pd247 March 17 mag-web_Neat

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 51

INDABA REVIEW

Alternative answer to
eternal questions

With the traditional lenders thin on the
ground in Africa these days, it was
hardly surprising that much of the Mining

Indaba project funding chatter revolved

around “alternative financing”.

Where once the major question about

project financing was over the exact mix

between equity and debt provided by

the big commercial banks, today’s pro-

ject developments have myriad capital

sources.

The prominence of private equity

groups, streaming and royalty companies

and development banks has changed the

landscape for budding miners and ac-

cording to Julian Treger, chief executive

at London-based royalty company Anglo

Pacific Group plc, the wider array of op-

tions means companies have better op-

portunity to get into development.

“It is about sourcing the most com-

plete funding package for projects. Min-

ing is challenging but if project funding

is strong it is possible to secure strategic

equity,” Treger said during a panel dis-

cussion on alternative financing options. Investor registrations were up 75% at this year’s Mining Indaba

Streaming and royalty companies

such as Anglo Pacific have firmly estab- are tired of risky debt structures prop- and we are willing to commit capital to

lished themselves in the North American ping up mining companies and are also development royalties with projects with

market over the last five years and their troubled by serial equity dilution at the longer development timetables,” he said.

presence in Cape Town suggests they worst possible time. We also believe the “We have also set up an incubator fund

are now ready to move into the African progressive and sophisticated manage- to manage smaller projects for juniors

space. ment teams in the industry are frustrated who only want $1-2 million in cash. Pri-

“Most streaming deals have been fo- with the unstable traditional methods of marily, we look to see if the project is in

cused in the Americas and perhaps that financing in the industry and they want the lowest cost quartile.”

is because that’s where the streaming to create stable cooperative financing ar- Sandstorm’s criteria appear similarly

“and royalty companies are based. How- rangements to access capital.” focused on quality rather than size.

ever, Sandstorm has been very “All stage projects and com-

active throughout the continent panies can be stream or royal-

and is keen to continue work- It is about sourcing the most ty financed,” Awram said. “The
ing here,” Sandstorm Ltd vice complete funding package more important characteristic
president David Awram told is quality. We are excited be-

Paydirt. “This is the sixth year for projects. Mining is challenging cause our pipeline of deals is
in a row that I’ve been attend- but if project funding is strong it is full for every stage of project.
ing Indaba and I can see that We are looking at packages

Africa is where the biggest possible to secure strategic equity. of existing royalties that pro-
growth will be for the mining ject generators are selling, we

industry over the medium and are completing deals on early-

long term.” stage exploration, we are look-

Awram said the arrival of streaming Anglo Pacific has historically focused ing to finance construction of assets that

and royalty companies as a mainstream on in-production or near-production as- are large and small, plus we are looking

source of finance reflected a changing sets but according to Treger, the recent to help multi-asset producers de-lever

approach to mining finance. metals price recovery had afforded the their balance sheets. We look at deals all

“We are awakening to the concern company opportunity to expand its hori- across the spectrum. It’s more important

from investors about managing the risk zons. that your partners are good and the as-

of how mining companies are financed,” “We are generating a large amount set is of high quality.”

he said. “We believe that shareholders of cash so I think opportunity is shifting Silver Wheaton Inc has built a $US9

PAGE 52 MARCH 2017 AUSTRALIA’S PAYDIRT

billion business on the issues for the direc-

back of its streaming tors.”

agreements and chief African Minerals Ex-

executive Randy Small- ploration & Develop-

wood believes it repre- ment Fund (AMED) is

sents the best source another private equity

of capital for companies group to have made

building projects. considerable impact

“As a source of capi- on the continent, fill-

tal, it is very flexible and ing two funds worth

covenant-light on the a combined $US400

mine operator,” Small- million over the last

wood said. “At the devel- six years. Founding

opment stage, a stream partner David Twist

qualifies as a non-dilu- said the fund steered

tive equity contribution, clear of providing debt

and improves the pro- to publicly listed com-

ject’s IRR.” panies.

Smallwood said the While traditional investors and debt providers remain active, alternative sources of “We don’t look at
Silver Wheaton stream- debt and equity are growing increasingly influential in the African mining space debt and we prefer pri-

ing model of acquiring vate companies in this

non-core, by-product streams allowed with the likes of Taurus Funds Manage- market because listed companies are so

the operator to “focus on its core fran- ment, RCF and Tembo Capital providing undervalued,” he said.

chise”. an investment, and in some cases debt, Private equity and privately held miners

Awram said there was little doubt where traditional lenders are hesitant to are often treated with suspicion because

streaming and royalty financing deals go. of their lack of disclosure compared to

were “here to stay” and wouldn’t be cast “I’ve been surprised how willing private listed vehicles. This can particularly be

aside as momentum returned to the sec- equity has been to take the geopolitical the case with assets located in jurisdic-

tor. risk,” de Calonje said. “Taurus and RCF tions with questionable human rights

“As we have seen over 2015 and 2016, at Tiger Resources [Ltd in the DRC] is an records but de Calonje said there was

almost all of the largest and most sophis- example of private equity groups going to increasing scrutiny among investors.

ticated mining companies have identi- places the commercial banks have left.” “Transparency is more important than

fied that stream financing has been an Taurus in particular has been active in ever,” he said. “Private equity groups

economical and crucial part of creating the debt as well as its traditional equity have investors with very high levels of

a stable balance sheet,” he said. “Also, space, providing project and acquisition transparency and so there is a lot more

smaller developing companies have debt funding to the likes of Tiger, Hum- scrutiny of investments than previously.”

identified that stream and royalties can mingbird Resources plc and Toro Gold Twist agreed and said the risks were
“provide stable, non-dilutive financing Ltd.
not restricted to geopolitics.

which is key to supporting ex- “Some investors are say-

isting shareholders. The smart I’ve been surprised how ing to stay away from specific
management teams have fig- commodities, such as thermal

ured it out and are approach- willing private equity has coal, as well as jurisdictional
ing the streaming companies been to take the geopolitical risk. risk,” Twist said.
about working together. That
Transparency may be on the

trend will only increase as life agenda but it appears there is

comes back into the industry.” little to slow the rise of alterna-

International development banks and Taurus has filled a gap in African re- tive financing options on the continent.

agencies are also increasingly involved sources left by traditional lenders. Ned- With investor numbers at Mining Indaba

in African project development. Ignacio bank Corporate and Investment Bank is up 75% and sideline events such as the

de Calonje, chief investment officer at the only commercial lender to expand 121 Investment Conference drawing

the International Finance Corporation its African mining finance book in re- larger numbers, Africa is a major focus

(IFC) said his group – the investment cent years, having closed 24 deals in for mining investors; whether they come

arm of the World Bank – was investigat- 2016 alone. Meanwhile, others including from traditional equity and debt or alter-

ing ways to expand its $US1 billion min- Standard Chartered, RMB and Barclays native structures.

ing finance book. have withdrawn from the sector. Ned- “There is a ubiquitous field of oppor-

“The IFC is looking at how we can up- bank’s head of mining finance, Nivaash tunity for Sandstorm in Africa,” Awram

size our mining investment,” de Calonje Singh, said companies should be careful said. “Sandstorm and the royalty and

said. “We have reduced our junior min- about the rise of alternative debt funding streaming sector are currently focused

ing company exposure but we are taking packages. primarily on precious metals… but I

more, smaller stakes at the asset level “We have seen the birth and growth of see the streaming business eventually

with majors. It is a question for investors non-commercial institutions in the lend- spreading out into various different com-

‘where can we add value?’ and we look ing space such as equity funds that are modities from rarer metals to energy and

for projects that aren’t in the scope of becoming debt funds,” Singh said. “It is a bulk materials.”

other investors.” very risky situation if you have equity and – Dominic Piper
Equity funds have been the other big debt funds invested in the same compa-

movers in the African junior mining space ny; it can open up corporate governance

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 53

INDABA REVIEW

Friedland’s quest for clean air

Ivanhoe Mines Ltd founder and ex- else is maybe sleeping in the Congo.”
ecutive chairman Robert Friedland China’s Zijin Mining Group Co Ltd

had a notable spring in his step at acquired a 49.5% stake in Kamoa

this year’s Mining Indaba. for $US412 million in late 2015, with

Not because his company’s share Ivanhoe retaining 39.6% of the pro-

price was nearing an all-time high ject, which is subject to ongoing fea-

($C5.03/share at the time of print), sibility work.

but more to do with the promis- A new feasibility study on the Pla-

ing outlook for the key minerals he treef project in South Africa is due

plans to mine – copper, platinum later this year, according to Fried-

and zinc. land, who said development of Shaft

Friedland spent the first half of 1 had progressed to about 210m be-

his hour-long speech detailing the low surface.

negative impacts of toxic smog on Shaft 2 is expected to be the larg-

the urbanised world and why he ex- est in Africa – twice the size of Impa-

pected both copper and platinum to la Platinum Holdings Ltd’s Shaft 16

be in high demand in the very im- – and will be engineered, designed

mediate future. and constructed in South Africa by

Copper and platinum are vital in- Robert Friedland local contractors, Friedland said.

gredients in the make-up of an elec- “At 12 mtpa, Platreef is definitely

tric car; widely considered the optimal “Of course, the beauty of this technol- going to be the world’s largest PGM mine

solution to cleaner air in polluted cities ogy is the only exhaust coming out of the and one with very large by-products of

and counties, such as China. tailpipe is water.” copper and nickel,” he said.

“Current copper production is less than Ivanhoe has been exploring in the “Even our baby mine – our Phase 1

20mt a year, but if we are to have every- DRC for more than two decades, with at- mine – at 4 mtpa is capable of being the

body start breathing clean air, we’re go- tention mostly directed towards the Ka- No.3 platinum mine in the world. As soon

ing to need about 120mt a year of copper moa copper project. However, Friedland as we get to 8 mtpa, we’ll be the largest

metal [for use in electric cars],” Friedland boldly stated the Kakula discovery was producer in the world. At 12 mtpa, we’ll

said. “rewriting the Kamoa story”. be the largest producer by far.”

“In the last 30 years the world has in- A maiden resource estimate for Kaku- Ivanhoe reported in late November that

creased copper production by an aver- la was released in October, comprising “excellent” progress had been made on

age of 328,000 tpa – and that’s been a 192mt @ 3.45% copper for 14.6 blb (1% the upgrade of the existing shafts, pump-

lot of work – but we need, from now on, cut-off) or 66mt @ 6.59% copper for 9.6 ing stations and underground infrastruc-

6.4 mtpa of new copper production just to blb (3% cut-off). Combined with Kamoa, ture at its Kipushi zinc mine in the DRC

maintain where we’re headed on global the total resource stands at 944mt @ as the company edges closer towards a

population estimates. 2.83% copper for 58.9 blb (indicated) production restart.

“We’re not even close to finding and and 286mt @ 2.31% copper for 14.6 blb, Boasting a resource of (measured and
developing the copper the world needs based on a 1% copper cut-off. indicated) 10.2mt @ 34.9% zinc (7% cut-
for clean air [based on] current tech-
nologies. We’re only mining about We’re not even off), Kipushi is the highest-grade zinc
16% of the copper required.” close to finding and project in the world by size, according
developing the copper the to data from Wood Mackenzie.
Four of the world’s most prolific car
manufacturers – DaimlerChrysler, Friedland said he was just as up-
beat about the outlook for zinc as he
“BMW, Ford and Volkswagen – have was for copper and platinum.
committed to “electrifying Europe” world needs for clean air…
“Last time the zinc market went into
by proposing to install a number of deficit, its price more than quadrupled

fuel cell charging stations, each of from less than $US0.40/lb in 2003

which is expected to have a capacity of According to data from Wood Mac- to over $US2/lb in 2006; now we face a

350MW. kenzie, the combined Kamoa-Kakula re- very significant deficit in zinc,” he said.

Platinum-catalysed fuel cells are the source sits among the world’s 10 largest “We have a new disruptive use for

signature feature of the electric vehicles copper deposits – and is also the largest zinc; zinc sulphate, or zinc oxide, is rec-

to be produced by those manufacturers, copper find on the African continent. ognised as an extremely potent fertiliser

with Friedland claiming platinum held the “Kakula is like Kamoa on steroids,” for rice, corn, in fact, for all agricultural

key to unlocking the hydrogen potential Friedland said. “The mineralisation is crops. More than 60% of the soils in In-

required to fuel much larger forms of now over 45km long, it’s thicker than the dia and China are deficient in zinc, and

transport such as buses and trains. ceiling [of the Cape Town International when you grow food none of that zinc is

“A typical small car uses about 30g of Convention Centre], it’s about 10km wide recycled.”

platinum, so when you go from a catalytic and it’s absolutely continuous. Kakula is – Michael Washbourne
convertor to a fuel cell car, you’re using the thickness of this room at 6-7% cop-

almost 10 times more platinum per auto- per. It is absolutely the discovery of the

mobile,” Friedland said. century and it gives you an idea of what

PAGE 54 MARCH 2017 AUSTRALIA’S PAYDIRT

Rule sees bull market ahead

Sprott US Holdings Inc chief executive Rick Rule the people running some of these com-
Rick Rule sees a bull market ahead panies, Rule said regardless of bull or
for the resources sector. and play the game in that patch.” bear markets, many of these companies
According to Rule, 80% of the 1,800 were unsustainable.
“I hope this talk, which is the outcome
of 40 years of making all of these mis- listings in the American, AIM and Aus- Therefore, Rule’s 40 years’ industry
takes, will help you in a bull market that I tralian markets at exploration, pre-pro- experience has taught him that “seri-
see in front of us and I hope that you keep duction and pre-development stages are ally successful people” have the odds
more of the money that you will make in “value-less and have no real reason to stacked in their favour of performing
the next three or four years,” Rule said to be on earth”. strongly in any given market.
delegates during a keynote presentation
at Mining Indaba. While having absolute admiration for “After being successful once it gets
easier,” Rule said.
However, investors must employ dis-
cipline and know within themselves the “The key in a bear market is to not
level of risk they can live with, particularly down trade your portfolio from the high
in junior companies, when picking stocks quality people and high quality projects
to back, Rule said. to low quality people and low quality pro-
jects.
“It’s pretty easy to get shaken out of a
stock in the 50% decline before it runs,” “The most important thing to remem-
Rule said. “There are some people in this ber is that the most important asset, par-
room that are psychologically incapable ticularly in small companies, is people.
of enduring a 50% decline. That is fine if Stick with people, stick with teams that
you know that within yourself. If you know have been hired for expertise that are
that inside yourself, I think the right thing specific to the task at hand.”
to do is buy the very best companies in
the industry – Rio Tinto [Ltd], Cameco – Mark Andrews
Corp and the like – in the bad markets

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 55

INDABA REVIEW

Real direction for
battery minerals

Demand for battery min-
erals such as lithium
and cobalt is “very real”, ac-

cording to a panel of experts

at Mining Indaba.

Lithium was the buzz

mineral of 2016, with spot

prices for lithium carbonate

jumping from about $US7/

kg in July to as much as

$US24/kg in recent times.

Cobalt is widely tipped

to follow lithium’s upward

trend in 2017, with prices

soaring 15% to $US16.70/

lb during January and an

overall increase of more

than 50% over the past 12

months. Industrial Minerals managing editor Barbara O’Donovan convened a panel on battery minerals

Dramatic price rises in which featured Australian consultant Cameron Perks, Bloomberg New Energy Finance’s

lithium and cobalt have Andrew Grant and Edward Lauer from Eurasian Resources Group

come on the back of fore-

cast global demand for electric vehicles, worldwide and he was intrigued to see said he had seen evidence of this with

which account for less than 1% of the to- which projects would come online over his own eyes.

tal car market. the next few years, with forecast demand “The fact it’s happening in this day

However, forecasters expect to see tipped to hit 500,000t by 2020, up from and age is shocking, quite frankly,” Lau-

more than 600,000 new electric vehi- less than 200,000t at present. er said. “It’s a big challenge, but it’s a

cles on the road this year, up from just “All of these companies are racing to big challenge that a number of groups,

270,000 in 2015, and believe that num- become the next lithium producers, but thankfully, are very keen to do something

ber will surpass 1 million by 2020. once we do have enough production it’s about.

“There is more upside risk on battery not going to be viable to bring on 350 “It requires a change to supply chain

demand than downside,” Bloomberg projects,” Perks said. due diligence, and stakeholders need to

New Energy Finance data analyst An- “I think that by 2020 lithium suppliers come together, from government to local

drew Grant said during a panel session will at least be keeping up with demand, level. The importance of governments is

moderated by Industrial Minerals manag- although there are a lot of different lithi- massive, especially for metals like cobalt

ing editor Barbara O’Donovan. um demand scenarios; some quite bull- and lithium which can help transform the

“Big changes are expected in the way ish, some bearish and some in between. way we consume energy.”

we use our cars, from self-drive to auto- “In 2016, people started realising there Another key battery mineral, graph-

mation, to the impact of regulation and might not be enough lithium, but they for- ite, has been somewhat forgotten in the

societal views on the environment, with get it does take time to get these projects wake of increased interest in lithium and

forecasts of up to 3 million additional online, particularly brine projects, so cobalt. While prices might have come off

electric vehicles by 2025.” spodumene projects are the ones better recently, Perks said large flake graphite

Industrial Minerals consultant Cam- placed to take advantage of this demand projects still had a key role to play in the

eron Perks dismissed the notion lithium we’re seeing currently.” future of the industry.

was in a supply bubble, claiming new Cobalt’s rise has given new life to pro- “You will find there are quite a lot of

supply would meet the expected increase jects which produce the metal as a by- large flake graphite projects out there,

in demand, at least in the medium term. product, particularly those where nickel some of those are jumbo flake,” Perks

“There’s a definite difference between and copper are the primary focus of pro- said.

a bubble in investment and supply and I duction. About 98% of the world’s cobalt “Large flake graphite producers are

think a lot of people have been confusing supply comes from other mineral streams also turning to expandable graphite and

the two,” Perks said. and most of that is from the DRC. graphite foil production for things like mo-

“There hasn’t been a lithium supply However, accusations of child labour bile phones. There’s a lot to take into con-

bubble yet – and I don’t think there will at cobalt mines in the DRC have come sideration in terms of graphite, including

be – but I do think it (battery minerals de- to light in the wake of the metal’s recent just how all the chemistry is changing for

mand) is very real.” emergence. the battery anode.”

Based on his research, Perks said Edward Lauer, head of portfolio opti- – Michael Washbourne
there are about 350 lithium projects misation at Eurasian Resources Group,

PAGE 56 MARCH 2017 AUSTRALIA’S PAYDIRT

Sustainability finds a voice

Discussions around sustainable devel- creating a shared vision for velopment performance in
opment are likely to be more promi- all concerned.
nent on the agenda of Mining Indaba the mining industry through
2018. “Unlike many other sec-
tors, there is no primary various collaborations and
It comes after the organisers of Min- point of connection be-
ing Indaba, the International Council of tween mining and one sin- partnership initiatives.
Mines and Metals (ICMM) and South Af- gle SDG [sustainable de-
rica’s Chamber of Mines and Department velopment goal],” he said. ICMM played a key role
of Mineral Resources jointly accepted a “Instead, operations have
memorandum from representatives of the extraordinary poten- in the launch of the United
the Alternative Mining Indaba. tial to contribute to several
different goals at any one Nations-led SDG pro-
For the past eight years, Alternative time.
Mining Indaba has been running concur- gramme in 2015; a set of
rently to the main event in Cape Town “In addition, many mining and metals
and serves as a forum for activists to companies have acquired valuable expe- 17 individual goals and 169
raise concerns about challenges in min- rience in remote and challenging areas
ing-affected communities. about how to operate effectively in col- specific targets which seek
laboration with government, civil society
Activists regularly conduct protests and development agencies. This experi- Tom Butler to address a range of glob-
outside the Cape Town International ence needs to be captured and shared in al development issues.
Convention Centre during Mining Indaba new ways in order to unlock the potential
and were vocal once again outside the that mining can bring to the ambitious in- “We believe that by en-
venue at this year’s event. tegrated global agenda represented by
the SDGs.” couraging closer collaboration and part-
Speaking on the final day of Mining In-
daba, less than 24 hours after accepting Founded in 2001, ICMM’s primary nership we can improve the wellbeing of
the memorandum, ICMM chief executive objective is to improve sustainable de-
Tom Butler stressed the importance of people and give people access to a bet-

ter quality of life,” Butler said.

“To me, the most important SDG is

SDG17, which acknowledges that busi-

ness has a key role to play; that wasn’t

present in the millennium development

goals. It also talks about the importance

of partnerships that we’re to deliver on

the other 16 SDGs.”

– Michael Washbourne

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 57

INDABA REVIEW

Respect the exploration game

Invest Africa founder Rob Hersov moderated a panel on the link between investment and exploration. The panel featured Resolute
Mining managing director John Welborn, Orion Resource Partners portfolio manager Michael Barton, Genesis Investment
Management partner Paul Ballantyne and TSX global mining head of development Orlee Wertheim

Producers need to show greater re- gold and 18m @ 3.02 g/t gold. “In terms of the demographics, active
spect to their exploration depart- “It’s a fantastic time to be out explor- retail investors tend to be people over
ments, according to Resolute Mining Ltd the age of 50 and close to retirement and
managing director John Welborn. ing,” Welborn said. “There’s a wonderful they are, therefore, not going to invest in
risk capital environment to back juniors new and risky ventures,” she said.
“The mindset within our business must at the right time of the cycle and I think
value exploration,” Welborn said during we’re starting to see that again. “I think it’s very important for us as an
a panel session discussing the link be- industry to also engage with the younger
tween investment and discovery. “But I think it’s the responsibility of eve- generation about investing in explora-
ryone in the industry to invest in explora- tion, particularly junior exploration.”
“Operating companies are particularly tion. People in my position, as the CEO
very shovel-focused and if we have budg- of a producer, often don’t understand the Investor appetite for exploration ap-
et constraints or we’ve got problems, we concept that sustainability is intrinsically pears to be on the rise after a barren few
generally take that out of exploration to linked to your ability to explore. years, but London-based analyst Paul
solve our operating issues. Ballantyne, of Genesis Investment Man-
“The only way to be sustainable is to agement, is not convinced the market is
“We need to see exploration as a fun- add to your resources as you deplete out of troubled waters.
damental part of maintaining and sus- them. We are out looking, too, as a pro-
taining our operations. We need to allo- ducer, for new deposits and we’re inter- “Companies we are dealing with are at
cate resources to it and make sure when ested in talking to juniors if they’re on least talking more about exploration,” he
we announce our exploration budgets good ground.” said. “I’m not sure we can see a quanti-
that they are value accretive, they are fiable increase in spending yet. I would
part of our business and they’re not de- Resolute’s approach to exploration doubt it, personally. We are still some-
pleting shareholder value.” received praise from TSX global mining what in a downward cycle.”
head of business development Orlee
Despite his background in investment Wertheim. It was suggested innovative technolo-
banking, Welborn has brought a strong gies could bring investment to the ex-
focus on exploration to Resolute since “There are very few companies like ploration sector, particularly at the junior
being installed as chief executive of the Resolute who are taking those bold steps end, but Orion Resource Partners port-
gold miner in July 2015. and having an open mind,” she said. folio manager Michael Barton did not
agree.
Resolute has already tasted success “There’s a lot of talk about innovation –
with the drill bit under Welborn’s leader- it’s been a key word for the past couple of “You don’t want to be the first one do-
ship, recently making a major discovery years – but I think there needs to be more ing new technologies,” he said. “We [Ori-
just 250m south of the current limit of of an open mind from the industry. I think on] do take more risks than a traditional
mining at its Syama operation in Mali. there’s a lot more that could be done.” bank might, but it’s of big concern to us
if someone is trying something new at an
Drill rigs have been on site since De- Wertheim said more retail participation operation.”
cember to test the full extent of this prom- had been observed in the exploration
ising find, named Nafolo, which recorded plays over the past 12 months. However, – Michael Washbourne
discovery intercepts of 19m @ 2.57 g/t she remains concerned not enough in-
vestors are looking at the sector.

PAGE 58 MARCH 2017 AUSTRALIA’S PAYDIRT

Water worries for mining’s majors

Some of the world’s conflict down the road,”
top mining companies Goldcorp chief executive

have warned their as- David Garofalo said in

sets will be stranded and an interview earlier this

investors will walk away year, calling water the

unless water scarcity is- mining industry’s “No.1

sues are dealt with in key challenge”.

mining regions such as The International

Africa, Australia and Latin Council on Mining and

America. Metals (ICMM), which

After the hottest global groups 23 firms including

year on record in 2016, BHP Billiton Ltd, Rio Tin-

water has shot up the to plc, Anglo American

agenda of many mining and Glencore, published

board meetings, including a position on water stew-

those at Gold Fields Ltd Gold Fields chief executive Nick Holland, Mining Association of Canada ardship to enforce best

and Anglo American plc. president Pierre Gratton, Anglo American chief executive Mark Cutifani and practice.

“Investors say to us, WWF freshwater programmes senior manager Christine Colvin discuss It quotes research

‘don’t talk to us about re- the impact of water and tailings on mining investment showing increased lev-

turns’; they want to know els of conflict because of

how we’re managing water,” Gold Fields water and has a stated goal of reaching water and the financial cost of water is-

chief executive Nick Holland told del- 95% over the next decade. sues, saying water-related infrastructure

egates during a panel session on delev- “Water is one of the greatest con- accounts for approximately 10% of the

eraging investment risk through sustain- straints to new supply of mined products industry’s capital expenses.

able practice on water and tailings. across the industry,” Anglo American Since 2000, water-related issues were

Mining requires water at almost every chief executive Mark Cutifani said. implicated in 58% of mining cases lodged

stage of the process and the bulk of the “Investors can see there’s a risk that with the World Bank Group’s compliance

assets of major miners, including Gold if regions are running short of water, officer ombudsman, which deals with

Fields, are in water-stressed regions in there’s a good chance miners will have complaints from communities around

the southern hemisphere. to divert those resources. What are we mining operations, data published in

“We do need water for our mining op- doing to anticipate that?” January showed.

erations. Right now if we don’t have wa- Companies will often cite examples Holland said his company always

ter we cannot mine,” Holland said. where water has caused conflict. For in- strived to enact sharing agreements with

“Obviously we need to understand stance, Barrick Gold Corp’s operations in the local communities.

where we are going to get the water Peru were disrupted in 2012 because of “In many of our mines we are actually

sources for our operations, but at the protests over water supplies. able to use some of the water we have

same time it’s important to look at the With its biggest mine in the Mexi- and recirculate that to the operations

lifecycle of the operation and try and do can desert, Canada’s Goldcorp Inc, the around us and to the catchments areas

some kind of dynamic predictive [which world’s third-biggest gold miner, is in- where communities are, so that they can

looks at] what you think is going to hap- vesting $C60 million in new technology get access to that water,” he said. “We’ve

pen over the life of the mine.” to slash the amount of water it uses to been very successful with that in Peru.”

Anglo American is striving to use as store mine tailings, or waste. – Barbara Lewis, Reuters, with
little water as possible. It has limited wa- “To draw on wells to sustain your op- Paydirt staff
ter consumption by using 65% recycled
erations could be a source of potential

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 59

INDABA REVIEW

Munali restart awaits funding

Consolidated Nickel Mines below 300,000t an increase
Ltd is confident of restart- in price will be triggered.

ing the Munali nickel mine in With few significant nickel

Zambia within five months. projects brought online in

Of course, the re-start is the last five years, Purkiss

dependent on Consolidated believes when prices start to

attracting the necessary move, they will do so quickly.

$US40 million for working “If you look at some of the

capital and mining fees. demand growths, batteries

Operations at Munali for instance, every electric

stopped in 2011 and since car takes about 40kg of nick-

leasing it from owner Jin- el,” Purkiss said about one of

chuan, Consolidated has the demand fundamentals for

been re-evaluating the project the nickel sector.

for the past three years with “There is a plan in China

an emphasis on pulling down to have 5 million electric cars

operating costs. per annum produced by 2020

“We are focusing on getting and if China says it is going

cash costs down and we have to do it, it probably will do it.

got it down to a level that we That means 200,000t of new

believe is financeable,” Con- nickel is going to be required.

solidated chief executive Si- Simon Purkiss Last year, there was about

mon Purkiss said. 20% growth in nickel use in

Forecast C1 costs have been reduced able to walk through the orebody and has batteries.”

to $US7,000/t nickel. At the time of print allowed for a new resource model to be Targeted production from Munali,

nickel was trading at $US11,155/t. engineered. 75km south of Lusaka, is 4,000-5,000

The company has successfully rede- In constructing the new geological tpa nickel metal over about 10 years, with

signed the resource, made changes to model, Consolidated has found the de- saleable products also including 480 tpa

the mining method and metallurgical pro- posit is open at depth and therefore one copper concentrate, 200 tpa cobalt slat

cess to enhance the project economics of the first things to be done once Munali and 7,790oz PGM concentrate.

at Munali and is eyeing a restart to pro- is back in production is underground drill- Opex costs on a contractor-run opera-

duction in mid-2017, subject to funding. ing. tion are $US10,498/t nickel.

“Purkiss said discussions with suppliers Munali was commissioned in 2007 There is potential for Consolidated to

were under way, as double production to

the mine has been 8,000 tpa nickel in

dewatered and was We are in the middle of Africa, so any the future.
ready to run. market for our concentrates is 2,500km “We have also

“It can be put back looked at a better

into production very away by road and then ship but we are looking value-add concen-
quickly. We already at a value-add step to produce nickel metal at trate, so we are
have a DMS [plant] now producing two

sitting in Johan- site which will reduce our concentrate costs. concentrates; cop-
nesburg and we are per running at about

talking to off-takers, 25% and 35 g/t pal-

etc. We are five ladium and then the

months from the start of being back into and has been on care-and-maintenance nickel concentrate, which we can get up

production,” Purkiss said. since 2011. to about 12%,” Purkiss said.

“Currently, there is a seven-year mine During the shutdown, Consolidated “We are in the middle of Africa, so any

life, with a 60% IRR, $US66 million NPV has maintained community relations and market for our concentrates is 2,500km

and from drilling underground we think has the support of both community and away by road and then ship but we are

we can quite comfortably extend mine government to switch Munali back on. looking at a value-add step to produce

life to 10 years with a 90% IRR. We are The volatility in nickel prices has al- nickel metal at site which will reduce our

capitalising on $US180 million already ways been a challenge for companies concentrate costs.”

spent on the project. There is also up- to navigate around and the large nickel – Mark Andrews
side in the area with an inferred resource stocks around the world are not making

500m away for us. None of this has been it any easier for Consolidated to revive

included in the current operations and Munali.

that is why we think we are fairly comfort- Purkiss said the timing of the soft draw

able in extending the mine life.” down of nickel stocks would be key to

Purkiss said the task of re-evaluating price improvements, with Consolidated

the geology was made easy by being forecasting that once nickel stocks fall

PAGE 60 MARCH 2017 AUSTRALIA’S PAYDIRT

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INDABA REVIEW

Walkabout leaps into contention

Walkabout Resources Ltd has official-
ly emerged as a serious contender
in the race to become the ASX’s next

graphite producer following the release of

a robust DFS on the Lindi Jumbo project

in Tanzania.

Released during Mining Indaba, the

DFS confirmed Walkabout could develop

Lindi Jumbo for an upfront capex of just

$US38.7 million (plus sustaining capital

of $US5.6 million), making it one of the

lowest capital intensive projects among

the graphite hopeful’s peer group.

The mining plan is based around a

high-grade plant feed of at least 17%

TGC during the first three years of pro-

duction and at least 16% TGC over the

remaining life-of-mine. On-mine cash

costs of $US292/t in concentrate are

proposed for delivery at the mine gate.

Other key findings from the study in- A robust DFS on the Lindi Jumbo graphite project in Tanzania
cluded a pre-tax NPV of $US323 mil- helped lift Walkabout’s share price last month
lion with IRR of 97%, average annual

free cash flow of $35.8 million, payback cused on corporate activities, including draising mode and therefore allow us to

within 22 months, average annual EBIT- product marketing and project finance. get our project development ahead.”

DA of $US47.7 million and LOM revenue “The company has achieved its first Walkabout is competing with the likes

of $US1.26 billion, based on a 20-year primary milestone and therefore we now of fellow Tanzanian-focused hopefuls

mine life model. shift from being an exploration com- Kibaran Resources Ltd, Magnis Re-

Walkabout received some love from pany to a development company, which sources Ltd and Graphex Mining Ltd,

investors on the back of the DFS release, means that we have to approach things along with Battery Minerals Ltd and

with the company’s stock up 60% since slightly differently,” Mulligan said. Syrah Resources Ltd in neighbouring

the start of the year to 12c/share at the “We have two short-term requirements Mozambique, to establish a graphite op-

time of print. in terms of the fast-track. One is to ac- eration in East Africa.

“The DFS delivered the lowest unit of cess the development funds as quick With several players at similar stages

production of our peer group, it delivered as possible without stalling the project. of development all looking to make an

the lowest capital on a production tonne The other is to fast-track the engineer- imprint in a relatively small market, Mul-

basis of our peer group and it delivered ing and stick to a very tight development ligan said an interesting time loomed for

a high NPV and IRR,” Walkabout execu- timeframe which we’re achieving through the graphite space.

tive director Allan Mulligan told Paydirt commencing some front-end engineer- “What has to be proven is whether the

during a site visit last month. ing design with a preferred EPC contrac- demand forecasts manifest themselves,”

“It also showed there were no fatal tor. he said.

flaws and the project will be able to pro- “That will continue while we are in fun- “If the demand grows, then those fore-

ceed with no technical or casts will be accurate and

financial risk.” pricing will come under at-

Walkabout intends to tention. However, if excess

fast-track development of graphite is produced by the

Lindi Jumbo to take ad- industry, then the prices

vantage of the positive will remain low and many

forecast market conditions projects will not be viable.

for flake graphite deposits The successful graphite

which host high ratios of companies will be those

large and jumbo flakes. that can produce a pre-

Mulligan voluntarily mium quality product at the

stepped down as manag- lowest price.”

ing director last month – Michael Washbourne
as he prepares to spend

more time on project de- Walkabout directors Allan Mulligan, Andrew Cunningham and Thomas See the April 2017 edi-
velopment within Africa, Murrell with chairman Trevor Benson at Mining Indaba tion of Australia’s Paydirt
allowing his chairman Tre- for a feature length story
vor Benson to take on a on Walkabout Resources
full-time executive role fo-

PAGE 62 MARCH 2017 AUSTRALIA’S PAYDIRT

OreCorp sailing through
Nyanzaga PFS

Development stories in Af-
rica have been scarce in
recent years but there is one

gold project in Tanzania that

has investors worldwide in a

spin.

OreCorp’s Nyanzaga pro-

ject, near Mwanza, is being

fast-tracked through the PFS

stage with completion set for

this quarter.

Last year, a scoping study

into Nyanzaga revealed the

potential for OreCorp to pro-

duce 220,000 ozpa from open

pit operations over an initial

five years.

The mine is expected to be

ramped up to an average life-

of-mine 182,000 ozpa at AISC

of $US798/oz.

Pre-production capital

costs of $248 million have

been estimated, with OreCorp

planning to use a 4 mtpa CIL

plant.

The study was optimised OreCorp chairman Craig Williams and managing director Matt Yates take investors
through the Nyanzaga gold story, near Lake Victoria, Tanzania
at a $US1,250/oz gold price,

with the precious metal trad-

ing at $US1,234/oz at the time of print. $US100 million and an IRR of 21% with cise this right, OreCorp can take its own-
a payback period of 2.3 years following ership in the project to 51% by making
OreCorp hopes for a better reaction in commissioning were also calculated. cash and royalty payments up to $US15
million, based on milestones achieved.
the market than its counterparts in West A DFS is expected to be completed in
Q3, with West African to also include re- “As it stands at the moment, ownership
Africa – Cardinal Resources Ltd (Ghana) source and reserve updates for the M1 is a DFS defined outcome on the NPV of
and M5 deposits at Sanbrado. the project, so you won’t know that un-
and West African Resources Ltd (Burki- til we deliver the DFS, from which point
In late 2016, West African’s ESIA was the ownership gets resolved in 60 days,”
na Faso) – have received in recent times. approved and a mining permit for Sanb- OreCorp chief executive Matt Yates told
rado was also issued earlier this year by Paydirt in light of a recent visit to site.
Late last year, Cardinal was punished the relevant Burkinabe authorities.
OreCorp and shareholders alike are
by investors for less than flattering met- West African hopes to start early con- keen to have a larger percentage of the
struction work by the end of the year and project and Yates said he would consider
allurgical results despite announcing a enter production in 2019. the opportunity to act on any deal earlier
than upon DFS outcomes.
maiden 4 moz gold resource from Nam- During this timeframe, OreCorp will
also have significant news flow to re- – Mark Andrews
dini. lease, with a DFS expected to flow
straight on from the Nyanzaga PFS. See Paydirt’s sister publication Gold
Meanwhile, last month, West Afri- Mining Journal April-June 2017 edition
The company will also announce a re- for a full feature on OreCorp
can released a feasibility study on the source update this year, however, what
the market is keenly anticipating is defini-
Sanbrado open pit project and forecast tion of ownership of Nyanzaga.

150,000 ozpa gold production for an ini- OreCorp is earning an interest in the
project from Acacia Mining plc.
tial three-year period.
Dependent on the NPV in the DFS,
Capex of $131 million was estimated Acacia may elect to retain a 75% interest
by paying OreCorp a fee based on NPV
for a project transitioning into a 93,000 and expenditure. If Acacia does not exer-

ozpa operation over the current nine-

year life-of-mine. West African’s share

price retreated on the day of the feasibil-

ity study result, with the company ending

the day 16% down at 23c/share.

A base case gold price of $US1,200/

oz, using a 5% discount rate, estimated

Sanbrado to generate a pre-tax NPV of

$US143 million, IRR of 27% with a pay-

back period of 2.1 years. Post-tax NPV of

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 63

INDABA REVIEW

Bannerman still a
big yellowcake believer

Uranium may have collected the wooden spoon for the worst-per- that is still very attractive,” Bannerman
forming commodity of 2016, but that has done little to deter Ban- chief executive Brandon Munro told Pay-
nerman Resources Ltd from advancing its Etango project in Namibia. dirt on a recent site visit in Namibia.

The price of U3O8, commonly referred to continue moving a very large project “We’ve had very good board continuity
to as yellowcake, tumbled 41% last year, forward during some very difficult mar- during that period and we’ve been very
slipping below $US18/lb in November – a ket conditions and, I’m pleased to say, disciplined and skilled at corporatising
12-year low – according to research from emerge at the other end with a project the vast amount of process and corpo-
nuclear reporting experts Ux Consulting. rate information that we’ve generated
Brandon Munro over that time. I suppose my previous
Uranium’s fall contrasted the pricing involvement with the company gives me
lifts experienced in gold, zinc, coal and a lot of context that I might not otherwise
iron ore, with the halcyon days of yellow- expect to have on those business as-
cake commanding nearly $US140/lb in pects.”
mid-2007 now all but a distant memory.
Munro, a corporate lawyer, replaced
At these low prices, no uranium mine the popular Len Jubber at the helm of the
in the world is profitable, offering little en- company almost 12 months ago, marking
couragement to junior developers such his return to Bannerman where he acted
as Bannerman and fellow ASX-listed as in-country manager and general man-
hopefuls Toro Energy Ltd and Vimy Re- ager of corporate development five years
sources Ltd in the interim. earlier.

Bannerman, however, has always With the Etango heap leach demon-
taken a long-term view on Etango, 38km stration plant in full swing, Munro’s ap-
east of Swakopmund. The company pointment signalled the next phase of
listed in 2005 when the price of uranium the company’s lifecycle; engaging with
was around $US35/lb and completed a investors in a bid to secure project fi-
DFS in 2012, just 12 months after the nance. There is just one obvious major
Fukushima incident crippled the sector. hurdle standing in the way of completing
that mission.
“Bannerman is in a fairly small group
of companies that have been solely com- “As we stand, the only challenge for
mitted to a single project for over a dec- Etango is the [uranium] price,” Munro
ade and I think that focus has enabled us said. “The technical work has been done
very well, we’ve got a simple orebody,

PAGE 64 MARCH 2017 AUSTRALIA’S PAYDIRT

conventional mining, conventional pro-“Demonstration plant testwork confirmed impressive leaching dynamics and lower acid consumption for the project
cessing which has been de-risked be- …now is the time to be getting exposure to
yond doubt by the demonstration plant, a the sector, given we’ve only just bottomed
superb investment jurisdiction and envi-
ronmental clearance on top of that. out of a 12-year bear market.

“My job when I’m talking to investors is

to help them understand the basis for our almost two years before wrapping up described as “exceptional leaching dy-

view that the uranium sector is primed for January when optimal particle size was namics” where 93% of uranium was ex-

extreme volatility. Once investors appre- achieved. tracted from the Etango ore within 20 and

ciate that, they can quite readily under- Favourable results were reported from 22 days of open and closed circuit leach

stand now is the time to be getting expo- the very first phase of demonstration irrigation respectively.

sure to the sector, given we’ve only just plant testwork, including what Munro Testwork also demonstrated lower

bottomed out of a 12-year bear market.”

Prior to Jubber’s departure, Banner-

man released an update of the original

DFS. The optimised study identified a

number of improvements, including a

revised NPV of $US419 million (up from

$US69 million) and IRR of 15% (up from

9%) as well as increased average annual

production of 7.2 mlbpa over an initial

open pit mine life of 15.7 years.

Other key outcomes were reduced

life-of-mine operating costs of $US38/

lb (down 17%), a lower pre-production

capex of $US793 million (down 9%) and

payback within 4.4 years of first pro-

duction (down from 6 years). Both stud-

ies used a base case uranium price of

$US75/lb.

Bannerman is now embarking on a

new update of the DFS following the suc-

cessful completion of the sixth and final

phase of the Etango heap leach demon- Metallurgist Christal Lebusa and exploration superintendent

stration plant programme, which ran for Tinus Prinsloo inspecting core at the company’s base

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 65

INDABA REVIEW

Bannerman’s investment in a heap leach demonstration plant enhanced Etango’s reputation as one of
the world’s leading uranium development projects

acid consumption averaging 14.4 kg/t, market that’s showing the first signs of Christal Lebusa – in conjunction with
compared to the 17.6 kg/t estimated in being receptive to success in uranium.” renowned global engineering firm Amec
the DFS, with no impurities observed and Foster Wheeler plc, Munro will continue
potential for further reagent optimisation. The latest DFS update, which is slated his task of winning over project financi-
for completion and release in the second ers.
“We’re very pleased with the results, half, will target further capital and operat-
not only because the results themselves ing cost reductions as well as other “key The uranium spot price jumped to
are excellent and give us some real value value drivers” across mining, processing $US26.50 in early February before slip-
to unlock, but it was a gusty call from our and infrastructure. ping back marginally to $US25/lb at the
board in that market to continue investing time of print. The positive movement co-
a very substantial amount to keep mov- While the DFS update will largely be incided with top exporter KazAtomProm’s
ing the project forward,” Munro said. the responsibility of the company’s in- decision to cut production by 10% (about
country team – managing director, Na- 5 mlbpa) in 2017 and Japan’s TEPCO Inc
“It’s very rewarding to see those very mibia Werner Ewald, exploration super- declaring a force majeure on a key deliv-
positive results being delivered into a intendent Tinus Prinsloo and metallurgist ery contract with Cameco Corp.

Managing director, Namibia Werner Ewald “As the uranium price starts to re-
cover, there will be little bumps both up
and down along the way and the TEPCO
termination is nothing more than a small
bump,” Munro said.

“Cameco will need to reorganise
855,000 lbpa within a very large portfolio
and I think they’re in a position to supress
any pricing or market impact as a result.”

Munro said his understanding of ura-
nium market dynamics had been “signifi-
cantly enhanced” since taking the reins
at Bannerman and he believed it would
only be a matter of time before institu-
tional investors realise the yellowcake
boat is preparing to leave the docks.

“The institutions who either had the
insight to go long in metallurgical coal
or who were trapped in illiquid positions
before metallurgical coal corrected now
have outperforming portfolios – and the
converse is true of institutions who were

PAGE 66 MARCH 2017 AUSTRALIA’S PAYDIRT

light on metallurgical coal, for example,” Bannerman achieved optimal particle size during the sixth and final phase of
Munro said. the demonstration plant programme

“We don’t need to think back very far to stands very tall on the world stage in one the commodities ladder for much longer.
appreciate that very, very few commen-
tators saw that coming. With uranium, of the most interesting and critical indus- “Over the next 6-12 months there’s a
we’ve got a very cohesive thesis as to
why it’s coming and how it will come, and tries you can consider.” number of uranium price catalysts that
the only question is timing.
Speaking to Munro, it is clear he is rel- could come into play and the Bannerman
“But, even with the timing uncertain-
ty, I think institutions and investors are ishing his time in the hot seat at Banner- investment opportunity is centred on su-
beginning to understand they have to
have some exposure so that if the timing man despite working with a commodity perior exposure to that upside volatility,”
comes abruptly, as we think it will, they
aren’t left on the sidelines.” few want to go near. However, the enthu- he said.

Munro pointed to China’s ‘Airpoca- siastic and upbeat young executive does “The market generally understands
lypse’ and further concerns around cli-
mate change policy as two of the key “not expect uranium to be at the foot of that any new production in uranium of
catalysts which could drive a long-term any scale requires significantly high-
pricing recovery for uranium.
Along with diamonds, er uranium prices and on that curve
Such a turnaround could likely put ura- we currently sit in the middle. Follow-
nium-rich jurisdictions such as Namibia
at the forefront of investors’ minds. The uranium is the most ing our DFS update, we hope to be
country is home to a number of large important natural resource towards the front.”
operations, including Langer Heinrich,
Husab and Rössing (which Etango is ex- export to Namibia. – Michael Washbourne
pected to be twice the length of).

Namibia, which has a population of just
2.3 million, recently lifted a decade-long
moratorium on uranium exploration and
Munro expects to see more juniors return
to the southern African nation as a result.

“Along with diamonds, uranium is the
most important natural resource export
to Namibia,” Munro said.

“In addition to the financial and
social benefits a large scale indus-
try like that offers, by its nature, ura-
nium production provides a level of
bilateral credibility that’s hard to find
elsewhere. By being a top three pro-
ducer in the world, Namibian uranium

The Etango open pit will be twice the size of the nearby Rössing mine
AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 67

INDABA REVIEW

Smart choice by
Orion at Prieska

For Errol Smart to be involved in a mining project in South Africa, 430,000t copper at an average 1.42%
the proposition needed to be simple. and 1mt zinc at an average 4.2%.

That meant the asset had to be of the Prieska, in Areachap Terrane, was first About 4,000 people were employed to
highest quality, close to all relevant in- drilled in 1968 and was in project devel- work at the mine until closure in 1991.
frastructure and free of any community opment a year later.
issues which is often a deterrent for com- Since then Prieska has been rehabili-
panies entering South Africa. By 1971, a 68km water pipeline from tated and remained dormant until now,
the Orange River was finished to com- with Orion managing director Smart ada-
All criteria considered, it appears plement other infrastructure items com- mant the time is right to revive the historic
Smart and the team at Orion Gold NL prising what was touted as the biggest operation.
have found their perfect match in the mining operation in the Southern Hemi-
brownfields Prieska zinc-copper pro- sphere at the time. “For so many years now the indus-
ject at Copperton in the Northern Cape, try has been such a mess and all of a
about 400km north of Cape Town. The following 20 years saw 47mt sudden we’re the flavour of the season
ore milled at Prieska for production of again,” Smart told Paydirt in light of a
site tour which included keen investors
and analysts.

PAGE 68 MARCH 2017 AUSTRALIA’S PAYDIRT

“While awaiting approvals, Orion requested its drillers apply innovative techniques to test underground
“With zinc hitting an The way that we structured the deal of $5.3 million in cash
eight-year high [in the first allowed us a year to really enhance and shares.
week of February] and the project and be able to get more
copper flying, I think it is Orion issued sophis-
exactly the right time for ticated and professional
investors a convertible

Prieska. There are very comfort using our own data and our own note up to 307,692,308
few significant scale zinc derived data. It has all been very positive, at 2.6c/share to fund
plays to come online in acquisition costs pay-

the next five years, there no negative surprises only positives so far. able to Agama Explora-
are a lot of small ones and tion & Mining Pty Ltd.

there are some revivals of Orion will end up with

similar scale but nothing that is really off Last month, Orion announced an $8 a 73.33% interest (26.66% BEE owner-

the radar screen. million convertible note issue to fund the ship) in Prieska and Marydale, with a

“There is still a deficit in zinc. It is very acquisition of Prieska and the Marydale maiden resource expected from the for-

timely and Prieska is something that is gold-copper project for a consideration mer in the next few months.

going to be a long-term and poten- “We are a little bit behind

tially significant zinc producer.” schedule, we probably have an-

Any hesitation Smart had about other six weeks of drilling to go

operating in South Africa, a country then we will have a maiden open

with its fair share of bureaucracy to pit resource out shortly after,”

contend with, has been nullified by Smart said.

the value inherent at Prieska and With copper and zinc running

the other base metals opportuni- well in the commodity cycle, the

ties Orion has along 100km of the maiden resource at Prieska may

Areachap belt. be the milestone to trigger enthu-

“I have been convinced for a year siasm in the market for Orion.

now already,” Smart said. “When The company, like many on

we started putting our money in, the ASX, is dealing with stricter

our minds were made up. The way reporting guidelines introduced

that we structured the deal allowed by ASIC last year.

us a year to really enhance the pro- Companies must refrain from

ject and be able to get more com- providing outlooks and expecta-

fort using our own data and our tions in market releases, as ASIC

own derived data. It has all been intends to provide more protec-

very positive, no negative surpris- Orion managing director Errol Smart says the time is right to tion to investors.

es only positives so far.” revive the Prieska zinc-copper project in South Africa While Smart acknowledges

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 69

INDABA REVIEW

ASIC’s ploy, it doesn’t make him “Orion has been very active in drilling, with five rigs in operation across its portfolio late last year
any less frustrated. It is a little bit frustrating at the moment because
our hands are behind our back as we can’t make
“It is really difficult to give inves- disclosure on ongoing appraisals. As a board, we at
tors a fair appraisal of the project least have the comfort of the information we have in
because when they read about
the project they see no JORC re-

source and they don’t have any hand that this is a very sound, solid project.
sense of how advanced we are

in the engineering type work we

are doing in parallel with our current re- moment because our hands are behind we have in hand that this is a very sound,

source work,” he said. our back as we can’t make disclosure on solid project.”

“It will all come together in the coming ongoing appraisals. As a board, we at Orion can start to build investor confi-

months. It is a little bit frustrating at the least have the comfort of the information dence further and add to its own knowl-

edge base now that it has access to the

underground at Prieska.

From previous operations, Orion has

inherited an 8.8m diameter concrete-

lined vertical shaft down below more

than 1,024m and three separate ramp

declines providing access to the deepest

ore at 1,140m.

Regulatory permission to access un-

derground workings at Prieska was re-

ceived in February, affording Orion entry

to assess the condition of the existing

shaft and other underground infrastruc-

ture, as well as conduct drilling.

While awaiting approval to access the

underground, Orion made a head start on

its investigations of its potential by adopt-

ing angled drilling at 15-20 degrees.

“We had to develop something very in-

novative and we actually had to get ma-

Orion chairman Denis Waddell and Errol Smart entertained a group of investors, chines developed especially for the job

analysts and Paydirt on a site tour of Prieska, 400km north of Cape Town and it has paid off,” Smart said.

PAGE 70 MARCH 2017 AUSTRALIA’S PAYDIRT

Orion has a pipeline of projects to explore
once Prieska is up and running

its product to a number of refineries in

the region.

However, whether or not the refineries

are set up to handle sulphide ores is a

question to be answered.

Orion geologist Clive Benhura at the core shed Orion is keeping a close eye on Ve-

danta Resources Inc – a presence in

“It has given us a big head start on Historical production from Prieska was the Northern Cape through its holding in

getting access from the underground. If characterised by a high-quality concen- Black Mountain Mining and its Aggeneys

we had to wait to get access before we trate with a very low toxic metal content project – as the Indian mining house has

drilled our first hole, then we wouldn’t be which is much sought after in today’s expressed a need for a sulphide refinery.

where we are now with the project.” market. Orion may also find Vedanta looking

Early indications are that mining will Smart is confident similar material will back at the company, particularly upon

start from the +105 open pit (explora- be produced this time around and that upcoming milestones such as the maid-

tion target of 3-4.5mt @ 1-1.6% copper customers in North America and Europe en open pit resource, expected in the

and 1.3-2% zinc) before Orion targets will be willing off-takers. near future.

the deep sulphide ore (exploration target “Countries with high environmental “Vedanta have their mouths full with

7-11mt @ 1.2-1.8% copper and 3.9-5.9% controls that are running refineries obvi- everything they are trying to do on their

zinc). ously give preference to clean concen- own properties at the moment,” Smart

The mine is flooded to 400m from sur- trates coming in and hopefully with a bit said. “But, certainly they will be aware

face, with Orion hoping that feasibility cleaner quality concentrate we can actu- of who the other potential large-scale

studies will prove the viability of conduct- ally get a premium value for our concen- concentrate producers in the region are

ing dewatering activities alongside the trate product,” he said. because if they are looking at developing

start of open pit mining. Its position within the SADC commu- a refinery they might not just want to be

Smart said even before open pit mate- nity means Orion can potentially export reliant on their concentrate.”

rial had been exhausted the mine would

have been dewatered, leaving the com-

pany well poised to dovetail into under-

ground operations.

He didn’t expect any complications

transitioning from open pit to under-

ground mining.

“I think it will work very well,” he said.

“I think we are very fortunate because

there was a lot of test work that was done

during the last 10 years of operation that

incorporated mine scale tests on that in-

termediate ore, the closest intermediate

ore, which we are targeting for our open

pit and the underground ore.”

Smart said the company could lever-

age from the metallurgical process de-

veloped and published in the South Afri-

can Journal of Mining and Metallurgy for

the deposit.

Prieska is the 28th biggest VMS de-

posit ever discovered in the world and

unlike other VMS deposits it boasts clean

metallurgy amenable to blending. The Namaqua-Disawell area is believed to be similar to Western Australia’s Fraser Range

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 71

INDABA REVIEW

Orion received a permit to access the underground shaft at Prieska in February. The company can now assess the
acidity of the water and its effect on the shaft

While zinc and copper concentrates copper mine going again and then there Orion holds 3,830sq km of ground in
are the main game, there are significant is a whole exploration pipeline [behind the Fraser Range and has received $2
silver and gold credits. At this stage, it],” Smart said. million in R&D funding for the property,
the precious metal component won’t with some of the information garnered
be quantified in the resource, however, Exploration has been limited in the past applied in the Namaqua-Disawell project
there is potential for monetising the com- 20 years at Prieska and while drilling re- area.
modities during mining. mains ongoing at its flagship, Orion has
not ignored projects it has in its 1,790sq Rounding out the company’s multi-el-
Additionally, there is potential for Orion km ground package in the Areachap belt. ement portfolio is the Conors Arc gold-
to make an economic case to extract the silver project in Queensland.
barite at Prieska, which is commonly The company had five rigs in opera-
used around the world for drilling fluid in tion late last year, with the Kantienpan The company believes all its projects
the oil and gas sector. At the time of print, zinc-copper deposit at Masiqhame and are highly prospective but Prieska is by
barite was worth about $US180/t. the Marydale gold-copper project being far the most advanced and most likely
drilled at the time of print. to attract market attention, particularly
However, Orion’s priority is to produce as zinc ($US1.35/lb) and copper (over
a maiden resource from the +105 level Furthermore, the Jacomynspan de- $US2.79/lb) continue to trade in value ar-
open pit to demonstrate Prieska’s poten- posit at Namaqua-Disawell is a nickel- eas not seen for some time.
tial to the market. copper play bearing semblance to those
found in Western Australia’s Fraser – Mark Andrews
“Our focus is to get the Prieska zinc- Range.

Assays from the +105 open pit have exceeded expectations and Soon there will be 75MW of solar power available in striking dis-
include intercepts of: 22m @ 10.8% zinc, 1.38% copper and 0.3 tance of Prieska. Orion can potentially purchase solar power at a big

g/t gold from 57m, 12m @ 4.14% copper, 1.89% zinc and 0.29 discount to the regional grid. The option will be a significant money
g/t gold from 57m, 20m @ 8.58% zinc, 2.21% copper and 0.3 g/t saver for the company, while going green ticks many boxes in the
eyes of potential financiers
gold from 48m

PAGE 72 MARCH 2017 AUSTRALIA’S PAYDIRT

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POTASH/PHOSPHATE

Danakali ready for
final push

Danakali received the mining licence for its Colluli potash
project in Eritrea at the beginning of February

Danakali Ltd has started 2017 at a whirlwind pace with the mining licence for its Colluli potash project in Eri-
trea approved and front-end engineering design work starting. Managing director Paul Donaldson is now con-
fidently predicting a start to construction at Colluli in early 2018, and the company’s share price performance
since the turn of the year is indication that fertilisers, and potash in particular, could be one of the commodities-
of-choice in 2017.

When Paydirt visited Danakali Ltd’s sanctions over arms imports due to its This has included Danakali hosting
Colluli potash project late last year, role in the ongoing political struggle in various investor, analyst and engineering
the company was somewhat stagnant. the region. The sanctions have reduced groups on site to give them a first-hand
It had been marketing its positive DFS the appetite of foreign investors but Don- look at the environment – both political
since November 2015 but its flat share aldson’s claim that doing business is and ecological – which the company is
price graph betrayed the fact that inves- readily achievable has been supported operating in.
tors remained wary of both potash and by recent activity.
Eritrea. “Over the last three months we have

However, by the time Paydirt caught Paul Donaldson
up with managing director Paul Donald-
son in February on his return from the
annual Mining Indaba week in Cape
Town, the former BHP Billiton Ltd gener-
al manager could reflect on a stellar start
to the year.

“A lot has happened in the last three
months,” Donaldson said of a period
which has seen Danakali’s share price lift
from 39c in October to as high as 78c in
January.

“It has always been a fantastic story
but it just needed distilling into a simple
message and I think the main reason for
the share price performance is that it we
have been able to achieve that and dispel
some of the myths surrounding the pro-
ject and Eritrea,” Donaldson said.

One of the smallest countries on the
Horn of Africa, Eritrea is subject to UN

PAGE 74 MARCH 2017 AUSTRALIA’S PAYDIRT

been getting a number of different The company plans to begin construction on the 1.2bt project in early 2018
groups along and it has worked; they’ve
developed an understanding of the coun- MoUs with eight parties and Donaldson from a desalination plant but at the end
try and the opportunity and realigned is confident the process will be complet- of the DFS we hit a sub-surface aquifer
perception of Eritrea and the project itself ed before the end of the year, paving the next to the project with what looks like
with reality.” way for financing discussions to begin in a decent amount of water in it. It could
earnest. potentially eliminate the need for off-site
The company had three engineering water altogether, producing a saving of
groups on site ahead of the front-end “The off-take will be a significant event, $15 million.”
engineering design (FEED) contract and not just for the desirability of the project
Donaldson said that process alone had but also for the significant input into the The FEED process will also deliver a
given the project more credibility. funding process,” he said. procurement strategy which will provide
input to the financing discussions as Da-
“If you look at Fluor [which eventually The FEED also needs to be complet- nakali is considering export credit and
won the FEED job], they were happy to ed ahead of final financing discussions finance agencies as possible funding
come to Eritrea and are committing to it. and Donaldson is confident the design sources.
They did their due diligence and looked process will also present some potential
at the country and are comfortable es- savings measures. “Debt will be made up of traditional as
tablishing themselves there. It is an ex- well as non-traditional sources,” Donald-
ample of the outcomes groups arrive at “The FEED optimisation process has son said.
when they visit the country.” identified a number of key areas for cost
compression, particularly around pre- The company plans to have off-take
If the political risk question began to stripping and water,” he said. and finance in place before the end of
be addressed by the various site visits, 2017.
the technical aspects of the project were The FEED project team is investigating
clearly evident to visitors. The 1.2bt Col- the potential to reduce Colluli’s pre-strip “We want to be in a position to start
luli deposit starts just 16m below surface in an effort to reduce overburden and construction in early 2018,” Donaldson
– making it one of the few open-pittable tramming distances and is also pursuing said.
sulphate-of-potash (SOP) projects in the alternative options for water.
world – and the project is located just – Dominic Piper
180km along the coastal highway from “The biggest opportunity is perhaps in
Massawa, a port which is under-utilised the elimination or reduction of off-site wa-
and has recently developed ship-loading ter requirements,” Donaldson said. “Cur-
infrastructure. rently, we are looking at an 80km pipeline

Donaldson said the company’s recent
trip to Cape Town to meet with investors
from across the world reinforced Colluli’s
position as a leader in the SOP develop-
ment space.

“The response from the investors and
financiers we spoke with was unanimous;
we are now clearly the most advanced
and best SOP project on the market,”
Donaldson said. “If you look at what the
resource and the jurisdiction have to offer
and then consider the advantages in ge-
ology, geometry, geography, the growth
potential and the government support we
receive, you realise how well placed we
are.”

Donaldson and Danakali chairman
Seamus Cornelius headed to Cape Town
with copies of the freshly awarded min-
ing licence in their pockets. Donaldson
said the licence award was another key
milestone in pushing Colluli ahead of rival
SOP projects.

“As far as deliverables go, we’ve done
well versus competing projects,” he said.
“The licence was vital but there are other
milestones in front of us this year,” he
said.

Most pertinent will be off-take agree-
ments and project financing.

“We work through things in a pragmat-
ic manner and in off-take we are working
on a number of options but we don’t plan
to rush into anything.”

The company has signed off-take

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 75

POTASH/PHOSPHATE

Agrimin to serve PFS in 2017

Graphite and lithium are niche markets Like most brine deposits in WA, Mackay is capable of producing 52% K2O,
to have taken off in recent times and which is at the upper end of the quality spectrum
now with a shortage of cobalt on the ho-
rizon. there is great interest in the blue production of a specialty fertiliser to sat- meaning operating costs are the biggest
metal. isfy demand which has been lacking in factor in the total cost equation.
the past.
However, there is another mining op- Ironing out of such costs is currently
portunity some believe is being under- Current prices for standard SoP prod- under way, as is another component of
played at the moment and that is the pot- ucts are $US500/t; a $US275/t premium the PFS; the next round of evaporation
ash sector. over muriate of potash (MoP). trials.

“The outlook we have for SoP [sul- The price differential between SoP and Evaporation trials can take six months
phate of potash] is quite amazing,” Ag- MoP products is the highest it has ever but it is a process Agrimin will take its
rimin Ltd managing director Mark Savich been, which is born from the shortage of time completing.
told Paydirt. supply of the premier SoP products.
Savich said the PFS was on track to be
“It is the high-value product that we Agrimin ran a scoping study over Mac- finished sometime in the second half of
use on fruit and vegetables, so when kay last year and upon release of the re- 2017, possibly in September, which could
you look at the growth and demand for sults, the company’s share price spiked attract more attention to Agrimin.
different crops ; fruit and vegetables are at nearly 80c/share.
the fastest growing segment which is re- The company has three institutions
ally driven by the rising middle class and Details of the study completed by Ly- on the register, which is better than the
people trying to eat better.” copodium included SoP production of handful of other companies in a similar
370,000 tpa over 20 years at an average position on the ASX.
With the impacts of climate change total cash cost of $US256/t FOB.
and rising sea levels, there is an increase Savich said Tier 1 institution JP Mor-
of saline soil around the world and using Development costs estimated in the gan recently showing support for Da-
traditional potassium chlorides in fertilis- scoping study on Mackay are $US259 nakali Ltd in Eritrea was a good sign,
ers will only add to the saline environ- million, based on granular and standard however, there was a long way for the
ment. (powder) 52% grade SoP product via a industry to go yet.
conventional flowsheet used in Chile,
“We are going to see a lot of peo- China and the US. “I think definitely where there is a huge
ple shift away from that and buy SoP,” amount of upside to come from is actu-
Savich said. “All of the plant and equipment is ally getting those institutional and more
standard,” Savich said. “It is all pretty generalist type fund managers across
“Also, with water becoming scarce, simple and requires pumps, pipes and the space and interested,” he said.
farmers who would use irrigation to wash tanks, there is really no high pressure or
out the chloride that was left in the soil extreme heat you are dealing with. You “That comes back to learning more
from using potassium chloride can’t do are basically dealing with a salt mate- about the industry, the SoP side, not just
that anymore. They have to start supply- rial, it is pretty benign and actually pretty the technical aspects of our project but
ing potassium sulphate, so that is a really good to deal with.” the industry as a whole because I don’t
big opportunity for us. As a water soluble feel like investors know the industry well
product you can put that into drip irriga- Roads, rail and bulk loading port facili- enough.”
tion, so as water becomes scarce and ties in Northern Territory and South Aus-
farmers start to spend more on irrigation tralia are in place for Agrimin to access, – Mark Andrews
systems they will start to use better qual- however, there is some distance needed
ity fertilisers like SoP in those systems.” to be covered to get product to port,

An astute researcher and analyst,
Savich and the team at Agrimin are con-
vinced the potash sector is only going to
grow, however, selling the story to inves-
tors is a challenge.

Educating people on the Agrimin story
is also not straightforward, as there is no
other project like its Mackay SoP asset
in Western Australia to compare against.

Nevertheless, the company has fared
well in the market and was trading at a
healthy 59c/share at the time of print.

Savich said investors generally took
to the Agrimin story once explained that
Mackay is the largest undeveloped salt
lake SoP deposit in the world.

Comparable to major producing salt
lakes globally, Mackay could kickstart a
multi-generational industry in WA, ac-
cording to Savich, as Agrimin targets

PAGE 76 MARCH 2017 AUSTRALIA’S PAYDIRT



POTASH/PHOSPHATE

No flags in the way of Muga

Highfield is due to respond to items raised in its environmental application to Spanish authorities soon

Construction of the Muga potash mine said. A syndicate of four international Eu- cussions are underway with fertiliser off-
in Spain is nearing. ropean banks are on board with Muga, takers.
Muga’s owner, ASX-listed Highfield with credit approved for €185 million.
Resources Ltd, is working through the The company is targeting customers in
environmental approvals process and is Albert said there was a lot of interest Western Europe to supply to and thanks
currently responding to items raised by from other parties in terms of project fi- to well established infrastructure to work
the relevant regional authorities in ac- nancing scenarios and while encouraged with, Highfield can deliver its product at
cordance with the environmental permit by the level of interest, the company’s fo- an extremely competitive price.
application lodged for the project last cus is on securing debt and moving the
year. project forward. “As a consequence of us being in
Western Europe and us being able to
The Ministry of Agriculture, Fishing, The company is confident it will have deliver right to the doorstep of farmers
Food and Environment (MAPAMA) in debt arrangements finalised on or imme- with the small loads they would want,
Spain reported there were no items diately post receipt of approvals to sup- we could also participate in the signifi-
or areas of concern for Highfield, with port a final investment decision. cant European premium that exists in
the company expected to submit its re- the more bulk deliveries in to Brazil and
sponse this month. Muga is expected to produce 1.08 China and elsewhere,” Albert said.
mtpa of granular K60 MoP for an initial
Highfield managing director Peter Al- 47 years at AISC to port of €122/t. “That is one of the reasons why Muga
bert, who took the post six months ago, is such a fantastic opportunity and pro-
applauded the way in which the regula- Phase one is expected to cost €267 ject, our total cost of delivery to customer
tory process had been handled by the million for 540,000 tpa, with an estimat- is, according to independent analysis by
authorities in Spain. ed cost of €145 million to add another Argus, the best in the world.”
540,000 tpa to production in phase two.
“On an international comparison and While Muga is a long-life prospect,
from a time perspective, the communi- “There is interest from other quarters Highfield has four other projects – Sierra
cation and correspondence between us in terms of financing possibilities, wheth- del Pardon, Vipasca, Izaga and Pintanos
and the authorities have all been very er that be mezzanine or a raising of some – which are also highly prospective.
good,” Albert told Paydirt. sort,” Albert said.
However, with Muga on the cusp of
“The response time from the authori- “We are very encouraged by the development there will be little time for
ties, in my view, has been good and level of interest in the project by other Highfield to work its other projects too
appropriate and the way they have pro- institutions who are very keen to be aggressively.
cessed the information has been en- involved. They obviously see the high
couraging. The ball is in our court at the credibility and credentials of the pro- “We are continuing some exploration
moment as we have all the reports from ject and are keen to participate. We activities on the other projects but I have
the various regional authorities and other are keeping our powder dry, we are to say that 99% of our focus is on Muga,”
bodies who have asked for comment. certainly not of a mindset to be firm- Albert said.
ing up any of those possibilities at this
“There is nothing we have seen in stage and we don’t need to. We are “Everything else will cascade later. We
the reports that raises a red flag that very comfortable that there are a lot of can’t forget about exploration and SoP
will give us any real serious cause for people knocking on the door and we projects and other things that are going
concern. We don’t see any major is- continue to talk to various people in to add value but it is Muga, Muga, Muga;
sues.” the market place, mostly in the Euro- get that up and running, all the others will
pean space at the moment.” fall into place.”
Once Highfield moves through the en-
vironmental approvals process, a series Highfield has signed MoUs with two – Mark Andrews
of events will be triggered leading to con- Atlantic coast ports to provide a logistics
struction and project execution, Albert solution, while MoUs with three traders
for the sale of MoP are in place and dis-

PAGE 78 MARCH 2017 AUSTRALIA’S PAYDIRT

Potash prices facing testing year

The deepest slump in a decade for the of 62c, according to Thomson Reuters ior government official said in February.
oversupplied potash fertiliser market I/B/E/S. He did not wish to be identified, be-
may abate only slightly in 2017, major
producers say, and could take years to The midpoint of Potash Corp’s 2017 cause he was not authorised to talk to
correct due to the imminent start-up of forecast, 45c, would be its second-low- the media.
new mines. est profit per share in 13 years.
Prime Minister Narendra Modi’s cabi-
Canada’s Potash Corp of Saskatch- To be sure, potash prices are weak net has to decide on the proposal, said
ewan Inc, the biggest fertiliser producer, enough to stimulate demand, and are the official, who is directly involved in the
has forecast a much less profitable year creeping higher. A “modest recovery” is decision-making process.
than analysts expected, and reported a ahead this year, Potash Corp chief ex-
surprisingly big drop in quarterly profit. ecutive Jochen Tilk said. If India were to import 4mt of potash in
2017-18, the savings from the proposed
Potash prices are hovering around Potash Corp expects 2017 potash subsidy cut would equate to almost
their lowest levels since 2007, amid sales to rise to 8.7-9.4mt, from 8.6mt in $US100 million.
bloated capacity and weakening farm in- 2016.
comes. Adding to miners’ problems, new Two other industry officials confirmed
low-cost mines are scheduled to begin “We do see signs that things are bet- the plan.
production. ter,” Tilk said in an interview. Even so,
the company will curtail potash produc- A spokesman for the Ministry of Chem-
Oversupplied conditions may improve tion this year. icals and Fertilisers declined to comment
between 2020 and 2022, according to on the proposed changes.
Agrium Inc chief executive Chuck Magro. Potash Corp’s fourth-quarter earnings
plunged to $US59 million, or 7c/share, India relies on imports to meet its an-
Agrium and Potash Corp plan to merge from $US201 million or 24c/share a year nual potash demand of about 4mt, but
by mid-2017 to cut costs. earlier. higher prices are expected to limit how
much its 263 million farmers use.
“The markets are very, very competi- Meanwhile, an Indian Government
tive right now and [the merger] is the only proposal to slash potash subsidies by India buys potash from global miners
way that we can compete,” Magro said. 17% would hit demand in one of the in annual contracts that the South Asian
world’s largest importers. country usually signs before the start of
Germany’s K+S AG will ramp up pro- the fiscal year.
duction at its Western Canada mine this Some officials at Indian companies
year, while EuroChem begins mining importing potash said that were the pro- Contracts signed by India and China
potash in Russia next year. posal to be adopted, they would seek are considered benchmarks globally,
lower prices when negotiating annual and are closely watched by other potash
“I’ve been trying really hard to find contracts with global suppliers and also buyers such as Malaysia and Indonesia.
something positive in these fertiliser raise retail prices charged to farmers,
nutrients,” Manulife Asset Management dampening demand. The potential subsidy cut seems
portfolio manager Diana Racanelli said. counter to recent government decisions
“It’s really hard to see where price im- Global producers including Uralkali, aimed at an imbalance in subsidies for
provement will come just because of all Potash Corp, Agrium, Mosaic, K+S, Arab potash compared with nitrogen, Potash
the capacity coming on.” Potash and Israel Chemicals have been Corp spokeswoman Denita Stann said.
hoping for robust demand to help coun-
The merger offers hope, and more in- ter weak prices. The impact of a possible subsidy cut
dustry consolidation is likely, she said. will not be known until India sets the
Asian import prices have fallen around maximum retail price for fertilisers and
Potash Corp forecast earnings of 35- 10% in the last 12 months. other details are known, according to
55c/share in 2017, including merger- Agrium spokesman Richard Downey,
related costs of 5c/share, and it also India’s fertiliser ministry has proposed who added that its subsidy system was
flagged concerns for its nitrogen and fixing the potash subsidy at 7,669 rupees complicated.
phosphate businesses. The forecast ($US114.61) a tonne for the 2017-18 fis-
missed analysts’ average expectation cal year beginning in April, down from – Rod Nickel, Reuters
9,280 rupees per tonne this year, a sen-

Kore Potash is pleased to announce the commencement
of the Definitive Feasibility Study at Kola.



AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 79

POTASH/PHOSPHATE

Cashed-up Kore
contemplates dual listing

Overwhelming feedback from Austral- Kore has raised $US45 million to complete asset” in Sintoukola, it was unlikely his
ian investors has tempted Kore Pot- a DFS on Kola company could complete such a sub-
ash Ltd into considering a secondary list- stantial raise.
ing on a London market. rent climate is no easy task for any jun-
ior, let alone one which is still relatively “I know for a fact that SQM looked at
Formerly known as Elemental Miner- unknown to Australian investors. At the about 25-30 potash projects around the
als, Kore is coming off a whirlwind 12 time of print, Kore’s stock was trading at world and kept coming back to this one
months in which the company success- 16c/share – a level it has hovered around because they felt this was the best pot-
fully completed a $US45 million raising since early 2014. ash project in the world,” he said.
and landed two cornerstone investors.
Bennett said without a “world-class “Likewise, SGRF looked at various
Those cornerstones – integrated pot- projects around the world and they came
ash producer SQM and Oman-based back to the fact this was a genuinely
sovereign wealth fund SGRF – are set great project. Without a really good pro-
to play a critical role in the ASX-listed ject and a real structural advantage – we
company’s bid to develop the Sintoukola can make money when other can’t – then
project in the Republic of Congo. you don’t attract these sorts of corner-
stones.”
But, according to managing director
Sean Bennett, it was the company’s Aus- Bennett views the $US45 million rais-
tralian investor base which pushed for ing as more than just a crucial cash injec-
Kore to contemplate a secondary listing tion for Kore, with both SQM and SGRF
on either the AIM or LSE. signing preliminary agreements for 20%
off-take of future potash production.
“Various institutions who we’ve met
with recently in Australia have the view SQM will also offer the company up
that we should have a dual listing, just to 200 man-hours a week of project and
because of the size and scale of the pro- marketing assistance.
ject,” Bennett told Paydirt in between a
busy schedule of investor meetings at Kore has appointed a French-based
Mining Indaba last month. engineering and construction consor-
tium, led by Vinci and Technip, to com-
“Looking back, it probably makes plete a DFS on the flagship Kola deposit
sense to tap into another market as well, within the next 14 months.
so that’s something we’re considering.”
It is proposed the consortium will be
Kore’s $US45 million raising, which required to deliver a fixed price EPC of-
was completed in November, has proven fer within three months of completing the
to be one of the world’s largest resourc- DFS, which was due to officially kick off
es investments of the past 12 months, at the time of print.
ensuring the company is well funded
to complete the next phase of work at “Vinci would normally only get involved
Sintoukola, including a DFS. once the DFS is finished, but they’re ac-
tually now getting involved in the DFS
Raising that amount of cash in the cur- and that means the consortium will take
the design risk out of the DFS,” Bennett
SQM and SGRF have come on board as cornerstone investors of Kore said.

“They take the ownership when they’re
constructing it, which is a fantastic out-
come for us. If something comes out of
the DFS which is wrong, it’s their prob-
lem to solve, not mine. It de-risks the pro-
ject to a large extent because they’re the
ones who are going to build it.”

Kore will also look to use some of the
funds raised to conduct some additional
drilling to test the resource at Kola as well
as punch a further eight holes into the
ground at Dougou Extension (previous-
ly known as Yangala) where one of the

world’s highest-grade sylvinite seams
(55-60% KCL) was recorded.

A recent drill intercept at Kola returned
4.04m @ 58.9% KCL from 255.85m

PAGE 80 MARCH 2017 AUSTRALIA’S PAYDIRT

and is hosted by a hangingwall sylvinite which reflected what we government before. This
seam. The company is assessing what
this result means for the scope the pro- do, which is potash.” is a very important pro-
ject.
Kore has submitted a ject for them and they’re
Under the previous management
team, the original PFS on Kola was up- mining licence applica- doing everything they
dated in late 2014, flagging an initial de-
velopment capex of $US908 million. A tion for Dougou as well can to make sure it hap-
scoping study on Dougou was finalised
a few months later. as the mining convention pens.”

Johannesburg-based Bennett and his for both of its key depos- Potash prices picked
long-timer business partner, respected
South African packing executive David its, with authorities from up towards the end of
Hathorn, joined the company at the end
of 2015, bringing a fresh approach to a the Republic of Congo last year and Bennett is
business described as “a bit sleepy” by
the incoming managing director. set to make a decision encouraged by some of

The pair decided late last year to re- on both soon. the forecasts from mar-
badge the company and gave it the new
name ‘Kore’, the goddess of vegetation One of the challenges ket commentators.
and daughter of Zeus, along with the ob-
vious link to mining. Bennett has faced since “They’re talking about

“I think we have to be honest here, taking the reins has the potash price going
the company went quite for about three
of four years and we went off the radar been quashing misgiv- up by about 50% on a
screen with lots of different people and
the company also had no capital for a pe- ings about the project’s base case level over
riod of time,” Bennett said.
location, with many in- the next few years, po-
“It was time to rebrand, rethink and
re-energise. We wanted to put the past vestors incorrectly plac- tentially up by 100% on
behind us and focus on the future and I
think that’s what David and I have done ing it in the DRC. their upside, so I think
since we’ve come in. It was also really
important that we gave ourselves a name Bennett said his deal- the seeds of optimism

ings with regulators in are around the industry

the Republic of Congo again,” Bennett said.

had been very positive. Kore has reported some of the “I don’t think people

“I have been immense- world’s highest-grade expect potash prices to

ly impressed with how sylvinite seams race away, but I think

commercial the Govern- they expect to see it

ment are, and I don’t say that because slowly climb over the next few years,

I’m there; I say that genuinely and I’ve which is fine for us. We don’t need it to

been in Africa for quite a while,” he said. race away because we will make money

“Does the Republic of Congo have when other people don’t, even a modest

issues? Of course it does, but so does potash price.”

everyone, and from our perspective – Michael Washbourne
they’ve been brilliant. I’m not certain I’ve

been involved with such a commercial

Rapid start continues at Kalium Lakes

New market arrival Kalium ports, engineering studies and
Lakes Ltd expects to com- gain key approvals for the pro-

plete a PFS on its Beyondie ject, which will assist us in the

SoP project by mid-2017. rapid completion of the PFS

Kalium Lakes, which listed once an upgraded resource is

on the ASX in late Decem- available,” Hazelden said.

ber after operating as a pri- “The project’s high potassi-

vate company for two years, um grade, low impurity levels

ramped up PFS work last of sodium chloride, as well as

month after finalising a series the close proximity to a port,

of technical and engineering gas pipeline and main road

studies. gives the project a key stra-

The PFS will review several tegic advantage which should

potential throughput scenar- translate to capital and opera-

ios to determine a preferred tional cost benefits.”

throughput for Beyondie, Accommodation and infra-

about 160km south-east of structure facilities were being

Newman. Kalium Lakes hopes to finalise a PFS on Beyondie by mid-year installed at the project at the

German potash experts K- time of print, with drilling and

UTEC and other specialised consultants set to follow. Previous technical reports a pump testing programme, targeting an

are contracted to deliver the PFS. and studies have confirmed the robust- increase in the confidence of the Beyon-

Kalium Lakes expects to progress im- ness of the project, according to Kalium die resource, to begin this month.

mediately to the next stage of feasibility Lakes managing director Brett Hazelden.

upon completion of the PFS, with funding “Prior to listing, we were able to com-

activities and a final investment decision plete a number of detailed technical re-

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 81

POTASH/PHOSPHATE

Century link in plain sight

The mothballed Century zinc discussions with potential equity
mine could play a key role in partners.

the potential development of POZ “We really need an equity part-

Minerals Ltd’s Highland Plains ner – preferably somebody in the

phosphate project in the Northern industry involved in fertilisers or

Territory. something of that nature – to come

Highland Plains, one of several in and kick this along,” Richards

undeveloped projects in the phos- said.

phate-rich Georgina Basin, is just “If somebody walked in the door

68km west of Century, which was today with the money to get this

placed on care-and-maintenance thing kicked off, we feel we could

in February 2016. be in production by the end of year

Century has a grinding and ben- three. And, if they wanted to come

eficiation plant and slurry pipeline in with even more money, we could

to the Queensland coast, where probably do it quicker again.

existing facilities at Port Karumba “Sooner or later the pendulum

such as slurry de-watering, bulk will swing back, but we’ve got to re-

storage and operational barging POZ has built up an inferred resource of 53mt main patient in the meantime.”
are available. @ 16% P2O5 at Highland Plains Rock phosphate was trading just
above $US100/t at the time of print,
POZ (previously Phosphate

Australia) has expressed an interest in a majority of funds directed to diamond a far cry from the circa $US400/t prices

leveraging off the Century infrastructure drilling, metallurgy and groundwater and the bulk commodity was commanding

should the company land the equity part- environmental studies. when the company listed on the ASX.

ner it needs to develop the project. Positive metallurgical testwork to date However, Richards still sees plenty of

“You’ve got a whole bunch of infra- has established a method of beneficia- upside for many of the phosphate players

structure, including a logistics solution, tion with promising recoveries, headlined due to the geopolitical risks associated

just sitting there on care-and-mainte- by a best flotation test grading 32.3% with key suppliers.

nance waiting to go,” POZ chairman Jim P2O5 at 76% recovery. Most seaborne “About 60-70% seaborn rock phos-

Richards told Paydirt. material is typically graded at 31%. phate comes from Morocco or Western

“We feel we’re a lot further advanced “They’re pretty good numbers, but Sahara and, given some of the problems

than many other people are in the basin that’s from desktop metallurgical work so in North Africa, Algeria, Libya and Mau-

and if a major group wanted to fast-track we need to do some pilot plant testing, ritania, it’s in a tough neighbourhood,”

a phosphate project, then we think we probably chuck through 10,000-20,000t, Richards said.

should be first cab off the rank when you just to see if we’ve got some scalability “Should there be a disruption, or even

consider the serendipity of the Century on it,” Richards said. a perceived disruption, to that supply

mine closing up.” “The minor elements – carbon, sul- then things would go absolutely crazy on

POZ has built up an inferred resource phur, fluorine, chlorine, cadmium, ura- the prices and away we’d go. Now that

of 53mt @ 16% P2O5 (based on a 10% nium – are all low or very low, and that’s may or may not happen, but the fact it

P2O5 cut-off) at Highland Plains since very handy because with these deleteri- could happen means there are always

floating the company on the back of the ous materials, particularly cadmium, a lot very nervous buyers out there, particu-

project’s potential in 2008. The resource of people in Europe and elsewhere won’t larly from India which has no domestic

also includes a shallower, higher-grade take it because it can end up in the soils production.”

zone of 14mt @ 20% and the food chain.” With equity partner discussions over

P2O5 (based on a Highland Plains is Highland Plains ongoing, POZ will con-

20% cut-off). also the only target on tinue to progress its Bulgera, Mt Monger

Highland Plains is the eastern edge of a and Laverton gold projects in Western

geographically the 792sq km tenement Australia, as well as the Blina diamond

closest phosphate package which has project.

project to the coast been drilled, but Rich- Bulgera is part of the same greenstone

in the Georgina Ba- ards and his team are belt which hosts the Plutonic and Mary-

sin, giving POZ an confident more high- mia gold mines, while Mt Monger is just

advantage over other grade phosphate can 10km from Silver Lake Resources Ltd’s

players in the region be found on the prop- Randalls mill.

looking to tap into the erty. Laverton, 6km from Gold Fields Ltd’s

Asian fertiliser mar- POZ suffered a set- Granny Smith mine, was recently sub-

kets. back last year when jected to a large soil sampling pro-

According to Rich- a previously granted gramme aimed at identifying drill targets.

ards, POZ has spent option over High- POZ was awaiting those results at the

more than $10 million land Plains lapsed, time of print.

on the project over the Metallurgical testwork has delivered a but Richards said his – Michael Washbourne
past nine years, with grade of 32.3% P2O5 at 76% recovery company remained in

PAGE 82 MARCH 2017 AUSTRALIA’S PAYDIRT

SAVE THE DATE

17 October 2017
Pan Pacific Perth

australiannickelconference.com

To present, exhibit or attend as a delegate please contact Christine Oelschlaeger
on (+61) 8 9321 0355 or email [email protected]

Image courtesy of Western Areas Ltd

POTASH/PHOSPHATE

Fertoz feeds into organic boom

Fertoz Ltd geologists had a brief to fulfil
when the hunt for phosphate projects
started.

The mission was to find projects boast-

ing a particular type of shallow, sedimen-

tary-hosted rock phosphate, with high

availability close to organic markets.

Wapiti and Fernie, both in Canada, fit-

ted the bill and while production is start-

ing on a small scale, Fertoz has big plans

for the future.

“We have had our phosphate verified

by a number of distributors who say it

is much higher than other people’s,

we have done greenhouse field tests

which show that and a higher produc-

tivity,” Fertoz executive chairman Pat- Winter conditions at Wapiti, central British Colombia, will see mining stop and
rick Avery told Paydirt. Fertoz shift its attention to Fernie

“Our goal is to move several hundred

thousand tonnes of it to provinces in The company has some trials running Picking up one more good resource that

western USA and perhaps add another around blended products which will in- is close to our market perhaps ex-Califor-

good phosphate resource to our portfolio crease its attractiveness in the market nia and then partnering and investing in

and grow into distribution. That way we and add flexibility to its growth strategy. distribution would give us the ability to do

can store and ship rock phosphate but Avery said in addition to cranking up the value-added products.”

we can also make value-added blended production at its mines, Fertoz would run The organic food boom is driving Fer-

products. We think there is a real growth a rule over potential distribution partners. toz’s bullishness on the sector and Avery

market for high quality, readily available “We have a few products now and we’d feels it is only the beginning.

organic fertilisers.” like to bring on organic P [phosphate] “Guys will take more product if they

Avery, an experienced campaigner and we would like to partner or acquire can get it. Organic chicken, organic milk

having worked in the traditional N-P-K distributors that have blending, pelletis- it’s all quite popular now. The demand

conventional fertiliser industry for more ing [facilities], good storage, rail and and seasonal growing means there

than 20 years, joined Fertoz in Septem- truck loaded [infrastructure],” Avery said. is a fair amount of organic acreage in

ber and while his long-term ambitions “One way of acquisition would be to Mexico and Central America [that is at-

are clear, the focus is certainly on what partner or invest in good distributors that tractive] and now they are doing highly

is happening now. have good products now and also a cou- productive organic crops and shipping

In the December quarter, haul road ple of good facilities. The other direction, them to America. I see that same trend

construction and infrastructure work was more basic, we have found a couple of of commercial agriculture to follow for 50

completed at Wapiti, allowing Fertoz ac- places in North America that have pretty years; we see it grow from pretty steady

cess to the 17,500t bulk sample area. good ore, shallow, high available P and demand and moderately complicated to

The company aims to have 1,100t of close to good markets. grow to there being more growers with

rock phosphate available for sale by ear- “We wouldn’t mind taking on another good organic fertilisers feeding into a

ly spring in Canada, with material to be resource this year that meets our criteria. pretty steady cycle.”

trucked to a processing facility at North America has been a

Beaverlodge, Alberta. large exporter of phosphate

A Canadian grain and fertiliser products for a long period of time

distributor has already placed an and players such as Fertoz will

order for 100t of Fertoz’s rock no doubt be important contribu-

phosphate, which will be a key tors to the fertiliser industry into

ingredient in the former’s organic the future.

fertiliser blend. The company also has a pres-

Avery said the company would ence in Australia and New Zea-

look to mine 10,000-20,000t from land via Fertoz Agriculture Ltd

Wapiti in the summer and sell the (FertAg) which owns distribution

product. rights to a phosphate product.

Fertoz has a varied sales strat- Demand for FertAg product is

egy for its product whereby it increasing, with 279t sold in the

has sold rock phosphate directly December quarter and an order

to people in the fields, while its for 400t of 0-8-0 product set to

product blends well with sulphur be delivered this month.

opening up opportunities to sell a A mine application for 75,000 tpa at Wapiti is being prepared – Mark Andrews
variety of streams.

PAGE 84 MARCH 2017 AUSTRALIA’S PAYDIRT

Centrex beefs up fertiliser game

Centrex Metals Ltd increased its inter- one phosphate mine. There is also a lack
est in the fertiliser industry with the of supply stemming from Asia.
acquisition of the Ardmore phosphate
“We are importing from faraway plac-
rock project last month. es, so there is a lot of scope to start pro-
ducing in this region,” Hammond said.
For the transfer of the Ardmore min-
Centrex hopes to fill the vacant posi-
ing lease, Centrex will pay Incitec Pivot tion of phosphate producers in Australia
and in Ardmore it has an advanced asset
Ltd subsidiary Southern Cross Fertilisers to capitalise on to supply markets in Aus-
tralia and Asia.
Pty Ltd (SCF) $5 million.
More than 300 drill holes have been
SCF will retain an interest in the pro- completed on the project in Queensland
and an independent exploration target of
ject via a first right of refusal of up to 20% 12-16.5mt @ 28.2-29.4% phosphate es-
tablished.
of production in addition to a 3% royalty.
“We have to meet JORC compliance
Ardmore, 90km from the Mt Isa-Towns- on that, but it is a very advanced project
with a mining lease. We need to validate
ville railway, will become Centrex’s lead that old data and show the market exact-
ly how advanced Ardmore is,” Hammond
project. said.

The PFS on the Oxley potassium pro- “Hopefully we can get some uplift
when we show that and the other thing
ject, Western Australia, will still be ad- we’ll be trying to do is tying up some
off-take deals. Hopefully that will get the
vanced albeit at a slower rate, as Centrex market excited once we show what the
appetite is like offshore.”
looks to bring Ardmore into production
Once the mining lease is transferred
and subsequent cash generation. Ben Hammond from SCF, Centrex plans to change the
exploration target for the resource, with
“We have been looking at Ardmore for Hammond is convinced by the demand further drilling to be followed by engi-
fundamentals for fertiliser products, neering feasibility and environmental
a while and the key for us was getting studies.
however, the challenge will
something that was DSO grade as there be exciting investors in the The company has set a two-year time-
Australian market. frame to receive environmental approv-
are not many of them about,” Centrex als and complete a feasibility study ready
There is a general per- for financing.
chief executive Ben Hammond said. ception that because
Australia is a large user With limited processing equipment re-
“At the moment I think we have a nice quired and the outcropping nature of the
of fertilisers that pot- deposit, production may not be too far
mix and we will concentrate on the two ash and phosphate is away for Centrex at Ardmore.
produced en mass
projects. Obviously we will never say “If you look at the rest of the projects
in country. In actual being proposed in Australia they are
never if something came up but we have fact, there are no about half the grade,” Hammond said.
operating potash
enough cash in the bank to progress mines in Aus- “I have been likening it to hematite
tralia and versus magnetite and we have just
these two and hopefully get Ardmore only bought a hematite project. Globally,

into revenue generation quickly. That there is such a shortage of high-
grade phosphate, so we’re happy
will give us some cash as well and once
to make this acquisition.”
we are in that position we can possibly
– Mark Andrews
consider more acquisitions.”

Hammond was

speaking to Paydirt

from India where the

start of off-take discus-

sions was the purpose

of the visit.

India is the big-

gest importer of

phosphate, while

Hammond said

the interest in

potassium nitrate

was starting to take off in

the country further empha-

sising Centrex’s shift into

the fertiliser industry.

“I think fertilisers is defi-

nitely the right choice,” he

said. “The appetite off- shore is

so much bigger for anything agribusi-

ness-related than minerals at the mo-

ment. Through my travels, there is cer-

tainly not too much appetite here [India]

or in China, for the metals sector. Howev- Centrex is in advanced discussions with infrastruc-
ture providers for the export of phosphate rock from
er, anything to do with agriculture there is Ardmore out of Townsville. Ardmore is 90km by road

a growing appetite and they all seem to to the Mt Isa-Townsville rail line

have a mandate to go and invest in.”

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 85

REGIONAL ROUNDUP LATIN AMERICA

Consolidated hits zinc study

Zinc is one of the commodities to watch Argonaut Ltd managing director Eddie Rigg has had his hands full raising money
in 2017 but there is a scarcity of pro- in Australia’s gold sector. However, he also likes zinc but finding a decent project
jects emerging as prospective in the eyes
of investors. to back has been a problem

“I do like zinc, the difficulty with zinc is crease throughput to 200 tpd or 75,000 “There is opportunity for early cash
you see the upward pressure on zinc and tpa. The plant was built in 2006 and over flow by using the existing plant currently
I think the incentive price is $US3,500/t or a five year period treated 100,000t of ore. on site. The scoping study will help im-
something. It is that close to $US3,000/t prove our understanding of the mine
now it is not funny. The problem is trying Consolidated managing director Will mineralisation and give us some insight
to find decent zinc projects, it is a really Dix said the short and medium outlooks into the various mining methods and pro-
hard thing to find and at a certain price for zinc gave the company confidence cessing options initially focused on the
Glencore brings back online their shut pursuing the fast-tracking of production indicated part of the resource,” Dix said.
mines,” Argonaut Ltd managing director was the right path to take.
Eddie Rigg said recently. To assist in Consolidated’s push for a
At the time of print, zinc was trading at quick, low-cost restart to mining are a
Since the closure of Century in Aus- just under $US2,900/t. In January 2016, series of shafts, declines and drives that
tralia and Lisheen in Ireland, there has zinc was worth $US1,500/t.
been a lack of emerging plays to fill the afford Consolidated immediate
supply void. access to the resources de-
fined at Level 7.
Consolidated Zinc Ltd is one player
looking to play a role in the zinc sector Consolidated is also con-
with its Plomosas zinc-lead-silver project tinuing with resource definition
in Mexico’s north. drilling, targeted at Level 8 test-
ing for resource extensions be-
The company announced a maiden in- low Level 7.
dicated and inferred resource of 568,000t
@ 16.9% zinc and lead and 28.4 g/t silver Significant results reported
for 96,000t of contained zinc and lead by the company at Level 8 so
metal late last year. far include; 2.75m @ 25.7%
zinc, 10.52% lead and 64 g/t
The indicated component of the re- silver and 3.85m @ 3.72%
source comprises semi-oxidised sul- zinc, 1.91% lead and 18.86 g/t
phide mineralisation of 99,000t @ 19.3% silver.
zinc, 9% lead and 57.9 g/t silver above a
3% zinc cut-off grade. – Mark Andrews

In light of the strength of global zinc Throughput of 75,000 tpa is being targeted at Plomosas
prices and the potential to use existing
infrastructure on site, Consolidated said
now was the right time to consider op-
tions to fast-track production.

Therefore, last month the company
announced the start of a scoping study
which is expected to be completed some-
time in the second quarter.

RungePincockMinarco Ltd
has been engaged to assess
the existing mining and infra-
structure facilities, while Batter-
yLimits Pty Ltd will take care of
metallurgical and process engi-
neering work.

There are sufficient declines
and shafts in place for under-
ground material to be accessed,
with the purpose of the study to
confirm whether re-establishing
past operations is viable.

A key part of the study will
be investigating if the refurbish-
ment and potential expansion of
the pilot plant on site will work.

Currently the pilot plant has
capacity to process 90 tpd,
with Consolidated hoping to in-

PAGE 86 MARCH 2017 AUSTRALIA’S PAYDIRT

LATIN

AMERICA

17-18 May 2017

Perth,Western Australia

Early Bird
rate

$A9av9a0i.l0ab0leinucn. tGilST
17 March
2017

Programme Highlights:

HE Javier Córdova Unda, Minister for Mining, Republic of Ecuador
HE Aurora Williams, Minister for Mining, Republic of Chile

HE César Navarro Miranda, Minister for Mining and Metallurgy, Plurinational State of Bolivia
Hon Raphael Trotman, Minister for Natural Resources, Co-operative Republic of Guyana
Sra Silvana Habib-Daza, President, National Mining Agency of Colombia
Chris Gale, Managing Director, Latin Resources Limited
Christian Easterday, Managing Director, Hot Chili Limited
Tony Rovira, Managing Director, Azure Minerals Limited
Paul Stephen, Managing Director, Crusader Resources Limited

Conference sponsors &
supporters to date:

www.latinamericadownunder.com

To present, exhibit or attend as a delegate please contact
Melita Fogarty on (+61) 8 9321 0355 or email [email protected]

REGIONAL ROUNDUP

Escondida dispute continues

BHP Billiton Ltd’s decision to give up its clashes with striking miners trying to to date; equivalent to the annual produc-
legal right to replace striking workers prevent temporary workers entering the tion of a mid-sized mine.
at the Escondida copper mine in Chile is mine.
a move aimed at sacrificing some output A government-mediated attempt at
to undermine the union’s position, ana- Camped out under burning daytime restarting talks floundered, with the two
lysts said last month. sunshine and cold nights in the Atacama sides far apart on issues such as ben-
Desert next to the mine, workers’ enthu- efits for new workers and shift changes.
The strike began on February 9, after siasm for the strike may begin to crack,
workers voted overwhelmingly to reject a although the union insists its members Both sides say they remain open to di-
wage contract offer by BHP Billiton. That remain united. alogue but firm in their positions. Despite
led BHP Billiton to say it would not be the failure, the Government has said it
able to meet contractual commitments, “The guys are relaxed, they’re OK, will continue to push to get the two sides
driving the copper price up on supply some are heading to town to rest and back at the negotiating table.
concerns. next week they will come back with more
energy for however long it takes,” union Other miners, including those at
The company made a surprise an- spokesman Carlos Allendes said. Chile’s No.2 mine, Anglo American plc
nouncement in February, saying it would and Glencore’s Collahuasi, which has
not seek to exercise its right to replace Escondida, in northern Chile, is by far contract talks due later this year, will be
the 2,500 striking workers after 15 days, the world’s largest copper mine. At usual watching carefully.
which would have been February 25. output rates, some 40,000t of copper has
Instead, it said it would wait at least 30 been taken out of supply during the strike – Fabian Cambero, Reuters
days.

The company said this was to assure
the safety of its workers but industry ex-
perts say it was a strategic move that
puts the ball in the union’s court.

After 30 days, workers can individually
exit the strike and accept the company’s
offer, weakening the union’s position.

Juan Carlos Guajardo, an industry vet-
eran and consultant at Plusmining, said
the delay would ease tension after day
15 of the strike, when the company could
have brought in temporary workers if it
had sought to.

“By delaying to day 30 it prevents the
risk of days 15 to 30 being violent, some-
thing which could provoke the workers,”
Guajardo said.

“On day 30 the invitation to leave the
strike will therefore be better received.”

Previous strikes in Chile have seen

Labour stoush shuts Mexico mine

Some 1,000 unionised employees at labour agreement when the company with its performance and shift workers
Primero Mining Corp have gone on “reversed the important advances al- onto a more continuous shift cycle to im-
strike at the Canadian gold miner’s San ready achieved and proposed starting prove productivity, it said.
Dimas mine in Mexico, halting mining and again from scratch”.
milling operations, the company and un- “We expect a negative reaction from
ion said last month. Workers went on strike after the union Primero’s shares to the company’s an-
and company were unable to reach an nouncement,” RBC Capital Markets ana-
Depending on its duration, the strike agreement during collective bargaining lyst Dan Rollins said in a note to clients.
could have a negative impact on the negotiations.
company’s 2017 production, Primero The San Dimas mine produced
said. As a result, it has decided to post- Primero said it had started cutting jobs, 151,355oz gold and 8.3 moz silver in
pone releasing its 2017 production and including contractors, at the San Dimas 2015, according to the company.
cost forecasts. mine in an attempt to increase produc-
tivity and make the operation profitable Last year, Primero said it expected to
The National Union of Mine, Metal, again. increase production capacity at San Di-
Steel and Allied Workers of the Mexican mas to 215,000 ozpa gold.
Republic said it had been negotiating a The company wants to “better align”
the mine’s short-term bonus structure – Reuters

PAGE 88 MARCH 2017 AUSTRALIA’S PAYDIRT

LATIN AMERICA

AusQuest allies with South32

Diversified junior explorer AusQuest three exploration opportunities are ac- Graeme Drew
Ltd has attracted some big company cepted by South32 in a single calendar
attention. year, while a $US1 million interest-free there. It says a lot about our technical
unsecured facility is available to Aus- credibility and I think a lot of it is to do
The company is no stranger to mixing Quest from South32 to advance project with the scale and size of the resources
it with heavy hitters in the industry and generation activities. we are trying to find.”
is now actively negotiating JVs in sev-
eral copper, zinc and nickel projects with While the immediate focus is on what Drew said that the industry was slowly
South32 Ltd, as interest in the mining South32 has identified as prospective starting to turn for the better and while
sector begins to escalate. opportunities in AusQuest’s portfolio, there were companies out there looking
the strategic alliance agreement also for good projects, price was still holding
“I think it is a good sign for the industry provides for the companies to partner in back potential deals.
that one of the bigger players is keen to other mineralisation styles in other juris-
take the risk that we believe is necessary dictions. “We have looked at lots of opportuni-
if you are going to succeed in explora- ties around the world and many compa-
tion. I think it is a good win-win situation In the past, AusQuest has entertained nies are still looking because they haven’t
for us and South32,” AusQuest manag- agreements with large companies on seen things they like at a reasonable
ing director Graeme Drew told Paydirt. ground in Peru, while it is currently in- price. Therefore, a lot of the bigger guys
volved in a gold project in Burkina Faso are turning back towards greenfields or
The strategic alliance agreement be- with a subsidiary of SEMAFO. early-stage exploration and we are going
tween AusQuest and South32 covers the to form part of that,” Drew said.
former’s projects in Australia and Peru. South32’s asset portfolio in Africa,
Australia and Latin America is well known Last month, AusQuest’s peer in Latin
South32 has already indicated an in- and there is no doubt an abundance of America – Orinoco Ltd – was also sub-
terest in five projects – three in Australia knowledge to be potentially shared in ject to attention from a major player in the
and two in Peru – with one deemed a these jurisdictions. game.
drill-ready opportunity and the others ex-
ploration opportunities. “We will be looking at getting more op- AngloGold Ashanti Ltd took a 15%
portunities through the target identifica- stake in Orinoco by investing $US5.9
It is hoped that by mid-year drilling, tion stage and that is what we are work- million to help restart the Cascavel gold
funded by South32 and with AusQuest ing on as well. It is a performance-based mine in Brazil. By investing a further
as the operator, will start at the Blue Billy agreement, if we can produce targets $US9.5 million over a three-year period,
zinc project in Western Australia. they are interested in then they will be the gold major can earn up to 70% in the
helping to fund all of that,” Drew said. Faina goldfields assets.
Blue Billy has been accepted as a drill-
ready opportunity by South32, therefore “It is a great formula, it is a bit innova- – Mark Andrews
a JV agreement (BBJVA) has been ex- tive and there are not too many agree-
ecuted. ments that I am aware of like this out

South32 can earn a 70% in Blue Billy
by sole funding all approved programmes
and budgets in the initial funding period
whereby $US4 million will be committed.

South32 can take its interest in Blue
Billy to 80% by completing a PFS.

The structure of the BBJVA is what will
also be executed at the other areas of in-
terest under the strategic alliance agree-
ment, which includes the Chololo and
Los Otros copper porphyry prospects in
Peru.

“We generate the projects and if
South32 accept them, say at pre-drilling
stage, and agree to our programme and
budgets, they will fund it to the tune of
$US500,000 to bring it to drilling stage,”
Drew said.

“If we can do it cheaper in the event
that all that is required is an EM survey to
be run over some ground, it is then at the
target stage of each project when a JV
will be formed.”

AusQuest hopes to get at least another
two of the four prospects to drilling stage
this year and therefore trigger another
two JVs with South32.

AusQuest is incentivised via a bonus
generation fee of $US500,000 if at least

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 89

REGIONAL ROUNDUP

Indonesia to temporarily
exempt Freeport

Indonesia will tem- porary permit while the “[Freeport] has requested that concen-
porarily exempt the Government decided on trate exports be permitted while the new

local unit of Freeport- the company’s applica- license and stability agreement are ne-

McMoRan Inc from tion for a new special gotiated,” Pratama said.

some new rules while mining licence. Under its current contract, Freeport

processing its appli- A temporary permit “is not required to pay export duties on

cation for new mining would also allow Free- concentrate or to conduct further divest-

rights, a ministry offi- port to resume concen- ments,” he said.

cial said, potentially al- trate exports, he said. Freeport is one of Indonesia’s biggest

lowing for the resump- At a media discussion taxpayers, paying more than $US16 bil-

tion of copper concentrate exports. in January, Jonan said Freeport would lion in taxes, royalties, dividends and

Freeport has warned that the halt to need to convert its contract of work to other payments between 1992 and 2015,

its shipments since the new mining rules a new special mining license before be- according to company data.

took effect on January 12 could lead to ing allowed to resume exports, as part Freeport is also involved in a dispute

“a sharp drop in output at its Grasberg of Indonesia’s push to develop domestic over $US469 million in water taxes and
mine. industries under the new rules. penalties in Papua province dating back

When asked about the fis- to 2011, and has argued that

cal and other requirements [Freeport] has requested it should not be subjected to
of Freeport’s special mining that concentrate exports be any taxes that are not speci-
license, coal and minerals di- fied in its 1991 contract.
rector general Bambang Gatot permitted while the new license and
said: “While their special mining Fellow Indonesian copper
stability agreement are negotiated. miner Amman Mineral Nusa

licence is not definitive, we can- Tenggara, a unit of PT Med-
not apply [these rules] fully.” co Energi Internasional, said

It was not immediately clear it had applied for new mining

which of the new rules, which require Freeport Indonesia Riza Pratama said rights last week.

Freeport to pay more taxes and divest a the company would only adopt the new – Wilda Asmarini, Reuters
51% stake, the company would be tem- mining rules after obtaining “a stability

porarily exempted from. agreement providing the same rights and

Mining Minister Ignasius Jonan said the same level of legal and fiscal certain-

Freeport could be issued with a tem- ty provided under its contract of work”.

India to explore mining potential
with massive aerial survey

India launched its biggest aero geophysi- which has meant that flew eight aircraft from
cal survey of minerals last month to un- the country imports Singapore and New
earth deep-seated resources such as everything from as- Zealand starting on
gold and copper, as it seeks to develop bestos and copper to February 15 to con-
its mining industry and reduce its depend- gold and aluminium. duct the project, at an
ence on imports. initial cost of $US16
“The survey will go million.
India’s Mines Secretary Balvinder Ku- a long way in unearth-
mar said the survey covered more than ing the untapped re- As well as Ra-
200,000sq km across seven states from sources lying under- jasthan and Andhra
Rajasthan in the west to the south-east- neath,” Kumar said. Pradesh, the sur-
ern state of Andhra Pradesh. “The kind of explora- vey focused on the
tion advanced countries like Australia do, states of Gujarat, Karnataka, Odisha,
The data gathered will be made public we are nowhere near that. But in three Jharkhand and Madhya Pradesh.
later this year for local and foreign com- years, we should reach that level.”
panies to consider mining in the country. – Reuters
A group of three surveying companies
Only a fraction of areas in India with from Australia, Kazakhstan and India
mineral potential have been explored,

PAGE 90 MARCH 2017 AUSTRALIA’S PAYDIRT

ASIA

OceanaGold appeals
mining orders

Philippines environment min- “The cancellation of the
ister Regina Lopez has crip- 75 agreements is consist-

pled the nation’s mining sector, ent with Philippine laws

after ordering the closure of 23 ‘that mining applications are

mines, the cancellation of 75 closed to proclaimed water-

mining contracts, and the sus- shed forest reserves’,” a Du-

pension of six projects includ- terte spokesperson said in a

ing OceanaGold Corp Ltd’s statement.

Didipio gold-copper project. Unsurprisingly, the DENR

On February 14, Lopez, an- Secretary is coming under

nounced the rescinding of min- increased scrutiny from her

ing contracts at a conference nation’s mining industry, with

in Manila, 270km south of the a prominent mining group

Didipio project, just two weeks opposing her appointment

after issuing a “non-negotia- as minister.

ble” closure of more than half On February 14, the

the country’s mines. Chamber of Mines of the

Both decisions have been OceanaGold is adamant Didipio has not violated or breached Philippines said in a letter

based on environmental con- any Philippines’ laws, rules or regulations to lawmakers, her actions

cerns, and target existing and showed an “antagonism to-

developing mine sites located on water- directly with the Office of the President wards large-scale mining, rendering her

sheds, which have the potential to affect which has the power to stay the suspen- unfit and incapable of a responsible, fair,

local water supplies. sion. just and balanced implementation of the

Lopez, a former environmental activist, An OceanaGold spokesperson told Constitution, the Philippines Mining Act

sent a clear message to miners: “You kill Paydirt: “We are disappointed with this and related laws”.

watershed, you kill life”. outcome and we don’t accept the allega- It seems the pressure of industry dis-

OceanaGold received a formal sus- tions made by the DENR Secretary. The satisfaction has crept up the ladder with

pension order from the Department of alleged issues raised are not consistent Duterte announcing on February 18 he

Environment and Natural Resources on with the official findings presented to us would review his minister’s orders to

February 14, which cited a petition from as part of the country-wide mining audit close the country’s mines.

the local government of Nueva Vizcaya process last year.” “I will review. There’s such a thing as

calling for the cancellation of the FTAA. “We lodged an appeal because we’re exhaustion of administrative remedies,”

The suspension order raised concerns following due process as set by the Gov- Duterte said. “I will not judge her now. I

about “the potential adverse impact to ernment. We hope for an expeditious will see if there’s something wrong.”

the agricultural areas of the province”, resolution of this matter.” This was the first time Duterte had

and went on to allege that blasting op- When asked how the company would openly questioned Lopez’s orders.

erations had caused damage to homes. proceed with its relationship with the lo- While it did not give miners a complete

OceanGold chief executive Mick cal government and people of Nueva Viz- sigh of relief, the President conceded:

Wilkes said the Didipio project had not caya, it said: “We enjoy strong local sup- “We get something like 70 billion pesos

violated or breached any Philippines’ port for the mine – as has been vocally a year out of the mining operations in the

laws, rules or regulations. communicated by our community lead- entire Philippines. We have to also take

“We are an environmentally and so- ers. We’re a major employer of Filipino [that] into consideration.”

cially responsible mining company that nationals in the region with the Didipio As for OceanGold, it told Paydirt its

has delivered meaningful benefits to operation underpinning the fastest grow- position on the Didipio project remained

a multitude of stakeholders in the host ing economy in that part of Luzon. Didi- as crystal clear as Lopez’s orders:

communities that support the mine in the pio has operated uninterrupted and in “We always were, and continue to be,

provinces of Nueva Vizcaya and Quiri- harmony with our many local stakeholder proactively engaged with our local and

no,” Wilkes said. groups since production commenced in regional stakeholders. This is recognised

“We have the strong endorsement from 2012. We, and our employees and local in Didipio being the recipient of numerous

our host communities to operate and are community members, expect this to con- international and national awards related

a major employer of Filipino nationals, tinue once due process is followed.” to our strong track record for health and

the majority of whom are from the local The day after the company lodged its safety, environmental management and

communities.” appeal, Philippines President Robert community engagement ever since we

The company was given a period Duterte said he would stand by his envi- recommenced operation there in 2012.”

of three months to address the issues ronment minister’s orders, despite being – Jonathon Daly with Reuters
raised against it, but subsequent to re- warned the move could impact 1.2 million

ceiving the order it lodged an appeal Filipinos according to industry.

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 91

REGIONAL ROUNDUP

Confidence boost for
Cinovec ahead of PFS

European Metals Ltd is expected to pleted a seven-month Contained lithium in-
release a PFS on its Cinovec lithium drilling campaign at the
project by the beginning of April. project, with 17 holes creased 50% within the
drilled for 6,081m.
The PFS follows an increase to the in- 347.7Mt @ 0.45% Li2O
dicated mineral resource at the Cinovec The programme
lithium-tin project in the Czech Republic. aimed to increase the and 0.004% tin indicated
confidence in the re-
European Metals managing director source base by up- resource. Global con-
Keith Coughlan told Paydirt the indicat- grading the inferred re-
ed resource exceeded expectations, and source to indicated. tained lithium increased
the company was now looking to release
the numbers the market had been await- Coughlan said the 11.8% to 7mt, within an
ing. Cinovec project was
a globally significant inferred-indicated re-
“We will conclude our PFS in about five lithium deposit and the
or six weeks, around the end of March. largest lithium resource source of 656.5mt @
At which case we will be able to publish in Europe.
all the information the market is waiting 0.43% Li2O and 0.004%
on in regards to capex, opex, and NPV. “Its location on the
We will be able to talk in a lot more detail German-Czech Re- tin.
about the process,” Coughlan said. public border places
it in very close proximity to the largest Independent resource
“The most telling numbers will be the car manufacturers in Europe and is in a
capex and opex numbers. I think the unique position to supply lithium to the consultant Lynn Widen-
market is particularly focused on what rapidly growing European electric vehi-
opex we can talk about. We have said cle industry,” Coughlan said. bar noted: “The addi-
for some time that with the very strong
by-product credits, particularly from the “The substantial increase in the higher tional new drilling results
tin, our view was we would have a cost confidence indicated resources of both
of production in the bottom quartile glob- contained lithium and invaluable by- from 2016 have greatly
ally of all lithium producers, including the product tin provides more certainty that
brines. We are confident we will be able European industry will be able to source Keith Coughlan increased confidence
to deliver on that.” locally produced lithium in a secure and in the historic surface
stable environment.”
In February, European Metals com- and underground drilling

and sampling, resulting in a substantial

amount of previously inferred material

being reclassified as indicated. The ad-

ditional drilling has also enabled the two

main value elements of lithium and tin to

be combined in one complete model that

covers the entire mineralisation at the Ci-

novec deposit.”

– Jonathon Daly

FinnAust sets sights on Greenland’s titanium

FinnAust Mining plc has announced it ership of Pituffik will provide certainty of sure to this highly prospective asset and
intends to acquire 82,560 shares of title and remove any issues associated will also aid future development plans by
Bluejay Mining Ltd, which will result in the with JV partners. having a simplified ownership structure.”
company having full ownership in Bluejay
and its Pituffik titanium project. FinnAust managing director Rod Following the acquisition of Bluejay,
McIllree said: “Pituffik has proven its the company intends to change its name
The 82,560 shares represent the potential to be in the top percentile of il- to Bluejay Mining plc.
39.63% of Bluejay which FinnAust Min- menite projects in terms of heavy mineral
ing does not already own. grade. With a maiden mineral resource “Whilst we maintain additional assets
targeted to be published in Q1 2017, in Finland, which offer further upside to
The AIM- and FSE-listed company is a bulk sample due later this year, and our company, our primary development
primarily focused on advancing of the larger scale production targeted in 2018, focus is undoubtedly on our portfolio of
Pituffik project in north-west Greenland. we believe the project offers significant assets in Greenland. Accordingly, we are
Pituffik includes three main exploration value upside. proposing a change of name to BlueJay
sites across an area historically proven Mining plc. This change is again subject
to contain large, high-grade accumula- “It is therefore our intention, subject to to shareholder approval at a general
tions of primary ilmenite. shareholder approval, to increase our in- meeting to be held in a few weeks. We
terest in the project to 100% by acquiring believe the proposed change of name
The Pituffik project has demonstrated the remaining 39.63% interest in Bluejay and exercise of the Bluejay option will
the potential to be a successful titanium which we do not currently own. Being the best position our company for growth,”
project and the maiden mineral resource sole owner of Pittufik will ensure that the McIllree said.
is expected to be published in Q1 2017. company benefits from maximum expo-

The company believes that 100% own-

PAGE 92 MARCH 2017 AUSTRALIA’S PAYDIRT

EUROPE

Dakota delivers maiden
results at Sepeda

Dakota Minerals Ltd has “Today marks a major mile-
flagged the potential for stone in executing our strat-
a decade-long mine life at its egy to become sustainable
fully-owned Sepeda lithium suppliers of lithium to the
project following completion European markets, with the
of a maiden resource on the announcement of resource
Portuguese project. capable of supporting a 10-
year mine life,” Frances said.
The inferred resource at
the Romano pegmatite is While metallurgical testing
10.3mt @ 1% lithium oxide of the Sepeda mineralisation
and 0.05% tin, enough to is still ongoing, the initial re-
support a sustainable project sults indicate a low iron pet-
with a mine life of 10 years or alite concentrate which is
more, according to Dakota. potentially suitable for tech-
nical market and could be
The Sepeda project, in produced with conventional
the Barroso-Alvão district of methods.
northern Portugal, could rep-
resent the largest pegmatite- Test work using roasting
hosted lithium resource in and hydrometallurgy methods
Europe, and is a major dis- is expected to be complete by
covery for Dakota. April-May this year.

This is the second lithium On February 22, the com-
discovery made by the com- pany announced the sale of
pany within the last year. its Lake Barlee exploration
Drilling has already restarted license in Western Australia
to deliver a resource update to Parkway Minerals Ltd. The
by Q3 2017. decision to sell was based on
Dakota’s strategy to focus on
Dakota chief executive Da- the development of its Euro-
vid Frances paid credit to the pean lithium projects.
team at Dakota for making a
second major lithium discov- A maiden resource of 10.3mt @ 1% Li20 and 0.05% tin
ery and yielding metallurgi- was announced at Sepeda last month
cal results which indicated a
product suitable for the Euro-
pean markets.

Plymouth under way at San Jose

Adiamond drilling programme at Plym- indication that the deposit had further po- this as a standout lithium project. We re-
outh Minerals Ltd’s San Jose lithium tential and remained open at depth. main excited for the assay results from
project has yielded promising initial re- the rest of the nine diamond holes from
sults, indicating potential for a wide, high- With two diamond drilling rigs work- this 10 diamond hold programme,” Byass
grade lithium deposit. ing around the clock, the rest of the pro- said.
gramme is testing to a depth of 2,400m
The San Jose deposit, in the Extrema- and was expected to be complete by “The style of mineralisation encoun-
dura Region of central Spain, was the the end February. Results are expected tered in the drilling conducted by Plym-
subject of favourable feasibility stud- to continue flowing until the end of this outh would lend itself to be exploited by
ies between 1985 and 1991, and the 10 month. a bulk mining, open pit method at a low
diamond hole programme is expected to strip ratio.”
confirm the historic resource. Plymouth executive chairman Adrian
Byass said he was delighted with the re- Plymouth is continuing with metallurgi-
The first diamond drill hole drilled to sults from the first diamond hole. cal work to confirm the deposit’s ability
the depth of 250m, finished with a grade to produce a saleable lithium carbonate.
of 1.08% lithium oxide and exceeded ex- “We have wide and high-grade inter-
pectations. Plymouth said it was a good sections that have exceeded our expec-
tations and go a long way to validating

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 93

SIGNED, SEALED AND DELIVERED

Kluane Drilling is undertaking a 1,650m diamond programme for Oro Verde at Topacio, Nicaragua

Kluane wins race to and load and haul production mining of agreed to a three-year contract exten-
drill Rebecca vein ore and overburden. sion, having first joined forces back in
2004.
Guatemala-based Kluane Drilling has NRW is expected to deploy existing as-
been confirmed as the preferred contrac- sets for the required work, which is slated It is the second major contract win for
tor to undertake diamond drilling of the to begin this month and will be carried Alliance in the past three months, with
Rebecca vein at Oro Verde Ltd’s Topacio out over more than five years. the airline extending its partnership with
gold project in Nicaragua. CITIC Pacific Mining in December.
Up to 60 personnel will be employed
Kluane, which was awarded the con- on site and NRW will work with the local Meanwhile, NRW Holdings Ltd has
tract after a competitive tender process, Njamal indigenous communities to offer been awarded a drilling and blasting
has extensive drilling experience in Nica- employment and subcontract participa- services contract – through Macmahon
ragua and currently has rigs working on tion. Holdings Ltd – at Telfer, 400km south-
other major projects in the country, in- east of Port Hedland.
cluding the La Libertad (B2Gold Corp) Meanwhile, NRW’s wholly owned
and Bonanza (HEMCO/Mineros) gold subsidiary Action Drill & Blast has been The 66-month contract, awarded to
mines and at Calibre Mining Corp’s ex- awarded a $12 million two-year contract NRW subsidiary Action Drill & Blast,
ploration projects, near Bonanza. extension by Talison Lithium Pty Ltd for is the company’s second gold project
blast hole and grade control drilling and award to date and has a base value of
Drilling was due to start at the time of blasting services at the Greenbushes about $40 million.
print. It comes after Oro Verde received mine, 250km south of Perth.
the final permits for drilling early last
month. Telfer extends air deal Guma comes together
with Alliance for iron ore majors
Newcrest Mining Ltd will fund the initial
1,650m programme of seven diamond Indigenous contractor Guma ICRG
holes, under the terms of a JV agree-
ment signed in November 2015. Alliance Aviation Services Ltd will con- Pty Ltd has secured two major contract

NRW boosts lithium tinue to provide air charter services to wins with Roy Hill Holdings Pty Ltd and
drill and blast
portfolio Newcrest Mining Ltd’s Telfer gold opera- Fortescue Metals Group Ltd.

NRW Holdings limited has been tion until at least 2020. Guma has been appointed to con-
contracted to oversee the mine de-
velopment, drill and blast and min- Last month, Alliance and Newcrest struct and install four concrete evapora-
ing services at Altura Mining Ltd’s
Pilgangoora lithium project in West- tion sumps at Roy Hill’s operations,
ern Australia.
south of Port Hedland. The scope
The contract is valued at $110
million, with the award subject to of work includes the redirection
Altura completing project funding
as part of the final investment deci- of conveyor effluent, excavation
sion.
works to accommodate the sump,
The scope of the work includes
construction of the required mining installation of formwork and asso-
infrastructure, development of mine
haul roads, drill and blast services, ciated concrete pours, and earth-

works to accommodate permanent

drainage.

The Roy Hill contract win follows

on from previous work Guma has

completed at the iron ore project,

including the upgrade and sealing

of the mine access road.

Guma has also successfully

secured contract extensions with

Fortescue for the Hi-Rail and Main-

Alliance Aviation Services will continue to fly workers line projects.

to Telfer for at least another three years The Hi-Rail contract extension

PAGE 94 MARCH 2017 AUSTRALIA’S PAYDIRT

swana was a deciding factor in the geotechnical investigations. The compa-
award of the contract. ny has also been involved in three of the
only four mining projects in Eritrea.
Aveng Moolmans replaces
Eqstra Botswana, which had its Elemental also contributed to the feasi-
contract terminated last Decem- bility studies, namely mass balance mod-
ber just two years into a five-year elling work on the project.
deal.
The FEED process is being led by en-
Pacific positioned to gineering and construction firm Fluor,
power Fortnum with the team already assembling for the
first phase of value engineering and op-
Pacific Energy Ltd has secured timisation talks to identify capital reduc-
tion and optimisation areas prior to the
a new electricity supply contract development of the final equipment lists
and procurement packages.
with a wholly owned subsidiary
Non-process infrastructure work pack-
of Westgold Resources Ltd at the age specification and market engage-
ment is expected to be opened to tender
Guma ICRG has won key contracts Fortnum gold project. shortly.
with Fortescue and Roy Hill The ASX-listed power genera-
Strandline puts faith in
tion specialists will build, own and GR to deliver Fungoni

includes the rail drain cleaning of the maintain a 5MW diesel-fuelled power GR Engineering Services Ltd has
Port Hedland to Christmas Creek and station at Fortnum, near Meekatharra in been appointed to manage and integrate
Solomon Spur rail-lines, with the initial Western Australia’s Mid West. feasibility study packages for Strandline
two-year contract now extended by an Resources Ltd’s zircon-rich Fungoni min-
additional two years to December 2019. The contract is for an initial term of five eral sands project in Tanzania.
years, subject to early termination and
In addition to cleaning the rail drain, the purchase options, with commissioning The award-winning engineering and
Hi-Rail scope of work includes changing due to be completed at the time of print. construction contracting firm’s primary
out the ballast and general rail infrastruc- role will be to develop the most economi-
ture maintenance. Following the award of this contract, cal process plant and infrastructure solu-
Pacific Energy’s total contracted capac- tions for the project, about 25km south of
The Mainline project involves the man- ity now exceeds 250MW. Dar es Salam port infrastructure.

agement and maintenance of rail access Danakali adds two Strandline is targeting completion of
roads servicing more than 560km in the more to FEED team the feasibility study – followed by a final
East Pilbara. The initial three-year con- investment decision – during the third
tract, which was to expire in June, has quarter of 2017, with production to begin
about 12 months later.
also been extended by a further two Danakali Ltd has added Knight Piesold
years. and Elemental Engineering to its FEED
team for the Colluli potash project in Eri-
ICRG chief executive Shane Cable trea.
said the organisation was delighted with
the contract wins. Knight Piesold has an intimate knowl-
edge of the project, having had key input
“We believe the nature of [these con- during the PFS and DFS in the areas of
tracts] demonstrates our adaptability surface water modelling, hydrogeology,
and demonstrates the confidence large potassium recovery pond design and site
resources firms have in ICRG when it
comes to our track record of project de-

livery,” he said.

Lucara appoints new GR Engineering will manage and integrate feasibility study packages for
mining contractor Strandline at Fungoni in Tanzania

Lucara Diamond Corp has appointed
Moolman Mining Botswana Pty Ltd as its
new mining contractor at the Karowe dia-
mond mine in Botswana.

Moolman Mining, also known as Aveng
Moolmans, has been contracted to pro-
vide the full suite of mining services – in-
cluding all drill, blast, load and haul func-
tions for both ore and waste – for the next
six years.

Aveng Moolmans was mobilising the
required equipment to site at the time of
print and was expected to begin mining
activities early this month.

Lucara president and chief executive
William Lamb said Aveng Moolmans’
extensive operational expertise in Bot-

AUSTRALIA’S PAYDIRT MARCH 2017 PAGE 95

COMINGS AND GOINGS

Tony Walsh has been ap- Heald as company secretary phase of growth. Executive Practice and holds more than
pointed joint company at Pacifico Minerals Ltd. Ho- director Greg Bittar has been 30 years of practice in re-
secretary of Battery Minerals lywell has more than 13 years appointed non-executive source regulation, JV agree-
Ltd. Walsh currently holds of experience in accounting chairman, with former Doray ments, project infrastructure
similar roles with Atlas Iron and finance, including posi- Minerals Ltd chairman Peter development approvals and
Ltd, Legend Mining Ltd and tions at Deloitte, Patersons Lester joining the board as a general commercial issues.
S2 Resources Ltd. and other ASX-listed compa- non-executive director. Bittar Meanwhile, current director
nies. replaces outgoing chairman Roger Higgins has been pro-
Andrew Michelmore Richard Proctor, who has re- moted to non-executive chair-
Kin Mining NL has restruc- tired after seven years as a man.
Jerry Jiao has succeeded tured its board as it pre- company director.
Andrew Michelmore as pares to begin development Dianmin Chen
chief executive of MMG Ltd. of the Leonora gold project Erik Palmbachs has been
Jiao has been a director of in Western Australia. Long- appointed Cardinal Re- Dianmin Chen has re-
MMG since the company’s standing managing director sources Ltd’s new chief finan- signed as managing di-
formation in 2009 and has Trevor Dixon has become cial officer. rector of CuDeco Ltd. Chen
served as its chairman for the non-executive chairman, re- oversaw the company’s tran-
past three years. Michelmore placing Terry Grammar, with TNG Ltd has appointed sition from explorer to estab-
will formally step down from chief executive Don Harper international renewable lished copper producer. He
MMG on July 1 after first an- appointed managing director. energy executive John David- has been replaced by former
nouncing his retirement plans Experienced metallurgist Da- son as a non-executive direc- Waltz Group chief executive
last September. Meanwhile, vid Sproule has also replaced tor. Davidson is the founder Mark Gregory. Noel White
Guo Wenqing has been ap- Fritz Fitton as a non-execu- and managing director of has also resigned as chair-
pointed as a director and will tive director. Perth-based off-grid power man due to increasing other
assume the chairmanship and utility-scale solutions business commitments, with
of MMG. Guo is president of Brad Sampson has re- provider Energy Made Clean, board member Peter Hutch-
MMG’s largest shareholder, signed as a director of Ti- which was recently acquired ison taking over the role in the
China Minmetals Corp. ger Resources Ltd. Sampson, by ASX-listed Carnegie Clean interim. Financial manage-
appointed as chief executive Energy Ltd. ment specialist Wang Chiwei
Talga Resources Ltd has on February 6 resigned on has been appointed a non-
appointed renowned in- February 24, will fulfil the BC Iron Ltd has appointed executive director.
dustrial technologist Terry role of chief executive on a Simon Hodge as chief
Stinson to replace retiring contract basis, reporting to financial officer and Rubini Peter Hutchison
chairman Keith Coughlan. the board and providing key Ventouras as general counsel
Stinson is the managing di- executive leadership to the and company secretary. Leigh Junk will continue
rector of ASX-listed Orbital company. as managing director of
Corp Ltd and last year se- Australian Vanadium Ltd Doray Minerals Ltd on a per-
cured a deal into the in-situ di- Brad Sampson has appointed Daniel manent basis. Junk, a mining
vision of Boeing Corp’s global Harris to its board of direc- engineer, assumed the role in
unmanned aerial vehicle sup- Danakali Ltd has added tors. Harris was recently the an interim capacity last No-
ply business arm. experienced potash min- interim managing director of vember following the resigna-
ing executive Robert Con- Atlas Iron Ltd and has previ- tion of company founder Allan
Patersons Securities insti- nochie to its board as a non- ously held senior executive Kelly.
tutional sales and wealth executive director. Connochie roles with several vanadium-
director Tom Bahen has replaces Tony Kiernan, who focused companies, including
joined the board of Fraser has resigned after playing Atlantic Ltd, Evraz Group and
Range Metals Group Ltd. a key role in the company’s Strategic Minerals Corp.
Bahen has held previous di- pursuit of a mining licence for
rectorships with ASX-listed the Colluli potash project in Chris Creagh has been
companies Alcidion Group Eritrea. promoted to chief execu-
Ltd, Carbine Resources Ltd tive of tin developer Elemen-
and Cre8Tek Ltd. Millennium Minerals Ltd tos Ltd. Creagh, a geologist,
has made two board has been the company’s
Patrick Holywell has re- changes as the gold producer operations manager since
placed Amanada Wilton- positions itself for the next September and oversaw the
accelerated expansion and
development of the Cleveland
tin project in Tasmania.

George McKenzie has
joined the board of Mi-
notaur Exploration Ltd as a
non-executive director. Un-
til recently, McKenzie was
a partner and head of Fin-
laysons Lawyers Resources

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LEFTFIELD

Craig Oliver gong for Evolution

Evolution Mining Ltd has past 12 months.
claimed the 2017 Craig Oli- The award was created
ver Award.
in memory of Oliver, former
Evolution is one of Australia’s non-executive director of
largest gold producers, having Sundance Resources Ltd,
acquired a series of projects, who died in June 2010 when
with the Cowal mine in New a plane carrying the entire
South Wales, acquired from Sundance board crashed in
Barrick Gold Corp, one of the the Congo, killing all on board.
company’s largest purchases.
The award was tightly con-
Evolution recorded a net profit tested this year with Capri-
for the December half of $136.3 corn Metals Ltd, Dacian Gold
million and recorded group pro- Ltd, Kidman Resources Ltd
duction of 423,120oz @ AISC of and Western Areas Ltd the
$978/oz. other nominees.

The Craig Oliver Award is Evolution vice president of
assessed by members of a business development and
committee and is presented investor relations, Aaron Col-
annually at RIU’s Explorers leran, accepted the honour on
Conference to the company behalf of executive chairman
deemed the best small to mid- Evolution’s all round achievements in acquisitions and production Jake Klein.
tier “all-round” achiever over the were acknowledged with the 2017 Craig Oliver Award



INDEX

Acacia 34, 63 Doray 96 KazAtomProm 16, 44, 66 Rio Tinto 5, 27, 46, 55, 59
Kin 96
Aeris 5 Kore Rosas & Petalas 23, 24, 25
Korea Zinc 80-81
Agrimin 79 Elementos 96 K+S 10 Roy Hill 5, 94-95
Endeavour 34 Kumba Iron 79
Agrium 79 Endiama 23, 24, 35
Eurasian Resources 56 41, 47
Altura 94 Eurochem 79 S2 Resources 96
European Metals 92 SEMAFO 89
Anglo American 32, 36, 41, 59, 88 Evolution 4, 5, 11 Sandfire 45
Sibanye 32
AngloGold 7, 38, 89 Silver Lake 81
South32 4, 34, 36, 89
Arab Potash 79 Legend 96 St Barbara
Lucapa 20-26 Strandline 5
Artemis 12 Lucara 25, 95 Summit 95
16
Atlas Iron 96

AusQuest 89 Fertoz 84
FinnAust 92
Australian Vanadium 96 Firestone 25 Millennium 96
First Quantum 8-9, 30-31 Minotaur 96
B2Gold 94 Fortescue 4, 5, 27, 94-95 MMG 96 Talga 96
Bannerman 29, 64-67 Fraser Range 96 Mosaic 79 Talison 94
Barrick Freeport 90 Teck 10
Battery Minerals 34, 59 Newcrest 7, 94 Tiger 53, 96
BC Iron 96 Northern Star 4, 5, 11 TNG 96
Beadell 96 Toro Energy 64
BHP Billiton 6 Gascoyne 5, 6, 11 OceanaGold 91 Toro Gold 53
Blackham Gem 22, 23 OreCorp 63
5, 74, 59, 88 Glencore 10, 59, 86 Orinoco 38, 89
11 Goldcorp Orion Gold 43, 68-72
Gold Fields 59 Oro Verde 94
Calibre 94 Gold Road 36-37, 59, 81 Uralkali 79
Cameco 55, 66
Carbine 8-9, 96 5
Cardinal 63, 96
Centrex Harmony 7, 43 Pacifico 96 Vale 5
Chinalco 85 Highfield 78 Vedanta 71
CITIC Pacific 46 Horizon 18 Paladin 16, 17, 39 Vimy 64
Consolidated Nickel 94 Hummingbird 53
Consolidated Zinc 60 Panoramic 18
CuDeco 86
96 Peninsula Energy 43 Walkabout 4, 29, 62
West African 5, 63
Petra 24 Western Areas 14
West Wits 43
IAMGold 38 Plymouth 93 Westgold 95
Impala 54 White Rivers 43
Independence 38 Potash Corp 79
Israel Chemicals 79
Ivanhoe 54 POZ 81

Dacian 5, 6 Primero 88
Danakali 74-75, 79, 95, 96
Dakota Resolute 29, 58 Zijin 54
De Beers 93 Regis 5
22 Kalium Lakes 81

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