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Published by Paydirt Media, 2016-04-05 04:45:12

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April 2016 VOLUME 1. ISSUE 237 $11.95


front and back cover
supplied seperately

Challenger ready:
Golden chance for WPG

• SAREIC preview • Potash/Phosphate ISSN 1445-3436
• Queensland focus 03

9 771445 343007


PAYDIRT (ISSN 1445-3436) 8 NEWS
Published by With some of Australia’s largest gold
Paydirt Media Pty Ltd. miners beginning to increase their hedge
A.C.N. 063 985 133 books, could miners in other commodities
Head Office: also benefit from laying off some produc-
Suite 9, 1297 Hay St, West Perth tion? Dominic Piper spoke to Sean Russo
Western Australia 6005 of Noah’s Rule about opportunities in the
P.O. Box 1589, West Perth hedging market
Western Australia 6872
Phone: (+61 8) 9321 0355 19 COVER 19
Facsimile: (+61 8) 9321 0426 Once a shining light in the Australian gold 26
[email protected] scene, the Challenger gold mine was 40 placed on care-and-maintenance last
month. However, with new ownership
Editorial: under a combination of WPG Resources
Editor: Dominic Piper and PYBAR, the South Australian mine
Deputy editor: Mark Andrews could be set for a rapid resurrection. Mark
Journalist: Michael Washbourne Andrews spoke with WPG chairman Bob
Graphics: Marian Noonan Duffin about plans for Challenger’s revival
Keith Goode (Sydney), Brendan Ryan 26 SAREIC PREVIEW
(Johannesburg), Ross Louthean The South Australian Resources and En-
Advertising: ergy Investment Conference returns to the
Advertising manager: Tony Mwarey Hilton Hotel Adelaide on April 20. Ahead
Subscriptions: Mitchelle Matambo of the conference, we look at the state-of-
Phone: (+61 8) 9321 0355 play in SA and find that despite the current
Facsimile: (+61 8) 9321 0426 difficulties in attracting exploration funding,
a number of innovative juniors are finding
Pre-press and printing: pathways forward
Vanguard Press 26 John St,
Northbridge WA 6003 40 POTASH/PHOSPHATE
Member of: Potash and phosphate have largely
avoided the price pressures brought about
Paydirt Media by the end of China’s “stronger-for-longer”
Executive chairman: Bill Repard growth pattern and as a result have at-
Finance manager: Giovanny Jefferson tracted a number of ASX-listed juniors to
Accounts/administration: assets. Paydirt casts its eye over the lead-
Heather Melling ing proponents
Conferences: Tammy Caldwell,
Melita Fogarty 46 QUEENSLAND

Cover image: WPG Resources chair- With coal in the doldrums and the Century
man Bob Duffin is all smiles after his zinc mine in closure mode, Queensland’s
company’s acquisition of the Chal- resources sector is at its lowest ebb in
lenger gold mine South Australia a generation. There are, however, still
stories emerging and Paydirt has hunted
down the best, including Evolution Mining,
Stavely Minerals and Diatreme Resources

Member of:
Australia-Africa Minerals & Energy Group

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


Runners and riders still
hopeful in graphite

This edition of Paydirt hits newsstands est, or highest grade, resource as it does in more traditional
at the height of UK horseracing’s na- commodity groups. Rather graphite miners, like other industrial
tional hunt season with the Chelten- minerals miners, will see success defined as much by their abil-
ham Festival just completed and the ity to market their product to customers as they will their ability
Grand National just days away. to build a robust mining project.
National hunt racing – hurdles and
steeplechases in which horses jump Like horseracing, not every company can be a winner in
over obstacles – is much more popu- graphite but as with steeplechase horses there are strong re-
lar in Britain than Australia where animal welfare concerns have turns to be made given the speculative nature of the investment.
seen the sport pushed out of the mainstream.
Bookmakers take more bets on the Grand National than any Graphite demand and prices may never reach the heights
other event during the year – it is the closest Britain has to the needed to make every project desirable but at least a handful
Melbourne Cup – with odds often generous because even the of this new generation of Australian graphite hopefuls will guide
favourites are no guarantee of making it to the finishing post. their horses to the production line.
My mind turned to the Grand National during Paydirt’s first
Australian Graphite Conference, held in Perth last month (see It will take not only a good horse (project), but a good jockey
page 5). (management), good tactics (marketing) and a good run (graph-
More than 150 delegates attended a full one-day programme ite demand) to hit that finishing post first.
with presentations from 12 graphite companies, one lithium
company and a variety of expert commentators. Not an election issue, thankfully
The conference felt, in many ways, similar to the first Paydirt The start of the Australian Federal election campaign is upon
Uranium Conference, held in Adelaide in 2007. us and unlike previous campaigns, the resources industry ap-
Then, as now with graphite, there was a flowering of interest pears to be off the agenda.
in uranium among ASX-listed juniors as speculation about fu- What a relief.
ture demand fuelled positive price forecasts. And, just as many There may be many advantages to being a high profile indus-
of the uranium companies at that first conference have failed try and it is understandable why a sector such as resources be-
to make it to production or moved into other commodities, it is comes a political football during the boom times. However, now
unlikely every runner on the programme for the first Australian that some of the air has gone out of the ball, it will be hopefully
Graphite Conference will clear the final fence and make it to the left in the corner to reinflate. I’m sure after the headline-making
finishing post of graphite production. last decade, many shareholders will be happy to see their com-
I am not about to suggest which of the runners will make it, panies out of the political spotlight.
my fortunes at the track are enough to assuage tips of any form. When it comes to the Federal arena, politicians talking about
What became apparent, however, is that in resources – and par- resources can only spell trouble. As mining is governed at the
ticularly industrial minerals such as graphite – the favourites are state level, the Federal Government’s only jurisdiction over the
not always there at the end. sector is through either tax regime (as evidenced by the MRRT)
In this regard, graphite has already had a high profile fall at or environmental legislation, both debates the industry doesn’t
an early fence. In March, Triton Minerals Ltd entered voluntary particularly want to flare up.
administration. Triton lays claim to the largest graphite-vanadi- So, what is on the sector’s wish-list from Federal Govern-
um resource in the world at Balama North in Mozambique but ment? Ideally, the exploration development incentive – the Gov-
despite the size of the asset, the company came unstuck even ernment’s truncated flow-through share scheme – would be ex-
before it had truly hit development. panded but I remain doubtful.
Similarly, Valence Industries Ltd has closed its Uley graphite Since assuming the prime ministership, Malcolm Turnbull has
mine in South Australia less than 12 months after opening it due steered clear of discussing support for the resources sector,
to processing problems and a lack of marketing contracts. choosing instead to focus on “innovation” (maybe he should be
However, neither of these high-profile cases appeared to looking to lithium and graphite then).
douse enthusiasm at the conference. Paydirt was delighted Speaking to Leigh Sales on ABC’s 7.30 last month, Turnbull
with both the turnout and the sentiment throughout the day. mentioned a whole raft of business incentives his Government
Most presenters were measured in their outlook for the sector had launched but did not specifically mention the exploration
and admitted it would only be through good planning, high qual- development incentive.
ity management and a bit of luck that their companies would Supporting exploration may not fit in with Turnbull’s carefully
reach production. crafted public image of innovative thinker so the sector should
Patersons Securities’ Jason Chesters is perhaps the best- keep a close eye on whether the Prime Minister will remain com-
versed analyst on graphite in Australia and his keynote address mitted to the scheme.
gave hope as well as caution. He said while the Triton and Va-
lence failures had given investors pause, good quality projects [email protected] @DominicPiper
would continue to attract investor attention.
It was generally agreed that “good quality” did not mean larg-



First graphite event energises sector

Australia’s graphite players with Japanese group Sojitz
remain confident the indus- Corporation is also crucial.

try is still in good shape despite “Germany, Japan and Ko-

recent high profile failures. rea are leaders in battery

At times, graphite develop- technology and having part-

ers have struggled to convince ners in these markets puts us

Australian investors the market in the best position to access

is more than a flash-in-the-pan them,” Spinks said.

and the recent travails of Tri- Dr John Parker – whose

ton Minerals Ltd and Valence Lincoln Minerals Ltd is this

Industries Ltd have done little month set to receive a mining

to correct that trend. However, lease for its Kookaburra Gully

faced with a large turnout at the project in South Australia –

inaugural Australian Graphite said the recent failures in the

Conference on March 22, ASX- sector had not distracted his

listed graphite developers de- company.

livered an upbeat, if tempered, More than 150 delegates attended the first ever “We have been in graphite

tone. Australian Graphite Conference in Perth last month and we have been through the

Patersons Securities re- highs and lows of the industry

source analyst Jason Chesters set the “Graphite projects require a slightly dif- but Kookaburra Gully remains our prime

mood for the one-day conference, telling ferent approach to advancing a project focus as it is a world-class asset,” Parker

the audience the recent corporate failure compared to other non-industrial mineral said.

of Triton – which appointed administra- projects. Additional considerations, skills China’s dominance of world graphite

tors in early March – had caused con- and market intelligence are required to and lithium-ion battery production hangs

cern among investors already struggling be successful, particularly as investor over western world producer ambitions

to understand the graphite sector. interest and understanding in the sector but Metals of Africa Ltd managing direc-

“The recent project and corporate fail- is low.” tor Cherie Leeden believes US and Euro-

ures in the graphite sector have given Without trading platforms graphite pro- pean policies may play a role in reversing

investors pause as the market comes to jects, like those in other industrial miner- that.

“better understand the added complex- als, require a willing buyer to commer- “Policy is important,” she told the con-

ity and additional attributes required in cialise the opportunity. ference. “Increasingly, companies have

a good graphite pro- to prove their prod-

ject,” Chesters said. Graphite projects require a slightly uct’s journey from
However, Chesters’ the moment it comes

outlook was not en- different approach to advancing a out of the ground and
tirely bleak. project compared to other non-industrial they can’t do that out
of China. That is why
“Raising capital will

be challenging but mineral projects. Additional considerations, we are proposing a
good quality projects skills and market intelligence are required to spherical graphite fa-
will attract investor at- cility in the US.”

tention,” he said. be successful, particularly as investor interest Talga Resources
ASX-listed juniors and understanding in the sector is low. Ltd’s Mark Thomp-
son also identified his
have become increas- company’s location
ingly attracted to the

graphite space in re- in Sweden as a com-

cent years thanks to price projections “There is just one real question; ‘Can petitive advantage with regards policy

linked to its use in rising industries such you sell what you produce?’” Chesters settings.

as lithium-ion batteries. But, the lack of said. “Can your project produce a range “There is concern among the top

trading platforms and the myriad prod- of graphite products to a required specifi- battery-making companies about things

ucts and applications for the carbon cation and sell these to long-term quality like conflict minerals and carbon dioxide

material means accurately predicting customers for a reasonable market price emissions,” Thompson said. “So, being

prices and future demand is increasingly while simultaneously keeping costs low- in Sweden means low emissions be-

fraught. er than those of most competitors?” cause we can use hydropower and your

It also means projects cannot be Among those companies to have product chain will carry that advantage

judged solely on the traditional metrics heeded such warnings is Kibaran Re- all the way through.”

of tonnes and grade. Chesters pointed to sources Ltd. Kibaran managing director – Dominic Piper
the importance of flake size distribution, Andrew Spinks told the conference the
Look out for full coverage of the inau-
product purity, location, infrastructure company’s two binding off-take agree-
and timeframe to production for graphite ments with European groups had been gural Australian Graphite Conference in
developments but placed strong market- critical to its plans for development of its the May edition of Paydirt
ing above all other considerations.
Epanko project in Tanzania, while a MoU



Walsh exits Rio Tinto
after 25 years

After almost seven years as a direc- Sam Walsh “Jean-Sébastien is a very experienced
tor on the Rio Tinto plc board, Sam executive with a demonstrated track re-
Walsh will retire from the business on bauxite and steel industries. From 2007 cord and brings a unique blend of strate-
July 1. to 2011, Jacques was group strategy di- gic and operational expertise. He has run
rector at Tata Steel Group. complex operations and projects across
Walsh has served as chief executive five commodities and five continents. J-S
for the past three years and has been is a highly-regarded leader who shares
credited with saving the company $6 bil- Rio Tinto’s strong values and has em-
lion in costs, while returning more than braced its culture,” Rio Tinto chairman
$13 billion to shareholders. Jan du Plessis said.

The Australian’s successor will be Upon starting as chief executive on
copper and coal chief executive Jean- July 2, Jacques will receive a base sal-
Sébastien Jacques. ary of £1.08 million, with a target annual
opportunity at 120% of base salary.
Jacques has been on Rio Tinto’s ex-
ecutive committee for more than three In the interim, Chris Salisbury has
years and during that time he has helped been appointed acting chief executive of
deliver a step-change in safety and cash the copper and coal product group and
performance, while reducing costs. will attend the Rio Tinto executive com-
mittee in this capacity. The rest of the ex-
Before his tenure with Rio Tinto, ecutive team remains unchanged.
Jacques worked across Europe, South
East Asia, India and the US for more than
15 years in a variety of operational and
functional positions in the aluminium,


22 March 2016 - Novotel Perth Langley

The CD-Rom of the 2016
Australian Graphite Conference

is now available

CD-Rom – $30 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]



The coal merry-go-round
in South Africa

The Waterberg (water moun- “coal supply cliff” – which was
tains in Afrikaans) is where
the future of coal mining in due to kick in from about 2018.
South Africa lies because it
contains most of the country’s Reason I have been harping
remaining coal resources, but
it’s proving a tough nut to crack on it is because of the investor-
as two ASX-listed juniors have
found out the hard way. unfriendly attitude taken by the

Resource Generation Ltd South African Government in
(Resgen) and the Waterberg
Coal Company Ltd (WCC) general – and Eskom in particu-
have battled for years to get
their respective projects – the lar – against the country’s coal
proposed Boikarabelo and
Waterberg Coal mines – off the majors.
That has resulted – so far – in
Both hit the wall in recent
months. Resgen chief execu- BHP Billiton Ltd getting out of
tive Paul Jury was booted out
along with chairman Brian Warner in No- South Africa while Anglo Ameri-
vember after a bitter feud with the com-
pany’s strategic shareholders – Altius can plc is in the process of sell-
and Noble.
ing its coal business and the re-
WCC chief executive Stephen Miller
resigned on March 10 as part of a major percussions on future business
restructuring exercise which will – hope-
fully – see the company recapitalised. of Eskom’s bust-up with Glen-

Miller’s departure followed the break- core over the Optimum Colliery
down of discussions with South African
gold major Sibanye Gold Ltd, which Exxaro has been one of the few coal companies to have yet to be seen.
is keen on establishing an independ-
ent power producer (IPP) project in the operate successfully in the Waterberg Eskom’s response is interest-
Waterberg to supply the power required
by its deep-level gold and platinum ing. According to chief executive
mines. Sibanye is now talking to Resgen
about establishing such a project. It will be extremely difficult for a new- Brian Molefe: “There is no coal supply

Both Resgen and WCC ran into trou- comer to go the route that many coal cliff – it’s a thing of the past”. That claim
ble because they could not find the funds
needed to complete their initial start-up juniors have used successfully in the stands in total contrast to lobbying from
projects. The reasons for that include the
collapsed commodity markets and the traditional coalfields around Emalahleni Eskom executives over the past few
harsh realities facing any company trying
to get going in the Waterberg. which is to start small, make some profits years for government to declare coal a

In a nutshell; anyone trying to start up and then ramp up. “strategic mineral” and put controls on
in the Waterberg needs very deep pock-
ets because the nature of the coal de- The only company to crack the Water- exports because of fears that the South
posits is such that you need to establish
a large-scale operation from the outset. berg so far is Exxaro Resources plc African coal companies would export to

There are also big logistical problems, which went in there in the 1970s when India coal that Eskom needs to power do-
mainly the provision of sufficient water
and rail capacity. Despite its name the it was part of the then state-owned Iscor mestic stations.
Waterberg, it is actually a dry region
while it is twice the distance to the main (Iron and Steel Corporation) which, of Since he took over at Eskom last year,
export terminal at Richards Bay as the
mines around Emalahleni (the former course, had extremely deep pockets in Molefe has also repeatedly stressed the
the form of the country’s taxpayers. utility’s success in stopping load-shed-

Exxaro is now one of South Africa’s ding and he’s right. Eskom has not had to

leading coal groups which supplies two shed power for seven months now.

major power stations – Grootegeluk and The bad news is the reason for that is

the under-construction Medupi – which the collapse in demand for power as the

are situated in the Waterberg and is also growth rate in the economy has fallen

steadily building up its export business. back towards around 1% to 2% annually

Exxaro has further big plans for the instead of reaching the forecast 5% rate.

Waterberg where it is looking at estab- According to newly appointed Exxaro

lishing a new multi-product mine called chief executive Mxolisi Mgojo: “There is

Thabametsi which would supply the ex- no coal cliff right now because there is no

port market as well as establish an IPP growth scenario in South Africa. That’s

project. why he [Molefe] can boldly say there

The really interesting fact that came will be no load-shedding. Who is using

out of Exxaro’s recent presentation of electricity? All the furnaces are closed

results for the year to end-December is because the economy is not performing.”

that the group’s strategy is not to seek So, when South Africa does get back

more business from Eskom because of onto a growth path it is likely to run

the “business risk” involved given that straight back into a power supply short-

Eskom already takes 80% of the coal age situation unless Eskom gets its act

mined annually by the group. together and/or one or more of these pro-

I have harped on this before because posed IPPs get off the ground.

of the question over where Eskom will Brendan Ryan is a Johannesburg-based

find the coal required to meet its future mining writer
needs – the future shortfall known as the



Price rises give chance to
look over hedge

Miners in all commodities should would ask whether or not the com-
take heed of gold producers pany has considered hedging be-

and lock in future prices when the cause it is not for the rest of your

opportunity arises, according to life. Streaming might look lighter

one of Australia’s leading hedging but it is for the life-of-mine and

proponents. down the track investors will be as

The recent rise in spot gold pric- angry about streaming deals as

es led a number of Australian gold they have been about too much

miners to increase their hedge hedging and debt.”

book and Noah’s Rule managing In contrast, Russo advises cli-

director Sean Russo believes a ents to take short-term hedge po-

price spike is the ideal signal to sitions to smooth out revenue.

make such a move. “It is not about doing long-dat-

“There has been a history of ed, complicated hedging and it is

hedging at the wrong time but if not driven by price but by the re-

you get a purple patch, lock it in,” quirement for a certain amount of

Russo told Paydirt. “It is great to money at a certain time. It is driven

see producers selling into specu- by a company’s particular circum-

lative rallies. It is fantastic because stances rather than the market.”

for the first time in a long time Sean Russo If the global hedge book among

they are behaving rationally. High miners has shrunk in the last dec-

grade your price, rather than high grade whatever assets they can find. But, when ade, debt levels have increased dra-

your mine.” it’s not running people will hang onto matically. Russo believes it is companies

Gold miners such as Northern Star those companies that are well managed with large debt obligations which need to

Resources Ltd, Evolution Mining Ltd and and that means those companies who sharpen their hedging strategies.

Metals X Ltd have increased their hedge have hedged to offset debt.” “I would hope companies with debt

positions in recent months but Russo While hedging has remained largely would be more likely to hedge. It is bet-

wonders whether other miners have fol- unfashionable, miners have turned in- ter to mine your way out of trouble than

lowed suit. creasingly to other instruments to gen- raise capital to pay back debt. Equity to

“Our clients led the way and looking erate funding. Metals streaming compa- pay debt is mostly a disaster.”

at other sectors, you see that many of nies have enjoyed strong market growth Having debt without hedging could

the producers could’ve performed better in recent years but Russo remains doubt- also leave companies at the mercy of the

with hedging; look at the nickel sector for ful of their long-term suitability for most short-sellers who are currently stalking
“instance. I hope the iron ore miners have miners.
the commodities sector.

been doing the same in “Mining companies

their recent rally.” Our clients led the way and looking don’t fully appreciated
The mining indus- that hedge funds will

try turned away from at other sectors, you see that many happily be either long
hedging in the previ- of the producers could’ve performed better or short. When they
ous decade as com- want to short a metal,

modities began their with hedging; look at the nickel sector for they will also look for
seemingly inexorable companies with expo-

upward march. The instance. I hope the iron ore miners have sure to that metal who
world’s gold majors in been doing the same in their recent rally. are vulnerable to it fall-
particular claimed that ing. If you’re hedging,

investors didn’t want the shorters are less

them to hedge. Russo likely to move on you.

has always doubted the logic of this ar- “Streaming companies started get- “Consumers are always rational and

gument. ting traction because the banks lost their buy when prices are low,” Russo said.

“Many of the majors say they don’t way and hedging was on the nose and “The only people in the market who don’t

want to hedge because their sharehold- so they were able to take advantage of act rationally are the producers who sell

ers don’t like it but that hasn’t stopped the distressed companies,” he said. 52 weeks of the year and have histori-

companies who are hedging achieving “If you look at the implied value of the cally been bad at selling high and buying

share price appreciation,” he said. streaming companies you can only as- low.”

“The thing about the gold space is that sume there is a massive value transfer – Dominic Piper
the global investment pool is far larger between the streamer and the streamee

so when gold is running, people will buy (sic). I think there is a place for it but I


Rox returns to its gold roots

The dwindling nickel price at it, but we’re a little bit
has forced Rox Resourc- tight on funds so we’re talk-

es Ltd to delay its develop- ing to various parties about

ment plans for Fisher East, coming in as a partnership.

however, surging sentiment We’re finding there is quite

towards gold has provided a bit of interest out there for

the company with a silver gold.”

lining. Partnerships have prov-

Rox is looking to reacti- en successful for Rox in

vate its exploration efforts the past, headlined by the

at the Mt Fisher gold pro- JV with Teck Australia Pty

ject, about 150km north- Ltd at the Reward zinc-lead

east of Leinster, having project in the Northern Ter-

barely touched the ground ritory.

since discovering nickel on Teck has about $1.3 mil-

the eastern side of its tene- lion to spend on exploration

ments in late 2012. by 2018 to acquire 70%

Mt Fisher hosts a re- of the project, including

source of 973,000t @ 2.75 the promising Teena zinc

g/t gold for 86,080oz, which prospect, having already
Rox is looking to reactivate exploration at the Mt Fisher gold project claimed a 51% stake of the
Rox is updating to JORC

2012 compliance standards. asset.

Previous drilling returned a number of forced Rox’s hand at Fisher East, while Teena produced a number of stun-

high-grade intercepts, including 9m @ the likes of Mincor Resources NL and ning intercepts late last year, including

7.1 g/t gold, 3m @ 17.4 g/t, 4m @ 9 g/t Panoramic Resources Ltd have also suc- 35.4m @ 13.2% zinc (including 21.2m @

and 11m @ 5.3 g/t. cumbed to poor nickel sentiment. 18.6%), 19.7m @ 14.9% zinc and 20.8m

“We originally got into this project be- “With the way the nickel price is at the @ 12.8% zinc (including 15.1m @ 16.4%).

cause of the gold,” Rox managing direc- moment and what’s been happening with However, Mulholland believes his com-
tor Ian Mulholland told Paydirt.
all the nickel producers around Kambal- pany is yet to realise any value for the

“We spent most of 2011 and 2012 da, this project is not going to be getting project he places among the best unde-

working on the gold and then we found off the ground at present,” Mulholland veloped zinc resources in the world.

the nickel so we started concentrating said. “If you went through all the ASX-listed

on that. Gold at that point wasn’t getting “It’s an excellent option on the nickel companies that have zinc assets – out-

much support, but obviously now things price going forward when times do re- side the majors – you wouldn’t find a

have swapped around. cover. It’s a good project when the nickel larger and higher grade deposit than this

“We’ve identified a resource and we’ve price is at normal levels, but we’re not at one,” he said.

already done some scoping studies on normal levels at the moment.” “We don’t have a resource on it yet and

some deposits, but they didn’t Rox has identified three that’s probably one of the reasons why

quite make it with the price at areas of interest at Mt Fisher, we don’t feel we’re getting value for this

the time in 2012. Gold is now including known resources in the market…so we’re looking at op-

about 15% higher and costs underneath the existing open tions for getting value for it, either a sale

have come down a lot since pit. Additional prospects, in- or some form of spinout.

then, so the net effect could cluding Dam and Damsel, “Those processes are ongoing. We

be a 30% difference.” extending over 12km to the haven’t reached a conclusion on any-

Rox completed a scoping south have shown strong thing yet, but we’re certainly very active

study on Fisher East in Febru- gold anomalism. on doing all that stuff.”

ary 2015, flagging a potential Mt Fisher was previously Mulholland believes the market is yet

toll milling operation for an explored by CRA Exploration to appreciate the consequences of the

upfront capex of $20.8 mil- Pty Ltd during the 1990s and closure of the Century zinc mine last

lion. The base case option for was the lead project in Avoca year, claiming the full impact of the sup-
the company to build its own Ian Mulholland Resources’ IPO in 2002 be- ply cut-off will take at least another 3-6

500,000 tpa processing facil- fore that company shifted its months.

ity carried a larger capex of $85 million. focus to Higginsville, south of Kalgoorlie. Meanwhile, Rox has pulled back its ex-

The company recently upgraded the Mulholland said his company was cur- ploration efforts at the Bonya copper pro-

resource at Fisher East to 4.2mt @ 1.9% rently seeking a development partner for ject in the Northern Territory due to poor

nickel containing 78,000t, including 91% Mt Fisher. base metal prices. Previous best hits in-

in the indicated category and an estimat- “We could kick things off, but we’re not clude 38m @ 4.4% copper and 11m @

ed 260,000t @ 2.8% nickel containing going to be funded for a lot so bringing a 4.4% copper.

7,300t at the Cannonball deposit. partner in will probably be the sensible – Michael Washbourne
However, the low nickel price – thing to do,” he said.

$US3.92/lb at the time of print – has “We’ve got a bit of money we can throw



Cyber crimes on the up

Despite heightened attention and un- Global mining cyber threats include the theft of intellectual property,
precedented levels of security invest- such as reserves, resources and exploration data
ment, the number of cyber incidents —
and their associated costs — continues make electronic control units vulnerable How can organisations reverse the
to rise. to hackers, potentially presenting threats gap between security investment and
to production, life and safety. effectiveness?
The concern typically revolves around
the growing sophistication of hackers Companies with trading and finance In a world where it is not feasible to be
and other adversaries, and whether be- arms face similar financial fraud insider 100% secure, it is of course critical to
ing secure is even possible in today’s dealing issues as banks and stockbroker protect the most important assets. But
rapidly evolving landscape of cyber at- companies. an organisation must focus equal, and
tacks. in some cases greater, effort on gaining
Highly integrated supply chains make more insight into the potential threats to
The underlying reasons for this trend, the industry especially susceptible to be able to respond to reduce their im-
and how organisations can actually re- compromises among their business part- pact.
verse it to meet and start winning the ners and suppliers.
cyber risk battle, need to be addressed. By implementing an ongoing pro-
In the following chart we call out the gramme to become secure, vigilant, and
The first reason has a lot to do with the very high, high, moderate and low areas resilient, organisations can be more con-
organisation itself. It is not just about the of concern around cyber threats in the fident in their ability to reap the value of
sophistication of the external actors, but mining sector; who is doing it and their their strategic investments.
how by increasing your own digital reach impacts.
adds layers of complexity, volatility, and
dependence on infrastructure that is not
fully within your control.

Your efforts to grow, serve, differenti-
ate and streamline, introduce new gaps
and opportunities attackers will try to ex-

When you consider the inherent link
between business performance, innova-
tion and cyber risk, it becomes clear that
protecting everything — while perhaps
not impossible — would be economically
impractical and would be likely to impede
some of your most important strategic

The second – that cyber incidents will
occur – means every organisation must
realistically assess its changing risk pro-
file and determine what levels and types
of cyber risk are acceptable.

So understanding cyber risk starts with
specifics. Identifying the specific threats
facing your organisation enables you to
better prioritise what to secure, deter-
mine how best to monitor it, and decide
what types of incidents to prepare for.

Global mining cyber threats

The theft of intellectual property (e.g.
reserves, resources, and exploration
data) and strategic plans (e.g. mine de-
velopment plans or marketing plans) by
criminals, nation states and/or competi-
tors, especially those able to compro-
mise insiders or suppliers/business part-

Vulnerabilities in industrial control
systems, building management systems
(e.g. C-Bus) which provide opportunities
for hacktivists and nation states to disrupt
mining operations, production and possi-
bly to create quality or safety issues.

Automation and remote control centres


Being secure In the mining industry it is important to understand who could harm you, what motivates
them, and how they are likely to operate through cyber criminal activity
Malicious actors, especially those mo-
tivated by financial gain, tend to operate psychology of adversaries, and consid- ment structures and legal process can
on a cost/reward basis. If the organisa-
tion’s defences are strong enough to ering the potential for accidental damage mean a failure to capture valuable foren-
raise the criminal’s risks and the level of
effort relative to the value of what they by well-intentioned customers, partners sic evidence
can gain, they are more likely to turn their It won’t work without governance
attention elsewhere. or employees, cyber risk strategists will

Given the reach and complexity of be able to anticipate what might occur Transforming from a traditional, stand-
today’s digital ecosystems, it is not pos-
sible to secure everything equally. Be- and design detection systems accord- ards-driven IT security programme to a
ing secure means focusing protection
around the organisation’s risk-sensitive ingly. secure, vigilant, resilient cyber risk pro-
assets; those the organisation and its Being resilient gramme is not just about spending mon-
adversaries are likely to agree are the
most valuable. Being resilient means having the ca- ey differently, it’s a fundamentally differ-

This is usually critical infrastructure, pacity to rapidly contain the damage, and ent approach.
applications, and data, as well as spe-
cialised control systems, but they are not mobilise the diverse resources needed Although it is critical such a programme
isolated. They are part of larger services
and transaction chains, so it is essential to minimise impact — including direct is tailored to your organisation, there are
to address weak points along the end-to-
end business process. costs and business disruption, as well some common characteristics;

For example, strong asset manage- as reputation and brand damage. While • They are executive-led
ment is a significant enabler of secure,
vigilant, and resilient practices. For in- resilience requires investment in tradi- • They involve everyone
stance, when proper reconfiguration and
decommissioning of laptops and servers tional technology-based redundancy and • They’re programs, not projects
is critical when it comes to preventing
data leakage. Mature processes main- disaster recovery capabilities, the bigger • They are comprehensive and
tain up-to-date tagging of critical assets
that support high-risk areas of the busi- picture includes a complete set of crisis integrated
management capabilities. • They reach beyond your walls
Being vigilant Cyber war gaming exercises • They cover cyber risks not just cyber

Today’s costliest attacks tend to be Cyber war gaming exercises reveal security.
the ones that are highly targeted. Being
vigilant means establishing threat aware- common issues that cause delays in re-
ness throughout the organisation, and
developing the capacity to detect pat- sponding as rapidly and effectively as a
terns of behaviour that may indicate, or
even predict, compromise of critical as- real crisis situation.
• Groups accus-
Collecting terabytes of data can gen-
erate tens of thousands — sometimes tomed to operating in
millions — of alerts daily. Analysts often
become overloaded as they focus on in- silos face challenges
fected machines, malicious IP address-
es, or failed login attempts. Those details in agreeing the rela-
may be important, but without context, it
is impossible to know if what you’re see- tive severity of an in-
ing really matters.
cident, and therefore
One way of accessing relevant context
and pragmatic intelligence that is action- the key actions need-
able, is through the work of analysts in
Deloitte’s network of in-country based ed
Cyber Intelligence Centres.
• Roles and re-
Knowing the landscape
sponsibilities despite
In the mining industry it is an important
starting point which can then be supple- the process manual Based in Perth, Michael Based in Sydney, James
mented by understanding the organisa- are often not well un- Barrett is the Deloitte Na- Nunn-Price is the Deloitte
tion’s specific business risks. It is a broad derstood tional Risk Advisory leader Asia-Pacific Cyber Risk
exercise to examine who could harm for Energy & Resources leader
you, what motivates them, and how they • Lack of aware-
are likely to operate. ness of law enforce-

By carefully plotting the motives and



Mitsubishi jumps on Hawsons

Carpentaria Explora- Carpentaria managing director Quentin Hill (right) and technical director Ray Koenig
tion Ltd has taken on site at the Hawsons iron project
the first steps towards
establishing a supply net- “Very rarely can projects achieve such Hill said the recent uplift in the iron ore
work in Asia after signing quality as what we’ve demonstrated,” Hill price during March had no bearing on his
a non-binding letter of in- said. company’s discussions with Mitsubishi
tent (LOI) with Mitsubishi because the Japanese entity was look-
Corporation RtM Japan “What I think Mitsubishi has recog- ing much further ahead.
Ltd for 1 mtpa of pellet nised is that the future trends of the steel
feed from its Hawsons industry require high-grade [product] and “The recent announcement from the
iron project in New South Hawsons provides amongst the highest- Chinese Government about significant
Wales. grade raw materials for steel-making.” stimulus and maintaining their growth
between 6.5% and 7% is important,” Hill
The agreement for the Hill said his company intends to secure said.
potential off-take of at potential off-take agreements in other
least 10% of the planned key markets, including the Middle East “I think the sentiment in the iron ore
production from Haw- direct reduction market and the Chinese sector was very much conditioned to
sons, about 60km south- magnetite pellet feed market, to comple- Chinese demand drastically falling and
west of Broken Hill, ment its proposed entry into the Asian as the year rolls on, I think we’ll see that
places Carpentaria in a high-grade pellet feed market via Mit- particular scenario is less and less likely
strong position to tap into subishi. and sentiment will change as that be-
Mitsubishi’s established comes clearer.”
pelletiser networks in the All engineering aspects of the project
Asia-Pacific region. are at a PFS level, however, Carpentaria Although the Hawsons project team is
had not seriously considered pellet feed based mostly out of Broken Hill, Carpen-
Carpentaria will look production until recently when test work taria continues to hold regular talks with
to convert the LOI into a started to confirm the commercial viabil- key government officials in South Aus-
binding off-take agreement for an initial ity of the Hawsons product. tralia about a logistics model to deliver its
term of up to 10 years in due course, with product to end-users from Port Pirie via
the company targeting first pellet feed “What the results have shown us is existing rail facilities.
supply in 2020. that we can make fantastic pellets and
we hope to further investigate potential “All mines from Broken Hill have histor-
“Ultimately we will need binding off- pellet production,” Hill said. ically gone through Port Pirie, that’s why
take contracts to finance this project and the world’s largest lead smelter is in Port
we expect to work with Mitsubishi to get Next on Carpentaria’s agenda is using Pirie,” Hill said.
there,” Carpentaria managing director the recent test work success to gauge
Quentin Hill told Paydirt. the interest of the various off-take and “The South Australian Government
capital markets and garner further in- is doing all it can to support projects in
“This LOI is a ringing endorsement vestment for the project. South Australia, but it is also very sup-
for our project, a ringing endorsement portive of our project and for that we con-
for our Hawsons product and it also im- A resource upgrade at Hawsons – cur- tinue to thank them and work with them.”
proves our ability to attract investment for rently 1.77bt @ 14.9% magnetite con-
the next phase of our feasibility studies. taining 263mt grading 69.7% iron and – Michael Washbourne
2.9% silica – is also on the cards for later
“What it also signals is that at the time this year.
of construction there may be significant
competition for our product, which will
benefit investment and development.”

Hawsons has emerged as one of the
world’s best iron ore pellet feed sources
following recent metallurgical test work
from the renowned China Iron and Steel
Research Institute.

Tests showed the Hawsons “super-
grade” product met a series of key crite-
ria from potential customers – including
high iron and low slag content and supe-
rior physical properties and iron-making
characteristics – and would rank among
the top-tier iron ore pellet feed produc-

Another key finding from the test work
was that the product would improve pel-
letising and iron-making productivity and
reduce energy consumption when added
to most pellet blends.


Data delivers for Emmerson

Emmerson Resources Ltd has snared drilling at its new projects shortly and
four gold-copper projects in New hopefully find some high-grade gold-

South Wales from its alliance with a New copper deposits.

Zealand-based team of exploration data “We’ll take it through to the first phases

analysts. of exploration and just try and validate

The junior explorer partnered with the parameters that we thought were

Kenex Ltd last August to find prospective there from the model are actually there in

ground in other parts of Australia, hav- the field,” Bills said.

ing previously teamed together to identify “Our value proposition is Emmerson

new targets around Emmerson’s Tennant does this and then takes it to a certain

Creek projects in the Northern Territory. point and seeks a JV partner.”

Kenex provided predictive target- Bills said Emmerson’s JV partner at

ing models from geoscientific datasets, Tennant Creek, prolific gold producer

identifying a number of targets on open Evolution Mining Ltd, could be interested

ground along the Lachlan Fold Belt, in forming another partnership in NSW

which hosts known copper-gold deposits following that company’s acquisition of

such as Cadia, Ridgeway and Cowal. Cowal last year.

The exploration strategy highlighted Exploration at Tennant Creek, where

four targets near Wellington, Parkes, Te- Emmerson identified the promising Mau-

mora and Fifield, collectively comprising retania discovery late last year, will still

768sq km in area and displaying epith- Rob Bills be the company’s main focus, however,

ermal gold-silver and porphyry copper- Bills was pleased his business had diver-

gold potential. Kenex, which has conducted similar sified out of the NT.

Some of the targets contain historical programmes in Oman and New Zealand, “It makes a lot of sense for us as Em-

workings or previous exploration sup- then ranked the datasets from highest to merson and our shareholders because

porting Kenex’s predictive model. lowest correlation and identified the tar- we’ve not got all our eggs in the one bas-

Emmerson is one of the few junior gets on a tenement map which were on ket; the Tennant Creek basket,” Bills said.

companies focused on early stage explo- open ground. “I think it’s a great result for everyone.

ration at present, but managing director Bills said his company hoped to start “We think we’ve got enough capability

Rob Bills said his company wanted and capacity to run these [work pro-

to do something different to its larger, grammes] in parallel, but we need

acquisitive peers. to dedicate most of our energies

“Most companies tend to buy as- into the Tennant Creek field and

sets with resources, but we think that’s what we’ll be doing.”

there’s a market here to generate Meanwhile, pre-development un-

new, high-quality projects from first- derground drilling at the Edna Beryl

principle geology, geophysics and small mine has intersected bonanza

geochemistry that’s become lost in a gold grades within the supergene

lot of these big companies,” Bills told hematite ironstone, including hits of
1.83m @ 139.7 g/t, 1.83m @ 309.5

“The idea here is to try and in- g/t and 1.83m @ 93.4 g/t.

crease your probability of success Emmerson struck a tribute agree-

and the way to do that is to have ment with the Edna Beryl Mining

high-quality targets because the Company (EBMC) last August to

probabilities of finding an economic mine one of the small, existing

deposit are very small, something deposits with the company’s tene-

like 0.05%. ments at Tennant Creek.

“We think the way to increase your “Not only do we get cash from

probability of success is to generate mining them via the tribute agree-

high-quality projects at the front-end ment, but the development under-

which actually go through to a mine ground gives us the opportunity to

so you don’t have to have to turn over drill some underground holes and

as much ground to find that econom- look for more of these high-grade

ic mine.” pods,” Bills said.

Bills said the alliance generated “We’re not trying to say this is go-

130-140 different maps of prospec- ing to be representative of the entire

tive opportunities which Kenex orebody, that’s probably not going

converted into digital datasets and to be the case but it would be fan-

correlated them against major tastic if it is, and it’s obviously very
copper-gold deposits in NSW and Pre-development underground drilling at the Edna Beryl encouraging for us.”
deposit has intersected bonanza gold grades
Queensland. – Michael Washbourne



Better days ahead: Barnaba

Mark Barnaba has encour- in another direction.
aged those in the resources
sector to stop looking in the rear- “There has been a lot more
view mirror and focus on the fu-
ture. activity for the lawyers, bankers

The Macquarie Group Ltd and accountants because there
chairman, Western Australia,
was the guest speaker at a Com- hasn’t been much, and I see that
mittee for Economic Develop-
ment of Australia (CEDA) event changing,” he said.
in Perth earlier this year, which
hosted a number of the State’s “We are starting to see in-
business leaders.
creased activity because the
Among attendees were sec-
tions of the resources industry market is starting to become
experiencing tough times due to
decade-low commodity prices. stable; it is not rising but we

While Barnaba admitted the don’t need a rising commodity
rout of the past two years was
hard to forget, he was confident the next price to have stability and that
18 months would be better.
leads to activity.
“By and large, given where they [com-
modity prices] are now, you still have to “We are now sitting in board-
think that going forward is a better place
to look than what’s happened in the last rooms with chief executives
two years,” Barnaba said.
saying; ‘we have done the cost
“Mining and metals has had four years
[good pricing] which have now come reductions, we have done eve-
off their peaks. Have we bottomed? It
comes down to individual commodities, Mark Barnaba rything, we have to think about
but my personal view is that if we are not growth, how do we do it?’”
already there, we are very close.”
Mass redundancies in the mining sec- The mining boom delivered permanent
Despite a recent rally in the iron ore
spot price – $US58.36/t at the time of tor and the flow-on effect has meant changes to WA, in terms of infrastruc-
print – Barnaba said it was difficult to see
the market returning to the highs of four confidence in the business sector is low, ture, population and wealth.
years ago.
while WA battles a big debt burden. WA has experienced a period of about
Resource-rich WA boomed during this
period, however, the landing from such a Addressing the State’s debt is a priority 15 years where GDP averaged about 5%
high has not been forgiving.
for the Government as WA adjusts to a per annum, putting the State in a fortu-

new environment in the resources sector, nate position.

which Barnaba is already seeing some Today, WA’s GDP growth is lower than

positive signs. the Australian average, however, Barna-

“I believe today that the next 18 months ba has full faith the State – and Australia

will be better than the past 18 months,” for that matter – will avoid a recession.

he said. “Confidence is lower [in WA] than what

“I think in the next three to six months it is for Australia as a whole. You read the

you will see a bit more stability [in com- news on commodity prices, especially oil

modity prices].” and gas. Some of the news that has hap-

Companies have reacted to low com- pened in property is good reason to draw

modity prices by conducting cost-cutting confidence from people. My own view is

programmes across their businesses. that it [confidence] will return. West Aus-

Barnaba believes that many companies tralians are remarkably resilient people,”

have squeezed as much as they can out Barnaba said.

of their businesses and are now moving “Did we squander the investment

boom that we had? Did we squander a

long period of wealth in our state? The

facts suggest we probably didn’t. If you

have a look at a number of indicators and

a portion of the State economy that is

still driven by mining, it has permanently

increased. If you have a look at iron ore

and LNG and if you have a look at terms

of volume in our state it is a very different

story. They are permanent changes that

generate wealth in this state and [will do]

for decades to come.

“It does not mean that we are not expe-

riencing a period that is challenging, but

it is worth keeping in mind that the mining

boom delivered permanent changes and

we certainly have had some.”

– Mark Andrews

Despite a big debt, WA did not squander wealth generated from the mining boom,
according to Macquarie Group chairman WA Mark Barnaba



World’s miners blindsided

Why did nobody see it coming?” still in place, which is why BHP Bil-
With this simple question, liton and others were forecasting

posed to Professor Luis Garicano Chinese steel consumption only to

of the London School of Economics peak sometime in the next decade.

in November 2008, Britain’s Queen But, this was not business as usu-

Elizabeth famously summed up the al, even by Chinese standards.

layman’s astonishment that an ob- As Macquarie puts it, “bluntly” to

scure part of the derivatives universe use its own word, “China got urbani-

could trigger a global financial crisis. sation very wrong”.

A similar question might be posed “While developers and local gov-

of the world’s miners right now. ernments built out provincial manu-

Having collectively bet the house facturing hubs in expectation of the

on a commodities “supercycle” only next wave of migration, in actual fact

to see the “super” part of that cycle China has developed like any other
Miners did not anticipate the end of the mining boom economy – strong growth in the
dissolve in front of their eyes, they

are now fighting the numerous fires largest cities as the service industry

engulfing their overstretched balance measures did the trick in terms of both boomed.”

sheets. insulating the Chinese economy from This has created a yawning gulf be-

They simply don’t appear to have seen the collapse in trade but it’s the play-out tween the property market in major cit-

it coming. of the longer-term negative effects that ies, which is once again showing signs of

But then, if you believe Andrew Mac- have caused the “super” to drop off the speculative life, and that just about eve-

kenzie, chief executive of BHP Billiton “supercycle”. rywhere else.

Ltd, they didn’t see the original boom Too much property was built too quick- If Chinese central planners got urbani-

coming either. ly, particularly in smaller, new cities. Too sation wrong, the world’s miners were

Speaking at the AFR Summit in Mel- much capacity was built to feed what was guilty of putting too much faith in Beijing’s

bourne last month, Mackenzie confessed an unsustainable rate of construction in ability to engineer the Chinese economy

the economic rise of China earlier this industries such as steel. And too much in any way they saw fit.

century “happened at a scale and a pace debt, often of dubious quality, was accu- As with the original financial meltdown,

we simply didn’t see coming”. mulated in the credit binge, transferring everyone involved saw it as business as

“Many [including BHP Billiton] were un- the US housing bubble into a newly cre- usual and strove to do the best job they

prepared for what has been the greatest ated one in China. could, which in the case of BHP and its

commodities boom of our time.” It’s the engineered deflation of the Chi- iron ore peers, meant digging more stuff

Having failed to foresee the boom, nese housing bubble that is now roiling out of the ground as efficiently as pos-

they also failed to foresee the bust. the world’s metal producers. Beijing has sible.

“While BHP Billiton anticipated emerg- made it clear that it expects property de- Because that was in fact the less-re-

ing trends that signalled the end of the velopers to run down unsold inventory, ported answer to the queen by Garicano.
boom, we didn’t expect the scale and the particularly outside of major cities, be- Writing in an editorial for The Guard-
speed with which it happened.” fore embarking on new developments.
ian shortly after, he explained that “what I

But how did nobody see it coming? It could be a long process. told the Queen is that the reason the situ-

It’s not just that the GFC of 2008-2009 Analysts at Macquarie Bank estimate ation got out of hand is that those work-

is still with us in the form of “whatever it that Chinese steel usage in the construc- ing at every point in the lending chain

takes” central bank intervention to prop tion sector peaked in 2013 and will be were eager to continue doing the job they

up still foundering economies. 20% lower by 2020. were paid to do” from mortgage agents to

It’s more that the current “slowdown” With hindsight the warnings of a po- lending banks to rating agencies to asset

in China has its roots in the same col- tential commodities crash were there managers.

lapse of the house of over-mortgaged US for everyone to see. Rather than being There had been, he added, warnings

housing cards. hidden in the spreadsheets of market from economists but they had been muf-

Faced with an export shock rippling derivatives quants, as was the case in fled by the group-think.

out from what soon morphed from a fi- the U.S. housing crash, they were all too And there were plenty of warnings

nancial to a manufacturing crisis, Beijing visible in the form of newly-built but ee- from commodity analysts, particularly

unleashed its unprecedented domestic rily deserted housing complexes across those who had spent time in those Chi-

stimulus package. China’s lesser cities. nese ghost towns.

The twin pillars of this gargantuan stim- So why didn’t the likes of BHP Billiton But having failed to see the boom com-

ulus were infrastructure and housing. see them? Perhaps because the 2009- ing, the world’s miners were in no mood

It is an extraordinary fact that in just 2013 construction boom looked like a to hear that it wasn’t going to continue for

three years, 2011, 2012 and 2013, China continuation of the pre-GFC trend which a long time.

used more cement than the US did in the had been one of rapid industrialisation The good times will come again. Just

20th century, 6.6bt compared with 4.4bt, and urbanisation in China. don’t expect the world’s miners to see

according to figures from the US Geo- The longer-term trend line may have them coming.

logical Survey. shifted shape, steepening in the short – Andy Home, Reuters
In the short term, Beijing’s emergency term, but the consensus was that it was



Schlam aims high with
DT dumpers

Schlam Group has added Ausdrill ing quality as best we can. Customers
Ltd’s DT HiLoad dump truck tray are looking for value and the most ex-

manufacturing business to its stable. pensive way to do something is to do

Schlam managing director Ryan it twice.”

Schlam said the company had an eye Schlam started dealing with Ausdrill

on DT HiLoad for some time before in mid-January and after about eight

negotiations officially started in Janu- weeks of complex negotiations the

ary. transaction was completed.

“Strategically we have been eyeing A $2.6 million upfront consideration,

off the business for 2-3 years. DT is a with additional steel and tray inven-

big move for an organisation like us, tories provided on a fixed price, con-

coupled with the activities we are al- signment basis over three years are
ready undertaking,” Schlam told Pay-
dirt. terms of the deal. Ausdrill expects the
Schlam has many arms servicing
It has been a busy period for managing director Ryan sale to generate up to $8 million over
the mining sector and DT HiLoad is Schlam. Since August, the company has expanded three years.
expected to boost its manufacturing
into the Pilbara and acquired three other businesses The divestment by Ausdrill is in line
with its strategy of exiting non-core

capabilities. and underperforming assets.

While the mining sector is experiencing new suite of interests. With Schlam’s expertise in asset man-

a slowdown, Schlam would not know it. “Mining is cut-throat,” Schlam said. “It agement, maintenance and manufac-

The company has been busy growing is very tight and tough to make a profit ture, DT HiLoad has a better chance of

its business through M&A, with the likes and clients want value for money and we performing to capacity and creating bet-

of The Pilbara Clean Machines (TPCM), pride ourselves on efficient and safe de- ter outcomes for all stakeholders under

sister company Unique Blasting & Coat- livery. It is hard to say we are experienc- its new owner.

ings (UBC) and RIM Engineering brought ing a downturn given the amount of work While there is a change ownership, DT

into the group late last year. we have been getting recently. The cost HiLoad will still be based in Forrestfield,

Schlam said there remained opportu- pressures [are enormous] and we are fo- Western Australia, and all key personnel

nities for the company to capitalise on, cused on ensuring that our businesses will be retained, Schlam said.

however, the short-term focus would be remain lean, but efficient and most im- – Mark Andrews
on consolidating and leveraging from its portantly performing safely and deliver-

Robust PFS for Pilbara at Pilgangoora

Pilbara Minerals Ltd’s PFS on the under way as part of the DFS.
Pilgangoora project has con-
firmed the viability of a standalone “Excellent financial returns of the
mining operation producing 330,000
tpa spodumene and 274,000 lbpa project are underpinned by a rela-
tively modest capital cost,” Brinsden
The estimated capital cost for the
2 mtpa project is $184 million, which said.
can potentially be paid back in two
years, assuming operating cash “The project will be capable of gen-
costs of $US205/t FOB spodumene
concentrate. erating very strong operating mar-

Project NPV is $407 million and gins and cash flows. Pilgangoora is
IRR of 44% has been estimated,
while EBITDA over the first five years now firmly established as the world’s
of operation is $120 million per an-
num. Life-of-mine average spodumene leading lithium development project,
prices used in the PFS were $US456/t.
which is already attracting strong
Pilbara Minerals chief executive Ken
Brinsden said the PFS demonstrated Pil- interest from prospective project fi-
gangoora was a robust, long-life project
nanciers and cornerstone investors

Pilgangoora, 100km from Port Hedland, could be based on its potential to transform
in commissioning phase in Q4 2017 Pilbara into a leading player.”
Pilbara Minerals now aims to com-

based on a world-class resource. plete a DFS by Q3 this year, with com-

A maiden ore reserve of 29.5mt @ missioning at Pilgangoora planned for

1.31% lithium and 134 ppm tantalite is Q4 2017.

enough for a 15-year mine life. A 15,000m – Brendon Shilling
drilling programme to extend reserves is


BC Iron ‘not just Nullagine’

BC Iron Ltd continues to keep opera- Operations at Nullagine have been suspended since December
tions at the Nullagine JV suspended
despite the recent uptick in the iron ore the market and if we believe the market market appreciates that we’re not just
price. will support a restart it’s something we Nullagine, notwithstanding that Nullagine
will seriously consider, but it will take a has pretty good option value,” Ball said.
The junior miner placed its flagship Pil- joint decision from both ourselves and
bara asset on temporary suspension last FMG.” “In Iron Valley we have a long mine
December when the iron ore price dipped life, cash flow producing asset run by
below $USS40/t. Nullagine’s breakeven The price slump which led to the sus- top-notch operators in MinRes and in
cost is reportedly $US42-44/t. pension of operations at Nullagine was Buckland we have another long mine
reflected in BC Iron’s half-year results. life opportunity that brings with it an in-
Iron ore has since jumped back up to The company reported revenue of $115.8 frastructure advantage as well. We think
around $US53/t, including hitting a high million for the six months to December they’re both good assets to have in our
of $US63.74/t on March 8, prompting 31, but posted an EBITDA loss of $2.1 portfolio.
speculation BC Iron could be tempted to million and a net loss of $72.9 million af-
reopen the gates at Nullagine. ter tax. “We’ve done some good work in the
last 12 months in getting the potential
BC Iron managing director Morgan Ball Underlying net loss after tax was $3.8 feasibility costs down [at Buckland] but
said his company was constantly moni- million, after adjusting for non-cash and we still think the fact we have a resource
toring market conditions, but had not yet one-off items. which could be anywhere between
seen enough evidence of a longer-term 8-10mt as a standalone or 10-20mt with
price recovery for the industrial metal. BC Iron did receive some benefit from partners in the region…is pretty interest-
the ongoing low-cost operations at Iron ing if you take a longer-term view on iron
“It’s not about making money on a price Valley, which contributed a positive EBIT- ore.”
of one day or one week, it’s about making DA of $4.5 million in the December half.
money for shareholders on a sustained Iron Valley is operated by Mineral Re- BC Iron holds some non-iron ore tene-
basis,” Ball told Paydirt. sources Ltd, with ore taken from ground ments in the Pilbara it can turn to if the
held by BC Iron following its takeover of iron ore price falls once again, but Ball
“We need to get the confidence, on Iron Ore Holdings in 2014. insisted his company was maintaining a
behalf of our shareholders, that the price positive, long-term outlook for both the
will be there for a sustained period of The acquisition of Iron Ore Holdings business and the commodity.
time. Suspending the operation was a also yielded the Buckland project, West
very difficult decision and, similarly, the Pilbara, and BC Iron has spent several “We will continue to be cautious and
decision to restart does cost money and months optimising the economics for the prudent in the way we operate the com-
thus we’ve got to make sure we’re doing promising development asset. pany, but we are monitoring the market
it in their best interests.” closely and if the opportunity comes to
Recent optimisation realise the value at Nullagine we will do
Ball said the decision to suspend op- work reduced the pro- so,” Ball said.
erations at Nullagine was one his com- ject capex by $55 million
pany had mulled over for several months to $942 million ($US660 “In the meantime, we will make sure
before eventually making the tough call. million) and C1 cash op- we continue to support MinRes in run-
erating costs by $10.1/t ning Iron Valley and hopefully develop-
Nullagine’s future was further clouded to $31.6/t ($US22/t) from ing the bulk ore transport system, which
early last month when BC Iron’s 75:25 the June 2014 feasibility looks pretty interesting not only for Iron
JV partner Fortescue Metals Group Ltd estimates which envisage Valley but potentially for our West Pilbara
knocked back an offer to purchase low- an 8 mtpa operation of at opportunities in the future.”
grade ore. least 15 years.
Morgan Ball “I think it’s important the – Michael Washbourne
Fortescue had agreed to a trial to pro-
cess 200,000mt of low-grade stockpiled
ore but declined the chance to imple-
ment the proposal on a longer-term ba-
sis. About 11mt of low-grade ore remains
stockpiled on site.

BC Iron believes these stocks could be
blended with DSO in future operations
and is now investigating potential benefi-
ciation opportunities.

Fortescue recently an-
nounced a new partnership
with Brazilian mining giants
Vale SA, but Ball was confi-
dent it would not impact future
plans for Nullagine.

“Our relationship with FMG
remains strong and we have
an open communication about
the JV operation,” Ball said.

“Both parties are monitoring


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Up for the Challenger

Hailed as one of South Australia’s best discoveries Kingsgate grew to understand the mine, but it was not
of its time, the Challenger gold mine has had its fair all smooth-sailing under its tenure and as its Chatree
share of ups and downs. and Nueva Esperanza projects appeared better value
to the portfolio, momentum gathered for Challenger to
Initially, open pit operations performed swimmingly be divested.
for founders Dominion Mining, however, the transition
into underground mining in 2005 threw up a new set of Enter WPG Resources Ltd and Diversified Minerals
challenges Dominion struggled with. Pty Ltd, an operating subsidiary of mining services con-
tractor PYBAR.
The problems Dominion encountered were on the
table for all to see, but nevertheless Kingsgate Con- The WPG/PYBAR combination took control of the
solidated Ltd was unperturbed by troubles at the mine mine – currently on care-and-maintenance – in March
when it acquired the project five years ago. and plan to take it into a new era, starting in June.

At the time, then Kingsgate managing director Gavin Paydirt’s Mark Andrews spoke with WPG about how
Thomas said: “It has had problems over the last 18 Challenger will be revived alongside PYBAR and what
months, but it is a much better mine than people are it means for South Australia.
giving it credit for.”



Mining at Tarcoola is targeted to begin in Q3 2016

AJV between WPG Resources Ltd and mining services
contractor PYBAR will orchestrate the next chapter of
the Challenger gold mine in South Australia.

A greenfields discovery by Dominion was producing at a rate of

Mining in the mid-1990s, Challenger 100,000 ozpa.

became part of Kingsgate Consolidated Based on reserves and

Ltd’s family in 2011. production, the mine life in-

The rationale behind Kingsgate’s push herited was four years and

for Challenger was plausible; buy an based on resources it was

asset which would catapult it into the nine years, on top of the

sparsely populated mid-tier Australian eight years of production that

gold sector. preceded the Kingsgate/Do-

At the time of the transaction, Kings- minion deal.

gate was a single-asset company pro- Challenger was once a

ducing 130,000 ozpa gold from Chatree market darling and a top
in Thailand. performer in the early days A new round of exploration at Tunkillia started in March

Therefore, the addition of Challenger before transitioning into an

enabled Kingsgate to enter the realms underground operation in 2005. It had clear cut. Since assuming control of the

of ASX multi-asset gold producers occu- enjoyed among the lowest C1 cash costs mine in 2011, Kingsgate has reported

pied only by the likes of Newcrest Mining of Australian gold operations for five annual production of 87,388oz @ 4.55

Ltd, Allied Gold plc, OceanaGold Corp, years. However, troubles with a ventila- g/t at $US862/oz, including $US62/oz

St Barbara Ltd and Resolute Mining Ltd. tion shaft saw disruptions to production, royalty (FY2011/12); 66,216oz @ 3.91

To get there, Kingsgate offered 0.31 cash costs rise and head grades deplet- g/t for total cash costs of $US1,135/oz

shares for every Dominion share which ed. (FY2012/13); 74,954oz @ 4.78 g/t at total

made the deal worth almost $380 million. With a bank balance of $48 million be- cash costs of $US1,310/oz (FY2013/14)

For its outlay, Kingsgate was getting a hind it, Kingsgate was adamant it could and 80,151oz @ 5 g/t at operating costs

“mine which had reserves of 421,650oz turn fortunes around at Challenger. of $US1,059/oz (FY2014/15).
The reality has not been quite so Over this period, Challenger became
gold and resources of 950,220oz and
When Dominion first developed Challenger it made a lot of money,
serious money, in the first three to four years. Then they went

underground and it did ok for a while, then it went into a zone where, for a
whole range of reasons grades depleted. They didn’t understand it at the
time; Kingsgate understands it now and so do we.


Over 12,000 calcrete samples have been taken at Tunkillia

an increasingly tricky asset to fit into the was taking more of their key manage- Tarcoola is just one of a suite of projects
Kingsgate portfolio. While cash costs ment time then they might want to de- WPG has in the Gawler Craton
there were stubbornly refusing to reduce vote to it.”
to previous levels, Chatree was averag-
ing 130,000 ozpa production and the Essentially, the deal has been three
newly acquired 1.9 moz gold equivalent years in the making, Duffin saying ne-
Nueva Esperanza project in Chile was gotiations with Kingsgate had been a
shaping as a 120,000 ozpa at $US700/oz case of progressing “one step forward
cash cost producer. In the circumstanc- and two steps back” during that time.
es, Challenger appeared better suited in
the hands of other parties. “We thought it was a non-core asset
for Kingsgate, considering Chatree was
And, there is no doubt in Bob Duffin’s producing a lot more gold and the South
mind that WPG has a handle on what is American project has potential to pro-
required at Challenger. duce even more. We simply knocked on
the door at the right time and were able
“When Dominion first developed Chal-
lenger it made a lot of money, serious WPG hopes to produce at a rate of 20,000 ozpa gold from Tarcoola
money, in the first three to four years.
Then they went underground and it did
ok for a while, then it went into a zone
where, for a whole range of reasons
grades depleted. They didn’t understand
it at the time; Kingsgate understands
it now and so do we,” WPG executive
chairman Duffin told Paydirt.

“We think that period when Kingsgate
was mining low-grade material about
four years ago – pardon the pun – but
I think that really challenged the man-
agement team, as to what they should
do with the project. We first approached
them three years ago in the knowledge
that with their Thai project [Chatree] and
very large pre-development project Nue-
va Esperanza [developing], Challenger



ments, with first payment

due within 30 days of

re-starting milling op-

erations – WPG was

banking on resources of

140,000oz remaining at


Challenger West is

where initial production

will start, Duffin said.

“It is our game plan to

mine as much of that re-

source as possible over

the next three years,” he


“All of that resource is

already developed for

underground mining, so

it doesn’t require any

material new develop-


The Challenger JV

plans to produce at a

rate of 50,000 ozpa from

the current resource

There is potential for Tunkillia to produce 70,000 ozpa gold over 10 years base, however, Duffin is

bullish on the explora-

to convince them if they were minded to Minerals Pty Ltd, will conduct mining tion potential, particularly at Challenger

sell the project then we were the right services, while WPG is the manager at South South West (SSW), which is not

group to speak to,” Duffin said. Challenger where Kingsgate has left an included in the resource, and has poten-

There were a number of groups inter- estimated resource of 194,000oz gold, tial to replicate the M1 and M2 lodes pre-

ested in taking on the asset, including as of June 30, 2015. viously mined.

Marmota Energy Ltd which offered $2 Upon taking possession of the mine So far, the best drilling result Kingsgate

million, but history now shows that on – for $1 million ($100,000 already com- has come up with at Challenger SSW is

“March 15, 2016 WPG completed the ac- mitted) to be paid in four quarterly instal- 0.2m @ 368.47 g/t gold but such is the
quisition of Challenger. strength of its potential,

Of course, the deal in- Kingsgate retains a $25/oz

volves PYBAR, which is We think there is a lot of upside royalty on the zone, ensur-
now a 50% owner of the in the project over and above that ing it will not miss out on
Challenger JV. any future exploration up-

To earn its share, PY- 140,000oz resource which we should be side.
BAR, through its operat- able to develop and mine profitably. “We think there is a lot
ing subsidiary Diversified
of upside in the project


Challenger is currently on care-and-maintenance. A restart to production is scheduled before the end of June

over and above that 140,000oz resource

which we should be able to develop and

mine profitably,” Duffin said.

Squeezing as much as possible from

the project won’t be an expensive exer-

cise either.

Underground infrastructure (decline,

ventilation shaft, etc) is already in place,

as is a mill and plant, plus a camp.

“We are buying a plus-$100 million as-

set for $1 million. That is, of course, only

relevant if the gold is there, but in any

case that is $100 million we don’t have

to spend to access this ore,” Duffin said.

Assuming gold prices hold and no

“black swan type of event emerges”, Duf-

fin envisions being at Challenger for cer-

tainly three years and possibly in excess Challenger has had its issues, but WPG is confident it will have the mine under control

of five years, depending on exploration

success. largely at the mercy of the drill bit. which the longer term sustainability of

While there will be some staff downsiz- Once all ore has been extracted from the company will be launched.

ing, Challenger will still employ 160-180 Challenger, WPG will not be at a loose The Challenger acquisition includes

people for the next three years at least, end. all Kingsgate’s exploration assets in SA,

however, any certainty beyond that is Rather, Challenger is the asset from as well as rehabilitation bonds lodged

with the SA Government totalling about

$2.7 million. But the real boon for WPG

could be the CIP plant.

Challenger now sits besides the

Tarcoola and Tunkillia gold projects,

also in the Gawler Craton, in WPG’s


“Tarcoola is small, but high-grade.

While we saw it initially as a modest

scale heap leach operation, with the

advent of the Challenger deal we are in-

tending to process that ore through the

Challenger plant,” Duffin said.

“That will do at least two things: re-

duce the company’s upfront expenditure

required because we don’t have to build

any treatment facility whatsoever on

WPG is confident of Challenger lasting another three years and site; and, all things being equal, treat-

potentially in excess of five years ing ore through a CIP plant gets better



recoveries than it does through a heap ozpa gold. So, by the end of this year we However, unlike Challenger and
leach operation. should be in a production rate of 45,000 Tarcoola, there are capital requirements
ozpa, nearly half way there,” Duffin said. for WPG to consider.
“So, in fact it is going to be more lucra-
tive for us with Challenger, notwithstand- Tarcoola (900,000t @ 2.6 g/t gold for “As far as Tunkillia is concerned, that is
ing the ore has to be trucked for 120km 74,000oz reserve) and Challenger com- a bigger issue,” Duffin said.
to Challenger rather than treating it on bined will drive the bigger picture for
site.” WPG which involves pulling off the larger “The capex for development of Tunkil-
Tunkillia project. lia has previously been estimated at
Mining is expected to start at Tarcoola $100-130 million. That is a big ask for a
in Q3 2016, with the PEPR and mineral Before WPG’s involvement, a PFS company of our size.”
lease conditions for the Challenger pro- over Tunkillia focused on the 223 deposit
cessing option to be completed in the – 12.3mt @ 1.41 g/t gold (measured and Nevertheless, signs are that WPG is
meantime. indicated) for 558,000oz gold and 1.5 growing and on the back of nailing the
moz silver, boasting initial mine life po- Challenger deal, its market cap has tri-
WPG is targeting production of 20,000 tential of 5-6 years. pled in three months to $35 million.
ozpa gold from Tarcoola, which, added
to the 25,000oz attributable from Chal- WPG holds 100% of the project and There was strong support in the mar-
lenger, will see the company producing believes there is potential to convert ket when the Challenger acquisition was
at a minimum rate of 45,000 ozpa for the Tunkillia into a 70,000 ozpa gold project completed, with WPG’s share price surg-
next three years. spanning 10 years. ing 15% to 8.5c/share.

“About 12 months ago we said in one of Proving the economic viability of Having such a high profile asset, de-
our ASX announcements that we had a Tunkillia will perhaps make market ob- spite its maligned history, may well serve
five by 100 strategy; within five years we servers take notice of WPG. WPG well in the long-run, particularly if it
can exceed expectations.
wanted to be producing 100,000
“I think if we can deliver the goods on
Challenger and Tarcoola, in a few years


time – and again absent of a collapse ploration in the good times and not so shareholders which had allowed WPG
in the gold price – the market will start well in the bad, as currently being experi- to execute its gold strategy, which is
to take notice of what we are doing and enced by the resources sector. months away from take-off.
we’ll be in a position to fund the develop-
ment of Tunkillia,” Duffin said. “We have a very big tenement pack- “There has been hardly any movement
age, both in our own right and in the in our top 50 shareholders in the past
“We see Challenger and Tarcoola as Gawler Craton, and as a result of the four or five years,” he said.
our transition into gold production out of Kingsgate assets we will have a bigger
iron ore. Once in gold production we will package of tenements. Some of them “We do have the credibility in the mar-
literally be generating cash flow within are farmed out to different parties and ket place to do these sorts of deals and
a few months, but the real upside is in we are quite happy for them to continue it did not surprise me that Kingsgate
Tunkillia with the tonnage potential there expending money on those projects, par- agreed to deal with us versus some of
able to support a much larger scale of ticularly in the knowledge that if they are the other parties that threw their hat into
development.” successful they will come knocking on the ring to acquire this asset. We are in
the door to treat ore through the Chal- JV with a pretty well respected and com-
At the time of print, WPG was headed lenger plant,” Duffin said. petent mining contracting firm – PYBAR
for Tunkillia to conduct an exploration – which has a track record of taking eq-
programme, including drilling on Area 51 It may have surprised many that in 2016 uity positions in projects or in corporates
and Tomahawk Extended. anyone wanting to deal with the Chal- and we thought and still do think that we
lenger mine would have to go through put up a pretty good proposal to Kings-
Duffin said the company would have WPG; a company which dispersed of its gate as to why they should do a deal with
been on the ground earlier, however, un- iron ore assets for $320 million – much of us and nobody else.”
seasonal rain prevented it which was distributed back to sharehold-
ers – in 2011. – Mark Andrews
The company’s strategy at Tunkillia
is to identify satellite resources from a Duffin said it was the loyal band of
number of exploration targets already

Calcrete sampling, the mode of explo-
ration which led to the Challenger dis-
covery, has been conducted with over
12,000 samples collected at Tunkillia.

Calcrete sampling on eight priority
targets has been completed, while a his-
torical review to date has identified 33

“Our exploration programme at Tunkil-
lia at the moment is fairly modest and
costing us only $500,000. I would like
to be spending a lot more on exploration
because that is one way of generating
real wealth, but most of the time explora-
tion is unsuccessful. Once we start gen-
erating cash flow from these assets then
we will be ramping up our exploration ef-
fort,” Duffin said.

WPG is well spread in SA with almost
5,000sq km of gold tenure in the State,
while its total landholding in the Gawler
Craton is 7,323sq km.

With WPG’s management team com-
ing from an exploration background,
there is a penchant for exploration within
the inner sanctum, however, it under-
stands the market responds well to ex-



South Australia
back among
the elite

South Australia’s mining sector may be suffering more than most mineral sands, copper and gas, the slide
from the current market malaise but miners and explorers con- in prices for these commodities has seen
tinue to rate the State for its investment attraction. investors lose interest in many of the jun-
iors exploring in the State.
SA was placed 10th in the latest Fraser welcomed in a state where exploration
Institute Survey of Mining Companies in- momentum has stalled over the last three While the outlook for iron ore and ura-
vestment attractiveness index, indicating years. nium continues to appear bleak, fore-
companies continue to recognise Jay casts for an upswing in copper supply/
Weatherill’s State Government as a force However, with the State dropping three demand fundamentals could reinvigorate
for good in the State. places to 20th in the policy perception red metal exploration in a state which
index, it appears the Government has produced Australia’s first copper.
The survey is based on the responses more work to do.
of 449 participants from exploration and To counter the drop in exploration and
mining around the world. The investment While the second half of the previous development momentum, the State Gov-
attractiveness index ranks jurisdictions decade saw a rash of new mine devel- ernment in February launched a Copper
by combining regions’ geological attrac- opments in SA – including Prominent Strategy, a long-term outlook designed
tiveness with the effects of government Hill and Jacinth-Ambrosia – the last four to build an $8 billion annual copper in-
policy on attitudes toward exploration in- years have seen a lack of new construc- dustry for the State.
vestment. tion projects.
SA is already home to 68% of Austral-
Neighbour Western Australia finished Much of the blame can be attributed to ia’s copper resources, including the icon-
top of the index for 2015 but SA’s move the end of the China-fuelled commodi- ic Olympic Dam mine which has been
from 16th in 2014 to 10th in 2015 will be ties super-cycle. While SA is undoubted- joined in the past decade by the Promi-
ly well-endowed with iron ore, uranium, nent Hill and Kanmantoo copper mines.

The new policy will see the State aim


prove copper-in-concentrate.
“Overall, PACE Copper aims to gen-

erate more than $400 million in private
mineral exploration return for the State,
and create and retain up to 1,000 direct
and indirect jobs within the minerals in-
dustry,” Mineral Resources and Energy
Minister, Tom Koutsantonis said.

Other strategies in the initiative in-

• Building South Australia as an inter-
national copper technology and research
hub, through leveraging existing copper
research initiatives and programmes

• Identifying infrastructure needs and
developing innovative approaches in-
cluding finding suitable water supplies
and transport opportunities for current
and future mines

• Running copper strategy success
seminars with mining industry, research-
ers and services companies to share
innovations, ideas, build skills and learn
from experts in the field

• Developing regional approaches to
changes in the copper mining industry
to support transfer of skills and jobs and
support new ventures in regional com-

• Establishing South Australia as a
nationally recognised centre for copper
mining services

• Attracting major international re-
source and service companies with
deep mining expertise and technology

• Supporting groundwater research
to find long-term suitable water sources
with the Goyder Institute for Water Re-
search in South Australia

• Supporting international information
exchange programmes with Chile and
China who are world leaders in copper

for a 300% increase in copper production SA produced and exported $1.9 billion The 14th South Australian Resources
over the next two decades to 1 mtpa. of copper in 2014-15, and last year the and Energy Investment Conference will
copper industry employed about 5,000 take place at the Hilton Adelaide on April
The Government’s aspirations for cop- people in exploration and production. 20. For sponsorship, registration and
per have already received a boost, with attendance information, please contact
Oz Minerals Ltd confirming it would pur- Funding for the new strategy started Tammy Caldwell on (08) 9321 0355 or
sue a PFS on a high-grade development last year with the commitment of $20 mil- [email protected]
at its Carrapateena project on the Gawler lion to the Government’s PACE Copper

Craton (see page 31). programme and $10 million towards a

“By trebling our copper production, we partnership with Oz Minerals to support

have the potential to create up to 10,000 innovative research into a process to im-

extra jobs, increasing the

workforce involved in the Fraser Institute Survey of Mining Companies investment attractiveness index ranking

sector to 15,000 people,” NSW Northern Queensland South Tasmania Victoria Western
Weatherill said in Febru-
ary. “This would equate to Territory Australia Australia

South Australia producing 2015 38/109 7/109 16/109 10/109 30/109 62/109 1/109
and exporting more than 2014 55/122 31/122 22/122 16/122 46/122 69/122 4/122
$8 billion of copper per

year, with the red metal 2013 36/112 19/112 20/112 23/112 44/112 51/112 2/112

remaining the State’s 2012 45/96 19/96 20/96 18/96 66/96 65/96 6/96
number one export com- 2011 52/93 28/93 27/93 10/93 66/93 83/93 7/93



SA continues to lead oil and
gas innovation

The right geology, together and a variety of gas plays (conventional, operated by BP Developments
with policy innovation and as well as shale gas, basin-centred gas Australia Pty Ltd (BP), two oper-
excellent investment frame- and deep gas from coal source rock), ated by Bight Petroleum Ltd, two
works are reasons why South continue to be explored and developed. by Chevron Australia New Ven-
Australia is leading oil and gas tures Pty Ltd and one by the Mur-
transformation in Australia. Offshore, in Commonwealth waters, phy Australia Oil Pty Ltd/ Santos
there are currently nine exploration pe- Offshore Pty Ltd JV. Collectively,
SA is widely regarded as hav- troleum permits in the Bight Basin – four these companies have guaran-
ing one of the country’s most teed to spend approximately $1.2
effective upstream petroleum Barry Goldstein has more than 30 years in- billion over the period 2011-2018.
frameworks. It offers a sup- ternational experience in energy businesses. BP is well advanced in planning
portive investment framework, He is executive director for South Australia’s for its two well drilling programmes
a trusted regulatory framework, Energy Resources Division where he and his in 2016-17, including substantial
benefits from pre-existing infra- team are focused on the delivery of regula- stakeholder consultation in addi-
structure, and is a jurisdiction tory nirvana for resources projects. tional to technical, logistical and
focused on increasing capa- environmental planning and ap-
bilities and productivity. This is proval documentation.
reflected in results of the 9th
Fraser Institute Global Petro- The SA Government’s vision is
leum Survey, released in De- about opening the door to new ide-
cember 2015 which rated SA as as, new opportunities, new people
the best performing jurisdiction and new businesses and we are
in the nation. For the first time, committed to unlocking the full po-
SA topped the world for fiscal tential of the State’s resource and
terms – over the last two years energy assets. To that end, the
petroleum retention license fees Energy Resources Division is fo-
have been reduced by 25% and cussed on delivering the following:
it is intended to further decrease
these fees in future. • sustaining a trustworthy, effi-
cient and effective one-stop-shop
SA is the first Australian jurisdiction for regulatory approvals;
to deliver a comprehensive approach to • regulating to meet both community
developing its vast gas resource plays. and investor expectations;
The Roadmap for unconventional gas • pragmatic tenure over extensive
projects in SA was released in Decem- proven play tends via petroleum reten-
ber 2012 and is designed to inform in- tion licences (PRL);
dustry strategies, government policies, • 35% reduction in PRL fees by July 1,
and regulations to facilitate oil and gas 2020;
projects in ways that SA communities • five year deferment of royalties for
welcome. Work to implement the Road- gas produced from unconventional res-
map continues through the Roundtable ervoirs;
for Oil and Gas and its eight working • when oil is less than $US70/bar-
groups established to address the most rel, company development investment
critical recommendations. Nearly all of counts towards minimum exploration ex-
the state’s onshore prospective acreage penditure;
is covered by 53 petroleum exploration li- • publishing market analysis and play
cences (PELs – area currently 211,119sq size to inform stakeholders;
km) in the productive Otway and Cooper- • considering government-funded in-
Eromanga basins, the frontier Officer, frastructure (e.g. roads, airports, etc) to
Arrowie, Stansbury and Arckaringa ba- foster productivity at times of low con-
sins, and over basins with coal seam gas struction costs, and;
and underground (in situ) coal gasifica- • improving access to data and infor-
tion potential. mation by translating the PEPS data-
base (which manages SA well, seismic,
The Cooper Basin remains the nation’s tenement, engineering and production
largest onshore oil and gas producer data) into a fully web enabled platform
and record levels of drilling occurred in to provide open file data to stakeholders
2013-14. While the current low oil price quickly and simply in 2016.
has impacted company exploration pro-
grammes, the western flank oil play trend



Exhibition and sponsorship opportunities are available by contacting
Tammy Caldwell on (+61) 8 9321 0355 or email [email protected]


Iluka heeds to zircon demand

South Australia will still receive a Iluka to find a way to drawdown its
royalty payment from Jacinth- stockpiles at Jacinth-Ambrosia and

Ambrosia despite the imminent aid a global market recovery for

suspension of mining and concen- mineral sands products.

trating activities at Iluka Resources “We don’t seek to push zircon

Ltd’s premier minerals sands op- volume into the market if zircon de-

eration. mand is not there,” Porter said.

Mining and concentrating activi- “We think that would be counter-

ties at Jacinth-Ambrosia will cease productive in terms of shareholder

on April 16 for 18-24 months, de- interest and it will just reduce the

pending on market conditions. margins that we receive. Our ap-

Iluka cited lower global demand for proach across the business has

zircon behind its decision to flex been to flex production downwards

production downwards. when market conditions are weak

Jacinth-Ambrosia has the ability and then when market conditions

to supply 25-30% of global zircon recover to reactivate production

demand at peak production. Iluka will suspend mining and concentrating activities and supply more material to the

However, royalty payments to at Jacinth-Ambrosia later this month marketplace.”

the SA Government will be unaf- Iluka’s shareholders have react-

fected because Iluka intends to continue structure and rehabilitation costs. Next ed positively to the news of the suspen-

processing its current concentrate inven- year that benefit will jump to $45 million. sion, with the company’s stocks up 10%

tory at Jacinth-Ambrosia, totalling over “It’s certainly not an action which is out to $7.40/share since the decision was

800,000t, at either of its mineral sepa- of desperation or economic necessity,” made public in mid-February.

ration plants at Hamilton, Victoria, and Porter said. “The company is in very “Shareholder interest has been at the

Narngulu, Western Australia. good shape. We have no debt, we’re forefront in this and I think for those peo-

“This has nothing to do with State eco- generating free cash flow, so it’s not as if ple in the investment community who fol-

nomic factors, this is based on global we’ve been forced to do this. low Iluka closely they would see this ac-

market demand,” Iluka general manager “We obviously realise this has been tion as being consistent with what we’ve

of investor relations and corporate affairs a difficult course of action to pursue… done elsewhere,” Porter said.
Robert Porter told Paydirt.
but this is clearly an operation that will “Obviously not everybody has the

“We want to make it clear this is noth- come back, there’s no doubt about it. same view, but I think most people would

ing related to policy settings or govern- This is one of the premier mineral sands see this as being a disciplined and re-

mental support in SA. In fact, it’s quite deposits globally and there will certainly sponsible action for the market leader

the opposite. The SA Government has be a need for the product from the mining in zircon to take, so the investor reaction

been quite supportive of our operations. operation to be back in the marketplace has been generally positive from our per-

“Transporting concentrate is the basis at hopefully the shorter end of that 18-24 spective.”

on which we pay royalties, so royalties month period.” Jacinth-Ambrosia, in the Eucla Basin,

will still be paid to the SA Government Porter said the company had been was discovered in 2004 and achieved

over the period of time we’re suspended. mulling over the decision to suspend first production five years later, becoming

So from that perspective, the royalty mining and concentrating activities at Ja- the project which put Iluka in the interna-

stream doesn’t change.” cinth-Ambrosia since 2014 when an ex- tional resources spotlight.

Iluka said 33 of its direct workforce of pected recovery in zircon demand failed The operation churned out 297,000t

79 at Jacinth-Ambrosia will be made re- to eventuate. zircon, 39,900t rutile and 231,000t ilmen-

dundant as a result of the suspension, Further subdued demand last year and ite in the last calendar year, up 24%, 34%

with the remaining 46 to be redeployed similar expectations this year prompted and 125% respectively on the 2014 pro-

for continuing activities such as duction figures.

concentrate handling, asset mainte- “It’s what most people in the re-

nance and environmental rehabilita- sources sector would aspire to have

tion work. in their portfolio,” Porter said.

Local communities and business- “It’s also very important in terms

es could also suffer negatively from of global supply because it came

the impending suspension. into production at a time when…

Iluka expects the suspension will the zircon coming out of WA was

increase the company’s net cash reducing very rapidly, but Jacinth-

flow due to the reduction in group Ambrosia has been able to replace

production costs, offset partially by that in effect. It’s been very impor-

rehabilitation, restructure and idle tant from the point of view of Aus-

costs. tralia’s ability to supply this product

Early forecasts suggest a net Stockpiled concentrate at Jacinth-Ambrosia will be internationally.”

cash benefit of about $30 million – Michael Washbourne
for 2016 after $16 million in idle, re- processed at Iluka’s separation plants in WA and Victoria


Oz gives Carrapateena higher life

Oz Minerals Ltd has con- grade option in October 2015
firmed it will pursue a after investigating other op-

stripped down development of tions for development, in-

Carrapateena, thereby reduc- cluding trucking ore to the

ing both capital and operating company’s Prominent Hill

costs for the copper project. mine 250km away.

The company announced “The original review did

in late February it would start bring the economics down

a new PFS for Carrapateena but the risks were still too

based on a 2.8 mtpa opera- high. The rail option helped

tion using sub-level caving to with capex but operating

exploit the 61mt high-grade costs were increased and

component of the deposit’s it didn’t de-risk the project,”

wider 800mt resource. Cole said.
Oz had completed a PFS on A reinterpretation of the orebody has led Oz Minerals to commit to a Speaking to Paydirt in De-
Carrapateena in 2014 based smaller, higher grade development of the Carrapateena copper project cember, Cole admitted the
on a 12.8 mtpa block caving smaller, high-grade option

operation but negative sentiment for both own cash reserves and the cash flow previously hadn’t been built up enough.

copper and mining equities left the com- generated from Prominent Hill,” Cole told “We realised we hadn’t given enough

pany struggling to find funding for the $3 a conference call on announcing the de- consideration to the third option of a

billion project. cision. “Whatever lens you look through, smaller, high-grade operation. So, in the

Eighteen months on, Oz managing di- whether it is value, rate of return, grade, last six months we have been rebuild-

rector Andrew Cole is confident Oz won’t cost, mine life, production profile, jobs or ing the resource models on much finer

have to tap the market for the revised scalability, we believe Carrapateena will meshes,” he said.

$770 million price tag. be an outstanding project.” To page 32
“We can fund Carrapateena out of our Oz had initiated work on the high-



Oz returned to re- and 38,000 ozpa gold. four or five months has shown the 2.8

source modelling, iden- Average annual cash mtpa capacity is the best base case and

tifying a 61mt @ 2.4% flow is estimated at this will be taken to PFS.”

copper and 0.9 g/t gold $150 million with pay- Cole said choosing sub-level caving as

high-grade component back expected in five the mining method allowed for scalability

within a global resource years. NPV is estimat- down the track.

of 800mt @ 0.8% copper ed at more than $600 “It is a pipe-like orebody that is coher-

and 0.4 g/t gold. million and IRR more ent and consistent which allows for a

“I must admit to being a than 20%. smaller start-up project. Stoping works

little surprised at just how Oz will exploit the as well but sub-level caving allows us to

high the grade is, how orebody using sub-lev- mine more of the high-grade and gives

large it is and how robust el caving through a sin- much more flexibility and scalability once

it looks,” Cole said. gle decline. Processing in production. If copper prices improve,

The results of the Feb- will occur on site with a we can rapidly expand the scale to take

ruary scoping study con- hydromet treatment cir- in more of the resource.”

firmed Cole’s belief that cuit to produce a 60% Throughput is also scalable should

the high-grade option copper concentrate. market conditions improve.

would prove the most de- Andrew Cole “On nearly every “We can expand up to 4.8 mtpa and as
sirable. level the sub-level cav- we work through the PFS we will consid-

Capex for the project is ing mining option of the er a second access – either a shaft or de-

estimated at $770 million with estimated high-grade resource is far more attrac- cline – if it creates value by allowing more

C1 costs of $US0.70/lb in the first five tive and a lower risk proposition,” Cole ore to be mined more quickly,” Cole said.

“years and $US1/lb over the life-of-mine. said. “The scoping study work of the last The numbers in the scoping study were

Production is es- based on consen-

timated at 55,000 Whatever lens you look through, whether it sus copper price
is value, rate of return, grade, cost, mine life,
tpa copper and forecasts but Cole
58,000 ozpa gold was eager to point
for the first three out under the pre-

years with life-of- production profile, jobs or scalability, we believe vailing copper
mine averages of Carrapateena will be an outstanding project. price, Carrapatee-
40,000 tpa copper na still stacked up.


“If you assume flat pricing for the life- Oz was set to return to drilling last month in ple have capacity at the moment. Being
of-mine the NPV is still more than $50 an effort to upgrade the Carrapateena re- able to transfer risk to suppliers gives us
million and the IRR more than the cost of source to indicated and provide material a natural hedge,” he said.
capital expense.” for metallurgical test work
“One of the reasons for ensuring the
The addition of the hydromet circuit will by the end of 2016 with a full feasibility decline is started by mid-2016 is to pre-
add additional value to Carrapateena’s study and subsequent decision to mine serve the value of the project. Pushing
product, according to Cole. to follow in the first quarter of 2017. Oz out development would destroy Carrapa-
has identified a late-2019 date for first teena’s value.”
“We could sell Carrapateena concen- production.
trate under our Prominent Hill agree- Oz’s confidence it can fund Carrapa-
ments but having the hydromet circuit Despite the tough market conditions teena’s development internally was fur-
will reduce the amount of concentrate for copper miners, building a mine in ther emphasised by the company’s deci-
we transport and will give us the best 2016 was “far less risky than five years sion to launch a share buy-back initiative
copper-in-concentrate product in the ago”, according to Cole. in conjunction with the PFS announce-
market.” ment.
“You need tight contract management
Oz will now press ahead with PFS but you do have a natural advantage giv- The programme will see Oz buy back
work. en so many quality companies and peo- up to $60 million worth of shares on-mar-
ket, representing 3.7% of the company.
“We will complete PFS level work on
the 2.8 mtpa base case and also explore “With the lower than expected capex for
opportunities to increase throughput to Carrapateena and ongoing performance
a maximum of 4.8 mtpa [largely through of Prominent Hill we have launched the
cut-off grade optimisation and alternative share buy-back when shares, we believe,
handling system options] and will have are well below fair value,” Cole said.
the work completed by mid-2016,” Cole
said. “We will also drill four new holes to “Our clear capital management frame-
upgrade the resource to measured sta- work will focus on maximising share-
tus and for metallurgical test work. We holder value by competition between
are also finalising scoping, costing and paying dividends and/or buy backs and/
supplier selection in order for us to start or investments – whether internal or ex-
long-lead ordering to allow us to start the ternal. We will ensure capital is allocated
exploration decline in mid-2016.” efficiently,” Cole said.

The PFS is expected to be completed – Dominic Piper



Tyranna’s drilling challenge

Tyranna Resources Ltd has Tyranna is set to test several targets on ground around the Challenger gold mine
launched a 6,200m drilling pro-
gramme it hopes will be the first step The company has set a target of a 70- “These broadly spaced drill results
to defining at least 500,000oz gold reflect the calcrete geochemistry and
at its Jumback project on the Gawler 100,000oz reserve at Golf Bore with a strongly indicate that the 750m gold
Craton. strike extent already demonstrated at
Golf Bore continues into EL 5526 and
The RC programme will be the first may well double the overall strike extent
of 15-20,000m of drilling planned for to over 1.5km,” the company said in an
2016 as Tyranna formulates plans to ASX release.
build resources at seven advanced
prospects within a 50km radius of Tyranna will continue to follow the cal-
the Challenger gold processing plant crete anomaly trail by drilling the Camp
(see page 20). Fire Bore prospect, 22km west of Golf
Bore. Early aircore drilling returned inter-
Six of the seven advanced gold cepts of 14m @ 4.17 g/t, 6m @ 4.97 g/t.
prospects form part of a JV with and 8m @ 3.5 g/t but only tested 400m of
Challenger Gold Operations Pty Ltd. the 1,600m calcrete signature.
Under the JV, and subject to certain
circumstances, gold ore may be “The current programme aims to re-
processed at the Challenger facility. view the geometry of the gold body and
Tyranna is the JV manager, holding subsequently carry out RC drilling to as-
a 59% stake which will increase to sess the full resource potential,” the com-
70% once the current exploration pany said.
programme is completed.
Another calcrete anomaly at Mainwood
The company hopes development will also be followed up after aircore drill-
of a 3-5 year toll-treatment operation ing on the 2km long prospect earlier re-
can act as a springboard to the delinea- turned hits of 13m @ 3.5 g/t, 6m @ 4.4
tion of a larger, 2-3 moz gold resource. g/t and 1m @ 41 g/t gold.

further 500,000oz Tyranna will also return to its geo-
chemical programme with further cal-
of resources to crete sampling at the Thunderbolt Tank
nickel prospect, 70km to the west of Golf
hopefully come from Bore.

other prospects. The company has previously reported
an “exceptional result” of 480 ppm nickel
The drilling pro- and 180 ppm gold from a single sample
on the prospect.
gramme will start

at the Golf Bore

prospect where

30,000m of previ-

ous drilling “clearly

outlines a broad

supergene blanket,”

according to the

company. Almost all

of the previous drill-

ing had been shal-

low and Tyranna

is keen to test the

deeper potential on

the target.

From there,

Tyranna will move

north-east to the

Gold Bore North

prospect, which sits

outside the Chal-

lenger JV. At Golf

Bore North, drilling

will follow up on

shallow aircore re-

sults which returned

best hits of 1m @

9.89 g/t gold and

3m @ 2.48 g/t gold.


Gold brings silver lining
for Investigator

Domestic and US gold prices tion tenure, with drilling proposed
have caused a positive stir in for the next round of PACE fund-

the market and the current bull run ing.

has also meant goods things for An astute explorer, Anderson

other sectors. said he and the Investigator team

Silver, often the forgotten pre- had closely watched innovative

cious metal, has ridden on the government surveys which had

coattails of the yellow metal’s rise refined the mapping of the Olym-

and is enjoying a small purple pic Dam IOCG belt.

patch in pricing. A geophysical corridor in-

At the time of print, silver was terpreted to be the underlying

clawing its way back up the chart The current gold bull run has dragged silver prices along as metal-rich source of the region
and on the verge of breaking well, which is good news for Investigator’s Paris project extends from Olympic Dam to
through $US16/oz for the first time Carrapateena and south to Mas-

since October 2015. positive metallurgical tests have demon- lins, which is close to road, rail and port

Towards the end of 2015, silver prices strated a strong economic case for future infrastructure.

fell sharply, dropping below $US14/oz to development of Paris. “We are bringing that forward as a high

start this year. The company is considering its op- priority drill target for 2016,” Anderson

However, as gold has gained momen- tions, including a further resource up- said.

tum, so has silver, providing those with grade and other development alterna- “At this stage, I think that’s why Maslins

silver assets some impetus to forge tives. is probably the best opportunity [in the

ahead. A recent Federal Government R&D tax corridor]. We went to it because of this

Investigator Resources Ltd is one refund of $950,000 will be used to build concept of the geophysical corridor ex-

such company, with its Paris silver pro- on the Paris project and also help Inves- panding the Olympic Dam belt. We have

ject within the Peterlumbo tenement on tigator test flow-on opportuni- gone down to where people

the northern Eyre Peninsula, South Aus- ties within its surrounding tene- haven’t drilled before or deep

tralia. ments on the southern Gawler enough and we’re not that far

In November, an updated inferred re- Craton. from Carrapateena.

source was announced at Paris; 8.8mt Drilling is proposed for the “If we have gravity anoma-

@ 116 g/t silver for 33 moz (50 g/t silver nearby Nankivel copper pros- lies in the right position then

cut-off). pect, which is in a wider mineral I think there may be more

The timing of Investigator’s resource system extending from Paris around, but we went to this

update, which signified a 60% increase and a candidate for PACE fund- area specifically to look at
to the 2013 maiden inferred resource of ing, in the June quarter. John Anderson gravity targets, but at this

20 moz, coincided with silver’s flop in the Meanwhile, a major fillip for stage I would have to say that

market. one of SA’s most active explorers has Maslins is the best IOCG greenfields op-

The tide has changed in silver and so been the recent progress made at Ma- portunity going. We are hoping that we

has sentiment towards Investigator, with slins; a 6km by 1km gravity target, 50km are actually on to another very large 6km

its share price doubling to 2c/share since south of Carrapateena. by 1km IOCG system and that is what we

February. Investigator has been granted explora- want to test.”

“That has something to do 1 Year Silver High 17.68 Low 13.65 Anderson said the com-
with our silver interest which 18.00 pany has received good trac-
is being carried by the inter- 18.00 tion in the market from its

est in gold at the moment,” 17.50 17.50 Maslins announcement and

Investigator managing direc- 17.00 17.00 hoped to deliver more good
tor John Anderson told Pay- 16.50 16.50 news in the future.
dirt. 16.00 16.00
“It is hard to get the mes-
“I think we are through the sage out there but I think
worst of the cycle and hope- 15.50
15.50 the release we put out about

fully interest in silver will con- 15.00 15.00 Maslins we have had good

tinue. We are pursuing some 14.50 14.50 feedback about it. We have
innovative development [op- 14.00 14.00 a strong following of people
tions] for Paris and looking at 13.5019Mar 13.50 that actually like us and are
ways we can move the pro- 13.00 27Apr 13.00 interested in what we have to
ject towards development.” 03Jun say,” Anderson said.
Internal studies on a shal- 18Aug – Mark Andrews
low open pit on the back of 24Sep

Based on New York Close



Road opens for Central Eyre

Iron Road Ltd managing director An- said. “To my knowledge this is unprec-
drews Stocks believes his company’s edented in South Australia.

proposed partnership with Emerald “The next process will be to respond

Grain is the prefect example of how to all those comments or queries and

mining and agriculture can work to- get some approvals in place.”

gether. Iron Road completed an optimised

The iron ore hopeful confirmed last DFS last October, successfully reduc-

month it had signed a MoU with Emer- ing the life-of-mine operating costs

ald Grain, a wholly owned subsidiary from $US44.33/t to $US37.72/t. Cen-

of Japanese conglomerate Sumitomo tral Eyre’s breakeven price was as-

Corp, to develop a grain distribution sessed at $US40/t.

and supply network using Iron Road’s Estimates were based on an op-

planned port and rail facilities on the timised 24 mtpa production rate of

Eyre Peninsula. premium quality concentrate grading

The original MoU was first signed in about 67% iron with low impurities.

early 2014, but Emerald’s identity and “The thing about this project which

the terms of the proposed partner- is unusual is that the orebody is rela-

ship had remained confidential until tively low-grade in the ground, how-

recently. ever, it upgrades quite easily,” Stocks

Iron Road is looking to build a said.

148km railway from its Central Eyre “We brought experts in-house and

iron project, near Warramboo, to a we spent another year looking at the

new 70 mtpa port facility at Cape project and really studied the in-pit

Hardy. The company anticipates it will crushing and conveying aspect, but

require 20-25 mtpa of that shiploader also some of the aspects in the plant,

capacity. particularly around the milling circuit.

Third-party infrastructure access Iron Road has signed a MoU with Emerald Grain for “The upshot of all that is that our fi-

has been integral to Iron Road’s bid to use of its proposed port and rail infrastructure nal cost structure is far more sensitive

get Central Eyre off the ground. The to mining than it is for ore processing,

project, including the infrastructure arm, the other product…that part of the pro- which is quite different to many other

carries a total capex of over $US4 billion. gramme is not really contentious.” magnetite projects around the world. Be-

Stocks said his company’s relationship Iron Road is also looking at a number cause of that, we decided to spend a bit

with Emerald showed how different in- of potential development scenarios for more time studying the mining.”

dustries could co-exist in a region. the port, including the delivery of grain The elephant in the room for Iron Road

“It’s a good example of how mining and before the proposed first shipment of iron remains the low iron ore price, but Stocks

agriculture can work together for the ben- ore concentrate in 2020. is unperturbed and said his company was
efit of everybody,” Stocks told Paydirt.
The tough environment for iron ore well placed to leverage off forecast long-

“There’s too much of a debate, this juniors has not stopped the company term pricing in the $US70-80/t range.

‘mining versus agriculture’ concept. It from taking big strides towards devel- Stocks said recent announcements

should be about how can the two lever- oping Central Eyre. In September last from China regarding cutbacks of crude

age each other, how can mining leverage year, Iron Road signed MoUs with five steel production augured well for his

what agriculture already has in place and Chinese steel companies to evaluate the company.

when mining moves in, how are they go- commercial and technical benefits of us- “Cutting capacity is going to help the

ing to benefit the agricultural community. ing its product. steel industry and we believe over the

There needs to be more of it.” Four of the five companies have com- next two or three years there will be a

Both parties are currently working on a pleted their reviews and Stocks said the tightening in the market,” Stocks said.

detailed engineering plan to ensure Em- initial feedback had been positive. “We’ve also seen China tightening up

erald’s requirements are compatible with “Some of them like it more than others their environmental standards, particu-

Iron Road’s. Emerald is likely to have a and every mill has different requirements, larly the atmospheric standards, and we

storage facility near the port and will in- so the conversation is different with each expect to see a further tightening.

dependently load grain via a separate group, but they all acknowledge the qual- “[Our product] is high quality, it reduc-

conveyor. ity of the product,” he said. es power consumption in the sintering

Stocks said it was essential his compa- According to Stocks, Iron Road also process in the blast furnace and it also

ny’s product did not mix with Emerald’s received positive feedback from the im- reduces atmospheric emissions…when

grain, and vice-versa. pacted communities, following submis- you put all of this together, it means we

“They have to be totally independent sions for a mining lease proposal and have a very desirable product and one

of each other,” he said. “We’re not going environmental impact statement. that will receive premium pricing.”

to wash down our iron ore conveyors to “You don’t normally get positive sub- – Michael Washbourne
load wheat on to them for one shipment missions, or very many positive submis-

and then go back to iron ore. sions, but we received 105 submissions

“No product is going to be mixing with and about half of them are positive,” he


Havilah hits pay dirt at Portia

It may have one of the most un- million, at a $1,580/oz gold price.
conventional mining projects in
the State, but Havilah Resources “If you can do [a project] like this,
Ltd now sits in the bracket of
South Australian miners. it is great as a junior because it is

The company announced first impossible for juniors to get funding
ore mined from the Portia gold
project last month, three-and-a- and it also allows you to do some-
half months ahead of schedule.
thing and advance something. If we
Managing director Chris Giles
told Paydirt that Havilah had ex- hadn’t got that financing help from
perienced somewhat of a dream
run into production. CMC, we’d still be sitting here won-

“We haven’t really come across dering what to do,” Giles said.
anything that we didn’t expect or
out of the blue, we mined down “We are up on the surface which
[mid-March] to 70m depth below
the surface, about 5m above the is a much better place to be. There
ore,” Giles said.
are probably a lot of contractors
“We drilled down the remain-
ing 5-10m to the ore zone and hurting now so they don’t have the
it was all there where it should
have been, so that was good. Now they spare cash flow or funds to be able
are select mining that ore out and put-
ting it on the ROM pad near the process- to fund shifting 8 million cubic me-
ing plant. Once the processing plant is
up and going, we’ll process it and put it tres of dirt before they get pay back,
through. No bad things have happened,
nor have there been any bad signs or so you have to find the right kind of
contractor. Portia is ideally suited
Commissioning of the processing plant
was progressing as planned at the time because it is a short mine life, the
of print, with commissioning expected
sometime this month. gold is all coarse grade, so there is

Havilah will control processing, while Chris Giles a fairly quick pay back.”
Consolidated Mining & Civil Pty Ltd
(CMC) is the mining contract partner at Giles said Portia was a simple
Portia, north-east of Broken Hill, and will
earn a 50% stake in the project. orebody and perhaps if there was a long-

Earlier this year, Havilah announced er life projected, orchestrating a deal,

$500,000 had been received from the such as the revenue share arrangement

forward sale of 300oz gold at a price of Havilah has with CMC, would be more

$1,691/oz, which supplements 10,000oz difficult.

gold already hedged at $1,618/oz. “A couple of things have worked for

Giles said production from Portia Portia, not to say it couldn’t be adapted in

would last between three to six months other situations, but perhaps it is the only

and possibly a maximum of 12 months, way juniors will get small projects off the

with gross cash flow generated by Hav- ground, I suspect,” he said.

ilah alone this year is potentially $40 mil- Once production is exhausted from

lion. Portia, there is potential for Havilah to at-

Total cash flow generation from Por- tack the North Portia project, which hosts

tia – based on 720,000t @ 2.9 g/t gold, a resource of 622,000t copper and 2 moz

within an open pit of 355,000t @ 4.7 g/t gold.

gold for 53,600oz – is estimated at $80.5 “We are doing a fast tracked feasibility

study on that at the moment to see the

viability of mining that straight after Por-

tia. We still have to get permits and the

like, I don’t know how long that will take,

hopefully not too long, and we can get on

mining copper and gold at North Portia,”

Giles said.

Following North Portia, Kalkaroo is the

big fish Havilah aims to snag.

A development decision on Kalkaroo,

20km south of North Portia, is expected

in 2017.

“That will be a 15-20 year mine life

there, that is advancing OK and the min-

ing licence approval is going through the

process in the Mines Department. It has

passed through all the tests, it’s just go-

ing through the approval process. It is a

formality type of thing,” Giles said.

– Mark Andrews

First ore from Portia was mined in March



Archer’s attention to detail

While its peers in the graphite field
view getting into production first
as a race, Archer Exploration Ltd is not

concerned about where it is placed in this

perceived competition.

Instead, the company is focused on

getting its Campoona Shaft project on

South Australia’s Eyre Peninsula right.

“We’ve got a different approach to

most, it is not about entering the race or

getting to production,” Archer managing

director Gerard Anderson said.

“It is about getting the project right.

Industrial minerals is a tough gig to get


The recent collapse of Mozambique-

focused Triton Minerals Ltd and, closer

to home, Valence Industries Ltd’s shut-

down of the historic Uley mine less than

eighteen months into operation have

highlighted graphite’s challenges.

Anderson understands the graphite

business is not for the faint-hearted and Archer Exploration is one of the leading graphite developers on
South Australia’s Eyre Peninsula
is prudently ticking every box necessary

on the way to production in 2017.

A draft mining lease proposal (MLP) “To go forward on the basis of not pro- existing one and that will mean that the
mine lease proposal will effectively be
was submitted in May 2015, which cen- ducing graphene then having to put out completed in April,” he said.

tred on a throughput rate of 140,000 another addendum at a different stage In the meantime, Archer has almost
completed the PEPR, with only the de-
tpa from the current Campoona Shaft is another problem, so we wanted to in- tailed testing of that material to be used
for the construction of the tailings stor-
resource of 2.17mt @ 9.6% TGC for clude graphene capability,” Anderson age facility containment to sign off on.

209,000t contained metal. said. In addition to Campoona, the com-
pany’s Sugarloaf project is shaping as a
The proposed MLP also covered the “Including the small-scale start-up is potential carbon deposit.

establishment of a processing facility perhaps because of the lessons we have The company has scheduled field tri-
als to start soon in light of initial research
at Sugarloaf and despite an exhaustive learnt from others entering the business, work indicating Sugarloaf is not a typical
crystalline graphite deposit. Research
draft stage, the document is open for which is [getting] the product accredita- work, also in collaboration with the Uni-
versity of Adelaide’s School of Chemical
public comment. tion phase right. That Engineering, suggests Sugarloaf is a
form of carbon deposit which has many
Anderson said process does take a little attributes potentially suited to be used as
a soil conditioner or fertilizer.
Archer was closely bit of time and we clearly
Archer will continue to investigate
engaged with the com- wanted to de-risk our Sugarloaf, while also negotiating infra-
structure access with third parties and
munity and didn’t ex- project in terms of capital permitting issues with the Government
concerning its Leigh Creek magnesite
pect any major issues and the amount invested. project.

to arise during the We are including a small- With 453mt grading 41.4% magnesia,
Archer believes it potentially has one
process and expected scale start-up for a nomi- of the largest magnesite projects in the
world and leveraging from existing infra-
MLP approval within nal period of time, which structure in Leigh Creek could provide it
with a low-cost path to production.
six months of final sub- decreases the capital
– Mark Andrews
mission. requirement substan-

Prior to final submis- tially and that gives you

sion, Archer will tweak a product in the market

the MLP to include a and logically once it is in

smaller-scale opera- the market it is likely to

tion, where the capital Gerard Anderson grow.”
requirements won’t be changes being

overly demanding. made to the MLP has

Furthermore, after a joint research meant Archer has had to revisit the mine

programme funded by Archer through plan and address a lesser amount of tail-

the University of Adelaide’s School of ings to be stored in the first year or so.

Chemical Engineering deemed Campoo- Anderson said that work has been

na graphite concentrates could produce completed, however, the updated mine

pure graphene (99.9% TGC), Archer de- plan was yet to be finalised.

cided to also include the graphene po- “We think it is better to put out a fully

tential in the MLP. updated plan than an addendum to the


Minotaur cements
gypsum resource

Diversified explorer Minotaur Minotaur believes it has the largest gypsum resource in South Australia
Exploration Ltd unveiled
South Australia’s largest unde- shipping gypsum plus Minotaur’s nearby Altia lead-silver-zinc deposit, and the JV
veloped gypsum resource ear- kaoilin and halloysite assets and local hopes to target this style of mineralisa-
lier this year. grain production. tion with drilling by the middle of the year.

A maiden inferred resource While Minotaur assesses its options at Last year, Oz and Minotaur entered
of 87mt @ 91% gypsum was Lake Purdilla, the Eloise project is sub- into an exploration farm-in over Mino-
announced from the Lake Pur- ject to initial work under the JV with Oz taur’s assets south-east of Cloncurry,
dilla deposit in the State’s west. Minerals Ltd in Queensland. with Oz committed to sole-funding an
initial $1.5 million in exploration in 2016,
SA currently produces about A $1.5 million work programme will while it has an option to earn a 70% in-
80% of Australia’s gypsum – 4 be completed by the end of 2016, with terest in the tenements by investing $10
mtpa – which is suffice to sup- field-based gravity and EM geophysical million over six years.
ply domestic requirements for surveys to be conducted in an effort to
materials such as plasterboard develop drilling targets.
manufacture, cement manufac-
ture and agricultural use. Eloise lies along the Levuka Shear
Zone, which hosts the Cannington-style
Minotaur believes the gyp-
sum at Lake Purdilla is suitable
for these purposes in Australia
and aboard, particularly South
East Asia, where cement and
plasterboard production is in-

It is possibly customers in
these markets that Minotaur
can target for its raw gypsum
as it looks to divest Lake Purdilla, 130km
from a bulk-handling port and 15km from
a potential deepwater port development

Once divested of the project, Minotaur
will look to engage with the new owners
to progress the port solution to reach the
wide-ranging customer base it envis-

Last year, the company carried out a
port trans-shipment study which indi-
cated a cost effective logistics solution
could be established near Lake Purdilla.

The study included the possibility of



Highfield with the
honours in potash

Highfield Resources Ltd has all the key gus FMB found Highfield’s Muga project experienced in other commodities,
ingredients to make a successful pot- to be the highest margin potash producer with Chinese benchmark prices cur-

ash business in Spain, according to man- in the world, based on 2015 prices. rently about $US270/t, down from about

aging director Anthony Hall. Argus, commissioned by the European $US450/t in 2013.

“From a Highfield perspective we tick project finance banking syndicate for Hall believes prices are due for an ever

every box, which is really fortunate for Muga, indicated Highfield was likely to so slight uptick, but nothing remarkable.

us,” Hall said. “We have great minerali- be the lowest cost potash producer, with “What you are starting to see is the Ca-
“sation, which we will access from a de- a total cash margin of 61% in 2015.
nadians, the Belarussians and Russians

cline and conventional being disciplined with

underground mining You are always going to be able to enter production and we
operation. We are in a a market, if from a margin perspective, think that we will start
great location, which you have an advantage over the existing to see higher potash
means that we don’t prices in the short-to-
have to spend lots of medium term, but we

money on roads, la- market participants. People talk about the don’t see it skyrocket-
bour camps, etc and ing like they were in

we have a great roy- cost curve and what Argus is saying is that 2013,” he said.
alty regime, great la- we will have the highest margin. “It is an agricultural
bour rates, low price
commodity, so it is

customers and from very much driven by

a technical risk per- population growth.

spective we have a mine that can deliver The report took into account delivery of “In the shorter term you still have major

for 35-45 years. Highfield’s Muga’s granular K60 muriate producers that have capacity. It is a rea-

“We don’t need to demonstrate to the of potash (MoP) to customers in Europe, sonably well balanced market right now

market we can do something that has Brazil and the US, with Highfield rated from our point of view.”

never been done before; we’re in a base- the best of its competitors on the basis of Drivers may not be enticing new en-

ment that’s produced potash before.” a sales ratio of 75% into Europe and 25% trants to the sector at the moment, how-

Hall is right to be singing his company’s into the US. ever, not all players are in Highfield’s po-

praises, particularly after a report by Ar- Potash has not escaped the travails sition.


The company has a term sheet signed Highfield will enjoy good labour rates when in production
with four commercial European banks
for €222 million in project finance, with rerating when we receive our environ- “We don’t think that the market is giv-
pre-production capital costs of €267 mil- mental approval and by the time we start ing us value outside of the Muga project,
lion demanded to build Muga; a poten- production we hope that investors see so we hope to be getting value for our
tial 1.08 mtpa granular K60 MoP project value in our five other projects.” other projects as well,” Hall said.
with a mine life of 47 years, generating
$US200 million EBITDA per annum at Muga, 264mt @ 13.5% K20, is the For the time being, Highfield is all
current prices. company’s flagship project, which cov- about developing Muga and if the market
ers only half of the entire Muga project is impressed by that, then the company
Cash costs of are estimated at €130/t, area, where an exploration target of 127- may well be able to build a loyal following
with North West Europe 2015 spot prices 255mt @ 12-16% K20 has been set. as it looks to exploit its growth potential.
(October) fetching about €300/t.
Furthermore, Highfield has four other Internally, it is believed Vipasca – 319-
Highfield has forecast production of 2 MoP projects – Vipasca, Izaga, Sierra 1,213mt @ 11.4-15.2% K20 (exploration
mtpa MoP by 2020, with Muga coming Del Perdon (82mt @ 10.6% K20, re- target) – could shape as Highfield’s the
on stream late next year. source) and Pintanos (187mt @ 11.2% best project.
K20, resource) – and a sulphate of pot-
“You are always going to be able to ash project it is working on. – Mark Andrews
enter a market, if from a margin perspec-
tive, you have an advantage over the
existing market participants. People talk
about the cost curve and what Argus is
saying is that we will have the highest
margin,” Hall said.

“Margin will determine how long you
can stay in production. Potash prices are
very difficult [to deal with], even look at
Jansen [BHP Billiton Ltd’s project in Can-
ada], it has a phenomenally high capex
because it has difficult geology and it is
in a difficult location.”

Highfield’s entry into the potash mar-
ket will be less onerous, given Muga is
in a renowned potash-producing region
supported by necessary infrastructure in
northern Spain.

“We anticipate receiving environmen-
tal approvals shortly and from there we
receive the mining concession, which al-
lows us to commence construction and
we are aiming to be in production 18
months after the start of construction,”
Hall said.

“We hope that we receive a positive



Elemental knocks back Dingyi

Elemental Minerals Ltd has the staged approach to produc-
poured cold water on an un-
solicited off-market takeover bid tion, as flagged by previous
from Hong Kong-based Dingyi
Group Investment Ltd. management, in order to max-

Dingyi proposed to acquire imise project value.
the Republic of Congo-focused
potash hopeful for a cash con- Bennett and new Elemen-
sideration of 30c/share. El-
emental’s stock was trading at tal chairman, respected South
18c/share when the bid was an-
nounced on February 12. African businessman David

However, Dingyi’s non-bind- Hathorn, have been well re-
ing expression of interest was
subject to a number of pre-con- ceived by shareholders since
ditions, including “the comple-
tion of satisfactory confirmatory joining the company late last
due diligence, the negotiation
and execution of pricing and year.
definitive documentation and no
material change to Elemental’s number “It’s not just about this next
of issued shares”.
phase, it’s not just about the
Elemental was quick to reject the pro-
posal in favour of pursuing a binding DFS. It’s about the whole chain
agreement with Summit Private Equity,
headlined by a potential equity injection of events right the way through
of $US50 million that would enable the
company to launch an accelerated de- to construction,” Bennett said.
velopment strategy for its suite of potash
projects. Elemental is looking to finalise a binding agreement with “Once we tie up this Summit

“The Dingyi proposal was nowhere Summit to ensure the company is funded to the start proposal – and we hope to do
near the value we think we can achieve
from the Summit proposal,” Elemental of construction at Kola that pretty shortly – then one will
managing director Sean Bennett told
Paydirt from his Johannesburg office. be able to see this all the way

“Our calculations are significantly the requirements for a reverse takeover through. I think that’s really exciting and
above that valuation from Dingyi and it
was also highly condi- or the then-new listing regulations for that’s what hopefully will differentiate us
tional, it had no clarity
on whether it was there mineral assets. and get the confidence going in the com-
at all, and at a price we
didn’t think was in the After rejecting Dingyi’s proposal, El- pany again.”
best interests of share-
holders. emental advised the investment firm it Interest in the company also appears

“If someone wants to could not have any discussions due to to be on the rise. Elemental successfully
put a price on the table
and we think it’s in the the exclusivity agreement it had signed raised $4.1 million in February through
best interests of share-
holders to take it, then with Summit in January. the issue of 20.5 million fully paid ordi-
that’s fine but that wasn’t
the case with this pro- The lucrative deal will ensure Elemen- nary shares at 20c/share from unrelated
posal from Dingyi.
tal is funded through to the start of con- sophisticated and institutional investors
“We’re really pleased
with the Summit proposal, it really does struction at its flagship Kola sylvinite to be put towards the feasibility studies
tick all the boxes so we’ll keep moving
forward with that.” project, as well as pursuing new devel- under way.

It is the second time in three years Din- opment strategies for the nearby Dougou “We’ve obviously got an ongoing cash
gyi has attempted to acquire the ASX-
listed junior company. A previous bid in and Yangala projects. burn and just while we are in the process
2013 lapsed after the Hong Kong Stock
Exchange ruled Elemental did not meet A French-based construction consor- of negotiating and finalising the Summit

tium will also become involved in com- transaction we felt we need a little bit

pleting the Kola DFS, paving the way more working capital,” Bennett said.

for a potential open-book, “These things always take slightly long-

fixed-price, binding EPC er than you think so we went out to do a

contract. small cash raise of just over $4 million,

“Someone said to me really just for working capital purposes

the other day that with a until the Summit proposal is finalised.”

fixed EPC contract you run Potash prices have come off slightly

the risk of getting a lot of in the last few months, possibly a victim

add-ons at the back-end of the wider commodities downturn, but

of it because your design long-term forecasts are very positive – a

is wrong,” Bennett said. situation Bennett says is perfect for his

“Well, in this case the company.

people who are providing “You want to build a project when the

the EPC are also the peo- prices are relatively weak because that

Sean Bennett ple who are helping us de- means you build it at a relatively low
sign it, so they’re embed- cost,” he said.

ded in the design process “This is actually not bad timing for us

and embedded in the construction pro- because we’re not going to be produc-

cess, so the risk is taken out. ing for another five years. Having a weak

“They know how to build in Congo, price, lowering the potential supply and

they know how to build in Africa and they having a relatively low construction cost

know the RoC. Their ability to provide is all good news for us.”

you with a fixed EPC is second to none.” – Michael Washbourne
The Summit masterplan proposes a 2

mtpa operation from start-up rather than


Baobab funded to production

Avenira Ltd has received a $28 million Avenira is targeting first production at Baobab in the second half of 2016
capital injection from its new Senega-
lese JV partner, ensuring the company is increasing the project resource and ex- ment decision so we are very comforta-
funded through to the start of production tending the environmental impact studies ble it covers everything an external study
at the Baobab phosphate project. and community development plans to ac- would…we have had some queries [from
commodate the bigger footprint. shareholders] about what the numbers
The financial close of the new partner- are and we will progressively release in-
ship was completed early last month, “We should have all the administration formation as we get closer to production.”
with prominent West African agribusi- and works done during the course of this
ness Groupe Mimran handing over year, such that we can be granted a full At the time of print, Avenira had signed
$US11.25 million for 20% of the issued mine permit in the first half of next year,” at least six MoUs for quantities of prod-
capital in project company Baobab Min- Lawrenson said. uct from Baobab, ranging from 50,000
ing and Chemical Corporation (BMCC). tpa to 240,000 tpa. The combined total is
“The full mine permit has many ben- almost double the company’s initial pro-
Mimran Natural Resources, an affiliate efits within the mining code, including duction target.
company of Groupe Mimran, also trans- substantial local tax advantages.”
ferred the 2,000sq km Gossas explora- Negotiations to convert those MoUs
tion permit, about 25km south of Baobab, A maiden indicated resource of 12.6mt into formal off-take agreements are ex-
to BMCC as part of the transaction. @ 21% P2O5 (based on a 15% cut-off pected to keep Lawrenson and his team
grade) for the Gadde Bissik deposit was busy for the rest of this quarter, capping
Another affiliate, Tablo Corporation, announced in December. Gadde Bissik a whirlwind 12 months for Avenira since
was issued with almost 105 million fully also has an inferred resource of 87mt @ acquiring Baobab.
paid ordinary Avenira shares at 11.7c/ 19% P205, including 16mt @ 20% within
share, equating to a 19.9% stake in the the small mine permitted area. “We’ve done a lot over the last 12
ASX-listed phosphate hopeful. months, including a name change [for-
Avenira has not completed a formal merly Minemakers]. We had a grand plan
David Mimran will also join the boards feasibility study, but did engage with a and we’ve doggedly stuck to it,” Lawren-
of both Avenira and BMCC. number of independent consultants in son said.
geology, metallurgy, mining and market-
The transaction will deliver Avenira ing as part of an internal study it conduct- “We did a placement [for $3.1 million]
about $28 million in development funds, ed on the project. in November to JP Morgan [Asset Man-
on top of the $12 million of existing cash agement UK Ltd], a very prestigious re-
reserves it held at December 31, 2015. “We completed an internal PEA and sources fund and we have feedback that
felt the additional cost of doing a third- we are the envy of many because we
Avenira managing director Cliff Law- party PFS would be a waste of money were able to do that.
renson said the JV with Groupe Mimran because the potential benefit it would
would bring much more than just finan- have brought was not worth the costs “JP Morgan will tell you that Avenira
cial benefits to the company. and time spent going down a more for- delivered what we said we were going to
mal route,” Lawrenson said. and we continue to deliver what we say
“Groupe Mimran is the biggest private we are going to. JP Morgan and others
company in Senegal and a major play- “Also, the small mine permit under will continue to be supporters and accu-
er in the agrisector in West Africa. You which we currently operate provides six mulators as long as we keep delivering.”
could not ask for a better local partner,” months from award to the start of min-
Lawrenson told Paydirt. ing, so we actually didn’t have time for a – Michael Washbourne
formal third-party study.
“We are very happy with the valuation
Groupe Mimran attached to the Baobab “Groupe Mimran obviously looked at
phosphate project, we are very happy our internal study in making its invest-
with the fact that we are fully funded to
production and we are very happy with
the due diligence and scrutiny Groupe
Mimran performed along the way. We
always learn and have the opportunity
to improve when others assess what we
are doing.

“The investment is not only good for
us, it validates and improves what we are
doing because a third party has come in
and formed the same view that we have
in terms of value, in terms of project dili-
gence and strategy.”

Avenira is targeting first production
from Baobab in the second half, having
received the final environmental approv-
als for a small mine permit late last year.
Mining began last month.

The company has put the wheels in
motion to obtain a full mine permit, in-
cluding partnering with a local company,



Centrex majors in potassium

With its South Australian iron ore pro- Centrex’s Oxley potassium project is 125km from the Geraldton port
jects on care-and-maintenance for
obvious reasons, Centrex Metals Ltd is growers groups and growers trying to Bungalow magnetite JV, Centrex is for-
surging ahead at the Oxley potassium tunate to have other options like Oxley to
project in Western Australia. solve the marketing side early on. I think concentrate on.

Acquired from minerals sands hopeful we are in a good position now with a lot As it stands, the company is negotiat-
Sheffield Resources Ltd in March 2015, ing a retention lease with the SA Govern-
Centrex has wrapped a resource around of interest and I think that is one thing we ment over Kimba Gap to reduce holding
Oxley just 12 months later. costs and has dropped non-prospective
are going to be aiming for is proposing ground from its portfolio, while by the end
The inferred resource is 155mt @ 8.3% of the year it would have exited the Bun-
potassium (using a 6% cut-off grade), in- a smaller scale start-up, something we galow JV with Baotou Iron & Steel.
cluding 38mt @ 10% potassium (using
9% cut-off). think is realistic to enter into the market “Obviously there is every considera-
tion on the table for that,” Hammond said
Centrex chief executive Ben Ham- without creating too much reaction.” about completing cutting ties with the
mond told Paydirt the company would iron ore sector.
liked to have released a resource sooner, Assuming studies prove to be eco-
however, it was still pleased with the out- “I think there are probably 100 iron ore
come, particularly the size. nomical, Oxley is ideally placed for the projects on the market right now.”

“Obviously the quantity [is a highlight],” export market as there is infrastructure While there may be an abundance of
Hammond said. unwanted iron ore projects on the shelf,
available to get product to Geraldton, Hammond said identifying good assets –
“I think where the high-grade bits no matter the commodity – was not an
were coming out, it is in pods laterally only 125km away. easy task.
so quite easy to mine out selectively. We
only need a fraction of this resource for At this point in time, Oxley is shaping However, he is happy that Centrex
the start-up of this project, so you can looked for other opportunities beyond
cherry-pick as much as you like, bear- as a more realistic development option the iron ore sector before the industry hit
ing in mind we’ve only drilled three of the rock bottom.
32km [striking ultra-potassic lava flow], for Centrex, as opposed
so there is plenty of opportunity there to “I think we saw this coming and diver-
get started and ramp up. We are pleased to its suite of iron ore as- sified early on, which puts us in a good
with the grade and quantity.” spot. It took us a while, which goes to
sets in South Australia. show how long it does take to find a good
Although a further exploration target project. It took us a few years, but I’m
of 500-800mt @ 7.5-9.5% potassium Hammond said the glad we started then and not now,” Ham-
has been set, Centrex’s sights are on a mond said.
smaller-scale starter project. company was not ac-
In addition to Oxley, another project
Having completed a series of work in- tively working on any of Centrex is keen on is the Goulbourn
cluding, metallurgical polymetallic project in New South Wales,
bulk sample drilling, its SA projects, despite which will be drilled this year.
process route scop-
ing, bench scale test some recent improve- – Mark Andrews
work, conceptual nitric
acid plant cost esti- ments in the iron ore
mates (operating cost
of $US148/t to make price.
nitric acid on site) and
resource drilling and “We have seen a spike,
definition, Centrex is
focused on internal but that just encourages
works and a scoping
study. those that were about to

“The problem we’re shutdown to keep going.
faced with as usual is
that until you have got You still have 20-30% of
indicated resources
you are a bit limited the world [iron ore pro-
in what you can an-
nounce, but internally we are certainly ducers] making a loss,
progressing at a rate of knots,” Ham-
mond said. Ben Hammond so it is not sustainable,”
Hammond said.
“I have been right out across Asia
and Australia talking to every distributor, With little confidence

that iron ore prices will rebound any time

soon to levels which would command

greater attention to its projects on SA’s

Eyre Peninsula, including the Kimba Gap

magnetite, Eyre Iron magnetite JV and


Plymouth finalises move to Gabon

The perilous existence of junior re- time we were looking for acquisi-
sources is such that companies have tion opportunities.”

to be prepared to dramatically switch fo- Under terms of the deal, Equa-

cus in order to build momentum. torial Potash will receive 50 mil-

When Plymouth Minerals Ltd was lion shares in Plymouth, split into

faced with a severe downturn in tung- 25 million ordinary shares and

sten prices last year, managing director 25 million performance-based

Adrian Byass felt the company had little shares which rest upon comple-

choice but to make a switch. The com- tion of certain milestones.

pany put its Morille tungsten project in “The deal took longer but it

Spain into hibernation and Byass set would’ve involved too much risk

about finding an asset that would attract raising money before we had se-

market attention. cured the tenements. We’ve seen

“After the tungsten market fell apart we so many companies in the past

were faced with either changing out of make announcements about ac-

resources completely or finding another quisitions too early. In our case,
commodity,” Byass told Paydirt.
we waited for the tenement to

Instead of heading to biotech, drone be dropped and then it was re-

technology or gambling apps, the com- pegged to ensure the ownership

pany’s change of direction instead came structure was clean.” Plymouth Minerals managing director Adrian Byass

from two previously drilled potash pro- Once that process was com- with the onsite team at the company’s newly

jects in the West African nation of Gabon. pleted, Plymouth immediately set acquired Banio project in Gabon

“I’ve always felt you need to find a dif- about raising funds and closed a

ferent angle, ideally in a non-traditional $3 million at 8.5c/share to sophisticated a couple of drill-holes into it to instantly

commodity,” Byass said. “I’d been a non- investors on March 22. transform the value of the company,” he

executive director in a phosphate pro- “We were really happy we closed at said.

ject so the fertiliser space was already $3 million because the overs are already Emulating Elemental’s market growth

interesting to me. All the mining skills buying on market which is an endorse- off the back of its Kola potash project in

still apply to these projects but there is ment of the company’s strategy and re- neighbouring Republic of Congo may be

a completely different mindset when it inforces that it was the right thing to do.” an initial target. Elemental is currently

comes to discussing end-markets. This With exploration rights and funding attempting to fund development of Kola

is not about China. The fertiliser market secured, the company can press ahead and on February 12 rejected an unsolicit-

has got consistent, long-term growth fun- with work on the two projects. ed takeover offer from Hong Kong-based

damentals.” Mamana – 120km from the Gabonese Dingyi Group Investment Ltd despite the

The Mamana and Banio projects – capital Libreville – is the more advanced 30c/share bid representing a 66% pre-

which Plymouth began due diligence project, having been first subject to drill- mium on Elemental’s closing price (see

on in October – also offer “a few quirks”, ing in the 1950s. More recent drilling re- page 44).

having been identified for potash poten- turned intercepts of 4.35m @ 29% K2O Elemental’s market cap is currently

tial only after their original owners had from 384m and 9.5m @ 16.5% K2O from around $71 million while Plymouth’s is

pegged them for iron ore. 433m. less than $5 million.

“When they [Equatorial Potash Pty Ltd] “We will do 6,000m of diamond drilling Plymouth’s recent capital raising

lost momentum in their iron ore explora- at Mamana,” Byass said. “The intercepts means the company has enough cash to

tion they looked around for opportunities we have are at 1.5km spacing and we see it through the next 12 months, includ-

for the assets,” Byass said. “At the same think we can put a 20-year mine life to- ing drilling at both projects and work on

gether off the back of seismic the Mamana scoping study.

work and three holes.” Byass will move to executive chairman

Once a resource is complet- in coming weeks with South African min-

ed, Plymouth will likely launch ing engineer Eric Lilford to be managing

a scoping study, including de- director. Byass said it was more appro-

tailed work on the barging of priate to have Lilford as managing direc-

material along the adjacent tor given he would be spending more

Ogooue River to Port Gentil. time in-country.

While Mamana is the more “I think the biggest problem that has

advanced asset, Byass be- befallen ASX-listed juniors in Africa has

lieves shorter term market im- been the imbalance between strategy in

pact will be generated by drill- Perth and reality in the bush,” he said.

ing at Banio, which is 20km “To be successful, you’ve got to be there,

from Elemental Resources making sure things are getting done cor-

Ltd’s Sintoukola potash project. rectly.”

Plymouth is happy with the infrastructure options “Mamana is still the best pro- – Dominic Piper
around its Banio potash project in southern Gabon ject but Banio only has to have



Mining the
great provider for


Despite the downturn, Queensland’s resources sector still provides 60,000 jobs

Queensland Nickel’s demise couldn’t have come at a worse time Despite challenging times, Queens-
for the State’s resources sector. land’s minerals and energy sector pro-
vided one in six jobs in FY2014/15 in the
“At this time, our thoughts are with the With Clive Palmer’s Queensland Nick- State and with demand for resources
entire workforce of Queensland Nickel – el going down, there is more pressure on expected to grow, particularly exports of
the 240 workers who lost their jobs earlier the surviving mining companies in the coal and gas to Asia, it is vital that min-
this year and the 550 who had their con- State to continue operating sustainably. ers are given some reprieve after “doing
tracts terminated last week [mid-March]. their own heavy lifting to strip billions of
These job losses are a blow for these The mining sector is still a large em- dollars of costs out of their businesses”.
workers, their families and for the Towns- ployer of Queenslanders, with the sector
ville economy but are symptomatic of the accounting for 60,000 jobs in the State. “Governments need to recognise that
extremely difficult market conditions fac- many resource operations are in sur-
ing most sections of the resources sector Like their counterparts in Australia and vival mode in the face of some of the
in Queensland and nationally,” a spokes- across the globe, Queensland mining most difficult global market conditions in
person for the Queensland Resources companies have introduced measures decades. The QRC met with the Cabi-
Council (QRC) told Paydirt. to remain viable in the current downturn, net Jobs Committee on March 8 and
however, more support is needed, ac- submitted a number of realistic propos-
cording to the QRC. als to help save the remaining 60,000


resources jobs,” the QRC spokesper- Natural Resources and Mines Minister for Queensland Resources Council chief
son said. Queensland Anthony Lynham executive Michael Roche

“The proposals aimed to reduce the “These initiatives are a sensible re- 16 permits and approvals at local, state
cost of doing business and cut down un- sponse to the prevailing challenging and federal level, including six primary
reasonable project approval times. What times facing all explorers where it is al- approvals.
governments can do is ensure existing most impossible to attract new capital.
and proposed new projects are not be- Most explorers are carefully husbanding Adani is proposing to develop the
ing strangled by excessive red tape, scarce cash reserves to simply survive North Galilee Basin Rail project to take
weighed down by unjustified state and the current severe market downturn,” the coal from the Galilee Basin to the Ab-
local government charges and held up by spokesperson said. bot Point port via a multiuser, standard
the gaming of the court system by anti- gauge rail line.
resources activists.” “This initiative is a perfect example
of what governments can do to provide It is widely believed that the Galilee Ba-
In March, Natural Resources and some relief to resources sector compa- sin is the last undeveloped coal resource
Mines Minister for Queensland, Anthony nies in some of the toughest conditions. in Queensland and has the potential to
Lynham, announced a reduction in ex- The Queensland resources sector needs be the largest coal producing region in
penditure requirements for coal explor- to position itself for the next upturn and the State.
ers, which was welcomed by the QRC. this can only be done with the support of
government.” The importance of the project has not
been lost on the Government, with Minis-
One initiative the QRC is pushing the ter Lynham keen to see an application for
Government for is the establishment of a a mining lease in due course.
special north-west economic zone in the
Mount Isa region. “I am advised that Adani has reached
agreement on compensation with the re-
Mount Isa and the north-west of maining landholder,” Lyhnam said.
Queensland has been one of the regions
hardest hit by the resources downturn “My department has advised that it is
and QRC chief executive Michael Roche awaiting confirmation from Adani that the
urged for a collaborative effort from all agreement can now be filed in accord-
levels of government to keep its engine ance with the Mineral Resources Act.
running until the sector recovers. Once that occurs, I will be able to consid-
er the application for the mining leases
“The north-west is a melting pot of un- in the same way as for any other project.
tapped opportunity but it is faced with
unique challenges, including distance “The other milestone the mine, rail and
and infrastructure,” Roche said. port project has achieved is the last key
state-based approval for dredging for the
“It’s going to take a combined effort Abbot Point expansion. The next step for
between local, state and federal gov- Abbot Point is for Adani to finalise ap-
ernments to ensure this region not only provals for the rail in-loading facilities,
survives this challenging time, but is in onshore stockpile yards and offshore
prime position to thrive during the next wharves and this is now underway.”
Progress made to date has been done
Queensland is still one of Australia’s in accordance with the Palaszczuk Gov-
top ranked and most mature mining juris- ernment’s commitment to protecting the
dictions, however, there remains plenty Great Barrier Reef and Lynham stressed
of untapped mining opportunities. that no dredging would take place at Ab-
bot Point until Adani demonstrated finan-
One the State’s most significant future cial closure.
coal prospects is the Carmichael mine in
the Galilee Basin. “Queensland taxpayers will not fund
this infrastructure,” Lynham said.
In March, an agreement was reached
with all landholders for the $21.7 billion
project, with Adani Australia now holding



Foundations for an Evolution

The composition of Evolution Min- last three years we have been sell-
ing Ltd has changed so dramati-
cally in the last 12 months that it is ing concentrate to a customer and
easy to forget the company’s foun-
dations were built on the success of we’ve never once had an issue with
its Queensland assets.
the sale of that concentrate.
Evolution acquired Barrick Gold
Corp’s Cowal mine in New South “The only caveat I would put on
Wales as well as La Mancha Aus-
tralia’s Mungari operations near that is our dreams are now bigger
Kalgoorlie last year to become the
second largest gold producer on for Mt Carlton because we’re start-
the ASX.
ing to think about the exploration
It has meant Evolution’s Queens-
land assets – Cracow, Pajingo, Mt potential there, given the absolute-
Rawdon and Mt Carlton – are no
longer at the forefront of the com- ly fantastic grades we’re achieving,
pany’s production portfolio, at least
from an investor perspective. so expect to see a lot more about

Internally, it is a different story. Mt Carlton and exploration.”
The significance of opening the first
new gold mine in Queensland in a The average grade put through
decade at Mt Carlton in 2013 and
defying the expectations of many the mill at Mt Carlton during the
to keep operations ticking over at
the other three is certainly not lost December half was 7.6 g/t gold,
on Evolution’s executive chairman
Jake Klein. compared to the reserve grade of

“We would suggest that Queens- 4.4 g/t gold.
land is under-recognised and under-
rated as a destination for explora- Bonanza grades were also in-
tion and mining,” Klein told Paydirt.
“We certainly have always found it a tersected as part of recent drilling
very good place to operate.
programme targeting mine life ex-
“Our engagement with the regulators is
good, they are supportive and the land- tensions, including a hit of 10m @
owners are also supportive.
22 g/t gold from 69m.
“I continue to promote the fact that,
having spent the first part of my career Evolution – formed in 2011 when
developing mines in China, that Australia
– and Queensland being a subset of that Conquest merged with Catalpa Re-
– is god’s gift to miners.
sources – has remained one of the
“It’s a vast, underpopulated, highly
mineralised, mining-friendly country and most consistent and reliable mining
it’s a place that ought to get more
attention and more focus from inter- companies in Australia, in part be-
national markets.”
cause of its “act like owners” mind-
Pajingo, Cracow and Mt Rawdon
were all cash flow positive in the last set, first implemented at some of its
six months of 2015, generating a
combined total of $US30.9 million. Queensland operations.
Mt Carlton’s cash flow for the half-
year was $US31 million. Recent examples of the “act

Mt Rawdon’s ability to make like owners” approach include the
money while undergoing major cut-
backs has been a notable achieve- Mt Carlton is Evolution’s leading Queensland asset Pajingo workforce identifying ways
ment and Klein expects the mine to
generate strong returns for at least to safely and conservatively as-
another three years once the major
capital works wrap-up towards the Mt Carlton – one of the world’s high- sess potential ounces in an area not pre-
end of the year.
est grade open-pit gold mines – is ap- viously thought to be economic to mine,

proaching the third anniversary of its first ultimately generating about $1 million in

concentrate, a milestone many thought it extra revenue.

would not achieve when held by Evolu- An engineering and maintenance team

tion’s predecessor Conquest Mining. member at Cracow also identified an al-

“There was a failed feasibility on this ternative cyclone feed pump and negoti-

asset [when acquired by Evolution] in ated a successful trial which yielded cost

that the key thing missing was off-take savings of almost $300,000 to the busi-

of the concentrate,” Klein said. “For the ness.

“It’s the great thing about the Aus-

tralian gold industry and our work-

force, asking them to act like own-

ers,” Klein said.

“We not only ask them to act like

owners, we actually made them

owners. We’ve given every employ-

ee in our company $1,000 worth of

shares and since we launched this

programme a year ago, we’ve had

48 ideas which have saved us $6.5

million a year. To put that in context,

the $1,000 of shares for each em-

ployee cost us $1.3 million.”

Evolution’s Queensland assets generated – Michael Washbourne
$US61.9 million in the December half


Stavely’s bargain buy

Victorian-focused explorer Stavely Chris Cairns that’s reflected in the Fraser Institute
Minerals Ltd is branching out into standings of the respective states.
Queensland after picking up a prospec- happy with the terms and conditions of
tive gold-copper project for the bargain a cultural heritage agreement they must “There’s some worrying moves by the
price of just $2. enter into to be granted a full permit. Government that affects the confidence
of companies working in Queensland,
Stavely has acquired Ukalunda Pty “Quite frankly, with the agreement but I don’t think you can doubt the pro-
Ltd, owner of the Ravenswood West that’s in front of us, I think the terms spectivity of the place.”
exploration permit application, covering are far too onerous and just ridiculous,”
241sq km and adjacent to the historical Cairns said. Regulatory grievances aside, Cairns is
Ravenswood mining district. not only excited about returning to one of
“The operating environment in his first projects but also reacquainting
Ukalunda was established by Stavely Queensland is a little bit more difficult himself with gold during a time when the
managing director Chris Cairns and fel- than it is in Western Australia and I think precious metal is a hot commodity.
low director Peter Ironside in 2007 for the
specific purpose of opportunistically ap- Cairns, Ironside and fellow Stavely di-
plying for exploration permits in Queens- rectors Bill Plyley and Jennifer Murphy
land’s north. were at the helm of WA gold producer
Integra Mining when it was sold to neigh-
Cairns also worked on the project as bour Silver Lake Resources Ltd for $426
a budding geologist for BHP Minerals in million in 2012.
1993 and was surprised to find very little
exploration work has been carried out on “You can’t deny that at the moment the
the ground since. market has an appetite for gold stories,”
Cairns said.
“I think the area is particularly fertile
because it’s right next to a 4 moz gold- “Obviously the gold producers have
field in Ravenswood, but it just hasn’t had done very well and I think that will trickle
any real modern exploration done on it,” down into the mid-tier and then, hope-
Cairns told Paydirt. fully, eventually down into the explorers.

“We’ll be looking for deeper targets “A number of the deposits up there are
that might have a bit more of a gold fla- worth having a look at…certainly it’s that
vour, as well as there are results indicat- intrusive-related style of gold mineralisa-
ing very strong anomalism in rare earths tion which can have some scale.”
that were never followed up, so I find that
particularly intriguing.” Stavely hopes to sneak in one more
drilling programme at the Ararat project
Ravenswood West hosts four
known porphyry copper-molybde- in Victoria before the wet season ar-
num-gold prospects – The Bank, rives in May, with the intention of fol-
Keane’s, Barrabas and Turkey Gully lowing up on some encouraging re-
– but none have been drilled since the sults from the most recent campaign.
early 1970s.
Diamond drilling at the Forgan’s
Surface rock chips of up to 49% Find prospect returned narrow inter-
copper, 0.24 g/t gold, 0.2% molybde- vals of massive-to-stringer sulphide
num and 1,793 g/t silver have been zinc and copper mineralisation, in-
returned from these prospects. cluding hits of 0.2m @ 1.77% zinc
and 0.12% copper, 0.25m @ 0.57%
A nearby prospect named Po- zinc and 0.13% copper and 0.25m @
dosky’s has recorded high-grade gold 0.41% zinc.
mineralisation, including promising
intercepts of 6m @ 16.7 g/t gold from “We’re doing some regional soil
14m, 6m @ 13.38 g/t from 26m and sampling at the moment, hoping to
5m @ 12.06 g/t from 29m. Podosky’s find a couple more prospects for
is excised from the exploration permit VMS,” Cairns said. “That’s starting to
application and is held by Kitchener look promising as well.”
Mining NL.
Stavely has about $2 million of cash
Stavely plans to split its time be- reserves, plus an application with the
tween its two Victorian copper-gold Victorian Government for another $2
projects and its new Queensland as- million of co-funded exploration, en-
set, with Cairns expecting his team to suring the company is funded to com-
be based on the Sunshine Coast be- plete its initial 2016 programmes.
tween May and September.
– Michael Washbourne
Exactly when Stavely will be able to
start exploring Ravenswood West is Stavely hopes to soon explore the Ravenswood
unclear, given the tenement remains West project in north Queensland
in application and the company is un-



Metal Banks on Queensland

The Australian dollar gold The Triumph project cov-
price has compelled
Metal Bank Ltd to pay more ers 356sq km and its poten-
attention to its assets in
Queensland. tial has been recognised in

Late last year, the com- the past, with the Queens-
pany rounded off exploration
activities at the Mason Val- land Government putting
ley copper project, Nevada,
USA, where the Copper Hill forward funding for drilling.
and Bluestone prospects
were drilled. A total of 16 holes have

Best mineralisation at been completed at Triumph,
Copper Hill included 3m
@ 1.2% copper, 88 g/t sil- with an intersection of 9m
ver, 1% lead and 5.5% zinc
from surface, while the only @ 3.6 g/t gold, including 1m
hole drilled in the last pro-
gramme intersected narrow, @ 21.8 g/t.
low-grade mineralisation at
Bluestone. Other results from the

The best result Metal Bank limited previous drilling in-
has reported from Bluestone
is 42m @ 1.5% copper. cludes 4m @ 10.5 g/t gold

Metal Bank executive di- from 31m, including 1m @
rector Tony Shreck told Pay-
dirt Mason Valley is under 20.8 g/t, 1m @ 16.6 g/t and
review, while the focus shifts
to capitalising on gold oppor- 3m @ 4.8 g/t.
tunities in Queensland.
“We have had some good
“When we were looking
at Nevada, Queensland did take a back intercepts at Bald Hill – 9m
seat but with the gold price [increasing],
Queensland will be more of a focus,” @ 3.6 g/t – which is one of
Shreck said.
the targets tested with mod-
Metal Bank’s primary targets will be
the Triumph, Eidsvold and Mt McKenzie ern exploration. Because
gold projects in the New England Fold
belt of central Queensland. most of it is undercover, it

The area of Queensland where Metal has not been looked at. The
Bank is focused has produced over 30
moz gold and hosts the likes of Evolu- cover we’re talking about
tion Mining Ltd’s Cracow (3 moz) and Mt
Rawdon (2 moz) mines plus Mt Morgan is less than 10m,” Shreck
(8 moz gold and 400,000t copper) and
Gympie (5 moz). said.

At Triumph, Metal Bank is looking to Shreck is excited by the
capitalise on a “typical brownfields” op-
portunity, particularly in an Australian potential Triumph offers be-

Metal Bank will focus on the Triumph gold project cause of the limited follow-

up drilling and while cash is

gold price environment warranting in- a concern, Metal Bank remains commit-

vestment. ted to going alone at the project for now.

“For us we believe the region is still un- He said toll treating ore would be one

derexplored. We are not grassroots ex- of the easier options for the company to

plorers, mainly because it is hard to get get into production at Triumph and while

any interest out there, and with our board that is a little way off, there are other op-

which includes Inés Scotland [former portunities for the company to consider.

managing director of Ivanhoe Australia Eidsvold, south of Triumph, is one pro-

and Citadel Resource Group Ltd] we are ject on the company’s radar, having pro-

more into the brownfields stuff around duced 100,000oz gold in the early 1900s.

the headframe,” Shreck said. “The cover is a little bit deeper at Eids-

And right now the company feels it is vold and was explored by Newcrest [Min-

getting value for money at Triumph. ing Ltd] in the past. Airborne geophys-

It was initially thought Triumph was a ics are commanded there, but probably

1sq km goldfield but exploration carried won’t be done this year,” Shreck said.

out in 2010 confirmed Metal Bank was “Best bang for buck at the moment

amongst a golden patch spanning 15sq seems to be offered mostly at Triumph

km. for us at the moment. However, Mt Mc-

Kenzie [north of Triumph] can add a lot of

value for very little money spent. We can

walk up to the project and start sampling

before mid-year and it will be the first bit

of modern gold exploration done there.”

– Mark Andrews

Modern exploration at Bald Hill has returned an intercept of
9m @ 3.6 g/t gold, including 1m @ 21.8 g/t


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