September 2017 VOLUME 1. ISSUE 253 $11.95
front and back cover
Golden Road to
Fields of dreams
• Diggers & Dealers review ISSN 1445-3436
• New South Wales focus 08
• Zinc hits 10-year highs
9 771445 343007
PAYDIRT (ISSN 1445-3436) 5 NEWS
Published by First Quantum Minerals Ltd announced
Paydirt Media Pty Ltd. last month it was placing the Ravensthorpe
A.C.N. 063 985 133 nickel mine in Western Australia on care-
and-maintenance. The move leaves Murrin
Head Office: Murrin as WA’s only active nickel laterite
Suite 9, 1297 Hay St, West Perth mine. Jon Daly takes a look at the often
Western Australia 6005 controversial history of nickel laterites in
P.O. Box 1589, West Perth Australia
Western Australia 6872
Phone: (+61 8) 9321 0355 18 COVER 18
Facsimile: (+61 8) 9321 0426 It was the obvious candidate for the Dealer 24
[email protected] of the Year award at this year’s Diggers
www.paydirt.com.au & Dealers forum but there is still plenty of
work to be done on Gold Road Resources
Ltd’s and Gold Fields Ltd’s Gruyere project.
Mark Andrews visited the remote project to
Editorial: find out where the Yamarna belt fits in the
Editor: Dominic Piper plans of two very different-sized companies
Deputy editor: Mark Andrews
Journalists: Michael Washbourne, 24 DIGGERS & DEALERS
Jonathon Daly REVIEW
Photography: Picture This The feeling was unanimous; the 2017
Art director: Marian Noonan
Contributors: edition of Diggers & Dealers was the most
Keith Goode (Sydney), Brendan Ryan
(Johannesburg), Ross Louthean upbeat in five years. Paydirt delivers the
Advertising: most extensive coverage of this year’s fo-
Advertising manager: Richa Fuller
Subscriptions: Mitchelle Matambo rum, including a one-on-one interview with
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 keynote speaker Robert Zoellick and the
Pre-press and printing: very best stories from inside and outside
Vanguard Press 26 John St,
Northbridge WA 6003 the Goldfields Arts Centre
56 NEW SOUTH WALES
Paydirt Media FOCUS
Executive chairman: Bill Repard Leading our annual coverage of the New
Finance manager: Giovanny Jefferson
Accounts/administration: South Wales metals sector is Carpentaria
Conferences: Melita Fogarty, Exploration Ltd’s attempts to get its Haw-
Christine Oelschlaeger sons iron ore project near Broken Hill off
the ground. Michael Washbourne travelled
to the State to investigate Carpentaria’s
66 BASE METALS
Zinc hit 10-year highs last month, mak-
ing our base metals review perfect timing.
Among the companies attracting attention
are Heron Resources Ltd in New South
Wales, Energia Minerals Ltd in northern
Italy and Metalicity Ltd in WA
Cover image: Gold Fields’ Nick Holland 66
and Gold Road’s Ian Murray at Diggers
& Dealers in Kalgoorlie
Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be
reproduced in any form without the consent of
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
The glitter and glamour
comes back to Kal
The exhibition tent at Diggers & Resources Ltd, told me he had seen a change in investor at-
Dealers always has something of titudes in the course of just a few months.
a carnival atmosphere but this year
the “big top” gave the clearest “Since we launched the IPO, investors certainly appear to
indication yet that the circus has have changed from demanding immediate cash flow to looking
returned to the junior end of town. at exploration,” Marston said. “That is a good indication the sup-
I use the word circus in a com- port is there for non-producers.”
plimentary sense. I’m not sug-
gesting the forum was full of the mining equivalent of clowns, The change in sentiment is also leading to more deals being
questionable treatment of animals and bad magic tricks (al- done as buyers begin to worry about missing out and vendors
though the Gala Dinner provided us with plenty of the latter). see less undervaluing of their assets. An upwardly mobile mar-
Instead, I refer to the excitement traditionally generated by the ket is also giving companies more options for development; a
circus arriving in town. fact borne out by this year’s Dealer of the Year, Gold Road Re-
Diggers never fails to fire enthusiasm among the mining fra- sources Ltd.
ternity and even in the dark times of the last five years there has
been plenty of bouts of fervour among delegates who were cer- In another market, Gold Road may have been castigated for
tain the bottom had been plumbed and the market was showing giving too much of its Gruyere project away when it struck its
signs of recovery for juniors. $350 million deal with Gold Fields Ltd. However, as chief execu-
For the most part, however, it was all bluster and the confi- tive Ian Murray explains in our cover story, the deal has given
dence gained from imbibing a few overpriced pints in the Gold Gold Road the freedom to continue to pursue value accretion for
Bar soon made way for melancholy and insecurity as investors shareholders through exploration.
failed to respond to exploration stories with the same gusto after
they returned to Perth, Sydney, Melbourne or London. “We have been able to accelerate our regional exploration,”
This year was palpably different though. Among the usual Murray said. “If we had gone the debt [financing] route – and this
booths of the established miners, explorers and service provid- is what people overlook – we would not have been spending the
ers a new generation of IPOs, early-stage exploration plays and exploration money we are spending this year, or next year, or
project generators could be seen promoting themselves. Except the year after. We would have had the bank covenants on us; we
this time they had something to back up their enthusiasm. wouldn’t have had the discretionary spending until the project
They were being positive but not in a hopeful way. Instead, was in operation for two years at least.”
they could point to share and commodity prices as evidence
that things really are improving. Prices for copper, zinc and even It is a valid point and one which was backed up by Jake Klein’s
nickel were up, gold was holding relatively steady, iron ore was assessment of the Australian gold sector. The Evolution chief
still defying expectations and there appeared no end to the bat- executive said the industry by-and-large was still failing to meet
tery mineral boom for lithium and cobalt. shareholder expectations.
The commodity price rebound has given the resources sector
a base from which to re-establish its market reputation and, led “…the harsh reality is that even in a benign US dollar gold
by the gold companies and Fortescue Metals Group Ltd, it is price environment and a favourable Australian dollar gold price
now capitalising on that basis. environment, we the gold industry as a group have difficulty cre-
The evidence was there from the larger companies pre- ating and delivering value consistently,” Klein said.
senting. Northern Star Resources Ltd announced plans to hit
600,000 ozpa during the conference, before following it up with The next indicator of just how far the resources revival has
a post-Diggers full-year profit of $215.3 million. Evolution Mining spread will come this month at Paydirt’s very own Africa Down
Ltd managed to eclipse that figure by $2 million after producing Under conference. At the height of the resources boom, dele-
844,124oz gold for FY2017 and St Barbara Ltd was rewarded for gate numbers at Africa Down Under were larger than Diggers
its remarkable turnaround with the Digger of the Year gong. But, as companies and investors looked over the horizon for the best
for cementing credentials, Fortescue was surely the standout, value.
with chief executive Nev Power confirming at the conference the
company had repaid $US2.7 billion in debt and reported cash of Operators on the continent fell further than most when the
$US1.8 billion for the year. downturn started to bite but as the process starts up again we
The success of the mid-tier companies means investors are are seeing signs of a rebound. This year’s conference will attract
starting to look further down the food chain for value and op- more than 30 junior and mid-tier companies. They will be joined
portunities and that is allowing juniors to emerge from their hi- by a record 26 African ministerial delegations as governments
bernation. across this most alluring but unpredictable of mineral continents
The rate of IPOs is probably the best indicator of whether the gears up for what they hope will be another mining boom.
mid-tier profits are beginning to percolate down to the junior
sector and IPO promoters were thick on the ground in Kalgoorlie [email protected] @DominicPiper
this year. Neil Marston, managing director of a new IPO, Bryah
PAGE 4 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
WA miners fall short with
Ravensthorpe nickel mine million loss for the June quar-
has become the latest ad-
dition to a protracted history of ter, following a $US29 million
unrealised success for nickel
laterite plays in Western Aus- loss in the March quarter.
It is a case of déjà vu for
TSX-listed First Quantum
Minerals Ltd cited a depressed the Ravensthorpe community,
nickel price for the closure, af-
ter a sustained period of weak which suffered through 1,800
demand and oversupply saw
the LME nickel price struggle to job losses as a result of BHP’s
break from the 12-year lows it
reached in 2015. closure in 2009. This time 270
But a low commodity price First Quantum employees have
is not the only determining fac-
tor. Those with even a passing been shown the gate.
knowledge of the WA nickel
sector know, the history of lat- Shire of Ravensthorpe chief
erite closures is long.
executive Ian Fitzgerald told
The State’s nickel boom was built on
the high-grade sulphide orebodies of first Paydirt the community was
Kambalda and then elsewhere but the
lower grade, more capital intensive later- disappointed by the decision
ite orebodies have had a patchy history,
turning potential into disappointment for but not completely surprised.
a host of companies. Even WA’s iron ore
king, Andrew “Twiggy” Forrest, came un- “There have been mumblings
stuck in the laterite space with the fail-
ure of his Anaconda Nickel to get Murrin for a while and we were aware
Murrin operational in the mid-90s.
First Quantum has placed its Ravensthorpe nickel that First Quantum were try-
Forrest cut his ties with the project in laterite operation on care-and-maintenance ing to streamline their costs
2001 following a fallout with major share- because they wanted to keep
holders Glencore and Anglo American
plc. Glencore subsidiary Minara Re- in late 2008, only to suspend operations operating,” he said.
sources Ltd picked up the operation later
that year. 12 months later due to waning profitabil- “At least First Quantum are winding
Murrin Murrin is now the only opera- ity. down slowly. BHP, from what I can gath-
tional nickel laterite mine in WA and even
it has clouds gathering above it. In 2015, First Quantum stepped in to pick up the er, shut the gates and that was it. First
Glencore flagged the possible closure of
Murrin Murrin due to collapsing profitabil- pieces, restoring community confidence Quantum are actually closing down the
ity as nickel prices fell below $US9,000/t
and the operation’s full-year EBITDA after BHP’s abrupt departure. The Cana- processing and finishing what’s in the
dropped 75% to $US32 million.
dian miner restarted operations in 2011 system at the moment and over the next
Like Murrin Murrin, Ravensthorpe
has changed hands between experi- with expectations for the mine to produce four or six weeks winding down and let-
enced miners. First Quantum purchased
the mine in 2010 from BHP Billiton for an average of 39,000 tpa for the first five ting people go.
$US340 million. At the time the deal was
done, there was no shortage of scepti- years before settling at 28,000 tpa over “A number of those staff are FIFO, but
cism, with naysayers questioning the
prospects of an asset which had failed to its expected 32-year mine-life. the loss in the residential component
Last year, the company produced of the workforce will have an impact on
BHP spent about $US2.2 billion con-
structing and commissioning the mine 23,624t of nickel, most of which came schools and businesses in the commu-
and hydrometallurgical processing plant
from Ravensthorpe, following the nity.”
$US712 million sale of its Kevitsa mine Fitzgerald said there was potential for
in Finland. But, at current prices, Raven- some workers to be placed at Galaxy Re-
sthorpe is losing more than a dollar on sources Ltd’s Mt Cattlin lithium mine.
every pound of nickel it produces. Ra- Pascall said First Quantum would offer
vensthorpe produced 11,512t of nickel in assistance to employees in seeking fur-
the first half of 2017 at an all-in sustaining ther employment opportunities.
cost of $US5.70/lb. “Over the next few weeks we will work
First Quantum chief executive Philip closely with our employees and key con-
Pascall said the decision was disappoint- tractors to mitigate the impact and man-
ing for the company. age carefully the staged shutdown of op-
“Ravensthorpe is an excellent opera- erations,” he said.
tion with an outstanding workforce and WA Mines minister Bill Johnston said
supportive community but the continu- the Government would launch a task-
ing depressed nickel market conditions, force to help workers find employment
over some years, leaves us no option,” elsewhere in the mining industry.
he said. “It’s well known that the nickel sector
First Quantum said it would continue is very tough … it’s very disappointing
with the permit process for the Shoemak- that the company has made the deci-
er Levy orebody and undertake regular sion to shut this mine. Unfortunately in
reviews of the market conditions. a resource economy you are sometimes
The closure comes on the back of con- captive to the world’s price,” he said.
secutive quarterly losses for the com- Fitzgerald said the Shire of Raven-
pany. First Quantum reported an $US18 sthorpe still held hope for the future of
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 5
the mine after receiving indications that Pacific Islands but apart from Murrin strategies, including elective milling, size
it could come back online in the future. Murrin and Ravensthorpe, WA’s dry lat- classification and dense media separa-
“They’re continuing their approval ap- erite projects have failed to meet expec- tion were tested on WA laterites.
plications to expand the mine into Shoe- tations. “Even under well controlled operating
maker Levy, where they have good prod- Robinson said WA’s nickel laterites are conditions only very limited upgrading
uct at a good quality. It is all going to be generally around 1% nickel in grade and could be achieved with acceptable nickel
dependent on the world price. If the price varied by the nature in which nickel is losses,” Robinson said.
“kicks and the mine is viable I’m sure hosted in a range of different minerals.
CSIRO has been researching the lat-
they’ll come back,” he said. erite industry for more than
The CSIRO’s head of Non-sulfuric acid-based circuits 20 years. Robinson said work
base and precious metals on geology, mineralogy, ben-
research David Robinson have yet to be taken beyond the eficiation, leaching, interme-
told Paydirt the cost of piloting scale but based on results diate production and refining
processing nickel laterite had all been the focus of sig-
played an important role in potentially offer high-efficiency low- nificant research.
project viability. pressure leach systems with acid Robinson said conven-
It is the dichotomy facing tional laterite processing had
WA nickel hopefuls; while recycle circuits to manage reagent moved towards high pressure
sulphides are high-grade costs and relatively low capex. acid leaching, which offered
and easy to process, they the advantage of being ap-
are notoriously difficult to plicable to all nickel laterite
find and global supplies ores.
are shrinking. “These ores can have high silica and “However, this involves large pieces
In contrast, laterite deposits are big, magnesium content, high acid consump- of sophisticated equipment and conse-
near-surface and consistent but their tion, and significant clays content. These quently significant capital investment up
complex metallurgy leads to multibillion properties lead to limited opportunity for front and on-going maintenance costs,”
dollar capital requirements. significant beneficiation and often bigger he said.
For the last 20 years, nickel laterites processing challenges and thus higher An often neglected but important con-
have been the focus of the world’s major costs than anticipated,” he said. tributor to processing challenges and
miners and developers and a new gen- “An additional complexity in WA nickel production costs of nickel laterites is fine/
eration of wet laterite operations have laterites is their local variability. Samples clay/gangue separation, removal and
sprung up in Asia, Madagascar and the taken from as little as a few meters apart handing.
can have very dif- “The consequence of bottlenecks at
ferent responses to the rear end of the operation should not
beneficiation and be underestimated, they can be debilitat-
leaching process- ing, causing production delays and in-
es.” flated costs,” Robinson said.
Robinson said While yet to be fully developed, at-
Ravensthorpe, like mospheric sulfuric acid leaching is also
other WA laterite emerging as a potential process.
operations, would “It offers some advantages but has
have had its share yet to be commercialised. Non-sulfuric
of beneficiation acid-based circuits have yet to be taken
challenges and beyond the piloting scale but based on
any problems in its results potentially offer high-efficiency
beneficiation plant low-pressure leach systems with acid
would have impact- recycle circuits to manage reagent costs
ed all downstream and relatively low capex.”
stages. CSIRO senior research scientist Rob-
“Chasing grade bie McDonald said hydrometallurgical
through a benefi- processing circuits, such as the process-
ciation plant eases ing plant BHP commissioned at Raven-
downstream pro- sthorpe, had the potential to improve
cessing challenges problem concentrates by removing pen-
but significant grade alty elements, such as arsenic, which
improvement often can lead to serious price reductions or
comes with an un- even concentrates being deemed unac-
acceptable loss of ceptable to some smelters.
value to the tails,” But despite great progress in this tech-
he said. nology, Robinson said only a small num-
In a study recent- ber of primary producers were giving it
ly completed by the attention.
CSIRO and Univer- – Jon Daly
sity of South Aus-
tralia, a wide range
PAGE 6 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Red 5 swoops on Darlot
Red 5 Ltd will soon call the cern,” Williams said.
Eastern Goldfields home. “We want to keep the em-
The company announced it ployees and we need to main-
was acquiring the Darlot gold tain ties with the contractors
mine and nearby King of the and suppliers. We have a
Hills project from Gold Fields transitional service agreement
Ltd and Saracen Mineral which we will work very hard
Holdings Ltd respectively, last with Gold Fields on to ensure
month. it will be a smooth transition
The timely additions of Dar- on October 1.”
lot and King of the Hills to the Williams said the company
Red 5 portfolio come three was looking to bring King of
months after the company the Hills online late next year if
suspended its Philippines op- all goes to plan, with regional
erations because of ongoing exploration in the Leonora-
regulatory concerns in the Leinster area also set to be a
country. strong focus over the coming
However, the company is 18 months.
not closing the door on the Red 5 has acquired the Darlot gold mine from Gold Fields “We really think there’s a lot
Siana gold project just yet. more consolidation within this
Red 5 managing director Mark Williams for 402,000oz) is a near-term under- 100km radius around the Darlot mine
said his company had been seeking to ground proposition, giving Red 5 a total and that will be the next phase for us as
boost its portfolio since restarting Siana mining inventory of 626,000oz across a company,” Williams said.
in 2015. the 25,700ha landholding. “We want to deliver value to our share-
“We looked at multiple opportunities Red 5 will fork out $18.5 million in cash holders and we believe these transac-
and we’re very pleased to have landed and shares to Gold Fields for Darlot and tions can help us do that. We have a
on these two, given the criteria was ei- a further $16 million in cash and shares great operational team we’ve been able
ther a near-production or producing as- to Saracen for King of the Hills, about to keep together and they will dovetail
set,” Williams told Paydirt. 80km south of the operating gold mine. neatly with the Gold Fields team.”
“We like gold, we like copper and we At the time of print, Red 5 was round- While the company’s focus has
like the Australian-Asian geographical ing up a $12.7 million rights issue to fund switched to Australia, Red 5 still wants
space, so a combination of King of the the cash component of the transaction. to remain active in the Philippines and is
Hills and Darlot fits very neatly with the The company reported a strong cash po- currently seeking an amendment to the
vision we’ve been looking at for a number sition of $16 million at the end of July. environmental certificate for a new tail-
of years.” “We’re absolutely delighted to have ings storage facility at Siana.
Darlot has produced, on average, been able to negotiate the two acquisi- That amendment is to be reviewed by
about 94,000 ozpa since 1989 and cur- tions from two different vendors in two Roy Cimatu, the recently appointed Sec-
rently hosts a resource of 1.2mt @ 6 different sales processes at the same retary for the Department of Environment
g/t gold for 224,000oz. A refurbished time and sign the two agreements on the and Natural Resources. If approved, Red
830,000 tpa processing facility and 402- same day,” Williams said. 5 can proceed with a formal application
room camp are key features of the site. “It’s a real testament to the three par- for the tailings facility.
King of the Hills (2.71mt @ 4.6 g/t gold ties – Red 5, Gold Fields and Saracen “Once the Secretary has passed the
– to have understood the confirmation process, we don’t see im-
vision and the timeframe pediments to that application being pro-
we had, which was a cessed within due course,” Williams said.
very tight timeframe, “The gold is still in the ground at Siana.
and everyone delivered We’ve got 500,000oz in the mine plan
accordingly.” and reserve that was published in an up-
Red 5 will also acquire dated feasibility study some 18 months
the Darlot workforce ago. We’ve preserved the asset, we’ve
when the operation for- got a core team looking after that and
mally changes hands on we’ve reduced the spend as much as we
October 1, with Williams can.”
expecting his team to – Michael Washbourne
work closely with per-
sonnel from Gold Fields
to avoid any hiccups.
“It’s important for Red
Harwind Partners consultant Mike Harrowell with Red 5 chief 5 and it’s also important
geologist Bryan Dumpleton and managing director for Gold Fields that Dar-
Mark Williams at Diggers & Dealers lot remains a going con-
PAGE 8 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Back to reality
Conditions for the mining business which include the settle- with AngloGold but it was
seem to have improved generally ment of Lubambe’s gener- vetoed by the Department
but it’s still ugly out there for many South al banking facility and ad- of Mineral Resources.
African companies, as a recent spate of ditional funding provided That rumour was denied
write-downs and impairments have re- to Lubambe by ARM and by both groups but the
vealed along with a setback for African Vale between May 1 this speculation is not going
Rainbow Minerals Ltd chairman Patrice year and the completion away.
Motsepe – although that will probably do date. The write-downs by
more damage to his pride than his pocket. So – you win some and Harmony and AngloGold
Almost exactly a year ago in this col- you lose some as they say Ashanti were generally
umn I reported on how Motsepe was – and the list of South Af- anticipated by investors
looking to sell the Lubambe copper mine rican “losers” in terms of but many were caught by
– formerly known as the Konkola North reporting impairments for Patrice Motsepe surprise by the unexpect-
mine – which ARM and Brazilian re- financial periods to end- ed announcement from
source giant Vale jointly owned. June includes gold heavy- high-flier Sibanye that it
Motsepe was adamant he was going to weights Harmony Gold Mining Co Ltd, too would take major impairments on
get a high price for Lubambe despite the Sibanye Gold Ltd and AngloGold Ashanti some of its South African operations.
then-grim state of the copper business Ltd. Sibanye announced early in August
and despite the fact that this mine has AngloGold Ashanti has announced an that it intended restructuring its Cooke
some serious fundamental flaws – such $US86 million impairment against some and Beatrix West operations because
as a major flooding problem and difficult of its South African mines following man- of ongoing losses and putting around
mining conditions which combined to agement’s decision at the end of June to 7,400 jobs on the line. Chief executive
place it near the very top of the copper restructure the group’s Tau Tona and Ko- Neal Froneman commented at the time
industry cost curve. ARM took a R1.4 bil- panang mines – after a prolonged period that “the losses experienced at the Bea-
lion impairment against Lubambe in its of unsustainable losses – potentially put- trix West and Cooke operations threaten
results for the year to end-June 2016. ting 8,500 jobs at risk. the future of other group operations and
Nonetheless, Motsepe maintained that That was followed by a string of impair- the employment of many other South Af-
“if we get the right price, we will sell it” ments announced by Harmony which ricans”.
and he indicated that he was looking to wrote off R1.7 billion in respect of its fi- That announcement was followed by
get back most of the $US400 million that nancial year which included: an impair- a trading update which said Sibanye ex-
had been invested in the operation to ment of R785 million against its Target pected to report an attributable loss of “at
date by ARM and Vale. One mine; an impairment of R678 million least $US360 million” for the six months
His exact words were: “It’s very sim- against Kusasalethu and an impairment to end-June as a result of impairment
ple. The price we want is the best price. of R255 million against the Tshepong charges and non-recurring cost items.
“We have invested in that mine for the fu- mine.
These included a $US211 million im-
ture. We have spent a huge pairment charge against the
amount of money on it… The underlying fundamental Cooke and Beatrix West op-
more than R5 billion… so, erations along with an $US82
reasons for the operating
we will let you know how the losses being made on many of South million occupational health-
whole process unfolds.” care provision and a $US30
million cost provision associ-
The whole process has
now unfolded and ARM Africa’s ageing gold mines remain ated with the acquisition of
has – grudgingly – finally unchanged. These operations are Stillwater Mining.
informed its shareholders
The underlying fundamen-
about the outcome in a terse inherently high-cost because they tal reasons for the operating
statement released on the are deep and labour intensive. losses being made on many
JSE which it describes as a of South Africa’s ageing gold
“voluntary announcement” mines remain unchanged.
because “the disposal falls These operations are inher-
below the transaction categorisation Harmony had previously dropped the ently high-cost because they are deep
threshold in terms of the listing require- expected life of mine at Kusasalethu and labour intensive.
ments of the JSE”. – previously one of its “core, long-life But what’s making it even worse right
Reason the disposal falls below the South African operations” – to five years now is the unexpected strength of the
“transaction categorisation threshold” is from 21 years through a decision to high- South African rand against the US dol-
because – as widely predicted despite grade the operation. lar. Despite South Africa’s well publicised
Motsepe’s optimism – the Lubambe mine For what it’s worth there’s still specula- political and economic meltdown, the
has been sold for a fraction of what he tion on the JSE that Harmony is negoti- rand is actually appreciating against the
was looking for. ating to buy AngloGold Ashanti’s South greenback. Blame it on President Donald
It has been sold to private equity firm African operations which is the latest Trump.
EMR Capital Bidco for $US97.1 million in variation on a prior rumour that Harmony Brendan Ryan is a Johannesburg-based
cash, subject to a few final adjustments had actually reached such an agreement mining writer
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 9
AngloGold revives SA spin-off
AngloGold Ashanti Ltd producer Harmony Gold If the spinoff happens it could boost
is considering separat- Company Ltd is likely to the credit rating of the company, which,
like other South African miners, is trading
ing its South African assets buy some of the assets at a discount to its international peers,
due to domestic political instability and
from the rest of its portfolio, AngloGold plans to offload concerns over a stronger rand.
three years after sharehold- in South Africa. Harmony The Srinivasan Venkatakrishnan-led
AngloGold, which operates in nine coun-
ers revolted against a simi- also declined to comment. tries including Ghana, Mali, Tanzania,
Brazil and Australia, is rated just above
lar effort. In 2016, AngloGold’s junk by credit agency Moody’s, while
S&P has the miner in junk status with a
Africa’s top bullion pro- South African operations stable outlook.
ducer has hired Deutsche Srinivasan Venkatakrishnan produced 967,000oz gold, Should the spinoff happen, AngloGold
Bank to evaluate options, or 26% percent of its total would be the latest miner to reduce ex-
posure to South Africa, where political
but discussions are be- output. instability, controversial new mining rules
and a stronger rand have made it less at-
lieved to be at an early stage. The company said in June it could cut tractive to operate.
Both AngloGold and Deutsche Bank up to 8,500 jobs in South Africa as part of Anglo American plc and diversified
miner Glencore have sold their coal as-
declined to comment. a restructuring after heavy losses. sets in the country, while BHP Ltd made
its exit in 2015 by spinning off assets into
The miner is understood to be looking AngloGold abandoned a plan to spin Perth-based South32 Ltd.
at listing its international assets, which off its South African business in 2014, – Zandi Shabalala and Clara
include gold mines in Western Australia five days after announcing the proposal,
and Brazil, in London, while the South Af- after major shareholders objected to a
rican assets, some of which will be sold $US2.1 billion rights issue that was part
as part of the plan, will remain in the ex- of the plan and was intended to cut its
isting Johannesburg listing. debt levels.
“AngloGold is reviving aspirations to Since then, the company has cut net
spin off the international assets from the debt to $US1.92 billion at end-December
South African ones,” a source told Reu- from $US3.13 billion in 2014, indicating
ters. it may not need to tap shareholders to
Another source added that bullion carry out the deal this time.
PAGE 10 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
ConsMin revives Woodie
als Ltd (ConsMin)
is breathing life into its
mine in the Pilbara,
thanks to a $30 million
investment from new
Chinese owners, Ningx-
ia Tianyuan Manganese
Industry Ltd (TMI).
400km south-east of
Port Hedland, had been
a source of high-grade,
nese for some 70 years.
Yet in the face of The Pilbara region will be buoyed by the restart of the Woodie Woodie manganese operation
historically low manga-
nese prices, Woodie Woodie was placed Woodie Woodie continuing into the fu- the Pilbara, and hope similar offers are
on care-and-maintenance in February ture. This is a great outcome for Cons- made by other companies,” he said.
2016, affecting about 330 employees. Min, the Pilbara region and WA,” he said. – Jon Daly
The manganese price has dropped An initial 115 jobs have already been
some 60% since January 2015 from placed as part of the
$US4.18/dmt to $US1.80/dmt. restart plan, which
Buoyed by a surge to about $US2/dmt includes processing
in the last 12 months, TMI, the world’s of low-grade stock-
biggest electrolytic manganese pro- piles.
ducer, acquired ConsMin and Woodie ConsMin is tar-
Woodie in May and is pushing towards a geting production
full restart of operations in October. of 1.3-1.5 mtpa and
TMI chairman Tianjiang Jia said has flagged its first
Woodie Woodie was an important part of shipment for No-
the company’s international strategy to vember.
integrate mining operations and its pro- The company has
duction of electrolytic manganese metal, also extended a
a key ingredient of stainless steel. helping hand to First
“This is a very exciting time for TMI. Quantum Minerals
We were attracted to ConsMin because Ltd employees dis-
of the quality of its assets and we were placed by the Ra-
always confident that there would be fu- vensthorpe nickel
ture opportunities for Woodie Woodie at mine closure, by en-
some stage,” Tianjiang said. couraging workers
About 10% of the world’s manganese to apply at Woodie
goes into the production of electrolytic Woodie.
manganese. Chamber of Min-
Since 2003, TMI has grown its annual erals and Energy of
electrolytic manganese production ca- WA chief executive
pacity from 1,500t to 800,000t and has Reg Howard Smith
plans to increase that to 1.2 mtpa. welcomed the offer.
ConsMin chief executive Oleg Sheyko “We are pleased
said the mine’s reopening was an impor- with TMI’s prompt
tant event for WA’s mining industry. invitation to the Ra-
“It was a very tough decision to close vensthorpe work-
Woodie Woodie but at the time it was ers to apply for
simply unviable. We are now confident new positions at
in the manganese market outlook and the Woodie Woodie
with exploration investment we can see manganese mine in
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 11
Building bridges with China
The Australian National Exhibition foreign companies and products
and Trading Centre (ANETC) with the Chinese market.”
aims to promote and sell Australian By creating an ecosystem for
imports in China and has usually fo- investment and trade, Wang
cused on goods like the Tim Tams, said the trade zone worked as
Barossa Valley wines and boomer- an incubator for small and me-
angs which populate its showroom dium foreign companies looking
in Shanghai. to enter China.
But curator Lily Lou said her Chi- ANETC’s exhibition centre as-
nese clients had a growing appetite sistant curator Oreo Zhu said his
for mid-tier mining stories. company provided a one-stop
“Australia has the world’s most shop service for domestic and
reputed and quality mining [sector]. international companies.
Thus, importing mining to Chinese “First we find potential part-
market can create a win-win situa- Australian National Exhibition and Trading Centre curator ners from both countries. Once
tion for both the Australian and Chi- Lily Lou and assistant curator Oreo Zhu on site in Shanghai we find them we do the back-
nese economy,” she said.
ground investigation to find out
“Any boom in the mining industry index on the interest from Chinese companies. whether the company has a good reputa-
can definitely be beneficial to the Austral- Waigaoqiao was created in the early tion and good value,” he said.
ian economy.” 1990s as a place of international trade, “Then once that is done we will do pro-
Since opening its doors to international advanced manufacturing industry, mod- ject planning, then contract negotiation
trade in the early 1980s, China has seen ern logistics and duty-free commodity and then the last thing we do is to help
an average GDP growth of 10% each exhibition and trading. them have the legal support and govern-
year, the fastest sustained expansion of In 2013 it was incorporated into the ment backing.”
a major economy in history. China (Shanghai) Pilot Free Trade Zone, Lou said ANETC could help small and
As one of its main trading partners, expanding the trade area from 28sq km medium-sized Australian mining compa-
Australia has been a major beneficiary of to 120sq km. nies obtain the best policies and estab-
this unrestrained growth. Last year it produced 75% of GDP in lish trade connections.
China is Australia’s top export destina- Shanghai’s economic district of Pudong “We can utilise our business network
tion, with exports amounting to $93 bil- and reached a total invested volume of to promote mining companies and help
lion, which is about 30% of total exports, 4.38 billion yuan. them find Chinese partners and inves-
in 2016. Wang Jianxing is the deputy general tors,” she said.
Lou said mining continued to represent manager of the marketing department Addressing the China-Australia Coop-
a considerable resource for Australia of state-owned enterprise, Shanghai eration on Economy and Trade Forum in
and export opportunity for China. Waigaoqiao International Trading Opera- March, Prime Minister Malcolm Turnbull
“Australian products have a very good tions Center Co Ltd. highlighted the importance of trade ties
image and reputation here in China, so ITOC was launched as a trade opti- between the two nations.
lots of Chinese consumers and compa- miser, with the purpose of building pro- “Reliable, high quality Australian re-
nies come to us to gather information fessional platforms and increasing the sources and energy exports have been
about Australian goods,” she said. amount of trade. integral to the building and powering of
Lou said ANETC was one of the few The company refers to itself as the China during its period of rapid infrastruc-
platforms endorsed by both the Austral- “bridge between government and clients, ture-driven growth. In 2016, we exported
ian and Chinese Government. creation of better trade environment and 650mt of iron ore to China, five times as
“We have made contact with two large pilot project of new policy”. much as we did in 2006,” he said.
Chinese bulk commodity exchanges, Wang said the trade zone had 40,000 “China’s manufactured goods provide
which are in Shandong province and newly registered companies since 2013 key industrial inputs and meet consumer
Zhejiang province respectively,” she said. and 150 of world’s top 500 companies demand here, reducing the cost of living
“It is noteworthy that the Zhejiang were registered in the trade zone. for Australians.
Zhoushan bulk commodity exchange is Wang said China’s trade had tradition- “We enjoy a longstanding and suc-
now at the national level, which is au- ally been focused on exportation, but cessful partnership. It is a partnership
thorized by the central state government. Waigaoqiao was now helping foreign built on those cultural and personal ties.
We have reached a preliminary agree- companies export to China. People to people ties. Family ties. And
ment with the local government. The lo- “Why we developed into the China one built on the complementarily of our
cal government entrusted us to set up a (Shanghai) Pilot Trade Zone is because economies.”
sub-bulk commodity exchange only for we wanted to have new functions or new – Jon Daly, who visited ANETC in
Australian products under these bulk reforms and regulations,” he said. Shanghai recently
commodity exchanges. These commod-
“We call our area the Pilot Free Trade
ity exchanges use credit transactions to Zone, so this infers that we need to have
do exchange.” a lot of facts and we will test whether this
Sitting in the Waigaoqiao Free Trade things work of not.
Zone, ANETC is well placed to capitalise “[This] is the best platform to combine
PAGE 12 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Minamata Convention on
mercury in full force
Ahead of the first Minamata Con- Mercury is highly toxic and can cause serious health issues when it contaminates food and
vention conference on mercury groundwater. It is a big issue in the artisanal mining scene, particularly across Africa
in Geneva later this month, China
has thrown its support behind the ternative for replacement is available”. signatories should be applauded for their
global pact to cut pollution from the China produced 4,000t of mercury in efforts.
2016, accounting for 88.9% of the world’s “ICMM’s members are at the forefront
The entry into force of the Mi- total supply that year, data from the US of driving safety standards through the
namata Convention was celebrat- Geological Survey shows. mining industry and adopted a position
ed in August, with China announc- statement on mercury risk management
ing a ban on the production and “Looking to the future, the environ- in 2009,” he said.
trade of a range of products con- ment ministry will continue to work with
taining mercury by 2020, including other departments to promote the use of “Our members are already aligned
thermometers and blood pressure mercury-free and low-mercury technolo- with the Minamata Convention and we
monitors, and ban primary mercury gies,” Zhao said in the MEP statement. endorse the need for the effective man-
mining by 2032. agement of mercury.”
China vowed in its recent 2016-2020
Mercury is highly toxic and poses five-year plan to control mercury emis- A key objective of the Convention is to
severe public health risks when it sions from coal-fuelled power plants, control and reduce emissions of mercury
contaminates food and groundwa- industrial boilers, non-ferrous metallurgy to the atmosphere. In support of this ob-
ter. and cement production. jective, ICMM has already contributed
extensively to the development of draft
The adverse effects that mercury The country also aims to stop the UN guidance on the control of airborne
can have on human health and the launch of new primary mercury mining emissions from mining and metals pro-
environment was recognised by and calcium-made polyvinyl chloride duction.
the International Council on Mining (PVC) production projects by 2020.
and Metals (ICMM), which led the “I very much hope this guidance will be
way for industry to align itself with PVC, measuring instrument manufac- formally adopted at the first meeting of
a UN convention on mercury when turing and battery production are the top the Minamata Convention taking place
it adopted a position statement on mercury consuming sectors in China, in September. ICMM members are com-
mercury risk management in 2009. which consumes more than 1,440t of mitted to minimise airborne emissions of
mercury every year, according to the mercury through the application of cost-
ICMM’s position commits members to China Association of Environmental Pro- effective best available technology,”
not open any new mines for primary pro- tection Industries. Atherton said.
duction of mercury, to reduce mercury
emissions to air and, in collaboration with ICMM’s Director of Health, Safety and – Reuters with Paydirt staff
others, to responsibly manage the mer- Product Stewardship John Atherton said
cury that can arise as a by-product of the a lot of hard work had gone in to getting
mining and production of other metals. the Minamata Convention into force and
China – the world’s biggest miner and
consumer of mercury – signed the Mi-
namata Convention on mercury in 2013.
It was approved by the cabinet last year
and took effect in July.
“China is a developing country and is
a big mercury producer and consumer,
and the task of implementing the treaty is
very arduous,” Zhao Yingmin, vice minis-
ter at the Ministry of Environmental Pro-
tection (MEP), said in a statement.
The Convention commits signatory
countries to phasing out old mines and
banning new exploration projects, as well
as reducing the use of mercury in gold
mining. Countries must also ban the pro-
duction, import and export of batteries,
fluorescent lamps, cosmetics and pesti-
cides that contain mercury by 2020.
However, the treaty makes exceptions
for military applications as well as prod-
ucts where “no feasible mercury-free al-
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 13
Gold giant in best shape for years
Newmont Mining Corp chief ment and community. There is
economist Tom Brady sees also a lot of upside with three
plenty of challenges ahead for more ELs in the area.”
the global gold industry but The company has also
believes his company is better spent considerable capex on
placed than most to thrive in developing the Victor complex
the new conditions. in Colorado and is rumoured
US-based Newmont was to still be in discussions with
among the most damaged by Barrick over acquiring its 50%
the investor backlash experi- share of the Kalgoorlie Super
enced across the global gold Pit operation in Western Aus-
industry in 2012-13. The ma- tralia.
jority of its management team Newmont declared commer-
was replaced as shareholders cial production at the 500,000
revolted over a perceived lack ozpa Merian mine in Suriname
of returns generated by a sec- and at Long Canyon, Nevada
tor enjoying record prices. The Kalgoorlie Super Pit operation represents the high-margin in 2016 as it moves to secure
Five years on from that pro- Newmont is stacking its portfolio with its stated goal of 5 mozpa
production over the next 5-7
cess, Newmont is working to
repay its market reputation by offering tract new investors, Newmont can also years.
improved margins and returns. It has use its cash position to tap into a new- Brady said selective M&A would re-
undergone a rationalisation process, found market enthusiasm for growth. main on Newmont’s growth agenda but
dropped a series of assets and has pur- “The market does want them to rein- was unlikely to be as strong a priority as
sued cost reductions across its portfolio. vest in projects which have high rates of during the 1990s and early 2000s.
“Since 2012, the company has been return and relatively low risk,” Chris Man- “There was a lot of M&A in the 1990s
focused on efficiency and cost reduc- cini, an analyst at Gabelli Gold Fund, and 2000s which proved to be value de-
tion,” Brady said at the inaugural Mining said. “To the degree that there is excess structive,” he said.
Cumbre in Santiago in July. “It has been cash on their balance sheet, the market The challenge for Newmont and its
selling non-core, higher cost operations would like to see that returned to them, in peers is where growth will actually come
and we have now lowered AISC by 25%.” the form of a dividend.” from. There has been a dearth of explo-
The savings drive has improved New- Brady said the tidier balance sheet and ration in the last two decades, a situation
mont’s balance sheet with net debt re- firmer margins had granted Newmont which is beginning to bite in the global
duce by 70% since 2013 to $US1.5 billion more flexibility to make strategic invest- gold sector. Brady said the lack of explo-
and with $US3.1 billion in the bank, the ments, pointing to the firm’s acquisition ration investment would see a gradual
world’s second largest gold miner is in a of 19% of Continental Gold Inc, owner of decline in gold production over coming
position to consider both growth and in- the 3.7 moz @ 8.4 g/t gold, 10.7 moz @ years.
creased dividend options. 42.3 g/t silver Buritica project in Colom- “You can expect to see increases in that
With most of the gold industry only just bia. decline as grade challenges increase,”
beginning to ramp up its growth pipeline “It is a quality asset made up of two he said. “Look at the Carlin Trend, where
after the swingeing cuts of four years veins which are still open along strike the head grade is now around 0.1-0.2 g/t
ago, Newmont finds itself in an enviable and down dip,” Brady said. “It has more gold. Processing grades are on a global
position. than 4 moz gold @ 8 g/t [in resources]. downward trend and as they go lower
“One of the things we’ll be looking at is We have been very impressed with the cost and social pressures will increase.”
‘what’s an appropriate level of dividend Continental management team which Brady said it was unlikely that explo-
that might attract new investors’,” chief has a strong relationship with govern- ration would go back to the levels of 20
executive Gary Goldberg years ago and neither could
told Reuters last month. the industry expect to experi-
Newmont is nipping at the ence the economies-of-scale
heels of Barrick Gold Corp improvements it enjoyed in
for the title of world’s larg- the 90s.
est gold miner, with plans “So, where will growth
to produce 5-5.4 moz gold come from? I believe it will be
this year, against Barrick’s through cost savings through
forecast 5.3-5.6 moz out- things like increased auto-
put. The two miners are also mation. But companies also
wrestling for top valuation, have to have continual cost
with Newmont’s market cap discipline, balanced explo-
of $US19.3 billion just behind ration funding and selective
Barrick’s $US19.4 billion. M&A,” he said.
While increased or special – Dominic Piper
dividends are certain to at-
PAGE 14 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Innovate to cultivate
Innovation and technology will provide Apple’s new Liam (dis)assembly robot can pull apart an iPhone 6 into its
mining with as many challenges as ben- constituent parts in just 19 seconds
efits in coming decades as companies
and communities adjust to the rapid rate Liam became more efficient?” due to the subsequent job losses. Ash
of change currently being experienced. There are many positive trends miners believes industry should consider in-
novation as not only a way of achieving
Mining was perhaps later to the inno- can benefit from, however. Ash pointed greater productivity and efficiency but
vation party than other industries but the to the emerging cost competitiveness also deeper engagement with host com-
world’s majors are now moving forward of solar energy as an example of how munities.
with alacrity. emerging technology can create a new
world of innovation. “Barrick is looking at ways of using
Rio Tinto Ltd set the standard with central data platforms to help communi-
its move into automation and driver- “Only 10 years ago, solar cost $75/ ties apply analytics used in agriculture
less trains but others are now catching kWh, it is now around 3-4c versus 28c for and combine them with crop production
up. Anglo American plc has launched a diesel,” she said. “That makes me think to become more productive,” she said.
major innovation drive (see page 40) it of electric mines and how we could pro-
hopes will eventually deliver technology vide power to host communities.” “On our Pueblo Viejo mine in the Do-
to allow it to mine the metal or mineral minican Republic we have used virtual
alone without any dilution and process it While many technological innovations reality to allow investors a full view of the
using waterless systems. make media headlines when first made, operation and we are now trialling it with
it is often years before they become cost- communities around our Lagunas Norte
Michelle Ash, chief innovation officer effective enough to be adopted by indus- mine in Peru.”
at Barrick Gold Corp said innovation was try. Ash said the rate of innovation was
a vital part of the gold major’s plans for so great that cost-competitiveness was Other initiatives being introduced by
the future but said the world’s largest now being achieved much earlier. Barrick include the use of drones for
precious metals producer was also try- monitoring which can also be used by
ing to understand how technology would “Gene editing, virtual reality, robotics, communities, creating strong WiFi net-
change the lives of its workers and host etc; not only are there a number of tech- works capable of delivering education
communities. nologies becoming available but they are programmes and web channels for small
coming down the cost curve,” she said. businesses and the creation of digital
“Technology is accelerating faster now “Adopting technology does not need and programming jobs in host communi-
than since the Renaissance and people huge costs involved anymore.” ties.
have two responses to change; they are
either excited about the prospect or they Among innovations being embraced “When we think about innovation, we
are fearful,” Ash said at the inaugural by Barrick are the use of robotics to im- need to think not only about what is fea-
Mining Cumbre in Santiago. “The chal- prove safety on its mines and the adop- sible and viable but we actually have to
lenge for industry, government, NGOs tion of predictive analytics to understand start with desirability for stakeholders,”
and communities is to consider how to maintenance activity. Ash said. “We need to discover how in-
help people embrace technological ad- novation and technology can help build
vancement.” However, the adoption of new tech- partnerships with governments, commu-
nology can come with challenges, par- nities and other companies which aren’t
Ash said prevailing political, environ- ticularly in the developing world where wholly transactional.”
mental, social and economic forces were replacing people with machinery can be-
intensifying the challenges facing the come a thorny social issue. – Dominic Piper
mining industry and technological inno-
vation was creating more. Countries such as South Africa, Zam-
bia, Chile and Peru have seen wide-
“We are seeing greater competition spread opposition to the introduction
from unlikely sources, such as metals of more mechanised mining practices
recycling,” she said. “When Apple an-
nounced it would no longer use freshly
mined material in its products, we thought
the decision was more aspirational than
anything. But then, they developed the
Introduced in 2016, Liam is made up of
29 different robots organised into an as-
sembly line. It can dismantle an iPhone
6 in 19 seconds. Apple estimates it can
take apart 1.2 million unit a year and cur-
rently has two plants running; in Califor-
nia, US and the Netherlands.
“If Apple stops using new metal, that
is 1 mozpa gold and 6,500 tpa copper
coming out of demand,” Ash said. “It may
appear a small amount but what if other
companies adopted a similar strategy or
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 15
Pan Pacific Perth 7
Monday 13th November 12:45pm Lunch
5.00pm Welcome reception Session Three
Exhibition Area, Pan Pacific, Perth
1.45pm Burkina Sanbrado: Continuing discovery
Tuesday 14th November Faso success along the Markoye Fault
Richard Hyde and Vincent Morel*
8:00am Registration West African Resources Limited
9:00am Welcome and opening 2.30pm Ghana Namdini: A major discovery in a new
Session One Keith Yates and Bill Repard Ghanaian gold district
Paul Abbott, Kevin Tomlinson*, Julian
9.15am Keynote Address: Transforming the Barnes, Richard Bray, Malik Easah
business of gold exploration and Archie Koimtsidis
Dan Wood AO, former Executive General Cardinal Resources Limited
Manager Exploration, Newcrest Mining Limited
3.15pm Afternoon Tea
10.00am Russia Gross gold deposit: A giant in Siberia Session Four
Nord Gold SE 3.45pm Côte 85 Years of exploration and mining in
d’Ivoire the Yaouré gold district
10.45am Morning Tea Chris Picken*, Cissé Amadou and
Session Two Perseus Mining Limited
11.15am Burkina Houndé gold discovery: One mine and a 4.30pm Tanzania Nyanzaga: Small company approach,
Faso long story for exploration big company view
Gérard de Hert* and Paul-Claude Delisle Jim Brigden* and Matthew Yates,
Endeavour Mining Corporation OreCorp Limited; Malcom Titley,
CSA Global Pty Ltd; Peter Spora,
12.00pm Burkina The Yaramoko mine: Timing of Acacia Mining plc
Faso mineralisation and regional implication
for the Houndé belt 7.00pm Dinner
Yan Bourassa*, Razack Ouedraogo,
Théodore Kabore and Adrian Woolford
Sponsors: Proceedings Sponsor: Dinner Sponsor: Closing Drinks Sponsor: Lanyard Sponsor:
Gold Nugget Sponsor: Presenter Gifts Sponsor: Café Sponsor: Lunch Sponsor: Destination Sponsors:
CASE HISTORIES OF DISCOVERYREGISTER NOW
The world’s pre-eminent gold exploration event
Jointly organised by:
Keith Yates & Associates Pty Ltd
Wednesday 15th November Session Seven
8:30am Registration 1.00pm Chile Alturas: A greenfield discovery resetting
exploration maturity in El Indio Belt
Session Five Raul Guerra*
Barrick Gold Limited
8.30am Canada Putting the hope back into Hope Bay
Terry MacGibbon* 1.45pm Ecuador Alpala: The discovery and geology of a
TMAC Resources Inc. world-class porphyry copper-gold
deposit in the Cascabel project of
9.15am Canada Moose River: Applying a different northern Ecuador
approach to revitalise a stale goldfield Steve Garwin, Benn Whistler*, Jason Ward,
in Atlantic Canada Nick Mather, Santiago Vaca, Alfredo Cruz,
Wally Bucknell*, John Utely Carlos Diaz, Alex Chafla, Santiago Mantilla,
Atlantic Gold Corporation Leonardo Aguilar and Alvaro Guachamin
10.00am Morning Tea
Session Six 2.30pm Afternoon Tea
10.30am Australia Mt Morgans: Bringing Dacian Gold’s Session Eight
two plus-1 million ounce discoveries
into production with five years of an IPO 3.00pm Turkey High grade gold-copper mineralisation
Dan Baldwin*, Christopher Oorschot, at the Hot Maden project, north-east
Anna Probst and Rohan Williams Turkey
Dacian Gold Limited Eric Roth*, Sandstorm Gold Ltd. (formerly
Mariana Resources Ltd.); Firuz Alizade,
11.15am Australia The Dead Bullock Soak gold deposits – Polimetal Madencilik
Multiple new discoveries supporting
transformational growth in a mature 3.45pm Turkey Öksüt gold deposit: Discovery, history
mining camp and geology
Shaun Schmeider*, Stuart Perazzo and Chris Bahri Yıldız*, Richard Sillitoe, Bob Foster and
Robinson David Hall, Stratex Madencilik (Subsidiary of
Newmont Australia Stratex International Plc.); Malcom Stallman,
Centerra Gold Inc.
12.00pm Lunch 4.30pm Forum
5.30pm Closure followed by farewell drinks
For all enquiries about exhibiting or attending please contact
Melita Fogarty (+61) 8 9321 0355 [email protected]
Golden Road to
Fields of dreams
Boss of South African gold West Australian gold plays into the port- gold-silver project in northern Chile, fur-
powerhouse Gold Fields Ltd folio while also taking 50% ownership ther emphasising the Gold Fields strat-
Nick Holland pledged allegiance of Gold Road Resources Ltd’s 6.16 moz egy of “reinvesting for the future”.
to Australia’s gold sector on a Gruyere project.
recent visit down under. So, among all this expenditure where
With mine life at its WA assets span- does South Africa – the Motherland of
“Gold Fields is a global company, but ning 3-5 years, a focus on production Gold Fields – sit in the company’s future?
we do see Australia as a key part of the and replenishing ore reserves has been
portfolio. We are here for the long term the order of the day and Gold Fields has Mining in South Africa is not for the
and we are looking forward to investing committed unrivalled amounts of money feint hearted but Gold Fields, under some
and growing operations down here in on exploration and development. guise, has been doing it since 1887.
Australia,” he said. When the company last appeared on
As it stands, Gold Fields is halfway the cover of Paydirt in December 2011,
Gold Fields’ entry to Australia 16 years through a five-year plan to spend $100 the South African Government was try-
ago was on the back of acquiring the un- million a year on exploration in WA, while ing hard to push a new Mining Act, which
loved St Ives and Agnew mines. Since at Damang, Ghana, $US1.4 billion over ended up being deemed unlawful, while
then, Gold Fields has pulled another four eight years will be dedicated to mine life the sector was also coming to grips with
extensions. BEE ownership requirements.
And, in 2016, $US39 million was spent Talk of the South African industry be-
on a PFS and drilling at the Salares Norte coming nationalised was also gathering
PAGE 18 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Gold Road executive director Justin Osborne, non-executive chairman Tim Netscher,
general manager geology John Davidson and chief executive
Ian Murray at the Yamarna camp in August
The Government’s new Mining Charter $US1,234/oz) means it contributes about
proposes applicants for new prospecting 13% of group production but the aim
rights must have a minimum 50% plus remains hitting steady state production
one black person shareholding with vot- of 500,000 ozpa gold at all-in costs of
ing rights attached. In relation to mining $US875 by 2022, nearly a decade after
rights, applicants must have 30% black initial expectations.
person shareholding which must be held To achieve this, investment of R2.28
in a separate entity from the holder of the billion is required over the next six years
right. at South Deep.
The South African Chamber of Mines Given the investment already made
has opposed the Charter with the matter in South Deep (plus-R6 billion), Holland
now before the court and a decision on has no plans on leaving the mine, the
implementation not likely to be made by people and South Africa behind at this
years’ end. stage.
The latest stoush between govern- “It will be played out in court,” Holland
ment and industry has inevitably led told Paydirt in reference to the Mining
speculation about the viability of min- Charter.
ing companies and the attractiveness of “I am not thinking beyond that [pro-
South Africa as a resources investment posed Mining Charter succeeding]. In-
destination. dustry is determined to follow through
steam amid labour disputes and rising The political turmoil is matched by op- with the court process in absence of dia-
“power costs, which put the jurisdiction erational challenges at the 34 moz gold logue in a constructive way forward. Wethink we will sort it out.”
on the nose of investors.
The disruption saw BHP I am not thinking beyond that Dealing with govern-
Ltd leave the country while ment issues has added
Anglo American plc and [proposed Mining Charter to a difficult start at
De Beers exited key as- succeeding]. Industry is determined to South Deep in 2017, with
sets but Gold Fields did two fatalities reported
not follow, surprising many follow through with the court process in the March quarter af-
analysts by choosing to ter Gold Fields reached
in absence of dialogue in a constructive
keep its South Deep gold way forward. We think we will sort it out. cash breakeven status at
asset instead of farming it the mine last year.
into new vehicle Sibanye
Despite outside calls
Gold Ltd. to shelve the deep-level
Having withstood that project, Holland and the
period of uncertainty, Gold Fields and South Deep operation, south of Johan- Gold Fields team are stoic and commit-
its peers are once again faced with a nesburg. South Deep’s FY2016 produc- ted to the rebase plan which took the
change in legislation in South Africa. tion of 290,000 ozpa (at all-in costs of best part of two years to devise.
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 19
However, it retains exposure to any
riches it may have left behind, having tak-
en an equity position in Red 5 by selling
Darlot for cash and shares worth $18.5
“We are going to underwrite a rights
issue Red 5 will be doing to $7 million,”
“I must compliment the team at Red
5 because they have agreed to take on
all of our employees which is about 160
people, with no redundancies and we are
thrilled with that because it has been a
great operation for us for the three years
or so that we have had it.
“When we bought it from Barrick it was
losing money, since we have owned it
in Gold Fields it has made money, so in
this great team I think there is exploration
potential. It could be a win all round, we
have our hands full with other stuff, so we
A fresh result from Ibanez is explained by Donaldson wish Red 5 and the team at Darlot all the
Most of the cash has been sunk in the the team down here in Australia can do. I Gold Fields’ has proven its ability to
rebase plan and it will be a momentous think it is a great story and we are happy see unwanted mines in WA flourish but
occasion when Gold Fields can report to be here,” Holland said. now it has the opportunity to demon-
safe steady state production of 500,000 Gold Fields has happily spent $748 strate its mine building skills at its newest
ozpa gold from the world’s second larg- million in 16 years on exploration in Aus- investment – Gruyere.
est orebody. tralia and been fairly rewarded for its ef- Under the terms of its December 2016
In FY2016, net cash in-flow was $US12 forts with production totalling 942,000oz deal with Gold Road, a total considera-
million from South Deep, however, with a at $941/oz all-in costs for $256 million net tion of $350 million, will grant Gold Fields
mine so deep challenges still lay ahead cash from the region in FY2016. equal ownership of the Gruyere JV.
for Gold Fields in South Africa. The portfolio continues to evolve. In Discovered by Gold Road in 2012,
Therefore, despite the constant pres- August, Darlot – Gold Fields’ highest cost Gruyere, in WA’s Yamarna Belt, has
sure to replace ounces at its operations mine in Australia at $1,662/oz – was sold been rapidly progressed through the de-
in the State, the company can find com- as part of a deal which included Saracen velopment and permitting process, giv-
fort in the stability and gold endowment Mineral Holdings Ltd’s King of the Hills ing Gold Fields a clear run at construc-
provided by its WA portfolio. mine to Red 5 Ltd. tion and commissioning.
“We are spending most probably about Holland said Gold Fields had eked as “We have all the permits we need,
a third of the total exploration budget in much as it could from the mine and now which is a relief, so it really is up to us to
Australia; that translates to about $100/ was the time for a new owner. take this forward. We have built the camp
oz. I think we are spending more than
most other people,” Holland said.
“I think that is starting to change and
people are starting to look more at explo-
ration and that is great, but we have been
doing it for quite some time.
“We are pretty much up there with the
top producers in the country. We came
to Australia in 2001 and it has been quite
a journey for us. We bought St Ives and
Agnew from Western Mining then and a
lot of people said ‘why are you buying
these dying mines’ they only have 3-4
years of reserve life. Sixteen years later
they still have 3-4 years of reserve life
with lots of potential.”
Having proved its prowess at St Ives
and Agnew, Gold Fields swooped on
Barrick Gold Corp’s Yilgarn South assets
– Granny Smith, New Holland and Darlot
– in 2013 to take the Australian produc-
tion profile over the 1 mozpa gold mark.
“From nothing to over 1 moz and mak-
ing substantial cash flow of over $300 There are few companies as committed to or cashed up for gold exploration in
million a year, I think that shows what Australia as Gold Road and Gold Fields
PAGE 20 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
so we have enough space for the
peak construction crews, that will
be about 550 people at peak, we
have 648 rooms that is all done and
in place,” Holland said.
“We are certainly on track and
we have committed most of the
$532 million project spend. So, I
think that the price risk from here is
going to be much lower than when
we started and I think the key for
us here is all about timing. Let’s get
this done, it is not an overly com-
plex project, it is now a function of
All major contracts have been
awarded and first gold is expect-
ed late next year/early 2019, with
steady state output of 270,000
ozpa over 13 years scheduled.
Drilling at other targets within the
Gruyere JV package has so far re- Midas touch. Sharon Warburton is non-executive director at Gold Road and Fortescue Metals
Group Ltd; two of the most attractive resources companies on the ASX at the moment
“turned some promising results and
Holland hopes to add further ounc-
es with more exploration.
He indicated exploration expenditure The Ibanez grades look interesting. It is
of $90-100 million in Australia was likely early days but we would like, in the next 18
to continue beyond the five-year plan
which started in 2015 and while Gold months, to have the second million ounce-plus
Fields has had its own greenfields dis- camp identified and ready for project studies with
covery success in recent times – Invinci-
ble at St Ives in 2012 – the key to unlock- the money from Gruyere [part sale].
ing the Yamarna belt will be Gold Road’s
Gold Road has 6,000sq km of ground Metal Mining Co. Ltd in the South Yamar- 11.63 g/t gold from 229.67m, including
tied up in the Yamarna greenstone belt, na region, while it owns 100% of the 3.33m @ 27.48 g/t from 232.26m.
spanning three shears in an untouched 2,300sq km North Yamarna project. “The Ibanez grades look interesting. It
part of WA. Prior to Diggers & Dealers, high-grade is early days but we would like, in the next
In addition to the Gruyere JV, Gold gold mineralisation was confirmed at 18 months, to have the second million
Road has a partnership with Sumitomo Ibanez, North Yamarna, with 8.2m @ ounce-plus camp identified and ready
for project studies with the money from
Gruyere [part sale],” Gold Road chief ex-
ecutive Ian Murray said.
“At the same time that is happening we
could also be potentially looking at where
the third one [1 moz deposit] could be.
This is a massive belt and should not host
just one 1 moz-plus discovery. There is
potential to host more and working with
[traditional owners] Yilka and Gold Fields
to get the development up and running,
get the job creation and get the sustain-
able benefit for the communities in this
area is Gold Road’s vision.”
Sustaining a production profile in the
belt of 500,000 ozpa (135,000 ozpa at-
tributable from Gruyere] within the next
5-10 years is the aspiration for Gold
Having ventured into the region when
no-one else dared, Gold Road has
gained respect of the Yilka people and
the Cosmo-Newberry Aboriginal Corpo-
ration, with the first Native Title Agree-
ment ever signed in the Yamarna belt
Murray and Gold Fields Australia chief executive Stuart Mathews achieved in 2016.
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 21
It took some eight years
from the discovery of gold at
Central Bore to negotiate a
Native Title Agreement. The
lengthy process was neces-
sary as mining is a foreign
concept in this part of the
world, as Harvey Murray
from Cosmo-Newberry com-
“We have dealt with explo-
ration for a while, first with the
discovery at Central Bore,
then the small pits down
there. With Gruyere, we had
to think because this place is
very close to sensitive areas
which are sensitive to our
senior members, so we had
to make sure things were
done properly; people were
watching us and making sure
that we abided by strict cul-
tural rules,” Murray said. Mathews, Harvey Murray and Ian Murray hope everyone gets a fair slice of the Gruyere pie in the Yamarna
“That is why it has taken so
long, but we had to get it right and we did riginal reserves, with Yamarna situated in cus even further on exploration.
get it right in the end. the middle. Its war chest for exploration in 2017 is
“This is the first time we have dealt with Currently, there are eight people, ei- $30 million, which would not have been
the private sector, we have been depend- ther Yilka or connected to Yilka people possible without a partner to lift the con-
ent on government and depending on and Cosmo-Newberry, employed at the struction cost burden of Gruyere.
government is hopeless. They do train- Gruyere village and as construction and “We have been able to accelerate our
ing for training’s sake to satisfy statistics. operations ramp up, more opportunities regional exploration,” Murray said. “If we
Now with the mines here we can get real will arise. had gone the debt [financing] route – and
jobs and training and that is what I want In the meantime, Gold Road and Gold this is what people overlook – we would
for my people.” Fields are working hard to paint a better not have been spending the explora-
There are about 600 Yilka people picture of what the future looks like in the tion money we are spending this year,
scattered from Yamarna as far down as Yamarna belt. or next year, or the year after. We would
Mandurah, south of Perth, with between Attracting Gold Fields to Gruyere have had the bank covenants on us;
70 and 100 people living at Cosmo-New- earned Gold Road the Dealer of the Year we wouldn’t have had the discretionary
berry. award at Diggers this year but more im- spending until the project was in opera-
Cosmo-Newberry sits within four Abo- portantly has allowed the explorer to fo- tion for two years at least.”
Gold Road is busy with diamond drill-
ing at Ibanez, Mesaboogie, Washburn,
and targets within the Corkwood Camp
plus initial stratigraphic diamond drilling
at Stratocaster, starting in the September
Gold Road will spend $15 million on
North Yamarna this year, while fruits of
the $11 million to be committed on the
Gruyere JV ground could be seen by the
end of the year.
Resource-to-reserve delineation at
PFS levels could be seen at both Attila
and Alaric by the end of the year, Murray
As for taking control of any more
ground in the Yamarna, Murray preferred
not to reveal his intentions and appears
more focused on succeeding in the next
challenge for Gold Road.
“There are some other players that
have come in and picked up tenements
around here, some of which we have
The cost per ounce from discovery through to reserve at Gruyere was $10/oz. tested before and dropped, some others
Gold Fields paid the equivalent of $200/oz for a 50% share in the project that look interesting,” Murray said.
PAGE 22 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Gold Road and Gold Fields will account for much of the gold exploration spend in Australia this year
“The biggest challenge is always the prices, global volatility had not impacted The recruitment drive for senior leader-
geology. You don’t know what is in the gold on the upside to the extent some ship positions for operations at Gruyere
ground; we have the budget and we are had predicted. would start in the next six months and
doing the testing. What could start off as Mathews said there was always an Mathews said there was a noticeable
interesting or good results may not stack expectation that gold could drop quickly change in the calibre of talent available
up to be the excitement and scale that and therefore Gold Fields would be pru- and the salaries and wages being asked.
makes an economic deposit.” “dent in managing costs. Mathews said if nickel prices surged,
Murray said another chal-
there would be even more
lenge – albeit uncontrollable
– was the gold price. pressure on the gold industry
Six years ago, Gold Road If we had gone the debt to compete for talent.
was the recipient of the Best [financing] route – and this is “You’d hope that something
Emerging Company award
at Diggers, recognition com- crazy like happened five or
ing on the back of a $1,900/
what people overlook – we would not six years ago doesn’t happen.
I think we have to be mindful
have been spending the exploration that we might have to work a
oz gold price. In the following bit harder about how we man-
two years, the price plummet- money we are spending this year, or age our people, rosters, etc to
ed $300/oz and Gold Road next year, or the year after. make sure that we are a good
watched 95% wiped off its employer,” Mathews said.
value and gold stories ban- Compared with other juris-
ished from the minds of investors. “Gold staying where it is would mean dictions, Australia is a high cost place to
“Nobody can predict where the gold a reasonable price. We can make some do business, but it consistently outper-
price is going and that kind of rapid re- good money at these levels, but as more forms other countries when it comes to
duction in the gold price does stop ac- and more people start developing small endowment/risk equations. For those
cess to capital for exploration and for projects, there is going to be a search for reasons alone, it wouldn’t surprise to see
growth of projects anywhere,” Murray people,” Mathews said. Gold Fields extracting more than 43%
said. “Iron ore is on a bit of a run, coal has of its current 2.2 mozpa gold production
At the time of print, gold was worth just gone on a run and there is a little bit from projects down under in the future.
$US1,289/oz, a healthy backdrop to pro- of pressure coming on the resources in- – Mark Andrews
ject development. dustry now. The gold industry has good
However, Gold Fields Australia chief talent and retaining talent and getting
executive Stuart Mathews said that while new talent in is something to be mindful
good money could be made at current of.”
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 23
DIGGERS & DEALERS REVIEW
rises for miners
The rumblings of a new era of US protectionist economic policy could Mongolia isn’t the only country to
have a wide ranging impact on the global mining industry according which Zoellick provided advice on re-
source policy and each time he used the
to this year’s Diggers & Dealers keynote speaker, Robert Zoellick.
“When I was at the World Bank, you
A former World Bank president and case of resource nationalism with Presi- had a number of countries that were
trade envoy to President George W. dent John Magufuli introducing swinge- commodity development countries; I
Bush, Zoellick has long advocated trade ing new investment laws for natural re- would often point them to Australia and
liberalism and raised concerns about US sources projects, including a mandatory Canada. People don’t realise that they
President Donald Trump’s protectionist 16% state ownership in projects, the right are both very strong natural resource
rhetoric during his address. to tear up and renegotiate mining and oil economies but they’ve been able to have
“US trade policy is very uncertain; and gas contracts and the removal of the a broader base and the key is good gov-
Trump sees foreign policy as being about right for international arbitration. ernance.”
making deals and his domestic agenda Zoellick noted Tanzania’s shift and He said strong governance was vital to
will take prominence,” Zoellick said. warned other commodity-rich developing healthy, successful resources industries,
Speaking to Paydirt later in the day, countries that such moves were fraught without which resource nationalism rhet-
Zoellick said Trump’s attitude towards with danger and instead urged them to oric could fester.
trade could fuel resource nationalism in follow the lead of Australia. “The real danger in the natural re-
other commodity-focused countries. “Tanzania has taken the resource na- source sector is corruption which gets
“I do worry about it [protectionism] if tionalism approach but you can end up tied into nationalism, lack of transpar-
the US mishandles it, it gives justification paying a price,” he said. “Mongolia did ency and not sharing the benefits more
for resource nationalism because they that and when all the prices fell, they broadly. You have to do it in a transpar-
are cousins,” he said. “It’s like countries changed their tune and wanted the in- ent way. In the old days, companies
are saying they’ll worry about resource vestment. I said to them: ‘You guys might would do sweet deals with certain gov-
nationalism and people lose sight of the want to consider joining TPP to send a ernments but when it became too obvi-
overall economy.” signal that you are open for business and ous the general public would say: ‘Wait
Tanzania has seen the most recent willing to follow the rules’.” a minute’ and the companies take the hit
Zoellick on… “ TRUMP’S TRADE FOCUS:
Economists don’t think bilateral deficits are
“RECENTLY ELECTED LEADERS: important but Trump is very focused on it. It is
Performance will matter. If Macron very important to watch what happens with NAFTA;
gets through some reforms and Trump is ambivalent about allegiances. But the US
France improves and Germany and system is more than the President. We have to watch
France work better together, that will how the different houses of congress, the states and
sell with voters. If Trump can’t deliver
the goods and he looks like he can’t the private sector react.
govern, that will hurt.
PAGE 24 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
which was directed at the leader. about your regional position; you have to “Moving from middle to high income
“You have to think long term and I think think regionally and globally.” [status] is tricky and China knows this. It
has made significant progress and uses
mining companies are beginning to rec- Trump’s support base swelled in part financial sector liberalisation to drive
ognise that. In the industry, a lot is done thanks to the protectionist policies but reform but it now also has specific en-
regarding reclamation and returning the Zoellick thinks the change in mood in vironmental and social objectives – not
land you’re going to find Australians and the US and Britain could be countered just economic ones – but the big goal is
Canadians ahead of the curve.” through better communication. moving up the value chain through tech-
Zoellick’s praise for his hosts went “There are studies which show the
beyond mining. He said Australia’s eco- trade liberalisation of the last few dec- He pointed to China’s One Belt, One
nomic performance over 26 years high- ades has amounted to savings of about Road policy as important to Eurasian
lighted the importance of ongoing eco- $US10,000 for a family of three in the US integration and said the country’s steel-
nomic reforms. but most people don’t know that. They makers would rely more heavily on the
know you get fresh fruit all year round seaborne iron ore market as environ-
“I was speaking with Kim Beazley and more choices but if you’re in a manu- mental policies put pressure on domestic
about the reforms of the 80s and he said: facturing plant and you lose your job and supply.
‘We didn’t have a choice, we had to make the community suffers, that is recognis-
these changes.’ The challenge in politics able. “Urbanisation will continue,” he said.
is whether people can get ahead of the The other risks include increasing cap-
curve which is sometimes harder or they “So, businesses have to help people ital intensity of mining projects and oper-
have to wait until their backs are against adjust to change and to get trade back ating cost inflation.
the wall. on track; they will have to explain the Despite the seemingly major political
benefits of trade to their employees. Boe- fissures of recent years, the global econ-
“It is not only a question of monetary ing sells about 90% of its planes abroad omy has rebounded, dragging metals
and fiscal policies; it is the structural but the Boeing Airspace workers were prices with it. Speaking on the outlook
reforms you must keep changing. Com- against trade agreements – figure that for global growth, Zoellick remained cau-
pared to the rest of the world, Australia out. tiously optimistic.
doesn’t do too badly but Australians keep “The political situation has turned down
pushing for more, which is their right, and “Business needs to help people ad- but the economic situation is still good.
is why Australia has gotten ahead.” just to the process of change better; The economy is as strong as it has been
that’s not just worker retraining but also at any time in the last five years and for
Australia’s economic liberalisation ef- education and skills development. AT&T the first time since 2010 all of the G20 is
forts of the 1980s allowed it to shed pro- spends 3-4c/share on training but it also growing, so it is a broad-based recovery.”
tectionist policies and open up its econ- explains to its people: ‘These are the Zoellick expects economic conditions
omy. Zoellick fears the US may go into jobs we see going away; these are the to remain healthy for at least two years,
reverse under Donald Trump. jobs we see being created; these are the “barring a major geopolitical shock”.
skills you need and here’s what you can “Social and political tension creates
“Walking away from TPP [Trans Pa- do to certify those skills.’” wildcards and their given long-term debt
cific Partnership] was not a good move profiles and the pensions situation, cen-
for itself or the other economies. It was Protectionism and resource nation- tral banks’ ability to respond is limited.”
certainly in our [the US] interests to do so alism was one of four potential threats After nearly a decade of “extraordinary
[join],” he said. Zoellick sees to the mining sector in com- monetary policy”, Zoellick sees the US
ing years. Federal Reserve heading towards the
He pointed to the North American Free exit but admitted it wouldn’t be easy tim-
Trade Agreement (NAFTA) between the Among the others, China’s shift from ing increases to interest rates.
US, Canada and Mexico as a major ben- middle to high-income nation will be “If you tighten too much you get a prob-
efit to the region’s security as well as its watched perhaps closest. lem but the Fed also doesn’t want to get
economy. caught; they are digging a big hole and
Zoellick reminded his audience that have to be careful,” he said.
“North America has been a real Chinese President Xi Jinping’s top priority
strength in a global context – 500 million would always be the preservation of the – Dominic Piper
people, three democracies, energy self- Chinese Communist Party.
sufficiency – but if we screw up NAFTA
we could mess a lot of that up,” Zoellick “Reform and anticorruption [measures]
said. “Then you lose the cooperation of are the leading issues and he believes
the Mexicans whether it is on narcotics the party is the only way to [manage that
or the issue of Central American im- process],” Zoellick said before warning
migration. Part of this is about thinking reform was not an easy process.
“ BREXIT: Robert Zoellick
There are some similarities between the US
election and Brexit but Brexit was less based on
trade and more based on a sense of identity. In pure
economic terms, these people [British yes voters]
are voting against their interests. So, it was a bit
of a protest vote and in the general election young
people flipped and said: ‘We don’t want to leave the
EU’. People can vote in protest and anger but does it
get you to where you want to go?
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 25
DIGGERS & DEALERS REVIEW
BHP drives into battery space
BHP Nickel West’s Mt Keith operation continues to churn a reliable source of nickel concentrate
BHP Nickel West will build the world’s teries is they have high energy density, global shift in energy technology that we
largest nickel sulphate plant as its which allows cars to travel greater dis- think will provide important new opportu-
steps up its bid to enter the lucrative elec- tances between charging, as well as their nities for our business,” he said.
tric vehicle-driven battery market. lower cost,” Haegel said.
“The arrival of low-cost, low-quality
During his first presentation to Dig- “The high price of cobalt and its lack of sources of nickel like NPI and ferron-
gers & Dealers, BHP Nickel West asset availability is already encouraging more ickel have changed the sector and those
president Eduard Haegel announced the rapid adoption of these nickel-heavy changes are not going to go away. We
company had approved funding for the technologies. We believe there is going have therefore concluded that Nickel
first stage of development of a $US43.1 to be a very large increase in nickel sul- West needs to reorientate away from the
million nickel sulphate plant at Kwinana phate demand over the mid-term in order stainless steel industry and towards a
Refinery, south of Perth. to support this new energy revolution.” new industry; one that values quality and
one which we believe we are blessed
The plant is set to produce 100,000 Refined nickel products such as those with significant competitive advantages.”
tpa of nickel sulphate hexahydrate by produced from BHP Nickel West’s Kam-
dissolving nickel powder in sulphuric balda operation have proven to be the While low nickel prices have forced
acid from the Kalgoorlie smelter. Subject most effective metal source for nickel the closure of several nickel mines, BHP
to approvals, first production is slated for sulphate, with traditional ferronickel and Nickel West’s Mt Keith operation contin-
April 2019. nickel pig iron (NPI) emerging as an ex- ues to perform admirably.
pensive option due to the high levels of
BHP Nickel West has flagged a low- impurities which need removing. Work is already under way on the Mt
cost expansion of the plant, once opera- Keith satellite project, with a proposal
tional, to 200,000 tpa, with an estimated Therefore, nickel sulphate production sent to the EPA and a decision due within
44,000t of nickel powder to be consumed from the dissolution of refined nickel 6-9 months. The focus of this low capi-
when at full capacity. powder is viewed as a more attractive tal intensive project is to identify more
option, according to Haegel. resource options to extend BHP Nickel
“Nickel sulphate is a great fit for Nickel West’s pipeline out to 2056.
West,” Haegel said. “There is low techni- “There is a great deal of excitement
cal risk, it has higher margins than what within Nickel West about an important Block cave mining at Leinster B11 is
we achieved for our briquettes and it re- set to lift production by 600,000 tpa at
positions Nickel West into the new en- Eduard Haegel a grade of 1.6% nickel over nine years.
ergy market with the many opportunities Further feasibility study work is sched-
that this sector will offer in the future.” uled to begin in the next quarter.
BHP Nickel West’s push to enter the Rocky’s Reward is expected to deliver
battery market comes as the likes of Vol- more than 50,000t of nickel over its pro-
vo and Mercedes up their commitments ject life, with 156% more metal mined to
towards proposed future production of date, including a bonus recovery from in-
electric and hybrid vehicles. ferred resources.
Electric vehicle demand is forecast to “These initiatives create the potential
grow at 25% compounded annually, with for the Leinster concentrator to provide
140 million cars powered exclusively by 30,000 tpa of nickel in concentrate un-
lithium-ion batteries tipped to be on the til 2032 and we expect with further re-
road by 2034. source definition to extend that to 2040,”
Nickel is a key element of the cathode
component of a lithium-ion battery. – Michael Washbourne
“The attractiveness of nickel-rich bat-
PAGE 26 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
17 October 2017
Pan Pacific Perth
As Australia’s only dedicated nickel event, the Australian Nickel Conference serves up the very
best the sector has to offer.After defying market sentiment during the downturn, last year saw
the Australian Nickel Conference reflect growing interest in nickel, bringing together players
from across the industry spectrum to shine the spotlight on established miners and emerging
stories.This year’s edition will be held in Perth on Tuesday 17 October 2017. In addition to
offering nickel companies the chance to present their stories to the market, the conference
offers an opportunity to meet and network with industry players throughout the day.
To present, exhibit or attend as a delegate please contact
Christine Oelschlaeger (+61) 8 9321 0355 [email protected]
DIGGERS & DEALERS REVIEW
Nickel days are here again
The last day of Diggers & Dealers gave Dan Lougher tpa contract closing in June 2019).
the clearest indication yet that the do- The deal with Tsingshan – China’s larg-
mestic nickel market is regaining its feet gramme of innovation across the For-
after a torrid five years for the sector. restania operations in Western Australia. est stainless steelmaker – had opened up
The jewel in Western Areas’ innovation new markets for Forrestania’s product,
Western Areas Ltd, Independence crown is the mill recovery enhancement according to Lougher.
Group Ltd and BHP Nickel West gave project (MREP) which the company re-
positive assessments on the state of a turned to in the second half of the year. “Tsingshan uses a roasting technology
market they are all heavily reliant on, each and we’ve been working with these guys
pointing to the potentially disruptive force Designed to produce a new higher since 2012 and we were very cautious
of the lithium-ion battery market. Some grade product from tailings material, the about moving into that market,” Lougher
24kg of nickel is estimated to be used in MREP has the potential to produce 1,400 said. “We are quite unique because the
an electric vehicle battery, giving all three tpa of nickel sulphate by processing 5% concentrate is quite clean. Tsingshan
companies hope structural change is of the operation’s tailings through the doesn’t pay by-product credits so it
about to occur in nickel demand. company’s patented BioHeap flow sheet. makes our concentrate quite important
[to Tsingshan] because we don’t have
It may be that commodity markets Lougher said the project – which is any copper and cobalt.”
are already reacting. By the time the estimated to cost $17.5 million – would
three nickel chiefs took to the stage, the result in a 3-5% life-of-mine recovery in- While there is a new level of confi-
LME nickel price had pulled away from crease. dence about the future of nickel demand,
12-month lows to its strongest position in Lougher said it wouldn’t spur Western Ar-
four months. Western Areas had deferred the pro- eas into the M&A space.
ject last year to conserve cash but its po-
The prolonged downturn in the stain- tential to supply a niche product into the “We are inwardly focused,” he said.
less steel additive has seen miners fully burgeoning battery market has seen the “M&A is expensive and you don’t always
focused on cost management and sur- MREP return to prominence. get it right.”
vival. Indeed, mainstays of the nickel
sector such as Panoramic Resources Ltd “There is no contract in place yet but The one acquisition he will hope he has
and Mincor Resources NL were forced to we know the product will be in demand,” got right is that of the Cosmos nickel com-
close their operations. However, Western Lougher said. “The MREP will produce a plex, purchased from Glencore in 2015.
Areas managing director Dan Lougher’s nickel sulphate. From there, we can con- Previously the highest grade nickel mine
address to this year’s forum hinted at a vert it back to a nickel sulphide concen- in the world, Cosmos has been on care-
new direction for the sector; one of pro- trate with a 40-50% nickel grade, allow- and-maintenance since 2013 but a recent
gress rather than survival. ing us to either blend it with the existing PFS into the unmined Odysseus orebody
concentrate production or bag it sepa- suggested a restart could be imminent.
“Our task is to make sure the company rately and sell it as a high-grade concen-
is positioned for growth as we move into trate or produce refined nickel sulphate “Xstrata had drilled out 7.5mt at Od-
a better market,” Lougher said. “But we crystals which grade 22% nickel.” ysseus,” Lougher said. “Yes, it is lower
need to keep moving. We need to be in- grade than Forrestania [7.14mt @ 2.32%
novative and find new ways to do things.” The marketing of the MREP product nickel versus 4.13mt @ more than 5%
will come at a time when Forrestania’s nickel] but it is a much larger orebody so
Western Areas has been far from the traditional concentrate is also in high de- the cost per tonne is going to be much
best performer on the ASX but it has mand. Earlier this year, Western Areas lower. We are currently in the middle of a
managed to retain shareholder support by signed new off-take agreements with DFS which we will complete in February.
consistently meeting operational expecta- BHP and Tsingshan at what Lougher de-
tions in a vicious nickel market, achieving scribed as “superior commercial terms”. “And, we’ve got resources and the
guidance for seven consecutive years. highest grade intersection in the world
Both Tsingshan and BHP will take 3.5m @ 20% nickel. This project is go-
“It is important in a tough market to de- 10,000 tpa of nickel concentrate out to ing to be the foundation of the assets at
liver on promises,” Lougher said. January 2020 (BHP has a second, 2,000 Cosmos.”
The company returned to profit for The company also plans to step up
FY2017, posting net profit after tax of exploration at Forrestania with plans to
$19.3 million after losing $29.8 million in convert resources to reserves at the Fly-
FY2016. ing Fox mine and restart work on the New
Morning/Daybreak deposit which already
Lougher pointed to the implementation has a resource of 418,000t @ 3.4% for
of innovative efficiency projects at For- 14,249t nickel.
restania as one of the main reasons for
Western Areas’ return to profitability. The “We believe we have an open pit re-
company has installed an ore sorter at its source at New Morning and there are
Flying Fox mine and has also optimised strong linkages between New Morning
mining techniques at the Spotted Quoll and the MREP,” Lougher said.
mine to reduce dilution.
– Dominic Piper
He said such projects were part of the
company’s strategy to maximise cash
The ore sorter and optimisation of min-
ing techniques are part of a wider pro-
PAGE 28 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Preliminary programme Tuesday 17 October 2017
07.45 Arrival tea, coffee and registration
08:25 Welcome: Bill Repard, Executive Chairman, Australia’s Paydirt (5)
08:30 Opening Address: Hon Bill Johnston MLA, Minister for Mines and Petroleum,
Government of Western Australia (20)
08:50 Jim Lennon, Consultant, Macquarie Group Ltd (20)
09:10 Eduard Haegel, Asset President, BHP Nickel West (20)
09:30 Dan Lougher, Managing Director & CEO, Western Areas (20)
09:50 Peter Bradford, Managing Director & CEO, Independence Group NL (20)
10:10 Questions (10)
10:20 Morning Tea (30)
10:50 John Prineas, Executive Chairman, St George Mining Ltd (20)
11:10 Warren Hallam, Managing Director, Metals X Ltd (20)
11:30 Mark Wilson, Managing Director, Legend Mining Ltd (20)
11:50 Ian Mulholland, Managing Director, Rox Resources Ltd (20)
12:10 Questions (10)
12:20 Lunch (60)
13:20 Peter Muccilli, Managing Director, Mincor Resources NL (20)
13:40 Peter Harold, Managing Director, Panoramic Resources Ltd (20)
14:00 Jamie Sullivan, Managing Director, GME Resources Ltd (20)
14:20 Richard Bevan, Managing Director, Cassini Resources Ltd (20)
14:40 Speaker TBC
15:00 Questions (10)
15:10 Afternoon Tea (30)
15:40 Speaker TBC
16:00 Carey Smith, Senior Analyst, Alto Capital (20)
16:20 Brighton Gwavava, Managing Director, Suntech Geometallurgical Laboratories (15)
16:35 Questions (10)
16:45 Closing Panel Discussion (Convened by Dominic Piper, Australia’s Paydirt) (45)
17:30 Closing Drinks sponsored by GR Engineering Services
* This programme is subject to change without prior notice
DIGGERS & DEALERS REVIEW
St Barbara digs clear
One way to endear you to depths at least 2km below sur-
a sector which has fallen
on hard times is to announce a face.
dividend to shareholders during
Australia’s biggest mining confer- Meanwhile, at Simbieri, Papua
New Guinea, $4-5 million will
That is exactly what St Bar-
bara Ltd chief executive Bob be spent on oxide and sulphide
Vassie did at Diggers this year.
gold exploration for possible fu-
Prior to taking the podium,
St Barbara announced a full ture sulphide expansion. Also
year, fully franked dividend of
6c to shareholders. Consider- in Papua New Guinea, ongoing
ing St Barbara had plummeted
to 7c/share in December 2014 copper-gold porphyry explora-
– $2.90c/share at the time of
print – it has been a remarkable tion will continue under an op-
comeback story for the diversi-
fied gold miner. tion/farm-in agreement with
“When I joined we didn’t add people, Newcrest Mining Ltd.
we subtracted a few, but the guys in the
operations were the guys that turned In addition to the Newcrest
this place around. To have that type of
turnaround, which is record turnaround deal, St Barbara is also happy
in the industry, from the people that were
already in the team is particularly pleas- with stakes taken in Australian
ing,” Vassie said.
juniors Catalyst Metals Ltd (gold
St Barbara received further plaudits
when it claimed the Digger of the Year Bob Vassie in Victoria) and Peel Mining Ltd
(copper-gold, New South Wales).
gong, just reward for a period where the Vassie said St Barbara would consider
company reported record safety perfor- investing in other projects, with a prefer-
mance, record cash ($323 million) and ence for Australian assets, as it looks to
record production of 381,000oz sold at maintain its current standing in the sec-
record AISC of $907/oz. tor and making sure FY2018 guidance
The company is debt free and with of 350,000-375,000oz gold at AISC of
cash of $161 million it is ready for growth. $970-1,035/oz is achieved.
A sum of $100 million has been com- – Mark Andrews
mitted to the Gwalia Extension project,
Western Australia, which will take 2.5-
3 years to complete, taking mining to
Metals X finds the copper spot
Metals X Ltd has not had the keys Hallam said there was un-
to Nifty for very long but no time
has been wasted in steering the tapped potential Metals X was
mine in the direction it wants.
keen to explore regionally, with
At the time of Diggers, results
from the first hole of a drilling cam- the emerging Finch deposit,
paign had been received and it
brought good news for the com- 20km south-east of Nifty, a
Multiple zones of copper min-
eralisation were intersected 30m “It is very much a look-a-
downhole, including 10.95m @
1.12% copper from 531.47m, includ- like of Nifty and then we have
ing 4.34m @ 1.5% from 538m and
3.56m @ 1.73% from 548.44m, a trend of 120km here, which
including 2.23m @ 2.15% from
548.44m is basically a copper-lead-zinc
“The first hole is basically 1km belt that hasn’t had any ex-
further down, down plunge from the ore-
body. The orebody has been mined for ploration done on it since the
nearly 10 years for 20mt @ 2.49% [cop-
per] and we have stepped 1km further Western Mining days in the
down and hit 30m of mineralised zones,”
Metals X managing director Warren Hal- 80s,” Hallam said.
Hallam is certain Nifty op-
“We are extremely excited about what
erations will continue for a
Warren Hallam long time to come, however,
the company hit a snag post
the future is here at Nifty. We are just Diggers when underground activities
not sure what to do next, whether we go stopped while remedial repairs to the
down another kilometre or not.” secondary escape-way were carried out.
Nifty has produced 25,000 tpa copper, The work was expected to take a week
with over 600m mined to date. to complete, with Metals X due to restart
Drilling by Metals X has confirmed min- operations at the time of print.
eralisation extensions 250m to the west, – Mark Andrews
200m to the east and down plunge.
PAGE 30 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
DIGGERS & DEALERS REVIEW
Klein cautions gold peers
Evolution Mining “In fact, 11 of the “We are among the lowest cost gold
Ltd executive producers in the world and it’s fair to say
chairman Jake Klein 20 in the group had we have largely achieved what we ini-
says the gold indus- tially set out to do, which was to build a
try should be “em- negative shareholder globally relevant, mid-tier Australian gold
barrassed” for large- company,” Klein said.
ly delivering negative returns over this pe-
shareholder returns “I do think the renaissance that has
over the past three riod of three years. It occurred in the Australian gold sector is
years. something that we as an industry can all
is therefore probably be proud of. We are again demonstrat-
Klein was star- ing that Australia is a world-class mining
tled by the share not surprising that destination.”
of Evolution’s clos- against this back- However, as he has done during his
est domestic and past two Diggers & Dealers presenta-
offshore peers from drop, many active tions when all eyes have been on Evolu-
mid-2014 until the tion, Klein sounded a warning to the local
end of June this year, with more than half fund managers are gold sector to avoid complacency.
of the 20 companies in the red.
having real difficulties “Unless we can demonstrate that we
“Whilst I am pleased Evolution is very have learnt the lessons of the past cy-
near the top of this table – and I don’t stemming the rise cles, we will end up in the same place;
consider three years to be long term – relegated to the investor sin bin for de-
the harsh reality is that even in a benign and rise of passive stroying shareholder value,” Klein said.
US dollar gold price environment and a
favourable Australian dollar gold price ETFs.” “It is a cautionary tale, but I do believe
environment, we the gold industry as a the Australian gold sector has an out-
group have difficulty creating and deliv- Jake Klein Evolution is coming standing opportunity in front of it.”
ering value consistently,” he said. off a sixth consecu-
– Michael Washbourne
tive year of meet-
ing both cost and production guidance
across a portfolio which includes the cor-
nerstone Cowal and Ernest Henry mines.
In FY2017, Evolution produced
844,124oz gold for an AISC of $905/oz to
post a net profit of $217.6 million, with a
3c/share fully franked final dividend to be
returned to shareholders.
Evolution has guided 820,000-
880,000oz at $850-900/oz AISC for
Resolute seeks fair appraisal
Resolute Mining Ltd managing director we’re doing, which is fo- of our shareholders.”
John Welborn has accused the mar- cusing on running mines
ket of unfairly applying a discount to his in Africa and producing Resolute continues to
company because it operates in Africa. profits.”
make strong progress at
In comparison to other plus-300,000 One the opening day
ozpa gold producers listed on the ASX, of Diggers, Resolute its two key operations,
Resolute has a lower share price and announced it produced
market cap despite having similar or bet- 329,834oz gold at an Syama in Mali and Ra-
ter resource and production numbers. AISC of $1,132/oz for an
average price received venswood in Queens-
Based on broker research, which of $1,717/oz for FY2017.
Welborn presented to Diggers & Deal- land.
ers, Resolute trades at only 0.6 times its That production gen-
net asset value compared to the likes of erated $541 million (un- Underground develop-
Australian-focused gold producers Evo- audited) revenue from
lution Mining Ltd (1.5), Northern Star Re- gold and silver sales for ment at Syama is track-
sources Ltd (1.3) and Regis Resources a net profit of $136 million before tax.
Ltd (1.3). Resolute’s overall cash, bullion and listed ing ahead of schedule
investments was $290 million at June 30.
“I don’t accept that there is a rational and the company con-
discount for African operations,” Welborn “For the past three years we’ve out-
said. performed our guidance on production, tinues to prove up the
we’ve outperformed our guidance on
“Let’s consider that in the light of the costs and we’ve outperformed the mar- John Welborn potential of the Nafolo
highest valued miner in the world, Rand- ket on the price we’ve achieved for our discovery. Meanwhile,
gold [Resources Ltd]. Randgold trades gold,” Welborn said.
at 1.8 times its net asset value, yet oper- Ravenswood is transi-
ates mines alongside us in Mali and in “We’re increasingly focused on the
the DRC. They have a track record of value chain from the shovel all the way tioning to an open-pit operation, with the
more than 20 years of doing exactly what through to the bullion we put in the hands
Mt Wright underground to close within
the next 12 months.
Both operations have more than 10
years of mine life in front of them.
“We’re taking mature mines and we’re
building long life futures for them by mak-
ing the appropriate capital investments,”
– Michael Washbourne
PAGE 32 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
DIGGERS & DEALERS REVIEW
Saracen comes of age
The timing of this year’s Diggers & were boxes also ticked. not growth for growth sake. If the financial
Dealers conference was perfect for “Those three things demonstrate the metrics stack up, we will go hard at it.”
Saracen Mineral Holdings Ltd.
high level maturity of Saracen Mineral After spending $30 million and lifting
Coming off a milestone June quarter, Holdings and a coming of age for us,” reserves by 40% to 2.1 moz gold at Kara-
in which 80,000oz gold was produced to Finlayson said. ri within Carosue Dam and Thunderbox
take the company to a run rate of 300,000 in FY2017, continued organic growth will
ozpa, Saracen followed up with the sale As the company embarks on another also be a key plank in Saracen’s future.
of the non-core King of the Hills project. defining period where “every hole drilled
in the next six months could certainly “It is one thing having a good quarter,
With two key ambitions achieved, define the future in a very big way”, the but it is about sustaining that. We had a
Saracen managing director Raleigh Fin- presence of Morgan Ball as chief finan- milestone June quarter and not only is
layson was certainly feeling the love in cial officer and Roric Smith, one of the it sustainable, it gets better by the day
Kalgoorlie. best structural geologists in the world, which is the key theme here,” Finlayson
stiffens the Saracen spine. said.
Unlike in previous years where the
company was inundated with offers to That the company has made two key “We have a declining cost profile
buy the best ball bearings in town, Fin- appointments in recent times and en- [FY2020 target $950/oz], that is not artic-
layson said there was a “genuine interest dured the last six months without a chief ulated on the assumption that the diesel
in investing in the company, better than operating officer speaks volumes of the price is going to reduce or labour is going
previous years”. strength of the team already in place. to come down; it is driven by two key at-
tributes which are real and tangible.”
Becoming Australia’s newest 300,000 A chief operating officer will be ap-
ozpa gold producer has warranted in- pointed soon to help Saracen: “To take A lower strip ratio and higher head
vestor attention, while the definition of advantage of our internal growth oppor- grade yielded from Thunderbox in the
900,000oz in gold reserves – 800,000oz tunities that we see at Karari and Thun- next four years, plus doubling ounces per
of which is within 500m of processing fa- derbox and any other opportunities that vertical metre at Karari are areas which
cilities – at $35/oz in the last 12 months might present itself in the M&A space,” will see Saracen increase its margins.
has also elevated Saracen’s standing in Finlayson said.
the sector. “FY2021 could possibly be our best
“We are ready. We have the balance year. Again, we will articulate that when
On the non-core side of its business, sheet [$45 million cash and bullion] to we update our five-year plan in the De-
divesting King of the Hills for $16 mil- execute, so we will look at opportunities cember quarter. What we are simply do-
lion and retaining a 10% shareholding in as they come up. Ultimately, whether it is ing at the moment is company defining
buyer Red 5 Ltd, and signing a $25 mil- inorganic or organic, there are financial or making, particularly at the Karari pre-
lion farm-in at Carosue Dam North with metrics to be met, none more so than be- cinct,” Finlayson said.
AngloGold Ashanti Ltd in October 2016, ing accretive to our shareholders so it is
– Mark Andrews
More Lynas’ required
Actions in China bode the prices for magnetic for NdPr in electric vehicles (mainly) and
well for Lynas Corpo- wind turbines would ramp up towards
ration Ltd, which mines materials increase sig- 10,000 tpa by 2020 and 16,000 tpa by
and produces rare earth 2024.
oxides from the Mt Weld nificantly.”
project in Western Aus- “To put these figures in perspective,
tralia. Being the largest sup- we’re currently ramping up towards and
beyond 6,000 tpa NdPr and our head of
The Chinese Govern- plier of NdPr – neodym- marketing is one of the best informed in
ment has been working the industry and he likens the situation to
to ensure its rare earths ium and praseodymium, needing a new Lynas every four years,”
industry is sustainable Leung said.
and has acted accord- which is used for elec-
ingly by enforcing mining “In terms of supply side, China has
and production quotas, while conducting tricity generation – to dominated the market for many years
environmental audits and shutting down and there have been concerns about
operations with poor environmental per- the free market globally, supply. There was a big price spike in
formance. 2011 and there has been some ques-
Lynas is well placed to tionable environmental practices in the
“They have been conducting raw ma- industry and the supply from illegal min-
terial audits and shut down the illegal Kam Leung feed off the electric vehi- ing has flooded the market. They are all
mining industry overnight,” Lynas vice cle boom. factors that have the potential to provide
president of production Kam Leung said. uncertainty for prospective end users.”
Back in 1997, the
“Since late 2016, we have seen the – Mark Andrews
recovery of the rare earths market and Toyota Prius kick-started a generation
of hybrid vehicles and now many of the
world’s largest car manufacturers are
bringing out their own versions.
Encouragement to invest in electric ve-
hicles has also come from governments
around the world which are legislating to
replace traditional vehicles with electric
or hybrid models.
Leung said forecasts showed demand
PAGE 34 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Pilbara braces for second wave
Australia’s leading lithium de- Based on reserves of 80mt
veloper is preparing for anoth-
er surge in demand in light of re- @ 1.27% lithium and 123 ppm
bounding lithium hydroxide prices
this year. tantalum, and a throughput of 2
“We have people knocking our mtpa, Pilgangoora can be mined
door down saying: ‘Can we secure
more supply?’” Pilbara Minerals for 36 years.
Ltd managing director Ken Brins-
den said. Pilgangoora is the backbone
“Unfortunately, we are sold out for Pilbara, however, Mt Francis-
in stage one but we’d love to talk to
you about stage two of our project co is also emerging as a source
and yet that is not reflected in eq-
uity value in projects. In my view, of spodumene production down
there’s another wave to come.”
Pilbara is on track to start ship-
ping 314,000 tpa @ 6% spo- “We are looking forward to
dumene concentrate from the Pil-
gangoora project, near Port Hedland, in drilling there later on this year.
They are fantastic opportuni-
Supply can’t come quick enough for
off-takers Gangfeng Lithium and General ties and based on what is now
Lithium Corporation, with Brinsden say-
ing China needed mines under way 3-4 known about Pilgangoora and
Wodgina, there is every reason
Nevertheless, the market is currently
“running hot” and the trend is likely to to believe that has some serious
continue for some time, with Pilbara per-
fectly placed to capture further upside in Ken Brinsden future potential,” Brinsden said.
“Spodumene is almost be-
“At a cost base of $US220/t in the first coming the preferred source because it
5-7 years – today that product is sell- immediately upgrades to battery grade
ing for a minimum $US820/t – you are carbonate or battery grade hydroxide, so
making a cash margin of $US600/t over we’re in a fantastic position,” he said.
315,000t sold. That is serious cash flow “Today, people are grossly underesti-
and we are not that far away from pro- mating how quickly the lithium-ion supply
ducing,” Brinsden said. chain has to grow, especially [to satisfy]
Mining for the stage one 2 mtpa opera- that demand coming out of China.”
tions at Pilgangoora is scheduled to start – Mark Andrews
in Q3, with studies under way to assess
the potential for capacity to be lifted to 4
Lithium supply concerns raised with Galaxy
The rise in lithium demand has hap- 160,000 tpa lithium to roll out hundreds
pened quicker than most expected concentrate from Mt
and supply shortages are a real concern, Cattlin means Gal- of thousands of elec-
according to Galaxy Resources Ltd chief axy is receiving am-
financial officer Alan Rule. ple attention. tric vehicles and they
Rule’s Galaxy – one of the few pure “From discussions don’t have supply for
play lithium companies in the world – we’ve had in recent
started production from the Mt Cattlin weeks with the larg- batteries.
hard rock lithium mine, Western Aus- est motor manufac-
tralia, late last year, while a revised DFS turers in the world, it “One of them said
on its flagship Sal de Vida brine project, is clear they have a
Argentina, supports a low-cost, long life detailed plan, a well to us that they had
operation. thought out strat-
egy to execute. They looked at over 200
A development team comprising 200 know what they have
years’ experience in building and operat- to do and by when. It lithium companies
ing brine operations has been recruited, is clear they have a
while discussions with potential funding much better under- across the globe,
and strategic partners and off-takers for standing of demand than we do. They
the development of the $US376 million have done their homework and supply is their expectation
Sal de Vida project are ongoing. their problem; they are very concerned
about supply,” Rule said. was that only 10
Forecast production from Sal de Vida is
25,000 tpa lithium carbonate and 95,000 “They do not want to be caught with were ever going to
tpa potash over 40 years. Combining their pants down in 2025 when they have
Sal de Vida with a targeted run rate of make it. One of the
things to understand
Alan Rule about lithium is that
not all of it is of the
right quality; you
need to have high-grade battery quality
lithium and they want to deal directly with
the mining companies.”
– Mark Andrews
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 35
DIGGERS & DEALERS REVIEW
Fosterville flowing well
The Fosterville gold mine is well known cess has given Kirkland greater confi-
to regular Diggers & Dealers dele- dence in Fosterville’s longer term poten-
gates but even a number of conference tial.
veterans were surprised by the strength “The new reserve has seen mine life
of the asset when new owner Kirkland increase to three years and we plan to
Lake Gold Inc presented for the first time. take further advantage with eight rigs
Kirkland – $C2.78 billion market cap – on the property at the moment,” Holland
is forecast to record group production of said.
570-590,000oz this year with Fosterville The newly delineated Swan deposit
– 20km from Bendigo, Victoria – set to will be a major focus.
be a major contributor at grades of more “Within 100m of vertical extent and
than half an ounce per tonne. 200m strike length we have more than
Kirkland is the fifth Canadian company half a million ounces and it remains
to take on Fosterville in the last decade open,” Holland said. “We expect to up-
– and third in the last two years – having date the market regularly in the coming
picked up the asset as part of its acquisi- months.”
tion of fellow TSX-listed gold miner New- Kirkland also plans for greater access
market Gold last year. Newmarket had to underground drill pads having in-
inherited the mine as part of its takeover Ian Holland creased underground development from
of another Canadian gold junior, Croco- 600m to 1,000m a month this year.
dile Gold, in 2015. a record 94% in the June quarter – have On a district scale, Kirkland appears
Fosterville had developed a reputation further added to margins. the most serious company in a genera-
as a difficult operation before Newmar- “Those physicals have driven improv- tion when it comes to returning Victoria’s
ket’s arrival. Like many Victorian gold de- ing cost metrics and last quarter saw goldfields to their former glory.
posits, its high-grade mineralisation is al- AISC below $US400/oz. Our revised “Our view is that this is a rejuvenation
luring but the nuggetty, refractory nature guidance, the second this year, is for of Victorian gold with district-scale poten-
of the ore had made it an inconsistent, 250-260,000 ozpa at cash costs of tial and that there is significantly more to
difficult orebody to maintain. $US260-280/oz.” go,” Holland said. “Surrounding the min-
Newmarket had increased production The grade increases in production ap- ing licence, we have 500sq km of explo-
from 100,000 ozpa in 2014 to 123,095oz pear set to continue following revised re- ration licences with 60km of mineralised
“in 2015, at the same time lowering AISC serve estimates for the operation. gold-bearing structures – the majority
from $US1,186/oz to $US837/oz. of which have historical resource
The turnaround was enough to and/or workings – and all within
tempt Kirkland to launch a merg- Really, the lion’s share of 30km of the processing plant.
er offer, its $C1.01 billion bid be- the increase came from “We will be accelerating re-
ing announced last September.
gional exploration, including using
Production for 2016 was the new Swan footwall deposit seismic to guide our drilling to be
150,000oz gold but the Diggers where we have a reserve of more successful, and we have ap-
presentation by Kirkland Austral- plied for a further 1,400sq km of
ian operations vice president Ian 532,000oz at 58.8 g/t gold. ground.”
Holland proved how much more Things have not gone quite so
the new owner believed could be smoothly at the company’s other
extracted from the mine. Australian gold operation, Cosmo
Kirkland has increased its Fosterville “We have put out a revised resource- in the Northern Territory. Kirkland placed
guidance twice this year, having lifted reserve statement, doubling the ounces the mine (which produced 55,000oz in
quarterly production from 35,000oz gold in six months to underground reserves of 2016) on care-and-maintenance at the
last year to 77,000oz gold in the June more than 1 moz @ 18 g/t. That was driv- end of June but Holland said opportuni-
quarter. en by successful drilling bringing about ties still remained in the region.
Holland said it had been grade rather an 83% increase in grade,” Holland said. “We have the infrastructure and re-
than production rates which had allowed The delineation of reserves at the sources there and currently have five
the increase. Swan deposit was the “scene stealer” rigs drilling in the Northern Territory,” he
“Volumes have been relatively stable according to Holland. said. “We see exceptional opportunity to
but the production has been driven by “Really, the lion’s share of the increase restructure the NT operations at the right
grade increases from 7-8 g/t to 17 g/t,” came from the new Swan footwall depos- scale with the right metrics.”
he said. it where we have a reserve of 532,000oz – Dominic Piper
At the Fosterville mill, improvements at 58.8 g/t gold.”
from the biox plant – recoveries reached It appears the recent exploration suc-
PAGE 36 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
OceanaGold’s exploration push
OceanaGold Corp Ltd’s reputation has Craig Feebrey exploration drives have been established
been burnished by judicious M&A with 18,000m of drilling set to be under-
and project construction but the pres- of 96.3m @ 3.11 g/t gold and 18.3m @ taken over the next 18 months.
ence of exploration vice president Craig 4.37 g/t gold from the Palomino and
Feebrey on the Diggers stage suggests a Snakeshoe targets at Haile. “Work started last week [early Au-
change in focus is afoot. gust] and we expect to complete the first
“Preliminary models and resources will phase of drilling by the end of 2018,” Fee-
Past OceanaGold presentations were be undertaken to assess the economic brey said.
focused on either the development of potential and the need for further drilling
the Didipio copper-gold mine in the Phil- at the two prospects,” Feebrey said. “In Waihi also holds regional potential with
ippines or the acquisitions of the Waihi addition, we have other opportunities in the Coromandel gold district having his-
gold mine in New Zealand or the Haile our growing land package in the Carolina torically produced 12 moz gold and 52
gold project in US. Each delivered imme- Terrane and two will undergo drilling this moz silver.
diate or near-term production ounces but year.”
Feebrey’s presentation highlighted their Feebrey said the company had at least
less well-known exploration potential. At another recent acquisition, Waihi on seven prospects to be explored in the
New Zealand’s North Island, OceanaGold district.
“Long term, we are seeking geopoliti- has already managed to increase the to-
cal and production diversity through 5-7 tal resource by 210,000oz to 570,000oz At its longest running mine, Macraes
quality gold mines and exploration plays in less than three years of ownership de- on New Zealand’s South Island, Ocean-
an important role,” Feebrey said. “And, spite also mining 300,000oz during the aGold is confident the 1.38 moz Round
the company has ample opportunity to period. Hill/Golden Point discovery will extend
create value in the Pacific Rim region.” mine life by 10-12 years.
Exploration at Waihi is currently fo-
At Haile – the company’s newest mine cused on the 1 moz Martha target. Two With the development pipeline look-
– OceanaGold has already found ex- ing bare, the company is also preparing
ploration success at the South Carolina a new generation of opportunities. It has
operation. In March, the company pro- recently moved into Nevada, US, and the
duced its first updated reserve-resource Santa Cruz province of southern Argen-
statement for the newly minted mine, in- tina through JVs, respectively.
creasing reserves by 70% to 58.2mt @
1.85 g/t for 3.46 moz gold. In Argentina, the JV with Mirasol Re-
sources Inc has already identified three
Gold production – forecast to hit targets along a 6km gold trend which has
130,000 ozpa this year – currently com- no reported historical drilling.
prises two open pits but Feebrey said
having captured underground ounces in In Nevada, two separate JVs with Gold
the reserve model for the first time, the Standard Ventures Inc and NuLegacy
company would continue its focus on have handed OceanaGold strategic posi-
deeper mineralisation. tions on both the Carlin and Battle Moun-
In June, the company announced hits
– Dominic Piper
Plutonic to give Superior more
Since listing in Febru- “The haul road just “We are trying to increase the mine
ary, Superior Gold life and get to 100,000oz stable [pro-
Inc has outperformed started out and this duction per year] and focus on the best
its peers both on the ounces, leverage excess mill capacity
ASX and TSX thanks year we will be looking and expand our production. Once we
to solid gold production have got ourselves where we want to be
from the Plutonic gold to spend about $US9.9 at the mine site in the Plutonic area and
mine in Western Aus- we have a valuation that we think is ap-
tralia. million to finish that haul propriate, then we will look at potentially
transforming into something larger with
Output from Plutonic road and begin pre- more assets,” Bradbrook said.
– acquired from North-
ern Star Resources Ltd stripping and whatever The first nine months of production
in 2016 – is forecast to from Plutonic has returned 61,319oz at
be 75,000 to 80,000oz gold this year. infrastructure we need total cash costs of $US785/oz, netting
Superior free cash flow of $US12.8 mil-
The introduction of the Hermes deposit outside of that,” Superior lion.
will see production of 100,000-110,000oz
gold next year, with work under way on president Chris Bradrook – Mark Andrews
Chris Bradbrook said at Diggers. in
Plutonic has been
since 1990, with 5.5 moz gold mined.
Bradbrook said Plutonic was a unique
mine within a big system, with aggressive
expansion of resources and reserves a
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 37
DIGGERS & DEALERS REVIEW
Monty makes magic for Sandfire
Development of the Monty underground mine is under way
Sandfire Resources NL managing di- “I’ve been in this industry now com- When Paydirt visited site with Simich
rector Karl Simich has become ac- ing up to my 32nd year and Monty is the on the eve of Diggers & Dealers, the
customed to answering questions about ninth mine that I’m taking to production. company was preparing to conduct the
mine life. I’ve been in many parts of the world and first blast for the underground box cut at
I can tell you that persistence, patience, Monty, about 10km east of DeGrussa.
As development of the new Monty un- diligence and determination is critical.
derground mine ramps up, Simich still You can’t be dictated by the market cy- First ore from Monty (reserve of
finds himself being peppered with que- cles or investors that will potentially 920,000t @ 8.7% copper and 1.4 g/t
ries and concerns from analysts and in- come and go. You have to have a differ- gold) is likely to be blended with De-
vestors about the long-term outlook for ent mindset.” Grussa feed in early Q3 2018. Feasi-
his company’s DeGrussa copper-gold bility studies confirmed a mine plan of
operation in Western Australia’s Bryah Karl Simich 7mt @ 5.1% copper and 1.6 g/t gold for
Basin. 359,000t copper and 368,000oz gold
from the combined ore sources.
DeGrussa currently has a five-year
mine life ahead of it, having been produc- Sandfire has agreed to purchase Talis-
ing high-grade copper since 2013, with man Mining Ltd’s 30% share of the Mon-
Monty to provide a further injection of ty ore prior to blending.
quality material for three years from this
time next year. “The top of Monty is going to be some-
where in the order of 10% copper,”
However, from a market perspective, Simich said.
Sandfire is under increasing pressure
to make further discoveries in the wider “Obviously we’ll be working as hard as
Doolgunna region – of which it has ac- we can to get into the ore as quickly as
cess to almost 6,000sq km of tenure – to possible – I think we’ve got the next 12-
ensure the 1.6 mtpa processing plant at 15 months to get to that ore – but then
DeGrussa keeps ticking over. we’ve got ore there that is going to be
blended in with DeGrussa and feeding in
If Simich is feeling that pressure, he at over 9% copper, on average.
certainly isn’t showing it.
“It’s just a wonderful proposition for us
“Sometimes people are a little bit im- as we continue to go through what is now
patient in terms of wanting more results a five-year mine life at DeGrussa. This
and wanting them quicker, but we’re con- is a mine that is getting better the more
ditioned to that, we always have been,” mature it becomes.”
Monty is the first major discovery in
PAGE 38 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
the Doolgunna region since DeGrussa in
2009, a find which saw Sandfire’s share
price hit nearly $9/share in subsequent
years as the mine was being built.
While a falling copper price inevitably
correlated with Sandfire’s ensuing share
price struggles – $5.64/share at the time
of print – the desire to make repeat dis-
coveries in and around DeGrussa has
“As we know with these volcanogen-
ic-hosted massive sulphide deposits,
they form in clusters, they have multiple
lenses, they go deep and they are high-
grade,” Simich said.
“Having now got two VMS deposits,
we are absolutely confident that we have
only just seen the beginning of what will Sandfire’s $40 million solar farm supplies about 20% of DeGrussa’s
transpire in this region. But, it takes time, annual power requirements
it takes a lot of energy, it takes a lot of
money, it takes a lot of persistence, it made another discovery. Now again, project in the Lachlan Fold Belt of NSW,
takes a lot of dedication and determina- there is this school of thought there’s returned a number of promising hits, in-
tion to have that success. It doesn’t come nothing more to be made. cluding 125m @ 0.32% copper and 0.46
easy.” “Patience isn’t a very good thing for g/t gold (including 44m @ 0.41% copper
Sandfire is anticipating an early rush the analysts and the other commentators and 0.62 g/t gold) and 77m @ 0.44%
of high-grade copper from Monty not in the market. It’s very much an instan- copper and 0.65 g/t gold (including 24m
dissimilar to the first ore produced at De- taneous scenario where I just think they @ 0.87% copper and 1.38 g/t gold).
Grussa, with the maiden shipment which have a bit of difficulty in looking further “If you can find orebodies which can
left Geraldton port in 2013 grading about out than the length of their nose, but I yield, on average, somewhere in the or-
35% copper. understand it. And some investors are der of $400-500/t of revenue, you have a
“What we have got in Monty, as op- impatient, too.” licence to print money,” Simich said.
posed to what we didn’t see at DeGrus- Simich may be a charted accountant, “At the end of the day, we are in the
sa, is a mineralisation called bornite, but his passion for geology and explo- business of value generation. We just
which in its pure form runs at I think 63%, ration is unwavering. Having tasted dis- happen to be particularly in love and fas-
in its in-situ form,” Simich said. covery success with DeGrussa almost a cinated and intrigued by resources. This
“It’s pretty exciting and hopefully will decade ago, he is salivating at the pros- business has accreted a huge amount of
give us another understanding of what pect of spearheading another major find, money and that is going to continue. In
might be happening here geologically wherever in the world that may be. fact, I think it will get better.”
and also give us the vectoring [required] Sandfire recently entered into farm-in Meanwhile, Sandfire’s application for a
towards finding repeat deposits.” arrangements with junior explorers En- mine operating permit for its 78%-owned
Sandfire copped some criticism from a terprise Metals Ltd and Great Western Black Butte copper project in Montana,
number of analysts following the release Exploration Ltd to boost its profile in the USA, has been declared “complete and
of its June quarterly report, which includ- Doolgunna region. The company is also compliant” with all state rules and regula-
ed the updated mine plan for DeGrussa/ committed to several exploration pro- tions.
Monty, with one market commentator de- jects in New South Wales, Queensland Focus will now turn to the final stage
scribing the company as “being stuck in and the Northern Territory. of permitting – an environmental impact
a holding pattern”. Recent drilling at the Donnington study – which will take about 12 months
Simich hit back, declaring it would only prospect, part of the company’s Temora to complete, in the absence of any pro-
be a matter of time before his tests from NGO groups.
company’s $20 million explo- “We have strong support
ration budget for the region from the legislators in the US,
reaped rewards. so we are feeling optimistic
“The market is a beast, but that this project will be permit-
to a large extent very reaction- ted,” Simich said.
ary,” he said. “We’ve made some great
“It’s difficult for them some- progress over the time of our
times to have that longer view investment. We believe we are
on perception of certain things. getting towards the end of that
It’s a here-and-now proposi- permitting process – it’s a little
tion and they’re under huge bit longer than it would be in
pressures in terms of getting Australia – but essentially we
information out very quickly. believe the project is getting
“Some said when we made very close to that point.”
the DeGrussa discovery we – Michael Washbourne
were never going to make an-
other discovery, and then we Monty will boost the copper grade being fed to the DeGrussa mill
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 39
DIGGERS & DEALERS REVIEW
Red River zinc surprise
The zinc price is at 10- has seen so much ore over lead and zinc from Thalanga.
year highs and Red For its efforts to date, Red River has
River Resources Ltd is nearly two and a half dec-
primed to take advantage a market cap of $113 million and share
of the base metal’s current ades, the flow sheet has price of 24c, while it boasts a bank bal-
sexiness. ance of $27.4 million.
been optimised year-on-
PYBAR started under- Proving its production credentials
ground mining at the West year. We have all the oper- could see Red River’s status on the ASX
45 deposit back in April, rise, particularly if zinc prices hold and
with 20,000t of ore on the ating history so we are not the company has more zinc to offer from
ROM pad, putting Red Far West.
River in a good position for going to do anything differ-
the restart of production “Our second mine will be Far West,
at its Thalanga operation, near Charters ent that hasn’t been done which is 400m from the mill on a mining
Towers, Queensland. lease and an extension of the old Thalan-
before.” ga West mine,” Palancian said.
The mill refurbishment was 70% com-
plete when Red River managing director Pre-production capital of “We have been doing an extensional
Mel Palancian spoke at Diggers & Deal- and infill programme there and the cur-
ers and production was on track to start Mel Palancian $17.2 million has been com- rent resource is 1.6mt @ 14.9% [zinc
in Q4. mitted to Thalanga’s rebirth, equivalent]. The resource is currently
being updated, with a new mine plan to
“There aren’t any zinc companies on with targeted production of come out with a maiden reserve by the
the ASX that are currently pure play and end of the year. This has been a real sur-
we hope to be the first one [into produc- 1.7mt @ 15.2% zinc equivalent (9% cut- prise for us because we didn’t expect that
tion],” Palancian said. much high-grade ore to be sitting on a
off grade) over an initial five years. mining lease 400m from the mill. We will
“Commissioning of the plant has al- be putting a brand new portal in, while we
ready started. This plant was last running Palancian said the company was ruth- have got ore pretty close to the surface
in March 2012 and there was nothing re- which is all good high-grade stuff.”
ally wrong with it and because the plant less with the cut-off grade as a means
– Mark Andrews
of protection against weaker zinc prices.
At the time of print, zinc was trading at
$US1.40/lb, with life-of-mine average C1
cash costs of US18c/lb payable zinc after
“We can make money when the market
is great, but when the market turns we
have the ability to jack the cut-off again,”
Copper produced will be sold to Glen-
core, while Trafigura has the off-take for
Anglo gets innovative
Anglo American plc is embracing tech- ing technologies on offer, cost curve; it will change
nological change across its diverse being able to extract just the slope of the cost
suite of operations. the metal or mineral alone curve. Not everybody has
will one day be a reality,” the orebodies that will be
“I’m convinced we’re on the cusp of O’Neill said. able to do this, but it will
a technological revolution that will fun- have a profound effect on
damentally change our industry and “Exactly when this day the industry.”
will change it very, very quickly,” Anglo will come I cannot tell you,
American technical director Tony O’Neill but a pathway is beginning Anglo American is also
said. to open up and a series of investigating dry process-
steps that ultimately will ing options to eliminate
“These technologies are real and hap- take us there. At Anglo the need for tailings dams.
pening. We don’t know how this revolu- American, we’re already Tony O’Neill If testing proves success-
tion will exactly unfold, but one thing is taking these steps.” ful, the “waterless” mine
clear; it is absolutely going to happen technology could be ap-
and tomorrow’s winners will be today’s Anglo American has plied across the company’s portfolio,
pioneers.” floated the possibility of “concentrated” with about 75% of operations located in
and “waterless” mines in the not too dis- “high risk” regions for water.
Celebrating its 100th year in 2017, An- tant future. “A waterless mine may sound far-
glo American operates 37 assets – pri- fetched until you consider that scientists
marily copper, PGMs and diamonds with A pilot “concentrated” mine, whereby have already developed dry water using
some iron ore, nickel and coal – across operators move and process only the silica nanoparticles to mimic the proper-
three continents. metal or mineral, is currently subject to ties of water,” O’Neill said.
testing at a Chilean facility. “It is quite possible, in our view, that
Innovation and technology integration this will replace water in our closed-loop
have become a mandate at Anglo Ameri- “Early indications are that we could processing systems.”
can since Mark Cutifani was appointed possibly achieve 30% more throughput
chief executive in 2013, with the compa- with 30% less water, 20% less energy – Michael Washbourne
ny on the lookout to gain an upper hand and only a 3% recovery loss,” O’Neill
wherever it can. said.
“It is clear to me that given the emerg- “These changes will shift the copper
PAGE 40 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Fortescue to play cards right
With a grip on its finances and in- Nev Power just one of the most efficient and produc-
novations improving efficiencies tive through technology and innovation –
across iron ore operations in the Pilbara, so we think that is the best way to cre- as a means of absorbing any volatility in
talk about Fortescue Metals Group Ltd’s ate value. While we never say never and iron ore prices.
diversification strategy has started to gar- would always keep an open mind, it is
ner attention. much more difficult to see how we would Since 2012, a lot of high-cost iron ore
create value through M&A compared production has exited the market, how-
It has been a mighty effort to repay to grassroots exploration or early stage ever, a third of supply is still produced on
$US2.7 billion and report cash of $US1.8 farm-in,” he said. the higher end of the cost curve, which
billion in FY2017, however, with volatile “is a massive shock absorber on the in-
iron ore prices in mind, chief executive The immediate focus for the company dustry and keeps a very healthy margin
Nev Power said Fortescue would be then is to sustain its performance at the for low-cost producers”, Power said.
measured by its diversification strategy. bottom of the cost curve for global iron
ore production. “If all the low-cost producers expanded
The company has copper-gold ex- and pushed all this high-cost production
posure in South Australia, New South C1 costs for the June quarter were out of the cost curve, the price would
Wales and Ecuador, all through early- $US12.16/wmt, with Fortescue targeting then drop to $1-2/t above the low-cost
stage exploration projects, and while it $US11-12/wmt for total shipping of 170mt producers and it wouldn’t be such a great
has the financial capacity to buy an as- – in line with FY2017 output – in FY2018. industry structure anymore,” he said.
set, Power said seeing full value for ac-
quisitions was not easy. Power said it was not important to be “We fundamentally don’t believe that
the lowest cost producer in the world – this is an industry where we should be
“I think that would require a dripping continuing to expand for production’s
roast because it is very difficult from our sake and simply lowering the price as a
perspective to create value through ac- result.”
quisitions; we have seen a lot of people
try to do that and it has been very dif- Iron ore producers have dramatically
ficult,” he said. slashed costs since 2012, as currencies
in Australia, Brazil, South Africa and In-
“We are not in any way thinking that dia also retracted.
we can do anything or that we have skills
that apply to everything. We are looking “Of course the oil price, which gener-
very carefully at areas where we think ally flows through to diesel or electricity
we can bring skills and practices that we generation, is less than half of what it
have developed within Fortescue and was back in 2012. That has had a mas-
apply them to other industries or other sive deflationary effect on industry, so
areas. today $US60-65/t iron ore price is proba-
bly equivalent to $US130/t back in 2012,”
“For the most part we have created Power said.
enormous value through exploration de-
velopment and ramp up into production, – Mark Andrews
Roy Hill on highway to 55
After securing an endless list of ap- they were incredibly good as a group of while having substantial amounts of in-
provals and organising the largest partners, particularly their willingness to frastructure work and FEED completed
land-based mining project financing deal take the risk. Towards the funding point, also helped.
ever in the world, Roy Hill Holdings Pty we had a major issue, the market place
Ltd is on the way to hitting the desired run was moving, if you recall the prices for First ore was shipped from Roy Hill in
rate of 55 mtpa iron ore production from iron ore changed and so it was fairly December 2015, however, there have
the Pilbara. touch-and-go for a period,” Fitzgerald been a few difficulties during ramp up.
In 2014, a $US7.2 billion debt package To date, 45mt or ore has been pro-
was secured via five export credit agen- “The export credit agents are govern- duced, with 43mt shipped to key markets
cies and 19 commercial banks, paving ment institutions and very sensible and in Japan, Korea, China and Taiwan.
the way for completion of the $US10 bil- focused. So, that took a while and when
lion Roy Hill mine. trying to fast-track a project [you have to] “With 4.5mt shipped in July, we believe
run very quickly, and we certainly almost we are closely on the path to 55mt. That
Roy Hill chief executive Barry Fitzger- ran out of time with them. It was a factor is where we are at in terms of ramp up,”
ald said attaining the support of the eq- of too many expectations for the time- Fitzgerald said.
uity partners, particularly against a back- line.”
drop of a depressed iron ore price, was a Roy Hill will initially produce for 17
major challenge. To provide some comfort for its part- years, with the company confident of ex-
ners, Roy Hill worked feverishly to en- tending the mine a further 12 years be-
“It was a concern, it was a challenge, sure every milestone was achieved, yond that.
but once we had those folks on board
– Mark Andrews
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 41
DIGGERS & DEALERS REVIEW
Ramelius straps up for M&A race
Ramelius Resources Ltd managing
director Mark Zeptner shunned the
usual coy approach to expressing M&A
intentions at Diggers and instead laid his
cards firmly on the table.
“It is time to deliver on project acquisi-
tion which we have talked about for a
long time,” Zeptner told his audience.
Ramelius has etched out a consistent,
if unremarkable, production profile for it-
self over 11 years of gold mining at Mt
Magnet and Vivien in Western Australia.
However, Zeptner knows the company
needs to deliver a big ticket corporate
move to elevate its status among the
growing junior gold throng.
“Ramelius is generally at the wrong
end of the peer comparative charts but
you could ask what would need to hap-
pen to jump Ramelius to the next tier,” Mark Zeptner
he said. “Our time is now and there are
some projects coming on the table which really exciting and the obvious benefits ing Star orebodies at depth.
look quite exciting. We have got the team, to shareholders will be there.” Morning Star has been closed since
we have got a bedded-down operation, The ability to even discuss M&A 2005 but a recent resource update de-
we’ve got the balance sheet and we can comes as a result of Ramelius’ consist- livered an increase in resources from
make it happen.” ent performance over the last few years. 103,000oz to 506,000oz. Ramelius plans
It is four years since Ramelius paid The company actually missed its June to bring the mine online in FY2020 by
$10 million and $3.65 million for the quarterly targets – meaning it also nar- which time it hopes to have defined the
Vivien and Kathleen Valley projects re- rowly missed its annual production fore- Morning Star Deeps prospect for which
spectively but Zeptner said there had cast – but Zeptner said the results were it has set an exploration target of 225-
been no shortage of offers canvassed far from debilitating. 275,000z @ 4-6 g/t gold.
in the intervening period. “After our quarterly came out I was a At Mt Magnet, recent intersections on
“We want to be backing the right horse little bit ‘woe is me’ but then I said to my- the Shannon deposit – including hits of
which means we say no a lot of the time self: ‘Wait a minute, we’ve just had two 5.7m @ 10.6 g/t gold from 149.3m, 6.2m
but I think we will get it right once we do years of consecutive record production @ 39.5 g/t gold from 168.8m – are en-
pull the trigger. We will follow our own and we have $90 million in the bank’. couraging further work.
due diligence process and Vivien and I’d actually argue we’ve never been in a “Shannon is the most exciting thing to
“Kathleen Valley were both project acqui- better position.” happen at Mt Magnet in a long time. It
sitions which we appear to is in the Boogardie Basin
have got right.” Our time is now and there are where you normally find
This time around, Rame- low-grade porphyries but
lius will have the added some projects coming on the this is a 45-degree dip-
balance sheet weight of al- table which look quite exciting. We have ping quartz vein which is
liance partner Zhaojin Min- high-grade. When you‘re
ing Industry Company Ltd, got the team, we have got a bedded getting numbers which are
China’s fourth largest gold underground mineable it is
down operation, we’ve got the balance encouraging.”
producer. The alliance will
see the companies team sheet and we can make it happen. Zeptner said that while
up on generating and as- the open pit ounces were
sessing project opportuni- already in the mine plan,
ties. the company would look at
Zeptner believes the alliance will el- Zeptner’s confidence in Mt Magnet bringing underground ounces in earlier
evate Ramelius in a busy M&A market. and Vivien (combined production of if the results continued.
“Our Zhaojin alliance allows us to 125,488oz gold in FY2017) is reinforced “We need another 15-16 RC holes
think a bit bigger than we could other- by the opportunity for mine life exten- first to define the strike extent but we
wise look at on our own and pops us sions in front of the company. are excited about getting more under-
out of a pretty crowded space in terms Ramelius has dedicated $11 million to ground ounces into the plan,” he said.
of the smaller projects coming onto the testing mine life extensions at both Mt – Dominic Piper
market,” he said. Magnet and Vivien with the $8.5 million
“That potential step change in terms budget at Mt Magnet to be focused on
of production and asset life is something chasing the Water Tank Hill and Morn-
PAGE 42 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
The real digger and dealer
It has been a fruitful 12 months for West- re-establishing key underground mines Peter Cook
gold Resources Ltd. at the project continues apace.
Successfully demerging from Metals X flexibility; [by not having] a contractor
Ltd, Westgold cracked 100,000oz gold at Production from the Paddy’s Flat un- where you are pinned to a schedule or
AISC of $1,290/oz in the first full year of derground is at a steady state of 503,299t forecast, but having the inherent flex-
production from the Central Murchison @ 3.42 g/t gold for the full year, while de- ibility to move gear around as you want,
gold project (CMGP), despite the asset watering of Big Bell continues. when you want to achieve the best out-
remaining in development mode. come. It lowers our overall unit cost, it
The total cost to dewater Big Bell is gives us all the gear and the fleet and
The company achieved the production $30 million, which Cook is confident will there is lots of it to be able to handle all
milestone at CMGP, while also negotiat- become a great mine again. of our own expansions over the next few
ing an asset merger-type agreement with years internally.
RNC Minerals over SKO, restarting the “We will attempt to build [Big Bell] as a
Fortnum gold mine and expanding its in- sub-level cave,” Cook said. “We aggregated this with our own
volvement in the industry with the 100% open pit mining fleet; at Meekatharra
acquisition of underground mining con- “The task to dewater this mine is a big we do our own open pit mining as well,
tractor ACM. one – 25 million cubic metres of water – so we intend to put a fair bit of balance
but we have already been pumping for 12 sheet behind ACM and run internal con-
“Of course, in the last month the second months. You can walk about 3km down tracts and if anyone wants help, we are
deal we have done since the demerger the portal now and it requires $24 million happy to run external contracts as well,”
was the acquisition of the Tuckabianna of pumping infrastructure to push this he said.
gold project as part of the expansion of water into the salt lake.”
the CMGP,” Westgold managing director As at July 2017, Westgold had no debt
Peter Cook said. To increase bang-for-buck from these and $50 million cash and working capital
born-again mines, Westgold has taken at its disposal.
By adding Tuckabianna, Cook said the total control of mining activities.
move was the “biggest aggregation play On the exploration front, 80% of the
since the Super Pit in Kalgoorlie”. By acquiring ACM earlier this year, budget would be dedicated to brown-
Westgold can determine its own fate and fields areas in order to upgrade mine
Westgold’s CMGP is comprised of nine is looking to save $75-100/oz, on a fully plans, while 20% would go on grassroots
historic mining centres, with 302 mining integrated basis, in production costs. opportunities “trying to find a new mine
titles covering 932sq km of ground. that makes a difference”, Cook said.
“For us, this is about squeezing the
“The production history in this area is lemon a little bit harder. If a mining com- – Mark Andrews
10.6 moz and it has a resource base of pany has the financial capacity and the
just under 8 moz; it is like owning all the technical capability to be a miner itself, it
land between St Ives and Kalgoorlie and should be,” Cook said.
it is in the Murchison,” Cook said.
“The most important thing for a small
“It is not quite as a prolific a goldfield, mining company developing projects is
but it is a substantial aggregation play.
The recent acquisition is a game chang-
er for this; we have a process plant in the
southern part of this field, as well as one
in the north.”
The company hopes to have 3 mtpa
of processing capacity in the field before
the end of the year, with the 1.2 mtpa
Tuckabianna plant expected to come on-
line in that timeframe.
In the last 12 months, Westgold has
produced almost 267,000oz from Fort-
num, CMGP, Higginsville and South
Fortnum is the latest mine added to the
mix and as commissioning ramps up, so
will Westgold’s ambitions of producing at
a rate of 400,000 ozpa gold, which is the
target in the next 18 months.
Extracting open pit material from the
CMGP – Westgold’s largest project with
some 7.75 moz in gold resources and
reserves of 1.92 moz – will be done as
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 43
DIGGERS & DEALERS REVIEW
Fotios faces the music
Eastern Goldfields Ltd ment of about $383,000 to Genalysis said the company was
made headlines be- Laboratory Services Pty Ltd was made. currently ramping up pro-
fore, during and after Dig- duction from Davyhurst to
gers & Dealers – mainly In a statement to the market, Fotios about 80,000 ozpa and
for all the wrong reasons. said: “Our focus has been on building hoped to crack 100,000
Eastern Goldfields into a premier Aus- ozpa in December by
In the lead-up to the an- tralian gold producer through the recom- bringing onstream the
nual Kalgoorlie meet, a mencement of mining at the Davyhurst high-grade Golden Eagle
number of angry suppli- mining hub. and Lights of Israel de-
ers threatened to protest posits.
about their lack of pay- “With operations now well under way
ments while Eastern Gold- and gold being produced, the board will Fotios said the real po-
fields executive chairman now focus on addressing administration tential of the Davyhurst
Michael Fotios presented and management issues in front of the mining hub was through
the company’s story. company.” underground operations.
GR Engineering Ser- Speaking at Diggers & Dealers, Fotios “We think the transition
vices Ltd also launched from open pit to under-
legal action against the ground mining is going to
company over a series of significantly enhance the
missing payments relat- economics over time and
ing to the refurbishment of add to an already sub-
the Davyhurst processing stantial resource base,”
facility. Michael Fotios he said.
By the time Fotios took “We’re now looking at
the lectern at the Goldfields Arts Cen- trying to get the best we can out of the
tre, things had cooled somewhat after organic growth potential of these tene-
Eastern Goldfields settled payments with ments. We’ve got a long way to go – it’s
some contractors. early days – but we think we’ve got a lot
of potential on this ground position and
First gold was poured from Davyhurst it’s the reason we’ve been focused on it
on July 25, with that bar delivered to The for so long.”
Perth Mint on August 15.
Eastern Goldfields is also searching
However, the following day the com- for a new chief executive, with Fotios re-
pany’s stock was suspended on the back vealing his plans to step back from his
of a Supreme Court of Western Aus- current full-time role in due course.
tralia ordering that Eastern Goldfields be
“wound up” and a liquidator appointed. – Michael Washbourne
The order was set aside about 24
hours later when an outstanding pay-
Beadell ready for rebound
Beadell Resources Ltd is halfway structuring debt to match projected cash to treat more fresh material and that will
through a dramatic turnaround which flow and getting Tucano into a position allow us to truly optimise the project,”
should deliver a much improved compa- where growth can be achieved. Jackson said. “From next year, we will
ny in coming years, according to manag- have flexibility in the plant to process in
ing director Simon Jackson. The mine, in north-east Brazil, is ex- combination.”
pected to produce 170,000oz in the next
Brazilian-focused gold miner Beadell 12 months as Beadell aims to hit reserve There could also be more ore avail-
has seen its growth profile stall in recent levels in the head grade and completes able after Beadell restarted exploration
years due to the underperformance of its upgrading of the plant. earlier this year. The company controls
its Tucano operation and an unenviable 2,500sq km of the prolific Guiana Shield
debt profile but Jackson said recent im- The Tucano mill had been built primar- and Jackson is eager to make the most
provements on both fronts had allowed ily with oxide mineralisation in mind but a of that landholding.
the company to break the shackles. recently started $US27 million plant up-
grade will see it optimised for fresh mate- “We restarted exploration last year
“This is a true turnaround story with rial. Included in the revamp is a new ball which led to a 70% increase in reserves
significant potential in the future but with mill, pre-leach thickener, an additional and resources and an increase in grade
a few problems in the short term,” Jack- CIL tank and an oxygen plant. Beadell from 1.5 g/t to 1.7 g/t gold but that is just
son told Diggers & Dealers. expects recoveries to increase from 88% the tip of the iceberg,” he said.
The company’s turnaround strategy – Dominic Piper
has been focused on reducing and re- “We have started the plant upgrade
PAGE 44 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Double delight for Dacian
Dacian Gold Ltd execu- Morgans, without ques-
tive chairman Rohan
Williams had two com- tion,” Williams said.
pelling reasons to smile
throughout Diggers & “We are well and tru-
ly into the development
If the rapid development
of the Beresford under- stage. Two years ago we
ground at his company’s
Mt Morgans project wasn’t had an annual expenditure
boosting his mood, an en-
ticing drill hit at the Cam- of $6 million and we’re now
eron Well prospect did the
trick. spending $6 million every
Dacian reported an in- 10 days. It’s been quite a
tercept of 2.3m @ 311.3 g/t
gold from 140m at Cam- ride.”
eron Well during the three-
day event in Kalgoorlie, Open-pit mining will
ensuring investors once
again stayed close to the start at Jupiter (reserve of
company’s booth inside
the big tent. 14.8mt @ 1.4 g/t gold for
Williams told delegates he was field- 643,000oz at a forecast
ing similar levels of interest about the
company’s exploration plans at Cameron AISC of $1,193/oz) later
Well and the concurrent development of
the Westralia and Jupiter deposits. this year. Three sub-pits
“I am yet to see such a well-defined, extending over 1.8km are
coherent, large oxide gold anomaly as
this one,” Williams said of Cameron Well. set be mined over the next
“To deliver that in the first round of drill- eight years.
ing is exceptional. Clearly we’ve got a lot
more work to do, but this looks to be an- Development of the Beresford underground mine is Westralia was discov-
other mineralised system. We’re particu- progressing ahead of schedule ered less than a year after
larly excited by it. Dacian floated on the ASX
“We’re quite hopeful we’re going to find Development of the Beresford under- in late 2012, with Jupiter added to the mix
some oxide reserves here, and we all
know how oxide reserves will go through ground, part of the 1.6 moz Westralia in 2014.
a hard rock plant; swiftly and cheaply.”
complex, had progressed 170m ahead of “We found two 1 moz orebodies in a
The impressive result at Cameron Well
came from one of the first six diamond schedule when Williams presented to the very quick space of time and then spent
holes drilled into the prospect, located
between the Westralia and Jupiter pits. conference in early August. a lot of time drilling them out, doing the
Only 18 RC holes had previously been
punched into the fresh rock below the First ore from Beresford (reserve of feasibility, financing it all and now the
extensive surface gold which caught the
company’s eye. 2.4mt @ 4.2 g/t gold for 331,000oz at construction,” Williams said.
RC drilling was continuing at the time a forecast AISC of $845/oz) is set to be “It’s really hard to understand and con-
of print, with Williams and his team look-
ing to develop their understanding of the processed in November, with the first vey the size of these ore systems. One of
mineralisation in the area and potential
synergies with the nearby Wallaby mine. gold pour likely to take place in March. the things about Mt Morgans – and cer-
“My view is there is a lot of value still to “RUC Mining has advanced 850m in tainly around Laverton – is they are very
be found at Mt Morgans,” Williams said.
12 weeks,” Williams said. “For those of large ore systems. If you’ve ever walked
“I get asked a lot about M&A, but the
cheapest gold we’re going to get is going you who understand mining advance across the Sydney Harbour Bridge, that’s
to come from Mt Morgans. Our job is to
work Mt Morgans as hard as we can and rates, that’s flying.” exactly the length of the mineralisation at
get us and the market to appreciate the
value of it.” Development of the Allanson under- Westralia.
ground (reserve of 900,000t @ 5.7 g/t “Mt Morgans is going to be the first new
gold for 162,000oz at a forecast AISC of 200,000 ozpa producer since Tropicana,
$819/oz) will begin in December, with first I’m led to believe…and we’ve clearly got
ore to be processed during the second some outstanding growth potential on
half of 2018. top of that.”
“Westralia is the engine room of Mt Williams also marvelled at the pro-
gress GR Engineering Services Ltd had
made on the new 2.5 mtpa processing
plant, adjacent to Jupiter.
More than half of the 400-room ac-
commodation village had been commis-
sioned at the time of print and is expect-
ed to be fully operational by the end of
– Michael Washbourne
A feature length story on Dacian Gold
will appear in the next edition of our sister
publication Gold Mining Journal
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 45
DIGGERS & DEALERS REVIEW
Northern Star rises again
Not many mines in Tier 1 jurisdictions
are capable of producing 300,000
ozpa gold; but within two years Northern
Star Resources Ltd will have two such
assets in its portfolio.
After large capital investment in the
past few years, Northern Star has opened
up visibility on the Jundee and Kalgoorlie
operations and is confident the respec-
tive mines will surpass the magical mile-
stone in the near future, Northern Star
chief executive Stuart Tonkin said.
“There are 23 mines in the world in Tier
1 jurisdictions – Australia, North Amer-
ica and Ghana – that are greater than
300,000 ozpa and Northern Star has two
of those that we will build on the next two
years,” Tonkin said.
Forecast production in FY2018 from
Jundee is 245,000-265,000oz @ AISC Stuart Tonkin
of $950-1,000/oz and while output from
the Kalgoorlie operations is estimated Additionally, Zodiac – 4.8m @ 21.2 g/t Northern Star’s committed approach to
to be the same, AISC will come in at gold, 2.9m @ 10.4 g/t, 0.3m @ 47 g/t, exploration has it well placed for growth,
$1,000-1,050/oz. 3.6m @ 4 g/t, 3.1m @ 4.3 g/t and 2.5m and ahead of the competition, according
Overall guidance for FY2018 is @ 5.4 g/t – is a fresh discovery and rep- to Tonkin.
525,000-575,000oz at AISC of $1,000- resents some of the future potential at “Since 2012, the five major gold pro-
1,050/oz. Next year, Northern Star is tar- Jundee. ducers’ reserve life have declined by
geting 600,000 ozpa gold from Jundee “There is a lot of real estate between 37%, all the while we’ve grown our re-
and Kalgoorlie alone, as it starts to pull the Zodiac discovery and the main sources by 218% in just three years by
back on capex. Jundee mine. There is a lot of activity in investing in successive multi-year explo-
In the past three years, $250 million front of us there,” Tonkin said. ration programmes,” he said.
has been spent on exploration and ex- In the meantime, the Paulsens revitali- “Discovery of resources around the
pansionary capital, with money spent on sation programme is under way and $10 world has been done at about $200/oz.
the latter to reach a total of $165 million million will be spent over the next two We have achieved that over the last three
in the next three financial years. years assessing the viability of bringing years by adding resources at $21/oz.
““The capex hump is over, we did things the mine back into production in 2021. And when it comes to questions around
in a hurry and spent a lot M&A, we have been
of time on exploratory drill- Discovery of resources around the good at buying mines,
ing,” Tonkin said. renovating mines and
Reward for its invest- world has been done at about $200/ finding new mines; that
ment has been returning is our business model.”
oz. We have achieved that over the last
Jundee to world-class sta- three years by adding resources at $21/oz. In FY2017, the com-
tus and to a point where pany reported record
there appears to be plenty net profit after tax of
in front of the mine beyond And when it comes to questions around $215.3 million, a 42%
the 3 moz resource. M&A, we have been good at buying mines, increase from the previ-
ous corresponding pe-
“We can see how ex-
tensive this network is; renovating mines and finding new mines; riod, while shareholders
5km by 3km. The aver- that is our business model. were kept happy with
age depth of activity is a final dividend of 6c/
still around the 300-400m share fully franked.
below surface and we The 50% increase
are literally picking up multiple produc- Exploration-wise, Northern Star has in final dividend took the total full year
tion fronts embedded inside the existing committed $35 million for FY2018, with payout to 9c/share, with Northern Star’s
Jundee mine,” Tonkin said. $7 million dedicated to the Central Tan- cash of $447 million coming after return-
“We are able to bring multiple produc- ami JV. ing $60 million in dividends.
tion fronts online, we are not stuck. We “We see this mine coming into the plan – Mark Andrews
were producing from five production cen- and being a 120,000-150,000 ozpa pro-
tres in the last quarter and we’re looking ducer [100% Northern Star], which is an
to add six and seven fronts onto this as- exciting opportunity for growth,” Tonkin
PAGE 46 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
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DIGGERS & DEALERS REVIEW
Bryah finds space in the basin
If there was one difference earnest.
this year from recent Dig- That chase has so far
gers & Dealers forums, only revealed a few further
it was the proliferation of discoveries but Marston be-
representatives of IPOs lieves the Bryah Basin still
and early-stage exploration has plenty to offer.
plays among the 2,000 del- “All of these deposits –
egates. DeGrussa, Monty, Wodger,
While Diggers always at- etc – are all under cover
tracts its fair share of hope- but there has only ever
fuls, they were much thicker been shallow drilling. There
on the ground this year and has been so little explora-
appeared to be generating tion done in this basin and
a more positive response the drilling which has been
than at any time this dec- done was mainly for gold,
ade. they didn’t even assay for
There have already been copper.”
14 new resources listings Despite the lack of copper
on the ASX this calendar exploration, the success of
year with several more us- DeGrussa, Monty and now
ing Diggers to warm to Wodger gives Bryah plenty
investors. Among the pro- Bryah Resources is the latest entrant to hunt for VMS deposits of information to work with.
posed IPOs is Bryah Re- in the eponymous WA basin “It is a known model we
sources Ltd which is looking are looking for and we know
The market support for Auris is also these VMS deposits have large alteration
to raise $5-6 million to fund exploration
at its Bryah Basin and Meekatharra pro- confirmation that investors are willing to systems around them,” Marston said.
back early-stage exploration plays after “So, once the aeromag interpretation
jects in Western Australia.
Bryah managing director Neil Marston fleeing the sector several years ago. The is complete we can move from there to
told Paydirt the company had consid- change in attitude is understandably wel- soil sampling, deeper drilling and ground
ered several alternatives before seeing comed by Marston.
“Since we launched the IPO, inves- geophysics.
the IPO market open up at the beginning “We are aiming for a discovery in the
tors certainly appear to have changed next couple of years. It is ambitious but
of the year.
“We had been looking at this ground from demanding immediate cash flow to we have the benefit of other discoveries
for more than a year but hadn’t found looking at exploration,” he said. “That is and we are looking on the same horizon
the right vehicle,” Marston said. “We had a good indication the support is there for as Wodger.”
considered a reverse takeover because non-producers.”
Bryah plans to release the results of
Bryah’s plan is more intricate than just the aeromag survey on the day of listing
there was no-one looking at IPOs at the
time but after a number of false starts we riding on Auris’ coattails however.
in an effort to generate immediate up-
The company has already spent more ward momentum in the market.
decided the best way forward was with than $150,000 on flying aeromagnetics
the clean slate of an IPO.” “We will release the aeromag straight
Timing can be everything with new list- across its 713.8sq km land package in away and then get out drilling in the first
ings and while a number of floats have the Bryah Basin.
“The aeromag is very useful because few weeks,” Marston said.
got away this year, the erratic nature of Further early news flow is planned
at that resolution you can see where the to come from the company’s second
the market slowed Bryah’s progress.
“This year has been up and down for volcanics are in the sedimentary cover; project, Gabanintha, 40km south of
IPOs,” Marston said. “There were a few a lot more structures show up,” Marston Meekatharra.
in the first quarter but when we came said.
Dominion Mining mined Gabanintha
Bryah has almost completed its inter- via open pit between 1987 and 1991,
out in May it was not good but since July pretation of the aeromag survey and is producing 150,000oz of gold in that time.
there has been a lot more interest.”
Interest in Bryah was likely piqued by now narrowing in on prospective targets. The tenements Bryah has applied for
“Our consulting geologist was given cover the area between Gabanintha and
the success of Auris Minerals Ltd on its
Wodger copper-gold prospect (2km west a brief of: ‘How do we look for a VMS?’ the Burnakura gold mine.
of Bryah’s tenements) where an initial These systems are tricky to find but we
“We could build a resource very quick-
intercept of 31m @ 2.39% copper has are trying to hone in on 10-20% of that ly and the whole area had a lot of copper
been followed up by hits of 14m @ 1.48% 700sq km so we can start some broad- in the orebodies,” Marston said. “Blue-
based drilling,” Marston said.
copper and 61m @ 0.49% copper. bird and Burnakura are nearby so there
Gold production in the Bryah Basin are a few toll-treatment options and the
Marston is happy to take advantage of can be traced back to the 1980s but it opportunity for quick cash flow.”
the reflected glow from Wodger. has only been since Sandfire Resources
NL’s discovery of DeGrussa in 2011 that
“It is a bit of a nearology play with Au- – Dominic Piper
ris Minerals doing so well; it has certainly
the district has been tested for copper in
helped us,” he admitted.
PAGE 48 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT
Kin emerges with win
Winner of this year’s Best By starting off as a small miner,
Emerging Company award,
Kin Mining NL, expects to be in pro- the emphasis for Kin will be low-
duction by the next Diggers & Deal-
ers forum. cost, high-margin production from
Kin managing director Don Harp- the LGP.
er said a DFS and maiden ore re-
serve on the Leonora gold project Harper said arranging debt fund-
(LGP) would be delivered in the cur-
rent quarter. ing from banks was almost com-
The LGP, nestled in a district host- plete, as Kin also started to attract
ing King of the Hills, Sons of Gwalia
and Mt Morgans, was acquired for institutional support for LGP.
$2.7 million back in 2014.
“It is really great to see the inter-
Over 43,000m of resource drilling
has been completed since the ac- est from people to support us to
quisition and Kin has delivered with
some recent high-grade discover- build the LGP. We believe that this
ies which will have an impact on the
production profile. time next year we will be in a posi-
“We may be starting at 50,000 ozpa tion to be commissioning and turn-
gold production, but with the high-grade
discovery pointed out, we lift the head ing on the mill,” Harper said.
grade from 1.5 g/t to 2.5 g/t without
Kin exercised an option to ac-
quire the 800,000 tpa Lawlers
plant, which has been well kept by
Don Harper Gold Fields Ltd, Harper said.
Kin will relocate the Lawlers mill
spending any more capital. We are head- to the LGP and will add a 2.5MW ball mill
ing to be a 75-100,000 ozpa producer. to increase throughout to 1.2 mtpa in the
We have the ground, we have the oppor- early stages of production.
tunities and we are starting to drill [again] – Mark Andrews
in September,” Harper said.
Metro riding bauxite train
Metro Mining Ltd is set to be- operation for $35.8 million with a fur-
come Cape York’s newest
bauxite producer early next year. ther $36.7 million of expansion capi-
Construction of the company’s tal required in the second and third
Bauxite Hills mine in North Queens-
land began on the same day Metro years of production to lift throughput
managing director Simon Finnis
presented to Diggers & Dealers. to 6 mtpa.
“We started construction today Key financials from the BFS were
and we’ll be finished by the end of
November and then commissioning operating costs of $16.42/t (exclud-
in December,” Finnis said.
ing royalties and ocean freight), NPV
“Unfortunately, we then mothball
for the wet season but we’ll start of $601 million, IRR of 81%, payback
production in late March/early April
2018.” within 1.7 years and average annual
Metro’s stock has tripled to 18c/ EBITDA of $145 million.
share over the last seven months,
having locked away financing to Finnis said now was a good time to
build the project alongside an improving
bauxite price. be bringing a new bauxite operation
Sprott Resource Lending and Ingata- online given the looming structural
tus AG are providing a $40 million debt
package over three years, with Metro change in key Chinese markets.
also securing an off-take deal with China
Xinfa Group Corp Ltd – China’s second “The reason bauxite has become
largest private bauxite importer – cover-
ing about half of the first four years of a commodity and will grow as a com-
production from Bauxite Hills.
Simon Finnis modity is simply because the power
Metro is also looking to convert a LOI
with Shandong Lubei Enterprise Group stations [in China] couldn’t consume
General Co Ltd for a further 0.5-1 mtpa all their power, so they built aluminium
over the coming months. smelters,” he said.
“We had no institutions on the regis- “When alumina became too expen-
ter six months ago, now we’ve got 26% sive, they started building alumina refin-
through a couple of fundraisings,” Finnis eries and started importing bauxite. They
said. imported about 5mt in 2006, that grew to
“We’ve raised just over $90 million 60mt last year and over the next dec-
in equity this year. We’ve been able to ade we expect that to expand to about
strengthen our register by doing that pro- 150mt.”
cess.” – Michael Washbourne
According to a BFS released earlier
this year, Metro can develop a 2 mtpa
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 49
DIGGERS & DEALERS REVIEW
Gascoyne’s tonic in
Gascoyne Resources Ltd was quickly 122,000 ozpa gold will be produced in Mike Dunbar
rewarded for its decision to keep the first two years, with 100,000 ozpa at
separate exploration and development low AISC below $1,000/oz over the six- ing resemblance to the 8 moz Tropicana
teams during the ramp-up towards pro- year mine life. deposit.
duction at its Dalgaranga gold project.
Gascoyne controls about 90% of the Dunbar did not declare Glenburgh a
With the company steaming towards Dalgaranga greenstone belt, with numer- Tropicana look-alike, however, the pro-
production in Q2 2018, exploration has ous prospects yet to be fully evaluated ject does have the potential to greatly en-
not been ignored and the discovery of across the property. hance the company’s production profile.
Sly Fox in March is set to have a positive
impact on Dalgaranga in Western Aus- Most of the exploration conducted by “We have the potential to double the
tralia’s Murchison region. Gascoyne has been focused on targets size of production in the company with
within 3.5km of the plant. Glenburgh, growing towards 200,000
“When Sly Fox comes into the reserve ozpa production,” Dunbar said.
it will be slightly higher grade than the “There is a huge amount of potential in
rest of the feed and as a result of that, the Dalgaranga area itself, all of the work “We see very few [development] op-
it will leapfrog some of the Gilbeys’ ore we have done has been focused on an portunities in the sector. You’ll hear
and will be front-ended in the schedule,” area around Golden Wings, Gilbeys, Gil- from Dacian [Gold Ltd] and Gold Road
Gascoyne managing director Mike Dun- beys South and Sly Fox,” Dunbar said. [Resources Ltd]; they are a lot larger
bar said. developers than we are and they will
“A little bit of work at Hendricks has be producing around 290,000 ozpa and
“Met test work has been completed on been done where we have intersected 270,000 ozpa, but our capital costs will
Sly Fox, with up to 98% recovery in the 15m @ 1.5 g/t and that is yet to be prop- be substantially lower.”
oxide zone there. We had a maiden re- erly followed up. At Caorunn we have hit
source within three months of discovery 13m @ 1.1 g/t, Gilbeys North 8m at just In addition to mandating bank finance
and [will have] a maiden reserve within under 1.5 g/t and on top of that a little bit in the near future, the award of power
about seven months. Geotech drilling of work at Tanqueray and Bombay...there supply and appointment of a mining con-
has been completed and a reserve will are a lot of prospects and lot of potential tractor are also expected soon.
be out soon. We are expecting that to here.”
feature quite early in the mine life. The company has bolstered its board
Cash will be king for Gascoyne as it this year to execute its development and
“The feasibility study was completed in will look to reinvest its riches in seeing exploration strategies, and with both
November and then we concentrated on Glenburgh reach its full potential. teams performing on-song, Gascoyne
moving the company into an exploration will closely follow Dacian into production
group and development team to ensure Glenburgh, in the Gascoyne region, is early in 2018.
the exploration guys can continue to fo- primed to become the company’s sec-
cus on exploration and don’t get sucked ond mine, with a resource in excess of 1 – Mark Andrews
in to development, as generally occurs moz gold and a geological setting bear-
on something bulky.”
All long lead items for Dalgaranga
have either been ordered or were already
on site, with a final development decision
set to be made soon after Dunbar’s pres-
entation at Diggers.
Dunbar said there was strong interest
from Australia’s tier one banks to provide
debt funding for Dalgaranga, with an an-
nouncement on the selected entity ex-
pected to be made at the time of print.
A $55 million equity raising earlier this
year enabled Gascoyne to start con-
struction at Dalgaranga and also gar-
nered a larger institutional following for
Currently 50% of the register is made
up of Australian and international institu-
tions, demonstrating the support for the
company’s near-term 100,000 ozpa pro-
duction ambitions and longer-term strat-
Based on the current mine plan,
PAGE 50 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT