October 2016 Volume 1. Issue 243 $11.95
paydirt
front and back cover
supplied seperately
Comet streaks
into nickel
Plus:
Africa Down Under review.... The gaps in trust, infrastructure and the market
Australian Nickel Conference preview... Preparing for the deficit
Independence... Creasy, Bennett and Bradford on the future of Nova ISSN 1445-3436
09
9 771445 343007
contents
PAYDIRT (ISSN 1445-3436) 5 NEWS
Published by Pilbara Minerals released its highly anticipated
Paydirt Media Pty Ltd. DFS on the Pilgangoora lithium-tantalum project
A.C.N. 063 985 133 in late September. The company is confident the
robustness of the study will attract the neces-
Head Office: sary funding for the project, to be commissioned
Suite 9, 1297 Hay St, West Perth late next year. While Pilbara switches attention
Western Australia 6005 to financing Pilgangoora, an issue surrounding
P.O. Box 1589, West Perth off-take is playing out in the background. Mark
Western Australia 6872 Andrews reports
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 14 COVER 5
[email protected] Hugh Morgan returns to the mining spotlight 24
www.paydirt.com.au with his private company Comet Minerals and
its unique nickel discovery in Nigeria. Morgan
Editorial: and company consultant UWA Professor Louisa
Editor: Dominic Piper Lawrance were on hand at Africa Down Under
Deputy editor: Mark Andrews to explain the new style of native nickel deposit
Journalist: Michael Washbourne believed to have been discovered
Graphics: Marian Noonan
Contributors: 18 INDEPENDENCE
Keith Goode (Sydney), Brendan Ryan
(Johannesburg), Ross Louthean Ahead of first nickel production from Nova-
Photography: Bryan Charlton Bollinger later this year, Independence Group
hosted a group of analysts and investors on a
Advertising: site tour of the operation in Western Australia’s
Advertising manager: Tony Mwarey Fraser Range. While Independence is in control
Subscriptions: Mitchelle Matambo of the asset, Mark Creasy and Mark Bennett
Phone: (+61 8) 9321 0355 were key players behind the discovery. Mark
Facsimile: (+61 8) 9321 0426 Andrews spoke to the pair and Independence’s
Peter Bradford about Nova-Bollinger and its
Pre-press and printing: future
Vanguard Press 26 John St,
Northbridge WA 6003 24 AFRICA DOWN UNDER
Member of:
The 14th Africa Down Under conference was
Paydirt Media once again the platform for Australia and Africa
Executive chairman: Bill Repard to enhance relationships in the mining sector.
Finance manager: Giovanny Jefferson Despite commodity prices remaining volatile
Accounts/administration: and some mining companies still doing it tough,
Heather Melling there was a sense of optimism and enthusiasm
Conferences: Melita Fogarty, for the sector from the delegates who attended
Kale Nakazwe, Christine Oelschlaeger this year’s conference
74 NICKEL preview
Few miners do it tougher than those in the nick-
el sector. However, with the Philippines – the
major exporter of nickel ore to China – closing
down mines deemed harmful to the environ-
ment, the nickel price has received a bump and
instilled some confidence back into the sector.
As always, Paydirt provides a preview to the
stories to be featured at this year’s Australian
Nickel Conference at the Pan Pacific Perth on
October 20
Cover image: Comet Minerals direc- Click here to download 74
tor Hugh Morgan presented the Titan 2017 Conference Brochure
nickel discovery to the public for the
first time at Africa Down Under for Mining Indaba
Member of:
Australia-Africa Minerals & Energy Group
Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be
reproduced in any form without the consent of
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
parties
Trust in me
The word trust pervades through much of this been announced by a junior explorer with a management team
issue and it is a pertinent one for all mining lacking the reputation Morgan has built over his long, distin-
companies, particularly at a time when the in- guished career.
dustry is in recovery mode. Trust is also at the heart of our other major feature, the pre-
In this period of fledgling rebounds, it is view to this month’s Australian Nickel Conference (October 20,
vital resources companies win the trust Pan Pacific Perth). Nickel company shareholders have had to be
of their shareholders and other inves- loyal over the last five years and as evidenced by the interviews
tors. It has been widely accepted in the preview (from page 74), they have placed their trust in their
that the world’s biggest miners didn’t company’s declarations that the nickel market will turn sooner
make the most of the opportunity af- rather than later (or ever).
forded to them by the commodities In fact, shareholders of all resources companies with interests
boom and after three years of mas- in commodities other than gold and lithium are forced to show
sive write-downs, investors are beginning to query whether they trust at the moment. It has been a long, painful descent to the
have the wherewithal to get it right next time around. bottom of the commodities cycle but it appeared by the end of
PwC Australia-Africa practice leader Ben Gargett spoke on August that we were through the worst of it. The market has
the point during the closing panel session at last month’s Africa since suffered a few bumps and now investors’ trust that the
Down Under (pages 30-31). worst of the cycle is behind us is beginning to be tested.
“The sector really blew up that trust by doing deals at the top But the notion of trust extends far beyond the stock exchange.
“of the market and then obviously having the asset write-downs, African Natural Resources Centre director Sheila Khama, one
subsequently, what we are hearing from investors is that they of Africa’s most respected mining experts, made the point at
are looking at two things; Africa Down Under that the
asset quality and manage- I am not placing doubt on Titan trust gap between miners,
ment teams,” Gargett said. governments and commu-
“Those management teams but it is intriguing to think what nities was the biggest chal-
really have to earn the trust the industry and media would make of lenge facing the industry on
of the investors and the the continent.
money will come.” the discovery if it had been announced “I also hear there is a lack
Nowhere is the trust be- by a junior explorer with a management of trust. The logical result is
that governments can be-
tween shareholder and
management more frag- team lacking the reputation Morgan has come defensive or unwill-
ile than in the gold sector built over his long, distinguished career. ing to take your word for it,”
which made a hash last time Khama said (see page 28).
around of the strongest gold “If you share... information
bull market in history. with the African continent
Once the gold price tailed off, companies quickly lost the trust you will narrow the knowledge gap and with that the trust will
of shareholders who recognised companies had been buying improve.”
ounces to grow rather than be profitable, eroding what should’ve It is a vital issue for companies operating in Africa. A genera-
been a high return on investment. tion ago companies may have gotten away with telling investors
I have spoken previously about the tendency of investors, in one thing, governments another and communities something
fickle markets, to place their trust not in the commodity price or else again. The digital age means what an executive says in
the geology but in the people behind the project. New York or Sydney about high margins and multimillion dollar
This trend is highly evident in the current market. Jake Klein profits will undoubtedly reach the halls of government in Abjua,
has turned Evolution Mining Ltd into one of Australia’s largest Accra or Windhoek and the ministers will understandably begin
gold miners by generating trust and loyalty among first inves- asking where their share is, as will communities.
tors and now bankers who have been willing to back his latest The trust gap between company and government also works
move; the acquisition of a 30% stake in Glencore’s Ernest Henry in the other direction, as Bannerman Resources Ltd managing
copper-gold mine in Queensland. director Brandon Munro pointed out during the closing panel.
Rohan Williams (Dacian Gold Ltd) and Julian Hanna (MOD “The difficulty is when someone hears a sound bite [about eq-
Resources Ltd) have generated strong support for their explora- uitable economic reform] and they associate it with BEE-type
tion companies because they have a proven track record and structures like in South Africa, it does have some negative rami-
the trust and support of shareholders. fications,” Munro said. “Part of our job is to help government
Our cover story is also in some ways about trusting the man- understand that they are starting to undermine trust if it isn’t con-
agement behind it. Comet Minerals is a privately-held company sulted in a fairly sensitive way,”
which has made a highly unusual find in a country which is not Trust is at the heart of the resources sector at the moment,
only off the mineral exploration map but is also far from the top let’s hope it continues to build.
of ease-of-doing-business surveys. Would investors and the
media “trust” the veracity of the Titan discovery and its “nickel
balls” if someone other than the esteemed Hugh Morgan was
in charge?
I am not placing doubt on Titan but it is intriguing to think what
the industry and media would make of the discovery if it had [email protected] @DominicPiper
PAGE 4 OCTOBER 2016 AUSTRALIA’S PAYDIRT
NEWS
Real deal lithium project
for Pilbara
It is rare that a company pro- “We have issued our final
duces a DFS on a project and
can feel completely confident say on notice of right to first
of attracting the necessary fi-
nance to build it. refusal for which we have
Many companies produce spent a lot of time ensuring
supposedly robust studies and
shop the story around to finan- that there is as good a sales
ciers, only to find internal en-
thusiasm for the project is not model possible under the
reciprocated by outsiders.
agreement,” Brinsden said.
Even now as the ice starts
to thaw from investors’ pockets “Our expectation is that
after one of the coldest winters
experienced in the mining sec- there is a rock-solid sale no-
tor, there will be few compa-
nies confident that the project tice and in essence as good
they are putting in front of in-
vestors will demand financing. a purpose as it is intended to
Pilbara Minerals Ltd is an ex- be. Having said that it seems
ception to the rule.
likely we will continue to see
“We haven’t made any de-
cisions yet with respect to fi- some further challenge from
nancing, we are leaving all op-
tions on the table and we will MinRes in respect to that.”
continue to work on all of those
options. With such a strong If the parties cannot re-
project under our belt we are
not expecting the financing solve this matter satisfacto-
itself to be overly complex or
particularly difficult,” Pilbara rily, Pilbara intends to refer
managing director Ken Brin-
sden said. the question of the validity
Brinsden’s confidence is of the sale notice to dispute
partly fuelled by the fact that
Pilbara finds itself in one of the resolution.
few sweet spots of the com-
modities market; lithium. Brinsden said the spo-
But, unlike peers who have dumene price was derived
only recently clambered after
lithium ground on the back of increasing off the combined effect of
demand for lithium-ion batteries, Pilbara
has led all comers in the race to be a Chinese domestic pricing
supplier of the raw material and expects
to feed the market its 6% spodumene and import pricing. At the
concentrate by the end of next year.
time of print, the spot price
That is, of course, subject to financing
the $214 million Pilgangoora project. The for spodumene was about
capital outlay will deliver Pilbara a 2 mtpa
operation at Pilgangoora, designed to $US650/t CFR.
produce 314,000 tpa @ 6% spodumene
concentrate (44,000 tpa lithium carbon- “You require both price
ate equivalent (LCE)) and 321,000 lbpa
tantalite. decks – battery-grade, lith-
NPV for the project was slated at $709 ium carbonate decks and a
million in the DFS. Life-of-mine revenues
of $9.2 billion and after-tax cash flows of spodumene deck – for those
tonnes that are not subject to
those off-take agreements,”
Brinsden said.
“All that leads to a healthy
Pilbara’s Pilgangoora lithium-tantalum project is 120km pricing outcome and in par-
south of Port Hedland ticular for those tonnes which
are priced against the Gen-
$2.6 billion have been estimated based eral Lithium off-take and a life-of-mine
on an average life-of-mine spodumene estimated price of $US537/t CFR.”
price of $US537/t CFR. Brinsden doesn’t expect there to be
The DFS used a consensus model on an oversupply in the lithium market any
battery-grade lithium and spodumene time soon and is therefore confident the
– developed from several independent company’s pricing consensus is on the
forecasters – which allowed Pilbara to conservative side.
gauge the average life-of-mine price. Having released the DFS, Pilbara will
Both consensus models were in- now need to forge ahead with converting
line with the General Lithium off-take MoUs for off-take into formal agreements
(140,000 tpa for an initial six years), for both the spodumene and tantalite
which is yet to be executed. Mineral Re- product.
sources Ltd has until the end of the month With the tantalite industry somewhat
to exercise its own pre-emptive right to hamstrung by having to rely on supply
purchase Pilbara’s lithium product on no from Central Africa, Brinsden said supply
less favourable terms than those offered from the western world would be keenly
to General Lithium. sought after.
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 5
NEWS
Using Roskill, the leading eco- on a 2 mtpa base case scenario,
nomic forecaster for the tantalite
industry, it is estimated that tan- Pilbara has also contemplated
talite prices will range between
$US65/lb-80/lb over the next five the merit of doubling capacity to
to seven years.
4 mtpa in a PFS.
“That relates to a 30% [tanta-
lite] concentrate which is what we In terms of building resources
have proposed to sell from the Pil-
gangoora project,” Brinsden said. and reserves, Pilbara has only
Tantalite recoveries – 45% in “scratched the surface” at Pil-
the PFS to 53-59% depending on
the section of the orebody mined gangoora and is therefore not
– was a major boon of the DFS
and the benefit of the improved concerned about proving up sup-
tantalite credits will be seen in the
cost base of the spodumene. ply.
Better spodumene and tanta- By opting for a larger project
lite recoveries were one highlight,
while the growing reserve and further economies-of-scale will
overall size of the project were
other wins from the study. be delivered, with the life-of-
Continued growth in the pro- mine concentrate cost base in
ject – bigger tailings dams, larger
cleared areas for waste dumps, pit the range of $US180/t CFR (after
locations and the like – resulted in
a modest capital cost increase as- tantalite credits), NPV of $1.165
sumed in the PFS, $184 million, to
$214 million in the DFS. Payback is ex- billion and EBITDA of $245 mil-
pected to take 2.7 years.
lion.
“We have also had a change in pro-
Taking the project from 2 mtpa
to 4 mtpa will mean an incremen-
tal capital cost $128 million for
production of 564,000 tpa at 6%
spodumene inclusive of techni-
cal grade product (75,000 tpa
LCE) and 579,000 lbspa tanta-
lite.
Ken Brinsden “I would expect quite possibly
that it will be the lowest cost hard
cess flow having moved from three-stage rock operation globally at that point in
heavy media separation to two-stage time,” Brinsden said.
heavy media separation,” Brinsden said. “Ultimately, it is a natural fit for the Pil-
“That is to simplify gangoora site, but it is going to be sub-
the plant, however, ject to more work. We are going to do
it does send more more feasibility work and we will continue
material down- to assess market conditions and techni-
stream in the plant cal conversion capacity, whether within
and that means or outside China, to continue to facilitate
bigger mills, bigger the mine expansion.
flotation tanks and “That is a theme we expect to continue
the benefit is the im- to unfold. Our consensus is that there is
proved recoveries substantial conversion capacity going on
both in lithium and both in China today and over the course
it is also true from of the next four or five years. We think
a tantalite point of Pilgangoora is a natural source of the
view.” raw material supply,” he said.
With the benefit For the time being, Pilbara is working
of lower strip ratios towards locking down critical elements,
and higher grades including Native Title agreements, statu-
in the first five years, tory mine approvals plus major construc-
EBITDA of $136 tion and operating contracts.
million is expected At the time of print, three ECI groups
compared with life- had been selected to provide fixed price
of-mine projections contracts for works at Pilgangoora.
of $121 million per Pilbara expects to start construction
annum. of the 2 mtpa Pilgangoora project by the
The DFS was end of the year.
based on a mine life “Financing [Pilgangoora] is where we
of 36 years assum- will start to take our efforts in the com-
ing operating costs ing weeks and months, so that we can
of $US207/t CFR, set the project for execution or the bulk
with operating costs execution during 2017, again with a view
for the first 15 years to commissioning in late 2017,” Brinsden
estimated to be said.
$US196/t CFR. – Mark Andrews
While the DFS
numbers are based
PAGE 6 OCTOBER 2016 AUSTRALIA’S PAYDIRT
BUSH TELEGRAPH
ARM ready to cast away
Lubambe
Some six years after African Rain- greater water ingress as neighbour-
bow Minerals Ltd (ARM) jumped ing copper mines in the Democratic
into the Zambian copper mining sec- Republic of Congo shut down and
tor – through a JV set up with Brazil- stopped pumping water out of their
ian resource giant Vale SA to develop workings.
the Lubambe copper mine – the part- The extra water flowed through to
ners want out although getting ARM Lubambe – already known as a “wet”
chairman Patrice Motsepe to confirm mine – and the JV partners had to
the details at the group’s recent an- pump out considerable volumes of
nual results presentation was akin to water to be able to conduct normal
pulling teeth. operations.
Motsepe also seemed to be “in de- According to Schmidt, Lubambe
nial” over the price he expected to get was set up to deal with pumping
for Lubambe pointing out that ARM/ around 2 million litres of water a day.
Vale had pumped more than $US400 It’s currently pumping out 8-10 million
million into Lubambe, and saying “if and has beefed up its installed pump-
we get the right price, we will sell it”. ing capacity to be able to handle up to
But the partners seem likely to re- 20 million litres a day.
alise a fraction of the sunk cost at A year ago Schmidt commented:
Lubambe given the current state of “There’s no reason to believe we will
the copper market and the other de- not turn the situation around but this
velopments – such as dealing with will take a year and currently it’s a
the erratic demands of the Zambian bleed situation. We are burning work-
Government and the need for greatly ing capital.”
increased pumping facilities to pre- ARM’s stated objective is to have
vent the mine workings from flooding all its operations below the 50th per-
– that have brought ARM/Vale to the centile on the industry cost curve and
stage where they now want out. African Rainbow Minerals and JV partner Vale are pre- Schmidt put up a graph showing that
ARM took a R1.4 billion write down paring to divest the Lubambe copper mine in Zambia Lubambe sits around the 98th per-
against its investment in Lubambe in centile.
its latest financial results. during the past two years during which, So, it’s now clear that commitment is
Quizzed on what he expected to get as ARM chief executive Mike Schmidt gone although, like I said, it required a
for Lubambe, Motsepe replied: “It’s very told investors: “The copper price fell fast- process akin to pulling teeth to get Mot-
simple. The price we want is the best er than we could cut costs. We dropped sepe to finally spit it out.
price. We have invested in that mine for unit operating costs by 28% but the cop- Motsepe commented: “Both parties
the future. We have spent a huge amount per price fell 30%”. are looking at what is in the best interests
of money on it… more than R5 billion… First inkling of trouble came a year ago of both parties. At the right time, we will
so, we will let you know how the whole when Motsepe sounded off about the make the right announcement in terms of
process unfolds.” 20% royalty the Zambian Government what is in our best interests.
The fact that both partners want out was proposing to slap on the mining in- “This (Lubambe) was a very good op-
only became apparent after Motsepe dustry as part of a new tax regime. portunity and we and Vale have spent a
was grilled at question time because the That, it turns out, was just the start of total of more than $US400 million which
initial impression given from his pres- government interference because ARM is a huge amount of money. There’s a
entation was that it was just ARM that subsequently came under serious politi- very exciting opportunity in the extension
was looking to sell off its 40% stake in cal pressure to grant hefty pay rises to its area which we think is world-class.
Lubambe. Vale also holds 40% with the workers ahead of general elections to “But over the last three years we have
Zambian Government retaining the bal- be held in the country as well as to hold had to look at that specific asset. We will
ance of 20%. back on the announcement of proposed be in copper – there’s no doubt about it
Lubambe was previously known as the restructuring at the mine until after the – and there are some exciting opportuni-
Konkola North mine and, back in 2010 elections so as not to upset voters. ties in copper which we are looking at.
when ARM announced the project, was Then there were mining issues to be “The decision we have taken is that
estimated to have a mine life of 28 years dealt with. A year ago, Schmidt blamed this [Lubambe] is an asset may be better
during which it would produce 45,000 tpa production problems on “bad ground utilised in the hands of a third party. End
copper. conditions and the undulating, variable of story.”
Lubambe was hit by the global down- reef width and reef dips which has re- Finally!
turn in the commodities markets but the sulted in grade dilution”. Brendan Ryan is a Johannesburg-based
real damage appears to have been done But worse was to come in the form of mining writer
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 7
GOODE NEWS
Woods Point: More Valhalla
than Walhalla
The Morning Star dyke bulge in 3D Leapfrog together with views from underground
When I announced ERA’s next re- Woods Point, after Morning Star opened easier in recent years through the appli-
port was to be on Morning Star at and closed within months in 2011, on the cation of Leapfrog’s 3D software pack-
Woods Point, a broker remarked to me: 150-year anniversary of Woods Point. age which was not in use in 2011.
“Oh no, not Walhalla, if you are talking Morning Star Gold Ltd targeted where
about Walhalla then the gold market has it thought there was an unmined visible So, how did the 2011 Morning Star op-
to have peaked, no one has made money gold-in-quartz ore block at the mine, but erators get it wrong? Well, they appeared
out of Victoria for many years”. decided not to delineate it by drilling and to have ignored the historical records and
instead developed for it and then found it focused on the down-dip side of the vein
Yes, the gold market was at a peak, but was not there. It had built its Gecko plant entering the sediments from the dyke
not necessarily for that reason. which was eventually closed after treat- boundary, and on the notoriously often
ing around 3,000t of ore. weakly mineralised eastern side of its
It is true though, whether it is east dyke bulge – as detailed in WMC’s GMA
(Woods Point to Walhalla) or west Vic- The Woods Point to Walhalla goldfields (Gold Mines of Australia) records up to its
toria (Ballarat and Bendigo) many gold consists of a north-west/south-east strik- 1963 closure.
companies have failed to make a profit ing dyke swarm (of possibly more than
in Victoria, and fallen by the wayside. In 100 dykes), in which some of the dykes While that target did not work, the trial
east Victoria, A1 Consolidated Gold Ltd have bulged out along their length (hence mining of the dyke access in the roof
(at Gaffneys) almost went into receiver- dyke bulges). These dykes were injected of the adit leading to the Rose of Den-
ship but is surviving due to a change in with a stacked sequence of mostly visible mark (ROD)’s dyke bulge surprisingly
direction; Goldstar Resources which be- gold-in-quartz veins in which (at Morning averaged an unexpected 8 g/t when pro-
came Orion Gold NL has, after 13 years, Star) the higher grade mineralisation ap- cessed. And that ROD ore resembles a
finally abandoned its Cohens mine at pears to often be at the up-dip side on ladder vein system across the narrow
Walhalla and the Eureka and Tubal Cain the vein boundary where it passes out of dyke as shown in the image. In fact, the
dyke bulges in a sale to A1, as part of a the dyke into the surrounding sediments, ROD was mostly mined and stoped out-
strategy of heading into copper at Pries- as shown in the image, or throughout the side of its dyke bulge over its 62-year his-
ka in South Africa. dyke such as the Victory lode at A1. tory from 1864 to 1926, producing almost
40,000oz at 13.7 g/t.
More recently, Mantle Mining Ltd is The representation of the lodes/veins
in the process of acquiring the Morning in the dykes has become significantly A1 is mining a breccia block on the
Star gold mine and tenement package at edge of its dyke bulge as also shown in
PAGE 8 OCTOBER 2016 AUSTRALIA’S PAYDIRT
the image, and expected to realise about
10-11 g/t. The delineated 30,000t block
of breccia at the A1 mine is expected to
be mined and treated at A1’s 150,000 tpa
plant at Maldon over six to eight months
and realise about 10,000oz, inferring that
A1 could be capable of producing 20,000
ozpa to 30,000 ozpa or more – a far cry
from receivership.
The Morning Star dyke bulge also con-
tains a number of breccia intersections
that had previously not been considered,
especially in the “gap” areas between its
major lodes. Some of the breccias have
different coloured clasts and sometimes
the quartz is laminated (grey) which was
usually a preferred target. After 13 years, Orion Gold has abandoned its Cohens mine at Walhalla and the Eureka
Despite mining of dyke bulges occur- and Tubal Cain dyke bulges in a sale to A1, as part of a strategy of heading into copper
ring for more than 150 years, it comes as at Prieska in South Africa
a surprise that no one appears to have
defined why the bulges occur along a
dyke and whether there are undiscov- Then there are the dykes themselves the main north-west/south-east strik-
ered ones, let alone what is thought to be outside of the bulges, and whether ad- ing dyke swarm. Further north, there is
the main feeder for the gold mineralisa- jacent dykes in the swarm have been the old three compartment north-east/
tion. As a general observation, most of considered. There are also references south-west striking Dempsey shaft that
the bulges appear to be under a hill. The to cross-cuts to parallel dykes, but there was sunk in the creek because the vis-
A1 dyke bulge also has bits on its sides seems to have been little lateral/horizon- ible gold-in-quartz lode was exposed in
that do link to the main bulge, and an off- tal drilling checking for such structures. the creek (which is more of a fast flowing
set extension that is not in the line of the Plus, there is the sandstone. On a re- river). That is about it as far as the north-
main dyke. cent visit with Mantle Mining to the Hunts east/south-west direction has been con-
It very quickly becomes clear that sim- mining area (south of Gaffney’s) we no- sidered, other than east/west striking
ply focusing on visible gold-in-quartz ticed an old shaft that seemed to have quartz lodes that can be seen in the A1
lodes within known dyke bulges appears been mining sandstone, not dyke materi- gold mine.
to have overlooked a number of styles of al. This was an extension of a north-east/ There also appears to be a number of
mineralisation that have simply not been south-west open cut that had north-west/ overlooked structures with valleys possi-
considered economic. south-east striking quartz veins often bly linking with dyke; Google Earth was
When the mines in the area closed, it cutting across or between sediments non-existent, let alone freely available
was often due to encountering water at such as sandstone. And, underground at many years ago and hence possible ex-
creek level, or the time to mine an adit. Morning Star in the old workings some tensions to the dykes would probably not
“The main creek adit at ROD, for exam- of the stopes were clearly mining sand- have been considered.
ple, took almost 10 years over 1880 to stone (or veins in the sandstone). A trawl Clearly, despite its 150-year history,
1890 to be developed, and by many potentially economic
more than one company or Tarring Woods Point as aspects of gold mineralisa-
syndicate. Also, in the early tion do not appear to have
1900s mines closed because Walhalla could prove to be been contemplated in the
they were uneconomic – the very misleading. Sometimes, all Woods Point area, so it could
breakeven grade at Morning actually be revived and not
Star was 18 g/t, and at A1 it that is needed is a fresh outlook, as be reliant solely on the dyke
was even higher at 22 g/t. has been seen in Newmarket Gold bulges, while a better under-
There is more than one his- standing of controls on the
torical remark at how poor Inc’s discovery at depth at another mineralisation in the bulges
the grade was at 0.5 oz/t Victorian mine, Fosterville referred to themselves may also be suc-
(16 g/t), and hence a mine in the September edition of Paydirt. cessful.
closed.
Tarring Woods Point as
So, aside from visible gold- Walhalla could prove to be
in-quartz in dyke bulges, very misleading. Sometimes,
what else is there that does all that is needed is a fresh
not appear to have been looked at or through some historical records such as outlook, as has been seen in Newmarket
considered? the book, Gold at Gaffney’s Creek shows Gold Inc’s discovery at depth at another
Well, there are the mutton fat grade more than one reference to mining gold- Victorian mine, Fosterville referred to in
ores. Mutton fat refers to blobby white in-quartz in sandstone which has clearly the September edition of Paydirt.
fat, and when applied to describe quartz, become forgotten. Keith Goode is managing director of Ea-
it referred to the degenerated or oxidised And there is the north-east/south-west gle Research Advisory Pty Ltd
quartz often adjacent to or before a vein open cut clearly showing that something
and was usually ignored because its was being materially mined in a north-
grade was too low at 3-10 g/t. east/south-west direction, compared to
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 9
NEWS
Ausdrill the chosen one in Africa
Araft of activity in Africa helped Aus- Ausdrill posted a profit of $20 million in FY2016
drill Ltd post a profit of $20 million in
FY2016. some of the heavy hitting gold contracts The project is slated to produce at a
Ausdrill has. rate of 100,000 ozpa gold over 10 years.
Contract renewals awarded by Anglo-
Gold Ashanti Ltd and Nordgold helped Meanwhile, Ausdrill also performs a Ausdrill has raised its profile in East
increase revenues in US dollar terms, variety of services for BHP Billiton Ltd Africa with greater exposure in the re-
while new drill and blast works at New- in the Pilbara, Oz Minerals Ltd in South gion, and it is no secret that it is thriving
crest Mining Ltd’s gold-copper Telfer pro- Australia and Peabody Energy in New in West Africa and will continue to do so,
ject in Western Australia and further con- South Wales’ Hunter Valley region. Sayers said.
tract extensions at Rocky’s Reward (WA)
and Ensham Resources in the Bowen While the company’s Australian book “In Africa, we are an earthmoving con-
Basin, Queensland, ensured company reads like a who’s who of mining, it is Af- tractor in our own right and we win more
revenues were stabilised at $743.9 mil- rica where near-term growth opportuni- than our share of work in the African re-
lion during the period. ties are anticipated to come from. gion based on our experience and the
ability to get the job done,” he said.
The sales revenue performance was In what is still a challenging time for all
3.3% better than FY2015 results with that participants in the mining sector, through “We have been operating [in Africa]
year’s after-tax loss of $160.3 million be- its African divisions – African Under- for 26 years. The West Africa region is a
ing followed by a strong rebound, with a ground Mining Services (a 50% JV with greenstone belt, very similar to the green-
profit of $20.2 million in FY2016. Barminco) and wholly owned subsidiary stone belt from Norseman to Meekathar-
African Mining Services (AMS) – Ausdrill ra, for instance, and in that West African
Improvements across all divisions has managed to win significant scales of region there are a lot of gold plays.”
were reported, with about 84% of mining work and have contracts extended in Af-
services revenues generated from gold- rica during the period. One up-and-coming producer in the
focused companies. region is Toro Gold Ltd, which is on track
Perseus Mining Ltd recently awarded to start mining at the Mako project in
Record Australian dollar gold prices a $US120 million, two-year contract to Senegal in January.
have certainly helped Ausdrill, which had AMS to provide surface mining services
net debt of $216.7 million outstanding to at the Edikan gold mine, Ghana, while AMS will carry out open pit mining ser-
June 30. AUMS started a 31-month contract for vices for Toro for a period of 75 months.
AngloGold to provide underground min-
“In the last month or so we have ac- ing services at the Star and Comet pits Revenue generated for Ausdrill will be
tually touched on what the record was at Geita, Tanzania. in the order of $US300 million, with 90%
around about $1,800/oz. As I have often of the 350 people employed at Mako to
said, at $1,800/oz there should be traffic Elsewhere in East Africa, a major coup be sourced locally.
lights in the bush to direct the drill rigs to for AMS was being selected as the pre-
where the drill holes are,” Ausdrill man- ferred contractor for mine establishment The gold sector is certainly a lively
aging director Ron Sayers told Paydirt and operation at Kefi Minerals plc’s Tulu space at the moment and with Ausdrill
upon the release of the company’s 2016 Kapi gold project in Ethiopia. heavily leveraged to the precious metal it
financials. is targeting about $800 million in revenue
The Ethiopian Government has thrown and a profit uplift of 50% in FY2017.
Northern Star Resources Ltd, Evolu- its support behind Tulu Kapi by increas-
tion Mining Ltd and Gold Fields Ltd, in ing its stake in the project to 25%, with This financial year Ausdrill is without
addition to servicing Tropicana and the Kefi aiming to have production from the the burden of non-core assets weighing
Super Pit for KCGM where it has been mine starting late in 2017. it down, with the likes of Drilling Tools
the in-house drill and blast contractor of Australia (DTA) and DT HiLoad sold for
choice for the last 27 years, represent $66 million and $3.2 million, respectively,
Ron Sayers
PAGE 10 OCTOBER 2016 AUSTRALIA’S PAYDIRT
in FY2016. terests.
The sale of DTA was particu-
Late last year the company
larly favourable for the compa-
ny, with a profit of $36.3 million subscribed for $1 million worth
made.
of leading West African gold ex-
“When they [non-core as-
sets] were purchased and first plorer West African Resources
developed they created very
good margins,” Sayers said. Ltd shares, which was converted
“When people were buying to $2.5 million when it cashed-in
lots of trucks, the truck body
building business [DT HiLoad] earlier this year.
was generating 20% margin,
which is not available in con- “We have taken to engaging
tracting; the competition and
also clients they aren’t too with some of the smaller compa-
comfortable with people mak-
ing too much margin on con- nies and engaging in equity deals
tracting jobs. However, in the
manufacturing industry a 20% margin is where we can take a position in
normal, the problem is when the sales
come off as they did when the market a company and get paid in cash
slowed down, it made it a tough industry
to be in. The drill consumable manufac- or alternatively get paid in equity
turing business, DTA, while still profitable
had also come off.” which has worked reasonably
No doubt Ausdrill is in a happier place well for us to date,” Sayers said.
right now, however, Sayers knows there
are still headwinds to overcome in the Selling non-core assets has relieved some of the “At the end of the day we have
mining sector.
financial pressure Ausdrill was under a discipline that goes with it, we
He said there was a minor uplift in ex-
ploration activity in Australia, but the lack have an amount of money that
of new projects coming on stream meant
competition in the mining services sector drilling for equity in mining companies as is agreed at board level that we can in-
would continue to be tough.
another means of growth and opportu- vest in this area. We don’t get the farm in
With this being the case, the idea of
nity would continue to be pursued by the anyway, in doing what we do we have a
company, Sayers said. discipline with our client where as much
A recent example of deals Ausdrill is as we are not long-term investors, we are
willing to entertain is the MoU struck with there to achieve an end and we will sell
Primary Gold Ltd over the Mt Bundy gold the stock, we won’t dump it, but we will
project in the Northern Territory. sell it and we will sell it to people of their
Essentially, the drilling for equity agree- choice. If they identify who they want the
ment will see Ausdrill conduct about stock to go to, all things being equal we
30,000m of drilling over brownfields and try our best to make that happen.”
greenfields areas at the 1.2 moz Mt Bun- At the time of print, Ausdrill was trad-
dy project for a total of $3 million to be ing at $1.54c/share compared with 23c/
paid in Primary Gold shares. share in September 2015.
Sayers said Ausdrill was in drilling for – Mark Andrews
equity deals to achieve an end and would
buy and sell stock to service its best in-
Ausdrill’s spread of work in Africa
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 11
NEWS
Evolution earnest about Henry
Evolution Mining Ltd’s latest cor- to part with the asset as it strived to
porate activity was a simple
case of out with the old and in with build on its position as Australia’s
the new.
second largest gold producer.
In the space of just eight days,
Evolution offloaded the Pajingo “Pajingo played a role in our for-
gold mine – one of its original as-
sets – and effectively replaced the mation and development and it’s
lost ounces by acquiring an eco-
nomic interest in Glencore’s Er- an appropriate time to put it in the
nest Henry copper-gold operation,
about 35km north-east of Cloncur- hands of an operator where it will
ry, Queensland.
be a bigger part of their business,”
Under the terms of the complex
deal, Evolution will acquire 100% Klein said.
of future gold production and 30%
of future copper and silver produc- “For us, from a mine life per-
tion from the existing life-of-mine
area at Ernest Henry for an upfront spective, it increases the average
fee of $880 million. The company
must also contribute 30% of all fu- length of our mine lives, which is
ture production costs.
now just over eight years with both
Evolution has also agreed to pay 49%
of development and production costs in of these deals done.”
return for the equivalent of 49% of future
gold, copper and silver production from Evolution’s recent corporate
outside the life-of-mine area and within
the existing mining tenements on the Er- activity was warmly received by
nest Henry property.
investors, but it was the response
Following the sale of Pajingo, Evolu-
tion reduced its FY2017 production guid- from the analyst community which
ance to 745,000-800,000oz at an AISC
of $970-1,030/oz, but the addition of pleased Klein most.
Ernest Henry has seen the company lift
that forecast to 800,000-860,000oz at an “Prior to this deal, we had 10
AISC of $900-960/oz.
Jake Klein analysts covering us – two had a
Based on FY2016 production figures,
Evolution’s interest from Ernest Henry buy rating, seven were neutral and
would have yielded 88,342oz and re-
duced the leading gold miner’s overall has maximised their exposure to cop- one said sell,” Klein said. “Post the deal,
AISC by $59/oz. per,” Klein told Paydirt.
we’ve now got seven buys and three neu-
Evolution first approached Glencore
about the status of Ernest Henry late “We’ve got a 30% share of the copper trals.
last year – just months after finalising the
transactions for the Mungari and Cowal as a by-product credit and that’s going “I’m always nervous when you do a big
gold operations – but was told by the
Swiss-based multinational the asset was to make for extraordinarily low-cost gold deal like this, whether it’s selling or buy-
not for sale.
from our perspective.” ing, but the analyst coverage has been
Negotiations continued into this year
and eventually terms were agreed in Au- Ernest Henry was commissioned as very good.”
gust, shortly after Evolution confirmed
the sale of Pajingo, also in Queensland, an open-cut mine in 1997 and transi- At the time of print, Evolution was
to Chinese-owned Minjar Gold Pty Ltd.
tioned to a wholly underground operation seeking to raise about $400 million via
Evolution executive chairman Jake
Klein described the deal as a “win-win” in late 2011. Current reserves support a a 2-for-15 underwritten pro-rate accel-
for both his company and Glencore.
mine life of at least 11 years. erated renounceable entitlement offer
“We would certainly say it ticks the
box in terms of improving the quality of This is the first time since Evolution to partly fund the acquisition of Ernest
the portfolio because we’ve been able to
construct a deal where we’ve maximised was formed five years ago that the com- Henry. The balance of the $880 million
our exposure to the gold and Glencore
pany has gained exposure to a commod- payment will be funded by a new $500
ity outside gold, but Klein denied that million term facility with a five-year tenor.
was a deliberate strategy. Copper from Evolution cleared $322 million of debt
Ernest Henry will account for just 7% of in FY2016 and Klein backed his team to
the total production across the compa- do it all again.
ny’s portfolio of assets. “The repayment of $322 million of debt
“We’re a gold miner, we’re not chang- really allowed us to do this next transac-
ing that. We’re certainly not looking for tion because when we went to our bank-
more copper exposure at this stage,” ers and said we wanted to do this deal,
Klein said. there was a recognition that we had ex-
“You need a perfect storm of circum- ceeded expectations in repayments in
stances to create a deal that is effective the last 12 months and that was a big
and successful. In this case, Glencore stepping stone for us to get this deal,”
are in a deleveraging phase and wanted Klein said.
to maximise their exposure to copper, “That’s going to be the test of this deal.
while we wanted to maximise our lever- A deal is only successful if it delivers and
age to gold and the upside to the asset. meets or exceeds expectations. We’ll
“It’s not dissimilar, in our view, to when only be able to tell that in the next 12-24
we bought Cowal from Barrick [Gold months and whilst I’m confident we will, I
Corp] last year. Barrick was a motivated accept that will be the proof of it.”
seller of the asset and that is the circum- – Michael Washbourne
stance required to do a deal which allows
us to add value.”
While Klein admitted he was sad to see
Pajingo exit the Evolution portfolio, he
said the time was right for his company
PAGE 12 OCTOBER 2016 AUSTRALIA’S PAYDIRT
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COVER
Comet unveils great
balls of nickel
Samples of the remarkable “nickel balls” which Comet Minerals has discovered at its Titan project in Nigeria.
The company believes the geology of the native nickel deposit to be unique
Africa Down Under Louisa Lawrance because this is unique,”
2016 was the forum for The extraordinary find Mor-
Comet Minerals Ltd to un- gan is referring to is the Titan
nickel project between Nige-
veil its extraordinary nickel ria’s capital Abuja and the re-
gional centre of Jos.
find in Nigeria.
“It is not your traditional lat-
As a member of the Reserve eritic or sulphide derived re-
Bank board and chief executive of source. So, with a great sense
WMC, Hugh Morgan always de- of incredulity did we engage in
manded the spotlight however in a great deal of effort to try and
2016 it is the little known Comet work out the genesis and we
Minerals and its remarkable dis- needed a fair bit of help quite
covery that has the mining veteran frankly,” Morgan said.
in the headlines once again.
“Professor [Lousia] Law-
Comet, a private concern for the rance has spent almost two
time being, has taken the nickel years seeking to try and come
sector by storm with an out of this to a rational understanding of
world discovery in Nigeria’s central why it is a unique occurrence
north. – and this is a unique occur-
rence, it is not like anything else
“I’ve never seen anything like it,” we are accustomed to seeing.
Comet director Morgan told Pay- The importance of it is currently
dirt. underestimated, although it still
has some distance to travel to
“That is one of the problems – confirm all the things that are
when I say problems I mean fasci- going for it.”
nations – this has turned out to be
unique and that is why it has been Comet believes it has re-
quizzed and investigated in a man- vealed a new style and poten-
ner that we usually wouldn’t. We tial world-class native nickel
haven’t exactly understood what deposit at Titan and hopes to
we were doing, we didn’t know also convince investors.
what we were doing; nobody did
PAGE 14 OCTOBER 2016 AUSTRALIA’S PAYDIRT
What makes Titan so “unique, extraor- profile and appear at surface. Hugh Morgan
dinary and fascinating” is the balls of In the absence of bold geochemistry,
nickel metal identified. The nickel balls “Exploration is a little difficult from sur-
range from 0.1mm to 5mm in diameter it is not yet known whether the nickel face because laterite is difficult to dig
and contain up to an estimated 3 weight leached through weathering of the balls into and similarly fresh rock is difficult to
percent nickel. is retained in the clay profiles or not. At dig into. We also have some swamps [to
this stage, Lawrance believes this is an contend with], so we are a little bit limited
Indications from 6m deep pits dug at unlikely scenario. in our surface exploration.”
about 200m centres are that the nickel
is hosted in a coarse grained micaceous Drilling would help to build a better un- Nevertheless, Comet knows it has
felsic unit. derstanding of the greater Titan project, something special in its keep and in-
however, since last year Comet’s focus tends to surge ahead with breaking new
Depending on exposure and intensity has been on getting a handle on the dis- ground.
of weathering born from a subtropical tribution of the balls, both in the near-sur-
savannah climate with rainfall of about face materials and also the underlying Upon presenting the Titan project
1,200mm per annum, the balls are silver bedrock, which mostly involves pitting to the public for the first time at Africa
and gold becoming brown as weathering and stream sediment sampling. Down Under in early September, Morgan
increases. said that Comet had a diverse work pro-
Titan’s surface exposure – where gramme ahead of it.
In some of the sections, Comet has the fresh nickel balls occur in the near-
identified balls containing 93 weight per- surface sediment – is about 500m long “There will be more regional [work],
cent nickel and as much as 98 weight while to the north adjacent to the lateritic trying to understand the genesis of the
percent nickel. exposure the balls become more weath- position, so [there will be] a combination
ered. of activities [under way]. From the discov-
With oxidation, the nickel is dissolved erer’s point of view, we will be looking for
and replaced with iron oxide and it is in “All told, we have defined an area of financial assistance and there are a few
this process that the concentration of about 2sq km so far,” Lawrance said. [options] in the market place right now. I
nickel decreases, according to Profes- am talking to a number of parties to step
sor Louisa Lawrance, from the School of
Earth and Environment, The University
of Western Australia.
“Usually with a ball that is starting to be
oxidised like this, the percentage drops
down to about 35 [weight percent nickel]
and eventually the nickel will be lost out
of iron oxide, so the end result of that
process is just to have ferruginous balls,”
Lawrance said.
“Of course, because weathering hap-
pens from the near surface most of these
balls, right at the near surface with this
very tense weathering environment,
eventually become depleted. These de-
pleted balls, though, are an indicator that
the subsurface profile is mineralised.
The pits done to date and the stream
sediment samples; we have found balls
in all of these environments.”
Visible in soil, the nickel balls can
be scooped up, placed in a basin and
panned.
The nickel balls are believed to be the
closest thing to nickel metal as you can
get, meaning there is an opportunity for
Comet to bypass costly refining process-
es to recover nickel material.
The nickel balls could potentially be
put into a container and sent straight to a
stainless steel smelting facility.
“If you were separating out just the
nickel balls and you are putting it into
containers and shipping it off to a nickel
smelter and tipping it in... quite frankly,
it is nickel scrap. It is high-grade mate-
rial and as near to anything called nickel
metal,” Morgan said.
At this stage, it is known that the balls
in the fresh rock are more resistant to
weathering than the rock which is why
the fresh balls occur in the weathered
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 15
COVER
Lawrance said the potential primary mechanisms were comparable to the world economy and with the price of oil plum-
class Merensky Reef in South Africa and Great Dyke, Zimbabwe meting in recent years, now more than
ever the country needs another pillar of
up the momentum of what we are doing. he stressed looking after the local com- growth.
A nickel discovery has been made and munities around Titan is the company’s
justifies some immediate attention,” Mor- number one priority. The Government has identified steel-
gan said. making as a potentially viable long-term
“That’s why we’ll start off relatively industry for the country, therefore Com-
Rather than prosecuting Titan through small on the alluvium, so the communi- et’s Titan is not only significant as poten-
drilling now, Comet is instead keen to ties understand what it is like,” Morgan tially the highest grade nickel deposit in
test its theories and have a mine running said. the world, but as a boom project in a po-
within a year. tentially new province which could spark
Traditionally an oil and gas-rich econo- a new era of mining in Nigeria.
“We have resisted doing just that [drill- my, Nigeria has strived for diversity in its
ing], because we just don’t know [how Managing expectations in-country is
significant it is], and we want to focus on a concern for Comet, particularly given
the alluvium to actually understand the the lack of experience within the Nigerian
surface,” Morgan said. Mines Department in regulating mining
activity.
“If we were to start putting some holes
down, let’s say they were very exciting; “It is something new for the Nigerian
what would you do about it? The answer Government to handle. Africa Down
is you are the dog that caught the car. Under has attracted good support from
On the other hand, nothing could be Nigeria, with Goodluck Jonathon here in
more sensible than to attack the alluvium the past, which is why we are here,” Mor-
first. We are certainly going to be drilling gan said.
but the alluvium from the weight you are
seeing running at 1-3% nickel is why we “Everybody is on trial with these things.
expect a very low operating cost. This is It is a learning curve for the country and
clearly the thing to start at and then you us, so first and foremost we are making
can go into the drilling phase and all of sure the community is looked after right.”
those things because there is so much
more yet to discover, there is an enor- Government delegations from Ni-
mous amount to discover.” geria’s mining department have been
strongly represented in recent Africa
Despite going public with the Titan Down Under conferences and 2016 was
discovery, Comet is keeping some of no different, with Morgan taking the op-
its cards close to its chest, such as the portunity to liaise with officials during
amount of money it would like to conjure their time in Perth.
to maintain the momentum it has built.
He said he had met with Minister of
Morgan, Stephen Davies and Steve Solid Minerals, Dr Kayode Fayemi, at
Pragnell make up the Comet shareholder
contingent, with Lawrance on board as a
consultant.
Morgan said Nigerian participation in
raising money would be welcome, while
PAGE 16 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Africa Down Under and “couldn’t have Native nickel is usually found in tiny amounts in ultramafic rocks, with the nickel
asked for much more” from the Nigerian normally detected by microscopic studies and is usually about the size of a human hair
Government in terms of its support.
The nickel in the transported cover sequence is in colluvium
“It’s an extraordinary adventure. It’s
news, it’s a challenge and has the hall- Native nickel is recoverable by panning
marks of something special,” Morgan
said. Studies are being conducted to assess the potential of a viable mining
operation to start within a year
A challenge to overcome may well be
enticing investors into Nigeria.
According to the Fraser Institute Sur-
vey of Mining Companies 2015, Nigeria
is off the pace as an investment destina-
tion in Africa.
Botswana is the continent’s most at-
tractive jurisdiction, however, Nigeria is
not within the top 20 of African countries
investors would choose to invest in.
Security remains one issue for the
country and from an Australian perspec-
tive the recent kidnapping of Macmahon
Holdings Ltd employees would have
done little to comfort potential investors.
Despite the Macmahon incident in
June, Morgan said companies such as
WorleyParsons were still well represent-
ed in-country and Comet had no issues
accessing service providers.
Nickel prices on the other hand are an
ongoing concern for Comet and the rest
of the sector.
However, like the prospects at Titan,
Morgan is bullish on the nickel price.
“Apart from Norilsk there are not too
many nickel miners making money. Be-
tween $US6-7/lb long-term is where it
is going to be one day, not too many will
survive at $US4.50/lb,” he said.
But, with a rare beast such as Titan,
expectations are that low-cost process-
ing demands will provide Comet with
some cover from the price volatility syn-
onymous with the nickel sector.
“We believe we have defined a new
style of deposit – a native nickel deposit
– it is hosted within mixed felsic intrusive
rocks, we believe that what we see is the
expression of a potential world-class de-
posit with high grade and large tonnage,”
Lawrance said.
“This style of deposit being native
nickel in a fairly benign host has fairly
favourable economics notwithstanding
that it is actually outstanding at surface.
The nickel can be physically extracted
because it behaves as a resitate mineral
and also because the nickel occurs with
no other mineral assemblage that could
cause processing problems, such as sul-
phides. We believe that we will have low
processing costs.
“There is a lot more to say about this
deposit.”
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 17
SITE VISIT
Champagne
moment at Nova
The legend of Nova is set to in the Goldfields where any amount of Creasy’s major ownership of Sirius
grow further with first produc- gold was found all over the place. No- converted to an 18.88% share in Inde-
va-Bollinger is distinguished by being pendence when the merger was com-
tion of nickel concentrate expect- the first nickel discovery in that kind of pleted this year.
geological terrain,” legendary prospector
ed in December. Mark Creasy told Paydirt. Having a significant shareholding in
Independence means Creasy retains ex-
Few greenfields plays have been taken “Nova is distinguished today by the posure to Nova-Bollinger, found by Siri-
from discovery hole to production in four most amazing smoothness with which us, and his experience will be valuable in
years, and even fewer have ignited a pre- everything has happened. As the mar- helping the company crack the explora-
viously barren mineral district like Nova ket collapsed after 2011, we had our pick tion code in the Fraser Range.
has. of contractors and the general experts
you need to get a mine open. That was It’s fair to say that exploration in the
So, what does the key player behind our silver lining and to the best of my district has not been a priority for Inde-
the Nova-Bollinger nickel-copper sul- knowledge, the mine is due to produce pendence as its attention has been firmly
phide discovery in Western Australia’s concentrate on time and within budget, on bringing Nova on stream this year.
Fraser Range reckon of it? which is a fairly unusual thing to happen.”
At the time of print, Nova was on time
“Jundee is a major gold mine and it Creasy became the largest sharehold- and within its $443 million budget to pro-
was a major bit of mineralisation in a er of Nova-Bollinger’s owner, Independ- duce first concentrate in December.
completely virgin area when we found it. ence Group NL when it completed the
Nova-Bollinger, yes it is a significant dis- takeover of Sirius Resources in Septem- The start of production will not only
covery and once again in a completely ber 2015. herald a new era for nickel mining in WA
virgin area. In other words, Jundee was but will also cast a spotlight back on the
Fraser Range.
PAGE 18 OCTOBER 2016 AUSTRALIA’S PAYDIRT
While there is a plethora of tainly looking to do more,”
explorers chasing a “Nova-look- Independence managing
alike” in the Fraser Range, a director Peter Bradford told
match is yet to be made despite Paydirt in light of signing a
the rush of activity in the region JV agreement with Buxton
following Nova’s discovery. Resources Ltd.
If there is a secret to explora- The transaction grants In-
tion in the Fraser Range, no one dependence the right to buy
is revealing it, but Creasy does a 90% interest in Buxton’s
offer some advice for hopeful Zanthus and Widowmaker
explorers wishing to find Nova tenements for $1.5 million
No. 2. cash.
“Like anywhere else you have Buxton will be free-carried
to pick the right target and be through to a decision to mine
very persistent,” he said. and will retain the rights to
“In a relatively new terrain like explore and develop the
the Fraser Range there are a lot iron ore tenements at Zan-
of hard knocks that have to be thus (103.6mt @ 26.5% iron)
endured as people get up the Nova project manager David English has overseen construction and which is 60km along strike
learning curve. I would say that commissioning of WA’s newest nickel-copper sulphide operation from Nova.
with the amount of money spent “We will have a huge
and the number of geological minds “So, unless another Nova fortuitously advantage because we will be able to
there, it is not a question of where is the happens to be in that detectable depth touch and feel the rocks underground [at
next one [deposit]. We are probably mov- range it is going to be very difficult to find Nova],” Bradford said.
ing to a stage where the exploration dol- using the same techniques. I think those “Through that and through the appli-
lar being spent is more effective than in techniques are far less receptive than cation of technology in the mine we will
the past which will upgrade the chance of people think they are. People who think be able to get a better understanding of
another discovery.” they can use EM and see down 300- the geological setting and we think that
However, S2 Resources Ltd managing 400m... really it shows you can only see gives us a great advantage technically.
director Mark Bennett, believes mimick- 100-200m, so unless you have got Nova We want to be able to deploy that more
ing the approach his Sirius took to find No. 2 just lurking not too far beneath the broadly in the Fraser Range. The land
Nova is not the answer to unearthing a surface, you could easily walk across it position we have at present is relatively
replica. and not notice it.” small, so the transaction with Buxton was
“I am sure there are more out there, but The Fraser Range is characterised by aimed at expanding our land position and
finding it is a different ball game,” Bennett thick cover and runs about 130km south- giving us greater capacity to deploy that
told Paydirt.
west to north-east, roughly on a 45 de- technical knowledge that we will have to
“In hindsight if you look at how we gree angle from Norseman and is about make more discoveries.”
found Nova, if it weren’t for a particular 40km wide. Zanthus and Widowmaker will add
part of the orebody, a very small part we While the patch has delivered Nova, to Independence’s mix of tenure in the
call the pan-handle, rather than the pan, the downturn and unpredictable nature Fraser Range, which includes 70% of
coming very close to surface, we would of the nickel sector has stymied the post- JVs covering an area of 895sq km and
never have detected it with the geophys- discovery exploration momentum. strike length of 100km of the Fraser
ics we used. With better sentiment returning to Range/Tropicana belt and 70% of the
the mining sector and large Salt Creek JV tenement package
the start of operations on the eastern flank of the Tropicana JV.
at Nova, perhaps a new Nickel-copper sulphide mineralisation
wave of exploration in the has been identified at both JVs but, like
region may be triggered. most prospects in the Fraser Range,
If so, Independence is extensive exploration has yet to be con-
poised to be leader of ducted by Independence.
the pack with its mining “These things take a long time to dis-
of Nova giving it a better cover and if you look at where the explo-
understanding than most ration sector has been the last couple of
of the geological setting years and if you look at who is holding
of the Fraser Range. the land out in the Fraser Range, it is ba-
And, unlike a lot of sically all held by junior exploration com-
juniors in the space, In- panies,” Bradford said.
dependence is also well “Their capacity to fund the exploration
funded to carry out mean- needed to find the next Nova discovery
ingful work and has indi- potentially hasn’t been there. The degree
cated a willingness to join or the amount of exploration that needs
forces with peers in the to be done to find the next discovery is
field to make another dis- just not getting done. One benefit we will
covery. have is that if we can broaden our land
“Each transaction is position we will have strong cash flows
Independence chief operating officer Rob Dennis unique and we are cer- from Nova, we will have the technical
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 19
SITE VISIT
Ore from Nova will be ground to a size of 106 microns before being fed into separate copper and nickel floats
understanding of the belt and we be- understanding of controls to mineralisa- and while theoretically the project should
perform at 15-20% above nameplate ca-
lieve the combination of investment and tion.” pacity, proof will only come once Nova is
At the time of Paydirt’s visit to Nova, up and running.
knowledge will help us to drive that dis-
“There are two elements to the plant
covery faster.” Swick was engaged with three under- capacity. The first is the number of
tonnes of rock that you can put through
Bradford is backing seismic tech- ground diamond rigs conducting infill the crushing and grinding section and
that depends on the hardness. The bet-
niques, such as used at the Tropicana drilling as Independence looks to in- ter the quality of the ore – i.e. more mas-
sive, higher grade and softer – the more
JV, to build an understanding of the base crease its knowledge of the deposit tonnes we can push through.
and architecture across the Nova ore- which has reserves of 275,000t nickel “The second part of the throughput
equation is the volume of metal that you
body and apply that knowledge further (325,000t resources) and 112,000t cop- are pushing through the circuit that is
then controlled by the back-end of the
across the belt. per (112,000t resources). process with the thickening and filtration.
The filtration can only handle certain
“We don’t believe there is a secret [to On the current resource/reserve base, tonnes per annum of nickel ore or cop-
per,” Bradford said.
exploring in the Fraser Range], it is all in excess of 10 years’ production can be
“It is a bit of a balancing act to blend
about doing the layers of work required to expected from Nova, with FY2017 esti- as much of the material as possible to
find the optimal rate that we can push
get that best understanding. We will have mated to deliver 9-10,000t nickel, 3,900- material through crushing and grinding
and then the optimal rate that we can get
the deposit level understanding as a re- 4,000t copper and 280-320t cobalt at C1 material through the filtration circuit. You
want to have both of those maximised all
sult of mining the Nova orebody and be- cash costs of $4-4.50/lb nickel. the time, you don’t want to get one end of
the plant out of kilter with the other.”
ing able to do the detailed grade control Nova is expected to be fully ramped up
By the June 2017 quarter, Independ-
drilling and digital observations,” he said. during FY2018 and from there Independ- ence hopes to have Nova performing on-
song and show the project was a worthy
“We will also do some amount of R&D ence is expected to produce in-line with investment.
through some of the universities with life-of-mine expectations of 27-30,000 The deal on the table for Sirius in May
last year valued Nova-Bollinger at $1.81
PhD level researchers to give us a better tpa nickel, 12-13,000 tpa copper and billion, with Independence paying a 35%
premium to Sirius’ $3.24c/share price at
900-1,000 tpa cobalt
from a brand new 1.5
mtpa plant.
Bradford is keen to
test Independence’s
underground systems
early in its mine life
and get a handle on
the rate at which ore
can be delivered to
surface.
During construction
of the project, close at-
tention has been paid
to ironing out known
Underground mining at Nova is in full swing bottlenecks in the plant
PAGE 20 OCTOBER 2016 AUSTRALIA’S PAYDIRT
the time and a 46% premium
to the company’s share price
in the month prior.
Bradford said Nova was the
type of project Independence
was on the “watch for” and
interest in it grew stronger as
the scale and quality of the
asset was defined.
Independence’s share
price took a hammering fol-
lowing the announcement
that it would acquire Sirius for
Nova-Bollinger only and be-
come a new force in the mid- Nova underground mining manager Michael Mcloughney
tier mining space on the ASX. manages all aspects of underground mining activities,
However, the project has only including current development and future production
delivered upside for the com-
pany, Bradford said. of call was to run an optimisation study
“The level and quality of the work by on Nova.
the team at Sirius was to a very high The exercise proved to be fruitful with
standard. You always go into these key project parameters markedly im-
transactions being a little bit wary about proved, including 50% improvement in Having brought Nova to fruition, Independ-
ence is best placed to understand the geo-
whether people have been optimistic or NPV.
logical setting of the wider Fraser Range
conservative about how they have rep- “If we compare it to the original feasi-
as sustaining capex in the operational
resented facts, but the team at Sirius bility study capital cost of $473 million, phase,” Bradford said.
did a first-class job and our view is that, we will do it for $443 million but on top of The availability of labour, equipment
and contractors providing services at
if anything, the work they have done is that we have order of magnitude of $60
conservative,” Bradford said. million within that $443 million relative to
Upon the scheme of arrangement be- the original feasibility study scope. That
ing approved, Independence’s first port is $60 million we don’t have to spend
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 21
SITE VISIT
A nominal eight trucks per day will pass through the concentrate shed at Nova. Trucks will take nickel and
copper concentrates to Esperance
good rates has played into Independ- $280 million – $250 million placement JV at Tropicana have warranted a large
chunk of the company’s exploration dol-
ence’s hands during the construction and $30 million SPP – would set it on a lars, however, with two years of produc-
tion remaining at Long, exploration at the
stage. better trajectory. mine has restarted.
There is about $140-150 million left to “We had sufficient debt facilities to Long, in Kambalda, has remained cash
flow positive throughout a sustained pe-
fund the completion of Nova, while a sum do that, but that would have left us sig- riod of low nickel prices and is forecast
to deliver 7,400-8,200t nickel at $3.50-
of $50-55 million in stamp duty due to nificantly indebted in a time we have 3.90/lb in FY2017.
the WA Government for the acquisition seen very recently a high degree of risk Current resources at Long are 66,000t
nickel and at Diggers & Dealers Brad-
of Sirius also needs to be settled. averseness from investors about highly ford said: “Exploration is the life blood
of a mine such as Long and without this
Bradford said rather than use the com- indebted companies,” he said. ongoing investment there is no replace-
ment of production with new reserves.
pany’s debt facilities to fulfil such expens- “Shareholders are more attracted to Therefore, we are pleased to say that this
quarter we have recommenced a limited
es, it decided an equity raising totalling clean balance sheets with low degrees exploration programme at Long.”
of debt. The fundraising While the immediate future at Long is
clear, the company’s Stockman project
reduced our net debt by in Victoria remains subject to permitting
giving Independence time to weigh up its
about half and once Nova options for the project.
is up and running we are Stockman – 294,000t copper, 598,000t
zinc, 17 moz silver and 400,000 oz gold
going to be able to very (resources) – will command an estimated
capex of $202 million.
quickly clear that remain-
Independence has demonstrated the
ing debt and we will be ability to fund such large projects, howev-
er, Bradford said the scale of the project
ready to invest in the next was not of the ilk of Nova and therefore
all options to take the Stockman VMS
series of opportunities for project forward would be considered.
the company.” “The management time you put into
developing a smaller project is the same
Outside of its existing op- amount as developing a bigger project.
We have to make sure that we are mak-
erations – Nova, Long, Jag- ing the right decision to invest our time
and money in the right sized projects,”
uar and Tropicana – Brad- Bradford said.
ford said Independence “The other thing that you would ob-
serve in our portfolio, the operating as-
would look to greenfields sets that we have at the moment – Tropi-
cana, Long, Jaguar, Nova – are all in a
exploration and opportuni-
ties to expand its portfolio.
“We’re looking to add
more belt-scale land posi-
tions, so we are quite ac-
tively looking for opportuni-
ties there,” Bradford said.
Almost half of the com-
pany’s $33 million explora-
tion budget for FY2017 will
be dedicated to generative
and greenfields projects
targeting provinces which
can potentially deliver mul-
tiple gold and base metals
projects.
Nova and mine life exten-
Independence plans to apply its knowledge of the geology sion work at the AngloGold
at Nova to the broader Fraser Range region Ashanti Ltd/Independence
PAGE 22 OCTOBER 2016 AUSTRALIA’S PAYDIRT
cluster. This is a concept that we knows a time will come in the fu-
like and if we were to develop
Stockman, we would want to see ture when nickel prices are very
how we can develop a cluster of
assets supporting Stockman. We strong and gold prices have come
really don’t see the opportunity
to do that. Both of those factors back, placing Independence in
would weigh on our decision
making.” a position to strike an even bal-
The permitting process at ance of gold and base metals in
Stockman is expected to take
about 12 months to complete, its portfolio.
affording Independence ample
time to assess its options for the Right now, Bradford’s concerns
project, which include a sale pro-
cess and a potential JV arrange- are ensuring the safety of the
ment.
company’s people across its op-
If it decides to fly solo and de-
velop the mine, Independence erations and bedding down func-
would house five operating as-
sets with a heavy emphasis on tionality at Nova.
base metals.
“A month ago if you asked me
Before the Nova acquisition, Bradford
said the company had a good spread of the same question [what con-
commodities in its portfolio offering it a
natural hedge, particularly in gold and cerns you have] it would have
nickel, which share a strong inverse cor-
been debt,” Bradford said. “But,
doing the equity raise has re-
solved that, the next big step
When Paydirt visited Nova, 35,600t of ore was ready for for the company is the commis-
the commissioning process sioning and ramp up process for
Nova. Every aspect of the project
relation on prices. to date has gone extremely well, but you
Gold prices are currently riding high always have to be wary of what is around
and outside of its commitments to Tropi- the corner, and until Nova is commis-
cana, the opportunity to invest in gold is sioned and ramped up then there will
not present for now. It is not something always be one eye open at night time.”
Bradford will lose any sleep over, as he – Mark Andrews
Independence reports FY2016 loss
Improved productivity from the Jaguar depth of the Arnage lens,” Bradford said. from the Long nickel mine.
zinc mine and lower production costs “We did work on both of those in the As the company prioritised investment
from Long were highlights reported by In-
dependence Group NL as it slumped to a last 12 months to convert mineralisation in Nova and Tropicana, money was taken
$58 million loss in FY2016. there from resource to reserve, so that off the table for Long. Reducing the man
was a tick for the project and extends the hours by about half resulted in a 15%
Poor base metals prices and the ac- mine life.” drop in metal production at a significantly
quisition of Nova were major factors in lower cost structure.
the company’s results, which included a Indications are that Arnage continues
strong balance sheet with pro-forma $50 even deeper and has demanded Inde- Output from Long was 8,483t at cash
million net cash at year end and a 2c fully pendence conducts more drilling to un- costs payable of $3.68/lb, with FY2017
franked dividend declared. derstand it better. guidance 7,400-8,200t at cash costs of
$3.50-3.90/lb.
With Nova set to come online in De- Elsewhere on the concession, the
cember and the company accelerating discovery of the Triumph deposit dem- Independence had now recommitted
development of Bollinger, Independence onstrates – despite it not being of mine- investment in Long, Bradford said. The
was sure it had unlocked growth through able scale – further potential in the belt company has been able to discover two
measured investments in a down-cycle. according to the company. orebodies in its time at Long.
Despite conditions in the base met- “The system there is the type of miner- “Our desire is to find another one, so
als sector, Independence has had some alisation where you get clusters of these the work we are doing at the moment is
strong success from an operational and deposits and three have been discovered conceptual,” he said.
exploration perspective at Jaguar in the and mined so far – Teutonic Bore, Jaguar
past two years. and Bentley. Triumph indicates there is “We are chasing conceptual targets
potential there for a fourth and if there is that are relatively close to existing infra-
The company was able to beat pay- a fourth there is no reason why there isn’t structure. If we are successful in identi-
able cash cost guidance at Jaguar – 53c/ a fifth and a sixth,” Bradford said. fying new mineralisation then we would
lb zinc in FY2016 – and report record be able to very quickly develop that and
mining and milling rates at the operation “We have had some wins in improving start mining it. But, with conceptual tar-
since mining started. the overall production levels and produc- gets the success rate is relatively low, so
tivity levels of both the underground mine at the moment we are getting on with do-
Zinc concentrate produced at Jaguar and processing plant and in the process ing the work and analysing the work we
was 39,335t, while copper output was of doing that [we are] trying to get more are doing.”
7,412t. consistent operations from week to week,
month to month, quarter to quarter.” – Mark Andrews
“We have had success underground
at Bentley with discovery of Flying Spur In addition to the performance at Jag-
and then the indications of extensions at uar, there was some positivity stemming
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 23
AFRICA DOWN UNDER REVIEW
Promise returns to
the Africa stage
This year’s Africa Down Under offered something which hasn’t curity, infrastructure, transparency and
been seen at the conference for a number of years; optimism. sovereign risk remain acute challenges
in various parts of Africa, there was rec-
A torrid four-year period for the global gave a resounding address on the op- ognition among visiting delegations that
resources sector has left many African portunities his Government saw in min- foreign investment would play the lead-
countries and miners feeling like they eral development. ing role in resources development on the
are back to square one when it comes continent. Pitt said that pointed to the in-
to mining developments on the continent “We want to become one of the top tegral part foreign investors had played
but the mood at Africa Down Under this mining destinations in the world and in Australia’s own resource development
year proved there is enough resilience in have a 20-year strategy,” Kazungu told and urged African governments to pro-
both the sector and the region to allow for delegates. vide the right conditions to foster it.
a new generation of mines to prosper in
the coming decade. It was an ambitious statement given Kazungu picked up on this point, telling
the country only opened its first commer- delegates his Government was striving
The resilience and optimism was cap- cial-scale mine in 2014 when ASX-listed to put the right structures in place.
tured as early as the opening session. Base Resources Ltd opened its Kwale
Paydirt chairman Bill Repard welcomed mineral sands mine. However, that East “Our minerals policy is based on pro-
delegates with an upbeat assessment of Africa’s largest and most diversified viding transparency, clarity, predictability
where the sector was and following new economy is keen to embrace resources and stability to the sector,” he said.
Australian Assistant Minister for Trade development is an indication Africa is
Keith Pitt’s encouragement to African ready to take its place at the international Kazungu’s address was followed by
governments to continue attracting for- investment table. PCF Capital chairman Liam Twigger de-
eign investment, new Kenyan Cabinet claring that the resources downturn was
Secretary for Mining, Dan Kazungu, Kazungu’s enthusiasm for foreign in- over.
vestment was replicated throughout the
13 visiting African delegations. While se- “Since the start of this year, gold is
up 25%, zinc 40%, iron ore 35%, nickel
20% and even unloved thermal coal is
PAGE 24 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Senior officials from the 13 African delegations which visited Perth for
Africa Down Under joined Australian Assistant Minister for Trade, Keith
Pitt, and Australian diplomats for morning tea during the conference
up 35%,” Twigger said. “The rally in com- Kenyan Cabinet Minister for Mining, Dan Kazungu provided a sharp boost
modity prices has seen a 400% increase of optimism and enthusiasm to Africa Down Under proceedings
in the value of Australian gold explorers
and developers, and more than $2.5 bil- AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 25
lion in equity has been raised for the Aus-
tralian mining sector.
“This is up $700 million or 40% more
than compared to the same time last
year.”
The conference proved the upturn is
not restricted to domestic stories. Among
the presenting companies, gold miners
Resolute Mining Ltd and Perseus Min-
ing Ltd have enjoyed strong operational
and market performances in 2016 while
behind them a new generation of ASX-
listed West African explorers, led by the
likes of Cardinal Resources Ltd are turn-
ing themselves into potential M&A tar-
gets.
– Dominic Piper
AFRICA DOWN UNDER REVIEW
Kenya to grasp mining chance
In his first visit to Australia, newly ap-
pointed Kenyan Cabinet Secretary for
Mining, Dan Kazungu, left little doubt his
Government was intent on building the
country’s fledgling mining industry into a
continental leader.
Kazungu said he had been appointed
to the role of Cabinet Secretary in De-
cember 2015 with “a mandate to stream-
line mining in Kenya [amid recognition]
that mining can create jobs and employ-
ment opportunities in the country”.
Despite being East and Central Af-
rica’s largest economy, Kenya has never
boasted a mining sector to rival the likes
of regional neighbours Tanzania, Zambia
and DRC. Indeed, its first commercial-
scale mine was only opened in February
2014 when ASX-listed Base Resources
Ltd began production from its Kwale min-
eral sands operation near Mombasa.
However, with Kwale now up and run-
ning and making a positive contribution
to both the national and local economy,
the Government is keen to expand its
mining horizons.
Kenya’s economy is currently domi- Dan Kazungu
nated by tourism, financial services, ag-
riculture and IT and Kazungu sees this Advisory Board and will establish a Di- Along with the new Act, the Govern-
diversity as an advantage in attracting rectorate of Mines to regulate the sector ment has established an online mining
foreign investment into the country’s min- and a Directorate of Geological Survey to cadastre portal to improve transparency
ing sector. develop a geological database and pro- and reduce approval times and is in the
“Kenya survived without mining and mote interest in the mining sector. process of enhancing the country’s pre-
the economy has been diversified as a Exploration and mining licences will be competitive database.
result. Nairobi is the number one city in drawn through a grid system, eliminating “We have put together a budget of $30
Africa for foreign direct investment and overlap between tenements and improv- million to map the entire country with
Kenya is acknowledged as the gateway ing transparency. geophysics,” Kazungu said, before call-
to East and Central Africa,” he said. Artisanal mining is also recognised ing on Australian miners to take advan-
Foreign investment has already arrived as part of the Act with small-scale min- tage of the new initiatives. “It is time for
to fund infrastructure development – in- ing being made legal in an effort to make you to work with us to maximise the op-
such activity safer. portunity.”
“cluding a new standard gauge rail net-
Kazunugu said the new Act and policy The Government will work further on
work between Nairobi and Mombasa,
new port berths at Mombasa and improving investor access to
new power projects – and now the
Government is looking to mining When the new Government the geological database and
for further GDP growth. is also in the process of es-
“When the new Government came to power it realised tablishing Kenya’s first mineral
came to power it realised mining mining was a key frontier and certification laboratory.
Kazungu said providing a
was a key frontier and anchored anchored around the African stable and predictable fiscal
around the African Mining Vision Mining Vision is a policy which is regime which was both attrac-
is a policy which is now taking tive and competitive was also a
centre stage,” Kazungu said. now taking centre stage. priority for the Government.
That policy, announced in April “We want to become one of
this year, was the first in the coun- the top mining destinations in
try’s history and was followed in May by would deliver on the Government’s plans the world and have a 20-year strategy
repeal of the 76-year old colonial-era for Kenya’s mining framework to have developed with McKinsey,” he said.
Mining Act. A new Mining Act was passed transparency, clarity, predictability and – Dominic Piper
in May. Kazungu described it as the most stability.
progressive mining law in the world. “So, we can call win and avoid the pit-
The new Act will give some of the Cab- falls other countries have encountered,”
inet Secretary’s powers to the Mineral he said.
PAGE 26 OCTOBER 2016 AUSTRALIA’S PAYDIRT
2016
THANK YOU
TO ALL SPONSORS, SPEAKERS,
EXHIBITORS AND DELEGATES
JOIN US NEXT YEAR 6-8 SEPTEMBER 2017
www.africadownunderconference.com
AFRICA DOWN UNDER REVIEW
Bridging the infrastructure gap
Ask anyone associated has been a problem. The
with African mining pro-
jects and they are unani- depth of legislation re-
mous in what they consider
to be the biggest hurdle to quired to underpin those
development – infrastruc-
ture, or the lack thereof. projects has not always
“I think it can be said, been present and instead
without a shadow of a
doubt, that in terms of Af- has presented a hurdle.
rica’s development, the
lack of infrastructure is the “There also needs to be
Achilles’ heel for that con-
tinent and indeed for min- a clear government policy
ing companies,” African
Natural Resources Centre underpinning the develop-
director Sheila Khama said
during a panel discussion ment of the project, includ-
on overcoming the conti-
nent’s infrastructure chal- ing the commitment to fill
lenges.
in any of the legislative
Developing modern infrastructure that
caters for multiple industries, not just gaps and to work with de-
mining, will be critical if forecasts which
predict African’s continental population velopers and multi-lateral
to double to 2.4 billion by 2050 prove
correct. organisations on the rules
Overcoming infrastructure hurdles is and frameworks that will
at the heart of DRA’s current business
strategy. The South African-based en- help give investors the
gineering firm has been delivering min-
ing projects on the continent for the past confidence that their pro-
50 years and has received widespread
praise for its ability to work around those Sheila Khama headed a panel discussion on overcoming ject will have the neces-
challenges. Africa’s infrastructure challenges sary legislative support.”
ASX-listed coal develop-
However, that approach only lasts for
so long, according to DRA Projects busi- Nadeba iron ore project, with a view er African Energy Resources Ltd is one
ness development director Paul Howard,
and it is now paramount to find a solution other industries looking to tap into the company attempting to overcome the
which benefits several parties.
proposed port and rail facilities could infrastructure challenges surrounding its
“We have a vision to engineer tomor-
row better,” Howard said. “Part of that is contribute earlier in its development. projects in Botswana. The company was
driven by our strategy not to earn into just
mining, but to move across into energy, “Philosophically we accept that infra- previously focused on becoming a key
into water and into agriculture.
structure is the responsibility of the state, coal exporter, but over the last two years
“That really talks to population growth.
Each of those people you’ve got in a but the real question is how we then bal- has turned its attention to power genera-
growing population is going to need
something to eat, they’re going to be ance that to ensure investors get fair tion.
energy consumers and they’re going to
need water.” value,” Khama said. “As we started to understand the chal-
Khama said most countries in Africa “We work a lot with countries to im- lenges in exporting coal and recognising
were either landlocked or too small to fi-
nance the infrastructure projects mining prove port facilities. One of our major similar challenges from an infrastructure
companies typically wanted to develop
but, she insisted, host governments still projects is in Mauritania where we are perspective in exporting electricity, we’ve
have a role to play.
working with that country’s iron ore min- naturally shifted away from coal export
Last year, the Cameroon Government
committed to sourcing a funding solution ing companies to dredge and expand the to a power export focus,” African Energy
for the $US3.5 billion infrastructure arm
of Sundance Resources Ltd’s Mbalam- port facility and we have been funding managing director Frazer Tabeart said.
infrastructure around that for a very long “There really isn’t the enabling infra-
time.” structure in place to allow a large coal
Khama said one potential infrastruc- export business, but there is the infra-
ture solution which needed more at- structure in place to allow supply of both
tention was cross-border development domestic and exported electricity.”
initiatives, particularly among landlocked Tabeart suggested investors may fol-
neighbouring countries. low African Energy’s lead and turn to
King & Wood Mallesons partner Rob energy-focused infrastructure develop-
Edel highlighted that six African nations ments for pricing stability rather than in-
feature in the top 10 fastest growing world vest in the bulk commodities.
economies, but the lack of infrastructure “Energy prices tend to be fairly stable
on the continent was an impediment to and generally increase over a period of
private investment. time, making it much easier for those
Edel said a number of emerging de- people investing in infrastructure to know
velopments were offering potential so- there are always customers that will take
lutions to the problem, but he sounded up capacity,” Tabeart said
a warning on the regulatory framework “To get people to invest in these infra-
supporting that infrastructure plan. structure projects, you’ve actually got to
“They need to be very robust, they demonstrate there are benefits to more
need to be very clear, very certain and in- than one person. It has to benefit a whole
vestors need to know they are not going variety of stakeholders across a broad
to change and will be available to under- spectrum of cultures and countries.”
pin and support their investment through- – Michael Washbourne
out the lifecycle of the project,” Edel said.
“In Southern African countries, that
PAGE 28 OCTOBER 2016 AUSTRALIA’S PAYDIRT
AFRICA DOWN UNDER REVIEW
Rebuilding the trust
Paydirt Media editor Dominic Piper convened a panel discussion on financing African projects. Bannerman chief executive Brandon
Munro, PwC Australia-Africa practice leader Ben Gargett, Northcott Capital managing director Nick Martin, PCF Capital Group
managing director Liam Twigger and King & Wood Mallesons partner Nathan Collins share their thoughts on the subject
For some investors, the ill-effects of the in an African context, where there is a sources, Munro is closely aligned with
last mining boom are still very raw and starting perception from investors that the Government’s hopes and ambitions
despite better sentiment recently, mining the continent as a whole is a high-risk for its mining sector which is rich with
companies should expect to be greeted region for doing business. uranium opportunities.
by cautious investors when tapping eq-
uity markets ahead of the next commodi- Despite having projects in one of Af- Uranium has been on the nose of in-
ties up-cycle. rica’s safest jurisdictions, Bannerman vestors since 2011 and will always be a
Ltd chief executive Brandon Munro con- contentious space but being in a stable
“It’s an issue of trust,” PwC Australia- curred with Gargett’s thoughts and said country somewhat offsets these difficul-
Africa practice leader Ben Gargett said while building trust in the private sector ties. Bannerman is fielding interest from
in the closing panel session of Africa was important, it was critical to nurture investors determined to be first in when
Down Under 2016, titled “Sourcing the strong relationships with governments. the uranium cycle turns but Munro said
sentiment: Finding capital for African companies needed to be creative with
projects”. “In the same way that trust can be how they courted investors.
eroded pretty quickly at the big end of
“The sector really blew up that trust by the private sector, it can be eroded pretty Inviting third parties in for equity, which
doing deals at the top of the market and quickly with government as well,” Munro has been popular among services com-
then obviously having the asset write- said. panies, was one strategy cash-strapped
downs, subsequently, what we are hear- mining entities could pursue.
ing from investors is that they are looking At the same time, Munro said govern-
at two things; asset quality and manage- ments needed to understand the con- The lull in the resources sector has
ment teams,” Gargett said. “Those man- cerns of the private sector, particularly certainly made companies think outside
agement teams really have to earn the around issues such as taxation and own- the box to stay relevant and while it re-
trust of the investors and the money will ership. mains hard to read whether the worst of
come.” the rout is over, some believe there are
“The difficulty is when someone hears good times ahead.
While various forms of funding mecha- a sound bite [about equitable economic
nisms such as private equity, streaming reform] and they associate it with BEE Alongside Gargett and Munro on the
facilities, bank debt and off-take arrange- type structures like in South Africa, it panel were King & Wood Mallesons
ments are re-opening, investors need to does have some negative ramifications. partner Nathan Collins, PCF Capital
feel comfortable in the environment they Part of our job is to help government un- Group managing director Liam Twigger
are stepping into and companies needed derstand that they are starting to under- and Northcott Capital managing direc-
to demonstrate the returns on offer for in- mine trust if it isn’t consulted in a fairly tor Nick Martin who all agreed the sector
vestors, according to Gargett. sensitive way,” Munro said. was in better shape, a fact which would
be reflected in more IPOs in the next 12
He said this was particularly important Having been in Namibia for some time, months.
with Bannerman and also Kunene Re-
PAGE 30 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Gold and lithium are the flavour of banks are prepared to go and [some they is quite specialised, but we are seeing
the month and new floats built on these are] not prepared to go.” the diversification of P.E. funds like RFC
commodities can be expected to feature [Ambrian] that really understand mining
highly. In addition to seeking stability, Twigger and you are seeing a bit more investment
said investors were driven by seeing a in that space.”
Gold and lithium have taken the atten- pathway to cash flow, relativity between
tion of investors, particularly in Australia, capital raisings and a company’s market There may be money coming back into
and Twigger believes the sentiment down cap and a payback period of three years. the sector, however, not all companies
under has started to filter into Africa. will see the penny drop their way, accord-
“The appetite is there, equity in partic- ing to Martin.
“Absolutely, certainly, if you have gold ular, certainly if you are in gold,” he said.
on Africa’s west coast. Outside of gold, it “But, financiers want to see the bulk of Northcott’s team has raised over
looks like Cradle Resources Ltd will get their money back and dividends paid out $US15 billion in 37 countries, includ-
its niobium project away,” he said. in three years. That is a pretty tight time- ing closing transactions in locations in
frame, which tends to lead to some of the Southern, Central and West Africa.
The world class nature of the depos- more high-grade [projects] and certainly
its across Africa means that projects on leads to more higher value metals, which Martin said investors would still be pru-
the continent would always attract inter- is gold, attracting funding.” dent with their cash, meaning explorers
est however, Twigger said, there was needed to work hard to attract funding.
still a “nervousness about the rules be- Collins, whose law firm King & Wood
ing changed along the way” which was a Mallesons’ Africa group has over 25 “I think the tide is not yet coming in and
major deterrent for investors. years’ experience on the continent, said it is just a regression of where the money
there was a noticeable change in invest- is and where it has gone in looking for
“Looking at Africa, it is important there ment by private equity funds from infra- a quick return. The obvious place is to
is stability and that stability agreements, structure into mining projects in Africa. go where you are already producing or
if you can get them, are very important, near-production assets. The capital in-
so you don’t get caught investing your “What has happened in the last few tensity might be lower there or the infra-
money and then there is a change in the years is that there has been more of a structure investment lower, or the price
tax and a change in the royalty,” Twigger willingness to invest in mining projects, of expansion may be lower with existing
said. certainly on the multilateral side where near-term projects,” Martin said.
there has been a turning point,” he said.
“I think some areas of some govern- “That is where the start of the money
ments in some countries are more ad- “That is also because they [multilater- goes into it; then the money starts flow-
vanced than others, but I can’t underesti- als] have been able to partner up with ing into the lower end of the exploration
mate how important it [stability] is. There more traditional financiers, such as market. It is cyclical and you [explorers]
are still some areas in Africa where banks, as well. Private equity in mining have to wait your time unfortunately.”
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 31
AFRICA DOWN UNDER REVIEW
Base ready for expansion
Tim Carstens has a enough to predict a better “We expanded our exploration tenure
spring in his step once year ahead. in May to find the answer to the question
again thanks to rebound- of mine life,” he said. “We have a drill rig
ing mineral sands prices, “We are starting to see arriving in September and will start drill-
a change which has the the first signs of recovery,” ing to the north and south of the mine
Base Resources Ltd he said. “In the last three or and we are enthusiastic about adding to
managing director confi- four months there has been the mine life.”
dent enough to start talk- a tightening in the market.
ing about the company’s With inventories expected Beyond organic growth opportunities,
next move. to be gone by the end of the Base continues to seek out new projects
year, 2017 is looking quite having failed to secure a second asset
“The company is well encouraging. We are seeing through an unsuccessful bid for World
positioned for growth op- Tim Carstens demand coming back for il- Titanium Resources Ltd.
portunities; it is a ques- menite and quite significant
tion of how we add value bringing forward of orders One thing is certain, if new opportuni-
from here,” Carstens said during the from rutile customers. Where we are at ties arise in Kenya, Carstens would be
opening session of Africa Down Under. the moment is simply unsustainable.” keen to expand Base’s footprint in the
The hostile pricing has not prevented country. Kwale is the first commercial-
The current optimism at Base is in Base from getting Kwale – just south of scale mine built in the East African na-
stark contrast to the last two years, a pe- the Kenyan port city of Mombasa – into tion and Carstens bestowed the virtues
riod during which the company brought steady-state production. The company of operating in the country.
its Kwale mineral sands project into op- made its first shipment in February 2014
eration in the face of rapidly declining and two years on sold its 1 millionth tonne “Kenya has a highly educated popu-
commodity prices. of product. It is now both operationally lation, it is constantly improving well-
and corporately cash flow positive and developed infrastructure and one of the
“At the peak of the cycle, ilmenite was has paid down $43 million in debt in the advantages of coming to mining late, is
fetching $350/t; at first shipment it was last 15 months. that it has well defined support sectors
$150/t and at the start of 2016 it was With the company’s net debt position including financing and ITC.”
around $65/t,” Carstens said of Kwale’s now a manageable $50 million – the debt
most important product, which is now package was rescheduled in December Despite some early teething problems,
fetching around $95/t. “There was rela- 2015 – Carstens is preparing Base to an- he said the relationship with the Kenyan
tively weak demand and we found our- swer most investors’ first question: What Government was good.
selves in freefall.” does the future hold?
“You can’t build an asset like this with-
Mineral sands prices have been ris- out a high level of collaboration with gov-
ing since April and Carstens is bullish ernment.”
– Dominic Piper
Government support for AAMEG
Kenya has become the latest country see it as a valuable portal to the Austral- gagement with the Australian Federal
to join the Australia-Africa Minerals ian mining industry,” Carstens said. Government, specifically the Department
and Energy Group (AAMEG) as an asso- of Foreign Affairs and Trade (DFAT).
ciate member. Established in 2010, AAMEG is seek-
ing to link more than 190 Australian “We’ve long enjoyed a strong relation-
Led by the Hon Dan Kazunga, Cabinet resources companies – including ex- ship with DFAT and recognition by DFAT,
Secretary for Mining, Kenya was one of plorers, miners and services providers – but the focus now is on getting a much
the largest visiting delegations to attend operating almost 600 projects across 38 broader engagement so that the politi-
this year’s Africa Down Under confer- countries in Africa. cians in Canberra understand or have a
ence and used the three-day forum to felt-need to support Australian industry
reaffirm its commitment to improving ties AAMEG’s membership base is com- into Africa,” Carstens said.
with the Australian extractives industry. prised of service providers (62%), min-
ing and exploration companies (24%), “This is not something new for us, but
Mineral sands producer Base Re- academic groups and non-government it’s something we are putting a particular
sources Ltd is the only Australian-based organisations (6%) and other individuals focus into at the moment.”
company to have successfully developed (8%).
a mine in Kenya. Carstens, who took over the chairman-
The recent downturn in resources has ship of AAMEG from founding member
AAMEG chairman and Base managing not diminished AAMEG’s determination and industry stalwart Bill Turner AO ear-
director Tim Carstens said Kenya was to improve relations between mining lier this year, said collaboration was the
the 10th country to join the organisation companies and governments from both key to overcoming the challenges faced
after Ethiopia, Mali, Equatorial Guinea, Australia and Africa. by companies and individuals operating
Malawi, Cote d’Ivoire, Nigeria, Uganda, in Africa on a daily basis.
Mauritius and Egypt. AAMEG recently launched two re-
search projects, in conjunction with The – Michael Washbourne
“The focus of those countries and the University of Western Australia, and is
reason for their engagement is that they seeking to “expand and deepen” its en-
PAGE 32 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Pitt welcomes younger
African economies
New Australian Assistant Minister for Keith Pitt of 16-60 year olds with tertiary educa-
Trade, Tourism and Investment, Keith tion, its logistics chain is efficient and it
Pitt, has urged African governments to African students had participated in is business friendly. For those reasons,
continue striving to attract foreign invest- post-graduate or short-course study pro- Australia is seen as a safe, low-risk place
ment into their mining sectors. grammes in resources management in to invest.”
Australia.
Delivering the opening address to this Speaking to Paydirt on the sidelines of
year’s Africa Down Under conference, Pitt said such stability was a key step the conference, Pitt said bilateral meet-
Pitt said “foreign investment has been to securing investment. ings during the week had both empha-
crucial to Australia’s growth as it will be sised the willingness of African countries
in Africa”. “Australia has enjoyed 25 consecutive to court resources investment and recog-
years of growth and that didn’t happen nition of the need for stability, transpar-
“Foreign investment from Britain, Eu- by accident. Australia has strong govern- ency and clarity in resources manage-
rope and North America laid the foun- ance, it has the sixth largest percentage ment if such investment is to be realised.
dations of Australia’s modern resources
industry,” Pitt said. “I’ve spoken with some of my ministe-
rial counterparts and the message is the
There was also a warning, however, same from all of them: ‘We are here to do
about the need to control such invest- business’,” Pitt said. “Investors look for
ment. the same things regardless of geography
stability, low risk and ensuring they get
“Investment is a goal shared but it is a return. Every country needs to ensure
also controversial and needs to be well they have those in place if they are to at-
managed.” tract investment.”
Both Australia’s Federal Government Pitt said that with nearly 500 million
and the West Australian State Govern- citizens under the age of 21, Africa con-
ment have worked with African gov- tained “a world of opportunity” that Aus-
ernments on ensuring their regulatory tralia would help it fulfil, particularly in the
framework was robust enough to provide METS sector.
a stable investment climate for miners.
In the past five years, more than 450
Connecting with Africa
Acting Austrade chief executive Grame Barty said captur- bile mechanism, by
Barty said it was essential Australia ing those future cities which we deliver new
used its world leading frameworks in re- and opportunities within services. Then by as-
sources, energy, agriculture, education, them was not an over- sisting and partnering
general creativity and digital connectiv- night transaction, but with some of the pres-
ity to ensure Australia and Africa prosper now was the time to start entations that we have
from the shared competitive advantage in setting the scene and seen today [at Africa
the offing. the internet was the key. Down Under] in our
creativity and general
Currently, India is poised to surpass It has been estimated connectivity we can
China as the most powerful economy that one in three Af- provide access to more
in the world in 20 years. Beyond 2050, ricans own a mobile than 500 million ap-
there exists an opportunity for Africa to phone, and while ser- plicants by 2050. We
overtake the mantle from India. vices and connectivity transition not just in
need to vastly improve, helping develop a tradi-
“That is a long-term projection, but the the foundation is in place Grame Barty tional economy but we
wherewithal exits within Africa to take ad- for greater connectivity also find ways to coop-
vantage of that and to develop it if it can,” through internet across erate and invest in the
Barty said. the continent. opportunities for Africans to participate
in the digital economy and I mean in the
Currently, there are 1 billion people liv- “We need to help Africa establish its global digital economy, not just in the Af-
ing within Africa and by 2100 the popula- full cross-border E-commerce market rican digital economy.”
tion is anticipated to reach 4 billion. and we need to capture the human capi-
tal that it has and we deliver that via the – Mark Andrews
A large majority of the population will internet,” he said.
be teens and 20-somethings who will be
the driving forces behind cities of the fu- “The internet is a mechanism, the mo-
ture.
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 33
AFRICA DOWN UNDER REVIEW
Financiers still not sold on Africa
Financiers still need strong con- management” was no longer the in-
vincing to invest in African min-
ing projects despite improving senti- centivising drawcard it used to be.
ment towards resources, according
to Northcott Capital managing di- Martin added it was important to
rector Nick Martin.
show project financiers what they
Money which has been sitting
on the sidelines for several years want to see rather than tell them
is now returning to the sector, with
some African-focused companies what they want to hear.
having already successfully rattled
the tin for small exploration pro- “As a bit of advice, please don’t
grammes.
turn up and say ‘we’ve achieved a
However, commercial banks and
other lenders remain overly cau- conservative project’ because al-
tious when it comes to providing
larger funding packages for project most instantly they won’t believe
development, particularly in Africa
where the risk is considered high. you,” he said.
“Whenever you talk about project “In one sentence you’ve lost
finance, the political risk question
is always asked,” Martin told Africa management credibility, you’ve
Down Under.
lost technical credibility and you’ve
“The money is there, but it really needs
convincing to go to Africa.” probably lost your financial cred-
Martin said there was no “silver bullet” ibility.”
for obtaining project finance in today’s
“evolving” market, urging companies to Martin highlighted the strategy
allow for the changing landscape when
progressing through the various stages Kenya-focused Base Resources
of feasibility.
Ltd adopted towards achieving
“Most feasibility studies completed in
the last few years are probably not fit for project finance as a case study for
the market anymore,” he said.
other ASX-listed hopefuls in Africa
Nick Martin to follow.
“They matched different lenders
“Those of you undertaking new feasi- to the different risk profiles, bringing in
bility studies have really got to look to- key private equity partners and also off-
wards how the market has changed and take partners,” he said.
what is considered fit. Financial credibil- “You can only do that when you’ve got
ity can be easily lost if you don’t get these all those relevant aspects of credibility
factors together.” ticked off and have financial flexibility,
Other areas where Martin believes which ultimately allows you to survive
companies must demonstrate credibility and continue in a challenging market.”
is on the management and technical side – Michael Washbourne
of the business, although he stressed
the old adage of “good projects and good
Tanga keen on new greenstone model
Tanga Resources Ltd chairman question is where does it come
John Jones believes the compa-
ny’s Winston gold discovery is the first from?” Jones said.
indication of an entire new gold camp
in Tanzania. Tanga has undertaken both ground
“We have good ground position and magnetic and IP surveys to better de-
we will look to extend it. We believe
we have another greenstone belt that fine the area and is now continuing
was previously unknown,” Jones said
at Africa Down Under. drilling along strike at Winston as well
Tanga reported first positive inter- as at regional targets Wedge, Sophie
cepts from Winston – part of the com-
pany’s wider Singida project in north- and Crystal.
ern Tanzania – in December 2015
when the discovery hole hit 16m @ Tanzania is one of Africa’s most
55.23 g/t gold, including 9m @ 92.78
g/t. Since then the company has fol- prolific gold producers but Singida is
lowed up with hits of 14m @ 13.33 g/t,
7m @ 35.89 g/t and 14m @ 3.75 g/t. located more than 250km from the
Such hits sent the Tanga share price main gold centre of Mwanza. Jones
on a run from a low of 1.1c to as high as
said this gave the company encour-
agement it was dealing with a new
field.
John Jones “We have pitched our future explo-
ration programmes on the idea that
14.5c earlier this year. The challenge for we have an entire gold camp,” Jones
the company is to now define exactly said.
what Winston represents. – Dominic Piper
“There is very little outcrop so the
PAGE 34 OCTOBER 2016 AUSTRALIA’S PAYDIRT
AFRICA DOWN UNDER REVIEW
Resolute to pair with juniors
Resolute Mining Ltd diligence on a gold project in Tanzania. To ensure it maintains
will continue its push Resolute will also look to grow its ex- its position as a long-life
to partner with smaller gold producer, Resolute
companies on the explo- ploration asset portfolio organically hav- is currently transitioning
ration front as it embarks ing almost doubled its FY2017 explora- its key African operations
on an aggressive growth tion budget to $19 million, the majority of to continue the strong
phase driven by its Afri- which will be used to test targets within cash generation that has
can projects. Resolute’s 13,500sq km landholding in helped to steer the com-
Africa. pany from a $120 million
The gold miner will loss a year ago to a net
also commit $19 million “Increasingly our gold reserves and re- profit of $213 million in
to exploration in FY2017, sources are being built by our ability to FY2016.
with the bulk of that to successfully exploit African projects,” he
test targets in Africa, said. Resolute is currently
most notably in Mali and progressing the trans-
Cote d’Ivoire. “There are plenty of very high profile formation of the Syama
gold mines in Australia but none of them open pit gold mine into
Chief executive of have the ability to demonstrate that scale an underground develop-
Resolute, John Wel- of continuous production and the quan- ment with an initial mine
born, told delegates at tity of gold that we’ve produced.” life of at least 12 years
Africa Down Under the and capable of produc-
company was “open for John Welborn ing 250,000 ozpa gold at
business”, inviting Afri- AISC of $US881/oz.
can countries to speak A key growth asset for the company
about opportunities in their backyard, is the Bibiani project in Ghana where
and encouraged smaller companies to Resolute is looking to re-establish an un-
talk about partnership opportunities. derground operation. A feasibility study
has identified an upfront capital cost of
“The challenge for mining in all of its $US72 million and gold production of
facets is sustainability, and we see ex- about 100,000 ozpa at AISC of $US851/
ploration as a fundamental part of that,” oz over a five-year mine life.
Welborn said. “We’ll do it ourselves but Welborn is keen to extend Bibiani’s life
we’ll also back efficient, well funded and to at least 10 years and added that a fi-
well credentialed teams.” nal investment decision was about nine
months away.
Resolute recently took a 14.6% inter-
est in TSX-V listed Kilo Goldmines, a – Rebecca Lawson
company which holds gold prospects
and resources in the DRC. The company
is also a major shareholder in ASX-listed
Manas Resources Ltd, which recently
divested all of its assets in the Kyrgyz
Republic and is currently conducting due
Sudan to head Africa gold list
Since 2009, the contribution of min- with most of them in exploration stages. behind only South Africa and Ghana,
ing to Sudan’s GDP growth has in- We still have more than 100 bocks up which it hopes to overtake in 2018.
creased significantly. for investment showing mineralisation,”
director general of geological research Gold is the major opportunity for inves-
The establishment of the Ministry of authority of Sudan Dr M Abu Fatima said tors in the country, however, with more
Minerals six years ago has seen mining’s at Africa Down Under. than 20 types of minerals to economical-
contribution to GDP grow from 1% prior ly exploit, Fatima welcomed investors to
to 2009 to 3.1% in 2015, with general While not as well known as a mining exploit the resource potential in Sudan.
growth of about 10%. jurisdiction as gold behemoths South
Africa and Ghana, Sudan is on track to “This is an invitation to investors to
The country’s sector is split into four produce 100t by the end of the year. explore Sudan and invest in the mineral
subsectors – large-scale concessions sector. Sudan has a diversified geology
(300sq km plus), small-scale (1-5sq km), By the halfway point of this year, gold and huge mineral potential waiting to be
artisanal mining and treatment of tailings output in Sudan – 45.9t – had surpassed discovered, evaluated and developed,”
by artisanal miners. what had been produced at the same he said.
time in 2015 (21.6t) and 2014 (19.3t).
“Currently there are 149 companies in – Mark Andrews
different states of activity (on large-scale Sudan is the third largest gold produc-
concessions), only nine are producing, er in Africa, according to Fatima, sitting
PAGE 36 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Few regrets at First Quantum
First Quantum Minerals Ltd Mike Christie
continues to apply the les-
sons learned from its troubled ment, which is quite The CD-Rom of Paydirt’s 2016
time in the DRC in its global a remarkable statis- Africa Down Under Conference
search for new projects. tic.”
will be available soon
It has been seven years Christie shared
since First Quantum ceased his thoughts on why Perth,Western Australia
operating in the DRC following others had strug-
the Government’s decision to gled to understand CD Rom includes
strip the TSX-listed company the geology of
of its licence to run the Frontier Kansanshi, which • Over 50 presentations • Conference media coverage
and Lonshi copper mines. First Quantum ac- • Australia’s Paydirt preview and review reports • Conference Sponsors
quired in 2001 and
First Quantum was forced commissioned in CD-Rom – $95 (inc.GST)
to cull 700 employees, having 2005. Phone (+61) 8 9321 0355 or email [email protected]
spent about $US750 million on
acquiring and developing the “We’re all used to
projects, but exploration direc- sulphide deposits
tor Mike Christie said the com- and oxide deposits,
pany had few regrets. but this deposit has
an awful lot of mixed
“People often ask us, ‘do material in the mid-
you wish you didn’t go to the dle. Some people
Congo?’ Well, no, I don’t think would call it transi-
so because without those de- tional material, but
posits and without the cash it is basically mixed
flow that came from Lonshi and up with the entire
Frontier, I don’t think the com- orebody, so treating
pany could’ve done what it did that through three
subsequently,” Christie told Africa Down separate trains on
Under. the site has become
the secret to the
First Quantum’s portfolio now boasts success there.”
seven operating mines and four develop-
ment projects across nine countries on – Michael
four continents, including the $US5.5 bil- Washbourne
lion Cobre Panama copper project in the
Central American nation of Panama.
Cobre Panama will lift First Quantum’s
copper production profile above 1 mtpa
when it comes online in 2019 and con-
tinue the company’s legacy of developing
projects in difficult jurisdictions.
“With the lessons of Sentinel [in Zam-
bia] and some of the other projects in
Africa behind us, we’ve launched off into
Latin America and porphyry coppers
instead of sediment-hosted coppers,”
Christie said.
“We’re quite happy to go places where
other people won’t. In Zambia in 1996
there weren’t too many companies go-
ing in there…the DRC in 2000 certainly
didn’t have too many people going there.”
Described by Christie as the “power-
house” of First Quantum, the Kansan-
shi mine in Zambia is Africa’s largest
copper-producing asset, churning out
226,000t last year after mining 30mt ore
and 70mt waste.
“At times it has delivered phenomenal
cash flows,” Christie said. “During the
boom in 2012, it actually paid $US2 mil-
lion in tax a day to the Zambian Govern-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 37
AFRICA DOWN UNDER REVIEW
Lucapa diamond shines at ADU
It did not take long for Lu- “However, right now we
capa Diamond Company are focusing on our larg-
Ltd chief executive Stephen est target (L259) which is
Wetherall to capture the at- right beneath the area that
tention of his audience at Af- is producing these stones.
rica Down Under, announc- [Some] 70% of the large
ing the recent discovery of specials that we have re-
the world’s largest pink dia- covered to date have come
mond at 38.6ct from its Lulo from a mining area on top of
project in Angola. this target.”
Brandishing a 404ct rare In 2015, the Lulo alluvial
type 2A white diamond (rep- project generated $US32
lica) as testament to the con- million and 10,200ct, but
tinuing success of the com- the company has “come on
pany’s alluvial operations at leaps and bounds” in 2016.
Lulo, Wetherall said even Revenue has risen 240%
more exciting discoveries in the year to date, after the
were just around the corner. Stephen Wetherall discovery of numerous spe-
Research by Lucapa’s cial sized diamonds, the lat-
partner Endiama – the two groups hold “Given the large size, irregular shape est parcel selling for $US5.8 million.
the project in JV with local firm Rosas and jagged edges of these diamonds, Lucapa confirmed record production of
& Petalas – has found only 10% of An- along with the other indicator minerals 3,164ct including 59 special sized stones
gola’s alluvial diamonds can be traced and geological results we believe that the for the month of July.
to known kimberlites, with a staggering source of these diamonds is proximal,” “We don’t just recover these [special
90% sourced from undiscovered kimber- Wetherall said. sized stones] every other day, we recov-
lites. “We have uncovered 300 targets to er these with exceptional frequency. So
With the source of its own alluvial de- date. We have converted 100 of those to much so that 90% of our revenue comes
posits still undiscovered, Lucapa will known or probable kimberlites. Of the 13 from these stones. These diamonds sell
continue with its kimberlite exploration that we have tested to date, five are dia- for much higher than the average dollar
push over the coming year. mondiferous. per carat price in the world.” Wetherall
said.
The diamond company boasts one of
the world’s best prices, with an average
of $US2,100/ct.
With Lulo delivering such high cash
flow and low operating costs of $1.3 mil-
lion, Lucapa has invested in upgrading its
mining and exploration equipment, and
processing facilities.
The company is about to commission
XRT technology and larger screens to
handle coarse material, and will upgrade
its DMS facility to a capacity of 150 tph.
“We have invested in a larger drill rig,
capable of drilling to 2,000m. We have
already placed the order and paid the
50% deposit, and that should leave port
in late September.”
Wetherall said it had been an excep-
tional 2016 for Lucapa, and it was hard to
imagine the next 12 months being better,
but he suspected they would be.
Tapping the source: Antonio Carlos Sumbula, chairman of Angolan state diamond “Lucapa is a growing diamond produc-
company Endiama, told Africa Down Under that the kimberlite source of the country’s er with the strong support from our part-
rich alluvial diamond resources was still to be discovered. Only 10% of alluvial dia- ners Endiama and Rosas & Petalas. We
monds have been traced to known kimberlites but when the huge Luaxe kimberlite was have an exciting alluvial and kimberlite
found in 2015, it was assumed this would prove the source. However, results have since project in the most prospective country
indicated Luaxe contributed 0% of alluvial diamonds. So, the search remains on, and to in Africa,” Wetherall said.
encourage foreign investment in the sector, Angola has dropped headline tax rates from
35% to 25% and is now allowing majority foreign ownership of mining concessions. “The future is bright.”
– Jonathon Daly
PAGE 38 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Acacia to grow without Barrick
There are two obstacles get access to debt and eq-
holding Acacia Mining uity markets,” Gordon said.
plc back from a higher rat-
ing according to Australian- “So, we need to be quick
born chief executive Brad before we start to have some
Gordon. competition.”
Making his first appear- Along with Mali, Acacia is
ance at Africa Down Under, focused on exploration of its
Gordon pointed to the previ- tenement package in Kenya
ously problematic Bulyan- and Burkina Faso with 14
hulu gold mine in Tanzania drill rigs recently deployed to
as one key obstruction. all three countries.
“It’s a world-class deposit “We will find something,
but not a world-class mine now how big it is who knows,
but we’re getting close, the but Africa is still on the track
turnaround is almost there,” as the place to be in terms
he said. “The last three of geological potential,” Gor-
quarters we’ve been con- don said.
sistently boring and that’s
what we want it to be be- “We believe that we have
cause it’s never been bor- now set the company up for
ing.” the next 10 years and we’ll
start to reap the benefits of
For the past nine months, that investment this year and
Bulyanhulu production has next.”
steadied to 79,000oz gold
per quarter and AISC has – Rebecca Lawson
dropped to below $US1,000/
oz. In the medium-term, Gordon said the Brad Gordon
mine will produce 350,000 ozpa at AISC
of about $US800/oz. tional funds, and
Gordon said Aca-
Another key hurdle is Barrick Gold cia had welcomed
Corp’s 64% shareholding in Acacia, a couple of those
which until 2010 had been a subsidiary onto its European
and was formerly known as African Bar- dominated share
rick Gold. register.
“Barrick has said that Acacia is non- “The gold industry
core to its portfolio, they are ultimately and the investment
sellers,” Gordon said, adding that he had alternatives in Aus-
no idea how Barrick would offload its tralia are quite limit-
stake. ed, so if you want to
invest in gold, there
“We’re not going to be sitting here in aren’t too many op-
three to four years time with Barrick still tions,” Gordon said.
sitting at 64%.”
“Some are start-
South Africa’s Harmony Gold Mining ing to look more
Company Ltd is said to be considering globally for those
Barrick’s stake and there are reports of investments… it
interest from Australian and North Ameri- makes it more worth
can miners. my while to come to
Australia.”
“Beyond Barrick and Bulyanhulu, we
should be valued even higher than what On the explora-
we are today,” Gordon added. tion front, Acacia
is keen to secure
Gordon’s ambition comes as he cel- more JVs in Mali
ebrates three years at the helm of the where it holds three
miner, transforming it from an ailing com- exploration licences
pany burning through its $US600 million in the Senegal-Mali
cash stockpile to a diversified African Shear Zone.
business with a share price that has
surged from about £1/share to as high as “The opportunity
£6 on the London Stock Exchange. for signing these
JVs is probably re-
The turnaround has drawn interest ducing as juniors
from some of Australia’s bigger institu-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 39
AFRICA DOWN UNDER REVIEW
Oklo’s Malian exploration push
Acashed-up Oklo Re- where aircore drilling had Boyd is already familiar with the Sen-
sources Ltd is about to egal-Mali Shear Zone, having been in-
attack its recent discovery returned gold grades of up volved in the discovery of the 5.15 moz
of a new gold mineralised Fekolo gold deposit when he was previ-
zone within Mali’s highly to 21.2 g/t. ously with Papillon Resources.
prolific western region that
has yet to be tested by Drilling in the northern Taylor said Oklo would be guided by
drilling. Boyd’s experience at Fekola, located
part of the Diabarou trend 30km from Dandoko.
Managing director Si-
mon Taylor told Africa has measured this section “We’re chasing alteration, we’re not go-
Down Under that as soon ing to get caught chasing narrow veins
as the year’s wet season at 220m long and open under artisanal pits,” Taylor said. “The di-
finished, Oklo would start amond core holes that we put in this year
a major drill campaign at along strike to the east confirm there’s alteration assemblages
its projects within the pro- very similar to Fekola.”
lific Senegal-Mali Shear Zone in western and west. Taylor said the
Mali. Oklo is also keen to drill its Moussalo
trend is a steeply dipping project, located some 15km from Dan-
“We’re going to pepper the area with doko.
drilling and try to move Oklo through the zone with the deepest
exploration phase to resource defini- “Would you believe in an area where
tion and development phase in the near hole reaching 222m and there’s over 40 moz gold, this project
term,” Taylor said. hasn’t got one drill hole in it,” Taylor said.
Simon Taylor still in mineral alteration.
With $9.8 million in cash, Oklo will be “There’s a system there, “There’s less mature targets that we’re
keen to find out the extent of recently going to bring up to drilling quickly and
discovered gold mineralisation in the we’re going to chase it and have this ready for RC and diamond drill-
southern portion of the Diabarou trend, ing early next year.”
we’re looking forward to drilling,” he said.
– Rebecca Lawson
Oklo is assessing the open pit potential
of the Diabarou prospect, located within
the Dandoko project that contains multi-
ple targets identified from drilling earlier
in the year for the company to test in its
upcoming campaign. Targets will include
those within the Disse and Selingouma
prospects, with the latter a large 6km
long gold-in-soil anomaly.
Oklo’s technical consultant Andrew
PAGE 40 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Zimbabwe nothing to fear
Prospect Resources Ltd executive di- etc has all been positive do business; look very
rector Harry Greaves says compa- and there is a real desire
nies should not be afraid of investing in to particularly get junior carefully at getting the
Zimbabwe. mining companies in-
volved and exploring in right partners who can
Backed by a board and management the country.
team experienced in the southern Afri- add value, it is a power-
can nation, Prospect is well spread with “We have had suc-
lithium and gold assets in the country. cessful relations with ful tool,” he said.
the Government, we
Its latest acquisition, the Arcadia have met all the indi- Prospect’s solid cor-
lithium project, 35km from Harare, was genisation criteria and
closely followed by a $16 million capital that is not something to porate structure has al-
raising (predominantly to sophisticated be feared.”
Chinese investors) indicating there is lowed it to forge ahead
willing support for Prospect in Zimbabwe. The Zimbabwean In-
vestment Authority has on the ground and the
As long as Zimbabwe remains under approved Prospect’s application to own
the Robert Mugabe regime it appears a 70% equity interest in certified Zimba- company has been
other parts of Africa will be more at- bwean indigenous company Hawkmoth
tractive to foreign investors, however, Mining and Exploration Pvt Ltd. particularly active since
Greaves said Prospect has had positive
experiences with government thus far. Greaves said having indigenous share- mid-2016.
holders and a local community workers’
“I really want to stress the ease in trust, was one of the company’s great Harry Greaves In light of the Arcadia
which we find doing business in Zimba- strengths. transaction, a maiden
bwe of all southern African countries,” he
said. “Those are all very big positives for 48-hole RC and dia-
us and something I would strongly rec-
“Our interaction with the Zimbabwean ommend for people coming to Zim’ to mond drilling campaign has been com-
Investment Authority, Ministry of Mines,
pleted.
Initial assays received by the com-
pany are encouraging with 1-2% lithium
grades struck.
A scoping study at Arcadia is expected
by the end of 2016, with an exploration
target at the project of 15-18mt @ 3.5%
lithium set.
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 41
AFRICA DOWN UNDER REVIEW
Zimbabwe eyes platinum throne
Zimbabwe is gear- and Mining Development those who are interested in platinum to
ing up to overtake Fred Moyo said his coun- come to Zimbabwe and see the poten-
South Africa as the try’s ultimate target was to tial,” Moyo said.
world’s largest pro- achieve sustainable pro-
ducer of platinum. duction beyond 2 mozpa According to Moyo, Zimbabwe is
platinum. “blessed with geological features” and
In a bold bid to hosts more than 60 minerals, including
curtail South Africa’s “We believe that in the gold, coal, iron ore, nickel and chromium.
stranglehold on the years to come Zimbabwe
sector, Zimbabwe will take over pole position It is estimated that Zimbabwe hosts
will bring two new as the leading producer of 12% of the world’s chromium resourc-
platinum mines on- platinum in Africa,” Moyo es, most of which are located along the
line within the next told Africa Down Under. Great Dyke.
five years.
“Our platinum is sitting In recent years, Zimbabwe has teamed
Zimbabwe is cur- Fred Moyo quite shallow, has rea- with organisations from China and Japan
rently home to three to conduct a national geochemical sur-
of the world’s larg- sonably good grades of vey and a high technology programme of
est platinum mines – Mimosa, Zimplats 3-3.5 g/t and is very, very remote sensing data analysis and map-
and Unki – with cumulative production of amendable to easy mining.” ping.
about 750,000 ozpa. Zimbabwe hosts the second largest
platinum resource in the world, behind “We invite other nations – and we hope
New mines owned by Todal Mining the feted Bushveld Complex in South Australia is interested – in joining us and
Ltd (Kazakhstan) and Great Dyke In- Africa. The mineralised zone averages our bilateral activities to support the in-
vestments Pvt Ltd (Russia) are tipped to 4 g/t combined platinum, palladium, gold vestigative work,” Moyo said.
more than double the country’s annual and rhodium and also contains known
platinum output when up and running. nickel, copper and cobalt resources. Moyo also extended an invitation to
“There are a lot of opportunities and ASX-listed juniors to peg ground in Zim-
Chinese-owned GPR also has a plati- open ground available for application babwe and explore selected terrain “un-
num project currently at feasibility level. and investment licences, so we invite der specific negotiated conditions for
specific mineral portfolios”.
Zimbabwe Deputy Minister of Mines
– Michael Washbourne
DRC still willing to support miners
Continued transparency and regulato- multiple mine closures due to declining Transparency Initiative (EITI), a global
ry moves by the Democratic Repub- commodity prices however this has been standard that encourages accountable
lic of Congo’s government is helping the tempered with discoveries including Afri- management of natural resources and
country remain an attractive mining des- ca’s most significant copper discovery at the distribution of resource revenue.
tination despite a number of challenges. the Kamoa project, a JV between Robert
Friedland’s Ivanhoe Mines Inc and Zijin The DRC’s EITI reports, produced
Speaking to delegates at Africa Down Mining Group Co. In addition, Chinese in 2015, show the mining industry con-
Under, the DRC’s Chamber of Mines companies are spending big dollars buy- tributed the bulk of total revenues for
deputy secretary general Freddy Elonga ing stakes in DRC mining developments. FY2014 with $US1.35 billion out of a total
said the country had been hit hard by the of $US1.78 billion.
deterioration of the global market, with The DRC Government was also look-
the Government taking action to arrest ing at how to manage and control illegal “Through these EITI reports, the DRC
the impact. artisanal miners, Elonga said. mining industry has demonstrated its
commitment to work harder on the trans-
For the third time this year, the DRC “The Government now is trying to cre- parency of revenues from the exploita-
Government has cut the country’s 2016 ate structures such as cooperatives so tion of natural resources,” Elonga said.
growth forecast to 4.3%, down from an that the artisanal miners can be better
original estimate of 9%. The resources controlled,” he said. “The Government Tenacity at fostering a good working
sector in the DRC accounts for 95% of normally has to get [the artisanal miners] relationship with the DRC Government
total exports. some sites so they can continue to de- is also paying off, with the Prime Minis-
velop their business. ter now consulting with the Chamber of
Elonga pointed to recent moves by the Mines before making a decision.
Government to suspend the revision of “For sure we’re still having problems
the country’s mining code and the rein- like the invasion of tenements but we’re “It took a while but at least we’re get-
statement of reimbursing some $US700 trying to ensure that the artisanal miners ting there,” Elonga said.
million from the value-added tax (VAT) are able to keep their revenue and bal-
to mining companies, while halting VAT ance that with a good governance mining “It’s difficult for a mining company
on mining imports, as signs the DRC is framework.” to find its way in a challenging country
willing to support its mining sector in a like the DRC but by working together it
tough time. The importance of transparency has is possible to make a profitable business
seen the DRC’s Chamber of Mines pro- and to survive the impossible.”
In the past year, the DRC has suffered duce reports for the Extractive Industries
– Rebecca Lawson
PAGE 42 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Orion eyes beyond production
Despite having a near-term zinc- same [as the Fraser Range]. 4.41% zinc, 2.36% copper,
copper project to bring into produc- There are 14 known depos-
tion, Orion Gold NL chief executive Errol its and more than 40km of 0.42 g/t gold plus 14 g/t sil-
Smart said there was a bigger play for the known mafic/ultramafic de-
company to get excited about. posits here with only 900m ver from 55m including, 5m
of that having had any drill-
“This is a fantastic exploration oppor- ing on it.” @ 9.28% copper from 55m
tunity, adding on top of an already ad-
vanced zinc-copper development oppor- Smart said Jacomynspan and 6m @ 12.4% zinc from
tunity, this is going to propel Orion Gold represented a huge oppor-
into developer base metal, producer/ex- tunity in its South African 75m.
plorer status very quickly,” he said. portfolio, however, it is some
way behind the company’s At the time of print, drill-
Smart was referring to the Jaco- Prieska zinc-copper project
mynspan nickel-copper deposit, which is within the Areachap belt, ing continued at the +105
hosted in an area of South Africa bearing Northern Cape.
similar characteristics to Western Aus- level exploration target with
tralia’s Fraser Range. The brownfields play produced
430,000t copper and 1mt zinc from 1971 results pending as the com-
“If the explorers in the Fraser Range to 1991 before going into rehabilitation.
today drilled intersections like that pany worked towards for-
[JMP38 returned 4.2% nickel] it would be Despite being supported by existing
the greatest geological excitement that infrastructure, the project has been left mation of a new resource.
you can imagine here in West Perth,” largely untouched until Orion’s involve-
Smart said. ment. Errol Smart “We have worked our
technical mine planning
“There are massive sulphides, nickel The company is fast-tracking a feasi-
pentlandites, they are exactly the same bility study on the project and recently around there and this mine
rocks, exactly the same metamorphic started a maiden drilling campaign.
conditions, they behave and look the has produced successfully [in the past],”
Results returned so far include 42m @
Smart said.
“We know the metallurgical processes
required and all the infrastructure is in
place for us to get going quickly. That is
what we want to do. The deep sulphide
orebody is a big attraction over there, an
8.6m diameter shaft is in place down to
1.2km plus ramps from surface down to
the existing ore are also in place.”
– Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 43
AFRICA DOWN UNDER REVIEW
Harmony broadens horizons
Shortly after chief execu- with current operators, and
tive of South East Asia
operations, Johannes Van look forward to discussions
Heerden, presented the
Harmony Gold Mining Ltd with any interested people.”
story to Africa Down Under
delegates, the company’s Outside of PNG and South
strategy of increasing its
production profile became Africa, where Harmony has
clearer.
nine underground operating
For consideration of
$US1 cash, Harmony pur- mines, Van Heerden said
chased Newcrest Mining
Ltd’s 50% share of the the company was looking for
Hidden Valley JV in Papua
New Guinea. expansion into continental
The buy will see Harmo- Africa.
ny afforded total control of
reserves 1.4 moz gold @ Underground mining is
1.6 g/t and 27 moz silver at
31 g/t and resources of 4 a core part of Harmony’s
moz gold at 1.6 g/t and 73
moz silver at 29 g/t. business and any opportu-
Within three years, Har- nity where it can deploy this
mony expects Hidden Val-
ley to contribute a further 180,000 ozpa skill-set will be assessed and
gold at AISC of less than $US950/oz to
while gold is a strong focus,
Van Heerden said copper
was also of interest to the
company.
“As seen in our reserve
statement we are quite com-
fortable in copper and as
long as there is gold associ-
Johannes Van Heerden ated we don’t actually mind
the split between copper and
group production, as it looks to expand gold. We see that both those metals have
its output from 1.1 mozpa gold to 1.5 mo- a bright future,” he said.
zpa. “We are looking for something with a
While Harmony reasonable reserve and production pro-
has assumed own- file. Obviously it needs to satisfy the cri-
ership of Hidden teria of margin, ability to mine safely and
Valley, it still re- ability to demonstrate an adequate return
mains in JV with for our shareholders.”
Newcrest at the In the past five years, Harmony has
Wafi-Golpu copper- steadily increased its underground grade
gold project which profile in South Africa, one of the key ob-
could be funded jectives in helping it maintain and grow
from free cash flow margins.
generated from Hid- Van Heerden said it was not the com-
den Valley. pany’s mantra to high grade an orebody
Van Heerden said in light of gold prices, rather it has been
the company was a clear objective of Harmony’s to stably
comfortable oper- mine above 5 g/t gold from underground
ating in PNG and deposits.
happy to entertain “In open pit terms 5 g/t seems like a lot,
interested parties in in a South African mining environment 5
JV opportunities in g/t is not seen as high grade; it is proba-
projects at various bly at the lower end of the reserve grade
stages. of the underground operations there,”
“Most of the op- Van Heerden said.
portunities we are “We are proud to say we are one of the
targeting are prob- only operating companies that have an
ably at advanced increasing grade profile in its portfolio.
stage as well as in The reason for that is we have been in-
operation,” he said. vesting in our South African projects for a
“As well as that, number of years through the cycle.”
we have demon- – Mark Andrews
strated in PNG the
value of greenfields
exploration. We are
comfortable JV-ing
PAGE 44 OCTOBER 2016 AUSTRALIA’S PAYDIRT
South African amendments
to add greater stability
South Africa’s MPRDA Amend- there are stronger linkages, which
ment Bill will remove the am-
biguities which have plagued the makes for a greater multiplier ef-
country’s mining industry over
the last decade, Deputy Minister fect,” he said.
for Mineral Resources, Godfrey
Oliphant said at Africa Down Un- South Africa has already devel-
der.
oped downstream expertise in the
The MPRDA (Minerals and Pe-
troleum Resources and Devel- coal-to-liquids and gas-to-liquids
opment Act) was passed by the
South African Parliament in 2015 sectors and is also building ca-
but was sent back by President
Jacob Zuma over concerns there pabilities in the PGM value chain
had not been enough consultation
with stakeholders and that it could through development of auto-cat-
be unconstitutional and inconsist-
ent with international trade agree- alyst and fuel cell technology.
ments, particularly in the area of
beneficiation. “This is important work for the
Oliphant said the move was in platinum industry,” Oliphant said.
line with the constitutional pro-
cess. Other major challenges remain
“It was sent back to parliament and in South Africa mining’s nega-
to ensure absolute rigour in the
drafting and consultation pro- tive legacy issues can often out-
cess and to ascertain whether
the provisions over beneficiation weigh the positive ones. Oliphant
are aligned with our international
trade obligations,” Oliphant said, said the Government was commit-
who added the subsequent delay was
because of a parliamentary recess for lo- ted to ensuring environmental, so-
cal government elections.
cial and health issues associated
Speaking at a subsequent Africa Down
Under lunch, Oliphant said he expected with the mining sector would be
the bill to be passed later this year.
overcome.
The slow progress of the amend-
ment bill has been held up by critics as “The next century of mining
an example of the South African Gov-
ernment’s inability to provide an attrac- must also be characterised by
tive investment environment for miners.
Oliphant rejected such suggestions, say- environmentally responsible and
ing investment in the resources sector
was actually on the increase. sustainable mining. Long after
“The national economy grew – to the the life-of-mine or depletion of re-
surprise of some economists – by 3.3%
quarter-on-quarter in the last period, source, we want to not only see
driven in part by 12% growth in mining,”
he said. “They may say something else thriving economies, but an envi-
in public but the evidence says investors
are still coming to South Africa. In 2015 Godfrey Oliphant ronment that has been faithfully
alone, over 1,500 PLs and MLs were ap-
proved in South Africa of which 583 were rehabilitated,” Oliphant said.
for prospecting. These are positive signs
for the future of the industry.” mining industry in South Africa and the “Let us not repeat the mistakes of the
Oliphant said the Government re- MPRDA amendment bill was designed to past, or to do in other jurisdictions that
mained committed to the future of the
create an enabling environment. which we would not be allowed or in-
Despite other jurisdictions gaining clined to do at home. In South Africa, we
ground, South Africa remains Africa’s are still dealing with the legacy of envi-
largest economy and Oliphant pointed to ronmentally irresponsible mining in the
the advantages its mining sector could form of over 6,000 derelict and owner-
count on. less mines and acid mine drainage which
“Our geology simply rocks,” he said. pose real dangers to communities on a
“Our mining sector is mature and resil- daily basis.
ient. We have enviable associated in- “The cost of closing shafts and holes
frastructure and world-class legal and left open as well as rehabilitating land
financial institutions.” and water systems in retrospect, is exor-
One aspect of the amendment bill to bitant and is being borne by the public.
cause major controversy is the provi- This should be unthinkable today.”
sion for beneficiation and downstream The health of former mineworkers
processing. The bill proposes to place is also widely debated in South Africa.
restrictions on the export and sale of Oliphant said the Government continued
unprocessed minerals and miners are to work to address the issue.
concerned the legislation will force them “Some of these health issues are not
to undertake loss-making beneficiation emerging until 20 years or so after mining
operations in the country. ceased, and due to the asbestos mining
For Oliphant, the beneficiation legisla- in the past, there are still ex-mineworkers
tion is about ensuring mining helps the being diagnosed with asbestosis.”
development of the wider economy. – Dominic Piper
“Mining has the ability to help other
industries develop. We must ensure
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 45
SPONSORED FEATURE
DRA looks to expand beyond
metals and minerals
Multidisciplinary engineering group tive change and developing long-term more holistically and to consider the
DRA is looking to expand its capa- solutions around food, water and energy wider development opportunities created
bilities beyond the mining sector, where security. As a responsible corporate citi- by the injection of commerce into often
the group has earned its reputation for zen, DRA is acutely aware that a min- remote, infrastructure-poor regions, es-
providing services from geotechnical to ing project of $2 billion has a profound pecially in Africa.
systems control engineering. and positive impact on a country and the
impact on the availability of water, food DRA has already begun with a move to
Speaking on the sidelines of the Africa and energy needs to be managed in a enhance food security by expanding its
Down Under conference recently held in responsible and sustainable manner, de expertise to the fertiliser commodities of
Perth, DRA Africa Projects managing di- Bruin said. potash and phosphate. Through subsidi-
rector, Johann de Bruin, said the group’s ary PGBI, DRA holds unrivalled exper-
wide array of engineering skills could His comments are in line with a wider tise in the sugar, bio-ethanol, biomass
also be applied in other sectors such as trend to approach resources projects power generation, timber and food and
agriculture, water treatment, energy gen- beverage industries.
eration as well as storage and distribu- Johann de Bruin
tion thereof. De Bruin says through its involvement
in these minerals, and with the expertise
“The extended decline in the commod- to deliver large scale agricultural devel-
ities market and the focus on sustainabil- opment projects, the group is in a strong
ity motivated our diversification plans,” position to contribute to food security.
says de Bruin. “Even though the group
has expanded its expertise to include “Africa has the potential to be the food
emerging materials like lithium, graphite, basket of the world, and this could be the
phosphates and potash, the group’s po- start of that process.”
tential has expanded far beyond metals
and minerals.” Through another recent acquisition,
DRA strengthened its professional ma-
De Bruin believes that DRA has the rine capability to offer port and harbour
skills and expertise to develop complex expertise.
agricultural, water and energy projects,
which also present great opportunities. As part of its expansion strategy the
African engineering expert is also build-
“Fundamentally, the world needs food, ing on its capabilities to add to water se-
water and energy; everything else flows curity. To this end, DRA plans to source
from that.” the very best water engineers for its
business and has already begun discus-
According to De Bruin, the mining in- sions with some of the best technical wa-
dustry can play a vital role in driving posi- ter experts, says de Bruin. The group is
PAGE 46 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Rangold’s Nzoro 22MW hydropower project
acutely aware of the scarcity of usable, “It is unlikely that that diesel-generated energy skills of our non-traditional com-
clean water across the globe and will aim power would ever disappear – especially petitors to continue to boost those skills,”
to provide both mining and non-mining in Africa and Australia” says de Bruin. says de Bruin.
clients with progressive solutions to mini- “Clients are keen to lessen dependen-
mise pollution of water resources. cies on traditional fuel sources, and as “Our main challenge lies in navigating
we develop solutions to challenges, we political and cross-border issues when
“Through our knowledge we will unlock great potential.” building projects which will serve more
are able to add value in the than one country.”
management of water,” says de Aware of the opportunity, DRA has es-
Bruin. “Effective water manage- tablished an in-house energy business to De Bruin believes that an engineer-
ment is essential throughout the build on its strong reputation in electrical ing company that can work on a mining
entire process, from the plan- engineering. project, followed by associated projects
ning of projects, to the transport, in agriculture, energy and water, will con-
treatment and distribution of the “We are establishing an energy busi- tribute to the sustainable development of
resource; each area fraught with ness and have begun to acquire the any region.
complexities and requiring differ-
ent solutions.” The early stages of the Tongaat Hulett Factory expansion project in Xinavane, Mozambique
Committed to enhance food
security and sustainable water
supply, DRA also acknowledges
the importance of reliable power
supply to continued economic
and social development, espe-
cially in emerging markets.
Therefore, another pillar in the
group’s expansion strategy is to
focus on renewable energy.
“Renewable energy is becom-
ing increasingly popular in the
mining sector and we are looking
at a number of renewable energy
solutions for mining clients, par-
ticularly hybrid solutions,” says
de Bruin.
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 47
JV partner to revive Bongou
Predictive Discovery 90 targets within 20km of the as string geochemical anomalies. The
Ltd is on the cusp Bongou resource and last best intercept from a recent drilling pro-
gramme was 20m @ 10.5/t gold from
of landing a JV partner year announced an explora- 38m, including 1m @ 144.5g/t gold and
1m @ 21.4g/t gold.
for its Bongou gold pro- tion target of 9.4-10.4mt @
“We’ve only drilled along a 2km strike
ject in Burkina Faso, 1.5-1.7 g/t gold for 460,000- length and we’ve only released results
from three lines so far, but the results are
according to managing 560,000oz for those within very interesting,” Roberts said.
director Paul Roberts. 10km. “I wouldn’t say we entirely understand
this mineralisation, but we do know it’s
Bongou hosts a Bongou is the most ad- hosted within a shear zone that certainly
has substantial strike length. There’s
resource of 1.13mt vanced project in Predictive’s width, there’s grade and there’s visible
gold in one of the higher-grade intervals
@ 3.75 g/t gold for portfolio and the company is we panned out of rock chips.”
136,000oz (based on eyeing off a potential heap More results from Boundiali were due
at the time of print and Predictive is plan-
a 2 g/t cut-off) but has Paul Roberts leach operation. Test work on ning a follow-up diamond drilling pro-
remained largely dor- the Dave prospect returned gramme for later in the quarter.
mant since Predictive’s 89% gold recoveries from Work at Boundiali and Kokoumbo is
funded by UK-based private group Toro
last drilling campaign ended in July 2015. rock chip samples. Gold Ltd, which is earning up to 65% in-
terest in both projects.
But with investor sentiment returning “It’s certainly a very attractive starter
– Michael Washbourne
to West African gold projects, Predictive pit and below that we believe there’s sub-
is keen to revive its plans for Bongou, stantial potential in the mineralised gran-
including a scoping study, but Roberts ite at depth,” Roberts said.
accepts that a JV partner is needed to Predictive’s focus for the past 12
make that happen. months has been in Cote d’Ivoire where
“We’re in discussions with a very ca- the company has several promising pro-
pable party right now, so hopefully that jects, including Boundiali, Kokoumbo
will come to fruition over the next month and Bobosso.
or two,” Roberts told Africa Down Under. Boundiali has attracted the most inter-
Predictive has identified more than est, with three key prospects discovered
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 49
AFRICA DOWN UNDER REVIEW
Nigeria turns to ‘hidden gem’
Nigeria is looking to mining as a poten- course, mining comes say Nigeria is not a mining
tial saviour for its economy.
Propped up for several decades by the in strongly as one of the nation,” Fayemi said.
oil and gas sector, Nigeria has become
Africa’s economic leader but has flagged key areas to focus with “We’ve never done well in
a move away from dependence on hy-
drocarbons and into a greater focus on regards to our diversifi- taking advantage of devel-
hard rock exploitation.
cation plans.” oping our mineral prospec-
Mining contributed about 4% to Nige-
ria’s GDP during the 1960s, however, it Nigeria’s hopes for a tivity into concrete projects.
has slipped to just 0.33% in recent times.
recognised mining sec- There have been some
With oil prices floundering, Nigerian
Minister for Solid Minerals Kayode Fay- tor were boosted earlier deposits that have been
emi said it was time for the rejuvenated
mining sector to play a bigger role in the this year with the dis- developed and Australian
country’s future growth.
covery of a rare nickel companies are quite active
“Given what is happening to the oil and
gas market around the world, we’ve lost occurrence by Australi- on the ground in working up
about two-thirds of our revenue, from a
top price of over $US100 per barrel of an-based private group Kayode Fayemi some of those key minerals
oil to what is hovering today between Comet Minerals Ltd. which are beginning to gain
$US47-49 per barrel,” Fayemi told Africa
Down Under. Other minerals attention, but by and large
“Clearly Nigeria needs to be look- known to be in abundance in Nigeria in- we haven’t done very well.
ing at other areas in order to generate
more resources for our economy. Of clude coal, lead-zinc, iron ore and gold, “You may say Nigeria is no Ghana,
however, there are no recognised miners Nigeria is also no South Africa yet, but
or explorers currently based in the coun- Nigeria may be that hidden gem you are
try. looking forward to in terms of completely
Fayemi acknowledged his country developing a mining sector.”
still had a long way to go before Nigeria Fayemi, who was appointed to his cur-
would be declared a genuine mining na- rent role last October, said security re-
tion. mained a concern for potential foreign
“Even though we have the right regula- investors, but his country was working
tory regime and Nigeria is really a well- hard to reduce all related risks.
endowed, mineral-rich country, it’s fair to – Michael Washbourne
PAGE 50 OCTOBER 2016 AUSTRALIA’S PAYDIRT
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