December 2019 - January 2020 VOLUME 1. ISSUE 278 $11.95
Best Workforce & Industry
Truth and stability:ruth and stability:
Mining policy in 2020ining policy in 2020
Australia’s Paydirt December 2019 - January 2020
Gold Fields... the African-Australianold Fields... the African-Australian
Mining Indaba 2020 Preview Indaba 2020 Preview
Mining ISSN 1445-3436 343007
ASX/LSE:RSG | www.rml.com.au 771445
Page 1 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
TECHNICAL EXCELLENCE & SURETY IN DELIVERY
Lycopodium is an internationally IRON ORE
recognised engineering and project Our demonstrated commitment
delivery group servicing global and proven ability to safely deliver
mineral resource projects and projects on schedule and on
associated mine infrastructure. budget, quickly ramping up to meet
project performance targets, is the
Lycopodium’s capabilities extend cornerstone of our success and
worldwide and across project size, repeat client base.
process complexity and commodity.
Lycopodium has a diverse team of
Coupled with our reputation in Industry experts spanning a network
precious and base metals, we of global offices, delivering fit-for-
have now grown to be a widely purpose and innovative solutions
recognised services provider to across all commodity types. E [email protected]
the iron ore, battery metals and P +61 8 6210 5222
industrial minerals industries. On time. On spec. On budget. www.lycopodium.com.au
PAYDIRT (ISSN 1445-3436) NEWS
Published by 06
Paydirt Media Pty Ltd. Saracen Mineral Holdings sprang a
A.C.N. 063 985 133 surprise last month when it emerged as
Head Office: the preferred bidder for Barrick Gold’s 50%
Suite 9, 1297 Hay St, West Perth share of the Kalgoorlie Super Pit. Saracen
Western Australia 6005 will pay $US750 million for its share of the
P.O. Box 1589, West Perth iconic gold mine, having fought off both
Western Australia 6872 domestic and international competition
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426
[email protected] 14 NEWS
Despite a fall in the spot price last month,
the nickel sector continues to heat up with
Independence Group making a move for
Editor: Dominic Piper fellow miner Panoramic Resources and
Deputy editor: Mark Andrews Mincor Resources tapping the market for 14
Journalist: Michael Washbourne $40 million last month. Paydirt has followed
Art director: Nick Brown both stories closely
Contributors: Brendan Ryan
(Johannesburg) 22 COVER
Advertising: Gold Fields chief executive Nick Holland
Advertising manager: Richa Fuller is one of many executives growing
Subscriptions: Kate Blanchard increasingly wary of governments across
Phone: (+61 8) 9321 0355 the world using mining to plug gaps in
Facsimile: (+61 8) 9321 0426 their fiscal deficits. With 10 presidential
and general elections set to take place in
Pre-press and printing: Africa in 2020, we look at mining policies on
Vanguard Press, 26 John St, the continent and ask what policy settings
Northbridge WA 6003 governments will need to promote in order
Member of: to strike the balance between attracting
investment and ensuring equitable
Paydirt Media PREVIEW
Executive chairman: Bill Repard
Finance manager: Giovanny Jefferson The Mining Indaba, held each February,
Accounts/administration: has grown into one of the largest global
mining investment conferences. Delegates
Lana Luketic from every corner of the mining world will
Conferences: Melita Fogarty, be in Cape Town for the forum, including
Namukale Nakazwe, the usual sizeable Australian contingent.
Christine Oelschlaeger, As official Gold Media Partner of the
Mitchelle Matambo conference, Paydirt looks at the issues and
companies set to make the most noise at
2019 Winner December 2019 - January 2020 VOLUME 1. ISSUE 278 $11.95
Best Workforce & Industry the annual event
T Truth and stability:ruth and stability: ROUNDUP
M Mining policy in 2020ining policy in 2020
Australia’s Paydirt December 2019 - January 2020
G Gold Fields... the African-Australianold Fields... the African-Australian 11
Mining Indaba 2020 Preview Indaba 2020 Preview
Mining ISSN 1445-3436 Africa is not the only continent on which
ASX/LSE:RSG | www.rml.com.au 771445 343007
9 Australian companies are thriving. In
Cover image: Gold Fields chief executive
Nick Holland our monthly global wrap, we speak with
Australians on a Spanish treasure hunt, ask 30
what new President Alberto Fernandez will
Member of: mean for Argentina’s lithium sector, catch
up on Charlie Bass’ progress in the US and
analyse the new opportunity on offer in
Registered by Australia Post PP 643938/0071. Myanmar
No pages or articles in this publication may be re-
produced in any form without the consent of the
publisher. This includes photographs either taken
by Paydirt Media staff or provided by other parties.
When trust fades,
the funding gap widens
Our cover story and much of the edi- “The banks still have no mandate to work in Tanzania,” on executive
torial content in this edition is concerned told me. “Wherever we go they have a misconception that the Govern-
with identifying the conditions required ment wants 51% of the project. It is simply not true.”
to induce reluctant investors to commit Such comments come back to the heart of the African resources
to funding African resources projects. sector’s most pressing problem; trust and communication.
This is not by design but through Investors can read the Government legislation, but they do not trust
necessity. Through our interviews and that 16% free-carried interest will remain at 16%. Instead, they hear
discussions with African-focused companies, it has become appar- the comments of Magufuli and Prime Minister Kassim Majaliwa insist-
ent that international investors – worried by the fallout from Brexit, the ing that Tanzania receives 51% of the “economic benefits” of mining.
US-China Trade Wars and numerous other global uncertainties – are Even Barrick Gold Corp chief executive Mark Bristow has spoken of
definitively “risk off” at the moment. This sentiment has left numerous the “50/50 share of economic benefits”. At first read, this may appear
African projects stuck at the development stage; they have a com- a form of resource nationalism but closer inspection the legislation
pleted DFS but cannot find the funding to begin construction. accounts for income tax, pension payments, local procurement and
There are examples of successful companies. Resolute Mining Ltd other investments into the country. This makes the distribution of “ben-
is ramping up the development of its Syama underground gold mine in efits” equivalent to that of Western Australia and other major Tier 1
Mali and in Burkina Faso, West African Resources Ltd is scheduled to mining jurisdictions.
pour first gold from its Sanbrado gold project in 2020. Both companies As another Australian-Tanzanian mining executive said: “A mining
have attracted debt and equity financing despite major security issues company with nothing to hide, one which is sticking the spirit of the
in West Africa. mining policy, will have no problem working in Tanzania.”
However, they are the exception which proves the rule. For the rest It is again a matter of communication. In Tanzania’s case, Acacia
of the African junior and mid-tier development space, project finance Mining operated in an environment of mistrust between it, govern-
is proving elusive. International investors have no appetite for Africa. ment and community. The mistrust and miscommunication become
In North America, high-risk capital is being soaked up by cannabis so severe the Government was sparked into seemingly irrational ac-
stocks and cryptocurrencies. In the UK, investors are paranoid about tion which has had longer-term consequences for the country’s entire
the post-Brexit future and in Australia, the remarkable performance of mining industry.
domestic gold producers means there is little incentive to expand risk If trust and communication were stronger, Acacia would likely have
appetite out of the backyard. recognised the frustration within government and community and
At the same time, policy uncertainty, security concerns and social taken proactive measures to address the problem. Instead, it stuck to
instability continue to blight African development plans. the letter of its investment agreement until it was too late.
Nowhere is the problem highlighted more than in Tanzania, where In our cover story and Mining Indaba coverage, Gold Fields Ltd
a dozen ASX-listed companies have shovel-ready projects but are un- chief executive Nick Holland points out that gold companies have
able to bridge the financing chasm. been selling different stories to different groups for too long.
In speaking with these companies, there is clear frustration with the To roadshows in Johannesburg, New York, London and Sydney,
current situation. They recognise why investors left in the first place. they have presented investors with a story of ever decreasing costs
The move in July 2017 to slap Acacia Mining with a $US300 billion tax as they wring every last drop out of an operation.
bill and the policies President John Magufuli consequently launched The next month, they are in Bamako, Dar es Salaam and Kinshasa
for the entire mining sector were borne of misguided populism and telling governments and other stakeholders that their margins are so
were certain to prompt capital to flee. tight they cannot afford an increase in royalties, greater tax payments
However, two years on, much of the initial damage has been rec- or deeper CSR investments.
tified. Privately, the Government has acknowledged it was heavy- Companies can no longer tell these opposing narratives to differ-
handed in letting its dispute with Acacia spread throughout the rest ent stakeholders. The savvy investors will have already worked out
of the resources industry. The revised policies and legislation have the real numbers and the governments and communities will have
cycled back on many of the most punitive measures. In its place is a seen their headline numbers. This sparks the debate over economic
Mining Act which calls for a 16% free-carried interest in net profits of benefits and thus begins the spiral which leads to the current situation
mining operations only, an increase in royalties from 4% to 6% and a in Tanzania.
5% local ownership requirement which, according to most of the com- Hopefully, lessons can be learnt and a new generation of miners
panies Paydirt has spoken to, is eminently achievable through com- and politicians will create an environment of trust and honesty which
munity trusts. In comparison to many mining codes on the continent leads to sustainable development across the continent.
and elsewhere, the Tanzanian framework would appear welcoming.
The frustration for the Australian juniors operating in Tanzania is
that the changes appear not to have resonated with the international
investment community. [email protected] @DominicPiper
Page 4 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
CREATING VALUE THROUGH DISCOVERY
CÔTE D’IVOIRE GOLD PEDIGREE
• Extensive tenure position 3,584km 2
• Highly prospective Birimian terrain with large scale
• Along strike from multi Moz gold desposits and mines
• Pro-mining jurisdiction, excellent infrastructure
GHANA CAPE COAST LITHIUM PROJECT
• Rediscovered hard-rock lithium spodumene dominant
pegmatite field - 684²km portfolio
• Historic 1.48Mt @ 1.67% Li O deposit (non-JORC)
• Broad high-grade drilling results incl. 80m @ 1.52% Li O
• Exceptional logistics (nearby port, highway, power)
CHAD - NEW GOLD PROVINCE
• 900km ground holding
• 1st mover advantage, high grade Dorothe discovery
• No previous modern day exploration
• Large scale artisanal footprints over 3km x 1km area
IRONRIDGERESOURCES.COM.AU @AIM_IRR [email protected]
Saracen takes flight
Barrick Gold Corp’s involvement with the Australian
gold sector is drawing to a close following Saracen
Mineral Holdings Ltd’s move to secure 50% of the
iconic Super Pit in Kalgoorlie.
arrick was on a mission to depart onside with the deal that will likely
BAustralia well before its high-profile catapult Saracen into the ASX100.
merger with African miner Randgold Re- When the Super Pit transaction
sources 12 months ago but with addition- is complete, Saracen’s net debt
al world-class assets now its portfolio, the position will be $200 million, while
gold heavyweight’s portfolio clean-up has group production guidance (pro-
accelerated. forma) for FY2020 is estimated
Despite having a spread of assets in to be 605,000oz gold at AISC of
high-risk jurisdictions – including Demo- $1,220/oz.
cratic Republic of Congo and Papua New The Super Pit – operated by
Guinea – Barrick deemed its Australian Newmont under the Kalgoorlie
interests non-core several years ago. The Consolidated Gold Mines incorpo-
locals – mainly Northern Star Resources rated JV – has a total 190mt of ore
Ltd – have profited from the decision, re- @ 1.2 g/t gold for 7.3 moz reserve
alising the value inherent in assets such (43% already stockpiled and min-
as Plutonic, East Kundana and Kanowna ing costs sunk) sustainable for 15
Northern Star is now the darling of the Processing capacity is about 13
Australian gold sector, boasting a mar- mtpa, with the operation achieving
ket cap of over $6 billion and producing an average 662,000 ozpa gold at
800,000-900,000 ozpa at an AISC of an AISC of $1,098/oz over the past Raleigh Finlayson
$1,200-$1,300/oz (FY2020 guidance). five years on a 100% basis.
Northern Star used its success at the The May 2018 East Wall failure and a
Barrick castoffs as a springboard to further subsequent smaller failure in 2019 means we have had 25 years of combined [Su-
growth. Last year it incorporated a North production in FY2020 – Saracen has guid- per Pit] experience from people within our
American asset – Pogo in Alaska – into its ed 245,000oz for its 50% – are estimated business and have been through that busi-
portfolio and Saracen will now be aiming to be at the mine’s lowest levels for the ness. Talking to Tom [Palmer, Newmont
for similar transformation via the Super Pit past three decades. President] I think there is a really good
JV with Newmont Gold Corp. Production is expected to improve once alignment of what the path looks like mov-
“Having this asset right in our backyard, remediation is completed over the next ing forward with this asset.
adjacent to our existing assets means 3.5 years, which will enable Golden Pike “I think having both JV partners aligned
that we have complete focus in that same North to be mined as well as improved ac- is going to help the operating team enor-
region; we can literally land in Kalgoorlie cess to Morrison and Southern Extension mously and help to unlock that potential.
and within three days see all of our assets laybacks via Y-ramp. We are really excited about sharing some
– 600,000oz gold – that’s absolutely our Finlayson said the company was pre- of the views that we have seen during the
priority and hence why we did this deal,” pared for lower production and higher due diligence and we are working really
Saracen managing director Raleigh Fin- costs in the next 3-4 years, as the path closely with Newmont to extract that full
layson said. to extracting full value from the Super Pit value,” he said.
Saracen’s preference for domestic M&A starts under the Saracen/Newmont com- Prior to accessing proper technical data
activity cost a total $1.2 billion, to be fund- bination. in September, Finlayson said the opportu-
ed via an institutional placement of $369 “The long-term sustainable Q2 quartile nities, including to the south, were not fully
million and a 1 for 5.75 pro-rata acceler- type costs generate significant cash flows grasped by the company, but now the pic-
ated non-renounceable entitlement offer over what we believe [will be] many dec- ture was much clearer.
of $427 million at a price of $2.95/share. ades to come. It is a proposition we are He said the endowment per vertical me-
Senior secured facilities totalling $500 very comfortable to take on, particularly on tre of 45,000oz gold (100% basis) at the
million – $450 million term facility, three- the basis of how strong our existing Caro- Super Pit was “off the chart”.
year $45 million revolving corporate facil- sue Dam and Thunderbox operations are “If you put that into perspective of what
ity and a $5 million contingent instrument over the next four-year period drawing in we thought were large endowments for us
facility – gives Saracen the capacity to buy significant cash flows on the basis of the at Carosue Dam and Thunderbox, both
Barrick’s half of the Super Pit. investment we put into that asset,” Finlay- less than 20,000oz per vertical metre…,”
There was strong support for the place- son said. Finlayson said.
ment and institutional component of the “We’ve had the benefit where KCGM “This is something that really grabbed
entitlement offer indicating the market was has been in that structure for 30 years and our attention through the DD phase and
Page 6 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
again this is something that anyone in The underground
the market has not really seen for the last potential at the Su-
three decades because it has been non- per Pit hasn’t been
core for both Barrick and Newmont.” properly modelled by
As the operator, Newmont is expected Saracen, however,
to provide an updated production outlook Finlayson indicated
for the Super Pit in December, with Finlay- the success derived
son expecting most of the growth to come from its existing as-
through resources. sets could be a key
“They will continue to do more work element the compa-
modifying that and getting it into reserve ny brings to KCGM.
probably in the next 12 months,” Finlayson “We have also
said. spoken about the
In 2018, there was a significant step- Fimiston extension
change in resource growth with 4.4 moz, areas, which are rel-
excluding the 7,3 moz reserve, which ative to what we have
came on the back of an exploration budget done in our efforts
ramp-up dedicated to surface drilling at back in 2014 to take Mark Bristow
Fimiston South. Karari underground
Twelve months ago, KCGM reported at 2.7 g/t gold. Most of the market wasn’t Meanwhile, Barrick will pocket $US750
that resource ounces were being discov- sure if we could pull that off and that has million from the sale to Saracen, which will
ered at $10/oz in the Fimiston South area. been a fantastic asset for us. We are do- go some way to achieving its ambitions for
“We are looking forward to the numbers ing the same at Whirling Dervish and that 2020.
in the report on the back of the significant is kicking some goals and the Thunderbox “The sale of our non-operating interest in
drilling done in the last 12 months and we underground has kicked off really well at KCGM represents the first step in our plan
are excited about what that brings,” Finlay- 2 g/t; this stands out as a massive oppor- to realise in excess of $US1.5 billion from
son said. tunity when we look at it from a technical the disposal of non-core assets by the end
“The Fimiston South area; we 100% perspective,” Finlayson said. of next year . While this iconic gold
agree on drilling out that system and they The Super Pit transaction is expected mine has been a valuable contributor to
have been hitting that pretty hard in the to be completed in Q4 and will give Sara- Barrick over the years, the asset does not
last 12 months. We endorse the spend cen three mines within a 300km radius in fit with our strategy of operating mines that
in that area and a future cutback that will Western Australia’s Goldfields and estab- we own. The sale allows us to further fo-
get converted into reserves in the coming lish it as one of Australia’s largest produc- cus our portfolio on core operations,” Bar-
years also in the Fimiston area.” ers with some 7 moz in reserves. rick president Mark Bristow said.
– Mark Andrews
In-line with its existing hedging policy – one year of production hedged over three years – Saracen will enter into additional gold hedges to
underpin the repayment of debt incurred to purchase 50% of the Super Pit
Page 8 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
C Australian PayDirt Edition A4 5mm bleed Op1.pdf 1 06 Nov 2019 22:16:26
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 9
Fenix gets a high grade
unior activity in the iron ore space als projects have been far more appeal- many others than can produce ore of
Jhas virtually been non-existent, but ing but that could create a point differ- that quality.”
that has not shuttered the belief Fenix ence for Fenix as it looks to advance the A feasibility study published on Iron
Resources Ltd has in potentially bring- Iron Ridge project in Western Australia’s Ridge in November indicated potential
ing the Iron Ridge project into production Mid West. for Fenix to start ore sales four months
next year. “It is not a huge deposit, but it is high from receiving project approvals, subject
Since the iron ore price bottomed in grade – and grade is king – and we to locking in an initial $11.9 million in cap-
late November 2015, essentially squeez- should be able to get a decent revenue ital costs, over half of which is payable
ing out smaller companies and explor- rate and shouldn’t have to worry about on a pre-production basis and the rest
ers, the market has been dominated by discounts and those sorts of things that after the first shipment.
the blue-chip miners. were topical last year,” Fenix managing Brierley hoped to have project approv-
Iron ore spot prices have appreciated director Rob Brierley told Paydirt. als in hand in early 2020, with the start
significantly from the $US39/t experi- “The premiums for high-grade iron ore of forecast production of 1.25 mtpa over
6.5 years shortly after.
The feasibility study was based on a
62% Fe Index price of $US78/dmt and
exchange rate of $US0.70 compared
to the $US85.10/dmt and $US0.69 ex-
change rate spot figures when the study
was released. C1 cash operating costs
were estimated at $US76.86/dmt, with
average annual EBITDA of $16.4 million,
pre-tax IRR 58.9% and NPV of $54.3
“The beauty about this deposit is it
starts at surface. It sits on a granted
mining lease, so there are no permitting
problems on the mining side of things.
The permitting is all related to the infra-
structure; the haul roads and the roads
to get it out to the public road,” Brierley
“We’re still hopeful of project approv-
als coming in early next year and four
months from that we’ll be in production,
which is pretty good. We should have a
very short ramp-up period as well be-
cause our mine schedule shows us that
there is no shortage of ore at surface,
we are straight into it with no pre-strip to
Infrastructure established in the days
of Murchison Metals and Crossland Re-
sources to accompany their Jack Hill
There is capacity at Geraldton Port, about 350km to the south-west of Iron Ridge, for ore operation is already in place for Fenix to
supplied by Fenix piggyback from.
“We are not recreating the wheel or
enced in 2015, however, a spate of in- have disappeared recently because of trailblazing road train transport from
terest from the junior sector has been the shortage of iron ore, but on a full cy- where we are to Geraldton Port as it
lacking. cle side of things, if you have got quality was done for five or six years during the
At the same time, the majors have then you’ll never have a problem selling noughties and up until, I think, December
committed to mine expansions and new your ore. The best attribute of our project 2011. Of course, the Geraldton Port has
projects to replace exhausted deposits, is the grade, the average grade of the a dedicated iron ore ship loader which
while also effectively implementing au- deposit is a little under 64% iron and that is currently used for a small fraction of
tomated practices to ensure high margin really puts us in territory where many its capacity, there is some real benefit
operations across their iron ore busi- other people can’t compete against. there,” Brierley said.
nesses. There is the Carajas ore in Brazil and – Mark Andrews
For the juniors, gold and battery miner- Koolan Island up in far north WA but not
Page 10 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
2020 SAVE THE DATE
4 - 5 March – Pan Pacific Perth
Paydirt’s Battery Minerals Conference will once again showcase the junior mining companies with the
essential ingredients driving Industry 4.0. It has been estimated that the lithium value chain alone could be a $1.3
trillion per annum industry by 2025, while it is expected that demand for graphite, cobalt, nickel, copper, manganese,
tin, vanadium and rare earths will surge exponentially in the next decade. Investors are awake to the opportunities in
the battery minerals sector and remain active in their pursuit of the next best stock to watch.
Following the Federal Government’s pledge of $25 million for a six-year co-operative research centre initiative to
examine future battery industries in Western Australia, Australian companies are poised to be major players in the
battery minerals sector. Kwinana in WA is potentially the only other (global) viable alternative to China for the
downstream processing of battery chemicals; giving Australia a natural advantage in fulfilling growing demand for
ethical supply, sustainability, traceability and quality standards.
Paydirt’s 2020 Battery Minerals Conference will afford investors the opportunity to build on their
understanding of this most captivating sector, which serves as a melting pot for the battery minerals sector,
involving in-depth discussions on market outlooks, project developments, and the future of the global battery
industry and technology.
WHO SHOULD ATTEND?
Upstream – Exploration End Users: EV, Batteries, Electronics,
Mining: Executives, Consultants, Energy Storage, Metal Refiners
Investors, Financiers, Bankers, Research and Development
Brokers, Analysts, Fund Managers Industry Associations
Government Service Providers
Mining Services and Suppliers Regulation/Inspection
To present, exhibit or attend as a delegate please contact Namukale Nakazwe
on (+61) 8 9321 0355 or email [email protected]
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 11
Carawine on the radar
Carawine has signed JVs with Rio Tinto
t has been a barnstorming end to 2019 and base metals tenements in the east- and Fortescue in Western Australia’s
Ifor Carawine Resources Ltd. ern Paterson province. Paterson province
The company managed to land two Fortescue can earn up to 75%. By
major coups within weeks of each other spending $1.5 million within three years process and we will do some concerted
with Rio Tinto Ltd and Fortescue Metals it will gain a 51% interest and a further and well thought out exploration and it is
Group Ltd over tenure in Western Aus- 24% share of the project will require an probably going to take one or two years
tralia’s Paterson province. additional $4.5 million spent on explora- to get to that next discovery,” Boyd said.
While the heavy lifting will be done by tion within four years. “It would take a particular type of in-
Rio Tinto at Red Dog and Baton, Fortes- Meanwhile, to participate at Red Dog vestor up there to support a junior but
cue will do likewise at Lamil Hills, Trot- and Baton, Rio Tinto will pay $200,000 there aren’t many juniors active in that
man South and Sunday. upfront and subscribe for $300,000 of area. Rio Tinto, Newcrest, Antipa, Sipa,
Carawine still retains 100% exposure Carawine shares. Thereafter, Rio Tinto’s Encounter [Resources NL] is in JV with
to some ground in the region and also exploration arm will be required to spend Independence [Group NL]; it has be-
has tenure under application in its own $1 million on exploration and complete at come a place for the big companies.”
right. least 2,000m of drilling within the first two Boyd said Carawine had no fear about
“Our culture/DNA is rooted to explora- years. drilling holes anywhere and was about to
tion, so we can’t help but pick up ground Rio Tinto can earn a 70% interest by get busy in the Paterson before Rio Tinto
that we like and we think is in good prov- spending at least $5.5 million within six entered the fray.
inces. That is why we picked up the Pat- years and can further its stake to 80% by On Carawine’s budget, drilling a few
erson ground well before Havieron took sole funding to a discovery milestone, or targets this year and a couple next year
off,” Carawine managing director David completion of a scoping-level study on on its Paterson tenements was realistic,
Boyd told Paydirt. any discovery. however, the company can enjoy quicker
“As those tenements started to get “Clearly it is becoming a domain for exposure to the opportunities in the prov-
granted and as we started to do some guys with deep pockets and sustained ince thanks to its partnerships.
groundwork on them with geophysical effort,” Boyd said of the Paterson prov- “The money that we were going to drill
surveys to generate targets, you can ince. at Baton just a first-pass at three of those
then promote the prospectivity. In that “There aren’t going to be any quick targets obviously now stays in the bank
process you gather the attention of the wins out there, it is going to take a sus- and means we can chase the Jamieson
others that are exploring and both Rio tained and thorough exploration effort to targets a bit harder, particularly the deep
Tinto and Fortescue came to us, we get the next discovery,” Boyd said. porphyry targets that have crystallised
didn’t seek them out.” Havieron (Greatland Gold plc/New- over the last couple of months,” Boyd
The interest shown by Rio Tinto and crest Mining Ltd JV) and Winu (Rio Tinto) said.
Fortescue is recognition of the propsec- are the kind of “overnight successes five “That probably has something to do
tivity of the ground as demonstrated by years in the making” that have sparked with our lift in share price and recognised
Carawine. mass interest in the Paterson province value. I reckon we still have a long way to
“It wasn’t a defined strategy or out- and Boyd doesn’t expect the next discov- go in terms of value, but it just means that
come that we were aiming for [JVs with ery to come any quicker. we can have a bit more freedom when
majors] but it has evolved and we are Carawine is prepared to be patient, but we go and attack our Jamieson targets
happy; we think they are good, sensible will juniors be supported in their endeav- and we don’t have to hang off the result
deals for Carawine,” Boyd said. ours in the Paterson? Boyd believes so, of every hole. In the end I think we have a
An upfront cash payment of $125,000 given Sipa Resources Ltd’s approach better chance of being successful.”
and minimum spend of $500,000 in the and the longstanding presence of Antipa Carawine had planned to start exten-
first 18 months has been committed by Minerals Ltd in the area. sion drilling at Hill 800, part of the Jamie-
Fortescue at Carawine’s copper, gold “Our targets are at the start of the son project in Victoria, at the time of
Page 12 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Reward Minerals Ltd has entered a farm-in/JV agreement with Fortescue Metals
Group Ltd in the McKay Range, north-west Western Australia.
The McKay Range arrangement is over tenements E45/3285 and E45/4090,
immediately north of Lake Disappointment.
Reward will retain all rights to evaporite minerals such as potassium and
magnesium on the tenements.
In addition, Reward’s rights to the Lake Disappointment SoP project’s
infrastructure requirements are protected under the agreement. Fortescue, which
will be the operator of the farm-in and JV, can earn an 80% JV interest in the
tenements by spending $2 million over four years, with a minimum expenditure
obligation of $400,000.
Once the $2 million expenditure threshold has been met, a JV will be established
after which both parties will either contribute to expenditure in accordance with
their respective JV interests or dilute. If a party’s JV interest falls below 5%, that
party’s JV interest will be converted to a 1% NSR to be paid over the first five years
of commercial production.
In addition to retaining the potash rights over the tenements, Reward has also
been granted the potash rights on two Fortescue tenements in the area, E45/5360
and E45/5361 for a nominal sum.
Carawine remains fully exposed to ground in
the Paterson outside its JV areas
Extension drilling at Hill 800,
Victoria, was planned for Q4
print, as well as conduct porphyry target from 62m down-hole and 12m @ 14.3%, Boyd said there was generally a “tem-
definition activities in Q4. 2.26 g/t gold and 145 g/t silver and 2m @ pered optimism” in the market and felt in-
Following that, drilling of porphyry tar- 40%, 3 g/t gold and 517 g/t silver), which vestors were starting to loosen a little bit.
gets in Q1 was to be followed by drilling Boyd said was a timely reminder of the “It hasn’t taken off, but it is better,” Boyd
at the Rhyolite Creek prospect in Q2. value that can be generated from explo- said of the conditions for junior compa-
The mineralisation models at Rhyolite ration. nies in the market.
Creek garnered from results of 1.4m @ Stavely’s share price broke through Carawine was about to close the sec-
15.6% zinc, 7.4 g/t gold, 113 g/t silver the $1/share barrier on the back of suc- ond tranche of a $3 million capital rais-
from 223m representing the VMS sea- cess at Thursday’s Gossan. ing at the time of print and with cash due
floor position and 37m @ 0.44 g/t gold, “Stavely reminds people that you are from Rio Tinto and Fortescue, the com-
0.2% copper, 44 g/t silver from 67.5m re- only one discovery away from a big lift in pany sits pretty entering 2020.
flects large, low-grade, near surface por- value,” Boyd said. “At the end of the second tranche we
phyry/epithermal system potential. Carawine itself has experienced sig- will have 77 million shares on issue. We
Stavely Minerals Ltd has generated nificant share price movement in recent are still a young company with a tight reg-
fair interest in exploration in Victoria in times, with Boyd happy to be trading at ister and it doesn’t take much to move the
late 2019 at Thursday’s Gossan (32m @ 26c/share (mid-November) compared to dial for us,” Boyd said.
5.88% copper, 1 g/t gold and 58 g/t silver 9c/share mid-2019.
– Mark Andrews
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 13
ndependence Group NL (IGO) has dou-
Ibled down on its commitment to nickel,
launching an unsolicited takeover offer for
Panoramic Resources Ltd last month. Peter Bradford (IGO), Dan Lougher (Western Areas), Peter Harold (Panoramic) and David
IGO currently produces more than Southam (Mincor) at the Australian Nickel Conference in October
30,000 tpa nickel from its Nova nickel mine
in Western Australia but, having sold its derground. Remediation work is expected “The company advises that it has estab-
Long nickel mine to Mincor Resources NL to take four months, leading Panoramic to lished a data room and will provide a num-
earlier this year, the company is eager to consider further equity raisings in an effort ber of parties, including IGO, with informa-
raise group production again and take ad- to shore up its cash position. tion to conduct due diligence, to allow them
vantage of the gathering EV trend. IGO’s move appears likely to have been the opportunity to put forward alternative
“This bid is strongly aligned to IGO’s influenced by Panoramic’s operational proposals which have the potential to max-
strategy of clean energy metals,” IGO man- problems and Bradford remains convinced imise value for Panoramic shareholders,”
aging director Peter Bradford said. by the long-term outlook for the project. Rajasooriar said.
IGO has offered one of its shares for “They haven’t achieved what they ex- In response, IGO said it expected to start
every 13 Panoramic shares, valuing its tar- pected but that shouldn’t be a guide to immediately due diligence and complete
get at 47.6c/share or $312 million. The offer the long-term performance of Savannah the process before Christmas.
represents a 42% premium on Panoramic’s North,” Bradford said. “[I think] part of the Panoramic major shareholder Zeta Re-
last closing price and a 52% premium on its lack of engagement was around wanting to sources (32%) said it did not intend to ac-
two-month VWAP. progress development at Savannah North. cept the IGO offer, labelling it “opportunis-
The Panoramic board responded to the But ramp-up has taken considerable time tic”.
hostile offer immediately, urging sharehold- so instead of waiting we engaged now and “Independence Group has launched
ers to “take no action” on what it described hope to get shareholders to encourage the its takeover offer for Panoramic at a time
as the “unsolicited, highly conditional” offer. [Panoramic] board.” when the proper value for the full ramp-up
The prize IGO is chasing is Panoramic’s Bradford said IGO had the financial clout of mining at Savannah has not yet been
Savannah project in WA’s Kimberley re- and technical capability to ensure Savan- achieved, and yet the capital funds needed
gion. Panoramic restarted operations at nah was executed correctly. to complete the ramp-up have only just
the mine earlier this year, having previously “We’ve built a highly capable team of been invested in Panoramic,” Zeta said in
mothballed it during nickel’s downturn. The nickel sulphide experts we could deploy at statement.
restart was driven by its assessment of the Savannah,” he said. “We have the financial “Independence Group is using its rela-
newly defined Savannah North orebody capacity to unlock value from Savannah tively inflated share price to sell its own
which boasts a 5.97mt @ 1.49% nickel and the regional exploration. We have ex- shares to purchase the shares of Panoram-
reserve in comparison to 1.68mt @ 1.18% ploration expertise to apply to Savannah ic at a relatively deflated price.”
nickel remaining in the main Savannah ore- and the Kimberley. We also have track re- Bradford said IGO’s offer would allow
body. cord of underground mining, a proven re- Panoramic shareholders to participate in
Panoramic was expected to reach the cent track record of development and the “the upside to the future nickel market”.
Savannah North orebody before the end balance sheet will ensure the operation is IGO has set a minimum acceptance for
of the calendar year but ongoing ground is- properly capitalised.” its offer of 50.1%. IGO said the offer would
sues in the main Savannah orebody have In the company’s last market response remain open for at least the minimum statu-
slowed progress throughout 2019. Mining before Paydirt went to print, new Pano- tory period of one month.
rates were down in the September quarter ramic managing director Victor Rajasooriar – Dominic Piper
and the month of October after mining-re- said the company was open to “alternative
lated seismic issues caused disruption un- proposals”.
Mincor Resources NL has rattled the tin for $35 million “The capital raising effectively puts us ahead of the curve in
as its bid to restart nickel operations in Kambalda gains terms of the normal evolution of a resource developer as we
momentum. progress from DFS through to production,” Mincor managing
Proceeds from the raising – comprised of a $30 million director David Southam said.
placement at 60c and a $5 million SPP to eligible “Mincor is planning to be in operation for many years and this
shareholders – will be used to begin early capital works at important upfront investment in our project pipeline will help
Cassini and Long-Durkin ahead of the expected completion us to achieve that objective, creating a platform to continue
of a DFS in the March quarter. growing our ore reserves well into the future.”
Existing shareholders Independence Group NL ($2 million) Planned pre-development activities at Cassini include the
and Andrew Forrest’s Squadron Resources Pty Ltd ($7.2 construction of a box-cut, site infrastructure and the start of
million) both contributed to the raising, lifting their respective a decline.
holdings in Mincor to 4.41% and 6.17%. Mincor also plans to set aside about $8 million for exploration
On the back of the raising, Mincor expects to have a cash work – split between brownfields resource expansion
position of about $55 million. projects and emerging greenfields opportunities – in 2020.
Page 14 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
6 October 2020 SAVE THE DATE
Perth, Western Australia
THE BEST NICKEL STORIES ALL IN ONE DAY
To present, exhibit or attend as a delegate please contact Christine Oelschlaeger
on (+61) 8 9321 0355 or email [email protected]
Renascor head of the class
enascor Resources Ltd managing di- Despite Christensen’s optimism on
Rrector David Christensen is not the least graphite, Renascor still chose to quote
bit fazed by the lack of market appetite for a conservative basket price of $1,149/t
new graphite stories. ($US804/t) in the Siviour DFS, compared
Speaking to Paydirt following the release to the $1,470/t ($US1,029/t) referenced in
of a robust DFS on his company’s Siviour previous studies.
project in South Australia, Christensen is It mattered little as the DFS reaffirmed
upbeat about the medium and longer term Siviour’s forecast operating costs of $508/t
outlooks for graphite despite prices sliding ($US355/t) were among the lowest of any
over recent months. graphite project globally.
That pullback in pricing has been widely “We took a very conservative position on
attributed to a combination of slower than graphite pricing, which is in contrast to what
anticipated demand for battery-grade most other existing companies have done
graphite and the beleaguered Syrah Re- where they can be a bit more bullish on
sources Ltd flooding the market with large pricing, but we tried to be a bit more realistic
volumes of product from its Balama mine in in recognition of what has happened in the
Mozambique. market recently,” Christensen said.
A depressed market is a far from ideal “If demand starts to increase and graph-
situation for Christensen as he enters 2020 ite changes from an industrial mineral to
looking to secure offtake and project fi- a battery mineral – it hasn’t happened yet
nance for Siviour, with a view towards start- but it looks like it’s starting to happen – we
ing mine construction within the next 12 want to be the first cab off the rank in getting
months. there and that’s going to be incumbent on
However, while Christensen acknowl- us keeping our costs quite low.
edges graphite is “a bit disfavoured” at the “We think if we can start off next to the
moment, he does not expect the malaise to low part of the curve, hopefully it will allow
last. us to go to the head of the class amongst David Christensen
“The one thing I would say about the the developers.” is selectively choose the best-grade mate-
graphite space is I think the trade winds are The DFS also confirmed a staged de- rial to be running through the plant in the
at our back and they’re now blowing in the velopment approach was the optimal way first 10 years and push our opex down to
right direction,” he said. “We’ve seen things for Renascor to manage the construction the lowest quartile.”
really push back a bit, perhaps largely be- capex while keeping operating costs low Up to 60% of the start-up capex is expect-
cause of what’s happened with Syrah, but from the opening day of production. ed to qualify for in-principle support from
I think the medium term looks rather good. According to the DFS, Renascor will Dutch export credit agency Atradius. This is
“Around 200,000 tpa of graphite is going need $114 million ($US79 million) to fund subject to Renascor finalising the procure-
into that [battery] market right now, but by an initial 80,000 tpa operation, with cash ment strategy in the upcoming FEED phase
2025 that’s up over 500,000 tpa, by 2028 flow from the first four years of production with likely EPC contractor Royal IHC.
it goes up over 1 mtpa and by 2030 it’s up to underpin the $77 million ($US54 million) Renascor plans to submit PEPR environ-
over 8 mtpa. It’s really hard to argue with expansion to 144,000 tpa. mental application before year’s end after
those numbers.” Key financial returns over the life-of-mine which the company’s attention will be firmly
(40 years) include a focused on securing offtake.
post-tax NPV of $388
“In order to get the finance done, it’s now
Siviour graphite DFS million ($US271 mil- really about getting offtake,” Christensen
lion), IRR of 33% and
Production: 80,000 tpa (years 1-4) average EBITDA of said. “All of the new demand is in the lithium
ion battery space and we think we have the
144,000 tpa (years 5-10) $83 million ($US58 right material for that market. And we’d re-
105,000 tpa (LOM) million). ally like to move into that sector because it’s
Capex: $US79 million ($114 million) “We have this gi- such a high growth area.”
$US54 million ($77 million) gantic reserve of Renascor is also advancing a down-
Opex: $US345/t (years 1-4) over 3.6mt contained stream strategy for Siviour, having complet-
$US325/t (years 5-10) graphite, but we’ll ed a PFS on production of low-cost spheri-
only mine 80,000 tpa
$US355/t (LOM) initially, so what that cal graphite earlier in 2019.
Life of mine: 40 years allows us to do is “If we have a low-cost feedstock, then we
Average feed grade: 10.7% TGC (years 1-4) get great economics ought to be able to produce low-cost spher-
9.1% TGC (years 5-10) on the mining side,” ical,” Christensen said. “We also have the
7.4% TGC (LOM) Christensen said. added advantage of we’re in a good loca-
tion. We don’t have to take our material and
NPV (after tax): $US271 million ($388 million) “We’re actually go- transport it to a safer country, we can do it
IRR: 33% ing to be stockpiling right here in South Australia.”
Payback: 3.7 years a lot of material and
what it allows us to do – Michael Washbourne
Page 16 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
1 - 2 April 2020 1 - 2 April 2020 BOOK TODAY!
SOUTH AUSTRALIA’S PREMIER MINING FORUM
Sponsorship and exhibition
opportunities now available
For all enquiries please contact
Christine Oelschlaeger on (+61) 8 9321 0355 or email [email protected]
Green pitch for first test
ustralia’s federal opposition leader An- WA has led the charge in identifying in WA, however the conundrum of servic-
Athony Albanese launched Labor’s run opportunities to take its abundant endow- ing the insatiable demand for minerals re-
into the 2022 election in the country’s min- ment of raw battery materials from pit to mains.
ing capital, Perth. product on home soil, and the State’s lithi- STEM courses related to the mining
Albanese was accompanied by no less um sector has been afforded some royalty sector are failing to attract the requisite
than 20 shadow cabinet members, includ- relief recently. interest among students, leaving industry
ing leader of the opposition in the senate The WA Government plans to introduce short on qualified talent.
Senator Penny Wong, while West Austral- a 5% feedstock royalty rate for lithium hy- Albanese said that by 2024, an addi-
ian Premier Hon Mark McGowan was in droxide and lithium carbonate where those tional 21,000 onsite employees would be
attendance and Mineral Resources Ltd are the first products sold by a lithium pro- required in Australia’s mining sector and
(MinRes) general manager external affairs ducer and the feedstock is spodumene with competition rising for personnel from
Gary Gray was shotgun on the luncheon concentrate. creative industries – architecture, design,
table next to Albanese. Meanwhile, in April, WA was selected software, digital content, advertising and
In the lead up to what was billed as La- by the Federal Government to host a na- marketing, publishing, fila, television and
bor’s first policy test since the surprising tional consortium to position Australia as a radio – the resources sector faced another
election defeat in May 2019, Albanese’s globally significant manufacturer and sup- challenge.
visit to Perth included a tour of MinRes’s plier of batteries. “In Australia, these [creative] industries
facilities in Kwinana alongside local MP The national battery research hub – Fu- are growing at nearly twice the rate of
David King and Federal shadow minister ture Battery Industries Cooperative Re- Australian employment in the workforce,”
for resources Matt Keogh. search Centre – attracted $135 million in Albanese said.
“I saw firsthand this exciting growth Federal Government funding, as Australia Albanese used his appearance at the
industry,” Albanese said in front of a re- looks to boost its capacity in processing, Committee for Economic Development of
sources-heavy crowd at WA’s State Re- manufacturing and deployment of batter- Australia (CEDA) forum in Perth to launch
ception Centre in Kings Park. ies, an industry which could be worth $2.5 Labor’s new jobs policy
billion to the coun- which the party believes
try’s economy over will address industry con-
the next 15 years. cerns and lessen the reli-
WA already has ance on skilled temporary
seven lithium mines migration visas. Albanese
and two process- said the Jobs and Skills
ing plants operat- Australia agency would be
ing (with feasibility established on Labor win-
studies being con- ning government in 2022.
ducted on a third) Albanese hoped the
and Albanese hopes agency would replicate
the whole country’s the success of the Labor-
healthy reserves of modelled Infrastructure
lithium, copper, sil- Australia initiative in 2008.
ver and rare earths Jobs and Skills Australia
will spur the clean would identify prevailing
energy economies skills shortages and future
of the 21st century. employment trends as
“Right here in WA Australia shifted towards a clean energy
we are seeing the under a Labor Government, according to
emergence of an Albanese.
industry and an up- “That can help our major trading part-
stream value to a re- ners such as Japan or South Korea make
source creating new a switch to hydrogen. This goal is also
Anthony Albanese’s first major policy speech was made in Perth in
front of a resources-heavy crowd which included representatives processing and man- consistent with the ambitions that were set
from BHP Ltd, Rio Tinto Ltd, Chevron, Woodside Petroleum Ltd and ufacturing industries, out in the Asian Century whitepaper,” Al-
Newmont Mining Corp creating regional and banese said.
metropolitan jobs as “Experts tell us that achieving 50% re-
electric vehicles and newable energy at home while building
“The emerging lithium industry is a liv- energy storage systems and smart devic- a hydrogen export industry would create
ing example of how real world progress es become more mainstream,” Albanese 87,000 good, well-paid jobs. Chief scientist
economics happens; business, unions, said. Alan Finkel says that a hydrogen export in-
researchers and Government coming to- “The global demand for lithium batteries dustry in just 10 years could be worth $1.7
gether to deliver an aspiration bigger than will explode and WA, under Mark McGow- billion. Working towards a low carbon fu-
just digging stuff out of the ground and an’s leadership, is ready.” ture provides the opportunity to revitalise
letting the value-adding happen offshore The battery minerals sector is expected the Australian manufacturing sector; op-
before it is imported back in.” to drive another mining boom, particularly portunities that are all about jobs.”
Page 18 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Australia’s energy transmission system has been beefed up with Prime Minister Scott Morrison pledging
$1 billion towards a new Grid Reliability Fund (GRF). The GRF will support government investment in new
energy generation, storage and transmission infrastructure, including eligible projects shortlisted under the
Underwriting New Generation Investments (UNGI) programme. The Clean Energy Finance Corporation (CEFC)
will administer the $1 billion which is in addition to its existing $10 billion capital allocation. Since inception
in 2013, CEFC investments have helped court more than $24 billion in private sector funding, including $6.3
billion in 2018/19.
“This additional capital will work alongside our continuing investments in solar, wind, hydro, bio-energy and
other technologies in the renewable energy sector,” CEFC chief executive Ian Learmonth said.
“We also have a strong focus on addressing some of Australia’s toughest emissions challenges across
agriculture, infrastructure, property, transport and waste.”
Albanese acknowledged that climate cheapest renewable energy resources. Additionally, copper sources will be well
change was real and said the current We have the highest average solar radia- sought after to complement growth on the
Australian Government should be embar- tion per square metre of any continent on electrical vehicle market worldwide.
rassed that emissions were tipped to rise the planet. We don’t need nuclear power “Global copper production in the next 25
every year until 2030. when every day we can harness the power years will be larger than all the copper pro-
With a major programme of decarboni- of the greatest nuclear reactor in the so- duction that has been mined anywhere in
sation happening around the world, Alba- lar system. It is called the sun and we also human history,” Albanese said.
nese believes Australia can continue to have some of the best wind and light re- “Simply put, the road to a low carbon fu-
be an energy export superpower amid his sources and some of the best engineers ture can be paved with literally hundreds
plan to deliver a new manufacturing boom and scientists in the world breaking down of thousands of clean energy jobs as well
in the country. the barriers of what is possible,” he said. as traditional jobs, including coal mining.”
“Australia can be the land of cheap and Traditional industries, such as coal min- The metallurgical coal sector, important
endless energy; energy that could power ing, were also to benefit from a low carbon for the steel manufacturing industry, ap-
generations of metal manufacturing and future with an estimated 15.5mt of Austral- pears to have the support of Labor, how-
other energy intensive manufacturing in- ian-produced coking coal potentially re- ever, Albanese was less committal to the
dustries,” Albanese said. quired to build wind turbines – about 200t thermal sector, saying that market dynam-
“In the century before us, the nations of metallurgical coal is needed to build one ics would determine its future.
that will transform into manufacturing pow- turbine – to fulfil global power generated
erhouses are those that can harness the from such instruments. – Mark Andrews
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 19
NEWS Stuart Mathews at Granny Smith
Gold Fields thrives
old Fields Ltd appears to be rooted to expected sometime in 2020. Studies have Fields will be at the table discussing any big
Gcurrent listings on the JSE and NYSE indicated life-of-mine production from the deals and if it maintains a discovery rate of
(secondary) despite the bulk of the compa- $US834 million (upfront capex) Salares $82/oz its strategy will continue to speak for
ny’s cash flow and production coming from Norte project to be in the order of 350,000oz itself.
its Australia operations, where it has thrived at AIC of $US545/oz. “M&A is never off the table, but it would be
for the past 17 years. “Salares Norte will become a mine, abso- opportunistic and it would have to be some-
“[Currently], 43% of gold production and lutely it will become a mine and it will move thing that would support our existing opera-
42% of cash flow comes from Australia and Gold Fields into a new jurisdiction [Chile],” tions; there is nothing really out there right
shortly that will be 50% [group production] Mathews said. now that is begging us to just go and grab it,”
and heading towards 60% very, very quickly It will be a satisfying moment for Gold Mathews said.
in the next year or two,” Gold Fields Australa- Fields when it starts pouring gold from Sala- “Right now, because of the gold price, I
sia executive vice president Stuart Mathews res Norte, a greenfields discovery made in would say M&A is going to be expensive –
said recently. 2011, and no doubt provide more impetus for $US250-350/oz maybe even north of that
“In the region, in the last 6-7 years we have the company to stay on the course of explo- – is what you are going to have to pay. We
produced $1.7 billion free cash flow; that is a ration. would never discount additional M&A, but
massive contribution of cash in such a small In Australia alone, prior to 2015 Gold at the moment our hands are full with our
time. We have taken it to another level in the Fields has spent about $834 million on ex- own tenements because of the foundation
last few years and that is down to the people ploration over the years, which it realised just we laid in the first two years of that elevated
on the ground that actually strive to deliver wasn’t enough given its WA assets had 3-5 exploration strategy which has really moved
for us as a company.” year mine lives in front of them at the time. the dial.
The performance from the likes of St Ives, Therefore, it injected a programme to “In year two we had a bit of smoke, in year
Granny Smith and Agnew – all in Western spend $100 million in each of the preceding three we had prospects and genuine pros-
Australia – has contributed strongly to the five years since then to move the business, pects and now we have enough that we
company’s balance sheet and helped to with the decision being made at a similar have a fantastic pipeline in our exploration
bankroll its half of the $631 million Gruyere time it committed to spending $1.4 billion portfolio,” he said.
JV with Gold Road Resources Ltd. over eight years dedicated to mine life exten- In late November, Stage 1 of the Agnew
Gruyere – Australia’s newest greenfields sions at Damang. hybrid renewables project was completed
gold mine – should be close to a consistent “We have done that and can go forward and will be the first operation to combine
rate of production after first gold was poured now. We have dropped down a little to about wind and solar power generation at a mine
at the end of June and commercial produc- $80 million a year [exploration spend in Aus- site.
tion declared in October. tralia], but only because we divested one of Agnew has been commended for leading
CY2019 production forecasts from our assets [Darlot, WA] a couple of years the way in the transition to renewable power
Gruyere of 75,000-100,000oz gold has been ago. We have been pretty proactive in that for off-grid, remote mines, which is being de-
guided and on the back of strong gold prices, space and our mineral reserves have been livered by EDL.
Mathews expects that the project will take pretty steady, way ahead of our production Stage 1 consists an off-grid 23 MW power
Gold Fields’ “group cash to another level”. base,” Mathews said. station incorporating 16MW gas, 3MW die-
While fellow cashed-up gold majors and “We’ve got no aspirations to be the No.1 sel generation and 4MW photovoltaic solar.
mid-tiers have used their robust balance gold producer in the world, we’re currently Stage 2, which the Australian Renewable
sheets to execute a series of headline M&A seventh biggest and go up to eighth some- Energy Agency is supporting through its con-
plays over the past two years, Gold Fields times. It is hard enough to replace 1-2 mo- tribution of $13.5 million, is already underway
hasn’t flinched in that space amid a period of zpa gold let alone 10 mozpa.” and expected to be completed in 2020.
reinvestment in its own business. Full year 2019 group guidance for Gold Upon completion of Stage 2, with the addi-
The dividend from significant countercycli- Fields is 2.13-2.18 moz gold at AISC of tion of 18MW wind generation (five turbines),
cal investments made in its own portfolio has $US1,075-1,095/oz, with one of the key focal a 13MW battery and an advanced micro-
seen Gold Fields bring on Gruyere and its points for the company in the second half of grid control system, the project will provide
other new mine, the Damang expansion in 2019 being to pay down net debt of $US1.78 the mine with more than 50% renewable en-
Ghana, in a healthy gold environment. billion. ergy over the next 10 years.
Additionally, Salares Norte has also pro- Given the company’s debt position and – Mark Andrews
gressed to the stage of where an EIA is with two new mines in play, it is unlikely Gold
Furthermore, Australia and the US Government have formalised a controls on critical mineral distribution, and developing data analytics
partnership on developing both nations’ critical mineral assets, with capability to understand supply and demand scenarios for developing
a project agreement signed by Geoscience Australia and the United the critical minerals pipeline.
States Geological Survey (USGS).The signing paves the way for both Critical minerals are of course essential for the production of high-
nations to work more closely on understanding each country’s geo- tech, aerospace, defence, renewable energy, agricultural, automotive
logical resource potential for critical minerals, including rare earth ele- and telecommunications technologies, and are found in everyday
ments, and developing a pathway to supply arrangements. items such as lithium-ion batteries which power laptops and smart-
The new agreement focuses on joint critical mineral potential map- phones.
ping and quantitative mineral assessments, determining geological
Page 20 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Gold Fields moves the dial on energy
old Fields Ltd’s philosophy to “move had about 150MW gas installed across “And, also the affordability of that. The
Gthe dial on energy” started some its operations already. things that we can do to move the dial
five years ago with energy security as- Meanwhile, the company has 4MW so- because [energy is] about 25-30% of our
sessments on its business starting with a lar power installed, 7MW under construc- costs. It is a big thing and if we can move
feasibility study into 40MW solar PV in- tion and 40MW under study; 18MW wind it by 5%...,” he said.
stallation at South Deep and the commis- power under construction, 4MW battery In 2018, Gold Fields spend on energy
sioning of 128kW solar rooftop systems power installed and 8MW under con- was $US302 million, which accounted
at its corporate office in Johannesburg. struction and about 200,000 tpa CO2e for 22% of its operating costs.
The company is now at the point where from high impact supply projects. With the company’s mines getting
it relies on diesel for about 5% of its en- “…addressing the energy supply im- deeper, particularly in Australia, power
ergy requirements. pacts is important to do because I think if requirements have been addressed with
“Mainly diesel is used on our fleet and we don’t believe and we don’t do some- a renewable energy project with Aggreko
that is starting to change now as well,” thing to derisk our business people won’t in play at Granny Smith to build upon
Gold Fields Australasia executive vice want to work for us. And, people would solutions already in place while a 4MW
president Stuart Mathews said. not want to invest in us as well. Bankers solar plant containing 10,000 panels will
“We have been on quite an aggres- are getting asked questions as to where be established at Agnew.
sive journey in the last 4-5 years, start- they are investing their money and are The efforts to decarbonise the busi-
ing back in South Africa where there is getting quizzed on companies sustain- ness will see about 40,000 tpa CO2e
already some solar in place. We started ability profile,” Mathews said. reduced at Agnew and 9,500 tpa CO2e
looking at solar options around Agnew “Energy and climate change, technol- reduced at Granny Smith.
early, we also committed to an Agnew ogy…we need to de-risk our business “We are also aligning ourselves with
solution and also a solution on an ex- around that and also societal accept- the principles around ICMM, we are quite
panded power supply at Granny Smith ance, water stewardship. We worry about a prominent player in that space. We are
and now we are about to implement both the availability of energy, particularly in committed to the principles that came out
of those.” Australia, where we are out in the middle of the Paris pledge on climate; it is not
In a presentation given by Gold Fields of nowhere. Three of our sites are very just about governance it is about compa-
executive vice president, group head of isolated, we want reliability of that supply nies and business,” Mathews said.
carbon and energy, Tsakani Mthombeni, as well, and not to have to rely on third – Mark Andrews
at the 2019 Windaba, Cape Town, in Oc- parties or other people for our supply and
tober it was highlighted that the company our growing needs for energy.
Industry leaders have welcomed
the Australian Government’s
commitment to secure the future
of rare earth and critical mineral
projects, including those strategically
important to defence end-use, with
new financial options and a dedicated
project facilitation office within the
Department of Industry.
The Critical Minerals Facilitation
Office will be opened in January.
Minister for Defence Linda Reynolds
said critical minerals were essential
inputs to defence capability and a
wide range of advanced technology
“These measures will play a vital
role in supporting a secure, ethical
and sustainable supply of critical
minerals, and in doing that help
deliver the capability that keeps
Australians safe,” Reynolds said.
The Government will also commit
$4.5 million to fund critical minerals
research by key Commonwealth
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 21
The challenge facing
African mining policy
hile the rest of the world observes the Washington polls, the African resources
Wsector’s political watch will be focused much closer to home with 10 countries
holding presidential and parliamentary elections on the continent in 2020. Among
them are Ghana, Burkina Faso, Tanzania, Guinea and Cote d’Ivoire, jurisdictions
for which mining is a major contributor to GDP.
Mining is always a major campaign topic with politicians attempting to balance the
need for foreign investment with the demands of an expectant electorate. It is a
fraught act, one which has seen presidents toppled and economies flounder when
policy settings fail.
The last five years have seen high-profile examples of miners exiting jurisdictions
where stability is at risk. At the same time, other African countries have maintained
investment levels despite numerous security challenges. Ahead of the 2020 Mining
Indaba, Paydirt looks at the challenges facing some of Africa’s major mining
jurisdictions and asks how successfully they are addressing threats to investment.
or Gold Fields Ltd chief executive Nick as well. But governments and communi- spotlight in resources-rich countries.
FHolland, governments in many juris- ties should be wary of these short-term Election candidates from Accra to Dar es
dictions give in too easily to the tempta- grabs. If you take from one side of the Salaam are targeting the mining sector
tion of targeting the mining sector to raise balance sheet, it has to come off some- for its perceived failure to evenly distrib-
revenues. where else. But governments continue ute economic returns.
“The mining industry, because it is cap- to take short-term decisions instead of Holland sees evidence of this resource
tive, is often seen as a source of plug- long-term ones.” nationalism creep in many jurisdictions.
ging holes in fiscal deficits,” Holland told As populist politics takes hold across “I think resource nationalism is a ma-
Paydirt. “It’s not just an African problem, the globe, it appears likely short-termism jor geopolitical risk because the global
we have seen it in places like Australia will drag mining further into the political economy is struggling, more countries
Page 22 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Development planning: are operating at a fiscal deficit debt to
GDP levels have worsened over the last
10 years and governments are trying to
The challenge facing find ways of plugging holes,” he said.
For Base Resources Ltd managing di-
rector Tim Carstens, mining is a touch-
stone for politicians because the dynam-
African mining policy ics of the industry are misunderstood.
“People’s expectation about the mining
industry and what it makes are skewed,”
he said. “They fail to understand that just
because a company spends $1 billion,
it is not making $1 billion immediately.
There is a suspicion around that.
“The land issue is also an easy cam-
paign basis for politicians. It is very diffi-
cult to run on a pro-development agenda
in most African countries because they
become a target for populist rivals. Re- I do believe it is possible to operate
source nationalism policy to promote “
than pro-development.” safely in West Africa and we look at
Tanzania witnessed the debate during the security risk much like we look at the
its 2015 presidential election campaign.
At the end of it, new President John underground risk.
Magafuli promised citizens his Govern-
ment would redress the perceived imbal-
ance between industry profits and gov-
ernment and community benefits.
In 2017, Magafuli announced a new
mining code with provisions for a 16%
free-carried interest for government,
increased royalty rates of 6% and the
scrapping of existing development agree-
ments without arbitration.
The move was squarely targeted at
the East African country’s biggest miner,
Acacia Mining, which the Government
accused of underreporting on production
and running up a $US300 billion tax bill.
The new policy immediately put the
brakes on one of the most vibrant explo-
ration and development sectors in Africa.
In October, the country’s mining sector
was handed a lifeline when Barrick Gold
Corp (having acquired Acacia) and the
Government announced agreement had
been reached over the future of the com-
pany’s three mines in the East African
The deal will see Barrick pay $US300
million to settle outstanding tax and other
fiscal disputes and its investment restruc-
tured to see it sharing future economic
benefits from the mines on a 50/50 basis
“Barrick is definitely back in Tanzania,”
Bristow declared in Dar es Salaam on an-
nouncement of the deal.
The deal allows Barrick to restart con-
centrate exports, but the rest of the in-
dustry remains paused as questions re-
main on whether the country can restore
its international investment reputation.
At least half a dozen gold, rare earths
and graphite projects have been stuck at
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 23
the starting gate with a completed DFS but there is still a long way to go,” Baxter
for more than two years with project fi- told Paydirt. “In the Fraser Institute’s An-
nancing seemingly stalled as investors nual Survey of Mining Companies, South
consider the platform for mining in Tan- Africa has gone from 81st to 56th posi-
zania. tion on the policy survey and 48th to 43rd
“It takes a long time for investors to on the investment attractiveness index.
trust again,” PwC Africa Practice leader The positive direction is important, but
Ben Gargett said. “Companies may stick we are not there yet. We have to develop
with their Tanzanian projects because a track record which keeps us in that top
they are their best projects and the eco- half and even top quartile globally.”
nomics might work on paper but they are South Africa has numerous advan-
stuck if the financiers are not prepared to tages over African peers thanks to the
put the money up and the financiers will depth and breadth of its economy and
want to see stability and certainty before well-regarded institutions. However, its
putting money into Tanzania.” current economic problems (growth is
It is a similar situation in South Africa. forecast at just 1% for 2019) highlight the
Africa’s largest economy and a global need to ensure all policy decisions are
resources behemoth, South Africa has progressive.
seen investment in its mining sector “If you ran through a lot of risk metrics,
shrink over the last decade with interna- Tim Carstens they would say invest in South Africa; it
tional and domestic mining houses stop- has strong rule of law, a robust tax re-
ping investment plans and withdrawing gime and a large economy,” Gargett said.
from existing assets. ered, Now, the Government is undermin- “But investors are still not going there, if
Companies have pointed to the rash ing that with its Mining Charter III saying anything, they are exiting as we have
of policy changes, including three itera- you must re-empower. It is creating lots seen with the likes of South32 [Ltd] and
tions of the Government’s flagship min- of discomfort and uncertainty among for- AngloGold Ashanti [Ltd].
erals policy, the Mining Charter, which eign investors and local companies.” “It has endemic corruption, labour
has muddied the waters over what con- Genuine progress was difficult dur- problems and power issues. The un-
stitutes compliance to black economic ing the presidential reign of Jacob Zuma ions are trying to win members by being
empowerment requirements. which ended abruptly in February 2018 more militant, Eskom, the state power
Gold Fields hived off the majority of amid revelations of widespread corrup- company, is a shambles and BEE hasn’t
its domestic assets in 2013 to focus on tion in government. sorted the national problem of wealth
ventures in Australia and Ghana. Holland Zuma’s presidency also saw an in- distribution in the way it was intended to.
told Paydirt that six years on SA Govern- creasingly hostile relationship between Because of those problems the economy
ment policies were still not conducive to government and miners. Minerals Coun- is weak and the country is losing invest-
attracting investment. cil of South Africa chief executive Roger ment.”
“The concern overseas investors have Baxter has been working with new Presi- In contrast to Tanzania and South
is that the country’s Mining Charter dent Cyril Ramaphosa and Minister for Africa, West African countries such as
keeps changing,” Holland said. “We had Mineral Resources, Gwede Mantashe to Burkina Faso, Cote d’Ivoire and Mali
a Charter that said once you were em- rectify the hostility and win back interna- have seen a new generation of gold
powered up to 26% you would get your tional investor support. mines built in the last decade. However,
licenses and would always be empow- “We have seen some signs of progress this progress could be blighted by dete-
Tanzania’s exploration sector
has been suffocated by the
country’s 2017 mining policies
Before these changes,
Tanzania was viewed
as an extremely favourable
“ African jurisdiction.
Page 24 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
“ People’s expectation
about the mining
industry and what it
makes are skewed. They
fail to understand that
just because a company
spends $1 billion, it is
not making $1 billion
West African countries
such as Cote d’Ivoire have
mining investment despite
security issues blighting
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 25
riorating security conditions throughout Miners and explorers with assets in the throughout the region. Managing direc-
the region. region were sold down on the major in- tor John Welborn believes the ability to
On November 6, five buses with mili- ternational mining exchanges in the days manage risk is key to investor confidence
tary escort carrying workers to SEMA- following the tragedy. However, most in miners.
FO Inc’s Boungou gold mine in eastern have retained optimism about the future “I do believe it is possible to operate
Burkina Faso were ambushed in what is of their investments. safely in West Africa and we look at the
believed to be a jihadist attack, killing 39 West African Resources Ltd is con- security risk much like we look at the un-
and injuring 60 workers with 141 people structing its Sanbrado gold mine 150km derground risk; you’ve got to be good at
accounted for and one remaining unac- south-east of the Burkinabe capital of underground mining to take it on,” Wel-
counted for. Ouagadougou. Managing director Rich- born said. “If you are in West Africa, you
Islamist terror groups have been push- ard Hyde told Paydirt the company re- must be good at security. That’s why we
ing south from strongholds in northern mained committed to the project and the have invested so heavily in security and
Mali to carry out attacks across much of country. ensuring our people are safe, just as we
Burkina Faso and parts of western Ni- “I am comfortable with the measures have in our underground mines.”
ger. Over 1,000 people have been killed we’ve implemented and we have key per- For both Welborn and Hyde, security
in Burkina Faso since 2016 and nearly sonnel with experience of dealing with threats can be planned for, political risk
500,000 more have fled their homes, security in the region,” he said. cannot.
mainly this year. In this time, there have Resolute Mining Ltd operates gold “Everything in the new Mining Code
been dozens of attacks on industrial and mines in Mali and Senegal as well as that we were entitled to in terms of reduc-
small-scale mining operations. having exploration and growth projects tion in duties and taxes and exoneration
Most miners agree community
engagement is key to ensuring
Page 26 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Gold Fields has invested heavily in its Damang gold operation in Ghana
of VAT during construction, have been the Government had demonstrated its what we look for in jurisdictions, as well
delivered to us,” Hyde said. “We have mining framework,” he said. “We have in- as a robust legal framework,” Carstens
had great support from the Burkina Faso vested in Syama because we have long- said.
Government, and we have had no im- term faith in the Malian mining regime. Base took on considerable risk by
pediments moving the project forward. In The ability to invest further is going to be building Kenya’s first commercial mine,
fact, that is why we are currently tracking predicated on transparency we can bring the Kwale mineral sands operation in the
ahead of schedule because we have had and that our partners can bring.” country’s south. Carstens said the legal
no hold ups moving key pieces of equip- Gold Fields has recently recommitted certainty provided by stability agree-
ment through customs to site.” to its Ghanaian operations, unfurling a ments meant Base’s investors were
“Obviously it will add maybe a few dol- $US1.5 billion expansion of its Damang comfortable with the project.
lars to the cost of producing an ounce mine in the country. Holland said the in- “In Kenya, we had a very robust invest-
of gold, but it is not going to change the vestment decision was driven by the sta- ment agreement accounting for compen-
overall economics,” Joe Foster, gold bility of the country’s mining code. sation and international arbitration which
fund portfolio manager at VanEck Invest- “Ghana has a more mature, collabora- gave us comfort in the investment,” he
ment Management, told Reuters. Va- tive approach than many countries,” he said.
nEck holds a 10.1% stake in Semafo and explained. “I don’t think the crazy deci- The strength and certainty that agree-
a 9.8% stake in Endeavour Mining Corp, sions we have seen elsewhere on the ment brings has been reinforced in the
another Canadian firm with two mines in continent regarding tax regimes and roy- years since Kwale was established. A
Burkina Faso. alties would happen there. new mining policy launched in 2016 has
Resolute listed on the LSE this year to “The country has a proud history of effectively stalled exploration and mining
court investors who understand the nu- sustainable mining and a good mining development in Kenya, leaving the coun-
ances of African politics and security. code which has been stable and consist- try without a key plank of its diversifica-
“They understand the security and ent for many years. We know what we’re tion strategy.
sovereign risk and they will reward us getting into, that’s why we will keep in- In 2018, Base expanded into Mada-
for sustained operational performance,” vesting more money into Ghana.” gascar with the acquisition of the Toliara
Welborn said. Even in countries where the invest- mineral sands project. Again, policy sta-
He said the fiscal and legal stability of- ment climate isn’t always clear, miners bility was key to its decision-making.
fered by Mali and Senegal outweighed are prepared to invest if stability can be “In Madagascar, there is real stability
the security risks. enshrined. in policy and the development agree-
“We have gone to Senegal because “Stability and a history of stability is ment locks down fiscal terms for the life
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 27
of a project; that made us com-
fortable with Madagascar.”
Which leads back to Tanza-
nia and South Africa. The East
African nation has a dozen
mining projects at the starting
gate but currently no financiers
to set them away. The Tanza-
nian Government, through the
Barrick arrangement and other
public comments, appears in-
clined to water down the most
egregious terms of its new min-
ing policies. The question is:
Will it be enough to provide the
spark investors need?
“It can take a long time to win
back trust,” Gargett said. “There is talk that Burkina Faso remains a popular exploration investment destination
Tanzania wants to wind back some of the despite recent terrorist activity
legislation as it recognises it hasn’t been
doing what it intended. The Barrick deal is
a positive in one respect, but it may leave quite positive. They indicated to us that we ter how good laws may look on paper, if
individual companies needing to talk to should be expecting some sort of decision they result in zero investment, the Govern-
government. That is not exactly delivering by the end of the year.” ment’s share on returns will still be zero.”
certainty for the whole industry.” For Kibaran Resources Ltd managing For Tanzania, this will require fiscal and
After three years of frustration, project director Andrew Spinks, details of the Bar- legal frameworks which will not impede
developers in Tanzania are viewing the rick agreement are crucial. juniors and mid-tiers building projects.
progress in a positive light. “The investment communities are not We think the legislation is very workable
“Before these changes, Tanzania was looking favourably at Tanzania, but that across all the commodities. If you adhere
viewed as an extremely favourable African can quickly change with the messaging to the structures and the intent of the leg-
jurisdiction, I’m confident that 2019 being from these resolutions that we are hoping islation which is not fiscally onerous in
the turnaround year will return it to that in to come out of Barrick’s agreement,” he comparison to many other jurisdictions,”
the near future,” Graphex Mining Ltd man- said. Walkabout Resources Ltd executive direc-
aging director Phil Hoskins said. Once the correct policy settings are in tor Allan Mulligan said. “The Government
Graphex is one of half a dozen ASX-list- place investor attitudes can often change fully recognises the impact the chances
ed companies aiming to produce graphite quickly. At the beginning of the decade, have had on perceptions but is no asking,
from Tanzania. All have been hamstrung Cote d’Ivoire had only two operating gold having settled with Barrick, what more it
by the policy changes, but Hoskins be- mines and no exploration due to a civil can do to appease investors and turn sen-
lieves sentiment could change just as war which was ravaging the country. Nine timent around.”
quickly. years on and after implementation of what For South Africa, it will mean govern-
“I think whilst it’s frustrating when you’re is widely regarded as the region’s most ment, industry and community finding
dealing with these things on a day-to-day progressive mining code, the country is common ground.
basis, when you step back and look at the hottest gold exploration destination in Baxter said it was unlikely the mining
that we’re now almost 2.5 years after the Africa. sector would become a target of revenue
changes taking place, I don’t think there’s But what are the “correct policy settings” raising. Instead, the Minerals Council is
many instances historically with African for African countries? calling on government to make investment
legislation where you’ve seen legislation On announcing the Barrick-Tanzania easier.
go down a certain path and then be re- deal, Bristow said: “A true partnership can “The Government needs to make sure
turned to the norm so quickly.” only be described when you have 50/50 infrastructure is sorted and more product
Peak Resources Ltd chief executive and our joint venture with the Government is making it onto rail and to the ports for
Rocky Smith is equally optimistic. Peak of Tanzania is exactly that – a committed export,” he said. “It also needs to rectify
is sitting on the high-value Ngualla rare partnership to develop Tanzania’s gold as- Eskom’s issue. All of this will allow it to
earths project in Tanzania’s south-west. sets for the benefit of all stakeholders.” increase economic growth rates.”
He said recent visits from mines depart- Gargett believes this will require govern- While every African economy re-
ment officials to the project suggested the ments to set aside their eagerness to take quires an economic boost from mining,
company’s special mining licence could a greater portion of “the pie”. the circumstances in each jurisdiction
soon be issued. “Perhaps we need to be looking at it as are unique. If the continent is to fulfil its
“We had a contingent from Tanzania not a smaller portion of one pie but a slice promise, for the benefit for all its citizens,
that included the Mining Commission and of 10 pies,” he said. “Developing 10 differ- the fine policy balance between develop-
members of the Ministry of Minerals and ent projects, likely in different parts of the ment and return must be found.
they were really wanting to talk to us,” country, would spread the economic ben- – Dominic Piper
Smith said. “We all came out of that feeling efits and create a critical mass for training,
infrastructure developments, etc. No mat-
Page 28 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
The concern overseas
investors have is that
the country’s [South Africa]
“ Mining Charter
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 29
on the mind
s the mining world prepares to start 2020 with its annual pilgrimage
A to Cape Town for the Mining Indaba, Paydirt looks at whether the
shackles are eventually about to be broken for African-focused miners.
ape Town in February has tradition- day, as other sectors such as cannabis listings are not new, but the reasoning
Cally attracted the western world’s Afri- and cryptocurrencies attract risk capital behind company strategies is changing.
can financing specialists from the hubs of and ETFs and passive index funds cre- Companies such as Mod Resources, Da-
Canada, the UK and Australia. However, ate their own momentum. nakali Ltd and Resolute Mining Ltd joined
with each market struggling with peculiar Toronto’s travails have opened the the LSE in search of African-savvy inves-
problems, the usual fight over African as- door for the London scene to re-estab- tors rather than immediate equity injec-
sets has been missing in recent years. lish its African mining credentials. tions.
After four years where the market nar- “While we’ve seen other global markets “It is not necessarily about capital
rative has been dominated by cannabis suffering because of structural move- raising and creating liquidity from Day
and crypto (Canada), Brexit (UK) and ment of capital into other asset classes, 1. Triangulating the capital raising, list-
domestic asset bias (Australia), what can this hasn’t been so much the case in ing process and market cycle in unison
prospective deal-hunters expect from fi- London given the depth of institutional is a tough proposition for some issuers,”
nanciers at Mining Indaba 2020? capital here,” London Stock Exchange’s Attenborough said. “Instead, a London
The situation in North America con- head of international primary market Tom listing via an introduction raises the com-
tinues to be difficult. Major specialist re- Attenborough told Paydirt, “ pany profile in the region and gets spe-
sources funds have closed and the op- The last 18 months has seen a flurry of cialist mining and metals funds excited
tions for companies requiring institutional dual listings by African-focused ASX and about the stock ahead of a well-timed
investment are shrinking, almost by the TSX-listed companies on the LSE. Dual capital raising.
Page 30 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
“ There is structural movement of capital
elsewhere – into ETFs, etc – in Toronto.
That isn’t so much the case in London.
“Pure Gold [Inc] was clear that it saw a ing risk-averse, the market has opened dilutive form of funding which improved
far greater market of active fund manag- to alternative investors. The last decade project IRR and crystallised future pro-
ers in London than North America. It is has seen the rise of streaming and roy- duction.
a bit more pronounced on the TSX but alty companies in the North American re- Streamers and royalty companies
the ASX there is also a concentration of sources sector but they are yet to enter the have often been treated with suspicion
institutional investors.” African space. by the mining fraternity, but Smallwood
Not only is the pool of investors deep- Wheaton Precious Metals Inc is perhaps said their reputation was due to a lack of
er, it is also more knowledgeable about the most successful of the streaming com- understanding of the risk Wheaton was
African projects. West African gold miner panies, selling 184,868oz gold equivalent taking on.
Resolute joined the LSE in June and in the September quarter, resulting in net “At first, the simplicity was confusing to
managing director John Welborn has earnings of $US70 million for the period. people,” he said. “They were suspicious
been pleased to encounter investors with Wheaton has 19 active streams with that we were doing too well. But, we’ve
an existing understanding of the conti- a further nine projects in development got 19 contracts delivering metal but only
nent. across North and Latin America and Eu- one is doing so ahead of schedule. The
“We need to attract investors who un- rope. Most of its partners are major and others are either late or significantly be-
derstand West Africa. I don’t think those mid-tier companies but it is now actively hind the production forecasts. We make
investors are sitting in Australia, but they seeking new markets, particularly Africa those investments upfront and if it is late,
are in London and Germany and other and Australia as it looks to take advantage we suffer. There is no obligation to pay
places in Europe. They understand the at the widening chasm in project finance. into the stream if it is not operating. All
security and sovereign risk and they will Wheaton’s investment strategy sees the risk is ours.”
reward us for sustained operational per- it make an upfront payment in return While most of its investments are with
formance.” for access to a stream of by-product larger companies, current market condi-
Danakali chief executive Niels Wage production at a nominal price, allowing tions are forcing Wheaton to further its
agrees. companies to realise value for previously horizons.
“The reason we went to London was to ignored by-product production. Wheaton “The current state of the sector means
get access to a pool of investors which chief executive Randy Smallwood said we have gone further upstream,” Small-
understood Africa better,” he said. “The the facility provided miners with a non- wood said. “A lot of companies are strug-
proof will come next year when we test
the market to complete the project fi-
Advisor Tamesis Partners has assisted
a number of ASX and TSX-listed compa-
nies with UK compliance listings, including
Mod Pure Gold and Adriatic Metals Ltd.
Partner Richard Greenfield said while
it was understandable that Australian and
Canadian companies wanted to tap into
London-based institutional capital and
marginal market buyers who required a
London listing to invest, he warned suc-
cess was not guaranteed.
“We are yet to see any of these test the
market with a major UK-led financing how-
ever,” he said. “The generalist funds in the
UK still have a related universe of mining
companies with the UK quote to choose
from and are being selective. We’ve seen
tightness generally with smaller company
financing, not just in the mining space,
with liquidity thresholds continuing to rise
due to UCITS regulations, which has not
been helped by the high profile collapse of
Woodford Investment Management driven
by an inability to exit illiquid [and private]
positions. Peers are understandably keen
to avoid similar issues.”
With traditional equity markets prov-
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 31
“Ultimately, however, “
gling to even get to the BFS stage which expected to be looking We make those investments
means they only have access to equity at an IPO are now often
markets. Under our new early deposit doing one more round upfront and if it is late, we
model, if a company has a scoping study of funding through pri- suffer. There is no obligation to
or a PEA, we are willing to take a look. vate equity.
Obviously, the return is greater because pay into the stream if it is not
we have taken a gamble on some of the investors will want li- operating. All the risk is ours.
cash. quidity and will look to
“We have five or six early deposit move to a long-term
structures in place. There has been a lot capital business. So,
of interest, the problem is there are not the merits of capital markets are still valid. pletion,” Pearce said.
a lot of good projects around. If it is a When companies do go public, they are Convertible is closing in on a 1 moz gold
standout project, they are going to have often bigger and better prepared with resource at its Seke project in Guinea.
access to equity capital, so we are look- more liquidity. We may have had fewer The company is utilising its relationship
ing for the hidden gems. We have done IPOs by volume last year, but the value with sister company Ore Search Drilling
four deals but have looked at more than was considerably up.” to fund exploration and has established
100 projects.” The trend of staying private for longer a Mauritius-based company, Kingfisher
While streaming companies offer a is bearing fruit. In August, Resolute paid Holdings, through which new private in-
lifeline to developers who find equity $US274 million for Toro Gold, a company vestors can become shareholders.
markets hostile, private equity groups which had stayed private throughout the “If funding is in place to take you to that
are keen to keep projects away from discovery, development and construction point of feasibility study, there is less mo-
market altogether. of the Mako gold mine in Senegal. tivation to rely on public markets,” Pearce
The volume and depth of private fi- Richard Pearce, managing director of said.
nancing deals has grown exponentially private explorer Convertible Resources Convertible plans to repeat the strat-
across all sectors in the last decade and Ltd, told Paydirt the incentive to go public egy elsewhere on the continent.
Attenborough admitted it was a trend the while projects were still at the exploration “We want to talk to people with pro-
LSE kept a close eye on. stage was not as compelling as it once jects in West Africa, all the way down to
“There is a global phenomenon of com- was. Angola. We have a 15-year track record
panies staying private for longer,” he said. “You can typically expect the project in the region and our local exploration
“The private funding ladder is being ex- value to be increased fourfold between team has done a great job utilising Ore
tended and companies who you would’ve target definition and feasibility study com- Search’s rigs to quickly define what will
“ The Canadian and Australian companies
are targeting the pool of generalist funds
in London which can’t invest without a UK
quote. We are yet to see any of these test the
market with a major UK-led financing however.
Page 32 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
be a 1 moz gold resource.”
Greenfield said there had been a no-
ticeable increase in interest in resources
from private equity funds who were keen
to see projects kept private for longer.
“Private funding for mining projects has
continued to be strong, much of which
has been driven out of London from pri-
vate equity, strategic investors and trading
houses, many of which are based here,”
he said. “The likes of Orion, Greenstone
Resources and Appian Capital have been
amongst the most active financiers to the
industry globally over the last 12 months.
“We’re increasingly seeing such groups
work together with each other and advis-
ers to construct holistic financing pack-
ages, with or without public equity, and
these pools of capital have to be consid-
ered potential cornerstone investment for
any serious development financing.”
Streamers and private equity investors
have grown increasingly influential but Recent exploration and discovery success, particularly in gold, means Africa remains the most
are coming under renewed competition prospective continent for resources development
from mining corporates. With the rate of
new precious and base metals discover- folio. Mod had been courted by a host of this way, all that value will be maintained
ies at generational lows, established min- different financiers before recommending within the Sandfire bubble and the former
ers are increasingly turning to juniors to fill shareholders accept Sandfire’s 45% pre- Mod shareholders can share in that.”
their growth pipelines. mium offer. In West Africa, Resolute has adopted a
Sandfire managing director Karl Simich
The last 18 months have seen a string believes his company and other miners big brother approach, taking minority po-
sitions in several explorers in the expec-
of junior company investments and acqui-
“ If funding is in place to panies shareholders than alterna- support.
represent a better option for junior com-
tation of providing financial and technical
Simich is keen for Sandfire to make
“Those private equity groups are
ruthless investors and they wield a
“We are looking for projects and oppor-
take you to that point
big stick,” Simich told Paydirt. “Their
tunities where we can utilise the techni-
of feasibility study, there is
expected returns are multiples of
sources we have,” he said. “It could make
what we as Sandfire would expect.
less motivation to rely on
a difference for a company looking for
Other forms of financing can be cal and commercial skills and human re-
public markets. equally expensive. If Mod had cho- patient investment capital.”
sen to go a different path, its project With the project pipeline dry, it appears
sitions by mid-tier and emerging miners. financing would’ve been spread across 2020 could see a battle for assets from
In August, Sandfire Resources NL paid prepayments, royalty streams, less fa- public and private, traditional and alterna-
$167 million for Mod and its T3 copper vourable debt terms and onerous equity tive sources from across the globe.
project and associated exploration port- terms. That’s all value loss. Choosing – Dominic Piper
The ASX has largely managed to avoid
the carnage caused by cannabis and
ETFs in North America
“ The Canadian and Australian
companies are targeting the
pool of generalist funds in London
which can’t invest without a UK
quote. We are yet to see any of these
test the market with a major UK-led
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 33
Misleading numbers doing harm:
e may be winning few friends with his Speaking to Paydirt from Gold Fields’ those numbers are.”
Hcomments, but Gold Fields Ltd chief Johannesburg head office, Holland said Reported costs have risen in the last two
executive Nick Holland is convinced the he stood by his comments and the data. years in line with a rise in the spot price but
global gold sector is only papering over the “People aren’t happy with what I have Holland believes this is only further indi-
structural cracks which it has developed said but nobody has disputed the facts. cation that the industry simply postponed
over the past 20 years. The data we used was not ours, it was in- growth projects in order to present a rosier
Holland used his address to Africa Down dependent analysis done by Global Mine picture.
Under in September to argue leading gold Research, so it is not just our view,” he “Analysts believe the industry is going
miners were misleading stakeholders on said. to have to spend a lot more money just to
the state of their businesses by reporting “The industry has not been spending keep gold production where it is,” he said.
costs in an opaque manner. Holland pro- enough and it has used ‘artistic licence’ “I believe we are going to see costs going
duced independent data which showed on its cost reporting around what is growth up over the next few years. As a conse-
average sustaining capital expenditure and what is sustaining capital.” quence, investors will be disappointed and
went from $US360/oz in 2012 to $US70/ Holland believes that while gold min- we will all go down together.”
oz in 2016 as the industry looked to win ers were successful in reducing costs and It is a glum outlook for an industry which
back investor support following a period of showing greater capital discipline following is still recovering investor confidence but
avarice. But Holland argued the cuts were the previous downturn, a time of reckoning Holland insists companies will have to be
cosmetic and unsustainable as it involved is approaching. more transparent on costs if they are to
reclassifying sustaining capital expendi- “The industry has not done a bad job in win back support in an increasingly com-
ture as growth capital. So, while industry- being more disciplined and the notion of petitive marketplace.
wide cost reduction has been achieved ‘big is beautiful’ has been abandoned for “If we are going to have a vibrant gold
it has been done so at the sacrifice of the moment. However, some of these cost industry we have to make sure we do the
growth. reductions are attributable to currency right things and don’t make the same mis-
“It’s not an attack on the industry – we movements – particularly in Australia and takes which saw a lot of investors leave the
are part of it – but we must be more truthful Canada – as well as a 40% fall in the oil sector and not return which has been the
about what it costs to produce an ounce price. What is really concerning though difference between this bull run and previ-
of gold because the wrong picture is be- is that not only has exploration been cur- ous ones.
ing given to less informed investors,” Hol- tailed for many years but also that sustain- “The price pick-up has allowed compa-
land said last month. “Only six of the top 25 ing capital has been reassigned as growth nies to catch up on capital expenditure but
gold companies are reporting to the World capital. Ongoing sustaining capital is a real it is critical investors understand this. Gold
Gold Council’s standard of all-in sustaining worry. The industry has not been spend- companies need to be on the front foot in
costs; what does that say about the trans- ing the money it should’ve on growth and explaining it to investors. The institutional
parency of the industry?” it begs the question of how sustainable funds have not had a large influx of capital
Page 34 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
SAVE THE DATE
The premier Africa-Australia mining forum
this time and the specialty gold funds are cal businesses into its supply chain which
not as widespread as previously. Instead, allows it to reduce costs but also provide
we are relying on the generalist investors deeper linkages into community.
who have had to catch up on their under- “It helps us manage expectations,” Hol-
standing of gold.” land said. “It is a question of engaging with
Holland’s feelings on the issue are communities, tell people what we can and
likely fuelled by his own company’s perfor- can’t do but you have to tell people.”
mance. While others have reduced all-in Gold Fields operates in three countries
costs significantly, Gold Fields has wit- – Australia, Ghana and South Africa – and
nessed an increase as it brings a swag of has a development project in Chile as well
growth projects on-stream. as exploration interests in several other re-
“We’re not saying we are lily white as a gions. Holland sees evidence of resource
company but we’ve been investing heav- nationalism creep in many jurisdictions.
ily in new mines in the last three years Given its geographically diverse port-
while others have been focused on lower- folio, Gold Fields can afford to direct its
ing costs,” he said. “We are building pro- growth expenditure into the most attrac-
jects [Gruyere in Western Australia, the tive jurisdictions. This month it will officially
Damang expansion in Ghana] which will open its $631 million Gruyere JV with Gold
lower group costs and lengthen mine lives. Road Resources Ltd in WA, is spending
“We will be in a better position from $1.4 billion over eight years on expanding
2020 as a result so it is annoying to hear the Damang mine in Ghana and has com-
in comparisons that we have high costs pleted feasibility studies on the $US834
when others have been deferring capital; million 350,000 ozpa Salares Norte mine
it is not a level playing field.” in Chile.
Holland’s concerns extend beyond mar- Holland said WA, Ghana and Chile were
ket perceptions. Gold Fields was an ac- favourable destinations because of their
tive participant in the industry’s response stable fiscal and legal environments.
to WA State Government proposals to “Ghana has a proud history of sustain-
raise gold royalty rates when the price able mining, has a good mining code that
increased in 2016. He believes the false has been stable for many years; that is
cost reporting can lead to misconception why we will keep investing more money
among governments about the profitability into Ghana,” he said.
of gold operations. “We can talk to the Government through
“What message are we sending to host the forum of the Minerals Council and we
governments when we are showing costs have a stability agreement in place. Gha-
which are rosier than reality?” Holland na has a much more mature, collaborative
asked. “We are playing into the hands of approach than many other countries.”
governments and communities who be- The one problem child in the current
lieve we should be doing more, who be- Gold Fields brood is the closest to home.
lieve their share of the pie is disproportion- The South Deep complex has consistently
ate. failed to meet expectations for more than
“Some in the industry tell investors how a decade but Holland said the company
low their costs are but then tell other stake- was not yet ready to walk away from the
holders how high they are. There must be 3,500m-deep mine.
one version of truth.” The operation actually posted cash
Host communities are also aware of flow positive numbers in Q2 2019, with
the difference in messages to corporates 92,000oz gold at all-in costs of $US1,529/
and other stakeholders and can react by oz and net cash flow for the first half of
demanding more local investment from 2019 at $US49 million.
miners. “The fact that that things are pretty quiet
“The community always expects us to tells a story at South Deep,” Holland said
do more, which isn’t helped if we are pro- of the mine’s performance. “We’re trying
jecting inflated margins,” Holland said. “In to get the asset to a stable operating posi-
Ghana, there is a paucity of basic infra- tion. It is still somewhere to go before it is
structure. To alleviate that problem in the in a position where we are comfortable but
area we operate in, we have tarred what compared to a year ago it is night and day.
was a bush track which linked our two It is something we will evaluate in the next
mines. That has had a tremendous impact 12 to 18 months – exactly what is best for
on the local economy, and we have also the asset and for the company. We don’t
built clinics in the area but there is still de- have a hard and fast plan yet.
mands for more, there is an insatiable ap- – Dominic Piper
petite from local community.”
Gold Fields approach is to integrate lo-
Page 36 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Gold Fields has committed heavily to exploration around its St Ives mine in Western Australia
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 37
Gold Fields growth stays in-house
ticking to what it knows appears to be be the order of the day by and large be- overwhelming focus, Gold Fields has
Sthe order of the day when it comes to cause we have lots of potential in our ex- “dipped its toe” into the greenfields
growth prospects at Gold Fields Ltd. isting assets. The best place to find gold space.
The South African gold major has been is where you’re already mining it,” Hol- “We have the new JV with Lefroy Ex-
an active participant in M&A over the land told Paydirt. ploration [NL] next to St Ives. We are al-
last eight years, spinning out the major- With four operations in the State, West- ways looking for things which are within
ity of its domestic assets, picking up the ern Australia is the obvious place to start. trucking distance of our plants. It is un-
Australian cast-offs of other majors and Gold Fields upped its WA exploration likely we will move into a standalone
buying a 50% interest in the biggest Aus- budget in 2015 and has since maintained greenfields environment as we have got
tralian greenfields discovery of the last it at $90-100 million annually. Those ef- plenty ahead of us already.”
decade. However, despite rumours swirl- forts are delivering with an average $82/ Holland said JVs with junior explorers
ing about the prospects for further deal- oz discovery cost in the last five years, was the preferred method for Gold Fields
making following the Barrick Gold Corp a period which has seen reserve ounces in the greenfields space.
and Newmont Goldcorp megamergers, added to the St Ives, Granny Smith and “Large companies are not that good
Gold Fields chief executive Nick Holland Agnew operations. at identifying and advancing early-stage
appears content with putting the compa- Holland pointed to the 3 moz Invinci- projects, junior companies are usually
ny’s existing portfolio to work. ble discovery at St Ives as an example of more successful at that sort of explora-
The company is set to officially open its the rewards brownfields exploration can tion,” he said. “So, that model of letting
$631 million Gruyere JV this month, has generate. He said the company would them take projects to the point where
a major expansion at its Damang mine continue its focus on WA. they need help to develop assets is one
in Ghana almost complete and is in the “Australia is a happy hunting ground for we quite like.”
approvals stage for its Salares Norte pro- us and it will be into the future,” Holland The Gruyere JV with Gold Road Re-
ject in Chile. said. “We are drilling 300,000m there sources Ltd is the standout example but
Further up the pipeline, Gold Fields this year and I’m confident we will be pro- Gold Fields hopes to repeat the trick in
appears wedded to a near-mine growth ducing at that 1 mozpa mark for the next West Africa.
strategy. 8-10 years, if not longer.” “We have our 45% interest in Asanko
“Brownfields exploration is going to While brownfields exploration is its in what is an underexplored district, and
The Damang mine in Ghana is undergoing a $US1.1 billion expansion
Page 38 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Gold Fields’ largest development project is the Gruyere JV with Gold Road Resources in Western Australia
“ Large companies are not that good
at identifying and advancing early-
stage projects, junior companies are
usually more successful at that sort of
we have 17% of Cardinal [Resources ther discards. aligned but I think the rising gold price
Ltd] so we have some got some inter- “We don’t need to do any M&A as we has thrown a spanner in the works. Buy-
est in exploration in Africa as well. We have got a solid growth pipeline and eve- ers are wanting more for assets but sell-
also have a toehold in Peru so there are ry asset has potential to grow. ers aren’t willing to pay premiums.”
a few avenues for growth to pursue if we “Also, from the comments of both com- With the industry still in recovery mode
choose.” panies [Barrick and Newmont Goldcorp] after overreaching during the last bull
The Australian division’s rise to nearly it is apparent the best assets won’t be put run, Holland doubts there is even the
50% of group production came after Gold on the block. Those assets for sale will capital available to fund transactions.
Fields secured the Granny Smith, Agnew be the most undercapitalised with loom- “There is not a lot of money going
and Darlot mines when Barrick departed ing closure cost obligations.” around. The Top 10 gold miners still have
Australia in 2013. Despite the success of Holland has misgivings that any divest- $US15 billion dollars of net debt so it
those acquisitions and rumours swirling ment process following the megamerg- won’t take long to slide into a bad place if
that both Barrick and Newmont Goldcorp ers will yield headline-grabbing transac- the price drops again.”
are preparing to divest assets, Holland tions. – Dominic Piper
has shown little interest in picking up fur- “For any deal, valuations need to be
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 39
Sandfire in play for
“When looking at other opportunities, there were
few that got us really excited. However, this is a belt-
scale opportunity and – at nearly 12,000sq km – we sit
on three-quarters of the Kalahari Copper Belt,” says
Sandfire Resources managing director Karl Simich of
the company’s acquisition of MOD Resources.
When Sandfire (ASX: SFR) paid the equivalent of $167 million in formed decision,” Simich says. “We have done exactly that; we
cash and scrip for ASX-listed copper explorer MOD in August, know our topic and we’re comfortable with the risk profile.
much of its domestic market was surprised. Australia’s mid-tier “Ranked number one for investment attractiveness in Africa in
base and precious metals miners rarely move offshore, preferring the Fraser Institute’s 2018 Survey of Mining Companies in terms
to stay close to home, and none had previously shown a willing- of doing business, Botswana is very stable geopolitically, has won-
ness to take on the “African challenge”. derful existing operations in-country, is very progressive and has
Sandfire and Simich, however, have always been different and the a well-educated population. There is stable rule of law and clear
company was convinced that MOD, its T3 development project and coherent practices. There is also a drive to expand the min-
and Botswana could provide the springboard for its transforma- erals sector, looking further afield to diversify from the country’s
tion into a genuine mid-tier base metals producer. reliance on the diamond industry.”
“If you scan the globe looking for business opportunities in the The jewel in the MOD acquisition was the T3 copper project, locat-
mid-tier base metals space where there is a genuine pathway to ed near the town of Ghanzi in central Botswana. A DFS released
build something, you find there are hardly any,” Simich says. “But, in early 2019 suggested that 60.2mt @ 0.98% copper and 13.9 g/t
in Botswana MOD had built a development-ready project and a silver resource could underpin an 11-year, 3 mtpa operation with
dominant land position in the Kalahari Copper Belt. That was the forecast production of 28,000 tpa of copper-in-concentrate on the
greatest attraction to Sandfire – the scale and nature of the op- back of a $250 million in capital price tag. The DFS identified an
portunity. It is an area which hasn’t been explored to any great ex- NPV of $309 million for the project.
tent and, until MOD’s involvement, largely without any significant Such an operation would fit neatly alongside Sandfire’s flagship as-
modern technology, application or geological theory.” set, the 65,000 tpa DeGrussa copper mine in Western Australia.
Having received shareholder and court ratification for the acquisi-
tion and completed it in October, Sandfire is now optimising the
DFS ahead of a decision-to-mine.
T3 is 100km south-west of the Khoemacau copper project, which
Cupric Canyon Capital is currently spending more than $US600
million to develop into a 60,000 tpa copper producer.
Simich believes T3 and other prospects in Sandfire’s nearly
12,000sq km ground package hold similar and quite possibly
“Cupric Canyon is heading towards initial production of 60,000
tpa copper, then looking to expand to 90,000 tpa while ulti-
mately targeting in excess of 100,000 tpa,” Simich says. “That is
an impressive target but if you compare the two assets, we have
nearly three-quarters of the belt compared with their one quar-
ter – which gives us huge exploration upside. Also, because the T3
deposit and much of the rest of our ground lies beneath calcrete
cover, it means the mineralisation around our deposit has poten-
tially been better preserved and has therefore had less exploration
than the Cupric Canyon ground.
“So, the acquisition price of $167 million is underwritten by a pro-
ject with a completed DFS highlighting a project NPV of $US309
million. The rest of the ground becomes a free option. There hasn’t
been a premium paid for the exploration opportunity.”
Thanks to a wealth of African experience in the Sandfire manage-
ment team, the company is unfazed by the perceived risk profile The start of mining at T3 will push Sandfire towards 100,000 tpa
often attached to African projects. group copper production. The exploration team’s enthusiasm for
the long-term prospectivity is such that Simich believes the project
“I can understand the misgivings about Africa and the perceived could propel his company even further into the mid-tier space.
risk, but you can be anywhere in the world and there is risk. So, “It just hasn’t seen much modern exploration,” he says. “MOD has
you need to understand and unpack that risk and make an in-
done a fantastic job in getting the package together and discover-
ing T3 and the other prospects, but the market conditions meant it
couldn’t spend what was required. It has left what is essentially a
pristine geological environment. That is Prize No.1: if we are suc-
cessful in finding additional and higher grade resources and estab-
lishing new operations of significance, we can leverage off that to
potentially have multiple mining operations in the region.”
Sandfire’s reputation for rapid growth and development was
forged at DeGrussa, where the company made the usually long
and difficult transition from explorer to miner in just three years.
With over seven years of operating now under its belt, the com-
pany has the financial, operational and human resources capacity
to repeat the process in Botswana.
“We believe we have the processes, policies and procedures and
architecture to execute a series of projects,” Simich says. “We have
got solid foundations – technical, commercial, a stable and compe-
tent workforce with a good culture, geological processes and pro-
cedures, mining and processing expertise, safety, environment,
marketing and relationships with all stakeholders.
“In the case of T3 and MOD, there is a wealth of experience within choice in the mid-tier base metals space. At the moment, that
the senior management of our company and we want to lever- means we are very interested in projects that are or could produce
age off the back of that capacity. Once you have got to the point between 20-70,000 tpa copper equivalent.”
where you are running multiple mines it doesn’t need multiple The company is assessing opportunities and Simich is sympathet-
teams. The operations necessarily become decentralised but there ic to the challenges such juniors face. Equity markets have been
is no need for every function at the head office/corporate level to harsh on all juniors in recent years and traditional funding op-
be replicated. You just don’t need independent financial systems, tions have run dry. Simich says Sandfire can offer juniors a genu-
marketing teams, IR, capital raising, etc.” ine win-win opportunity other potential partners and financiers
With its international credentials now established – the company simply can’t match.
boasts a second development project in the form of Black Butte in “T3 was a big ask for a company of MOD’s size so they needed help
Montana, United States – and Sandfire is increasingly confident to get it up, but you need to get as much alignment as possible with
about its growth potential. people who are sympathetic to your cause,” he says. “A lot of those
“Once we have these assets operating well, it creates the opportuni- funding groups, whether private equity, royalty and streaming
ty for further M&A,” Simich says. “We are still in the game of mak- groups or debt providers are ruthless sources of funding and can
ing discoveries and building mines and we want to be a partner of wield a big stick.
“Sandfire is a builder of projects and foremost a mining company
with a strong history and long term aspirations so our interests
are going to be aligned with the junior company, and the returns
we are seeking are nowhere near as high as other groups.
“A junior going it alone on a project will necessarily have to use
different groups to fund development. Whether it is prepayments,
royalty streams, less favourable debt terms or onerous equity
terms; that is all value loss. By partnering with Sandfire, devel-
opers can ensure all the value is maintained under the Sandfire
“We have a strong balance sheet and cash at bank position and
we have deep relationships with traditional banks and customers
who are prepared to support us in developments.”
Government stop order
won’t slow Toliara: Base
suspension order placed by the Govern- tions and “open and transparent” dialogue
A ment of Madagascar on the Toliara min- with the Government, the potential eco-
eral sands project is inconvenient for Base nomic impact of Toliara appeared not to be
Resources Ltd but managing director Tim resonating with government.
Carstens expects activity to restart soon. “I think it is a combination of a new gov- Tim Carstens
The suspension – announced by the ernment with a lot of first-time ministers and
Malagasy Government on November 7 – the dismay over tax revenues being gener-
forced Base to halt on-ground activity at To- ated from the country’s two other opera- mains comfortable with the overall direction
liara, its mineral sands development project tions [Ambatovy nickel, owned by Norilsk Madagascar is taking.
in the country’s south-west. Nickel and QMM minerals sands owned by “There are a lot of moving parts from a
While the order has stopped on-ground Rio Tinto Ltd].” policy perspective around delivering on the
work Carstens told Paydirt it would have The Base share price shed 10% on the president’s plan for growth,” he said. “It is
no impact on an impending DFS, due for Government’s announcement but quickly not atypical in Madagascar to have these
release this month. bounced back. Carstens said shareholders debates about mining policy but, practi-
“The DFS is going according to plan as were largely comfortable with the compa- cally speaking, the country has to attract
we had already completed all on-ground ny’s progress in-country. investment, so policy tends not to move too
work so the suspension has no effect on “We’ve had a mixed reaction from share- much.”
that,” he said. “The disappointing thing is holders but the majority are comfortable, Such stability will be key to Base commit-
that it halts the community programmes they understand it is Africa and trust our ting to Tolilara’s development. The DFS is
and the workforce development work we ability to manage it. Some others are a bit expected to closely mirror a PFS released
are doing.” more nervous,” he said. in March. The PFS showed a project with a
While inconvenient, the suspension is un- “There is no question it heightens sensi- NPV of $US671 million capable of sustain-
likely to cause long-term problems for Base tivity to political risk but most investors have ing 33 years of production of rutile, ilmenite
in Madagascar according to Carstens. seen it before and know how it will play out. and zircon.
“We don’t expect the suspension to last A lot of people actually saw it as a buying Capex was estimated at $US439 million
too long,” he said. “The Government is opportunity because they recognised Toli- for the 13 mtpa Stage 1 build with a further
clearly keen to get started on discussions ara isn’t really priced in anyway.” $US67 million required to expand to 19
about its involvement in the project. The Mining was a key policy issue during the mtpa in Stage 2.
suspension is a blunt means to bring Base 2019 election campaign and new Presi- Carstens said numbers in the DFS would
to the table, particularly around the eco- dent Andry Rajoelina is eager to ensure show little deviation from the PFS.
nomic impact of Toliara.” more benefits are generated. Carstens was “There have been no significant changes
He said despite a strong communica- aware of the competing agendas but re- and it is basically the same project that we
Base estimates Toliara infrastructure – including road
upgrades – will come with a $150 million price tag
Page 42 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
acquired,” he said. “We did a lot of option from the exhausted
analysis in the PFS but it has been quite high-grade Central
consistent in concept since the acquisition. Dune, to the lower
“We don’t see any real technical prob- grade South Dune.
lems with the project, it is very similar in Carstens said the
that regard to Kwale. The biggest chal- transition had run
lenge, and difference to Kwale, is around smoothly with min-
infrastructure, which requires $150 million. ing and process-
However, the sheer economics of the pro- ing running above
ject means it will fund itself.” nameplate design. In
While the DFS will be focused exclusively the September quar-
on Stage 1 production, Base is already con- ter, Kwale produced
templating future growth. 73,808t of ilmenite,
“There is real opportunity to enhance the 16,390t rutile and
project without significant further invest- 6,980t zircon. The Kwale mine in Kenya continues to perform well for Base
ment. The global reserve is 1.3bt but the Mining of the South
33-year mine life in the DFS is only based Dune will take operations out to 2024 but restart a corporate hunt which previously
on half of that. We have drilled 26,000m Base is committed to finding future produc- delivered Toliara.
since acquisition and expect to post a re- tion sources. “We do have one eye on what is next and
source-reserve increase next year. It will “That is the next challenge,” Carstens we are keeping alive to what’s happening
then continue to increase over time. said. “We have the North Dune for which in the mineral sands space,” Carstens said.
“We will probably talk in the DFS about we will complete a concept study by the end “We do have to plan for the possibility of a
designing it to be more readily scalable, of January 2020 but we are trying to find 2024 shutdown at Kwale and we don’t want
but we haven’t done DFS level work on the something which can come into the mining to go back to a single operation, single ju-
broader economics.” plan ahead of that. risdiction scenario if we are looking to get
Delivering Toliara will establish Base as a “We would like to drill some priority loca- close to full value for our production.
multi-operational, multi-jurisdictional miner. tions this year. We are making good pro- “The advantage we have is our database
The company has been mining in Kenya for gress on land access and will hopefully is strong following the Toliara acquisition
six years at its Kwale mineral sands mine be spending $2 million on drilling this year process, so we understand what is out there
south of Mombasa. which gets you a lot of work in minerals and the likely development sequence.”
Earlier this year, Kwale operations under- sands exploration.”
went a major switch as production moved If Kwale fails to deliver, Base is willing to – Dominic Piper
FOR AUSTRALIAN INVESTMENT
FOR AUSTRALIAN INVESTMENT
AND LEADERSHIP IN AFRICA
AND LEADERSHIP IN AFRICA
FOR AUSTRALIAN INVESTMENT
AND LEADERSHIP IN AFRICA
ADVOCACY. INSIGHTS. CONNECTIONS.
ADVOCACY. INSIGHTS. CONNECTIONS.
ADVOCACY. INSIGHTS. CONNECTIONS.
Proudly Proudly www.aameg.org www.aameg.org
aUSTRaLIa’S PaYDIRT DeCeMBeR 2019 - JaNUaRY 2020 Page 43
Making its mark in stone
Blackstone Minerals Ltd managing director Scott Williamson
was certain nickel was the space for the company to be in
when 2019 started.
Twelve months ago, the Blackstone portfolio spanned the steel production and while that sector still drives demand, the
early-stage Silver Swan South gold-nickel project, Kalgoorlie battery revolution has provided dormant nickel companies with a
and Middle Creek (gold) and cobalt-gold assets in BC, Canada. heart starter and given projects like Ta Khoa another chance.
However, the entwined grapevine that is the Australian mining Given Ta Khoa’s location, 160km west of Hanoi in the Son La
sector turned a casual conversation with a former colleague province, and the fact that it was previously housed in the
– Evan Spencer, who was behind Asian Mineral Resources Canadian-domiciled AMR, Australian interest in the project has
(AMR) – into an opportunity the ever-alert Williamson hadn’t only been piqued since Blackstone’s acquisition in mid-2019.
Enthusiasm in Ban Phuc has since quickly grown with eight
“At the start of the year we were looking at moving into nickel, but different broking firms visiting site since June and Williamson
we definitely weren’t focused on Asia. It wasn’t until I had a chat returning for a sixth time since then at the time of print.
with Evan that I started having a particular focus on this asset,” Upon arrival, Williamson will be met with four drill rigs at Ban Phuc
where a maiden resource, followed by a reserve, is the aim in the
The asset in question is Ta Khoa, northern Vietnam, which was next six months.
last run by Spencer’s AMR as a modern mechanised operation
Confidence in the disseminated material appears to be growing
producing 975,000t @ 2.4% nickel and 1% copper for 20,700t
with every drill metre for Blackstone, with highlights from maiden
nickel and 10,100t copper between 2013-2016 from a narrow vein
drilling including: 22m @ 0.76% nickel, 0.13% copper, 0.01% cobalt
massive sulphide deposit at Ban Phuc.
and 0.4 g/t PGE from 138m; 17.8m @ 1% nickel, 0.09% copper,
Nickel followers would know that the industry was on its knees 0.01% cobalt and 0.74 g/t PGE from 106.6m; 45.5m @ 1.2% nickel,
during Ban Phuc’s previous existence, with few companies 0.17% copper, 0.01% cobalt and 0.35 g/t PGE from 56.5m; 27.7m
prevailing from that period unscathed. @ 0.88% nickel, 0.09% copper, 0.01% cobalt and 0.74 g/t PGE from
Back then the industry was consumed by nickel’s use in stainless 101m; 29.4m @ 1% nickel, 0.12% copper, 0.02% cobalt and 0.6
Blackstone Minerals Ltd (ASX:BSX)
Suite 3, L3 24 Outram Street,
West Perth WA 6005
Phone: +61 8 9425 5217
Fax:+61 8 6500 9982
Hamish Halliday (non-executive
chairman), Scott Williamson
(managing director), Andrew
Radonjic (technical director), Steve
Parsons (non-executive director),
Michael Naylor and Jamie Byrde
(joint company secretaries), Dr Stuart
Owen (exploration manager)
g/t PGE from 140.6m; 11.9m @ 1.35% nickel, 0.15% copper, 0.02%
cobalt and 1.09 g/t PGE from 107m; 33.3m @ 0.8% nickel, 0.09%
copper, 0.01% cobalt and 0.36 g/t PGE from 138m.
The focus of previous mining activity had been on a narrow
2m-wide massive sulphide vein at Ban Phuc and while there are
potentially a further 25 deposits of similar nature, Blackstone’s
priority is defining a large-scale, bulk tonnage, lower grade
disseminated resource conducive to open pit or bulk underground
Impressed with drilling outcomes so far on the nickel content,
further excitement is building within the Blackstone camp on the
back of platinum-palladium-gold credits evident at Ban Phuc.
Spurred by demand for usage in catalytic converters, palladium
prices started to surge in October.
Continued strength in PGE pricing would be a sweetener for
Blackstone at Ban Phuc if enough material proves to be economic.
“Nickel will deliver 80-90% of the project revenue and the nickel
numbers are strong enough without those credits. However, if they
are economic, the mining and processing costs could be covered
by the PGEs,” Williamson said.
“We think that has a lot of potential to be monetised over a lot of
the operating costs. For an open pit mining scenario, we’re looking
at 0.7-1 g/t platinum plus palladium plus gold credits.”
Historic comparisons between total site operating costs at Ban
Phuc versus a similar mine operating in a western destination
indicated costs in Vietnam were 25% lower at all-in costs of
$US136/t for narrow vein underground mining, including tariffs
and royalties. The 20% Vietnam Government tariff on concentrates
is perhaps one reason why companies have abstained from
involvement in the project. But, with almost $US140 million having
been spent on infrastructure at Ban Phuc, including a 450,000 tpa
plant, Blackstone has a head start. Additionally, the company’s
masterplan for Ta Khoa is to eventually circumvent the concentrate
tariff by taking processing further downstream and delivering a
product suitable for the lithium-ion battery industry. Vietnam is regarded as one of the fastest growing markets in
Asia and the fundamentals of investing in the country are well
Potential capex to bring the downstream dream alive would be understood by generalist funds.
about $US100 million, manageable for a junior, but even more
realistic with a partner. Blackstone is revelling in low labour and power costs and an
investor-friendly approach from government, while access to a
A pressure oxidation (Pox) processing option, similar to the flow
skilled workforce and diamond drilling for $80/m compared to
sheet Independence Group NL is assessing for nickel sulphate
$500/m in Canada is providing Williamson with some relief in what
production, is the model Blackstone would look to replicate at Ban
has been another challenging year for the junior mining fraternity.
“We get these 3-6 months windows where it looks like a bull
In line with resource/reserve drilling as well as testing geophysical
market, but then we get smashed back down again. We knew
targets for new discoveries at Ban Phuc, a scoping study on
that supply was going to get tight and the Indonesian ban coming
downstream options is also in the pipeline for the next six months.
quicker than expected has certainly been very helpful,” Williamson
“We could potentially be one of the first companies delivering said.
nickel sulphate to the industry and will look to a JV scenario “We hope that the last little fall in nickel stockpiles is real, there is
through the downstream side of the business, while retaining full speculation that it has been manipulated. We do know there is a
exposure at mine level,” Williamson said. very strong underlying demand and that over the medium to long-
“We’ve only had the asset for six months and we’ve already hosted term there is not going to be enough nickel to supply the battery
end-users to site, so clearly we have what they need and they will industry.”
be looking for us to drill this out.” A nickel price in the vicinity of $US17,000/t would be something
The growing demand for nickel sulphate has encouraged sulphide that makes Ban Phuc very profitable for Blackstone, however,
miners to research and develop new technologies and flow sheet Williamson has more on his plate than to be watching daily price
to meet the tight specifications of battery manufacturers. Several fluctuations.
companies are already collaborating on research and Williamson is “When LME stockpiles have gone low like this before, we saw
happy for Blackstone to participate. significant prices spikes and in 12 months’ time there might not
As industry embraces cooperation in developing an emerging even be a stockpile, which isn’t necessarily good as you won’t be
segment of the market, there are few companies on the doorstep able to track where the nickel is going,” he said.
of China, Japan and Korea in a position to offer nickel sulphate like “Our five-year view is that nickel will be at these levels or much
Blackstone is planning. higher and being in nickel sulphide we make money as low as
“We didn’t go looking at Asia, but once we realised how well- $US14,000-15,000/t. If anything, we don’t want the price to run too
suited this particular destination is to the battery market and fast because that then brings laterites into their own. We’d be
end-users in Asia, which are looking at securing 10-20 years of happy with a price anywhere between here and $US20,000/t.”
supply, and the strength of this particular orebody, we went all in,”
SA on brink of spring back
here is nothing quite like the sweet taste
Tof victory to unite a country, which is ex-
actly what is happening in South Africa right
Its defeat of England in Japan means SA
will have a firm grip on the Rugby World
Cup for the next four years and the winning
feeling couldn’t have come at a better time
for the country itself.
“Those feel-good moments are impor-
tant in any group’s life wherever you are in
the world. When you looked around and
saw everyone dancing in the streets re-
gardless of race, colour or creed and to see
a poor black guy that grew up impoverished
lift the trophy was amazing to see,” Orion
Minerals Ltd managing director Errol Smart
told Paydirt of the Springboks’ win under
captain Siya Kolisi.
“It is a similar feeling to when Nelson
Mandella lifted the trophy, there is a very Orion managing director Errol Smart is congratulated by South African President Cyril
good feeling about things in the country at Ramaphosa for the company’s efforts at Prieska
the moment and at the recent SA Invest-
ment Conference there was a definite vibe
of ‘yes we can do this, we can overcome this, important part of the sector,” Smart said. rified for off-site discharge. This essentially
we can do it’. We are even starting to see For the past few years Orion has gener- allows for increased pumping rates and the
the Government take on the unions on the ated great momentum in bringing a new potential to accelerate project development
big issues as well. They are making impor- dawn to the Prieska copper-zinc mine in timelines. Meanwhile, semi-autogenous
tant moves to change the macro-economic SA’s Northern Cape. milling test work indicates scope for reduced
structure in this country, otherwise we are The company is currently undertaking op- processing plant capital and operating costs.
not going to turn it around. I think the Govern- timisation studies on the Prieska BFS. “Positive results from water treatment tri-
ment is recognising that now and they are Smart said there was a lot of promise als mean that we now have more options
taking strides to do it.” shown in the optimisation studies to date for dewatering and can improve on what we
SA has been dragged down by high-level and he hoped to have work completed by see as an already very robust plan. In addi-
corruption in political ranks and an underper- the time of February’s Mining Indaba. How- tion, having SAG milling as a real alternative
forming economy for many years, however, if ever, the pending Christmas holiday break to ball milling is yet another opportunity to
commitments made by global powerhouses may push the timeline out. make material improvements on capital and
at the second SA Investment Conference in “I would hope to have it done by the end of operating costs,” Smart said.
Johannesburg during November are any in- the first quarter , but if the angels smile An initial 10-year project is estimated to
dication, the start of a rejuvenated economy on us it might get done by the time of Mining deliver undiscounted free cash flows of $1.1
might not be far away. Indaba,” Smart said. billion, a NPV $574 million at an 8% discount
With the likes of Ford and BMW announc- Cash will not be a concern for the com- rate and IRR of 38% (all pre-tax).
ing plans to build major new factories in SA pany as Orion announced an increase to its The project will cost $378 million to de-
plus other proposed big-ticket investments capital raising target to $7.7 million to fund velop a modern 2.4 mtpa underground and
by companies in mining and energy, manu- BFS optimisation studies, early works at open pit mining operation, which will pro-
facturing, technology and pharmaceuticals, Prieska and continued exploration activity of duce payable metal production of 189,000t
about $36 billion worth of projects were an- its tenements in the Northern Cape. of copper and 580,000t of zinc.
nounced at the SA Investment Conference. “I think we are quite pleased with the out- Capital payback is expected to take less
While mining only accounts for 8% GDP in come. We went out to raise $5 million and than three years from first production, with
SA, it is nonetheless an important contributor were surprised with the early interest and an all-in-sustaining margin of 44%.
to foreign exchange and a large employer. increased it to $6.4 million. Then, there were “The President congratulated us for our
The narrative in the last decade has been some other parties which really wanted to be work at the SA Investment Conference be-
of mining companies looking to exit, how- part of it but couldn’t get organised in time cause it is now a project recognised as of na-
ever, the scale of investment made by Anglo and these are the type of people, quality in- tional importance to SA. That does bring the
American plc into its chrome, platinum and vestors, that you want. So, we got them in- right kind of attention, we are genuinely sup-
diamond businesses, plus other big mining volved at this stage and that now puts us in ported by all the regulatory authorities which
houses in the country is often overlooked, a fairly comfortable position for the next six can help you go through the permitting and
according to Smart. months or so,” Smart said. right processes to construction,” Smart said.
“They are making big investments which One of the latest study developments at
are significant and little old Orion has limped Prieska has been positive results from water – Mark Andrews
past most people’s sights, but we are a very treatment trials for the shaft water to be pu-
Page 46 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
WE’LL HELP YOU
THEN WE’LL HELP YOU
We provide a full range of exploration drilling and mine site services
including grade control and blast hole drilling, shot firing and load and
haul services across Africa.
Contact us to discuss how our knowledge and
experience can help your project.
www.capdrill.com | [email protected]
Zimbabwe still a risk
“ Ilittle bit of irony in my new position,” was is now held by Russian-linked firm GDI – $US500 million.
So, 15 years on the Darwendale ground
t’s a funny old world and, yes, there is a
Phase Two would take throughput capac-
how David Brown put it when I asked him which is not the Russian company to which ity to 10.5 mtpa with metal production then
how he felt about becoming non-executive the ground was originally granted – but the reaching 860,000 ozpa PGMs plus gold.
chairman of platinum mining “wannabe” $64,000 question remains – will they actu- Just to put that in context, Zimplats –
company Great Dyke Investments (GDI). ally develop the mine? which has been in operation since 2002
Reason is that GDI is looking to develop That question has to be asked given two – milled 6.5 mtpa in the year to end-June
a new PGM mine at Darwendale in Zim- key stumbling blocks which have deterred 2019 from which it produced 549,320oz of
babwe which, if it goes ahead, will exploit major new foreign investment in Zimba- PGMs.
resources previously owned by Brown’s for- bwe for more than a decade; the amount Asked how realistic GDI’s plans were,
mer group – Impala Platinum Ltd – through of money that has to be raised, which is Brown replied the key issue was raising the
its Zimbabwean subsidiary Zimplats. around $US500 million, and the fact that funding required for which GDI has target-
Brown is currently chief executive of ASX- Zimbabwe remains a high-risk destination. ed financial close by March 31 next year.
and JSE-listed coal junior MC Mining Ltd Despite plenty of rhetoric from the new GDI has appointed the African Export-Im-
but he was previously financial director and Government along the well-worn theme port Bank as its main financial partner and
subsequently chief executive of Implats. that “Zimbabwe is open for business” little mandated lead arranger.
Some 15 years ago, when Brown was appears to have actually happened on the According to a GDI statement, “advanced
Implats’ financial director, the group was ground despite the regime change to en- negotiations are currently underway with a
forced by the Zimbabwean Government courage new investment. The fact that the number of South African, Russian and Zim-
to give up two chunks of platinum mineral country appears to be plunging into a new babwean financial institutions to participate
rights it had previously been awarded. bout of hyperinflation is another huge disin- in the syndicate”.
That was in terms of the Zimbabwe centive to foreign investors. Brown told me: “A lot of this will turn on
Government’s stated desire to “open up” While there have been plenty of enthu- the fundraising. PGMs are running hot at
the country’s fledgling platinum sector to siastic expressions of interest nobody has the moment. There’s a lot of interest and
wider participation. At the time the platinum yet taken the plunge to pump money into PGMs have a very favourable outlook.
business was dominated by Zimplats with a major new platinum project. That must Provided they can raise the money in the
smaller operations owned by Anglo Ameri- be hugely disappointing for Mnanagagwa next six to eight months then I think there’s
can Platinum plc (which was also forced to because he seems to be banking on a a realistic chance of bringing the mine into
give up ground) and Mimosa Platinum Ltd. platinum mining boom to fund Zimbabwe’s production on schedule.”
The ground taken from the two majors attempts to dig its way out of the financial Brown pointed out the mine would be
was awarded largely to Russian and Chi- morass it has gotten into. straightforward, accessing a shallow de-
nese investors who – you guessed it – did GDI is controlled “on a parity basis” by posit via a decline shaft and using known
absolutely nothing with the resources which Russian and Zimbabwean shareholders. and proven technology.
“ Despite plenty of rhetoric from the new development on the ground but I am con-
He added: “There remains a lot of hard
The Russian company is Afromet JSC, a
have remained undeveloped.
work to be done before we can commence
fident that the Darwendale project has the
Government along the well-worn theme that
potential to become a significant low-cost
PGM producer, ultimately becoming a ma-
‘Zimbabwe is open for business’ little appears to
jor part of the global PGM industry in the
have actually happened on the ground despite the
What’s interesting is that Brown seems to
regime change to encourage new investment. mid-term.”
be increasingly getting back into platinum
given that he has been a non-executive di-
However, during the past 15 years, Zim- wholly-owned subsidiary of Russian invest- rector of South African producer Northam
plats has steadily expanded its own op- ment and industrial group VI Holdings. Platinum Ltd for the past two years.
erations, ploughing hundreds of millions of The Zimbabwe partner is Landela Mining Asked about this – and any potential
dollars into new mines and refineries all the Venture which, according to Reuters, is a conflict with his current day job running MC
while fighting an uphill battle with the Zim- subsidiary of commodity trading firm Sotic Mining – Brown replied: “I love the platinum
babwean Government to be granted cast- International which is linked to Zimbabwean industry in which I spent 17 years and there
iron rights over its operations. fuel tycoon Kudakwashe Tagwireyi who is could come a time when I decide to change
Zimplats was forced to give up yet more one of President Mnangagwa’s advisors. gears but that time is not now. I still have a
ground a few years back but now seems to GDI’s stated plans for Darwendale are box to tick at MC Mining which is comple-
have secured clear title in return for that fol- ambitious. It wants to have Phase One of tion of the Makhado project.”
lowing the change of government two years the project up and running by 2021 which
ago when former president Robert Mugabe would involve a production rate of 3.5 mtpa Brendan Ryan is a Johannesburg-
was removed from power and replaced by to produce 280,000 ozpa PGMs plus gold. based mining writer
Emmerson Mnangagwa. Peak funding for Phase One is stated at
Page 48 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT
Beefing up the mining brand
pproaching her first anniversary as
Achief executive of Business for De-
velopment (B4D), Karen James reflected
on the surprises, challenges and rapid ad-
justment to the mining industry in a recent
interview with Paydirt.
An engineer by trade, with a Masters
in environmental engineering, James is
well suited to the B4D make-up and came
to the not-for-profit organisation as it en-
tered a new phase of growth.
“We have more programmes on the
ground than we ever have as an organi-
sation. We’ve spent a lot of our history
doing thought leadership and desk-based
research; we know that the hard work is in
the implementation and execution and we
are kind of putting our money where our
mouth is,” James said.
B4D is experienced in unpacking com-
plex value chains and developing inclu-
sive, practical solutions ensuring those
who live in rural poverty can benefit from
enterprise, recognising them as custom-
ers, producers, and entrepreneurs. It cur- Karen James
rently has an ongoing programme in Mo-
zambique, one in Kenya, four in PNG and and drilling because having conversa- James’ recent experience in the IT in-
is about to start a project in Mongolia. tions early produces very different out- dustry has led to her proposing the use
Meanwhile, there were opportunities in comes than when the mine is closing in of digital platforms better to create a mar-
Australia and Philippines pending at the two years. Agriculture takes time and it is ketplace for people’s input and ideas for
time of print, as B4D’s focus was on tak- important to be discussing what people how land could be looked after to be tran-
ing ideas beyond scoping study and field are growing, what people want to grow, sitioned into another economy when the
trials “and putting them into work where what people can grow and what markets mine gate closes.
farmers are getting paid for their product there are for farmers.” Technology allowing for old tyres to be
and we are truly able to measure the im- Most surprising for James since start- reused in steelmaking and ash to fortify
pact in social performance that we are ing at B4D in January 2019 has been the cement are just some ideas the mining
having,” James said. mining industry’s work in transforming industry could build on, she said.
“We’re industrialising our operations to exhausted pits into something meaningful Bringing strategies that deal with waste
scale and we are looking at ways to share post-production. effectively would do the mining industry
our learnings and expertise with others so “The thing that shocked me is the no harm, as the sector faces continued
that we become IP sharers in an inclusive amount of pits and mine closures around pressure from the broader community
model. Success for us isn’t necessarily the world that need to be turned into about the nature of its practices.
about volume, it is about outreach and something so that it is not a dead asset. James repeated a common industry
disrupting models where smaller farm- As an engineer I would like to see us look- lament that mining people haven’t ad-
ers are price takers and they get to par- ing towards helping with that problem,” equately promoted the sector well, which
ticipate in a fair and equitable commercial James said. needs to change.
arrangement.” “We co-facilitated a workshop with “Now is the time to really ramp that up.
While James is encouraged by the will- ICMM in South Africa and I thought com- We haven’t done a good enough job in
ingness of the mining sector to address munities in SA were lucky having all these communicating to the broader community
sustainability issues and implement com- assets, but they didn’t see them as assets and the consumer, particularly given the
munity development programmes and they saw them as liabilities. But, if you fact that there are 43-plus minerals that
commit time and revenue to such activi- can repurpose this land, similar to some go into a mobile phone,” James said.
ties, she urged companies to start pro- of the work we have done in PNG in very “We need to find a balance, which is
cesses well before any dirt was dug. challenging terrain and constrained infra- very important. There have been mis-
“I think that when we engage close to structure, having access to ports, roads takes made in the past, but we can only
mine closure, we get a very different out- and level land and no tribal wars can’t be look forward; we have to learn from the
come than when we engage in the early underestimated. past and look forward.”
days of exploration and start seeding the “I was kind of shocked and I didn’t re-
conversation,” James said. alise that there are 60,000 empty pits in – Mark Andrews
“Even when there is no cash flow, we Australia alone,” she said.
want to be engaged through exploration
Page 50 DeCeMBeR 2019 - JaNUaRY 2020 aUSTRaLIa’S PaYDIRT