pd271-May19-mag-web

LADU PREVIEW

Best address on the Lake

As Lake Resources NL prepares to its completion. It will build on the results ous elements, it produces an extremely
launch a PFS on its Kachi project, of last year’s engineering report which high quality product.
managing director Steve Promnitz has proved up a direct extraction process
urged investors to take a closer look at patented by Lilac Solutions Inc. “It’s also interesting that the sector
why he believes his company is operating understands it. When we talk to battery
in what he dubbed the “best address” for “We’re looking at 25,000 tpa of lithium makers and cathode makers, they under-
lithium brines in Argentina. carbonate equivalent using direct extrac- stand that process, but the investment
tion on site and then producing either lith- market has still yet to appreciate the dif-
Lake has three lithium brine projects – ium carbonate or lithium hydroxide at a ference.
Kachi, Cauchari, Olaroz – plus the Paso separate plant down the hill where you’ve
pegmatite project in its portfolio, com- got grid power, gas, and more people,” “Investors often say to me, ‘oh but the
prising one of the largest lithium explora- he said. grade is too low’ and I say ‘yeah, but if I
tion plays in Argentina. was in gold and I gave you a low grade
“Now we may add to that, we may also project, but I had really high recoveries of
While a prolific tenement package of produce a brine concentrate for export, 85-90% and I was able to do it at a low
about 200,000ha is a key selling point but that’s our base for now. cost, you would think that would be much
for any explorer, it is Lake’s position better than something that was higher
amongst a plethora of larger players in “The reason for going down the direct grade, but maybe refractory because I’d
South America’s Lithium Triangle that extraction path is not only do we think it only get half the gold out’. It’s exactly the
Promnitz believes should have investor cuts off at least a year to production, it’s same here.”
tongues wagging. at much lower production cost and most
importantly it produces a very high qual- Lake will be funded for the PFS after
“If anybody felt it wasn’t the best ad- ity end product. And we’ve found in our receiving a timely funding boost from a
dress, no-one else has suddenly pro- discussions with battery makers that is North American investor who recently
duced the largest defined lithium brine in what everyone is focused on.” tipped in $1.65 million, with the option of
the world, only 400m away from where increasing that facility to $5 million.
we are [at Cauchari] and there’s multi- Promnitz hopes the PFS will begin to
billion deals happening there every few unlock the value he sees in Kachi which The company continues to engage
months,” he told Paydirt. covers almost the entire salt lake hosted with US-based consultancy firm RB
in Argentina’s Catamarca province. Milestone Group to broaden its access to
“We had POSCO pay $US280 million North American investors who have an
for the northern half of Galaxy’s [Re- Recent corporate transactions in the appetite for lithium brine projects.
sources Ltd] Sal da Vida resource; we’ve region have implied an acquisition cost
now had Ganfeng, the world’s No.2 lithi- of $US50-110 million per 1mt of lithium Meanwhile, Lake has added a dia-
um producer, pay nearly $US160 million carbonate resources. mond rig to its drilling fleet at Cauchari, in
[after paying $US237 million] for 50% of the Jujuy province, in a bid to drill deeper
the Cauchari project and in January we One of the challenges Promnitz is and hit a representative sample.
had LSC Lithium [Corp] acquired by an still contending with is changing the at-
oil and gas company for $C111 million. I titude of investors who query Kachi’s “Even though the drilling companies
don’t see that happening elsewhere ex- lower grade, when compared to some performed well at Kachi, it’s different
cept for some of the major spodumene of the neighbouring projects and opera- drilling conditions here, with much higher
projects in Western Australia.” tions. However, Lilac’s direct extraction fluid pressures,” Promnitz said.
process has successfully demonstrated
Lake is coming off an impressive first recoveries of 85-90% and lithium brine “If we can produce one hole with good
year on the ground at Kachi during which concentrates in excess of 25,000 mg/L. results, with representative numbers,
it defined a maiden resource of 4.4mt then that will be an outstanding result,
of lithium carbonate equivalent with an “We were of the same view when because we’re drilling in the same basin
exploration target of 8-17mt, placing it we first started drilling here, but what’s next to the largest defined lithium brine
among the top 10 reported lithium brine interesting is it’s about the recovered resource in the world.”
resources globally. grade,” Promnitz said. “Using this direct
extraction method we’re going to get a Promnitz said once that result was
With an engineering company to soon recovered grade of 25,000 mg/L and that achieved, a rig would immediately be
be appointed to drive the Kachi PFS, produces a very high cash margin. And moved to the neighbouring Olaroz pro-
Promnitz has pencilled in October for because it selectively takes out the lithi- ject which should soon be approved for
um and doesn’t bring any other deleteri- drilling.
PAGE 52 MAY 2019 AUSTRALIA’S PAYDIRT
– Michael Washbourne

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 53

LADU PREVIEW

Latin dances
into Brazil

Latin Resources Ltd looks set to add a mits are granted.
third string to its bow in South Ameri-
ca, reviewing a suite of prospective lithi- Gale and Latin
um consessions in Minas Gerais, Brazil.
chairman David
While awaiting receipt of drilling per-
mits for its San Luis lithium project in Vilensky met with
Argentina, Latin decided to look around
for other near-term exploration opportu- government offi-
nities, ultimately landing in the underex-
plored Jequitinhonha region which hosts cials in San Luis in
the Eastern Brazilian pegmatite province.
March and returned
TSX-listed Sigma Lithium Corp is
the largest explorer in the region, hav- confident the prov-
ing built up a high-grade resource con-
taining 45.7mt @ 1.38% lithium oxide. ince was serious
Companhia Brasileira de Litio (CBL) is
actively mining pegmatites in the area to about developing
produce a spodumene concentrate which
is then transferred to a chemical plant in a lithium mining
nearby Divisa Alegre for conversion into
industrial-scale lithium hydroxide. industry. Some of

Latin’s ground is within 50km and those dignitaries
shares similar geology to Sigma’s project.
It is also less than 100km from the CBL are expected to visit
lithium hydroxide facility.
Western Australia –
Latin managing director Chris Gale
said the company was excited by the op- the world’s largest
portunities a potential project acquisition
in Brazil would present for future battery- lithium producer
grade lithium hydroxide production.
– this month to fur-
“We are continuing with due diligence
of the province and on completion we ther their due dili-
intend to begin securing priority one tar-
gets,” Gale said. gence of the sector. Latin Resources is reviewing prospective lithium projects in Brazil
Latin’s pursuit of
“Focus will be given to well-advanced
tenure which will allow the Company to pegmatites in Ar-
rapidly drill test any potential spodumene
deposit and enable it to quickly be ad- gentina contrasts Este and Ilo Norte projects which it sold to
vanced to JORC compliancy. The compa- what other lithium explorers are doing in TSX-listed Westminster Resources Ltd, of
ny’s resources will continue to be directed the country, with most focused on oppor- which Latin now has a 40% shareholding.
at Brazil where we believe they can effec- tunities in the brines space. Gale said his
tively execute exploration programmes company favoured hard rock projects be- Latin was one of the first Australian
and deliver positive news and results to cause they were faster and less capital- explorers to set foot in South America 11
shareholders.” intensive to develop than brines. years ago and Gale is proud of what his
company has achieved to date. However,
Drilling could also soon begin at San “The guys here in WA have done a sen- he lamented the fact Australian investors
Luis in Argentina, with Gale optimistic the sational job and what that showed us was were still yet to fully grasp the opportuni-
long-awaited permits will be awarded in we could get hard rock into production a ties on offer in the region.
the next month or so. lot quicker than you can a brines project,”
Gale said. “We’re starting to see a lot more activ-
It has been 18 months since Latin sub- ity there now, but it’s still a battle trying to
mitted its initial application for drilling to “We looked right throughout South get the Australian investment community
San Luis provincial authorities. It is un- America and found these pegmatites in to understand South America,” Gale said.
derstood the delay relates to some locals Argentina. Obviously being from WA and
having concerns about the potential im- with the IP and the technology we have “They understand Africa because the
pact of lithium mining on the province’s here, it made a lot more sense for us to Australian investment community have
agricultural industry. develop hard rock rather than brines pro- been investing in Africa for 30 years, but
jects. the struggle has been getting people to
Latin has locked in a drilling contractor really understand the Latin American
to start work immediately once the per- “It’s half the capex, twice as quick to mining sector. And I don’t know why that
market for production, not a sophisticated is.
process, and ultimately we think the mar-
ket is heading to lithium hydroxide, not so “I can talk to a few brokers and fund
much to lithium carbonate. And we think managers in Australia and say ‘First
with the grades we’re looking at getting, Quantum is our partner’ but they’ve never
an average of around 1.4-1.5%, we think heard of First Quantum, despite the fact
that material in Argentina will be ideal for they are Canada’s largest copper pro-
high-grade lithium hydroxide.” ducer with a market cap of over $10 bil-
lion and have a huge presence in South
Latin is also closing in on confirmation America.”
of approval for drilling at the Pachaman-
cha-MT03 project at Ilo Sur, Peru. Cana- Latin could soon add a fourth South
dian copper producer First Quantum Min- American country to its exploration stable
erals Ltd is farming into the project. with the company also entertaining po-
tential lithium projects in Uruguay.
Gale said the company was keeping a

close eye on work at the neighbouring Ilo – Michael Washbourne

PAGE 54 MAY 2019 AUSTRALIA’S PAYDIRT

Argosy pilots commercial vision
for Rincon

Argosy is targeting a 10,000 tpa operation at Rincon in Argentina’s Salta province

Japanese conglomerate Mitsubishi a robust PEA on the Rincon project itself. agreement.
Corp has recognised Argosy Minerals Argosy had been courting Mitsubishi “They’ve no doubt looked at other com-
Ltd’s efforts to rapidly prove up a chemical
process solution for commercial produc- as a potential customer for more than panies and projects and I guess what kept
tion of lithium carbonate from the Rincon 18 months and managing director Jerko them with us for the past 18 months was they
project in Argentina’s Salta province. Zuvela said the sales agreement was an knew that we were quite far ahead of most of
important step in his company’s long- our peers in being able to get to production,
Mitsubishi has signed a preliminary term bid to become a commercial lithium and certainly having a pilot plant would have
12-month sales agreement to purchase producer. been seen as a step in the right direction.”
up to 100t of lithium carbonate to be pro-
duced from Argosy’s small-scale indus- “Having Mitsubishi come on board, the Mitsubishi has flexibility to extend the
trial pilot plant. Initial operations support- fact they are a Japanese conglomerate, terms of the sales agreement by mutual
ing the contract terms are expected to validates everything we’ve done to date agreement, with prices for each cargo to be
begin in the coming months. and also brings to the table a very large determined using a set formula which ref-
international and reputable group, given our erences an industry-standard benchmark
Penning a sales agreement with a ma- priority is still to move into commercial pro- index.
jor international conglomerate caps a duction,” Zuvela told Paydirt.
busy past year for Argosy following com- Argosy commissioned its Salta-based
pletion and commissioning of the pilot “Obviously to do that we need capex fund- pilot plant just over 12 months ago and pro-
plant and confirmation of the proprietary ing and given that projects in the lithium duced its first battery-grade lithium carbon-
chemical process solution to produce a space are generally funded by strategic ate product in June. Preparations to scale up
lithium carbonate product grading more parties, we feel Mitsubishi is a great one to the workforce for operations under the sales
than 99.5%, both of which culminated in be involved with and so we’ll be looking to agreement were ongoing at the time of print.
build on that relationship via this initial sales
Zuvela said he hoped production from

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 55

LADU PREVIEW

the pilot plant would lead to a broader sales their budget, blown
agreement with Mitsubishi or other Asian-
based battery entities. their contingency and

“We’ve not overcommitted on production, there’s got to be huge
we don’t think, but we’ve made it very clear
to Mitsubishi – and perhaps that’s the rea- doubts over that project
son why they initially got involved with us –
we’re not in this for small-scale pilot plant just because the fea-
production,” Zuvela said.
sibility study probably
“From the PEA that we outlined back in
November, we’re looking to build a com- wasn’t done properly,”
mercial project that can do 10,000 tpa of
lithium carbonate product; that’s the main he said.
game. It’s what Mitsubishi want, it’s what we
want. These smaller sales agreements and “I’ll put a disclaimer Argentina President Mauricio Macri (centre right) has offered
any future potential sales agreements of this
magnitude are really secondary and is about there saying I don’t Argosy his full support for Rincon’s development
formalising relationships that we can provide
product to these guys and they can sort of know how that’s
see how it works.
worked out, but to me if
“If they’re going to invest in us, or become
a strategic party or associated with us, they you blow your budget that much, that sug- unnoticed. At the time of print, the company’s
need to know that we’ve got the chemical
expertise and chemical process experience, gests you don’t know how to chemical pro- stock was trading at just 9c/share, having
even though it’s only a pilot plant, to be able
to go out and build a project which can pro- cess, which means you can’t build a plant to peaked at almost 50c/share in early 2018.
duce such products.”
cater for that. Zuvela, who was integral in establishing
According to the PEA, Argosy is set to
generate a pre-tax NPV of $US399 million “Again that just reinforces why we’re going the JV for Argosy to acquire up to 90% of the

Mitsubishi will purchase up to 100t of lithium about this step-by-step. We’ve spent very Rincon project in mid-2016, acknowledged
carbonate from pilot plant production under a
minimal funds to build the pilot plant and it that while the hype in the lithium market had
preliminary 12-month contract with Argosy
will be the same for our next steps. We even waned, the opportunities were still out there
and IRR of 53% from base-case production
of 10,000 tpa of lithium carbonate over the have the ability to go to an intermediate step, for developers if they were prepared to put in
initial 16.5 years of mine life. Capex is esti-
mated at $US141 million with payback of just somewhere between 1,500 tpa to 10,000 the hard yards.
over two years.
tpa if the potential strategic party preferred “Finding additional customers and poten-
Other key financial estimates reported in
the study included annual pre-tax cash flow that, or we can go straight to the 10,000 tpa tial strategic partners has tightened up in the
of $US74 million and an EBITDA margin of
61% over the life-of-mine. because we’ve done enough test work and last 6-9 months, but because of our position

Zuvela pointed to industry evidence which we’ve got a sales agreement in place.” where we can produce not only lithium car-
suggested a staged development approach,
on the back of thorough feasibility studies Last month Argosy also completed an bonate but also lithium hydroxide, we feel we
and test work, was Rincon’s best chance of
being a success. oversubscribed raising of $9.2 million, ensur- can use that to our benefit to try and reach

“A good example of that recently is ing the company will have enough funds in out as larger audience as possible,” he said.
Nemaska Lithium [Inc] where they’ve blown
the bank to continue the permitting process “Some of the bigger Korean conglomer-

for its pilot plant operations and beyond. ates have said to us, ‘listen, we’re interested

Environmental approval applications for in the product, but the interest to fund capex

the 10,000 tpa option will be finalised and is not in our window anymore’.

submitted to the relevant authorities this “The wider sector, it’s tightened up, it’s a

month. Other activities designed to de-risk lot tougher than it was, but we just have to

the project are also in the planning phase. believe that our development strategy is the

Argosy is also exploring opportunities right way to go about it and we’re hopeful

to produce lithium hydroxide from Rincon that the relationship with Mitsubishi and po-

following interest from a major Korean bat- tential other Asian groups might allow us to

tery group. Recent lab work has indicated be lucky enough to secure the capex funding

battery-grade lithium hydroxide can be pro- that we need.”

duced via the pilot plant, although further One thing working in Argosy’s favour is

testing is required to prove up this process. support from the Argentine government, in-

“Potentially we can have a dual strategy cluding President Mauricio Macri.

of producing not only lithium carbonate but Zuvela and other members of the Argosy

also lithium hydroxide, given they’re the two management team presented the Rincon

main materials for cathode production,” Zu- story to President Macri and National Mining

vela said. Secretary Carolina Sanchez last year and

“We’ve been doing a bit of work on that, were subsequently offered full support for

but really over the next 6-9 months we’re go- project development.

ing to be focused on delivering on our sales “Not many companies get a chance to

agreement with Mitsubishi. We’ve got to meet both the President and the Federal

scale up the pilot plant in terms of building up Mining Secretary in their early stages,” Zu-

the workforce, the technicians and so forth, vela said.

because the manpower up to now has really “We’re very fortunate to have such strong

just been based on processing test works. support, even in the Salta province where

“We need to be working on the bigger pic- we’re located. Salta, on the Fraser Institute

ture design of the commercial plant and all rankings, is the second highest Argentine

that sort of stuff. So, what we’re trying to do province, well ahead of Jujuy and Catama-

with this money that’s just come in is de-risk rca where Orocobre [Ltd] and FMC [Corp]

the project further to really mitigate the risk have operations.

for any strategic parties who may be inter- “Salta is a great city and we have access

ested in capex funding for the commercial to good quality infrastructure to develop our

plant.” project.”

To some extent, Argosy’s recent achieve- – Michael Washbourne
ments at Rincon have gone relatively

PAGE 56 MAY 2019 AUSTRALIA’S PAYDIRT

Continental drifts along
nicely in Colombia

In addition to proven and probable
reserves of 13.72mt for 3.71 moz gold

@ 8.4 g/t and 10.72 moz silver @ 24.3
g/t at Buriticá, the project also hosts

measured and indicated material of
16.02mt @ 11 g/t gold for 5.67 moz gold

eq and inferred gold eq resources of
15.6mt @ 9.5 g/t for 4.8 moz

Access to capital for exploration is not ing these little Canadian companies pull sampling assays received from develop-
as difficult as some think, according a drill hole and their stock quadruples in ment drifts in stoping areas are being
to Continental Gold Inc chief executive a week. There is definitely interest and prepared for production continue.
Ari Sussman. there is money for small companies –
not $20-40 million – but if you have the Recently reported high-grade gold
“It is a struggle for most, but believe goods I think you could raise $5 million results from stope development drifts at
it or not, there is interest for exploration easily.” Buriticá included 16.08 g/t gold equiva-
right now. I don’t know if that is an over- lent along 78m of strike, while 17.2m @
flow from cannabis with the crowd liking Sussman’s Continental is one of those 100.24 g/t gold equivalent in BMZ1 at
early stage drill holes instead. There is companies driving interest in exploration Yaraguá demonstrate the type of narrow
no money for anyone between the dis- with continued success at the Buriticá vein underground system Continental is
covery phase and production phase, it is gold project, Antioquia, Colombia. in.
very limited and challenging,” Sussman
told Paydirt. Mining is scheduled to start in the first “We have passed our expectations im-
half of 2020 at Buriticá, where discovery mensely because the CBM [carbonate
“I keep hearing that there is no explo- of new mineralised areas in the eastern base metal] vein system we thought we
ration money out there, but I keep see- Yaraguá system and high-grade channel had a target of 1-2 moz gold and here

LATIN The USB of Paydirt’s 2019

AMERICA Latin America Down Under
Conference is
OUT SOON!

29-30 May 2013, Sydney

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

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 57

LADU PREVIEW

With Canadian juniors hampered by from Australian companies into Colom- ing code now in place, Sussman said.
North America’s love affair with canna- bia. In fact, I’d say that there are more
bis stocks and cryptocurrencies, there Australian juniors in Colombia looking “Colombia is a bit of a disoriented coun-
is an opportunity for ASX companies to at early stage exploration projects than try and always has been. It has always
infiltrate Latin America’s mining scene. there are Canadians.” been misunderstood, even in the very
dark years of the country, it was still an
And, that is no more evident than in Co- At the time of print, private Australian en- attractive jurisdiction from a legal per-
lombia, according to Continental Gold tity Andes Resources and Metminco Ltd spective; Colombia has never voted for a
Inc chief executive Ari Sussman. were moving ahead with a transaction left wing government at the national level
to merge, with the new-look outfit set to into power. It swings from centre, centre
“We’re in a bit of a correction phase, but boast a portfolio of highly prospective right to right, at least in the last 50 years
I think there is going to be a huge boom, exploration ground and more advanced anyway,” Sussman said.
I am optimistic. I can’t give exact dates projects.
but to me the marijuana market which is “It has been an excellent jurisdiction, but
dominating the spectrum of the market, That Colombia is now rebounding as a there are national, state department and
it really reminds me of the internet bub- favourable destination to operate, Met- obviously municipal-level governments
ble and I feel like I am in 1999,” Sussman minco/Andes is well placed to capture to think about. In our case, through trial
told Paydirt. the imagination of investors keen on po- and error, the many challenges over the
tential high-grade gold elephants in the years we have been able to garner much
“I think there is a bubble we just have to country. support for our project so it has been
find it, and it is going to happen sooner very good from that aspect.”
rather than later. We haven’t spent much Putting together land packages in the
time talking to Australian mining compa- country has not always been easy but it
nies, but there is definitely a big move is improving courtesy of a modern min-

we are in all resource categories with 12 a low point, no question,” Sussman said. “Everyone has great targets, but the
moz gold equivalent and climbing, so it That such world-class – and not to odds of making a discovery are very
has exceeded our expectations,” Suss- slim. Our two deposits are very open for
man said. mention high cost – projects are being growth. We’ve drilled some deep holes
built in Colombia and Ecuador indicates from where the top of the mineralisation
With proven and probable reserves of the extent to which investors are prepared starts at the top of the mountain slope
13.72mt for 3.71 moz gold @ 8.4 g/t and to go for the right project. down to about 1.7km down at both de-
10.72 moz silver @ 24.3 g/t, there are few posits.
projects like Buriticá in the world except Colombia is only recently emerging
for Lundin Gold’s Fruta del Norte in Ec- from decades of political upheaval and “We are still in very high-grade veins,
uador. Ecuador is in its infancy as a mining coun- so it’s easy to see a lot of growth in these.
try. When you compare us to many others,
Lundin is expected to bring Fruta del their only growth is going to come from
Norte on stream slightly ahead of Buriticá, Nevertheless, Newmont Mining Corp making a brand new speculative discov-
with both being large scale, high-grade, is backing Continental heavily and has a ery,” he said.
underground project beacons for Latin 19.9% stake, while RK Mine Finance and
America’s mining sector. Tripleflag have also weighed in signifi- At the time of print, Newmont was set
cantly with a variety of financing streams to become the world’s biggest gold min-
“There are not many peers and there supporting Buriticá’s development. ing company and Sussman was unsure
are not many mines being built and the of the former’s intentions at Buriticá. A
ones that are being built are small. In Lat- “There is a lot of interest in us and what standstill agreement is in place, whereby
in America, there’s very few new mines separates our asset from other single as- after six months of commercial production
being constructed right now; it is certainly set companies is the upside,” Sussman
said.

Construction of the Buriticá gold mine was about 60% complete at the time of print

PAGE 58 MAY 2019 AUSTRALIA’S PAYDIRT

Production from Buriticá is scheduled for the first half of 2020

discussions on ownership of Buriticá can inclusive model that we have been work- tractor in and we are ahead of schedule
take place. ing so hard on building. This is really the and below budget. We are very confident
platform for the country to get up and run- in the mining. If you were to ask me two
Sussman said if Newmont was to ne- ning and whoever comes next it will just years ago I would have said it was the key
gotiate attractive buy-out terms of Burit- get easier because there will be Continen- risk of the project.”
icá, Continental’s likeness for exploration tal’s Buriticá project to show how it works.”
would mean that some sort of spin-out ar- Another area Continental has taken
rangement of Buriticá would potentially be Once in production, Continental will charge is in small-scale mining.
entertained. employ over 1,000 people at Buriticá, with
about 3,000 people currently on site during “We are the leaders of that. The compa-
Continental’s success and the changing peak construction. The expat representa- ny ran a pilot project regarding small scale
tide of doing business in Colombia, sug- tion is about 1% and consists of mainly un- mining and we have mining formalisations
gests Sussman could be anchored to the derground mine building expertise. in place. Essentially, to become a formal-
country for some time. ised miner, the main criteria is that you
Colombia is predominantly an open pit need to be from the local area or born in
“The country has issued four permits mining country and with the onset of Bur- the area. You can’t come from somewhere
for gold projects in the last four years and iticá, Continental is introducing new skills else in the country and say let me mine.
those are the only four that have been ap- into the country and hopes to have a pure- We do work with formalisations, it is a suc-
plied for. I firmly believe that betting on ly local workforce on site one day. cess but a constant challenge,” Sussman
Colombia today is like betting on Peru in said.
the early 1990s. The challenges are simi- “There are small underground mines,
lar in so many ways. Colombia like Peru but nothing like what we are building. “We have an agreement that is working
has lots of population, so that means in the Therefore, well before we even received well, we pay them a certain percentage of
long run, some projects are going to work our permits to build the mine we made the the price of gold and we have a small plant
and some are going to fail under social li- decision to put a training school in place, that we operate for them once a month to
cence,” Sussman said. which has been very successful,” Suss- process their material. It is working well, it
man said. is a challenge and if you don’t supervise
“If you look at the metrics for the last 10 it is easy to run off the ore, so we have to
years; tourism is going up, GDP continues “We have been training people from the make sure they are successful.”
to increase, the crime rate keeps coming impacted communities in underground
down so it is going to continue to be the mining skills and we are using expat train- – Mark Andrews
engine of growth. We call ourselves mod- ers to do this. We are proud to say that we
ern mining, which is simplistic for you and have done all the underground develop-
I, but we’re really pushing this community ment ourselves, we have not had a con-

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 59

LADU PREVIEW

BMG to conduct drilling

BMG hopes to be drilling at Salar West, Chile

BMG Resources Ltd managing direc- Where we are the grade is potentially May is when we would likely start drill-
tor Bruce McCracken believes Chile’s high.” ing. We want to have drilling and results
lithium brine potential to be just as rich as completed by June 30,” McCracken said.
Argentina. SQM and Albemarle have proved
there are no fatal impurities in the Salar “Once you start to demonstrate that
Argentina’s lithium brine sector is cer- de Atacama region where BMG is pre- the target is an aquifer then you can start
tainly flush with Australian juniors at the sent at the Salar West JV. to demonstrate the value.”
moment where the likes of Argosy Miner-
als Ltd and Galan Lithium Ltd are flying At the time of print, preparations for a A successful drilling programme may
the flag in the junior sector. drilling programme were being finalised well trigger BMG bringing share options
after Stage 2 geophysics confirmed a worth between $5-6 million into play and
The level of activity in Argentina is not conductive target (varying in thickness see the company adequately funded for
being replicated in Chile and for no good between 35m and 200m along the TEM some time.
reason, according to McCracken. lines) for drilling.
BMG has raised $1.6 million since
“There certainly has been a hell of a lot Stage 2 geophysics also covered the entering the JV late last year, which in-
of activity in Argentina. Argentina is still additional 2,100ha acquired by BMG and cludes a recent placement of $670,000
in the same triangle as Chile and in terms its partner and confirmed the westward to see it through the drilling programme.
of mining code and sovereign risk its bet- extension into the new properties.
ter in Chile,” McCracken said. – Mark Andrews
“The first drilling programme will hope-
“The average grade across the Ata- fully be into an aquifer and will be more
cama is higher in Chile than Argentina. confirmatory drilling. In the back end of

Chile faces copper competition

Codelco and other copper mining giants of declining ore grades as a key reason not be enough, calling instead for legal
are set to plough billions of dollars into for slower than anticipated growth in what changes that would push those with inac-
the revitalisation of Chile’s mines, but that is normally one of the region’s healthiest tive exploration claims to either use them,
may not be enough to keep the country from economies. or lose them.
losing ground to competitors elsewhere in
the world. “The new structural projects being un- Amberg said Terraza’s plans did not rep-
dertaken by the majors in Chile are mostly resent a radical change from the status quo.
Demand for copper is widely expected about maintaining production, not increas-
to take off by the mid-2020s amid a boom ing it,” Chile deputy mining minister Pablo “It’s going to be a very difficult thing to do,
in EV production, but Chile is saddled Terrazas said. politically it’s very difficult, and it will have to
with mines facing crippling declines in ore be over multiple governments to implement
grades and a system that allows the bulk of “With a supply deficit on the horizon, we any change,” Amberg said.
its exploration concessions to sit idle. need new projects, new deposits, new dis-
coveries.” Diego Hernandez, an industry veteran
“Chile is a fantastic country to work in. who heads mining trade body Sonami in
The question then comes, if it has all this At a presentation at the World Copper Chile, agreed that any law change would
potential, why are we not seeing growth in Conference in Santiago last month, Ter- be unlikely. But, he said that existing and
exploration?” Anthony Amberg, of Cana- razas said investment in exploration had planned projects, including Codelco’s over-
dian junior Los Andes Copper, said. grown by 19% in 2018. hauls and Teck Resources Ltd’s Quebrada
Blanca 2 expansion, could potentially in-
The answer to that question could prove But the numbers are deceptive: Of 300 crease Chile’s production by as much as a
critical as Chilean projects increasingly exploration concessions, just 22 are ac- quarter.
compete for capital with up and coming tive. And of the total, big global miners own
greenfields prospects in Congo, Mongolia 89%, where juniors own just 4.5%, just one- If smaller exploration prospects in Chile
and even neighbouring Peru. eighth of the global average. continue to fizzle, though, the spike in de-
mand driven by EVs will eventually require
Many of the projects approved and under That means many concessions have sat supply from new projects, whether from
way in Chile, including a 10-year, $US40 idle for decades or more. Chile or elsewhere, according to Jaime
billion overhaul drive by the world’s top cop- Sepulveda, a copper analyst with CRU.
per producer, Codelco, focus on reinvigor- Chile’s Mining Ministry this week pro-
ating massive, but sometimes decades or posed several solutions, from fostering bet- “In any case, there will be a gap between
even century-old mines. ter financing options for exploration within what we’re projecting for demand and what
Chile to hosting roundtable-style conversa- Chile’s existing projects can offer,” he said.
The problem has become so severe tions with major and junior miners to inspire
that Chile’s Central Bank cited the issue more turnover in exploration concessions. – Dave Sherwood, Reuters

Critics say, however, the reforms may

PAGE 60 MAY 2019 AUSTRALIA’S PAYDIRT

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SAREIC REVIEW

Pellekaan bill crushed by
Government MPs

South Australia’s mining amendments South Australia Minister
bill has been defeated after four rebel for Energy and Mining,
Government MPs crossed the floor to oppose
Dan van Holst Pellekaan
it, leaving Mines Minister Dan van Holst
Pellekaan bereft of a key piece of legislation.

The Liberal Party split came the day Industry groups “AMEC is pleased that the Premier and
before van Holst Pellekaan gave the were quick to criti- Minister have ruled out the Government
opening address to the South Australian cise their disap- from supporting a right to veto for farming
Resources & Energy Investment Confer- pointment at the in South Australia.”
ence (SAREIC). On the morning of the Government’s fail-
conference, the Government announced ure to enact leg- The amendment bill debate comes at an
plans to shelve the Statutes Amendment islation designed unfortunate time for South Australia’s min-
(Mineral Resources) Bill after failing to win to improve the ap- ing sector as activity picks up after several
full party support or the backing of the La- provals process. years in hibernation.
bor opposition.
“The modernisation of this 47-year-old Van Holst Pellekaan pointed to BHP Ltd
The twist came amid suggestions van piece of legislation is essential to improv- and Oz Minerals Ltd’s expansion inten-
Holst Pellekaan had initially agreed to ing practice to reflect the standards ex- tions and Iluka Resources Ltd’s decision to
include the veto during party room dis- pected from our minerals sector,” South restart operations at the Jacinth-Ambrosia
cussions but reports in The Adelaide Ad- Australian Chamber of Mines and Energy mineral sands mine in the State’s west as
vertiser suggested he then reversed that (SACOME) chief executive Rebecca Knol signs SA’s mining sector was returning to
decision based on advice from the Depart- said. “SACOME will continue to support good times. He highlighted the increased
ment for Energy and Mines. the consultation and negotiations required exploration activity also witnessed in the
to reform the oldest mining legislation last year.
Van Holst Pellekaan remained defiant in the country and ensure it is fit for our
during those opening remarks, telling the modern mining industry and upholds the “There was $1.5 billion committed to
industry he would never allow landholders behavioural practices demanded by the new projects last year. And, approved drill-
a veto on exploration, the key sticking point South Australian public.” ing metres were up 30%. We are optimistic
of the rebel MPs. that trend will continue.”
The Association of Mining and Explora-
“We will continue to improve the rules tion Companies (AMEC) chief executive He said the Government was also work-
governing the industry,” he said. “We are Warren Pearce expressed his disappoint- ing to improve the attractiveness of SA’s
striving for improved engagement between ment in the decision but said it was better mining sector to national and international
explorers and landholders, for greater cer- than seeing exploration in the State sty- investors.
tainty and transparency. We will not offer mied.
landholders a right of veto on the minerals “We must do more,” van Holst Pellekaan
below the land which belong to all the peo- “Today’s announcement… is a back- said. “The Government is currently under-
ple of South Australia.” wards step for South Australia,” Pearce taking a review of international and inter-
said. “However, it is better that these state engagement which will lead to a new
Van Holst Pellekaan also reaffirmed the amendments were shelved than for the approach to investment attraction and ex-
decision to prevent the right to veto was his Government to have caved to a range of port promotion. We will confirm the goals
decision, not the department’s, and said concessions that would hinder exploration in consultation with industry.
the review, which had been instigated by and the future development of the mining
the former Labor Government, was never industry. “We are not expecting the resources
likely to provide satisfaction to all stake- sector to carry the State alone, but it will
holders. “After three years of consultation on the
Mining Bill in good faith, it is frustrating
“It would be foolish to think the industry that the Government is being held hos-
review will provide recommendations that tage by four members of parliament. The
everyone would like,” he said. “We will reason the Act was being amended has
push forward and I take personal respon- not changed, it needs to be updated and
sibility. The objective is to get it as right as streamlined.
possible.”

PAGE 62 MAY 2019 AUSTRALIA’S PAYDIRT

“We will not offer landholders a right of veto on
the minerals below the land which belong to
all the people of South Australia.
remain a key driver and support will be on- and processing operations at Whyalla,
going.” Port Pirie and Roxby Downs,” he said. “In
the last 12 months $50 million of grid scale
Energy security had been a major con- storage had been committed to renewa-
cern when the Steven Marshall-led Gov- bles and there is an opportunity to export
ernment won the 2018 state election, but renewable energy to the east coast.”
van Holst Pellekaan said SA was now well
on the way to becoming a net exporter of – Dominic Piper
renewables and was also welcoming new
pumped hydro, natural gas and hydrogen Van Holst Pellekaan with SA
projects. mining veteran Derek Carter

“Energy has been a major concern for
the sector and this is especially poignant
when we look at important steelmaking

Comment

Tom Koutsantonis’ failure to front at SAREIC may be another sign of the ALP’s willingness to use the mining
amendments bill as a political football to wedge the Steven Marshall Government.

Koutsantonis was a tireless supporter of SA’s mining sector during his time as Mines Minister and even in his early
months as shadow spokesperson. Indeed, last year he urged conference delegates to not let the new Government
impose its will on the industry.

“Governments need to listen to people who know what they are talking about,” Koutsantonis said last July.

“As soon as we impose political rule above regulation, companies will stop coming.”

However, Labor’s decision to reject the amendments bill – which was created as a result of the mining act review
it instigated three years ago – smacks of political expediency and Koutsantonis’ cancellation of his appearance at
SAREIC (no reason was given to Conference organiser Paydirt) left industry without an explanation of Labor’s current
position on exploration in South Australia.

AMEC’s Warren Pearce pointed to Labor’s change of sentiment.

“It is also disappointing to see that Labor have not stepped forward to support this legislation, which they played a
major role in developing,” Pearce said.

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 63

SAREIC REVIEW

SA renews its energy credentials

South Australia’s remarkable journey could be but it is a long way off.” Neil Gibbins
from energy insecurity to net exporter DEM’s executive director energy re-
of power on the back of new wind and so- “In 2010 we formed the Gas Roundta-
lar generation is set to continue, but don’t sources, Barry Goldstein, said those de- ble, which produced a roadmap that in-
count on the State going 100% renewable bating the adoption of renewables on a formed the community about the sector
just yet. wider scale were missing the point. but it was not sufficiently persuasive to
avoid a ban on fracture stimulation in the
The State has become a renewable “The question is not renewables versus Otway Basin,” he said. “But, the ban on
energy leader almost by mistake after a non-renewables,” Goldstein said. “You fracking has been very effective. It means
series of network blackouts in 2017 forced must take out an insurance policy; that we can get on with the job of exploring for
the Government, major industry and the is, a number of technologies competing conventional gas in the Otway.
power sector to look for alternative solu- to get to the benchmark of delivering the
tions. best price. The US dropped emissions “When we had a drop-in session in the
and prices by switching from coal to shale south-east of the State, the only criticism
Elon Musk made the biggest headlines gas. Carbon capture is not available right we got was saying how can we be sure the
when he promised, and delivered, a large now, clean coal is not available right now. It gas produced will come to the south-east.”
Tesla storage battery in SA and the State doesn’t mean there won’t be technological
now gets more than half its power needs breakthroughs to achieve that. Opposition to offshore exploration in
from renewable sources. the Great Australian Bight has also been
“We will need oil and gas and coal for strong but Goldstein is confident the pro-
Department for Energy and Mines decades to come, I’m just not sure how ject will go ahead.
(DEM) chief executive Paul Heithersay many decades.”
told SAREIC that investment continued to “It’s clear that there is nothing unusual
build in the renewables space. Association of Mining and Explora- about deep water exploration,” he said.
tion Companies chief executive Warren “We’ve got good regulators and respon-
“South Australia has become a leader Pearce agreed, saying keeping perspec- sible companies. I fully expect exploration
in renewables, heading towards 70%, and tive around energy policy aims was es- to be undertaken to community expecta-
there is much investment coming to SA sential. tions.”
because of it,” he said. “There is reported
new investment of $21 billion in the pipe- “The biggest concern with the 50/50 tar- While the likes of Santos Ltd and Beach
line. Now, we won’t get all of that but we get is on cost. When I look at NSW, I don’t Energy Ltd have dominated exploration
will get some of it and renewables will be see a scenario where energy prices are and production of SA’s onshore gas re-
a major contributor to that 3% gross state coming down,” he said. sources, a new generation of players are
product growth the Government is target- emerging.
ing.” Goldstein has led the SA Government’s
efforts to find new reserves of natural gas Leigh Creek Energy Ltd is currently de-
In addition, a proposed new 800MW in- in the last 15 years. He said the additional veloping its namesake project into a pro-
terconnector between SA and New South 50 terajoules of gas production currently ducer of synthetic gas (syngas) and ferti-
Wales should provide further security and being developed or assessed would have liser products.
stability. a dramatic impact on supply side dynam-
ics in the power space. The company completed pre-commer-
However, SA’s emerging energy re- cialisation demonstration work and envi-
sources are not restricted to wind and so- The SA oil and gas sector had run up ronmental studies earlier this year, paving
lar with projects involving pumped hydro, against a widespread community backlash the way for a reserve upgrade to 1,153
hydrogen, syngas and natural gas all re- in recent times but Goldstein said on-the- petajoules in March. Richard Peasgood,
ceiving investment in the last 12 months. ground opposition was much different to commercial and procurement manager at
general perceptions. Leigh Creek, said the company was now
The rise of various energy projects targeting a 2023 date for first production.
meant a 100% renewables network was
still some way off, according to Electranet
commercial manager Ashley Manna.

“We are certainly seeing that rather than
being something that won’t work, batteries
and storage are really game changers, not
just for remote penetrations but from a grid
perspective,” Manna said.

While competing ideologies dominate
the national discourse around power and
renewables, Electranet remains agnostic
about the forms of generation it takes on,
allowing it to embrace new developments.

“It comes down to technology, particu-
larly on remote sites,” Manna said. “We
thought six years ago that no pumped hy-
dro project would work. Now we have six
projects; that’s the technology curve we
see moving.

“Can SA be a 100% renewable grid? It

PAGE 64 MAY 2019 AUSTRALIA’S PAYDIRT

South Australia has become a leader in renewables,
heading towards 70%, and there is much investment

“ coming to SA because of it.
“We have given ourselves two years for New gas reserves are likely to be vital ward contracts and cost stability as well,”
approvals and funding,” he said. if renewable supply continues its upward Manna said.
trajectory.
Elsewhere, the former Beach manage- Pearce said it was disappointing that
ment team is returning to SA in the Vintage Manna said while batteries had de- uranium and nuclear power appeared to
Energy Ltd vehicle. Led by founding Beach livered wind and solar storage benefits, have been forgotten in the debate around
chairman Reg Nelson, Vintage has acre- reliability was still an issue to be fully ad- the country’s energy mix.
age straddling the Victorian border and dressed.
having raised $30 million at IPO plans to “I’m disappointed to see nuclear dis-
invest heavily in exploration in the next 24 “Storage is important but a bigger ques- carded as an option,” he said. “I think we
months. tion is that system strength,” Manna said. need a conversation asking do we need
“Look at Denmark; it can achieve high something else to provide baseload pow-
Vintage managing director Neil Gibbins use of renewables because it has a lot of er in between coal and renewables and
said the supply crisis in eastern Australia strength from nuclear from across Europe where does nuclear fit into that?”
had opened the gas market to smaller behind it. South Australia is at the end of
players like Vintage. the grid [so needs to increase its security].” – Dominic Piper

“Gas production is becoming what oil The NSW interconnector should go Rebecca Knol
was for smaller cap players and that wasn’t some way to solving issues around secu-
the case 10 years ago with oversupply and rity and reliability.
long-term contracts in place,” Gibbins said.
“It improves reliability and helps with for-

Double standards rile
SACOME chief
The head of South Australia’s peak community for consultation ahead of for-
resources body has accused mining mal submission to the regulator. Knol also urged the resources indus-
magnate Andrew Forrest of “industry can- try as a whole to think more strategically
nibalism” for publicly opposing explora- Knol said this was a prime example of about the impact of its messaging, high-
tory oil well drilling 400km off the coast of a resources company focused on being lighting a recent example from South
the Great Australian Bight. transparent and having the best interests Australia’s farming/mining debate which
of a local community at heart. became misconstrued.
SACOME chief executive Rebecca
Knol pulled no punches in detailing how However, following its review of 30,000 “A company with interests located at
Norwegian multinational energy produc- comments on the draft environment the epicentre of the farming/mining de-
er Equinor’s efforts to work with the lo- plans, Equinor said that many of the bate issued media comments that stated
cal community for the “benefit of all” had statements made had been “influenced it hoped to capitalise on the ‘great work
been adversely impacted by the com- by material circulating online which ethic’ of the daughters and sons of farm-
ments from the Fortescue Metals Group grossly misrepresented both the risk and ers in the area,” she said.
Ltd founder. consequences of a major oil spill”.
“This statement was made at the
“With a company such as Equinor Knol said misinformed public percep- same time that farmers were vocalising
working so hard to counter negative pub- tion was the greatest threat to the re- a preference for a right to veto to prevent
lic perception, it is even more disappoint- sources industry. miners having access to land. The sig-
ing when one of our own, ‘Twiggy’ For- nificance of the timing was not lost on
rest – who incidentally owns property on “We have always battled the ‘dirty and the farming community and , once again,
Kangaroo Island and chairs a company dangerous’ tagline, but since the birth of we as an industry association – and un-
that is actively exploring oil and gas op- social media, fake news and the rise of beknownst to the company concerned –
portunities – claims that Equinor’s plans environmental activism, the perception were back in damage control.
present ‘an unacceptable risk to an irre- of our industry has plummeted,” she said.
placeable ecosystem’,” Knol said. “It only takes one bad headline to
“Public perception, however inaccu- change an individual’s opinion; one con-
“This example of industry cannibalism rate, is damaging our sector. Negativity versation at the pub.”
is unfathomable, and is born out of deep spreads quickly and trust, when lost in a
commercial competitiveness. And, like community, is almost impossible to re- – Michael Washbourne
a developer desperate to attract invest- gain.
ment, it does not consider the whole-of-
industry ramifications.” “Today, our politicians are making de-
cisions based on community sentiment;
According to Knol, Equinor was the a sentiment that is largely fuelled by
first company in South Australia to pub- social media, fake news and misinfor-
lish its draft environmental plans to the mation. The sector’s supporters remain
silent, while the activists become ever
more vocal.”

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 65

SAREIC REVIEW

Renascor’s Dutch delight

Renascor Resources Ltd managing director David Christensen was
unquestionably the happiest participant at SAREIC this year.

When Christensen presented his ness, the official export credit agency of “Royal IHC is going to be procuring a
company’s story to delegates on the Netherlands. lot of projects from Holland, therefore,
the opening morning of the conference, we qualify under the Dutch export credit
he was pleased to announce Renascor Export credit agency cover is common agency scheme. These loan guarantees
had just been granted a mineral lease for practice in some European countries effectively allow you to put in commercial
its Siviour graphite project on South Aus- to assist exporters in winning contracts debt, and generally, because it’s guaran-
tralia’s Eyre Peninsula. while also increasing a project’s capacity teed, you get better terms.”
to raise finance from banks.
Less than 24 hours later, Christensen Royal IHC is working with Renascor to
unexpectedly returned to the lectern to Renascor entered into a strategic part- complete a DFS on Siviour. Previously
reveal the Dutch Government had of- nership with Dutch-based EPC contrac- the graphite hopeful has assessed both
fered in-principle support for project fi- tor Royal IHC last November. staged and immediate full-scale devel-
nance under its export credit guarantee opment options of the project, with the
scheme. “It’s only a letter of interest, it’s the first final path set to be decided by what type
step in a long due diligence process, but of financing package the company can
“For Renascor, this is a potential game it’s a major first step and it really indi- pull together.
changer in establishing us as a serious cates a willingness to provide finance,”
graphite player, on the road to hopefully Christensen said. The DFS is due for completion at the
becoming a South Australian producer of end of this quarter, with Royal IHC tipped
graphite,” Christensen said. “What this means for Renascor, as a to deliver an EPC proposal to Renascor
company and for our Siviour project here for the process plant build soon after.
Renascor has estimated that up to 60% in South Australia, is it gives us a degree
of the capex for Siviour will qualify un- of credibility that maybe we lacked be- Renascor’s quest to land project fi-
der the export credit guarantee scheme fore. In particular, we think this is going nance – the company hopes to begin
which was issued in the form of a letter to open up offtake opportunities because construction towards the end of this year
of interest by Atradius Dutch State Busi- it makes us a more credible partner and – has also been aided by the grant of a
this in turn is going to open up financing.

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PAGE 66 MAY 2019 AUSTRALIA’S PAYDIRT

David Christensen

mineral lease for Siviour. the world’s fifth largest
“It’s difficult to convince the investment reported graphite re-
serve and its near-sur-
community to invest significant amounts face, flat-lying orebody
of capital to start-up projects in what is expected to translate
might be considered a risky jurisdiction,” to low mining costs once
Christensen said. in production.

“One of the advantages of operating Renascor continues
in a low sovereign risk jurisdiction like to explore opportunities
South Australia is the confidence in the to produce a spherical
integrity of the regulatory process. Now graphite product suitable
that we’ve concluded this, it’s an impor- for application in lithium-
tant milestone for Siviour because to ion batteries. The com-
some degree the confidence in South pany completed a PFS
Australia’s regulatory process now at- earlier this year which
taches to the Siviour project. supported production of
nearly 30,000t of spheri-
“Importantly we can share some of the cal graphite from a por-
confidence in the mineral lease with the tion of its concentrate
equity markets and, perhaps more impor- production.
tantly, this is the key de-risking event that
we can share with our potential offtake – Michael Washbourne
and finance partners.”

Despite only being discovered a little
more than three years ago, Siviour hosts

EMMIE BLUFF CODA METALS LTD a subsidiary of Gindalbie Metals,
has the right to earn up to 75% interest in the
WINDABOUT Mt Gunson Copper-Cobalt Project by way of farm-in.
MG14
Gindalbie is proposing to demerge Coda to Gindalbie
shareholders as a separate entity as part of a scheme
of arrangement with Ansteel

Coda intends to apply for listing on ASX (with listing
subject to all necessary regulatory approvals). Coda’s
focus will be on progressing the Mt Gunson Copper-
Cobalt Project

Mt Gunson is situated approx. 145km NNW of Port
Augusta in the world class Olympic Copper province
and contains JORC compliant indicated resources with
159,000t contained Cu and 9,000t contained Co

Coda is advancing PFS level studies on Windabout
and MG14 using a conventional, flotation-based
flowsheet

Substantial potential for exploration upside with
studies ongoing on the Emmie Bluff prospect +700km2
of highly prospective tenure

Situated close to some of Australia’s most exciting
mineral projects including Carrapateena, BHP’s Oak
Dam prospect

ASX:GBG
ndbe.com.u

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 67

SAREIC REVIEW

Breaking SA’s discovery hoodoo

BHP Ltd’s Oak Dam West discovery shows there are plenty
more new deposits to be found in South Australia, but greater
collaboration between majors and juniors, coupled with assistance

from government, is required to unlock what John Anderson
described as a “concertina of discoveries”.

The discovery of a new IOCG prospect Paydirt editor Dominic Piper (centre) convened a closing panel session on SA’s
at Oak Dam West, 65km south-east exploration future that featured consultant John Anderson, Hillgrove’s Steve McClare,
of the Olympic Dam, prompted BHP to
take the unusual step of publishing drill- Gindalbie’s Chris Stevens and Renascor managing director David Christensen
ing results from an early stage explora-
tion programme last November. a release out’,” Stevens said. like exploration and development.”
“We’ve seen an uptick in people say- Despite sliding from 14 to 24 in the
In making the Oak Dam West dis-
covery public, it revived hope of further ing ‘OK, that’s an interesting piece of real latest Fraser Institute rankings, SA’s
major finds in SA following a long hiatus estate you’ve got there, you’re operating Tier One status was enough to ensure
since Carrapateena was unearthed a in the right area, it’s a good spot to be in’ Hillgrove remained planted in the State,
decade ago. and that gives us a lot more confidence even though its Kanmantoo copper mine
to be committing funds into exploration.” is coming to the end of its life.
For Anderson, he hopes it won’t be an-
other decade before the State’s next big Anderson, who is now an independent McClare said having a solid under-
IOCG deposit is found. consultant, said the key to finding more standing of the regulatory process in SA
discoveries like Oak Dam West was free- was the determining factor for Hillgrove
“There was something like 35 years ing up exploration tenements, particular- in knocking back opportunities abroad.
between drill holes at Oak Dam West, so ly for cashed-up majors to go crazy over
you’ve got to seriously ask, it wasn’t just with the drill bit. “We did a fair bit of work up in Indone-
depth, was it?,” Anderson said. sia, we spent about $30 million up there
“I think with the majors now showing and we had one extremely good explora-
“We don’t want the next major discov- interest in deeper resources, we should tion project, but for us – and the way I
ery in SA to be another decade away, find a way for them to access ground that looked at it – was that’s elephant country
which is basically what’s happened with is maybe held by a junior,” he said. up there,” McClare said.
Oak Dam West. We should be getting
back to what we thought we were head- “Here in SA we offer high-grade de- “You’ve got to go hunting with a big gun
ing towards when Prominent Hill, then posits. We may be going a little deeper, if you want to win a big prize, and that
Carrapateena and Hillside were found. but I think there’s still shallow deposits to just wasn’t for us. If we’re going to find
be found, but we’ve just got to make SA something, the competitive advantage
“We were going to have a concertina as amenable as possible. You’ve just got we have [here in SA] over others is a
of discoveries. Oak Dam West shows to do the best you can to make the indus- paid-off processing facility.”
there’s more out there and you don’t need try the most viable it can be and attract
a lot of space between these things.” companies to come here and do things Stevens, whose company is prepar-
ing to demerge the Coda Minerals Ltd
Anderson, the former managing direc-
tor of Investigator Resources Ltd, shared
his thoughts during the closing panel
session to SAREIC. He was joined on
stage by Renascor Resources Ltd’s Da-
vid Christensen, Gindalbie Metals Ltd
chief executive Chris Stevens and Hill-
grove Resources Ltd managing director
Steve McClare.

Gindalbie’s Emmie Bluff prospect is
just 15km from Oak Dam and sits along
the same geological trend.

While his company’s share price did not
enjoy the same spike that many juniors
in Western Australia’s Paterson province
did on the back of Rio Tinto Ltd setting up
a major exploration camp in the region,
Stevens said investors were still quick
to draw links between Oak Dam and the
soon-to-be-drilled Emmie Bluff.

“When Oak Dam was discovered I had
various calls from numerous sharehold-
ers saying ‘you should be capitalising on
this, this is very exciting, you need to get

PAGE 68 MAY 2019 AUSTRALIA’S PAYDIRT

subsidiary which has the rights to the Mt “Dutch authorities are concerned with open file of information, we have won-
derful technical people here who come
Gunson project, agreed. Equator Principles, so from our perspec- up with wonderful opportunities, but of-
ten we’re stymied in getting access,” he
“Every company has to sit down and tive, being in SA makes that easy,” Chris- said.

go through a strategic process to consid- tensen said. “The way the capital markets work
these days is you need to get success
er which risks they’re willing to take and “We had initial discussions with the fast. It’s not good enough to just go to the
open file and say ‘look, we’ve got some
to consider the kind of projects they can Dutch about what our overall policy was great targets, give us money and a cou-
ple of years and we’ll find something’.
look at in which jurisdictions,” Stevens on sustainability and environmental pro- Well, no, the capital markets don’t want
that. They want you to be successful and
said. tection. The reality is we don’t have much they want you to be successful fast.

“For us it was a very attractive fact that of a choice because we have a pretty “We were quite fortunate in our project
to be dealing with only one landowner
the Mt Gunson copper-cobalt project is comprehensive regulatory framework and he turned out to be a really wonder-
“in SA.” ful person to deal with. But if he weren’t, I
here in SA and that’s where the sort of wouldn’t be here talking to you about this
great graphite project, I’d probably be
We don’t want the next major discovery in SA talking about something else.”
to be another decade away, which is basically
what’s happened with Oak Dam West. McClare said it was important for
the regulators to maintain consistency
Exploration is currently not a focus for integrity in the regulatory process makes through the life of a project.
Renascor, but SA’s reputation appears more of a difference.
to be boding well for the company as it “If you’re going to finance a project for
chases development funding for its Sivi- “In our case, we’re quite confident the a long time, the rules can’t change half-
our graphite project on the Eyre Penin- Equator Principles are easily met by the way,” he said. “We’ve got to be very care-
sula. SA standards.” ful that we don’t have live rules because
then you won’t be able to finance any
Renascor last month received in-prin- Christensen said, however, if the in- project unless it’s spectacular.”
ciple support from a Dutch export credit vestment community is expecting more
agency for project finance, with up to major finds in SA, the Government would – Michael Washbourne
60% of the capex required to develop need to waive some of the access im-
Siviour expected to be covered by the pediments to undertaking exploration.
scheme.
“We’re in a market right now that de-
mands success and we have a great

Australian graphite

RNU_Paydirt_ad_SAREIC_190315.indd 1 www.renascor.com.au
ASX:RNU

15/3/19 10:33 am

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 69

SAREIC REVIEW

Carpentaria bridges the market

Fortescue Metals Group Ltd’s recent Hawsons is capable of producing a with eight interested parties for up to 14
decision to commit $3.6 billion to de- 70% Fe product which is a desired input mtpa of proposed production. A base-
velopment of its Iron Bridge magnetite for the global pellet feed and direct re- case production scenario of 10 mtpa was
project is the market signal Carpentaria duction markets. used in the PFS.
Resources Ltd managing director Quen-
tin Hill has been looking for. “The market has shown its preference Mitsui has committed to funding $5.4
for higher grade ores, with the Platts 65% million of the overall BFS cost for an op-
For several years now, Hill has pro- Fe index currently more than $US100/t,” tion over 20% of the offtake. Hill said his
moted the development case for his Hill said. company was seeking similar deals to
company’s Hawsons iron project, 60km protect shareholder value.
south-west of Broken Hill, on the back of “It is the demand for high quality ores
rising demand for higher quality ores. that has led to the development of the “Fortunately customers look at pro-
Iron Bridge magnetite project. It is, I be- ject and market fundamentals, not at our
Quentin Hill lieve, a signal that their higher quality company’s market value,” Hill said.
ores will displace their lower quality ores.
This idea has been the foundation of our “The project fundamentals are strong
business model. and the financial metrics outstanding.
Our PFS results show an all-in landed
“The decision by Fortescue shows, as China cost of $US48/t and, using con-
ever, market supply and demand fun- sensus iron ore price forecasts and pre-
damentals are working to get the best miums, it shows a $40/t profit margin.
projects developed. Our financial met- Today that margin is over $65/t with an
rics compare favourably with Iron Bridge equity rate of return of more than 43%.
– and at a smaller scale – so you would Our assumptions are looking a little con-
expect market fundamentals to pull Haw- servative at the minute.”
sons to development. And we are talking
to the right people to make that happen.” Leading research firm Wood Macken-
zie has rated Hawsons as the world’s
Carpentaria has already partnered best high-grade iron ore development
with Japanese trading house Mitsui & project outside of those held by the ma-
Co to complete a BFS on Hawsons, hav- jors.
ing also signed non-binding agreements
– Michael Washbourne

Cracking the Coda Chris Stevens

Gindalbie Metals Ltd chief executive and then following that we’ll go straight of Karara, the namesake operating entity
Chris Stevens has pinpointed two back into the lab for more geotechnical, of the troubled iron ore mine in Western
upcoming milestones which he believes metallurgical and resource work. There’s Australia, down to nil since 2014. Ansteel
will begin to unlock the full potential of the a lot of work to do here at Emmie Bluff, owns the remaining 52.16% and is the
Mt Gunson copper-cobalt project. it’s a pretty serious area to be looking at.” project’s sole funder.

The first is Gindalbie’s demerger of Emmie Bluff will eventually be com- Ansteel is poised to acquire all the
the Coda Minerals subsidiary which bined into a broader operational play shares it does not already own in Gin-
holds the JV rights to Mt Gunson, 135km that incorporates the MG14 and Winda- dalbie. Assuming that and the Coda de-
north-northwest of Port Augusta. Gin- bout resources which collectively contain merger are completed, Gindalbie share-
dalbie’s remaining entities, in particular 158,000t copper and 9,300t cobalt. PFS holders are set to receive 2.6c/share
those linked to Karara Mining Ltd, will be work is slated to begin in the next quarter. cash plus a pro-rata distribution of Coda
snapped up by Ansteel via a $25 million shares.
cash acquisition. Regional exploration of the wider Mt
Gunson JV – Coda is earning up to 75% Upon separation, Coda will be capital-
While that transaction unfolds, the of the project by way of a staged farm- ised with $10.64 million less any incurred
company will look to boost the existing in – is also on the agenda post the de- expenditure on Mt Gunson since June
resource at Mt Gunson. merger. 2018.

Gindalbie recently completed a dia- “One of the advantages of this project – Michael Washbourne
mond drilling programme and concept is there is a lot of data out there,” Stevens
study on the Emmie Bluff prospect and is said.
now preparing a scoping study ahead of
a resource drill-out. “Companies have previously looked
and said processing is difficult and then
“Emmie Bluff has the potential to ma- not necessarily progressed with some of
terially increase the resource base,” Ste- the exploration, especially with the sedi-
vens said. mentary-hosted mineralisation. We now
have a wealth of data to be going through
“We believe this [drilling] should be and to follow up.”
sufficient to take us to a JORC-compliant
resource, subject to additional studies, Gindalbie has written its 47.84% share

PAGE 70 MAY 2019 AUSTRALIA’S PAYDIRT

Hillgrove plans
shareholder return

Hillgrove Resources Ltd managing di- While the original Kanmantoo orebody Steve McClare
rector Steve McClare was unequivo- is coming to the end of its life, Hillgrove is
cal, saying the company aims “to pay a not lacking for other targets which could “The reason we are doing the hydro is
fully franked dividend to shareholders this provide feed to the mothballed mill. that it enables us to offer a value return
year”. to shareholders and allows us to unlock
“We have exploration potential. We are the regional exploration potential,” Mc-
Such statements are rare from junior building a strong pipeline with 6,100sq Clare said.
miners but with the company nearing the km of ground in the region,” McClare
end of operations at its Kanmantoo mine said. “There are some interesting near- Pumped hydro projects have sprouted
and preparing to redesign the completed surface targets in the south and we be- up across SA in the last few years but
open pit as a pumped hydro project, Hill- lieve this is the most understated copper McClare believes the Kanmantoo pro-
grove is set to be flush with cash in the exploration area in South Australia.” ject’s mining history makes it among the
short term. most significant in the country.
The most intriguing target appears to
Drill and blasting at the Kanmantoo pit be the Kanappa project. There Hillgrove “We’ve taken a much quieter path and
finished last month, but haulage will con- has identified a 150m wide anomaly of proved it to be one of the best projects
tinue on a non-continuous basis with the magmatic-related alteration, unusual for in Australia,” he said. “It has low capex,
plant set to be put in hiatus in mid-2020. SA where Olympic Dam-style IOCG de- about $1 million per megawatt where
Hillgrove has 4mt of stockpiles still to get posits are most common. most projects are double that. That is be-
through and McClare is looking forward cause our lower pond is the pit and be-
to producing more copper at higher mar- “We are looking for a Cadia, not Olym- cause of its steep walls it looks more like
gins. pic Dam, at Kanappa,” McClare said. a European mountain and there is less
than 1.5km between the ponds.”
“Around 75% operating costs are taken Exploration will be funded not only
out which means we will continue to gen- from the cash generated by Kanmantoo – Dominic Piper
erate cash,” he said. but also the sale of Hillgrove’s pumped
hydro project.

The Company continues to focus on the From Au to Zn
exploration, evaluation and development
of base and precious metal projects in Exploring and Developing Projects
Australia and Algeria.
From Australia to Algeria…
Fresh Management to build on proven
operational experience. Ulooloo Gold to Tala Hamza Zinc
Kapunda Copper to Kitticoola Copper-Gold
Our new team represented the Adelaide Hills to South Gawler Ranges
company at domestic and international Bird In Hand Gold to Wild Horse Copper
mining conferences and presented to Angas Processing Facility, Strathalbyn
investors throughout Australia, in Hong We are Terramin Australia Ltd.
Kong, London and New York.

With two major projects in final
stages of permitting, Terramin
Australia is looking for opportunities.

ASX : TZN

Terramin Australia Limited
Unit 7, 202-208 Glen Osmond Road, Fullarton, Adelaide, South Australia, 5063
T +61 (0) 8 8213 1415 E [email protected] terramin.com.au

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 71

SAREIC REVIEW

Alliance scopes out Weednanna

Alliance Resources Ltd now knows exactly tion,” Johnston said at SAREIC. “We know Depth potential also exists and the 8 g/t
what it needs to do to push its Weed- we’ve done enough drilling in one month to gold grade in the deepest portion of the re-
source had Johnston confident underground
nanna gold project towards development after revise the resource from inferred to indicated, positions could be defined.

releasing a scoping study last month. the scoping study will show us where to go “The underground is why we think this pro-
ject has so much upside,” he said. “We are
The study, undertaken by Mining One Pty from there.” looking at widths of 3-5m so we think the un-
derground will be amenable to mechanised
Ltd, showed a $40-48 million capex could Alliance has built a resource of 180,000oz mining to bring the costs down.”

deliver a mine capable of processing 250,000 at Weednanna. The resource was designed While Alliance is the fourth company to
explore Weednanna, it is the first to commit
tpa of the identified 1.097mt @ 5.1 g/t for around a $2,000/oz gold price, higher than solely to gold with previous explorers focusing
on the project’s iron ore credentials. Johnston
181,000oz gold resource (49% indicated). the prevailing Australian spot gold price, but said the history of iron ore mining meant there
were still plenty of gold indicators to follow up
Alliance managing director Steve Johnston Johnston was unconcerned about appearing on.

said the study had provided strong encour- overly optimistic about the project. “We re-analysed the iron ore pulps and 11
returned gold mineralisation,” he said. “They
agement for the company to commit to the “We used a $2,000/oz gold price and got a were not as good a grade as at Weednanna
but that drilling was optimised for iron ore and
next stage of its exploration and development bit of flack for that but you have to give your- spread over 650m, so there is potential to fol-
low up with RC drilling in an area on the min-
programme. self the best shot possible in the early stage of ing licence.”

Speaking at SAREIC ahead of its release, a project,” he said. “When you get to the PFS At Weednanna East, the company plans to
follow up on historical RAB anomalies.
Johnston said the scoping study has been and BFS, then you can give tighter economic
Alliance is currently raising $4.95 million
designed to give the company an idea of what assessments but the price is only $200/oz off to fund its exploration and feasibility plans for
2019 and beyond.
further work was needed at Weednanna. there now anyway. At $1,600/oz modelling we
“We will launch straight into a PFS following
“We are doing a scoping study for gap anal- only lost 4.5% of the ounces and at $1,800/oz the scoping study, test the recently generated
IP targets and define the Weednanna East
ysis and to identify the critical path to produc- only 0.5%, so it is a very robust deposit.” target as well as do some regional explora-
tion on the aeromagnetic targets,” Johnston
Increasing that robust- said.
Steve Johnston ness is Weednanna’s exten-

sional potential.

“We believe we have a

gold camp here. Historical

hits include 14m @ 36.1 g/t

and 44m @ 6.3 g/t and the

majority of the shoots are

open in at least one direc-

tion,” he said. “More than

80% of the resource is within

120m of surface. As we drill

north we are confident we

will get more mineralised

positions.” – Dominic Piper

Marmota leaps into action

Marmota Ltd appears to be favouring supported the typically low capex treat- Kevin Wills
a heap leach operation for its Aurora ment option.
Tank gold project. “The advantages of this technique is it’s
This included intermittent bottle roll test- pretty low impact, two people can do the
An upcoming scoping study is compar- ing of 12.5mm and 25mm coarse crushed sampling by foot or on quad bikes, and
ing a heap leach set-up against conven- samples which returned gold recoveries of they can collect between 60 and 90 sam-
tional milling for the project, about 50km 92% and 89% respectively. ples a day,” Wills said.
north-east of the mothballed Challenger
gold mine, with Marmota exploration direc- Variable grind size tests also produced “It has similar costs to calcrete analysis
tor Kevin Wills indicating the former option recoveries ranging from 89% to 92%, and it’s based on the depth penetration of
was leading the race. while overall gravity and leaching recover- the roots being able to pick up mineralisa-
ies were 93-96%. Recoveries were pre- tion from significant depths. The larger the
“We’re now looking at heap leach as the dominantly completed within six hours. root area, the better the interactions and
most likely way we can get the deposit into so on.”
operation in the short term,” Wills said. Marmota is planning a large drilling pro-
gramme which will comprise both exten- – Michael Washbourne
“We’re trying to select the optimal path- sional and reconnaissance drilling and is
way to production. We should be finishing based on recent biogeochemistry.
that [scoping study] in the next month or
two and then we’ll be releasing more in- Biogeochem work – essentially sam-
formation about what we’ve got and if we’ll pling of tree leaves – has yielded anoma-
be able to look at a potential development.” lous gold targets not apparent from previ-
ous calcrete sampling. Drill testing of one
Marmota’s expected selection of a heap biogeochem anomaly returned the com-
leach operation for Aurora Tank comes on pany’s highest composite grade to date,
the back of metallurgical test work which 4m @ 72 g/t gold.

PAGE 72 MAY 2019 AUSTRALIA’S PAYDIRT

Minotaur eyes
development

Along-standing kaolin-halloysite play near kaolin; that is the platelets that have rolled Tony Belperio
Streaky Bay is shaping as the first pro- themselves up into little micron-sized nano-
ject in Minotaur Exploration Ltd’s current tubes,” Belperio said. “Every hole intersected mineralisation
stable to move into development. along the 4.5km strike extent of the J1 and
“The conventional work that has been J2 sub-parallel lodes, so that vindicated
While the Poochera project has been on done on the deposit has confirmed it’s very Jericho as a significant copper discovery,”
its books for more than a decade, Minotaur large, it’s very pure and it’s useful for a heap Belperio said.
and JV partner Andromeda Metals Ltd are of products, but what makes it unique is the
keen to extract a DSO product as quickly as halloysite component.” “People in South Australia might scoff
possible and generate early cash flow for a and say ‘look at Oak Dam, plus-400m of
bigger operation. Belperio said there were areas of the 3% copper, what’s this 17m stuff?’. The
Poochera project which contained pure important thing up there is this is a 4.5km
Demand for kaolin and halloysite has halloysite and these would be followed up strike extent.”
increased in recent times due to their ap- shortly. Approvals for full processing are
plication in new technologies such as bat- currently being sought, while a scoping Minotaur is also transferring knowledge
teries and superconductors as well as for study is due next month. gained from its work in Queensland over
high-purity alumina production. to its Peak and Denison projects in South
Andromeda, which is earning up to 75% Australia where it is chasing Cloncurry-
Minotaur executive director Tony Belper- of Poochera via a $6 million spend over style mineralisation.
io said both companies were keen to move five years, is currently negotiating binding
into production as quickly as possible and offtake agreements with potential Asian – Michael Washbourne
take advantage of current prices for kaolin customers.
and halloysite.
Minotaur’s main focus remains the Eloise
The hybrid kaolin-halloysite products copper-gold project in Cloncurry, Queens-
Poochera could produce are currently land, where it made the Jericho discovery
fetching $500-1,000/t, well above the in late 2017. Oz Minerals Ltd is funding an
$300/t average for pure kaolin. Pure hal- initial $10 million earn-in.
loysite is selling for upwards of $US3,000/t.
Best hits from last year’s drilling included
“What sets Poochera apart is that it 17m @ 2.39% copper and 0.58 g/t gold and
contains a large proportion of nanotubular 12m @ 2.39% copper and 0.42 g/t gold.

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AUSTRALIA’S PAYDIRT MAY 2019 PAGE 73

SAREIC REVIEW

Ausmex ready to cash in

Junior explorer Ausmex Mining Group ing at the regional structural architec-
Ltd finds itself in the rare position of
being able to boast about having a sig- ture, looking for deep crustal, scale-flu-
nificant war chest to fund its discovery
ambitions across two Australian states. id pathways and mineralisation styles.

Ausmex last month pocketed $7 “What’s really exciting is these beau-
million from an oversubscribed place-
ment and is now embarking on aggres- tiful conductive plumes coming to the
sive exploration pursuits in separate
IOCG provinces in South Australia and surface and, in this case, we know it
Queensland.
correlates to known mineralisation, so
One of the projects to benefit from
that recent cash injection will be Burra, the historic Monster mine as well as
about 160km north-east of Adelaide.
Burra West, which was a high-grade
At Burra, Ausmex has access to
about 7,400sq km of ground which is pro- underground mine back in the late
spective for gold and copper-cobalt. It is
part of the same G2 structural corridor 1800s. We’re very excited about fol-
which hosts Olympic Dam, Carrapateena
and Prominent Hill. Nicole Galloway Warland lowing these other areas up.”
Ausmex intends to “ground truth” the
While the ground has been known about
for some time, Ausmex believes new tech- Ausmex collaborated with experts from conductive feature over the coming
nologies are the key to unlocking its po- the University of Adelaide to roll out the months, alongside its plans to under-
tential, including use of magnetotellurics, magnetotelluric surveys which identified a take a 15,000m drilling campaign at its Mt
a passive geophysical method which uses large conductive feature below the project Frieda IOCG project in Cloncurry, Queens-
the natural time variation of the Earth’s area. land.
magnetic and electric fields to measure the One of the main targets, Golden Mile,
electrical resistivity of the sub-surface. “We carried out initially a 10km spaced plunges south towards the Newcrest Min-
gridded survey because this was a fairly ing Ltd-held Canteen prospect which the
low cost-effective way of covering a large gold major has revealed very little about.
area and it is also non-invasive and rela- Ausmex is eyeing production from the re-
tively environmentally friendly,” Ausmex’s gion within the next 12-18 months should it
Burra region project manager Nicole Gal- be able to work up a sizeable resource and
loway Warland said. take advantage of the excess processing
capacity around the Cloncurry district.
“As opposed to previous explorers, we’re
not just following the high-grade historic
workings, we’re taking a step out and look- – Michael Washbourne

WPA investment warning

While it has been a decade since a for- “In particular, it recommended that where Kyra Reznikov
eign resources entity had its application Defence is assessing applications for access
to access a project inside the Woomera Pro- to the WPA, a key question be asked whether “For instance, Minmetals must operate the
hibited Area (WPA) knocked back, companies the companies applying for access have sub- acquired mines as a separate business with
with overseas interests are likely to come un- stantive Australian ownership control and in- commercial objectives, using companies in-
der more scrutiny should they wish to explore fluence,” she said. corporated, headquartered and managed in
in one of Australia’s most heavily controlled Australia, and using a predominantly Austral-
regions. “It also recommended that Defence should ian management team.”
implement a policy of arm’s length foreign
The findings of a multi-pronged review of investment only and be looking for arrange- Reznikov also warned that failure to obtain
the co-existence framework for the WPA ments where the investors have limited or no FIRB approval for any transaction or acquisi-
was released in late March, with one of the physical access to the WPA itself and using tion which requires it can have massive con-
recommendations being that the Department only approved contracted services for all the sequences.
of Defence exercise greater control over busi- on-ground work.”
nesses wishing to operate in the sanctioned “The foreign investor can be required to
war material testing zone. China Minmetals was the last foreign com- dispose of the shares or assets that they
pany to be denied access to the WPA in 2009 have acquired without approval and can be
It comes almost three years after invest- when it attempted to acquire a suite of assets stopped from using the voting rights that they
ments of up to $750 million were flagged for from Oz Minerals Ltd, including Prominent would have acquired,” she said.
the WPA due to proposed increased demand Hill.
for further testing by the Department of De- “It can also impact on future transactions
fence and its security partners, including the A revised proposal, excluding Prominent because compliance history is taken into ac-
US. Hill, was later approved but came with a num- count when assessing each application.”
ber of conditions, including requirements for
Finlaysons Lawyers special counsel Kyra the Chinese government-owned company to – Michael Washbourne
Reznikov said the recommendations, if imple- comply with all Australian industrial relations
mented, could potentially limit foreign invest- laws.
ment opportunities for some resources com-
panies which are either looking to access or “Those conditions are essentially in line
are already operational inside the WPA. with those national interest factors,” Reznikov
said.

PAGE 74 MAY 2019 AUSTRALIA’S PAYDIRT

Bird-in-Hand but not in bush

For Terramin Australia Ltd chief execu- forest which is able to screen the project from the existing resource which sits be-
tive Richard Taylor, the answer of how and make us almost invisible from the tween the 100 and 400 RL and take it
to develop a project in a sensitive area is neighbouring areas. down a further 300m. Work we have done
simple; be transparent with stakeholders. confirms the orebody doesn’t pinch out it
“We’ve done work with award-winning extends in depth and widens in places.
“We often get asked: ‘How can you de- landscape architects and redesigned the
velop a project in the Adelaide Hills?’. It is entire plant site around visual amenity “We also believe some of the drill holes
because we listen to the community and so that the water dam looks like those on into the near-mine targets missed the
make changes accordingly,” Taylor said at neighbouring properties. plunge, so we think there is a good 10
SAREIC. years’ potential in the near-mine area.”
“It’s come at a huge cost but is neces-
“We’ve had extensive stakeholder con- sary if we want a successful mine and the The company is also building its regional
sultations, more than 600 interactions and resource supports it.” target base, including the Kitticoola pro-
responding to each of those. More impor- ject, acquired in January.
tant is that we’ve listened and made sub- The gold development story is a new
stantial changes to the project.” chapter for Terramin, which has been ac- Kitticoola operated until 1971, always as
tive in the district since the early 2000s. a private concern, meaning there has been
Terramin is attempting to resurrect the From 2009 it operated the Angas zinc-lead no concerted exploration on the ground.
historical Bird-in-Hand goldfield in the Ad- mine before placing it on care-and-mainte-
elaide Hills. just north of Adelaide. There nance in 2013 in the face of plunging base Terramin has recovered rock chip sam-
are more than 300 historical gold workings metals prices. ples of up to 30 g/t and will now test its po-
in the area but today the region is more tential with a drill rig.
readily associated with viticulture and tour- Terramin’s plan is to use the Angas pro-
ism. cessing facility to treat ore from Bird-in- “We need to drill it to see how much
Hand and any other orebodies it defines of the resource is left, but we don’t need
The competing land uses would usually in the field. much material to be commercial at 30 g/t,”
be a red flag for any mine developer but Taylor said.
Terramin has dutifully ensured the mine “We can truck ore to Angas from any-
and associated infrastructure is either in- where on the tenements so it provides The company was also recently granted
visible or visually in keeping with its neigh- optionality to test other locations,” Taylor Commonwealth access to the Wild Horse
bours. said. project which Taylor said showed porphyry
potential.
“We’ve been out there planting 30,000 “It is a very tasty project for the first four
trees, providing a buffer for native or five years. In 2018 the scoping study “It is an interesting anomaly which needs
wildlife,”Taylor said. “We own all the land, showed NPV of $101 million and a 96% work to show what is under cover,” he said
having bought a 40ha farm outright. We’ve IRR based on a five-year project with a “Now we have access, we are keen to
been planting trees and growing up native grade of 12.6 g/t gold. It is also open at have a good look at it.”
depth. We have a plan to drill and take it
– Dominic Piper

Richard Taylor
AUSTRALIA’S PAYDIRT MAY 2019 PAGE 75

SAREIC REVIEW

Defending the mining industry

Growth in the defence industry is the big- to a few years ago when 100% was com- Phil de Courcey
gest threat to jobs in South Australia’s ing from mining.”
resources sector, according to Resources universities across Australia.
and Engineering Skills Alliance (RESA) Currently South Australia’s mining and “In the downturn, we saw that mining be-
chief executive Phil de Courcey. METS sectors employ more than 26,000
people. Advertised resources-related jobs came unpopular,” de Courcey said. “The
Despite recent reported increases in in the State are also trending at a five-year workforce demographics are not favour-
the number of advertised mining-related high. ing mining, so we need to think about how
jobs in South Australia – up 69% in the 12 we’re going to address that.”
months since February 2018, according to De Courcey said conversations around
the Australian Bureau of Statistics – the employment were now focused on identi- De Courcey called on the South Austral-
Defence Force could poach many po- fying talent and skilled workers, in particu- ian Government to support RESA’s target
tential applicants for those positions with lar those who can think outside the square. of 20,000 new apprenticeships across the
some 15,000 new applications tipped to be industry over the next four years, while
made available over the next three years. “The issue about mobile, blockchain, also encouraging mining companies to
remote operations and drones, innovative increase involvement in mentoring and
“That’s a significant threat to finding things, data analytics, AI machine learn- graduate programmes.
people of high skills and talent because ing, augmentative reality cloud, all of those
really we both sit in the same sector,” de things are what is driving the new set of – Michael Washbourne
Courcey said. skills,” he said.

“You will find that the companies work- “It’s no longer sufficient to be a compe-
ing in the supply chain – companies that tent person who can do a repetitive task
are manufacturing components and pro- well. You have to a critical thinker, you
cessing plants – are also working in the have to be creative, you have to be think-
Defence space and so trying to work out ing about the way that your product is go-
whether you’ve got a supply chain com- ing to fit into the whole business.”
pany that’s going to provide to you or to a
defence company is very different. On the flipside, the increasing transition
to automation-based operations across
“In fact, one of the companies that I was many mine sites, including in South Aus-
speaking to which was working in the con- tralia, has forced a change in thinking for
tracting space is now saying that with the businesses in finding credentialed candi-
Woomera expansion and Cultana devel- dates.
opments, 100% of their work is now com-
ing from the defence industry, as opposed However, this has coincided with a sig-
nificant reduction in the number of enrol-
ments for mining engineering courses at

Connecting the resources dots

Mining is part of everyday life. While that opportunity,” IMER executive director Ste- Global contractors Boart Longyear and
fact is common knowledge among phen Grano said. Sandvik are other entities which contribute
to the IMER-led consortium focused on
those entrenched in the industry, few out- “These are the things that don’t fall neat- linking data pools to enable optimal operat-
ing performance.
side of it have connected the dots. ly within any one discipline, these are the
“The idea here is in the future the re-
That is where the University of Adelaide’s things that fall in between the disciplines source model will become the depositary
of all knowledge of the resource, both up-
Institute for Mineral and Energy Resources and then connecting that opportunity to the stream and downstream,” Grano said.

(IMER) comes in, attempting to link the multidisciplinary capability. “Then it’s about how we link all the data
streams to the resource knowledge and
many pieces of the puzzle which relate to “Half of my job has been trying to educate how we exploit that in terms of doing AI
on a combined data set for rapid decision-
the energy and resources sectors. computer scientists, physicists and chem- making downstream in both mining and
processing.”
“Our role at IMER is to connect up the ists about geology, metallurgy and mining
New initiatives in the pipeline for IMER
global challenges with the interdisciplinary – and that’s not an easy task.” include CRC Future Battery Industries,
Mining Industry 4.0 CRC, Future Energy
All of the projects associated with Exports CRC and the Chilean Clean Tech-
nologies Institute.
the IMER are multi-million dollar in-
– Michael Washbourne
vestments and supported by the likes

of BHP Ltd and Oz Minerals Ltd, both

of which operate major mines in South

Australia.

IMER is also assisting with in-situ

copper and gold recovery research for

Thor Mining plc spin-out Environmen-

tal Copper Recovery SA and Terramin

Australia Ltd at its Kapunda project.
Stephen Grano

PAGE 76 MAY 2019 AUSTRALIA’S PAYDIRT

Innovation the Paul Heithersay
key to exploration:

Heithersay

South Australia’s Department of En- next step would be scale reduction and include uranium, mineral sands, zinc,
ergy & Mines and the SA Geological integration of satellite gravity data. cobalt, graphite, silver, diamonds and
Survey are increasingly turning to tech- kaolin.
nology to deliver the exploration break- At the State Core Library, the GSSA
throughs needed to deliver a new gener- is using the HyLogger core scanner to Activity is not confined to the juniors
ation of mine developments in the State. source down-hole mineralogy informa- with Oz Minerals Ltd and BHP announc-
tion on the more than 7.5 million metres ing major projects in the last 12 months.
Paul Heithersay, chief executive De- of core it has access to.
partment of Energy & Mines (DEM) told Oz is on schedule for first production
SAREIC delegates increased activity in The GSSA has scanned more than from its Carrapateena project in the De-
the State was encouraging but said the 1,000 drill holes using the HyLogger with cember quarter, having broken through
Government would continue its work on data now available online. more than 11,000m of development ear-
new search methods. lier this year. The company is now under-
“It is being used to understand the al- taking a PFS on a block cave expansion
“You have to roll the dice a few times teration footprints from copper mineral of the project which will see throughput
in exploration and we need to work again systems,” Twining said. increase from 4.25 mtpa to 10-12 mtpa,
to get explorers active,” Heithersay said. lifting average life-of-mine copper pro-
The HyLogger project includes a col- duction to 105-125,000 tpa from 2026.
The DEM/Geological Survey (GSSA)’s laboration with BHP Ltd on spectral min-
efforts include a next generation air- eralogy aimed at providing a complete BHP caught industry attention in No-
borne magnetic and radiometric survey. picture of the Olympic Dam footprint. vember when it announced the Oak Dam
Twining said all data was open file and West IOCG discovery which included an
“We are well on the way to complet- would be loaded on the SARIG online intersection of 425m @ 3% copper, 0.59
ing the largest aeromagnetic survey in platform. g/t gold (plus uranium and silver).
South Australian history over the Gawler
Craton which will also include value-add Heithersay also said the rise of renew- “We would like to see a few further re-
products and collaboration to determine ables and electric vehicles offered further sults like that and it may happen at Lake
optimum magnetic source solutions for opportunity for SA’s mining sector. The Torrens,” Heithersay said.
depth-to-crystalline basement model- State already has dedicated strategies in
ling,” Heithersay said. place for copper, uranium, gas and hy- A JV between Aeris Resources Ltd and
drogen but Heithersay appears intent on Argonaut Resources NL, the Lake Tor-
The GSSA is also using spatial sta- expanding this to other commodities. rens copper project looms as one of the
tistics to quantify the correlations be- most intriguing in SA after environmental
tween magnetic and gravity responses “After the success of our Copper to and indigenous challenges locked ex-
on IOCG deposits and prospects in SA. the World strategy we are looking at ex- plorers out for more than a decade.
The project sees spatial statistics used panding the strategy portfolio,” he said.
to produce weighted ingredient map- “South Australia has 25% of Australia’s Heithersay said the proposed use of
ping. Gravity anomalies are overlaid with gold resources, mainly at Olympic Dam, innovative techniques had made Lake
anomalies identified by a set of geologi- but we think we need to highlight the Torrens exploration more acceptable.
cal “pre-requisites” including magneto- other opportunities in the State and the
telluric conductors in the lower crust and Geological Survey is working on informa- “At Lake Torrens, they are using mod-
structural conduits such as interpreted tion that the industry will find interesting.” ern technology to have the minimal
faults and shears. footprint on the salt lake and have good
Companies such as Alliance Resourc- relationships with the indigenous com-
The GSSA is also a participant in the es Ltd, Terramin Australia Ltd and Mar- munities, which was a historical prob-
MinEx CRC, with the Fowler-to-Flinders mota Ltd are already exploring for gold in lem.”
region on the Gawler Craton, the Curna- SA, part of a statewide increase in explo-
mona province and the Delamerian Oro- ration activity. At Whyalla, British businessman San-
gen to be the focus of the MinEx CRC’s jeev Gupta has announced his intention
national drilling initiative. Heithersay said exploration momen- to expand steel production. GFG has al-
tum was building with exploration ap- ready announced a $1.5 billion project to
“This is going to be using the cutting- provals up 37% in 2018 and approved expand production to 1.8 mtpa but the
edge of drilling and analytical technology drilling metres up 31%. company has launched a concept study
in exploration,” Heithersay said. to increase capacity even further.
“There is a lot of activity in the mar-
Another national project, AusLamp, ket; things are turning around quickly in “Sanjeev Gupta has ambitious plans
has collected and uploaded data from South Australia,” Heithersay said. for Whyalla and we are keen to help him
more than 900 new magentotelluric sites achieve his 10 mtpa aim,” Heithersay
in SA in the last year. GSSA senior prin- More than 50% of those approvals said.
cipal geologist Mark Twining said the were for copper-related exploration with
iron ore and gold accounting for more – Dominic Piper
than 25%. Other minerals being hunted

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 77

SAREIC REVIEW

Mining to drive
3% growth target

Development of resources and energy Pearce agreed with earlier comments gesting it would incentivise much-needed
projects will drive South Australia’s
bid to achieve its 3% economic growth from SA Department for Energy and exploration on projects which could be
target, according to Association of Min-
ing and Exploration Companies (AMEC) Mines chief executive Paul Heithersay developed into mines.
chief executive Warren Pearce.
that every new mine the size of Carra- “It was extremely disappointing to
The Steven Marshall-led Liberal State
Government unveiled a strategic plan in pateena would provide a 1% kick to the see that programme dropped last year,”
March for SA to boost its annual eco-
nomic growth rate, headed by skills de- State’s economic growth. Pearce said. “It was an initiative born out
velopment, investment in technology and
innovation and structural changes to the Mining is a key contributor to SA, hav- of South Australia and a brilliant initia-
public sector.
ing tipped $269 million in royalties last tive – so brilliant in fact that every other
After five years of modest or negative
growth from 2012-2016, SA has recorded year. In February, it was reported 13,400 state and territory has picked up that pro-
an average gross state product of 1.5%
over the past two years, ac- people were employed in the industry. gramme under another name.
cording to data from the Aus-
tralian Bureau of Statistics. With only 12 mines currently operation- “We’re pushing to get that programme

“That really means you’ve al in SA, Pearce said serious reform to the reinstated, we’re proposing to change its
got to double your effort and
double your achievements in State’s regulatory policies was needed to name to SAGE – South Australian Green-
order to get that 3% target,”
Pearce said. encourage more investment in resources fields Exploration – because the reality

“And what I’m really here and energy projects. is we’re not going to get PACE back in
to say is that I think the way
that’s going to happen is “We need to make it easier for compa- the same form that it was. We’re going to
through the growth and devel-
opment of the mining industry. need to find a way to reposition
I think that is going to be the
primary driver if SA is going to it a little, but it is something SA
achieve that outcome.”
needs.”
Pearce expressed his
concerns over the dwindling Pearce addressed SARE-
amount of tenure allocated
under formal exploration li- IC delegates a day after the
cences in SA, having fallen
from a peak of 450,000sq km mining amendments bill was
in 2012 to 250,000sq km today.
shelved amid a heated debate
Mineral exploration expenditure in SA
has also dried up with no more than $100 on whether landowners should
million spent in any one year since 2013.
In recent years, most of that spend has have the right to veto explora-
been on brownfields activities.
tion in the State.
SA currently trails Western Australia,
Queensland, New South Wales and the While disappointed the bill
Northern Territory for total greenfields ex-
ploration expenditure and is only margin- was not passed in parliament,
ally ahead of Victoria.
Pearce took comfort from the
“I think that’s a particularly important
statistic for SA because we’re working fact the matter remained on
from a reasonably low base,” Pearce said.
“There’s only a small number of mines in the table for further discussion.
SA, so we need to be in the greenfields
space, we need to bring investment into “The important thing to take
SA to make that happen.”
from this is we’ve got into a

conversation around this bill

and around some of the issues

between our sector and the

Warren Pearce agricultural sector that don’t

accurately portray what’s hap-

nies to move through that exploration and pening out there,” Pearce said.

mining lease stream on towards project “The truth is the majority of exploration

development; that is an important factor,” companies and mining companies have

Pearce said. good relationships with their landowners

“If states and jurisdictions are known and/or leaseholders and are able to work

for being successful and being able to through their exploration programmes.

move potential projects into real operat- “For our industry, it remains a frustration

ing projects, then investment follows. If that it’s slow to get on ground here and

people feel they can be successful here, that land access is still quite difficult, but a

companies want to be here and the inves- lot of the stuff that’s blown up over this is-

tors feel like they can get a return.” sue of right to veto really is a bit away from

Pearce said faster approvals and a re- the main game. There’s no real sugges-

vision of the complicated PEPR process tion that right to veto will be put in place in

for environmental regulations was also SA. In fact, we’ve heard both the Premier

required. and the [Mines] Minister completely rule

The SA Government should also re- that outcome out.”

vive the PACE programme which was – Michael Washbourne
scrapped last year, Pearce said, sug-

PAGE 78 MAY 2019 AUSTRALIA’S PAYDIRT

Labor changes could impact
mining investment

The ALP’s proposed tax changes will to 25% [which equates to an effective tax is a permanent cut to R&D rebates,” How
have a negative impact on mining com- rate on capital gains 23% to 35%]. The ef- said.
pany investors according to Bentleys part- fective tax rate on a franked dividend at the
ner, tax Simon How. top marginal rate is 27%. So, we are go- The ATO is also focusing attention on the
ing to have a situation where investors are borderline between what expenditure falls
Changes to investment tax laws are a perhaps going to move away from want- under exploration and development.
major plank of the ALP’s election campaign ing to get capital returns to getting franked
with the party proposing to limit the credit dividend returns because they might have a “If the expenditure is related to explora-
returns on franked dividends, adjust capital lower tax rate.” tion you can get an upfront R&D rebate. If
gains tax discount rates and scrap negative the expenditure moves into development
gearing concessions. The ALP’s negative gearing proposal phase you then need to allocate those con-
could also affect mining investments. cessions over time,” How said.
How said while the final form of the pro-
posals was still unclear, it was apparent “The Labor policy is proposing to remove “Be very careful, especially when you’re
that they would all impact the way investors negative gearing, not only on properties but doing things like pilot plant-type expendi-
looked at mining companies. other investments as well. We don’t know tures to makes sure they are within the ex-
how far this will go – whether on a share- ploration phase not the development phase
“It is going to preference the types of in- by-share basis or a portfolio – but the situ- of the project.”
vestments shareholders are looking for,” ation is you may not be able to claim tax
How said. deductions on interest in investing in mining How also warned that the ATO was look-
companies,” How said. ing closely at the way tax losses were car-
“At the moment, if you’ve got a low-rate ried forward.
person investing in a company that is gen- While the ALP proposals depend on the
erating franked dividends, if their tax rate is outcome of this month’s Federal election, “If you are going to have a change in
below 30% they can get a refund on franked How said miners and explorers should al- ownership surrounding an IPO, be very
credits,” How said. “Labor is proposing to ready be aware of other tax changes which careful around maintaining the same busi-
get rid of that there may be shareholders will have a more immediate effect on their ness in the company going forward,” How
who are not looking for franked dividends circumstances. said. “Government has loosened up on the
but more for capital returns.” ‘same business test’ for carrying forward
Recent Federal Government changes to tax losses. It used to be strict; if you were
Alternatively, the changes to capital gains R&D rebates have seen a cap of $4 million a gold mining company and started mining
tax discounts could shift investors in the op- placed on annual rebates and the Coalition copper you would fail the ‘same business
posite direction. is also proposing to reduce the R&D rebate test’ but now it allows for a partial change.
by 5% in line with company tax cuts. But if you are going to make a major change
“Under the current laws, if you hold the to the products you are producing, consider
shares for more than 12 months you get a “That’s fine if you are paying tax but a lot what affect it will have on tax losses.”
50% capital gains tax discount,” How said. of mining companies aren’t paying tax so it
“Labor has proposed to bring that down – Dominic Piper

Mithril takes on Lennard Shelf

Diamond drilling is set to start at the Billy “Mithril is bringing new ideas to the area silver have been collected, but overall a
Hills zinc project next month after Mith- by taking a mineral systems approach to lack of systematic testing over the 1,500m
ril Resources Ltd completed soil sampling targeting.” strike prospect has been done.
and mapping in April.
The 400sq km of tenements are 20km The last of three shallow holes were
Mithril is currently waiting on drilling ap- east of Fitzroy Crossing and surround the drilled in 1993 and it is unclear whether
provals from the West Australian Depart- old Pillara zinc-lead mine. they even tested the prospective fault
ment of Mines & Petroleum to start work zone.
at Billy Hills – in the Lennard Shelf base Hutton said Mithril’s intention was to find
metals district of the Kimberley – having repeats of Pillara which produced 10.3mt At the Python prospect a 1,000m target
defined two high priority targets during soil @ 6.9% zinc and 2.3% lead between June zone is characterised by soil anomalies
sampling and mapping campaigns earlier 1997 and October 2003. and rock chip samples of up to 12.23%
this year. zinc and lead. There was again only lim-
“We are not targeting a small deposit, ited wide-spaced drilling on the prospect
Mithril managing director David Hut- we are looking for other Pillaras,” Hutton with no evidence holes targeted the fault
ton said the diamond programme would said. “We see this as the start of a broader zone or an unexplained IP anomaly.
be the first work completed in the area in consolidation strategy on the Lennard
more than two decades and some of the Shelf and will look to divest all other pro- Despite the focus on a WA project, Hut-
first work ever on the Billy Hills prospects. jects to focus on this.” ton said Mithril remained a “proudly South
Australian company” with 25% of its share-
“There has been no exploration in the Two main targets have been identified holders based in Adelaide.
last 20 years and historically exploration at Billy Hills. The Firetail prospect has a
was focused on outcropping areas and favourable structural setting with zinc oc- – Dominic Piper
immediate mine site targets,” Hutton said. currences at surface. Rock chip samples
of up to 10.98% zinc and lead and 98 g/t

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 79

FERTILISER SPOTLIGHT

Kalium prepares to
spread SoP joy

Australian farmers could start spreading do and we can start getting stuck into build- upon a time did where it was all contractor-
their crops with product from the coun- ing a project.” based and as soon as the pricing came off
try’s first commercial sulphate-of-potash they were in big trouble.”
(SoP) operation during the summer of 2020. Kalium Lakes made a compelling case
for being the busiest junior stock on the Kalium Lakes only requires a final tick of
Kalium Lakes Ltd has broken away from ASX during the first four months of 2019 approval from both the state and federal
a small pack of ASX-listed hopefuls in the with a swathe of corporate deals that have governments for the NAIF funding to be
race to become Australia’s first SoP pro- all but ensured Beyondie will be developed activated. Once in play, up to $48 million of
ducer, with a busy start to the year on the over the next 12-15 months. the $74 million loan will be directed towards
corporate side strengthening its bid to have developing supporting infrastructure for the
the Beyondie project, 160km south-east of Just days after having all of its mining ten- project, including roads, communication
Newman, ready for first production during ure granted in February, the Pilbara-based services and facilities, an airstrip and the
the second half of next year. developer received a $74 million loan from accommodation village.
the Northern Australia Infrastructure Facil-
As project financiers complete their final ity (NAIF) that effectively allows the com- If investors thought the NAIF funding
checks before committing to development pany to fast-track some items which were was a boon for the company, it was quickly
funding, Western Australia’s Environmental earmarked for later development, including usurped by the subsequent announcement
Protection Authority has recommended ap- construction of a 78km gas pipeline and that Kalium Lakes agreed to a $102 million
proval for full-scale construction activities to gas-fired power station. senior debt facility with Germany’s KfW
begin as soon as a final investment deci- IPEX-Bank.
sion is made by the Kalium Lakes board. “That NAIF funding is quite important be-
cause not only does it bring forward things About half of that funding will be cov-
“Everyone is really looking forward to that like the gas pipeline and power station, it ered by a German export credit guarantee
moment,” Kalium Lakes managing director means we can own and operate those as- from government export credit agency Eu-
Brett Hazelden told Paydirt. sets, which actually drops about $60/t off ler Hermes. KfW was finalising its due dili-
our operating costs,” Hazelden said. gence at the time of print.
“In particular, I think the farmers are really
looking forward to it. We speak to a lot of “NAIF has got the ability to split those “These guys are focused on different
farmers – obviously our major shareholder loans over 10-15 year periods instead of the commodities and trying to get these new
[Brent Smoothy] is a farmer – and they normal Australian bank loan of 5-7 years, types of projects off the ground,” Hazelden
all keep asking when can they drive their so for us it becomes a no brainer to bring said.
trucks up [to the mine gate] and grab some that infrastructure forward and just become
of our produce. that low cost, long life miner for forever and “From their point of view it supports the
a day. German engineering that we’re using and
“This is the last homeward stretch for us the German equipment that we’ll import,
now. Hopefully we don’t have too many hic- “We don’t want to make the same mis- which costs about $50 million and is spe-
cups along the way like projects normally takes some of those iron ore guys of once cialised equipment not made in Australia.”

PAGE 80 MAY 2019 AUSTRALIA’S PAYDIRT Kalium Lakes is targeting first
SoP production from Beyondie
during the second half of next year

“It’s been an entertaining ride – a rollercoaster of emotions at times –
but there always seems to be another thing to keep you going. It’s really
been quite incredible what a small little company like ours has done.

The catalyst which ultimately delivered Beyondie is set to become Australia’s first commercial producer of SoP
the debt finance from KfW as well as the
NAIF facility came in the form of a lucrative and transition into production. spoke, as such, so people need to get their
offtake agreement with leading German Kalium Lakes will target an initial produc- head around what the pricing mechanisms
fertiliser producer K+S. are because it’s a little bit more
tion rate of 90,000 tpa from Beyondie, up
Under the terms of an initial 10-year from the 82,000 tpa conservatively estimat- opaque given it’s not a traded commodity
agreement, K+S will take 90,000 tpa of SoP ed in the BFS released last September, fol- with spot prices,” he said.
to be produced from Beyondie, represent- lowing completion of a positive FEED study
ing 100% of the Stage 1 output. Price terms in March. “It’s just trying to bring people up to speed
are linked to the sales price realised by and then we’ll probably be only the fifth new
K+S, which will also receive a marketing fee Other benefits to the project identified mine of this type in the world.”
for selling and distributing product. in the FEED study included an overall po-
tassium recovery improvement to 91% (up With SoP products forecast to sell be-
Revenue from the offtake deal with K+S from 72%), increased mine life of 50 years tween $US450-650/t over the next decade,
is estimated at $650 million. (up from 30 years) and decreased life-of- Kalium Lakes appears well placed to be
mine operating costs of $US178-207/t FOB entering production at a time when a high
“If we didn’t have K+S on board we (down from $US226-263/t). proportion of the local market is craving do-
wouldn’t be anywhere near getting anything mestic supply.
off those banks or NAIF,” Hazelden said. Kalium Lakes plans to double production
to 180,000 tpa, potentially as early as two Global demand also continues to in-
“It’s a big win for us. It’s been able to un- years after commissioning the initial 90,000 crease with leading experts predicting 3%
derwrite the banks’ confidence in the 10- tpa operation, but has not yet committed to annual growth – or up to 200,000 tpa of
year offtake agreement for that first 90,000 any offtake arrangements for the Stage 2 new capacity – to what is currently a 6.5
tpa of production. K+S are the gold stand- development. mtpa market.
ard in this industry. Without them the banks
wouldn’t have spoken to us or anyone else “Obviously K+S would be a logical option History will show the decision by Kalium
for that matter. there, but we’ve got the ability to negotiate Lakes to operate as a private entity for two
with others, but all that will depend on mar- years before going public in late 2016 was
“K+S controls about 50-60% of the Aus- ket demand, pricing and everything else,” the correct one, with the company hardly
tralian market already, so they’re a price- Hazelden said. putting a foot wrong since its arrival on the
setter and a major exporter around the ASX, particularly at a time when gold or
world. From that point of view, having them “We obviously want to de-risk the project battery minerals appeared the only choice
on board helps with getting our product to make sure there’s nothing wrong during for investors.
out there without having really large entry construction and commissioning, so we will
costs.” look to double capacity in the next 2-3 years “Looking back, what we didn’t know
effectively, or virtually two years after com- about potash at the time we could write a
Kalium Lakes last month also welcomed missioning at the earliest.” book on, but we obviously know a lot more
UK-based Greenstone Resources II LP to about it now,” Hazelden said.
its register as a new 19.99% shareholder For Hazelden and many other former
following a $20.8 million cornerstone equity members of the Iron Ore Holdings team “It’s been an entertaining ride – a roller-
investment. which now comprise the key management coaster of emotions at times – but there al-
positions at Kalium Lakes, the experience ways seems to be another thing to keep you
The timely equity injection from Green- gained from funding projects involving what going. It’s really been quite incredible what
stone ensures Kalium Lakes can continue was an emerging commodity at the time a small little company like ours has done.”
its early works programme at Beyondie, proved invaluable during the latest bid.
including the purchase of long-lead items, – Michael Washbourne
pond construction and other key infrastruc- “The joy of iron ore is at least people know
ture, while the company wraps up the re- what iron ore is and what the prices are…
maining components of its financing pack- whereas with potash, it’s a little bit more be-
age.

Hazelden was confident the debt funding
would be locked away before the end of this
quarter, with an upcoming entitlement offer
and potential placement to existing and new
shareholders likely to be the last piece of
the puzzle on the equity side of the finance
solution.

With an early works approval in place
since last year, Kalium Lakes has laid the
foundation for a full-scale operation to be
erected at Beyondie, with the company to
soon appoint a new chief operating officer
to oversee the full construction activities

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 81

FERTILISER SPOTLIGHT

Highfield carries move along at a reasonable pace. We’re
on at Muga not actually sure how much time, but we
estimate the best case is nine, probably
Highfield Resources Ltd continued 12 months. It could be a bit longer but
to “line its ducks up” at the Muga that sort of timeframe,” he said.
potash project in 2018.
In the meantime, Albert said Highfield
Muga is subject to Spain’s environ- ready, but they won’t start firmly until they would stay patient and continue to work
mental approvals process and is see the environmental permits,” Albert closely with the environmental authori-
proceeding well, according to Highfield told Paydirt. ties handling permitting.
chief executive Peter Albert.
“We are quite clear that that will take Albert said that environmental permit-
Muga, hosted over the Navarra and some time, but it is a much more straight- ting had been fine-tooth combed both by
Aragon provinces in Spain’s north, is forward process but we have to help Highfield and Spanish and European au-
receiving strong support from people in people understand the process because thorities since 2017.
both communities. it is a big project. We have to get approv-
als from town hall and the like, which “We’ve gone through a couple of phas-
Once environmental approval is se- wouldn’t have the experience in this type es and up until the end of last year com-
cured, Highfield can start the next phas- of project development so we will be pleted the final review of the three items
es of permitting; mining and construction. there on the ground, assisting. they were focused on – seismicity, sub-
stance and the salt by-product manage-
“All of the parties that need to provide “When you talk about Navarra or ment,” Albert said.
consequential permits have been en- Aragon, there is tremendous support –
gaged in the environmental permitting unprecedented [support] in my experi- “Our documentation was sent out to
processes, so there are no surprises, all ence – and we anticipate that people will various parties around the countryside.
the bodies are aware, all the bodies are In this case it was 14 parties in Navarra
and Aragon, mining departments, envi-
ronmental authorities, water authorities
etc. All of those reports were favoured
and in support of the project. There were
no fatal flaws or red flags, they have all
that information and are in the process
of digesting and reviewing it. I can’t say
when they will reach a conclusion on

Environmental permitting is under way at Muga

PAGE 82 MAY 2019 AUSTRALIA’S PAYDIRT

“With over $50 million in the bank Peter Albert
we can be a bit more selective in
our funding. There are few suppliers of potash
that, but one would hope that it’s not too Such work has culminated in an es- within Europe, which imports large ton-
far away.” timated mine life at Muga of 27 years, nages of the fertiliser.
with phase one potash production of
Albert said it was unfair to “put words 500,000 tpa at C1 costs of €104/t (in- “We are located in a potash-consum-
into the mouth of authorities” regarding cluding a salt by-product) incurring a ing region and we don’t have the costs
a timeframe on when environmental ap- capital cost of €342 million. associated with logistics so we are able
proval would be granted. to secure the higher [price] for a portion
Phase two capex of €199 million for an of our production,” Albert said.
“All we can do is the work and build the additional 500,000 tpa production has
relationships and make sure that we are been estimated, with EBITDA based on Not all of Muga’s potash will be fed
there and available all the time to provide full tilt 1 mtpa production of €300 million. into Europe, with Brazil a “hop, skip and
any responses or clarifications required, A project NPV of €1.16 billion and IRR jump” away from Navarra, while High-
so hopefully they can deal with it in a rea- of 23% were other key financials guided. field has identified Africa as a market for
sonable timeframe,” Albert said. the longer term.
“All the mining development, equip-
Muga has not remained idle during the ment and contracts, etc. have been re- Potash prices continued to strength-
environmental permitting process with priced and requoted, which has effec- en in 2018, with prices about $US35/t
SRK overseeing the reserve statement tively resulted in a restated feasibility better than 2017 and most forecasters
and Highfield revising aspects of the fea- study,” Albert said. indicating demand will rise 2-2.5% pa
sibility study.
over the longer term.
The upward trajectory of potash

prices will only help Highfield de-
risk Muga once environmental per-
mitting is in hand.

The company has about $50
million cash, with three European
banks approving half of project
finance through debt and other
banks signalling a willingness to
participate in the future.

“With over $50 million in the bank
we can be a bit more selective in our
funding. We are keeping those Euro-
pean banks warm and there are other
banks there with debt for us also,” Al-
bert said.

– Mark Andrews

Highfield has good interactions with the local communities impacted by Muga

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 83

FERTILISER SPOTLIGHT

Parked up Davenport has 5bt @ 10.6% potassium oxide for
for now 524mt in inferred resources across various areas

Parkway Minerals NL is putting its ual mining licences at South Harz, central Germany
Dandaragan Trough project, which and two explora-
includes the Dinner Hill potash and phos- tion licences in
phate deposit, on ice for now.
central Germany.
Managing director Patrick McManus
told Paydirt the company was enter- “With the sig-
taining other project opportunities in
Queensland and East Africa. nificant land holding [659sq km] and produce its own POLY4 product from pol-

With investor sentiment cool on Dan- the perpetual mining licences, we have yhalite; a unique multi-nutrient fertilizer,
daragan, Parkway’s spin-off Davenport
Resources Ltd is hoping to garner more established pretty large JORC resourc- which can be used to increase balanced
support for its South Harz project in Ger-
many. es on a number of those licences. This fertilisation around the world.

Parkway is the main shareholder in year we are hoping to do some high level Sirius is confident of fulfilling farmer’s
Davenport, with McManus serving as its
non-executive chairman. scoping studies to understand the best needs of sulphur fertilisers for healthy

Last year Davenport added a Frankfurt development options for these different plant growth and has a place in the mar-
listing to its ASX standing, however, the
company is yet to see any real benefits. project areas, what they would be worth ket.

“South Harz is looking good technical- and the one worth pursuing most,” Mc- McManus applauded Sirius for being
ly, but it is not getting supported; there’s
no support for early stage potash explor- Manus said. able to attract attention in such a niche
ers. The [Frankfurt] listing has had no
major impact in my mind, but we will be “We’re also planning to drill at least space and he hoped Davenport could do
targeting investors in Germany and we
will probably end up with a bigger Ger- one or maybe more holes to take one of the same in Germany through the Frank-
man shareholding,” McManus said.
the areas up from a inferred to indicated furt bourse.
What Davenport hopes to offer inves-
tors exposure to is Western Europe’s status, which we are targeting to do in “We have had a number of discussions
largest inventory of potash.
the next 12 months.” with people in the UK and generally the
Currently the company has 5bt @
10.6% potassium oxide for 524mt in in- Israeli Chemicals Ltd stopped potash brokers are supportive if you are listed
ferred resources across various areas at
South Harz, where it owns three perpet- production at Boulby in the UK last year there, but we actually have no ability for

in favour of polyhalite to produce its own them to be able to buy on market,” Mc-

polysulphate; a multi-nutrient fertiliser Manus said

containing sulphur, in addition to potas- “Sirius has managed to achieve that

sium, magnesium and calcium. and perhaps put in place a bit of a tem-

The transition at Boulby from potash to plate, which is why we are targeting

polysulphate producer made it the only Germany. Sirius has got their support

polyhalite mine in the world and its suc- basically from people in the north of Eng-

cess is something Sirius Minerals plc is land, so we hope to do the same in Ger-

looking to replicate at Woodsmith, North many with Davenport. Certainly there are

Yorkshire. enough investment funds, which typically

Sirius is looking at a $US3 billion multi- had a lot of interest in early stage gold

tranche structure to finance the mine and mining in Germany and Switzerland, so

whether we can translate that into

earlier stage potash is something for
Davenport hopes for exposure to local investors us to investigate.”
through its Frankfurt listing
As Davenport looks to drum up in-

vestor support, a point of emphasis

in its crusade will be explaining the

strategic position of South Harz.

“With Israeli Chemicals closing

down their operation [North York

Moors] last year that has raised the

import requirement into Western

Europe. Locally that is a big plus

for South Harz because Germany

is a pretty large [potash] producer,

France has no domestic production

and Spain has a little bit. They are all

big consumers, so Western Europe is

a big importer and I think that is an

important marketing point,” McManus

said.

– Mark Andrews

PAGE 84 MAY 2019 AUSTRALIA’S PAYDIRT

Fertoz flurries with activity in 2019

After a “pretty tough” 2018, Fertoz Ltd has found the going better this year.

Dealing with logistics issues and ket. That combined with Alberta and
inclement weather as it strived Marten and then DC coming on we

to hit 10,000t of shipments of organic will have a range of ore supplies all

fertiliser product to new customers – in great agricultural markets,” Avery

while undertaking field trials – was no said.

mean feat. Having a diverse range of mar-

Additionally, handling affairs with kets to tap into appears a key in

the governments of both Alberta and North America, given the adoption

British Colombia (BC) has delivered of agricultural products by users in

varied outcomes for Fertoz at its flag- the region takes about 2-3 years, in

ship Fernie projects. Avery’s experience.

Fernie covers 7,100ha spreading Also critical, is connecting with

over both BC and Alberta. reputable distributors and keeping

“I’ll be gracious to say that we got close contacts in the industry, Avery

our Alberta permit in about eight said.

months and it’s now about 1.5 years “We have talked about bringing on

since we applied for Marten and 15-20 sales people ourselves and

Barnes Lake in British Colombia,” spreading across the region, but we

Fertoz executive chairman Pat Avery have to be aligned with reputable dis-

told Paydirt. tributors. We have a couple in East-

Avery said Alberta’s history of con- ern Canada and Western US where

suming its natural resources meant we are aligned with trusted distribu-

the process in the province was much tors,” Avery said.

more efficient than in BC. “We have announced some part-

However, having progressed a Fertoz hopes to receive a bulk sampling permit for nerships with some great distribu-
long way down the track with bulk the Marten phosphate project, BC, in Q2 tors and we should have one or two
sampling permit applications at Mar- agreements more with major distrib-

ten and Barnes Lake, Fertoz is well utors in other geographies. We are a

placed for future activities in BC. small company and we want to grow

“There is actually no volume restric- The company is planning a 5,000t bulk with well established distributors plus

tion on the Alberta permit; it is more about sample to develop organic N-P-K fertiliser also sell direct to growers.”

disturbance and environmental monitoring. for local famers in Alberta, with estimations Fertoz supplies to Canada’s largest co-

But, we are very much advancing our Mar- that 15% cost savings can be made using op – Federate Co-Operatives Ltd – and

ten and Barnes Lake permits. The key is not rock phosphate from the province com- sells to the world’s largest provider of crop

only to get Marten, but use that as a proto- pared to the stockpiles it has in Montana. inputs, Nutrien.

type for the others,” Avery said. “We announced last fall that we picked The company believes it has a sustaina-

“We are basically saying, now we know up a large stockpile in Montana where ble operating model in place, which it hopes

how much environmental monitoring, how there’s well over 100,000t out there. It is to reflect in more mine gate sales in 2019,

much disturbance and how many studies to an old mine that I knew about years ago, as the shift to more organic products and

do, that should be the prototype for Barnes so we have two more supplies in Western wholesome foods increases.

Lake, Pump Station, Crows Nest, Big Horn Montana which are also close to the mar- “The majority of our sales are to organic

and the like. It is an important area markets and we see no drop-off in

for us as it is so close to the key ag- margins for organic products and

riculture areas of Alberta, Saskatch- wholesome foods,” Avery said.

ewan, while directly south is Wash- “Amazon made a big announce-

ington State, and Oregon is not far, ment regarding having more [or-

so moving in there means a great ganic] products and produce, while

deal for us.” some of the other majors – Walmart

Fertoz hopes to receive final re- and Target – have gone into organic

ceipt of a bulk sample permit for supplies. We are seeing very steady

Marten soon followed by the Barnes demand in the organic field and

Lake permit in Q2. there are big education campaigns

Meanwhile, with a trenching and Trials of Fertoz products on various plants have been for dealers, distributors and growers
bulk sample permit in hand for the successful. Fertoz has also been providing cannabis themselves out there.”
Alberta claims, Fertoz can start ex-
tracting rock phosphate for planned producers with agronomic information and sees a – Mark Andrews
sales and N-P-K blending trials potential opportunity to tap into the cannabis market
scheduled for this year.
with a premium organic fertiliser

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 85

FERTILISER SPOTLIGHT

One big road to opportunities

Who, what, where and how much are
common points raised whenever
a Federal Budget is released and this time
around infrastructure items featured highly
in the National Coalition’s commitments.

Included among the Budget proposals The upgrade under ROSI is applicable of the federal election, the WA Labor Gov-
on infrastructure was the Roads of Stra- to the section of the existing Tanami Road ernment has been exceptionally support-
tegic Interest (ROSI) initiative, whereby which Agrimin plans to access for its Mac- ive of regional development and helping
$75 million has been designated for a kay operations, including bringing LNG to projects like ours get off the ground, so I
road connecting Alice Springs to Halls site. genuinely hope that if the [federal] Gov-
Creek. ernment was to change then the Federal
Agrimin is currently in DFS mode at the Labor Government would be just as sup-
The benefits of building the proposed 426,000 tpa Mackay SoP project, with portive,” Savich said.
Tanami Road are expected to be far reach- consideration being given to using quad
ing, according to Agrimin Ltd chief execu- trains to haul product to Wyndham port. “We have to also remember, the Tana-
tive Mark Savich. mi Road upgrade is not new, it has been
Therefore, discussions are ongoing not talked about for 20-30 years. It is well over-
“At the moment, to get from one local only in respect to using existing port facili- due and I am hoping that the importance
community to another it can be a commute ties at Wyndham, but also with the Shire of that is coming on the radar of people
of 13 hours, so that time will dramatically of Halls Creek and Department of Main and won’t be overshadowed if we do see
decrease once a sealed road is in place. Roads Western Australia regarding timing a change in government.
That will tighten community relationships, of future works on the Tanami Road.
as families are spread in various commu- “Obviously, exploration and mining is
nities and people in those communities Establishing a new transport corridor is somewhat restricted at the moment just
are always travelling. But, until this infra- critically important to Agrimin’s ambitions because of access to the Tanami. I think
structure is actually in place it is hard to of developing a large-scale, long-life, pot- we will definitely see a surge in mineral
understand what the true benefits will be,” ash project. exploration in the region courtesy of the
Savich told Paydirt. upgrade. There are also cattle stations out
Savich said the infrastructure corridor there and the feeling out of the Tanami is
“Also, there are definitely reasons for could result in very cost-effective trans- that those cattle stations will look to truck
the Defence Force to have a sealed artery portation of large tonnages of potash from their cattle to the East Coast markets,
through the interior of Australia in terms of Mackay. which will be really positive,” he said.
mobilising defence assets from the east
and from the southern parts of Australia up Additionally, the road may also open up Prior to the proposed ROSI, Agrimin
to the north-west if there is ever a need.” the minerals potential of a region which has started separate discussions with the
in the past has been hard to access and Northern Australia Infrastructure Facility
Where Agrimin is concerned, the Tana- Savich believed that all levels of govern- (NAIF).
mi Road is a critical piece of the puzzle for ment now realised the importance of such
its Mackay SoP project. infrastructure. NAIF has expressed an interest in poten-

“Although we can’t predict the outcome

PAGE 86 MAY 2019 AUSTRALIA’S PAYDIRT

Agrimin is in discussions with potential project
partners and offtakers for Mackay SoP product

tially providing support for Ag- routes and as a result logistics are very im- The proposed Tanami Road upgrade,
rimin’s proposed infrastructure, portant. I think it has taken time over the last supported by the Federal Government,
and could provide concessional 12 months on that front for people to under-
longer term debt finance for the stand.” may well unlock many mineral
company’s intended road works. opportunities in the region
A clearer picture of the Mackay project will
Federal support for Agrimin be in hand later this year when Agrimin re- year, certainly around the logistics chain and
has been duly matched by the veals its DFS. that takes time and involves a whole new
State Government with largely range of stakeholders in the project plus a
reduced mining lease rental rates Since release of the PFS on Mackay in whole bunch of work required for the DFS.
for potash players proposed last May 2018, Agrimin has rapidly progressed Ultimately the thing that sets Agrimin apart is
year (see page 88) also a boon the DFS with due consideration to both a securing a long-time logistics chain that can
for industry. new haul road and the relevant section of the support a very large- scale of production,
Tanami Road to allow for greater efficiencies which is probably a differentiating factor for
Savich said it had taken some in haulage, with design packages awarded our project,” Savich said.
time for the market to connect the and DFS engineering for road works under
dots in Agrimin’s story, but he felt way. “In terms of project partnerships and
the positive news stemming from offtake discussions that are in process, we
potential logistics solutions was At the time of print, reconnaissance her- are not going to rush because we have a
starting to trigger a response. itage and environmental programmes had long-term project and we are making sure
been completed, while geotechnical test that we can capture as much value as pos-
“I think it has taken time and work results and LiDAR data had also been sible for shareholders. Finding the right stra-
we’ve had to go through a pe- received. tegic partner will be a huge milestone for the
riod of digestion to get our busi- company.”
ness model around this logistics Meanwhile, detailed environmental sur-
chain in northern WA but I think veys were planned to take place in April and – Mark Andrews
that our investors are starting to May.
realise just how significant it is to
the business. If you want to have Savich said discussions with large global
a very large-scale, long-term fertiliser companies were also in play, with
project, you need to have a lo- project partnerships and potential offtake
gistics chain that suits, especially terms for Mackay product the focus.
given that potash projects gener-
ally worldwide are big projects According to the 2018 PFS, production of
far away from the nearest port,” 426,000 tpa over an initial 20-year mine-life
Savich said. is forecast from Mackay.

“If you look at projects around On that basis, EBITDA over the life-of-
the world, most of them are fur- mine has been estimated at $2.7 billion as-
ther inland than ours. If you look suming cash costs of $US222/t FOB from
at the potash fields in Canada, Wyndham.
US, the salt lakes in China; all
these have very long transport A post-tax NPV of $US453 million and
post-tax IRR of 20%, based on an average
$US555/t SoP price, were highlighted on the
back of capital costs of $US409 million.

“We made some really big decisions last

The Tanami Road upgrade will significantly
reduce the time it takes for families to travel

between communities

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 87

FERTILISER SPOTLIGHT

Potash rewards subject to EPA

Reward awaits environmental permitting
approval at Lake Disappointment

Recent Federal and State government the project in 2018 indicated potential on-site activities while it waits on envi-
announcements have thrust potash for Lake Disappointment to be a globally
hopefuls into the limelight, particularly in significant project producing 407,500 tpa ronmental permitting for Lake Disap-
Western Australia. SoP over an initial 27 years.
pointment.
Federal Budget commitments to The capital cost estimated for the ini-
spending large on developing infrastruc- tial project was $450.6 million, with en- An infill drilling programme was com-
ture in isolated regions of Australia have hancements made to the PFS reducing
been welcomed by the likes of Agrimin FOB cash operating costs by about $20/t pleted at Lake Disappointment at the end
Ltd, which owns the Lake Mackay SoP to $335/t.
project (see pages 86-87). of last year but the company has since
While the company has a project to
Meanwhile, the WA Government’s sup- market, Lake Disappointment remains focused on conserving cash, carrying on
port of reducing the mining lease rental subject to stringent environmental per-
rate for potash players is significant. mitting. with other “smart” work internally.

WA’s proposed amendment to rates At the end of 2017, Reward was re- “When we stopped for Christmas we
will see $2.32/ha for the first five years quested by the State’s environmental
and $4.64/ha thereafter, compared to regulators to make amendments to its decided we’d do a full review of all the
previous charges of $18.70/ha. first Environmental Review Document
(ERD) and after consideration was asked historical work that we have done. We felt
The cost savings are a relief to potash to update the ERD to the Environmental
players, given the current market envi- Protection Authority in November. that as individuals have changed [within
ronment and the difficulties in securing
funding to advance projects. Reward’s ERD has been opened and the company] over time we haven’t got
closed for public review and was waiting
While the recent government support for feedback at the time of print. bang for buck because there hasn’t been
is unlikely to trigger a wave of new pot-
ash projects coming on stream tomor- “It has been a long time in the mak- someone with a great historical under-
row, the announcements underline the ing and it is complex. Given the nature
importance of an industry largely in the and size of Lake Disappointment, it is so standing of Lake Disappointment so that
shadows of traditional mineral commodi- large we are certainly being put through
ties. the ringer, there’s no doubt about it, there is what we are doing now,” Cochran said.
are no short cuts,” Cochran said.
“It is still far from being a mainstream Cochran joined Reward as chief ex-
industry and there is still some way to go “For instance, there was no need for
in addressing how licences are held and Kalium Lakes [Ltd] to go through the ecutive in late 2017 and is getting quickly
royalty rates, but it is great we are being public consultation process. As far as
recognised,” Reward Minerals Ltd chief the WA EPA was concerned we got six up to speed with the potash sector by at-
executive Greg Cochran told Paydirt. weeks. We were both put through the
ringer by the Feds also, but it is because tending global conferences such as the
It is a good time for a company like Kalium’s project is much smaller and has
Reward to be getting a kick on the side- a much smaller footprint, however, not International Fertilizer Association forum
lines, given the lull in proceedings on the everything has gone their way either;
ground at its flagship Lake Disappoint- they have had their challenges. We are in Berlin last year and was headed to
ment project in WA. taking it on the chin, but it is taking a lot
more time than we would have hoped.” Shanghai for the Argus conference after
Reward’s Lake Disappointment pro-
ject, 340km east of Newman, covers The company has pulled back from speaking with Paydirt.
some 5,000sq km of ground. A PFS on
Upon his return, Cochran will have

more on his plate to consider with Re-

ward making an application for over

5,500sq km of exploration licences in the

Officer Basin, east of Lake Disappoint-

ment.

In addition, the company has exclusive

rights to an additional 3,075sq km of ex-

ploration licences contiguous to its appli-

cations.

Reward expects to be granted the ten-

ements in mid-2019, with a drilling pro-

gramme to depths of 400-500m planned

for the Gibson area, testing for shallow

SoP mineralisation in this year’s field

season.

– Mark Andrews

PAGE 88 MAY 2019 AUSTRALIA’S PAYDIRT

Ammaroo goes private

The future of Verdant Minerals Ltd’s Am- Revenue over the first 20 years of mine 25% by spending $2 million on progressing
maroo phosphate project in the Northern life, based on Australia’s largest reported feasibility studies for the development of a
Territory is set to be decided by a London- JORC-complaint rock phosphate resource small-scale SoP operation. CD Capital’s
based private equity firm. of 1.14bt @ 14% P2O5, is estimated to total acquisition will have no impact on the JV
$8.6 billion. agreement.
Pending shareholder approval, CD Capi-
tal Natural Resources Fund III LP will ac- Last year Verdant received a non-binding Tzilois is upbeat about the outlook for fer-
quire all of the issued capital in Verdant, indicative term sheet for a long-term con- tiliser minerals, particularly those to come
other than those held by or relevant to 33% cessional NAIF debt facility for up to $160 from Australia and fed into South East
major shareholder Washington H. Soul Pat- million for the project. The company is also Asian markets where growing middle-class
tinson and Company Ltd, and assume con- nearing completion of a Native Title agree- populations are expected to drive demand
trol of Ammaroo, about 300km north-east of ment with the Traditional Owners at Amma- for potash and phosphate.
Alice Springs. roo.
“If you look at a country like Indonesia, for
CD Capital’s offer of 3.2c/share values “Taking it from being an exploration pro- example, in about 15 years time it’s going to
Verdant at $40.5 million on a fully-diluted ba- ject and doing a bit of corporate activity have a bigger population than the US and a
sis and represents a 113% premium to the where we bought our neighbour out and very rapidly growing middle-class,” he said.
company’s closing share price of 1.5c/share turned into a very large 1bt resource…as
prior to the takeover being announced. At well as getting the environmental approvals “In just the context of consumerism and
the time of print, Verdant’s stock had dou- in place and those conditional terms around demand, it’s going to be pretty significant. In
bled to 3c/share. the NAIF facility, it’s a pretty big effort for a Northern Australia we’re right on the door-
junior,” Tziolis said. step, so we’re primed to supply. There’s op-
Verdant managing director Chris Tziolis portunities not only in phosphate and pot-
said the takeover by CD Capital was the “There’s still quite a lot of work to do be- ash, but also if we can get the gas industry
best option on the table for development fore we it gets to a point where the project going up in that part of the world to produce
of Ammaroo, given the mismatch between can be constructed, but we’re looking at all ammonia and nitrogen-based fertilisers.
his company’s market cap ($33 million) and the strategic options for Ammaroo and we’ll
the capital required to bring the project into select the best way forward.” “The challenge for Australian projects,
operation. whether that be phosphate or potash, is to
CD Capital will also take control of the be competitive on the right part of the cost
“We’d been casting our net pretty widely nearby Karinga Lakes sulphate-of-potash curve, such that you can effectively sup-
around the world to all sorts of industry play- (SoP) project. Consolidated Potash Corp ply the market and pay your capital back
ers – mining and fertiliser, private equity and (CPC) recently satisfied the requirements throughout the cycle. I’m positive about it,
just normal sources of capital – and this was to acquire an initial 15% of the project un- but we need to make sure we’re clever and
the best option where shareholders actually der a JV agreement with Verdant via a $1 innovative about the way we put these pro-
stand to make some money, as opposed to million spend on bench-scale and pilot test jects together.”
being diluted from a capital raising to take work.
this project forward,” Tziolis told Paydirt. – Michael Washbourne
CPC has the right to earn an additional
“This is a big-scale project on a global-
scale resource, but it will take a little bit more
capacity than what a traditional junior can
actually bring to bear and actually deliver.
With private equity involved, hopefully we
can get to that point.”

Based on current proposed timelines,
the scheme is slated for implementation on
June 24, at which point Verdant intends to
delist from the ASX. A new board compris-
ing representatives from CD Capital and
Soul Pattinson will also be formed to over-
see Ammaroo’s progression.

Verdant’s existing management team is
expected to transition across to CD Capital
and continue refining its development strat-
egy for the project.

A feasibility study completed 12 months
ago found Ammaroo could be developed
into an initial 1 mtpa rock concentrate opera-
tion for $368 million and expanded to 2 mtpa
after five years for an additional $200 million.

The Ammaroo phosphate project in the
Northern Territory will soon have a new
owner, with CD Capital set to acquire 67%
of the issued shares in Verdant Minerals

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 89

REGIONAL ROUNDUP

Celamin poised to regain Chaketma

Celamin managing director Simon Eley at the Chaketma phosphate project in Tunisia

Celamin Holdings Ltd is more thankful yer, joined Celamin as chief executive doors that we have not previously been
than most to be starting initial feasi- last July and was promoted to the man- able to open.”
bility work on the Chaketma phosphate aging director’s chair last month. He said
project in Tunisia while a protracted legal the company was open to reaching an Celamin is considering two develop-
battle over the ownership of the asset amicable settlement with TMS. ment options for Chaketma. One is the
reaches its final stages. traditional rock phosphate export play,
“We want to get the project back so while the other is an integrated chemical
Last month the Court of Appeal in that we can get moving,” he said. “That’s fertiliser project producing lowest-quar-
Tunisia ordered the enforcement of the been our message to government for tile DAP.
arbitration award against Tunisian Min- some time. We have invested a lot of
ing Services (TMS) to return Celamin’s shareholder funds in this project and de- Eley said regardless of what produc-
interest in the operating company which fined a large high-grade resource. tion path Celamin chooses to walk, he
holds the Chaketma permits. is confident the company is in the right
“A project of this scale will also provide space.
It comes 18 months after the Interna- significant benefits to the country and
tional Court of Arbitration of the Interna- add meaningfully to the level of foreign “If I’ve learnt anything [since joining the
tional Chamber of Commerce first ruled direct investment in Tunisia.” company] it’s around food security and
in favour of Celamin over the fraudulent the level of effort that has been going into
transfer of its 51% interest by TMS. Chaketma hosts an inferred resource developing countries from the likes of the
of 130mt @ 20.5% P2O5. A scoping World Bank, IMF, etc in order to make
On top of returning Celamin’s interest, study was completed on the project in sure that the world can be fed,” Eley said.
TMS must also pay damages and costs 2012 prior to the resource being fully un-
now totalling more than $6 million. derstood. “It’s easy to say and I haven’t got any
firm numbers on it, but there’s more and
Penalty interest on the amount TMS Helping Celamin’s push to realise the more of us on a daily basis and there’s
owes Celamin is reportedly accruing potential of Chaketma is prominent Tuni- less and less arable land, so we need to
by $US602 per day. A further debt of sian businessman Ahmed Bouchamaoui. be able to produce more food from this
$160,000 owed by TMS remains subject amount of land and we’re only going to
to an ongoing legal case. In March, Celamin signed a MoU with do that if we can beneficiate the soils
his company, Al Kassm Holding, to col- in order to grow these crops. This may
It has been a long and grinding four laborate on development of mineral in part account for the recent increase
years for Celamin since the ownership resources projects in Tunisia and else- we’ve seen in rock phosphate prices.
struggle first emerged, but managing di- where in Africa.
rector Simon Eley said the company now “Phosphate and fertilisers are going to
had a clear line of sight on how to take the “Having a highly reputable local part- be in demand for the foreseeable future,
project forward. ner is essential and one of the devel- so much so that you’ve now got some
opment banks we are talking to is very sovereign wealth funds out of the Middle
“Once we have regained control of pleased we have attracted someone of East that are putting food security high on
Chaketma, we will be looking to complete the calibre of Ahmed,” Eley said. their agenda, in some cases above gold
a BFS,” Eley told Paydirt. and oil. It’s an interesting move when you
“Ahmed has a background in engineer- think about where those companies have
“There’s a considerable amount of ing contracting and oil and gas, but he’s made most of their money.”
interest from development banks and expressed a very keen desire to get into
offtake groups, so we are very confident mining and, in particular, phosphate. His – Michael Washbourne
of funding this stage with the involvement network both within the bureaucracy and
of these groups.” also the business world within Tunisia
is unbelievably extensive. He can open
Eley, a resources and corporate law-

PAGE 90 MAY 2019 AUSTRALIA’S PAYDIRT

AFRICA

Avenira chases BFS funding

Appetite to finance the full redevel- studyindicatedpre-production Louis Calvarin
opment of Avenira Ltd’s Baobab capex of $US183 million is
phosphate project in Senegal is strong, needed to expand Baobab whole redevelopment is about; having a
according to managing director Louis intoa1mtparockphosphate beneficiation system that is suitable for
Calvarin, but the challenge is finding operation. our very promising and very good ore-
someone now to fund activities before a body.”
final investment decision can be reached. Key financials reported
in the study included a post- Calvarin said the company had not
Avenira is targeting a final investment tax NPV of $US212 million, yet decided whether it would implement
decision on Baobab in Q4 2019 follow- IRR of 25.5%, free cash flow contract mining or lease the necessary
ing completion of a BFS, which will be of$US544million,EBITDAof equipment, however, both have been
supported by a value-engineering study $US1.02billionandpayback factored into the final cost estimates for
launched last month. within 3.3 years of first pro- the project.
duction.
At the time of print, Calvarin was in Hong The knowledge and experience gained
Kongmeetingwithpotentialfundingpartners Amaidenreserveof39.3mt from almost two years of mining at Bao-
tosecureupto$14millionofworkingcapital. @ 18.9% P2O5 supporting bab has only enhanced Avenira’s un-
Avenirareportedlyhadlessthan$1millionin 13.4 years of mine life was derstanding of the project, according to
the bank in early March, although the com- declaredalongsidethefeasibil- Calvarin, who noted the previous opera-
pany’sthreemajorshareholderswereoffering ity study. tional shortcomings were related to the
a$1.25millionbridgeloantounderwritethose simplicity of the existing plant.
initial study works. Avenira began mining at
Baobab in late 2015, less than a year after Calvarin said with so few phosphate
Calvarin said identifying a short-term pickinguptheproject,butsuspendedactivities development opportunities on offer for
funding partner could prove more chal- in2017–processingofROMstockpilesisongo- investors, it was imperative for Avenira to
lenging than pulling together the larger ing–duetosub-optimalrecoveriesfromthe make its strategy for reviving Baobab as
financing package for Baobab, about existing plant. “bulletproof” as possible.
140km east of Dakar.
Calvarin said the company was largely “The good thing about where we are
“People are extremely positive about satisfied the outcomes in the feasibility now is we have a good line of sight, it’s
financing the project when we reach that study and the subsequent refining work just about rolling out the rest of the pro-
stage, but we need to find the folks that would focus on optimising the plant lay- gramme now,” Calvarin said.
are also positive about financing now,” out and the crushing set-up.
Calvarin told Paydirt. “A year from now we should have the
“We are very fortunate because this value engineering and the BFS both
“It’s a bit of a tough time in the project orebody is extremely simple,” Calvarin wrapped up, and I hope to be well ad-
life because we’re close to project fi- said. vanced, if not closed, on finance.
nance but we’re not there yet. We keep
getting positive comments and buy-in in “It’s well liberated, the mineral we have is “We just need to find the parties – on
terms of the whole project for when the almost pure apatite, which is the mineral of the debt side or private equity and funds
time comes to finance it, but we just need choiceinphosphate,it’sjustasortinggameat – for investing in phosphate now. It’s
to find the right partner to finance it now the end of the day. Other minerals are much a narrower market than gold or battery
for the working capital bit.” more complicated; you need to work on the minerals, but we’re quite optimistic.”
liberation,youhavefairlycomplexbeneficiation
Calvarin’squesttosecureworkingcapital strategies. – Michael Washbourne
has been made easier now that he is armed
withacompletedfeasibilitystudyforthepro- “It’s really something unique with our
posedredevelopment.ReleasedinMarch,the orebody, we just need to have the right
tools to do it justice. That’s what the

Avenira is chasing working capital to fund completion of a BFS on the AUSTRALIA’S PAYDIRT MAY 2019 PAGE 91
redevelopment of the Baobab phosphate project, Senegal

REGIONAL ROUNDUP

DFS puts T3 partners on notice

Arefined DFS has Mod Resources Ltd well
placed to take its T3 copper discovery in
The updated DFS pointed to a Botswana into full production over the next 12 servative in many aspects.”
project with a NPV of $US368 months. The question now is whether Mod will The conservative nature of
million, IRR of 33% and life-of-mine
EBITDA of $US1.1 billion. The next call on outside help to do so. the study, and the mix of high-
grade underground and me-

quest for Mod is to secure finance dium-grade open pit material,

to fund T3’s $US182 million price Mod has already seen extensive inter- hand Mod room to move if cop-
tag. est with a takeover bid by Australian min- per prices begin to slide.
er Sandfire Resources NL made public
The study was well-received by the in late January. While those negotiations “There is flexibility in the mix between
market, with Mod shares putting on near- didn’t progress (Sandfire was rumoured open pit and underground so if the cop-
ly 10% on March 28, the day of release, to have offered 38c/share for Mod) Han- per price is lower we can take more of
and managing director Julian Hanna is na said interest in Mod and T3 was still the higher grade underground ore,”
confident that enthusiasm will extend to high. McGhee said. “And, even though the re-
potential project funders. cent reserve upgrade exceeded expec-
“We are in advanced discussions with tations we think we can maybe tease out
“We have had interest from corpo- a number of parties globally and we have more ore closer to surface which is never
rates, offtakers, traders, smelters and attracted a lot of attention,” he said. “That a bad thing in an open pit scenario.”
streamers although streaming and roy- interest will increase with the release of
alties wouldn’t be our preference – and the DFS.” If Mod is to take the project through
we are confident we will get a solution in development itself, raising T3’s profile
the timeframe we have set,” Hanna told Hanna’s confidence is understand- among international investors will be
Paydirt. “We are looking at a range of able given the dearth of available copper vital. The company listed on London’s
options – there is a lot of debt capac- projects around the world. According to Standard Board in November but has yet
ity in this project – but the fundamental Mod’s own analysis, T3 is one of only to fully commit itself to a market it has
principle is about partnerships. We need three projects globally that could pro- identified as a likely source of funding.
balance sheet strength to assist with T3’s duce more than 20,000 tpa copper for
development and future opportunities.” less than $US500 million capex which “This project hasn’t really had the air
time for many to consider it, perhaps it
After releasing a positive DFS, Mod are not controlled by has not seen the light of day because of
Resources hopes to attract funding the majors. the wider macroeconomic circumstanc-
for its T3 copper project this year es,” McGhee said.
“If you look for
comparisons, Ka- When Paydirt spoke with them in late
moa-Kakula [Ivan- March, the entire Mod management
hoe Mines Inc’s team was preparing to rectify the lack of
massive DRC pro- knowledge around T3 by heading out on
ject] and Sandfire’s roadshows in Australia, Asia and the UK.
[Black Butte] project
in Montana are the “There has been a huge amount of in-
only other ones that terest from UK investors as a result of the
sit outside the ma- DFS,” Hanna said. “People have woken
jors,” Hanna said. up to the opportunities in copper.

In such circum- “We listed in London in November and
stances, it could be will really begin opening up there in April.
expected that Mod’s There are very few copper plays in Lon-
DFS release was an don but the appetite for them is there.
attempt to dress T3 That market also has an appetite for Afri-
up for partial sale but ca and there is a huge retail market there
Mod technical direc- which is keen for new copper stories.”
tor Steve McGhee
refutes such claims. While there are more than 100 cop-
per projects currently being marketed to
“The approach to resource investors, Hanna believes the
the DFS is an ex- Mod story has a number of unique at-
ample of where the tributes.
company is head-
ing,” McGhee said. “I think one of the advantages is that
“It stacks up both this is a fresh story; it hasn’t been around
commercially and the block a few times over the decades,”
technically as a pro- he said.
ject which we could
develop ourselves; it Furthering the uniqueness of the Mod
is detailed and con- proposition is the company’s large land
position in Botswana. The company con-
trols more than 12,000sq km of ground
on the underexplored Kalahari copper

PAGE 92 MAY 2019 AUSTRALIA’S PAYDIRT

AFRICA

Julian Hanna

T3 DFS

Reserve: 34.4mt @ 1.1% copper, 13.2 g/t silver
Mine life: 11.5 years
Throughput: 3.2 mtpa
Production: 28,000 tpa copper, 1.1 moz silver
Capex: $US182 million
AISC: $US1.56/lb
NPV: $US368 million
IRR (pre-tax): 33%
EBITDA: $US1.1 billion (life-of-mine)

belt, a fact Hanna is keen to exploit in the McGhee said Mod was confident it
next 12 months. would receive its approvals within the al-
lotted timeframes.
“No one else has got the belt scale op-
portunity we have,” he said. “T3 sits in “We will be in Botswana in April talking
the middle of a 1,000sq km area in which to the various government departments,”
we have a 100% strike rate in exploration McGhee said. “We are hoping that by the
discovery.” end of the half-year we will have an ap-
proved EISA which is out for public re-
The most promising of its additional view. From there, we could receive the
discoveries is the A4 Dome prospect, lo- granted mining licence
cated just 8km from T3. on the day of EISA ap-
proval.”
In December, Mod reported that 18 of
20 holes drilled at A4 had hit copper min- Hanna said the strong
eralisation, including best hits of 27m @ government and com-
1.1% copper and 20 g/t silver from 394m, munity relations in coun-
42.9m @ 1% copper and 19 g/t silver, try had Mod confident
52m @ 1.5% copper and 14 g/t silver there would be few hur-
from 232m and 50.9m @ 0.9% copper dles in permitting.
and 9 g/t silver from 451m.
“We’ve had nothing
“We’ve had some great hits from A4,” but encouragement
Hanna said. from government,”
Hanna said. “We run a
Having raised $15 million off the back local entity with 60 em-
of speculation about Sandfire’s inten- ployees and created ad-
tions, Mod is well-placed to extend its re- ditional jobs from explo-
gional exploration programme this year. ration activity. We are
meeting our timeframes,
“The strategy for this year is to bring T3 have engaged with local
through early development but the other businesses, including
part of it is to ramp-up exploration on the building the camp lo-
other targets,” McGhee said. cally and provided many
local enterprise oppor-
The short distance between A4 and tunities.”
the proposed processing plant should
see A4 developed as a satellite deposit. – Dominic Piper
Mod is confident it can spring a few more
satellite targets in order to build the ulti- Steve McGhee
mate size of the T3 operation.

“We would like to eventually be con-
sidered a mid-tier producer, for which we
would need 60,000 tpa so it is about how
we maximise those satellite orebodies,”
Hanna said.

Before that, the company will have to
finalise T3’s licensing requirements. Al-
though Botswana is known as the safest
investment destination in Africa, its per-
mitting process can be laboured.

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 93

4 - 6 September 2019
Perth,Western Australia

SPEAKER HIGHLIGHTS

$AE1a,a6rvl30ya10iBl.Ma0ibr0adleyinr2uac0nt.e1tGi9l ST Nick Holland
Chief Executive Officer, Gold Fields Ltd

Nick Holland has been CEO of Gold Fields – the South African-based gold miner – since
2008. Prior to that he was CFO of the company for 10 years. Under Nick the company
has introduced its vision of “Being the global leader in sustainable gold mining” and has
made significant strides in becoming a truly global mining company with operating mines
and projects in six countries.

Before joining Gold Fields Nick held senior position in other South Africa mining
companies, including Impala Platinum and Gencor. He joined the mining industry in 1990
from accounting firm Deloitte where he spent the first 11 years of his professional
career after graduating with a B.Com and B.Acc from Wits University in Johannesburg.
Nick matriculated at King EdwardsVII School, also in Johannesburg.

Kojo Annan
Investor and Entrepreneur; Director, Vector Global

Kojo Annan is a serial entrepreneur and investor, with an extensive global network
and strong track record of growing new businesses across international markets. He
is currently managing Vector Global, an investment holding company with interests
in infrastructure, technology, sport, education and biotech. Kojo started his career
in natural resources and infrastructure most notably by founding Meridian Port
Services (MPS) in partnership with the Ghana Ports and Harbour Authority, Bolloré
and Maersk (APMTerminals) to develop a modern container terminal inTema, Ghana.

Kojo Annan will also be the Keynote Speaker at the Australia Africa Universities Network
Forum (AARF), hosted on Tuesday 3 September 2019 by Murdoch University.

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Managing Director & CEO Managing Director Managing Director CEO & Managing Director CEO & Managing Director
MOD Resources Ltd Base Resources Ltd
Resolute Mining Ltd Cardinal Resources Ltd Black Rock Mining Ltd

Tom Revy Trevor Benson David Flanagan Len Kolff Justin Tremain
Managing Director Executive Chairman Managing Director Chief Operating Officer Managing Director
BlackEarth Minerals NL Walkabout Resources Ltd Battery Minerals Limited IronRidge Resources Ltd Exore Resources Ltd

Craig Mackay Phil Edmands Mike Christie Chris Evans William Witham
Managing Director Partner - Energy Resources Director - Exploration Managing Director Chief Executive Officer
Golden Rim Resources Ltd First Quantum Minerals Ltd
Gilbert + Tobin Birimian Ltd AAMEG

Richard Hyde Eddie Grieve Ben Gargett Errol Smart Speaker TBA
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REGIONAL ROUNDUP

Xanadu opens up
on Kharmagtai

Xanadu believes there is potential to develop a low-cost, high value gold heap
leach operation as a precursor to the larger copper-gold project at Kharmagtai

Xanadu Mines Ltd reached a significant milestone at the Kharmagtai copper and gold project
when it released a scoping study last month. With very few large scale copper plays in the
pipeline, it is a good time for Xanadu to be showcasing the potential it has in Mongolia.

“All the majors want to be in the cop- copper projects.” The company’s London-based direc-
per space, particularly a porphyry Stewart arrived home in Australia with tors Kevin Tomlinson and Marcus Engel-
copper deposit; it is what the majors want brecht were expected to stand down at
to mine. We all understand the shortfall a scoping study on Kharmagtai in hand. Xanadu’s AGM on April 30.
coming and the lack of projects coming Prior to its completion, Stewart was
on. If you look at the ASX, there is proba- Australia and Mongolia are effectively
bly only us and Mod [Resources Ltd] that based in Mongolia and the Xanadu board on the same timeline, therefore coordi-
have advanced copper projects of any spread across the world. nating board meetings will likely be less
scale,” Xanadu chief executive Andrew cumbersome for Xanadu, and Stewart
Stewart told Paydirt. Stewart is now chief executive, with can connect the Kharmagtai story more
Melbourne-based Darryl Clark as execu- effectively to the targeted audience.
“There is a real lack out there and that tive chairman, Ganbayar Lkagvasuren
is my job, I suppose, to educate people a executive director, Michele Muscillo in- “With me being in Mongolia and the
bit more in the copper space, so people dependent non-executive director, while chairman in London, we felt that we
can see the valuation you can get out of Hannah Badenach remains as a non- weren’t getting good coverage in Aus-
executive director and nominee of Noble tralia,” Stewart said.
Resources International Pte Ltd.

PAGE 96 MAY 2019 AUSTRALIA’S PAYDIRT

ASIA

Kharmagtai open pit scoping study 20 mtpa
86.6% copper and 70.9% gold
Processing: $US25/t
Recoveries (average): 96% copper, 90% gold
Concentrate transport cost: $US90/dmt copper
Payability: $US5/oz gold (payable)
Smelting cost: $U484 million
Refining cost: $US683 million
Total initial capital:
Total capital, including sustaining and environmental:

An open pit scoping study on
Kharmagtai indicated a 20 mtpa
copper-gold project would cost

$US683 million

“You can put a release out and you can 448m, including 102m @ 1%, 1.67 g/t resource that sits on top of it, we want to
have IR people, etc driving that, but at from 572m, including 78m @ 1.14% and know more about and put some econom-
the end of the day you need to be talking 2.06 g/t from 594m, including 14m @ ics on that while focusing on grade on the
to people or been seen in the street. We 1.51% and 3.36 g/t from 622m and 10m underground project,” Stewart said.
need to be speaking and in touch with in- @ 2.24% and 5.28 g/t from 658m.
vestors, we are fixing that up and have a Defining a cheap pathway to gold pro-
bit more of a focus on the Australian mar- “We just [late February] drilled some of duction and early cash flow at Kharmagtai
ket. The Australian market is doing well; the best holes to date and hit a bornite is also a must for a company like Xanadu
much better than Canada.” zone below the pit. They were very good if it wishes to pursue funding the long life
drill holes on the edge of the pit so that copper-gold porphyry on its own.
Following release of the scoping study, needs to be resourced up,” Stewart said.
Xanadu has decided to progress with fur- However, it has always been a long-
ther drilling and advancing mine studies “We have some met work to come term strategy of Xanadu’s to do a deal at
to continue. through etc, so a lot of these things need Kharmagtai when the time is right.
to come through; there’s a lot of work that
Stewart flagged to Paydirt that a DFS needs to be done.” What may make Kharmagtai more ap-
would be put on ice as there were more pealing to potential suitors down the track
resources to add to Kharmagtai, which is While there is a pipeline of work Xanadu may be the realisation infrastructure in
composed of the White Hill, Stockwork can get on with it, available cash will es- the region can be leveraged from, cour-
Hill and Copper Hill deposits hosting sentially determine what can be done. tesy of Rio Tinto Ltd’s development of
some indicated resources of 129.3mt @ Oyu Tolgoi.
0.54% copper eq, 0.36% copper and 0.36 “We’d like to push forward with a global
g/t gold for 703,000t copper eq, 468,000t resource upgrade in the near future which The soon-to-be world’s third largest
copper and 1.479 moz gold. will require some drilling, detailed metal- copper mine, Oyu Tolgoi, is just 100km
lurgical work and an updated PEA on south of Kharmagtai.
Inferred resources, as at October 2018, the global project, which would include
were 468.9mt @ 0.41% copper eq, 0.31% the oxide gold, open pit copper and un- “That has been developed in record
copper and 0.19 g/t gold for 1.9bmt cop- derground copper. That would probably time by Rio Tinto since its discovery. We
per eq, 1.468mt copper and 2.832 moz be the next steps, but we can’t really talk look at that and we are a fraction of the
gold. about it because we are not funded for it size of that, but what that has brought is
at this stage,” Stewart said. a landslide of infrastructure to the South
“There are a lot more resources to add. Gobi which helps projects like Kharmag-
This PEA is really only including 51% of The potential cream on the cake – and tai,” Stewart said.
the global current open pit resources; not included in the Kharmagtai scoping
that is only a fraction of the geological re- study – is a 1-1.3 moz oxide gold resource “Overall, Mongolia still has things to
sources at surface so it is a big project,” at Golden Eagle (exploration target) which improve to bring foreign investment back
Stewart said. sits above the main copper-gold orebody. and they are working towards that. At the
end of the day there are things that need
Encouragement for the company to Stewart said there appeared to be po- to improve in Mongolia in terms of fiscal
continue drilling came recently with an tential for Xanadu to develop a low-cost, regime and taxes, but on the ground it
intersection in a new zone of high-grade high value gold heap leach operation as a is a very good place to build a mine and
mineralisation outside the current open precursor into the larger copper-gold pro- move things forward. Everywhere is chal-
pit. ject at Kharmagtai. lenging at the moment depending on the
theatre you are working, but you have
The new bornite gold-rich porphyry “The copper is not going anywhere and to go where the discoveries are and the
was discovered with a hit of 352m @ in the short-term the PEA on the open other stuff will work itself out.”
0.41% copper and 0.58 g/t gold equiva- pit, it is only on 51% of the open pit re-
lent to 0.78% copper or 1.22 g/t gold from sources, so it is only a small snapshot of – Mark Andrews
our project. It looks very good but the gold

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 97

REGIONAL ROUNDUP

Alta asks market to fund its
search for tonnes

Despite a series of setbacks, Alexander Burns remains confident
Alta Zinc Ltd can defy market expectations to turn its Gorno zinc
project into a robust operation in the next few years.

Gorno has had a troubled recent past he hopes it amounts to a reset for Alta sue. He has been joined by fellow direc-
with resource downgrades and a and Gorno itself. tor Marcello Cardaci and largest share-
postponed PFS leading sceptical inves- holder the Smorgon family, meaning
tors to doubt Alta’s ability to develop the “It is a challenge and has brought eve- $1.15 million has been committed.
project, near the city of Bergamo in north- rything back to a very preliminary valua-
ern Italy. tion of an asset that has had €13.5 million The task now is to convince oth-
spent on it since 2015,” Burns said. er shareholders to give Alta another
Burns, however, is not one for quitting chance. Burns understands the frustra-
and the man who was instrumental in Burns knows he will have to turn tion of investors but believes timing could
turning Sphere Investments’ Mauritanian around perceptions of a project seem- be on Alta’s side.
iron ore venture from $1 million oddity to ingly dogged by missteps but he is urg-
$500 million takeover target is preparing ing investors to set aside sentiment and “That’s why we receive a mixed bag re-
to redraw Gorno once again in an effort look at Gorno’s economic fundamentals. action to the rights issue,” he said. “Some
to definitively prove its value. investors within 15 minutes say: ‘It’s a
“Of course Alta is affected by past de- strong zinc market and we see where
Last month, Alta launched a $4.4 mil- cisions but the economics of the project you’re heading, I’m in’. Others are say-
lion rights issue designed to fund the haven’t changed and nothing which has ing: ‘We’ve been done this road before.
next stage of development at Gorno. happened takes away from the funda- You’ve had your opportunity why should
Burns admitted to Paydirt that raising mentals of the project.” we think it would be different this time?’”
$4.4 million off the back of a $5 million
market cap was an ambitious target but Burns has put his money where his Burns argues that plenty has changed,
mouth is, taking his full entitlement of including a rising zinc price and the
$407,359 worth of shares in the rights is-

PAGE 98 MAY 2019 AUSTRALIA’S PAYDIRT

Alta will use funds from a rights issue to rehab
the development access and drill the Pian Bracca
orebody from underground

opportunity to add the the project’s tech-
tonnes lost during the re-
source downgrade. nical aspects. Alta

The downgrade saw had intended to
Gorno’s overall indicated-
inferred resource reduced release a PFS but
from 3.87mt @ 7.7% zinc-
plus-lead and 25 g/t silver insufficient meas-
to 3.3mt @ 6.1% zinc-
plus-lead and 27 g/t silver. ured-indicated

The downgrade came tonnages meant
as a result of chasing the
main Zorzone orebody it could not clear
down-dip but the disap-
pointing result led Alta to the ASX’s require-
adjust its exploration strat-
egy. An all-Italian explora- ments.
tion team was brought in
and it set about mining “We couldn’t
the Gorno archives to find
where the resource op- talk about produc-
portunities were.
tion scenarios but
“The work by our ge-
ologists on the historical it confirmed the
information showed very
quickly that we shouldn’t infrastructure, the
chase Zorzone south but
rather stay on the same metallurgy, the
level and head east-
wards towards the Pian plant design, etc.;
Bracca zone because
that’s where exploration everything on that
was heading when the
mine was closed in 1980,” side was proven.
Burns said.
It is a high-quality
Alta spent much of 2018
defining the potential at concentrate with
Pian Bracca, undertaking sampling and
geophysics to come up with an explora- low impurities; the Despite setbacks on the resource side, Alta has proven
tion target of 5-9.7mt @ 6-7% lead-zinc.
“If the drilling confirms we have a railway can be re- Gorno will work, given it can find the tonnes
thicker zone on the same level and same habbed for ore and
grade as Zorzone, we can completely re-
assess the project,” Burns said. waste trucking and sation at Zorzone and instead develop at
Funds from the rights issue will be used we’ve identified gaps for the DFS to fo- the same level across Zorzone and Pian
to execute the new exploration strategy, cus on.” Bracca.”
including drilling from underground.
“It will cost us $2 million for the rehab The technical study was based on a Burns expected permitting for the Pian
of the underground drive and then four two-phased approach which would see Bracca drilling to be received in the next
months will be needed to drill it out,” the Zorzone resource exploited first be- few months, opening up Alta to a busy
Burns said. fore being joined by Pian Bracca and second half of 2019. If that drilling proves
If Alta’s assumptions are correct, Pian other targets. Alta’s internal analysis has successful, the company could build im-
Bracca will provide the impetus needed led it to reconsider the concept. petus to push its ambitions further.
to launch immediately into full DFS work.
“We’ve already done 80-90% of the “The technical study showed that “There are still opportunities at depth,
work of assessing the project, we just the way to make this fly is to add more to the east and to the south,” Burns said.
now need to bring in the tonnes,” Burns tonnes so, with Pian Bracca, we can go “Last year we did a lot of work on the his-
said. “We lost time getting to this point straight to the Phase 2 plant size, which torical information that should’ve been
but we will save time from here on in.” has been proven to be the most efficient done years ago. We have combined it
The Gorno technical study released in size for the project,” Burns said. “From with the geophysics, the sampling and
January allowed Alta to confirm most of there, we can leave the deeper minerali- the historical grade control drilling and

we have identified a number of new tar-

gets.”

Some investors might deem such talk a

bit rich given Alta’s market performance

but Burns sees a bright future at both the

project and macroeconomic level.

“It is fair criticism but we are now in a

much better part of the zinc cycle and are

much better prepared about how to take

all the information and realise the pro-

ject,” he said.

“My job is to deliver a project which

makes the best zinc concentrate in West-

ern Europe and show that we are just

scratching the surface of the geological

potential here. Once we are up and run-

ning, this project will go for a long time.”

– Dominic Piper

Alexander Burns

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 99

DRREIGLLIOBINTSAL ROUNDUP Exploring together for success bostech.com.au

Spectrum lights up over 14,000m of RC and diamond drilling Antonio and Roswell prospects was ex-
Penny West in the first phase programme, with Tier pected to start as soon as practical, with
1 equivalent mineral deposits the target. about 50,000m of predominantly RC drill-
Spectrum Metals Ltd had reported re- Meanwhile, ongoing project generation al- ing planned.
sults from an additional eight holes drilled at liance activity continues.
Penny North, with results pending for Ma- Peel thunders along
genta and from three more holes at Penny Australian Vanadium
North when Paydirt went to print. on track Peel Mining Ltd remains on track to deliver
a maiden resource for Wagga Tank/South-
Highlights included SPWRC027: 2m @ Australian Vanadium Ltd completed met- ern Knights, New South Wales, in June.
140 g/t gold from 153m (within 6m @ 47.4 allurgical and resources drilling at its name-
g/t from 150m; SPWRC029: 6m @ 46.8 sake project, near Meekatharra, ahead of Recent drilling at Southern Nights con-
g/t from 121m (within 11m at 25.8 g/t from schedule. tinues to yield exceptional intercepts, with
121m); SPWRD024: 2m @ 12 g/t from continuity of high-grade mineralised zones,
173m; SPWRC028: 1m @ 16.2 g/t from The tightly controlled drilling programme linking previous high-grade intercepts both
172m; and SPWRC030: 1m @ 11.4 g/t from extracted over 30t of massive magnetite down dip and along strike.
175m. for further processing, utilising 2,862m of
drilled core from 30 holes. High-grade mineralisation is now con-
SPWRC029 occurs immediately up-dip firmed over 180m of strike and from about
of SPWRC002 which recorded an intersec- A further 18 new drill holes have been 120m below surface to at least 350m below
tion of 8m @ 23.3g/t gold (within 14m at targeted for resource extension drilling, as surface.
14.4g/t gold from 128m) which is described the company targets production in 2021,
as the discovery hole. subject to financing. Highlights from the latest results released
included 23.1m @ 22.54% zinc, 12% lead,
The intersection in SPWRD027 of 11m A pilot study and DFS on the Australian 0.25% copper, 200 g/t silver and 1.42g/t gold
at 25.8 g/t gold, including 6m at 46.8 g/t, Vanadium project is scheduled for comple- from 224m (including 16.35m @ 28.09%
is located on a section line 40m south and tion this year. zinc, 15.77% lead, 0.26% copper, 270 g/t
down plunge of the discovery hole. silver and 1.8 g/t gold from 224.75m); 9m
Good signs at @ 19.91% zinc, 9.55% lead, 0.17% copper,
Eloise JV goes hard Tomingley 220 g/t silver and 0.36 g/t gold from 336m,
including 5.4m @ 29.26% zinc, 13.97%
Minotaur Exploration Ltd and Oz Miner- Alkane Resources Ltd has planned a lead, 0.22% copper, 326 g/t silver and 0.45
als Ltd launched a 21,000m drilling cam- major drilling programme, as broad, shal- g/t gold from 337.2m and 17m @ 10.36%
paign at the Eloise copper JV area, North low, high-grade gold intercepts 3-4km zinc, 6.05% lead, 0.6% copper, 401 g/t silver
West Queensland, last month. south of Tomingley, New South Wales,
demonstrates potential for material project Peel is on track to deliver a maiden resource
The Jericho copper discovery will be the life extension and a potential return to open at Wagga Tank/Southern Knights in June
focus of the four-month drilling programme, pit mining.
with 80 holes to be drilled on the central
section. Drilling should lead to an inaugural RC and diamond core drilling results re-
resource estimate. ceived for the San Antonio prospect dem-
onstrated significant high grade gold zones
Good encounter – 24m @ 5.08g/t gold from 78m (including
with Newcrest 6m @ 13.83g/t from 78m); 51m @ 2.52g/t
from 39m (including 18m @ 5.34 g/t from
Newcrest Mining Ltd will solely fund ex- 57m); 33m @ 4.37g/t from 141m (including
ploration programmes at the Tanami and 9m @ 12.25 g/t from 141m); 39m @ 6.09g/t
West Arunta JVs it has with Encounter Re- from 153m to end of hole (including 9m @
sources Ltd. 10.45 g/t Au from 153m and 6m @ 15.41 g/t
from 180m.
Newcrest has provided Encounter with
extensive exploration plans that include Resource definition drilling at the San

Exploring together for success

PAGE 100 MAY 2019 AUSTRALIA’S PAYDIRT

Exploring together for success bostech.com.au

and 1.86 g/t gold from 181m (including 3m Cardinal continues to intercept high-grade shallow gold at Ndongo East, Ghana
@ 16.67% zinc, 6.78% lead, 1.04% copper,
437g/t silver and 0.76 g/t gold from 185m
and 2.9m @ 30.34% zinc, 18.24% lead,
0.19% copper, 415 g/t silver and 0.38 g/t gold
from 193m).

Kin goes under
Mertondale

Drilling beneath Mertondale 5 pit con-
firmed down-plunge extension and the ore-
body extends at depth, Kin Mining NL has
reported.

Mertondale 5 drilling has intersected 14m
@ 2.5 g/t gold from 217m and 3.8m @ 1 g/t
from 279.2m.

Drilling demonstrated consistent lode-style
gold mineralisation associated with tension
veining in a sheared, felsic volcanic sequence
and highlights the potential for lode-style open
pit mining to extend and deepen the historical
pit which produced 37,841oz @ 3.06 g/t gold.

The deposit, not included in the 2017 DFS
on the Cardinia gold project, remains open
down-plunge and at depth.

Metallurgical test work was under way at
the time of print, with a new resource estimate
to follow an updated geological model in pro-
gress.

Cardinal expanding 3m @ 29.3 g/t from 45m.
wings Drilling has encountered multiple inter-

An optimised ore reserve estimate of 5.1 cepts of near-surface mineralisation, with
moz gold for Namdini, Ghana, has been an- the ongoing programme continuing to eval-
nounced by Cardinal Resources Ltd. uate the open strike and depth extension of
the Ndongo East mineralised system.
Meanwhile, the company intercepted
high-grade shallow gold at Ndongo East. Additional parallel mineralised structures
striking NE-SW remain to be evaluated by
Highlights included 8.3m @ 11.3 g/t gold drilling and provide high priority drill targets,
from 75.7m, 5.2m @ 4.5 g/t from 60m and while infill auger drilling and geophysical
6.3m @ 2.8 g/t from 58.2m. surveys started last month over the Ndon-
go East deposit and its southern extension,
The latest results followed intersections about 7km strike length, to define the scope
at Ndongo East of 14m @ 7 g/t gold from and scale of this structurally controlled min-
69m, 9m @ 23.3 g/t from 60m, 7m @ 4.4 eralisation shear system.
g/t from 14m, 6m @ 12.6 g/t from 2m and

Industry leaders in Aircore
Deep hole Reverse Circulation
Experienced in complex remote exploration drilling

29a Clayton St, Bellevue WA 6056

www.bostech.com.au 08 9250 4252

AUSTRALIA’S PAYDIRT MAY 2019 PAGE 101