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Challenger ready:
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CONTENTS
PAYDIRT (ISSN 1445-3436) 8 NEWS
Published by
Paydirt Media Pty Ltd. With some of Australia’s largest gold
A.C.N. 063 985 133 miners beginning to increase their hedge
Head Office: books, could miners in other commodities
Suite 9, 1297 Hay St, West Perth also benefit from laying off some produc-
Western Australia 6005 tion? Dominic Piper spoke to Sean Russo
P.O. Box 1589, West Perth of Noah’s Rule about opportunities in the
Western Australia 6872 hedging market
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426
[email protected] 19 COVER
www.paydirt.com.au Once a shining light in the Australian gold
scene, the Challenger gold mine was 19
placed on care-and-maintenance last
Editorial: month. However, with new ownership
Editor: Dominic Piper under a combination of WPG Resources
Deputy editor: Mark Andrews and PYBAR, the South Australian mine
Journalist: Michael Washbourne could be set for a rapid resurrection. Mark
Graphics: Marian Noonan Andrews spoke with WPG chairman Bob
Contributors:
Keith Goode (Sydney), Brendan Ryan Duffin about plans for Challenger’s revival
(Johannesburg), Ross Louthean SAREIC PREVIEW
Advertising: 26
Advertising manager: Tony Mwarey The South Australian Resources and En-
Subscriptions: Mitchelle Matambo ergy Investment Conference returns to the
Phone: (+61 8) 9321 0355 Hilton Hotel Adelaide on April 20. Ahead
Facsimile: (+61 8) 9321 0426 of the conference, we look at the state-of-
play in SA and find that despite the current
Pre-press and printing: difficulties in attracting exploration funding,
Vanguard Press 26 John St, a number of innovative juniors are finding
Northbridge WA 6003
Member of: pathways forward
40 POTASH/PHOSPHATE
Potash and phosphate have largely
avoided the price pressures brought about
by the end of China’s “stronger-for-longer” 26
Paydirt Media growth pattern and as a result have at-
Executive chairman: Bill Repard tracted a number of ASX-listed juniors to
Finance manager: Giovanny Jefferson
Accounts/administration: assets. Paydirt casts its eye over the lead-
Heather Melling ing proponents
Conferences: Tammy Caldwell,
Melita Fogarty 46 QUEENSLAND
With coal in the doldrums and the Century
zinc mine in closure mode, Queensland’s
resources sector is at its lowest ebb in
a generation. There are, however, still
stories emerging and Paydirt has hunted
down the best, including Evolution Mining,
Stavely Minerals and Diatreme Resources
Cover image: WPG Resources chair-
man Bob Duffin is all smiles after his
company’s acquisition of the Chal-
lenger gold mine South Australia
Member of:
Australia-Africa Minerals & Energy Group
Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be
reproduced in any form without the consent of 40
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
parties
EDITORIAL
Runners and riders still
hopeful in graphite
his edition of Paydirt hits newsstands est, or highest grade, resource as it does in more traditional
Tat the height of UK horseracing’s na- commodity groups. Rather graphite miners, like other industrial
tional hunt season with the Chelten- minerals miners, will see success defined as much by their abil-
ham Festival just completed and the ity to market their product to customers as they will their ability
Grand National just days away. to build a robust mining project.
National hunt racing – hurdles and Like horseracing, not every company can be a winner in
steeplechases in which horses jump graphite but as with steeplechase horses there are strong re-
over obstacles – is much more popu- turns to be made given the speculative nature of the investment.
lar in Britain than Australia where animal welfare concerns have Graphite demand and prices may never reach the heights
seen the sport pushed out of the mainstream. needed to make every project desirable but at least a handful
Bookmakers take more bets on the Grand National than any of this new generation of Australian graphite hopefuls will guide
other event during the year – it is the closest Britain has to the their horses to the production line.
Melbourne Cup – with odds often generous because even the It will take not only a good horse (project), but a good jockey
favourites are no guarantee of making it to the finishing post. (management), good tactics (marketing) and a good run (graph-
My mind turned to the Grand National during Paydirt’s first ite demand) to hit that finishing post first.
Australian Graphite Conference, held in Perth last month (see
page 5). Not an election issue, thankfully
More than 150 delegates attended a full one-day programme The start of the Australian Federal election campaign is upon
with presentations from 12 graphite companies, one lithium us and unlike previous campaigns, the resources industry ap-
company and a variety of expert commentators. pears to be off the agenda.
The conference felt, in many ways, similar to the first Paydirt What a relief.
Uranium Conference, held in Adelaide in 2007. There may be many advantages to being a high profile indus-
Then, as now with graphite, there was a flowering of interest try and it is understandable why a sector such as resources be-
in uranium among ASX-listed juniors as speculation about fu- comes a political football during the boom times. However, now
ture demand fuelled positive price forecasts. And, just as many that some of the air has gone out of the ball, it will be hopefully
of the uranium companies at that first conference have failed left in the corner to reinflate. I’m sure after the headline-making
to make it to production or moved into other commodities, it is last decade, many shareholders will be happy to see their com-
unlikely every runner on the programme for the first Australian panies out of the political spotlight.
Graphite Conference will clear the final fence and make it to the When it comes to the Federal arena, politicians talking about
finishing post of graphite production. resources can only spell trouble. As mining is governed at the
I am not about to suggest which of the runners will make it, state level, the Federal Government’s only jurisdiction over the
my fortunes at the track are enough to assuage tips of any form. sector is through either tax regime (as evidenced by the MRRT)
What became apparent, however, is that in resources – and par- or environmental legislation, both debates the industry doesn’t
ticularly industrial minerals such as graphite – the favourites are particularly want to flare up.
not always there at the end. So, what is on the sector’s wish-list from Federal Govern-
In this regard, graphite has already had a high profile fall at ment? Ideally, the exploration development incentive – the Gov-
an early fence. In March, Triton Minerals Ltd entered voluntary ernment’s truncated flow-through share scheme – would be ex-
administration. Triton lays claim to the largest graphite-vanadi- panded but I remain doubtful.
um resource in the world at Balama North in Mozambique but Since assuming the prime ministership, Malcolm Turnbull has
despite the size of the asset, the company came unstuck even steered clear of discussing support for the resources sector,
before it had truly hit development. choosing instead to focus on “innovation” (maybe he should be
Similarly, Valence Industries Ltd has closed its Uley graphite looking to lithium and graphite then).
mine in South Australia less than 12 months after opening it due Speaking to Leigh Sales on ABC’s 7.30 last month, Turnbull
to processing problems and a lack of marketing contracts. mentioned a whole raft of business incentives his Government
However, neither of these high-profile cases appeared to had launched but did not specifically mention the exploration
douse enthusiasm at the conference. Paydirt was delighted development incentive.
with both the turnout and the sentiment throughout the day. Supporting exploration may not fit in with Turnbull’s carefully
Most presenters were measured in their outlook for the sector crafted public image of innovative thinker so the sector should
and admitted it would only be through good planning, high qual- keep a close eye on whether the Prime Minister will remain com-
ity management and a bit of luck that their companies would mitted to the scheme.
reach production.
Patersons Securities’ Jason Chesters is perhaps the best-
versed analyst on graphite in Australia and his keynote address
gave hope as well as caution. He said while the Triton and Va-
lence failures had given investors pause, good quality projects
would continue to attract investor attention.
It was generally agreed that “good quality” did not mean larg-
[email protected] @DominicPiper
PAGE 4 APRIL 2016 AUSTRALIA’S PAYDIRT
NEWS
First graphite event energises sector
ustralia’s graphite players with Japanese group Sojitz
Aremain confident the indus- Corporation is also crucial.
try is still in good shape despite “Germany, Japan and Ko-
recent high profile failures. rea are leaders in battery
At times, graphite develop- technology and having part-
ers have struggled to convince ners in these markets puts us
Australian investors the market in the best position to access
is more than a flash-in-the-pan them,” Spinks said.
and the recent travails of Tri- Dr John Parker – whose
ton Minerals Ltd and Valence Lincoln Minerals Ltd is this
Industries Ltd have done little month set to receive a mining
to correct that trend. However, lease for its Kookaburra Gully
faced with a large turnout at the project in South Australia –
inaugural Australian Graphite said the recent failures in the
Conference on March 22, ASX- sector had not distracted his
listed graphite developers de- company.
livered an upbeat, if tempered, More than 150 delegates attended the first ever “We have been in graphite
tone. Australian Graphite Conference in Perth last month and we have been through the
Patersons Securities re- highs and lows of the industry
source analyst Jason Chesters set the “Graphite projects require a slightly dif- but Kookaburra Gully remains our prime
mood for the one-day conference, telling ferent approach to advancing a project focus as it is a world-class asset,” Parker
the audience the recent corporate failure compared to other non-industrial mineral said.
of Triton – which appointed administra- projects. Additional considerations, skills China’s dominance of world graphite
tors in early March – had caused con- and market intelligence are required to and lithium-ion battery production hangs
cern among investors already struggling be successful, particularly as investor over western world producer ambitions
to understand the graphite sector. interest and understanding in the sector but Metals of Africa Ltd managing direc-
“The recent project and corporate fail- is low.” tor Cherie Leeden believes US and Euro-
ures in the graphite sector have given Without trading platforms graphite pro- pean policies may play a role in reversing
investors pause as the market comes to jects, like those in other industrial miner- that.
better understand the added complex- als, require a willing buyer to commer- “Policy is important,” she told the con-
ity and additional attributes required in cialise the opportunity. ference. “Increasingly, companies have
a good graphite pro- to prove their prod-
ject,” Chesters said. uct’s journey from
However, Chesters’ Graphite projects require a slightly the moment it comes
outlook was not en- “ different approach to advancing a out of the ground and
tirely bleak. they can’t do that out
“Raising capital will project compared to other non-industrial of China. That is why
be challenging but mineral projects. Additional considerations, we are proposing a
good quality projects spherical graphite fa-
will attract investor at- skills and market intelligence are required to cility in the US.”
tention,” he said. Talga Resources
ASX-listed juniors be successful, particularly as investor interest Ltd’s Mark Thomp-
have become increas- and understanding in the sector is low. son also identified his
ingly attracted to the company’s location
graphite space in re- in Sweden as a com-
cent years thanks to price projections “There is just one real question; ‘Can petitive advantage with regards policy
linked to its use in rising industries such you sell what you produce?’” Chesters settings.
as lithium-ion batteries. But, the lack of said. “Can your project produce a range “There is concern among the top
trading platforms and the myriad prod- of graphite products to a required specifi- battery-making companies about things
ucts and applications for the carbon cation and sell these to long-term quality like conflict minerals and carbon dioxide
material means accurately predicting customers for a reasonable market price emissions,” Thompson said. “So, being
prices and future demand is increasingly while simultaneously keeping costs low- in Sweden means low emissions be-
fraught. er than those of most competitors?” cause we can use hydropower and your
It also means projects cannot be Among those companies to have product chain will carry that advantage
judged solely on the traditional metrics heeded such warnings is Kibaran Re- all the way through.”
of tonnes and grade. Chesters pointed to sources Ltd. Kibaran managing director
the importance of flake size distribution, Andrew Spinks told the conference the – Dominic Piper
product purity, location, infrastructure company’s two binding off-take agree- Look out for full coverage of the inau-
and timeframe to production for graphite ments with European groups had been gural Australian Graphite Conference in
developments but placed strong market- critical to its plans for development of its the May edition of Paydirt
ing above all other considerations. Epanko project in Tanzania, while a MoU
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 5
NEWS
Walsh exits Rio Tinto
after 25 years
fter almost seven years as a direc- “Jean-Sébastien is a very experienced
Ator on the Rio Tinto plc board, Sam executive with a demonstrated track re-
Walsh will retire from the business on cord and brings a unique blend of strate-
July 1. gic and operational expertise. He has run
Walsh has served as chief executive complex operations and projects across
for the past three years and has been five commodities and five continents. J-S
credited with saving the company $6 bil- is a highly-regarded leader who shares
lion in costs, while returning more than Rio Tinto’s strong values and has em-
$13 billion to shareholders. braced its culture,” Rio Tinto chairman
The Australian’s successor will be Jan du Plessis said.
copper and coal chief executive Jean- Upon starting as chief executive on
Sébastien Jacques. July 2, Jacques will receive a base sal-
Jacques has been on Rio Tinto’s ex- ary of £1.08 million, with a target annual
ecutive committee for more than three opportunity at 120% of base salary.
years and during that time he has helped In the interim, Chris Salisbury has
deliver a step-change in safety and cash been appointed acting chief executive of
performance, while reducing costs. the copper and coal product group and
Before his tenure with Rio Tinto, Sam Walsh will attend the Rio Tinto executive com-
Jacques worked across Europe, South mittee in this capacity. The rest of the ex-
East Asia, India and the US for more than bauxite and steel industries. From 2007 ecutive team remains unchanged.
15 years in a variety of operational and to 2011, Jacques was group strategy di-
functional positions in the aluminium, rector at Tata Steel Group.
AUSTRALIAN
GRAPHITE
22 March 2016 - Novotel Perth Langley
The CD-Rom of the 2016
Australian Graphite Conference
is now available
CD-Rom – $30 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]
PAGE 6 APRIL 2016 AUSTRALIA’S PAYDIRT
BUSH TELEGRAPH
The coal merry-go-round
in South Africa
he Waterberg (water moun- “coal supply cliff” – which was
Ttains in Afrikaans) is where due to kick in from about 2018.
the future of coal mining in Reason I have been harping
South Africa lies because it on it is because of the investor-
contains most of the country’s unfriendly attitude taken by the
remaining coal resources, but South African Government in
it’s proving a tough nut to crack general – and Eskom in particu-
as two ASX-listed juniors have lar – against the country’s coal
found out the hard way. majors.
Resource Generation Ltd That has resulted – so far – in
(Resgen) and the Waterberg BHP Billiton Ltd getting out of
Coal Company Ltd (WCC) South Africa while Anglo Ameri-
have battled for years to get can plc is in the process of sell-
their respective projects – the ing its coal business and the re-
proposed Boikarabelo and percussions on future business
Waterberg Coal mines – off the of Eskom’s bust-up with Glen-
ground. core over the Optimum Colliery
Both hit the wall in recent Exxaro has been one of the few coal companies to have yet to be seen.
months. Resgen chief execu- operate successfully in the Waterberg Eskom’s response is interest-
tive Paul Jury was booted out ing. According to chief executive
along with chairman Brian Warner in No- It will be extremely difficult for a new- Brian Molefe: “There is no coal supply
vember after a bitter feud with the com- comer to go the route that many coal cliff – it’s a thing of the past”. That claim
pany’s strategic shareholders – Altius juniors have used successfully in the stands in total contrast to lobbying from
and Noble. traditional coalfields around Emalahleni Eskom executives over the past few
WCC chief executive Stephen Miller which is to start small, make some profits years for government to declare coal a
resigned on March 10 as part of a major and then ramp up. “strategic mineral” and put controls on
restructuring exercise which will – hope- The only company to crack the Water- exports because of fears that the South
fully – see the company recapitalised. berg so far is Exxaro Resources plc African coal companies would export to
Miller’s departure followed the break- which went in there in the 1970s when India coal that Eskom needs to power do-
down of discussions with South African it was part of the then state-owned Iscor mestic stations.
gold major Sibanye Gold Ltd, which (Iron and Steel Corporation) which, of Since he took over at Eskom last year,
is keen on establishing an independ- course, had extremely deep pockets in Molefe has also repeatedly stressed the
ent power producer (IPP) project in the the form of the country’s taxpayers. utility’s success in stopping load-shed-
Waterberg to supply the power required Exxaro is now one of South Africa’s ding and he’s right. Eskom has not had to
by its deep-level gold and platinum leading coal groups which supplies two shed power for seven months now.
mines. Sibanye is now talking to Resgen major power stations – Grootegeluk and The bad news is the reason for that is
about establishing such a project. the under-construction Medupi – which the collapse in demand for power as the
Both Resgen and WCC ran into trou- are situated in the Waterberg and is also growth rate in the economy has fallen
ble because they could not find the funds steadily building up its export business. back towards around 1% to 2% annually
needed to complete their initial start-up Exxaro has further big plans for the instead of reaching the forecast 5% rate.
projects. The reasons for that include the Waterberg where it is looking at estab- According to newly appointed Exxaro
collapsed commodity markets and the lishing a new multi-product mine called chief executive Mxolisi Mgojo: “There is
harsh realities facing any company trying Thabametsi which would supply the ex- no coal cliff right now because there is no
to get going in the Waterberg. port market as well as establish an IPP growth scenario in South Africa. That’s
In a nutshell; anyone trying to start up project. why he [Molefe] can boldly say there
in the Waterberg needs very deep pock- The really interesting fact that came will be no load-shedding. Who is using
ets because the nature of the coal de- out of Exxaro’s recent presentation of electricity? All the furnaces are closed
posits is such that you need to establish results for the year to end-December is because the economy is not performing.”
a large-scale operation from the outset. that the group’s strategy is not to seek So, when South Africa does get back
There are also big logistical problems, more business from Eskom because of onto a growth path it is likely to run
mainly the provision of sufficient water the “business risk” involved given that straight back into a power supply short-
and rail capacity. Despite its name the Eskom already takes 80% of the coal age situation unless Eskom gets its act
Waterberg, it is actually a dry region mined annually by the group. together and/or one or more of these pro-
while it is twice the distance to the main I have harped on this before because posed IPPs get off the ground.
export terminal at Richards Bay as the of the question over where Eskom will Brendan Ryan is a Johannesburg-based
mines around Emalahleni (the former find the coal required to meet its future mining writer
Witbank). needs – the future shortfall known as the
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 7
NEWS
Price rises give chance to
look over hedge
iners in all commodities should would ask whether or not the com-
Mtake heed of gold producers pany has considered hedging be-
and lock in future prices when the cause it is not for the rest of your
opportunity arises, according to life. Streaming might look lighter
one of Australia’s leading hedging but it is for the life-of-mine and
proponents. down the track investors will be as
The recent rise in spot gold pric- angry about streaming deals as
es led a number of Australian gold they have been about too much
miners to increase their hedge hedging and debt.”
book and Noah’s Rule managing In contrast, Russo advises cli-
director Sean Russo believes a ents to take short-term hedge po-
price spike is the ideal signal to sitions to smooth out revenue.
make such a move. “It is not about doing long-dat-
“There has been a history of ed, complicated hedging and it is
hedging at the wrong time but if not driven by price but by the re-
you get a purple patch, lock it in,” quirement for a certain amount of
Russo told Paydirt. “It is great to money at a certain time. It is driven
see producers selling into specu- by a company’s particular circum-
lative rallies. It is fantastic because stances rather than the market.”
for the first time in a long time Sean Russo If the global hedge book among
they are behaving rationally. High miners has shrunk in the last dec-
grade your price, rather than high grade whatever assets they can find. But, when ade, debt levels have increased dra-
your mine.” it’s not running people will hang onto matically. Russo believes it is companies
Gold miners such as Northern Star those companies that are well managed with large debt obligations which need to
Resources Ltd, Evolution Mining Ltd and and that means those companies who sharpen their hedging strategies.
Metals X Ltd have increased their hedge have hedged to offset debt.” “I would hope companies with debt
positions in recent months but Russo While hedging has remained largely would be more likely to hedge. It is bet-
wonders whether other miners have fol- unfashionable, miners have turned in- ter to mine your way out of trouble than
lowed suit. creasingly to other instruments to gen- raise capital to pay back debt. Equity to
“Our clients led the way and looking erate funding. Metals streaming compa- pay debt is mostly a disaster.”
at other sectors, you see that many of nies have enjoyed strong market growth Having debt without hedging could
the producers could’ve performed better in recent years but Russo remains doubt- also leave companies at the mercy of the
with hedging; look at the nickel sector for ful of their long-term suitability for most short-sellers who are currently stalking
instance. I hope the iron ore miners have miners. the commodities sector.
been doing the same in “Mining companies
their recent rally.” don’t fully appreciated
The mining indus- Our clients led the way and looking that hedge funds will
try turned away from “ happily be either long
hedging in the previ- at other sectors, you see that many or short. When they
ous decade as com- of the producers could’ve performed better want to short a metal,
modities began their they will also look for
seemingly inexorable with hedging; look at the nickel sector for companies with expo-
upward march. The instance. I hope the iron ore miners have sure to that metal who
world’s gold majors in are vulnerable to it fall-
particular claimed that been doing the same in their recent rally. ing. If you’re hedging,
investors didn’t want the shorters are less
them to hedge. Russo likely to move on you.
has always doubted the logic of this ar- “Streaming companies started get- “Consumers are always rational and
gument. ting traction because the banks lost their buy when prices are low,” Russo said.
“Many of the majors say they don’t way and hedging was on the nose and “The only people in the market who don’t
want to hedge because their sharehold- so they were able to take advantage of act rationally are the producers who sell
ers don’t like it but that hasn’t stopped the distressed companies,” he said. 52 weeks of the year and have histori-
companies who are hedging achieving “If you look at the implied value of the cally been bad at selling high and buying
share price appreciation,” he said. streaming companies you can only as- low.”
“The thing about the gold space is that sume there is a massive value transfer
the global investment pool is far larger between the streamer and the streamee – Dominic Piper
so when gold is running, people will buy (sic). I think there is a place for it but I
PAGE 8 APRIL 2016 AUSTRALIA’S PAYDIRT
Rox returns to its gold roots
he dwindling nickel price at it, but we’re a little bit
Thas forced Rox Resourc- tight on funds so we’re talk-
es Ltd to delay its develop- ing to various parties about
ment plans for Fisher East, coming in as a partnership.
however, surging sentiment We’re finding there is quite
towards gold has provided a bit of interest out there for
the company with a silver gold.”
lining. Partnerships have prov-
Rox is looking to reacti- en successful for Rox in
vate its exploration efforts the past, headlined by the
at the Mt Fisher gold pro- JV with Teck Australia Pty
ject, about 150km north- Ltd at the Reward zinc-lead
east of Leinster, having project in the Northern Ter-
barely touched the ground ritory.
since discovering nickel on Teck has about $1.3 mil-
the eastern side of its tene- lion to spend on exploration
ments in late 2012. by 2018 to acquire 70%
Mt Fisher hosts a re- of the project, including
source of 973,000t @ 2.75 the promising Teena zinc
g/t gold for 86,080oz, which prospect, having already
Rox is updating to JORC Rox is looking to reactivate exploration at the Mt Fisher gold project claimed a 51% stake of the
2012 compliance standards. asset.
Previous drilling returned a number of forced Rox’s hand at Fisher East, while Teena produced a number of stun-
high-grade intercepts, including 9m @ the likes of Mincor Resources NL and ning intercepts late last year, including
7.1 g/t gold, 3m @ 17.4 g/t, 4m @ 9 g/t Panoramic Resources Ltd have also suc- 35.4m @ 13.2% zinc (including 21.2m @
and 11m @ 5.3 g/t. cumbed to poor nickel sentiment. 18.6%), 19.7m @ 14.9% zinc and 20.8m
“We originally got into this project be- “With the way the nickel price is at the @ 12.8% zinc (including 15.1m @ 16.4%).
cause of the gold,” Rox managing direc- moment and what’s been happening with However, Mulholland believes his com-
tor Ian Mulholland told Paydirt. all the nickel producers around Kambal- pany is yet to realise any value for the
“We spent most of 2011 and 2012 da, this project is not going to be getting project he places among the best unde-
working on the gold and then we found off the ground at present,” Mulholland veloped zinc resources in the world.
the nickel so we started concentrating said. “If you went through all the ASX-listed
on that. Gold at that point wasn’t getting “It’s an excellent option on the nickel companies that have zinc assets – out-
much support, but obviously now things price going forward when times do re- side the majors – you wouldn’t find a
have swapped around. cover. It’s a good project when the nickel larger and higher grade deposit than this
“We’ve identified a resource and we’ve price is at normal levels, but we’re not at one,” he said.
already done some scoping studies on normal levels at the moment.” “We don’t have a resource on it yet and
some deposits, but they didn’t Rox has identified three that’s probably one of the reasons why
quite make it with the price at areas of interest at Mt Fisher, we don’t feel we’re getting value for this
the time in 2012. Gold is now including known resources in the market…so we’re looking at op-
about 15% higher and costs underneath the existing open tions for getting value for it, either a sale
have come down a lot since pit. Additional prospects, in- or some form of spinout.
then, so the net effect could cluding Dam and Damsel, “Those processes are ongoing. We
be a 30% difference.” extending over 12km to the haven’t reached a conclusion on any-
Rox completed a scoping south have shown strong thing yet, but we’re certainly very active
study on Fisher East in Febru- gold anomalism. on doing all that stuff.”
ary 2015, flagging a potential Mt Fisher was previously Mulholland believes the market is yet
toll milling operation for an explored by CRA Exploration to appreciate the consequences of the
upfront capex of $20.8 mil- Pty Ltd during the 1990s and closure of the Century zinc mine last
lion. The base case option for was the lead project in Avoca year, claiming the full impact of the sup-
the company to build its own Ian Mulholland Resources’ IPO in 2002 be- ply cut-off will take at least another 3-6
500,000 tpa processing facil- fore that company shifted its months.
ity carried a larger capex of $85 million. focus to Higginsville, south of Kalgoorlie. Meanwhile, Rox has pulled back its ex-
The company recently upgraded the Mulholland said his company was cur- ploration efforts at the Bonya copper pro-
resource at Fisher East to 4.2mt @ 1.9% rently seeking a development partner for ject in the Northern Territory due to poor
nickel containing 78,000t, including 91% Mt Fisher. base metal prices. Previous best hits in-
in the indicated category and an estimat- “We could kick things off, but we’re not clude 38m @ 4.4% copper and 11m @
ed 260,000t @ 2.8% nickel containing going to be funded for a lot so bringing a 4.4% copper.
7,300t at the Cannonball deposit. partner in will probably be the sensible
However, the low nickel price – thing to do,” he said. – Michael Washbourne
$US3.92/lb at the time of print – has “We’ve got a bit of money we can throw
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 9
OPINION
Cyber crimes on the up
espite heightened attention and un-
Dprecedented levels of security invest-
ment, the number of cyber incidents —
and their associated costs — continues
to rise.
The concern typically revolves around
the growing sophistication of hackers
and other adversaries, and whether be-
ing secure is even possible in today’s
rapidly evolving landscape of cyber at-
tacks.
The underlying reasons for this trend,
and how organisations can actually re-
verse it to meet and start winning the
cyber risk battle, need to be addressed.
The first reason has a lot to do with the
organisation itself. It is not just about the
sophistication of the external actors, but
how by increasing your own digital reach
adds layers of complexity, volatility, and
dependence on infrastructure that is not
fully within your control.
Your efforts to grow, serve, differenti-
ate and streamline, introduce new gaps
and opportunities attackers will try to ex-
ploit.
When you consider the inherent link
between business performance, innova-
tion and cyber risk, it becomes clear that
protecting everything — while perhaps
not impossible — would be economically
impractical and would be likely to impede
some of your most important strategic
initiatives.
The second – that cyber incidents will
occur – means every organisation must
realistically assess its changing risk pro-
file and determine what levels and types
of cyber risk are acceptable.
So understanding cyber risk starts with
specifics. Identifying the specific threats
facing your organisation enables you to
better prioritise what to secure, deter- Global mining cyber threats include the theft of intellectual property,
mine how best to monitor it, and decide such as reserves, resources and exploration data
what types of incidents to prepare for.
Global mining cyber threats make electronic control units vulnerable How can organisations reverse the
The theft of intellectual property (e.g. to hackers, potentially presenting threats gap between security investment and
reserves, resources, and exploration to production, life and safety. effectiveness?
data) and strategic plans (e.g. mine de- Companies with trading and finance In a world where it is not feasible to be
velopment plans or marketing plans) by arms face similar financial fraud insider 100% secure, it is of course critical to
criminals, nation states and/or competi- dealing issues as banks and stockbroker protect the most important assets. But
tors, especially those able to compro- companies. an organisation must focus equal, and
mise insiders or suppliers/business part- Highly integrated supply chains make in some cases greater, effort on gaining
ners. the industry especially susceptible to more insight into the potential threats to
Vulnerabilities in industrial control compromises among their business part- be able to respond to reduce their im-
systems, building management systems ners and suppliers. pact.
(e.g. C-Bus) which provide opportunities In the following chart we call out the By implementing an ongoing pro-
for hacktivists and nation states to disrupt very high, high, moderate and low areas gramme to become secure, vigilant, and
mining operations, production and possi- of concern around cyber threats in the resilient, organisations can be more con-
bly to create quality or safety issues. mining sector; who is doing it and their fident in their ability to reap the value of
Automation and remote control centres impacts. their strategic investments.
PAGE 10 APRIL 2016 AUSTRALIA’S PAYDIRT
Being secure
Malicious actors, especially those mo-
tivated by financial gain, tend to operate
on a cost/reward basis. If the organisa-
tion’s defences are strong enough to
raise the criminal’s risks and the level of
effort relative to the value of what they
can gain, they are more likely to turn their
attention elsewhere.
Given the reach and complexity of
today’s digital ecosystems, it is not pos-
sible to secure everything equally. Be-
ing secure means focusing protection
around the organisation’s risk-sensitive
assets; those the organisation and its
adversaries are likely to agree are the
most valuable.
This is usually critical infrastructure,
applications, and data, as well as spe-
cialised control systems, but they are not
isolated. They are part of larger services
and transaction chains, so it is essential
to address weak points along the end-to-
end business process.
For example, strong asset manage- In the mining industry it is important to understand who could harm you, what motivates
ment is a significant enabler of secure, them, and how they are likely to operate through cyber criminal activity
vigilant, and resilient practices. For in-
stance, when proper reconfiguration and psychology of adversaries, and consid- ment structures and legal process can
decommissioning of laptops and servers ering the potential for accidental damage mean a failure to capture valuable foren-
is critical when it comes to preventing by well-intentioned customers, partners sic evidence
data leakage. Mature processes main- or employees, cyber risk strategists will It won’t work without governance
tain up-to-date tagging of critical assets be able to anticipate what might occur Transforming from a traditional, stand-
that support high-risk areas of the busi- and design detection systems accord- ards-driven IT security programme to a
ness. ingly. secure, vigilant, resilient cyber risk pro-
Being vigilant Being resilient gramme is not just about spending mon-
Today’s costliest attacks tend to be Being resilient means having the ca- ey differently, it’s a fundamentally differ-
the ones that are highly targeted. Being pacity to rapidly contain the damage, and ent approach.
vigilant means establishing threat aware- mobilise the diverse resources needed Although it is critical such a programme
ness throughout the organisation, and to minimise impact — including direct is tailored to your organisation, there are
developing the capacity to detect pat- costs and business disruption, as well some common characteristics;
terns of behaviour that may indicate, or as reputation and brand damage. While • They are executive-led
even predict, compromise of critical as- resilience requires investment in tradi- • They involve everyone
sets. tional technology-based redundancy and • They’re programs, not projects
Collecting terabytes of data can gen- disaster recovery capabilities, the bigger • They are comprehensive and
erate tens of thousands — sometimes picture includes a complete set of crisis integrated
millions — of alerts daily. Analysts often management capabilities. • They reach beyond your walls
become overloaded as they focus on in- Cyber war gaming exercises • They cover cyber risks not just cyber
fected machines, malicious IP address- Cyber war gaming exercises reveal security.
es, or failed login attempts. Those details common issues that cause delays in re-
may be important, but without context, it sponding as rapidly and effectively as a
is impossible to know if what you’re see- real crisis situation.
ing really matters. • Groups accus-
One way of accessing relevant context tomed to operating in
and pragmatic intelligence that is action- silos face challenges
able, is through the work of analysts in in agreeing the rela-
Deloitte’s network of in-country based tive severity of an in-
Cyber Intelligence Centres. cident, and therefore
Knowing the landscape the key actions need-
In the mining industry it is an important ed
starting point which can then be supple- • Roles and re-
mented by understanding the organisa- sponsibilities despite
tion’s specific business risks. It is a broad the process manual
exercise to examine who could harm are often not well un- Based in Perth, Michael Based in Sydney, James
you, what motivates them, and how they derstood Barrett is the Deloitte Na- Nunn-Price is the Deloitte
are likely to operate. • Lack of aware- tional Risk Advisory leader Asia-Pacific Cyber Risk
By carefully plotting the motives and ness of law enforce- for Energy & Resources leader
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 11
NEWS
Mitsubishi jumps on Hawsons
arpentaria Explora-
Ction Ltd has taken
the first steps towards
establishing a supply net-
work in Asia after signing
a non-binding letter of in-
tent (LOI) with Mitsubishi
Corporation RtM Japan
Ltd for 1 mtpa of pellet
feed from its Hawsons
iron project in New South
Wales.
The agreement for the
potential off-take of at
least 10% of the planned
production from Haw-
sons, about 60km south-
west of Broken Hill,
places Carpentaria in a
strong position to tap into
Mitsubishi’s established
pelletiser networks in the
Asia-Pacific region. Carpentaria managing director Quentin Hill (right) and technical director Ray Koenig
Carpentaria will look on site at the Hawsons iron project
to convert the LOI into a
binding off-take agreement for an initial “Very rarely can projects achieve such Hill said the recent uplift in the iron ore
term of up to 10 years in due course, with quality as what we’ve demonstrated,” Hill price during March had no bearing on his
the company targeting first pellet feed said. company’s discussions with Mitsubishi
supply in 2020. “What I think Mitsubishi has recog- because the Japanese entity was look-
“Ultimately we will need binding off- nised is that the future trends of the steel ing much further ahead.
take contracts to finance this project and industry require high-grade [product] and “The recent announcement from the
we expect to work with Mitsubishi to get Hawsons provides amongst the highest- Chinese Government about significant
there,” Carpentaria managing director grade raw materials for steel-making.” stimulus and maintaining their growth
Quentin Hill told Paydirt. Hill said his company intends to secure between 6.5% and 7% is important,” Hill
“This LOI is a ringing endorsement potential off-take agreements in other said.
for our project, a ringing endorsement key markets, including the Middle East “I think the sentiment in the iron ore
for our Hawsons product and it also im- direct reduction market and the Chinese sector was very much conditioned to
proves our ability to attract investment for magnetite pellet feed market, to comple- Chinese demand drastically falling and
the next phase of our feasibility studies. ment its proposed entry into the Asian as the year rolls on, I think we’ll see that
“What it also signals is that at the time high-grade pellet feed market via Mit- particular scenario is less and less likely
of construction there may be significant subishi. and sentiment will change as that be-
competition for our product, which will All engineering aspects of the project comes clearer.”
benefit investment and development.” are at a PFS level, however, Carpentaria Although the Hawsons project team is
Hawsons has emerged as one of the had not seriously considered pellet feed based mostly out of Broken Hill, Carpen-
world’s best iron ore pellet feed sources production until recently when test work taria continues to hold regular talks with
following recent metallurgical test work started to confirm the commercial viabil- key government officials in South Aus-
from the renowned China Iron and Steel ity of the Hawsons product. tralia about a logistics model to deliver its
Research Institute. “What the results have shown us is product to end-users from Port Pirie via
Tests showed the Hawsons “super- that we can make fantastic pellets and existing rail facilities.
grade” product met a series of key crite- we hope to further investigate potential “All mines from Broken Hill have histor-
ria from potential customers – including pellet production,” Hill said. ically gone through Port Pirie, that’s why
high iron and low slag content and supe- Next on Carpentaria’s agenda is using the world’s largest lead smelter is in Port
rior physical properties and iron-making the recent test work success to gauge Pirie,” Hill said.
characteristics – and would rank among the interest of the various off-take and “The South Australian Government
the top-tier iron ore pellet feed produc- capital markets and garner further in- is doing all it can to support projects in
ers. vestment for the project. South Australia, but it is also very sup-
Another key finding from the test work A resource upgrade at Hawsons – cur- portive of our project and for that we con-
was that the product would improve pel- rently 1.77bt @ 14.9% magnetite con- tinue to thank them and work with them.”
letising and iron-making productivity and taining 263mt grading 69.7% iron and
reduce energy consumption when added 2.9% silica – is also on the cards for later – Michael Washbourne
to most pellet blends. this year.
PAGE 12 APRIL 2016 AUSTRALIA’S PAYDIRT
Data delivers for Emmerson
mmerson Resources Ltd has snared drilling at its new projects shortly and
Efour gold-copper projects in New hopefully find some high-grade gold-
South Wales from its alliance with a New copper deposits.
Zealand-based team of exploration data “We’ll take it through to the first phases
analysts. of exploration and just try and validate
The junior explorer partnered with the parameters that we thought were
Kenex Ltd last August to find prospective there from the model are actually there in
ground in other parts of Australia, hav- the field,” Bills said.
ing previously teamed together to identify “Our value proposition is Emmerson
new targets around Emmerson’s Tennant does this and then takes it to a certain
Creek projects in the Northern Territory. point and seeks a JV partner.”
Kenex provided predictive target- Bills said Emmerson’s JV partner at
ing models from geoscientific datasets, Tennant Creek, prolific gold producer
identifying a number of targets on open Evolution Mining Ltd, could be interested
ground along the Lachlan Fold Belt, in forming another partnership in NSW
which hosts known copper-gold deposits following that company’s acquisition of
such as Cadia, Ridgeway and Cowal. Cowal last year.
The exploration strategy highlighted Exploration at Tennant Creek, where
four targets near Wellington, Parkes, Te- Emmerson identified the promising Mau-
mora and Fifield, collectively comprising retania discovery late last year, will still
768sq km in area and displaying epith- Rob Bills be the company’s main focus, however,
ermal gold-silver and porphyry copper- Bills was pleased his business had diver-
gold potential. Kenex, which has conducted similar sified out of the NT.
Some of the targets contain historical programmes in Oman and New Zealand, “It makes a lot of sense for us as Em-
workings or previous exploration sup- then ranked the datasets from highest to merson and our shareholders because
porting Kenex’s predictive model. lowest correlation and identified the tar- we’ve not got all our eggs in the one bas-
Emmerson is one of the few junior gets on a tenement map which were on ket; the Tennant Creek basket,” Bills said.
companies focused on early stage explo- open ground. “I think it’s a great result for everyone.
ration at present, but managing director Bills said his company hoped to start “We think we’ve got enough capability
Rob Bills said his company wanted and capacity to run these [work pro-
to do something different to its larger, grammes] in parallel, but we need
acquisitive peers. to dedicate most of our energies
“Most companies tend to buy as- into the Tennant Creek field and
sets with resources, but we think that’s what we’ll be doing.”
there’s a market here to generate Meanwhile, pre-development un-
new, high-quality projects from first- derground drilling at the Edna Beryl
principle geology, geophysics and small mine has intersected bonanza
geochemistry that’s become lost in a gold grades within the supergene
lot of these big companies,” Bills told hematite ironstone, including hits of
Paydirt. 1.83m @ 139.7 g/t, 1.83m @ 309.5
“The idea here is to try and in- g/t and 1.83m @ 93.4 g/t.
crease your probability of success Emmerson struck a tribute agree-
and the way to do that is to have ment with the Edna Beryl Mining
high-quality targets because the Company (EBMC) last August to
probabilities of finding an economic mine one of the small, existing
deposit are very small, something deposits with the company’s tene-
like 0.05%. ments at Tennant Creek.
“We think the way to increase your “Not only do we get cash from
probability of success is to generate mining them via the tribute agree-
high-quality projects at the front-end ment, but the development under-
which actually go through to a mine ground gives us the opportunity to
so you don’t have to have to turn over drill some underground holes and
as much ground to find that econom- look for more of these high-grade
ic mine.” pods,” Bills said.
Bills said the alliance generated “We’re not trying to say this is go-
130-140 different maps of prospec- ing to be representative of the entire
tive opportunities which Kenex orebody, that’s probably not going
converted into digital datasets and to be the case but it would be fan-
correlated them against major tastic if it is, and it’s obviously very
copper-gold deposits in NSW and Pre-development underground drilling at the Edna Beryl encouraging for us.”
Queensland. deposit has intersected bonanza gold grades
– Michael Washbourne
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 13
NEWS
Better days ahead: Barnaba
ark Barnaba has encour- in another direction.
Maged those in the resources “There has been a lot more
sector to stop looking in the rear- activity for the lawyers, bankers
view mirror and focus on the fu- and accountants because there
ture. hasn’t been much, and I see that
The Macquarie Group Ltd changing,” he said.
chairman, Western Australia, “We are starting to see in-
was the guest speaker at a Com- creased activity because the
mittee for Economic Develop- market is starting to become
ment of Australia (CEDA) event stable; it is not rising but we
in Perth earlier this year, which don’t need a rising commodity
hosted a number of the State’s price to have stability and that
business leaders. leads to activity.
Among attendees were sec- “We are now sitting in board-
tions of the resources industry rooms with chief executives
experiencing tough times due to saying; ‘we have done the cost
decade-low commodity prices. reductions, we have done eve-
While Barnaba admitted the Mark Barnaba rything, we have to think about
rout of the past two years was growth, how do we do it?’”
hard to forget, he was confident the next Mass redundancies in the mining sec- The mining boom delivered permanent
18 months would be better. tor and the flow-on effect has meant changes to WA, in terms of infrastruc-
“By and large, given where they [com- confidence in the business sector is low, ture, population and wealth.
modity prices] are now, you still have to while WA battles a big debt burden. WA has experienced a period of about
think that going forward is a better place Addressing the State’s debt is a priority 15 years where GDP averaged about 5%
to look than what’s happened in the last for the Government as WA adjusts to a per annum, putting the State in a fortu-
two years,” Barnaba said. new environment in the resources sector, nate position.
“Mining and metals has had four years which Barnaba is already seeing some Today, WA’s GDP growth is lower than
[good pricing] which have now come positive signs. the Australian average, however, Barna-
off their peaks. Have we bottomed? It “I believe today that the next 18 months ba has full faith the State – and Australia
comes down to individual commodities, will be better than the past 18 months,” for that matter – will avoid a recession.
but my personal view is that if we are not he said. “Confidence is lower [in WA] than what
already there, we are very close.” “I think in the next three to six months it is for Australia as a whole. You read the
Despite a recent rally in the iron ore you will see a bit more stability [in com- news on commodity prices, especially oil
spot price – $US58.36/t at the time of modity prices].” and gas. Some of the news that has hap-
print – Barnaba said it was difficult to see Companies have reacted to low com- pened in property is good reason to draw
the market returning to the highs of four modity prices by conducting cost-cutting confidence from people. My own view is
years ago. programmes across their businesses. that it [confidence] will return. West Aus-
Resource-rich WA boomed during this Barnaba believes that many companies tralians are remarkably resilient people,”
period, however, the landing from such a have squeezed as much as they can out Barnaba said.
high has not been forgiving. of their businesses and are now moving “Did we squander the investment
boom that we had? Did we squander a
long period of wealth in our state? The
facts suggest we probably didn’t. If you
have a look at a number of indicators and
a portion of the State economy that is
still driven by mining, it has permanently
increased. If you have a look at iron ore
and LNG and if you have a look at terms
of volume in our state it is a very different
story. They are permanent changes that
generate wealth in this state and [will do]
for decades to come.
“It does not mean that we are not expe-
riencing a period that is challenging, but
it is worth keeping in mind that the mining
boom delivered permanent changes and
we certainly have had some.”
– Mark Andrews
Despite a big debt, WA did not squander wealth generated from the mining boom,
according to Macquarie Group chairman WA Mark Barnaba
PAGE 14 APRIL 2016 AUSTRALIA’S PAYDIRT
OPINION
World’s miners blindsided
hy did nobody see it coming?” still in place, which is why BHP Bil-
WWith this simple question, liton and others were forecasting
posed to Professor Luis Garicano Chinese steel consumption only to
of the London School of Economics peak sometime in the next decade.
in November 2008, Britain’s Queen But, this was not business as usu-
Elizabeth famously summed up the al, even by Chinese standards.
layman’s astonishment that an ob- As Macquarie puts it, “bluntly” to
scure part of the derivatives universe use its own word, “China got urbani-
could trigger a global financial crisis. sation very wrong”.
A similar question might be posed “While developers and local gov-
of the world’s miners right now. ernments built out provincial manu-
Having collectively bet the house facturing hubs in expectation of the
on a commodities “supercycle” only next wave of migration, in actual fact
to see the “super” part of that cycle China has developed like any other
dissolve in front of their eyes, they Miners did not anticipate the end of the mining boom economy – strong growth in the
are now fighting the numerous fires largest cities as the service industry
engulfing their overstretched balance measures did the trick in terms of both boomed.”
sheets. insulating the Chinese economy from This has created a yawning gulf be-
They simply don’t appear to have seen the collapse in trade but it’s the play-out tween the property market in major cit-
it coming. of the longer-term negative effects that ies, which is once again showing signs of
But then, if you believe Andrew Mac- have caused the “super” to drop off the speculative life, and that just about eve-
kenzie, chief executive of BHP Billiton “supercycle”. rywhere else.
Ltd, they didn’t see the original boom Too much property was built too quick- If Chinese central planners got urbani-
coming either. ly, particularly in smaller, new cities. Too sation wrong, the world’s miners were
Speaking at the AFR Summit in Mel- much capacity was built to feed what was guilty of putting too much faith in Beijing’s
bourne last month, Mackenzie confessed an unsustainable rate of construction in ability to engineer the Chinese economy
the economic rise of China earlier this industries such as steel. And too much in any way they saw fit.
century “happened at a scale and a pace debt, often of dubious quality, was accu- As with the original financial meltdown,
we simply didn’t see coming”. mulated in the credit binge, transferring everyone involved saw it as business as
“Many [including BHP Billiton] were un- the US housing bubble into a newly cre- usual and strove to do the best job they
prepared for what has been the greatest ated one in China. could, which in the case of BHP and its
commodities boom of our time.” It’s the engineered deflation of the Chi- iron ore peers, meant digging more stuff
Having failed to foresee the boom, nese housing bubble that is now roiling out of the ground as efficiently as pos-
they also failed to foresee the bust. the world’s metal producers. Beijing has sible.
“While BHP Billiton anticipated emerg- made it clear that it expects property de- Because that was in fact the less-re-
ing trends that signalled the end of the velopers to run down unsold inventory, ported answer to the queen by Garicano.
boom, we didn’t expect the scale and the particularly outside of major cities, be- Writing in an editorial for The Guard-
speed with which it happened.” fore embarking on new developments. ian shortly after, he explained that “what I
But how did nobody see it coming? It could be a long process. told the Queen is that the reason the situ-
It’s not just that the GFC of 2008-2009 Analysts at Macquarie Bank estimate ation got out of hand is that those work-
is still with us in the form of “whatever it that Chinese steel usage in the construc- ing at every point in the lending chain
takes” central bank intervention to prop tion sector peaked in 2013 and will be were eager to continue doing the job they
up still foundering economies. 20% lower by 2020. were paid to do” from mortgage agents to
It’s more that the current “slowdown” With hindsight the warnings of a po- lending banks to rating agencies to asset
in China has its roots in the same col- tential commodities crash were there managers.
lapse of the house of over-mortgaged US for everyone to see. Rather than being There had been, he added, warnings
housing cards. hidden in the spreadsheets of market from economists but they had been muf-
Faced with an export shock rippling derivatives quants, as was the case in fled by the group-think.
out from what soon morphed from a fi- the U.S. housing crash, they were all too And there were plenty of warnings
nancial to a manufacturing crisis, Beijing visible in the form of newly-built but ee- from commodity analysts, particularly
unleashed its unprecedented domestic rily deserted housing complexes across those who had spent time in those Chi-
stimulus package. China’s lesser cities. nese ghost towns.
The twin pillars of this gargantuan stim- So why didn’t the likes of BHP Billiton But having failed to see the boom com-
ulus were infrastructure and housing. see them? Perhaps because the 2009- ing, the world’s miners were in no mood
It is an extraordinary fact that in just 2013 construction boom looked like a to hear that it wasn’t going to continue for
three years, 2011, 2012 and 2013, China continuation of the pre-GFC trend which a long time.
used more cement than the US did in the had been one of rapid industrialisation The good times will come again. Just
20th century, 6.6bt compared with 4.4bt, and urbanisation in China. don’t expect the world’s miners to see
according to figures from the US Geo- The longer-term trend line may have them coming.
logical Survey. shifted shape, steepening in the short
In the short term, Beijing’s emergency term, but the consensus was that it was – Andy Home, Reuters
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 15
NEWS
Schlam aims high with
DT dumpers
chlam Group has added Ausdrill ing quality as best we can. Customers
SLtd’s DT HiLoad dump truck tray are looking for value and the most ex-
manufacturing business to its stable. pensive way to do something is to do
Schlam managing director Ryan it twice.”
Schlam said the company had an eye Schlam started dealing with Ausdrill
on DT HiLoad for some time before in mid-January and after about eight
negotiations officially started in Janu- weeks of complex negotiations the
ary. transaction was completed.
“Strategically we have been eyeing A $2.6 million upfront consideration,
off the business for 2-3 years. DT is a with additional steel and tray inven-
big move for an organisation like us, tories provided on a fixed price, con-
coupled with the activities we are al- signment basis over three years are
ready undertaking,” Schlam told Pay- terms of the deal. Ausdrill expects the
dirt. sale to generate up to $8 million over
Schlam has many arms servicing It has been a busy period for managing director Ryan three years.
the mining sector and DT HiLoad is Schlam. Since August, the company has expanded The divestment by Ausdrill is in line
expected to boost its manufacturing into the Pilbara and acquired three other businesses with its strategy of exiting non-core
capabilities. and underperforming assets.
While the mining sector is experiencing new suite of interests. With Schlam’s expertise in asset man-
a slowdown, Schlam would not know it. “Mining is cut-throat,” Schlam said. “It agement, maintenance and manufac-
The company has been busy growing is very tight and tough to make a profit ture, DT HiLoad has a better chance of
its business through M&A, with the likes and clients want value for money and we performing to capacity and creating bet-
of The Pilbara Clean Machines (TPCM), pride ourselves on efficient and safe de- ter outcomes for all stakeholders under
sister company Unique Blasting & Coat- livery. It is hard to say we are experienc- its new owner.
ings (UBC) and RIM Engineering brought ing a downturn given the amount of work While there is a change ownership, DT
into the group late last year. we have been getting recently. The cost HiLoad will still be based in Forrestfield,
Schlam said there remained opportu- pressures [are enormous] and we are fo- Western Australia, and all key personnel
nities for the company to capitalise on, cused on ensuring that our businesses will be retained, Schlam said.
however, the short-term focus would be remain lean, but efficient and most im-
on consolidating and leveraging from its portantly performing safely and deliver- – Mark Andrews
Robust PFS for Pilbara at Pilgangoora
ilbara Minerals Ltd’s PFS on the under way as part of the DFS.
PPilgangoora project has con- “Excellent financial returns of the
firmed the viability of a standalone project are underpinned by a rela-
mining operation producing 330,000 tively modest capital cost,” Brinsden
tpa spodumene and 274,000 lbpa said.
tantalite. “The project will be capable of gen-
The estimated capital cost for the erating very strong operating mar-
2 mtpa project is $184 million, which gins and cash flows. Pilgangoora is
can potentially be paid back in two now firmly established as the world’s
years, assuming operating cash leading lithium development project,
costs of $US205/t FOB spodumene which is already attracting strong
concentrate. interest from prospective project fi-
Project NPV is $407 million and nanciers and cornerstone investors
IRR of 44% has been estimated, Pilgangoora, 100km from Port Hedland, could be based on its potential to transform
while EBITDA over the first five years in commissioning phase in Q4 2017 Pilbara into a leading player.”
of operation is $120 million per an- Pilbara Minerals now aims to com-
num. Life-of-mine average spodumene based on a world-class resource. plete a DFS by Q3 this year, with com-
prices used in the PFS were $US456/t. A maiden ore reserve of 29.5mt @ missioning at Pilgangoora planned for
Pilbara Minerals chief executive Ken 1.31% lithium and 134 ppm tantalite is Q4 2017.
Brinsden said the PFS demonstrated Pil- enough for a 15-year mine life. A 15,000m
gangoora was a robust, long-life project drilling programme to extend reserves is – Brendon Shilling
PAGE 16 APRIL 2016 AUSTRALIA’S PAYDIRT
BC Iron ‘not just Nullagine’
C Iron Ltd continues to keep opera-
Btions at the Nullagine JV suspended
despite the recent uptick in the iron ore
price.
The junior miner placed its flagship Pil-
bara asset on temporary suspension last
December when the iron ore price dipped
below $USS40/t. Nullagine’s breakeven
cost is reportedly $US42-44/t.
Iron ore has since jumped back up to
around $US53/t, including hitting a high
of $US63.74/t on March 8, prompting
speculation BC Iron could be tempted to
reopen the gates at Nullagine.
BC Iron managing director Morgan Ball
said his company was constantly moni-
toring market conditions, but had not yet
seen enough evidence of a longer-term
price recovery for the industrial metal. Operations at Nullagine have been suspended since December
“It’s not about making money on a price
of one day or one week, it’s about making the market and if we believe the market market appreciates that we’re not just
money for shareholders on a sustained will support a restart it’s something we Nullagine, notwithstanding that Nullagine
basis,” Ball told Paydirt. will seriously consider, but it will take a has pretty good option value,” Ball said.
“We need to get the confidence, on joint decision from both ourselves and “In Iron Valley we have a long mine
behalf of our shareholders, that the price FMG.” life, cash flow producing asset run by
will be there for a sustained period of The price slump which led to the sus- top-notch operators in MinRes and in
time. Suspending the operation was a pension of operations at Nullagine was Buckland we have another long mine
very difficult decision and, similarly, the reflected in BC Iron’s half-year results. life opportunity that brings with it an in-
decision to restart does cost money and The company reported revenue of $115.8 frastructure advantage as well. We think
thus we’ve got to make sure we’re doing million for the six months to December they’re both good assets to have in our
it in their best interests.” 31, but posted an EBITDA loss of $2.1 portfolio.
Ball said the decision to suspend op- million and a net loss of $72.9 million af- “We’ve done some good work in the
erations at Nullagine was one his com- ter tax. last 12 months in getting the potential
pany had mulled over for several months Underlying net loss after tax was $3.8 feasibility costs down [at Buckland] but
before eventually making the tough call. million, after adjusting for non-cash and we still think the fact we have a resource
Nullagine’s future was further clouded one-off items. which could be anywhere between
early last month when BC Iron’s 75:25 BC Iron did receive some benefit from 8-10mt as a standalone or 10-20mt with
JV partner Fortescue Metals Group Ltd the ongoing low-cost operations at Iron partners in the region…is pretty interest-
knocked back an offer to purchase low- Valley, which contributed a positive EBIT- ing if you take a longer-term view on iron
grade ore. DA of $4.5 million in the December half. ore.”
Fortescue had agreed to a trial to pro- Iron Valley is operated by Mineral Re- BC Iron holds some non-iron ore tene-
cess 200,000mt of low-grade stockpiled sources Ltd, with ore taken from ground ments in the Pilbara it can turn to if the
ore but declined the chance to imple- held by BC Iron following its takeover of iron ore price falls once again, but Ball
ment the proposal on a longer-term ba- Iron Ore Holdings in 2014. insisted his company was maintaining a
sis. About 11mt of low-grade ore remains The acquisition of Iron Ore Holdings positive, long-term outlook for both the
stockpiled on site. also yielded the Buckland project, West business and the commodity.
BC Iron believes these stocks could be Pilbara, and BC Iron has spent several “We will continue to be cautious and
blended with DSO in future operations months optimising the economics for the prudent in the way we operate the com-
and is now investigating potential benefi- promising development asset. pany, but we are monitoring the market
ciation opportunities. Recent optimisation closely and if the opportunity comes to
Fortescue recently an- work reduced the pro- realise the value at Nullagine we will do
nounced a new partnership ject capex by $55 million so,” Ball said.
with Brazilian mining giants to $942 million ($US660 “In the meantime, we will make sure
Vale SA, but Ball was confi- million) and C1 cash op- we continue to support MinRes in run-
dent it would not impact future erating costs by $10.1/t ning Iron Valley and hopefully develop-
plans for Nullagine. to $31.6/t ($US22/t) from ing the bulk ore transport system, which
“Our relationship with FMG the June 2014 feasibility looks pretty interesting not only for Iron
remains strong and we have estimates which envisage Valley but potentially for our West Pilbara
an open communication about an 8 mtpa operation of at opportunities in the future.”
the JV operation,” Ball said. least 15 years.
“Both parties are monitoring Morgan Ball “I think it’s important the – Michael Washbourne
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 17
is now digital!
FREE access to Paydirt Digital with every magazine subscription
to Australia’s Paydirt and Gold Mining Journal
New Features:
• View Paydirt Digital on Mac, PC, iPad, iPhone and Android devices
• Watch videos and listen to audio recordings
• Direct links to promotional material & websites
• More photos
• Print out the whole magazine or a selected range of pages
For further enquiries please contact Mitchelle on (+61) 8 9321 0355
or email [email protected]
COVER
is now digital! Up for the Challenger
FREE access to Paydirt Digital with every magazine subscription
to Australia’s Paydirt and Gold Mining Journal
New Features:
• View Paydirt Digital on Mac, PC, iPad, iPhone and Android devices ailed as one of South Australia’s best discoveries Kingsgate grew to understand the mine, but it was not
Hof its time, the Challenger gold mine has had its fair all smooth-sailing under its tenure and as its Chatree
• Watch videos and listen to audio recordings share of ups and downs. and Nueva Esperanza projects appeared better value
to the portfolio, momentum gathered for Challenger to
Initially, open pit operations performed swimmingly
for founders Dominion Mining, however, the transition be divested.
• Direct links to promotional material & websites into underground mining in 2005 threw up a new set of Enter WPG Resources Ltd and Diversified Minerals
challenges Dominion struggled with. Pty Ltd, an operating subsidiary of mining services con-
• More photos The problems Dominion encountered were on the tractor PYBAR.
table for all to see, but nevertheless Kingsgate Con- The WPG/PYBAR combination took control of the
• Print out the whole magazine or a selected range of pages solidated Ltd was unperturbed by troubles at the mine mine – currently on care-and-maintenance – in March
and plan to take it into a new era, starting in June.
when it acquired the project five years ago.
At the time, then Kingsgate managing director Gavin Paydirt’s Mark Andrews spoke with WPG about how
Thomas said: “It has had problems over the last 18 Challenger will be revived alongside PYBAR and what
months, but it is a much better mine than people are it means for South Australia.
For further enquiries please contact Mitchelle on (+61) 8 9321 0355 giving it credit for.”
or email [email protected]
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 19
COVER
Mining at Tarcoola is targeted to begin in Q3 2016
JV between WPG Resources Ltd and mining services
A contractor PYBAR will orchestrate the next chapter of
the Challenger gold mine in South Australia.
A greenfields discovery by Dominion was producing at a rate of
Mining in the mid-1990s, Challenger 100,000 ozpa.
became part of Kingsgate Consolidated Based on reserves and
Ltd’s family in 2011. production, the mine life in-
The rationale behind Kingsgate’s push herited was four years and
for Challenger was plausible; buy an based on resources it was
asset which would catapult it into the nine years, on top of the
sparsely populated mid-tier Australian eight years of production that
gold sector. preceded the Kingsgate/Do-
At the time of the transaction, Kings- minion deal.
gate was a single-asset company pro- Challenger was once a
ducing 130,000 ozpa gold from Chatree market darling and a top
in Thailand. performer in the early days A new round of exploration at Tunkillia started in March
Therefore, the addition of Challenger before transitioning into an
enabled Kingsgate to enter the realms underground operation in 2005. It had clear cut. Since assuming control of the
of ASX multi-asset gold producers occu- enjoyed among the lowest C1 cash costs mine in 2011, Kingsgate has reported
pied only by the likes of Newcrest Mining of Australian gold operations for five annual production of 87,388oz @ 4.55
Ltd, Allied Gold plc, OceanaGold Corp, years. However, troubles with a ventila- g/t at $US862/oz, including $US62/oz
St Barbara Ltd and Resolute Mining Ltd. tion shaft saw disruptions to production, royalty (FY2011/12); 66,216oz @ 3.91
To get there, Kingsgate offered 0.31 cash costs rise and head grades deplet- g/t for total cash costs of $US1,135/oz
shares for every Dominion share which ed. (FY2012/13); 74,954oz @ 4.78 g/t at total
made the deal worth almost $380 million. With a bank balance of $48 million be- cash costs of $US1,310/oz (FY2013/14)
For its outlay, Kingsgate was getting a hind it, Kingsgate was adamant it could and 80,151oz @ 5 g/t at operating costs
mine which had reserves of 421,650oz turn fortunes around at Challenger. of $US1,059/oz (FY2014/15).
“ When Dominion first developed Challenger it made a lot of money,
gold and resources of 950,220oz and The reality has not been quite so Over this period, Challenger became
serious money, in the first three to four years. Then they went
underground and it did ok for a while, then it went into a zone where, for a
whole range of reasons grades depleted. They didn’t understand it at the
time; Kingsgate understands it now and so do we.
PAGE 20 APRIL 2016 AUSTRALIA’S PAYDIRT
Over 12,000 calcrete samples have been taken at Tunkillia
an increasingly tricky asset to fit into the was taking more of their key manage-
Kingsgate portfolio. While cash costs ment time then they might want to de-
there were stubbornly refusing to reduce vote to it.”
to previous levels, Chatree was averag- Essentially, the deal has been three
ing 130,000 ozpa production and the years in the making, Duffin saying ne-
newly acquired 1.9 moz gold equivalent gotiations with Kingsgate had been a
Nueva Esperanza project in Chile was case of progressing “one step forward
shaping as a 120,000 ozpa at $US700/oz and two steps back” during that time.
cash cost producer. In the circumstanc- “We thought it was a non-core asset
es, Challenger appeared better suited in for Kingsgate, considering Chatree was
the hands of other parties. producing a lot more gold and the South
And, there is no doubt in Bob Duffin’s American project has potential to pro-
mind that WPG has a handle on what is duce even more. We simply knocked on Tarcoola is just one of a suite of projects
required at Challenger. the door at the right time and were able WPG has in the Gawler Craton
“When Dominion first developed Chal-
lenger it made a lot of money, serious
money, in the first three to four years.
Then they went underground and it did
ok for a while, then it went into a zone
where, for a whole range of reasons
grades depleted. They didn’t understand
it at the time; Kingsgate understands
it now and so do we,” WPG executive
chairman Duffin told Paydirt.
“We think that period when Kingsgate
was mining low-grade material about
four years ago – pardon the pun – but
I think that really challenged the man-
agement team, as to what they should
do with the project. We first approached
them three years ago in the knowledge
that with their Thai project [Chatree] and
very large pre-development project Nue-
va Esperanza [developing], Challenger WPG hopes to produce at a rate of 20,000 ozpa gold from Tarcoola
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 21
COVER
ments, with first payment
due within 30 days of
re-starting milling op-
erations – WPG was
banking on resources of
140,000oz remaining at
Challenger.
Challenger West is
where initial production
will start, Duffin said.
“It is our game plan to
mine as much of that re-
source as possible over
the next three years,” he
said.
“All of that resource is
already developed for
underground mining, so
it doesn’t require any
material new develop-
ment.”
The Challenger JV
plans to produce at a
rate of 50,000 ozpa from
the current resource
There is potential for Tunkillia to produce 70,000 ozpa gold over 10 years base, however, Duffin is
bullish on the explora-
to convince them if they were minded to Minerals Pty Ltd, will conduct mining tion potential, particularly at Challenger
sell the project then we were the right services, while WPG is the manager at South South West (SSW), which is not
group to speak to,” Duffin said. Challenger where Kingsgate has left an included in the resource, and has poten-
There were a number of groups inter- estimated resource of 194,000oz gold, tial to replicate the M1 and M2 lodes pre-
ested in taking on the asset, including as of June 30, 2015. viously mined.
Marmota Energy Ltd which offered $2 Upon taking possession of the mine So far, the best drilling result Kingsgate
million, but history now shows that on – for $1 million ($100,000 already com- has come up with at Challenger SSW is
March 15, 2016 WPG completed the ac- mitted) to be paid in four quarterly instal- 0.2m @ 368.47 g/t gold but such is the
ing subsidiary Diversified “ We think there is a lot of upside royalty on the zone, ensur-
strength of its potential,
quisition of Challenger.
Kingsgate retains a $25/oz
Of course, the deal in-
volves PYBAR, which is
now a 50% owner of the
ing it will not miss out on
in the project over and above that
Challenger JV.
any future exploration up-
To earn its share, PY-
side.
140,000oz resource which we should be
BAR, through its operat-
“We think there is a lot
PAGE 22 APRIL 2016 AUSTRALIA’S PAYDIRT able to develop and mine profitably. of upside in the project
Challenger is currently on care-and-maintenance. A restart to production is scheduled before the end of June
over and above that 140,000oz resource
which we should be able to develop and
mine profitably,” Duffin said.
Squeezing as much as possible from
the project won’t be an expensive exer-
cise either.
Underground infrastructure (decline,
ventilation shaft, etc) is already in place,
as is a mill and plant, plus a camp.
“We are buying a plus-$100 million as-
set for $1 million. That is, of course, only
relevant if the gold is there, but in any
case that is $100 million we don’t have
to spend to access this ore,” Duffin said.
Assuming gold prices hold and no
“black swan type of event emerges”, Duf-
fin envisions being at Challenger for cer-
tainly three years and possibly in excess Challenger has had its issues, but WPG is confident it will have the mine under control
of five years, depending on exploration
success. largely at the mercy of the drill bit. which the longer term sustainability of
While there will be some staff downsiz- Once all ore has been extracted from the company will be launched.
ing, Challenger will still employ 160-180 Challenger, WPG will not be at a loose The Challenger acquisition includes
people for the next three years at least, end. all Kingsgate’s exploration assets in SA,
however, any certainty beyond that is Rather, Challenger is the asset from as well as rehabilitation bonds lodged
with the SA Government totalling about
$2.7 million. But the real boon for WPG
could be the CIP plant.
Challenger now sits besides the
Tarcoola and Tunkillia gold projects,
also in the Gawler Craton, in WPG’s
portfolio.
“Tarcoola is small, but high-grade.
While we saw it initially as a modest
scale heap leach operation, with the
advent of the Challenger deal we are in-
tending to process that ore through the
Challenger plant,” Duffin said.
“That will do at least two things: re-
duce the company’s upfront expenditure
required because we don’t have to build
any treatment facility whatsoever on
WPG is confident of Challenger lasting another three years and site; and, all things being equal, treat-
potentially in excess of five years ing ore through a CIP plant gets better
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 23
COVER
recoveries than it does through a heap ozpa gold. So, by the end of this year we However, unlike Challenger and
leach operation. should be in a production rate of 45,000 Tarcoola, there are capital requirements
“So, in fact it is going to be more lucra- ozpa, nearly half way there,” Duffin said. for WPG to consider.
tive for us with Challenger, notwithstand- Tarcoola (900,000t @ 2.6 g/t gold for “As far as Tunkillia is concerned, that is
ing the ore has to be trucked for 120km 74,000oz reserve) and Challenger com- a bigger issue,” Duffin said.
to Challenger rather than treating it on bined will drive the bigger picture for “The capex for development of Tunkil-
site.” WPG which involves pulling off the larger lia has previously been estimated at
Mining is expected to start at Tarcoola Tunkillia project. $100-130 million. That is a big ask for a
in Q3 2016, with the PEPR and mineral Before WPG’s involvement, a PFS company of our size.”
lease conditions for the Challenger pro- over Tunkillia focused on the 223 deposit Nevertheless, signs are that WPG is
cessing option to be completed in the – 12.3mt @ 1.41 g/t gold (measured and growing and on the back of nailing the
meantime. indicated) for 558,000oz gold and 1.5 Challenger deal, its market cap has tri-
WPG is targeting production of 20,000 moz silver, boasting initial mine life po- pled in three months to $35 million.
ozpa gold from Tarcoola, which, added tential of 5-6 years. There was strong support in the mar-
to the 25,000oz attributable from Chal- WPG holds 100% of the project and ket when the Challenger acquisition was
lenger, will see the company producing believes there is potential to convert completed, with WPG’s share price surg-
at a minimum rate of 45,000 ozpa for the Tunkillia into a 70,000 ozpa gold project ing 15% to 8.5c/share.
next three years. spanning 10 years. Having such a high profile asset, de-
“About 12 months ago we said in one of Proving the economic viability of spite its maligned history, may well serve
our ASX announcements that we had a Tunkillia will perhaps make market ob- WPG well in the long-run, particularly if it
five by 100 strategy; within five years we servers take notice of WPG. can exceed expectations.
wanted to be producing 100,000 “I think if we can deliver the goods on
Challenger and Tarcoola, in a few years
PAGE 24 APRIL 2016 AUSTRALIA’S PAYDIRT
time – and again absent of a collapse
in the gold price – the market will start
to take notice of what we are doing and
we’ll be in a position to fund the develop-
ment of Tunkillia,” Duffin said.
“We see Challenger and Tarcoola as
our transition into gold production out of
iron ore. Once in gold production we will
literally be generating cash flow within
a few months, but the real upside is in
Tunkillia with the tonnage potential there
able to support a much larger scale of
development.”
At the time of print, WPG was headed
for Tunkillia to conduct an exploration
programme, including drilling on Area 51
and Tomahawk Extended.
Duffin said the company would have
been on the ground earlier, however, un-
seasonal rain prevented it
The company’s strategy at Tunkillia
is to identify satellite resources from a
number of exploration targets already
identified.
Calcrete sampling, the mode of explo-
ration which led to the Challenger dis-
covery, has been conducted with over
12,000 samples collected at Tunkillia.
Calcrete sampling on eight priority ploration in the good times and not so shareholders which had allowed WPG
targets has been completed, while a his- well in the bad, as currently being experi- to execute its gold strategy, which is
torical review to date has identified 33 enced by the resources sector. months away from take-off.
prospects. “We have a very big tenement pack- “There has been hardly any movement
“Our exploration programme at Tunkil- age, both in our own right and in the in our top 50 shareholders in the past
lia at the moment is fairly modest and Gawler Craton, and as a result of the four or five years,” he said.
costing us only $500,000. I would like Kingsgate assets we will have a bigger “We do have the credibility in the mar-
to be spending a lot more on exploration package of tenements. Some of them ket place to do these sorts of deals and
because that is one way of generating are farmed out to different parties and it did not surprise me that Kingsgate
real wealth, but most of the time explora- we are quite happy for them to continue agreed to deal with us versus some of
tion is unsuccessful. Once we start gen- expending money on those projects, par- the other parties that threw their hat into
erating cash flow from these assets then ticularly in the knowledge that if they are the ring to acquire this asset. We are in
we will be ramping up our exploration ef- successful they will come knocking on JV with a pretty well respected and com-
fort,” Duffin said. the door to treat ore through the Chal- petent mining contracting firm – PYBAR
WPG is well spread in SA with almost lenger plant,” Duffin said. – which has a track record of taking eq-
5,000sq km of gold tenure in the State, It may have surprised many that in 2016 uity positions in projects or in corporates
while its total landholding in the Gawler anyone wanting to deal with the Chal- and we thought and still do think that we
Craton is 7,323sq km. lenger mine would have to go through put up a pretty good proposal to Kings-
With WPG’s management team com- WPG; a company which dispersed of its gate as to why they should do a deal with
ing from an exploration background, iron ore assets for $320 million – much of us and nobody else.”
there is a penchant for exploration within which was distributed back to sharehold- – Mark Andrews
the inner sanctum, however, it under- ers – in 2011.
stands the market responds well to ex- Duffin said it was the loyal band of
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 25
SAREIC PREVIEW
South Australia
back among
the elite
outh Australia’s mining sector may be suffering more than most mineral sands, copper and gas, the slide
Sfrom the current market malaise but miners and explorers con- in prices for these commodities has seen
investors lose interest in many of the jun-
tinue to rate the State for its investment attraction. iors exploring in the State.
While the outlook for iron ore and ura-
SA was placed 10th in the latest Fraser welcomed in a state where exploration nium continues to appear bleak, fore-
Institute Survey of Mining Companies in- momentum has stalled over the last three casts for an upswing in copper supply/
vestment attractiveness index, indicating years. demand fundamentals could reinvigorate
companies continue to recognise Jay However, with the State dropping three red metal exploration in a state which
Weatherill’s State Government as a force places to 20th in the policy perception produced Australia’s first copper.
for good in the State. index, it appears the Government has To counter the drop in exploration and
The survey is based on the responses more work to do. development momentum, the State Gov-
of 449 participants from exploration and While the second half of the previous ernment in February launched a Copper
mining around the world. The investment decade saw a rash of new mine devel- Strategy, a long-term outlook designed
attractiveness index ranks jurisdictions opments in SA – including Prominent to build an $8 billion annual copper in-
by combining regions’ geological attrac- Hill and Jacinth-Ambrosia – the last four dustry for the State.
tiveness with the effects of government years have seen a lack of new construc- SA is already home to 68% of Austral-
policy on attitudes toward exploration in- tion projects. ia’s copper resources, including the icon-
vestment. Much of the blame can be attributed to ic Olympic Dam mine which has been
Neighbour Western Australia finished the end of the China-fuelled commodi- joined in the past decade by the Promi-
top of the index for 2015 but SA’s move ties super-cycle. While SA is undoubted- nent Hill and Kanmantoo copper mines.
from 16th in 2014 to 10th in 2015 will be ly well-endowed with iron ore, uranium, The new policy will see the State aim
PAGE 26 APRIL 2016 AUSTRALIA’S PAYDIRT
prove copper-in-concentrate.
“Overall, PACE Copper aims to gen-
erate more than $400 million in private
mineral exploration return for the State,
and create and retain up to 1,000 direct
and indirect jobs within the minerals in-
dustry,” Mineral Resources and Energy
Minister, Tom Koutsantonis said.
Other strategies in the initiative in-
clude:
• Building South Australia as an inter-
national copper technology and research
hub, through leveraging existing copper
research initiatives and programmes
• Identifying infrastructure needs and
developing innovative approaches in-
cluding finding suitable water supplies
and transport opportunities for current
and future mines
• Running copper strategy success
seminars with mining industry, research-
ers and services companies to share
innovations, ideas, build skills and learn
from experts in the field
• Developing regional approaches to
changes in the copper mining industry
to support transfer of skills and jobs and
support new ventures in regional com-
munities
• Establishing South Australia as a
nationally recognised centre for copper
mining services
• Attracting major international re-
source and service companies with
deep mining expertise and technology
• Supporting groundwater research
to find long-term suitable water sources
with the Goyder Institute for Water Re-
search in South Australia
• Supporting international information
exchange programmes with Chile and
China who are world leaders in copper
production
for a 300% increase in copper production SA produced and exported $1.9 billion The 14th South Australian Resources
over the next two decades to 1 mtpa. of copper in 2014-15, and last year the and Energy Investment Conference will
The Government’s aspirations for cop- copper industry employed about 5,000 take place at the Hilton Adelaide on April
per have already received a boost, with people in exploration and production. 20. For sponsorship, registration and
Oz Minerals Ltd confirming it would pur- Funding for the new strategy started attendance information, please contact
sue a PFS on a high-grade development last year with the commitment of $20 mil- Tammy Caldwell on (08) 9321 0355 or
at its Carrapateena project on the Gawler lion to the Government’s PACE Copper [email protected]
Craton (see page 31). programme and $10 million towards a
“By trebling our copper production, we partnership with Oz Minerals to support
have the potential to create up to 10,000 innovative research into a process to im-
extra jobs, increasing the
workforce involved in the Fraser Institute Survey of Mining Companies investment attractiveness index ranking
sector to 15,000 people,”
Weatherill said in Febru- NSW Northern Queensland South Tasmania Victoria Western
ary. “This would equate to Territory Australia Australia
South Australia producing 2015 38/109 7/109 16/109 10/109 30/109 62/109 1/109
and exporting more than
$8 billion of copper per 2014 55/122 31/122 22/122 16/122 46/122 69/122 4/122
year, with the red metal 2013 36/112 19/112 20/112 23/112 44/112 51/112 2/112
remaining the State’s 2012 45/96 19/96 20/96 18/96 66/96 65/96 6/96
number one export com-
modity.” 2011 52/93 28/93 27/93 10/93 66/93 83/93 7/93
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 27
OPINION
SA continues to lead oil and
gas innovation
he right geology, together operated by BP Developments
Twith policy innovation and Australia Pty Ltd (BP), two oper-
excellent investment frame- ated by Bight Petroleum Ltd, two
works are reasons why South by Chevron Australia New Ven-
Australia is leading oil and gas tures Pty Ltd and one by the Mur-
transformation in Australia. phy Australia Oil Pty Ltd/ Santos
SA is widely regarded as hav- Offshore Pty Ltd JV. Collectively,
ing one of the country’s most these companies have guaran-
effective upstream petroleum teed to spend approximately $1.2
frameworks. It offers a sup- billion over the period 2011-2018.
portive investment framework, BP is well advanced in planning
a trusted regulatory framework, for its two well drilling programmes
benefits from pre-existing infra- in 2016-17, including substantial
structure, and is a jurisdiction stakeholder consultation in addi-
focused on increasing capa- tional to technical, logistical and
bilities and productivity. This is environmental planning and ap-
reflected in results of the 9th proval documentation.
Fraser Institute Global Petro- The SA Government’s vision is
leum Survey, released in De- about opening the door to new ide-
cember 2015 which rated SA as as, new opportunities, new people
the best performing jurisdiction and new businesses and we are
in the nation. For the first time, committed to unlocking the full po-
SA topped the world for fiscal tential of the State’s resource and
terms – over the last two years energy assets. To that end, the
petroleum retention license fees Energy Resources Division is fo-
have been reduced by 25% and cussed on delivering the following:
it is intended to further decrease • sustaining a trustworthy, effi-
these fees in future. cient and effective one-stop-shop
SA is the first Australian jurisdiction and a variety of gas plays (conventional, for regulatory approvals;
to deliver a comprehensive approach to as well as shale gas, basin-centred gas • regulating to meet both community
developing its vast gas resource plays. and deep gas from coal source rock), and investor expectations;
The Roadmap for unconventional gas continue to be explored and developed. • pragmatic tenure over extensive
projects in SA was released in Decem- Offshore, in Commonwealth waters, proven play tends via petroleum reten-
ber 2012 and is designed to inform in- there are currently nine exploration pe- tion licences (PRL);
dustry strategies, government policies, troleum permits in the Bight Basin – four • 35% reduction in PRL fees by July 1,
and regulations to facilitate oil and gas 2020;
projects in ways that SA communities • five year deferment of royalties for
welcome. Work to implement the Road- gas produced from unconventional res-
map continues through the Roundtable ervoirs;
for Oil and Gas and its eight working • when oil is less than $US70/bar-
groups established to address the most rel, company development investment
critical recommendations. Nearly all of counts towards minimum exploration ex-
the state’s onshore prospective acreage penditure;
is covered by 53 petroleum exploration li- • publishing market analysis and play
cences (PELs – area currently 211,119sq size to inform stakeholders;
km) in the productive Otway and Cooper- • considering government-funded in-
Eromanga basins, the frontier Officer, frastructure (e.g. roads, airports, etc) to
Arrowie, Stansbury and Arckaringa ba- foster productivity at times of low con-
sins, and over basins with coal seam gas struction costs, and;
and underground (in situ) coal gasifica- • improving access to data and infor-
tion potential. mation by translating the PEPS data-
The Cooper Basin remains the nation’s Barry Goldstein has more than 30 years in- base (which manages SA well, seismic,
largest onshore oil and gas producer ternational experience in energy businesses. tenement, engineering and production
and record levels of drilling occurred in He is executive director for South Australia’s data) into a fully web enabled platform
2013-14. While the current low oil price Energy Resources Division where he and his to provide open file data to stakeholders
has impacted company exploration pro- team are focused on the delivery of regula- quickly and simply in 2016.
grammes, the western flank oil play trend tory nirvana for resources projects.
PAGE 28 APRIL 2016 AUSTRALIA’S PAYDIRT
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Iluka heeds to zircon demand
outh Australia will still receive a Iluka to find a way to drawdown its
Sroyalty payment from Jacinth- stockpiles at Jacinth-Ambrosia and
Ambrosia despite the imminent aid a global market recovery for
suspension of mining and concen- mineral sands products.
trating activities at Iluka Resources “We don’t seek to push zircon
Ltd’s premier minerals sands op- volume into the market if zircon de-
eration. mand is not there,” Porter said.
Mining and concentrating activi- “We think that would be counter-
ties at Jacinth-Ambrosia will cease productive in terms of shareholder
on April 16 for 18-24 months, de- interest and it will just reduce the
pending on market conditions. margins that we receive. Our ap-
Iluka cited lower global demand for proach across the business has
zircon behind its decision to flex been to flex production downwards
production downwards. when market conditions are weak
Jacinth-Ambrosia has the ability and then when market conditions
to supply 25-30% of global zircon recover to reactivate production
demand at peak production. Iluka will suspend mining and concentrating activities and supply more material to the
However, royalty payments to at Jacinth-Ambrosia later this month marketplace.”
the SA Government will be unaf- Iluka’s shareholders have react-
fected because Iluka intends to continue structure and rehabilitation costs. Next ed positively to the news of the suspen-
processing its current concentrate inven- year that benefit will jump to $45 million. sion, with the company’s stocks up 10%
tory at Jacinth-Ambrosia, totalling over “It’s certainly not an action which is out to $7.40/share since the decision was
800,000t, at either of its mineral sepa- of desperation or economic necessity,” made public in mid-February.
ration plants at Hamilton, Victoria, and Porter said. “The company is in very “Shareholder interest has been at the
Narngulu, Western Australia. good shape. We have no debt, we’re forefront in this and I think for those peo-
“This has nothing to do with State eco- generating free cash flow, so it’s not as if ple in the investment community who fol-
nomic factors, this is based on global we’ve been forced to do this. low Iluka closely they would see this ac-
market demand,” Iluka general manager “We obviously realise this has been tion as being consistent with what we’ve
of investor relations and corporate affairs a difficult course of action to pursue… done elsewhere,” Porter said.
Robert Porter told Paydirt. but this is clearly an operation that will “Obviously not everybody has the
“We want to make it clear this is noth- come back, there’s no doubt about it. same view, but I think most people would
ing related to policy settings or govern- This is one of the premier mineral sands see this as being a disciplined and re-
mental support in SA. In fact, it’s quite deposits globally and there will certainly sponsible action for the market leader
the opposite. The SA Government has be a need for the product from the mining in zircon to take, so the investor reaction
been quite supportive of our operations. operation to be back in the marketplace has been generally positive from our per-
“Transporting concentrate is the basis at hopefully the shorter end of that 18-24 spective.”
on which we pay royalties, so royalties month period.” Jacinth-Ambrosia, in the Eucla Basin,
will still be paid to the SA Government Porter said the company had been was discovered in 2004 and achieved
over the period of time we’re suspended. mulling over the decision to suspend first production five years later, becoming
So from that perspective, the royalty mining and concentrating activities at Ja- the project which put Iluka in the interna-
stream doesn’t change.” cinth-Ambrosia since 2014 when an ex- tional resources spotlight.
Iluka said 33 of its direct workforce of pected recovery in zircon demand failed The operation churned out 297,000t
79 at Jacinth-Ambrosia will be made re- to eventuate. zircon, 39,900t rutile and 231,000t ilmen-
dundant as a result of the suspension, Further subdued demand last year and ite in the last calendar year, up 24%, 34%
with the remaining 46 to be redeployed similar expectations this year prompted and 125% respectively on the 2014 pro-
for continuing activities such as duction figures.
concentrate handling, asset mainte- “It’s what most people in the re-
nance and environmental rehabilita- sources sector would aspire to have
tion work. in their portfolio,” Porter said.
Local communities and business- “It’s also very important in terms
es could also suffer negatively from of global supply because it came
the impending suspension. into production at a time when…
Iluka expects the suspension will the zircon coming out of WA was
increase the company’s net cash reducing very rapidly, but Jacinth-
flow due to the reduction in group Ambrosia has been able to replace
production costs, offset partially by that in effect. It’s been very impor-
rehabilitation, restructure and idle tant from the point of view of Aus-
costs. tralia’s ability to supply this product
Early forecasts suggest a net internationally.”
cash benefit of about $30 million Stockpiled concentrate at Jacinth-Ambrosia will be
for 2016 after $16 million in idle, re- processed at Iluka’s separation plants in WA and Victoria – Michael Washbourne
PAGE 30 APRIL 2016 AUSTRALIA’S PAYDIRT
Oz gives Carrapateena higher life
z Minerals Ltd has con- grade option in October 2015
Ofirmed it will pursue a after investigating other op-
stripped down development of tions for development, in-
Carrapateena, thereby reduc- cluding trucking ore to the
ing both capital and operating company’s Prominent Hill
costs for the copper project. mine 250km away.
The company announced “The original review did
in late February it would start bring the economics down
a new PFS for Carrapateena but the risks were still too
based on a 2.8 mtpa opera- high. The rail option helped
tion using sub-level caving to with capex but operating
exploit the 61mt high-grade costs were increased and
component of the deposit’s it didn’t de-risk the project,”
wider 800mt resource. Cole said.
Oz had completed a PFS on A reinterpretation of the orebody has led Oz Minerals to commit to a Speaking to Paydirt in De-
Carrapateena in 2014 based smaller, higher grade development of the Carrapateena copper project cember, Cole admitted the
on a 12.8 mtpa block caving smaller, high-grade option
operation but negative sentiment for both own cash reserves and the cash flow previously hadn’t been built up enough.
copper and mining equities left the com- generated from Prominent Hill,” Cole told “We realised we hadn’t given enough
pany struggling to find funding for the $3 a conference call on announcing the de- consideration to the third option of a
billion project. cision. “Whatever lens you look through, smaller, high-grade operation. So, in the
Eighteen months on, Oz managing di- whether it is value, rate of return, grade, last six months we have been rebuild-
rector Andrew Cole is confident Oz won’t cost, mine life, production profile, jobs or ing the resource models on much finer
have to tap the market for the revised scalability, we believe Carrapateena will meshes,” he said.
$770 million price tag. be an outstanding project.”
“We can fund Carrapateena out of our Oz had initiated work on the high- To page 32
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 31
SAREIC PREVIEW
Oz returned to re- and 38,000 ozpa gold. four or five months has shown the 2.8
source modelling, iden- Average annual cash mtpa capacity is the best base case and
tifying a 61mt @ 2.4% flow is estimated at this will be taken to PFS.”
copper and 0.9 g/t gold $150 million with pay- Cole said choosing sub-level caving as
high-grade component back expected in five the mining method allowed for scalability
within a global resource years. NPV is estimat- down the track.
of 800mt @ 0.8% copper ed at more than $600 “It is a pipe-like orebody that is coher-
and 0.4 g/t gold. million and IRR more ent and consistent which allows for a
“I must admit to being a than 20%. smaller start-up project. Stoping works
little surprised at just how Oz will exploit the as well but sub-level caving allows us to
high the grade is, how orebody using sub-lev- mine more of the high-grade and gives
large it is and how robust el caving through a sin- much more flexibility and scalability once
it looks,” Cole said. gle decline. Processing in production. If copper prices improve,
The results of the Feb- will occur on site with a we can rapidly expand the scale to take
ruary scoping study con- hydromet treatment cir- in more of the resource.”
firmed Cole’s belief that cuit to produce a 60% Throughput is also scalable should
the high-grade option copper concentrate. market conditions improve.
would prove the most de- “On nearly every “We can expand up to 4.8 mtpa and as
sirable. Andrew Cole level the sub-level cav- we work through the PFS we will consid-
Capex for the project is ing mining option of the er a second access – either a shaft or de-
estimated at $770 million with estimated high-grade resource is far more attrac- cline – if it creates value by allowing more
C1 costs of $US0.70/lb in the first five tive and a lower risk proposition,” Cole ore to be mined more quickly,” Cole said.
years and $US1/lb over the life-of-mine. said. “The scoping study work of the last The numbers in the scoping study were
40,000 tpa copper “ Whatever lens you look through, whether it forecasts but Cole
based on consen-
Production is es-
timated at 55,000
sus copper price
tpa copper and
was eager to point
58,000 ozpa gold
is value, rate of return, grade, cost, mine life,
out under the pre-
for the first three
years with life-of-
vailing
copper
production profile, jobs or scalability, we believe
mine averages of
price, Carrapatee-
Carrapateena will be an outstanding project.
na still stacked up.
PAGE 32 APRIL 2016 AUSTRALIA’S PAYDIRT
“If you assume flat pricing for the life- ple have capacity at the moment. Being
of-mine the NPV is still more than $50 able to transfer risk to suppliers gives us
million and the IRR more than the cost of a natural hedge,” he said.
capital expense.” “One of the reasons for ensuring the
The addition of the hydromet circuit will decline is started by mid-2016 is to pre-
add additional value to Carrapateena’s serve the value of the project. Pushing
product, according to Cole. out development would destroy Carrapa-
“We could sell Carrapateena concen- teena’s value.”
trate under our Prominent Hill agree- Oz’s confidence it can fund Carrapa-
ments but having the hydromet circuit teena’s development internally was fur-
will reduce the amount of concentrate ther emphasised by the company’s deci-
we transport and will give us the best sion to launch a share buy-back initiative
copper-in-concentrate product in the in conjunction with the PFS announce-
market.” ment.
Oz will now press ahead with PFS Oz was set to return to drilling last month in The programme will see Oz buy back
work. an effort to upgrade the Carrapateena re- up to $60 million worth of shares on-mar-
“We will complete PFS level work on source to indicated and provide material ket, representing 3.7% of the company.
the 2.8 mtpa base case and also explore for metallurgical test work “With the lower than expected capex for
opportunities to increase throughput to Carrapateena and ongoing performance
a maximum of 4.8 mtpa [largely through by the end of 2016 with a full feasibility of Prominent Hill we have launched the
cut-off grade optimisation and alternative study and subsequent decision to mine share buy-back when shares, we believe,
handling system options] and will have to follow in the first quarter of 2017. Oz are well below fair value,” Cole said.
the work completed by mid-2016,” Cole has identified a late-2019 date for first “Our clear capital management frame-
said. “We will also drill four new holes to production. work will focus on maximising share-
upgrade the resource to measured sta- Despite the tough market conditions holder value by competition between
tus and for metallurgical test work. We for copper miners, building a mine in paying dividends and/or buy backs and/
are also finalising scoping, costing and 2016 was “far less risky than five years or investments – whether internal or ex-
supplier selection in order for us to start ago”, according to Cole. ternal. We will ensure capital is allocated
long-lead ordering to allow us to start the “You need tight contract management efficiently,” Cole said.
exploration decline in mid-2016.” but you do have a natural advantage giv-
The PFS is expected to be completed en so many quality companies and peo- – Dominic Piper
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 33
SAREIC PREVIEW
Tyranna’s drilling challenge
yranna Resources Ltd has
Tlaunched a 6,200m drilling pro-
gramme it hopes will be the first step
to defining at least 500,000oz gold
at its Jumback project on the Gawler
Craton.
The RC programme will be the first
of 15-20,000m of drilling planned for
2016 as Tyranna formulates plans to
build resources at seven advanced
prospects within a 50km radius of
the Challenger gold processing plant
(see page 20).
Six of the seven advanced gold
prospects form part of a JV with
Challenger Gold Operations Pty Ltd.
Under the JV, and subject to certain
circumstances, gold ore may be
processed at the Challenger facility.
Tyranna is the JV manager, holding
a 59% stake which will increase to
70% once the current exploration
programme is completed.
The company hopes development Tyranna is set to test several targets on ground around the Challenger gold mine
of a 3-5 year toll-treatment operation
can act as a springboard to the delinea- The company has set a target of a 70- “These broadly spaced drill results
tion of a larger, 2-3 moz gold resource. 100,000oz reserve at Golf Bore with a reflect the calcrete geochemistry and
further 500,000oz strongly indicate that the 750m gold
of resources to strike extent already demonstrated at
hopefully come from Golf Bore continues into EL 5526 and
other prospects. may well double the overall strike extent
The drilling pro- to over 1.5km,” the company said in an
gramme will start ASX release.
at the Golf Bore Tyranna will continue to follow the cal-
prospect where crete anomaly trail by drilling the Camp
30,000m of previ- Fire Bore prospect, 22km west of Golf
ous drilling “clearly Bore. Early aircore drilling returned inter-
outlines a broad cepts of 14m @ 4.17 g/t, 6m @ 4.97 g/t.
supergene blanket,” and 8m @ 3.5 g/t but only tested 400m of
according to the the 1,600m calcrete signature.
company. Almost all “The current programme aims to re-
of the previous drill- view the geometry of the gold body and
ing had been shal- subsequently carry out RC drilling to as-
low and Tyranna sess the full resource potential,” the com-
is keen to test the pany said.
deeper potential on Another calcrete anomaly at Mainwood
the target. will also be followed up after aircore drill-
From there, ing on the 2km long prospect earlier re-
Tyranna will move turned hits of 13m @ 3.5 g/t, 6m @ 4.4
north-east to the g/t and 1m @ 41 g/t gold.
Gold Bore North Tyranna will also return to its geo-
prospect, which sits chemical programme with further cal-
outside the Chal- crete sampling at the Thunderbolt Tank
lenger JV. At Golf nickel prospect, 70km to the west of Golf
Bore North, drilling Bore.
will follow up on The company has previously reported
shallow aircore re- an “exceptional result” of 480 ppm nickel
sults which returned and 180 ppm gold from a single sample
best hits of 1m @ on the prospect.
9.89 g/t gold and
3m @ 2.48 g/t gold.
PAGE 34 APRIL 2016 AUSTRALIA’S PAYDIRT
Gold brings silver lining
for Investigator
omestic and US gold prices tion tenure, with drilling proposed
Dhave caused a positive stir in for the next round of PACE fund-
the market and the current bull run ing.
has also meant goods things for An astute explorer, Anderson
other sectors. said he and the Investigator team
Silver, often the forgotten pre- had closely watched innovative
cious metal, has ridden on the government surveys which had
coattails of the yellow metal’s rise refined the mapping of the Olym-
and is enjoying a small purple pic Dam IOCG belt.
patch in pricing. A geophysical corridor in-
At the time of print, silver was terpreted to be the underlying
clawing its way back up the chart metal-rich source of the region
and on the verge of breaking The current gold bull run has dragged silver prices along as extends from Olympic Dam to
through $US16/oz for the first time well, which is good news for Investigator’s Paris project Carrapateena and south to Mas-
since October 2015. positive metallurgical tests have demon- lins, which is close to road, rail and port
Towards the end of 2015, silver prices strated a strong economic case for future infrastructure.
fell sharply, dropping below $US14/oz to development of Paris. “We are bringing that forward as a high
start this year. The company is considering its op- priority drill target for 2016,” Anderson
However, as gold has gained momen- tions, including a further resource up- said.
tum, so has silver, providing those with grade and other development alterna- “At this stage, I think that’s why Maslins
silver assets some impetus to forge tives. is probably the best opportunity [in the
ahead. A recent Federal Government R&D tax corridor]. We went to it because of this
Investigator Resources Ltd is one refund of $950,000 will be used to build concept of the geophysical corridor ex-
such company, with its Paris silver pro- on the Paris project and also help Inves- panding the Olympic Dam belt. We have
ject within the Peterlumbo tenement on tigator test flow-on opportuni- gone down to where people
the northern Eyre Peninsula, South Aus- ties within its surrounding tene- haven’t drilled before or deep
tralia. ments on the southern Gawler enough and we’re not that far
In November, an updated inferred re- Craton. from Carrapateena.
source was announced at Paris; 8.8mt Drilling is proposed for the “If we have gravity anoma-
@ 116 g/t silver for 33 moz (50 g/t silver nearby Nankivel copper pros- lies in the right position then
cut-off). pect, which is in a wider mineral I think there may be more
The timing of Investigator’s resource system extending from Paris around, but we went to this
update, which signified a 60% increase and a candidate for PACE fund- area specifically to look at
to the 2013 maiden inferred resource of ing, in the June quarter. John Anderson gravity targets, but at this
20 moz, coincided with silver’s flop in the Meanwhile, a major fillip for stage I would have to say that
market. one of SA’s most active explorers has Maslins is the best IOCG greenfields op-
The tide has changed in silver and so been the recent progress made at Ma- portunity going. We are hoping that we
has sentiment towards Investigator, with slins; a 6km by 1km gravity target, 50km are actually on to another very large 6km
its share price doubling to 2c/share since south of Carrapateena. by 1km IOCG system and that is what we
February. Investigator has been granted explora- want to test.”
“That has something to do Anderson said the com-
with our silver interest which 1 Year Silver High 17.68 Low 13.65 pany has received good trac-
is being carried by the inter- 18.00 18.00 tion in the market from its
est in gold at the moment,” 17.50 17.50 Maslins announcement and
Investigator managing direc- 17.00 17.00 hoped to deliver more good
tor John Anderson told Pay- 16.50 16.50 news in the future.
dirt. “It is hard to get the mes-
“I think we are through the 16.00 16.00 sage out there but I think
worst of the cycle and hope- 15.50 15.50 the release we put out about
fully interest in silver will con- 15.00 15.00 Maslins we have had good
tinue. We are pursuing some 14.50 14.50 feedback about it. We have
innovative development [op- a strong following of people
tions] for Paris and looking at 14.00 14.00 that actually like us and are
ways we can move the pro- 13.50 www.kitco.com 13.50 interested in what we have to
ject towards development.” 13.00 13.00 say,” Anderson said.
Internal studies on a shal- 19Mar 27Apr 03Jun 10Jul 18Aug 24Sep 02Nov 09Dec 15Jan 23Feb 17Mar
low open pit on the back of Based on New York Close – Mark Andrews
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 35
SAREIC PREVIEW
Road opens for Central Eyre
ron Road Ltd managing director An- said. “To my knowledge this is unprec-
Idrews Stocks believes his company’s edented in South Australia.
proposed partnership with Emerald “The next process will be to respond
Grain is the prefect example of how to all those comments or queries and
mining and agriculture can work to- get some approvals in place.”
gether. Iron Road completed an optimised
The iron ore hopeful confirmed last DFS last October, successfully reduc-
month it had signed a MoU with Emer- ing the life-of-mine operating costs
ald Grain, a wholly owned subsidiary from $US44.33/t to $US37.72/t. Cen-
of Japanese conglomerate Sumitomo tral Eyre’s breakeven price was as-
Corp, to develop a grain distribution sessed at $US40/t.
and supply network using Iron Road’s Estimates were based on an op-
planned port and rail facilities on the timised 24 mtpa production rate of
Eyre Peninsula. premium quality concentrate grading
The original MoU was first signed in about 67% iron with low impurities.
early 2014, but Emerald’s identity and “The thing about this project which
the terms of the proposed partner- is unusual is that the orebody is rela-
ship had remained confidential until tively low-grade in the ground, how-
recently. ever, it upgrades quite easily,” Stocks
Iron Road is looking to build a said.
148km railway from its Central Eyre “We brought experts in-house and
iron project, near Warramboo, to a we spent another year looking at the
new 70 mtpa port facility at Cape project and really studied the in-pit
Hardy. The company anticipates it will crushing and conveying aspect, but
require 20-25 mtpa of that shiploader also some of the aspects in the plant,
capacity. particularly around the milling circuit.
Third-party infrastructure access Iron Road has signed a MoU with Emerald Grain for “The upshot of all that is that our fi-
has been integral to Iron Road’s bid to use of its proposed port and rail infrastructure nal cost structure is far more sensitive
get Central Eyre off the ground. The to mining than it is for ore processing,
project, including the infrastructure arm, the other product…that part of the pro- which is quite different to many other
carries a total capex of over $US4 billion. gramme is not really contentious.” magnetite projects around the world. Be-
Stocks said his company’s relationship Iron Road is also looking at a number cause of that, we decided to spend a bit
with Emerald showed how different in- of potential development scenarios for more time studying the mining.”
dustries could co-exist in a region. the port, including the delivery of grain The elephant in the room for Iron Road
“It’s a good example of how mining and before the proposed first shipment of iron remains the low iron ore price, but Stocks
agriculture can work together for the ben- ore concentrate in 2020. is unperturbed and said his company was
efit of everybody,” Stocks told Paydirt. The tough environment for iron ore well placed to leverage off forecast long-
“There’s too much of a debate, this juniors has not stopped the company term pricing in the $US70-80/t range.
‘mining versus agriculture’ concept. It from taking big strides towards devel- Stocks said recent announcements
should be about how can the two lever- oping Central Eyre. In September last from China regarding cutbacks of crude
age each other, how can mining leverage year, Iron Road signed MoUs with five steel production augured well for his
what agriculture already has in place and Chinese steel companies to evaluate the company.
when mining moves in, how are they go- commercial and technical benefits of us- “Cutting capacity is going to help the
ing to benefit the agricultural community. ing its product. steel industry and we believe over the
There needs to be more of it.” Four of the five companies have com- next two or three years there will be a
Both parties are currently working on a pleted their reviews and Stocks said the tightening in the market,” Stocks said.
detailed engineering plan to ensure Em- initial feedback had been positive. “We’ve also seen China tightening up
erald’s requirements are compatible with “Some of them like it more than others their environmental standards, particu-
Iron Road’s. Emerald is likely to have a and every mill has different requirements, larly the atmospheric standards, and we
storage facility near the port and will in- so the conversation is different with each expect to see a further tightening.
dependently load grain via a separate group, but they all acknowledge the qual- “[Our product] is high quality, it reduc-
conveyor. ity of the product,” he said. es power consumption in the sintering
Stocks said it was essential his compa- According to Stocks, Iron Road also process in the blast furnace and it also
ny’s product did not mix with Emerald’s received positive feedback from the im- reduces atmospheric emissions…when
grain, and vice-versa. pacted communities, following submis- you put all of this together, it means we
“They have to be totally independent sions for a mining lease proposal and have a very desirable product and one
of each other,” he said. “We’re not going environmental impact statement. that will receive premium pricing.”
to wash down our iron ore conveyors to “You don’t normally get positive sub-
load wheat on to them for one shipment missions, or very many positive submis- – Michael Washbourne
and then go back to iron ore. sions, but we received 105 submissions
“No product is going to be mixing with and about half of them are positive,” he
PAGE 36 APRIL 2016 AUSTRALIA’S PAYDIRT
Havilah hits pay dirt at Portia
t may have one of the most un- million, at a $1,580/oz gold price.
Iconventional mining projects in “If you can do [a project] like this,
the State, but Havilah Resources it is great as a junior because it is
Ltd now sits in the bracket of impossible for juniors to get funding
South Australian miners. and it also allows you to do some-
The company announced first thing and advance something. If we
ore mined from the Portia gold hadn’t got that financing help from
project last month, three-and-a- CMC, we’d still be sitting here won-
half months ahead of schedule. dering what to do,” Giles said.
Managing director Chris Giles “We are up on the surface which
told Paydirt that Havilah had ex- is a much better place to be. There
perienced somewhat of a dream are probably a lot of contractors
run into production. hurting now so they don’t have the
“We haven’t really come across spare cash flow or funds to be able
anything that we didn’t expect or to fund shifting 8 million cubic me-
out of the blue, we mined down tres of dirt before they get pay back,
[mid-March] to 70m depth below so you have to find the right kind of
the surface, about 5m above the contractor. Portia is ideally suited
ore,” Giles said. because it is a short mine life, the
“We drilled down the remain- gold is all coarse grade, so there is
ing 5-10m to the ore zone and Chris Giles a fairly quick pay back.”
it was all there where it should Giles said Portia was a simple
have been, so that was good. Now they earn a 50% stake in the project. orebody and perhaps if there was a long-
are select mining that ore out and put- Earlier this year, Havilah announced er life projected, orchestrating a deal,
ting it on the ROM pad near the process- $500,000 had been received from the such as the revenue share arrangement
ing plant. Once the processing plant is forward sale of 300oz gold at a price of Havilah has with CMC, would be more
up and going, we’ll process it and put it $1,691/oz, which supplements 10,000oz difficult.
through. No bad things have happened, gold already hedged at $1,618/oz. “A couple of things have worked for
nor have there been any bad signs or Giles said production from Portia Portia, not to say it couldn’t be adapted in
anything.” would last between three to six months other situations, but perhaps it is the only
Commissioning of the processing plant and possibly a maximum of 12 months, way juniors will get small projects off the
was progressing as planned at the time with gross cash flow generated by Hav- ground, I suspect,” he said.
of print, with commissioning expected ilah alone this year is potentially $40 mil- Once production is exhausted from
sometime this month. lion. Portia, there is potential for Havilah to at-
Havilah will control processing, while Total cash flow generation from Por- tack the North Portia project, which hosts
Consolidated Mining & Civil Pty Ltd tia – based on 720,000t @ 2.9 g/t gold, a resource of 622,000t copper and 2 moz
(CMC) is the mining contract partner at within an open pit of 355,000t @ 4.7 g/t gold.
Portia, north-east of Broken Hill, and will gold for 53,600oz – is estimated at $80.5 “We are doing a fast tracked feasibility
study on that at the moment to see the
viability of mining that straight after Por-
tia. We still have to get permits and the
like, I don’t know how long that will take,
hopefully not too long, and we can get on
mining copper and gold at North Portia,”
Giles said.
Following North Portia, Kalkaroo is the
big fish Havilah aims to snag.
A development decision on Kalkaroo,
20km south of North Portia, is expected
in 2017.
“That will be a 15-20 year mine life
there, that is advancing OK and the min-
ing licence approval is going through the
process in the Mines Department. It has
passed through all the tests, it’s just go-
ing through the approval process. It is a
formality type of thing,” Giles said.
– Mark Andrews
First ore from Portia was mined in March
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 37
SAREIC PREVIEW
Archer’s attention to detail
hile its peers in the graphite field
Wview getting into production first
as a race, Archer Exploration Ltd is not
concerned about where it is placed in this
perceived competition.
Instead, the company is focused on
getting its Campoona Shaft project on
South Australia’s Eyre Peninsula right.
“We’ve got a different approach to
most, it is not about entering the race or
getting to production,” Archer managing
director Gerard Anderson said.
“It is about getting the project right.
Industrial minerals is a tough gig to get
into.”
The recent collapse of Mozambique-
focused Triton Minerals Ltd and, closer
to home, Valence Industries Ltd’s shut-
down of the historic Uley mine less than
eighteen months into operation have
highlighted graphite’s challenges.
Anderson understands the graphite
business is not for the faint-hearted and Archer Exploration is one of the leading graphite developers on
is prudently ticking every box necessary South Australia’s Eyre Peninsula
on the way to production in 2017.
A draft mining lease proposal (MLP) “To go forward on the basis of not pro- existing one and that will mean that the
was submitted in May 2015, which cen- ducing graphene then having to put out mine lease proposal will effectively be
tred on a throughput rate of 140,000 another addendum at a different stage completed in April,” he said.
tpa from the current Campoona Shaft is another problem, so we wanted to in- In the meantime, Archer has almost
resource of 2.17mt @ 9.6% TGC for clude graphene capability,” Anderson completed the PEPR, with only the de-
209,000t contained metal. said. tailed testing of that material to be used
The proposed MLP also covered the “Including the small-scale start-up is for the construction of the tailings stor-
establishment of a processing facility perhaps because of the lessons we have age facility containment to sign off on.
at Sugarloaf and despite an exhaustive learnt from others entering the business, In addition to Campoona, the com-
draft stage, the document is open for which is [getting] the product accredita- pany’s Sugarloaf project is shaping as a
public comment. tion phase right. That potential carbon deposit.
Anderson said process does take a little The company has scheduled field tri-
Archer was closely bit of time and we clearly als to start soon in light of initial research
engaged with the com- wanted to de-risk our work indicating Sugarloaf is not a typical
munity and didn’t ex- project in terms of capital crystalline graphite deposit. Research
pect any major issues and the amount invested. work, also in collaboration with the Uni-
to arise during the We are including a small- versity of Adelaide’s School of Chemical
process and expected scale start-up for a nomi- Engineering, suggests Sugarloaf is a
MLP approval within nal period of time, which form of carbon deposit which has many
six months of final sub- decreases the capital attributes potentially suited to be used as
mission. requirement substan- a soil conditioner or fertilizer.
Prior to final submis- tially and that gives you Archer will continue to investigate
sion, Archer will tweak a product in the market Sugarloaf, while also negotiating infra-
the MLP to include a and logically once it is in structure access with third parties and
smaller-scale opera- the market it is likely to permitting issues with the Government
tion, where the capital grow.” concerning its Leigh Creek magnesite
requirements won’t be Gerard Anderson The changes being project.
overly demanding. made to the MLP has With 453mt grading 41.4% magnesia,
Furthermore, after a joint research meant Archer has had to revisit the mine Archer believes it potentially has one
programme funded by Archer through plan and address a lesser amount of tail- of the largest magnesite projects in the
the University of Adelaide’s School of ings to be stored in the first year or so. world and leveraging from existing infra-
Chemical Engineering deemed Campoo- Anderson said that work has been structure in Leigh Creek could provide it
na graphite concentrates could produce completed, however, the updated mine with a low-cost path to production.
pure graphene (99.9% TGC), Archer de- plan was yet to be finalised.
cided to also include the graphene po- “We think it is better to put out a fully – Mark Andrews
tential in the MLP. updated plan than an addendum to the
PAGE 38 APRIL 2016 AUSTRALIA’S PAYDIRT
Minotaur cements
gypsum resource
iversified explorer Minotaur
DExploration Ltd unveiled
South Australia’s largest unde-
veloped gypsum resource ear-
lier this year.
A maiden inferred resource
of 87mt @ 91% gypsum was
announced from the Lake Pur-
dilla deposit in the State’s west.
SA currently produces about
80% of Australia’s gypsum – 4
mtpa – which is suffice to sup-
ply domestic requirements for
materials such as plasterboard
manufacture, cement manufac-
ture and agricultural use.
Minotaur believes the gyp-
sum at Lake Purdilla is suitable
for these purposes in Australia
and aboard, particularly South
East Asia, where cement and
plasterboard production is in-
creasing.
It is possibly customers in
these markets that Minotaur Minotaur believes it has the largest gypsum resource in South Australia
can target for its raw gypsum
as it looks to divest Lake Purdilla, 130km shipping gypsum plus Minotaur’s nearby Altia lead-silver-zinc deposit, and the JV
from a bulk-handling port and 15km from kaoilin and halloysite assets and local hopes to target this style of mineralisa-
a potential deepwater port development grain production. tion with drilling by the middle of the year.
site. While Minotaur assesses its options at Last year, Oz and Minotaur entered
Once divested of the project, Minotaur Lake Purdilla, the Eloise project is sub- into an exploration farm-in over Mino-
will look to engage with the new owners ject to initial work under the JV with Oz taur’s assets south-east of Cloncurry,
to progress the port solution to reach the Minerals Ltd in Queensland. with Oz committed to sole-funding an
wide-ranging customer base it envis- A $1.5 million work programme will initial $1.5 million in exploration in 2016,
ages. be completed by the end of 2016, with while it has an option to earn a 70% in-
Last year, the company carried out a field-based gravity and EM geophysical terest in the tenements by investing $10
port trans-shipment study which indi- surveys to be conducted in an effort to million over six years.
cated a cost effective logistics solution develop drilling targets.
could be established near Lake Purdilla. Eloise lies along the Levuka Shear
The study included the possibility of Zone, which hosts the Cannington-style
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 39
POTASH/PHOSPHATE
Highfield with the
honours in potash
ighfield Resources Ltd has all the key gus FMB found Highfield’s Muga project experienced in other commodities,
Hingredients to make a successful pot- to be the highest margin potash producer with Chinese benchmark prices cur-
ash business in Spain, according to man- in the world, based on 2015 prices. rently about $US270/t, down from about
aging director Anthony Hall. Argus, commissioned by the European $US450/t in 2013.
“From a Highfield perspective we tick project finance banking syndicate for Hall believes prices are due for an ever
every box, which is really fortunate for Muga, indicated Highfield was likely to so slight uptick, but nothing remarkable.
us,” Hall said. “We have great minerali- be the lowest cost potash producer, with “What you are starting to see is the Ca-
sation, which we will access from a de- a total cash margin of 61% in 2015. nadians, the Belarussians and Russians
cline and conventional being disciplined with
underground mining production and we
operation. We are in a You are always going to be able to enter think that we will start
great location, which “ to see higher potash
means that we don’t a market, if from a margin perspective, prices in the short-to-
have to spend lots of you have an advantage over the existing medium term, but we
money on roads, la- don’t see it skyrocket-
bour camps, etc and market participants. People talk about the ing like they were in
we have a great roy- cost curve and what Argus is saying is that 2013,” he said.
alty regime, great la- “It is an agricultural
bour rates, low price we will have the highest margin. commodity, so it is
customers and from very much driven by
a technical risk per- population growth.
spective we have a mine that can deliver The report took into account delivery of “In the shorter term you still have major
for 35-45 years. Highfield’s Muga’s granular K60 muriate producers that have capacity. It is a rea-
“We don’t need to demonstrate to the of potash (MoP) to customers in Europe, sonably well balanced market right now
market we can do something that has Brazil and the US, with Highfield rated from our point of view.”
never been done before; we’re in a base- the best of its competitors on the basis of Drivers may not be enticing new en-
ment that’s produced potash before.” a sales ratio of 75% into Europe and 25% trants to the sector at the moment, how-
Hall is right to be singing his company’s into the US. ever, not all players are in Highfield’s po-
praises, particularly after a report by Ar- Potash has not escaped the travails sition.
PAGE 40 APRIL 2016 AUSTRALIA’S PAYDIRT
The company has a term sheet signed
with four commercial European banks
for €222 million in project finance, with
pre-production capital costs of €267 mil-
lion demanded to build Muga; a poten-
tial 1.08 mtpa granular K60 MoP project
with a mine life of 47 years, generating
$US200 million EBITDA per annum at
current prices.
Cash costs of are estimated at €130/t,
with North West Europe 2015 spot prices
(October) fetching about €300/t.
Highfield has forecast production of 2
mtpa MoP by 2020, with Muga coming
on stream late next year.
“You are always going to be able to
enter a market, if from a margin perspec-
tive, you have an advantage over the
existing market participants. People talk
about the cost curve and what Argus is
saying is that we will have the highest
margin,” Hall said.
“Margin will determine how long you Highfield will enjoy good labour rates when in production
can stay in production. Potash prices are
very difficult [to deal with], even look at rerating when we receive our environ- “We don’t think that the market is giv-
Jansen [BHP Billiton Ltd’s project in Can- mental approval and by the time we start ing us value outside of the Muga project,
ada], it has a phenomenally high capex production we hope that investors see so we hope to be getting value for our
because it has difficult geology and it is value in our five other projects.” other projects as well,” Hall said.
in a difficult location.” Muga, 264mt @ 13.5% K20, is the For the time being, Highfield is all
Highfield’s entry into the potash mar- company’s flagship project, which cov- about developing Muga and if the market
ket will be less onerous, given Muga is ers only half of the entire Muga project is impressed by that, then the company
in a renowned potash-producing region area, where an exploration target of 127- may well be able to build a loyal following
supported by necessary infrastructure in 255mt @ 12-16% K20 has been set. as it looks to exploit its growth potential.
northern Spain. Furthermore, Highfield has four other Internally, it is believed Vipasca – 319-
“We anticipate receiving environmen- MoP projects – Vipasca, Izaga, Sierra 1,213mt @ 11.4-15.2% K20 (exploration
tal approvals shortly and from there we Del Perdon (82mt @ 10.6% K20, re- target) – could shape as Highfield’s the
receive the mining concession, which al- source) and Pintanos (187mt @ 11.2% best project.
lows us to commence construction and K20, resource) – and a sulphate of pot-
we are aiming to be in production 18 ash project it is working on. – Mark Andrews
months after the start of construction,”
Hall said.
“We hope that we receive a positive
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 41
POTASH/PHOSPHATE
Elemental knocks back Dingyi
lemental Minerals Ltd has the staged approach to produc-
Epoured cold water on an un- tion, as flagged by previous
solicited off-market takeover bid management, in order to max-
from Hong Kong-based Dingyi imise project value.
Group Investment Ltd. Bennett and new Elemen-
Dingyi proposed to acquire tal chairman, respected South
the Republic of Congo-focused African businessman David
potash hopeful for a cash con- Hathorn, have been well re-
sideration of 30c/share. El- ceived by shareholders since
emental’s stock was trading at joining the company late last
18c/share when the bid was an- year.
nounced on February 12. “It’s not just about this next
However, Dingyi’s non-bind- phase, it’s not just about the
ing expression of interest was DFS. It’s about the whole chain
subject to a number of pre-con- of events right the way through
ditions, including “the comple- to construction,” Bennett said.
tion of satisfactory confirmatory Elemental is looking to finalise a binding agreement with “Once we tie up this Summit
due diligence, the negotiation Summit to ensure the company is funded to the start proposal – and we hope to do
and execution of pricing and of construction at Kola that pretty shortly – then one will
definitive documentation and no be able to see this all the way
material change to Elemental’s number the requirements for a reverse takeover through. I think that’s really exciting and
of issued shares”. or the then-new listing regulations for that’s what hopefully will differentiate us
Elemental was quick to reject the pro- mineral assets. and get the confidence going in the com-
posal in favour of pursuing a binding After rejecting Dingyi’s proposal, El- pany again.”
agreement with Summit Private Equity, emental advised the investment firm it Interest in the company also appears
headlined by a potential equity injection could not have any discussions due to to be on the rise. Elemental successfully
of $US50 million that would enable the the exclusivity agreement it had signed raised $4.1 million in February through
company to launch an accelerated de- with Summit in January. the issue of 20.5 million fully paid ordi-
velopment strategy for its suite of potash The lucrative deal will ensure Elemen- nary shares at 20c/share from unrelated
projects. tal is funded through to the start of con- sophisticated and institutional investors
“The Dingyi proposal was nowhere struction at its flagship Kola sylvinite to be put towards the feasibility studies
near the value we think we can achieve project, as well as pursuing new devel- under way.
from the Summit proposal,” Elemental opment strategies for the nearby Dougou “We’ve obviously got an ongoing cash
managing director Sean Bennett told and Yangala projects. burn and just while we are in the process
Paydirt from his Johannesburg office. A French-based construction consor- of negotiating and finalising the Summit
“Our calculations are significantly tium will also become involved in com- transaction we felt we need a little bit
above that valuation from Dingyi and it pleting the Kola DFS, paving the way more working capital,” Bennett said.
was also highly condi- for a potential open-book, “These things always take slightly long-
tional, it had no clarity fixed-price, binding EPC er than you think so we went out to do a
on whether it was there contract. small cash raise of just over $4 million,
at all, and at a price we “Someone said to me really just for working capital purposes
didn’t think was in the the other day that with a until the Summit proposal is finalised.”
best interests of share- fixed EPC contract you run Potash prices have come off slightly
holders. the risk of getting a lot of in the last few months, possibly a victim
“If someone wants to add-ons at the back-end of the wider commodities downturn, but
put a price on the table of it because your design long-term forecasts are very positive – a
and we think it’s in the is wrong,” Bennett said. situation Bennett says is perfect for his
best interests of share- “Well, in this case the company.
holders to take it, then people who are providing “You want to build a project when the
that’s fine but that wasn’t the EPC are also the peo- prices are relatively weak because that
the case with this pro- ple who are helping us de- means you build it at a relatively low
posal from Dingyi. Sean Bennett sign it, so they’re embed- cost,” he said.
“We’re really pleased ded in the design process “This is actually not bad timing for us
with the Summit proposal, it really does and embedded in the construction pro- because we’re not going to be produc-
tick all the boxes so we’ll keep moving cess, so the risk is taken out. ing for another five years. Having a weak
forward with that.” “They know how to build in Congo, price, lowering the potential supply and
It is the second time in three years Din- they know how to build in Africa and they having a relatively low construction cost
gyi has attempted to acquire the ASX- know the RoC. Their ability to provide is all good news for us.”
listed junior company. A previous bid in you with a fixed EPC is second to none.”
2013 lapsed after the Hong Kong Stock The Summit masterplan proposes a 2 – Michael Washbourne
Exchange ruled Elemental did not meet mtpa operation from start-up rather than
PAGE 42 APRIL 2016 AUSTRALIA’S PAYDIRT
Baobab funded to production
venira Ltd has received a $28 million
Acapital injection from its new Senega-
lese JV partner, ensuring the company is
funded through to the start of production
at the Baobab phosphate project.
The financial close of the new partner-
ship was completed early last month,
with prominent West African agribusi-
ness Groupe Mimran handing over
$US11.25 million for 20% of the issued
capital in project company Baobab Min-
ing and Chemical Corporation (BMCC).
Mimran Natural Resources, an affiliate
company of Groupe Mimran, also trans-
ferred the 2,000sq km Gossas explora-
tion permit, about 25km south of Baobab,
to BMCC as part of the transaction.
Another affiliate, Tablo Corporation,
was issued with almost 105 million fully
paid ordinary Avenira shares at 11.7c/
share, equating to a 19.9% stake in the Avenira is targeting first production at Baobab in the second half of 2016
ASX-listed phosphate hopeful.
David Mimran will also join the boards increasing the project resource and ex- ment decision so we are very comforta-
of both Avenira and BMCC. tending the environmental impact studies ble it covers everything an external study
The transaction will deliver Avenira and community development plans to ac- would…we have had some queries [from
about $28 million in development funds, commodate the bigger footprint. shareholders] about what the numbers
on top of the $12 million of existing cash “We should have all the administration are and we will progressively release in-
reserves it held at December 31, 2015. and works done during the course of this formation as we get closer to production.”
Avenira managing director Cliff Law- year, such that we can be granted a full At the time of print, Avenira had signed
renson said the JV with Groupe Mimran mine permit in the first half of next year,” at least six MoUs for quantities of prod-
would bring much more than just finan- Lawrenson said. uct from Baobab, ranging from 50,000
cial benefits to the company. “The full mine permit has many ben- tpa to 240,000 tpa. The combined total is
“Groupe Mimran is the biggest private efits within the mining code, including almost double the company’s initial pro-
company in Senegal and a major play- substantial local tax advantages.” duction target.
er in the agrisector in West Africa. You A maiden indicated resource of 12.6mt Negotiations to convert those MoUs
could not ask for a better local partner,” @ 21% P2O5 (based on a 15% cut-off into formal off-take agreements are ex-
Lawrenson told Paydirt. grade) for the Gadde Bissik deposit was pected to keep Lawrenson and his team
“We are very happy with the valuation announced in December. Gadde Bissik busy for the rest of this quarter, capping
Groupe Mimran attached to the Baobab also has an inferred resource of 87mt @ a whirlwind 12 months for Avenira since
phosphate project, we are very happy 19% P205, including 16mt @ 20% within acquiring Baobab.
with the fact that we are fully funded to the small mine permitted area. “We’ve done a lot over the last 12
production and we are very happy with Avenira has not completed a formal months, including a name change [for-
the due diligence and scrutiny Groupe feasibility study, but did engage with a merly Minemakers]. We had a grand plan
Mimran performed along the way. We number of independent consultants in and we’ve doggedly stuck to it,” Lawren-
always learn and have the opportunity geology, metallurgy, mining and market- son said.
to improve when others assess what we ing as part of an internal study it conduct- “We did a placement [for $3.1 million]
are doing. ed on the project. in November to JP Morgan [Asset Man-
“The investment is not only good for “We completed an internal PEA and agement UK Ltd], a very prestigious re-
us, it validates and improves what we are felt the additional cost of doing a third- sources fund and we have feedback that
doing because a third party has come in party PFS would be a waste of money we are the envy of many because we
and formed the same view that we have because the potential benefit it would were able to do that.
in terms of value, in terms of project dili- have brought was not worth the costs “JP Morgan will tell you that Avenira
gence and strategy.” and time spent going down a more for- delivered what we said we were going to
Avenira is targeting first production mal route,” Lawrenson said. and we continue to deliver what we say
from Baobab in the second half, having “Also, the small mine permit under we are going to. JP Morgan and others
received the final environmental approv- which we currently operate provides six will continue to be supporters and accu-
als for a small mine permit late last year. months from award to the start of min- mulators as long as we keep delivering.”
Mining began last month. ing, so we actually didn’t have time for a
The company has put the wheels in formal third-party study. – Michael Washbourne
motion to obtain a full mine permit, in- “Groupe Mimran obviously looked at
cluding partnering with a local company, our internal study in making its invest-
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 43
POTASH/PHOSPHATE
Centrex majors in potassium
ith its South Australian iron ore pro-
Wjects on care-and-maintenance for
obvious reasons, Centrex Metals Ltd is
surging ahead at the Oxley potassium
project in Western Australia.
Acquired from minerals sands hopeful
Sheffield Resources Ltd in March 2015,
Centrex has wrapped a resource around
Oxley just 12 months later.
The inferred resource is 155mt @ 8.3%
potassium (using a 6% cut-off grade), in-
cluding 38mt @ 10% potassium (using
9% cut-off).
Centrex chief executive Ben Ham-
mond told Paydirt the company would
liked to have released a resource sooner,
however, it was still pleased with the out-
come, particularly the size.
“Obviously the quantity [is a highlight],”
Hammond said. Centrex’s Oxley potassium project is 125km from the Geraldton port
“I think where the high-grade bits
were coming out, it is in pods laterally growers groups and growers trying to Bungalow magnetite JV, Centrex is for-
so quite easy to mine out selectively. We solve the marketing side early on. I think tunate to have other options like Oxley to
only need a fraction of this resource for we are in a good position now with a lot concentrate on.
the start-up of this project, so you can of interest and I think that is one thing we As it stands, the company is negotiat-
cherry-pick as much as you like, bear- are going to be aiming for is proposing ing a retention lease with the SA Govern-
ing in mind we’ve only drilled three of the a smaller scale start-up, something we ment over Kimba Gap to reduce holding
32km [striking ultra-potassic lava flow], think is realistic to enter into the market costs and has dropped non-prospective
so there is plenty of opportunity there to without creating too much reaction.” ground from its portfolio, while by the end
get started and ramp up. We are pleased Assuming studies prove to be eco- of the year it would have exited the Bun-
with the grade and quantity.” nomical, Oxley is ideally placed for the galow JV with Baotou Iron & Steel.
Although a further exploration target export market as there is infrastructure “Obviously there is every considera-
of 500-800mt @ 7.5-9.5% potassium available to get product to Geraldton, tion on the table for that,” Hammond said
has been set, Centrex’s sights are on a only 125km away. about completing cutting ties with the
smaller-scale starter project. At this point in time, Oxley is shaping iron ore sector.
Having completed a series of work in- as a more realistic development option “I think there are probably 100 iron ore
cluding, metallurgical for Centrex, as opposed projects on the market right now.”
bulk sample drilling, to its suite of iron ore as- While there may be an abundance of
process route scop- sets in South Australia. unwanted iron ore projects on the shelf,
ing, bench scale test Hammond said the Hammond said identifying good assets –
work, conceptual nitric company was not ac- no matter the commodity – was not an
acid plant cost esti- tively working on any of easy task.
mates (operating cost its SA projects, despite However, he is happy that Centrex
of $US148/t to make some recent improve- looked for other opportunities beyond
nitric acid on site) and ments in the iron ore the iron ore sector before the industry hit
resource drilling and price. rock bottom.
definition, Centrex is “We have seen a spike, “I think we saw this coming and diver-
focused on internal but that just encourages sified early on, which puts us in a good
works and a scoping those that were about to spot. It took us a while, which goes to
study. shutdown to keep going. show how long it does take to find a good
“The problem we’re You still have 20-30% of project. It took us a few years, but I’m
faced with as usual is the world [iron ore pro- glad we started then and not now,” Ham-
that until you have got ducers] making a loss, mond said.
indicated resources so it is not sustainable,” In addition to Oxley, another project
you are a bit limited Ben Hammond Hammond said. Centrex is keen on is the Goulbourn
in what you can an- With little confidence polymetallic project in New South Wales,
nounce, but internally we are certainly that iron ore prices will rebound any time which will be drilled this year.
progressing at a rate of knots,” Ham- soon to levels which would command
mond said. greater attention to its projects on SA’s – Mark Andrews
“I have been right out across Asia Eyre Peninsula, including the Kimba Gap
and Australia talking to every distributor, magnetite, Eyre Iron magnetite JV and
PAGE 44 APRIL 2016 AUSTRALIA’S PAYDIRT
Plymouth finalises move to Gabon
he perilous existence of junior re- time we were looking for acquisi-
Tsources is such that companies have tion opportunities.”
to be prepared to dramatically switch fo- Under terms of the deal, Equa-
cus in order to build momentum. torial Potash will receive 50 mil-
When Plymouth Minerals Ltd was lion shares in Plymouth, split into
faced with a severe downturn in tung- 25 million ordinary shares and
sten prices last year, managing director 25 million performance-based
Adrian Byass felt the company had little shares which rest upon comple-
choice but to make a switch. The com- tion of certain milestones.
pany put its Morille tungsten project in “The deal took longer but it
Spain into hibernation and Byass set would’ve involved too much risk
about finding an asset that would attract raising money before we had se-
market attention. cured the tenements. We’ve seen
“After the tungsten market fell apart we so many companies in the past
were faced with either changing out of make announcements about ac-
resources completely or finding another quisitions too early. In our case,
commodity,” Byass told Paydirt. we waited for the tenement to
Instead of heading to biotech, drone be dropped and then it was re-
technology or gambling apps, the com- pegged to ensure the ownership
pany’s change of direction instead came structure was clean.” Plymouth Minerals managing director Adrian Byass
from two previously drilled potash pro- Once that process was com- with the onsite team at the company’s newly
jects in the West African nation of Gabon. pleted, Plymouth immediately set acquired Banio project in Gabon
“I’ve always felt you need to find a dif- about raising funds and closed a
ferent angle, ideally in a non-traditional $3 million at 8.5c/share to sophisticated a couple of drill-holes into it to instantly
commodity,” Byass said. “I’d been a non- investors on March 22. transform the value of the company,” he
executive director in a phosphate pro- “We were really happy we closed at said.
ject so the fertiliser space was already $3 million because the overs are already Emulating Elemental’s market growth
interesting to me. All the mining skills buying on market which is an endorse- off the back of its Kola potash project in
still apply to these projects but there is ment of the company’s strategy and re- neighbouring Republic of Congo may be
a completely different mindset when it inforces that it was the right thing to do.” an initial target. Elemental is currently
comes to discussing end-markets. This With exploration rights and funding attempting to fund development of Kola
is not about China. The fertiliser market secured, the company can press ahead and on February 12 rejected an unsolicit-
has got consistent, long-term growth fun- with work on the two projects. ed takeover offer from Hong Kong-based
damentals.” Mamana – 120km from the Gabonese Dingyi Group Investment Ltd despite the
The Mamana and Banio projects – capital Libreville – is the more advanced 30c/share bid representing a 66% pre-
which Plymouth began due diligence project, having been first subject to drill- mium on Elemental’s closing price (see
on in October – also offer “a few quirks”, ing in the 1950s. More recent drilling re- page 44).
having been identified for potash poten- turned intercepts of 4.35m @ 29% K2O Elemental’s market cap is currently
tial only after their original owners had from 384m and 9.5m @ 16.5% K2O from around $71 million while Plymouth’s is
pegged them for iron ore. 433m. less than $5 million.
“When they [Equatorial Potash Pty Ltd] “We will do 6,000m of diamond drilling Plymouth’s recent capital raising
lost momentum in their iron ore explora- at Mamana,” Byass said. “The intercepts means the company has enough cash to
tion they looked around for opportunities we have are at 1.5km spacing and we see it through the next 12 months, includ-
for the assets,” Byass said. “At the same think we can put a 20-year mine life to- ing drilling at both projects and work on
gether off the back of seismic the Mamana scoping study.
work and three holes.” Byass will move to executive chairman
Once a resource is complet- in coming weeks with South African min-
ed, Plymouth will likely launch ing engineer Eric Lilford to be managing
a scoping study, including de- director. Byass said it was more appro-
tailed work on the barging of priate to have Lilford as managing direc-
material along the adjacent tor given he would be spending more
Ogooue River to Port Gentil. time in-country.
While Mamana is the more “I think the biggest problem that has
advanced asset, Byass be- befallen ASX-listed juniors in Africa has
lieves shorter term market im- been the imbalance between strategy in
pact will be generated by drill- Perth and reality in the bush,” he said.
ing at Banio, which is 20km “To be successful, you’ve got to be there,
from Elemental Resources making sure things are getting done cor-
Ltd’s Sintoukola potash project. rectly.”
Plymouth is happy with the infrastructure options “Mamana is still the best pro- – Dominic Piper
around its Banio potash project in southern Gabon ject but Banio only has to have
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 45
QUEENSLAND FOCUS
Mining the
great provider for
Queensland
Despite the downturn, Queensland’s resources sector still provides 60,000 jobs
ueensland Nickel’s demise couldn’t have come at a worse time Despite challenging times, Queens-
Qfor the State’s resources sector. land’s minerals and energy sector pro-
vided one in six jobs in FY2014/15 in the
State and with demand for resources
“At this time, our thoughts are with the With Clive Palmer’s Queensland Nick- expected to grow, particularly exports of
entire workforce of Queensland Nickel – el going down, there is more pressure on coal and gas to Asia, it is vital that min-
the 240 workers who lost their jobs earlier the surviving mining companies in the ers are given some reprieve after “doing
this year and the 550 who had their con- State to continue operating sustainably. their own heavy lifting to strip billions of
tracts terminated last week [mid-March]. The mining sector is still a large em- dollars of costs out of their businesses”.
These job losses are a blow for these ployer of Queenslanders, with the sector “Governments need to recognise that
workers, their families and for the Towns- accounting for 60,000 jobs in the State. many resource operations are in sur-
ville economy but are symptomatic of the Like their counterparts in Australia and vival mode in the face of some of the
extremely difficult market conditions fac- across the globe, Queensland mining most difficult global market conditions in
ing most sections of the resources sector companies have introduced measures decades. The QRC met with the Cabi-
in Queensland and nationally,” a spokes- to remain viable in the current downturn, net Jobs Committee on March 8 and
person for the Queensland Resources however, more support is needed, ac- submitted a number of realistic propos-
Council (QRC) told Paydirt. cording to the QRC. als to help save the remaining 60,000
PAGE 46 APRIL 2016 AUSTRALIA’S PAYDIRT
Natural Resources and Mines Minister for Queensland Resources Council chief
Queensland Anthony Lynham executive Michael Roche
“These initiatives are a sensible re- 16 permits and approvals at local, state
sponse to the prevailing challenging and federal level, including six primary
times facing all explorers where it is al- approvals.
most impossible to attract new capital. Adani is proposing to develop the
Most explorers are carefully husbanding North Galilee Basin Rail project to take
scarce cash reserves to simply survive coal from the Galilee Basin to the Ab-
the current severe market downturn,” the bot Point port via a multiuser, standard
spokesperson said. gauge rail line.
“This initiative is a perfect example It is widely believed that the Galilee Ba-
of what governments can do to provide sin is the last undeveloped coal resource
some relief to resources sector compa- in Queensland and has the potential to
nies in some of the toughest conditions. be the largest coal producing region in
The Queensland resources sector needs the State.
to position itself for the next upturn and The importance of the project has not
this can only be done with the support of been lost on the Government, with Minis-
government.” ter Lynham keen to see an application for
One initiative the QRC is pushing the a mining lease in due course.
Government for is the establishment of a “I am advised that Adani has reached
special north-west economic zone in the agreement on compensation with the re-
Mount Isa region. maining landholder,” Lyhnam said.
Mount Isa and the north-west of “My department has advised that it is
Queensland has been one of the regions awaiting confirmation from Adani that the
hardest hit by the resources downturn agreement can now be filed in accord-
and QRC chief executive Michael Roche ance with the Mineral Resources Act.
urged for a collaborative effort from all Once that occurs, I will be able to consid-
levels of government to keep its engine er the application for the mining leases
running until the sector recovers. in the same way as for any other project.
“The north-west is a melting pot of un- “The other milestone the mine, rail and
tapped opportunity but it is faced with port project has achieved is the last key
unique challenges, including distance state-based approval for dredging for the
resources jobs,” the QRC spokesper- and infrastructure,” Roche said. Abbot Point expansion. The next step for
son said. “It’s going to take a combined effort Abbot Point is for Adani to finalise ap-
“The proposals aimed to reduce the between local, state and federal gov- provals for the rail in-loading facilities,
cost of doing business and cut down un- ernments to ensure this region not only onshore stockpile yards and offshore
reasonable project approval times. What survives this challenging time, but is in wharves and this is now underway.”
governments can do is ensure existing prime position to thrive during the next Progress made to date has been done
and proposed new projects are not be- upturn.” in accordance with the Palaszczuk Gov-
ing strangled by excessive red tape, Queensland is still one of Australia’s ernment’s commitment to protecting the
weighed down by unjustified state and top ranked and most mature mining juris- Great Barrier Reef and Lynham stressed
local government charges and held up by dictions, however, there remains plenty that no dredging would take place at Ab-
the gaming of the court system by anti- of untapped mining opportunities. bot Point until Adani demonstrated finan-
resources activists.” One the State’s most significant future cial closure.
In March, Natural Resources and coal prospects is the Carmichael mine in “Queensland taxpayers will not fund
Mines Minister for Queensland, Anthony the Galilee Basin. this infrastructure,” Lynham said.
Lynham, announced a reduction in ex- In March, an agreement was reached
penditure requirements for coal explor- with all landholders for the $21.7 billion
ers, which was welcomed by the QRC. project, with Adani Australia now holding
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 47
QUEENSLAND FOCUS
Foundations for an Evolution
he composition of Evolution Min- last three years we have been sell-
Ting Ltd has changed so dramati- ing concentrate to a customer and
cally in the last 12 months that it is we’ve never once had an issue with
easy to forget the company’s foun- the sale of that concentrate.
dations were built on the success of “The only caveat I would put on
its Queensland assets. that is our dreams are now bigger
Evolution acquired Barrick Gold for Mt Carlton because we’re start-
Corp’s Cowal mine in New South ing to think about the exploration
Wales as well as La Mancha Aus- potential there, given the absolute-
tralia’s Mungari operations near ly fantastic grades we’re achieving,
Kalgoorlie last year to become the so expect to see a lot more about
second largest gold producer on Mt Carlton and exploration.”
the ASX. The average grade put through
It has meant Evolution’s Queens- the mill at Mt Carlton during the
land assets – Cracow, Pajingo, Mt December half was 7.6 g/t gold,
Rawdon and Mt Carlton – are no compared to the reserve grade of
longer at the forefront of the com- 4.4 g/t gold.
pany’s production portfolio, at least Bonanza grades were also in-
from an investor perspective. tersected as part of recent drilling
Internally, it is a different story. programme targeting mine life ex-
The significance of opening the first tensions, including a hit of 10m @
new gold mine in Queensland in a 22 g/t gold from 69m.
decade at Mt Carlton in 2013 and Evolution – formed in 2011 when
defying the expectations of many Conquest merged with Catalpa Re-
to keep operations ticking over at sources – has remained one of the
the other three is certainly not lost most consistent and reliable mining
on Evolution’s executive chairman companies in Australia, in part be-
Jake Klein. cause of its “act like owners” mind-
“We would suggest that Queens- set, first implemented at some of its
land is under-recognised and under- Queensland operations.
rated as a destination for explora- Recent examples of the “act
tion and mining,” Klein told Paydirt. like owners” approach include the
“We certainly have always found it a Mt Carlton is Evolution’s leading Queensland asset Pajingo workforce identifying ways
very good place to operate. to safely and conservatively as-
“Our engagement with the regulators is Mt Carlton – one of the world’s high- sess potential ounces in an area not pre-
good, they are supportive and the land- est grade open-pit gold mines – is ap- viously thought to be economic to mine,
owners are also supportive. proaching the third anniversary of its first ultimately generating about $1 million in
“I continue to promote the fact that, concentrate, a milestone many thought it extra revenue.
having spent the first part of my career would not achieve when held by Evolu- An engineering and maintenance team
developing mines in China, that Australia tion’s predecessor Conquest Mining. member at Cracow also identified an al-
– and Queensland being a subset of that “There was a failed feasibility on this ternative cyclone feed pump and negoti-
– is god’s gift to miners. asset [when acquired by Evolution] in ated a successful trial which yielded cost
“It’s a vast, underpopulated, highly that the key thing missing was off-take savings of almost $300,000 to the busi-
mineralised, mining-friendly country and of the concentrate,” Klein said. “For the ness.
it’s a place that ought to get more “It’s the great thing about the Aus-
attention and more focus from inter- tralian gold industry and our work-
national markets.” force, asking them to act like own-
Pajingo, Cracow and Mt Rawdon ers,” Klein said.
were all cash flow positive in the last “We not only ask them to act like
six months of 2015, generating a owners, we actually made them
combined total of $US30.9 million. owners. We’ve given every employ-
Mt Carlton’s cash flow for the half- ee in our company $1,000 worth of
year was $US31 million. shares and since we launched this
Mt Rawdon’s ability to make programme a year ago, we’ve had
money while undergoing major cut- 48 ideas which have saved us $6.5
backs has been a notable achieve- million a year. To put that in context,
ment and Klein expects the mine to the $1,000 of shares for each em-
generate strong returns for at least ployee cost us $1.3 million.”
another three years once the major
capital works wrap-up towards the Evolution’s Queensland assets generated – Michael Washbourne
end of the year. $US61.9 million in the December half
PAGE 48 APRIL 2016 AUSTRALIA’S PAYDIRT
Stavely’s bargain buy
ictorian-focused explorer Stavely that’s reflected in the Fraser Institute
VMinerals Ltd is branching out into standings of the respective states.
Queensland after picking up a prospec- “There’s some worrying moves by the
tive gold-copper project for the bargain Government that affects the confidence
price of just $2. of companies working in Queensland,
Stavely has acquired Ukalunda Pty but I don’t think you can doubt the pro-
Ltd, owner of the Ravenswood West spectivity of the place.”
exploration permit application, covering Regulatory grievances aside, Cairns is
241sq km and adjacent to the historical not only excited about returning to one of
Ravenswood mining district. his first projects but also reacquainting
Ukalunda was established by Stavely himself with gold during a time when the
managing director Chris Cairns and fel- precious metal is a hot commodity.
low director Peter Ironside in 2007 for the Cairns, Ironside and fellow Stavely di-
specific purpose of opportunistically ap- rectors Bill Plyley and Jennifer Murphy
plying for exploration permits in Queens- were at the helm of WA gold producer
land’s north. Integra Mining when it was sold to neigh-
Cairns also worked on the project as bour Silver Lake Resources Ltd for $426
a budding geologist for BHP Minerals in million in 2012.
1993 and was surprised to find very little “You can’t deny that at the moment the
exploration work has been carried out on Chris Cairns market has an appetite for gold stories,”
the ground since. Cairns said.
“I think the area is particularly fertile happy with the terms and conditions of “Obviously the gold producers have
because it’s right next to a 4 moz gold- a cultural heritage agreement they must done very well and I think that will trickle
field in Ravenswood, but it just hasn’t had enter into to be granted a full permit. down into the mid-tier and then, hope-
any real modern exploration done on it,” “Quite frankly, with the agreement fully, eventually down into the explorers.
Cairns told Paydirt. that’s in front of us, I think the terms “A number of the deposits up there are
“We’ll be looking for deeper targets are far too onerous and just ridiculous,” worth having a look at…certainly it’s that
that might have a bit more of a gold fla- Cairns said. intrusive-related style of gold mineralisa-
vour, as well as there are results indicat- “The operating environment in tion which can have some scale.”
ing very strong anomalism in rare earths Queensland is a little bit more difficult Stavely hopes to sneak in one more
that were never followed up, so I find that than it is in Western Australia and I think drilling programme at the Ararat project
particularly intriguing.” in Victoria before the wet season ar-
Ravenswood West hosts four rives in May, with the intention of fol-
known porphyry copper-molybde- lowing up on some encouraging re-
num-gold prospects – The Bank, sults from the most recent campaign.
Keane’s, Barrabas and Turkey Gully Diamond drilling at the Forgan’s
– but none have been drilled since the Find prospect returned narrow inter-
early 1970s. vals of massive-to-stringer sulphide
Surface rock chips of up to 49% zinc and copper mineralisation, in-
copper, 0.24 g/t gold, 0.2% molybde- cluding hits of 0.2m @ 1.77% zinc
num and 1,793 g/t silver have been and 0.12% copper, 0.25m @ 0.57%
returned from these prospects. zinc and 0.13% copper and 0.25m @
A nearby prospect named Po- 0.41% zinc.
dosky’s has recorded high-grade gold “We’re doing some regional soil
mineralisation, including promising sampling at the moment, hoping to
intercepts of 6m @ 16.7 g/t gold from find a couple more prospects for
14m, 6m @ 13.38 g/t from 26m and VMS,” Cairns said. “That’s starting to
5m @ 12.06 g/t from 29m. Podosky’s look promising as well.”
is excised from the exploration permit Stavely has about $2 million of cash
application and is held by Kitchener reserves, plus an application with the
Mining NL. Victorian Government for another $2
Stavely plans to split its time be- million of co-funded exploration, en-
tween its two Victorian copper-gold suring the company is funded to com-
projects and its new Queensland as- plete its initial 2016 programmes.
set, with Cairns expecting his team to
be based on the Sunshine Coast be- – Michael Washbourne
tween May and September.
Exactly when Stavely will be able to
start exploring Ravenswood West is
unclear, given the tenement remains Stavely hopes to soon explore the Ravenswood
in application and the company is un- West project in north Queensland
AUSTRALIA’S PAYDIRT APRIL 2016 PAGE 49
QUEENSLAND FOCUS
Metal Banks on Queensland
he Australian dollar gold The Triumph project cov-
Tprice has compelled ers 356sq km and its poten-
Metal Bank Ltd to pay more tial has been recognised in
attention to its assets in the past, with the Queens-
Queensland. land Government putting
Late last year, the com- forward funding for drilling.
pany rounded off exploration A total of 16 holes have
activities at the Mason Val- been completed at Triumph,
ley copper project, Nevada, with an intersection of 9m
USA, where the Copper Hill @ 3.6 g/t gold, including 1m
and Bluestone prospects @ 21.8 g/t.
were drilled. Other results from the
Best mineralisation at limited previous drilling in-
Copper Hill included 3m cludes 4m @ 10.5 g/t gold
@ 1.2% copper, 88 g/t sil- from 31m, including 1m @
ver, 1% lead and 5.5% zinc 20.8 g/t, 1m @ 16.6 g/t and
from surface, while the only 3m @ 4.8 g/t.
hole drilled in the last pro- “We have had some good
gramme intersected narrow, intercepts at Bald Hill – 9m
low-grade mineralisation at @ 3.6 g/t – which is one of
Bluestone. the targets tested with mod-
The best result Metal Bank ern exploration. Because
has reported from Bluestone most of it is undercover, it
is 42m @ 1.5% copper. has not been looked at. The
Metal Bank executive di- cover we’re talking about
rector Tony Shreck told Pay- is less than 10m,” Shreck
dirt Mason Valley is under said.
review, while the focus shifts Shreck is excited by the
to capitalising on gold oppor- potential Triumph offers be-
tunities in Queensland. Metal Bank will focus on the Triumph gold project cause of the limited follow-
“When we were looking up drilling and while cash is
at Nevada, Queensland did take a back gold price environment warranting in- a concern, Metal Bank remains commit-
seat but with the gold price [increasing], vestment. ted to going alone at the project for now.
Queensland will be more of a focus,” “For us we believe the region is still un- He said toll treating ore would be one
Shreck said. derexplored. We are not grassroots ex- of the easier options for the company to
Metal Bank’s primary targets will be plorers, mainly because it is hard to get get into production at Triumph and while
the Triumph, Eidsvold and Mt McKenzie any interest out there, and with our board that is a little way off, there are other op-
gold projects in the New England Fold which includes Inés Scotland [former portunities for the company to consider.
belt of central Queensland. managing director of Ivanhoe Australia Eidsvold, south of Triumph, is one pro-
The area of Queensland where Metal and Citadel Resource Group Ltd] we are ject on the company’s radar, having pro-
Bank is focused has produced over 30 more into the brownfields stuff around duced 100,000oz gold in the early 1900s.
moz gold and hosts the likes of Evolu- the headframe,” Shreck said. “The cover is a little bit deeper at Eids-
tion Mining Ltd’s Cracow (3 moz) and Mt And right now the company feels it is vold and was explored by Newcrest [Min-
Rawdon (2 moz) mines plus Mt Morgan getting value for money at Triumph. ing Ltd] in the past. Airborne geophys-
(8 moz gold and 400,000t copper) and It was initially thought Triumph was a ics are commanded there, but probably
Gympie (5 moz). 1sq km goldfield but exploration carried won’t be done this year,” Shreck said.
At Triumph, Metal Bank is looking to out in 2010 confirmed Metal Bank was “Best bang for buck at the moment
capitalise on a “typical brownfields” op- amongst a golden patch spanning 15sq seems to be offered mostly at Triumph
portunity, particularly in an Australian km. for us at the moment. However, Mt Mc-
Kenzie [north of Triumph] can add a lot of
value for very little money spent. We can
walk up to the project and start sampling
before mid-year and it will be the first bit
of modern gold exploration done there.”
– Mark Andrews
Modern exploration at Bald Hill has returned an intercept of
9m @ 3.6 g/t gold, including 1m @ 21.8 g/t
PAGE 50 APRIL 2016 AUSTRALIA’S PAYDIRT
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