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• Latin America Down Under review ISSN 1445-3436
• Site visit...Sheffield Resources 05
• Mining services feature
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PAGE 1 JUNE 2018 AUSTRALIA’S PAYDIRT



CONTENTS

PAYDIRT (ISSN 1445-3436) 5 NEWS 5
Published by Nickel is back on the agenda for miners 19
Paydirt Media Pty Ltd. and explorers in a big way with the lack of 30
A.C.N. 063 985 133 exploration and rising demand, particularly
in the EV sector, leading to forecast deficits
Head Office: in the market. Rio Tinto has shown some
Suite 9, 1297 Hay St, West Perth adventure by taking an interest in Sipa
Western Australia 6005 Resources’ nickel project in Uganda while
P.O. Box 1589, West Perth Independence Group has also ventured
Western Australia 6872 outside Western Australia by increasing
Phone: (+61 8) 9321 0355 its interest in South African-focused Orion
Facsimile: (+61 8) 9321 0426 Minerals. Mark Andrews reports
[email protected]
www.paydirt.com.au 19 SITE VISIT
As it surges ahead with its advanced stage
long-life, zircon-rich Thunderbird project
in Western Australia, Sheffield Resources
Editorial: is emerging as an attractive M&A target in
Editor: Dominic Piper the mineral sands space. The company’s
Deputy editor: Mark Andrews environmental and Native Title approvals
Journalist: Michael Washbourne are on track to be signed off by the end of
Photography: Picture This the month and a port access agreement
Art director: Marian Noonan has been granted. Michael Washbourne
Contributors: accompanied Sheffield managing director
Keith Goode (Sydney), Brendan Ryan Bruce McFadzean to the project, 70km
(Johannesburg), Ross Louthean west of Derby

Advertising: 24 COVER
Advertising manager: Richa Fuller Investors worldwide have tested the waters
Subscriptions: Mitchelle Matambo in other sectors and industries, but are
Phone: (+61 8) 9321 0355 now starting to gravitate back towards tried
Facsimile: (+61 8) 9321 0426 and tested stocks in the mining sector. The
commodities bust pushed many miners
Pre-press and printing: and explorers to the brink of collapse but
Vanguard Press 26 John St, those that survived now have the opportu-
Northbridge WA 6003 nity to access significant capital from big
Member of: pocketed investors from around the world.
But, what are the best places to house
Paydirt Media these companies and should dual-listings
Executive chairman: Bill Repard be a key part of a junior’s strategy? Paydirt
Finance manager: Giovanny Jefferson talks to industry experts on the cross-bor-
Accounts/administration: der nature of mining capital flows
Heather Melling
Conferences: Melita Fogarty, 30 LATIN AMERICA
Namukale Nakazwe-Msiska,
Christine Oelschlaeger DOWN UNDER

Cover image: The TSX’s Dean The seventh coming of Paydirt’s Latin
McPherson with Eddie Grieve of the America Down Under conference was
ASX timely given Australian companies continue
to forge ahead in Latin America. High-
Member of: level government representatives from
both regions joined the mining fraternity to
Registered by Australia Post PP 643938/0071. strengthen industry connections at what is
No pages or articles in this publication may be becoming one of the must-attend interna-
reproduced in any form without the consent of tional mining conferences. Paydirt provides
the publisher. This includes photographs either full coverage of the two-day Latin America
taken by Paydirt Media staff or provided by other Down Under conference
parties

Latin carnival is far from over

As you will see from the coverage of the they know they can secure flow-through credits for – these Aus-
event in this edition, Latin America Down tralians have dug in their heels and are now reaping the benefits.

Under was an unqualified success with almost All three alluded to themselves as being “partners of choice”,

300 delegates in attendance at the Pan Pacific an invaluable accolade in a region where many projects are held

Perth last month. in private hands.

To be brutally honest, it hasn’t been The assets they have acquired are the kind always assumed

the easiest conference to build since unavailable in Latin America; high-grade, small-tonnage, low

we started it in 2012 but Paydirt be- capex projects amenable to development by juniors.

lieves Latin America Down Under This was always a cross against investing in Latin America

(LADU) still has much growth left – “the Canadians already have access to all the good projects”

in it. Part of LADU’s challenge has but Azure, Hot Chili and Crusader are proving this is no longer

been that the Australian mining sec- the case.

tor hasn’t always seen itself as a natural fit for the region. Further down the project curve, Dempsey Minerals Ltd, Latin

However, in reflection on this year’s conference, there is a Resources Ltd and Dark Horse Resources Ltd are dispelling the

“clear sense that attitudes are changing with more Australian myth that all the worthwhile grassroots ground in Latin America
companies now active in Latin is occupied by TSX-V companies.

America and investor attitudes They have taken advantage of the

towards them more positive. I There is a clear sense current Australian investor obses-
hesitate to say Australian inves- that attitudes are sion with battery minerals to raise
tor attitudes because there is still money and stake ground in Ar-

reluctance among domestic in- changing with more Australian gentina’s lithium provinces. They
vestors to back ASX-listed Latin too have arrived before the Ca-
companies now active in Latin nadians have awoken from their
American stories but it is obvious

that Aussies are finding support, America and investor attitudes slumber.
whether from overseas investors, towards them more positive. The question now is regarding
or increasingly, larger Australian
companies keen to acquire a foot- the next step.
The closing panel debate at

hold in the region. LADU highlighted the difficulty

A glance at the share registers of the ASX-listed companies Australian companies with offshore projects have traditionally

presenting at LADU betrayed the fact many of them count on had in maintaining momentum on their home bourse and it may

international investors for support. This isn’t necessarily some- be that these companies need to dual list or even eventually

thing to lament, instead it highlights how fluid capital is in the migrate to Toronto. But success breeds success and as we saw

21st century. in Africa a decade ago, it only takes a few winners to send inter-

Dean McPherson of the TMX made a sound argument dur- est soaring.

ing the conference for Australian companies taking up a dual In 2011, there were 200 ASX-listed companies in Africa, a fig-

listing, pointing to Toronto’s dominance of capital raisings and ure which would’ve been unimaginable even a decade before

its access to the big North American investors either side of the but thanks to the success of a plethora of junior gold, base metal

US-Canadian border but I am still not convinced. and uranium companies the ASX has now become the natural

If anything, there is more reason for Australian companies to home for African stories.

stay at home at the moment. I said in Paydirt’s May edition that A few similar stories in Latin America and the same could ap-

Aussies had for once stolen a march on their Canadian peers in ply to that region. And, with the likes of Fortescue Metals Group

Latin America and LADU reinforced the advantages ASX-listed Ltd, Newcrest Mining Ltd, Oz Minerals Ltd and Hancock Pros-

companies currently enjoy. pecting Pty Ltd highly active in the region, the odds of a new era

While Canadian companies are still trying to entice inves- of Australian Latin success are narrowing by the year.

tors away from dope and computer screens (or, more precisely, One advantage Aussies in Latin America have over their com-

medical marijuana and cryptocurrencies), Australians in the re- patriots in Africa is the level of diplomatic engagement with the

gion are enjoying strong market support. region. Australia is well represented in the region and Austrade

The likes of Azure Minerals Ltd, Hot Chili Ltd and Crusader is highly active. Contrast this with Africa where there are just

Resources Ltd are examples of companies which have stuck seven posts and Austrade’s two trade commissioners are left

things out during the toughest of times and now appear set for with even less resources and support.

a favourable run. So, contrary to common perceptions, Australia is well-posi-

All three have shown a persistence that is synonymous with tioned to take a prominent role in the next round of Latin Ameri-

Australian junior explorers but not their Canadian peers who can mining growth and Paydirt and LADU will be there every

have a reputation for living and dying by the next drilling cam- step of the way.

paign.

Speaking to Tony Rovira, Christian Easterday and Paul Ste-

phen at LADU, it is apparent they base their ability to generate

new opportunities on the reputation they have forged for them-

selves in their respective countries.

Where North American juniors are liable to cut and run during

the tough times – often heading back to ground in Canada which [email protected] @DominicPiper

PAGE 4 JUNE 2018 AUSTRALIA’S PAYDIRT

NEWS

Rio returns to Uganda

Junior nickel sulphide explorer Sipa Re- 1.04% nickel, 0.35% copper and 0.05%
sources Ltd is responsible for bringing cobalt.

Rio Tinto plc back to Uganda. Sipa has planned a detailed grav-

In the mid-2000s, Rio Tinto took own- ity survey covering several regional pro-

ership of a vermiculite project in the East spective ultramafic intrusive complexes

African nation but its stay in country was to be followed up with drilling later this

short and sharp. This time around, the year.

lack of genuine nickel sulphide stories The junior explorer will continue to

emerging around the world has seen manage exploration activities at Kitgum-

the diversified major act decisively on an Pader, with Rio Tinto reserving the right

earn-in and JV agreement at Sipa’s Kit- to take the reins 18 months after the JV

gum-Pader base metals project, which starts.

includes the Akelikongo nickel-copper The exploration scene in Uganda is

discovery in Northern Uganda. quite barren other than Sipa’s presence,

Like many of the deals struck with Lynda Burnett something which Burnett puts down to

juniors, Rio Tinto has the option to earn the challenge of attaining tenements in

up to a 75% interest in Kitgum-Pader by In late 2016, strong zones of up to 7m country.

making a series of staged payments, of semi-massive sulphide interpreted to There is no digital system available to

which includes $US12 million exploration dip shallowly to the north-west were in- apply for tenements from outside Ugan-

expenditure within five years, including tersected with strong off-hole conductors da.

a minimum $US2 million to earn 51% in associated with them. Significant inter- “That makes it difficult for somebody

stage one. cepts beneath up to 113m of disseminat- out of the country to get a tenement.

The agreement will become condition- ed nickel sulphide included about 0.25% We’re very lucky that we pegged these

al within three months of signing once all nickel and about 0.1% copper sulphide, tenements in our own right, we did all

Rio Tinto’s due diligence requirements with intercepts of 84.5m @ 0.37% nickel the ground work to create those relation-

are satisfied. and 0.16% copper and 43.7m @ 0.53% ships in the community and as a result

“Once we started talking we actually nickel and 0.18% copper, including 7m @ we hold those tenements 100%, which

got the deal done really quickly doesn’t happen a lot in those sorts

and they were really good to deal of jurisdictions,” Burnett said.

with. I was concerned it was going Sipa’s persistence could be a

to take six months but it didn’t take massive boon for Uganda, as other

that long at all once they actually miners may now look towards ex-

convinced themselves they wanted ploiting the country’s mineral en-

to be involved. And, once they real- dowment, while Rio Tinto has ex-

ised it was technically exciting, they posure to a potential Tier 1 nickel

really did press the go button on it,” sulphide deposit.

Sipa managing director Lynda Bur- Burnett said Rio Tinto’s eager-

nett told Paydirt. ness to participate at Kitgum-Pader

The deal marked one of the better was a telling indication of the level

days for Sipa on the market with a of neglect for greenfields nickel sul-

large number of shares traded and phide exploration.

the stock closing almost 40% up on “There are very few new nickel

the day the JV was announced. exploration stories on the horizon

Sipa had been on the hunt for a and we basically made the initial

major to help with Kitgum-Pader for nickel sulphide discovery in early

a number of years, with its perse- 2015 when the market was really

verance reaping the big reward last down,” she said.

month. “Rio Tinto’s interest shows that

Sipa made the Akelikongo nickel- you do have to consider jurisdic-

copper sulphide and Pamwa lead- tions [like Uganda] if you want quali-

zinc-silver discoveries, within the ty nickel sulphide projects. The only

Kitgum-Pader project area, during other place is maybe the Fraser

the downturn of 2014/2015 but has Range, which has had a couple

found garnering any traction in the hundred million dollars spent on it

market challenging. now through 20-plus companies

Nevertheless, Sipa believes the with very little to show for. We have

intrusive-hosted nickel-copper sul- Rio Tinto has announced an earn-in agreement with Sipa spent $12 million on a belt of the

phide mineralisation at Akelikongo Resources over the Kitgum-Pader project in Uganda. same size with potentially equal

has the potential to stack up against A commitment of $US2 million will give the major a 51% prospectivity.”

Tier 1 deposits Nova, Raglan and interest with further payments of $US45 million capable of – Mark Andrews

Voisey’s Bay. landing it a 75% share of the nickel-copper project

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 5

NEWS

IGO goes for South African nickel

Errol Smart’s long-held belief that the Independence Group has matching rights to any potential JV or sale of Orion’s
Jacomynspan nickel-copper-cobalt nickel projects in South Africa’s Areachap Belt
project in South Africa’s Areachap Belt
has the potential to stack up against any Independence’s Nova-Bollinger nickel tonic setting, with similar age and meta-
prospects emerging in the Fraser Range mine and Jaguar zinc-copper mine had morphic overprint, making this belt a vir-
is starting to gain traction. “remarkable geological and engineering tual double of the Fraser Range.”
similarities to Orion’s advanced staged
Jacomynspan has piqued the interest projects in the Areachap Belt in South Areachap has not benefitted from ex-
of Australian-focused diversified miner Africa”, which bodes well for the collabo- ploration on a regional scale for 30 years.
Independence Group NL, which has se- However, with the lack of exploration and
cured matching rights to any potential JV rative working rela- importance of nickel to the electric vehi-
or sale of Orion Minerals Ltd’s nickel pro- tionship for the two cle story starting to be realised, the pro-
jects in the wider Areachap project area. parties. ject’s time appears to be imminent.

Independence’s position in the region “Following the “Suddenly everyone has realised that
came via a $5 million placement in Ori- discovery of Nova- the global lack of spend on nickel ex-
on, which follows on from the $1.3 million Bollinger in the ploration has left the supply chain vul-
placement and JV agreement on the lat- Fraser Range, the nerable. Globally, the number of mag-
ter’s Fraser Range nickel-copper project investment in the matic nickel sulphide mines has been
in Western Australia made by the former understanding of dwindling for years, with the remaining
in 2017. the geology and to known deposits getting deeper and more
develop explora- expensive/complex to mine. There have
Last month’s $5 million placement tion tools to find the been very few major discoveries globally
means Independence’s shareholding next ‘big one’ was in the past two decades and everyone is
in Orion rose to 11.1% and supports astounding,” Smart asking where the next big mine can be
fast-tracked development of the latter’s told Paydirt. found with no answer [yet],” Smart said.
Prieska zinc-copper project and regional
exploration programmes within the Ar- “When I saw “If we had drilled core with the fea-
eachap Belt. Jacomynspan for tures that we see at Jacomynspan in
the first time three the Fraser Range – immiscible nickel
Orion managing director Smart said years ago, I was sulphides with net textures and veinlets,
struck by the clear hosted in mantel derived ultramafic rocks
similarity of the with cumulate textures – we would have
rocks and the geo- been over the moon.
logical setting to
the Fraser Range. “Yet, here at Jacomynspan there were
The Jacomynspan thousands of metres of core showing
and surrounding those features and no-one had spotted
intrusives have all the opportunity to search for massive
the key features sulphide lenses or had the tools to do it.
that we had spent We moved quickly and secured a large
so much time and contiguous land package and then set
money searching about applying the tools developed in
for in Fraser Range. the Fraser Range and we are turning up
The rocks are in an some really hot targets,” he said.
almost identical tec-
– Mark Andrews

PAGE 6 JUNE 2018 AUSTRALIA’S PAYDIRT

Altura in control, for now

Altura Mining Ltd managing director Altura is set to produce first concentrate from its namesake lithium project this month
James Brown has lauded his staff for
staying on course amid the distraction of “I’ve always been an advocate of con- appears likely to be funded from initial
a potential control transaction involving solidation, I can just see it coming a mile mine cash flow, potentially in staged pay-
the company’s largest shareholder. off,” Brown said. ments.

First concentrate production from “I think if the groups want to be strong- Brown said lessons learned from initial
Altura’s namesake lithium project at Pil- er, they’re going to have to get bigger and development and production would hold
gangoora in Western Australia’s Pilbara I see us as a natural fit to a number of his company in good stead for the next
region was due at the time of print, while entities and vice versa. We’ve appointed phase of growth.
the company’s board is set to approve Citigroup to manage that, whether that
expansion of the newly commissioned be defence or acceptance, we’ll see how “We’ve already got the relationships
processing plant. it goes. It’s all about what’s best for the built, all of our partners want to assist
shareholders, which we all are.” again, it’s going to be a much easier
The impending milestones add intrigue path,” Brown said.
to the scrutiny being cast over Altura, A final investment decision on dupli-
which recently appointed Citigroup to act cating the size of the processing plant to “If I could coin a phrase, it’s like having
as a corporate advisor following confir- 440,000 tpa was yet to be made at the your second child versus the first; it’s a
mation of “confidential, incomplete, indic- time of print, but Brown is not expecting lot easier and a lot smoother having been
ative and non-binding” discussions with the proposed expansion to be knocked through it all before. And the important
Shaanxi J&R Optimum Energy Co Ltd in back. part for us is we’ve got a team on board
March. that has been so good to us and so good
A DFS released in late April confirmed at delivering on time and on budget and
Shaanxi – one of China’s biggest bat- the robustness of an expanded opera- hopefully we can keep them together for
tery manufacturers – is Altura’s largest tion at Altura, about 120km south of Port Stage 2.
shareholder with a 19% stake and is also Hedland, with life-of-mine revenue lifted
a key off-take partner alongside Lionergy to $4.38 billion and payback within 2.3 “Good personnel are hard to find and
Ltd. years. these guys and girls have been able to
deliver on Stage 1 so it would be good for
Brown confirmed to Paydirt that sev- The $118 million of estimated capital them to move to Stage 2.”
eral other groups had expressed interest required to double the plant’s capacity
in Altura – now an ASX300 company – Altura is tipped to hit the revised
since news of the Shaanxi discussions James Brown 440,000 tpa nameplate capacity in ear-
were made public. However, he insisted ly 2020, with product for the first three
operations were unaffected by the back- years of Stage 2 operations already cov-
ground corporate activity. ered under existing off-take agreements.

“This has not distracted us for more Brown said he expected the additional
than a single hour,” Brown said. “We had product from Altura to be “soaked up”
a talk about it one day with all of our staff, quickly amid a realisation demand for
they have all been briefed, but it doesn’t lithium is much bigger than first thought.
bother anyone because they know
they’re all very valuable people. “We obviously have loyalty to our off-
take partners, but we keep a contingency
“We said, ‘right, it’s out there, the com- in place and we always visit other plants
pany is not for sale, but we’re not closed and other producers just to say we’ve got
to a sale’. In the end you just have to deal Stage 2 coming online and if our partners
with these things. Essentially everyone’s can’t take it then obviously it’s there,” he
jobs are safe – the ones who are least said.
safe are probably myself and the board
of directors – but everyone else knows, – Michael Washbourne
no matter who it is, they need a team
that’s there. These operations are all
about the people on the ground.”

Altura will be the first of three Pilbara-
based hard rock lithium plays to achieve
producer status this year, with Pilbara
Minerals Ltd and Mineral Resources Ltd
on track to commission their respective
operations in the coming months. Tawa-
na Resources Ltd shipped first concen-
trate from its new Bald Hill lithium mine,
near Kambalda, early last month.

With the Pilbara likely to be a lithium
hotspot for decades to come, Brown said
consolidation was vital for both the re-
gion and the industry.

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 7

BUSH TELEGRAPH

SA platinum woes linger

South Africa’s platinum mines made an operating loss of $US32 million platinum surplus of around
have endured a 10-year re- for the six months to end-March and that 318,000oz this year, meaning
cession and the situation is ac- its net cash had fallen to $US17 million continued downward pres-
tually getting worse, which has from $US75 million a year earlier. Lonmin sure on the price which was
grim implications for the sector has gross cash of $US167 million but that back below $US900/oz as of
in general and for Lonmin plc in includes a $US150 million loan that has mid-May.
particular. to be repaid.
Likewise the rand is holding
I wrote about Lonmin in my It gets worse. Lonmin’s debt facilities onto its new-found strength
February column after the an- are subject to financial covenants with because international inves-
nouncement of the takeover its bankers which include a requirement tors like what new president
offer for the group by Sibanye- that the tangible net worth (TNW) of Cyril Ramaphosa is saying
Stillwater Ltd. General reaction the group will not be at any time below and doing to turn the econo-
at the time was that this was $US1.1 billion. As of end-March Lonmin’s my around.
a “life-saver” for Lonmin. That TNW was just $US631 million.
assessment has subsequently General reaction from the
been shown to be an under- The banks have waived the covenant South African platinum exec-
statement following publication on TNW until the completion of the ac- utives to all this has been one
of the group’s interim results for quisition by Sibanye which means the of continued optimism – albeit
the six months to March. waiver is valid until either the transaction through increasingly gritted
closes, or lapses, with a “long stop” date teeth – and a view that “al-
It’s now clear that if this deal of February 28, 2019 when the transac- les sal reg kom” which is the
does not go through then Lon- tion will void if not completed by that time. Afrikaans version of “she’ll be
min will not survive and there is Ben Magara right, mate”.
a growing probability the deal As Magara puts it: “The outcome of the
will not happen because of Lonmin’s conditions precedent to the transaction They have cut back on out-
weak financial position which continues represents a material uncertainty to the put – the industry now produces some
to deterioriate. completion of the transaction and going 1.5 mozpa less platinum than it did in
concern assumptions.” 2008 – but they have still not gone far
The takeover offer has still to be ap- enough. Estimates are more than 50% of
proved by Sibanye shareholders and So, Lonmin has been a disaster for the platinum being produced currently is
one of the conditions that Sibanye chief years because of the reasons I laid out being mined at a loss but despite this the
executive Neal Froneman laid down was in January but it – and the rest of the platinum producers are likely to actually
that Lonmin’s operations had to be cash- South African platinum sector – has increase output this year.
positive by the end of this year. been clobbered over the past six months
by the unexpected recovery in the value Justification for increasing output is
Reason is the high debt level that of the rand versus the US dollar which that this should reduce unit costs but his-
Sibanye is already carrying on its bal- has made the drop in the dollar platinum tory shows this approach does not work
ance sheet from prior acquisitions – most price all that much worse. – costs have gone up steadily every year
notably to buy the Stillwater palladium come rain or shine.
mine in the US. Simply stated, Sibanye Neither seem likely to change anytime
does not want to have to take on more soon. Latest prediction on the platinum It all got just too much for the analysts
debt to cover ongoing losses at Lonmin. market from Johnson Matthey is for a at JP Morgan Cazenove who put out a
report in late April accusing the platinum
Sibanye already has its own troubles miners of being a “dysfunctional oligop-
as underscored by the group’s plunging oly”.
share price which has dropped from a
12-month high on the JSE of R20.64 to According to JP Morgan, “transforma-
as low as R8.35 by mid-May. tional supply reform is inevitable in our
view but we do not expect it in 2018/19”.
The latest numbers from Lonmin show
a marked deterioration in the group’s fi- So “alles sal reg kom” could eventually
nancial situation plus an admission from happen in 2020 but that is going to be
Lonmin chief executive Ben Magara that way too late to save Lonmin.
the group is “not in full control of the ap-
provals” required to make the merger The only way it might happen sooner is
happen. if Lonmin goes down the tubes at the end
of 2018. Removing Lonmin’s 650,000oz
He pointed out Lonmin’s net cash posi- of annual output would deliver the “trans-
tion could be materially affected by ad- formational supply reform” that JP Mor-
verse changes in PGM prices, the rand/ gan is predicting.
dollar exchange rate and operational fac-
tors. Investors in the surviving platinum min-
ers would be happy but nobody else in
Magara added that Lonmin “continues South Africa would be because the so-
to be hamstrung by the macro-economic cial costs and political backlash would be
challenges, its capital structure and li- severe.
quidity constraints”.
Brendan Ryan is a Johannesburg-based
The numbers showed that Lonmin mining writer

PAGE 8 JUNE 2018 AUSTRALIA’S PAYDIRT

NEWS

M&A growth back on
industry agenda

Resources M&A activity is ex- “There is just not the depth of
pected to increase in the sec- development projects there needs

ond half of 2018 with focus shift- to be,” he said. “Any junior which

ing from divestment strategies to shows promise; the majors are

acquisitive growth for the sector’s likely to pounce on them.”

majors. The resources IPO market is

The last five years has seen the also showing signs of re-emerging

world’s major miners divest a se- after an extended downturn. Mur-

ries of projects as they attempted phy said much would depend on

to rebalance the excesses of the the success of recent floats. April

mining super-cycle, however, EY saw the ASX welcome its largest

Asia Pacific Mining Transactions resources IPO in five years when

Leader, Paul Murphy believes in- Jupiter Mines Ltd relisted follow-

dustry M&A strategy is now fo- ing a $240 million capital raising.

cused on growth again. “Equity markets are ultimately

“With stronger balance sheets driven by the success of recent

and buoyant commodity demand, listings so if Jupiter is a success

acquisitive growth will drive deal it will open up to further IPOs,” he

activity in Australia in 2018,” Mur- said.

phy told Paydirt. “The majors have Jupiter’s business is based

been undergoing a divestment pro- solely on its South African man-

gramme since the GFC and while ganese assets but Murphy said

“they are mostly through this there battery minerals were generating

are still some options. Fortescue is one company to watch in the M&A space most interest at the smaller end
The future of the majors’
of the IPO market with 18 new
non-core divisions is still to be
resolved. There are lots of large resources floats hitting global
boards in the first quarter of
“Rio Tinto [Ltd] got rid of its
coal assets and there remains single commodity players 2018, up from 15 in 2017.
a question over its aluminium with strong balance sheets who “There is a good story

emerging because IPOs were

assets and with BHP [Ltd] are looking to replace reserves… closed for five years,” he said.
there remains a question mark I can’t think of a company in that “The trouble at the moment is
over their coal holdings and that despite the better outlook,

the petroleum division.” space which is not in growth mode. the IPO market remains large-
The value of M&A transac- ly closed but the excitement in

tions rose to $US25 billion battery minerals is delivering

during Q1 2018 (up 86% year-on-year) “There are lots of large single com- the multiples that people need through a

largely thanks to the $US18.5 billion modity players with strong balance number of small IPOs.”

merger of potash giants PotashCorp and sheets who are looking to replace re- Murphy also expects alternative forms

Agrium. serves,” Murphy said. “For this reason I of financing to remain active in the mining

Among other commodities, gold, alu- can’t think of a company in space.

minium and coal all witnessed multimil- that space which is not in “Five years ago, the

lion dollar transactions during the quar- growth mode.” prediction was that pri-

ter. Murphy pointed to New- vate equity would take

Murphy suspects the majors’ divest- crest Mining Ltd, MMG over the world of min-

ment programme is almost up with only Ltd and Fortescue Metals ing finance but what we

one-off opportunities such as BHP’s Group Ltd as companies to have seen since then is

Nickel West division and Rio Tinto’s alu- watch in the M&A space. that it has consistently

minium business still on the market. “Even Evolution [Min- been involved in 20% of

“There remains a question on Rio Tin- ing Ltd] may diversify off- all deals,” Murphy said.

to’s aluminium business. Bauxite is quite shore,” he said. “They aren’t dominat-

strong at the moment so they may take The lack of a strong de- ing rather resource eq-

advantage of that and IPO it,” he said. velopment pipeline will uity funds are just one

Away from the diversified miners, lead many of these compa- of a number of finance

healthy balance sheets and falling re- nies to consider moves for options for companies.”

serves are almost demanding growth smaller players, according Paul Murphy – Dominic Piper
strategies. to Murphy.

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 9

NEWS

Moment arrives for Watershed

After 13 years, Vital
Metals Ltd is prepar-
ing to bid farewell to the

Watershed tungsten pro-

ject in North Queensland.

The company man-

aged to strike a deal

with Tungsten Mining NL

which will see the latter

take full ownership of Wa-

tershed for $15 million.

A binding heads of

agreement was an-

nounced last month and

upon all necessary ap-

provals being satisfied,

the deal should be com-

pleted by about July.

For some Vital share-

holders, the sale of Wa-

tershed is bittersweet,

given the ready-to-devel-

op status of the project

and the current state of

the tungsten market.

Tungsten ammonium

para tungstate (APT)

prices have rebounded Watershed has the capacity to produce 3-4% of global tungsten supply to consumers in the US and China

to near-decade highs –

$413/mtu average price during the March 70,400t is open at depth and along strike. southern zone is coming up trumps for

quarter – largely on the back of polluting With the addition of Watershed, Tung- Vital with the latest hit from a maiden RC

tungsten mines in China being shut down sten Mining will have two near-term de- programme of 4m @ 157 g/t gold from

and the strains increased end-user de- veloping assets within its portfolio. 76m, which was 200m south along strike

mand is putting on supply. In April, Tungsten Mining raised $20 from an intersection of 2m @ 36.5 g/t.

The hard, tough and heat resistant na- million to advance the Mt Mulgine project Vital is working towards earning an in-

ture of tungsten metals and composites – 70.9mt @ 0.18% tungsten and 230 ppm terest in Bouli from private Turkish com-

makes them desirable for applications in molybdenum (indicated and inferred) – in pany SUMMA, with the initial option pe-

many industries including the automo- Western Australia’s Murchison region. riod ending and decision to proceed with

tive sector, industrial engineering, mining Mining at Mt Mulgine is scheduled to stage two nearing.

and road construction and the aviation start later this year with first concentrate “I think we have the tiger by the tail in

space. production targeted for Q1 2019. Niger at Bella Tondi, and to be able to

Watershed has been primed to serve “Tungsten Mining has to be given have the grades that we have through

these sectors since a DFS was com- credit as they have maintained a single very limited drilling is pleasing and it can

pleted in 2014, which indicated an open focus and with GWR [Group Ltd] being a be funded to take us all the way through,”

cut mining operation could produce high- shareholder they were able to minimise Strizek said.

quality tungsten concentrate at a rate of dilution, whereas we had many years “So, if you want to have a bite of Vital

2.5 mtpa over about 10 years from 21mt of being unable to raise any money on you have to try and buy it on market be-

@ 0.15% tungsten for 31,400t reserves. tungsten,” Vital managing director Mark cause we have the cash in the bank to

An independent review of the costing Strizek told Paydirt. prosecute our work programme. It looks

by Corporate Mining Resources (CMR) “Tungsten Mining moved quickly on very exciting from here and the sale of

to bring Watershed on-stream was re- this transaction and from our board’s Watershed allows us to clean up the

vealed in March, with a new project point of view if someone is offering you structure of the company. The market

capex of $105.8 million estimated signifi- cash essentially the size of your market wants a steely focus and I think that is

cantly better than the initial $172 million cap, it is something we have to take very what we can give them now in Niger.”

cost of the open pit. seriously. Tungsten moved very quickly – Mark Andrews
Vital had engaged Proviso Corporate and conversely we think that it is an offer

to help provide information to potential that is currently too good to refuse.”

non-equity funders for Watershed, which Compelling Vital to pursue the sale of

also has the potential to be developed Watershed has been exploration suc-

into an underground operation as the cess at the Bouli gold project in Niger.

resource of 49mt @ 0.14% tungsten for Drilling at Bella Tondi in the high-grade

PAGE 10 JUNE 2018 AUSTRALIA’S PAYDIRT



NEWS

Canadians take a look
down under

Action is tipped to pick up on the Pilbara conglomerate gold front and all eyes are expected to be on Novo Resources once again

Naysayers believe the quietening of where things are going to give. One thing the Pilbara, and look for more as cash
Pilbara conglomerate gold stocks is though, is that companies are cashed up would not be a concern.
a sign that the Witwatersrand Basin-style and the Pilbara players are gearing up
gold story in Western Australia is just a [for activity] and it will create news flow,” The backing of Sprott Group ensures
fallacy. Topping said. Pacton is comfortable for cash for the
time being, while the corporate mining
However, true believers offer another Topping is executive chairman of Kai- finance abilities of advisor Peter Ball can
perspective and are willing to do so ros Minerals Ltd, one of the companies also be banked on.
ahead of another potential rush of activ- heavily backed by Eric Sprott to explore
ity in the region. the Pilbara for conglomerate gold. Despite 25 years’ experience in min-
ing engineering, corporate finance, busi-
Speaking to media upon introducing From a market cap of $8 million prior to ness development and marketing, Ball’s
TSX-V vehicles Pacton Gold and Blue- Sprott’s $5 million investment last year, involvement with Pacton and as chief ex-
bird Battery Metals Inc to the Australian Kairos is now poised to be one of the ecutive of Bluebird Battery Metals marks
market, well-known local mining iden- more active gold explorers in the Pilbara. his first foray into the Australian mining
tity Terry Topping explained that weather scene.
factors in the Pilbara, which range from Hot on Kairos’s tail will be Canadian
extremely hot to cyclonic conditions, outfit Pacton led by interim chief execu- Bluebird only started trading on the
didn’t always make boots-on-ground ex- tive Alec Pismiris. TSX-V in April and like Pacton arrives
ploration viable, slowing news flow from down under full of cash and with an ag-
the region. Pacton is well funded, with Sprott Cap- gressive exploration mindset.
ital Partners the lead agent in a recently
The lack of data and useful infrastruc- completed $5.5 million private place- “Whatever capital we want, we will
ture in areas potentially hosting conglom- ment. get,” Ball said.
erate gold in the Pilbara also needed to
be taken into account, he added. Pacton’s entry to the Pilbara is via an “We are looking to add to our board
earn-in/JV agreement with Steven Mi- and strengthen our Australian content,
Nevertheless, hopeful gold explorers chael’s Arrow Minerals Ltd’s tenements that is what we are here doing now.”
which capitalised on the opportunity to adjacent to ground held by Novo.
raise money on the back of Novo Re- Topping – who helped vend the flag-
sources Corp’s success last year are Like Kairos, Arrow originally pegged ship Canegrass nickel-cobalt-copper
now well positioned to attack the coming ground in the region for lithium and will project near Mt Magnet into Bluebird – is
field season with some vigour. retain rights to the commodity, while its a welcome addition as director and will
focus will be on the Menzies gold project. help kick-start things in WA’s Mid West
“The interest wanes for a number region.
of reasons and there will be situations Pismiris said Pacton’s priority will be
to bed down its immediate acquisitions, Canegrass is the immediate opportu-
which will give it 1,031sq km of tenure in nity for Bluebird and with multiple priority

PAGE 12 JUNE 2018 AUSTRALIA’S PAYDIRT

targets the project is ready for ties here to overlook,” Ball said.

drilling in the next few months. “We don’t want to burn our

It is likely drilling at Cane- money any other way than by

grass, south-west of Wind- putting it in the ground. Some

imurra, will be followed with ex- companies just accumulate as-

ploration activity at Bluebird’s sets, we want to differentiate by

second project, Batt, in Cana- getting boots on the ground.”

da’s Yukon, during July. While bullish on the prospec-

By taking interests in pro- tivity of projects in Australia, an

jects located in WA and Yukon, ASX listing is not currently part

Bluebird believes it is well rep- of Bluebird’s plans.

resented in Tier 1 mining ju- Given some heat is dissipat-

risdictions potentially boasting ing from tech stocks, medical

critical commodities to feed the marijuana businesses and con-

electric vehicle market. fusion about cryptocurrencies,

“We are on the cusp of a rev- North American investors’ in-

olution in transportation from Canadian outfit Bluebird Battery Metals will be cashed up and terest is returning to the mining

petrol to EVs,” Bluebird presi- ready to aggressively explore Canegrass this year sector.

dent Alf Stewart said. North America hosts 300 mil-

Stewart, an experienced miner with Australia’s potential to fill the demand lion of the wealthiest people in the world,

more than 40 years’ experience as a for battery metals quicker than any other and with memories of the last resources

geologist and investment banker among country in the world making it an attrac- downturn beginning to wane, such inves-

other things, knows the Australian mar- tive destination. tors are beginning to view some com-

ket well, having been involved with King- Bluebird said it was looking globally for modities, particularly the battery metals,

sgate Consolidated Ltd’s dual listing. projects, however, given the safe invest- favourably.

Stewart, an owner of two EVs himself, ment and operating environment and the “There is potential for those tech inves-

firmly believes that electric cars will dom- prospect that explorers may have over- tors to crossover into the battery metals

inate the roads in the next five years. looked or poorly explored projects here as well,” Stewart said.

Therefore, while Bluebird aggressively in the past, Australia will be the first port – Mark Andrews
explores Canegrass and Batt, adding to of call.

its portfolio is also on the agenda, with “There are too many [good] opportuni-

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AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 13





NEWS

Doray dines on Deflector

Embattled miner Doray Minerals Ltd
appears to be back on track after
posting another quarter of record produc-

tion from its Deflector gold-copper mine,

about 170km east of Geraldton.

Doray reported record production of

18,551oz gold at an AISC of $986/oz and

C1 cash costs of $717/oz, alongside re-

cord underground output of 966t copper,

from Deflector during the March quarter.

Perhaps most importantly, the com-

pany now boasts a positive net debt

position for the first time, having raised

$25 million via a two-tranche placement

through the first three months of 2018.

“It’s not just the last three months,

we’ve been building towards this for a

while,” Doray managing director Leigh

Junk told investors, analysts and media Deflector has churned out back-to-back quarters of record gold-copper production

during a conference call to review the

March quarter. guidance for the financial year. We will “We’re going to do an underground

“Doray is in the healthiest shape it’s announce the new guidance in June and PFS on the zones we know now, but

been for years with regard to its cash and [revised] life-of-mine after that.” throughout the year we’re going to con-

debt and Deflector continues to impress. Doray reported a net debt position of tinue drilling from surface to extend [the

We’ve executed our turnaround strategy $3.3 million at the end of the March quar- mineralisation] to the north and at depth,”

at Doray and we’re well placed now to ter, but the company is now confirmed to Junk said.

take aim at our growth targets. We’ll be- be in the black after collecting the sec- “We’ve got more follow-up drilling to

gin with Deflector and we’ll build up from ond tranche of the $25 million placement do and that will form part of the ongoing

there.” in early April. overall strategy within the operations at

Junk joined Doray in December 2016, Junk said the funds would be primar- Deflector over the next year. There’s still

taking the reins from founding managing ily used to reduce debt to a manageable more work to do to increase [the mine

director Allan Kelly at a time when seri- level and for working capital to underpin life] year-on-year.”

ous questions were being asked about the company’s internal growth plans for After a troubled first 12 months of oper-

the newly minted Deflector operation, the next 12 months. ation, Deflector – acquired by Doray from

coupled with a rapidly depleting orebody Those plans include further near-mine its takeover of Mutiny Gold in late 2014

at the company’s inaugural Andy Well exploration around Deflector and eco- – appears to be humming after mining

mine, near Meekatharra. nomic studies to assess the viability of 140,454t @ 4.7 g/t gold and 0.8% copper

Andy Well was placed on care-and- the promising Da Vinci lode discovery. A during the March quarter.

maintenance in November and the com- PFS was yet to get under way at the time Stoping ore represented about 60%

pany is currently reviewing its options for of print, but is likely to be completed in of the total underground ore supply, with

the mine, with a decision expected by the the second half of the year. ore driving producing 51,749t @ 6.1 g/t

end of this month. A spectacular intercept of 11m @ 56.3 gold and 0.7% copper, which was higher

Discussions also remain ongoing g/t gold and 0.9% copper (including 2m than in preceding quarters.

around the future of the nearby Gnawee- @ 260 g/t gold and 3.3% copper) was re- Deflector’s resurgence has correlat-

da project which Westgold Resources turned at Da Vinci late last year. ed with Doray’s share price rise from a

Ltd had previously expressed an 12-month low of 16c in December

interest in farming out of Doray’s to a high of 39c in recent months,

stable. with Junk predicting things would

For Doray, it is now all about only get better for his company’s

Deflector and the company is on shareholders.

track to meet both production and “Keep watching,” he said. “We’ll

cost guidance of 60,000-65,000oz get through this quarter and hope-

at an AISC of $1,250-1,350/oz for fully finish off the financial year

FY2018. well.

“We’ve got one quarter to go “Our strategy was to build from

this year and we should be within the operations up and that is ex-

guidance,” Junk said. actly what we have done.”

“We had a slow start, we’re still – Michael Washbourne
ramping up, even though we’re

producing at that high rate now,

we’re still looking at [meeting] our Andy Well was placed on care-and-maintenance in November

PAGE 16 JUNE 2018 AUSTRALIA’S PAYDIRT





SITE VISIT

Sheffield shines in
the Kimberley

Sheffield Resources Ltd man- bulk handling facilities at Derby port was the “business as usual” approach he
aging director Bruce Mc- finalised last month. has brought to Sheffield since taking the
management reins in late 2015.
Fadzean is under no illusions his Off-take arrangements for Thunder-
bird’s ilmenite production line are also “We don’t run the business to be on the
company is a target on the M&A imminent, shoring up 90% of the pro- radar, we just reckon that if we focus on
ject’s revenue under binding contracts. doing the right job and doing the job well,
radar. After all, a long-life, zircon- that we’ll get on the radar,” McFadzean
Speculation of a potential takeover is told Paydirt.
rich project in a stable jurisdiction nothing new for experienced mining ex-
ecutive McFadzean, who is maintaining “I’ve heard it [the takeover question] so
is an attractive proposition for many times. In fact, the first time I pre-
Sheffield managing director Bruce McFadzean sented at Diggers [and Dealers Forum],
anyone currently in or looking to it was ‘if you’re so good, why haven’t you
been taken over?’, but that was at the
join the mineral sands game. bottom of the market and pre-BFS.

Market advisory firm Blue Ocean Equi- “We’re no different to anyone else.
ties Pty Ltd has speculated Sheffield is You’ve got to tick the boxes and do the
at the front of the queue to be snapped work properly to get on the radar. If I was
up by a bigger player following the recent a big producer or consumer of these
all-cash takeover of Mineral Deposits Ltd products, [I think] that we’d have to be on
by France’s Eramet SA. the radar. So we’ll just get on with it and
try and add value for shareholders where
Blue Ocean is maintaining a “convic- we can.”
tion buy” and $1.70 price target for Shef-
field, which was trading at 86c at the time While the next year is shaping as a
of print. RBC Capital Markets is equally defining period for Sheffield, the results
bullish and has set a $1.50 price target achieved by McFadzean and his team in
for the ASX-listed junior. recent months have provided the ideal
foundation from which to launch Thun-
The next few months will reveal more derbird.
about the long-term future of Sheffield
and its Thunderbird minerals sand pro- Of particular note is a financing man-
ject, about 70km west of Derby in West- date with Taurus Mining Finance Fund
ern Australia’s Kimberley region. Envi- for $US200 million of underwritten senior
ronmental and Native Title approvals are debt. Taurus is widely recognised as the
on track to be signed off by the end of linchpin which helped Base Resources
the month and an access agreement to

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 19

SITE VISIT

The proposed site for the 8.5 mtpa processing plant. GR Engineering Services Land had also been cleared at a near-
has been announced as the preferred EPC contractor by site for the 60-room part permanent
village which will be upgraded to accom-
Ltd lift its Kwale mineral sands project in age is for Sheffield to have at least 70% modate more than 300 workers as activ-
Kenya off the ground earlier this decade. of forecast revenue for Stage 1 produc- ity increases at the project.
tion at Thunderbird locked into binding
“Taurus pretty quickly realised, like off-take agreements. With Native Title agreements on the
most people do, that this is an extraordi- horizon, Sheffield continues to have a
nary project,” McFadzean said. At the time of print, more than 60% positive impact in the West Kimberley in-
of that Stage 1 revenue was committed digenous communities, including its part-
“We’re a group of people that says, – via binding contracts for 100% of the nership with Broome-based Nirrumbuk
‘well, we like the people and we like zircon concentrate and 100% of the pre- Aboriginal Corp, with eight graduates
the proposal that’s put on the table, we mium zircon to be produced from Thun- from a group training programme recent-
should walk down that route’. We had a derbird – with off-take discussions for the ly employed by Sheffield to undertake
reasonably short process there and Tau- ilmenite and related titanium feedstock at some of the early site work activities.
rus were pretty keen to move forward. an advanced stage.
We like Taurus for a lot of reasons. One, “It’s a very, very exciting project to be
we know them and, two, they know the “We would expect certainly by the end associated with, something so big and so
industry. We’re at the back end of that of June to have all of our ilmenite done rich in a lot of qualities,” McFadzean said.
due diligence phase now and we expect as well,” McFadzean said. “It’s pretty ex-
to have that all concluded by the end of traordinary that you’ve got a project the “We’ve put a fair amount of effort into
May/early June.” size of Thunderbird which will have 90% the community and I think one of the
of its gross revenue under binding con- things that we have been really across is
Sheffield has also opened discussions tracts.” focusing on the local community, in par-
with the Northern Australia Infrastruc- ticular Aboriginal benefit to the ground,
Kimberley-based contractor McCorry which doesn’t always happen.”
ture Fund about shared infrastruc- Brown Earthmoving has begun early site
ture funding for gas storage, works at Thunderbird, paving the way for According to the BFS released in
power, roads and sheds near the start of major construction activities. March 2017, Thunderbird is forecast
Thunderbird. When Paydirt visited the project in early to produce 76,100 tpa premium zircon,
One of the key criteria for May, a 32-room camp with kitchen and 68,500 tpa zircon concentrate, 387,800
execution of the debt laundry facilities had just been installed tpa LTR ilmenite, 20,300 tpa Hi-Ti88 and
financing pack- at the temporary accommodation site at 229,800 tpa titano magnetite over the 42-
Colourstone Quarry. year mine life.

Stage 1 capex to develop an initial
8.5 mtpa operation is estimated at $348
million, with a further $195 million to be
injected over a 10-year period from the
fifth year of oper-
ation to double
throughput to
17 mtpa.

Other key
metrics from
the BFS include
a pre-tax NPV
of $676 million,
IRR of 25%, life-
of-mine EBITDA of
$5.1 billion and

PAGE 20 JUNE 2018 AUSTRALIA’S PAYDIRT

Zircon and ilmenite products will Chief operating officer Stuart Pether, McFadzean and site health and safety officer
generate about 90% of the total revenue Geoff Stagbouer check their bearings about 1km into the Thunderbird orebody

from Thunderbird value anywhere in there for sharehold- them. By the time Rio had lodged the re-
ers that’s what we’ll do.” ports some months later, they were able
life-of-mine site costs of $US790/t pre- to find the asset, find where the discov-
mium zircon equivalent ($US8.55/t ore Thunderbird was the first mineral ery was and peg the ground. And not
mined). sands discovery in the gas-rich Canning only that, the ground had only just be-
Basin, home to Browse and the ill-fated come vacant weeks beforehand when
GR Engineering Services Ltd has James Price Point projects. Sheffield another company dropped it.
been announced as the preferred EPC picked up the former Rio Tinto asset in
contractor, with Sheffield targeting first 2010 following some clever detective “It’s all about persistence. If they hadn’t
production in late 2019. work from technical director Dave Archer of followed it up, if the GFC hadn’t hit, if
and then-managing director Bruce Mc- the other company hadn’t dropped the
McFadzean continues to marvel at the Quitty. ground, then somebody else might have
opportunity in front of his company. the asset. A lot of it is luck, but it is also
“It’s all about timing and that’s what about persistence and that’s one thing
“When I joined, I didn’t know mineral I love about our exploration team,” Mc- our guys do well.”
sands, but I know mineral economics and Fadzean said. “These guys picked up
when I first looked at this thing I thought, this asset through a little bit of persis- Within three years of Sheffield drilling
‘gee, this is the biggest thing that I’ve tence. Yes, Rio did discover Thunderbird its first hole into Thunderbird in 2012, the
ever been involved in’,” McFadzean said. – one hole hit the high grade – but it was company had completed a PFS and was
right at the time of the GFC hitting every- making ripples in the mineral sands
“To put that into perspective, I was one and so they parked up their mineral community despite the backdrop of a
there with Rio [Tinto Ltd] for the con- sands exploration in Australia. depressed market.
struction of Argyle in 1985-86. First dia-
mond was in 1986 and it closes in 2019, “Dave and Bruce heard In November 2015, McFadzean
so a 33-year mine life. Thunderbird is a about the asset, went to check succeeded McQuitty, who has re-
mained on the Sheffield board as
42-year mine life and could easily be a the reports but couldn’t get a non-executive director. Along with
lot longer, we’ve just cut it off at that
point, but the orebody’s economics
continue; it’s just not drilled beyond
that.
“My brief from the board was
very simple; build a team, do a
quality BFS, fund it, build it
and operate it and
if we can add

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 21

SITE VISIT

Zircon concentrate and titanium feedstock products will be shipped to
customers from Derby port (left), while premium zircon and leucoxene

will leave via the public dock at Broome port (right)

Archer, McQuitty is now a key player the mineral sands market to turn as said. “Demand has always stayed pretty
at Carawine Resources Ltd, which was quickly as it has. Within months of the static, something like circa 3% demand
spun out of Sheffield via an IPO on its former Catalpa Resources boss join- growth year-on-year, but the supply has
non-core assets late last year in a move ing Sheffield, Iluka Resources Ltd an- been falling off and we’re starting to see
designed to keep what McFadzean de- nounced it was halting production at its that come to the front now.”
scribed as the “DNA of the company”
intact. “Jacinth-Ambrosia mine in South Austral- With growing concerns about future
ia due to low global demand for zircon. supply from African operations, particu-
“They’re probably one of the most
exceptional exploration teams I’ve A lot of it is luck, larly with Rio Tinto’s Richards Bay
ever had the pleasure to work with, but it is also about mine in South Africa suspended in
but one of the things we agreed was April due to a labour dispute, those
that if we can get all of those other persistence and that’s one who have been following Sheffield
good assets out of Sheffield and into thing our guys do well. for years look set to be joined by a
another listed entity, we can keep new group of keen onlookers.
the DNA of the company going,” Mc- However, zircon prices have since
Fadzean said. soared and are tipped to rise even further “Thunderbird at full tilt with Stage
with no significant new supply forecast to 2 on board by 2024 produces around
“We think there’s going to be a lot of come online in the near term. 3-4% of the world’s ilmenite and
success through that demerger of assets around 6-7% of the world’s zircon;
and it also makes it easier when you talk “Dave Archer has always been of the it’s a big player,” McFadzean said.
about getting on the M&A side of it. So, view that the whole mineral sands mar- “Africa has been a growing supplier of
when people look at us, if we’re a clean ket was asleep at the wheel in terms of both zircon and ilmenite for the last 20-
mineral sands play, it’s a lot easier than where supply was heading,” McFadzean 30 years and there are some magnificent
looking at something with all these other operations over there, but they’re all old…
commodities tied into it.” and older projects naturally have declin-
ing grades because we always mine the
McFadzean admits he did not expect best stuff first. So, I think there’s a fair bit

of threat there, in particular in South
Africa right now, probably less so in
Mozambique and other places, but
that threat of supply is realised by
a lot of consumers worldwide and I
think that’s one of the reasons why
we’ve been able to do all of our off-
take really quickly.

“There’s a shortage coming and
everyone is saying so now, it’s pret-
ty well accepted. So being an Aus-
sie, supplying for 42 years… that’s
going to make us a fairly attractive
supplier of products worldwide.”

– Michael Washbourne

Sheffield is set to be one of the leading employers of indigenous people in the West Kimberley
PAGE 22 JUNE 2018 AUSTRALIA’S PAYDIRT

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COVER

Gloves off as
duel heats up

As miners and investors feel est profile example of a North Ameri- ronto exchanges, there appears to be no
the pain generated by the can company bringing its portfolio down funding roadblocks, even for an emerg-
under with others following in its wake. ing junior like Bluebird.
great mining downturn sub- Meanwhile, Jupiter Mines Ltd chose the
ASX over more traditional markets to Ball’s brazen attitude towards access-
side and begin to watch capital relist its South African manganese as- ing capital from North American markets
sets via a $240 million IPO. is common among peers on the TMX –
movements again, they may an ecosystem of markets, including the
It has been a reversal of the long-term mining heavy TSX and smaller venture
be surprised where it is flowing trend which has seen Australian compa- exchange TSX-V.
nies big and small head to the Northern
from and to. Hemisphere chasing the deep pockets of While there appears to be an endless
thousands of high net worth individuals, pit of greenbacks available to Ball and
In North America, the pain still lingers pension funds and other institutional in- friends, ASX-listed companies to have
for many junior miners as medical mari- vestors. ventured into the same space are less
juana and cryptocurrencies continue to convinced of the ease of filling the cof-
drain the high risk capital pools in the US However, with Australian gold stocks fers.
and Canada. Instead, resources invest- now widely accepted to be fully valued,
ment focus has swung to Australia, with the recent trend may be coming to an West African Resources Ltd (WAF)
Antipodean gold stocks and lithium plays end. Bluebird Battery Metals Inc listed managing director Richard Hyde told
leading an unprecedented performance on the TSX-V earlier this year with the Paydirt that having an ASX and TSX-
which saw the ASX outstrip the TSX for Canegrass nickel-cobalt-copper project V listing offered the company exposure
resources IPOs for the first time in a dec- in Western Australia as its flagship asset to a variety of investors and flexibility to
ade last year. and despite looking to further beef up its tap markets at different times. However,
Australian content, the company has no Hyde is currently finding the North Amer-
North American investors have flooded plans to take on an ASX listing. ican and Canadian markets “slammed
into Aussie gold equities, catapulting the shut” to WAF, which recently raised $35
likes of Evolution Mining Ltd and North- “Whatever capital we want, we will million for pre-development work at the
ern Star Resources Ltd into the genuine get,” Bluebird chairman Peter Ball told Sanbrado gold project in Burkina Faso.
mid-tier of international gold producers. Paydirt.
The shift has been so acute that North “We had demand for over $75 million,”
America’s gold juniors and mid-tiers are Bluebird’s reasoning for assuaging an Hyde said. “We originally set out to raise
now wondering what an ASX listing could Australian listing is simple; with the pock- $20-30 million, with the bulk of that com-
do for them. ets of 300 million of the wealthiest inves- ing from Australia. We got little out of
tors to tap in North America via the To- Canada and about $20 million demand
Kirkland Lake Gold Ltd is the high-

PAGE 24 JUNE 2018 AUSTRALIA’S PAYDIRT

The Toronto exchanges have become the natural home for Latin America
resources projects

Koimtsidis told Paydirt. much removes all the risk for the compa-

“I was told by a long-only gold fund that nies in raising capital,” McPherson said.

if you’re not being sold, consider it a buy “It pretty much guarantees you getting

and vote of confidence in Cardinal and your funds; it takes away market risk from

our North American institutional share- you as a company looking to raise capi-

holders haven’t sold.” tal. We have done pretty well with that in

If the reversal of the recent capital flow Canada.”

out of the US. trend does occur, WAF and Cardinal With such a large number of mining

Hyde said complying with the TSX’s NI could be about to cash in on their fore- companies – 1,211 listed on the TSX and

43-101 standards was a more transpar- sight. TSX-V, almost double that of the ASX –

ent way of reporting. Details on NPV, IRR On a recent tour down under, Dean analyst coverage is high and visibility for

and after tax numbers must be included, McPherson, head of global mining at prospective companies great.

giving North American investors comfort TMX, reinforced the merit in Australian Last year, $C54.5 billion was raised,

in their investment. companies listing in Toronto to tap the with an average $C73.6 million rallied

““We have stuck with a dual listing coffers of large North American institu- per company on the larger TSX board
since 2014 and we still need to report to tional funds. and $C3.9 million on the TSX-V.

NI 43-101 standards or guide- “We hadn’t seen IPO activity

lines and my view is it is actu- I was told by a long-only like this since 2012 because, as
ally a more complete reporting you know, our sector has been

standard anyway.” gold fund that if you’re not under pressure for quite some
Despite little support from being sold, consider it a buy and time and we came to see that
2017 was a return for the sector
the North American market

for its latest raising, WAF will vote of confidence in Cardinal and coming out of the bottom of the
maintain its TSX-V listing for our North American institutional cycle,” McPherson said.
the foreseeable future, as will
“What is significant here is

fellow West Africa gold hopeful shareholders haven’t sold. that we are a North American
Cardinal Resources Ltd. exchange and there is $C5 tril-

Cardinal joined the TSX-V 12 lion here, but we have such a di-

months ago and has raised $C12 million Half of the world’s mining companies rect conduit and relationship with the US

on the exchange since. are listed in Toronto, with close to 40% which has a $US19 trillion institutional

“Given general investor interest shifted of equity capital over the past five years base ready to access. To enter Canada

into alternative sectors over the last 12 going through TMX exchanges. is not only to access that $C5 trillion, but

months on the TSX, the entire gold sec- And, with capital raising mechanisms also accessing close to $US20 trillion

tor has been sidelined. Marijuana, block- like bought deal structures on the table, sitting in the US; it is quite an attractive

chain and battery minerals have been more companies are expected to be at- proposition,” McPherson said.

top of mind for most TSX investors hence tracted to Toronto. “When you look across Asia and Aus-

traditional, stable sectors have seen out- “We have a unique financing system tralia the institutional base here is $2

flows,” Cardinal chief executive Archie in the bought deal structure which pretty trillion [Australian dollars] and when you

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 25

COVER

consider the entire Asia block you are Archie Koimtsidis differences between the Americas and
talking about $10 trillion at most.” the junior mining heartland of Western
cause of our location and familiarity and Australia means companies committing
Precious and base metals proposi- time zones means we have a large por- to Latin American projects and North
tions account for over half of the stories tion of issuers with properties in Latin American listings are subject to taxing
listed on the TSX/TSX-V, while there is America; 1,100 properties in Latin Amer- travel and cost pressures.
genuine thirst for companies with battery ica versus 400 in Africa,” McPherson
metals prospects. said. Maintaining and servicing another in-
vestor base required to satisfy a dual list-
Australian companies’ reputation in Similar geology in Australia and Africa ing can be too much for some.
such commodities means they are now has meant ASX companies have swayed
being targeted for greater participation towards African jurisdictions but the tyr- “It comes at a cost also, it is impor-
on the Toronto exchanges, particularly anny of distance also plays its part. tant to understand that,” mining and re-
those with assets in Africa and Latin sources dealmaker Mark Connelly told
America, jurisdictions in which TSX par- The logistics of travel and time zone Paydirt.
ticipants are well-versed.
“You have to also maintain the cost
“Australia is a very important location of time – it is not just a financial cost of
for us because it is so similar and so in- time as well. You have to spend time to
teresting in many ways in terms of our go over and service them, just like any
knowledge and appetite for mining, es- investor; they want to see you face-to-
pecially within the junior space,” McPher- face and get updates from management.
son said. It is certainly beneficial but the effort it
takes to maintain it shouldn’t be under-
“There are 30 Australian [ASX] com- estimated. While it gives you some flex-
panies listed on our exchanges – with a ibility, you are also out looking for equity
[combined] market cap close to $7 billion where one market may be more fluid
– which raised close to $300 million last than others.”
year on our exchange.”
Markets relevant to the mining sector
The 317 Latin-American focused com- appeared to have re-emerged in 2017,
panies listed in Toronto raised a com- with $C8.5 billion equity raised alone for
bined $C44 billion in capital last year. the industry, while so far this year the fig-
ure is $C2 billion.
“By way of comparison, 191 compa-
nies have a focus in Africa for instance, McPherson expects the flow of cash to
so while ASX and Australian companies increase for mining companies in Toron-
tend to be focused in Africa, we tend to to and therefore inter-listings to become
have a wider spread. Latin America be-

ASX ponders Latin lag

One of the ASX’s most senior figures Eddie Grieve having secondary boards dedicated to
remains perplexed by the lack of resources floats.
Latin America stories on the local bourse. it seemed to be really odd that we were
lagging in that way. But I see a great op- Only Hong Kong (161) had more new
ASX head of listings and issuer ser- portunity and I do believe this is the time.” listings than the ASX (143) in 2017.
vices Eddie Grieve said Australian inves-
tors were global leaders when it came to The ASX is the world’s 10th largest “A major factor in Australia’s favour is
tipping funds into overseas ventures, but exchange by market capitalisation and the availability of funds and this of course
they tended to favour Africa and North ranks behind only powerhouse China in is due to the large pool of investable
America over Latin America. the Asia-Pacific region. funds resulting from the superannuation
system,” Grieve said.
Both Africa (94) and North America Since 2010, the ASX has been the
(75) have substantially more mining/ex- leading main board exchange for mining “We’re currently the largest pool of in-
ploration projects listed on the ASX than capital raisings despite the TSX and LSE vestable funds in Asia and we’re about
Latin America (48), which is only margin- sixth in the world, and that’s growing rap-
ally ahead of Asia (40) and Europe (35). idly. We’re currently about $2.6 trillion in
funds under management and that’s go-
“We are way ahead compared to other ing to grow to $9.4 trillion in 2035.
exchanges with the amount of capital
raised and number of companies oper- “That money needs to find a home. In
ating in Africa, but in Latin America it’s fact, the relative investment opportunities
been relatively small,” Grieve said. are shrinking, so it’s a major opportunity.”

“Australia seems to have been a bit Grieve said the $298.6 million raised
slow in coming to the party. I’ve just re- this year from 11 new metals and mining
cently come back from Latin America, I floats pointed to investor confidence in
spent a couple of weeks over there, and both the resources sector and the ASX
I compared the fundamentals of Latin as a leading capital raising platform.
America and Africa, the relative risks, the
sophistication in South America, the sig- “We’re increasingly becoming a desti-
nificantly higher levels of education, and nation for international issuers,” he said.

– Michael Washbourne

PAGE 26 JUNE 2018 AUSTRALIA’S PAYDIRT

“Australian companies should be wary
about committing to dual listings in
other jurisdictions despite the numerous
promises brokers and agents make.
popular again. er jurisdictions despite the
Among the benefits of adding anoth-
numerous promises brokers
er listing was the uplift companies also
received on their domestic exchange, and agents make,” one Eu-
McPherson noted.
ropean-based private equity
“Companies that do an inter-listing
over here find that their trading activity fund manager told Paydirt.
improves not only here but their average
daily volumes tend to increase on their “Certain groups push dual
home exchanges as well, we think that is
very interesting,” McPherson said. listings using the argument

“If you are looking for capital, Toronto that there is more liquidity
is where you want to be, we are a global
exchange with half the properties listed and access to investors but
on our exchange located outside of Can-
ada. Unlike a lot of our competitors, our I’ve never known a company
investor base is very comfortable with
different geological/geographical loca- to get the premium it is seek-
tions.
ing from a dual listing.”
“When things are going good in min-
ing, like five years ago, a lot of compa- Navigating the unique reg-
nies which were listed in Australia, for
instance, would do a dual listing on and ulatory standards of the dif-
in Canada as well. It disappeared at the
bottom of the cycle, it is coming back and ferent jurisdictions can also
last year we saw a return to inter-listings;
companies and investors are getting prove troublesome. Head of global mining at TMX Dean McPherson and ASX
confident in mining companies and are “The administration of be- head of listings and issuer services Eddie Grieve at
looking for new stories,” he said. Latin America Down Under
ing on two exchanges can be
However, dual listings can also prove expensive and time-consum-
a disappointment. The promised levels
of liquidity not always proving as easily ing; it is hard enough on one,” the private deal with Golden Harp Resources Inc.
accessible.
equity fund manager said. “Then there is The new outfit – Americano Mining Inc
“Australian companies should be wary
about committing to dual listings in oth- the problem of common denominators. – will retain its ASX listing and hopes its

What can you say or not say? We know Brazilian gold portfolio will receive the at-

companies in JVs where one party is list- tention it deserves with increased liquid-

ed on the TSX and one on the ASX. The ity and analyst coverage.

ASX is hamstrung about what they can At the time the deal was agreed, Bead-

say and that creates tension. So, regula- ell managing director Simon Jackson

tory constraints have to be factored in.” told Paydirt’s sister publication – GMJ

With the investment climate improving, – that a Toronto listing would provide bet-

it is critical for companies, particularly ter comparisons with other companies

juniors, to make the most of their target facing similar cost structures in South

audience now and perhaps think hard America rather than being compared to

about pairing project and location with Australian-focused gold producers.

the bourse most likely to be receptive. Jackson’s long held belief has been

Australia’s Beadell Resources Ltd is that a Brazilian gold mine should be list-

one such company on its way to the TSX- ed among the vast majority of its peers

V via a scheme of arrangement merger in Toronto.

“Having a Perth-based South Ameri-

can gold producer doesn’t really make

a lot of sense,” Jackson said.

“Joining up with

In 2017, over $C54 billion was raised on the TSX and the
TSXV, pipping the ASX for fourth position in the world

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 27

COVER

Mark Connelly

Cardinal has raised $C12 million since it listed on the TSX-V in July 2017 mitment all the way there – which I think
is the right strategy because when you
some equity players over there [North than a similar deal between peers on move onto a new exchange, you don’t
America] allows you to get some volume the same bourse, however, the value of know how it is going to go.”
and so on. I think by finding a share- Beadell’s projects sitting in its “natural”
holder – Golden Harp is just a shell – and habitat can’t be measured. Stephen said Toronto was the logical
getting Sprott equity and the Lundin’s in- choice to list a Brazilian project, however,
volved in the equity, even at a very small Fellow Brazil-focused gold company the temperature of investors in that part
level to start with, is part of that stepping Crusader Resources Ltd is another of the world can be difficult to gauge.
stone to getting that volume and ultimate- which has struggled for traction on the “When they are hot, they are unbeliev-
ly a valuation re-rate in Toronto.” ASX and initially attempted to garner at- ably good, but when they are cold, they
tention in London via a merger with AIM- are so cold they can destroy the whole
The cross-jurisdiction merger will take listed Stratex International plc. company,” he said.
about three months longer to complete
Stratex shareholders baulked at the “We felt that although you could get
Richard Hyde move, leaving Crusader to go it alone better performance in Toronto, you would
with an AIM listing this year. get more stability and longevity in Lon-
don with deeper capital markets – we are
While Crusader is now a dual-listed yet to see if it is the right strategy – I do
company, executive director Paul Ste- think London has deeper markets, but all
phen believes in sticking to one ex- of these markets require effort to access
change and concentrating on that was them.”
best practice.
PCF Capital Group director, corporate
“The dual listing is a pathway to a sin- finance and capital markets, Graeme
gle listing. As in, list on another exchange Testar said there was “no perfect world”
then encourage the performance there when it came to earmarking a project for
and over time water will find its natural a particular exchange.
level, and you hope that if it is a success-
ful strategy that is where all your volume The be-all and end-all for a project is
and trades start to come,” he said. whether or not it passes technical muster
and the quality of management driving
“Then, at some point in time in the fu- the company.
ture, to reduce costs, you let the lesser
of the two listings fall away – rather than “The ASX is in a reasonably good spot
go in one hop and just make the com- at the moment, there are some good
monies here that are looking for a home
elsewhere, but if you are specifically
looking in the LatAm area you gravitate
to the TSX and its natural time zone,” Te-
star said.

“I think it is easier to finance projects
[now] than five years ago, but we’re com-
ing from a pretty low base and it is still
hard. We were in North America a couple
of times over March/Feb this year; it has
been opened up, there has been a whole
lot of money looking to be invested.

“There is a belief that the medicinal
cannabis and crypto stories may come
to an end soon, so that should underpin
a little bit more performance. I think we
are seeing a lot more appetite for risk so
that is encouraging, there is a lot more

PAGE 28 JUNE 2018 AUSTRALIA’S PAYDIRT

Paydirt’s Dominic Piper hosted a panel discussion on funding projects in Latin America at Latin America Down Under. Azure’s Tony
Rovira, Kura’s Thomas Eggers, Crusader’s Paul Stephen and PCF Capital’s Graeme Testar shared their thoughts

equity appetite and we are seeing a lot dimension. Arguably, they are looking for has a third of its shares held outside

more commodity-based funds and not yield like the rest of us – they come with Australia and predominantly in North

the usual suspects involved in financing far less hooks, but they do commercially America, is focused in Mexico and has

some of these projects,” Testar said. align in terms of potentially taking equity a penchant for acquiring advanced stage

“Testar said alternative financing mod- at the same time.” projects.

els – such as royalties Rovira said the sen-
sible location for Azure
and streaming deals to be listed would be in
Canada, however, that
– are go-to options The dual listing is a pathway to a decision wouldn’t be
for North American- single listing. As in, list on another made overnight.
backed companies but
“A lot of our fund-
Australians are still re- exchange then encourage the performance ing comes out of North
luctant to accept them. there and over time water will find its

“There is that cultural

boundary to get across natural level, and you hope that if it is a America now, so there’s
and then the financial successful strategy that is where all your a natural fit for us for
metrics have to match raising money in Canada
up. Without doubt, there volume and trades start to come. and the US, and working
is business to be done in Mexico,” Rovira said.

with some of these pri- “For us, in time, it will

vate equity, pension be the natural home for a

and endowment funds,” Testar said. The exposure to alternative financing listing, and as Paul [Stephen] said we will

“They are simply looking for quality and an ever-growing shareholder base in probably start off with a dual listing and

projects and, more importantly, quality North America is the backdrop for Azure in time transition through to being solely

management teams that go with it – their Minerals Ltd to one day morph into a Ca- a Canadian company.”

due diligence process is not forgotten, nadian company. – Mark Andrews
but they are looking at it from a different The Tony Rovira-led company, which

Graeme Testar Tony Rovira Paul Stephen
AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 29



LATIN AMERICA DOWN UNDER REVIEW

Bishop urges more free trade

Donald Trump’s shift to protectionism
will not halt the course of the Trans
Pacific Partnership, the new “gold stand-

ard” among free trade agreements, ac-

cording to Australian Minister for Foreign

Affairs Julie Bishop.

Delivering the opening address to

Latin America Down Under, Bishop said

Australia’s relationship with the region

would “continue to flourish on trade and

Australia is a very strong advocate and

join with our partners in Latin America in

promoting strong, open liberalised trade”.

“TPP11 is, of course, a standout,”

Bishop said. “Even though the US did

not stay in the negotiations, the TPP11

went ahead and concluded a high qual-

ity, comprehensive free trade agreement

which will be a gold standard for others.”

Comprising Australia, Brunei Darus- Latin Resources managing director Chris Gale takes Australian Minister for
salam, Canada, Chile, Japan, Malaysia, Foreign Affairs Julie Bishop through the company’s Latin American portfolio

Mexico, Peru, New Zealand, Singapore

and Vietnam, the TPP11 is the most than 730 million over the coming decade. The Foreign Minister lauded Austral-

comprehensive free trade agreement By 2030, both Brazil and Mexico will be ian companies’ willingness to venture

Australia has entered into. firmly entrenched in the world’s Top 10 offshore for both trade and investment

Trump withdrew the US from nego- economies. opportunities and her Government’s will-

tiations following his election but the re- “Latin America is emerging as a sig- ingness to attract inbound investment.

“maining members revived the agreement nificant economic region with significant “Australia is always alive to opportu-

in May 2017, eventually signing off on a global influence,” Bishop said. nities so when opportunity emerges for

revised version in March Australians to do busi-

this year. We are committed to working ness everywhere, we
Bishop said the TPP11 take this opportunity,”

and the recently conclud- with different trade groups and she said. “Our economic
ed free trade agreement countries who are all focused on ensuring strength is based on for-
with Peru were examples eign investment, which

of Australia’s promotion of the strains of rising protectionism and is most welcome.
open, liberalised trade. economic nationalism are overshadowed “You don’t get rich

“We are committed to selling to yourself and

working with different by the far more beneficial commitment to Australia is very alert
trade groups and coun- free, open liberalised trade… to the opportunities to
tries who are all focused trade and invest in Latin

on ensuring the strains of America.”

rising protectionism and Bishop praised outgo-

economic nationalism are overshadowed The pace of Australian investment is ing Council of Australian-Latin American

by the far more beneficial commitment to already picking up. Relations (COALAR) chairman Chris

free, open liberalised trade which is of “In 1999, when Ricky Martin was sing- Gale for his commitment to the relation-

great benefit to the citizens across Latin ing Livin’ La Vida Loca, there were 25 ship.

America and our continent,” she said. Australian businesses operating in Latin “COALAR has done much to promote

The TPP11 may represent the begin- America,” Bishop said. “Today, there are trade, commercial investment and deep-

ning of a new era for Australian invest- more than 400 with many in the ASX200. er economic engagement. Chris… your

ment in Latin America. While the region Macquarie Bank for instance is involved legacy will be much valued.”

is one of the world’s great mining des- in energy projects in Mexico and Colom- She also highlighted the role Latin

tinations, Australian activity has been bia, there are Australian-owned projects America Down Under continued to play

negligible but Bishop said an increase in in lithium, there is Karoon Gas [Australia in the ties between the regions.

trade and investment following the TPP Ltd, which has acreage in offshore Peru “The conference is a wonderful oppor-

could not be better timed. and Brazil], Fortescue Metals Group tunity to exchange views and ideas and

“Some say that Australia may have [Ltd] has announced it is looking to do pursue endless opportunities for growing

been late to Latin America but I think the more work in Argentina where it is hoping personal links,” she said. “The very best

timing is just about right,” she said, point- to replicate its success story and there days lie ahead of us.”

ing out that the region’s population was are also finance, fin-tech, agriculture and – Dominic Piper
set to increase from 593 million to more manufacturing businesses in the region.”

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 31

OPINION

Latin lessons: Doing business
in Latin America

Over 2016 and 2017, I hosted The Air- if size does matter and if demography re- we call it Europhobia, Euro-sclerosis or
port Economist, a series on how to ally is destiny. In South Korea, in look- even Eurovision (although that’s already
do business in Asia. ing at international diplomacy with APEC taken). Or given the fiscal issues plagu-
and G20, etc. we found that Australia and ing the region, due to a self-inflicted com-
In a 12-part series, sponsored by Qan- South Korea had become Seoul mates. mon currency, we could call it My Big Fat
tas, The World of Hyatt, ANZ Banking In China, we studied Panda-monium and Greek Debt.
Group, Australia Post, Telstra, Black- compared the Great Mall of China and
mores and the Government of South studied that other emerging economic And across the Atlantic is the time ripe
Australia, we examined the economic superpower, India, was in a grip of Modi- for a show on the US economy given the
trends of the Asian region and looked mania. current trade policy antics of the White
at how businesses – Australian and in- House in flirting with protectionism and
ternational – had entered the variety of We then thought: “where else could isolationism – or it may just be trade pol-
Asian marketplaces on offer. we go in Asia?” After all, Myanmar is icy on Twitter?
opening up, in Mongolia there’s Genghis
The trade opportunities and invest- Khan-nomics, or we could explore Ka- However, with all this noise in the world
ment environments were vast and var- zakhstan and the Eurasian region. economy, we thought there is one region
ied. In South East Asia, we discovered that stands out in terms openness – Latin
Singapore slings plenty of trade our Or should we go to the Middle East – in America. That’s why we are here produc-
way, in Indonesia it was the year of living Israel, Tim Tams to Tel Aviv, Sheik, Mod- ing The Airport Economist Latin America
prosperously, in Malaysia, you could try el and Mall in Dubai in the United Arab series to be shown on Sky News, Sev-
a MAFTA with your LAKSA, in Bangkok Emirates, or Prosperous on the Bos- en Network, A Plus in partnership with
there were the Thais that bind and in Ho porus in Turkey? Or in Africa, in South LATAM Airlines, the World of Hyatt, the
Chi Minh City we dubbed the episode Africa what would we call it? Free Trade Department of Foreign Affairs (DFAT)
Good Exporting Vietnam. Nelson Mandela? via the Council of Australia Latin Amer-
ica Relations (COALAR), CSIRO and
In North East Asia, in Japan, we studied In the UK, we are filming a Brexit spe- the Government of Victoria. We’ve had
the Arrows of Abeonomics and explored cial, but if we were to go to Europe, would some preparations with Great Southern
Lands (launched by Bob Carr when he
Tim Harcourt is the JW Nevile Fellow in Economics at the UNSW Business School was Foreign Minister) and Latin Lessons
Sydney. He is a former chief economist of the Australian Trade and Investment Com- launched by current Foreign Minister
mission (Austrade), the Australian Council of Trade Unions (ACTU) and Reserve Bank Julie Bishop.
of Australia (RBA). He hosts the TV show The Airport Economist on Sky News Business
Channel, Qantas and LATAM Airlines www.theairporteconomist.com. This is based on We’ve just been in Peru for our first epi-
an address he gave to Latin America Down Under sode, Incanomics, together with the Pe-
ru’s new talented Trade Commissioner,
Mario Vargas, looking at why Peru is be-
coming a “superfoods superpower” with
a strong agricultural sector searching
for markets in Asia and beyond. We also
interviewed Australian Ambassador to
Peru Nick McCaffrey about the opportu-
nities in agribusiness, mining and profes-
sional services in the new Peru-Australia
Free Trade Agreement (PAFTA) which
will eliminate 99% of tariffs for Australian
exporters in Peru.

In the second episode, Red Hot Chile
peppers the world with FTAs, we looked
at Chile, the “Andean jaguar” (as op-
posed to the Asian tigers), to see how
its commitment to free trade has allowed
it to access 80% of the world economy
with its 26 FTAs spread over 65 countries
reaching 4 billion global consumers.

At Expomin, one of the world’s larg-
est mining shows, which attracts 1,300
exhibitors from over 35 countries, we in-
terviewed a number of Australian mining
engineering, technology and services
companies with strong footprint in Latin

PAGE 32 JUNE 2018 AUSTRALIA’S PAYDIRT

America including Duratray, a Chilean- ly talented human capital. We also look ruption to trade and immigration in the
Australian business manufacturing min- to explore Ecuador, which has reached a global economy where nations like Aus-
ing trucks, as well as Swann Global and target of 90% renewable energy. tralia and our friends in Latin America
Gekko Systems. can make the case for openness
So, why did we choose Latin America?
In Santiago, I also interviewed Or- It’s partly because of rocks and crops In that journey, education will play an
lando Jimenez from CSIRO Chile who – the resources sector that we are here important role and Latin America is mak-
explained how they lead innovation in to celebrate but also agriculture – as we ing its presence felt in Australian edu-
several areas, including aquaculture, add the dining boom to the mining boom. cation already with future generations
foodtech, medtech, etc as well as min- And of course, the technology and pro- in good hands. We already have strong
ing and mining technology. Australian fessional services we value add to the presence of students from Brazil, Colom-
Ambassador Robert Fergusson also ex- mining sector. Innovation is in the mines bia, Chile and Argentina in Australia and
plained Chile’s attraction to Australia with and in the farms, it’s not only some cool their contribution – particularly in MBA
230 Australian companies established hipster in Surry Hills, San Francisco or classes is high quality. And the AGSM
and/or brands represented in Chile – the trendy part of Santiago or Sao Paulo. also added a Doing Business in Latin
more than double the presence in any Just a look at the great mining and min- America study trip to its successful Asian
other LATAM country – and Victoria’s ing engineering technology and services course in 2015. The case for education
Trade and Investment representative (METS) companies at Latin America and immigration should be made as well
Natalia Gorrono, explained the reason Down Under as hard evidence of this as the case for trade and investment. So,
for her state’s presence in Santiago as with great innovative companies like it just proves that being open to not only
a gateway to Latin America boosted by Latin Resources Ltd, Hot Chili Ltd, Azure trade and investment, but ideas and peo-
the new Santiago-Melbourne service by Minerals Ltd, SolGold plc, First Quantum ple, will be why Latin America and Aus-
LATAM Airlines. Minerals Ltd, Crusader Resources Ltd, tralia can succeed in the 21st century.
and Dark Horse Resources Ltd explain-
After Peru and Chile, we will look to ing their success. Thanks for being part of that journey
that other “Great Southern Land”, Bra- Secondly, Latin America and Australia with us and I’ll see you at a mine, a lab, a
zil, follow up on Argentina (see “Don’t have become natural allies in the world farm, a hotel or at an airport somewhere
buy from me, Argentina”) to see how it trading system from the Cairns Group during the series.
is recovering under Macri-nomics (with in the WTO to now the G20, APEC and
President Macri) as it hosts the G20 in the role that the Pacific Alliance plays in
2018. We will also look at Uruguay, the keeping economies open
plucky country, the Mexico Moment and This is important given the current dis-
Colombia’s Premium Blend, with its vast-

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 33

LATIN AMERICA DOWN UNDER REVIEW

Productora ready for reheating

The sense of renewed optimism “These projects could have quite
flowing through the Hot Chili Ltd
team was palpable during manag- a dramatic impact on Productora,”
ing director Christian Easterday’s
address at Latin America Down Un- Easterday said.
der.
The grade of Productora’s re-
Once a headline act among ASX-
listed explorers in the region, Hot source – 237mt @ 0.48% copper,
Chili has essentially spent the last
three years locked in stasis, unable 0.1 g/t gold and 135 ppm molyb-
to advance its Productora copper
project in Chile due to depressed denum – has always been a major
commodity prices and an even
more depressed equity market. stumbling block to securing pro-

This year has seen investors ap- ject finance but with the El Fuego
parently begin to wake from their
junior miner slumber and the cop- assets boasting historical copper
per price recover, but Hot Chili has
also taken its own measures to ensure grades of 2-5%, Hot Chili believes
it changes the narrative of recent years,
completing a series of high-grade acqui- they could deliver the critical mass
sitions which could eventually paint Pro-
ductora in a very different light. it requires.

Since the start of the year, Hot Chili Easterday said the San Antonio
has secured four-year options over the
three projects – San Antonio, Valentina asset was the “standout” of the

group, with historical production of

Christian Easterday 2mt of copper at 2% copper and

0.3 g/t gold head grades over the

and Lulu – collectively called the El Fue- course of more than 50 years.

go project. However, San Antonio offers more

All three are within 20km of the pro- than simply grade with Easterday saying

posed processing facility at Productora it had been the mining widths on the pro-

but more importantly contain the kind of ject – from 7m up to 30m development

grades which could turn the economics widths in some areas – which had most

of the overall project into something very impressed him.

attractive to investors and financiers. “It was the widths that struck us,” he

PAGE 34 JUNE 2018 AUSTRALIA’S PAYDIRT

said. “Thirty metres wide over 100m have included 7.5m @ 10.4% copper, “These operations are being charged

strike and at plus-2% copper. It is an ab- 8.5m @ 2.3% and 9m @ 2% with under- 1.3% copper for their 3% feed grade,” he

solute prize asset and something which ground drilling results including 12m @ said.

is very rare to find.” 2.9%, 12m @ 2.6% and 10m @ 2.2%. The Australian junior has also en-

While mining at San Antonio dates The Main Lode remains open at depth deared itself to the existing leaseholders

back to 1964, it has remained under and in all directions. Hot Chili intends to by allowing them to continue their mining

the control of family-owned businesses, complete further underground channel operations while exploration is ongoing.

meaning it has been largely starved of sampling before launching a drilling cam- “Is that crazy? No,” Easterday said.

the exploration budgets listed companies paign targeting depth and strike exten- “We never paid for the option and it is

can offer. “sions around the existing mine area. important to ensure the parties continue
“There has been no geological
to derive an income while we are in
work done here, there is just the
mines where they have been fol- development.”
lowing the copper underground,
very similar to how it was done in Thirty metres wide over The lease miners will continue to
Australia 100 years ago,” Easter- 100m strike and at plus- mine under a capped 50,000 tpa
day said. arrangement during the option pe-

Hot Chili’s task now is to apply 2% copper. It is an absolute riod, a situation which could prove
prize asset and something advantageous to Hot Chili.

“It allows us to secure under-

modern exploration thinking to the which is very rare to find. ground information and see the live
deposit. production parcels which are go-

“In 1969, the miners thought the ing into the ENAMI [state-owned]

deposit had pinched out but when plant,” Easterday said.

you put the geology together in 3D and With such impressive grades and The success of Hot Chili’s acquisition

talk to the miners your eyes start to wid- widths, it may be a surprise that Hot Chili campaign has emboldened it to look for

en because they are some of the most has been able to gain access to San further opportunities.

stunning results in the copper market. Antonio at all, let alone for the relatively “We are not finished with the consoli-

“The historical development on the 150 low-risk structure of $300,000 in the first dation either, and are looking for a few

Level of the Main Lode was actually inef- six months of the option agreement and more things yet,” Easterday said.

fective – it was 30m too far east.” $6.7 million within four years. Easterday – Dominic Piper
Selected underground face channel said the stranded nature of the asset had

results from San Antonio’s Main Lode played into the company’s hands.

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 35

LATIN AMERICA DOWN UNDER REVIEW

Majors join Ecuador rush

First-mover SolGold plc has welcomed @ 0.93% copper equivalent economy, however, the coun-
the influx of major mining companies at the Alpala discovery.
into Ecuador over the past 12 months. try wisely invested revenue
With SolGold showcas-
In a bid to replicate SolGold’s success ing a taste of the country’s from that sector into develop-
at the acclaimed Cascabel copper-gold potential, Ecuador’s Govern-
project, the likes of Newcrest Mining Ltd, ment has opened the doors ing key infrastructure such as
Fortescue Metals Group Ltd, Barrick for further investment in its
Gold Corp, BHP Ltd, Anglo American burgeoning resources sector, highways, ports and airports.
plc and Hancock Prospecting Pty Ltd with 30 companies now op-
have all staked ground in what has been erating across circa 300 con- “I’ve worked in a lot of
dubbed the most underexplored seg- cessions.
ment of the world’s richest copper belt. countries and I’ve never seen
Mining is on track to become the sec-
“These companies recognise the fu- ond pillar of Ecuador’s economy under a project with a sealed high-
ture is in copper and it’s in Ecuador,” Sol- the leadership of President Lenin More-
Gold exploration manager Jason Ward no, with $US4 billion to be invested in ad- Jason Ward way going through the con-
said. vancing the country’s resources potential cession,” Ward said. “There’s
over the next three years.
“It’s great to see the country endorsed a six-lane highway all the way
like that. These companies have all done “It’s a modern day gold and copper
their due diligence, they wouldn’t be rush happening in Ecuador at the mo- to Ibarra and a sealed two-lane highway
there if they thought Ecuador was a risk.” ment,” Ward said.
going through the project. The infrastruc-
SolGold has rarely experienced any- “We feel we’re in a very privileged time
thing but good news since first setting and place. It really is the most underex- ture is a real eye opener.”
foot in Ecuador in 2012. At Cascabel, the plored segment of the richest copper belt
AIM-listed company has returned some on Earth.” SolGold has begun a PEA on Cas-
of the world’s best recent porphyry cop-
per-gold intersections, including 1,560m Ecuador has long been dependent cabel, which hosts a global resource of
on its lucrative oil industry to prop up its
430mt @ 0.78% copper equivalent con-

taining 3.35mt (indicated) and 650mt

@ 0.62% copper equivalent containing

4.03mt (inferred).

Ward said the company also planned

to drill up to eight new discoveries which

have been made on the prospective

3,000sq km property.

– Michael Washbourne

PAGE 36 JUNE 2018 AUSTRALIA’S PAYDIRT

Dempsey ready for salt lake splash

The mining world is littered with once- largely ignored in the 40 years flat, ignoring the Rio Los
ignored projects which now boast
world-class production numbers and new since Hombre Muerto came to Patos river basin which was
Dempsey Minerals Ltd managing director
Juan Pablo Vargas de la Vega is hoping miners’ attention. responsible for 79% of the
the company’s ground in the Hombre
Muerto salar takes a similar path. “We believe there is no di- water inflow into the salar.

Dempsey’s landholding – vested into vide between Galaxy’s project Surface sampling by Blue
it by Vargas’ own Blue Sky Lithium vehi-
cle – is next door to world-class projects and ours, only the tenement Sky Lithium had returned
owned by FMC Corp and Galaxy Re-
sources Ltd but the ground has seen little boundary,” Vargas said. “We values of up to 59 ppm
exploration in the 40 years since lithium
development began in the region. are looking at the alluvial ar- lithium, similar to Galaxy’s

Vargas described Hombre Muerto as eas in the vicinity of salt flats own results from there area.
the “purest” salar in Argentina, with high-
er lithium grades and lower impurities. and it is that alluvial cover Vargas said the Los Patos
FMC has been producing from the salar which gives us our opportunity Juan Pablo Vargas palaeochannel was clearly
for 30 years while an updated feasibility to get ground that was not ob-
study released in May identified a NPV of de la Vega visible, running into the Gal-
$US1.48 billion for the Sal de Vida pro-
ject. vious for FMC and Galaxy.” axy ground.

Dempsey’s initial focus will be on the Galaxy’s closest drilling to Candelas “There is potential for significant vol-
Candelas project adjacent to the Galaxy-
owned Sal de Vida. Vargas said the pres- indicated “substantial volumes” of brine umes of brines to exist at depth within the
ence of alluvial cover had seen Candelas
hosted by coarse sands and gravels sim- Candelas channel,” he said.

ilar to those thought to exist at Candelas Dempsey’s strategy for Candelas’ de-

which Vargas described as a “perfect velopment takes inspiration from fellow

permeable host”. ASX-listed junior Argosy Minerals Ltd

“It is a rich setting for lithium brine and the rapid development of the Rincon

development; ground waters sourcing lithium project in Salta province. “Our fo-

volcanic rocks, hydrothermal activity, a cus is to get a JORC-compliant resource

closed basin, arid climate and a faulted within 12 months and build a pilot plant

environment.” in less than 24 months. It is a formula

Vargas said Galaxy, FMC and other proven at Argosy.”

explorers had focused purely on the salt – Dominic Piper

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 37

LATIN AMERICA DOWN UNDER REVIEW

WA strengthens Latin ties

West Australian Minister for Mines and Petroleum Hon Bill Johnston MLA was a special guest on the opening morning
of Latin America Down Under. Prior to signing a MoU with the Argentine Government around sharing knowledge and
skills to foster two-way investment between each other’s jurisdictions, Johnston joined Paydirt editor Dominic Piper on
stage for a Q&A session to discuss what WA has to offer other regions in Latin America.

Q: What brings you to this forum try in battery minerals here in WA. in Kwinana and I visited that plant two
and why is the WA Government look- What’s the rationale behind the Gov- weeks ago. They’ve already sanctioned
ing to collaborate with Latin Ameri- ernment’s move to foster a down- an expansion of the plant, even while the
can jurisdictions? stream battery minerals sector? first stage is under construction. This is
a genuine opportunity for the State. We
A: We see ourselves as the world’s A: You can’t subsidise your way to a have the skills, we have the materials,
pre-eminent resource jurisdiction. A sig- successful industry. I think some people we have the energy resources, we have
nificant amount of the world’s resources in WA, if you go back to the 1950-60s, everything that’s needed to support this
investment comes to WA and that has that’s what they thought they would be industry and that’s what the Government
presented us with lots of opportunity for able to do. What you actually have to do will do. And indeed, noting the success-
co-operation. We’re also a pre-eminent is provide a stable environment that al- ful industries in Argentina, Chile and
jurisdiction for companies in the METS lows the private sector to do the invest- elsewhere, there’s many things we can
sector, so again that’s an opportunity ment and of course reap the rewards. learn from our friends in Latin America to
for a co-operation that will benefit WA. We believe we do have a genuine op- make sure we’re successful in this impor-
We have a number of companies like portunity in battery materials. We have tant new industry.
South32 Ltd, Galaxy Resources Ltd and the resources in the ground, we have the
Fortescue Metals Group Ltd all head- capacities, the technologies to make the Q: Downstream processing is a
quartered here in Perth and they’re all best of that and we believe with careful goal of many jurisdictions that boast
investing in South America, so they are partnership between government and strong mineral resources. What are
obvious examples of the benefit of that investors that we can get a genuine long- the policy settings your Government
two-way relationship. We think the skills term downstream processing industry. If is trying to establish to give that in-
and experience we have in the Depart- you think about iron ore being processed dustry the best chance of success?
ment of Mines, Industry, Regulation and into steel, there’s actually a lot of the com-
Safety is another opportunity for co-op- ponents you need that aren’t available in A: One of the things we’re most inter-
eration and clearly providing a long-term WA, like coking coal, so we actually nev- ested in is the Co-operative Research
stable investment environment is a win- er had all the circumstances to support Centre for new energy materials that the
win for both inbound investors and the that industry. When you look at battery Commonwealth Government is sponsor-
countries that are involved. materials, the circumstances here in WA ing. We believe that WA is the only logical
are very conducive to successful invest- place for the CRC. As a demonstration of
Q: We’re currently witnessing the ment in that space. We’re very pleased our good faith we have put down $6 mil-
burgeoning of a new energy indus- to see Tianqi Lithium investing down lion to support that CRC – $5.5 million

PAGE 38 JUNE 2018 AUSTRALIA’S PAYDIRT

through the Minerals Research In- Minister Johnston was able to strengthen his ties with his Latin American counterparts
stitute of WA and another $500,000 at his second Latin America Down Under conference
from the science portfolio. When
you talk to the various potential in- ty for a jurisdiction like WA where we can is an opportunity for us to package up
vestors in these projects here in WA, guarantee we are only acting ethically in our practices and take them elsewhere
they paint a very strong future where our supply chains. in the world. It’s probably worth remind-
there is adaptive R&D taking place. ing everyone here that the WA resource
Q: What are you doing to improve sector underpinned the greatest achieve-
Q: Is it the Government’s inten- education on the technology side of ment in world history, which was the lift-
tion that WA will one day be pro- the downstream processing chain? ing of a 1.5 billion people out of poverty
ducing lithium ion batteries for in Asia. When you look around the Asian
our iPads, iPhones and electric A: We are working very closely with region and see the developments that
vehicles? universities to market the capacities we have happened there, the fact is WA’s
have here in WA. The WA School of resource sector underpinned much of
A: It’s certainly a possibility, but Mines rated No.2 in the world for min- that development and that is something
let’s not get too excited. Before you ing education, only behind the Colorado that we should all be very proud of. If the
can have a battery factory, you have School of Mines. That is another genu- so-called fourth industrial age is going to
to have all the inputs and at the mo- ine competitive advantage of us partner- work, WA’s resource sector – and Argen-
ment they don’t exist here. You can’t ing with other nations. Barminco Ltd is a tina’s and Chile’s and others – will all be
go from where we are today with classic example of the success of WA- contributing to that new paradigm for the
lithium hydroxide plants under con- based mining services companies pro- world’s industrial future.
struction to having a battery plant viding activity around the world. We’re
tomorrow. The Government is develop- excited about the capacities being devel- Q: What is being done to bridge the
ing a strategy to ensure we can support oped here and we want to help market language barrier between Australians
the development of each of those interim those capacities and skills around the who speak only English and Latin
stages so that maybe in the future we world. Americans who mostly speak Span-
can have a battery factory here. This is ish?
a revolution that’s happened in the world Q: What lessons can we impart on
that has been driven by climate change the rest of the world about WA’s min- A: I’m actually the only bilingual mem-
and there are enormous opportunities for ing culture? ber of the Cabinet in WA. I’m bilingual
many countries in the space. in Indonesian which is probably why I’m
A: In February this year I went to Min- also the Minister for Asian Engagement.
Q: One of the hot topics of discus- ing Indaba and one of the most inter- Our language skills in Australia are not
sion in the new energy metals space esting forums I participated in was with what they should be. There’s actually
is the issue of the ethical supply Murdoch University in talking about mine only 100 people learning Indonesian at
chains. How does WA continue to closure. There’s a genuine excitement university level in the whole of Australia,
maintain that profile and reputation when people understand the way we now which is unbelievable. There’s no ques-
on the international stage? handle mine closures in WA in that when tion we can do better, it’s certainly some-
you make your application for the mine thing we’re sensitive too. We’ve got some
A: Society is putting greater expecta- you have to also submit your mine clo- ideas about the future to try and encour-
tions on supply chains. The fact that we sure plan, which you then have to update age learning second languages. It would
have very high standards in WA is now every five years. We also have the Min- be great if Australian business saw lan-
a competitive advantage for operators ing Rehabilitation Fund which is effec- guage skills as being critical and they
in the State because we can go to end- tively an insurance policy for the industry gave some benefit for people who are
users of materials and make the point so that if something does go wrong the multi-lingual, but there’s no short-term
that we can guarantee the ethics of the industry already has the resources to pay answer I’m afraid.
environmental and social impact of pro- for any rehabilitation requirements. This
jects in WA that may not be able to be
done in some other places, with the DRC
being one of those examples. Our rela-
tionships to indigenous people, our high
environmental standards, our health and
safety standards, our work and labour
standards; these are now all competi-
tive advantages in these types of supply
chains. I note that Apple is investing with
Rio Tinto Ltd and Alcoa Inc in a “zero-
carbon” aluminium project because they
want to prove to the Apple customers
that they are environmentally sensitive,
because we all know how much energy
goes into aluminium. You only have to
look at the shirt you’re wearing and the
arguments that are being had around the
world about ethical supply of clothing to
see that this is now a genuine opportuni-

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 39

LATIN AMERICA DOWN UNDER REVIEW

Crisis averted,
now on with the show

The unfolding monetary crisis in Argen- ernment is not concerned by it. I can as- a mandate to fix an economy gutted by
tina is a mere flesh wound and will not sure you it is nothing to get too worried 15 years of leftist populist policies which

halt the maturing of the country’s econo- about,” Biset said. had seen Argentina all but banished from

my, according to Undersecretary for Min- The peso’s subsequent rebound at the international markets.

ing Sustainability Juan Biset. end of May apparently confirmed Biset’s The new Government’s reform pro-

“Argentine authorities requested fi- assertion that the Government was calm gramme is now beginning to take shape
nancing from the International Mone- about the situation. with the tax burden lowered, inflation

tary Fund last month after a run slowing, the deficit narrowing and

on the peso saw it shed 25% of There has been some GDP increasing.
its value against the US dollar. Biset said the country’s “very

With President Mauricio Macri’s jitteriness around foreign significant” natural resource
Government already battling to exchange, but the Government meant mining would inevitably be-
lower the fiscal deficit and control come part of that process.

double-digit inflation, some com- is not concerned by it. I can “It was decided that the policy
mentators speculated the country assure you it is nothing to get going forward would be for Ar-
would once again be plunged into gentina to become a major mining

full economic crisis, but speaking too worried about. destination in years to come,” he
at Latin America Down Under, said.

Biset said investors shouldn’t be The key, according to Biset, is

panicked by the situation. Macri’s Government has walked an for Argentina to offer a predictable, stable

“There has been some jitteriness economic tightrope since coming to and clear environment for mining inves-

around foreign exchange, but the Gov- power in 2015. Macri was elected with tors. However, this goal is complicated by

PAGE 40 JUNE 2018 AUSTRALIA’S PAYDIRT

the fact that natural resources owner- The biggest advances have come in Juan Biset
ship resides with the provinces, a num- the lithium space where, along with Chile
ber of which are strongly opposed to and Bolivia, Argentina boasts the world’s only 35% of gold-prospective ground ex-
mining. largest lithium brines resources. plored.

Biset said the Federal Government Biset said the country now boasted 24 He also pointed to the mining treaty
was conscious of the need to find com- advanced lithium salar projects with 40 with Chile as advantageous to the coun-
mon ground among provincial govern- new companies entering the space since try’s desire to develop porphyry copper
ments. 2015. deposits.

“Different provinces have different The Government is also keen to see “We have identified a number of world-
attitudes but we are working to bring its precious and base metals potential class porphyry assets and the treaty with
all of them into the fold and present a realised. Biset encouraged investment Chile means miners don’t have to export
similar face to investors,” he said. in the country’s gold opportunities with through the Atlantic, if the logistics point
towards the Pacific; fantastic.”
“We got together with the provin-
cial governments and agreed a wide- – Dominic Piper
ranging policy on what kind of mining
we want to have for the next 30 years.
The Ferro Mining Council had been
disregarded for some time but now it
is firing and we are using it to develop
a homogenous approach to mining in-
stead of engineering a race to the bottom
between the provinces. We have got to
agree on how to do it sustainably.”

Results are palpable with more than
$US800 million in new investments and
$US1.2 billion of in-country deals occur-
ring since Macri’s election. The aggre-
gate score of the Argentine provinces in
the Fraser Institute’s investment attrac-
tiveness survey also increased 65% this
year.

LATIN

AMERICA

16-17 May 2018

Pan Pacific Perth

The CD-ROM of the
2018 Latin America Down Under
Conference proceedings is now available

Contact Mel on (+61) 8 9321 0355 or [email protected]
or visit www.latinamericadownunder.com/2018-cd-rom/
to order yours

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 41

LATIN AMERICA DOWN UNDER REVIEW

Gale blows into Argentina

Latin Resources Ltd is forgoing “We are talking to one of the
the salt lakes of Argentina to fo-
cus on the country’s hard rock lithi- plants now,” Gale said. “It currently
um potential.
produces feldspar and quartz for
The company’s approach may
appear contrarian given Argen- the glass industry but we believe
tina’s north is part of the famed
Lithium Triangle of lithium-bearing we could fast-track lithium produc-
salars but managing director Chris
Gale believes the focus on lithium tion by using that infrastructure and
brines has meant the abundance
of pegmatites in the country has put an additional circuit in for the
largely been ignored.
spodumene.”
“Chile and Argentina are the
world’s largest lithium producers In Catamarca, Latin has put its
through the salars but Latin Re-
sources has discovered hard rock foot on 70,000ha of lithium conces-
pegmatites in Argentina,” Gale said at
Latin America Down Under. sions and expects to have permits

The company has acquired projects granted in the next six weeks fol-
across four provinces in Argentina. While
Gale is conscious of the unenviable rep- lowing which it will undertake air-
utation a number of the provinces have,
he believes Latin can forge ahead, par- borne radiometric and magnetic
ticularly in San Luis.
surveys.
“San Luis is the same as Catama-
rca, Salta and San Juan, once you get Chris Gale In La Rioja, Latin is targeting
through the permitting challenge there is
a wonderful opportunity to take lithium cobalt and gold on concessions
projects into production,” he said.
the crown”. Geminis has operated as an surrounding an early 20th century gold-
Latin is focusing on historical pegma-
tite mines in San Luis with the Geminis underground mine intermittently since cobalt mine.
and Don Gregorio project the “jewel in
the 1930s and has more than 70m of tun- The company’s switch to Argentina

nels into the 18m thick pegmatite. has come as its Peruvian assets are ei-

“There is an opportunity to develop a ther divested or farmed out. Gale said

mine very quickly,” Gale said. “Every- JV partner First Quantum Minerals Ltd

where we look there is high-grade spo- had defined targets on the Ilo Sur copper

dumene and the historical records show project with drilling set to start in July-

graders of 5-6% lithium. I believe we August.

have another potential Greenbushes on The Ilo Este and Ilo Norte projects

our hands here.” were divested to TSXV-listed Westmin-

Geminis and the other Latin-held ster Resources Inc for $US250,000 cash

ground in San Luis are all within 70km and 19 million shares.

of commercial processing plants, offer- – Dominic Piper
ing further opportunity for rapid develop-

ment.

Dark Horse saddles up for lithium ride

Interest is gathering in its lithium story “We believe a spodumene concentrate
but Dark Horse Resources Ltd manag- produced at that rate could have $30-40
ing director David Mason would rather the million value a year and we could be into
company stick to its own path, for now. production within 6-9 months.”

Dark Horse controls 34,000ha of lithi- Mason said the company planned to
um concession in the Cordoba and San raise $4-5 million to fund exploration and
Luis provinces, Argentina, and is prepar- development work over that period. How-
ing to start exploration at the Las Tapias ever, longer term plans would negate the
project where two separate, continu- need for the company to keep returning
ous 30m sections averaging 2.47% and to shareholders for more cash.
1.11% lithium oxide already returned from
historical underground workings. “The medium-term outlook is to align
ourselves with a hydroxide manufacturer
The company’s plan is to define to fund a larger development,” Mason
JORC-compliant resources and quickly said. “We have knocked back an offer
move into feasibility studies in order to already because we want to define the
establish itself in the burgeoning lithium resource first. We believe others went
market. into agreements too early.”

“We are looking at a short-term strat- – Dominic Piper
egy of producing 200,000 tpa into a spo-
dumene concentrate plant rather than David Mason
producing a lithium hydroxide product,”
Mason said.

PAGE 42 JUNE 2018 AUSTRALIA’S PAYDIRT

Miners arrive in Argentina

Argentina’s rapid ascen-
sion as a popular destina-
tion for mining companies has

received kudos from many

corners and Australia can be

at the vanguard of helping the

country fast-track develop-

ments in the sector.

Speaking during “The new

Argentina: Open for Busi-

ness” panel discussion,

Latin Resources Ltd manag-

ing director Chris Gale said

there was a general positivity

among most Argentines and

support in-country was now

needed to harness the signifi-

cant opportunities emerging

in the mining sector.

“Argentina now needs sup-

port, even some of our DFAT

people don’t understand the

nature of this business. There

are 2,000 listed companies Paydirt’s Dominic Piper chaired “The new Argentina: Open for Business” panel discussion. Par-

on the ASX, 900 of those ticipants included Undersecretary for Mining Sustainability Juan Biset, Auscham President Diego

are junior explorers, 700 are Temperley, Alfaro Abogados and Chamber of Mining Companies’ Ignacio Celorrio, Latin Resources

within a 15km radius of here,” managing director Chris Gale and Dempsey Minerals executive director Juan Pablo Vargas de la Vega

Gale said in Perth.

“We are like ants, we find projects and lations to enhance participation from looking to exploit Argentina’s lithium-rich

we assist in expertise in METS, we have blue chip miners in the country’s mining resources and is currently concentrating

the capital, we don’t have a problem get- sector. on nailing down its sustainability efforts

ting capital for our projects, and we per- “When the new administration came in a transparent manner, while paying

sist. We can assist Argentina in bringing in, they did not have to reshape, restart close attention to mine closure regimes.

that expertise and help them leapfrog again or clean up or enact new regula- Argentina’s place in the Lithium Trian-

what they would have needed to do in tions; it is just to honour the system that gle of Latin America provides great op-

developing the METS industry. We can was already working and was so positive portunity, however, the country’s mining

bring that in immediately and help them before,” Celorrio said. potential is certainly not limited to battery

develop their projects to the next level.” An area of mining law receiving atten- minerals.

Latin Resources arrived on the mining tion in Argentina is synchronising the Auscham president Diego Temperley

scene in Argentina shortly after Presi- work between the provincial federal au- said large cap mining houses from Aus-

dent Mauricio Macri’s heralded admin- thorities towards a more modern system. tralia and Canada were looking to re-

istration came to power and has quickly Attitudes towards the mining sector engage with Argentina’s copper and gold

pegged lithium pegmatite ground. vary between provinces; some are “su- industries.

“We found a 25 year old white paper on per friendly” while others appear to be “Management people, CEOs, VPs and

lithium pegmatites in Argentina and we no-go zones at the moment. presidents are looking to re-engage with

just followed that blue print and snaffled “Some jurisdictions have passed laws other types of metals, mostly copper and

everything,” Gale said. limiting the possibility of certain types of gold,” Temperley said.

Despite an old mining code dating mining or the usage of certain types of “They are looking at some of the pro-

back to the 19th century to work with, chemicals, which puts a hindrance on jects that were abandoned in the previ-

Latin Resources has demonstrated that the development of mining,” Dempsey ous administration because of the lack of

the rules and regulations in place are Minerals Ltd executive director Juan Pa- policies towards private investment coin-

workable. blo Vargas de la Vega said. ciding with the end of the super cycle.

Alfaro Abogados partner and Chamber “Why is that the case? I would say that “Argentina can now show to the world

of Mining Companies president Ignacio mining has been a non-issue for a long that you can come and invest in projects

Celorrio said the mining code in place time in many places in Argentina. It has without having the difficulties you would

provided a platform conducive to invest- been mostly a conceptual matter rather have faced with previous administra-

ment. than the reality of an economic power- tions,” he said.

Celorrio said concessions in the min- house that we know it can be and it is – Mark Andrews
ing industry were equivalent to real es- only now that we have decided that we

tate ownership, while many laws in place want that to be the case.”

were enacted with a lot of ancillary regu- Dempsey is one of the new companies

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 43

LATIN AMERICA DOWN UNDER REVIEW

Swimmingly well in Panama

David Engel Eduardo Palacios Gavin Ashley

While deputy minister of internal trade cess plant facilities was on track for the pand. What we are trying to do is recruit
and industry HE Eduardo Palacios, second half of this year followed by pro- professionals, access international train-
bemoaned his country’s mining code, duction in the middle of 2019. ing and the acquisition of technologies to
Panama’s biggest investor – First Quan- learn about what other projects are hap-
tum Minerals Ltd – has been quick to pro- “The copper production will be in line pening in the mining sector to make ours
vide reassurance that things are achieva- with our forecast of 150,000t in 2019, more attractive.”
ble as it stands in the emerging resources ramping up to the full capacity by the end
jurisdiction. of 2020, with 2021 being the first full pro- As mining is a sector largely foreign
duction year when we will process 85mt to Panama, Palacios said there was a
First Quantum’s Cobre Panama will be of ore through the mills,” Ashley said. focus on creating a mining tradition via
the most expensive private project in the the creation of a Ministry of Mining and
country’s history, matched in size and “The project has also been designed Natural Resources, with a strong empha-
scope only by the publicly funded Pana- with a 100mt final upgrade figure in mind sis on engaging the country’s indigenous
ma Canal. However, it is being built in a and in some areas we have invested in populations.
regulatory environment unused to mod- that upfront and in other areas we will
ern mining investments. assess the debottlenecking and optimi- “There are a lot of worries in the coun-
sation through the operation and ramp- tryside near water or rivers, but we know
“The Mining Code is almost 50 years up phase so we can optimise where that the technology has advanced a lot
old, so that is one of the challenges that that capital investment is as the market from our last experience. That is one
this administration faces,” Palacios told grows.” thing we want to do; expand our outreach
delegates at Latin America Down Under. so they know this is not going to be bad
Currently, Cobre Panama is slated to for the community,” Palacios said.
“We want to at least give people a new be in operation for 40 years, with a low
footprint to a new mining code; our min- strip ratio accommodating grades of Highly regarded as one of the most at-
ing code is way too old and it sets a chal- 0.37% copper. Once in full flow, copper tractive mining jurisdictions in the world,
lenge for foreign companies to work with production is targeted to be 350,000 tpa. Australia has a key role to play in the
a mining code that is so old.” development of Panama’s mining sector
More than $1 billion has been expend- and Australian Ambassador to Panama
Cobre Panama project manager Gavin ed with local companies, with 1,200 peo- David Engel encouraged METS and
Ashley said First Quantum had man- ple on board already and about 3,200 Austrade to embrace the opportunities.
aged with the code at hand just fine and people (90% Panamanian) targeted at
looked forward to producing first copper start-up. “I accompanied Julie Bishop to see
concentrate in 12 months’ time. the mine and she came away, as we all
While the economic benefits from Co- did, extraordinarily impressed [by Cobre
At the time of print, commissioning of bre Panama will be massive, the capac- Panama], but I think we were most im-
the project’s power station was report- ity and skills building element of such a pressed by the country itself,” Engel said.
edly going well with the turbines cranked project is not being taken for granted by
to maximum speed. the Government. “It is a small, but fascinating place
with the fastest growing economy in all
In 2016, amid a bearish copper market, “We don’t have the human resources of Latin America, with compound annual
First Quantum put the brakes on project or the education to expand in the near fu- growth rate of 9% over the past decade.
development and concentrated on estab- ture – we have a shortage of geologists As a mining jurisdiction it is very new, but
lishing supporting infrastructure, such as and engineers – so this administration is I think First Quantum will assure you it is
the two 150MW power generation units. trying to get foreign teachers from over- a very interesting place indeed.”
seas and we are sending Panamanian
Given the size of Cobre Panama, First students abroad to start the mining busi- – Mark Andrews
Quantum also has its own port which has ness. That presents the real challenge
allowed it to mobilise equipment to site for us right now,” Palacios said.
20km away.
“We don’t have the manpower to ex-
Ashley said commissioning of the pro-

PAGE 44 JUNE 2018 AUSTRALIA’S PAYDIRT

Striking a perfect partnership

Strike Resources managing director William Johnson, Australian Ambassador to Peru Nick McCaffrey and Minprovise
International’s Wayne Richards discuss the benefits of public-private partnership models

One of the key players behind the de- mine and then focusing on the mine and so you can focus on your mine.”
velopment of a rail and port solution trying to complete a port and/or rail at the Richards, who is now an executive di-

for budding iron ore miners in the Pilbara same time,” Richards said. rector for product and engineering ser-

a decade ago believes a multi-user trans- “Traditionally with a multi-user, or even vices company Minprovise International

port network funded via a public-partner- same commodity end-user business, following a stint as chairman of Tawana

ship model offers Strike Resources Ltd if they can piggyback on to an existing Resources NL during its focus on iron

the best chance of lifting its Apurimac rail and/or port system and pay the ex- ore in Liberia, expects other parties to

project in Peru off the ground. tra $US2-3/t on each leg of the journey, join Strike along various parts of the rail.

Wayne Richards, widely recognised that will allow them to focus on the capi- Apurimac is surrounded by multiple

for his role as managing director of tal required for the mine and deliver the potato farms and other agriculturalists

Brockman Resources during the height mine as and when required, because for that stand to benefit from a significant

of the iron ore boom, said Strike had the somebody to go and spend $US1 billion upgrade in regional infrastructure.

necessary ingredients to bring Apurimac on rail infrastructure and a port upgrade, “Other proponents will have the stra-

to life, but only if the Peruvian Govern- they will see take-or-pay commitments tegic advantage, if they’re producing,

“ment held up its end of the bargain by from the proponents. of having cash flow that can be used to

committing to develop- develop the rail system,”

ment of a multi-user rail- A whole range of stakeholders Richards said. “As more
are going to be involved here
way from Andahuaylas to and more proponents
San Juan de Marcona on come on, a discount will
the country’s coast. apply to the original rail

Apurimac is just 20km and I think one of the key things the agreement and so Strike
from the inland city of Government will look at over the next should see their unit costs
Andahuaylas. Strike is come down as well.”

tipped to be the biggest year will be to work out what are the Richards said the down-
user of the proposed public and social benefits of this railway. fall of several iron ore jun-
570km railway, transport- iors who unsuccessfully

ing about 20 mtpa. attempted to go it alone in

Speaking during a pan- the Pilbara was a prime ex-

el session on infrastruc- ample of why Strike – with

ture funding and partnership models, “No matter who it is as a third party, a market cap of just $10 million – should

Richards said a multi-user rail and port they will run as a profit centre, not a look to leverage off the PPP model being

network carried many benefits for Strike. cost centre, to the mine, therefore they mooted by the Peruvian Government.

“The opportunity to do a PPP [public- will seek to make a profit out of the rail, Fortescue Metals Group Ltd and Roy

private partnership] in a country like Peru as will the port, and whilst that may Hill Holdings Pty Ltd are the only com-

with a third party is probably the best so- add $US2-3/t to your actual product C1 panies to have broken the Rio Tinto Ltd-

lution for Strike because one thing you costs, you’ve got the opportunity not to BHP Ltd duopoly over the Pilbara iron

won’t want to be doing is starting up a be caught up in the capital environment ore landscape.

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 45

LATIN AMERICA DOWN UNDER REVIEW

“The trick is to get as many proponents due to be awarded at the time of print equipment and financing and they’ve got
as you can early,” Richards said. “They and is expected to take 12-18 months to a really good network of connections with
won’t put any ballast or steel down until complete. other Chinese groups who have comple-
their take-or-pay commitments warrant mentary resources in terms of products
that.” Johnson said investors could expect to and services and financing. I think the
see Apurimac brought online within 5-7 Chinese are going to be a major player in
Strike managing director William John- years “if everything continues to go to the development of this project.”
son said local farmers had expressed plan”.
only positive reactions to the potential Australian Ambassador to Peru, Nick
new avenue to get their produce to the Strike has already signed a MoU with McCaffrey, expects local communities
Peruvian coast. Chinese bulk handling manufacturers will rally around Strike if the Apurimac
Dalian Huarui Heavy Industry Group Co project, which hosts a resource capable
“A whole range of stakeholders are go- Ltd over development of Apurimac and of supporting a 15-year mine life, is given
ing to be involved here and I think one of associated rail and port infrastructure. the green light for development.
the key things the Government will look
at over the next year will be to work out “From what I understand, the Chinese “The country is getting wealthier and I
what are the public and social benefits of have already made offers to the Peruvian think the communities are starting to link
this railway,” Johnson said. Government to fund this and other rail- it to sectors like mining,” McCaffrey said.
ways,” Johnson said. “The Government is doing a much better
“Obviously if the Government sees job of selling the message, just like our
huge social and environmental benefits “Ultimately, the Chinese are really governments have done for a long time,
from the railway, there will be more mo- good at building railways. They’ve built about the link between mining and pros-
tivation for them to provide some public lots of them, they’ve built them very perity.
funding, whereas if those benefits are cheaply and from our perspective, given
very small relative to the commercial that the Chinese are most likely to be the “We’re hoping very much the project
benefits that companies like ours will get, major end-user and buyer of our product, William has talked about will go ahead.
then a larger part of funding responsibil- it makes sense for us to look to the Chi- Foreign investment tailed off a bit, as it
ity will fall on the private sector rather nese to assist us with finding some re- did elsewhere in the region, but it is start-
than the public sector.” sources and funding. ing to pick up again.”

A study tender to assess the viability “The MoU we’ve done with DHHI is – Michael Washbourne
of the multi-user transport network was the first step on that road. They’ve got
some great capabilities in terms of heavy

Peru to get back on track

It is hard to argue Peru’s status as world’s sought-after minerals,
one of the most fancied mining
jurisdictions in the world, however, as well as legal stability, exper-
political turmoil has somewhat
soured perceptions of the country. tise, good partnerships in place

“In terms of recent develop- and clear goals to achieve their
ments in Peru, it has been a little
less rosy,” Australian Ambassador stated ambitions.
to Peru and non-resident Ambas-
sador to Bolivia Nick McCaffrey It is hoped some stable gov-
said.
ernance can set the country on
“We had, up until a few months
ago, a period of political grid a path to prosperity, of which
lock and that affected economic
growth, it affected big projects that mining will play an important
the country desperately needs,
particularly around infrastructure. role on the back of new opti-
However, the previous President [Pedro
Pablo] Kuczynski fell on his sword and mised mining and exploration
resigned and the political poison that
had kept the country in a headlock for 18 regulations.
months has disappeared.”
“Despite the change in presi-
Incoming President Martin Alberto Viz-
carra Cornejo now has the task at hand dent, mining is still seen as
to instil some confidence and faith back
into the nation’s 31 million people, which being an industry to help it.
is largely survived by its mining sector.
Miguel Julian Palomino De La Gala Australian mining companies
Poverty is a major issue, with the coun-
try’s index in addressing the problem go- that operate there have noticed
ing backwards.
to Peru, such as helping people up from positive developments around red tape,”
Despite the change in leadership, the
benefits the mining industry can bring poverty, is well understood and will re- McCaffrey said.

main an area to be embraced by the “We see investment which is mainly

Government and the message has not directed at the mining and energy sector

been lost on the investment community. starting now to reach across into other

“Mining investment in Peru improved parts of the Peruvian economy, which is

by 15% in 2017,” Peru Ambassador a very good thing. Lastly, we have seen

Miguel Julian Palomino De La Gala told a jump in senior government, including

delegates at Latin America Down Under. senior ministerial visits to Peru and not

“Peru has a pipeline of mining projects just Peru, but other regions as well in the

– $U58 billion – Peru is one of the most last few years. The signs are all good in

attractive jurisdictions for mining invest- terms of the foundations for the direction

ment in the world, ranking 19th most at- in which Peru is going.”

tractive in the world.” – Mark Andrews
Palomino added that Peru had all of the

PAGE 46 JUNE 2018 AUSTRALIA’S PAYDIRT



LATIN AMERICA DOWN UNDER REVIEW

Brazil back on the map

Majors such as Anglo American plc and shows it can be done,” Stephen
have returned to untapped areas
of Brazil, but the head of the country’s said.
geological survey says it still has a lot
of catching up to do to compete with “It’s been a very turbulent period to
the likes of Canada and Australia.
be in the mining industry and to also
Following favourable changes to
Brazil’s mining code last September, be an Australian junior company op-
Anglo American pegged more than
20,000sq km of ground along the Alta erating in a foreign country, but I’ve
Floresta belt in the centre of the coun-
try. got to say our experience in Brazil has

Vale SA also pegged some 7,000sq been very good.
km along the Tapajos belt to the north
of Alta Floresta. “One thing the iron ore mine ena-

Both acquisitions followed confirma- bled us to do was take the cash flow
tion from Brazil’s Ministry of Mines and
Energy only a week earlier that royal- we generated and allow us to buy and
ties would increase from 1% to 1.5% in
a bid to entice more foreign investment develop what we think are two excep-
into its long-standing resources industry.
tional precious metals projects; at the
According to data from S&P Global
Market Intelligence, Brazil’s exploration end of the day the company’s DNA is
budget totalled $US260 million in 2017,
up 3.3% on the previous year, for an in gold.”
overall global ranking of ninth.
Distance and up to 12-hour time
However, Brazil still significantly trails
leaders Canada ($US1.1 million) and zone differentials are often cited as
Australia ($US1.08 million), prompting
CPRM director of geology and mineral Jose Leonardo Silva Andriotti one of the main reasons for Australian
resources Jose Leonardo Silva Andriotti
to appeal for more foreign investment in groups baulking at opportunities to ex-
the Latin American jurisdiction.
Eight ASX-listed companies currently plore in Brazil, however, Andriotti is not
“We have similar sizes, similar surfac-
es and similar geological characteristics, have major projects or operations in convinced that argument stacks up.
but lower production and lower invest-
ment,” Andriotti said. Brazil, including gold miners Beadell “In mining, we can’t speak about dis-

“I think if we receive more investment Resources Ltd and Orinoco Gold Ltd. tance so far from here, so far from there,”
of foreign capital we will have conditions
to improve our production of a lot of min- Copper producer Avanco Resources he said. “This is not valid because if
eral commodities like gold, diamonds,
base metals and so on.” Ltd remains the subject of an on-market you’re producing in Brazil, you can sell

Research by CPRM – Brazil’s geo- takeover by Oz Minerals Ltd. to consumers in Brazil. When a com-
logical survey – shows the country’s
total gold production is only 26% of For Crusader Resources Ltd, more pany chooses Brazil, this company will
the size of Canada’s overall output of
the metal and 16% of Australia’s an- than a decade of operating in Brazil has find consumers in Brazil. Rarely do they
nual accumulation.
been nothing but a positive experience. choose to bring the material to Australia
“The Geological Survey is playing
an important role because we are The company is now exploring and de- or to China or to the US. You can look for
working a lot to generate new data,
new targets, identifying new areas veloping the Borborema and Juruena consumers in the same place.”
and new mineralised bodies,” Andri-
otti said. gold projects, having previously discov- Speaking to Paydirt on the sidelines

“In this situation, we are contribut- ered, built and operated the Posse iron of Latin America Down Under, Andriotti
ing to better knowledge of our geol-
ogy. We need new investments, not ore mine until selling the asset to a local said the CPRM was finalising a series of
only national investments but also
foreign investments, to grow in terms consortium last year. MoUs with geological surveys from other
of knowledge but also in terms of
production.” Crusader executive director Paul Ste- countries and states to share informa-

phen said the process of developing and tion, with a number of mining companies,

permitting Posse had provided his com- universities and related institutions also

pany with invaluable experience it was part of the process.

now transferring over to its gold projects. Another area of focus for CPRM is

“Posse really credentialed us in Brazil finding homes for the abundance of pro-

spective phosphate projects it has

identified in Brazil.

“We are an agricultural country

and we import a lot of phosphate,

more than 90%, so we need to

improve the production of these

mineral commodities because we

need them,” Andriotti said.

“In the next year, in the extreme

south of Brazil, we will have a new

phosphate mine in Rio Grande

do Sul. This mine is a result of

the Geological Survey and our

discoveries and activities in the

region. This gives us hope to find

more places like this.”

– Michael Washbourne

Paul Stephen

PAGE 48 JUNE 2018 AUSTRALIA’S PAYDIRT

Azure ready to lift pace at Oposura

Azure Minerals Ltd is preparing a interest from international metals trading cobalt). Azure trailed these results up
maiden resource estimate for its companies and base metal smelters”. It with an 11-hole follow-up programme
Oposura zinc asset this month as it looks said it had also received interest in an up- with results expected in June.
to fast-track the high-grade project. graded direct-shipping ore product from
Oposura. With two active 100%-owned explora-
Resource estimations for Oposura – in tion projects and a JV farm-in with Teck
the northern Mexican state of Sonora – “The current market conditions for Resources Ltd, Azure is perhaps the
started in May following the release of Oposura’s direct-shipping ore and its most active junior explorer in Mexico.
final assay results from its resource drill- concentrates are very favourable,” man-
out programme. aging director Tony Rovira said. “The The company’s project generation
high grade and shallow nature of the min- strategy continues to uncover opportuni-
Final results from the programme eralisation at Oposura lends itself to ei- ties which Rovira said was testament to
included hits of 12.25m @ 16.3% zinc- ther or both of these processing options.” its standing within the Mexican industry.
plus-lead, 3.2m @ 20.9% zinc-plus-lead,
2.95m @ 17.9% zinc-plus-lead and 2.5m The drilling and met results came a “We have been in Mexico for 12 years
@ 27.2% zinc-plus-lead week after Rovira’s appearance at Latin and that longevity brings us a lot of bene-
America Down Under where he told del- fits. The people that we deal with in Mex-
The company said the results com- egates the management team’s track ico in a business sense recognise we’ve
plemented earlier intercepts to define a record of discovery and the company’s always treated our people and the other
large zone of thick, high-grade miner- strong cash position meant Azure would people we do business with respect, we
alisation adjacent to the existing under- enjoy steady news flow throughout 2018. are now getting a lot of opportunities
ground workings at Oposura, offering op- come to us and a lot of these people deal
portunity for rapid development. Azure plans to follow the maiden re- with you straight up,” Rovira said.
source with a PEA/scoping study in the
“The weighted average thickness and September quarter before starting a BFS The level of respect bestowed on Az-
grade of the intersections within this high- in the December quarter. A decision to ure and Rovira was recognised in May
grade zone are 5.8m @ 19.2% zinc-plus- mine could be made in the second half when he was presented with the 2018
lead, which is a thickness suitable for of 2019. Ostotakani Award for outstanding explo-
mechanised underground mining. Azure ration success and his contribution to the
is investigating early exploitation of this By then, the company will likely be mining industry in Mexico. The award is
high-value mineralised zone,” the com- considering its options over the nearby made annually on behalf of the Mexican
pany said in a market announcement. Sara Alicia project where planning is Mining Industry by Mundo Minero at the
scheduled for this quarter. A maiden drill- International Drilling and Mineral Explo-
Earlier in May, Azure announced that ing campaign returned a hit of 26.2m @ ration Seminar in Hermosillo, Sonora.
the “high quality” zinc and lead-silver 9.5 g/t gold and 1.26% cobalt (including
concentrates it had produced in metal- 12.6m @16.8 g/t gold and 6.4m @ 3.6% – Dominic Piper
lurgical test work was “attracting strong

Equus offers hope to tiny town

Equus Mining Ltd could be the saviour Damien Koerber said. (or 3.24% lead equivalent).
for the small mining town of Chile
Chico still reeling from the closure of “About $20 million that A 7,500m phase two
Mandalay Resources Corp’s Cerro Bayo
gold-silver mine in southern Chile. was going into a popu- drilling programme was

Cerro Bayo accounted for about 80% lation of 4,000 has now ongoing at the time of
of Chile Chico’s economy before it was
placed on care-and-maintenance last dried up and we’re actu- print.
October following a major flooding inci-
dent at the mine four months earlier. ally welcome to be explor- “I’m confident we have

Unemployment levels in the town are ing there. We’re essen- the capacity to discover
reportedly more than 30% and a decision
is yet to be made on a potential restart. tially located around what further mineralisation to

Equus has two projects – Los Domos is now a stranded mill and Damien Koerber give us a resource of 1-2
and Cerro Diablo – within a 20km radius plant infrastructure at Cer- moz,” Koerber said.
of Cerro Bayo and while both assets are
early stage plays, their significance to ro Bayo.” “We haven’t done a
Chile Chico is already being recognised.
Los Domos is the most advanced of large amount of drilling and we’re actual-
“It’s rare to be exploring in an area
where you have great support from both the two projects. The first hole drilled ly starting to focus the drilling more on T7
provincial and federal-level government
and that goes back to the situation that into the T7 target last year intersected to take that towards a resource. Further
Chile Chico is in where there’s 33% un-
employment,” Equus country manager an encouraging 18.94m @ 18.11% lead understanding at T7 is going to explain

equivalent (or 722 g/t silver equivalent) the zonation of what we’ve got at Los Do-

and Equus enjoyed a share price spike mos. We’ve got 12km strike length of epi-

of almost 300% on the back of that result. thermal veining and brecciation to test.”

Follow-up drilling has since returned Equus acquired Cerro Diablo last Au-

further promising intercepts, including gust and hopes to undertake a drilling

1.3m @ 28.09 g/t gold equivalent (or campaign at the project during the up-

44.7% lead equivalent), 2.7m @ 19.58 g/t coming Chilean spring.

gold equivalent (or 31.16% lead equiva- – Michael Washbourne
lent) and 4.55m @ 3.3 g/t gold equivalent

AUSTRALIA’S PAYDIRT JUNE 2018 PAGE 49

LATIN AMERICA DOWN UNDER REVIEW

Troy turns the corner

Troy Resources Ltd is on track to be Ken Nilsson for its long-suffering shareholders, with
debt-free by the end of the year. near-mine and regional exploration firmly
Operations at the company’s Karouni few months are back around the levels back on the agenda.
gold mine in Guyana have turned the we saw a few years ago.”
corner over the past 12 months, allowing Troy’s current reserves of 210,000oz
Troy to slash its bank debt from $US23.19 Troy’s output at Karouni lifted from @ 2.2 g/t gold will support at least an-
million to $US16.19 million. 12,885oz at $US1,240/oz AISC in other two years of operations at Karouni.
the September quarter to 16,109oz at
A further $US5 million is expected be $US1,017/oz for the December quarter “Troy has been a company that has un-
paid off during the current quarter, leav- and then 21,703oz at $US720/oz for the fortunately adopted the Japanese meth-
ing just $US11.19 million to be wiped dur- most recent March quarter, helping the od of ‘just in time’ and what that means
ing the back end of 2018. company’s share price hit a 12-month is we always run with very low reserves,
high of 17c last month. but we’ve always managed to get more
It continues a remarkable turnaround reserves on to the books when we need-
for Troy after barely churning out 12,500oz Nilsson said the company’s strategy ed it,” Nilsson said.
at an AISC of nearly $US1,600oz for the was centred around increasing value
March 2017 quarter. The disappointing “Most of what we’re doing today has
result saw experienced operations exec- been about building back our reserve
utive Ken Nilsson parachuted in to take base. As luck would have it, Guyana, for
the reins of the company. what it is, it is a very gold-rich country
and one of the cornerstones of its econo-
“For some time, the company was very my is gold production.”
successful in running a negative profit on
the operation, but eventually that had to Nilsson said the company was also
come to a stop,” Nilsson said. looking to add to its single-mine portfolio,
with a potential acquisition on the cards
“Clearly where we were at the time was in Brazil, where Troy previously built and
not very healthy, so the board decided operated the Sertão gold mine.
they would drag me out of the cupboard,
dust me off and told me to go and fix it. – Michael Washbourne
Since then it’s been a very strong per-
formance and operating costs for the last

Latin trade on the rise

Australia’s two-way trade in goods and Richard Andrews peak industry body’s recent appointment
services with Latin America is back of Marcelo Salas as chief executive.
on the rise after a challenging few years, “With stability in the region, we’re see-
according to the new chairman of the ing a lot more strength and a lot more Chilean-born Salas has resided in
Australia-Latin America Business Council people talking about going into new ar- Australia for almost two decades and
(ALABC). eas. And many of the guys who have has more than 25 years of experience in
presented at this conference are talking both private and public roles in mining,
Some $9.7 billion was exchanged be- about areas outside of the well estab- engineering, manufacturing and agri-
tween Australia and established jurisdic- lished ones because they can see there business.
tions Argentina, Brazil, Chile, Colombia, are so many opportunities.”
Mexico, Peru and Mexico in 2017, signifi- “There’s been a lot of work going on
cantly up on previous years due to a re- ALABC’s confidence in resurgent during the tough times over the last few
bound from the economic downturn. trade between Australia and Latin Amer- years,” Andrews said.
ica is perhaps best reflected through the
Richard Andrews, who succeeded “People haven’t stopped and they’ve
long-serving ALABC chairman Jose seen that maybe Australia isn’t the only
Blanco last month, expects that trade place to invest. Latin America is an ex-
figure to rise even further over the next tremely good place to invest and it’s an
few years, particularly with sentiment re- easier place than people give credit for.
turning to mining opportunities in Latin The forecasts for the coming years are
America. increased growth out of the region.”

“We recognise that the industry is ALABC will celebrate its 30th year
growing, the region is much more in fa- as an association in 2019 and boasts a
vour than it was previously and I think strong member list which includes the
it is an area where investment is much likes of BHP Ltd, MMG Ltd, Air New Zea-
more obvious than going to some other land and the Australian Government.
regions of the world, particularly as there
is so much instability in other regions,” – Michael Washbourne
Andrews said.

PAGE 50 JUNE 2018 AUSTRALIA’S PAYDIRT