April 2018 VOLUME 1. ISSUE 259 $11.95
front and back cover
A downstream revolution
• Battery Minerals Conference review ISSN 1445-3436
• Queensland focus • Fertiliser spotlight 03
PAGE 1 APRIL 2018 AUSTRALIA’S PAYDIRT 9 771445 343007
PAYDIRT (ISSN 1445-3436) 16 NEWS 16
Published by Long-time mineral sands hopeful Image 20
Paydirt Media Pty Ltd. Resources is set to green light the zircon-
A.C.N. 063 985 133 rich Boonanarring project, 80km north of
Perth. While project funding couldn’t be
Head Office: arranged with any of Australia’s big four
Suite 9, 1297 Hay St, West Perth banks, Image found noted mining financi-
Western Australia 6005 ers Pala Investments Ltd and Castlelake
P.O. Box 1589, West Perth L.P. more forthcoming with a $50 million
Western Australia 6872 loan. Mark Andrews spoke with Image
Phone: (+61 8) 9321 0355 managing director Patrick Mutz and execu-
Facsimile: (+61 8) 9321 0426 tive director George Sakalidis ahead of the
[email protected] company making a decision to mine
Editorial: 20 COVER
Editor: Dominic Piper Australia has the potential to capture $2
Deputy editor: Mark Andrews trillion worth of value stemming from the
Journalist: Michael Washbourne lithium sector alone in the next few years.
Photography: Picture This Western Australia, in particular, hosts
Art director: Marian Noonan some of the best lithium resources in the
Contributors: world, however, a complementary down-
Keith Goode (Sydney), Brendan Ryan stream processing industry in country is
(Johannesburg), Ross Louthean at this stage very small. Key players in
the broader battery minerals field shared
Advertising: their thoughts on what needs to happen for
Advertising manager: Richa Fuller Australia to take advantage of the battery
Subscriptions: Mitchelle Matambo boom. Mark Andrews reports
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 26 BATTERY MINERALS
Pre-press and printing:
Vanguard Press 26 John St, Paydirt’s first ever Battery Minerals Con-
Northbridge WA 6003 ference in Perth was a showcase of the
Member of: emerging companies which host an array
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full coverage from the two-day event
Paydirt Media 70 REGIONAL ROUNDUP
Executive chairman: Bill Repard South Australian powerhouse Oz Miner-
Finance manager: Giovanny Jefferson als has made its most decisive corporate
Accounts/administration: move in years, swooping to acquire emerg-
Heather Melling ing Brazilian-focused copper producer
Avanco Resources in a plus-$410 million
Conferences: Melita Fogarty, deal. Oz has tried to diversify beyond Aus-
Namukale Nakazwe-Msiska, tralian borders in the past, however, the
Avanco proposal is the most real deal yet.
Christine Oelschlaeger Dominic Piper spoke to Oz chief executive
Andrew Cole when the transaction was
Cover image: Australia has the 70
opportunity to put its stamp on the
battery minerals sector
Registered by Australia Post PP 643938/0071.
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taken by Paydirt Media staff or provided by other
Policy over execution
The West Australian Government has an Public mistrust of institutions, industry and government is a
opportunity during its term to resurrect the growing trend in the post-Trump, post-Brexit world. Citizens now
State’s finances and foster a new era of de- openly question the authority of politicians, business leaders
velopment in the resources sector but it must and scientific experts and the trust gap which the CSIRO re-
show its commitment to the industry is more port’s authors urge stakeholders to close is only widening.
than simply rhetoric. So, in this climate of mistrust between community, govern-
So far, the Mark McGowan-led ment and industry, how can the WA Government balance its
ALP Government’s relationship with acute budget needs with ensuring the State retains a strong in-
WA’s most important economic sec- vestment climate?
tor has been patchy. I would suggest the best course of action is to improve the ca-
It came to office promising to pacity of the regulator. I’m not suggesting setting stricter guide-
change little and retain the State’s lines for the approvals process, I am talking about empowering
standing as a premier mining jurisdiction among international the relevant departments to do their job with more alacrity and
investors. Those promises were still echoing around the world clarity.
when the Government decided one of its first budget fix meas- Quicker approvals would mean more activity, as Queensland
ures would be to up the gold royalty rate. Resources Council chief executive and former Federal Minister
The decision wasn’t a fatal blow to WA’s international standing for Resources Ian Mcfarlane tells us on page 42.
“– even if it had gone through – but the uncertainty it created has “The system does not need to be bogged down with new reg-
taken its toll, as evidenced ulations,” Mcfarlane says.
by this year’s Fraser Insti- “…if the answer is ‘no’ we
tute Annual Survey of Min- However, it is also apparent from need to know the answer
ing Companies which saw is no’. If the answer is ‘yes’
WA drop from the No.1 the report that governments we need to streamline the
spot to No.5 in the invest- must be careful as well. The CSIRO process, we are not talk-
ment attractiveness rank- ing about cutting corners
ings. report provides evidence that the we just need to get there…
The question is; how public doesn’t have a simplistic view the amount of time it takes
to get a mining permit is too
will the WA Government of the mining industry as a golden long and that again is drag-
approach the sector in goose and doesn’t implicitly trust that ging us down for attractive-
the coming two years and government policy towards the sector ness against our interna-
what will the industry’s re- tional competitors.”
The only way to achieve
For starters, the indus-
try needs to recognise the will be fair and in the best interests of better outcomes is through
royalties discussion is not Australia’s future prosperity. better staffed agencies.
going away and, more im- But, the WA Government is
portantly, that it won’t be currently focused on slash-
able to win the fight every ing the public service. At
time. As I have said before, as the memories of the boom fade, the same time, the focus in agencies such as Environment is on
the industry’s standing in the public eye will suffer. Individu- headline-grabbing policies, not regulatory systems.
als will no longer see themselves as direct beneficiaries of the As the WA Government guts the public service, can it seri-
mining sector and are likely to begin to ask about how fair the ously call itself committed to faster approvals? Something has
spreading of mining’s benefits are. to give.
The CSIRO’s Australian attitudes towards mining citizen sur- Bigger bureaucracy is anathema to most mining industry pro-
vey 2017 report (covered on pages 12 and 13 of this edition) fessionals but it may be its best hope of solving the looming
gives some support to this claim. The survey shows most Aus- problem of a slower approvals system.
tralians are glad of mining’s impact on the economy and employ-
ment but there is also plenty of doubt whether it is sharing the
benefits fairly and is meeting its tax obligations. Individuals are
also ambivalent to the individual benefits they receive from the
This ambivalence is likely to increase the further we move
away from the boom years.
However, it is also apparent from the report that governments
must be careful as well. The CSIRO report provides evidence
that the public doesn’t have a simplistic view of the mining in-
dustry as a golden goose and doesn’t implicitly trust that gov-
ernment policy towards the sector will be fair and in the best
interests of Australia’s future prosperity.
It was an assumption the Federal Labor Government got hor-
ribly wrong during the MRRT debate. [email protected] @DominicPiper
PAGE 4 APRIL 2018 AUSTRALIA’S PAYDIRT
St George banks drilling funds
With spot prices for the up their nickel resources would
metal above $US6/lb, it become very popular with inves-
is a good time to be a nickel tors and hoped St George would
player. be a company of choice to sup-
It is probably an even bet- port.
ter time for companies which While the money came flooding
have hung in during the dark in for St George in March, unfor-
days, managed to get some tunately so did the rain at Mt Alex-
traction and are now well ander which delayed the start to
placed to hit the dance floor. drilling.
Having raised $4 mil- St George’s exploration ef-
lion via an oversubscribed forts at Mt Alexander so far have
placement at 18c/share, St yielded the company an extensive
George Mining Ltd is one high-grade nickel-cobalt-PGE
such company suited up to sulphide mineral system extend-
enjoy the nickel party and ing over a 4km strike.
primed to capture the mar- The company geared up in the
ket’s imagination with the best possible fashion for a return
current drilling programme to positive sentiment for nickel
under way at Mt Alexander, The current drilling programme at Mt Alexander will be critical with a stellar 2017 performance
east of Leonora. to the resource estimate this year through the drill bit at the Strick-
“Everyone is watching the lands prospect.
drill programme again, hopefully we can very successful, and their price has kept Drilling on Stricklands – one of three
have some drilling success which will be running for them, hopefully ours will do prospects in a 75/25 JV with Western
reflected in our share price,” St George the same,” Prineas said. Areas Ltd – produced a hit of 17.45m
executive chairman John Prineas told “The nickel market is probably the best of nickel-copper sulphides from 37m
Paydirt. it has been for several down-hole; a true indication of the thick
At the time of print, St years and it is only go- high-grade mineralisation and resource
George was trading at ing to get better. That potential, Prineas said.
20c/share, with Prineas was what we were say- He said the company would be produc-
hopeful St George would ing last year, that the ing a resource estimate from Mt Alexan-
receive the kind of posi- penny will drop soon der this year, with various parties already
tive reception Pano- and it actually has. expressing an interest in locking down
ramic Resources Ltd has Nickel is going to be off-take.
basked in since raising used for the new age “Certainly this year we will have a re-
$20.9 million ($3.4 million batteries, etc and no- source. This coming drilling programme
oversubscribed) earlier one has really shored is going to be very important, the mar-
this year. up their nickel supply.” ket got very excited last year from that
“Panoramic raised Prineas said compa- 17.45m intersection; that immediately
some money, which was John Prineas nies which could prove speaks about volumes of sulphides and
6.500 1 Year Nickel Spot potential,” Prineas said.
“There are also really good copper and
cobalt grades as well, so now we are
seeing big intersections with hopefully
6.000 economic potential as we hope to put the
resource together as well.
“We are now even starting to get some
5.500 parties in China wanting to secure off-
take with us and offering us finance for
USD/lb the project. There is a lot of investor inter-
5.000 est bubbling, and hopefully it will translate
into a stronger nickel price and stronger
share prices for guys like us,” he said.
4.500 The 12-hole drilling programme
planned for Stricklands will include step-
4.000 out holes to the east, west and north of
MAD71, testing of DHEM conductors and
www.kitco.com testing interpreted thickened channel po-
Aug17 Sep17 Oct17
3.50M0ar17 Apr17 May17 Jun17 Nov17 Dec17 Jan18 Feb18 sitions which St George is confident will
convert to further economic potential.
– Mark Andrews
PAGE 6 APRIL 2018 AUSTRALIA’S PAYDIRT
Mines caught out by
If ever “a picture painted a thousand gold shares dropped 16% from £70
words” it was the one of the grim-
faced mining company chief execu- at the beginning of February to £59
tives standing behind DRC president
Joseph Kabila who had just turned by mid-March.
down their request not to sign the
country’s new mining code into law Bristow has been sounding off in
(see page 8).
public about the negatives of the new
Instead, the mining companies will
now have to negotiate changes after DRC mining code for the past year
the new code has been implemented,
putting them in a weaker situation but he has always been confident
than had they succeeded in persuad-
ing Kabila to hold off on approving the that a suitable solution would be ne-
The DRC mining companies issued
a joint statement declaring: “After a In April 2017, he warned that the
constructive debate, the mining op-
erators agreed to continue discus- new code “could be catastrophic to
sions with the Government on issues
existing in the current agreement once the DRC economy” and that chang-
the new mining code has been signed
into law.” es to key sections of the code – in
That was followed by a subsequent particular the stability clause – were
statement on March 15: “A legal and
technical team representing the major likely to be challenged in the interna-
mining companies operating in the DRC
has arrived in Kinshasa for engagement tional courts.
with the Government on its new mining
code. In Bristow’s view, the new code
“As agreed with his Excellency the was designed to maximise short-
President a matrix of the industry’s is-
sues as well as proposals regarding the Robert Friedland term revenue gains by government
mining code have been delivered to the
Minister of Mines. The companies are and it would have serious negative
now awaiting an appointment with the
Minister to discuss a programme of en- “blue moon” event. He recounted a tale consequences for future mining devel-
gagement with the Government’s work-
ing group.” from his experiences with the Oyu Tolgoi opments in the country which could be
Considerable damage has been done copper mine in Mongolia where, he said: shelved.
to various companies’ share prices as in-
vestors turned negative despite optimis- “I remember it was on a full moon that He commented: “Right now, the DRC
tic reassurances in recent months from
the likes of Randgold Resources Ltd the Mongolian Government – under the needs friends. It should be focused on
chief executive Mark Bristow and Ivan-
hoe Mines Inc executive chairman Rob- influence of vodka apparently – suddenly retaining its existing investors and at-
ert Friedland that this would all work out.
passed a 50% windfall profits tax and de- tracting new ones. It’s certainly not the
In his address to the Mining Indaba
in Cape Town on February 7, Friedland manded 34% participation.” time to harvest more from less for short-
assured investors everything would be
fine, commenting: “I am highly confident Friedland concluded his presentation term gain.”
there will be a dialogue and I am highly
confident we will reach a sustainable and saying: “I express the faith that, despite So Bristow, in particular, must be dis-
mutually beneficial, long-term solution.”
the doubts of the press and the constant appointed by the turn of events given his
Friedland then pondered whether there
had been “astrological influences” at calls that we are getting, we will find the assessment last April that, “unlike South
work in the DRC resulting from January’s
way. This is a marathon, not a sprint. I Africa, the DRC is a country where you
ask all of you to have faith in our efforts. can engage in an open forum with gov-
Don’t freak out too much about what ernment and 90% of the time the com-
you are reading. There’s a lot more un- mercial logic will prevail.”
derneath the surface. We will get there. Which brings me to South Africa,
Peace.” where a new major debate is looming be-
It does not look like Friedland’s share- tween government and the private sector
holders are into astrology. They certainly over the ANC’s determination to imple-
seem to be less than impressed by his ment a programme of land redistribution.
explanation of the situation. Ivanhoe Just when you thought it was safe to
shares dropped from around $C4 at the invest in South African mining again –
beginning of February to around $C3 by because Jacob Zuma had been replaced
mid-March. by Cyril Ramaphosa – the new president
Randgold shares took a similar beating has proposed that there will be “expro-
even though Bristow was at pains in his priation of land without compensation
presentation in Cape Town to point out but done in such a way that it will not af-
that Randgold’s Kibali gold mine in the fect investor confidence nor threaten the
DRC would be far less affected by the country’s security of food supply.”
new DRC mining code than the copper- From where I sit that is simply impos-
cobalt producers in Katanga province. sible to achieve. Also, from where I sit,
Just to rub it in, on February 7 Rand- this raises the spectre of nationalisation
gold doubled its annual dividend to all over again. How this one is going to
$US2/share but the company’s share play out I have no idea.
price dropped 7.5% on the negative news Brendan Ryan is a Johannesburg-based
coming out of the DRC. Overall, Rand- mining writer
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 7
How Congo faced down
world’s biggest miners
In an ornate room in Demo- statement they had dispatched
cratic Republic of Congo’s a team of legal and technical
presidential palace, some of specialists to Kinshasa for
global mining’s most powerful talks with the Congolese Gov-
men faced off against govern- ernment about drafting meas-
ment officials over proposed ures to implement the code.
changes to the country’s min- The companies said they
ing code. hoped those discussions
Facing the officials, includ- would include negotiations
ing President Joseph Kabila, over royalties and taxes as
the executives at times threat- well as recognition of the pre-
ened to pursue arbitration or vious code’s stability clause.
close mines if the Government Mines Minister Martin Ka-
went ahead with changes, bwelulu, however, said af-
including royalty increases, ter the meeting that nothing
according to one of the presi- agreed to in the follow-up ne-
dent’s top advisers, Barnabe gotiations could contradict the
Kikaya bin Karubi, who attend- terms of the new code.
ed the meeting. Joseph Kabila The new mining code strips
But there was no mistaking away a stability clause protect-
the sense of defeat as executives from increasingly lucrative resources become ing existing investments from changes
Glencore, Randgold Resources Ltd, emboldened. to the fiscal and customs regime for 10
Ivanhoe Mines Inc and other firms de- DRC’s effort could serve as a model years, opens the door for cobalt royal-
scended the red carpeted stairs after six for other countries looking to boost min- ties to increase five-fold and introduces
hours to accept before the media a min- ing sector revenue, particularly those a 50% windfall profits tax.
ing code that hikes taxes and removes that can leverage demand for prized met- The new code applies to all minerals,
exemptions for cobalt and other miner- als like cobalt. including copper, of which DRC is Afri-
als. Meeting participants Glencore, Rand- ca’s top producer.
It was an extraordinary climb down for gold, Zijin Mining, China Molybdenum Companies could still challenge it
companies that had campaigned tooth- and Ivanhoe declined to comment for this through international arbitration. It is also
and-nail for six years for better terms, story. The other participant, MMG Ltd, unclear how rigorously the code will be
and the President signed the bill into law did not immediately respond to a request enforced in a country where informal ar-
two days later. for comment. rangements often supersede legal provi-
Congolese officials close to the pro- In February, Randgold publicly threat- sions.
cess say that, in being so publicly com- ened to challenge the new code through In a joint statement issued by the DRC
bative, the miners overplayed their hand, international arbitration if Kabila did not Government and the mining executives
ment’s resolve.“and in so doing hardened the Govern- return it to the mines ministry for further directly after the meeting, the minersconsultation with industry.
said they had received assurances from
“We realised the bad faith Kabila “that their concerns will
on their part,” Patrick Kakwata, We realised the bad faith on be taken into account through a
president of the National As- constructive dialogue with the
sembly’s Natural Resources their part. They only wanted Government after the promul-
Commission, said. to look after their own interests gation of the new mining law”.
“They only wanted to look af- Private investors have
ter their own interests and not and not also the interests of the poured money into DRC since
also the interests of the Congo- Congolese people. Kabila signed the 2002 mining
lese people.” code at the tail end of a 1998-
The changes to the mining 2003 war. But locals have seen
code in DRC, which supplies few benefits. DRC remains one
some 60% of the world’s cobalt, could And, in December, several of Congo’s of the world’s least developed countries,
have repercussions for consumers largest mining companies said in a state- plagued by corruption and poor govern-
around the world if mining companies ment that an earlier version of the code ance.
pass on costs. passed by the lower house of parlia- In March 2015, the Government sub-
The Congolese Government’s suc- ment would “cause the certain death of a mitted a bill to parliament that proposed
cess in facing down the companies’ young industry”. raising royalties to levels higher than in
lobbying could also signal a shift in the Following their March meeting with the 2002 code but still lower than in most
balance of power as countries sitting on Kabila, the mining companies said in a rival mining countries.
PAGE 8 APRIL 2018 AUSTRALIA’S PAYDIRT
Mining companies in DRC typically say that the high risk and cost of investing in the vast country with poor infrastructure
hit profitability, justifying demands for favourable terms
Mining companies resisted, saying that Lubamba, an MP closely involved in the in person; no stand-ins would be admit-
proposed changes to the code would revision process, said. ted.
“put the future of the country’s mining in-
dustry at grave risk” and urged the Gov- “This means that we’re being suck- After a last-minute postponement by a
ernment to retain the 2002 code. ered.” day, the meeting finally began at around
2:30p.m. on March 7 with Kabila presid-
Following a steep drop in commodities Mining companies in DRC typically say ing.
prices, the Government buckled to in- that the high risk and cost of investing in
dustry pressure and announced in March the vast country with poor infrastructure Randgold chief executive Mark Bris-
2016 it was suspending consideration of hit profitability, justifying demands for fa- tow, the miners’ designated spokes-
the new code. vourable terms. person, started by laying out their main
concerns and imploring Kabila to re-
But as the commodity slump bit into Mark Bristow open negotiations. The other executives
the national economy last year – stretch- Randgold formed a new lobbying plat- chimed in from time-to-time, according to
ing foreign reserves to breaking point form with Glencore and others and re- Kikaya, the Kabila adviser.
and pushing inflation to 47% – the Gov- quested an audience with Kabila.
ernment needed cash. The president accepted a meeting with “For three hours, they were very con-
top executives from six mining compa- frontational and they were talking in
Parliament toughened up the code at nies, but insisted they come to Kinshasa terms of closing down the mines,” Kikaya
the start of this year. said. Bristow couldn’t be reached for
Protections under the previous code’s
stability clause were axed entirely. A Kabila interjected occasionally, Kikaya
10% royalty was introduced on “strategic said, urging the miners not to pursue ar-
substances”, which the Prime Minister’s bitration.
office said would include cobalt and pos-
sibly copper. “The president explained that this
would be bad for everyone. He said,
Companies were also mandated to re- ‘Look you are a businessman. If you
patriate 60% of export revenues to DRC, make a mistake, you lose money. I am a
up from 40% in earlier drafts. politician’,” Kikaya said.
Lawmakers involved in the negotia- A breakthrough appeared to come af-
tions did not provide clear explanations ter Kabwelulu, the mines minister, prom-
for how these last-minute changes came ised the miners that their concerns would
about, but two of them said that they had be addressed on a case-by-case basis in
grown inured to doomsday warnings from regulations to be hammered out after the
miners about the code killing investment. code was signed, according to Kikaya.
“There is this contradiction that emerg- Kabila then exited the room, leaving
es each time ... when the miners declare his advisers and the executives to figure
losses [in DRC] when their mother com- out how to break the news.
pany is only enjoying success,” Alain
– Aaron Ross, Reuters
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 9
Encounter closes in
Adrone survey has helped Encounter Drone technology was used to identify new gold reef
Resources Ltd identify new reef po- potential at East Thomson’s Dome. Inset: A 3oz
tential at one of its key gold projects. nugget recovered from the target area
Drone technology was trialled over grammes also being finalised for its West “I don’t think it’s particularly well under-
a previously untested area at the East Telfer and West Tanami projects. stood just how successful Newmont has
Thomson’s Dome project in Western been at Callie over the last five years with
Australia’s Paterson province late last Telfer West was the first gold project the exploration drill bit,” Robinson said.
year and led to the company identifying acquired by the company in 2014 as a “A major company doesn’t really need to
extensions to known gold-bearing reefs natural extension to the copper-cobalt announce too much of their success, but
and new sub-cropping reefs under thin and zinc exploration assets it holds in the they’ve been adding millions and millions
sand cover. Paterson province. of high-grade, profitable ounces to that
deposit and it’s become a very high-mar-
The survey will now be expanded Encounter recently extended Telfer gin, low-cost gold mine.
across the broader 12sq km which de- West’s gold stockwork corridor by 1.5km
fines the full East Thomson’s Dome pro- to the south-east of the Egg prospect, “I think it has established that area,
ject. where drill hits of 8m @ 0.52 g/t gold once and for all, as one of the most
from 78m and 8m @ 0.42 g/t gold from prospective gold districts on the planet
Encounter geologists recovered a 3oz 108m were returned last year. and we’ve now got a very large position
nugget from the target area prior to fly- – 100km of strike on the WA side of the
ing the drone. Coarse gold was also re- “There’s a very large mineral system at border – in that district.”
covered by prospectors about 2km to the Telfer West that we’ve drilled over 5km
south-southeast along the same struc- and pretty much every hole we’ve drilled Despite its new opportunities in the
tural trend. over that trend has been mineralised,” gold space, Encounter is not parking up
Robinson said. “Now it’s about finding the base metals projects it has been ex-
RC and aircore drilling is planned for where the higher grade shoots are within ploring for the best part of the last dec-
East Thomson’s Dome, only 5km north that mineral system. We’ve only been at ade, with drilling of the Lookout Rocks
of the Telfer gold mine, this month. that for one field season so far and we’re copper-cobalt gossan to occur later this
gearing up for the next round of drilling quarter.
Encounter managing director Will Rob- in April.”
inson said drone technology was ideally “We’re looking at the best way forward
suited to a project such as East Thom- Perhaps the hidden gem in Encoun- for those copper-cobalt assets and we
son’s Dome where a thin veneer of cover ter’s portfolio is the 4,200sq km land are revisiting them on the basis of the
can mask the near-surface reef potential. package it has accumulated in the gold- significantly higher prices for copper and
rich Tanami region, with the tenements cobalt than when we last looked at them,”
“We’re picking up linear quartz float being assessed under a project genera- Robinson said.
trends that you can just see popping up tion alliance it has with Newcrest Mining
every 50-100m,” Robinson told Paydirt. Ltd. “We’ve commenced some test work
on the oxide position that we discovered
“You can play dot to dot on those much If Newcrest likes what it sees on En- there a few years ago and we’re also
more effectively than you could ever do counter’s ground, Australia’s largest gold looking at a new technology that’s been
standing on the ground and I think this is miner will form a 50-50 JV with the junior developed out of Curtin University that is
going to be a really important technology explorer and fund future programmes in ideally suited to these carbonate-hosted
in terms of fast-tracking the next wave of the West Tanami. deposits. If that’s successful, we will
exploration along this newly recognised charge forward to see whether it could
corridor.” Encounter’s ground sits along the be an operation that might make us a bit
same gravity corridor which hosts New- of cash.”
Robinson said the orientation of this mont Mining Corp’s Callie gold mine,
new area also appeared to be coincident Northern Star Resources Ltd’s upcoming – Michael Washbourne
with a major regional lineament which Tanami operation and ABM Resources
continues through the West Dome pit at NL’s Old Pirate project.
“These domes are surface expres-
sions of major structures ripping through
the area and there’s a gravity gradient
that runs right through the West Dome
pit,” he said.
“The next dome it intersects is East
Thomson’s, right on our ground where
we’re finding widespread coarse gold
over a very large area. Our initial drilling
found new gold reefs and extended some
of the existing gold reefs there. Now our
focus is very much on the undercover,
shallow veneer across that dome where
we think there’s potential to find addition-
al high-grade ounces.”
Encounter will be spoilt for choice in
2018 across its gold portfolio with pro-
PAGE 10 APRIL 2018 AUSTRALIA’S PAYDIRT
Caravel upgrades Calingiri
Caravel Minerals Ltd appears to have Caravel has addressed the issue of low-grade ore feed at its Calingiri
erased what chief executive Marcel copper project, 120km north-east of Perth
Hilmer described as the “one red cross
on a page of green ticks” for the Calingiri indicated $440 million was required to Caravel is currently undertaking a
copper project in Western Australia. build a 15 mtpa operation at Calingiri. 5,000m RC drilling programme target-
Key economics from the study included a ing potential extensions and new targets
Recent bulk ore sorting test work has pre-tax NPV of $800 million, IRR of 31%, around Calingiri. Hydrology testing and
successfully lifted the project’s life-of- payback within three years, net revenue bore hole drilling will begin this month.
mine feed grade from the previously esti- of $7.1 billion and operating cash flow of
mated 0.26% copper to 0.48%. $2 billion over an initial 21 years of mine Environmental and social desktop
life. studies are also on the immediate agen-
Calingiri, only 120km north-east of da as the company ultimately pursues
Perth, is expected to enjoy substantial Hilmer acknowledged the project’s a DFS scheduled for completion in late
capex and opex reductions on the back low grade has been the single biggest 2019.
of these results which were achieved for obstacle standing in the way of luring
just a 22% loss of contained copper. new shareholders and potential strategic Strengthening copper prices and bull-
partners to the company’s register. ish forecasts for the red metal also have
Caravel has also flagged that plant the Caravel team confident of landing a
throughput will likely decrease from 15 With that question now seemingly an- strategic partner to assist with the de-
mtpa to about 6.6 mtpa due to a 56% re- swered, Caravel is seeking to boost its velopment of Calingiri over the next few
duction in post-sort ore feed. marketing and promotion of the project, years.
having engaged strategic advisory firm
Results from the bulk ore sorting cam- Fivemark Partners to help put the com- “We mentioned a $US2.75/lb copper
paign will be fed into an updated scoping pany on the radar of bigger investment price in the first scoping study and to-
study due for release in Q4 2018. institutions. day it is well over $US3/lb – that’s a $4/
lb copper price in Australia if we were in
“The results were beyond our expecta- At the time of print, Caravel’s stock production today,” Hilmer said.
tions,” Hilmer told Paydirt. was up nearly 140% since the release of
the bulk ore sorting results. “Major discoveries of high-grade pro-
“We have an incredibly large bulk ton- jects have dried up and existing larger
nage deposit with a relatively low grade “Interest has grown because we’ve projects that have been in production
of copper and other associated miner- overcome the one and only weakness are coming near the end of life-of-mine
als, so we looked at the opportunity to in this project,” Hilmer said. “We’ve over- or their costs of production are going up
beneficiate the grade between mining come the one red cross on a page of significantly because they’re having to go
and feeding the plant. We believe quite green ticks and now we’re getting seri- deeper.
strongly that smart tech is the future for ous interest.
mining. “When you look at the demand side,
“People can see that this will be a mine clearly there’s going to be a deficit. One
“This technology is working in hun- one day, there’s no doubt about it. They of the reasons why the price improved
dreds of sites throughout the world, but are really interested by being able to re- was because that surplus dried up. We
we had to make sure that it worked with duce the cut-off, increase the feed grade remain very bullish on all the forecasts
our project because bulk ore sorting and have a very substantial resource go- we’ve looked at.”
does not work with all orebodies. A desk- ing through a plant that can be funded.
top study we had completed indicated Our job now is to talk about the technol- – Michael Washbourne
that Calingiri was going to be suitable for ogy and the success of it.”
the beneficiation process through bulk
ore sorting and these results demon-
Hilmer said the beneficiation process
should allow his company to lower the
0.25% copper cut-off for the Calingiri re-
source, currently 251mt @ 0.34% copper
containing 844,300t copper metal.
The test work – conducted at a TOM-
RA Sorting Solutions facility in Sydney –
also indicated Calingiri could churn out
a higher grade product at a beneficiated
grade of 0.83% copper in its early years
“Keep in mind that in the scoping study
we were talking 0.3% feed, so it’s a mas-
sive potential improvement,” Hilmer said.
“Now you can’t feed 0.8% life-of-mine –
your life-of-mine might be 0.5%, which is
probably double and still fantastic – but
we have that flexibility in our early stage
A scoping study released mid-2016
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 11
Mining viewed as positive
but trust gap persists
Anew CSIRO report highlights the pos- BENEFITS
itive regard mining is held in by the
Australian public but also emphasised
the trust gap which remains between in- • The main perceived benefits of
dustry, government and community. mining was the creation of jobs,
including for Australians, employ-
The report – Australian attitudes to- ment and training opportunities in
wards mining citizen survey 2017 – found regional areas and for indigenous
that, overall, mining was seen as central Australians and women.
to Australia, was contributing substantial-
ly to Australia’s economy and was impor- • Mining was also considered to de-
tant to the country’s way of life. Around liver positive benefits to regional and
87% of Australians surveyed accepted indigenous communities, improved
mining to some degree. infrastructure in regional Australia
and made an important contribution
However, while respondents said min-
ing communities received a fair share of “ to the development of young Aus-
benefits, statements about the fair dis- tralians.
tribution of the economic benefits of
mining, the industry’s tax contribution The report shows people have a nuanced
and the ability of governments to suf- opinion towards mining. One of the problems
ficiently regulate the industry were all for the mining industry is the public conversations
met with a lack of confidence. about mining haven’t been constructive and are
CSIRO social scientist and report
author Dr Kieren Moffat told Paydirt
the report’s finding highlighted the
depth of public opinions on Australia’s often around negative impacts, but the findings are
mining sector and that on balance actually counter-intuitive to that.
mining was seen as a positive for the
“The report shows people have a findings are actually counter-intuitive to dustries but given the impacts and ben-
nuanced opinion towards mining. One that,” Moffat said. “How Australians per- efits the value proposition is positive on
of the problems for the mining industry ceive the benefits and impacts of mining balance and that is a good predictor of
is the public conversations about min- can directly influence their acceptance of acceptance in the community.”
ing haven’t been constructive and are mining. There is concern about impacts The CSIRO launched the survey in
often around negative impacts, but the on the environment, water and other in- 2014 in an effort to bring an empirical un-
ABOUT THE REPORT: derstanding to better define the pub-
lic’s stance on mining.
This report summarises the key findings from a survey of 8,020 Australians about their at- “In 2014, we had just come out of
titudes toward the mining industry. The data was collected over two time periods, during the the MRRT debate,” Moffat said. “What
last quarter of 2016 and the second quarter of 2017. The data was collected using an online had been lacking in all these debates
survey based on questions asked in the first Australian survey conducted by CSIRO in 2014. – about a resource base that’s man-
aged on behalf of Australian citizens –
NEGATIVE IMPACTS is the citizens’ voice.
We thought we could
do a better job of pro-
viding trusted data
• The main perceived negative impacts of mining were the envi- about public percep-
tions of this big in-
ronment and water quality. dustry.
“It opens up differ-
• On average, the impacts of mining on the manufacturing and ent kinds of conver-
sations and brings
tourism sectors were perceived to be low, but impacts on agri- the perspective of
citizens into board-
culture sector were perceived to be much higher. rooms and govern-
ments using empiri-
• There was moderate agreement that mining had negative im-
“These results aim
pact on the health of local communities and mine employees
• Participants in mining regions were less supportive of FIFO/
DIDO as a “sensible workforce strategy” than those in non-
mining regions and metropolitan areas.
PAGE 12 APRIL 2018 AUSTRALIA’S PAYDIRT
• Australians weren’t convinced the
economic benefits of mining were
being distributed fairly, although they
tended to agree that mining communi-
ties received their fair share of ben-
• Survey participants also generally
believed the mining industry listened
to and respected community opinions
more than state and federal govern-
ments and overall trust in all actors
(advocacy groups, industry and fed-
eral and state governments) was low.
to give mining companies, government
and communities a deeper understand-
ing of the factors that lead to acceptance
of the industry and the critical elements A MODEL FOR SOCIAL LICENCE
that develop trust between the commu- TO OPERATE
nity and industry.”
The first report from 2014 has already “The level of trust in the mining The flow chart illustrates one part of a social
been used to inform policymakers and industry and trust in government is acceptance model that shows how percep-
companies about their community obli- even lower than in 2014,” Moffat said. tions of various impacts and benefits affect the
gations. Moffat said the key finding of the “As in 2014, the 2017 results con- overall balance of benefits and impacts, which
2017 report was undoubtedly the grow- firm that the Australian public are in turn affects acceptance of mining.
ing importance of the social licence and more accepting of the mining indus-
trust. try in Australia when industry and gov- ment in an effort to provide clear evi-
“Trust in the mining industry is the main ernments work together to build trust in dence for future policies and company
“vehicle for improving acceptance; it is a the industry. Holding a social licence to strategies.
question of going from how to build the operate continues, therefore, to be the “It is our intention to speak to all the
social licence to oper- critical stakeholders,”
ate to how to build trust. There is growing recognition that he said. “We will brief
When people are heard anyone interested in the
and respected, they the way people are treated in content of this report. We
perceive distribution of decision-making processes, the way the have already had inter-
benefits to be fair. When est from the Queensland
people have faith in gov- benefits of mining are shared amongst Resources Council, and
ernance; that drives trust. society, and the role of governance next week I will be pre-
senting the finding to the
“There is growing rec- arrangements are critical to building trust International Council of
ognition that the way and acceptance with Australia’s citizens. Mining and Metals con-
people are treated in
decision-making pro- ference about trust in the
cesses, the way the ben- mining industry.”
efits of mining are shared The CSIRO is also
amongst society, and the role of govern- responsibility of governments and indus- working with Rio Tinto Ltd on the Local
ance arrangements are critical to build- try working with communities and wider Voices research programme which sees
ing trust and acceptance with Australia’s society to promote effective, construc- the science agency conduct an ongoing
citizens.” tive, and mutually beneficial relation- analysis of community attitudes to the
However, trust levels were down on the ships.” company’s iron ore operations in the Pil-
2014 survey, showing both industry and Moffat said the report would now be bara.
government had much work to do. distributed among industry and govern- Moffat said the programme was an
example of industry applying
the findings his report gener-
ated at the local level.
“Rio is now talking about
social licence being a make-
or-break frontline decision
and this kind of work can help
companies navigate through
– Dominic Piper
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 13
Podium hopes to come out on top
Podium Minerals Ltd is looking to act It has been a while since Australian investors have been offered exposure to a PGM
quickly and re-introduce the Austral- story. Podium hopes to be a significant player in the space through its Weld Range
ian market to the narrative around the
PGM sector. Complex project
And, if it is to do so, producing a re- Africa and Russia, plus falling prices for PGMs’ main industrial use has been
source from Parks Reef, 70km north of in auto-catalytic convertors but with
Cue, Western Australia, and rapidly ad- the precious metals, there has been lit- widespread controversy over the report-
vancing the project to development stage ing standards of major car manufactur-
is the strategy Podium chief executive tle impetus for players to get active in the ers, the sector’s focus has switched to
Tom Stynes knows it has to execute. emerging technologies such as hydro-
space. gen fuel cells.
At the time of print, Podium had started
3,000m of RC resource drilling targeting However, Stynes said, people were With legislation to reduce emissions
PGMs at Parks Reef, while a 1,000m RC expected to get stricter, plus continued
exploration programme targeting nickel- starting to question the demand/supply use of PGMs for bullion and jewellery,
copper sulphide potential was also under Stynes sees further upside in the PGM
way. scenario emerging in the PGM sector, market.
Initial results are expected to come to with some challenges ahead on the sup- “PGMs are a complicated market and
hand sometime this month. explaining it will be a hurdle we need to
ply side. get over. But, the impact of supply/de-
“We are aiming to very quickly identify mand on prices will prove that and the
a resource, put some metrics around it Furthermore, some of the mines where fundamental outlook is quite positive,” he
and put a value on the project. We are said.
looking to take the project to develop- PGMs are being extracted are highly
ment stage very quickly,” Stynes told Podium listed in February and raised
Paydirt. complex and often coming from high- $5.5 million, with about $2 million budg-
eted for project work this year.
“We know the resource is there, the cost underground operations, whereas
[potential] size of the deposit is big Work on heritage clearances for the
enough to support a project and the other Parks Reef could poten- second drilling campaign scheduled for
thing is the geometry; it is big and thick, mid-year was planned for after Easter,
suitable to bulk open pit mining.” tially be a low-cost, bulk with another 2km to be tested.
Stynes is quietly confident Podium can mining operation support- Meanwhile, the company will also test
potentially define Australia’s first ever some potential nickel sulphide targets in
PGM mine in Australia at Parks Reef, ed by a simple flotation/ Q3.
with the drilling campaign – targeting a
2km strike along the reef to a depth of concentration/smelting “Nickel is in a good space at the mo-
about 250m – expected to ment and it looks like there is a long way
provide critical information process sheet, similar to to go for the sector. We are not betting
well under the weathered the company on that and we should be
surface. The area defined base metals. valued on the PGMs; anything else is up-
for initial drilling is just part side for us but we are not going to die
of the 15km strike of plati- “We are potentially on wondering,” Stynes said.
num, palladium and gold
mineralisation. such a large resource of – Mark Andrews
Parks Reef was last what is a precious metal,
drilled in the late 1990s/
early 2000s, with nickel plus we have good geom-
laterites the focus when
the mining tenements were etry,” Stynes said.
under fragmented owner-
ship by various groups. “We know we are not
“No single company has coming in at the top of
had all the tenements on
their own before. There the PGM space, but we
were JVs and the like on other minerals.
It was identified in the 90s and compa- Tom Stynes think we are in an interest-
nies got through the exploration stages, ing space. It is not a typi-
but no-one took the next step,” Stynes
said. cal Australian asset and
Companies and investors alike have we will be judged on our results. Part of
fallen out of love with the PGM sector
and with 75-80% of global platinum/pal- our job in attracting investors will be ex-
ladium production controlled by South
plaining the PGM story because PGMs
haven’t been in the market place.”
Stynes said palladium prices had dou-
bled in the past two years, with PGMs
being caught up in the EV story.
“But, the reality is the use of PGMs in
vehicles is to reduce emissions,” he said.
PAGE 14 APRIL 2018 AUSTRALIA’S PAYDIRT
Instos take to Draig story
Draig Resources Ltd has grade mineralisation at depth
been flying under the ra- and to the south; 2.5m @
dar for the past 12 months, 29 g/t gold from 147.5m and
however, it is set to emerge 3.8m @ 5.2 g/t from 133m
in 2018. down-hole; 4m @ 9 g/t from
The spectacular intersec- 57m; 2.4m @ 16.6 g/t from
tion at the Tribune prospect – 102.4m; 7m @ 7.2 g/t, includ-
7m @ 27.5 g/t gold from 92m ing 2m @ 17.8 g/t from 288m
including 5m @ 37.5 g/t – and 9m @ 5.4 g/t from 375m,
came late in 2017 as markets including 2m @ 15.2 g/t.
were winding down towards Parsons said the company
the festive season. would continue to chase the
Nevertheless, Draig man- mineralisation to the south
aged a small placement of and north at Tribune where
$5 million before costs which strike now extends over
was largely taken up by Aus- 550m.
tralian institutional and so- Following the underwritten
phisticated investors. placement, drilling of deeper
However, the story at the targets within the Western
historic Bellevue under- Corridor is now able to begin
ground mine – 800,000oz @ in pursuit of a repeat of the
15 g/t gold – appears to be Bellevue and Tribune lodes.
now resonating with inves- The company is well fund-
tor circles beyond Australian ed through to Christmas and
shores. will now look to scope out the
Institutional funds from wider area of Bellevue where
North America, Asia and it has 866sq km of ground.
Australia bankrolled an $8 Parsons said geophysics
million raising for Draig last and down-hole EM activities
month. would start soon.
“The institutional place- “There has only really been
ment would have been nice a focus on 1km of the Belle-
to have done back then [Trib- vue area. Now we can go and
une intersection] but in the have a look at the regional
lead-up to Christmas it prob- picture. We’ll go back to ba-
ably wasn’t the best time,” sics with geophysics on that,
Draig executive director Ste- which has worked really well,”
ve Parsons told Paydirt. he said.
“We have had three rigs Draig is cashed up to produce a resource from Bellevue this year In the meantime, Parsons’
on site since mid-January, other interest – African Gold –
with two lots of results out demonstrat- maiden resource out later this year.” is expected to go live on the ASX in the
ing good continuity at Tribune, which also At the time of print, step-out drilling near future.
appears open at depth. We are getting had confirmed further high-grade gold – Mark Andrews
holes into the ground now and will have a at Tribune, with results extending high-
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 15
Picture perfect zircon
canvas for Image
Despite being overlooked by the big
four Australian banks, Image Re-
sources Ltd has secured financing for
the Boonanarring mineral sands pro-
ject, 80km north of Perth.
Funding arrangements for the zir-
con-rich project started in mid-2017,
with Image confident one of the four
major banks would consider the value
proposition at Boonanarring – 3.7
mtpa (dry) for 220,000t heavy mineral
concentrate production for a pre-tax
NPV of $197 million and pre-tax IRR
of 104% – strong enough to attract a
conventional loan of $50 million.
After four months of negotiations,
it appeared Image was on course to
achieve a debt solution, however, the
amount required was deemed too
small for a bank to participate.
“So, we were rejected on that ba-
sis,” Image managing director Patrick
Mutz told Paydirt. Image executive director George Sakalidis
“We then had to find financing from
a different source outside of a clas-
sic low interest rate loan from one of the Pala Investments Ltd and Castlelake suit of project financing.
big four banks. We ended up going to L.P. are well-known mining project fi- “The mineral sands market was still
Tier 2 providers, which are higher inter- nanciers and in March agreed to be loan coming off its bottom when we started
est rates, but still relatively conventional noteholders and raise $50 million from project financing discussions and it
loans. We found a few parties and had the issue of senior secured loan notes. hadn’t really showed the stronger sides
a total of four offers providing this kind There have been marked improve- that we are seeing today. Effectively,
of debt out of the US, Switzerland and ments in mineral sands prices, particu- nine months later with a really good re-
ended settling with Pala and Castlelake.” larly zircon, since Image started its pur- covery on our hands we ended up with
a deal with Tier 2 providers; the interest
rates are a little higher, costs are overall
a little bit more but it is still a relatively
stock standard conventional loan where
you pay back the money,” Mutz said.
“They move very quickly though, they
can get all the work done on due dili-
gence in basically a two-month period
which is very attractive to a company
because when the market was improving
our whole goal was to get into production
as quickly as possible.”
Following on from the commitment
shown by Pala and Castlelake, Euroz
Securities Ltd led the book on a $25 mil-
lion equity raising for Image, which was
At the time of print, Mutz said the board
was likely to green light a decision to
mine paving the way for formal construc-
tion works at the Boonanarring project to
start at a capital cost of $52 million.
Boonanarring will be the closest operating mine to Perth. Its location means The debt and equity raise means Im-
Image can leverage from infrastructure already established age has $75 million to move through the
PAGE 16 APRIL 2018 AUSTRALIA’S PAYDIRT
construction into production those areas.
during Q4 followed by posi- “Probably the best exten-
tive cash flow from Q1 2019. sion is going northwards
“One of the attractive and we are seeing very high
things about this project as grades of 15-20% intersec-
an investment proposition, tions with over 20% zircon,
whether it suits the banks or so we know that continues
investors, is that construction north but that is not in the
is only a six-month period, reserve,” Sakalidis said.
ramp up is typically quick High-grade zircon pro-
with a mine like this because jects like Boonanarring
it is just gravity separation of traditionally don’t have 25-
sand,” Mutz said. year mine lives, however,
Site preparation works had the benefit Image has at
started in mid-March and with Boonanarring is another
a plant purchased from Mur- three or four deposits, albe-
ray Zircon in South Australia it at lower zircon grades, to
a couple of years ago, there add to the sequence which
is little in the way to stop Im- will allow it to operate for as
age from making bulk mineral long as 15 years or so in the
sands shipments from Bun- area.
bury to China. With a clear vision ahead
Current ore reserves from at Boonanarring, Mutz said
the Boonanarring and At- he was tentatively looking
las deposits total 29.3mt for at phase two growth for Im-
7.5% heavy mineral sands age.
and 75.8% very heavy min- Bidaminna – 45mt @ 3%
eral sands. HM, including 6.5% zircon
Reserves from Boonanar- plus rutile – is about 25km
ring make up two-thirds of the from Boonanarring and
total assemblage of zircon. potentially next cab off the
Next year, Boonanarring rank.
production is estimated to be Both projects are in the
3.68mt @ 7.8% HMS (with middle of infrastructure-
assemblage of 68,600t zir- rich areas and in a mineral
con @ 25.4%, 5,000t rutile Image will help fill the supply gap opening up in the zircon market sands province spanning
@ 2.4%, 119,100t @ 48.8% more than 20 years of op-
ilmenite and 2,700t leucoxene @ 1.7%) launching a new venture.” erations, providing Image with a potential
for total heavy mineral concentrate sales Image executive director George opportunity to move through develop-
of 225,000t. Sakalidis said the zircon price recovery ment quickly should market dynamics
Projected EBITDA for 2019 is expected could be attributed somewhat to produc- demand.
to be in the range of $56 million, before tion winding down at Iluka Resources “Bidaminna is another beach, but it is
more than doubling in 2020. Ltd’s Jacinth-Ambrosia mine in South a flooded deposit which means it will be
Zircon is estimated to account for 70% Australia and Tutunup, in Western Aus- operated as a dredge mining operation.
of project revenue from Boonanarring, tralia’s south-west. Dredge mining operations are much low-
with further upside potential in pricing, “JA is moving from higher grade to er cost per tonne of production and typi-
according to Mutz. lower grade production, so we have seen cally they are much larger economy of
“Commodities started moving in the their output drop from 300,000 tpa zir- scale, larger tonnage rates,” Mutz said.
middle of 2017, but zircon has been con to 200,000 tpa zircon. That is part “We have another deposit there with
marching in the last nine months now, of the reason why pricing is going up and 40mt [Bidaminna] of resources that we
it was a little later behind the curve,” he it gives companies like ourselves an op- are looking to expand to in excess of
said. portunity to get in there. Generally, we 100mt and then considering a dredge
“Zircon came off a bottom, which was are seeing this all over the place and mining operation on that one, that is our
in my opinion an artificially low bottom. there is no one really stepping up to fill view on expanding our horizons on higher
It is now back to a reasonable level, the gap. In the next two years there is no production output. If that happened, this
it is climbing from a low of just under other [significant zircon] production com- deposit is unique – very low slimes and
$US1,000/t in June 2016; it is now up ing online except for us,” Sakalidis said. very rich in leucoxene – which means
to $US1,400/t. Projections by TZMI see Despite its size relative to Iluka, Image every tonne of concentrate in the ground
prices in excess of $US1,500/t before the can have impact on the zircon market is considerably more valuable than just a
end of this year. The shape of this curve with its output of 60,000-70,000 tpa from standard mineral sands project. A longer
looks like it will continue to be buoyant be- the 13.6km-long Boonanarring reserve mine life on dry mining and the potential
cause of the shortage of supply through area. for a dredge mining operation is where
2019 and 2020. When a company like Sakalidis said the overall resource we see upside for the company.”
ourselves puts itself in a position to be base at Boonanarring was 20km and if – Mark Andrews
launching into production as the price re- the zircon pricing really “got going” more
covery starts, it is the perfect place to be tonnes could potentially be added from
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 17
Battery makers descend on
Australia, Canada cobalt
Nervous Asian battery makers are turn- Mine developers say interest from Japanese and Korean battery makers is particularly
ing to early-stage cobalt projects in strong as they compete with rivals from China, which has built deep supply chain ties
Australia and Canada to lock in supplies with DRC, the world’s top cobalt producer
of the critical battery ingredient ahead of
expected shortages as demand for elec- Riggall said automotive companies were procurement contracts and developing
tric vehicles revs up. also showing interest, along with cathode new procurement routes,” the company
manufacturers, the direct users of cobalt, said in emailed comments.
Mine developers say interest from Jap- a key material in lithium-ion batteries.
anese and Korean firms is particularly South Korea’s Samsung SDI and LG
strong as they compete with rivals from In DRC, production is set to rise sharp- Chem declined to comment specifically
China, which has built deep supply chain ly, driven by commodity giant Glencore, on procurement but also said they were
ties with DRC, the world’s top cobalt pro- the world’s biggest producer, and Lux- looking at other methods to source cobalt
ducer. embourg’s ERG taking DRC’s share of and to reduce usage.
global output to over 75% by 2023, ac-
The central African country accounts cording to UK-based Darton Commodi- Despite surging share prices for some
for nearly two-thirds of global cobalt out- ties. cobalt developers, analysts warn the
put and production is set to rise despite projects are not without risk, given fickle
concerns over the use of child miners In March, Glencore agreed to sell technology and the high cost of process-
and rising royalties. around a third of its cobalt production ing out contaminants like arsenic, found
over the next three years to Chinese bat- in some North American operations.
“We are starting to see the first signs of tery recycler GEM Co Ltd.
an arms race to secure long-term cobalt Clean TeQ shares more than doubled
supplies,” Cobalt Blue Holdings Ltd chief Developments in Australia and Can- in the second half last year, but have
executive Joe Kaderavek told Reuters. ada will be small to mid-size, produc- since slipped 20%, partly because it has
ing around 1,000-5,000 tpa each, in a twice delayed the date of its DFS, Canac-
“With over 85% of new global cobalt global market expected to swell to some cord Genuity Larry Hill said.
supply over the next decade coming 157,000 tpa by 2023.
from Africa, in a region where the Chi- Still, the company easily raised $150
nese have entrenched relationships, the Fortune Minerals said it has signed 25 million in March, and pulled forward its
Korean and Japanese cobalt processing confidentiality agreements. production timeline by a year.
industries are very focused upon Austral-
ian and Canadian projects.” Japan’s Panasonic, the main battery “There’s still a lot of upside in any
supplier to Tesla Inc, said it was aware cobalt supply that is ex-DRC,” Tribeca
South Korean battery maker SK In- of issues in DRC and was looking to Global Natural Resources Fund invest-
novation Co Ltd locked in a seven-year source some material elsewhere. It was ment analyst James Eginton said.
supply deal with Australian Mines Ltd also looking at lowering its dependency
last month, helping to win funding for a on cobalt. “The challenges of the DRC make any-
project that has yet to make a final in- thing that comes out of anywhere else a
vestment decision and does not expect “Regarding concerns about procuring lot more attractive.”
to produce any cobalt until at least 2020. cobalt and other raw materials, we are
addressing this by establishing advanced – Melanie Burton and
At least half a dozen Australian and Nicole Mordant, Reuters
Canadian juniors are in talks on potential
supply deals with battery and automak-
ers for production at some point beyond
late 2019-2021, company executives told
These include ASX-listed Aeon Met-
als Ltd, Northern Cobalt Ltd and Cobalt
Blue, and Canada’s Ecobalt Inc and For-
tune Minerals Inc.
China’s Beijing Easpring Material
Technology Co, which makes products
for battery makers, has also signed a
binding five-year deal with Australian
mine developer Clean TeQ Ltd.
“We are speaking to a number of par-
ties about the balance of the off-take;
that includes not just Chinese potential
customers but also customers from other
parts of the world,” Clean TeQ chief ex-
ecutive Sam Riggall told Reuters.
In an indication of heightened demand,
PAGE 18 APRIL 2018 AUSTRALIA’S PAYDIRT
Scrap a key player in
The global refined copper market re- Playing a key part in the copper mar- capacity to produce in excess of 1 mtpa
corded another year of supply-usage ket’s balancing act has been scrap, or copper, which means that a prolonged
deficit in 2017, according to the Interna- “secondary”, copper. operational hit such as that last year is
tional Copper Study Group (ICSG). capable of moving the global dial.
The copper price endured five years of
The group’s preliminary assessment is falling prices until bottoming out in Janu- It’s why the mine is once again the
that the headline shortfall was 163,000t ary 2016 at a low of $US4,318/t. focus of market attention this year. Last
or, adjusting for changes in Chinese year’s prolonged industrial dispute was
bonded warehouse stocks, an even more The recovery to last December’s highs never resolved, the existing contract
marginal 135,000t. above $US7,300 unlocked a store of merely being rolled forward a year for re-
scrap metal that had been hoarded dur- newed negotiations.
In the context of a 23mt global mar- ing the down years and which has been
ketplace, these are very fine balances flowing through the supply chain ever Escondida was not the only hit to cop-
indeed. since. per supply last year but it was the biggest
and once it resumed operations, global
Moreover, copper supply and demand World refined copper production rose output bounced higher. It was up 10% in
were almost evenly matched in the last by 0.6% last year and it only managed the second half of the year relative to the
quarter of 2017, suggesting that copper’s that anaemic growth rate thanks to a first, according to the ICSG.
deficit dynamics are ebbing. 4.5% rise in secondary production.
Labour negotiations at Escondida and
However, the real story in the ICSG’s Secondary production had declined to at the many other mines with expiring
first take on last year’s statistical land- 3.87mt in 2016, when prices were at their contracts represent multiple sources of
scape hides behind the headlines. low point, but jumped to 4.04mt last year. potential price disruption this year.
Copper scrap, the often overlooked Excluding the contribution of refiners But so too does scrap.
component of both market dynamics and processing scrap, global refined produc- How long will the scrap supply surge
price, played a starring role in determin- tion actually fell by 0.15% in 2017, accord- last? The copper price recovery has
ing that landscape. ing to the ICSG. lost momentum over the last couple of
months with the LME three-month price
Copper bulls have loved a narrative Strikes and smelter downtime hit re- currently trading at $US6,750.
of supply deficit ever since the years of fined production in Chile, Japan and the Together with finite amounts of hoard-
chronic shortfall, when the London Metal United States, the world’s second, third ed scrap, that should mean the scrap ef-
Exchange (LME) price shot up to its all- and fourth largest producers respective- fect fades over time as the supply bulge
time high of $US10,190/t in February ly. moves down the supply chain.
2011. A complication comes in the form of
Production of straight-to-metal copper China’s confusing profusion of new rules
And the deficit narrative is alive and from mines with SX-EW capacity also fell on imports of all sorts of scrap products,
kicking again as the market collectively by 3% last year. including copper.
ponders the ominous combination of de- News of a ban on imports of “Category
clining mine grades, lack of investment in However, being used as an input to 7” scrap last July propelled LME copper
new supply and the demand accelerator make new refined copper is only one of through the $US6,000/t level.
that will be the electric vehicle revolution. scrap’s roles. That ban, effective the end of 2018,
has already disrupted material flows as
But last year’s “deficit” of 135,000t is Its other is as a direct melt input into this lower grade material, which has to be
almost too small to have market signifi- the process of manufacturing copper disassembled before being processed, is
cance, being equivalent to a 0.6% margin products, where it acts to displace the redirected to other Asian countries.
of error in global usage. need for primary metal. A tightening of the rules on who can im-
port metal is still playing out while down
Keep in mind the statistical labyrinth Thus, “improved scrap supply con- the line loom changes to minimum impu-
that is global copper demand, particu- strained world refined copper usage rity levels.
larly in China, where the ICSG employs growth globally in 2017”, the ICSG noted. No surprise, this being scrap, that the
an “apparent usage” calculation based details and potential ramifications on the
on the country’s own production and net The group’s headline calculation is that rest of the copper supply chain remain
imports. “apparent”, and emphasis on that word, frustratingly sketchy.
global usage rose “modestly” by 0.7% It’s an intriguing variable in a global
The broader picture over the last few last year. market forecast to be in a 104,000t deficit.
years is of a steadily diminishing deficit to Which is perhaps better viewed as a
the point of market balance in the closing Scrap is a massively important, but sta- finely balanced match between supply
months of 2017. tistically opaque, balancer of the market. and demand. Just as was the case in
The ICSG’s preliminary take on the The copper supply chain needed it last
fourth quarter of last year is a 7,000t year to offset a 2% decline in global mine – Andy Home, Reuters
surplus, or 2,000t when adjusted for an production. Complementing the slide in
assessment of how much is in China’s SX-EW output was a 1.6% fall in concen- AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 19
bonded warehouses. trates production.
The Group’s last forecast in October That, more than anything else, was
was for another statistically marginal def- down to the 43-day strike at the Escon-
icit of 104,000t this year. dida mine in Chile in February and March
of last year.
Escondida is the world’s only mine with
A downstream flood:
Can Australia build a
The odds of taking up a win- Australia is currently staring at such an value chain alone could be worth $2 tril-
ning ticket in a $2 trillion offer in the battery minerals space and lion to Australia in the next few years,
lottery draw are extremely slight it appears the only gamble the country says Future Smart Strategies managing
so when such an opportunity is can’t afford to take is not acting deci- director Prof Ray Wills.
presented as a “sure thing”, it sively enough to convert its once-in-a-
has to be taken. lifetime ticket into untold riches from the “We can actually start to build the val-
battery minerals bonanza. ue chain that suggests Australia could
easily have a $2 billion industry in lithium
It has been estimated that the lithium by 2020 by making big rocks into small
rocks. The question then is what we do
WA Minister for Mines Bill Johnston to value-add down that value chain?,” he
“Potentially by 2025, the industry will
be worth $1.3 trillion by our estimates,
although we think these estimates are a
bit conservative and have talked about
a figure of $2 trillion for this whole value
chain by 2025.
“This is about every resource, it is not
just about lithium. We also need to be
thinking of things like nickel and cobalt
Blessed with an abundant supply of
lithium in the ground, Australia is well
poised to charge the electric vehicle and
battery storage market for many years to
The quality of Australia’s resources
has never been questioned, however,
PAGE 20 APRIL 2018 AUSTRALIA’S PAYDIRT
the country’s track record “Potentially by 2025, the industry Adrian Griffin for providing
in processing and refining will be worth $1.3 trillion by our a backdrop conducive for
has not replicated the suc- estimates, although we think these such large-scale invest-
cess of the mining sector. estimates are a bit conservative and ments to be made.
Half of hard rock lithium “You might be very sur-
supplied globally in 2017 prised to hear me say that
came from Australia, pre- have talked about a figure of $2 trillion the Government here has
dominantly Western Aus- for this whole value chain by 2025. inadvertently created an
tralia, with China dominat- extremely good tax regime.
ing downstream value-add It is actually cheaper to do
activities followed by the likes of Ja- it [downstream value-addition] here
pan and Korea. than it is in China,” Griffin said at Pay-
Companies such as Greenbushes dirt’s Battery Mineral Conference.
lithium mine owner Tianqi Lithium “If you take the spodumene con-
have taken a proactive approach to centrate into China you get hit with a
new world demand for battery miner- 17% non-refundable VAT. If you export
als. Tianqi is building a battery grade it out of China, not as a value-added
lithium oxide plant at Kwinana, south product but as a lithium chemical,
of Perth. Next door, BHP Nickel West which they don’t consider to be value-
Ltd is converting its nickel smelter to added, you get hit with a 20% export
enable production of nickel sulphate, tax exporting out of China. So, on the
another key ingredient of battery min- way through that lithium chemical to
erals. get lithium into Korea for instance has
The companies’ commitment to cost the manufacturer 37% in tax. If he
WA has been welcomed and the produces it here in WA it costs a 3.5%
State Government has earned praise There is plenty of lithium available around the world, royalty, so why is Tianqi building a re-
from industry veterans such as Lithi- therefore, Australia mush act quickly to secure its finery here? It is because of Australia’s
um Australia NL’s managing director place in the supply chain tax policy.”
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 21
WA boasts some of the world’s largest and most accessible resources industry and academia to advance WA’s
of lithium, cobalt and nickel position as a leading jurisdiction in bat-
tery minerals R&D.
While the royalty regime is attractive, sector is applying that right here in WA,”
increased taxes in other areas such as Johnston said earlier this year. “MRIWA, with WA universities and in-
payroll is where Griffin said gains could dustry partners, are active in trying to co-
be made. “What I am trying to do is tell that in- ordinate a New Energy Industries CRC
novation story; if you have a technical bid – and we strongly believe this should
“If you did pay the state royalty and you problem/challenge in any industry in the be located here in WA,” Johnston said. “If
increase production, the consequence world, you can come to WA and get a so- such a CRC is not placed in WA, it would
of doing that and single biggest impact lution.” be a tragedy.
would be income tax, which is a federal
tax not a state tax, so there is a lot of bal- Speaking at the conference, Johnston “We have a stable energy supply sys-
ance that’s needed,” Griffin said. said his Government was working with tem, plenty of industrial land, transport
infrastructure in place, a skilled work-
WA Minister of Mines Bill Johnston Humphrey Hale force, a community used to dealing with
said the State’s miners in the lithium major projects, a regulatory environment
space wouldn’t be afforded any subsi- that allows a rapid response to the de-
dies, but has continually thrown his sup- mands of industry and which is trusted by
port behind the industry through provid- the people and we have a highly skilled
ing an environment suitable for long-term workforce capable of moving between
investment decisions to be made. one industry and another.”
Furthermore, Johnston said that WA- Johnston is on a mission to enhance
based miners were at the forefront of WA’s reputation as a world leader in tech-
technology and innovation and there was nology and innovation and it is an area
enough capacity to ensure the State de- where the Federal Government could
livered on these fronts in battery miner- sharpen its focus, according to Griffin.
He said a coherent approach from
“Every cutting edge innovation that has state and federal governments was es-
been discussed in the world, the mining sential to ensure the downstream oppor-
tunities on offer in battery minerals were
PAGE 22 APRIL 2018 AUSTRALIA’S PAYDIRT
“This is about
it is not just about
lithium. We also need
to be thinking of
things like nickel and
cobalt as well.
“I think the issues need to be
tackled not only at a state level but
at federal, too. We have a federal
government that says they sit on
an innovation platform; I’d like to
debate otherwise. I am not on the
political left, but I just don’t like the
[Federal] Government’s lack of
support for industry.”
The breakdown of Australia’s au-
tomotive industries in recent years,
means there is also an available
skills set and equipment to be uti-
Griffin said it was important that
Australia’s politicians were being
pushed to make sure the technol-
ogy and innovation sectors were
“Let’s not worry too much about
the detail, but unless we open our
mouths and say something it just
won’t happen,” he said.
Australian Vanadium Ltd’s Vin-
cent Algar agreed and highlighted
facilities in South Australia and Vic-
toria, where automotive behemoths
Holden and Ford, respectively, Lithium Australia’s Adrian Griffin, Australian Vanadium’s Vincent Algar, Infinity Lithium’s Humphrey
have shut their production lines. Hale and Peninsula Mines’ Jon Dugdale expressed their thoughts on the opportunities ahead for
“I think the technology skill set of Australia to open up a downstream industry in the battery minerals sector
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 23
“Australia’s expertise in a range of commodities means it is well-equipped to be a reliable source of key battery minerals
putting together batteries is You might be very surprised to federal levels, was vital.
here, we have South Aus- hear me say that the Government “Everyone is so keen on
tralia and Geelong where here has inadvertently created an
people have the skill set renewable energy, but they
and are sitting on the side- look away from the mining
side of things and still they
lines at the moment,” Algar extremely good tax regime. It is don’t want to know about
said. actually cheaper to do it [downstream it,” he said.
“Those facilities could be “I think if we have a
reignited, can easily be an value-addition] here than it is in China. change in federal govern-
exporter of high quality en- ment to a Labor Govern-
ergy storage devices of any ment then there will be a
type, but we are sitting around asking The first signs of change are starting to better policy for renewable energy.”
‘should we do that?’ It is all about politics. be seen courtesy of Tianqi’s strategy. US To encourage new industries to
It is getting to a point where there is lack lithium producer Albermale has adopted emerge in Australia, the right policy set-
of leadership in some of these issues in a similar tactic, proposing to build a lith- tings must be in place.
innovation.” ium hydroxide plant at Kemerton, 17km Special economic zones providing
At the moment, Australia’s energy north of Bunbury, bringing proposed users with tax-free exports and tariffs
storage devices are all imported, with downstream lithium investment to almost is one “absolute must” which has been
the battery minerals required to make $1 billion. called for.
them effectively leaving town, except at Harnessing such big ticket investments “Once you have those sorts of things,
Greenbushes, and returning in finished will be key and Algar said offering incen- the industry can get going and it will tend
products at a much higher rate. tives for developers, both at state and to grow at its own volition. There is no
doubt we have the raw materials availa-
ble, but we do require the Government’s
support,” Griffin said.
The WA Government has demon-
strated its support for industry by mak-
ing land available for the likes of Tianqi
Griffin, who sits on a committee which
advises the Federal Government on
waste management issues, including
battery recycling, said WA’s endowment
of battery grade raw materials and criti-
cal infrastructure made the State an at-
tractive proposition for investors.
“We have a very unique situation and
that all comes into focus at Kwinana.
Very soon we will have lithium chemicals
or nickel chemicals, we have all the other
chemicals we need to make the compo-
nents of batteries and the downstream
materials for the lithium-ion industry, but
Australia’s processing and refining history has not lived up to that of the mining industry what we don’t have is the right political
PAGE 24 APRIL 2018 AUSTRALIA’S PAYDIRT
Half of hard rock lithium supplied globally in 2017 came from Australia
environment to make it work,” he said. anything in Australia – Cobalt, nickel and graphite are just as important to
“The first thing I have to do is make steel, copper, coal – it will the battery minerals story as lithium
all come back as some-
land available because no-one is going thing else. We are not just AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 25
to go and build a plant that is required talking about battery [min-
to do these things unless they are in erals] we are talking about
the most appropriate areas and clearly a wide range of commodi-
the most appropriate area is Kwinana. I ties we could build things
say that on a global basis, without land from here,” Infinity Lithium
available you are not going to get that, Corporation non-execu-
but how do you encourage people to use tive director Humphrey
that land when it is available?” Hale said.
Peninsula Mines Ltd managing direc- “In Australia, we have
tor Jon Dugdale said Australia could do seen some fiddling about
worse than look at the model used in with the tax rates, royal-
South Korea where the country’s free ties; we don’t want that.
market economy sees one corporate tax We want a straight long-
rate of 22% applied plus the necessary term deal, we want mini-
provision of land to see industries exe- mal taxation, we want
cuted properly. assistance with getting
through red tape; we do
Dugdale said places like South Korea get that in WA.
saw Australia as a traditional mining hub
rather than a potential destination for “We have high power
downstream processing. costs and we have high
labour costs, which goes
“There are huge areas of industrial against the downstream
parks next to ports and there are five dif- processing and why these
ferent ports next to Seoul, so they really things go offshore to Po-
roll out the red carpet,” Dugdale said. land and Romania. To get
support, and for WA to
“It is a high labour cost for the country be efficient and meet the
and yet everything is downstream and rest of the technology, we
value-add, so there is something that has have to ship 8t to China to
been done right there. In terms of sup- make lithium carbonate,
porting anything downstream, manufac- that is a big thing. That is
turing and processing there are no roy- why Tianqi has been so
alties on anything. That is incentivising successful and wanted
downstream, so the ability to put a down- to build here. Albermale
stream processing facility for graphite or will do the same. We are
lithium in Korea will be a piece of cake... not sure many of our spo-
even worth the cost of shipping 8t of dumene converters can
something out of Australia.” see the benefit in following
that pathway,” Hale said.
High power and labour costs are
things considered by potential investors – Mark Andrews
when weighing up propositions in Aus-
tralia, while it appears the country needs
to shake the tag of being a mining-only
“We have been hopeless processing
BATTERY MINERALS CONFERENCE REVIEW
Africa continues to emerge as “My personal point of view – and I’ve take it through to a partially finished raw
a battery minerals hotspot, only been developing mines for 35 years material?
now – is it’s hard work just to develop a
but the question remains just mine, let alone managing a refinery or a “Mt Isa had integrated value chains
battery plant on the back of it,” de Vries – mines, smelters, marketing facilities –
how far down the value chain said. but the whole thing disintegrated and so
we need to understand the dynamics of
should a mining company pro- “We need to actually go through and why all of that disintegrated.”
understand as a battery producer where-
gress its prospective project. abouts do we jump off the hooks in our Mozambique-focused Battery Miner-
value-add. That is, do we take it all the als Ltd canvased opportunities for down-
Discussions around downstream pro- way through to the batteries or do we stream processing from its Montepuez
cessing opportunities proximal to mines and Balama graphite projects in its ini-
or future operations are becoming in- John de Vries tial studies, but has since shelved those
creasingly common among battery min- plans to focus on successfully building
erals enthusiasts, particularly for African and operating a mine in an undeveloped
projects where the opportunity to devel- region.
op an additional industry in an undevel-
oped country is widely applauded as an Battery Minerals chief financial of-
avenue worth investigating. ficer Jeff Dawkins said uncertainty in the
graphite market and the broader battery
However, executives from some of minerals space meant his company was
Australia’s African-focused mining com- better off focusing on just one aspect of
panies have cautioned their peers from project development for the time being,
looking too far beyond the core skill of although the door remains open for fu-
building a profitable mining operation. ture downstream options.
Speaking during a panel session at It is a similar story for Battery Minerals’
Paydirt’s Battery Minerals Conference, Mozambican neighbour Syrah Resourc-
Black Rock Mining Ltd chief executive es Ltd at its upcoming Balama graphite
John de Vries said companies needed to mine.
temper expectations on how much extra
value they could add to an undeveloped “This is a very unique market and
patch of ground. where it’s going to be in two years or
five years is still really unclear,” Dawkins
PAGE 26 APRIL 2018 AUSTRALIA’S PAYDIRT
said. “Everyone out there is predicting
exponential growth in global demand for
battery minerals – I don’t think anyone is
disputing that – however, as John said,
it’s hard building a mine and the last thing
you need is distractions in downstream
areas where there’s still a lack of clarity.
“What we decided to do as a team was
to just build a traditional mine with the
classic crush, grind, float and produce
a product that is sellable into the mar-
ket. Then we’ll dovetail in some of those
downstream opportunities, but for now
the main focus is to just build a mine and
get into production.”
De Vries highlighted the time it typi-
cally takes to develop historical mining
centres in traditional commodities such
as gold as an example of why companies
should focus on what they know best.
“If they found Kambalda today, would
they necessarily go out and build a
smelter? Probably not,” he said.
“The challenge really comes back to at
what point do you stop trying to pursue
that very elusive value-add and focus on Downstream processing and conflict minerals were topics of discussion during a panel
your core skills. A mine half-built and a session on Africa’s battery minerals sector. Panellists included Black Rock Mining chief
refinery half-built is nothing, but a mine
fully built is a hell of a lot better than two executive John de Vries, BlackEarth managing director Tom Revy, Battery Minerals
halves. I think that’s the bottom line and chief financial officer Jeff Dawkins, METS Engineering’s Damian Connelly and Force
that’s how we need to engage, particu-
Commodities managing director Jason Brewer
larly in Africa.”
Countries such as Tanzania, Zam- particularly out of the DRC where some “There are some very strange per-
bia and South Africa have previously miners have been accused of employing ceptions of what we do as directors of
expressed a desire to see downstream children. companies when we go overseas, as if
processing of raw materials occur within Force Commodities Ltd managing di- to suggest we would employ different op-
their jurisdictional boundaries. rector Jason Brewer said the issue could erating practices over there.”
BlackEarth Minerals NL managing di- not be avoided for all concerned. While the DRC still presents somewhat
rector Tom Revy said he had received “It’s not just a concern for the Western- of a security risk for foreign companies,
no such pressure from authorities in based trading groups or manufacturers Brewer – who sits on the board of two
Madagascar where his company has two of iPhones, etc, it’s also an increasing other ASX-listed companies with flagship
graphite projects. However, he acknowl- concern for all the Chinese groups that projects in the country – has no such res-
“edged it was an avenue worth exploring are purchasing product from the DRC,” ervations.
he said. “In the past two years, I’ve probably
for a country largely deprived of foreign spent half my time there, I actually
investment. It’s not just a concern love the place,” he said.
for the Western- “The headlines are enough to
“Madagascar’s major trading part- scare people off, but I actually don’t
ners include the US, China, Germa- based trading groups or mind that because it’s created op-
ny and a few others, all of whom are portunity where, as a junior compa-
potentially big consumers of graph- ny, we’ve been introduced to some
ite or have ambitions of being big very attractive projects where the
consumers of graphite, so there’s manufacturers of iPhones, risk-reward balance is insurmount-
already pre-existing trade relation- etc, it’s also an increasing
ships with those countries,” Revy
said. concern for all the Chinese able [for others].
“There is no pressure at this groups that are purchasing “I’ve done five transactions for
stage, but there probably will be listed companies in Australia and
pressure moving forward I suspect. product from the DRC. London and each one of those has
At the same time they’ve got to closed within three months of first
come clean with the infrastructure to finding the opportunity and we’re
support that. I think the World Bank has “Clearly as an ASX company, we have now on the ground doing exploration. I
gone there and they’re splurging about a series of obligations to our sharehold- would go crazy working in Australia hav-
$US3-5 million over the next few years to ers. I’ve actually been accused of going ing to wait two years to get approval to go
get things right.” over to the Congo and employing young and start drilling.”
Another major talking point for Afri- children to do my mining and explora- – Michael Washbourne
can-focused mining companies is the tion. I actually question the sanity of the
contentious issue of conflict minerals, shareholders who make that assumption.
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 27
BATTERY MINERALS CONFERENCE REVIEW
Combustion vehicles out by 2021
The challenge for a manufacturers intro- drive and how fleets would be managed
futurist like Profes- ducing a range of new in the future.
sor Ray Wills, managing models, availability and
director of Future Smart prices are expected to Last year, 70% of all motor vehicles
Strategies, is to be relia- appeal to a wider cus- were equipped with driver assist capa-
ble and “the least wrong” tomer base. bilities – such as brake warnings and
when making forecasts. emergency braking devices – a figure
Wills said the car in- only expected to increase as technology
Wills knows making dustry was flexible in advances.
predictions about the the way it could roll out
future is fraught with vehicles in quick time “If we start to change the fleet, and
danger, but he hopes and that change was using my imaginative numbers if we as-
his outlook for the role Ray Wills happening now, not in sume the car sharing and mobility solu-
of electric vehicles and 10 years. tions are going to change car ownership
battery storage devices models, then by 2040 I expect the global
in society is somewhere in the vicinity of “I have a fairly bullish car fleet to be half the size, not twice the
reality. forecast and I actually think the combus- size; that is really a speculative thing,”
tion engine will be dead by 2021, we will Wills said.
“At the end of the day, we will need a stop producing them by 2025 and only
few batteries, quite a few batteries,” he electric vehicles will be produced by “Anything past 2025, I think you’d be
said at Paydirt’s Battery Minerals Con- 2026,” he said. nuts to try and forecast that. That is what
ference. the future looks like to me and it impacts
“I am about 10 years ahead of every battery demand and EVs will be a core
Year-on-year sales of battery-powered other forecast. They actually have the part of that demand. We’re actually get-
EVs and plug-hybrids have grown expo- same change scenario but it is just 10 ting to a formula of where we put these
nentially, with the uptake reaching a point years away, which in my view, is 10 years batteries. Initially, up until 2025, two-
whereby Wills believes traditional com- too late.” thirds of batteries, in my estimation, are
bustion engine vehicles will be “dead” by going to go in motor vehicles and the rest
2021. Along with how cars on our roads will into stationary storage.”
be powered, Wills said it was also impor-
With demand growing for EVs and car tant to think about the way people would – Mark Andrews
Lepidico moving early
Lepidico Ltd will look to distinguish itself be extracted. Importantly, with a quality lithium chemi-
in the lithium sector in the next two
years with the patented L-Max technol- the phase one L-Max cal product to take advan-
plant site is in Sudbury, tage of demand as it stands.
L-Max has been designed and devel-
oped to leach lithium from non-conven- Canada, close to potential People here predict the de-
tional mineral sources, namely lithium
micas and phosphates. Studies and markets for its agriculture mand growing for lithium
testing to date have demonstrated the
technology can produce battery-grade and manufacturing by- products, but I believe being
lithium carbonate equivalent (LCE) using
traditionally cheap reagents via stand- products. early in the market is a first-
ard equipment and is environmentally
friendly. “The beauty of the L- mover advantage that we
Since the L-Max technology was first Max process is when want to take advantage of.”
rolled out in 2015, L-Max has treated
over 20 lithium micas from around the extracting lithium from le- Tom Dukovcic Development of phase one
world, with consistent battery-grade LCE pidolite it also produces a L-Max is expected to cost
suite of by-products that $US40 million to produce
Lepidico recently entered a strate-
gic alliance with Galaxy Resources Ltd, are used in the manufacturing indus- 3,000 tpa LCE, with costs for full-scale
whereby 99.8% battery-grade LCE from
lepidolite in Mt Cattlin tailings was pro- try. Those by-products tend to increase operations of 20,000 tpa LCE pending.
or almost double in value, but you don’t “We will have a processing plant inte-
Furthermore, fertiliser by-products
such as SoP, sodium silicate and so- realise that unless you are close to the grated with a concentrator and concen-
dium sulphate, plus potentially gypsum,
caesium and rubidium formats can also market for them,” Lepidico exploration di- trating lithium from our own mines. On
rector Tom Dukovcic said. the other side, we want to licence the
“We are looking at making a financial L-Max technology to third parties. To ef-
investment decision towards the end of fectively do that we need to demonstrate
this year and in 2019 we will be in pro- the commercial viability of L-Max, which
duction, producing LCE for upwards of will give us a greater price for it. Also we
10 years. Pretty much after 3-6 months need to demonstrate that L-Max works
operation of phase one plant testing through our own people first without
through to a concept on commercial damaging the brand too early,” Dukovcic
scale, we will embark on feasibility stud- said.
ies to the full-scale stage. – Mark Andrews
“The aim here is to get into the market
PAGE 28 APRIL 2018 AUSTRALIA’S PAYDIRT
WA eyes battery technology CRC
West Australian Mines Min- have everything we need to en-
ister Bill Johnston has sure we have opportunity to take
declared the State as the only best advantage of these oppor-
logical location for a new coop- tunities.
erative research centre (CRC) “We have a stable energy
investigating the emerging bat- supply system, plenty of indus-
tery storage sector. trial land, transport infrastructure
Opening Paydirt’s Battery in place, a skilled workforce,
Minerals Conference in Perth a community used to dealing
on March 14, Johnston said the with major projects, a regula-
State Government was actively tory environment that allows a
involved in a bid to host a new rapid response to the demands
energy industries CRC. of industry and which is trusted
“It is not just about the miner- by the people and we have a
als in the ground, it is the whole highly skilled workforce capable
ecosystem here in Western Aus- of moving between one industry
tralia which means that we are and another.”
going to continue to be an im- He said investors shouldn’t un-
portant supply source for these derestimate the advantages of
resources; not just in mining and regulatory certainty WA offered.
industrial processing but R&D,” Bill Johnston “We are a jurisdiction that ac-
Johnston said. “This makes WA cepts 100% foreign investment
an ideal location for downstream pro- downstream options opening up for bat- and we allow repatriation of profits and
cessing. We have a unique opportunity tery material suppliers in WA. don’t have restrictions on dividend flows.
and the Government is prepared to work “We want to make sure the settings And, if you want to build a 30-year pro-
with industry to maximise that opportu- are right to attract further downstream ject, WA is the best place in the world
nity.” opportunities here in WA, not just to pro- because you can have confidence that
R&D projects in WA are already well vide subsidies but rather to provide the if you meet the regulatory hurdles, your
advanced and Johnston believes the settings to ensure the companies can project will last 30 years.”
State should take advantage of this mo- operate profitably and we can make the He also suggested the increasing
“ most of resources here in our State.”
mentum. importance of supply chain integrity to
“MRIWA, with WA
battery makers and
universities and indus-
try partners, are active We are a jurisdiction that accepts end-users made WA
in trying to co-ordinate 100% foreign investment and we a more attractive en-
a New Energy Indus- allow repatriation of profits and don’t have vironment, highlight-
tries CRC bid – and ing the issues facing
cobalt miners in DRC.
we strongly believe restrictions on dividend flows. And, if you “You can go to a
this should be located customer in the US
here in Western Aus- want to build a 30-year project, WA is the and tell them if they
tralia,” Johnston said. best place in the world because you can have buy from a WA sup-
“If such a CRC is not plier they can be con-
placed in WA, it would confidence that if you meet the regulatory fident our materials
be a tragedy.” hurdles, your project will last 30 years. will be acceptable to
any community in the
The Minister said
his Government was world,” Johnston said.
supporting a number “The DRC is being
of research projects which had the po- Johnston admitted previous attempts pressured because of the problems they
tential to “make the processes for extrac- to bolt downstream and value-adding in- have in their domestic political environ-
tion and processing in the industry more dustries onto the back of WA’s vast min- ment. There is certain to be social media
economically viable and cost effective”. eral resources had summarily failed but campaigns about blood metals [from the
“The research is already under way said there were material differences in DRC]. There is not going to be a social
and the future R&D capability in WA the battery minerals space. media campaign about cobalt coming
make this state well placed to be a world “There’s been a vision for [downstream out of Nickel West; this is a major strate-
leader in this highly competitive and industries for] a long time but it failed be- gic advantage for us in the contemporary
emerging industry.” cause it didn’t meet the economic test world.”
Johnston pointed to Tianqi Lithium’s of investors. So, we weren’t able to get – Dominic Piper
development of its 24,000 tpa lithium steel mills, etc because we weren’t able
hydroxide plant and BHP Nickel West’s to compete with investment opportuni-
100,000 tpa nickel sulphate plant, both at ties in other parts of the world. But in the
Kwinana, as evidence of the developing lithium and batteries space we actually
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 29
BATTERY MINERALS CONFERENCE REVIEW
Tawana switches Bald Hill on
Tawana Resources NL will had started the previous day.
spin-out its non-core assets
in an effort to sharpen its focus He said development had been
on newly minted operations at
its Bald Hill lithium mine. remarkably swift given the first
Tawana became Western drilling targeting lithium at Bald
Australia’s newest lithium miner
in March when it switched op- Hill had only occurred in 2016.
erations on at Bald Hill – 50km
south-east of Kambalda. The The company now boasts re-
company and JV partner Al-
liance Mineral Assets Ltd are sources of 8.9mt @ 1.18 lithium
aiming to export 10-15,000
tpa of spodumene concentrate oxide and 6.4mt @ 330 ppm
from the mine with first con-
centrate product anticipated to tantalum as well as a reserve of
leave Bald Hill this month.
4.3mt @ 1.18% lithium oxide.
With ramp-up operations set
to continue through 2018 and a Ramp-up of Bald Hill’s DMS
major new exploration push to
be undertaken around Bald Hill, plant will now take 3-4 months
Tawana has chosen to clear the
decks. The three projects to be with the work on completion of
housed in the proposed new ve-
hicle are the Cowan and Yallari lithium the Stage 2 lithium fines circuit
projects in WA and the Mofe Creek iron
ore project in Liberia. design and recommissioning of
the tantalum circuits occurring in
Calderwood said the decision
to go ahead with construction
of the DMS circuit was based
on both financing and customer
Mark Calderwood “We completed the PFS and
realised we weren’t going to get
Tawana managing director Mark Cal- traditional bank finance so got on with
derwood said the focus on Bald Hill building the DMS plant; that is the easy
meant the projects were “unlikely to gar- part of spodumene concentrate produc-
ner the appropriate tion,” he said. “We haven’t done any drill-
management focus ing in the last six months because we
and budgetary al- didn’t want to drill for three years when
location which they we had off-takers screaming at us.”
warrant and require As well as the fines circuit, Tawana is
for short-term ad- also investigating building a second DMS
vancement. plant however it will need the resources
“Tawana recog- to fill it.
nises the value of “We have a short mine life [3.6 years]
the Cowan, Yallari and next year we will look at installing
and Mofe Creek another DMS circuit but I have full con-
projects may be fidence the exploration team can do it,”
better recognised Calderwood said.
by the market by “There are vast pegmatite fields at Bald
de-merging these Hill, more than 200sq km of them. The JV
assets from Tawana has 770sq km of ground and Tawana has
to form a new stan- a further 770sq km owned 100%. Both
dalone exploration areas are riddled with pegmatites and
company,” Calder- there has only ever been 12 months of
wood said. “Follow- lithium-focused drilling so there is a dec-
ing the proposed ade of exploration ahead of us.
transaction, both “It is a vast area to explore but we will
companies will be focus on the mining licences to begin
better placed to ad- with. Mapping has shown outcropping
vance their respec- pegmatites on the ground which have
tive asset portfo- never been drilled before.”
lios.” – Dominic Piper
Earlier in March,
dirt’s Battery Min-
erals Conference in
buoyant mood given
Bald Hill operations
PAGE 30 APRIL 2018 AUSTRALIA’S PAYDIRT
Race is on at Munglinup
Mineral Commodities Ltd (MRC) will ing environmental approval “We’ve had excellent re-
aggressively pursue off-take deals
and outstanding regulatory approvals for Munglinup, with all stud- sults in terms of flake con-
over the coming months in a bid to put
the Munglinup graphite project into pro- ies and surveys scheduled centrate purity and quite
duction next year.
for completion this quarter. good recoveries as well.
Munglinup, 105km west of Esperance,
already has a granted mining lease and Munglinup has been Because of the high-grade
MRC is expected to leverage off its un-
geared balance sheet – underpinned by awarded “Level 2 Lead [nature] of the deposit, we
the Tormin mineral sands operation in
South Africa – to secure project finance. Agency” status by WA’s can – with relatively low
“We have a view that we should be Department of Mines, In- throughputs – generate a
able to get into production sometime in
2019,” MRC business development man- dustry Regulation and lot of concentrate.”
ager Daniel Hastings said.
Safety, giving the project Munglinup hosts a meas-
“The size of the processing plant is
such that it won’t be a long construction “strategic significance” in ured and indicated re-
period and because of the nature of the the eyes of the State. Daniel Hastings source of 3.6mt @ 15.3%
plant, it’s not overly complex, it’s just a
standard flotation. MRC is targeting produc- TGC for 554,000t con-
“Because the material is in saprolite, tion of 53,000 tpa graphite over an initial tained graphite. Following a recent scop-
there is no drill and blast, no crushing up
front and no significant grinding, so that nine years at Munglinup. Recent metal- ing study, MRC announced a production
will also help fast-track the project.”
lurgical test work from BatteryLimits Pty target of 3.2mt @ 17% TGC for 540,00t
MRC has begun the process of obtain-
Ltd forms the basis of a PFS currently be- contained graphite.
ing finalised. Hastings expects his company will
Using a basket price of $1,092/t, pre- “significantly” increase the size of the re-
liminary capital ($47 million) and operat- source over the next year given drilling to
ing ($528/t) costs have been estimated. date has been limited to the upper sapro-
“The recent metallurgical test work litic zone of the project.
we’ve done shows we can put in a pro- Like many others in the sector, MRC
cessing plant to recover the graphite us- is also exploring opportunities for down-
ing a pretty standard flotation,” Hastings stream processing of its graphite.
said. – Michael Washbourne
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 31
BATTERY MINERALS CONFERENCE REVIEW
Barra thirsty for cobalt
Barra Resources Ltd is determined Gregory – an experienced time of print, Gregory said
not to rush a PFS on its Mt Thirsty
cobalt-nickel project, about 14km north of operations manager who devel- current pricing was not out of
oped projects for Mineral Re- step with historical demand.
A scoping study released last October
supported development of a $212 million sources Ltd in the Pilbara – said “We’re not in a bubble,
operation producing 6,000 tpa of a mixed
sulphide product over a 21-year mine life. his company would also tinker we’re not in a boom, but
Barra has begun tendering key con- with mine plans, including a re- there is a real opportunity for
tracts for the PFS, which will be com-
pleted during 2018. However, managing view of in-pit tailings disposal. a structural shift from there,
director Sean Gregory said the company
would review every detail possible. Mt Thirsty is a 50-50 JV be- driven by EVs,” he said.
“I’ve seen it happen too many times be- tween Barra and Conico Ltd. “Supply is scarce. There
fore with companies all too eager to dive
into the PFS,” Gregory said. “They pick The project’s cobalt grade is are very few projects lining
the wrong option, then cycle back around
and do it again and again and again. reportedly double that of many Sean Gregory up to come into production
traditional nickel laterite plays in for those that are – and in-
“We’re going to invest the time in the
PFS to make sure that we explore all of Western Australia. deed the producers – 97% of
the options. We’re going to look at our
base case flowsheet, we’re going to look “The mineralogy is what enables us to all cobalt produced is actually a by-prod-
at options to add varying quantities of
sulphuric acid to that process. Some op- get that low capital cost,” Gregory said. uct of nickel and copper mines. So, if the
tions may have higher capital costs, but
we will explore them for completeness.” “Our cobalt is not tied up in the silicates cobalt price goes up for these producers,
that require expensive high-pressure they’re not necessarily going to be incen-
acid leaching. Our cobalt is tied up in a tivised to turn on additional production.”
manganese oxide called asbolane that is Gregory said his company was looking
easily recoverable with agitated atmos- to top up its $2.4 million cash position to
pheric leaching.” fund completion of the PFS, before em-
Barra is also keeping a watchful eye barking on discussions over off-take and
over a neighbouring tenement held by project finance with potential strategic
Mark Creasy which is believed to host partners.
about 20mt of cobalt-nickel resource. – Michael Washbourne
With cobalt nearing $US90,000/t at the
PAGE 32 APRIL 2018 AUSTRALIA’S PAYDIRT
BlackEarth fast-tracks Maniry
BlackEarth Minerals NL plans to de- of geological predictability, which has al- velop a project in a mining-friendly coun-
fine a maiden resource and complete ready assisted us in minimising drilling try – could not be disputed.
a scoping study on its Maniry graphite costs and efforts, while maximising con-
project in Madagascar within its first 12 fidence in delineating resources.” “With historic graphite production in
months on the bourse. excess of 100 years, Madagascar has a
BlackEarth is hopeful of completing a reputation for quality large flake product
Having listed on the ASX in January, scoping study on Maniry in Q4 2018 be- with low production costs,” he said.
BlackEarth recently started diamond fore fast-tracking a feasibility study next
drilling to follow up on historic explora- year. “In the 1920s and 1930s, Madagascar
tion results. was a major supplier of graphite to Eu-
Preliminary exploration work has also rope and the US. With an enviable global
Previous drilling returned hits of 10m begun at the Ianapera project, 40km reputation for producing quality graphite,
@ 10.2% TGC, 12m @ 11.6% TGC, 14m north of Maniry, ahead of a trenching other producers around the world meas-
@ 11.3% TGC and 26m @ 9.1% TGC, all programme this quarter. ured their quality against product pro-
within 50m of surface. duced from Madagascar.”
“While at a much earlier stage to
Diamond drilling is expected to be Maniry, Ianapera represents an excellent Revy said recent global trends sug-
completed by June, with first assay re- prospect for us,” Revy said. gested pressure would remain on the
sults to be released this month. cost of producing raw materials such as
“Grades from rock chip samples which graphite for the battery sector.
“The aim of the drilling is to delineate lie over an intense conductor have re-
an indicated and inferred resource, as turned excellent results, with the num- “What we’re seeing is an irreversible
well as a substantial exploration target,” bers ranging from 10-38% TGC, and shift and commitment to battery technol-
BlackEarth managing director Tom Revy 70% of those results are in excess of ogy,” he said.
said. 20% TGC.
“The bottom line is future demand for
“Maniry has the potential to be a very “The bonus for us here is that we have natural graphite is clearly going to in-
large project, which we expect to confirm acquired a project with 40-year MLs al- crease, based on current consumption
in mid-2018 with a sizable exploration ready completed over the project leases.” needs and future commitments being
target. Previous drill results, together made by the industrial majors.”
with trench samples, indicate a high level Revy said the graphite potential in
Madagascar – and the opportunity to de- – Michael Washbourne
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 33
BATTERY MINERALS CONFERENCE REVIEW
Montepuez takes shape
Battery Minerals Ltd has “We’ve been very busy Battery Minerals hopes to become a
begun construction 200,000 tpa producer by 2023 via the
of its Montepuez graph- at Battery Minerals over addition of its Balama project, adjacent
ite project in Mozambique to Syrah Resources Ltd’s upcoming mine
as it strives to ship its first the last six months,” chief of the same name.
batch of concentrate early
next year. financial officer Jeff Dawk- Scoping study estimates point to initial
production of 50,000-55,000 tpa from
All key plant equipment ins said. Balama for a capex of $US50 million,
has been ordered, with the with operating costs of $US372/t.
crushing circuit arriving in “We are building a mine.
country last month and on A feasibility study is due in Q3 2018,
its way to site at the time The crushing circuit has with first exports from Balama slated for
of print. early 2021.
arrived in country, we’ve
Commissioning of the plant is set for “The numbers we’ve got so far from the
November following the recent award of built and constructed the scoping study are very encouraging and
supply contracts for the ball mill, flotation very close to Syrah’s in terms of similar
cells, re-grind mills, flash dryer and thick- water dams which are now qualities in the economics,” Dawkins
Jeff Dawkins full and civil works are un-
Award of a mining licence followed der way, with the earth- “Sometimes you are just in the right
Paydirt’s Battery Minerals Conference. place at the right time. We’re in Mozam-
moving fleet on site build- bique on arguably the best quality graph-
Battery Minerals has also signed four ite belt in the world. No one is arguing
binding off-take agreements with Urbix ing the access roads and preparation for that the growth forecast for graphite is
(up to 11,000 tpa), GEM, Black Dragon not rising exponentially. We see demand
and Keshuo (10,000 tpa each), with ne- various other areas of the project.” doubling by 2020 and growing seven
gotiations continuing for further product times by 2025.”
sales. According to the updated DFS, Mon-
– Michael Washbourne
tepuez will initially produce 45,000-
50,000 tpa graphite concentrate at an
average operating cost of $US337/t.
Capex is estimated at $US42.3 million,
with projected net operating cash flow of
at least $US20 million a year and pay-
back within two years.
“That sort of cash flow gives the com-
pany a lot of options to grow and to de-
velop,” Dawkins said.
PAGE 34 APRIL 2018 AUSTRALIA’S PAYDIRT
Ardea gets KNP fighting fit
Resplendent with a new Australian mining circles.
PFS, it appears the
Kalgoorlie nickel project “But, off the various pro-
(KNP) is in the best shape
of its history. cessing options, pressure acid
The laterite project, com- leach wins by a long shot,” he
monly referred to as the
KNP, has been one of West said. “The deposit has low im-
Australian mining’s great
enigmas, attracting con- purities but you still have to
siderable investment over
20 years from international precipitate the nickel sulphides
players enticed by its scale
but ultimately put off by the because it makes it easier to
enormity of the develop-
ment task and plus-$1 bil- take out the impurities.
lion price tag.
“Pressure acid leach has
First Inco, then Vale SA
attempted to build a case had a chequered history in
for the KNP during the
2000s before the Brazilian WA but elsewhere it is not
giant walked away from the project in
May 2009, leaving Heron Resources Ltd something people are wor-
to go it alone again. Heron itself moved
on and into production at its Woodlawn ried about. It is all off-the-shelf
zinc project in New South Wales, leaving
the KNP under the ownership of spin-out technologies and we have
made bench-scale sulphates
The timing could not have been better
for the new company with increasing de- and are doing more work now.”
mand for cobalt pushing the metal’s price
up to record levels and turning the KNP’s With end-users increasingly
economics on their head.
heading upstream in search
Released two weeks after the com-
pany’s appearance at Paydirt’s Battery Matt Painter of material, Painter expects a
Minerals Conference, the PFS confirmed
the KNP could host a 1 mtpa operation number of manufacturers to
producing 5,500 tpa of cobalt sulphate
and 41,500 tpa of nickel sulphate. per tonne value is much lower than our be interested in Ardea’s progress.
The PFS estimated capex of $599 mil- peers,” managing director Matt Painter “We will make the products on site
lion for the project with post-tax NPV
forecast at $1.04 billion. told Paydirt’s Battery Minerals Confer- at Goongarrie and sell direct to battery
“This is the largest cobalt resource ence. manufacturers,” he said. “All battery
in the developed world but our dollar
Cobalt’s rise has changed the ap- manufacturers are stepping out of their
proach at the KNP with Ardea now fo- comfort zone and into mining because it
cusing on the high-grade Goongarrie is going to be increasingly difficult to get
area of the project. Goongarrie contains their hands on the required material. We
a resource of 108mt @ 0.1% cobalt and are having discussions now and if we
0.7% nickel with the wider KNP contain- bring in a party we can start at 1 mtpa but
ing more than 400,000t of in-ground co- bring in multiple trains of plant after that.”
balt metal and 5.6mt of in-ground nickel As well as cobalt, nickel and scandium,
metal. the KNP could ultimately prove a source
The PFS is focused on production of of high-purity alumina, platinoids, man-
high-purity cobalt sulphate and nickel ganese and chromium.
sulphate products via a pressure acid “Basically, it has everything you need
leach process. for a battery, bar the lithium,” Painter
“We can also produce a scandium said.
oxide without any impact on the cobalt- – Dominic Piper
nickel circuit but the scandium market is
still quite immature,” Painter said.
Painter acknowledged pressure acid
leach had an unenviable reputation in
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 35
BATTERY MINERALS CONFERENCE REVIEW
Peninsula to broaden
horizons in 2018
Peninsula Mines Ltd Essential to the compa- other key end-users in the lithium-ion
has had its feet well battery space.
planted in South Korea ny’s prospects is identify-
for the past five years “South Korea was the world’s largest
but 2018 is shaping as ing and ensuring the met- graphite producer in the early 1970s be-
a pivotal period in the fore China kicked into gear but there has
company’s history. allurgical characteristics been no modern exploration. Now, with
the modern applications for flake graph-
“This year is the year; of the projects it chooses ite and lithium which have come to the
we are going to be drill- fore, we are starting to pick up some
ing projects, establish- ultimately suit the clientele good projects and move them towards
ing off-take relation- resource delineation,” he said.
ships and providing it’s trying to appeal to.
some certainty on gen- Peninsula has set up a wholly-owned
erating a cash flow-pro- So far, flake graphite in-country subsidiary – Korea Graphite
ducing business with Co Ltd – which will drive project develop-
some potentially excit- projects identified in South ment work for the Korean projects.
ing discoveries on the way,” Peninsula
managing director Jon Dugdale said. Korea include Yongwon, The Korea Graphite vehicle will also
look to establish off-take relationships
Despite a portfolio of prospective lith- Daewon, Eunha and Gapy- and supply from other projects anywhere
ium, zinc, copper and graphite projects around the world to suit the off-take
in South Korea, Peninsula is market eong; all deposits which needs.
capped at just $10 million, something it
hopes to turnaround this year. could potentially host the An example of the deals Korea Graph-
ite will look for is the binding agreement
While boasting a diversified portfolio, Jon Dugdale material South Korean it signed in January whereby it will sup-
Peninsula is attempting to develop an end-users are interested ply Korean graphite users with 24,000
integrated high-grade flake graphite and tpa flake graphite from DNI Metals Inc’s
battery minerals business in South Ko- in. Madagascan projects.
“South Korea is a good place to do – Mark Andrews
things because it is the world’s leading
lithium-ion battery manufacturer,” Dug-
“Over the past 18 months or so we
have really started to generate relation-
ships with some of the key potential off-
take partners [in South Korea] that are
going to consume some of these key
commodities. We already have an off-
take MoU with an expandable graphite
producer and we are in discussions with
Force prepares for first DRC lithium drilling
Force Commodities Ltd managing di- ium expedition, having more targeted 1,000m di-
rector Jason Brewer is confident his secured a JV agreement
company will stand up to scrutiny regard- with Mining Mineral Re- amond drilling campaign.
ing the ethical integrity of any cobalt it sources SPRL (MMR)
produces from its DRC assets. which is already mining “We will formalise the
tin and tantalum on the
A number of Brewer’s fellow speak- mining and exploration JV this month [March]
ers highlighted the issue of responsibly licenses which form the
sourced cobalt from DRC during Pay- Kanuka project. and from there we have
dirt’s Battery Minerals Conference but,
he said, Force would be firm on the is- “Through that tin-tan- the opportunity to take
sue. talum mining, MMR ex-
posed the pegmatites,” the project forward,”
“Sourcing responsibly mined material Brewer said. “The key
is a focus for us,” Brewer said. “Austral- one is over 3km and Brewer said. “Our JV
ian companies would appear to have a is open with plenty of
competitive advantage but the reality is width.” partner MMR is run-
that in DRC we are operating to no lesser
standard than if we were operating in the Force is mobilising a drill rig to site this ning a bit too fast but we
Eastern Goldfields. month to test the pegmatites where sam-
ples of highly weathered shallow mate- are really pleased to be
“We will be operating to OECD and IFC rial returned grades of 2.12% and 1.93%
guidelines and we are currently working lithium. working with group like
with a UK-based group to get third-party
verification for this.” Force will begin with a 3,000m shallow that. We both think we
aircore programme before moving onto a
Force is just embarking on its DRC lith- Jason Brewer can achieve a lot over
the course of 2018 as we
look to follow-up on those
grades of plus-2% lithium.
“DRC has never had any lithium explo-
ration before but the success AVZ [Min-
erals Ltd] is having proves the potential
– Dominic Piper
PAGE 36 APRIL 2018 AUSTRALIA’S PAYDIRT
Blackstone looks for width
in Little Gem
Blackstone Minerals Ltd managing Blackstone is confident its Little Gem cobalt project has the grades
director Scott Williamson isn’t con- to be an outstanding proposition
cerned with grade at this stage of the
Little Gem cobalt project’s development; Scott Williamson intercepts will continue but what he is
what he wants to see is width. truly hoping for is some width to the min-
Gem but the first diamond holes will be eralised zones.
Blackstone started drilling Little Gem – focused on the original 300m strike zone
330km from Vancouver in British Colum- before stepping out 1km to the east and “The massive sulphides are grad-
bia, Canada – in January, returning a hit 500m to the west. ing 3% cobalt and 40 g/t gold and even
of 4.3m @ 1% cobalt and 15 g/t gold, in- the disseminated sulphides are grading
cluding 1m @ 3% cobalt and 44 g/t gold Williamson is confident the high-grade 0.5% cobalt and 20 g/t gold,” he said.
from the first hole. “What we want to see is intersections of
metres, not centimetres; something wide
The result was consistent with histori- enough that we won’t dilute too much
cal underground drilling and adit channel during mining.”
sampling from Little Gem and has given
Blackstone confidence it has picked up Having searched globally for an analo-
one of the highest grade cobalt-gold pro- gous system, Williamson believes the
jects in the world. closest comparison to be the Bou-Azzer
cobalt district in Morocco, among the
“You know you’re in a high-grade sys- highest grade cobalt districts in the world.
tem when historical data refers to ounces
per tonne,” Williamson said at Paydirt’s Whether Little Gem can stand up to
Battery Minerals Conference. such comparisons should be clear fairly
quickly, according to Williamson.
Little Gem was discovered in the 1930s
but has since seen little exploration with “We will follow-up that first hole and
the district more synonymous with high- within 12 holes we will know whether Lit-
grade gold production. Williamson said tle Gem is going to be a mine or not.”
despite the attractive grades, cobalt was
likely considered a deleterious element – Dominic Piper
in the early years of mining.
With cobalt prices rising to more than
$US90,000/t, Blackstone views the pro-
ject very differently and despite having
a promising portfolio of West Australian
gold assets, it is increasingly committed
to its Canadian venture.
Radius Drilling was mobilising to site
at the end of March ahead of an initial
six-hole diamond drilling programme at
Stream sediment sampling has indi-
cated 1.5km of strike extensions at Little
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 37
BATTERY MINERALS CONFERENCE REVIEW
Dempsey lands in Argentina
Dempsey Minerals Ltd is set to to secure some ground in not only
become the third largest player
in one of Argentina’s premier lithium one of the premier regions of the
world, but the premier basin in Ar-
The Nathan McMahon-chaired
company is acquiring Blue Sky Lith- gentina,” Jones said.
ium Pty Ltd and its package of min-
ing tenements in the famed Hombre Jones, an industry veteran who
Muerto salar region.
previously guided Namibian urani-
Hombre Muerto is already home
to FMC Corporation’s Fenix and um hopeful Bannerman Resources
Galaxy Resources Ltd’s Sal de Vida
lithium operations. Ltd, said the potential to establish a
“The Hombre Muerto salar is the mining operation in Argentina was
most productive lithium brine salt
flat in Argentina,” Dempsey senior unwavering.
advisor Clive Jones said.
“Argentina is increasingly becom-
“Hombre Muerto has very high
grades, very low impurities – the ing a far more attractive place to
magnesium/lithium ratio, for exam-
ple, is less than four – and it is a invest,” he said. “President Macri
highly permeable and user-friendly area.
is very pro-development, very pro-
“The company is planning to be the
third largest player in that salar. They mining and he is rapidly changing
have put together a very strong team that
really want to take this project forward Argentina for the better.”
and develop it as quickly as possible.”
Jones is equally upbeat about the
Pending shareholder approval, Demp-
sey will assume control of more than opportunities in lithium, pointing to
4,000ha of potential brine reservoirs,
leading Chinese battery producer
Clive Jones CATL’s recent strategic partnership
with Toyota as an example of the
specifically the Candelas, Catalina and growing demand for new supply.
Deceo mining tenements. “It seems every day there is more posi-
Respected lithium analyst Juan Pablo tive news coming out in this space,” he
Vargas de la Vega, who put together the said. “The Chinese are leading the way
ground package for Blue Sky Lithium, is and being very proactive and are regu-
set to be appointed Dempsey’s new man- larly investing in companies all over the
aging director at this month’s EGM. world with good lithium projects.”
“It was basically during that work that – Michael Washbourne
he realised the opportunity in Argentina
CSIRO eyes cheaper processing
Government-backed research agen- “Natural graphite is a cheaper
cy CSIRO has high hopes for its
new LithSonic processing technology alternative,” Otto said. “We have
in the future production of lithium-ion
batteries. done considerable research and
LithSonic – a new process for the development work on how to better
production of lithium metal via carboth-
ermal reduction with shock quenching use artificial graphite in lithium-ion
– is a variant of the MagSonic technol-
ogy developed by the CSIRO in 2003. batteries.”
MagSonic uses carbothermal reduc- Otto told Paydirt’s Battery Miner-
tion and a supersonic nozzle to directly
produce magnesium metal. It is consid- als Conference that understanding
ered a more efficient and cost-effective
alternative for processing magnesium, the characterisation of an orebody
using up to 70% less carbon dioxide-
equivalent emissions than traditional would lead to successful process-
ing of the minerals in question.
CSIRO principle research scientist
Alex Otto said LithSonic could lower cap- “Our processing unit has exper-
ital and operating costs in future lithium
production chains. tise in all battery metals,” he said.
“The key part of that process is to pre- “We can develop proof of concept,
vent the oxidation of the metal while you
are producing,” he said. “Our research- flowsheet optimisation and we can
Alex Otto conduct an investigation on how
to scale up the processes via pilot
ers were able to get around that with su- plants or other alternative processing
personic quenching.” routes.
CSIRO has also reviewed the use of “This will open up for engagement with
artificial graphite used in most lithium-ion industry and we will be able to help out
batteries being produced on the market. with government and co-funding possi-
While artificial graphite has a longer bilities and be a scientific partner.”
cycle life than natural graphite, it is much – Michael Washbourne
more expensive to produce.
PAGE 38 APRIL 2018 AUSTRALIA’S PAYDIRT
New Venture, new discoveries
Venture Minerals Ltd from surface sam- north-east of Geraldton, with the first
has identified a pri- hole returning a hit of 1m @ 1.8 g/t gold,
ority ultramafic target pling and geophysi- 4.6 g/t silver, 806 ppm copper, 655 ppm
near one of the biggest zinc and 578 ppm lead from 157m.
nickel-cobalt discover- cal interpretations.
ies of last year. Micro-probe analysis verified the pres-
We’ll get out there ence of nickel and cobalt within the inter-
Following Golden sected sulphides.
Mile Resources Ltd’s once the tenements
success at its Quick- “We’re hoping to go back and do some
silver nickel-cobalt are granted and do more work in the area,” Radonjic said.
project, Venture accu-
mulated 822sq km of some EM work and “There are a couple of targets to fol-
tenement applications low up. We think there may be something
in what is shaping as a some drill testing.” better underneath those targets.”
new mineral province
in Western Australia’s Venture is current- Venture is also set to resume work
South-West. on its Mt Lindsay project in Tasmania,
ly drilling the Odin particularly on the back of rising tin and
Golden Mile’s share price jumped tungsten prices.
more than 800% last November as it lithium prospect at
detailed its find at Quicksilver. Venture’s Mt Lindsay hosts a resource of 13mt @
stock lifted 200% upon announcing its its South West pro- 0.3% tin and 0.2% tungsten for 38,000t
acquisitions in the area. contained tin and 61,000t contained
ject, 30km south of tungsten.
Venture’s Pingaring project is 4km
along strike from Quicksilver and con- Greenbushes. “Tin is the forgotten EV metal,” Ra-
tains a strike of 150km of ultramafic tar- donjic said. “The tin market is starting
gets hosted on the same unit. Andrew Radonjic The rejuvenated to come back again, the price is now
explorer hopes to $US21,000/t, which is actually higher
“This is a very exciting province,” Ven- than what we used in our studies. Tung-
ture managing director Andrew Radonjic soon drill the nearby sten has also come back 70% over the
said. last year, so the economics for Mt Lind-
Thor VMS prospect, as well as other tar- say are looking quite attractive.”
“All the targets we’ve generated are
gets on the 281sq km patch of ground it – Michael Washbourne
holds in the region.
“We don’t recall anyone having these
style targets in the area,” Radonjic said.
“I must admit exploring down in the
South-West does have it challenges –
there’s a lot of permitting to be done – but
the exploration team has done a great
job. We’re very much looking to those re-
sults coming through.”
Venture recently finished drilling at
its Caesar nickel-cobalt project, 200km
Walkabout strides across continents
Walkabout Resources Ltd is becom- have got geologists ground was testament
ing the very definition of junior ex- on the ground now in
ploration diversification after identifying Namibia and will have to executive director
a third battery mineral prospect in a third them on the ground
different jurisdiction. soon in Northern Ire- Allan Mulligan’s strong
Perhaps best known for its Lindi Jumbo industry network.
graphite project in Tanzania, Walkabout Progress in Tan-
can now boast of a diversified battery zania has been slow “It is a new destina-
minerals portfolio having started lithium due to President John
exploration in Namibia and discovered Magafuli’s restructur- tion which is underex-
cobalt potential on newly acquired explo- ing of the mining sec-
ration ground in Northern Ireland. tor but Murrell said plored,” Murrell said.
the company still held
Speaking at Paydirt’s Battery Min- ambitions to be pro- In February, Walka-
erals Conference, Walkabout director ducing and exporting
Thomas Murrell said the company had product next year. bout reported that a
plans to move all three projects forward
in 2018. In Namibia, Walka- data review had con-
bout has identified 90 line-km of pegma-
“The company has had a recent meet- tites and is currently assaying 200 rock firmed the presence
ing with the Tanzanian Government to chip samples.
confirm the Minerals Commission is op- of cobalt-copper-silver
erating and we have certified funding for The acquisition of the Northern Ireland
equipment for our graphite plant through projects may have caught some inves- occurrences of up
the China Export Credit and Insurance tors by surprise but Murrell said the move
Agency, Sinosure,” Murrell said. “We onto the former Lonmin plc-controlled to 0.13%, 1.27% and
Thomas Murrell 50.3 g/t respectively in
quartz veins within the
Slieve Gallion JV with
Koza (UK) Ltd.
The company plans to follow-up with
detailed soil sampling and, potentially, an
aerial TDEM survey over the VMS tar-
gets on the project.
– Dominic Piper
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 39
BATTERY MINERALS CONFERENCE REVIEW
Battery mineral boom
as big as 90s gold
Veteran metallurgical engineer Da- Damian Connelly cessing requirements but Connelly had
mian Connelly expects the nascent warnings for vanadium and graphite pro-
battery minerals boom to be as important pointing to issues regarding mica and ducers.
to Western Australia as the gold boom of water quality.”
the 1990s but anticipates a few casual- “Historically in WA we have not been
ties along the way. The major challenges in lithium pro- good with vanadium plants. You can pro-
cessing come in flotation, which can be duce a vanadium concentrate but does
WA’s gold industry was transformed by an “art form”, according to Connelly. it have too many deleterious elements?
the introduction of carbon-in-precipita- How do you get the vanadium out?
tion processing techniques in the 1990s, “Talison [operator of the Greenbushes How do you get the electrolytes out?
opening up a new generation of gold lithium mine in WA] did brilliant work in The Precious Metals [Australia] plant at
mines and Connelly was quick to draw the early days of Greenbushes to get the Windimurra worked well but the opera-
comparisons to the current emergence flotation working. It is complex and there tions struggled because of the vanadium
of new lithium, graphite, cobalt and nickel are a lot of lever you can play with.” price.”
Other battery minerals such as nickel In graphite, Connelly expects com-
“I have been telling people this boom and cobalt had more conventional pro- panies to encounter issues in meeting
will be bigger and more sustained than specifications of customers.
the gold boom of the 90s,” Connelly said
at Paydirt’s Battery Minerals Confer- “There are demanding specs which
ence. “In the 90s, CIP transformed the will limit the amount of projects which get
gold industry; this will be bigger.” up,” he said.
He said industry, investors and finan- With the current battery mineral boom
ciers had underestimated how quickly now entering its fifth year, there is specu-
the industry would grow but warned not lation about its longevity. Connelly be-
every new battery mineral project would lieves the gestation period of projects
come to fruition. means it has some way to run.
“The metallurgical work for lithium is “You are looking at three to four years
not rocket science but not all projects before projects come on-stream so it will
cut the mustard and some areas of an continue for some time yet.”
orebody can’t be mined,” Connelly said,
– Dominic Piper
Vanadium price flows high
It is as good a time as any to have a high- which is still driving demand – however slag steel, it has to come from new mine
grade vanadium project in a stable min- there is now some overlay coming from production. But, new mine production
ing jurisdiction such as Western Australia. the energy storage space where the va- has to be low-cost because expensive
nadium redox flow battery technology vanadium production is not going to go to
Vanadium prices are currently six has advanced to the point of large-scale anybody, anywhere,” he said.
times higher than at the start of 2016 due commercialisation of the new energy
to a shortage of supply and a lack of new storage application. Algar said Australian Vanadium was
material available on the horizon. pitching to be in the cost range of $US4-
The recent closure of some key mines 6/lb at Gabanintha, which would effec-
Australian Vanadium Ltd hopes to be in South Africa has constrained supply in tively make for a profitable operation
part of that supply story in the future the sector and as demand increases, so given current pricing.
with its Gabanintha project in WA’s Mur- are vanadium prices.
chison. “The ferrovanadium price is at $US62/
However, Australian Vanadium manag- kg, vanadium pentoxide price has moved
Gabanintha hosts a total resource of ing director Vincent Algar said sky-high up to $US14/lb. That is a six time im-
179.6mt @ 0.75% vanadium pentoxide, prices for vanadium were not necessarily provement since 2016 and that has pri-
with a potential open pit operation capa- beneficial for the market in the long run. marily been a result of that very long tail
ble of providing 1 mpta high-grade ore in vanadium prices. That is associated
over 15 years. “Vanadium flow makers and producers with production of steel and cheap steel
and intermediaries are looking at new in the market.”
Outside of China, there are currently production to try and secure a lower price
four vanadium mines in the world – one for the longer term to make their batter- – Mark Andrews
in Brazil, two in South Africa and one in ies, but where do we secure our product
Russia. from for the next 10 years? It has to come
from new production. It can’t come from
Traditionally, vanadium has been used
as an input for steel – a primary market
PAGE 40 APRIL 2018 AUSTRALIA’S PAYDIRT
Spreading through the value chain
It seems with each year, Lithium Austral- energy metal recycling Griffin said SiLeach had
ia NL moves further from being a mining
and exploration company in favour of in- from spent batteries to the potential to change
creasing its tech stock credentials.
produce high-quality the cost-curve for hard-
This year’s Paydirt Battery Minerals
Conference saw managing director Adri- cathode material. rock lithium production.
an Griffin give the clearest indication yet
that his company no longer considered “Lithium Australia is the As well as its interests
itself a miner.
only company with full in SiLeach and other
“The lithium ground the company holds
is just a back-up,” Griffin said. “We want process integration,” Grif- lithium extraction tech-
to develop the technology to get those re-
sources into the value-addition stream.” fin said. nologies such as L-Max
Instead of focusing on developing new Chief among the tech- and LieNA, Lithium Aus-
sources of the battery material, Lithium
Australia is committing its efforts to nology company’s tools tralia is advancing fur-
“rescuing” lithium minerals from waste
streams. is the SiLeach process ther downstream with
“Application of advanced technologies which it controls 100%. Adrian Griffin development of the Very
is the key to a sustainable lithium-ion bat- Small Particle Company
tery future,” Griffin said. “Presently, more An acid extraction
lithium is discharged to waste streams
than gets into the supply chain. Lithi- method, SiLeach can ex- Ltd (VSPC). VSPC owns
um Australia can capture those waste
streams to reduce mining supply pres- tract lithium from all silicates without the an advanced cathode powder production
need for roasting, resulting in a low ener- facility for the production of advanced
The focus then, is on developing tech-
nologies which allow the company to gy footprint and low operating costs. The cathode materials.
“close the loop” by either extracting met-
als from waste material or undertaking company has identified Lepidolite Hill, “Integrating VSPC technology with
near Coolgardie in Western Australia, as SiLeach will create the ability to pro-
a potential feed source and is negotiating cess waste materials and generate new
a number of acquisitions for additional cathodes for the battery industry,” Grif-
lepidolite feed. fin said. “It will create an unprecedented
Griffin said front-end engineering and uplift in value beyond the production of
design for the SiLeach flowsheet would lithium carbonate and advance sustain-
be completed this year with first produc- ability of energy metals.
tion set for 2020. Lithium Australia is “Sustainability is the key to maintaining
eventually targeting 25,000 tpa of lithium development and everyone in the indus-
carbonate equivalent production with a try has a responsibility to ensure the sus-
global search for new feed sources on- tainability of battery minerals.”
going. – Dominic Piper
Infinity’s bull rush in Spain
Infinity Lithium Corporation hopes to be important things about where we are in 15,000 tpa @ 2.1% lithium carbonate
in the construction and commissioning Spain is that we are very close to infra- (years 1-8) could be produced at an av-
phase of its San Jose lithium project in structure. When you are creating lithium erage C1 cost for the first 10 years of
Spain by 2020. carbonate from rocks, you need a lot of $US4,736/t. The long-term lithium car-
gas, people and electricity. This is all bonate price of $US10,000/t was used in
A feasibility study, which will trigger close by. We will be using a material the scoping study as opposed to current
75% ownership of San Jose for Infinity, amount of gas because we use a sul- spot prices of about $US20,000/t.
is on track for the completion by the end phate roast procedure which takes ore
of this year and a mining licence, permit up to 850°C for up to 20 minutes and A capex of $US248 million was esti-
and bank funding organised by next year. then we cool it down and wash it with mated, with leading Spanish construc-
fresh water,” Hale said. tion and engineering company Sacyr,
Giving the company every chance of through its mining subsidiary Valoriza
hitting its stated timeline to low-cost pro- “The proximity to gas has meant we Mineria, to be a 25% contributing devel-
duction is the ideal setting in which San can do this operation on site and we see opment partner at San Jose.
Jose is located, Infinity non-executive di- the benefit of costs associated with that.
rector Humphrey Hale said. If we had the same project in the middle Meanwhile, Infinity has a technology
of nowhere we wouldn’t be able to import alliance with Chinese lithium carbonate
San Jose is proposed to be an open pit the gas or reagents to make the project producer Shandong Ruifu also on its
mine development spanning a mine life worthwhile, so we see the benefits of be- side.
of 16 years, with the processing of lower ing in an area of high-grade infrastruc-
grade materials for a further eight years. ture.” “By the end of this year, we will be
looking for product off-take partners and
A low strip ratio for a large scale bulk Infinity aims to produce 15,000 tpa of strategic partners to help us look at a re-
mining operation for the eventual pro- lithium carbonate, while future produc- finery and to help with the capex associ-
duction of lithium carbonate will require tion of lithium hyrdroxide is in the pipe- ated with the project,” Hale said.
plenty of gas, something which Infinity line, Hale said.
can access on the doorstep of San Jose. – Mark Andrews
According to scoping study estimates,
“We have a large, easily mined re-
source in an open pit. One of the very
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 41
Queensland fires up
Glencore’s decision to acquire copper and zinc, and employing 7,300 be bullish. A rebound in investment in the
majority interests in Rio Tinto people. coal and base metals sectors is being
Ltd’s Hail Creek and Valeria coal seen, with miners in coking coal in partic-
mines, central Queensland, for Commenting to Paydirt on the trans- ular making good profits at the moment.
$US1.7 billion cash brings the action, Queensland Resources Council
State’s standing in the global coal chief executive Ian Macfarlane said: “The “I think there is a general optimism –
sector to the fore. proposed sale highlights the global im- probably past cautious optimism – more
portance of Queensland’s coking coal re- generally about resources in Queens-
Terms of the sale were reached by the serves for steel production and the over- land,” Macfarlane said.
two powerhouse miners last month, with all strength of Queensland’s coal and
Glencore to acquire 82% of the 794mt resources sector. Coking coal is a major “People are looking at more invest-
Hail Creek quality coking and thermal contributor to Queensland’s economy ment opportunities and are looking at ex-
coal mine and 71.2% of the Valeria ther- and a key part of the State’s resources panding mines; three mines opened last
mal coal deposit which has resources of sector. The Queensland resources sec- year and there are more to come.”
762mt. tor now provides one in every $6 in the
Queensland economy, sustains one in The coal sector is expected to go from
Subject to all relevant approvals, the eight Queensland jobs, and supports strength to strength in Queensland and
deal should be completed in the second more than 16,400 business across the Macfarlane expects Adani’s proposed
half of 2018. State, all from 0.1% of Queensland’s land $16.5 billion Carmichael thermal coal
mass.” mine in the Galilee Basin to be part of
Glencore already has a significant the State’s future. When up and running,
presence in Queensland and contrib- Macfarlane said it was important to 10,000 direct and indirect jobs are ex-
uted more than $4.2 billion to the State’s emphasise how valuable the mining in- pected to be created by the mine.
economy in 2017 from operations in coal, dustry was to the people of Queensland
and while the State went backwards, like “My expectation is that it will proceed,”
Western Australia, in the recent Fraser he said.
Institute Survey, there is good reason to
“They need to sign off on their royalty
agreement with the State and I under-
stand Jackie Trad [deputy premier of
PAGE 42 APRIL 2018 AUSTRALIA’S PAYDIRT
New Century is expected to bring the Century zinc mine back into play in Q3
“The State has to look at what the out- Regulation and red tape dragged
comes are going to be – more jobs and Queensland down in the Fraser Institute
more royalties for the State Government 2017 rankings from outside the top 10
– more income for the State Government most fancied mining jurisdictions to 12th,
to spend. So, they need to ensure that according to Macfarlane.
the processes are transparent and pre-
dictable. “Prospectivity was good, in fact it in-
creased, but the amount of time it takes
“The system does not need to be to get a mining permit is too long and that
bogged down with new regulations. At again is dragging us down for attractive-
the moment, we are in discussions with ness against our international competi-
government over labour hire legislation tors,” he said.
concerning contractors and the like and
the Government has to focus on out- Santos and its GLNG partners provid-
comes of these discussions: if the an- ed a boon for the State earlier this year
swer is ‘no’ we need to know the answer by confirming a $900 million investment
is no’. If the answer is ‘yes’ we need to in upstream developments in the Mara-
streamline the process, we are not talk- noa, Western Downs, Central Highlands
ing about cutting corners we just need to and Banana regions, which includes the
get there,” he said. first year of funding for the $750 million
Roma East project to be developed over
Queensland] is engaging with them on the next three years.
that. The State needs to complete the
land transfer process, so the railway line “There has been a number of [encour-
can be handed over, titled and then built. aging] announcements in the gas sector,
Adani then needs to raise its finances as with the most recent being Santos’ and
it is intending for that project to proceed.” generally across the base metals sector
there has been an uptick in exploration.
Adani’s coal mine proposal has been That means people are seeing an oppor-
highly controversial and doubts remain tunity for investment. Copper is strong
on whether funding can be accessed for and we are seeing a 41% uptick in explo-
the project to see the light of day. ration for copper, and nickel and cobalt
are coming off pretty low bases, so gen-
While a funding solution remains a erally confidence is growing,” Macfarlane
mystery for now, Adani has been suc- said.
cessful in garnering both State and Fed-
eral approvals. ABS data for the December 2017
quarter revealed mineral exploration in
From a state perspective, Macfarlane Queensland totalled $64.3 million – a
said the Queensland Government could 27% increase on the same period in
do better to cut the time taken for per- 2016 – while petroleum exploration was
mits to be approved for new mines amid also up 23% to $40.2 million.
a flourishing time in the global resources
sector. – Mark Andrews
“We are seeing mines get up, but we Queensland Resources Council chief
do need to be mindful that as prices executive Ian Macfarlane
move up and confidence improves that
other countries are becoming attractive
too,” Macfarlane said.
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 43
When John Welborn was Mt Wright continues to exceed
appointed managing di- expectations despite being ear-
rector of Resolute Mining Ltd in marked to close during the last year.
mid-2015, the future of the long- “The reality of our Mt Wright un-
standing Ravenswood gold op- derground mine and the sub-level
eration in Queensland was bleak cave that we own and operate there
at best. is we’ve mined a 2.5 g/t orebody to
Welborn was confronted with 900m deep at an average life-of-
depleting reserves at the Mt mine cash cost of around $850/oz,”
Wright underground mine and Welborn said.
no alternative ore sources under “That is a truly remarkable
immediate consideration. achievement. If you put that in a
It was therefore the expecta- feasibility study, people would find
tion of many both inside and it incredulous. Internally we recog-
outside the company that Ra- nise that and perhaps we should
venswood would shut its doors apply for more industry awards in
within two years, leaving Reso- relation to what that team, led by
lute to focus on its African min- Joel Ray, has achieved up there.”
ing assets. Resolute’s strong ties in Queens-
Fast-forward almost three land – in particular its relationships
years and operations at Raven- with the relevant authorities and
swood have returned to the sur- stakeholders – has often enticed
face and the mine has at least 13 the company to consider expanding
years of life ahead of it. its presence in the State.
“It is very pleasing that almost This included Welborn and his
three years later we’re still min- team running their eye over Evolu-
ing Mt Wright,” Welborn told tion Mining Ltd’s Pajingo gold mine,
Paydirt. “It continues to over-de- which was ultimately picked up by
liver and overdraw and we don’t Minjar Gold Pty Ltd in August 2016.
expect to finish mining at Raven- Welborn expects both Resolute
swood for decades to come now. and Ravenswood to remain key
It has been a seriously underrat- members of Queensland’s mining
ed mining operation.” community for many years to come.
Ravenswood churned out Ravenswood remains a key asset for Resolute after “I’ve been really pleased with the
43,215oz at an average head overcoming a threat of closure just a few years ago support we’ve received from the
grade of 1.11 g/t gold for an AISC Queensland Government in relation
of $1,373/oz during the December half. commissioned by the company. to the Ravenswood expansion project
Resolute reported total gold production Recent beneficiation trials have also being a ‘prescribed project’ under their
of 142,748oz at AISC of $1,395/oz for the supported the possible upgrading of low- legislation,” he said.
half-year. grade ores. “I think if you look at high profile [min-
An optimised feasibility study examin- “Like all of our assets, we continue ing] stories coming out of Queensland
ing options for modifying mining sched- to refine and optimise our development they’re usually about Clive Palmer and
ules and tailings strategies in a bid to plan,” Welborn said. “It’s great to have nickel refineries blowing up and environ-
maximise project returns was recently a mine in Australia with a mine life be- mental degradation of the mining indus-
yond 10 years. We exist in Australia try. So, I think Ravenswood is a wonder-
amongst a very well credentialed ful news story, not only for Queensland
peer group of really efficient gold min- mining but for the whole sector to be
ers and I think the Ravenswood gold proud of.
mine, but also the Ravenswood gold “We’ve been operating there for more
belt, still has a lot of life left in it.” than a decade as Resolute and we’ve
The Nolans processing plant managed to hang on to a local workforce
was recently reconfigured to lift its in North Queensland of more than 200
throughput from 1.5 mtpa to 2.8 mtpa people. We support the local town, we
to cater for the new open-pit ore provide fresh water, we fund the swim-
sources, specifically Nolans East, ming pool and we’re now building a new
Sarsfield and Buck Reef West. primary school for the children of Raven-
Resolute is awaiting a key regula- swood as part of our expansion plan.
tory approval to begin open-pit mining “I think it’s a great asset and we contin-
at Buck Reef West by mid-year, with ue to value it very highly within Resolute.”
a further expansion of the milling ca- – Michael Washbourne
John Welborn pacity to 5 mtpa expected to follow.
PAGE 44 APRIL 2018 AUSTRALIA’S PAYDIRT
Red River rides out
Severe weather events have slowed
Red River Resources Ltd’s progress
at its Thalanga base metal operations
near Charters Towers but managing di-
rector Mel Palancian remains confident
the project is on-track.
Red River started concentrate produc-
tion from the refurbished Thalanga plant
in the December quarter. Operations
ramped up quickly with 6,400t of zinc
concentrate produced in the December
However, when storms lashed cen-
tral Queensland between January and
March, Thalanga found both power and
site access cut off for varying periods.
The delays resulted in material losses
to production with the mine closing com- As a drive in/drive out site, Thalanga was severely impacted by the
pletely for six days in March while roads recent weather-related road closures around Charters Towers
into site were flooded.
“Cumulatively between January and satisfied with progress, notwithstanding there ready to take the product.
February we lost material time, mainly the weather events. “We are not giving guidance yet – and
due to power outages,” Palancian told “Before that [the weather events] the I’m quietly glad we didn’t given what
Paydirt. “It didn’t affect the mill because operation had been performing really happened – but exceeding what we pro-
we have excess capacity, rather it was well,” he said. “In the December quarter duced in the December quarter is the
the underground where we lost a fair bit we produced 6,400t of zinc concentrate, next target in front of us.”
of productivity owing to the fact we have generating $6 million of cash. That is a Realising that feat will be made easi-
to get everyone out, reset all the switch- great first quarter of production. We were er by the introduction of a second ore
es, reset the fans, etc. Then, in early looking at the same for the March quar- source.
March we had a lot of rain which closed ter but because of the interruptions we “Far West, our proposed second mine,
roads in the area and because we are a clearly won’t meet that target now.” will start development in a matter of
drive in/drive out operation that lost us The company has declined to set months so we can feed the mill from two
six days.” monthly or quarterly forecasts but Palan- sources. Then, we have two rigs on Wa-
The setbacks were particularly frus- cian said the operation had now returned terloo in an effort to produce a maiden
trating for Red River given its refurbish- to “steady-state” levels. reserve there.”
ment job at Thalanga appeared to be “I’m never happy and I’m always push- Far West was subject to extensive
charting well. ing for more tonnes through the plant drilling in the 1990s and Red River has
The company spent $17.1 million on but we are back on our trajectory,” he followed up with 15,700m of its own infill
restarting the plant, having acquired the said. “The mining is good, the orebody drilling to build a reserve of 1.5mt @ 12%
asset from embattled former owner Ka- is good, the metallurgy is good and we zinc equivalent.
gara for $6.5 million. have customers [Glencore and Trafigura] Mining is scheduled to start in the sec-
Red River’s plan is to have the ond half of 2018 using the same
650,000 tpa processing plant method as West 45, 20m sublev-
running at 400-450,000 tpa, pro- els and bench stoping.
ducing 21,000 tpa zinc, 3,600 tpa Red River hopes Waterloo will
copper, 5,000 tpa lead, 365,000 come up behind West 45 with in-
ozpa silver and 2,000 ozpa gold fill and extensional drilling set to
over an initial 5.25 years. start in and around the 700,000t
Mining has started at the West @ 19.1% zinc equivalent re-
45 orebody – reserve of 567,000t source.
@ 15.45% zinc equivalent – with Finding extensions to known
the Far West orebody – resource orebodies is encouraging but
of 1.645mt @ 1.7% copper, 2% Palancian is taking most satis-
lead, 6% zinc, 0.2 g/t gold and 53 faction from the company’s ear-
g/t silver – set to be opened up lier stage exploration work.
later this year. The 650,000 tpa Thalanga processing plant is running well, “We have five drill rigs right
although not at full capacity now drilling not only the existing
Palancian declared himself
PAGE 46 APRIL 2018 AUSTRALIA’S PAYDIRT
deposits but some new targets crop, no surface soils, you have
as well,” he said.
to do geophysics and then stick
Thalanga and the entire Char-
ters Towers region have a long a hole into it.
history of exploration and mining
but Palancian believes Red Riv- “This is a high quality belt with
er is in a better position than pre-
vious miners to take advantage a history of both large and high-
of the region’s prospectivity.
grade resources, it has just been
“For the first time, we have
consolidated the Mt Windsor forgotten about.”
Volcanics,” he said. “There is no
other base metals concentrator Red River is spending $4 mil-
for miles. So, for us it is natu-
ral to get our hands on the best lion a year on exploration with
ground. We have already found
orebodies and I’m confident we Thalanga’s production perfor-
can find more.
mance meaning the company’s
“The use of modern geophys-
ics has been integral to opening search efforts are now self-fund-
up new opportunities. We have
a cover formation which is very ed.
conductive and essentially stopped ex-
ploration in the 90s. Today’s geophysics The company also has $13
can see through it, it has proven to be
successful and is a key tool for us.” million in the bank, meaning it
The use of geophysics was integral can withstand the jolt its share
to the discovery of the Liontown East
deposit in late 2016. Latest drilling re- price received following the lost
sults reported on March 7 included hits
of 18.15 @ 8.8% zinc equivalent from production and easing of zinc
517m down-hole and 23m @ 8.25% zinc
equivalent from 219m down-hole. Earlier sentiment.
Red River has been happy with progress underground Palancian expects the share
at the West 45 mine price to rebound – it hit 40c in
February before falling to 28.5c
hits included 15.6m @ 15.8%, 6.9m @ at the time of print – as the company hits
12.8%, 7.5m @ 16%, 18.1m @ 11.5% its production straps.
and 26m @ 10.3% (all zinc equivalent) “We have got a wonderful bunch of
as well as 7.7m @ 1.2% copper. supportive shareholders,” he said. “The
Palancian said Red River was now price has been impacted by a slight re-
working on a maiden resource for Lion- traction in zinc and the general global
town East. uncertainty. But I think that simply makes
“We are really happy with the geophys- for a good buying opportunity.”
ics because Liontown East was entirely – Dominic Piper
under cover. There are no other ways of
interpreting the orebodies; there’s no out-
Metal banks on gold
As blue skies start to appear in Aus- within 3m @ 25 g/t struck from surface at “We will evaluate the data and make a
tralia’s mining sector, most juniors Advance. These things have never been decision on whether to announce a re-
are increasingly busy. drilled before and the results are proof source or persevere because we know
that a lot of gold has been left behind.” we will be able to expand the resource.”
However, Metal Bank Ltd in South East
Queensland is not one of the companies The Advance prospect is comprised of Having raised money last year, Metal
just arriving to the party. Instead, the more than seven historical mines, with Bank is well funded to carry out explora-
copper and gold hopeful has been par- Metal Bank receiving encouraging re- tion activities with about $5 million in the
ticularly active throughout the market’s sults from shallow drilling to a depth of bank.
bleak period. 38m.
While a wait-and-see approach will be
The company’s commitment to explo- Shreck said in light of intersecting taken on the announcement of the maid-
ration during lean times could soon pay stopes and historical workings at Ad- en resource from Triumph, Metal Bank
off with a maiden resource from the Tri- vance, the company had been able to has a large airborne geophysical survey
umph gold project in the pipeline. complete mapping and conduct follow up planned at Eidsvold gold project, which
drilling. is in between Evolution Mining Ltd’s Cra-
At the time of print, the company was cow and Mt Rawdon mines.
rounding out a 6,500m RC drilling pro- “We can now drill deeper to about
gramme primarily targeting near-surface, 100m. The deepest mine was about “We are the first movers at that pro-
high-grade prospects – Bald Hill West 100m vertical so we can go beneath ject and we will be the first ones to see
(15m @ 10.3 g/t gold from 9m); Advance that,” he said. if there is Tier 1 potential there or not,”
(3m @ 25 g/t from 17m); Super Hans Shreck said.
(22m @ 1.1 g/t from 12m) and New Con- “We are tracking towards a resource,
stitution (10m @ 26.9 g/t from 51m). when all the drilling results are in we will Shreck said Metal Bank had fostered
have a look at it. All the mineralisation good relationships with all of the mid-tier
“We have had a tremendous cou- is open, and in parallel with the RC pro- and major gold producers on Australia’s
ple of years and 2017 was one of our gramme we are undertaking a bedrock East Coast and was certain they were
best,” Metal Bank managing director Ton programme to open up a new wave of watching on with interest.
Shreck told Paydirt. targets. In total, 95% of the project is un-
der cover and our focus has largely been – Mark Andrews
“The last two months have been par- on the outcropping.
ticularly good also with 1m @ 69 g/t gold
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 47
Worth the wait for Diatreme
It has been a long time com- ties that are 100% focused
ing, but the first metallurgi-
cal test work results from the on silica sands, but we like
Cape Bedford silica sands
project appear to have justi- what we see. It’s a very lucra-
fied Diatreme Resources Ltd’s
persistence with the North tive market, very much linked
to expansion in the hi-tech
An exploration permit for
Cape Bedford, 200km north of sectors, urbanisation and
Cairns, was granted last Sep-
tember, more than three years growth.
after Diatreme acquired the
rights to a tenement abutting “The level of purity within
the world’s largest silica mine
at Cape Flattery. the silica we’re talking about
Having finally been granted is used in the manufactur-
access, Diatreme collected six
bulk samples, totalling about ing of things like car wind-
600kg, which were wet ta-
bled to simulate conventional screens, TFT glass for your
washing and gravity separa-
tion typical of silica sand pro- smartphones and electron-
ics. It is a fast-growing mar-
The resulting recovery of circa 80% of
a primary silica sand product, ranging ket.”
from 99.6-99.9% silicon dioxide and less
than 0.02% iron oxide, easily met specifi- Encouraging news flow
cations for glass-grade silica sand.
from Cape Bedford has pro-
“The results were very encouraging
because they showed us there is really vided Diatreme sharehold-
high purity silica sand in-situ and within
the deposits,” Diatreme chief executive ers with further reason to be
Neil McIntyre told Paydirt.
excited about 2018 as the
“From a mining perspective, it’s a very
straight-forward process with minimal Diatreme has been encouraged by initial test work results company approaches key
effort to produce a high-value product. from Cape Bedford milestones at its flagship Cy-
And, it has very low impurities, which is clone zircon project in West-
what you look for within a silica deposit.”
whole of that northern region was locked ern Australia’s Eucla Basin.
Diatreme will conduct an infill pro-
gramme – using its own drill rig – at Cape up for quite some time, so we had to take A DFS will be completed on Cyclone
Bedford over the next few months in a bid
to delineate a resource for the project. a softly, softly approach,” McIntyre said. next quarter and the company is believed
Further specialised test work will also “We very carefully negotiated conduct- to be close to finalising offtake and devel-
be carried out to determine what else
may be required to upgrade the silica and-compensation and cultural heritage opment finance on the back of growing
sand from Cape Bedford to the highest
quality product possible. agreements with the Traditional Owners popularity in China.
McIntyre said the initial exploration and built up some ground-level support “Ultimately we’re building to the final
and test work results had validated the
company’s patience with Queensland for what we were about to do within the ‘go’ decision,” McIntyre said.
regulatory authorities and the Traditional
Owners, the Hopevale Congress. concession area. We enjoy a really good “What we’re looking for from the DFS
Diatreme executed a conduct-and- relationship with the Traditional Owners is not so much confirming the econom-
compensation agreement in January
2017 and a cultural heritage agreement and we wanted to progressively work ics – we know the economics are very
last June with the Hopevale Congress,
paving the way for exploration work to through the logical steps of getting a min- sound – but really looking to drive down
begin last September.
ing business established up there. the capex model. We’re looking at es-
“We understood inherently that it was
an incredibly valuable tenement, but the “We didn’t want to rush that at the risk sentially a Chinese capital equipment
of prejudicing relationships, we want to procurement hub to try and drive down
make sure those relationships are rock our capex costs, but that will also flow on
solid.” to our economics and it will make them
Silica sand has grown as an industry even more robust.
at nearly 8.7% annually since 2009 and “Concurrently with that we’re engaging
boasts current global market value of off-takers and potential equity partici-
$US6.3 billion. IMARC Group estimates pants in the project. We see this project
demand for silica sand – typically used in getting under way in the very near future.
glass-making, foundry casting and water This year could be absolutely transfor-
fibration – will grow at 7.2% annually over mational for the company.”
the next five years and hit nearly $US10 McIntyre said the company was likely
billion market value by 2022. to undertake some form of capital rais-
McIntyre said local investors were ing this quarter to fund upcoming work at
yet to recognise the growth opportunity both Cyclone and Cape Bedford.
in the global silica sand industry for an Diatreme continues to examine devel-
Australian-based operation. opment options for its Tick Hill gold pro-
“It’s a relatively opaque market and it’s ject in Queensland, however, McIntyre
hard to get behind, principally because acknowledged the company’s growing
most of the existing or larger companies focus on heavy minerals could lead to
and players involved in the silica market the sale or spin-out of the metalliferous
are privately held, particularly by large assets in its portfolio.
trading houses in Japan and elsewhere,” – Michael Washbourne
“There’s literally no ASX-listed enti-
PAGE 48 APRIL 2018 AUSTRALIA’S PAYDIRT
GBM cool on early cash flow
GBM Resources Ltd is set to join Evo- GBM plans to resume mining of the historic Glen Eva pit early next year
lution Mining Ltd and Resolute Min-
ing Ltd as a Queensland gold producer the project forward we had to look at the Coolon Hotel to accommodate its ex-
later this year.
opportunity to acquire Twin Hills. pected workforce of about 30 people.
At the time of print, GBM was finalis-
ing an ore purchase agreement with “Because of its grade and distance, Thompson remains confident of secur-
Minjar Gold Pty Ltd to process material
mined from its Mt Coolon project via the Twin Hills is a stranded asset for Pajingo, ing funding for a small CIL plant at Mt
Chinese-backed company’s Pajingo op-
eration. but for Mt Coolon it essentially doubles Coolon within the next 12 months.
GBM was also finalising a separate the resource from a production point of “It will only be a small plant of 300,000
heads of agreement with Minjar to ac-
quire the nearby Twin Hills project which view. We’ve essentially now got four sat- tpa, but it certainly adds value to our cur-
will not only double the size of its re-
source base but potentially underwrite ellite feed sources and that reduces our rent resources,” he said.
the planned development of Mt Coolon,
about 250km west of Mackay. development risk significantly.” “The plant is a staged approach. We
Mining of the Koala Central pit is GBM will fork out $1.5 million on a de- have a tailings dump there, so our aim is
scheduled for the September quarter,
with GBM looking to secure environmen- ferred settlement basis plus 50 million or- to build the leaching side of the plant and
tal approval and finalise amendments to
the proposed plan of operations by the dinary fully paid shares to Minjar for Twin put through the tailings and then bolt on
end of this month.
Hills, which hosts a non-JORC compliant to the crushing and grinding.
GBM has only drawn up scoping-level
economics for Mt Coolon, but managing inferred resource nearing 400,000oz. “It will be modularised so it can be ex-
director Peter Thompson said partnering
with Minjar presented an irrefutable case Initial tenders have been floated with panded. Our strategy is build a 1 moz re-
for project development.
potential mining contractors, while the source and look to produce somewhere
“We would prefer to get the $30 million
funding and start it in its full production, company is in discussions with the Mt around that magical 80,000-100,000
but we believe the staged start-up reduc-
es risk and reduces the funding require- ozpa, which puts you on the high side
ment,” Thompson told Paydirt.
of a small producer in Australia.”
“I think in this market, with our market
cap, it’s probably more achievable than GBM listed on the ASX in 2007 on
trying to get the big funding up-front.”
the back of some Victorian gold op-
GBM is undertaking groundwater
studies to support mining below the portunities, but within a year the com-
water table, as well as the transfer of
water, to the Glen Eva and Koala North pany turned its focus to IOCG explora-
pits earmarked for first production ear-
ly next year. tion projects in the Mt Isa/ Cloncurry
Cash flow from production at Koala region and has remained present in
Central will underpin GBM’s plans to
fully redevelop all three deposits at Queensland ever since.
Mt Coolon with a CIL plant and heap
leach processing on site. Mt Coolon was acquired from Drum-
A scoping study was completed mond Gold (now DGO Gold Ltd) in
on Mt Coolon late last year which
supported life-of-mine production of April 2015.
155,000oz, generating pre-tax cash
flow of $60.5 million over the first 5.5 “We’ve found the government bod-
years of mine life.
ies to be quite supportive and helpful
Pre-production capital was esti-
mated at $25.2 million, along with C1 to get things going and we’re look-
costs of $909/oz and AISC of $1,020/
oz. ing forward to joining those exist-
“While Mt Coolon as a project is ing Queensland gold producers very
small-scale, it is profitable,” Thompson
said. “It will make $1 million a month, shortly,” Thompson said.
which is significant for us, but to move
“Certainly the main province we are
now in – the Drummond Basin – has
plenty of past production history and
current resources of over 7 moz, so we
Cash flow from the production of Koala Central think it’s a good pedigree to be in.”
will underpin GBM’s strategy to redevelop the – Michael Washbourne
entire Mt Coolon project
AUSTRALIA’S PAYDIRT APRIL 2018 PAGE 49
Altona conquers its mountain
Altona Mining Ltd’s pro- going to have a mine life of 30-
posed merger with TSX- plus years, easy.”
listed Copper Mountain Mining According to an updated
Corp has been approved by DFS released last August,
their respective shareholdings. Cloncurry is forecast to pro-
Copper Mountain is expect- duce 39,000 tpa copper and
ed to acquire all of the issued 17,200 ozpa gold over a mini-
shares in Altona and begin mum of 14 years.
trading on the ASX later this Construction of a 7 mtpa con-
month, with the dual-listed en- ventional flotation plant attract-
tity likely to have a market cap ed an estimated capex of $288
around $300 million. million. Other revised econom-
The merger paves the way ics from the study included pre-
for the long-awaited develop- tax cash flow of $1.48 billion, a
ment of Altona’s Cloncurry pre-tax NPV of $462 million
copper project in Queensland. (based on a $US2.95/lb copper
At the time of print, Copper Altona is merging with Copper Mountain to form a dual-listed price and $US1,250/oz gold
Mountain was undertaking a 80,000 tpa copper producer, pending development of the Cloncurry price) and life-of-mine average
review of the project econom- project in Queensland cash costs of $US1.65/lb cop-
ics for its NI43-101 report. per in concentrate.
Copper Mountain is the operator of a on the phone to Cowden to reactivate Copper Mountain’s revision of the
12-14 mtpa open-pit copper mine in Brit- discussions about a potential merger. project economics is expected to prefer
ish Columbia. Should a mine at Clon- Altona and Copper Mountain had in- more electronic-based equipment, plus
curry be developed, the combined entity ternally floated the idea of joining forces the introduction of an owner-operator
will become a top four ASX-listed copper prior to the former siding with SRIG in mining fleet rather than the contractor
producer churning out almost 80,000 tpa mid-2015. model proposed by Altona.
across two jurisdictions. “We still went through the whole pro- An emerging new cluster of copper-
Altona managing director Alistair cess again, but I was always inclined to gold discoveries around Cloncurry – all
Cowden said the merger was attrac- this deal,” Cowden said. within 30km of the main Little Eva de-
tive because it exposed his company’s “No other deal offered our sharehold- posit – has further validated the merger,
shareholders to an immediate production ers better exposure to copper produc- according to Cowden.
profile. tion. This is a very large scale, leveraged Recent promising drill intercepts in-
“We go from being a problem to a solu- copper play in a rising copper market. I’m cluded 32m @ 1.48% copper and 0.98
tion that is very positive and terribly logi- more than happy with this deal because g/t gold from surface at Companion, 74m
cal,” Cowden told Paydirt. some of the issues we might have had @ 0.53% copper and 0.23 g/t gold from
“There’s not many copper producers in with China and doing things differently I surface at Veiled and 13m @ 0.61% cop-
the Australian marketplace, maybe half a don’t think will happen now. per and 4.6 g/t gold from 29m (including
dozen, and this will be one of the best “It’s a very big mine they’ve got over 2m @ 23.6 g/t gold) at Quamby.
and probably the cheapest, in terms of there in Canada and their exploration “One of the reasons I was interested
production over market cap, once it gets results are just outstanding. I think it’s in this whole area when we acquired it
there. I think it’s quite compel- in 2009 was that Dugald River
ling for our shareholders. is a world-class zinc mine and
“The other thing is our next to it is this bucketload of
shareholders are now ex- copper deposits which we’ve
posed to the TSX, which is a subsequently more than dou-
much bigger mining market bled in size,” Cowden said.
than the ASX.” “It’s a mini Mt Isa. We’ve
Altona’s merger with Cop- identified copper anomalism
per Mountain comes less over something like 50km.
than nine months after a deal We’ve got an abundance of
with China’s Sichuan Railway drill targets, we’ve got an
Investment Group (SRIG) to abundance of ore grade hits,
fund Cloncurry’s develop- we’ve already got nine depos-
ment collapsed after more its and there is the possibil-
than two years of negotia- ity we might even generate a
tions. second mining centre of out
Within days of Altona an- this. This will be going in 30-
nouncing the end of deal- 40 years time.”
ings with the prolific Chinese Recent drilling results have both Altona and Copper Mountain – Michael Washbourne
group, Copper Mountain
president Jim O’Rourke was excited over Cloncurry’s exploration potential
PAGE 50 APRIL 2018 AUSTRALIA’S PAYDIRT