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Published by Paydirt Media, 2017-07-25 23:37:10

October16 Australia's Paydirt

October 2016 Volume 1. Issue 243 $11.95
paydirt
front and back cover supplied seperately
Comet streaks
into nickel
Plus:
Africa Down Under review.... The gaps in trust, infrastructure and the market Australian Nickel Conference preview... Preparing for the de cit Independence... Creasy, Bennett and Bradford on the future of Nova
ISSN 1445-3436 09 9 771445 343007




PAYDIRT (ISSN 1445-3436)
Published by
contents
5 NEWS
Pilbara Minerals released its highly anticipated DFS on the Pilgangoora lithium-tantalum project in late September. The company is con dent the robustness of the study will attract the neces- sary funding for the project, to be commissioned late next year. While Pilbara switches attention to nancing Pilgangoora, an issue surrounding off-take is playing out in the background. Mark Andrews reports
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Editorial:
Editor: Dominic Piper
Deputy editor: Mark Andrews Journalist: Michael Washbourne Graphics: Marian Noonan Contributors:
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14 5 Hugh Morgan returns to the mining spotlight
with his private company Comet Minerals and its unique nickel discovery in Nigeria. Morgan and company consultant UWA Professor Louisa Lawrance were on hand at Africa Down Under to explain the new style of native nickel deposit believed to have been discovered
18
24 AFRICA DOWN UNDER
The 14th Africa Down Under conference was once again the platform for Australia and Africa to enhance relationships in the mining sector. Despite commodity prices remaining volatile and some mining companies still doing it tough, there was a sense of optimism and enthusiasm for the sector from the delegates who attended this year’s conference
74
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Conferences: Melita Fogarty,
Kale Nakazwe, Christine Oelschlaeger
Cover image: Comet Minerals direc- tor Hugh Morgan presented the Titan nickel discovery to the public for the rst time at Africa Down Under
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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 parties
INDEPENDENCE
Ahead of rst nickel production from Nova- Bollinger later this year, Independence Group hosted a group of analysts and investors on a site tour of the operation in Western Australia’s Fraser Range. While Independence is in control of the asset, Mark Creasy and Mark Bennett were key players behind the discovery. Mark Andrews spoke to the pair and Independence’s Peter Bradford about Nova-Bollinger and its future
Australia-Africa Minerals & Energy Group
CLiCk here to downLoad 2017 ConferenCe BroChure for Mining indaBa
74
COVER
NICKEL PREVIEW
Few miners do it tougher than those in the nick- el sector. However, with the Philippines – the major exporter of nickel ore to China – closing down mines deemed harmful to the environ- ment, the nickel price has received a bump and instilled some con dence back into the sector. As always, Paydirt provides a preview to the stories to be featured at this year’s Australian Nickel Conference at the Pan Paci c Perth on October 20
24


The word trust pervades through much of this issue and it is a pertinent one for all mining companies, particularly at a time when the in-
dustry is in recovery mode.
In this period of edgling rebounds, it is
vital resources companies win the trust of their shareholders and other inves- tors. It has been widely accepted that the world’s biggest miners didn’t make the most of the opportunity af- forded to them by the commodities boom and after three years of mas- sive write-downs, investors are beginning to query whether they
have the wherewithal to get it right next time around.
PwC Australia-Africa practice leader Ben Gargett spoke on the point during the closing panel session at last month’s Africa
Down Under (pages 30-31).
“The sector really blew up that trust by doing deals at the top
been announced by a junior explorer with a management team lacking the reputation Morgan has built over his long, distin- guished career.
Trust is also at the heart of our other major feature, the pre- view to this month’s Australian Nickel Conference (October 20, Pan Paci c Perth). Nickel company shareholders have had to be loyal over the last ve years and as evidenced by the interviews in the preview (from page 74), they have placed their trust in their company’s declarations that the nickel market will turn sooner rather than later (or ever).
In fact, shareholders of all resources companies with interests in commodities other than gold and lithium are forced to show trust at the moment. It has been a long, painful descent to the bottom of the commodities cycle but it appeared by the end of August that we were through the worst of it. The market has since suffered a few bumps and now investors’ trust that the worst of the cycle is behind us is beginning to be tested.
But the notion of trust extends far beyond the stock exchange. African Natural Resources Centre director Sheila Khama, one of Africa’s most respected mining experts, made the point at
Trust in me
of the market and then obviously h“aving the asset write-downs, subsequently, what we are hearing from investors is that they are looking at two things;
Africa Down Under that the trust gap between miners, governments and commu- nities was the biggest chal- lenge facing the industry on the continent.
“I also hear there is a lack of trust. The logical result is that governments can be- come defensive or unwill- ing to take your word for it,” Khama said (see page 28). “If you share... information with the African continent
asset quality and manage- I am not placing doubt on Titan “Those management teams
ment teams,” Gargett said. but it is intriguing to think what really have to earn the trust
of the investors and the the industry and media would make of
money will come.”
Nowhere is the trust be-
the discovery if it had been announced
tween shareholder and by a junior explorer with a management
management more frag- ile than in the gold sector which made a hash last time around of the strongest gold bull market in history.
team lacking the reputation Morgan has built over his long, distinguished career.
Once the gold price tailed off, companies quickly lost the trust of shareholders who recognised companies had been buying ounces to grow rather than be pro table, eroding what should’ve been a high return on investment.
I have spoken previously about the tendency of investors, in ckle markets, to place their trust not in the commodity price or the geology but in the people behind the project.
This trend is highly evident in the current market. Jake Klein has turned Evolution Mining Ltd into one of Australia’s largest gold miners by generating trust and loyalty among rst inves- tors and now bankers who have been willing to back his latest move; the acquisition of a 30% stake in Glencore’s Ernest Henry copper-gold mine in Queensland.
Rohan Williams (Dacian Gold Ltd) and Julian Hanna (MOD Resources Ltd) have generated strong support for their explora- tion companies because they have a proven track record and the trust and support of shareholders.
Our cover story is also in some ways about trusting the man- agement behind it. Comet Minerals is a privately-held company which has made a highly unusual nd in a country which is not only off the mineral exploration map but is also far from the top of ease-of-doing-business surveys. Would investors and the media “trust” the veracity of the Titan discovery and its “nickel balls” if someone other than the esteemed Hugh Morgan was in charge?
I am not placing doubt on Titan but it is intriguing to think what the industry and media would make of the discovery if it had
you will narrow the knowledge gap and with that the trust will improve.”
It is a vital issue for companies operating in Africa. A genera- tion ago companies may have gotten away with telling investors one thing, governments another and communities something else again. The digital age means what an executive says in New York or Sydney about high margins and multimillion dollar pro ts will undoubtedly reach the halls of government in Abjua, Accra or Windhoek and the ministers will understandably begin asking where their share is, as will communities.
The trust gap between company and government also works in the other direction, as Bannerman Resources Ltd managing director Brandon Munro pointed out during the closing panel.
“The dif culty is when someone hears a sound bite [about eq- uitable economic reform] and they associate it with BEE-type structures like in South Africa, it does have some negative rami- cations,” Munro said. “Part of our job is to help government understand that they are starting to undermine trust if it isn’t con- sulted in a fairly sensitive way,”
Trust is at the heart of the resources sector at the moment, let’s hope it continues to build.
[email protected]
@DominicPiper
PAGE 4 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Real deal lithium project for Pilbara
It is rare that a company pro- duces a DFS on a project and can feel completely con dent
of attracting the necessary - nance to build it.
Many companies produce supposedly robust studies and shop the story around to nan- ciers, only to nd internal en- thusiasm for the project is not reciprocated by outsiders.
Even now as the ice starts to thaw from investors’ pockets after one of the coldest winters experienced in the mining sec- tor, there will be few compa- nies con dent that the project they are putting in front of in- vestors will demand nancing.
Pilbara Minerals Ltd is an ex- ception to the rule.
“We haven’t made any de- cisions yet with respect to - nancing, we are leaving all op- tions on the table and we will continue to work on all of those options. With such a strong project under our belt we are not expecting the nancing itself to be overly complex or particularly dif cult,” Pilbara managing director Ken Brin- sden said.
Brinsden’s con dence is partly fuelled by the fact that Pilbara nds itself in one of the few sweet spots of the com- modities market; lithium.
But, unlike peers who have
only recently clambered after
lithium ground on the back of increasing demand for lithium-ion batteries, Pilbara has led all comers in the race to be a supplier of the raw material and expects to feed the market its 6% spodumene concentrate by the end of next year.
That is, of course, subject to nancing the $214 million Pilgangoora project. The capital outlay will deliver Pilbara a 2 mtpa operation at Pilgangoora, designed to produce 314,000 tpa @ 6% spodumene concentrate (44,000 tpa lithium carbon- ate equivalent (LCE)) and 321,000 lbpa tantalite.
NPV for the project was slated at $709 million in the DFS. Life-of-mine revenues of $9.2 billion and after-tax cash ows of
Pilbara’s Pilgangoora lithium-tantalum project is 120km south of Port Hedland
“We have issued our nal say on notice of right to rst refusal for which we have spent a lot of time ensuring that there is as good a sales model possible under the agreement,” Brinsden said.
“Our expectation is that there is a rock-solid sale no- tice and in essence as good a purpose as it is intended to be. Having said that it seems likely we will continue to see some further challenge from MinRes in respect to that.”
If the parties cannot re- solve this matter satisfacto- rily, Pilbara intends to refer the question of the validity of the sale notice to dispute resolution.
Brinsden said the spo- dumene price was derived off the combined effect of Chinese domestic pricing and import pricing. At the time of print, the spot price for spodumene was about $US650/t CFR.
“You require both price decks – battery-grade, lith- ium carbonate decks and a spodumene deck – for those tonnes that are not subject to those off-take agreements,” Brinsden said.
“All that leads to a healthy pricing outcome and in par- ticular for those tonnes which are priced against the Gen-
$2.6 billion have been estimated based on an average life-of-mine spodumene price of $US537/t CFR.
The DFS used a consensus model on battery-grade lithium and spodumene – developed from several independent forecasters – which allowed Pilbara to gauge the average life-of-mine price.
Both consensus models were in- line with the General Lithium off-take (140,000 tpa for an initial six years), which is yet to be executed. Mineral Re- sources Ltd has until the end of the month to exercise its own pre-emptive right to purchase Pilbara’s lithium product on no less favourable terms than those offered to General Lithium.
eral Lithium off-take and a life-of-mine estimated price of $US537/t CFR.”
Brinsden doesn’t expect there to be an oversupply in the lithium market any time soon and is therefore con dent the company’s pricing consensus is on the conservative side.
Having released the DFS, Pilbara will now need to forge ahead with converting MoUs for off-take into formal agreements for both the spodumene and tantalite product.
With the tantalite industry somewhat hamstrung by having to rely on supply from Central Africa, Brinsden said supply from the western world would be keenly sought after.
NEWS
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 5


NEWS
Using Roskill, the leading eco- nomic forecaster for the tantalite industry, it is estimated that tan- talite prices will range between $US65/lb-80/lb over the next ve to seven years.
“That relates to a 30% [tanta- lite] concentrate which is what we have proposed to sell from the Pil- gangoora project,” Brinsden said.
Tantalite recoveries – 45% in the PFS to 53-59% depending on the section of the orebody mined – was a major boon of the DFS and the bene t of the improved tantalite credits will be seen in the cost base of the spodumene.
Better spodumene and tanta- lite recoveries were one highlight, while the growing reserve and overall size of the project were other wins from the study.
Continued growth in the pro-
ject – bigger tailings dams, larger cleared areas for waste dumps, pit locations and the like – resulted in
a modest capital cost increase as- sumed in the PFS, $184 million, to
$214 million in the DFS. Payback is ex- pected to take 2.7 years.
“We have also had a change in pro-
on a 2 mtpa base case scenario, Pilbara has also contemplated the merit of doubling capacity to 4mtpainaPFS.
In terms of building resources and reserves, Pilbara has only “scratched the surface” at Pil- gangoora and is therefore not concerned about proving up sup- ply.
By opting for a larger project further economies-of-scale will be delivered, with the life-of- mine concentrate cost base in the range of $US180/t CFR (after tantalite credits), NPV of $1.165 billion and EBITDA of $245 mil- lion.
Taking the project from 2 mtpa to 4 mtpa will mean an incremen- tal capital cost $128 million for production of 564,000 tpa at 6% spodumene inclusive of techni- cal grade product (75,000 tpa LCE) and 579,000 lbspa tanta- lite.
“I would expect quite possibly that it will be the lowest cost hard rock operation globally at that point in
time,” Brinsden said.
“Ultimately, it is a natural t for the Pil-
gangoora site, but it is going to be sub- ject to more work. We are going to do more feasibility work and we will continue to assess market conditions and techni- cal conversion capacity, whether within or outside China, to continue to facilitate the mine expansion.
“That is a theme we expect to continue to unfold. Our consensus is that there is substantial conversion capacity going on both in China today and over the course of the next four or ve years. We think Pilgangoora is a natural source of the raw material supply,” he said.
For the time being, Pilbara is working towards locking down critical elements, including Native Title agreements, statu- tory mine approvals plus major construc- tion and operating contracts.
At the time of print, three ECI groups had been selected to provide xed price contracts for works at Pilgangoora.
Pilbara expects to start construction of the 2 mtpa Pilgangoora project by the end of the year.
“Financing [Pilgangoora] is where we will start to take our efforts in the com- ing weeks and months, so that we can set the project for execution or the bulk execution during 2017, again with a view to commissioning in late 2017,” Brinsden said.
– Mark Andrews
cess ow having moved from three-stage heavy media separation to two-stage heavy media separation,” Brinsden said.
“That is to simplify the plant, however, it does send more material down- stream in the plant and that means bigger mills, bigger otation tanks and the bene t is the im- proved recoveries both in lithium and it is also true from a tantalite point of view.”
With the bene t of lower strip ratios and higher grades in the rst ve years, EBITDA of $136 million is expected compared with life- of-mine projections of $121 million per annum.
The DFS was based on a mine life of 36 years assum- ing operating costs of $US207/t CFR, with operating costs for the rst 15 years estimated to be $US196/t CFR.
While the DFS numbers are based
Ken Brinsden
PAGE 6
OCTOBER 2016 AUSTRALIA’S PAYDIRT


BUSH TELEGRAPH
ARM ready to cast away Lubambe
Some six years after African Rain- bow Minerals Ltd (ARM) jumped into the Zambian copper mining sec-
tor – through a JV set up with Brazil- ian resource giant Vale SA to develop the Lubambe copper mine – the part- ners want out although getting ARM chairman Patrice Motsepe to con rm the details at the group’s recent an- nual results presentation was akin to pulling teeth.
Motsepe also seemed to be “in de- nial” over the price he expected to get for Lubambe pointing out that ARM/ Vale had pumped more than $US400 million into Lubambe, and saying “if we get the right price, we will sell it”.
But the partners seem likely to re- alise a fraction of the sunk cost at Lubambe given the current state of the copper market and the other de- velopments – such as dealing with the erratic demands of the Zambian Government and the need for greatly increased pumping facilities to pre- vent the mine workings from ooding – that have brought ARM/Vale to the stage where they now want out.
ARM took a R1.4 billion write down against its investment in Lubambe in its latest nancial results.
African Rainbow Minerals and JV partner Vale are pre- paring to divest the Lubambe copper mine in Zambia
greater water ingress as neighbour- ing copper mines in the Democratic Republic of Congo shut down and stopped pumping water out of their workings.
The extra water owed through to Lubambe – already known as a “wet” mine – and the JV partners had to pump out considerable volumes of water to be able to conduct normal operations.
According to Schmidt, Lubambe was set up to deal with pumping around 2 million litres of water a day. It’s currently pumping out 8-10 million and has beefed up its installed pump- ing capacity to be able to handle up to 20 million litres a day.
A year ago Schmidt commented: “There’s no reason to believe we will not turn the situation around but this will take a year and currently it’s a bleed situation. We are burning work- ing capital.”
ARM’s stated objective is to have all its operations below the 50th per- centile on the industry cost curve and Schmidt put up a graph showing that Lubambe sits around the 98th per- centile.
Quizzed on what he expected to get for Lubambe, Motsepe replied: “It’s very simple. The price we want is the best price. We have invested in that mine for the future. We have spent a huge amount of money on it... more than R5 billion... so, we will let you know how the whole process unfolds.”
The fact that both partners want out only became apparent after Motsepe was grilled at question time because the initial impression given from his pres- entation was that it was just ARM that was looking to sell off its 40% stake in Lubambe. Vale also holds 40% with the Zambian Government retaining the bal- ance of 20%.
Lubambe was previously known as the Konkola North mine and, back in 2010 when ARM announced the project, was estimated to have a mine life of 28 years during which it would produce 45,000 tpa copper.
Lubambe was hit by the global down- turn in the commodities markets but the real damage appears to have been done
during the past two years during which, as ARM chief executive Mike Schmidt told investors: “The copper price fell fast- er than we could cut costs. We dropped unit operating costs by 28% but the cop- per price fell 30%”.
First inkling of trouble came a year ago when Motsepe sounded off about the 20% royalty the Zambian Government was proposing to slap on the mining in- dustry as part of a new tax regime.
That, it turns out, was just the start of government interference because ARM subsequently came under serious politi- cal pressure to grant hefty pay rises to its workers ahead of general elections to be held in the country as well as to hold back on the announcement of proposed restructuring at the mine until after the elections so as not to upset voters.
Then there were mining issues to be dealt with. A year ago, Schmidt blamed production problems on “bad ground conditions and the undulating, variable reef width and reef dips which has re- sulted in grade dilution”.
But worse was to come in the form of
So, it’s now clear that commitment is gone although, like I said, it required a process akin to pulling teeth to get Mot- sepe to nally spit it out.
Motsepe commented: “Both parties are looking at what is in the best interests of both parties. At the right time, we will make the right announcement in terms of what is in our best interests.
“This (Lubambe) was a very good op- portunity and we and Vale have spent a total of more than $US400 million which is a huge amount of money. There’s a very exciting opportunity in the extension area which we think is world-class.
“But over the last three years we have had to look at that speci c asset. We will be in copper – there’s no doubt about it – and there are some exciting opportuni- ties in copper which we are looking at.
“The decision we have taken is that this [Lubambe] is an asset may be better utilised in the hands of a third party. End of story.”
Finally!
Brendan Ryan is a Johannesburg-based mining writer
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 7


GOODE NEWS
Woods Point: More Valhalla than Walhalla
When I announced ERA’s next re- port was to be on Morning Star at Woods Point, a broker remarked to me: “Oh no, not Walhalla, if you are talking about Walhalla then the gold market has to have peaked, no one has made money out of Victoria for many years”.
Yes, the gold market was at a peak, but not necessarily for that reason.
It is true though, whether it is east (Woods Point to Walhalla) or west Vic- toria (Ballarat and Bendigo) many gold companies have failed to make a pro t in Victoria, and fallen by the wayside. In east Victoria, A1 Consolidated Gold Ltd (at Gaffneys) almost went into receiver- ship but is surviving due to a change in direction; Goldstar Resources which be- came Orion Gold NL has, after 13 years, nally abandoned its Cohens mine at Walhalla and the Eureka and Tubal Cain dyke bulges in a sale to A1, as part of a strategy of heading into copper at Pries- ka in South Africa.
More recently, Mantle Mining Ltd is in the process of acquiring the Morning Star gold mine and tenement package at
Woods Point, after Morning Star opened and closed within months in 2011, on the 150-year anniversary of Woods Point. Morning Star Gold Ltd targeted where it thought there was an unmined visible gold-in-quartz ore block at the mine, but decided not to delineate it by drilling and instead developed for it and then found it was not there. It had built its Gecko plant which was eventually closed after treat- ing around 3,000t of ore.
The Woods Point to Walhalla gold elds consists of a north-west/south-east strik- ing dyke swarm (of possibly more than 100 dykes), in which some of the dykes have bulged out along their length (hence dyke bulges). These dykes were injected with a stacked sequence of mostly visible gold-in-quartz veins in which (at Morning Star) the higher grade mineralisation ap- pears to often be at the up-dip side on the vein boundary where it passes out of the dyke into the surrounding sediments, as shown in the image, or throughout the dyke such as the Victory lode at A1.
The representation of the lodes/veins in the dykes has become signi cantly
easier in recent years through the appli- cation of Leapfrog’s 3D software pack- age which was not in use in 2011.
So, how did the 2011 Morning Star op- erators get it wrong? Well, they appeared to have ignored the historical records and focused on the down-dip side of the vein entering the sediments from the dyke boundary, and on the notoriously often weakly mineralised eastern side of its dyke bulge – as detailed in WMC’s GMA (Gold Mines of Australia) records up to its 1963 closure.
While that target did not work, the trial mining of the dyke access in the roof of the adit leading to the Rose of Den- mark (ROD)’s dyke bulge surprisingly averaged an unexpected 8 g/t when pro- cessed. And that ROD ore resembles a ladder vein system across the narrow dyke as shown in the image. In fact, the ROD was mostly mined and stoped out- side of its dyke bulge over its 62-year his- tory from 1864 to 1926, producing almost 40,000oz at 13.7 g/t.
A1 is mining a breccia block on the edge of its dyke bulge as also shown in
The Morning Star dyke bulge in 3D Leapfrog together with views from underground
PAGE 8 OCTOBER 2016 AUSTRALIA’S PAYDIRT


the image, and expected to realise about 10-11 g/t. The delineated 30,000t block of breccia at the A1 mine is expected to be mined and treated at A1’s 150,000 tpa plant at Maldon over six to eight months and realise about 10,000oz, inferring that A1 could be capable of producing 20,000 ozpa to 30,000 ozpa or more – a far cry from receivership.
The Morning Star dyke bulge also con- tains a number of breccia intersections that had previously not been considered, especially in the “gap” areas between its major lodes. Some of the breccias have different coloured clasts and sometimes the quartz is laminated (grey) which was usually a preferred target.
Despite mining of dyke bulges occur- ring for more than 150 years, it comes as a surprise that no one appears to have de ned why the bulges occur along a dyke and whether there are undiscov- ered ones, let alone what is thought to be the main feeder for the gold mineralisa- tion. As a general observation, most of the bulges appear to be under a hill. The A1 dyke bulge also has bits on its sides that do link to the main bulge, and an off- set extension that is not in the line of the main dyke.
It very quickly becomes clear that sim- ply focusing on visible gold-in-quartz lodes within known dyke bulges appears to have overlooked a number of styles of mineralisation that have simply not been considered economic.
After 13 years, Orion Gold has abandoned its Cohens mine at Walhalla and the Eureka and Tubal Cain dyke bulges in a sale to A1, as part of a strategy of heading into copper at Prieska in South Africa
torical remark at how poor the grade was at 0.5 oz/t (16 g/t), and hence a mine closed.
Inc’s discovery at depth at another Victorian mine, Fosterville referred to in the September edition of Paydirt.
So, aside from visible gold-
in-quartz in dyke bulges,
what else is there that does
not appear to have been looked at or considered?
Well, there are the mutton fat grade ores. Mutton fat refers to blobby white fat, and when applied to describe quartz, it referred to the degenerated or oxidised quartz often adjacent to or before a vein and was usually ignored because its grade was too low at 3-10 g/t.
through some historical records such as the book, Gold at Gaffney’s Creek shows more than one reference to mining gold- in-quartz in sandstone which has clearly become forgotten.
And there is the north-east/south-west open cut clearly showing that something was being materially mined in a north- east/south-west direction, compared to
outlook, as has been seen in Newmarket Gold Inc’s discovery at depth at another Victorian mine, Fosterville referred to in the September edition of Paydirt.
Keith Goode is managing director of Ea- gle Research Advisory Pty Ltd
Then there are the dykes themselves outside of the bulges, and whether ad- jacent dykes in the swarm have been considered. There are also references to cross-cuts to parallel dykes, but there seems to have been little lateral/horizon- tal drilling checking for such structures.
Plus, there is the sandstone. On a re- cent visit with Mantle Mining to the Hunts mining area (south of Gaffney’s) we no- ticed an old shaft that seemed to have been mining sandstone, not dyke materi- al. This was an extension of a north-east/ south-west open cut that had north-west/ south-east striking quartz veins often cutting across or between sediments such as sandstone. And, underground at Morning Star in the old workings some
stone (or veins in the sandstone). A trawl
the main north-west/south-east strik- ing dyke swarm. Further north, there is the old three compartment north-east/ south-west striking Dempsey shaft that was sunk in the creek because the vis- ible gold-in-quartz lode was exposed in the creek (which is more of a fast owing river). That is about it as far as the north- east/south-west direction has been con- sidered, other than east/west striking quartz lodes that can be seen in the A1 gold mine.
There also appears to be a number of overlooked structures with valleys possi- bly linking with dyke; Google Earth was non-existent, let alone freely available many years ago and hence possible ex- tensions to the dykes would probably not have been considered.
Clearly, despite its 150-year history, many potentially economic aspects of gold mineralisa-
When the mines in the area closed, it
was often due to encountering water at
creek level, or the time to mine an adit.
The main creek adit at ROD, for e“xam- of the stopes were clearly mining sand-
ple, took almost 10 years over 1880 to 1890 to be developed, and by
more than one company or
syndicate. Also, in the early
1900s mines closed because
they were uneconomic – the
breakeven grade at Morning very misleading. Sometimes, all actually be revived and not
Tarring Woods Point as
Walhalla could prove to be tion do not appear to have
that is needed is a fresh outlook, as
Star was 18 g/t, and at A1 it be reliant solely on the dyke
was even higher at 22 g/t. bulges, while a better under-
There is more than one his- has been seen in Newmarket Gold
standing of controls on the mineralisation in the bulges themselves may also be suc- cessful.
Tarring Woods Point as Walhalla could prove to be very misleading. Sometimes, all that is needed is a fresh
been contemplated in the
Woods Point area, so it could
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 9


NEWS
Ausdrill the chosen one in Africa
Araft of activity in Africa helped Aus- drill Ltd post a pro t of $20 million in FY2016.
Contract renewals awarded by Anglo- Gold Ashanti Ltd and Nordgold helped increase revenues in US dollar terms, while new drill and blast works at New- crest Mining Ltd’s gold-copper Telfer pro- ject in Western Australia and further con- tract extensions at Rocky’s Reward (WA) and Ensham Resources in the Bowen Basin, Queensland, ensured company revenues were stabilised at $743.9 mil- lion during the period.
The sales revenue performance was 3.3% better than FY2015 results with that year’s after-tax loss of $160.3 million be- ing followed by a strong rebound, with a pro t of $20.2 million in FY2016.
Improvements across all divisions were reported, with about 84% of mining services revenues generated from gold- focused companies.
Record Australian dollar gold prices have certainly helped Ausdrill, which had net debt of $216.7 million outstanding to June 30.
“In the last month or so we have ac- tually touched on what the record was around about $1,800/oz. As I have often said, at $1,800/oz there should be traf c lights in the bush to direct the drill rigs to where the drill holes are,” Ausdrill man- aging director Ron Sayers told Paydirt upon the release of the company’s 2016 nancials.
Northern Star Resources Ltd, Evolu- tion Mining Ltd and Gold Fields Ltd, in addition to servicing Tropicana and the Super Pit for KCGM where it has been the in-house drill and blast contractor of choice for the last 27 years, represent
Ausdrill posted a pro t of $20 million in FY2016
PAGE 10 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Ron Sayers
some of the heavy hitting gold contracts Ausdrill has.
Meanwhile, Ausdrill also performs a variety of services for BHP Billiton Ltd in the Pilbara, Oz Minerals Ltd in South Australia and Peabody Energy in New South Wales’ Hunter Valley region.
While the company’s Australian book reads like a who’s who of mining, it is Af- rica where near-term growth opportuni- ties are anticipated to come from.
In what is still a challenging time for all participants in the mining sector, through its African divisions – African Under- ground Mining Services (a 50% JV with Barminco) and wholly owned subsidiary African Mining Services (AMS) – Ausdrill has managed to win signi cant scales of work and have contracts extended in Af- rica during the period.
Perseus Mining Ltd recently awarded a $US120 million, two-year contract to AMS to provide surface mining services at the Edikan gold mine, Ghana, while AUMS started a 31-month contract for AngloGold to provide underground min- ing services at the Star and Comet pits at Geita, Tanzania.
Elsewhere in East Africa, a major coup for AMS was being selected as the pre- ferred contractor for mine establishment and operation at Ke Minerals plc’s Tulu Kapi gold project in Ethiopia.
The Ethiopian Government has thrown its support behind Tulu Kapi by increas- ing its stake in the project to 25%, with Ke aiming to have production from the mine starting late in 2017.
The project is slated to produce at a rate of 100,000 ozpa gold over 10 years. Ausdrill has raised its pro le in East
Africa with greater exposure in the re- gion, and it is no secret that it is thriving in West Africa and will continue to do so, Sayers said.
“In Africa, we are an earthmoving con- tractor in our own right and we win more than our share of work in the African re- gion based on our experience and the ability to get the job done,” he said.
“We have been operating [in Africa] for 26 years. The West Africa region is a greenstone belt, very similar to the green- stone belt from Norseman to Meekathar- ra, for instance, and in that West African region there are a lot of gold plays.”
One up-and-coming producer in the region is Toro Gold Ltd, which is on track to start mining at the Mako project in Senegal in January.
AMS will carry out open pit mining ser- vices for Toro for a period of 75 months.
Revenue generated for Ausdrill will be in the order of $US300 million, with 90% of the 350 people employed at Mako to be sourced locally.
The gold sector is certainly a lively space at the moment and with Ausdrill heavily leveraged to the precious metal it is targeting about $800 million in revenue and a pro t uplift of 50% in FY2017.
This nancial year Ausdrill is without the burden of non-core assets weighing it down, with the likes of Drilling Tools Australia (DTA) and DT HiLoad sold for $66 million and $3.2 million, respectively,


in FY2016.
The sale of DTA was particu-
larly favourable for the compa- ny, with a pro t of $36.3 million made.
“When they [non-core as- sets] were purchased and rst developed they created very good margins,” Sayers said.
“When people were buying
lots of trucks, the truck body
building business [DT HiLoad]
was generating 20% margin,
which is not available in con-
tracting; the competition and
also clients they aren’t too comfortable with people mak-
ing too much margin on con-
tracting jobs. However, in the manufacturing industry a 20% margin is normal, the problem is when the sales come off as they did when the market slowed down, it made it a tough industry to be in. The drill consumable manufac- turing business, DTA, while still pro table had also come off.”
No doubt Ausdrill is in a happier place right now, however, Sayers knows there are still headwinds to overcome in the mining sector.
He said there was a minor uplift in ex- ploration activity in Australia, but the lack of new projects coming on stream meant competition in the mining services sector would continue to be tough.
With this being the case, the idea of
Selling non-core assets has relieved some of the nancial pressure Ausdrill was under
terests.
Late last year the company
subscribed for $1 million worth of leading West African gold ex- plorer West African Resources Ltd shares, which was converted to $2.5 million when it cashed-in earlier this year.
“We have taken to engaging with some of the smaller compa- nies and engaging in equity deals where we can take a position in a company and get paid in cash or alternatively get paid in equity which has worked reasonably well for us to date,” Sayers said.
“At the end of the day we have a discipline that goes with it, we have an amount of money that
drilling for equity in mining companies as another means of growth and opportu- nity would continue to be pursued by the company, Sayers said.
A recent example of deals Ausdrill is willing to entertain is the MoU struck with Primary Gold Ltd over the Mt Bundy gold project in the Northern Territory.
Essentially, the drilling for equity agree- ment will see Ausdrill conduct about 30,000m of drilling over brown elds and green elds areas at the 1.2 moz Mt Bun- dy project for a total of $3 million to be paid in Primary Gold shares.
Sayers said Ausdrill was in drilling for equity deals to achieve an end and would buy and sell stock to service its best in-
is agreed at board level that we can in- vest in this area. We don’t get the farm in anyway, in doing what we do we have a discipline with our client where as much as we are not long-term investors, we are there to achieve an end and we will sell the stock, we won’t dump it, but we will sell it and we will sell it to people of their choice. If they identify who they want the stock to go to, all things being equal we try our best to make that happen.”
At the time of print, Ausdrill was trad- ing at $1.54c/share compared with 23c/ share in September 2015.
– Mark Andrews
Ausdrill’s spread of work in Africa
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 11


NEWS
Evolution earnest about Henry
Evolution Mining Ltd’s latest cor- porate activity was a simple case of out with the old and in with
the new.
In the space of just eight days,
Evolution of oaded the Pajingo gold mine – one of its original as- sets – and effectively replaced the lost ounces by acquiring an eco- nomic interest in Glencore’s Er- nest Henry copper-gold operation, about 35km north-east of Cloncur- ry, Queensland.
Under the terms of the complex deal, Evolution will acquire 100% of future gold production and 30% of future copper and silver produc- tion from the existing life-of-mine area at Ernest Henry for an upfront fee of $880 million. The company must also contribute 30% of all fu- ture production costs.
Evolution has also agreed to pay 49% of development and production costs in return for the equivalent of 49% of future gold, copper and silver production from outside the life-of-mine area and within the existing mining tenements on the Er- nest Henry property.
Following the sale of Pajingo, Evolu- tion reduced its FY2017 production guid- ance to 745,000-800,000oz at an AISC of $970-1,030/oz, but the addition of Ernest Henry has seen the company lift that forecast to 800,000-860,000oz at an AISC of $900-960/oz.
Based on FY2016 production gures, Evolution’s interest from Ernest Henry would have yielded 88,342oz and re- duced the leading gold miner’s overall AISC by $59/oz.
Evolution rst approached Glencore about the status of Ernest Henry late last year – just months after nalising the transactions for the Mungari and Cowal gold operations – but was told by the Swiss-based multinational the asset was not for sale.
Negotiations continued into this year and eventually terms were agreed in Au- gust, shortly after Evolution con rmed the sale of Pajingo, also in Queensland, to Chinese-owned Minjar Gold Pty Ltd.
Evolution executive chairman Jake Klein described the deal as a “win-win” for both his company and Glencore.
“We would certainly say it ticks the box in terms of improving the quality of the portfolio because we’ve been able to construct a deal where we’ve maximised our exposure to the gold and Glencore
Jake Klein
to part with the asset as it strived to build on its position as Australia’s second largest gold producer.
“Pajingo played a role in our for- mation and development and it’s an appropriate time to put it in the hands of an operator where it will be a bigger part of their business,” Klein said.
“For us, from a mine life per- spective, it increases the average length of our mine lives, which is now just over eight years with both of these deals done.”
Evolution’s recent corporate activity was warmly received by investors, but it was the response from the analyst community which pleased Klein most.
“Prior to this deal, we had 10 analysts covering us – two had a buy rating, seven were neutral and
has maximised their exposure to cop- per,” Klein told Paydirt.
“We’ve got a 30% share of the copper as a by-product credit and that’s going to make for extraordinarily low-cost gold from our perspective.”
Ernest Henry was commissioned as an open-cut mine in 1997 and transi- tioned to a wholly underground operation in late 2011. Current reserves support a mine life of at least 11 years.
This is the rst time since Evolution was formed ve years ago that the com- pany has gained exposure to a commod- ity outside gold, but Klein denied that was a deliberate strategy. Copper from Ernest Henry will account for just 7% of the total production across the compa- ny’s portfolio of assets.
“We’re a gold miner, we’re not chang- ing that. We’re certainly not looking for more copper exposure at this stage,” Klein said.
“You need a perfect storm of circum- stances to create a deal that is effective and successful. In this case, Glencore are in a deleveraging phase and wanted to maximise their exposure to copper, while we wanted to maximise our lever- age to gold and the upside to the asset.
“It’s not dissimilar, in our view, to when we bought Cowal from Barrick [Gold Corp] last year. Barrick was a motivated seller of the asset and that is the circum- stance required to do a deal which allows us to add value.”
While Klein admitted he was sad to see Pajingo exit the Evolution portfolio, he said the time was right for his company
one said sell,” Klein said. “Post the deal, we’ve now got seven buys and three neu- trals.
“I’m always nervous when you do a big deal like this, whether it’s selling or buy- ing, but the analyst coverage has been very good.”
At the time of print, Evolution was seeking to raise about $400 million via a 2-for-15 underwritten pro-rate accel- erated renounceable entitlement offer to partly fund the acquisition of Ernest Henry. The balance of the $880 million payment will be funded by a new $500 million term facility with a ve-year tenor.
Evolution cleared $322 million of debt in FY2016 and Klein backed his team to do it all again.
“The repayment of $322 million of debt really allowed us to do this next transac- tion because when we went to our bank- ers and said we wanted to do this deal, there was a recognition that we had ex- ceeded expectations in repayments in the last 12 months and that was a big stepping stone for us to get this deal,” Klein said.
“That’s going to be the test of this deal. A deal is only successful if it delivers and meets or exceeds expectations. We’ll only be able to tell that in the next 12-24 months and whilst I’m con dent we will, I accept that will be the proof of it.”
– Michael Washbourne
PAGE 12 OCTOBER 2016 AUSTRALIA’S PAYDIRT


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COVER
Comet unveils great balls of nickel
Samples of the remarkable “nickel balls” which Comet Minerals has discovered at its Titan project in Nigeria. The company believes the geology of the native nickel deposit to be unique
Africa Down Under 2016 was the forum for Comet Minerals Ltd to un- veil its extraordinary nickel nd in Nigeria.
As a member of the Reserve Bank board and chief executive of WMC, Hugh Morgan always de- manded the spotlight however in 2016 it is the little known Comet Minerals and its remarkable dis- covery that has the mining veteran in the headlines once again.
Comet, a private concern for the time being, has taken the nickel sector by storm with an out of this world discovery in Nigeria’s central north.
“I’ve never seen anything like it,” Comet director Morgan told Pay- dirt.
“That is one of the problems – when I say problems I mean fasci- nations – this has turned out to be unique and that is why it has been quizzed and investigated in a man- ner that we usually wouldn’t. We haven’t exactly understood what we were doing, we didn’t know what we were doing; nobody did
Louisa Lawrance
because this is unique,”
The extraordinary nd Mor-
gan is referring to is the Titan nickel project between Nige- ria’s capital Abuja and the re- gional centre of Jos.
“It is not your traditional lat- eritic or sulphide derived re- source. So, with a great sense of incredulity did we engage in a great deal of effort to try and work out the genesis and we needed a fair bit of help quite frankly,” Morgan said.
“Professor [Lousia] Law- rance has spent almost two years seeking to try and come to a rational understanding of why it is a unique occurrence – and this is a unique occur- rence, it is not like anything else we are accustomed to seeing. The importance of it is currently underestimated, although it still has some distance to travel to con rm all the things that are going for it.”
Comet believes it has re- vealed a new style and poten- tial world-class native nickel deposit at Titan and hopes to also convince investors.
PAGE 14 OCTOBER 2016 AUSTRALIA’S PAYDIRT


What makes Titan so “unique, extraor- dinary and fascinating” is the balls of nickel metal identi ed. The nickel balls range from 0.1mm to 5mm in diameter and contain up to an estimated 3 weight percent nickel.
Indications from 6m deep pits dug at about 200m centres are that the nickel is hosted in a coarse grained micaceous felsic unit.
Depending on exposure and intensity of weathering born from a subtropical savannah climate with rainfall of about 1,200mm per annum, the balls are silver and gold becoming brown as weathering increases.
In some of the sections, Comet has identi ed balls containing 93 weight per- cent nickel and as much as 98 weight percent nickel.
With oxidation, the nickel is dissolved and replaced with iron oxide and it is in this process that the concentration of nickel decreases, according to Profes- sor Louisa Lawrance, from the School of Earth and Environment, The University of Western Australia.
“Usually with a ball that is starting to be oxidised like this, the percentage drops down to about 35 [weight percent nickel] and eventually the nickel will be lost out of iron oxide, so the end result of that process is just to have ferruginous balls,” Lawrance said.
“Of course, because weathering hap- pens from the near surface most of these balls, right at the near surface with this very tense weathering environment, eventually become depleted. These de- pleted balls, though, are an indicator that the subsurface pro le is mineralised. The pits done to date and the stream sediment samples; we have found balls in all of these environments.”
Visible in soil, the nickel balls can be scooped up, placed in a basin and panned.
The nickel balls are believed to be the closest thing to nickel metal as you can get, meaning there is an opportunity for Comet to bypass costly re ning process- es to recover nickel material.
The nickel balls could potentially be put into a container and sent straight to a stainless steel smelting facility.
“If you were separating out just the nickel balls and you are putting it into containers and shipping it off to a nickel smelter and tipping it in... quite frankly, it is nickel scrap. It is high-grade mate- rial and as near to anything called nickel metal,” Morgan said.
At this stage, it is known that the balls in the fresh rock are more resistant to weathering than the rock which is why the fresh balls occur in the weathered
pro le and appear at surface.
In the absence of bold geochemistry,
it is not yet known whether the nickel leached through weathering of the balls is retained in the clay pro les or not. At this stage, Lawrance believes this is an unlikely scenario.
Drilling would help to build a better un- derstanding of the greater Titan project, however, since last year Comet’s focus has been on getting a handle on the dis- tribution of the balls, both in the near-sur- face materials and also the underlying bedrock, which mostly involves pitting and stream sediment sampling.
Titan’s surface exposure – where the fresh nickel balls occur in the near- surface sediment – is about 500m long while to the north adjacent to the lateritic exposure the balls become more weath- ered.
“All told, we have de ned an area of about 2sq km so far,” Lawrance said.
Hugh Morgan
“Exploration is a little dif cult from sur- face because laterite is dif cult to dig into and similarly fresh rock is dif cult to dig into. We also have some swamps [to contend with], so we are a little bit limited in our surface exploration.”
Nevertheless, Comet knows it has something special in its keep and in- tends to surge ahead with breaking new ground.
Upon presenting the Titan project to the public for the rst time at Africa Down Under in early September, Morgan said that Comet had a diverse work pro- gramme ahead of it.
“There will be more regional [work], trying to understand the genesis of the position, so [there will be] a combination of activities [under way]. From the discov- erer’s point of view, we will be looking for nancial assistance and there are a few [options] in the market place right now. I am talking to a number of parties to step
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 15


COVER
Lawrance said the potential primary mechanisms were comparable to the world class Merensky Reef in South Africa and Great Dyke, Zimbabwe
economy and with the price of oil plum- meting in recent years, now more than ever the country needs another pillar of growth.
The Government has identi ed steel- making as a potentially viable long-term industry for the country, therefore Com- et’s Titan is not only signi cant as poten- tially the highest grade nickel deposit in the world, but as a boom project in a po- tentially new province which could spark a new era of mining in Nigeria.
Managing expectations in-country is a concern for Comet, particularly given the lack of experience within the Nigerian Mines Department in regulating mining activity.
“It is something new for the Nigerian Government to handle. Africa Down Under has attracted good support from Nigeria, with Goodluck Jonathon here in the past, which is why we are here,” Mor- gan said.
“Everybody is on trial with these things. It is a learning curve for the country and us, so rst and foremost we are making sure the community is looked after right.”
Government delegations from Ni- geria’s mining department have been strongly represented in recent Africa Down Under conferences and 2016 was no different, with Morgan taking the op- portunity to liaise with of cials during their time in Perth.
He said he had met with Minister of Solid Minerals, Dr Kayode Fayemi, at
up the momentum of what we are doing. A nickel discovery has been made and justi es some immediate attention,” Mor- gan said.
Rather than prosecuting Titan through drilling now, Comet is instead keen to test its theories and have a mine running within a year.
“We have resisted doing just that [drill- ing], because we just don’t know [how signi cant it is], and we want to focus on the alluvium to actually understand the surface,” Morgan said.
“If we were to start putting some holes down, let’s say they were very exciting; what would you do about it? The answer is you are the dog that caught the car. On the other hand, nothing could be more sensible than to attack the alluvium rst. We are certainly going to be drilling but the alluvium from the weight you are seeing running at 1-3% nickel is why we expect a very low operating cost. This is clearly the thing to start at and then you can go into the drilling phase and all of those things because there is so much more yet to discover, there is an enor- mous amount to discover.”
Despite going public with the Titan discovery, Comet is keeping some of its cards close to its chest, such as the amount of money it would like to conjure to maintain the momentum it has built.
Morgan, Stephen Davies and Steve Pragnell make up the Comet shareholder contingent, with Lawrance on board as a consultant.
Morgan said Nigerian participation in raising money would be welcome, while
he stressed looking after the local com- munities around Titan is the company’s number one priority.
“That’s why we’ll start off relatively small on the alluvium, so the communi- ties understand what it is like,” Morgan said.
Traditionally an oil and gas-rich econo- my, Nigeria has strived for diversity in its
PAGE 16 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Africa Down Under and “couldn’t have asked for much more” from the Nigerian Government in terms of its support.
“It’s an extraordinary adventure. It’s news, it’s a challenge and has the hall- marks of something special,” Morgan said.
A challenge to overcome may well be enticing investors into Nigeria.
According to the Fraser Institute Sur- vey of Mining Companies 2015, Nigeria is off the pace as an investment destina- tion in Africa.
Botswana is the continent’s most at- tractive jurisdiction, however, Nigeria is not within the top 20 of African countries investors would choose to invest in.
Security remains one issue for the country and from an Australian perspec- tive the recent kidnapping of Macmahon Holdings Ltd employees would have done little to comfort potential investors.
Despite the Macmahon incident in June, Morgan said companies such as WorleyParsons were still well represent- ed in-country and Comet had no issues accessing service providers.
Nickel prices on the other hand are an ongoing concern for Comet and the rest of the sector.
However, like the prospects at Titan, Morgan is bullish on the nickel price.
“Apart from Norilsk there are not too many nickel miners making money. Be- tween $US6-7/lb long-term is where it is going to be one day, not too many will survive at $US4.50/lb,” he said.
But, with a rare beast such as Titan, expectations are that low-cost process- ing demands will provide Comet with some cover from the price volatility syn- onymous with the nickel sector.
“We believe we have de ned a new style of deposit – a native nickel deposit – it is hosted within mixed felsic intrusive rocks, we believe that what we see is the expression of a potential world-class de- posit with high grade and large tonnage,” Lawrance said.
“This style of deposit being native nickel in a fairly benign host has fairly favourable economics notwithstanding that it is actually outstanding at surface. The nickel can be physically extracted because it behaves as a resitate mineral and also because the nickel occurs with no other mineral assemblage that could cause processing problems, such as sul- phides. We believe that we will have low processing costs.
“There is a lot more to say about this deposit.”
– Mark Andrews
Native nickel is usually found in tiny amounts in ultrama c rocks, with the nickel normally detected by microscopic studies and is usually about the size of a human hair
The nickel in the transported cover sequence is in colluvium
Native nickel is recoverable by panning
Studies are being conducted to assess the potential of a viable mining operation to start within a year
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 17


SITE VISIT
Champagne moment at Nova
The legend of Nova is set to grow further with rst produc- tion of nickel concentrate expect- ed in December.
Few green elds plays have been taken from discovery hole to production in four years, and even fewer have ignited a pre- viously barren mineral district like Nova has.
So, what does the key player behind the Nova-Bollinger nickel-copper sul- phide discovery in Western Australia’s Fraser Range reckon of it?
“Jundee is a major gold mine and it was a major bit of mineralisation in a completely virgin area when we found it. Nova-Bollinger, yes it is a signi cant dis- covery and once again in a completely virgin area. In other words, Jundee was
in the Gold elds where any amount of gold was found all over the place. No- va-Bollinger is distinguished by being the rst nickel discovery in that kind of geological terrain,” legendary prospector Mark Creasy told Paydirt.
“Nova is distinguished today by the most amazing smoothness with which everything has happened. As the mar- ket collapsed after 2011, we had our pick of contractors and the general experts you need to get a mine open. That was our silver lining and to the best of my knowledge, the mine is due to produce concentrate on time and within budget, which is a fairly unusual thing to happen.”
Creasy became the largest sharehold- er of Nova-Bollinger’s owner, Independ- ence Group NL when it completed the takeover of Sirius Resources in Septem- ber 2015.
Creasy’s major ownership of Sirius converted to an 18.88% share in Inde- pendence when the merger was com- pleted this year.
Having a signi cant shareholding in Independence means Creasy retains ex- posure to Nova-Bollinger, found by Siri- us, and his experience will be valuable in helping the company crack the explora- tion code in the Fraser Range.
It’s fair to say that exploration in the district has not been a priority for Inde- pendence as its attention has been rmly on bringing Nova on stream this year.
At the time of print, Nova was on time and within its $443 million budget to pro- duce rst concentrate in December.
The start of production will not only herald a new era for nickel mining in WA but will also cast a spotlight back on the Fraser Range.
PAGE 18 OCTOBER 2016 AUSTRALIA’S PAYDIRT


While there is a plethora of explorers chasing a “Nova-look- alike” in the Fraser Range, a match is yet to be made despite the rush of activity in the region following Nova’s discovery.
If there is a secret to explora- tion in the Fraser Range, no one is revealing it, but Creasy does offer some advice for hopeful explorers wishing to nd Nova No. 2.
“Like anywhere else you have to pick the right target and be very persistent,” he said.
tainly looking to do more,” Independence managing director Peter Bradford told Paydirt in light of signing a JV agreement with Buxton Resources Ltd.
The transaction grants In- dependence the right to buy a 90% interest in Buxton’s Zanthus and Widowmaker tenements for $1.5 million cash.
Buxton will be free-carried through to a decision to mine and will retain the rights to explore and develop the iron ore tenements at Zan- thus (103.6mt @ 26.5% iron) which is 60km along strike from Nova.
“In a relatively new terrain like
the Fraser Range there are a lot
of hard knocks that have to be endured as people get up the learning curve. I would say that
with the amount of money spent
and the number of geological minds there, it is not a question of where is the next one [deposit]. We are probably mov- ing to a stage where the exploration dol- lar being spent is more effective than in the past which will upgrade the chance of another discovery.”
However, S2 Resources Ltd managing director Mark Bennett, believes mimick- ing the approach his Sirius took to nd Nova is not the answer to unearthing a replica.
“I am sure there are more out there, but nding it is a different ball game,” Bennett told Paydirt.
“In hindsight if you look at how we found Nova, if it weren’t for a particular part of the orebody, a very small part we call the pan-handle, rather than the pan, coming very close to surface, we would never have detected it with the geophys- ics we used.
Nova project manager David English has overseen construction and commissioning of WA’s newest nickel-copper sulphide operation
“So, unless another Nova fortuitously happens to be in that detectable depth range it is going to be very dif cult to nd using the same techniques. I think those techniques are far less receptive than people think they are. People who think they can use EM and see down 300- 400m... really it shows you can only see 100-200m, so unless you have got Nova No. 2 just lurking not too far beneath the surface, you could easily walk across it and not notice it.”
The Fraser Range is characterised by thick cover and runs about 130km south- west to north-east, roughly on a 45 de- gree angle from Norseman and is about 40km wide.
While the patch has delivered Nova, the downturn and unpredictable nature of the nickel sector has stymied the post- discovery exploration momentum.
With better sentiment returning to the mining sector and the start of operations at Nova, perhaps a new wave of exploration in the region may be triggered. If so, Independence is poised to be leader of the pack with its mining of Nova giving it a better understanding than most of the geological setting
of the Fraser Range. And, unlike a lot of juniors in the space, In- dependence is also well funded to carry out mean- ingful work and has indi- cated a willingness to join forces with peers in the eld to make another dis-
covery.
“Each transaction is
unique and we are cer-
“We will have a huge advantage because we will be able to touch and feel the rocks underground [at
Nova],” Bradford said.
“Through that and through the appli-
cation of technology in the mine we will be able to get a better understanding of the geological setting and we think that gives us a great advantage technically. We want to be able to deploy that more broadly in the Fraser Range. The land position we have at present is relatively small, so the transaction with Buxton was aimed at expanding our land position and giving us greater capacity to deploy that technical knowledge that we will have to make more discoveries.”
Zanthus and Widowmaker will add to Independence’s mix of tenure in the Fraser Range, which includes 70% of JVs covering an area of 895sq km and strike length of 100km of the Fraser Range/Tropicana belt and 70% of the large Salt Creek JV tenement package on the eastern ank of the Tropicana JV.
Nickel-copper sulphide mineralisation has been identi ed at both JVs but, like most prospects in the Fraser Range, extensive exploration has yet to be con- ducted by Independence.
“These things take a long time to dis- cover and if you look at where the explo- ration sector has been the last couple of years and if you look at who is holding the land out in the Fraser Range, it is ba- sically all held by junior exploration com- panies,” Bradford said.
“Their capacity to fund the exploration needed to nd the next Nova discovery potentially hasn’t been there. The degree or the amount of exploration that needs to be done to nd the next discovery is just not getting done. One bene t we will have is that if we can broaden our land position we will have strong cash ows from Nova, we will have the technical
Independence chief operating of cer Rob Dennis
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 19


SITE VISIT
understanding of the belt and we be- lieve the combination of investment and knowledge will help us to drive that dis- covery faster.”
Bradford is backing seismic tech- niques, such as used at the Tropicana JV, to build an understanding of the base and architecture across the Nova ore- body and apply that knowledge further across the belt.
“We don’t believe there is a secret [to exploring in the Fraser Range], it is all about doing the layers of work required to get that best understanding. We will have the deposit level understanding as a re- sult of mining the Nova orebody and be- ing able to do the detailed grade control drilling and digital observations,” he said.
“We will also do some amount of R&D through some of the universities with PhD level researchers to give us a better
understanding of controls to mineralisa- tion.”
At the time of Paydirt’s visit to Nova, Swick was engaged with three under- ground diamond rigs conducting in ll drilling as Independence looks to in- crease its knowledge of the deposit which has reserves of 275,000t nickel (325,000t resources) and 112,000t cop- per (112,000t resources).
On the current resource/reserve base, in excess of 10 years’ production can be expected from Nova, with FY2017 esti- mated to deliver 9-10,000t nickel, 3,900- 4,000t copper and 280-320t cobalt at C1 cash costs of $4-4.50/lb nickel.
Nova is expected to be fully ramped up during FY2018 and from there Independ- ence is expected to produce in-line with life-of-mine expectations of 27-30,000 tpa nickel, 12-13,000 tpa copper and
and while theoretically the project should perform at 15-20% above nameplate ca- pacity, proof will only come once Nova is up and running.
“There are two elements to the plant capacity. The rst is the number of tonnes of rock that you can put through the crushing and grinding section and that depends on the hardness. The bet- ter the quality of the ore – i.e. more mas- sive, higher grade and softer – the more tonnes we can push through.
“The second part of the throughput equation is the volume of metal that you are pushing through the circuit that is then controlled by the back-end of the process with the thickening and ltration. The ltration can only handle certain tonnes per annum of nickel ore or cop- per,” Bradford said.
“It is a bit of a balancing act to blend as much of the material as possible to nd the optimal rate that we can push material through crushing and grinding and then the optimal rate that we can get material through the ltration circuit. You want to have both of those maximised all the time, you don’t want to get one end of the plant out of kilter with the other.”
By the June 2017 quarter, Independ- ence hopes to have Nova performing on- song and show the project was a worthy investment.
The deal on the table for Sirius in May last year valued Nova-Bollinger at $1.81 billion, with Independence paying a 35% premium to Sirius’ $3.24c/share price at
Ore from Nova will be ground to a size of 106 microns before being fed into separate copper and nickel oats
Underground mining at Nova is in full swing
900-1,000 tpa cobalt from a brand new 1.5 mtpa plant.
Bradford is keen to test Independence’s underground systems early in its mine life and get a handle on the rate at which ore can be delivered to surface.
During construction of the project, close at- tention has been paid to ironing out known bottlenecks in the plant
PAGE 20 OCTOBER 2016 AUSTRALIA’S PAYDIRT


the time and a 46% premium to the company’s share price in the month prior.
Bradford said Nova was the type of project Independence was on the “watch for” and interest in it grew stronger as the scale and quality of the asset was de ned.
Independence’s share price took a hammering fol- lowing the announcement that it would acquire Sirius for Nova-Bollinger only and be- come a new force in the mid- tier mining space on the ASX. However, the project has only delivered upside for the com- pany, Bradford said.
Nova underground mining manager Michael Mcloughney manages all aspects of underground mining activities, including current development and future production
“The level and quality of the work by the team at Sirius was to a very high standard. You always go into these transactions being a little bit wary about whether people have been optimistic or conservative about how they have rep- resented facts, but the team at Sirius did a rst-class job and our view is that, if anything, the work they have done is conservative,” Bradford said.
Upon the scheme of arrangement be- ing approved, Independence’s rst port
of call was to run an optimisation study on Nova.
The exercise proved to be fruitful with key project parameters markedly im- proved, including 50% improvement in NPV.
“If we compare it to the original feasi- bility study capital cost of $473 million, we will do it for $443 million but on top of that we have order of magnitude of $60 million within that $443 million relative to the original feasibility study scope. That is $60 million we don’t have to spend
Having brought Nova to fruition, Independ- ence is best placed to understand the geo- logical setting of the wider Fraser Range
as sustaining capex in the operational phase,” Bradford said.
The availability of labour, equipment and contractors providing services at
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 21


SITE VISIT
good rates has played into Independ- ence’s hands during the construction stage.
There is about $140-150 million left to fund the completion of Nova, while a sum of $50-55 million in stamp duty due to the WA Government for the acquisition of Sirius also needs to be settled.
Bradford said rather than use the com- pany’s debt facilities to ful l such expens- es, it decided an equity raising totalling
$280 million – $250 million placement and $30 million SPP – would set it on a better trajectory.
“We had suf cient debt facilities to do that, but that would have left us sig- ni cantly indebted in a time we have seen very recently a high degree of risk averseness from investors about highly indebted companies,” he said.
“Shareholders are more attracted to clean balance sheets with low degrees of debt. The fundraising reduced our net debt by about half and once Nova is up and running we are going to be able to very quickly clear that remain- ing debt and we will be ready to invest in the next series of opportunities for
JV at Tropicana have warranted a large chunk of the company’s exploration dol- lars, however, with two years of produc- tion remaining at Long, exploration at the mine has restarted.
Long, in Kambalda, has remained cash ow positive throughout a sustained pe- riod of low nickel prices and is forecast to deliver 7,400-8,200t nickel at $3.50- 3.90/lb in FY2017.
Current resources at Long are 66,000t nickel and at Diggers & Dealers Brad- ford said: “Exploration is the life blood of a mine such as Long and without this ongoing investment there is no replace- ment of production with new reserves. Therefore, we are pleased to say that this quarter we have recommenced a limited exploration programme at Long.”
While the immediate future at Long is clear, the company’s Stockman project in Victoria remains subject to permitting giving Independence time to weigh up its options for the project.
Stockman – 294,000t copper, 598,000t zinc, 17 moz silver and 400,000 oz gold (resources) – will command an estimated capex of $202 million.
Independence has demonstrated the ability to fund such large projects, howev- er, Bradford said the scale of the project was not of the ilk of Nova and therefore all options to take the Stockman VMS project forward would be considered.
“The management time you put into developing a smaller project is the same amount as developing a bigger project. We have to make sure that we are mak- ing the right decision to invest our time and money in the right sized projects,” Bradford said.
“The other thing that you would ob- serve in our portfolio, the operating as- sets that we have at the moment – Tropi- cana, Long, Jaguar, Nova – are all in a
A nominal eight trucks per day will pass through the concentrate shed at Nova. Trucks will take nickel and copper concentrates to Esperance
Independence plans to apply its knowledge of the geology at Nova to the broader Fraser Range region
the company.”
Outside of its existing op-
erations – Nova, Long, Jag- uar and Tropicana – Brad- ford said Independence would look to green elds exploration and opportuni- ties to expand its portfolio.
“We’re looking to add more belt-scale land posi- tions, so we are quite ac- tively looking for opportuni- ties there,” Bradford said.
Almost half of the com- pany’s $33 million explora- tion budget for FY2017 will be dedicated to generative and green elds projects targeting provinces which can potentially deliver mul- tiple gold and base metals projects.
Nova and mine life exten- sion work at the AngloGold Ashanti Ltd/Independence
PAGE 22 OCTOBER 2016 AUSTRALIA’S PAYDIRT


cluster. This is a concept that we like and if we were to develop Stockman, we would want to see how we can develop a cluster of assets supporting Stockman. We really don’t see the opportunity to do that. Both of those factors would weigh on our decision making.”
The permitting process at Stockman is expected to take about 12 months to complete, affording Independence ample time to assess its options for the project, which include a sale pro- cess and a potential JV arrange- ment.
If it decides to y solo and de- velop the mine, Independence would house ve operating as- sets with a heavy emphasis on base metals.
Before the Nova acquisition, Bradford said the company had a good spread of commodities in its portfolio offering it a natural hedge, particularly in gold and nickel, which share a strong inverse cor-
When Paydirt visited Nova, 35,600t of ore was ready for the commissioning process
knows a time will come in the fu- ture when nickel prices are very strong and gold prices have come back, placing Independence in a position to strike an even bal- ance of gold and base metals in its portfolio.
Right now, Bradford’s concerns are ensuring the safety of the company’s people across its op- erations and bedding down func- tionality at Nova.
“A month ago if you asked me the same question [what con- cerns you have] it would have been debt,” Bradford said. “But, doing the equity raise has re- solved that, the next big step for the company is the commis- sioning and ramp up process for Nova. Every aspect of the project
relation on prices.
Gold prices are currently riding high
and outside of its commitments to Tropi- cana, the opportunity to invest in gold is not present for now. It is not something Bradford will lose any sleep over, as he
to date has gone extremely well, but you always have to be wary of what is around the corner, and until Nova is commis- sioned and ramped up then there will always be one eye open at night time.”
– Mark Andrews
Independence reports FY2016 loss
Improved productivity from the Jaguar zinc mine and lower production costs from Long were highlights reported by In-
dependence Group NL as it slumped to a $58 million loss in FY2016.
Poor base metals prices and the ac- quisition of Nova were major factors in the company’s results, which included a strong balance sheet with pro-forma $50 million net cash at year end and a 2c fully franked dividend declared.
With Nova set to come online in De- cember and the company accelerating development of Bollinger, Independence was sure it had unlocked growth through measured investments in a down-cycle.
Despite conditions in the base met- als sector, Independence has had some strong success from an operational and exploration perspective at Jaguar in the past two years.
The company was able to beat pay- able cash cost guidance at Jaguar – 53c/ lb zinc in FY2016 – and report record mining and milling rates at the operation since mining started.
Zinc concentrate produced at Jaguar was 39,335t, while copper output was 7,412t.
“We have had success underground at Bentley with discovery of Flying Spur and then the indications of extensions at
depth of the Arnage lens,” Bradford said. “We did work on both of those in the last 12 months to convert mineralisation there from resource to reserve, so that was a tick for the project and extends the
mine life.”
Indications are that Arnage continues
even deeper and has demanded Inde- pendence conducts more drilling to un- derstand it better.
Elsewhere on the concession, the discovery of the Triumph deposit dem- onstrates – despite it not being of mine- able scale – further potential in the belt according to the company.
“The system there is the type of miner- alisation where you get clusters of these deposits and three have been discovered and mined so far – Teutonic Bore, Jaguar and Bentley. Triumph indicates there is potential there for a fourth and if there is a fourth there is no reason why there isn’t a fth and a sixth,” Bradford said.
“We have had some wins in improving the overall production levels and produc- tivity levels of both the underground mine and processing plant and in the process of doing that [we are] trying to get more consistent operations from week to week, month to month, quarter to quarter.”
In addition to the performance at Jag- uar, there was some positivity stemming
from the Long nickel mine.
As the company prioritised investment
in Nova and Tropicana, money was taken off the table for Long. Reducing the man hours by about half resulted in a 15% drop in metal production at a signi cantly lower cost structure.
Output from Long was 8,483t at cash costs payable of $3.68/lb, with FY2017 guidance 7,400-8,200t at cash costs of $3.50-3.90/lb.
Independence had now recommitted investment in Long, Bradford said. The company has been able to discover two orebodies in its time at Long.
“Our desire is to nd another one, so the work we are doing at the moment is conceptual,” he said.
“We are chasing conceptual targets that are relatively close to existing infra- structure. If we are successful in identi- fying new mineralisation then we would be able to very quickly develop that and start mining it. But, with conceptual tar- gets the success rate is relatively low, so at the moment we are getting on with do- ing the work and analysing the work we are doing.”
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 23


AFRICA DOWN UNDER REVIEW
Promise returns to the Africa stage
This year’s Africa Down Under offered something which hasn’t been seen at the conference for a number of years; optimism.
curity, infrastructure, transparency and sovereign risk remain acute challenges in various parts of Africa, there was rec- ognition among visiting delegations that foreign investment would play the lead- ing role in resources development on the continent. Pitt said that pointed to the in- tegral part foreign investors had played in Australia’s own resource development and urged African governments to pro- vide the right conditions to foster it.
Kazungu picked up on this point, telling delegates his Government was striving to put the right structures in place.
“Our minerals policy is based on pro- viding transparency, clarity, predictability and stability to the sector,” he said.
Kazungu’s address was followed by PCF Capital chairman Liam Twigger de- claring that the resources downturn was over.
“Since the start of this year, gold is up 25%, zinc 40%, iron ore 35%, nickel 20% and even unloved thermal coal is
A torrid four-year period for the global resources sector has left many African countries and miners feeling like they are back to square one when it comes to mining developments on the continent but the mood at Africa Down Under this year proved there is enough resilience in both the sector and the region to allow for a new generation of mines to prosper in the coming decade.
The resilience and optimism was cap- tured as early as the opening session. Paydirt chairman Bill Repard welcomed delegates with an upbeat assessment of where the sector was and following new Australian Assistant Minister for Trade Keith Pitt’s encouragement to African governments to continue attracting for- eign investment, new Kenyan Cabinet Secretary for Mining, Dan Kazungu,
gave a resounding address on the op- portunities his Government saw in min- eral development.
“We want to become one of the top mining destinations in the world and have a 20-year strategy,” Kazungu told delegates.
It was an ambitious statement given the country only opened its rst commer- cial-scale mine in 2014 when ASX-listed Base Resources Ltd opened its Kwale mineral sands mine. However, that East Africa’s largest and most diversi ed economy is keen to embrace resources development is an indication Africa is ready to take its place at the international investment table.
Kazungu’s enthusiasm for foreign in- vestment was replicated throughout the 13 visiting African delegations. While se-
PAGE 24 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Senior of cials from the 13 African delegations which visited Perth for Africa Down Under joined Australian Assistant Minister for Trade, Keith Pitt, and Australian diplomats for morning tea during the conference
up 35%,” Twigger said. “The rally in com- modity prices has seen a 400% increase in the value of Australian gold explorers and developers, and more than $2.5 bil- lion in equity has been raised for the Aus- tralian mining sector.
“This is up $700 million or 40% more than compared to the same time last year.”
The conference proved the upturn is not restricted to domestic stories. Among the presenting companies, gold miners Resolute Mining Ltd and Perseus Min- ing Ltd have enjoyed strong operational and market performances in 2016 while behind them a new generation of ASX- listed West African explorers, led by the likes of Cardinal Resources Ltd are turn- ing themselves into potential M&A tar- gets.
– Dominic Piper
Kenyan Cabinet Minister for Mining, Dan Kazungu provided a sharp boost of optimism and enthusiasm to Africa Down Under proceedings
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 25


AFRICA DOWN UNDER REVIEW
Kenya to grasp mining chance
In his rst visit to Australia, newly ap- pointed Kenyan Cabinet Secretary for Mining, Dan Kazungu, left little doubt his
Government was intent on building the country’s edgling mining industry into a continental leader.
Kazungu said he had been appointed to the role of Cabinet Secretary in De- cember 2015 with “a mandate to stream- line mining in Kenya [amid recognition] that mining can create jobs and employ- ment opportunities in the country”.
Despite being East and Central Af- rica’s largest economy, Kenya has never boasted a mining sector to rival the likes of regional neighbours Tanzania, Zambia and DRC. Indeed, its rst commercial- scale mine was only opened in February 2014 when ASX-listed Base Resources Ltd began production from its Kwale min- eral sands operation near Mombasa.
However, with Kwale now up and run- ning and making a positive contribution to both the national and local economy, the Government is keen to expand its mining horizons.
Kenya’s economy is currently domi- nated by tourism, nancial services, ag- riculture and IT and Kazungu sees this diversity as an advantage in attracting foreign investment into the country’s min- ing sector.
“Kenya survived without mining and the economy has been diversi ed as a result. Nairobi is the number one city in Africa for foreign direct investment and Kenya is acknowledged as the gateway to East and Central Africa,” he said.
Advisory Board and will establish a Di- rectorate of Mines to regulate the sector and a Directorate of Geological Survey to develop a geological database and pro- mote interest in the mining sector.
Exploration and mining licences will be drawn through a grid system, eliminating overlap between tenements and improv- ing transparency.
Dan Kazungu
Along with the new Act, the Govern- ment has established an online mining cadastre portal to improve transparency and reduce approval times and is in the process of enhancing the country’s pre- competitive database.
Artisanal mining is also recognised as part of the Act with small-scale min- ing being made legal in an effort to make
“We have put together a budget of $30 million to map the entire country with geophysics,” Kazungu said, before call- ing on Australian miners to take advan- tage of the new initiatives. “It is time for you to work with us to maximise the op- portunity.”
Foreign investment has already arrived
to fund infrastructure development – in-
cluding a new standard gauge rail net“- such activity safer.
work between Nairobi and Mombasa, Kazunugu said the new Act and policy
new port berths at Mombasa and
new power projects – and now the When the new Government the geological database and Government is looking to mining came to power it realised is also in the process of es- for further GDP growth. tablishing Kenya’s rst mineral
“When the new Government mining was a key frontier and certi cation laboratory.
came to power it realised mining Kazungu said providing a
anchored around the African
is a policy which is now taking Mining Vision is a policy which is
was a key frontier and anchored stable and predictable scal
around the African Mining Vision regime which was both attrac-
centre stage,” Kazungu said. That policy, announced in April this year, was the rst in the coun-
try’s history and was followed in May by repeal of the 76-year old colonial-era Mining Act. A new Mining Act was passed in May. Kazungu described it as the most progressive mining law in the world.
The new Act will give some of the Cab- inet Secretary’s powers to the Mineral
now taking centre stage.
would deliver on the Government’s plans for Kenya’s mining framework to have transparency, clarity, predictability and stability.
“So, we can call win and avoid the pit- falls other countries have encountered,” he said.
tive and competitive was also a priority for the Government.
The Government will work further on improving investor access to
“We want to become one of the top mining destinations in the world and have a 20-year strategy
developed with McKinsey,” he said.
– Dominic Piper
PAGE 26 OCTOBER 2016 AUSTRALIA’S PAYDIRT


2016
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AFRICA DOWN UNDER REVIEW
Bridging the infrastructure gap
Ask anyone associated with African mining pro- jects and they are unani- mous in what they consider to be the biggest hurdle to development – infrastruc- ture, or the lack thereof.
“I think it can be said, without a shadow of a doubt, that in terms of Af- rica’s development, the lack of infrastructure is the Achilles’ heel for that con- tinent and indeed for min- ing companies,” African Natural Resources Centre director Sheila Khama said during a panel discussion on overcoming the conti- nent’s infrastructure chal- lenges.
Developing modern infrastructure that caters for multiple industries, not just mining, will be critical if forecasts which predict African’s continental population to double to 2.4 billion by 2050 prove correct.
Overcoming infrastructure hurdles is at the heart of DRA’s current business strategy. The South African-based en- gineering rm has been delivering min- ing projects on the continent for the past 50 years and has received widespread praise for its ability to work around those challenges.
However, that approach only lasts for so long, according to DRA Projects busi- ness development director Paul Howard, and it is now paramount to nd a solution which bene ts several parties.
“We have a vision to engineer tomor- row better,” Howard said. “Part of that is driven by our strategy not to earn into just mining, but to move across into energy, into water and into agriculture.
“That really talks to population growth. Each of those people you’ve got in a growing population is going to need something to eat, they’re going to be energy consumers and they’re going to need water.”
Khama said most countries in Africa were either landlocked or too small to - nance the infrastructure projects mining companies typically wanted to develop but, she insisted, host governments still have a role to play.
Last year, the Cameroon Government committed to sourcing a funding solution for the $US3.5 billion infrastructure arm of Sundance Resources Ltd’s Mbalam-
Sheila Khama headed a panel discussion on overcoming Africa’s infrastructure challenges
has been a problem. The depth of legislation re- quired to underpin those projects has not always been present and instead has presented a hurdle.
“There also needs to be a clear government policy underpinning the develop- ment of the project, includ- ing the commitment to ll in any of the legislative gaps and to work with de- velopers and multi-lateral organisations on the rules and frameworks that will help give investors the con dence that their pro- ject will have the neces- sary legislative support.”
Nadeba iron ore project, with a view other industries looking to tap into the proposed port and rail facilities could contribute earlier in its development.
“Philosophically we accept that infra- structure is the responsibility of the state, but the real question is how we then bal- ance that to ensure investors get fair value,” Khama said.
“We work a lot with countries to im- prove port facilities. One of our major projects is in Mauritania where we are working with that country’s iron ore min- ing companies to dredge and expand the port facility and we have been funding infrastructure around that for a very long time.”
Khama said one potential infrastruc- ture solution which needed more at- tention was cross-border development initiatives, particularly among landlocked neighbouring countries.
King & Wood Mallesons partner Rob Edel highlighted that six African nations feature in the top 10 fastest growing world economies, but the lack of infrastructure on the continent was an impediment to private investment.
Edel said a number of emerging de- velopments were offering potential so- lutions to the problem, but he sounded a warning on the regulatory framework supporting that infrastructure plan.
“They need to be very robust, they need to be very clear, very certain and in- vestors need to know they are not going to change and will be available to under- pin and support their investment through- out the lifecycle of the project,” Edel said.
“In Southern African countries, that
ASX-listed coal develop- er African Energy Resources Ltd is one company attempting to overcome the infrastructure challenges surrounding its projects in Botswana. The company was previously focused on becoming a key coal exporter, but over the last two years has turned its attention to power genera-
tion.
“As we started to understand the chal-
lenges in exporting coal and recognising similar challenges from an infrastructure perspective in exporting electricity, we’ve naturally shifted away from coal export to a power export focus,” African Energy managing director Frazer Tabeart said.
“There really isn’t the enabling infra- structure in place to allow a large coal export business, but there is the infra- structure in place to allow supply of both domestic and exported electricity.”
Tabeart suggested investors may fol- low African Energy’s lead and turn to energy-focused infrastructure develop- ments for pricing stability rather than in- vest in the bulk commodities.
“Energy prices tend to be fairly stable and generally increase over a period of time, making it much easier for those people investing in infrastructure to know there are always customers that will take up capacity,” Tabeart said
“To get people to invest in these infra- structure projects, you’ve actually got to demonstrate there are bene ts to more than one person. It has to bene t a whole variety of stakeholders across a broad spectrum of cultures and countries.”
– Michael Washbourne
PAGE 28 OCTOBER 2016 AUSTRALIA’S PAYDIRT




AFRICA DOWN UNDER REVIEW
Rebuilding the trust
Paydirt Media editor Dominic Piper convened a panel discussion on nancing African projects. Bannerman chief executive Brandon Munro, PwC Australia-Africa practice leader Ben Gargett, Northcott Capital managing director Nick Martin, PCF Capital Group managing director Liam Twigger and King & Wood Mallesons partner Nathan Collins share their thoughts on the subject
For some investors, the ill-effects of the last mining boom are still very raw and despite better sentiment recently, mining
companies should expect to be greeted by cautious investors when tapping eq- uity markets ahead of the next commodi- ties up-cycle.
“It’s an issue of trust,” PwC Australia- Africa practice leader Ben Gargett said in the closing panel session of Africa Down Under 2016, titled “Sourcing the sentiment: Finding capital for African projects”.
“The sector really blew up that trust by doing deals at the top of the market and then obviously having the asset write- downs, subsequently, what we are hear- ing from investors is that they are looking at two things; asset quality and manage- ment teams,” Gargett said. “Those man- agement teams really have to earn the trust of the investors and the money will come.”
While various forms of funding mecha- nisms such as private equity, streaming facilities, bank debt and off-take arrange- ments are re-opening, investors need to feel comfortable in the environment they are stepping into and companies needed to demonstrate the returns on offer for in- vestors, according to Gargett.
He said this was particularly important
in an African context, where there is a starting perception from investors that the continent as a whole is a high-risk region for doing business.
Despite having projects in one of Af- rica’s safest jurisdictions, Bannerman Ltd chief executive Brandon Munro con- curred with Gargett’s thoughts and said while building trust in the private sector was important, it was critical to nurture strong relationships with governments.
“In the same way that trust can be eroded pretty quickly at the big end of the private sector, it can be eroded pretty quickly with government as well,” Munro said.
At the same time, Munro said govern- ments needed to understand the con- cerns of the private sector, particularly around issues such as taxation and own- ership.
“The dif culty is when someone hears a sound bite [about equitable economic reform] and they associate it with BEE type structures like in South Africa, it does have some negative rami cations. Part of our job is to help government un- derstand that they are starting to under- mine trust if it isn’t consulted in a fairly sensitive way,” Munro said.
Having been in Namibia for some time, with Bannerman and also Kunene Re-
sources, Munro is closely aligned with the Government’s hopes and ambitions for its mining sector which is rich with uranium opportunities.
Uranium has been on the nose of in- vestors since 2011 and will always be a contentious space but being in a stable country somewhat offsets these dif cul- ties. Bannerman is elding interest from investors determined to be rst in when the uranium cycle turns but Munro said companies needed to be creative with how they courted investors.
Inviting third parties in for equity, which has been popular among services com- panies, was one strategy cash-strapped mining entities could pursue.
The lull in the resources sector has certainly made companies think outside the box to stay relevant and while it re- mains hard to read whether the worst of the rout is over, some believe there are good times ahead.
Alongside Gargett and Munro on the panel were King & Wood Mallesons partner Nathan Collins, PCF Capital Group managing director Liam Twigger and Northcott Capital managing direc- tor Nick Martin who all agreed the sector was in better shape, a fact which would be re ected in more IPOs in the next 12 months.
PAGE 30 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Gold and lithium are the avour of the month and new oats built on these commodities can be expected to feature highly.
Gold and lithium have taken the atten- tion of investors, particularly in Australia, and Twigger believes the sentiment down under has started to lter into Africa.
“Absolutely, certainly, if you have gold on Africa’s west coast. Outside of gold, it looks like Cradle Resources Ltd will get its niobium project away,” he said.
The world class nature of the depos- its across Africa means that projects on the continent would always attract inter- est however, Twigger said, there was still a “nervousness about the rules be- ing changed along the way” which was a major deterrent for investors.
“Looking at Africa, it is important there is stability and that stability agreements, if you can get them, are very important, so you don’t get caught investing your money and then there is a change in the tax and a change in the royalty,” Twigger said.
“I think some areas of some govern- ments in some countries are more ad- vanced than others, but I can’t underesti- mate how important it [stability] is. There are still some areas in Africa where
banks are prepared to go and [some they are] not prepared to go.”
In addition to seeking stability, Twigger said investors were driven by seeing a pathway to cash ow, relativity between capital raisings and a company’s market cap and a payback period of three years.
“The appetite is there, equity in partic- ular, certainly if you are in gold,” he said. “But, nanciers want to see the bulk of their money back and dividends paid out in three years. That is a pretty tight time- frame, which tends to lead to some of the more high-grade [projects] and certainly leads to more higher value metals, which is gold, attracting funding.”
Collins, whose law rm King & Wood Mallesons’ Africa group has over 25 years’ experience on the continent, said there was a noticeable change in invest- ment by private equity funds from infra- structure into mining projects in Africa.
“What has happened in the last few years is that there has been more of a willingness to invest in mining projects, certainly on the multilateral side where there has been a turning point,” he said.
“That is also because they [multilater- als] have been able to partner up with more traditional nanciers, such as banks, as well. Private equity in mining
is quite specialised, but we are seeing the diversi cation of P.E. funds like RFC [Ambrian] that really understand mining and you are seeing a bit more investment in that space.”
There may be money coming back into the sector, however, not all companies will see the penny drop their way, accord- ing to Martin.
Northcott’s team has raised over $US15 billion in 37 countries, includ- ing closing transactions in locations in Southern, Central and West Africa.
Martin said investors would still be pru- dent with their cash, meaning explorers needed to work hard to attract funding.
“I think the tide is not yet coming in and it is just a regression of where the money is and where it has gone in looking for a quick return. The obvious place is to go where you are already producing or near-production assets. The capital in- tensity might be lower there or the infra- structure investment lower, or the price of expansion may be lower with existing near-term projects,” Martin said.
“That is where the start of the money goes into it; then the money starts ow- ing into the lower end of the exploration market. It is cyclical and you [explorers] have to wait your time unfortunately.”
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 31


AFRICA DOWN UNDER REVIEW
Base ready for expansion
Tim Carstens has a spring in his step once again thanks to rebound- ing mineral sands prices, a change which has the Base Resources Ltd managing director con - dent enough to start talk- ing about the company’s next move.
“The company is well
positioned for growth op-
portunities; it is a ques-
tion of how we add value
from here,” Carstens said during the opening session of Africa Down Under.
The current optimism at Base is in stark contrast to the last two years, a pe- riod during which the company brought its Kwale mineral sands project into op- eration in the face of rapidly declining commodity prices.
“At the peak of the cycle, ilmenite was fetching $350/t; at rst shipment it was $150/t and at the start of 2016 it was around $65/t,” Carstens said of Kwale’s most important product, which is now fetching around $95/t. “There was rela- tively weak demand and we found our- selves in freefall.”
Mineral sands prices have been ris- ing since April and Carstens is bullish
Tim Carstens
enough to predict a better year ahead.
“We are starting to see the rst signs of recovery,” he said. “In the last three or four months there has been a tightening in the market. With inventories expected tobegonebytheendofthe year, 2017 is looking quite encouraging. We are seeing demand coming back for il- menite and quite signi cant bringing forward of orders
“We expanded our exploration tenure in May to nd the answer to the question of mine life,” he said. “We have a drill rig arriving in September and will start drill- ing to the north and south of the mine and we are enthusiastic about adding to the mine life.”
Beyond organic growth opportunities, Base continues to seek out new projects having failed to secure a second asset through an unsuccessful bid for World Titanium Resources Ltd.
One thing is certain, if new opportuni- ties arise in Kenya, Carstens would be keen to expand Base’s footprint in the country. Kwale is the rst commercial- scale mine built in the East African na- tion and Carstens bestowed the virtues of operating in the country.
“Kenya has a highly educated popu- lation, it is constantly improving well- developed infrastructure and one of the advantages of coming to mining late, is that it has well de ned support sectors including nancing and ITC.”
Despite some early teething problems, he said the relationship with the Kenyan Government was good.
“You can’t build an asset like this with- out a high level of collaboration with gov- ernment.”
– Dominic Piper
from rutile customers. Where we are at the moment is simply unsustainable.”
The hostile pricing has not prevented Base from getting Kwale – just south of the Kenyan port city of Mombasa – into steady-state production. The company made its rst shipment in February 2014 and two years on sold its 1 millionth tonne of product. It is now both operationally and corporately cash ow positive and has paid down $43 million in debt in the last 15 months.
With the company’s net debt position now a manageable $50 million – the debt package was rescheduled in December 2015 – Carstens is preparing Base to an- swer most investors’ rst question: What does the future hold?
Government support for AAMEG
Kenya has become the latest country to join the Australia-Africa Minerals and Energy Group (AAMEG) as an asso-
ciate member.
Led by the Hon Dan Kazunga, Cabinet
Secretary for Mining, Kenya was one of the largest visiting delegations to attend this year’s Africa Down Under confer- ence and used the three-day forum to reaf rm its commitment to improving ties with the Australian extractives industry.
Mineral sands producer Base Re- sources Ltd is the only Australian-based company to have successfully developed a mine in Kenya.
AAMEG chairman and Base managing director Tim Carstens said Kenya was the 10th country to join the organisation after Ethiopia, Mali, Equatorial Guinea, Malawi, Cote d’Ivoire, Nigeria, Uganda, Mauritius and Egypt.
“The focus of those countries and the reason for their engagement is that they
see it as a valuable portal to the Austral- ian mining industry,” Carstens said.
Established in 2010, AAMEG is seek- ing to link more than 190 Australian resources companies – including ex- plorers, miners and services providers – operating almost 600 projects across 38 countries in Africa.
AAMEG’s membership base is com- prised of service providers (62%), min- ing and exploration companies (24%), academic groups and non-government organisations (6%) and other individuals (8%).
The recent downturn in resources has not diminished AAMEG’s determination to improve relations between mining companies and governments from both Australia and Africa.
AAMEG recently launched two re- search projects, in conjunction with The University of Western Australia, and is seeking to “expand and deepen” its en-
gagement with the Australian Federal Government, speci cally the Department of Foreign Affairs and Trade (DFAT).
“We’ve long enjoyed a strong relation- ship with DFAT and recognition by DFAT, but the focus now is on getting a much broader engagement so that the politi- cians in Canberra understand or have a felt-need to support Australian industry into Africa,” Carstens said.
“This is not something new for us, but it’s something we are putting a particular focus into at the moment.”
Carstens, who took over the chairman- ship of AAMEG from founding member and industry stalwart Bill Turner AO ear- lier this year, said collaboration was the key to overcoming the challenges faced by companies and individuals operating in Africa on a daily basis.
– Michael Washbourne
PAGE 32 OCTOBER 2016 AUSTRALIA’S PAYDIRT


New Australian Assistant Minister for Trade, Tourism and Investment, Keith Pitt, has urged African governments to
continue striving to attract foreign invest- ment into their mining sectors.
Delivering the opening address to this year’s Africa Down Under conference, Pitt said “foreign investment has been crucial to Australia’s growth as it will be in Africa”.
“Foreign investment from Britain, Eu- rope and North America laid the foun- dations of Australia’s modern resources industry,” Pitt said.
There was also a warning, however, about the need to control such invest- ment.
“Investment is a goal shared but it is also controversial and needs to be well managed.”
Both Australia’s Federal Government and the West Australian State Govern- ment have worked with African gov- ernments on ensuring their regulatory framework was robust enough to provide a stable investment climate for miners.
In the past ve years, more than 450
Keith Pitt
African students had participated in post-graduate or short-course study pro- grammes in resources management in Australia.
Pitt said such stability was a key step to securing investment.
“Australia has enjoyed 25 consecutive years of growth and that didn’t happen by accident. Australia has strong govern- ance, it has the sixth largest percentage
of 16-60 year olds with tertiary educa- tion, its logistics chain is ef cient and it is business friendly. For those reasons, Australia is seen as a safe, low-risk place to invest.”
Speaking to Paydirt on the sidelines of the conference, Pitt said bilateral meet- ings during the week had both empha- sised the willingness of African countries to court resources investment and recog- nition of the need for stability, transpar- ency and clarity in resources manage- ment if such investment is to be realised.
“I’ve spoken with some of my ministe- rial counterparts and the message is the same from all of them: ‘We are here to do business’,” Pitt said. “Investors look for the same things regardless of geography stability, low risk and ensuring they get a return. Every country needs to ensure they have those in place if they are to at- tract investment.”
Pitt said that with nearly 500 million citizens under the age of 21, Africa con- tained “a world of opportunity” that Aus- tralia would help it ful l, particularly in the METS sector.
Pitt welcomes younger African economies
Acting Austrade chief executive Grame Barty said it was essential Australia used its world leading frameworks in re- sources, energy, agriculture, education, general creativity and digital connectiv- ity to ensure Australia and Africa prosper from the shared competitive advantage in the of ng.
Currently, India is poised to surpass China as the most powerful economy in the world in 20 years. Beyond 2050, there exists an opportunity for Africa to overtake the mantle from India.
“That is a long-term projection, but the wherewithal exits within Africa to take ad- vantage of that and to develop it if it can,” Barty said.
Currently, there are 1 billion people liv- ing within Africa and by 2100 the popula- tion is anticipated to reach 4 billion.
A large majority of the population will be teens and 20-somethings who will be the driving forces behind cities of the fu- ture.
Barty said captur- ing those future cities and opportunities within them was not an over- night transaction, but now was the time to start setting the scene and the internet was the key.
It has been estimated that one in three Af- ricans own a mobile phone, and while ser- vices and connectivity need to vastly improve, the foundation is in place for greater connectivity through internet across the continent.
“We need to help Africa establish its full cross-border E-commerce market and we need to capture the human capi- tal that it has and we deliver that via the internet,” he said.
“The internet is a mechanism, the mo-
Grame Barty
bile mechanism, by which we deliver new services. Then by as- sisting and partnering with some of the pres- entations that we have seen today [at Africa Down Under] in our creativity and general connectivity we can provide access to more than 500 million ap- plicants by 2050. We transition not just in helping develop a tradi- tional economy but we also nd ways to coop- erate and invest in the
Connecting with Africa
opportunities for Africans to participate in the digital economy and I mean in the global digital economy, not just in the Af- rican digital economy.”
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 33


AFRICA DOWN UNDER REVIEW
Financiers still not sold on Africa
Financiers still need strong con- vincing to invest in African min- ing projects despite improving senti-
ment towards resources, according to Northcott Capital managing di- rector Nick Martin.
Money which has been sitting on the sidelines for several years is now returning to the sector, with some African-focused companies having already successfully rattled the tin for small exploration pro- grammes.
However, commercial banks and other lenders remain overly cau- tious when it comes to providing larger funding packages for project development, particularly in Africa where the risk is considered high.
“Whenever you talk about project nance, the political risk question is always asked,” Martin told Africa Down Under.
“The money is there, but it really needs convincing to go to Africa.”
Martin said there was no “silver bullet” for obtaining project nance in today’s “evolving” market, urging companies to allow for the changing landscape when progressing through the various stages of feasibility.
“Most feasibility studies completed in the last few years are probably not t for the market anymore,” he said.
Nick Martin
management” was no longer the in- centivising drawcard it used to be.
Martin added it was important to show project nanciers what they want to see rather than tell them what they want to hear.
“As a bit of advice, please don’t turn up and say ‘we’ve achieved a conservative project’ because al- most instantly they won’t believe you,” he said.
“In one sentence you’ve lost management credibility, you’ve lost technical credibility and you’ve probably lost your nancial cred- ibility.”
Martin highlighted the strategy Kenya-focused Base Resources Ltd adopted towards achieving project nance as a case study for other ASX-listed hopefuls in Africa to follow.
“Those of you undertaking new feasi- bility studies have really got to look to- wards how the market has changed and what is considered t. Financial credibil- ity can be easily lost if you don’t get these factors together.”
Other areas where Martin believes companies must demonstrate credibility is on the management and technical side of the business, although he stressed the old adage of “good projects and good
“They matched different lenders to the different risk pro les, bringing in key private equity partners and also off- take partners,” he said.
“You can only do that when you’ve got all those relevant aspects of credibility ticked off and have nancial exibility, which ultimately allows you to survive and continue in a challenging market.”
– Michael Washbourne
Tanga keen on new greenstone model
Tanga Resources Ltd chairman John Jones believes the compa- ny’s Winston gold discovery is the rst indication of an entire new gold camp in Tanzania.
“We have good ground position and we will look to extend it. We believe we have another greenstone belt that was previously unknown,” Jones said at Africa Down Under.
Tanga reported rst positive inter- cepts from Winston – part of the com- pany’s wider Singida project in north- ern Tanzania – in December 2015 when the discovery hole hit 16m @ 55.23 g/t gold, including 9m @ 92.78 g/t. Since then the company has fol- lowed up with hits of 14m @ 13.33 g/t, 7m @ 35.89 g/t and 14m @ 3.75 g/t.
Such hits sent the Tanga share price onarunfromalowof1.1ctoashighas
question is where does it come from?” Jones said.
Tanga has undertaken both ground magnetic and IP surveys to better de- ne the area and is now continuing drilling along strike at Winston as well as at regional targets Wedge, Sophie and Crystal.
Tanzania is one of Africa’s most proli c gold producers but Singida is located more than 250km from the main gold centre of Mwanza. Jones said this gave the company encour- agement it was dealing with a new eld.
14.5c earlier this year. The challenge for the company is to now de ne exactly what Winston represents.
“There is very little outcrop so the
said.
John Jones
“We have pitched our future explo- ration programmes on the idea that we have an entire gold camp,” Jones
PAGE 34 OCTOBER 2016 AUSTRALIA’S PAYDIRT
– Dominic Piper




AFRICA DOWN UNDER REVIEW
Resolute to pair with juniors
Resolute Mining Ltd will continue its push to partner with smaller
companies on the explo- ration front as it embarks on an aggressive growth phase driven by its Afri- can projects.
The gold miner will also commit $19 million to exploration in FY2017, with the bulk of that to test targets in Africa, most notably in Mali and Cote d’Ivoire.
Chief executive of
Resolute, John Wel-
born, told delegates at
Africa Down Under the
company was “open for
business”, inviting Afri-
can countries to speak
about opportunities in their backyard, and encouraged smaller companies to talk about partnership opportunities.
“The challenge for mining in all of its facets is sustainability, and we see ex- ploration as a fundamental part of that,” Welborn said. “We’ll do it ourselves but we’ll also back ef cient, well funded and well credentialed teams.”
Resolute recently took a 14.6% inter- est in TSX-V listed Kilo Goldmines, a company which holds gold prospects and resources in the DRC. The company is also a major shareholder in ASX-listed Manas Resources Ltd, which recently divested all of its assets in the Kyrgyz Republic and is currently conducting due
John Welborn
To ensure it maintains its position as a long-life gold producer, Resolute is currently transitioning its key African operations to continue the strong cash generation that has helped to steer the com- pany from a $120 million lossayearagotoanet pro t of $213 million in FY2016.
Resolute is currently progressing the trans- formation of the Syama open pit gold mine into an underground develop- ment with an initial mine life of at least 12 years and capable of produc- ing 250,000 ozpa gold at AISC of $US881/oz.
diligence on a gold project in Tanzania. Resolute will also look to grow its ex- ploration asset portfolio organically hav- ing almost doubled its FY2017 explora- tion budget to $19 million, the majority of which will be used to test targets within Resolute’s 13,500sq km landholding in
Africa.
“Increasingly our gold reserves and re-
sources are being built by our ability to successfully exploit African projects,” he said.
“There are plenty of very high pro le gold mines in Australia but none of them have the ability to demonstrate that scale of continuous production and the quan- tity of gold that we’ve produced.”
A key growth asset for the company is the Bibiani project in Ghana where Resolute is looking to re-establish an un- derground operation. A feasibility study has identi ed an upfront capital cost of $US72 million and gold production of about 100,000 ozpa at AISC of $US851/ oz over a ve-year mine life.
Welborn is keen to extend Bibiani’s life to at least 10 years and added that a - nal investment decision was about nine months away.
– Rebecca Lawson
Since 2009, the contribution of min- ing to Sudan’s GDP growth has in- creased signi cantly.
The establishment of the Ministry of Minerals six years ago has seen mining’s contribution to GDP grow from 1% prior to 2009 to 3.1% in 2015, with general growth of about 10%.
The country’s sector is split into four subsectors – large-scale concessions (300sq km plus), small-scale (1-5sq km), artisanal mining and treatment of tailings by artisanal miners.
“Currently there are 149 companies in different states of activity (on large-scale concessions), only nine are producing,
with most of them in exploration stages. We still have more than 100 bocks up for investment showing mineralisation,” director general of geological research authority of Sudan Dr M Abu Fatima said at Africa Down Under.
While not as well known as a mining jurisdiction as gold behemoths South Africa and Ghana, Sudan is on track to produce 100t by the end of the year.
By the halfway point of this year, gold output in Sudan – 45.9t – had surpassed what had been produced at the same time in 2015 (21.6t) and 2014 (19.3t).
Sudan is the third largest gold produc- er in Africa, according to Fatima, sitting
behind only South Africa and Ghana, which it hopes to overtake in 2018.
Gold is the major opportunity for inves- tors in the country, however, with more than 20 types of minerals to economical- ly exploit, Fatima welcomed investors to exploit the resource potential in Sudan.
“This is an invitation to investors to explore Sudan and invest in the mineral sector. Sudan has a diversi ed geology and huge mineral potential waiting to be discovered, evaluated and developed,” he said.
– Mark Andrews
Sudan to head Africa gold list
PAGE 36 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Few regrets at First Quantum
First Quantum Minerals Ltd continues to apply the les- sons learned from its troubled
time in the DRC in its global search for new projects.
It has been seven years since First Quantum ceased operating in the DRC following the Government’s decision to strip the TSX-listed company of its licence to run the Frontier and Lonshi copper mines.
First Quantum was forced to cull 700 employees, having spent about $US750 million on acquiring and developing the projects, but exploration direc- tor Mike Christie said the com- pany had few regrets.
“People often ask us, ‘do
you wish you didn’t go to the
Congo?’ Well, no, I don’t think
so because without those de-
posits and without the cash
ow that came from Lonshi and
Frontier, I don’t think the com-
pany could’ve done what it did subsequently,” Christie told Africa Down Under.
First Quantum’s portfolio now boasts seven operating mines and four develop- ment projects across nine countries on four continents, including the $US5.5 bil- lion Cobre Panama copper project in the Central American nation of Panama.
Cobre Panama will lift First Quantum’s copper production pro le above 1 mtpa when it comes online in 2019 and con- tinue the company’s legacy of developing projects in dif cult jurisdictions.
“With the lessons of Sentinel [in Zam- bia] and some of the other projects in Africa behind us, we’ve launched off into Latin America and porphyry coppers instead of sediment-hosted coppers,” Christie said.
“We’re quite happy to go places where other people won’t. In Zambia in 1996 there weren’t too many companies go- ing in there...the DRC in 2000 certainly didn’t have too many people going there.”
Described by Christie as the “power- house” of First Quantum, the Kansan- shi mine in Zambia is Africa’s largest copper-producing asset, churning out 226,000t last year after mining 30mt ore and 70mt waste.
“At times it has delivered phenomenal cash ows,” Christie said. “During the boom in 2012, it actually paid $US2 mil- lion in tax a day to the Zambian Govern-
Mike Christie
ment, which is quite a remarkable statis- tic.”
Christie shared his thoughts on why others had strug- gled to understand the geology of Kansanshi, which First Quantum ac- quired in 2001 and commissioned in 2005.
“We’re all used to sulphide deposits and oxide deposits, but this deposit has an awful lot of mixed material in the mid- dle. Some people would call it transi- tional material, but it is basically mixed up with the entire orebody, so treating that through three separate trains on the site has become the secret to the success there.”
– Michael Washbourne
The CD-Rom of Paydirt’s 2016 Africa Down Under Conference will be available soon
Perth,Western Australia
CD Rom includes
• Over 50 presentations • Conference media coverage
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Phone (+61) 8 9321 0355 or email [email protected]
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 37


AFRICA DOWN UNDER REVIEW
Lucapa diamond shines at ADU
It did not take long for Lu- capa Diamond Company Ltd chief executive Stephen
Wetherall to capture the at- tention of his audience at Af- rica Down Under, announc- ing the recent discovery of the world’s largest pink dia- mond at 38.6ct from its Lulo project in Angola.
Brandishing a 404ct rare type 2A white diamond (rep- lica) as testament to the con- tinuing success of the com- pany’s alluvial operations at Lulo, Wetherall said even more exciting discoveries were just around the corner.
Research by Lucapa’s
partner Endiama – the two groups hold the project in JV with local rm Rosas & Petalas – has found only 10% of An- gola’s alluvial diamonds can be traced to known kimberlites, with a staggering 90% sourced from undiscovered kimber- lites.
With the source of its own alluvial de- posits still undiscovered, Lucapa will continue with its kimberlite exploration push over the coming year.
Stephen Wetherall
“However, right now we are focusing on our larg- est target (L259) which is right beneath the area that is producing these stones. [Some] 70% of the large specials that we have re- covered to date have come from a mining area on top of this target.”
In 2015, the Lulo alluvial project generated $US32 million and 10,200ct, but the company has “come on leaps and bounds” in 2016.
Revenue has risen 240% in the year to date, after the discovery of numerous spe- cial sized diamonds, the lat-
“Given the large size, irregular shape and jagged edges of these diamonds, along with the other indicator minerals and geological results we believe that the source of these diamonds is proximal,” Wetherall said.
“We have uncovered 300 targets to date. We have converted 100 of those to known or probable kimberlites. Of the 13 that we have tested to date, ve are dia- mondiferous.
est parcel selling for $US5.8 million. Lucapa con rmed record production of 3,164ct including 59 special sized stones
for the month of July.
“We don’t just recover these [special
sized stones] every other day, we recov- er these with exceptional frequency. So much so that 90% of our revenue comes from these stones. These diamonds sell for much higher than the average dollar per carat price in the world.” Wetherall said.
The diamond company boasts one of the world’s best prices, with an average of $US2,100/ct.
With Lulo delivering such high cash ow and low operating costs of $1.3 mil- lion, Lucapa has invested in upgrading its mining and exploration equipment, and processing facilities.
The company is about to commission XRT technology and larger screens to handle coarse material, and will upgrade its DMS facility to a capacity of 150 tph.
“We have invested in a larger drill rig, capable of drilling to 2,000m. We have already placed the order and paid the 50% deposit, and that should leave port in late September.”
Wetherall said it had been an excep- tional 2016 for Lucapa, and it was hard to imagine the next 12 months being better, but he suspected they would be.
“Lucapa is a growing diamond produc- er with the strong support from our part- ners Endiama and Rosas & Petalas. We have an exciting alluvial and kimberlite project in the most prospective country in Africa,” Wetherall said.
“The future is bright.”
– Jonathon Daly
Tapping the source: Antonio Carlos Sumbula, chairman of Angolan state diamond company Endiama, told Africa Down Under that the kimberlite source of the country’s rich alluvial diamond resources was still to be discovered. Only 10% of alluvial dia- monds have been traced to known kimberlites but when the huge Luaxe kimberlite was found in 2015, it was assumed this would prove the source. However, results have since indicated Luaxe contributed 0% of alluvial diamonds. So, the search remains on, and to encourage foreign investment in the sector, Angola has dropped headline tax rates from 35% to 25% and is now allowing majority foreign ownership of mining concessions.
PAGE 38 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Acacia to grow without Barrick
There are two obstacles holding Acacia Mining plc back from a higher rat- ing according to Australian- born chief executive Brad Gordon.
Making his rst appear- ance at Africa Down Under, Gordon pointed to the previ- ously problematic Bulyan- hulu gold mine in Tanzania as one key obstruction.
“It’s a world-class deposit but not a world-class mine but we’re getting close, the turnaround is almost there,” he said. “The last three quarters we’ve been con- sistently boring and that’s what we want it to be be- cause it’s never been bor- ing.”
For the past nine months,
Bulyanhulu production has
steadied to 79,000oz gold
per quarter and AISC has
dropped to below $US1,000/
oz. In the medium-term, Gordon said the mine will produce 350,000 ozpa at AISC of about $US800/oz.
Another key hurdle is Barrick Gold Corp’s 64% shareholding in Acacia, which until 2010 had been a subsidiary and was formerly known as African Bar- rick Gold.
“Barrick has said that Acacia is non- core to its portfolio, they are ultimately sellers,” Gordon said, adding that he had no idea how Barrick would of oad its stake.
“We’re not going to be sitting here in three to four years time with Barrick still sitting at 64%.”
South Africa’s Harmony Gold Mining Company Ltd is said to be considering Barrick’s stake and there are reports of interest from Australian and North Ameri- can miners.
“Beyond Barrick and Bulyanhulu, we should be valued even higher than what we are today,” Gordon added.
Gordon’s ambition comes as he cel- ebrates three years at the helm of the miner, transforming it from an ailing com- pany burning through its $US600 million cash stockpile to a diversi ed African business with a share price that has surged from about £1/share to as high as £6 on the London Stock Exchange.
The turnaround has drawn interest from some of Australia’s bigger institu-
get access to debt and eq- uity markets,” Gordon said.
“So, we need to be quick before we start to have some competition.”
Along with Mali, Acacia is focused on exploration of its tenement package in Kenya and Burkina Faso with 14 drill rigs recently deployed to all three countries.
“We will nd something, now how big it is who knows, but Africa is still on the track as the place to be in terms of geological potential,” Gor- don said.
“We believe that we have now set the company up for the next 10 years and we’ll start to reap the bene ts of that investment this year and next.”
– Rebecca Lawson
tional funds, and Gordon said Aca- cia had welcomed a couple of those onto its European dominated share register.
“The gold industry and the investment alternatives in Aus- tralia are quite limit- ed, so if you want to invest in gold, there aren’t too many op- tions,” Gordon said.
“Some are start- ing to look more globally for those investments... it makes it more worth my while to come to Australia.”
On the explora- tion front, Acacia is keen to secure more JVs in Mali where it holds three exploration licences in the Senegal-Mali Shear Zone.
“The opportunity for signing these JVs is probably re- ducing as juniors
Brad Gordon
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 39


AFRICA DOWN UNDER REVIEW
Oklo’s Malian exploration push
Acashed-up Oklo Re- sources Ltd is about to attack its recent discovery of a new gold mineralised zone within Mali’s highly proli c western region that has yet to be tested by drilling.
Managing director Si-
mon Taylor told Africa
Down Under that as soon
as the year’s wet season
nished, Oklo would start
a major drill campaign at
its projects within the pro-
li c Senegal-Mali Shear Zone in western Mali.
“We’re going to pepper the area with drilling and try to move Oklo through the exploration phase to resource de ni- tion and development phase in the near term,” Taylor said.
With $9.8 million in cash, Oklo will be keen to nd out the extent of recently discovered gold mineralisation in the southern portion of the Diabarou trend,
where aircore drilling had returned gold grades of up to 21.2 g/t.
Drilling in the northern part of the Diabarou trend has measured this section at 220m long and open along strike to the east and west. Taylor said the trend is a steeply dipping zone with the deepest hole reaching 222m and still in mineral alteration.
Boyd is already familiar with the Sen- egal-Mali Shear Zone, having been in- volved in the discovery of the 5.15 moz Fekolo gold deposit when he was previ- ously with Papillon Resources.
Taylor said Oklo would be guided by Boyd’s experience at Fekola, located 30km from Dandoko.
“We’re chasing alteration, we’re not go- ing to get caught chasing narrow veins under artisanal pits,” Taylor said. “The di- amond core holes that we put in this year con rm there’s alteration assemblages very similar to Fekola.”
Oklo is also keen to drill its Moussalo project, located some 15km from Dan- doko.
“Would you believe in an area where there’s over 40 moz gold, this project hasn’t got one drill hole in it,” Taylor said.
“There’s less mature targets that we’re going to bring up to drilling quickly and have this ready for RC and diamond drill- ing early next year.”
– Rebecca Lawson
Simon Taylor
long gold-in-soil anomaly.
Oklo’s technical consultant Andrew
“There’s a system there, we’re going to chase it and we’re looking forward to drilling,” he said. Oklo is assessing the open pit potential of the Diabarou prospect, located within the Dandoko project that contains multi- ple targets identi ed from drilling earlier in the year for the company to test in its upcoming campaign. Targets will include those within the Disse and Selingouma prospects, with the latter a large 6km
PAGE 40 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Zimbabwe nothing to fear
Prospect Resources Ltd executive di- rector Harry Greaves says compa- nies should not be afraid of investing in
Zimbabwe.
Backed by a board and management
team experienced in the southern Afri- can nation, Prospect is well spread with lithium and gold assets in the country.
Its latest acquisition, the Arcadia lithium project, 35km from Harare, was closely followed by a $16 million capital raising (predominantly to sophisticated Chinese investors) indicating there is willing support for Prospect in Zimbabwe.
As long as Zimbabwe remains under the Robert Mugabe regime it appears other parts of Africa will be more at- tractive to foreign investors, however, Greaves said Prospect has had positive experiences with government thus far.
“I really want to stress the ease in which we nd doing business in Zimba- bwe of all southern African countries,” he said.
“Our interaction with the Zimbabwean Investment Authority, Ministry of Mines,
etc has all been positive and there is a real desire to particularly get junior mining companies in- volved and exploring in the country.
“We have had suc- cessful relations with the Government, we have met all the indi- genisation criteria and that is not something to be feared.”
The Zimbabwean In-
vestment Authority has
approved Prospect’s application to own a 70% equity interest in certi ed Zimba- bwean indigenous company Hawkmoth Mining and Exploration Pvt Ltd.
Greaves said having indigenous share- holders and a local community workers’ trust, was one of the company’s great strengths.
“Those are all very big positives for us and something I would strongly rec- ommend for people coming to Zim’ to
Harry Greaves
do business; look very carefully at getting the right partners who can add value, it is a power- ful tool,” he said.
Prospect’s solid cor- porate structure has al- lowed it to forge ahead on the ground and the company has been particularly active since mid-2016.
In light of the Arcadia transaction, a maiden 48-hole RC and dia-
mond drilling campaign has been com- pleted.
Initial assays received by the com- pany are encouraging with 1-2% lithium grades struck.
A scoping study at Arcadia is expected by the end of 2016, with an exploration target at the project of 15-18mt @ 3.5% lithium set.
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 41


AFRICA DOWN UNDER REVIEW
Zimbabwe eyes platinum throne
Zimbabwe is gear- ing up to overtake South Africa as the world’s largest pro- ducer of platinum.
In a bold bid to curtail South Africa’s stranglehold on the sector, Zimbabwe will bring two new platinum mines on- line within the next ve years.
Zimbabwe is cur-
rently home to three
of the world’s larg-
est platinum mines – Mimosa, Zimplats and Unki – with cumulative production of about 750,000 ozpa.
New mines owned by Todal Mining Ltd (Kazakhstan) and Great Dyke In- vestments Pvt Ltd (Russia) are tipped to more than double the country’s annual platinum output when up and running.
Chinese-owned GPR also has a plati- num project currently at feasibility level.
Zimbabwe Deputy Minister of Mines
Fred Moyo
and Mining Development Fred Moyo said his coun- try’s ultimate target was to achieve sustainable pro- duction beyond 2 mozpa platinum.
“We believe that in the years to come Zimbabwe will take over pole position as the leading producer of platinum in Africa,” Moyo told Africa Down Under.
“Our platinum is sitting quite shallow, has rea- sonably good grades of 3-3.5 g/t and is very, very
those who are interested in platinum to come to Zimbabwe and see the poten- tial,” Moyo said.
According to Moyo, Zimbabwe is “blessed with geological features” and hosts more than 60 minerals, including gold, coal, iron ore, nickel and chromium.
It is estimated that Zimbabwe hosts 12% of the world’s chromium resourc- es, most of which are located along the Great Dyke.
In recent years, Zimbabwe has teamed with organisations from China and Japan to conduct a national geochemical sur- vey and a high technology programme of remote sensing data analysis and map- ping.
“We invite other nations – and we hope Australia is interested – in joining us and our bilateral activities to support the in- vestigative work,” Moyo said.
Moyo also extended an invitation to ASX-listed juniors to peg ground in Zim- babwe and explore selected terrain “un- der speci c negotiated conditions for speci c mineral portfolios”.
– Michael Washbourne
amendable to easy mining.”
Zimbabwe hosts the second largest
platinum resource in the world, behind the feted Bushveld Complex in South Africa. The mineralised zone averages 4 g/t combined platinum, palladium, gold and rhodium and also contains known nickel, copper and cobalt resources.
“There are a lot of opportunities and open ground available for application and investment licences, so we invite
DRC still willing to support miners
Continued transparency and regulato- ry moves by the Democratic Repub- lic of Congo’s government is helping the
country remain an attractive mining des- tination despite a number of challenges.
Speaking to delegates at Africa Down Under, the DRC’s Chamber of Mines deputy secretary general Freddy Elonga said the country had been hit hard by the deterioration of the global market, with the Government taking action to arrest the impact.
For the third time this year, the DRC Government has cut the country’s 2016 growth forecast to 4.3%, down from an original estimate of 9%. The resources sector in the DRC accounts for 95% of total exports.
Elonga pointed to recent moves by the Government to suspend the revision of the country’s mining code and the rein- statement of reimbursing some $US700 million from the value-added tax (VAT) to mining companies, while halting VAT on mining imports, as signs the DRC is willing to support its mining sector in a tough time.
In the past year, the DRC has suffered
multiple mine closures due to declining commodity prices however this has been tempered with discoveries including Afri- ca’s most signi cant copper discovery at the Kamoa project, a JV between Robert Friedland’s Ivanhoe Mines Inc and Zijin Mining Group Co. In addition, Chinese companies are spending big dollars buy- ing stakes in DRC mining developments.
The DRC Government was also look- ing at how to manage and control illegal artisanal miners, Elonga said.
“The Government now is trying to cre- ate structures such as cooperatives so that the artisanal miners can be better controlled,” he said. “The Government normally has to get [the artisanal miners] some sites so they can continue to de- velop their business.
“For sure we’re still having problems like the invasion of tenements but we’re trying to ensure that the artisanal miners are able to keep their revenue and bal- ance that with a good governance mining framework.”
The importance of transparency has seen the DRC’s Chamber of Mines pro- duce reports for the Extractive Industries
Transparency Initiative (EITI), a global standard that encourages accountable management of natural resources and the distribution of resource revenue.
The DRC’s EITI reports, produced in 2015, show the mining industry con- tributed the bulk of total revenues for FY2014 with $US1.35 billion out of a total of $US1.78 billion.
“Through these EITI reports, the DRC mining industry has demonstrated its commitment to work harder on the trans- parency of revenues from the exploita- tion of natural resources,” Elonga said.
Tenacity at fostering a good working relationship with the DRC Government is also paying off, with the Prime Minis- ter now consulting with the Chamber of Mines before making a decision.
“It took a while but at least we’re get- ting there,” Elonga said.
“It’s dif cult for a mining company to nd its way in a challenging country like the DRC but by working together it is possible to make a pro table business and to survive the impossible.”
– Rebecca Lawson
PAGE 42 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Orion eyes beyond production
Despite having a near-term zinc- copper project to bring into produc- tion, Orion Gold NL chief executive Errol
Smart said there was a bigger play for the company to get excited about.
“This is a fantastic exploration oppor- tunity, adding on top of an already ad- vanced zinc-copper development oppor- tunity, this is going to propel Orion Gold into developer base metal, producer/ex- plorer status very quickly,” he said.
Smart was referring to the Jaco- mynspan nickel-copper deposit, which is hosted in an area of South Africa bearing similar characteristics to Western Aus- tralia’s Fraser Range.
“If the explorers in the Fraser Range today drilled intersections like that [JMP38 returned 4.2% nickel] it would be the greatest geological excitement that you can imagine here in West Perth,” Smart said.
“There are massive sulphides, nickel pentlandites, they are exactly the same rocks, exactly the same metamorphic conditions, they behave and look the
same [as the Fraser Range]. There are 14 known depos- its and more than 40km of known ma c/ultrama c de- posits here with only 900m of that having had any drill- ing on it.”
Smart said Jacomynspan represented a huge oppor- tunity in its South African portfolio, however, it is some way behind the company’s Prieska zinc-copper project within the Areachap belt, Northern Cape.
The brown elds play produced 430,000t copper and 1mt zinc from 1971 to 1991 before going into rehabilitation.
Despite being supported by existing infrastructure, the project has been left largely untouched until Orion’s involve- ment.
The company is fast-tracking a feasi- bility study on the project and recently started a maiden drilling campaign.
Results returned so far include 42m @
Errol Smart
4.41% zinc, 2.36% copper, 0.42 g/t gold plus 14 g/t sil- ver from 55m including, 5m @ 9.28% copper from 55m and 6m @ 12.4% zinc from 75m.
At the time of print, drill- ing continued at the +105 level exploration target with results pending as the com- pany worked towards for- mation of a new resource.
“We have worked our technical mine planning around there and this mine
has produced successfully [in the past],” Smart said.
“We know the metallurgical processes required and all the infrastructure is in place for us to get going quickly. That is what we want to do. The deep sulphide orebody is a big attraction over there, an 8.6m diameter shaft is in place down to 1.2km plus ramps from surface down to the existing ore are also in place.”
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 43


AFRICA DOWN UNDER REVIEW
Harmony broadens horizons
Shortly after chief execu- tive of South East Asia operations, Johannes Van
Heerden, presented the Harmony Gold Mining Ltd story to Africa Down Under delegates, the company’s strategy of increasing its production pro le became clearer.
For consideration of $US1 cash, Harmony pur- chased Newcrest Mining Ltd’s 50% share of the Hidden Valley JV in Papua New Guinea.
The buy will see Harmo- ny afforded total control of reserves 1.4 moz gold @ 1.6 g/t and 27 moz silver at 31 g/t and resources of 4 moz gold at 1.6 g/t and 73 moz silver at 29 g/t.
Within three years, Har-
mony expects Hidden Val-
ley to contribute a further 180,000 ozpa gold at AISC of less than $US950/oz to
Johannes Van Heerden
with current operators, and look forward to discussions with any interested people.”
Outside of PNG and South Africa, where Harmony has nine underground operating mines, Van Heerden said the company was looking for expansion into continental Africa.
Underground mining is a core part of Harmony’s business and any opportu- nity where it can deploy this skill-set will be assessed and while gold is a strong focus, Van Heerden said copper was also of interest to the company.
“As seen in our reserve statement we are quite com- fortable in copper and as long as there is gold associ- ated we don’t actually mind the split between copper and
group production, as it looks to expand its output from 1.1 mozpa gold to 1.5 mo-
zpa.
While Harmony
has assumed own- ership of Hidden Valley, it still re- mains in JV with Newcrest at the Wa -Golpu copper- gold project which could be funded from free cash ow generated from Hid- den Valley.
Van Heerden said the company was comfortable oper- ating in PNG and happy to entertain interested parties in JV opportunities in projects at various stages.
“Most of the op- portunities we are targeting are prob- ably at advanced stage as well as in operation,” he said.
“As well as that, we have demon- strated in PNG the value of green elds exploration. We are comfortable JV-ing
gold. We see that both those metals have a bright future,” he said.
“We are looking for something with a reasonable reserve and production pro- le. Obviously it needs to satisfy the cri- teria of margin, ability to mine safely and ability to demonstrate an adequate return for our shareholders.”
In the past ve years, Harmony has steadily increased its underground grade pro le in South Africa, one of the key ob- jectives in helping it maintain and grow margins.
Van Heerden said it was not the com- pany’s mantra to high grade an orebody in light of gold prices, rather it has been a clear objective of Harmony’s to stably mine above 5 g/t gold from underground deposits.
“In open pit terms 5 g/t seems like a lot, in a South African mining environment 5 g/t is not seen as high grade; it is proba- bly at the lower end of the reserve grade of the underground operations there,” Van Heerden said.
“We are proud to say we are one of the only operating companies that have an increasing grade pro le in its portfolio. The reason for that is we have been in- vesting in our South African projects for a number of years through the cycle.”
– Mark Andrews
PAGE 44
OCTOBER 2016 AUSTRALIA’S PAYDIRT


South African amendments to add greater stability
South Africa’s MPRDA Amend- ment Bill will remove the am- biguities which have plagued the
country’s mining industry over the last decade, Deputy Minister for Mineral Resources, Godfrey Oliphant said at Africa Down Un- der.
The MPRDA (Minerals and Pe- troleum Resources and Devel- opment Act) was passed by the South African Parliament in 2015 but was sent back by President Jacob Zuma over concerns there had not been enough consultation with stakeholders and that it could be unconstitutional and inconsist- ent with international trade agree- ments, particularly in the area of bene ciation.
Oliphant said the move was in line with the constitutional pro- cess.
“It was sent back to parliament
to ensure absolute rigour in the drafting and consultation pro-
cess and to ascertain whether
the provisions over bene ciation
are aligned with our international
trade obligations,” Oliphant said,
who added the subsequent delay was because of a parliamentary recess for lo- cal government elections.
Speaking at a subsequent Africa Down Under lunch, Oliphant said he expected the bill to be passed later this year.
The slow progress of the amend- ment bill has been held up by critics as an example of the South African Gov- ernment’s inability to provide an attrac- tive investment environment for miners. Oliphant rejected such suggestions, say- ing investment in the resources sector was actually on the increase.
“The national economy grew – to the surprise of some economists – by 3.3% quarter-on-quarter in the last period, driven in part by 12% growth in mining,” he said. “They may say something else in public but the evidence says investors are still coming to South Africa. In 2015 alone, over 1,500 PLs and MLs were ap- proved in South Africa of which 583 were for prospecting. These are positive signs for the future of the industry.”
Oliphant said the Government re- mained committed to the future of the
Godfrey Oliphant
there are stronger linkages, which makes for a greater multiplier ef- fect,” he said.
South Africa has already devel- oped downstream expertise in the coal-to-liquids and gas-to-liquids sectors and is also building ca- pabilities in the PGM value chain through development of auto-cat- alyst and fuel cell technology.
“This is important work for the platinum industry,” Oliphant said.
Other major challenges remain and in South Africa mining’s nega- tive legacy issues can often out- weigh the positive ones. Oliphant said the Government was commit- ted to ensuring environmental, so- cial and health issues associated with the mining sector would be overcome.
“The next century of mining must also be characterised by environmentally responsible and sustainable mining. Long after the life-of-mine or depletion of re- source, we want to not only see thriving economies, but an envi- ronment that has been faithfully rehabilitated,” Oliphant said.
mining industry in South Africa and the MPRDA amendment bill was designed to create an enabling environment.
Despite other jurisdictions gaining ground, South Africa remains Africa’s largest economy and Oliphant pointed to the advantages its mining sector could count on.
“Our geology simply rocks,” he said. “Our mining sector is mature and resil- ient. We have enviable associated in- frastructure and world-class legal and nancial institutions.”
One aspect of the amendment bill to cause major controversy is the provi- sion for bene ciation and downstream processing. The bill proposes to place restrictions on the export and sale of unprocessed minerals and miners are concerned the legislation will force them to undertake loss-making bene ciation operations in the country.
For Oliphant, the bene ciation legisla- tion is about ensuring mining helps the development of the wider economy.
“Mining has the ability to help other industries develop. We must ensure
“Let us not repeat the mistakes of the past, or to do in other jurisdictions that which we would not be allowed or in- clined to do at home. In South Africa, we are still dealing with the legacy of envi- ronmentally irresponsible mining in the form of over 6,000 derelict and owner- less mines and acid mine drainage which pose real dangers to communities on a daily basis.
“The cost of closing shafts and holes left open as well as rehabilitating land and water systems in retrospect, is exor- bitant and is being borne by the public. This should be unthinkable today.”
The health of former mineworkers is also widely debated in South Africa. Oliphant said the Government continued to work to address the issue.
“Some of these health issues are not emerging until 20 years or so after mining ceased, and due to the asbestos mining in the past, there are still ex-mineworkers being diagnosed with asbestosis.”
– Dominic Piper
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 45


SPONSORED FEATURE
DRA looks to expand beyond metals and minerals
Multidisciplinary engineering group DRA is looking to expand its capa- bilities beyond the mining sector, where
the group has earned its reputation for providing services from geotechnical to systems control engineering.
Speaking on the sidelines of the Africa Down Under conference recently held in Perth, DRA Africa Projects managing di- rector, Johann de Bruin, said the group’s wide array of engineering skills could also be applied in other sectors such as agriculture, water treatment, energy gen- eration as well as storage and distribu- tion thereof.
“The extended decline in the commod- ities market and the focus on sustainabil- ity motivated our diversi cation plans,” says de Bruin. “Even though the group has expanded its expertise to include emerging materials like lithium, graphite, phosphates and potash, the group’s po- tential has expanded far beyond metals and minerals.”
De Bruin believes that DRA has the skills and expertise to develop complex agricultural, water and energy projects, which also present great opportunities.
“Fundamentally, the world needs food, water and energy; everything else ows from that.”
According to De Bruin, the mining in- dustry can play a vital role in driving posi-
tive change and developing long-term solutions around food, water and energy security. As a responsible corporate citi- zen, DRA is acutely aware that a min- ing project of $2 billion has a profound and positive impact on a country and the impact on the availability of water, food and energy needs to be managed in a responsible and sustainable manner, de Bruin said.
His comments are in line with a wider trend to approach resources projects
more holistically and to consider the wider development opportunities created by the injection of commerce into often remote, infrastructure-poor regions, es- pecially in Africa.
DRA has already begun with a move to enhance food security by expanding its expertise to the fertiliser commodities of potash and phosphate. Through subsidi- ary PGBI, DRA holds unrivalled exper- tise in the sugar, bio-ethanol, biomass power generation, timber and food and beverage industries.
De Bruin says through its involvement in these minerals, and with the expertise to deliver large scale agricultural devel- opment projects, the group is in a strong position to contribute to food security.
“Africa has the potential to be the food basket of the world, and this could be the start of that process.”
Through another recent acquisition, DRA strengthened its professional ma- rine capability to offer port and harbour expertise.
As part of its expansion strategy the African engineering expert is also build- ing on its capabilities to add to water se- curity. To this end, DRA plans to source the very best water engineers for its business and has already begun discus- sions with some of the best technical wa- ter experts, says de Bruin. The group is
PAGE 46 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Johann de Bruin


acutely aware of the scarcity of usable, clean water across the globe and will aim to provide both mining and non-mining clients with progressive solutions to mini- mise pollution of water resources.
“Through our knowledge we are able to add value in the management of water,” says de Bruin. “Effective water manage- ment is essential throughout the entire process, from the plan- ning of projects, to the transport, treatment and distribution of the resource; each area fraught with complexities and requiring differ- ent solutions.”
Committed to enhance food security and sustainable water supply, DRA also acknowledges the importance of reliable power supply to continued economic and social development, espe- cially in emerging markets.
Therefore, another pillar in the group’s expansion strategy is to focus on renewable energy.
“Renewable energy is becom- ing increasingly popular in the mining sector and we are looking at a number of renewable energy solutions for mining clients, par- ticularly hybrid solutions,” says de Bruin.
“It is unlikely that that diesel-generated power would ever disappear – especially in Africa and Australia” says de Bruin. “Clients are keen to lessen dependen- cies on traditional fuel sources, and as we develop solutions to challenges, we will unlock great potential.”
Aware of the opportunity, DRA has es- tablished an in-house energy business to build on its strong reputation in electrical engineering.
“We are establishing an energy busi- ness and have begun to acquire the
Rangold’s Nzoro 22MW hydropower project
energy skills of our non-traditional com- petitors to continue to boost those skills,” says de Bruin.
“Our main challenge lies in navigating political and cross-border issues when building projects which will serve more than one country.”
De Bruin believes that an engineer- ing company that can work on a mining project, followed by associated projects in agriculture, energy and water, will con- tribute to the sustainable development of any region.
The early stages of the Tongaat Hulett Factory expansion project in Xinavane, Mozambique
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 47




JV partner to revive Bongou
Predictive Discovery Ltd is on the cusp of landing a JV partner
for its Bongou gold pro- ject in Burkina Faso, according to managing director Paul Roberts.
Bongou hosts a
resource of 1.13mt
@ 3.75 g/t gold for
136,000oz (based on
a 2 g/t cut-off) but has
remained largely dor-
mant since Predictive’s
last drilling campaign ended in July 2015.
But with investor sentiment returning to West African gold projects, Predictive is keen to revive its plans for Bongou, including a scoping study, but Roberts accepts that a JV partner is needed to make that happen.
“We’re in discussions with a very ca- pable party right now, so hopefully that will come to fruition over the next month or two,” Roberts told Africa Down Under.
Predictive has identi ed more than
Paul Roberts
90 targets within 20km of the Bongou resource and last year announced an explora- tion target of 9.4-10.4mt @ 1.5-1.7 g/t gold for 460,000- 560,000oz for those within 10km.
Bongou is the most ad- vanced project in Predictive’s portfolio and the company is eyeing off a potential heap leach operation. Test work on the Dave prospect returned 89% gold recoveries from
as string geochemical anomalies. The best intercept from a recent drilling pro- gramme was 20m @ 10.5/t gold from 38m, including 1m @ 144.5g/t gold and 1m @ 21.4g/t gold.
“We’ve only drilled along a 2km strike length and we’ve only released results from three lines so far, but the results are very interesting,” Roberts said.
“I wouldn’t say we entirely understand this mineralisation, but we do know it’s hosted within a shear zone that certainly has substantial strike length. There’s width, there’s grade and there’s visible gold in one of the higher-grade intervals we panned out of rock chips.”
More results from Boundiali were due at the time of print and Predictive is plan- ning a follow-up diamond drilling pro- gramme for later in the quarter.
Work at Boundiali and Kokoumbo is funded by UK-based private group Toro Gold Ltd, which is earning up to 65% in- terest in both projects.
– Michael Washbourne
rock chip samples.
“It’s certainly a very attractive starter
pit and below that we believe there’s sub- stantial potential in the mineralised gran- ite at depth,” Roberts said.
Predictive’s focus for the past 12 months has been in Cote d’Ivoire where the company has several promising pro- jects, including Boundiali, Kokoumbo and Bobosso.
Boundiali has attracted the most inter- est, with three key prospects discovered
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 49


AFRICA DOWN UNDER REVIEW
Nigeria turns to ‘hidden gem’
Nigeria is looking to mining as a poten- tial saviour for its economy.
Propped up for several decades by the
oil and gas sector, Nigeria has become Africa’s economic leader but has agged a move away from dependence on hy- drocarbons and into a greater focus on hard rock exploitation.
Mining contributed about 4% to Nige- ria’s GDP during the 1960s, however, it has slipped to just 0.33% in recent times.
With oil prices oundering, Nigerian Minister for Solid Minerals Kayode Fay- emi said it was time for the rejuvenated mining sector to play a bigger role in the country’s future growth.
“Given what is happening to the oil and gas market around the world, we’ve lost about two-thirds of our revenue, from a top price of over $US100 per barrel of oil to what is hovering today between $US47-49 per barrel,” Fayemi told Africa Down Under.
“Clearly Nigeria needs to be look- ing at other areas in order to generate more resources for our economy. Of
course, mining comes in strongly as one of the key areas to focus with regards to our diversi - cation plans.”
Nigeria’s hopes for a recognised mining sec- tor were boosted earlier this year with the dis- covery of a rare nickel occurrence by Australi- an-based private group Comet Minerals Ltd.
Kayode Fayemi
say Nigeria is not a mining nation,” Fayemi said.
“We’ve never done well in taking advantage of devel- oping our mineral prospec- tivity into concrete projects. There have been some deposits that have been developed and Australian companies are quite active on the ground in working up some of those key minerals which are beginning to gain attention, but by and large
Other minerals
known to be in abundance in Nigeria in- clude coal, lead-zinc, iron ore and gold, however, there are no recognised miners or explorers currently based in the coun- try.
Fayemi acknowledged his country still had a long way to go before Nigeria would be declared a genuine mining na- tion.
“Even though we have the right regula- tory regime and Nigeria is really a well- endowed, mineral-rich country, it’s fair to
we haven’t done very well.
“You may say Nigeria is no Ghana,
Nigeria is also no South Africa yet, but Nigeria may be that hidden gem you are looking forward to in terms of completely developing a mining sector.”
Fayemi, who was appointed to his cur- rent role last October, said security re- mained a concern for potential foreign investors, but his country was working hard to reduce all related risks.
– Michael Washbourne
PAGE 50 OCTOBER 2016 AUSTRALIA’S PAYDIRT


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