pd240 July16 mag-web

“We could potentially refinance some debt and leave some
in play, but much less than what we have now. We haven’t
made a decision yet, because it also relates to what we do at
Gwalia and Simberi,” he said.

Simberi is currently under strategic review, which did not
necessarily mean St Barbara would divest the project, Vassie
said.

Divesting or possibly entertaining JV partners at Simberi,
where forecast production for FY2016 is 100-110,000oz
(AISC for Q3 was $1,404/oz), are options, as is the potential
to materialise a 130,000 ozpa sulphide gold project.

“We have an opportunity to invest in Simberi and expand to
develop a sulphide orebody by adding flotation capability to
the plant and shipping the concentrate,” Vassie said.

Setting up for a sulphide operation has the potential to bring
other sulphide opportunities on nearby islands, such as Tatau
Island, into play at Simberi.

“We have just got approval to go in there [Tatau] now and
next week [early June] we are putting an excavator on the is-
land for tracks and drill pads and we are going to start drilling
there. Interestingly we have always looked there for oxides
to go in the Simberi plant, but now we will be looking for sul-
phides if we want to carry on with converting the plant and
get a contribution from the other islands. Importantly, we are
looking at a number of copper-gold porphyry targets that exist
on that island,” Vassie said.

Air core drilling is also under way at Pinjin, near Carosue
Dam in WA, which has remained untapped due to St Bar-
bara’s troubled time in the past. “Our exploration efforts are
tightly focussed on these opportunities so we are not throwing
money all over the place.” Vassie said.

– Mark Andrews

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 51

DIGGERS & DEALERS PREVIEW

Gruyere on road to production

It will take a compelling offer for “There’s no reason why anybody
Gold Road Resources Ltd to hand-
ball development of the Gruyere can’t run their project finance in par-
project to another party.
allel with wrapping up their studies.
A media report in April suggest-
ed the leading junior explorer was Once the PFS was up we actually
seeking to offload a 30-40% stake
in the $455 million project, but Gold kicked off talking to the banks and
Road said it had only granted due
diligence access to some compa- getting them familiar with the project
nies regarding possible JVs so all
development options could be con- and running that assessment in par-
sidered.
allel.”
Gold Road has received numer-
ous plaudits for its work to date at Gold Road kicked off 2016 by
Gruyere, including twice winning
Gold Mining Journal’s Explorer completing a robust PFS and an-
of the Year award, but some have
queried whether the exploration-fo- nouncing a maiden reserve of 81.1mt
cused company has the credentials
to develop the 6.2 moz resource on @ 1.22 g/t gold for 3.17 moz for
the Yamarna greenstone belt in its
own right. Gruyere, 200km east of Laverton.

However, in a sign the company The company’s stock has climbed
is serious about development, Gold
Road executive chairman Ian Mur- 55% to 62c/share since sharing that
ray told Paydirt he was preparing
to hire a mining manager, a chief news with the market in early Febru-
financial officer and a human re-
sources manager. ary.

“As a management team, a The PFS found the project could
300,000 ozpa operation is a very
good foundation block to build a support a 7.5 mtpa operation for
successful company and that’s why we
think if you take the equity support, the $455 million over the initial 12 years
bank support, the skills base we’re build-
ing and the gold price environment we’re of reserve life, including payback
in, it’s the perfect environment to build
the project ourselves,” Murray said. within 42 months.

“But, to be sure, we are running that Other key economics from the
JV process. We have a number of quality
mining companies looking at the Gruyere PFS were AISC of $960/oz, based
project in detail and we’ll see what that
delivers. It would have to be a pretty im- on an exchange rate of 73c to the
pressive proposal for us to choose to go
down that route rather than build it our- US dollar, and more than $1 billion
selves.”
of undiscounted, pre-tax cash flow.
Perhaps another sign Murray and his
current team are confident of transition- Gold Road has since increased
ing from successful explorer to developer
came in May when the company com- the total resource at Gruyere by
pleted a $74 million equity raising.
10% to 148mt @ 1.3 g/t gold for 6.16
Three “high quality” institutional inves-
tors from North America are now on the Gold Road has grown the resource at Gruyere to moz, including measured 14mt @
share register and the company is fund- 148mt @ 1.3 g/t gold for 6.16 moz 1.18 g/t for 530,000oz, based on a
ed to complete the feasibility study and 0.5 g/t cut-off and a $1,700/oz gold
begin early front-end engineering and
design work. tutional investors to the register,” Murray price (the previous estimate was based

“It was a big chunk of money to raise, said. on a 0.7 g/t cut-off and a $1,600/oz gold
but I think more importantly for our future
growth it was about introducing new insti- “Our register has matured from less price).

than 5% instos three years ago to 53% “Every time we’ve moved the project

today and these are guys that like the along it’s got bigger, it’s got more robust

size and scale of the Yamarna belt and and the additional benefit we have now

the Gruyere project and, in all likelihood, is obviously the gold price,” Murray said.

will continue to support us and fund the “We did [the PFS] at a $1,500/oz gold

final leg so we can start development.” price and obviously now we’re sitting

Securing project funding will be a key closer to $1,700/oz. We’re now into the

focus for Gold Road over the next six feasibility study, which should be com-

months, as well as the completion of the pleted in the fourth quarter of this year,

feasibility study, and Murray is anticipat- but we’ll keep running that at a modest

ing multiple crossovers between the two. price. We won’t run it at spot.”

“We’ve met over 10 banks so far and in Gold Road was awarded mining leases

the second half of this year we’ll narrow for Gruyere and the neighbouring Cen-

that down and come up with a shortlist tral Bore and Attila projects in May after

of banks to do the final negotiations with, signing a Native Title agreement with the

with the aim of once the feasibility study Yilka people and Cosmo Newberry Abo-

is completed and reported to the mar- riginal Corporation.

ket, we can move very quickly through The company has committed to $10

to completion of project finance,” Murray million of regional exploration activities

said. on its North Yamarna tenements in 2016

“With any mining project, momentum is and a further $5 million at South Yamar-

important and at the moment we’ve got na through its JV with Sumitomo Metal

the momentum so we want to keep run- Mining Oceania Pty Ltd, marking one of

ning as quickly as we can, but safely, to the biggest gold exploration budgets in

get to the end point. Australia.

PAGE 52 JULY 2016 AUSTRALIA’S PAYDIRT

Drilling to convert the resources at At- Ian Murray sider takings its award-winning explora-
tila and Central Bore to reserves so they tion expertise to other parts of the world.
can be incorporated into the Gruyere on the belt.
mine plan will take place later this year, “The strategy for now is let’s get “We haven’t been [tempted to look
but Murray said finding another major de- elsewhere] up until now because obvi-
posit along the prospective belt would be Gruyere up and running and look for any ously the Yamarna belt is big enough and
the ultimate prize for his company. satellite projects which can be fed into finding the Gruyere deposit has kept our
the Gruyere plant.” hands full, but looking forward from here,
However, he concedes the market we certainly believe we have the skills
expectations may be different to those Once Gruyere is in operation and con- and the expertise to replicate this else-
within the company walls. sistently producing, Gold Road will con- where across the globe on unexplored
greenstone belts,” Murray said.
“I think it’s fair for the market to expect
us, given we have a 5,000sq km tene- However, South African-raised Murray
ment belt, to find numerous deposits believes investors should be looking no
across the belt, but you need to remem- further than his adopted country for posi-
ber that exploration is difficult,” Murray tive exploration stories.
said.
“You take what Dacian [Gold Ltd] is
“You don’t discover every time you drill achieving and what we’re achieving on
and it takes persistence and belief in an our belt, it’s showing the rest of world that
outcome, and obviously cash flow, to test Australia is a good destination for explo-
all the theories and to test all the targets ration,” he said.
to come up with further discoveries.
“Probably five years ago, if you had
“Finding another project the size and spoken about exploration in Australia,
scale of Gruyere will be very, very unu- people would have said, ‘oh, it’s well ex-
sual because projects of that size and plored, you’re not going to find anything’.
scale, even on the Kalgoorlie or Laver- Now you’ve got Dacian coming up with
ton belts, just haven’t been found. We’ll good results, we’ve come up with good
more than likely find anywhere between results and even some of the miners are
200,000oz up to maybe 2 moz depos- doing good exploration.”
its, either within trucking distance of the
Gruyere plant or of grade and size suffi- – Michael Washbourne
cient to consider building a second plant

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 53

DIGGERS & DEALERS PREVIEW

Antipa plays in fields of giants

With big brother Rio Tinto Ltd doing Antipa has a dominant land position in the Paterson province
the heavy-lifting at the Citadel JV,
Antipa Minerals Ltd has the capacity times however Antipa has been some- Antipa has been most welcoming of Rio
to delve deeper into the Minyari gold- what of an exception. Tinto’s participation at the project where
copper project on its own. an IP survey has covered 16 target ar-
Snapping up and amalgamating min- eas within seven survey areas covering
At the time of print, Antipa was pre- ing leases M45/247 and M45/248 (the 400sq km.
paring an extensive drilling campaign Minyari/WACA project), formerly owned
of 70 holes to depths of 60-270m for up by Newcrest, late last year was a boon “Rio Tinto is covering the deeper ex-
to 10,000m to get an idea of what it is as Antipa considers this to be the jewel ploration area at Citadel, they are in the
contending with at Minyari, managing in the North Telfer crown. first phase of the $3 million, 18-month
Roger Mason told Paydirt. evaluation period through to mid-March
Claiming such valuable land added to 2017. Rio has zero equity at this stage.
“We are cashed up for the next two Antipa’s feat of partnering with Rio Tinto Both parties are happy with the way the
phases of drilling at Minyari which will in a $60 million JV at Citadel in October. survey has performed and we could pos-
take us through to next year,” Mason sibly be [RC] drilling there in August and
said. At that stage the company was trading hope to make some new discoveries,”
at about 1c/share and market capped at Mason said.
“It [Minyari] smacks of having a pro- a lowly $3 million. By the time of print,
ject development scenario about it and with Rio Tinto concluding an IP survey Having Rio Tinto as a partner is a
we need to understand the size of the at Citadel and Ausdrill Ltd preparing to strong endorsement for the ground and
project.” hit the ground at Minyari, Antipa shares province Antipa is operating in, consider-
were worth 4c. ing the blue chip miner only deals with
Antipa’s Minyari and WACA tene- potential Tier One assets.
ments are 36km north of Newcrest “As we sit here today our market cap
Mining Ltd’s Telfer operations in West- is about $30 million, which is a function Rio Tinto is fully funding exploration,
ern Australia’s Paterson Province. of the fact people have appreciated the which affords Antipa the opportunity to
execution of a strategy that has attracted assess development and production po-
Although no commercial discussions a major to a farm-in at Citadel,” Mason tential at Minyari.
have taken place between Antipa and said.
Newcrest regarding the potential for “It is good to see that market reward
the former to access any specific infra- Without the financial capability to ex- us for that and I think Paterson [Province]
structure, the region is at least set up to plore at Citadel, 75km north of Telfer,
handle any new potential mine.

Furthermore, the area is also “very
geochemically alive” with a number of
prospective targets deprived of any drill
testing deeper than 10-20m and only
six Minyari and WACA holes drilled to
a depth of about 140m.

“It is a big system, it just remains under
explored,” Mason said.

Previous drilling conducted has inter-
sected results such as 35.5m @ 3.15
g/t gold and 0.56% copper from 9m and
35m @ 2.89 g/t and 0.36% from 10m,
with shallow oxide mineralisation exist-
ing 1-10m from surface demonstrating
potential for open pittable operations.

“It is a very manageable asset for An-
tipa and something a junior can evaluate
and potentially develop. The market can
appreciate that we can do that. We are
most excited about Minyari as we can po-
tentially take it from exploration through
to development. We have the in-house
capability to do that, we are primed to do
that and we are cashed up,” Mason said.

In May, a $3.34 million underwritten
options raising was completed, some of
which will be used for phase one drilling
at Minyari where the WA State Govern-
ment will chime in with $147,000 for about
3,000m through its EIS grant system.

It has been tough for explorers to con-
jure any support in the market in recent

PAGE 54 JULY 2016 AUSTRALIA’S PAYDIRT

in general is an exploration province that The Paterson province has attracted some positive attention in recent times
will see a lot of activity with the manoeu-
vring of groups like Metals X [Ltd], New- of the Paterson Province. worthwhile to hold onto these assets,”
crest activities at Telfer and others like “It will start to become a well known Mason said.
ourselves. It will start to generate some
excitement over the next 12 months or area in Australia and to say we are ex- – Mark Andrews
so,” Mason said. cited is an understatement. It has been
hard work to get here, but it has been
Since completing a $10 million IPO in
2011 and picking up Citadel from Cen-
taurus Metals Ltd and then acquiring
North Telfer from Paladin Energy Ltd, it
has taken Antipa some time to garner at-
tention in the market.

Market conditions have hardly enticed
investors to back explorers and Antipa
has used the lull in the resources sector
to establish a meaningful presence in the
Paterson Province.

“It has taken four years, but in the inter-
im we have put together a good package
and we hold the dominant land position –
the vast majority of shallow gold-copper
territory north of Telfer. While it has taken
4-5 years for the area to start to glow, we
are starting to see our initial thoughts en-
dorsed,” Mason said.

While Antipa is busy in the area, Met-
als X’s bid to capture the Nifty copper-
gold mine, Rio Tinto’s involvement at
Citadel and Newcrest’s commitment to
Telfer has helped highlight the potential

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AUSTRALIA’S PAYDIRT JULY 2016 PAGE 55

DIGGERS & DEALERS PREVIEW

Growth has Independence
feeling better

It is universally accepted in the industry idea of a V-shaped recovery but it is now
that it is better to build mines at the bot-
tom of the cycle when contractors, ma- obvious the recovery is much flatter. We
terials and labour are all cheaper. Inde-
pendence Group Ltd managing director know some of the particularly high cost
Peter Bradford agrees with the assertion
but believes the opportunity afforded his producers are collectively losing $3-5 bil-
company isn’t one of cost savings, but
improved growth prospects. lion a year. Will this flatter recovery even-

One of Independence’s first acts on in- tually force them to capitulate and take
heriting the Nova nickel project through
its merger with Sirius Resources was supply out of the market? I think it will.”
to undertake a review of the feasibility
study. The review resulted in a welcome One of the operations which could suf-
$30 million capex reduction to $443
million, but Bradford believes the wider fer because of the prolonged nickel price
benefits of the review will come once in
operation. downturn is Independence’s own Long

“Building at the bottom of the cycle mine at Kambalda.
does make it easier to come in on time
and budget,” Bradford told Paydirt. “You The original jewel in the company’s
get the best contractors and the best
people and you’re first in the queue in crown, Long has been producing for
the factory. But it has been the additional
work we have been able to do – $25 mil- more than 36 years but with the nickel
lion worth of work within that $443 million
– which will prove of greatest benefit.” price depressed and Independence’s

The additional work, Bradford said, focus on Nova’s development and Tropi-
would allow for both a more efficient
ramp up and greater expansion opportu- Peter Bradford cana’s expansion, the mine has not re-
nities at Nova.
ceived the investment needed to ensure
“Because mining costs are lower, we
have been able to do much more un- sioning of the final stages of the power it can continue that run.
derground development than originally
planned, 4.3km in all, at the same cost. station will begin ahead of planned first The mine has operated on the back of
That has delivered us optionality with
more faces set to be available in the ini- concentrate production in December. 3-5 years of reserves since Independ-
tial mining stages which means we will
be able to speed up the ramp-up of the “Rob Dennis and Dave English are ence acquired it from Western Mining in
plant.”
leading a great team which is doing a ter- 2002, but Bradford said the need to de-
An extra ventilation shaft was also in-
stalled and the ability to stretch capital rific job,” Bradford said in June. ploy cash elsewhere had seen the “ex-
further has also meant further work has
been undertaken to set Nova up for sub- It might seem churlish for Bradford to ploration dial turned back”.
sequent expansion.
be speaking about expansion of a nas- “We haven’t been able to do that con-
“We identified the areas which would
potentially be bottlenecks to expansion cent nickel mine when the base metal’s version work but once we have robust
and have addressed them,” Bradford
said. However, he would not be drawn on spot price languishes around 10-year cash flow from Nova we will return to ex-
when and by how much Nova’s 26,000
tpa capacity would be expanded. lows but the managing director has ploration. Unfortunately, that may come

“We are not promising we will have joined the likes of Dan Lougher of West- too late to avoid a period of care-and-
higher rates, we have just improved our
chances. It is about stacking the deck in ern Areas Ltd and Eddy Hagael of BHP maintenance,” he said.
our favour,” he said.
Billiton Nickel West in taking an increas- Elsewhere in Western Australia, the
General construction at Nova contin-
ues to hit its marks. This month commis- ingly bullish view on nickel’s future. company continues to produce zinc-lead

Bradford returned from the China Nick- concentrate from its Jaguar mine at C1

el Conference in Beijing “feeling better” cash costs of just 65c/lb and Bradford

about future supply/demand dynamics. said the operation would remain in the

“I took comfort in the supply deficit portfolio for the foreseeable future.

forecasts of 50-150,000t for next year “We will continue with the exploration

and the following four or five years fur- model at Jaguar because we feel we can

ther because there is no new supply generate more VMS deposits there and

coming on stream,” he said. the only way to do that is through brown-

Such forecasts have been made be- fields and greenfields exploration,” he

fore but the nickel price has stubbornly said.

refused to move. However, Bradford be- “We’ve had a number of approaches

lieves the eventual dwindling of invento- for Long, Jaguar and Stockman [the

ries on the LME will eventually lead to a company’s Victorian base metals project]

turn in sentiment. but while each asset still makes sense

“If you look at all the inventories, there we will keep them. Of the three we would

is about 29 weeks which is a lot and the be more inclined to divest Stockman and

market sentiment is always bearish if we are in a formal sales process now.”

there is more than 20 weeks,” he said. Bradford said it was “all about cutting

“We have to get through nine weeks of our cloth while we are building Nova and

stock to get the sentiment the right way expanding Tropicana”.

around. That is probably two years away.” With Nova due online by the end of the

Bradford thinks the moment of reckon- year, the capital projects will be largely

ing in an industry bleeding cash is nigh. complete following the successful ex-

“Most producers have always had this pansion at Tropicana.

PAGE 56 JULY 2016 AUSTRALIA’S PAYDIRT

The expansion project was are doing. If you look back to

designed by Independence when exploration started it

and 70% JV partner AngloGold took three years to find Ha-

Ashanti Ltd to maintain the vana so the fact we haven’t

mine’s 500,000 ozpa produc- found the next big deposit

tion profile despite the planned yet doesn’t bother us.”

drop in grade to 2 g/t gold. Nova’s emergence as a

“Now that we have stopped producer and a develop-

the high-grade streaming the ment pipeline stacked with

grade has dropped and to early-stage prospects would

mitigate the impact on gold suggest Independence may

production we are working on need to find a new corpo-

expanding capacity to 7 mtpa,” rate target. Bradford said the

Bradford said. company was always keen to

At a time when mature Aus- maintain its status as a diver-

tralian gold operations are en- sified miner.

joying a renaissance, Bradford “If you look back at FY15,

was keen to remind people about half of EBITDA came

Tropicana was still in its forma- Independence’s review of the Nova feasibility study has from Tropicana, a quarter
tive years. resulted in a $30 million capex reduction to $443 million from Long and a quarter

“It is a very dependable pro- from Jaguar. By FY18, it will

ject and very youthful compared to the “We are looking for similar types of be 55% from Nova with the rest making

other WA gold operations,” he said. “All deposits and we are doing aircore drill- up the remaining 45%. It was good be-

the upside is in front of us and so far we ing and EM on targets with similar geo- ing weighted heavily to Tropicana when

have only planned on the reserves dis- chemical signatures. If you look at No- we were in that window where senti-

covered in the feasibility study. We are va’s footprint, it is 1km long, sitting at a ment was strong towards Australian gold

spending $30 million this year on explo- lazy angle 150m below the surface. If stocks and in future nickel will be in the

ration underneath the pits to extend the the whole thing was 150m deeper, there ascendancy again and Nova will be a

mine life to 2050 and beyond. We should wouldn’t have been an EM response and good face for the business.

have a resource statement out in Sep- you would be relying on geochem and “But, we want to be diversified and not

“tember which will begin to demonstrate Hail Mary holes to find it.” overweight either way.”

what the potential upside The added advantage is

will look like because it will that in Nova and Tropicana

be the first time we have Most producers have always had the company has projects
published the larger exist- this idea of a V-shaped recovery capable of weathering any
ing resource.” price cycle.

Bradford’s enthusiasm but it is now obvious the recovery is “Australian gold opera-
for Tropicana’s future is much flatter. We know some of the tions are currently enjoy-
a reminder of the reputa- ing a strong gold price but

tion Independence built particularly high cost producers are EBITDA and cash margins
for exploration excellence. collectively losing $3-5 billion a year. of those margins are no
Exploration was inevitably better than Nova’s and it is

parked while first Tropicana at the bottom of the cycle.

and then Nova were con- These are the sorts of pro-

structed but the company is now gearing The discovery of Nova led to a rush of jects we have in the portfolio.”

up to return to those roots. junior explorers into the Fraser Range The question, then, is whether Inde-

With a dominant position on the geo- area however it is yet to yield another pendence can find a suitable compan-

logical trend that runs between Tropica- discovery. Bradford remains philosophi- ion?

na and Nova, the Independence explora- cal about the future of the district. “We would be looking at projects at

tion team will not have to head far for its “It is only four years and there has not greenfields to construction ready stage

first targets. been the dollars spent to find another de- but they must deliver us belt scale posi-

“Independence is in a unique place to posit. That has especially been the case tion, like what we have at Nova and Tropi-

be at the forefront and keep an eye on in the last two years when exploration cana and Lake Mackay where we have a
others,” Bradford said, reminding Pay- companies haven’t had the ability to fund large land position where we can deliver
dirt that Nova had not even celebrated work and then the whole tenure has been multiple Tier One discoveries,” Bradford

four years since its discovery while Tropi- fragmented. To get that belt scale under- said.

cana has only just passed 10 years. standing you need to spend on R&D and “We are comfortable with some level

“At Nova we need to focus on exten- good science and that is still in front of us of jurisdictional risk because geological

sions to the orebody; repetitions of Nova as an industry in the Fraser Range.” risk is a far greater but you can’t manage

somewhere else on the licence, where It is a similar situation around Tropica- it. You want to find the geological envi-

another chamber comes off the main na where Independence and AngloGold ronment with the greater level of success

feeder. That is a likely geological occur- Ashanti are confident more discoveries than not because that will have a far big-

rence and it is up to us to find it.” will be made. ger influence on making a large discov-

On the wider Nova leases, the explora- “We have 3,000sq km I’m there but it is ery.”

tion strategy starts with geophysics and a different exploration environment with – Dominic Piper
low-cost drilling. 20-30m of cover, so can’t see what you

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 57

DIGGERS & DEALERS PREVIEW

Vimy fights for nuclear future

Vimy Resources Ltd about these asymmet- ments, we didn’t disregard anyone’s con-
managing director
Mike Young is fighting an rical standards people cerns and we tried to answer them as
unusual battle: How do
you change people’s per- have, that’s the thing objectively as we could,” Young said.
ceptions about uranium
and nuclear energy when I’ve found most frus- Award of an environmental permit is a
their limited knowledge
is restricted to arguably trating, and the shear huge milestone for Vimy as it all but en-
the most popular televi-
sion show of the past 30 ignorance of attitudes sures the only thing standing in the way
years?
towards radiation and of Mulga Rock becoming WA’s first ura-
Young recently asked
his brother, who knows all the other issues nium mine is project funding.
very little about the in-
dustry, for the first thing people raise. A change of governance at State level
that came to mind when
someone mentions nu- “Ironically, one of early next year could spell trouble for
clear waste. His response
left Young stunned, but the questions people Vimy and other uranium hopefuls in WA,
not that surprised.
always ask is, ‘what but Young is unperturbed by the prospect
“He said, ‘The Simpsons’,” Young
told Paydirt. “That’s what you’re fight- about nuclear waste?’ of the Labor Party winning power.
ing. People’s reality is based on The
Simpsons. How do you combat that?” I say, ‘what about it? “All we can do is keep moving our ap-

Unlike Mr Burns, the evil owner of the There’s no issue’. But provals process forward and that’s why
Springfield nuclear power plant in The
Simpsons, Young has been striving to then I ask them, ‘what the PER is a significant milestone in the
demystify multiple misconceptions about
uranium since joining Vimy more than about coal waste? approvals process because after that it
three years ago, initially as chairman be-
fore stepping into the chief executive’s Where do they put goes to fairly departmental-level approv-
seat in early 2014.
Mike Young that?’ Well, they put als,” Young said.
Young, the founding managing director that in the atmosphere. “We think we’re far enough down the
of BC Iron Ltd, began his career work-
ing as a graduate geologist on several People are dying all approvals process that we’re safe, but
uranium projects in his native Canada
and jumped at the chance to develop over China from respiratory disease, but there’s still a risk. It’s tragic because I do
Mulga Rock, about 240km north-east of
Kalgoorlie, into a yellowcake-producing no one seems to question that.” know there are people within the Labor
operation.
The good news for Young is Vimy is Party that do support uranium mining and
Never one to back down from a chal-
lenge, Young has often found it close to receiving an environmental ap- see it as a really critical way of reducing
difficult changing attitudes to-
wards an arm of the industry his proval to mine uranium at Mulga Rock greenhouse gas emissions, so obviously
company has coined “mining a
cleaner tomorrow”. from as early as 2018. Responses to the part of the Labor Party is hijacked by an-

“Probably the key thing I’ve public environmental review (PER) were ti-nukes who are just idiologs and, as you
learnt in the past two years is the
really strong asymmetrical stand- submitted in late April for assessment know, an idiolog will never change their
ards people apply to our industry,
compared to all the other energy by the EPA and a recommendation will position and will die to defend it.
industries,” Young said.
be put to the WA Government sometime “What the environmentalists need
“Every 10 years we seem to
have an oil rig disaster or a ship next month before a likely final decision to ask themselves is where would they
sink…then you have an accident
like Fukushima and the world in October. rather it be mined? Would they rather it
goes crazy, yet you have a chem-
ical plant blow up in China, va- Vimy received about 1,100 submis- be mined in places like Kazakhstan or Ni-
porising 200 people and nobody
is closing chemical plants? It’s all sions during the 12-week public review ger, places that have poor environmental

period and responded to each one indi- standards and poor democratic stand-

vidually, with Young saying every con- ards, or would they rather it be some-

cern was “treated with respect and an- where where they can actually keep an

swered accordingly”, including those he eye on us and hold us accountable?”

described as “politically motivated throw- The first quarter of 2017 will also coin-

away lines”. cide with the release of the Mulga Rock

“We didn’t disregard anyone’s com- DFS, with Young confident there would

be “no surprises”, allowing for

construction works to begin soon

after.

A PFS released late last year

found the project could support a

2.65 mtpa operation over at least

17 years for a capex of $US254

million plus a mine pre-strip cost

of $US33.6 million. Operating

costs are estimated at $US31.47/

lb before by-product credits and

$US27.77/lb after by-product

credits, based on a production

rate of 3 mlbpa for the first 10

years.

Mulga Rock boasts a total re-

source of 65.6mt @ 520 ppm ura-

Vimy’s Mulga Rock project is on track to become nium oxide for 75 mlb, including

WA’s first uranium mine reserves of 15.2mt @ 660 ppm

PAGE 58 JULY 2016 AUSTRALIA’S PAYDIRT

for 22.1 mlb, making it the will be the key to all

third largest undeveloped contract negotiations.

uranium deposit in Aus- “These guys want to

tralia. lock in five-year con-

A revised resource es- tracts and they want

timate for the Ambassa- delivery two years

dor pit was pending at the from now for the first

time of print. Upgrades for bit of that contract,”

Shogun and Emperor are Young said.

also likely be completed “You’ve got to bear

over the coming months. in mind that there’s go-

Recent test work found ing to be a lot of new

53% more contained reactor starts from

uranium oxide in a bulk now out until at least

sample from Ambassa- 2030 and to start a

dor than estimated in the new reactor you need

resource model, confirm- to put three years

ing all assumptions for the worth of uranium in

DFS are appropriate. the core, then you

“What was really good swap a third of it out

about those test pits was Mulga Rock hosts 65.6mt @ 520 ppm uranium oxide for 75 mlb, making it the every year. And they
our understanding of the third largest undeveloped uranium deposit in Australia also want two years
geology and metallurgy,” on stockpile.

Young said. “We completely get how this age – $5 million placement, $10 million “Security of supply is really critical. At

thing is formed and the test pits are really royalty payment and $15 million bridging the end of the day, if you’ve spent billions

good at providing some hard data for the loan – from Resource Capital Fund VI to of dollars on a nuclear reactor, the last

stripping and that’s going into what we assist with project development capital. thing you want it to do is run out of fuel.”

call pre-qualification tenders, so we’ve The company is targeting Europe, par- – Michael Washbourne
actually started talking to some earth- ticularly France, and the USA as the fa-

moving contractors.” voured markets for uranium off-take, with

Vimy holds a $30 million funding pack- Young stressing that “security of supply”

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 59

DIGGERS & DEALERS PREVIEW

Middle Island re-calibrates
its outlook

With investors crying out Ltd. However, when Black
for near-term produc- Oak appointed receivers in

tion stories to punt on, it is September last year, Sand-

little surprise Middle Island stone and its surrounding ex-

Resources Ltd found strong ploration ground was put out

market support following to market.

its acquisition of the moth- Middle Island had already

balled Sandstone gold op- started negotiations with re-

eration. ceivers over the surround-

Middle Island announced ing 720sq km exploration

the deal on May 4 and saw tenement package – which

its share price immediately was eventually acquired by

jump from 1.2c to 3.5c on Alto Resources Ltd – when

the first day of trading. It the company realised it had

subsequently steadied the means to acquire the

around 4c/share, justify- two mining licences and the

ing managing director Rick 650,000 tpa Sandstone pro-

Yeates’ decision to dramati- cessing plant.

cally change the company’s The company will eventu-

focus. ally pay $2.5 million under

Middle Island had listed in the agreement with $250,000
2010 on the back of a suite Rick Yeates due immediately, $1.25 mil-

of early stage gold assets lion within 60 days, $500,000

in West Africa. Timing, however, is so again in 2015 with an undisclosed as- within 18 months and a final $500,000 on

often everything when it comes to junior set – Yeates is delighted to have finally first gold production.

resource stocks and despite some early landed a worthwhile opportunity, particu- To fund the deal, Middle Island under-

exploration success, Middle Island found larly given the current investor penchant took a concurrent placement at 1c, net-

itself at the wrong end of the West Afri- for gold plays. ting $4 million, before launching a sec-

can gold bubble, as investors grew dis- “The mid-tier gold miners are now fully ond placement and rights issue to raise a

enchanted with the region’s myriad junior priced and there is a cascade into the further $5.05 million.

exploration stories. smaller producers and now into the ex- “The response was really pleasing for

An aborted acquisition of the Samira plorers. And we feel we can provide an both capital raisings,” Yeates said. “We

“Hill gold mine in Niger further sullied alternative to those smaller plays,” he did the initial placement at 1c and those
the company’s development story and it said. who participated have already got a sub-

spent all of 2015 and the stantial lift. We had stu-

early part of 2016 as a sub- It ticked all three boxes for us. It diously preserved the
1c stock. capital structure for as
Yeates told Paydirt the mitigated the sovereign risk issue,
switch from West African which was important after our experience long as possible but we
greenfields exploration to were always prepared
to sacrifice some of that

West Australian brown- in Niger. There was a route to near-term for the right asset and
fields development had production and it could be funded without this is the right asset.”
been a very deliberate
Yeates said the de-

one. ripping up the balance sheet. cision to expand the
“The deal was good in raising from the original

terms of commodity, loca- $2.8 million had been in

tion and timing,” Yeates said. “It ticked Sandstone – 150km south-west of response to interest and encouragement

all three boxes for us. It mitigated the Leinster – has produced more than 1 from existing shareholders.

sovereign risk issue, which was impor- moz gold since mining begun in the dis- “It actually allows us not only to com-

tant after our experience in Niger. There trict in the 1890s. It was last operated by plete the transaction but complete the

was a route to near-term production and Troy Resources Ltd, which mined 4.4mt feasibility study and start our brownfields

it could be funded without ripping up the @ 3.6 g/t for 508,000oz gold production exploration,” Yeates said. “A number of

balance sheet.” over 11 years until 2010. investors were insistent on it. They said

Middle Island had run the rule over The operation was subsequently it was a good project and we should pur-

more than 300 projects during its search brought into Black Oak Minerals Ltd as sue it.”

for a new cornerstone asset and having part of the merger between Southern The larger raising means Middle Island

come close twice – at Samira Hill and Cross Goldfields Ltd and Poly Metals can activate a $100,000 saving in mak-

PAGE 60 JULY 2016 AUSTRALIA’S PAYDIRT

ing the second Sandstone cause we have the plant
payment early and complete
resource definition work, the and we know quite accu-
PFS and start an exploration
programme, which was origi- rately what that will cost
nally set to begin in 2017.
to refurbish,” he said.
Yeates’ immediate concern
is building a PFS case based “The plan is to be able to
on cutbacks of the Two Mile
Hill and Shillington open pits. start the refurbishment

“The plan is to start, in before the end of 2016.”
June, a review of the data
and looking at resources Yeates said refurbish-
and drill planning,” he said.
“We currently have two prior- ment of the 650,000 tpa
ity targets; Two Mile Hill and
Shillington. They can be ac- was estimated to cost
cessed via cutbacks [aver-
age strip ratio 5:1] and are $5-8 million and with the
looking good for a 2-2.5 year
mine life at 25-35,000 ozpa, extensive infrastructure
which would be a good start.”
already available to the
The company plans to con-
vert Two Mile Hill and Shil- company – diesel power
lington’s JORC 2004-compli-
ant 479,000oz gold resource plant, offices, workshop,
to JORC 2012 guidelines and
then complete a PFS on the cutbacks tailings, bore field and
and plant refurbishment.
three equipped camps –
Given ASIC’s recent clampdown on
reporting standards, such an effort could start-up costs would be

minimised.

Near-term gold produc-

tion plays are attracting

plenty of attention from

possible funding sourc-

es and Yeates said the

Middle Island is keen to test whether the 1 moz gold Sandstone company was happy with
belt still has more ounces hidden within it the level of interest ex-
pressed to date despite

prove problematic for many juniors but Sandstone not being large enough to at-

Yeates is confident Middle Island will not tract traditional project funding.

run into any regulatory trouble. “The source of funding hasn’t been

“We are taking it straight to PFS be- determined yet,” he said. “We have had

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 61

DIGGERS & DEALERS PREVIEW

The 650,000 tpa Sandstone mill was acquired as part of the $2.5 million deal

expressions of interest from contractors lowed Middle Island to begin planning its nalite mineralisation. It is beyond the
to assist with funding on mining and pro- exploration programmes around Sand- realms of a cutback as the grade is too
cessing and expressions of interest from stone. low but along the edges of the tonalite
funds for the refurbishment. The reality we can trace the banded-iron formation
is that the scale and longevity of the op- The two mining licences have a num- [BIF] mineralisation and there is virtually
eration will preclude sourcing traditional ber of old pits and targets not currently no drilling.
financing but it may be that we even do it in the resource inventory and Yeates is
through equity.” confident the company will find additional “We will be looking for shallow plung-
feed for the mill. ing lenses within that BIF and at 150-
The greater capital raising has also al- 200m depth it makes a cracking under-
“At Two Mile Hill, we have classic to- ground target from the bottom of the pit.”

Elsewhere, the company has an ar-
ray of targets at Shillington North, Goat
Farm, Eureka, Mt Klemptz and McIntyre,
all within the Sandstone mining leases.

“It is only a 20sq km package and the
beauty of that is you are focused. Troy
had a massive exposure in the area and
had to do work in a lot of different areas
to meet its expenditure commitments; we
can be focused.”

At a time when a number of juniors are
looking at using the prevailing Australian
dollar gold price to generate cash flow,
Middle Island may also become attrac-
tive as a JV partner.

“It is the only mill within 100km,”
Yeates said. “We have already had two
approaches from stranded deposits. The
preference is to deal into such assets
but there is opportunity for toll-treating
as well and there are a number of other
deposits within old Troy assets and we
know they can’t go anywhere else unless
they are standalone deposits.”

– Dominic Piper

Despite not producing gold for more than a decade, Sandstone remains one
of Western Australia’s iconic gold rush towns

PAGE 62 JULY 2016 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Chen to the rescue at CuDeco

CuDeco is finally approaching the end of construction activities at Rocklands

Popular mining executive Dianmin been appointed the company’s new grow the business from there.”
Chen has arrived at CuDeco Ltd and chairman and the restructured board and An updated feasibility study on the first

has wasted no time getting to work on management team has set about chang- 10 years of operations at Rocklands was
completed in the first quarter, projecting
improving the aspiring copper producer’s ing attitudes within CuDeco to bring an revenue of $1.93 billion, an after-tax NPV
of $405 million and net free cash flow of
reputation in the industry. end to the construction and commission- $631 million.

Chen was confirmed as CuDeco’s new ing delays which have angered share- Operating costs over the duration of
the mine plan are expected to total of
managing director on May 20, having holders. $1.299 billion, as well as a remaining
capex spend of $64 million to complete
joined the Brisbane-based company’s “My focus [since joining CuDeco] has construction and commissioning items.

board as a non-executive director only been about changing the company cul- Once Rocklands is in full production,
Chen intends to tip some cash into re-
six months earlier. ture to be more performance- gional exploration. An unashamed sup-
porter of M&A, the Chinese-born mining
The former chief execu- driven and to deliver results,” engineer would not rule out making plays
for other prospective base metals pro-
tive of Chinese-backed gold Chen said. jects in the Mt Isa region.

producer Norton Gold Fields “The Rocklands project has Australian investors typically associ-
Ltd told Paydirt he entered ate Chen with gold on the back of his
been in the construction stage most recent success at Norton, but few
are aware some of his early career roles
the top job at CuDeco with for a long while…so we must were on copper mines, including North-
parkes for Rio Tinto Ltd in 1994.
the intention of generating change our mindset and get
Stints with Barrick Gold Corp, Sino Jin-
returns for the company’s the job done for our share- feng Mining (a subsidiary of Sino Gold
Mining Ltd) and CITIC Pacific Mining fol-
long-suffering shareholders. holders. Commissioning of the lowed before he made his way to Norton
in 2012 and oversaw a turnaround in op-
“CuDeco has been here Rocklands process plant is of erations at the Paddington gold mine as
well as two company takeovers before
for a long time, but it has paramount importance.” stepping aside last July when Zijin Min-
ing Group Co Ltd assumed 100% control
not been doing very well in Dianmin Chen The first stage of ore com- of Norton.
the eyes of investors,” Chen missioning took place in late
“I like gold, but I do have substantial
said. May and the second phase experience in copper as well,” Chen
said. “I’m certainly not afraid of copper
“We are in a critical stage now and I am was due to start at the time of print, co- mines…so I can’t see any significant dif-
ference when you’re manager of a com-
here to meet the challenge of generating inciding with the planned first shipment pany like CuDeco. My leadership of Cu-
Deco will be similar in nature to my time
value for shareholders. I can see we’ve of product. at Norton Gold Fields.”

got strong shareholder support and that A number of large plant items, includ- – Michael Washbourne

is what helped lure me to the company.” ing the ball mill, crushing circuit, high

CuDeco’s flagship Rocklands project, pressure grinding rolls and flotation cir-

near Cloncurry in north-west Queens- cuits, have all been tested and are op-

land, has long been heralded as Aus- erating “satisfactorily”, according to the

tralia’s – and, at times, the world’s – next company.

great copper mine, but has failed to enter CuDeco is funded through to the end

production after first capturing the atten- of commissioning, having raised $63 mil-

tion of investors back in 2006. lion via a rights issue in the first half.

The lack of progress at Rocklands “The immediate goal is to complete

saw the company’s three largest share- commissioning safely, smoothly and

holders – Sinosteel Equipment and En- quickly, so we can start generating cash

gineering Co Ltd, China Oceanwide In- flow,” Chen said.

ternational Investments Co Ltd and New “In the next few weeks, more and more

Apex Asia Investment Ltd – finally lose ore will go through the circuit and then

patience last July and they ultimately had we’ll be able to fine-tune and start pro-

founding chairman Wayne McCrae re- ducing concentrate. I’m pretty confident

moved from his post. by the end of the year we can become

Industry veteran Noel White has since cash [flow] positive and we will be able to

PAGE 64 JULY 2016 AUSTRALIA’S PAYDIRT



OPINION

Introducing James Wilson...

Hi, my name is James and I’m an un- The latest data released by the AIG Fast forward 16 years and the likes of
employed geoscientist. I expect that showed around 19.5% of geoscientists Dacian Gold Ltd and Saracen Mineral
around 20% of you reading this article are were unemployed and a further 23.4% Holdings Ltd are reopening old mines
in a similar situation given the recent em- were underemployed. I’m guessing the with a gold price roughly 500% higher
ployment survey released by the Austral- latter category refers to those on re- in US dollar terms (about 300% higher
ian Institute of Geoscientists (AIG). Are duced hours, working 3-4 day weeks to in Australian dollar terms) and they’re
we shocked? Not really, and we shouldn’t save on costs. I’ve met a lot of people valued at $330 million to $1.1 billion re-
be. After all, mining is a cyclical business, in this situation in the last few months. spectively. Investors obviously like that
but I think we’re turning the corner – it’s Most people have the brow-beaten look and the fact both companies have come
just that some don’t know it yet. of having done a few rounds in a boxing from humble roots. In my view, it’s a posi-
ring. Despite the frustrations they still tive signal against a market that says the
We’ve all seen each other at the su- push on, and this for me is testament to resources boom is over.
permarket; shuffling around and looking the fact the resources game in its purest
a bit confused by the unfamiliar layout form is for optimists. Of course, there’s the base metals
of our local Coles. To be honest, most space, with China’s rampant expansion
of us have never set foot in a supermar- I cast my eye back to 2000 when the causing many copper, nickel and iron ore
ket during mid-week daylight hours. It’s gold price hit a low of about $US264/oz. miners to jump for joy a few years ago,
10.45am on a Tuesday and mining peo- Back then, I had finished a job in Africa followed by a rough landing when they
ple are a dead giveaway, among the grey and spent six months looking for work. put the hand-brake on growth, leading
army out for a spot of lunch and a hot cup News reports at the time asked: “Is gold to a supply imbalance and copper, nickel
of tea. They’re the ones shuffling around finished as a store of value?” and “Could and iron ore pared their big boom-time
in a faded work shirt like they aren’t sup- gold prices drop further?” Mines shut gains.
posed to be there, frustrated that the mi- down and workers were laid off.
crowave popcorn isn’t in the snacks isle, But, as China’s population grows and
but squirrelled away with picnic items. It’s Sentiment then was much the same as more people head to the cities, commod-
a bit like watching a polar bear in the Af- it is now – doom, gloom and definitely no ity demand will once again pull down
rican savannah, it just doesn’t look right. boom in many people’s eyes. But it got those stockpiles. Have a look at the Lon-
better. don Metals Exchange zinc stockpiles

PAGE 66 JULY 2016 AUSTRALIA’S PAYDIRT

which have been declining rap- Out-of-work geologist James Wilson is getting used to sharing the supermarket aisles with
idly for the last two years if you the grey army. But he is ready for the next wave of exploration growth to sweep him along
don’t believe me.
modities. But what remains a constant is global populations increase and econo-
But this isn’t a sermon on his- the fervour for the commodities in favour mies grow, the decline of mature opera-
torical commodity prices. The – somewhat like a red rag to a bull if you tions will drive the necessity, nay the
point I’m trying to make is that look at lithium and graphite stocks. Isn’t requirement for new discoveries. This
things eventually get better. It’s this another positive point to rebuke the doesn’t even factor in the growth in India
a cycle remember? naysayers that the commodities boom which has the potential to mimic a China-
is over? Ask anyone who’s invested in a style growth spurt at any time.
Cut to today and gold produc- gold producer or lithium player in the last
ers are corporately streamlined 6-12 months if they think the resources Much of the advice passed on to me
and are seeing strong margins, market is not worth investing in. has been to get out there and get in front
some stellar share price gains, of people so that when the tide turns for
and dare I say it, paying divi- I’m a student of the Owen Hegarty the better, you’ll be front of mind. Others
dends to shareholders. School of Optimists in that I think com- I’ve spoken to have tapped their network
modities will be stronger for longer! I of colleagues for a few weeks and admit-
The lithium space has gone ba- think the time is now as assets are cheap, ted defeat, but it’s important to push past
nanas and investors are climbing equipment is cheap and drilling contrac- the arena of people you know and let
over each other to throw money tors are more likely to offer you a decent people know you are there. At worst you
at a market which is largely in its meterage rate which includes a morning might end up with a bad case of caffeine
infancy of new battery technol- cappuccino and an on-site masseuse. overdose (tip: drink peppermint tea), but
ogy. So why is it that everyone the reality is getting your face in front of
says the resources boom is over So how does all this supposed posi- companies is the best way to go.
when the resources market has tive sentiment get you to give me and the
raised in excess of half a billion other unemployed 23% a job? Well, the – James Wilson
dollars in new equity in the first doom and gloom surrounding commodity
half of 2016? prices (ex-gold and ex-lithium and soon
to be ex-zinc) might be valid now, but as
I’m also a firm believer in the Lion Se-
lection Investment Clock which attempts
to quantify the investment cycle in re-
sources. So far its predictive capability is
holding true – we’ve had declining explo-
ration and takeovers and strong activity
by the private equity space. The recent
spate of small explorers going to IPO
certainly suggests that we are over the
hump and that the first embers of a boom
cycle might be on the horizon.

It’s a big call but recent comments from
the likes of Jake Klein at Evolution Min-
ing Ltd suggest the buying and selling
of large resources assets is done and
that investment in junior companies for
organic growth through exploration and
discovery might be the next wave. We
might have come full circle and perhaps
the turn in the market isn’t that far away
at all; but we’re so used to being brow-
beaten that we just haven’t realised it yet.

Whatever part of the cycle we are in,
there’s in vogue and out of vogue com-

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AUSTRALIA’S PAYDIRT JULY 2016 PAGE 67

DIGGERS & DEALERS PREVIEW

Sandfire: A model of consistency

Sandfire managing director Karl Simich (right) with long-serving executive assistant Rita Care at
the recently reopened West Perth institution, Julio’s

It may feel a little incongruous given best of our abilities.” er, after three years of production, pres-
his personality but there is no denying The March quarterly and FY2015 re- sure has begun to build on Sandfire to
the sense Karl Simich makes when the repeat the discovery.
Sandfire Resources Ltd managing di- sults bear Simich’s claims out. DeGrussa
rector speaks about the consistency his – 900km north-east of Perth – produced Until the Monty deposit was found
company is building its reputation on. 67,254t copper and 37,386oz gold at C1 on the 70/30 Springfield JV project 18
cash costs of $US1.09/lb in 2015. By months ago, Doolgunna had failed to
Investors grew used to Simich’s ma- March, the company was selling its 1 mil- yield another VMS deposit and with its
chine-gun style delivery talking up the lionth tonne of copper concentrate and in small reserve, DeGrussa began to be
potential of Sandfire’s high-grade De- the March quarter it achieved 15,095t of viewed as having little upside.
Grussa project, its rapid development copper-in-concentrate and 9,080oz gold
and the follow-up discovery of the Monty production at C1 costs of $US1.01/lb, de- Simich rails at any suggestion DeGrus-
deposit. But, after five years of solid pro- spite a planned shutdown in February. sa will burn out. Instead, he believes the
duction from the DeGrussa copper mine exploration story at Doolgunna is still in
in Western Australia, Sandfire’s strategy That 2015 represented the third con- its infancy.
is currently more about consistency and secutive year Sandfire recorded profit-
delivery than wild promises. able operations at DeGrussa, just six “I’d look at the exploration clock in the
years after the discovery hole was drilled, Doolgunna region as being at about one
“Good operations are our religion and is testament both to the high-grade na- and a half minutes past midnight so far;
operations at DeGrussa have never gone ture of the deposit and the company’s we are only at the start,” he said. “Since
better,” Simich told Paydirt over lunch in rapid development of it. we made the discovery, we have quadru-
West Perth last month. “We are doing pled our footprint. We have acquired con-
precisely what we said we’d do regards DeGrussa was a bolt from the blue trol of ground from the likes of Sipa [Re-
production, throughput, underground when discovered in 2009; rarely had sources Ltd], Talisman [Mining Ltd] and
mining rates, metallurgy and cost struc- such a high-grade copper deposit been Ventnor [Resources Ltd] through bargain
tures. Any improvements we get now are found in WA and when Sandfire began basement deals and one of them has al-
at the margin and we just have to ensure mining 26% copper DSO material in late ready produced a significant discovery in
everything else makes us operate to the 2012, it was hailed as one of Australia’s Monty.
most successful developments. Howev-
“Where else have you seen a plus-5%

PAGE 68 JULY 2016 AUSTRALIA’S PAYDIRT

Sandfire remains committed to exploration around Doolgunna with a budget of $20 million for this year

copper resource discovered and then, you’re in the right area you will find them. The discovery of Monty was the clear-
just five years later, a plus-10% copper
resource discovery with all the hallmarks It is probably why you don’t see majors est indication yet that Doolgunna has life.
of a VMS in region that had no VMS dis-
coveries before. We are rewriting the focusing on VMS; they lend themselves When Sandfire and JV partner Talisman
geological book at Doolgoona and I don’t
think we have received sufficient credit more to nimble, agile companies but they announced the first drill results from the
for that.”
can become enormous systems.” project 12 months ago, the junior part-
Credit or not, DeGrussa’s mine life re-
mains relatively short at five years and And, contrary to the claims, Simich ar- ner’s share price jumped from 17c to 73c
while Simich acknowledges investors
have questioned its longevity, he remains gues Sandfire has consistently done ex- in a matter of days.
confident DeGrussa, and now Monty, will
continue to offer up further life. actly what the market is asking for. A maiden resource of 1.05mt @ 9.4%

“That is where we have struggled a “DeGrussa started with a seven-year copper and 1.6 g/t gold was released in
bit. There is not pressure as such but the
mine life is a challenge,” he said. “There mine life and we have since been very April this year and Sandfire is now fo-
are a number of other companies
in WA who are very successful aggressive with our exploration and we cused on getting Monty ore through the
but also face the same challenge;
Northern Star [Resources Ltd], have now extended the total mine life to plant.
Western Areas [Ltd] for instance
have small mine lives but I think 10 years, almost by stealth. With Monty, “I recently had investors from London
investors understand that extend-
ing their mine life is quite easy. we will stretch that to 11 years. Investors asking if Monty was finished because
However, with VMS deposits, you
can never be as sure, so it is dif- have a fixation with what mine life is left we had put a resource out on it,” Simich
ficult, even for informed people,
to put a weighting on when those and don’t see that we have doubled our said. “The answer is no. It is complicated
discoveries will be made.
original figure.” geology and is still open at depth but we
“Given we control 1,600sq km, I
am certain there will be more dis- don’t want to hit it deeper until we
coveries; we just don’t know the
timing or scale of them. VMS de- understand it better. We will con-
posits are discrete and neither are
they massive volumes, but when tinue to do work on it while also

moving it into the mining plan and

lodging the mining licence be-

cause we want to start blending it

with DeGrussa ore.”

The resource announcement

didn’t result in a similar jump in

Talisman’s share price as the ini-

tial discovery, suggesting the mar-

ket was disappointed by its size

but Simich said its discovery not

only added mine life but opened

up the geological understanding

of the region.

“Because it is smaller in the

An example of the high-grade massive bornite being first instance, some people think

pulled out of the Monty discovery it is just a straggler but we have

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 69

DIGGERS & DEALERS PREVIEW

In June, Sandfire switched on its $40 million solar power project. The project comprises 34,080 solar PV panels and associated site
electrical work, allowing incorporation of the 10MW facility and the 6MW on-site battery storage with the existing diesel-fired power

station at DeGrussa

confirmed Monty happened at a different Simich said. “We have imported the from Straits [now Aeris],” Simich said. “It
period to DeGrussa so that immediately SQUID technology [semi-conducting is an area which already hosts Cadia,
doubles the amount of time horizons we quantum interface device, used to detect North Parkes and Cowal and this project
are looking at in Doolgunna.” subtle EM anomalies in areas with cover] has 300mt @ 0.4% copper in historical
and we are trying to rewrite the geo- resources but has suffered from frag-
It is this wider potential and the Sand- chemistry. Monty was found at 430m but mented ownership for 20 years. We think
fire exploration team’s continued enthu- we have drilled it up to 80m below sur- we have drill-ready targets there but a
siasm for Doolgunna that has Simich face and it is highly conductive. So, are lack of data.”
convinced the district should continue the team surprised we didn’t pick up in
to receive the majority of the company’s EM from surface? Yes, the question now Away from the domestic front, Sandfire
$30-40 million exploration budget. is whether there something in the cover has taken a position in TSXV-listed cop-
masking the EM response. per explorer Tintina Resources Inc. The
“Given we have spent $400 million put- company now has 57% of the Canadian
ting everything in there, the best thing to “We are always trying to put ourselves junior which holds 100% of the Black
do is find more material where we are,” in a position for further success.” Butte copper project in the US state of
he said. “We have built up a massive un- Montana.
derstanding of this region. We have un- Despite this enthusiasm, Simich ad-
locked the stratigraphy, the layers of min- mits to some imperative to balance “This is the third highest grade un-
eralisation and the structural controls. Sandfire’s project pipeline. The company developed copper project in the world,”
You can’t just photocopy that and apply it has already embarked on a number of Simich said of a project with indicated
to other parts of the world. It has been a low-key exploration ventures in Australia resources of 15.7mt @ 3.4% for 533,600t
huge investment.” (New South Wales, Queensland, South copper with a further 63,500t copper in-
Australia) and Papua New Guinea but is ferred.
Simich pointed to Monty as the first yet to find something to get its teeth into.
evidence of that investment. “It is a project which has never had any
“We have strict criteria,” he said. “We love but still has 600,000t copper in it.
“The discovery of Monty was down to are focused on hard rock base and pre- The trick is to get it permitted and from
application of skills,” he said. “We discov- cious metals, particularly copper. We there we could get it into production in
ered it on execution of good science; not want something capable of 30,000 tpa two years.”
luck and we will use that template and production, with an IRR of 15% at a
those tools as a baseline for other areas $US2.50-2.80/lb copper price. We would Simich said the company continued
in the district.” never buy something our balance sheet to look at other opportunities across the
couldn’t handle and there has to be a world, but for now investors should prob-
Around Monty, the JV has already clear pathway to control.” ably get used to hearing about consist-
started major aircore and RC drilling ency from DeGrussa rather than expan-
programmes to test the interpreted 5km The company’s Australian and PNG sion elsewhere.
event horizon while at Homer, 6km clos- exploration has been focused on the
er to DeGrussa, the JV is testing rocks hunt for large, lower grade systems with “We look at lots of things but where
which are analogous to the host se- the latest being the acquisition of ground else are you going to find plus-10% cop-
quence seen at DeGrussa. on the Lachlan Fold Belt in NSW. per like we did at Monty?”

“We have never had a more exciting “We picked up the entire Temora belt – Dominic Piper
time from an exploration perspective,”

PAGE 70 JULY 2016 AUSTRALIA’S PAYDIRT



DIGGERS & DEALERS PREVIEW

Arafura advances approvals

Rare earths prices might still be on Arafura is advancing multiple approvals for its Nolans rare earths
the nose, but Arafura Resources Ltd project in the Northern Territory
managing director Gavin Lockyer doesn’t
expect that to continue for much longer. feedback we’ve had from all that consul- attractive for potential project financiers,”
tation to date has been positive. Lockyer said.
Lithium has emerged as the boom
commodity of 2016, however, savvy in- “As you would expect in Central Aus- Lockyer admitted further reductions
vestors are keeping a close eye on the tralia, the main concern is around water to capital and operating costs would be
rare earths space, given the key role of and our potential impact on water sup- “pretty tight”, but said his company was
magnet metals neodymium and praseo- plies, so we’ve spent a significant amount considering smaller-scale development
dymium in electric vehicles. delineating and identifying a wholly inde- options as well as the potential to pro-
pendent water resource from which we duce a merchant-grade phosphate prod-
Lockyer compared today’s lithium will draw upon for our operations. uct from the waste stream.
craze to the rare earths bubble of
2010/11 and he sensed the tide was “We’re very confident it won’t affect Negotiations with South Korean chem-
about to turn for companies which have the wider community or existing users ical manufacturer OCI Company Ltd are
projects enriched in neodymium and pra- because this is actually a new resource. also progressing after both parties up-
seodymium. We won’t be tapping into any existing wa- graded an existing letter of intent to a
ter resource and therefore affecting any non-binding MoU earlier this year.
“Between April and May, we saw neo- current users.”
dymium go back up by about $US0.30/ “They’re extremely keen to take a bi-
kg, which is nice when typically every- Arafura has continued to advance dis- partisan approach whereby they can be
thing else has been going backwards,” cussions with the Central Land Council a JV participant in a rare earth separa-
Lockyer told Paydirt. over a land access agreement with the tion plant in Korea, whilst also being a
Traditional Owners of the ground which key supplier of the consumables we re-
“You get the feeling the demand for hosts the Nolans project. quire back at site,” Lockyer said.
neodymium and praseodymium is prob-
ably starting to turn now and I think once Lockyer said the local communities, in- “The natural progression for that is we
the manufacturers of the batteries have cluding Laramba and Ti Tree, were sup- will need to do some piloting, which we
secured their lithium supplies, the next portive and excited by the potential new would hope to do later this year or very
logical step for them to consider is where jobs on offer at Nolans if the company early next year, on which we can base
will those magnets come from for these can secure project development funding. some detailed engineering design, and
electric vehicles. obviously that will go a long way to for-
Arafura reduced the project operat- mulating a more binding agreement be-
“The electric vehicle demand we’ve ing costs by 15% to $12.36/kg following tween our parties.
forecast internally says it will grow at 10% a recent independent engineering re-
per annum for the next 5-10 years, so we view, while the capex estimate was also “Historically, pilot plants are a fairly ex-
see a very strong link between the lithium slashed by $244 million to $1.19 billion pensive engineering exercise, so we’re
market and the neodymium market.” earlier this year. currently working with a number of en-
gineering firms to try and ascertain if
Arafura’s Nolans project, about 135km A 2012 study found the project could there’s an alternative route we can take
north-west of Alice Springs in the North- support a 20,000 tpa operation over a to achieve the same outcome in terms of
ern Territory, hosts one of the world’s minimum 40-year mine life for $1.4 bil- getting reliable data for the DFS without
richest sources of neodymium, account- lion, returning a NPV of $2.05 billion with necessarily having to build and operate a
ing for 26%, by volume, of the 56mt @ an IRR of 21.4% and payback within five significant size plant.”
2.6% rare earths oxide resource. years.
– Michael Washbourne
With the market in general at a low “Rare earths projects are typically
point last year, the company decided to capital intensive, so every dollar that you
advance its environmental approvals for can get down makes it that little bit more
Nolans in a bid to secure a mining lease
for when sentiment returned to the sec-
tor.

Arafura submitted an EIS to the North-
ern Territory EPA in May and the 14-
page document will remain open for pub-
lic comment until later this month.

“One of the things we knew we could
fast-track in this market – which was go-
ing to cost us some money, but not cost
us as much as the detailed engineering
– was our environmental approvals pro-
cess,” Lockyer said.

“Obviously to get our mining lease ap-
proved, we need formal EPA approval
and so we made a conscious decision
at the end of last year to crank up that
process and I’m pleased to say that the

PAGE 72 JULY 2016 AUSTRALIA’S PAYDIRT



2016

Diggers & Dealers
Mining Forum

* Subject to change

PAGE 74 JULY 2016 AUSTRALIA’S PAYDIRT

Aeris Resources Limited 98 Lithium Australia NL 2

Aggreko 105 Lynas Corporation Ltd 53

ALS Minerals 61 Macmahon 81

Alto Metals Ltd 47 MacPhersons Resources Limited 121

Altona Mining Limited 31 Matsa Resources Limited 93

Amec Foster Wheeler 23 Metals X Limited 82

Andes Resources Limited 39 MICROMINE 19

AngloGold Ashanti Ltd 128 Millennium Minerals Limited 11

Antipa Minerals 59 Mincor Resources NL 44

ASX 30 Minerals Development Victoria 133

Ausdrill 28 MinesOnline.com 52

Ausgold Limited 79 Mining People International 88

Australian Mines Limited 102 Minotaur Exploration Ltd 96

Australia’s Mining Monthly& MiningNews.net (MNN) 46 Neometals Ltd 130

Australia’s Paydirt 9 Newmarket Gold Inc 126

Barminco 50 Newmont Asia Pacific 85

BGC Contracting Pty Ltd 83 Nextgen Group 108

Bis Industries 73 Northern Star Resources Limited 95

Blackham Resources Limited 34 OceanaGold Corporation 104

Boss Resources Limited 58 Olympus Australia 13

Bureau Veritas Minerals 43 OMNI GeoX Pty Ltd 71

Carbine Resources Limited 26 Optiro 87

Cassini Resources Limited 62 Outback Fuel Distributors 36

Cazaly Resources Ltd 45 Pacifico Minerals Limited 7

CIBC 54, 55 Pantoro Limited 6

Clarke Energy 76 Patersons Securities Limited 110

Como Engineers Pty Ltd 89 Peel Mining Limited 80

CRU Group 32 Peninsula Energy Limited 10

Dacian Gold Limited 125 Pilbara Minerals Limited 21

Dassault Systemes Australia Pty Ltd 25 Pioneer Resources Limited 90

Deloitte 8 Primary Gold Limited 123

DGR Global Limited 114 PYBAR Mining Services 116

Doray Minerals Ltd 48 Ramelius Resources Ltd 132

Downhole Surveys 120 Rapid Crushing & Screening Contractors Pty Ltd 1

Eastern GoldFields Limited 24 Red 5 Limited 69

Encounter Resources Limited 86 Regis Resources Limited 84

Energia Minerals Limited 101 Resolute Mining Limited 17

Energy Power Systems Australia (EPSA) 29 Rio Tinto Exploration 77

Evolution Mining 129 Rowe Scientific P/L 118

Far East Capital 66 Rox Resources Limited 40

Fortescue Metals Group Ltd 109 S&P Global Market Intelligence 38

Galaxy Resources Limited 111 S2 Resources Ltd 41

Gascoyne Resources Limited 127 Sandfire Resources NL 106

Gekko Systems 117 Sandvik Mining and Construction Australia Pty Ltd 42

Geological Survey of Western Australia 12 Saracen Mineral Holdings Limited 68

Geoscience Australia 60 SGS Australia Pty Ltd 115

Gold Fields Australia Pty Limited 56 Sheffield Resources Limited 22

Gold Road Resources 134 Silver Lake Resources Limited 63

Golder Associates 4 Southern Gold Limited 67

Government of South Australia 49 SRK Consulting 72

GPR Dehler Pty Ltd 65 St George Mining Limited 75

Gryphon Minerals Limited 16 Swick Mining Services Ltd 124

Haines Surveys 99 Talisman Mining Ltd 37

Hampton Mining & Civil Services 27 Teck Australia Pty Ltd 91

Hanking Gold Mining 112 The Perth Mint 135

Harmony Gold Mining Company Limited 57 TNG Limited 103

Hays Specialist Recruitment Pty Ltd 97 Topdrill Pty Ltd 5

Heron Resources Limited 15 Troy Resources Limited 119

HiSeis Pty Ltd 94 Tyranna Resources Limited 64

Hot Chili Limited 51 Venture Minerals Limited 113

Image Resources NL 33 Vimy Resources Limited 14

Independence Group 92 VM Drilling 35

Intertek Genalysis 18 West African Resources Ltd 3

Jindalee Resources Limited 100 Western Areas Ltd 70

Kal Tire Mining Tire Group 78 Western Australian School of Mines 20

Kin Mining NL 122 WesTrac Pty Ltd 107

Klohn Crippen Berger Ltd 131 Xanadu Mines 74
* Subject to change

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 75

LATIN AMERICA DOWN UNDER REVIEW

Big debt issues for
Latin America

Latin America Down Under arrived in Perth, Western Australia for the first time in May. Five Latin ministerial
delegations joined Australian Government diplomats, ASX-listed miners and explorers, services providers and
investors from the region to discuss what role Australia would play in the region’s next mining investment boom

As in Australia, Latin America Speaking at the Latin America
is facing a new reality brought on Down Under closing panel discus-
by the slowing down of China’s sion, MinesOnline managing direc-
economy and lower commodity tor Liam Twigger said massive debt
prices. issues across Latin America meant
countries would struggle to access
Metals miners and those in the debt market, particularly from
the oil and gas sector have been the banking sector.
severely impacted by volatility
in the global economy, with iron Banks around the world are them-
ore giant Vale S.A. and state-ran selves under increasing capital con-
Brazilian entity Petrobas carry- straints and they are being urged to
ing seemingly uncontrollable debt put aside more capital.
burdens of $US27 billion and
$US125 billion, respectively. However, raising more equity and
cutting dividends are solutions not
Petrobas has recently ap- favoured by banks as they usually
pointed former Brazilian energy mean share price depreciation. In-
minister Pedro Parente as chief stead, banks have been winding
executive to stem the bleeding, back loans.
however, could his intervention
be too late? “Loans are down 27% year-on-
Liam Twigger year,” Twigger said.

PAGE 76 JULY 2016 AUSTRALIA’S PAYDIRT

“They are generally way, way
better advised from a technical
point of view than retail broking
houses which generally don’t have
decent technical advice at all; we like

private equity groups.

“As long as loans keep ticking over “They are generally Nicholas Mather
and rolled over, people can keep paying way, way better advised
higher interest rates, but when you stop from a technical point of taken over by middleweights and ma-
lending that is when economies come to view than retail broking jors which is a very good way for your
a halt and that is the issue you have got houses which gener- shareholders to make money. We are not
in Latin America at the moment. There is ally don’t have decent specifically setting up SolGold to be tak-
a question mark over access to the debt technical advice at all; en over by anyone, certainly not at any
markets, but equity is coming through we like private equity of these prices, but the bigger you can
and we have seen some nice equity is- groups,” he said. make your project then the more likely it
suances done in the last few months and is that the very rarefied market of majors
that has opened up the tap.” “They are well advised which are equally looking to replace re-
and they are capable. source inventories we’ll be interested in.”
So, when it comes to project financing, They have some big re-
it appears companies in Latin America serves they can tap into for their inves- As SolGold assembles a project wor-
will have a tough task asking banks for a tors who are generally US and European thy of attention by a blue chip miner or
loan, but as that door is closing another high net worth [individuals] and funds. cashed up investors, MMG Ltd chief
is opening. We are trying to stay away from the retail operating officer Marcelo Bastos com-
market, ultimately I think if you have a big mended the work of the junior sector and
The equity markets which have been project and it is a high-grade one that can encouraged greater participation from
jilted by the mining sector collapse in the withstand metal cycles you won’t have a explorers.
past four years are starting to warm up problem getting debt. I am a big fan of
again, which should excite developing debt, especially when it is priced this low, “There is always room [for smaller
miners, including the ones at the junior so long as your project can weather the companies], it is much more difficult to
end of town. storms.” start exploration from scratch and we
need partnerships and joint ventures,
While being a fan of taking on debt to Mather and Twigger believe good pro- so it is with the junior companies that
finance a project, Solgold plc executive jects will demand funding, so long as a we can progress. In the end, our explo-
director Nicholas Mather said equity in- pathway to cash flow is demonstrated.
vestors provided a good source of capital ration is much more focused on
for juniors to tap into for project financing “We are to address that requirement, the assets that we have, how can
and would be the likely road travelled by specifically focusing on the definition of a we expand or prove something
the company at the Cascabel copper- large as possible high-grade resource in around greenfields exploration?
gold project in northern Ecuador. the Cascabel project,” Mather said. There is always room for juniors,”
Bastos said.
However, Mather remains cautious “At the moment, the majors have de-
about equity raisings done via broking clining resource inventories and not only Juniors with ambitions to build
firms through their retail base, particu- the size but the grade is declining too. It a project from scratch were urged
larly in booming markets. has been nine times now that resource to start small, generate cash and
companies that I have set up have been move up from there by Twigger,
“You do not want to touch that at the while Mather said companies
moment because retail investors needed to dream big.
are just as short of money as we
are,” Mather said. “There is certainly room for
small companies in Latin Ameri-
“They tend to invest very ca, but you have to have big aspi-
quickly for quite a quick return, rations,” Mather said.
so we are increasingly interested
in people who will invest in our – Mark Andrews
business rather than speculate in
price about our listed shares.” Marcelo Bastos

Mather is aware that this re-
stricts the number of places Sol-
Gold can go to raise equity. Alter-
native financing methods such as
streaming and forward selling are
not being considered by SolGold
because it would somewhat de-
tract from the upside the project
offers.

Instead, Mather’s preferred
outlet would be attracting a pri-
vate equity group to Cascabel.

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 77

LATIN AMERICA DOWN UNDER REVIEW

Mining language binds
Australia and Latin America

Australia and the large and billion of investment from Latin
small conglomerates that
make Latin America may be sepa- America into Australia in 2014-15.
rated by the biggest ocean on
earth, but when it comes to re- Frydenburg said the Govern-
sources the language is the same,
Federal Minister for Resources, ment looked forward to strength-
Energy and Northern Australia
Hon Josh Frydenburg said. ening the relationship in years to

Amid campaigning for the up- come and identified the METS
coming federal election, Fryden-
burg spared the time to deliver sector as an area for further ex-
a video message to delegates
in Perth for Latin America Down pansion.
Under.
“METS has since transformed
Frydenburg took the opportunity to
reinforce Australia’s willingness to con- into a $90 billion industry in Aus-
tinue collaborating with countries in Latin
America to help drive economic develop- tralia and a recent survey con-
ment in all countries.
ducted by Austmine – the peak
“Over the years we have developed
close friendships that are based on com- industry body for the METS
mon values – democratic governance
and respect for the rule of law. And we Josh Frydenburg sector – shows that 42% of our
share a belief in the mutual benefit that
results from trade and investment,” he METS companies are exporting
said.
ture, tourism, cultural promotion and, of to South America,” Frydenburg said.
“It is these common values that have
and continue to underpin decades of course, resources.” “We have recently signed the Trans-
close co-operation between our nations
in areas as diverse as education, agricul- Not long ago there was only a hand- Pacific Partnership which will eliminate

ful of Australian mining companies with 98% of tariffs among 12 countries includ-

projects in Latin America, today there is ing Mexico, Chile and Peru. We have also

close to 100 ASX-listed mining and ex- recently signed MoU’s on co-operation in

ploration companies with interests in the the hydrocarbon industry with Colombia,

region. as well as on mining collaboration with

In line with the resources sector’s in- Ecuador. This adds to bilateral agree-

creasing fondness to operate in Latin ments we already have with Brazil, Chile

America has been a rapid growth in in- and Cuba.

vestment from Australia into the region, “And the Council on Australia Latin

with $24 billion committed in 2014, up America Relations continues to enhance

from $908 million in 2004. our business links and deepen engage-

Investment has not been all one way ment between corporate Australia and

though, with the FIRB approving $1.5 Latin America.”

WA Minister welcomes Latin Americans

In one of his first presenta- “We share customers, In terms of trade, Argentina ($245.7
tions to foreign mining del- we also share challenges million), Brazil ($185.9 million), Mexico
($110.5 million) and Chile ($35.8 million)
egations as West Australian of the industry, particularly were valuable trade partners for WA in
2015 and L’Estrange hoped the co-oper-
Minister for Mines and Pe- in adjusting to weak com- ation would continue to be built on and
further enhanced in the mining sector.
troleum and Small Business, modity prices. However,
“Western Australia is willing to share
Hon Sean L’Estrange, made these challenges create its mining expertise, best practice regula-
tions and environmental management for
it clear he would embrace the opportunities to share so- the neutral advancement of both West-
ern Australia’s and Latin America’s min-
opportunity to work along- lutions,” L’Estrange said. ing sectors,” he said.

side his counterparts in Latin WA is already well repre- “While mining is largely at the core of
the relationship between Western Aus-
America to navigate through sented in the Latin Ameri- tralia and Latin America, the oil and gas
sector also provides many opportunities
the mining downturn. Sean L’Estrange can mining industry, with for collaboration.”
L’Estrange pointed to the statistics from SNL Metals
– Mark Andrews
preliminary agreement an- & Mining indicating that of

nounced by WA’s Fortescue Metals the 101 Australia mining companies in

Group Ltd and Vale S.A., whereby the the region, a total of 55 from the West

two competitors may blend between 80- were spread across 11 countries.

100 mtpa of ore in a facility in China, as Furthermore, WA companies account-

an example of how competitors could ed for 60% of the 278 mining and explo-

work together to find innovative solutions ration projects under Australian guidance

to common challenges. in Latin America.

PAGE 78 JULY 2016 AUSTRALIA’S PAYDIRT

Region still most attractive

If any new delegates to Latin America While S&P’s data counts Canada, between 2000 and 2014; 1.3c/lb versus
Down Under needed confirmation of just Australia and the US individually, Latin a global average of 2c/lb,” Godwin said.
how big the region’s mining industry is, America’s increased share reflected its
they would have been left in no doubt fol- growing attraction against both those In charting the exploration pipeline,
lowing Peter Godwin’s presentation. mature destinations and other emerging Godwin said initial resource announce-
markets such as Africa, which had seen ments rose during March and April to
While Latin America has been far from its global share flatten over the last dec- their highest levels since May 2015, but
immune to the exploration slump expe- ade. were still experiencing a 60% decline
rienced across the globe in the last four since 2011.
years, Godwin – S&P Global Market In- The region is known for its large, low-
telligence’s senior manager for mineral grade Tier 1 deposits and Godwin said However, the region remained at the
rights information – said the region had this was reflected in exploration budgets, forefront of new developments, with the
actually increased its share of global ex- with majors accounting for 65% of ex- three top development studies completed
ploration budgets. ploration expenditure in the region com- in 2015 all exceeding $US3 billion capi-
pared to a global average of 50%. Junior tal cost projections. The highest is First
“The global non-ferrous exploration explorers accounted for 20% (compared Quantum Minerals Ltd’s 80%-owned Co-
budget for 2015 was $US8.8 billion, the to 29% globally) and mid-tier miners bre Panama copper project in Panama,
lowest since 2009 and there was a 19% 10%. which will attract a $US5.48 billion price
decline in 2015 alone,” Godwin said. tag.
“This reflects the low investment across Latin America remains the world’s pre-
the sector. Juniors are struggling for cap- mier destination for both gold and copper Such projects have meant Latin Amer-
ital and majors have moved their focus exploration, with copper a particular fa- ica has dominated capital expenditure in
to operations and away from greenfields vourite. Chile alone accounted for 21% of the last 12 months. Expenditure on pro-
exploration. copper exploration budgets in 2015, with jects in the region exceeded $US31 bil-
Peru attracting a further 10% and Brazil lion last year, while Canada and the US
“However, while exploration budg- and Mexico 3% each. only saw a combined $US28 billion and
ets decreased, Latin America’s share Asia-Pacific and Africa each less than
of global budgets actually increased to “Latin America also gave the best re- $US20 billion.
more than 29% in 2015.” turn on copper exploration expenditure
– Dominic Piper

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 79

LATIN AMERICA DOWN UNDER REVIEW

Samarco fallout continues

The Samarco tailings Ferreira addressed Latin
dam disaster undid
more than 30 years of hard America Down Under del-
work by the wider mining
industry to develop a strong egates as part of a special
reputation for successful
management of environ- panel session on sustaina-
mental and legacy issues,
according to former Vale bility, water and the environ-
SA senior executive Mauri-
cio Ferreira. ment, and was supported

Nineteen people were by MMG Ltd chief adviser
killed when one of Samar-
co’s three tailings dams international affairs Andrew
collapsed on November 5
last year, slurrying about Patterson, Australian Riv-
60 million cubic metres
of iron ore waste into the ers Institute director at Grif-
Doce River for more than
600km, wiping out the en- fith University, Prof Stuart
tire village of Bento Rodri-
gues in the process. Bunn, and CSIRO Land and

It is estimated 1,500 peo- Water Flagship researcher
ple from Bento Rodrigues
were displaced by the incident and an- Dr Mike Trefry.
other 500,000 were impacted in the fall-
out to what has been described as the Trefry said the Interna-
worst environmental disaster in Brazil’s
history. Authorities are still investigating tional Council on Mining
the cause of the collapse.
and Metals (ICMM) was
Samarco is a 50/50 JV between Vale
and BHP Billiton Ltd. Samarco was hit conducting a global review
with a R155 billion ($58 billion) lawsuit in
May. of tailings dam failures and

Ferreira, now a non-executive director he expected the CSIRO
of Brazil-focused Australian junior Cru-
sader Resources Ltd, said the implica- would follow up on the find-
tions of the disaster went “beyond Brazil-
ian mining borders”. ings when they were re-

“One of the ironies of this accident Mauricio Ferreira leased later this year.
was that it hit exactly what was the main
strength of the industry, which is the sus- A separate CSIRO in-
tainability spectrum and its capacity and
capability to successfully manage envi- for 26 years until 2012, said it was an vestigation also found that while the
ronmental issues,” Ferreira said.
“uphill struggle” for Samarco to provide number of tailings dams worldwide had
“Everybody who is old enough and has
been in this business long enough has immediate emergency relief and pointed increased over the past 50 years, the
seen remarkable progress made over
the past 30 years in a way that organ- the finger at the structure of the JV be- number of tailings dam failures each year
ised mining recognises and manages
environmental issues. Things that we tween two majors. had stayed relatively the same over the
do today and things that we think today
weren’t even on the table 30 years ago. “I think Vale and BHP, in my personal period.

“It’s very important to note that until the opinion, took a little bit of time to co-or- “We’re very concerned to understand
accident, Samarco was considered the
benchmark in Brazil for sustainability ef- dinate their actions and move together what the cause of this is,” Trefry said. “We
forts, both on the environmental and so-
cial sides of the Brazilian mining industry, because neither could move alone,” Fer- feel we know enough about geotechnical
so the whole industry was hit pretty hard
by this accident.” reira said. engineering and geological characterisa-

Ferreira, who filled senior roles at Vale “There was this little bit of hesitation tion that we should be in a position where

at first, you could notice that…but at the these types of failures should be exceed-

end of the day, there wasn’t really any ingly rare, but what we actually have out

preparation for an accident. As much as there in the world is a vast inventory of

we have emergency plans and all these old tailings dams that were constructed

sorts of protocols in place, people don’t to old engineering standards dating back

practice for that. 50-60 years, or in some cases, even a

“It doesn’t matter how remote the prob- century ago.

ability or the possibility they’re giving for “The industry is actually facing a chal-

such an accident happening, you have to lenge at the moment of designing and

be prepared. You have to know exactly building new age and modern tailings

what you’re going to do…there will be a dams with very high levels of engineer-

lot to learn in the following months and ing compliance and safety margins. At

the following years.” the same time, the industry still has to

Ferreira said he wouldn’t be surprised manage a large number of less compli-

if no new tailings dams in Brazil were li- ant dams of very significant risk and very

censed for at least the next decade as significant volume. I don’t think at the

impacted parties remain on tenterhooks moment the industry is set up in such a

in the wake of the disaster. way to pay appropriate attention to that

“It is very unlikely at this stage that any legacy inventory of dams. They seem to

new dam is going to be licensed in the be focusing on building new and better

near future,” he said. “Regulators are re- dams.”

ally afraid to issue a licence because if – Michael Washbourne
anything goes wrong, their neck is on the

line as well, so we shouldn’t expect any

new licences popping up for the next 10

years, maybe.”

PAGE 80 JULY 2016 AUSTRALIA’S PAYDIRT



LATIN AMERICA DOWN UNDER REVIEW

New pillar emerges in Panama

Mining is currently not one the “four including $US390 million in 2016, while Tristan Pascall
pillars” of Panama’s economy, but it its Korean-based partners will chip in a
soon could be if First Quantum Minerals further $US1.1 billion during that time. production, ore feed will average 0.43%
Ltd can successfully deliver the $US5.5 copper and a strip ratio of 0.7:1. Initial
billion Cobre Panama copper project. “Importantly that will be managed – concentrator feed is slated at 55 mtpa
and continues to be managed – by cur- before ramping up to about 74 mtpa by
Cobre Panama, about 120km west of rent market conditions,” Pascall said. “It 2020.
Panama City, will become the country’s doesn’t really make sense to be deliv-
first major mine when it becomes opera- ering copper into the market in 2016 or “My responsibility on the operations
tional in 2018 and is tipped to produce 2017, however, given the outlook at the side is to get this ready for power sales
320,000 tpa copper-in-concentrate for at moment, 2018 is looking a lot better.” next year and then ramping up opera-
least four decades. tions to around 5mt a month into the mills
Cobre Panama boasts measured and in 2018 and 6mt in 2019,” Pascall said.
Panama’s economy has slipped from indicated resources of 3.6bt @ 0.37%
10.8% to 6.6% growth over the past five copper, including reserves of 3.1bt @ – Michael Washbourne
years and the incumbent Panameñistas 0.38% copper. In the first 10 years of
Government has embraced mining as a
potential new economic pillar alongside
the Panama Canal, banking and financial
services, aviation and tourism and the
Colon Free Trade Zone.

However, two failed mining operations
have offered a less than ideal start to
mining’s origin story in Panama.

“There remains a lot of opportunities
in Panama, but a lot hangs on how this
project performs and how First Quantum
performs in terms of acceptance of min-
ing in country,” Cobre Panama general
manager Tristan Pascall said.

“Panama hasn’t had a great record
with two previous smaller mines that
were established…the outcome of those
mines leaves a legacy that we have to
now bring about. We have to put a lot of
effort into convincing people that mining
can be good for the economy and good
for the people.”

Cobre Panama is expected to employ
more than 7,000 people during the up-
coming construction phase (represent-
ing 16% of Panama’s construction sec-
tor over the next three years) and about
2,500 jobs when in operation.

First Quantum will tip $US1.67 billion
into the project over the next four years,

PAGE 82 JULY 2016 AUSTRALIA’S PAYDIRT

Cascabel the real deal for SolGold

Drilling continues to support SolGold pect to this discovery at neighbouring Chile.
plc’s belief it has made a Tier One
discovery at its Cascabel copper-gold Cascabel,” Mather said. “We don’t think Ecuador is
project in northern Ecuador, according to
executive director Nicholas Mather. “Some people may de- any different from a resource

SolGold has spent more than $US30 bate that this is a Tier One endowment point of view, it
million on the project, taking it from a
handful of stream sediment samples discovery. We believe it is just hasn’t been found yet,”
anomalous in copper-gold and molybde-
num to boasting some of the world’s best and increasingly the data Mather said.
porphyry copper-gold intersections.
we return from this very ex- “In Chile, these things
Of the 17 holes the AIM-listed compa-
ny has punched into its ground along the citing drilling programme have no cloud, no rain, no
Andean copper belt, only two have failed
to strike economic lengths of copper- that we’re doing continues soil, no vegetation, so they’re
gold mineralisation.
to support our assertion.” easy to see and there’s also
SolGold is seeking repeat discoveries
of Cascabel along the belt and Mather SolGold has set an ex- Nicholas Mather a mining culture that’s been
was confident of a discovery-based re- ploration target of up to developed there over hun-
rating for his company, similar to the
price spikes enjoyed by Imperial Miner- 10bt @ 0.6% copper and dreds of thousands of years.
als plc (Red Chris), Reservoir Minerals
Inc (Timok) and Intrepid Mines Ltd (Tujuh 0.8 g/t gold (1.4% copper equivalent) for “In Ecuador, you have cloud, rain, soil,
Bukit).
Cascabel, having already recorded sev- jungle, so it’s harder to see and there’s no
“We believe we are on the cusp of a
similar re-rating as we define a 3D as- eral high-grade intersections, including mining culture, plus it’s a little bit tougher

1,312m @ 0.67% copper and 0.63 g/t to get going there because the Govern-

gold, 1,050m @ 0.68% copper and 0.92 ment is still getting up to speed with all of

g/t gold, 772m @ 0.8% copper and 1.19 the processes required.”

g/t gold and 1,088m @ 0.66% copper Mather said the project carried a num-

and 0.89 g/t gold. ber of capital advantages due to available

Mather said “state-of-the-art” geo- infrastructure in the area and expected

physical techniques were enabling his ongoing road upgrades would open the

company to identify orebodies which door for more drill rigs to be deployed.

shared characteristics with many of the – Michael Washbourne
porphyry-based ones found throughout

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 83

LATIN AMERICA DOWN UNDER REVIEW

Chile ripe for exploration

Chile is looking to boost The new market has been Right now, the north of Chile is where
capacity in its explora- implemented specifically for the investment dollar is likely to be spent
by intrepid explorers, however, Moreno is
tion sector through a number small and medium enter- confident the area of focus will soon shift.

of initiatives aimed at local prises in the mining sector to “We think that in the future [the explo-
ration focus] will switch from the north [of
junior companies. access capital, with designs Chile] to the centre,” he said.

Commodity prices, par- on potentially expanding into Much of the $US600 million invested
in the exploration sector in Chile during
ticularly for Chile’s staple other industries later. 2014 would have been in the north, with
a great deal of the budget directed to-
– copper – are not encour- Chilean vice minister of wards base metals prospects.

aging boots-on-the-ground mining Ignacio Moreno said Like a lot of countries, exploration ex-
penditure in Chile has declined in recent
exploration at the moment, Ignacio Moreno 12 Canadian companies years, but comparatively the copper-rich
therefore the Government had benefitted from the dual nation has fared well and sits behind the
likes of Australia, Canada and USA for
has intervened with some listing option in 2015 and exploration spend, according to Moreno.

incentives for junior companies to con- hoped, as the market started to turn, that “Investment in exploration [globally]
has declined about 80% and in Chile it
sider. the uptake would continue to grow. is 40%, so we can say that the decline
in Chile is less important than we had in
The Fénix exploration fund – worth “There are very few junior companies other mining countries,” he said.

$US150 million over three years – has from Chile, so we are trying to foster in- “It is still a strong place for exploration.”

been set up for juniors to access, while tegration of the junior companies in the – Mark Andrews

the pathway for TSX-V entities wanting country by funding $US150 million in

to list in Chile has also become easier three years via Fénix,” Moreno said.

with the launch of the Santiago Stock Ex- “The other initiative we funded last

change Venture (SSEV) in 2015. year was to reach an agreement be-

The TSXV and SSE entered an agree- tween the TSX-V and the stock market in

ment whereby a streamlined dual listing Santiago which was a cross agreement

process has been created to provide so a company listed in the TSX Venture

companies with access to public venture capital can also be listed in the Chilean

capital markets in both Chile and Canada. market [more easily].”

PAGE 84 JULY 2016 AUSTRALIA’S PAYDIRT

CMP ups stake in Productora

Shortly after presenting at Latin Amer- sources of 1.47mt copper The discovery of the
ica Down Under, Hot Chili Ltd man-
aging director Christian Easterday was in and 980,000oz gold. Alice porphyry last year –
Chile advancing the company’s partner-
ship with Compania Minera del Pacifico The current ore re- 17.9mt for 73,000t copper
S.A. (CMP).
serve is sufficient for at and 23,000oz gold (indi-
The latest announcement indicated
Hot Chili would sell a further 2.5% stake least 12-13 years of pro- cated and inferred) – has
in Productora to CMP for $US1.5 million,
subject to shareholder approval. duction, however, Easter- encouraged Hot Chili to

Should the deal go ahead, CMP’s day is bullish of adding a seek further opportunities.
ownership of Productora will increase to
20%. further 2-3 years worth of “Exploration drilling is

Money from CMP’s purchase will go resources in the DFS. to follow in the coming
towards paying off Hot Chili’s $US9.5
million loan facility with Sprott Resource CMP is currently re- months and has the poten-
Lending Partnership. The facility was
due to be repaid by June 30, however, viewing the PFS and, Christian Easterday tial to not only solve where
Sprott has extended the facility for an- subject to the project pro- we are going to get our
other 12 months.
gressing to a decision to next few years of mine life,
Within that timeframe a DFS on Pro-
ductora is likely to be well under way. mine, production could start in 2019 at a but most importantly whether Productora

A PFS has previously outlined the po- cost of $US725 million. will step up into the next tier of projects,”
tential for Productora to deliver 66,000
tpa copper for the first eight years of pro- While CMP undertakes its due dili- Easterday said.
duction and 25,000 ozpa gold from re-
gence, Hot Chili is assessing the merit of “Our path forward from here is about

adopting an owner/operator model utilis- realigning and completing some of our

ing its own fleet at Productora. trade-off studies, adding that extra val-

Easterday believes cost savings of ue to Productora. We are working very

$US0.20/lb could be cut from cash costs closely with our partners CAP [CMP] to

of $US1.47/lb estimated in the PFS. get a drilling programme under way and

Despite an intense focus on sharpen- really answer those final questions be-

ing the economics of Productora, Easter- fore making a decision to mine.”

day is also keen to keep exploration front – Mark Andrews
of mind.

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 85

LATIN AMERICA DOWN UNDER REVIEW

Argentina ready to get going

Mining investors need not wait jects which have not started again.
for legislative change before
investing in Argentina as the le- The Chamber can help avoid that.”
gal framework already in place is
among the best in Latin America, Meilan said one of his main tasks
according to a panel of experts.
was to create clearer policy be-
Speaking during a specially con-
vened Argentina session at Latin tween federal and provincial regu-
America Down Under, Argentinian
mining law specialist Ignacio Celor- lation.
rio said Argentina’s Mining Act was
superior to many in the Latin Ameri- “The previous government acted
can region but had laid largely dor-
mant for the last 20 years. as Unitarian government rather

“In the 90s, the Government than a federal one but the prov-
passed mining investment frame-
work legislation and then left it inces have to work with the Gov-
untouched but the Mining Act is one of
the most competent in the world,” Celor- ernment now. There needs to be
rio said. “This legal framework is still in
place and now the Government is seri- understanding and trust; something
ous about change there are no legal
changes because it is now honouring the Argentina has lost and will take time
Act.”
to change.”
Australian Peter Freund of Aconcagua
Consulting & Investments Pty Ltd was Latin America Down Under’s expert panel declared Buenos Aries-based investment
active in Argentina throughout the 1990s Argentina immediately open for business banker Diego Temperley had fore-
and he said that period had led to some cast the impending changes in Ar-
major developments.
Negro province – had already noticed a gentina when he spoke at Latin America
“In the 90s, there was a vision for min-
ing to be the third industry sector and that distinct change in attitude towards min- Down Under in 2015. Twelve months on
framework allowed Alumbrera [the larg-
est mine in Argentina] to be developed ing investment in the country. he said the Macri Government would
and that mine is still going so I am de-
lighted that the framework is back,” Fre- “In the provinces it is very evident that continue to build the country’s reputation.
und said. “Industry can take satisfaction
that Daniel Meilan has come back into change is occurring,” Mason said. “There “Macri comes from a new party and his
the role of secretary of mining.”
is a programme being run by the secre- election was a reaction to the crisis. Now,
He warned companies, however, that
they would need to commit to the coun- tary of mining to coordinate and integrate the country is being governed by Macri
try’s development if the mining sector
was to achieve success. mining divisions in each province and for it is getting rid of heritage and returning

“Private companies now have a part to provinces to consider mining investment. trust to its institutions,” Temperley said.
play in the country’s development. They
can’t stand by and wait for it to be fixed. We have seen it helping at the commu- “Macri was previously mayor of Bue-
Argentina didn’t fall on its own in 2001,
it did so because of the actions of the nity relations level in Rio Negro, and we nos Aries and the same party is now in
banks and lenders.”
are moving the project forward quicker power at a city, provincial and national
Freund called for companies to instead
be proactive in their support for the Gov- than we otherwise would.” level. This always leads to better articula-
ernment’s initiatives.
Celorrio has also recognised change. tion of policies because there is no com-
“Companies need to strengthen the
Mining Chamber and support the efforts “The effect of the new government can petition.”
of the Federal Government. They have
to work with the federal and provincial be seen,” he said. “There has been new Temperley said the country’s interna-
governments. Framework has been sit-
ting there but ignored by previous gov- investment – in lithium in particular – and tional standing would also be improved
ernment.”
there is interest from companies who under Macri.
Dark Horse Resources Ltd executive
director David Mason said his company have never been to Argentina before. “He has built an economic team with
– which is building a power project in Rio
“There are also a number of projects a former senior economist of JP Morgan

which were due for closure but are now at its head and he has changed the ap-

profitable again because a lot of import/ proach to other countries. He went to

export restrictions have been lifted. Even the World Economic Forum in Davos,

a project like Casposo [the gold-silver Switzerland and – along with US Presi-

mine recently sold by ASX-listed Troy dent Barack Obama – was the most in-

Resources Ltd] is seeing new investment demand leader. Since Macri’s election,

and it to be kept open.” we have had presidential visits from Italy

Celorrio also shared Freund’s assess- and France.”

ment that industry would have to show Obama has also visited the country

unity among its own ranks and with gov- which in April launched the largest ever

ernment. emerging market bond sale, worth some

“Government and industry have to be $US16 billion.

unified. In the last few years, there has Temperley said he expected the US

been no unified block of mining compa- Government to encourage Macri.

nies but the Government has now told “Since the problems took hold in Brazil,

the industry to unite around the Chamber the US has been looking for a new Latin

in order to assist it in communicating the American leader. After the super-cycle,

message of how important mining is to populist regimes were elected across

Argentina. the region but Argentina is now the first

“There needs to be a more compre- country to move to the centre and the US

hensive approach to CSR because in is encouraging them in the hope other

Argentina there is a lot of community fear countries do the same.”

of the unknown and the biggest problems – Dominic Piper
with community opposition come at pro-

PAGE 86 JULY 2016 AUSTRALIA’S PAYDIRT

Argentina visit heralds
new attitude

If investors needed any further proof that “This is a very impor- “Chile has found deposits
the new Argentine Government was
serious about reinvigorating the coun- tant meeting [for Argen- in front of its face in remote
try’s ailing resources sector, they need
only have observed its presence at Latin tina to attend] because regions but all the migrants
America Down Under.
we have the possibility to Buenos Aries could only
Where the first five years of the con-
ference had failed to elicit an official visit of growing the mining find roots 1m deep; because
from Cristina Kirschner’s Government,
the 2016 edition of Latin America Down industry and it is impor- they were largely Spanish
Under welcomed recently installed sec-
retary of mining Daniel Meilan. And his tant politically to devel- and Italian, they were more
message: that there was a new invest-
ment-friendly attitude in South America’s op the mining industry focused on agriculture. But
second largest economy.
in our country,” Meilan President Macri believes
In many ways, Meilan’s job at the con-
ference – to convince resources inves- said. mining needs to be attended
tors to come to his country – was an
easy one. Argentina is well endowed All but six of the 42 to after 20 years of neglect.”
with mineral potential, the world’s min-
ers know it and there is plenty of ground mining companies ac- The focus on agriculture
available. However, given its reputation
as an economic basket-case and market tive in Argentina are Daniel Meilan to the neglect of mining and
pariah, the difficult part of his pitch was foreign-owned with other sectors had led to a
to persuade investors that newly elected
President Maurizio Macri’s policies of Canadian companies skewed spread of economic
economic liberalisation will result in a
better investment climate. making up 50% of the sector. ASX-listed development, according to Meilan.

Macri has been busy in his first five companies account for just 15% of those “There is a regional imbalance in Ar-
months in office, lifting capital controls
on repatriation of profits, defining a uni- active companies but Meilan said there gentina with a bias towards the east and
fied floating foreign exchange rate, lifting
import controls on capital goods, remov- was ample opportunity to increase that central parts of the country [the regions
ing taxes on mining exports and begin-
ning negotiations over unpaid debt. share, thanks to the vast tracts of unex- of major cities Buenos Aries and Rosa-

While most of the change has occurred plored ground. rio].”
at a macro level, Meilan said they would
all have a direct impact on the resources “Of Argentina’s 750,000sq km, only However, much of the country’s miner-
sector which had been identified as a key
driver of growth in the new Argentina. 180,000sq km has been mapped. We al prospectivity is away from the eastern

need investment of $US400 million a hub. Meilan pointed to the precious metal

year to adequately explore the country,” potential in southern provinces such as

he said. San Juan and Patagonia but it is the

Argentina is the second largest lithium north and the area known as the Lithium

producer in Latin America and is also Triangle which offers the likeliest growth.

among the top four producers of gold, As the name suggests, the region –

silver and copper but given it shares bor- which takes in salt lakes in Argentina,

ders with Chile and Brazil – the region’s Bolivia and Chile – is highly endowed

most prolific mining economies – Meilan with lithium, a commodity very much in

believes enormous potential remains. demand thanks to its use in emerging

“The geology we share with Chile is technologies such as electric vehicles.

evident at [the Barrick Gold Inc-owned] “By 2020, Argentina will be producing

the Pascua Lama copper-gold project. 220,000 tpa of lithium,” Meilan said. “And

How can Chile have so much mining and the best is yet to come.”

we don’t?” – Dominic Piper
Meilan suggested the answer lay not

with geology but with history.

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 87

LATIN AMERICA DOWN UNDER REVIEW

Las Bambas ramp up on-song

Ramp up of one of Peru’s most signifi- per production. The main $US10 billion was spent
cant mines is on track for commercial challenger to Chile’s by MMG on Las Bambas.
production in the second half of 2016. leadership is Peru, which
is expected to treble its MMG will no doubt
MMG chief operating officer Marcelo copper production by reap financial reward for
Bastos gave an update on proceedings 2020,” Bastos said. its investment and Peru-
at the Las Bambas copper mine in Peru’s vians will also taste some
Apurimac region at Latin America Down “This will come into fru- of the benefits of this
Under. ition with imminent first monster project.
production and ramp up
He said production of 250,000-300,000 of Las Bambas, Toromo- Steady state produc-
tpa was expected from Las Bambas in its cho and other projects tion will see 3,442 people
first year at C1 costs of $US0.80-0.90/lb. that are expected to sus- working at the mine, with
tain the strong Peruvian 98% of the workforce to
MMG expects to produce 2mt of cop- growth.” be locals, while over the
per from Las Bambas in the first five Marcelo Bastos 20-year life-of-mine roy-
years of operation which will place it in Las Bambas is expect- alty and tax revenue pay-
the top 10 copper mines in the world and ed to be part of Peru’s ments to the Government
elevate Peru’s standings as a producer of mining landscape for a long time with is expected to total $US5 billion.
the red metal. over 2bt of copper in resource and an ini- As Las Bambas is being primed to
tial 20-year mine life. hit its straps, MMG will look to bring its
“Las Bambas will take Peru from third Dugald River lead-zinc-silver mine in
largest to the second largest copper pro- Furthermore, only 10% of the 35,000ha Queensland on stream in 2018.
ducer [in the world] with the amount of tenement has been explored to date. After 16 years of production, MMG
copper it will bring to the market,” Bastos closed its Century zinc mine, also in
said. Las Bambas ranks behind Escondida, Queensland, last year with final process-
Grasberg, Cerro Verde, Morenci and ing of ore taking place in January.
Chile provides the current benchmark Buenavista as the sixth largest copper
for annual copper production, with the mine in the world and MMG has not been – Mark Andrews
country contributing 31% (5.89mt) of the shy on investment in Peru in the last few
19.2mt of global copper output in 2015. years.

“In the next five years, the importance Of the $US42 billion invested in Pe-
of Chile will remain high, but its participa- ru’s mining industry from 2011 to 2015,
tion will decline to 23% of the world’s cop-

Copper’s rosy outlook

Chilean Copper Com- to Chile either, with in prices before triggering project go-
mission (COCHILCO) aheads.
executive vice president COCHILCO forecast-
Sergio Hernández said Currently, there is about $US44 bil-
Chile’s copper sector was ing copper to stay at lion invested in copper projects alone
currently a shadow of its in Chile, with four projects under review
past. about $US2.15/lb this – Pascua Lama, El Abra, Relincho and
Andina 244 – worth a combined $US20
“Chile is not in a good year, which could put billion.
place at the moment...15
years ago it was good,” at risk Chile’s poten- Higher copper prices would obvi-
he said. ously help owners of these projects
tial to produce its des- to green-light development plans and
Hernández’s glum as- Hernández hopes they will be taking a
sessment of the current ignated 6 mtpa with long-term view of the sector when mak-
state of Chile’s copper in- ing a final decision. He also hoped that
dustry was in direct con- about half of produc- COCHILCO’s outlook for copper to av-
trast to the enthusiasm erage $US6,330/t or $US2.87/lb for the
MinesOnline managing tion costing (C3 costs) next decade would provide copper inves-
director Liam Twigger created from his tors with some certainty that better days
opening remarks to Latin America Down just under $US2/lb. are ahead.
Under.
Despite Hernán- Hernández said the mining industry
Chile – the world’s largest copper pro- was not necessarily about today or to-
ducer – only grew quarterly mine produc- dez’s downbeat pres- morrow, but 10-15 years into the future
tion at 0.3% in 2015, way behind its main and investors needed to be reminded of
rivals Peru (23.6%), DRC (4.4%) and entation, there was this.
China (2.3%).
Sergio Hernández some positive light – Mark Andrews
Copper prices have not been kind shed on future copper

prices.

At the time of print, copper was worth

about $US4,578/t, with COCHILCO fore-

casting copper prices to rise slightly to

$US2.20/lb or $US4,850/t next year.

Any appreciation for red metal prices

will be welcomed by the Chilean copper

sector, however, given the current mar-

ket conditions copper mine developers

might need to see greater improvements

PAGE 88 JULY 2016 AUSTRALIA’S PAYDIRT

M&A, Canada buoys
Mexican mining

Another $US4.5 billion is expected to tractive option for inves- how to deal with commu-
be pumped into Mexico’s mining in- tors, with $US700 million
dustry in 2016. of equity raised via the nities and how to comply
Canadian markets last
The sum is on par with last year’s capi- year, down slightly on the with all the environmen-
tal injection into the country, but still well $US1.1 billion raised in
down on the peak $US8 billion invested 2014. tal requirements, which
in 2012.
According to figures are also very strict in
Mexican Mining Industry general coor- presented by Cantu at
dinator, Dr Mario Alfonso Cantu Suarez, Latin America Down Mexico,” he said.
said his country’s investment forecasts Under, 927 projects in
were in line with worldwide trends, in- Mexico are held by 267 Cantu said his country
cluding the slide in funding for explora- foreign companies, in-
tion. cluding 173 from Cana- was “working hard” to
da, 44 from the USA and
Only $US600 million is tipped to be al- 13 from China. enhance its foreign in-
located towards exploration activities in
Mexico this year, but that figure will su- Only seven Australian companies, in- vestment prospects.
persede the likely investments in project cluding Tony Rovira’s Azure Minerals
expansion ($US529 million) and equip- Ltd, have projects in Mexico. This year Mexico
ment ($US460 million).
Cantu said his country’s proximity to moved up four places in
M&A is the big winner, with more than Canada and a strong entrepreneurial
$US1.7 billion set to be made from a se- history in other areas of business with both the World Bank’s
ries of corporate deals. its North American neighbour were the
main reasons for the high number of TSX Mario Cantu Doing Business and the
“Exploration has dropped off in the past and TSX-V companies – mostly juniors – World Economic Forum’s
few years and that will [impact] the future with interests in Mexico.
supply of new projects,” Cantu said. “This Global Competitiveness
is a trend we’ve seen worldwide.” “They understand Mexico, they know
rankings to 38 and 57 respectively.
Mexico’s mining sector remains an at-
According to Behre Dolbear, Mexico

was the fifth most attractive mining desti-

nation in the world last year, behind Can-

ada, Australia, USA and Chile.

However, the country has slipped from

24th to 37th in the latest investment at-

tractiveness index from the Fraser Insti-

tute.

– Michael Washbourne

Mexico to manufacture growth

Mexico is tipped to boom in the next costs in China have been growing stead- surely an attraction for Australians. How-
two decades and its manufacturing ily over the years, in Mexico the labour ever, the lure of pursuing opportunities
sector will be a key driver behind its eco- costs have pretty much maintained the in Mexico was not simply based on cost,
nomic growth. same over the years. The exchange rate Garza explained.
to the US dollar has been an additional
Top consultants around the globe are advantage to manufacturing costs. So, “We don’t have an IP problem with
bullish on Mexico’s potential in the manu- right now, according to these predictions, companies that come and invest in Mexi-
facturing sector and agencies within the we have a 40% competitive manufactur- co. You can have a 100%-owned compa-
country are keen to promote its offerings ing cost [advantage] in Mexico,” Garza ny in Mexico. You don’t need to joint ven-
in this space. said. ture with either a local company or with
government, you can participate directly
“KPMG recently released a study This year marks the 50th anniversary and you can be the owner of your own
called Top Competitive Alternatives and of diplomatic relations between Australia technology and you can keep your own
Mexico is No.1 because of the costs of and Mexico and while the relationship technologies, you don’t have to share it
manufacturing as well as other factors,” can be strengthened, it appears both with anyone,” he said.
ProMexico trade commissioner for the countries are starting to grasp what each
United Mexican States, Esau Garza, can offer the other. While Garza said there was a positive
said. trend of Australian companies willing to
Australia has not ignored the pull of invest in Mexico, he said Mexicans had
“Deloitte also places Mexico as the doing business in Mexico and there has also reciprocated, with many companies
eighth most competitive place for manu- been an uptick in the number of Austral- looking at potentially expanding business
facturing or doing business.” ian businesses considering Mexico as a interests and operations in Australia.
business partner, according to Garza.
From a cost competitive advantage – Mark Andrews
in manufacturing, Mexico is currently a Australia is often considered as a high-
world leader. cost business destination, therefore, the
low-cost nature of operating in Mexico is
“According to a study by the Bank of
the Americas, and as you all know labour

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 89

LATIN AMERICA DOWN UNDER REVIEW

Condoto acquires
Colombian cash flow

With less than $500,000 in the bank, lead-up to Latin America Down Under ment in this area,” Johnstone said. “It’s
Condoto Platinum NL is hoping its and director Andrew Johnstone told the shedding into the basins with gold and
acquisition of a Colombian precious met- conference the company was negotiating other things which are being mined allu-
als refinery will provide vital funding for its further refining contracts. vially…this is something we intended to
exploration plans in the country. focus on when we first started working in
“We hope it will be a revenue generator the area back in 2012.”
Condoto completed its acquisition for us and fund what we’re looking to do
of GPS Metals Group in April, taking at Novita,” Johnstone said. Condoto’s original partnership with a
control of a smelter, refinery and manu- local miner at Novita failed to “bear the
facturing facility in Cali. Cash flow will “We’re currently smelting 25kg/week, fruit” the company had hoped it would,
initially be used to grow that arm of the but we’re going to grow that rapidly as but Johnstone said new JVs were being
business before being directed towards we’re negotiating new contracts as we formed with interested parties.
exploration activities at Novita, where the speak. We’re also licenced to buy, sell
company has exclusive access to almost and export precious metals.” “We most recently bought a mobile
106,000ha of land with gold and platinum plant to go out and start doing some sam-
potential. Colombia was the world’s largest plati- pling in the greater area over the commu-
num producer before large resources of nity lands where we have this agreement
Novita has historically produced al- the metal were discovered in South Af- at Novita,” Johnstone said.
most 30,000oz platinum and more than rica after World War II. Less than 1% of
650,000oz gold – one of the main rea- global platinum production now comes “We’ve started offering our services
sons Condoto was drawn to the region from Colombia. to separate gold and concentrate gold
when it listed on the ASX in 2012. in the area…so there’s toll treating pos-
The world’s largest platinum nugget sibilities and there’s possibilities for pur-
The first gold pour at Cali under Con- was also discovered in Colombia’s Cho- chasing gold outright.”
doto management took place in the co Department, which hosts Novita.
– Michael Washbourne
“There is significant platinum endow-

ROC and roll mines

Aformer supply chain schedul- tivity improvements on site.
ing manager with BHP Billiton
Ltd’s iron ore division has endorsed Furthermore, another cost saving
the role of remote operating centres
(ROC) to run mines. benefit of establishing a ROC was

While ROCs are popular with larg- the potential to reduce FIFO require-
er mining houses in the modern era
because of the safety and efficiency ments for staff.
benefits achieved through the use of
technology, Cecilia Haddad encour- Retaining staff, particularly dur-
aged smaller companies to assess
the merits of utilising such centres ing the boom, was difficult for some
for their businesses also.
companies as different outfits could
“It should be viable for small com-
panies as well,” she said. offer more lucrative and flexible ros-

“Imagine if we had a remote oper- ters than others.
ating control centre somewhere here
in Western Australia or Latin Amer- While there were great financial
ica...if you invest in Latin America
then you can have something over incentives offered during the boom
there and then you could have a lot
of mines tip into that resource. You could for workers willing to undertake the
maybe have one controller controlling
two to three mines and then you have rigours of FIFO rosters, the negative
economies-of-scale straight away and
you also have benchmarking.” impact on mental health and family

Haddad said there was potential for lives has also been brought to the
one controller to operate several mines
for competing miners, however, rather fore.

“Staff turnover on site is 20% com-

pared to 2% in the city,” Haddad said.

Cecilia Haddad “There are probably many people

who would love to live and work in

than this being a negative it could be mining out of Rio [de Janeiro] for exam-

used to stoke productivity through incen- ple, opposed to a mine site. There is no

tivising controllers operating the centres. doubt that staff turnover is costly be-

Haddad said setting up a ROC from cause of the loss of knowledge to a com-

day one of operations would provide pany when people leave.”

immediate benefits for a company and – Mark Andrews
would essentially eliminate the costs of

making constant efficiency and produc-

PAGE 90 JULY 2016 AUSTRALIA’S PAYDIRT

Colombia needs a new look

Colombia must improve Trafford Resources Ltd are in the country, only 4.19% is dedicated
the regulation of its also present in country. to mining, of which 1.5% is exploration,

mining sector to encourage “I think you’re ahead of 1.2% in construction and assembly and

investment in the nation’s the pack [because] you’re 1.5% in operation.”

mineral potential, accord- already there,” Urdinola told Urdinola said Colombia needed to

ing to one of the country’s the conference, pointing to have a more competitive tax structure

leading industry advocates. a section of Australians in and urged the relevant authorities to look

Colombia has the third the audience. at implementing tax breaks, particularly

largest economy in Latin “This is great news be- for small mining companies.

America behind Brazil and cause you can help men- Gold and silver miners currently fork

Mexico and is the second Santiago Angel Urdinola tor the junior companies. out 4% royalties for open-pit and under-
biggest coal producer in You know our country and ground operations and 6% for alluvial

the region, as well as the I think in this new era you mining contracts. Coal miners must pay

world’s top exporter of emeralds. already have a foot in there.” a 5% royalty for exploitation of less than

The country is also endowed with Mining represents 2% of Colombia’s 3 mtpa or 10% if the exceed that produc-

other minerals such as gold, copper and GDP and has pumped almost $US12 tion rate.

nickel, however, an inefficient and incon- billion into the country’s economy in the “As an industry we have challenges

sistent regulatory system is holding back past decade. Mining is also the source and so we are trying to foster a structural

further foreign investment, Colombian for 18% of total exports. tax reform,” Urdinola said.

Mining Association president Santiago Coal production accounts for 65% of “Colombia has been getting taxes up

Angel Urdinola told Latin America Down Colombia’s mining GDP, while the sector for the last couple of years, so it’s impor-

Under. directly employs 350,000 people and an- tant to have a new look at the Colombian

“We have the geological potency, but other 1 million indirectly. tax regimes. We need to make it easier…

we have to do a better job with regula- Several new projects are also in the so this is a discussion for the second se-

tion,” he told delegates. development pipeline, having recently mester.”

“Colombia is still having this huge been awarded environmental permits – Michael Washbourne
debate about whether we want to be a and are now in the construction or as-

green country or a mining country. I think sembly phases,

both are possible and Australia is a great including Buritica LATIN
example of this.” (Continental Gold),
Sergovia and Mar- AMERICA
Urdinola has been lobbying new Na- mato (Gran Colom-
tional Mining Agency Colombia presi- bia Gold Corp) and
dent Silvana Habib-Daza, who also ad- Gramalote and La
dressed the two-day conference, since

her appointment last October for im- Colosa (AngloGold

provements to regulation of the mining Ashanti). 29-30 May 2013, Sydney
sector and said he was pleased with her Habib-Daza said

immediate response. this was an example

Land fees for resources companies of the rapid growth

were reduced 15% at the end of last year, of her country’s

while a zero import tax for mining equip- mining sector.

ment has been maintained. “An independ-

“I think my first message to her was ent survey showed

let’s work on red tape procedures, let’s mining managers

move on the machinery to have titles are now 17% more

granted in a less period of time,” Urdinola confident with the

said. support of the Gov-

“There’s still some things to work on – ernment to mining

let’s be faster and be keener – but Sil- activity,” she said.

vana has kept up her promises to date.” “Colombia is an

Urdinola bemoaned the lack of more unexplored country

Australian mining companies in Colom- and there are im- The CD-Rom of Paydirt’s 2016
bia, claiming the presence of some nota- portant opportuni- Latin America Down Under Conference
ble majors was an advantage for others ties for exploration

to follow over the coming years. in minerals like gold ORDER NOW!
AngloGold Ashanti Ltd, Glencore, Con- and copper, among

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all have operating mines in Colombia, the last report from CD-Rom – $80 (inc. GST)
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AUSTRALIA’S PAYDIRT JULY 2016 PAGE 91

LATIN AMERICA DOWN UNDER REVIEW

Peruvian pipeline still pumping

Investment in Peruvian cious and base metals “You don’t see this level of Chinese in-
mining projects may vestment in any of the other countries in
have slowed in recent and also resides in the Latin America.”
years due to the global
economic downturn, but world’s top five for out- According to a recent survey by PwC,
the country still boasts obtaining a social licence to operate due
the most attractive in- put of silver, copper and to frustrating standoffs with local com-
vestment pipeline in munity groups remains the biggest ob-
Latin America. zinc, among others. stacle for resources companies to over-
come in Peru.
Almost $US7.5 billion “There may have
was invested in Peru- Newmont Mining Corp abandoned
vian mining projects been a slowdown within plans to develop the $US5 billion Conga
last year, down from the copper-gold project in April, conceding
$US8.9 billion injected the investment into the defeat after years of relentless commu-
in 2014 and the peak nity opposition to construction of a mine
$US9.9 billion in 2013. However, 51 ad- construction phase, but in the region.
vanced projects across 16 regions could
potentially pour up to $US56.3 billion into the production phase “Social engagement is paramount,”
the country’s economy over the coming Blanco said. “The social licence to op-
years. continues to expand,” erate is as important as the operating
licence and the moment you have to
These include the Magistral copper Blanco Partners Pty start the strategy, whether it be in Peru or
project ($US480 million), the San Gabriel almost any other jurisdiction, is from the
gold project ($US520 million) and the Jose Blanco Ltd senior partner Jose moment you start exploration.
Toromocho copper expansion project Blanco said.
($US1.35 billion) – all of which currently “The sooner you engage with the lo-
have environmental studies under review “The bringing online of cal community, the better prospects you
by Peruvian authorities. have for navigating through all of the
Las Bambas and a couple of these other process of going into production with the
Peru is ranked either first or second in least number of issues.”
Latin America for production of most pre- major projects has significantly boosted
– Michael Washbourne
the total production of copper in Peru.”

Blanco, also chairman of the Aus-

tralia Latin America Business Council

(ALABC), said the presence of major

Chinese groups such as Chinalco and

Minmetals was another encouraging

message for both near-term and longer-

term mining investment in Peru.

“Clearly the Chinese have an enor-

mous appetite for minerals and they are

likely to continue to support Peru,” Blan-

co said.

Growth spurt in the middle class

Latin America’s growing middle class is sustainability will spawn exploration companies, but
driving economic growth in the region prosperous relations.
and there are no signs of any slow down. mining services and I know
On the resources
Council on Australia Latin America Re- side, Australia has re- there are lots of mining ser-
lations (COALAR) chairman Chris Gale ally upped its level of
said the middle class in Latin America engagement in Latin vices being developed by
grew by 50% in the past decade and now America with almost 100
30% of the 700 million people in the re- Australian companies in Austrade into Latin America
gion are considered to be in the middle the region compared to
class. 20 in 2008. and we have to continue to

“They like their cars, they like their food Gale said this was do that.
and they like their apartments, there is no proof that miners and ex-
doubt the middle class is growing,” Gale plorers were cognisant of “We are the best at what
said. the opportunities in Latin America and
hoped Australia’s participation in the we do; engineering, techni-
“By 2050, in 35 years time, two of the region would increase in the future, par-
top six global economies will be situated ticularly with an estimated $US269 billion cians, we are the best sec-
in Latin America; Brazil and Mexico. So estimated to be sunk in the Latin Ameri-
perhaps, we can help them grow their can mining and exploration sector in the Chris Gale ond to none throughout the
economy and perhaps help our economy next five years. world. We can assist and
grow with Latin America.”
“We are the greatest explorers in the help drive their growth with
A point of entry for Australians into world, no question. We will go anywhere
Latin America has been through the min- on this planet as long as we can make a best of class engineering.”
ing and exploration sectors and COA- dollar out of that,” Gale said.
LAR hopes collaboration in other areas While encouraging Australian compa-
such as education, business (including “What does that mean for us [$US269
mining), tourism, cultural promotion and billion spent]? It means METS; not only nies to capture any prevailing opportu-

PAGE 92 JULY 2016 AUSTRALIA’S PAYDIRT nities in Latin America, Gale said it was

prudent to remember that it has to be

done in the right way.

“You have to respect the local environ-

ment and community, there is nothing

more important than spending some time

talking to the locals in their local commu-

nity, in their local town and describing

what you intend doing,” he said.

– Mark Andrews

HoMs show the way in
Latin America

More countries in Latin
America are ready to
engage with Australia.

That was the clear mes-

sage delivered by Austral-

ia’s High Commissioners

and Ambassadors in the

region at this year’s Latin

America Down Under con-

ference.

Sadly, after its first dance

at the conference in 2015,

Ecuador’s participation this

year was subdued as the

nation deals with the fallout

from the devastating earth-

quake in April.

It is reported that about

700 people died and the Australian Heads of Mission in Latin America took part in a special panel discussion at this year’s
rehabilitation costs in the conference. Participants included Ambassador to Argentina Noel Campbell, Ambassador to Brazil
country are tipped to ex- John Richardson, Ambassador to Chile, Colombia, Ecuador Tim Kane, Ambassador to Mexico, Cuba
ceed $US3 billion. and Central America David Engel, High Commissioner to Caribbean John Pilbeam, Ambassador to

Oil prices have not Peru, Bolivia Nick McCaffrey and Austrade’s Nicholas Baker
helped Ecuador’s economy

either, however, Ambas-

sador to Chile, Colombia and Ecuador, places once considered closed shops to 2025 and a top five economy by 2050.

Tim Kane, said Australia’s presence in investment. Ambassador to Mexico, Cuba and

the country was definitely building, not Political and economical circumstanc- Central America, David Engel, said Mex-

slowing. es have also changed in various coun- ico was set on an extraordinary growth

“We have a new services MoU in place tries with the likes of Cuba now part of trajectory on the back of a diversified

now, we want to take things to the next conversations regarding foreign invest- economy.

level,” he said. ment while under the leadership of Presi- “There will be very little that will stop

“It is incredible the number of Austral- dent Maurizio Macri, more importance Mexico from being a powerhouse for a

ian tourists going to Ecuador, including is expected to be placed on Argentina’s variety of reasons, particularly manu-

senior Australians; the numbers are mind mining sector. facturing. [Mexico] manufactures just as

boggling. The future in Ecuador is very “The political settings in Argentina much as the rest of Latin America [com-

bright and we are very lucky.” have mostly changed; Argentina is under bined],” Engel said.

Kane is also bullish on the business new management,” Ambassador to Ar- In addition to the mining and manufac-

prospects for Australians starting to open gentina, Noel Campbell, said. turing sectors, Engel said agriculture and

up in Colombia, where the METS sector “Argentina is open for business and the infrastructure were other industries for

has taken off. time for Australia to capitalise on those Australians to tap into.

“The Colombian train has definitely changes is now.” “Australia needs to wake up to the di-

left the station and peace is coming. We Argentina is the second largest econ- verse opportunities in Mexico. The TPP

need to increase our focus in Colombia. omy in South America and evidence that will have a major bearing on things if that

There are MoUs in mining and agree- President Macri is a man in a hurry, is does eventuate as it will widen the scope

ments in place between Australia [com- the welcoming of the presidents of Italy, of everything,” Engel said.

panies] and Colombia.” France and USA to the country within his However, to make the most of the op-

Kane encouraged Australian resourc- first three months in office. portunities in Mexico, Engel said “Aus-

es companies to continue pursuing op- The view is that President Macri will tralia Inc” needed to work on its superfi-

portunities in both Ecuador and Colom- govern in a manner of inclusion, not cial knowledge of Mexico.

bia as they have done in the past in more conflict, with his immediate challenge to “There is still a degree of ignorance by

developed mining jurisdictions such as jumpstart the economy and get it moving, Australia Inc. We don’t have an image

Brazil, Chile and Peru. possibly on the back of mining related problem in Mexico but our knowledge is

Since Latin America Down Under’s in- opportunities. still superficial and it is the same on the

ception five years ago, Australian explor- Argentina would do well to follow the other side of the pond,” Engel said.

ers and miners have spread themselves lead taken by Mexico. Mexico is destined – Mark Andrews
wide across the region and entered to become a top 10 global economy by

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 93

LATIN AMERICA DOWN UNDER REVIEW

New flow sheet opens
Latin lithium possibilities

Latin Resources Ltd is turning tradition- “relatively straightforward”, with crushing on salt lakes.
al assumptions about lithium in South and grinding of ore followed by flotation Gale said the L-Max process would
America on their head. Instead of looking concentration of a lithium mica concen-
for another of the high capex brine depos- trate and then leaching of the concen- allow Latin to explore the region’s hard
its the region is known for, it is focused on trate by hot concentrated sulphuric acid rock potential for the first time.
lower cost hard rock occurrences. to produce a liquid enriched in lithium.
Various chemicals are then added to pre- “It opens up new exploration opportu-
It is technology which is allowing Latin cipitate and progressively filter the solu- nities for Latin Resources,” he said. “No
to adopt its contrarian approach. In May, tion to arrive at a saleable lithium carbon- one else is in there looking at the hard
the company signed a binding term sheet ate or lithium hydroxide product. rock lithium potential in Argentina but we
with Lepidico Ltd (set to be taken over by have been working hard to identify peg-
Platypus Minerals Ltd) which will see Le- The company has similar licensing matite occurrences in the country. It is
pidico grant two separate JV companies agreements in place with Crusader Re- the same rocks and structures as the Pil-
in Argentina and Peru exclusive licences sources Ltd (Brazil) and European Met- bara [where a number of lithium deposits
to use its L-Max processing technology als Holdings Ltd (Czech Republic) and are being developed].”
for an initial 12 months. Gale believes the licence opens up an
entirely new opportunity to Latin Re- Gale said the 70,000ha acquired in
The process is designed to economi- sources. Catamarca already displayed very large
cally extract lithium from lithium-bearing structures. The company is undertaking
micas such as lepidolite and zinnwaldite. “L-Max has brought an edge to the surface sampling while it awaits licence
Historically, these micas have not been company as a junior explorer,” he said. approval.
considered for lithium extraction be- “We will use the technology as a major
cause processing was uneconomic. competitive advantage.” “There are reports of historical grades
of 5-7% lithium, but we have to do our
Lepidico claims the L-Max flow sheet is The market responded well to Latin’s own work though.”
announcement
and the company’s Latin’s arrival in Argentina may well be
share price has perfectly timed. The election of Maurizio
recovered from a Macri has heralded a new focus on for-
12-month low of eign investment in the country and the
0.3c to reach as Government is keen to encourage explo-
high as 1.7c on the ration.
back of the news.
The price sub- “We hope to offer Argentina another
sequently drifted industry,” Gale said.
back down to 0.8c,
but was further bol- Gale also admitted the Lepidico deal
stered by news the had given him a personal boost after a
company had ac- long winter for junior exploration compa-
quired 70,000ha of nies.
ground across sev-
en ELAs in an area “The last few years have been very dif-
of Catamarca Prov- ficult for junior explorers. Mining is on the
ince, Argentina, well comeback and our market cap has gone
known for its peg- from $4 million to $16 million in the last
matite occurrences. few weeks. Now I can’t sleep because I
The hunt for am excited, not because I am worried,”
pegmatite-hosted he said.
lithium is also a ma-
jor shift for South Lithium may have provided most of that
American lithium boost but Latin remains confident its Pe-
exploration. Chile, ruvian copper assets will also provide it
Argentina and Bo- with ballast.
livia – collectively
known as the Lithi- At the Ilo Sur project in Peru’s south,
um Triangle – domi- JV partner First Quantum Minerals Ltd is
nate world lithium preparing to drill a number of porphyry
production but ex- copper targets.
clusively from lithi-
um brine operations Gale said the targets were very large
but funding porphyry exploration was “a
big ask” for a junior in the current envi-
ronment.

“Luckily we have First Quantum in
and they will start drilling in the coming
months,” he said.

– Dominic Piper

PAGE 94 JULY 2016 AUSTRALIA’S PAYDIRT

Crusader advances gold strategy

Brazil-focused Crusader Resources Paul Stephen Gold exploration and development will
Ltd could pour first gold from its flag- dominate Crusader’s plans for the rest
ship Juruena project before the end of this project after we get Juruena into of this year and into 2017, as the com-
2017. production,” Crusader executive director pany looks to take advantage of rising
Paul Stephen said. precious metal prices and a depreciating
Despite only landing in the company’s Brazilian real.
portfolio two years ago, Juruena is the “Juruena represents an opportunity to
most advanced of Crusader’s develop- move very quickly and could possibly see Borborema, in the north-east of the
ment projects and a second major drill- production within the next 18 months, but country, is set for a second chance at
ing campaign was ongoing at the time of Nova Astro is a much larger prize and life after being put on the backburner fol-
print. something that will require a bigger and lowing the acquisition of Juruena. The
more exciting exploration programme, to company is completing a scoping-level
The 6,000m programme is looking to be hopefully funded out of the cash flow study on a smaller 2 mtpa operation to
increase the size of the overall resource from Juruena. mine the upper lens of the 42mt @ 1.2 g/t
(1.3mt @ 5.6 g/t gold for 234,000oz) as gold reserve.
well as convert some of the inferred re- “This [belt] is highly likely, we think, to
sources at the Querosene and Dona Ma- host more than one major gold deposit. “It’s an asset we believe is going to
ria deposits to indicated status. We’re talking about a cluster of projects come back to the market’s attention,”
over 8-9km.” Stephen said.
A scoping study will follow a resource
upgrade announcement over the coming “We’ve done a series of optimisations,
months. really focusing in on lowering the strip ra-
tio because the biggest single cost to this
Juruena sits on the north-western tip of project is material movements.
the 400km long, 6 moz Alta Floresta gold
belt, Central Brazil, and was acquired by “If we see a run on the gold price, this
Crusader from TSXV-listed Lago Dour- is really a lottery ticket that is going to
ado Inc in July 2014 for just $C650,000 continue to appreciate.”
plus shares.
Stephen said he expected the Posse
Crusader also picked up the highly iron ore mine, about 35km from Belo
prospective Novo Astro artisanal mining Horizonte, would continue to remain prof-
centre as part of the transaction. itable for at least the next three years.

“It’s where we see the real upside for – Michael Washbourne

Gold to flow from Cascavel

First gold will be poured at Orinoco thing to take away is that hit a bonanza every 10 or 15
Gold Ltd’s Cascavel project in Brazil underground mine develop-
later this month. ment has been continuing holes,” Spencer said.
unabated and now we have
In the lead-up to Latin America Down more than three months of “We would have to drill on
Under, the final pieces of equipment for stoping ore set up under-
the gravity circuit arrived on site after the ground, ready to bring to a couple of metre spacing
containers carrying the critical compo- surface and put through the
nents were finally cleared through cus- plant.” and spend tens of millions
toms.
First gold from Cascavel of dollars to get this thing
The delay meant the proposed start of will cap a remarkable tran-
production at Cascavel was pushed back sition from explorer to pro- towards a resource, or even
on more than one occasion, but Orinoco ducer for Orinoco since listing in 2012.
chief financial officer Tim Spencer said a reserve. It makes more
the company could quickly make up for Spearheaded by managing direc-
lost time. tor Mark Papendieck and Brazilian co- sense to spend that money
founders Klaus Petersen and Marcelo de
“Once we turn the plant on, we’ll start Carvalho, the company has built up an Tim Spencer developing and collating all
commissioning in late June and then impressive land package along the Faina the knowledge you get from
we’ll put low-grade commissioning ore to greenstone belt and will enter production
settle the plant down and then we’ll be without a JORC-compliant resource for underground development
testing it with some higher grade ore, just Cascavel.
to see what sort of recoveries and rec- to show this can work.”
onciliations we can take back,” Spencer “It’s a very difficult project to drill in the
said. sense you’re dealing with coarse gold, so Orinoco will initially process 40,000
it’s not homogenous through the deposit,
“We would have loved to have been which means you might drill some holes tpa at Cascavel, but throughput should
producing gold by now, but that has that have very low grades, then you might
been delayed until July. The important double as production levels increase and

more ounces are added to the mining in-

ventory through regional exploration.

Spencer said the company’s Septem-

ber quarterly report would “make for

some very good reading” as it would con-

tain the first actual production numbers

and costings from the project.

– Michael Washbourne

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 95

LATIN AMERICA DOWN UNDER REVIEW

Dark Horse rides into contention

Argentina’s mining potential may be of renewable technology, Mason said Ar- gating the potential of the project to sup-
vast but a looming energy crisis could gentina’s power generating carbon foot- ply a 750-1,500MW project which could
limit the scope of opportunity. print was so low, it could safely build new solve the Rio Negro region’s base-load
fossil fuel-fired projects. power problem.
“Argentina lacks investment in infra-
structure,” Buenos Aries-based lawyer “Argentina can afford coal economi- “We have the support of the provincial
Igancio Cellorio said during Latin Ameri- cally and environmentally. It currently re- government and it is close to existing in-
ca Down Under. “In the 90s, a number of lies on imported gas, costing the country frastructure, including four 500kV power
power projects attracted foreign invest- significantly in unwarranted costs. Coal- lines just 80km south of us,” Mason said.
ment but due to the last 20 years of popu- fired power will allow Argentina cheaper
list government there is a need for more.” power and would still keep it below the Capex for the project is estimated at
carbon emission percentages of other $US2 billion, with Dark Horse now on the
The new Maurizio Macri Government countries. We believe Pico can be part hunt for a development partner.
has vowed to address this infrastructure of that mix.”
gap with particular attention to be paid to “We can earn up to 75% of Pico and
the regions outside of the densely popu- Pico – and the associated Pico Que- will work with a development partner
lated Buenos Aries district. mado coal mining project – is on Argen- 50/50 to fund. It will likely be a European,
tina’s western border with Chile, a region Japanese or US development partner,”
ASX-listed junior Dark Horse Re- which is infrastructure poor in compari- Mason said.
sources Ltd is hoping to tap in to this son to the Buenos Aires-Rosario indus-
new-found enthusiasm for infrastructure trial hub of the country. “We are looking at debt, forward sales
development with its Pico power project of power, equipment manufacturer con-
in the western Rio Negro province. Dark Horse is owner and manager of tracts and private investment for funding
the JV with Trendix SA and could eventu- options.”
“The Energy Minister recognises the ally earn 75% of the pit-to-power-station
energy system is in a precarious posi- project. Dark Horse has set the December
tion and has plans, although they are not quarter of 2019 for a start-up date and
finalised, to increase capacity by plus- Pico Quemado – the thermal coal de- while Mason admitted such a timeline
20,000MW over the next 10 years,” Dark posit the project is based on – has four was “aggressive”, he said the company
Horse executive director David Mason main seams with up to 12m aggregate was “confident we can reach that”.
said. coal thickness dipping 10-30 degrees
over a 22km strike length. – Dominic Piper
While the global trend is to increase
power generation through the adoption Mason said Dark Horse was investi-

Igniting the METS sector

The drive to strength- profile [of Australia’s The aim is for METS Ignited to put to-
en Australia’s po- gether a strategic framework to identify
sition as a global hub METS sector] glob- platforms to invest in, with four specific
for mining integration lenses to focus on.
and enhance its global ally and developing
competitive advantage Key points to be addressed will be
in our local METS sec- world-class clus- what is driving the METS sector, advan-
tor is on. tages and weaknesses of the Australian
ters. That is a criti- METS sector, what other industry mod-
“It is already very sig- els can the METS sector learn from on
nificant, but it could be cal mass of activity,” and the METS ecosystem and dynamics
better,” METS Ignited and how it can be influenced.
non-executive director Lilly said.
Peter Lilly said. “This is a 10-year plan that we are talk-
“We haven’t been ing about,” Lilly said.
The newly formed
METS Ignited organi- going very long While METS Ignited continued its con-
sation is an industry- sultation process at the time of print, it
led, Australian Government-funded outfit [as an organisa- has already forged an alliance in the sec-
which will work with various participants tor with Austmine.
in the mining industry, particularly Aus- tion]. We are going
tralian suppliers, to improve the competi- The two groups have set out ways to
tiveness and productivity of the Austral- through a process collaborate and leverage greater effi-
ian METS sector. ciencies for the growth and development
of consultation with of Australian METS.
“We have a number of strategies in
place; creative shared vision; strength in Peter Lilly a range of stake- – Mark Andrews
collaboration, addressing down gaps in holders. It is hap-
Australia’s METS ecosystem, raising the
pening all over

the country, where we are trying to pull

together what we [believe] is our sec-

tor competitiveness which is a starting

point for us to start to build and develop

a strategic framework to take this thing

forward. That is happening as we speak.”

Lilly said there would be more infor-

mation on the outcomes of METS Ignit-

ed’s initial consultation process in three

months.

PAGE 96 JULY 2016 AUSTRALIA’S PAYDIRT

AusQuest ready for big drill push

There was a spring in the step of Grae- “There is extensive to be completed by
me Drew during his Latin America
Down Under presentation that was at cover but we have iden- the end of 2016, with
odds to the general sense of pessimism
which has engulfed the junior exploration tified copper anomalies Drew confident re-
sector in recent years.
in soils. Nine diamond sults could change
Managing director of ASX-listed Aus-
Quest Ltd, Drew’s enthusiasm for the holes will test a range of the dynamics of both
year ahead is defined by the company’s
fortune in having its biggest challenge targets,” Drew said. project and company.
answered. While other juniors struggle to
find the funding needed to advance their The focus will sub- “We believe we are
projects, exploration on AusQuest’s four
porphyry copper targets in southern Peru sequently move to the on the threshold of
is being funded by JV partner Zahena.
Colorada prospect something special.
“Zahena will drill all four porphyry tar-
gets before the end of 2016,” Drew said. which is defined by an The covered areas
“It will be a decent test of their potential
and represents a lot of activity for a jun- IP target, with epither- of southern Peru are
ior.”
mal veins sampling up poorly explored even
Zahena started drilling at the Puite pro-
ject in May. The company will complete a to 1.1% copper and 3 though it is elephant
minimum of 4,500m with permits for nine
diamond drill sites already received. The g/t gold also present. country,” he said. “We
porphyry targets are defined by anoma-
lous copper-in-soils, alteration and IP At Ventana, Zahena will have a potentially
anomalies.
drill 6,500m into a target Graeme Drew company-making
year ahead of us.”
defined by copper near

surface. The copper The company also

was identified by AusQuest in a road cut has a series of 100%-owned targets in

while travelling through the ground. the region, including the Chololo por-

Drew said Ventana was an example of phyry prospect and the Cerro de Fierro

why AusQuest was so excited about its prospect, which has a magnetic signa-

southern Peru ground. ture suggesting IOCG potential.

“It is very exciting because it demon- “We are in discussions over a JV at

strates what can be hidden under thin Chololo with several parties,” Drew said.

cover,” he said.

The 20,000m programme is expected

Austrade pursues efficiency

Austrade’s mining and itable, their low grades have capability on cost-saving equip-
resources hub is in- combined with shrinking ment and services. More than 50% of
global oilfields are in decline and new
creasingly focused on find- commodity prices has led technologies to optimise recovery and
production from these fields, along with
ing ways into the global miners to strive for greater maintenance, is a global imperative.”

supply chain – and Latin efficiencies. On renewable energy, Baker said the
investment downturn domestically had
America’s mega mines are “The downturn means triggered interest in exports for those
companies still operating in Australia.
a big target. we need to look for new
A scoping project was recently under-
Speaking at Latin Amer- opportunities and there is a taken to identify Australian capabilities in
hydro, wind, solar and geothermal.
ica Down Under, Austrade step change within industry
Austrade has six offices in Latin Amer-
manager for mining and towards efficiency in cost ica and, despite recent volatility, remains
committed to the region, according to
resources, Nicholas Baker, production,” Baker said. Baker. He said the region was now a
competitor and innovative but with low
said value chain access Austrade is already labour costs.

was increasingly important Nicholas Baker working with global multi- “Innovative partnerships will be need-
to Australian METS com- nationals, with centralised ed to keep Australian businesses inter-
ested and successful in LATAM,” he said.
panies. procurement programmes
Chile, Peru, Mexico, Colombia, Ecua-
“We need to increase the number of and large EPC providers who oversee dor and Argentina remain priorities for
Austrade’s METS focus and a watching
innovative METS companies selling into development and procurement for pro- brief has also been opened on Cuba as it
emerges from isolation.
the supply chains of multinational min- jects.

ers,” Baker said. “Austrade is speaking to METS is one of three global trade

miners to find out what they need and we themes Austrade is focused on, along

are working to engage in a deeper way with oil and gas and renewable technol-

to leverage off Australia’s reputation and ogy and Baker said all three sectors were

supply to large international mines with feeling the need for cost innovation.

similarities to those in Australia.” “The oil and gas industry is transition-

Latin America is host to some of the ing from a build-and-construction project

world’s largest mines, including Escon- phase to an operations and maintenance

dida, Chuquicamata, Collahausi and phase,” he said. “This provides oppor-

Yanacocha, and while they remain prof- tunities for Australian companies which

AUSTRALIA’S PAYDIRT JULY 2016 PAGE 97

LATIN AMERICA DOWN UNDER REVIEW

Cuba: Get in quick before the
Americans arrive

The Cuban Government intends “The US blockade is not actual-
to reform its mining policy in an ly finished; the US has only taken

effort to modernise the industry and some measures. Foreign compa-

build on the two nickel plants al- nies are making investments you

ready operating on the Caribbean just need to take into account the

island. blockade,” he said.

Speaking at Latin America Down The Cuban Government real-

Under for the first time, Cuban Vice ises the “absolute necessity” of

Minister of Energy and Mines Yuri foreign investment for develop-

Viamontes Lazo said the commu- ment and Lazo pointed to the

nist country was seeking more for- success of Sherritt over more

eign investment in its base metals than 20 years as an example of

and precious metals sectors. what could be achieved.

“We have six policies; with four “I offer an open invitation to

approved and two being consid- Australians and we have a lot to

ered,” Lazo told delegates. learn from your mining and oil

Among the policies already Yuri Viamontes Lazo and gas expertise,” he said.
adopted is a push to improve geo- Australian-Cuba Business

logical research activity, improve mineral among other initiatives adopted to attract Council chairperson Kim Prior said the

programmes and increase development foreign investment is a reduction of tax Cuban Government had set out its am-

of renewable energy projects. Lazo said on imported equipment to zero and an bitions to be the “Singapore of the Car-

separate policies on mining and power eight-year tax holiday. There is also no ibbean”, a regional hub for sea and air

were still being considered. tax accrued when using Cuban labour. traffic.

Cuba has two nickel plants currently in However, Lazo warned that despite “The Government is establishing a

operation, one part-owned by Canadian the changes and the recent visit by US special economic zone around the Mar-

miner Sherritt International Inc. Lazo President Barack Obama, investors in ial deepwater port to encourage invest-

said further nickel potential existed and Cuba still had to be aware of the US re- ment,” she said.
“the Government hoped to attract foreign strictions in place.
Prior has worked in Cuba for more than

investment to the sector. 25 years and said the country

“The Government wants The Government wants to had great advantages, includ-
to create, broaden and mod- ing a very strong workforce

ernise production capacities create, broaden and modernise with literacy rates of more
and promote projects for ex- production capacities and promote than 99% and 62% of the
ploration, extraction and pro- population tertiary educated.

cessing minerals,” he said. projects for exploration, extraction She said new legislation
Among the projects the and processing minerals. had put the mechanisms in

Government is currently place to prevent any expro-

promoting for foreign invest- priation of assets, eliminating

ment is the Pinares Oeste a major concern for foreign

nickel laterite project, originally found by investors.

Western Mining. Lazo said the 190mt @ The Government has a dedicated for-

1.15% nickel, 0.125% cobalt and 45.3% eign investment ministry which Prior said

iron resource was available to foreign in- was “very approachable”.

vestors. “There is a lot of activity there already

On the wider economic climate, Lazo and with the US changing its diplomatic

said foreign investment in Cuba had position, Australian companies need to

become more workable in recent years be on the front foot now if they are to se-

thanks to changes in legislation. cure their position,” Prior said.

“Two years ago the laws for foreign However, she did warn delegates that

investment were reviewed to make the only companies which showed patience

legislation more open and flexible and and a willingness to spend time in-coun-

position the country for investment,” he try would prosper.

said. “The country is now basically open “Make preparations before you go,”

to investment in every area of the energy she said. “It is important to develop good

and resources sectors.” relationships with a JV partner early.”

The passing of Law 118 has increased Kim Prior – Dominic Piper
asset protection for foreign investors and

PAGE 98 JULY 2016 AUSTRALIA’S PAYDIRT

LATIN

AMERICA

17-18 May 2016, Perth

THANK YOU

TO ALL SPONSORS, SPEAKERS,
EXHIBITORS AND DELEGATES

JOIN US FOR THE NEXT ONE IN
MAY 2017

www.latinamericadownunder.com

LATIN AMERICA DOWN UNDER REVIEW

Latin America Down Under was hosted in Perth for the first time this year and expert lensman Bryan Charlton was on
hand to capture all the highlights from the conference, including the exclusive Ministerial dinner at the State Reception
Centre, Fraser’s Restaurant, Kings Park.

Despite slow going in the resources sector of late, more than 250 delegates attended the two-day event at the Pan
Pacific in Perth. It was the first time government delegations from Argentina and Cuba participated in the conference,
with new West Australian Minister for Mines and Energy Minister Sean L’Estrange extending a warm welcome to all of
his Latin American counterparts.

Argentina and Cuba-focused presentations proved to be very popular with delegates keen to follow up on the mining
potential of those countries in the Austrade Lounge. While Argentina and Cuba were the new faces at the conference,
delegations from Chile, Colombia and Mexico were once again on hand to update investors on the resources and energy
opportunities on offer in their respective countries.

Last year’s newcomers – Ecuador – were last-minute withdrawals from the conference due to the devastating earth-
quake which cruelled the country in April. Paydirt sends its best wishes to its comrades in Ecuador and we look forward
to seeing them and many of their Latin American neighbours in 2017.

PAGE 100 JULY 2016 AUSTRALIA’S PAYDIRT