pd269-Mar19-magweb

MARCH 2019 Volume 1. Issue 269 $11.95

Battery on charge: ISSN 1445-3436
03
Flanagan’s graphite goal
9 771445 343007
• Mining Indaba 36-page wrap-up
• Site visits... Orion... Lucapa
• Battery Minerals Conference
- full preview

Page 1 MARCH 2019 AUSTRALIA’S PAYDIRT

Exploring one of the world's highest grade Cobalt – Gold projects in British Columbia, Canada

BC Cobalt Project (Cobalt-Gold), Canada
First drill hole intersected 3% cobalt and 44 g/t gold, consistent with historic drilling and adit channel
sampling average grades of 3% cobalt and 20 g/t gold;
First ever cobalt focussed IP survey delivers multiple new targets along strike of Little Gem and at the
nearby Jewel prospect with signatures typical of a large scale sulfide bearing bodies;
48km of strike potential of geology analogous to the world class Bou-Azzer cobalt district still
remains untested;
The recent Erebor Cobalt-Gold discovery sees Blackstone's 335km² landholding around Little Gem rapidly

emerging into British Columbia's premier Cobalt Belt.

Silver Swan South Project (Gold & Nickel-Cobalt), Western Australia
Emerging gold discovery located 8 km along strike of the world class Kanowna Belle gold mine
(+5 Moz gold endowment);
Nickel-Cobalt sulfide targets located only 10 km south of the Silver Swan (655 kt @ 9.5% Ni) and
Black Swan (10 Mt @ 1% Ni) nickel mines (166 kt nickel endowment).

Middle Creek Project (Gold), Western Australia
Pilbara gold exploration adjacent Novo Resources (NVO.tsx-v) Beatons Creek Conglomerate Gold project
and Millennium Minerals (MOY.asx) Nullagine Gold project;
Visible gold in quartz veins at surface and an untested 1.3km long gold in soil anomaly.

BC Cobalt (Cobalt -Gold) Car er (Nickel-Cobalt)

Middle Creek (Gold)
Silver Swan South (Gold & Nickel-Cobalt)

@blackstone_BSX www.blackstoneminerals.com.au Blackstone Minerals
@blackstoneminerals

PAYDIRT (ISSN 1445-3436) contents
Published by
Paydirt Media Pty Ltd. 14 NEWS 14
A.C.N. 063 985 133 Paydirt will celebrate its 25th anniversary in
November and to start a promising year of
Head Office: celebration we take a trip down memory lane
Suite 9, 1297 Hay St, West Perth and reflect on the news that has shaped the
Western Australia 6005 mining industry since 1994. In this edition
P.O. Box 1589, West Perth we provide a snapshot of events over the
Western Australia 6872 last quarter of a decade and in subsequent
Phone: (+61 8) 9321 0355 editions this year we will continue to take a
Facsimile: (+61 8) 9321 0426 look back on the personalities and companies
[email protected] which have shaped the sector in Australia and
www.paydirt.com.au overseas

20 COVER
David Flanagan is best known for his exploits
Editorial: with Atlas Iron in the Pilbara, however, his
Editor: Dominic Piper career in mining extends far beyond the
Deputy editor: Mark Andrews confines of outback Western Australia. On a
Journalist: Michael Washbourne site visit to Mozambique, Paydirt discovered
Photography: Picture This Flanagan’s passion for the graphite space
Art director: Nick Brown and what he hopes to achieve as managing
Contributors: director of Battery Minerals. Mark Andrews
Keith Goode (Sydney), Brendan Ryan reports
(Johannesburg), Ross Louthean
28 BATTERY MINERALS
Advertising: CONFERENCE
Advertising manager: Richa Fuller
Subscriptions: Mitchelle Matambo If there was ever an apt forum right now it must
Phone: (+61 8) 9321 0355 certainly be a battery minerals conference.
Facsimile: (+61 8) 9321 0426 Paydirt will host its second Battery Minerals
Conference at the Pan Pacific Perth, March
Pre-press and printing: 12-13, to see how quickly Industrial Revolution
Vanguard Press 26 John St, 4.0 is advancing. A precursor to the event is
Northbridge WA 6003 covered over 20 pages in this edition
Member of:

Paydirt Media 20
Executive chairman: Bill Repard
Finance manager: Giovanny Jefferson 48 MINING INDABA
Accounts/administration: To mark the 25th Mining Indaba, the heads
Heather Melling of state from South Africa and Ghana were
headline speakers, and did not disappoint the
Conferences: Melita Fogarty, 7,000-strong crowd. A loyal supporter of Mining
Namukale Nakazwe-Msiska, Indaba, Paydirt was well represented in Cape
Town and covered the event from every angle
Christine Oelschlaeger

MARCH 2019 VOLUME 1. ISSUE 269 $11.95

Battery on charge:ISSN 1445-3436 84 REGIONAL ROUNDUP
03 Hot Chili (Chile) and Galan (Argentina) have
Flanagan’s graphite goal caught the attention of the market in recent
9 771445 343007 times for different reasons. Hot Chili appears
• Mining Indaba 36-page wrap-up to have pulled off a company-changing
• Site visits... Orion... Lucapa deal in the copper space, while Galan is 28
• Battery Minerals Conference enjoying exploration success on its lithium
- full preview brine property. Mark Andrews and Michael
Washbourne report
PAGE 1 MARCH 2019 AUSTRALIA’S PAYDIRT

Cover image: Battery Minerals
managing director David Flanagan
and geologist Geraldo Lembura at the
Montepeuz project, Mozambique

Member of:

Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be re-
produced in any form without the consent of the
publisher. This includes photographs either taken
by Paydirt Media staff or provided by other parties.

Battery space unlike
any other

Of all the market trends I’ve reported on comments from Cape Town.
during more than 13 years at Paydirt, “We are the miners and the world needs us now,” he said. “We
there has been nothing to compare with
the rise of the battery minerals over the are part of the solution, not part of a problem.”
last four years.
Sure, there have been plenty of 50/50 split the only way
niche commodity booms over that
period but the popularity of uranium, Much of this edition is dedicated to our annual review of the Min-
rare earths and even iron ore (at least ing Indaba, held in Cape Town, South Africa last month.
among junior companies) always came from an established base
and these price spike eventually, inevitably reverted to the mean, The atmosphere at this year’s event was much changed with
taking the companies with them. genuine engagement between government and industry – in the
However, the battery minerals boom is different; it has depth, host country and elsewhere on the continent – widely apparent.
longevity and came almost as a complete surprise to everyone
in the resources space. It is set to not only restructure the global That mood carried throughout the month of February with news
commodity supply/demand dynamics but also the public image of at the end of the month that the Tanzanian Government and Bar-
the global resources sector. rick Gold Corp had reached agreement over the future Acacia Min-
A decade ago, Australia’s “battery minerals” sector comprised of ing plc.
the Greenbushes mine, a few other half-forgotten lithium projects
in Western Australia and a couple of long-closed graphite mines The Acacia episode has been a long, drawn out saga, one which
in South Australia. has damaged the country’s investment reputation and put a num-
In November 2010, I attended the opening of Australia’s second ber of Australian companies in severe trouble.
lithium mine – Galaxy Resources Ltd’s Mt Cattlin operation 2km
north of Ravensthorpe, WA. Most of the guests at the opening, The apparent breakthrough between Tanzanian President John
particularly the media contingent, were still getting their heads Magufuli and Barrick chief executive Mark Bristow should reset
around the lithium market. I know we were still recovering from Tanzania’s mining sector and could act as a blueprint across the
the GFC but I couldn’t imagine why there would be such demand continent.
for what to my knowledge (gleaned from the Nirvana song) was a
material largely used as a mood stabiliser in patients with severe There will be plenty within the industry who see the 50/50 split of
depression. economic benefits and cry resource nationalism but this is surely a
I did manage to listen to then Galaxy managing director Iggy sensible way of approaching things.
Tan enough to recognise his company’s plans were about more
than psychiatric medication and even managed to identify China’s Once in-country investments are taken into consideration, the
growing enthusiasm for hybrid and electric vehicles and what that economic split can be considered fair.
may mean for lithium demand.
Today, WA boasts six lithium mines which have placed the State Governments in emerging economies sometimes have to lower
at the centre of a nascent battery sector. No other commodity their investment barriers to attract investors. The cost of doing
group has gone from 0 to 100 in such quick time. business in these countries – lack of infrastructure, power, produc-
The slow realisation was repeated in graphite, a material the re- tivity levels – are high and geopolitical risk means the price of debt
sources sector had barely thought about since the Second World finance is inevitably higher as well. But Bristow is right, the barri-
War given it was a low-value industrial mineral with a poor environ- ers are lowered in order to attract investment which will eventually
mental track record and whose global supply was almost entirely leave the country better off. If the operators don’t achieve this, then
locked up in China. they must be held accountable.
Now, the ASX boasts more than a dozen graphite focused com-
panies, all intent on supplying the battery market. Why have Rio Tinto Ltd and BHP enjoyed such generous state
Even the WA nickel miners – well established and with strong agreement terms in WA for so long? Because the State and its
links into China – didn’t see the impact of EVs coming. It wasn’t people are materially better off as a result of their activity. Together,
until 2016 that BHP Nickel West, Independence Group NL and they have grown the WA economic pie.
Western Areas Ltd began talking up their EV market credentials.
The battery minerals revolution has turned the entire resources In Tanzania, Barrick/Acacia failed to grow the economic pie.
sector upside down and even base metal miners are attempting to Such was the parlous state of their operations, the company failed
link themselves to this electric future. to begin paying taxes, leading to frustration from communities and
It means miners have a rare opportunity to reduce their public government.
image as global polluters and instead build a narrative around their
role in sustainable development. “Tanzania was a leader in the early 90s; it had the most gen-
I’ve never been enamoured by the faux “mining guru” philosoph- erous mining code in the emerging world but the industry didn’t
ical words of Robert Friedland but I found myself agreeing with his deliver on its promises,” Bristow says on page 65. “They’ve done
a good job of turning a large fortune into a small one. People get
aggravated when promises don’t materialise.

“The people of Tanzania must also benefit from development
and an appropriate split in economic terms is 50/50 after capital
recoupment. Above 50% and you will lose the investors.”

Left in the ground or mined, these resources are of no benefit
to the people of Tanzania; they need resources development. But
mined and sold at a loss to the miner is also a waste of a national
resource.

Industry and government would do well to remember this.

[email protected] @DominicPiper

Page 4 MARCH 2019 AUSTRALIA’S PAYDIRT

Vale disaster pushes miners to
monitor tailings

January’s fatal tailings dam collapse at The disaster prompted
Vale SA’s Corrego do Feijao mine has
sent the global mining industry once again the world’s largest miners
scrambling to check the integrity of its tail-
ings management systems. to announce risk reviews

The January 26 tailings dam collapse at of their tailings facilities.
the Corrego do Feijao mine near the town
of Brumadinho, in Minas Gerais, killed BHP Ltd, which was
more than 300 people and came just four
years after the Samarco tailings collapse Vale’s JV partner in Sa-
in the same state became Brazil’s worst
environmental disaster and also killed 19 marco, said it had “signifi-
people.
cantly increased the rig-
Brazi’s mining regulator ordered Vale
to suspend operations at its Fabrica and our of its assessment and
Vargem Grande complexes immediately
after the Brumadinho disaster. management” of tailings

In a statement, Vale said the mining since 2015, including a
regulator ordered the suspension in light
of the possible failure of five dams at the risk review which resulted
mining sites in the interior state of Minas
Gerais. Since then, both authorities and in more than 400 actions
mining companies have stepped up scru-
tiny of so-called upstream dams, which being assigned to com-
have been subject to multiple high-profile
failures in recent years. pany assets.

In a statement, Vale said it was abiding “These actions are
by the regulator’s decision but was asking
the body for permission to dismantle the 93% complete, with the
dams, while continuing some operations
at the mine, “which would bring about lim- remaining actions consid-
ited impacts on production”.
ered low priority such as The January 26 tailings dam collapse at Vale’s Corrego
The miner did not offer an estimate on administrative actions and do Feijao mine killed more than 300 people
how much production likely would be lost. long-lead items regard-
However, the company had previously
planned to maintain operations at Fab- ing closure and climate jor miners in Australia including Rio Tinto,
rica via dry mining, which eliminates the change impacts. None of South32 Ltd and Newmont Australia pro-
need for upstream dams. The company these actions is overdue,” the company viding geotechnical and structural instru-
estimated that plan would result in 3mt of said in a statement on February 19. mentation and asset monitoring. Malcolm
lost production in 2019. said the days of having just a few sensors
Rio Tinto Ltd – which has 100 active on a tailings dam, intermittently monitored
Minas Gerais is still recovering from the tailing facilities and a further 36 closed by hand were rapidly ending.
2015 Samarco collapse which buried a or under rehabilitation – said its tailings
village and poured toxic waste into a ma- facilities were subject to three levels of “The cost of the wireless monitoring
jor river. governance and assurance. makes sense than a couple of employees
driving around different locations, taking
Vale chief executive Fabio Schvarts- “In August 2015, Rio Tinto introduced a measurements every few months. It elimi-
man said the dam that burst was being standard for management of tailings and nates errors, increases safety in remote
decommissioned and its capacity was water storage facilities in order to ensure locations and reduces costs because it is
about a fifth of the total waste spilled at all our managed facilities are operated in less labour-intensive,” he said.
Samarco. accordance with one global standard,”
chief executive J-S Jacques said. “In light Software such as the Mission Monitor-
Schvartsman said there had not been of this tragic event, Rio Tinto is again re- ing operating system also allows com-
any recent construction around the dam viewing its global standard and, in par- panies to anticipate problems as well as
and apologised without taking responsi- ticular, assessing how we can further alerting them to impending spills.
bility in a television interview. strengthen the existing audit of facilities.”
“It is less about the alarms but about
“Apologies to society, apologies to you, Perhaps the most surprising aspect of the constant, real-time review,” Malcolm
apologies to the whole world for what has the disaster is how late Vale was in recog- said. “It allows you to see the trends well
happened,” he said. “I don’t know who is nising the dangers. before anything happens.”
responsible, but you can be sure we’ll do
our part.” Schvartsman said equipment had The web-based software could also
shown the dam was stable on January present opportunities for companies to
10 and it was too soon to say why it col- better relate their tailings management to
lapsed. However, according to Geomo- affected communities.
tion Australia managing director Kim
Malcolm, modern instrumentation and “The software is designed so alarms
software allow for real-time monitoring of are set up on individual smart phones,”
tailings facilities. Malcolm said. “It allows companies to
select who has access to the alarms
“In the past it was prohibitive to have and they can even present the monitor-
real-time monitoring because of all the ing data on open websites to ensure their
cabling required but now wireless data management has a more public-facing
loggers are readily available; there was interface.”
never previously anything available that

could do that,” he said. – Dominic Piper
Geomotion works with a number of ma-

AUSTRALIA’S PAYDIRT MARCH 2019 Page 5

NEWS

DMIRS states WA’s
TSF requirements

In light of the devastating failure of the complex design processes that match regardless of its height, with potential
tailings storage facility at Vale SA’s Cór- the designated risk/consequence profile to cause harm to humans, loss of pub-

rego do Feijão iron ore mine in Brazil, for each TSF regardless of construction lic or private assets, and prolonged or

Western Australia’s Department of Mines, method. permanent damage to the environment

Industry Regulation and Safety (DMIRS) When considering the design of TSFs, and all cross-valley TSFs and TSFs that

issued important information for similar companies must pay great attention to are higher than 15m (regardless of their

infrastructure in the State. the location and general layout of the location, method of construction or the

In WA, there are more than 800 TSFs, site; size and height of the TSF; nature type of materials stored).

“with about two-thirds deemed as shut, of materials to be stored in the TSF; the Category 1 TSFs require detailed and

including historic TSFs. tailings deposition method; the liquefac- regular inspection and auditing, includ-

The design, construction, ing the preparation and im-

operation and closure of all From what is currently understood, plementation of a site spe-
TSFs in WA mines must com- these general characteristics cific “Operating Manual”
ply with the Mines Safety and which sets out the safe and
Inspection Act 1994 (MSIA differ significantly from those at the environmentally accept-
1994), Mines Safety and In- Vale Córrego do Feijão TSF and more able operating procedures,
significantly, the Brazilian cross-valley
spection Regulations 1995 monitoring and reporting
(MSIR 1995) and Mining Act requirements, trigger levels
1978, as well as the depart- and actions to be taken to

ment’s codes and guidelines. TSF was notably higher than current rectify any impending defi-
Mining companies are re- facilities in WA. ciencies.

quired by DMIRS to under- Mining companies must

take rigorous and sometimes submit the findings of au-

dits to DMIRS.

Compliance is verified by

DMIRS officers through site

tion potential of inspections and document review pro-

the tailings where cesses (i.e. mining proposals, operating

upstream and cen- audits, mine closure plans and project

tre-line construc- management plans).

tion methods can Where anomalies are identified,

be more suscep- DMIRS has the capacity to impose addi-

tible to dynamic tional conditions to the original proposal.

and static load- The vast majority of the TSFs built in

ing; assessment WA by upstream construction methods

of the effects of are paddock storage situated on relative-

TSF failures (dam ly gentle topography, with generally drier

break studies) climatic conditions and less propensity to

under a combina- seismic events.

tion of worst case From what is currently understood,

scenarios, and these general characteristics differ sig-

provision of control nificantly from those at the Vale Córrego

and management do Feijão TSF and more significantly, the

requirements; ma- Brazilian cross-valley TSF was notably

terials used for higher than current facilities in WA.

construction and The current regulatory approach to

foundations; cli- TSF management in WA was estab-

mate, drainage, lished subsequent to the Merriespruit

etc; construction tailings disaster in South Africa in 1994.

methods. Since then, WA’s approach has been

Based on these continually improved by incorporating the

factors the TSFs learnings from tailings incidents in other

in WA are grouped parts of the world.

into three catego- Any relevant new information attained

ries. from the Brazilian incident will also be

Category 1 in- considered for further improvements in

cludes any TSF, TSF management in WA.

Page 6 MARCH 2019 AUSTRALIA’S PAYDIRT

OPINION

Yellow cake returns to the table

The uranium market has been dead I was in the front seats at the presen- Backing up Major was UK securities
since the rinderpest – that’s 1896 for tation on uranium given at this year’s In- firm Numis which predicted a long-term

non-South Africans. OK, so that’s an ex- vestment in African Mining Indaba held in uranium contract price of $US60/lb and

aggeration. It just feels that way. A more Cape Town in February. a spot price of $US50/lb in its latest as-

realistic assessment is that the uranium Yet again commentators were making sessment of the market.

market has been dead since the Fuku- optimistic predictions that the uranium The Numis report attributed the rise in

shima nuclear meltdown that occurred in market must soon turn around and I had the uranium spot price to production cuts

March 2011. one pressing question to put to them: implemented by major uranium produc-

The uranium price took an immediate What’s different this time that we should ers Kazatomprom and Cameco in 2017.

hit as did shares in the uranium produc- believe you? According to Numis, the short-term

ers but general reaction at the time was The answer involved a number of fac- market is still oversupplied and key short-

that this was a “buying opportunity” be- tors, according to GoviEx chief executive term drivers will be further actions by

cause the negative impact was expected Daniel Major. Kazatomprom; Japanese nuclear power

to be short-lived. He said that the first reason was strong station restarts and aggressive Chinese

A series of reasons were put forward demand. Nuclear generation is now at contracting behaviour.

explaining why uranium had been over- the same level that it was pre-Fukushi- Numis commented: “Long-term funda-

sold even before the accident and why ma. mentals remain positive and a key driver

the price had to rebound. In the imme- “On the supply side you have a lot of of price shift will be a return to contract-

diate aftermath of Fukushima one com- projects closing down and you have the ing on the part of energy utilities.”

mentator quipped: “uranium stocks – get Kazatomprom and Cameco [Corp] shut- Specifically, Numis expected demand

them while they are hot!” downs which have effectively put the to grow with key trends including China’s

At the forefront of the optimists was market into a deficit,” Major said. nuclear power buildout; progressive Jap-

John Borshoff, then chief executive of “The other item that has disappeared anese restart and developing economy

Paladin Energy Ltd, which was the hot- off the map is under feeding.” builds in Russia, India and South Korea.

test uranium stock at the time because it Under feeding involves the re-enrich- Numis said uranium inventories were

was the world’s most successful uranium ment of low-grade uranium tails assays returning to “normalised levels relative to

junior. to produce extra uranium. consumption” due to increased Chinese

Fast forward to 2019 and Paladin “That had resulted in the appearance consumption and gradual Japanese nu-

still exists, just. It was delisted from the of 20 mlb to 30 mlb of new material that clear restart.

TSX but survives on the ASX following had not been mined out of the ground but The Numis report pointed out that Ja-

a restructuring through which the share- was coming out of the uranium enrich- pan accounted for just 1.7 mlb or 1% of

holders basically handed over just about ment circuit. world uranium demand in 2017 but the

everything to the company’s bankers and “That meant you had two big mines country’s reactor capacity implied annual

creditors. that appeared from nowhere but actually demand of 30 mlb showing the demand

Borshoff stepped down from Paladin in did not exist,” Major said. impact of the idled reactors.

2015 to re-appear the next year as chief “So, effectively, you have not only just According to Numis, Japan now had

executive of Namibian uranium explorer seen production cuts but you have seen nine reactors back on line with seven ap-

Deep Yellow Ltd. That, as I recall, was another production cut with that. The proved for start-up in between now and

a company which Paladin always viewed other thing that has changed is that the 2020.

as second rate compared to its own US Government has stopped selling and Turning to China, Numis said the coun-

Langer Heinrich operation in Namibia. they used to sell 5 mlbpa. try was “already the world’s third larg-

An imminent recovery in the uranium “There was also an inventory overhang est consumer at 12% of world demand

price has been called by various com- but now you have people like Yellow and accounts for the largest nuclear

mentators over the past decade probably Cake plc sucking metal out of the market reactor build programme with 11 reac-

as many times as similar calls have been as well. You have a massive tightening of tors expected to connect in the next two

made predicting a recovery in the plati- inventory; demand growth and big sup- years and 30 new construction starts are

num price. ply cuts. That’s why we are going to see expected for 2019”.
“But, the platinum price has gone no- a difference this time,” Major concluded.
where and the uranium Brendan Ryan is a
Johannesburg-based
price has not done that Backing up Major was UK securities mining writer
much better although it firm Numis which predicted a long-
has finally shown some term uranium contract price of $US60/lb
signs of life over the past
year with the spot price

rising from a rock bot- and a spot price of $US50/lb in its latest
tom $US20/lb to around

$US29/lb as of mid-Feb- assessment of the market.
ruary.

AUSTRALIA’S PAYDIRT MARCH 2019 Page 7

NEWS Deshnee Naidoo

Zinc players grab
the spotlight

Australia’s zinc players dominated will be used to extinguish and replace the In a statement to the ASX, Heron man-
headlines last month as one company company’s existing facility with National aging director Wayne Taylor said the
landed a sizeable funding package, an- Australia Bank. lodgement of the claim had not impacted
other staved off a contractor dispute and a construction, commissioning or production
fresh face on the block joined forces with The remaining $40 million is subject to activities at the mine.
one of the industry’s leading producers. completion of technical and commercial
tests by August 30 and MMG’s consent “Commissioning of the Woodlawn plant
With the LME zinc price hitting a seven- prior to being available for draw down. is well under way and all necessary pro-
month high in early February, the spotlight cesses are in place,” Taylor said.
was never going to be far from those as- “While New Century has made strong
sociated with the key steel-making ingredi- progress with the ramp-up to date, the “Our people are ready to start moving
ent. board has determined that obtaining addi- ore through the facility. The plant is de-
tional working capital is a prudent measure signed to the highest industry standards
Although the price tailed off after its to ensure the company maintains a strong and using some of the best equipment
initial spike, a number of ASX-listed zinc cash buffer to complement the growing available today. We are confident that it will
companies grabbed attention for vari- cash flows from concentrate shipments,” perform very well.”
ous reasons, notwithstanding the severe the company said.
weather events which threatened to sus- In Western Australia, Galena Mining
pend operations at Century and Thalanga, “The debt facilities also provide New Ltd’s January share price surge continued
respectively run by New Century Resourc- Century with sufficient working capital to into February after partnering with Japan’s
es Ltd and Red River Resources Ltd. execute the phase two programme from 8 Toho Zinc in a $90 million tie-up over the
mtpa to a 15 mtpa mining rate at the Cen- Abra silver-lead project.
Both companies reported operations tury zinc mine.”
were unaffected by the floods which re- Toho – one of the world’s leading zinc
stricted access to parts of the region, which South of the border in New South and lead producers – will acquire up to
was particularly critical for New Century as Wales, Heron Resources Ltd’s impending 40% of the project through staged invest-
it continues to ramp up production. restart of the Woodlawn mine, near Goul- ments, including $20 million upfront and
burn, remains on track for later this month $10 million post completion of a DFS. The
Retreatment of the tailings from the for- despite being hit with a progress claim for final $60 million will be injected upon con-
mer MMG Ltd mine has now surpassed additional costs totalling $49.9 million by firmation of debt financing.
50,000t with overall zinc recoveries gradu- its EPC contractor Sedgman Pty Ltd.
ally on the rise, having achieved modest Meanwhile, Vedanta Zinc International’s
levels since operations were restarted last The progress claim was rejected by the newly minted Gamsberg mine in South Af-
August. Contract Superintendent with Heron set to rica is on track to produce 250,000 tpa zinc
seek liquidated damages for the delayed in concentrate within the next 12 months,
It prompted New Century to seek a work- delivery of the new Woodlawn processing according to chief executive Deshnee Nai-
ing capital buffer in the form of a new $100 facility. doo.
million debt facility with global investment
firm Varde Partners, of which $60 million Heron and Sedgman had entered into a First production at Gamsberg – a former
is available for immediate draw down and guaranteed maximum price EPC contract Anglo American plc asset on the Northern
for $109 million in May 2017. Cape – was achieved late last year as Ve-
danta completed its initial $US400 million
New Century Resources has secured a new $100 million debt facility from Varde investment in the project.
Partners as a working capital buffer for operations at Century, North Queensland
Phase two operations will see produc-
Page 8 MARCH 2019 AUSTRALIA’S PAYDIRT tion increased to 450,000 tpa with a po-
tential underground option lifting total zinc
output to 600,000 tpa.

“This is all very much in line with [Ve-
danta] Zinc International’s ambition of be-
coming a 1 mtpa producer,” Naidoo told
delegates at Mining Indaba.

“For Vedanta, Gamsberg is more than a
mine; it is potentially a catalyst for industri-
al and economic development on the back
of beneficiation.

“Our plan is to process concentrate in an
integrated smelter/refinery complex. This
is entirely aligned with Vedanta’s vision
and track record of adding value to our
products at the location in which they are
mined. We have done this in India several
times, and the possibilities are many.”

– Michael Washbourne

Oz sees Oz Minerals partnerships
big red
potential Sweden

For the resilient bunch of junior explor- Lannavaara IOCG project, Norrbotten district, northern Sweden.
ers that have clung onto assets in Aus- Under agreement with private explorer Mineral Prospektering
tralia, now could be the time to realise true
value from their portfolios. i Sverige, Oz can earn 75% by spending $US10 million over
66 months at Lannavaara. A further 25% equity can also be
Volatile markets and continued geopo-
litical instability will make raising capital purchased by Oz as per the June 2018 agreement.
difficult again this year, however, juniors
could be afforded another avenue to Peru
funding now that the major mining houses
have ended their exploration hiatus. Paraiso IOCG project, Arequipa district, south coast Peru. In 2018, Oz
agreed to spend $US500,000 in the first 12 months on exploration at
“Our company has always looked at Paraiso, where its partner is private company Inversiones Mineras La
Tier 1 prospects, not for cash flow, so we Chalina S.A.C. Assuming Oz elects to proceed, it can earn 100% of the
have always garnered interest from the
majors because that is what they are after. project by spending $US11.525 million over five years.
The majors disappeared [from Australia]
over the last 10 years and went overseas Mexico
looking for porphyries. We have kept the
door ajar here for the last 10-15 years and Oaxaca base metals project, south Mexico. Oz is earning 78%
we are starting to see them come back. of the project after entering an agreement with Canadian-based
There is nothing left overseas to buy and
it is less risky here,” Red Metal Ltd man- private explorer Acapulco Gold Corp in 2017.
aging director Rob Rutherford said.
South Australia
Rutherford spoke to Paydirt after Red
Metal announced a greenfields discovery East Musgrave nickel-copper project, northern SA. Just over
alliance (GDA) with Oz Minerals Ltd in 12 months ago Oz entered an agreement to earn up to 75% of
late January. Woomera Exploration Ltd’s East Musgrave project, 500km from
the West Musgrave project. Also in SA, Mithril Resources NL is
Often for companies like Red Metal,
which saw a share price spike to 12c/ earning into Oz’s Coompana project.
share upon the deal with Oz, welcoming
a major into the fray essentially means Queensland
giving the farm away for little return.
Eloise copper gold/Cannington-style lead-zinc-silver, south-east
This is not the case for Red Metal un- of Cloncurry. Oz is set to earn its 70% interest in the Eloise JV
der the GDA with Oz, according to Ru-
therford, who is accustomed to the atten- with Minotaur Exploration Ltd this year. If it does, the milestone will be
tion of bigger players. achieved three years ahead of schedule, with the original agreement for Oz

In addition to Oz, Red Metal is in JV to spend up to $10 million over six years on exploration at Eloise.
with a member of the Shanxi Donghui
group of companies, Chinova Resources Western Australia
Pty Ltd, at the Emu Creek copper-gold-
zinc project in Queensland, while MMG West Musgrave copper-nickel project, WA, near the SA and NT
Ltd is partner at the Mallapunyah lead- borders. Oz has invested $22 million and earned a 51% interest in
zinc-silver and copper-silver-cobalt pro- the West Musgrave JV with Cassini Resources Ltd. A PFS is expected
ject in Northern Territory. to be completed in Q2 2019. Oz can earn 70% by spending a further

“It’s not always easy dealing with ma- $14 million on project studies and regional exploration.
jors, but Oz understood where we were
coming from,” Rutherford said. Australia

“It’s not every day that you get a deal In January, Oz and Red Metal Ltd struck a greenfields discovery
like that; it was essentially off the back of alliance (GDA), whereby the former has the option to earn 51% in
the deal at Punt Hill last year with Oz. We Yarrie (WA, copper-gold/copper-cobalt), Nullarbor (WA, copper-gold/
started with that and then asked ‘why not copper-nickel), Gulf (Queensland, copper-gold) and Three Ways, Lawn
do something with the whole lot?’” Hill and Mount Skipper (all Queensland, zinc-lead-silver). The GDA came
on the back of the two companies forming a JV at the Punt Hill and
Oz can earn 70% of Punt Hill, where Pernatty Lagoon projects, 30km from Carrapateena, SA, in late 2017.

AUSTRALIA’S PAYDIRT MARCH 2019 Page 9

NEWS

geophysical characteristics are akin to years at the Yarrie (copper-gold/copper- est in the Australian exploration space,
deposits at Carrapateena, by spending cobalt) and Nullarbor (copper-gold/cop- Rutherford is eager to get stuck into the
$10 million on exploration over three and per-nickel) projects in WA and the Gulf GDA and start producing results.
a half years. (copper-gold), Three Ways (zinc-lead-
silver), Lawn Hill (zinc-lead-silver) and “The only thing that can make our
Punt Hill is just 30km from Carrapa- Mount Skipper (zinc-lead-silver) plays in share price move is a discovery and
teena and gives Oz the potential to ex- Queensland. that $8-10 million funding over two years
pand in the region and capitalise on the helps. We could have raised that kind
established infrastructure. In September, Oz can earn 51-70% of Red Metal’s of money over four years in dribs and
a maiden drilling programme targeting projects under the GDA. drabs, but it would have been dilutionary
prospects at Punt Hill and Pernatty La- to our shareholders,” he said.
goon had started. To kick-start the GDA, high resolution
gravity surveys over Nullarbor and Lawn – Mark Andrews
Oz’s stated approach to JVs is to work Hill were planned and to be followed by
with their partners and let them manage proof-of-concept drilling at Mount Skip-
the on-ground activities. per, Gulf and Nullarbor.

At the end of December, Oz reported Meanwhile, work programmes at Yar-
a cash balance of $505 million, with rie and Three Ways were to be decided
its extended commitment to Red Metal once tenements are granted, presum-
totalling $8.05 million in exploration ably this year.
and $1.8 million cash over the first two
Given Red Metal’s renewed inter-

Red Metal and Oz have extended their
partnership in South Australia to

Western Australia and Queensland

Page 10 MARCH 2019 AUSTRALIA’S PAYDIRT

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NEWS

Altura breaks the shackles

Things are not as bad for Altura Min- Altura expects to achieve nameplate Pilbara potash hopeful Kalium Lakes
ing Ltd as the market would have you production at its namesake lithium mine Ltd is a step closer to becoming
believe, according to managing director the country’s first SoP producer
James Brown. in the Pilbara by the end of the month after securing a $74 million funding
package from the Northern Australia
At the time of print, Altura’s stock had Strong demand from non-related par- Infrastructure Facility (NAIF) for its
plummeted to its lowest levels since mid- ties saw Altura ultimately pocket $24.5 Beyondie project, about 160km south-
2017 as concerns swirled about the state million from the placement (originally tar- east of Newman.
of operations at its namesake lithium geting $23 million) with a further $5 mil-
mine in the Pilbara. lion from a SPP to existing shareholders The NAIF funding essentially brings
set to come in later this month. forward the planned construction of a
Those concerns were somewhat 78km gas pipeline and a gas-fired power
heightened early last month when Altura Given the fresh support for his busi- station, which is set to reduce operating
tapped the market for a $28 million fi- ness, Brown expressed his confidence costs by $62-65/t from the base case
nancing package which the company Altura was over the worst of its process- presented in last year’s BFS.
said was for “working capital strength” ing issues and predicted operations
ahead of the final ramp-up of its newly would hit nameplate capacity of 600- Funds will also be used to facilitate
commissioned 220,000 tpa operation. 620 tpd by the end of the month. At the construction of supporting
time of print, production was reportedly infrastructure, including road upgrades,
In its December quarterly report, Altu- achieving more than 500 tpd on a con- communications tower, an airstrip and
ra cited issues with the wet commission- sistent basis. the accommodation village.
ing of the fines plant, in particular the ball
mill start-up and the tailings thickener “By the end of the first quarter, I’d like Kalium Lakes is eyeing first SoP
performance, resulting in considerable to think we’re somewhere close to where production next year, beginning at a rate
downtime while modifications to the af- we need to be with regards to nameplate of 82,000 tpa before a staged ramp up to
fected parts were carried out. production,” he said. 164,000 tpa

Despite this, Altura still shipped four “It wasn’t really a costly exercise to operation to 440,000 tpa could also be
cargoes of on-spec spodumene concen- do all the fixes. This isn’t an unusual made early next quarter. Last year’s DFS
trate totalling 24,000t to its Chinese cus- ramp-up by any stretch and I think the found the project expansion would re-
tomer base, prompting Brown to declare team have done very well to get it to quire $119 million of development capital,
that his company had the operation “well where it is now. Things are certainly but would ultimately boost life-of-mine
and truly under control”. less problematic now than what they revenue to $4.38 billion, NPV to $835
were. And the good thing is we’re pro- million and IRR to 63%.
“You can map out these things as best ducing fines, we’re shipping fines and
as you like, but when you’re ramping up it’s all on spec. Brown said the Altura board was
you do have additional costs sometimes following the same “crawl, walk, run”
and you do have fluctuations in your “It would have been nice if it had all approach it adopted for the initial de-
saleable product,” Brown told Paydirt. come together a couple of months ear- velopment of the mine when consider-
lier, but it didn’t and really nothing was ing a final investment decision on the
“In simple terms, we’ve got bills to pay beyond any of the normal hiccups you Stage 2 expansion.
that are due at a certain time, so we need- have with commissioning.”
ed a working capital buffer to be able to “I think it will all come about pretty
ride through that smoothly instead of be- Brown said the company’s offtake part- quickly in the end; it basically comes
ing a bit more cash constrained. ner – leading producer Gangfeng Lithium down to who wants what, when they want
– was happy with the shipments it had re- it and how we go ahead funding it,” he
“As for timing, you always hope that the ceived to date, in particular the low levels said.
market picks up and you wait for that, but of mica in the Altura concentrate.
in the end you’ve got to raise it when you “There’s a lot of people who want to
can, not when you desperately need it.” A decision on doubling the size of the get on that ticket and we need to work
out who is best in regards to both fund-
James Brown ing and longevity, as well as the ability to
adhere to this offtake capacity.

“Across the board, I wouldn’t say
there’s fear of missing out, but people
really want to be aligned with the lowest
costs and longer operations, which is
something we’re now starting to demon-
strate.”

– Michael Washbourne

Page 12 MARCH 2019 AUSTRALIA’S PAYDIRT

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25NEWS Celebrating
Years
Est.1994

In the first in a new series of retrospectives to celebrate Paydirt’s 25th anniversary
this year, we look in the archives to see what the Ides of March brought
Australia’s mining sector down the years.

1995 overs and corporate raiders from North America who are attracted
by local price/earnings ratios and low to medium production costs”.
A look back at the first ever March
edition of Paydirt just proves the What is noticeable from these early editions of Paydirt is the al-
more things change, the more they most complete lack of news about iron ore. Just how different the
stay the same, a Paydirt survey sector was treated in those pre-China boom years is apparent
showing “a handful of companies from APPEA pointing out that at $3.661 billion, WA gas produc-
were in a threadbare state for capi- tion outstripped both gold ($3.122 billion) and iron ore ($2,794 bil-
tal”. According to Macintosh Corpora- lion). In fact, in an interview with Paydirt, BHP Ltd chief economist
tion Ltd, the amount of funds raised on Robin Stewardson doesn’t even get around to mentioning iron ore
the ASX halved in a 12-month period. until after he has covered copper, zinc, nickel and coal but the
Among them was Jason Mining Ltd Big Australian did strike a deal with Japanese steel mills to sell at
which tried to shore up its negative $50,000 bank balance via a pri- $US37.68/t in 1996.
vate placement through Hambros Equities. The problem was, Ham-
bros couldn’t find enough investors to raise the target. On foreign shores, the global nickel sector was looking anxious-
ly at Falconbridge and its $C4 billion takeover offer for Diamond
Elsewhere, National Resources Exploration Ltd enjoyed good ear- Fields and its new Voisey’s Bay nickel deposit in Newfoundland.
ly drilling results from its Deflector prospect at Gullewa. Deflector
is now the key asset in Silver Lake Resources Ltd’s bid for Doray Diamonds again dominated this month’s Paydirt with a young(ish)
Minerals Ltd. Karl Simich being shown in the Blina diamond field in his position
as company secretary of Kimberley Diamond Company Ltd.
Outokumpu was taking its first steps into the West Australian nickel
scene and was looking to expand its Forrestania project. 1998

There were some major differences between 1995 and 2019. To- By its fourth year, Paydirt was
day, it would be hard to imagine Paydirt devoting 35 pages to the committed to its annual February
diamond sector. And, how many geologists would quickly post pilgrimage to Cape Town for the
their typed CV to Glenbrook Management Consultants who were Mining Indaba and the March edi-
advertising a $40,000 salary package for an exploration manager. tion reflected that fact.

1996 Among the big stories was the pro-
gress made by the intrepid Centamin
A year later and politics was the NL on its Sukarno gold project in
main talking point in Paydirt with Egypt (see 2003) and another Austral-
the WA Liberal Party deputy leader ian gold play in Africa still surviving
Colin Barnett spooking the state’s from the 90s is Resolute Mining Ltd. In 1998, the company was
gold sector by suggesting a gold finally seeing reward from its development of the Obotan gold mine
royalty was “inevitable”. Paydirt, of in Ghana with 69,166oz gold produced at $232/oz in the December
course went into bat for the miners half year.
and would do so again many times
down the years as governments Away from gold, John Borshoff was beginning to build Paladin En-
of both political persuasions eyed ergy Ltd’s credentials on the continent, acquiring the Kayelekera
the sector for extra funds. uranium project in Malawi, a mine it eventually brought into produc-
tion in 2009.
Obviously not worried by the proposed royalty hike were North
American gold companies and Sons of Gwalia managing director The Australian presence at Mining Indaba was highlighted over a
Peter Lalor was warning the industry to prepare for “a wave of take- double page spread with some familiar faces including Nick Farr-
Jones of Societe Generale, Rick Yeates of RSG, John Flynn of
Intertek Genalysis and “the Pascall boys” from First Quantum Min-
erals Ltd.

Page 14 MARCH 2019 AUSTRALIA’S PAYDIRT

1999 2003

The last March edition of the mil- With interest in gold and Africa
lennium opened with a lament gathering pace, the story of the
from founding publisher Ross El-Raghy family and its develop-
Louthean about the town of Kam- ment of the Sukari gold mine in
balda, which had been rocked by Egypt emerged. Centamin was the
the news WMC was to close sev- first commercial miner to enter the
eral shafts, including the iconic North African country (and still is
Long shaft, resulting in the loss its only operator). Paydirt had been
of more than 300 jobs. following its story as far back as 1998
and by 2003, it had defined a resource of 2.6 moz gold. Today,
Louthean called on state and federal the mine is producing more than 450,000 ozpa and is still owned
governments to do more to incentivise exploration. Less than a by the now London-listed Centamin, making it undoubtedly one of
decade later, Kambalda had been reborn out of the WMC ashes Australian mining’s early African success stories.
with the likes of Independence Group Ltd, Mincor Resources NL
and Panoramic Resources Ltd building new businesses on the In a preview to the Paydirt Gold Conference, Croesus Mining
back of old WMC nickel operations. chairman Ron Manners said news of an impending gold boom –
the spot price had hit $US380/oz in February – “has crept up on us
In the now annual Mining Indaba review, gold was the main talk- and taken many by surprise”.
ing point with the lamentable performance of both gold price and
gold equities dominating discussions. However, as whenever gold In the African review, South Africa’s new Mining Charter was caus-
companies find themselves in trouble, there are always a few white ing consternation among sector participants. It will come as little
knights around and Ian Cockerill’s AngloGold appeared to be one surprise to today’s miners who are only just beginning to see light
of them. Cockerill told Paydirt he had “a team of professionals at the end of what has been a very long Mining Charter tunnel.
generating targets across the globe”. Two years later, the company
completed one of the first gold mega deals through its merger with 2004
Ashanti Goldfields.
March 2004 saw two of the most
For Perth-based Redback Mining, things were already looking up successful Australians in Africa
with managing director Ross Ashton, having secured the Chirano adorn the cover of Paydirt. Craig
project in Ghana. Eleven years on, Chirano went to Kinross Gold Williams was in the midst of building
Inc in a $US7 billion acquisition of Redback. Equinox Minerals from junior explorer
to multi-billion dollar takeover target on
2001 the back of the company’s Lumwana
copper project in Zambia while Anvil
Nickel was making the headlines in Mining chief Bill Turner was doing a
March 2001 with Kerry Hermanis’ similar job in DRC. While Equinox took on grand plans from the
Jubilee Mines opening its Cosmos start, Anvil chose to begin life as a producer slowly, producing just
nickel mine, Andrew ‘Twiggy’ For- 12,000 tpa copper concentrate and 144,000 ozpa silver from its
rest promising North American in- Dikulushi mine. Turner said he wanted Anvil to be perceived as “a
vestors that his Anaconda Nickel small, gusty company which makes modest claims about what it
was on track to produce 350,000 tpa can do”. In 2011, Anvil was sold to MMG Ltd for $US1 billion.
nickel within two years and Acclaim
Exploration boasting of its plans 2007
for the 30 year-old Wingellina nickel
laterite project. Eighteen years on and Jubilee could claim to have This year heralded a high-water
had the best outcome, being sold to Xstrata for $4 billion. Forrest was mark for the resources boom. With
eventually forced out of Anaconda and its Murrin Murrin project while the GFC just around the corner,
Wingellina remains in the ground, now owned by Metals X Ltd. there were record numbers of IPOs
on the ASX and record high com-
2002 modity prices on global markets as
China’s insatiable appetite fuelled
As rumbling about a resources ever greater demand.
boom began, Paydirt attempted
to identify the next generation of No commodity was affected as much
great Australian mining compa- as uranium, which spiked to $US100/
nies. Having seen BHP merge with lb during the year, making it apt that Paladin Energy Ltd and its
Billiton, North Ltd swallowed up by ebullient managing director, John Borshoff, was our cover star for
Rio Tinto Ltd and Normandy Min- the edition. Paladin was in the middle of constructing its Langer
ing taken out by Newmont Mining Heinrich uranium mine in Namibia when Paydirt visited and within
Corp, the stage was clear for new 18 months it boasted a second operation in Malawi and a $1 billion-
players. plus market cap. The charmed run did not last and as uranium
prices crashed in the post-Fukushima period, it struggled to retain
Among those identified were the George Jones-led Portman Min- its early momentum. It now finds itself trading at below 20c/share
ing Ltd, Harry Anagnostaras-Adams’ (then just Harry Adams) (market cap: $300 million) having sold most of Langer Heinrich to
Gympie Gold Ltd, now established nickel producer Jubilee and keep afloat.
British investment bank Paul Atherley’s Murchison United.

AUSTRALIA’S PAYDIRT MARCH 2019 Page 15

2010 March2010 Volume 1. Issue 170 2016 March 2016 VOLUME 1. ISSUE 236 $11.95
$9.95

March saw West Australian Premier 1–4 February 2010 The year of graphite was encap-
Colin Barnett move quickly to dis-
miss the suggestions of the Henry Australia’s Paydirt • Mining Indaba sulated in Paydirt’s visit to Mo-
Tax Review that Australia’s states • Boddington
and territories should give up their • Minjar zambique to check on the early
ownership of mineral rights in fa-
vour of a federally-run resources • Paydirt’s Gold Conference preview progress of Cherie Leeden’s Met-
rent scheme. • Queensland focus
March 2010 als of Africa exploration story at East Africa:
Tiger ready for its Montepuez. While next door Syrah
first bite in Congo
Resources Ltd was promising immi- The Pilbara of graphite

nent production from its Balama pro- Plus:
ject, Metals of Africa was looking at
Mining Indaba... full review

“To think we will take our place in the Australian Graphite Conference... new conference set to launch
queue behind Tasmania and South
ISSN 1445-3436 Site visits... Mozambique, Tanzania and South Africa ISSN 1445-3436
02 02

9 771445 343007 more modest start-up plans. Three 9 771445 343007

Australia to wait for handouts is ludicrous,” Barnett said while open- years on, Paydirt revisited Mozam-

ing the Boddington gold mine in WA. bique (see page 20) to find Syrah still struggling to hit nameplate

“There are some people in Canberra who think those royalties capacity and the now Battery Minerals Ltd edging closer to de-
should go into the Federal Treasury coffers,” Barnett continued.
“However, let me tell you, those resources belong to the Govern- velopment at Montepuez.
ment of Western Australia on behalf of the people of Western Aus-
tralia. The royalty is not a tax, it is the price we sell that gold. To
suggest we should give up our right to sell that gold is untenable.”

It was a debate that was to run throughout 2010, helping bring down 25Celebrating
a prime minister and, eventually, an entire federal government. Years
Est.1994
2014 March 2014 VOLUME 1. ISSUE 214 $11.95

While Africa remained the focus

of most of the magazine, the main

news headline concerned the re-

bound in WA nickel’s fortunes. At

Western Areas Ltd, new managing

director Dan Lougher was talking up a Development link:
return to profit, while Sirius Resources
leader Mark Bennett was investigating Africa’s infrastructure challenge
ways to buy Mark Creasy out of his 30%
interest in the new Nova-Bollinger nickel • Full Mining Indaba coverage... including site visits in

Botswana, Zambia and Namibia ISSN 1445-3436
• Uranium special • Tasmania focus 02

9 771445 343007

discovery. Creasy eventually settled for $28 million cash and 30% eq-

uity interest in Sirius. Less than a year later that had been converted

into a 19% holding in Sirius acquirer Independence Group Ltd, which

is now market capped at $2.8 billion.

From its inception Paydirt
could boast widespread in-

dustry support. This page
of testimonials comes

from the first ever March
edition of Paydirt in 1995.

Page 16 MARCH 2019 AUSTRALIA’S PAYDIRT

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NEWS

Southam all charged up for Mincor

In starting as Mincor Resources NL man- David Southam dow.”
aging director on February 1, David One of the pillars to Western Areas’
Southam fulfilled a career ambition of be- camp and there really has been no ex-
ing the figurehead of a company. ploration around Widgiemooltha. It does success has been remaining active in
have the potential to host a significant a volatile market, which is an approach
And, while some people in similar posi- deposit and that is something that we will Southam can see working at Mincor.
tions may take time to settle into the role, be reviewing over the next 3-6 months,”
Southam’s eight-year stint as executive Southam said. “A recent example is what Western Ar-
director of Western Areas Ltd has him eas has done with Odysseus. They are
primed to hit the ground running at Min- “Nickel is part of our DNA and as I’ve kicking off that work now while they can
cor. said we are not allergic to capital and and it is a very similar approach to Min-
cash flow. The gold keeps our mining cor,” Southam said.
While his experience with one of Aus- credentials up and often one of the dif-
tralia’s premier nickel producers holds ficulties with having two asset styles in Mincor started positioning for a “new
Southam in good stead, the changing the company is that you don’t get full nickel era” in late 2017. The company
nickel market dynamics is the platform value for one of them. That is something kicked off 2018 by closing a $10 million
for Mincor’s re-emergence. we will look at, but we will probably be capital raising to fund nickel exploration,
making some noise about the gold over with Cassini a high priority.
“Joining Mincor, I am backing up my the next few months. There is a much
beliefs from what I have expressed quite bigger landholding with our gold and the While 2018 marked a restart to Min-
publicly at Western Areas and that is strategy – do we work it ourselves, sell it, cor’s nickel regime, a vote of confidence
there’s going to be a structural shift in sell part of it – will be announced at the for the company came through the arrival
the nickel market associated with EVs,” right time.” of a number of institutional investors on
Southam told Paydirt. the register.
Southam sets a high bar for himself
“We can all argue about the timing and the market shouldn’t be surprised if “It doesn’t have as many institutional
and when the take up will be, but I don’t he makes some quick and decisive deci- owners as it probably should do. There
think we can argue that there will be a sions early in his tenure at Mincor. is some messaging that can be done and
take up. Given that OEMs have com- as an alternative to a mid-cap nickel in-
mitted $US200 billion in new capital for While gold prices are running in the vestment, not detracting from Western
EVs, that to me is an absolute pointer company’s favour, the nickel market fluc- Areas or Independence Group [NL], but
as to why we should be working on the tuated dramatically last month. there are not too many sub-$100 million
restart plans for the nickel operations at market cap companies out there,” South-
Kambalda.” After hitting a five-month high of am said.
$US13,350/t on the LME in early Febru-
Mincor was once one of Western Aus- ary, the nickel bounce back was short “There might be a slight reset of strat-
tralia’s most reliable nickel producers lived with prices of $US12,400/t at the egy, I am certainly not here to see things
and marked its reputation as a dividend time of print. slide by. I’m keen to ramp up activity and
paying company after pioneering the at the end of the day you can talk as
Kambalda nickel revival in 2001. “There is no point waiting for the nickel much as you want to market, but if you
price to get to the point where you think don’t get results the market won’t listen.
However, there have been few com- you need it; I won’t be drawn in to where My experience with institutions and build-
panies to handle nickel market volatility [we’d like it], but it is not far off where we ing institutional ownership of Western
with aplomb and eventually in mid-2016 are. There is no point in waiting for that Areas is certainly something I can bring
Mincor started a hard push on its gold to happen and then start a drilling pro- across. It’s important to be hitting our
strategy. gramme and start off-take negotiations promises like we did at Western Areas
and study work,” Southam said. where it had been 32 quarters in a row
Six months into gold production at that we hit guidance.”
Widgiemooltha and Mincor is hitting its “We are doing that work now in prepa-
straps in a region of WA hosting none ration. If you wait, you can miss a win- It will be a proud day for Southam and
other than Northern Star Resources Ltd Mincor once the company returns to sta-
(Jubilee), Evolution Mining Ltd (Mungari) tus of Kambalda nickel producer, in the
and Gold Fields Ltd (St Ives). meantime loyal shareholders can be en-
thused by exploration results from Cas-
Ore from Widgiemooltha is toll treat- sini.
ed at Westgold Resources Ltd’s facili-
ties nearby, with production of 15,000- Preceding a maiden resource an-
18,000oz gold expected in the January nouncement at Cassini in mid-2018, Min-
to June period. cor’s share price hit 47c/share, its highest
point since mid-2015.
“At $1,850/oz that provides some good
cash flow for the business which pays The resource at Cassini is 550,000t
all of our overheads, all of our nickel @ 3.4% nickel for 18,700t, with Mincor
exploration and potentially some more,” reporting its best nickel intersection from
Southam said. the deposit – MDD314: 7.17m @ 11.49%
(estimated true width 4.6m) and MD-
Mincor’s 2 g/t gold operations from D314W1: 13.07m @ 4.97% (estimated
shallow open pits are the result of the true width 9.4m) – in its latest quarterly.
company “just scratching the surface”
within the Widgiemooltha Dome. The intersections were struck 105m
beyond the resource boundary, indicat-
“We know we are in a prolific gold

Page 18 MARCH 2019 AUSTRALIA’S PAYDIRT

ing strong potential to extend the Cassini

resource.

It is early days at Cassini, however,

Southam is clearly excited by the oppor-

tunity.

“Through some pretty good explora-

tion work we have had the first green-

fields discovery in Kambalda in the last

20 years. If you have a look at the history

of greenfields exploration spend, it has

been virtually minuscule since the sell-

ing of the mines from WMC. Most of the

exploration dollars have been spent near

mine or part of the mine, whereas Cassi-

ni is a whole new belt and basal contact; Mincor hopes to re-emerge as a nickel producer
basically to find nickel sulphides in Kam-

balda you must have a basal contact and covery of Cassini, there were significant Discussions with potential nickel off-take
that is proven history,” Southam said. intersections and we have really only just parties have also started as Mincor angles
scratched the surface of that channel. towards a restart of operations.
“Quite impressively, Mincor has kept
some fantastic trigger points for a cer- “Cassini was certainly attractive and To support a restart to nickel production,
tain discovery which has held true over I could see the restart opportunities for increasing the company’s reserve base
the years so there is quite a systematic the other mines that have been effectively beyond the current 30,000t is essential as
approach to exploration. With that dis- on care-and-maintenance – principally at is a higher nickel price.

A mine enhancement study to the existing Durkin North and Ken/Mc- “We’re not that far off,” Southam said re-
Durkin North feasibility study progressed Mahon – and there are a garding nickel price.
whole lot of other targets,”
during the last quarter he said. “We also need a processing solution.
There are many options and that is around

A scoping study for offtake. My experience with Western Ar-

Cassini will be finalised eas in negotiating some quite new style

once extensional drilling offtake agreements and bringing in com-

is completed, while nickel panies like Tsingshan from China means it

oxide intersections above is certainly an area of focus for me. We do

the Durkin mine are pro- have quite a few options around of where

viding encouragement to process or whether we build our own

for Mincor as a mine en- concentrator ourselves. The two things

hancement study to the that we can control are well in control, the

existing Durkin North fea- things we can’t control are nickel price and

sibility study progressed exchange rate.”

during the last quarter. – Mark Andrews

As David Southam embarks on a new career opportu- Above all, Southam expressed sincere appreciation for
nity as managing director of Mincor Resources NL, he being afforded the opportunity to work with a “great
took time out with Paydirt to reflect on the past eight bunch of people” at Western Areas who were integral
years as executive director of Western Areas Ltd. in some of the key moments for the company.

“I always push myself hard and it has always been Southam pinpointed breaking the shackles of debt,
an ambition of mine to run a company. There are lots buying Kagara’s nickel assets and more recently the
of opportunities that come your way when your team $24 million purchase of Cosmos – “one of the best
has success like we did at Western Areas. I suppose asset deals in recent times” – and negotiating off-take
I have nickel blood in me, I worked at Western Mining agreements as particular highlights experienced with
and Western Areas and then I saw the opportunity at Western Areas.
Mincor, where it sits in terms of value and potential
upside,” he said. “I guess we really caused a bit of industry disruption
in that we are selling nickel concentrate to a stainless
“That excited me and it is a very strong geological steel producer; the first deal of its kind after three
company. It has a pretty good reputation with peo- years researching and working with our Chinese part-
ple in the markets and that opportunity with a good ner. Then we also consummated a very good deal with
board...it was time to go, but also from a Western Ar- BHP Nickel West and that really set the company up
eas perspective it gives people that were working with well in difficult times in nickel pricing,” Southam said.
me an opportunity to grow at the company.”

AUSTRALIA’S PAYDIRT MARCH 2019 Page 19

COVER

A time to fund:
Battery Minerals zeros in

on Montepeuz

Exactly 10 years ago, David Flanagan was
watching the first of many iron ore loaded ships
leave Port Hedland for China as Atlas Iron emerged

as the hottest stock rising on the ASX.

Page 20 MARCH 2019 AUSTRALIA’S PAYDIRT

It was the high point of a remarkable Urbix Resources LLC has off-take and other agreements to maximise any
story which disproved armies of scep- downstream value-added opportunities for Battery’s Montepeuz graphite
tics who believed it impossible for a junior concentrate. Purification and spheroidization test work has been completed
miner to establish a business in an iron in Arizona and a scoping study on outcomes expected in early Q3. Urbix’s
ore space dominated by the majors. At- advanced technology includes a unique environmentally/cost conscious
las’ impact on the sector was confirmed purification method as well as intellectual property developments in applications
at Diggers & Dealers that year, with the such as proprietary lithium-ion battery cells, graphene products, lightweight
company recognised as the Digger of the concrete additives and other composites and energy storage materials
Year for 2009.
“Going back to the Atlas days, we found
Reflecting on that feat with Paydirt at ourselves with piles of money but waiting
Pemba Airport, Mozambique, after host- on approvals. Here in Mozambique, we are not
ing a tour to Battery Minerals Ltd’s Mon- waiting for approvals, it is the markets.
tepeuz graphite project, Flanagan recalls
a different time in the history of the re- ing at Montepeuz. groups to finance our projects, which we
sources sector. Shortly after completing first phase never would have had access to if that
[RCF] deal had been completed.”
“We had a massive paradigm that we due diligence, RCF pulled out of the ar-
were challenging, there was massive ris- rangement citing: “The graphite market Despite a rugged December quarter
ing demand for iron ore and now it feels no longer meets investment criteria”. – one of the worst financial quarters in
like that moment could be about a year 90 years – Flanagan said the company’s
off [for graphite],” Flanagan said. Having RCF’s proposed term sheet loan and first round pitch to banks on the back of
led Atlas as managing director during its equity investment in Battery was agreed the independent documentation was well
development and early production years, on May 3 2018, before the deal was received.
he is in the same role at Battery Miner- pulled on June 13, leaving Montepeuz’s
als and is intent on recreating the experi- phase one capex in the air. He said up to eight banks had signed
ence only in a different commodity, new CAs, two of which had visited site in re-
country and with a wealth of experience “RCF not completing that funding cre- cent times with another two scheduled to
behind him. ates funding uncertainty, which is not a visit Montepeuz at the time of print.
good thing. We knew it wasn’t certain, but
“For me, it is a little bit different. I went we didn’t expect them to exit so quickly. “I would expect that over the next few
charging into [Atlas] never having done it weeks we will start exchanging term
before. Going back to the Atlas days, we “I am not saying it was actually for the sheets with probably four or five of them.
found ourselves with piles of money but better, but maybe in five years’ time you It has already started with one party and
waiting on approvals. Here in Mozam- never know; a sliding doors moment per- from there we will move to documenta-
bique, we are not waiting for approvals, haps for us,” Flanagan said. tion. Once we have concluded documen-
it is the markets.” tation we will tell the market and at that
Battery has since regrouped with a point we would have already satisfied the
If the current graphite market dynam- sense of optimism in front of it. conditions precedent to be able to ac-
ics were as clear-cut as iron ore in 2009, cess that money,” Flanagan said.
Battery may already be in operation at “Ultimately, we went back and created
Montepuez, about 200km from the sea- a whole heap of independent documents, Investor sentiment towards graphite
side city of Pemba. which from an independent perspective since interest piqued in the period 2013-
verified anything that anyone had con- 2017 has waned, as lithium and cobalt
While Flanagan believes telling the cerns about at both graphite market and have become focal points in the EV/bat-
company’s graphite story is much easier project level,” Flanagan said. tery revolution.
today than 12 months ago, getting mar-
kets in-sync is another proposition. “That has now positioned us to provide Interest still remains in lithium and
a really strong argument on which to of-
“It is about getting equity and capital fer the opportunity. We are now talking to
markets to align with the physical mar-
kets and then with the actual project
milestones that you are going to deliver.
At the moment, our project has nothing
standing in the way of a mine starting, it
is just financing,” Flanagan said.

Of course, Battery believed a debt
($33.3 million) and equity ($6.7 million)
arrangement with Resource Capital
Funds (RCF) would go some way to ful-
filling phase one graphite production tar-
gets at Montepuez.

In a research note released after the
RCF agreement, Hartleys estimated $85
million would be required for Montepeuz.

According to Hartleys’ note on June 1
2018, it assumed a capital raising of $20
million would be needed after it factored
in RCF’s commitment, tranche one of a
$20 million capital raise completed and
a $5 million SPP (subject to shareholder
approval back then) for Battery to get go-

AUSTRALIA’S PAYDIRT MARCH 2019 Page 21

COVER

cobalt, while rare earths, copper, vana- Syrah’s progress presents a quan- ah in Mozambique is something which
Battery can leverage from, while fore-
dium, nickel and the like have emerged dary for those graphite companies hop- casts from Benchmark Minerals Intelli-
gence (BMI) indicating a potential flake
as commodities of importance in the In- ing to emulate it. On the one hand, its shortage by 2021 certainly enhance the
prospect of near-term projects like Mon-
dustrial Revolution 4.0. large production profile has created an tepeuz attracting requisite investment.

The push to secure supply of such overhang for those below on the devel- There is a host of ASX companies on
the East African coast – from Mozam-
commodities has sharpened and the rel- opment ladder. However, if it fails to live bique up to Tanzania – sitting on “super
high-grade, quality graphite” at varying
ative lack of success of graphite hopefuls up to promise, the entire graphite devel- stages of development that Battery con-
siders peers in the field.
to date means there is growing pressure opment sector will suffer from a bout of
“The whole region literally doesn’t
on supply of the bulk commodity. severe market scepticism. have bad graphite; it is all good,” Flana-
gan said.
Syrah Resources Ltd currently hosts Flanagan would rather bask in the re-
“The differentiator is how close you
the world’s largest graphite resource at flected glory of the bigger neighbour. are to production, whether you have ap-
provals, the technical understanding you
Balama, also in Mozambique. “Syrah’s success does overflow into have of your project, customers, port al-
locations and access to cash.”
Syrah has indicated production of us to some extent; the more successful
Battery sits comfortably on most
250,000t of natural graphite in 2019, sub- they are, the easier everything is for us,” fronts, with 100,000 tpa of graphite con-
centrate for export allocated at Pemba
ject to market conditions. Flanagan said. port for Battery, while a mining licence
at Montepeuz has been granted and off-
The Balama deposit is the world’s lead- “There are a lot of people in the market take agreements are in place.

ing producer of high-purity graphite, but that have been trained, educated, sup- “Fast-forward six months and we hope
to have completed financing, completed
the mine remains in its infancy as com- ported and helped by Syrah, so net-net equity funding and have all shareholder

mercial production was only declared they have done a wonderful job and I

“on January 14 after a series of ramp-up wish them every success.”
The graphite canvas prepared by Syr-
delays.
There is absolute intent out there to engage
with us, there is money out there, but I still
think the market has a way to go to get back to
where we were this time last year.

Battery has a global resource of 152.5mt
@ 8.5% for 13.03mt contained graphite
at Montepeuz and Balama Central

Pemba port is about 200km from Montepeuz. Battery has locked in 100,000 tpa of export capacity
Page 22 MARCH 2019 AUSTRALIA’S PAYDIRT

The public school built by Battery in the
community of Nkewene, 7km from the
Montepeuz project, was opened in
February

AUSTRALIA’S PAYDIRT MARCH 2019 Page 23

COVER

Battery hopes to be more than a graphite company and is

seeing signs of other minerals at Montepeuz

approvals in place,” Flanagan said. “All “I reckon that the tion profile in 2025 could be in excess of
long lead items would have been ordered graphite market is 200,000 tpa at a forecast basket price of
and starting to arrive on site. We’ll have short. It’s in undersupply $US1,300/t.
120-150 people on site and if someone
would turn up to site it would look like the and graphite prices The basket price has been weighted
plant is finished because there is not a lot against BMI’s average yearly prices.
of plant to put in; it will be fully strapped
and ready to put in,” Flanagan said. “I reckon that the graphite market is
short. It’s in undersupply and graphite
“There are people raising money, so
there is money out there and the groups haven’t fallen. It is well prices haven’t fallen. It is well known that
that are talking to us have priced the risk known that Syrah has Syrah has had to discount some cargo to
and are seeing whether they can make sell them, but the benchmark itself hasn’t
money. There is absolute intent out there
to engage with us, there is money out had to discount some fallen. Some of the other commodities
there, but I still think the market has a way cargo to sell them, but have fallen, so I think there could be sig-
to go to get back to where we were this nificant upside in graphite price,” Flanagan
time last year.”
the benchmark itself said.
Battery has indicated it would take 15 hasn’t fallen. “You have to build another five Syrahs in
months from finance to first export of its
11% TGC from Montepeuz (12% TGC for the next seven years [to satisfy demand].
the first 18 years) at a rate of 50,000 tpa Trying to build just one of the biggest
in stage one from a modular 500,000 tpa
plant over a mine life in excess of 50 years. mines in the world will be hard enough let

C1 opex for the first 10 years has been for Montepeuz 96% TGC concentrate is alone five in the next seven years. What
estimated at $US361/t with EBITDA of
$US30 million a year suffice to payback $US1,064/t. you have to do is stimulate a large number
capital costs in two years.
Assuming Montepeuz stage one is of new producers and that will happen as
Based on BMI’s October 2018 FOB Chi-
na graphite spot prices, the basket price nailed down, Battery plans on a quick as- the price goes higher and the equity mar-

cension in the graphite market with the kets go bananas.”

introduction of Montepeuz stage two and Montepeuz phase one and Balama

stages one and two of its second project, Central alone have combined mine lives in

Balama Central, potentially realised by excess of 85 years, meaning Battery can

2025. pay full attention to locking down capital to

The company’s combined potential ensure its graphite reaches the market.

96% TGC concentrate CIF China produc- With fundraising the current focus, the

Page 24 MARCH 2019 AUSTRALIA’S PAYDIRT

“We don’t have a super long time on the planet,
so you kind of want the things that you are doing
to have an impact. Going to Mozambique to build a
mine, make money, be involved in the global [energy]
thematic and change the lives of people is a real driver.

geologist in Flanagan is keeping a lid on for finding capital from myriad sources.

the temptation to explore other oppor- In August 2009, he told Paydirt the Atlas

tunities, including vanadium potential, philosophy lay in having multiple parallel

across the company’s properties. strategies working towards the corporate

“Every now and then we find sulphides goals.

in some of the drilling and we have stud- “We have done 30 deals since we have

ied the assemblage quite closely. We listed and we’d like to think that those

sort of know where these prospects who did deals with us would like to do

are and some of the other prospects in another deal, and pass on the message

Mozambique and we are called Battery to others,” he said at the time. “The more

Minerals, we are not just about graphite,” people you have conspiring with you to

Flanagan said. succeed, the greater chance you have of

“Fast-forward five years and I wouldn’t success.”

be surprised if we have another asset At Battery, he has people backing him

that is well advanced and that sharehold- to deliver the first priority for Battery; pro-

ers love because it has real wow factor.” ject funding for Montepeuz.

There are few in the industry with the While people’s confidence in Flanagan

ability of Flanagan to present the “wow” stems from the success achieved at At-

factor to shareholders. las in the favourable jurisdiction of West-

At Atlas, Flanagan built a reputation ern Australia, it is timely to remember he

had a career before Battery chief operating officer
Ben Vanroon
heading the iron ore
looked at 20 other opportunities around
juggernaut. the world and after choosing to be part
of the graphite in Mozambique narrative
During the mid- to has had to learn on the fly about both
commodity and country.
late-1990s Flana-
So far, he has learned that Mozam-
gan had vast expo- bique is “absolutely open for business”
and relied on the likes of Battery chief
sure to West Africa, operating officer Ben Vanroon to drive
the project in country.
namely Ghana,
Flanagan said he’d like to spend more
Guinea and Burkina time in country, however, attending to
customers in China and North America,
Faso, with Coffey in while also servicing the capital mar-
kets meant Vanroon took charge on the
mining and explo- ground in Mozambique.

ration project man- “I had a ballpark understanding of the
project before I came in and the project
agement. is different now to what it was. If you get
someone like Ben and throw them at the
“People only got project...he’s just so dynamic and contin-
ues to make improvements on the pro-
to see me operate ject,” Flanagan said.

after I listed Atlas; I “When I backed out of Atlas and looked
around I really wanted to be involved in
did do other things building something and an opportunity
to develop a high-grade deposit that is in
before that and demand which will really generate good
cash flow and profits for shareholders;
know how to build that’s a given.”

teams in Africa. With global energy consumption worth
$10 trillion a year, exposure to the renew-
I didn’t start with

nothing, I started

with Metals of Africa

and there were al-

ready good people

in there. It is just

about resourcing

them, backing them,

raising money and

getting sharehold-

ers on board and

building the project,”

Flanagan said.

Prior to joining

After class its back to the field for some students Metals of Africa
to help prepare crops in 2016, Flanagan

AUSTRALIA’S PAYDIRT MARCH 2019 Page 25

COVER

able and new energy industries is an sources projects under way here right Syrah’s Balama project has provided
area of great attraction for Flanagan, now just in Mozambique, it is going leverage for other graphite hopefuls
who is hell-bent on making the most of to transform the nation for the better.
the chances he’s afforded. African countries are different and in Mozambique
have their nuances. Often you are
“We don’t have a super long time dealing with people with low incomes,
on the planet, so you kind of want the low standards of education and there
things that you are doing to have an im- can sometimes be governance chal-
pact. Going to Mozambique to build a lenges, but one of the core skills is the
mine, make money, be involved in the patience in dealing with certain things,
global [energy] thematic and change it is about showing genuine and au-
the lives of people is a real driver,” Fla- thentic dedication to helping the local
nagan said. people.”

“I absolutely believe that mining has – Mark Andrews
created opportunity here in Africa and
it will continue to. If you look at the re-

David Flanagan with Sunni Resources’ – Battery’s
in-house subsidiary – geologist Geraldo Lembura

and field technician Frederico Joao

Page 26 MARCH 2019 AUSTRALIA’S PAYDIRT

“You’d never know
all this used to
be a mine.”

Australian miners and farmers are working together towards a common goal.
Mining land is being rehabilitated to graze cattle and grow crops. When the mining is
gone, the rehabilitated land will be here to stay – preserving it for future generations.

There’s more to Australian mining.

ZZZPLQHUDOVRUJDX

BATTERY MINERALS PREVIEW

German carmakers start EV engines

Electric vehicle figures rose to 5.6 million in early 2019, a However, Püttner has little doubt if the manufacturers ac-
64% increase on the previous year and the trend appears cept the trend, they will breach the gap with Tesla and others.
set to continue.
“If they do it seriously, capacity will grow very fast. It’s their
According to data produced by the German Centre for profession and they are very experienced in it,” he said.
Solar Energy and Hydrogen Research Baden-Württemberg
(ZSW), China is the undisputed leader in e-cars with a total Full German industry adoption of EVs, batteries and bat-
of 2.6 million EVs in the country, more than double the 1.1 tery cells will likely fuel a seismic shift in global market dy-
million in the second biggest market, the US. In contrast, Eu- namics but will also increase questions over security of sup-
rope’s largest market, Germany, has just 142,000 EVs. ply.

According to ZSW, Tesla accounts for the largest number Püttner said there were already concerns among German
of newly registered vehicles, nearly 234,000, followed by the manufacturers about the availability of battery materials.
Chinese brands BYD and BAIC. The most successful Ger-
man manufacturer was BMW, taking sixth place with close to “The manufacturers really care about the long-term avail-
87,000 electric cars, followed by VW in ninth place. ability of materials,” he said. “They have tried to conclude
long-term treaties,
Andreas Püttner, research associate in Systems Analysis especially for cell sup-
at ZSW told Paydirt it was likely these figures would change plies. Already some
as companies such as BMW and VW invested in their EV manufacturers say EVs
fleets. He said the German manufacturing giants’ response won’t get cheaper be-
to the rise in EVs had thus far been slow. cause the materials are
in such high demand.”
“Their move into EVs has been driven by the success of
Tesla,” Püttner said. “There was a bit of arrogance from the Ethical issues are
German companies to stay focused on combustion engines also being raised with
because they were technological leaders in that space and cobalt in particular
they underestimated Tesla’s ramp-up capabilities.”
causing consternation in Europe.
Now, with European governments increasingly legislating “There is a problem with the ethical
for greater EV market penetration, BMW and Volkswagen
are preparing to act. nature of cobalt supply coming out of
DRC, the car manufacturers are aware
“By 2020, the EU says all new cars can have a maximum of this and are trying to reduce the use
of 95g of CO2 per kilometre so there is a long way to go if the of cobalt and find more ethical sourc-
car manufacturers want to reach those goals,” Püttner said. es,” Püttner said.

The German Government was also slow to respond, While he couldn’t provide clarity on whether companies
worried about the impact the EV revolution would have on such as BMW and VW were looking at investments in mining
employment in car manufacturing. However, as the trend to- companies, Püttner said there was evidence of manufactur-
wards EV adoption grows, it is designing policies to ensure ers heading upstream.
the country’s auto industry is not left trailing China and Tesla.
“They are certainly looking for cell suppliers and who sup-
“There will be lots of value-add industry lost from the de- plies them,” he said.
mise of combustion engines and the Government hopes
Germany can produce its own batteries and battery cells in The Government is also playing an active role.
the future to replace those lost jobs,” Püttner said. “Germany has signed a treaty with Bolivia through which
from 2021 lithium will be available for German battery cell
ZSW managing director Prof. Frithjof Staiß believes it is producers and it is EU policy is that car manufacturers invest
imperative that Germany takes its EV capacity further up- in cells as well. Government wants to eliminate the risk of
stream. China restricting access to batteries.”

“The German automotive industry should bring cell manu-
facturing capabilities of its own to this multibillion euro market.
This way, it could secure batteries’ high share of value-add in
electric cars and be less dependent on offshore supplies,”
Staiß said.

European consumers are also adding pressure to domes-
tic manufacturers with EV registrations in Europe climbing
steadily but still far behind China and the US.

Norway boasts the most EV registrations with 86,340 ve-
hicles on the road in 2018, compared to 67,500 in Germany,
59,910 in the UK and 53,750 in France.

Püttner believes new policy initiatives and consumer
awareness about climate protection will continue to drive
demand placing the German car makers under pressure to
deliver; a task that they are currently struggling with.

“In Germany, there are not a lot of cars available yet,” he
said. “Manufacturers are telling consumers they must wait
6-12 months for the vehicles.”

Page 28 MARCH 2019 AUSTRALIA’S PAYDIRT

Aussies primed for Euro drive

Having seen Tesla and Chinese competitors steal a march project in Czech Republic boasting the largest lithium resource
on them, Europe’s car manufacturers may turn to an un- on the continent. Managing director Keith Coughlan told Pay-
likely source for their battery materials supply; their own con- dirt his company had a clearly defined strategy to supply the
tinent. burgeoning European battery market.

BMW and VW are playing catch up in the EV market (see “The global battery industry continues to change rapidly be-
page opposite) and their ability to reach emulate the likes of cause until recently, there was very little battery manufactur-
Tesla, BYD and Nissan could be hampered by a lack of critical ing outside Asia,” Coughlan said. “However, the likes of LG,
materials. Samsung and others are beginning to build significant battery
manufacturing facilities in Europe and at the same time there
China is very strong government support for the start-up of an inde-
dominates the pendent European battery industry.”
production
of lithium-ion Even with battery factories on the continent, European end-
batteries with users will still likely be reliant on Asia for precursor and cath-
Korea and Ja- ode material.
pan second
and third. Chi- “If it is just assembling the batteries in Europe, that means
na currently the material is still being shipped in,” Coughlan said. “But as
has 90% of the world’s they make begin making batteries in Europe, having a local
lithium supply locked up in source of supply makes sense.”
contracts and holds domi-
nant positions in graphite, Talga Resources Ltd managing director Mark Thompson
cobalt, nickel and rare has also recognised the growing concern in Europe over fu-
earths. It means the Eu- ture battery mineral supplies. Talga has been developing its
ropean car makers will Vittangi graphite-graphene project in northern Sweden for
have to find new sources six years. Having spent much of that time investigating sup-
of these materials if they ply chains and industrial trends on the continent, Thompson
want to lessen is convinced Talga has a ready-made market on its doorstep.
their reliance
on Asia. “I don’t know why battery makers and car manufacturers
A host of think they can continue to source materials out of Asia and Af-
Australian jun- rica, there is a lot of risk attached,” Thompson told Paydirt. “In
ior miners have the battery space, Europe will go from having zero to 100GW
anticipated hours and it currently imports 100% of its graphite from Asia
the trend and so, clearly, there is interest from government and investors for
are intent on local sources of materials. Battery producers would like supply
providing the from Europe because that provides security of supply.”
European car
manufacturers Offering supply from within the continent should also endear
with their own companies such as European Metals and Talga to potential
internal supply project financiers and investors.
of critical miner-
als. “The early conversations we’ve had with advisors suggest
The last three we can go for 60/40 debt-to-equity on good terms,” Coughlan
years have said. “It is to do with sovereign risk. Most of Europe is consid-
seen ASX-list- ered the developed world and once you get a licence, it won’t
ed companies get taken away, so the cost of debt funding is much lower.
such as Infin-
ity Lithium Corp “Also, there is a massive amount of public money available
(Spain), European Lithium Ltd (Austria), Jadar Lithium Ltd for industrial projects and particularly clean energy projects;
(Serbia), European Cobalt Ltd (Slovakia), Lithium Australia Ltd export credit agencies, EU grants, soft debt; they all enhance
(Germany) and Pursuit Minerals Ltd (Sweden) pick up battery the potential economics of the project.
mineral assets throughout the continent.
European Metals Holdings Ltd is one of the most advanced “It adds up to a massive political tailwind.”
of this European battery minerals club with its Cinovec lithium Thompson agrees.
“The incentives in place for batteries in Europe continue to
be expanded and I can see our project being pushed along
because of that,” he said.
Equity investors are also attracted to the European story,
according to Thompson.
“The main interest from investors is about the advanced
materials we offer; the clean tech story,” he said. “We’ve got
significant shareholders from Europe in the last two years. Our
register is more than 20% European now. From that, there is
an obvious line into further funding opportunities and having
a project in Sweden certainly exposes the company to local
sources of finance that otherwise would not available to you.”

– Dominic Piper

AUSTRALIA’S PAYDIRT MARCH 2019 Page 29

graphite tin cobalt

nickel lithium
copper

manganese vanadium

rare earths

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David Flanagan John de Vries
Managing Director CEO & Managing Director

Battery Minerals Limited Black Rock Mining Ltd

Trevor Benson Bert Witkamp
Executive Director IEA HEV Operating Agent

Walkabout Resources Ltd Task 40 CRM4EV

Andrew Scogings David Christensen
Director Managing Director
KlipStone Pty Ltd Renascor Resources Ltd

Scott Williamson Andrew Radonjic
Managing Director Managing Director
Blackstone Minerals Ltd Venture Minerals Ltd

To present, exhibit or attend as a delegate please contact Namukale Nakazwe-Msiska
on (+61) 8 9321 0355 or email [email protected]

BATTERY MINERALS PREVIEW

Blackstone back on
at Silver Swan South

Twelve months ago engagement be- timent is gradually improving, raising Scott Williamson
tween Blackstone Minerals Ltd and money is still a major challenge.
an agent for a Korean cathode manufac- Kalgoorlie and cobalt in Canada.”
turer started at Paydirt’s Battery Miner- “Hopefully after we pull off the first deal Silver Swan South, near the Plutonic fa-
als Conference. we will have enough money for the next
12-18 months without being dilutive at our cility which is being upgraded, is in green-
This year’s coming of the Battery Min- current share price. We hope to be able to fields pastures and the level of interest
erals Conference could see Blackstone secure a deal which will enable us to go shown by the Korean group is indicative of
and its Korean suitor go public with what out and do our work and test targets,” Wil- the need to secure supply.
they have been working on for the last liamson said.
6-9 months. “Although the interested party is a small-
“If we didn’t go down this path we er group and a cathode manufacturer they
“We met a Korean agent at the Battery would’ve had to wait [for better market are still directly linked to the EV revolution.
Minerals Conference last year who was sentiment] because right now there is no They really do need more cobalt and nickel
interested in the cobalt in BC, Canada. way we would be able to raise significant than they are able to find; they need three
The original idea was initiated in March capital in this market.” or four Nova-Bollingers,” Williamson said.
[2018] and Blackstone arrived in Korea in
July. This group is a long-term strategic Considering the state of the market, Wil- – Mark Andrews
investor and they were originally interest- liamson isn’t taking anything for granted,
ed in a deal for the cobalt, but became but is fairly confident that a deal can be
aware of our nickel potential at Silver struck and drilling at Silver Swan South
Swan South in Kalgoorlie,” Blackstone can start this month.
managing director Scott Williamson told
Paydirt. The deal at Silver Swan South is likely
to only concern the nickel potential, there-
The fact that Blackstone is in advanced fore, Blackstone will need alternative fund-
discussions with one particular Korean ing to test the gold targets, which it is also
cathode manufacturer interested in its keen to do.
cobalt and nickel potential and is fielding
significant interest from other battery- “We haven’t drilled at Silver Swan South
focused players in the BC Cobalt project at Kalgoorlie for 12 months because we
(Little Gem’s first hole intersected 3% co- have been focused on Canada. But, once
balt and 44 g/t gold) is a boon consider- we start drilling again at Silver Swan South
ing the market malaise juniors are in. then very quickly we can also follow-up
with drilling in Canada in April-May,” Wil-
The back-end of 2018 was a shocker liamson said.
for market participants and while sen-
“Essentially, we will have three sources
of news flow; nickel in Kalgoorlie, gold in

Silver Swan South is along trend from the 655,000t
@ 9.5% Silver Swan nickel sulphide deposit

Page 32 MARCH 2019 AUSTRALIA’S PAYDIRT

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BATTERY MINERALS PREVIEW

Nickel rally fades, EV buzz doesn’t

Was February’s rally another false tion by treating stocks of ore. counted for just 85,000t, or 4% of global
dawn for the nickel market? This long-running dispute may yet come demand, in 2018, according to Simon
The uptick in the first week of Febru- Moores, managing director of Benchmark
ary took nickel to a five-month high of into even sharper regulatory focus if, as Mineral Intelligence.
$US13,350/t on the LME but a week later it seems inevitable, the Brazilian authorities
had gone into sharp reverse, closing Feb- look for a step-change in Vale’s social and But demand from EV batteries “is set to
ruary 12 at $US12,445. environmental impact on its home base. grow by between 30-40% a year, making
it the fastest growing battery raw material”,
The trigger for the price surge was con- Moreover, Brazil shows every sign of Moores told a US Senate hearing on min-
cern that Brazilian producer Vale SA’s looking for a fundamental policy reset erals dependency on February 5.
nickel operations would suffer some sort across the spectrum of its minerals re-
of knock-on effect from the devastating source sector. Not only is nickel one of several existing
tailings collapse at the company’s Bru- key metallic inputs to EV batteries, but a
madinho iron ore mine. Brazil’s National Mining Agency is talk- shift towards high-nickel content in battery
ing about banning all tailings dams similar chemistry will accelerate usage exponen-
Such fears have proved unfounded… to that which collapsed at Brumadinho. tially.
so far. There may still be ramifications for
Vale’s Onca Puma ferronickel operations There are 88 of them, according to Ed- The so-called NCM811 battery cell tech-
in the state of Para. uardo Leão, a director at the agency. nology, comprising eight parts nickel to
one part cobalt and one part manganese,
But nickel’s ability to rally at all in the cur- Lacking any confirmation as to which is still in its formative years.
rent gloomy macroeconomic dams may have to be removed or when,
environment is testament to it’s impossible to say what the potential im- But, according to Moores,
continued investor interest in over 90% of new lithium-ion
the metal’s potential demand pact might be on other operators. battery capacity plans to use
boost from the EV revolution. But it’s worth noting that Vale is not such high-nickel chemistry.

Even after the rapid descent the only nickel producer in Brazil. Anglo This is the core of nickel’s
from early February’s highs, American plc also operates two ferron- electric bull narrative, one of
nickel is still the best performer ickel plants with combined production of a supply chain that is unpre-
among the core LME metals 42,000t in 2018. pared for a fundamental usage
pack. It is up 14% since the shift away from stainless steel
start of January, compared There may yet be another nickel chapter to batteries; a shift that will be
with zinc’s 10% gains. to Vale’s dam tragedy. compounded by the need for
the “right sort” of high-grade
Although most analysts Lacking any concrete news about what, nickel to meet battery-makers’
were quick to dismiss fears if any, impact the Brumadinho dam col- strict chemical requirements.
that Onca Puma would be im- lapse might have on Onca Puma, the Vale
pacted by the regulatory scru- effect on the nickel price has almost com- The story took a heavy
tiny surrounding all of Vale’s pletely dissipated. knock towards the end of last
tailings dams in Brazil, nickel’s year when China’s Tsingshan
price reaction wasn’t irrational. But nickel’s continued outperformance Group, already a nickel and
relative to other metals such as copper is stainless steel powerhouse in
Onca Puma, which last year testament that it hasn’t given up on its EV Indonesia, said it planned to
produced 25,000t of nickel in dreams. build a plant to produce 50,000
ferronickel, is itself the subject tpa of the “right sort” of nickel
of a multi-year battle with environmental It’s easy to understand why, given the using a different processing route.
authorities in Brazil. constant drip-drip of nickel-positive news Initial shock has given way to scepticism
and commentary. that Tsingshan can deliver on such an am-
A Brazilian court last November ordered bitious target any time soon.
Vale to stop mining at Onca Puma and to Nickel usage in lithium-ion batteries ac- There is still an electric buzz in this
pay damages to two indigenous tribes that market and one which, as last month’s
live in the area. mini rally showed, can easily be sparked
into life.
The prosecutor-general’s office said Nickel has the largest speculative long
Vale would not be allowed to resume min- positioning of any of the core LME-traded
ing until it met certain environmental re- metals, according to LME broker Marex
quirements and presented plans aimed at Spectron.
mitigating the impact of its operations on As of February 7, investors’ collective
locals. long position was relatively modest at 8%
of open interest but still a standout rela-
Vale rejects all claims that Onca Puma tive to the almost complete lack of inves-
harms either the environment or the peo- tor engagement in copper right now or
ple living nearby and is appealing the the huge speculative short weighing on
court’s decision. aluminium.
Investors’ enthusiasm in London, how-
The exact status of operations is uncer- ever, is not being matched in China.
tain.

A similar order to stop mining was issued
in 2015 for the same reasons as now. Back
then, Vale maintained ferronickel produc-

Page 34 MARCH 2019 AUSTRALIA’S PAYDIRT

Even though Chinese speculators have gests a pick-up in Shanghai nickel open But the rally is a reminder that on the
a history of trading nickel as a steel deriv- interest may reflect “signs of some specu- London market it doesn’t take much to re-
ative, the Shanghai nickel contract shows lative short selling”. kindle the EV nickel fires.
no signs of spill-over from the Dalian iron
ore contract, which shot to record highs As of now, Chinese investors seem a They are still smouldering, awaiting the
in February. Indeed, Marex Spectron sug- lot more sceptical of the EV bull story for next spark.
nickel than their Western counterparts.
– Andy Home, Reuters

Tin use in batteries may rise
to 60,000 tpa by 2030: ITA

Tin could see a surge of new demand The industry group did not give a fore- “Three anode materials technologies
from lithium-ion batteries for EVs and cast of overall tin consumption in 2030, are highlighted that could each reach
energy storage of up to 60,000 tpa by but it has forecast demand of 357,000t 10-20,000 tpa by 2030 if they gain mar-
2030, the International Tin Association for this year. ket share in a highly competitive market.
(ITA) said. This could at least double by 2050,” ITA
The ITA tracks global research and said in a statement.
Investors have been excited about the patents for tin markets and it has seen
prospects for increased consumption of rising interest in the metal for energy ma- Last November, the ITA said it expect-
other metals, such as nickel, due to an terials and technologies, according to a ed the global tin market to move into a
expected ramp up of EVs, but there has report by the group. surplus of 500t this year from a 7,500t
been less mention of tin, currently mainly deficit in 2018, mainly due to weaker de-
used to make solder for the electronics New uses are mainly in high-capacity mand in top market China.
industry. anode electrode materials, but also in
solid-state and cathodes, it added. – Eric Onstad, Reuters

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Lepidico flows Having already defined a unique
into hydroxide route to lithium carbonate
and carbonate production from micas and
markets phosphates, Lepidico Ltd is on the
verge of another breakthrough in
processing, this time in the lithium
hydroxide space.

Lepidico has built a reputation as one of the burgeoning produce lithium carbonate without producing a sodium sulphate
Australian lithium industry’s most dynamic performers, by-product.
formalising its patented L-MaxTM process to produce lithium
carbonate from lithium micas and lithium phosphates. “Subsequent feedback from several prospective customers was
that lithium hydroxide was their preferred chemical, so Strategic
The company is on the cusp of commissioning an L-MaxTM pilot Metallurgy set aside the lithium carbonate research work and
plant in Perth, Western Australia to further define the process went searching for a solution to produce lithium hydroxide that
flowsheet but over the course of the last 12 months, Lepdicio has didn’t produce sodium sulphate as a by-product.”
identified further hydrometallurgical opportunities.
The result is the LOH-MaxTM process, which Walsh describes as
“In mid-2018, we were undertaking a group level risk review – “an elegant solution” to produce the much sought-after lithium
including mining and processing projects,” Lepidico managing hydroxide product.
director Joe Walsh says. “While we were confident we could
reach an offtake agreement for the sodium sulphate by-product “Strategic Metallurgy developed the LOH-MaxTM process and
generated from the Phase 1 plant in the early years, our analysis Lepidico entered into an exclusive use agreement with worldwide
showed that the market is mature and contract in the years to marketing rights,” Walsh says.
come, resulting in demand drying up.
Although understandably guarded about the chemistry behind the
“This would present a significant disposal risk to the company.” process, Lepidico is confident the LOH-MaxTM process will deliver
both capital and cost savings in hard rock lithium conversion
Lepidico and metallurgical consultant Strategic Metallurgy Pty Ltd plants.
began searching for alternative processes which could be applied
at the L-MaxTM process intermediate product, lithium sulphate, to “All of the currently proposed conversion plants in Western
Australia appear to be using sulphur-based chemistry with
Page 36 MARCH 2019 AUSTRALIA’S PAYDIRT

Lepidico offer’s something unique to both lithium
equity investors and to the lithium industry.

lithium sulphate as an intermediate compound,” Walsh says. “So, MaxTM and lithium carbonate via L-MaxTM,” Walsh says.
LOH-MaxTM should be applicable to all of them and we believe it
could produce significant capex savings over the conventional While Lepidico intends to apply the L-MaxTM technology for its
technology. The indications are that it will also have lower Phase 1 Plant Project which sources lepidolite from Portugal, the
operating costs and it will eliminate the disposal risk of sodium horizons for LOH-MaxTM are much wider.
sulphate.”
“It is broadening the technological suite we offer,” Walsh says.
“We are cautious about the IP so will only share the process “L-MaxTM is a solution to quite a specialist area – lithium micas
chemistry under confidentiality agreements but we have started and phosphates – but LOH-MaxTM has much broader application
talking about the processes conceptually to a number of groups, into spodumene and sedimentary hosted deposits; basically any
which have shown interest. It is early days and there is more test operation which is making lithium sulphate as the intermediate
work needed.” compound in the conversion plant.”

Aiding Lepidico’s ability to further refine the LOH-MaxTM process Further breakthroughs on the LOH-MaxTM process could afford
will be its fully functioning pilot plant in the Perth suburb of Lepidico further leverage in a lithium market, where the supply
Belmont. chain is still being developed and is undergoing unprecedented
growth. While most other ASX-listed lithium companies have
The plant is being built to take L-MaxTM testing to small industrial focused on defining and building projects capable of producing
scale. The innovative L-MaxTM process – also developed with lithium mineral concentrates, Lepidico could find itself inserted
Strategic Metallurgy – leaches lithium from non-conventional further up the value chain.
and relatively uncontested sources such as lithium micas and
phosphates. “I think Lepidico offers something unique to both lithium equity
investors and to the industry” Walsh says.
The process utilises common use, inexpensive reagents and has
proved energy efficient in lab-scale testing.

Walsh says the construction of the pilot plant will allow Lepidico
to both demonstrate the technical viability of L-MaxTM and LOH-
MaxTM, reduce scale-up risk for the Phase 1 commercial plant and
also provide material for further product development, particularly
for by-products such as amorphous silica and SoP fertiliser.

“We are building the pilot plant now and will be commissioning
from April with operations starting in May,” Walsh says. “It is
the first time we will have continuous operation of the L-MaxTM
technology using industrial equipment. Previously, everything had
been done at the lab scale. It will give us further proof of process,
providing certainty on the flowsheet and also allow us to produce
samples to help us continue our product development.”

The plant is also planned to be augmented to include the LOH-
MaxTM process at the back-end of the flowsheet.

“We are trying to work out how to include the process into our
pilot plant so we can produce both lithium hydroxide using LOH-

AUSTRALIA’S PAYDIRT MARCH 2019 Page 37

BATTERY MINERALS PREVIEW

West is best in lithium class

Amid general softness in the lithium Further afield, one of the richest spo- pursue arbitration.
demand market and brine producers dumene deposits in the world – Wha-
having to contend with rainfall events in bouchi in Quebec, Canada – faces a While the rest of the lithium world
certain parts of Latin America, the cre- testing time to get off the ground.
dentials of Western Australia’s lithium navigates such strong headwinds, WA’s
companies, including Pilbara Minerals In mid-February, Whabouchi mine de-
Ltd, are being further enhanced. veloper Nemaska Lithium Inc advised premier spodumene producer, Pilbara
market an additional $C375 million would
Last month, Orocobre Ltd reported that be required to complete construction and Minerals, is enjoying a healthy breeze
recent rains at Olaroz, Argentina, which meet the drawdown conditions provided
exceeded totals recorded in 2017 and in the streaming agreement with Orion behind its back.
2018, meant FY2019 production would Mine Finance and the senior secured
probably only be in line with FY2018 bonds closed on April 12 and May 30 Pilbara reached a significant occa-
numbers. 2018, respectively.
sion in the December quarter with the
“There have not been any material Whabouchi has been in construction
production stoppages, disruption to the for eight months, with $C138.4 million first shipment of plus-6% spodumene
import of supplies or the export of fin- spent on the mine and $C67.3 million on
ished product. However, production has the processing plant at Shawinigan. concentrate (8,800 wmt) from the Pilgan-
been lower due to dilution of the brine
feedstock,” the company said in an an- If the cost blowout wasn’t a big enough goora lithium-tantalum mine, 120km from
nouncement. whack for shareholders, Nemaska is
amidst an ugly fallout with Livent Corp Port Hedland.
Heavy rain has also been reported over a deal to supply the latter with
in Chile, which forced the shutdown of 28,000t of lithium carbonate. The 2 mtpa stage one operation at
Codelco’s Chuquicamata operation in
February, while the scarcity of water in Nemaska’s offer to repay Livent the Pilgangoora will produce 330,000 tpa
other parts of the country remains a con- $US10 million forwarded in 2017 “plus
cern for brine producers. a similar amount as a termination fee”, of plus-6% spodumene concentrate and
was rejected, with Livent stating it would
plus-5% tantalite concentrate.

All of the stage one spodumene con-

centrate is committed under offtake

agreements and the company has also

locked away stage two contracts.

Financing for the stage two 5 mtpa,

800-850,000 tpa plus-6% spodumene

concentrate operation at Pilgangoora will

be completed in Q1, with construction to

follow and commissioning scheduled for

Q1 2020. Turn to p40.

Australian
graphite

www.renascor.com.au
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EG PREP 4P.inadgde138 MARCH 2019 AUSTRALIA’S PAYDIRT 19/2/19 4:32 pm
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In comparison to 2017, conditions in the lithium market Ken Brinsden
are “relatively soft now”, according to Pilbara Minerals Ltd
managing director Ken Brinsden.

However, Brinsden says the medium- to long-term outlook for
companies such as Pilbara remain strong. He also added that
the penny had dropped across the investor base last year, as
the merit of the low-cost, hard rock spodumene to hydroxide
pathway had started to be realised.

“We started to see the reality and a lot more capital deployed
in the hard rock supply chain, including in places like WA, but
also South Korea. From a customer point of view, they see it is
a combination of high quality product from a stable, reputable
mining jurisdiction that is low-risk, that then plays to stable high
quality hydroxide production, which is what the battery industry
wants. People are understanding the merits in this supply base
and that is why WA is attracting a lot of capital,” Brinsden said.

“The battery industry is creating this enormous scale. What
used to be a big battery house way back is probably now
quite small. For example, Elon Musk made a big deal of the
gigafactory, well some of the battery making facilities in China
are now proposed to be at least double that size. As the battery
industry scales up in a way that is unprecedented, it’s implied
the raw materials industry at the front end has to do the same.
What historically might have been a big mine, 100,000 tpa LCE,
is now a baby. You now need a 200,000 tpa LCE mine to be of
critical mass to the industry and that is what we have in WA,
really big mines, Greenbushes, Pilgangoora and now Wodgina
are now the giga-mines of the lithium industry.”

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BATTERY MINERALS PREVIEW

Pilbara not only appears to have op- storage units has had a dramatic impact ment and with the State Government
erations at Pilgangoora under control, but on WA’s lithium sector and the State now working closely with the private sector we
also a firm understanding of what its cus- hosts five mines with further projects in the can get even further value-adding oppor-
tomer base wants and the dynamics un- pipeline. tunity here in Western Australia,” he said.
folding in the lithium sector.
The growth has been rapid. Governments and mining companies
To this end, the company is evaluating “We basically went from discovery to can often be at loggerheads, usually con-
the merits of pursuing a 7.5 mtpa operation production in less than four years, which cerning tax and royalty rates and/or ap-
for production of up to 1.2 mtpa plus-6% is a bit unusual in the mining game,” Brin- provals, however, in WA at the moment
spodumene concentrate and 1.1 mlbpa sden said. there appears to be a harmonious relation-
tantalite concentrate plus-5% option at Pil- “The reason that happened was be- ship in the battery minerals space.
gangoora. cause of the relatively supportive environ-
ment for mining activity, especially in the Brinsden said the State Government
Offtake discussions for stage three are Pilbara, the Government being helpful in had understood the dynamics driving the
under way, with Pilbara managing direc- the progress for environmental approvals industry, which gave WA an ultimate com-
tor Ken Brinsden telling Paydirt he envi- and of course the tailwind for financing petitive advantage in corralling foreign in-
sioned 2021 as the timeframe for the sub- terms.” vestment.
sequent expansion from Pilgangoora. That has all worked for Pilbara and it can
be argued Galaxy Resources Ltd, Tawana “I am really pleased with the Govern-
“That is now pretty much part of our (before merging with Alliance Minerals As- ment’s response,” Brinsden said. “They
thinking and we are engaged with the cus- sets Ltd), Mineral Resources Ltd at Wodgi- have been really supportive in trying to
tomer base to see what we can do to sup- na and Altura Mining Ltd have all been on capture the downstream value-added
port more product and that is where stage par with Pilbara within the short window. piece and that is good news because we
WA’s reputation as a solid mining state do have a genuine competitive advantage.
WA Minister of Mines Hon Bill Johnston blessed with mineral riches has afforded
such companies opportunity to prosper “Being a solid mining state and typically
three comes in, although in regards fund- and with the promise of a variety of raw having natural raw materials that support
ing it is too early to tell,” Brinsden said. battery minerals to be unearthed in the technology and then chemical and engi-
State, designs to become an end-to-end neering expertise to create value-added
“There is a huge natural endowment at battery minerals behemoth are advancing. products, it’s all available here and to a
Pilgangoora and therefore it can support a “I am very confident that in 10 years time certain extent we should be trying to take
bigger mine, a much bigger mine and the when we look back, Western Australia will advantage of that as much as possible. I
quality at Pilgangoora is now proven and is have become the pre-eminent supplier of am pleased to say that the Government
genuinely sought after in the market. The lithium hydroxide to the battery industry in is supportive of those initiatives, so that is
volume therefore creates an economy of all market economies around the world,” why you are starting to see people deploy
scale. WA Minister of Mines Hon Bill Johnston capital here.”
told Paydirt.
“And, then there is demand. What we “We would have also moved further Tianqi’s $700 million spend on a two-
have found as we continue to build our down the value chain in other materials stage lithium processing facility in Kwi-
customer relationships is that almost and I am very hopeful that we will see nana, Albermarle breaking ground at
universally the downstream players are much more investment in the chemical Kemerton and Covalent Lithium Pty Ltd’s
continuing to expand. If they have got Pil- processing industry to support a future proposed fully integrated operations to
gangoora product in their portfolio they battery industry here in Australia.” produce 44,000 tpa of battery grade lithi-
will look to want to take advantage of that Johnston spearheaded the Lithium um hydroxide in WA are all big ticks for the
same material type and then grow out their Taskforce in WA last year, however, it direction the State wants to head.
facilities. That has been our experience, was quickly realised the emphasis should
so the customers want to grow and sup- be on the broader picture and hence the “There is the additional investment by
port our mine expansion,” he said. taskforce culminated in the Future Battery BHP [Nickel West] into nickel sulphate and
Industry Strategy. there are other companies also talking
For the best part of 20 years, Tianqi’s “The battery industry strategy was re- about investigating further battery materi-
Greenbushes lithium mine in WA’s south- leased just three weeks ago and we are als in WA; it is a really exciting time to be in
west was the sole hard rock play of note in now implementing all those outcomes – in- the sector,” Johnston said.
the State. vestment attraction, marketing, regulatory
activity right across the board – we are A further boost for WA would be win-
The rise in demand of EVs and battery continuing to see how we can improve our ning Federal Government support to host
position to support continued investment the Future Battery CRC. A decision is ex-
Page 40 MARCH 2019 AUSTRALIA’S PAYDIRT in this sector,” Johnston said. pected to be made by the end of March,
“I do think that the community is starting however, regardless of the decision, there
to appreciate the opportunity here, that’s are enough heavyweights in the State’s re-
why the McGowan Government released sources sector ensuring the opportunity in
the Future Battery Industry Strategy; to battery minerals won’t be missed.
make sure people understand that this is
a genuine opportunity. “Chris Reed, Ken [Brinsden] and my-
“We have to be realistic, I don’t want to self and a couple of other companies, we
make it sound like everything is going to have contributed a few thousand dollars to
change overnight, but there is a genuine a grant application for downstream pro-
opportunity here. With careful manage- cessing in WA to try and create a proper
battery industry. It seems crazy not to
think that we might be able to make bat-
teries in WA but, if you don’t start you will
never get there,” Battery Minerals Ltd
managing director David Flanagan told
Paydirt.

– Mark Andrews

Mahenge

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www.blackrockmining.com.auAUSTRALIA’S PAYDIRT MARCH 2019 Page 41

BATTERY MINERALS PREVIEW

Lithium powers Africa’s
battery future

New Birimian Ltd managing director standing of the industry and it’s now Chris Evans
Chris Evans has likened the opportu- on so many radars. Even the big banks
nity to develop a large lithium resource in are starting to consider it, whereas they clearly there. For that reason, it’s a real
West Africa to the one presented to Pil- wouldn’t four years ago. You had to go to surprise to me that no one has really
bara-based companies such Altura Min- non-risk averse funds to build a lithium heard of this project, it just hasn’t been
ing Ltd only a few years ago. project.” promoted enough.”

Evans crossed over to Birimian in Jan- The final piece of the Birimian restruc- For a West African-focused company
uary, having just completed the delivery ture was completed last month when for- such as Birimian, the opportunity to pro-
of Altura’s namesake lithium mine in the mer Altona Mining boss Alastair Cowden vide feed to future conversion plants in
Pilbara, home to some of the world’s big- joined the company as non-executive countries in Europe – many of which
gest iron ore operations. chairman, with battery minerals special- have stated electrification policies and
ists Brendan Borg and Noel O’Brien as- mandates – on top of supplying to es-
Despite having no African project ex- suming other board roles. tablished markets such as China and the
perience on his resume, the opportunity US, is compelling.
to develop another large lithium resource Hepburn, an experienced corporate
– this time in gold-rich Mali – was one he finance manager, was instrumental in It is a similar proposition for other ASX-
couldn’t pass up. luring Evans to Birimian just weeks after listed lithium juniors such as Prospect
orchestrating the company’s MoU with Resources Ltd (Zimbabwe) and Force
“I see it [Mali] as being very similar China’s General Lithium Co for a poten- Commodities Ltd (DRC).
to the Pilbara three or four years ago; tial offtake deal for 55% of Goulamina’s
a well-known mining jurisdiction, never annual production over five years. For Prospect executive director Harry
seen lithium before,” Evans told Paydirt. Greaves, Africa’s lithium narrative is only
General Lithium is one of the key just beginning.
“When you strip it all back, like the Pil- offtake partners for Pilbara Minerals Ltd
bara there’s a well-known mining code at Pilgangoora. “The great beauty of Africa obviously
in place, the infrastructure is there and for all commodities is there are so many
plenty of contractors ready to build it.” Hepburn said the MoU had piqued the undiscovered deposits out there, and I
interest of the Malian Government which think lithium is really still in its infancy,”
With a new board and management is keen to diversify its mineral economy Greaves said.
team in place, Birimian is shaping as one away from its heavy reliance on gold.
to watch in 2019 with heavy promotion of “There will be some challenges obvi-
the 103mt Goulamina project a high pri- “The mining infrastructure and mining ously, firstly the ability to get to market
ority for Evans and chief executive Mark know-how is already there, Mali being a fast is going to be critical. And the very
Hepburn. mining jurisdiction, so this is not a com- remote projects with lithium, being an
plicated process,” he said. industrial mineral, I think are going to
Goulamina ranks among the world’s struggle, but there’s some interesting
largest undeveloped lithium projects and “Having good mining knowledge, an projects coming through. In time, I think,
with a reserve grade of 1.56% lithium ox- available workforce, the opportunity is the lithium market is going to be vibrant.”
ide it is also one of the richest.
Force followed the lead of another
A PFS completed on the project last
year found a 2 mtpa open pit opera-
tion producing 362,000 tpa of 6% spo-
dumene concentrate could be developed
for $US199 million, with C1 cash costs of
$US281/t also estimated. A full feasibil-
ity study with a strong focus on improved
metallurgy and recoveries is in the works
and slated for completion by June.

Evans, who plans to use his army back-
ground to overcome the challenge of op-
erating in an unfamiliar and challenging
jurisdiction, said the world was embrac-
ing all potential sources of lithium.

“Africa was never really discussed as
a lithium jurisdiction, certainly in my time
at Altura, but over the last three years the
lithium industry and the battery minerals
industry has just matured very quickly
and new sources are popping up all over
the place,” he said.

“It’s now talked about so much that
people have a much greater under-

Page 42 MARCH 2019 AUSTRALIA’S PAYDIRT

“The great beauty of Africa obviously for Jason Brewer
all commodities is there are so many
undiscovered deposits out there, and I think
lithium is really still in its infancy.

ASX-listed company in AVZ Minerals Ltd particular already has a tin mining opera- However, he hinted the company was
and picked up a suite of prospective ten- tion on there. So, whilst it is fair to say unlikely to limit itself to just lithium explo-
ements in the DRC three years ago when it is an early stage exploration play for ration in 2019.
the market was craving fresh lithium sto- the lithium, we felt once we had identi-
ries. fied that and been able to drill out a rea- “We’re looking at becoming more of a
sonable, mid-sized resource, our ability broader battery-focused exploration de-
While lithium is not necessarily a new to then move to a development decision velopment company as there are a lot
opportunity for the DRC – there is a long and towards a small scale production of complementary licences and projects
history of lithium exploitation through facility was something we could do very with our existing JV partners that will give
mining of tin-tantalum orebodies in the well.” us an ability to push ahead on a number
country – Force managing director Jason of fronts,” he said.
Brewer believes the full potential of the Prospect is seeking to put its Arcadia
former Belgian colony is yet to be real- project into production within the next “Despite the negative perception of
ised. 12-18 months and will spend most of this the country from a risk perspective, it’s
year looking to secure finance to develop an amazing place to operate. The people
“Given the very nature of the Congo a 2.4 mtpa operation in Zimbabwe. are very friendly, they want to improve
and the high prospectivity of all areas their lives, they want to work, and if we
within there, it was just something we Exploration on Force’s ground at can come in there and grow that econo-
wanted to be part of and something Manono is expected to ramp up later in my by investing in lithium, cobalt and all
which we felt we could move very quick- the year once the remaining results from the other commodities which are there
ly,” Brewer told Paydirt. last year’s first phase drilling programme on a world scale, there’s tremendous po-
are placed in front of Brewer and his tential there for the DRC.”
“The two JVs we have in lithium are on team.
established mining licences, and one in Brewer has demonstrated an affinity
for the DRC through his investments in
Multiple Australian companies, including Force Commodities in the shell companies which now have pro-
DRC, are looking to develop African-based lithium projects jects in the country, including cobalt
hopeful Winmar Resources Ltd.

As Paydirt went to print, Winmar an-
nounced plans to undertake a secondary
listing on the main market of the London
Stock Exchange. The listing is expected
to be completed during the first half, co-
inciding with the company’s plan to re-
start its Likasi cobalt plant in the coming
months.

“The London and European investment
communities and metal trading markets
have demonstrated in the past their un-
derstanding and long-term commitment
to investment in African mining projects,
and I am firmly of the opinion that there
will be a very strong support for what we
are looking to achieve in Africa, once the
company is dual listed,” Brewer said.

– Michael Washbourne

AUSTRALIA’S PAYDIRT MARCH 2019 Page 43

BATTERY MINERALS PREVIEW

Graphite game back on

Tanzania could reclaim its position as a graphite hopefuls at the pointy end of pro- “Syrah has come in and replaced some
go-to destination for mining investment, ject development in Tanzania. of the Chinese supply. Syrah’s product is
largely fine, medium and large flake but
a move which wuld provide a boost to a Prior to the stoush between government not very much jumbo or coarse flake which
means the fines, medium and large flake
group of fledgling graphite companies. and Acacia, Kibaran had released a BFS [markets] have probably flat-lined a bit. The
interesting thing is that jumbo flake prices
Late last month, the Tanzanian Govern- on the Epanko natural flake graphite pro- continue to go up, so that is sort of showing
Syrah isn’t really putting a dent in potential
ment and 65% Acacia shareholder Bar- ject, southern Tanzania. demand for very coarse flake graphite.”

rick Gold Corp announced a proposal “to The ready-to-construct Epanko project Hoskins’ synopsis of the market is the
value proposition for Graphex, which has
resolve outstanding disputes concerning will require $US89 million (plus $US20 mil- the fully permitted Chilalo 16.9mt @ 10.2%
TGC project at the ready in Tanzania.
Acacia Mining plc’s operations in Tanzania” lion for grid power connection), with interna-
In October, private equity outfit Castle-
(see page 64). tional project and export financier KfW Ipex lake L.P. and other market participants en-
tered a term sheet agreement proposing to
Independent directors at Acacia were to Bank of Germany showing keen interest. provide $US80 million (equal parts equity
and senior secured loan notes) to help build
be presented with the proposal, which in- “We expect KfW to resume financing Chilalo.

cluded a local company to operate Acacia’s and that is a result of the last 3-6 months “China is going to run out of coarse flake
graphite and even with Syrah coming on
Tanzanian operations; 50/50 shared eco- and the Acacia deal will accelerate that pro- board it is the opportunity Castlelake saw to
come in and finance us after their extensive
nomic benefits, with the Government com- cess,” Spinks said. due diligence process last year,” Hoskins
said.
pensated in royalties, taxes plus a 16% free Epanko stage one will see 60,000 tpa
The graphite market remains complex
carried interest in operations and $US300 natural flake graphite produced and sold to with a number of different flake sizes, puri-
ties and applications often confusing inves-
million payment to the Government to re- ThyssenKrupp and Sojitz Corporation. tors, while finding independent information
on graphite pricing is also a challenge.
Having offtake locked in provides
“When people are confused they would
financiers with certainty from which rather sit on the sidelines until there is better
clarity. I think the commodity will continue to
to make decisions, however, Spinks be dominated by retail investors and small
institutions; larger institutions need the cer-
knows general market conditions tainty and independent market analysis.
There are a few sources out there and the
are tough and that the increas- accuracy of those don’t appear to be prov-
en,” Hoskins said.
ing demand for graphite will only
“That is why you haven’t seen a debt fi-
heighten competition for attention in nancing package in the graphite space be-
cause there is not that certainty that a bank
the space. would rely on. Combined with a jurisdiction
like Tanzania that has had it challenges and
“There’s a large number of graph- you’d find that is a pretty big hurdle.”

ite players in development and at Nevertheless, the changing situation in
Tanzania could be a boon for Graphex’s
various other stages, but the de- ambition of bringing stage one production
at Chilalo online at 58,000 tpa for 1-2 years
mand thematic playing away in the and then 100,000 tpa of high-grade large
flake graphite in stage two.
background is positive,” Spinks
Currently, total graphite market world de-
said. mand is about 700,000 tpa, however, physi-
cal demand is poised to increase as EVs
Despite Syrah Resources Ltd’s become more affordable in the next five
years.
attempt to dominate the graphite
Therefore, there is enough room in the
Black Rock managing director John de Vries (left) at supply market with its Balama pro- market for Graphex, Kibaran and other
the Mahenge graphite project in Tanzania. Black Rock ject, it has been a jittery start to op- emerging players in the industry.
has three binding offtake agreements in place and has erations at the Mozambique mine.
With Tanzania potentially returning as an
had its mining licence upgraded to “recommended” While Balama will take a fair bit of
market share, graphite players look-

ing to enter the start-up phase are

egging the mine on to be successful

solve outstanding tax claims, to be paid as it would confirm the validity and viability

over time, subject to mutual agreement. of new projects.

The announcement was broadcast na- Graphite projects cannot all be catego-

tionally in Tanzania and while a formal rised in the same basket with individual

agreement is pending, the announcement customers chasing various specifications

is the most positive news yet for a group of around flake size, grade and purity, howev-

Australian junior graphite developers who er, one consistent message stemming from

have seen their efforts in the country stalled the sector is the shortage of supply coming

for more than 18 months. from China.

“The settlement of the Acacia issue with For the last 100 years, about 77% of the

the Government will be a major turning point world’s graphite has been supplied from

and allow investment to come back into the China. The country’s environmental crack-

country and no doubt give confidence to down has caused some severe disruptions

financiers such as KfW and Nedbank. It’s to this supply, with some analysts believing

been 20 months and our view is a resolu- closed mines will not reappear.

tion will allow our project to commence “It is a perfect storm for a commodity

and resume financing with KfW,” Kibaran where you have got surging factors in an

Resources Ltd managing director Andrew environment of timing and supply out of

Spinks told Paydirt. China,” Graphex Mining Ltd managing di-

Kibaran is among the handful of ASX rector Phil Hoskins told Paydirt.

Page 44 MARCH 2019 AUSTRALIA’S PAYDIRT

attractive place to do business and Mozam- need to eventuate at some point. Phil Hoskins
bique on the cusp of becoming a prominent However, that time is not now, according
graphite producer, East Africa could be the from the downstream side, as their provi-
place to be for graphite players. to Walkabout Resources Ltd executive di- sion of financing is something that has been
rector Allan Mulligan told Paydirt. lacking. So far, funding has all been from re-
“I think there’s a lot of analogies with the tail and institutions and we need the support
East African graphite industry to the global Walkabout is developing the Lindi Jumbo from the downstream if we are to become
iron ore industry; there’s no shortage of iron graphite project, near Graphex’s Chilalo, a viable alternate supply of graphite outside
ore on the planet, it’s just some iron ores and south-west of Epanko and Black Rock’s of China.”
are better. Clearly East Africa dominates Mahenge project.
[graphite] resource quality. So if you want to – Mark Andrews
establish a profitable mine, controlling the “The market remains the largest risk for all
best quality resource is a good start,” Black graphite projects so it is too early to speak of
Rock Mining Ltd managing director John de consolidation until projects are up and pro-
Vries told Paydirt. ducing and selling product,” Mulligan said.

“The other thing is that logistics play a very “We are always happy to collaborate with
significant part in the business. If you’ve got other players in regard to areas of common
a four-day camel trek to get to a port, you’re interest. We do not see ourselves in com-
on a hiding to nothing. You need access petition with others in regard to production
to fairly sophisticated logistics systems to – only in respect of the sales end of the
make your business work. Bagging this stuff market.”
up and putting it on a 900km road haul isn’t
going to work because all that does is chew Spinks agreed with Mulligan and called
into your marketing. We’re rapidly seeing for greater collaboration in the graphite
the evolution of an international price for space and encouraged downstream play-
product. Logistics will cost you roughly 40% ers to step-up their involvement.
of the FOB cost of your product, so manag-
ing that cost down is just fundamental to the “We need greater collaboration between
profitability of the business.” the graphite groups because the market op-
portunity is great and the common theme
If East Africa is to become the unrivalled is that we’re up against supply from China,”
graphite hub of the world, a graphite equiva- Spinks said.
lent to iron ore’s Pilbara, consolidation will
“There will be room for a lot of players,
whether you can go the distance or not and
match your product to market specifications
is critical. There also needs to be support

aameg

AUSTRALIA’S PAYDIRT MARCH 2019 Page 45

BATTERY MINERALS PREVIEW

Battery M&A sidelined

The Chinese Ministry of Information and Lithium transactions may be the only lucrative opportunities in battery
Technology has told the country’s bat- minerals sector at the moment
tery sector to act now to secure their supply
streams for future expansions. “We have seen cobalt pricing be ex- “There’s definitely a reason or rationale
tremely volatile, we have seen it go as high out there in the lithium sector to do M&A
However, the opportunities around the as $US95,000/t down to $US40,000/t. So, and for M&A transactions to take place, par-
world in commodities such as copper, nick- if you are looking to invest $1.5 billion or ticularly when we are in a low cycle. No one
el and cobalt appear limited for Chinese $300 million; that is a huge amount of risk in in the lithium market is making a distinction
players considering prospective purchases. a market that is incredibly volatile.” between battery grade and industrial grade,
so this is the equivalent of everyone saying
Speaking to Paydirt ahead of this year’s With the cobalt price being so high in all coal is black. I guess lithium is at that be-
Battery Minerals Conference, Airguide early 2018, Langford said he was bullish on ginning stage of the coal or iron ore markets
International Pte Ltd executive director activity in the nickel sector on the back of in terms of people understanding and look-
Michael Langford said copper projects val- mothballed projects coming to light. ing at things being homogenous when it is
ued at sub-$US1 billion, producing at least absolutely not.”
20,000 tpa concentrate over 10 years or “The cobalt credits meant that those
more, were sparse around the globe. nickel projects were potentially profitable. Langford lamented the decline of credible
But, just like all the previous cycles when independent research houses to educate
“There is nothing out there that meets the nickel prices went up and then down most the market on the battery minerals sector
key M&A check list for copper for the Chi- projects you’d say are now back on hold,” and feared social media was having too
nese. We have been searching the market he said. much of a profound impact.
and my view is that we will see transactions
in lithium, but I don’t see the potential for “There isn’t really anything in that space “In the past, research was one of the
transactions from an M&A perspective in from an M&A perspective that are particu- most respected functions because you
cobalt, nickel or copper at this point in time,” larly attractive, especially when you look at were basically the repository of knowledge
Langford said. the specific product specification require- at both the client meetings and in establish-
ments of the battery sector in China. You ing credibility with those clients, as well as
Airguide, a corporate and advisory ser- have also got the nickel projects looking to trading or trading ideas,” he said.
vices company specialising in M&A, de- be developed in Indonesia as well by Chi-
mergers, debt and corporate restructur- nese battery makers and that creates a bit “These days research is more sensation-
ings, balance sheet and capital optimisation of an overhang on industry in terms of po- alist oriented where there is no account-
plus funding solutions and strategic invest- tential for oversupply.” ability by people for being wrong. They are
ments, is well represented in China. there to stimulate trade, it is not there as a
An area of the battery minerals sector respected source of information anymore.
Langford said recent investments in the where Langford believes there may be con- If you can’t rely on that information because
ilk of CITIC Metal’s $US556 million equity solidation is in lithium. research has fallen away, then people rely
push into Robert Friedland’s Ivanhoe Mines on social media.
Ltd and China Moly’s $US1.14 billion play He said the market had escaped the
to control the Tenke copper-cobalt mine, stranglehold the likes of Gangfeng and “I think there is a reliance on social me-
DRC, indicated the weight of money waiting Tianqi had on it in 2015/16, when prices dia that we are seeing which has definitely
to be deployed in China. rose 400%. emerged in the last number of years. I hope
that is on the wane and we move back to-
“We find that the market has a very short- “Cathode processors, cathode material wards research and independent research
term orientation towards investing, but makers, battery makers, EV makers, all got where people with real industry experience
doesn’t have the nous to really put the key shafted. One of the key things for that sec- can provide real insights. That way every-
parameters around what makes an M&A tor is security and not relying on two domi- one can make better investment decisions,”
transaction. The first step is to define those nant players to provide the material [other- he said.
characteristics because there is definitely wise] it ends in an iron ore situation where
money in China; there is money in China to Rio [Tinto Ltd], BHP [Ltd] and Vale [S.A.] – Mark Andrews
develop projects,” Langford said. control the prices and basically end-users
are subject to the mercy of the processors,”
While there is demand and an appetite to Langford said.
invest from China, markets are volatile and
therefore high risk remains.

Langford said this was particularly evi-
dent in cobalt where capex to build projects
was top-end, while the companies in play
were extracting cobalt as a by-product
credit or producing as a primary product in
the DRC.

“There is no middle ground for compa-
nies that are in development or have a DFS
where the capex is so low that they have
the potential to be financed. A lot of the
cobalt companies are talking about $300
million to $1.5 billion capex requirements in
an environment where there is a lot of com-
modity price risk,” Langford said.

Page 46 MARCH 2019 AUSTRALIA’S PAYDIRT

Arafura to lock in funding

A long-awaited DFS has confirmed Nolans as potentially
one of the world’s lowest-cost producers of NdPr

When Gavin Lockyer joined Arafura is a big competitive advantage because with the successful parties likely to come
Resources Ltd in 2006, his man- if commodity prices don’t behave them- from either Asia or Europe.
date was to source funding to develop the selves, obviously the lowest cost opera-
Nolans rare earths project in the Northern tor is the last person standing,” Lockyer “You really have to target your offtake
Territory within a couple of years. said. partner or party specifically with the view
that the quality of that offtake will under-
Little did he know just how long that “The other advantage I see us hav- pin your debt financing,” he said.
process would take. ing over other potential projects and
also existing projects is that we’re doing “Ultimately we hope the quality of that
Some 13 years on, having endured the everything in Australia. All our environ- offtake arrangement will bring in export
GFC and a downturn in the resources mental approvals are done and we’ll be credit guarantees from those countries
sector, Lockyer is now able to focus on managing our waste and everything in because they’re seen to be critical ele-
his original mission. one place, rather than exporting mate- ments to their industries, which then
rial around into different jurisdictions, so underpins the debt which the banks can
Armed with a long-awaited DFS, Lock- I think that will help us when we’re trying provide us.”
yer and his team will soon start canvas- to get project finance.”
ing the global markets for offtake and Lockyer is also confident the global
project finance for Nolans, about 135km Lockyer, who has been Arafura’s man- rare earths industry is primed for supply
north of Alice Springs. aging director since mid-2013, was confi- from outside China, which is tipped to
dent the project had no further technical become a net importer of NdPr oxide by
“It’s taken a long time to get to this challenges to overcome given the suc- 2022, the same year Nolans is forecast
point, but I’m glad we’re finally here,” cess of the planned flowsheet – involv- to come online.
Lockyer told Paydirt. ing a phosphoric acid pre-leach – via a
three-year piloting programme. In 2018, China produced about 80% of
“This is effectively the third flowsheet the global NdPr supply, yet its own con-
that’s been developed by Arafura, but One hurdle Arafura must still clear is sumption requirements totalled 85%.
the only one we’ve taken through to DFS changing market perceptions of rare
stage. A lot of hard work has gone into earths projects. For Lockyer, the biggest “If you just take the demand for NdPr
this and now there’s some exciting times misunderstanding relates to investors fo- and apply it simply against electric vehi-
ahead.” cusing purely on the mining side of the cles, there’s a looming shortfall in prod-
process. uct, so whilst at the moment the market is
The DFS released last month con- in equilibrium and being supplied by Chi-
firmed Nolans as potentially one of the “The market sees rare earth projects na predominantly, we believe and most
world’s lowest cost producers of key as mining projects, but in actual fact analysts believe that over time China is
magnet metals neodymium and praseo- they’re not because it’s a lot more com- going to become a bigger and bigger
dymium (NdPr) with estimated operating plex than just digging stuff up and then consumer of all these strategic metals,”
costs of $US25.94/kg. shipping it offshore,” he said. Lockyer said.

Pre-production capital of just over $1 “It’s not like a gold mine where you can “With China actually looking to be-
billion is required to produce 4,357 tpa just go to an existing engineering firm come a net importer of NdPr, the ques-
NdPr oxide, with the current reserve sup- and say ‘build me a mine based on this tion remains as to where the rest of the
porting at least 23 years of mining. Oper- head grade, this strip ratio,’ where it’s world is going to get its product from. So,
ations are projected to generate annual a known standard process. Every rare I think there’s plenty of room in the mar-
revenue of $539 million and an average earths project is different and every rare ket for us and others to come online and
EBITDA of $377 million per annum. earths orebody has its unique character- to feed that demand.”
istics. And so, with that comes a bit of
Other key financial estimates from the trial and error in terms of the processing, Initial construction activities at Nolans
DFS include a pre-tax NPV of $729 mil- the flowsheet and that’s why they take so are pencilled for next year, with commis-
lion and IRR of 17.4%. Payback is ex- long to develop.” sioning of the mine slated for 2022. The
pected during the fifth year of production. peak construction workforce is estimated
Lockyer said the company would target at 650, with about 280 people to be em-
“Our operating costs have come in at end-users such as automobile and mag- ployed during steady-state operations.
a really ultra-low level of just $US24/kg net manufacturers as potential offtakers,
NdPr which we firmly believe will put us – Michael Washbourne
in the lowest quartile of any producer in
the world, including the Chinese, which

AUSTRALIA’S PAYDIRT MARCH 2019 Page 47

INDABA REVIEW

The 25th instalment of Mining Indaba was a special one for all concerned and the grand occasion was not
missed by Ghanaian President Nana Afuko-Addo and South African President Cyril Ramaphosa, who
became the first ever the heads of state to address the conference. About 7,000 delegates attended Mining
Indaba in Cape Town (February 4-7) and among the global mining and investment community there was a
strong contingent from down under. Paydirt held its annual Paydirt & Friends dinner at the Ginja Restaurant on
the V&A Waterfront. The dinner brought together 100 guests from across the Australia-Africa sector, including
all of Australia’s Heads of Mission on the continent before they scurried off to all corners of the Mother City
to fulfil busy meeting schedules. The occasion also marked the launch of Africa Down Under 2019 and the

associated Africa Week, to be held in Perth, Western Australia on September 2-7.

Page 48 MARCH 2019 AUSTRALIA’S PAYDIRT

AUSTRALIA’S PAYDIRT MARCH 2019 Page 49

INDABA REVIEW

South Africa presses re-set button

The 2019 Mining Indaba was awash government is more willing to recognise cy and by its final months the Minerals
with conciliatory tones from both gov-
ernment and industry; the question now the role foreign capital will need to play Council South Africa was boycotting
is whether the South African Government
can deliver on its promises of a new ap- if South Africa’s once mighty resources events at which Minister Zwane was pre-
proach to investors.
sector is to return to prominence. sent.
The atmosphere at the Cape Town
International Convention Centre when “Our message to international inves- The resentment stemmed from the
President Cyril Ramaphosa addressed
the conference on its second day was in tors is simple: we’re taking practical ANC Government’s failure to finalise
stark contrast to the events of 12 months
earlier. measures to build the economy, under- the terms of the Mining Charter 3 and

Then-mines minister Mosebenzi pinned by inclusive growth and competi- amendments to the country’s mining act
Zwane hurriedly left the conference
minutes after a confused address to tiveness and also articulated a country which had led to a freeze on investment
a largely hostile audience. Just days
later, President Jacob Zuma resigned facing economic challenges,” Ramapho- in the country.
amid an unfolding corruption scandal
and Zwane was at the centre of inves- sa told the audience. Ramaphosa – who built significant
tigations over graft involving Zuma
and the disgraced Gupta family busi- Industry and government were at log- mining interests during a successful
ness empire.
gerheads for much of Zuma’s presiden- business career – said the Government
This year, delegates queued out-
side the auditorium for more than an now recognised the importance of
hour to get a seat for Ramaphosa’s
address – the first by a sitting South regulatory certainty in attracting min-
African president in the event’s 25-
year history. ing investment.

It reflected the change in attitude “It is the reason we prioritised the
from both government and industry
over the course of 2018. Mining inves- restoration of a policy and regulatory
tors are no longer fleeing the country
but considering new investments and environment that is stable and pre-

dictable,” he said. “We are emerging

from a period of strained relations. We

want to put that behind us. We don’t

want to meet you in the court room but

in your boardroom or in the Minister of

Mineral Resources’ office. The days

of conflict should belong to the past.

Industry will grow if we inculcate that

type of culture.”

The new Minister of Mineral Re-

sources, Gwede Mantashe – a for-

South African President Cyril Ramaphosa mer cohort of Ramaphosa in the Na-
addresses the Mining Indaba in Cape Town tional Union of Mineworkers and the
first modern mines minister to have

At the end of his historic address to Mining Indaba, South African President Cyril Ramaphosa
issued a challenge to the mining industry “to create broader social value in a way that also
enhances the success of their business”. To help them on their way, he offered 10 principles “for a

more modern, successful and productive mining industry”.

RAMAPHOSA’S 10 VALUE CREATING PRINCIPLES:

1) Companies should foster inclusive growth in the areas 6) Companies should embrace beneficiation
where they operate
7) Companies need to pay more attention to, and invest
2) Companies should partner with local governments to more in, the health and safety of workers
improve infrastructure, such as water and roads, in the
areas where they operate 8) Companies need to provide internships and job
experience opportunities for young people as well as
3) Companies need to see investment in the living providing business opportunities for small and medium-
conditions of their workers as more than a regulatory sized enterprises
obligation
9) Companies must prioritise the development of young
4) Companies should invest in education and training women, through proactive hiring policies, prioritised
training, promotion and mentorship
5) Companies should partner with training colleges,
contributing to the development of curricula and providing 10) Companies must have the courage to include their
work experience for students workers in the shareholding of the companies

Page 50 MARCH 2019 AUSTRALIA’S PAYDIRT