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Published by Paydirt Media, 2016-03-29 21:59:00

gmj123-April-June16mag-web

April – June 2016 VOLUME 1. ISSUE 123
$11.95
Registered by Australia Post PP 643938/00057

Aussie wits on
South Africa’s Rand

• Africa focus • Australia review ISSN 1324-4396
02

9 771324 439005



CONTENTS

16 22 34

5 NEWS 22 AFRICA
Leading our round-up of gold stories from continental
The hunt is on for the next exploration hot spot. Barrick Africa is all the news from February’s Mining Indaba
Gold’s entry into Guyana suggests it is looking at the in Cape Town. Among those to make appearances
South American country as a potential answer. Alicanto were Randgold Resources Ltd, AngloGold Ashanti Ltd
managing director Travis Schwertfeger spoke about his and Acacia Mining plc. Among the Australian stories
company’s JV with the Canadian major in the country to feature are Resolute Mining Ltd and West African
Resources Ltd
7 OPINION
36 AUSTRALIA
South Africa’s gold producers have enjoyed a renais- The country’s gold miners are enjoying almost unprec-
sance in the early part of 2016 as a depreciating rand edented times thanks to lower costs and higher gold
doubles with an appreciating gold price to offer the em- prices. In our wrap of the sector, we look in on emerg-
battled miners a lifeline. Johannesburg-based column- ing mid-tier miners such as Evolution Mining Ltd, St
ist Brendan Ryan looks at how long the rally may last Barbara Ltd and Saracen Mineral Holdings Ltd as well
as junior producers such as Doray Minerals Ltd and
16 COVER emerging development stories, including Blackham
South Africa’s Witwatersrand Basin may be the world’s Resources Ltd
richest goldfield but it has not been a natural hunting
ground for Australian junior explorers. However, as
Dominic Piper found out on a recent visit to the West
Rand, one junior ASX-listed company, West Wits Min-
ing Ltd, may have found a niche on this most historic of
gold belts

COVER PHOTOGRAPH:

Shango Solutions’ Manie Swart at the Soweto Cluster project with West Wits Mining chairman Michael Quinert

GOLD MINING JOURNAL (ISSN 1324-4396) Paydirt Media:
Published by Paydirt Media Pty Ltd. A.C.N. 063 985 133 Executive chairman: Bill Repard
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Head Office: Accounts/administration: Heather Melling
Suite 9, 1297 Hay St, West Perth, Western Australia 6005
P.O. Box 1589, West Perth, Western Australia 6872 Conferences:
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[email protected] www.paydirt.com.au
Pre-press and printing:
Editorial: Vanguard Press 26 John St, Northbridge WA 6003
Editor: Dominic Piper
Deputy editor: Mark Andrews Member of:
Journalists: Michael Washbourne
Art director: Marian Noonan Australia-Africa Minerals & Energy Group
Contributors: Keith Goode, Brendan Ryan (Johannesburg)
Registered by Australia Post PP 643938/0071. No pages or articles in this publication
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EDITORIAL

Ready for days of sunshine

As Australia’s gold miners in cash and bullion – to go on another spending spree, Northern
enjoy the continuation of a Star chose instead to reward shareholders with a 50% increase
largely unexpected price rally, to the dividend, which now stands at 3c/share.
a time of reckoning is rapidly
approaching. The decision to increase the dividend demonstrates the com-
pany has paid heed to the concerns voiced by investors. Bea-
I do not want to disparage what the ment spent six months talking to investors throughout the world
miners have achieved. The likes of before launching the transformation strategy. He recognised
Northern Star Resources Ltd, Evolu- during that period that growing a mid-tier miner would only be
tion Mining Ltd, Metals X Ltd, Regis supported by investors if they saw a decent return on capital.
Resources Ltd, St Barbara Ltd and
Saracen Mineral Holdings Ltd all took rela- And, judging from the company’s recent corporate presenta-
tively large risks in the previous two years and their well thought- tions, there is little chance of the company overreaching. While
out strategies are now bearing fruit in an upwardly mobile price growth is still on the agenda, presentations suggest it will come
environment. from internal projects and new exploration opportunities on ex-
The reckoning will come, however, when the profits from a solid isting ground, not by ambitious M&A bids.
6-12 months of strong prices begin to flow in. Will the sector have
learnt the lessons of the last bull-run, one in which shareholder Northern Star can do this because it has acquired some of the
returns were squandered in favour of grandiose attempts at M&A best gold mines Australia has ever seen and is now producing
and development of projects which were, at best, marginal? enough free cash to eliminate the need for dilutive capital rais-
The last gold run certainly failed to deliver to shareholders. ings.
We are still seeing the fallout from this in the North American
gold sector where majors sacrificed investor returns in favour of However, there are few other gold companies in that position
corporate largesse and ambitious and flawed takeover moves. and for most the temptation to raise money on the market will
The shareholder revolt was dramatic and seemingly an entire only increase in line with share price appreciation.
generation of gold executives was given its marching orders.
Now, as gold rebounds and gold equities come back onto inves- Again, all companies need to raise additional capital (unless
tor radars, will Australian companies avoid the pitfalls and use you are Mincor Resources NL, listed for 16 years with only one
funds generated in the high price environment to thank share- capital raising) but the decision to dilute shareholders should
holders for their support or will they be kept within the company? only be taken if the money raised can have a transformative ef-
And, if companies are looking to continue their expansion will fect on the company. In the past, too many companies undertook
they be tapping markets again, eager to dilute the very investors capital raisings just because they could, locking in their survival
who stayed loyal during the tough times? for another 12 months without producing any plan on how they
Furthermore, at the junior end of the market, will gold explor- would grow shareholder value in the intervening period.
ers take the favourable winds to kick-start their greenfields ex-
ploration programmes or will they head back to the tried-and- When companies do raise additional capital, how they deploy
tested (-and-failed) brownfields projects and give them a new it in this rising market will be vital to their chances of creating
lick of $1,700/oz paint? shareholder wealth. If it is only used to simply spruce up an old
Every mining company should, of course, have a growth asset using new reserve prices and input costs, the first sign of a
strategy but too often in the past, gold companies’ focus has downturn will see the company’s fortunes reversed.
switched from growing shareholder value to simply growing the
company itself. However, if the funds are applied to genuine exploration, they
The current environment represents a rare opportunity for have the rare opportunity to set the company up for an entire
companies to set themselves up for a generation or more. Spot cycle.
gold is in the ascendency, the Australian dollar is below parity
and the end of the mining boom has meant input costs – particu- Exploration doesn’t have to be outlandish or overly ambitious;
larly for labour and materials – have fallen dramatically. it just needs to be well thought out and focused and have good
According to Deloitte’s WA Index, the aggregate market cap science behind it. Companies such as Doray Minerals Ltd have
of West Australian gold companies has increased 69.7% since built mining companies on the back of this sort of exploration
June 2015, and February alone saw this aggregate value grow initiative.
29.2%.
The largest of those WA-domiciled gold producers, Northern It is apparent that ounces have been cheaper to find at the
Star, saw a 32% market cap increase in February and is now corporate level than at the drill bit in the last three years but as
valued around $2.34 billion. project valuations across Australia continue to rise, the smart
The rise of the Bill Beament-led company is now well known companies will plough their cash into the ground, not into the
and it seems management has recognised the pitfalls ahead. pockets of legal advisers.
Instead of using its clean balance sheet – no debt, $226 million
[email protected] @DominicPiper

Page 4 GOLD MINING JOURNAL April – June 2016

NEWS

Barrick moves into Guyana
with Aussie junior

Alicanto Minerals Barrick is set to spend $US1.8 million this year on exploration at Arakaka manage the project with Bar-
Ltd has received rick committed to spending
a major boost to its “Knowing what equity mar- ity underlying data,” he said. $US1.8 million in the first year
2016 exploration ploy kets were like, we decided to “Newmont invested a lot of of the JV.
with news Barrick look for a JV partner to fund money and effort into build-
Gold Corp is prepared exploration,” Schwertfeger ing the geochemical and geo- “I suspect Barrick will
to spend up to $US10 said. “We had interest from physical base at Arakaka but spend a significant portion
million to earn a 65% several major and mid-tier around the time of the GFC of their earn-in commitment
interest in the junior’s companies but after a nine- had to make a decision and in 2016,” Schwertfeger said.
Arakaka project in month process, it was Barrick chose to focus on Suriname “We are working in collabora-
Guyana. which we gave exclusivity to.” instead.” tion to finalise the exploration
programme now. The current
Under the terms of the Guyana’s reputation has Since taking on the project, spend is based only on a pre-
farm-in, Barrick can acquire been burnished by the recent Alicanto has built on this ini- liminary programme but we
a 65% interest in Arakaka – successes of Guyana Gold- tial understanding. will finalise things in detail in
northern Guyana – by spend- fields and Troy who opened coming weeks.”
ing $US8 million on explora- 150,000 ozpa and 100,000 “We’ve reconsolidated the
tion over the next four years ozpa gold mines respectively land position and extended The plan is to undertake
and making a $US2 million in the last 12 months. the geochemical signature two drilling campaigns this
cash payment to complete to 14km,” Schwertfeger said. year; one this month and a
the deal. Geologically, Arakaka sits “Across the 300sq km land follow-up programme in the
on the Guiana Shield which – package we have got poten- September quarter.
Alicanto managing direc- in the days before the Atlan- tial for high-grade resources
tor Travis Schwertfeger told tic Ocean opened up – was and lower grade, bulk tonnage The earn-in agreement
Gold Mining Journal the contiguous to the Birimian disseminated mineralisation.” also sees Barrick commit to
deal proved the high regard Shield, West Africa’s prolific a $US200,000 placement in
the Guiana Shield was held gold-producing belt. Alicanto will continue to Alicanto but Schwertfeger
in and the quality of work un- wouldn’t rule out further capi-
dertaken on the project by the “The region has substantial Alicanto has expanded the tal raisings this year.
company. potential,” Schwertfeger said. mineralised trend on its Arakaka
“And there are examples of “We may do a small raising
“The Guiana Shield in the size of endowment pos- project to more than 12km later in the year but the focus
general is of interest to a lot sible in Venezuela [which has would be on new initiatives
of companies and because several plus-10 moz deposits] within the company. We are
of the success of Guyana and the grade is proven by interested in potentially new
Goldfields [Inc] and Troy Re- Guyana Goldfields at Aurora acquisitions in Guyana and
sources [Ltd], Guyana itself [3.09 g/t head grade].” any capital raising would be
is at the forefront of that. It done with a view to that.”
is English speaking and pro- Arakaka was acquired
mining which adds to its at- by Alicanto in 2012 but had Guyana may be on the ra-
tractiveness,” Schwertfeger previously been subject to a dar of a number of larger play-
said. “That Barrick are happy JV between Newmont Min- ers but the country still lacks
for Alicanto to manage it and ing Corp and StrataGold Inc. a significant junior sector.
get straight into exploration Schwertfeger said the previ- Alicanto was one of the first
rather than redoing some of ous JV had prepared a body juniors to arrive and Schwert-
our work is also a compliment of work that Alicanto had sub- feger believes the company
for us.” sequently benefited from. could pick up good additional
ground.
The deal with Barrick is the “We started with high qual-
culmination of a 12-month “When we first came into
process which began when the country we did a detailed
Alicanto recognised market technical review and risk as-
conditions were proving in- sessment of the country,” he
compatible with junior explo- said. “Arakaka was at the top
ration funding. of that list but now we plan
to go back and have a look
at the other projects which
ranked well and we will follow
up on them.”

– Dominic Piper

April – June 2016 GOLD MINING JOURNAL Page 5

NEWS

Regis lifts Duketon reserves

Regis Resources to Regis’s ore reserves from Mark Clark at both deposits.
Ltd will have a recent drilling at Gloster and Regis recently reported
beefed-up reserve Baneygo highlights the excel- executive chairman Mark
base at its Duketon lent organic growth potential Clark said. drilling success at Tooheys
gold project to start that aggressive exploration Well, 2.5km south of the main
FY2017. of the prospective Duketon “With Regis’s considerable Garden Well gold mine, in-
greenstone belts controlled installed milling capacity in cluding a headline intersec-
Maiden reserve esti- by Regis can deliver,” Regis the district, these satellite de- tion of 72m @ 2.73 g/t gold
mates for the new Gloster posits will provide significant from 131m within the fresh
and Baneygo deposits have value for the company. The rock zone of the deposit.
added 361,000oz to the Gloster and Baneygo depos-
company’s mining inventory, its will add mine life to the Other promising gold hits
replacing the entire FY2016 Duketon project and the com- included 67m @ 2.18 g/t from
guidance of 275,000- pany looks forward to contin- 126m, 27m @ 1.78 g/t from
305,000oz and then some. ued exploration success at 58m, 32m @ 1.56 g/t from
other satellite deposits such 58m and 16m @ 3.35 g/t from
The additional ounces as Tooheys Well and on the 118m.
from Gloster (7mt @ 1 g/t broader exploration tenure.”
gold for 226,000oz) and Nine RC holes were drilled
Baneygo (3.6mt @ 1.16 g/t for Mining at Gloster is sched- in January and February to
136,000oz) represent an 18% uled to start in the Septem- follow up anomalous gold
increase on the company’s ber quarter and is expected mineralisation in the eastern
last quoted reserve estimate to add about three years of shear zone. Regis was await-
of 2 moz in March 2015. additional feed to the compa- ing assays from a diamond
ny’s Moolart Well processing drilling programme at the
“The addition of 361,000oz plant. time of print.

About 70% of the reserves “The continued high grade
at Gloster are within 80m of results being returned in drill-
surface in the oxide zone. ing at Tooheys Well point to a
potential significant new sat-
Gloster now boasts a re- ellite project for the nearby
source of 21.3mt @ 0.77 g/t Garden Well processing facil-
gold for 528,000oz, an in- ity,” Clark said.
crease of 45% for contained
ounces from the previous “It is exciting that the east-
1996 JORC-compliant re- ern shear zone already has
source estimate. a mineralised strike length
of 450m and is open both
No mining schedule has at depth, where we have re-
been revealed for Baneygo, turned some very interest-
but it is likely to be factored ing fresh rock intersections,
in with plans for a number of and for a further 600m along
satellite deposits in the Gar- strike to the south.”
den Well and Rosemont re-
gion of the Duketon tenure. Meanwhile, Newmont Min-
ing Corp, via its Australian
Further drilling is under way subsidiary Newmont Capital
to test along strike extensions Pty Ltd, has disposed of its
19.45% shareholding in the
gold producer.

Newmont has held shares
in Regis since 2006, but its
divestment of its Regis hold-
ing is understood to be part
of the company’s reported
strategy focused on reducing
corporate and project debt.

Clark said a number of new
“high quality” institutional in-
vestors from Australia, North
America and Europe had tak-
en up Newmont’s stake in the
company.

Page 6 GOLD MINING JOURNAL April – June 2016

OPINION BRENDAN RYAN

RSA miners finally have
their day in the sun

C’mon baby let the RSA gold miners are raking “were the Fed to join other
good times roll” in cash hand-over-fist while central banks in adopting
– amazingly enough the favourable fundamentals NIRP – a negative interest
that’s the tune that for the metal which have been rate policy – (unlikely in our
has been rocking the ignored for a decade appear – opinion, but...) the fact that
Johannesburg Stock at long, long last – to be start- gold pays no interest rate be-
Exchange “all night ing to weigh on the minds of comes an asset.”
long” since the begin- global investors.
ning of the year as Holmes said he was not
South African gold I am referring to the grim calling gold back to its previ-
shares blasted off. state of the world economy ous peak of $US1,900/oz but
– the slowdown in China; ob- he stressed that “what will
They took off fuelled initially scene debt levels; growing Gold miners have been the take gold back up is negative
credit risk; renewed worries toast of the JSE real interest rates in dollar
by the collapsing rand and – over the dollar – all of which terms”.
global investors seem to have What a lot of serious in-
subsequently – the firming US just taken in their stride until vestors do pay attention to in Holmes may not be calling
now. their trading activities is the gold back to record levels but I
dollar gold price. Right now, technical picture which has am sure you will have noticed
As DRDGold chief execu- turned very much in favour of that various gold messiahs;
anybody who owned those tive Neil Pretorius put it re- gold in recent weeks. pundits; snake-oil salesmen
cently: “A little bit of fear has – call them what you will – are
former bombed-out “dogs” crept back into investors’ I have never been much on already dishing out proph-
minds.” charts and technical assess- esies that gold is going to
like DRDGold Ltd, Harmony ments but I listened closely hit levels anywhere between
Investors also seem to have when my most respected $US3,000 and $US8,000/oz.
Gold Mining Co. Ltd and taken an extremely sanguine gold “guru” – Martin Muren-
approach to the world’s vola- beeld, the chief economist I would rather stay in the
Sibanye Gold Ltd back in De- tile political situation up until at Dundee Economics in To- real world. Gold is up 20%
now. ronto – pointed out the signifi- this year in dollar terms which
cember is literally “dancing on cance of the “golden cross” puts it into a bull market. That
Major regional – potentially that happened in February 20% rise has already worked
the ceiling”. global – wars could erupt in as the gold price broke out on wonders for gold shares. You
any of Eastern Europe, the the charts. don’t need the gold price to
Since mid-December, South China Sea and the Mid- double or treble from where
dle East where proxy battles “The global background is it is currently to make a lot
Sibanye has more than dou- are already under way in plac- increasingly gold positive” is of money. Were it to reach
es like Yemen and Syria be- how Murenbeeld summed up $US1,400 or $US1,500 both
bled; DRDGold has trebled tween the region’s two bitterly the situation early in March. gold miners and investors
opposed heavyweight pow- would be doing marvellously.
and Harmony is up an as- ers; Saudi Arabia and Iran. Murenbeeld and other
commentators such as US Investors should also re-
tounding five times. Even the Maybe I pay too much at- Global Investors chief execu- member that short-term pull-
tention to history which I tive Frank Holmes have high- backs are part and parcel of
heavyweights like AngloGold gather is a highly unpopular lighted that a key fundamen- a rising gold market so let me
subject with the millennium tal development pushing up end with a final comment from
Ashanti Ltd and Gold Fields generation but which, I must the dollar gold price has been my guru – Murenbeeld – who
confess, fascinates me. You the move to negative interest said in early March: “We have
Ltd – which have far greater can trace the origins of most rates by a number of central noted that cautious readers
of the uprisings and confron- banks. might consider some protec-
exposure to gold mining out- tations currently rocking the tion against a short-term pull-
Middle East and Eastern Eu- The great criticism of gold back in the gold price, and
side of South Africa – have rope back to the end of the has always been that hold- that remains a consideration.
First World War with a few ing it does not give the in- But it certainly appears that
either doubled or come close subsequent border modifica- vestor any returns compared the market wants to take gold
tions made at the end of the to holding cash, or bonds or higher.”
to it. Second World. shares.
Brendan Ryan is a freelance writ-
Nobody in South Africa ex- Use it, don’t use it. What- Murenbeeld commented; er, based in Johannesburg
ever.
pected anything like this al-

though it was common cause

that the collapse of the rand

against the dollar had to be

good for RSA gold mine profit

margins. However, against

such pleasant prospects had

to be set the highly negative

attitude of investors towards

RSA both outside and inside

the country given the factors

that had led to the rand’s col-

lapse.

Just how long this par-

ticular party can continue is

anybody’s guess but I have

to say it’s looking good. The

April – June 2016 GOLD MINING JOURNAL Page 7

NEWS

Gold shines in the west

Gold miners and ing its market cap by 178% to (Brazil) was up 45% to $180 from Saudi Arabia and Rus-
explorers were $100 million as the emerging million, Troy Resources Ltd sia that both countries had
the standout perform- gold producer continued its (Guyana) enjoyed an 88% agreed to freeze oil output at
ers in the Deloitte WA remarkable turnaround story rise to $145 million and Me- January levels.
Index for February. at Nullagine in the Pilbara. dusa Mining Ltd (Philippines)
increased 62% to $128 mil- Platinum was another sur-
Almost one quarter of the Dacian Gold Ltd also post- lion. prise bolter, increasing 6.7%
Index – the top 100 ASX- ed a 101% increase in its to $US924/oz on the back
listed companies with a head market cap, now $209 million, Metals X Ltd (down 2.6%) of strong car sales figures in
office in Western Australia, on the back of strong drilling and Focus Minerals Ltd Europe.
ranked according to market results at its Mt Morgans pro- (down 15.8%) were the only
capitalisation – was made up ject, near Laverton. two gold companies in the top With a new market cap of
of gold industry businesses. 100 to record reductions in $6.65 billion, South32 Ltd has
Gold Road Resources Ltd their market caps, while New- overtaken Fortescue Metals
Spot gold increased 10.4% (up 31% to $357 million), field Resources Ltd, Rand Group Ltd ($6.35 billion) as
during February and holdings Doray Minerals Ltd (up 40% Mining Ltd and Kingsrose the highest-ranked mining
in ETFs also lifted to their to $258 million), Silver Lake Mining Ltd did not experience company, jumping to third
highest levels since October Resources Ltd (up 45% to any growth. behind agriculture giant Wes-
2014. $180 million) and Blackham farmers Ltd ($44 billion) and
Resources Ltd (up 59% to Overall, the Deloitte WA oil and gas firm Woodside
Deloitte WA clients and $97 million) were among Index slipped 1.1% to $118 Petroleum Ltd ($20.9 billion).
markets partner Tim Richards those with projects housed in billion despite February yield-
said investors appeared to be WA to also witness a nice lift ing strong movements in the Alaska-focused 88 Energy
turning to gold as a “safe ha- in market cap during Febru- gold, iron ore and crude oil Ltd was the biggest mover
ven” asset due to volatility in ary. sectors. during February with a 584%
the equity markets. improvement in market cap
Gold companies with flag- Iron ore had the biggest from $18 million to $127 mil-
“Interestingly, pure-play ship projects in overseas increase of all commodi- lion following the release of
gold companies continue to jurisdictions also fared well ties during the month, rising a positive evaluation update
shine among the WA Index as during February. Resolute 15.4% to $US49.40/t by the from its Icewine No.1 well.
the gold safe haven strategy Mining Ltd (Mali/Ghana) end of February. Crude oil
plays its part within investor jumped 72% to $359 mil- jumped 5.2% to $US36.30/ – Michael Washbourne
portfolios,” Richards said. lion, Beadell Resources Ltd barrel following confirmation

“Since June 2015, we WA gold companies in Deloitte’s Top 100 Index
have observed the aggre-
gate market capitalisation of Market Cap (million) Share Price
these companies increase by
69.7%, with February alone Feb 2016 Jan 2016 Last 52-week Range
providing gains of 29.2%.”
Northern Star Resources Ltd $2,341 $1,776 $3.90 $1.81-4.07
Northern Star Resources Independence Group NL $1,309 $1,120 $2.56 $1.98-6.21
Ltd continues to lead the Regis Resources Ltd $1,289 $1,174 $2.58 $1.07-2.53
charge among the WA-based Saracen Mineral Holdings Ltd $773 $571 $0.98 $0.34-1.06
gold companies, boasting a Metals X Ltd $444 $456 $0.94 $0.86-1.06
market cap of $2.34 billion at Resolute Mining Ltd $359 $209 $0.56 $0.23-0.57
the end of February, up 32% Gold Road Resources Ltd $357 $273 $0.51 $0.29-0.53
on the previous month. Doray Minerals Ltd $258 $184 $0.84 $0.51-0.88
Dacian Gold Ltd $209 $104 $1.58 $0.72-1.67
The Bill Beament-led com- Perseus Mining Ltd $196 $146 $0.37 $0.16-0.51
pany announced a strong Tribune Resources Ltd $180 $170 $3.60 $0.44-4.29
first-half result during Febru- Beadell Resources Ltd $180 $124 $0.23 $0.10-0.33
ary, including an increased Silver Lake Resources Ltd $164 $116 $0.33 $0.15-0.35
dividend. Newfield Resources Ltd $150 $150 $0.77 $0.35-1.03
Troy Resources Ltd $145 $77 $0.43 $0.03-0.58
Saracen Mineral Holdings Medusa Mining Ltd $128 $79 $0.62 $0.04-1.10
Ltd was another major mover, Millennium Minerals Ltd $100 $36 $0.14 $0.10-0.14
increasing its market cap by Alkane Resources Ltd $99 $84 $0.24 $0.02-0.40
35% to $773 million, coincid- Blackham Resources Ltd $97 $61 $0.48 $0.18-0.52
ing with the first gold pour at Rand Mining Ltd $87 $87 $1.45 $0.04-2.25
its Thunderbox operation, Kingsrose Mining Ltd $81 $81 $0.23 $0.03-0.36
45km south of Leinster. Excelsior Gold Ltd $74 $60 $0.13 $0.02-0.15
Focus Minerals Ltd $69 $82 $0.17 $0.12-0.27
Millennium Minerals Ltd
enjoyed the biggest rise, lift-

Page 8 GOLD MINING JOURNAL April – June 2016

Miners swing back to the hedge

Hedging is back on and $US1,290/ hedging as a won’t tap the market because
the agenda for investors don’t like it, they
buoyant gold miners oz to mitigate part of that,” have been burnt in the past,”
looking to take ad- Markus Bachmann, manager
vantage of this year’s cash flow risk he said. of Craton Capital gold fund,
double-digit gold rally said.
and it is Australian associated with “It is hard
companies who are Large gold mining compa-
leading the way. potential falls in in the US but nies like Barrick Gold Corp
and AngloGold Ashanti Ltd
ASX-listed mid-tier miners gold prices. even there in- lost billions closing out hedg-
Evolution Mining Ltd and Met- es during the 12-year rally.
als X Ltd are among those South Af- vestor mood
companies to have taken “There is an increasing
gold’s recent run as a sign to rica’s Harmony has changed. awareness among compa-
secure forward pricing, join- nies, although they never fully
ing others such as Northern Gold Mining There are now learn, that maybe they need
Star Resources Ltd and St to focus on operational ex-
Barbara Ltd in securing for- Co Ltd hedged good exam- cellence and maintain or in-
ward sales. crease your margins,” Bach-
local currency Sean Russo ples of sensi- mann added.
Gold suffered a four-year against the ble hedging
downturn having hit a record Globally, gold mining com-
$US1,900/oz in 2011 but value of around and many panies increased their out-
with the spot price rebound- standing global hedge book
ing almost 20% in 2016, it is one third of this year’s gold examples of companies with by 16t in the third quarter of
now sitting around 13-month last year, the quarterly Global
highs of $US1,280/oz. sales. bad debt and no hedging Hedge Book Analysis has
shown.
Hedging has been out of Capital raisers include in place. You can see how
fashion for a decade with Produced by Societe Gen-
gold miners spending bil- Canada-based Kinross Gold quickly those companies can erale and GFMS analysts at
lions to close hedge books Thomson Reuters, the report
that were severely out of the Corp, which raised $US250 unravel and investors are be- showed the global producer
money following spot gold’s hedge book stood at 193t
rise through the previous million to repay debt and ing more discerning.” at the end of September, up
decade. However, the re- 9% from the quarter before.
cent rebound had led to the ASX-listed Beadell Resourc- Anti-hedgers have long ar-
return of hedging for many “The third quarter of 2015
gold miners. es Ltd, which raised $50 mil- gued that investors prefer to saw the producer hedge
book back to net hedging as
“The pendulum has swung lion to fund exploration and be leveraged to the gold price a handful of Australian pro-
back towards considering ducers continued to lock in
hedging as a tool, rather than pay back some debt. but Russo points to the per- favourable Australian dollar-
a black or white topic,” Noah’s denominated gold prices,”
Rule’s Sean Russo told Gold Some may think this is their formance of Australian pro- GFMS/TR analyst Dante
Mining Journal. “It is great Aranda said.
to see producers selling into best chance to lock in a life- ducers as a counter. Australian miners Evolution
speculative rallies. It is fan- Mining and Metals X saw a
tastic because for the first line for the next 6-12 months, “Australian companies 25% devaluation of the Aus-
time in a long time they are tralian dollar against the US
behaving rationally.” according to JP Morgan As- are looking better; Northern dollar in the 12 months to
September 2015 as a good
Companies that have set Management Natural Re- Star has hardly any debt. opportunity to lock in gold
hedged so far include forward prices.
London-listed Acacia Min- sources fund manager Neil Evolution has more debt but The mining industry re-
ing plc which sold forward turned to net hedging in 2014
136,000oz of its Buzwagi “Gregson. has good hedging in place. for only the second time in 15
mine in Tanzania for 2016 at years as prices fell. The out-
a price between $US1,150/oz There is an increasing awareness standing global hedge book
among companies, although they has shrunk significantly from
never fully learn, that maybe they need 57.2 moz at the end of March
to focus on operational excellence and 2005.
maintain or increase your margins.

“The first stage for those They look much better than
companies that would like companies with debt and no
healthier balance sheets is to hedging in place,” he said. “A
try and issue equity and then, lot of companies, particularly
if gold rallies around $US200 in North America, argue that
more, we might see more on their shareholders don’t want
the hedging side,” Gregson hedging but the Australian
told Reuters. companies with hedging have
still seen their share prices
Russo believes the disas- going up.”
ters of 2014 and 2015 have
led companies to reconsider Some of the higher-rated
hedging. firms such as Randgold Re-
sources Ltd, Newmont Mining
“Last year a lot of com- Corp and Goldcorp Inc – tra-
panies looked over into the ditionally do not hedge.
abyss and so it is not surpris-
ing that sensible companies “When it comes to hedg-
are looking to get through the ing or capital raising, a lot of
next 9-12 months and see the medium-sized companies

April – June 2016 GOLD MINING JOURNAL Page 9

NEWS

Saracen seeing the future

Saracen Mineral Thunderbox is performing beautifully for Saracen
Holdings Ltd man-
aging director Raleigh they might switch back into Saracen has enjoyed the Ltd (360,000 ozpa) and Re-
Finlayson has flagged Australia which we have seen limelight and seen strong gis Resources Ltd (300,000
the possibility of North all too often in the past.” buying of its register from ozpa) as a leading Australian
American gold heavy- North America. mid-tier producer.
weights returning to Australian producers are
Australian shores. making good business cas- A lot of the investment out Forecast production from
es for themselves and have of North America has been Western Australia for FY2016
Speaking to Gold Min- been received warmly on from the specialist resources is 165,000 ozpa, which will
ing Journal after present- international conference cir- funds. substantially grow from the
ing at the BMO Conference cuits since the back end of next financial year.
in Miami, Finlayson said as last year. “What we saw from our 25-
strength in the US dollar gold 30 meetings in the three days The company has complet-
price allowed North Ameri- Investors around the world [at BMO], is probably half if ed the revamp of the Thun-
can gold companies to repair have realised that low labour not more of those meetings derbox operation – acquired
damaged balance sheets, the and input costs, combined were with more generalist from Norilsk Nickel in 2014 –
Australian gold scene would with $1,700/oz gold prices, funds,” Finlayson said. where 125,000 ozpa over 10
start to look attractive again. have some Australian pro- years is being targeted.
ducers sitting pretty with “You tend to find that the
Finlayson said marginal $600-700/oz margins. specialist funds are there Commissioning of the 2.5
producers in the US were be- earlier and when it starts to mtpa plant started in Febru-
ing stretched and smart M&A Raleigh Finlayson get a bit warmer you start to ary, with the first gold pour
activity was occurring, unlike see the generalist funds get later that month occurring
in Australia where high gold in. I don’t think we are quite four months ahead of sched-
prices and margins had made there yet, but we may be on ule.
it harder and more expensive the cusp of that. Ask me in six
to do deals. months time and there might “It has worked out beauti-
be a few more of those gener- fully for us since first gold
“In my view, what you will alists on our register which is pour from Thunderbox in
find is less [M&A] activity in a good sign.” February and we are riding a
the Aussie space and prob- nice crest of the wave at the
ably continued activity in Saracen is on the radar of moment,” Finlayson said.
the North American space, investors for good reason.
particularly as you continue “We couldn’t be happier.
to have those small margins Of the ASX gold producers It was a very simple refurb
that are increasing slowly,” with operations predominant- in a low-risk jurisdiction. We
Finlayson said. ly on home soil, Saracen only had a plant already there and
trails the likes of Evolution previous milling was from en-
“I think you will see the Mining Ltd (800,000 ozpa), tirely the same deposit we are
corporates jumping on that. Northern Star Resources Ltd mining now, so it was a very
I think the other trend you (550,000 ozpa), St Barbara vanilla start-up. The mining
might see, oddly enough,
is the [opposite of] what we
have seen in the big North
Americans exiting Australia in
the last couple of years, Bar-
rick [Gold Corp] in particular,
which has been mainly driven
by trying to sort their balance
sheets and get their debt
down.

“As margins increase and
we obviously see more cash
flow, it wouldn’t surprise me if
you see the switch happen. It
might be 12 months away, but
when they start to get their
balance sheet under control

Page 10 GOLD MINING JOURNAL April – June 2016

costs are obviously extremely Carosue Dam also contin- Saracen will sit amongst Australia’s leading mid-tier
low when you see where ues to deliver on the explora- gold producers in FY2017
diesel and labour costs are. tion front with recent drilling
We’re extremely fortunate not results pointing to significant 400 per reserve ounce,” he right now. We’ve got cash on
only with where the gold price growth in mine life. said. the balance sheet now and
is but that we’re also in a low who knows, in three or four
cost environment.” The company expects to “For the drilling we are do- years time, the cycle could
announce a resource to re- ing at the moment at Karari, have gone against us and
Stage one open pit pro- serve increase in the June Red October and Thunder- moved back into the M&A
duction is expected to yield quarter, with an extra $3.6 box later in the year, we are space which is the way we
596,000oz at AISC of $1,032 million in funding approved looking at discovery costs of are reading it at the moment.”
over a four to five year mine for drilling at Karari and Red around $20/oz reserve. To
life for Saracen. October. grow organically at $20-25/oz – Mark Andrews
reserve is pretty compelling
Bulk underground oppor- Infill drilling down dip of the
tunities, high-grade potential resource at Karari intersect-
at Kailis and King of the Hills, ed 13m @ 4.3 g/t gold from
Thunderbox D zone and sat- 522m, while a hit of 1.8m @
ellite open pits, are all areas 19.1 g/t from 109m was re-
where Saracen sees longev- turned from Deep South.
ity for Thunderbox.
First full scale production
Thunderbox will essentially stoping from Deep South is
double Saracen’s gold output expected in the June quarter.
to 300,000 ozpa at AISC of
$1,075/oz. Finlayson said the compa-
ny was getting good bang for
The other side of the equa- its buck from drilling, which
tion for Saracen is Carosue was helping efficient organic
Dam, which has been a prov- growth.
en performer since 2010.
“For example, the last
FY2016 outlook is for spate of M&A in the Aussie
150,000-160,000oz @ AISC space probably saw acquisi-
of $1,025-1,075/oz. tion costs of around $300-

· Scoping & Feasibility Studies
· Design
· Process Optimisation
· Sustainable Asset Management
· Operational Readiness
· Reliability & Maintenance
· Audits & Investigations
· Project Management
· Construction Management
· Expert Advice & Consulting Services

Level 3, 516 Hay Street Tel: (08) 9442 3333
SUBIACO WA 6008 Fax: (08) 9442 3399

ABN: 64 064 105 488 [email protected]

April – June 2016 GOLD MINING JOURNAL Page 11

NEWS

Metminco looks for quick
fix in Colombia

Peruvian copper de- Chile,” Howe said. costs down. The peso has
veloper Metminco also depreciated by 100%
Ltd swung into a new Previous owner against the US dollar in the
direction in March last three years and 60% of
when it announced Seafield Resources our costs will be in pesos.”
the acquisition of the
Quinchia gold project Ltd was halfway The company will weigh
in Colombia. up the merits of using mining
through a feasibility contractors and/or leasing
ASX-listed Metminco al- equipment to reduce upfront
ready has copper assets in study for a 42,000 capital costs and sourc-
Chile and is trying to find a ing plant and infrastructure
development partner for its ozpa gold opera- equipment locally. It believes
352mt @ 0.75% copper and it can drive the $US83 million
318 ppm molybdenum Los tion on the deposit capex figure down by more
Calatos project in Peru. than 25%.
when it struck finan-
However, exposure to While Miraflores offers im-
Quinchia will offer it a near- cial trouble in 2014. mediate production potential,
term production proposition. Quinchia also offers larger,
A PEA completed longer term opportunities.
The acquisition will bring
1.88 moz gold and 3.8 moz by Batero Gold In Tesorito, Metminco be-
silver resources into the com- lieves it has a porphyry tar-
pany from the Miraflores pros- Corp in 2013 was get which has the potential to
pect, a project which Met- replicate the large Colombian
minco sees as a near-term designed around porphyry gold systems such
producer. The deal – struck as AngloGold Ashanti Ltd’s
with RMB Australia Holdings a 3.5 mpta open 33 moz La Colosa project
Ltd – will also deliver Metmin- and Continental Gold Inc’s 9
co the 920,000oz gold and pit, heap leach op- moz Buritica project.
1.04 moz silver Dosquebra-
das deposit and the Tesorito eration producing “The near-term gold pro-
porphyry prospect which has duction opportunity at the
returned a best intercept of 56,000 ozpa gold Miraflores project, combined
384m @ 1.01 g/t gold, 0.9 g/t with the drill-ready gold-cop-
silver and 0.08% copper. and 117,000 ozpa per porphyry system identi-
fied at Tesorito, makes the
Metminco will issue RMB silver. Quinchia portfolio a very at-
50 million shares at 0.5c/ tractive acquisition for Met-
share for the heads-of-agree- Howe said Met- minco,” Howe said.
ment to become binding, a
further 350 million shares on minco would revisit “The real story... is the por-
settlement and a $500,000 phyry system. One hole inter-
reimbursement on costs. Two the parameters of cepted 384m at more than 1
cash payments of $1 million g/t gold top to bottom. This is
will come 12 and 24 months Metminco managing director William Howe the study in an ef- a large porphyry system and
after settlement with an ad- on site at the company’s Los Calatos fort to drive up NPV we believe it is potentially a
ditional $5 million to be paid copper project in Peru and reduce capital multimillion ounce deposit.”
following a decision-to-mine costs.
being made. RMB will then be The company plans to start
entitled to a maximum $7 mil- tor William Howe said the “We will re-optimise the drilling Tesorito immediately
lion in royalty payments from after settlement of the trans-
cash flow. deal was structured to allow feasibility study, put all per- action.

Metminco managing direc- Metminco a clear path to pro- mitting in place and go to – Dominic Piper

duction. construction as quickly as we

“We purchased the asset can,” he said. “The feasibility

for upfront 400 million shares study almost completed by

– about 5% of the company Seafield was fairly compre-

– but then it is delayed pay- hensive. We believe there is

ments over time. The struc- an opportunity to optimise

ture was specifically ear- the mine plan. We think it is

marked towards not paying possible to up the profile from

cash up front and focusing on 42,000 to 50,000 ozpa and

the feasibility study at Miraflo- reduce mine life to nine years,

res and getting into produc- capitalising on economies-of-

tion,” Howe said. scale but also reviewing the

Work on its Peruvian and $83 million capex.”

Chilean copper assets will The devaluation of the Co-

continue but Metminco is ea- lombian peso, and the slow-

ger to pursue the short-term down in the country’s mining

cash flow opportunity at Mira- sector could deliver further

flores. cost reductions.

“The Quinchia portfolio will “There is a very distressed

diversify our portfolio, ena- industry and there are min-

bling Metminco to become ing services companies who

a near-term gold producer have a wealth of experience

while complementing our on- and are looking for work so it

going activities in Peru and is a great environment to get

Page 12 GOLD MINING JOURNAL April – June 2016

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NEWS

High times for Australian gold

In a high local price Australian gold production reached 285t in 2015
environment, Aus-
tralian gold production boost to the Australian gold margins have increased,” Dr addition, there was increas-
peaked at its highest sector, as well as to other ex- Close said. “Much of the local ing toll treatment of ore by
levels since 2003 last porters. gold sector is travelling quite small companies.
year. well for the moment.”
“I wonder if investors are “Metals X [Ltd] is ramping
A total of 285t gold was aware that the Australian Recent overseas commen- up its rejuvenated Murchison
produced in 2015 – about dollar gold price, at around tary suggesting that Australi- operations near Meekatharra
2t more than in 2014 – ac- $1,700/oz, is only about $100/ an gold producers were being [200,000 ozpa], Saracen
cording to Melbourne mining oz less than the all-time re- squeezed by high costs, was Mineral Holdings [Ltd] poured
consultants Surbiton Associ- cord Australian dollar gold dismissed by Dr Close. the first gold at the reopened
ates Pty Ltd. Production in price reached in August Thunderbox mine [150,000
the December quarter 2015 2011,” Dr Close said. “Such comments are typi- ozpa] early in February and
was 73t, slightly above that cal of US-centric observers Blackham Resources [Ltd]
produced in the September Dr Close said lower oil and who fail to appreciate the expects to bring its Wiluna
quarter 2015. gas prices have reduced the effect of weaker local cur- operation (100,000 ozpa)
cost of energy in both the rencies on the economics of back into production mid-
While commodities and the mining and processing phas- gold production, whether in year,” Dr Close said.
shares of resource compa- es of the industry and that the Australia or in other gold pro-
nies were sold down heavily end of the mining boom has ducing countries outside the While Newcrest Mining Ltd
in 2015, the gold sector was a reduced pressure on wages US,” she said. will soon place its Ridgeway
bright spot on the Australian and led to lower contract mine on care-and-mainte-
scene, despite the negative rates for mining and ore haul- Dr Close said a number of nance, it will probably use the
sentiment, particularly in US age. mothballed operations were spare milling capacity to treat
markets. currently being brought back additional higher-grade Ca-
“If you factor higher prices into production which should dia East ore.
“For 2015, Australia’s gold and tighter cost containment help boost Australian gold
production of 285t was worth into the overall equation, output in the near future. In “We have seen the usual
over $14 billion at the average ups and downs in output for
gold price, that’s good news,” Australia’s largest gold producers for 2015 individual operations in the
Surbiton director Dr Sandra December quarter, “she said.
Close said. Operation Ounces Owner “Both Tanami and Super Pit
reduced output by around
“Once again the local gold Boddington 794,000 Newmont Mining Corp a tonne each, compared to
sector has benefitted from Newmont Mining Corp 50%, the previous quarter but on
weaker US dollar exchange Super Pit – JV 640,000 Barrick Gold Corp 50% the other hand production at
rates.” Newcrest Mining Ltd Telfer, Tropicana and St Ives
AngloGold 70%, was considerably improved.”
Throughout 2015 the US Cadia East 508,303 Independence Group 30%
dollar gold price slowly de- Newcrest Mining Ltd
clined to around $US1,050/oz Tropicana – JV 488,939
by the end of the year.

Since the start of 2016 it has Telfer 488,817
recovered to over $US1,200/
oz. By contrast the Austral-
ian dollar gold price remained
relatively stable during 2015,
averaging $1,540/oz, while
since January it has risen to
over $1,700/oz at the time of
print.

“The Australian dollar has
fallen from near 95c [to the
US dollar] in mid-2014, to
around 82c at the start of
2015, to around 72c cents by
the end of 2015,” Dr Close
said.

“Such a significant devalu-
ation has provided quite a

Page 14 GOLD MINING JOURNAL April – June 2016

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COVER

West Wits revives
million ounce SA project

Page 16 GOLD MINING JOURNAL April – June 2016

A1.2 moz resource, at surface and close to exist-
ing infrastructure; it is the kind of project Aus-
tralian gold investors are currently salivating over,
but West Wits Mining Ltd chairman Michael Quinert
knows there is still much work to be done if his
company is to overcome the perceived political risk
discount South Africa attracts.

“The reaction from Austral- Randfontein had smaller tar-
ian investors thus far has not
been great, but then again gets which were closer to
we’ve not really engaged
them in any big way,” Quin- surface and was the obvious
ert explained to Gold Mining
Journal. “We’re in a position choice.”
where the market won’t take
us on face value; we first The move proved presci-
have to deliver, especially
given the perceptions Aus- ent. West Wits built 58,800oz
tralian investors have about
South Africa.” of JORC-compliant reserves

It is an honest admission and 139,000oz of JORC-
but one Quinert makes only
because he believes both in compliant resources on the
the value of West Wits’ asset
and the company’s ability to West Wits, Rand Consoli-
execute its plans.
dated, Luipaardsvlei and East
West Wits listed on the
ASX on Christmas Eve 2007 Champ D’Or leases and after
at a time when South African
junior gold plays were finding a couple of false starts fel-
a willing home on the Aus-
tralian bourse with the likes low ASX-listed junior Mintails
of Mintails Ltd, Gold One In-
ternational Ltd and Vantage paid $9 million for them in
Goldfields Ltd all joining the
ASX. 2012, achieving West Wits’

West Wits’ portfolio com- objective.
prised prospecting rights
over historical production The company retained the
areas on the West Rand
and was split into two pro- DRD and Rand leases and Shango Solutions’ Manie Swart is heading West Wi zts’
jects; the Randfontein and their combined 237,000oz re- exploration push on the West Rand, having previously
Soweto clusters. source but with the newly ac- worked on the ground for DRD
quired Dewero gold project in
The strategy was a simple
one; consolidate the plethora Indonesia commanding most sues were proving a road- Quinert said. “We decided
of historical mines in the re-
gion into just a few licences of its attention, West Wits block. to go into hiatus as we were
and then test open pit targets,
unmined underground reefs slowed the exploration pace “By that time, the prospect- reticent about spending mon-
and underground remnant pil-
lar targets in licences which in South Africa. ing right had expired and al- ey on the project when there
between them had previously
produced 30 moz gold. Even had it wished to in- though applied for, the exten- was no guarantee it would be

“We began exploration just “crease activity, licensing is- sion had not been granted,” granted. It didn’t worry us too
as the GFC was beginning We’re in a position where the market won’t take us on
to take effect,” Quinert said. face value; we first have to deliver, especially given the
“We decided to concentrate perceptions Australian investors have about South Africa.
on those targets which could
generate either early revenue Illegal miners – or zama-zamas as they are locally known – sift through mine
opportunities or asset sales. dumps on the Soweto Cluster project

April – June 2016 GOLD MINING JOURNAL Page 17

COVER

Gold Mining Journal editor Dominic Piper at one of
the shaft closure sites

Zama-zamas continue to find dangerous entry points understanding of the project. to take that information and
to historic shafts “We are now in a far bet- the knowledge of Manie
about the individual shafts,
much because we had Indo- right wouldn’t be extended.” ter position,” he said. “When etc, and build a resource of
nesia on our plate and the West Wits initiated legal ac- we first came in we did some 1.2 moz,” Quinert said.
DMR [the South African De- good quality work but we
partment of Mineral Resourc- tion and in early 2015 saw the didn’t have access to all the The resource consists
es] had verbally assured us DMR’s decision overturned historical geological knowl- of 302,300oz measured,
all the way through that it with the prospecting right re- edge of the leases. 566,400oz indicated and
would be granted.” instated for a three-year pe- 350,000oz inferred ounces.
riod in April that year. “When we dusted the pro-
In South Africa’s labyrin- ject off last year we recruited “That would have cost a
thine licensing system how- After a five-year hiatus, the [consulting geologist] Patrick substantial sum to develop
ever, verbal assurance is far company was ready to begin Harford and he went straight or even acquire in the current
from a guarantee. exploration in South Africa to [consultants] Shango Solu- market and we are still going,
again. tions and Manie Swart who there are still areas the com-
“In late 2014 we received a had been mineral resource pany is reviewing,” Quinert
letter out of the blue from the Quinert believes the en- manager for DRD throughout said. “We also have sampling
DMR saying the prospecting forced delay, while not ideal, the 1990s and early 2000s. – both our own and histori-
has led the company to a new Manie knew the ground bet- cal – which points to further
ter than anyone and eventual- areas of interest outside both
Despite the Department of Mineral Resources’ efforts, ly convinced the former DRD the resource and the explora-
illegal miners continue to access reefs across the Rand head geologist to give us all tion target.”
the old resource data.”
The decision to restrict the
Acquiring the information JORC-compliant resource to
and the intimate understand- the top 400m is designed to
ing of it through Swart has produce a mineable reserve
given West Wits’ exploration at Soweto Cluster. While re-
programme renewed vigour. sources may be extensive,
West Wits is deliberately
“Since April last year there keeping its ambitions for min-
has been a flurry of activity ing in check.
and we now have a three-
year prospecting right; a new “The first targets we are
environmental plan and a new looking for are those where
works programme lodged.” mineralisation is outcropping
at surface, many of which are
The company pared a running at 4 g/t gold. They
JORC Code 1997 historical provide an obvious oppor-
resource of 87.9mt @ 4.6 g/t tunity for simple, clean slot
for 12.82 moz gold from pre- mining where you can take a
vious owner DRD Gold Ltd’s 15-20m shelf out to expose
2000 annual report and used the reef, mine it and then re-
it to build an exploration tar- habilitate by backfill.
get – based only on the top
400m – of 1-2.2 moz gold. “You could contract out
most of the work and there
“From there, we were able

Page 18 GOLD MINING JOURNAL April – June 2016

West Wits was able to build an initial resource from historic data but since November has been drilling
in an effort to increase confidence in the resource

are plants all around us tive impact on both social and of addressing the problem in community engagement to

through which we could toll- environmental management this area.” show it could help solve such

treat,” Quinert said. “That in the project area. As well Most of the zama-zamas issues and provide employ-

means we are not spending as the environmental issues are illegal immigrants which ment.

the capital and we can gen- which proliferate throughout creates further tension in the “Relations with the commu-

erate cash flow, allowing us the Witwatersrand Basin, local community. Quinert said nity are good. We are work-

“to avoid going back to the the Soweto Cluster project is West Wits had stepped up its ing with several communitymarket but stillgroups and are

keep going un- These leases could turn into a 100,000 ozpa pro- in discussions
til we develop with the DRD

a full mine plan ducer over 10 years. But for that to happen West community in
for the entire Wits will have to gear up which would require signifi- Soweto. We
lease.” cant re-skilling and restructuring of the company. are working

Such simple with another

methods not group to create

only minimise employment

capital expenditure, they subject to extensive ar- opportunities for locals

could also prove less disrup- tisanal mining activity – and Shango has a pro-

tive to a densely populated zama-zamas in the local gramme in place to reha-

area. parlance – which is both bilitate ex-convicts so we

As the name suggests, the dangerous and illegal. are in discussions with

Soweto Cluster project sits “The DMR is con- them about participating

just above and to the north cerned about the zama- in that.

of Soweto township, one of zamas,” said Quinert. “We have had recent

the largest urban areas in the “There are old shafts and meetings with senior

Johannesburg area. Commu- stopes being opened up police, the local council

nities are present throughout by these illegal miners; and the DMR. If we do

the leases and while the com- it is highly dangerous. It it properly, we can con-

pany is adamant there will be is one of the reasons the vince the Government

no community opposition to DMR is supportive of our and the community that

development, it is still keen to plans; they have tried to we are helping to improve

ensure the impact is minimal. close the shafts but they the area. If we can bring

In fact, West Wits believes keep getting in and they these shafts back into

its own plans can have a posi- see our plans as a way Michael Quinert commercial operation

April – June 2016 GOLD MINING JOURNAL Page 19

COVER

“The 11 Shaft on the Rand Leases still hosts infrastructure
from previous generations
I think there would be interest,
not from Australia but certainly
from some of the bigger, emerging
South African companies.
one central mill then you are of DRD Gold, JCI, etc) or

de-risking by diversifying the rapidly exiting the domestic

resource.” scene (Harmony Gold Min-

From there, it will be a ing Co Ltd, Gold Fields Ltd,

question of how willing and/or AngloGold Ashanti Ltd) and

able West Wits is to expand the once king of global gold

West Wits has also conducted trenching to expose shallow the scope of the project. mining is now only the world’s
mineralisation on the Soweto Cluster “These leases could turn fifth largest producer of the

into a 100,000 ozpa producer precious metal.

we can go some way to solv- from the first few locations, over 10 years,” Quinert said. Furthermore, the assets

ing the problem.” West Wits can then open up “But for that to happen West West Wits acquired are lefto-

It is for both technical and other areas. Wits will have to gear up vers from that era; who, then,

social reasons that the Sol “We will probably look for which would require signifi- would make such a move?

Plaatjes target – near the the flexibility of five or six cant re-skilling and restruc- “I think there would be in-

historic No.8 Shaft which tar- targets,” Quinert said. “If we turing of the company.” terest, not from Australia

geted Kimberley Reef – has can keep that many faces The other option is to di- but certainly from some of

been identified as the most open, using manual mining vest the assets. However, the the bigger, emerging South

appropriate for initial mining. at shallow depths feeding South African gold majors of African companies,” Quin-

“There is a big illegal min- the 1980s are either gone ert said. “A number of local

ing presence in the area and (the original incarnation companies are experiencing

the DMR has identified it as a a rebirth. The majors who

problem and it is a good tar- dominated the Rand up

get for us so it suits everyone until the 90s have largely

to start there,” Quinert said. gone. A few entrepreneurs

The second priority is the filled that space for a while

11 Shaft target on the Rand – Brett Kebble, etc – but

leases. Bird Reef was previ- now they’ve also gone

ously mined in this area via and there is a space to be

open pits on both sides and filled. We are starting to

from underground on the 7 see a few emerge, led by

Level. The company sees an Sibanye Gold [Ltd].”

opportunity to mine the re- Since being spun out

maining outcrop by means of of Gold Fields in 2012,

an open pit and the remaining Sibanye has grown into

underground resources from South Africa’s largest do-

infrastructure that will utilise mestic gold producer and

the high wall of the open pit. A sample of mineralisation from has now moved into plati-

Once generating cash flow Patrick Harford the Soweto Cluster num and coal.

Page 20 GOLD MINING JOURNAL April – June 2016

For nearly a century, the Witwatersrand Basin was the most prolific
gold producing region in the world

However, the company – the Kebble family’s owner- with other groups and of the company’s ability to get
led by chief executive Neal ship of the DRD Gold group investors, we think our into production will be even
Froneman – is not averse to of companies saw leases theory for commercialis- more difficult.
picking up smaller assets, shifted about with alarming ing this project continues
as proven by its acquisition regularity. By the time the to stack up,” Quinert said. “As yet we have not been
of the 130,000 ozpa Cooke dust had settled, DRD Gold’s “But, whether we are looking embraced but we are not con-
underground mine from Gold attention had moved to the at full-scale expansion or a cerned at this stage,” he said.
One International Ltd in 2013. East Rand and its tailings sale, there is nothing better “If we start to open up some
retreatment projects. Swart, than proving it can be done. of those outcropping areas
There is also West Wits’ who was intimately involved We have to show we can deal and start making money toll-
largest shareholder, DRD with DRD Gold’s exploration with the zama-zamas and the treating the ore then the mar-
Gold, which has built a programmes at the time, has local community and get into ket will react. It needs results
150,000 ozpa business re- been eager to return to the production. It is the proof-of- before we can expect it to fol-
treating tailings dumps along ground for more than a dec- principle approach.” low, especially as investors
the Witwatersrand. ade. are currently still gun-shy, es-
West Wits shareholders pecially about South Africa.”
The notion that the Soweto Quinert knows, however, would also want to see any
Cluster is just a handful of that any corporate activity takeover offer come at a – Dominic Piper
unwanted leases is also dis- would only come once West much higher price than the
missed by Quinert. Instead, Wits has demonstrated it can current 2c/share. However,
they were caught up in South execute its strategy. Quinert is cognisant that con-
African gold’s corporate bat- vincing Australian investors
tles of the late-90s, when “From testing the water

April – June 2016 GOLD MINING JOURNAL Page 21

AFRICA FOCUS

Resolute buoyant ahead of
Syama underground decision

Resolute Mining established Sy-
Ltd continues to
enjoy the benefits of a ama in the 80s and
resurgent gold price,
with the Australian- identified it as a
African miner report-
ing a 19% increase world-class asset.
in gold sales revenue
for the second half of Resolute has since
2015.
solved the metal-
Resolute reported a net
profit of $107 million for the lurgy issues and
half-year on the back of
153,191oz gold production, an we have proven we
11% increase on 12 months
previous. AISC for the period can successfully
was $1,247/oz ($US902/oz).
operate in Mali. It is
With gold prices increasing
since the reporting period, a big long-life mine,
Resolute expects the second
half of the 2016 financial year looking for signifi-
to be even stronger.
cant improvement
“The gold price on Decem-
ber 31, 2015 [the end of the on the PFS to dem-
reporting period] was $1,450/
oz and $US1,060/oz. So, we onstrate it is a Tier
are announcing good operat-
ing numbers in an environ- 1 asset.”
ment where the gold price
has since risen to $US1,220/ The DFS is set
oz which is above $1,700/oz.
It is looking very positive,” for completion in
managing director John Wel-
born said. the June quarter

The return to profit came and Welborn sug-
just 12 months after a net loss
of $324 million in the Decem- Resolute managing director John Welborn addresses the media gested develop-
ber 2014 half year. at last year’s Africa Down Under conference ment could be
funded internally.
Welborn said the results
had allowed Resolute to “in- from $64 million to $22 million in the December half-year, up “The half-year results were
crease liquidity and aggres-
sively pay down debt”. in the period, giving Resolute from 86,965oz in the Decem- important because we can

Some $28 million of debt greater flexibility as it heads ber 2015 period. now demonstrate we can
repayments were made fol-
lowing the agreement of an towards decisions on several “This came after signifi- fund the Syama underground
accelerated debt restructure
with the group’s lending syn- development projects. cant investment in techni- project from existing cash
dicate, with the $US50 mil-
lion cash advance facility to “The focus for the period cal improvements at Syama, flows,” he said.
be repaid in full by June 30.
Overall net debt was reduced has been strengthening the specifically the installation of The company’s plans for

balance sheet, commencing a new crusher and complete Ravenswood are less ambi-

our continuous improvement refurbishment of the roaster.” tious but Welborn remains

programme, and advanc- Welborn said the cost sav- confident further mineable

ing feasibility studies for the ings achieved in the last 12 gold will be delineated.

future of our Syama, Raven- months would also flow into “At Ravenswood we are

swood, and Bibiani opera- the underground DFS. looking for possible mine life

tions,” Welborn said. “We think we can do better extensions,” he said. “We

The three asset reviews in the DFS on cash costs. We have been very success-

reflect a new momentum in are doing some work on re- ful with Mt Wright where the

the company as it sets itself ducing current costs and they mine life has been extended

to take advantage of gold’s will flow into the DFS. We also to early 2017 and we are ex-

upswing. think we can boost recoveries ploring opportunities to con-

At Syama – in southern in the sulphide circuit and are tinue to efficiently operate

Mali – Resolute is prepar- doing test work on that.” there.

ing to release a DFS for un- Completion of the under- “We have still got more

derground development this ground DFS is a priority for than 1 moz reserves at Sars-

year, having previously in- Resolute as it looks to justify field and have a lot of regional

curred a $323 million impair- claims that Syama is a Tier 1 reserves and resources. We

ment charge when it deferred asset. have been looking at those

an expansion of the opera- “We are prioritising Syama options for years but got a

tion’s open pit. because we have a world- new team and a big catalyst

Existing open pit opera- class orebody there that we to demonstrate we have got

tions at Syama produced will be mining for decades to a long-term future beyond Mt

94,729oz @ $1,294/oz AISC come,” Welborn said. “BHP Wright.”

Page 22 GOLD MINING JOURNAL April – June 2016

Welborn said the clear- A decision on underground development at Syama is expected this year continues to cast its eye over
ing of debt served to both projects in those jurisdictions.
strengthen the balance sheet as one of the more sprightly “We’re always looking at
and prepare the company for African mid-tier gold miners. the market and I think we “We are looking at 10-
a renewed growth push. have an enormous proven year plus, 100,000 ozpa and
“We are looking for new op- capacity to run multiple gold $500-plus margin operations
“It is a very important cash- portunities to not only demon- mines,” Welborn said. and we do see opportunities,”
ing up exercise for what is a strate Resolute’s strengths of Welborn said. “We cut our
very exciting organic devel- historical technical expertise Resolute has operated teeth in Australia and would
opment profile,” he said. but to reward shareholders by nine mines across Western like to continue there but Aus-
developing long-life sustain- Australia, Queensland, Tan- tralia is a very competitive
Welborn has previously ad- able mines with big margins. zania, Mali and Ghana and it space.”
mitted to Bibiani being a “gold
price play” but with longev- He said the company had
ity in spot gold’s recent rally, demonstrated its ability to
redevelopment in Ghana is operate in Africa and would
back on the drawing board. continue to focus on a con-
tinent in which gold projects
“It’s incredibly leveraged to currently represented greater
the gold price and its advan- value.
tage is we have identified a
$30 million capex so it’s very “In Africa we are seeing op-
quick and low cost to get go- portunities where there are a
ing. It has a lot of ounces in lot of ounces with valuation
the ground, a fully efficient 3 a lot less than you could drill
mtpa plant and simple metal- them out for.”
lurgy,” he said.
– Dominic Piper
The company will also pur-
sue new opportunities as it
enters the gold bull market

Fekola funding update on the way

B2Gold Corp will provide and concrete was being – over the course of the
an update on financing poured in readiness for
for the $US450 million Fe- the peak of construction year, and how we will
kola mine soon, according to in the next year which
president Clive Johnson. will see 1,000 workers stay on our schedule to
on site.
Last year, a $US350 million be in production in 2017.”
revolving credit facility was To date, $US125 mil-
raised to help B2Gold build lion has been spent on Johnson said Fekola
Fekola by 2017 from existing building the project,
cash flows. which includes a camp was ahead of schedule
to host 1,000 people.
The global gold price – and without looking too
$US1,204/oz at the time of An optimised study
print – affected cash flows completed at Fekola in far forward, reiterated
in 2015, hence B2Gold’s 2015 revealed an open
need to fill the financing gap pit mine life lasting a that Kiaka in Burkina
to build Fekola, which was minimum of 12.5 years,
acquired for $US500 million with average production Faso would be the next
from Australia’s Papillon Re- of 350,000 ozpa @ $US418/
sources in 2014. oz for the first seven years. mine B2Gold developed.
Average life-of mine produc-
Pre-production capital costs tion was estimated at 276,000 “We are starting to see
are estimated at $US395 ozpa @ $US522/oz.
million (not including $US30 better grade at Kiaka
million already spent in early Johnson believes the po-
works), with an additional tential for the open pit to last and it will probably be
$US67 million in mine fleet longer, the undoubted under-
and power generator capital ground potential and explora- B2’s next mine. A better
costs to be lease financed. tion upside at Fekola provide
further evidence of a compel- Clive Johnson gold price will help that,”
Johnson told delegates ling investment case.
at Mining Indaba that 450 he said.
Malian workers were on site “We are looking at a num-
ber of opportunities to fill the In 2015, the company

financing gap for Fekola, but brought the Otjikoto mine

I can tell you we have had a in Namibia on-stream. The

lot of interest because of our mine is scheduled to pro-

credibility and our success duce 160,000-170,000oz @

and the extraordinary attrac- $US400-440/oz this year,

tiveness of the project,” he compared to 145,723oz @

said. $US500-525/oz last year.

“Over the next month you – Mark Andrews
will see us announce the way

we are going to add the ad-

ditional funding – perhaps

in the $US150 million range

April – June 2016 GOLD MINING JOURNAL Page 23

AFRICA FOCUS

Perseus takes Amara
down the aisle

Perseus Mining Ltd “Another advantage
managing director
Jeff Quartermaine is of developing Sissingue
riding high at the mo-
ment. sooner rather than later

Having launched a com- is that it will give our de-
bination bid, under a UK
scheme of arrangement for velopment team an op-
AIM-listed Amara Mining plc,
in February, it appears Per- portunity to cut their teeth
seus has made the move at
exactly the right time in the on a smaller scale project
market.
ion Cote d’Ivoire; learn the
“Sentiment towards gold
is certainly improving dra- ropes, learn who can do
matically,” Quartermaine said
upon return from this year’s what in country, etc and
BMO Conference.
then when it comes time
“Clearly the Australian de-
nominated producers have to build a third project we’ll
done well, but I certainly be-
lieve that the investors’ atten- be ready to go and play
tion is starting to trickle down
into the broader international the big game.”
gold sector. It certainly is a
good time to be presenting as Along with two almost
a credible alternative invest-
ment.” ready to build projects in

Perseus has turned its Perseus will end up with resources and reserves totalling almost 10 moz Cote d’Ivoire and an op-
fortunes around since 2014, gold in Cote d’Ivoire, 3.4 moz in Sierra Leone and 8.1 moz in Ghana erating mine and devel-
particularly at its flagship Edi- opment project in Ghana,
kan mine in Ghana.
marriage with Amara was an at AISC of $US632/oz over Perseus will also have expo-
For the half year ending
December 2015, mining unit opportunity not to be missed. about 5.5 years – waiting to sure to Liberia courtesy of the
costs decreased by 48% to
$US2.40/t, processing unit He said both companies be built. Amara tie up.
costs were down 15% to
$US9.19/t, while G&A costs were busy focusing in their Quartermaine said there A feasibility study was con-
were decreased 21% to
$US1.38 million compared to own assets last year and now would be news about Siss- ducted on a 2 mtpa open pit
half year 2014 costs in these
categories. Perseus had a better handle ingue, expected to cost in the scenario at Baomahun, while

Perseus reported $12 mil- on Edikan and knew what order of $106 million to build, there is scope to investigate
lion profit for the half year,
while cash and bullion on Amara’s Baomahun project in coming months. underground potential as
hand was $99.1 million com-
pared to $41.3 million in the (Liberia) and Yaoure project “Our intention was to get well.
2014 half year.
(Cote d’Ivoire) can add to the the Sissingue project into At the moment Baomahun,
With his business in much
better shape and investors stable. development as quick as we which has a reserve of 1.2
warming to gold again, Quar-
termaine knew proposing the “Had we sought to transact practically could. Get that into moz and indicated resources

six months ago it wouldn’t production and the cash flows of 2.2 moz, is seen as a “solid

have been the right time at Sissingue can be deployed optionality in an improved

and if we waited another six along with those at Edikan to gold market”.

months who knows what the help a development project,” Assuming the Perseus/Am-

market would be like,” Quar- Quartermaine said. ara deal is completed, Per-

termaine said. seus will end up with 6 moz

Once the deal is formal- in resources and 3.7 moz in

ised, Quartermaine said the reserve in Cote d’Ivoire, 5.7

priority would be progressing moz (resources) and 2.4 moz

a DFS at Yaoure – 62.3mt @ (reserves) in Ghana and 2.2

1.62 g/t gold for 3.2 moz (re- moz (resources) and 1.2 moz

serves). (reserves) in Sierra Leone.

Although a quality as- Two Amara directors –

set, Yaoure was somewhat John McGloin and Alex Da-

stranded in the hands of vidson – are proposed to

cash-strapped Amara, but join the Perseus board, with

with the strength of Perseus’ the pro-forma ownership of

balance sheet, real value in the company being Perseus

the project can be seen. 64.9% and Amara 35.1%.

Having Yaoure also offers – Mark Andrews
Perseus greater exposure

to Cote d’Ivoire where it has Jeff Quartermaine
Sissingue – 75,000 ozpa

Page 24 GOLD MINING JOURNAL April – June 2016

SAVE THE DATE

7 - 9 September 2016

Perth,Western Australia

www.africadownunderconference.com

For all enquiries please contact Tammy Caldwell on (+61) 8 9321 0355
or email [email protected]

AFRICA FOCUS

AngloGold chips away at debt

The effectiveness of Srinivasan Venkatakrishnan Srinivasan Venkatakrishnan phase, as we decrease the
AngloGold Ashanti (Venkat) said at Mining In- spend this year,” Venkat said.
Ltd’s restructuring pro- daba. Geita – $US717/oz – Tanza-
cess is starting to be nia, was AngloGold’s top per- With regards to Obuasi,
displayed. “We have retained a signifi- former in Africa. Venkat said the company
cant portion of our expensive was confident of progressing
Debt reduction has been debt and cut our interest bill Meanwhile, in Australia, discussions with the Ghana-
core to AngloGold’s recent by about 30% and debt by a Brazil and Argentina – des- ian Government to collate all
strategy and its performance similar amount. Our opera- tinations where AngloGold necessary approvals to com-
in this area since the end of tional efficiencies will con- produces about 66% of its plete a satisfactory invest-
2014 was highlighted in its Q4 tinue across the portfolio, gold – weaker currencies ment agreement to optimise
2015 results. focusing on our South African against the US dollar and the feasibility study.
assets as well.” lower oil prices helped cush-
The company has cut net ion the blow of a lower US Venkat said the project re-
debt by 30% from $US3.13 Safety issues and lower dollar gold price. mained highly geared to the
billion to $US2.19 billion last grades blighted RSA gold gold price, meaning there
year, while cash flow gener- output with 1 moz at AISC of Assuming average oil pric- were a few more ducks to
ated in Q4 2015 alone was $US1,088/oz being a poorer es of $US35/barrel for 2016 line up before AngloGold re-
$US160 million. return than in 2014 when An- and exchange rates to the US sumed the search for a JV
gloGold produced 1.22 moz dollar of R15, 4 Brazilian real, partner at Obuasi.
Divesting the Cripple Creek at AISC of $US1,064/oz. 70c Australian and 14.9 Ar-
and Victor mines in US deliv- gentina peso, AngloGold has Randgold Resources Ltd
ered $US820 million and a Domestic operations were forecast production of 3.6-3.8 pulled out of JV negotiations
royalty to AngloGold, while somewhat offset by achieve- moz at AISC of $US900-960/ before Christmas and at the
the cash was used to buy ments internationally, as oz. time of print the mine was
back some of its most expen- receiving more unwanted at-
sive debt. Capital expenditure ear- tention.
marked for projects is ex-
It has now been 12 consec- pected to be $US120-140 mil- Illegal miners entered the
utive quarters that AngloGold lion out of the total budget of mine in late January which
has met or beaten cost and $US790-850 million. warranted a military presence
production guidance, with from the Government.
overall AISC for 2015 11% Venkat said the current
lower than 2014 at $US910/ investment climate was not Military personnel withdrew
oz. conducive to moving Anglo- in early February, leaving the
Gold’s Colombian projects door ajar for illegal mining ac-
Production – 3.95 moz gold – La Colosa, Gramalote and tivity on site.
– was at the high end of guid- Nuevo Chaquiro – forward
ance for 2015. with large scale investment Although the situation on
this year. site was calm, AngloGold
“[These are] the results removed all non-essential
from restructuring that has “We have halved our Co- employees and remains con-
been completed so far, with lombian exploration expendi- cerned that ongoing illegal
the benefits that will [con- ture for 2016 and Obuasi will mining will be detrimental to
tinue] to flow for us in 2016,” remain in a limited operating Obuasi.
AngloGold chief executive
“AngloGold Ashanti Ghana
remains deeply concerned
about the prevailing condi-
tions, with illegal miners con-
tinuing to enter the site. If al-
lowed to continue unchecked,
illegal mining taking place on
parts of the concession, and
vandalism of property, could
threaten the long-term viabil-
ity of the mine and AngloGold
Ashanti Ghana’s ability to
continue its feasibility study
and maintain critical servic-
es,” the company said in a
statement.

– Mark Andrews

Page 26 GOLD MINING JOURNAL April – June 2016

Rewards start coming
for Randgold

Randgold Resourc- can fund a development Mark Bristow owner of the Kibali project in
es Ltd appears when we find it. DRC – but has avoided bid-
ready to reap the ben- spent and they still end up ding for rivals or established
efits of a decade-long While the rest of the indus- running on the spot. It has operations, choosing instead
string of outstanding try was in survival mode, we definitely stopped but the to focus on promising earlier
performances after in- confidently predicted value pick-up in prices is a key test; stage assets.
creasing cash-at-hand addition,” he said. will we see massive dilution
by 157% in 2015. of shareholder value again? The move has paid off with
However, it is unlikely in- Companies should be work- Kibali (a JV with AngloGold
The London-listed miner vestors will see Randgold ing to maintain share value Ashanti Ltd) exceeding its
reported a 7% quarter-on- undertaking ambitious corpo- rather than taking money 600,000 ozpa guidance by
quarter production increase rate activity. Bristow has been from the market.” 42,720oz, Tongon increasing
in its December results, leav- scathing of the gold industry’s production by 7% for the year
ing annual production up perceived profligacy over the Randgold’s success has on the back of improved re-
6% for the year to 1.21 moz last decade. been largely based on organ- coveries and Loulo-Gounkoto
gold. Profit was also up for ic growth and development. set to reach 600,000 ozpa for
the quarter ($US53,527 ver- “Companies recklessly While the company has par- the next 10 years
sus $US48,761 in the Sep- raised equity to conduct ticipated in corporate activ-
tember quarter) despite a M&A and buy old, marginal ity – it paid $US488 million in The company has also
lower average gold price re- projects. All that money was 2009 for Moto Goldmines Inc, continued to expand its ex-
ceived ($US1,091/oz against ploration push, signing three
$US1,122/oz). new West African JVs in the
last year. Bristow believes it
Randgold chief executive has been Randgold’s abil-
Mark Bristow told a Mining ity to find and develop high-
Indaba audience the results grade orebodies which has
were proof the company had done most to set it apart from
fully captured the opportunity peers.
it set out to pursue when first
established at the beginning “Industry has been unable
of the century. to replete its reserves; it just
kept raising the reserve price
“The great strides the min- in the belief the super-cycle
ing industry took in the early would last forever,” he said.
2000s were in a low com- “The industry has not put
modity time; Africa was money back into the ground
open to business and and now the average grade is
Randgold was set up half of what it was in 2005.”
to capture this,” Bristow
said. “In 2005, the com- Randgold spent $US45
pany was well placed to million on exploration and
take advantage of the corporate expenditure in
upswing. Now, it is clear 2015 (up from $US36.7
that was an exceptional million in 2014) with the
event and Randgold had company continuing to
prepared for its start and see DRC and West Africa
end.” as the most prospective
regions.
With $US213.37 mil-
lion now in cash, Bristow “Africa still has prospec-
believes the company is tive, unexplored terrain,
ready to fund its next de- among the most prospec-
velopment. tive in the world,” Bristow
said. “Tanzania, DRC,
“Randgold has never South Sudan and West
impaired an asset and Africa are still interesting.”

– Dominic Piper

Randgold increased cash-at-hand by 157% in 2015

April – June 2016 GOLD MINING JOURNAL Page 27

AFRICA FOCUS

Acacia close with Bulyanhulu

In a moment of brutal hon- Making a success out of the Bulyanhulu mine in $US1,187/oz in 2015 with the
esty rarely seen among Tanzania remains Acacia’s primary focus company forecasting a 10%
senior mining executives, increase in production and
Acacia Mining plc chief and managed to get through ment, the company’s two oth- a 15% reduction in AISC for
executive Brad Gordon with much improved perfor- er Tanzanian mines – North 2016.
admitted his company had mance,” he said. Mara and Buzwagi – con-
yet to deliver on the prom- tinue to provide much of the “We expect all our opera-
ise its Bulyanhulu mine The mine – near Mwan- production and cash cost im- tions to be under $US1,000/
held. za in northern Tanzania provements on Acacia’s bot- oz this year,” Gordon said.
– produced 274,000oz at tom line.
“Bulyanhulu is one of the $US1,253/oz AISC in 2015, The company has forecast
best assets in the world but a 17% increase on 2014 pro- North Mara produced group AISC of $US950-980/
nobody has ever made any duction. Acacia expects simi- 287,000oz at $US915/oz oz with cash costs expected
money out of it,” Gordon lar production levels in 2016 AISC in 2015 and as the to fall to $US670-700/oz.
told Mining Indaba del- and is targeting a 15% reduc- ramp-up of the Gokona un-
egates. tion in AISC on the back of derground mine nears com- On exploration, Gordon
increased development me- pletion, Acacia expects 5% said the once Tanzania fo-
His honesty, however, was tres, improved stope cycle improvements to both ounc- cused company continued to
followed by optimism. “But times and improved recover- es produced and AISC in push into new frontiers.
we’re getting close.” ies. 2016. At Buzwagi, which is
now in “harvest mode”, Aca- “We are picking up good
It has always appeared an While Bulyanhulu is at last cia produced 171,000oz at ground in West Africa at very
anomaly that a 54.44mt @ showing signs of improve- attractive rates,” he said.
8.93 g/t for 15.63 moz ore-
body can fail to be profitable In East Africa, Acacia is
and Gordon believes Aca- hopeful of making a break-
cia’s future rests on the cur- through this year on its
rent management team being 2,200sq km West Kenya JV
able to rectify that. while in West Africa it plans
to start drilling targets on its
“It is all about Bulyanhulu Tintinba project in Mali and
and the December quarter produce an updated inferred
showed what it is capable resource for its 2.1 moz South
of. We made a decision to Houndé project in Burkina
restructure the workforce Faso.

– Dominic Piper

Centamin uses purse for exploration

The gold price isn’t entic- executive Andrew Pardey holdings in Burkina Faso and “[Our focus] is on optimis-
ing too many companies said. Cote d’Ivoire and we have a ing production at Sukari;
to embark on elaborate ex- [significant] exploration budg- expanding the underground
ploration campaigns at the Centamin is in a privileged et for these two countries,” operation so we can lift
moment, however, there position; no debt, no hedging Pardey said. throughput,” Pardey said.
are some who believe that and $US216 million in cash
old fashioned boots on the and equivalents. Further- The company has 2,200sq Production in 2015 was
ground is the only way for- more, the company started km of ground in Burkina Faso 450,000-500,000oz from a
ward. paying dividends in 2014 and 1,520sq km in Cote throughput of 11 mtpa.
($US33 million) to woo its d’Ivoire plus a further 1,800sq
Centamin plc is one such shareholders. km under application. Forecast guidance for
company throwing its eggs 2016 is 470,000oz @ AISC
into the exploration basket, The plan is to pay a 15-30% With plenty of ground in of $US900/oz, which is ex-
as opposed to chasing M&A dividend on free cash flow West Africa for the company pected to hit 500,000 ozpa in
opportunities for expansion. and then fund exploration and to cover, it can do so knowing 2017 at similar AISC.
development across its suite that its cash cow – Sukari – is
“At Sukari, we have to focus of African assets from exist- performing on-song. No material capex is re-
on exploration. We have seen ing cash reserves. quired for this production
limited high-quality acquisi- Sukari has been in produc- ramp up, giving Centamin the
tion targets in the Arabian A budget of $US25 million tion since 2010, with reserves flexibility to allocate money
Nubian Shield. Our company has been set aside for explo- of 8.8 moz gold and resourc- to exploration, particularly on
thought is to grow through ex- ration outside of its flagship es of 14 moz holding the mine advanced underground tar-
ploration,” Centamin plc chief Sukari gold mine in Egypt. in good stead for a further 20- gets.
plus years of operations.
“We have significant land- – Mark Andrews

Page 28 GOLD MINING JOURNAL April – June 2016

The need to meet expectations

The gold indus- ships between industry and
try will have to government across Africa.
change its habits if it
expects recent gains “It is very easy to always
in equity markets to blame government but miners
be sustained, ac- haven’t delivered on prom-
cording to Randgold ises made to government and
Resources Ltd chief shareholders. That is why
executive Mark Bris- Randgold’s relationships are
tow. in reasonable shape because
we have. None of the other
Speaking at a special panel (From left) Metals Focus’ Philip Newman led a gold exploration players have delivered much
discussion with Mark Bristow, Ryan Cochrane and Venkat as his guests value though.”
focusing on the sustainability
Venkat said African gov-
of Africa’s gold sector, Bris- ernment attitude towards the
gold sector was “a mixed
tow – whose company has own mine,” Venkat said. windfall in cash flow but if you bag” but he believed commu-
“Buying assets is a little like don’t have higher prices and nity level relationships were
operating mines in Mali, Cote renovating an old house; it new investment, reserves are just as important.
always costs more than you going to fall again.”
d’Ivoire and DRC – said the think it is going to. We see “Interests between com-
near-mine exploration as the Bristow said exploration panies and governments are
industry had much work still most cost-effective explora- was the answer to address- generally aligned but in the
tion opportunity.” ing the gold industry’s falling details there are differences
to do if it was to win back the grade problem. of opinion but if the discus-
Ryan Cochrane, senior re- sions are moving forward that
trust of investors and host search manager, gold mine “The only way to look long is ok.
costs, Wood Mackenzie term is to drive grades back
countries. agreed, but said the recent up, either by discovery or “What is very important is
downturn may lead to some closures. The average head getting local community buy-
“Investors’ expectations corporate value. grade is half what it was in in because they are the big-
2005.” gest supporters of your op-
have changed,” Bristow said. “In gold, it is generally eration and a line of defence
cheaper to build than buy but He was critical of those when dealing with govern-
“The industry’s reputation some juniors and mid-tiers companies continuing to ment. Having proper dialogue
are so distressed you might mine gold at a loss who he is quite important, through
had gone to an all-time low be able to buy cheaper at the said were breaking the pact community forums, etc to
moment,” Cochrane said. they had with host countries. make clear the community
but in the last two weeks can’t just be a parasite to the
Gold’s development pipe- “You could also bring operation,” Venkat said.
we’ve seen a change as con- line has been squeezed by the bull market forward by
a lack of investment over the stopping the 15% of gold “The catch is that industry
cern for the global economy last decade and as compa- production which is cur- must only promise what it
nies adjust their profiles in rently loss-making. You can’t can deliver,” Bristow added.
grows. But to entice investors accordance with lower gold make profits when you de- “Overpromising is the first
prices, global reserves are sign a business based on a step in destroying the so-
back, the industry will have to in danger of quickly diminish- $US1,400/oz price versus a cial licence, so we need to
ing. Cochrane said a move spot price of $US1,000/oz. be honest with communi-
change habits and convince towards more conservative When a company does that, ties about what the mine will
pricing could present short- it is not being truthful to the bring.”
them we’re serious about cre- term benefits but pose long- host country. If prices are
term difficulties for the indus- marginal it is better to leave On the short-term outlook
ating value. Gold is in better try. the reserves in the ground for gold equities, Venkat
until the country sees benefit said there was a discernible
shape than other commodi- “There is a real risk of price- from them. There needs to change in the air towards
related reserve attrition and be more diligence in deliver- positive momentum.
ties but we still have to build in the short term we may see ing profitable businesses and
some mine lives shortened,” we have to help governments “Two years ago, it was all
that investor confidence.” he said. “If we do see a move understand the risks we’re about risk mitigation in gold
towards conservatism, we will imposing on their assets.” but now we are starting to
Bristow believes the only see cost deflation so in the see growth come onto the
next few years there will be a Bristow said such situations agenda.”
way to achieve value will be continued to harm relation-
– Dominic Piper
through exploration invest-

ment.

“We all learnt in the last

decade that the industry

should focus on investment in

troughs and making a return

for shareholders in the peaks.

So, we owe it to our share-

holders and host countries to

do some investing now.”

Bristow’s AngloGold

Ashanti Ltd counterpart,

Srinivasan Venkatakrishna

(Venkat) said his company

viewed organic growth as al-

ways preferable to corporate

activity.

“It is better to build your

April – June 2016 GOLD MINING JOURNAL Page 29

AFRICA FOCUS

Karma comes to Endeavour

Endeavour Mining Neil Woodyer said ecutive Christian
Corp expects to the deal highlight-
become a 900,000 ed his company’s Milau said.
ozpa gold producer strong financial
by 2018 after acquir- position, with esti- “We’ve ramped
ing fellow TSX-listed mated available li-
company True Gold quidity of more than down from about
Mining Inc. $US300 million.
1,100 people at
The transaction, valued at “It continues the
$C226 million, will see En- production profile the end of last
deavour acquire all of the is- of reducing our
sued and outstanding com- costs and extend- year in construc-
mon shares of True Gold via ing our mine lives
a court-approved plan of ar- and it’s accretive to tion to probably
rangement. our shareholders,”
Woodyer told inves- less than 700 as
Shareholders from both tors and analysts on
Endeavour and True Gold will a conference call. we speak. We’ll
vote to approve the transac-
tion in mid-April. True Gold “It’s a transaction that en- have about a
shareholders will represent hances our capabilities of
20.9% of the combined entity. developing the company 550-person work-
through the construction of
Endeavour’s major share- Hounde, the potential of Ity force as we get
holder, La Mancha Holdings and, very importantly, start-
SARL owner Naguib Sawiris, ing to unlock the value of into operations.”
also intends to exercise an both companies’ exploration
anti-dilution right to subscribe ground that we at Endeavour Endeavour has
for new shares to maintain his have, for capital restriction
30% stake in the company. purposes, not been able to Endeavour is poised to become one of Africa’s forecast produc-
access before.” premier gold producers from 2018 tion of 535,000-
At the centre of the deal is
True Gold’s 90% interest in Endeavour approached 560,000oz at
the Karma gold mine in Burki- True Gold about a possible
na Faso. Karma is slated to deal shortly after confirming cial flexibility and strength AISC of $US870-920/oz in
produce 110,000-120,000 the La Mancha transaction,
ozpa at AISC of $US700/oz including the acquisition of to grow through the devel- 2016 after exceeding guid-
in the first five years of opera- the Ity mine in Cote d’Ivoire,
tion. last September. opment of existing projects ance last year with an output

The first gold pour at Kar- True Gold executive chair- and an expanded exploration of 517,000oz, up 11% on the
ma was scheduled to take man Mark O’Dea said the
place at the time of print. transaction was a major win strategy…I’m confident they 2014 figure. AISC was down
for his company’s sharehold-
Karma will become the fifth ers, with the offer represent- will continue to advance the 9% to $US922/oz and below
producing asset in Endeav- ing a 43.4% premium on True
our’s portfolio and the extra Gold’s closing price on March entire portfolio to its full po- guidance of $US930-980/oz.
funds generated by the new 3, the last trading day before
mine will be used to advance the proposed deal with En- tential.” Despite an 8% decline in
the Hounde project, also in deavour was announced.
Burkina Faso, and other de- Endeavour confirmed the realised gold price, Endeav-
velopment and exploration The combined entity has a
properties. pro-forma market capitalisa- sale of its maturing Youga our still managed to record
tion of $C1.08 billion.
Based on current and fu- mine in Burkina Faso to MNG an all-in sustaining margin
ture mine plans, the company “Through this combina-
expects to be churning out tion, we will collectively hold Gold, a privately-owned Turk- of $122 million, up 4% from
more than 900,000 ozpa from one of the largest explora-
2018, making it the fifth larg- tion portfolios in West Africa,” ish gold exploration and de- the previous year. Free cash
est gold producer in Africa. O’Dea said.
velopment company, in late flow before tax, working capi-
Endeavour chief executive “The combined company
will benefit from a strong bal- February for $US25.3 million. tal and financing costs also
ance sheet with the finan-
The company retained a 1.8% more than doubled from $35

NSR on production realised million in 2014 to $85 million

beyond current reserves. last year.

Karma is expected to offset Strong cash flow and the

the loss of Youga, with the La Mancha deal also allowed

new mine boasting measured Endeavour to reduce its net

and indicated resources of debt from $US250 million at

75.2mt @ 1.08 g/t gold for 2.6 the start of 2015 to $US144

moz plus inferred resources million at year’s end.

of 65.2mt @ 1.13 g/t for 2.4 “The strong 2015 financial

moz. results are the culmination

Based on current reserves of several years of asset de-

of 33.2mt @ 0.89 g/t for velopment and optimisation,”

949,000oz, Karma has at Woodyer said.

least 11 years of mine life for “We are now ideally po-

Endeavour to dig up and pro- sitioned as the major, pure

cess once it officially receives West African, multi-operation

the keys to the operation. gold mining company, with

“It’s a fairly simple, open-pit a demonstrated capacity to

mining, heap-leach process- generate significant cash

ing, free-dig, lower powering flows at even lower gold pric-

requirement mine, so it’s an es, as witnessed last year.”

attractive West African addi- – Michael Washbourne
tion to the portfolio Endeav-

our has,” True Gold chief ex-

Page 30 GOLD MINING JOURNAL April – June 2016

Big underground win for Kefi

There is potential for Kefi open pit, we are pleased
Minerals plc to produce
150,000 ozpa gold from the with the positive results of
Tulu Kapi project in Ethio-
pia. our preliminary economic

A PEA assessing the assessment for the under-
combination of open pit and
underground production ground mine potential.”
has indicated the possibility
of increased output generat- Project financing of
ing operating net cash flow
of $US100 million a year. $US130 million, which

The PEA for the under- includes capital costs,
ground project is based on
indicated and inferred re- working capital and all in-
sources of 1.65mt @ 6.26
g/t gold for 330,000oz (in- surance, transaction and fi-
situ cut-off of 3.5 g/t).
nancing costs, is expected
Kefi exploration director
Jeff Rayner said the devel- to be finalised by mid-2016.
opment of the underground
would likely start once the A syndicate of financiers
open pit begins generat-
ing cash flow (based on a are progressing with pro-
$US1,250/oz gold price) and
viding funding, while Kefi

Kefi exploration director Jeff Rayner at Tulu Kapi in 2015 continues due diligence on

alternative proposals.

repayment of development and other exploration targets It is hoped financing can be

finance. that stand to leverage the locked in soon and first debt

“It will increase the net Tulu Kapi infrastructure, in drawdown by the end of the

operating cash flow of the due course,” Rayner said. year, with the start of produc-

project, thereby strengthen- “As we continue to make tion scheduled for late 2017.

ing the economic potential of excellent progress on financ-

Tulu Kapi. We look forward ing and preparing for the de-

to reporting progress on this, velopment of the Tulu Kapi

April – June 2016 GOLD MINING JOURNAL Page 31

AFRICA FOCUS

Predictive is awaiting results from a diamond drilling programme at its Kokoumbo permit in Cote d’Ivoire

Toro gets moving addition, we have successfully conclud-
for Predictive ed two JVs with major companies in 2015
and will continue to assess opportunities
Predictive Discovery Ltd ex- for agreements that represent value for
pects results from a diamond drilling pro- our shareholders,” Taruga managing di-
gramme at the Kokoumbo permit in Cote rector Bernard Aylward said.
d’Ivoire this month.
Bernard Aylward Burey making the grade
The company’s JV partner – Toro Gold
Ltd – started a diamond drilling pro- from the Borbon prospect, which remains Burey Gold Ltd chairman
gramme at Kokoumbo in March, specifi- open along strike and at depth. Klaus Eckhof is confident Giro
cally targeting the Kokoumbo Hill pros- will deliver bulk tonnage and
pect where promising results from chip Taruga is now planning exploration smaller high-grade deposits in
channel sampling included 44m @ 3.8 g/t programmes for additional drilling of ex- the Republic of Congo.
gold, including 2m @ 25.7 g/t and 26m tensions to defined mineralisation.
@ 2.9 g/t. Giro, near Kibali, continues to impress
Furthermore, the company has had its Burey, with the latest results from a dia-
Large scale artisanal mining activity Kossa project licences renewed and addi- mond drilling campaign including 21m
has uncovered significant areas of bed- tional licences granted, with Taruga’s pro- @ 6.06 g/t gold from 0m, including 7m
rock, which suggest most of it is aurifer- ject area now covering over 1,100sq km. @ 12.44 g/t from 0m and 10m @ 3.55
ous. g/t from 11m and 69.6m @ 1.67g/t, in-
Despite a large landholding in Niger, cluding 39m @ 2.3 g/t from 94.9m from
The drilling programme started less Taruga continues to as- hole GRDD004, which confirmed a sec-
than 12 months after Predictive and Toro sess more opportunities in ond zone of good mineralisation, east of
completed JV negotiations and the Kok- country and in other parts of GRDD001: 23.5m at 3.07 g/t.
oumbo is one of four permits under the West Africa, including Mali
JV arrangement. and Cote d’Ivoire where it Meanwhile, GRDD003 intersected
already has projects. 8.89m @ 2 g/t gold from 111.5m, includ-
“Toro’s work has advanced rapidly ing 4.32m @ 3.87 g/t from 115m.
on the four JV permits in Cote d’Ivoire. Last year the company
With RC drilling planned for the northern managed to sign two major “The results of the
Boundiali permit in April, we can expect JVs with Resolute Mining diamond drilling again
significant news flow from the two drill Ltd and Newcrest Mining confirm that Giro is
programmes in the coming months,” Pre- Ltd in Cote d’Ivoire. developing into a ma-
dictive managing director Paul Roberts jor gold camp in the
said. “We are confident there vicinity of the world
are excellent opportunities class Kibali mine. The
Prelim resource for to acquire, explore and ad- prospectivity of the
Taruga in Niger vance gold exploration pro- 30km corridor which
jects within West Africa. In hosts multiple historic
Taruga Gold Ltd has released a pre- high-grade gold mines
liminary resource estimate at the Kossa and recent new dis-
project in Niger. coveries will generate
targets for years to
The inferred resource estimate of come,” Eckhof said.
2.7mt @ 1.3 g/t gold for 112,000oz (top- Klaus Eckhof At the time of print,
cut 20 g/t gold and lower cut-off 0.5 g/t) is

Page 32 GOLD MINING JOURNAL April – June 2016

drilling had been completed at Peteku The company is considering
and Adoku, while the programme re- applying ground geophysical sur-
mained ongoing at Mangote, with results veys to assist interpretation and
expected in early April. targeting.

The purpose of diamond drilling is to Cardinal rattles
confirm continuation and grade of miner- with success again
alisation at depth at the Kebigada pros-
pect where most of the drilling to date has One of the standout ASX-listed
been focused. explorers in West Africa contin-
ues to feel support from the mar-
Soil sampling across the 30km struc- ket.
tural corridor has been undertaken, with
results expected at the time of print. Bu- Cardinal Resources Ltd’s
rey will follow up any coherent gold in soil placement to institutional and
anomalies, with infill soil sampling and professional investors of 45 mil-
RC drilling once all results have been lion shares at 12c/share each
analysed. ($5.4 million) was oversub-
scribed, while an additional 1.75
SEMAFO feels good million shares to directors, also at
about Natougou 12c/share ($2.1 million) is subject
to shareholder approval.
SEMAFO Inc has re-
leased a positive PFS from the Natougou The funds raised will be direct-
project in Burkina Faso. ed towards an additional nine-
hole drilling programme aimed
During the first three years, gold pro- at defining an initial exploration
duction is estimated at 226,000 ozpa @ target in Ghana.
5.72 g/t at average AISC of $US374/oz.
So far, Cardinal has intersected
Life-of-mine is scheduled for more than wide zones of gold mineralisation
seven years, with total gold produced in from every hole drilled at Nam-
the range of 1.2 moz at AISC of $US518/ dini, with high grade intervals of
oz. 67m @ 3.1 g/t from 3m, including
10m @ 9.1 g/t gold, 51m @ 3.58
An initial capex of $US219 million, in- g/t from 85m, including 12m @
cluding $US42 million in pre-stripping 4.38 g/t and 45m @ 7.73 g/t from
and $US18 million in contingency, has 168m, including 2m @ 137 g/t.
been estimated.
The company is confident
Natougou, acquired through the takeo- Namdini has the potential to host
ver of Australian company Orbis Gold, is Aureus has declared the start of commercial a multi-million ounce gold re-
being primed for first full-year of produc- production at its New Liberty gold mine in Liberia source, with a 900m strike extent
tion in 2018. remaining open and 200m verti-
moz @ 3.63 g/t and inferred resources of cal of gold mineralisation open at depth,
The company is targeting construction 5,730,000t for 593,000oz @ 3.2 g/t gold. while 300m wide mineralised zones con-
start-up at the end of 2016. taining higher grade gold zones.

To help its cause, Macquarie Bank Apollo re-launches
has entered into a commitment letter to in Cote d’Ivoire
extend the existing credit facility from
$US90 million to $US120 million. Drilling has restarted at Apol- Archie Koimtsidis
lo Consolidated Ltd’s Boundiali property
Aureus switches in northern Cote d’Ivoire.
on in Liberia
Infill and extensional aircore drilling will
AIM and TSX-listed Aureus Mining be focused on Antoinette where first re-
Inc declared commercial production at sults released in February included; 20m
the New Liberty gold mine in Liberia in @ 2.71 g/t gold, 36m @ 1.54 g/t, 4m @
March. 13.8 g/t, 11m @ 3.71 g/t and 9m @ 3.71
g/t.
Production from New Liberty in Janu-
ary and February has totalled 14,000oz Results so far indicate multiple miner-
gold. alised zones which remain open to strike
and depth below shallow soil cover.
The company expects the mine to run
for eight years at a rate of 119,000oz for The entire Antoinette property is soil
the first six years of production. covered, with Apollo currently revealing
the underlying geology through aircore
Proven and probable reserves to date programmes.
include 8.5mt for 924,000oz @ 3.4 g/t
gold, while estimated measured and in-
dicated resources 9,796,000t for 1.14

April – June 2016 GOLD MINING JOURNAL Page 33

AFRICA FOCUS

Nowhere to hide for
West African

When Richard M1 prospect, also part that we have hit at
Hyde left Aus- of the Tanlouka pro- M1 is not suitable
tralian shores in late ject hosting Mankarga for heap leaching
5, has Hyde and the so we need to look

January, he wasn’t team considering a at changing our
expecting to return much larger project in strategy.”
home in the middle of Burkina Faso.
Hyde said the
Recent step-out company was in the

a gold bull run. RC drilling at M1 from process of absorb-
TAN16-RC122 has ing the new strate-

Based in London for five- returned 31m @ 17 g/t gies while continu-

and-a-half weeks, Hyde gold from 104m, in- ing drilling at M1

found himself on the radar cluding 4m @ 109 g/t, and the existing re-

of investors wanting to know while a second high- source at M5.

more about what the manag- grade zone from the “I would really like

ing director and West African same hole registered to get the current

Resources Ltd are building in 12m @ 11 g/t from Drilling results from M1 have changed the complexion drill programme out
Burkina Faso. 80m down hole. of West African’s Tanlouka project in Burkina Faso the way and assess

“I saw most of the PE funds Up dip on the same all the results and

that are in our space in West section at TAN16-RC119 also suggesting M1 was a game- take it from there. I certainly

Africa and the mood is posi- returned 24m @ 7 g/t gold. changing discovery for West think there is a lot more up-
tive,” Hyde told Gold Mining African. side in the project and I think
Journal. Hyde said results from we have worked the geology
RC122 surprised the com- Preliminary estimates have

“Those guys are receptive pany, as Mankarga 1 has his- Hartleys believing there is po- out at M1 as well.

and you can get meetings torically been high grade, but tential for a 2 mpta CIL circuit “We will just focus on

with them quite easily now, patchy. to deliver 100,000 ozpa gold squeezing the project and

which hasn’t always been the In the past, the company alone from Mankarga 5, while making it as economic as

case. In Zurich the feeling at has encountered open stopes there is significant upside possible which will mean

the conference was that gold that had been backfilled with potential for M1 to add to the making the proposed mine

was back in a bull market. It waste, meaning the high- economics of the project. schedule robust, while we try

is nice to be in that sort of grade intervals have been “We see potential for a to find as much grade as pos-

optimism, it has been pretty missed. high-grade open pit and un- sible and bring cash flow for-

hard for the last two years “We have been going back derground mine at M1 com- ward. That always helps with

and a lot of companies in our deeper next to [artisanal] bining with a large, bulk ton- the economics and paying

space have fallen away.” workings and when we have nage open pit at M5 and M3 back capital and those impor-

Others explorers in West hit those zones that haven’t producing at plus-100,000 tant things.”

Africa may have perished, been mined out by artisanal ozpa with low operating costs In the PFS on Mankarga 5,

however, West African’s tale miners, the grades are quite of less than $US800/oz,” was pre-production capital costs

has been quite the opposite. outstanding,” Hyde said. the summation from Hartleys were estimated at $US46.6

A PFS on the 440,000oz As one of the ASX-listed in its research report. million, including $US8.7 mil-

Mankarga 5 starter project in juniors to survive the com- Hyde agreed with Hartleys lion in working capital and

2015 was based on modities rout, and acknowledged there was contingency, while pre-tax

a $US1,300/oz gold West African a change of strategy for West cash flow after initial and

price and indicated has not escaped African on the horizon. sustaining capital costs of

production of 69,000 attention in the “Clearly the project is out- $US146 million and a post tax

ozpa (49,000 ozpa past two years growing our initial scope,” he NPV of $US86 million.

over seven year life and on the back said. At the time of print West Af-

of mine) at AISC of of the results “Initially, we were looking rican reported re-sampling of

$US538/oz ($749/oz from M1 in March at doing a heap leach pro- TAN16-RC122 returned 12m

over life of mine) for there has been ject and trying to keep things @ 53.1 g/t gold, with 1m @

the first three years increased expec- fairly tight with the capital 534.45 g/t.

was viable. tation on it. structure and capex down as – Mark Andrews
However, contin- much as possible, but clearly
Hartleys re- some of the mineralisation
ued success at the Richard Hyde leased a note

Page 34 GOLD MINING JOURNAL April – June 2016

LATIN

AMERICA

17-18 May 2016, Perth

$A1,200

INC. GST

Visiting Delegations to date:

Republic of Ecuador, keynote presentation by HE Mr. Javier Cordova Unda, Minister of Mines
Republic of Venezuela, keynote presentation by HE. Mr Richard Lozada, Vice Minister for Mining
Republic of Colombia, keynote presentations from Santiago Angel Urdinola, President of Colombian Mining Association

and Ms Silvana Habib-Daza, President of National Mining Agency of Colombia
United Mexican States, keynote presentation by Mario Alfonso Cantú, General Coordinator of Mining (TBC)

Republic of Cuba, keynote presentation by Yuri Viamontes Lazo, Vice Minister of Energy and Mines
Argentine Republic, keynote to be confirmed
Republic of Chile, keynote to be confirmed

Conference sponsors
& supporters to date:

www.latinamericadownunder.com

To present, exhibit or attend as a delegate please contact
Melita Fogarty on (+61) 8 9321 0355 or email [email protected]

AUSTRALIA FOCUS

Blackham’s golden touch at Wiluna

Australia’s next Blackham will start mining at Matilda in June
gold mine is only
a matter of months tion budget because it is im- Approvals with the West was imminent.
away from production. portant we don’t turn the drill Australian Government were Dixon said mining would
rigs off.” well advanced and progress-
Many would be familiar with ing well, Dixon said. start in June and first gold
the Wiluna gold project histo- In 2015, Orion Mine Fi- poured in August.
ry, while a growing audience nance agreed to provide a At the time or print, contract
is starting to realise a new funding facility to Blackham award for the refurbishment of There has hardly been a
dawn is on the horizon for the worth $38.5 million. A total of the Wiluna gold plant (ramp- better time to bring a gold
asset in Western Australia’s $13 million has been drawn ing up to 1.7 mtpa in year two) project on-stream and the
Mid West. down, with the remaining sum plus an 800 tpa Biox circuit start of production will be a
to be accessed subject to a for treating refractory ore was sweet achievement for Black-
Blackham Resources Ltd review of the DFS and grant- close to being finalised, while ham which has had its detrac-
is at the forefront of breathing ing of approvals. locking in a mining contractor tors since purchasing the Ma-
life back into Wiluna’s mining tilda project in for $1.4 million
scene, with first gold from the Bryan Dixon in 2011.
Matilda gold project sched-
uled to be poured in Q3 2016. Ironically, Blackham bought
Wiluna when Australian gold
A DFS released in Febru- prices peaked at an all-time
ary confirmed the viability of a high of $1,800/oz and five
seven-year mine life produc- years later it appears the
ing 100,000 ozpa gold (in the project will be rejuvenated in
first five years) at $US850/oz similarly high times.
from reserves of 6.1mt @ 2.5
g/t for 481,000oz gold. The present gold price has
traded consistently above
Based on a gold price of $1,700/oz, however, serving
$1,600/oz EBITDA in the first Blackham just as well are in-
year is estimated at $58 mil- put costs 25-30% lower than
lion and $62 million for five in the last Australian gold
years thereafter. boom.

Projected cash flow is $234 Blackham can toast to that
million, allowing for pre-pro- but it can also feel good about
duction capital costs to be the potential impact it can
paid pack within 12 months. have on the town of Wiluna.

The NPV (7%) is $170 mil- Wiluna boomed during the
lion and IRR 150%, before period 1930-1950 as around
corporate and tax respec- 1.54 moz gold was produced.
tively.

Blackham managing direc-
tor Bryan Dixon told Gold
Mining Journal Matilda was
the most capital efficient pro-
ject of its size in Australia.

“It is also the closest [to
production]. We can get into
production and repay the
capital and de-risk the op-
eration very quickly because
of that capital efficiency and
strong cash flows early in the
project. It also allows us to
repay the debt quickly,” Dixon
said.

“Between the cash and the
undrawn debt that covers the
production needs. It would be
nice to have a bigger explora-

Page 36 GOLD MINING JOURNAL April – June 2016

Throughput will be ramped up to 1.7 mtpa in year two of production

Later, in 1984-2013 2.65 moz missioning and 170 round the and published the feasibil- all within a 20km radius, with
was produced from tailings clock once operations ramp ity study in February and we base load ore supplied from
retreatment, oxide open pits up. have still done very limited the Matilda mine followed
and underground develop- drilling. We are still getting by Williamson which will be
ment. “It will be a FIFO operation a one-one conversion of in- supplemented with higher
because Wiluna is a small ventory into reserves and we grade quartz reef ores from
With more than 4 moz of town with a small skill-set to think by this time next year we the Golden Age underground
gold extracted during these draw from, but we will try and can grow that mine life to 10 and Galaxy open pit.
gold rushes, the people of maximise as much local con- years,” Dixon said.
Wiluna have always had an tent as possible,” he said. Drilling continues at the
industry to turn to. Mining inventory at Mat- aforementioned deposits,
The Shire of Wiluna can ilda is currently 8.3mt @ 2.9 with resources and reserves
However, the closing of also take some comfort in g/t for 767,000oz, including to be updated before produc-
Wiluna and placement of the fact that Matilda won’t be reserves of 6.1mt @ 2.5 g/t tion.
Ivernia Inc’s lead mine on a splash and dash operation, for 481,000oz gold, while the
care-and-maintenance mean with Blackham focused on global resource at the Matilda At the time of print a place-
the town has not experienced exploiting the exploration po- project is 45mt @ 3.2 g/t for ment delivered Blackham
much luck in recent times. tential of the region. 4.7 moz. Of that, 21mt @ 3.4 $20.3 million for the refurb of
g/t for 2.3 moz is in the indi- the Wiluna gold plant, fast-
Dixon said the company “Not too many of our peers cated category. tracking of reserves at Mat-
would employ as many locals have got seven year mine ilda, exploration drilling and
as possible at Matilda and lives and we still have done The mix of open pit and working capital.
the Wiluna plant, with a work- very limited drilling. We go underground resources are
force of 230 require for com- the funding in June [2015] – Mark Andrews

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April – June 2016 GOLD MINING JOURNAL Page 37

AUSTRALIA FOCUS

Doray six and not out

Doray Minerals Ltd Doray began its 2.9m @ 6.5 g/t from 377.1m
celebrated the and 3.6m @ 13.6 g/t from
sixth anniversary of its search for a second 255.6m.
listing on the ASX by
turning first dirt at its project to comple- Andy Well still has three
Deflector project. years of reserves left to mine,
ment Andy Well about having been discovered with
Open-pit mining began an initial mine life of just three
on February 8, less than 12 18 months before an- years and Kelly is confident
months from when the com- there are still plenty more
pany formally acquired De- nouncing its proposed ounces to be found.
flector, 150km east of Ger-
aldton, through its takeover of takeover of Mutiny in “We’ve outperformed the
Mutiny Gold. BFS we said it was supposed
October 2014. to produce 74,000 ozpa, but
Commissioning of the we’ve just had a fifth consecu-
new processing facility was Deflector had been tive quarter of over 20,000oz
scheduled to start early this produced,” he said.
month ahead of first produc- on Doray’s radar for
tion in June. “We’ve found a couple of
some time, particu- Doray has started mining at Deflector really high-grade open pits
Underground mining con- over the last 12 months that
tractor, GBF Underground larly due to its explo- have really added to the pro-
Mining Company, is expected duction as well, and we’ve
on site in May. Open-pit min- ration upside. According to when it only just met the mini- just had record throughput
ing contractor MACA Ltd ar- through the mill last quarter
rived at Deflector in January. Kelly, the average hole depth mum subscription require- [84,365t] which is well in ex-
cess of what the mill was de-
With an initial mine life across the project is just 34m, ments for an IPO, which was signed for.”
of six years, Deflector will
lift Doray’s production to including deep drilling on the delayed by three months. Ensuring Deflector makes
140,000 ozpa for an average a smooth transition into pro-
AISC of less than $1,000/oz Deflector orebody. Doray debuted on the ASX duction is Doray’s immediate
across its two projects. priority, but Kelly is already
“I guess the way we’re look- with a listing price of 20c/ thinking about adding a third
Doray managing direc- project to his company’s op-
tor Allan Kelly described the ing at it now is at Deflector share and endured a tough erational portfolio.
start of mining at Deflector
as a “significant milestone” in there’s actually two projects,” first fortnight on the bourse Unlike fellow mid-tier pro-
the company’s short history. ducers Northern Star Re-
Kelly said. before striking big with its sources Ltd and Evolution
“Previously we had a triple Mining Ltd, Doray wants to
whammy where we had one “There’s the Deflector maiden drilling programme at find that project through dis-
mine, we had small produc- covery rather than M&A.
tion and Andy Well has al- gold-copper orebody which Andy Well.
ways had a relatively short “Potentially it could come
mine life,” Kelly told Gold we’re going to be mining, but “By mid-year we will have out of something like our
Mining Journal. Horse Well project, but it’s a
there’s also the Gullewa gold funded and built two mines in longer-term goal to see if we
“With Deflector, we basical- can come up with a third pro-
ly answer all of those things. project only 6km away, which four years, from scratch basi- ject through exploration and
We reduce our single-asset discovery rather than neces-
risk, we double our produc- is a series of little open pits cally,” Kelly said. sarily going out and buying it,”
tion and we increase our Kelly said.
mine life…so it takes a bit of and a couple of underground “We ended up being the
pressure off Andy Well. “It’s got to be the right pro-
workings, but it’s had no work most successful IPO of 2010, ject for us and it’s got to make
“It transforms the company, sense in terms of what it does
increases our market cap since the early 2000s. we won Gold Mining Jour- to your production and cash
and gets us on the radar of flow. We don’t want to go
larger, institutional investors. “We’re sort of looking at it nal’s Explorer of the Year out and chase production for
It’s a real step forward and a the sake of being able to say
change of profile for the com- as we’ve bought Deflector in 2011 and Heath Hellewell we’re a 300,000 ozpa pro-
pany.” ducer.”
and we’ve got a gold project and I were fortunate enough
– Michael Washbourne
thrown in for free.” to win the AMEC Prospector

Kelly quashed concerns Award in 2014.

surrounding the metallurgy at “It’s been a very busy six

Deflector, claiming previous years. The first three years

operators have come unstuck was all about Andy Well and

because they tried to pro- the second three years has

cess ore containing copper been focused on getting an-

through the existing CIL plant other project. Hopefully the

at Gullewa. next three years has another

“On the other hand, you milestone coming.”

can mine the Gullewa site Andy Well, 350km north

and put the ore through the of Deflector, continues to

new Deflector plant we’re perform above expectations,

building,” Kelly said. churning out 21,507oz @

Doray’s stocks have 8.2 g/t gold for the Decem-

jumped more than 50% since ber quarter, putting Doray

the start of mining at Deflec- on track to exceed the upper

tor to 92.5c/share at the time end of its FY2016 guidance of

of print, suggesting the mar- 78,000-85,000oz.

ket now views the company Underground diamond drill-

as an emerging mid-tier gold ing within the Wilber North

producer. area also recently returned

Few analysts would have a number of promising inter-

predicted such a rise for Kel- sections, including 4.3m @

ly’s company six years ago 52.7 g/t gold from 270.7m,

Page 38 GOLD MINING JOURNAL April – June 2016

Instinctive win for Gold Road

Gold Road Re- our longer technical items… Gold Road announced a maiden reserve of 81.1mt @ 1.22 g/t gold
sources Ltd now on the back of the PFS for 3.17 moz at Gruyere in early February
started work on the being completed, more de-
Gruyere feasibil- tailed engineering design Murray took the Gold Road Road’s bread and butter and
ity study nearly two work can start.” story on the road during Feb- the company has set aside
months before finalis- ruary, first to the east coast of $12 million to follow up other
ing the PFS, such was GR Engineering Services Australia and then the US, in prospects around Gruyere.
the company’s con- Ltd will continue as lead en- a bid to attract new investors
fidence of a positive gineer of the feasibility study, to the company’s share regis- “It is a good time to be ex-
result. focusing mainly on develop- ter, which is already growing ploring because drill rigs are
ment of a 7.5 mtpa SAG/ball at a rapid rate. available, they’re at good
The findings from what mill circuit, gravity/CIL plant costs and good people are
proved to be a technically at Gruyere, 200km east of “We have been focusing on available, so if you have
sound and economically ro- Laverton. the North American resource funding from shareholders it
bust PFS were released in specialist funds and in Aus- makes sense to spend money
early February, including a Key economics from the tralia on the generalist funds, on exploration,” Murray said.
maiden reserve of 81.1mt @ PFS included a capex of and over the last six months
1.22 g/t gold for 3.17 moz, $455 million, including $35 we’ve seen those funds com- “Our shareholders are
triggering a 30% uptick in the million contingency, and ing on to the register and buy- certainly telling us they can
company’s share price. AISC of $960/oz, based on ing on-market,” Murray said. see our expertise is in grass-
an exchange rate of 73c to roots exploration. We found
Gold Road executive chair- the US dollar. “They can see from our Gruyere at a very low discov-
man Ian Murray and his news reports and the follow- ery cost and they want us to
fellow board members pre- The PFS also forecast up information that we are repeat that across the belt
empted such an outcome and more than $1 billion of undis- achieving all the milestones – we own almost the entire
signed off on immediate pro- counted, pre-tax cash flow that we set out to achieve and Yamarna greenstone belt –
gression to full feasibility late over the initial 12 years of they can also see the pro- so we need to continue doing
last year, allowing a series of project life. found scale of Gruyere and work in the south, together
follow-up work programmes the potential of the Yamarna with our JV partner Sumito-
to start and finish before the “The capital cost per ounce belt, so they’re coming on to mo, to see how many world-
market had a chance to run is just $157/oz gold produced, the register.” class systems we can find.”
its eyes over the latest project which is very low for projects
economics. of this size and scale,” Murray While development plans – Michael Washbourne
said. for Gruyere are top prior-
Metallurgical test work and ity, exploration remains Gold
geotechnical drilling were “The payback on the pro-
completed during January, ject is 42 months, or three-
while environmental survey and-a-half years, compared
work and additional water to a reserve life of 11-12 years
bore drilling and modelling for the project, so payback is
remains ongoing. less than a third of the life of
the project.
“We could see from quite
early on that it was very un- “I think those are the key
likely the PFS would be nega- points that show this pro-
tive,” Murray told Gold Min- ject is fundamentally very
ing Journal. robust…there are so few of
these long-life projects being
“We raised money [$39.3 discovered around the globe,
million plus an additional not just Australia.”
$570,000 via a share pur-
chase plan] from sharehold- Gold Road will announce
ers in the middle of last year an upgrade to Gruyere’s
to fund the PFS and the fea- 128.4mt @ 1.36 g/t gold for
sibility study, so it just made 5.62 moz resource later this
sense to let the study team quarter and expects to have
carry on and not have to stop the feasibility study wrapped
and restart. up by the end of the year.

“Some of the work actually The company, alongside
started last year for some of lead advisor PCF Capital,
is also seeking to lock down
a formal project funding ar-
rangement this year ahead of
the proposed first construc-
tion works in early 2017.

April – June 2016 GOLD MINING JOURNAL Page 39

AUSTRALIA FOCUS

Evolution hedges more gold

Evolution Mining Ltd itives as to why gold will of operation and we
has taken advan- continue to go up – the
tage of the higher reality is that at around made $US33 mil-
Australian dollar gold $1,700/oz gold is only
price and hedged an about $135-140/oz from lion at Mungari in four
additional 150,000oz its all-time high in Aus-
at an average price of tralian dollar terms,” months,” Klein said.
$1,764/oz. Klein said.
“Both of those as-
The additional hedg- “It’s not a certainty
ing package comprises that it will continue to sets are fantastic cash
50,000oz at $1,741/oz sched- go up and so we want
uled for delivery in FY2017, to ensure that we are a generators, high mar-
another 50,000oz at $1,762/ very solid and success-
oz in FY2019 and a further ful business, even in the gin ounces and have
50,000oz at $1,791/oz in event that the gold price
FY2020. were to go down. significant exploration

Evolution’s hedge book “I think if you look at potential.”
now stands at 837,817oz at some of the lessons
an average price of $1,619/ learned from the re- Evolution’s stocks
oz, including 130,828oz at source sector boom
$1,596/oz in FY2016. and bust, the compa- have more than dou-
nies that were most
Evolution executive chair- exposed are those with bled in the past 12
man Jake Klein said the extra substantial debt and no
hedging would help protect protection and found months on the back
his company’s balance sheet, themselves in a really
particularly while the under- difficult situation.” of its acquisition spree
ground at Edna May is devel-
oped in FY2017. Klein attended the and strong sentiment
BMO Global Metals &
“We’ve reduced our debt Mining conference in Florida towards Australian
gearing level from 32% to in February and noted an in-
23%, but we just thought it creased level of interest from gold producers, peak-
was prudent and we got a overseas investors in Austral-
good price in the $1,750s,” ian gold producers. ing at $2.14/share in
Klein told Gold Mining Jour-
nal. The interest in Evolution February but down to
was also greater than in pre-
“We’ve only got 25% of our vious years, according to $1.70/share at the time
gold hedged, so we’re confi- Klein, with an unprecedented
dent that we’re protecting the number of meeting requests of print.
downside and shareholders following the acquisitions of
will share significantly in the the Cowal and Mungari gold Klein said he was
upside if gold rises. mines last year.
not put off by the fact
“I’m just trying to ensure we Evolution is now the sec-
run Evolution as a business ond-largest gold producer his company trailed
focused on cash flow genera- on the ASX and has fore-
tion, focused on reserve and cast production of 770,000- fellow mid-tier gold
resource expansion and driv- 820,000oz at an AISC of
ing performance.” $970-1,020/oz from its seven Evolution executive chairman Jake Klein miners Northern Star
operating assets in FY2016. on site at Mungari
Klein has long maintained Resources Ltd ($3.95/
that hedging is an “important “Evolution was formed just share at the time of
and necessary” component over four years ago and the
of running a successful gold first three years were true to tionary and I think people are print), OceanaGold Corpora-
mining business. our name; it was evolutionary
as we improved the perfor- still coming up to speed with tion ($3.99/share), St Barbara
“Whilst we are all loving the mance of our existing portfo-
fact that gold is going up – lio and built Mt Carlton,” Klein just how much this company Ltd ($2.32/share) and Regis
and I think there’s a lot of pos- said.
has changed and what poten- Resources Ltd ($2.55/share)
“Last year was truly revolu-
tial there is as well.” on the share market.

Evolution reported a re- “I think value will ultimately

cord underlying net profit be recognised by the market

of $107.9 million for the first and I think a healthy mid-tier

half of FY2016, up 150% on sector is good for all of us,”

the corresponding period in Klein said.

FY2015 prior to the additions “We still need to demon-

of Cowal and Mungari to the strate and articulate the value

company’s portfolio. proposition in Evolution and

All seven of Evolution’s op- I’m very confident that in due

erations were cash flow posi- course it will be recognised.

tive during the six months to “We are now an 800,000

December 31, contributing to ozpa producer, there’s better

record group production of liquidity in our share price,

377,869oz and net cash flow we’ve been a consistent de-

of $202.9 million, up 250% on liverer into guidance and we

the first half of FY2015. have paid a consistent divi-

Despite only officially own- dend…Evolution is a very dif-

ing Mungari and Cowal for ferent proposition to what it

four and five months of the was 12 months ago.”

reporting period, Evolution – Michael Washbourne
still managed to clear $167

million of debt.

“We made $US50 million at

Cowal in the first five months

Page 40 GOLD MINING JOURNAL April – June 2016

20 October 2016

Perth, Western Australia

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AUSTRALIA FOCUS

Untapped potential excites Hanking

Hanking Gold Min- be extending it beyond by 2020, processing
ing Pty Ltd is con- 10 years because we
fident it has enough are doing additional more than 2 mpta.
untapped resources drilling and two feasi-
around its Southern bility studies at the mo- At the time of print,
Cross operations to ment.”
continue mining for at Marvel Loch was pro-
least 10 years. Hanking has already
pounced on the un- cessing 5,800 tpd
Based on current resources derexplored potential
and reserves, the Chinese- of the Southern Cross from ROM stockpile
backed private company will gold belt, lifting the
have enough ore to feed the resource at Cornish- of 150,000t @ 2.7 g/t
Marvel Loch processing plant man from 17,000oz to
until 2020 when total gold 340,000oz following gold and an average
production is slated to nudge the discovery of the
200,000 ozpa. west lode, north lode recovery of 93%.
and southern exten-
However, Hanking believes sion of the existing pit, Hanking will also
it is not short of potential including a notable hit
ounces it can quickly add to of 10m @ 47 g/t from look to spin out from
its mining inventory, given the 221m.
company’s ability to grow its its parent company,
resource base by 32% since A recent feasibility
acquiring the asset from St study on the Axehan- Hong Kong-listed
Barbara Ltd in April 2013. dle deposit contained
a resource increase China Hanking Hold-
Feasibility studies on the from 120,000oz to
Nevoria Silver and Frasers 300,000oz, yet the ings Ltd, and debut on
deposits will be completed gold mineralisation
early this quarter, while Jac- remains open at depth and the ASX in the near
coletti is also yet to be fac- along strike.
tored into the immediate five- future, having spent
year production plan. Axehandle – Hanking’s
biggest open pit – carries an most of last year
Hanking recently acquired initial mine life of three years,
the Redwing deposit (1.4mt but has only been drilled to weighing up which
@ 2.4 g/t gold for 108,000oz) 200m. Pre-stripping works
from Audax Minerals Pty Ltd began last September. bourse would be most
and is poised to soon an-
nounce the addition of two A drilling programme is also suitable for its entry
new projects from within the under way at Jaccoletti where
district to its portfolio, accord- the company is looking to ex- into the public arena.
ing to managing director Mark tend and upgrade the current
Qiu. resource. The first hole of the “We had a look at
campaign intersected 27m @
Southern Cross currently 9 g/t gold. Singapore, but we
boasts a resource of 27mt
@ 3.6 g/t gold for 3.17 moz, Mark Qiu decided on Australia,”
including 600,000oz of re-
serves. Hanking expects to grow its current Qiu said.
resource base beyond 3.17 moz “The project is in
“So far the conversion rate Australia and Austral-
from resource to reserve is
very high, therefore we do Qui, who completed a ian shareholders understand
have a long life available,” Qiu
told Gold Mining Journal. PhD on the gold belt some the mining industry much bet-

“We are fully confident the 20 years ago, said the ten- ter, so that’s why we decided
life of mine will be expanded
further. On paper it’s five ements in Southern Cross to go with Australia instead of
years, but we expect we will
were severely underexplored. Singapore.”

“In the last 20 years there Qiu said many overseas

hasn’t been a lot of drilling, markets fail to distinguish

but we’re choosing to invest the difference between gold

a lot more on drilling. We’ve and other commodities such

budgeted for another $4.5 as coal, prompting Hanking’s

million this year,” he said. decision to specifically target

“Our discovery cost is knowledgeable investors.

under $7/oz, which is very “As a gold mining company,

cheap because of the poten- if you discover additional re-

tial for additional resources.” sources or you have a good

Hanking churned out al- intersection, Hong Kong does

most 60,000oz last year, not understand but in Aus-

having poured first gold at tralia people understand a

the refurbished Marvel Loch discovery and it may be rec-

processing plant in Febru- ognised,” he said.

ary 2015. Southern Cross “If you want to become a

was in full production from real player you need to be in

December, operating against the right markets…Australia

C1 cash costs of $750/oz and has a long history and they do

AISC of just over $1,000/oz. have the expertise for mining

The company is anticipat- management and we want to

ing production of more than leverage this expertise.”

150,000 ozpa in 2016 and will – Michael Washbourne
gradually look to ramp up its

output towards 20,000 ozpa

Page 42 GOLD MINING JOURNAL April – June 2016

Millennium maintains margins

Maintaining strong
cash margins is
more important to Mil-
lennium Minerals Ltd
than the prestige of
becoming a 100,000

ozpa producer.

The emerging gold miner Millennium is on track to exceed the upper end of production guidance of 80,000-85,000oz at Nullagine
produced 91,462oz at an
AISC of $1,175/oz from its turnaround stories of the past part of the pack. I know there one diamond rig on site, with
Nullagine operation in the Pil- 12-18 months, having been are some big frontrunners a fourth RC rig potentially
bara in 2015, delivering free forced to announce a reserve like Northern Star [Resourc- mobilising at Nullagine later
cash flow of $28 million be- impairment in late 2014. es Ltd] and Evolution [Mining this quarter.
fore financing costs. Ltd], but we’re at least in the
A new management team, pack now when before we Recent drilling at the Anne
Millennium has fore- led by former Atlas Iron Ltd weren’t even considered, and De Vidia prospect also re-
cast production of 80,000- mine manager Dovaston, ar- I think that’s been the biggest turned a number of high-
85,000oz at AISC of $1,180- rived in December 2014 to change.” grade hits, including 8m @
1,220/oz for FY2016, but the lift the embattled company 6.84 g/t gold (including 3m
actual output is expected to up off the canvas, triggering Millennium still has to con- @ 15.08 g/t), 3m @ 24.49 g/t
fall beyond the upper end of a turnaround in operational tend with the issue of short (including 1m @ 67 g/t), 7m
that guidance based on cur- success at Nullagine. mine life at Nullagine (fore- @ 5.03 g/t (including 1m @
rent mining performance cast to end in September 2017 30.9 g/t) and 12m @ 2.2 g/t
rates, prompting specula- Millennium raised $20 mil- based on current reserves) (including 1m @ 12.5 g/t).
tion the company could soon lion late last year, enabling but Dovaston was quick to
crack the magical 100,000 the company to retire the last dismiss any concerns about A resource upgrade incor-
ozpa mark. of the $37.1 million debt in operational longevity. porating a maiden estimate
February, one month ahead for Anne De Vidia is due for
However, Millennium chief of schedule. “We’re a victim of our own release with the company’s
executive Glenn Dovaston success because we’re con- March quarterly results.
said sacrificing potential The market has rewarded stantly finding more exten-
greater returns for sharehold- Millennium for its efforts, sions and we’re starting to “We don’t know quite how
ers over gaining membership with the company boasting mine those,” Dovaston said. big these things are going to
to an exclusive club of gold a share price of 12c/share at be yet, but what we do know
producers was not an option. the time of print, up 300% on “Some of these extensions is that the lack of work that
the last trading day of 2014. won’t get to reserve before was done in the past is to
“Could we achieve 100,000 we’ve mined them, so we’re some degree now our advan-
ozpa? Possibly we could, but “It’s quite surprising just going to finish up mining tage,” Dovaston said.
the problem with that is our how many people within the them before we get a chance
margin wouldn’t change,” industry have now heard of to model them and announce “We’re starting to under-
Dovaston told Gold Mining Millennium and are watching them under JORC.” stand the structural controls
Journal. us closely,” Dovaston said. of these extensions and
Current mining activities there’s indications these
“The benefit to our share- “This is not just the punters. are focused on the Little things do extend significantly
holders is the margin, not the People in fairly high positions Wonder, Roscoes Reward further along strike and espe-
quantum of ounces. There’s within other mining compa- and Bartons open pits with cially down-dip.
a natural state and we think nies are now talking about the Shearers and Otways de-
that natural state is between how well we’ve done. posits potentially coming into “That’s why pushing the
80,000 ozpa and 90,000 the mine plan from late April. drilling is really important be-
ozpa. “Eighteen months ago we cause we need to drill these
talked to brokers and other Millennium intends to out and hopefully find out
“When you start pushing people about the place and spend $8 million on explora- what’s there before we start
over that level…then you’re no one had even heard of tion this year, although that mining them.”
possibly going to increase us. Now we’re getting people could increase if discovery
your AISC, but your cash flow we’ve never heard of ringing success continues. Currently – Michael Washbourne
doesn’t change and therefore us up. there are three RC rigs and
your margin is going to be af-
fected.” “We’re now sort of seen as

Now debt-free, Millen-
nium continues to emerge as
one of the more remarkable

April – June 2016 GOLD MINING JOURNAL Page 43

AUSTRALIA FOCUS

Kidman buys into production

Kidman Resources gold project. We have looked
Ltd’s decision 18
months ago to pursue at the data and are excited by
growth via acquisition
is starting to look like what we see.”
a masterstroke.
For now, the company has
The company’s objective
is to occupy a spot among its hands full and while Aus-
Australia’s mid-tier gold pro-
ducers through the Burbanks tralian gold prices are reach-
and Mt Holland projects in
Western Australia. ing historical highs – $1,700/

Burbanks and Gunga were oz at the time of print – Dono-
opportunities swooped upon
last year, while Mt Holland hue has closed the cheque
was recently added to Kid-
man’s diversified asset port- book on any more acquisi-
folio.
tions.
“Burbanks is now in pro-
duction and we managed He said the company was
to get a foothold on the Mt
Holland goldfield, which is a comfortable with its position
bit more of a substantial as-
set with a bit more upside in on gold, which has Kidman
terms of ounce potential,”
Kidman managing director poised for some bright years
Martin Donohue told Gold
Mining Journal. ahead.

“And, now that we have Near-mine exploration at Burbanks is Kidman’s focus “We have enough on our
funding in place, that should
see us into production [at plate for the foreseeable fu-
Mt Holland] in possibly 18
months. If we had that, com- would see a greater lifespan 246,000oz which remains ture and we are fine with what
bined with Burbanks, we
would be well on the way to at the project beyond its cur- inaccessible at Bounty, is we have in the portfolio. The
mid-tier producer status.”
rent term. 928,000oz gold. other thing is they [acquisi-
Achieving its near-term am-
bition has been helped along “There is plenty of explora- Donohue said there was tions] are not easy to find
by a successful $6.5 million
capital raising – $3 million via tion happening which will be enormous scope to add a lot and where there is something
share placement and $3.5
million via a one-for-three near-mine at Burbanks, gold of ounces at Mt Holland and good and available there is a
partially underwritten rights
issue, both at 8.5c/share – in only, and all our exploration pointed to Dacian Gold Ltd’s lot of competition for it, so to
March.
will only be in WA,” he said. Mt Morgans project, where get things at the right price is
The funds have allowed
Kidman to take full ownership “That is because if we dis- over 3 moz of resources has difficult,” Donohue said.
of Mt Holland and increase
production at Burbanks. cover something, we can pro- been added in the past three “We took the view about 18

Ramp up at Burbanks, cess it and turn that gold into years. months ago now, during the
near Coolgardie, is on track
for 30,000 ozpa gold from a cash.” “They picked up a project market downturn, to try and
resource base of 99,000oz
gold. Gold in WA is the focus, from a company that was in turn ourselves into a mid-tier

Donohue said near-mine which means Kidman is ac- administration and that is ef- miner by buying an asset or
exploration at Burbanks
tively considering divesting fectively what we have done. two and jump several rungs

its copper projects in North- We have picked up a project on the ladder by buying our

ern Territory and gold in New that hasn’t had the drilling way into production, rather

South Wales. done on it which is the only than through exploration and

“The reason for that is be- thing holding Mt Holland discovery.”

cause we are still a junior, back,” Donohue said. – Mark Andrews
we want to become a mid- “As we get to drill it, we can

tier company so we want to firm this up as a significant

streamline something and

do it right. Those exploration

projects have a lot of promise

but for our shareholders now

they are not figuring in our

immediate plans,” Donohue

said.

Mt Holland is at the fore-

front of Kidman’s planning,

with a drilling campaign to

grow the resource at the flag-

ship Blue Vein deposit from

its current 372,000oz (meas-

ured, indicated and inferred)

@ 2.39 g/t gold.

Combined measured, indi-

cated and inferred resourc-

es at Mt Holland, excluding The simplicity of the gold sector is a major attraction for Kidman

Page 44 GOLD MINING JOURNAL April – June 2016

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ASIA

St Barbara weighs up
Simberi’s future

The fate of St Bar- that is why we are doing the A PFS on a potential sulphide operation at Simberi
bara Ltd’s Simberi strategic review.” is expected to be completed in April
gold mine in Papua
New Guinea will be Preliminary PFS results for we could make more value increased year-on-year pro-
known by the end of the sulphides indicated the out of that sulphide project. duction from Gwalia in West-
the year. potential for a seven-year To be honest, it may be more ern Australia.
mine life producing at a rate valuable in someone else’s
With good profits still to of 2 mtpa for 140,000 ozpa portfolio. There is a lot of for- Half-year results for
be made from the oxide pro- gold, with a further 140,000oz eign investment in PNG and FY2016 from Gwalia included
ject for another three to four of oxide gold to be extracted some of those entities might 135,921oz gold at AISC of
years, St Barbara is running at varying rates over the pro- have access to roasters, oxi- $764/oz, with full-year pro-
a PFS (expected to be com- ject life. disation plants, smelters, etc duction expected to be in the
pleted in April) on a potential so the value in their hand may range of 245-260,000oz at
sulphide project utilising ex- AISC are expected to be in be different to ours and that is AISC between $840-900/oz.
isting infrastructure on Sim- the vicinity of $US930-990/ why we have to test the mar-
beri Island. oz, while a capex of $US100 ket.” Cash flow is strong, with
million has been estimated in $123 million generated in the
St Barbara chief executive the PFS. Vassie said St Barbara half year to the end of De-
Bob Vassie told Gold Mining was comfortable operating in cember 2015.
Journal a number of options Vassie said only $US43 PNG and it was the strength
were being assessed at Sim- million would be required to of the sulphide project at Sim- “We generated $123 million
beri, including divesting the modify the plant to process beri against other uses for the from operations, mostly from
project. sulphide ore through flota- company’s cash which would Gwalia of course, and that
tion and make a concentrate, ultimately sway the decision. $123 million was done at an
Production guidance for as well as handling oxide ore average gold price of $1,564/
FY2016 is 100-110,000oz through the existing CIL plant. Once debt-stricken and oz and now we are sitting
gold at AISC of $1,350-1,430/ fighting for survival, St Bar- north of $1,700/oz. The next
oz. The balance of the capex bara’s uplift in share price half year is going to be quite
would be used for general from 7c in 2014 to $2.20, and cash generative, so we are
“We can continue for three site infrastructure ($US15 mil- inclusion into the ASX200 at eating away at our debt,” Vas-
or four years, we are making lion), while $US42 million has the time of print, has been sie said.
good profit out of it now as we been factored in for a new done on the back of improved
have the mine set up well,” mining fleet. performances at Simberi and In nine months to February
Vassie said. 2016, St Barbara has settled
Bob Vassie $159 million in debt, which is
“We can finish there, sell
the plant, or sell the sulphide “That $US42 million
orebody with the plant, or we wouldn’t be spent in one day,
could invest in a new plant to it would be a continuous re-
have a longer life through the placement of the existing
sulphides, or we could divest fleet,” Vassie said. “We could
everything now. The board also look at contract mining.
would like to understand
those options and we need “We are really going
to finish the PFS and test the through understanding how
market; test our own value
of what we could do there,
based on the gold price, and
work out which way to pro-
ceed.

“If we are going to keep
the project timeline, in terms
of being able to have the sul-
phide treatment facility avail-
able in time, then we probably
really need to make the deci-
sion this calendar year and

Page 46 GOLD MINING JOURNAL April – June 2016

$US103 million ahead of debt next financial year.
amortisation schedule and in-
cludes $US55 million repaid The company did lock
in the first half of FY2016.
in a 40,000oz hedge at a
The company’s cash bal-
ance at the end of December maximum of $US1,287/
was $100 million, after financ-
ing commitments, and in Feb- oz in order to secure US
ruary a further $US12 million
of senior secured notes were dollars and enable ac-
bought back at a 2% dis-
count. Of the $US250 million celerated pay back of
notes issued in 2013, $US168
million remains outstanding. Red Kite debt in full.

Meanwhile, the $US36 mil- “We will always look at
lion debt facility St Barbara
has with Red Kite will be re- whether instead of hedg-
duced to $26 million by the
end of the March quarter. ing currency we should

“The Red Kite facility we look at hedging gold in
will pay off a year earlier, fin-
ishing in June,” Vassie said. US dollar terms rather

“We will continue to look for than Australian dollar
opportunities to buy back our
notes, we still think that is the terms for a portion of our
best way to go. We know we
Simberi has been profitable for St Barbara since December 2014 US dollar debt,” he said.

“We may or may not

have opportunities to invest in Gwalia, so we are sitting in do that, it is always a board

further at Gwalia, but some quite a good position.” decision. We don’t hedge

of the opportunities at Gwalia With Australian gold prices to speculate. Our investors

are not that expensive to go at $1,700/oz and the low-cost want that exposure to gold

deeper. For example, just nature of mining at Gwalia, St and Gwalia is such a low cost

adding ventilation shafts rath- Barbara has little hedging in [operation] so we’d rather not

er than production shafts will place at the moment, how- hedge that.”

allow us to handle our debt ever, Vassie said it would be – Mark Andrews
easily and invest ourselves something to look at in the

Pan luck for Kula

Pan concentrate geochem- which has been granted an Kula Gold has identified six new gold targets on Woodlark Island
istry over a 16sq km patch environmental permit and
has come up trumps for Kula mining lease. However, with cost of $US160 million would into one large operation. The
Gold Ltd on Woodlark Island the latest results coinciding be needed to build the Wood- economies of scale may be
in Papua New Guinea. with an uplift in sentiment in lark Island project utilising a the catalyst for the develop-
the gold sector, Kula will be 1.8 mtpa plant. ment of both projects, partic-
Six gold anomalies, de- hoping it can regain some at- ularly in the current low cost
fined by particulate gold, tention in the market. The MoU is not exclusive environment where costs
were discovered during a re- and each company can pur- have materially reduced for
gional pan concentrate sam- Market watchers may also sue development of their pro- plant, equipment, energy and
pling programme conducted notice that Kula has entered jects independently. labour. If this combined de-
earlier this year. a non-binding MoU with WCB velopment is successful it will
Resources Ltd over the 1.7 Kula chairman David deliver a larger gold project
Kula believes the new moz Misima gold project. Frecker said the MoU was a with expected economies of
anomalies are potentially part pragmatic and logical step for scale,” he said.
of a mineralised trend and The MoU also incorpo- his company.
could deliver additional ounc- rates Kula’s Woodlark Island
es within trucking distance to project, with both companies “It opens up the possibility
the proposed plant site se- agreeing to explore the possi- of combining our two projects
lected in the feasibility study. bility of developing Woodlark
and Misima together.
In 2012, a feasibility study
was run over a 2.1 moz Woodlark and Misima are
gold resource, including on adjacent islands in Milne
766,000oz in reserve at a Bay, PNG.
gold price of $US1,200/oz.
The relative closeness of
The study was based on a the two projects means there
nine-year mine life from three is potential to barge ore from
open pit mining areas, with one island to the other for
ore to be processed through processing in a large CIP/CIL
a 1.8 mtpa gravity and CIL plant.
plant.
Back in 2012, Kula estimat-
Low US dollar gold prices ed in its feasibility study that
have stymied the project, a total establishment capital

April – June 2016 GOLD MINING JOURNAL Page 47

ASIA

Xanadu surges on gold
in Mongolia

The elements are in
place for Xanadu
Mines Ltd to develop
something meaningful
in Mongolia.

Banking $8.8 million in the High-grade rock chip samples from Oyut Ulaan caught the market’s attention in March
December quarter through
existing and new sophisti- way and aimed at defining tar- proved ability to target zones 203mt @ 0.34% copper and
cated and institutional inves- gets to be drilled in the com- of higher grade and/or large 0.33 g/t gold – a former Rio
tors via a placement and SPP ing months, Xanadu chief ex- orebodies of mineralisation, Tinto plc asset, which the
indicates the kind of support ecutive Andrew Stewart told they have also led to the dis- company now fully owns.
and attention Xanadu is re- Gold Mining Journal. covery of additional targets
ceiving for its efforts at its and recognition of a much A drilling campaign was
flagship Kharmagtai copper- “The Oyut Ulaan project is broader range of mineralisa- scheduled to start at Kharma-
gold project in the South Gobi close to well developed in- tion, which has been validat- gtai – north of the 2.3bt Oyu
region. frastructure, which allowed ed with the exceptional high- Tolgoi mine – at the time of
our geology team to work grade gold rock chips taken print.
The cash injection means through the harsh winter this from Oyut Ulaan,” he said.
Xanadu is funded for explora- year and also means we can Kharmagtai is certainly not
tion at Kharmagtai this year, be in position to drill relatively While the rock chip results in Oyu Tolgoi’s league but is
in addition to progressing quickly,” Stewart said. have excited Xanadu, Stew- shaping as a project of scale
work at the Oyut Ulaan pro- art said the high-grade miner- which will potentially require
ject where high-grade gold “We all know to be suc- alisation was one of the ben- significant capital to develop
rock chips from surface of cessful in this business you efits of exploring for porphyry one day.
305.8 g/t gold, 171.6 g/t and need a very good project and deposits.
123.2 g/t have been discov- a good team of explorationists Therefore, having some-
ered from quartz carbonate and you need to be funded. “The shoulders or the up- thing on the side, like a po-
sulphide veins. Xanadu has got those ingre- per parts of these large sys- tential small operation at
dients to be a success and is tems often host high-grade Oyut Ulaan, is a good fit for
Such results did not go un- moving forward with our strat- gold deposits,” he said. Xanadu in the meantime.
noticed in the market, with egy to convert our exploration
Xanadu’s share price spiking projects in the South Gobi of “Currently we are access- “When you look at these
50% to 15c in early March. Mongolia into mineable de- ing the potential for shallow porphyry mineral districts we
posits through discovery of gold mineralisation at our have in Mongolia, they can
Detailed trenching and high value copper-gold and Oyut Ulaan and Kharmagtai harbour a range of mineral
channel sampling is under gold resources.” projects. It can often be a deposits that are character-
significant value-add to large ised by high gold grades, so it
Xanadu is focused on gold-rich Despite harsh wintery con- copper projects to discover makes sense to pursue these
copper porphyries in Mongolia ditions, Xanadu ploughed shallow gold caps or periph- different opportunities. After
through exploration to good eral high-grade veins that all any one could potentially
effect with a number of sig- support low-capex starter support a standalone pro-
nificant geological break- projects.” ject,” Stewart said.
throughs, Stewart said.
The big fish for Xanadu in – Mark Andrews
“That has not only given im- Mongolia is Kharmagtai –

Page 48 GOLD MINING JOURNAL April – June 2016

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TRIPLE BOTTOM LINE

Treasure hunter jailed

AUS judge is keep- Last December, Thomp- was yet to comment at the suit over the proceeds of the
ing a former son was sentenced to one time of print. shipwreck discovery, which
treasure hunter in jail year of supervised release, brought up gold coins and
for again failing to an- a $US250,000 fine and 208 Thompson told the court bars worth millions.
swer questions about hours of community service, last December that he had
the location of 500 but the sentence was not to a stroke and suffered from Members of Thompson’s
commemorative gold take effect until he revealed chronic fatigue syndrome, team and investors accused
coins from the discov- where the coins were. short-term memory loss and him of failing to pay them and
ery of a 19th century other physical problems. He they sued.
shipwreck. On March 15, US District apologised then for not ap-
Judge Algenon Marbley, of pearing in court previously to More than 400 people
Thomas “Tommy” G. Ohio, found Thompson in answer questions. drowned when the SS Cen-
Thompson, 63, of Columbus, contempt of a court order in tral America, carrying as
Ohio, was arrested in 2015 a civil lawsuit over the treas- Thompson and his for- much as 21t of gold from
and jailed because he failed ure, Jennifer Thornton, a mer assistant and girlfriend, California mines, sank in
to appear in court to disclose spokeswoman for the US At- Alison Antekeier, pleaded 1857 off the coast of South
the whereabouts of the gold torney’s office in Columbus, guilty last April to criminal Carolina.
coins discovered in 1988 in said. contempt after they were ar-
the wreck of the SS Central rested in January 2015. Thompson is scheduled to
America. Marbley also continued a reappear in federal court in
daily fine of $US1,000 until The pair had been living in Ohio on May 16.
Thompson reveals the loca- a Florida Hilton Hotel under
tion of the treasure, Thorn- fake names and paying with – Kim Palmer, Reuters
ton said. Thompson’s lawyer cash after a 2013 arrest war-
rant was issued in a civil law-

INDEX

88 Energy 8 DRD Gold 7, 18, 20, 21 Kula 47 Rio Tinto 48
Medusa 8
Metals X Saracen 4, 8, 10-11, 14
Metminco 4, 8, 9, 14
Acacia 9, 28 Endeavour 30 Millennium 12 Seafield 12
Mincor
Alicanto 5 Evolution 4, 9, 10, 38, 40, 43 Mintails 8, 43 SEMAFO 33
MNG Gold 4
Alkane 8 Excelsior 8 Sibanye 7, 20, 21
17
Amara 24 30 Silver Lake 8

AngloGold 9, 12, 14, 20, Focus 8 South32 8
Fortescue 8
26, 27, 29 St Barbara 4, 9, 10, 40, 42,

Apollo Consolidated 33 46-47

Atlas Iron 43 Goldcorp 9 Newcrest 14, 32
Newfield 8
Aureus 33 Gold Fields 7, 20 Newmont Taruga 32
Norilsk 5, 6, 9, 14 Toro Gold 32
Gold One 17, 20 Northern Star 10 Troy 5, 8
Tribune
B2Gold 23 Gold Road 8, 39 4, 8, 9, 10, True Gold 8
Barrick 5, 9, 10, 14 38, 40, 43 30
Batero Gold Guyana Goldfields 5
Beadell 12
Blackham 8, 9 Hanking 42 OceanaGold 40 Vantage 17
Burey Gold 8, 14, 36-37 Harmony 7, 9, 20
32-33

Independence 8, 14 Perseus 8, 24 WCB 47
Ivernia 37 West African 34
Cardinal 33 Predictive Discovery 32 West Wits 16-21
Centamin 28 Woodside
Continental Gold 12 Kefi 31 Rand 8 8
Randgold 9, 26, 27, 29
Kidman 44 Regis 4, 6, 8, 10, 40
Resolute 8, 22-23, 32
Dacian 8, 44 Kingsrose 8 Xanadu 48
Doray 4, 8, 38
Kinross 9

Page 50 GOLD MINING JOURNAL April – June 2016


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