pd275-Sept19-mag-web

September 2019 VOLUME 1. ISSUE 275 $11.95

Saracen graduates ISSN 1445-3436
with honours 08

Diggers & Dealers review 9 771445 343007
Base metals spotlight
NSW focus



CONTENTS

PAYDIRT (ISSN 1445-3436) 6 NEWS
Published by The long-time uranium lull could be over as early
Paydirt Media Pty Ltd. as next year. Eight years on from Fukushima
A.C.N. 063 985 133 demand for uranium appears to be increasing,
however, there is little supply available in the
Head Office: near term. While there is conjecture on the
Suite 9, 1297 Hay St, West Perth price needed to incentivise project restarts and
Western Australia 6005 investment in new developments, the general
P.O. Box 1589, West Perth consensus is that contract prices are headed
Western Australia 6872 upwards. Mark Andrews reports
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 20 COVER 20
[email protected] Saracen Mineral Holdings is set to join a select
www.paydirt.com.au club of Australia gold miners next year when
it pays its first dividend. It is a major milestone
for a company which has grown on the back of
reinvesting profits in organic growth. Michael
Editorial: Washbourne spoke with Saracen managing
Editor: Dominic Piper director Raleigh Finlayson about the delicate
Deputy editor: Mark Andrews balancing job the company must strike between
Journalist: Michael Washbourne continued growth and rewarding the loyalty of
Photography: Picture This shareholders
Art director: Nick Brown
Contributors: Brendan Ryan 26 DIGGERS & DEALERS
(Johannesburg) Former Australian Prime Minister Hon John
Howard connected with delegates at Diggers
Advertising: & Dealers with an insightful, often humorous,
Advertising manager: Richa Fuller opening address which set the tone for another
Subscriptions: Kate Blanchard upbeat forum in Kalgoorlie. Gold stories were once
Phone: (+61 8) 9321 0355 again popular, but undoubtedly the flourishing
Facsimile: (+61 8) 9321 0426 nickel sector received as much attention as in
the early days of Diggers. Paydirt provides a
Pre-press and printing: comprehensive review in this edition
Vanguard Press, 26 John St,
Northbridge WA 6003 58 NEW SOUTH WALES
Member of: The New South Wales Minerals Strategy
released in February appears to be having the
Paydirt Media desired effect in the State, with a high number 26
Executive chairman: Bill Repard of companies engaged in active exploration
Finance manager: Giovanny Jefferson programmes. NSW’s minerals strategy is centred
Accounts/administration: on increasing its exposure to the EV and battery
Lana Luketic revolution through promoting its endowment of
Conferences: Melita Fogarty, high tech metals. Paydirt takes a look at some
Namukale Nakazwe-Msiska, of the players in the State busy helping the
Christine Oelschlaeger, Government’s strategy succeed
Mitchelle Matambo

September 2019 VOLUME 1. ISSUE 275 $11.95

Australia’s Paydirt

tically • BULK HAULAGE
g services • MINE SITE SERVICES
ocus • CONTRACT CRUSHING
and
mes AND SCREENING
• CONSTRUCTION MATERIAL

SUPPLIES
• IMPORT/EXPORT MINERAL

CONCENTRATE LOGISTICS

September 2019 Saracen graduates 67 REGIONAL ROUND-UP
with honours John Welborn’s Resolute Mining is the latest to
08 9022 7746 10 Yindi Way ISSN 1445-3436 partake in gold sector consolidation. Recently,
mlgoz.com.au Kalgoorlie WA 6430 Diggers & Dealers review 08 Resolute’s pitch for Guernsey-headquartered Toro
Base Metals spotlight Gold was endorsed, giving the former greater
NSW focus 9 771445 343007 exposure to the African gold sector. Mark Andrews
reports on how Toro’s Mako gold mine in Senegal
7/6/18 1:43 pm and exploration assets in Cote d’Ivoire and Guinea 67
fit into Resolute’s budding portfolio
Cover image: Saracen Mineral Holdings Ltd
managing director Raleigh Finlayson at

Thunderbox, Western Australia

Member of:

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

Financing shackles begin to
loosen, but just a little

“What did you make of Diggers?” It’s Potash Ltd and Danakali Ltd – had secured plus-$100 million fi-
a common refrain around the streets of nancing packages.
West Perth at this time of year. Wheth-
er the inquisitor was in Kalgoorlie for Venturex’s deal with European metals trader Trafigura comprises
the annual industry shindig or missed $100 million of senior debt funding for its Sulphur Springs copper-
it (or even was in attendance but can’t zinc project. African potash developer Danakali secured $US200
really remember a lot of it), everyone million from the Africa Finance Corporation and African Export Im-
is eager to know each other’s takeaway from Diggers & Dealers port Bank for construction of its Colluli project in Eritrea and Salt
because it is seen as a barometer for the 12 months ahead. Lake, another potash developer landed two finance facilities worth
In the first instance, it has to be said the conference was yet again a combined $US180 million with private equity group Taurus Funds
a tremendous success. The owners and committee put together a Management for its Lake Way project.
fine forum, crowned by the sizeable coup of attracting former Prime
Minister John Howard as the keynote speaker. And, the operations The three deals are the strongest indications so far that debt fi-
team, led by Suzanne Christie, has a remarkable track record of nanciers are growing increasingly comfortable with deploying their
success and should be congratulated yet again. sizeable resources in the sector.
As for trends, this year “it was good for gold” was the most obvi-
ous answer, as it has been for several years now. I would argue The one commodity sector where this hadn’t been the case over
though, the answer needs to be more nuanced. It was certainly the last three years was lithium but at this year’s Diggers lithium and
good for the established gold producers who revelled in their status the other battery minerals were much lower on the hot commodity
as industry leaders with investors, brokers, analysts, service provid- counter than previously.
ers and media battling to get a piece of their time.
At a conference which has always lacked the presence of the It is becoming apparent that while the EV revolution narrative
chief executives of the diversified majors, the likes of Jake Klein, Bill playing out on the demand side of the lithium, graphite and cobalt
Beament and Raleigh Finlayson are the superstars and given their markets is very real (and perhaps even underestimated), the most
performance over the last three years, they were rightly saluted. It bullish investors have ignored many of the supply side fundamen-
has been a long time since Diggers had so many dividend-paying tals.
chief executives on the stage in the same year and that they all
come from the mid-tier gold sector tells you all you need to know It has dawned on investors this year that lithium deposits are
about how that group is performing. plentiful and not that difficult to find and define a resource on. The
The problem was that underneath the producers the mood difficult part is securing customers, keeping them happy and keep-
among explorers and developers in Kalgoorlie was generally de- ing them engaged.
spondent. Numerous executives I spoke to felt that despite the
numbers at the conference, the current market was the most torrid In cobalt, DRC material is vastly superior in quality that ASX-list-
they could remember. ed companies have not been able to define elsewhere.
The disparity between gold’s producers and explorers is a symp-
tom of a wider problem for the junior resources sector; a lack of risk Like lithium, graphite is abundant across the world and project de-
appetite. velopment requires much more than finding and mining a deposit,
The established producers are attracting new investors to the as Diggers presenter Syrah Resources Ltd is painfully finding out.
gold sector but these investors are not reinvesting their earnings
into higher risk exploration and development stocks. Meanwhile, So, those investors who believe in the EV trajectory have gone off
the traditional funds which have supported such companies are looking for other battery metals where demand growth is matched
suffering widespread redemptions. by projected supply tightness. Fortunately for those who were pay-
The biggest hurdle has been at the development stage. Numer- ing attention at Diggers, the answer came from one of the confer-
ous junior companies in various commodities have enjoyed strong ence’s most traditional commodity groups; nickel.
investor support for capital raisings through to feasibility study but
have then found that final fence, securing project finance, impos- A corner of the Diggers programme and exhibition floor has al-
sible to negotiate, even for gold projects in a record price environ- ways been nickel, how big that corner was has usually depended
ment. on the stainless steel market. Presentations from the nickel miners
Equity is reluctant to back construction and debt won’t come in have always had a slide about demand-side dynamics but this year,
without the equity to back it up. each of them provided additional slides showing projected numbers
The problem is not confined to gold. Throughout the commodity for EV sales and the increasingly nickel-reliant chemical mix of the
spectrum, companies are unable to reach the finish line. batteries used in EVs.
However, Diggers week finally provided the first evidence things
may be changing. Delegates arrived at the Goldfields Arts Centre One investor even suggested to me that the EV-inspired nickel
to news that three developers – Venturex Resources Ltd, Salt Lake mini-boom would simply end up going the way of the lithium, graph-
ite and cobalt booms but I think they are misguided.

Unlike the other three, nickel is not readily and cheaply available,
at least not in the form battery makers are looking for; nickel sul-
phate. The cheapest processing route to nickel sulphate is through
nickel sulphide deposits and while there has been a whole host of
supply/demand dynamics at play in the sector over the last decade,
a rash of new nickel sulphide discoveries is not one of them.

[email protected] @DominicPiper

PAGE 4 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

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NEWS

Honeymoon period
set for beginning

ADFS on the Honeymoon uranium pro- from investors like Tribeca Investment moon project is and that it is destined to
ject in South Australia is expected to Partners Pty Ltd (9.81%) and Paradice be the next uranium supplier.”
be completed in November. Investment Partners Pty Ltd (9.81%),
while a dedicated uranium fund from Boss’ phase one restart of Honey-
GR Engineering Services Ltd is lead Brazil and two from the US have taken moon is forecast to cost about $US10
consultant for the Honeymoon study, to Boss more recently. million to produce 880,000 lbpa at AISC
with project owner Boss Resources Ltd of $US24/lb and operating costs of
also beefing up its capabilities in the Craib told Paydirt there was growing $US16/lb.
sector by appointing international ura- recognition in the market that uranium
nium expert Bryn Jones as technical supply was needed from both idle pro- Honeymoon is currently the only non-
director. duction and new mines, which would producing uranium mine primed for pro-
only occur on the back of stronger ura- duction in Australia.
Honeymoon was placed on care-and- nium prices.
maintenance in 2013 by then-owner “From our perspective, when we see
Uranium One Australia Pty Ltd and yel- “Once the uranium price runs it is go- the spot price at around $US30/lb [at
lowcake prices since have not spurred a ing to be hard for investors to enter this the time of print it was $US25-26/lb],
rush back to production. market with production and sales se- it would imply contract prices of about
cured,” Craib said. $US40/lb and that is when we will start
However, the uranium sector appears getting excited,” Craib said.
poised for a reboot in the coming years “We have solid relationships with a
and Boss managing director Duncan variety of international institutions and “It goes back to delivering our share-
holders an IRR greater than 40% and
A DFS on Honeymoon is schedule for completion by the end of 2019. In the meantime, a really positive NPV and from all our
exploration to expand the current global resource of 71.6 mlb uranium continues modelling that is what we are targeting.
The market is not there yet, but we’re
Craib hopes to have Honeymoon in US utilities and we are discussions for not far off, and in the meantime we are
shape for a restart. off-take agreements. The US utilities doing everything we can to prepare
send us [request for purchase] RFPs, Honeymoon for the restart.”
The Australian Government renewed which is the tendering process for pur-
a 3.3 mlbpa export permit at Honey- chase and we generally respond and With limited options to participate in
moon in April. have done to a number of them. That ready-for-production uranium projects
in itself is a very positive endorsement in Australia, Honeymoon offers a rare
The award of the Mineral Export Per- of Honeymoon being considered in that opportunity for investors and a success-
mit means all necessary approvals for tendering process and it is really a tes- ful restart programme could bode well
production are in place at Honeymoon. tament to how far advanced the Honey- for the rest of the sector.

State and Federal support for Hon- “One of views is that there will be a
eymoon is being met with enthusiasm key number of projects that get into pro-
duction in this first phase of the cycle
and that has been a big focus for us.
Boss ticks a lot of boxes for us; it is a
smallish cap type of project that is going
to be able to sit alongside some of the
bigger projects coming back to market
in the first stage,” Tribeca commodities
analyst Guy Keller told Paydirt.

“That doesn’t mean the others in the
market don’t benefit. I don’t know what
the magical spot price has to be [to gen-
erate activity], but if it clears $US30/lb,
then people are going to be coming into
the space and saying; ‘what is avail-
able, who has deposits, who has good
deposits, who is cheap?’ The answer to
that is that there is a lot of value to be
realised in some of the juniors and it is
no fault of what they own or what they
are doing, it is just a function of being
in a market that has been very ignored
from institutions and fairly ignored from
the retail.”

– Mark Andrews

PAGE 6 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Time to rebuild
the (yellow) cake stall

A historic MoU signed in Jabiru will secure the town’s Guy Keller
future as the tourism heartland of the World Heritage-
listed Kakadu National Park. Australian Federal Minister The NT Government has committed a further $135.5
million to the town. ERA will continue to have
for the Environment Sussan Ley joined Northern
Territory Minister for Aboriginal Affairs, Selena Uibo, a presence in Jabiru as the company undertakes the
Energy Resources of Australia Ltd (ERA) and Traditional rehabilitation of the Ranger Project Area to protect
Owners from the Gundjeihmi Aboriginal Corporation Kakadu’s World Heritage values. Jabiru was established
(GAC) for the signing of the MoU last month, which will in 1982 to support uranium mining in the region. Today, it
support the town’s transition from a mining town to a is a services and tourism hub for Kakadu National Park
and the West Arnhem region. ERA will cease processing
tourist town. activities at the Ranger uranium mine no later than
January 2021, with remediation work to be completed
ERA is scheduled to cease operations at the Ranger by 2026. As Jabiru transitions from a mining town to a
Mine by 2021. The four MoU parties have committed locally-led community, until 2023, the NT Government
will continue to take responsibility for essential services
to their role in the future of Jabiru and to growing and infrastructure, including education, health, police,
the town as a regional services and tourism hub for
Kakadu National Park and the West Arnhem region. fire and emergency services.
“The Australian Government has committed $216
million to Kakadu with $35 million directly supporting
Jabiru’s transition from mining to tourism. Importantly,
the certainty that comes from this MoU will encourage

further private investment,” Ley said.

In the last uranium bull market the Paladin Energy Ltd legend Exploring
was born on the back of a portfolio of projects in Africa which saw together for success
the then-John Borshoff led company rise from a 10c/share stock
to in excess of $8/share on the ASX in 2007. Established in 1993 Bostech Drilling has successfully
completed exploration and mining projects across
Paladin was the champion many juniors wanted to emulate at a
time when the sector was awash with uranium-hopefuls. Australia and overseas.
Whether it be the Deserts of central Australia or the
However, like in any commodity rush not all companies hit their in- Forests of South Western Australia Bostech can assist
tended markers and in the case of the uranium sector the unforseen
tragedy at Fukushima in 2011 essentially shut down the junior sector. you with your drilling requirements.
Industry leaders in:
In large part, uranium prices have been blunt since with spot pric-
es, according to UxC.com, only hitting highs of $US28/lb this year. RAB/Aircore - GradeControl - Reverse Circulation
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end of town. e: [email protected] w: www.bostech.com.au 08 9250 4252

However, with two of the world’s biggest uranium producers – AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 7
Cameco and KazAtomProm – cutting low-cost production and en-
acting policies prioritising premium pounds, respectively, there is be-
lief supply discipline will allow for other sources to mature against a
rallying uranium spot price.

“I think we will get [price] movement by the end of this year, I don’t
think we will need to wait until next year. Everybody I talk to is con-
stantly waiting for utility contracting or for their stock price to move,
but we are getting to the point now where Cameco have still got to
buy 10-11 mlb of uranium by the end of this year and that is assum-
ing they don’t start buying for next year as well,” Tribeca Investment
Partners commodities analyst Guy Keller told Paydirt.

“The clock is ticking on that and once summer is out of the way
and the World Nuclear Association Symposium in London in early
September starts, I’d expect you’d see the pace of utility enquiries,
if not announcements of contracts, pick up by the end of the year as
well. That will put a little bit of fire under the market before next year.”

Driving uranium prices higher in the next 12 months is likely to be
the continuing shift and changes to the global energy mix and the
new reactor builds in China.

With the strategies to cut supply employed by Cameco and Kaz-

NEWS

AtomProm and the lack of quick-to-market been successful in connecting one by John Howard
developments in the pipeline, Tribeca be- then and that changes the landscape
lieves there is support for uranium prices amazingly and becomes another demand relating to significant concerns regarding
to move towards $US40/lb in the next 12 source.” the impact of uranium imports on the na-
months. tional security with respect to domestic
Addressing media at this year’s Dig- mining.
In late August, Kazatomprom an- gers & Dealers Forum in Kalgoorlie, for-
nounced its intention to continue to flex mer Australian Prime Minister Hon John Therefore, further analysis of the na-
down production by 20% through 2021, Howard said the way in which the pace tional security considerations was or-
compared to the planned levels under of renewable energy had been forced has dered, including the entire nuclear fuel
Subsoil Use Contracts. The company an- been a mistake. supply chain, with the United States Nu-
nounced it was working with JV partners clear Fuel Working Group to report back
to assess the impact and implement the It is debatable whether heavy incen- within 90 days [of July 12] recommenda-
plan across all of Kazakhstan’s uranium tives encouraging investment in renewa- tions for reviving and expanding domestic
mines. bles had come at too high a price for aver- uranium production.
age consumers in Australia, Howard said.
Stymieing momentum in the uranium Sprott Inc president Rick Rule said al-
market will be another event in the ilk of “As I move around Australia I don’t find lowing the passage of Section 232 would
Fukushima, while backwards steps in people happy with energy prices and to have been bad policy and predicted a bull
costs and time of new reactor builds are the extent that they have been driven up market for uranium in 2020.
other potential limiting factors for the sec- in prices through too great a reliance/too
tor to consider. great an investment in renewable and too “I like the uranium business, I am more
fast retraction from fossil fuels, that’s an focused on gold right now because I see
Meanwhile, the hype around renewable issue,” Howard said. gold moving this year and uranium mov-
energy solutions and the evolution of bat- ing next year. But, the truth is that when
tery storage in the power make-up are “I think that is a matter for the Govern- the uranium market moves the impact on
disruptors to base load power supply in ment [the role of uranium in the future], uranium stocks are more dramatic than
the future. I just think that every option should be any other stocks in the resources sector,”
on the table and I demonstrated that Rule told Investing News Network on the
Nevertheless, Keller said there was with the Switkowski Inquiry the last year sidelines of the Sprott Investment Sym-
enough work being done in the nuclear I was in government. We have 38-40% posium in Vancouver in July.
energy space to ensure the 11% of global of the world’s easily recoverable uranium
electricity it supplies is maintained and reserves. Basically, in the eyes of some “I remember Paladin went from 10c/
potentially built upon. people that has been off the table, but share to $10/share in the last uranium
how that develops obviously I am not in boom and what is interesting about that
“There are small modular reactors de- favour of some artificial economic incen- is that investors’ memories are still fresh.
signed, with one of the new scale ones tive through its utilisation, but I don’t think When the uranium price does move,
being built in the US, China has started we should close our minds to it.” the anticipation you’ll see from investors
construction of their version, Canada has crowding into the few remaining uranium
approved an area next to one of their re- While the sector has been largely ig- stocks on the planet I think will be very
actors to build one, France and Russia nored since 2011, uranium was under the dramatic. I just can’t tell you, sadly, when
are onto it and even Australia has people spotlight in July when the White House that will occur.”
running around in the US trying to keep produced determinations on an investiga-
up with the technology side there,” Keller tion into the effect of uranium imports on While investors aren’t spoiled with a
said. the national security of the US conducted plethora of uranium companies to invest
under Section 232 of the Trade Expan- in, Rule said the vehicles to have with-
“All governments want to be first in the sion Act of 1962. stood the uranium bust were an “unusu-
pack because it is landscape changing. ally good crop”.
We may see some commercial success US President Donald Trump did not
from 2025 onwards and with government concur with the Secretary of Commerce’s “The last bull market in uranium we saw
initiatives to assist that could be brought findings that uranium imports threaten to juniors expand from five, which is almost
forward. We could find that we are roll- impair the national security of the US, ac- none, to 500 over 6.5 years. Now you see
ing them out commercially in 2025 as cording to Section 232 of the Act. that 500 collapsed to 20, and of that 20,
opposed to just announcing that we have I can absolutely, positively recommend,
However, Trump supported the findings eight of them to intelligent speculators,”
Rule said.

“That is a reasonably high population
of good quality companies, relative to the
universe to select from.”

– Mark Andrews

A bull market for uranium is tipped for 2020

PAGE 8 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Seeing green in mining

Companies which mine, make prof- out into the ocean for 7km and its hyper- cility (NAIF) plus another $75 million in
its and help the environment at the saline solution is like introducing Mars to equity.
same time are rarities. So, when one Earth; it kills everything in its path. We
such company comes along in an era can take that stream out and redeem it Discussions have started with com-
driven by responsible investing, a fair back to the closest to what sea water is. It mercial lenders, while the company is
amount of curious interest is garnered. is gentler on the environment at the end through to the second stage of consid-
of the day,” EcoMag chief executive Tony eration (detailed due diligence) for a sub-
In this particular instance, EcoMag Ltd Crimmins told Paydirt. stantial loan through NAIF.
has managed to turn curiosity in its activ-
ities into genuine support for the Pilbara “We’re a little bit trickier to understand, “NAIF and the equipment suppliers are
magnesium project. we don’t dig one single product out of the [hopefully] putting in about $90-100 mil-
ground and put it on the boat, we create lion. To be honest, every time we have a
Using the hydrometallurgy process it a range of variants of our basic products, success we become a bit more popular
created, EcoMag can recover magne- which can then be used in agriculture, and you find these private investment
sium from a range of sources, however, it manufacturing and even in some mining. groups coming out wanting to provide
is ideally suited to precipitating magnesi- similar types of instruments to us, which
um carbonate from hypersaline brines, a “We are a mining company and we are is great,” Crimmins said.
by-product of sea salt production, which mining the ocean. Not only are we mining
has historically been discharged into the the ocean, we are mining a waste stream “The discussions are mature and we
sea. that is deposited out into the ocean. Our hope to get the government [funding]
investors that get involved in this com- concluded in the next month or so. [Com-
Through a proposed $150 million facil- pany find it quite unique because in one mitments] from the equipment suppliers
ity in Karratha, EcoMag aims to produce part they are going to make money, but are pretty much a given because they do
80,000 tpa of hydrated magnesium car- the second profit stream of investing is this through export mining associations/
bonate, mainly for export, worth about in a redeeming company as we try and organisations. If you look at what Kalium
$130 million a year at today’s prices. fix up an environmental situation at the [Lakes Ltd] have done through a Ger-
same time.” man group, we have a similar one that
The proposed facility would gener- we hope to do with a European sovereign
ate income by treating the wastewater As the gold price peaks, nickel starts fund as well.”
stream from existing salt production, ex- to run with copper predicted to follow, in-
tracting the magnesium and then diluting vestors can be forgiven for latching onto Analysis of EcoMag’s proposed mag-
and rebalancing its composition. Essen- companies in traditional commodities, nesium recovery plant by Deloitte Ac-
tially, the result is a waste water stream making it difficult for vehicles like Eco- cess Economics indicates that direct
that is closer to seawater, reducing sa- Mag to attract capital. benefits from the first 20 years of opera-
line toxicity threats to the local marine tion to Australia would be valued at over
system. However, in a stiff capital market, Eco- $149 million through company taxes to
Mag is confident of potentially locking the Commonwealth, payroll taxes and
The company is also currently negoti- away funding for the Pilbara magnesium royalties to WA, while infrastructure im-
ating with a major Australian salt produc- project this year, which would mean the provements for the Pilbara and the envi-
er in Karratha over access to its bitterns start of production in 2022. ronmental benefits would result.
channel, both for more efficient bitterns
harvesting and for disposal of its treated The funding plan is to raise $100 mil- – Mark Andrews
waste stream. lion in debt from commercial lenders and
the Northern Australia Infrastructure Fa-
“When it [bitterns] goes out it stretches

EcoMag chief executive Tony Crimmins and chief technology officer
and magnesium extraction process inventor Dr Tam Tran, at the
site in Karratha. EcoMag plans to extract high purity magnesium
from the concentrated brines generated by sea salt production,
before releasing a more environmentally benign stream into the

ocean. A range of magnesium compounds are sold for industrial,
environmental and specialty applications

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 9

25Celebrating
YEARS
Est.1994

In the latest of our new series of retrospectives to celebrate Paydirt’s
25th anniversary this year, we look at September down the years and our
coverage of the conference season, from high profile Diggers & Dealers
visitors to the rise of Africa Down Under, as well as GIS for the home PC

1995

Paydirt’s first ever September edition identified emerging economies in other parts of Asia weaken
the seeds of the commodity story set to dominate the dominant influence of Japanese steel mills in
the next decade; iron ore. The editorial focus Australian iron ore mines,” we said, somewhat
was on Robe River Mining Associates and major presciently in 1995.
shareholder North Ltd, which was considering Changes were also occurring in technology,
expansion of its Pilbara iron ore assets and related with recent developments by Geo Mapping
Cape Lambert infrastructure to a barely believable Technologies Pty Ltd providing GIS programmes
50 mtpa. The expansion ambitions were based capable of being installed on desktop PCs.
on the assertion that Japan’s hold on the Asian “…Continuing advances in hardware and
steel market would come under threat from other software will soon make this technology almost as
nations. ubiquitous as spreadsheets and word processors.
“While it may be a big spender, Robe’s rivals – GIS is the digital equivalent of a drafting table, map
CRA’s Hamersley Iron and BHP’s Mt Newman cabinet and light table but is far more versatile than
Mining, are in the process of undertaking similar, the traditional cartographic tools,” we helpfully
large-scale exploration programmes. They are explained to the uninitiated.
designed primarily to keep the Pilbara in play as

1997

The month’s lead story surrounded Andrew partner Rod Smith warned that upcoming talks
“Twiggy” Forrest and the news that his Anaconda in Kyoto, Japan around climate change could
Nickel had “taken another step to ensuring the eventually cost the mining industry “millions of
smooth path to development at their Murrin Murrin dollars in upgrades” and lead to the assessment of
laterite nickel project”. Construction at another alternative energy sources at long-life mines.
nickel laterite play, Bulong, was also featured, This year also saw Paydirt’s biggest foray yet into
including analyst warnings that its “more advanced Africa. Editor Ross Louthean identified “at least
process route… may or may not entail higher risk”. 32 listed Australian companies involved in Africa”,
The analysts were ultimately proven right. While driven, he said, by “Australia’s cumbersome Native
Murrin Murrin is still in operation (despite Anaconda Title Act”. Among them, Equinox Minerals which
and its shareholders falling by the wayside in the was imparting new exploration theories on ground
process) Bulong was closed in 2005, having failed in southern Zambia and Resolute Ltd which had
to hit its straps. opened the Obotan gold mine in Ghana in May.
On the other side of the country, Paydirt visited In Canada, the fallout from the Bre-X scandal could
two intriguing projects in Queensland; the recently still be felt with the Australian JORC committee
opened Ernest Henry copper-gold mine and BHP’s telling the Mining Standards Taskforce and the TSX
Cannington lead-zinc-silver project, both in the Mt that they should adopt similar reporting standards
Isa region. to their southern hemisphere cousins.
Elsewhere, Deloitte Touche Tohmatsu’s mining

PAGE 10 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

2002-2003

By the early 2000s, the focus of Paydirt’s promoting Ivanhoe Mines Ltd’s Oyu Tolgoi copper-
September edition was very much on all the gold project in Mongolia.
action from the annual Diggers & Dealers forum In the conference coverage, nickel players were
in Kalgoorlie. In 2002, Newmont Mining Corp asserting themselves. Junior Independence Gold
director Pierre Lassonde was the big attraction NL was revelling in an opening session position
following the engineering of Newmont’s takeover on the stage which had allowed it to talk up mine
of Normandy Mining. life extensions at its recently acquired Long nickel
According to Paydirt, Lassonde was bullish on the mine in Kambalda and the exploration potential of
gold market, predicting it would hit $US350/oz by its Tropicana gold JV with AngloGold.
2004. Also on the Diggers stage, Perseverance Corp told
“We are only at the very beginning of a gold bull delegates its Fosterville gold mine in Victoria was
market,” Lassonde told an excited Diggers mob. “on the very of a new and very exciting future” (see
A year later, another North American mining page 40) while Placer Dome Asia Pacific managing
identity was the cover star. Robert Friedland had director Peter Tomsett described Tanzania as a
already made a name for himself with Voisey’s “very miner-friendly country”.
Bay nickel in Canada, now he was in Kalgoorlie

2004

Keith Goode is a regular and well-regarded presence at Diggers & 2005
Dealers but the Paydirt columnist has more strings to his bow than
“two questions in three parts”. In 2004, he was already talking up the The middle of the 2000s saw an editorial shift for Paydirt in
impact Chinese development would have on metals demand.
Goode was particularly struck by the sheer size of development out- September with the rise of the increasingly popular Africa
side of the recognised population centres.
“While Yantai does not appear on most China maps that we looked Down Under taking precedence over a review of the more
at, its population (in the last statistics) was over 9 million – about the
same as London,” he said. parochial Diggers & Dealers.
“As wealth levels rise, gold demand should benefit and new cars be-
ing sold all contain catalytic converters with the petrol stations selling The cover image of September 2005 displayed the chang-
unleaded fuel,” Goode added.
ing tides, with Gryphon Minerals and Adamus Resources

executives Steve Parsons and Hamish Halliday standing in

front of the Mt Charlotte headframe having spoken to editor

Barry Avery about the companies’ work in Burkina Faso and

Ghana respectively. 2010

September 2010 VOLUME 1. ISSUE 176 $11.95

Continental drift: At the start of the new decade, Africa and Africa John Lewins told us. “On the ASX we have 1.5
Down Under were the clear focus of September and million trades a day, in London it is less than 10%
South Africans now calling Australia home Paydirt was simply following the market trends. It of that and the costs are higher. The situation has
may have had something to do with miners being changed because the ASX has matured as a
Special edition • Diggers and Dealers review ISSN 1445-3436 eager to secure tickets to that year’s FIFA World market for companies that have a primary focus
• Resources Victoria review 08 Cup in South Africa, but just 13 years after Ross overseas. The market is now far more comfortable
Louthean had highlighted 32 Australian companies with Africa. That secondary listing in London or
9 771445 343007 active in Africa, there were close to 200 ASX-listed Canada is less important, access to funds is better
companies with interests on the continent. and there is no need to go to London because
The cover story considered the shift of African there is a lot of Asian money going into the ASX
stories away from London and Toronto to Australia. so you don’t necessarily need to tap into North
“We delisted off AIM because there was no American and UK markets.”
liquidity,” Platinum Australia managing director
2011

The following years saw Paydirt continue to focus its September number of industry veterans had warnings for the sector.
coverage on previewing Africa Down Under and reviewing “It may take 10 to 15 years but there is no doubt, this is the last
Diggers & Dealers. In 2011, the focus at both conferences was major opportunity for projects of this type in the world,” George
very much iron ore. In the Diggers review there was coverage of Jones said, while Anvil Mining’s Bill Turner suggested the capital
presentations by Fortescue Metals Group Ltd, Atlas Iron, Cliffs intensity of the infrastructure requirements may be a bridge too far.
Natural Resources, Gindalbie Metals Ltd and Grange Resources. “In iron ore you just can’t stage it that easily, you need a big brother.
Meanwhile, the cover story focused on the new generation No market in the world is going to give a junior company $2 billion
of African iron ore developers hoping to emulate the likes of for the capex on a mine development in Africa. Developing an
Fortescue. operating presence in an African country is a big challenge,” he
The African group had been led by a revitalised Sundance said.
Resources Ltd which was still recovering from the air tragedy Eight years on, those African iron ore hopefuls are nowhere nearer
which claimed the lives of its board a year before. the starting gate.
Confidence at Sundance and other companies was high but a
AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 11

NEWS

Potash players find funding
nourishment
Emerging potash developers Danakali interest developing in the fertiliser space. rybody loves – about the project and the
Ltd and Salt Lake Potash Ltd shook off “It is a popular sector at the moment; entire potash thematic,” he said. “The
the financing malaise afflicting the junior Mannheim cost curve sets a floor price of
market to secure a combined $US350 mil- there is a real buzz about it,” Swiericzuk around $US400/t. All of the WA SoP pro-
lion in debt facilities last month. said. “It has a beautiful thematic around ducers will comfortably fit under that; it is
the desire for better diets, better farming an amazing opportunity.”
Danakali released details of a $US200 practices and the use of green and renew-
million senior credit facility with the Africa able energy.” The race is now on between these al-
Finance Corporation and African Export ternative sources of SoP to supply an in-
Import Bank for construction of its Colluli Potash production has traditionally been creasingly demanding market. Swiericzuk
project in Eritrea on August 5. On the same sold into the muriate-of-potash (MoP) fer- said the availability of infrastructure and
day, Salt Lake announced it had signed tiliser market but as farmers adjust to the the scalability made his company’s Gold-
two finance facilities worth a combined food demands of growing middle classes fields Salt Lakes project highly attractive.
$US180 million with private equity group in emerging markets, SoP has become a
Taurus Funds Management for its Lake highly sought after fertiliser due to its low “The single biggest attraction is that it is
Way project (part of the wider Goldfields chloride content. nine lakes, that gives it volume and means
Salt Lakes project) in Western Australia. it is scalable – and there is rail, road and
Currently, most of the world’s SoP is pro- gas access there. There is nothing else in
Finalisation of the two debt packages duced via the Mannheim method, a capital Western Australia to compare with that,”
represents the biggest financing step yet intensive, environmentally challenging and he said.
in the nascent Australian potash sector expensive process. Swiericzuk said the
which has more than half a dozen juniors popularity of the new generation of WA Swiericzuk speaks from experience. Af-
active. potash projects (and Danakali’s Colluli) ter finishing a nine-year stint at Fortescue
came from their ability to disrupt the Man- Metals Group Ltd in mid-2018, the mining
Salt Lake chief executive Tony Swieric- nheim SoP product cost curve. engineer spent his time running the rule
zuk told Paydirt it was symptomatic of the over numerous junior resources opportu-
“This is what we loved – and what eve-

OOPPEENNININGGOOPPPPOORRTTUUNNITITIEIESS
OPFFEONORIRNAGAUOUSPSTPTRORARALTLIUAINANINTIINEINSVVEESSTTMMENENTT
FOARANANDUDSLTLEREAAADLDIEAERNRSISHNHVIPIEPSINTINMAEAFNFRTRICICAA

AND LEADERSHIP IN AFRICA
AADDVVOOCCAACCY.YI.NINSSIGIGHHTST.SC. COONNNECETCITOIONSN.S.

ADVOCACY. INSIGHTS. CONNECTIONS.

sPprooundsolsPyrperodosPunbprdsyooolunyrdseoldyrebdy by www.aameg.orgwwwww.awa.maaemg.eogrg.org
PAGE 12 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

One of Salt Lake Potash’s evaporation
ponds on its Lake Way project in WA

“This will be, like Fortescue, a game-changer; the first
potash mine in WA and we believe we can grow this
into Fortescue 2.0.
nities before settling on Salt Lake in No- Danakali shares a similar modular plan “It should provide comfort for other in-
vember 2018. but with even greater ambitions. The com- vestors that sophisticated parties have
pany’s Colluli deposit is hosted in hard done a significant amount of due diligence
“I liked the thematic around potash and rock, meaning there is no need for the and eager to invest in Colluli and Eritrea,”
when I looked at this project, I couldn’t fault evaporation process most projects re- he said.
it. The infrastructure support is there with quire, affording it a quicker route to pro-
gas and water pipelines and an airstrip on duction. For Salt Lake, the key now is to ramp-up
the licence.” Stage 1 early works and begin marketing
The company plans to produce 472,000 in earnest.
For Swiericzuk, the Goldfields Salt tpa potash in the first five years of opera-
Lakes project represents an opportunity tion before doubling production from Year The company has the advantage of op-
to repeat the Fortescue success story in 6. Chief executive Niels Wage told Paydirt erating on granted mining leases associat-
another commodity. in August that the scaled approach would ed with Blackham Resources Ltd’s Wiluna
deliver capex savings as it would allow the gold operation. In July, Salt Lake struck
“This will be, like Fortescue, a game- company to utilise the existing logistics ca- a $10 million agreement with Blackham
changer; the first potash mine in WA and pacity. which hands Salt Lake granted mining ten-
we believe we can grow this into Fortes- ements and access to infrastructure.
cue 2.0,” he said. “It is one of the reasons why we have
chosen the module plan; it allows us to “All Stage 1 work is on the Blackham
The Fortescue experience is inform- scale up, using the existing infrastructure mining lease which has allowed us to start
ing Salt Lake’s development plans. The capacity,” Wage said. “We are conscious with a fast sprint,” Swiericzuk said.
project encompasses nine salt lakes in of the need to keep capex low, keep labour
an area spanning north of Kalgoorlie to costs low. We could go to 1 mtpa imme- Completion of Stage 1 will run in con-
Wiluna. The company’s strategy is to start diately but that would double the upfront junction with a full marketing campaign.
production at Lake Way, near Wiluna, be- capex.”
fore scaling up in line with infrastructure “We will have the first product specs
access and customer interest. On confirmation of the debt finance out to customers soon,” Swiericzuk said.
package, Wage said the company was “What we do know is that it is very high-
A June scoping study estimated $237 closing in on the start of construction. quality potash with low chloride as expect-
million would be sufficient to build a ed and early indications are that it will be
200,000 tpa SoP operation with an initial “I am very pleased to achieve credit ap- water soluble, which also equates to high
20-year mine life based on the Lake Way proval as it represents one of the last re- quality.
deposit. Once Lake Way is established, maining milestones prior to project execu-
Salt Lake will build capabilities on other tion,” he said. “Depending on what we make, we will
lakes, including potentially 400,000 tpa start angling for placing the low-grade into
from Lake Wells. Ultimately, it hopes to Danakali head of corporate develop- China and the high-quality, high-grade
develop a regional hub-and-spoke model ment and external affairs, William Sando- product into the North American and Eu-
similar to Fortescue’s Pilbara iron ore ver, told Paydirt the approval of the credit ropean markets.”
operations which could see it producing facility would prove a catalyst for the re-
close to 1 mtpa SoP. maining financing of the project. – Dominic Piper

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 13

REGISTER NOW

15 October 2019

Perth,Western Australia

THE BEST NICKEL STORIES ALL IN ONE DAY

Limited sponsorship and exhibition
opportunities available!

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

australiannickelconference.com

Preliminary Programme Tuesday 15 October 2019

08:00 Arrival tea, coffee and registration

Session One

08:30 Welcome: Bill Repard, Executive Chairman, Paydirt Media Pty Ltd
08:35 Eduard Haegel, Asset President, BHP Nickel West
Dan Lougher, Managing Director & CEO, Western Areas Ltd
Peter Harold, Managing Director, Panoramic Resources Ltd
David Southam, Managing Director, Mincor Resources NL
10:15 Questions
10:20 Morning Tea sponsored by St George Mining Ltd

Session Two

10:50 Peter Bradford, Managing Director & CEO, Independence Group NL
Tim Maclean, Chief Operating Officer, Australian Mines Ltd

John Prineas, Executive Chairman, St George Mining Ltd

Andrew Penkethman, Chief Executive Officer, Ardea Resources Ltd

Questions

In conversation with Hon Bill Johnston MLA, Minister for Mines and Petroleum,
Government of Western Australia, with Dominic Piper, Editor, Paydirt Media


12:50 Lunch

Session Three

Richard Bevan, Managing Director, Cassini Resources Ltd
Mark Wilson, Managing Director, Legend Mining Ltd
Aidan Platel, Chief Executive Officer, Auroch Minerals Ltd
Analyst update
Questions

Afternoon Tea sponsored by PCF Capital Group

Session Four

Scott Williamson, Managing Director, Blackstone Minerals Ltd
Martin Kavanagh, Non-Executive Director, Chase Mining Corporation Ltd
Speaker TBC

Questions

Closing Panel Discussion (convened by Dominic Piper, Paydirt Media)
Closing Drinks sponsored by GR Engineering Services Ltd

* This programme is subject to change without prior notice

australiannickelconference.com

NEWS

The golden gateway to WA

West Perth-based PCF Capital Group Golden Gateway JV signing: Hon Bill Johnston, Her Excellency Dong Zhihua,
has helped deliver an Australia-Chi- PCF managing director Liam Twigger, Zhaojin Mining chairman Weng Zhanbin
na first, with the corporate advisory firm
partnering with Zhaojin International Min- and Zhaojin vice president Sun Xiduan
ing to form the Golden Gateway JV.
“I am very confident that this Golden is like a two-speed economy; you’ve got
Zhaojin is currently China’s fourth larg- Gateway JV will be very successful. The the big end of town that is going very well
est gold producer and in recent years first goal is to find some strategic oppor- and at the smaller end it’s really tough, so
has embarked on a journey to elevate its tunities for Zhaojin and for the broader the concept of having additional capital
status. Chinese market. Initially gold [focused] coming out of Asia, coming out of China,
and then I am sure broadening into other to Australia is a fantastic development.”
“We have [had] the strategy to speed commodities. This is a great thing, we
up the strategy of doing business over- all know the Australian mining industry In maintaining its reputation, the 50:50
seas in the last couple of years,” Zhaojin Golden Gateway JV has been structured
chairman Weng Zhanbin said at the of-
ficial launch of Golden Gateway.

“Through a lot of our discussions with
Mr Liam Twigger and PCF Capital in
terms of business in Australia, [we find]
there is a lot of good opportunity in Aus-
tralia, especially in Western Australia.”

Zhaojin International – a wholly-owned
subsidiary of Zhaojin Mining Industry Co.
Ltd – was established in 2015 and has
since made strategic investments in Aus-
tralian and Canadian projects, while also
forming a mutual mining investment fund
with a partner in Toronto.

At the time of the Golden Gateway
signing, Zhaojin International’s market
cap on the Hong Kong stock exchange
was $5 billion.

“The JV has just been signed, we will
now consider all opportunities and with a
plus-$5 billion market cap; no deal is too
big or too small,” PCF Capital managing
director Liam Twigger told Paydirt.

PCF Capital Group Zhaojin International Golden Gateway JV
Mining Co Ltd
Founded by Liam Twigger in 1999 An incorporated 50:50 JV
and has since completed more Wholly-owned by Zhaojin between PCF Capital Group and
than 130 mine asset transactions Mining Industry Co Ltd, Zhaojin Zhaojin International. Golden
and project financing mandates International was established Gateway will leverage from its
worth an aggregate of more in 2015 to expand its parent broad range of expertise to pose
than $3.5 billion. PCF has built company’s global footprint. Australian mining investment
an extensive international With expertise from exploration and acquisition opportunities
client-base in the past 20 years to building mines, Zhaojin is to Chinese buyers. Zhaojin
providing a range of corporate one of China’s largest gold will be a foundation client of
advisory services to the mining producers. Zhaojin International Golden Gateway as the former
sector has investments in Australia and aspires to build a sizable gold
Canada and formed a mutual production profile in Australia.
mining investment fund with a Golden Gateway hopes to be a
Canadian partner in Toronto conduit for other Chinese mining
companies to fully consider
opportunities in Australia

PAGE 16 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

in a way that protects PCF’s current Twigger, Zhanbin and Xiduan make the Golden Gateway JV official. Golden Gateway
standing as a leading independent cor- expects to not only attract interest from other Chinese investors, but also from the owners
porate advisory firm.
of Australian mining assets wanting to tap into the Chinese investment community
Through Golden Gateway, PCF’s role
will be to generate potential Australian through with equality and mutual respect than some other industries in the mining
opportunities to be bankrolled by Zhaojin and abide by the laws and regulations of sector,” Johnston said.
International to complement the parent both China and Australia and start a new
company’s current 670,000 ozpa produc- success story of mutually beneficial co- Johnston hoped that Golden Gateway
tion profile in China. operation.” would continue to firm WA as one of the
premier gold mining jurisdictions in the
Golden Gateway is the first time a Chi- Chinese investment in WA’s mining world, while also calling for deeper re-
nese mining company has joined forces sector has not always gone to plan, how- lationships between WA, China and the
with an outfit in the mould of PCF, which ever, PCF has noticed a reinvigorated rest of the Asian region, with WA Minister
essentially begins a new model of coop- willingness from Chinese companies to for Asian Engagement Hon Peter Tinley
eration between Australian and Chinese engage in Australian opportunities. set to release the State’s strategy for
enterprises. tighter connections in the region.
“There has been some hesitancy to
China’s WA Consul-General, Dong transact because of a perceived lack by “Our region will see continuing growth
Zhihua, backed Golden Gateway to go the prospective buyers of local market in- over the next 20-30 years and if we are to
beyond the enrichment of the bilateral sight and the ability to carry out effective continue to be a successful society with
trade and economic cooperation and due diligence,” Twigger said. a vibrant economy, we need to make
contribute to the comprehensive strate- sure that we are open to engagement
gic partnership between Australia and “Golden Gateway is structured as a with this important part of the world,”
China. conduit to identify and offer up invest- Johnston said.
ment opportunities, backed by locally-
Dong said that with the world economy based technical and financial due dili- “We [Australia] are currently the 14th
facing downward pressure from the US gence, to willing Chinese investors.” largest economy and by 2050 we are
Government’s stance on tariffs on goods likely to be the 30th largest economy, so
and products from China, the time to Chinese investments span iron ore, you can see if that we don’t remain en-
strengthen bonds was now. LNG, manganese and lithium but the gaged in our region there is a risk that we
record Australian dollar gold prices will be left behind.
“In a period of difficulties and uncer- reached last month means there has
tainties, it is important that China and never been a better time to invest in WA “Our relationship with China and other
Australia grow closer and stronger eco- gold projects, according to WA Minister countries in our region is essential to our
nomic ties though our joint efforts,” Zhi- of Mines Bill Johnston. prosperity and we want to continue to
hua said. work hard to build that relationship and
In 2018, gold production in WA hit new today I am very pleased to be here to
“Australian companies will benefit from highs of 7.5 moz valued at $11.5 billion. mark the Golden Gateway JV as another
financial investment that generate new opportunity for that continued engage-
jobs and tax revenue while exploring “Our gold industry here in Western ment between China and Western Aus-
business opportunities in China; it will Australia is very important to us. One of tralia.”
be a win-win cooperation. It is my sin- the advantages of the gold industry is
cere hope that the two sides will follow that there is quite a high level of employ- – Mark Andrews
ment intensity, so each dollar of invest-
ment creates more West Australian jobs

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 17

NEWS

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COVER

Organic sizzle to
Saracen’s dividend

strategy

Every August for the past three years, Saracen Mineral Holdings
Ltd managing director Raleigh Finlayson has been confronted with

the same question: When is the company going to reward loyal
shareholders with a maiden dividend? His response has always been

very direct: “Right now, we’re happy to invest in our business.”

It is a strategy that has worked perfectly paying a dividend and also showing Saracen has committed to spending
for Saracen with the company outrank- growth attributes, and that’s really what $50 million on exploration in FY2020,
ing its peers – including fellow “G5” we want to maintain.” having tipped $56 million into the ground
Australian gold producers and dividend- last year. A further $112 million has been
payers Northern Star Resources Ltd, Unveiled last month alongside its full- set aside for production growth activities
Evolution Mining Ltd, St Barbara Ltd and year results for FY2019, Saracen’s in- such as underground and mill expansion
Regis Resources Ltd – on total share- augural dividend policy indicated the works at Carosue Dam and open-pit de-
holder returns over the past three years. company would target a payout equal to velopment at Thunderbox.
20-40% of NPAT, subject to a minimum
However, things are set to change. cash balance of $150 million being main- A heavy focus on exploration over the
Next August, Saracen will distribute its tained. past few years has helped Saracen lift
first dividends to shareholders, many of its reserves to 3.3 moz gold, including
whom have been on board since the first Saracen reported a record NPAT of a 32% increase in FY2019 for a sector-
gold bar was poured at Carosue Dam in $92.5 million for FY2019, up 22% on leading discovery cost of $30/oz.
January 2010. the previous financial year, with underly-
ing NPAT also increasing 40% to $94.2 Continued success with the drill bit
“There’s always this argument you’re million. At the end of June, the compa- was one of the key factors Saracen had
either a growth stock or a dividend stock, ny boasted a healthy cash balance of to mull over in deciding whether or not it
but I think we’ve graduated now,” Finlay- $154.4 million despite spending $216.9 should go down the path of paying divi-
son told Paydirt last month. million on exploration and growth over dends.
the preceding 12 months.
“We held our nerve when we could “We didn’t want it to stifle our growth,
have easily paid a 3c dividend any time Record production of 355,077oz (up particularly on the exploration spend,”
in the last three years given our growth 12% from FY2018) at an improved AISC Finlayson said.
and our cash balance, but that may have of $1,030/oz from its Carosue Dam and
prevented us going from $1.50/share to Thunderbox operations ultimately gener- “Exploration continues to be our major
$4/share in that same period. ated revenue of $555.6 million (up 9%) as value proposition, but at the same time it
well as record EBITDA of $219.5 million is a combination of costs coming out of
“For us, it’s about making sure that (up 11%). our business, increased production and
we’ve invested wisely. We’ve been very obviously the nice tailwinds we’re getting
focused on that and now we can do both. “Obviously any year where you’re pro- with the gold price which has meant we
And if you look across the peer group ducing a record amount is always going can add in a dividend.
globally, there’s not many that are both to be handy,” Finlayson said.
“If there was an environment where

PAGE 20 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

we couldn’t do both, we good baseline to launch off.

would obviously con- “And, of anyone in our peer group,

tinue to invest in our all of our focus is within 250km of each

growth and explora- other and in the heart of the West Aus-

tion, so we wanted to tralian Goldfields. That remains a strate-

make sure we held that gic advantage for us as we look to grow,

policy until we were whether that be continuing organic or

very comfortable we bolt-ons around us, or if we go the next

could do both and sus- step where we acquire something which

tain it.” is a third production centre.”

While shareholders Saracen has progressively captured

may be looking forward more and more recognition from various

to Saracen paying divi- sections of the market for its ability to

dends for the first time, grow production while bringing down its

those within the com- cost base. At the end of 2018, the com-

pany are more focused pany was unanimously selected as “Min-

on breaking through er of the Year” by a panel of experts for

the 400,000oz produc- Paydirt’s sister publication Gold Mining

tion mark. Journal.

Saracen is targeting In casting his vote, Argonaut Ltd ana-

3 5 0,0 0 0 - 370,0 0 0 oz lyst James Wilson said: “In terms of price

at an AISC range of performance improvement, [Saracen]

$1,025-1,075/oz for has killed the pig.”

FY2020, but beyond Taurus Funds Management director

that the company ex- Michael Anderson added: “Saracen has

pects to produce up- done very well, continues to do well and

wards of 400,000 ozpa from a market perspective they are a

and has provisionally standout on the charts…it took me a mil-

guided such output un- lisecond to decide Saracen was Miner of

til FY2026, based on its the Year.”

entire reserves at Ca- Saracen’s rise to prominence among Raleigh Finlayson

rosue Dam and Thun- Australia’s leading mid-tier gold produc- which the company has been able to ef-
fectively build from the ground up.
derbox. ers has contrasted that of Evolution and
“I think perhaps we’ve benefited from
“I’m not sure if there’s Northern Star, both of which have built the fact that neither of these have been in
previous ownership of majors, so we’ve
any other producer – multibillion dollar empires on the back of been able to come in, generate some re-
ally good cash flows and invest back into
“ and I could be wrong strategic acquisition of assets unwanted the ground and had really good returns,”
We held our nerve when we could have easily he said.
paid a 3c dividend any time in the last three
years, given our growth and our cash balance, but “Our discovery cost on reserves was
that may have prevented us going from $1.50/share a sector-leading $30/oz in the last two
to $4/share in that same period. years, there’s not numbers globally like
that at the moment, so that’s been our
and would love to know otherwise – that’s by the majors. strategic advantage. We’ve played that
put out a seven-year life-of-mine plan off Carosue Dam is essentially Saracen’s card extremely well and, I guess, by de-
100% of reserves,” Finlayson said. fault we’ve been able to grow organically.
foundation asset, while Thunderbox was
“Yes, it’s seven years forward-looking, added to the mix in 2014. History will “At a $2,200/oz gold price, I think the
but we’ve also delivered seven years in show the company forked out just $14 market is wary of major M&A that blows
the past where we’ve met or exceeded million and $32 million for the two pro- our brains out. We’ve seen it in cycles
guidance in every single year, so that jects which today have a combined mar- gone in the past, so I think shareholders
gives us confidence we can execute that ket value of almost $3 billion. are particularly nervous when compa-
plan, but also gives the market confi- nies go into a trading halt pending a M&A
dence. With its latest move, it is aiming to rep- deal that is going to be a large transac-
licate that value. In the June quarter, Sar- tion that’s actually in time going to be di-
“The other observation is that it’s not acen announced it was acquiring junior lutive to shareholders.”
declining. We have seen a lot companies explorer Bligh Resources Ltd via an all-
in the past put out a short-term forecast scrip off-market takeover valued at $38 Saracen will celebrate 10 years since
and they’ve either not hit it or there’s a million, with the Bundarra gold project its first gold pour at Carosue Dam on
declining production profile, which is considered a natural “bolt-on” for Thun- January 29. While the festivities are tak-
probably the theme globally in the gold derbox. ing place, the long-awaited expansion of
space at the moment. So, we’re not say- the mill from 2.4 mtpa to 3.2 mtpa will be
ing ‘that’s it for us’. It just gives us a really Finlayson believes Saracen has been under way. Open-pit mining is also set to
the beneficiary of picking up two assets resume during FY2021.

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 21

COVER “I’m not sure if there’s any other “We’re not getting car-
producer – and I could be wrong ried away by where the gold
No one is looking forward and would love to know otherwise – price is at, we’re saying
to those celebrations more that’s put out a seven-year life-of-mine ‘well, this is great, it could go
than Finlayson, who began
his career with Saracen as

a fresh-faced general man- plan off 100% of reserves. higher, but let’s also plan for
ager, operations two years the fact it could go lower’,”

before that first gold pour. he said.

“I was 29 and got ap- “We don’t want to be look-

pointed to basically start up this opera- day. ing back in five years and saying ‘if only

tion, having never done anything like that Despite a less-than-welcoming start we invested this here, we would have got

before, so it was a huge amount of faith to life in the chief executive’s chair, Fin- ourselves on a really good platform’. We

shown in me by the board and ultimately layson stuck to his guns and the follow- think if we can establish a good platform

the shareholders,” he said. ing year spearheaded the acquisition of for our business now, we’re going to be

“It was a massive learning curve, but Thunderbox, which a recent feasibility in a really good position to weather that

you know that old saying ‘what doesn’t study indicated would become a profit- storm, that long winter, that might come

break you makes you stronger’? Well, able, low cost, long life underground our way and then be able to react really

that was certainly the case when we operation. First stoping ore is expected smartly with accretive M&A at a different

started up at Carosue.” from FY2021. time of the cycle.”

Finlayson was appointed Saracen’s With gold prices at record highs in Away from Saracen, Finlayson is also

chief operating officer in October 2009 Australian dollar terms, the only thing focused on his role as president of the

and eventually succeeded company keeping Finlayson awake at night is the Western Australian School of Mines

founder Guido Staltari as managing di- safety of his staff and ensuring his com- (WASM) Alumni, a position he has held

rector in April 2013, coinciding with the pany sustains the strong operating cash for the last three years.

biggest drop in the gold price in a single flows it has been reporting to date. When he accepted the role via a “gold-

From August 2020, Saracen is set to start
paying dividends to shareholders

PAGE 22 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

The new paste plant at Carosue Dam was
commissioned during the June quarter

“I was 29 and got appointed to basically
start up this operation, having never
done anything like that before, so it was a
huge amount of faith shown in me by the
board and ultimately the shareholders.
AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 23

COVER Production of 355,077oz helped
Saracen post a record net profit
Carosue Dam senior geologist Charles Hughes at of $92 million for FY2019
the recent Atbara discovery which has returned
gold hits of 104m @ 1.4 g/t and 130m @ 1.1 g/t “My time in Kalgoorlie
was one of the best
times of my life and we
need to make sure that
people who haven’t lived
there before get to see that

opportunity and live that
opportunity.

PAGE 24 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

When he accepted the role via a “gold- that number had jumped fourfold to 32.

en handpass” from outgoing president, “I think mining is a really good profes-

Northern Star chairman Bill Beament, he sion for young kids,” Finlayson said.

was told his responsibilities would not be “To me, there’s nothing better than work-

hugely time-consuming. Finlayson quickly ing with young people and as you get a bit

discovered that was not the case and he older, I think you start to realise the benefit

has been very hands-on since, embracing of working with young people; they’re en-

everything that comes with the position, thusiastic, they’re very keen.

including being the face and mentor to the “Millennials get such a bad rap from

next generation of mine workers. older generations for the wrong reasons.

“Like anything, the more you get in- We’ve got to get better at understanding

volved, the more important it becomes what drives them.”

to you and overall it’s been massively re- Finlayson himself is a proud Kalgoorlie Saracen has budgeted $50 million
in FY2020 for exploration work across
warding,” he said. kid and retains an ongoing love affair with
its portfolio
“For me, this has come in a period in the town, and not just because his compa-
mines in the Goldfields, Finlayson ad-
the last three years where we’ve obviously ny’s operations are nearby. Several mem- mitted he was “not a massive fan of it”
but conceded the cultural shift towards
seen a massive decline in enrolments in bers of his family, including on his in-laws, city-based lifestyles for workers and the
families was something Kalgoorlie cannot
most mining-related activities, whether it run long-standing successful businesses compete with.

be in tertiary education or in trades.” in the tight-knit community. “Even time rosters are very appealing to
people, I understand all that, but the ques-
At the time of print, 50 students from However, he bemoans the fact the town tion is how do you make it attractive for
local residents who want to work a more
Curtin University were set to descend on is no longer what it once was. Attracting traditional five-day week,” he said.

Kalgoorlie for the annual WASM Mining people to Kalgoorlie has proven to be a “My time in Kalgoorlie was one of the
best times of my life and we need to make
Camp. challenge, not just for the mining industry, sure that people who haven’t lived there
before get to see that opportunity and live
Prior to last year’s camp, which 68 stu- with some 1,500 job vacancies unable to that opportunity. A lot of people say they’ll
come for a year and they’re still there 20
dents attended, WASM only had eight stu- be filled. years later, so we’ve just got to work to-
gether on both sides to come up with a
dents enrolled to study mining engineering While Saracen operates under a FIFO proper solution.”

“the following year. By the end of the camp, model, along with several others with One of the major changes Finlayson has
Our discovery cost on reserves was a led at Saracen in recent times has been
sector-leading $30/oz in the last two the implementation of the thinking and act-
years, there’s not numbers globally like that ing like owners programme, loosely based
at the moment. on a similar model first introduced by Evo-
lution several years ago.

Some 98% of Saracen’s employees
have shares in the company and Finlay-
son believes the ownership mindset which
has been created from the programme will
drive the business to even greater heights.

“We’ve been able to build really good
rapport with our existing people but also
attract other people into our business
which I think is really important,” Finlayson
said.

“For us, I think the ultimate measure is
being respected by your peer group be-
cause ultimately our peers have got like-
minded management and employees and
we want them to be talking about us as a
good company, not necessarily to work
for us, but one that they respect, one that
they’ve got a lot of time for, all of which is
the core of our DNA.”

– Michael Washbourne

Almost $30 million was spent on underground development work at Thunderbox last year
AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 25

DIGGERS & DEALERS REVIEW

John Howard on: Donald Trump

Sir Arvi Parbo “He sometimes gets himself in a position where
he’s not displaying the sort of public grace that
“He understood the importance of freedom, leaders of countries are meant to. He’s a mixed
because he’d been denied it in his earlier bag, but that is true of so many political leaders
years, and he also understood the importance the world has seen. What is interesting about
of incentive for risk-taking, which is Trump is that there is a directness about his
fundamental to the success of the mining administration and I think, on balance, he has
industry. I join with many others in saluting been more successful than many people wanted
him as a symbol of not only the achievement him to be.
of that generation of post-war migrants, but
also of the great mining industry. Brexit

Adani coal mine “I think the British people rejected the former
Prime Minister Theresa May simply because
“A monument of how not to attract investment instead of bringing to the Brexit negotiation and
in this country. Thankfully, the most recent optimism that it represented an opportunity for
federal election demonstrated that the the future, she saw it as a damage-limitation
common sense of the people of Queensland exercise. If you go into a big national enterprise
quite rightly kept a greater premium on job and you don’t really believe in it and you see it as
security than it did on fantastical climate a damage-limitation exercise, you’re not going to
change zealotry. be successful.

Interest rates Climate change

“There wouldn’t be anybody in this room “We’re often told the greatest moral challenge
who has lived in an era of lower interest rates we had is the warming of the planet, or climate
than we live at the present time. When I first change. I think the greatest moral challenge still
borrowed to buy a home after Jeanette and remains the reduction in poverty around the
I married, we paid 8-9% and when we put a world. And the good news is that the world has
storey on the house we had what they used to made amazing progress in reducing poverty
call a cocktail loan… we paid 17.5%. I can tell over the last 25 years. More people have been
you no cocktail could obliterate that. lifted out of poverty than at any other time since
the industrial revolution… and your industry has
made a major contribution to that.

PAGE 26 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Howard bowls over Diggers crowd

Former Australian Prime Minister John the $US120/t mark John Howard
Howard had the near-record crowd at and nickel edging to-
this year’s Diggers & Dealers eating out wards $US10/lb dur- than anything else,” Howard said.
of the palm of his hand from the opening ing the conference, “China remains an authoritarian country,
minute of his keynote address on the first Howard said it was
morning of the three-day forum. a time to be celebrat- but the economic importance to Australia
ing everything that is overwhelming and we should never lose
“To borrow a phrase from our Prime was great about the sight of that. I think successive govern-
Minister, Scott Morrison, how good is the resources industry ments in Australia, once again from both
gold price? More to the point, after last and its contribution to sides of politics, have worked very effec-
night, how good is Steve Smith?” Howard Australia’s economy tively to keep a good balance in the rela-
beamed to a packed audience inside the over many decades. tionship between the two societies. But,
Kalgoorlie Arts Centre. it is getting harder because the regime in
However, he found China now is a lot more authoritarian than
While the biggest cheer may have been it difficult to overlook the one that was in power over 10 years
reserved for the self-confessed cricket the “climate change ago.”
tragic’s remarks about Smith’s match-win- zealots” who con-
ning efforts in the first Ashes Test, How- stantly make it their Howard described controversial US
ard knew he was addressing a gathering mission to tarnish the President Donald Trump as “different”,
where rising prices for not just gold but image of industry. something he considers to be a defining
also nickel and iron ore would be topics of trait of many successful political leaders
hot discussion over the ensuing days. Howard said he throughout history.
was perplexed by why one of the great-
Therefore, he wasn’t going to miss a est success stories of Australia’s economy “I think on some things he’s done a ter-
chance to spruik the “superb economic – mining – was always under attack and rific job. I think he’s managed the Ameri-
conditions” his Liberal Government had forced to be apologetic for its existence can economy well, I think he’s understood
left the country’s finances when it was fi- and defend its future. the character of the American economy
nally defeated in late 2007 after almost 12 and the tax cuts he’s brought in have been
years in power. “I talk of course of the constant attacks valuable and they’ve been valuable for the
in the name of climate change zealotry world,” Howard said.
“There are a number of reasons why this on sections of your industry, particularly
country dodged the bullet, so to speak, at but not least the coal mining industry, but “I think he understands the character of
the time of the global financial crisis – and it goes beyond that. There seems to be a China’s trading behaviour. [Despite] what-
I don’t mind reminding you that one was collective determination in some sections ever the leadership of China may say, they
the superb economic conditions,” Howard of the Australian community to vilify what are not pristine practitioners of respect for
said we do best, to vilify those industries at intellectual property.
which we have succeeded,” he said.
“But, arguably even more important, “I think his attack on his security agen-
of course, was the contribution of the “This industry is one of the things we cies in America has been foolish. A true
resource sector to the salvation of the have done well…it is environmentally sen- conservative leader never attacks security
strength of the Australian economy and sitive, it is safe – the envy of industries agencies. Security agencies, with all their
the way in which we were able to draw around the world when it comes to safety flaws, are very, very valuable.”
upon the contribution of our resource trade – and it’s played a major role in the eco-
with North Asia and other parts of the nomic growth and the economic prosperity – Michael Washbourne
world, [it] played a material role in us com- of our society. So, be very proud of what
ing through without enormous damage you have achieved. Don’t be in any way
and it’s something we never should forget.” defensive in the face of the climate change
zealots.”
With the gold price climbing above
$2,200/oz, iron ore sitting nicely around Howard turned a few heads in
the audience when he suggested
Australia’s ties with the US would
always supersede those with
China despite the latter being its
biggest trade partner by some
margin.

“Australia will always be closer
to the US than it will be to China
and that is because we share
common values with the US; not
in everything, not in every way,
there are a lot of differences be-
tween our two societies, but our
fundamental human values are
very similar, and values bind
countries together far more tightly

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 27

DIGGERS & DEALERS REVIEW

Aussies primed for new gold bull run

Evolution Mining Ltd executive chairman never as good or as bad as they seem – chases of unwanted Australian assets in
Jake Klein has long warned his gold in- reminded those in the audience on the final 2014, Tonkin said the real value-driver in
the company was how its people worked
dustry peers to be prepared for their “mo- afternoon of the conference that investors those mines to the best of their capabilities.

ment in Hollywood”. were now putting even greater expectations “For us, it comes down to that simple
formula of you drill, you find, you mine, you
That moment seemingly arrived last on gold producers to deliver the goods. repeat – and that’s probably no better rep-
resented than in our Pogo asset in Alaska…
month during Diggers & Dealers as the “As Australian producers, we look like we which now holds 10 moz of endowment,
with the 6 moz that we’ve just defined in re-
gold price crashed through $2,200/oz for have won the lottery, with a rising US dol- source at 9.6 g/t and also the 4 moz that’s
been mined to date,” Tonkin said.
the first time. lar gold price and a falling currency,” Klein
“The uplift to our market cap, which is sit-
With delegates salivating over the pros- said. ting over $8 billion today, is through organic
growth, through discovery. I think we’ve
pect of a new bull run for gold, Evolution “We’ve seen this play out before; the gold been given credit for being good buyers,
but we are better miners than buyers, be-
($5.58) and Northern Star Resources Ltd price goes up, cut-off grades are reduced, cause all of that uplift, it doesn’t matter if
you’ve paid two, three, four times what we
($14.05) were among those to record new more gold is mined and yet despite gener- paid for those assets, it’s what we’ve done
with those assets.”
ating more revenue, the cash all
Klein was equally cognisant of what Evo-
seems to disappear before reach- lution needed to do to keep creating more
value for shareholders.
ing shareholders’ pockets.
“At Evolution we dare to be different,”
“So, with the Australian dollar Klein said. “We won’t use industry head-
winds as an excuse and concede higher
gold price at record levels, I do costs are inevitable. The vast majority of
our cost base is within our control and we
think we need to answer this ques- continue to be laser-focused on finding in-
novative ways to reduce or at least maintain
tion, one which I don’t think the in- our low cost base.

dustry has answered very well in “We will not be distracted by the gold

the past. And that question [show Stuart Tonkin

me the money] is one I think inves- price and we will ensure we remain focused
on banking every dollar that the gold price
tors should ask first at any investor increases by.”

meeting.” – Michael Washbourne

A similar sentiment was shared

by Northern Star chief executive

Stuart Tonkin, who pointed to ma-

jor recent acquisitions by the likes

of Barrick Gold Corp (Randgold

Resources) and Newmont Mining
Jake Klein Corp (Goldcorp) as one of several

key indicators that gold was set for

share price highs. And while their respec- another bull run.

tive stock values have since come off, they “What it’s done is create mas-

are still significantly ahead of the levels ob- sive voids in that investment space

served only four months prior. and massive voids for the oppor-

Klein highlighted the outperformance of tunities for other gold companies,

Australian gold producers relative to their with growth, to fill,” Tonkin said.

global peers on the Van Eck Gold Miners “When we zoom out and look at

Index over the past three years. Evolution, what’s been happening and what

Northern Star and fellow ASX-listed jug- the signs are, we want to position

gernaut Newcrest Mining Ltd are all ranked our company, Northern Star, to

among the top 10 gold producers in the capitalise on those opportunities

world, according to that index. and position ourselves in the best

“As we stand here today, there are defi- way for shareholders.

nitely far more reasons to be optimistic “We won’t get starry-eyed on

about the gold price environment than the gold price, but it’s amazing

there have been over the last few years,” when you zoom right out and

Klein said. look back at the [last] 50 years

“In recent months, gold is getting much and what has driven that [the gold

more attention as an asset class for invest- price] in a sustained way. We think

ment. When people like Ray Dalio – the bil- the fundamentals are strong, we

lionaire founder of Bridgewater, the world’s think history is repeating, and so we need

largest hedge fund – starts talking about to be looking at that.”

gold, people do start taking notice. Northern Star collected the prized “Deal-

“As gold miners we are undoubtedly op- er of the Year” gong for the second time in

erating in an amazingly positive environ- being recognised for its acquisition of the

ment, it is definitely a great time to be an Pogo gold mine in Alaska.

Australian gold producer.” While Northern Star is consistently

However, Klein – known for his contrar- praised for its M&A achievements, having

ian approach to business in that things are first gained prominence for a suite of pur-

PAGE 28 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Home is safer for OceanaGold

With its Didipio operation mired in Fili-
pino politics, OceanaGold Corp Ltd
chose to focus on its organic growth op-

portunities at this year’s Diggers & Dealers

forum.

OceanaGold has been an active player

on the gold M&A scene this decade, pay-

ing Newmont Mining Corp $US101 million

for the Waihi mine and $C856 million for

Romarco Minerals and its Haile project

in 2015. However, in the four years since

those purchases it has stuck to in-house

growth plans, setting itself a target of in-

creasing its 500,000 ozpa production by

50% over the next five years.

OceanaGold head of exploration Craig

Feebrey’s presentation suggested Waihi,

on New Zealand’s North Island, would be

key to realising those ambitions.

The mine had just 360,000oz in re-

serves and 140,000oz in resources when

OceanaGold took ownership but in the

nearly four years since, more than 2 moz

of resources have been added to the in- Craig Feebrey

ventory, more than half of it from the Mar-

tha deposit.

A prolific open pit producer through two sources in three low-sulphidation epither- wider Waihi project’s later life.
In the US, the company has reinvigor-
separate eras, Martha is now being re- mal veins.
ated exploration following the Haile opera-
developed as an underground operation. “We believe WKP is an exceptional gold tion’s plant expansion earlier this year.

OceanaGold is drilling 75,000m at Waihi in discovery with significant size potential The Haile plant can now process 3.5-4
mtpa with the exploration team searching
2019, including 55,000m on Martha. and that it will be a significant part of Waihi for pit expansion and underground oppor-
tunities throughout the 3km strike on the
“We have already completed 31,000m along with the Martha underground,” Fee- project.

of drilling since 2017 on the Martha un- brey said. Feebrey said the Horseshoe deposit
would be the focus of Haile’s first un-
derground to deliver the resource update At Macraes on the South Island, the derground mining campaign from 2021
with other targets such as Palomino and
earlier this year [677,000oz inferred and company is aiming to extend mine life to Snakeshoe to be tested in the coming
year.
300,000oz indicated] and we anticipate 2024 and beyond.
Outside of its existing operations,
the drilling this year will lead to a further re- Feebrey said results from the 45,000m OceanaGold has expanded its exploration
footprint in the Americas with four JVs in
“source upgrades in September and early of drilling being undertaken this year were Nevada and two JVs in Argentina.
We feel we are playing to our strengths
by prioritising bonanza low-sulphidation “We feel we are playing to our strengths
epithermal and orogenic gold systems that we by prioritising bonanza low-sulphidation
know well and offer superior benefits of high epithermal and orogenic gold systems that
grade, good metallurgy, generally no acid- we know well and offer superior benefits
generating waste and low upfront capital. of high grade, good metallurgy, generally
no acid-generating waste and low upfront
in 2020,” Feebrey said. meeting expectations with the company capital,” Feebrey said.
While Martha demonstrates the brown- now conducting a feasibility study on
a standalone underground mine at the The company plans to spend 15% of the
fields potential at Waihi, the recent WKP Golden Point prospect where recent hits group $US50 million exploration budget
discovery shows the 100-year-old mining included 15m @ 4.3 g/t, 9m @ 4.6 g/t, 9m on its Nevada and Argentinian projects
district still has greenfields opportunities @ 3.9 g/t and 6.6m @ 4 g/t gold. this year.
as well.
Drilling is also in progress at the Round – Dominic Piper
Discovered in late 2017, WKP – 10km Hill project where the company is inves-
north of Waihi – already has indicated tigating the importance of the tungsten
resources of 234,000oz @ 18 g/t with a mineralisation and how it could impact the
further 401,000oz @ 12 g/t of inferred re-

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 29

DIGGERS & DEALERS REVIEW

Mincor not short on nickel game

Arejuvenated nickel sector was one of the raised, we are looking to spend on capital.
dominant themes of Diggers & Dealers
2019 and David Southam capitalised on the When you look at the nickel price, it moves
vibe to underline the significance of Min-
cor Resources NL in the Kambalda nickel quickly and the price we are using in our
scene.
DFS is actually lower than today’s spot. The
“We will be the principal, if not the only,
feed source into that [BHP Ltd’s Kambalda] Australian dollar per pound price has actu-
concentrator,” Southam, Mincor’s manag-
ing director, said. ally hit $10/lb so hopefully again we are get-

“We are absolutely critical and to give you ting our timing right.”
an idea, with the off-take agreement we are
dedicated to push through 400-600,000t Southam said there was a possibility of
ore. If we choose 500,000t @ 3% average
nickel grade, that is 15,000t of nickel ore starting early capital works and had iden-
times 90% recovery; that is about 13,500t
nickel-in-concentrate which would make us tified the start of a box cut and decline at
the largest independent supplier to BHP.”
Cassini, underground development at Long
Last month, a binding ore tolling and con-
centrate agreement for Mincor to process David Southam – purchased for $3.5 million in scrip from In-
up to 600,000 tpa of nickel sulphide ore at
the BHP Nickel West concentrator in Kam- cember and will comprise a maiden ore dependence Group NL – and Durkin North.
balda was signed. reserve from Cassini (800,000t @ 3.7%
nickel for 28,500t contained nickel) – the Tender documents for full contract under-
Clarity on processing and a sales path first discovery made in the Widgiemooltha
means Mincor is now forging ahead with a Dome for 20 years. ground mining at Long and adjacent assets
DFS on an integrated mine plan to have its
Kambalda operations back in play. Cassini is likely to be the first mine devel- belonging to Mincor and also for Cassini
oped in Mincor’s resurrection in the nickel
A DFS is expected to be released in De- sector. have been issued, as the Kambalda nickel

“Cassini as a brand new one will probably revival starts to surge.
be the principal restart along with Durkin
North and Long, but there are many other “Remember the Kambalda concentrator
opportunities for us to reopen other mines
that have been put on care-and-mainte- is designed for Kambalda ore, so when we
nance,” Southam said.
put our ore through BHP’s concentrator it
“The money [$23 million in May] that we
has very high recovery and has very high

value and usage, which is why BHP sees

us as underpinning the restart of Kambalda

as a valued end-user in the smelter,” South-

am said.

– Mark Andrews

Nickel Mines steeled for growth

Nickel Mines Ltd celebrated an impres- significantly’.” securing seven-year tax holidays for all
sive first year on the ASX by increas- Ranger and Hengjaya combined are four RKEF lines.
ing its ownership in two RKEF lines within
the Indonesian Morowali Industrial Park. expected to produce about 20,000 tpa “Given the tax concessions we have
grading 12-14% nickel. and the very little sustaining capex,
Following Diggers & Dealers, Nickel there’s actually not a lot of difference
Mines confirmed its interest in the Rang- Shares in Nickel Mines peaked at between our EBITDA and free cash flow
er nickel project had lifted from 17% to 62.5c last month to cap what proved to profiles,” Werner said.
60%. be a memorable first year on the bourse
for a company which started life more Nickel Mines has also signed a MoU
Ranger is comprised of two RKEF than a decade ago as a nickel laterite to supply limonite ore from its Hengjaya
lines within the IMIP which is owned and miner. nickel mine – about 12km south of the
operated by Tsingshan Holding Group, IMIP – to Tsingshan’s new HPAL plant
one of the world’s largest stainless steel Notable achievements from the last within the industrial precinct.
producers. year were production at both projects
within 12 months of breaking ground and “The growth opportunities for us with
Nickel Mines also has a 60% interest Tsingshan are significant given what’s
in two other RKEF lines which are re- already in that park and the future plans
ferred to as the Hengjaya nickel project. that they have,” Werner said.
The company has options to increase its
ownership in both projects to 80%. “We are one of a large number of sup-
pliers and the nice thing about our busi-
“We have the unique opportunity to ness is the mine is completely decoupled
buy cash flows,” Nickel Mines managing from our nickel processing facilities, so
director Justin Werner said. there’s no reliance whatsoever on ore
that we produce. We simply barge and
“We’re not a mining story. You’ll see deliver into the port there.”
very few mining stories that can go out
and say ‘we’re going to pay X amount – Michael Washbourne
of dollars and suddenly our nickel pro-
duction overnight is going to increase

Justin Werner

PAGE 30 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Wherever we are... trend with us

#paydirtmedia #magazines #conferences

Paydirt Media deputy editor Mark Andrews with Gold Road Resources Ltd managing director
Duncan Gibbs at Diggers & Dealers 2019, Kalgoorlie

DIGGERS & DEALERS REVIEW

Foot to the floor in nickel’s
vehicle-led revival

After a near-decade absence, the nickel LME nickel hit $US15,010/t on the Tues- ducers,” Lougher said. “We need to get in
bulls were back out in force at this day of Diggers week, the base metal’s rise the face of the precursor manufacturers
year’s Diggers & Dealers forum. being fuelled primarily by the EV boom and users. They will provide strong compe-
which has already provided price boosts tition for nickel sulphide concentrate.”
While the nickel sector has had its mo- to lithium, graphite and cobalt. Nickel’s role
ments over the last 10 years, they have al- in the EV mix took some time to be recog- The company also expects greater pay-
ways proved fleeting, leaving nickel-focused nised but it is a key, and growing, ingredient ability from precursor manufacturers. Typi-
miners and explorers to battle against re- in EV batteries. cally, stainless steel producers pay miners
ceding prices, growing LME stockpiles and less than 80% of the nickel content of con-
low-cost production from Asia. For a num- The latest Tesla EV, the Model S, con- centrates.
ber of years, the annual nickel presence at tains 50kg of nickel and similar levels of
Diggers was almost apologetic. Mainstays nickel content in other EVs has Western “We will be talking with experts in that
like Mincor Resources Ltd and Panoramic Australia’s nickel producers increasingly field and the real value comes in the paya-
Resources Ltd spoke only of shuttering op- confident the sector will be a great disruptor bles,” Lougher said.
erations, BHP Ltd barely spoke at all about in the global nickel supply chain which has
its unloved Nickel West division and even traditionally been dominated by stainless Even if it does renew contracts with its ex-
stronger performers Independence Group steel production. isting customers, at least some Western Ar-
Ltd (IGO) and Western Areas Ltd lament- eas product is almost certain to be headed
ed the tough operating environment they “Lithium-ion batteries will become the for batteries thanks to BHP Nickel West’s
faced. dominant player in the nickel market,” West- dramatic swing towards the market.
ern Areas managing director Dan Lougher
Production of stainless steel – the over- said at Diggers & Dealers. Nickel West asset president Eduard Hae-
whelming user of refined nickel – was flat- gel told Diggers delegates the company
lining but of more concern for Australian Western Areas is a physical demonstra- was now fully focused on supplying the
nickel producers was the rise of the Asian tion of the shift in nickel’s demand funda- battery sector. It has built a nickel sulphate
nickel pig iron (NPI) sector which was pro- mentals. The company’s two nickel sul- – the preferred product for batteries – con-
viding Chinese steel mills with cheap nickel phide concentrate supply contracts with version plant at its Kwinana nickel refinery
product from Indonesia and the Philippines. BHP and Tsingshan, the world’s largest and has spent the last three years building
stainless steel producer, expire in early its understanding of the sector.
The growth in NPI production appeared 2020 and the company has begun pre-
to have placed a ceiling on the nickel price, liminary negotiations over terms of the next “Three years ago we announced here
frustrating the Australian miners’ ambitions three-year contracts. that after 50 years of supplying the stainless
to extend and expand their mature, high- steel market we would dedicate ourselves
cost operations. It is likely that a significant amount of its to the EV chain,” Haegel said. “We produce
annual 30,000 tpa of nickel-in-concentrate a high-quality product which is valued by
In 2019 however, the situation is much production will be used to supply the battery battery customers.”
brighter. While gold’s rise through $2,200/ precursor market rather than the traditional
oz stole most of the pre-conference head- stainless steel market. That decision has seen Nickel West’s
lines, nickel’s continued revival saw the parent company finally choose to retain the
sector also being hailed by the end of this “We can go through the old routine of division after years of trying to offload it.
year’s Diggers. talking to smelters but we need to look at
the developments with downstream pro- “It has proven to be the right call and now
we focus on creating value,” Haegel said.
“The quality of those plans led to BHP re-

PAGE 32 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Nickel West has cast off its unwanted Australia’s nickel revival
status and is now preparing for mining and

processing expansions in WA

Company Plans

BHP Nickel West Expansion plans at Leinster and
Mt Keith, refurbishment and
expansion at Kalgoorlie smelter and
Kwinana refinery
First Quantum Minerals Ravensthorpe mine to be restarted
in January 2020
Independence Group $26 million nickel exploration
budget and new nickel sulphate
production process confirmed
in PFS
Western Areas 13,000 tpa Odysseus mine under
construction
Panoramic Resources Restarted 10,800 tpa Savannah
mine in January 2019
Mincor Resources Acquired Long mine as part of
Kambalda restart strategy

taining the nickel division. Now we have a up a steeper and steeper adoption curve The Forrestania operations are set to be
very different future before us.” and that is a potential future for electric vehi- joined by the Odysseus mine in Western
cles [to do the same].”
While Haegel admitted Australia was yet Areas’ nickel portfolio
to see any demonstrable EV penetration in The changing chemistry of EV batteries
the local car market, he said it was coming. is also playing into nickel producers’ hands. “We not only have an increasing amount
Haegel, Lougher and Bradford all pointed of nickel going forward but an increasing
“While we have increasing confidence in to the better performance of nickel-heavy amount going into each electric vehicle so
this mega trend and have recently raised batteries as indications that manufactur- that is a perfect storm for nickel, as we get a
our low case for the EV market share, it is ers were moving towards nickel-dominant build-up in demand we will continue to see
clear that it is not here yet.” chemical mixes. a widening supply deficit of nickel.”

The tipping point would come, Hae- “We expect nickel-in-vehicle demand to LME warehouse stocks have fallen
gel said, when EV battery packs reach surge,” Haegel said. “Batteries are becom- dramatically in the last 12 months from
$US100/kwH. ing larger, nickel-based cathodes are taking 250,000t to 141,000t.
market share from non-nickel based cath-
“When the pack costs reach $US100, it odes and the amount of nickel in the battery “The nickel deficit is now a reality,”
will match the cost of a combustion engine, is increasing as the industry switches from Lougher said.
making the EV a very compelling purchase NMC 111 to NMC 811, which reduces the
with much lower running costs,” he said, say- cost of the cathode and increases its energy According to Bradford, numbers from
ing the major battery manufacturers were density. Simply, the battery’s performance Roskill already showed 3.5 years of deficit
not far off achieving price parity. improves as nickel content is increased.” ahead which would only increase as stain-
less steel and EV demand increased.
“A battery pack costs less than $US180/ Bradford concurred.
kwH today, it was $US1,000 a decade ago.” “That will continue to draw down the vis-
ible nickel inventories like we have seen on
IGO managing director Peter Bradford is
similarly bullish on EV uptake in coming dec-
ades, perhaps even more so than Haegel.

“All the analysts have higher projections
going forward,” Bradford said during his
presentation. “Not a day goes by where you
are reading someone else’s projection on
EV growth on social media or some other
media mechanism.

“What we can guarantee today is that
likely all those estimates be wrong. If it is
anything like any other disruptive technology,
forward estimates are always undercooked.
If you look at the solar PV record, analysts
forever undercooked projections, year after
year, for a decade or more.

“What solar PV did was continue to ramp

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 33

DIGGERS & DEALERS REVIEW

IGO is developing new processing circuits to
produce a battery-ready nickel sulphate material

Eduard Haegel

the LME over the last three and a half years supply issues but Haegel doesn’t Dan Lougher
and very soon the cupboard will be bare.” expect BHP’s major competitors
to move anytime soon. director Peter Harold said.
The last wide supply deficit sparked the “There’s a lot of deficit forecasts go-
creation of the Asian NPI industry and “We do not expect to see a
Bradford warned against the threat of meaningful impact on the nickel ing forward and those deficits will cre-
substitution once again. market from batteries until the ate stronger prices...I’ve seen numbers
mid-to-late-2020s. Only then do of around 500,000t by 2030 in batteries,
“The biggest challenge for the indus- we expect to see serious indus- but that could be as high as 900,000t,
try is that we need a measured supply try investment from Class 1 nickel and that would be something like a 30%
response because the worst thing we producers. However, we at Nickel increase in the current supply of nickel
can do is allow that chart to happen be- West will not rest waiting for that into the market. [I’m] not too sure where
cause that will just incentivise end-users day to arrive. We are actively de- that nickel is going to come from, but
to think about replacement technology,” veloping options to position our- clearly it’s going to lead to higher prices.”
he said. selves for a once-in-a-generation
– Dominic Piper
Further production would smooth out opportunity.”
The same could be said of the
Peter Bradford
sector’s juniors with Mincor aiming
to finalise its Kambalda consolida-
tion plans following its acquisition
of the Victor Long complex previ-
ously owned by IGO and Pano-
ramic’s revival of the Savannah
mine set to expand this year.

“We’ve had a nickel market that
has been reliant on stainless steel
for many years and we’re now see-
ing a new end-use which is actu-
ally growing exponentially going
forward,” Panoramic managing

PAGE 34 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

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DIGGERS & DEALERS REVIEW

Pilbara goes light on expansion

In response to the hiccup in the lithium sector, At throughput of 2 mtpa, Pilgangoora is stream and think there are certain counter-
Pilbara Minerals Ltd will take a measured ap- producing 330,000 tpa of 6% spodumene parties that we’d like to be more deeply inte-
proach to Stage 2 expansions at Pilgangoora. concentrate and 321,000 lbpa plus-5% tan- grated with,’ Brinsden said.
talite concentrate, with recoveries in the June
Original designs had the company spend- quarter the highest achieved since the start of “The point to be made out of all this is that
ing $235 million on beefing up processing ca- operations at 55%, 73% of the targeted de- no one is slowing down.”
pacity to 5 mtpa to produce 800-840,00 tpa sign recovery.
spodumene concentrate in Stage 2. In China, where the price has come off,
“We want to make sure that we are expand- there are still large amounts of EVs and hy-
However, a virtue of spodumene concen- ing consistent with our customers’ demands brids being manufactured, while investment
trate production outpacing chemical conver- and as a result we have been rethinking our in energy storage is being “grossly underes-
sion capacity has triggered Pilbara to rethink stage two capacity and how that gets devel- timated”, according to Brinsden.
its game plan and implement Stage 2 Light. oped over time,” Pilbara Minerals managing
director Brinsden said. “In the meantime, Japan and Korea, global
Therefore, instead of committing a full- car manufacturers, are crawling all over those
blown $235 million on Stage 2, Pilbara is likely “An obvious conclusion to draw from the guys trying to work out how they can get big-
to consider spending $50 million as it revises current impasse in the market is that our cus- ger and bigger battery contracts. The medi-
implementation strategies for the next phase tomers are still catching up with their chemical um term, the longer term for the lithium raw
of Pilgangoora. conversion capacity. The reality is we have material stories is still incredibly strong and
been more successful in the development that is why we have a lot of faith in our position
Ken Brinsden and ramp up of our spodumene concentrate in that market.”
operation in comparison to our customers’
capacity to deliver the chemical conversion While work continues on Stage 2 Light,
capacity. A lesson to come out of that is to be discussions with potential partners for Stage
really careful about how you think about the 3, including a chemical conversion plant are
subsequent expansion.” also under way.

Lithium markets remain soft, but Brinsden Meanwhile, due diligence on a JV on
noted the huge moves being made down- downstream participation and Korean sales
stream as end-users positioned for growth. with POSCO have been completed and sub-
ject to approvals, a decision is expected in the
“From our point of view, we look down- September quarter.

– Mark Andrews

Syrah shakes up the flake

Entering the sphere of graphite producer in tion improvement plan where operational Shaun Verner
a flat market has not been the ideal start improvement is underpinned by enhanced
for Syrah Resources Ltd. equipment management and also increasing base so far this calendar year, with Verner
process control stability,” Verner said. saying that demand is increasing for Balama
Nevertheless, the company has claims on product.
having the largest natural graphite mine and “Enablers in the plant will have a positive
processing plant based on annual flake con- impact on recoveries where we are targeting “Whilst natural graphite volume demand
centrate production in the world and is target- movement from the high 60% to more than has been growing strongly, it has taken longer
ing output of 205-245,000t at about $US400/t 80% by year-end and the coarse flake final for the battery and electric vehicle market to
C1 costs by the end of 2019. product percentage of 20% and 80% fines. grow than was envisaged at the time the Bal-
Importantly, we know what gaps there are ama investment decision was taken,” Verner
Syrah’s guidance is dependent on the and we have enablers in place; there are no said.
sales volume versus price scenario and pro- major design or equipment issues, there is
duction and quality performance measures at no additional significant capital expenditure “Our entry into the market started from
Balama, Mozambique. or expertise that are required to deliver these a lower demand base. Over the past 18
improvements. It is really just a systematic months Syrah’s ramp up has delivered almost
In the first half of CY2019, production from and sequential process, a set of process and 200,000t to a market currently consuming
Balama tipped 92,000t of natural flake graph- management initiatives being implemented around 750,000 tpa. Accordingly, the short-
ite, which demonstrated a strong ramp-up in and being implemented at a scale that has term market balance and pricing have been
the production profile of 100,000t produced in not been done before in the graphite industry.” driven by incremental production running
2018, according to managing director Shaun slightly ahead of market growth, with market
Verner. Verner believes the insights garnered from entry pricing having been more challenging
the ramp-up at Balama holds the company in than was initially anticipated.”
Balama has the capability of producing at good stead to manufacture positive outcomes
a rate of 350,000 tpa and at full tilt C1 cash at the mine, while Syrah’s learnings provide – Mark Andrews
operating costs are expected to come within useful context for the next wave of wannabe
the first quartile on the cost curve of $US300- graphite producers.
330/t.
Syrah has sold and shipped over 100,000t
“At Balama we are making steady progress graphite concentrate to its global customer
in the improvement of underlying production
drivers in-line with an integrated produc-

PAGE 36 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

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AUSTRALIA’S PAYDIRT DECEMBER 2018 - JANUARY 2019 PAGE 37

DIGGERS & DEALERS REVIEW

Lynas revels in rare South32 sets
global position up in the
Americas
Amanda Lacaze

Lynas Corporation Ltd is preparing to make new productivity gains and efficiencies into South32 Ltd’s sizable commitment to
a decision on the site for a cracking and the process. While Phase 1 processing at Mt exploration projects in parts of the
leaching plant in Western Australia, despite Weld required 29 flotation cells and Phase 2 Americas will be reflected in chief devel-
receiving an extension to its Malaysian oper- an additional nine cells, Lynas Next will see opment officer Simon Collins’ move to a
ating licence last month. the installation of only one further cell for a new base in Vancouver.
40% increase and Lynas 2025 only three to
Lynas expected to receive approval for five cells for a 50% increase in capacity. “For a number of exploration projects we
a licence extension on its rare earths treat- are partners in Alaska, Arizona, Mexico,
ment facility before the end of August af- Japanese Government backing and the Columbia and Peru – these are attractive
ter Malaysia’s Prime Minister indicated his ambitious expansion plans are an indication jurisdictions for us due to the known miner-
Government was prepared to drop export of Lynas’ growing importance to the global al endowment, the quality of the opportuni-
pre-conditions. The licence for Lynas’ rare rare earths sector. ties and the high residual prospectivity and
earths treatment facility is set to expire on in many cases an investor friendly policy
September 2, with Malaysian reluctance The company currently supplies 20-25% environment,” Collins said.
to extend it spanning from concern over of the world’s refined NdPr and is the only
450,000t of low-level radioactive waste cre- supplier outside of China. In addition to existing partnerships,
ated by the plant. The Government had pre- South32’s approach to JVs with juniors
viously insisted it would have to export the Lacaze said this placed Lynas in a unique will continue as it looks to reshape and im-
waste product. position, particularly given the importance prove its portfolio.
being placed on critical raw material security
“We are confident we have a reasonable by governments and corporations across One of the more recent beneficiaries of
outcome to the licence renewal issue,” Laca- the globe. South32’s open door policy to juniors with
ze said at Diggers & Dealers, after Prime prospective projects has been Inca Miner-
Minister Mahathir Mohamad indicated the “Our NdPr and by-products are sold into als Ltd.
export of the low-level waste would not be a increasingly diverse markets with a focus on
pre-condition of the licence renewal. the outside-China markets,” she said. “Com- Inca’s Riqueza copper, gold and zinc
ponent manufacturers and OEMs tend to project in Peru is now subject to an earn-in
Regardless of the decision, Lynas has operate across the world but as they move agreement with South32.
committed to building a cracking and leach- back through the rare earths supply chain,
ing circuit at its WA operations, taking away they find they don’t get diversity.” South32 has an option agreement
the first processing step from the Malaysian whereby it can earn a 60% interest in
operations. The circuit is part of the Lynas All major Western governments and man- Riqueza by fulfilling phase one funding
Next initiative which will see an additional ufacturers are designing policies around commitments of $US9 million.
40% capacity added to the company’s Mt critical raw materials as the shift towards
Weld operations. EVs and other new technologies increases. “Going forward we will continue this ap-
Demand for NdPr is forecast to accelerate proach of partnering with juniors. And, we
The expansion will be secured through from 2021 with an additional 88-155,000 tpa will also build out of own portfolio of self
the recent 10-year extension to Lynas’ loan of supply needed over the following decade. generated things, starting in Queensland.
facility with JARE, a special purpose com- We will also continue to explore around our
pany established between Japanese groups Lacaze said Lynas had become a partner existing operations to identify opportuni-
JOGMEC and Sojitz Corporation. The re- of choice in securing sustainable NdPr sup- ties for life extensions,” Collins said.
vised agreement reduces repayments to ply as it was the only downstream producer
nominal levels up to 2025, allowing Lynas to outside of China. “We are open to hearing about oppor-
concentrate on building cash reserves and tunities that align with our ambition to de-
self-funding Lynas Next and the subsequent “[Countries and manufacturers are find- velop a pipeline of growth options as we
Lynas 2025 project, according to Lacaze. ing] developing resources is not sufficient reshape and improve our portfolio.”
to ensure security and the Western market
“Our $US500 million capital plan has is heavily dependent on China for its rare While the company increases its pres-
the support of the Japanese Government earths,” she said. “Lynas supplies 100% of ence in the Americas, Collins said South32
through JARE and will all be entirely self- the world’s outside-China rare earths, other was not totalling pulling away from other
funded,” she said. than a few minerals. jurisdictions where it has divested assets,
namely South Africa.
Lynas 2025 will see expansions to the “We face the future with confidence.”
company’s WA mining and processing (in- “The divestment of these operations
cluding the introduction of cracking and [South Africa Energy Coal business] does
leaching), enhancements to its Malaysian not signal an exit from South Africa. We
solvent extraction, product finishing and continue to have a significant presence
value-adding processing and further devel- with our manganese ore mines in the
opment of its new separation and product Kalahari, where our Wessels mine has a
finishing plans in the US. reserve life of more than 50 years, and our
Hillside Aluminium smelter in KwaZulu-
The result will be an increase of neodym- Natal,” Collins said.
ium and praseodymium (collectively NdPr)
production from 7,800 tpa to 10,500 tpa. – Dominic Piper – Mark Andrews
Lacaze said the expansion would introduce

PAGE 38 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Ramelius looks beyond 1 moz

Not so long ago, Ramelius Resources Ltd “We probably tracked sideways for the best could be developed into an open-pit mine and
was facing serious questions about the part of 1.5-2 years, so it’s nice to now be get- ore processed at Edna May from FY2021 fol-
longevity of its operations at Mt Magnet and ting a bit of recognition,” Zeptner said. lowing modifications to the existing plant.
Edna May.
“I think the last box we really had to tick was This month marks two years since Rame-
Today the company is confidently spruiking that life-of-mine part of the story. Over the last lius acquired Edna May from Evolution Min-
production of at least 1 moz over the next five 2-3 years we’ve put a concerted effort into ex- ing Ltd for $90 million, including an upfront
years after landing two key acquisitions and ploration, we’re spending record amounts, so payment of $40 million. Stoping of the under-
reporting several promising exploration re- $20 million last year and we’ll look to repeat ground mine is due to begin shortly.
sults across its portfolio. that again going forward.
“It’s been an excellent acquisition,” Zeptner
Ramelius has guided a record 205,000- “That coupled with some well priced acqui- said. “We’ve essentially doubled our money
225,000oz at an AISC of $1,225-1,325/oz for sitions has enabled us to grow our reserve on the upfront purchase, it’s given us that di-
FY2020, having churned out 196,679oz at an base such that we can essentially have this versity of production capacity, and our recent
AISC of $1,192/oz for FY2019. 1 moz plan.” drilling results at depth gives me confidence
there is five-plus years of mining.”
Beyond that the company is expects to Earlier this year Ramelius acquired the
consistently produce above 200,000oz for a Marda project, about 190km north-northeast Zeptner also marvelled at the ongoing ex-
further four years based on current resources of Edna May, for $13 million and plans to bring ploration success his company was having
and reserves, as well as the potential for more it online over the coming months. around its Mt Magnet operations. High-grade
ounces to be added from other sources not hits of 4.9m @ 11.6 g/t gold, 5.7m @ 15.4
included in the five-year mine plan. Zeptner described Marda (330,000oz re- g/t and 3.7m @ 7 g/t were reported from the
source, 89,000oz reserve) as a “bread and Vivien underground mine early last month.
Speaking to Paydirt on the sidelines of Dig- butter Ramelius project” given it was a strand-
gers & Dealers, Ramelius managing director ed resource too small to justify having its own “Finding new deposits up there is some-
Mark Zeptner pointed to the company’s rising plant. thing that might be a little bit of a surprise, but
share price over the first half as evidence the what that tells me is if you put the money in
market was also confident the five-year pro- Ramelius quickly followed up the Marda the ground, it will pay you back,” Zeptner said.
duction target could be achieved. acquisition by completing its hostile takeover
of Explaurum and its prized Tampia project, – Michael Washbourne
Ramelius shares have surged from 38c at about 140km north of Edna May.
the start of the year to $1.44 during last month.
A recent strategic review found Tampia

AUSTRALIA’S NICKEL ORDER NOW
ADVENTURE

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AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 39

DIGGERS & DEALERS REVIEW

The way of Winu

Rio Tinto Exploration Ltd is keen and at depth and to the east, north and Stephen McIntosh
actively seeking partnerships with south,” Rio Tinto Exploration group
junior and mid-tier companies in projects executive for growth and innova- deposit but we have been thinking for
around the world, where it makes sense. tion Stephen McIntosh said. quite a long time that it is obviously gold-
dominated; do we see something where
The mining heavyweight is currently “To date, we have defined a we see that switch where we are likely
drilling the largest number of greenfields strike length of approximately to see more copper than gold? We are
targets than at any time in the past 20 2.1km roughly north-south. Our obviously not a gold company per se,
years, with over $US230 million across Tier 1 assets of today didn’t all start that but we like it, especially at these sorts of
seven commodities in 17 countries com- way and it is important with Winu that we prices,” McIntosh said.
mitted in 2018. look for a case that is bankable, relatively
low capital and low risk. As such, we are Winu will be drilled extensively for the
Drilling on the virgin soil where Winu primarily focused on potentially finding remainder of 2019 with some 12 rigs in
is located may have only started late last an open pit starter case. As such, we are play and a 190-man camp up and run-
year but the potential Tier 1 asset in the at present prioritising drilling into the su- ning.
making is generating most interest in Rio per gene zone.”
Tinto’s exploration portfolio. Alongside drilling, significant enabling
Winu was discovered by applying new works as well as cultural, heritage, en-
Prior to Diggers, the company an- insights to improve targeting techniques, vironmental and related studies to pro-
nounced new data on 14 diamond holes with McIntosh saying that the combina- gress the permitting and the approvals
and 28 RC holes, bringing the total num- tion of techniques complemented the process are also under way.
ber of holes disclosed to market to 70. work engineered from the office.
– Mark Andrews
“The results continue to indicate rela- “A lot of [the] smarts is done in the of-
tively wide intersections of vein-style fice through rethinking, reimagining what
copper mineralisation associated with the Paterson province might be able to
gold and silver beneath relatively shallow host. Obviously, Telfer is an amazing
cover. The mineralisation remains open

Kirkland Lake continues
growth trajectory

Growth, both organic and inorganic, is land saying Fosterville would produce ploration work in Victoria as it looks to
very much on the agenda at Kirkland 570-610,000oz for this year and each of build on its 2.7 moz @ 31 g/t gold re-
Lake Gold Inc after another year of stellar the next three years. For the June quar- source inventory.
performance for the Canadian gold miner. ter, Kirkland Lake sold 132,048oz from
Fosterville at AISC of just $US316/oz, “We are committed to organic growth,
Kirkland Lake has grown in promi- propelling the company’s balance sheet and are focused on exploration,” Holland
nence over three appearances at Dig- to nearly $US469.4 million in cash and said. “We have 13 rigs on site, six at sur-
gers. When it first arrived in 2017 it was receivables. face and seven underground.”
the latest in a long line of North American
curiosities that came to tell the domes- Holland said that healthy cash back- At its Canadian operations, Kirkland
tic miners and investors that they’d got it ing would be applied to the next stage of Lake is also eyeing growth beyond the
wrong about the Victorian goldfields and growth at Fosterville. 240,000oz forecast for 2019.
that the Fosterville mine still had a bright
future. Its acquisition of Fosterville (and “We have no debt and now have a “Our 1 mozpa target doesn’t include
the Cosmo gold mine in Northern Terri- $US10 billion market cap and we are organic growth at Macassa where we
tory) had delivered it a 100,000 ozpa pro- looking at 1 mozpa with growth coming are looking to double production over the
ducer but despite being high-grade, the almost exclusively from Fosterville,” he near term,” Holland said.
mine offered only modest margins and said.
little longevity. Kirkland Lake had paid While it has plenty to occupy it on ex-
$C1.01 billion to secure the two assets, The company has several growth pro- isting assets – the Cosmo mine in North-
saying it saw plenty of opportunity for ex- jects in train at the mine, including the ern Territory could also be reopened next
tension and expansion at a mine which construction of a new ventilation system, year – Kirkland Lake is conscious of the
had been summarily ignored by local a paste-fill plant and a new water treat- need to make use of its growing cash re-
Australian miners. ment plant. serves.

Two years later and there is little doubt Last year, the company installed a sec- “We are looking to seek other opportu-
about the validity of Kirkland Lake’s ond gravity circuit to drive further cost nities with our growing treasury,” Holland
boasts, vice president Australia Ian Hol- savings. Some 75% of Fosterville ounces said.
are now recovered via gravity.
– Dominic Piper
The company is also accelerating ex-

PAGE 40 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Fraser MacCorquodale Masters in innovative,
cutting-edge mining solutions
Newcrest’s
exploration edge Leading global experts in drilling solutions that
support our clients’ unique needs with our specialised
Newcrest Mining Ltd has expanded its “search window” in a bid
to remain at the forefront of the next wave of new gold discover- in-house equipment design, manufacturing,
ies in Australia. training and maintenance capabilities.

As well as partnering with a raft of juniors in provinces such as RAISE BORING
the Paterson and Tanami, Newcrest is collaborating with service HORIZONTAL RAISE BORING
providers to identify technologies which boost the chances of ex-
ploration success. BOX HOLE BORING
SLOT BORING
This includes development of real-time analytics with compa-
nies such as Boart Longyear, allowing for decisions to be made REEF BORING
almost immediately after drill core is recovered. MOBILE TUNNEL BORING

Newcrest general manager exploration Fraser MacCorquodale DIRECTIONAL DRILLING
said the company was also attempting to train machines to pick up BLIND SHAFT BORING SYSTEM
what a “near-miss” might look like to improve its predictive target-
ing strategies. Keen to drill deeper?

“It’s not a way of getting rid of geologists, the industry will always Visit us at www.masterdrilling.com
need geologists,” he said. “This is just another tool that we need to
help us to be able to explore smarter.”

MacCorquodale reminded delegates at Diggers & Dealers that
Newcrest was a company built on the back of exploration success,
highlighting the history behind the likes of Cadia, Telfer, Gosowong
and Wafi-Golpu over the years.

In more recent times, Newcrest has become an industry leader
in finding deeper orebodies. MacCorquodale said this attribute
was a product of the company’s bulk underground mining capa-
bility which he believes is yet to be matched by others in the gold
sector.

“Newcrest has been successful by looking deeper; deeper with-
in known mineralised districts, and that’s still the cornerstone of
our exploration,” he said.

“For us, how we’ve expanded our search window is through
our bulk underground mining. We can go into existing districts
and look deeper, or try and unlock assets that have already been
found, or explore what we have in our existing assets, but also we
can go under cover.

“The potential in countries like Australia for discoveries is huge,
when you consider that this country has got 70% of cover and all of
the orebodies found by the industry is sitting in that 30% of outcrop
or shallow cover. So, there’s a whole generation of discoveries
waiting to be found.”

MacCorquodale said the company was also looking to repeat its
success in Australia on assets abroad such as Red Chris in British
Columbia, Canada. Newcrest last month finalised its acquisition of
a 70% stake in the mine from Imperial Metals Corp for $1.18 billion.

“We see a lot of similarities to Cadia and the advantage for our
company is that we can go into an asset like this and look at it dif-
ferently,” he said.

– Michael Washbourne

DIGGERS & DEALERS REVIEW

Beyondie funding finalised

Afinal investment decision on Australia’s ing the financing process. through site last month…so lots of plumb-
first SoP operation appears imminent “The whole exercise was very good for ers, electricians, road guys, you name it, it
with the last piece of the financing puzzle for was all happening. In terms of operations,
Kalium Lakes Ltd’s Beyondie project locked us,” he said. “It perhaps takes a little bit we’ve already started hiring some of key
away in the week following Diggers & Deal- longer to go through those processes with operational guys. We’ve just appointed a
ers. the bureaucracy and all, however, the re- GM of operations and we’ll have another
sults are really good in terms of 10-15 year project director coming on board shortly.”
First production at Beyondie – 160km loans at less than 5% of the total interest
south-east of Newman – is scheduled for rates. Hazelden said the investor reaction to the
late 2020. According to last year’s BFS, Ka- company’s progress had been overwhelm-
lium Lakes will initially pursue production of “What it means for us going forward is ing, with the latest equity raising oversub-
90,000 tpa SoP from a commercial-scale we’re not going to be stressed out in the first scribed and its stock doubling during the
demonstration facility before ramping up five years in terms of trying to pay back debt first half of 2019.
to 180,000 tpa as early as two years after with no money left over anywhere else. Ef-
commissioning. fectively we’ve got what I call my HECS Despite narrowly missing out on the Best
debt, which is our NAIF loan, and that will Emerging Company Award to Bellevue
Pre-production capex is estimated at continue for 15 years at about 3-3.5%.” Gold Ltd, Kalium Lakes is set to return to
$216 million, including a $29 million con- Kalgoorlie next year on the cusp of first pro-
tingency which was one of the key re- All approvals, including Native Title, are duction at Beyondie.
quirements for Kalium Lakes to land debt in place for Kalium Lakes to start erecting
finance. the required infrastructure at Beyondie. The “This time next year we’ll have all the
company recently announced completion ponds operational, all of our bore fields
Kalium Lakes finalised its $72 million of upgrade works to a 78km access road operational, the only thing that won’t be op-
equity raising last month to balance out from site to the Great Northern Highway. erational will be the final gas pipeline which
a Northern Australia Infrastructure Facil- will only be a couple of months away,” Ha-
ity (NAIF) loan of $74 million and German- Communication towers have also been zelden said.
backed KfW facilities totalling $102 million. installed on site and bore equipment or-
dered to coincide with the start of construc- “At the same time we’ll be getting ready
Speaking to Paydirt on the sidelines of tion of the first 150ha of evaporation ponds. to start commissioning of the process plant.
Diggers, Kalium Lakes managing director We’ll start putting concrete into that at the
Brett Hazelden had nothing but praise for “The construction side of things is rela- end of this year and progressively and just
the Australian and German government tively straightforward, it’s all normal con- steadily building that up over time.”
agencies which support his company dur- crete and erecting steel,” Hazelden said.
– Michael Washbourne
“We actually had 116 different people go

Metro bemoans market malaise

Metro Mining Ltd managing director Si- record 463,000 wmt shipped for the month, Simon Finnis
mon Finnis continues to wonder what was an indication of things to come for
more his company has to do to get recogni- Metro, which has been running commercial bauxite into China, with 98% of that supply
tion from the market. operations at Bauxite Hills since April 2018. coming from the Chinese-controlled SMB-
WAP group.
Despite an impressive first year of pro- Metro has guided production of 3.5mt for
duction from its Bauxite Hills operation in 2019 and at the time of print was set to un- “If there’s a problem in Guinea, if it stops,
Far North Queensland, as well as a record veil plans to expand operations to 6 mtpa if there’s a disruption, then there’s simply
shipment in July, Metro’s share price re- from 2021. nowhere else that can take up the slack
cently slipped to its lowest levels in more from a supply of bauxite point of view,”
than three years. “We’ve got to still prove to the board we Finnis said.
can sell this product over the long term, but
“Before we started operations, this is way we’re very confident of doing that,” Finnis “Where you find 20mt of extra supply in
back in 2017, the market thought we were said. this market is interesting, and that’s where
a $400 million company, and that was after we come in, so we’re perfectly poised to de-
we raised money, spent all that money and “The next step, of course, is the bigger liver into that demand cycle.”
had no money,” Finnis said. step, so we’re taking our time to do that. We
have to stick a ship loader in between the – Michael Washbourne
“A year later, we shipped 2mt of baux- trans-shipping so we can load capsize ves-
ite, made $100 million of revenue and had sels and we can take advantage of cheaper
$30 million in the bank, and we are worth ocean freight.”
$250 million, so less than when we had no
money. Forecasters such as CM Group are pre-
dicting Chinese demand for imported baux-
“Now, this year, we produced another ite will rapidly increase over the next five
great quarter with $50 million of revenue, years, from current levels of about 90mt to
$9 million EBITDA and we’ve dropped out nearly 180mt by 2023.
and are worth less than before.”
Guinea has overtaken Australia in recent
Finnis said the July results, including a years as the primary source of imported

PAGE 42 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

St Barbara becomes
Nova Scotia patron

Taking a 30% share price hit while nego- oz in 2019. Bob Vassie
tiating the $C723 million acquisition of There is a pathway to sustained produc-
Atlantic Gold wasn’t ideal but managed by they had a dramatic impact on the resourc-
St Barbara Ltd. tion of 200,000 ozpa gold over a minimum es there with Fifteen Mile Stream having a
12-year mine life from Touquoy and Bea- 47% increase in resource [676,000oz] and
St Barbara was punished hard earlier ver Dam, followed by the integration of sat- Cochrane Hill 50% increase [607,000oz]
this year upon news that the future of its ellite deposits – Fifteen Mile Stream and and we are still drilling,” Vassie said.
Gwalia operations in Western Australia Cochrane Hill – in phase two at the Atlantic
would not entail slurry pumping. At the gold project. “To put that into more context; from Hali-
same time, the company launched its am- fax, Touquoy and Beaver, up to Cochrane
bitious bid for North American gold pro- “Atlantic does exactly what we want it Hill is 80km. There are historical workings
ducer Atlantic. to do and we’re not stopping there, we will all the way through to Halifax and we’ve
keep the same strategy. Atlantic is a long- also got ground down [in the south-west]
“When your stock comes off 30%, I think life, low-cost producing asset with a great which is the same geology, but we’re un-
a lot of people would take a lie down and pipeline and lots of exploration,” Vassie der cover that the old timers could never
take a small rest. We kept on going and said. get through.
said to our shareholders ‘can you back us
on this?’ We are over 85% institutionally “Phase 3 is about the known depos- “We will be exploring there and are cur-
held and they said ‘yes’ we will give you its around Beaver Dam and Fifteen Mile rently flying a survey as we speak to get
the money,” managing director Bob Vassie Stream. [Then], there is a lot more work stuck into the south-west tenements. We
said. and drilling around Cochrane Hill and have stitched up the spine of gold territory
making these existing deposits bigger and in a historic gold area in Nova Scotia and
“That was coming off the news of Gwalia uncovering satellites so we can fill that pro- we want to be here for a very long time,”
and it was really pleasing to get that back- duction profile and keep it above 200,000 he said.
ing. What that really meant was we could ozpa for a longer period of time.”
come up with a cash offer and cash was On Gwalia, Vassie said more would be
what won that battle for Atlantic because Vassie applauded the Atlantic team’s known about the direction the mine takes
we were not the only people there. We did efforts in bringing together such a large, once potential mass extraction options
the whole process on our own and when quality land package and successfully ex- were assessed and the ventilation pro-
we wanted money we went to Deutsche ceeding guidance in the first production gramme is completed come January.
Bank and they did a fantastic job.” year.
– Mark Andrews
The Atlantic acquisition adds the With the emphasis on bedding down
Touquoy open pit where commercial pro- operations, exploration initially took a back
duction started in March 2018 and is fore- seat but in a short period of time the return
cast to produce 92-98,000oz at $740-803/ to drilling has been fruitful.

“When they came back into exploration

Bellevue stars on the main stage

On a night that the man responsible for sected across 1,00m of strike and is open in Steve Parsons
lighting up the Eastern Goldfields in the all directions.
modern era – Mark Creasy – was honoured invest in exploration companies because it is
with the GJ Stokes Memorial Award, it was Significant results included 3.6m @ 18.3 a tough gig and if you invest you’ll eventually
fitting that Bellevue Gold Ltd was recognised g/t gold from 654.6m, including 2.2m @ 27.8 get there.”
as Best Emerging Company at Diggers & g/t from 656m; 2.5m @ 5.1 g/t from 753m
Dealers 2019. and 2m @ 4.3 g/t from 669m and 2.4m @ With speculation earlier this year that there
4.9 g/t from 676m. were suitors lining up to pitch a bid for Belle-
In a short amount of time, the company vue, time will tell if Parsons and co. are in-line
has confirmed a 1.8 moz @ 11.1 g/t inferred “We’ve defined 1.8 moz gold at an impres- for the Dealer of the Year Award in 2020.
resource, which continues at depth, at Belle- sive 11 g/t and the most amazing thing is that
vue. it is only four hours drive from right here in – Mark Andrews
Kalgoorlie, so discoveries are still happening
In further confirmation of the success in the Goldfields and it is just a matter of get-
Bellevue is having, prior to the conference ting out there, drilling holes and backing the
the company announced a new high-grade exploration team,” Parsons said at the gala
gold discovery beneath the historical mine, dinner.
which produced 800,000oz @ 15 g/t from
1986-1997. “I’d like to thank the exploration team; it
has been amazing what they have done and
From eight broad-spaced exploration I’d also like to thank the Mines Department
scout drill holes (200m apart) beneath the of Western Australia and the EIS, which re-
12th level of the mine, Bellevue-style miner- ally helped us out. I’d also like to thank all
alisation and shearing was reportedly inter- the funders and bankers and people that

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 43

DIGGERS & DEALERS REVIEW

Pantoro charges into Norseman

Pantoro Ltd has laid bare its plans to re- absolutely fantastic gold projects that have ment opportunities are Gladstone/Ever-
vitalise one of Western Australia’s most had very, very little work for the past 20 lasting, Scotia, Cobbler, Maybelle and the
prolific and highest grade goldfields. years,” Cmrlec said. OK underground mine.

A day before managing director Paul “People remember the last decade of “While there’s a large complex story,
Cmrlec addressed delegates at Dig- Norseman and some of the difficulties that there’s a whole lot of good low-hanging
gers & Dealers, Pantoro kicked off a have been seen there, but it’s one of the fruit for us to go and develop there,” Cm-
40,000m drilling programme at its newly longest-running goldfields in Australia. It rlec said.
acquired Central Norseman gold project was developed on a large-scale by West-
(CNGP) with a stated aim of building up a ern Mining in 1935 and ran continuously “There’s very big potential here in our
500,000oz mining inventory. right through until 2006 and periods be- view for multiple plus-1 moz deposits. Gold
yond there. Fields [Ltd] has demonstrated pretty com-
Pantoro acquired a 50% interest in prehensively what can be done on these
CNGP from Central Norseman Gold Con- “The processing plant needs refurbish- lake areas with the modern lake drill rigs
solidated Pty Ltd in early July for $7.5 mil- ment and in some parts of it replacement, that we can get access to today.”
lion cash and 100 million ordinary shares but everything that we require is there. The
values at 20c/share. opportunity is just outstanding. There’s Cmrlec said his company would adopt a
long-term projects that do need quite a bit development approach at CNGP similar to
“I see Norseman as a treasure chest of of development work, but there’s a num- the one it deployed at its Nicolsons project
ber of projects for us to get stuck into fairly four years ago.
Paul Cmrlec early on and that’s our focus.”
Since the first gold bar was poured at
Through its acquisition, Pantoro has Nicolsons in early 2016, Pantoro has pro-
gained access to 143 mining tenements, duced 151,000oz at an average life-of-
of which 108 are on granted mining leas- mine head grade of 7.25 g/t. That output is
es. About 6 moz gold has been historically almost double the resource the company
produced from the Norseman goldfield. started operations with.

Pantoro’s land package stretches 70km Pantoro also has high hopes for the
and hosts a resource of 35.5mt @ 3.9 g/t Grants Creek and Mary River exploration
gold for 4.4 moz, comprising 4.2mt @ 15.3 projects as potential future satellite feed for
g/t for 2 moz underground and 31mt @ 2.3 Nicolsons, near Halls Creek in WA’s Kim-
g/t for 2.4 moz open pit resources. berley region.

Some of Pantoro’s near-term develop- – Michael Washbourne

Breaker ensuring homework is done

Breaker Resources NL has deliberately engaging a highly experienced resource ge- and that we will find more open pit dirt.”
taken its time over resource definition ologist to conduct an independent review of Breaker has drilled more than 226,000m
and PFS work on its Lake Roe gold project the updated resource model,” the company
following a string of project failures in the said. at Lake Roe, largely focused on Bombora,
West Australian gold sector this year. the central portion of an 8km-long gold sys-
Sanders added that recent setbacks in tem. The focus of resource drilling and the
Breaker burst onto the gold exploration the WA gold sector meant the delay was the PFS is a single, 2.5km-long open pit running
scene in 2016 with the Bombora discovery most sensible course of action. to a depth of around 250m.
at Lake Roe – 100km east of Kalgoorlie –
but after underwhelming the market with a “Given the size of the deposit, the amount The company has put a pause on drilling
maiden resource in April 2018, the company of data used in the resource model and the while it completes the resource update and
chose to truly get to grips with the deposit well-publicised challenges encountered in PFS but Sanders is eager to return later in
before pushing too far ahead with economic the WA gold industry in recent times, we be- the year.
studies. lieve the additional time being taken to vali-
date our model is warranted,” he said. “The idea has been to underpin the project
“Two years ago we didn’t understand it with early development options but we plan
well but now we do; we have systematically Sanders said he expected the resource to keep growing the deposit and we will get
de-risked the project with drilling,” Breaker update to be lodged with the regulator before back to more drilling soon,” he said.
executive chairman Tom Sanders said at the end of August with the PFS to follow in
Diggers. October. However, that will be far from the As well as open pit mining, the PFS is in-
end of the Lake Roe growth story. vestigating processing options based on a
In an ASX announcement on the day of 2.5 mtpa standalone plant. Sanders expects
Sanders appearance on the Diggers stage, “The current resource [24.6mt @ 1.4 g/t the financials to look attractive.
Breaker said release of the updated re- for 1.1 moz gold] is limited to the top 250m
source had been delayed by three to four and even after the next resource update we “Some 790,000oz gold is in the first 150m
weeks. expect the deposit to still be drill constrained,” so there is little pre-strip which means early
he said. “The step-out and deeper drilling we payback,” he said. “Metallurgical test work
“Breaker has adopted what it believes to have done, up to 2km north of Bombora, is showing 96-98% overall recoveries with
be a prudent and conservative approach by firmly established that it will go underground plus-30% gravity recovery.”

– Dominic Piper

PAGE 44 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Mining’s call to attention

Deloitte Risk Advisory Principal Dr Leeora Black, Saracen
Mineral Holdings managing director Raleigh Finlayson,

Gold Industry Group vice chairperson and Gold Fields vice
president legal and compliance, Kelly Carter, and retired
Australian Army Lieutenant General David Morrison AO

Mining industry leaders have lamented efitting greatly from leadership teams the mining sector and elevating the num-
the inability of the sector to attract enacting change and following through ber of female at executive level within
new talent to deliver and run the mines with decisions that were shaping their it has yet to be unlocked. It was a point
of the future. workforces of the future. raised by Fortescue Metals Group Ltd
chief executive Elizabeth Gaines who
The problem is not going away any “Unless you are doing it now, you will noted there were more Peters presenting
time soon and could be exacerbated by not attract the talent that you need at any on the main stage at Diggers than there
the scrap for talent from competing sec- level in the future,” Morrison said. were females.
tors, according to retired Australian Army
Lieutenant General David Morrison AO, For a long time, the Australian Army The step-change needed to rectify the
who was the guest speaker at the annual struggled for female representation, imbalance is creating an environment
Diggers & Dealers Gold Industry Group with the culture of the country’s suite of whereby everyone feels comfortable,
breakfast. armed forces called into question at vari- safe and happy working in the sector.
ous times.
“We are all competing for talent and of An example of this has been the
course it is not just for women, it is men However, through a diligent approach stance taken by some companies partic-
and women who haven’t been tradition- to HR policy, retention and recruitment ipating at Diggers choosing to host and
ally drawn to my profession or to yours. campaigns, the army managed to re- attend events away from venues hosting
I can tell you corporate Australia, public verse the trend, which resulted in the skimpy bar tenders.
sector Australia, the not-for-profit sector number of women inside the army, both
in Australia; all are absolutely focused recruited and retained, increasing by The small but significant gesture is a
on this issue,” Morrison said. 750 in a two-year period. demonstration of the willingness of some
mining companies to alter the percep-
“The initiatives I see in the banks, cor- “Most particularly [it was] about giving tions of how the mining industry is seen
porate world, public service, police forc- women the chance to reach their poten- as a whole, particularly as the role of stu-
es and military obviously, they are tak- tial. It is quite an achievement and I am dents and women are increasingly rec-
ing talent, we are all taking talent from really proud of it, it wasn’t achieved by ognised in the future of mining.
each other. It is a good place to be. We me, it was the 750 women that could
are bringing people into our sectors now have been somewhere else. They could Saracen Mineral Holdings Ltd manag-
who want to make a difference and want have been networking in your industry, ing director Raleigh Finlayson said there
to reach their potential.” they could have been in the public sec- was an opportunity for industry to be
tor,” Morrison said. on the front foot about the positive out-
Morrison said organisations were ben- comes being achieved within the sector.
The secret to attracting more people to

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 45

DIGGERS & DEALERS REVIEW

“Last year, a group of teachers from the industry we need to make them feel try mining is to get involved in [need to
Perth went underground in Kalgoorlie comfortable and we do need to do more be recognised]. We are not getting ro-
and came back absolutely glowing and to enable that step-change to happen.” bots in the Pilbara maintaining or fixing
apologetic about the industry because of equipment; that is the message we are
what they had been telling their students Finlayson said it was important to pro- sending. We have to be very careful and
what not to be doing, as opposed to what mote the use of automation, robotics, mindful that that is going to take a long,
they should be doing,” Finlayson said. drone technology and AI to demonstrate long time to change,” Finlayson said.
the changing nature of the mining work-
“There was a switch in mindset there, force. “For example, mechatronic engineer-
from the female perspective one of the ing went from eight enrolments to 140 in
things about the camp last year was that Rio Tinto Ltd and BHP Ltd have been four years – mining engineering did the
we had about 50% females. It wasn’t running active campaigns showcasing exact opposite. We have mechatronic
that long ago when Sabina Shugg was innovation in the sector, however, the engineers coming out in droves at the
coming through as the first female under- message construed from such advertis- moment, so we have to be very careful
ground [mine manager] only 20-30 years ing needed to be considered, according about our messaging and make sure that
ago. It is amazing how there is an op- to Finlayson. we don’t get ahead of ourselves and dig
portunity for women to come into the in- ourselves a hole.”
dustry and for other women to come into “The implications on trades watching
those films showing how interactive and – Mark Andrews
fancy we are and what a great indus-

The Gold Industry Group (GIG) is the new naming rights partner of “We are thrilled to support the home of netball in Western
the State Netball Centre, with Netball WA announcing the world- Australia, growing the sport and building its connection with the
class, netball-first venue will now be known as the Gold Netball community through our partnership,” Carter said.
Centre.
“The Gold Netball Centre is an amazing facility for the community
The Gold Netball Centre is the heart of netball in Western that brings players, families and friends together. We are proud
Australia, hosting the West Coast Fever, while it is the main venue to be an integral part of the netball community and support every
of the GIG West Australian Netball League and features Netball player’s journey.”
WA’s major events, including the Fuel to Go & Play Association
Championships and NAIDOC Netball Carnival, as well as housing The news comes after a record $5 million partnership between
Netball WA’s offices. the GIG and Netball WA was announced earlier this year, which
ensures the sustainability of netball across the State with the
The Gold Netball Centre is the latest collaboration between Netball GIG the first principal partner of Netball WA, elite partner of West
WA and the GIG, with the partnership supporting the growth and Coast Fever and premier partner of Shooting Stars.
development of the sport at all levels, including the roll out of its
regional office structure, which employed 25 new staff across the The GIG has also become the naming rights partner of the Gold
State to deliver grassroots netball. Industry Group West Australian Netball League, and the associate
partner of grassroots programme, Suncorp NetSetGo.
GIG vice chairperson Kelly Carter welcomed the next phase of
growth between GIG and netball in WA.

PAGE 46 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Century plots recovery mission

It has been a rollercoaster ride for New “Currently we’re Patrick Walta
Century Resources Ltd and its manag- bottlenecked inside
ing director Patrick Walta over the last 12 Cleaner 2A, but we’re “China produces approximately half the
months. bringing on Cleaner world’s zinc metal, around 7 mtpa, and
2B to eliminate that two years ago those regulations kicked
New Century was the hottest ticket in bottleneck and al- in and about 1.3 mtpa of that production
Kalgoorlie at last year’s Diggers & Deal- lowing recoveries to capacity came out of the market over-
ers as delegates eagerly awaited first bump back up into the night. They have a relatively consistent
production from the restart of the historic mid 50s and beyond. supply coming from the miners in terms
Century zinc mine in north-west Queens- We’re also bringing of concentrate, but a massively reduced
land. on Cleaner 3B and smelter capacity on a global scale, and
4B at the same time, so, law of supply and demand kicked in
At the time, shares in the company they will all be online and treatment charges go up.
were close to $1.40 despite not a single imminently and that
tonne being mined from the expansive will allow us to have “What’s pleasing though is that while
tailings dam which was the focal point for efficient operations we are sitting at 10-year high treatment
the restart of an operation shuttered by for future expansions charges, the trend has been broken. We
MMG Ltd almost three years earlier. to a fourth mining know that Chinese smelters are turning
cannon, which will ul- back on, they’ve been refurbished or re-
Century was officially reopened last timately get us to our placed…and we’re seeing it in our own
September and New Century has now target of 12 mtpa.” direct negotiations for treatment charges
completed three full quarters of opera- in that those are starting to come back
tions, producing more than 50,000t of Post Diggers, New Century announced down. So, as those treatment charges re-
zinc metal over that period. However, the slurry commissioning of cleaners 2B, 3B vert back to a 10-year average, that will
company’s stock has now plummeted to and 4B had begun, allowing the full clean- drop our C1 costs by $US0.15/lb.”
below 30c/share as questions are asked er circuit of the plant to be incorporated
about the underperformance of the pro- into the operation for the first time. Wheth- Walta said while “we’re absolutely at
cessing plant and a slower than expect- er this has been effective will not be clear the bottom of the base metals cycle”,
ed ramp-up. until later this month. forecast growth for zinc of 1.5% annually
meant New Century was well placed to
Despite its best quarterly production New Century has guided production meet some of that 230,000 tpa of new
result for the three months to the end of of 23,000-29,000t zinc at C1 costs of demand.
June, New Century was plagued by poor $US0.95-1.07/lb for the September quar-
recoveries attributed to the additional ter. “We see an opportunity in the market
throughput from bringing a third hydraulic that, as base metals turn, as demand is
mining cannon online for the expansion “We’ve learnt a lot over the last 12 re-established, there’s very quickly going
of operations from 6 mtpa to 8 mtpa, cre- months about how to efficiently ramp up to be a need for zinc,” he said. “So, we
ating a bottleneck in cleaner 2A. the plant and the operations,” Walta said. will stick to our knitting over the next 12
months. We’ll execute our ramp-up and
The bottleneck saw recoveries sharply “Instead of just ramping up throughput start delivering tonnes into a market that
dip from a tick above 50% to below 40% for throughput’s sake, we’re actually adopt- is structurally incapable of absorbing any
over a three-week period in April/May. ing an efficiency-based model, so bringing new demand.”
Since then, New Century has managed on the entire cleaning circuit, which is the
to lift recoveries back towards 50% but recovery-generating part of the circuit. – Michael Washbourne
they are still well off the long-term target
of at least 60%, particularly with a further “In November, we will bring online the
expansion to 12 mtpa on the horizon. other bank of scavengers and it won’t be
until next March that we actually bring on
Walta, a metallurgist, said it was “com- the second bank of roughers, which is
pletely understandable” that recoveries your volume-increasing component of the
had become a big focus for investors. plant, which will also include that fourth
However, he requested patience as the mining cannon.”
remaining half of the plant which is cur-
rently inactive is progressively brought Walta said the company’s efforts to im-
online over the coming months. prove its production efficiency would have
further positive ramifications for its already
“Over the course of this financial year low cost profile.
we will be bringing on that remaining half
and increasing our production rates ac- New Century is targeting average life-
cordingly, pushing us towards being a of-mine C1 costs of $US0.56/lb – some
top 10 zinc producer in the world,” Walta $US0.10/lb less than the entire produc-
said. tion base of Glencore – although Walta
acknowledged that continued to be a chal-
“Bringing on the third cannon we had lenge in the wake of treatment charges
a recovery drop-off…it was still a record increasing almost 500% since operations
metal production quarter for us, but we had restarted at Century.
recognise the need now to bring on more
of the plant to remove that recovery bot- “That is solely driven by the change in
tleneck and continue to grow towards our Chinese environmental regulations,” Walta
targeted recovery mark. said.

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 47

DIGGERS & DEALERS REVIEW

Fortescue’s right mix

Fortescue Metals Group Ltd’s control Elizabeth Gaines of our foresight, our agility and our adapt-
on its iron ore product mix to meet ability is the introduction of West Pilbara
all segments of market demand is key to ed the iron ore price would have been as Fines,” Gaines said.
handling the current volatility in iron ore high as $US120/t recently, Fortescue did
prices, chief executive Elizabeth Gaines foresee the cyclical nature of price reali- Gaines said the consistent theme in
said. sations for our products and with that in the iron ore market last year was struc-
mind perhaps the single biggest example tural change in demand and pricing for
In FY19, Fortescue recorded iron ore various grades of iron ore, with the view
shipments of 167.7mt, with average rev- that the spread in price between higher
enue of $US65/dmt received on the back and lower iron content ores would remain
of $US13.11/wmt C1 costs. wide.

The company’s full-year average real- Gaines said Fortescue was the outlier
ised price was 48% higher than in FY18 and believed pricing and market dynam-
($US44/t), with Gaines highlighting the ics were a function of the very high mar-
impact the introduction of its 60.1% iron gins steelmakers in China experienced
content West Pilbara Fines (WPF) prod- for just about all of 2018.
uct has had on its business.
“What we saw was that towards the end
Shipping of WPF started in December of 2018 those steel margins moderated
and the forecast is to deliver 17-20mt in and as a result we saw the rapid narrow-
FY20. ing of the spread in prices,” Gaines said.

Volumes of WPF will double with the “And, the narrowing of the spreads
onset of the $US1.275 billion Eliwana continued in the recent [June] quarter
project late next year and it is expected due to both the low steel margins and
that consistent delivery of 40 mtpa of our successful integrated operations and
WPF will occur for 20 years. marketing strategy, which is matching
the product mix to customer demand.”
Furthermore, the 67% iron Iron Bridge
magnetite project is set for first ore in Record production was reported
2022, combined with Eliwana it will in- by Fortescue in the June quarter with
crease the average product grade and 46.6mt shipped, with Gaines saying the
give Fortescue the ability to deliver the company had achieved exceptional re-
majority of its products at greater than sults against all its key pillars for Q4.
60% iron.
– Mark Andrews
“While none of us would have predict-

Celebrations on hold at Roy Hill

Having achieved its long-term ambition our orebody but also allows us to main- about 1 mtpd total movement, which in
of producing 55 mtpa of iron ore, Roy tain our grade,” he said. anyone’s language is a reasonably large
Hill Holdings Pty Ltd is wasting no time mining operation,” Fitzgerald said.
moving on to its next target. Roy Hill was recognised as “Digger
of the Year” for hitting 55 mtpa just over While Roy Hill is a private company
Roy Hill has received approvals to three years after the first shipment of iron and directly employs about 2,400 peo-
boost output at its Pilbara operation to 60 ore departed Port Hedland. ple across the business, Fitzgerald said
mtpa, an expansion being underpinned collaboration with some third parties had
by construction of a wet high-intensity It was the third time the Gina Rinehart- been crucial to the overall success of the
separation (WHIMS) plant. chaired operation has taken out one of operation.
the major awards at the conference,
First production from the new WHIMS with Hancock Prospecting Pty Ltd (70% “Even though we are a new player in
plant is scheduled for early next year. owner of Roy Hill) previously crowned the market, even though we are a young
“Dealer of the Year” in 2006 and 2012. company, we have adopted the policy of
Roy Hill chief executive Barry Fitzger- working effectively with suppliers and
ald said the company hoped to be run- Production at Roy Hill was up 8% in partners,” he said.
ning at 60 mtpa on a consistent basis by FY2019 with 15% more tonnes moved
the end of FY2020. as the daily mining capacity surpassed “The reason why we do this is because
1 mtpd. as a single, small company, we have
“What was important to us this year much more capacity and much more ca-
is that we actually received approval to Since the start of operations in late pability if we embrace and work with the
go to 60 mtpa of exports and in fact part 2015, Roy Hill has produced 150mt and suppliers and other partners within the
of that was to enable the WHIMS plant loaded some 800 ships of product to industry.”
which will allow us to move that 60mt and customers in China, Japan, Korea and
treating of our tails stream, which obvi- Taiwan. – Michael Washbourne
ously allows us to increase the yield of
“We currently have the capacity to do

PAGE 48 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT

Mount Gibson cool on interest

Often described as the birthplace of be $10 million cash flow positive for the enough to be of interest to steelmakers
Western Australia’s iron ore industry, month of June. who are trying to deal with the fact that
Koolan Island is attracting renewed inter- the low alumina concentrates out of China
est from Chinese steelmakers. With the 62% iron ore price comfort- have been decreasing over the last 3-4
ably sitting around $US100-120/t since the months.”
Mount Gibson Iron Ltd resumed sales restart, Mount Gibson has begun fielding
from Australia’s highest grade DSO he- several enquiries from existing and poten- Prior to resuming operations in the main
matite iron ore mine in April following sev- tial new customers about the quality of its pit, Mount Gibson completed a feasibility
eral challenging years of low prices post a product. study which found the mine would gener-
catastrophic collapse of the Main Pit wall ate a post-tax NPV of $1 billion at a spot
in 2014. Of particular interest is the low alumina price of $US99/t CFR, assuming an ex-
content of the high-grade iron ore being change rate of $US0.68 to one Australian
It has been a solid restart for Mount Gib- produced from Koolan Island. Chinese dollar.
son at Koolan Island to date with an av- steelmakers are typically blending this
erage realised sales price of $US106/dmt type of product with its domestic supply “We are on the cusp of generating signif-
FOB achieved during the June quarter. which is now reportedly increasing in alu- icant cash flows under really any foresee-
mina levels. able iron price environment we have going
The Koolan Island operation – about forward,” Kerr said.
140km north of Derby – was reported to “Alumina has a negative implication for
slag within the steel “We have life-of-mine offtake contracts
Peter Kerr furnace in that it for the production here and those con-
makes the slag im- tracts obligate the buyer or buyers to take
movable and the those tonnes and the price that is paid is
only real way to deal the market price at the time.”
with that is to blend,
and blend down the Mount Gibson is also continuing to pro-
alumina levels to a cess low-grade stockpiles at its Extension
low number,” Mount Hill operation in WA’s Mid West, reporting
Gibson chief execu- total revenue of $240 million from the sale
tive Peter Kerr said. of 3.2 million wmt during FY2019.
“What we have is
a low alumina, high “It’s a bit of a gift that keeps on giving,”
iron grade feed. Kerr said. “That programme will continue
Not great volumes for hopefully the rest of this year, maybe
of it, but something even longer.”

Cook plots another spin – Michael Washbourne

Peter Cook

Westgold Resources Ltd sharehold- The company operates six underground chase agreement with Andromeda Metals
ers will soon have the opportunity mines and with a seventh in line, shaping Ltd for two additional tenements adjacent
to participate in a new vehicle comprised Westgold as a pure gold play is the move to Rover 1, while Castile’s portfolio also in-
of unloved assets that have been housed now being made. cludes the Warumpi project, 300km west
alongside Westgold’s core portfolio for the of Alice Springs.
past four years. “The ramp ups are nearing completion,
the gold output is rising, the costs are re- “It hopefully should list in November or
Westgold has become a top 10 gold ducing; it’s now a much simpler focused sometime soon after with a $20 million EV,
producer in Australia through its emphasis story. It is heavily discounted to its peers substantial resource base and, for the first
on the Central Murchison, Western Aus- on most metrics, it has plenty of money, it time in this company in four years, its own
tralia, and has guided production of 270- is asset rich and it has plenty of growth,” dedicated exploration budgets to bring
300,000oz @ AISC of $1,340-1,410/oz for Cook said. these mines into production,” Cook said.
FY2020.
It is hoped that the company hosting Cook said the polymetallic assets were
“Our core focus for Westgold today is Westgold’s polymetallic interests in the “completely lost” in Westgold and the spin-
the Central Murchison aggregation,” West- Northern Territory – Castile Resources out would benefit shareholders which
gold managing director Peter Cook said. Pty Ltd – will be converted into a public en- elected to participate via an entitlement
tity via an ASX listing aimed for November. issue.
The company has nearly 10 moz gold
in resources, with about 25% of that in re- Upon completion of the demerger, Cas- – Mark Andrews
serve, in the Central Murchison. tile will come to the bourse with working
capital of $18 million dedicated to the likes
Westgold’s Central Murchison aggrega- of the Rover project – consisting of the
tion has involved acquiring 350 mining ti- Rover 1 IOCG, Explorer 108 zinc-lead-sil-
tles and 124,000ha hosting over 200sq km ver-copper and Explorer 142 (176,000t @
of strike and strategically located process- 5% copper and 0.21 g/t gold) prospects.
ing hubs in the north, centre and south of
the region. Castile has entered into a sale and pur-

AUSTRALIA’S PAYDIRT SEPTEMBER 2019 PAGE 49

BASE METALS SPOTLIGHT

Abra emerges from
myth to reality

One of Australia’s largest undeveloped the start of construction in earnest. While early so by the time the EPC contractor ar-
base metals projects is finally poised a number of ASX-listed peers have found rives the project is already lower risk from
a timetable and budget schedule. And they
for development after owner Galena Mining themselves stuck at the financing stage, like the fact we are spending equity money
to do that.”
Ltd secured equity funding for the Abra lead Galena is set to benefit from turning the
Molyneux said at least a dozen parties
project in Western Australia. funding pathway upside down. had expressed interest in participating in
the debt financing with Galena leaning to-
Abra has taken almost mythical status In April, the company confirmed a $90 wards the traditional banking sector.

in base metal circles, having been brought million investment deal with Toho Zinc He expected the process to close in com-
ing months.
to the cusp of development several times which will eventually deliver the Japanese
“There is a lot happening in a short space
since its discovery in the 1970s. However, smelting and mining group a 40% interest of time,” he said.

thanks to a positive BFS, a new geological in Abra Mining Pty Ltd, the project’s holding The arrival of Toho into the project has
also seen project development ramped up
model and a recent $100 million cash injec- company. with the miner eager to get under Abra’s
bonnet.
tion, Galena believes it finally has every- “We have done our financing differently,”
“The Toho deal solved one problem but
thing in place to begin development. Galena managing director Alex Molyneux created another in a way because it inten-
sified the timetable we were working to,”
The July feasibility study was the strong- explained to Paydirt. “Usually companies Molyneux said. “Before the equity came
in, we were running things on a shoe-string
est confirmation yet of the project’s viability. would lock in the debt and then complete fi- then suddenly expectations changed and it
was a major shift for the company. Toho are
The study found Abra – in the Gascoyne nancing with equity but we have got the first serious miners and they began looking over
our plans in depth. It created a good over-
region of WA – could host a 16-year op- equity, now we need the debt to begin final lay for the project because it meant we had
more human resources to work with but
eration capable of producing a high-grade construction.” also had to share information, which was a
good discipline to develop.”
lead-silver concentrate containing 95,000 Securing equity before debt is unusual
The outcome is a project which has never
tpa lead and 805,000 ozpa silver. Pre- but does have its advantages. been closer to realisation.

“Although we By the time Galena acquired the project
in 2017, its last owner, Hunnan Nonferrous
can’t commit to the Metals Corp, had walked away, unable to
make the project work in a falling lead price
full capex yet, we environment.

are sort of in con- With lead rebounding, the new private
owners brought in former Abra geologist
struction already” Ed Turner to reassess the sediment-hosted
deposit.
Molyneux said.
“Abra always looked like one of the
“We won’t sign the world’s biggest lead deposits but there has
always been a debate about the geological
plant EPC contract model,” Molyneux said. “It is unique, with
a hydrothermal event carrying the lead
until the debt is in through breccia and fault zones to a sedi-
mentary boundary. The mineralised fluids
place but we are have then mushroomed sideways with the
overlying, stratiform-hosted mineralisation
undertaking early in a series of high-grade zones.

works and items “Ed Turner had the contention that some
of the high-grade zones would connect up
in the project de- and if we drill tested those zones then we
would get more continuity of the high-grade
velopment plan. mineralisation.

We’ve put in water

holes, ordered the

underground ven-

tilation fan system

and will continue

our work over the

next couple of

weeks, including

installation of the

first camp module.

“The fact that

we raised equity

Galena Mining managing director Alex Molyneux with core from the makes the project
company’s Abra project more real for the
banks. So, the mul-

tiparty interest is

production capex was estimated at $170 there and also because they can see what

million with C1 cash costs of $US0.44/lb. we are doing with the equity.

Pre-tax NPV was estimated at $553 million “The debt financiers like the idea of doing

using spot prices with a 39% IRR. that because they look at what could cause

The positive outcomes pave the way delays to construction and it is around site

for the completion of project financing and readiness. We are addressing those items

PAGE 50 SEPTEMBER 2019 AUSTRALIA’S PAYDIRT