all-in costs to where we want to look at other opportunities.”
them. We did the original fea-
sibility study on an all-in cost The West African gold sec-
of $US860/oz. Automation
and power brought that down tor could be poised for a peri-
to $US750/oz. Currently it is in
the mid-$US900s, next year od of corporate activity as the
it will be in the mid-$US800s
and by 2021 it will be in the recent proliferation of newly
mid-$US700s.”
established miners combines
After an 18-month ramp-
up, Resolute is now ready to with a restructuring of portfo-
start reaping the benefits of
the great technological leap it lios among industry majors
made.
such as Barrick Gold Corp
“Sub-level caving takes a lot
of time and money to establish and Newmont Mining Corp.
but now we are at the fun bit – if we were
building a model aeroplane we’d be put- Welborn has kept a close
ting the stickers on,” Welborn said. “All the
automated equipment is in and we are set eye on the shifting dynam-
up for the move that will see the mine es-
sentially become a rock factory. ics at the top end of town but
“We have 24km of decline development would rather focus Resolute’s
completed out of a life-of-mine 100km. It
gives you an indication of the scale of what An automated primary loader works underground at Syama attention elsewhere.
we have achieved so far.”
“A lot of the market is fo-
Syama could represent a major step
for the gold sector, an industry which has tions for Malian nationals. cused on the divestments of
always held suspicions about innovation “Five years ago we were already 95% the majors but there is a reason the ma-
and technological change. jors are divesting them,” he said. “Over
Malian but it is inevitably in the top echelon 30 years Resolute has discovered, built,
“Even though everyone talks technol- where the expats dominate. Three years acquired, operated and closed nine mines
ogy and innovation the mining industry is ago, all of the 16 senior managers on site and the ones we have built ourselves are
very slow to adopt,” Welborn said. “The were expats, now five of those roles are the ones we’ve made money on. So, new
Toyota Camry I hire to drive to our Raven- occupied by Malians and two of those are discoveries are our preference.”
swood mine in Queensland has cameras, women. We strive to continue increase the
parking sensors, etc. yet when I get to the wage and seniority split. The company already has the Bibiani
mine a $1 million piece of mining equip- project in Ghana in its portfolio as well as
ment doesn’t have any of that.” “John Gaunt, our GM, has done a great a series of minority stakes in junior explor-
job with the Malian talent identification ers. Welborn said the smaller investments
Resistance to innovation, and automa- programme. We are now taking people were in line with Resolute’s wider explo-
tion in particular, can also be felt from from elsewhere. In July, we had our first in- ration strategy but he was growing more
workers understandably concerned for take of interns from Bamako University. It anxious to see them deliver.
their long-term employment prospects. means we are bringing in Malian workers
Welborn, however, is convinced the per- into roles usually the domain of expats.” “We’re not a fund; we see the invest-
ception that automation equals fewer jobs ments as an extension of our exploration
needs to be reversed, particularly in the Mali has a well-established gold sec- budget,” he said. “We are probably at a
African context. tor so finding experienced employees is point now where they need to convert into
possible but Welborn believes the shift something or we have to look at something
“We are not like a bulk miner or a factory to automation and other innovations will else. But, not every drill hole or company
where the aim is to remove employment create new opportunities throughout the investment is going to be a winner and we
opportunities,” he said. “The only employ- continent. will continue to back smart exploration
ment opportunities we remove are the in- teams where we think there is a chance of
efficient, expensive, FIFO expat workers. “There is huge untapped human re- building a Resolute mine.”
sources in Africa,” he said. “As soon as we
“I am a huge believer that technology opened our minds to that we developed Where that will be is not yet known but
will allow us to train local workers in a way better recruiting networks.” given the reputation it has built in Mali
which hasn’t been done before. When and Ghana, there will be few jurisdictions
I visited Syama last week, at one of the With Syama on the path to full produc- which Resolute will be afraid to consider.
drive points, one of the four members of tion, it could be expected Resolute is pre- Long-term success in Africa is a rare
the charge crew was a woman and this paring for a period of steady-state opera- achievement but Welborn places his com-
in a country where up until recently it was tion and cash flow but Welborn said the pany’s ability down to recognition of the
actually illegal for women to work under- team was already raring to go on the next bonds which need to be built.
ground. I believe that is down to the use of chapter.
technology.” “Relationships are crucial, no matter
“It is really uplifting that the team has where you are, but in Australia, where the
Miners are under increasing pressure successfully completed this project and it relationship with government is as regula-
from African governments to up their lo- has built enthusiasm within the company tor or revenue collector, the most impor-
cal workforce quota and Resolute is con- to keep doing it,” he said. “There is no fear tant relationship is with your investor,” Wel-
scious of this requirement. Its focus has about rolling onto the next project, in fact, born said.
shifted from filling the mine with low and we can’t wait.”
unskilled local labour to more senior posi- “If you are to be successful in Africa,
Welborn said the company’s preference your primary stakeholder relationship is
was to stay in West Africa where it saw with your host government. They are not
ample opportunities to build successful only your tax and royalty partner; they are
mines in supportive jurisdictions. usually your equity partner as well. Too
many people see government simply as
“We are looking for opportunities to a tax and royalty partner. I can tell you
spread our wings in Africa,” he said. “Sy- for certain that African governments cer-
ama gives us a bigger cash flow base tainly see themselves as equity partners.
to build a long-life, low-cost gold mining Once that is established, you have greater
business in Africa. We will look at projects chances of success.”
where we are welcome and confident in
the long-term situation in the jurisdiction.
We would like to expand in Mali, we have
Ghana in the long term and we are keen – Dominic Piper
AUSTRALIA’S PAYDIRT AUGUST 2019 Page 51
Capital expansion
fulfils client needs
From exploration, to grade control and
into production drilling; for 15 years the
Capital Drilling story has been one of
transformation and adaptation to meet
changing client needs.
“We started out as an exploration drilling company, before The expertise of its workforce is also a key differentiator when oper-
ating on a continent where skills are not always readily available.
moving – in an effort to ride the various parts of the cycle – into
“Capital Drilling is trustworthy and has a good reputation within
grade control drilling,” Capital Drilling Executive Director Brian drilling services. We have always had the approach that we will offer
first-world service levels to emerging markets, from the quality of
Rudd says. “In 2006-07 we started production blast-hole drilling our rigs on site and our safety standards to ensuring our crews are
fully trained and competent to deliver a level of service you would
at Sukari Gold Mine in Egypt, then we moved into underground expect in countries like Australia or any other developed mining
region,” Rudd says.
blast-hole drilling and were awarded contracts at Geita and
“Our crews are professional, highly trained and always looking out
North Mara gold mines in Tanzania.” More recently, Capital Drill- for a way to do something better or more efficiently, they don’t just
turn up to drill holes every day. This means our clients can work with
ing acquired MSALABS in Vancouver, providing its African client a drilling contractor they can rely on.”
base with a fully integrated suite of drilling and analysis services. Striving for productivity gains is not the exclusive domain of Capital
Drilling’s on-rig crews. The company works closely with some of the
The company continues to evolve and has been focussed on a world’s leading mining service providers to deliver innovative solu-
strategic expansion into West Africa over the last 18 months. The tions and new technologies.
West African region represents 45% of exploration activity in Africa,
the largest concentration on the continent. “Technology is moving so quickly it is vital we stay on top of all
developments,” Rudd says. “We have strong relationships with the
“Expansion into West Africa to leverage the growth opportunities OEMs which allows us to provide clients with the latest drilling solu-
in the region was a logical move for Capital Drilling. Our traditional tions.”
markets of Tanzania and Egypt represented only 5% of exploration
activity in Africa and we already had existing operations in Maurita- “In Egypt, we have a D65 smart rig which is controlled remotely and
nia and Mali.” we have cameras fitted on a number rigs using the IRIS system. We
are also in constant dialogue with the manufacturers of down-hole
“In 2018 we established additional facilities in Mali and set up new instrumentation about their innovations and how these tools can talk
infrastructure in Cote d’Ivoire. At the same time, we mobilised ap- to the driller.”
proximately a third of our fleet into the region.”
Capital Drilling’s reputation was forged in Tanzania but the company
This expansion is coming to fruition for the company, recently an-
nouncing six new contracts in West Africa, including expansion of its
operations into Burkina Faso and Nigeria.
Capital Drilling’s reputation has been built on its ability to deliver a
professional drilling service, regardless of how remote or challeng-
ing the drilling conditions are.
now boasts a service book across the African continent. In Egypt ager who has supervised work in Kenya and Botswana while in
it works with Centamin plc on the Sukari mine while its move into Egypt our team is now 97% Egyptian.”
West Africa has been such a success the region now accounts for
approximately 25% of company revenue. The company has also initiated what they believe may be the
first international training opportunity of its kind offered to African
Rudd says Capital Drilling’s success across different jurisdictions employees.
speaks to the company’s cultural approach to working in Africa.
“In February, three of our employees from Egypt, Mauritania and
“It comes from taking the time to learn the environment you are Tanzania commenced apprenticeships at Cairns TAFE in Queens-
operating in,” he says. “We make sure we speak with the relevant land. They are studying a Certificate III in Engineering and when
people; meet with the local government departments and under- they have finished, they will have a qualification recognised to
stand the history of the countries we operate in.” international standards that will provide long-term career benefits,”
said Rudd.
“We work with the local people and their traditions and customs
and adjust our operations to suit – for example we have changed “We are very excited to offer this opportunity and it is another step
shifts during Ramadan to night shift to accommodate those who forward in our strategy of providing meaningful career develop-
were fasting. We also translate everything into local languages ment for our National employees.”
so it is easier to transfer our systems and procedures over to new
countries.” “We plan an annual intake for employees who show a strong ca-
pability in these areas and the selection process is now underway
This cultural sensitivity, when combined with Capital Drilling’s com- for four students to start in the 2020 intake,” said Rudd.
mitment to training and skills development has allowed the com-
pany’s employees to bring home more than just a regular wage. “Providing this support to our employees also means we are natu-
rally aligned to the increasing nationalisation movement happening
“It is important that we provide not only jobs for national employ- across African resources now.”
ees in countries where we operate, but career paths,” Rudd says.
“We have established training facilities at our long-term sites with While gold production on the continent is at its highest levels since
the aim of upskilling local employees to replace many of the expat South Africa’s heyday, exploration activity has slowed in recent
roles.” years as junior miners struggle to attract significant funding.
“We now have African expats working on some of our projects, Capital Drilling recognises the difficulties explorers face in securing
with Tanzanian drillers in Mauritania and a Tanzanian project man- funding for exploration projects and has moved to provide support
through its Capital Investments arm.
“It helps stimulate exploration drilling with Capital Drilling dur-
ing what has been a challenging time for explorers when raising
capital,” Rudd says.
Corporate Head Office:
Capital Drilling Limited
The CORE Building, 9th Floor
Ébène CyberCity, Mauritius
Telephone: +230 464 3250
Email: [email protected]
capdrill.com
ADU PREVIEW
Evans at home with Mali Lithium
It has taken six months, but Chris Evans “Over the last six months, we’ve basi- Chris Evans
is finally starting to feel settled at Mali cally had to go out and re-sell the compa-
Lithium Ltd (MLL). ny and re-introduce ourselves to all the continued on page 56
relevant stakeholders. Now that’s done
Evans joined MLL as managing direc- and we’ve got the right people on board,
tor in February, having made the switch we’re looking forward to getting down to
from Altura Mining Ltd where he was the business and sorting out the deals that
chief operating officer who oversaw the we need so we can move into that next
build of the company’s namesake lithium stage of starting construction.”
mine in Western Australia’s Pilbara re-
gion. Evans arrived at MLL shortly after the
company – then known as Birimian Ltd
Since stepping into the role, Evans has – underwent a complete board overhaul
barely had time to come up for air. He following a shareholder rebuttal against
has now visited Mali on four separate the proposed development path for Gou-
occasions, having never previously set lamina.
foot in the country, while also attending a
number of investor roadshows. While undertaking a clean-up of the
company’s corporate affairs, Evans be-
Evans has also implemented wide- gan running the ruler over the work pro-
spread change at the company level in grammes for a DFS which was originally
a bid to boost the chances of the Gou- slated for completion last month. Hav-
lamina lithium project being developed ing been through a similar process with
into Africa’s first major spodumene op- Altura, he knew more work was required
eration. before he could present that final docu-
ment to prospective financiers.
“I feel I’ve had a pretty good bedding-
in time from the last six months and I’m To that end, Evans called on his former
now ready for the next six months,” Ev- Altura colleagues Mark Rowley (project
ans told Paydirt.
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ADU PREVIEW
Bamako and around the mine site when
I’m there and I’ve only found the locals to
be very friendly.
“There’s actually very little petty crime
in Mali. You never feel threatened from
the petty crime, but obviously the inter-
ethnic violence in the north of the coun-
try creates this feeling that something big
could happen.”
Evans hopes MLL can tick off several
milestones before the end of the calen-
dar year, including converting more of
Goulamina’s 103mt resource into meas-
ured status and declaring maiden proven
reserves for one of the world’s richest
lithium deposits.
However, he is in no rush to pull the
trigger on development, indicating the
company’s current timeline will dovetail
nicely with the medium-term forecasts
Mali Lithium is aiming to publish a DFS on its Goulamina lithium project early next year for lithium demand.
“It’s a tough market for lithium at the
director) and Walter Mädel (processing Evans said. “We’ve got a great relation- moment, prices both on the spodumene
engineer) to drive Goulamina’s develop- ship now with the Department of Mines concentrate side and the carbonate side
ment from an internal company perspec- and Geology, the Malian Mines Minister are low, but it doesn’t really affect us,”
tive. Lycopodium Minerals Pty Ltd was and of course the Environmental Minis- Evans said.
subsequently appointed to oversee the ter.”
“Everyone believes in the lithium story,
DFS – now scheduled for a Q1 2020 re- Despite having no previous operating that the demand is going to continue to
lease – while DRA Global Ltd will provide experience in Africa, Evans has been increase somewhere near 20% year-on-
engineering services to optimise the pro- “pleasantly surprised” by his first foray year, and when you look at those growth
cessing flowsheet. on the continent, especially amid some numbers, you’re going to need a project
“The areas we’ve been focusing on of the security concerns in Mali and of our size every year to come online in
as the main thrust of the DFS are the neighbouring countries which are mak- order to meet the demand.
resource and reserve, transport, power ing headlines around the world.
“I have no doubt there is going to be
and water, and the processing,” Evans “People tend to get scared by Mali be- another uplift in the lithium market. I of-
said. cause of the news reports they hear, but ten get asked why we’re not building this
“When we’re talking to strategic in- for me it’s very easy to explain what a quicker. Well, for a start it takes a long
vestors and offtake partners, these are great place it is,” he said. “That’s part of time to raise money and get offtake part-
the areas of due diligence they focus on the reason we rebranded and renamed ners, but even if we could I don’t know if
straight away. In the absence of a com- ourselves Mali Lithium. We don’t want to I’d want to right at this moment. Selling
pleted DFS document, we need to have be shy about the fact that we are operat- into the market in late 2021/early 2022
those areas squared away because ing in Mali and we are a lithium company. when we intend to, I think, is going to be
they’re the areas which contribute to re- “In the last six months, I haven’t ex- the perfect time for us.”
ducing risk on the project.” perienced any security situations. I feel – Michael Washbourne
A precursor study to the upcoming very safe. I actually go for a run through
DFS was due to be published at the time
of print, updating the findings from last Goulamina is one of the world’s richest undeveloped lithium deposits
year’s PFS which indicated a 2 mtpa
open-pit operation producing 362,000
tpa of 6% spodumene concentrate could
be developed for an upfront capex of
$US199 million.
MLL has also appointed Seydou Se-
mega, who was instrumental in helping
the company obtain its environmental
permit earlier this year, as its country
manager. An application for an exploita-
tion/mining permit is understood to be
progressing through the Malian regulato-
ry process in a timely fashion and could
be awarded as early as this month.
“Seydou’s not a mining guy, but he’s
worked on mining projects all over Mali
and he’s made huge leaps and bounds
with our government relations in the last
four months since he’s been appointed,”
Page 56 AUGUST 2019 AUSTRALIA’S PAYDIRT
Key people: Richard Crookes (non-executive chairman), John de
Vries (CEO & executive director), Gabriel Chiappini (non-executive
director & joint company secretary), Ian Murray (non-executive
director), Jeff Dawkins (chief financial officer & joint company
secretary), Raymond Hekima (vice-president corporate, Tanzania)
ENHANCING BUILDING A GRAPHITE MINE IN TANZANIA
MAHENGE
inevitably comes with a lot of firsts.
It has now been two years since de Vries stepped into the hot seat at
Black Rock. At the time, the company was the straggler in a pack of howeVER, as black rock mining LTD CHIEF
graphite hopefuls emerging out of East Africa.
Under the leadership of experienced mining engineer de Vries, Black Rock’s JOHN DE VRIES EXPLAINS, FLYING BLIND DOES
value has tripled and its Mahenge project is now shaping as potentially one of
the world’s largest graphite producers. NOT MEAN CUTTING CORNERS.
Along the way there have been plenty of firsts, including production of a
commercial-scale 99.3% concentrate, operation of the largest-known pilot “We’ve got a track record of being the first to have done a lot of things and
plant run for a graphite project and development of a transparent offtake with that comes some pretty significant challenges,” de Vries says.
pricing framework. “To be successful in graphite, you have to do things differently but you also
have to do things properly. Probably one of the biggest challenges I’ve had as
MAHENGE GRAPHITE PROJECT - DFS comparison CEO is balancing the expectations of investors who might think you can cut
corners and still produce a result.
October 2018 DFS July 2019 eDFS “You won’t see us cutting corners – there are great perils in cutting corners as
we’ve seen in the performance of the listed graphite sector to date – but what
Post-tax NPV10: $US895 million $US1.16 billion we also know is that same-same doesn’t work in this space.”
Post-tax IRR: 42.8% 44.8% The culmination of a busy first half of 2019 for Black Rock was an enhanced
$US116 million DFS (eDFS) on Mahenge, about 370km south-west of Dar es Salaam.
Module one capex: $US115 million $US69.5 million Central to the eDFS was customer demand for a more aggressive ramp-up
$US85.3 million of the proposed production schedule, with an unintended outcome being the
Module two capex: $US69.5 million $US67.1 million addition of a fourth module which had no material impact on the forecast
26 years capex for the preceding three phases.
Module three capex: $US84.2 million 340,000 tpa With the addition of a fourth module of 85,000 tpa, Black Rock is now eyeing
7.4mt total steady-state production of 340,000-350,000 tpa from Mahenge, up
Module four capex: N/A $US397/t from the 250,000 tpa proposed in the original DFS released in October 2018.
$US494/t As a consequence, post-tax NPV10 increased 30% to $US1.16 billion.
Life-of-mine: 32 years Black Rock also intends to bring each module online annually rather than
every two years as previously indicated.
Average production: 250,000 tpa “When we set out on this journey, the one thing that was abundantly clear was
we had to produce a DFS that was going to be fundable, as opposed to simply
Total production: 6.6mt pulling together a study that would produce a transaction,” de Vries says,
“We’ve engaged in a lot of dialogue around what our funders want. We’ve
Life-of-mine C1 costs: $US401/t
Life-of-mine AISC: $US473/t
OFFICE PRICING FRAMEWORK
Regular Premium Ultra
Nominal graphite grade 94.5-95.5% 97.5-98.25% >99%
TGC TGC TGC
CIF China (ex-duty) $US1,117/t $US1,490/t $US2,161/t
Exchange rate RMB:US 6.71
Rise & falling price reference
95% TGC - #100 mesh Benchmark Minerals
$U950/t as at Nov 2018
called this the enhanced DFS, but really we should be calling this the fundable It seems de Vries is not the only who is recognising the potential in front of
DFS because our customers and the financial markets are ultimately going Black Rock with Mining Journal recently naming Mahenge as one of the top
to drive how we get this project off the ground.” five projects globally.
One of the key changes outlined in the eDFS is the provision of a 10MW Over the next six months, de Vries hopes his company’s financing solution
duel fuel (HFO/diesel) power station for module one. Prospective financiers for Mahenge will become clearer. Black Rock is targeting first production in
indicated to Black Rock a strong desire to decouple the mine start-up from 2021, but that goal still remains subject to confirmation from the Tanzanian
the development schedule for TANESCO’s 220KV high voltage lateral from Government over the proposed 16% free-carried interest under its new
Ifakara to Mahenge. mining code.
The TANESCO grid is expected to be available for module two and the station “Am I confident that we can progress in a timely manner? Absolutely I am,”
will then potentially serve as a back-up/standby power option for the mine. de Vries says.
A pivotal factor in the outcomes of the eDFS was an 18t pilot plant run in “If the Government had got to an end-point around some of the mechanics
China during March, supplementing the previous test work completed by of this 16% free-carry, I think we’d probably be a bit further down the road with
SGS Lakefields Laboratories in Canada. financing. We haven’t had conditions precedent yet, but I don’t think we’re that
Black Rock’s EPC partner, Yantai Jinyuan Mining Machinery, oversaw the far off it. It’s in everybody’s best interest to resolve that. Once that occurs, I’m
operation of the pilot plant. Large flake concentrate was then made available confident we can start shunting inbound investment into Mahenge.”
to both potential and existing customers for validation purposes.
“Ultimately in the world of customers, when you’re producing a plus-99% COMMITTED OFFTAKE VOLUMES BY CUSTOMER
product which nobody on the planet has ever seen before, there’s a degree
of scepticism in the offtake markets,” de Vries says. Year 1 Year 2 Year 3
“I am a strong believer that seeing is believing so we invited everybody to
come and have a look. Essentially it was run by the Chinese, for the Chinese, Heilongjiang Bohao 20,000t 50,000t 90,000t
so the Chinese would believe us. They then took away the material to do their Qingdao Fujin 10,000t 15,000t 15,000t
own validations and they’ve since signed up for a pricing framework which Taihe Soar 20,000t 55,000t 100,000t
no one else has achieved to date; again, another first.” Qingdao Yujinxi 20,000t 20,000t 20,000t
Four of Black Rock’s five offtake partners have agreed to the framework Yantai Jinyuan 15,000t 30,000t 30,000t
which guarantees pricing is dependent only on the type and quality of the
graphite product to be supplied to each customer. TOTAL 85,000t 170,000t 255,000t
The framework reflects CIF pricing in China, includes ocean freight and a
rise/fall clause referencing benchmark pricing to protect both supplier and
customer. Import duties are excluded as many customers are located in
duty-exempt import/export zones.
With mining and environmental licences already in hand, Black Rock
has appointed Ironstone Capital to help drive the financing process for
Mahenge. The company has also beefed up its own team with former Gold
Road Resources Ltd managing director Ian Murray recently joining the
board as a non-executive director and Jeff Dawkins being appointed chief
financial officer.
“We’re becoming a championship team made up of champions,” de Vries
says.
“I looked at the playbook Ian put together at Gold Road and followed it
shamelessly. To have had the honour of the guy whose playbook I copied
say: ‘I’d like come along and work with you’ was monumental. Then to tie
that up with Crookesy [chairman Richard Crookes] and Jeff who have got
the pedigree of project finance experience under their belt and scar tissue
in all the right places, I feel we’ve got the right skills and the right people to
make this happen.”
Office: 45 Ventnor Avenue, West Perth, Western Australia 6005 Tel: +61 8 9389 4415 Web: blackrockmining.com.au
ADU PREVIEW
Patient charge for Battery Minerals
As much as Jeremy Sinclair would like so will allow Battery to consider bring- slowed for Battery.
to be building a graphite mine in Mo-
zambique right now, he knows justice to ing on Montepeuz stage two and Balama Graphite market prices have weak-
shareholders would not be served by do-
ing so. Central stages one and two in quick time, ened recently but as is the case with
As part of a board reshuffle, Sinclair bringing its output to over 200,000 tpa lithium, Sinclair believes the long-term
took the helm as managing director of
Battery Minerals Ltd in April, replacing graphite. fundamentals are only getting stronger in
David Flanagan who is now non-execu-
tive chairman. The company was well down the fund- light of government policies around the
Since his appointment, the graphite ing path when Resource Capital Funds world and the surge in investment and
market has not been conducive for pro-
ject developers to secure funding on rea- (RCF), signalled intent to deliver a $US25 development plans big car and battery
sonable terms. Therefore, Sinclair has
remained patient in the search for the million term sheet loan and $US5 million manufacturers have in the pipeline.
$US39.5 million required to build phase
one of Montepuez. “equity investment in Battery. However, in “Also, of note more recently, is some of
Based on a modular 500,000 tpa plant, late 2018, it reneged on the deal. the geopolitical developments. Markets
Battery has guided 11% TGC from Mon-
tepeuz (12% TGC for the first 18 years) RCF said long-
at a rate of 50,000 tpa over a mine life in
excess of 50 years. term graphite funda- ...whilst some would think
mentals did not meet
C1 opex for the first 10 years has been
estimated at $US361/t with EBITDA of its investment crite- the best we can do for
$US30 million a year sufficient to pay ria, leaving Battery shareholders is to build the mine
back capital costs in two years. Doing searching for other
funding possibilities. no matter what, the right thing
to do is get the right funding
However, with
graphite still some-
what of an evolv- solution, with partners that get
ing growth market, the clean energy story and/or who
without the certainty
of a transparent in- we have strategic overlap with.
dex to reference, the
funding process has continued on page 62
MURRAY & ROBERTS CEMENTATION
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Page 60 AUGUST 2019 AUSTRALIA’S PAYDIRT
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ADU PREVIEW
in the US, Korea, Japan, and particularly Montepuez is a funding scenario away from being developed
Europe are starting to give more strate-
gic thought to security of supply of raw operation, near Montepuez, has not just 50,000 tpa of natural flake concen-
materials [graphite, lithium, etc.] when it helped market sentiment towards the trate, the orebody has the capacity to
comes to lithium-ion batteries as it re- likes of Battery. significantly increase production as the
lates to their automotive industries,” Sin- market demands. In addition, we have
clair told Paydirt. However, while sections of the mar- Balama Central,” Sinclair said.
ket can spin a layer of negativity on the
“Who would have thought that min- whole graphite sector off the back of Syr- And, Mozambique is just the right
ing and the transition to clean energy ah, Sinclair points out that Balama has at place to do so, as the country has been
were going to be so intrinsically linked? least demonstrated the scale of produc- attractive to mining and resource devel-
Lithium-ion batteries require the mining tion from one mine in Mozambique. opment for some time.
of certain raw materials and right now
there’s nothing in the pipeline that will He said the unprecedented forecast in “Some of the larger mining houses
change that. So, for me it’s good to be in demand for graphite – as a result of the [South32 Ltd and Vale SA] have been
mining right now, and be in a commodity transition to clean energy – meant more present in Mozambique and in produc-
that we’ll be more and more reliant upon operations like Syrah’s Balama needed tion for some time and more recently
as the global transition to clean energy to be developed. Syrah,” Sinclair said. “Combine that with
gathers pace. mega-project investment from some of
“While Montepuez stage one targets the oil and gas majors and you are talk-
“I’d like to be building a mine right now ing about a country with circa $220 billion
but at the same time if we were I’d be of foreign natural resources investment.
reasonably confident that the funding
deal would not be the best outcome for “Australian investment markets aren’t
shareholders. The current market makes as familiar with the country. People for-
it more difficult for funding, and whilst get Africa is not made up of a bunch of
some would think the best we can do for states like Australia; it’s made up of coun-
shareholders is to build the mine no mat- tries that are quite unique from each oth-
ter what, the right thing to do is get the er in terms of their government and state
right funding solution, with partners that of stability and attractiveness to invest-
get the clean energy story and/or who we ment. US energy company, Anadarko
have strategic overlap with. I’m confident Petroleum, recently gave the go-ahead
they are there, but it will take a bit longer for the construction of a $US20 billion
than what it might if it was project finance gas liquefaction and export terminal in
for a commodity of a more mature and Mozambique, which says it all, and the
established market like gold or nickel,” US embassy is establishing a 3,000 per-
he said. son presence there,” he said.
On top of the challenges of attracting
financing for a graphite project, Syrah
Resources Ltd’s less than smooth run
into sustained operations at its Balama
– Mark Andrews
A maiden inferred vanadium resource of
34.6mt @ 0.25% vanadium pentoxide, from
within the existing ore reserve pit designs
at Montepuez graphite, was announced
in April
Page 62 AUGUST 2019 AUSTRALIA’S PAYDIRT
zimbabwe is open
for business
DRA Global share the
fundamentals of project
success in Africa
Project development and delivery is full of risks regardless Our specialist team of process and project engineers are acutely aware
of location but the additional variables of geopolitics, of what it takes to deliver a successful project across all commodities
community expectations and logistics mean African projects including Copper, Gold, Platinum (PGM’s), Diamonds, Coal, Bauxite,
require highly experienced development teams if they are Cobalt, Iron ore, Mineral Sands to mention a few, says Hodgkinson.
to run smoothly, according to Africa’s leading diversified “Experience and knowledge are crucial in building successful projects
engineering, project delivery and operations management in almost any country, it’s important to prepare properly, understand
group, DRA Global. the risks and put the right precautions in place. If you get to a place
where the risks are too big or you can’t mitigate them then you may
“If you are taking on a project in need to make some tough decisions.”
Africa you need to fundamentally Hodgkinson says planning is also key to ensuring African projects
meet time and budget expectations. “As a general rule good planning
understand what you’re up is essential in any project but even more so in Africa where there can
be infrastructure, permitting and capability challenges,” he says. “By
against, says DRA Global’s understanding the infrastructure and logistics, project teams can
identify how either might impact timing and costs. DRA Global recently
Executive Vice President – Africa accomplished full commercial production on the Bisie Tin Project in the
DRC for Alphamin Resources. Although logistic procedures, transport,
projects Alistair Hodgkinson. infrastructure and accommodation for construction and operational
purposes had to be established, DRA Global was able to deliver the
“Various factors need to be project more than two months ahead of schedule and with an excellent
safety record.
considered to ensure the success
By completing legal and permitting work upfront it’s easier to foresee
of a project – the project build problems such as getting equipment and parts through ports and
custom controls; some countries also require local contracting –
itself and the operational another major consideration. These are issues that DRA Global typically
navigates, our experience allows us to identify and plan for these
readiness – however in Africa challenges.”
the correct set-up must be a Given it has grown up on the continent, DRA Global offers a unique
perspective to clients who are perhaps more used to the Australian or
Alistair Hodgkinson major consideration. Coordinating Canadian mining milieu.
arrangements with government,
the local communities the various
authorities; if those are finalised up front, the job will go well but if not,
the project is likely to experience a range of difficulties.”
With more than three decades of experience working on the continent,
DRA Global offers a unique skill-set when it comes to building projects
on the African continent, with superior knowledge across various
jurisdictions, commodities and project sizes.
“Over the years DRA Global has successfully delivered the largest
projects, across all commodities in Africa, many from a study phase.
YOUR TOTAL SOLUTIONS PARTNER www.draglobal.com
James Smith “Over time we’ve built a solid to identify who is going to operate the asset, what systems are going to
understanding of different be used, where the operators are going to be sourced and how we are
geographies and what successful going to train them.”
delivery looks like in each,” says
Hodgkinson. “In Australia, as an As with DRA Global’s engineering team, Minopex’ vast experience
example, cost of labour is very high in Africa gives clients a clear advantage. “We are probably the only
when compared to the same in outsourced operations team on the continent that can boast more than
Africa. DRA Global deploys tactics two decades of experience operating plants in all parts of Africa,”
that maximise efficiencies of all Smith says. “We have a wide skills base we can deploy to any part of
available resources, people and the continent and we know what is needed to operate in territories
equipment, to manage costs, deliver like the DRC, Zambia, Mozambique or West Africa. We know what
the project safely and achieve the is required to run localized training and development programs and
highest standards. we know where to find the skilled operators and artisans needed to
commission a plant.
“Operational readiness forms part of DRA Global’s comprehensive
offering, it is as important for us to build a plant well and have it “Minopex currently employs over 2000 people across 16 sites
ready for commissioning as it is to ensure its operational readiness,” throughout the African continent and the Middle East. We deploy a very
according to Hodgkinson. “In the first years of operation, we know the experienced operational team, from plant operators up to technical
client will be navigating the nuances of the orebody and how it works, plant metallurgists, supplemented by engineering and maintenance
so we make it our priority to ensure all operational matters are in skills. These skilled resources train up further local operators and
place.” technicians in the area as required. Minopex is also in a position to
bring in expats from other parts of Africa if needed.
Risk does not end at the point of construction and the wider DRA group
allows for African experience to also permeate the commissioning and “At the same time, we bring reliable systems to that plant. Junior
operational phase. James Smith, Executive Vice President at Minopex, miners don’t always have access to tried and tested systems and
DRA Global’s specialist processing plant operation and maintenance processes for their plant. We deploy an integrated set of operations,
subsidiary, says the Group’s strengths lie in its ability to reduce maintenance management, finance, SHEQ and human capital systems
operational risks during the commissioning and operation phase, and procedures that can be implemented quickly and efficiently.
allowing the owner’s team to focus on other variables.
DRA Global has also developed MOMS (Mine Operations Management
“When operating in Africa, the owner’s team has a lot to think about System), as an integrated data management and MIS system. This
- geopolitical factors, the regulatory side, the local communities, provides mine owners comprehensive real-time operational intelligence
logistics and everything else that comes with operating in a specific anywhere in the world without any lengthy custom development.”
country,” Smith says. “This is intensified by project commissioning
activities and performance expectations on the plant, which need to Such experience and local knowledge can prove invaluable to
convert to financial success sooner rather than later.” companies new to African project development. Not only does
DRA Global’s experience ensure construction, commissioning and
Smith says DRA Global and Minopex’ focus on operational readiness operational efficiencies, it can offer financiers peace of mind about
allows for a smoother hand over from construction to commissioning. operational performance and asset management.
“Ideally, our involvement starts early in the project, at the operational “Having DRA Global and Minopex involved with their extensive track
readiness stage, looking at all aspects of the operation and planning for record, knowledge base and systems is a significant factor in reducing
it to be self-sustainable,” he says. “This integrated approach allows us project risk,” says Smith. “It gives the investor comfort that the
numbers can be met on that project.”
Minerals & Metals Processing Mining Infrastructure Energy Water Industrial
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ADU PREVIEW
All go at Sanbrado
Twenty years ago Richard Hyde got his AISC near $US600/oz on average for the Richard Hyde
first taste of West Africa, with the West first five years - was about 45% complete.
African Resources Ltd (WAF) managing di-
rector fondly recalling his early days. With Stage 1 infrastructure earthworks
and civils, plus pipeline and water dams
“This year marks 20 years since my first completed, the CIL tanks were being weld-
job in Mali as a contract geologist, soil sam- ed on site at the time of print, while decline
pling in 40-degree heat and melting the for the underground had advanced 75m.
soles off my field boots,” he told Paydirt.
“I ended up spending about six years liv- Hyde said WAF’s ability to seamlessly
ing and working in the region and I’ve been compose an experienced build team, led by
travelling backwards and forwards ever chief development officer Matt Wilcox, has
since. So, I have a lot of good friends and put the company on the path to first produc-
former colleagues I get to see each year at tion at Sanbrado in the second half of 2020.
ADU [Africa Down Under], which is great.”
“We’ve managed to recruit well through-
While Hyde looks forward to catching out 2019. A large part of that has been the
up with acquaintances and checking in on key hire of Matt as chief development of-
other companies, there has been no short- ficer and he’s assembled an A-Team that
age of people queuing at the WAF booth in has a lot of recent build experience in West
recent years. Africa, in particular in Burkina,” Hyde said.
Africa Down Under 2019 will be no differ- “This has meant we have been able to
ent, as WAF surges ahead with construc- move pretty quickly and also use more local
tion of the Sanbrado gold project in Burkina contractors for some of the less technical
Faso. construction, maximising the employment
of Burkinabe personnel. The selection of
In mid-July, construction of the project - Lycopodium was also important as they
which is primed to deliver 217,000 ozpa at have a lot of experience in the region.
continued on page 68
ASX:BEM
Developing the Maniry
Graphite Project - Madagascar
Level 1, 675 Murray Street
West Perth WA 6005 Australia
www.blackearthminerals.com.au
Page 66 AUGUST 2019 AUSTRALIA’S PAYDIRT
AUSTRALIA’S PAYDIRT AUGUST 2019 Page 67
ADU PREVIEW
Sanbrado boasts a 3.1 moz resource and “Timely permitting has probably been Sentiment towards gold players maybe
1.7 moz reserve the biggest challenge but we have man- on the march, however, given the atten-
aged to meet our timelines regarding tion on construction, full value for WAF’s
permitting and key approvals, which has efforts at the drill bit at Sanbrado is es-
been the result of a lot of diligent work on caping the company.
our part in cooperation with the Burkina
Faso Government.” In July, WAF reported maiden grade-
control drilling results from the M1 South
Achieving permitting and approvals open pit deposit had returned high-grade
timelines allowed WAF to meet the re- results in the ilk of 27m @ 8.7 g/t gold,
quired conditions with lenders, leading to including 7m @ 16.2 g/t, to confirm San-
the first draw of $US75 million from the brado will process high-grade free milling
$US200 million Taurus debt facility within ore early on in the production schedule.
four months of signing the funding agree-
ment. M1 South will be mined in the first two
years of production and contains more
Having gone through the process of than 150,000oz @ 5.5 g/t gold.
securing full funding for Sanbrado, Hyde
has a good gauge on the environment for Other highlights of grade-control drilling
project financing at the moment. at M1 included 21m @ 9.2 g/t from 14m,
(including 6m @ 25.4 g/t) 37m @ 2.4 g/t
“It’s improving,” he said. “The Austral- from 3m (including 5m @ 8.5 g/t) 24m @
ian producers have outperformed over 3 g/t from surface and 17m @ 3.3 g/t from
the last few years and the gold price has 12m (including 6m @ 5.8 g/t).
been marching higher during 2019 which
is good for all companies. Like many company directors, Hyde
believes WAF – $278 million market cap
“I think investors and specialist funds – remains under-valued and is due for a
have been looking around for value op- re-rate, however, he acknowledges what
portunities and more recently the African investors are focused on at the moment.
gold producers have started to move. It
takes some time for that to filter down to “Given we are in the build period of our
developers and explorers, but it is hap- first mine investors are looking for de-
pening.” risking catalysts,” Hyde said. “Certainly
the grade-control results to date have
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Page 68 AUGUST 2019 AUSTRALIA’S PAYDIRT
NEG PREP 4.indd 1 19/2/19 4:32 pm
shown both M1 and M5 are pretty consistent
and support our feasibility resource and geo-
logical models.
“Our build is progressing well and we are on
track for commercial production in the second
half of 2020.”
At the time of print, WAF had received approval
for its Mining Convention at Sanbrado.
The Mining Convention is the final major piece
of the permitting milestones required at Sanb-
rado. The Mining Convention sets out the fiscal and
legal terms in respect to the development
and operation of Sanbrado.
– Mark Andrews
West African Resources is on track for gold production at Sanbrado in the second half of 2020. Year 1 production of 300,000oz gold is
estimated, with Sanbrado producing an average 217,000 ozpa in the first five years and 153,000 ozpa over the current 10-year life-of mine
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• Environmental Permit approved
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• Pre Feasibility Study (PFS) completed
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AUSTRALIA’S PAYDIRT AUGUST 2019 Page 69
ADU PREVIEW
Prieska gets green nod
Orion Minerals Ltd’s fast-track approach The resource at Prieska – 30.49mt @ al, either on the development front or some
to development of the Prieska cop- 1.2% copper and 3.7% zinc – is deemed other structure, we will always consider it
per-zinc project in South Africa’s Northern but our focus is very much on delivering
Cape is on-song. globally significant the baby. Now that we have it, we have to
grow it and feed it.”
Release of the Prieska BFS in late June Could that then lead to further corporate
was followed by a series of milestones, activity in the sector? Having appealed to investors with the
including the issue of shares to the Anglo 10-year “foundation phase” Prieska BFS,
American sefa Mining Fund (AAMF) and “You can’t get distracted and we have which included undiscounted free cash
the granting of environmental authorisa- our work cut out trying to finance and start flows of $1.1 billion, NPV $574 million at an
tion by South Africa’s Department of Min- building this project. If somebody waved a 8% discount rate and IRR of 38% (all pre-
eral Resources (DMR). very big cheque [to acquire the company], tax), Orion is now working on optimising
then all power to the investors; it is all about the project on all fronts.
Having environmental permitting in hand making money for our shareholders, bear-
provides Orion a clear path towards re- ing in mind our management team are also Peak funding requirements estimated in
ceiving a Mining Right, which is essential shareholders in the company,” Smart said. the BFS for Prieska were $378 million for
for the start of project development upon a a modern 2.4 mtpa underground and open
final investment decision being made. “As soon as someone makes a propos- pit mining operation, which will deliver pay-
able metal production of 189,000t of cop-
Orion hopes to decide the fate of Pries- per and 580,000t of zinc over an initial 10
ka in the second half of 2019 and start con- years.
struction of the project in early 2020.
Capital payback is expected to take less
“I think the BFS was a good outcome be- than three years from first production, with
cause we delivered exactly what we said an all-in-sustaining margin of 44% “con-
we were going to deliver,” Orion managing firming the operation’s high-margin and
director Errol Smart told Paydirt. strong economics”.
“The market has changed a bit, with “I think the project is resonating [in the
copper having the stronger outlook at the market]. This is the only base metals de-
moment, so it is proving to be more of a velopment company listed on the JSE. At
copper-focused than zinc-focused mine, the moment, South Africans wanting to
but the benefit we have is that we know invest in copper equities have no options
both metals are there. We’ve got a good and no ability to do that in a copper or zinc
basis to get equity financing away and get mine, so I think we have definitely whet the
under construction very shortly.” investor’s appetite,” Smart said.
The Prieska BFS hit the market on the In addition to optimising the BFS and ad-
same day Sandfire Resources NL’s sec- vancing project discussions, Orion is also
ond bid for Botswana copper developer planning project implementation and final-
Mod Resources Ltd went public.
ising agreements with concentrate
Both Orion and Mod have man- offtake partners and key suppliers.
aged to generate plenty of interest in
what is a barren space for base met- “We believe we can bring capital
als developments in Southern Africa. savings in the construction,” Smart
said.
Like Mod, Orion was receiving a
lot of interest on the corporate front, “We didn’t want to focus on the by-
according to Smart, as people were products either, we wanted to get the
starting to see the “bigger picture for main study done, so now we have
the region now”. the luxury to look at the by-products
[barite and pyrite] again which is quite
“I do think the region is starting to useful.
get some more attention,” he said.
“South Africa was a very good cop- “The industry as a whole has been
per producer in the Northern Cape quite depressed and there is a whole
and of course Botswana has been lot of opportunity to buy crushers and
historically good in nickel sulphides, ball mills at a fraction of the price if
but hasn’t had copper production of you have cash available. That could
any scale. Between us and Mod, we also mean you can accelerate the
are looking at quite reasonable scale development of the project and bring
and people are starting to talk about it in at lower costs, which we are ad-
our critical scale and the opportunity vancing on all fronts,” he said.
for copper beneficiation in Southern
Africa; I think people are starting to – Mark Andrews
see the bigger picture for the region
now,” he said.
Errol Smart
Page 70 AUGUST 2019 AUSTRALIA’S PAYDIRT
EXPLORATION
TO BECOME A SIGNIFICANT COPPER PRODUCER BY DELIVERING
ON OBJECTIVES, CREATING SHAREHOLDER VALUE AND
WORKING WITH THE LOCAL COMMUNITY CREATING EMPLOYMENT
OPPORTUNITIES AND ENVIRONMENTAL SUSTAINABILITY
London offices
LSE: MOD
T3 Copper Perth offices
Project ASX: MOD
Image: T3 Accommodation Camp, Ghanzi.
ADU PREVIEW
Lucapa adds polish to strong first half
Up against a challenging backdrop for ments for the first half of the year and I think capa managed to do just that at Mothae with
diamond producers, Lucapa Diamond it’s really set us up for the second half of $US1.1 million banked.
Company Ltd found a way to sparkle brighter 2019,” Lucapa managing director Stephen
than its peers during the first half of 2019. Wetherall told Paydirt. Lucapa attributed a successful first-half
at Mothae to the performance of its new 1.1
Diamond producers continue to feel the “From a performance perspective on our mtpa plant with throughput rates often ex-
pressure of tight Indian liquidity, an unprofit- operations, we really have just continued to ceeding the 150 tph target.
able midstream and a perceived oversupply do what we’ve told the market we’re going to
of low-end diamonds into the market. do and we’ll continue to tick those boxes. The challenge now for Lucapa is to main-
tain that momentum. As such, the company
Fortunately for Lucapa, its focus on niche “There are still some winds we must con- has been reviewing its water retention and
production of high-end diamonds – which tinue to navigate, but obviously our philoso- storage plans. Ultimately, it was decided to
enjoyed more robust pricing – has kept the phy has been to focus on special, high-end, dewater the southern pit to access higher-
company on track to post an operating profit niche diamonds which have been far more margin zones during the current quarter.
for the full calendar year. robust in the pricing environment to date.”
“We had planned the dams really only to
Lucapa reported first-half diamond sales Lucapa officially turned the lights on at provide water for a 1.1 mtpa plant,” Wetherall
of $US29.4 million ($41.4 million) from its Mothae on January 1. By June 30, diamond said.
Lulo alluvial mine in Angola and newly- carat production and grades were roughly
minted Mothae operation in Lesotho. Some 20% above what the company had planned. “If we’re going to continue to drive the plant
20,504ct were recovered from both assets Cash operating costs of $US12.56/t were at a higher throughput rate we do need ad-
during the period, including 445 plus-4.8ct also 14% better than originally estimated. ditional water and the storage for that water
diamonds. was in the south pit. We did have access
It is rare an operation will post a positive to other lower margin ore in the north lode,
“We’re very excited about our achieve- EBITDA during its first six months, but Lu- the “neck” and some of the south-east lode
continued on page 74
West African Resources Limited
West African Resources Limited (WAF) is an ASX
listed gold company, creating shareholder value
through the development of the Sanbrado Gold
Project in Burkina Faso, West Africa. Sanbrado is
a robust gold project with strong early cash flow,
rapid payback of capital, production of more than
300,000oz gold in the first year, and more than
200,000oz of gold over the 6 years of operations.
West Africa’s highest margin gold project in construction
• +300,000 ounces gold in first 12 months
• Fully funded and on track for 2020 gold production
• Open-pit oxide and free-milling high grade underground ore
• Average annual production 217,000oz gold over first five years
at lowest quartile AISC <US$600/oz
• Growing 3.1 Million ounce gold Mineral Resource
Underground: 0.8 Moz at 19.5 g/t gold
Open-pits: 2.3 Moz at 1.3 g/t gold
• Open at depth 1.7 Million ounce gold Probable Reserve
Underground: 0.65 Moz at 10.2 g/t gold
Open-pits: 1.0 Moz at 1.6 g/t gold
West African Resources Limited Burkina
ACN 121 539 375 Faso
Phone: + 61 8 9481 7344
Fax: + 61 8 9481 7355
[email protected]
www.westafricanresources.com
WEST AFRICAN RESOURCES
Page 72 AUGUST 2019 AUSTRALIA’S PAYDIRT
ADU PREVIEW Lulo diamonds
which we had access to and therefore decid- A third sales tender of Mothae diamonds diamonds and that will bring down the dol-
ed to put that through in the first six months was scheduled for late July. Given the suc- lar per carat. At the end of the day, whilst
of the year. cess of the first two, Wetherall is not ex- the dollar per carat is nice, dollars in the
pecting any surprises. bank are even better, so that’s what we’re
“I wouldn’t say it is an issue or a prob- focusing on and ensuring our revenues are
lem, it was just a T-junction decision that “When you produce the very special maximised.”
we had to make in terms of which way we product that we do from Mothae, the com-
turned. We took those decisions in order to ments that you get back is that the clients Mothae’s longer term future was also
increase the value that would be derived in always want more, but obviously you can’t boosted during the last quarter with Lucapa
H2. So, all in all, we’re very, very chuffed deliver more because we’ve set the plant to successfully negotiating debt refinancing
with how Mothae is performing.” produce 1.1 mtpa,” he said. arrangements with its two largest share-
holders, New Azilian Pty Ltd and Equigold
Lucapa is also investigating different “I think from a pricing perspective, we Pte Ltd.
ways to double Mothae’s capacity to 2.2 can expect more of the same, as we’ve
mtpa – originally slated for 2020/21 via a had from the first two tenders. And whilst At Lulo, the company reported an EBIT-
predetermined capital investment – given we are processing this highly weathered DA of $US11.3 million for the first half. Cash
the plant’s strong performance to date. material, we are recovering a lot more finer operating costs of $US76/cubic metre were
in line with expectations.
Sales of Lulo diamonds to the half-year
totalled $US22.1 million and were sold for
an above-average price of $US3,668/ct.
Another tender was also scheduled for late
July.
“Lulo has been successful for the last
3.5-4 years now since its second year of
production. It continues to be one of the
most special projects in the world from a
diamond resource perspective and it con-
tinues to generate good cash flows for both
us and our partners [Endiama and Rosas &
Petalas],” Wetherall said.
“It’s been a challenging environment in
The Company continues to focus on the From Au to Zn
exploration, evaluation and development
of base and precious metal projects in Exploring and Developing Projects
Australia and Algeria.
From Australia to Algeria…
Fresh Management to build on proven
operational experience. Ulooloo Gold to Tala Hamza Zinc
Kapunda Copper to Kitticoola Copper-Gold
Our new team represented the Adelaide Hills to South Gawler Ranges
company at domestic and international Bird In Hand Gold to Wild Horse Copper
mining conferences and presented to Angas Processing Facility, Strathalbyn
investors throughout Australia, in Hong We are Terramin Australia Ltd.
Kong, London and New York.
With two major projects in final
stages of permitting, Terramin
Australia is looking for opportunities.
ASX : TZN
Terramin Australia Limited
Unit 7, 202-208 Glen Osmond Road, Fullarton, Adelaide, South Australia, 5063
T +61 (0) 8 8213 1415 E [email protected] terramin.com.au
Page 74 AUGUST 2019 AUSTRALIA’S PAYDIRT
Angola with respect to the marketing of dia- Angola have also paved the way for Lucapa With the advent of cutting and polishing
monds and now that they have brought in to pursue its own cutting and polishing busi- technology, analytic tools, etc, a lot of that
these new regulations for the marketing of ness. An agreement with its Lulo partners smoke and mirrors has disappeared and
diamonds, we believe that full value will be was expected to be finalised this quarter. you can now actually access that technol-
derived.” ogy off the shelf. So, if you’ve got experi-
“Not so long ago, the mid-stream on the enced hands, you’re able to utilise their skil-
Wetherall has two reasons to be excited cutting and polishing side was what a lot of lets to analyse the diamonds and achieve
about the future at Lulo. The first is the ar- the industry referred to as smoke and mir- the value that perhaps escaped miners
rival of a new fleet of earthmoving equip- rors,” Wetherall said. back in the day.”
ment which will soon begin work on a $U12
million expansion programme of the exist- “Those smoke and mirrors caused a lot Having now been an established dia-
ing alluvial mining operations to increase of uncertainty in terms of how one cut and mond producer for more than three years,
annualised throughput to 450,000 bulk cu- polished the technology, the skillset, etc to Lucapa is looking forward to what the next
bic metres. derive additional value through the pipeline. three years may bring. And whatever head-
winds come their way, Wetherall and his
The other is a $US3.3 million exploration Mothae diamonds team will be ready.
programme targeting kimberlite sources at
Lulo. “It’s been a very, very good journey tran-
sitioning the company from a pure explorer
“We’ll be looking at kimberlites that have into a niche high-end producer,” Wetherall
been identified from the previous work that said.
has been done there, we’ll continue with de-
lineation drilling on those,” Wetherall said. “We don’t believe there is any reason why
we should change that focus just yet. We
“We’ll look to do bulk sampling of those in don’t want to be the biggest, we just want
due course as well and we’re also going to to be very good at what we do. We want
be taking large bulk samples in the streams to involve ourselves in very niche, bespoke
that feed from these kimberlites to try and projects and continue to look at those pro-
identify which kimberlites or tributaries ac- jects with large, high-end goods because
tually brought the different types of high we believe that area of the industry will re-
quality material to the Block 8 and Block 6 main robust through these headwinds.”
areas where we’ve been recovering these
very large and high-value diamonds from.” – Michael Washbourne
The long-awaited legislative changes in
AUSTRALIA’S PAYDIRT AUGUST 2019 Page 75
ADU PREVIEW
African Gold sets specific agenda
African Gold Ltd’s latest acquisition in tially embarking on an aircore/RC drilling “We will continue to look for projects,
Mali is in line with its strategy of as- programme in December/January. In the but we don’t want to split the effort too
tute ground selection. meantime, Edwards said there were op- much at the moment and will concen-
portunities for African Gold to expand its trate on Mali and Cote d’Ivoire. To add
“We’re looking at specific packages to portfolio in Mali and/or Cote d’Ivoire. a project in a third country can become
find something and if it doesn’t work we quite costly for a small company,” Ed-
move on,” African Gold chief executive wards said.
Glen Edwards told Paydirt.
In the meantime, results from the com-
“We don’t want to pick up a big pack- pany’s maiden 6,000m reconnaissance
age and not do anything with it.” aircore drilling programme at Agbo-
ville, 50km north-west of Abidjan, Cote
African Gold landed four contiguous d’Ivoire, were expected when Paydirt
permits covering a total of 111sq km of went to print.
ground in the Senegal Mali Shear zone,
western Mali, last month. Edwards said he expected the reason-
ably shallow drilling programme to de-
The company has entered into four op- liver within the company’s expectations
tion agreements to acquire the gold pro- and looked forward to capitalising on a
jects making up Falémé in the Kenieba break in rains to get back on the ground
Inlier. at Agboville in August/September.
Historic work completed at Falémé in- – Mark Andrews
cludes 25 shallow reconnaissance holes
drilled across the entire package and de- African Gold has staked ground in prolific gold
spite results of 7m @ 4.2 g/t gold, 5m @ bearing regions of Cote d’Ivoire and Mali
8.6 g/t, 24m @ 2.01 g/t and 4.3m @ 4.3
g/t, limited follow-up work has occurred.
African Gold will unroll an exploration
campaign, including pitting and trench-
ing to work out the regolith, before poten-
NEXT GENERATION POSITIVE BFS
Leveraging new generation June 2019 BFS confirms long life,
technology and existing high margins from “Foundation
Phase” 2.4Mtpa development,
infrastructure to deliver a new
operation in the footprint of a delivering 189kt copper and 580kt
zinc over 10-year mine life
historic mine
STRONG
30.49Mt ECONOMICS
RESOURCE BFS outcomes include A$1.1B
pre-tax free-cashflow; Pre-tax
Prieska Total Mineral Resource of
30.49Mt @1.2% Cu and 3.7% Zn NPV8% of A$574M; All-in-
sustaining margin of 44%
Page 78 AUGUST 2019 AUSTRALIA’S PAYDIRT
ASX: TGM, TGMO
Office: L32, 101 Miller Street, North Sydney 2060
Tel: +61 2 89122126
www.thetagoldmines.com
6 Moz Au Global Mineral Resources (incl. 1.3 Moz Au in open‐cut)
Theta Gold Mines Limited has released a positive Feasibility Study (“FS”) for the Theta Project open‐cut
gold mine development. The FS confirms a low CapEx, with an initial 5 years operation to initially
recover ~200,000oz Ore Reserves for ~USD100m cumulative EBITDA. Average All‐In‐Sustaining Cost of
USD764/oz with average head grade of 2.71g/t, processing 500,000tpa.
In parallel with this development, the Company will continue to convert more open‐cut resources
(currently 1.3Moz) into reserves, extending Life‐of‐Mine and allowing for further plant expansion.
Why Invest In TGM? Theta Project START UP Value & GROWTH
6Moz JORC Resource, including Feasibility shows low‐cost, Continue to convert Resources
open‐cut development with into Reserves to add to
1.3Moz open‐cut (M/I 485.2Koz Au short timeline to production production schedule
@ 2.11g/t, Inferred 827Koz Au @
4.35g/t) Approved plant footprint
Average USD20m annual allows TGM to build >1.5Mtpa
EBITDA for initial 5 years size plant (modular plant to
Fully permitted CIL plant requiring start from 500ktpa)
upgrade and expansion at low
capex (USD29m peak funding) Initial 5yrs to recover 200,000oz Shallow Underground Resources
gold, average of 40kozpa @ AISC from surface to <400m (~4.6Moz
USD764/oz Au @ ~5.5g/t)
Fully permitted Tailings Storage
Facility, currently 2.5Mt Significant exploration upside
Low‐cost bench‐style mining for both open‐cut and
with in‐pit waste emplacement underground (only 15%
< 9 month construction period and surface miners (limited explored so far)
drill/blast)
TGM controls the third largest First of many planned mining
South African goldfield (over Low capital cost (USD29m peak developments by TGM with an
620sqkm) historically produced extensive gold project portfolio
>6.7Moz high grade gold funding) and short construction
timeframe (9 months) means
Well positioned for re‐rating lower risk than other greenfields
throughout 2019 in lead‐up to projects
production
Better value than other African
development peers on EV/oz basis
Experienced Board including Rob
Thomson (MD, ex‐Climax Mining);
Bill Guy (Chairman, ex‐Jupiter
Mines); Finn Behnken (Director,
ex‐Jupiter Mines); Richie Yang
(Director, ex‐Bligh Resources)
AUSTRALIA’S PAYDIRT AUGUST 2019 Page 79
ADU PREVIEW
Toliara numbers out by end of 2019
ADecember target date has been set for a DFS
into Base Resources Ltd’s Toliara minerals
sands project with a funding outcome expected to
follow soon after for the Malagasy development.
Base completed a positive PFS into raising big amounts of project finance by the on-market performance, Carstens
Toliara in March and ploughed immedi-
ately into definitive work. However, such through equity. Australian-focused Shef- is confident the back end of 2019 will see
is the depth of the initial study, the com-
pany has already been talking to potential field Resources Ltd is currently pursuing a reversal of the trend. He knows that will
funders about financing requirements.
a partnership agreement for its $466 mil- require providing an answer to the main
“We did the PFS to a much higher level
than most so that we would be further lion Thunderbird project in Western Aus- questions around Toliara.
along the path to a final DFS,” Base man-
aging director Tim Carstens told Paydirt. tralia having failed to match its $US250 “Investors have got the cue in the rack
“We wanted to make sure there was as
little movement as possible between the million debt with the required equity. when it comes to Base until we explain
PFS numbers and the DFS because we
wanted to move the financing discus- Carstens said Base was also consider- how we will fund Toliara,” he said. “We
sions alongside the study. If the num-
bers change too much it would ing various equity options. are pedalling hard to get to a point where
be back to square one in that
regard. Now we have a lot more “To have a project with the right rev- we can clear up that perception but there
clarity around the scope of the
DFS and we are not seeing any- enue to cash cost ratio, you typically is just no appetite at the moment.”
thing coming out to make us feel
differently about the project.” need scale and that means a decent It is not the first time Base has been
The PFS envisaged a two- sized capex and trying to find large licks faced with investor apathy but in the past
stage operation, starting at
13 mtpa for a capital outlay of equity for that is rather problematic. it has usually come as a result of wider at-
of $US439 million. A further
$US67 million would be needed We have got a few different ways we can titudes towards mineral sands. Ironically,
to expand to 19 mtpa.
Base is searching for answers to
Base’s preference is to avoid
capital raisings for project fi- company-specific questions at
nance and it has already built
interest among international fi- a time when the outlook for the
nanciers.
greater sector is quite positive.
“It depends on how it all plays
out. Starting presumption was “We are in a good market and
we would need $100 million in
equity,” Carstens said. “We have the long-term fundamentals are
received the expressions of in-
terest and are working through extremely good, hence why we
the short-listed group; the data
room is now open. are keen to get Toliara up and
“It will be conventional lenders running,” Carstens said.
as there is a fair bit of interest in Mada-
gascar. Plenty of funders are interested Project development and the
in the country but the challenge has
been finding worthwhile projects. Some DFS work appear to be pro-
are already present in the retail sector,
such as SocGen, while the DFIs want to gressing to plan. The company
be involved in one of the least developed
economies in the world. There are lots of has put its in-country team in
different reasons for the interest.”
place, having attracted experi-
Despite a strong price outlook, min-
eral sands developers have encountered enced leaders from the Ambat-
the same difficulties as other miners in
ovy nickel-cobalt mine (Sherritt
International Inc) and QMM min-
eral sands operations (Rio Tinto
Ltd) on the Indian Ocean island.
“There are plenty of good peo-
ple out there, particularly at the
level we are looking,” Carstens
said. “We have more than 100
people in place now and the key
Tim Carstens management team is coming
together with a few people be-
ing brought down from Kenya to
do it; a JV partnership for instance, which complement them.
we are exploring in parallel with the fi- “We are now focused on training and
nancing. The objective is to avoid a full development of the local people. We had
equity raising,” he said. more than 5,500 people signed up for
A share issue is even less palatable training and have already got 1,000 of
given Base’s flat run on the market since them into programmes. The first round of
the beginning of the June quarter. The trainees we had through the equipment
company hit 33c/share in March follow- simulators are now on heavy machinery,
ing release of the Toliara PFS but the undertaking community project work.”
price has now drifted to under the 25c Base has excelled in employment,
mark, making Carstens more averse to training and development in Kenya
a capital raising. While slightly frustrated through its Kwale mineral sands opera-
Page 80 AUGUST 2019 AUSTRALIA’S PAYDIRT
tion and is intent on applying a similar 7,400m of slurry and water piping, an bit of fine-tuning but that is mineral sands
model in Madagascar. The company 8,500m 11kV power line, 1.25MW slurry plants the world over; there is a constant
has sent 100 Malagasy apprentices and booster pump and 1MW process water process of small adjustments to account
other operators to Kwale for 18 months to booster pump were all completed within for the various subtle changes but our
learn the company culture and operation- less than two weeks. highly experienced team understands
al approach. Carstens is obviously proud the nuances of that.”
of Kwale’s ability to be a role model for The switch in mining focus will see
other developments. mining volumes increased in an effort The major question at Kwale is; what
to keep production close to earlier rates. next? Base is currently undertaking a
“This is Kenya exporting mining ex- FY19 guidance had been 88-94,000t scoping study into the Kwale North de-
pertise for the first time and the Kenyan of rutile, 385-415,000t of ilmenite and posit and is also planning drilling pro-
authorities have been really supportive of 31-34,000t of zircon. FY20 guidance is grammes for Vanga and Kwale North.
that, as has the Malagasy Government,” for 64-70,000t, 315-350,000t and 25-
he said. 28,000t respectively. “We are working on community access
issues so that we have a solid foundation
On arrival at Kwale – just south of The last seven months of mining in the for exploration,” Carstens said. “The rig is
Mombasa – the Toliara workforce will Central Dune had also been on lower on site and we expect to be drilling in the
find a mature operation which recently grades so the operations team was al- next few months.”
saw mining move from the high-grade ready used to the production profile,
Kwale Central Dune to the lower grade Carstens said. Comments around community access
Kwale South Dune. and expectations are always liable to
“It is a new orebody so you have to keep get certain investor groups twitchy but
Carstens said the transition had “gone your eye on the ball for subtle variations Carstens is comfortable with the politi-
beautifully” with operations ramping back but it is not affecting anything,” he said. cal risk profile Base faces in both juris-
up to nameplate capacity. The three hy- “We’ve had good exposure to those high- dictions it is operating in despite a wider
draulic mining units were fully operational volume, low-grade environments and we suspicion about African governments’ at-
by early July and the commissioning of don’t need to change anything. There is a titudes towards foreign investment.
Base’s Kwale mineral sands mine in Kenya has adapted quickly to the switch
from low volume, high-grade material to higher tonnage, low-grade ore
AUSTRALIA’S PAYDIRT AUGUST 2019 Page 81
Madagascar has gone through a pro-
longed election season with both presi-
dential and parliamentary elections since
the turn of the year but Base, and mining
in general, have not been central elec-
tion issues in the country. It is a similar
situation in Kenya where Base is seen as
the industry leader of a nascent mining
industry.
“There are heightened perceptions
about African governments taking left
turns on policy and there is a bit of that
going on but I think there is always some
country on that journey,” Carstens said.
“We don’t get the sense there’s a gen-
eral tide of what is happening. We are
not seeing anything to worry about in the
jurisdictions we operate in and Kenya,
for example, has been very stable when
it comes to mining for a number of years.
“It may have led to these heightened
perceptions in Australia but the institu-
tions, particularly in the UK, have a much
more nuanced understanding of individu-
al African jurisdictions.”
– Dominic Piper
Malagasy locals in Toliara queue to register their
interest in working with Base Resources. Base
has taken more than 1,000 people onto its training
register so far
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Page 82 AUGUST 2019 AUSTRALIA’S PAYDIRT
ADU PREVIEW
Mako managing director Peter Ledwidge
(far right) with senior geologist Guigma
Boukare, chief geologist Jamie Light and
general manager, exploration,
Ann Ledwidge were all on hand in Cote
d’Ivoire for the latest drilling programme
at the company’s Napie project
Mako hunting its prey
Mako Gold Ltd managing director Peter identified to date, representing only a por- same thing and not having the same suc-
Ledwidge isn’t interested in “nearology” tion of the 17km-long shear zone which cess.
exploration – his focus is “newology”. Mako identified from a geophysical reinter-
pretation of the airborne magnetics. “What people don’t understand is here
Ledwidge has seen first-hand the value in West Africa you can make shallow dis-
which can be created from a greenfields “It would be really tempting to be drilling coveries. Our deepest hole here is prob-
discovery, having been instrumental in find- all of that 17km shear, but I don’t think that’s ably 180m, but the average hole is probably
ing Natougou in Burkina Faso for Orbis moving the company in the right direction,” 150m vertical. There’s huge opportunities
Gold prior to its $US139 million takeover by Ledwidge said. “The objective is to go to- here in the Birimian; 60 plus-1 moz deposits
Semafo Inc in 2015. wards a resource. I’m not saying that this and 30 of those are multi-million deposits.
programme will give us the resource, but Big elephants can be found here.”
Therefore, it’s hardly surprising that Led- that’s really what we’re shooting for.”
widge and his fellow geologist wife Ann are Like the shark after which it was named,
looking to repeat the trick with Mako, which Mako had hoped to punch a handful of Mako is aiming to move quickly and secure
is currently exploring early-stage projects in additional holes into Niou before the start of its prey before hopefully attracting the at-
Burkina Faso and Cote d’Ivoire. the wet season, but the rush to finalise work tention of a larger player.
at Napie meant that programme had to be
“I remember going back to Burkina in postponed until late October. “Maybe it’s the Canadian coming out of
2016 – once again on the back of our me, but I see too many Australian com-
mortgage – and some of the people I was Niou is less advanced than Napie, but panies wanting to put something into pro-
speaking to were asking ‘hey, are you go- Mako has so far reported nothing but en- duction, whereas Canadians have the ap-
ing to do like what you did with Orbis?’ and couraging results, including grades of up proach of ‘we find them, you mine them’,”
I’d say ‘absolutely, that’s how you make the to 53.8 g/t gold from broad-spaced maiden Ledwidge said.
good discoveries’,” Ledwidge told Paydirt. drilling.
“We figure you can’t be good at eve-
“I don’t do ‘nearology’, I want to make the Despite the promising finds at both Napie rything. I was a mine geologist for three
big discoveries, so we do ‘newology’.” and Niou, Mako has struggled to gain trac- years, but I really don’t believe that qualifies
tion with investors, as evidenced by a short- me to run a mining company. However, it
Mako recently completed its first full year fall for a recent $1.5 million rights issue. does give me a very good insight as to what
of exploration at Napie in Cote d’Ivoire and the end game is and what you need to get
across the border at Niou, Burkina Faso. “Some people perceived it as a negative there.
thing and then other people found a bit of
It was a photo finish at Napie with the fi- a positive spin because all three directors “It’s no secret we have an exit strategy,
nal hole of an extended drilling programme plus the company secretary put money in but we don’t plan on having all our projects
wrapping up just as the wet season arrived. [the shortfall] and obviously we’re not going taken over. Basically if we get taken over,
The company will now spend the next few to put money into something if we think it will we want it to be for one project and then
months analysing the data before returning fall over,” Ledwidge said. we’ll spin out the other assets into a new
the rigs to action for a new campaign ulti- vehicle and keep our crews working, keep
mately targeting a maiden resource. “I’m finding it a little difficult competing the IP and then go and do it all over again.
with some of the things that are going on in
Drilling was primarily focused on the Tch- Western Australia. The flavour of the month “The example I like to use is when Sirius
aga prospect where previous intercepts of right now in WA is to go and drill under a got taken over [by Independence Group
28m @ 4.86 g/t gold and 25m @ 3.43 g/t historic mine and announce a ‘discovery’. NL]; to me, that’s as good a situation as you
were recorded. Granted, companies like Bellevue [Gold can get for shareholders. I mean, I was a
Ltd] have had very good success, but there shareholder and I was pretty happy.”
The latest programme tested 1.4km of are a slew of other companies doing the
strike length to infill and extend the 500m- – Michael Washbourne
long broad zones of gold mineralisation
Page 84 AUGUST 2019 AUSTRALIA’S PAYDIRT
GHANA - WEST AFRICA
5.1 Moz
ORE RESERVE
Developer
ASX - TSX : CDV
cardinalresources.com.au
AUSTRALIA’S PAYDIRT AUGUST 2019 Page 85
ADU PREVIEW
The right Guy’s behind Theta
Theta holds about 620sq km of tenements,
predominantly under mining rights, in South Africa’s
Mpumalanga Province. The company has a global
resource of 44.8mt @ 4.18 g/t gold for 6 moz
South Africa is still the best place in the pleted three resource upgrades, digitised development], we only need $US30-35
world to find gold, according to Theta the historical data, done all the metal- million with plenty of upside,” Guy said.
Gold mines Ltd chairman Bill Guy. lurgical test work, completed 18,000m
of drilling and taken 21,000 QA/QC With an air of stability in South African
While gold production is on the slide, samples, all done to modern standards. political circles right now, Guy said the
historically well over half of the world’s We’ve also come up with another round environment for investment in the coun-
gold has come from South Africa. The- of exploration targets plus we’ve already try was good.
ta itself is sitting on a 6 moz resource got under management over 43 historical
across the TGME gold project area, mine sites.” “The London guys are very receptive
370km north-east of Johannesburg. to be honest, particularly for things at the
The numbers produced from Theta’s development phase. The English money
The TGME goldfield has produced 6.7 graft at its namesake open cut project in- is starting to come in, there is a better
moz gold since 1880 and Theta – for- clude an initial five-year project recover- vibe in general and people seem very
merly Stonewall Mining – is starting to ing 201,000oz gold at an average AISC stable and content. The new President
showcase the next chapter in the prolific of $US764/oz, resulting in cumulative un- [Cyril Ramaphosa] is making the right
gold belt. discounted life-of-mine EBITDA of more moves, he still has quite a job ahead of
than $US100 million. The post-tax NPV him, but South Africa was once one of
Demonstrating what that next chapter was estimated to be $US49.6 million and the top five nations in the world, so there
at TGME looks like has not been without IRR of 65.1%. is a lot of infrastructure and other things
its challenges, as Guy explained to Pay- in South Africa that other countries don’t
dirt. The initial two years will see Theta Hill have already,” Guy said.
(including Browns Hill) recover 91,050oz
“They are technically-based projects gold @ 2.81 g/t. While a mining right for underground
and they are not easy. People who mining exists at the project, Theta has
thought you could just go in and follow Peak funding of $US29.2 million has initiated amendments to include open cut
the old timers’ work and do underground been estimated, with project construction mining.
mining; it is not quite that simple unfortu- and establishment of a 500,000 tpa CIL
nately,” Guy said. plant expected to take nine months. In the current resource base, Theta has
open cut material standing at 13.08mt @
Since Guy joined as a director in March Guy was keeping details around fi- 3.12 g/t for 1.3 moz plus an underground
2018, Theta has applied a systematic ap- nancing close to his chest, but was con- component of 26.3mt @ 5.4 g/t for 4.5
proach and modern techniques to under- fident there would be support for Theta’s moz.
standing the historical data at its dispos- ambitions.
al. This culminated in a feasibility study Theta is the starter project Guy and his
on the Theta project in May. “Financing can take a long time three team will use as a launch pad to grow its
months minimum – so we don’t really production profile from 50,000 ozpa gold
“No-one actually went in and did the want to talk too much about financing [at to in excess of 100,000 ozpa by capitalis-
work – a systematic drill out programme, this stage]. Given the amount of money ing on both the open pit and underground
metallurgy, engineering – and come up we need, we are confident that we can potential it has in the TGME goldfield.
with a way to complete the feasibility get it. Everyone in West Africa is look-
study,” Guy said. ing for close to $US300-400 million [for – Mark Andrews
“In the last 15 months we have com-
Page 86 AUGUST 2019 AUSTRALIA’S PAYDIRT
ADU PREVIEW
SPD PFS in-line for Tando
As the vanadium price heads towards A phase two downstream option at SPD is being assessed by Tando. The company hopes to
a more sustainable level in the next use its high-quality concentrate to produce value-added specialist products suitable for the
3-6 months, Tando Resources Ltd will be
embarking on a two-pronged develop- steel, renewable energy and industrial minerals markets
ment approach at its Steelpoortdrift pro-
ject (SPD) in South Africa. us and now they will be fully on board,” two options,” Oliver said.
Tando managing director Bill Oliver told Vanadium price forecasts will be giv-
Following a successful scoping study Paydirt.
on phase one production of high-quali- en due consideration by all interested
ty, plus 2% vanadium concentrate from Shareholders were set to vote on the parties in SPD. Prices ran hot in 2018
SPD, a PFS was triggered, while Tan- transaction in July, as Tando was prepar- through to the start of this year, however,
do also moved to start development of ing to conduct initial reserve drilling at had dropped back to about $US8.10/lb
phase two. SPD. for vanadium pentoxide, according to va-
nadiumprice.com, at the time of print.
Phase two is essentially the down- A shallow, high-grade resource of
stream value-add opportunity which 169mt @ 1.07% (in situ) vanadium pen- “Vanadium prices have slid and people
Tando is pursuing to better its return on toxide currently exists at SPD and under- are occupied with that rather than what
investment. Studies will involve the as- pins what Tando believes will be a long we are doing. We still believe the market
sessment of how maximum value can life operation. is well poised for us to enter it, which is
be extracted from the suite of economic why we have started looking at the down-
elements (potential specialist iron and ti- Reserve drilling will be done in parallel stream option and brought that work for-
tanium products) at SPD and which con- with the PFS and met test work for the ward,” Oliver said.
ventional and new-age processes can be purpose of phase two studies.
used to produce battery grade vanadium “It [downstream] gives you more rev-
pentoxide. Tando expects the PFS to take four enue and a better return on investment.
months and combined with reserve drill- Vanadium has had a big run in pricing
Meanwhile, Tando is looking to ac- ing will give potential offtakers, particu- and the price now is not realistic, inven-
celerate to 74% ownership of the project larly in China and South Africa, a better tories are too low for it to be. In the next
with an eye to broadening its financing gauge on what they are investing in. 3-6 months we will see more sustainable
options. pricing. You can see that the demand
It is estimated that phase one pre-pro- is very strong and demand is not going
“The idea is that the project will then duction capex will be less than $US20 away.”
become more attractive to financiers. We million. Tando is open to the idea of en-
will end up with a couple of South African gaging a JV partner at project level to as- Tando has engaged Asian-focussed,
vendors on board who have the experi- sist with funding. commodity market adviser Mastermines
ence of developing mines in the coun- to develop strategic relationships for SPD.
try. They have always been available to “Big capex projects will struggle to get
funded. Tando’s focus is on how do we – Mark Andrews
Page 88 AUGUST 2019 AUSTRALIA’S PAYDIRT get to market in a less capital intensive
scale, whether the phase one or phase
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ADU OPINION
Coal story powers on
Back in Novem- Brown has sorted
ber I highlight- out the rest of MC
ed how well coal Mining’s issues, but
was doing in South it took him nearly
Africa despite the five years to do so
growing global until he was able
backlash against to declare, late last
the commod- year, that he had
ity and, since then, finally gotten on top
coal has become of the situation.
even more of a four The radical steps
letter word. Brown took in-
The world’s cluded a complete
major diversified reassessment of
miners are all ei- Vele’s situation fol-
ther reducing their South African juniors continue to buck the wider trends of the global coal sector lowed by a deci-
exposure to the sion to mothball the
commodity or are mine; the sale of the
That’s not a promising background for a group’s troubled Mooiplaats mine; the pur-
talking about getting out of it completely,
but coal continues to do well in South Africa junior against which to start up a new col- chase of a profitable, replacement opera-
with two juniors having made considerable liery in the Waterberg, leaving aside such tion to generate much-needed cash which
progress this year in their plans to establish fundamental issues as the construction was the Uitkomst Colliery and settlement of
and working capital requirements because the outstanding debt to Rio Tinto Ltd for the
new collieries.
MC Mining Ltd (the former Coal of Africa) Exxaro’s experience has shown you need purchase of various coal projects in Lim-
and Resource Generation Ltd (Resgen) deep pockets if you want to mine in the popo Province.
have both travelled long roads and expe- Waterberg.
Just when he thought he had it all un-
It seems Resgen is now finally in a posi- der control Brown got caught up in a land
rienced plenty of setbacks to get the point
where conditions, at long last, are starting tion to nail down its funding plans following claims dispute between the owners and the
an announcement at the end of June that SA Government over the rights to two key
to look up for them.
Resgen has been battling uphill for near- “the third and final member of the proposed farms on MC Mining’s Makhado project on
ly a decade to find the funding required to funding syndicate” had confirmed its par- which the group’s future now rests.
build the proposed Boikarabelo mine in the ticipation in the mine construction package
But, he has successfully sorted that out
Waterberg. A key development in that bat- of R4.2 billion. On top of that there’s anoth- as well, completing the purchase of those
tle was the removal of former chief execu- er R750 million needed to build a rail link farms in January this year and then put-
tive Paul Jury and former chairman Brian in which negotiations “are at an advanced ting in place all the other building blocks for
Warner in 2015 and the reconstitution of the stage”.
the development of Makhado including the
Resgen now intends finalising a “com- debt funding and coal offtake agreements.
board under predominantly South African mon term sheet with all members of the
control. While the company’s immediate future is
The Waterberg hosts the bulk of South proposed lending syndicate”.
pinned on developing Makhado there are
Resgen’s problems, so far, have been interesting looking long-term possibilities
Africa’s remaining coal resources but it is
situated a long way from the required in- overwhelmingly financial but MC Mining to supply coal to a major Special Economic
frastructure – railway lines to haul the coal has had a far more diverse and rougher Zone which the South African Government
to Richards Bay and Eskom’s coal-fired ride. Basically, everything that could go is talking about developing in Limpopo
power stations – which is largely located in wrong with a junior miner has gone wrong Province which MC Mining is well posi-
across the full gamut of issues including tioned to supply from its other projects.
Mpumalanga.
The Waterberg is also dominated by environmental, regulatory, operational and
the country’s major coal group – Exxaro financial. So, it looks like “the boy done good”
which is all the more noteworthy given
Putting it all right has taken the best part Brown’s previous track record as financial
Resources – which recently announced a
strategy shift aimed at stepping up the min- of a decade under two vastly experienced director and then chief executive of the
chief executives – former Anglo American world’s second largest platinum group.
ing of its Waterberg resources.
Exxaro’s aim is to avoid getting “caught Coal head John Wallington who inherited
History shows making the transition from
short” and finding itself in a situation 30 or the original mess from his predecessor Si- running a major mining group to a junior
40 years down the track where it cannot sell mon Farrell in 2010 – and then former Im- outfit is one that many executives have
its remaining coal because it has run out of pala Platinum chief executive David Brown been unable to accomplish.
who took over from Wallington in 2014.
customers. Exxaro’s preference is to mine Much of Wallington’s tenure was spent Brendan Ryan is a Johannesburg-based
it and sell it quick to generate revenues mining writer
needed to fund diversification into alterna- sorting out environmental issues in a situa-
tive sources of energy, such as solar and tion where a coalition of NGOs had actually
managed to shut down the group’s flagship
wind.
operating mine, Vele.
Page 90 AUGUST 2019 AUSTRALIA’S PAYDIRT
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AUSTRALIA’S PAYDIRT AUGUST 2019 Page 91
ADU PREVIEW
Aussies first to recognise Uganda potential
As the international resources indus- maintenance centre. The project is funded a different continent.”
try continues its march across Africa, by Chinese firm Guangzhou Dongsong Sipa has followed up that initial recon-
there are fewer and fewer corners of the Energy Group Uganda Ltd.
continent left unexplored. However, a naissance work with a series of drilling
handful of jurisdictions still present rare Away from Chinese investment, it has programmes which have delivered tech-
opportunities for explorers looking for un- been Australian juniors who have taken nical success, if not economic intersec-
tapped potential. on the genuine greenfields opportunities tions. Its work was compelling enough that
in Uganda. First to move was Sipa Re- in May 2018, Rio Tinto Ltd committed to
Uganda is one such country. Bordering sources Ltd, which secured licences in the underwriting an accelerated nickel-copper
prolific copper-producing DRC on one side north of the country after field trips in 2010 exploration programme on the Kitgum
and sitting on the opposite shore of Lake and 2011. Pader project. The major can fund up to
Victoria from major gold producer Tanza- $US57 million of exploration and make
nia on the other, the East African country “Sipa’s entry into Uganda was based $US2 million cash payments to earn up to
could be expected to have attracted its fair 100% on geological prospectivity and 75% of Kitgum.
share of exploration interest in the post- the fact that there you are still able to find
colonial era but a complex political his- walk-up targets at surface; that is very rare “Rio Tinto came in because they want
tory has meant miners have been largely these days,” Sipa managing director Lynda exposure to this kind of belt-scale oppor-
locked out. Burnett explained. tunity in a region where there are no other
majors playing,” Burnett said.
According to Minister of Energy and “Nic Archibald and Mike Doepel went on
Mineral Development Irene Muloni’s 2018 a tour of East Africa – Tanzania, Kenya, Sipa has drilled 10 diamond holes for
minerals policy, foreign investment in Rwanda, Uganda – looking for walk-up 4,083m this year as part of the JV, with
Uganda’s mining sector rose from $US5 targets and in northern Uganda they saw drilling on the Akelikongo prospect return-
million in 2003 to $US800 million in 2017, evidence of what they thought was a Bro- ing hits of 10m @ 0.49% nickel and 0.16%
with more than $US620 million of it tied up ken Hill-style mineral system. Follow-up copper, 10m @ 0.43% nickel and 0.13%
in the ambitious Sukulu project, a multi- soil sampling proved effective and put us copper, 16.4m @ 0.44% nickel and 0.12%
purpose operation comprising a mineral on to sulphides and led us to understand it copper and 18.4m @ 0.3% nickel and
separation facility, fertiliser plant, steel mill, was a similar setting to the Fraser Range 0.08% copper.
glass factory and brick plant as well as a in Western Australia. It is the same rocks,
the same age, the same everything, just in While Sipa was attracted by the un-
touched nature of Uganda’s mineral
continued on page 94
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Page 92 AUGUST 2019 AUSTRALIA’S PAYDIRT
ADU PREVIEW
prospectivity, Carnavale Resources Ltd Lynda Burnett put a resource out.
chose to enter the country on the back of “That’s the plan for the next 12 months;
historical mining activity, but it is chasing Carnavale completed 2,000m of drill-
equally sizeable prospects. ing earlier this year as part of the option define a resource. It won’t be on the whole
to earn-in agreement with vendor African thing but perhaps a 100m strike of the
“We were looking for something to vend Panther Resources Ltd. Beckwith said the quartzite, just enough to allow us to dem-
into Carnavale, a bigger scale project initial drilling had confirmed the prospec- onstrate there are open pit grades and
which we could get our teeth into,” Car- tive quartz vein stockwork hosted visible indicate how much we will need to get an
navale director Andy Beckwith told Pay- cassiterite and extended at depths of at operation going.”
dirt. “We had been patient for a few years. least 900m.
We had looked at some stuff in DRC but The latest ASX-listed entrant into
were a bit unsure and then this [the Kik- “The first part of the drilling programme Uganda is Oro Verde Ltd which in July an-
agati tin project] was presented to us al- was designed to prove the scale exists nounced it had put its foot on the Makuutu
though, to be honest, I didn’t know much which we did,” he said. “The last six holes project in the east of the country which is
about Uganda. approached it from the opposite direction, prospective for rare earths.
aiming to hit mineralisation in the veins and
“We chatted to the owners who had prove they were consistently spaced. “We wanted something which could add
gone in with an early-mining strategy on value to the company quickly,” Oro Verde
the alluvials on the main hill. They built a “We have been encouraged by the managing director Marc Steffens said.
small plant but could never really get the fact we have hit so much visible cassiter- “We were always looking for something
project to work, probably because the ar- ite when the diamond holes are just pin we believed had legs, which we could
tisanal miners had already been in and pricks. It is a strong sign that it is mineral- progress and not be accused of flogging
taken most of the alluvial tin over 50 years ised. The question now is around what we a dead horse.”
or more.” have to do to produce a decent grade and
Oro Verde has struck an agreement to
Carnavale approached the project – lo- acquire up to 60% of Makuutu from Ugan-
cated near Uganda’s southern border with dan company Rwenzori Metals Ltd. Previ-
Tanzania – with large-scale intentions. ous drilling has identified the presence of
mineralised rare earth oxide clays over an
“There is 3km of continuous artisanal area of 15km strike and 1.5km width.
workings over widths of 100-200m on the
hill, attacking veins,” Beckwith said. “Our In mid-July, Steffens headed to the
drilling confirmed the quartzite host unit country to begin the due diligence pro-
with 100m average widths and we know cess.
from the artisanals that it is mineralised.”
“The primary objective is to validate
the project’s credentials during the due
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Page 94 AUGUST 2019 AUSTRALIA’S PAYDIRT
diligence period,” he told Paydirt prior to A handful of ASX-listed explorers have been from an active exploration industry.”
his departure. “We will validate the data pleasantly surprised by the mining-friendly Beckwith has been impressed by the in-
we have, review it and put the necessary
documents and competent person’s re- environment in Uganda terest expressed by the Government since
ports out. Carnavale entered Uganda last year.
“We have preliminary plans and it is not “The mines department is very ap-
going to be an onerous task to work out proachable; we are currently talking to
what to do next; most likely we will move them about hiring an XRF machine,” he
quickly into infill drilling and met test work. said. “The mines minister has been to site
with me, and the Government regards it as
“The met test work which has been done one of the strongest projects in the coun-
has been very early stage; it has confirmed try. Obviously the Sipa/Rio Tinto JV is held
the mineralisation and the presence of rare in the limelight but we are also held in high
earths and shown those rare earths can be regard.”
extracted. We need to do more work how-
ever to better understand and define what “All the tenure system has been re-
it is we have.” vamped and is now similar to WA. There is
a push to get foreign investment into mining.
Like Beckwith and Burnett, Steffens has The only problem we have encountered is a
been pleasantly surprised by the regulatory logistics one, getting permission to export
climate in Uganda. samples, but even that is only a time issue.”
“It is not an exploration hotspot but it is While Sipa has enjoyed its first-mover
mining-friendly,” he said. status, Burnett recognises what Uganda re-
ally needs is more activity and, eventually, a
Having spent seven years in the country, genuine discovery.
Burnett is positive about investment in the
country but believes more could be done to “It is very prospective for nickel, tin-tanta-
encourage further investment. lum, rare earths and phosphates and I have
been surprised that not more companies
“There are good people doing good work have come in on the back of our Rio deal,”
in the mines department but they lack the she said. “We need more companies com-
resources,” she said. “No one is denying ing in and ultimately getting some mines
there is huge potential but the Government going.”
doesn’t really get the exploration game and
the opportunity to generate investment – Dominic Piper
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ADU PREVIEW
Danakali finds timing on its side
Timing – both political and marketing momentum,” Wage said. “Every time I to have several, near-insurmountable,
– is very much on Danakali Ltd’s side have been since they signed the peace challenges. Like most bulk commodity
as the potash hopeful looks to finalise treaty it has been really good, with more operations, potash projects must have
funding arrangements for its Colluli pro- activity on the ground. multiple advantages around mining, pro-
ject in Eritrea. cessing and logistics to be competitive
“The IFC and World Bank have re- against other development opportuni-
Danakali’s development of Colluli has established discussions with Eritrea and ties. According to Wage – who has spent
been a long time in the making – it first there are investors very keen on projects more than 20 years in the potash sec-
entered the project in 2009 – but rarely here.” tor with BHP Ltd and others – Colluli has
has the company enjoyed such positive more advantages than any other potash
momentum on a number of fronts. Having international investor interest development in the world.
in Eritrea must be a welcome, if unusual,
Perhaps most vital is the reintegration experience for Danakali given how long it “It’s not a challenging project,” Wage
of Eritrea into the international commu- has been operating in the country. Ironi- said. “I’ve been involved in potash pro-
nity. The East African country found it- cally, the investor interest comes despite jects all over the world where we had
self sidelined for much of the last decade the attitude of Government rarely chang- to deal with challenges such as 1,000m
stemming from ongoing border disputes ing over the course of the company’s in- shafts or complicated aquifers. The
with Ethiopia. The unrest led to inter- volvement. beauty of Colluli is it is very shallow –
national sanctions being placed on the one of the shallowest deposits in the
country, however, the signing of a peace “The Government is very supportive world at 16m – and because it is in solid
accord in mid-2018 has opened the for- of Colluli and other projects,” Wage said. salts it is straightforward mining and the
mer Italian colony up to international in- “There is very positive momentum and processing is proven technology. There
vestors. Danakali chief executive Niels our timing is good, a lot more investors is no reinventing things.”
Wage told Paydirt the diplomatic ac- talking to us since the sanctions were
tions were already resulting in noticeable dropped.” In potash more than most commodi-
change. ties, simplicity can equate to vital capital
Eritrea’s reintegration may have given and operating cost savings.
“It’s early days but we are definitely Danakali an injection of optimism but de-
seeing a massive increase in positive veloping a potash operation in an infra- “Other projects need solution mining
structure-poor country would still appear
Page 96 AUGUST 2019 AUSTRALIA’S PAYDIRT
and evaporation which may take month Danakali surprisingly has a number of logistics
or even years to produce,” Wage said. options in Eritrea, including the Port of Massawa,
“Colluli’s simplicity; truck-and-shovel
mining, at surface means its costs are 180km east of the project
much lower than most competing pro-
jects.”
Colluli also has infrastructure advan-
tages even the new potash projects in
Western Australia struggle to compete
with.
“There is an assumption that Eritrea
is low-development and that is abso-
lutely correct but when it comes to Col-
luli, there is existing infrastructure there,”
Wage said. “There are roads and ports
already being used by other miners
which we can take advantage of.”
The presence of an established mining
operation in the form of the Bisha gold-
base metal mine, gives Danakali a figu-
rative and literal path to follow in Eritrea.
The company plans to utilise those
existing logistical chains to reinforce
Colluli’s low-cost start-up credentials.
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10.5% for 250mt contained SoP, suffi- The company will produce 472,000 tpa investment, the broadening of the global
cient for 200 years of production – Da- potash in the first five years of operation sulphate-of-potash (SoP) market offers
nakali has opted to scale production to before doubling production from Year 6. the company even deeper economic
fit its means. Wage said the scaled approach would credentials.
deliver capex savings as it would allow
The solid state of the Colluli orebody means the company to utilise the existing logis- Potash has been a well-established
Danakali will not be required to undertake tics capacity. crop nutrient for decades but largely in
complex solution mining or evaporation the form of muriate-of-potash (MoP).
“It is one of the reasons why we have However, as farmers adjust to the food
chosen the module plan; it allows us to demands of growing middle classes in
scale up, using the existing infrastructure emerging markets, SoP has become a
capacity,” Wage said. “We have the Port highly sought after fertiliser.
of Massawa which is suitable for either
container or bulk shipping and there are “SoP will continue to win market share
trucks already going between Bisha and but not necessarily in competition to
the port. There are sections of the road MoP,” Wage said. “As there are changes
which need upgrading but nothing major. in diet and food to crops which are taste
sensitive – such as fruit and vegetables,
“We are conscious of the need to keep tea, coffee, etc. – demand for SoP is ex-
capex low, keep labour costs low. We pected to increase.
could go to 1 mtpa immediately but that
would double the upfront capex. That “This is connected to changing diets
makes the development very manage- and as people move away from staple
able and it will allow us to prove we can crops towards fruit and vegetables, you
deliver what we promise. By using what really see growth in SoP demand.”
we have today we can show with the
cash flow coming out of the operating Danakali is plugged directly into the
that we can build the second module.” SoP market through its offtake and mar-
keting agreement with fertiliser trader
If the reintegration of Eritrea into the Eurochem.
international community has handed
Danakali an opportunity to court foreign “Eurochem sees in its distribution
channels a lot of demand,” Wage said.
“You can also make MPK in that potash
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Page 98 AUGUST 2019 AUSTRALIA’S PAYDIRT
The shallow, flat-lying nature of the deposit makes Colluli a rarity in the potash world
Falcon we more SoP used, again because of the chloride content.”
Danakali is far from the only company banking on potash
World-leading Airborne Gravity Gradiometry
application expanding to new markets. The last three years
Falcon® is the only Airborne Gravity Gradiometer system purpose-built for had seen a proliferation of potash projects across the globe,
airborne data acquisition. Falcon provides the lowest noise, the highest including Western Australia. A common presumption would
sensitivity, the best spatial resolution and the broadest bandwidth. be that projects in WA, one of the world’s premier mining
Falcon Plus further reduces the noise floor by 50%. jurisdictions, would have ample cost advantages but Wage
Falcon Full Spectrum Gravity measures wavelengths from 10’s of meters to believes that when it comes to Colluli and its peers, the op-
100’s of kilometers. position is true.
The world’s best AGG system keeps getting better.
“From a technical aspect, the WA projects are using differ-
ent mining, extraction and processing techniques, they are
further from the coast and the capex challenge is very differ-
ent as well,” Wage said. “If you look at how far advanced they
are, in terms of size, they will be suitable for the Australian
market, and they obviously have advantages in that. But, we
won’t be selling any tonnes into the Australian market; we’re
near the markets of Europe, the Middle East and Russia so
we can dominate when it comes to logistics for global mar-
kets.”
With product marketing and project economics seemingly
its favour, Danakali is confident it can close the funding gap
so many of its resources peers, regardless of commodity,
have struggled to navigate in the last three years.
“We have a bank mandate and we are finalising final ap-
provals on that now,” Wage said. “That will be the milestone
which triggers the strategic equity partner component which
will comprise either an industry player or one of a whole host
of institutions which are showing interest.
“We are confident we will be able to close the gap. There
are groups which understand SoP but also who are looking
for opportunities to develop African projects.”
cgg.com/multi-physics – Dominic Piper
17AD-MP-344-V1_Falcon-GravityZambia_SAGA_ShowCatalogue_D2.indd 1 07/08/2017 09:32
AUSTRALIA’S PAYDIRT AUGUST 2019 Page 99
ADU PREVIEW
Minbos enjoys regeneration
Just months after it looked bereft of op- Although disappointed by the lack of earths. In total 22% of the soil samples
tions, Minbos Resources Ltd is sud- success in Madagascar, Minbos manag- collected at Ankazohambo contained
denly brimming with confidence on two ing director Lindsay Reed was determined greater than 1% TREO, compared to
fronts. to continue testing of the Ankazohambo, only 11% in a 2018 campaign. Most en-
Ifasina and Marovoalavo project areas. couragingly for Reed, the soils reinforced
By the start of 2019, Minbos had seem- the correlation between the radiometric
ingly run aground. The ASX-listed junior In February, the company announced anomalies and rare earths mineralisation.
was locked out of its Cabinda phosphate positive results from an airborne mag-
JV in Angola and a September 2018 drill- netic and radiometric programme had “It showed that the drilling had missed
ing programme on its Ambato rare earths identified several anomalies across the the larger, stronger part of the anomaly,”
project in Madagascar had failed to iden- licence areas, giving Minbos confidence Reed said.
tify mineralisation. the limited rare earths values in the 2018
drilling could be improved on. Just as encouraging were indications
Lindsay Reed from the radiometrics that mineralisation
“We had drilled next to the old trench- was bastnasite, rather than monazite.
es and unfortunately didn’t get anything Bastnasite is generally accepted as more
which replicated those trenching results,” treatable than monazite.
Reed told Paydirt. “We then chose to
use geophysics and the results were very Reed said the recent geophysical and
interesting because it showed where we geochemical results had given the project
drilled had no positive anomaly.” new impetus.
Minbos followed the geophysics with a “We are looking at what to do next,” he
soil sampling campaign which confirmed said. “We may do some pitting and auger
1.5km of undrilled strike extension at An- drilling to better define the anomaly.”
kazohambo identified in the radiometric
survey. Under the terms of the Ambato option
agreement, Minbos must spend $250,000
Handheld XRF results indicated grades on drilling. However, a backlog of explora-
in the soil samples of up to 11.7% rare tion permit applications means the com-
pany is still waiting for clarification on the
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We operate a mixed fleet of RC and Diamond
drilling rigs, plus a large fleet of portable drilling rigs.
STOCKED IN WEST AFRICA BY
Exploration and Mining Suppliers (Procurpro)
WWW.ENERGOLD.COM P: +225 75 33 88 79 E: [email protected]
CALL: +44 1926 691 036
EMAIL: [email protected] www.xandm.com
Page 100 AUGUST 2019 AUSTRALIA’S PAYDIRT
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