October16 Australia's Paydirt

Success is simple at Sovereign
Graphite hopeful Sovereign Metals Ltd has taken enormous con dence from the rst batch of metallurgical test
work on its Malingunde project in Malawi. On the opening day of Africa Down Under, Sovereign announced recent test work had achieved a combined concen- trate across all ake size fractions grad- ing 97.3% TGC, with about 50% in the medium, large and jumbo ake size frac-
tions (above 149 microns).
Concentrates were produced using
a simple owsheet that incorporates a scrubber instead of a primary crusher and mill, offering potential capital and operational cost bene ts.
“Many graphite projects take many dozens or even hundreds of otation tests to achieve a good result and some don’t even achieve a result,” Sovereign managing director Julian Stephens said.
“Our very rst otation test produced some fantastic metallurgical results... we’ve got all the ingredients for a low cost operation.”
Prior to the metallurgical test work be-
ing completed, Sovereign announced a series of en- couraging hand auger drill- ing results, including best hits of 8m @ 13.8% TGC, [email protected]%TGC,9m@ 18.8% TGC, 9m @ 16.1% TGC, 7m @ 11.3% TGC, 10m @ 16.3% TGC and 8m @ 17.9% TGC.
Sovereign was awaiting
the results of a short dia-
mond drilling campaign at
the time of print. A 6,000m aircore drilling programme is slated to begin this month before the next series of metallurgical test work is undertaken in early 2017.
“We have shown that this deposit has approximately 20-30m thicknesses from surface of soft saprolite,” Stephens said.
“Why is this important? Saprolite is free dig, so no drill and blast required, very cheap mining and very low strip ra- tio. It’s also thick and it’s consistent, large and high-grade.
“Saprolite is the soft, weathered mate-
Julian Stephens
rial formed above primary deposits. These types of deposits have the poten- tial for signi cantly lower capital and operational costs than hard rock graphite deposits.”
Sovereign holds about 4,000sq km of prospec- tive tenure in Malawi – believed to be the larg- est graphite package in Africa – and Malingunde
is within 20km of key rail and power fa- cilities.
Meanwhile, the company has tempo- rarily put its other Malawian graphite pro- ject, Duwi, on hold while it completes the next phase of work at Malingunde.
A recent scoping study found Duwi (86mt @ 7.1% TGC for 6.13mt) could produce 110,000 tpa of graphite concen- trates over a minimum 20-year mine life for an initial capex of $US112.4 million.
– Michael Washbourne
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 51


SPONSORED FEATURE
Communication the key to African development
Amec Foster Wheeler has a long his- tory of delivering complex projects across Africa, including the current EPCM contract for one of the largest uranium projects in the world – Husab in Namibia.
The company’s African mining capabil- ity was bolstered in November 2014 by the acquisition of MDM Engineering, a minerals process engineering and pro- ject management company, with more than 24 years’ experience in delivering mining projects around the globe. MDM is currently delivering a number of pro- jects across Africa including an EPC for Petra Diamond Ltd’s Cullinan mine in South Africa. The two companies are now fully integrated, with MDM residing in Amec Foster Wheeler’s mining of ces in Bryanston, Johannesburg.
Paydirt recently interviewed Amec Foster Wheeler’s director of mining and metals for the Asia, Middle East, Africa and Southern Europe region, Malcolm Brown, on challenges faced in delivering projects in Africa and how to overcome them in the current market.
It has been a tumultuous period for the resources sector globally. How do you feel the sector has changed over the last ve years?
With fewer projects going ahead, re- duction in workload has created a much
more competitive environment and the cost of services has become a critical criteria for our customers. At the same time, all of the service industries have
also been reducing their numbers which has enabled the industry to retain some of the best talent available. Really, it’s a double win for the customer – lower costs and better quality.
We’ve de nitely seen less juniors oper- ating in this space due to lack of funding. We’re left with companies who are more committed to developing and some that have been taken over by foreign inves- tors. The result is we now have compa- nies more nancially capable of getting projects into production.
Africa has perhaps failed to pro- duce as many world-class projects as was initially hoped at the start of the mining boom. Why was this and what lessons have been learnt from that inability to transform potential into reality?
Irrespective of where it is, a large project requires a large investment of capital and a high level of certainty. De- veloping world-class projects generally comes with world-class sized budgets and for companies to commit such large amounts of money they require greater long-term political and cost stability.
Most larger projects also require sub- stantial infrastructure. Infrastructure in large parts of Africa is immature and un- able to support these developments; this
PAGE 52 OCTOBER 2016 AUSTRALIA’S PAYDIRT
The Husab uranium project in Namibia – one of the largest resources projects currently under development in Africa – is being built by Amec Foster Wheeler
Amec Foster Wheeler’s director of mining and metals for the Asia, Middle East, Africa and Southern Europe region, Malcolm Brown


“Above all, the ones who have succeeded are the ones that have taken the time to build the important local relationships.
project site is complex due to its brown- What advice do you give to clients
elds nature and the fact it is being built within an operating plant that is over 100 years old. This has meant that the exca- vations are exposing services, old equip- ment, rock outcrops and the tailings de- posits from years of operation which is not without its challenges but work is still progressing well.
What are the key points to success- ful project development in Africa?
I’d have to say certainty, strong gov- ernment relationships, a willingness to work with local communities and utilising local expertise. Understanding all of the logistics is vital in terms of getting materi- als into country. Above all, the ones who have succeeded are the ones that have taken the time to build the important local relationships.
The infrastructure gap remains one of the biggest challenges in African resources development. Is it possible to overcome the infrastructure gap? How does a company such as Amec Foster Wheeler
and its clients
manage that gap?
Owners will have to work closely with the Government to build that infrastruc- ture, whether it is rail, roads, ports or power station. But rstly, you need to work out whether the economics add up after adding that infrastructure. This is no different to remote projects in Australia such as the Roy Hill iron ore mine. It also de- pends very much on the commodity. The precious met- als such as gold, diamonds, etc have less infrastructure demands whereas the bulk commodi- ties will always re- quire signi cant in- frastructure.
There are other contentious is- sues remaining on the continent.
regarding issues such as local con- tent requirements and downstream processing and bene ciation require- ments?
Owners need to develop good rela- tionships with the Government and truly understand what their drivers are, what they’re trying to achieve and how this de- sire can be met through the project. If, at the end of the day, the economics don’t stack up, it’s always going to be a chal- lenge.
Owners must always be involving the local communities and industries as much as they can as it’s important they see some bene t owing back into the local populace, via direct employment or via supporting local industries. The ‘social licence to operate’ is still critical factor in the long-term success of new mining projects.
means companies need to think about building this infrastructure themselves, at signi cantly greater capital cost.
Amec Foster Wheeler has been in- volved in a number of the few world- class projects being built in Africa. How and why have these projects succeeded?
We have been delivering the EPCM contract for the Husab uranium project since 2012. This project has a signi cant amount of Chinese investment, with the owner committed to the project to feed its downstream power stations. The mo- tivation behind such a large project go- ing ahead at the time wasn’t standalone economics and we’ve seen a number of Chinese companies making similar investments in order to secure supply. Engaging the local Namibian workforce has been very important at Husab – at peak we’ve had over 6,000 local workers on site.
We are also delivering the EPC con- tract for Petra Diamonds – a key reason this project has been so successful for us is our relationship with the customer, enabling total transparency and strong collaboration around our customer’s pri- or learnings. We’ve been able to make good use of these to achieve the required savings on capital cost and opex. The
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 53


AFRICA DOWN UNDER REVIEW
There was no shortage of media spotlight on Africa Down Under 2016 at the Pan Paci c Hotel in Perth.
Veteran mining identity Hugh Morgan used the conference to tell the world about Comet Minerals Ltd’s unique nickel nd in Nigeria, while Acacia Mining plc chief executive Brad Gordon’s rst appearance was well received.
However, one of the stars of the show was Kenya’s newly appointed Cabinet Secretary for Mining, Hon Dan Kazungu.
Kazungu’s lively presentation in the rst session was full of enthusiasm and optimism, which is a good way to describe the mood at Africa Down Under 2016.
While commodity markets remain volatile and mining companies prudent with their cash, there is no doubt sentiment in mining is changing for the better and investors are once again warming to opportunities on the continent.
In among the serious capacity-building discussions and forums, events such as the Ministerial Dinner at the State Re- ception Centre, Kings Park, and the annual Africa Down Under Cup were showcased during ‘Africa Week’.
And, once again Bryan Charlton from Picture This Photography, was on hand to capture all aspects of the conference from every angle.
PAGE 54 OCTOBER 2016 AUSTRALIA’S PAYDIRT


AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 55


AFRICA DOWN UNDER REVIEW
Miners can bene t from a fair go
Mining companies must embrace the notion of “fair mined” miner- als if they are to satisfy increasing de-
mands for transparent supply chains from customers, a prominent African law rm said at Africa Down Under.
The ethical nature of mining has been brought into prominence over
the last decade following a string of revelations regarding “con ict min- erals”; metal production from which pro ts have been used to fund armed activity on the African continent. Diamonds, gold and tantalum have been the most queried minerals and Herbert Smith Freehills partner Ber- trand Montembault said end-users such as consumer companies like high-end jewellers, Apple and Tesla were placing increasing pressure on miners to prove their minerals had been ethically sourced. However, this trend represented an opportunity for mining in Africa.
“Final customers are more and more interested in getting fair mined minerals and responsible mining will play an im- portant role in the future of the industry,” Montembault said. “This is a real oppor- tunity for the mining business in Africa. By securing responsible supply chains, for example, miners can gain a competi- tive advantage.”
Montembault admitted the issues of responsible mining and gaining a social licence to operate were impossible to de ne from a legal perspective but re- mained among the top 10 risks identi ed by mining and metals companies.
“It is not a contract or legal document. It is about acceptability by the stakehold- ers; that the project is seen as legitimate, credible and creating trust.”
The last 15 years has seen the scope
ment commitments and ensure local content requirements – both procure- ment and employment and training – are adhered to.
“Countries are keen to make sure companies commit to a speci c time schedule for development,” Montem- bault said.
Human rights is another area in which companies are now held ac- countable.
“Human rights is now a critical is- sue,” Montembault said. “We have completely changed the paradigm of human rights. It used to be responsi- bility of the states but there is now an obligation for companies to ensure hu- man rights are not breached. And hard sanctions can follow for failure to do so.”
of social licence also expanded to in- clude economic, environmental and so- cial considerations.
“In the past, the main constraints to project development were negotiation with government and access to capital but now there are environmental and so- cial issues which have to be taken into context. You have to take care of the so- cial licence during the whole life of the project from exploration to closure of the mine and it should never be taken for granted.”
Montembault said miners had to en- sure their contracts with governments were balanced otherwise they would be vulnerable to review at later dates.
“You need to have fair deals if you want the deal not to be challenged during re- visitation exercises,” he said.
Governments are also increasingly in- sistent that companies stick to develop-
Bertrand Montembault
Land rights were another vexed area of the social licence debate with many African countries having incomplete laws
or laws which are not enforced. “Managing land rights may prove very challenging but it has been established that miners need free, prior and informed consent from all local communities, not just consultation from indigenous com-
munities.”
Above all, Montembault said, it was
important to understand the individual local concerns of host communities and governments.
“Understand what is locally relevant or important. Once you have done that there are various legal tools to use to en- sure you have a responsible mine. There are a number of global standards avail- able, not just relating to responsible min- ing but that relate to parts of responsible mining.”
– Dominic Piper
PAGE 56 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Sissingue on track for Perseus
Perseus Mining Ltd is on track to pro- duce rst gold from Sissingue in Cote d’Ivoire in late 2017.
Just days before Africa Down Under, the company received full credit com- mittee approval for a $US60 million debt facility from lenders Macquarie Bank and BNP Paribas for the development of Sissingue.
Earlier in the year, a $102 million eq- uity raising allowed Perseus to start de- velopment activities at Sissingue which is costing $US100 million to build.
The project debt facility with Macquar- ie and BNP Paribas is expected to be available for draw-down in the December quarter.
Compared to the 220,000 ozpa Edi- kan gold mine Ghana, Sissingue is a much smaller operation, however, its im- portance to Perseus’ ambitions to be a 500,000 ozpa producer 2021 is not being underestimated.
Sissingue is expected to deliver 75,000 ozpa at AISC of $US632/oz over ve years for Perseus.
It will be the company’s second pro- ducing asset, but rst in Cote d’Ivoire, where Perseus is xed on developing a potentially much larger scale project at Yaoure.
Yaoure was the jewel in the crown in the takeover of London-listed Amara Mining earlier this year.
A DFS on Yaoure is expected to be completed by the June 2017 quarter, while a 42,000m drilling programme is set to begin in the near term.
Perseus is con dent Yaoure will be a low-cost operation and is preparing its team at Sissingue to move.
“As soon as Sissingue is nished being developed, we will move our team to the Yaoure project,” Perseus chief executive Jeff Quartermaine said.
“Sissingue is a smaller operation lo- cated in the north of Cote d’Ivoire. We commenced developed of that project earlier of this year and I am very happy to say that things are moving along well there. That project is more or less on rails at the present time and we expect to see rst gold coming from there in Decem- ber next year. It is a fairly short mine life, but it is reasonably high grade [average 2.4 g/t] and consistent production costs. That also means we have a good oppor- tunity to generate cash, the development schedule is well set, things are moving along according to plan, exactly as we would have expected.
“[Sissingue] gives us a very good ow into the next project, which is the Yaoure project. In a sense the Sissingue project is part one of a two-part strategy for de- veloping our business in Cote d’Ivoire,” he said.
While Cote d’Ivoire is a country Perseus is expand- ing into, Ghana, namely through Edi- kan, has been the pillar of growth for the company.
Quartermaine ad- mits it has not been all smooth sailing at Edikan, and with another $20 million to be invested in the mine in FY2017, AISC – $US1,285- $US1,595/oz – is expected to be high for the December 2016 half, but is ex- pected to improve thereafter.
“As we move into the second half of the year our pro- duction levels go up, our costs come down, our margin improves and our business is look- ing very strong and that continues in the rest of the life of the
Jeff Quartermaine
project. The future of the Edikan mine is particularly strong,” Quartermaine said.
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 57


AFRICA DOWN UNDER REVIEW
Shifting sands delight Strandline
When Strandline Resources Ltd merged with Tom Eadie’s Jacana Minerals Ltd last October, the company was struggling for funding and only had a very small resource in Tanzania on its books.
In the background, there was very lit- tle love for the mineral sands sector as prices for zircon, rutile and ilmenite con- tinued to slide.
Fast forward 12 months and a $6.6 mil- lion equity raising underwritten by new major shareholder Tembo Capital has boosted Strandline’s cash position and the company now has three growing re- sources to spruik.
Mineral sands prices are also on the way up and while Strandline is yet to see a lift in market value, key players such as Iluka Resources Ltd, Rio Tinto Ltd and Base Resources Ltd have enjoyed posi- tive runs.
Eadie expects his own company will have its time in the sun within the next 12 months as prices continue to recover.
“By this time next year we’ll still be well
nanced, we’ll certainly have projects at the feasibility stage and we might even be in production at Fungoni,” Eadie told Africa Down Under in what was his last company presentation before stepping down as Strandline’s managing director on September 19.
“We’re in pretty good shape to prove up these resources instead of just sit- ting on them year after year. We’re very excited about having a really aggressive exploration programme in play right now and getting good results.”
Strandline recently concluded a brief drilling programme at Fungoni, which hosts an indicated resource of 11mt @ 3.1% heavy minerals and an inferred re- source of 3mt @ 1.7% heavy minerals.
A scoping study was completed on a high-grade shallow portion (2.4mt @ 8.4% heavy minerals containing 22% zir- con, 4% rutile and 44% ilmenite, includ- ing 58% titanium dioxide) of the Fungoni resource earlier this year, putting it in the frame to be Strandline’s rst producing asset.
“We’re looking at a nice, cheap, quick production scenario there,” Eadie said. “We’re only 30km from the port of Dar es Salam, so we think it’s got an excellent opportunity to make a bit of money, even at today’s prices.”
A 5,000m drilling campaign was ongo- ing at Tanga South, comprising the Tajiri (19mt @ 5.1% heavy minerals) and Tajiri North (40mt @ 3% heavy minerals) re- sources, at the time of print.
Eadie said the outlook for mineral sands was encouraging despite prices remaining below modest levels.
“Green shoots didn’t show in mineral sands quite as early as they did in some other commodities and it’s really only been in the last six months prices have increased,” he said.
“There doesn’t seem to be any good low-cost discoveries around the world, so we think the supply-demand factors are going to be good for mineral sands prices, especially titanium, in the next few years.”
– Michael Washbourne
PAGE 58 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Bannerman leaps to the front
Bannerman Resources Ltd is at the head of the queue for the “inevitable” turnaround in the uranium price, accord-
ing to managing director Brandon Munro. Sentiment towards uranium has waned since the Fukushima incident in 2011, but Munro and his team have identi ed six potential catalysts which will soon posi-
tively impact prices for yellowcake. Those include the restart of several nuclear reactors in Japan, geopolitical disruption in Kazakhstan and Niger and secondary demand increases as China recommences stockpiling and India en-
ters the market.
Speaking at Africa Down Under on the
six-month anniversary of his return to Bannerman, Munro said now was a com- pelling time to invest in uranium despite the metal trading at 10-year lows.
“The shape of the [pricing] curve belies the fact the nuclear industry is experienc- ing an unprecedented level of growth and we have a well accepted, well ac- knowledged supply shortfall looming in 2020/2021,” Munro said.
“The dynamics, once you understand them as we do, point to not only a correc- tion but a very abrupt price correction.”
According to Munro, China has un-
derestimated its nuclear ambitions and current stockpiles and production levels will fall well short of the long-term clean energy targets.
“China is doubling its
current nuclear demand
over the next ve years
and then doubling that
again by 2030,” Munro
said. “Now that seems like
a big number and it’s often
called ambitious and so
forth, however, if you look at what those numbers represent relative to China’s clean energy commitment of 20% by 2030, those ambitious numbers really aren’t quite so ambitious after all.
“If China hits the top end of its guid- ance by 2030, which is 150GW of nucle- ar power, that’s about 150 nuclear reac- tors, which only meets about 5% of the clean energy target of 20%. That gap of 15% is partly made up by hydro inven- tory...however, with only 10% of today’s Chinese energy requirements met by clean energy, we don’t see how hydro- renewables and gas can scale in China to the extent required to meet that 20%.”
Brandon Munro
If Munro’s assumptions prove correct, Banner- man’s Etango project in Namibia could be the one of rst undeveloped urani- um assets to enter produc- tion to meet that demand.
An optimised DFS on Etango was completed late last year, agging produc- tion of 7.2 mlbpa over an initial 15.7 years of mine life and generating peak annual free cash ow of
$US392 million.
Bannerman has spent the past two
years constructing and operating a heap leach demonstration plant at Etango, ef- fectively de-risking the project and posi- tioning it for development when funding is secured.
“There’s something really fantastic about our ore,” Munro said. “It leaches very, very well, it’s incredibly stable and simple from a mineralogy point of view and what we’ve seen from our demon- stration plant is we can achieve a 93% extraction in only 20 days.”
– Michael Washbourne
Minbos ags lower capex, opex
Initial bulk sample test work has agged lower capital and operating
costs for Minbos Re- sources Ltd’s Cabinda phosphate project in An- gola.
Minbos collected sam-
ples of 8t and 10t from
the central and south-
ern portions of the high-
grade Cacata deposit to
assess the viability of
two treatment options as
part of a trade-off study leading into the BFS.
A 5t sample of DSO grade material was pilot-tested by equipment suppli- ers in the USA, while a 10t “scrub and screen” sample was analysed and tested by Mintek in South Africa.
The favoured treatment route will be incorporated into the upcoming BFS.
Final test work results are due in De- cember, but Minbos chief nancial of cer
Stef Weber
Stef Weber said the com- pany was encouraged by the ndings to date.
“If the test work on the DSO option is successful, clearly that will dramati- cally reduce our capital and operating costs and also our lead times,” We- ber told Africa Down Un- der.
“We are getting in- creasingly con dent that this will be a low capex
right, developing [Cacata] will demon- strate the attractiveness of Angola, spe- ci cally when it comes to logistics and infrastructure, and that will unlock the value of the potential of the remainder of the Cabinda resource,” Weber said.
Minbos could receive a cash injection of about $7 million from almost 700 mil- lion options which are exercisable at 1c/ share on December 30. Weber said that would be more than enough funding to carry the company through to the com- pletion of the BFS and early stages of development at Cacata.
“The timing of the BFS will be deter- mined once we complete phase one of the trade-off studies,” Weber said.
“We’ve got a busy programme ahead of us between now and into 2017.”
Minbos has also signed a LOI for ac- cess to 800,000 tpa at the new Cabin- da port, now under construction, about 60km by road from Cacata.
– Michael Washbourne
and low opex project.”
Weber said the company was aiming
to produce a 32-33% rock phosphate product, which is in line with Moroccan benchmark pricing.
Minbos has identi ed Cacata (resource of 15.2mt @ 24.5% P2O5) as the rst cab off the rank at Cabinda (391.3mt @ 9.2% P2O5), but Weber said it was only the start of a larger development picture.
“Although it’s a great project in its own
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 59


AFRICA DOWN UNDER REVIEW
Wet fails to stall Vital push
Past drilling success has spurred Vital Met- als Ltd to endure the pain
of drilling in the wet sea- son as it prepares to re- lease a pipeline of news from its Kollo gold project in Burkina Faso.
The company is cur-
rently ramping up a
2,000m RC drill pro-
gramme, following the
recently completed
rst phase, eight-hole
diamond campaign de-
signed to test depth ex-
tensions to known gold mineralisation.
The drill campaign rmly places Vi- tal back in Burkina Faso with a scoping study under way to investigate the early- stage development potential of the Kollo project. Vital recently raised $1.02 million with drilling contractor Ausdrill Ltd as a cornerstone investor.
Managing director Mark Strizek told delegates at Africa Down Under that Kol- lo’s location in an area with multi-million ounce potential, combined with the right rocks and structures, was driving the team to push through the wet season.
“We think it’s well worth the pain be-
cause we’ve got some fantastic drill results that we want to follow up and see what we’ve got,” he said.
Results from diamond drilling are expected shortly, and Strizek added that would mark the start of a pipeline of news and valuable information to in- crease the understanding of the extent of gold min- eralisation in the project.
within the tenement that is located on the proli c Markoye Fault Corridor. There were also extensions along the Kollo trend to the south and east and recently, as part of regional mapping on Kollo’s Eastern Boundary shear, geologists have discovered two, 150m-long artisa- nal workings near the Nabenia zinc pros- pect.
In addition, there are drill-ready tar- gets at the Boungou South gold prospect where rst pass RC drill results returned 5m @ 5.59g/t from 31m, including 1m @ 24.97g/t from 35m, a 600m gold-in-soil anomaly at the ADB prospect and zinc prospects.
“We’ve almost got too much on our plate when you start looking at the op- portunities that exist in front of us,” Strizek said.
For now, the focus remains on Kollo and preparing for the ow of information to come from the drill campaign.
“We see Kollo as having some very, very good growth potential and we be- lieve we’ve got a good tenement package with a strong pipeline of results and gold targets that can be generated from that,” Strizek said.
Mark Strizek
which stretches 400sq km.
“The rst hole from the get-go had
some very good grades,” he said. “How- ever, maybe because of that success we haven’t had a real good opportunity to look at what we’ve got and the more we look, the more we seem to be nding.”
Strizek said there were encouraging signs of gold mineralisation elsewhere
Previous drilling at Kollo had returned intercepts of 5m @ 60.36g/t from 75m, including 2m @ 128.5g/t and 44m @ 6.39g/t from 8m. While the Kollo project has generated results right from the start, Strizek said this success had perhaps precluded the exploration of the rest of the tenement,
Gold may be the dominant mineral in Burkina Faso, but Alfa Oumar Dissa wants the rest of the world to know his
country is prospective for more than just the precious metal.
Burkina Faso’s Minister of Energy, Mines and Quarries told Africa Down Un- der that gold “can be found almost eve- rywhere on the national territory”, with several Australian-based companies, in- cluding Predictive Discovery Ltd, Gryph- on Minerals Ltd, West African Resources Ltd and Ampella Mining, pouncing on available ground over the last decade.
However, Dissa is keen for his country to be recognised for more than just its gold potential, highlighting its prospec- tivity for nickel, zinc, lead, manganese, titanium, vanadium, phosphate and lime- stone.
Some of the biggest non-gold deposits in Burkina Faso include Bonga (20mt @ 1.2% nickel), Aloub-Djouana (100mt @ 20% P2O5), Perkoa (6.9mt @ 18% zinc
and 20 g/t silver) and Tambo (19mt @ 52% manganese).
“Burkina has established a long list of mining outcrops and other signs of mineralisation largely located within the Birimian volcano-sedimentary belts,” Dissa said.
Despite the Minister’s ambitions for the aforementioned minerals, gold is unlikely to be unseated as the mineral of choice for those looking at Burkina Faso as a potential investment destination.
Ten major industrial gold mines have been established in the last decade, in- cluding two in 2016, namely Endeavour Mining Corp’s Karma and Roxgold Inc’s Yaramoko operations.
“One should also note the ongoing construction of the industrial gold mine of Hounde, which will be the biggest mine in Burkina, and that of Kiaka,” Dissa said.
“There are many advanced projects, including the gold deposits of Bombore, Mankarga and Balogo in the Nahouri
province, Yeou in Sanmatenga and Na- tougou in Tapoa.”
With interest for gold across the key global markets still high, Dissa was hope- ful his country’s mining sector would be subject to more foreign investment over the coming years.
“Burkina Faso has a mining code de- signed to favour and protect foreign in- vestment,” Dissa said.
“This mining code, adopted in July 2015, aims at facilitating the establish- ment of mining companies in Burkina Faso, while guaranteeing a competitive- ness through several regulatory and in- stitutional measures.
“The code makes provision for tax and customs advantages favourable for in- vestment, the creation of mining funds to promote community development, mine closure and rehabilitation, and securing artisanal mining sites and training in the geological science.”
– Michael Washbourne
Burkina more than just gold
– Rebecca Lawson
PAGE 60 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Tiger chases cobalt tale
Tiger Resources Ltd is on track to begin ramp- ing up copper production at its Kipoi project as it con- tinues to push ahead with plans to produce cobalt.
The company is nearing the end of a debottleneck- ing programme at the sol- vent extraction and elec- trowinning (SXEW) plant at Kipoi, located in the Demo- cratic Republic of Congo, with copper production set to increase by some 30% to 32,500 tpa.
Managing director Mi- chael Grif ths told Africa Down Under the company expected to have the tail- ings storage facility (TSF) under way before this cur- rent wet season, due in October. The TSF is part of the tank leach where steel erection is currently in pro- gress.
“Its progressing exceedingly well and its all due for completion by the end of November,” Grif ths said.
Tiger is currently reprocessing stock- piles at Kipoi. In the 2016 June quarter, technical issues dented production, with lower than expected copper cathode re- covery of 5,541t from the heap leach op- eration. AISC were US$1.57/lb.
“The issues that mining can have can attack you from anywhere,” Grif ths said. “What you need to do is be nimble enough to be able to nd out the prob- lems very quickly and do your best to recover from that. I’m happy to say that we’ve managed to recover the copper that closed off on us prematurely.”
Heap leach recoveries started improv- ing from mid-May onwards and for the month of June Kipoi produced 2,203t of copper cathode. However, Tiger has had to reduce its annual 2016 production guidance from 26,000t to 28,000t of cop- per cathode to 25,000t to 26,500t.
The potential production of cobalt at Kipoi could be another revenue source for Tiger, which recently decided to push ahead with a metallurgical testwork pro- gramme to con rm process ow sheets and rm up capital and operating costs.
“We have a latent amount of cobalt in our system,” Grif ths said. “Until recent times the cobalt price hasn’t been suf - cient to make putting this into the produc-
intermediate product as a rst step.
The estimated capital cost for a 1,000 tpa cir- cuit is $US22 million.
“Capital is the key for us,” Grif th said.
In July, Tiger drew down $143 million of a total $162 million facility.
“We’re looking at co- balt not being a pana- cea but something that will add signi cant value to the company’s op- eration over the life of mine.”
The cobalt metallurgi- cal testwork is expected to be completed by De- cember 2016.
– Rebecca Lawson
tion circuit worth- while.
“Clearly at cur- rent cobalt prices, it’s looking pretty at- tractive.”
The price of co- balt is currently about $US12.25/lb. The commodity is a critical raw material input for lithium bat- teries.
Tiger said a re- cent study by in- dependent engi- neering company Mintrex Pty Ltd found there was suf cient cobalt potential within the current Kipoi cop- per leach circuit to warrant further in- vestigation.
Grif th said the study identi ed two cobalt processing methods, with Min- trex recommending development of a cobalt hydroxide cir- cuit that produces a cobalt hydroxide
Michael Grif ths
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 61


AFRICA DOWN UNDER REVIEW
Frances impressed by Ethiopia
Side functions have become a popular attraction for Africa Down Under delegates. Paydirt editor Dominic Piper (left) convened a special lunch time discussion on investing in Ethiopia. Panel members included Ke head of operations in Ethiopia Wayne Nicoletto (second left), Embassy of Ethiopia, minister counsellor for economic diplomacy, Jemal Beker (second right), and Dakota managing director David Frances
Having forged an impressive career in the DRC leading the Mawson West Ltd team onto the TSX with a market cap
of $250 million, David Frances is well aware of the intricacies of operating in Africa.
Now involved with lithium-hopeful Da- kota Minerals Ltd, Frances is scouring the globe for opportunities in the space and Ethiopia is showing some appeal as a destination to do business.
Frances said he was encouraged by how well the country was organised.
His comments came during a special lunch time discussion in which Paydirt editor Dominic Piper was also joined by Ke Minerals plc head of operations in Ethiopia, Wayne Nicoletto, Embassy of Ethiopia, minister counsellor for eco- nomic diplomacy, Jemal Beker.
“If you are going to talk to people to nd out things – how to peg tenements or have to do anything at all – you can go to the Mines Ministry for an address and the Mines Minister is at the address,” Frances said. “You can speak to them about these things, whereas places like the DRC, sometimes you are not quite sure who you are meant to speak to and
then nding someone in the DRC is quite dif cult because generally they are in Eu- rope. So it is a very dif cult place to do business compared to what I have seen in Ethiopia so far.”
Additionally, accessing pre-competi- tive data in Ethiopia is achievable, how- ever, this is an area which can be im- proved, according to Nicoletto.
“It is not electronic, so it is a bit of a slog but all the information is there. We have done that and continue to improve our database but you can go to the ge- ological society and nd information,” Nicoletto said.
Nicoletto’s Ke is developing one of the few commercial mines in Ethiopia and it is the country’s inexperience in hosting such projects which may be holding in- vestors back from exploiting the coun- try’s mineral resources.
However, Nicoletto said investors were warming to Ethiopia and hoped Ke ’s part in bringing the Tulu Kapi gold project on stream would help set the country up to prosper from mining activities.
“We are learning along the way with the country on how to do things. Our min- ing licence took about six months to get
and hopefully we are creating a template for future mines in the country,” Nicoletto said.
The Government has shown a pen- chant for backing industry and has com- mitted to spending $20 million to develop infrastructure in support of the 100,000 ozpa Tulu Kapi gold play, which will give it a 20% stake at project level.
While the Government has shown a desire to support mining, Nicoletto said the investment landscape in the country had changed slightly.
“The banks themselves are stepping away but what we are nding is that eq- uity investors and non-banking nancing institutions are coming, so they are more the people that we are tapping into,” he said.
“The Development Bank of Ethiopia has committed to $40 million for or in- vested in the project, so from inside the country we have a lot of support. Exter- nally, it is more the non-banking nanc- ing institutions and more the equity mar- kets starting to open up.”
– Mark Andrews
PAGE 62 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Ethiopia a top choice for mining
Ethiopia is one of the rising economies in Africa, with manufacturing and agri- culture key areas of focus for the Govern-
ment, Minister Counsellor for Economic Diplomacy, Embassy of Ethiopia, Jemal Beker said.
“We are moving very well in this area,” Beker said.
“Ethiopia is accommodating by labour, cheap energy and we have attracted a huge manufacturing industry, especially with companies coming from Asia. Tur- key is the No. 1 investor and is invest- ing billions in manufacturing. The Middle East, Europe and America as well. There are big companies coming in from this side, while the Chinese are investing in infrastructure. India is investing in sugar and infrastructure, so there is a diversity [of investors].”
Despite a strong focus on manufactur- ing and agriculture, there is potential to capitalise on mining opportunities in the country as well.
Beker said Australian involvement in this area would be welcome and perhaps
the latest Fraser Institute Survey ndings could do much to trigger interest from lo- cal miners and explorers.
Ethiopia was rated the eighth most at- tractive jurisdiction for mining investment in Africa, ahead of heavyweights such as South Africa and Zambia.
Given the country only hosts the 130,000 ozpa Lege Dembi gold mine and the country’s mineral potential remains relatively unknown, Ethiopia’s rating is somewhat of a surprise.
Australia does have some exposure in Ethiopian mining circles through Ke Minerals plc of which West Australian School of Mines graduate Wayne Nico- letto is the chief operating of cer in the country.
Nicoletto, formerly general manager at Edikan, Ghana, said while Ethiopia was a relative latecomer to the mining game in an African context, Ke and country were learning together as the Tulu Kapi gold project moved closer to development.
While Ke is well placed to become Ethiopia’s second commercial gold mine
behind Lege Dembi, Nicoletto said the likes of Newmont Mining Corp had start- ed exploration in the country and trans- actions such as Israeli Chemicals Ltd’s $US110 million buyout of Allana Potash demonstrated the mining industry was on the way up.
Ke has been backed by the Govern- ment to build the $US130 million Tulu Kapi project and bringing it to fruition will be another boon for Ethiopia’s mining sector.
“We plan to secure nancing and draw- down by the end of this year and that will trigger the community settlement, which is a 90-day process,” Nicoletto said.
“We expect that to be completed by the end of March. During that time we will start initial mobilisation, initial engineer- ing and start ordering all long lead time items.
We expect to begin construction on site in early Q2 2017, with mining and commissioning in early 2018 and steady state production by the middle of 2018.”
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 63


AFRICA DOWN UNDER REVIEW
Cardinal goes for resource
Such has been Cardinal Re- sources Ltd’s success at the Namdini gold project, the company
has re-jigged its plans, managing director Archie Koimtsidis said.
Originally, an exploration target at the project was to be prepared but better than expected drilling results has afforded Cardinal to go one step further.
At the time of print, drilling for resource delineation and regional exploration drilling was continuing, while met test work was under way ahead of an initial resource esti- mate by the end of the year.
“We were expecting to put out
an exploration target this quarter
but we have been given some con- dence by the resource guys and
met [test work] people that the drilling to date and the information they have far exceeds the exploration target that we anticipated putting out,” Koimtsidis said.
“They have told us to hold off just a little bit longer and we will go straight to a resource. We are actually also drilling for resource delineation with a little bit of in ll and some extension drilling which I will put out for all readers in the not too distant future.”
wasn’t like anything seen for a long time and he was excited by the up- side present within Cardinal’s land packages.
“We also have more ground around the place, so we will con- tinue on with regional exploration both along strike of this orebody and around it and at some other land packages that we have,” he said.
“Importantly, we are con dent enough at this time and we have all seen enough of this that there is excellent potential to host a mul- timillion ounce gold resource there, we are not talking hundreds of thousands of ounces, we are talk- ing multimillion ounces.”
Koimtsidis and his team, which includes colleagues behind PMI Gold’s Asanko gold project plus Mark Connelly as non-executive chairman and Beadell Resources Ltd chief executive Simon Jackson as non-executive director, are known for dealing with large-scale pro- jects and no doubt have the company on the right trajectory.
Cardinal Resources managing director Archie Koimtsidis at Africa Down Under with Ghana Ministry of Lands and Natu- ral Resources chief director Prof Bruce Banoeng-Yakubo
Big wide zones of gold mineralisation have been intersected, including 133m @ 1.61 g/t gold from 3m (including 52m @ 2.4 g/t); 119m @ 1.72 g/t from surface (including 41m @ 2.57 g/t); 108m @ 1.62 g/t from surface (including 43m @ 2.52 g/t) and 99m @ 1.21 g/t from surface (including 35m @ 2.5 g/t), has Cardinal con dent that it is onto a multimillion ounce play in Ghana’s north.
Koimtsidis said the Namdini discovery
– Mark Andrews
Chief director of the Ministry of Lands and Natural
Resources, Ghana, Prof Bruce Banoeng- Yakubo, reiterated the Government’s position on welcom- ing foreign investors into the country at Africa Down Under.
Banoeng-Yakubo said. Ghana is one of the most mature mining jurisdictions in Africa, however, it is not with- out its problems, as evidenced by the ac- tion of illegal miners at AngloGold Ashanti Ltd’s Obuasi mine in
the country’s south. Earlier this year hun- dreds of illegal miners entered Obuasi, dam- aging property and threatening staff on
site.
Ghanaian authori-
ties tried hard to re-
hardly an atmosphere investors would want to enter and Banoeng-Yakubo wanted to reassure investors that Gha- na – where 3.6 moz of gold resulted in $US3.3 billion of export revenue in 2015 – was open for business.
“As you know with every mature sys- tem, there are always underlying prob- lems,” he said.
“Ghana has seen this and is regulat- ing this legal and legislation framework to support mining in the country and to get as many investors as the country can to come to Ghana and invest in the mining industry.
“The Minerals and Mining Act of 2006 has been amended, with regulations in place for enhancing investment in the mining sector and to minimise illegalities in the mining sector, especially within the small scale mining industry.”
– Mark Andrews
“In order to max-
imise the resources
derived from min-
ing, for sustainable
development in the
country, a very im-
portant part of the
Government agenda
is the focus to im-
press proceeds on mining within the min- ing communities in order to stop the agi- tations or minimise agitations in mining communities which sometimes occur,”
Ghana the place for investors
Prof Bruce Banoeng-Yakubo
store law and order, however, as the situation deteriorated AngloGold was forced to declare force
majeure in the interests of safety.
While being an isolated incident, it is
PAGE 64 OCTOBER 2016 AUSTRALIA’S PAYDIRT




AFRICA DOWN UNDER REVIEW
Kibaran prepares Epanko for starting line
With a compelling case to start pro- duction, graphite-hopeful Kibaran Resources Ltd is looking for more from its Epanko project in Tanzania.
The BFS on Epanko was based on a 40,000 tpa operation costing $US77.5 million for a NPV of $US197.4 million and EBITDA of $US33.6 million.
Furthermore, Kibaran has 100% of its annual production locked away in binding agreements with Japanese out t Sojitz Corporation (14,000 tpa) and Thysssen- Krupp from Germany (20,000 tpa), while a European graphite trader has signed up for the remaining 10,000 tpa.
Having managed to garner such sup- port, Kibaran is well placed to capitalise on its position and is assessing produc- tion of battery-grade graphite at a rate of 15,000 tpa.
A scoping study has been completed with results indicating a NPV of $U115 million from a capex of $US30 million.
At the time of print, a production scale bulk sample was being tested as part of a more detailed feasibility study, while dis- cussions on strategic partnerships were well advanced, according to Kibaran managing director Andrew Spinks.
Andrew Spinks
“It is not only just about commencing production at Epanko,” Spinks said.
“With our European trader, it’s all about
value-adding and value-adding our prod- uct and with Sojitz we will be able to do that. We will be able to produce our graphite from Epanko from our mine gate through a processing facility, an addi- tional processing facility and sell that to the lithium ion anode manufacturers and then that will go into the batteries.
“We are very well positioned to com- mence production. We have the best partners, in our view, outside of China. We have a debt nancing consortium that is ideal for development of graphite. We can now access the lucrative Japa- nese/Korean battery markets. We have an enormous amount of value add op- portunities now in place. We have very strong support from the German Govern- ment and Epanko is there ready to go, ready to grow.”
Epanko could be in production within nine months of nancing being complet- ed, with Germany’s KfW-Bank having completed project debt ($US40 million) due diligence, while discussions con- tinue with Africa’s Nedbank ($US30 mil- lion).
– Mark Andrews
Niger has moved to improve available in- frastructure in the coun-
try in a bid to develop its small mining sector.
struction and will soon offer an alternative form of energy for the min- ing sector, according to Niger Minister of Mines and Industrial Develop- ment, Hassane Baraze Moussa.
“The country is im- proving its infrastruc- ture to facilitate the de- velopment of the mining sector,” Baraze Moussa told Africa Down Under.
Some emerging gold deposits in the country include Bosse Bangou, Libiri, Tiaklam, Boura, Bandio and Sirba Mban- ga.
Niger is also prospective for phos- phate, manganese, copper, molybde- num, coal and uranium.
Few foreign companies are currently exploring in Niger, with only two Austral- ian groups holding active permits to ex- plore in the country, compared with 14 local explorers.
Baraze Moussa said he hoped that would soon change.
“A great part of the territory is still un- explored,” he said.
“We welcome all interested mining companies and we are ready to assist them in obtaining mining titles in Niger.”
– Michael Washbourne
Niger offers infrastructure incentive
Already boasting one
of the most extensive
transport networks in
the region, with more
than 18,000km of road
providing access to all
recognised mine sites
in the country, Niger is
constructing a new rail-
way which will offer export opportunities to its West African neighbours.
One of the key pieces of infrastruc- ture in Niger is the 80MW power plant at Gorou Banda. A coal plant in the country’s north also provides an energy source for mining companies to tap into.
A dam at Kandadji is also under con-
Hassane Baraze Moussa
“Niger also has one of the best tele- communication networks, with the pres- ence of ve operators providing broad- band internet.”
Gold is the main commodity mined in Niger, with the Samira deposits churning out average grades of 2 g/t gold since 2004.
PAGE 66 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Mining can draw in other sectors for African engagement
The mining industry’s role in the development of African commu- nities and close relationships with governments can play a pivotal role in strengthening engagement be- tween Australia and Africa.
Canberra-based think tank Aus- tralian Strategic Policy Institute (ASPI) recommended a need for a more strategic approach to Austral- ia’s engagement with countries and regional organisations in Africa. The recommendation stemmed from the second Aus-Africa Dialogue, held in Zambia in 2015, in collaboration with South Africa’s Brenthurst Foun- dation.
“This should include the devel- opment of a whole-of-government strategy which identi es Australia’s priorities for engagement both re- gionally and in terms of geography and with the private sector,” ASPI senior analyst Lisa Sharland told Africa Down Under.
“Such a strategy would ensure that the Government and private sector are well positioned to identify opportunities for broader Australian-African engagement. This is also essential to ensure the Gov- ernment is able to mitigate potential risks to Australia’s national interests.”
Sharland acknowledged the Australian mining industry’s role in the development of communities in Africa and the poten- tial to use this position to strengthen en- gagement between the two regions.
“The remote location of African mines, many of them JVs with Australian part- ners and investors, means mine owners
Lisa Sharland
ernments, I think, provides a unique look into the role the private sector can perform in building commu- nity resilience, and looking at how it can work with government in terms of countering some of the security threats,” she said.
“While Africa is arguably more peaceful perhaps compared to the latter decades of the 20th century, there is an acute range of political volatility and instability, which is in- creasingly transnational, including extremist terrorist violence, organ- ised crime, forced migration and communal con ict.”
Massive historical shifts are under way on the African continent with an increasingly urbanised population predicted to double to 2.4 billion by 2050.
often perform a quasi-government role,” she said.
“Admittedly, some of the higher risk African mining ventures can present dif- culties for investment and there are on- going challenges with taxation and rev- enue arrangements. But investment in African mines also has a large multiplier effect in terms of jobs in regions, invest- ment in local infrastructure and the pros- perity of regional industries.”
Sharland added the private sector’s engagement and relationship with com- munities and governments could help to address broader concerns affecting the whole of Africa, including sexual and gender-based violence and security.
“This level of engagement and rela- tionship with communities and with gov-
“Higher Australian-African engage- ment beyond mining can draw in other sectors for potential Australian invest- ment, including infrastructure, profes- sional services and the energy sector,” Sharland said.
“However, mining partners on both sides of the Indian Ocean should be en- couraged to share lessons on govern- ance and surveys in the mining sector.
“A workshop with African mining stake- holders as well as regional bodies and institutions such as the African Devel- opment Bank, the Common Market for Easter and Southern Africa (COMESA) and the African Union, would also be bene cial.”
– Rebecca Lawson
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 67


AFRICA DOWN UNDER REVIEW
Walkabout gathers pace at Lindi
Walkabout Resourc- es Ltd may be a late-comer to the graph- ite supply chain, but its Lindi Jumbo project in south-eastern Tanzania is expected to deliver a strong start.
Addressing the third
and nal day of Af-
rica Down Under 2016,
Walkabout managing
director Allan Mulligan
said the company’s de-
cision to fast-track and
de-risk the Lindi Jumbo
project was paying off,
garnering an earlier
than expected entry into the market.
The move to hasten the project is based on the exceptionally high grade of graphite found at Lindi Jumbo, and Walkabout’s forecasted rise in market risk and increased graphite supply from larger companies by 2020.
“There is no shortage of graphite in the world. Most previous mines for the last 100 years are producing less than 10,000 tpa. We decided what we needed was a differentiator,” Mulligan said.
“To achieve this we needed to scale the project into a manageable size, and appropriate market size, and it needed to be de-risked in a number of areas; princi- pally opex, capex and then revenue.”
Mulligan expects the project will be well posi- tioned to withstand mar- ket changes.
“Unlike many other graphite projects Lindi Jumbo is bullet-proof against market shocks, it is strongly positioned to expand and grow into its reputation of premium product at low cost,” Mulligan said.
“Being fast-tracked, it will have a great chance Allan Mulligan of locking in customers for a premium product, and opening doors for
growth and expansion.”
Lindi Jumbo is returning a concentra-
tion grade of 98.34% and the site could deliver industry-leading revenue per tonne for Walkabout.
Lindi Jumbo also has an excellent ake size distribution, with 75.98% in high val- ue large and jumbo ake size categories.
“Our initial geological scouting over Lindi delivered surface samples of super high-grade ake graphite ranging be- tween 35% and 45% total graphitic car- bon,” Mulligan said.
“Lindi Jumbo is right in the middle of the best address for premium ake graphite probably anywhere in the world right now. Immediately around us are ve
graphite projects in various stages of de- velopment.”
“We were quite late coming into the graphite space; about two years after our neighbours. We sat down and thought about how to catch up and how to be an early starter, and present a low risk ap- proach for our shareholders.”
Walkabout, in a JV with a Tanzanian mineral rights holder, has purchased 70% of Lindi Jumbo’s four prospecting licenses, with the option to purchase 100%.
The Lindi Jumbo project is also well connected to existing infrastructure with the port of Lindi just 60km to the east.
Mulligan said the company strongly believed in the Aquarius model of man- agement, which it was planning to apply at Lindi Jumbo.
“The concept is total outsourcing. At Lindi Jumbo we are considering maxi- mum outsourcing. An example is our accommodation camp which will be awarded to a Tanzania company on a build-and-operate contract for around ve years. The packages will be let on a similar strategy with transfer of much of the engineering and design responsibility to the operators.”
Mulligan said considering the high ake grade and low risk of the project, the future looked promising.
Clear communications the key
Africa’s opportunities in future mining booms are expected to be greater, according to Gilbert+Tobin partner Phil Edmands.
“As Africa develops, so its sovereign and operating risk is going to diminish and its infrastructure will improve. Com- pared to Africa, Australia got a huge share of international investment relative to its resources endowment during the last boom, partly as a result of its greater stability and its greater development, but the playing eld is going to be more level going forward,” Edmands said.
With Africa vastly rich in resources, mining is seen as one industry which can help its people achieve the same ambi- tions as those in the developed world.
Establishing strong relationships
was key to helping drive growth in Africa and rath- er than Australia and Af- rica pitting against each other in developing their economies, Edmands said there was an oppor- tunity to generate win-win scenarios.
How Australia and Af- rica prospered would largely be dependent on the attitude taken to strengthening relation- ships.
“Good relationships
rely on good communication and in an age of social media you need to publicly prosecute your case and get your story
Phil Edmands
out, otherwise others will ll the void,” Edmands said.
“And often they will ll the void with mistruths, which destroys trust, which is at the core of good relationships.”
Enhancing relation- ships through stability agreements was an idea worth considering and needed to be managed carefully, with Edmands describing stability agree- ments as “best used as
– Jonathon Daly
the ground rules for living a dynamic re- lationship”.
– Mark Andrews
PAGE 68 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Green graphite for Metals of Africa
Metals of Africa Ltd boasts high quality graphite from its project in Mozambique, but its plans for en-
vironmentally favourable spherical graphite are expected to have end- users sitting up in their seats.
Currently spherical graphite – a key ingredient in lithium-ion batteries used in electric cars – is produced mainly in China using harmful chemi- cals such as hydrochloric acid.
Metals of Africa managing direc- tor Cherie Leeden said her company was investing in a collaborative pilot mill in the US, which is based on a chemical free process of spherical graphite production, which will make the company’s graphite stand out from the crowd.
“The clean energy revolution is really what is driving the demand for
the graphite. We are most focused on the electrical vehicle and home storage bat- teries, because that is where the demand is really growing,” Leeden said at Africa Down Under 2016.
“Traceability is going to be key. There are several legislations that are enforced in the US right now which dictate that if a battery company is going to receive green energy grants, they must be ac- countable for their battery components.
“Currently, most of that involves the Chinese hydrochloric link. I think once we have a source that bypasses that environmentally negative process, this graphite should be in high demand.”
Metals of Africa will boast a 100% traceable product, and it expects to at- tract more end-users once the pilot mill is operational next month.
“We are working on securing binding off-take agreements. We have been in detailed due diligence phase with a num- ber of end-users across the Americas and Asia for several months,” Leeden said.
“There is a lot of interest coming out of Japan, Korea, China and the US in respect to securing natural graphite and also spherical graphite.”
Metals of Africa has conducted exten- sive lithium-ion battery tests, and has been “pleasantly surprised by results”, according to Leeden.
“The results to date indicate that our natural graphite is performing better
Cherie Leeden
“There is a huge push from the battery end-users, the electric ve- hicle manufacturers, to switch from synthetic graphite to natural graphite because it is cheaper and it is pro- ducing even better results.”
In an increasingly crowded mar- ket cost is vital, and the fact that its Mozambique projects have an opex among the lowest in the world, gives Metals of Africa a distinct advan- tage.
Aside from its participation in the production of spherical graphite, Metals of Africa will yield high qual- ity graphite from its Montepuez and Balama projects in Cabo Delgado Province, Mozambique.
Balama’s total resource is 16.3mt and Montepuez’s 61.6mt. Both boast large and jumbo ake size distribu-
than synthetic graphite. Why that is quite relevant is that synthetic graphite costs about twice as much as natural graphite,” Leeden said.
tion of 50%, making them some of the richest graphite deposits in Mozambique.
– Jonathon Daly
New perspectives: Cameroon Minister of Mines, Industry and Technological Devel- opment, Ernest Gbwaboubou, told Africa Down Under his Government was conscious it needed to do more to attract new investors at a time of low commodity prices. Gb- waboubou said legal and regulatory frameworks were under revision to ensure better management and more transparency in exploration and mining activities. There is also a push to increase the depth and access to pre-competitive data in the country. Some 57% of Cameroon is now covered by hi-res geophysical surveys and the total area of the country will be covered by geological and geochemical mapping by the end of 2016 with the release of 14 new maps to follow.
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 69


AFRICA DOWN UNDER REVIEW
MOD prepares for T3 resource
MOD Resources Ltd has kept the momentum up at its Kalahari cop- per project in Botswana and remained
on-track to deliver a maiden resource for the T3 prospect before the end of September.
T3 was only discovered in March but such has been the vigour with which MOD has hit the shallow prospect, the company was preparing a maiden re- source at the time of print.
The resource will include results from the three most recent holes drilled at T3 – MO-G-49D, MO-G-50D and MO-G-51D – the deepest drilled to date.
Intercepts from these three holes included; 23m @ 1.2% copper and 22 g/t silver from 275m and 10m @ 1.7% copper and 21 g/t silver from 210m.
Two shallower holes drilled at the southern boundary of the mineralised zone – MO-G-44D and MO-G-45D – intercepted 23.9m @ 1% copper and 5 g/t silver and 1m @ 7.6% copper and 72 g/t silver respectively.
Speaking at Africa Down Under, MOD managing director Julian Hanna said the
MOD managing director Julian Hanna at the company’s Kalahari copper project in Botswana
processing, environmental and social studies around T3 available by No- vember and would look to a comple- tion of the scoping study by December and then a decision to proceed to the PFS,” Hanna said.
In anticipation of development stud- ies, the company has also begun in- ll drilling on the 100m by 50m high- grade core of T3 with the company reporting “signi cant copper miner- alisation” in the rst two holes with as- says expected in the coming weeks.
MOD has already built a resource of 2.7mt @ 2% copper and 50 g/t silver at the Mahumo prospect on the Kalahari project but T3 sits on a different con- tract to it and other deposits along the Kalahari copper belt, giving the com- pany belief there are further shallow discoveries to be made.
Further work is planned on the pro- ject including an IP survey along strike and down dip of T3, drilling of copper- zinc anomalies around T3 and further
maiden resource would be swiftly fol- lowed by in-house scoping study work.
“We expect to have preliminary pit,
drilling of the T2 East, T2 West and Ma- humo targets.
Bass Metals looks to Graphmada growth
Bass Metals Ltd has high hopes for its recent acquisition and planned ex- pansion of the Graphmada graphite mine
in Madagascar.
The company is already seeing reve-
nue from Graphmada’s Loharano deposit which is yielding concentrations of above 60% within the large and jumbo ake size categories.
Chief executive Tim McManus told the Africa Down Under audience that plans for an expansion project into the Mahefe- dok region looked promising, with drilling to start in October this year.
McManus said he expected the graph- ite market to grow in the US, India and Europe in line with burgeoning battery, aerospace and nuclear technology ap- plications.
Bass has already implemented an operational optimisation programme at Graphmada to improve working cul- ture, yield higher margins, and minimise losses and inef ciencies. The optimisa- tion programme is expected to ramp up production capacity to 6,000 tpa by next year.
“We are very excited about the results we have achieved to date. We are plan- ning an expansion project to leverage off the infrastructure that is already in place. We have some exciting times ahead,” McManus said.
“The expansion project will see us ex- tend that [6,000 tpa] to 12,000 to 20,000 tpa in additional exports.”
The expansion will also see the con- struction of a second processing plant with a capacity of 12,000 to 20,000 tpa.
McManus said the company planned to optimise its existing processing plant, with improvements to otation cells, new slurry pumps, and improving existing de- watering centrifuges.
“In quarter three and four of 2017 we are actually going to decommission the plant so that we can install a num- ber of key items to not only improve the throughput and optimisation, but also the quality. We are then looking to have the upgraded product sales out on the mar- ket by Q1 2018.” McManus said.
Bass has purchased a 40-year min- ing permit at Graphmada and it intends
to make the most of “a stable operation”. “We have shallow low-cost mining. There is no blasting. It is very simple excavation. We have an established pro- cessing plant that is currently underuti- lised. We have an analytical laboratory and other supporting infrastructure that we are leveraging off. We also have an excellent product, it is a premium-priced
product.” McManus said.
The company has also engaged in a
number of community engagement ini- tiatives, providing education and health resources for local communities.
McManus said Bass was committed to hiring staff from the local community, and building the local economy.
“All this doesn’t happen without a strong base, and investment in our peo- ple and surrounding communities. That is an ongoing process that we have al- ready commenced.”
– Jonathon Daly
PAGE 70 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Act fast on security threats
Resolute Mining Ltd managing di- rector John Welborn is thankful his company is “ahead of the curve”
when it comes to assessing security risk.
Welborn and his chief operating of cer Peter Beilby were in Bamako, Mali, last November when Islamist militants killed 20 people and held an- other 150 hostage in a mass shooting attack at the Radisson Blu hotel.
Resolute operates the Syama gold mine, about 300km south-east of Bamako.
Speaking during a panel session on managing security risk in Africa, Welborn said he and Beilby were not caught up in the incident because his company’s se- curity team had agged concerns about the hotel.
“Previously Resolute executives have stayed in the Radisson, but we chose on that particular occasion not to, due to the information we had received,” Welborn said.
“In honestly assessing the security risk in Mali, we made a choice not to sit and wait and hope not to be a victim, but to be ahead of the curve and to be very ac- tively understanding of the risks and be involved in the planning. To me, this is fundamentally consistent with what the mining industry is all about.”
Resolute has operated Syama since 2008 and has rarely encountered ma- jor security breaches at the mine, about 30km from the Cote d’Ivoire border.
Welborn joined the company in May 2015 and was tasked with stripping costs from the business wherever possible. However, he quickly found one area he was happy to spend a few extra dollars.
“One of the areas where we have en- thusiastically exceeded our budget is in capital investment in security,” Welborn said.
“We treat Syama like an island. We’re negotiating direct international access into our airstrip – our expats currently y through Accra almost directly into our mine site in the south of Mali, on the Cote d’Ivoire border, without having to transit through Bamako at this stage.
“We have a very serious understand- ing of the credible risk of security issues in Mali generally and we have a respon- sibility to our employees, our investors and the Mali Government – our partners in the Syama mine – to take that very se- riously.”
Mali was one of three countries, along
A specially convened panel discussed managing security risks in Africa
70km north of Dikulushi, to Kilwa. “This kind of thing can easily happen to any company operat- ing in a remote location where host country security forces are under-resourced,” Turner said. “Beyond the tragic loss of life, the impact on a company when such events occur can be very signi -
cant.”
Turner, who went on to be-
come a founding member of the Australia-Africa Mining and En- ergy Group (AAMEG), said the
with Somalia and Libya, identi ed by DFAT’s Africa and Middle East branch rst assistant secretary Marc Innes- Brown, as posing the greatest security threats in Africa.
Innes-Brown said the two main types of threats came from those seeking rev- enue – mostly through kidnapping, piracy and trading of illicit goods – and those wanting attention.
“If you’re operating in countries neigh- bouring Mali, Somalia and Libya, you need to be wary of the threat of possible attacks by these terrorist groups,” Innes- Brown said.
“These terrorist groups usually target the low-hanging fruit. As an example, the hotels in West Africa...all of these are within easy reach of northern Mali and originated from ungoverned spaces where al-Qaeda in the Islamic Maghreb is hiding out.”
Innes-Brown said the countries which responded best to security challenges were those willing to participate in re- gional co-operation initiatives.
“The countries that run pluralistic and inclusive governments tend to do better,” he said. “A good example is Niger, where the Government has ensured the Tuareg ethnic minority is well represented, which is in contrast to at least one neighbouring country.”
Former Anvil Mining boss Bill Turner AO experienced rst-hand the conse- quences of failing to properly manage a security threat. In 2004, an armed rebel group seized control of the village of Kil- wa, 50km south of Anvil’s Dikulushi cop- per mine in the DRC, and the subsequent military action saw a number of innocent civilians killed.
Anvil was accused of aiding and abet- ting the military to commit human rights abuses after the governor of the prov- ince requisitioned company vehicles to transport troops from their headquarters,
incident forced security protocols to be revised and then collaboration with other mining companies on security training programmes.
“Bad things can happen to good com- panies, but there are some lessons on security that can be learnt from the school of hard knocks,” Turner said. “Know the voluntary principles that were designed speci cally for the extractives sector. And when you need to engage with host country security forces, make sure you have the appropriate documen- tation in place.”
Gilbert+Tobin partner Phil Edmands sounded a warning about engaging with security companies without doing the proper checks.
“When you engage a security compa- ny, you put a great deal of power in their hands,” Edmands said. “The message in relation to engaging security companies is due diligence, due diligence, due dili- gence. You need to know whether they are non-aligned or whether they are aligned with particular factions. You need to know what their record is and whether there is anyone in that institution who has been involved in past abuses. You need to know what their policies are and that their policies are acceptable.”
Arthur J Gallagher credit and political risks managing director Mark Gubbins said insurance would never make a bad project “good” and it was essential com- panies mitigate all commercial aspects of risk where possible.
“If they’re insuring a company that is going into a challenging jurisdiction, they would be expected to prepare them- selves to spend a lot of money on very good lawyers, to anticipate arguably all the risks that are to be insured and to do their best to mitigate them,” Gubbins said.
– Michael Washbourne
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 71


AFRICA DOWN UNDER REVIEW
Lesotho looks to build on Promise
It may not have the vast expanses of pro- spective land of its larger neighbour but the Kingdom of Lesotho remains one of
the most enticing diamond regions of the world.
A mountainous enclave in the east of South Africa, Lesotho is heavily reliant on diamond production which accounts for nearly 50% of exports. The country produced 134,445ct in 2015 – up from as little as 1,794ct in 2003 – and has set an ambitious target of 2 mct by 2018.
It is the start of production at the Liq- hobong and Kolo mines later this year which will do most to reach that produc- tion target but regards value, Gem Dia- monds Ltd’s Letseng mine continues to be the country’s most prominent.
Letseng produces more than 100,000 ctpa but the quality of the stones it produces – average realised price of $US2,225/ct – makes it the richest dollar per carat diamond mine in the world.
In the last ve years, Gem – which owns Letseng in a 70/30 JV with the Le- sotho Government – has sold several exceptional diamonds, including a 357ct diamond for $US19.3 million (September 2015), a 198ct stone for $US10.6 million (October 2014), a 12ct blue diamond for $US7.5 million (October 2013) and the
Lebohang Thotanyana
550ct Letseng Star for $US16.5 million (October 2011).
With diamond prices continuing to drag, Letseng’s high value output has enabled Gem to grow into one of the largest independent diamond miners in the world and Lesotho Minister of Mining, Lebohang Thotanyana believes others could join it.
“We have production starting at Liqho- bong and Kolo this month,” Thotanyana said. “And, we have lots of kimberlite pipes and dykes still unexplored in our country. Indeed, we have the highest vol-
ume of kimberlite intrusions in the world with more than 430 pipes in the country.” To encourage exploration of these tar- gets as well as a number of base and precious metal prospects in the country, the Government launched a new miner-
als and mining policy in 2015.
“This is the rst mining policy in Leso-
tho and the rst in Africa to fully incorpo- rate the African Mining Vision,” Thotan- yana said.
There are already 19 prospecting li- cences currently active but Thotanyana said the Government was committed to expanding this.
“Lesotho promotes exploration and development of her mineral resources through availability and dissemination of all geoscienti c data necessary for the promotion of mineral sector investment,” he said.
Among the initiatives included in the new policy are the establishment of a geological data bank to provide pre-com- petitive data and the establishment of a certi ed assay laboratory in the country.
The Government is also undertak- ing a geochemical mapping programme across the country, targeting base met- als, with plans to extend this to rare earths and precious metals in the future.
Madagascar – the world’s fourth larg- est island – has agged imminent changes to the governance of its mining
and petroleum industries.
“The Ministry in charge of mines and
petroleum is about to improve the min- ing code and the petroleum code and they’re implementing legislation to better meet the expectations of the state, pop- ulation and investors in the principle of ‘win-win’,” Madagascar Minister of Mines Ying Vah Za lahy told delegates at Africa Down Under.
Madagascar is not a widely recognised mining nation, but does host one of Rio Tinto Ltd’s largest operations, the QMM ilmenite mine, near Fort Dauphin.
At full capacity, QMM can produce 750,000 tpa ilmenite and 60,000 tpa zir- con.
Madagascar also hosts the Andria- mena chromium mine and the Ambatovy nickel-cobalt operation. Both operations have Australians within the management
Susan Coles, Australia’s Ambassador to Madagascar, with Madagascar Minister of Mines Ying Vah Za lahy
teams.
Australian Ambassador to Madagas-
car, Susan Coles, said locals accounted for most of the workforces at QMM and Ambatovy.
“When I visited QMM, I noted only four
or ve expats in total,” she said. “Every other job – plant supervisors, secu- rity guards, cooks in the lunch canteen, workers in the land rehabilitation nurs- ery – are all Malagasy, representing 750 households in the Fort Dauphin area.
“The multiplier effect – plus the schools, roads, and port built as part of the project – is enormous.”
Coles said after ve years of political instability in Madagascar, the country’s mining sector was back on track and new permits were being issued.
“There is some uncertainty while re- forms to the mining code are under con- sideration, but the Minister said at ADU he hopes these amendments can be - nalised by the end of the year,” she said.
“Mining offers Madagascar an unpar- alleled opportunity to stimulate growth, create training and employment and re- duce poverty. This has already occurred in the communes around the Rio and Ambatovy mines.”
Madagascar ready for change
PAGE 72 OCTOBER 2016 AUSTRALIA’S PAYDIRT


For the love of the game
Each year the Africa Down Under Football Cup showcases the passion and talent of several young
football teams representing the proud African communities based in Perth, Western Australia.
Team African Phosphate (Nige- ria) won the day, with Walkabout (Tanzania) coming second, and CSA Global (Naija FC WA) nish- ing third.
But win or lose, the players were happy enough to be playing football with friends.
Team Arthur J. Gallagher player Dini Abdi, 28, emigrated from Ethi- opia as an infant, and lives in Nolla- mara with his wife and two children.
not just about pro ts and develop- ment, it is also about people.”
Team Walkabout player Ado- domin Pesha, 35, moved to Perth from Tanzania in 2003 and cur- rently works as a computer systems administrator.
“We all do this for fun but at the same time we get to meet our oth- er African friends. We get to meet and know about people who have invested in our countries,” Pesha said.
“I didn’t know about Walkabout Resources but they have told me about their operations in Tanzania where I come from. It is good to know the things going on at home.”
Spectator Emmanuel Mamsaray, 22, immigrated to Australia from Sierra Leone 16 years ago, and stood on the sideline cheering on
“This event means I can catch up
with my mates and get a feel of the grass. We love football doesn’t mat-
ter what time it is, what the weather
is like, we just play football for fun. There is a social aspect just to hang out and be happy, it’s joyful.” Abdi said.
Football West chief executive James Curtis said the African community in WA had grown in the last decade, along with their participation in the local football scene.
“The thing is the rst time you arrive to a new town there are a whole lot of cultural differences, but football is one of those things that goes across all different cultures,” Curtis said.
“This is a chance for them to represent different countries in Africa, and come
There was plenty of passion and action during this year’s Africa Down Under Football Cup which is designed to promote Perth’s various African communities
together and celebrate it in a multicultural Perth community.”
Walkabout Resources Ltd managing director Allan Mulligan said the company was happy to sponsor Team Tanzania, and would continue to do so in coming years.
“It is good to make the connection that Walkabout is a company that is working in some of their countries, and we re- spect them and where they come from, and we are happy to support them,” said Mulligan.
“Social interaction and upliftment is a key part of doing business in Africa. It is
his mates playing for Team PCF Capital (Zimbabwe).
“Football for us is life. It is what brings us together and keeps us out of trouble,” Mamsaray said.
Mamsaray said even though he lived in Cannington, his family kept a good con- nection with their homeland and culture.
“I study Urban Planning at Curtin Uni- versity. I have two more years left of my degree,” Mamsaray said.
“My aim is to go back when I nish my degree, because there is a lot of develop- ment that is needed back home. Why not go back and help your country and try to help build where you come from.”
Northlake Senior Campus English Pro- gram Co-ordinator Sean Bruce-Cullen said the Africa Down Under Football Cup provided a great experience for his stu- dents to share their passion for the inter- national sport.
“All the students at our school are recent migrants and many are from hu- manitarian backgrounds. So we have got quite a lot of African students in our cen- tre as well as from Vietnam, Indonesia, Afghanistan and Syria,” Bruce-Cullen said.
“Football, or soccer, is one of the things they have in common. It is just a way for the students to interact with each other at a level where they have something in common.”
The Africa Down Under Football Cup will be back next year for another cele- bration of Perth’s vibrant community.
– Jonathon Daly
This year African Phosphate took out the Cup, beating Walkabout Resources in the nal
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 73


NICKEL PREVIEW
Nickel de cit buoys ailing sector
The Australian Nickel Conference returns to the Pan Paci c Perth Hotel on October 20 at a time of renewed optimism for the sector.
Study Group suggests nickel went into de cit in the rst half of 2016 and while the LME price rebound has been mod- est, the EU price for nickel in scrap has moved sharply. The EU scrap nickel price was just 72% of the LME price for most of 2014 and 2015 but has moved to more than 80% in the last three months, sug- gesting the physical markets are show- ing signs of strain.
This trend has been boosted by record high imports from Chinese nickel users.
“The stainless steel market is improv- ing in China, and stainless steel scrap tightness is driving higher demand for primary nickel units globally,” Lennon said.
Particularly encouraging for Australia’s nickel sulphide producers is the faster growth in 300 series stainless steel pro- duction in China. The 300 series stain- less steel contains 8% nickel against 1.5- 2% nickel in 200 series and zero nickel content in 400 series stainless steel.
After the toughest market in a genera- tion, nickel miners are beginning to nd hope in the supply/demand equations in global markets.
After ve consecutive years of surplus, the global nickel market is nally in de cit and the nickel price is beginning to show signs of recovery. LME spot nickel hit a 12-year low of $US7,700/t on February 11 but has since rebounded more than 30%, closing September 20 at $US10,190/t, having hit $US10,895/t in mid-August.
Some of that rebound was fuelled by the decision of the Philippines Govern- ment to suspend eight nickel mines in July over environmental concerns. The Philippines is the largest supply of nickel laterite ore to China’s nickel pig iron (NPI) sector, an industry whose cheap produc- tion has been the bane of western nickel
producers for nearly a decade. However, with the Filipino ban follow-
ing on from a similar ban in Indonesia three years ago, supply is nally begin- ning to bite for Chinese nickel users. Although it is dif cult to be precise with actual stockpile gures – many stocks outside the LME and SHFE go unreport- ed – there is consensus among analysts that the nickel market has nally swung into de cit.
According to Macquarie Capital con- sultant Jim Lennon, this move to de cit is being driven by more than Philippines politics.
“The market has nally swung to de cit [with the] recovery driven by strong de- mand recovery as well as lower supply,” Lennon said.
Data from the International Nickel
PAGE 74 OCTOBER 2016 AUSTRALIA’S PAYDIRT


11000 10500 10000
9500 9000 8500 8000
7500
8 Oct 2015
29 Jan 2016
Date 21 May 2016
11 Sep 2016
The nickel price spike of 2007/08 led Chinese stainless steel producers to drop their 300 series production but g-
Forecasts suggest nickel use in lith- ium-ion batteries could more than dou- ble over the next 10 years from around 70,000 tpa currently to close to 170,000 tpa.
On the supply side, the mine closures in the Philippines may not provide long- term buoyancy to the nickel price but Lennon believes the country’s nickel sec- tor is not as strong as assumed.
“Forecasts of potential supply from Philippines out to 2020 vary from plus- 350,000 tpa to 400,000 tpa. The higher gure needs a much higher nickel price and a bigger reserve base in Philippines than many believe exists,” he said. “In January-July, exports from Philippines to China were down 23% year-on-year.”
However, the subsequent price rise failed to generate a strong supply re- sponse, particularly from high-grade mines.
“The high-grade supplies to China are set to fall this year due to exhaustion of reserves at Tawi mine and it is unclear
how much replacement mines [such as Davao] can supply,” Lennon said.
There has also been a perception that there has been very little supply cuts from western producers but Lennon said nickel supply was actually falling faster than all other base metals with 197,800t of nickel coming out of the market. How- ever, much of this loss was offset by 125,300t of new supply coming into the market.
Lennon expects further production cuts if prices remain low this year with 60% of the sector being loss-making at current levels.
“Prices are too low relative to the cost curve,” he said. “If prices go back below $US10,000/t, expect more cuts in 2016.”
Macquarie’s forecast is for the LME cash price to average $US9,262/t in 2016, before rising to $US11,625/t in 2017, $US13,000/t in 2018 and out to $US16,000/t by 2021.
Lennon did, however, have some
warnings.
The LME nickel cash price October 2015 – September 2016
ures suggest that imbalance is being versed.
“China is underrepresented in 300 series,” Lennon said. “In 1H16 we estimate Chinese total stainless steel production [to be up] 4% year- on-year but 300 series [is up] 8.8% year-on-year.”
Lennon said that growth could be an indication of a long-term move away from the lower quality 200 se- ries stainless steel production in China.
“Maybe [there’s] a structural shift to better quality [300 series] but time will tell. Perhaps only a strong a nick- el price rally can reverse the trend?”
There is further demand hope generated from a rising market for lithium-ion batteries, a product which uses 10kg of nickel in every unit.
re-
Company
Buxton Resources Ltd Cassini Resources Ltd Impact Resources Ltd Independence Group Ltd Legend Mining Ltd Mincor Resources NL Panoramic Resources Ltd Poseidon Nickel Ltd
Rox Resources Ltd St George Mining Ltd Western Areas Ltd
Year-to-date performance
37.9% 76% 0% 62.2% 25% 56.8% 29.7% (13%) 25% 97.2% 26.5%
“Stock levels remain very high, and this limits the upside potential for prices for several years,” he said. “Out to 2020, a major de cit has been avoided by the Chinese using lower- quality ore from Philippines [albeit] at higher cost. The key issue is how much ore can the Philippines supply to China in future and at what cost?
The Australian Nickel Confer- ence will be held at the Pan Pa- ci c Perth Hotel on October 20. For more information please contact Melita Fogarty on (08) 9321 0355 or melita@paydirt. com.au
– Dominic Piper
ASX-listed nickel performance since January 1
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 75
Price US$ per tonne


20 October 2016
Perth, Western Australia
Register now for Australia’s only nickel event
australiannickelconference.com
To present, exhibit or attend as a delegate please contact Melita Fogarty
on (+61) 8 9321 0355 or email [email protected]
Image courtesy of Western Areas Ltd


20 October 2016
Thursday 20 October 2016
17.00 Closing Drinks
Conference Sponsors to date:
* This programme is subject to change without prior notice
Pan Pacific Perth
08.00 Arrival tea, coffee and registration
Session One
08.45 Welcome: Bill Repard, Executive Chairman, Australia’s Paydirt (5)
08.50 Opening Address: Hon Sean L’Estrange MLA, Minister for Mines, Petroleum and Small Business (20) 09.10 Dan Lougher, Managing Director, Western Areas Ltd (20)
09.30 John Prineas, Executive Chairman, St George Mining Ltd (20)
09.50 Carey Smith, Senior Analyst, Alto Capital
10.10 Eduard Haegel, Asset President, BHP Billiton Ltd Nickel West
10.30 Questions (5)
10.35 Morning Tea (30)
Session Two
10.55 TBC, First Quantum Minerals Ltd (20)
11.15 Peter Harold, Managing Director, Panoramic Resources (20)
11.35 Richard Bevan, Managing Director, Cassini Resources Ltd (20) 11.55 Peter Bradford, Managing Director, Independence Group NL (20) 12.15 Questions (5)
12.20 Lunch (60)
Session Three
13.20 Leo Horn, Chief Operating Of cer, Impact Minerals Ltd (20)
13.40 Michael Rodriguez, Chief Operating Of cer, Poseidon Nickel Ltd (20) 14.00 Mark Wilson, Managing Director, Legend Mining Ltd (20)
14.20 Ian Mulholland, Managing Director, Rox Resources Ltd (20)
14.40 Questions (5)
14.45 Afternoon Tea (30)
Session Four
15.15 Peter Muccilli, Chief Executive Offcer, Mincor Resources NL (20) 15.35 TBC (20)
15.55 Questions (5)
16.00 Closing Panel Discussion (60)
australiannickelconference.com


NICKEL PREVIEW
Talisman restarts Sinclair programme
It has often taken a back seat to higher grade projects but the Sinclair nickel de- posit may be about to return to the spot-
light.
Discovered by Jubilee Mines in 2006,
Sinclair was developed and mined for ve years by Xstrata before being placed on care-and-maintenance in 2013. Throughout that period it was a strong performer but was never quite a match for the Cosmos mine, its high-grade brother in the Jubilee/Xstrata stable.
Xstrata produced 38,500t @ 2.44% nickel from the mine – located at the southern end of the Agnew-Wiluna greenstone belt which boasts more than 9mt of nickel production – but as nickel prices fell and the Swiss company con- tinued its expansion, Sinclair fell down the priority list.
“The focus at the time was on opera- tions and competition for capital within
the company was erce,” Talisman Min- ing Ltd managing director Dan Madden told Paydirt.
Madden and two other Talisman board members – Alan Senior and Brian Dawes – were familiar with Sinclair from their days with Jubilee and when the as- set came up for sale, the junior explorer jumped at the opportunity.
“Jubilee made the decision to mine before selling out to Xstrata, who even- tually developed it. So, we knew it was only lightly explored by both Jubilee and Xstrata and it had existing infrastructure, a camp and a 330,000 tpa concentrator that was running at 400,000 tpa.”
Talisman completed the acquisition in February 2015 paying $8 million for an asset valued at $800 million when bought by Xstrata. The company started drilling almost immediately but market condi- tions and progress on other projects
began to de ect Talisman’s attention away from Sinclair.
“We have only lightly tested it since we acquired it,” Madden said. “We started drilling in October 2015 but that was cut short; somewhat because of the market senti- ment towards nickel but mainly because the Spring eld JV with Sand re [Re- sources NL] started at the same time and we were right in the middle of a drill- out on the Monty copper deposit.
“We had to focus our cash on that.”
So, just as under Xstrata Sinclair was pushed down the priority list in favour of a high-grade re- lation. Talisman en- joyed strong market support following the Monty discov- ery and a resource of 1.05mt @ 9.4%
copper and 1.6 g/t gold has since been delineated with a feasibility study expect- ed to follow in early 2017.
With that work being undertaken by Sand re, Talisman is free to return to Sinclair.
“Since stopping the drilling last Octo- ber we have delineated the resource at Monty, completed a $16.7 million capital raising and sentiment towards nickel has picked up,” Madden said.
The deposit has been mined to a depth of 445m and while mineralisation is known to continue at depth, Talisman does not intend to immediately chase the extensions and remnants.
“Going back into the mine and focusing on what was left was never the rationale,” Madden said. “We knew there was min- eralisation beyond the 440m level but the drilling down there is fairly wide-spaced and to get to JORC would be expensive and in this market not the best use of funds.
“Instead, we are focused on exploring along the Sinclair Trend and delineating more nickel. There is more than 80km strike of ultrama c rocks, most within 25km of the Sinclair concentrator.”
While the drill rigs were running at full throttle on Monty, Talisman’s exploration team, led by general manager geology Tony Greenaway, took a more consid- ered approach to Sinclair.
“This is very complex geology but in that lays the opportunity,” Greenaway said.
The company undertook a major re- view to better understand controls on mineralisation and remodel the ultramaf- ic/basal contact – the key to unlocking the belt’s nickel potential.
Greenaway said there were ve imme- diate regional targets to follow up. Drilling restarted in September with Delphi North identi ed as a priority target.
In late September, the company re- ported massive and stringer nickel sul- phide intersections in four out of seven RC holes, in some cases with intervals of 8m. Assays are due this month but Talisman already intends to follow up the initial hits.
“We like Delphi North because we see potential for Sinclair repetitions there,” he said. “It has similar lithology, geochemical signature, structure and EM anomalies.”
PAGE 78
OCTOBER 2016 AUSTRALIA’S PAYDIRT


“We are looking for these jogs in the base- ment geology where ter- races form,” Madden said. “Sinclair sits on that as does Delphi North and it looks very similar.”
Delphi North is 4km south of Sinclair and Madden said the immedi- ate priority would be on such near-mine targets.
“The best bang for our buck is with the closest targets to the mill,” he said. “We are planning for a second programme lat- er this year. It is a focused strategy; not a huge pro- gramme.”
Talisman’s rst drilling at the Delphi North target has returned massive and stringer nickel sulphide intercepts in four of seven RC holes
happy with the JV rela- tionship and looked for- ward to release of the fea- sibility study in the March quarter.
“Monty is one of the highest grade copper discoveries of the last 30 years,” he said. “It may be fairly small but more than 75% of the tonnes are plus-12% copper. What we particularly like is the proof-of-concept of the VMS camp model and it has been proven to not be on the same trend as De- Grussa which suggests further opportunities for near-deposit targets.”
With much of the com-
pany’s cash being held in reserve for the prospect of Monty’s development, Mad- den is unwilling to break the bank for Sinclair exploration at the moment but did suggest exploration success could change the situation.
“If the nickel price suddenly shot up or something of suitable scale was found, we could undertake a capital raising but we are not there yet. The Sinclair area
is likely to be similar tenor to the exist- ing deposit, around 2-3.5% nickel. It is not Cosmos but we are comfortable with that fact.
“It was a counter-cyclical acquisition. It is underexplored and there is $120 mil- lion of infrastructure there, ready to go. And, the carrying costs are only $2 mil- lion a year.”
On Monty, Madden said Talisman was
However, both Madden and Greenaway said patience was re- quired in searching for the next Monty or
DeGrussa.
“These are tricky things to nd and you
need to be methodical in the approach taken,” Madden said.
– Dominic Piper
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 79


NICKEL PREVIEW
St George gets the good vibes
Even at times of low nickel pric- es, St George Mining Ltd has stayed true to its core; exploration.
The company has been one of the most active junior explorers in any commodity on the ASX and is well positioned now that positivity has returned to the nickel sector.
However, the company’s share price – 14c/share at the time of print – perhaps does not re ect the exploration success St George has had at its Mt Alexander project this year.
Mt Alexander, which was ac- quired from BHP Billiton Nickel
West Pty Ltd under a 75:25 St George/Western Areas Ltd con g- uration, has been a focus for St George, which has discovered high-grade nickel sulphides within the Cathedrals belt.
Now that the nickel price is improving – $US3.50/lb in February to $US4.60/lb in late August – share price appreciation might start to come for St George.
If the company’s latest capital raising
Despite low nickel prices, St George has remained active in the exploration space
hardline approach to the country’s industry, which could result in the closure of more mines, including nickel projects which supply China.
St George executive chairman John Prineas told Paydirt that while the current restriction of sup- ply out of the Philippines was good for nickel prices, banking on the situation to build a nickel business was fraught with danger.
“You can’t rely on those coun- tries delivering that restriction in the long term, I am not holding my breath just on the Philippines,” Prineas said.
is any indication, there is renewed inter- est in the nickel sector and St George is emerging as a stock of choice.
St George’s recent $6.47 million pri- vate placement closed heavily over- subscribed, as investors reacted to the decline in LME nickel stockpiles and Philippines President Rodrigo Duterte’s
“I think if we are all banking on the Philippines cutting supply, it is not good enough, we need to look at the broader supply/demand equation. Phil- ippines has been a great little boost but you need to look at the broader picture
as well.”
The Chinese nickel pig iron industry is
still a big factor in nickel supply but it is the high quality stainless steel products
PAGE 80 OCTOBER 2016 AUSTRALIA’S PAYDIRT


which are in greatest need of high-grade nickel sulphide concentrates.
“Everyone realises that nickel, of all commodities, is very cyclical and they are starting to see that the cycle is start- ing to change,” Prineas said.
“We are seeing smarter investors looking for nickel plays. Brokers are tell- ing us some of their institutional clients and technically minded high-net worths are looking for nickel plays as they can see the cycle turning. We were well sup- ported in the recent capital raising with quality investors from Bell Potter and Ar- gonaut coming onboard, so we are very pleased with how we are progressing.”
High-grade massive nickel-copper sulphides discovered at Cathedrals ex- tending over 400m is no doubt one of the value propositions investors have con- sidered when summing up St George.
By stepping out west of Cathedrals, high-grade massive nickel sulphides at Investigators have also been intersect- ed, while similar success at the Strick- lands prospect has been reported by St George.
“We have gone from a 400m strike length to over 3.5km. It is not totally mineralised all the way, but it covers that 3.5km which is quite a tremendous
achievement,” Prineas said.
Recent drilling has intersected addi-
tional massive nickel-copper sulphide mineralisation 64m from surface at Ca- thedrals in hole MAD35.
Drilling at MAD35 was completed to a depth of 94.5m, down dip from MAD15 and MAD16 where mineralisation in MAD15 included 1.17m @ 8.75% nickel, 3.37% copper, 0.24% cobalt and 6.16 g/t PGEs from 30.17m.
In ll and extensional drilling is planned along the Cathedrals ultrama c, as the high-grade nickel, copper, cobalt and PGEs have encouraged the company to continue exploiting the underexplored 400m strike.
Meanwhile, at Investigators mas- sive sulphides at a depth of 122.5m at MAD37, ultrama c with massive sul- phides at a shallow 27.6m at MAD38 and massive sulphides down to 107.85m at MAD40 (average nickel content of 15% based on XRF eld analysis) have been intersected.
In addition to keeping the market up to date with his company’s nickel-copper sulphide results, Prineas said more in- formation on the cobalt credits could be expected in the coming months.
“I don’t think the penny has quite
dropped on cobalt just yet, but I think it will and it will be a big story going for- ward,” he said.
“Nickel is red hot and cobalt will fol- low into that I think, eventually. We are lucky enough to have very strong cobalt credits in our nickel sulphides and as we go on we will do a little bit more work on the metallurgy of the mineralisation in the next couple of months and we will get some information out there on the cobalt as the market catches up.”
One story the market is in tune with is gold and St George is a participant in the sector, albeit at an early stage, and is making good progress at its East Laver- ton project.
A total of 1,580m RC drilling had been completed at Bristol testing for anoma- lous supergene and bedrock geology over the magnetic sequence. Assays were pending at the time of print, while a 2,000m programme to follow up on RC drilling at Ascalon to test for further ex- tensive metal-rich hydrothermal systems identi ed this year was also in play.
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 81


NICKEL PREVIEW
Silver Swan rst to take ight
Poseidon Nickel Ltd will plough ahead with a DFS on a restart
at the Silver Swan nickel mine in the hope that a turnaround in the nickel price eventually arrives.
Poseidon is set to complete the DFS be- fore the end of 2016 and chief operating of cer Michael Rodriguez said the company would then be in a position to hit the approval button for the Silver Swan redevelop- ment as soon as market conditions supported it.
“The indications are
that the DFS will support
a restart, it is just a mat-
ter of pricing,” Rodriguez told Paydirt. “From the time we nalised nancing we would need a minimum of six months and a maximum of 12 so if the board said yes at the end of this year it would be around
18 months to rst produc- tion.”
The current DFS is be- ing built on the foundations of an internal study com- pleted at the end of 2015.
“We did the internal study at the end of 2015 and the numbers we are getting now from contrac- tors are supporting those ndings,” Rodriguez said.
Poseidon has continued to build the restart case at Silver Swan, which con- tains 136,000t @ 9.08% for 12,400t contained nickel.
Beck Engineering is un- dertaking geotechnical en- gineering work for the un-
derground mine and Entech Engineering is in charge of de nitive engineering and the life-of-mine schedule.
In addition to the in situ resource, there is 1.2mt @ 0.49% nickel of run-of-
mine stockpiles at the Black Swan mill on which the company plans to run ore blend test work.
The entire Black Swan project was ac- quired in the November 2014 deal which saw Poseidon also land the Lake John- ston nickel assets of Norilsk Nickel. It had agreed to sell Silver Swan to Caeneus Minerals Ltd but when that sale failed to materialise, Poseidon reassessed its own development plans for the under- ground mine.
“Silver Swan is the most likely the rst of the nickel assets to be restarted,” Rod- riguez said. “We’ve been looking at a number of options but with its indicated resource grade of above 9% nickel Silver Swan is the favourite to restart and is the focus in the short to medium term while we await a turn in the market.”
An explosives licence and a project management plan are the only outstand- ing approvals for the restart and Rodri- guez is con dent there would be little delay if the board did give the go-ahead.
“A restart is fairly straightforward as we
Poseidon plans to use the Lake Johnston processing plant to treat lithium ores
PAGE 82 OCTOBER 2016 AUSTRALIA’S PAYDIRT


have continued to dewater and conduct care-and-maintenance,” he said.
With three West Australian nickel as- sets in the portfolio – Lake Johnston and the long-held Mt Windarra nickel project being the others – Poseidon could be a much changed company following a spike in nickel prices and Rodriguez said he continued to weigh up other openings in the space.
“I think there are still some M&A or purchase options out there and Posei- don has got access to good money,” Rodriquez said of a company that counts Andrew Forrest among its largest share- holders.”
The question is when the board will be in a position to make restart decisions.
“The board needs to see stability in the nickel price,” Rodriguez said. “It would like to see nickel above $US5/lb for a minimum of three months so it is a cau- tious approach.”
The company’s caution is understand- able. Poseidon has been almost peren- nially in nickel development mode for the last eight years, patiently waiting for the market to provide the right conditions for the construction of rst Windarra, then Lake Johnston and now Silver Swan.
It has been close on a number of occa-
sions but Rodriguez is glad the company is still alive and kicking in what has been a brutal market for nickel juniors.
“We were almost there [development] in 2013 when nickel was $US6/lb and had two term sheets on the table for Windarra. Had we started we would’ve had a shock to the organisation once the price dropped. Instead, we were actually rst-mover and shut things down. History has proven us correct as the market has remained soft.”
Nickel has recovered from the dec- ade-long lows of less than $US3.50/lb it reached in February this year but even 2016’s high of $US4.90/lb is widely con- sidered unsustainable by most of the in- dustry.
“The market is about supply and de- mand and at some point it will shift again. We are unlikely to ever see $US30,000/t again but certainly there will be a healthy market in the future,” Rodriguez said. “At the current spot price, 65-70% of nickel is loss-making and the world’s biggest operations are all losing money. If in two years the price is still below $US5/lb I think you will start to see some closures, particularly in the big mines.”
In the meantime, Poseidon is playing the role of plucky junior; surviving on its
feet through a mix of sound development work and opportunism.
In May, it joined the growing throng of juniors at the lithium table.
“The lithium play is pretty exciting,” Rodriguez said. “We started looking at the pegmatites on our Lake Johnston ground and the soils gave us some inter- esting values. We were originally going to do some trenching but will now prob- ably get a drill rig in. We have to see if the spodumene we have is commercial.”
The company is also building a re- lationship with Kidman Resources Ltd which is de ning lithium resources at its Mt Holland project in WA’s Eastern Gold- elds.
“We had been talking to Kidman about them using the Lake Johnston plant for toll-treatment of their gold. Now we are turning it into an option to use Lake John- ston as a central lithium processing facil- ity and are working on a heads-of-agree- ment now,” Rodriguez said.
“Gold and lithium are very attractive in the current market so the opportunity is there for us to look for short-term op- tions to utilise the Lake Johnston asset and create a win-win for both us and Kid- man.”
– Dominic Piper
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 83


NICKEL PREVIEW
Dual production drives Mincor
Mincor Resources NL will produce both nickel and gold from its Kambalda pro-
jects if chief executive Peter Muccilli’s dream comes to frui- tion.
Having placed its nickel op- erations on care-and-mainte- nance at the start of the year, Mincor has spent most of 2016 working up the prospec- tive gold tenure on its 500sq km property.
Since launching its gold strategy in March, Mincor has built up a resource of 4.15mt @ 1.8 g/t gold for 238,640oz across six prospects at Widg- iemooltha. The company has also completed pit optimisa- tion studies which highlighted its economic potential for the precious metal.
Recent in ll drilling returned a series of encouraging hits, including 10m @ 4.74 g/t
Peter Muccilli
gold from 20m at Bass, 5m @ 3.32 g/t from surface and 11m @ 4.64 g/t from 59m at Hronsky, 7m @ 23.1 g/t from 7m at Flinders and 7m @ 2.71 g/[email protected]/t from 4m at West Oliver.
While the gold results are generating quite a buzz in- side Mincor’s West Perth of ce, Muccilli and his team have also been keeping a close eye on the nickel price.
Muccilli, who became Mincor’s chief executive in February after many years as chief operating of cer, re- vealed to Paydirt his vision for dual production of both metals when the nickel price improves.
“Salt Lake [Mining Pty Ltd] is mining both gold and nickel together and poten- tially we could be in the same boat,” Muccilli said. “We’ve
PAGE 84 OCTOBER 2016 AUSTRALIA’S PAYDIRT


got quite a bit of work to get to that point though, but this is the sort of opportunity the land holdings have presented to us.
“Adding gold to your operational bow just gives you a lot more exibility in rid- ing out cycles in both gold and nickel.
“We are in the heart of a gold-nickel district and we have both assets. In the long run, as people before us have done, mining both bodes well over time, so I like to think we have both operational strings in our armoury.”
Mincor completed a DFS in March for independent restarts to mining at Durkin North and Miitel/Burnett, while retaining nickel reserves of 28,200t, its highest level in ve years.
The studies found Durkin North can be revived for $20 million and Miitel/Burnett for $12.4 million, returning NPVs of $24 million and $15 million over their respec- tive four and three-year project lives, based on at nickel prices of $20,000/t and $22,000/t for each.
Mincor also recently sold $4.35 mil- lion worth of surplus equipment from its mothballed operations, topping up the company’s cash balance which stood at $18 million at the end of FY2016.
Muccilli said he was “carefully consid- ering” enhancing his company’s nickel
option by restarting exploration for the base metal.
“We’ve got the Cassini prospect where we’ve only looked at the southern end of this magnetic feature,” he said. “The northern half is still untested by drilling; diamond or RC. In a different nickel price environment, that’s a high priority target and would have been drilled. Likewise at Republican Hill.”
Muccilli said it was possible his com- pany could use cash ow from gold pro- duction to fund the restart of nickel op- erations and then ultimately be churning out both metals via separate processing facilities.
Mincor received the gold rights to its North Kambalda tenements for the rst time in its history in mid-June and Muc- cilli is champing at the bit to punch some holes into the prospective ground.
“We’d never seen the gold data prior to June, it was never given to us, so when we got the data, with all the gold results now included, we can see there’s gold in soils, there’s gold intersections in the drilling and there’s plenty to work with in that corridor,” he said.
“This is the best gold corridor in West- ern Australia. St Ives [Gold Mining Com- pany Pty Ltd] have recognised four pro-
jects from four prospects on our leases. We want to be testing those targets in the near future. It’s been a really important addition to our portfolio.”
Muccilli said the company’s gold strat- egy had exceeded his expectations and Mincor would soon be launching a longer drilling campaign at Widgiemooltha to in- crease the size of the current resource and upgrade it to reserve classi cation in order to pursue feasibility studies.
“We’re moving very quickly with our strategy, March is not that long ago,” Muccilli said.
“There is a lot of gold near surface and each prospect we’ve drilled has de- livered quality intersections. That’s what happens when an asset sits in the back- ground of a nickel company.
“The change has been forced upon us a little bit, but it’s also an opportunity. In the long run, if we get this right, I think we’re going to come out much stronger on the other side, with both commodities on the table.”
– Michael Washbourne
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 85


NICKEL PREVIEW
Nickel st“ill having an Impact
Impact Minerals Ltd is planning ma-
jor drilling programmes for its nickel
projects in Western Australia and are characterised
All our projects
New South Wales from early next year.
With the success of its Common- wealth gold project in NSW dominat- ing focus in 2016, Impact expects to switch its attention to Mulga Tank and Broken Hill over the coming months.
And the diversi ed junior explorer could be in for a timely cash injection from Andrew Forrest’s Squadron Re- sources Pty Ltd, the private investment vehicle of the mining magnate’s Mind- eroo Group.
Having already tipped in $3 million over the past 12 months, Squadron has an option to invest a further $1 million in either Commonwealth or Broken Hill, or both, to earn a 19.9% interest. A decision is expected soon.
Impact managing director Mike Jones said if Squadron was to commit to Broken Hill, then new holes could be punched into the ground in early 2017.
by targeting high-grade deposits, which makes any future mine far less susceptible to price variation.
“We want to rejuvenate our nickel projects,” Jones told Paydirt. “We’ve got a drill programme for Broken Hill all planned, it’s virtually ready to go, but it’s been overtaken by events at Commonwealth...so we’re hopeful they [Squadron] will come into the deal.
“We were very active on Broken Hill late last year, where we discovered the highest-grade platinum group metal results ever seen in Australia in a drill hole, in the order of 1.2m @ 10.4 g/t platinum, 10.9 g/t gold, 294 g/t palladium, 4.6 g/t rhodium, 7.2 g/t
iridium, 5.6 g/t osmium, 3.1 g/t ruthenium, 19 g/t silver, 1.8% cop- per and nally 7.4% nickel.”
RUC Mining is ideally situated both geographically and technically to ensure the optimum success of any operation. As Underground mining and construction specialists they have the capability, facilities and capacity to o er a full support service which includes:
• A Comprehensive Mechanised Mining Solution
• Underground Construction
• Boxhole Boring
• Raise Drilling
• Shaft Sinking
• Specialist Ground Support and Grouting
RUC Mining is committed to innovation in designing ever safer working practices and more e cient development and production techniques. Operating in locations from the remote to the highly urbanised, the company seeks to maximise the engagement of local workers, whilst maintaining world’s best practices.
Incycle Shotcrete Pty Ltd (ICS) is a proud member of the RUC Cementation Mining Group and specialises in the supply and installation of high quality reinforced shotcrete and concrete products used for ground support and civil construction.
Mulga Tank, about 200km north-east Kalgoorlie, has been on the back- burner for the past 12 months, but Jones said that was not due to falling nickel prices or lack of support for the base metal.
The company has maintained activ- ity on all three of its agship projects, with Common- wealth the project most likely to deliver it a big discovery,” Jones said.
“We have done some nominal appli- cations of HeliSAM and EM [at Mulga Tank] and we’ve been able to basi- cally map out the
Drilling at Mulga Tank is set to resume in 2017
black shale units which have caused us to drill a number of false anomalies in the past. We’ve also done quite a bit of soil geochemistry surveys over our two key prospects and we’re expecting those as- says through shortly. We also recently won a $150,000 from the EIS grant to drill there in the future.”
Jones said his company was also keen to poke some holes into a second pros- pect at Broken Hill – Platinum Springs – where magmatic nickel-copper sulphides have been identi ed.
“One of the reasons we got into Bro- ken Hill was the grade,” he said. “All our projects are characterised by targeting high-grade deposits, which makes any future mine far less susceptible to price variation.
“The grades that we’ve produced at Broken Hill and also at Mulga Tank, albeit in narrow intervals, are the sort of grades that would see us through the hard parts of the cycle.”
– Michael Washbourne
of
PAGE 86
OCTOBER 2016 AUSTRALIA’S PAYDIRT


Panoramic plays waiting game
The immediate future of Panoramic Resources Ltd’s Savannah nickel pro- ject will become clearer over the next few months.
Having put the Savannah mine on care-and-mainte- nance in May, Panoramic is preparing a feasibility study for a potential restart of mining and processing activities.
The internally prepared study is due for completion in December, but Pano- ramic has stressed any re- start decision will hinge on a more stable nickel price.
When operations do
resume, however, Pano-
ramic will have more nickel
resources to dig up than
when rst dirt was turned at Savannah back in 2003.
Following a recent upgrade to the un- developed Savannah North resource, the project in Western Australia’s East Kimberley region now boasts 226,400t nickel, 104,700t copper and 15,300t co- balt – about 3.5 times the original esti- mate for Savannah.
The upgrade lifted the resource at Sa- vannah North by 60% to 10.3mt @ 1.7% nickel containing 175,100t, including 73% classed as indicated.
Panoramic managing director Peter Harold said the resource upgrade sug- gested his company was dealing with a much larger mineralised system.
“We might not even have touched the surface yet, it could be something much bigger,” Harold told Paydirt.
“It’s just amazing that 500m away from where we’ve been operating for the last 12 years there’s potentially a much big- ger orebody. It’s all very exciting.”
The feasibility study will build on the results of an earlier scoping study on Savannah North which agged produc- tion of 9,500 tpa nickel – plus copper and cobalt credits – over a mine life of almost eight years, based on a then-resource of 6.88mt @ 1.59% nickel containing 109,600t.
Key nancial metrics from that study include a pre-production capex of $42 million, life-of-mine capital of $137 million and C1 cash costs of $US2.20/lb.
Following the resource upgrade at Sa- vannah North, the resource model was handed to Panoramic’s internal mining
year low in February, of- fering suspended produc- ers such as Panoramic a glimmer of hope to restart- ing operations in the near term.
Harold – who poked fun at himself by revealing he now checks the nickel price on an hourly basis up to 10 times a day, much to his wife’s chagrin – con- ceded the current price trough felt different to oth- er downturns.
“I think the big differ- ence has been the pro- liferation of the nickel pig iron business, which went from being zero produc- tion to 600,000t in the space of seven or eight
years,” Harold said.
“One of the biggest changes [I’ve seen]
is just how much impact metal specu- lators are having on the market. They certainly move the markets very aggres- sively and when the prices are good they obviously go long and that pushes prices up. When the market is negative and there’s negativity around, they go on the short side and adjust it back to the down- ward price movements, probably more so than I’ve ever seen.”
Panoramic’s share price has jumped nearly 100% in the past three months, mainly on the back of its plans to spin out the Gum Creek gold project, 120km from Wiluna, via an IPO later this year.
A scoping study released earlier this year found the free-milling project (for- merly known as Gidgee) could support a 60,000 ozpa operation for a pre-produc- tion capex of $62 million and an average AISC of $1,209/oz.
Panoramic shareholders are set to own 50% of the new company, which is seeking to raise $15 million to list on the ASX. Somers & Partners Pty Ltd is over- seeing the proposed oat.
“We’re feverishly working away on the prospectus, that’s our number one priority in the business at the moment,” Harold said. “It’s a big document and a lot of people are involved, but we have a great team of people who are working very diligently and it’s all coming together pretty quickly. I’m really pleased with the progress they’ve made.”
– Michael Washbourne
Panoramic’s Savannah nickel operation has been on care-and-maintenance since May, but the company is optimistic about a restart
engineering team to undertake design and scheduling work.
Another drilling campaign is also planned, with the results likely to be in- cluded in the upcoming feasibility study.
“We want to test the western extension of that orebody and we’ve also got some other targets in the vicinity that have nev- er had a drill hole and could potentially be mineralised too,” Harold said.
“It will be a surface drill programme of ve or six holes and that will probably take a couple of months.”
Savannah produced a record 1,263t nickel in April as stockpiled ore was rapidly whittled down before operations ceased on May 20.
Harold said his team had adjusted to not being a recognised miner for the rst time in 13 years, although the company founder admitted it was still a “weird feel- ing” not having a producing asset at his disposal.
Panoramic mothballed its Lanfranchi nickel mine, near Kambalda, in August 2015 and little has been said about its future since, but Harold insisted his com- pany had not turned its back on the high- grade operation.
“We haven’t forgotten about Lan- franchi, it’s not costing us much money to hold it for the time being,” Harold said.
“We still have an off-take arrangement with BHP [Billiton Nickel West] until 2019, so when the nickel price does pick up again we’ll be in a position to return our sights to Lanfranchi.”
The nickel price has bounced back in recent months after slumping to a 12-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 87


NICKEL PREVIEW
Building a Legend in the Fraser Range
Like many explorers in the Fraser Range, Leg- end Mining Ltd aspires to
unearth a Nova-Bollinger lookalike.
It has been four years since Sirius Resources made the famed Nova dis- covery but companies have since failed to deliver after playing the “nearology” card.
However, as Legend managing director Mark Wilson points out, from the time exploration in the Fraser Range started in the 1970s it took almost 40 years for anything con- sidered world-class to be found in the province.
“The rst exploration that
I am aware of out there was
in the 70s and it took until 2012 before Nova was discovered. I think the secret there is the discovery of Nova has given everybody a template of what worked for Nova and that’s a great starting place; previously that didn’t exist,” Wilson told Paydirt.
“You would think that with the ad- vancement of technology, the fact that Nova has been discovered; it’s a realistic possibility [a Nova-like discovery can be made in the next three years] and I hope it is Legend.”
Compared to some other cash- strapped explorers, Legend is well fund- ed and, in some respects, is ahead of some of its peers in the Fraser Range.
Cash and liquids amounted to about $8.5 million (to the end of June) and with positive sentiment returning to the nickel sector, it appears money for players in the industry is more forthcoming now than in the recent past.
Despite encouraging feedback from in- vestors on a road show of Australia’s East Coast in August, Legend does not need to ll its coffers and instead is focused on proving its concepts at the Rockford project, 120km north-east of Nova.
“They [investors] like our systematic approach to our exploration programmes and the more technical analysts of sev- eral funds and broking houses that I have visited, truly appreciate the potential sig-
Legend’s Rockford project has revealed some similarities to Independence’s Nova project
“We found that particularly encouraging and evidence that the system is working.
What that did for us is re- ally increase the prospectiv- ity of our entire project area for the mineralisation that we are looking for,” Wilson said.
Legend’s use of aeromag- netic and gravity datasets to identify potential intrusive bodies, followed up with ground EM and drilling, was credited with producing such results thus far, according to Wilson.
It was this type of system- atic exploration investors appreciated about Legend, Wilson saying the company would continue this consci- entious approach.
ni cance of sulphides that we found in those rst two diamond holes,” Wilson said.
“I left that road show con dent that we were a pretty rare breed because we are a well-funded junior explorer. They un- derstand what we are trying to do, they understand what we have achieved and they are very supportive of both.”
Legend secured the Rockford project about 12 months ago and wasted no time hitting the ground with a drill programme.
By the end of the year, the company had identi ed seven conductors, with Area D hosting ve of those.
RC drilling of four conductors at Area D and one at Area F started early in 2016 and in addition to follow-up work on mov- ing and xed-loop EM surveys on the same conductors, targets for diamond drilling were generated.
A two-hole diamond drilling pro- gramme on three conductors – D6, D7 and D8 – signi cantly increased the po- tential at Area D, Legend reported.
“The pleasing aspect of that diamond drilling is we actually got sulphides in the metasediment and those sulphides were nickel, copper and iron sulphides; pentlandite, chalcopyrite, and pyrrhotite, respectively,” Wilson said.
The company had encountered sev- eral similarities to a Nova-Bollinger style system, according to Wilson.
At the time of print, Legend was reviewing all data from the diamond drilling programme, including structural interpretation of the core, petrology of selected samples and assays of selected
samples.
The use of the geophysical techniques
of inversion modelling and deeper in- vestigation of whether EM programmes could identify a deeper conductor is also being analysed.
Wilson said the company was really looking for the presence of massive nick- el-copper sulphides and if anything was detected “it would provide an enormous shot in the arm not only for that area but the entire project”.
“From the encouragement that we have got from Area D, we have commenced moving loop EM surveys [in late August] over another eight areas throughout the entire tenement package looking to build on our dataset of the entire project area,” Wilson said.
“In the six months to Christmas we will carefully review Area D to see if there is another drill target. We’ll do an aircore programme over all or some of those ar- eas later in the year as well. Obviously, if we get a target at Area D we will make all haste out there with a diamond rig and go out there and prosecute that drill.”
PAGE 88 OCTOBER 2016 AUSTRALIA’S PAYDIRT




NICKEL PREVIEW
New home for stalled KNP
Heron Resources Ltd’s longstanding Kalgoorlie Nickel Project (KNP) will soon
be housed in a new company. With the Woodlawn zinc- copper project in New South Wales dominating Heron’s focus, the company is looking to spin off its non-core assets via an IPO of wholly owned subsidiary Ardea Resources
Ltd.
Other assets to be incorpo-
rated into the new company include the Lewis Ponds gold-zinc project in central NSW and the Mt Zephyr gold targets, about 60km north- east of Leonora.
A prospectus and timetable
for the proposed oat was be-
ing compiled at the time of print. Heron plans to offer existing shareholders an in-specie distribution of shares in Ardea.
Heron managing director Wayne Tay- lor said his company had been consider-
The Kalgoorlie Nickel Project will soon be under the control of Heron subsidiary Ardea Resources
has meant the other projects, while really good projects, have struggled for funding, attention and activity on the ground to see them pro- gressed in their own right,” Taylor told Paydirt.
“The idea of the spin-out is really about putting the major- ity of those projects within an entity that can basically fund and manage itself and realise some value for Heron share- holders [because] if things go to plan with Woodlawn, we won’t be doing much else other than Woodlawn for the next couple of years.”
Heron picked up KNP in 1997, but a series of failed partnerships and funding
ing a spin-out of its non-core assets “for some time” following the merger with Tri- AusMin in mid-2014.
“It’s fair to say our focus has been wholly and solely on Woodlawn, which
plans over the next 19 years has cast se- rious doubt over whether the project can actually be developed.
Despite the market ambivalence to- wards the nickel laterite project, Heron
PAGE 90 OCTOBER 2016 AUSTRALIA’S PAYDIRT


has persisted with the project and built up a healthy resource of 796mt @ 0.7% nickel at KNP and released a 2014 scop- ing study focused on a 20,000 tpa operation using a carbon- friendly sulphuric acid leaching and recycling process.
The study found the project could support production of 19,500 tpa of nickel, shipped as a mixed hydroxide product, over a 35-year mine life for a pre-production capex of $660 million and operating costs of $US4.27/lb.
Some of the KNP tenements also host gold mineralisation which Heron has yet to follow up in detail.
Taylor said the project had a much better chance at being developed under Ardea’s control, however, he conceded that was unlikely to happen in the near term due to the current pricing trough for nickel.
“KNP hasn’t, for some time, been a project that Heron has seen itself developing in its own right because the capital re- quirements far exceed the capacity of the company to support it,” Taylor said.
“The nickel market has been well and truly out of favour – it’s certainly not out of the woods yet – but KNP presents a great option on nickel going forward in the right pricing en- vironment and with some alternative processing technology.
“I’m sure some shareholders would like to see it receive more recognition and to see it advance, but in the current pricing environment it’s dif cult to see that happening, as is the case for just about every other nickel project in the world, whether it be laterite or sulphide.”
KNP will compete with Lewis Ponds, about 15km east of Orange, to be the agship project in Ardea’s portfolio. Lewis Ponds hosts a JORC 2004 resource of 6.62mt @ 1.5 g/t gold, 69 g/t silver, 2.4% zinc, 0.2% copper and 1.4% lead and sits along the same trend as Regis Resources Ltd’s McPhillamys gold project, about 20km to the south.
“I’ve been associated with the Lewis Ponds project since 2011 and it’s a piece of real estate in a well-known gold dis- trict that many others would dearly have liked to have got their hands on, so we know it’s held in very high regard,” Taylor said.
Heron has a strong track record when it comes to spinning out assets. In 2002, the company oated Avoca Resources, which went on to develop the Higginsville gold mine before merging with TSX-listed Anatolia Minerals in 2011 to form Al- acer Gold Corp.
Ardea is expected be one of several new companies to list on the ASX via an IPO in the second half of 2016, with TNG Ltd and Panoramic Resources Ltd set to spin-out their respective non-core assets over the coming months. Metals X Ltd is also planning to split its gold and base metals projects into two separate companies.
“It’s probably the rst time the markets have really been open for IPOs in the resources sector in the last ve years or so,” Taylor said.
“We want to see some recognition for the projects we have within our portfolio, but they were clearly going to struggle with Woodlawn being pushed ahead and having to divert 99- 100% of our effort towards seeing that proceed.
“It is all about timing and the receptiveness of the market to support these projects going out on their own.”
– Michael Washbourne
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 91


NICKEL PREVIEW
Fisher East back in vogue
Rox Resources Ltd is preparing to bring its agship Fisher East nickel project back into the spotlight.
Work on the project, about 150km north-east of Leinster, was scaled back to a bare minimum earlier this year due to the low nickel price. However, with vital funding set to roll through the door any day now and the nickel price continuing to improve, Rox is ready to pick up where it left off.
And Rox managing director Ian Mul- holland is keen to remind everyone his company has one of the most advanced nickel projects in Western Australia.
“We’ve still got a little way to go, there’s no doubt about that, but the trick for us is going to be picking the right time to com- plete the studies and get the whole thing ready to go,” Mulholland told Paydirt.
“From the time we make the deci- sion to mine, we can be in production in about nine months. Obviously to get to that point, there might be another 18 months of work that needs to be done, but we think we can be in production
fairly quickly.”
Rox has built up a resource of 4.2mt @
1.9% nickel for 78,000t across three de- posits – Musket, Cannonball and Camel- wood – and completed a scoping study early last year before embarking on an un nished PFS.
Despite putting major work pro- grammes at Fisher East on hold, Mulhol- land and his team have continued to look for ways to improve the project’s eco- nomics, with one “controllable” standing out.
“One thing that always comes out of these studies is if you have a bigger re- source, then you have a greater timeline to get a return on investment,” Mulhol- land said.
“And it lowers the risk because if it’s a very short-term project and you pick the price cycle at the wrong time, then that project isn’t viable. But if you pick the right time, you can make a lot of money, so that’s what we’re aiming to do.
“There’s potential to increase the re- sources beneath the current resources.
We’ve got untested downhole EM con- ductors beneath each [deposit] but we’ve only drilled down to about 500m below surface. These deposits often extend well beyond that – the Kambalda de- posits are still going beyond 1.5km – so we’re pretty con dent these resources will continue at depth.
“Our 78,000t resource could eas- ily be 100,000-150,000t, maybe even 200,000t, and if we’ve got 200,000t, then we’ve really got some options.”
Rox completed a small aircore pro- gramme at Fisher East last month to test a series of targets, including Mt Tate and Horatio, with the drilling intersecting fresh sulphides up to 1% nickel.
Formal assay results were pending at the time of print.
A more extensive drilling campaign will be implemented once Rox closes the sale of its 49% stake in the Reward zinc project in the Northern Territory after striking a deal valued at $21 million with Marindi Metals Ltd.
Rox will be entitled to $8 million cash
PAGE 92 OCTOBER 2016 AUSTRALIA’S PAYDIRT


and $4 million worth of Marindi shares, to be escrowed for a mini- mum of 12 months. A $5.25 million convertible note and a $3.75 million deferred payment are also part of the sale.
The next programme will likely in- clude follow-up drilling at the Sabre prospect which previously returned a best hit of 10m @ 1.9% nickel.
“We’re pretty con dent Sabre is going to be another 20,000-30,000t nickel deposit, similar in size to Camelwood,” Mulholland said.
Picking when to ramp up efforts at Fisher East, however, is the main conundrum for Rox, but Mulholland is buoyed by Wood Mackenzie’s re- cent ve-year outlook on the nickel price.
“They’re predicting for the next
four years – at least – nickel is going
to be in de cit, which means the stock- piles that had built up will all be gone and eventually there’s going to be upward pressure on the price,” he said.
“That hasn’t happened yet, it’s prob- ably not going to happen until next year or maybe even the year after, but if all things stay equal to the assumptions behind this, then you can expect, come
Rox managing director Ian Mulholland with exploration manager Will Belbin at the Fisher East nickel project, about 150km north-east of Leinster
2019, we could be looking at a nickel price around $9.50/lb or $10/lb.”
With Doray Minerals Ltd earning into prospective gold tenure on the proper- ty, Rox has started assessing available ground to potentially add more nickel tonnes to its resource base.
“We’ll look for other nickel sulphide sources or other projects in the area that
could add to the overall picture,” Mulhol- land said.
“We’re in the Eastern Gold elds, so there’s lots of nickel projects around. Some of them are a bit unloved at the moment, so we’ll have a look to see if anything is worth taking up.”
– Michael Washbourne
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 93


REGIONAL ROUNDUP LATIN AMERICA
Drilling jubilation at Juruena
Aspectacular drill intercept grading more than 2,000 g/t gold has pro- vided Crusader Resources Ltd with the strongest indication yet its Juruena pro- ject in central Brazil hosts multiple high- grade deposits.
The extraordinary hit of 0.4m @ 2,009 g/t gold from 133m in hole MD-09 fol- lows the completion of a 14-hole drilling campaign covering almost 1,800m at the Dona Maria prospect.
Other results from the rst ve holes assayed include 10m @ 101 g/t gold from 125m (including 1m @ 65.4 g/t from 126m and 1m @ 104 g/t from 132m), 1.5m @ 141 g/t from 45m, 4m @ 8 g/t from 96m (including 1m @ 27.99 g/t) and 4m @ 3.98 g/t from 77m (including 1m @ 11.09 g/t).
Recent drilling at the nearby Quer- osene prospect also returned several impressive hits, including 2.9m @ 75 g/t gold from 113m (including 0.45m @ 335 g/t), 1.4m @ 48.62 g/t from 84m (includ- ing 0.4m @ 88 g/t and 0.64m @ 47.9 g/t) and 1.47m @ 29.42 g/t from 57m.
Crusader announced maiden resource estimates last September for both Quer- osene (263,500t @ 12.3 g/t gold for 104,100oz) and Dona Maria (196,300t @ 11.8 g/t for 74,700oz) and the company is equally excited about the potential of the Tomate and Mauro prospects.
“We’ve never viewed Juruena as being just one mine,” Crusader executive direc- tor Paul Stephen told Paydirt.
“Our approach has been to focus in on some of the smaller occurrences in the area where we see potential for a district of very high-grade, very pro table mines with a central processing facility.
“We think it’s got the potential to be an area that is akin to a Kalgoorlie, where you have multiple deposits with an obvi- ous source feeding those, but nding that will take a large amount of money, so our aim is to get into production, get into pos- itive cash ow and exploit the upside of many additional targets.
“We’re really encouraged by the suc- cess we’ve had lately, it’s really giving credibility to the concept that this is not a singular-mine project. How big they are is yet to be determined...there’s no ques- tion the tenor of gold in this area surpass- es anything we’ve seen in Brazil.”
Almost 8,000m was drilled at Juruena as part of the current programme – Cru- sader’s second major campaign since acquiring the project from Lago Dourado Inc in July 2014.
Recent drilling at Juruena has returned several spectacular gold hits
Lago Dourado spent close to $C30 million on exploration between 2009 and 2014 before selling the project, lo- cated on the largely untapped 6 moz Alta Floresta gold belt, to Crusader for $C650,000 plus shares.
“The previous operators were con- vinced the area had the potential to host a very large orebody in the vicinity of 10- 20 moz,” Stephen said.
“Every time you come out of the for- est into another clearing you see an area where the locals have mined extensively. When you y over it you just see work- ing after working after working. And all the survey, aeromag, ground work, etc points to multiple targets.”
“We have resisted the urge of trying to delineate where the ultimate source of that mineralisation is...that’s a question which requires ongoing work. We think it’s more important to be in cash ow and making money and funding that work out of positive cash ow rather than con- tinuing to come back to shareholders for more and more money.”
Crusader’s plans to generate quick cash from Juruena stems from its am- bition to develop the larger Borborema gold project, in Brazil’s north-east, while sentiment towards gold remains favour- able.
Borborema hosts a resource of 68.6mt @ 1.1 g/t gold for 2.43 moz, including proven and probable reserves of 42.4mt @ 1.18 g/t for 1.16 moz, and a PFS was completed on the project in September 2011, based on a 3 mtpa open-cut opera- tion producing up to 180,000 ozpa.
Crusader reignited development plans
for Borborema earlier this year, focusing on a smaller 2 mtpa operation targeting the upper lens (roughly 19.2mt @ 1.2 g/t gold for 743,000oz) of the reserve.
“This is a project that could easily be much larger than it currently is, however, with the gold price falling [after complet- ing the PFS] we decided to focus on our other projects,” Stephen said.
“Now that we’re seeing some enthusi- asm come back to the sector, we want to be ready to go into production in the very near term – and we’ve got some backers who want to see that happen.
“We announced a major breakthrough on licencing [in July] and we’re in the nal throes of discussion with Brazilian au- thorities and we hope to be able to report back on being in a position to commence mining – from a licencing perspective – very soon.”
Stephen said the company’s unherald- ed Posse iron ore mine, near Belo Hori- zonte, was “making money on a monthly basis” as the demand for local pig iron continued to rise at a steady rate.
“What we had hoped to see post-Sa- marco has happened and we see a big future for iron ore, but we think it’s prob- ably got a little bit of time to go yet,” he said.
“A large part of that has to do with the Brazilian economy. We’re expecting to see an improvement at some stage and as that happens that will be re ected in the demand for our iron ore.”
– Michael Washbourne
PAGE 94 OCTOBER 2016 AUSTRALIA’S PAYDIRT


LATIN AMERICA
17-18 May 2017 Perth,Western Australia
www.latinamericadownunder.com
To present, exhibit or attend as a delegate please contact Melita Fogarty on (+61) 8 9321 0355 or email [email protected]
SAVE THE DATE


REGIONAL ROUNDUP
Santana tunes up for Cuitoboca resource push
Santana Minerals Ltd has a new lease on life after return- ing a series of encouraging explo-
ration results at time when silver is beginning to return to investors’ thoughts.
The ASX-listed explorer has enjoyed a tenfold increase since February, moving from 0.6c/ share to as much as 7.8c in Au- gust. Keen to take advantage of the interest, Santana has under- taken two successful capital rais- ings this year, pulling in $495,000 at 1.8c/share in March and a fur- ther $2 million at 6c/share in late August.
Managing director Tony Mc- Donald said the change in mood towards silver and Santana itself had been very welcome.
“Things have turned around dramatically in the last six months and it has been through a combi- nation of things,” McDonald told Paydirt. “Silver has got a bit of avour about it – there is a recog- nition it needs to catch up to gold – and the fear has disappeared in markets, led particularly by the North American funds.”
Far East Capital Ltd took the lead on the $2 million August placement and Mc- Donald said the rm’s well-known chair- man, Warwick Grigor, had been fantastic support to Santana.
“Far East Capital has been a beaut for us,” he said. “Warwick approached us in March but we didn’t want to dilute too far and so we waited until August and he has supported us again.”
In August, Grigor used his weekly newsletter to outline the reasons for his interest in Santana.
“It ticks all the boxes; geology, scale, management and commodity. It is at the start of the value creation curve – the de nition and expansion of the resourc- es. It is taking ground that might be worth $10/acre and turning it into something worth millions of dollars per acre based on resources in the ground,” Grigor said.
The ground Grigor refers to is Santa- na’s Cuitaboca project in Sinaloa state, northern Mexico. The company acquired the project in July 2014 with a focus on its bulk tonnage silver potential. Drilling at
Tony McDonald
and we think once we understand the system at surface it will not be hard to build a resource and move onto the next target and then con- tinue moving north.”
At Jesus Maria, there is the tan- talising prospect of adding gold mineralisation to the mix.
“The target is on higher ground and a bit more dif cult to access but we know there is gold in the system so we want to have a look at it,” McDonald said.
“There isn’t a lot of vein expo- sure but it has good rock chip val- ues and it is a good target.”
The Jesus Maria prospect is 15km along the same structural trend as the San Jose de Gracia gold mine which boasts resources of 1.14 moz @ 7.2 g/t gold.
“If we get similar results we won’t be apologetic about this becoming a silver-gold story,” McDonald said. “It will allow us to add value at minimum dilution to shareholders.”
With North American investors returning to silver, McDonald be- lieves a resource announcement
the Mojardian Loop prospect in the June quarter further highlighted that potential. The company reported hits of 83m
@ 97 g/t from surface, 25m @ 222 g/t from 47m, and 67m @ 66 g/t from 31m from the programme. McDonald said the money raised in August would be used to follow up these results.
“We’ve shown good discipline dur- ing the downturn and that approach is starting to pay off,” he said. “We plan to drill another 1,000m at Mojardian Loop which, if the results are good, should be enough for a resource.”
The drill rig will then move onto the Mojardian South target in an effort to ex- pand the mineralised zone before head- ing to the Jesus Maria breccia target to the north which could change the shape of the project.
“We began by chasing the low-hang- ing fruit; the high-grade, narrow vein sil- ver mineralisation at lower elevations in the south. We are con dent they repeat to the north so have always intended to move in that direction.
“We have to show the project is real
could place Santana (current market cap $16 million) on the radar of other players. “There is not much M&A at the moment but the funds are getting themselves set and it won’t take long if we come up with a decent resource before somebody taps us on the shoulder,” he said. “But we don’t want that to happen until we have got the value into the stock and we are
certainly not looking to do a deal now.” Like its fellow ASX-listed silver explor- er Azure Minerals Ltd, Santana faces an eternal challenge in convincing Austral- ian investors of the merits of both silver
and Mexico.
“Mexico hasn’t had much attention
from the Australian market and our mar- ket still doesn’t comprehend the lack of risk associated with Mexico,” McDonald said. “We have done dual listings in the past [most memorably with Bolnisi Gold] and that is an option open to us again but it is a bit early in the story.”
– Dominic Piper
PAGE 96 OCTOBER 2016 AUSTRALIA’S PAYDIRT


LATIN AMERICA
Azure raises Loma Bonita pro le
The success of early drill- ing has been such that the Loma Bonita gold prospect is now looming as an equal rather than just a complement to Az- ure Minerals Ltd’s Mesa de Plata silver project.
Azure has quickly built a 15 moz high-grade silver resource at Mesa de Plata – part of the Alacran project in the northern Mexican state of Sonora – and while the company continues to investigate its potential, the Loma Bonita gold prospect is also emerging as a rapid de- velopment option.
A maiden intercept of 48m
@ 2.7 g/t gold was reported
in May with Azure since add-
ing further hits of 49m @ 1.59
g/t, 111m @ 0.81 g/t and 14m @ 1.59 g/t gold from surface. The six RC holes and four diamond holes have expanded the gold mineralised zone at Loma Bonita to 400m by 150m
“The beauty is that Loma Bonita is looking likely to be a signi cant gold deposit in its own right with potential for upwards of 100,000oz gold at surface in oxide material and with early metallurgy showing it has good cyanide leaching re- coveries,” Azure managing director Tony Rovira told Paydirt.
The prospect had originally been drilled as a potential source of additional material for the development of Mesa de Plata but Rovira now thinks it could con- tain economic mineralisation in its own right.
“The widths we are getting are indicat- ing there is signi cant tonnage potential and the grades are signi cantly higher than the average grade of open pit heap leach mines operating in the area,” he said. “Grades at those operations are 0.4-0.5 g/t gold; ours will be much higher than that.
“Together it means the potential value of Loma Bonita is getting close to equal- ling the value of Mesa de Plata.”
Not that Azure is thinking of slowing progress in what has been the lead pros- pect on the Alacran project since acquisi- tion two years ago. Instead, the company is undertaking early-stage development work to de ne development options for the 9.59mt @ 83.9 g/t for 25.9 moz silver resource.
While the in-house studies will con- sider all aspects of a full feasibility study,
dor Teck Resources Ltd. The deal for Alacran afforded Azure four years to reach the $5 mil- lion expenditure mark required to acquire 100% of the project. That the company is about to achieve the milestone in the next two months is testament to the vigour with which it has hit the project.
Azure’s aggressive approach to Alacran has been supported by shareholders. In May, the company raised $15 million through a placement to institu- tional and sophisticated inves- tors, giving it enough cash to complete its current exploration plans and project development work.
“We were very happy with the capital raising; particularly the level of support we received from existing share- holders,” Rovira said. “There is now in- terest from North America, Europe and
Asia as well as Australia.”
Precious metals companies have en-
joyed a strong rebound in 2016 thanks to improving gold and silver prices. On the ASX, domestic gold producers have heavily outperformed the market but Ro- vira believes the handful of silver-focused players have not received a similar level of support.
“North America is booming for pre- cious metals stories, however, in Austral- ia silver doesn’t have the same lustre as gold,” he said. “If you look at companies involved in precious metals exploration in Mexico, they have enjoyed share price increases of between four and tenfold. Ours has stayed at. That indicates the North American market is much more in- terested in a company such as ours.”
Around 25% of Azure’s share register is now North American-domiciled and Rovira con rmed the company was con- sidering an exchange listing in that part of the world.
“We are seeing more and more inter- est from that part of the world and all cor- porate options are on the table; including a listing there,” he said.
The “corporate options” could include further project acquisitions in Mexico.
“We are always looking for new op- portunities and there are many projects crossing our desk on a frequent basis,” Rovira said.
– Dominic Piper
Initially thought to be a complement to the nearby Mesa de Plata silver deposit, the Loma Bonita gold prospect is now emerging as a possible development project in its own right
Rovira is keen to crack the metallurgical code at Mesa de Plata before launching a full study.
“For Mesa de Plata, the key factor is the metallurgy. The mining, infrastructure and permitting are just process driven and we are con dent we can tick those boxes without much dif culty.”
Work has de ned two species of silver mineralisation at Mesa de Plata; a silver halide and a silver-iron oxide. Some 70% of the silver mineralisation occurs as silver halide, an advantage given metal- lurgical test work has indicated superior recoveries from the material.
“We are getting about 70% of the con- tained silver from the halide and that is almost exclusively associated with the high-grade portion of the deposit. Those results came from both otation and CIL and we are now trying a few other tech- niques to improve the recoveries from the silver-iron oxide.”
Rovira said the metallurgy would be vital as Azure pursued a quick, low-cost start-up for Mesa de Plata.
“The focus is on getting into production as quickly as possible,” he said. “It is at surface which makes it simple to mine and if we can heap leach with the same recoveries as through the plant it would mean lower capex and lower opex.”
Metallurgical work is continuing with a 5t bulk sample from the high-grade zone of the Mesa de Plata resource being used to conduct column testing. Rovira said the work would form part of an even- tual full feasibility study on the project.
Before that, the company needs to ful l its earn-in commitments with ven-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 97


REGIONAL ROUNDUP ASIA
Audit to shake up mining in the Philippines
The Philippines could suspend at least 10 more mines under an environmen- tal crackdown on the sector, the minister in charge of mining said, in a move that threatens to halt the operations of half the mines in the world’s top supplier of nickel ore.
Global nickel prices jumped 2% – $US10,275/t at the time of print – as the country’s second biggest nickel producer warned that more new stoppages would disrupt shipments to the crucial Chinese market and elsewhere.
President Rodrigo Duterte has taken a tough line on the industry and warned the nation could survive without mining, while mineral producers have labelled a review of the sector a “demolition cam- paign”.
The Philippines has already halted the operations of 10 mines, eight of them nickel producers, for environmental laps- es since it launched an audit on July 8.
That has left 30 mines still operating, but Environment and Natural Resourc- es Secretary Regina Lopez said others could be suspended when the agency releases the results of the mining audit on September 22.
Asked if a further 10 or more mines could be suspended, Lopez said in a text message: “Yes, possible.”
“We are coming clean here. For dec- ades we have turned a blind eye to the suffering of our people. Not anymore,” she said, adding that any decision to halt mines would follow the law.
Lopez, a committed environmentalist picked by Duterte to promote responsible mining, has said miners have to upgrade their operations to limit harm to the envi- ronment and local communities.
“They just need to get their act togeth- er,” Lopez said in the text message.
Dante Bravo, president of Global Fer- ronickel Holdings Inc, the Philippines’ No. 2 nickel producer, said further sus- pensions would hit shipments.
“De nitely, these suspensions would disrupt supply of nickel ore not only to China but to other markets as well,” Bravo said, who expects his company to pass the mining audit.
Bravo said nickel miners, many locat- ed in the southern Mindanao Island, are also expected to halt operations in Octo- ber due to the rainy season. “Hence, we
Nickel ore exports from Philippines to China have dropped 27% this year
would be seeing minimal exports toward the end of the year.”
Past environmental disasters, includ- ing a 1996 tailings leak at a copper mine in central Marinduque province that con- taminated rivers, have spurred mining opponents in the Philippines led by the in uential Catholic Church.
Miners, however, have questioned the inclusion of anti-mining activists in the audit teams.
The Philippines is the biggest supplier of nickel ore to China, where the metal is used to make stainless steel.
The South East Asian country shipped 34mt to Beijing last year, while exports this year have dropped 27% in from Jan- uary to July.
Earlier in the month, Lopez told Reu- ters via a text message that: “All the suspensions are absolutely due to envi- ronmental reasons, and my particular in- terest is the wellbeing of the community, that’s my benchmark.
“There will be large-scale mines to be suspended,” she told reporters later at a congressional hearing, without disclos- ing any names.
The release of an audit into the coun- try’s operating mines was delayed by a week and Lopez said the additional mine
suspensions will be announced by the end of September.
“The audit is done. And it’s important to say that even as we suspend mines, we have put up an area development programme. The commitment is in any suspended mines the people there will not lose work,” she said at the congres- sional hearing.
Lopez’s stance on mining is backed by President Duterte, who has previously warned miners to strictly follow tighter environmental rules or shut down.
“We have had mining in this country for over 100 years. And until now we don’t even have one rehabilitated mine site, not one,” Lopez said in the text message.
“Just gaping open holes, destroyed riv- ers, children with brain disease, so very sad,” she said, referring to sick children in the province of Marinduque due to the 1996 tailings dam leak.
Miners have claimed that the Govern- ment’s environmental crackdown is a “demolition campaign” against them and have sought a meeting with Duterte.
– Manolo Serapio Jr, Reuters
PAGE 98 OCTOBER 2016 AUSTRALIA’S PAYDIRT


Become a FACE in our BOOK
Connect with us
Follow us at the Australian Nickel Conference
#nickel2016
Search for Paydirt Media Australia
www.paydirt.com.au


REGIONAL ROUNDUP EUROPE
Talga tough
Coating steel with Talga’s graphene can signi cantly increase corrosion protection by up to 74%
phene, corrosion resistance was improved signi cantly, with researchers using Tal- ga’s nanoplatelets produced at the company’s pilot test facility in Germany to man- ufacture a base reference coating for testing corrosion resistance on mild steel.
It is estimated that $2.2 trillion a year is spent on maintenance and replacement costs of infrastructure and equipment, particularly in housing, buildings and the transport sector.
The latest study supports work by re- searchers on graphene in anti-corrosion coatings as an eco-friendly alternative to chromium based coatings.
Furthermore, the study on Talga’s gra- phene and results is encouraging for the company’s ambitions of making its trademarked Talphene brand graphene products highly sought after in the $120 billion global coatings industry, which consumes over 40 mtpa of materials.
Peer review studies have indicated Tal- ga Resources Ltd’s graphene could have a major impact on the $120 billion a
year coatings industry.
Research has revealed that coating
steel with Talga’s graphene increases corrosion protection by up to 74%.
With the addition of 0.1% Talga gra-
Not only did the test demonstrate the ability for Talga’s graphene to impact the multibillion dollar a year coatings industry, graphene’s high permeability, high electrical conductivity and ultra-thin shape has emerged as a potential game- changer in the anti-corrosion coatings industry.
Lundin to double-up on zinc in Portugal
Lundin Mining Corp could double zinc production at its Neves-Corvo mine in Portugal as a big rally in prices and loom-
ing de cit of the metal have created the right conditions for an expansion.
“We hope to go ahead with a positive decision by year end,” Lund chief ex- ecutive Paul Conibear said, adding that Toronto-based Lundin has also seen pro- gress on mine plant ef ciency and mod- ernisation efforts.
“Prerequisites to a go ahead include Portuguese government permits in hand and zinc prices continuing at current lev- els or better.”
The expansion would increase an- nual zinc in concentrate production to
150,000-160,000t (from 80,000t) at the mine, which also produces copper. The project will take about two years, once approved, and cost an estimated $US280.53 million.
Benchmark zinc on the London Metal Exchange has soared 58% from multi- year lows in January to $US2,299/t at the time of print, its highest level since May 2015.
The big unknown, Conibear said, is whether higher prices will prompt in- creased production from small zinc mines in China and what impact that may have on supply.
Major new sources of production are unlikely in the near-term, he said, with
just a handful of new mines planned and a paucity of exploration in the last dec- ade.
Glencore decided last year to cut 500,000 tpa of zinc output as prices slumped. Its output fell 31% in the rst half of this year to 506,500t, compared with the same period last year.
While many zinc mines have been shut or mothballed over the past couple of years, prices took off this year on intensi- ed de cit expectations with the closure of the Century mine in Australia and Lish- een in Ireland.
– Susan Taylor, Reuters
PAGE 100 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Talga graphene anti-corrosion coating on steel resized