to the red metal. “We believe we can find a high-grade
deposit in WA with VMS-style potential
Fortescue retains and then over in Chile, we are talking
about more of a porphyry-style system
a 2% royalty on any which is lower grade, but obviously very
economic. We’ll have a blend with these
copper produced two projects plus geographic spread
also,” Holland said.
within the portfolio
At the time of print, Cobre hadn’t quite
by Cobre. secured the Chilean asset to but Holland
was confident of getting a deal done.
Celebrating 25 years Cobre has start-
ed work on the He is using his connections in-country
tenement pack- to help Cobre’s copper strategy.

age with Newexco “Chile is the home of copper and we
are in the process of negotiating quite a
completing moving large copper project in the country and
I am using a lot of my ties I had through
loop technical work being there,” Holland said.

and interpretation, Cobre is positioning to be one of the
few pure copper plays on the ASX, a
closing in on three plausible strategy given demand is heat-

known copper tar-

gets.

Stage one ex-

penditure of about

$500,000 will be

committed to RC

drilling totalling

some 3,000m,

which was expect-

ed to start in mid-

29a Clayton St, Bellevue WA 6056 April with assays to
follow soon after.

www.bostech.com.au 08 9250 4252 Upon completion
of the initial explo-

ration campaign,

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 9

NEWS

Cobre team Ashley
Johns, Martin Holland,
Jamie Mazza and
Bernard Aylward

ing up for the red metal. you will see a shift in investor confidence

In March, it was reported that Codelco – in Chile, especially with the new president

the world’s largest copper miner – intend- who is pro-business and pro-mining,” Hol-

ed to revert back to a focus on copper ex- land said.

ploration and production rather than beef “When you look at the demand for cop-

up its exposure to Chile’s lithium sector. per, especially with this shift from the old

Codelco’s drive towards lithium was for thematic and the new thematic that is hap-

greater participation in the battery miner- pening from petrol to electric vehicles, it

als sector, a market where copper also has is only going to increase in the next five

a place, particularly in electric vehicles. years from the research I have done.

Holland said information he had been “There has been a big push from BHP

given indicated copper would be in deficit [Ltd], saying that that we need four times

in early 2020, which would put pressure on the amount of copper required in an EV

pricing. than a standard combustion engine, so

At the time of print, copper was trading when that shift kicks into gear there is go-

at $US6,360/t. ing to be a hell of a lot more copper re-

“Exploration has been fairly quiet in quired. That is just based on the vehicle

Chile and there has been news out of point of view, not talking about the power

Codelco that they have been looking to storage or anything else,” he said.

“spend tens of billions of dollars over the – Mark Andrews

next five years in exploration, so I think
The XRF results were above what Cobre There has been a big push from BHP [Ltd], saying that that
was targeting we need four times the amount of copper required in an EV
than a standard combustion engine, so when that shift kicks into
gear there is going to be a hell of a lot more copper required. That
is just based on the vehicle point of view, not talking about the
power storage or anything else.

PAGE 10 MAY 2019 AUSTRALIA’S PAYDIRT

SECURE YOUR INVESTMENTS
IN WEST AFRICA

The Australian High Commission, Ghana, will host the West Africa Mining
Security Conference in Accra on 11-12 June. The conference will bring
together academics, security practitioners, subject matter experts and
the mining industry to discuss strategic security trends in West Africa.
It will provide senior executives, operations and security managers
with the information to inform future security and investment decisions.
Conference tickets only US$300.
For further information contact Deputy High Commissioner,
Glen Askew ([email protected]) or Second Secretary
Jill Suggate ([email protected]).
https://ghana.embassy.gov.au/acra/Conference.html

11-12 June
2019

25Celebrating
YEARS

Est.1994

In the latest of our new series of retrospectives to celebrate Paydirt’s
25th anniversary this year, we look in the May archives and find stories
of technology breakthroughs, nerves in the gold sector and the new dawn
of Australian participation in Latin America’s mining and exploration sector.

1995 2000

Sound familiar? BHP Minerals The migration of resources
and CSIRO were investigating companies to the Australian
ways to revolutionise the bourse was continuing, with
nickel industry by improving Canadian explorer Tri Origin
recoveries of hard-to-treat Exploration headed down
ores through technology. BHP under, subject to a $6 million
also announced copper would IPO. The centerpiece of its
become its mainstay over listing was Lewis Ponds – a
the next two decades, with gold and base metals massive
companies spending big on sulphide – while it also had
exploration for the red metal, a large landholding in the
predominantly in Latin America. Lachlan Fold belt, New South
It was predicted that by 2000, 52% of mineral development Wales. Meanwhile, it was touted to be another great year for
spending would be geared to copper. Australian nickel, with WMC “basking in super profits” and
lateritic producers cashing in on solid commodity prices,
Cobalt had reared its head in this edition, with Cobalt despite slow production ramp ups and high cash operating
Resources NL embarking on a big programme at Mt costs. Anglo American plc had also just paid a visit to the
Gunson, namely the MG14 and Windabout deposits, South Anaconda where it had invested heavily.
Australia.
Downstream processing was brought to the fore in this
1998 edition, with Paydirt journalist Mark Fraser speaking with
vanadium developer Roderick Smith about Precious Metals
Ross Louthean reported that Australia’s $122 million Windimurra project in the Mid West.
Australia Kimberley Diamonds Smith said the major barrier to value-adding was that WA’s
may have inadvertently customers could do it themselves.
hit “paydirt” in Peru, as
another Australian company 2003
unknowingly drilled on its El
Molino copper-gold project, near West Australian miner Troy
Yanacoha, which was subject Resources NL featured on the
to ownership debate between cover having just opened the
Newmont Mining Corp and Brazilian Sertão gold mine
Normandy. Initial drilling results (grading almost 1 oz/t) and it
from El Molino returned an was on track to become one
intercept of 190m @ 0.45% copper from surface, including of the world’s richest mines of
82m @ 0.17 g/t gold from surface. its kind. It was the first major
gold mine in the State of Goiás
In a sign of the times, Louthean Publishing announced it for about 200 years, with Troy
would defer the World Diamond Conference until early the executive chairman John Jones
following year and proposed to shift the event to a venue in telling people gathered at the
Africa. Meanwhile, BHP’s $490 million Cannington silver- opening that 45,000-50,000oz gold was expected to be
lead-zinc mine, north-west Queensland, was set to become a produced in 2003.
big profit earner.

PAGE 12 MAY 2019 AUSTRALIA’S PAYDIRT

2004 Since the first LADU, Australian companies have expanded
their interests beyond the traditional mining centres of
After a visit to the East Kimberley, Paul Garvey reported that Brazil, Chile, Argentina, Peru and Mexico to more exotic
the region was set to experience its most intensive season destinations such as Ecuador and Guyana.
of resources activity ever. An influx of cashed-up explorers
were headed for the region, as the construction of Sally 2015
Malay Mining Ltd’s namesake nickel mine and plant had
opened up avenues for others to embrace an isolated part Paydirt has stepped foot on some of the world’s greatest
of Australia. discoveries and this month the magazine took in a visit
to Sirius’ Nova-Bollinger in WA’s Fraser Range with the
“We’ve got a highway running right up the guts of our company’s managing director Mark Bennett. The mine was
tenements, a sealed road leading to a deepwater port,” in development mode and shortly after was taken over by
LionOre Australia Pty Ltd exploration manager Mark Independence Group Ltd in a mega deal.
Bennett told Paydirt.
In the meantime, Oz Minerals Ltd had just appointed
“When you compare this to something like the West Andrew Cole as managing director, with questions being
Musgraves, this [the East Kimberley] has got a lot more asked of the company’s role in the M&A unfolding dance.
going for it.”
2018
This edition also included insights form the Australian Gold
Conference and Paydirt’s Gold Conference, with the In the 12 months leading into
gold bugs leaving both forums concerned that a projected Latin America Down Under
$US450/oz gold price by year’s end was doubtful as prices 2018, prominent ASX mid-tiers
had dipped to below $US400/oz at the time of print. such as Newcrest Mining Ltd
(Ecuador) and Oz Minerals Ltd
2009 (Brazil) started making serious
moves in Latin America.
In difficult global economic Fortescue Metals Group Ltd
times, remuneration experts also joined the party and now
Allan Feinberg and Mark Bussin has an expansive portfolio of
of 21st Century Pay Solutions, exploration ground in several
addressed the challenges Latin American jurisdictions,
facing Australian companies in as an insatiable appetite for the next world–class copper
getting organisational and pay orebody continues to build.
reward systems right.
“Latin America has been the ‘backyard’ and preferred
Meanwhile, as always, destination for many of the companies on the TSX and
Paydirt was hot on the trail of TSX-V but the vacuum in activity has created opportunities
another Australian company for Australian companies to secure major ground
looking to do good things positions literally under the noses of their North American
abroad with Strike Resources Ltd exploration manager counterparts,” PCF Capital chairman Liam Twigger told
Cherie Leeden hosting a site visit to its coal play in East Paydirt.
Kalimantan, Indonesia. On home soil, Paydirt’s two-day
Gold Conference was reviewed. Back then, it was the Meanwhile, a familiar face and familiar story returned to the
majors – Gold Fields Ltd, Sino Gold Mining, Newmont Asia ASX in a big way when Jupiter Mines Ltd re-listed on the
Pacific and Dominion Mining – that filled the conference ASX in the preceding month. In completing the $240 million
programme, with sparse representation from juniors and IPO at 40c/share – equating to a market cap of about $779
grassroots explorers. million – Jupiter completed the largest IPO in five years on
the ASX on the back of its 49.9%-owned Tshipi manganese
2012 operation in South Africa.

Enter Latin America Down Speaking to media upon re-listing, Jupiter chairman Brian
Under. Gilbertson said: “We watched the value of Jupiter decline
from $1 billion at the start in 2010, in line with everyone
Considered a no-go zone for else. That didn’t give us any satisfaction seeing everyone
ASX-listed companies, the else suffering the way you are suffering,” regarding the
landscape drastically changed company’s previous downfall.
in the lead up to 2012 with
Latin America hosting more
than 80 Australian miners
and explorers. On the back
of the new found popularity of
Australian companies in Latin
America, Paydirt launched the first ever Latin America
Down Under Conference (LADU) in Sydney.

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 13

NEWS

The broad spectrum at Penny West

Albeit coming from a There’s nothing like a high-grade gold intersection in Western whether something is
low base, Spectrum Australia to spark interest in the share market and that is likely to get into produc-
shares rose more than exactly what Spectrum Metals Ltd has done. tion or not. If it isn’t, we
600% in March after a won’t waste the money

series of bonanza drill on it. We’ll move on and

results from the Penny find assets that are like-

West project. you can just mine that all day long and with ly to go into production.

In late February, Spectrum was trading the appropriate sized gear and the right “We took that tack early and there’s al-

at 0.4c/share and reached a high of 3.1c/ methods you can make reasonable mar- ways a bit of luck involved in these things,

share in late March on the back of 4m @ gins on that.” but we are drilling in an area where there

105.2 g/t gold from 151m, including 1m @ Mining is front and centre in Spectrum’s has only been one drill hole that had a very

292.8 g/t from 153m (SPWRC022); 2m @ plans and the company will spy any oppor- small intersection that we thought needed

19.7 g/t from 115m and 1m @ 10.8 g/t from tunity that presents to execute that ambition to be followed up. What we hadn’t quite ex-

154m at the Penny North discovery, 25km sooner rather than later. pected was to find the tenor with the miner-

south of the Youanmi mining centre. Adams, a geologist who spent 12 years alisation that we have,” he said.

The hit of 4m @ 105.2 g/t gold at as director, head of equities research at DJ Penny West once held a special place in

SPWRC022 was immediately down-dip Carmichael, is part of a tight-knit, ready-to- WA’s mining history as one of the State’s

of SPWRC018 where 4m @ 35.2 g/t gold mine team at Spectrum, which includes Al- highest grade open pit gold mines with

within 9m @ 16.2 g/t from 130m was inter- exander Hewlett (non-executive chairman, 121,000t @ 21.8 g/t for 85,000oz gold rec-

sected. Nader El Sayed (non-executive director) onciled through the mill.

At the time of print, results were pend- and mining engineer James Crosser as Metana discovered the deposit in the

ing for three holes at Magenta, 11 holes at technical director. late 1980s and consequently mined it in

Penny West and 12 holes at Penny North. “We’re not really interested in three soil 1991/92. It has been part of the greater

“We are kind of pinching ourselves, there samples out the back of Meekatharra; we Youanmi tenement area for the best part of

is a lot of work to do and not every hole is have a board that is bent towards mining. 30 years.

going to be 4m @ 105 g/t gold,” Spectrum We have a mining engineer on the board, Adams was part of the Metana stable

managing director Paul Adams told Paydirt. I am a mining-based geo and a chairman working at Mt Magnet when Penny West

“In the presentations I have been mak- who is more on the exploration side, but was discovered and therefore has some

ing in Perth and over east and prior to our corporately good at negotiating deals and intimate knowledge of an area dormant for

knowledge of the first drill result, I was ex- getting hold of ground,” Adams said. such a long time.

plaining what a successful hole looks like. “Although we are a small company, we “This was a little gem of a project that I

For us, it is 2-3m at anything above 10 g/t have set the board up early in a manner think was underappreciated. There has

gold. If we get something like that we would that anticipates us going into production or been a litany of corporate takeovers, corpo-

consider that a successful hole because at least being able to ascertain pretty early rate failures and it ended up in private hands

See Drill Bits for Spectrum’s latest results pages 102-103

PAGE 14 MAY 2019 AUSTRALIA’S PAYDIRT

and then back out into public companies. Spectrum has ignited interest in the share starting to ask questions.”
Companies which had it then went into ad- market through the drill bit. Total inferred and Spectrum seemingly has options to
ministration, but mostly these two little min- indicated resources attributable to Spectrum
ing leases were always part of the major consider at Penny West, which was held
play which was perhaps problematical, so it are 230,000t @ 4.8 g/t gold for 36,000oz by Apex from 2007-2012.
has kind of been missed,” Adams said.
Tapping the facility is subject to share- Apex’s attention to refractory gold ore
The mining licence on Penny West is holder approval, if Adams and co feel they at Wiluna meant Penny West has been on
valid until 2032, while there is supporting need to take that path. the backburner for some time and given
infrastructure to utilise. the strength of the Australian gold price,
“It is nice for a junior to be called up, rather could well provide Spectrum with a low
Adams said every company with a mill than having to do the chasing,” Adams said tonnage, high-grade gold money spin-
in the district was aware of Spectrum’s in- of the international interest being garnered ner in a Tier One jurisdiction; much in the
tentions to capitalise on the potential for a by Spectrum. same vain as what Bellevue Gold Ltd is
quick start to production if the opportunity doing near Leinster.
prevailed. “Six weeks ago we were a $4 million com-
pany and now our volumes going through “A deposit like this shouldn’t be avail-
In recent times, the likes of Northern Star the market are large. One billion shares on able,” Adams said. “We thought it was
Resources Ltd at Paulsens, Ramelius Re- issue can be a double-edged sword, but it a great place to go back to, we like the
sources Ltd at Wattle Dam, Silver Lake Re- appears Spectrum is a stock that can be tenor of the mineralisation and there were
sources Ltd at Daisy Milano and Pantoro Ltd traded. Investors feel they are not trapped reasonable amounts of exploration drill
at Nicolsons, Doray Minerals at Andy Well in a cray pot with the liquidity there for them holes underneath the pit. That gave us
have launched substantial businesses from to get in and out which has been important. some confidence there was something
high-grade projects, which is something Liquidity has been an important factor now there and maybe we could concentrate
Spectrum could potentially emulate. that there are a lot of eyes on us and even on that area for a bit of a mining study and
some of the smaller institutions are now do some more drilling there to see if we
The company chased rights to Penny can increase the resource and see what
West hard and concluded the acquisition in we could do with it.
late 2018.
“High-grade gold tenure and brown-
Current results suggest the pursuit was fields; our view was that if you are going
worthwhile and as investors worldwide be- to try find more ounces in a system, it may
gin to realise Spectrum’s opportunity, the as well be near a high-grade system. That
company is under no pressure to rush into was our rationale in picking up this style of
any decisions on funding. asset. For a small company we wanted to
have relatively low hurdles to take a pro-
Spectrum’s largest shareholder, Platina ject through to exploitation and do it on a
Resources Pty Ltd, has provided an unse- scale that is suitable for a company of our
cured loan and convertible note facility for scale to get a cash flow going,” he said.
a maximum $1 million and maximum term
of 12 months. – Mark Andrews

Upon its election, Spectrum can draw
down on the facility in minimum tranches of
$250,000.

Penny West was once an iconic high-grade gold producing mine

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 15

NEWS Dan Lougher

Insta Dan
calls for influence

Asevere lack of graduates and negative
perceptions about the mining sector are
trends in need of reversing and only industry
leaders can do it, according to Western Areas

Ltd managing director Dan Lougher.

Addressing some 370 attendees at the end up telling the Government that we ducers of nickel sulphides in the world
WA Mining Club, Lougher encour- don’t need a school of mines or we don’t – has guided FY2019 production of
aged mining people to celebrate the in- need our colleges here to do science or 20,500-22,000t at unit cash costs of
dustry through social media with an em- whatever because we have got people to $2.80-$3.20/lb from Forrestania.
phasis on promoting an industry that is come in and do this for us.”
cutting edge and innovative. Meanwhile, Odysseus is set for pro-
On the eve of his 40th year in the min- duction in 2023 after a positive DFS in-
“We are not going to get enough gradu- ing sector, Lougher is starting to em- dicated a pre-production capex of $299
ates through our colleges in the next five brace the new way of engaging people million would see Odysseus deliver
years. We are still going to be short and in the industry and called for greater par- 13,000 tpa nickel-in-concentrate at C1
running out of skilled labour to build the ticipation from other “influencers”. cash costs of $2.65/lb.
next generation of mines,” Lougher said.
“We need to convince parents. There The company acquired the project in
“We have been hearing in the press is a mismatch between industry and 2015 for $24 million from Glencore.
about two companies already being what the public eye is, I am struggling
penalised hard by the share market be- with this, but I am a dinosaur. Let’s take Lougher said the company wasn’t cur-
cause they couldn’t deliver their targets this on board; everybody can be an influ- rently interested in project acquisitions
because of a lack of skilled fitters, boil- encer,” he said. with a pipeline of organic growth oppor-
ermakers, electricians. This is no longer tunities to be considered as global nickel
government policy; the industry needs to Influencer is a term prevalent in the stockpiles start to decline.
take control of our own destiny.” world of social media marketing, where
the popularity of individuals is harnessed At the time of print, Western Areas had
Lougher’s fears are heightened by his by commercial groups to promote their no debt, $134 million cash and a market
own company’s impending development brands. Despite being far from a Face- cap of $612 million.
of the Odysseus underground nickel book addict, Lougher said the industry
mine at the Cosmos complex, Western could benefit from using such “influenc- “No debt is immensely important these
Australia. ers” to lift mining’s public profile. days when you are looking at growth,”
Lougher said.
On the day of Lougher’s presentation, “Social media to me, I just don’t get
Western Areas announced it had over- it, but when you leave today, all of you, “The challenge for industry is to pro-
seas students starting with the company. you have to become an influencer. You duce more nickel in the next 10 years.
Coming from a long line of coal miners in have to take on board our responsibility Nickel seems to be in the backwaters
the UK, Lougher bemoaned the fact that to find new people coming into the indus- because there was so much of it in
the mining brand in colleges in Europe try and we can do it. In this room today, stockpiles. Bert Witkamp [International
was stronger than Australia at the mo- we have miners, metallurgists, lawyers, Energy Association hybrid electric vehi-
ment. PR people, marketing, oil and gas peo- cle technology collaboration operating
ple, geologists; the whole lot. We don’t agent] has come across and he is saying
“There is no industry in the UK any- really have an excuse for not going out that the EU is backward in understanding
more, Thatcher saw to that, but two of and tapping someone on the shoulder.” what critical minerals are and where they
the strongest colleges in Europe have are going to come from.
schools of mines; how is this? The coun- Lougher has enjoyed employment
try has no mining, here in Western Aus- throughout his 39 years in mining and is “One assumes that we want industry
tralia we have a great mining culture, but now preparing to help industry through to join his crusade and we will join that
we have no students,” Lougher said. the challenges currently being faced. group and get a lot of networking out of
that; it’s obviously something we need to
“We have to go to Johannesburg and He said there were certain sections work on because the volume of nickel re-
Camborne to bring students across. Is of the industry flourishing at the mo- quired for EV growth is phenomenal and
that a good thing or a bad, thing? It is a ment and while the price fundamentals as an industry we currently don’t have it,”
good thing because we are looking after for nickel price appreciation are in place, he said.
ourselves because we need someone to there was yet to be a reaction.
do the job. But, overall we will basically – Mark Andrews
Western Areas – one of the rare pro-

PAGE 16 MAY 2019 AUSTRALIA’S PAYDIRT

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15 October 2019

Perth,Western Australia

THE BEST NICKEL STORIES ALL IN ONE DAY

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opportunities available!

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Image courtesy of Western Areas Ltd

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on (+61) 8 9321 0355 or email [email protected]

NEWS

Indonesia nickel boom on track
to overshadow palm oil

Indonesia’s nickel-related industries – including stainless steel-maker Tsing- very supportive of Chinese investment in
such as the production of stainless steel shan Holding Group, battery firm GEM years to come,” Lembong said.
and battery materials are set to surpass Co Ltd and units of lithium battery maker
the value of its second-biggest export Contemporary Amperex Technology Ltd Indonesia, the second-largest car
earner, palm oil, in the next 10-15 years, (CATL) – started building a lithium bat- production hub in South-east Asia after
its investment board chief said recently. tery project in Morowali in January. Thailand, has also been looking to posi-
tion itself as a global hub for producing
South-east Asia’s biggest economy “Tsingshan is in the lead, but there are and exporting EVs to Asia and beyond.
suffered a drop in foreign direct invest- at least two other Chinese conglomer-
ment last year, but one area that at- ates who are catching up to them,” Lem- Indonesia has announced plans to
tracted more overseas money was nickel bong said, adding he expected three to introduce a fiscal scheme that will offer
processing, including a $US4 billion four major manufacturers would eventu- tax cuts to EV battery producers and
Chinese-led project to produce battery- ally emerge in the battery sector. automakers, as well as preferential tar-
grade nickel chemicals to power electric iff agreements with other countries that
vehicles (EVs). The industrial park in Morowali and have a high EV demand.
another $US10 billion park being built
Indonesia is also set to overtake Japan on the island of Halmahera are part of Industry Minister Airlangga Hartarto
and India to become the world’s second- Beijing’s Belt and Road Initiative, but said on February 13 that Indonesia
biggest producer of stainless steel be- Lembong noted that Tsingshan was also aimed for 20% of vehicle production
hind China, when it reaches an industry bringing in Japanese investors to take a to be EVs by 2025, representing about
ministry target of producing 4 mtpa from 40% stake. 400,000 vehicles.
its main production site at Morowali, on
the island of Sulawesi. “To me that’s a great example of where The deputy minister for industry, Har-
Belt and Road is going. More open, more janto, also said last December that Hyun-
“Our palm oil industry is worth about inclusive, professionalised,” he said. dai Motor Co, the world’s fifth-largest au-
$US18-20 billion in exports. I could see tomaker, planned to start producing EVs
nickel and its derivatives, stainless steel, Indonesia has a history of simmering in Indonesia as part of an $US880 million
carbon steel, lithium-ion battery cells, resentment towards China and a minority auto investment.
surpassing that in the next 10-15 years,” ethnic Chinese community so investment
Thomas Lembong, chief of the Indonesia from its giant neighbour can be sensitive. Lembong declined to name potential
Investment Coordinating Board, said in EV investors, saying that “it’s quite a
an interview. Reports have circulated on social me- leap” from producing batteries to building
dia suggesting the Chinese-led project EVs, at least until domestic usage grows.
Indonesia’s large nickel laterite ore re- had brought in a huge influx of Chinese
serves – prized for nickel pig iron used workers, although authorities say only “If you don’t have a large user base of
in stainless steel production – are also around 3,000 workers are foreign out of EVs, then why bother producing here?
a vital ingredient for lithium-ion batteries nearly 30,000 in Morowali. But electric cars are not going to take
used to power EVs. off for as long as diesel and gasoline are
“I predict the public will realise the ben- subsidised,” he said.
Developers led by Chinese companies efits of these investments fast enough to
swing public support around to become – Ed Davies and Gayatri Suroyo,
Reuters

PAGE 18 MAY 2019 AUSTRALIA’S PAYDIRT

Moving and
shaking at
Tropicana

Tropicana JV partners – AngloGold Matt Dusci
Ashanti Ltd (70%) and Independence
Group NL (30%) – are expected to bring on being completed at the time of print. Despite Independence’s focus on met-
production from the Boston Shaker under- Following the decision to proceed with als critical to clean energy, it couldn’t ignore
ground mine in the September 2020 quarter. the opportunity to capitalise on improved
Boston Shaker, Independence chief oper- grades and production profile at Tropicana.
The decision to approve the underground ating officer Matt Dusci told Paydirt it was
project came after a feasibility study indicat- only the beginning of the future opportuni- Independence’s contribution to the capi-
ed the viability of mining 1.1 mtpa @ 3.5 g/t ties to be realised at Tropicana. tal costs will be a modest $32 million.
gold for 100,000 ozpa over seven years.
“Ultimately for us, this is the start of the “The relationship has always been good
Currently, ore reserves for three years kind of opportunities we’re trying to unlock [with AngloGold] and we haven’t seen a
of production are in place, with inferred re- at Tropicana. It has been one of the work lot of change [under the new leadership]
sources totalling four years. programmes we’ve been working on as a because we are mainly dealing with the
value enhancement project. We’ve deliv- Australian team and Tropicana team. They
Including contingency, Boston Shaker is ered increased throughput through the ball have a great operational record, do a good
estimated to cost $105 million, with AISC mill to about 1.8 mtpa, the second stage job at Tropicana and continue to focus on
underground production costs of $95/t. now is the underground opportunity at Bos- things we focus on – costs, productivity im-
ton Shaker,” Dusci said. provements and how we can continue to
While the decision to proceed with Bos- drive value in the business,” Dusci said.
ton Shaker is a boon for the JV partners, it “We are also looking at how we can con-
is also a major win for Macmahon Holdings tinue to grow at Tropicana and I think with In the meantime, Independence has
Ltd which has been selected to develop the the underground announcement there is reported progress on its nickel sulphate
underground. further opportunity in unlocking the under- downstream processing studies.
ground opportunities. We are very commit-
Macmahon already has had the open pit ted to exploration and even the example of The company has lodged a patent for its
mining contract at Tropicana since 2012 Boston Shaker itself, it sits under one of the IGO Process to produce high-quality nickel
and it is the company’s largest mining con- open pits and [we’ve] identified two high- sulphate from nickel sulphide concentrate.
tract in Australia. grade shoots, which are still open at depth.
Part of the exploration philosophy is to con- Metal recoveries from the IGO Process
Macmahon intends to start work on Bos- tinue to unlock the value that we see both at are extremely high, achieving extraction
ton Shaker this month, with the contract Tropicana in a near-mine environment, but rates exceeding 97% of both the nickel and
worth about $170 million over five years, also in that regional package we have.” cobalt metal in the Nova nickel-cobalt sul-
with capex for the underground works es- phide concentrate feed.
timated to be $30 million.
“Further work remains to be done to opti-
Macmahon expected the underground mise the process design to minimise waste
capex would be primarily committed in the and maximise by-product credits,” Inde-
first three years, with final documentation pendence chief executive Peter Bradford
said. “We also continue to do trade off stud-
ies to determine the optimum project loca-
tion, with key drivers including access and
availability of power, water, transportation
options, workforce and environment and
community considerations.

“We are excited by the results to-date but
plan to spend more time to test all strate-
gic options for the study. In parallel with the
continuing studies, we will commence ne-
gotiations for the Nova concentrate offtake
in the September 2019 quarter. There is
strong demand for Nova-style Class I nickel
sulphide concentrates, and, as a company,
we will be in a position to negotiate higher
payabilities than currently received.”

– Mark Andrews

Underground production from Boston Shaker will see Tropicana produce
450,000-500,000 ozpa gold over five years up to FY2023

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 19

COVER The Guyanese are proud of their struggle against
slavery. This monument is dedicated to the

“millions who courageously and unceasingly
waged the war of Africans in the new world”

Guyana’s bid to avoid
oil’s economic shackles

While most attention has turned towards the country’s impending entry into oil-
producing ranks, Guyana’s Minister for Natural Resources is calling on Australian
companies to support the concurrent development of the country’s gold resources.
Guyana is due to begin oil production from its vast offshore reserves in 2022 but the
Government is already conscious of the need to keep diversity in its economy and avoid

the “Dutch Disease” which has struck so many other developing nations.

PAGE 20 MAY 2019 AUSTRALIA’S PAYDIRT

Gold may hold If the thriving small-
the key to this
diversity. Guyana is scale sector provides
already a large pro-
ducer of the precious headaches for Trot-
metal with official fig-
ures suggesting at man, it also provides
least 280,000oz of
production in 2018. incentive for prospec-
Half of that production
came from the coun- tive investors.
try’s two large-scale
mines – Troy Re- “You can see from
sources Ltd’s Karouni
operation and Guy- the level of small-
ana Goldfields Inc’s
Aurora mine – with scale activity that
the remainder coming
from the hundreds of this country is full of
small-scale operations littered throughout
the country. gold,” Troy managing

It is the prolific nature of these small- director Ken Nilsson
scale miners which gives Guyana’s Min-
ister for Natural Resources Raphael Trot- told Paydirt. “There
man both headaches and optimism.
is smoke all over the
“Guyana is better known for its pork
knockers [the Guyanese colloquial term country in the form of
for artisanal miners] but we would like to
get four or five large-scale projects here,” Architecture such as the Stabroek Markets in central Georgetown the small-scale min-
Trotman told Paydirt during a meeting in reflects Guyana’s colonial past ing, there must be
his Georgetown office. “We don’t want plenty of fires as well.”
to displace small-scale miners altogeth-
er, they epitomise the spirit of Guyana, there are challenges regarding security, Geologically, Guy-
but we would like to attract large-scale the syndicates from Venezuela are raid- ana is an almost ideal setting for oro-
miners because they manage their op- ing mining camps and in some cases genic gold deposits. It is underlain by
erations better. They have better envi- colluding with locals to harass miners, the Guiana Shield, a Proterozoic-aged
ronmental practices and better safety re- including putting tolls up on the rivers. craton that was contiguous with the Leo
cords so there are a number of benefits There are some reports of it being Ven- Mann Shield of West Africa prior to the
that come to Guyana come from having ezuelan military but we have no proof.” opening of the Atlantic Ocean, mean-
large-scale miners.” ing it shares much the same lithology
The prevalence of illegal activity in and style of mineralisation as the Birim-
An established commercial-scale Guyana’s interior points to the difficulties ian gold belts of West Africa which host
sector would also give the Government faced in reaching remote areas of the more than 200 moz gold.
greater transparency (and tax revenues) country.
from the sector. The Shield has proven prolific with
“We have reams of regulation, the diffi- several multimillion ounce deposits in
“The goal is to stabilise production, culty is enforcement because of the chal- Guyana (Aurora and Omai) as well as
create jobs for Guyanese and provide lenge of inaccessibility,” Trotman said. “It neighbouring Venezuela, Suriname and
environmental management in a sustain- can be cheaper for me to get to New York French Guiana.
able manner,” Trotman said. “The Gov- than parts of Guyana. So, the laws are
ernment would prefer large scale mining there but the enforcement is difficult but However, despite every gold major
because it provides stability in produc we have not given up. showing interest in the country in the last
two decades, Guyana is still lacking in
tion, we know what they are shipping “We recently formed the Corps of War- world-class discoveries.
and producing and paying in tax. Small- dens. They will work alongside the mining
scale miners report a fraction of what officers and the environmental officers to Nilsson is convinced the elephants will
they produce but it’s not their fault, they look at the enforcement of laws around be found.
often struggle to find an offical buyer.” hunting of wildlife and mining practices.
They have received training from the po- “In West Africa the majors have been
Although largely formalised, the small- lice but the cost is the biggest challenge.” in there a long time and made big discov-
scale gold sector also suffers from links eries. Now they are beginning to focus
to criminality. Much of Guyana’s interior on South America because of the potential
is difficult to access, making the borders
porous, a particular problem where Ven- for large-scale gold deposits. There is no
ezuela is concerned.
reason why Guyana shouldn’t have world-
“There is an informal market for gold
which is difficult to control when you are class deposits similar to West Africa.
a country of a vast area with less than
a million inhabitants,” Trotman said. “So “The majors look for elephants and

they’re not easy to find. The trend in Guy-

ana has been for them to have a quick look

then leave but I think the big elephants are

here.”

Trotman recognises there is a disparity

between geological potential and discovery

and admitted access – both physical and

regulatory – were barriers for many inves-

tors.

“The country has its challenges and I

won’t pretend its all rosy. The weather and

terrain can be very challenging and it is dif-

ficult to find a reliable skilled workforce,” he

admitted. “Licensing can be another chal-

lenge. We don’t have large swathes of land

open and available and because of this

foreign investors need to find ways to bring

Raphael Trotman together the disparate licence holders, nav-

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 21

COVER Another monument dedicated to slave
rebellion, this one to Cuffy who led year-

long uprise against plantation owners

igating legal challenges and loopholes.” he said. ate education”.
Troy senior geologist Jens Langhof said Dennisson also likes Australian compa- Elaborating on such potential would help

the presence of transported cover across nies’ commitment to sustainable practices the likes of Troy, which discovered first-
much of the prospective terrain presented and welcomed such input to address the hand the skills deficit in Guyana when de-
a challenge for exploration. lack of capacity within the country. veloping the Karouni mine.

“It is completely covered by 5-40m of Australian companies have forged a “It is difficult because there isn’t the sup-
sand which has only been transported there good reputation already in Guyana and port for operations of this scale. There are
in the last few hundred years,” he said. “It along with other international houses set a no contractors and the equipment that is
makes early-stage work very difficult.” benchmark for standards related to safety, here is usually second-hand and expen-
environment, technology and production sive. I’m not saying the operators are bad;
Nilsson agreed. practices. they know how to drive a truck, just not nec-
“The whole country is enigmatic. It is full essarily without breaking it,” Nilsson.
of gold but also full of sand,” he said. Dennisson also believes increased min-
Those deterrents have kept many ex- ing activity will help foster other industries, The skills shortage is likely to become
plorers away but both Trotman and GGMC particularly in remote regions. more acute as the oil sector opens up but it
commissioner Newell Dennisson said the could also offer solutions to mining’s current
country was renewing efforts to attract new Establishing infrastructure complemen- roadblocks. The Government has already
investment, with Australian companies top tary to mining projects could provide an op- committed to spending revenue on infra-
of the hitlist. portunity for industries in Guyana, such as structure projects throughout the country
“We travel to events such as PDAC and ecotourism. and Nilsson believes the oil majors could
LADU to get the chance to meet and nego- bring as much as they take in Guyana.
tiate with foreign investors,” Trotman said. “We have to learn to balance those eco-
“The Government’s role is to facilitate and nomic ventures with understanding mining “If the oil and gas is done right, it can be a
fast-track these investments where pos- development provides ways of accessing benefit for the country and for the gold sec-
sible, not go out and court large miners to those areas,” Dennisson said. tor,” Nilsson said.
invest in Guyana; they can do that without
the Government. “Power is an even larger challenge [all “The oil and gas industry will bring a lot of
“Guyana is open and welcoming, we of Guyana’s power comes from diesel] but technology into the country from which the
have had good relations with Australia with evolving solutions for sustainable ener- gold sector can benefit.”
and Australian companies are welcome to gy we have opportunity. Mining companies
come. We do feel an affinity with Australia can become the foundation for commercial – Dominic Piper
in a way. services of power. If we can bring to bear
“Australians appreciate a good challenge technology for power in particular, other
and we have them here weather, social and enterprise opportunities will be available for
bureaucracy but they are not known to be communities.”
shy and we believe they could be the per-
fect fit for Guyana.” Trotman is heading to Australia for Pay-
Dennisson said Guyana presented Aus- dirt’s Latin America Down Under confer-
tralian companies with the type of challenge ence this month with investor engagement
they were renowned for taking on. a key driver of the visit, while also embrac-
“We see Australian companies as part of ing the opportunity to connect with Australia
the fabric, we like their adventurous nature,” to provide capacity building assistance.

The Government believes there is an op-
portunity to exchange technology and IP in
some form and further develop “out-of-the-
box arrangements, including in post-gradu-

“Since the Liza-1 well discovery was announced in May 2015, Guyana has loomed as a major
new oil player on the global stage. Project owner ExxonMobil moved quickly to confirm
the potential of the Stabroek Blok – 190km offshore of the Guyanese coast at depths of 1,500-
1,900m. By mid-2018, gross recoverable resources for Stabroek were 5 billion oil equivalent
barrels, including Liza and other successful exploration wells on Payara, Liza deep, Snoek,
Turbot, Ranger, Pacora, Longtail and Hammerhead.

ExxonMobil’s development plan includes a floating production,
storage and offloading vessel (FPSO) designed to produce
120,000 barrels of oil a day from four drill centres across eight
production wells. The proposed Liza Phase 2 development
proposes a second FPSO to produce 190-220,000 barrels of
oil per day. With Chevron, Kosmos Energy, Hess and SBM

Offshore also active in offshore exploration, Guyana could find
itself a major producer of oil in coming decades. It is estimated

gross oil revenues of some $US13 billion annually will be
generated by the mid-2020s, or about $US17,000 per Guyanese

citizen, contrast to its 2016 GDP of just $US3.4 billion.

Georgetown is the seat of the Caribbean Economic Community secretariat

PAGE 22 MAY 2019 AUSTRALIA’S PAYDIRT

Wherever we are...
trend with us

#paydirtmedia #magazines #conferences #ladu2019

Australian Governor-General, General the Honourable Sir Peter Cosgrove
with Paydirt Media executive chairman Bill Repard at Latin America Down Under 2017, Perth

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 23

COVER

Troy epic
far from over

PAGE 24 MAY 2019 AUSTRALIA’S PAYDIRT

The Karouni gold mine feels about as a remote as
an Australian mining company could get; 17,000km
and a 12-hour time difference from the corporate office in
one of the most inaccessible places you could imagine.

The owner has often struggled to get the most out
of Karouni, its unique mix of logistical and geological
challenges making any misstep debilitating. But then,
Troy Resources Ltd has rarely done things the easy way.

Troy’s 2 mtpa Karouni project produces around 70,000 ozpa gold

Troy Resources started drilling on However, despite the travails, the out- gentina. Its standing had never been so
its new Ohio Creek prospect when look for Troy is perhaps better than it high – neither had its share price which
has been for three years or more. Mining hit $4.72 in October 2012 – and in March
Paydirt visited site in April and milling operations are consistently 2013 it made its most confident move
achieving stated objectives, the chal- to date, paying $181 million in scrip for
lenge now is to find enough ounces to ASX-listed explorer Azimuth Resources
keep the mill switched on. and its West Omai (now Karouni) project
in Guyana in the north-east corner of
Created as the classic West Austral- South America.
ian gold junior, Troy has morphed many
times over its 32 years as a listed compa- It seemed the ideal fit, the all-scrip of-
ny. It opened or reopened six WA mines fer providing Azimuth shareholders the
during its first 18 years of existence and opportunity to participate in a company
when it looked further afield showed a which had proved itself on the continent
willingness to take on almost any chal- and had, in Casposo, a flagship opera-
lenge. tion which looked likely to keep running
for a decade.
Its first big break came in 2001 with the
acquisition of the 1.5 oz/t Sertao mine in In hindsight, it was a watershed mo-
Brazil. Sertao ended up providing four ment for Troy as operational problems
years of high-grade production. It also at Casposo, development problems at
gave the company, and managing direc- Karouni and balance sheet pressures
tor Ken Nilsson in particular, a taste for conspired to send the company’s shares
South America. spiralling to less than 10c. Two managing
directors came and went in the interven-
Within a few years the company had ing period and Troy fell from ambitious
opened two more mines in Brazil and in mid-tier gold miner to struggling junior.
2012 the Casposo silver-gold mine in Ar-

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 25

COVER

Soft saprolite ore is blended
with higher grade hard rock

material at Karouni

It has taken a long time, and no little pected impact of the Guyanese environ- been done wrongly. The

pain, to reverse the trend. ment. independent experts

First, the company took the decision to “The mining operations were tough to couldn’t find any fault, it

close, and then offload, the loss making begin with; the combination of water and is a complex orebody.”

Casposo mine. Then, with Nilsson rein- sand meant the wear rates were higher After the toughest fi-

stalled as managing director, the com- than anticipated and the volumes of rain nancial year in 2017

pany set about redrawing the underper- during Guyana’s wet seasons made han- (56,200oz produced at

forming Karouni mine. dling and processing of the upper sapro- $US1,345/oz AISC), im-

It has been an arduous task. Troy had lite ore incredibly difficult,” Nilsson said. provements started in

entered Guyana with a plan to quickly fire That Troy was encountering so much 2018 and 2019 has so

up Karouni in order to fund exploration saprolite ore was indicative of the prob- far delivered consisten-

on the massive land package Azimuth lems it was also battling in the reserve. cy. The June 2018 quar-

had built up but speaking to Paydirt in “The other major damage was the ter saw production of

the Guyanese capital Georgetown, Nils- miscalculation in the resource to re- 19,510oz at $US895/oz

son admits the company missed its initial serve conversion,” Nilsson said. “What ASIC, September was

objective. we thought was a 4 g/t orebody turned 18,991oz at $US825/oz,

“It didn’t go quite as we planned,” Nils- out to be something much less. We December 14,333oz at

son admitted. “But really, all the damage changed the way we drilled it out but $US1141/oz and March
“was done in Argentina [at Casposo]. The there was no real science saying it had
13,333oz (costs yet to

problems there pulled be declared).

money and resources If there is not 1 moz found Despite ounces falling
away from Karouni at an
in the last two quarters,

important time for the pro- by Troy here we’ve done Nilsson is delighted with
ject.” something wrong. But it will
how Karouni is perform-
New developments al-
ing.

ways need dedicated re- probably be in a series of pits “It has turned around
sources but compounding rather than a single pit.
the teething difficulties at in a massive way in the
Karouni was the unex-
last 12-18 months and I

think we’ve done a re-

Ken Nilsson markable job in the last year,” he said.

The revival job is being led by Karouni

general manager Eric Olsen. A mining

engineer with extensive experience in

Latin America, Olsen was tasked with

bringing consistency and predictability

back into Karouni’s mining activities after

the pit wall failure which blighted Smarts

3, the highest grade pit in the Karouni

mine schedule.

Karouni comprises six small pits run-

ning along the north-west trending

Smarts-Hicks corridor.

Olsen and Nilsson both declared

themselves satisfied the mining team

had come to grips with Karouni’s com-

plexities after the failure of Smarts 3.

The geological complexity, the isolat-

ed location and lack of an experienced

workforce also conspired to Karouni’s

underperformance.

“As a result of the pit wall slip Golder &

Associates did a full analysis of the ore-

body and found the structure was really

challenging from a mining perspective,

fracture zones everywhere and shear

PAGE 26 MAY 2019 AUSTRALIA’S PAYDIRT

Senior geologist Jens Langhof takes general manager Eric Olsen and managing director
Nilsson through the exploration plans

zones in different directions,” Nilsson the last left in early 2019 and we now own he said. “In fact, it was those new pieces
which were always the first to fail, the rest
said. “But that gave us different technical the equipment,” Olsen said. “Part of the of the plant has held up well.”

parameters which are now working for problem is there are no mining contrac- Olsen said coming to terms with the
vagaries of the three different ore types
us at Hicks.” tors in Guyana and those that did show provided the biggest breakthrough in the
plant.
Olsen admitted the two orebodies interest wanted to bring in big equipment
“Metallurgically it has always been
were difficult to get under control. which we know doesn’t work here.” consistent but the material handling is
very difficult,” Olsen said. “There is a
“The structures mean it is much more In the 1 mtpa plant, processing rates lot of saprolite ore so production goes
down in the wet season when we are in
complex than the average open pit,” he have exceeded nameplate capacity in the the saprolite. The solution has been to
campaign process the saprolite ore while
said. six weeks to the end of April. The Karouni also taking into account the need to blend
high-grade and low-grade material and to
Hydrological solutions have also im- plant, like all of Troy’s operations, uses satisfy the separate royalties on the two
orebodies [Smart and Hicks].
proved performance. second-hand equipment but Nilsson is
“We think we are working really well
“Our water control is also working well. adamant the plant’s genesis had little to now.”

It is a much better overall operation.” do with Karouni’s underperformance. For Nilsson, the most crucial aspect of
the turnaround is the application of cash
Equipment availability is also up after “The plant was made a scapegoat but flow to paying off project debt.

Troy disposed of leased equipment and it was never the problem. It actually had “We’ve paid back a heck of lot of debt
in a short period off a very small project,”
took on its own fleet. more new parts in it than any other plant he said.

“Two years ago we had a heavy reli- we’ve installed and even though it was

“ance on contractors for equipment but second-hand it had never been used,”
But really, all the damage was done in
Argentina [at Casposo]. The problems there
pulled money and resources away from Karouni
at an important time for the project.

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 27

COVER

A cut-back on the Smarts 3 pit should
see first ore delivered by June

“The mining operations were tough to begin end and I’d be very surprised if this op-
with; the combination of water and sand eration doesn’t last many years.”
meant the wear rates were higher than anticipated
It seems an ambitious statement given
and the volumes of rain during Guyana’s wet there has been so little gold production in
seasons made handling and processing of the Guyana but Nilsson is convinced Karou-
ni’s true riches are yet to be discovered.
upper saprolite ore incredibly difficult. The proliferation of artisanal miners in
the area and the presence of multimillion
The improved performance at Karouni hof, senior geologist. ounce deposits in neighbouring countries
has allowed Troy to reduce its bank debt For Nilsson, the lack of exploration such as Brazil, Suriname and Venezuela
from $US22 million to $US5.2 million in suggest he may be onto something.
just 18 months. around Karouni can be traced back to the
reserve conversion problems. “It is actually embarrassing because
“The bank has been good in allowing us there is so much gold here but we haven’t
to pay slower, which had freed up money “The money marked for exploration found the source,” Nilsson said. “If there is
to spend on other things,” Nilsson said. had to be put to the drill out,” he said. not 1 moz found by Troy here we’ve done
something wrong. But it will probably be
More than just improving the balance “One way or another the mill will keep in a series of pits rather than a single pit.”
sheet, repayment will also clear a series running. I don’t believe 2020 will be the
of covenants attached to Troy, allowing
the company to look at alternative forms
of financing and funding at Karouni.

That Nilsson is prepared to discuss fu-
ture funding requirements suggests the
79-year old is confident the mine can
continue to perform. However, in keeping
with Karouni’s entire existence, there is
a hurdle to overcome first; a lack of mine
life.

Current reserves from the Smarts and
Hicks pits extend to mid-2020 with sup-
plementary ore to come from the smaller
(but high-grade) Larkins and Spearhead
orebodies. It is after that which is drawing
the attention of Nilsson and Jens Lang-

PAGE 28 MAY 2019 AUSTRALIA’S PAYDIRT

Troy has never reached the levels of tested the prospect with ground magnet- as a complete orebody but rather sets of
exploration it originally planned at Ka- ics, some auger drilling and a follow-up smaller quartz vein deposits, similar to
rouni but having built its understanding diamond drilling programme which pro- what we see at Smarts-Hicks.”
of the regional structural controls the duced a best hit of 1m @ 856 g/t gold.
exploration team is ready to step up its A diamond rig was on site when Pay-
efforts. All they need is the funding to After eyeing the project off for several dirt visited Karouni in April as Troy at-
support their push. years, Troy eventually secured entry in tempts to get a handle on the structural
August 2018 and despite having no set setting at Ohio Creek. The diamond rig
“If we don’t get money from outside budget for exploration, immediately set will complete an 18-hole, 4,400m pro-
it will have to be hand-to-mouth and drilling targets. gramme in order to get a better under-
it will take longer. Troy has been do- standing of the style and structural orien-
ing this for many years and we have It quickly drilled 100 RC holes, pro- tation and target the interpreted fault and
always been cautious around getting ducing a string of hits along the inter- fold zones as well as infill the drill lines to
money and diluting shareholders. preted Ohio Creek trend. build a more robust geological and struc-
tural model.
“We’ve committed $US4-5 million for “We started with RC drilling following
this year, the reality is we don’t have a up on the historical work,” Langhof said. Results from the Ohio Creek diamond
budget for exploration but if we don’t do said. “Since then we’ve mapped and drilling could be decisive in Karouni’s fu-
it we will die,” Nilsson said. “However, it sampled the 25m deep artisanal pit and ture. If there is success, Troy will push
is always a balancing act between mine found visible gold. We have found the hard to build a resource and bring the
shear zone and the cross-cutting quartz prospect into the mining plan, if not its
options may continue to shrink, taking it
“ The first core from Ohio Creek closer to putting the the Karouni mill on
If you gave us two years and $US10 million care-and-maintenance.
we could know exactly what we have but it
may be a tough task to do that. At the moment, it “Ohio Creek is very encouraging. It is
is a scramble to stay alive but with some space to a high quality target and we have already
seen a lot of gold in the limited work we
breathe we can approach this in a different way. have done. The evidence shows that it is
a structural fit for what we have learned
and exploration. If you gave us two years vein with lots of free gold.” at Smarts and all the experts we use are
and $US10 million we could know exactly Follow-up infill RC drilling also pro- equally fascinated by it,” Nilsson said.
what we have but it may be a tough task
to do that. At the moment, it is a scram- duced encouraging hits and Troy now The return to exploration has reminded
ble to stay alive but with some space to boasts intercepts of 4m @ 59.7 g/t gold, Troy of the reasons it acquired Karouni
breathe we can approach this in a differ- 5m @ 22.84 g/t, 6m @ 6.9 g/t, 5m @ initially; the camp-scale potential of the
ent way.” 13.94 g/t and 9m @ 40.5 g/t. When a area.
step-out hole drilled 950m from the arti-
The Ohio Creek prospect could deliver sanal pit produced 43m @ 3.5 g/t, expec- There are several prospects to follow
the breathing space Nilsson is looking tations suddenly increased. up, including Gem Creek where auger
for. Held by private groups – like so much soil sampling identified the basalt associ-
of the ground in Guyana – Ohio Creek “Each phase has been quite successful ated with gold at Smarts-Hicks. Langhof
has received little modern exploration. In including that step-out hole. The problem remains convinced there is also porphyry
1995, TSX-listed Cathedral Resources is we haven’t found it in between there and VMS prospectivity in the area.
and the other intercepts. We don’t see it
The focus on exploration success rep-
resents a change of gear for Troy but
Nilsson is determined it will eventually be
seen as just another chapter in the com-
pany’s long, diverse history.

“We have gone from a miner to an in-
debted miner to an explorer in a relatively
short time but hopefully we can begin
to reverse that trend in the next year or
two,” he said.

– Dominic Piper

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 29

LADU PREVIEW

Canadian dope addiction
clears path for Aussie
explorers

Paydirt is set to host the eighth annual Latin America Down Under conference at The Westin,
Perth on May 15-16. This year’s event boasts a strong line-up of miners, explorers and
developers as well as ministerial and government delegations from Argentina, Brazil, Chile, Colombia
and Guyana. Ahead of the conference, we look at the most active companies in the region and find

Australian companies are enjoying unparalleled access to projects in the region.

The marijuana haze clouding the TSX’s traction with ASX investors more comfort- BDO highlighted just how difficult Cana-
junior resources sector could provide able with domestic, Asia-Pacific and even dian mining stocks were finding life on
a rare opportunity for ASX companies African stories. the TSX.
to steal a march in their North American
rivals’ own backyard. TSX-listed compa- However, the rise of cannabis stocks BDO’s analysis showed new mining
nies have long dominated the Latin Amer- and cryptocurrency investments has company listings on the TSX and TSX-V
ican exploration space, thanks to their punctured the buoyancy in TSX junior had dropped by 20% to just 55 in 2018.
shareholders’ comfort with the region’s stocks in the last two years, handing an The two exchanges also experienced
political risk profile. In contrast, Australian opportunity to Australian juniors who are shrinking financing transactions, down
companies have struggled to gain market enjoying positive momentum on the ASX. 58% and 23% respectively in 2018.

A new report from accountancy firm In contrast, investment in cannabis-

PAGE 30 MAY 2019 AUSTRALIA’S PAYDIRT

related stocks on without any competition from North nies have to do something special to
the TSX grew from American peers. Even new Australian attract investors now,” Andrawes said.
$C43 million in the entrants are finding opportunity. Last “They can’t continue being just another
first half of 2016 year, Oz Minerals Ltd paid $444 million company, juniors need to do something
to $C770 million a for Brazilian copper producer Avanco to justify the investment of investors who
year later. Resources and the likes of Fortescue are looking for 10 times returns.”
Minerals Ltd, Newcrest Mining Ltd and
BDO natural BHP Ltd have picked up large tracts of Although the region’s traditionally
resources global exploration ground in Ecuador, while Ca- most active explorers are in hibernation,
leader Sherif An- nadians have stood idly by. Latin America remains the world’s most
drawes has been important exploration destination, espe-
surprised by the Australian companies’ ability to com- cially for copper.
depth of the TSX pete with the North Americans shows
junior mining cri- just how circumstances have turned for Andrawes said with copper demand
sis. the respective markets. expected to increase over the next dec-
ade, the region would remain popular
“We did a lot “In the past Australian companies with explorers and miners alike.
of conferences
in 2018 – Africa “would go to the TSX because the money Sherif Andrawes
Down Under, In- We had several
daba, 121, RIU discussions with “Projections from the Wood Group
– and they were TSX-listed companies suggest copper demand is set to boom
all very positive. and Australia is seen as in the next 10 years and the world’s larg-
Then I went to est miners are looking to Latin America
PDAC this year the place where IPOs to meet that demand,” he said.
and the feeling are still happening,
was so different. etc. That can only be However, the paucity of junior explora-
Very surprising. It positive for Australia. tion on the continent could lead to a fail-
hit me like a brick ing project pipeline.
wall and the mes- was there,” Andrawes said.
sage was always The trend could even result in Cana- Andrawes said that while exploration
the same; ‘all the expenditure increased in 2018, there
money is going dian companies choosing to list on the was a lack of new project development.
into cannabis’,” ASX.
Andrawes told “Interestingly, exploration expenditure
Paydirt. “That was a common theme at PDAC has been increasing despite the differ-
The mood is markedly different in Aus- and some companies were asking about ence in being able to raise funds, but this
tralia where BDO is seeing levels of in- de-listing and even some asking about increase has been in established areas,
terest in new listings not witnessed since listing in Australia,” Andrawes said. “We not on greenfields projects,” he said “It
the pre-GFC boom. had several discussions with TSX-listed appears that companies with more ad-
“There certainly is money in Australia companies and Australia is seen as the vanced projects, where the risks are
and we are seeing more IPOs coming to place where IPOs are still happening, lower, are finding it easier to attract capi-
us this year than at any time since the etc. That can only be positive for Aus- tal. However, if new greenfields projects
GFC. In 2007, we signed off on 26, it tralia.” are not being explored that reduces the
dropped to two or three the year after but number of new project developments in
this will be the biggest since then, par- Andrawes is, however, sceptical about the future.”
ticularly the second half of the year,” An- the likely longevity of the cannabis boom.
drawes said. “And it is not just for juniors – Dominic Piper
but also the mining services companies. “I think it’s a bubble for two reasons.
We are seeing exploration, iron ore con- Marijuana was legalised in Canada last
struction and a production boom so min- year and now these companies have to
ing services guys are doing well in the deliver. The flag is down and the race is
current market.” on. Secondly, all the cannabis compa-
The Canadian capital crisis could spell nies are now fully cashed up and there
good news for Australians with Latin aren’t any new ones coming up so the
American interests as TSX juniors walk opportunities for investors are restrict-
away from long held exploration pro- ed.”
jects. This is already resulting in project
acquisition opportunities for Australians A marijuana comedown may not be
active in the region. enough to revive the junior mining sec-
The likes of Hot Chili Ltd, Meteoric tor, however.
Resources Ltd and Metminco Ltd have
recently completed project transactions “Even if that is the case, mining returns
on the TSX have been so poor compa-

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 31

AMERICA
LATIN
AME1R5I-C1A6 The premier forum
May
2fo0r 1A9ustralian-Latin
15-P1e6 rMtahy ,2W019estern AAumsterrailciaan relations

Perth,Western Australia

TheP prorgerammmiee rDafyoOrnue m for Australian-LatWinedAnemsdaeyrMicaya1n5,r2e01l9ati

08.00 Arrival Tea, Coffee and Registration

Session One Chair: Liam Twigger, PCF Capital
08.45 Welcome: Bill Repard, Executive Chairman, Paydirt Media Pty Ltd (10)
08.55 Hon Bill Johnston MLA, Minister for Mines and Petroleum, Government of Western Australia (20)
09.15 Hon Raphael Trotman MP, Minister of Natural Resources, Co-operative Republic of Guyana (20)
09.35 Ken Nilsson, Executive Director, Troy Resources Ltd (15)
09.50 Tony Rovira, Managing Director, Azure Minerals Ltd (15)
10.05 Questions (5)
10.10 Morning Tea (35)

Session Two
10.45 HE Pablo Terrazas, Vice Minister of Mining, Republic of Chile (20) Chair: Melanie Leighton, HotChili Ltd

“ “ cs o111111on111212mt......032510iTn550005e hPe cneaCGNQSDLjrstyoueehesaeunedbaedvraec/dniirhinicssrinebdttnttsRooMigipliRoacTefunocicufnunosonfePrrestssenneEnrohhoxTr(eaatrs,ee5peheisn)tMrrn,edntoisficnwreuaoobcsTnreygrenheauhdd.T,gis”snaert,iHnokheyrDgt–irer,neoeiaoeDgirMeIndniatUnpdcrahoettlpnotolofcloaeearstyBuoigdayrtuSariennr/ftdstPnigdoenaDromoieDkTrnrcoasmceisokamwrimpeDnrncaaEaktefy”lao,xbovkeN(rezWc,1lrletHooihe5pnpta)ioaamghhltgtnasogeeCgnicRnsehtgu,eiseTlleaie,.oGL:ntr“teodWdonlT(oti1toghS5isS)XtDt, oEeVmcbktmeuwPEnwNlxeeittcLnueehhtr(ialtf1eludnt5tlghkehE)aeTnnefxeadihcornnVEhdedewiqiataTecuemnnSliltelXelgyyyecegSVMeocwepa(an5tiurrtneit0cinoun)eolirls,gdtenPraturEiesroenxcosrcspdftsohrei.a/ovcminDOtteimgvewieu.wr”(Mersa1o–5cilsmnir)etgFkogrehseQrre tdseMtlyai wntlgeetosrses

Session TI hhraede the opportunity to hold important meetings with representatives of diverse
13.00 mMisn.iCnagrocloinma pSáannciheesz,frSoecmretaAryuofsMtrinainlgia, AargnendtinLeaRteipnubAlicm(2e0r)ica... It was extremely beneficial

“ 13t.2o0 l isCtehnristoGatlhee, Msaunacgcineg sDsirefcutolr,eLaxtpineRreiseonurcceessLtodf(1r5e) presentatives of mining companies in

13.35 David Masseovne, MraalnaLgiangtiDnireActmor,eDrairckaHnorcseoRuensoturriceess .L”td–: “VEamluebCaresastoyrso–fLiEthciuuma&dGoorld Argentina” (15)

Ch13.50 Todd Williams, Managing Director, E2 Metals Ltd (15)
14.05 Questions (5)
14.10 Panel Discussion: “Meet the Ambassadors – Argentina and Brazil”
Dominic Piper, Convenor; HE Brett Hackett,Australian Ambassador to Argentina with accreditation to
Paraguay and Uruguay; HE Hugo Gobbi,Argentinian Ambassador to Australia; HE Tim Kane,Australian
Ambassador to Brazil; HE Sergio Eduardo Moreira Lima, Brazilian Ambassador to Australia (45)
14.55 Afternoon Tea (30)

Session Four Chair: Dominic Piper, Paydirt Media
15.25 Nick Mather, Executive Director, SolGold plc: “An Emerging Copper Gold Major” (15)
15.40 Speaker TBA (15)
15.55 Peter Clarke, GM Industry Engagement, METS Ignited (15)
16.10 Questions (5)
16.15 Panel Discussion: “Pathways to Innovation:The role of METS in Latin American Mining” (55)

www.latinamericadownunder.com 17.10 Cocktail Function in ExhibitionArea

PONSORSFHoIrPalAl eNnqDuirEieXs cHonIBtaIcTt MIOelNFoOgaPrtPy OonR+T61U(N0)I8T9I3E2S1 0N35O5W AVAILA

ContacotrM+e61l F(0o)ga4r2t0y4o9n5 1+6631 o(r0)em8 a9il3m21el0it3a5@5poayrd+ir6t1.co(0m).a4u20 495 163

inamewww.latina

ons Programme Day Two
mericadSoPwONnSuCOnoDRndtOSTaeHchNturIMrP.’scTedAloaFNMymoMDgIaSoarEyrStyXe16mOoH,na2IUiB+l01m6TI91Te!l(Ii0Ota)

08.15 Arrival Tea, Coffee and Registration

Session Five
09.00 Dr Alexandre Vidigalde Oliveira, Secretary of Geology and Mineral Transformation, Federative Republic
of Brazil (20)

09.20 Andrew Tunks, Managing Director, Meteoric Resources Ltd (15)
09.35 Keynote: Joe Lowry, President, Global Lithium LLC (20)
09.55 Speaker TBA (15)
10.10 Questions (5)
10.15 Panel Discussion: “Brine Time: Latin America’s role in the new world” (45)
11.00 Morning Tea (30)

Session Six Chair: Cathy Raper, Department of Foreign Affairs and Trade
11.30 Mr David Gonzalez, Vice President Promotion and Development, National Mining Agency of Colombia (20)
11.50 Graeme Drew, Managing Director, AusQuest Ltd (15)

12.05 Zenon Wozniak, Director of Projects, First Quantum Minerals Ltd (15)

12.20 Josh Collard, Business Development Manager - Listings, Australian Stock Exchange (15)
12.35 Questions (5)

12.40 Panel Discussion: “Meet the Latin Ambassadors” (45)

13.25 Lunch (55)

Session Seven Chair: Jason Stirbinskis, Andes Resources Ltd

14.20 Panel Discussion: “Disruptive Technology and Mining Education”

Sam Spearing,WA School of Mines (convenor); Louisa O’Connor, University of Sydney;

David Brereton, Sustainable Minerals Institute – University of Queensland; Christian Price,

Resource Dynamics (50)

15.10 Kieren Moffat, Managing Director, Reflexivity (15)

15.25 Stephen Hall, Director, Australia-Latin America Business Council (ALABC) (15)

15.40 Questions (5)

15.45 Afternoon Tea sponsored by Australian Stock Exchange (30)

Session Eight Chair: Dominic Piper, Paydirt Media
16.15 Closing Panel Discussion (45)
17.00 Closing Remarks: Bill Repard, Executive Chairman, Paydirt Media Pty Ltd (10)
17.10 Closing Drinks

m

ABLE

LADU PREVIEW

Lithium, policy change
improve Catamarca standing

Argentina’s Catamarca province has leapt to mining investor
attention in recent years thanks to changes in government
policy and the burst of lithium exploration activity driven by the

EV evolution.

Catamarca was one of the biggest improvers in the Fraser Institute’s Annual Survey of Mining Companies 2018 with respondents pointing
to improved security, infrastructure and the socioeconomic agreements and community development conditions. The province improved
its investment attractiveness ranking from 96th in 2015 to 67th in 2017 and 37th in 2018. Its ranking in the Policy Perception Index showed

similar improvement with its rating rising for the fourth successive year to 38th, having been 85th in the rankings just three years ago.

Catamarca is now ranked fifth among Latin American jurisdictions for investment attractiveness, behind only resources heavyweights Chile,

Peru and Mexico and emerging gold producer Suriname. Ahead of Rodolfo Micone Minister of Mines’ appearance at Latin America Down

Under, Catamarca secretary of mines María Inés spoke with Paydirt about the province’s remarkable progress.

Q&A prospecting and searching for new A: We are focusing on an
targets in different commodities, and has infrastructure development
Q: Catamarca experienced a developed a pretty wide portfolio with a programme, with the objective of
big jump in the Fraser Institute geological database. improving energy, gas and transport
survey. Was this a result of deliberate for the region. We are working
efforts to improve the investment Q: What have been the results of alongside the Federal Government
these changes? Has investment and other provinces to take action and
Aproposition? improve our competitiveness in South
: We think this is a result of Aincreased? America, regarding taxation regimes,
Catamarca´s mining policy in the : There has been a substantial simplification, community relations, etc.
growth in exploration and
last 7-8 years. We have worked : What challenges are still faced by
specifically in the areas that needed development expenditure [from 0 to
improvement, such us knowing our $US200 million] in the last three years, Q the mining sector in Catamarca?
geological potential, establishing a especially in the lithium brine sector, : Although Catamarca has a lot of
comprehensive legal framework, working with 13 areas under exploration, two
with communities and transparency, and in feasibility and one in expansion. A experience and tradition in mining,
developing infrastructure. Catamarca Projects like Sal de Vida [owned by
is a mining province, and it has been ASX-listed Galaxy Resources Ltd] and most of its territory is unexplored. We
producing minerals and metals for over 3Q [owned by NLC] are increasing aim to encourage greenfields exploration
100 years, and this great experience their investment and in the process of and add value to all these assets. There
contributes to the strengthening of our funding their construction. Together with is great potential, among very well-
institutions, professionals, and human the expansion of the already producing known world-class mineral deposits, that
resources. Fenix lithium mine, that would take us is waiting to be discovered.
to more than $US1.2 billion. Regarding
Q: How has government policy other commodities, we have the Agua : Which commodities are proving
towards mining in Catamarca Rica copper-moly porphyry project. The
owner, Yamana Gold Inc, has signed Q popular among investors?
Achanged? an MoU with Glencore and Goldcorp : In the last couple of years, interest
: Mining became a state policy, and Inc – operators of the Alumbrera project
the Government put a lot – to develop an integrated project using A has been centred on lithium but
existing infrastructure of Alumbrera.
of resources into the development of mainly, because of our history and
mining, encouraging exploration and : Where are investors coming geology, and our very well-known world-
investment, and helping companies class deposits, there is interest in gold,
develop their projects within our Q from? copper, silver, etc.
province. One of the key components : Investors are mainly coming from
of this policy is the interaction : What would your message be to
between companies, government and A Australia, Canada and China [as
communities, defining their roles and Q prospective Australian investors?
establishing synergies between these well as Galaxy, ASX-listed Galan Lithium : Do not hesitate to invest in
parts. Catamarca´s tenements and Ltd is active in the province].
environmental permitting processes A Catamarca. Check out the
are standardised, and relatively fast. Q: What other actions does the
Government plan for the mining companies that are working in our
sector? province, and please contact us if you
want to hear more about our projects.

Also, the Government is constantly

PAGE 34 MAY 2019 AUSTRALIA’S PAYDIRT

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Ensuring Intelligent Blasting
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AEL Executive: Asia Pacific

AEL Intelligent Blasting
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E-mail: [email protected]
www.aelworld.com

LADU PREVIEW

Salares Norte closer to green light
Construction on Gold Fields Ltd’s Salares
Norte gold-silver project could begin the maiden reserve of 21mt @ 5.3 g/t gold Nick Holland
next year after its EIA review was launched and 57 g/t silver for 3.47 moz gold and 39
in April. moz silver – concluded a $US834 million at all commercial aspects as part of any
capital investment could deliver an 11-year, deal. Given we see Salares Norte as only
Gold Fields announced a maiden reserve 2 mtpa project with average production of the start of something much bigger it would
and updated feasibility study for Salares 450,000 ozpa gold equivalent at AISC of be preferable for us to be operators.”
Norte in late February, paving the way for $US465/oz. IRR was 25% and payback
the final EIA which is expected to take 12- could be achieved in 2.2 years (based on a Most of the epithermal deposits along the
24 months. Speaking as part of a webcast $US1,300/oz gold price). Maricunga belt have added years of reserves
reviewing the project, Gold Fields chief ex- falling project execution and Holland said he
ecutive Nick Holland said the company was Attention will now turn to financing with was excited by the prospects of expanding
confident of receiving final EIA approval by Holland saying the company expected to the operation.
mid-2020 for a project he believes is the have its preferred funding model in place
perfect fit for the company. by the time the project was presented for “Salares Norte is only a small part of the
board approval at the end of the EIS pro- total land package we have here,” he said.
“This is the kind of project that ticks all cess. “While we are doing all this work to get the
the boxes in terms of Gold Fields’ strategy,” project ready we are doing district exploration
Holland said. “It is a long-life operation, it’s Holland said the company was confident to get a number of projects ready and there
low-cost, it’s in a jurisdiction we like and Salares Norte could be funded via conven- is every reason to believe we will add to this
we’ve been in for 10-years plus. It’s in a belt tional project financing means “but we have project.
that is very prospective and contains multi- to look on the impact of the greater Gold
million ounce deposits.” Fields and that’s why we will look at other Salares Norte itself has underground po-
opportunities”. tential but Holland said the preference would
Salares Norte was discovered in 2011 be for satellite deposits to be brought online
and Gold Fields has spent the last eight “The good news is that it is very robust first.
years meticulously building its understand- and the project looks pretty good at prices
ing of the high sulphidation epithermal de- below $US1,200/oz and because of our “Given we have a number of good pros-
posit. accelerated mining strategy we are able to pects within a 20km radius of the mill, it would
preferentially feed the high-grade ore early be more sensible to look for shallow oxide
The February feasibility study – based on in the mining schedule so from a financing resources [than take Salares Norte under-
ground],” he said.
perspective this
shouldn’t be a hard Max Combes, project director/country
project to finance,” manager American region, said that with 35%
Holland said. of detailed engineering completed, the project
had essentially been de-risked from a techni-
“Even at con- cal standpoint.
servative prices
we should be able “We have been studying it for more than
to come up with a three years,” Combes said. “So, we are going
funding strategy to be in the unique position that when we go
that works for us. to construction we will have most of the engi-
We will evaluate a neering done.”
number of strate-
gies. We may bring At 4,500m Salares Norte exposes Gold
in a partner but Fields to altitude challenges but Combes said
that doesn’t mean the company had worked hard to define safe-
a fully-fledged JV; ty and mitigate risks.
it could be a silent
partner or a techni- “We have had exploration activity for a long
cal partner. We will time which has allowed us to experiment with
also look at some the conditions and altitude of site so we have
innovative funding mature risk management in place.”
options.
– Dominic Piper
“What sort of
deal we want can
only be considered
once we test the
market, probably
over the next six
months,” he said.
“Our preference
would be to operate
but that said if we
get the right tech-
nical partner we
would have to look

PAGE 36 MAY 2019 AUSTRALIA’S PAYDIRT

Hot streak in Chile

Hot Chili Ltd’s rapid resurgence contin- Hot Chili traded as high as 4c/share in sulphide mineralisation from surface,
ues, with the Chilean copper hopeful April (3.5c/share at the time of print). Hot Chili reported from Cortadera.
engaging Australian advisory firm Stern-
ship Advisors to assist with its funding The company’s strategy resonates Given Cortadera has been privately
process for the acquisition of Cortadera. with the investment community, bullish held, information from 23,000m of dia-
forecasts for the short-term copper price mond drilling completed on the project
Sternship comes on board as inter- are also aiding players in the space. have never been revealed.
national and domestic interest in Hot
Chili intensifies following execution of a ANZ reports that demand from China Down-hole intersections from Cor-
binding MoU with private Chilean mining appears to be improving, while the bank tadera include 90m @ 1% copper and
group SCM Carola to secure 100% of the “places a great importance on any US- 0.4 g/t gold from 4m, 52m @ 0.9% and
Cortadera copper-gold porphyry project. China trade deal if copper prices are to 0.1 g/t from 6m, 846m @ 0.4% and 0.1
break out of their tight trading range over g/t from 62m, including 348m @ 0.6%
Cortadera is complementary to Hot the past couple of months”. and 0.2 g/t, 268m @ 0.4% and 0.2 g/t
Chili’s larger Productora project – 66,000 from 120m (including 42m @ 0.8% and
tpa copper and 25,000 ozpa gold (over ANZ’s short-term price target for cop- 0.4 g/t), 406m @ 0.4% and 0.2 g/t from
an initial eight years) – and the El Fuego per is $US7,000/t, still some way from 276m (including 146m @ 0.6% and 0.2
suite of assets (San Antonio, Lulu and the $6,556/t in mid-April. g/t) and 198m @ 0.6% and 0.2 g/t from
Valentina) in Chile’s Region III. 652m.
Nevertheless, it is a good time to be
The high-grade nature of Cortadera drilling against such a backdrop, particu- Hot Chili hopes to have results from
and El Fuego provide the edge Hot Chili larly in the copper capital of the world as the current drilling programme in hand by
has been looking for to accompany Pro- Hot Chili is. the time of Latin America Down Under in
ductora and it appears the market is on mid-May.
board with the company’s portfolio. A programme of 17 holes for 5,000m
had started at the time of print, with the – Mark Andrews
Starting the year trading at 1c/share, first five holes recording wide visual in-
tersections of copper oxide and copper

Developing the high-grade Oposura
zinc-lead-silver mine in Mexico

@AzureMinerals ASX: AZS

AN EMERGING COPPER GOLD MAJOR

solgold.com.au LSE & TSX : SOLG

Azure Minerals Limited
www.azureminerals.com.au

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 37

LADU PREVIEW

AusQuest battles hard
for South32

Phase two drilling at Cerro de Fierro is likely to start in the second half of this
year under the AusQuest Ltd/South32 Ltd strategic alliance (SAA) in Peru.

Since the SAA was established in 2017, potential at Cerro de Fierro, with one hole initial indications are great, we have high-
South32 has committed in excess of hitting a combined 150m of close to eco- er copper grades at surface several kilo-
$10 million to projects in Peru and Aus- nomic grade material of 0.4% copper and metres away from the centre and we have
tralia. 0.2-0.3 g/t gold. been looking at those and finding similar
characteristics to what we have recog-
At the time of print, drilling was due to “That certainly takes you over the 0.5% nised in the core.”
start at the Yallum Hill copper prospect in copper mark,” Drew said.
Western Australia with approvals for drill- Attacking a project like Cerro de Fierro
ing IOCG targets at Balladonia (Fraser “I am not sure the market necessarily would be nigh on impossible for a junior to
Range) and Hamilton (Queensland) ex- understood what we have found, but we do single-handedly in the current market.
pected for a campaign to start before found an IOCG system and intersected
mid-year. close on, if not on, at least three of the Therefore, AusQuest is working harder
seven holes. We’re close to getting the than ever to present South32 with the
AusQuest hopes that drilling in south- grades you typically get with these de- kind of large-scale opportunities the latter
ern Peru will follow soon after. posits, but what we need to find is size.” is interested in.

“That will be complicated by the permit- Ahead of phase two drilling at Cerro de Cerro de Fierro and 50km away, the
ting process in Peru, it hasn’t changed a Fierro, AusQuest was completing further Parcoy IOCG project, are projects identi-
lot but there are some aspects that have mapping and sampling surface work to fied for continued funding under the SAA.
been improved in terms of being able to help design the next programme in a re-
get approval for drill holes under various gion bereft of drilling. Meanwhile, South32 has pulled away
permits,” AusQuest managing director from drilling commitments at the Chololo
Graeme Drew told Paydirt. “This is the first drilling ever done in copper porphyry in favour of focusing on
this region. In fact, no copper was known the aforementioned projects.
“You still have to go through the whole around the prospect before we got there,
process – environmental, community, wa- so it is a virgin discovery. We are quite Drew said South32 were very good
ter etc – and we will find out in the coming encouraged by the mantos-style minerali- partners and the funding leverage Aus-
months whether that has been stream- sation several kilometres away from the Quest has courtesy of the SAA allowed
lined or not.” centre of the system and we are starting the latter to be active while the market re-
to think that the system is quite large,” mains soft for juniors.
Drew is eager to get busy again at Cer- Drew said.
ro de Fierro where there are strong sig- He said the market appeared to be
nals of economic copper potential. “We’ve got the inside intersection, but risk adverse, given trade discussions be-
we don’t know how far out that extends tween China and the US, uncertainty on
Results from a previous drilling cam- beyond the outside of the anomaly. The Brexit plus a looming federal election on
paign of seven holes has indicated IOCG home soil.

PAGE 38 MAY 2019 AUSTRALIA’S PAYDIRT

“If we had to come back to market for mine which ones may fit a smaller compa- vide $US9 million exploration funding
funding after these seven holes it would ny. We have had funding on our projects over four years for 60% of Inca’s Riqueza
have been rather hard explaining what we from South32, not all, some have been project in Peru.
have. But, having a company like South32 tested and haven’t come up to scratch
which understands what we’re trying to do so we have moved on. We are looking to Inca will be the operator of the project,
is appreciated and we’re working hard to identify more to put into the bag, so we with South32 able to secure ownership at
make sure it [SAA] continues,” Drew said. can continue testing as many targets as any time after full payment of phase one
we can.” funding if its elects to. South32 can earn
“One hole could change everything; an additional 10% by providing additional
copper is still a desirable commodity and In addition to AusQuest courting the at- funding to complete a PFS on Riqueza.
is what has attracted South32. We have tention of South32, fellow ASX junior Inca
to continue to work on projects with the Minerals Ltd has done the same. Inca and South32 were expected to un-
size and scale they want and also deter- dertake a site visit to Riqueza this month.
In early April, South32 agreed to pro-
– Mark Andrews

The AusQuest/South32 SAA completed about 9,000m of drilling
in Peru at a couple of prospects last year. Cerro de Fierro was
the one which provided most encouragement

LITHIUM AND GOLD IN ARGENTINA Critical Mass
Arrives
darkhorseresources.com.au ASX: DHR

Combining Cortadera & Productora

!  Underpins new large-scale, long life copper
development – GLOBALLY SIGNFICANT

!  Unlocks US$90M invested in Productora to date
!  Transforms Hot Chili into a premier ASX copper

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www.hotchili.net.au

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 39

LADU PREVIEW

Options open for Azure
at Oposura

Tony Rovira

Azure will release a PFS on Oposura, Mexico, in Q3

Despite a “fairly disappointing, ambiva- “We know already we can produce a As part of the PFS, an update of the re-
lent, if not negative” past 12 months concentrate product which has grades well source estimate at the East Zone is sched-
in the mining sector, Azure Minerals Ltd is above the requirements of offtakers,” Ro- uled following infill drilling conducted in De-
feeling some love for its Oposura zinc-lead- vira told Paydirt last year. cember.
silver project in Mexico’s state of Sonora.
“It is already highly sought after because The current indicated resource at Oposu-
The glut of financing solutions on offer for it is high-grade concentrate which is super ra is 2.1mt @ 8.2% zinc-plus-lead and 17.2
Oposura prompted Azure earlier this year clean. A number of traders are currently g/t silver and inferred resource is 800,000t
to engage the services of specialist advi- sourcing lower quality concentrate from @ 6.85% zinc-plus-lead and 16.5 g/t silver.
sor – Noah’s Rule – to assist with assessing across Central and South America and
interim funding proposals following a posi- blending it at their facilities here in Mexico. Based in the scoping study and resource,
tive scoping study on the project in October That will make our high-grade, low impuri- a mining rate of 500,000 tpa is estimated at
2018. ties concentrate very attractive.” Oposura, which has an NPV of $112 million,
IRR 76%, life-of-mine revenue $506 million
“Financing discussions are progressing There are few projects in the ilk of Opo- and life-of-mine EBITDA $237 million.
very well and we have had a lot of expres- sura at the moment, which is attracting
sions of interest from banks and financing Australian, Canadian, US and Mexican at- Payback on the capex of $69.9 million is
institutions for interim and also more ful- tention and the demand for base metals estimated to take 16 months with average
some project financing, while there is also means Azure is not competing for capital. life-of-mine C1 costs of 56c/lb.
interest from metals traders for arrange-
ments around off-take for project financing,” “There is an appetite for projects, but While Azure is focused on its flagship
Azure managing director Tony Rovira told it depends on the size and quality of the Oposura project, Teck Resources Ltd re-
Paydirt. project. Our capex is also modest plus the mains engaged in earning back an initial
simple geology, mining and processing also 51% stake in the Alacran project.
There are multiple reasons why Azure makes Oposura attractive,” Rovira said.
has a variety of project financing options to Teck drilled 10,500m on potential copper
consider, nonetheless the modest capex of Furthermore, the blazing marijuana in- porphyry-style mineralisation at the Cerro
$US50 million required for a project prom- dustry in North America has somewhat dis- Alacran prospect, while epithermal-style
ising to deliver 19,000 tpa zinc, 10,000 tpa tracted investors in that region and “sucked” targets at Cerro San Simon and Cerro Col-
lead and 145,000 ozpa silver for over five a lot of capital from the junior mining sector orado was also investigated.
years. in Canada.
Logging and sampling of the drill core
The high-grade nature of base metals Australian companies are not faced with was almost complete, Azure reported in
concentrate derived from Oposura at a the same capital drain, giving companies its half-yearly, with Teck to release assays
throughput rate of 295,000 tpa makes the such as Azure the opportunity to advance upon completion of the QA/QC process of
project a standout, particularly as traders projects to the point of development. the geochemical data.
are settling for inferior material at the mo-
ment. Rovira said the company’s aim was near- – Mark Andrews
term production from Oposura, with a PFS
PAGE 40 MAY 2019 AUSTRALIA’S PAYDIRT set for delivery in Q3 followed by a DFS in
Q4/early Q1 2020.

Q&A HE David Engel

Thanks to its vast reserves of copper, gold and silver Mexico can boast one of the most active
mining sectors in the Americas, however, Australian companies have rarely had an impact in
the country. Azure Minerals Ltd and Consolidated Zinc Ltd currently fly the Australian mining flag in
Mexico but ahead of Latin America Down Under, Paydirt asked Australia’s Ambassador to Mexico

City, HE David Engel, whether other explorers and miners should join them.

Q: Mexico remains one of Latin investment with environmental and worsening in some traditional mining
America’s primary mining states such as Chihuahua. Generally
jurisdictions. How does it retain Asocial demands? speaking, security is manageable, but
this popularity? Are government : The Mexican Government companies will need to do their own
policies broadly supportive of foreign supports mining that is socially risk assessments and at the very least
factor additional security costs into their
Ainvestment in the sector? responsible. It has committed to business plans.
: Mexico is highly providing regulatory certainty to
prospective for gold, silver, investors but it has laid out certain Q: The North American juniors
‘non-negotiable’ requirements that dominate the Mexican
copper, fluorspar, graphite, strontium investors must meet. First, companies exploration sector. Do you have any
and other minerals. It is relatively must ensure that safety is treated as sense whether Australian companies
underdeveloped as a mining jurisdiction. an utmost priority. The Government can break into the sector? What
It has traditionally been dominated has said that it regards mine-related is your advice for those looking at
by two Mexican firms (Grupo Mexico deaths as unacceptable. Secondly, this
and Peñoles) and Canadian miners, government places a high value on AMexican investments?
although the sector is rapidly community consultation. It is currently : Australian companies are
internationalising. Australian producers working to strengthen the process of well-positioned to break into the
and explorers are already present in engagement between the Government,
Mexico, as are major Australian METS companies and local communities. Mexican mining market. They bring a
companies. Government policies Thirdly, it wants companies that are high reputation in terms of corporate
are generally supportive of foreign committed to work with it, not against governance, as well as world-leading
investment in mining. At the same it. That is, the administration is keen technology and expertise. Already, two
time, mining remains a politically to attract companies that operate with Australian exploration companies have
sensitive issue in many parts of the highest standards of integrity – moved to become operators in Mexico
Mexico. Accordingly, the new Mexican for example, in relation to taxes and [Azure Minerals and Consolidated Zinc].
administration is keen to strengthen and anti-corruption. Australian companies Some well-known Australian names
formalise the process of consultation perform highly on all of these criteria and like Newcrest Mining Ltd and South32
with local communities to ensure that therefore should be well-regarded by the Ltd have also invested in exploration
local populations have buy-in to mining Mexican Government. projects in the country. Nonetheless,
projects that affect them. Another factor there are challenges to operating in
to consider is that Mexico, like Australia, Q: How much of an issue is Mexico and companies will need to
is a federal system. Companies will security for foreign miners/ invest in market research to determine
need to be aware of legal arrangements explorers operating in Mexico? Is it whether Mexico suits their corporate
at both the federal and state level, and profile. We advise that companies
policies can vary from state to state. Amanageable? looking to enter the market visit regularly
: Security is a major challenge for and establish a presence in country as
Q: President Andrés Manuel Australian mining companies in soon as possible. Firms may be well-
López Obrador appears to served by engaging a local partner early
have come out in support of mining Mexico, particularly those operating on as they acclimatise to the Mexican
development in recent times. in remote areas. Security concerns business environment.
How is his Government balancing have rendered some parts of Mexico
effectively off-limits for mining operations
and circumstances appear to be

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 41

LADU PREVIEW

Free to make an impact
at Yerbas Buenas

Freehill Mining Ltd has completed the final piece of the puzzle in its
“back to front” approach to transitioning into full-scale operations
at the Yerbas Buenas magnetite project in Chile.

Freehill has generated $US2.33 million
from trial mining and processing at
Yerbas Buenas since early 2017

After listing on the ASX in 2017, Free- From a logistical point of view it doesn’t which identified a hard rock magnetite
hill quickly undertook trial mining and get much better than this.” structure under what turned out to be a
processing at Yerbas Buenas, but had thin veneer of iron sands.
not declared a resource estimate for the Hinner’s comments are hard to argue
project until last month, even though all with given Yerbas Buenas is only 50km Freehill also sought the assay results
other building blocks for a 1 mtpa opera- north of the industrialised cities of La of two historic holes drilled by CAP on
tion were already in place. Serena and Coquimbo and within 2km of the property which indicated evidence
the sealed four-lane Pan American High- of the magnetic feature, prompting the
This includes the only external sales way. Up to 10 flights from Santiago – all company to source all the necessary
agreement with Compania Minera Del less than one hour travel time – service equipment to set up a small trial mining
Pacifico SA (CMP) – a division of CAP the region on a daily basis. operation at Yerbas Buenas.
SA, Chile’s largest iron ore producer – as
well as access to a capsize port for po- Latin America’s oldest iron ore mine, El Hinner said CMP was more than hap-
tential future independent exports to key Tofo, is also just 15km to the north along py to accept the new material.
pellet feed markets in China, Korea and the same fault.
Japan. “They loved the material because it
Freehill’s main logistical advantage is was quite low in calcium, sulphur and
Now armed with a maiden resource, being only 30km north of CMP’s Romeral phosphorus, and quite high grade,” he
Freehill will look to rapidly finalise scop- pellet feed plant. For the past two years, said.
ing and feasibility studies and secure the the company has generated revenue of
necessary regulatory approvals to start about $US2.33 million from selling prod- “It was easily turned into a pellet feed,
producing an initial 40,000 tpm of mag- uct from trial mining and processing to its they produced a 68-69% iron pellet feed
netite product from early 2021. larger neighbour’s facility. which they railed down to their own port
in the nearby city. So we quickly found
“Up until now absolutely every ele- Prior to listing in January 2017, Free- ourselves in a very unique position in
ment you need for a project was there,” hill – as a private entity – mined and pro- that we were and still are the only exter-
Freehill chief executive Peter Hinner told cessed iron sands material from Yerbas nal supplier of feedstocks into the CAP
Paydirt. Buenas and sold product grading 60- system anywhere in Chile.”
64% Fe to the Romeral plant. However,
“I think it’s got a very good future. It’s as the company was preparing its IPO, Since proving that its project was a
probably one of the best projects I’ve those grades began to decline. favoured feedstock for CMP’s Romeral
been associated with for a very, very long plant, Freehill has looked to build on the
time because this one has got all of the No sooner had Freehill gone public, invaluable technical knowledge gained
infrastructure elements already in place. the company tapped into its IPO funds from trial mining and expand its operat-
and launched a geophysics programme ing capacity.

PAGE 42 MAY 2019 AUSTRALIA’S PAYDIRT

However, in order to take that next pure magnetite and it’s overlain by only sort of did it back to front, but it’s a classic
step, Freehill found it needed to prepare 12-14m of overburden, which is actually Chilean approach to mining, to be quite
a resource estimate for Yerbas Buenas the sand that I think led everyone astray honest, and that is ‘see good rock, kick,
despite having an established sales 2-3 years ago,” he said. “That sand is start mining’. And the Chileans are not
pathway for the magnetite products it also mineralised and there’s enough risk-averse when it comes to these sorts
was already producing. magnetite in that to cover the cost of pre- of things, particularly magnetite and cop-
stripping.” per mining.”
Last month’s maiden resource an-
nouncement followed the end of a Following the drilling, Freehill also – Michael Washbourne
4,300m drilling programme. While the completed some IP surveys over the
initial estimate contains a low tonnage, northern concessions where artisanal Drilling for 4,300m was the catalyst for a
Hinner insists it is just a starting point for mining has been carried out. Two large maiden resource estimate at Yerbas Buenas
Freehill to expand operations. copper sulphide structures were subse-
quently identified and the company plans
“We actually chose to do the resource to drill these later this year.
drilling over our trial mining pit, which we
know is one of the smaller ground mag- With the components of Yerbas Bue-
netics targets in our project area,” Hinner nas now in the typical sequence of de-
said. velopment observed by most projects,
Freehill can begin its quest to obtain
“During our drilling programme we also its declaration of environmental impact
did a little bit of exploratory drilling to the (DIA) for production of 40,000 tpm, to
north and the south of the trial mining eventually be upgraded to 85,000 tpm.
pit, just to ground through some of the
other structures, and our resource geolo- “That’s the near-term objective and I
gists are certainly comfortable with what think we’ll get there because we already
they’re seeing.” have lots of the important elements in
place and that is local offtake partners,
Some of the better intercepts from the pricing, sales agreements, technical
maiden drilling were 12m @ 37.1% iron knowledge, and a lot of local knowledge,”
from 32m, 28m @ 37.4% iron from 34m, Hinner said.
38m @ 41.7% iron from 14m and 16m @
61% iron from 20m. “I think it will all be achievable, but we
just needed to get that resource in place
Hinner said the most promising drilling first and now try to define 10-15 years
results had come from the southern end worth of resource, minimum.
of the project area.
“It’s an intriguing project because we
“In the top 50m we had 18m of almost

AUSQUEST HITS CU (AU)

IN SOUTHERN PERU

COPPER & GOLD

Two Cu-Au targets drilled in 2018
Large IOCG system confirmed at

Cerro de Fierro
Porphyry Cu inferred at Chololo
Further drilling at Cerro de Fierro

under South32 SAA

AusQuest Limited www.ausquest.com.au
E. [email protected] P. 08 9364 3866

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 43

LADU PREVIEW

Price alone not enough to unlock
copper reserves

Social and environmental solutions will veloped a matrix of 12 risk categories that of orebody; directly price sensitive, indirectly
be as vital as economic resolutions if consider environmental, social, governance price sensitive and relatively price insensi-

the world’s largest undeveloped copper ore- and mineralogical factors affecting the viabil- tive.

bodies are to be brought into production, ity and accessibility of complex orebodies. While it was found those orebodies with

research from the University of Queensland Among the factors were grade, deleteri- risks directly price sensitive would likely be

has shown. ous elements, seismic risks associated with developed as technology improved and

Copper demand is expected to rise 300% tailings, ore variability, social challenges prices increased, projects in the other two

by 2050, fuelling a global pursuit of new such as poverty, access to water and land categories could remain dormant for dec-

project developments, but the research pressures, environmental challenges and ades to come, putting increasing pressure

conducted by UQ’s Sustainable Minerals In- infrastructure challenges. on supply/demand assumptions.

stitute shows more than 75% of the world’s “By taking the standard technical data- Valenta said the indirectly price sensitive

largest copper orebodies face environmen- base and adding other layers we were able orebodies could be developed, in the right

tal, social or governance issues which ren- to come up with a more holistic view, allow- circumstances.

der them inappropriate for exploitation, re- ing us to identify trends in the data,” Valenta “If you’ve got a big copper deposit in the

gardless of economics. said. Andes but no access to water, if the price

The findings are contrary to perceived in- Researchers identified three categories goes high enough you could afford to desal-

dustry wisdom which suggests all inate and pump it to site. Therefore,

deposits will be developed as long even though it is not a grade issue

as they prove economic. The man 12 risks to developing complex the company can spend money to
who led the study, Professor Rick copper orebodies develop the project,” Valenta said.
Valenta, admitted his own assump-
“But, lots of deposits are sitting in

tions in that regard had been chal- The University of Queensland’s Sustainable Minerals areas where it wouldn’t matter what
lenged during the research. Institute (SMI) has identified 12 major risks attached to the price was. They have stalled
308 of the world’s largest undeveloped copper orebodies. due to environmental or legal chal-
“As someone who was involved The SMI split the risks into three categories – price lenges – such as Pebble in Alaska
in the mining and exploration indus- sensitive, indirectly price sensitive and price insensitive. or Reko Diq in Pakistan. I wouldn’t
try for more than 25 years, I thought say these projects are completely
maybe 20% of the orebodies would

have social and environmental Price sensitive Price insensitive price-insensitive but much more so
challenges and we could then get Grade Biodiversity than the others.
on with defining the technological Indirectly price sensitive Community
breakthroughs needed to make the “The industry has been very suc-
cessful in technological advances

others viable and find new depos- Ore variability Land use and increasing production volume

its,” Professor Valenta told Paydirt. Infrastructure Poverty while lowering costs, but this is not
“What we actually found was a Water Legal going to make those mines acces-
Arsenic Permitting sible.”
lot of the undeveloped deposits are
not waiting for technology or price Valenta said the Sustainable

breakthroughs but for the solving of Tailings Minerals Institute’s work had shown

non-technical problems. When you miners were increasingly aware

look at the operating costs associ- of the challenges price insensitive

ated with copper you see there has risks presented to new develop-

been an enormous drop over 100 ments and said the research would

years. There has been a continu- be used to develop new approach-

ous set of technological develop- es to such projects.

ments to allow us to develop lower “There is increased recognition

grade deposits. from miners about these challeng-

“You could assume that further es,” he said. “In EY’s Top 10 Min-

innovation would be needed to off- ing Risks survey, licence to operate

set any decline in price and grade went from seventh in 2018 to first in

but the research showed 75% of the 2019 so companies are well aware

308 copper orebodies we looked of this challenge.”

had price-insensitive risks attached UQ’s Sustainable Minerals Insti-

to them and that low copper grades tute is also surveying mining com-

was the sole challenge in only 3-4% panies to measure their opinions

of the undeveloped orebodies we on their own performance in these

analysed.” areas and, anecdotally, Valenta is

Professor Valenta’s team has de- seeing a change in attitude.

PAGE 44 MAY 2019 AUSTRALIA’S PAYDIRT

have to sacrifice a bit of recovery but it will a statement.

likely mean the difference between getting The PRI brings together ethical inves-

the project approved or rejected. tors, including the Church of England, over-

“At PDAC, there was a discussion panel seeing around $80 trillion worth of invest-

about the West Tethyan belt and compa- ments.

nies brought up the possibility of building Aidan Davy, chief operating officer of

only dry tailings. That is much more expen- ICMM, which represents 27 miners includ-

sive but it’s the way things are going. ing Vale, said it and its members recog-

“Companies increasingly have to look nised the value of enhanced disclosure.

at all the things related to the footprint of He added that it was important “to get

operations that make communities oppose this information from all of the industry” not

mining developments in their backyards.” just the ICMM members.

Valenta said he expected future project Valenta said investors were applying

“I think companies themselves are very optimisations would look at more than sim- greater scrutiny to mining companies and
much realising at the executive level and
the frontline that it is going to be of great ply what was most financially beneficial. their chains of production. Industry has al-
commercial benefit to do better job socially
and environmentally so they are working “It will be about looking at development ready reacted but Valenta said those com-
towards that,” he said.
scenarios which can provide maximum fi- panies who took the initiative would likely
“It is akin to what happened around safe-
ty in mining a few decades ago. I was in the nancial benefit and minimise the footprint see clear benefits.
industry then and when you, as line man-
ager, become more responsible for safety downside. So, it will look at four or five sce- “It is not just something which has to be
in your crew; that level of responsibility
changes the mindset. It is not quite there narios and choose, not the one which is done as a regulatory requirement,” he said.
in the social/environmental sense yet but
the functions are becoming more central to most profitable, but the one which will allow “For companies doing things well there
company culture.”
the mine to be built.” will be clear commercial benefits in being
Valenta said he hoped the Sustainable
Minerals Institute’s research would allow Investors are also placing pressure on an industry leader. I’ve spoken with com-
companies to make more informed deci-
sions around risks associated with projects. mining companies to lift their social and en- panies who have a central strategic idea to

“We undertook this research in order to vironmental performance. be seen as leading the way as clean, green
develop a roadmap to address these pro-
jects’ challenges,” he said. In April, ethical investors including the battery technology companies and the best

Valenta suggested that while social, en- Church of England Pensions Board and possible corporate citizens.
vironmental and governance risks were
often perceived as “soft issues” there was the Swedish Council on Ethics wrote to 683 “It is definitely a growing area.”
room for technological innovation to be ap-
plied. listed resource companies, including major – Dominic Piper
miners, asking for information to be made
“In copper, there is opportunity to ap-
ply technical solutions around things like public within 45 days about every tailings
reducing competition for water, reducing
the emissions of deleterious elements or dam facility they control.
improving tailings management,” he said.
The safety of tailings
“In Chile, we see arsenic levels in cop-
per concentrates continuing to rise as the dams has gained promi-
quality of ore declines but at the same time
regulatory restrictions are more stringent nence since 300 people
around emissions levels. There is a lot of
work being done, particularly by Australian were killed in the Vale
METS companies around how to get arse-
nic out of concentrates before smelting.” SA tailings dam col-

Tailings management has also become lapse in Brazil in Janu-
a major problem for the mining industry in
Latin America, with community opposition ary. International ASX : MEI www.meteoric.com.au
and regulatory requirements rising. The

“Communities don’t want tailings facilities Council on Mining and
which are going to collapse, understanda-
bly,” Valenta said. “The industry is working Minerals (ICMM) indus-
actively on coarse grinding technology from
which it is easier and cheaper to produce try group said in March
dry stack tailings. It may be that companies
it was working with the

Brazilian BonanzaUnited Nations Envi-
Grade Goldronment Programme

(UNEP) and the Prin-
ciples for Responsible

Investment (PRI) to de- Juruena Project:
velop new standards. High-grade
Dona Maria
“It is essential that and Querosene
investors can establish
a clear line of sight on
which company has
which tailings facility

and how that facility is Resources –
being managed. The 436,000t @ 14.7 g/t
current disclosures from for 205koz Au –
companies are largely
inadequate,” the Church

of England Pensions drilling imminent.
Board director of eth-

ics and engagement,

Adam Matthews, said in

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 45

LADU PREVIEW

Emu gets the highs

at Viladita

Operating at an elevation of 4,800m in While Gold Fields at Salares Norte is loring an aircore rig specific to the terrain
Chile’s Atacama desert is not easy, what Emu hopes to emulate one day, the Emu has.
but the rewards far outweigh the chal- company’s 136sq km of tenure, 120km
lenges. east of Copiapo, is surrounded by ground “We are getting to depths of 200m in
occupied the biggest mining companies some places, but are struggling in other
Emu NL is one ASX junior realising just in the world, including Glencore, Barrick places. For the costs of aircore drilling
that at the Viladita gold-silver-copper pro- Gold Corp, Anglo American plc, Kinross we are getting good service, no-one has
ject in the Maricunga belt. Gold Corp, Teck and Goldcorp. brought aircore drilling to Chile ever be-
fore, to my knowledge,” Horn said.
Viladita may be some distance and There are three Tier 1 deposits within
down the development curve from Gold 30km of where Emu is operating and the Aircore drilling at Viladita was in pro-
Fields Ltd’s Salares Norte high-grade junior is far from daunted about the being gress at the time of print, with drilling fol-
gold-silver deposit in the Maricunga belt, in elephant country. lowing up the discovery hole also being
however, Emu is nonetheless excited planned.
about what similarities it is seeing from “Kinross and Teck are pretty active with
early exploration drilling. their regional exploration. There is a fair bit The company was also planning a dia-
of action, but not by many juniors because mond drilling programme to test some
In March, the company announced dis- of where it is, it’s not easy, and really pretty high-grade gold, silver and copper geo-
covery hole 5300-08 after a hit of 24m @ 5 ballsy what we’re doing,” Horn said. physical anomalies, with one diamond
g/t gold and 28 g/t silver from 20m. hole in 2018 testing the IP chargeability
Dealing with the time lag between drill- and conductivity intersecting 82m @ 0.2
“The discovery hole was a standout in- ing and results being returned is one thing g/t gold, 11 g/t silver and 0.12% copper
tersection. When you do something like to consider, while getting bang for buck from 174m, including 1m @ 0.8 g/t gold,
that people want more of the same, but during field seasons will be critical. 1,049 g/t silver and 5.4% copper.
generally it is not that easy. That’s our job
though as geologists to work these things As the tail end of the field season ap- “We plan to do what we can before the
out and find what’s there,” Emu chief ex- proaches before snow falls, Horn hopes to season ends, we can’t fight the weather.
ecutive Leo Horn told Paydirt. complete as much on-ground exploration It has been a pretty cruisy summer, there
as possible. was a lot more rain last season so hope-
“We think we are on to something similar fully the season will remain open a little
to what they [Gold Fields at Salares Norte] Conditions in Chile for exploration are longer,” Horn said.
have got, so their development is super challenging between May to November,
important to us. Salares Norte is proof that therefore, Emu was making use of drilling As Paydirt went to print, it was an-
these things are out there and that is the outfit Wallis at Validita at the time of print. nounced that Horn had left Emu.
reason why we are where we are and the
thing for us is the comparisons between Horn believes Validita is Wallis’ first – Mark Andrews
Viladita and Salares Norte.” foray into Latin America, with the driller tai-
Leo Horn
Traditionally, the Maricunga belt is not
associated with high-grade deposits like
Salares Norte where Gold Fields has
completed a feasibility study and declared
a maiden reserve of 21.1mt @ 5.1 g/t gold
and 57.9 g/t silver for 3.5 moz gold and 4
moz of gold equivalent.

Detailed engineering and an EIA was
in progress at Salares Norte at the time
of print, with Gold Fields aiming to start
construction on the 450,000 ozpa gold
equivalent at AISC of $US465/oz project
in late 2020.

PAGE 46 MAY 2019 AUSTRALIA’S PAYDIRT

Strike lines up
Argentina for lithium

William Johnson

Strike has acquired 90% of a lithium brine project near Orocobre in Argentina

Strike Resources Ltd has Corp, as well as Orocobre. constrains and iron ore market conditions
landed in Argentina in pursuit Strike is now among a host of ASX-listed have hamstrung the project.
of its battery minerals strategy.
juniors in the thick of Argentina’s explora- There appears to be some light appear-
Already with a 70% interest in the tion sector for lithium brines. ing for Apurimac, with Peru’s Ministry of
Burke graphite project, North Central Transport and Communications (MOTC)
Queensland, and lithium and tantalum Johnson said a round of geophysics tendering an international consortium of
tenements in North Pilbara, Western Aus- was planned at Solaroz ahead of a drilling engineering companies to study the feasi-
tralia, Chile was considered the next best programme. bility of constructing the proposed 570km-
destination for Strike to beef up its battery long railway.
minerals profile. “We are getting started with an EIS now
and that might take a couple of months The Andahuaylas railway will connect
“We’d been looking for a lithium pro- to get through and there are quite a few southern Peru to the export port of San
ject for some time and we came close to juniors getting busy at the moment; Galan Juan de Marcona on Peru’s west coast.
picking one up in Chile, but we found the [Lithium Ltd], Argosy [Minerals Ltd] and
regulatory environment not conducive for Lake [Resources NL] and Lithium Ameri- Apurimac is 20km from Andahuaylas
a lithium project,” Strike managing director cas is right next door to us with conces- and a railway line is an essential piece of
William Johnson told Paydirt. sions. Orocobre also looks like it is do- infrastructure required for Strike’s iron ore
ing some drilling to expand its resource,” ambitions.
Not deterred by the outcome in Chile Johnson said.
and with vast experience operating in Lat- Strike’s project is in an iron ore-rich prov-
in America, Johnson did not stray far from Although Solaroz is the latest addition to ince in Peru and the railway line will unlock
the lithium triangle and concentrated his the portfolio, it will become a major focus a lot of the bulk commodity potential there,
focus east-ward to Argentina. for Strike. while also serving other industries like ag-
riculture.
Given the brine potential demonstrated “It has the biggest potential at this stage
by Orocobre Ltd within the Salar de Olaroz given its location. Our graphite project is of “We’re still working with a study group
basin in Argentina’s north-west, it is a boon smaller scale but high-grade for potential in Peru on that and we’re hoping for a
for Strike being able to pick up real estate Australian feedstock, while if the railway positive outcome. There are a lot of mining
in the same area. goes ahead in Peru that will be of major companies in that area and a railway line
benefit for our project,” Johnson said. will enable our project and a lot of other
“It sits directly over the same aquifer that projects to be developed,” Johnson said.
feeds Orocobre,” Johnson said of Strike’s The Apurimac iron ore project in Peru
Solaroz lithium brine project. has been held on to for a long time by Johnson said that it had been indicated
Strike. the feasibility study on a multi-user railway
The company completed a 90% interest line was expected to be finished by mid-
in 12,000ha of concessions in the same Apurimac – 269mt @ 57.3% iron (142mt 2020.
basin as TSX-listed Lithium America’s @ 57.84% indicated and 127mt @ 56.7%
inferred) – is considered as one of the – Mark Andrews
world’s highest grade, large-scale mag-
netite deposits, however, infrastructure

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 47

LADU PREVIEW

E2 aiming to follow A sample of mineralisation on E2’s Conserrat project
in Andean’s billion where rock chip sampling returned samples of up to

dollar footsteps 7.46 g/t gold and 7,510 g/t silver

To put 220% onto the share price in a jects there already,” he said. and geophysical campaigns at Conser-
flat market could be considered im- Having identified its preferred prov- rat and a 2,000m RC drilling programme
at Sierra Morena.
pressive but to do it on the back of a suite ince, Circum Pacific then went looking
At Conserrat, 20km from Cerro Van-
of early-stage Latin America exploration for the right kind of opportunity. guardia, rock chip sampling returned
samples of up to 7.46 g/t gold and 7,510
projects is truly market-defying. “We were focused principally in areas g/t silver from the Veta Blanca prospect
and lag sampling extended the anom-
The appreciation of the E2 Metals Ltd’s of known endowment, so within truck- aly to more than 2km across the Veta
Blanca-Emilia epithermal vein trends. A
shares has come following the release of ing distance of Santa Cruz’s multimillion follow-up gradient array IP survey pro-
duced coincident resistive and charge-
encouraging early-stage work on the jun- ounce, world-class epithermal vein fields. able anomalies.

ior explorer’s Argentinian portfolio. While From there, our decision was to explore The company is now following up with
pole-dipole IP.
the company is yet to drill a hole in Santa like Australians; that is, under cover. The
“The ground is just 20km from the larg-
Cruz province in the country’s south, E2 combination of that broad strategy and est epithermal deposit in the province but
is concealed by a shallow veneer of cov-
Metals managing director Todd Williams the serendipity of being there just as er so has had no exploration at all,” Wil-
liams said. “Since we started, we have
sees the market performance as simply quality ground was becoming available demonstrated that the Conserrat veins
have potential to host mineralisation,
confirmation of the company’s strategy. gave us a great opportunity.” we’ve proven the surface scale through
the lag sampling and undertaken the first
“It was counter-cyclical in many ways,” Underlying the entire E2 proposition, ever sub-surface testing using IP.

Williams told Paydirt. “We entered Ar- and likely the market interest it is gener- “That work is beginning to show that
it is a potentially large vein field mostly
gentina at a time when a change in politi- ating, is the success of the last Australian concealed by basalt. We are now doing
detailed IP to produce vertical cross-sec-
cal regime was occurring and there was explorer to hit Santa Cruz hard. Andean tions in order to refine the drill targets.
There are four or five targets ready to
little interest in the country. We found Resources spent five years in the prov-
explore and we expect to have a
we could target and acquire projects ince developing Cerro Negro from grass- busy second half of 2019 there.”

with multimillion ounce potential in areas roots discovery to the edge of develop- Drilling has already started
at Sierra Morena, a project for-
which, while clearly having endowment, ment before Goldcorp paid $US3 billion merly controlled by fellow ASX-
listed junior De Grey Mining Ltd.
had been forgotten and left unloved from for the Aussie junior.
“All the indications are of a
an exploration perspective.” “The Andean Resources story was large system which has prob-
ably been inappropriately tar-
Williams’ private concern, Circum Pa- one of those once-in-a-decade stories geted,” Williams said. “There is
a lot of smoke in this area and
cific Pty Ltd, vended the portfolio of four for shareholders and host communi- some fire with a few outcropping
areas but there is no information
assets into E2 in December 2018. Wil- ties,” Williams said. “It is a clear beacon between.

liams came on board as managing direc- for success and we’d want nothing more “We have started a 2,000m
RC programme to test the tar-
tor and brought Colin Brodie in as coun- than to replicate that achievement.” gets we felt were quite obvi-
ous. It is a proof-of-concept
try manager whose local experience E2 began that quest at the turn of the programme aiming to identify
the depth extent of the veins
includes a stint as IAMGOLD Corp’s year, launching geochemical sampling but also validate the geological
models of the sub-surface and
exploration manager in Argen-

tina.

All four of the E2 projects

– Angostura, Conserrat, Co-

rona and Sierra Morena – are

located in Santa Cruz, a prov-

ince which boasts several mul-

timillion ounce deposits, includ-

ing producing assets such as

Goldcorp Inc’s Cerro Negro

(490,000 ozpa at $US600/oz

AISC) and AngloGold Ashanti

Ltd’s Cerro Vanguardia (8.9

moz gold and 137 moz silver

reserves).

Williams told Paydirt such

a track record was compelling

enough to build a land position

in Santa Cruz.

“The opportunity was clear The Santa Cruz province in Argentina boasts

as there are a number of high- several multimillion ounce deposits. ASX-listed

grade multimillion ounce pro- junior E2 Metals is planning on finding the next one

PAGE 48 MAY 2019 AUSTRALIA’S PAYDIRT

use that to undertake a regional drilling at depth. A good example is at Cerro has a mining culture and the economy is
very reliant on mining.”
programme.” Negro where the Silica Cap prospect
Perhaps surprisingly, it is Australian
At Corona, E2 is keen to test outcrop- had probably six explorers look at it and investors who are showing the most in-
terest in the story.
ping silica sinter which is often associ- walk away. Last year, Goldcorp reported
“It is the domestic market driving it be-
ated with epithermal systems in Santa 700,000oz from it and is still finding more cause the North American market is still
quite flat,” Williams said. “I think Austral-
Cruz. mineralisation.” ians understand the history of Andean
and the people are voting on the poten-
“Corona sits just south of Cerro Negro Such early-stage projects rarely gen- tial for another major discovery in this
province.”
and has an outcropping silica sinter and erate such investor interest but Williams
Political risk is never far from the sur-
there is a direct generic link between the believes the Andean experience is fresh face in Argentina where mining is often
an election topic, however, Williams be-
silica sinter at surface and high-grade enough in people’s minds to drive enthu- lieves Santa Cruz’s reputation for min-
ing-friendly politics will hold E2 in good
mineralisation at depth,” Williams said. siasm for E2’s story. stead, regardless of political winds.

“There is no gold at surface in the sinters “Insiders who understand what suc- “For us, the discovery-development
cycle is much longer than the political
but all of them are associated with ore cess in this province looks like are be- cycle so we can only allocate capital in
areas where there is a strong mining
ginning to look at culture,” he said. “If there is a strong his-
tory and culture of mining, it provides a
us and say that we hedge against any political risk created
by populist policies. For us, it is much
have a unique suite more about lowering the technical risk
on a project we couldn’t get access to in
of early-stage but Australia.”

prospective oppor-

tunities in what is

considered a very

mining-friendly

province,” he said.

“If you discov-

er 500,000oz in

Santa Cruz it will

be developed, the

development bar

is probably lower

here than in any

E2 has started a 2,000m proof-of-concept drilling other jurisdiction in – Dominic Piper

shoots programme at the Sierra Morena prospect South America. It

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AUSTRALIA’S PAYDIRT MAY 2019 PAGE 49

LADU PREVIEW

Crusader climbs off the canvas

It has been a turbulent past 12 months The new-look Crusader is revising a BFS on the Borborema gold project in north-east Brazil
for Crusader Resources Ltd, but new
executive director Andrew Richards is completed the sale of Juruena and Novo “I think most of us in the company have
confident of returning the Brazil-focused Astro to fellow ASX-listed junior Meteoric the expectation the gold price is going to
company to a sound financial footing be- Resources NL for $3 million cash and go up over the next year or two, so if we
fore year’s end. scrip. can get Stage 1 in production at a good
rate, that will then give us a better han-
Crusader appeared to be on the brink “In an ideal world, we would have liked dle as to how we go forward with Stage
of collapse just a few months ago when to have kept projects like Juruena, but 2 which will be the deeper part of the pit
its cash position plummeted below because of the dire financial decision the where there’s some very high grades.”
$500,000, eliciting the suspension of its company found itself in by January, we
securities on the ASX and AIM exchang- didn’t have that luxury,” Richards said. Richards, originally an exploration
es and a fire sale of its non-core assets, geologist who has specialised in near-
including the Juruena and Novo Astro “Juruena has got some really good production opportunities in more recent
gold projects. potential, but it would have been a dis- years, admitted he had “some catching
traction to some extent and would have up to do” on all things relating to mining in
Major shareholder Stephen Copu- taken up more management time and Brazil, despite having a wealth of experi-
los has returned as chairman, having more funding, so we adjudged that the ence operating in other South American
stepped down a little more than a year best thing we could do is get some cash countries.
ago when the company undertook what for that, cut the expenditure and at the
ultimately proved to be an ill-fated listing same time retain a significant sharehold- However, nothing has put him off the
on London’s AIM market. ing in the company that’s now going to be country and the ambition to bring Bor-
looking after it.” borema, in Brazil’s north-east, into pro-
Crusader has since delisted from AIM duction in rapid time.
and closed its UK office, in the process Having also sold its Posse iron ore
reducing overheads by almost $1 mil- mine last year, Crusader’s sole focus is “One thing that appeals to me about
lion per annum. Director remuneration now the 2.4 moz Borborema gold project Borborema is the infrastructure and fa-
fees have also been slashed by a similar it has been promising to develop for sev- cilities there and the access to them,”
amount. eral years. Richards said.

For Richards, who joined the company An updated BFS was completed last “You’ve got an international airport
on March 1, he acknowledges there is February, indicating pre-production capi- two hours away, you’ve got great roads,
still a long road to travel before investor tal of $US93.4 million was required for a you’ve got power, services, all the infra-
confidence is restored in Crusader. How- 2 mtpa operation focused essentially on structure. The only thing we’ve got to
ever, he believes the clean-up efforts mining and processing the upper lens of think about is water, but we’ve identified
to date have put the company back in a the 42mt @ 1.18 g/t gold reserve. two potential sources of grey water that
position where it could seriously pursue we could use and process.
project finance later this year. Richards said a review of the resource
estimate was under way ahead of anoth- “Our focus is without a doubt produc-
“My role is simple, it’s about getting the er revision of the BFS parameters. Re- tion because no matter what we say,
company back on a sound financial foot- duced operating costs and a lower strip what we do, I’m afraid Crusader has not
ing and to make a material advancement ratio are part of that plan. always delivered, by any measure, and
in the main project, Borborema,” Rich- the only way we can regain credibility is
ards told Paydirt. “What we’re aiming to do is have a fully just by actually doing it.”
functioning BFS and then start looking at
“Let’s not dwell too much on the deci- contracts to construct a Stage 1 plant in – Michael Washbourne
sions of the past, but certainly I think the the order of 2 mtpa by October at the lat-
focus from here needs to be on what is est,” Richards said.
inherently a good project in Borborema
and getting that into production.

“We’re going to turn this around. We’ve
done a hell of a lot of work so far and I
think we’ll be in a much better position in
the fourth quarter of this year. And in an
ideal world, we could even start looking
at project finance to get this thing up and
going.”

While it remains unclear when Crusad-
er will resume trading on the ASX, the
new-look board and management team
appears to be doing everything possible
to make that happen sooner rather than
later.

As well as reducing corporate over-
heads, Crusader is undertaking a $4.2
million rights issue, of which $3.5 million
is underwritten. Last month the company

PAGE 50 MAY 2019 AUSTRALIA’S PAYDIRT

Perth, Western Australia 9
November 12-13

PRESENTATIONS TO DATE:

FOSTERVILLE TABAKORONI KARLAWINDA OSIRIS

Kirkland Lake Gold Ltd. Resolute Mining Limited Capricorn Metals Ltd ATAC Resources Ltd.
Australia Mali Australia Canada

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Sabina Gold & Silver Corp. Emerald Resources NL K92 Mining Inc. Bellevue Gold Limited
Canada Cambodia Papua New Guinea Australia

BOLCANA KHARMAGTAI BOMBORA

Eldorado Gold Corporation Xanadu Mines Ltd Breaker Resources NL
Romania Mongolia Australia

The world’s pre-eminent gold exploration event

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Jointly organised by:

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For all enquiries about presenting, exhibiting or attending please contact Mitchelle Matambo on (+61) 8 9321 0355
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