pd253-September17 mag-web_Neat

West African measures its run

One of the most fancied explorers on a much better idea of what the feasibility Richard Hyde
the ASX, West African Resources study is going to look like and based on
Ltd, has moved fast in Burkina Faso, per- that we will make a decision on when we heap leach to CIL.”
haps a little too quickly at times, accord- go ahead with production,” Hyde said. The probable reserves at Sanbrado
ing to managing director Richard Hyde.
A resource update at the 2 moz Sand- are 16.8mt @ 1.7 g/t for 894,000oz gold,
Nevertheless, the company is happy brado project was being prepared for with life-of-mine recoveries estimated
with its status and could be in a position release at the time of print, while results at about 91%. With the addition of high-
to reveal a pathway to production at its from magnetic and IP surveys are ex- grade ounces, recoveries in the mid-90%
Sanbrado gold project by mid-2018. pected to deliver more drill targets for range are possible.
West African.
“We completed a feasibility study with- “The grade is increasing, so the more
in 12 months of discovery and that dem- “We are doing some 700m-deep holes high-grade resources we are able to add,
onstrated 160,000 ozpa gold at AISC of at the moment at M1, and we’ll start a the head grade is getting up to 2.5 g/t
around about $US700/oz [was achiev- new drill programme in the 2017/18 field gold and beyond. You need to run a pro-
able],” Hyde said. season once all the results are in during ject over 2 g/t gold for it to work,” Hyde
September,” Hyde said. said.
“After about three years [of the mine
plan], we run out of the high-grade that “Next year, you can expect more drill- – Mark Andrews
we discovered and subsequently we ing. We’re going to drill 60,000m of RC
have done a lot more drilling. We have and diamond and we’ll work on some met
more than doubled the depth of our high- test work and update the permits from
grade and it is still open at depth to about
400m. We drilled over 50,000m in the
last 10-12 months.

“Due to the previous work we have
done on the heap leach project, we have
applied for a mining licence and we are
actually fully permitted for a heap leach
project, so we are now updating those
permits for a CIL project.”

Courtesy of a recent capital raising,
supported by Sprott Group, West African
is well funded with $26 million cash plus
options that will mature this month inject-
ing a further $6 million into the company.

Therefore, the company has the finan-
cial capacity to maximise Sanbrado’s
value which will be revealed in an up-
graded feasibility study in Q1 2018.

As has always been the mantra even
through depressed capital markets, West
African will continue on with aggressive
drilling programmes.

“We have plenty of cash to really ag-
gressively help the project and keep drill-
ing and by mid-next year we should have

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AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 51

DIGGERS & DEALERS REVIEW

Agrimin sprouting timely

The role of lithium-ion batteries in the ject back in 2014 on the world’s largest Mark Savich
electric vehicle and home energy salt lake.
storage revolution is currently capturing “It is not just a China story. We’ve seen
the world’s imagination. The company has not been deterred an example of a farmer in Queensland
by a lack of appetite for SoP products build a greenhouse and is paying it off,
However, there is another major in Australia, rather it has watched the with reduced water, reduced use of pes-
change also occurring in society, which space grow overseas. ticides, and he is a believer that this is
flies very much under the radar, particu- going to be the norm in five years. Well,
larly in Australia. “We fit in very nicely among the devel- if that is the norm in five years, this new
opers and my belief why this hasn’t [Mac- industry in WA is going to be very excit-
Greenhouses to cultivate fruit and veg- kay] been developed in the past is be- ing,” Savich said.
etables are being built at a rapid pace in cause it is a very small market and there
places like China, as farmers shift from is very small usage of SoP in Australia,” Agrimin, which has $13 million in the
traditional farming methods and fertilis- Savich said. “There has never been an bank, is targeting SoP production from
ers in favour of sulphate of potash (SoP) internal push to develop our internal con- Mackay of 370,000 tpa over a 20-year
fertilisers to improve yields of high-value sumption, therefore, Agrimin is looking at mine life.
crops. this as a pure export business. We really
want to mine this and then sell into the With 3,325sq km – 2,621sq km on lake
SoP is chloride free and essential in seaborne market and sell into that insa- tenure – there is potential to increase
modern agriculture practices to produce tiable demand growing overseas.” both capacity and mine life at Mackay,
high quality fruit and vegetables to ac- which is 540km by road to the nearest
commodate the health conscious urban- Adding to the attractiveness of Ag- port and 1,410km by rail.
ised populations around the world. rimin’s project, is that half of the world’s
SoP production stems from the Manheim At the time of print, a PFS was in pro-
The SoP fertiliser market is small, but process; an outdated chemical process gress and scheduled for completion in
growing at such a rate that muriate of pot- which produces a lot of hydrochloric acid. Q4, with a Native Title agreement also
ash fertilisers, containing 46% chloride, on track for execution in the same time-
are being forced into oversupply, lead- Disposing of the hydrochloric acid is frame.
ing to the margins of large mainstream becoming a problem, with supply shut-
fertiliser companies being squeezed and ting down around the world. The company is also undertaking a
becoming price takers. major field programme and a long-term
“Taking up the slack is salt lakes. Eve- pilot trial to support a DFS remains on-
Agrimin Ltd chief executive Mark ry new major, large-scale SoP project in going.
Savich said many large fertiliser compa- the last two decades has been on a salt
nies were now in the market for potash/ lake,” Savich said. A scoping study indicated develop-
phosphate assets with a high quality ment costs in the vicinity of $US259 mil-
NPK compound (nitrogen, phosphorous, Furthermore, China’s five-year plan lion and FOB cash costs of $US256/t.
potassium) often contained in SoP. implemented in 2015 to see zero growth
in fertilisers after 2020 is also a boon for – Mark Andrews
“There were record levels of demand SoP players.
for SoP last year and it is really starting
to take off. If it keeps going like this it is
going to be very exciting to be part of this
industry,” Savich said.

“Traditionally farmers, mainly in China
where half the world’s fruit and veg is
produced, will hand apply the fertiliser
but most of that will oxidise into the at-
mosphere or lose its way into waterways
and it is a huge problem.

“What we are seeing now is a shift to a
smaller volume where the greenhouses
are getting much better yields, using less
water, less pesticides and it is the way
of the future. Even more important is the
agricultural or water scarcity issues you
see around the world and that is what
is forcing this structured change in food
production practices. Greenhouses are
popping up everywhere and we see this
as continuing in the future.”

Current prices for standard SoP prod-
ucts is $US500/t, which is incentivising
development of projects on remote salt
lakes such as Lake McKay in Western
Australia.

Agrimin pegged the Mackay SoP pro-

PAGE 52 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

Mustang focused on cash flow

Mustang Resources Ltd is gearing up Mustang has made several ruby discoveries at Montepuez in the past year
for its first ruby sales auction next
month. items that are still coming down the line,” supplier into this fast-growing market,”
he said. Jordaan said.
The ASX’s only ruby miner has ex-
tended invitations to 50 of the top cutters “Rubies are coming out on a daily ba- “There is a lot happening in the sector,
and manufacturers from places such as sis, we’re not talking 5-10 years before owing largely to the discovery of rubies at
Thailand, India and Hong Kong to enter you start seeing cash flow as the inves- Montepuez in 2009…but the market has
bids for about 200,000ct from Mustang’s tor. That’s obviously why we are so ex- always suffered from a lack of consistent
Montepuez project in Mozambique via a cited about this project. supply.
closed tender.
“We’re continuing to make additional “It’s the only thing that’s kept this
“We’re very close to first sales and first discoveries, recently on a newly acquired market back. That’s why diamonds, for
cash flow,” Mustang managing director licence, which was the last bit of open instance, grew to where it is today as a
Christiaan Joordan said. ground between us and Gemfields. We $US70 billion per annum industry, while
discovered a significant deposit which is rubies have been languishing and fallen
“These guys come in on very competi- very shallow.” behind to about $US2 billion per annum.
tive terms anonymously to secure par- That’s all set to change now following this
cels that we pre-grade and sort using Jordaan expects more attention for success at Montepuez.”
the propriety grading system that we’ve both Mustang and Mozambique over
developed over the last few months.” the next few years as the extent of the Mustang plans to continue exploring
depleted nature of other ruby deposits its 193sq km ground package in Mozam-
A second sales auction is likely to be in countries such as Myanmar, Thailand bique, while ramping up throughput at
held in March. and Cambodia becomes clear. Montepuez.

Mustang’s share price jumped almost Ruby prices have increased about 63% The company also has the Caula
400% to 11c/share in February as inter- over the last eight years due to increased graphite project in its portfolio. About
est in rubies soared on the back of ongo- demand and mine closures. 40km north of Syrah Resources Ltd’s
ing sales success by the ASX-listed com- developing Balama graphite mine, Caula
pany’s neighbour, Gemfields plc. “We’re well positioned to be a major
has been described as “one of the
Gemfields has collected about $US280 highest grade graphite projects” in
million from eight sales auctions since the world.
June 2014.
“There’s still really good value in
Mustang has boosted its ruby invento- this asset and we intend to unlock
ry from 500ct to 147,000ct over the past that,” Jordaan said.
year, with the upcoming sales auction to
precede the release of a maiden JORC “At the moment, we’re busy final-
resource for Montepuez. ising a JORC resource on it, to be
followed by a scoping study, at which
“Our strategy is a little bit unique from point we will know exactly what we
other resources projects in that we will have on our hands and we’ll then
have significant revenue before our first look to find a JV partner or end-user
JORC resource, which comes after the who wants to get involved directly in
sales and after significant bulk sampling the project.”
and auger drilling,” Jordaan said.
– Michael Washbourne
“All of that is under way at the moment,
including some annual test pitting that we Christiaan Jordaan
use to map the full extent of these de-
posits.

“I think it’s actually a nice change
of pace to have cash flow early on in
the project cycle. We’re really driven
to get that sale off the ground in Oc-
tober and get the cash coming into
the account.”

Mustang’s bulk sampling plant at
Montepuez, about 200km west of
the port city of Pemba, is currently
operating at about 1,500 tph and has
an estimated capacity of 400,000
tpa.

Jordaan said his company would
seek to expand the plant’s operating
capacity – for a low cost – following
the first sales auction by implement-
ing additional shifts at the mine.

“We don’t have any major capital

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 53

DIGGERS & DEALERS REVIEW

Silver Lake completes turnaround

Silver Lake Resources Ltd man- mineralisation at Daisy extends at
aging director Luke Tonkin has
declared his company’s three-year depth, we have drill holes 200m
operational and financial turnaround
strategy to be a resounding suc- below us, but the unrealised prize
cess.
lies high in the mine elevation and
Tonkin stepped into the hot seat
at Silver Lake in late 2014 at a time along strike.”
when the company was facing an
uncertain future due to rising debt Aldiss – Silver Lake’s fourth min-
and unwavering operational set-
backs. ing centre – will come to life in De-

Speaking on the opening morn- cember when construction begins
ing of Diggers & Dealers, Tonkin
presented his company’s FY2017 at the Harry’s Hill deposit. Clear-
results to show just how far Silver
Lake has come in the past three ing and pre-strip activities are
years.
scheduled for late FY2018, with
“Our focus on high margin ounc-
es has delivered $69 million in cash first ore processing likely to occur
and bullion, with no debt,” Tonkin
said. soon after.

“We’ve seen a 22% increase in Silver Lake has hedged
EBITDA in the last 12 months and
we have also had EBITDA margin 80,000oz at $1,720/oz to safe-
growth year-on-year since FY2014.”
guard its capital returns during de-
Central to Silver Lake’s turna-
round has been the performance of velopment of Aldiss, which Tonkin
its Mount Monger operations, about
50km south-east of Kalgoorlie. said would require “a reasonable

Mount Monger – currently com- amount of capital”.
prised of three mining centres
which feed the centrally located Randalls About $12 million will be invest-
mill – generated gold sales of 137,000oz
at $1,359/oz AISC in FY2017. ed into exploration at Mount Mon-

Guidance of 135,000-145,000oz has ger in FY2018, with the company
been set for FY2018, with an expected
higher contribution from the Maxwells reporting a $36/oz resource dis-
and Cock-eyed Bob underground mines
in the Mount Belches complex. covery cost for the past two finan-

“We’ve turned Maxwells underground cial years.
from a geological concept to a new
mine in less than 18 months and we’ve “We consider exploration to be a
also, through exploration, developed the
longer life, high margin Cock-eyed Bob returns-based investment,” Tonkin
mine,” Tonkin said.
said. “Every dollar in the ground is
“Exploration provides a pipeline of pro-
jects which compete against external op- justified on a risk/return basis and
portunities, and we’re always looking at
external opportunities.” Silver Lake has developed two underground mines a gated approach drives phased
in the past 18 months and risk-weighted spend.
Tonkin said the company was targeting “In simple terms, we assess our
a third underground mine over the com-
ing years, lifting production from Mount tions, churning out more than 800,000oz targets by the size of the prize, the prob-
Belches beyond 70,000 ozpa.
at an average rate of 70,000 ozpa at ability of success and its priority to our
Silver Lake is set to produce its one-
millionth ounce from Mount Monger in $1,050/oz since FY2008. business.”
FY2018, albeit never having more than
3-4 years of mine life since the opera- “Daisy is a reliable base load asset for Silver Lake appears to be flying under
tions were acquired in 2008.
the Mount Monger camp,” Tonkin said. the radar compared to some of its gold-
Daisy Complex continues to be the
cornerstone of the Mount Monger opera- “The nature of its mineralisation does producing peers in the Eastern Gold-

not lend itself to a large reserve, how- fields despite its improved production

ever, year-on-year our team delivers its profile, however, Tonkin conceded his

ounces per vertical metre and reserve company still had plenty of work to do to

replacement. win back the support of the investment

“Mining these orebodies – and they community.

are difficult orebodies – is a core com- “Our turnaround over the last 2-3 years

petency at Silver Lake. We know the has transitioned the Mount Monger op-

eration to longer life mining centres, but

our challenge is to have this valued ap-

propriately by the market,” Tonkin said.

“We have strengthened our balance

sheet and the ability to invest in our as-

set base, to increase the market’s confi-

dence in our outlook and our strategy, so

that we can at least start to trade again in

line with our ex-ASX200 peers.”

– Michael Washbourne

Luke Tonkin A feature length story on Silver Lake
Resources will appear in the next edi-
tion of our sister publication Gold Mining
Journal

PAGE 54 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

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NEW SOUTH WALES

Instinct pays off
for Carpentaria

Carpentaria Exploration Ltd continues to be rewarded for its brave Six years on and Hawsons now boasts
decision to stick with iron ore at a time when others were jump- a total resource of 2.5bt @ 13.9% DTR
ing off what appeared to be a sinking ship. for 348mt (17% iron head grade), includ-
ing an indicated resource of 840mt @

14.5% DTR for 121mt (17.4% iron head

A recent PFS on the company’s flag- when that potentially company-defining grade), and probable reserves of 755mt

ship Hawsons project, about 60km decision was made, having previously @ 14.7% DTR for 111mt (17.5% iron head

south-west of Broken Hill, confirmed its served as Carpentaria’s senior geologist grade).

standing in the first quartile of CRU’s and business development manager. He Blue-chip customers from key mar-

global iron ore supply cost curve. was also an integral part of the Hawsons kets in Asia and the Middle East are also

The encouraging result comes four discovery team in 2011. lining up for the Hawsons “supergrade”

years after Carpentaria’s product, with non-binding

board and management LOIs already covering 120%

team sat down and carefully of planned production.

weighed the pros and cons Further boosting the confi-

of developing a greenfields dence around Hawsons, the

iron ore project over oppor- NSW Department of Planning

tunities in precious and base and Environment reaffirmed

metals. the project’s status as a “State

“You don’t get many Significant Development” ear-

chances to find and devel- lier this year.

op a project like this,” Car- “None of this has been easy

pentaria managing director and there is still a significant

Quentin Hill told Paydirt. challenge ahead of us and it’s

“While a $US1.5 billion one we don’t take lightly,” Hill

project is a significant chal- said.

lenge to develop, we owed “That said, we are making

it to our shareholders to do it all the right moves at the mo-

and to realise the value.” ment and I look forward to that

Hill had only just been ap- Hawsons hosts a total resource of 2.5bt @ 13.9% DTR, continuing over the next 2-3

pointed managing director including reserves of 755mt @ 14.7% DTR years as we progress towards

PAGE 56 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

production at Hawsons.” The market showed Quentin Hill
The PFS completed in July is an up- some love for Carpen-
taria following the release and just the right project to counter those
date of a 2013 study, with a revised focus of the PFS – the com- increasing strategic concerns. So, the
on feeding off existing infrastructure in pany’s stock is up 35% feedback from a group of recognised
the Broken Hill area and export facilities since mid-May – and Hill steel mills and industry participants has
at Port Pirie in South Australia. said response from inves- been incredibly encouraging for Carpen-
tors and other key parties taria.”
Based on a 10 mtpa base case produc- had been encouraging,
tion scenario, the PFS found the project particularly with the iron Hill and marketing consultant Lou Jele-
could be developed for $US1.4 billion ore price now stabilising nich visited Japan and Taiwan to meet
and generate average annual revenue around $US70-75/t. with potential customers in the lead-up to
of $881 million over 20 years of mining the PFS release and will travel to the UK,
operations. “The feedback is we the Middle East and China for further dis-
are the right project at the cussions around off-take in the coming
Other key financials from the PFS were right time now that the
a post-tax, ungeared NPV of $US1.09 steel market and steel in-
billion with IRR of 29.9% for the com- dustry have emerged from
pany and an estimated operating cost two years of inward focus
of $US23.03/t (including a “supergrade” on cost reductions into an
premium), based on the 65% Fe fines environment that is much more stable
benchmark price of $US75/t. and the overall demand picture is also
much clearer,” Hill said.
“We are now the world-leading high
quality iron ore project in terms of operat- “The steel mills are now looking to the
ing costs, capital costs and product qual- long-term strategic challenges, which ac-
ity. If you wrap all of those things together tually haven’t changed since the very first
we have the lowest incentive price for round of magnetite investment. That is,
production and we’re first in the develop- they are looking to counter the increas-
ment queue,” Hill said. ing silica from Brazil and the increasing
phosphorus content from Australia.
“The project continues to deliver. At
Carpentaria, we take great pride in de- “The PFS results show we are now
livering on what we say – we really do the leading high-quality iron ore project
– and we’ve needed to because this is
certainly not a small project.”

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 57

NEW SOUTH WALES

Key outcomes from Hawsons PFS months, with the data room expected to
open at the time of print.
Pre-production capital $US1.401 billion
Operating costs $US23.03/t (includes premium) Carpentaria is rushing to secure fund-
NPV (10%, post tax, ungeared) $US1.091 billion/year ing to complete a BFS – likely in the order
IRR (post tax, ungeared) 29.9% of $US20 million – with a view towards
LOM revenue $US881 million/year starting construction at Hawsons during
LOM all-in costs $US480 million/year the first half of 2019.
LOM EBITDA $US401 million/year
According to the PFS, Hawsons ore
*based on a 65% Fe fines benchmark will be mined and processed on site
before the final mineral concentrate is
transported via a slurry pipeline to a rail
head site near the Broken Hill township.

Hill said his company would continue
monitoring the situation at the former
Arrium Ltd steelworks in Whyalla after it
was confirmed in early July the business
would be sold to Liberty House, a sub-
sidiary of London-based GFC Alliance,
and not a Korean consortium as origi-
nally flagged.

Carpentaria has long viewed Port Pirie
as its preferred export base, however, it
has also entertained options at Whyalla,
with interest ramping up when Arrium en-
tered administration early last year.

“We are very fortunate the rail line
goes directly through to Whyalla where
we know there is spare capacity,” Hill
said. “We also have what we believe is
the world’s best pellet feed and in an ide-
al world we would like to marry that with
the local pellet plant in Whyalla.

“It’s a logical partnership from our per-
spective and we will be doing everything
we can to maximise the opportunities
that Whyalla would bring to the pro-
ject. We wouldn’t be doing our job if we
weren’t exploring the opportunities those
infrastructure assets present.”

Carpentaria will also review its pro-
duction plans for Hawsons ahead of the
BFS after receiving more LOIs for an ad-
ditional 4.1 mtpa of “supergrade” product
during the June quarter.

Chinese steel producer Shagang
Group (2.5 mtpa) and Kuwait Steel (1
mtpa) are the latest customers to join the
queue for a piece of the Hawsons pie,
with Taiwan’s Formosa Plastics Group
(2.6 mtpa) also putting its hand up for a
further 600,000 tpa of concentrate/pellet
feed.

Bahrain Steel (3 mtpa), Mitsubishi
Corp RtM (1 mtpa), Gunvor Group (1
mtpa) and Emirates Steel (900,000 tpa)
are the other blue-chip buyers who have
previously entered into non-binding LOIs
with the company.

“The industry participants we’ve en-
gaged with understand the value of this
project, particularly in meeting the long-
term strategic challenges of rising silica
or rising phosphorus in the traditional ore
sources,” Hill said. “You can’t mine 1.2bt
of ore every year, as the majors do, and
not suffer from falling quality, so again

PAGE 58 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

I stress, we are the right project at the This giant outcrop led to the discovery of Hawsons in a region renowned
right time for these buyers and we will be for its lead-zinc-silver mineralisation
seeking feasibility funding from them.”
“Hawsons will be serviced by an existing rail line through to Port Pirie in South Australia
About 1,200 new jobs will be created We’re positioned exactly where we need
during the construction phase at Haw- to be and we will be looking to make every
sons, with around half of those to remain post a winner from here on in.
during steady-state production. Carpen-
taria will also have the luxury of leverag- Development of Hawsons will provide an economic boost to the
ing off a town which has been familiar mining-focused town of Broken Hill
with mining for more than a century.

“We are incredibly fortunate to be so
close to Broken Hill. It’s a great town, with
great people and great skills in mining,
notwithstanding all of the infrastructure
that will help us get into development,”
Hill said.

“Being able to demonstrate a skilled
workforce and a larger population close
to the project will do wonders for our abil-
ity to attract investment, so we look for-
ward to maximising the advantages for
Broken Hill and the region as we take this
project forward.”

While entertaining the prospect of
growing his workforce, Hill was quick
to sing the praises of the existing small
team at Carpentaria, including technical
director Ray Koenig and financial con-
sultant Adam Wheatley.

“We are incredibly lucky to have such
high quality and well regarded people
with the project,” Hill said.

“That’s no fluke; they don’t have to be
with us. Once these people join, they
stay and I think that’s testament to the re-
source and project quality. They’ve been
absolutely integral to what we’ve done in
the last three or four years and what we
plan to do in the next two or three.”

Iron ore prices were on the rise again
at the time of print after coming off in late
May. While Carpentaria is preparing to
ride another wave of pricing fluctuations
before it starts producing from Hawsons,
there are enough indicators to suggest
sticking with the bulk commodity was the
right choice.

“The World Steel Association has in-
creased its Chinese demand scenario
by 55mt over 12 months; that’s the en-
tire S11D project in terms of iron ore,” Hill
said.

“The fundamentals in China are still
positive, even though we’re not seeing
the huge demand growth we have had, it
is still incremental growth. It is not falling
off a cliff by any means.

“That is the big difference, Chinese
demand was being underestimated, not
by us, and it has now become very clear.
Now we’ve released these PFS results,
we’re positioned exactly where we need
to be and we will be looking to make eve-
ry post a winner from here on in.”

– Michael Washbourne

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 59

NEW SOUTH WALES

Heron locked and loaded

Heron Resources Ltd formally
broke ground at its Woodlawn
zinc project last month to cap a

whirlwind four months of mile-

stone accomplishments.

“It’s been an extremely busy

year, but also quite a satisfying

one for the team here at Heron

to get through a bunch of these

milestones,” Heron managing

director Wayne Taylor told Pay-

dirt.

At the top of the list of achieve-

ments was a $240 million pro-

ject financing package to fund

the construction and ramp-up of

Woodlawn, about 30km south of

Goulburn in New South Wales.

Other major milestones ticked

off during the period were an off-

take deal for the first three years

of production and the award of

EPC and earthworks contracts.

Success with the drill bit at the

regional Currawang prospect Heron is fully funded through to first production at Woodlawn

and zinc prices hitting a 10-year

high last month added an extra layer of private investment firm Castlelake LP. Heron is also seeking to raise $5 mil-

icing to Heron’s celebratory cake. Orion is putting up more than half of lion via a share purchase plan which was

Heron is fully funded through to first the total package via a Heron equity, due to close at the time of print.

production – slated for late 2018 – after Woodlawn loan facility and silver stream- Taylor said the final funding package

securing a combination of debt and eq- ing agreement valued at $129 million, “looked very different” to the one his

uity from major shareholder Greenstone while Greenstone and Castlelake have company had conceived when it first set

Resources LP, specialist mining fund equity subscriptions of $42 million and out to secure financing after completing

Orion Mine Finance Group and global $33 million respectively. a feasibility study just over a year ago.

“We’ve got a little bit of an unusual

structure there with three private equity

groups providing the majority of both the

equity and the debt,” he said.

“If you wanted a plain vanilla project fi-

nancing, you would expect to see banks

or a syndicate of banks involved, and we

did pursue them for a variety of reasons.

But, if you stand back and just look at the

wider industry, there’s not too many pro-

jects that are bank-funded, particularly

those for a single-asset company and for

the market cap that we have.

“Fortunately we had a number of dis-

cussions ongoing with private equity

groups and we were able to get a number

of those together to provide an overall fi-

nancing solution which allows us to take

the project forward.”

One of the project financing prerequi-

sites was for Heron to secure an off-take

deal for the base metal concentrate from

Woodlawn, with Louis Dreyfus Company

Metals winning a competitive bidding

process to land 100% of production until

Heron chief operating officer Andrew Lawry and non-executive director Fiona Robertson the end of 2021.
It is the second major base metals
inspect some recent drill core

PAGE 60 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

off-take agreement signed by an ASX- Woodlawn is a historic operation which ran from 1978 to 1998
listed zinc developer in recent times, with
Trafigura Pte Ltd last month snapping up 107m (including 2.7m @ 87.2% zinc tersected 5.3m of semi-massive and
the zinc and lead concentrate streams equivalent from 107m) and 14m @ stringer-style zinc and copper sulphide
from Red River Resources Ltd’s Thalan- 12.4% zinc equivalent from 146m (in- mineralisation and was interpreted to
ga project in Queensland. cluding 6.9m @ 21.6% zinc equivalent represent a new zone of mineralisation
from 151m). directly east and below the main lens.
“Getting hold of freely available base
metal concentrate, especially zinc, is “When someone is providing you with Last year’s feasibility study found
actually quite hard, so there was a lot of finance, the last thing they want to hear Woodlawn could deliver production of
competition and the traders are the most you say is that there’s some material 40,000 tpa zinc, 10,000 tpa copper and
aggressive from a competitive stand- you’re going to have a crack at under- 12,000 tpa lead for $163 million over an
point,” Taylor said. ground which isn’t in reserve,” Taylor initial 9.3 years of mine life. Key financial
said. returns include a post-tax NPV of $207
“Our negotiations had been ongoing million, IRR of 32% and net cash flow of
for quite some time and I’m sure we test- “We always knew we had to go and $402 million.
ed the patience of the off-takers because spend some more time on it after we
of the duration, but ultimately I think that had some drilling success there not long Zinc crashed through the $US3,000/t
worked in our favour. We had extremely after the feasibility came out last year. barrier for the first time in a decade last
good interest all the way through and se- We’ll run through a resource calculation, month as supply tightened amid strong
cured some very attractive terms.” but we expect it to add to the ‘very early’ demand. It was a price increase which
mine plan. We’re also quite confident that had been on the cards for several years,
Heron kicked off the run of key mile- it’s actually going to deliver more than but Taylor said he was not surprised the
stone achievements in early May by what we’ve currently drilled out.” base metal “turned up a bit late to the
awarding a guaranteed maximum price party”.
EPC contract of $107 million to Sedg- Recent drilling at Currawang, about
man. A $12 million earthworks contract 10km north-west of Woodlawn, also in- “The shortage has been talked about
was subsequently awarded to Ertech Pty for quite some time, but what I think
Ltd for the main road access, process everyone got wrong was the actual
plant site, haulage road construction, ex- timing of when we would start seeing
cavation of the box cut and development a real squeeze on available mate-
of a tailings storage facility. rial,” he said.
“The stock position has continued
Ertech has begun preparing the foun- to insulate the market and the zinc
dations for near-term concrete and steel price is starting to show an expecta-
works, with Sedgman expected to mobi- tion that material is actually becom-
lise on site shortly. Several key long-lead ing quite difficult to get a hold of.”
items such as a fine grinding mill, flota- Taylor said reduced treatment
tion cells and thickeners were recently charges and the removal of esca-
ordered by the company. lators on benchmark prices were
leading indicators which pointed to
Heron held a formal “soil turning” event a supply shortage lasting beyond 12
at Woodlawn on August 29, with a num- months.
ber of politicians, councillors and local
community members in attendance. – Michael Washbourne

“We’re making a line in the sand to Wayne Taylor
show that we’re actually going to get
started on this project,” Taylor said. “It’s
been a long time coming and this allows
us to formally signify the start.

“Everyone is looking forward to seeing
this sort of level of investment in the
local community. There is generally
a very good sense of the previous
operations [1978-1998] as well, so
we’ve been welcomed back a bit in
that regard. We hope to have a very
positive impact on the little village
of Tarago by making sure job and
education opportunities are made
available to local residents.”

Despite construction activities
ramping up at Woodlawn, Heron
has no plans to slow down on the
exploration front, particularly on the
back of recent drilling results at the
G2 Lens and Currawang.

Initial assays from the G2 Lens,
one of the early mine production
targets not yet in reserve, returned
4.7m @ 53% zinc equivalent from

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 61

NEW SOUTH WALES

Peel charges ahead at
Mallee Bull

Peel has reported a 65% increase in copper resources at the Mallee Bull base metals deposit

Peel Mining Ltd is pushing ahead with and-truck operation, with the mineralisa- 0.6 % lead and 0.6% zinc.
a PFS on its Mallee Bull base metals tion to be sent up to the Endeavour mine “We’ll do the drilling, update the re-
deposit after releasing an updated min- which is owned by CBH Resources Ltd.”
eral resource with a 65% increase in con- source and geological model and then
tained copper in early July. Since establishing an equal JV with do some economics based on that and
CBH Resources, a 100%-owned subsidi- some metallurgy we’ve done to date.
Mallee Bull is part of the Gilgunnia ary of Toho Zinc Ltd, in 2014, the Mallee Then it is plugging in the mining costs,
project, 100km south of Cobar in central Bull deposit has seen seven drilling pro- capital costs and trucking and process-
New South Wales, which sits within the grammes for 45,848m of drilling. ing costs and see what we get out the
historically prospective, Cobar Basin. other end,” Tyson said.
Programmes continue to confirm sig-
Peel managing director Rob Tyson told nificant grades of copper along strike, at With all T1 drilling complete at Mallee
Paydirt his company was encouraged by depth and also near surface. Bull, Peel plans to undertake metallurgi-
the results. cal test work and complete the PFS by
Attributes like short strike lengths, nar- the end of September.
“The assays are still flowing in from the row widths and vertical continuity are
drilling we have been doing. Once we get endemic to base metal deposits in the The company has also started a drill
the results back we will update the T1 re- Cobar Basin and Mallee Bull is no excep- programme at its Wagga Tank project
source,” he said. tion, with the deepest drill hole intercept on the western edge of the Cobar Basin,
at 800m below surface. with the first drill hole returning 6m @
“What we are seeing is some really 7.37% zinc.
high-grade zinc-lead-silver mineralisa- The updated resource at Mallee Bull
tion close to surface. There is potential sits at 6.76mt and contains about 119,000t – Jon Daly
there to start life on a lower capex and copper, 6.6 moz silver, 83,000oz gold,
staged development for Mallee Bull. 38,000t lead and 38,000t zinc at grades
of 1.8% copper, 31 g/t silver, 0.4 g/t gold,
“We’re looking at that T1 zone as a dig-

PAGE 62 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

Cobalt Blue builds pace at
Thackaringa

Since listing in February, Cobalt Blue Thackaringa, 23km from Broken Hill, enjoys the advantages that come with
Ltd has taken big steps towards the operating in a secure and developed jurisdiction
development of the Thackaringa cobalt
project in New South Wales. us a big advantage. It is not a lateritic ore, that power advantage.
which can be problematic to economi- “The piece de resistance for us is the
Bolstered by a scoping study in July, cally process.”
Cobalt Blue chief executive Joe Kader- railway line between Broken Hill and the
avek is confident the company – in con- Cobalt Blue’s approach to exploration Spencer Gulf, which passes through our
junction with its JV partner Broken Hill differs from other juniors, in respect to its tenement.”
Prospecting Ltd – has a world-class co- focus on a singular asset, but Kaderavek
balt project on its hands. said this worked to the company’s advan- Kaderavek said Cobalt Blue had start-
tage. ed educating the market on the scale
“In the six months since listing we’ve Thackaringa represented.
drilled 8,000m of holes, which is exem- “From a commercial perspective we
plary in Australian cobalt exploration,” are different because we have one as- “We are looking at a 4,000 tpa cobalt
Kaderavek told Paydirt. set and that is our focus, we are cashed mine, which is the biggest mine outside
up to spend on the one asset. Explor- the DRC. The market is just coming to
“We have doubled the contained co- ers tend to have a portfolio of assets, of grips with the scale of what we’ve got and
balt resource on site and in conjunction which they can only afford to spend so the low costs of what we intend to pro-
with that we have delivered a scoping much money on in a given area,” he said. duce,” he said.
study that shows we can effectively cap-
ture 90% of the cobalt in-ground for pay- Located 23km from Broken Hill, Thack- The positive sentiment towards the
able metal. aringa also enjoys some logistical advan- project is also shared by Broken Hill
tages that come with operating in a se- Prospecting chairman Creagh O’Connor,
“If you do the maths on the resource, cure and developed jurisdiction. who said his company had long believed
that is $US2.5 billion of revenue which in the potential of the cobalt resource at
is currently sitting there waiting to be ex- “If you look at all of the building blocks Thackaringa.
tracted.” that make up costs in modern mining –
for example, people – well that is a min- “These scoping study results provide
Following the substantial drilling cam- ing town that has the right skills and peo- major impetus towards proving that to be
paign, Cobalt Blue declared a combined ple for our purposes,” Kaderavek said. true,” O’Connor said. “We are committed
55mt inferred-indicated resource at 910 to pursuing the plans for development of
ppm cobalt. “The national electricity grid has a the project, and working with Cobalt Blue
220kV substation just 19km away, which to achieve that end.”
“We are going to drill another 10,000m we can plumb into, and that is a really
of holes in the next six months and that important differentiator because we use – Jon Daly
will prove up around 40mt of indicated re- bulk energy at around 14-15c/kWh to do
source,” Kaderavek said. all of our crushing, grinding and furnace
work. That means that we have got a
In addition to the drilling programme, tremendously low-cost mine because of
airborne geophysical surveys are
planned to be completed by year’s end,
with the aim of improving targeting
across a project area in which modern
exploration techniques have seldom
been applied.

Work on a PFS for Thackaringa has al-
ready begun, with planning and budget-
ing under way.

“The processing work will focus on
bulk sampling and will go from being tens
of kilograms to hundreds of kilograms
and beyond, so we can show to the mar-
ket that we can produce not only the co-
balt sulphate, but also sulphur in its own
right,” Kaderavek said.

“Thackaringa has naturally occur-
ring cobalt and sulphur in its ore, which
means we can make this cobalt sulphate
value-added product without having to
import any other minerals.

“Our ore is unique. Our cobalt is con-
tained in an iron pyrite ore, it is very clean
ore and simple to process, which gives

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 63

NEW SOUTH WALES

Aeris finds confidence in Tritton

Aeris’ strategy is to ensure the Tritton plant achieves its 1.8 mtpa capacity

The company is still publicly cautious formance at Tritton – in central New Forecast copper production for FY2018
but Aeris Resources Ltd appears to South Wales – showed it had overcome is 27,000t, a number Labuschagne said
was “sensible” and capable of delivering
be edging closer to restoring its reputa- the paste fill problems encountered in the good revenues given the current copper
price.
tion in the marketplace. December and March quarters. Having
The recent surge in copper prices – the
Little has gone right for Aeris share- built up a backlog of unfilled stope voids, LME spot price was up to $US6,459/t in
August, its highest point since December
holders in the last five years, the com- Aeris was able to stabilise the extraction 2014 – means Aeris’ operational turna-
round couldn’t have been better timed.
pany’s share price sliding from highs of sequence during the June quarter thanks
“This operation is quite sensitive to
$2.76/share in July 2012, to as little as to a change in the paste mix and the price, it is a high-cost, capital intensive
project, so the copper price has been
2.7c four years later. But, the outlook for distribution pipeline down to the lower welcomed,” Labuschagne said.

the company is currently brighter than at levels, allowing it to steadily reduce the The arrival of Murrawombie into Trit-
ton’s production profile has also been
any time since 2012 thanks to operational number of unfilled voids. welcomed. Mined via open pit in the
1990s, Murrawombie has current re-
improvements at its Tritton copper opera- At the newly commissioned Mur- serves of 3.35mt @ 1.4% for 46,000t
copper within a total resource of 110,000t
tion, a renewed exploration strategy and rawombie underground mine, problems contained copper.

a concerted push to clean up its balance were more intricate. Ground condi- The mine was scheduled to provide
replacement feed for the Larsens and
sheet and capital structure. tions in the upper levels forced Aeris to North East mines which concluded in
July 2016 but delays with ramp-up have
Aeris posted quarterly production of change its mining method from top-down meant it will only be in 2018 that Mur-
rawombie hits steady-state targets.
5,952t for the June pe- to bottom-up techniques.
Labuschagne said the underground
riod, an 18% increase on Company chairman mine would not only replace Larsens and
North East but would add much needed
the March quarter, an im- Andre Labuschagne told additional feed to the Tritton processing
plant.
provement which took it Paydirt implementation of
“Due to the sensitivity of the project to
to 23,404t for FY2017, al- the operational changes

lowing it to meet revised meant there was nothing

guidance of 23-24,000t standing in the way of Trit-

for the year. ton bouncing back in 2018.

However, the improve- “All those issues at Trit-

ment only highlighted ton and Murrawombie

the impact of operational have been resolved and

problems earlier in the everything is back to nor-

year which had forced mal so there is no reason

the company to revise for Tritton not to perform in

guidance down from 2018,” Labuschagne said

27,000t copper. on the sidelines of Diggers

The June quarter per- Andrew Labuschagne & Dealers.

PAGE 64 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

costs, the focus needs to be on keeping June quarterly performance from Tritton suggests Aeris has overcome
the mill full and Murrawombie was the its paste fill problems
next sensible project to come online be-
cause it is already developed to 3-400m. pleted by the end of the year. “It is not a risk for the business but if we
Tritton currently provides 1.3 mtpa but “The whole idea is to do the entire sur- can clear it up it frees the company up to
with Murrawombie online we can get do M&A or get into the equity markets
consistently at or close to the 1.8 mtpa vey first and then take a structured ap- because while that structure sits there it
capacity of the plant. The mine plan is proach to drilling.” doesn’t look attractive to investors.”
now about consistency and we are look-
ing for the same tonnes each month at Exploration could bring longer term Labuschagne’s demeanour suggests
stable grades.” rewards but Labuschagne is also begin- he believes the time for Aeris to move on
ning to feel the weight of M&A expecta- acquisitions is nearing.
If Aeris can achieve consistent produc- tion on the company.
tion at higher prevailing copper prices, it “There are a few projects available,” he
can begin to make earnest attempts to “M&A is very important to Aeris be- said. “The market has picked up and the
build its future. cause we always set ourselves a target copper space has improved significantly
of being a multi-mine business,” he said. from 6-8 months ago. There is an oppor-
Labuschagne knows the company tunity for a mid-sized base metals pro-
needs to prove its longer term as well The preference is to pick up an opera- ducer which we don’t have in Australia at
as near-term credentials to investors if it tional asset in Australia but Labuschagne the moment.”
was to achieve a full rerating. To do that, admitted the company needed to im-
he acknowledged, Aeris would need to prove its own corporate position before One opportunity already in the stable
find more tonnes; either within the shad- it could fully commit to new investments. is the Torrens JV in South Australia with
ow of the headframe or further afield. Argonaut Resources NL, a project mired
That process started in late 2015 with in Native Title disputes for the last six
“Investors are looking for you to secure a restructuring of its $US50 million sen- years.
mine life so you have to explore your ior facility with Standard Chartered but
own property and by securing 8-10 years Labuschagne said further clean-up work Situated between Olympic Dam and
mine life you allow yourself the space to was required. Carrapateena, Torrens has all the early
do what you want to do,” he said. hallmarks of a classic SA IOCG system.
“We need to deal with the balance
The most obvious targets for mine life sheet and capital structure because “It is a big opportunity for us,” La-
extensions will be on the 1,800sq km of that is frustrating our opportunities for buschagne said. “The approvals should
ground Aeris already holds around Trit- growth,” he said. “There are opportuni- take 3-6 months because it is a very sen-
ton. ties to clear it up from a capital and from sitive project but we are already seeing
a share register perceptive but I can’t re- a lot of interest from bigger companies.”
“Exploration focus is on extending that veal how at this time.”
six-year reserve mine life and we have – Dominic Piper
potential at depth on both orebodies so Aeris currently has 140 million shares
we are confident we can get out to 7-8 on issue but fully diluted that number
years,” Labuschagne said. “Regionally, would be 940 million, meaning a cloud
we have got a big land package with still hangs over its capital structure.
quite a few known targets already.”

Last year, Aeris committed to a two-
year, $7.5 million greenfields exploration
on the Tritton tenement package. The
programme is focused on finding deeper
mineralised systems in the vein of Tritton
along the Tritton and Kurrajong strati-
graphic corridors.

Labuschagne said the company was
applying modern techniques to an area
which hasn’t seen intensive exploration
for a generation.

“EM was last done 20 years ago but
the technology has advanced a lot since
then,” he said. “Back then, it could only
see the first 200m and Tritton was only
just clipped on that first 200m and you
could’ve easily missed it. The new tech-
nology can see 500m deep so our best
spend from a greenfields perspective is
to redo the whole property with EM.”

The company started a moving loop
transient EM survey in December and
was 50% complete when Labuschagne
spoke to Paydirt.

“We’ve already identified three new
targets, two of which are quite close to
Tritton,” he said.

The EM survey is expected to be com-

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 65

BASE METALS

Energia emerges from
resource downer

Energia Minerals Ltd executive chairman Alexander Burns ac- eralisation to the north and east exten-
knowledges the company has some reputation rebuilding to do sions of the deposit; none of which are
but he won’t let it distract the explorer from its ultimate goals. included in the resources.”

The exploration team began collecting

face samples from visible mineralisation

Burns converted to an executive “We have really only drilled the tip of in the Riso Parina drive, returning sam-

role in June following release of an un- the iceberg regards this project’s endow- ples of up to 52.2% zinc, more than 20%

derwhelming resource update for the ment,” Burns said. lead and 452 ppm silver. When matched

company’s Gorno base metals project Energia’s problems stemmed from its with historical drill holes of 0.8m @ 41%

in northern Italy. The resource update interpretation of extensions on the main zinc and 9.8% lead and 23m @ 1.4% zinc

downgraded the indicated-inferred re- Colonna Zorzone deposit at Gorno, with and 0.1% lead, the samples provided

source from 3.87mt @ 6.1% zinc, 1.6% access to only limited amounts of refur- enough incentive for Energia to give the

lead and 25 g/t silver to 3.3mt @ 4.8% bished underground drives making drill- prospect a name; Colonna Fontanone.

zinc, 1.3% lead and 27 g/t silver. ing challenging in places. “It was an area [previous miner] Eni

“The resource update was a real set- “The focus of the last resource drilling had found just before the Italian Govern-

back for the company and I felt, as the programme was on what was assumed ment forced it to move out of minerals,”

largest shareholder, it was time to dem- to be a new high-grade section but we Burns said. “So, following up on these

onstrate some leadership and get things found it was lower grade than anticipated great drill results the geologists waded

back on track,” Burns told Paydirt. and then five of the holes also missed through 10km of the drive and emerged

The most obvious reaction to such a their target,” Burns said. with these rich samples. They were

resource downgrade would be to scale “There is no question this mineralisa- grabbed at 5-15m spacing; we weren’t

back the size of development but Burns tion continues down-plunge but it is cur- picking the eyes out of it.”

remains convinced the best plan for rently difficult to get access for a drill rig Such low-cost exploration will continue

Gorno will be to develop the project “on down there.” to be the preferred method at Gorno as

a scale commensurate with the regional Instead of peppering Colonna Zorzone Energia attempts to entice major financi-

zinc endowment”. with more holes, Energia has instead ers and investors.

reverted to a more regional-scale ap- “The idea is to prove Gorno is viable

proach. and be commercially minded about what

“We got all the geologists together we do with the project and with the com-

and explained the situation and said we pany,” Burns said. “Rather than basing

needed to demonstrate the deposit was development on a small deposit which is

more substantial than it appeared in the reliant on its location in an infrastructure-

resource estimate,” Burns said. “That led rich area, our objective is to demonstrate

“us back to other panels and areas of min- this is much bigger than it appears.”
The resource update was a real setback
for the company and I felt, as the largest
shareholder, it was time to demonstrate some
Alexander Burns leadership and get things back on track.

PAGE 66 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

Sampling programmes are almost Energia has been able to drill from underground using existing drives
complete on northern and eastern ex-
tensions to Colonna Zorzone and the has even more solid credentials. said. “But, the banks who did some due
company is also about to test a new
area 500m to the north of the existing “The project is very strong; there is a diligence on Gorno said it was pristine
resource.
lot of local support for it and pride in this compared to some of the legacy mines
“Mineralisation certainly continues in
that direction so even though we are not operation. It is in a reliable, stable juris- they had looked at around Europe which
drilling it yet, it is obvious that the miner-
alisation is there, even if it is not currently diction and there are end-users close by have stigmas attached to them,” he said.
classified as JORC-compliant,” Burns
said. in Europe who are keen on its product. “There are no liabilities or legacies to

“The tonnes are there we just have So, all the elements are there and it has deal with which makes it much easier
to prove it – and we have to find crea-
tive ways to do that. Once we get back all the support you need to go ahead.” and we will be doing a lot of crushing, etc
to drilling, I think we could comfortably
double the size of Colonna Zorzone and The project is less than three hours’ underground so the impact will also be
double that resource again through the
inclusion of Colonna Fontanone.” drive from Milan and is blessed by all lower from that perspective.”

Where the company takes Gorno from the infrastructure required being within – Dominic Piper
there will depend greatly on the state of 30km. Burns said the approvals process
the market. While zinc has been among
the LME’s best performing metals for was also manage-
the last 18 months, zinc equity stocks
have largely failed to tempt investors. If able.
the market changes its attitude, Energia
could be emboldened to seek develop- “We have explo-
ment itself but if the market remains in-
transigent towards zinc stocks, the com- ration licences as
pany would likely pursue a partner.
well as a mining li-
Achieving its resource size goals would
begin to make Gorno attractive to larger cence over the main
players and Burns has already opened
up the channels of dialogue. He said his deposit,” he said.
experience as chief of African iron ore
junior Sphere Investments (which was “We have a direct
eventually bought by Xstrata for $US500
million) had taught him to keep all options relationship with the
open.
regulators and vari-
“We are opening discussions with ma-
jor off-takers in Europe about financing ous stakeholders.
development because they are very keen
on the high-grade, low impurities product In fact, it is a much
we can produce,” he said. “We have had
a good level of interest from a number of better system than
groups who have been digging around
the data room the complete lack

“During our time with Sphere we of process you en- Site Based Contract Position in Northern Italy
went through several different financing counter in a place Historic MVT Zinc/Lead Mining Operations
strategies as the project developed, so like Mauritania and Energia Minerals is an ASX listed company focused on:
I wouldn’t like to say which path we will the layers of face-
go down at this stage until we have seen
what they are prepared to offer.” less bureaucracy in • the exploration and fast-track development of the historic Gorno Zinc Project;
Australia.” • the significant, regional zinc endowment over and above the current resource; and
One corporate move almost certain to • re-starting production of high quality zinc and lead concentrates in Northern Italy.
occur is a listing on London’s AIM. Burns On environmental
said London brokers were more in tune
with European mining stories than their and legacy issues, QUALIFICATIONS AND EXPERIENCE SOUGHT
Australian counterparts.
Burns said Gorno’s • Eligible to reside and work in Italy – Italian language skills desirable.
The differing attitude of British and deposit style – Mis- • Post-graduate degree in Geology or a related field.
Australian markets is in keeping with a
perception in the latter that European sissippi Valley Type • Membership of a professional, international body recognised by JORC.
projects are too difficult due to bureau- – meant environ- • At least 10 years prior relevant experience at a senior management level.
cracy, environmental challenges and mental impacts • Ability to manage a site based team of admin & geology personnel.
legacy issues. could be limited. • Experience in the base metal sector – zinc/lead deposits preferred.
• Knowledge of MVT deposits and geological settings in Alpine tectonics.
Burns believes not only is the Austral-
ian perception misplaced but Gorno itself “If it was a VMS • Experience in both underground and near-mine exploration programs.
deposit we wouldn’t • Computer literate with geological software – Micomine, GIS & databases.

have touched it in For further information, please refer to www.energiaminerals.com/career

the first place be- Eligible applicants should send a detailed resume
cause of the tail- to [email protected]
ings issue,” he

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 67

BASE METALS

Kalamazoo gets nice surprise

Kalamazoo has serious base metals potential emerging in its portfolio

Aformer Atlas Iron Ltd gold project Snake Well meant the base metals po- holder money; we will spend money judi-
which provided the foundation for a tential was previously overlooked, how- ciously,” Benjamin said.
$5 million IPO in January is now offering ever, re-assaying has revealed signifi-
Kalamazoo Resources Ltd base metal cant VMS potential with values of up to Zinc potential at Conquistador and
prospects as well. 5.76% copper, 7.07% zinc, 1.88% lead deeper fresh portions of the A Zone pro-
and 247 g/t silver from pulps analysed spective for copper-zinc VMS-style de-
As a private concern, Kalamazoo had from drilling. posits at Snake Well will be assessed by
taken ownership of the Snake Well gold Kalamazoo in the near term, while plans
project from Atlas in 2014 and the asset “It has been a nice surprise,” Kalama- are in place to learn more about the cop-
is the company’s flagship in a portfolio zoo managing director Peter Benjamin per potential at Cork Tree.
which also includes the Cork Tree cop- told Paydirt in relation to the base met-
per project in the Doolgunna region. als potential emerging at Snake Well. Cork Tree – within 30km of Sandfire
Resources Ltd’s DeGrussa project – is
Successful stage one trial mining of “It has been a very busy six months, in the right address. A review of all his-
the Mixy lode at the A-Zone project, with- Minjar has spent $500,000 on drilling torical data is under way as is work on
in Snake Well, produced 4,400oz @ 6.83 and met test work at A Zone and opened the regional geology, geophysics and
g/t gold and $2.1 million for Kalamazoo up significant new base metals oppor- unearthing anomalous and target zones.
and development partners Minjar Gold tunities. It is a second string to the bow,
Pty Ltd. with gold at Snake Well having been the “We undertook a large holistic explo-
focus in the prospectus. ration review and we have doubled our
Minjar is currently assessing the po- tenement size since we listed,” Benjamin
tential to extract a much larger parcel “We are considering some work on the said.
from A Zone, with the ambition of gener- base metals at Snake Well on the histori-
ating cash flow for exploration and future cal core and the RC chip trays using a “We have a very large regional explo-
development purposes on the project. Niton-style XRF gun.” ration programme for copper and zinc,
we think there is a good opportunity to
By bankrolling mining and feasibility Uncut core left by previous explor- potentially JV and for one of the bigger
studies, Minjar has first right of refusal ers allows Kalamazoo the opportunity boys to do some of the heavy lifting.”
over the processing of ore extracted from to assess the base metals geology in
A Zone and expanded Mixy development the coming months without drilling any Benjamin has more than 30 years’
under an ore purchasing agreement with holes, with the potential at Snake Well industry experience, including spend-
Kalamazoo. interpreted to be associated with VMS- ing significant time with Iluka Resourc-
style mineralisation in the ilk of Golden es Ltd’s global team and most recently
Relieved of some of the working capi- Grove. serving as managing director of Namib-
tal requirements at Snake Well, in West- ia-focused Shaw River Manganese Ltd.
ern Australia’s Mid West, Kalamazoo “We knew there was some sort of base He will apply that experience to look for
can focus on exploration to increase the metals association around the A Zone, other projects in an effort to beef up the
resource base. Furthermore, it can also but we didn’t know how strong it was. We Kalamazoo portfolio.
consider the base metals potential aris- will do a lot of reviewing and assessment
ing at Snake Well. of geology because geology is funda- – Mark Andrews
mental. We don’t want to waste share-
Minjar’s interest in the oxide gold at

PAGE 68 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

Auris all good

World-class discoveries in Aus- Auris is among some big players in Western Australia’s Bryah Basin
tralia have not come easy in
the past decade and while Auris north of Meekatharra Doray [Minerals CEO of a junior company. Once a fort-
Minerals Ltd is far from declaring its Ltd] at Andy Well; there is a whole group night I was offered opportunities, many
Wodger discovery in that category, of people needing a new discovery or re- through LinkedIn, but didn’t find the right
early signs are encouraging for the sources. There is an insatiable appetite fit. It was probably a good time to be on
company. to keep the mills full,” Evans said. the sidelines and not involved in a junior
company given the state of the market in
In the lead up to Diggers & Deal- “We have to do a lot of work to find out the last few years,” Evans said.
ers, first assay results from RC what we have first though.”
drilling at Wodger – 50m @ 1.55% “I looked at the [Auris] tenement pack-
copper from 175m comprising 31m Cash is not a problem at the moment, age and where it sat among the big boys.
@ 2.39% from 187m and 17m @ with Auris – formerly RNI – reporting a It’s an ideal place to process ore, sell it or
3.41% copper from 200m – set the bank position of $3 million at the end of build it. It’s too early to think about that,
market alight with Auris surging the June quarter. but it is nice to have those scenarios in
41% when the announcement was the back of your mind. We still have to
made. Furthermore, on the back of early re- find it though.”
sults from Wodger, it is hoped that op-
The major intersection of copper- tions outstanding may be converted and Wodger has demanded closer inspec-
gold-silver oxide mineralisation if the full amount is collected, Auris will tion by Auris, while other VMS prospects
showed similarities to the geology be bolstered with another $3.5 million. – Cuba (near DeGrussa and Monty) and
at the nearby DeGrussa deposit Orient-10 – are also warranting attention.
owned by Sandfire Resources NL. With an attention grabbing hit and
money in the bank, Evans has joined Au- Orient-10, within the Cashman’s pro-
“It is the first significant copper ris at an opportune time, having shunned ject area, and Morks Well to the north,
oxides at a high grade and you a number of other junior explorer offers will be subject to 13,500m of aircore
don’t get oxides without a sulphide due to bad timing. drilling this quarter in addition to an air-
source,” Auris chief executive Wade core programme at the recently acquired
Evans told Paydirt. While consulting for Indiana Resourc- Chunderloo project.
es Ltd, Evans was identified by Bronwyn
Comparisons to DeGrussa have Barnes, chairman of both companies, for Auris acquired Chunderloo (22,000t @
sparked interest in Wodger, part the Auris hot seat. 5.4 g/t gold and 1.6% copper non JORC)
of the Forrest project (Auris 80%/Fe Ltd from Westgold via an all-scrip transac-
20%) in Western Australia’s Bryah Basin. A geologist with over 25 years’ indus- tion of 5 million Auris shares.
try experience, Evans’ most recent con-
The mineralisation in WDRC005 – nection with the industry was as a mining Chunderloo, south of Meekatharra, is
which included the 50m @ 1.55% copper consultant and director at Miro Advisors within striking distance of Westgold’s 2
– is consistent with the oxide zone above and prior to that business development mtpa Bluebird mill.
the massive sulphides at DeGrussa. with Panoramic Resources Ltd.
– Mark Andrews
At the time of print, results from the “I knew this is where I wanted to go to
first five holes for 999m of RC drilling at next. The next logical step for me was as
hand were determined via XRF analysis,
however, Evans was confident lab results
would verify the numbers.

Nevertheless, follow-up RC drilling,
down-hole EM and potentially some di-
amond tails was being planned as next
steps at Wodger.

“Hopefully we will get it qualified, but
we don’t want to be overzealous,” Evans
said.

Evans’ cautious optimism at this stage
is understandabe, given the gaps in dis-
covery success in the Bryah Basin.

Horseshoe Lights, DeGrussa and
Monty are notable discoveries, but have
been well spread over time.

However, there are some big hitters ac-
tive in the Bryah Basin bringing deserved
attention to the region, which Evans sees
as a plus for Auris.

“The appetite is there within Talisman
[Mining Ltd], Sandfire, Independence
[Group NL] with the JV with Alchemy
[Resources Ltd], Peter Cook with Fort-
num at Westgold Resources Ltd] and

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 69

BASE METALS

Metalicity finds a fit for
zinc aspirations

Metalicity Ltd has secured an Gauci said. “If we exercise the
option agreement over the option on Napier Range and

high-grade Napier Range zinc drill that out and develop it,

project, on the Lennard Shelf in then it would likely come into

the Kimberley. production before Admiral Bay

The option with Meridian Ltd and would obviously require a

was secured via the takeover mill or a plant with a capacity of

of Ridgecape Holdings for $1.1 300,000 tpa and other associ-

million. ated infrastructure that could

Metalicity managing direc- eventually be shifted over to Ad-

tor Matthew Gauci told Paydirt miral Bay upon the commence-

Napier Range was a fantastic fit ment of production,” he said.

for the development of the com- At Admiral Bay, Metalic-

pany’s zinc assets in north-west ity has signed a development,

Western Australia. construction and financing

Terms of the agreement MoU with CNFC Equipment

with Meridian, a subsidiary of Ltd, a subsidiary of China Non-

Chinese state-owned North- Ferrous Metals, as well as a fi-

west Nonferrous International nancing and off-take MoU with

Investment Company Ltd, will China Minmetals Nonferrous

give Metalicity the opportunity Metals Ltd.

to earn 100% of the Napier Gauci said the company

Range and Emanuel Range would look to extend the rela-

zinc projects for $2 million, to tionship with China Minmetals

be paid gradually over the next and China Non-Ferrous Metals,

18 months. in respect to financing and off-

“The option would have to be take.

exercised by November 22, so “We should be in China in

we have certainly got a bit of August to progress the relation-

time up our sleeves to be able ships with those two organisa-

to develop a really strong explo- tions and discuss the potential

ration programme and develop synergies between the two pro-

a potential mining plan for Napi- jects,” he said.

er Range,” Gauci said. “We are pretty excited about

The company has already un- Napier Range is a perfect fit for Metalicity on the Lennard Shelf the opportunity, not only from

dertaken the first stage of due an exploration perspective but

diligence on the takeover of Ridgecape undergoing a PFS. also from a resource development per-

and will now move onto a review of the “Napier Range is high grade, a lot spective.

data for the Wagon Pass deposit, the de- smaller and possibly a lower capital and “The next port of call is to do a site visit,

velopment of a base financial model to near-term producing asset,” Gauci said. get a lay of the land and understand the

confirm the potential project economics “It will be a great little fit to potentially structural setting of the deposit.”

and exploration targeting using an explo- get up into production and assist in the While Napier has a comparatively

ration database sourced by the company. development of Admiral Bay, which is a small resource, there is scope for expan-

“The initial due diligence we did very large-scale, long-life asset.” sion according to an exploration target

showed up no fatal flaws in respect to Metalicity’s main focus is Admiral Bay, study, completed in late 2016 for Merid-

tenure and it is certainly exciting geology. in the nearby Canning Basin. ian, which noted that the area was under-

There is a high-grade resource there and “It is one of the world’s largest zinc de- explored due to “ineffective and shallow

we’ve compiled an additional exploration posits in development, with an inferred drilling”.

target of 1-4mt @ 10-15% zinc equiva- resource of 170mt @ 7.5% zinc equiva- “Although drilling has occurred in the

lent,” Gauci said. lent,” Gauci said. project area, many drill holes did not

The Wagon Pass deposit has a JORC The company is currently consider- test the favourable Lower Napier stra-

2012 inferred resource of 750,000t @ ing potential synergies between Napier tigraphy. In addition, the footprint of the

13.6% zinc. Range and Admiral Bay, including mine Wagon Pass deposit is small and the

If all goes to plan, Napier Range will development, infrastructure, processing, area is significantly under-explored for

provide cashflow to support the develop- off-take and financing. additional deposits,” the study said.

ment of the company’s 100%-owned Ad- “From the outset, we can see there is – Jon Daly
miral Bay zinc project, which is currently going to be some infrastructure synergy,”

PAGE 70 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

Traka brings Chalice
into Musgrave

Nickel is one commodity They’re coming in on
yet to feel the warmth targets that have been

experienced in other base generated on the back of

metals such as zinc and years of previous work –

copper. airborne EM surveys, a

However, junior ex- lot of geological input, etc.

plorer Traka Resources “We have done a lot of

Ltd has attracted some work in the area, we won’t

interest in its Latitude Hill be able to tell if there is

nickel-copper-PGE pro- nickel or copper in them,

ject in the emerging Mus- but we fully expect to be

grave province of Western hitting massive sulphide

Australia. or stringer type sulphide

Cashed-up Chalice orebodies. Given there is

Gold Mines Ltd entered a a clear presence of those

JV with Traka over ground styles of deposits in the

in the Musgrave believed Musgrave, we probably

to be prospective for Ba- have a good chance. It is

bel/Nebo (830,000t con- a pretty exciting time.”

tained nickel and 850,000t Native Title has been

contained copper), and an impediment to explo-

Succoth (936,000t con- ration in the Musgrave in

tained copper) deposit- Chalice was preparing to start drilling at Latitude Hill in the Musgrave the past, but over the past

style mineralisation and is eight years Traka has nur-

said to be similar to deposits like Voisey Finding another Nova-Bollinger in the tured a formidable relationship with the

Bay and Nova-Bollinger. Fraser Range has been elusive so far Traditional Owners in the region.

Western Areas Ltd and Anglo Ameri- but explorers have stuck to the task and “It has a very good pedigree but un-

can plc, which spent about $20 million, Traka has done much the same in the un- less you can get on and have working

have partnered Traka in the Musgrave at derexplored Musgrave province. relationships with the Traditional Owners

different times, with Chalice now taking a “I’d like to think that it may be a bit like nothing happens and that has been part

shot at cracking the province. the Fraser Range; you’ll start seeing an of that story for 30-40 years in the area.

By committing $1 million within the emergence of that part of the Musgrave It is a critical part of our presence and

first 12 months, Chalice will win the right province as a fertile new exploration it has really been Traka’s success over

to earn 51% of the project by spending area,” he said. the past eight years, to build a working

$4 million in the following two years. A Verbeek said while the market had relationship with the Traditional Owners.”

further investment of $5 million over the been “sick” for the past 4-5 years, Traka With one eye on the JV with Chalice,

next three years would deliver it 70% of had carefully planned exploration activi- Verbeek is also keeping a close eye on

the project. ties all leading to the first drill programme the Mt Cattlin North JV with Galaxy Re-

At the time of print, Chalice was pre- at Latitude Hill. sources Ltd in WA.

paring to start drilling an initial six targets Chalice will drill an estimated 9,000m Traka has 20% free-carried interest

identified by Traka. into the Musgrave, with some RC holes in Mt Cattlin North, which Galaxy was

“Ground EM, heritage, permitting is all likely to go very deep. working towards drilling.

in place,” Traka managing director Pat- Verbeek welcomed the bravery of Extensions and repeats of the lithium-

rick Verbeek told Paydirt. Chalice to support the project and hoped bearing pegmatites mined at Galaxy’s Mt

“That work will follow up on years of the JV would be rewarded with a world- Cattlin lithium project have been identi-

work in areas that have never previously class discovery. fied extending into the JV tenements.

been explored. Obviously, that will tail in “Traka has done more work in the Mus- “Galaxy has met their milestones and

with some expected announcement from grave than anybody else and we want they will need to keep feedstock up. It

Cassini Resources [Ltd] and Oz Minerals to demonstrate to the big boys what is has been slow and frustrating but we

[Ltd] of what is going to happen at Ba- there,” Verbeek said. are happy that we can [potentially] ben-

bel-Nebo and Succoth. And, of course, “The fact that you have got companies efit from the Galaxy JV, we are sitting on

we have Metals X [Ltd] at the Wingellina like Chalice who will commit to explora- very valuable property there,” Verbeek

project not far to the north of us. There tion programmes gives us a fairly high said.

is quite a lot of activity in the Musgrave, degree of confidence that these targets – Mark Andrews
so I think any further success from our are going to be generated from sulphide

current exploration work will add a lot of orebodies and are unlikely to run into

critical mass in the Musgrave.” black shales giving us false anomalies.

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 71

OPINION

Zinc on a bullish tear but just
how high can it go?

Zinc hit a fresh decade high of tember prompt date (September 20) with interest is sitting on the $US3,200 strike
$US3,180.50/t on the LME on August the spread between then and October price (9,946 lots through December),
20. trading in small backwardation. the $US3,400 strike (4,620 lots) and the
$US3,500 strike (7,585 lots).
Zinc bulls have been waiting a long, Although there are no warning lights
long time for this moment. A slow-fuse yet flashing on the very front part of the Open interest then tails off sharply in
narrative of a looming supply crunch has curve, stocks have reached a level where the more rarefied atmosphere above that
been simmering for years but has finally more spread volatility seems assured. strike price level.
burst into explosive price action.
But what of the outright price? LME And beyond the end of December,
True, London zinc has been given three-month zinc is already up by almost things look even more subdued. The
a helping hand from Shanghai, where 25% so far this year. Can it go higher, highest call strike in June 2018, the
speculative froth seems to have spilled even back to those super-charged levels month with the largest options interest
over from the iron ore and steel markets seen 10 or so years ago? next year, is just $US3,650.
to the base metals complex.
The LME options landscape suggests Upside positioning in the zinc options
And also true, a supply-side response there are a few super bulls looking for market suggests that the current con-
to high zinc prices is already starting to more stellar upside price action but the sensus is for only a bit more upside and
build with old mines such as Thalanga in bulk of positioning betrays much more earlier rather than later.
Australia being brought back out of moth- modest expectations.
balls and speculation mounting as to how There are two major restraints on bull-
long Swiss producer and trader Glencore Market open interest is broadly bull- ish expectations.
will wait before reversing the production ish, skewed towards calls, which confer
cuts it announced in 2015. the right to buy, over puts, which confer The first is that building supply re-
the right to sell. As of August 18’s figures sponse, which could be significantly ac-
But right now the LME zinc market is from the LME, call open interest across celerated if Glencore pulls the trigger on
bubbling away with stocks falling and all active months totalled 64,055 lots, reactivating some of its shuttered capac-
spreads tightening. Volatility seems as- compared with 38,845 lots of puts. ity.
sured but can zinc return to the heady
days of late 2006/early 2007, when the And some of it is sitting on strike prices The second appears to be continued
price peaked out at $US4,580? as high as $US4,500 (September) and scepticism about the signalling power of
$US4,400 (December). But the tonnag- LME stocks.
There are a few believers, judging by es are relatively modest at 2,500t and
some of the higher strikes trading in the 8,575t respectively. LME stocks are already low and with
zinc options market but the overall op- almost half sitting in the cancelled cat-
tions landscape suggests collective bull Rather, most of the call open inter- egory awaiting load-out, they look set to
positioning is much less ambitious. est across the front four months (Sep- fall further.
tember-December 2017) is distributed
The zinc raw materials market has across a strike price spectrum running But how much zinc is sitting in the sta-
been tightening for many months thanks from $US3-3,500/t. tistical off-exchange shadows?
to the closure of exhausted mines such
as Century in Australia and Glencore’s A significant part of that, clustered on There is still little hard evidence of a
500,000t of annualised cutbacks. the $US3,000 and $US3,100 strikes, metal squeeze outside of the LME.
has already moved into the money after
But until very recently any flow-through zinc’s burst higher. It may, indeed, have “The availability of zinc metal for rapid
impact on the refined metal part of the acted as an accelerator to the move as delivery continued to be good in Europe
zinc supply chain has been elusive. those who sold those options would have and spot market metal premiums remain
had to cover their exposure. largely unchanged,” was Swedish pro-
That’s changed, at least as far as LME- ducer Boliden’s take on the physical mar-
registered stocks are concerned. The balance of the rest of the call open ket in its Q2 2017 financial report.

At 247,850t, headline LME zinc The possibility of metal finding its
inventory has fallen by 180,000t, way into, or even back into, LME sheds,
or just over 40%, so far this year. It
is back at levels last seen in 2008. particularly in the event of a
cash-date squeeze, seems to
On-warrant stocks are signifi- playing on bulls’ minds.
cantly lower still at 125,525t after
someone in August cancelled a Because for now, the zinc
23,050t tranche at New Orleans in options market is signalling
preparation for physical load-out. there is a bit more bullish ex-
citement to come, but only
Since this is the ultimate physi- a bit and only in a relatively
cal liquidity base of the London short timeframe.
contract, it’s no big surprise to see
time-spreads start to tighten up. You’ll know that’s changed,
if someone starts buying
There is a pocket of more acute call options that target those
tightness on the LME’s prime Sep- 2006-2007 all-time highs.

– Andy Home, Reuters

PAGE 72 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

BASE METALS

Golden reward for cobalt tip

Gold was the intended previous drilling and geo-
focus of the prospectus chemistry work, returning

for the pertinently named hits of 28m @ 0.68% nickel

Golden Mile Resources Ltd and 0.08% cobalt and 37m

until two promising cobalt @ 0.83% nickel and 0.06%

plays emerged. cobalt.

Golden Mile listed on the “What we’ve done is put

ASX in mid-June after rais- together a drilling database

ing $4.5 million at IPO and and we’re now interrogat-

drilling now under way at ing it for the cobalt content

the Quicksilver cobalt pro- because there is fractiona-

ject, about 340km south of tion and it does differentiate

Hyden in Western Austral- itself at different spots in the

ia’s Wheatbelt region. profile,” Putt said.

Quicksilver has emerged Quicksilver has emerged as the flagship project in Golden Mile’s portfolio “It’s not necessarily tar-

as the company’s flagship geting the better parts of the

project despite originally being consid- later this month once the necessary per- cobalt, but we’re re-evaluating it and we’ll

ered a “sweetener” on top of the pack- mits are received. go in a bit later in the year and do some

age of gold assets being vended into the “Quicksilver, in a lot of ways, is the infill. I’m very confident we’ll be able to

exploration-focused portfolio. easy one because virtually all of the put together a resource quite quickly.”

Golden Mile also floated with the Mi- ground work has been done,” Putt said. Exploration work has also begun at the

nara nickel-cobalt project, about 45km “The thing about Quicksilver is it’s company’s Ironstone Well gold project,

north-east of Leonora, as part of its pro- never really been explored as a nickel- about 7km north-east of Leonora. An

spectus. cobalt deposit. People who have held the upcoming priority target will be Natasha

Cobalt has surged more than 140% ground in the past have explored it for where historic drilling struck 3m @ 5.19

over the past 12 months, with several just about everything else. It was actually g/t gold from 57m and 12m @ 7.13 g/t

ASX-listed companies exploring ground explored in 2012 as an iron ore deposit gold from 84m.

prospective for the base metal typically because it had a very strong magnetic Golden Mile recently extended its

produced as by-product of copper and signature.” ground position at Ironstone Well by peg-

nickel. Minara hosts two mineralised trends ging more ground adjacent and along

Golden Mile chief executive Tim Putt – Waite Kauri and Welcome Well – with strike from its original tenements. The

said both cobalt projects were thrown both extending over more than 6km of company also has the Leonora East

into the new company prospectus as a strike. The cobalt potential of both trends project which is immediately adjacent to

“wildcard” opportunity, but ultimately is yet to be properly assessed. tenure held by emerging producer Kin

proved to be the cornerstone of the IPO. Waite Kauri has been subjected to Mining NL.

“Gold was the focus initially, but what “We’re actively looking at the opportu-

the market was clearly hungry for was nities in the Leonora area to consolidate

the cobalt,” Putt told Paydirt. our ground position,” Putt said.

“We’ve got two very good cobalt pro- “It’s a highly mineralised environment

jects and that really helped with the pro- there and at various times companies

motional side of things and also generat- have gone and picked the eyes out of

ing the required interest in the company.” it. Kin are finding deposits left, right and

An extensive surface cobalt anomaly centre and now they’re looking to start

covering more than 2.5km of strike has mining some of those and bring them into

been defined at the Garard’s prospect at production in the next little while.”

Quicksilver. Historic drilling has returned Golden Mile’s stock has remained

multiple high-grade cobalt results, in- steady around 15c/share since listing,

cluding 4m @ 0.68% cobalt from 2m and with Putt confident the market will con-

3m @ 0.46% cobalt from 9m. tinue to follow the company’s progress.

Recent soil geochemistry returned co- “Coming in with a clean slate is making

balt grades over 300 ppm, some of the a big difference in terms of getting a bit of

highest grades ever recorded at Quick- traction in the market,” Putt said.

silver. “In terms of where are we in the mar-

Systematic drilling of Garard’s was ketplace at the moment, I describe it as

completed early last month, with results almost the tip of the spear. I think we’re

pending at the time of print. The com- right at the start of the next uplift in com-

pany is also awaiting results from a re- modities. As explorers, we work in a fairly

cent drill campaign targeting a number niche marketplace, so it’s nice to be out

of promising prospects, including Fence- there doing what we love doing again.”

line, Wyatt’s and Eastern Cap. The cobalt-nickel potential of some of Golden – Michael Washbourne

Resource drilling is scheduled to begin Mile’s ground is yet to be properly explored

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 73

REGIONAL ROUNDUP

Lucapa narrows its
kimberlite focus

The special diamonds and Lucapa’s newly acquired Mothae project gives its portfolio much-needed diversity
the cash returns keep com-
ing from the company’s alluvial ground following interpretation of a re- have three rigs on site to drill priority kim-
diamond operations but Lucapa cently conducted extensive time domain berlite targets at Lulo. We will then follow
Diamond Company Ltd chief ex- electromagnetic (TDEM) survey over the up with further drilling.”
ecutive Stephen Wetherall knows Cacuilo River valley.
the major rerating catalyst is still In an effort to further enhance its cre-
to be created. “We’ve flown the TDEM and identified dentials as a genuine diamond growth
and reprioritised our targets, including company, Lucapa has also secured a
Lucapa has successfully 11 new EM targets,” Wetherall said. “We second development asset; Mothae in
evolved from ambitious explorer Lesotho.
to steady producer of diamonds
at its Lulo project in Angola; an An advanced project previously taken
operation which last year re- through a feasibility study by Lucara Dia-
corded the highest average per monds Inc, Mothae handed Lucapa the
carat sale price in the world at opportunity to diversify its portfolio risk.
$US2,983/ct.
“We didn’t want to rely on one asset,
However, as every diamond we wanted a second kimberlite source
company knows, the market al- and we wanted a second country risk
ways remains reluctant to fully profile,” Wetherall said.
support a new entrant until they
can move from alluvial to hard Lucara couldn’t get the numbers to
rock operations. work on its large-scale strategy but Lu-
capa believes a scaled-down version of
“The kimberlite sources are Mothae will prove economic.
still the main prize and we firmly
believe Lulo is the next Tier 1 as- “We will target the free digging mate-
set in the diamond space,” Weth- rial and spend $12 million in building a
erall said. Phase 1 operation producing 44,000
ctpa. That will go for three years before
Finding the kimberlite source of Lulo’s starting Phase 2 which will target 2 mtpa
high value stones appears to be one of over 12-13 years,” Wetherall said.
the final boxes to be ticked for Lucapa
before it can expect a major market re- – Dominic Piper
rating.
Stephen Wetherall
The company has spent the last year
eliminating a number of other areas of
doubt. To date, it has received $US11.5
million in dividends from the Lulo JV
company and repatriated $US2.5 mil-
lion in March as the first repayment of its
$US35 million loan to the Lulo JV.

It has also upgraded the alluvial pro-
cessing plant at Lulo, introducing an XRT
sorter (to aid the recovery of large spe-
cial stones), improving performance of
the wet front-end and installing a deep
boiling facility to improve the quality of
the diamonds recovered.

The consistency of alluvial production
has allowed Lucapa to redouble its ef-
forts on finding the kimberlite source of
the diamonds and Wetherall believes the
company is closing in.

“The shape of the diamonds we are re-
covering suggests the source is close to
the current alluvial operations,” he said.

A new five-year exploration licence is
ready to be signed and the company has
increased its understanding of the Lulo

PAGE 74 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

AFRICA

Anglo swims against the current
in backing fuel cells

Anglo American plc is plac- of platinum needed to keep
ing a contrarian bet on
hydrogen fuel cell vehicles as down costs.
it tries to squeeze more profit
from its platinum reserves, Volumes of platinum used
but risks being left behind as
rival miners look to cash in on in fuel cells per car have
battery-powered cars.
been falling for the last 10
The push for lower-emis-
sion transport – particularly years, Toyota’s director of
in Europe and China – raises
the prospect of weaker de- advanced technologies Craig
mand for platinum, whose
biggest industrial use is in Scott told Reuters, and are
diesel vehicles.
likely to drop further through
Other big miners are po-
sitioning themselves for the technology or the use of al-
shift away from the combus-
tion engine by betting on lith- ternative metals.
ium and cobalt, both used in
electric vehicle batteries. At the height of the plati-

Glencore signed a major deal last Oc- num market around a dec-
tober to sell 20,000t of cobalt products, a
hitherto niche material whose production ade ago, when prices soared
it dominates, while Rio Tinto Ltd is sitting
on a large deposit of lithium. above $US2,000/oz, the

As the world’s top supplier of platinum, metal accounted for nearly
Anglo American is left with little choice
but to remain committed to the metal. But 30% of Anglo’s core earnings
it sees strength in what others may per-
ceive as a weakness. (EBITDA).

“Platinum and palladium will long play That share has fallen to
a critical air quality role in the global ve-
hicle fleet, including in heavy commer- Mark Cutifani less than 10% as the price
cial vehicles, hybrids and the emerging
hydrogen fuel cell electric technology,” of platinum has dropped to
chief executive Mark Cutifani told Reu-
ters. catalytic converters of an average diesel around $US980/oz. Anglo American

The firm has modernised operations, car. has cut costs and reorganised its port-
aiming to mechanise at least 70% of its
platinum mining to boost efficiency. Cuti- China has set a target of 1 million hy- folio, selling off some assets including its
fani is relentlessly pursuing a target of
15% return on capital, up from 4% in the drogen fuel cell vehicles by 2030, which Rustenburg platinum mine in South Af-
first half of this year.
Anglo American says would require rica, a flashpoint of union violence.
It has also invested $US110 million
on encouraging technologies that use 300,000oz of platinum, about 10% of Cutifani said there were no plans to
platinum, setting up partnerships with in-
novators, and lobbying governments to current auto demand and a chunk of its expand the platinum business. But it is
provide more infrastructure for hydrogen
fuel cell vehicles. annual production of more than 2 moz. a significant contributor to earnings that

Instead of relying on a battery, such But so far the take-up of hydrogen ve- could boost shareholder returns in the
vehicles convert hydrogen into electricity
using a fuel cell, in which platinum acts hicles is tiny, and industry experts say event of a platinum rally.
as a catalyst. Water is the only emission.
their wider use is years away at best, with That may be a long wait.
Each vehicle would need between 10-
15g of platinum, Anglo American esti- high purchase prices and a lack of refuel- Frances Hudson, an investment direc-
mates, compared with around 7g in the
ling stations the major barriers. tor at Aberdeen Standard, which holds

Anglo says its lobbying is nonetheless Anglo American shares, said the short-

paying off. term consensus was for weak prices for

Britain, for example, announced a £23 most of the commodities the firm holds.

million fund to accelerate the take-up “But the company’s portfolio of long-life

of hydrogen vehicles and has pledged and mainly low-cost assets [diamonds,

to expand the refuelling network from a copper and platinum] should be fine on

dozen stations nationwide so far. a three-to-five year outlook as supplies

Cutifani meanwhile joined forces with tighten,” she said.

chief executives from the motor, chemi- Anglo American is focused in the

cal and oil industries to launch the Hydro- meantime on raising the value of every

gen Council lobbying group at the start ounce of platinum it mines. Investors

of this year. are waiting to see whether it is a bet that

Toyota, which backs fuel cells because pays off.

it does not want to be dependent on a “The market believes in electric ve-

single technology, was among those hicles. The market is sceptical about

represented. The Japanese carmaker fuel cells. Anglo could be right, but the

sees advantages in hydrogen vehicles’ market has yet to be convinced,” Chris

greater range and faster refuelling com- LaFemina, a managing director special-

pared with battery power, although it has ised in mining at Jefferies bank, said.

said it expects the technology to reach – Barbara Lewis, Reuters
the mainstream only by the mid-to-late

2020s.

It is also seeking to reduce the amount

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 75

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REGIONAL ROUNDUP LATIN AMERICA

BHP commits $US2.46 billion
to Spence

BHP Ltd will spend ject is expected to come
$US2.46 billion to ex-
tend the life of the Spen- online towards the end of
ce copper mine in north-
ern Chile by more than this decade.
50 years, creating up to
5,000 jobs and bringing BHP also announced
new output online from
2021. last month it was increas-

BHP chief executive ing investment in nickel,
Andrew Mackenzie – un-
der pressure from activist used in batteries.
investors Elliott Advisors
to increase shareholder In the first decade of
returns – said the project
supported BHP’s strat- operation, extra output
egy of delivering near-
term, valuable copper from the Spence mine
production.
extension will be ap-
“Execution of the
Spence growth option proximately 185,000 tpa
will create long-term
value for shareholders in one of our pre- of copper concentrate
ferred commodities,” Mackenzie said in
a statement. and 4,000 tpa of molyb-

Copper prices have hit their highest denum, used in making
levels since late 2014 as expectations
mount of strong demand and tighter sup- steel. First production is
ply following a fall in spending linked to
the commodity price crash of 2015-2016. expected in 2021.

BHP, the world’s biggest miner, and BHP said it had evalu-

ated the project and ex-

pected a payback period

Copper prices recently hit a three-year high of 4.5 years from first

production.

rival Rio Tinto plc rely heavily on iron The project will need a new 1,000 litre

ore for profits, but both firms are shifting per second desalination plant. A consor-

emphasis as global commodity needs tium of Mitsui & Co and Grupo Cobra

change and rising electric vehicle de- was in exclusive talks with BHP to build

mand increases consumption of minerals the $US800 million plant.

such as copper and nickel. – Barbara Lewis and Esha Vaish,
Rio Tinto has embarked on a giant un- Reuters

derground extension of its copper opera-

tions at Oyu Tolgoi in Mongolia. That pro-

Las Bambas on-song for MMG

Strong output from Las Bambas, Peru, first half of 2017. Queensland, comes into production later
has delivered a solid financial result “Increased copper sales volumes from this year.
for MMG Ltd.
Las Bambas, higher commodity prices “Since the beginning of the year, we
In announcing interim results for the and our pursuit of group-wide efficien- have completed the sale of Golden
six months ending June 30, MMG report- cies have contributed to the strong finan- Grove, Century and Avebury. We have
ed revenue growth of 231% to $US1.9 bil- cial result for the first half,” MMG chief also made significant progress in the
lion, with net profit after tax of $US113.7 executive Jerry Jiao said. construction of Dugald River,” Jiao said.
million.
“The ramp-up of Las Bambas has been “Dugald River is ahead of schedule
The outcome represented a $US206.7 an outstanding success. We are commit- with production of first concentrate now
million increase on the corresponding re- ted to further optimising the operation, in- expected in late 2017, which is well-timed
porting period in 2016 and helped MMG creasing efficiencies and reducing costs. to meet a tightening zinc market.”
reduce net debt by $US868.2 million on Across MMG we are implementing a
the back of strong cash generation. number of cost reduction programmes, Dugald River is expected to rank within
the full benefits of which will be realised the top 10 zinc mines in the world when
Output at Las Bambas in the first half from 2018.” operational, with production of 170,000
was 218,440t copper in concentrate, with tpa zinc in concentrate, plus by-products.
430,054t produced since July 2016, its In the first half of 2017, MMG has fo-
first year of commercial operations. cused on reducing debt and further sim- MMG anticipates producing 560,000-
plifying and optimising the asset port- 615,000t of copper and 65,000-72,000t
Across all operations, MMG produced folio, as the Dugald River zinc project, of zinc in 2017.
290,758t copper and 37,519t zinc in the

PAGE 78 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

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REGIONAL ROUNDUP

Gold bull turns to Brazil

Stratex International plc chief
executive Marcus Engel-
brecht is a self-confessed gold

bull who has never shied away

from taking on the tough chal-

lenges.

“We all know that gold is the

only real currency out there

and I think with where we’re

going in a world which is in-

creasingly uncertain we’re only

going to see a bigger uplift in

the gold price,” London-based

Engelbrecht told Paydirt dur-

ing a visit to Perth last month.

Engelbrecht, the former

chief financial officer and in-

terim chief executive of mid-

tier producer OceanaGold

Corp, is reacquainting himself

with Australian investors as he

prepares to merge AIM-listed

Stratex with Brazil-focused

junior Crusader Resources

Ltd. The Stratex-Crusader merger will secure the funding required to complete a BFS on Borborema

Crusader and Stratex are

joining forces in a calculated bid to boost trade at an enterprise value of $US13.4/ company with a flagship asset in Sene-

the chances of developing the former’s oz and a price to net asset value ratio gal and other early stage greenfield pro-

Brazilian gold projects, Borborema and of 0.29. At the time of print, Crusader jects in Egypt and Djibouti, as well as key

Juruena. was trading at an enterprise value of holdings in groups operating in Ghana,

Under the terms of a scheme imple- $US10.9/oz and had a price to net asset Tanzania and Turkey.

mentation agreement, or reverse takeo- value ratio of 0.19, compared to a peer Engelbrecht said the Crusader gold

ver in AIM terminology, Crusader will be average of $US53.2/oz and 0.48 respec- assets were a good fit for the cashed-up

acquired for 18c/share, representing a tively. Stratex currently has a negative Stratex, which had $US8 million in the

63.6% premium to the 15-day VWAP. enterprise value. bank at June 30.

It is expected the merged company will Stratex is a gold-focused exploration “Stratex has been looking for devel-

opment assets for a while now and Bor-

borema, we believe, in the 12 months

post this transaction, we could actually

make a decision to mine,” he said.

“Juruena is a project with a lot of up-

side. There’s seven areas of mineralisa-

tion and some of the grades that [Cru-

sader] have intersected are phenomenal.

We believe that with a focused drilling

programme, we could come up with

something quite substantial.

“I’ve been to Brazil and I’ve spent a lot

of time in South America and I believe

the regulatory environment [in Brazil] is

conducive to mining and I think the risks

are manageable and understandable.”

Engelbrecht’s confidence in Brazil

stems from his previous success at the

helm of Archipelago Resources plc,

where he oversaw development of a

150,000 ozpa gold operation in North

Sulawesi, Indonesia.

Indonesia is widely regarded as one of

the toughest operating environments in

Stratex chief executive Marcus Engelbrecht and Crusader executive director Paul Stephen the world for mining companies.

PAGE 80 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

LATIN AMERICA

Crusader is selling the Posse iron ore mine to Inter Invest

“The Brazil environment is something Stephen said the merger process, Crusader also recently terminated a JV
I believe I can work with and get an out- which will continue to play out into the agreement with ASX-listed Lepidico Ltd
come,” Engelbrecht said. December quarter, remained on track. over the Magna lithium project, with the
former to retain the asset despite no fur-
Central to the merger strategy is fund- “It’s a pretty complex transaction for ther plans being announced.
ing to finally complete a BFS on Bor- two small groups, given that we’re going
borema, north-eastern Brazil. During across and looking to dual list the com- “The intention is to focus 100% on gold
the due diligence period for the merger, pany on two different exchanges,” Ste- as we think that’s the correct space for
Borborema’s reserves (42.4mt @ 1.18 g/t phen said. the merged group,” Stephen said. “That’s
gold for 1.61 moz) were upgraded to a not to say that we don’t see the value in
JORC-compliant reporting standard. “Both Marcus and myself share the other commodities like copper, lithium
view that there is a dramatic misevalu- and so on, but as far as Crusader is
Crusader has previously flagged a 2 ation of the assets in both Crusader concerned the focus will be on develop-
mtpa CIL operation at Borborema, which and Stratex and we think by putting the ing gold projects, both inside the current
is also in the final stages of permitting. two groups together we’ll unlock a lot of portfolio in Brazil but also Stratex’s as-
shareholder value.” sets.”
Engelbrecht was confident the merged
company could complete the BFS within Crusader has entered into a sale Australian companies in Latin America
six months of finalising the corporate agreement with Inter Invest BP SA to di- have typically struggled to gain traction
deal, with construction to possible follow vest of the Posse iron ore mine the com- in the market, with the 12-hour time dif-
inside the ensuing 12 months. pany discovered, built and operated over ference often cited as a major barrier to
the past four years. investment. By comparison, it is listed
“London, as a funding environment, I one of the key reasons why TSX-listed
believe will be conducive to actually get- Under the terms of the agreement, companies enjoy greater success in the
ting funding for Borborema,” he said. Crusader will receive about 8 million real region.
“They have a deep understanding of min- to be paid over a 17-month period.
ing, they’re comfortable with the location Engelbrecht, however, disputes such a
and I believe putting the two companies “Posse is an asset that initiated us into theory.
together will create significant interest in producing status in Brazil,” Stephen said.
actually taking this forward.” “I’m not sure that the ASX doesn’t like
“It really credentialed us in the eyes of Brazil, I just think what the ASX, the TSX
Engelbrecht will become chief execu- a lot of the relevant and important bod- and the US fund markets are all looking
tive of the merged company, with Aus- ies in Brazil. We showed both the Mines for is a clear path to value and they want
tralian-based Crusader executive direc- Department and the Environmental De- a clear understanding how a company
tor Paul Stephen to also retain his title. partment that we were a capable and re- intends to drive a project towards cash
Brazil-based Crusader managing direc- sponsible operator and that can now be flow,” he said.
tor Rob Smakman will take up a yet to be printed on our resume.
confirmed senior executive position with “They want an asset that is de-risked
the new entity. “That sort of things really does make and shows some real value and, prob-
a difference when you want engage with ably very importantly, they want to see
The merged company will have its these departments on the next project. some upside. At the end of the day, a
head office in London and hold dual list- And it actually contributed a lot of cash mine is a hole in the ground, so they
ings on the AIM and ASX platforms. It is back into Crusader, perhaps not so much need to see some upside potential over
yet to be decided what name the com- in the last couple of years, but back in and above what they’re funding.”
pany will start trading under when the 2014 and 2015 the mine was very profit-
merger is completed. able and enabled us to do things like buy – Michael Washbourne
the Juruena project [in 2014].”

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 81

REGIONAL ROUNDUP

Crater digs deep to
reach Paradise

Former Paladin Energy Ltd chief execu-
tive Alex Molyneux is spearheading a
new look team at Crater Gold Ltd.

Subject to closing an entitlement of-

fer of $15 million, Molyneux will take

on chairmanship of Crater, with former

PanAust Asia executive general manag-

er Robert Usher to join him as a non-ex-

ecutive director alongside Dorian Nicol.

Rounding out the team will be Matthew

O’Kane as chief financial officer.

The offer, for which major shareholder

Freefire Technology Ltd committed to

taking its entitlement of $6.6 million, was

expected to be completed in mid-August.

Meanwhile, the sale of Croydon, North

Queensland, for a total of $1.2 million to

be paid in four equal amounts over 12

months, will mean Crater can resolve its

debt issues.

After clearing bills, Crater, or rather An exploration target of 60,000-100,000oz has been set at HGZ

the proposed new entity – Paradise Gold

Mining Ltd – will have between $4.3 mil- “It sounds like a sensible thing to do, Independent experts plus Crater’s new

lion to $5.1 million to reinvigorate the but when you stop the exploration for that team of geologists have reviewed the

Crater Mountain gold project in Papua and focus exclusively on the develop- data at Crater Mountain and have con-

New Guinea. ment of a small mine, people start to ask firmed resources are open at depth and

Under the influence of the late Peter ‘how big is the mine?’,” Molyneux said. in some lateral directions, while there is

Macnab, the company once thrived at a “At 5,000-7,000 ozpa gold, it is not very evidence of a potential copper-gold por-

market cap of $50 million as it appeared exciting and in a way sets a cap then on phyry system as well.

Crater Mountain was to be PNG’s next the value. I think that is what really hap- Having received first proceeds from

Tier 1 gold play. pened and if you are going to do a 7,000 the sale of the multi-commodity Croydon

Macnab’s expertise in PNG is arguably ozpa mine or something, that really caps project, Crater has been able to move
“unrivalled, after playing a hand in discov- you at a $15-20 million company.
forward with one part of the new strat-

eries or being solely respon- egy; purchasing drill rigs.

sible for the likes of Frieda I think if we’re passing through At the time of print, Cra-
River, Misima, Wafi, Simberi ter had already secured

and the Ladolam gold mine the million ounces and heading one and was seeking an-
on Lihir Island. towards 2 moz or what not, this is other. With two rigs, Crater
can drill at its own pace to a
“Peter Macnab was the real

driving force behind the com- a company that should be going cumulative total of 10,000m
pany and since his passing per year to increase gold
through the $50-100 million market
there hasn’t been the senior resources.

geological capability to drive cap range and then it should be The cash injection from
exploration and continue re- the entitlement offer puts
starting to attract the attention in a
source development. That is Crater in a good position to

where [Crater] has stalled, in M&A sense of a much larger company. conduct drilling campaigns.
my view,” Molyneux said. Furthermore, subject to

For a mere 14,500m of drill- metallurgical testing and

ing, Crater identified inferred mine planning, it is likely

resources of 800,000oz gold. Within the “At the same time, they borrowed mon- development of the Nevera gold mine

inferred resource, a very small, high- ey for the development and did not get will proceed.

grade component tempted the previous the mine commissioned with that fund- Nevera is within the High Grade Zone

team to consider cashing in on a modest ing, so they ended up being in an even (HGZ) at Crater Mountain and success-

scale operation. worse position. At that point they ac- ful development of the mine will provide

Money banked from the small start-up cumulated a debt overhang and had no some funding for exploration.

was then to be used for ongoing explora- clear path to produce that cash flow they Technical work on the development of

tion and eventually a larger mine. were pointing at.” Nevera resumed last month, with Mining

PAGE 82 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

ASIA

PNG is host to the type of projects attractive to the world’s gold majors

Associates Ltd assisting Crater with mine “Then you have got the Mixing Zone case the multi-million ounce potential it
planning parameters and a revised mine resource, which we think, based on cur- has in the highlands and while a lack of
plan. rent data should have a target in itself of infrastructure is a challenge to contend
2 moz-plus in resource. That is just a tar- with, Molyneux is comfortable with the
A particular focus of the technical work get where we are at now; it’s almost how legislative environment and compelling
will be on identifying stoping blocks with long is a piece of string given the scale geological-richness terrain in PNG.
gold grades in excess of 10 g/t, above of what you are working with. It’s quite
the 1960 level and between the 1930 and reasonable to assume that once you are Molyneux said the presence of majors
1960 levels. upgrading the resource you are also con- Barrick Gold Corp, Newcrest Mining Ltd
tinuing to upgrade the target into the 4-5 and Harmony Gold Ltd in country dem-
The company stated that resuming de- moz type level,” Molyneux said. onstrated the Tier 1 potential inherent in
velopment works could be done within PNG.
weeks of completing the entitlement “That is totally disregarding the poten-
offer, with Minmet Services Pty Ltd en- tial for identifying the Central Zone for If Crater identifies multi-million ounce
gaged to help with metallurgy work for copper-gold porphyry mineralisation and potential, Crater Mountain could well be
processing at Nevera. having a reasonable grade there. We’re something of interest to major companies
referring it publicly to a transformational with the expertise and financial capability
Cash from Nevera will be handy, how- increase in resources. Whilst we have to develop such large scale projects.
ever, it certainly won’t distract Crater done a few months of due diligence, we
from its exploration strategy. are going through a phase of getting up “In general I think you have always got
to speed ourselves, so I don’t want to be potential for M&A because it is a jurisdic-
Independent and in-house analysis re- out there saying it is going to be X million tion Tier 1 companies are in, operate in
view of data has identified a potential ex- ounces as a target, but people have put and understand. It is not a stretch for a
ploration target for HGZ alone of 60,000- those targets on it in the past and they Harmony, Barrick or Newcrest to be in-
100,000oz gold. are well qualified people.” terested in or some of the mid-sized Aus-
sie companies that will be following in
Molyneux said shoots in the ilk of HGZ The job is ahead of Crater to show- those companies’ footsteps,” Molyneux
didn’t tend to occur by themselves and said.
believed there to be potential for another Latest results from drilling included an
three or four within a 500m to 1km radius. intercept of 10m @ 7.84 g/t gold from “I think from our perspective, we need
53m at Kulumadau. to take the asset to the next level. If it is
Geopacific Resources Ltd reported ex- a multi-million ounce asset, and we have
ploration success at Woodlark Island, in “Delivering a robust feasibility on popped a couple of holes into the Central
light of the company’s corporate activity Woodlark remains our focus. The suc- Zone of a copper-gold porphyry, I think
involving the takeover of Kula Gold Ltd. cess of these results continues to vali- it then becomes an asset that either the
date our strategy to deliver Woodlark into Anglos of the world become interested
Geopacific holds 74% of Kula, with the production, after which we will turn our or the gold companies see it as in their
increased and final offer to Kula share- attention to unlocking the significant ex- zone of influence. That is the game to be
holders closing on September 1. ploration potential of the project,” Heeks played here.
said.
Kula’s three largest shareholders ac- “I think if we’re passing through the mil-
cepted Geopacific’s increased offer in “The aim of this drilling is to increase lion ounces and heading towards 2 moz
July. confidence in the current resource in- or what not, this is a company that should
ventory for potential inclusion in future be going through the $50-100 million
Geopacific managing director Ron reserve calculations. Continued drilling market cap range and then it should be
Heeks said drilling had not been impact- success outside the current resource in- starting to attract the attention in a M&A
ed by the off-market takeover and the ventory highlights the inherent prospec- sense of a much larger company.”
company was wrapped with continued tivity of the Woodlark gold project.”
broad widths of high-grade gold miner- – Mark Andrews
alisation from shallow depths at the Ku-
lumadau deposit at the Woodlark Island
project.

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 83

REGIONAL ROUNDUP

Euro aims for a hat-trick
in cobalt

Rebranded explorer
European Cobalt
Ltd is pushing ahead

with plans to expand its

high-grade base metals

portfolio.

European Cobalt’s ex-

pansion began with the

acquisition of the Slova-

kian Dobsina and Kolba

projects in May and July

respectively, followed by

a move on the Jouhine-

va project in Finland in

early August.

As a part of the re-

structure European Co-

balt (formerly Western

Mining Network) has

appointed Syrah Re-

sources Ltd founder Tol-

ga Kumova as chairman European Cobalt’s projects are in close proximity to multiple battery plants on the continent

and geologist Robert

Jewson as managing director. The deal has now entered a 60-day Jewson said the high grade cobalt-

Kumova said the option to acquire due diligence period, in which European nickel sulphide results from underground

100% of the Jouhineva cobalt-copper- Cobalt will assess the legality of the deal sampling validated the tenor of Dobsina.

gold project in the Northern Ostroboth- and local and regional infrastructure. “The Joremeny adit represents only

nia region of Finland was a low-risk entry A 3D geological model will also be cre- 764m of 110,000m of adit development

into an advanced project in a stable ju- ated using historical data and applica- throughout the Dobsina project,” he said.

risdiction. tions will be made for new drill targets. Jewson said historical reports and

“We are actively evaluating numerous “We have sufficient funding, technical discussions with previous miners had

other opportunities within Europe to de- and corporate expertise in order to con- confirmed that stoping between the adit

liver on our stated strategy of acquiring duct our exploration activities and look levels was limited.

and developing a portfolio of high-quality forward to providing further updates of “This means that significant potential

cobalt projects,” Kumova said. our progress to our shareholders,” Ku- for mineralisation exists between these

Jouhineva, previously an asset of Au- mova said. adits, which are constructed at 100-150m

rora Exploration Ltd, was discovered by Last quarter, the company acquired intervals vertically. We are currently de-

Outokumpu in 1978. another high-grade European cobalt as- veloping a 3D model of all underground

Outokumpu completed 119 diamond set, the Dobsina cobalt-nickel project in developments in order to facilitate drill

drill holes and 14,000m of drilling be- central Slovakia, about 2,100km south of planning to test the mineralisation,” Jew-

tween 1980 and 1998, giving European Jouhineva. Dobsina – acquired through son said.

Cobalt a strong historical database to a takeover of NiCo Minerals in May – European Cobalt started an extensive

work from. boasts historical production of 430,000t exploration programme at Dobsina in

Drill results include 5.55m @ 1.19% of high-grade cobalt and nickel from the July.

cobalt, 4.7 g/t gold from 23m, 2.6m @ 19th century. The programme includes an evaluation

1.0% cobalt, 1.9 g/t gold from 41.45m, At the end of the June quarter the com- of 42 historic waste dumps, validation of

5.8m @ 0.65% cobalt from 184.1m and pany released high-grade cobalt-nickel adits across the project area, geological

2.1m @ 0.66% cobalt, 4.94% copper and results from underground sampling at the mapping and geochemical sampling.

4.45 g/t gold from 42.1m. Joremeny adit. – Jon Daly
Aside from high-grade historical re- Results included 1m @ 3.52% copper

sults, Jouhineva is also in a good loca- and 4.34% nickel, 0.6m @ 3.32% cop-

tion, only 70km away from the port city of per and 6.72% nickel and 2.6m @ 1.37%

Kokkola and Glencore’s Kokkola cobalt copper and 1.9% nickel.

refinery. Joremeny, on the eastern side of the

The project is also 49km and 103km Zemburg vein system, has historically re-

away from processing plants at Hitura ported average production grades of 4%

and Pyhasalmi mines. cobalt and 16% nickel.

PAGE 84 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

EUROPE

Berkut beats drum for cobalt

Sc a n d i n a v i a - f o c u s e d Berkut plans to start drilling at Skuterud, Norway, in Q4
Berkut Minerals Ltd has
topped up its kitty with $1.5 as the future of vehicles and if you look at stead for the future.
million to fast-track explora- cobalt lithium-ion batteries they give the Field activities were in progress at
tion for cobalt in Norway. highest energy density. From memory,
they have a high percentage of cobalt in Lainejaur, Gladhammar and Tunaberg
The company listed on those. If you look at some of the antici- in Sweden, while a drilling programme at
the ASX 12 months ago and pated demand for those batteries there Skuterud will start in Q4.
headed straight into drill- is potentially going to be a huge deficit
ing at the Cairn Hill gold in cobalt.” “I think Skuterud has the geological
project, Western Australia, potential to be a large sized project,” In-
and while several drill tar- Berkut’s role in potentially supply- wood said.
gets remain untested at ing ethically sourced cobalt has started
the under-review Cairn Hill, with sampling and mapping activities at “We understand historically they mined
Berkut is now preparing to Skuterud. about 4mt of ore. Nobody knows what the
look deeper at the Skuterud grade is, but we are seeing good grades
cobalt play in Norway. Modern exploration has been limited from hand samples from the waste pile
at Skuterud which was a major source of selected looking for rocks that were min-
Skuterud, in addition to cobalt in the 19th century, with up to 4mt eralised. We are seeing disseminated
Tunaberg and Gladhammar mined in from 1773 to 1893. sulphides running 0.8% cobalt and mas-
in Sweden, were acquired 100% by Ber- sive sulphides of 3.5% cobalt.
kut earlier this year. While there is known mineralisation,
no drilling has been conducted in mod- “If we look at the workings at Skuterud
While the market is running hot, Berkut ern times. to the south, I think the size and the scale
managing director Neil Inwood’s experi- could support a modern operation if the
ence in the non-traditional metals market Having rattled the tin for $1.5 million grade profile was there. Our drilling will
meant he didn’t need convincing about from institutional and sophisticated in- hopefully start in Q4 this year and will
the future of cobalt in society, particularly vestors of Cannacord Genuity (Australia) demonstrate that potential,” he said.
in electric vehicles. Ltd, Berkut has just under $6 million cash
to support its near-term endeavours in Inwood said Norway was a mining-
Inwood was appointed managing di- Norway and Sweden. friendly jurisdiction, with the country cur-
rector in April specifically to advance rently in the process of updating its min-
Berkut’s Swedish and Norwegian assets Both jurisdictions are close to infra- ing laws.
and his history as principal resource ge- structure and the Kokkola cobalt refinery
ologist at Coffey Mining and leader of the in Finland, which places Berkut in good – Mark Andrews
geological team that established the nio-
bium resource for Cradle Resources Ltd
at Panda Hill in Tanzania has given him
keen insight into the minor metals.

“I love that space and my experience
with niobium too shows that it can be
built in a market that is highly controlled.
If you have the right size and right grade
project, you can slot in at 2-6% world de-
mand without upsetting the apple cart,
so I think there is space there in the co-
balt market,” Inwood told Paydirt.

“I think the electric vehicle uptake will
be quite major in the next few years, es-
pecially for near-city vehicles. I see this

Cobalt has been one of the hottest commodities this year
AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 85

Fortescue will take control of power supply to its Solomon Hub operations from November Golding deal for NRW

NRW Holdings Ltd is acquiring Austral-
ian contractor Golding Group Pty Ltd in a
$85 million deal.

The transformational acquisition deliv-
ers on NRW’s strategy of expanding its
presence and service offering into ad-
jacent and complementary sectors with
Tier 1 client bases.

Golding is a leading civil infrastructure,
urban and mining services company cur-
rently operating in Queensland and New
South Wales.

NRW’s acquisition will be funded via
new debt facilities and an equity place-
ment, including a $48 million acquisi-
tion debt facility and a $25 million equity
placement.

Golding’s experienced management
team will remain with the business fol-
lowing completion of the transaction.

Fortescue powers on at African Drilling tasked Drill-for-equity at
Solomon with DRC drill-out Admiral for Top Drill

Fortescue Metals Group Ltd will repur- African Drilling Ltd will complete a Metalicity Ltd has signed an equity-
chase the Solomon power station from 4,000m diamond drilling programme for funded drilling contract with Top Drill Pty
100%-owned TransAlta Corporation Vector Resources Ltd at its Maniema gold Ltd for up to $500,000 of drilling.
subsidiary, Tec Pipe Pty Ltd. project in the DRC.
The contract equates to about 10,000m
The station provides gas-fired power to An initial six holes have been approved of drilling, with 50% of costs to be paid in
Fortescue’s Solomon iron ore hub. Five for drilling at the advanced Kabotshome equity.
years ago, the company sold the power prospect, which hosted an inferred re-
station to TransAlta and then entered a source of 6.97mt @ 1.9 g/t gold for Under the terms of the agreement, the
power purchase agreement to buy all ca- 421,000oz. equity component for each separate pro-
pacity. gramme will be subject to shareholder
Infill and extensional drilling at Kabot- approval, priced at a five-day VWAP
Fortescue can repurchase the sta- shome will both test and confirm previous upon completion of each separate drill-
tion and terminate the power purchase high-grade intercepts at depth and along ing campaign and subject to six months
agreement under the terms of the cur- strike. voluntary escrow.
rent contract. The Solomon power sta-
tion is treated as a lease liability (totalling According to Vector, African Drilling is Metalicity will look to soon deploy rigs
$US348 million plus associated costs) viewed as the leading exploration drilling at its Admiral Bay zinc project for PFS
and recognised as debt on the compa- company on the continent, with a 30-year drilling as well as due diligence drilling
ny’s balance sheet. track record of managing and completing at the Napier Range zinc project and RC
gold exploration programmes. drilling at a suite of cobalt and lithium pro-
Fortescue plans to repay the total jects.
amount of $US348 million from available African Drilling was mobilising to site at
cash and resume full control and opera- the time of print and is expected to com-
tion of the power station in November. plete the programme over the next three
months.

PAGE 86 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

Lycopodium studies greenfield 198km Yamarna gas pipe-
up on L-Max plant line, which is under construction.

Lepidico Ltd has appointed a sub- GE’s Jenbacher J624 is the world’s
sidiary of Lycopodium Ltd to provide first two-stage, turbocharged gas
engineering services for the compa- engine. It provides particular ad-
ny’s Phase 1 L-Max plant feasibility vantages in hot environments and
study. in multiple engine power plants for
independent power production and
The objective of the study is to de- combine
fine an economically and technically
viable small commercial scale L-Max Fluor slots seamlessly
plant, to be built in Ontario, which on the South Flank
can treat lithium mica concentrate
feeds from a variety of sources. Fluor Corp has been awarded a

Final process design data is ex- project and construction manage-
pected to be completed by Decem-
ber. ment services contract by BHP Ltd

Under the terms of the agreement, for the South Flank iron ore project
Lepidico has allotted and issued 45
million new fully paid ordinary shares in the Pilbara.
to Lycopodium. The new shares are
subject to escrow restrictions pend- The scope of work requires Fluor
ing completion of the study and to
pro-rata buyback and cancellation to work closely with BHP to optimise
provisions.
the feasibility study design, with a
Bright spark Clarke
chosen for Gruyere focus on execution readiness and

Clarke Energy – GE’s distributor and capital efficiency. Work is being per-
service partners – will provide 11 of GE’s
high-efficiency Jenbacher J624 gas en- Saracen has awarded preferred tender status to formed from BHP’s Perth office.
gines to leading energy infrastructure Byrnecut for the $440 million underground A decision to move on the execu-
business APA Group for the new 45MW mining contract at Carosue Dam
Yamarna power station. tion phase of the project is expected
in mid-2018.
The power station will supply power
to the Gruyere gold project, a 50/50 JV Byrnecut preferred at
between Gold Road Resources Ltd and Carosue Dam
Gold Fields Ltd, in Western Australia’s
Yilgarn region. Gold producer Saracen Mineral Hold-
ings Ltd has awarded preferred tender
Clarke Energy has won the EPC ten- status to Byrnecut Australia Pty Ltd for
der for the gas-fired power station. Gas the underground mining contract at Ca-
for power generation will be transported rosue Dam in Western Australia.
1,500km using four APA Group inter-
connected pipelines, including its latest The contract is worth an estimated
$440 million and is for underground de-
GE’s Jenbacher J624 is the world’s first velopment and production stoping at the
two-stage, turbocharged gas engine Karari and Deep South underground
mines at Carosue Dam.

Formal award of the contract is subject
to agreement of the final terms and con-
ditions.

The initial term is four years with scope
for a one-year extension at Saracen’s
election.

AUSTRALIA’S PAYDIRT SEPTEMBER 2017 PAGE 87

COMINGS AND GOINGS

Susan Vearncombe has Tanzania-based Sullivan will Ltd chief executive Ian Gor- respectively. Both appoint-
joined the board of Auris complete due diligence on the don has been recruited to ments follow the retirement
Minerals Ltd as a non-exec- company’s recently acquired lead a review of the compa- of long-serving general man-
utive director, replacing Deb- Kitolo and Kiambi lithium pro- ny’s projects, especially those ager Brian Mann.
bie Fullerton. Vearncombe jects in the DRC, having re- with near-term development
served as managing direc- cently run the ruler over AVZ potential. Yosse Goldberg has suc-
tor of gold and base metals Minerals Ltd’s assets in the ceeded David Wheeler
explorer Silver Swan Group country. Underground hard rock as non-executive chairman
from 2008 until 2012 and prior mining contractor Bar- of Ausmex Mining Group Ltd.
to that was general manager Duncan Craib has been minco Ltd is on the lookout An international consultant,
of geology for Mercator Gold promoted to managing for a new chief executive fol- Goldberg is also a non-ex-
(now ECR Minerals plc). director of Boss Resources lowing the resignation of Pe- ecutive director of ASX-listed
Ltd. Craib joined the uranium ter Stokes. Having joined the South Pacific Resources Ltd.
Company founder Neil Bid- hopeful as chief executive in company from trucking giant
dle has stepped down January. In other manage- Linfox Pty Ltd more than four Robert Barraket has re-
from his non-executive direc- ment changes, Marat Abzal- years ago, Stokes has decid- signed a non-executive
tor role at Pilbara Minerals ov has stepped down as a ed to seek a new challenge. chairman of Mantle Mining
Ltd. company director to lead a He is credited with improving Ltd. A replacement is yet to
dedicated technical advisory productivity, efficiencies and be announced.
Neil Biddle board in a bid to ensure the safety across the business.
successful restart of the Hon- Alan Armstrong has joined
European Metals Holdings eymoon project in South Aus- Peter Stokes Castillo Copper Ltd as
Ltd has appointed Craig tralia. an executive director. Arm-
Reimer as project manager. St George Mining Ltd has strong, who guided Volt Re-
Reimer is a mechanical en- Joshua Wellisch has re- boosted its technical sources Ltd for two years until
gineer who has previously signed as managing di- team with the appointment mid-2016, will work alongside
worked on projects for BHP rector of Kairos Minerals Ltd of former Western Areas Ltd newly appointed technical
Ltd, Atlas Iron Ltd, Newmont to pursue other business in- general manager, explora- director Neil Hutchison on
Mining Corp, Vale Inco and terests. Terry Topping, who tion, Charles Wilkinson. the company’s suite of base
Alcoa. joined the company as an metals projects in New South
executive director in March, Asimwe Kabunga has as- Wales and Queensland.
Xanadu Mines Ltd has has assumed the role of ex- sumed the chairmanship
appointed Michele Mus- ecutive chairman and chief of Volt Resources Ltd from DRA Group Holdings has
cillo as an independent non- executive, while Tyranna Re- Stephen Hunt. Kabunga, the appointed Pierre Julien
executive director. Brisbane- sources Ltd managing direc- original vendor of the compa- as executive vice president –
based Muscillo is a partner at tor Bruno Seneque has joined ny’s Namangale tenements, origination. Based in Toronto,
HopgoodGanim Lawyers and the board as a non-executive joined Volt as a non-executive Julien will be responsible for
also sits on the board of ASX- director. director in April. Hunt, who identifying growth opportu-
listed copper producer Aeris has been with the company nities into adjacent sectors
Resources Ltd. Bruno Seneque since 2015, remains on the and accessing new business
board as a non-executive di- channels. He was previously
Talga Resources Ltd has Tiger Resources Ltd has rector. vice president of business de-
appointed its first Euro- appointed Narelle War- velopment and EPCM partner
pean-based board member, ren as company secretary to Phillip Wing has resigned management at Outotec Ltd.
with experienced Norwegian replace Susmit Shah. as chairman of Metminco
energy, banking and finance Ltd. Wing joined the company Luke Anderson has joined
executive Ola Rinnan joining Gary Ferris has stepped in late 2009 following its pur- rail service provider Gene-
as a non-executive director. down as managing direc- chase of Hampton Mining. see & Wyoming Australia Pty
Rinnan also sits on the board tor of Monax Mining Ltd after Ltd as chief executive. Ander-
of Smedvig, Talga’s largest eight years in the role, but will Ausdrill Ltd has appointed son, previously chief financial
shareholder. continue to provide geological Steve Dann and John officer of Oz Minerals Ltd, will
services to the company on Geary to the newly created start his new role in October.
James Sullivan has joined an as required basis. Mean- roles of general manager, ex-
Force Commodities Ltd while, former Flinders Mines ploration, and general man- Luke Anderson
as a technical consultant. Ltd and Ramelius Resources ager, drill and blast services,

PAGE 88 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT

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LEFTFIELD

Rio Tinto asks R U OK?

RU OK?s Conversation Con- steps to starting what could be
voy rolled into Pilbara mining a life-changing and life-saving

districts Wickham and Dampier conversation.

last month to encourage Rio “We are thrilled to be out

Tinto Ltd’s workforce and the lo- in the heart of the WA min-

cal community to check in with ing district talking to work-

workmates and loved ones or ers and community members

anyone who might be struggling who often face unique strug-

with life. gles around isolation and be-

R U OK? chief executive ing separated from family and

Brendan Maher said it was vital friends,” Maher said.

to get the R U OK? messaging “It’s important that we give

out into mining communities, people the skills to notice the

given the pressures and isola- signs that someone might be

tion staff often face. doing it tough and to know

Maher reminded Rio Tinto The R U OK? Conversation Convoy rolled through the Pilbara last what to say if someone says,
team members they had an month ahead of R U OK? Day on September 14 ‘no, I’m not OK’. That’s why
extra resource at their disposal we developed the four steps to

– their eyes, ears and mouth – in recog- He said everyone has the ability and starting a conversation: Ask, Listen, En-

nising and assisting anyone who didn’t skills to check in with anyone they are courage action and Check in.”

seem their usual self. worried about and broke down the four



INDEX

Aeris 64-65, 88 De Beers 19 Kirkland 36 Red River 40, 61
Doray 69 Kula 83 Regis 32
African Rainbow 9 Resolute 32
Lepidico 81, 87 Rio Tinto
Agrimin 51 Lucapa 74 Roy Hill 15, 75, 78
Lucara 74 41
Alchemy 69 Eastern Goldfields 44 Lynas 34
ECR Minerals 88
Alcoa 88 Energia 66-67 Mantle 88
Enterprise 39 Meridian 70
Anglo American 5, 10, 15, 19, European Cobalt 84 Metalicity 70, 86
European Metals 88 Metals X 30, 43, 71
40, 71, 75, 83 Evolution 4, 32 Metminco 88 Sandfire 38-39, 48, 68, 69
Metro 49
AngloGold 9, 10, 34 Minara Saracen 20, 34, 87
Mincor 5
Archipelago 80 Minjar 28 Shaw River 68
Mirasol 68
Argonaut 64 MMG 37 Sibanye 9, 19
Monax 78
Arrium 58 Mustang 88 Silver Lake 54
53
Atlas Iron 68, 88 Fe 69 Newcrest South Pacific 88
First Quantum 5-6, 11 Newmont 30, 83
Auris 48, 69, 88 Flinders Ningxia 14, 88 South32 10
Force Commodities 88 Northern Star
Aurora Exploration 84 Fortescue 88 NuLegacy 11 St Barbara 4, 30
4, 41, 86 4, 32, 37, 46
Ausmex 88 OceanaGold St George 88
Oz 37
AVZ Minerals 88 Stratex 80-81
Paladin 37
PanAust 71, 88 Sumitomo 21
Panoramic
Barrick 14, 15, 20, 83 Galaxy 5, 35, 71 Pilbara 82 Superior 37
Peel 82
Beadell 44 Gascoyne 50 28, 69 Syrah 53, 84
Ramelius 35, 88
Berkut 85 Gemfields 53 Randgold 30, 62
Red 5
BHP 5-6, 10, 19, 26, 28, 78, Geopacific 83 42, 88 Talga 88
32 Talisman 38, 69
87, 88 Glencore 5, 10, 28, 40, 72, Tiger
8, 20, 34 Toho Zinc 88
Boliden 72 75, 84 Traka 62
Tyranna 71
Boss 88 Gold Fields 4, 18-23, 34, 49, 87 88

Broken Hill Prospecting 63 Gold Road 4, 18-23, 50, 87

Bryah 4, 48 Gold Standard 37

Golden Mile 73

Carpentaria 56-59 Great Western 39 Vale 9, 88
Cassini 71 Vector 86
Castillo 88 Harmony 9, 10, 83 Volt 88
Catalyst 30 Heron 60-61
CBH Resources 62
Chalice 71 Iluka 68 West African 51
Cobalt Blue 63 Independence 28, 69 Western Areas 28, 71, 88
ConsMin 11 Indiana Westgold
Cradle 85 Inter Invest 69 43, 69
Crater 81
Crusader 82-83 Xanadu 88
80-81
Kairos 88 Zhaojin 42
Kalamazoo 68
Dacian 45, 50 Kin 49, 73

PAGE 90 SEPTEMBER 2017 AUSTRALIA’S PAYDIRT



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