Success is simple at Sovereign
Graphite hopeful Sovereign Metals ing completed, Sovereign rial formed above primary
Ltd has taken enormous confidence announced a series of en- deposits. These types of
from the first batch of metallurgical test couraging hand auger drill- deposits have the poten-
work on its Malingunde project in Malawi. ing results, including best tial for significantly lower
hits of 8m @ 13.8% TGC, capital and operational
On the opening day of Africa Down 7m @ 18.3% TGC, 9m @ costs than hard rock
Under, Sovereign announced recent test 18.8% TGC, 9m @ 16.1% graphite deposits.”
work had achieved a combined concen- TGC, 7m @ 11.3% TGC,
trate across all flake size fractions grad- 10m @ 16.3% TGC and 8m Sovereign holds about
ing 97.3% TGC, with about 50% in the @ 17.9% TGC. 4,000sq km of prospec-
medium, large and jumbo flake size frac- tive tenure in Malawi –
tions (above 149 microns). Sovereign was awaiting Julian Stephens believed to be the larg-
the results of a short dia- est graphite package in
Concentrates were produced using mond drilling campaign at Africa – and Malingunde
a simple flowsheet that incorporates a the time of print. A 6,000m aircore drilling is within 20km of key rail and power fa-
scrubber instead of a primary crusher programme is slated to begin this month cilities.
and mill, offering potential capital and before the next series of metallurgical Meanwhile, the company has tempo-
operational cost benefits. test work is undertaken in early 2017. rarily put its other Malawian graphite pro-
ject, Duwi, on hold while it completes the
“Many graphite projects take many “We have shown that this deposit has next phase of work at Malingunde.
dozens or even hundreds of flotation approximately 20-30m thicknesses from A recent scoping study found Duwi
tests to achieve a good result and some surface of soft saprolite,” Stephens said. (86mt @ 7.1% TGC for 6.13mt) could
don’t even achieve a result,” Sovereign produce 110,000 tpa of graphite concen-
managing director Julian Stephens said. “Why is this important? Saprolite is trates over a minimum 20-year mine life
free dig, so no drill and blast required, for an initial capex of $US112.4 million.
“Our very first flotation test produced very cheap mining and very low strip ra-
some fantastic metallurgical results… tio. It’s also thick and it’s consistent, large – Michael Washbourne
we’ve got all the ingredients for a low and high-grade.
cost operation.”
“Saprolite is the soft, weathered mate-
Prior to the metallurgical test work be-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 51
SPONSORED FEATURE
Communication the key to
African development
The Husab uranium project in Namibia – one of the largest resources projects currently
under development in Africa – is being built by Amec Foster Wheeler
Amec Foster Wheeler has a long his- more competitive environment and the also been reducing their numbers which
tory of delivering complex projects cost of services has become a critical has enabled the industry to retain some
across Africa, including the current EPCM criteria for our customers. At the same of the best talent available. Really, it’s
contract for one of the largest uranium time, all of the service industries have a double win for the customer – lower
projects in the world – Husab in Namibia. costs and better quality.
Amec Foster Wheeler’s director of mining and
The company’s African mining capabil- metals for the Asia, Middle East, Africa and We’ve definitely seen less juniors oper-
ity was bolstered in November 2014 by Southern Europe region, Malcolm Brown ating in this space due to lack of funding.
the acquisition of MDM Engineering, a We’re left with companies who are more
minerals process engineering and pro- committed to developing and some that
ject management company, with more have been taken over by foreign inves-
than 24 years’ experience in delivering tors. The result is we now have compa-
mining projects around the globe. MDM nies more financially capable of getting
is currently delivering a number of pro- projects into production.
jects across Africa including an EPC for
Petra Diamond Ltd’s Cullinan mine in Africa has perhaps failed to pro-
South Africa. The two companies are duce as many world-class projects
now fully integrated, with MDM residing as was initially hoped at the start of
in Amec Foster Wheeler’s mining offices the mining boom. Why was this and
in Bryanston, Johannesburg. what lessons have been learnt from
that inability to transform potential
Paydirt recently interviewed Amec into reality?
Foster Wheeler’s director of mining and
metals for the Asia, Middle East, Africa Irrespective of where it is, a large
and Southern Europe region, Malcolm project requires a large investment of
Brown, on challenges faced in delivering capital and a high level of certainty. De-
projects in Africa and how to overcome veloping world-class projects generally
them in the current market. comes with world-class sized budgets
and for companies to commit such large
It has been a tumultuous period for amounts of money they require greater
the resources sector globally. How do long-term political and cost stability.
you feel the sector has changed over
the last five years? Most larger projects also require sub-
stantial infrastructure. Infrastructure in
With fewer projects going ahead, re- large parts of Africa is immature and un-
duction in workload has created a much able to support these developments; this
PAGE 52 OCTOBER 2016 AUSTRALIA’S PAYDIRT
“Above all, the ones who have succeeded
are the ones that have taken the time to
build the important local relationships.
project site is complex due to its brown- What advice do you give to clients
fields nature and the fact it is being built regarding issues such as local con-
within an operating plant that is over 100 tent requirements and downstream
years old. This has meant that the exca- processing and beneficiation require-
vations are exposing services, old equip- ments?
ment, rock outcrops and the tailings de-
posits from years of operation which is Owners need to develop good rela-
not without its challenges but work is still tionships with the Government and truly
progressing well. understand what their drivers are, what
they’re trying to achieve and how this de-
What are the key points to success- sire can be met through the project. If, at
ful project development in Africa? the end of the day, the economics don’t
stack up, it’s always going to be a chal-
I’d have to say certainty, strong gov- lenge.
ernment relationships, a willingness to
work with local communities and utilising Owners must always be involving the
local expertise. Understanding all of the local communities and industries as
logistics is vital in terms of getting materi- much as they can as it’s important they
als into country. Above all, the ones who see some benefit flowing back into the
have succeeded are the ones that have local populace, via direct employment
taken the time to build the important local or via supporting local industries. The
relationships. ‘social licence to operate’ is still critical
factor in the long-term success of new
The infrastructure gap remains one mining projects.
of the biggest challenges in African
means companies need to think about resources development. Is it possible
building this infrastructure themselves, at to overcome the infrastructure gap?
significantly greater capital cost. How does a company such as Amec
Foster Wheeler
Amec Foster Wheeler has been in- and its clients
volved in a number of the few world- manage that gap?
class projects being built in Africa.
How and why have these projects Owners will have
succeeded? to work closely with
the Government to
We have been delivering the EPCM build that infrastruc-
contract for the Husab uranium project ture, whether it is
since 2012. This project has a significant rail, roads, ports or
amount of Chinese investment, with the power station. But
owner committed to the project to feed firstly, you need to
its downstream power stations. The mo- work out whether
tivation behind such a large project go- the economics add
ing ahead at the time wasn’t standalone up after adding
economics and we’ve seen a number that infrastructure.
of Chinese companies making similar This is no different
investments in order to secure supply. to remote projects
Engaging the local Namibian workforce in Australia such
has been very important at Husab – at as the Roy Hill iron
peak we’ve had over 6,000 local workers ore mine. It also de-
on site. pends very much
on the commodity.
We are also delivering the EPC con- The precious met-
tract for Petra Diamonds – a key reason als such as gold,
this project has been so successful for diamonds, etc have
us is our relationship with the customer, less infrastructure
enabling total transparency and strong demands whereas
collaboration around our customer’s pri- the bulk commodi-
or learnings. We’ve been able to make ties will always re-
good use of these to achieve the required quire significant in-
savings on capital cost and opex. The frastructure.
There are other
contentious is-
sues remaining
on the continent.
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 53
AFRICA DOWN UNDER REVIEW
There was no shortage of media spotlight on Africa Down Under 2016 at the Pan Pacific Hotel in Perth.
Veteran mining identity Hugh Morgan used the conference to tell the world about Comet Minerals Ltd’s unique nickel
find in Nigeria, while Acacia Mining plc chief executive Brad Gordon’s first appearance was well received.
However, one of the stars of the show was Kenya’s newly appointed Cabinet Secretary for Mining, Hon Dan Kazungu.
Kazungu’s lively presentation in the first session was full of enthusiasm and optimism, which is a good way to describe
the mood at Africa Down Under 2016.
While commodity markets remain volatile and mining companies prudent with their cash, there is no doubt sentiment in
mining is changing for the better and investors are once again warming to opportunities on the continent.
In among the serious capacity-building discussions and forums, events such as the Ministerial Dinner at the State Re-
ception Centre, Kings Park, and the annual Africa Down Under Cup were showcased during ‘Africa Week’.
And, once again Bryan Charlton from Picture This Photography, was on hand to capture all aspects of the conference
from every angle.
PAGE 54 OCTOBER 2016 AUSTRALIA’S PAYDIRT
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 55
AFRICA DOWN UNDER REVIEW
Miners can benefit from a fair go
Mining companies must embrace ment commitments and ensure local
the notion of “fair mined” miner-
als if they are to satisfy increasing de- content requirements – both procure-
mands for transparent supply chains
from customers, a prominent African ment and employment and training –
law firm said at Africa Down Under.
are adhered to.
The ethical nature of mining has
been brought into prominence over “Countries are keen to make sure
the last decade following a string of
revelations regarding “conflict min- companies commit to a specific time
erals”; metal production from which
profits have been used to fund armed schedule for development,” Montem-
activity on the African continent.
Diamonds, gold and tantalum have bault said.
been the most queried minerals and
Herbert Smith Freehills partner Ber- Human rights is another area in
trand Montembault said end-users
such as consumer companies like which companies are now held ac-
high-end jewellers, Apple and Tesla
were placing increasing pressure on countable.
miners to prove their minerals had
been ethically sourced. However, “Human rights is now a critical is-
this trend represented an opportunity for
mining in Africa. sue,” Montembault said. “We have
“Final customers are more and more completely changed the paradigm of
interested in getting fair mined minerals
and responsible mining will play an im- human rights. It used to be responsi-
portant role in the future of the industry,”
Montembault said. “This is a real oppor- bility of the states but there is now an
tunity for the mining business in Africa.
By securing responsible supply chains, obligation for companies to ensure hu-
for example, miners can gain a competi-
tive advantage.” man rights are not breached. And hard
Montembault admitted the issues of sanctions can follow for failure to do
responsible mining and gaining a social
licence to operate were impossible to so.”
define from a legal perspective but re-
mained among the top 10 risks identified Bertrand Montembault Land rights were another vexed area
by mining and metals companies.
of the social licence debate with many
“It is not a contract or legal document.
It is about acceptability by the stakehold- of social licence also expanded to in- African countries having incomplete laws
ers; that the project is seen as legitimate,
credible and creating trust.” clude economic, environmental and so- or laws which are not enforced.
The last 15 years has seen the scope cial considerations. “Managing land rights may prove very
“In the past, the main constraints to challenging but it has been established
project development were negotiation that miners need free, prior and informed
with government and access to capital consent from all local communities, not
but now there are environmental and so- just consultation from indigenous com-
cial issues which have to be taken into munities.”
context. You have to take care of the so- Above all, Montembault said, it was
cial licence during the whole life of the important to understand the individual
project from exploration to closure of the local concerns of host communities and
mine and it should never be taken for governments.
granted.” “Understand what is locally relevant
Montembault said miners had to en- or important. Once you have done that
sure their contracts with governments there are various legal tools to use to en-
were balanced otherwise they would be sure you have a responsible mine. There
vulnerable to review at later dates. are a number of global standards avail-
“You need to have fair deals if you want able, not just relating to responsible min-
the deal not to be challenged during re- ing but that relate to parts of responsible
visitation exercises,” he said. mining.”
Governments are also increasingly in- – Dominic Piper
sistent that companies stick to develop-
PAGE 56 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Sissingue on track for Perseus
Perseus Mining Ltd is on track to pro- “[Sissingue] gives us a very good flow Jeff Quartermaine
duce first gold from Sissingue in Cote
d’Ivoire in late 2017. into the next project, which is the Yaoure project. The future of the Edikan mine is
particularly strong,” Quartermaine said.
Just days before Africa Down Under, project. In a sense the Sissingue project
the company received full credit com- – Mark Andrews
mittee approval for a $US60 million debt is part one of a two-part strategy for de-
facility from lenders Macquarie Bank
and BNP Paribas for the development of veloping our business in Cote d’Ivoire,”
Sissingue.
he said.
Earlier in the year, a $102 million eq-
uity raising allowed Perseus to start de- While Cote
velopment activities at Sissingue which
is costing $US100 million to build. d’Ivoire is a country
The project debt facility with Macquar- Perseus is expand-
ie and BNP Paribas is expected to be
available for draw-down in the December ing into, Ghana,
quarter.
namely through Edi-
Compared to the 220,000 ozpa Edi-
kan gold mine Ghana, Sissingue is a kan, has been the
much smaller operation, however, its im-
portance to Perseus’ ambitions to be a pillar of growth for
500,000 ozpa producer 2021 is not being
underestimated. the company.
Sissingue is expected to deliver 75,000 Quartermaine ad-
ozpa at AISC of $US632/oz over five
years for Perseus. mits it has not been
It will be the company’s second pro- all smooth sailing
ducing asset, but first in Cote d’Ivoire,
where Perseus is fixed on developing a at Edikan, and with
potentially much larger scale project at
Yaoure. another $20 million
Yaoure was the jewel in the crown in to be invested in
the takeover of London-listed Amara
Mining earlier this year. the mine in FY2017,
A DFS on Yaoure is expected to be AISC – $US1,285-
completed by the June 2017 quarter,
while a 42,000m drilling programme is $US1,595/oz – is
set to begin in the near term.
expected to be high
Perseus is confident Yaoure will be a
low-cost operation and is preparing its for the December
team at Sissingue to move.
2016 half, but is ex-
“As soon as Sissingue is finished being
developed, we will move our team to the pected to improve
Yaoure project,” Perseus chief executive
Jeff Quartermaine said. thereafter.
“Sissingue is a smaller operation lo- “As we move into
cated in the north of Cote d’Ivoire. We
commenced developed of that project the second half of
earlier of this year and I am very happy
to say that things are moving along well the year our pro-
there. That project is more or less on rails
at the present time and we expect to see duction levels go
first gold coming from there in Decem-
ber next year. It is a fairly short mine life, up, our costs come
but it is reasonably high grade [average
2.4 g/t] and consistent production costs. down, our margin
That also means we have a good oppor-
tunity to generate cash, the development improves and our
schedule is well set, things are moving
along according to plan, exactly as we business is look-
would have expected.
ing very strong and
that continues in the
rest of the life of the
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 57
AFRICA DOWN UNDER REVIEW
Shifting sands delight Strandline
When Strandline Resources Ltd financed, we’ll certainly have projects at “We’re looking at a nice, cheap, quick
merged with Tom Eadie’s Jacana the feasibility stage and we might even production scenario there,” Eadie said.
Minerals Ltd last October, the company be in production at Fungoni,” Eadie told “We’re only 30km from the port of Dar es
was struggling for funding and only had Africa Down Under in what was his last Salam, so we think it’s got an excellent
a very small resource in Tanzania on its company presentation before stepping opportunity to make a bit of money, even
books. down as Strandline’s managing director at today’s prices.”
on September 19.
In the background, there was very lit- A 5,000m drilling campaign was ongo-
tle love for the mineral sands sector as “We’re in pretty good shape to prove ing at Tanga South, comprising the Tajiri
prices for zircon, rutile and ilmenite con- up these resources instead of just sit- (19mt @ 5.1% heavy minerals) and Tajiri
tinued to slide. ting on them year after year. We’re very North (40mt @ 3% heavy minerals) re-
excited about having a really aggressive sources, at the time of print.
Fast forward 12 months and a $6.6 mil- exploration programme in play right now
lion equity raising underwritten by new and getting good results.” Eadie said the outlook for mineral
major shareholder Tembo Capital has sands was encouraging despite prices
boosted Strandline’s cash position and Strandline recently concluded a brief remaining below modest levels.
the company now has three growing re- drilling programme at Fungoni, which
sources to spruik. hosts an indicated resource of 11mt @ “Green shoots didn’t show in mineral
3.1% heavy minerals and an inferred re- sands quite as early as they did in some
Mineral sands prices are also on the source of 3mt @ 1.7% heavy minerals. other commodities and it’s really only
way up and while Strandline is yet to see been in the last six months prices have
a lift in market value, key players such as A scoping study was completed on a increased,” he said.
Iluka Resources Ltd, Rio Tinto Ltd and high-grade shallow portion (2.4mt @
Base Resources Ltd have enjoyed posi- 8.4% heavy minerals containing 22% zir- “There doesn’t seem to be any good
tive runs. con, 4% rutile and 44% ilmenite, includ- low-cost discoveries around the world,
ing 58% titanium dioxide) of the Fungoni so we think the supply-demand factors
Eadie expects his own company will resource earlier this year, putting it in the are going to be good for mineral sands
have its time in the sun within the next frame to be Strandline’s first producing prices, especially titanium, in the next
12 months as prices continue to recover. asset. few years.”
“By this time next year we’ll still be well – Michael Washbourne
PAGE 58 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Bannerman leaps to the front
Bannerman Resources Ltd is at the derestimated its nuclear If Munro’s assumptions
head of the queue for the “inevitable”
turnaround in the uranium price, accord- ambitions and current prove correct, Banner-
ing to managing director Brandon Munro.
stockpiles and production man’s Etango project in
Sentiment towards uranium has waned
since the Fukushima incident in 2011, but levels will fall well short of Namibia could be the one
Munro and his team have identified six
potential catalysts which will soon posi- the long-term clean energy of first undeveloped urani-
tively impact prices for yellowcake.
targets. um assets to enter produc-
Those include the restart of several
nuclear reactors in Japan, geopolitical “China is doubling its tion to meet that demand.
disruption in Kazakhstan and Niger and
secondary demand increases as China current nuclear demand An optimised DFS on
recommences stockpiling and India en-
ters the market. over the next five years Etango was completed late
Speaking at Africa Down Under on the and then doubling that last year, flagging produc-
six-month anniversary of his return to
Bannerman, Munro said now was a com- again by 2030,” Munro tion of 7.2 mlbpa over an
pelling time to invest in uranium despite
the metal trading at 10-year lows. said. “Now that seems like Brandon Munro initial 15.7 years of mine
a big number and it’s often life and generating peak
“The shape of the [pricing] curve belies
the fact the nuclear industry is experienc- called ambitious and so annual free cash flow of
ing an unprecedented level of growth
and we have a well accepted, well ac- forth, however, if you look at what those $US392 million.
knowledged supply shortfall looming in
2020/2021,” Munro said. numbers represent relative to China’s Bannerman has spent the past two
“The dynamics, once you understand clean energy commitment of 20% by years constructing and operating a heap
them as we do, point to not only a correc-
tion but a very abrupt price correction.” 2030, those ambitious numbers really leach demonstration plant at Etango, ef-
According to Munro, China has un- aren’t quite so ambitious after all. fectively de-risking the project and posi-
“If China hits the top end of its guid- tioning it for development when funding
ance by 2030, which is 150GW of nucle- is secured.
ar power, that’s about 150 nuclear reac- “There’s something really fantastic
tors, which only meets about 5% of the about our ore,” Munro said. “It leaches
clean energy target of 20%. That gap of very, very well, it’s incredibly stable and
15% is partly made up by hydro inven- simple from a mineralogy point of view
tory…however, with only 10% of today’s and what we’ve seen from our demon-
Chinese energy requirements met by stration plant is we can achieve a 93%
clean energy, we don’t see how hydro- extraction in only 20 days.”
renewables and gas can scale in China – Michael Washbourne
to the extent required to meet that 20%.”
Minbos flags lower capex, opex
Initial bulk sample test Stef Weber said the com- right, developing [Cacata] will demon-
work has flagged lower strate the attractiveness of Angola, spe-
capital and operating pany was encouraged by cifically when it comes to logistics and
costs for Minbos Re- infrastructure, and that will unlock the
sources Ltd’s Cabinda the findings to date. value of the potential of the remainder of
phosphate project in An- the Cabinda resource,” Weber said.
gola. “If the test work on the
Minbos could receive a cash injection
Minbos collected sam- DSO option is successful, of about $7 million from almost 700 mil-
ples of 8t and 10t from lion options which are exercisable at 1c/
the central and south- clearly that will dramati- share on December 30. Weber said that
ern portions of the high- would be more than enough funding to
grade Cacata deposit to cally reduce our capital carry the company through to the com-
assess the viability of pletion of the BFS and early stages of
two treatment options as and operating costs and development at Cacata.
part of a trade-off study leading into the
BFS. also our lead times,” We- “The timing of the BFS will be deter-
mined once we complete phase one of
A 5t sample of DSO grade material ber told Africa Down Un- the trade-off studies,” Weber said.
was pilot-tested by equipment suppli-
ers in the USA, while a 10t “scrub and der. “We’ve got a busy programme ahead
screen” sample was analysed and tested of us between now and into 2017.”
by Mintek in South Africa. Stef Weber “We are getting in-
creasingly confident that Minbos has also signed a LOI for ac-
The favoured treatment route will be cess to 800,000 tpa at the new Cabin-
incorporated into the upcoming BFS. this will be a low capex da port, now under construction, about
60km by road from Cacata.
Final test work results are due in De- and low opex project.”
cember, but Minbos chief financial officer – Michael Washbourne
Weber said the company was aiming
to produce a 32-33% rock phosphate
product, which is in line with Moroccan
benchmark pricing.
Minbos has identified Cacata (resource
of 15.2mt @ 24.5% P2O5) as the first
cab off the rank at Cabinda (391.3mt @
9.2% P2O5), but Weber said it was only
the start of a larger development picture.
“Although it’s a great project in its own
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 59
AFRICA DOWN UNDER REVIEW
Wet fails to stall Vital push
Past drilling success cause we’ve got some within the tenement that is located on
has spurred Vital Met- fantastic drill results that the prolific Markoye Fault Corridor. There
als Ltd to endure the pain we want to follow up and were also extensions along the Kollo
see what we’ve got,” he trend to the south and east and recently,
of drilling in the wet sea- said. as part of regional mapping on Kollo’s
Eastern Boundary shear, geologists
son as it prepares to re- Results from diamond have discovered two, 150m-long artisa-
drilling are expected nal workings near the Nabenia zinc pros-
lease a pipeline of news shortly, and Strizek added pect.
that would mark the start
from its Kollo gold project of a pipeline of news and In addition, there are drill-ready tar-
valuable information to in- gets at the Boungou South gold prospect
in Burkina Faso. crease the understanding where first pass RC drill results returned
of the extent of gold min- 5m @ 5.59g/t from 31m, including 1m @
The company is cur- Mark Strizek eralisation in the project. 24.97g/t from 35m, a 600m gold-in-soil
anomaly at the ADB prospect and zinc
rently ramping up a Previous drilling at Kollo prospects.
had returned intercepts of
2,000m RC drill pro- 5m @ 60.36g/t from 75m, including 2m “We’ve almost got too much on our
@ 128.5g/t and 44m @ 6.39g/t from 8m. plate when you start looking at the op-
gramme, following the While the Kollo project has generated portunities that exist in front of us,”
results right from the start, Strizek said Strizek said.
recently completed this success had perhaps precluded the
exploration of the rest of the tenement, For now, the focus remains on Kollo
first phase, eight-hole which stretches 400sq km. and preparing for the flow of information
“The first hole from the get-go had to come from the drill campaign.
diamond campaign de- some very good grades,” he said. “How-
ever, maybe because of that success we “We see Kollo as having some very,
signed to test depth ex- haven’t had a real good opportunity to very good growth potential and we be-
look at what we’ve got and the more we lieve we’ve got a good tenement package
tensions to known gold mineralisation. look, the more we seem to be finding.” with a strong pipeline of results and gold
Strizek said there were encouraging targets that can be generated from that,”
The drill campaign firmly places Vi- signs of gold mineralisation elsewhere Strizek said.
tal back in Burkina Faso with a scoping – Rebecca Lawson
study under way to investigate the early-
stage development potential of the Kollo
project. Vital recently raised $1.02 million
with drilling contractor Ausdrill Ltd as a
cornerstone investor.
Managing director Mark Strizek told
delegates at Africa Down Under that Kol-
lo’s location in an area with multi-million
ounce potential, combined with the right
rocks and structures, was driving the
team to push through the wet season.
“We think it’s well worth the pain be-
Burkina more than just gold
Gold may be the dominant mineral in and 20 g/t silver) and Tambo (19mt @ province, Yeou in Sanmatenga and Na-
Burkina Faso, but Alfa Oumar Dissa 52% manganese). tougou in Tapoa.”
wants the rest of the world to know his
country is prospective for more than just “Burkina has established a long list With interest for gold across the key
the precious metal. of mining outcrops and other signs of global markets still high, Dissa was hope-
mineralisation largely located within the ful his country’s mining sector would be
Burkina Faso’s Minister of Energy, Birimian volcano-sedimentary belts,” subject to more foreign investment over
Mines and Quarries told Africa Down Un- Dissa said. the coming years.
der that gold “can be found almost eve-
rywhere on the national territory”, with Despite the Minister’s ambitions for the “Burkina Faso has a mining code de-
several Australian-based companies, in- aforementioned minerals, gold is unlikely signed to favour and protect foreign in-
cluding Predictive Discovery Ltd, Gryph- to be unseated as the mineral of choice vestment,” Dissa said.
on Minerals Ltd, West African Resources for those looking at Burkina Faso as a
Ltd and Ampella Mining, pouncing on potential investment destination. “This mining code, adopted in July
available ground over the last decade. 2015, aims at facilitating the establish-
Ten major industrial gold mines have ment of mining companies in Burkina
However, Dissa is keen for his country been established in the last decade, in- Faso, while guaranteeing a competitive-
to be recognised for more than just its cluding two in 2016, namely Endeavour ness through several regulatory and in-
gold potential, highlighting its prospec- Mining Corp’s Karma and Roxgold Inc’s stitutional measures.
tivity for nickel, zinc, lead, manganese, Yaramoko operations.
titanium, vanadium, phosphate and lime- “The code makes provision for tax and
stone. “One should also note the ongoing customs advantages favourable for in-
construction of the industrial gold mine of vestment, the creation of mining funds to
Some of the biggest non-gold deposits Hounde, which will be the biggest mine in promote community development, mine
in Burkina Faso include Bonga (20mt @ Burkina, and that of Kiaka,” Dissa said. closure and rehabilitation, and securing
1.2% nickel), Aloub-Djouana (100mt @ artisanal mining sites and training in the
20% P2O5), Perkoa (6.9mt @ 18% zinc “There are many advanced projects, geological science.”
including the gold deposits of Bombore,
PAGE 60 OCTOBER 2016 AUSTRALIA’S PAYDIRT Mankarga and Balogo in the Nahouri – Michael Washbourne
Tiger chases cobalt tale
Tiger Resources Ltd is intermediate product as
on track to begin ramp- a first step.
ing up copper production at
its Kipoi project as it con- The estimated capital
tinues to push ahead with cost for a 1,000 tpa cir-
plans to produce cobalt. cuit is $US22 million.
The company is nearing “Capital is the key for
the end of a debottleneck- us,” Griffith said.
ing programme at the sol-
vent extraction and elec- In July, Tiger drew
trowinning (SXEW) plant at down $143 million of a
Kipoi, located in the Demo- total $162 million facility.
cratic Republic of Congo,
with copper production set “We’re looking at co-
to increase by some 30% balt not being a pana-
to 32,500 tpa. cea but something that
will add significant value
Managing director Mi- to the company’s op-
chael Griffiths told Africa eration over the life of
Down Under the company mine.”
expected to have the tail-
ings storage facility (TSF) The cobalt metallurgi-
under way before this cur- cal testwork is expected
rent wet season, due in to be completed by De-
October. The TSF is part of cember 2016.
the tank leach where steel
erection is currently in pro- – Rebecca Lawson
gress.
Michael Griffiths
“Its progressing exceedingly well and
its all due for completion by the end of tion circuit worth-
November,” Griffiths said. while.
Tiger is currently reprocessing stock- “Clearly at cur-
piles at Kipoi. In the 2016 June quarter, rent cobalt prices,
technical issues dented production, with it’s looking pretty at-
lower than expected copper cathode re- tractive.”
covery of 5,541t from the heap leach op-
eration. AISC were US$1.57/lb. The price of co-
balt is currently
“The issues that mining can have can about $US12.25/lb.
attack you from anywhere,” Griffiths The commodity is a
said. “What you need to do is be nimble critical raw material
enough to be able to find out the prob- input for lithium bat-
lems very quickly and do your best to teries.
recover from that. I’m happy to say that
we’ve managed to recover the copper Tiger said a re-
that closed off on us prematurely.” cent study by in-
dependent engi-
Heap leach recoveries started improv- neering company
ing from mid-May onwards and for the Mintrex Pty Ltd
month of June Kipoi produced 2,203t found there was
of copper cathode. However, Tiger has sufficient cobalt
had to reduce its annual 2016 production potential within the
guidance from 26,000t to 28,000t of cop- current Kipoi cop-
per cathode to 25,000t to 26,500t. per leach circuit to
warrant further in-
The potential production of cobalt at vestigation.
Kipoi could be another revenue source
for Tiger, which recently decided to push Griffith said the
ahead with a metallurgical testwork pro- study identified two
gramme to confirm process flow sheets cobalt processing
and firm up capital and operating costs. methods, with Min-
trex recommending
“We have a latent amount of cobalt in development of a
our system,” Griffiths said. “Until recent cobalt hydroxide cir-
times the cobalt price hasn’t been suffi- cuit that produces
cient to make putting this into the produc- a cobalt hydroxide
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 61
AFRICA DOWN UNDER REVIEW
Frances impressed by Ethiopia
Side functions have become a popular attraction for Africa Down Under delegates. Paydirt editor Dominic Piper (left) convened a
special lunch time discussion on investing in Ethiopia. Panel members included Kefi head of operations in Ethiopia Wayne Nicoletto
(second left), Embassy of Ethiopia, minister counsellor for economic diplomacy, Jemal Beker (second right), and Dakota managing
director David Frances
Having forged an impressive career in then finding someone in the DRC is quite and hopefully we are creating a template
the DRC leading the Mawson West difficult because generally they are in Eu- for future mines in the country,” Nicoletto
Ltd team onto the TSX with a market cap rope. So it is a very difficult place to do said.
of $250 million, David Frances is well business compared to what I have seen
aware of the intricacies of operating in in Ethiopia so far.” The Government has shown a pen-
Africa. chant for backing industry and has com-
Additionally, accessing pre-competi- mitted to spending $20 million to develop
Now involved with lithium-hopeful Da- tive data in Ethiopia is achievable, how- infrastructure in support of the 100,000
kota Minerals Ltd, Frances is scouring ever, this is an area which can be im- ozpa Tulu Kapi gold play, which will give
the globe for opportunities in the space proved, according to Nicoletto. it a 20% stake at project level.
and Ethiopia is showing some appeal as
a destination to do business. “It is not electronic, so it is a bit of a While the Government has shown a
slog but all the information is there. We desire to support mining, Nicoletto said
Frances said he was encouraged by have done that and continue to improve the investment landscape in the country
how well the country was organised. our database but you can go to the ge- had changed slightly.
ological society and find information,”
His comments came during a special Nicoletto said. “The banks themselves are stepping
lunch time discussion in which Paydirt away but what we are finding is that eq-
editor Dominic Piper was also joined Nicoletto’s Kefi is developing one of the uity investors and non-banking financing
by Kefi Minerals plc head of operations few commercial mines in Ethiopia and it institutions are coming, so they are more
in Ethiopia, Wayne Nicoletto, Embassy is the country’s inexperience in hosting the people that we are tapping into,” he
of Ethiopia, minister counsellor for eco- such projects which may be holding in- said.
nomic diplomacy, Jemal Beker. vestors back from exploiting the coun-
try’s mineral resources. “The Development Bank of Ethiopia
“If you are going to talk to people to has committed to $40 million for or in-
find out things – how to peg tenements However, Nicoletto said investors were vested in the project, so from inside the
or have to do anything at all – you can warming to Ethiopia and hoped Kefi’s country we have a lot of support. Exter-
go to the Mines Ministry for an address part in bringing the Tulu Kapi gold project nally, it is more the non-banking financ-
and the Mines Minister is at the address,” on stream would help set the country up ing institutions and more the equity mar-
Frances said. “You can speak to them to prosper from mining activities. kets starting to open up.”
about these things, whereas places like
the DRC, sometimes you are not quite “We are learning along the way with – Mark Andrews
sure who you are meant to speak to and the country on how to do things. Our min-
ing licence took about six months to get
PAGE 62 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Ethiopia a top choice for mining
Ethiopia is one of the rising economies the latest Fraser Institute Survey findings behind Lege Dembi, Nicoletto said the
in Africa, with manufacturing and agri- could do much to trigger interest from lo- likes of Newmont Mining Corp had start-
culture key areas of focus for the Govern- cal miners and explorers. ed exploration in the country and trans-
ment, Minister Counsellor for Economic actions such as Israeli Chemicals Ltd’s
Diplomacy, Embassy of Ethiopia, Jemal Ethiopia was rated the eighth most at- $US110 million buyout of Allana Potash
Beker said. tractive jurisdiction for mining investment demonstrated the mining industry was on
in Africa, ahead of heavyweights such as the way up.
“We are moving very well in this area,” South Africa and Zambia.
Beker said. Kefi has been backed by the Govern-
Given the country only hosts the ment to build the $US130 million Tulu
“Ethiopia is accommodating by labour, 130,000 ozpa Lege Dembi gold mine and Kapi project and bringing it to fruition will
cheap energy and we have attracted a the country’s mineral potential remains be another boon for Ethiopia’s mining
huge manufacturing industry, especially relatively unknown, Ethiopia’s rating is sector.
with companies coming from Asia. Tur- somewhat of a surprise.
key is the No. 1 investor and is invest- “We plan to secure financing and draw-
ing billions in manufacturing. The Middle Australia does have some exposure down by the end of this year and that will
East, Europe and America as well. There in Ethiopian mining circles through Kefi trigger the community settlement, which
are big companies coming in from this Minerals plc of which West Australian is a 90-day process,” Nicoletto said.
side, while the Chinese are investing in School of Mines graduate Wayne Nico-
infrastructure. India is investing in sugar letto is the chief operating officer in the “We expect that to be completed by the
and infrastructure, so there is a diversity country. end of March. During that time we will
[of investors].” start initial mobilisation, initial engineer-
Nicoletto, formerly general manager at ing and start ordering all long lead time
Despite a strong focus on manufactur- Edikan, Ghana, said while Ethiopia was a items.
ing and agriculture, there is potential to relative latecomer to the mining game in
capitalise on mining opportunities in the an African context, Kefi and country were We expect to begin construction on
country as well. learning together as the Tulu Kapi gold site in early Q2 2017, with mining and
project moved closer to development. commissioning in early 2018 and steady
Beker said Australian involvement in state production by the middle of 2018.”
this area would be welcome and perhaps While Kefi is well placed to become
Ethiopia’s second commercial gold mine – Mark Andrews
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 63
AFRICA DOWN UNDER REVIEW
Cardinal goes for resource
Such has been Cardinal Re- wasn’t like anything seen for a long
sources Ltd’s success at the time and he was excited by the up-
Namdini gold project, the company side present within Cardinal’s land
has re-jigged its plans, managing packages.
director Archie Koimtsidis said. “We also have more ground
Originally, an exploration target around the place, so we will con-
at the project was to be prepared tinue on with regional exploration
but better than expected drilling both along strike of this orebody
results has afforded Cardinal to go and around it and at some other
one step further. land packages that we have,” he
At the time of print, drilling for said.
resource delineation and regional “Importantly, we are confident
exploration drilling was continuing, enough at this time and we have
while met test work was under way all seen enough of this that there
ahead of an initial resource esti- is excellent potential to host a mul-
mate by the end of the year. timillion ounce gold resource there,
“We were expecting to put out Cardinal Resources managing director Archie Koimtsidis at we are not talking hundreds of
an exploration target this quarter Africa Down Under with Ghana Ministry of Lands and Natu- thousands of ounces, we are talk-
but we have been given some con- ral Resources chief director Prof Bruce Banoeng-Yakubo ing multimillion ounces.”
fidence by the resource guys and Koimtsidis and his team, which
met [test work] people that the drilling to Big wide zones of gold mineralisation includes colleagues behind PMI Gold’s
date and the information they have far have been intersected, including 133m Asanko gold project plus Mark Connelly
exceeds the exploration target that we @ 1.61 g/t gold from 3m (including 52m as non-executive chairman and Beadell
anticipated putting out,” Koimtsidis said. @ 2.4 g/t); 119m @ 1.72 g/t from surface Resources Ltd chief executive Simon
“They have told us to hold off just a (including 41m @ 2.57 g/t); 108m @ 1.62 Jackson as non-executive director, are
little bit longer and we will go straight to g/t from surface (including 43m @ 2.52 known for dealing with large-scale pro-
a resource. We are actually also drilling g/t) and 99m @ 1.21 g/t from surface jects and no doubt have the company on
for resource delineation with a little bit of (including 35m @ 2.5 g/t), has Cardinal the right trajectory.
infill and some extension drilling which I confident that it is onto a multimillion – Mark Andrews
will put out for all readers in the not too ounce play in Ghana’s north.
distant future.” Koimtsidis said the Namdini discovery
Ghana the place for investors
Chief director of Banoeng-Yakubo said. hardly an atmosphere investors would
the Ministry of Ghana is one of the want to enter and Banoeng-Yakubo
wanted to reassure investors that Gha-
Lands and Natural most mature mining na – where 3.6 moz of gold resulted in
$US3.3 billion of export revenue in 2015
Resources, Ghana, jurisdictions in Africa, – was open for business.
Prof Bruce Banoeng- however, it is not with- “As you know with every mature sys-
tem, there are always underlying prob-
Yakubo, reiterated out its problems, as lems,” he said.
the Government’s evidenced by the ac- “Ghana has seen this and is regulat-
ing this legal and legislation framework to
position on welcom- tion of illegal miners support mining in the country and to get
as many investors as the country can to
ing foreign investors at AngloGold Ashanti come to Ghana and invest in the mining
industry.
into the country at Ltd’s Obuasi mine in
“The Minerals and Mining Act of 2006
Africa Down Under. the country’s south. has been amended, with regulations in
place for enhancing investment in the
“In order to max- Earlier this year hun- mining sector and to minimise illegalities
in the mining sector, especially within the
imise the resources dreds of illegal miners small scale mining industry.”
derived from min- entered Obuasi, dam- – Mark Andrews
ing, for sustainable aging property and
development in the threatening staff on
country, a very im- site.
portant part of the Prof Bruce Banoeng-Yakubo Ghanaian authori-
Government agenda ties tried hard to re-
is the focus to im- store law and order,
press proceeds on mining within the min- however, as the situation deteriorated
ing communities in order to stop the agi- AngloGold was forced to declare force
tations or minimise agitations in mining majeure in the interests of safety.
communities which sometimes occur,” While being an isolated incident, it is
PAGE 64 OCTOBER 2016 AUSTRALIA’S PAYDIRT
AFRICA DOWN UNDER REVIEW
Kibaran prepares Epanko
for starting line
With a compelling case to start pro- Andrew Spinks value-adding and value-adding our prod-
duction, graphite-hopeful Kibaran uct and with Sojitz we will be able to
Resources Ltd is looking for more from its “It is not only just about commencing do that. We will be able to produce our
Epanko project in Tanzania. production at Epanko,” Spinks said. graphite from Epanko from our mine gate
through a processing facility, an addi-
The BFS on Epanko was based on a “With our European trader, it’s all about tional processing facility and sell that to
40,000 tpa operation costing $US77.5 the lithium ion anode manufacturers and
million for a NPV of $US197.4 million and then that will go into the batteries.
EBITDA of $US33.6 million.
“We are very well positioned to com-
Furthermore, Kibaran has 100% of its mence production. We have the best
annual production locked away in binding partners, in our view, outside of China.
agreements with Japanese outfit Sojitz We have a debt financing consortium
Corporation (14,000 tpa) and Thysssen- that is ideal for development of graphite.
Krupp from Germany (20,000 tpa), while We can now access the lucrative Japa-
a European graphite trader has signed nese/Korean battery markets. We have
up for the remaining 10,000 tpa. an enormous amount of value add op-
portunities now in place. We have very
Having managed to garner such sup- strong support from the German Govern-
port, Kibaran is well placed to capitalise ment and Epanko is there ready to go,
on its position and is assessing produc- ready to grow.”
tion of battery-grade graphite at a rate of
15,000 tpa. Epanko could be in production within
nine months of financing being complet-
A scoping study has been completed ed, with Germany’s KfW-Bank having
with results indicating a NPV of $U115 completed project debt ($US40 million)
million from a capex of $US30 million. due diligence, while discussions con-
tinue with Africa’s Nedbank ($US30 mil-
At the time of print, a production scale lion).
bulk sample was being tested as part of a
more detailed feasibility study, while dis- – Mark Andrews
cussions on strategic partnerships were
well advanced, according to Kibaran
managing director Andrew Spinks.
Niger offers infrastructure incentive
Niger has moved to struction and will soon Some emerging gold deposits in the
improve available in- offer an alternative form country include Bosse Bangou, Libiri,
Tiaklam, Boura, Bandio and Sirba Mban-
frastructure in the coun- of energy for the min- ga.
try in a bid to develop its ing sector, according to Niger is also prospective for phos-
phate, manganese, copper, molybde-
small mining sector. Niger Minister of Mines num, coal and uranium.
Already boasting one and Industrial Develop- Few foreign companies are currently
exploring in Niger, with only two Austral-
of the most extensive ment, Hassane Baraze ian groups holding active permits to ex-
plore in the country, compared with 14
transport networks in Moussa. local explorers.
the region, with more “The country is im- Baraze Moussa said he hoped that
would soon change.
than 18,000km of road proving its infrastruc-
“A great part of the territory is still un-
providing access to all ture to facilitate the de- explored,” he said.
recognised mine sites Hassane Baraze Moussa velopment of the mining “We welcome all interested mining
in the country, Niger is sector,” Baraze Moussa companies and we are ready to assist
them in obtaining mining titles in Niger.”
constructing a new rail- told Africa Down Under.
– Michael Washbourne
way which will offer export opportunities “Niger also has one of the best tele-
to its West African neighbours. communication networks, with the pres-
One of the key pieces of infrastruc- ence of five operators providing broad-
ture in Niger is the 80MW power plant band internet.”
at Gorou Banda. A coal plant in the Gold is the main commodity mined in
country’s north also provides an energy Niger, with the Samira deposits churning
source for mining companies to tap into. out average grades of 2 g/t gold since
A dam at Kandadji is also under con- 2004.
PAGE 66 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Mining can draw in other sectors
for African engagement
The mining industry’s role in the ernments, I think, provides a unique
development of African commu-
nities and close relationships with look into the role the private sector
governments can play a pivotal role
in strengthening engagement be- can perform in building commu-
tween Australia and Africa.
nity resilience, and looking at how it
Canberra-based think tank Aus-
tralian Strategic Policy Institute can work with government in terms
(ASPI) recommended a need for a
more strategic approach to Austral- of countering some of the security
ia’s engagement with countries and
regional organisations in Africa. The threats,” she said.
recommendation stemmed from the
second Aus-Africa Dialogue, held “While Africa is arguably more
in Zambia in 2015, in collaboration
with South Africa’s Brenthurst Foun- peaceful perhaps compared to the
dation.
latter decades of the 20th century,
“This should include the devel-
opment of a whole-of-government there is an acute range of political
strategy which identifies Australia’s
priorities for engagement both re- volatility and instability, which is in-
gionally and in terms of geography and
with the private sector,” ASPI senior creasingly transnational, including
analyst Lisa Sharland told Africa Down
Under. extremist terrorist violence, organ-
“Such a strategy would ensure that the ised crime, forced migration and
Government and private sector are well
positioned to identify opportunities for communal conflict.”
broader Australian-African engagement.
This is also essential to ensure the Gov- Massive historical shifts are under
ernment is able to mitigate potential risks
to Australia’s national interests.” way on the African continent with an
Sharland acknowledged the Australian increasingly urbanised population
mining industry’s role in the development
of communities in Africa and the poten- Lisa Sharland predicted to double to 2.4 billion by
tial to use this position to strengthen en-
gagement between the two regions. 2050.
“The remote location of African mines, often perform a quasi-government role,” “Higher Australian-African engage-
many of them JVs with Australian part-
ners and investors, means mine owners she said. ment beyond mining can draw in other
“Admittedly, some of the higher risk sectors for potential Australian invest-
African mining ventures can present dif- ment, including infrastructure, profes-
ficulties for investment and there are on- sional services and the energy sector,”
going challenges with taxation and rev- Sharland said.
enue arrangements. But investment in “However, mining partners on both
African mines also has a large multiplier sides of the Indian Ocean should be en-
effect in terms of jobs in regions, invest- couraged to share lessons on govern-
ment in local infrastructure and the pros- ance and surveys in the mining sector.
perity of regional industries.” “A workshop with African mining stake-
Sharland added the private sector’s holders as well as regional bodies and
engagement and relationship with com- institutions such as the African Devel-
munities and governments could help opment Bank, the Common Market for
to address broader concerns affecting Easter and Southern Africa (COMESA)
the whole of Africa, including sexual and and the African Union, would also be
gender-based violence and security. beneficial.”
“This level of engagement and rela- – Rebecca Lawson
tionship with communities and with gov-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 67
AFRICA DOWN UNDER REVIEW
Walkabout gathers pace at Lindi
Walkabout Resourc- Mulligan expects the graphite projects in various stages of de-
es Ltd may be a project will be well posi- velopment.”
late-comer to the graph- tioned to withstand mar-
ite supply chain, but its ket changes. “We were quite late coming into the
Lindi Jumbo project in graphite space; about two years after our
south-eastern Tanzania “Unlike many other neighbours. We sat down and thought
is expected to deliver a graphite projects Lindi about how to catch up and how to be an
strong start. Jumbo is bullet-proof early starter, and present a low risk ap-
against market shocks, proach for our shareholders.”
Addressing the third it is strongly positioned
and final day of Af- to expand and grow into Walkabout, in a JV with a Tanzanian
rica Down Under 2016, its reputation of premium mineral rights holder, has purchased
Walkabout managing product at low cost,” 70% of Lindi Jumbo’s four prospecting
director Allan Mulligan Mulligan said. licenses, with the option to purchase
said the company’s de- 100%.
cision to fast-track and “Being fast-tracked, it
de-risk the Lindi Jumbo will have a great chance The Lindi Jumbo project is also well
project was paying off, Allan Mulligan of locking in customers connected to existing infrastructure with
garnering an earlier for a premium product, the port of Lindi just 60km to the east.
than expected entry into the market. and opening doors for
growth and expansion.” Mulligan said the company strongly
The move to hasten the project is Lindi Jumbo is returning a concentra- believed in the Aquarius model of man-
based on the exceptionally high grade tion grade of 98.34% and the site could agement, which it was planning to apply
of graphite found at Lindi Jumbo, and deliver industry-leading revenue per at Lindi Jumbo.
Walkabout’s forecasted rise in market tonne for Walkabout.
risk and increased graphite supply from Lindi Jumbo also has an excellent flake “The concept is total outsourcing. At
larger companies by 2020. size distribution, with 75.98% in high val- Lindi Jumbo we are considering maxi-
ue large and jumbo flake size categories. mum outsourcing. An example is our
“There is no shortage of graphite in “Our initial geological scouting over accommodation camp which will be
the world. Most previous mines for the Lindi delivered surface samples of super awarded to a Tanzania company on a
last 100 years are producing less than high-grade flake graphite ranging be- build-and-operate contract for around
10,000 tpa. We decided what we needed tween 35% and 45% total graphitic car- five years. The packages will be let on a
was a differentiator,” Mulligan said. bon,” Mulligan said. similar strategy with transfer of much of
“Lindi Jumbo is right in the middle the engineering and design responsibility
“To achieve this we needed to scale of the best address for premium flake to the operators.”
the project into a manageable size, and graphite probably anywhere in the world
appropriate market size, and it needed to right now. Immediately around us are five Mulligan said considering the high
be de-risked in a number of areas; princi- flake grade and low risk of the project,
pally opex, capex and then revenue.” the future looked promising.
– Jonathon Daly
Clear communications the key
Africa’s opportunities in future mining was key to helping drive out, otherwise others will
booms are expected to be greater, growth in Africa and rath-
according to Gilbert+Tobin partner Phil er than Australia and Af- fill the void,” Edmands
Edmands. rica pitting against each
other in developing their said.
“As Africa develops, so its sovereign economies, Edmands
and operating risk is going to diminish said there was an oppor- “And often they will fill
and its infrastructure will improve. Com- tunity to generate win-win
pared to Africa, Australia got a huge scenarios. the void with mistruths,
share of international investment relative
to its resources endowment during the How Australia and Af- which destroys trust,
last boom, partly as a result of its greater rica prospered would
stability and its greater development, but largely be dependent which is at the core of
the playing field is going to be more level on the attitude taken to
going forward,” Edmands said. strengthening relation- good relationships.”
ships.
With Africa vastly rich in resources, Enhancing relation-
mining is seen as one industry which can “Good relationships
help its people achieve the same ambi- rely on good communication and in an ships through stability
tions as those in the developed world. age of social media you need to publicly
prosecute your case and get your story agreements was an idea
Establishing strong relationships
worth considering and
needed to be managed
Phil Edmands carefully, with Edmands
describing stability agree-
ments as “best used as
the ground rules for living a dynamic re-
lationship”.
– Mark Andrews
PAGE 68 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Green graphite for Metals
of Africa
Metals of Africa Ltd boasts high “There is a huge push from the
quality graphite from its project
in Mozambique, but its plans for en- battery end-users, the electric ve-
vironmentally favourable spherical
graphite are expected to have end- hicle manufacturers, to switch from
users sitting up in their seats.
synthetic graphite to natural graphite
Currently spherical graphite – a
key ingredient in lithium-ion batteries because it is cheaper and it is pro-
used in electric cars – is produced
mainly in China using harmful chemi- ducing even better results.”
cals such as hydrochloric acid.
In an increasingly crowded mar-
Metals of Africa managing direc-
tor Cherie Leeden said her company ket cost is vital, and the fact that its
was investing in a collaborative pilot
mill in the US, which is based on a Mozambique projects have an opex
chemical free process of spherical
graphite production, which will make among the lowest in the world, gives
the company’s graphite stand out
from the crowd. Metals of Africa a distinct advan-
“The clean energy revolution is tage.
really what is driving the demand for
the graphite. We are most focused on the Aside from its participation in the
electrical vehicle and home storage bat-
teries, because that is where the demand production of spherical graphite,
is really growing,” Leeden said at Africa
Down Under 2016. Metals of Africa will yield high qual-
“Traceability is going to be key. There ity graphite from its Montepuez and
are several legislations that are enforced
in the US right now which dictate that if Balama projects in Cabo Delgado
a battery company is going to receive
green energy grants, they must be ac- Province, Mozambique.
countable for their battery components.
Balama’s total resource is 16.3mt
“Currently, most of that involves the Cherie Leeden and Montepuez’s 61.6mt. Both boast
Chinese hydrochloric link. I think once
we have a source that bypasses that large and jumbo flake size distribu-
environmentally negative process, this
graphite should be in high demand.” than synthetic graphite. Why that is quite tion of 50%, making them some of the
Metals of Africa will boast a 100% relevant is that synthetic graphite costs richest graphite deposits in Mozambique.
traceable product, and it expects to at-
tract more end-users once the pilot mill about twice as much as natural graphite,” – Jonathon Daly
is operational next month. Leeden said.
“We are working on securing binding New perspectives: Cameroon Minister of Mines, Industry and Technological Devel-
off-take agreements. We have been in opment, Ernest Gbwaboubou, told Africa Down Under his Government was conscious
detailed due diligence phase with a num- it needed to do more to attract new investors at a time of low commodity prices. Gb-
ber of end-users across the Americas waboubou said legal and regulatory frameworks were under revision to ensure better
and Asia for several months,” Leeden management and more transparency in exploration and mining activities. There is also
said. a push to increase the depth and access to pre-competitive data in the country. Some
57% of Cameroon is now covered by hi-res geophysical surveys and the total area of
“There is a lot of interest coming out the country will be covered by geological and geochemical mapping by the end of 2016
of Japan, Korea, China and the US in with the release of 14 new maps to follow.
respect to securing natural graphite and
also spherical graphite.”
Metals of Africa has conducted exten-
sive lithium-ion battery tests, and has
been “pleasantly surprised by results”,
according to Leeden.
“The results to date indicate that our
natural graphite is performing better
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 69
AFRICA DOWN UNDER REVIEW
MOD prepares for T3 resource
MOD Resources Ltd has kept the processing, environmental and social
momentum up at its Kalahari cop-
per project in Botswana and remained studies around T3 available by No-
on-track to deliver a maiden resource
for the T3 prospect before the end of vember and would look to a comple-
September.
tion of the scoping study by December
T3 was only discovered in March but
such has been the vigour with which and then a decision to proceed to the
MOD has hit the shallow prospect, the
company was preparing a maiden re- PFS,” Hanna said.
source at the time of print.
In anticipation of development stud-
The resource will include results
from the three most recent holes ies, the company has also begun in-
drilled at T3 – MO-G-49D, MO-G-50D
and MO-G-51D – the deepest drilled fill drilling on the 100m by 50m high-
to date.
grade core of T3 with the company
Intercepts from these three holes
included; 23m @ 1.2% copper and 22 reporting “significant copper miner-
g/t silver from 275m and 10m @ 1.7%
copper and 21 g/t silver from 210m. alisation” in the first two holes with as-
Two shallower holes drilled at the says expected in the coming weeks.
southern boundary of the mineralised
zone – MO-G-44D and MO-G-45D – MOD has already built a resource of
intercepted 23.9m @ 1% copper and 5
g/t silver and 1m @ 7.6% copper and 2.7mt @ 2% copper and 50 g/t silver at
72 g/t silver respectively.
the Mahumo prospect on the Kalahari
Speaking at Africa Down Under, MOD
managing director Julian Hanna said the project but T3 sits on a different con-
tract to it and other deposits along the
Kalahari copper belt, giving the com-
pany belief there are further shallow
discoveries to be made.
Further work is planned on the pro-
MOD managing director Julian Hanna at the ject including an IP survey along strike
company’s Kalahari copper project in Botswana and down dip of T3, drilling of copper-
zinc anomalies around T3 and further
maiden resource would be swiftly fol- drilling of the T2 East, T2 West and Ma-
lowed by in-house scoping study work. humo targets.
“We expect to have preliminary pit,
Bass Metals looks to Graphmada growth
Bass Metals Ltd has high hopes for its “We are very excited about the results to make the most of “a stable operation”.
recent acquisition and planned ex- we have achieved to date. We are plan- “We have shallow low-cost mining.
pansion of the Graphmada graphite mine ning an expansion project to leverage off
in Madagascar. the infrastructure that is already in place. There is no blasting. It is very simple
We have some exciting times ahead,” excavation. We have an established pro-
The company is already seeing reve- McManus said. cessing plant that is currently underuti-
nue from Graphmada’s Loharano deposit lised. We have an analytical laboratory
which is yielding concentrations of above “The expansion project will see us ex- and other supporting infrastructure that
60% within the large and jumbo flake size tend that [6,000 tpa] to 12,000 to 20,000 we are leveraging off. We also have an
categories. tpa in additional exports.” excellent product, it is a premium-priced
product.” McManus said.
Chief executive Tim McManus told the The expansion will also see the con-
Africa Down Under audience that plans struction of a second processing plant The company has also engaged in a
for an expansion project into the Mahefe- with a capacity of 12,000 to 20,000 tpa. number of community engagement ini-
dok region looked promising, with drilling tiatives, providing education and health
to start in October this year. McManus said the company planned resources for local communities.
to optimise its existing processing plant,
McManus said he expected the graph- with improvements to flotation cells, new McManus said Bass was committed to
ite market to grow in the US, India and slurry pumps, and improving existing de- hiring staff from the local community, and
Europe in line with burgeoning battery, watering centrifuges. building the local economy.
aerospace and nuclear technology ap-
plications. “In quarter three and four of 2017 we “All this doesn’t happen without a
are actually going to decommission strong base, and investment in our peo-
Bass has already implemented an the plant so that we can install a num- ple and surrounding communities. That
operational optimisation programme ber of key items to not only improve the is an ongoing process that we have al-
at Graphmada to improve working cul- throughput and optimisation, but also the ready commenced.”
ture, yield higher margins, and minimise quality. We are then looking to have the
losses and inefficiencies. The optimisa- upgraded product sales out on the mar- – Jonathon Daly
tion programme is expected to ramp up ket by Q1 2018.” McManus said.
production capacity to 6,000 tpa by next
year. Bass has purchased a 40-year min-
ing permit at Graphmada and it intends
PAGE 70 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Act fast on security threats
Resolute Mining Ltd managing di- 70km north of Dikulushi, to Kilwa.
rector John Welborn is thankful
his company is “ahead of the curve” “This kind of thing can easily
when it comes to assessing security
risk. happen to any company operat-
Welborn and his chief operating ing in a remote location where
officer Peter Beilby were in Bamako,
Mali, last November when Islamist host country security forces are
militants killed 20 people and held an-
other 150 hostage in a mass shooting under-resourced,” Turner said.
attack at the Radisson Blu hotel.
“Beyond the tragic loss of life, the
Resolute operates the Syama gold
mine, about 300km south-east of impact on a company when such
Bamako.
events occur can be very signifi-
Speaking during a panel session on
managing security risk in Africa, Welborn cant.”
said he and Beilby were not caught up in
the incident because his company’s se- Turner, who went on to be-
curity team had flagged concerns about
the hotel. A specially convened panel discussed managing come a founding member of the
security risks in Africa Australia-Africa Mining and En-
“Previously Resolute executives have ergy Group (AAMEG), said the
stayed in the Radisson, but we chose on
that particular occasion not to, due to the with Somalia and Libya, identified by incident forced security protocols to be
information we had received,” Welborn
said. DFAT’s Africa and Middle East branch revised and then collaboration with other
“In honestly assessing the security risk first assistant secretary Marc Innes- mining companies on security training
in Mali, we made a choice not to sit and
wait and hope not to be a victim, but to Brown, as posing the greatest security programmes.
be ahead of the curve and to be very ac-
tively understanding of the risks and be threats in Africa. “Bad things can happen to good com-
involved in the planning. To me, this is
fundamentally consistent with what the Innes-Brown said the two main types panies, but there are some lessons
mining industry is all about.”
of threats came from those seeking rev- on security that can be learnt from the
Resolute has operated Syama since
2008 and has rarely encountered ma- enue – mostly through kidnapping, piracy school of hard knocks,” Turner said.
jor security breaches at the mine, about
30km from the Cote d’Ivoire border. and trading of illicit goods – and those “Know the voluntary principles that were
Welborn joined the company in May wanting attention. designed specifically for the extractives
2015 and was tasked with stripping costs
from the business wherever possible. “If you’re operating in countries neigh- sector. And when you need to engage
However, he quickly found one area he
was happy to spend a few extra dollars. bouring Mali, Somalia and Libya, you with host country security forces, make
“One of the areas where we have en- need to be wary of the threat of possible sure you have the appropriate documen-
thusiastically exceeded our budget is in
capital investment in security,” Welborn attacks by these terrorist groups,” Innes- tation in place.”
said.
Brown said. Gilbert+Tobin partner Phil Edmands
“We treat Syama like an island. We’re
negotiating direct international access “These terrorist groups usually target sounded a warning about engaging with
into our airstrip – our expats currently
fly through Accra almost directly into our the low-hanging fruit. As an example, security companies without doing the
mine site in the south of Mali, on the Cote
d’Ivoire border, without having to transit the hotels in West Africa…all of these proper checks.
through Bamako at this stage.
are within easy reach of northern Mali “When you engage a security compa-
“We have a very serious understand-
ing of the credible risk of security issues and originated from ungoverned spaces ny, you put a great deal of power in their
in Mali generally and we have a respon-
sibility to our employees, our investors where al-Qaeda in the Islamic Maghreb hands,” Edmands said. “The message in
and the Mali Government – our partners
in the Syama mine – to take that very se- is hiding out.” relation to engaging security companies
riously.”
Innes-Brown said the countries which is due diligence, due diligence, due dili-
Mali was one of three countries, along
responded best to security challenges gence. You need to know whether they
were those willing to participate in re- are non-aligned or whether they are
gional co-operation initiatives. aligned with particular factions. You need
“The countries that run pluralistic and to know what their record is and whether
inclusive governments tend to do better,” there is anyone in that institution who has
he said. “A good example is Niger, where been involved in past abuses. You need
the Government has ensured the Tuareg to know what their policies are and that
ethnic minority is well represented, which their policies are acceptable.”
is in contrast to at least one neighbouring Arthur J Gallagher credit and political
country.” risks managing director Mark Gubbins
Former Anvil Mining boss Bill Turner said insurance would never make a bad
AO experienced first-hand the conse- project “good” and it was essential com-
quences of failing to properly manage a panies mitigate all commercial aspects
security threat. In 2004, an armed rebel of risk where possible.
group seized control of the village of Kil- “If they’re insuring a company that is
wa, 50km south of Anvil’s Dikulushi cop- going into a challenging jurisdiction, they
per mine in the DRC, and the subsequent would be expected to prepare them-
military action saw a number of innocent selves to spend a lot of money on very
civilians killed. good lawyers, to anticipate arguably all
Anvil was accused of aiding and abet- the risks that are to be insured and to
ting the military to commit human rights do their best to mitigate them,” Gubbins
abuses after the governor of the prov- said.
ince requisitioned company vehicles to – Michael Washbourne
transport troops from their headquarters,
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 71
AFRICA DOWN UNDER REVIEW
Lesotho looks to build on Promise
It may not have the vast expanses of pro- Lebohang Thotanyana ume of kimberlite intrusions in the world
spective land of its larger neighbour but with more than 430 pipes in the country.”
the Kingdom of Lesotho remains one of 550ct Letseng Star for $US16.5 million
the most enticing diamond regions of the (October 2011). To encourage exploration of these tar-
world. gets as well as a number of base and
With diamond prices continuing to precious metal prospects in the country,
A mountainous enclave in the east of drag, Letseng’s high value output has the Government launched a new miner-
South Africa, Lesotho is heavily reliant enabled Gem to grow into one of the als and mining policy in 2015.
on diamond production which accounts largest independent diamond miners in
for nearly 50% of exports. The country the world and Lesotho Minister of Mining, “This is the first mining policy in Leso-
produced 134,445ct in 2015 – up from as Lebohang Thotanyana believes others tho and the first in Africa to fully incorpo-
little as 1,794ct in 2003 – and has set an could join it. rate the African Mining Vision,” Thotan-
ambitious target of 2 mct by 2018. yana said.
“We have production starting at Liqho-
It is the start of production at the Liq- bong and Kolo this month,” Thotanyana There are already 19 prospecting li-
hobong and Kolo mines later this year said. “And, we have lots of kimberlite cences currently active but Thotanyana
which will do most to reach that produc- pipes and dykes still unexplored in our said the Government was committed to
tion target but regards value, Gem Dia- country. Indeed, we have the highest vol- expanding this.
monds Ltd’s Letseng mine continues to
be the country’s most prominent. “Lesotho promotes exploration and
development of her mineral resources
Letseng produces more than 100,000 through availability and dissemination of
ctpa but the quality of the stones it all geoscientific data necessary for the
produces – average realised price of promotion of mineral sector investment,”
$US2,225/ct – makes it the richest dollar he said.
per carat diamond mine in the world.
Among the initiatives included in the
In the last five years, Gem – which new policy are the establishment of a
owns Letseng in a 70/30 JV with the Le- geological data bank to provide pre-com-
sotho Government – has sold several petitive data and the establishment of a
exceptional diamonds, including a 357ct certified assay laboratory in the country.
diamond for $US19.3 million (September
2015), a 198ct stone for $US10.6 million The Government is also undertak-
(October 2014), a 12ct blue diamond for ing a geochemical mapping programme
$US7.5 million (October 2013) and the across the country, targeting base met-
als, with plans to extend this to rare
earths and precious metals in the future.
Madagascar ready for change
Madagascar – the world’s fourth larg- Susan Coles, Australia’s Ambassador to or five expats in total,” she said. “Every
est island – has flagged imminent Madagascar, with Madagascar Minister other job – plant supervisors, secu-
changes to the governance of its mining rity guards, cooks in the lunch canteen,
and petroleum industries. of Mines Ying Vah Zafilahy workers in the land rehabilitation nurs-
ery – are all Malagasy, representing 750
“The Ministry in charge of mines and teams. households in the Fort Dauphin area.
petroleum is about to improve the min- Australian Ambassador to Madagas-
ing code and the petroleum code and “The multiplier effect – plus the
they’re implementing legislation to better car, Susan Coles, said locals accounted schools, roads, and port built as part of
meet the expectations of the state, pop- for most of the workforces at QMM and the project – is enormous.”
ulation and investors in the principle of Ambatovy.
‘win-win’,” Madagascar Minister of Mines Coles said after five years of political
Ying Vah Zafilahy told delegates at Africa “When I visited QMM, I noted only four instability in Madagascar, the country’s
Down Under. mining sector was back on track and new
permits were being issued.
Madagascar is not a widely recognised
mining nation, but does host one of Rio “There is some uncertainty while re-
Tinto Ltd’s largest operations, the QMM forms to the mining code are under con-
ilmenite mine, near Fort Dauphin. sideration, but the Minister said at ADU
he hopes these amendments can be fi-
At full capacity, QMM can produce nalised by the end of the year,” she said.
750,000 tpa ilmenite and 60,000 tpa zir-
con. “Mining offers Madagascar an unpar-
alleled opportunity to stimulate growth,
Madagascar also hosts the Andria- create training and employment and re-
mena chromium mine and the Ambatovy duce poverty. This has already occurred
nickel-cobalt operation. Both operations in the communes around the Rio and
have Australians within the management Ambatovy mines.”
PAGE 72 OCTOBER 2016 AUSTRALIA’S PAYDIRT
For the love of the game
Each year the Africa Down Under not just about profits and develop-
Football Cup showcases the ment, it is also about people.”
passion and talent of several young Team Walkabout player Ado-
football teams representing the domin Pesha, 35, moved to Perth
proud African communities based in from Tanzania in 2003 and cur-
Perth, Western Australia. rently works as a computer systems
Team African Phosphate (Nige- administrator.
ria) won the day, with Walkabout “We all do this for fun but at the
(Tanzania) coming second, and same time we get to meet our oth-
CSA Global (Naija FC WA) finish- er African friends. We get to meet
ing third. and know about people who have
But win or lose, the players were invested in our countries,” Pesha
happy enough to be playing football said.
with friends. “I didn’t know about Walkabout
Team Arthur J. Gallagher player Resources but they have told me
Dini Abdi, 28, emigrated from Ethi- about their operations in Tanzania
opia as an infant, and lives in Nolla- where I come from. It is good to
mara with his wife and two children. know the things going on at home.”
“This event means I can catch up There was plenty of passion and action during this year’s Spectator Emmanuel Mamsaray,
with my mates and get a feel of the Africa Down Under Football Cup which is designed to 22, immigrated to Australia from
grass. We love football doesn’t mat- promote Perth’s various African communities Sierra Leone 16 years ago, and
ter what time it is, what the weather stood on the sideline cheering on
is like, we just play football for fun. There together and celebrate it in a multicultural his mates playing for Team PCF Capital
is a social aspect just to hang out and be Perth community.” (Zimbabwe).
happy, it’s joyful.” Abdi said. Walkabout Resources Ltd managing “Football for us is life. It is what brings
Football West chief executive James director Allan Mulligan said the company us together and keeps us out of trouble,”
Curtis said the African community in WA was happy to sponsor Team Tanzania, Mamsaray said.
had grown in the last decade, along with and would continue to do so in coming Mamsaray said even though he lived in
their participation in the local football years. Cannington, his family kept a good con-
scene. “It is good to make the connection that nection with their homeland and culture.
“The thing is the first time you arrive Walkabout is a company that is working “I study Urban Planning at Curtin Uni-
to a new town there are a whole lot of in some of their countries, and we re- versity. I have two more years left of my
cultural differences, but football is one of spect them and where they come from, degree,” Mamsaray said.
those things that goes across all different and we are happy to support them,” said “My aim is to go back when I finish my
cultures,” Curtis said. Mulligan. degree, because there is a lot of develop-
“This is a chance for them to represent “Social interaction and upliftment is a ment that is needed back home. Why not
different countries in Africa, and come key part of doing business in Africa. It is go back and help your country and try to
help build where you come from.”
Northlake Senior Campus English Pro-
gram Co-ordinator Sean Bruce-Cullen
said the Africa Down Under Football Cup
provided a great experience for his stu-
dents to share their passion for the inter-
national sport.
“All the students at our school are
recent migrants and many are from hu-
manitarian backgrounds. So we have got
quite a lot of African students in our cen-
tre as well as from Vietnam, Indonesia,
Afghanistan and Syria,” Bruce-Cullen
said.
“Football, or soccer, is one of the things
they have in common. It is just a way for
the students to interact with each other
at a level where they have something in
common.”
The Africa Down Under Football Cup
will be back next year for another cele-
bration of Perth’s vibrant community.
This year African Phosphate took out the Cup, beating Walkabout Resources in the final – Jonathon Daly
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 73
NICKEL PREVIEW
Nickel deficit
buoys ailing sector
The Australian Nickel Conference returns to the Pan Pacific Perth Study Group suggests nickel went into
Hotel on October 20 at a time of renewed optimism for the sector. deficit in the first half of 2016 and while
the LME price rebound has been mod-
After the toughest market in a genera- producers for nearly a decade. est, the EU price for nickel in scrap has
tion, nickel miners are beginning to find However, with the Filipino ban follow- moved sharply. The EU scrap nickel price
hope in the supply/demand equations in was just 72% of the LME price for most
global markets. ing on from a similar ban in Indonesia of 2014 and 2015 but has moved to more
three years ago, supply is finally begin- than 80% in the last three months, sug-
After five consecutive years of surplus, ning to bite for Chinese nickel users. gesting the physical markets are show-
the global nickel market is finally in deficit Although it is difficult to be precise with ing signs of strain.
and the nickel price is beginning to show actual stockpile figures – many stocks
signs of recovery. LME spot nickel hit a outside the LME and SHFE go unreport- This trend has been boosted by record
12-year low of $US7,700/t on February 11 ed – there is consensus among analysts high imports from Chinese nickel users.
but has since rebounded more than 30%, that the nickel market has finally swung
closing September 20 at $US10,190/t, into deficit. “The stainless steel market is improv-
having hit $US10,895/t in mid-August. ing in China, and stainless steel scrap
According to Macquarie Capital con- tightness is driving higher demand for
Some of that rebound was fuelled by sultant Jim Lennon, this move to deficit primary nickel units globally,” Lennon
the decision of the Philippines Govern- is being driven by more than Philippines said.
ment to suspend eight nickel mines in politics.
July over environmental concerns. The Particularly encouraging for Australia’s
Philippines is the largest supply of nickel “The market has finally swung to deficit nickel sulphide producers is the faster
laterite ore to China’s nickel pig iron (NPI) [with the] recovery driven by strong de- growth in 300 series stainless steel pro-
sector, an industry whose cheap produc- mand recovery as well as lower supply,” duction in China. The 300 series stain-
tion has been the bane of western nickel Lennon said. less steel contains 8% nickel against 1.5-
2% nickel in 200 series and zero nickel
Data from the International Nickel content in 400 series stainless steel.
PAGE 74 OCTOBER 2016 AUSTRALIA’S PAYDIRT
11000
10500
Price US$ per tonne 10000
9500
9000
8500
8000
7500 29 Jan 2016 Date 21 May 2016 11 Sep 2016
8 Oct 2015
The LME nickel cash price October 2015 – September 2016
Forecasts suggest nickel use in lith- how much replacement mines [such as
ium-ion batteries could more than dou- Davao] can supply,” Lennon said.
ble over the next 10 years from around There has also been a perception that
70,000 tpa currently to close to 170,000 there has been very little supply cuts
tpa. from western producers but Lennon said
On the supply side, the mine closures nickel supply was actually falling faster
in the Philippines may not provide long- than all other base metals with 197,800t
term buoyancy to the nickel price but of nickel coming out of the market. How-
Lennon believes the country’s nickel sec- ever, much of this loss was offset by
tor is not as strong as assumed. 125,300t of new supply coming into the
“Forecasts of potential supply from market.
Philippines out to 2020 vary from plus- Lennon expects further production
350,000 tpa to 400,000 tpa. The higher cuts if prices remain low this year with
figure needs a much higher nickel price 60% of the sector being loss-making at
and a bigger reserve base in Philippines current levels.
than many believe exists,” he said. “In “Prices are too low relative to the cost
January-July, exports from Philippines to curve,” he said. “If prices go back below
China were down 23% year-on-year.” $US10,000/t, expect more cuts in 2016.”
However, the subsequent price rise Macquarie’s forecast is for the LME
failed to generate a strong supply re- cash price to average $US9,262/t in
The nickel price spike of 2007/08 led sponse, particularly from high-grade 2016, before rising to $US11,625/t in
Chinese stainless steel producers to mines. 2017, $US13,000/t in 2018 and out to
drop their 300 series production but fig- “The high-grade supplies to China are $US16,000/t by 2021.
ures suggest that imbalance is being re- set to fall this year due to exhaustion of Lennon did, however, have some
versed. reserves at Tawi mine and it is unclear warnings.
“China is underrepresented in “Stock levels remain very
300 series,” Lennon said. “In 1H16 Company Year-to-date performance high, and this limits the upside
we estimate Chinese total stainless potential for prices for several
steel production [to be up] 4% year- Buxton Resources Ltd 37.9% years,” he said. “Out to 2020, a
on-year but 300 series [is up] 8.8% Cassini Resources Ltd 76% major deficit has been avoided
year-on-year.” Impact Resources Ltd by the Chinese using lower-
0% quality ore from Philippines
Lennon said that growth could be
an indication of a long-term move Independence Group Ltd 62.2% [albeit] at higher cost. The key
away from the lower quality 200 se- Legend Mining Ltd 25% issue is how much ore can the
ries stainless steel production in Philippines supply to China in
China. Mincor Resources NL 56.8% future and at what cost?
“Maybe [there’s] a structural shift Panoramic Resources Ltd 29.7% The Australian Nickel Confer-
Poseidon Nickel Ltd (13%)
to better quality [300 series] but time Rox Resources Ltd 25% ence will be held at the Pan Pa-
will tell. Perhaps only a strong a nick- St George Mining Ltd 97.2% cific Perth Hotel on October 20.
el price rally can reverse the trend?” Western Areas Ltd 26.5% For more information please
contact Melita Fogarty on (08)
There is further demand hope 9321 0355 or melita@paydirt.
generated from a rising market for com.au
lithium-ion batteries, a product which
uses 10kg of nickel in every unit. ASX-listed nickel performance since January 1 – Dominic Piper
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 75
20 October 2016
Perth, Western Australia
Register now for Australia’s
only nickel event
australiannickelconference.com
To present, exhibit or attend as a delegate please contact Melita Fogarty
on (+61) 8 9321 0355 or email [email protected]
Image courtesy of Western Areas Ltd
20 October 2016
Pan Pacific PeTrhtuhrsday 20 October 2016
08.00 Arrival tea, coffee and registration
Session One
08.45 Welcome: Bill Repard, Executive Chairman, Australia’s Paydirt (5)
08.50 Opening Address: Hon Sean L’Estrange MLA, Minister for Mines, Petroleum and Small Business (20)
09.10 Dan Lougher, Managing Director, Western Areas Ltd (20)
09.30 John Prineas, Executive Chairman, St George Mining Ltd (20)
09.50 Carey Smith, Senior Analyst, Alto Capital
10.10 Eduard Haegel, Asset President, BHP Billiton Ltd Nickel West
10.30 Questions (5)
10.35 Morning Tea (30)
Session Two
10.55 TBC, First Quantum Minerals Ltd (20)
11.15 Peter Harold, Managing Director, Panoramic Resources (20)
11.35 Richard Bevan, Managing Director, Cassini Resources Ltd (20)
11.55 Peter Bradford, Managing Director, Independence Group NL (20)
12.15 Questions (5)
12.20 Lunch (60)
Session Three
13.20 Leo Horn, Chief Operating Officer, Impact Minerals Ltd (20)
13.40 Michael Rodriguez, Chief Operating Officer, Poseidon Nickel Ltd (20)
14.00 Mark Wilson, Managing Director, Legend Mining Ltd (20)
14.20 Ian Mulholland, Managing Director, Rox Resources Ltd (20)
14.40 Questions (5)
14.45 Afternoon Tea (30)
Session Four
15.15 Peter Muccilli, Chief Executive Offcer, Mincor Resources NL (20)
15.35 TBC (20)
15.55 Questions (5)
16.00 Closing Panel Discussion (60)
17.00 Closing Drinks * This programme is subject to change without prior notice
Conference Sponsors to date:
australiannickelconference.com
NICKEL PREVIEW
Talisman restarts
Sinclair programme
It has often taken a back seat to higher the company was fierce,” Talisman Min- copper and 1.6 g/t gold has since been
grade projects but the Sinclair nickel de- ing Ltd managing director Dan Madden delineated with a feasibility study expect-
posit may be about to return to the spot- told Paydirt. ed to follow in early 2017.
light.
Madden and two other Talisman With that work being undertaken by
Discovered by Jubilee Mines in 2006, board members – Alan Senior and Brian Sandfire, Talisman is free to return to
Sinclair was developed and mined for Dawes – were familiar with Sinclair from Sinclair.
five years by Xstrata before being placed their days with Jubilee and when the as-
on care-and-maintenance in 2013. set came up for sale, the junior explorer “Since stopping the drilling last Octo-
Throughout that period it was a strong jumped at the opportunity. ber we have delineated the resource at
performer but was never quite a match Monty, completed a $16.7 million capital
for the Cosmos mine, its high-grade “Jubilee made the decision to mine raising and sentiment towards nickel has
brother in the Jubilee/Xstrata stable. before selling out to Xstrata, who even- picked up,” Madden said.
tually developed it. So, we knew it was
Xstrata produced 38,500t @ 2.44% only lightly explored by both Jubilee and The deposit has been mined to a
nickel from the mine – located at the Xstrata and it had existing infrastructure, depth of 445m and while mineralisation
southern end of the Agnew-Wiluna a camp and a 330,000 tpa concentrator is known to continue at depth, Talisman
greenstone belt which boasts more than that was running at 400,000 tpa.” does not intend to immediately chase the
9mt of nickel production – but as nickel extensions and remnants.
prices fell and the Swiss company con- Talisman completed the acquisition in
tinued its expansion, Sinclair fell down February 2015 paying $8 million for an “Going back into the mine and focusing
the priority list. asset valued at $800 million when bought on what was left was never the rationale,”
by Xstrata. The company started drilling Madden said. “We knew there was min-
“The focus at the time was on opera- almost immediately but market condi- eralisation beyond the 440m level but the
tions and competition for capital within tions and progress on other projects drilling down there is fairly wide-spaced
and to get to JORC would be expensive
began to deflect and in this market not the best use of
Talisman’s attention funds.
away from Sinclair.
“Instead, we are focused on exploring
“We have only along the Sinclair Trend and delineating
lightly tested it since more nickel. There is more than 80km
we acquired it,” strike of ultramafic rocks, most within
Madden said. “We 25km of the Sinclair concentrator.”
started drilling in
October 2015 but While the drill rigs were running at full
that was cut short; throttle on Monty, Talisman’s exploration
somewhat because team, led by general manager geology
of the market senti- Tony Greenaway, took a more consid-
ment towards nickel ered approach to Sinclair.
but mainly because
the Springfield JV “This is very complex geology but in
with Sandfire [Re- that lays the opportunity,” Greenaway
sources NL] started said.
at the same time
and we were right in The company undertook a major re-
the middle of a drill- view to better understand controls on
out on the Monty mineralisation and remodel the ultramaf-
copper deposit. ic/basal contact – the key to unlocking
the belt’s nickel potential.
“We had to focus
our cash on that.” Greenaway said there were five imme-
diate regional targets to follow up. Drilling
So, just as under restarted in September with Delphi North
Xstrata Sinclair was identified as a priority target.
pushed down the
priority list in favour In late September, the company re-
of a high-grade re- ported massive and stringer nickel sul-
lation. Talisman en- phide intersections in four out of seven
joyed strong market RC holes, in some cases with intervals
support following of 8m. Assays are due this month but
the Monty discov- Talisman already intends to follow up the
ery and a resource initial hits.
of 1.05mt @ 9.4%
“We like Delphi North because we see
potential for Sinclair repetitions there,” he
said. “It has similar lithology, geochemical
signature, structure and EM anomalies.”
PAGE 78 OCTOBER 2016 AUSTRALIA’S PAYDIRT
“We are looking for happy with the JV rela-
these jogs in the base- tionship and looked for-
ment geology where ter- ward to release of the fea-
races form,” Madden sibility study in the March
said. “Sinclair sits on that quarter.
as does Delphi North and “Monty is one of the
it looks very similar.” highest grade copper
Delphi North is 4km discoveries of the last 30
south of Sinclair and years,” he said. “It may be
Madden said the immedi- fairly small but more than
ate priority would be on 75% of the tonnes are
such near-mine targets. plus-12% copper. What
“The best bang for our we particularly like is the
buck is with the closest proof-of-concept of the
targets to the mill,” he VMS camp model and it
said. “We are planning for has been proven to not be
a second programme lat- on the same trend as De-
er this year. It is a focused Grussa which suggests
strategy; not a huge pro- Talisman’s first drilling at the Delphi North target has returned massive and further opportunities for
gramme.” stringer nickel sulphide intercepts in four of seven RC holes near-deposit targets.”
However, both Madden
With much of the com-
pany’s cash being held in reserve for the is likely to be similar tenor to the exist- and Greenaway said patience was re-
prospect of Monty’s development, Mad- ing deposit, around 2-3.5% nickel. It is quired in searching for the next Monty or
den is unwilling to break the bank for not Cosmos but we are comfortable with DeGrussa.
Sinclair exploration at the moment but that fact. “These are tricky things to find and you
did suggest exploration success could “It was a counter-cyclical acquisition. It need to be methodical in the approach
change the situation. is underexplored and there is $120 mil- taken,” Madden said.
“If the nickel price suddenly shot up or lion of infrastructure there, ready to go. – Dominic Piper
something of suitable scale was found, And, the carrying costs are only $2 mil-
we could undertake a capital raising but lion a year.”
we are not there yet. The Sinclair area On Monty, Madden said Talisman was
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 79
NICKEL PREVIEW
St George gets the good vibes
Even at times of low nickel pric- hardline approach to the country’s
es, St George Mining Ltd has
stayed true to its core; exploration. industry, which could result in the
The company has been one of closure of more mines, including
the most active junior explorers in
any commodity on the ASX and is nickel projects which supply China.
well positioned now that positivity
has returned to the nickel sector. St George executive chairman
John Prineas told Paydirt that
However, the company’s share
price – 14c/share at the time of while the current restriction of sup-
print – perhaps does not reflect the
exploration success St George has ply out of the Philippines was good
had at its Mt Alexander project this
year. for nickel prices, banking on the
Mt Alexander, which was ac- situation to build a nickel business
quired from BHP Billiton Nickel
West Pty Ltd under a 75:25 St was fraught with danger.
George/Western Areas Ltd config-
uration, has been a focus for St George, “You can’t rely on those coun-
which has discovered high-grade nickel
sulphides within the Cathedrals belt. tries delivering that restriction in
Now that the nickel price is improving the long term, I am not holding
– $US3.50/lb in February to $US4.60/lb
in late August – share price appreciation my breath just on the Philippines,”
might start to come for St George.
Despite low nickel prices, St George has remained Prineas said.
If the company’s latest capital raising
active in the exploration space “I think if we are all banking on
the Philippines cutting supply, it is
is any indication, there is renewed inter- not good enough, we need to look at the
est in the nickel sector and St George is broader supply/demand equation. Phil-
emerging as a stock of choice. ippines has been a great little boost but
St George’s recent $6.47 million pri- you need to look at the broader picture
vate placement closed heavily over- as well.”
subscribed, as investors reacted to the The Chinese nickel pig iron industry is
decline in LME nickel stockpiles and still a big factor in nickel supply but it is
Philippines President Rodrigo Duterte’s the high quality stainless steel products
PAGE 80 OCTOBER 2016 AUSTRALIA’S PAYDIRT
which are in greatest need of high-grade achievement,” Prineas said. dropped on cobalt just yet, but I think it
nickel sulphide concentrates. Recent drilling has intersected addi- will and it will be a big story going for-
ward,” he said.
“Everyone realises that nickel, of all tional massive nickel-copper sulphide
commodities, is very cyclical and they mineralisation 64m from surface at Ca- “Nickel is red hot and cobalt will fol-
are starting to see that the cycle is start- thedrals in hole MAD35. low into that I think, eventually. We are
ing to change,” Prineas said. lucky enough to have very strong cobalt
Drilling at MAD35 was completed to a credits in our nickel sulphides and as we
“We are seeing smarter investors depth of 94.5m, down dip from MAD15 go on we will do a little bit more work on
looking for nickel plays. Brokers are tell- and MAD16 where mineralisation in the metallurgy of the mineralisation in the
ing us some of their institutional clients MAD15 included 1.17m @ 8.75% nickel, next couple of months and we will get
and technically minded high-net worths 3.37% copper, 0.24% cobalt and 6.16 g/t some information out there on the cobalt
are looking for nickel plays as they can PGEs from 30.17m. as the market catches up.”
see the cycle turning. We were well sup-
ported in the recent capital raising with Infill and extensional drilling is planned One story the market is in tune with
quality investors from Bell Potter and Ar- along the Cathedrals ultramafic, as the is gold and St George is a participant in
gonaut coming onboard, so we are very high-grade nickel, copper, cobalt and the sector, albeit at an early stage, and is
pleased with how we are progressing.” PGEs have encouraged the company making good progress at its East Laver-
to continue exploiting the underexplored ton project.
High-grade massive nickel-copper 400m strike.
sulphides discovered at Cathedrals ex- A total of 1,580m RC drilling had been
tending over 400m is no doubt one of the Meanwhile, at Investigators mas- completed at Bristol testing for anoma-
value propositions investors have con- sive sulphides at a depth of 122.5m at lous supergene and bedrock geology
sidered when summing up St George. MAD37, ultramafic with massive sul- over the magnetic sequence. Assays
phides at a shallow 27.6m at MAD38 and were pending at the time of print, while
By stepping out west of Cathedrals, massive sulphides down to 107.85m at a 2,000m programme to follow up on RC
high-grade massive nickel sulphides at MAD40 (average nickel content of 15% drilling at Ascalon to test for further ex-
Investigators have also been intersect- based on XRF field analysis) have been tensive metal-rich hydrothermal systems
ed, while similar success at the Strick- intersected. identified this year was also in play.
lands prospect has been reported by St
George. In addition to keeping the market up to – Mark Andrews
date with his company’s nickel-copper
“We have gone from a 400m strike sulphide results, Prineas said more in-
length to over 3.5km. It is not totally formation on the cobalt credits could be
mineralised all the way, but it covers expected in the coming months.
that 3.5km which is quite a tremendous
“I don’t think the penny has quite
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 81
NICKEL PREVIEW
Silver Swan first to take flight
Poseidon Nickel Ltd 18 months to first produc- mine stockpiles at the Black Swan mill
will plough ahead tion.” on which the company plans to run ore
blend test work.
with a DFS on a restart The current DFS is be-
The entire Black Swan project was ac-
at the Silver Swan nickel ing built on the foundations quired in the November 2014 deal which
saw Poseidon also land the Lake John-
mine in the hope that a of an internal study com- ston nickel assets of Norilsk Nickel. It had
agreed to sell Silver Swan to Caeneus
turnaround in the nickel pleted at the end of 2015. Minerals Ltd but when that sale failed
to materialise, Poseidon reassessed its
price eventually arrives. “We did the internal own development plans for the under-
ground mine.
Poseidon is set to study at the end of 2015
“Silver Swan is the most likely the first
complete the DFS be- and the numbers we are of the nickel assets to be restarted,” Rod-
riguez said. “We’ve been looking at a
fore the end of 2016 and getting now from contrac- number of options but with its indicated
resource grade of above 9% nickel Silver
chief operating officer tors are supporting those Swan is the favourite to restart and is the
focus in the short to medium term while
Michael Rodriguez said findings,” Rodriguez said. we await a turn in the market.”
the company would then Poseidon has continued An explosives licence and a project
management plan are the only outstand-
be in a position to hit the to build the restart case at ing approvals for the restart and Rodri-
guez is confident there would be little
approval button for the Silver Swan, which con- delay if the board did give the go-ahead.
Silver Swan redevelop- tains 136,000t @ 9.08% “A restart is fairly straightforward as we
ment as soon as market for 12,400t contained
conditions supported it. Poseidon plans to use the nickel.
Lake Johnston processing Beck Engineering is un-
“The indications are plant to treat lithium ores dertaking geotechnical en-
that the DFS will support
a restart, it is just a mat- gineering work for the un-
ter of pricing,” Rodriguez told Paydirt. derground mine and Entech Engineering
“From the time we finalised financing we is in charge of definitive engineering and
would need a minimum of six months and the life-of-mine schedule.
a maximum of 12 so if the board said yes In addition to the in situ resource,
at the end of this year it would be around there is 1.2mt @ 0.49% nickel of run-of-
PAGE 82 OCTOBER 2016 AUSTRALIA’S PAYDIRT
have continued to dewater and conduct sions but Rodriguez is glad the company feet through a mix of sound development
care-and-maintenance,” he said. is still alive and kicking in what has been work and opportunism.
a brutal market for nickel juniors.
With three West Australian nickel as- In May, it joined the growing throng of
sets in the portfolio – Lake Johnston and “We were almost there [development] juniors at the lithium table.
the long-held Mt Windarra nickel project in 2013 when nickel was $US6/lb and
being the others – Poseidon could be had two term sheets on the table for “The lithium play is pretty exciting,”
a much changed company following a Windarra. Had we started we would’ve Rodriguez said. “We started looking at
spike in nickel prices and Rodriguez said had a shock to the organisation once the the pegmatites on our Lake Johnston
he continued to weigh up other openings price dropped. Instead, we were actually ground and the soils gave us some inter-
in the space. first-mover and shut things down. History esting values. We were originally going
has proven us correct as the market has to do some trenching but will now prob-
“I think there are still some M&A or remained soft.” ably get a drill rig in. We have to see if
purchase options out there and Posei- the spodumene we have is commercial.”
don has got access to good money,” Nickel has recovered from the dec-
Rodriquez said of a company that counts ade-long lows of less than $US3.50/lb it The company is also building a re-
Andrew Forrest among its largest share- reached in February this year but even lationship with Kidman Resources Ltd
holders.” 2016’s high of $US4.90/lb is widely con- which is defining lithium resources at its
sidered unsustainable by most of the in- Mt Holland project in WA’s Eastern Gold-
The question is when the board will be dustry. fields.
in a position to make restart decisions.
“The market is about supply and de- “We had been talking to Kidman about
“The board needs to see stability in the mand and at some point it will shift again. them using the Lake Johnston plant for
nickel price,” Rodriguez said. “It would We are unlikely to ever see $US30,000/t toll-treatment of their gold. Now we are
like to see nickel above $US5/lb for a again but certainly there will be a healthy turning it into an option to use Lake John-
minimum of three months so it is a cau- market in the future,” Rodriguez said. “At ston as a central lithium processing facil-
tious approach.” the current spot price, 65-70% of nickel ity and are working on a heads-of-agree-
is loss-making and the world’s biggest ment now,” Rodriguez said.
The company’s caution is understand- operations are all losing money. If in two
able. Poseidon has been almost peren- years the price is still below $US5/lb I “Gold and lithium are very attractive
nially in nickel development mode for the think you will start to see some closures, in the current market so the opportunity
last eight years, patiently waiting for the particularly in the big mines.” is there for us to look for short-term op-
market to provide the right conditions for tions to utilise the Lake Johnston asset
the construction of first Windarra, then In the meantime, Poseidon is playing and create a win-win for both us and Kid-
Lake Johnston and now Silver Swan. the role of plucky junior; surviving on its man.”
It has been close on a number of occa- – Dominic Piper
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 83
NICKEL PREVIEW
Dual production drives Mincor
Mincor Resources NL will Peter Muccilli gold from 20m at Bass, 5m
produce both nickel and @ 3.32 g/t from surface and
gold from its Kambalda pro- 11m @ 4.64 g/t from 59m at
jects if chief executive Peter Hronsky, 7m @ 23.1 g/t from
Muccilli’s dream comes to frui- 7m at Flinders and 7m @ 2.71
tion. g/t from 7m and 3m @ 8.2 g/t
from 4m at West Oliver.
Having placed its nickel op-
erations on care-and-mainte- While the gold results are
nance at the start of the year, generating quite a buzz in-
Mincor has spent most of side Mincor’s West Perth
2016 working up the prospec- office, Muccilli and his team
tive gold tenure on its 500sq have also been keeping a
km property. close eye on the nickel price.
Since launching its gold Muccilli, who became
strategy in March, Mincor has Mincor’s chief executive in
built up a resource of 4.15mt February after many years
@ 1.8 g/t gold for 238,640oz as chief operating officer, re-
across six prospects at Widg- vealed to Paydirt his vision
iemooltha. The company has for dual production of both
also completed pit optimisa- metals when the nickel price
tion studies which highlighted improves.
its economic potential for the
precious metal. “Salt Lake [Mining Pty
Ltd] is mining both gold and
Recent infill drilling returned nickel together and poten-
a series of encouraging hits, tially we could be in the same
including 10m @ 4.74 g/t boat,” Muccilli said. “We’ve
PAGE 84 OCTOBER 2016 AUSTRALIA’S PAYDIRT
got quite a bit of work to get to that point option by restarting exploration for the jects from four prospects on our leases.
though, but this is the sort of opportunity base metal. We want to be testing those targets in the
the land holdings have presented to us. near future. It’s been a really important
“We’ve got the Cassini prospect where addition to our portfolio.”
“Adding gold to your operational bow we’ve only looked at the southern end
just gives you a lot more flexibility in rid- of this magnetic feature,” he said. “The Muccilli said the company’s gold strat-
ing out cycles in both gold and nickel. northern half is still untested by drilling; egy had exceeded his expectations and
diamond or RC. In a different nickel price Mincor would soon be launching a longer
“We are in the heart of a gold-nickel environment, that’s a high priority target drilling campaign at Widgiemooltha to in-
district and we have both assets. In the and would have been drilled. Likewise at crease the size of the current resource
long run, as people before us have done, Republican Hill.” and upgrade it to reserve classification in
mining both bodes well over time, so I like order to pursue feasibility studies.
to think we have both operational strings Muccilli said it was possible his com-
in our armoury.” pany could use cash flow from gold pro- “We’re moving very quickly with our
duction to fund the restart of nickel op- strategy, March is not that long ago,”
Mincor completed a DFS in March for erations and then ultimately be churning Muccilli said.
independent restarts to mining at Durkin out both metals via separate processing
North and Miitel/Burnett, while retaining facilities. “There is a lot of gold near surface
nickel reserves of 28,200t, its highest and each prospect we’ve drilled has de-
level in five years. Mincor received the gold rights to its livered quality intersections. That’s what
North Kambalda tenements for the first happens when an asset sits in the back-
The studies found Durkin North can be time in its history in mid-June and Muc- ground of a nickel company.
revived for $20 million and Miitel/Burnett cilli is champing at the bit to punch some
for $12.4 million, returning NPVs of $24 holes into the prospective ground. “The change has been forced upon us
million and $15 million over their respec- a little bit, but it’s also an opportunity. In
tive four and three-year project lives, “We’d never seen the gold data prior to the long run, if we get this right, I think
based on flat nickel prices of $20,000/t June, it was never given to us, so when we’re going to come out much stronger
and $22,000/t for each. we got the data, with all the gold results on the other side, with both commodities
now included, we can see there’s gold on the table.”
Mincor also recently sold $4.35 mil- in soils, there’s gold intersections in the
lion worth of surplus equipment from its drilling and there’s plenty to work with in – Michael Washbourne
mothballed operations, topping up the that corridor,” he said.
company’s cash balance which stood at
$18 million at the end of FY2016. “This is the best gold corridor in West-
ern Australia. St Ives [Gold Mining Com-
Muccilli said he was “carefully consid- pany Pty Ltd] have recognised four pro-
ering” enhancing his company’s nickel
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 85
NICKEL PREVIEW
Nickel still having an Impactmpact Minerals Ltd is planning ma-
Ijor drilling programmes for its nickel
projects in Western Australia and
New South Wales from early next
“year.
All our projects
are characterised
by targeting high-grade
deposits, which makes
With the success of its Common-
wealth gold project in NSW dominat- any future mine far less
ing focus in 2016, Impact expects to
switch its attention to Mulga Tank susceptible to price
and Broken Hill over the coming variation.
months.
And the diversified junior explorer
could be in for a timely cash injection “We want to rejuvenate our nickel
from Andrew Forrest’s Squadron Re- projects,” Jones told Paydirt. “We’ve
sources Pty Ltd, the private investment got a drill programme for Broken Hill
vehicle of the mining magnate’s Mind- all planned, it’s virtually ready to go,
eroo Group. but it’s been overtaken by events at
Having already tipped in $3 million Commonwealth…so we’re hopeful
over the past 12 months, Squadron has they [Squadron] will come into the
an option to invest a further $1 million in deal.
either Commonwealth or Broken Hill, or “We were very active on Broken Hill
both, to earn a 19.9% interest. A decision late last year, where we discovered
is expected soon. the highest-grade platinum group
Impact managing director Mike Jones metal results ever seen in Australia
said if Squadron was to commit to Broken in a drill hole, in the order of 1.2m @
Hill, then new holes could be punched 10.4 g/t platinum, 10.9 g/t gold, 294
into the ground in early 2017. g/t palladium, 4.6 g/t rhodium, 7.2 g/t
iridium, 5.6 g/t
osmium, 3.1 g/t
ruthenium, 19 g/t
silver, 1.8% cop-
per and finally
7.4% nickel.”
Mulga Tank, Drilling at Mulga Tank is set to resume in 2017
about 200km
RUC Mining is ideally situated both geographically and north-east of black shale units which have caused us
technically to ensure the optimum success of any operation. Kalgoorlie, has to drill a number of false anomalies in the
As Underground mining and construction specialists they past. We’ve also done quite a bit of soil
have the capability, facilities and capacity to offer a full been on the back- geochemistry surveys over our two key
support service which includes:
burner for the past
• A Comprehensive Mechanised Mining Solution 12 months, but prospects and we’re expecting those as-
• Underground Construction Jones said that was says through shortly. We also recently
• Boxhole Boring not due to falling won a $150,000 from the EIS grant to drill
• Raise Drilling nickel prices or lack there in the future.”
• Shaft Sinking of support for the
• Specialist Ground Support and Grouting Jones said his company was also keen
RUC Mining is committed to innovation in designing ever base metal. to poke some holes into a second pros-
safer working practices and more efficient development The company has pect at Broken Hill – Platinum Springs –
and production techniques. Operating in locations from where magmatic nickel-copper sulphides
the remote to the highly urbanised, the company seeks maintained activ- have been identified.
to maximise the engagement of local workers, whilst ity on all three of its
maintaining world’s best practices. flagship projects, “One of the reasons we got into Bro-
with Common- ken Hill was the grade,” he said. “All our
Incycle Shotcrete Pty Ltd (ICS) is a proud member of the RUC wealth the project projects are characterised by targeting
Cementation Mining Group and specialises in the supply and most likely to deliver high-grade deposits, which makes any
installation of high quality reinforced shotcrete and concrete it a big discovery,” future mine far less susceptible to price
products used for ground support and civil construction.
Jones said. variation.
“We have done “The grades that we’ve produced at
some nominal appli- Broken Hill and also at Mulga Tank, albeit
cations of HeliSAM in narrow intervals, are the sort of grades
and EM [at Mulga that would see us through the hard parts
Tank] and we’ve of the cycle.”
been able to basi- – Michael Washbourne
cally map out the
PAGE 86 OCTOBER 2016 AUSTRALIA’S PAYDIRT
Panoramic plays waiting game
The immediate future of year low in February, of-
Panoramic Resources fering suspended produc-
Ltd’s Savannah nickel pro- ers such as Panoramic a
ject will become clearer glimmer of hope to restart-
over the next few months. ing operations in the near
Having put the Savannah term.
mine on care-and-mainte- Harold – who poked fun
nance in May, Panoramic at himself by revealing
is preparing a feasibility he now checks the nickel
study for a potential restart price on an hourly basis
of mining and processing up to 10 times a day, much
activities. to his wife’s chagrin – con-
The internally prepared ceded the current price
study is due for completion trough felt different to oth-
in December, but Pano- er downturns.
ramic has stressed any re- “I think the big differ-
start decision will hinge on ence has been the pro-
a more stable nickel price. liferation of the nickel pig
When operations do iron business, which went
resume, however, Pano- Panoramic’s Savannah nickel operation has been on care-and-maintenance from being zero produc-
ramic will have more nickel since May, but the company is optimistic about a restart tion to 600,000t in the
resources to dig up than space of seven or eight
when first dirt was turned at Savannah engineering team to undertake design years,” Harold said.
back in 2003. and scheduling work. “One of the biggest changes [I’ve seen]
Following a recent upgrade to the un- Another drilling campaign is also is just how much impact metal specu-
developed Savannah North resource, planned, with the results likely to be in- lators are having on the market. They
the project in Western Australia’s East cluded in the upcoming feasibility study. certainly move the markets very aggres-
Kimberley region now boasts 226,400t “We want to test the western extension sively and when the prices are good they
nickel, 104,700t copper and 15,300t co- of that orebody and we’ve also got some obviously go long and that pushes prices
balt – about 3.5 times the original esti- other targets in the vicinity that have nev- up. When the market is negative and
mate for Savannah. er had a drill hole and could potentially there’s negativity around, they go on the
The upgrade lifted the resource at Sa- be mineralised too,” Harold said. short side and adjust it back to the down-
vannah North by 60% to 10.3mt @ 1.7% “It will be a surface drill programme ward price movements, probably more
nickel containing 175,100t, including 73% of five or six holes and that will probably so than I’ve ever seen.”
classed as indicated. take a couple of months.” Panoramic’s share price has jumped
Panoramic managing director Peter Savannah produced a record 1,263t nearly 100% in the past three months,
Harold said the resource upgrade sug- nickel in April as stockpiled ore was mainly on the back of its plans to spin out
gested his company was dealing with a rapidly whittled down before operations the Gum Creek gold project, 120km from
much larger mineralised system. ceased on May 20. Wiluna, via an IPO later this year.
“We might not even have touched the Harold said his team had adjusted to A scoping study released earlier this
surface yet, it could be something much not being a recognised miner for the first year found the free-milling project (for-
bigger,” Harold told Paydirt.
time in 13 years, although the company merly known as Gidgee) could support a
“It’s just amazing that 500m away from founder admitted it was still a “weird feel- 60,000 ozpa operation for a pre-produc-
where we’ve been operating for the last ing” not having a producing asset at his tion capex of $62 million and an average
12 years there’s potentially a much big- disposal. AISC of $1,209/oz.
ger orebody. It’s all very exciting.” Panoramic mothballed its Lanfranchi Panoramic shareholders are set to
The feasibility study will build on the nickel mine, near Kambalda, in August own 50% of the new company, which is
results of an earlier scoping study on 2015 and little has been said about its seeking to raise $15 million to list on the
Savannah North which flagged produc- future since, but Harold insisted his com- ASX. Somers & Partners Pty Ltd is over-
tion of 9,500 tpa nickel – plus copper and pany had not turned its back on the high- seeing the proposed float.
cobalt credits – over a mine life of almost grade operation. “We’re feverishly working away on
eight years, based on a then-resource “We haven’t forgotten about Lan- the prospectus, that’s our number one
of 6.88mt @ 1.59% nickel containing franchi, it’s not costing us much money priority in the business at the moment,”
109,600t. to hold it for the time being,” Harold said. Harold said. “It’s a big document and a
Key financial metrics from that study “We still have an off-take arrangement lot of people are involved, but we have
include a pre-production capex of $42 with BHP [Billiton Nickel West] until 2019, a great team of people who are working
million, life-of-mine capital of $137 million so when the nickel price does pick up very diligently and it’s all coming together
and C1 cash costs of $US2.20/lb. again we’ll be in a position to return our pretty quickly. I’m really pleased with the
Following the resource upgrade at Sa- sights to Lanfranchi.” progress they’ve made.”
vannah North, the resource model was The nickel price has bounced back in – Michael Washbourne
handed to Panoramic’s internal mining recent months after slumping to a 12-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 87
NICKEL PREVIEW
Building a Legend in
the Fraser Range
Like many explorers in “We found that particularly
the Fraser Range, Leg-
end Mining Ltd aspires to encouraging and evidence
unearth a Nova-Bollinger
lookalike. that the system is working.
It has been four years What that did for us is re-
since Sirius Resources
made the famed Nova dis- ally increase the prospectiv-
covery but companies have
since failed to deliver after ity of our entire project area
playing the “nearology”
card. for the mineralisation that we
However, as Legend are looking for,” Wilson said.
managing director Mark
Wilson points out, from Legend’s use of aeromag-
the time exploration in the
Fraser Range started in netic and gravity datasets
the 1970s it took almost
40 years for anything con- to identify potential intrusive
sidered world-class to be
found in the province. bodies, followed up with
“The first exploration that ground EM and drilling, was
I am aware of out there was
in the 70s and it took until 2012 before credited with producing such
Nova was discovered. I think the secret
there is the discovery of Nova has given results thus far, according to
everybody a template of what worked for
Nova and that’s a great starting place; Wilson.
previously that didn’t exist,” Wilson told
Paydirt. It was this type of system-
“You would think that with the ad- atic exploration investors
vancement of technology, the fact that
Nova has been discovered; it’s a realistic appreciated about Legend,
possibility [a Nova-like discovery can be
made in the next three years] and I hope Wilson saying the company
it is Legend.”
Legend’s Rockford project has revealed some similarities would continue this consci-
Compared to some other cash- to Independence’s Nova project entious approach.
strapped explorers, Legend is well fund- At the time of print, Legend
ed and, in some respects, is ahead of
some of its peers in the Fraser Range. nificance of sulphides that we found in was reviewing all data from the diamond
Cash and liquids amounted to about those first two diamond holes,” Wilson drilling programme, including structural
$8.5 million (to the end of June) and with
positive sentiment returning to the nickel said. interpretation of the core, petrology of
sector, it appears money for players in
the industry is more forthcoming now “I left that road show confident that we selected samples and assays of selected
than in the recent past.
were a pretty rare breed because we are samples.
Despite encouraging feedback from in-
vestors on a road show of Australia’s East a well-funded junior explorer. They un- The use of the geophysical techniques
Coast in August, Legend does not need
to fill its coffers and instead is focused derstand what we are trying to do, they of inversion modelling and deeper in-
on proving its concepts at the Rockford
project, 120km north-east of Nova. understand what we have achieved and vestigation of whether EM programmes
“They [investors] like our systematic they are very supportive of both.” could identify a deeper conductor is also
approach to our exploration programmes
and the more technical analysts of sev- Legend secured the Rockford project being analysed.
eral funds and broking houses that I have
visited, truly appreciate the potential sig- about 12 months ago and wasted no time Wilson said the company was really
hitting the ground with a drill programme. looking for the presence of massive nick-
By the end of the year, the company el-copper sulphides and if anything was
had identified seven conductors, with detected “it would provide an enormous
Area D hosting five of those. shot in the arm not only for that area but
RC drilling of four conductors at Area the entire project”.
D and one at Area F started early in 2016 “From the encouragement that we have
and in addition to follow-up work on mov- got from Area D, we have commenced
ing and fixed-loop EM surveys on the moving loop EM surveys [in late August]
same conductors, targets for diamond over another eight areas throughout the
drilling were generated. entire tenement package looking to build
A two-hole diamond drilling pro- on our dataset of the entire project area,”
gramme on three conductors – D6, D7 Wilson said.
and D8 – significantly increased the po- “In the six months to Christmas we will
tential at Area D, Legend reported. carefully review Area D to see if there is
“The pleasing aspect of that diamond another drill target. We’ll do an aircore
drilling is we actually got sulphides in programme over all or some of those ar-
the metasediment and those sulphides eas later in the year as well. Obviously, if
were nickel, copper and iron sulphides; we get a target at Area D we will make all
pentlandite, chalcopyrite, and pyrrhotite, haste out there with a diamond rig and go
respectively,” Wilson said. out there and prosecute that drill.”
The company had encountered sev-
eral similarities to a Nova-Bollinger style
system, according to Wilson.
PAGE 88 OCTOBER 2016 AUSTRALIA’S PAYDIRT
NICKEL PREVIEW
New home for stalled KNP
Heron Resources Ltd’s has meant the other projects,
longstanding Kalgoorlie
Nickel Project (KNP) will soon while really good projects,
be housed in a new company.
have struggled for funding,
With the Woodlawn zinc-
copper project in New South attention and activity on the
Wales dominating Heron’s
focus, the company is looking ground to see them pro-
to spin off its non-core assets
via an IPO of wholly owned gressed in their own right,”
subsidiary Ardea Resources Taylor told Paydirt.
Ltd.
“The idea of the spin-out is
Other assets to be incorpo-
rated into the new company really about putting the major-
include the Lewis Ponds
gold-zinc project in central ity of those projects within an
NSW and the Mt Zephyr gold
targets, about 60km north- entity that can basically fund
east of Leonora.
and manage itself and realise
A prospectus and timetable
for the proposed float was be- some value for Heron share-
ing compiled at the time of print. Heron
plans to offer existing shareholders an holders [because] if things
in-specie distribution of shares in Ardea.
go to plan with Woodlawn,
Heron managing director Wayne Tay-
lor said his company had been consider- we won’t be doing much else
other than Woodlawn for the
next couple of years.”
The Kalgoorlie Nickel Project will soon be under the Heron picked up KNP in
control of Heron subsidiary Ardea Resources 1997, but a series of failed
partnerships and funding
ing a spin-out of its non-core assets “for plans over the next 19 years has cast se-
some time” following the merger with Tri- rious doubt over whether the project can
AusMin in mid-2014. actually be developed.
“It’s fair to say our focus has been Despite the market ambivalence to-
wholly and solely on Woodlawn, which wards the nickel laterite project, Heron
PAGE 90 OCTOBER 2016 AUSTRALIA’S PAYDIRT
has persisted with the project and built up a healthy resource
of 796mt @ 0.7% nickel at KNP and released a 2014 scop-
ing study focused on a 20,000 tpa operation using a carbon-
friendly sulphuric acid leaching and recycling process.
The study found the project could support production of
19,500 tpa of nickel, shipped as a mixed hydroxide product,
over a 35-year mine life for a pre-production capex of $660
million and operating costs of $US4.27/lb.
Some of the KNP tenements also host gold mineralisation
which Heron has yet to follow up in detail.
Taylor said the project had a much better chance at being
developed under Ardea’s control, however, he conceded that
was unlikely to happen in the near term due to the current
pricing trough for nickel.
“KNP hasn’t, for some time, been a project that Heron has
seen itself developing in its own right because the capital re-
quirements far exceed the capacity of the company to support
it,” Taylor said.
“The nickel market has been well and truly out of favour
– it’s certainly not out of the woods yet – but KNP presents
a great option on nickel going forward in the right pricing en-
vironment and with some alternative processing technology.
“I’m sure some shareholders would like to see it receive
more recognition and to see it advance, but in the current
pricing environment it’s difficult to see that happening, as is
the case for just about every other nickel project in the world,
whether it be laterite or sulphide.”
KNP will compete with Lewis Ponds, about 15km east of
Orange, to be the flagship project in Ardea’s portfolio. Lewis
Ponds hosts a JORC 2004 resource of 6.62mt @ 1.5 g/t gold,
69 g/t silver, 2.4% zinc, 0.2% copper and 1.4% lead and sits
along the same trend as Regis Resources Ltd’s McPhillamys
gold project, about 20km to the south.
“I’ve been associated with the Lewis Ponds project since
2011 and it’s a piece of real estate in a well-known gold dis-
trict that many others would dearly have liked to have got their
hands on, so we know it’s held in very high regard,” Taylor
said.
Heron has a strong track record when it comes to spinning
out assets. In 2002, the company floated Avoca Resources,
which went on to develop the Higginsville gold mine before
merging with TSX-listed Anatolia Minerals in 2011 to form Al-
acer Gold Corp.
Ardea is expected be one of several new companies to
list on the ASX via an IPO in the second half of 2016, with
TNG Ltd and Panoramic Resources Ltd set to spin-out their
respective non-core assets over the coming months. Metals
X Ltd is also planning to split its gold and base metals projects
into two separate companies.
“It’s probably the first time the markets have really been
open for IPOs in the resources sector in the last five years or
so,” Taylor said.
“We want to see some recognition for the projects we have
within our portfolio, but they were clearly going to struggle
with Woodlawn being pushed ahead and having to divert 99-
100% of our effort towards seeing that proceed.
“It is all about timing and the receptiveness of the market to
support these projects going out on their own.”
– Michael Washbourne
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 91
NICKEL PREVIEW
Fisher East back in vogue
Rox Resources Ltd is preparing to fairly quickly.” We’ve got untested downhole EM con-
bring its flagship Fisher East nickel Rox has built up a resource of 4.2mt @ ductors beneath each [deposit] but we’ve
project back into the spotlight. only drilled down to about 500m below
1.9% nickel for 78,000t across three de- surface. These deposits often extend
Work on the project, about 150km posits – Musket, Cannonball and Camel- well beyond that – the Kambalda de-
north-east of Leinster, was scaled back wood – and completed a scoping study posits are still going beyond 1.5km – so
to a bare minimum earlier this year due early last year before embarking on an we’re pretty confident these resources
to the low nickel price. However, with vital unfinished PFS. will continue at depth.
funding set to roll through the door any
day now and the nickel price continuing Despite putting major work pro- “Our 78,000t resource could eas-
to improve, Rox is ready to pick up where grammes at Fisher East on hold, Mulhol- ily be 100,000-150,000t, maybe even
it left off. land and his team have continued to look 200,000t, and if we’ve got 200,000t, then
for ways to improve the project’s eco- we’ve really got some options.”
And Rox managing director Ian Mul- nomics, with one “controllable” standing
holland is keen to remind everyone his out. Rox completed a small aircore pro-
company has one of the most advanced gramme at Fisher East last month to
nickel projects in Western Australia. “One thing that always comes out of test a series of targets, including Mt Tate
these studies is if you have a bigger re- and Horatio, with the drilling intersecting
“We’ve still got a little way to go, there’s source, then you have a greater timeline fresh sulphides up to 1% nickel.
no doubt about that, but the trick for us is to get a return on investment,” Mulhol-
going to be picking the right time to com- land said. Formal assay results were pending at
plete the studies and get the whole thing the time of print.
ready to go,” Mulholland told Paydirt. “And it lowers the risk because if it’s a
very short-term project and you pick the A more extensive drilling campaign
“From the time we make the deci- price cycle at the wrong time, then that will be implemented once Rox closes
sion to mine, we can be in production project isn’t viable. But if you pick the the sale of its 49% stake in the Reward
in about nine months. Obviously to get right time, you can make a lot of money, zinc project in the Northern Territory after
to that point, there might be another 18 so that’s what we’re aiming to do. striking a deal valued at $21 million with
months of work that needs to be done, Marindi Metals Ltd.
but we think we can be in production “There’s potential to increase the re-
sources beneath the current resources. Rox will be entitled to $8 million cash
PAGE 92 OCTOBER 2016 AUSTRALIA’S PAYDIRT
and $4 million worth of Marindi Rox managing director Ian Mulholland with exploration manager Will Belbin at the Fisher
shares, to be escrowed for a mini- East nickel project, about 150km north-east of Leinster
mum of 12 months. A $5.25 million
convertible note and a $3.75 million 2019, we could be looking at a nickel could add to the overall picture,” Mulhol-
deferred payment are also part of price around $9.50/lb or $10/lb.” land said.
the sale.
With Doray Minerals Ltd earning into “We’re in the Eastern Goldfields, so
The next programme will likely in- prospective gold tenure on the proper- there’s lots of nickel projects around.
clude follow-up drilling at the Sabre ty, Rox has started assessing available Some of them are a bit unloved at the
prospect which previously returned ground to potentially add more nickel moment, so we’ll have a look to see if
a best hit of 10m @ 1.9% nickel. tonnes to its resource base. anything is worth taking up.”
“We’re pretty confident Sabre is “We’ll look for other nickel sulphide – Michael Washbourne
going to be another 20,000-30,000t sources or other projects in the area that
nickel deposit, similar in size to
Camelwood,” Mulholland said.
Picking when to ramp up efforts
at Fisher East, however, is the main
conundrum for Rox, but Mulholland
is buoyed by Wood Mackenzie’s re-
cent five-year outlook on the nickel
price.
“They’re predicting for the next
four years – at least – nickel is going
to be in deficit, which means the stock-
piles that had built up will all be gone and
eventually there’s going to be upward
pressure on the price,” he said.
“That hasn’t happened yet, it’s prob-
ably not going to happen until next year
or maybe even the year after, but if all
things stay equal to the assumptions
behind this, then you can expect, come
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 93
REGIONAL ROUNDUP LATIN AMERICA
Drilling jubilation at Juruena
Aspectacular drill intercept grading Recent drilling at Juruena has returned several spectacular gold hits
more than 2,000 g/t gold has pro-
vided Crusader Resources Ltd with the Lago Dourado spent close to $C30 for Borborema earlier this year, focusing
strongest indication yet its Juruena pro- million on exploration between 2009 on a smaller 2 mtpa operation targeting
ject in central Brazil hosts multiple high- and 2014 before selling the project, lo- the upper lens (roughly 19.2mt @ 1.2 g/t
grade deposits. cated on the largely untapped 6 moz gold for 743,000oz) of the reserve.
Alta Floresta gold belt, to Crusader for
The extraordinary hit of 0.4m @ 2,009 $C650,000 plus shares. “This is a project that could easily be
g/t gold from 133m in hole MD-09 fol- much larger than it currently is, however,
lows the completion of a 14-hole drilling “The previous operators were con- with the gold price falling [after complet-
campaign covering almost 1,800m at the vinced the area had the potential to host ing the PFS] we decided to focus on our
Dona Maria prospect. a very large orebody in the vicinity of 10- other projects,” Stephen said.
20 moz,” Stephen said.
Other results from the first five holes “Now that we’re seeing some enthusi-
assayed include 10m @ 101 g/t gold “Every time you come out of the for- asm come back to the sector, we want to
from 125m (including 1m @ 65.4 g/t from est into another clearing you see an area be ready to go into production in the very
126m and 1m @ 104 g/t from 132m), where the locals have mined extensively. near term – and we’ve got some backers
1.5m @ 141 g/t from 45m, 4m @ 8 g/t When you fly over it you just see work- who want to see that happen.
from 96m (including 1m @ 27.99 g/t) and ing after working after working. And all
4m @ 3.98 g/t from 77m (including 1m @ the survey, aeromag, ground work, etc “We announced a major breakthrough
11.09 g/t). points to multiple targets.” on licencing [in July] and we’re in the final
throes of discussion with Brazilian au-
Recent drilling at the nearby Quer- “We have resisted the urge of trying to thorities and we hope to be able to report
osene prospect also returned several delineate where the ultimate source of back on being in a position to commence
impressive hits, including 2.9m @ 75 g/t that mineralisation is…that’s a question mining – from a licencing perspective –
gold from 113m (including 0.45m @ 335 which requires ongoing work. We think very soon.”
g/t), 1.4m @ 48.62 g/t from 84m (includ- it’s more important to be in cash flow and
ing 0.4m @ 88 g/t and 0.64m @ 47.9 g/t) making money and funding that work out Stephen said the company’s unherald-
and 1.47m @ 29.42 g/t from 57m. of positive cash flow rather than con- ed Posse iron ore mine, near Belo Hori-
tinuing to come back to shareholders for zonte, was “making money on a monthly
Crusader announced maiden resource more and more money.” basis” as the demand for local pig iron
estimates last September for both Quer- continued to rise at a steady rate.
osene (263,500t @ 12.3 g/t gold for Crusader’s plans to generate quick
104,100oz) and Dona Maria (196,300t @ cash from Juruena stems from its am- “What we had hoped to see post-Sa-
11.8 g/t for 74,700oz) and the company is bition to develop the larger Borborema marco has happened and we see a big
equally excited about the potential of the gold project, in Brazil’s north-east, while future for iron ore, but we think it’s prob-
Tomate and Mauro prospects. sentiment towards gold remains favour- ably got a little bit of time to go yet,” he
able. said.
“We’ve never viewed Juruena as being
just one mine,” Crusader executive direc- Borborema hosts a resource of 68.6mt “A large part of that has to do with the
tor Paul Stephen told Paydirt. @ 1.1 g/t gold for 2.43 moz, including Brazilian economy. We’re expecting to
proven and probable reserves of 42.4mt see an improvement at some stage and
“Our approach has been to focus in on @ 1.18 g/t for 1.16 moz, and a PFS was as that happens that will be reflected in
some of the smaller occurrences in the completed on the project in September the demand for our iron ore.”
area where we see potential for a district 2011, based on a 3 mtpa open-cut opera-
of very high-grade, very profitable mines tion producing up to 180,000 ozpa. – Michael Washbourne
with a central processing facility.
Crusader reignited development plans
“We think it’s got the potential to be an
area that is akin to a Kalgoorlie, where
you have multiple deposits with an obvi-
ous source feeding those, but finding that
will take a large amount of money, so our
aim is to get into production, get into pos-
itive cash flow and exploit the upside of
many additional targets.
“We’re really encouraged by the suc-
cess we’ve had lately, it’s really giving
credibility to the concept that this is not
a singular-mine project. How big they are
is yet to be determined…there’s no ques-
tion the tenor of gold in this area surpass-
es anything we’ve seen in Brazil.”
Almost 8,000m was drilled at Juruena
as part of the current programme – Cru-
sader’s second major campaign since
acquiring the project from Lago Dourado
Inc in July 2014.
PAGE 94 OCTOBER 2016 AUSTRALIA’S PAYDIRT
LATINSAVE THE DATE
AMERICA
17-18 May 2017
Perth,Western Australia
www.latinamericadownunder.com
To present, exhibit or attend as a delegate please contact
Melita Fogarty on (+61) 8 9321 0355 or email [email protected]
REGIONAL ROUNDUP
Santana tunes up for
Cuitoboca resource push
Santana Minerals Ltd has a and we think once we understand
new lease on life after return-
ing a series of encouraging explo- the system at surface it will not be
ration results at time when silver
is beginning to return to investors’ hard to build a resource and move
thoughts.
onto the next target and then con-
The ASX-listed explorer has
enjoyed a tenfold increase since tinue moving north.”
February, moving from 0.6c/
share to as much as 7.8c in Au- At Jesus Maria, there is the tan-
gust. Keen to take advantage of
the interest, Santana has under- talising prospect of adding gold
taken two successful capital rais-
ings this year, pulling in $495,000 mineralisation to the mix.
at 1.8c/share in March and a fur-
ther $2 million at 6c/share in late “The target is on higher ground
August.
and a bit more difficult to access
Managing director Tony Mc-
Donald said the change in mood but we know there is gold in the
towards silver and Santana itself
had been very welcome. system so we want to have a look
“Things have turned around at it,” McDonald said.
dramatically in the last six months
and it has been through a combi- “There isn’t a lot of vein expo-
nation of things,” McDonald told
Paydirt. “Silver has got a bit of sure but it has good rock chip val-
flavour about it – there is a recog-
nition it needs to catch up to gold ues and it is a good target.”
– and the fear has disappeared
in markets, led particularly by the The Jesus Maria prospect is
North American funds.”
15km along the same structural
Far East Capital Ltd took the lead on
the $2 million August placement and Mc- trend as the San Jose de Gracia
Donald said the firm’s well-known chair-
man, Warwick Grigor, had been fantastic gold mine which boasts resources
support to Santana.
of 1.14 moz @ 7.2 g/t gold.
“Far East Capital has been a beaut for
us,” he said. “Warwick approached us in “If we get similar results we
March but we didn’t want to dilute too far
and so we waited until August and he has won’t be apologetic about this
supported us again.”
becoming a silver-gold story,”
In August, Grigor used his weekly
newsletter to outline the reasons for his McDonald said. “It will allow us to
interest in Santana.
add value at minimum dilution to
“It ticks all the boxes; geology, scale,
management and commodity. It is at the shareholders.”
start of the value creation curve – the
definition and expansion of the resourc- With North American investors
es. It is taking ground that might be worth
$10/acre and turning it into something Tony McDonald returning to silver, McDonald be-
worth millions of dollars per acre based
on resources in the ground,” Grigor said. lieves a resource announcement
The ground Grigor refers to is Santa- the Mojardian Loop prospect in the June could place Santana (current market cap
na’s Cuitaboca project in Sinaloa state,
northern Mexico. The company acquired quarter further highlighted that potential. $16 million) on the radar of other players.
the project in July 2014 with a focus on its
bulk tonnage silver potential. Drilling at The company reported hits of 83m “There is not much M&A at the moment
@ 97 g/t from surface, 25m @ 222 g/t but the funds are getting themselves set
from 47m, and 67m @ 66 g/t from 31m and it won’t take long if we come up with
from the programme. McDonald said the a decent resource before somebody taps
money raised in August would be used to us on the shoulder,” he said. “But we
follow up these results. don’t want that to happen until we have
“We’ve shown good discipline dur- got the value into the stock and we are
ing the downturn and that approach is certainly not looking to do a deal now.”
starting to pay off,” he said. “We plan to Like its fellow ASX-listed silver explor-
drill another 1,000m at Mojardian Loop er Azure Minerals Ltd, Santana faces an
which, if the results are good, should be eternal challenge in convincing Austral-
enough for a resource.” ian investors of the merits of both silver
The drill rig will then move onto the and Mexico.
Mojardian South target in an effort to ex- “Mexico hasn’t had much attention
pand the mineralised zone before head- from the Australian market and our mar-
ing to the Jesus Maria breccia target to ket still doesn’t comprehend the lack of
the north which could change the shape risk associated with Mexico,” McDonald
of the project. said. “We have done dual listings in the
“We began by chasing the low-hang- past [most memorably with Bolnisi Gold]
ing fruit; the high-grade, narrow vein sil- and that is an option open to us again but
ver mineralisation at lower elevations in it is a bit early in the story.”
the south. We are confident they repeat – Dominic Piper
to the north so have always intended to
move in that direction.
“We have to show the project is real
PAGE 96 OCTOBER 2016 AUSTRALIA’S PAYDIRT
LATIN AMERICA
Azure raises Loma Bonita profile
The success of early drill- dor Teck Resources Ltd. The
ing has been such that the deal for Alacran afforded Azure
Loma Bonita gold prospect is four years to reach the $5 mil-
now looming as an equal rather lion expenditure mark required
than just a complement to Az- to acquire 100% of the project.
ure Minerals Ltd’s Mesa de That the company is about to
Plata silver project. achieve the milestone in the
Azure has quickly built a 15 next two months is testament to
moz high-grade silver resource the vigour with which it has hit
at Mesa de Plata – part of the the project.
Alacran project in the northern Azure’s aggressive approach
Mexican state of Sonora – and to Alacran has been supported
while the company continues by shareholders. In May, the
to investigate its potential, the company raised $15 million
Loma Bonita gold prospect is through a placement to institu-
also emerging as a rapid de- tional and sophisticated inves-
velopment option. tors, giving it enough cash to
A maiden intercept of 48m Initially thought to be a complement to the nearby Mesa de Plata complete its current exploration
@ 2.7 g/t gold was reported silver deposit, the Loma Bonita gold prospect is now emerging as plans and project development
in May with Azure since add- a possible development project in its own right work.
ing further hits of 49m @ 1.59 “We were very happy with the
g/t, 111m @ 0.81 g/t and 14m @ 1.59 g/t Rovira is keen to crack the metallurgical capital raising; particularly the level of
gold from surface. The six RC holes and code at Mesa de Plata before launching support we received from existing share-
four diamond holes have expanded the a full study. holders,” Rovira said. “There is now in-
gold mineralised zone at Loma Bonita to “For Mesa de Plata, the key factor is terest from North America, Europe and
400m by 150m the metallurgy. The mining, infrastructure Asia as well as Australia.”
“The beauty is that Loma Bonita is and permitting are just process driven Precious metals companies have en-
looking likely to be a significant gold and we are confident we can tick those joyed a strong rebound in 2016 thanks
deposit in its own right with potential for boxes without much difficulty.” to improving gold and silver prices. On
upwards of 100,000oz gold at surface in Work has defined two species of silver the ASX, domestic gold producers have
oxide material and with early metallurgy mineralisation at Mesa de Plata; a silver heavily outperformed the market but Ro-
showing it has good cyanide leaching re- halide and a silver-iron oxide. Some 70% vira believes the handful of silver-focused
coveries,” Azure managing director Tony of the silver mineralisation occurs as players have not received a similar level
Rovira told Paydirt.
silver halide, an advantage given metal- of support.
The prospect had originally been lurgical test work has indicated superior “North America is booming for pre-
drilled as a potential source of additional recoveries from the material. cious metals stories, however, in Austral-
material for the development of Mesa de “We are getting about 70% of the con- ia silver doesn’t have the same lustre as
Plata but Rovira now thinks it could con- tained silver from the halide and that is gold,” he said. “If you look at companies
tain economic mineralisation in its own almost exclusively associated with the involved in precious metals exploration
right. high-grade portion of the deposit. Those in Mexico, they have enjoyed share price
“The widths we are getting are indicat- results came from both flotation and CIL increases of between four and tenfold.
ing there is significant tonnage potential and we are now trying a few other tech- Ours has stayed flat. That indicates the
and the grades are significantly higher niques to improve the recoveries from North American market is much more in-
than the average grade of open pit heap the silver-iron oxide.” terested in a company such as ours.”
leach mines operating in the area,” he Rovira said the metallurgy would be Around 25% of Azure’s share register
said. “Grades at those operations are vital as Azure pursued a quick, low-cost is now North American-domiciled and
0.4-0.5 g/t gold; ours will be much higher start-up for Mesa de Plata. Rovira confirmed the company was con-
than that. “The focus is on getting into production sidering an exchange listing in that part
“Together it means the potential value as quickly as possible,” he said. “It is at of the world.
of Loma Bonita is getting close to equal- surface which makes it simple to mine “We are seeing more and more inter-
ling the value of Mesa de Plata.” and if we can heap leach with the same est from that part of the world and all cor-
Not that Azure is thinking of slowing recoveries as through the plant it would porate options are on the table; including
progress in what has been the lead pros- mean lower capex and lower opex.” a listing there,” he said.
pect on the Alacran project since acquisi- Metallurgical work is continuing with a The “corporate options” could include
tion two years ago. Instead, the company 5t bulk sample from the high-grade zone further project acquisitions in Mexico.
is undertaking early-stage development of the Mesa de Plata resource being “We are always looking for new op-
work to define development options for used to conduct column testing. Rovira portunities and there are many projects
the 9.59mt @ 83.9 g/t for 25.9 moz silver said the work would form part of an even- crossing our desk on a frequent basis,”
resource. tual full feasibility study on the project. Rovira said.
While the in-house studies will con- Before that, the company needs to – Dominic Piper
sider all aspects of a full feasibility study, fulfil its earn-in commitments with ven-
AUSTRALIA’S PAYDIRT OCTOBER 2016 PAGE 97
REGIONAL ROUNDUP ASIA
Audit to shake up mining
in the Philippines
The Philippines could suspend at least Nickel ore exports from Philippines to China have dropped 27% this year
10 more mines under an environmen-
tal crackdown on the sector, the minister would be seeing minimal exports toward suspensions will be announced by the
in charge of mining said, in a move that the end of the year.” end of September.
threatens to halt the operations of half the
mines in the world’s top supplier of nickel Past environmental disasters, includ- “The audit is done. And it’s important
ore. ing a 1996 tailings leak at a copper mine to say that even as we suspend mines,
in central Marinduque province that con- we have put up an area development
Global nickel prices jumped 2% – taminated rivers, have spurred mining programme. The commitment is in any
$US10,275/t at the time of print – as the opponents in the Philippines led by the suspended mines the people there will
country’s second biggest nickel producer influential Catholic Church. not lose work,” she said at the congres-
warned that more new stoppages would sional hearing.
disrupt shipments to the crucial Chinese Miners, however, have questioned the
market and elsewhere. inclusion of anti-mining activists in the Lopez’s stance on mining is backed by
audit teams. President Duterte, who has previously
President Rodrigo Duterte has taken warned miners to strictly follow tighter
a tough line on the industry and warned The Philippines is the biggest supplier environmental rules or shut down.
the nation could survive without mining, of nickel ore to China, where the metal is
while mineral producers have labelled a used to make stainless steel. “We have had mining in this country for
review of the sector a “demolition cam- over 100 years. And until now we don’t
paign”. The South East Asian country shipped even have one rehabilitated mine site,
34mt to Beijing last year, while exports not one,” Lopez said in the text message.
The Philippines has already halted the this year have dropped 27% in from Jan-
operations of 10 mines, eight of them uary to July. “Just gaping open holes, destroyed riv-
nickel producers, for environmental laps- ers, children with brain disease, so very
es since it launched an audit on July 8. Earlier in the month, Lopez told Reu- sad,” she said, referring to sick children
ters via a text message that: “All the in the province of Marinduque due to the
That has left 30 mines still operating, suspensions are absolutely due to envi- 1996 tailings dam leak.
but Environment and Natural Resourc- ronmental reasons, and my particular in-
es Secretary Regina Lopez said others terest is the wellbeing of the community, Miners have claimed that the Govern-
could be suspended when the agency that’s my benchmark. ment’s environmental crackdown is a
releases the results of the mining audit “demolition campaign” against them and
on September 22. “There will be large-scale mines to be have sought a meeting with Duterte.
suspended,” she told reporters later at a
Asked if a further 10 or more mines congressional hearing, without disclos- – Manolo Serapio Jr, Reuters
could be suspended, Lopez said in a text ing any names.
message: “Yes, possible.”
The release of an audit into the coun-
“We are coming clean here. For dec- try’s operating mines was delayed by a
ades we have turned a blind eye to the week and Lopez said the additional mine
suffering of our people. Not anymore,”
she said, adding that any decision to halt
mines would follow the law.
Lopez, a committed environmentalist
picked by Duterte to promote responsible
mining, has said miners have to upgrade
their operations to limit harm to the envi-
ronment and local communities.
“They just need to get their act togeth-
er,” Lopez said in the text message.
Dante Bravo, president of Global Fer-
ronickel Holdings Inc, the Philippines’
No. 2 nickel producer, said further sus-
pensions would hit shipments.
“Definitely, these suspensions would
disrupt supply of nickel ore not only to
China but to other markets as well,”
Bravo said, who expects his company to
pass the mining audit.
Bravo said nickel miners, many locat-
ed in the southern Mindanao Island, are
also expected to halt operations in Octo-
ber due to the rainy season. “Hence, we
PAGE 98 OCTOBER 2016 AUSTRALIA’S PAYDIRT
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REGIONAL ROUNDUP EUROPE
Talga tough
Talga graphene anti-corrosion coating on steel resized
phene, corrosion resistance It is estimated that $2.2 trillion a year is
spent on maintenance and replacement
was improved significantly, costs of infrastructure and equipment,
particularly in housing, buildings and the
with researchers using Tal- transport sector.
ga’s nanoplatelets produced The latest study supports work by re-
searchers on graphene in anti-corrosion
at the company’s pilot test coatings as an eco-friendly alternative to
chromium based coatings.
facility in Germany to man-
Furthermore, the study on Talga’s gra-
Coating steel with Talga’s graphene can significantly ufacture a base reference phene and results is encouraging for
increase corrosion protection by up to 74% coating for testing corrosion the company’s ambitions of making its
resistance on mild steel. trademarked Talphene brand graphene
products highly sought after in the $120
Peer review studies have indicated Tal- Not only did the test demonstrate the billion global coatings industry, which
ga Resources Ltd’s graphene could ability for Talga’s graphene to impact consumes over 40 mtpa of materials.
have a major impact on the $120 billion a the multibillion dollar a year coatings
year coatings industry. industry, graphene’s high permeability,
Research has revealed that coating high electrical conductivity and ultra-thin
steel with Talga’s graphene increases shape has emerged as a potential game-
corrosion protection by up to 74%. changer in the anti-corrosion coatings
With the addition of 0.1% Talga gra- industry.
Lundin to double-up on zinc in Portugal
Lundin Mining Corp could double zinc 150,000-160,000t (from 80,000t) at just a handful of new mines planned and
production at its Neves-Corvo mine in the mine, which also produces copper. a paucity of exploration in the last dec-
Portugal as a big rally in prices and loom- The project will take about two years, ade.
ing deficit of the metal have created the once approved, and cost an estimated
right conditions for an expansion. $US280.53 million. Glencore decided last year to cut
500,000 tpa of zinc output as prices
“We hope to go ahead with a positive Benchmark zinc on the London Metal slumped. Its output fell 31% in the first
decision by year end,” Lund chief ex- Exchange has soared 58% from multi- half of this year to 506,500t, compared
ecutive Paul Conibear said, adding that year lows in January to $US2,299/t at with the same period last year.
Toronto-based Lundin has also seen pro- the time of print, its highest level since
gress on mine plant efficiency and mod- May 2015. While many zinc mines have been shut
ernisation efforts. or mothballed over the past couple of
The big unknown, Conibear said, is years, prices took off this year on intensi-
“Prerequisites to a go ahead include whether higher prices will prompt in- fied deficit expectations with the closure
Portuguese government permits in hand creased production from small zinc of the Century mine in Australia and Lish-
and zinc prices continuing at current lev- mines in China and what impact that may een in Ireland.
els or better.” have on supply.
– Susan Taylor, Reuters
The expansion would increase an- Major new sources of production are
nual zinc in concentrate production to unlikely in the near-term, he said, with
PAGE 100 OCTOBER 2016 AUSTRALIA’S PAYDIRT
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