February 2017 VOLUME 1. ISSUE 246 $11.95
front and back cover
• New floats of 2016... Start of a turnaround
• Employment and recruitment spotlight
• The year ahead... Trends to watch
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PAYDIRT (ISSN 1445-3436) 7 BUSH TELEGRAPH 20
Published by The South African courts are beginning to 33
Paydirt Media Pty Ltd. turn on the Department of Mineral Re-
A.C.N. 063 985 133 sources (DMR) after the mining regulator
recently lost two big legal cases. Johan-
Head Office: nesburg correspondent Brendan Ryan
Suite 9, 1297 Hay St, West Perth looks at how the DMR managed to entan-
Western Australia 6005 gle itself in its own red tape
P.O. Box 1589, West Perth
Western Australia 6872 20 COVER
Phone: (+61 8) 9321 0355 Fortescue Metals Group has seemingly
Facsimile: (+61 8) 9321 0426 pulled itself back from the abyss. Just two
[email protected] years ago, the “third force in iron ore” was
www.paydirt.com.au teetering due to low iron ore prices and
an unfavourable debt structure. However,
Editorial: the company enters 2017 in the strong-
Editor: Dominic Piper est position of its history. Mark Andrews
Deputy editor: Mark Andrews visited the company’s Pilbara operations
Journalists: Michael Washbourne, with chief executive Nev Power to discover
Jonathon Daly exactly how the company managed such a
Graphics: Marian Noonan turnaround
Keith Goode (Sydney), Brendan Ryan 28 TRENDSWith an uncertain geopolitical landscape,
(Johannesburg), Ross Louthean
questions about the global economy and
Advertising: shifting dynamics in so many commodities,
Subscriptions: Mitchelle Matambo it is difficult to ascertain exactly where the
Phone: (+61 8) 9321 0355 resources sector will go in 2017. Paydirt
Facsimile: (+61 8) 9321 0426 doesn’t know either but we lay out where
industry observers should be looking for
Pre-press and printing: indications
Vanguard Press 26 John St,
Northbridge WA 6003
Paydirt Media 33 NEW LISTINGS
Executive chairman: Bill Repard After a three-year winter, resources floats
Finance manager: Giovanny Jefferson are returning to popularity on the ASX. In
Accounts/administration: our annual feature, we look at the compa-
Heather Melling nies who managed to hit the boards last
Conferences: Melita Fogarty, year and those who are preparing to list in
Namukale Nakazwe-Msiska, 2017
From skills shortages to retention poli-
cies, workplace health and safety and the
mental wellbeing of employees, there is
rarely a time in the resources sector when
recruitment, skills and training are not at
the forefront of company strategies. Pay-
dirt looks at the challenges and opportuni-
ties in front of employers in 2017
Cover image: Fortescue chief execu- 50
tive Nev Power at the company’s port
facilities in Port Hedland
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
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
2017: Sunny with the chance
of a shower or two
This first edition of Paydirt for 2017
highlights the growing optimism which prepared to encourage growth in its employees.
is afoot in the resources sector. There will, inevitably, be bumps during the course of 2017 and
While we entered 2016 in a sorry
state thanks to low commodity prices, while the downturn of the last few years was largely a response
negative market sentiment and an al- to the shifting supply/demand dynamics in commodities, it is
most complete lack of project devel- likely geopolitics will play a greater role in shaping prices and
opment stories, we closed the year in market sentiment through the year.
more positive territory.
The biggest surprises came in commodity prices, led by We have seen it already, following Donald Trump’s unlikely
the bulks. Iron ore rebounded strongly, as did coal for whom ascent to the US presidency.
many obituaries had already been written. Gold started the year
brightly before faltering following the US Federal Reserve’s in- The immediate market reaction to Trump’s election victory
terest rate rise but elsewhere zinc and nickel enjoyed standout was negative, the ASX200 dropping dramatically as the results
years while the rising tide of lithium-ion batteries not only lifted arrived. However, the following day there was a strong rebound
prices for the namesake material but also cobalt and to a lesser and commodities have subsequently been caught up in the in-
extent graphite. consistency the new president has so far displayed with prices
Capital raisings were back on the agenda for many ASX-listed moving, sometimes quite dramatically, on one or another utter-
juniors in the second half of 2016 as the investment community ance.
began to look favourably on exploration and development after
a four-year hiatus. So, of all the bizarre things Trump is likely to say this year,
The momentum has carried through into the early weeks of what should we look out for in relation to the Australian resourc-
2017 as evidenced by Paydirt’s West Perth Index. es sector? I would suggest the most important subject will be
As a reminder, the West Perth Index is a reliable indicator trade and the US-China trade relationship.
of the junior resources sector’s health as there is. Taken each
week by my colleagues and I – usually when we are doing the The Trump administration has already suggested it would im-
morning coffee run or the Friday afternoon beer one – it essen- pose further tariffs on Chinese imports of steel and aluminium if
tially involves checking how many people are in coffee shops President Xi Jinping doesn’t ease his Government’s support for
and pubs, how many cars are parked on the street, how many failing exporters, steelmakers in particular and there are fears
office removalists are working around the inner-city suburb and an all-out trade war could ensue which could leave Australian
how many suits we can see on the street. iron ore and coal producers as collateral damage.
For all of 2015 and the first half of 2016, the key indicators
were not good. However, the second half of 2016 saw activity However, according to S&P Global Platts, steel and aluminium
in the corporate heartland of the Australian junior mining sec- account for just 4% of China’s $US410 billion of total exports to
tor pick up and it was even more surprising to return after the the US in 2015. China also imports steel and aluminium from the
Christmas break to find most of the sector had forsaken an extra US, although the trade flow is much smaller at around $US1.3
week in Dunsborough or Margaret River to return to work early, billion in 2015. A new tariff would have an effect on Chinese ex-
full of enthusiasm for the year ahead. ports but not nearly as great as so many fear with the US market
That enthusiasm is starting to filter out into the wider resourc- accounting for just 2% of its steel exports in 2015.
es sector. Speaking with a number of service providers in Janu-
ary, I was struck by how busy they all seemed to be; lawyers, Similarly, commodities should be buoyed by Trump’s policy
auditors, drillers, financiers and brokers all told me they were of new infrastructure development, however, there is still much
experiencing a genuinely busy period, which means the posi- conjecture about how much of his campaign rhetoric will be
tive sentiment of late 2016 is now being harnessed to undertake translated into coherent and lasting government policy.
The features in this edition highlight that fact, none more so One prediction I will make is that gold is likely to enjoy a
than our annual new listings feature. strong, if not necessarily uniform upward climb in 2017. If there
A decade ago this feature stretched to more than 30 pages is one thing the gold price thrives on, it is political or economic
as we battled to cover all the new resources listings during the uncertainty and 2017 is certain to deliver both in spades with
boom. In the period 2014-2016, we struggled just to fill a few Trump on one side of the Atlantic, Brexit on the other and China
pages as IPOs, spin-outs and dual listings dried up. battling to define its space in the world economic order without
However, thanks to a rush of new listings in December – a threatening its domestic economy.
trend which continued in January – the IPO market is on the
upturn again. All of these events would have been viewed as potentially
Equally, the news that expats in the African mining sector can negative for the resources sector if we thought about them at
expect a salary increase, albeit modest, in 2017, points to an in- the beginning of 2016 but with optimism back in the sector, it is
dustry which has got to grips with its cost structures and is now more likely they will be spied as opportunities to build rather than
chances to sell in a brighter 2017.
[email protected] @DominicPiper
PAGE 4 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Some positive light for uranium
Ten years ago the ASX was swamped A decade ago uranium was worth $US135/lb
with new uranium company listings
looking to partake in the nuclear energy Ltd’s Mulga Rocks and Toro Energy Ltd’s it is likely that 1,500 jobs will be created
future. Wiluna – given the green light. and the industry would be worth a poten-
tial $1 billion a year in exports, based on
Uranium prices and anticipated chang- With a state election looming and the prices rising to economic levels.
es away from the three-mine policy in WA Labor Party opposed to uranium
Australia drove interest in the sector and mining, there is some comfort for those While uranium prices were moving
in 2006 alone there were 17 Australian companies, with Labor (if elected) be- higher in January, it would be brave to
start-ups with eyes focused on yellow- lieved to be willing to allow projects that predict that it is going to quickly spike this
cake. have been approved or are under con- year and encourage a flurry of activity in
struction to proceed. the sector.
It appeared uranium was the industry
to be in, with prices per pound topping a The Yeelirrie project alone is expected However, the uranium industry has
high of $US135 in mid-2007 as the ura- to employ about 225 people during op- suffered from some lean times and any
nium boom, which essentially started in erations and a peak of 1,200 during con- positive sentiment afforded will be taken
2005, took off. struction, however, capital and operating and hopefully capitalised on by the play-
costs of $5 billion mean current uranium ers which have remained loyal to the sec-
History will show that the yellowcake prices are too low for any of the four tor.
boom not only flopped but fell further mines to be developed.
than even pessimists expected when, in – Mark Andrews
2011, a tsunami in Japan caused a nu- Should all four WA projects proceed
clear meltdown at the Fukushima nuclear
power plant. MGT Resources Ltd has received bonds and $US145 million or 40% of
shareholder approval to acquire 30% of Paladin shares was being contemplated.
The incident left the country devas- Paladin Energy Ltd’s Manyingee uranium
tated and the total impact is still being project in Western Australia. “Paladin believes the implementa-
realised. Needless to say, the uranium tion of the restructure proposal will be a
industry – a controversial one even at its The sale, initially for MGT to take 30%, positive outcome, which will enable it to
best – has not been the same since. with an option to acquire a further 45% address its obligations in respect of the
for $US20 million, is subject to certain $US212 million outstanding 2017 con-
Amid continued scepticism about the conditions but is expected to be closed in vertible bond whilst at the same time
safety and viability of nuclear power, a late March/early April. preserving value for shareholders and
few Australian companies continue to positioning them to benefit when ura-
grit their teeth and advance projects in By offloading a share of Manyingee, nium prices recover with a stable and
the sector but most companies which Paladin will receive a much-needed cash sustainable debt structure,” the company
had an interest in uranium have moved injection of $US10 million as it continues said in its quarterly report on January 18.
onto other commodities. the process of restructuring its balance
sheet. “As at the date of this quarterly ac-
At the time of print, the uranium spot tivities report, bondholders representing
price was $US22.50/lb, hardly high Last month, Paladin announced ex- 67% of the 2017 convertible bonds and
enough to encourage boom-like invest- changing existing 2017 convertible bonds 44% of the 2020 convertible bonds have
ment in the sector. of $US212 million and 2020 convertible already signed binding undertakings to
bonds of $US150 million into $US115 support the restructure proposal.”
However, there are more indicators at million new secured bonds due in 2022,
the start of 2017 than at any time in the $US102 million of new 2024 convertible
recent past that yellowcake players will
enjoy some positive light.
“The rise in the spot uranium price
has continued to climb. It is now $US6/lb
higher, being 33% above the November
low. The latest spurt comes with news
that Kazakhstan, the world’s largest pro-
ducer of yellowcake, will cut production
by 10%. While Paladin’s [Energy Ltd] fu-
ture is under a cloud, some of the other
uranium companies on the ASX have
performed very well in recent days,” Far
East Capital analyst Warwick Grigor said
in a weekly commentary report in mid-
Preceding Grigor’s commentary, it
was announced that the West Australian
Government had granted approval for
Cameco’s Yeelirrie uranium project to go
Yeelirrie is among four projects – Kin-
tyre, also Cameco’s, Vimy Resources
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 5
RCR to get Pilbara going
Pilbara Minerals Ltd is Life-of-mine revenues of
charging towards commis- $9.2 billion and after-tax
sioning of its Pilgangoora lith- cash flows of $2.6 billion,
ium-tantalum project in West- based on an average life-
ern Australia’s Pilbara region. of-mine spodumene price
RCR Tomlinson Ltd re- of $US537/t CFR, was esti-
ceived a boon last month with mated from Pilgangoora.
the contract award for EPC Last month, Pilbara re-
work for the 2 mtpa Pilgan- ported work was continuing
goora plant, which is expect- on the balance of the fund-
ed to be delivered in Q4 2017. ing requirements, “which
The contract is worth $138 includes several financing
RCR Tomlinson was awarded an EPC contract for the 2 mtpa Pilgan- streams such as (but not
million, with a guaranteed goora plant. Pilbara’s contract award to RCR is worth $138 million limited to) conventional bank
maximum price of $148 in-
line with Pilbara’s DFS costs. project financing, non-bank
Stage one will entail FEED work, with the Stage 2 construction, which is for lending and customer/off-take financing”.
the two-month long process to cost the balance of the contract price and One of Pilbara’s peers in the field
about $10.3 million. planned to commence in May 2017,” the proved the appetite for lithium companies
Sub-contractors chosen by RCR to company said in a statement. is great, with Galaxy Resources Ltd an-
provide technical and engineering sup- According to the 2016 DFS, a total of nouncing it had secured a $US40 million
port are Primero and Minnovo. $214 million is required to build the Pil- debt facility with BNP Paribas in January.
“Once project funding has been se- gangoora project, which includes plant Galaxy was expected to drawdown
cured, a final investment decision made costs, with the project set to produce the facility by the end of January, partly
by the Pilbara board and Stage 1 satis- 314,000 tpa @ 6% spodumene concen- to repay existing OCP Asia facilities and
factorily completed, Pilbara has the op- trate (44,000 tpa lithium carbonate equiv- general corporate purposes.
tion but not the obligation to commit to alent) and 3210,000 lbpa tantalite.
22 March 2016 - Novotel Perth Langley
The CD-Rom of the 2016
Australian Graphite Conference
CD-Rom – $30 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]
PAGE 6 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
DMR comes unstuck in courts
South Africa’s Department of Min- heels of defeat for the DMR in the
eral Resources (DMR) has just
taken a second legal “kick in the Labour Court – also last November
teeth” from the country’s courts and
it could not have happened to a nicer – when AngloGold Ashanti LTd won
a decision in its favour over the ap-
What’s happening bears out the
predictions of top mining legal expert plication of Section 54 notices on its
Hulme Scholes, whose hard-line
views on how to deal with the DMR Kopanang mine.
were reported in my column back in
October 2014. Scholes’ attitude can Section 54 notices are used by
be summed up as “Sue them. The
courts work because they apply the the DMR to shut down mining oper-
ations for safety reasons and there
One of his assessments made at
the time has proven truly prophetic. have been widespread complaints
Scholes said he believed the South
African Government was becoming from mining executives over the
more hostile towards the country’s
mining industry saying: “It’s almost past year that these notices were
like a clash of ideologies. The State
has a transformation agenda – which is being applied out of all proportion to
a political agenda – and the industry has
a profit agenda. Often these two don’t the transgressions involved. Entire
meet and the Government appears not
prepared to allow any leeway.” mines were being closed down over
That is exactly what has happened minor infringements.
but, at the time, the general attitude of
the South African mining establishment The judgement ruled the DMR
was to continue to try and settle things
quietly “behind closed doors” and avoid had ignored the notion of “propor-
public and legal confrontations with gov-
ernment which were deemed to be bad tionality” when during October it
shut down the entire Kopanang mine
Their position has now changed dra-
matically after unprecedented interfer- AngloGold chief Venkat when the safety transgressions had
ence in the day-to-day operations of their only occurred on a level employing
mines by the DMR over the last year,
ostensibly on the grounds of safety but (PAMDC). This is a company created by 2% of the entire workforce.
which has frequently appeared to be po-
litically-motivated. the governments of South Africa, Zimba- Interesting aspect – and not part of the
That’s on top of the long-running is- bwe and Zambia. court case – was that earlier that month
sue of the uncertainties surrounding the
country’s overall mining legislation which The nub of the issue was that over- AngloGold chairman Sipho Pityana had
has been crystallised in the confrontation
between the Chamber of Mines and the lapping prospecting rights were granted launched an all-out attack on South Af-
DMR over the issue of “once empow-
ered, always empowered”. to PAMDC in 2011 on ground to which rican president Jacob Zuma demanding
That’s now the subject of legal action prospecting rights were granted to Aquila his resignation.
which will likely end up in the country’s
highest court but Scholes is still mov- in 2007 and on which Aquila had spent Asked on November 14 – at a quarterly
ing ahead of the establishment. He’s
launched action to have the entire Mining R150 million. results presentation – whether he thought
In a High Court judgement handed the DMR had stepped up Section 54 ac-
The DMR suffered its latest defeat
over its actions in 2015 to set aside min- down in November, Judge J Tuchten tions against the group’s mines follow-
ing and prospecting rights granted to Aq-
uila Steel South Africa – a subsidiary of upheld Aquila’s prospecting rights and ing Pityana’s speech, AngloGold chief
China’s Baosteel – in favour of the Pan
African Mineral Development Company also awarded Aquila the mining rights executive Srinivasan Venkatakrishnan
to ground. The judge then delivered a replied: “I cannot speculate.”
scathing assessment of the DMR’s ac- The bottom-line is these Section 54
tions, bias and lack of competence. stoppages cause hefty operating losses
He commented: “In my view, Aquila for the affected mines and they are par-
has established a high degree of insti- ticularly serious for a deep-level gold
tutional incompetence on the part of the mining operation. Fundamental econom-
government respondents and a lack of ics of such mines show that revenues
energy in resolving the issues from that generated over most of an operating
very incompetence.” quarter go towards covering costs and
He pointed out that PAMDC had “not capital expenditure.
made the slightest move to create the Actual profits are made out of a mi-
substantial infrastructure and incur the nority of operating shifts so – if some of
substantial costs which even prospect- those are lost due to unwarranted stop-
ing, let alone mining, have been shown pages – the mine could easily go into the
to require”. red for the quarter.
He added: “Their purpose in this litiga- Speculation now is that major mining
tion has been to obstruct the exercise companies may actually sue the DMR
by Aquila of the rights which it has ac- to claim back costs they incur from the
quired and seeks to acquire, no doubt in implementation of Section 54 stoppages
the hope that its capacity to obstruct will which are shown to be out of proportion.
drive Aquila commercially to cut PAMDC Brendan Ryan is a Johannesburg-based
– or one or more of those associated mining writer
with PAMDC – into its operations or to
pay PAMDC a sum of money to stop ob-
structing the process.”
The Aquila case follows hard on the
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 7
Funds keep the faith with
This time last year the base metals
complex was all doom and gloom.
The LME index of prices touched
2,049 in January 2016, its lowest read-
ing since the dark days of January
2009, when the world seemed to be
spiralling into full-blown depression.
China came to the rescue then and
it came to the rescue again last year,
Beijing policy-makers once again
pumping money down the twin metals-
intensive channels of infrastructure and
construction to reinvigorate economic
The LME index has since recovered
to 2,768. True, performance has been
mixed, largely reflecting each individual
metal’s supply dynamics.
But the worst seems to be over for
base metals prices, with more upside to
come. That, at least, is what fund man-
agers are betting on.
There was some marginal reduction Nickel was at five-year lows in the early part of 2016, however, fund positioning
in fund positions over the course of suggests the base metal is back in vogue
December but the money men appear
to be largely keeping the faith with the previous trading range in spectacular 68,938 contracts on the LME is still at
broader turnaround story. style. unprecedented levels.
Copper has long been the hedge Fund money poured into the market, Taking the COMEX contract as an ex-
funds’ favourite base metal to the point feeding on and accelerating the upwards ample because the US Commitments of
that somewhere in the mists of time momentum. Traders Report (COTR) has a much long-
someone awarded it an honorary doctor- Net fund long positioning on the LME er history, the previous high for net fund
ate for what it can supposedly say about and the COMEX contract in the US rock- commitment on the long side was 48,994
the state of global manufacturing. eted to previously unknown heights. contracts, a peak seen in July 2014.
Five years of falling prices, however, And although some of that froth has Particularly telling, moreover, is a com-
saw “Dr Copper” fall out of favour. been blown off over the last couple of parison with 2009, a year of dramatic bust
All that changed in November last year, weeks, net money manager position- to boom. Funds bought into copper’s rally
when the copper price broke up out of its ing at 70,547 contracts on COMEX and from a December 2008 low of $US2,817
to a December 2009 high of $US7,167
but the collective net long peaked just
shy of 30,000 contracts.
The inference is that the amount of
money available for investment in the
copper market has increased exponen-
tially over the same period.
Judging by the greater volatility of po-
sitioning in recent years, that money has
become a lot more active in terms of
switching between long and short posi-
tioning as well.
The more statistically curious might
want to draw a comparison in the graphic
between the COMEX and LME position-
The two use the same methodology.
Indeed, the LME based its own Com-
mitments of Traders Report, launched in
COMEX and LME copper positioning reports July 2014, on the US template.
PAGE 8 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
But the LME report seems to be Copper has long been the hedge funds’ favourite base metal
weighted towards the long side given
how infrequently net positioning has fall- through the 2009 lows in the early part the actual price action over the last six
en into short territory. of 2016 and has since staged only a months or so.
half-hearted recovery, fund positioning
That should serve as a caveat when suggests the money men are keeping But net long the money men still are, at
considering fund positioning in the other faith with the overall cyclical turnaround least according to the LME COTR data,
base metals because the LME’s report is theme. and that despite a fairly brutal sell-off in
all we have. December, from which the price has only
Even lead has been a beneficiary of partly recovered.
The CME, owner of the COMEX fran- investment money, albeit to a lesser de-
chise, now offers aluminium, zinc and gree than the other LME-traded metals. Which, in its own small way, says a
lead contracts but participation remains lot about how the funds feel about base
extremely low relative to the LME and Fund participation is relatively low in metals right now.
too low for most investment funds to risk this particular market and, curiously,
involvement. the net long has moved out of sync with – Andy Home, Reuters
Even with the peculiarities of the LME’s Fund positioning on LME aluminium, lead, nickel and zinc, rebased to Jan 2016
version of the COTR, however, fund po-
sitioning on LME aluminium and zinc
turned net short at some stage over the
first quarter of 2016, with that on lead fol-
lowing suit in May, since when the money
flow has been all one way.
Taking that January 2016 trough in the
LME price index as a reference point,
fund net long positioning has more than
doubled in the case of lead and nickel,
tripled in the case of aluminium and in-
creased five-fold for zinc.
Zinc’s preferred status should come as
While the bounce-back in Chinese de-
mand has lifted all metallic ships, zinc
has risen most because of its compelling
narrative of a tightening raw materials
Zinc was the outperformer among the
LME base metals last year and there is
still plenty of money betting there is more
to come this year as well.
At a current 81,874 contracts, the net
managed-money long is holding close to
its recent highs.
It has been exceeded substantially
only once, in the second quarter of 2015,
when fund money flooded the market,
also chasing the story of supply deficit
but, with the benefit of hindsight, prema-
That suggests there is scope for even
heavier fund commitment given the right
combination of fundamental news and
technical chart signals.
The build-out of net long positioning
by funds in metals such as aluminium
and nickel looks more curious given both
markets are still characterised by high
stocks and evidence of overproduction.
True, net long positioning in aluminium
has dipped quite sharply since a Novem-
ber peak of 178,131 contracts to a cur-
rent 139,319 contracts, but it is still high
by historic standards, which means since
the data series began in July 2014.
Fund positioning on nickel, meanwhile,
is still close to its all-time high of 66,062
contracts recorded in October last year.
Given that the nickel price actually fell
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 9
Copper run buoys Stavely
Stavely Minerals Ltd managing direc- Stavely is currently drill testing the Thursday’s Gossan prospect in western Victoria
tor Chris Cairns knows now is a good
time to be exploring greenfields copper to make a call and suspend drilling in project into Stavely,” Cairns said.
projects in Australia. February if we get a string of hot days.” “Notwithstanding that it does give us
“I think the combination of copper price Stavely is also conducting a large IP the flexibility to be able to work in the
forecasts and potentially what the Aus- geophysical programme on the Fairview winter, which is very difficult in Victoria
tralian dollar might do, particularly if the gold target, also in Victoria. given how wet it gets, there is quite a
US dollar gets a lot stronger, suggests it substantial package up there and it has a
could be a very attractive time to be in The company last year completed huge amount of potential in terms of both
copper in Australia,” Cairns told Paydirt. a positive conceptual study which as- copper and gold.”
sessed the potential of the chalcocite-
Copper was trading around $US2,600/t enriched supergene blanket at Thurs- Stavely recently confirmed it had made
at the time of print, up 30% on the report- day’s Gossan, based on the existing a copper-moly-silver discovery at The
ed spot price at the end of January 2016. 28mt @ 0.4% copper for 110,000t in- Bank prospect on the back of strong as-
The rise was particularly evident during ferred resource. The conceptual study say results, including a hit of 22.8m @
the past three months. revisited a 2008 scoping study by Bea- 0.6% copper (including 12.4m @ 0.95%
consfield Gold NL, the previous owners copper, 120 ppm molybdenum and 8 g/t
Stavely is one copper-focused junior to of the project. silver and 6.05m @ 1.31% copper, 100
have reaped the benefits of the red met- ppm molybdenum and 12.4 g/t silver).
al’s price run, with its stock lifting 60% During the past 12 months, Stavely
over the past year to a healthy 16c/share also expanded its portfolio to include the Cairns said investors would hear more
at the time of print. Ravenswood West gold-copper project news about his company’s gold pros-
in Queensland. The company picked up pects in Queensland over the coming
Cairns said he was not paying too the project from a private entity owned by months.
much attention to either his company’s Cairns and his long-time business part-
share price or the copper market, but ner Peter Ironside. While Cairns conceded it was still a dif-
when he did he liked what he saw. ficult market for junior exploration despite
“For the princely sum of $2 we got that the return of investor sentiment to the
“I watched it [copper price] jump a few
months ago and I probably look at it eve- sector, he was adamant there was still
ry second week or so just to see what is plenty of opportunities for those who
happening,” Cairns said.
get the formula right.
“I think the commentary from various “What you need to be able to pro-
analysts is very encouraging.”
vide investors is a string of opportuni-
Stavely is currently active on the ties,” Cairns said.
ground, chasing a major discovery on
its Victorian tenements, including the “You can’t be a single-prospect
Stavely, Ararat, Mortlake and Yarram story. Investors need to have a couple
Park copper-gold projects. of chances for a discovery to be will-
ing to invest. It’s critical you build your
Three porphyry targets – Toora West, targets, give [investors] an attractive
Thursday’s Gossan and Mt Stavely – proposition in terms of investment and
were the focus of a six-hole diamond what that would mean if there were to
drilling programme at the time of print. It be a discovery. If you don’t put in the
comes after the Perth-based company effort to create that value proposition
received a welcome cash injection of then it’s actually very difficult to mar-
$1.05 million co-funding from the Victo- ket.”
Chris Cairns – Michael Washbourne
Stavely also rattled the tin for $3.5
million ($2 million from a share place-
ment and a further $1.5 million from a
SPP) late last year, boosting the com-
pany’s overall cash position to almost
Cairns revealed his team was racing
the clock to complete the current ex-
ploration programme in Victoria before
hot weather intervenes.
“Because of the amount of rain Vic-
toria had last year in the winter, there’s
a lot of grass – so a lot of fuel on the
ground – and if we get caught up with a
couple of hot and windy days it’s going
to be a problem for us,” he said.
“We can’t be in the paddocks at that
time, so we can’t drill. We might have
PAGE 10 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Case histories of discovery
The world’s pre-eminent
gold exploration event
Pan Pacific Perth 7
Alturas (Chile) – Barrick Gold Limited
Hot Maden (Turkey) – Mariana Resources Ltd/
Lidya Madenulik Sanayi ve Ticaret A.S.
Nyanzaga (Tanzania) – OreCorp Limited/
Acacia Mining PLC
Yaramoko (Burkina Faso) – Roxgold Inc.
Yaouré (Côte d’Ivoire) – Perseus Mining Limited
Gross (Russia) – Nordgold N.V.
Hope Bay (Canada) – TMAC Resources Inc.
Pan Pacific Perth 7
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on (+61) 8 9321 0355 or email [email protected]
Thor in the USA
Thor Mining plc chief The tungsten potential at Pilot Mountain could be better than Thor’s
executive Mick Bill- ready-to-mine Molyhil project in the Northern Territory
ing says there is po-
tential for the mining businesses in the US.” @ 5.7% copper equivalent, and six RC
industry in the US to Thor is in the category of companies holes at Garnet are planned.
blossom quite quick-
ly once the dust set- in the mining sector with the opportunity Based on the last intersection at De-
tles on the inaugu- to potentially capitalise on Trump’s pro- sert Scheelite, Billing said it was possible
ration of the country’s posed endeavours to grow the US, as it that Pilot Mountain could end up being a
45th President, Donald is positioning to be a significant player in copper-tungsten play and the company’s
Trump. the tungsten industry. flagship project.
“The US exchange rate “Tungsten is a commodity that gets Thor has the ready-to-mine Molyhil
is strengthening at the min- used more when the world is growing; if tungsten project, 220km north-east of
ute, which is probably not the US is growing, generally the whole Alice Springs, however, current tungsten
helping them. But, labour costs world grows and tungsten will go up,” prices are hardly enticing enough to at-
in the US are probably a bit lower Billing said. tract development funding for the $64
than they are in Australia and infra- million project.
structure availability in the US is much “I sincerely hope that analogy is right.
better than in remote Australia. We have There are lots of tungsten deposits in Indicated and inferred resources at
a project in the back blocks of Nevada, the US but I don’t believe any are being Molyhil are 4.7mt @ 0.28% tungsten for
30 minutes from the bitumen road and mined right now. I think what we have 13,100t, 0.13% molybdenum for 6,220t.
10 minutes from mains power; they are could end up being close to a world-
some of the things that certainly give a class deposit.” Billing said there was potential for Pilot
lot of the US a competitive advantage Mountain to be bigger than Molyhil.
compared with outback Australia,” Billing At the time of print, Thor was prepar-
told Paydirt. ing to start its maiden drilling programme “Pilot Mountain is not ready to mine yet
on the Pilot Mountain tungsten project, but we could end up with a much larger
One of Trump’s promises is to improve 200km south of Reno. resource than at Molyhil,” he said.
the quality and spread of infrastructure in
the US, giving industries in the country a Two RC holes at Desert Scheelite, fol- “We are doing our first drilling pro-
chance to participate in “making America lowing up on an intersection of 17.5m gramme on this project. We have had it
great again”. for a couple of years after we bought it
“This should be good for utilities, coal from a company that wanted to change
“I think we are going to flounder while producers and uranium miners. Finally, I direction. There has been a reasonable
we work out how he plans to go about think he will actively reduce government amount of environmental work and met
implementing the things he wants,” Bill- agency red tape and look to stimulate test work done on the project, but this
ing said. growth. How successful he will be is any- is our first drilling programme. There is
one’s guess.” certainly availability of companies to drill
“He didn’t get to where he is by be- and the quality of the drillers around ap-
ing stupid and some of the comments Simpson said Trump may also look to- pears to be good.”
and things he does aren’t correct, how- wards offering tax relief on undeclared
ever, he is not a dill. He wants to stimu- foreign earnings and capital repatriation There is a resource of 6.79mt @ 0.31%
late American industry, lower tax rates back to the US to pay for the intended tungsten for 21,000t, 22.8g/t silver for
and do a whole bunch of infrastructure upgrades and expansion of infrastructure 160,000t and 0.17% copper for 12,000t
spending. If he is able to deliver on these in the country. at Desert Scheelite, which Thor hopes to
things it will do a lot of good for a lot of add to in the next drilling programme.
“This should see increased commodity
US-focused uranium producer Penin- demand and a higher US dollar, both of – Mark Andrews
sula Energy Ltd could be a beneficiary which would be good for miners.”
of some of the policies Donald Trump’s
Republican Party is looking to introduce. – Mark Andrews
Peninsula started production from the
Lance uranium projects, Wyoming, in
2015 and is working towards a scale-
able development plan which would see
it produce 2.3 mlbpa in the future.
“With regard to Peninsula and uranium
I believe he [Trump] will favour energy
generation diversity; see renewable sub-
sidies as unnecessary; acknowledge
nuclear as emissions-free and remove
penalties being paid by nuclear genera-
tion groups,” Peninsula chief executive
Gus Simpson told Paydirt.
PAGE 12 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Trump good for coal
Donald Trump – a big supporter of industry access to vast coal deposits
oil, gas and coal – has promised to
get to work quickly after being sworn remaining in the Powder River Basin.
in as president of the United States,
raising expectations that he will sign a Reversing some of Obama’s more
slew of executive orders.
recent moves to put federal acreage
Trump, a Republican, has promised
to kill the Clean Power Plan of Demo- off-limits to drilling could be more com-
cratic predecessor Barack Obama.
The rule requires states to cut carbon plicated. Obama designated around
dioxide emissions from power plants.
He has a few options to do so, some 1.6 million acres of federal lands in
simpler than others.
Utah and Nevada as monuments, us-
The plan is being challenged by 27
of the 50 states in court, so one option ing a tough-to-overturn law called the
is to order the Justice Department to
stop defending it – effectively giving the Antiquities Act. He also permanently
plaintiffs a win. Trump could also seek a
“voluntary remand” asking the court to protected areas of the offshore Arctic
send the rule back to the Environmental
Protection Agency for review. The prob- and Atlantic using another law that le-
lem is that attorneys general from states
like New York and California, as well as gal experts say would be a challenge
environmental groups, would likely step
into the gap and defend the rule. The lifting of a moratorium on coal leasing on US to overturn.
federal land could improve industry access The Obama administration finalised
Another possibility would be to order a couple of environmental regulations
the EPA not to enforce the rule. But that,
too, could open the door to lawsuits. Trump could sign an executive order in its last weeks in office that are likely to
A third option would be for Trump’s ad- approving the Dakota Access Pipeline in be quickly overturned, including the Bu-
ministration to try to issue a new regula-
tion “withdrawing” the Clean Power Plan, North Dakota, or order the acting secre- reau of Land Management Methane Rule
even if it is upheld in the courts, accord-
ing to the American Energy Alliance, tary of the army to approve the project, and the Streams Protection Act.
an industry group that helped advise
Trump’s energy transition team. That according to Brigham McCown, former Congressional leaders said they would
move may not be a fast one.
head of the US Pipeline and Hazardous target those rules under the Congres-
The Clean Power Plan, finalised in
2015, is the centrepiece of Obama’s Materials Safety Administration under sional Review Act, which allows law-
broader climate change strategy.
President George W. Bush. However, makers to use a simple majority vote to
Trump has promised to ask TransCan-
ada Corp to resubmit its application to such a move would be highly unpopu- rescind a regulation within 60 legislative
build the Keystone XL pipeline, a project
to pipe more Canadian crude oil sands lar among pipeline opponents who have days of publication.
into the US that was rejected by the
Obama administration after years of en- camped out at the construction site for The methane rule limits methane emis-
vironmental lobbying against it. While the
invitation to resubmit could come fast, it months, drawing national attention. sions from energy installations on fed-
is unclear whether TransCanada would
seek to revive the project given that oil Leaders from the Standing Rock Sioux eral land, while the Streams Protection
prices are far lower now than they were
when the company initially pursued it. tribe, which led the protests over worries Act protects waterways from coal mining
Trump may also seek to issue an order the pipeline would threaten water quality, runoff.
to undo a guidance issued last August by
the White House Council on Environmen- have vowed to challenge any executive Some other rules, affecting the ag-
tal Quality that requires federal agencies
to quantify greenhouse gas emissions action. The pipeline is owned by Energy riculture industry, could also fit in this
and factor in impacts on climate change
while evaluating projects like pipelines. Transfer Partners LP. category. They include the US Depart-
The council had updated the decades-
old National Environmental Policy Act to One little-known tool used by the Oba- ment of Agriculture’s final rule regarding
include the greenhouse gas update.
ma administration to support its regula- production requirements for organic live-
tions curbing carbon emissions is the stock and poultry, establishing minimum
“Social Cost of Carbon,” a calculation indoor and outdoor space requirements
made by a panel of technical experts to for chickens.
place a dollar value on the public harm During his campaign for the White
caused by carbon dioxide emissions. House, Trump said he would pull the
The calculation is used in the rule-mak- US out of the Paris Climate Agreement
ing cost/benefit analysis. within 100 days of taking office. The ac-
The current cost of carbon determined cord, signed by nearly 200 countries last
by the group is $US36/t, a level that will year, is intended to curb global warming
rise to $US50/t by 2030. by slashing emissions of carbon dioxide
The American Energy Alliance be- and other greenhouse gases. Since his
lieves that Trump could immediately or- election, Trump has softened his stance
der government agencies to end the use slightly, telling the New York Times that
of the Social Cost of Carbon, a move that he would keep an open mind about the
could help it unravel a number of Oba- deal. Nonetheless, the mercurial former
ma’s other anti-carbon regulations. New York businessman has been ad-
Trump could immediately lift the De- vised by his team about swift options he
partment of Interior’s moratorium on coal could take to end US participation in the
leasing on federal land – a move the accord, including issuing a presidential
department made last year as it sought order simply deleting the US signature
to review the programme and evaluate from the Paris accord.
whether the Government adequately – Valerie Volcovici, Reuters
priced the value of coal extracted from
public land on behalf of the taxpayer.
Lifting the moratorium would improve
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 13
Investigator shines in silver
The limelight has certainly been
on the gold sector, and as silver
generally follows the same trajecto-
ry – albeit with a lower profile – the
handful of Australian silver players
are hopeful of a fruitful 2017.
In mid-January, silver was trading
at above $US17/oz after reaching
over $US20/oz in August last year.
“Silver is starting to track upwards
with gold. Silver suffers from being
volatile as a 50:50 precious metal/
industrial usage. But, when gold
takes off, silver takes off too, as we
are seeing evidence of at the mo-
ment,” Investigator Resources Ltd
managing director John Anderson
“There are not a lot of silver play-
ers, we are one of a half a dozen
in Australia but we are certainly up
there in grade; we have high grades Investigator Resources managing director John Anderson on site at Paris with Paydirt in 2012
for an open pittable proposition
which is what we are proposing Paris will g/t silver, including 52m @ 468 g/t silver ferred to indicated, but reading between
be.” from 10m; 10m @ 2,708 g/t from 118m; the lines without revealing too much, we
Investigator shares received an uptick 17m @ 502 g/t from 81m and 8m @ 561 are getting much bigger intersections
following infill drilling results from the g/t from 49m. and much higher grade intersections
Paris silver project, about 350km north- Results from six diamond twins of RCP than we have before in closer spaced
west of Adelaide, on South Australia’s holes were expected to be received at drilling; so it is pretty encouraging stuff,”
Eyre Peninsula. the time of print. Anderson said.
The infill drilling programme proved to Nevertheless, the results to date have “We’re aiming for a scoping study so
be a successful one, with a new high- boosted optimism within the company as we need an indicated resource to do that
grade intercept adding to the company’s it prepares to upgrade the Paris resource and we can’t really talk about it until we
confidence in the resource ahead of the in Q1 2017. get the resource upgrade. We are quite
release of a scoping study by mid-year. Currently, Paris is host to an inferred advanced in metallurgy, we have to do
Investigator reported that all assays resource of 8.8mt ore for 33 moz silver @ more, but so far the metallurgy has been
from the 50 vertical RCP holes com- 116 g/t; 50 g/t silver lower cut-off. good.
pleted revealed grades greater than 30 “We are aiming to convert from in- “We have been looking at the ground-
water and, of course, the stuff of real in-
terest is the financial analysis. We have
been doing a lot of that in-house and
have a lot of advice from the processing
and mining guys. We are looking to get
that scoping study out mid-2017.”
In the meantime, the company will con-
tinue its detailed assessment of the geol-
ogy, with particular attention given to un-
derstanding the structural controls within
the deposit to explain the widespread
distribution of high-grade silver intersec-
tions in the infill drilling.
Metallurgical test work will also con-
tinue, with bulk samples of the RCP drill-
ing collected and preserved for further
analysis in the March 2017 quarter.
– Mark Andrews
Paris is being primed as a high-grade, open pit mine in South Australia
PAGE 14 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
23 - 24 May 2017
Image courtesy of OZ Minerals
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Shooting from the Base
Base Resources Ltd’s debt reduction Tim Carstens cleaned out our entire inventory during
programme continues apace, with a the quarter and we are now very much
further $US18.1 million repaid in the De- quarter, it has been a fairly spectacular operating hand-to-mouth,” he said.
cember quarter. recovery in price.”
“We are shipping as soon as produc-
The mineral sands miner has cut net A total of 3mt for 116,982t ilmenite, tion is achieved, which means we have no
debt down to $US129.5 million from a 22,870t rutile 8,591t zircon and 2,550t real buffer. From an ilmenite perspective
high of $US225 million 18 months ago. low-grade zircon was produced in the De- we need to build up 55,000-55,000t to get
cember quarter, which has Base on track a ship going and about 7,000-10,000t of
“We have made pretty substantial in- to deliver 88,000-93,000t rutile, 450,000- rutile, so it does have a bit of an impact on
roads to getting that debt down to levels 480,000t ilmenite, 33,000-37,000t zircon shipment timing.”
that shouldn’t really be a factor in peo- and 8,000-10,000t low-grade zircon for
ple’s calculations on their outlook for FY2017. Buoyancy in the mineral sands sec-
Base,” managing director Tim Carstens tor at the moment is partly due to “an
said. Forecast production has been refined extremely strong” painting season in the
somewhat, with sales during the quarter northern hemisphere last year, which
A cleaner balance sheet has not gone broadly matching production, Carstens resulted in significant consumption of
unnoticed in the market, with Base said. inventories and pigment price rises in
shares appreciating significantly during China.
2016. “With some impact of vessel timing we
Supply and demand for rutile and il-
Having started 2016 at below 5c/share, menite are largely balanced at the mo-
Base was 25c/share at the time of print ment, with no real impact on inventories
in light of a robust December 2016 quar- providing a good price environment for
terly report. players in the sector.
The tailwinds experienced in the min- There are other factors emerging
eral sands sector last year have contin- which could tighten the market and pro-
ued early into the new year and Base is vide further impetus for ilmenite prices to
capitalising at its Kwale mine in Kenya. increase. In China, supply disruptions are
occurring following environmental audits,
“The December quarter has continued while in India, politics are also affecting
apace with another 40% increase or a mineral sands supply. Market conditions
little more than 40% increase in ilmenite in the northern hemisphere are tradition-
price this quarter on top of the 50% gains ally slower at the start of the year, how-
from the September quarter,” Carstens ever, the current period has been very
said. strong with $US20-40/t added to ilmenite
prices over the past couple of months; a
“On top of that we have seen further trend Carstens expects to continue for
gains thus far in the March quarter; for shipments in March and April.
example our February shipment is head-
ing out at $US140/t. Given that we were “We see that [ilmenite] price continuing
around $US60/t at the end of the June to rise up into the high $US100s during
the course of 2017 and where that could
Throughputs in the mineral separation plant have been maintained up end up will be interesting to see. We are
around the targeted 91-92 tph not even yet quite inside the normal rela-
tivity of price between ilmenite and rutile,
which typically sits between four and six
times, with the rutile price sitting around
$US700/t. What we have been seeing
is a recovery into a more rational mar-
ket, rather than a market running away,”
“In terms of rutile, we expect to see
prices start to creep up in the March
quarter. We have seen some price sta-
bility through the June and September
quarters, [with prices] averaging across
the board $US700/t. The data for the
September quarter came in recently
and was a little softer than we were
expecting, we thought we might see
around $US720/t but it was down around
$US700/t. The conditions we are seeing,
we expect to see that price start to creep
up in the March quarter.”
PAGE 16 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
With respect to zircon, given
oversupply of the product in the
market, there were only mod-
est price gains in the December
quarter but that price achieve-
ment was expected to continue
into the March quarter.
Carstens said if supply man-
agement by the likes of Iluka
Resources Ltd and Rio Tinto
Ltd continued, a general upward
trend in zircon prices would con-
tinue this year.
“But, I would suggest it would
be quite some time before we
see really material price improve-
ments. What we are seeing now
is sort of $US30/t each quarter. It
is going to take a while before we
see something really significant, I Base will be monitoring the April-June wet season closely. 2016 saw Kenya receive just over 50%
suspect, but everything is head- of its annual long-term average rainfall, even in the tropical zone Kwale is based
ing in the right direction,” he said.
It has been a long winter for mineral bring those back this quarter,” Carstens West sector of Kwale started recently
sands companies, but there appears to said. and is expected to be completed within
be some joy in the sector. Also this quarter, Base will wrap up three to four months.
Iluka created headlines after complet- first-pass drilling on its near-mine exten- The company is also on track to deliver
ing its merger with Sierra Leone-focused sional targets on the South West sector a feasibility study into Kwale Phase Two
Sierra Rutile late last year, while fellow at Kwale, with an infill drilling programme during the June quarter.
ASX-listed mineral sands miner Mineral to follow. “The focus of that project is to optimise
Commodities Ltd recently signed a con- Preliminary results from that pro- the mining methodology, increase min-
tract to sell 83,000t of ilmenite from its gramme will be released this quarter and ing rates, increase concentrate produc-
Tormin mine, South Africa, in Q1 2017 to it is hoped a resource can be defined tion; basically de-constraining the front
a Chinese buyer. later this year. end of our flow sheet and processing the
With a tightening of supply in the mar- A first-pass programme of the North orebodies faster,” Carstens said.
ket, there is an opportunity for “It started as a trial but has
mineral sands companies to become an integral part of our
capitalise and start plotting their coming approach; that HMU
next steps. was a key element of the de-
Base is doing so and while constraining of the mine. The
output and sales were solid in performance we have been
the December quarter, the com- able to achieve from that unit
pany was particularly chuffed has been extremely encourag-
with the performance of the ing from the mine de-constrain-
hydraulic mining unit (HMU) at ing component of Kwale Phase
Fully ramped up, the HMU ex- Work won’t be limited to Kwale
ceeded 400 tph design capacity and Kenya this year, with Base
and contributed to record min- ready to make some moves in
ing volumes. Tanzania.
“Interestingly enough, it has The company hasn’t con-
performed so well that if we ducted any meaningful explora-
were doing Kwale again we tion on the ground yet but it has
would probably use hydraulic expanded its footprint to now
mining exclusively as our mining cover 450sq km.
method,” Carstens said. “We think it is pretty prospec-
Having the HMU down-pat tive. We have a programme of
will serve Base well for the fu- stratigraphic drilling planned for
ture as it heads to mining lower the first half of 2017. That will be
grades at South Dune from about 3,000m aimed at under-
around 2019. standing the structures and then
“It has really been important we will plan from there what
for us to demonstrate the plant’s the full exploration programme
ability to handle it. It has had Power quality issues are part of the reason work remains on looks like,” Carstens said.
some impact on wet concen- reaching pre-March and June quarter levels of recoveries. Zircon – Mark Andrews
trator recoveries, but there is a recoveries are about 74%, compared with 78% previously, while
re-optimisation [happening] to rutile recoveries are broadly back on track at 98%
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 17
Tawana’s bold bid for Bald Hill
One-time iron ore explorer from 140m, 23m @ 1.15% from
Tawana Resources NL has 107m (including 15m @ 1.33%
launched its bid to become a from 108m), 8m @ 1.3% from
spodumene producer by the end 109m and 15m @ 1.18% from
of the year. 127m (including 8m @ 1.61%
Tawana has pulled the trig- from 134m).
ger on a feasibility study for its Tawana has also been drilling
Bald Hill lithium-tantalum pro- at the neighbouring Cowan lithi-
ject in Western Australia after um project, which was acquired
a conceptual engineering study shortly after the company en-
returned several “outstanding” tered into discussions to JV into
results. Bald Hill with Alliance Mineral
Highlights of the study includ- Assets Ltd.
ed a low capex and rapid pay- Lithium’s emergence last year
back, based on the retrofit of a came as a surprise to many, in-
spodumene circuit to the project, cluding Calderwood, who admit-
about 50km south-east of Kam- ted he was still coming to terms
balda. with the hype surrounding the
The feasibility study is due for Tawana’s Bald Hill project includes a tantalum processing key battery mineral.
completion by the end of this facility and associated infrastructure “It’s really only dawning on me
quarter, coinciding with the re- now that we’re undergoing this
lease of a maiden resource/reserve es- What is less widely known about Cal- massive change,” he said.
timate for Bald Hill. derwood is that he is one of WA’s fore- “In 20 years time, none of us will be
Primero Group Pty Ltd, which oversaw most experts on lithium deposits, hav- driving petrol cars, they will all be elec-
construction and commissioning of the ing co-authored the book Pegmatites of tric. And they’ll probably be driverless
Mt Cattlin spodumene-tantalite mine for Western Australia with Ben Grguric and electric. I don’t think people realise how
Galaxy Resources Ltd, will serve as lead Mark Jacobson. quickly the momentum is changing.”
study manager. When lithium took off at the start of last Tawana has also obtained the rights to
A target commissioning date for Bald year, Calderwood began tying up pro- the giant Uis pegmatite tailings stockpile
Hill has been set for October, with long- spective ground around Bald Hill through in Namibia, estimated to contain about
lead items to be procured during the ear- his private company before approaching 20mt. Metallurgical test work to confirm
ly stages of detailed design to allow for Tawana about taking on the project. what grades can be recovered will begin
seamless transition between the various “This is one of the better spodumene this month.
construction phases. deposits in WA,” Calderwood said. “The lithium minerals have never been
Tawana’s share price lifted to 17c – its “WA has the bulk of the world’s spo- extracted from it,” Calderwood said. “It
highest level in almost a decade – fol- dumene resources and will remain a sig- will be cheap to drill and cheap to do the
lowing the feasibility study launch, with nificant producer of lithium minerals for initial met work. A very quick and easy
the company quickly emerging as one of some time to come. Probably half the review will tell us whether we’ve got a
WA’s next lithium producers. world’s lithium will come from WA over ready-to-go, decent project.”
“It’s all about getting to market quickly the next 10 years.” Meanwhile, the company is seeking a
because the next couple of years could Tantalum was historically mined and partner to help develop the Mofe Creek
be quite spectacular processed at Bald Hill, iron ore project in Liberia.
for the industry,” Ta- about 75km south- Tawana was assessing a DSO start-up
wana managing direc- east of Neometals option before the iron ore market tanked
tor Mark Calderwood Ltd’s Mt Marion lithium in late 2015 and the project was put on
told Paydirt. project. On site is an the backburner. However, with iron ore
“You don’t want to existing processing showing signs of a longer-term recovery,
be on a three-year facility and associated Mofe Creek may get a second chance at
curve and miss out on infrastructure, while becoming operational.
these big years that the project also holds “We’re in discussion with a couple of
are coming up.” environmental permits groups at the moment because it’s one
Calderwood is best and remains approved of those deposits that can be kicked into
known for guiding for tantalum mining. gear very easily,” Calderwood said.
Ghana-focused Per- Drill rigs have been “It’s a sweet little asset that has been
seus Mining Ltd from turning at Bald Hill recognised by quite a few people as be-
gold explorer to pro- since last August and ing one of the easier things out there to
ducer over a nine-year the company has been develop. And there’s spare port capacity
period, followed by a encouraged by the re- and loading capacity at Monrovia.”
recent stint with Ma- sults returned thus far, – Michael Washbourne
nas Resources Ltd in A maiden resource/reserve estimate including hits of 9m @
the Kyrgyz Republic. for Bald Hill is due later this quarter 1.65% lithium oxide
PAGE 18 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
SAVE THE DATE
27 April 2017 - Novotel Perth Langley
Conference Sponsors to date:
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Is Fortescue Metals Group Ltd’s in iron ore” started shipping from its inte- It took about two years for the com-
latest rise the platform for a grated mine, rail and port operations in pany to rebound and break through the
sustained run of success for the the Pilbara. $6/share mark again; the value placed
company in the iron ore sector? on Fortescue now after recovering from
With a lack of competition for Rio Tinto a prolonged period of low iron ore prices
Some expect the iron ore price re- Ltd and BHP Billiton Ltd in the Pilbara, since 2014.
bound seen in 2016 to taper and Fortes- Fortescue’s graduation to iron ore pro-
cue’s fortunes to follow, however, those ducer was welcomed in the market. Starting last year priced at about
within the inner sanctum responsible for $1.40c/share, Fortescue added nearly
creating, implementing and driving a low- However, Fortescue’s promising start 250% to its stock and at the time of print
cost production strategy are confident of was blighted by the GFC which saw mar- was trading at $6.24c/share.
taking the company to the next level. kets around the world collapse and com-
pany stock prices take a beating. Iron ore was worth $US80/t in mid-Jan-
The company’s share price peaked at uary, but some forecasters are predicting
$12.13c/share in 2008 as the “new force From glamour start-up producer in May, an average price of $US55/t for 62% Fe
Fortescue spectacularly plunged from in 2017.
over $12/share to $1.80c/share by No-
vember 2008. “It is very difficult to predict the iron ore
PAGE 20 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
price, however, it has remained in a fairly
consistent band of around $US40-60/t
for the past 18 months. The iron ore mar-
ket in 2016 was largely in supply/demand
balance and we expect that to continue
through 2017,” Fortescue chief executive
Nev Power told Paydirt.
“At current prices, we are generating
strong cash flows and through productiv-
ity and efficiency gains delivering sustain-
able cost reductions. Fortescue has now
become the lowest cost seaborne suppli-
er of iron ore into China, a great result that
reflects the efforts of the entire Fortescue
It has been an impressive effort by the
Fortescue outfit to be leading the ASX
100 Resources Index for FY2017, and
while there is a perception the achieve-
ments of the past 12 months have been a
“brilliant overnight success”, Power points
out that the preceding five years had been Fortescue was the first company in WA to control a railway from
hard yakka. outside the region of operation
During the period, the company quad-
ruped iron ore production and is now on ber that Fortescue would be back with highs and even if the bulk commodity
track to deliver 165-170mt in FY2017. gearing levels most in the mining indus- tested the 10-year lows of $US38/t hit in
However, transitioning into a premier try would be envious of; a statement hard 2015, Fortescue will still generate good
iron ore producer – the fourth largest in to argue with. margins.
the world – came at a cost. Current iron ore prices ($US80/t at the The only cash the company is com-
An audacious $9 billion expansion time of print) will allow Fortescue to set- mitted to putting on the table in the near
across its port, rail and mining operations tle more of its debt ahead of schedule in term is for sustaining capex and inter-
to cater for increased production capac- 2017. est repayments on the debt, meaning
“ity was officially commissioned in early However, the company is far from reli- $US30/t iron ore is a breakeven price,
2014 and recouping costs has been the ant on iron ore prices staying at five-year extremely competitive in today’s market.
order of the day since. With factors such as
The 2016 iron ore rally It is very difficult to predict the iron the oil price and ex-
was a boon for Fortescue ore price, however, it has remained change rate, which alone
as it managed to repay in a fairly consistent band of around helped Fortescue reduce
significant amounts of costs by about 40% from
debt – $2.9 billion – bring- $US40-60/t for the past 18 months. The FY2015 to FY2016, be-
iron ore market in 2016 was largely in
ing down net borrowings yond its control, the com-
in FY2016 to $US5.2 bil- pany’s focus is on nailing
lion. operational efficiencies to
Fortescue has since supply/demand balance and we expect a high standard to ensure
made two further debt that to continue through 2017. it hits its 2017 bench-
repayments on the 2019 marks.
senior secured credit fa- In FY2016, Fortescue
cility; $US700 million in Sep- shipped 170mt of iron ore,
tember and $US1 billion in produced in the range of
December, totalling combined $US15.43/wmt. Trimming a
annual interest savings of further $US2-3/t in C1 costs
$US64 million. to $US12-13/t in FY2017 is
At the time of the Decem- the company’s next aim.
ber payment, Power said: “C1 is simply the cash costs
“This $US1 billion payment is of everything up until putting
a continuation of our focused it on the ship. We build up
debt repayment strategy and from that, the cost of shipping
further lowers our total cost fluctuates and market rate is
position. Fortescue’s nearest [close] to $US5/t. The royalty
debt maturity is in June 2019 payments are the breakeven
and is now less than $US2 bil- price, our admin costs give
lion with gross gearing falling us a delivered cost into China
below our targeted 40% level and if we then adjust for mois-
once this payment is made.” Fortescue’s remote operations control centre in Perth has ture and DMTU adjustments
Power told a media contin- reduced FIFO commitments for some of its staff and or price realisation, adjust for
gent in Port Hedland in Octo- also delivered enormous productivity gains the grade and bring it to 62%
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 21
from this major cus- awarded Vale an operating licence for
the $US14.3 billion, 90 mtpa S11D mine
tomer will remain and plant in Canaã dos Carajás, south-
east Pará with commercial operations
healthy for the fore- expected to start last month.
seeable future. Meanwhile, Rio Tinto’s 20 mtpa Sil-
vergrass mine is on track for completion
Iron ore demand this year and it is considering pursuing
another greenfield development in the
in China is largely Pilbara – Koodaideri – which could bring
a further 40 mtpa of iron ore to market
driven by economic by 2021.
policy and with the BHP Billiton also plans to expand to
a nominal 290 mtpa, but will proceed
Material from Solomon is blended with ore from the Chichester country committed slower than its rivals as it looks at heavy
Hub, giving Fortescue a product highly marketable in China to building new infra- investment in chasing Tier 1 petroleum
structure, the hous- opportunities and copper exploration.
iron or equivalent, our total delivered ing sector performing strongly and the With full view of the competition’s
plans, Fortescue has some big decisions
cost per dry metric tonne directly com- auto industry growing in the past year, to make on how to keep pace, particu-
larly with ore reserves diminishing from
parable to the 62% Platts Index price is there are no signs that demand for iron
$US22.60/t all up,” Power said. ore will die off dramatically.
Fortescue’s costs are recognised as However, on the supply side, a glut of
the lowest of all seaborne suppliers of new production is coming on-stream.
iron ore into China, ahead on the curve In recent times, Roy Hill has entered
of Rio Tinto, BHP Billiton and Vale S.A. the fray with 55 mtpa of capacity from
China takes 95% of Fortescue’s prod- its namesake project in the Pilbara,
uct and Power is certain the demand while the Brazilian Government recently
More than 760mt has been shipped by Fortescue since 2008
PAGE 22 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Solomon general manager Julie Shuttleworth hosted media on a tour of the About 15% or 1,100 people of Fortescue
operations in October employees are Aboriginal
the 27 mtpa Firetail mine in the Solomon Firetail replacement are in the range of ity in its core business of iron ore in the
Hub. $US1-1.5 billion, with the majority of ex- Pilbara, with low-cost options being ex-
penditure likely to be incurred between plored in Australia and internationally.
“Firetail [mine life expected to 2021] is FY2019 and FY2021.
an important component of the Fortes- The company has very early stage
cue Blend and the replacement strategy “From a resources point of view we copper-gold assets in South Australia,
will ensure we maintain the integrity and have 12bt of hematite and another 6bt of New South Wales and Ecuador, how-
quality of our product range,” Power said. magnetite; we have a dominant position ever, minimal investment and effort will
in terms of our resources and we have be allocated to these projects as produc-
“We are continuing to study all options a lot of unexplored tenements yet to go. tivity and efficiency gains at its existing
and have yet to make a final decision be- We have about 20 years of mine life at all operations are prioritised.
tween Eliwana and Nyidinghu. Work is of our mines, except Firetail.”
underway on early stage approval pro- Technology and innovation have been
cesses with actual construction likely to Power said future exploration and in- the driving forces behind Fortescue’s
begin in late 2018 to support current pro- vestment would focus on maintaining productivity and efficiency improve-
duction plans. Capital estimates for the mine life and sustaining product qual- ments. The company has made great
The autonomous haul system utilised at Solomon has delivered 20% more productivity than the same trucks used in a regular fleet
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 23
Nev Power was recognised as The West Australian’s WA Leader of the Year in 2016
strides in introducing innovative tech- mine control all operate from Fortescue’s targeted, as the drive towards autonomy
nologies to its business to stay ahead of operations centre in Perth. in the Solomon Hub gathers pace.
the game, but the general feeling is that it
has only scratched the surface. Such a move has reduced the FIFO At Solomon, the hub hosting Firetail
demands on some of its workforce, while and Kings, innovation and technology
Fortescue thrives on the opportunity increased plant run time, improved up- advancements around the use of au-
to be an early adopter of technology and grades and yields, maximised through- tonomous or driverless trucks has been
was the first in Western Australia to con- put, optimised train weight and load a focus.
trol a railway from outside the region of times and reduced operator intervention
operation. Currently, integrated planning, at Christmas Creek are among the mate- Fortescue was the first commercial
port and train control, Christmas Creek rial benefits achieved. user of Caterpillar’s autonomous haul
mine and plant control and Cloudbreak technology and has been one of the most
Further gains in these areas are being successful applicants of that piece of kit.
“We are moving to autonomous drilling
there and again, like the trucks, this is
about productivity and efficiency,” Power
said last year.
There are 54 autonomous trucks, val-
ued at around $5 million each, with the
autonomous haul system proving to be
Fortescue started production in the Pilbara in 2008 Fortescue has hematite resources of 12bt
PAGE 24 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
20% more productive than a regular fleet
of trucks of the same type.
“From an operating cost point of view,
which we are still doing a bit of work on,
the numbers are actually looking far bet-
ter than we expected,” Power said. “Fun-
damentally, they [autonomous trucks]
use the same amount of fuel, they con-
sume the same amount of parts, they
wear the tyre out the same as a normal
truck, so the variable costs on them are
very similar to a normal truck. But, what
we are determining through the scanning
systems is that the trucks don’t run over
rocks or wind rows, there is a lot less
damage and they are always going to the
“They are very predictable where they
go, the diggers are more efficient and
that knock on is going right through and
we are seeing reduced costs across our
haulage as well. The autonomous trucks,
combined with a lower strip ratio, means
that we have excess trucks right now [as
at October] and that is one of the reasons
why our sustaining capital has been able
to be kept so low. We haven’t had to have
replacement trucks come into the busi-
ness and that has saved a lot of capital
in the last couple of years. Eventually,
we will need to replace those trucks in
another two or three years, but again it
has allowed us to defer that and use that
cash to pay down debt.”
The impact of the automation at Solo-
mon has been enormous and the mate-
rial from the hub a pivotal component of
Fortescue’s marketing strategy.
The two low-cost orebodies at Solo- C1 costs of $US12-13/t are being targeted in FY2017
mon were brought into production to
provide blend materials, particularly to to mine at lower grades and lower costs.” when asked about the key to sustained
compliment ore from the Chichesters, al- All of which would be music to the ears success.
lowing Fortescue to optimise and extract of investors who were returned a divi- “2016 was a record breaking year for
“maximum value from its orebodies. dend of 12c/share in FY2016. Fortescue, with improved safety per-
“We are shipping ma- formance, consistent
terials that other com- We are shipping materials that production and a focus
panies would be putting other companies would be putting on productivity and ef-
in waste piles because ficiency delivering sus-
we are able to upgrade it in waste piles because we are able to tained cost reductions for
upgrade it through our beneficiation
through our beneficiation continued repayment of
plants and to blend that debt. We are well placed
up into our product is a to continue this journey
very important feature for plants and to blend that up into our during 2017 through our
us. It allows us to mine product is a very important feature for us. clearly aligned strategy
more tonnes from small- to optimise production,
er footprints, it allows us maximise efficiency and
to make greater use of consistently deliver qual-
the State’s mineral assets and allows us Fortescue has consistently delivered ity products, ensuring we remain at the
to be more efficient and cost effective,” dividends to shareholders, even during lowest end of the global cost curve. We’ll
Power said. times when it carried considerable debt, also be working hard to ensure that our
“Today, we process and beneficiate and with its corporate rating lifted to BB+ communities continue to benefit from
around 85% of our product that is the by S&P Global Ratings, there is no doubt the development and growth of our busi-
highest by far of anybody in the Pilbara the company is once again a force in iron ness.”
and we continue to improve that. Every ore. – Mark Andrews
time we can improve on the metallurgical “Without a doubt, the key to Fortes-
performance of those plants, we are able cue’s success is its people,” Power said
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 25
Power and Forrest recognised
Fortescue Metals Group Ltd Nev Power Andrew Forrest
definitely had cause to cel-
ebrate in 2016. vantage and ensure the policy en- employers of Aboriginal people with 15%
vironment is set to attract business of its workforce – around 1,100 – indig-
As a whole, the company investment, which will in turn lead to eco- enous.
rebounded magnificently and nomic growth and strong communities.”
reduced its debt burden by al- Forrest and wife Nicola, established
most $US3 billion by shipping Meanwhile, Forrest was announced the original Australian Children’s Trust,
in excess of 165mt of iron ore 2017 West Australian of the Year. The ac- now the Minderoo Foundation, in 2001.
amid solid prices for the bulk colade meant Forrest was nominated for It runs on the ethos of giving a hand up,
commodity. the national Australian of the Year award not a hand out.
(announced at the time of print).
While it was not done sin- The foundation has been instrumen-
gle-handedly, Fortescue chief Forrest was acknowledged in WA for tal in supporting over 250 initiatives in
executive Nev Power has led his support of 250 community causes as Australia and internationally, including
the charge and was aptly rec- well as his efforts to highlight indigenous fighting slavery and ending indigenous
ognised as The Australian disparity in Australia and draw attention disadvantage.
Institute of Management in to the 45 million people across the globe
Western Australia (AIM WA) trapped in modern slavery.
and The West Australian’s
WestBusiness WA Business Leader of Fortescue is one of Australia’s largest
the Year 2016.
Fortescue chairman Andrew Forrest
has also been a recipient of the award in
2014, and with the company being one
of the State’s largest employers, its sig-
nificance to WA should not be underes-
“Western Australia has reaped consid-
erable benefits from the construction and
development of our mining sector and it
is important that this continues as the
production phase consolidates over the
coming years,” Power told Paydirt.
“As we look to the future, we must
focus on the areas of comparative ad-
Late last year, Fortescue Metals Group shipping requirements. Fortescue trains to fill.
Ltd finalised a transaction with the Chi- At dead weight, the 327m long ship The VLOC has been designed to com-
na Development Bank Financial Leasing
Co. Ltd to finance a fleet of eight very is over 260,000t and standing upright plement Fortescue’s infrastructure in
large ore carriers (VLOC). would be taller than the Eiffel Tower. Port Hedland and will improve load rates,
efficiencies and reduce operating costs.
FMG Nicola is the first ship being built At a cost of $US556 million, FMG
and will cater for 12% of Fortescue’s Nicola is 44% larger than a regular cape-
size bulk carrier which will take seven
PAGE 26 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
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After a year of turmoil on the political front – Brexit, Trump, Syria, terrorist attacks in Nice
and Berlin – and inconsistency in commodity markets, only the bravest would confidently
predict what 2017 holds for the world of resources.
Instead of definitive forecasts, Paydirt has decided to shine a spotlight on the commodi-
ties, companies, jurisdictions and issues which are likely to dominate the headlines in 2017.
Five industry trends to valued, investors are were worth. The lithium mar-
watch likely to start lowering ket has been dominated by a
A rebound for platinum their risk profile in order few players for more than two
It has been a barren decade so far for
the PGM business. Industrial relations to capture good value. decades and while the rise
action, government intervention and
underperforming assets have all con- The process may of lithium ion batteries has
tributed to the issues but the underlying
problem is the prices for palladium and already have started. sparked a surge in demand,
particularly platinum. The platinum mar-
ket has been mired in GFC-level prices The likes of West Afri- the industry is still opaque
for more than 18 months but some ana-
lysts are tipping a rebound in 2017. can Resources Ltd and and its future unclear.
In its 2017 house view report, UBS
predicted a rebound in both platinum and Cardinal Resources This year should give us
palladium prices thanks to an expected
increase in car sales. This would provide Ltd (before a big pre- some answers as savvy
welcome relief to the embattled South
African platinum sector and could even Christmas sell-off) en- companies deal their way out
encourage Australian juniors to relook at joyed breakout years Lithium players with genuine of projects they likely only
both African and domestic opportunities. on the ASX and with projects could cash in this year secured 18 months previ-
Mark Connelly putting ously. Birimian Ltd appeared
together a $250 million IPO for his Toro the first to realise value from its lithium
Gold Ltd gold play, it appears West Africa assets when it announced a $107 million
is attracting attention once again. deal with Chinese firm Shandong Mingrui
It is far from the only location with Group for its Bougouni lithium project in
gold potential. Amani Gold Ltd (formerly southern Mali. However, in what could
Burey Gold) has been joined by Vector be a sign of the difficulties facing lithium
Resources Ltd in the DRC and OreCorp players this year, Mingrui pulled out of
Ltd is preparing to release a PFS for its the transaction before paying a deposit.
Nyanzaga gold project in Tanzania. The industry continues its wait for deal
Across the Atlantic, Barrick Gold Corp to set a marker for the rest of the industry
Juniors return to Africa and Latin has increased its commitment to a JV
America with ASX explorer Alicanto Minerals Ltd, Rush for the next specialty com-
While Australian gold and base metal- a move which hints at an increasing in- modity
focused juniors have enjoyed a strong 18 terest in Guyana and the wider Guiana The lithium rush of 2016 will inevitably
months on the local market, ASX compa- Shield of South America. be replaced by another commodity in
nies with overseas projects have gener- 2017 but what will it be?
ally struggled to follow their lead. Lithium plays begin to be flipped The best place to start the search
However, with gold tipped for a re- As juniors raced to secure lithium-rich would be in the battery space which has
bound in the first half of 2017 and most ground in 2016, many an investor was already led to interest in lithium, graph-
of the locally-focused junior stocks fully left asking exactly what lithium projects ite and even nickel. Lithium-ion batter-
ies also contain cobalt but with a major
portion of global supply coming from po-
litically questionable sources in Central
and East Africa, end-users are increas-
ing their search for “ethical” supply.
The end of 2016 saw a number of com-
panies ramping up their cobalt explora-
tion and development plans and Cobalt
Blue Holdings Ltd – set to be one of the
first new resources floats of 2017 – has
the Thackaringa cobalt project near Bro-
ken Hill as its cornerstone asset. Another
IPO, Ardea Resources Ltd, is also talking
up the cobalt potential of its West Aus-
As with lithium and graphite, it is hard
to accurately forecast how the cobalt
market will look a decade from now but
Strong performances in the gold and base metals sectors could see that will not stop juniors taking advantage
Australian juniors return to exploration in Africa and Latin America of a surge in interest during 2017.
PAGE 28 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Five trends in base pleting funding and development. nickel story and with a number of jun-
metals Chief among them are Heron Resourc- iors ramping up exploration programmes
towards the back end of last year, 2017
Copper turnaround stories es Ltd with its Woodlawn project in New could see some enticing drilling results
While other base metals enjoyed South Wales and Energia Metals Ltd with reported.
strong price performances during 2016, its Gorno zinc project in Italy.
copper travelled along a relatively flat Talisman Mining Ltd could lead the
path which was a cause of frustration for The two share similarities; they are way with its Silver Swan project while
a number of ASX-listed copper produc- both brownfields prospects which have Western Areas Ltd will also be spending
ers who are desperate for a bit of price been closed for more than 20 years and money on increasing the resource at its
fortune. both are located in supportive communi- recently acquired Cosmos operation and
While it is unlikely to be a breakout ties. on the WA/South Australia border.
year for the spot price, there is enough
evidence in operational performance to Heron and Energia will be at the head Elsewhere, Independence Group Ltd’s
suggest 2017 will see some copper min- of a growing zinc pack. Zinc drilling re- consolidation of the Albany-Fraser Belt
ers hit their straps. sults are returning to the ASX announce- has continued and the diversified miner
Oz Minerals Ltd is likely to lead the ments page for the first time in a decade is committed to major exploration pro-
way. The South Australian miner has and from locations as diverse as WA, gramme on the Fraser Range this year.
enjoyed a 63% share appreciation since NSW, Mexico and Ireland, there is great-
July 2016, in the process announcing it er choice for investors keen on zinc than Five commodities to
would complete a full feasibility study for at any time since the height of the mining watch
the Carrapateena project this quarter. Its boom.
Prominent Hill mine is also improving its Iron ore
performance and exploration is also back Nervous nickel After falling below $US40/t in late
on the agenda on the Gawler Craton. After a strong rebound in prices in 2015, the industrial commodity slowly
Elsewhere, Aeris Resources Ltd is fi- 2016, the nickel sector appears set for a worked its way back up to more sustain-
nally climbing out of the hole it dug for year of instability in 2017 thanks largely able pricing levels before surging beyond
itself at the Tritton mine in New South to geopolitical events. $US80/t as last year drew to a close. For-
Wales, Sandfire Resources NL has This has been the case since Indone- gotten juniors such as Atlas Iron Ltd were
pulled well away from its 12-month lows sia’s 2014 ban on exports and last year’s among those to shine on the share mar-
and Metals X Ltd – back as a dedicated introduction of more stringent environ- ket in January as confidence returned to
base metals miner after the demerger of mental regulations in the Philippines, the iron ore sector after more than two
Westgold Resources Ltd – has locked in both of which fuelled price rises. Indo- years in the doldrums. The only stum-
hedging as it battles to prove the worth of nesia’s relaxation of the ban in January bling block in an otherwise sunny hori-
the Nifty mine it acquired in 2015. has already seen the LME price fall in the zon is the proposed increase in produc-
early weeks of this year and the political tion rental fees, paid by the likes of Rio
Smaller, higher grade copper outlooks in both countries appear uncer-
For the last decade, global copper ex- tain.
ploration has largely focused on the dis- Such inconsistency is the last
covery of large porphyry systems. How- thing ASX-listed nickel juniors
ever, with copper prices bouncing around need. Last year saw Mincor Re-
and investors still wary of the industry’s sources NL and Panoramic Re-
avarice leading up to the downturn, the sources Ltd shutter their nickel
preferred copper stories will likely be operations amid struggling
smaller and higher grade. prices. While a spot price run
The most successful ASX copper sto- towards the end of 2016 would
ries of the last decade – Anvil, Oxiana/Oz, take those operations above
Sandfire, etc – were all built on smaller, breakeven, both companies
higher grade assets and with majors un- have stated they want to see
willing to write multimillion dollar cheques three months or more of stable
for early-stage porphyry shows, juniors prices before pressing the re-
and mid-tiers will be more inclined, like start button.
their gold counterparts in recent years, to Similarly, developers such as
take a DIY approach and find more man- Poseidon Nickel Ltd are being
ageable, fundable projects. frustrated by the lack of consist-
ency in the market.
The year zinc projects finally hit de- The problem for the nickel
velopment juniors is that while their opera-
tions remain on care-and-main-
Zinc has been among the best per- tenance they are left to operate
forming commodities of the last two essentially as explorers and
years but the price movement has done shareholders may soon grow
little to spur investment, particularly at frustrated.
the junior end of the sector. That could
change in 2017 with a number of ASX- Nickel exploration boost From December 2015 to December 2016 the
listed companies moving towards com- Nickel’s strong performance in iron ore price doubled to $US80/t
2016 should mean an increase
in nickel exploration in 2017. The
Australian market loves a good
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 29
Tinto Ltd and BHP Billiton Ltd from 25c/t Aussie gold looks north
Many ASX-listed gold producers, in-
Trends shaping theto $5/t, put forward by the WA Nationals
ahead of next month’s West Australian
cluding Northern Star Resources Ltd,
gold sectorState election Evolution Mining Ltd and St Barbara Ltd,
Trump and Brexit enjoyed their best years on record in
Gold Newly elected US President Donald 2016 on the back of a depreciating Aus-
Despite a modest overall gain of about Trump’s mooted plans to spend big on tralian dollar against its US equivalent.
8%, the precious metal was one of last major infrastructure projects was widely Unfortunately, the festive season cheer
year’s standout performers. The ques- tipped to boost inflation and – inevitably for some was nowhere near as loud as
tion is will gold enjoy a much better run – send the gold price upwards. However, anticipated due to the US dollar’s late re-
in 2017? A number of analysts are tip- volatility has remained in precious metal covery. Once again, how the global mar-
ping similar levels of growth amid uncer- trading since last November’s presiden- kets react to the Trump factor will dictate
tainty surrounding Donald Trump’s US tial election, as well as Britain’s pending whether Australian gold players remain
presidential election victory and Britain’s exit from the European Union, with the in favour for a little while longer.
imminent exit from the European Un- market continuing to speculate on the
ion. This comes despite poor demand true fiscal outcome of both results. Africa’s lustre continues
for physical gold over the final two It is no secret gold is the com-
months of 2016, but perhaps that will modity of choice for most African-
be the catalyst for a sharp price rise focused companies and it’s not hard
over the next 12 months. to see why. Almost $US4 billion was
tipped into gold exploration in Africa
Copper between July 2015 and last August,
A long-time favourite among in- with Australian companies such as
vestors, the red metal was effec- West African Resources Ltd and
tively removed from any “most popu- Cardinal Resources Ltd leading the
lar” lists during 2016 after failing charge. With several countries pro-
to awake from its five-year pricing posing to adopt more mining-friend-
slump. However, copper returned ly codes, a West African gold revival
to favour in December after break- is not out of the question if demand
ing though the $US6,000/t barrier for the metal surges.
for the first time in two years amid
hopes of resurgent demand from A year for M&A… again
China. A re-rating of the “bellwether” Could this be the year several
metal is looming, according to The mid-tier gold mining companies
Bank of China International, due to join forces to create a new global
reported low copper-nickel and cop- conglomerate? Every year, market
per-zinc ratios for the year ahead. commentators will speculate on
which companies are in play and
Lithium who needs to take that next step.
Emerged from nowhere last year Some have even gone as far to sug-
to become the most widely talked gest a few perennial contenders will
about commodity in the resources surprise by linking up and doubling
sector. But will investors have the or tripling the size of their already
same amount of love for the key large portfolios. And they might not
battery mineral in 2017? If forecast be far off the money if murmurings
demand for electric vehicles contin- of a merger between Acacia Min-
ues to grow on a monthly basis as ing plc and Endeavour Mining Corp
it did in 2016, don’t expect to hear hold true.
any less about lithium anytime soon,
especially with a number of hopefuls
Hot spots to watchedging closer towards first produc-
Expect key North American funds to place more faith in
tion of concentrates. gold amid more uncertainty in the global markets in 2017 WA: Election year questions
This year will be a defining elec-
Cobalt North American funds return tion for Premier Colin Barnett with the
Another key battery mineral, cobalt is In the wake of the Trump and Brexit jury still out on whether the State squan-
being touted as the “new lithium”. With decisions, investors have once again dered the riches of one of the greatest
most of the world’s production coming turned to gold as a reliable safe haven mining booms of all time. Despite a num-
out of the Democratic Republic of Con- during a time of a perceived financial ber of big ticket infrastructure develop-
go, and mainly as a by-product of copper, crisis in the global markets. While gold ments, the State’s envied AAA credit
intrepid explorers are scouring the world soared in the immediate aftermath of rating has dropped amid a heap of debt,
for new cobalt-rich sources in more sta- the Brexit poll last June, it plummeted to placing the Government under pressure.
ble jurisdictions such as Australia. Riva six-month lows following Trump’s elec- WA Nationals leader Brendan Grylls has
Resources Ltd and new listing Ardea Re- tion win before rallying early last month suggested increasing the rents for iron
sources Ltd are among those trumpeting against a strengthening US dollar. Ex- ore miners just as the industry is begin-
the cobalt potential of their projects in pect key North American funds to place ning to awake from a long slump. Judge-
Western Australia. more faith in gold amid this uncertainty. ment day for WA is March 11.
PAGE 30 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
All eyes will be on the WA Election in March Ecuador: Amazonian discovery Fortescue Metals Group Ltd
Ecuador’s 16 million people are largely One of the best turnaround stories
Asia: More than China dependent on the country’s petroleum of 2016. Laden with debt, the company
Activity in Indonesia, Philippines and resources which account for more than managed the upturn in iron ore prices
Myanmar will all be worth following for half of export earnings and a quarter of to pay back almost $US3 billion in bor-
varying reasons. Philippines President public sector revenues. As a means of rowings and remained consistent with
Rodrigo Duterte’s election in 2016 and diversifying its economy, Ecuador has its dividend strategy, returning 12c/share
the resultant audit of mines definitely rat- moved to increase promotion of its min- to stock holders. In 2017, can Fortescue
tled operators in the country. Meanwhile, ing industry and is aiming to attract $US8 maintain the momentum it gathered last
Indonesia has made a political football billion of investment into the sector in the year?
of mining in regards exports, permits, next 10 years or so. The country is highly
contracts and taxes. Perhaps most in- prospective for copper and gold and is Fortescue was a standout performer in
triguing is Myanmar – so long closed more welcoming than ever to foreign in- Australia’s resources sector last year
to foreign investors – but with govern- vestment, which has been made clear at
ment being welcomed back into the in- the last two Latin America Down Under Paladin Energy Ltd
ternational community the situation has conferences. Australian explorer Sol- The uranium miner appeared to be on
changed. And, with the LME tin price at Gold plc had both Newcrest Mining Ltd the brink of administration not long ago.
$US21,150/t at the time of print, investors and BHP Billiton Ltd submit investment However, in its latest quarterly report,
may be keen to investigate opportunities proposals last year, with terms agreed Paladin stated it remains committed to
in tin-rich Myanmar. for Newcrest to invest $US22.86 million finding a solution to restructuring the bal-
for 10% and Maxit $US10.1 million for a ance sheet and staying relevant in the
East Africa: Battery central 4.43% stake in SolGold. uranium space. More positive news in
There are a number of lithium/graphite the sector would help its cause.
hopefuls with prospective battery mineral Companies on the
projects in Tanzania and Mozambique. radar Independence Group NL
On the back of increasing demand for As the five-year anniversary of the
electric vehicles and battery-powered South32 Ltd Nova discovery approaches, a replica
energy storage facilities, lithium and Broke the shackles of being little broth- has yet to be discovered. The Fraser
graphite stocks are continuing to enjoy er to BHP Billiton Ltd last year and stead- Range was set alight by Sirius Re-
the limelight. The battery mineral stocks ily grew its share price from 90c/share at sources’ success in 2012, with a number
are sexy right now but how long will it the start of 2016 to $2.84c/share at the of companies buying and investing in
continue and which of the ASX juniors in time of print. Expectations will be on the ground near Nova in the hope of find-
East Africa can cash in? No doubt, many company to keep the share price worm ing a duplicate. Independence Group
will be looking to replicate what Birimian moving in an upwards trajectory on the NL, which took over Sirius, has brought
Ltd has done in West Africa; court a Chi- back of its bulk commodities portfolio. Nova into production and has moved to
nese buyer and sell an early stage pro- acquire smaller companies in the region
ject for more than $US100 million. Evolution Mining Ltd and Northern to increase its chances of finding Nova
Star Resources Ltd Mark II. The bedding down of operations
at Nova will also be closely followed.
There has been no one else as active
as these two in the gold space in the last
few years. But, will they put the cheque
book away and focus on consistent pro-
duction and organic growth or are there
more opportunities for Northern Star and
Evolution to capitalise on? Time will tell.
USA! USA! It has been five years since the discovery of Nova; will 2017 be the year the
It will be hard to ignore the global mar- much anticipated Nova Mark II is landed?
ket ramifications Donald Trump’s arrival
as US president will have. US-China
relations, US-Russia relations, interest
rates, the performance of the US dollar;
everything is up in the year. One thing is
certain, there will be unrelenting specu-
lation and media coverage of the presi-
dency throughout 2017.
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 31
Become a FACE
in our BOOK
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Search for Paydirt Media Australia
It has been a long, harsh winter for new Encouragingly for the smaller end of The total funds raised increased slightly
resources listing on the ASX but after the resources sector, 2016 saw a return in 2016 to $7.5 billion, an increase of 7%
prolonged pain, it appears new floats are of the junior IPO, with none of the new on 2015 ($7.02 billion) and the previous
returning. listings raising more than the $15 million five-year average of $7.24 billion, which
Although there were less than a dozen Horizon Gold Ltd attracted. was inflated by the record set in 2014 of
new listings in 2016, the rush towards It was a marked change from the previ- $16.70 billion when there were several
the end of the year suggested investors ous three years when the Australian IPO very large IPOs.
keen to play in the IPO space would have market was dominated by large health While small resources IPOs rebound-
more options in 2017. and financial services floats and resourc- ed in 2016, they weren’t as prolific as dur-
Gold and lithium were the dominant es start-ups failed to make it even to the ing the heady days for resources in 2012.
“themes of 2016’s new resources com- starting line.
“For instance, in 2012 small cap com-
panies, as the safe haven (gold) panies made up 93% of listings
and renewable battery ingredi- In total, 83% of all new but in 2016 they comprised 68%
ent (lithium) wooed investors of all new listings,” Ohm said.
with their surprisingly upbeat de- listings met or exceeded The report also showed posi-
mand outlooks. their subscription targets, and tive signs in the rates of sub-
Graphite has been another
commodity to interest investors new IPOs obtained 102% of “In total, 83% of all new list-
over the last 18 months and IMX total funds being sought. This ings met or exceeded their sub-
Resources took the opportunity scription targets, and new IPOs
of the carbon material’s popular- is a positive step from 2015 and obtained 102% of total funds
ity to spin out its Chilalo graphite 2014, when only 68% and 65% of being sought. This is a positive
project into a dedicated vehicle; step from 2015 and 2014, when
Graphex Mining Ltd. companies respectively were able only 68% and 65% of companies
Former IMX and now Graphex to meet their funding targets. respectively were able to meet
their funding targets,” Ohm said.
managing director Phil Hoskins
told Paydirt the company had “Furthermore, subscription
considered a number of ave- rates were relatively well spread
nues before deciding the time was right According to HLB Mann Judd partner across all market capitalisation brackets,
to launch a new float. Marcus Ohm, there was a semblance of unlike previous years when small cap
“We considered a number of alter- balance in the IPO market during 2016. companies have struggled to meet their
natives, but the spin-off was chosen,” “We are starting to see a good bal- targets.”
Hoskins said. “We busily worked through ance of newly listed companies in terms Ohm said the scene is set for a strong
the prospectus. After a couple of false of both market capitalisations and sector year for IPOs in 2017, especially in the
starts with ASIC and some of the chang- representation, which is a very healthy materials sector.
es in the regulations there, we listed in sign,” Ohm said. “Following the global fi- “At the start of 2017, there were 23
June. nancial crisis, the IPO market was domi- companies planning to list, an increase
“It was a good time to be listing in the nated by small cap companies and by of 15% over the same time last year.
graphite space and in the market in gen- the mining and resources sector, almost Most notably, the recovery in the materi-
eral. I think shareholders ultimately ben- to the exclusion of anything else, while in als sector looks set to continue with 11
efited from that decision to spin out. recent years, large caps have been dom- explorers, miners and associated busi-
“We weren’t specifically trying to time inant. However, the market is now much nesses waiting to list,” he said.
the IPO into any sort of market. We had more balanced.” “Last year, technology companies
made the decision to spin it off and we Ohm authored HLB Mann Judd’s an- dominated the IPO pipeline but this year,
just wanted to achieve that as quickly as nual IPO Watch report which highlighted only one technology company is seeking
we could. Fortunately the market moved a strengthening in the IPO market. a listing, raising $5 million.”
in our favour.” During 2016 there were 94 new IPOs, – Dominic Piper
Graphex has performed solidly since compared to 85 in 2015 and 70 in 2014,
listing, as have most of 2016’s new floats. and a five-year average of 72 listings.
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 33
Egan Street hits the road
Within three months of pertise of Hedley Widdup
listing on the ASX, (non-executive) and geol-
Egan Street Resources Ltd ogy manager Julie Reid to
released a scoping study discover more ounces at
on its flagship Rothsay pro- Rothsay.
ject giving investors anoth- Ducler, a metallurgist
er gold story to get excited boasting operational ex-
about. perience with Gold Fields
The company arrived on Australia Pty Ltd and BHP
the bourse in September Billiton Ltd, and Widdup are
2016 and by Christmas it joined on the Egan Street
had started a feasibility board by Barry Sullivan
study to confirm Rothsay – (non-executive chairman),
300km north-east of Perth Lindsay Franker (chief op-
– could be producing gold erating officer) and Simon
early in 2018. Eley (non-executive direc-
According to scoping tor).
study estimates, mining It is a well-rounded board
of 493,000t @ 6.7 g/t gold comprised of mining engi-
(fully diluted) for 101,000oz neers and geologists with
from a mine life of almost the commercial experience
four years is viable from Egan Street is targeting underground production from early to emulate the feats of peers
AISC of $1,056/oz. next year at the Rothsay project in the market such as Pan-
toro Gold Ltd.
Egan Street based the
study on gold price assumptions of ternal optimism into greater appreciation Pantoro – the best emerging company
$1,600/oz and 5% discount rate with a in the share market. winner at Diggers & Dealers 2016 – cur-
capex of $20.4 million – part of a total “The key for us is to be able to assist rently has a market cap of $152 million
funding requirement of $28.1 million – the market in being able to understand compared with Egan Street’s market cap
estimated for new beginnings at Rothsay. what the potential is from a growth pro- of $14.29 million.
Egan Street managing director Marc spective,” Ducler said. Pantoro produces gold from a series of
Ducler said a feasibility study on Rothsay “The project on its own merit at the mo- pits at the Halls Creek project in West-
was on track for completion in Q3 this ment stands up well with an IRR of 40% ern Australia, which is a strategy Egan
year and, subject to financing, production generating $26 million in free cash. That Street is likely to pursue once operations
could start in the first half of 2018. in itself is a good project and when you at Rothsay are successfully established
The release of the scoping study co- consider 12km of strike that we have at and cash flow is generated.
incided with the holiday period, mean- Rothsay and the fact the resources are “We would love to see Egan Street run-
ing Ducler was keen to take the Rothsay positioned on only 1km of that...the chal- ning a number of high-grade gold mines,
story on a roadshow of the east coast at lenge for us is to make the market under- we believe that is the niche we would like
the time of print. stand that if we can make $26 million in to move into,” Ducler said.
“We should also have assays back free cash and pay for our infrastructure “We won’t necessarily be about scale,
from the drilling we conducted in the from 1km of strike, imagine how much but very low cost operations to bring into
second quarter as well [by then]. We money we can make when we explore production. To get all the initial Rothsay
are sitting reasonably comfortable with the rest of the unknown mineralisation.” infrastructure in place [including 200,000
the project looking good and we expect Ducler will look to the geological ex- tpa plant] for $20 million is pretty low-
the ounces to continue to cost and we think that we
increase on the resource Egan Street Resources Ltd (ASX:EGA) can take that concept and
and that adds more life- replicate it on a number of
of-mine. On that basis, Listed: September 2016 high-grade mines that po-
the project just looks bet- Board: Barry Sullivan (non-executive chairman), Marc Ducler (managing tentially haven’t received
ter and better,” Ducler told director), Lindsay Franker (chief operating officer), Hedley Widdup (non- the attention they deserve
Paydirt. because previously they
executive director), Simon Eley (non-executive director)
While Ducler and the have been too expensive
close family and friends Flagship project: Rothsay gold project, Western Australia to bring into production.”
who supported the $6 mil- Project status: Transitioned into feasibility status after robust scoping – Mark Andrews
lion Egan Street public of- study released in December. Feasibility study to confirm viability of po-
fer are bullish on Rothsay, tential of 40,000 ozpa @ 6.6 g/t gold project over 3.75 years expected for
the job ahead is turning in- completion in Q3.
PAGE 34 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Westgold seeks pure play market
Even without undertaking an IPO, duction to 400,000 ozpa
Westgold Resources Ltd’s arrival on
the ASX was easily the largest gold listing this year with a target of
450,000 ozpa within two
Westgold was created through a de-
merger of Metals X Ltd’s gold division. years,” Cook said.
The diversified miner had built up its gold
unit over four years following the appoint- Such an increase would
ment of gold industry veteran Peter Cook
as managing director. see Westgold climb from
By 2016, Metals X was producing ninth to fifth on the Aus-
300,000 ozpa gold as well as generat-
ing $350 million in revenue from its base tralian gold producer lad-
metals operations. The balance offered a
natural hedge in varying macroeconomic der. Cook believes the
times however Cook and the manage-
ment team felt there was still something combination of increased
production, a pure-play
“As we started to build the gold busi-
ness we were getting investors who only gold vehicle and a rising
wanted to be in gold and they were be-
coming frustrated when the pure-play gold market will deliver
gold companies moved and Metals X
didn’t,” Cook said. a rerating comparable to
With both precious and base metals other Australian gold min-
divisions performing strongly and the
group on a strong fiscal footing, the deci- ers.
sion was taken to spin out the gold busi-
ness. “It will definitely bring
“We used the strength of the balance greater support,” he said.
sheet to build the gold business and once
it was of a size comparable to pure-play “If you look at the rest of
gold companies it looked underrated,”
Cook said. the Aussie gold sector,
The demerger was ratified in late 2016 there has been a change
with almost unanimous shareholder sup-
port and Westgold hit the bourse on De- in the registers of all the
pure play gold companies.
The company’s portfolio comprises
three operating gold mines in Western It is a change towards
Australia; Central Murchison, Higgins-
ville and South Kalgoorlie. In addition, more North American
the company holds the Fortnum gold pro-
ject – acquired from RNI NL in October shareholders, dominated
2015 – and has recently begun commis-
sioning on the refurbished project. by large movements in
For a refurbishment gold EFTs. Because of the
capex of $15 million,
Westgold plans to dynamic of the Australian
gold over five years dollar it meant Australian
at an AISC of $1,290/
oz with payback esti- gold stocks were the place
mated to occur within
24 months. to be. And we believe that
“We’ve just started accounts for the under-
Fortnum and with that performance of Metals X.
we expect to go from “Westgold/Metals X has The Higginsville mine is one of four operations
300,000 ozpa pro- not been a participant in in the Westgold portfolio
those ETFs yet but the
company is now at the level where it challenges the junior sector faces in at-
could be and we expect a rerating when tracting investment extend even further.
these funds need that gold company “There is certainly enthusiasm for
weighting.” IPOs but there’s just not the risk appe-
Although entry into the ETF space tite for the more speculative plays. We
would bring benefits for the Westgold should be experiencing a gold boom
share price, Cook is far from enamoured in Australia but we haven’t seen it flow
with the investment group. down into the exploration space because
“The gold ETFs are a bit of a cancer a lot of people lost a lot of money in iron
on the industry be- ore and energy and, for them, resources
cause they encour- generally are still on the nose.”
age people to invest Despite these obstacles, Cook envis-
directly into gold and ages a good year ahead for the gold
a lot of the risk mon- price.
ey has been taken “We do think the gold price will go up
out of the gold equi- when the world realises ‘making America
ties and into ETFs. great again’ will take at least 30 years.
There isn’t as much The US debt problem and so forth is not
going into specula- going away and will give gold a bright fu-
tive gold plays so ture.”
the total amount go- – Dominic Piper
ing for juniors has
Peter Cook Cook thinks the
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 35
Bright Horizon for Gum Creek
Any concerns about Gum included AISC of $1,209/oz,
Creek’s ability to thrive life-of-mine revenue of $496
outside of Panoramic Re- million and EBITDA of $149
sources Ltd were wiped when million.
spin-off Horizon Gold Ltd “On top of that there is ob-
completed a $15 million IPO viously a lot of established
late last year. infrastructure; you’ve got the
“Having $15 million is cer- village, the airstrip, the tail-
tainly a significant amount of ings dam, there’s a lot of stuff
cash for that project and now there…and that gives you a
that it’s got its own entity it significant head start on a
can do its own thing,” Horizon project of this size, not just for
chairman Peter Harold told exploration but also for devel-
Paydirt. opment,” Harold said.
“That might involve other Horizon will use many of
deals which would be com- the Panoramic employees
plementary to the business, who worked on the project
but fundamentally the reason Panoramic’s $15 million spin-off of Gum Creek into Horizon Gold over the last five years, with
we raised the dollars was to was the largest resources IPO of 2016 effectively the only new per-
allow us to accelerate the ex- sonnel through the door be-
ploration [at Gum Creek] more aggres- “I think that structure is more attrac- ing non-executive directors Paul Bennett
sively than we would have been able to tive. What we’ve also seen is investors and Peter Venn.
do under the Panoramic banner where don’t mind diversified companies when Harold expects to split his time be-
primarily now the focus is our Savannah they’re a bit bigger, like IGO [Independ- tween Panoramic and Horizon as will
[nickel] project.” ence Group Ltd]. Once you’re at that sort others such as general manager of ex-
Horizon’s IPO was the largest of the of size, investors are comfortable to have ploration John Hicks and special projects
new resources floats in 2016, almost diversification, but I think when you’re a manager Tim Mason.
double the $8 million raised by second- smaller explorer or developer they prefer “It means you can hit the ground run-
placed Lithium Power International Ltd. single-commodity companies. ning because we haven’t had to go out
At the time of print, the company was “Therefore spinning it out so you’re just and replicate a whole team and bring in
trading just below its listing price of 40c/ a gold-only company means you’re at- consultants,” he said. “We’ve owned this
share on December 21. tracting gold investors rather than people asset for nearly five years, so we’ve got
Panoramic’s decision to spin out Gum who are looking for both gold and nickel an intimate knowledge of it and our peo-
Creek (formerly Gidgee) was two years exposure. I think there’s less of those in- ple have got significant experience in ex-
in the making, with the nickel-focused vestors at the development stage.” ploration and project development.”
company first flagging Staged programmes Despite the gold price coming off as
the idea of an IPO of of ground EM surveys, Horizon was wrapping up its IPO in De-
its gold assets, then IP surveys and aircore cember, Harold is confident the precious
including Mt Henry, in drilling are in the im- metal will continue to remain robust for
early 2015. mediate pipeline for some time to come.
Mt Henry was instead Horizon, building on “The gold market seems to be a lot
sold to Metals X Ltd for the results of a large more buoyant in the last couple of weeks,
22 million fully paid or- geophysical and IP a bit like it was 12 months ago,” he said.
dinary shares in July programme completed “Obviously there’s a bit of reaction to
2015, with Panoramic prior to the IPO. the change of presidency [in the US] and
only formally commit- Gum Creek hosts a some of the others things going on in Eu-
ting to an IPO for Gum 17.3mt @ 2.25 g/t gold rope with regard to Brexit and so on, but I
Creek, 80km north of Peter Harold for 1.25 moz resource think fundamentally the demand for gold
Sandstone, in the mid- despite more than 1 is robust and it’s going to outstrip supply
dle of last year. moz being mined from as a result. There’s renewed interest just
Harold, the founding managing direc- the area in years past. Other notable in the fundamentals of gold and I think
tor of Panoramic, said the spin-out was gold deposits in the region include Big most of the new gold projects require a
ideal for the parent company, which Bell, Wiluna, Mt Magnet and Agnew/ gold price at this level or higher to make
mothballed its Savannah and Lanfranchi Lawlers. a decent return.”
mines last year due to low nickel prices. A free-milling scoping study was com- Meanwhile, Panoramic was expected
“Funds are limited inside Panoramic pleted on the project in March 2016, to complete a feasibility study on the
and as a result [of the IPO] we’ve got ac- pointing to life-of-mine production of restart of nickel mining operations at
cess to an additional $15 million and our 290,000oz over a 5.8-year mine life for the combined Savannah and Savannah
existing Panoramic shareholder base a pre-production capex of $62 million, North projects at the time of print.
still owns 51% of the new company,” Har- based on a $1,700/oz gold price. – Michael Washbourne
old said. Other key numbers from the study
PAGE 36 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Smooth move for Kalium Lakes
Potash hopeful Kalium Lakes Ltd wait- Kalium Lakes founder Brent Smoothy (second from right) with directors Rudolph van Niekerk,
ed as long as possible before going Brendan O’Hara, Malcolm Randall and Brett Hazelden on the first day of trading
dolph van Niekerk and Brendan O’Hara. that can be produced for a lot less.”
Founded by pastoralist Brent Smoothy According to the company’s initial test At the time of print, Kalium Lakes had
in November 2014, Kalium Lakes was
the last of the 2016 resources arrivals to work, Beyondie appears to have the po- just begun work on upgrading access
ring the ASX trading bell on December tential to produce a premium potassium roads to the project as well as installing
22 after a $6 million IPO that was heavily sulphate product. water bore drill pads on site ahead of an
oversubscribed. upcoming campaign.
“There are two types of potash – po-
Prior to the float, the company had tassium chloride and potassium sulphate Purchase orders for an initial 12-man
raised about $6 million privately for ongo- – but most people are only familiar with accommodation camp and supporting
ing work at its Beyondie potash project, potassium chloride,” Hazelden said. facilities were also issued.
160km south-east of Newman in West-
ern Australia’s Pilbara region. “About 60mt of potassium chloride is Kalium Lakes has received approvals
traded annually in the world, but what ac- for pilot scale-sized processing facilities
And, such was the company’s prudent tually happens is the chloride ions build at the project and it is already operating
spend during its two years as a private up in the soils. Essentially the potassium trial evaporation ponds on site.
entity, Kalium Lakes has advanced Be- is good for your plant, but the chloride is
yondie towards a maiden reserve an- bad for your plant. The Perth-based company has also
nouncement due in the coming months. signed a MoU with the Geraldton Port
“With potassium sulphate, both the Authority, about 860km from the project,
No other Australian-based potash pro- potassium and sulphate get used on the for future export despite Beyondie’s clos-
ject is currently at reserve status. plant and it’s not detrimental to the soils, er proximity to Port Hedland.
so it attracts a premium price.”
Three weeks after listing, Kalium “Geraldton also gives you access to
Lakes confirmed Beyondie had a “drain- Beyondie also differs from many other that south-west corner of WA in terms of
able brine” totalling 148mt sulphate of potash projects in that the resource is the agricultural hub down there, plus we
potash (SoP), consisting of a 940,000t formed on a naturally occurring brine can run our trucking out of Geraldton and
SoP @ 7,145 mg/L potassium indicated lake, with Kalium Lakes looking to extract a lot of our distribution can run from there
resource and an 18.84mt SoP @ 6,051 the potash via brine processing. as well,” Hazelden said.
mg/L potassium inferred resource.
“There are about three other brine “We’ll use Newman as our FIFO base
Kalium Lakes managing director Brett lakes in the world that produce potash,” for the site-based guys, it’s about a two-
Hazelden said his company had exer- Hazelden said. hour drive down from there, so we’ll prob-
cised caution on launching an IPO until ably run a nice, even-time roster for the
the project was “absolutely ready” for life “From a potash market point of view, guys so there’s a good work-family bal-
on the ASX. the potassium chloride market has been ance.
on a downer and seems to have bot-
“We wanted to get the project as far as tomed over the last 1-2 years, not unlike “We’re a big family company to some
possible privately because we saw there a lot of other commodities, but the potas- extent, we’re just ASX-listed now but try-
was more value listing with a project sium sulphate market has held up well ing to make sure we spend every single
that’s pretty well de-risked,” Hazelden and the prices are quite attractive at the cent as wisely as a private company
told Paydirt in early January. moment. would.”
“As we stand here today, we’ve got “For example, in Australia, we’re pay- – Michael Washbourne
Native Title mining access agreements ing retail prices around $1,000/t for po-
in place and we’ve got certain environ- tassium sulphate, so there’s some good
mental approvals for effectively quite a margins that can be made for a product
large area of disturbance on exploration
“It was a deliberate decision not to go
[public] early and we were able to raise
money privately quite easily in the end.
De-risking the project was always going
to provide more value to the sharehold-
ers that came in.”
Smoothy decided to form the company
after discovering potash mineralisation
on his pastoral leases and having gained
a very basic understanding of geology
from years of flying mining professionals
to Pilbara sites in his helicopter.
Hazelden, a former project director
for Iron Ore Holdings and FerrAus, was
brought into the fold alongside veteran
mining executive Malcolm Randall as
chairman and experienced directors Ru-
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 37
Great Boulder rolls into town
Great Boulder Resources Ltd hit the prised is the thickness and extent of
ASX in November with a portfolio
specifically designed to feed investor shallow oxide mineralisation along the
appetite for low capex, quick start-up
gold opportunities. western and southern margin of the
The company joined the bourse on trend.”
November 18 and was quickly able to
prove momentum was behind it after its Murphy said the company would fol-
$6.1 million IPO, immediately launching
into exploration drilling on its Balangun- low up on the initial results at Mt Bellew
di gold project near Kalgoorlie.
with a view to putting out a resource
This came despite some unfortu-
nate timing which saw the company’s later in the year.
maiden trading day coincide with gold’s
slide to 10-month lows. “We continue to build up the story
“I think there was plenty of positive and it is all about getting a resource
sentiment around the listing,” Great
Boulder managing director Stefan Mur- out,” he said. “The work is coming
phy told Paydirt. “We closed the of-
fer on time and it was unfortunate we along and we want to get into that early
came on when gold was at a 10-month
low but apart from that opening day be- production scenario as soon as pos-
ing tough, it hasn’t slowed us down and
we are now seeing an improvement in sible.”
the share price.”
A review of historical data has also
Great Boulder’s share price has
tailed off from a 20c opening to 11.5c at led to the identification of two new tar-
the time of print, but with the $6.1 mil-
lion raised the company has time to get gets which will also be tested in the
its projects into position.
next RC programme.
Work began immediately after listing,
with a 39-hole, 3,500m RC drilling pro- The company is also preparing to
gramme launched at Balagundi.
start its 2017 exploration programmes
The project encapsulates Great Boul-
der’s strategy. Just 20km from the Super on the Tarmoola and Jundee South
Pit, Balagundi has been previously sub-
ject to exploration but has never been projects.
brought into production.
Murphy said despite the gold price’s
Targeting historical intersections of
24m @ 19.1 g/t gold, 4m @ 40.4 g/t and dampened performance since its list-
12m @ 15.2 g/t on the Mt Bellew pros-
ing, Great Boulder’s proposition still
“There is nothing in the strategy that
Great Boulder’s strategy has been to build a has changed and we have been able
portfolio of assets near existing gold operations to hit the ground running because the
company was set up for a while prior to
pect, Great Boulder reported a series of listing,” he said.
hits, including 4m @ 5.64 g/t gold, 4m @ At a time when other privately-held
3.47 g/t, 27m @ 1.42 g/t, 15m @ 1.25 g/t, gold projects are being brought to market
all within 75m of surface. in various guises, Murphy said he was
“Given the extensive historical work- satisfied the IPO process had been the
ings along the Mt Bellew trend and pre- best choice for Balagundi, Tarmoola and
vious high-grade drill intersections, we Jundee South.
were confident that this initial RC pro- “I’m certainly very happy that we were
gramme would define mineralised lodes able to get a clean IPO away,” he said.
and controlling structures,” Murphy said. – Dominic Piper
“Where we have been particularly sur-
Power play hopes focused on Chile
Capturing the 2016 resources zeitgeist mit itself further to South America, secur- duction, it will become the second best
nicely, Lithium Power International ing a JV over the Maricunga brine project deposit in the world outside of Atacama.”
Ltd listed on the ASX in June with a suite in northern Chile.
of lithium assets in Western Australia and Progress since listing has been steady
Argentina. LPI managing director Martin Hol- with the company announcing high-
land described the project as the best grade intersections and strong lithium
And, within a month of hitting the undeveloped lithium project in South brine flow rates from Maricunga in both
boards, it was expanding its Latin Ameri- America when speaking to Paydirt in December and January.
can interests. August.
It has also advanced its WA assets,
Lithium Power (LPI) raised $8 million “We’ve done some further independent with drilling targets identified at the
through IPO – the second largest float research reports on this project and they Pilgangoora project, which is adjacent
on the ASX in 2016 – at a time when the classified it as the fourth best project in to Pilbara Minerals Ltd’s project of the
Australian lithium boom was at its height. the world when it comes to lithium,” Hol- same name.
However, instead of battling over WA’s land said. “They also believe with further
pegmatites, the company chose to com- capital, and as we move closer to pro-
PAGE 38 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
CLASS OF 2006
The Class of 2006:
Where are they now?
If ever market observers need evidence of the rollercoaster ride endured by the Australian re-
sources sector over the last decade, they need only draw comparisons between the IPO space in
2016 and 2006. Last year’s eight new listings were rightly celebrated as the first signs of a recovery
in resources floats after the barren spell of 2014 and 2015. In contrast, the ASX’s new listings de-
partment was welcoming that many resources companies each month a decade ago as a buoyant
investment community latched on fully to the commodities boom.
However, how many of the 84 new resources listing from 2006 actually delivered for sharehold-
ers? Paydirt looks back on the record year to find how each of them fared.
A-Cap Resources Ltd (ACB): A- in Western Australia to its stable. In De- upon listing were restarting operations
Cap’s strategy was to explore and look cember, the company raised $1.25 mil- at the Comet gold mine and beginning
for JV opportunities at some of its as- lion in a private placement. mining at Horse Well in WA. Horse Well,
sets in Australia, China and Botswana. now a JV project with Doray Minerals
The company has exposure to a range Aditya Birla Minerals Ltd (ABY): Ltd, remains a focus for Alloy while ex-
of commodities, including gold, nickel, When Aditya Birla listed, the Nifty cop- ploration at the Ophara cobalt-gold pro-
uranium, PGMs, copper, other base met- per operation in the Pilbara and Mt Gor- ject, 50km west of Broken Hill, will keep
als and diamonds. A-Cap has refined its don mine in Queensland were the com- the company busy this year.
portfolio in the past decade and is con- pany’s priorities. In October 2015, Aditya
centrating on the Letlhakane uranium Birla sold Mt Gordon for $5 million cash. Argo Exploration Ltd (AXT): Start-
project in Botswana, while it also has two Last year Aditya Birla was taken over ing out as a South Australian-focused
coal projects in the country. by Metals X Ltd with Nifty – 31.1mt @ explorer chasing copper, gold and urani-
1.73% copper containing 539,000t cop- um, Argo is now evaluating and review-
ActivEx Ltd (AIV): After completing a per resources and reserves of 5.24mt @ ing potential corporate opportunities in
$3 million IPO, ActivEx set about explor- 1.85% copper containing 97,000t copper the resource sector. The company has a
ing copper and gold projects in Queens- – the jewel in the crown. stake in AIM-listed oil and gas explorer
land. The Brisbane-based company is and developer Pantheon Resources plc
still active in various parts of the State, Alloy Resources Ltd (AYR): The which has interests in East Texas.
while it has also added a potash project company’s short to medium term goals
Athena Resources Ltd (AHN): Athe-
Ten years after listing, Toro has received federal and state approvals na’s strategy was to apply geological
for the Wiluna uranium project in WA models and approaches not previously
used in mineral exploration in WA. Nick-
el sulphides at Ravensthorpe were tar-
geted, while regional geophysics which
showed a number of features often as-
sociated with large mineral systems at
Ashburton excited the company. More
recently, the company has been work-
ing the Byro iron ore project in WA’s Mid
West. In December, a formal sale option
agreement for Byro was entered with
Hong Kong-based Brilliant Glory Indus-
trial Corp Ltd.
Aura Energy Ltd (AEE): Aura En-
ergy has expanded its search for eco-
nomic uranium deposits beyond West
Australian borders since listing in 2006.
The company has a uranium project in
Sweden, while its most advanced as-
set – Tiris in Mauritania – is subject to
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 39
CLASS OF 2006
a DFS. For an estimated $US15 million, Eleckra, now Gold Road led by executive chair- bourse. The company’s primary listing
Tiris could produce 11 mlb uranium over man Ian Murray, has been one of Australia’s was on AIM and it held investments in
an initial 15 years. best gold explorers in the past decade coal and iron ore companies. The most
notable transaction it was involved in
Australasia Gold Ltd (AAO): Aus- Blackham Resources Ltd (BLK): during its time on the ASX was selling its
tralasia was quite active in exploration Blackham became Australia’s newest 19.9% interest in Mount Gibson Iron Ltd
across the portfolio of tenements it list- gold producer late last year, however, it for $98.8 million.
ed on which included gold in New Zea- was from an asset contrary to the one it
land, Northern Territory and New South listed on in 2006. Back then, the com- Castle Minerals Ltd (CDT): Despite
Wales, while it appeared to be making pany’s focus was the Carbine North gold having ground abutting Azumah Re-
significant progress with uranium explo- project in the Eastern Goldfields of West- sources Ltd’s Wa gold project in Ghana,
ration in SA. However, in 2011, the com- ern Australia. Carbine North is no longer Castle never quite replicated the same
pany entered financial services through part of the company’s plans, with the success as its WA-based peer. Just last
the acquisition of Emerchants. The Wiluna project and Matilda gold mine to year Castle sold the ground – Julie West
company is now EML Payments which be its cash-cow. – to Azumah, but still retains a significant
offers innovative payment technology land holding of 11,000sq km in Ghana.
solutions. Brumby Resources (BMY): Now The company is currently assessing op-
known as Marindi Metals, the company portunities in a range of commodities.
Axiom Mining Ltd (AVQ): Axiom announced an options exercise delivered
Mining has continued its endeavours $3.15 million into the company’s coffers Catalyst Metals Ltd (CYL): Catalyst
on exploration outside of Australia. With which will be used to accelerate explora- Metals has moved away from its original
many years of experience investing and tion for lithium at Forrestania and base flagship project – molybdenum at Minnie
exploring South East Asia, namely Viet- metals in the Northern Territory. The Springs – and is targeting a major gold
nam, Axiom has since entered another company started with a multi-commodity discovery to set it on the course of be-
domain – Solomon Islands. The compa- strategy and had some early success coming dominant in a world-class prov-
ny has overcome issues to do with land with iron ore exploration at the Pardoo/ ince. Bendigo, Australia’s second largest
ownership in recent times and is moving Telyagel projects, which comprised eight gold field, is the region Catalyst has cho-
ahead with a PFS on the Isabel nickel ELs covering 1,330sq km in the Pilbara sen to invest in, with the Four Eagles and
laterite project. The PFS is scheduled region, while manganese in the East Pil- Tandarra gold projects along the Whitel-
for completion soon. bara late became a focus. aw Fault corridor showing signs of being
BC Iron Ltd (BCI): BC Iron reached a Burey Gold (BYR): Burey Gold be-
share price high of $5.33/share in 2014 came Amani Gold on December 30. Chalice Gold Mines Ltd (CHN):
at the height of the last mining boom. While the company’s name has changed, Chalice had some prime real estate in
Unfortunately, like many miners, BC its strategy remains similar to 10 years WA’s gold sector to pick through, how-
Iron has felt the pain of the bust and ago; gold in Africa. Burey divested its ever, it was the Zara project in Eritrea
its share price has retreated to 17.5c/ interest in the Mansounia gold project, which grabbed the market’s attention.
share, about 60c less than its starting Guinea, in 2014, with its flagship now the Chalice developed Zara’s probable and
price in 2007. Good news is that iron ore Giro project in the DRC. Giro is 30km proven resources to 4.6mt @ 5.1 g/t
prices rose in 2016 and BC Iron recently west of Kibali, which is a Randgold Re- gold for 760,000oz suffice for produc-
received approval for below water table sources Ltd/AngloGold Ashanti Ltd JV. tion of 104,000 ozpa gold @ $US338/
mining at the Iron Valley mine, where oz over seven years. So compelling was
Mineral Resources Ltd is the operating Cambrian Mining plc (CBM): Almost the project, a Chinese group bought a
partner, in the Pilbara. The company a year to the day that it listed on the ASX, 60% stake for $US80 million cash, while
sold its 75% interest in the Nullagine Cambrian Mining delisted from the local the Eritrean National Mining Corp paid
project to JV partner Fortescue Metals $US32 million for the remaining 30% it
Group Ltd last year. didn’t own. Chalice was cashed up to
pursue other opportunities and currently
Balkans Gold (BNL): Balkans Gold, has a portfolio of projects across a range
focused on gold in Bulgaria, became In- of commodities, including gold (WA and
ternational Resource Holdings in 2006 Canada), nickel-copper-PGEs (WA).
which turned into Clean Global Energy, Chalice has about $30 million in cash.
which is now Citation Resources Ltd.
Trading of Citation stocks on the ASX Cobar Consolidated Resources
have been suspended, pending a sec- (CCU) : Cobar Consolidated was placed
ond meeting of creditors which was into administration in 2014. Base met-
scheduled to occur before January 25. als in western New South Wales was
the company’s focus and prior to being
Beacon Minerals Ltd (BCN): Bea- delisted, Cobar had developed the Won-
con recently executed an option to awinta silver mine and produced 2.1 moz
purchase the Jaurdi gold project, 35km silver from 2012-2014.
from Coolgardie. Beacon started life
on the ASX chasing copper-gold pros- Convergent Minerals (CVG): East
pects in WA and Queensland, with the West Energy better reflects the direc-
Barlee gold project in WA the main fo- tion the former Convergent Minerals is
cus now. heading. The name change in 2016 is
PAGE 40 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
in-line with the company’s strategy to Eromanga Uranium Ltd (ERO):
add oil and gas projects to its producing Spun out of South Australian explorer
assets. Convergent listed in 2006 to turn Maximus Resources Ltd, Eromanga
its Steam Engine gold-uranium project, initially had access to 20,000sq km of
North Queensland, into something re- prospective land in the Eromanga Basin
sembling Pajingo-Vera Nancy.
and Gawler Craton. The company was
Copper Range (CRG): Copper-gold- known as Ero Mining from late 2009 until
uranium mineralisation in South Austral- September 2013 when it began trading
ia was the focus for Copper Range and as Tychean Resources Ltd. At the time
since 2006 the company has flown under of print, Tychean’s involvement with the
different names and pursued different Spargoville gold project in WA was set
business cases. Before becoming West- to wrap up and it was seeking new op-
star Industrial – an investment house portunities “both within and outside the
– the company was known as Antares resource sector”.
Mining. Under the Antares banner, a shift
away from mining started with Copper Ryan Mount is leading Axiom’s charge in Fairstar Resources Ltd (FAS): The
Range’s tenements covering 2,365sq km nickel in the Solomon Islands diversified yet troubled explorer has re-
in the Olympic Domain sold to Forte En- tained the Kurnalpi-Randalls gold and
ergy NL in 2015. holes, including 4m @ 16 g/t from 64m. Mt Padbury uranium projects which were
On the corporate side, Echo has moved the backbone of its prospectus, but has
Cortona Resources (CRC): Cortona to merge with Metaliko Resources which referred to the Steeple Hill iron project,
Resources merged with Unity Mining Ltd would pair the Julius deposit with the 2 east of Kalgoorlie, as the company’s flag-
in 2013. The idea of the merger was to mtpa Bronzewing processing plant. ship since it was discovered in July 2008.
grow production, under the Unity guise, Fairstar shares have been suspended
to 100,000 ozpa gold from the Henty Eleckra Mines (EKM): A decade on since mid-2014 when a funding pact with
mine in Tasmania and Cortona’s Dar- from listing, and Eleckra as Gold Road controversial dealmaker Roland Bleyer
gues Reef project in New South Wales. Resources is the flavour of the month. broke down. Despite receivers being ap-
Prior to Dargues Reef, Cortona had three Gold Road is a multiple winner on Pay- pointed in July 2015, Fairstar continues
gold projects in WA as its focus. dirt’s sister publication Gold Mining to pursue the financing required to lift the
Journal’s Explorer of the year award trading ban.
Coziron Resources Ltd (CZR): Cozi- for its work on the Yamarna tenements it
ron Resources Ltd had started its maiden listed on. In 2016, Gold Road entered a Gawler Resources Ltd (GRL): Be-
drilling programme at its Rawang Ga- 50/50 JV with Gold Fields Ltd to develop ginning life in May 2006 with a granted
dang iron ore project, 54km south-east the 6.6 moz Gruyere project. Gold Fields’ tenement on the Eyre Peninsula and
of Padang in Sumatra, shortly after list- share in the project comes at a cost of seven exploration licence applications
ing and quickly added to its portfolio of $350 million, with the JV committed to for additional ground in South Australia
projects in Indonesia. However, by 2012 entering construction phase at Gruyere and the Northern Territory, the company
the company pulled back from Indonesia this year. switched focus to oil and gas after just six
and picked up prospective tenements in months of trading and the acquisition of
WA. The Yarraloola iron ore and Ash- Encounter Resources Ltd (ENR): a project in shallow waters off the Texas
burton magnetite projects are the com- Encounter started as a uranium ex- Gulf. Gawler opted to merge with Elixir
pany’s focus now. plorer with projects dotted around WA. Petroleum Ltd in March 2007.
The company remains committed to ex-
Eagle Eye Metals (EYE): Eagle Eye ploration in WA and in recent times has Geopacific Resources NL (GPR):
Metals failed to have an impact with the made zinc and copper discoveries at its Geopacific had been exploring in Fiji for
Waite Kauri and Randwick nickel projects flagship Yeneena project in the Paterson the best part of two decades when it float-
in WA upon listing. The company strug- province. ed in May 2006. The company’s stock
gled for any traction in the market and it reached as high as 75c/share towards
has only been recently, on the back of a Epsilon Energy Ltd (EPS): Epsilon the end of that year before tailing away in
lithium play, that the now-named Birimian Energy started as a uranium explorer at the aftermath of the GFC. Shares soared
has captured the market’s attention. The the Balladonia project in the Eucla Basin. from below 4c to 85c in April 2010 on the
company was trading at levels only expe- The company would later be taken over back of several high-grade gold intersec-
rienced 10 years ago – 34.5c/share – in by Azimuth Resources, which would then tions from the Faddy’s deposit at Vidi
January following a $107.5 million cash merge with Latin America-focused Troy Latu, but subsequent exploration failed
offer for its Bougouni lithium project in Resources NL. Troy’s attraction to Azi- to replicate the initial discovery success.
Mali which later fell through. muth was its exposure to gold in Guyana, Focus in recent years has turned to the
where the latter had resource of 1.6 moz Kou Sa copper-gold project in Cambodia
Echo Resources Ltd (EAR): Echo gold at the West Omai project. and last year the company committed to
recently received a mining lease for the spending up to $18.65 million to earn up
Julius deposit. A BFS on Julius was ex- to 80% of Kula Gold Ltd’s Woodlark Is-
pected to be released at the time of print. land gold project in Papua New Guinea.
The company discovered a gold min-
eralisation corridor at the Julius Creek Gladiator Resources Ltd (GLA):
prospect, WA, in 2006 with gold val- The market was poised to put a sword
ues of more than 1 g/t intersected in 12 through Gladiator and its Gindalbie
South project, north-east of Kalgoorlie,
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 41
CLASS OF 2006
until the company partnered with TSX-
listed Orosur Mining Inc to develop the
iron ore, manganese and base metals
potential on Uruguay’s Isla Cristalina
belt. Exploration success and growing
interest in Latin America combined to
lift Gladiator’s shares to a high of 55c
in February 2011, but as of last year the
company was in the process of parting
with its Uruguayan assets.
Golden China Resources Corpora- Former WA gold focused Peak Resources is pursuing development capital for
tion (GCX): The Canadian-based com- the Ngualla rare earths project in Tanzania
pany achieved an ASX listing in late 2006
following its merger with Australia’s Mi- Impact Minerals Ltd (IPT): The Mike Mile Creek gold-base metals project
chelago Ltd. Life on the bourse did not Jones-led company has explored for in Queensland and the Calypso nickel
last long, with Golden China’s securities uranium, nickel, gold and PGMs in Aus- sulphide project in Western Australia
suspended in March 2007 for failure to tralia, Africa and Turkey since debuting before being acquired as a shell com-
lodge a half-yearly report. The company on the ASX in late 2006. A merger with pany by US-based online recruitment
was acquired by Jake Klein’s Sino Gold Invictus Gold Ltd in August 2013 was the platform 1-Page Company Inc.
Mining Ltd later in the year. catalyst for the company’s current focus
at the Commonwealth gold and Broken International Goldfields Ltd (IGC):
Gulf Resources Ltd (GLF): Gulf wast- Hill nickel-copper-PGM projects in New Spun out of Tony Sage’s Cape Lambert
ed no time hitting the ground running on South Wales, as well as the Mulga Tank Iron Ore Ltd, the company’s early work
each of its three gold and base metals nickel-copper-PGM project in Western was focused on the Mt Ida and Evan-
projects in Queensland, New South Australia. Commonwealth dominated ston gold projects in Western Australia.
Wales and the Northern Territory. How- Impact’s focus in 2016, but the company In 2013, the company turned its focus to
ever, the early uptick in the company’s hopes to ramp up exploration efforts at the Ouro Paz gold project in Brazil and
share price has not been matched since its other two projects during the next 12 released a maiden resource estimate of
it switched focus to industrial minerals months. 690,000oz. A scoping study and mining
in 2010 and was renamed Gulf Industri- permit applications were advanced, how-
als Ltd. The Soalara limestone project Industrial Minerals Corporation ever, the company stunned the market in
in Madagascar remains the company’s Ltd (IDM): Plans to bring the Southern 2015 when it announced the 85% acqui-
flagship asset, although it is assessing Oregon mineral sands project online sition of a non-synthetic cannabis busi-
opportunities in West Africa, particularly never eventuated and the company ul- ness.
Ghana. timately parted with the project and was
renamed IDM International Ltd before Ironbark Gold Ltd (IBG): Floated on
Hazelwood Resources Ltd (HAZ): being delisted from the ASX in 2015 fol- the back of a suite of brownfields explo-
Despite a project prospective for nickel, lowing three years of non-trading. ration targets in New South Wales, the
gold, uranium and PGMs, Hazelwood company picked up the Citronen zinc
centred its focus on tungsten at Cookes InterMet Resources Ltd (ITT): An- project in Greenland in early 2007. Now
Creek in the south-east Pilbara before other explorer hoping to make a big known as Ironbark Zinc Ltd, the company
acquiring a majority interest in Asia find in South Australia’s Gawler Cra- completed a feasibility study on the pro-
Tungsten Products Company Ltd (ATC) ton. The company held interests in the ject in 2013 and was awarded a historic
and constructing of a ferrotungsten refin-
ery near Vihn Bao, Vietnam. The plant – mining permit by the Greenland Gov-
the largest outside of China – was com- ernment late last year.
missioned in 2013. Hazelwood sold its
tungsten assets early last year before Magma Metals Ltd (MMB): At the
changing its name to ATC Alloys Ltd. time of Magma’s listing, the market
appeared only interested in its West
Icon Resources Ltd (III): Origi- Australian projects. However, impres-
nally focused on tin exploration in sive drilling results from Thunder Bay
New South Wales, Icon picked up the North soon thrust the Canadian plat-
historic Mt Carbine tungsten project, inum-palladium-nickel-copper project
North Queensland, in March 2008. The into the spotlight of investors and ri-
company changed its name to Carbine val companies, including nickel miner
Tungsten Ltd in September 2011 as it Panoramic Resources Ltd, which
transitioned from explorer to produc- launched a $40 million takeover bid in
er. First concentrate from old tailings early 2012. Despite some resistance
dumps was produced in early 2012. from Magma, Panoramic ultimately
Late last year, the company acquired Blackham became one of Australia’s newest gold won the support required and con-
two gold projects in NSW and was also producers when it officially reopened the Wiluna tinues to advance the project, in con-
prospecting for lithium brines in South project late last year junction with Rio Tinto Ltd.
America as part of its diversification
PAGE 42 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Geopacific was originally focused in Fiji, but has now shifted its attention to Cambodia up the troubled asset in 2010 and worked
and PNG where it has an interest in Kula Gold Ltd’s Woodlark Island project on overcoming the processing chal-
lenges encountered by previous owners.
Mantle Mining Corporation Ltd 15c/share mark. Montezuma enjoyed its Following the release of an updated DFS
(MNM): A potential revival of the historic best year in 2011 on the back of strong in 2014, Mutiny was acquired by Allan
Charters Towers goldfield was the draw- drilling and study results at the Butcher- Kelly’s Doray Minerals Ltd, which began
card for Mantle to list on the ASX. The bird manganese project. More recently, mining Deflector less than a year later
company then added two other Queens- the company has focused on the Yamar- and poured first gold in mid-2016.
land assets, including Norton, to its port- na gold project, adjacent to Gold Road
folio until hitting a project funding hurdle. Resources Ltd’s 6.2 moz Gruyere depos- Nare Diamonds Ltd (NDM): A “spar-
A friendly merger with cashed-up junior it, and has acquired ground prospective kling” debut month of trading in late 2006
International Base Metals Ltd boosted for gold, nickel and lithium around the paved the way for the success which was
Mantle’s bank balance and allowed the Lake Johnston area. to follow. After entering into a JV with An-
company to complete its acquisition of golan state diamond company Endiama
its current focus, the Morning Star gold Mundo Minerals (MUN): Backed by a in 2007, the company changed its name
mine in Victoria. star-studded board comprising George to Lonhro Mining Ltd and continued to be
Jones, Barry Eldridge, Brian Hurley one of the ASX’s quiet achievers before
Mantra Resources Ltd (MRU): With and John Langford, Mundo was one of undergoing another rebranding in 2012,
prominent mining executive Robert Be- the first notable Australian ventures into becoming Lucapa Diamond Company
hets at the helm, Mantra was a pioneer South America. The company targeted Ltd. Perhaps still yet to hit its peak at
in Tanzania’s emergence as a possi- development of gold projects in Brazil the Lulo mine, Lucapa significantly lifted
ble uranium province. Prior to the 2011 and Peru, with Torrecillas in the latter production and diamond size in the past
Fukushima incident, the company’s flag- eventually emerging as the lead asset year.
ship Mkuji River project attracted inter- in the portfolio following the collapse of
est from ROSATOM, Russia’s nuclear Mundo’s Brazilian subsidiary. In 2012, Newera Uranium Ltd (NRU): Another
holding company. The $1.6 billion takeo- the company changed its name to Min- uranium hopeful which went to the mar-
ver bid lifted Mantra’s stock towards $8/ era Gold Ltd but encountered regulatory ket with prospective land packages in
share before the deal was completed in and financing problems in Peru before WA and the Northern Territory. Success
mid-2011. entering voluntary administration in mid- was limited after the first year, forcing
2015. the company to look abroad at gold op-
Minemakers Ltd (MAK): Investors portunities in Kyrgyzstan. After trading
clearly recognised the potential of the Mutiny Gold Ltd (MYG): Initially fo- as Newera Resources for five years, the
company’s flagship Wonarah phosphate cused on restarting the mothballed Cas- company is now known as Consolidated
project in the Northern Territory, with silis gold mine in eastern Victoria, Mutiny Zinc Ltd and is focused on the Plomo-
Minemakers’ shares soaring 1,240% to is best remembered for its efforts at the sas zinc-lead-silver project in northern
$2.73 over the first four months of 2008. Deflector gold-copper project, 170km Mexico.
However, it soon became clear the pro- east of Geraldton. The company picked
ject’s remote location presented signifi- Nimrodel Resources Ltd (NMR):
cant infrastructure and funding challeng- One of the smaller IPOs of 2006, the
es for the company. A year-long global company was quick to follow up on its
search for a near-term development as- promise to expand its portfolio beyond
set yielded the Boabab phosphate pro- the Buckaroo gold-base metals project in
ject in Senegal in early 2015 and at the New South Wales. A stint in Kyrgyzstan
time of print the company – now known preceded the big move to Africa, namely
as Avenira Ltd – was shipping the first the Takatokwane coal project in Botswa-
batches of concentrate from Dakar port. na. Since changing its name to Walka-
bout Resources Ltd in April 2013, the
Montezuma Mining Co Ltd (MZM): Impact Minerals is still headed Allan Mulligan-led company has made
The multi-commodity explorer has up by Mike Jones in-roads in graphite at the Lindi Jumbo
plugged away at the WA assets which project in Tanzania and last year picked
were central to its $3.6 million IPO in late up a lithium asset in Namibia.
2006 and continues to trade around the
Northern Uranium Ltd (NTU): Urani-
um exploration plays in Western Austral-
ia and the Northern Territory delivered
early excitement for the company as its
share price jumped from 40c to $1.80
within the first six months of trading. The
inevitable post-GFC slide followed and
the company was given a rebirth through
the acquisition of the Browns Range rare
earths project. Since known as North-
ern Minerals Ltd, the company recently
signed an EPC contract for a pilot plant
at Browns Range and is advancing ap-
provals for mining in the near-term.
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 43
CLASS OF 2006
North Queensland Metals Ltd ject. The GFC precipitated a sharp
(NQM): The Baal Gammon tin-cop- depreciation in the asset’s value
per mine was the cornerstone of the and by mid-2009 the company was
company’s $2.5 million IPO, but it trading at around $1.20/share. Red
was the co-acquisition of the near- Hill retains its interest in the still un-
by Pajingo gold mine which turned built project but is now looking at
heads. In conjunction with Heem- gold and base metals opportunities
skirk Consolidated Ltd, NQM oper- elsewhere on the ground in a JV
ated the mine for three years before with Chalice Gold Mines Ltd.
the Jake Klein-led Conquest Mining
swooped on the asset via a takeo- Redstone Resources Ltd
ver of the company in 2010. Pajingo (RDS): Redstone’s high-water mark
was one of the five mines which came in July 2007 when shares hit
Klein used to transform Evolution $1.30 on the back of nickel-PGE
Mining Ltd into Australia’s second drilling results in in the West Mus-
largest gold producer, before selling grave region of WA. The company,
the operation to Minjar Gold Pty Ltd now trading at sub-1c/share, is still
last year. there and is currently aiming to ex-
pand the 3.8mt @ 1% copper re-
Overland Resources Ltd (OVR): source it has on its Tollu project.
Despite floating on the back of the
nickel-copper potential at the Peel Rey Resources Ltd (REY): Hav-
project in New South Wales, the Aura is now exploring for uranium in Africa and Sweden, ing listed on the back of gold and
company’s focus has largely re- having originally listed on the back of WA uranium assets copper interests in Latin America,
mained in Canada since acquiring Rey has latterly focused on oil and
the Andrew zinc deposit in early 2007. ian gold explorer with a focus on Menzies gas exploration in WA’s Canning Basin.
Overland expanded its regional footprint in the Eastern Goldfields of Western Aus-
to incorporate the wider Yukon base met- tralia. A decade on, the company is chas-
Royal Resources Ltd (ROY): Mag-
als project, but has received little market ing funding for the development of its netite remains Royal’s focus but having
reward due to low commodity prices. Ngualla rare earths project in Tanzania.
listed in April 2006 with a suite of WA Mid
Late last year, the company acquired the West assets, its main focus is now on the
Platina Resources Ltd (PGM): The Mawson Iron project in South Australia.
Trojan gold project in the Eastern Gold-
fields from Westgold Resources Ltd, company was spun out of gold explorer The company changed its name to Mag-
signalling a new direction for 2017 and Helix Resources Ltd and set with the task netite Mines Ltd in 2015 and in August
of finding a genuine Australian platinum 2016 announced it had signed an agree-
beyond. deposit on its Owendale project. While ment with Dalian Huarui Heavy Industry
Palace Resources Ltd (PXR): Anoth- the company is still working on the New International Ltd and Bohai Shipbuilding
er aspiring yellowcake play with hopes South Wales asset, it is scandium, rather Heavy Industry Ltd to undertake a DFS
of a new uranium find in WA or NT, the than platinum, which is the lead com- into a 25 mtpa floating iron ore port for
company changed tack in 2011 when it modity.
Mawson. The company was trading at
looked abroad to East Kalimantan and around 3.5c/share at the time of print,
Primary Resources Ltd (PRZ): In having reached its all-time high of 26.9c
was renamed Padang Resources Ltd.
Unfortunately, the drill bit failed to deliver some ways Primary was ahead of its in July 2007.
and in 2015 the company opted for a re- time, listing with a 1,500sq km holding
verse takeover deal with digital identifica- in the West Musgrave. However, little
Royalco Resources Ltd (RCO): A
headway was made and by 2008 it had relatively new phenomenon when it
tion and verification firm TikForce Ltd. changed its name to Strzelecki Met- listed, royalty streaming company Roy-
Panaegis Gold Mines Ltd (PAU): als and, in 2010, to Wolf Petroleum Ltd alco built a portfolio of 10 assets over a
Many could be excused for thinking which now hovers around the 2c/share decade and paid more than $6 million in
this company had disappeared into the mark as it focuses on Mongolian hydro- dividends over four years. However, with
ethers given the limited success which carbon projects
a number of projects failing to move into
followed the 2006 float. Undergoing a developments, the dividend payments
Proto Resources & Investments Ltd were suspended in 2015 and in late 2016
name change to Nagambie Mining Ltd in
2008 and now referred to as Nagambie (PRW): Having raised more than $15 mil- the company’s board accepted a takeo-
Resources Ltd, the company had its best lion over eight years for projects in loca- ver bid from another royalty streaming
year of trade on the ASX in 2016, peaking tions as varied as WA, NSW, Tasmania, group, Fitzroy River Group Ltd.
at an all-time high of 24c/share in June Germany and Albania, Proto fell into
on the back of environmental approval administration in June 2014 with little to
Shannon Resources Ltd (SHA): The
for receiving and managing sulphidic show investors. The company was set to Kalgoorlie explorer lasted on the ASX for
excavation material from the Nagambie be wound up as Paydirt went to print.
less than 12 months before fellow gold
mine legacy pits in Victoria. The compa- junior Carrick Gold Ltd (now KalNorth
Red Hill Iron Ltd (RHI): One of the Gold Mines Ltd) took over the company.
ny hopes the excavated material can be last decade’s great iron ore junior sto-
used in the local construction industries. ries, Red Hill shares hit $6.62 in May
Shaw River Resources Ltd (SRR): A
Peak Resources Ltd (PEK): When it 2008 having released a positive PFS for spin-off of Atlas Iron Ltd’s precious and
listed, Peak was a run-of-the-mill Austral- its 40%-owned West Pilbara iron ore pro- base metal ground in the Pilbara, Shaw
PAGE 44 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
River eventually found its way to man- for long and in August 2007 changed
ganese. However, by 2016 the company its name to Greenland Minerals & En-
was in financial trouble and appointed ergy Ltd. It has since been develop-
administrators early in the year. ing its Kvanefjeld uranium-rare earths
project in Greenland.
Shield Mining Ltd (SHX): Spun out of
successful West African iron ore devel- Thor Mining plc (THR): Thor con-
oper Sphere Investments, Shield’s focus tinues to press ahead with its Molyhil
was on gold in Mauritania and when Kin- tungsten-molybdenum project, which
ross Gold Corp spent $5 billion to acquire was its flagship asset on listing after a
Redback Mining and its Tasiast project $10 million IPO. The company said in
in the country, the gold sector began to its September quarterly it was still in
pay attention to the West African nation. discussions over project finance and
Gryphon Minerals eventually acquired offtake arrangements.
Shield in 2010 but as the West African
gold rush stalled the Steve Parsons-led Toro Energy Ltd (TOE): When Nimrodel is now Walkabout Resources.
company was unable to fund much ex- created through the amalgamation A change of name has also meant priorities
ploration in Mauritania. of Oxiana and Minotaur Exploration
Ltd’s uranium interests, Toro entered are different with graphite and lithium
Sierra Mining Ltd (SRM): Sierra list- a growing heard of yellowcake hope- chosen over coal in Botswana
ed with gold assets in two politically fuls. Following Fukushima and the
challenging jurisdictions; Papua New global fall in uranium demand, it is assets is now looking for new non-ura-
Guinea and the Philippines. The com- now relatively out on its own as a ura- nium and perhaps even non-resources
pany had some success, particularly nium developer and continues to push opportunities.
in the Philippines, before it was the its Wiluna uranium project in WA, re-
avenue for a backdoor listing by RTG ceiving state and federal approvals Venture Minerals Ltd (VMS): For
Mining Inc in 2014. last year. most of its 10-year existence, Venture
has been focused on development of its
Silver Swan Group Ltd (SWN): The Trafford Resources Ltd (TRF): The Mt Lindsay tin-tungsten-magnetite pro-
company had a suite of intriguing base company listed with the Wilcherry Hill ject in Tasmania. However, due to the
and precious metals assets in WA and project as its flagship. The project was price slump in those commodities and
enjoyed some early success chasing later spun out into IronClad Mining but ongoing environmentalist challenges in
VMS deposits in the Murchison district the two companies reformed in 2015 as the State, the company has branched out
with shares reaching as much as 75c. Tyranna Resources Ltd. Wilcherry Hill is into Thailand (silver) and WA (lithium).
By mid-2012 however, the company had now under a JV agreement with Alliance
switched focus, to gold in Spain, sub- Resources Ltd while Tyranna itself pur- Western Uranium Ltd (WTN): Origi-
sequently changing its name to Caravel sues new gold opportunities around the nally spun out of Prairie Downs Metals
Minerals Ltd. It is now back in WA, test- Challenger gold mine in South Australia. Ltd to find market value for its Copper-
ing for VMS again at Bryah and Calingiri. mine bore uranium project, Western Ura-
U308 Ltd (UTO): Part of the 2006 ura- nium has undergone several changes of
Stonehenge Metals Ltd (SHE): No- nium club, U3O8 had picked up a pack- name and direction in the last decade.
vember 2016 saw Stonehenge finish its age of ground untouched since the last Recently, attention has been on the
global search for mineral exploration pro- uranium rush in the 1970s. Little head- 100%-owned Redcliffe gold project in
jects, with the company changing name way was made and in 2012 the company the Eastern Goldfields.
and direction to Protean Energy Ltd, changed its name to Avocet Resources
a wave energy technology developer. Ltd before being acquired by Lion One Wildhorse Energy Ltd (WHE): Start-
Stonehenge had listed with tin assets in Metals Ltd in a $7.6 million transaction. ing out as a uranium explorer with pro-
Tasmania and later became involved in jects in North and South America, Wild
vanadium and uranium in South Korea Uranium King Ltd (UKL): Rather than Horse failed to entice much market sup-
without ever truly capturing market atten- joining the Australian uranium trail, Ura- port. However, since becoming Salt Lake
tion. nium King headed to the US where it had Potash Ltd in December 2015, the com-
put a foothold on projects with JORC- pany has enjoyed a fine run, closing 2016
Terrain Minerals Ltd (TMX): A sur- compliant resources. Success was un- at a record high of 52c/share thanks to
vivor in the often harsh world of junior attainable however and the company success from its Lake Wells potash pro-
explorers, Terrain is still going 10 years has since undergone a number of name ject in the Northern Territory.
after listing despite never making signifi- changes, the last being to Ausroc Metals
cant waves with the investment commu- Ltd to which official liquidators were ap- Zedex Minerals Ltd (ZDX): Listing
nity. The company listed with four gold pointed in August 2016. with a 16.44% interest in Asian gold ex-
projects in the Eastern Goldfields and a plorer Olympic Pacific Minerals Inc, Ze-
decade on is still active in the region, re- UraniumSA Ltd (USA): The South dex eventually merged with its TSX-listed
cently raising $443,000 for drilling on its Australian uranium explorer hit nearly partner in 2010.
Great Western project. 60c/share in early 2011 before the de-
bilitating effects of the uranium market’s
The Gold Company Ltd (GGG): De- post-Fukushima fall took over. The com-
spite the unambiguous name, The Gold pany is still active however and following
Company wasn’t tied to precious metals the demerger of the Samphire uranium
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 45
Davenport’s lush patch in Germany
New listing Davenport Re- geting an inferred resource of
sources Ltd hopes to capi- about 200mt from one hole.
talise on better sentiment in the Similarly at Gräfentonna,
market for resources floats. there is potential for a large
Davenport was one of a resource, however, depend-
handful of IPOs scheduled to ing on results this year, Dav-
list in December but its entry to enport will decide whether to
the bourse was pushed back to drill another hole at Küllstedt or
last month. Gräfentonna in mid-2018.
Davenport was previously Based in Greece at the mo-
an unlisted public company ment, project director Jason
focused on copper-gold in the Wilkinson will lead the team in
Northern Territory and while South Harz and it is hoped he
it retains licences in Southern can emulate the success of Al-
Cross Bore, exposure to the ag- lana Potash in Ethiopia.
ricultural feedstock area is also Wilkinson was the in-country
now part of the portfolio. managing director for Allana
By acquiring private Austral- Potash, taking the Danakil pro-
ian company East Exploration ject through the feasibility pro-
Pty Ltd, Davenport has gained cess and confirming potential
access to potash project licenc- for the project to produce 1
es in Germany’s South Harz mtpa MOP over 25 years.
district. Allana Potash was taken
East Exploration is 55% over by Israeli Chemicals Ltd
owned by Parkway Minerals NL for $US109.5 million in 2015.
(formerly Potash West) which A similar outcome would be
means the latter’s shareholders Evidence of potash mining dating back to 1850 is still apparent at a pleasing result for Davenport,
have interests in two emerg- Küllstedt, part of Davenport Resources’ South Harz project however, there is another peer
ing potash plays: Dinner Hill in the field it hopes to emulate.
in Dandaragan, Western Australia and enport should be very strong for this first “The intention is to follow-up on the
South Harz, Thuringen, Germany. half of the year with the completion of the Highfield [Resources Ltd] model and
About $8 million is required to com- data evaluation for Gräfentonna and the build a management team in Germany,”
plete a BFS at Dinner Hill, while capex start and continuation of drilling at Kül- McManus said.
estimates in the vicinity of $200 million lstedt.” Highfield is developing the Muga pot-
means Parkway Minerals is looking for a South Harz has been a noted potash ash project in Spain.
JV partner to advance the project. producer in Germany since the 1880s “We’d be happy to see half the value
Parkway Minerals managing director and prior to the reunification of Germa- recognition Highfield has [share price
Patrick McManus, who is also chairman ny (South Harz is in the former German $1.28c/share and market cap of $413 mil-
of Davenport, said Dinner Hill would Democratic Republic) muriate of potash lion] and there’s no reason why we can’t.
have its time and FTI Consulting, which (MOP) was produced at a rate of about We’re both in proven potash producing
has a big agriculture arm in Sydney, has 4.4 mtpa. areas, albeit Highfield’s resources are
been engaged to find a suitable partner At Küllstedt, ERCOSPLAN was com- shallower [300m depth] to our 400m.”
for the project. missioned to undertake a study of all the McManus’s optimism would excite in-
Meanwhile, McManus is bullish Dav- available data in which an exploration vestors in Davenport and should mar-
enport can turn the assets at South Harz target of 4-5bt in resources was com- ket conditions for miners and explorers
– Küllstedt and Gräfentonna – into mean- piled. improve, the potash-hopeful may have
ingful projects. Davenport has planned to drill two timed its entry onto the bourse just right.
Having raised just under the intend- holes at Küllstedt this year and is tar- “I can see the positive sentiment
ed $6 million it aimed for continuing on from the im-
at IPO, Davenport is still Davenport Resources Ltd (ASX:DAV) proved confidence in the
well-funded to undertake second half of 2016 and
planned activities this year. Listed: January 20 investors will come back
“We have raised about Board: Patrick McManus (chairman), Chris Bain (managing director), to the market. That should
$5.2 million, which will be Rory Luff (executive director), Angus Edgar (non-executive director) see new exploration pro-
sufficient to do the drill- Flagship project: South Harz jects get some traction and
ing programmes we have bring more interest back
mapped out for this next year Project status: Two confirmation holes are planned to be drilled at the into our sector,” McManus
and various other explora- Küllstedt licence this year. Hole one down to a depth of 650-700m will said.
tion initiatives planned,” Mc- test a historical intersection of 58m carnaltite and sylvenite mineralisa- – Mark Andrews
Manus told Paydirt. tion at Felsentfest and hole two is planned to test the western side of
“The news flow from Dav- the licence following up a zone of high-grade sylvenite mineralisation.
PAGE 46 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Ardea adopts cobalt focus
The team behind Ardea Resources Ardea is keen to test the orogenic gold and base metal mineralisation at Lewis Ponds
Ltd cannot wait to “hit the ground
running” on Australia’s largest cobalt demand for ethical cobalt production for Lewis Ponds was one of the projects
resource. green energy,” Painter said. Heron secured from the merger with Tri-
AusMin, but little work has been carried
To be spun out of Heron Resources “Cobalt was certainly considered in out since. A historical mining operation
Ltd next month, Ardea will focus on the past as an addition to nickel at KNP, more than 100 years ago, Lewis Ponds
developing the cobalt-rich portions of but we’re sort of up-ending that if you like returned a number of high-grade base
the Kalgoorlie Nickel Project (KNP) and focusing on where the good cobalt metal intercepts during the last major ex-
after being inundated with inquiries is. And, where the good cobalt is also ploration programme.
about the key battery mineral. happens to be where there is high-grade
nickel as well. Clearly, any production will A bulk tonnage exploration target of
Ardea last month completed an take the nickel as well, but we’re just go- 15-25mt @ 2.2-3.7% zinc equivalent
extensive review of the cobalt con- ing for the high-grade cobalt.” (1.2-2 g/t gold equivalent) has been set
tent of the project and announced a for Lewis Ponds, with orogenic gold and
revised resource estimate of 49.7mt Painter himself admitted to having base metal mineralisation previously de-
@ 0.12% cobalt and 0.86% nickel a “ho-hum” attitude about some of the fined.
across three cobalt centres. KNP’s projects in the Ardea prospectus until he
global resource remains 805mt @ was invited by Heron founder Ian Buch- “It’s quite clear every other deposit in
0.05% cobalt and 0.7% nickel. horn to have a look at the assets. the region throughout the Lachlan Fold
Belt is large tonnes, low grade,” Painter
It was one of the key reasons why the Ardea’s portfolio will also include the said.
company decided to extend its public of- Lewis Ponds zinc-gold project in NSW
fer by one month after initially flagging a and the Mt Zephyr gold-nickel project “Our plan is to hit the ground running
listing date in January. Ardea now looks near Leonora. and hit it fast. We will start drilling at both
set to debut on the ASX on February 9. Lewis Ponds and KNP by March. If we
“I soon discovered there’s much more can get there earlier we will.”
“We felt we had a duty to extend the of- to this than meets the eye; some of the
fer simply because people weren’t aware; gold prospects in particular,” he said. Painter, an experienced geologist who
even we weren’t completely aware,” Ar- spent almost a decade with Namibian
dea managing director Matthew Painter “Ian Buchhorn has always said Her- copper explorer Sabre Resources Ltd, is
told Paydirt. on’s never pegged a spot of ground that joined on the Ardea board by Buchhorn
doesn’t have a walk-up drill target and it’s and non-executive chair Katina Law.
“Obviously we had an inkling before quite clear that is the case.”
we got the official numbers back. The “Part of our strategy is to let the
cobalt resources we had were all around
the nickel, so we thought ‘what if we pull rocks and the results speak for
this data apart and focus on the cobalt themselves,” Painter said.
first?’. That’s precisely what we did and
it’s shown we’ve got quite a substantial “I think we’ve put a good team
cobalt resource there.” together. We more than often
agree on a lot of things, but we’re
Some people once considered KNP to also quite complementary in our
be a “saviour” for Kalgoorlie when mine approach. Just from bouncing off
life issues surrounded the Super Pit, but each other we often come up with
unsteady nickel laterite prices over the a good solution.
last decade has seen the project disap-
pear from the limelight. “We’re going to try to be quite
innovative and quite proactive
KNP was first picked up by Heron in with how we go about things. It’s
1997 and despite plenty of market inter- an exciting time for all of us.”
est, the company was never able to get
the project off the ground. Heron’s Cobalt will be the focus of Ardea’s work at KNP – Michael Washbourne
decision to focus on the Woodlawn
zinc project in New South Wales
after merging with TriAusMin in
2014 all but sounded the end of
the company’s longstanding as-
sociation with the project.
However, investors were quick
to spruik their interest in KNP
when Heron declared its inten-
tions to spin out its non-core as-
sets last August.
“Nickel laterites have been
through an unfashionable period
of late, but I think that’s turning
with the interest in cobalt and the
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 47
Traprock eyes fast development
Queensland-focused Traprock Mining ence already within the company.
Ltd has set its sights on developing Former Diatreme exploration manager
the lead gold-copper project in its pro- and long-time Fawdon confidante David
spectus as soon as possible. Jelley has been appointed managing di-
Traprock was in the throes of complet- rector, with fellow geologist Warwick An-
ing a $6.5 million IPO at the time of print, derson also part of the three-man board
with multiple drilling programmes ready of directors.
to go should the company successfully “In all these things, you usually back a
list on the ASX on March 1. team, not so much the project,” Fawdon
This includes 7,000m of drilling at the said.
company’s flagship Mt Chalmers project, “You really want people who are going
about 17km north-east of Rockhamp- to make it happen. Most people we’ve
ton. A further 7,000m is also planned for talked to love the projects and know us
Woods Shaft, about 800m south-west of well anyway, so from that point of view
the main resource. we have a good chance of filling the
Mt Chalmers was mined intermittently spread [for the IPO].”
between 1898 and 1982, recovering Mt Chalmers is one of four gold-cop-
1.2mt @ 3.84 g/t gold, 1.99% copper and per projects in Traprock’s prospectus,
20.8 g/t silver during that time. Few drill which also includes Warroo, Herries
holes have been punched into the project Range and Kabunga, all in Queensland.
since production ceased 35 years ago, Warroo, near Stanthorpe, is an aban-
but Traprock is encouraged by those doned open-cut mine with numerous
which have, including 12m @ 6 g/t gold, high-grade intercepts, including 8m @
9.5m @ 6 g/t, 20m @ 3.2 g/t and 16m @ Traprock is seeking to list on the ASX on March 1 13.5 g/t gold. Historical production re-
turned 239,873t for 13,982oz gold, 21t
“The main game is to get into develop- source quoted for Mt Chalmers was ruled copper and 901oz silver. A 6,000m drill-
ment as fast as we can,” Traprock chair- non-complaint with JORC standards. ing campaign will begin at Warroo once
man Tony Fawdon told Paydirt. Fawdon, who helped float mineral the IPO is completed.
“We’ve got gold at surface at Mt Chal- sands and gold hopeful Diatreme Re- Herries Range, 18km north of War-
mers, we’ve got copper exposed in the sources Ltd in 2005, said his new com- roo, hosts more than 60 high-grade gold
pit and we’ve got quite a few gold-copper pany was now working to a mineralised mines in the project area and boasts six
targets [surrounding the pit] which really target at the VMS-hosted Mt Chalmers. drill-ready targets and seven prospective
haven’t been drilled out. Traprock is also keen to drill-test a fur- gold zones for further testing.
“In the past no one could do any real ther 12 VMS mineralised targets within Kabunga, near Gympie, is a green-
work putting this together because the 5km of the main Mt Chalmers resource. fields target which requires more explo-
area was fragmented, but now we have “We think there’s still about three-quar- ration work but the company is buoyed
the whole lot. We expect we’re going to ters of the orebody left in the ground, so by the potential for gold-copper discov-
pick up a lot more mineralisation around on that basis we’ve got a pretty good eries.
Mt Chalmers.” start,” Fawdon said. Fawdon said his company would spend
Traprock had planned to float before “There’s also another resource, which up to 85% of the funds raised from the
the end of 2016, but the company did not we can’t quote because it’s pre-JORC, IPO in the ground, adding a further rais-
meet the required listing conditions at the which was drilled by Newmont [Mining ing may be required in about 12 months
time. The company also had to slightly Corp] at Woods Shaft, about 800m away. to push Mt Chalmers through feasibility.
tweak its prospectus because the re- One of the very first things we’ll be doing While the Traprock team is excited
is drilling that out.” about the current market for new gold
One of the positives projects, Fawdon is also upbeat about
to come out of Trap- his company’s copper prospects with the
rock’s delayed listing red metal on the rise.
was the opportunity “Copper has put on approximately
for the company to $US1,600-1,700/t since the start of De-
engage with a cor- cember and we know a shortage in cop-
nerstone investor who per is coming,” Fawdon said.
wasn’t previously on “We’ve got some very good copper
board with the IPO. grades in the ground around Mt Chalm-
Fawdon said the ers and a few other places so we think
cornerstone investor we can take advantage of that. There’s a
was impressed with real sense of confidence in the company
the plans for Mt Chal- right now.”
mers and was also – Michael Washbourne
All four of the company’s projects in Queensland taking comfort from
are prospective for gold and copper the amount of experi-
PAGE 48 FEBRUARY 2017 AUSTRALIA’S PAYDIRT
Blackstone courts the
The founders of Blackstone Min- the eastern side of the tenement.
erals Ltd are convinced macro
and industry trends through 2017 will “It is also on the same shear zone
make the company’s traditional IPO
portfolio an enticing proposition for as that Breaker Resources NL has
had some success on,” Halliday said.
Blackstone was set to be one of
the first resources companies to hit “We have had a look around and have
the boards this year after it raised
$3.5 million for its suite of West Aus- seen some opportunities. We plan to
tralian gold and nickel assets. At a
time when lithium, graphite and co- work up some targets and do some
balt are dominating the IPO space,
Blackstone chairman Hamish Hal- broad-spaced aircore drilling there.”
liday believes the familiarity of gold,
nickel and WA will be welcomed by There are also drilling targets at
investors, particularly given the state
of commodity markets. Silver Swan South – 5km south of
“I think the natural hedge you get on the Black Swan nickel mine – where
the currency means Australia is a good
place to focus on,” Halliday said. “Gold Blackstone is hopeful of getting multi-
IPOs have been few and far between in
recent years but we felt there was appe- ple opportunities.
tite for pure gold exploration and when
looking for gold plays you always fall “We think we can have two bites
back to a WA focus, especially when
the gold price is $1,600/oz.” at Silver Swan South,” Halliday said.
The Blackstone portfolio consists Blackstone director Andrew Radonjich with “We have done some mapping and
of three such projects – Silver Swan chairman Hamish Halliday orientation work in the last few weeks
South and Red Gate in the Eastern on Silver Swan South with Kanowna
Goldfields and Middle Creek in the Pil-
bara – all of which offer opportunity to despite having some beautiful hits from Belle in mind and there are some old
quickly add value, something Halliday
sees as vital to a newly listed company. previous work including intercepts of holes with gold hits which we will follow
“I think regardless of the time in the 14m @ 3.7 g/t gold, 10m @ 8.5 g/t gold up with RC.
cycle, investors are always focused
on clear pathways to production for and 12m @ 9.2 g/t gold.” “We will also be able to drill the ultra-
juniors,” he said. “Maybe at the height
of the gold boom you could talk about While these hits will be followed up, mafic itself where there has already been
multimillion ounce resources but most
of the time investors want juniors to Blackstone is also keen to test a relative- some meaningful nickel hits and we think
have small, close-to-mine opportu-
nities. It is very rare that the market ly untouched 20km of greenstone belt in there is particularly good opportunity in
doesn’t appreciate those assets.
the nickel market currently.”
“We want to steer clear of risky pro-
jects; deep, narrow, low-grade and find At Middle Creek in the Pilbara, early
something that makes cash, even if it
is modest amounts. All of these pros- reconnaissance work has already iden-
pects are close to existing mines or
projects so it lowers the hurdle to pro- tified visible gold in quartz veins at sur-
face and high grade soil and rock sam-
At Red Gate – in which the company
can earn 80% by spending $50,000 – ples up to 3.3 g/t gold.
Halliday is keen to hit a series of walk-
up drilling targets located 140km north- The project lies adjacent to Millen-
east of Kalgoorlie.
nium Minerals Ltd’s Nullagine gold op-
“We believe it has been overlooked
eration and Halliday admitted an even-
tual deal with its neighbour could suit
Blackstone entered the market with
36 million shares on issue, a capital
structure which could prove key to any
corporate deals in the future according
“A tightly controlled capital structure
is very important and our recent expe-
rience with Alicanto [Minerals Ltd of
which Halliday is also chairman] rein-
forced that. When we took the story to
North America they were blown away
that there was an Australian company
with less than 100 million shares on
issue. So, we will get a lot more inter-
est from overseas because of the tight
structure. Deals are also easier to get
done because there is not a massive
spread with huge, unmarketable par-
Blackstone’s Red Gate project is in the heart of cels.”
the Eastern Goldfields, offering potential to – Dominic Piper
define low-cost start-up strategies
AUSTRALIA’S PAYDIRT FEBRUARY 2017 PAGE 49
Africa ups its local
The skills shortage may have abated but the resources sector still employment initiatives with managing di-
finds itself facing numerous challenges in the areas of recruitment, rector Mark Bristow a vocal proponent of
retention, training and employee relations. Paydirt takes a look at what greater indigenous employment.
is being done to address some of the issues facing the mining sector,
starting with Australians in Africa. The company’s three Malian opera-
tions – Loulo, Gounkoto and Morila –
African countries and companies con- plementing and enforcing its employ- have provided employment to 4,800
tinue to make progress with their employ- ment policies. Ghana has a long history people and all three are run by manage-
ment nationalisation plans but achieving of mining and has a very big skills base ment teams consisting entirely of Malian
widespread indigenous employment is and its rates of nationalisation are im- nationals.
still some way off for many. proving all the time. However, a country
such as Burkina Faso, which is up and At the newly established Kibali gold
Governments across Africa have coming in a mining sense, there still isn’t mine in DRC, Randgold and JV partner
launched employment nationalisation the broad base of skills required to have AngloGold Ashanti Ltd employs 4,000
plans in an effort to ensure their citizens full local employment.” people, almost all Congolese nationals.
benefit from mineral development in line
with the Africa Mining Vision. Industry Spicer said Globe 24-7’s annual Afri- Bristow said last year the JV had spent
has also embraced the strategy but ac- can Remuneration and Benefits Bench- $US1 billion with Congolese contractors
cording to African mining HR expert La- marking Report had shown even where and suppliers “many of whom have es-
chlan Spicer, the disparity between indi- countries had not drawn up a formal lo- tablished local operations leading to the
genisation rates across Africa can still be calisation plan, companies were them- creation of a new economic frontier in
stark. selves providing such programmes. this remote region of the country”.
“We have seen a very strong commit- The report showed 100% of surveyed “We’re not just creating jobs, we’re
ment to national and local development in companies in Ghana and Tanzania re- creating careers, and for generations to
Africa,” Spicer said. “There is no country ported participation in formal plans, come Kibali will be managed by Congo-
that has not committed to nationalisation while 75% of Malian-focused companies lese citizens with world-class skills,” Bris-
of the mining workforce. Some countries were participants in formal plans. Some tow said.
have formal plans and enforce it, others 50% of companies in other West African
have less formal plans and enforcement countries including Burkina Faso, Cote Ensuring host communities benefit
is not strict.” d’Ivoire and Senegal had plans in place, rather than suffer from the creation of
while Guinea and DRC continued to lag. employment opportunities in their region
Spicer pointed to Ghana as a model of is an associated challenge for miners.
what could be achieved. London-listed gold miner Randgold
Resources Ltd has been a leader in local In Kenya, ASX-listed Base Resources
“Ghana has had great success in im- Ltd is adapting to the challenge of im-
plementing local employment plans in a
country without an existing formal mining
PAGE 50 FEBRUARY 2017 AUSTRALIA’S PAYDIRT