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Published by Paydirt Media, 2018-03-22 07:09:36

GMJ131-April-June-web

April – June 2018 VOLUME 1. ISSUE 131
$11.95
Registered by Australia Post PP 643938/00057

Woodlark wonder:

Geopacific’s island paradise

AUSTRALIAN REVIEW AFRICAN SPOTLIGHT

ISSN 1324-4396
02

9 771324 439005

Gold Mining Journal April - June 2018

GOLD MINING JOURNAL (ISSN 1324-4396) NEWS 8
Published by Paydirt Media Pty Ltd.
A.C.N. 063 985 133 Fresh from the bank’s annual conference, Bank of Montreal’s (BMO)

EDITORIAL senior precious metals analyst Andrew Kaip highlights trends to watch in
Editor:
the global gold sector in 2018. Kaip told editor Dominic Piper that Austral-
Dominic Piper
ian companies were well ahead of their North American counterparts and
Deputy editor: expected ASX stocks to trend positively this year
Mark Andrews
COVER 16
Journalist:
Michael Washbourne Geopacific Resources only stepped foot on Woodlark Island, Papua New
Guinea, 18 months ago, however, its razor sharp focus has seen it pro-
Art director: duce a PFS on the Woodlark project already. At the time the PFS was be-
Marian Noonan ing completed, GMJ’s Michael Washbourne got a first-hand look at what
is potentially shaping as a low-cost, open-pit mining operation averaging
Contributors: 100,000 ozpa over an initial 10 years
Keith Goode,
Brendan Ryan (Johannesburg) AFRICA 22

ADVERTISING Is South Africa re-emerging as a mining powerhouse? A change of leader-
Advertising manager: ship and better dialogue between government and industry suggests the
country is on a path to do so. GMJ speaks to West Wits Mining and White
Richa Fuller Rivers Exploration about their expectations and potential for the South
African gold sector in the short to long term
Subscriptions:
Mitchelle Matambo Cover image: Geopacific’s Woodlark gold project, Papua New Guinea

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Accounts/administration: April - June 2018
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Gold Mining Journal

EDITOR’S LETTER

A big year for gold majors

The remaining nine months of 2018 could be a defining period for the
global gold industry, one which will decide whether it remains the niche
investment it has been since the onset of the GFC or return as a serious
investment class.

Gold equities’ fall from grace was rapid in the period after the gold price came
off its lofty 2011 highs. Investment in gold ETFs and physical gold had already
stolen much of the industry’s thunder but as investors began to reassess their
portfolios there was a realisation that the gold sector had summarily failed to
deliver adequate returns during a period of all-time high prices.

The result was sweeping changes at board and management level and a
wholescale write-down ($US80 billion by some estimates) of the majors’ gold
assets. Gold companies had blown their great opportunity and investors turned away from the sector in
a major way.

Six years on, the industry – at an operational level at least – has resurrected itself. The likes of Newmont
Mining Corp, Goldcorp Inc and Barrick Gold Corp have turned their ships around, restructuring their
portfolios and balance sheets to focus on higher margin operations and cash flow.

However, to date investors are yet to drop their caution towards gold miners.

“The senior miners have executed very well by increasing their exploration budgets and holding or
increasing reserves steadily,” BMO senior precious metals analyst Andrew Kaip told me in an interview on
page 8. “There has been some decent uptick in execution and they generating more free cash flow than
the market is giving them credit for.”

Evolution Mining Ltd executive chairman Jake Klein prosecutes a similar argument to Kaip; 2018 will be
the year when generalist investors begin seriously looking at gold equities again. The question is; can
management teams hold their nerve and stay focused on providing good margins, strong cash flow and
greater returns or will they get dragged back into the big-is-better mentality?

The problem is, as generalist investors return to the sector, they will demand to see where growth is
coming from. With the gold majors having slashed their exploration budgets during the downturn, their
development pipelines are very thin indeed. Will the pressure of providing compelling growth projections
lead them down the path of M&A again or do the new management teams have smarter strategies in
place?

The Australian mid-tier gold miners have performed admirably in this regard and have been rewarded with
strong support from North American investors.

Evolution and Northern Star Resources Ltd have shown a willingness to restructure their portfolios to
reflect their growing stature and both are now spending big on exploration in an effort to stock their project
pipeline. Newcrest Mining Ltd has been more outward looking, spending more than $400 million to secure
a dominant position in the emerging gold destination of Ecuador.

All three have built momentum into their portfolios but for the North American majors this is a much more
difficult process. This reflects Australian gold companies’ overall better performance than their North
American peers in the last 12 months.

At the junior end of the market, North American companies continue to battle for risk capital with the
emerging forces of medical marijuana and crypotcurrencies. Neither of these investment classes have
made a big impact in Australia, yet, and as such the stream of emerging producers, exploration stories
and IPOs continues to gather pace with North American investors growing increasingly enamoured with
Australian companies.

Hopefully, this momentum is maintained when these investors inevitably return to their domestic stocks.

[email protected] @DominicPiper /dominicpiper /PaydirtMediaAustralia

Gold Mining Journal Page 4 April - June 2018

Gold Mining Journal April - June 2018

NEWS

Evolution rallies gold peers

by Michael Washbourne

Evolution Mining Ltd has become win back the support of the so-called
the globally recognised mid-tier generalist investor.
gold company that executive chairman
Jake Klein once forecast, but there are “All of the investors we were
still aspects of that vision he considers speaking to at the recent BMO
unfulfilled. conference were really specialist
resource and gold investors,” Klein
With sector-leading group AISC of $785/ tells GMJ. “We need to demonstrate
oz ($US611/oz) for the December 2017 to generalist investors that investing
half, Evolution is now the envy of gold in a gold company is a highly
producers all over the world – and there profitable, high margin business
is potential for those costs to come down that will be dividend paying and
even further. sustainable.

Evolution shareholders were rewarded Jake Klein “We’re not there yet as a sector. If
with a 3.5c/share interim dividend, a you look at the volumes of shares
75% increase from the previous reporting period, as the
company’s underlying net profit after tax jumped 8% to traded in gold stocks globally, they’re down year-on-year
$124.7 million. and I think the next step we need to take as a sector is to
win back the trust of those investors who still may be scarred
But Klein remains ever the contrarian and believes the gold from the last downturn and all the impairments that were
sector as a whole still has a big challenge on its hands to incurred.”

Klein said most of the discussions he had with some of the
world’s largest gold investors at February’s BMO conference
in Florida were positive, with many heaping praise on
Evolution and the likes of Northern Star Resources Ltd,
Regis Resources Ltd, St Barbara Ltd and Saracen Mineral
Holdings Ltd for leading a turnaround in the performance of
Australian gold mines.

It comes just six months after Marcelo Kim, from New York-
based hedge fund Paulson & Co, blasted the world’s top
gold miners for “serial value destruction” in the industry.

Klein echoed Kim’s comments and called on his rival gold
companies to become “better stewards of capital”.

“The Paulson presentation at the last Denver gold show
highlighted over $US80 billion of impairments from the top
six gold companies in the world since 2012,” Klein says.
“If you think about that in the context of the largest gold
company in the world having a market cap of around $US20
billion, that’s a lot of scar tissue that needs to heal.

“We feel we have a business case now, but we’ve got to
work harder to win them back.

“Paulson is a shareholder of ours and we have very good
and constructive dialogue with them. They’ve invested in
Evolution because we are demonstrating a discipline by
constantly reviewing our portfolio.”

Evolution’s rise to prominence over the last three years
included the timely acquisitions of the Cowal gold mine in
New South Wales and an economic interest in Glencore’s
Ernest Henry copper-gold operation in Queensland.

Gold Mining Journal Page 6 April - June 2018

Australia’s second largest gold producer also Evolution reported an underlying
divested the Edna May and Pajingo mines on net profit of $124.7 million for
which it was founded in 2011. the December 2017 half

“We’ve made significant acquisitions, but we’ve
also sold our shortest mine life, highest cost,
lowest margin assets as well,” Klein said.

“We’re excited about the opportunity that we’ve
created at Evolution. We recognise that we need to
sustain that and continue to deliver, but we have a
very, very strong base with which to do that from.”

Evolution’s group net cash flow for the December
2017 half lifted 20% to $176.8 million after
investments, with Ernest Henry ($107.4 million),
Cowal ($87.3 million) and Mt Carlton ($57.5 million)
still the leading contributors.

During the first half of FY2018, net bank debt was Evolution yielded $189 million net mine cash flow from the
slashed by 61% to $231.5 million and gearing reduced to first 12 months of acquiring 100% of the gold production and
9.5%. 30% of the copper and silver output from Ernest Henry, near
Cloncurry.
Evolution is investing some $300 million in a large cutback
of the E42 pit at Cowal in a bid to extend the mine life out to The company remains busy with the drill bit across almost
2032. The flotation tails leach project targeting an increase 1,000sq km of tenure around its Mungari operation, near
in recoveries by 4-6% remains on track for delivery in the Kalgoorlie, as it chases a replacement for the depleting
second half of this year. Frog’s Leg mine.

Klein continues to marvel at the exploration upside of In Queensland, Mt Carlton continues to outperform feasibility
the former Barrick Gold Corp asset, with the company estimates, delivering an annualised $100 million net mine
successfully adding reserves to its inventory for a discovery cash flow for the past 2.5 years.
cost of just $14/oz.
Mt Rawdon is expected to soon enter a sustained period of
“I think the exploration story of Cowal is only in its infancy,” cash generation given most of the stripping for the Stage 4
Klein says. “They [Barrick] acquired Cowal in 2001 and built pit is now complete.
it in 2006, some 23 years after the E42 pit was discovered.
It was meant to cost $400 million and it ended up costing Another asset Klein believes is turning the corner is Cracow,
them $700 million and by then they were into growth in other which had faced an uncertain future with limited mine life
areas of the world and Australia was waning with respect to ahead of it.
importance.
“It’s had an incredible track record of replacing reserves,
“I think by 2009 they had 29 assets and Cowal was probably but 12 months ago we were getting a little concerned,” Klein
ranked, if you had tier one to five, it was probably in the says. “Twelve months later we’re much more optimistic. It’s
fourth or fifth tier. We would say that it is a Tier One asset in a good cash generator of $30-40 million and we see it as a
Australia and in Evolution’s thinking.” long-term part of our portfolio.”

Evolution Mining Ltd and Emmerson Resources Ltd have restructured Evolution is forecast to spend $13-20 million on
their JV over the Tennant Creek mineral field in the Northern Territory. resource definition work in FY2018 as well as $20-30
million on discovery, continuing a recent trend among
Following the end of the original earn-in agreement, Evolution has the leading gold producers of investing heavily back
elected to forego its right to a 65% interest of the field and will now into the ground.
take 100% of an area which hosts the Gecko, Goanna and Orlando
copper-gold deposits. “We’re trying as best as possible to make Evolution a
company that prospers through the cycle,” Klein says.
Emmerson retains 2,600sq km of tenure – about 94% of the previous “We operate in a very cyclical industry and I think one
JV area – and 100% of the tribute mining agreement over Edna Beryl of the difficulties the sector has had is that it’s kind of
where a small mine has now been established. been feast or famine. So, the foot is either flat down
on the accelerator with respect to investment and
“This proposed restructure better aligns the assets with the respective exploration, or it’s totally turned off.
companies,” Emmerson managing director Rob Bills said.

“Importantly, the investment in new data during the term of the JV “We’re saying you’ve got to invest in those parts of
has provided new insight into what we believe is a new generation of the business through the cycle and then you will have
high-grade, hematite-hosted gold deposits.” something that prospers through the cycle. That’s
how we’re trying to position Evolution.”

Gold Mining Journal Page 7 April - June 2018

NEWS

Aussies set precious
standard

by Dominic Piper

Australian companies are leading their 2017, they left a lot of investors shell-
North American peers on financial, shocked. We have seen some good –
operational and market metrics according B2Gold [Corp], Kirkland Lake Gold [Ltd ]
to one of the Northern Hemisphere’s and IAMGold [Corp] for instance – but
leading precious metals analysts. easily a third or 40% of the companies we
watch had material problems in execution
Speaking to GMJ after the bank’s annual in 2017.”
Florida conference, Bank of Montreal’s
(BMO) senior precious metals analyst TSX-listed gold miners have also been
Andrew Kaip said Australian gold struck by geopolitical issues and Kaip saw
companies had elevated themselves the Australian miners’ domestic weighting
against their North American peers thanks as a clear advantage.
to operational execution and were seeing
market support as a result. “The Australian miners are generally
operating mines in Australia so, they have
“There is a real bifurcation in our outlook Andrew Kaip taken the political risk out of the equation,”
for gold equities,” Kaip explained. “In he said. “In the Northern Hemisphere we
Australia, gold equities are bumping up have seen the likes of Acacia [Mining plc],
against 52-week highs while in North Eldorado Gold [plc], Tahoe [Resources
America they are testing 52-week lows.” Inc] and Torex Gold [Resources Inc]
experience geopolitical problems. These were all premium
Companies such as Newcrest Mining Ltd, Evolution Mining names on the TSX [Acacia through it links with Barrick Gold
Ltd and Northern Star Resources Ltd have continued to Corp] which have all since stumbled on external factors.”
generate large free cash flow numbers despite production
restrictions. Kaip said as well as their ability to produce free The maturity of Australia’s underground mining sector also
cash flow, it was Australian miners’ ability to spend it wisely offers advantages according to Kaip.
which had seen them outstrip their North American peers.
“The industry there has gone to a unitised approach to
“In Australia, the gold stocks are resonating well because execution; underground practices are practically the same
they are generating excess cash and are deploying that cash across the board and the country has a strong contractor
well through exploration, which is translating into improved industry which uses what is essentially a cookie-cutter
reserves and visibility in the company’s future.” approach. Canada hasn’t taken those risks out of the
industry yet,” he said. “Australian companies have executed
All three of Australia’s largest gold miners have continued well from a management perspective.”
with exploration and development objectives. Newcrest spent
$33 million on exploration in the six months to December Another factor weighing North American gold equities down
31 and has since expanded its Latin American business by is the rise of alternative investment classes.
investing $US250 million in Lundin Mining which controls the
Fruta del Norte project in Ecuador. “In North America, the gold equities have got significant
competition for risk capital, particularly from the marijuana
Northern Star has a $45 million exploration budget for FY2018 and blockchain sectors. This is diverting risk capital away
and recently paid $80 million for Westgold Resources Ltd’s from gold over here but I’m not sure you are seeing that in
South Kal operations, while Evolution spent $16.2 million for Australia yet.”
the half-year to December 31.
However, as always in relative underperformance of a sector
Kaip contrasted the Australian miners’ progress to North suggests a buying opportunity and Kaip sees a stronger
America’s mid-tier where companies had been beset by investor response coming to North American gold stocks.
operational issues.
“The senior miners have executed very well by increasing
“In North America, there has been a lack of interest in gold their exploration budgets and holding or increasing reserves
equities driven by myriad operational issues,” he said. “In steadily,” he said. “There has been some decent uptick in

Gold Mining Journal Page 8 April - June 2018

Northern Star recently paid $80 million for
Westgold’s South Kal operations

execution and they are generating more free cash flow than to see how it progresses,” Kaip said. “We don’t have any
the market is giving them credit for. exposure to South Africa currently and you only have to look
at Gold Fields [Ltd] and AngloGold’s [Ashanti Ltd] divestment
“Last year’s performance of North American portfolio decisions in the country to tell you what has been happening
managers was saved by their Australian weighting. That there.”
outperformance of the ASX-listed equities has been sufficient
that there might be a reversal back into the TSX but it has to Andrew Kaip lays out his
be predicated on performance.” three key gold trends for 2018:

Of the North American majors, Kaip sees Goldcorp Inc and 1) “Discussion about inflation. Senior miners are indicating
Barrick providing the most interesting 2018. they are seeing inflation on consumables and beginning
to see it on labour as well but most are optimising their
“Goldcorp is the most intriguing to look at,” he said. “It operations to keep it at bay. All-in cash costs are going
has been struggling on execution but is in the process of up, largely because of the contribution of increased
demonstrating better execution; the question now is whether exploration. I see that as a positive because it is investing
a rerating is going to take place. in the asset base. We are seeing sustaining capital rise
but that is now more about investing in the future and less
“Barrick is in transition from deleveraging to demonstrating it about catching up on deferred capital.”
has a stable production profile post-2018. It is now socialising
that profile with investors and if they can believe it can pull it 2) “Unmatched free cash flow out of the senior miners. We
there may be an opportunity. However, there are still some forecast more than $US10 billion in free cash flow out of the
issues for Barrick, with the resolution of the Acacia situation North American gold seniors this year; that is meaningful.
the biggest one.” It’s not approaching the same as the diversified miners yet
but for gold we haven’t seen this historically. Free cash
Acacia’s stoush with the Tanzanian Government and the flow of 4.5% at a $US1,280/oz gold price is a pretty decent
fervent resource nationalism emerging there and in DRC outcome. It is leading some companies – Newmont and
has left many observers to question the future of gold mining Agnico Eagle in particular – to increase dividends. This is
in Africa. Kaip is more level-headed in his outlook. not a wholescale move but over the next few years I think
you will see select increases in dividend policy.”
“Political risk is always there and it is not unique to Africa,”
he said. “It can become elevated on the continent but there 3) “Muted discussion about M&A. We are starting to see the
are good quality jurisdictions. For instance, Burkina Faso, Australian miners become more aggressive – Newcrest in
from a political standpoint has certainty – although it does Ecuador for instance – from a value standpoint, the North
have terrorist issues – and from the Government, you get American gold equities are trading at values we haven’t
reasonable stability. Cote d’Ivoire also has good stability seen since the start of 2016.”
but then you contrast that with Tanzania or DRC; it is a real
patchwork.”

As Africa’s largest gold producer, South Africa’s political
situation comes under constant scrutiny. BMO retains a
watching brief over the country.

“South Africa has some positive indicators but we have

Gold Mining Journal Page 9 April - June 2018

NEWS

Newmont growth versus
Barrick caution

by Paydirt staff and Susan Taylor, Reuters

The world’s two largest gold miners could The continued success of
swap places at the top of the production Newmont’s Tanami operations
table this year as they embark on radically
different plans. will contribute to increased
production in 2018
Newmont Mining Corp lost its position as
the world’s largest gold miner to Barrick Newmont said low-cost production from newer mines,
Gold Corp in 2017 but the Denver-based coupled with productivity gains, helped drive an 88% gain in
company will rebound in 2018 if its forecast full-year free cash flow to $US1.48 billion.
production figures hold.
Ending 2017 with $US3.3 billion cash on hand, Newmont
Newmont laid out plans for new projects to reported a fourth-quarter profit of 40c/share ahead of
grow gold production and cut costs in March, analysts’ expectation of 38c, lifted by bigger-than-expected
while reporting market-beating profits and production.
output forecasts that position it to take the
title of world’s largest bullion producer in In March, Newmont replaced its gold-price linked dividend
2018. policy with a quarterly payout of 14c/share, which it said
translates to a 1.5% yield. The company also reported
Newmont, whose 2017 production slightly gold reserves of 68.5 moz for 2017, unchanged from
lagged Barrick, boosted its 2018 capital 2016, as it replaced reserves through exploration, project
budget by $US300 million, to $US1.2-$1.3 billion, after developments, revisions and acquisitions.
approving a power project at its Tanami operation in Australia
and expansion of a JV mine in Nevada. Meanwhile, Barrick is reluctant to make rash corporate
decisions to retain its annual production profile as it finishes
Chief executive Gary Goldberg said Newmont’s efforts to the repay job to its balance sheet.
attract a broader investor base, by sweetening its dividend
and focusing on shareholder returns, is drawing increased The Toronto-based company considered a number of deals
interest from generalist investors. over the past year that offered growth, but passed on them
all, chairman John Thornton said.
“We need to make ourselves more attractive, which I think
we’ve done by upping our dividend yield,” he said in an While growth is a “conundrum” which Barrick has failed
interview with Reuters. to deliver, “we will not yield to the pressure to ‘just find
something’ in order to ‘grow’,” Thornton said.
And as the gold industry studies blockchain technology as a
way to confirm ethical and sustainable production, Newmont Barrick forecasts annual production of more than 4 moz
is interested in trialling it this year, he said. gold between 2023 and 2027, a steady view that contrasts
with February’s market-rattling outlook for lower output and
“We definitely want to be involved in it, we think it’s a good higher costs in the near term.
thing for the gold industry overall,” Goldberg said, adding
that other miners may launch trials before year-end.

Blockchain, the technology behind cryptocurrencies like
bitcoin, is drawing interest from a range of industries as a
means to track minerals and add security and transparency
in trade and other financial transactions.

Newmont, which has mines in the Americas, Africa and
Australia, forecasts annual gold production of 4.9-5.4 moz in
the next two years and 4.6-5.1 mozpa through 2022.

In contrast, Canada’s Barrick cut its 2018 forecast to 4.5-5
moz gold, while targeting 4.2-4.6 moz of annual production
from 2019 to 2022.

Gold Mining Journal Page 10 April - June 2018

For 2018, Barrick cut its forecast output to 4.5-5 moz gold and Pueblo Viejo in the Dominican Republic.
and predicted annual production of 4.2-4.6 moz from 2019
to 2022. It does not include contribution from large-scale greenfield
projects: Alturas, Donlin Gold, a Norte Abierto JV, or Pascua-
Still, Barrick flagged four projects that could add more than Lama.
1 moz to annual output starting in 2021, including three
Nevada developments approved to proceed, including the The long-stalled Pascua-Lama project does not currently
$US300-325 million Turquoise Ridge project – a 75/25 JV meet Barrick’s investment criteria and the company said
with Newmont – which will nearly double annual output, to it planned to seek a partner. Shandong Gold, which owns
more than 500,000 ozpa. half of Barrick’s Veladero mine in Argentina, has formed a
working group with Barrick to study a potential partnership.
The long-range forecast reflects potential gains from the
Cortez Deep South, Goldrush and Turquoise Ridge mines Barrick also said chief operating officer Richard Williams was
and Robertson property in Nevada; Lagunas Norte in Peru; stepping down to take on a new role focused on talks with
Tanzania for the company’s troubled Acacia Mining plc unit.

Tip top gold year for Oz

Australian gold mine production hit its highest peak since gold projects also in the pipeline
1999 in 2017. – would see Australian gold
production remain healthy for
A total of 301t, or 9.7 moz, gold was produced in Australia some time.
last year, which was 3t more than in 2016.
“In addition, Westgold Resources
According to Melbourne-based mining consultants Surbiton
Associates Pty Ltd, production for the December 2017 is commissioning its 1.2 mtpa
quarter totalled 80t, up 6t from the previous quarter.
Tuckabianna treatment plant near
Higher output in the December quarter was attributed to a
number of factors including the strong recovery at Newcrest Meekatharra, WA, which will ramp
Mining Ltd’s Cadia East in New South Wales, while significant
increases at the likes of Fosterville, Super Pit, Peak and up to an annual output of around
Tropicana were also reported.
100,000oz by 2020,” she said. Dr Sandra Close
“At the average gold price for 2017, the 301t was worth Despite a record ending to 2017,
almost $16 billion,” Dr Sandra Close, a Surbiton Associates
director, said. wet weather in WA to start the new year will probably mean a

“Australian gold production is still trending upwards and the decrease in gold output for the March quarter, however, the
next few years look promising.”
forecast beyond that is strong.
Dr Close said imminent production at Dacian Gold Ltd’s Mt
Morgans project, near Laverton – and with the Dalgaranga “Given the number of projects coming on stream and with
(Gascoyne Resources Ltd) and Leonora (Kin Mining NL) few closures anticipated, it would not be surprising to see
another 20t of production added to Australia’s annual
output,” Dr Close said. “This suggests that Australia’s all-
time record annual gold production of 314t recorded in 1997
might well be exceeded.”

AUSTRALIA’S LARGEST GOLD PRODUCERS FOR 2017 Meanwhile, Newcrest expects its fiscal 2018 guidance
to be adversely affected by the closure of Cadia
following damages to a tailings dam wall in March.

Operation Ounces Owner Gold production from Cadia contributes a largely to
Newcrest’s group output, however, the full extent of
Boddington 787,000 Newmont Mining Corp closing the mine in light of the dam wall collapse is not
Newmont Mining Corp 50%, yet known.
Super Pit – JV 738,000 Barrick Gold Corp 50%
Newcrest Mining Ltd “Whilst it is too early in the evaluation and recovery
AngloGold 50%, process for Newcrest to provide an indication of the
Cadia Valley* 545,869 Independence Group NL 50% extent to which FY18 production, capital and cost
Newmont Mining Corp guidance will be impacted, this event will adversely
Tropicana 461,704 impact guidance for FY18 given the contribution
of Cadia to the overall outcomes of Newcrest,” the
company said in a statement.

Tanami 419,000

*Two treatment plants No injuries or environmental damage because of the
accident occurred.

Gold Mining Journal Page 11 April - June 2018

NEWS

Safe haven demand to
push price higher

by Renita D. Young, Reuters

Gold prices could break above $US1,400/oz for the first
time since 2013 this year as an uncertain outlook for
stocks, bonds and currencies tempts investors to use the
precious metal as a safe haven, according to a Reuters
survey of analysts.

Key drivers identified by analysts include recent stock market A poll of 35 analysts conducted by Reuters in January showed
volatility, and US President Donald Trump’s congressional average expectations for gold at $US1,311/oz this year
tax deal and proposed budget that signal ballooning debt
and higher spending, which in turn could make it hard to Graves forecast gold could reach $US1,385/oz this year.
keep inflation in check.
“I also have a fear the equity market could go through some
“I’m sticking with my call for gold at $US1,450 by year-end. type of corrective phase and gold would generally get some
This is about a 9% gain from current levels and in my opinion type of safe-haven trade from that,” David Meger, director of
very possible,” EverBank president of world markets Chris metals trading at High Ridge Futures, said.
Gaffney said.
Aggressive rate hikes by the Federal Reserve to combat
Of the 12 analysts polled by Reuters, eight predicted prices inflation could limit gold’s gains, however, as could a return
of $US1,400/oz by year-end, including three who forecast to stable gains in the stock market.
$US1,450/oz – a level not seen since May 2013. A ninth
analyst said he expected gold to reach $US1,385/oz, a level
not seen since March 2014. The remaining three declined to
give a number but were generally bullish.

Gold prices have already climbed nearly 7% since mid- “Gold appears to have absorbed market expectations for
December to around $US1,325/oz. Bullion got a boost three Fed rate hikes in 2018. Additional rate hikes are likely
from inflation fears in the wake of the tax deal and budget to provide a headwind,” Rob Haworth, senior investment
proposal and a correction in the stock market. strategist for US Bank Wealth Management, said.

Inflation is sometimes regarded as gold-positive, because it During the recent wild stock market ride, jolted investors

can hurt investor returns in both stocks and bonds, forcing initially sought refuge in the dollar. But analysts are divided

investors to look for returns elsewhere. over the outlook for the dollar, and point out that future

“Investors are positioning a portion of their portfolios into weakness in the currency could boost demand for dollar-
gold and at least hedging their bets a little bit,” Josh Graves, denominated commodities like gold.

senior commodities strategist at RJO Futures, said. Various factors have weighed down the greenback this year,

including concerns that the Fed might pursue a

Analyst Company Forecast ($US/oz) weak dollar strategy and the perceived erosion

Suki Cooper Standard Chartered Bank 1,450 of its yield advantage as other countries start to
Chris Gaffney EverBank 1,450 scale back easy monetary policy.
George Gero RBC Wealth Management 1,400
Josh Graves RJO Futures 1,385 Traders’ confidence in the dollar has also declined
on worries over the US’s twin budget and current
account deficits, with the latter projected to balloon

Rob Haworth US Bank Wealth Management 1,400 to near $US1 trillion in 2019 amid a government

George Milling-Stanley State Street Global Advisors 1,400 spending splurge and hefty corporate tax cuts.

Bill O’Neill Logic Advisors 1,400 Gaffney of EverBank said a weaker dollar would
make gold more affordable to investors in China
Miguel Perez-Santalla Heraeus Precious Metals 1,450 and India, the world’s largest and second-largest
gold consumers, respectively.
William Rhind Granite Shares 1,400

Gold Mining Journal Page 12 April - June 2018

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Gold Mining Journal (+61) 8 9321 0355 or email [email protected] April - June 2018

NEWS

Hanking’s primary ambition

by Michael Washbourne

Chinese-backed Hanking Australia Investment Pty Ltd is Hanking is set to assume control
set to acquire Primary Gold Ltd and the junior explorer’s of Primary’s Mt Bundy gold
Mt Bundy and Coolgardie gold projects.
Hanking’s proposed all-cash takeover bid – valued at nearly project in the Northern Territory
$37.5 million – has been recommended by Primary directors
Garry Mills and Tony Patrizi. Hanking has also agreed to provide up to $1.5 million of
It comes almost a year after Hong Kong-listed Hanking sold interim project funding while Primary shareholders consider
its only operating asset in Australia, the Southern Cross gold the offer.
mine in Western Australia, to Minjar Gold Pty Ltd for $330
million. Mills – Primary’s executive chairman and managing director
The Mark Qiu-led Hanking is Primary’s largest shareholder – declined a request for an interview when contacted by
with an 8.4% interest. GMJ.
Qiu, who has been a non-executive director of Primary
since 2014, did not respond to requests for comment on the In a statement to the ASX, Primary said: “The independent
friendly takeover offer. directors have carefully considered the offer and unanimously
Hanking’s 5.75c/share offer for Primary represents a 47.3% recommend that Primary shareholders should accept the
premium to the 3.9c/share the ASX-listed company last offer in respect of all of their Primary shares, in the absence
traded on February 16, as well as a 35.4% premium to the of a superior proposal and subject to the independent expert
30-day VWAP of 4.2c/share. not concluding that the offer is not fair and reasonable.
The offer remains subject to Hanking achieving at least 50%
of acceptances, FIRB approval and other customary market “Subject to these two qualifications, the independent
conditions, but is not subject to any Chinese regulatory directors also intend to accept the offer for all the Primary
approvals or financing conditions. shares they hold or otherwise control.”

Hanking Gold Australia Investment Pty Ltd’s former Southern BDO Corporate (WA) Pty Ltd will act as the independent
Cross operation is set to close a little more than a year after expert for Primary.
Minjar Gold Pty Ltd forked out $330 million for the asset.
GMJ understands the last remaining ore from the high-grade At the time of print, Primary was yet to respond to the first
Axehandle open pit will be mined and processed during the supplementary bidder’s statement released by Hanking on
current quarter before the operation is placed on care-and- March 15.
maintenance.
It is believed Minjar has not conducted any exploration Primary’s flagship asset is the Mt Bundy gold project, about
around Southern Cross since assuming control of the 100km east of Darwin in the Northern Territory.
operation.
Minjar – also the owner of the Pajingo gold mine in A PFS on Mt Bundy is due for release this quarter, building
Queensland – did not return calls or respond to emails on the results of a scoping study which supported an initial
requesting comment. nine-year mining operation focused on the Rustlers Roost,
At the time of the sale, Southern Cross was reported to Toms Gully and Quest 29 deposits.
have resources of 34.7mt @ 4.1 g/t gold for 4.57 moz and
reserves of 8.74mt @ 3.4 g/t for 960,000oz. Primary recently boosted the resource at Rustlers Roost to
49.6mt @ 0.84 g/t for 1.33moz, with 78% now classed as
indicated.

A PFS on Coolgardie indicated the viability of recovering
65,000oz over an initial 28-month mine life, generating
undiscounted cash flow of $16.9 million, based on a gold
price of $1,600/oz.

Primary is chasing final statutory approval from the WA
Department of Mines to allow mining to begin at Coolgardie
later this year.

Gold Mining Journal Page 14 April - June 2018

Saturn peels off

by Mark Andrews

Just as the Apollo Hill gold by targeting along strike potential
prospect started to emerge in (5m @ 25.9 g/t gold hit) and testing

2011, Peel Mining Ltd struck a new newly identified high-grade plunging

Cobar-style copper discovery in shoots (5.3m @ 10.3 g/t).

New South Wales. “The holes have been planned,

Peel has since charged ahead at everything is in place with about

the Mallee Bull copper-polymetallic 2,500-3,000m planned initially. We

JV with CBH Resources/Toho Zinc will be targeting high-grade plunging

and has made a number of other shoots and grade distribution within

discoveries in NSW which have the deposit. And, if we look at

attracted the likes of JOGMEC. extensional and resource drilling

Such has been Peel’s success we are working towards a resource
in Cobar, West Australian gold upgrade within that programme,” he
miner St Barbara Ltd has taken its said.

shareholding in the tightly-held base “We have a diamond rig booked for

metals company to 16.3%. May to follow up on those results

The big company interest justifies Peel will be a 50% as we’re optimistic about them. The
Peel’s decision to shift attention shareholder in spin-out average depth of the drilling in the
from Apollo Hill to Mallee Bull Saturn Metals. Saturn’s focus first programme will be about 120m
but the gold prospect remains will be Apollo Hill in WA and we hope to keep repeating
appealing with an inferred resource this pattern [of drilling programmes] at regular intervals

amenable to gravity gold and cyanide leach recovery of throughout the year. We will keep the news flow going and

17.2mt @ 0.9 g/t gold for 505,000oz (0.5 g/t cut-off) to a are targeting about 20,000m of drilling this year.”

depth of about 180m at Apollo Hill. The 1,000sq km of ground Saturn has tied up stretches

Therefore, with the IPO market heating up, spinning Apollo south of Gwalia, Leonora, and covers a significant portion
Hill into the standalone Saturn Metals Ltd this year appears of the Eastern Goldfields, meaning it has neighbours of the
the right move with the new outfit easily fulfilling the nominal highest calibre. However, as with Apollo Hill itself, Saturn’s
$4.5 million raising and taking the maximum $7 million at regional landholding has not received due attention in the
20c/share. past.

Peel’s Rob Tyson will be executive chairman of Saturn “I think with the people around us, there is a good opportunity
and will be joined by Ian Bamborough as managing for a JV. If you look at Peel’s history and Rob’s strategy, which
director, Andrew Venn as non-executive director and Ryan has been to get real solid JV partners, we can leverage from
Woodhouse company secretary. that if granted. Also, can we find a new multimillion ounce
deposit ourselves? There is a lot hidden there,” Bamborough
Bamborough has developed his career with Newmont said.
Mining Corp and has spent considerable time in the US with
the gold major. “We are in the middle of a big regional hi-res airborne
magnetic programme and we’ve had to go out and fly 750sq
He told GMJ the potential at Apollo Hill, in WA’s North km of our 1,000sq km out there. If you look at other parts of
Eastern Goldfields, was as good as anything that had come the Goldfields, that work was probably done 10 years ago,
across his desk while at Newmont. so it speaks to the greenfields opportunities. We have put
the new data sets together and we have pulled what we can
“It has captured a lot of people’s imagination plus I have of the historic data which has been quite fragmented. I think
seen something in the data that hasn’t been pulled together we have the potential to completely rewrite what we do, that
for a number of reasons in the past. We have captured that is quite exciting.”
and want to sell that vision for people in buoyant times in the
market; maybe it is a perfect storm,” Bamborough said. A programme of 9,000m of aircore drilling is planned to test
regional targets in the back end of 2018, with Bamborough
Saturn has had a RC drill rig booked since November which keen to see prospects such as Bobs Bore (9m @ 10.9 g/t
was immediately fired up upon listing. Bamborough hoped gold) and Yerilla (17m @ 6.04 g/t) start to emerge.
to materially upgrade the existing resource within six months

Gold Mining Journal Page 15 April - June 2018

COVER

The wonder of Woodlark

by Michael Washbourne

Victor Kiam’s love affair with the Remington razor saw him buy the company
outright and go on to build an envious fortune. Geopacific Resources Ltd
managing director Ron Heeks and his team are hoping a similar chain of
events will unfold at the Woodlark gold project in Papua New Guinea.

Geopacific initially entered into a lucrative JV with project mining operation averaging 100,000 ozpa over an initial 10
owner Kula Gold Ltd in July 2016, but within nine months years at Woodlark.
of running its rule over the asset, the company moved to
acquire its junior counterpart in an all-scrip takeover valued It was the first real opportunity for Geopacific to showcase
at almost $10 million. the extensive work it had carried out over the project since
first setting foot on the island more than 18 months ago.
“We liked it so much that we bought the company,” Heeks
tells GMJ, paraphrasing Kiam’s famous catchphrase from “This was a project that was stuck for one reason or another
the 1980s. “We really liked what we saw, we understood a lot when we took it over,” Heeks says. “What we saw was a
more about the project by then and we could see that what different way to make this project work and it all revolved
we thought was going to happen would happen, so it made around costs.
sense for us to take the company out.”
“From understanding the orebody and thinking it through a
With control of Kula secured last October, Geopacific’s plans bit better, we saw this as a large tonnage operation rather
to bring the project – on Woodlark Island, about 500km east than a small selective mining operation as had been put
of mainland PNG – to life are now rapidly taking shape. forward.”

Those activities culminated in March with the release of a According to the PFS, Geopacific will need to spend $180
PFS which supported development of a low-cost, open-pit million to build a standard 2.4 mtpa CIL plant and related
mining infrastructure for processing of 21.5mt @ 1.37 g/t

Gold Mining Journal Page 16 April - June 2018

Geopacific managing director Ron Heeks

gold for 943,000oz breeding on itself.

run-of-mine ore. “We’re really maximising the orebody and throwing very little

The PFS also of it away. Looking back, we could see that a different spin

indicates 15mt on how to build it was going to give us a totally different

@ 0.43 g/t gold product.”

for 209,000oz will be stockpiled during the first 3.5 years Completion of the PFS increases Geopacific’s overall

of operation before being upgraded through an additional interest in the project to 93%.

2.4 mtpa gravity plant to produce 3mt @ 1.84 g/t gold for The company inherited a database worth more than $150
177,000oz supplemental feed to the CIL circuit. million, including more than 260,000m of historic drilling,

Key financials from the study include an AISC of $990/oz from its takeover of Kula and punched 30,000m of its own

for the first five years and $1,100/oz over the life-of-mine, holes into the project last year to lift Woodlark’s total resource

payback within two years, free cash flow of $338 million (pre- to 47mt @ 1.04 g/t gold for 1.57 moz, including 86% in the

tax) and $314 million (post-tax) and IRR of 38% (pre-tax) measured and indicated categories.

and 33% (post-tax), based on a $1,650/oz gold price. Reserves of 34.7mt @ 0.99 g/t gold for 1.1 moz were

Up to 60% of the gold is recoverable from gravity processing reported with the PFS.

“due to the free milling nature of the ore with Geopacific Heeks and his team – including executive director Philippa
Leggat – are anticipating a flood of questions from the market
estimating 92% recoveries can be achieved from the
leaching circuit in the first five about the viability of a low-grade
years of production with life-of- operation in an undeveloped
mine recoveries of 90%. A low location such as Woodlark
strip ratio of 2.5:1 for the first five Island.

Don’t look at the grade;years and 3.1:1 over the life-of- “If you look at all the star
mine is a major boon for both look at the profit that performers in Australia, the
company and project, according comes out at the end. cut-offs that we’re mining to
to Heeks.
[0.6 g/t run-of-mine ore, 0.3
“What became evident early on g/t upgraded ore] are similar
was that this project would benefit from having a slightly to the cut-offs they’re mining to,” Heeks says. “I don’t think
bigger plant,” Heeks says. “Therefore, the strip ratios were there is anything new there and the fact that unit costs have
going to be very different and considerably lower. That all come down and consumables have come down, particularly
feeds into the economics and the whole thing just starts oil, allows you to get down to those lower cut-offs quite easily.

Gold Mining Journal Page 17 April - June 2018

COVER

Woodlark exploration manager Warrick “More and more you’re going to see reserves and resources
Clent shows Geopacific executive director coming out at these sorts of grades. But don’t look at the
Philippa Leggat the proposed sites for the grade; look at the profit that comes out at the end.”
Kulumadau open pit and processing plant
Leggat at Leggat adds: “That low strip can’t be pushed enough. We’re
one of the not moving a huge amount of waste at high cost. Most of
caves which what we’re moving is ore.”
has helped
Geopacific Since taking control of Woodlark, Geopacific has strived
understand to dismiss any comparisons between the work it has
the Woodlark undertaken and that previously completed by Kula, including
geology a BFS released in 2012.

Gold Mining Journal Work on key items, including front-end engineering design,
for the DFS – due in Q3 2018 – began before the PFS was
released to ensure the company maintained the momentum
it has built at the project.

“We’ve gone to considerable efforts to verify, review and
validate information using independent consultants the
whole way through,” Leggat says. “There is little doubt along
the way as to the accuracy of certain aspects. While this is a
PFS, there are a number of elements done to a DFS level.”

Another benefit Geopacific has at its disposal is the
unwavering level of community and government support to
build a mine on Woodlark Island.

“Mining and environmental permits have previously been
They are very keen to move
now and if we’ve got a
problem it’s that it doesn’t quite fit
with our time schedule.

Page 18 April - June 2018

Geopacific completed a 30,000m drilling WOODLARK PFS
programme last year to supplement the
Estimated capital cost $180 million
database acquired from Kula Gold
AISC $990/oz (years 1-5),
granted for the key deposits – Kulumadau, Busai and
Woodlark King – central to the company’s plans to develop $1,110/oz (LOM)
the island’s first major industry.
NPV (8%) $226 million (pre-tax),
“They are very keen to move now and if we’ve got a problem
it’s that it doesn’t quite fit with our time schedule,” Heeks $178 million (post-tax)
says. “They’re looking for what everybody else is looking for
– health and education – and we will essentially be the only IRR 38% (pre-tax), 33% (post-tax)
employer on the island, apart from a couple of government
people. LOM revenue $1.668 billion

“There will be jobs, they get a royalty payment, so they’ll *based on $1,650/oz gold price
be able to, in conjunction with us, improve the education
standards and health standards on the Woodlark Island is serviced by regular
island. And there will obviously be better shipping routes, with food supplies
access to the mainland as well because of often arriving via the Boiboi jetty
the regular commercial flights.”

Geopacific will soon upgrade and extend
Woodlark’s existing airstrip – constructed
during World War II from the naturally
occurring limestone coronous – to cater
for increased traffic on the island.

Design and implementation of new haul
roads for a more efficient transport route
is also being undertaken.

Heeks, a geologist who has extensive
history developing projects in the Asia-
Pacific region, says there were no major
logistical challenges standing in the way
of building a gold operation at Woodlark.

“Where people see logistic challenges and
they think it’s going to be a higher price,
we actually see the exact opposite,” he
says.

Gold Mining Journal Page 19 April - June 2018

COVER

The 120-man accommodation camp
rarely had a vacancy last year as the
company ran its rule over the project

“Working with them on this is and basically glue it together on site. We have
absolutely vital. They can put a stop considerable economies over building things in the
to your plans if you don’t do it right. middle of Western Australia where everyone has to
fly in and fly out at a massive cost.”

Under the proposed mine plan, Geopacific will need
to relocate one of the villages near the Kulumadau

deposit. Heeks says the village is champing at the

“This will be a largely Asian-based build, either in the bit to begin the move, but managing expectations
Philippines or somewhere else nearby, and everything was imperative.

will be manufactured so that it can come down basically “We will be using as much off the village as possible to build

constructed, including tanks and things like that, so that we their [new] village,” he says. “They need ownership of it. The

don’t have a lot of people actually on site building. worst thing you can do is just give somebody something.

“You build it under controlled conditions, bring it down “If you just turn up with contractors and knock up everybody’s
houses, nobody’s actually got
ownership. It’s like being given a
present, but if you break it you don’t
really care about it. Working with
them on this is absolutely vital. They
can put a stop to your plans if you
don’t do it right.”

Woodlark Island has an estimated
population of about 6,000 people,
according to an unofficial census in
2010, with Geopacific believing the
actual number to be less than 2,000.

Leggat, who originally hails from
South Africa, said the eclectic mix of
nationalities inside Geopacific meant
the company was well positioned to
understand the cultural needs of an
impoverished population.

Community engagement has been a key agenda for Geopacific since arriving on Woodlark “For me it was one of the most
Island. Led by community relationship manager Karen Hayward, the company is committed to impressive things about this
company and one of the reasons
improving health and education standards among the local population why I ended up joining,” she says.

Gold Mining Journal Page 20 April - June 2018

“We’ve all worked all over the Clent explains the nature of the
world, so we understand how to Woodlark mineralisation to Leggat and
mix those cultures; how valuable Hayward at the company’s core shed
that can be to the organisation
and to the overall outcome. “When you think about it, for about $8-10 million worth of
paper, we’ve got a multi-million ounce, fully permitted gold
“Plus, we are forward-facing and project on our books. We just need to keep doing what we’ve
we take the flack if something said we’re going to do and that’s to develop this into a mine.”
goes wrong. So, it’s a whole lot
easier just to get it right in the first Geopacific Resources Ltd remains committed to its Kou Sa
place.” copper-gold project in Cambodia despite being stripped of
its flagship asset status.
Heeks expects his company will A brief round of drilling towards the back end of last year
have an “immediate win” upon identified a new zone of epithermal mineralisation – the first
relocating the village due to the time a discovery of its type has been made on the 158sq km
fact it is currently positioned on of prospective tenure.
top of the main Kulumadau pit. “We’re currently evaluating that to work out how we move
next, but it’s certainly added to the potential of the area a lot,”
“There’s probably greater than Geopacific managing director Ron Heeks says.
100,000oz sitting underneath it “While that project is not our focus right now, it’s been a
because the village is sitting on fantastic jurisdiction to work in. In fact, it’s one of the best
top of one of the ore zones,” he places in the world I’ve ever worked.
says. “We know what the ore “For all the things you hear about Cambodia, we haven’t
zone looks like on the side of the village, but we haven’t experienced any of them. The logistics really couldn’t be
been able to drill it because of where the village is. any better. Everything is unbelievably cost-effective and the
Government is unbelievably pro on the mines department
“We’ll have an immediate win when we move the village side.”
because we can put more ounces into the pit, but they’re Geopacific, however, is considering its options for its suite of
marked as waste at the moment. It also means our low strip early-stage exploration projects in Fiji, having not completed
ratio will come down even more.” any major work over the ground since picking up the
Woodlark gold project in PNG.
Geopacific’s geological team is also recalibrating its focus “The time is not right for juniors starting to do porphyry copper
towards regional exploration opportunities, especially on the exploration,” Heeks says. “Majors have been interested
back of the recent discovery at Boscalo, a prospect originally before, but when the exploration world ended five years ago
flagged as a possible extension of the mineralisation at they just lost interest. I think you’ll see the majors show more
Kulumadau East. interest as we move forward.”

Some of the best intercepts reported from Boscalo were
12m @ 7.45 g/t gold, 20m @ 1.77 g/t, 20m @ 1.71 g/t and
7m @ 5.25 g/t.

Heeks is confident of finding more orebodies on Woodlark
Island and unlocking a 3-5 moz gold field for his company
to exploit.

“A typical epithermal system doesn’t have one or two
orebodies, it has six or seven and we would expect to see
another five or six floating around,” Heeks says. “All the
indications are pointing towards that. We need to do some
more drilling because the exploration upside here is huge.
We’ve all but got a couple of million [ounces] in the bag now,
it’s hard not to see that doubling.”

Financing discussions are likely to accelerate once the
DFS is completed, putting Geopacific firmly in the frame
to join the likes of Newcrest Mining Ltd, Barrick Gold Corp
Harmony Gold Mining Co Ltd and St Barbara Ltd as a major
gold producer in the region.

“I think we’ve got to an extremely robust product now that
people would have a hard time disputing,” Heeks says. “Keep
in mind the costs we’ve used are reasonably conservative
and we think that we’re going to be able to optimise those as
we move into the DFS.

Gold Mining Journal Page 21 April - June 2018

AFRICA FOCUS

West Wits steps up
Rand production

by Dominic Piper

The impact dramatic political changes will have on South Africa’s gold mining industry remains
unknown but at least one Australian junior miner sees nothing but opportunity from the shift.

Cyril Ramaphosa’s usurping of Jacob Zuma as South Africa as charting a course towards a Robert Mugabe-era
African president in February has received widespread Zimbabwe but Michael Quinert, executive chairman of West
support from a mining industry hopeful of a more conciliatory Wits Mining Ltd, told GMJ his company saw encouragement,
approach. Ramaphosa – a highly successful mining rather than fear from Ramaphosa’s appointment.
businessmen as well as former mine union leader – has
already justified the hope, moving to suspend implementation “The recent media attention about possible farmland
of a new Mining Charter, thus convincing the South African appropriation is no reason to be concerned about
Chamber of Mines to drop related legal action. mining investment in South Africa,” Quinert said. “It is a
different story; mining already has BEE [black economic
The Government is intent on bringing industry and empowerment] allowances in place and has done for more
community back to the negotiating table. Zuma’s latter years than a decade.
in office were defined by a lack of communication and trust
between industry, government and community surrounding “Also, Ramaphosa is clearly an astute politician. There is
the MPRDA and Mining Charter. probably a need to recognise the fact that a lot of land is tied
up and is not always used productively. There is some room
The last decade has seen South African gold majors such to move ownership across to previously disadvantaged
as Gold Fields Ltd and AngloGold Ashanti Ltd sell down groups, and there is potential to do it without. Australia and
their domestic assets in favour of building portfolios slanted the UK have had laws in place for more than 100 years that
towards West Africa and Australia. can take land off owners if it is not being used appropriately.
It is a matter of doing it fairly rather than being done to win
Ramaphosa is intent on reversing that trend and new political flavour, as in Zimbabwe.
Minister for Mineral Resources Gwede Mantashe, another
former mineworker has been welcomed by the Chamber as “Ramaphosa knows this and he has already pulled a classic
someone who has a “sound and fundamental knowledge of political move against the Economic Freedom Fighters [the
the industry”. far-left political group which raised the subject in parliament]
to sideline this debate.”
Challenges remain, however. Implementation of the new
Mining Charter stalled due to issues such as black economic Quinert said a recent investor roadshow across Australia
empowerment and ongoing job losses in the sector have had seen the subject of political risk barely raised.
created tense standoffs between mine owners and labour.
“It really hasn’t come up too often,” Quinert said in the middle
Wider social, economic and environmental issues also of his national investor tour. “There is an understanding that
prevail and Ramaphosa’s recent comments about the things are going in the right direction and investors really
need to address the unequal distribution of farm ownership haven’t seen it as an issue.”
between South Africa’s white population and previously
disadvantaged groups garnered international headlines. Instead, the more prescient issue for West Wits and its
investors is the ramping up of the company’s operations on
Some of those headlines (and the response of Australian the Witwatersrand.
Home Affairs Minister Peter Dutton who suggested white
farmers could receive fast-tracked visas) have painted South West Wits’ has more than 3 moz of JORC-compliant resource

Gold Mining Journal Page 22 April - June 2018

on what it refers to as its Witwatersrand Basin project (WBP), Michael Quinert
a collection of remnant resources left on the historically
prolific West Wits, Rand Consolidated, Luipaardsvlei and test case for both West Wits and authorities but Quinert’s
East Champ D’Or leases on the western side of the Rand. enthusiasm suggests the company sees it as a success on
operational, community and regulatory fronts.
Its plan is to mine a number of these resources via small
open pits however the company’s strategy is more than “The three government bodies we have been working
simple engineering and geological opportunism. Ultimately, closely with are very happy with our progress,” he said.
it could provide solutions to social and environmental issues “The Department of Mineral Resources was key to getting
industry, government and community are currently grappling the dispensation licence and has expressed its satisfaction
with. to us. The police like what’s happening because they see
mining as a way of cleaning up the problem of zama-zamas
Closed shafts are frequently subject to incursions by and the local council ward are supporting us because they
illegal miners (zama-zamas), creating safety concerns, want to see the illegal mining and environmental issues
environmental problems and social order issues with many on the leases fixed and economic stability injected into the
of the zama-zamas being either illegal immigrants or part of community.”
criminal gangs.
Mining of the Rand’s narrow gold reefs can be notoriously
West Wits has been granted a special dispensation permit, difficult and Quinert admitted lessons had been learnt in the
allowing it to mine the WBP Central Kimberley pit. nine months since operations started.

“We are mining under a rehabilitation permit which was “We have learnt that you have to have the right people,”
negotiated with government and local landholders,” Quinert he said. “The mining is simple but if you want to maintain
said. “We were granted it because it allows for control of productivity and grade control, you have to be careful. The
the zama-zamas and cleans up some of the environmental reefs are very narrow and you can quickly run into dilution
legacy issues.” problems so you have to know you’re operating productively.”

Operations started in June 2017 under a 50/50 JV with The deployment of traditional mining methods in what is now
project partner Elandiwave. By January, the WBP operation essentially an urban area has also been an issue West Wits
had become self-funding with 12-15,000 tpm of ore being has been forced to negotiate.
sent to Sibanye-Stillwater Ltd’s Ezulwini processing plant
and a further 2,500 tpm of low-grade ore being sent to “These new pits are closer to housing so we can’t use
Mintails Ltd’s Mogale plant, generating around $400,000 a explosives but we have been using Xcentric rippers [a
month for West Wits. hydraulic attachment to excavators which can eliminate the
need for blasting], which have been a revelation. We have
Quinert said the Sibanye-Stillwater toll-treatment deal was moved hundreds of thousands of tonnes using the rippers
working well for both companies. and have not blasted once. They have been a technological
step up for the project.”
“They like the higher grade ore because they currently have
low-grade feed and the structure of the deal is such that we Working under the rehabilitation permit has also allowed
share costs based on gold production, which is a benefit for West Wits to begin building its community engagement
them. For us, we are only paying R20/t toll-treatment costs,” programmes ahead of the move to full mining right.
he said.
“It has allowed us to become engaged with local community,”
The Central Kimberley pit has less than a year of mine life Quinert said. “We are employing local people and we have
left but West Wits has already moved to secure a staged made commitments in the community [including running a
progression to other pits. soup kitchen]. When it comes to being granted the mining
right, they will already know us, allowing the company to
“The entire ground is still under a prospecting licence but move quickly.”
while you are holding the prospecting licence you can apply
to mine small areas of less than 5ha,” Quinert said. “In early
March, we lodged applications for two of these areas so we
can ramp up operations into other pits.”

The company is also preparing its full mining right application
which is expected to be lodged in April ahead of a nine-
month approval process. The scheduling means West Wits
should be able to mine right through to mining right approval.

“We could’ve decided to just wait for that but by undertaking
mining of these smaller pits we can underpin continual cash
flow throughout that period. Most of the money generated is
being ploughed back into the mining right application and we
haven’t had to send any money from Australia.”

The Central Kimberley pit operation has essentially been a

Gold Mining Journal Page 23 April - June 2018

AFRICA FOCUS

All flowing for White Rivers

by Mark Andrews

The South African mining sector’s enthusiasm for Cyril
Ramaphosa ascension to the presidency was further
boosted in late February with news that Gwede Mantashe
had replaced Mosebenzi Zwane as Minister for Mineral
Resources.

With renewed optimism and positive attention cast back on
SA’s mining sector, 2018 is shaping as a good promotional
year for companies with interests in the country.

White Rivers Exploration Pty Ltd – formed in 2007 and solely
funded by 63% owner Mark Creasy since then – hopes to
take full advantage of the changing tide with a PFS due on
one of the largest unmined gold resources in the world to be
followed by a public listing this year.

“For South Africa to turn themselves around they have to Godfrey Oliphant
put leadership in, they have to actually change mining policy
and encourage capital to come back into South Africa again,” there and mines that are nimble can be turned around very
White Rivers executive chairman Neil Warburton told GMJ. quickly by the world-class mechanised companies like we
have in Western Australia. If South Africa changes that
“They are heading in the right direction. They have just particular criteria, it will have a huge effect on the sector.”
changed the Minister for Mines and appointed someone
who is well respected by the commercial sector. So, all I Warburton needs little convincing of the potential for
am reading is very positive news coming out of South Africa profitable outcomes in SA, however, he feels the Australian
and we are all hoping that translates to more mining and market could be slow to respond.
opportunities to bring some of these projects into production.”
“I think people are a little bit jaundiced when it comes to
White Rivers is one of the largest tenement holders in the South Africa,” he said. “A lot of companies have been there
famous Witwatersrand Basin, with 10 gold projects ranging in the past and haven’t had the success they would have
from near-term producers to advanced exploration plays. liked for a number of reasons. London and Europe investors
have been investing in Africa for centuries. They understand
Warburton said deputy SA Minister for Mineral Resources the risk profile and what needs to be done when they see
Godfrey Oliphant had been particularly helpful in assisting assets of this quality and profile. We think we would get a
White Rivers conjure the amount of ground it had and better run in London than the ASX.”
welcomed the idea of establishing a mine rehabilitation fund,
similar to the West Australian model. By the time White Rivers is ready to list, investors will have
a new multimillion ounce resource (April)
“He [Oliphant] is looking to come over before and completed PFS (July) on the JV with
Africa Down Under and is entertaining a mine SA’s third largest gold miner Harmony Gold
rehabilitation fund in South Africa. At the Mining Company Ltd to consider.
moment, some of the major mining outlets
have hundreds of millions of US dollars According to scoping study parameters,
tied up in bank bonds. They can instead be utilising infrastructure from Harmony’s
giving those bonds to the Government to do Target mine – which the 65:35 White Rivers/
the rehabilitation work because for the junior Harmony JV abuts – production can be
sector to come in and repay some of those brought online nine months after a BFS is
bonds, well they just can’t do it; they don’t finalised and a decision to mine is made.
have the balance sheet to do it,” Warburton
said. The JV is proposing refurbishment of the
Target No.2 and No.3 shafts and establishing
“If you can convert it over to a mine a processing plant and tailing storage facility
alongside No.2, which closed in 1989.
rehabilitation fund and pay 1.5% pa into a
At the time of print, the PFS was 85%
fund then you will see the junior sector Neil Warburton complete, with White Rivers managing affairs
in there. There are a lot of opportunities

Gold Mining Journal Page 24 April - June 2018

until a decision to mine, potentially by the end of 2019, is With no repository to call upon, $17 million
taken by Jelani, the incorporated JV vehicle. has been spent collating data and building
a borehole data base. White Rivers’ IP has
“The scoping study included inferred resources so we ended
up with a mining inventory, but it showed a very profitable been compiled from 21 sources
mine for plus-25 years. The PFS will only use measured
and indicated resources. From Harmony’s perspective they “Some of the opportunities will be at depth and some
know that 70% of that inferred will end up in the mining ore shallow. I don’t think the big international companies that are
reserves, too, as we go underground and drill those out. It is based in South Africa have gone back and had a look at their
a very exciting time,” Warburton said. exploration areas. A lot of them have actually retrenched
or don’t have exploration departments within their South
“Harmony has been working very closely with us and I think African organisations. Therefore, there is huge opportunity
they will make a public statement once the PFS is done. for Australian companies spending tens of millions of dollars
Harmony has shown it is committed to South Africa and you to prove up their resources using the latest techniques in the
can see that by the recent acquisition of AngloGold’s [Ashanti exploration game because South Africa has fallen behind.”
Ltd] Moab Khotsong which they paid $US300 million for.”
White Rivers could be the example to follow, with the likes
The underground Moab mine also came with the underground of the Bothaville project boasting shallow Witwatersrand
Great Noligwa mine and associated infrastructure, which is mineralisation.
on care-and-maintenance.
Warburton said there were discussions about initiating a
The underground reserves (above infrastructure) were maiden drilling programme at Bothaville, which could also
estimated at 1.7 moz @ 8.8 g/t gold, while the underground host multimillion ounce gold potential to be accessed by
resources (above infrastructure) at Moab and Great Noligwa sinking a decline.
were about 4.98 moz @ 18.5 g/t.
There is no resource at Bothaville yet, with a three-stage
Harmony believes it can extract value from such an acquisition drilling programme proposed to improve the company’s
and there are potentially more similar opportunities to confidence in the style of mineralisation in the A Reef and
capitalise on. the entire 17km strike.

“I think there is real opportunity for Australian companies who Should Bothaville emerge in line with expectations, there are
know how to mine, I wouldn’t say exploration, I would say toll treating opportunities White Rivers could potentially take
there are a lot of assets that can be quickly turned around advantage of.
and put into production and money made from applying
modern Australian/international techniques,” Warburton Meanwhile, Ventersburg Goldfield – 76.88mt @ 4.13 g/t for
said. 8.8 moz gold (indicated and inferred) – is another asset in
the project pipeline that Warburton is also keen on.
About $7
million White Rivers is part of a consortium at Ventersburg which
has been includes Sibanye-Stillwater Ltd and Gold One.
spent on
exploration Ventersburg is subject to data room review activities, which
to date White Rivers can fund for a consideration of R2 million.

Gold Mining Journal Page 25 April - June 2018

AFRICA FOCUS

Indiana makes leap from
East to West

by Dominic Piper

Indiana Resources Ltd has moved to “It is almost as simple as completing the due
circumvent the continuing uncertainty in diligence and share placement agreement

Tanzania by acquiring gold-prospective and then finding a drilling contractor and

ground in Mali. getting on the ground,” she said. “They

Indiana and its predecessors have operated are halfway through a 5,000m trenching

in Tanzania for more than a decade but with programme from which we will probably start

the country’s mining industry in stasis due seeing results in the next few weeks. From

to new investment laws, Indiana has been there, we will take the results into drilling

forced to look elsewhere for opportunity. plans for late April/early May before the

Its search has landed it in gold-rich West onset of the rainy season.

Africa where it has secured an option “We can then use the rainy season to do a

agreement to acquire 100% of private rigorous review of all the existing exploration

explorer Mukuyu Resources Ltd. Ongoing political problems in Tanzania data, together with the trenching and drilling
have led Indiana Resources to Mali results to begin developing an exploration
Mukuyu controls 126sq km of ground strategy for the 2018/19 field season.”
over two exploration permits – Koussikoto
Indiana expects to complete an $897,000 placement along
Ouest and Kenieko Nord – in the Kenieba Province of
with the acquisition, providing it with enough funds to
western Mali. Kenieba is host to the country’s largest gold
undertake its immediate plans.
mines including Sadiola (13.1 moz) and Lulo (12.5 moz).

Mukuyu has been active on the assets since 2013, producing “We have $1.5 million in the bank so sufficient funds to
high-grade hits including 18m @ 3.35 g/t gold and 4.5m @ quickly and wisely get started and deliver value in the
18.55 g/t. short term,” Barnes said. “Then we can implement a more
supportive funding programme in a few months.”
Indiana chairman Bronwyn Barnes said Mali’s reputation
as a gold producer and the advanced nature of the assets Mali has risen in prominence in the last decade to become
made Mukuyu an appealing proposition. Africa’s most exciting gold producer. Barnes has experience
in the country and said Koussikoto Ouest and Kenieko Nord
“It was attractive because it wasn’t a greenfields proposition,” would be an ideal fit for Indiana.
Barnes told GMJ. “It was a project with a fair amount of
money already spent on early-stage exploration and we “It is in a great part of the world and we are surrounded by
could see opportunity for a walk-up drill programme and to some exciting projects as well as major gold mines,” she
bring in additional funding, which is needed given it was held said. “It is also in a good operating environment so it ticked
privately for so long.” all the boxes.”

Indiana will issue Mukuyu 650,000 shares to secure a 21-day Indiana had been forced to look for new projects due to the
option agreement. If due diligence gives the tick of approval, ongoing uncertainty in Tanzania. President John Magufuli
it will issue 6.5 million shares for 100% of Mukuyu. Indiana has introduced new laws restricting foreign investment in
shares were trading at 7c at the time of the offer. Indiana the country’s mining sector, a move being challenged by
will have plenty of options once the deal is closed. Mukuyu industry. Juniors such as Indiana are unable to progress
has conducted only limited drilling over small sections of an projects until there is greater clarity on Tanzanian mining’s
extensive gold trend. It has also defined multiple anomalies future.

which remain untested. “We’ve been looking for assets for some time given what’s

Mukuyu recently launched a 5,000m trenching programme happening in Tanzania,” Barnes said. “We can’t spend
to test a series of IP and geochemical anomalies. money there until we have some clarity. We are hopeful a
resolution can be achieved and we are not walking away
Barnes said the advanced nature of the project meant from those assets. So, we didn’t want to pursue assets in
trenching results could be quickly followed up with a drilling other parts of the world when we were still keen to remain
campaign. in Africa.”

Gold Mining Journal Page 26 April - June 2018

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AFRICA FOCUS

Bibiani primed for take-off

by Michael Washbourne

Resolute Mining Ltd appears set to approve Resolute is
development of the Bibiani gold project in Ghana expected
as early as this quarter. to make an
investment
At the time of print, Resolute was busy finalising decision on
an updated feasibility study on the project, with Bibiani this
the company’s board all but certain to sign off on quarter
development of what will become the company’s
third mine alongside Syama in Mali and Ravenswood assessment on our development plan.”
in Queensland. Based on current estimates, Bibiani is likely to become the
lowest-cost operation in Resolute’s portfolio, with operating
Resolute acquired Bibiani from the now-defunct costs of $US858/oz previously forecast.
Noble Mineral Resources in mid-2014 – one year “Across our whole portfolio we want to bring down our AISC
before John Welborn joined the company – with the and make our projects very robust and cash generative and
managing director suggesting the time had come for that’s why I’m increasingly confident Bibiani represents not
a decision to be made on the project’s future. only production expansion opportunity, but will actually be
our lowest-cost mine,” Welborn said.
“We’ve done two very successful drilling campaigns, “In fact, to make a positive development opportunity we
put to bear a lot of expertise in terms of looking at really have to be confident it will be our lowest-cost mine
what previous operators have done correctly but also where because not only are we focusing on bringing down the AISC
they have gone wrong,” Welborn told GMJ. of Syama and Ravenswood, we’re also looking at improving
our portfolio as we generate new assets.
“We’re using our experience, as well as industry experience, “Bibiani will be the mine that brings down our operational
to make sure that this matches our portfolio. At Syama we’re costs and increases our return on capital and therefore
building what will be a world-class, very high technology mine fulfilling our objective to not only mine gold but, most
and something that we can be very proud of. We’re looking importantly, create value for shareholders.”
to do the same thing at Bibiani and I think it’s something the An imminent decision on Bibiani’s future is welcome news
market should anticipate and look forward to.” for shareholders who are also closely tracking the progress
of the new underground mine at Syama.
Resolute had planned to complete the updated feasibility Development of the sub-level cave remains on track for
study on Bibiani last year, but decided to delay its release commissioning in December, marking the start of a new
following better than expected results from the most recent chapter for a mine previously operated by Randgold
drilling programme which led to a 40% increase in total Resources Ltd and BHP Ltd.
resources. Pre-production ore of 30,665t @ 2.8 g/t was delivered to the
Syama processing plant during the December 2017 quarter.
Bibiani now boasts 21.7mt @ 3.6 g/t gold for 2.5 moz, “Syama is a big operation and we’ve got a lot going on there,
including an indicated component of 13.3mt @ 3.5 g/t for 1.5 not just the opening of the underground, but all of that is on
moz, up 26% on the previous estimate. track and it’s important that continues,” Welborn said.
“We’re also working on some recovery projects, most
Resolute is targeting production of at least 100,000 ozpa
over 10 years at Bibiani. An earlier feasibility study estimated
$US72 million would be required to restart the mine and a
ramp-up period of six months.

“I’m increasingly excited and confident about the
opportunities at Bibiani,” Welborn said.

“We have a 20-year history of operating in Ghana. We went
into the country in 1996 and built the Obutan gold mine so
we know it’s a jurisdiction not without its challenges, but
having said that it is also the second largest gold producer in
Africa for a reason.

“There’s a huge skill set there and I’m really encouraged by
the strong support we have from the local community and
I’m eagerly anticipating updating the market when we’re
ready to complete that study and the board have made an

Gold Mining Journal Page 28 April - June 2018

notably Project 85 where we hope to achieve “We’ve got four simple values – bold, agile,
a minimum of 85% gold recoveries from our courageous, united – but ultimately we are
sulphide processing, and we’re also opening up an explorer, developer and operator of gold
some new oxide pits.” mines,” he said.

Resolute recently announced a 39% uplift in “In order to be successful at that, you need
Syama’s underground resource, giving the to be bold, you need to be agile, you need
company further confidence towards extending to be courageous as a company and we’re
the mine life beyond the forecast 12 years. John Welborn increasingly looking to be unified, not just

Exploration work is accelerating across the internally but with all of our stakeholders,
Syama belt as the company chases replicas of the Nafolo including the governments we work with, the communities
discovery made in late 2016. we operate in and, most importantly, our shareholders.

“We continue to see a huge value creation opportunity in “We have done a remarkable job of mining gold for 25 years
investing in exploration and the 80km of the Syama belt that and we’ve produced more than 8 moz in that time. The
we control is an exceptional opportunity,” Welborn said. challenge we’ve got – and it’s an industry-wide challenge –
is to make sure that when we create value for every one of
“I would love to discover new orebodies, but the first step the groups I’ve just mentioned.”
for us is to make sure that we’re maximising our organic
assets and any mining company needs to start with a While Resolute posted a net profit after tax of $38 million
very strong geological understanding. We have that at the from gold sales of $203 million for the December 2017 half,
Syama orebody and we’re looking to establish that not just Welborn has his sights set on reaching much greater heights
in the satellite oxide zones but in the sulphide zones that within the next 18 months.
potentially exist along that belt.
“I’m very ambitious and a hard taskmaster and I suppose a
“I think the Nafolo discovery is part of that new approach and background in sport and competitiveness means I’m never
I suspect there are more Nafolos out there.” that happy, so I’m always pushing the team to find something
more with each performance,” he said.
Resolute is expected to spend close to $40 million on
exploration across its portfolio in FY2018 as it transitions “We’re still very much in an investment phase, but I am
through what Welborn referred to as a “critical investment comfortable with how we are tracking on the key aspects of
phase” in the company’s growth story. the projects we’re delivering.”

Ghana tightens controls on gold exports

by Kwasi Kpodo, Reuters

Ghana will certify the value of gold exports as part of refined locally within five years, he said.
efforts to tighten controls on the sector to ensure the
state receives the revenues it is due, the vice president said Bawumia did not accuse any mining firms of wrongdoing and
in March. did not suggest past exports had been undervalued.

Ghana, Africa’s second largest gold miner behind South But President Nana Akufo-Addo, who took office last year,
Africa, earned $US5.78 billion from exports of the metal last has said about $US5 billion worth of revenues from gold
year, up 17.6% on 2016, central bank data showed. exports to the United Arab Emirates were unaccounted for.

Vice President Mahamudu Bawumia told a regional meeting He did not give a timescale or details to support the claim,
on the oil and mining sectors that Ghana’s previous but industry watchers believe the unreported shipments
administration had allowed companies to assay gold represented smuggled gold produced by Ghana’s thousands
produced from their mines themselves. of artisanal miners, whose activities are not properly
documented.
However, he said Ghanaian law required that the state-run
Precious Minerals Marketing Company test and validate The Government has banned small-scale mining as part
mineral production before export. of a general clamp-down on illegal miners last year. Their
activities have heavily polluted some fresh water supplies
“We have now begun conversations about the process of and in some instances obstructed the operations of
making sure every single bar of gold leaving our shores concession holders.
is properly weighed, tested, valued and accounted for,”
Bawumia said. Mining firms operating in Ghana include Newmont Mining
Corp, Gold Fields Ltd, AngloGold Ashanti Ltd and Asanko
The Government was also considering passing legislation Gold Inc.
stating that at least 50% of Ghana’s gold output would be

Gold Mining Journal Page 29 April - June 2018

AFRICA FOCUS

Gold Fields stays the course

by Dominic Piper

Gold Fields Ltd’s big spending Gold Fields enabling activity; how to take obstacles
plans remain on track despite continues to out of the way of our people,” Preece
the company enduring a tough 2017 struggle to hit said.
which included a net loss of $US2 steady-state
million. production at its Holland said productivity improvements
deep-level South would be a recurring theme at South
The South African-based miner’s chief Deep mine in Deep in the years ahead.
executive Nick Holland declared he South Africa
was comfortable with the company’s “We are looking at 5-10% productivity
2017 performance, pointing to the big improvements every year – albeit
capital outlay seen during the year. coming off a low base – as we head
towards 2022,” Holland said. “The
“2017 was always expected to be a new mining method has far more
tough year because of the increased structures, more mechanisation and
level of project spend,” Holland more repeated process. So, increased
said. “We were pleased with largely machinery and people productivity [is
achieving cash neutrality on the back achievable] but also the method itself
of better prices and productivity and will lend itself to increased productivity.”
cost control improvements,” Holland
said. Holland also admitted the company
would consider alternatives if South
Gold Fields spent $US273 million on Deep continued to underperform.
capital projects during the year as it
began its reinvention of the Damang “If the current model doesn’t deliver
operation in Ghana and stepped up spending on its 50% results, we will have to look at
interest in the Gruyere development in Western Australia. alternatives. What those alternatives are – we haven’t got a
specific list, but clearly it’s not our mantra to sit here and lose
Net debt increased from $US1.17 billion to $US1.3 billion as money,” Holland said.
a result of the spending but Holland said the company was
well placed to realise its ambitions. Gold Fields’ other major African development project is
the Damang reinvestment plan where $US115 million was
“Gold Fields’ balance sheet is in a strong position to complete invested in 2017 to reinvigorate the operation.
its reinvention,” he said.
Holland said the development was ahead of schedule.
While Damang and Gruyere appear to be on track, Gold
Field’s only remaining South African operation, South Deep, “The Damang reinvestment project is tracking well versus
is still a problem child. the project plan with 40mt mined against 33mt in forecasts
and the 144,000oz gold produce 29% higher than forecast,”
Operations at the deep-level mine were impacted by two he said.
fatalities and three falls of ground during the March 2017
quarter but Holland said performance had rebounded in the The company expects to continue deploying capital in 2018
second half of the year with a 36% half-on-half increase in and 2019 as it gets through the bulk of stripping, with steady
gold production. state production of plus-220,000 ozpa to be reached in 2020.

However, the operation is still four years away from achieving At Tarkwa – Gold Fields’ other Ghanaian operation – the
its forecast steady state target of 500,000 ozpa. company has faced union opposition to plans to shift to
contract mining.
Executive vice president South Africa Martin Preece
said the changes in mining method – including increased “I think the problem is about the union losing control,” Holland
mechanisation, long-hole stoping and the introduction said, “We’re a bit bemused because there will be very few
of high profile destress mining – was beginning to deliver job losses and we have already done it at Damang. I think it
productivity improvements in the mine. will play out in the next 1-2 months though.”

“We believe we have got strong and workable technical Changes to modelling and pit sequencing has seen Gold
solutions from mining and geotechnical perspectives, Fields increase Tarkwa’s reserves to 6 moz gold with the
the focus now is around productivity – creating a more operation expected to produce 500-540,000 ozpa for the
performance-driven organisational culture – and identifying next eight years before tailing off.

Gold Mining Journal Page 30 April - June 2018

Vector grows in the DRC

by Michael Washbourne

Strong in-country relationships have helped Vector Vector has also completed its technical due diligence on
Resources Ltd quadruple the size of its promising the Kibali South and Nizi projects, recently advising state-
exploration and development portfolio in the DRC. owned partner SOKIMO of its intentions to proceed with the
JV agreements.
Vector announced last December it was taking substantial
interests in the Adidi-Kanga, Kibali South and Nizi gold Kibali South is adjacent to the operating Kibali gold mine,
projects. The corporate deals saw the company’s share of which SOKIMO is also a partner alongside AngloGold
price jump more than 200% over the next month. and Randgold Resources Ltd. Nizi is 120km south-east of
Africa’s largest producing gold mine.
The acquisition spree came almost a year after Vector was
successfully recapitalised upon picking up the Maniema “Our partnership with SOKIMO is a key aspect of our growing
gold project and first setting foot in the DRC. presence in the DRC,” Youds said. “We can provide them
with technological and financial assistance on these projects
“In the process of developing that project and getting a – and maybe others – in terms of how they want to develop
drilling programme up and running, we came into contact
with a number of high profile their quite massive portfolio of
people in the resources gold assets.
industry in the DRC and it quite
quickly became evident that “Kibali South is probably more
there were a number of very advanced than Nizi, which
advanced high profile projects hasn’t got a resource as yet,
that weren’t progressing,” but we’ve actually got a 3D
Vector chief executive Simon model of the underground
Youds told GMJ. developed from the hard copy
plans and GPS coordinates
“Nowhere else would we taken while we’ve been on site.
We had to estimate it from the
have this opportunity than plans, but it’s given us a very
good indication of the mineral
in somewhere like the DRC. endowment in the area.”

It’s the perfect storm from Vector has established a strong Vector has established a
low-cost, locally-built camp at Maniema and is currently
our point of view because it land holding in the DRC undertaking an extensive drilling programme across the
project, of which it holds a 70% interest.
is such a prospective gold
An inferred resource of 6.97mt @ 1.9 g/t gold for 421,000oz
region, but the previous trouble and instability in the country for the Kabotshome prospect was declared last year.

really prevented these projects from progressing.” “We’re in the process of sending some core down to
Johannesburg to get sampled,” Youds said.
Vector’s 60% stake in Adidi-Kanga, in the Ituri province, was
secured via a heads of agreement with Mongbwalu Gold “We’re also sourcing some small-scale gravity equipment
Mines SA and Fimosa Capital Ltd. from Johannesburg to enable a bulk sampling exercise on
what we believe is a significant gravity resource at Mitunda.”
Due diligence on the project was completed by independent
consultants earlier this year, leading to an updated resource Youds, a mining engineer with an extensive history of
of 15mt @ 6.6 g/t for 3.2 moz, including 6.9mt @ 6.74 g/t for developing projects in Africa, admitted even he was surprised
1.5 moz classed as indicated. by the progress Vector has made over the past year.

The previous resource for Adidi-Kanga was prepared by “We mapped out this strategy and at the time we thought
AngloGold Ashanti Ltd in 2013. ‘if we could achieve 25% of this, we would do very well’,”
Youds said. “Now we’re on the verge of achieving 100% of
Vector is currently assessing the quality of the existing it and I suppose we’re are a little bit surprised we’ve actually
equipment and infrastructure on site at Adidi-Kanga, which managed to do it. It’s really all about timing and the skillset
is permitted for mining just shy of 1 mtpa. of everyone involved.”

“We don’t see any impediments at this stage that we won’t
deliver a DFS within the 12-month timeframe we’re looking
at,” Youds said. “If there is a short-term option to get to cash
flow earlier, we will assess that and adopt it – as long as
there is no long-lead equipment that we need to purchase
or fix up.”

Gold Mining Journal Page 31 April - June 2018

AUSTRALIAN REVIEW

Intermin’s perfect course

by Michael Washbourne

Intermin Resources Ltd’s bold plan to develop a small mine Mining of the Teal open pit yielded $7-8 million
and use the cash flow to fund an aggressive exploration for Intermin to put towards exploration
campaign could not have followed the script more closely.
management team joined the company in early 2016.
Mining of the Teal open pit was due to wrap at the time of
print, marking the end of a profitable exercise which yielded Having added more than 300sq km of ground with limited
the company about $7-8 million cash to tip into its other exploration history to its portfolio over the past 18 months,
projects in the Kalgoorlie region. Intermin has not been afraid to peg opportunities it is
confident of exploiting.
A 55,000m drilling programme – the largest in the company’s
history – began in February, targeting new discoveries and “We’ve done nine acquisitions now, the most recent one was
resource growth across almost 500sq km of prospective the Lakewood gold project where we consolidated a large
tenure. piece of land south of the Golden Mile,” Price said.

A record 65,200t @ 3.5 g/t for 7,400oz gold was mined “We’ll continue to acquire along the major geological
by Intermin from Teal in the December 2017 quarter, with structures [Bardoc, Abbatoir, Zuleika] and we’re now in a
5,214oz produced at C1 costs of $680/oz and all-in costs of strong financial position to move ahead with something on a
$1,292/oz. slightly different scale.”

Gold sales from the final three months of last year totalled Processing of the Teal ore will continue until the end of
$8.3 million at an average price of $1,664/oz. the quarter at the Lakewood mill following the end of the
previous partnership with the Paddington plant.
Intermin managing director Jon Price said the tonnage,
grade and recoveries pulled from Teal had exceeded Price urged rival small producers to consider toll treatment
feasibility study estimates. given the abundance of hungry mills around Kalgoorlie.

“One of the biggest risks you always take when you run a “Rushing out and building your own mill at a fairly high capital
little small mine like this is not getting the grade,” Price told cost is probably not the best way to do it, especially if your
GMJ. project is small,” he said.

“We live with the weather and the floods and some of the “Relationships [with third parties] enable you to get your
geotechnical issues, but at the end of the day the grade smaller projects developed and monetised without major
delivered on its promises – grade is king as we all know – capital risk or requirements. As it grows and gets bigger, you
and delivered the cash.” can start justifying building your own mill, but you shouldn’t
build or buy a mill until you’ve got at least five years of
Despite the success of Teal, Intermin is not planning to start reserve in the bank.”
up any new mines in 2018. Instead, the company will focus
on lifting its resource base – 6.36mt @ 2.12 g/t for 434,000oz Price, who has spent most of his working career operating
– towards the magical 1 moz mark. projects out of Kalgoorlie, expects more explorers to start
looking deeper for the next major discovery.
The first phase of the 55,000m drilling programme – valued
at $4 million – will target the core projects Anthill, Blister “The future of Kalgoorlie is underground,” he said. “We’re
Dam and the Teal gold camp. looking for them, Northern Star [Resources Ltd], Evolution
[Mining Ltd] and others are looking for them and finding
A maiden resource of 1.42mt @ 1.72 g/t for 78,000oz at them. We’re getting recognition from investors saying ‘go
Anthill was announced in March. hard, drill, get into it and don’t die wondering’.”

“We believe there is 1 moz in each of those [core projects],
but we’ve got to go and do the work first to prove that theory,”
Price said. “We’re not going to die wondering because we’re
putting down a lot metres and investing a lot of money in this.

“We’ve got a number of other projects in the mining pipeline
and we’ll continue with the feasibility work on all of our
projects, but 2018 will be a year of growth rather than
depletion of resources.”

Intermin has been one of the quite achievers on the bourse
since Price and other former members of the Phoenix Gold

Gold Mining Journal Page 32 April - June 2018

Cygnus takes gold road
to the sky

by Mark Andrews

Western Australia’s Wheatbelt progress, with about 80 holes
is characterised by fertile completed at Bottlebrush.

farm lands, leaving its gold riches Merrillees said a total of about
largely ignored. 170 holes would be completed

Companies such as Dominion over those geophysical targets

Mining have scouted the area with a steady flow of results

for gold, while Evolution Mining expected to be announced to the

Ltd ran Edna May in Westonia market in due course.

and Explaurum Ltd last year Investors can also expect some

announced a resource of Cygnus is encouraged by near-surface hits of 9.5m @ 29 g/t gold news on the JVs concerning
11.3mt @ 1.91 g/t gold for and 10m @ 15 g/t gold at the Bottleneck project in WA’s Wheatbelt Gold Road Resources Ltd at

695,000oz (0.5 g/t cut-off) at Wadderin and Lake Grace.

Tampia, discoved by BHP Ltd in the 1980s. Initial land access agreements and targeting work have been

Tampia is perhaps the most relevant of the Wheatbelt conducted already, with the group now focused on finalising

projects for Cygnus Gold Ltd’s strategy with the ASX-listed a budget for this year.

occupying 5,000sq km of ground in the Wheatbelt with some Gold Road’s initial 18-month earn-in at Wadderin and Lake
of its tenements holdings covering ground near Tampia. Grace started in October 2017 and while it is committed

“We think showing their success really highlights the potential to spending $1.3 million before withdrawing from the JVs,

for the region and we are really looking to build on that plus Cygnus is also benefitting from having such an esteemed

the results of previous explorers,” Cygnus managing director outfit as a partner. Gold Road holds about 6% of Cygnus

James Merrillees told GMJ. and along with Resource Capital Funds was a big backer of

Stanley is Cygnus’ flagship asset in its sizeable Wheatbelt the $6 million float.

package, with Bottleneck in particular a high priority. “That was really the endorsement and impetus that got us

On the day Cygnus listed on the ASX in January, a six- the listing and really made it quite straightforward to raise the

hole diamond drilling campaign started at Bottleneck. money when we did,” Merrillees said.

Results from the first four holes exceeded the company’s “Gold Road can earn up to 75% in those two large projects
expectations, with the remaining holes expected back from and I am really excited about that. It is great marketing
the lab at the time of print. for Cygnus having a well recognised company behind us

“We were following up on some shallow high-grade hits that and their success in the Yamarna belt, which is a similarly

Dominion got back in 2008/09 and I think we more than unloved, under-recognised, part of the Yilgarn. They have

replicated those with headline numbers of 9.5m @ 29 g/t had tremendous success and they are looking to do that

gold and the better part of 10m @ 15 g/t gold in shallow again, so culturally it is a great fit with their bunch of explorers

regolith, plus a number of other high-grade hits,” Merrillees who we know quite well and we really are excited to be in the

said. same room as them. We can leverage from their technical

“We are the first explorers to ever look at the geology and knowledge, but we also have the opportunity of managing
have a feel for the structural controls on the mineralisation those earn-ins and we get access to the Gold Road balance
there which is absolutely critical in these high metamorphic sheet.

grade rocks. It is early days, but we did get some hits in “Gold Road is obviously motivated and excited to get

the basement albeit at modest grades which included 2m @ us moving as fast as we can; the unloved high-grade

1.89 g/t gold. It is still a good hit for the first mineralisation metamorphic rocks of the Wheatbelt are where we believe

ever hit in the basement.” there is potential to host large, high-grade deposits. There is

Aircore drilling on targets produced from a ground gravity cover to contend with in the Wheatbelt but we have the tools
survey completed prior to Cygnus listing was also in to explore under that.”

Gold Mining Journal Page 33 April - June 2018

AUSTRALIAN REVIEW

Silver Lake charging home

by Michael Washbourne

Silver Lake Resources Ltd is gearing up “We’ve invested in the last three years,
for a strong finish to the financial year on average, about $15 million a year in
as a number of key operational strategies exploration and it’s had a very positive
at Mt Monger begin to take shape. dividend for us,” Tonkin said.

Despite reporting a higher AISC of $1,387/ “Like all smaller gold companies, you need
oz, Silver Lake still posted revenue of to reinvest in your property. If you don’t
$114.71 million for the December 2017 explore, you’re dead.
half on the back of the successful ramp-
up of the Imperial/Majestic open pits and “We’ve been able to replace our reserves
Maxwells underground mine. and grow our resource base in the Mt
Monger area and that’s allowed us to give
Silver Lake flagged elevated costs at the more transparency to our production profile
start of the financial year, but remains for the next five years.”
confident group AISC will fall during the
current half and average around $1,350/oz Tonkin is perhaps most buoyant about the
for the full year. Luke Tonkin potential of the Santa prospect within the

Operating cash flow for the half-year totalled $30.15 million, Mt Belches complex which also hosts
with $20.22 million invested in new mines and a further Maxwells and Cock-eyed Bob.
$6.41 million on exploration.
“We’re going to repeat those same learnings at the Santa
Silver Lake managing director Luke Tonkin said the first half area, which has significant potential for a reasonable-sized
results continued a trend of consistent production and cost underground mine in the next couple of years,” he said.
expectations by the company.
“We’re seeing a lot more value for every drill metre that we
“The first half was always going to be high cost as far as the drill. We’ve been a lot more efficient with our exploration
AISC was concerned, but we look at cash burn and cash spend and we’ve been far more disciplined in our capital
income, so what comes in and what goes out,” Tonkin told spend as well.”
GMJ.
A strong finish to FY2018 would mark another successful
“On that basis, we performed a little better than we actually chapter in the Silver Lake turnaround story since Tonkin took
anticipated, for two reasons; we received a slightly higher the reins of the company in late 2014.
gold price than we had forecast and our cost base at the
mines was a little bit lower than we had anticipated. Winning back investor support remains a key mandate for
Tonkin as the company continues to battle against the stigma
“Going into the second half, we start to yield a good cash of being a high-cost producer when compared to others in its
dividend. Our production base will increase significantly in peer group.
the second half and we should end off the year very strongly.”
“We don’t have the Jundees or the Gwalias where there
Development of the Cock-eyed Bob underground mine is are significant ounces per vertical metre in those mines
progressing as planned, with development ore accessed compared with ours,” Tonkin said.
and stoping under way since January.
“Our cost base is a function of the geological setting we’re
Silver Lake also continues to kick goals on the exploration in…but we’ll start to reap the rewards over the next couple of
front, with promising drilling results reported from campaigns years as we bring in more ounces from the Daisy North and
across the Daisy, Mt Belches and Aldiss mining centres. Easter Hollows areas.”

Extensional drilling at Daisy returned an impressive hit of Silver Lake’s hedge book shows the company is set to
2.13m @ 153 g/t gold from the Haoma West down-plunge deliver some 124,000oz over the next 2.5 years at an
extension, while diamond drilling has confirmed a new lode average forward price of $1,710/oz.
structure, subsequently named Easter Hollows, about 300m
west of the Daisy underground development. “We know our cost base very clearly for each of our sites
and we’re happy enough to lock in that margin,” Tonkin said.
At Aldiss, infill drilling led to broad, high-grade intersections “It’s not as big as some companies’ margins, but if you look
being reported from Karonie South, including headline at our cash balance in the half-year [$66.59 million] it’s very
intercepts of 23.4m @ 52.1 g/t gold and 4.19m @ 17.7 g/t. strong because we’ve been very disciplined about where we
produce from and at what gold price we lock in.”

Gold Mining Journal Page 34 April - June 2018

Gold Mining Journal April - June 2018

AUSTRALIAN REVIEW

Echo-ing success in
the Yandal

by Mark Andrews

Any company boasting Northern Star The Echo Resources team at their
Resources Ltd as a major shareholder West Perth headquarters
is certain to attract attention and after an
industrious two-year period of consolidating gold,” Coxhell said.
ground in the Central Yandal belt, Echo
Resources Ltd has investors eager to hear “The current reserve situation doesn’t include additional
more. deposits such as Lowlands and Wimbledon plus the other
current exploration we are conducting.”
Echo chief executive Simon Coxhell told
GMJ that Northern Star’s influence had At the time of print, deep diamond drilling had just started
definitely helped put the company on the at Julius and Orelia, with stepping out from the core Orelia
radar of investors. system to test the depth and strike of the mineralised Lotus-
Orelia system, 200m north of Orelia, with a hit of 9m @ 17
“There are a number of institutions and g/t gold, already bearing fruit for Echo.
individuals who have invested in Northern
Star at a range of prices and all of those Coxhell said Northern Star’s tactic in the past 3-4 years
investors would be significantly up on their to drill deep underneath known open pit deposits and
investment,” Coxhell said. underground workings in the Jundee district – at the northern
end of the Yandal where Echo is present – had successfully
“Northern Star effectively taking a 19.6% bite demonstrated that mineralised systems extended to great
of us really means there is credibility to the vertical depths.
work we have done in the last two years in
terms of consolidating the land position in the Central Yandal “If that deep diamond drilling we have just commenced can
belt and putting our foot on the Bronzewing processing demonstrate the same as Julius and Orelia to go to great
plant. By doing all of that, we have a very defined and cheap vertical depths, then the potential to significantly expand our
way forward to production, which I think has helped people resources and reserve base is apparent,” he said.
recognise the growth in the company in the last two years
and we hope to be able to maintain that momentum.” “I am keen to demonstrate very long-term value and
substantial increase mine life. The current mine life for
Occupying 1,600sq km of ground, book-ended by Jundee to stage one is four years, stage two is an additional 4.5 years
the north and Thunderbox and Darlot to the south, Echo is and that doesn’t include any of our potential open pits or
the largest landholder in the Yandal greenstone belt. potential underground ore that we may define if exploration
is successful.”
Echo has a number of advanced targets plus greenfields
potential within the Yandal project, with the company’s
standing as a near-term gold producer underpinned by the
open pit Julius deposit in the Empire district and the Orelia
deposit in the Bronzewing district.

Two years ago, Echo had no credited resources in its
portfolio; now it is on the verge of delivering a BFS based on
reserves of 856,000oz at an average 1.7 g/t gold from Julius
and Orelia.

The company has total resources of 27.4mt @ 2 g/t gold for
1.72 moz.

“We have profitable reserves, with stage one producing
at less than $1,050/oz AISC [including capital costs] while
stage two will be closer to $1,200/oz, with relatively low strip
ratios of between 5 and 7:1 and head grades of 1.6- 2 g/t

Gold Mining Journal Page 36 April - June 2018

There is
a high
percentage
of free gold
at Julius

Despite being in a proven gold-rich district, there were no “When you consider that Kalgoorlie was found in the 1890s
certainties when it came to unearthing gold, however, given and Wiluna in the 1900s and here we are in the Yandal
Echo’s financial position it is primed to make a good fist of belt which wasn’t really recognised until the 1980s, there is
exploration, Coxhell said. another 100 years of exploration here,” Coxhell said.
“The reason it took some of these major deposits so long to
Towards the end of 2017, a fully underwritten $15 million be found is the presence of a very complex regolith that is
placement at 22c/share to sophisticated and institutional younger transported rocks which sit on top of the Archaean
investors was put away for Echo with Cannacord Genuity bedrock, which hosts the gold mineralisation. If you don’t
(Australia) Ltd the sole underwriter and bookrunner, Euroz understand where these ancient creek systems and river
Securities Ltd joint lead manager and BW Equities broker systems are that sit on top of these Archaean bedrock
to the issue. you then don’t really know which areas have been tested
comprehensively and which haven’t. Certainly Northern
The interest was spurred by the high-grade greenfields Star’s aggressive deep exploration has led to a lot of
Zaphod discovery, the success and potential of Orelia and additional new discoveries.”
Julius plus the potential seen at the likes of Wimbledon, Northern Star’s latest discovery – Ramone (14m @ 8 g/t
Shady Well and Lowlands. gold, 13m @ 8.5 g/t and 18.5m @ 6.2 g/t true width), 35km

“We are the best funded we have ever been as a company Echo can leverage from established facilities at
and now is the time to conduct higher risk exploration, Bronzewing, including a 200-man camp
more speculative exploration; we have to be a bit more
adventurous now that we have got that money in the
bank,” Coxhell said.

“We have earmarked in the order of $1 million a month
over the next six months testing a multitude of targets,
both potential underground and also drilling out a
number of deposits that we think are going to translate
into economic open pits. That is the work going forward
for the next six months.”

Coxhell is optimistic about the greenfields opportunities
in the Yandal greenstone belt, which wasn’t properly
recognised until Mark Creasy discovered Bronzewing
in the 1980s.

Gold Mining Journal Page 37 April - June 2018

AUSTRALIAN REVIEW

south of the 10 moz Jundee With the resources sector
mine – is already being touted currently on a high, it is a
as a potential open pit, with good time to be nearing the
mineralisation detected over a completion of a BFS and
400m strike. unveiling more resources. The
company is on track to do both
Echo has ground encroaching in the first half of 2018 and with
into the Ramone discovery area the project last in operation in
and is keen to start “cranking 2013, 80% of approvals are
up” exploration activities in the in place while Julius is on a
space. granted mining lease.

Coxhell said a recent detailed Coxhell said upgrading portions
geological survey over large of Barwidgee Road so ore from
portions of its tenement holdings Julius could be road-trained
had highlighted a gravity low to the 2 mtpa Bronzewing
which seemingly coincided processing hub forms part of
with a shear zone previously the work to be done, while
interpreted from magnetics. Bronzewing can be dusted off
and be operational again in
“We think we are beginning to quick time, perhaps for as little
understand some of the more as $17 million over a 4-6 month
deep-seated controls on the timeframe.
gold mineralisation in the district,
so we are genuinely excited Mintrex has “fine-tooth combed”
about being able to apply some Echo is the largest landholder in the the plant, which requires the
modern exploration techniques
there,” Coxhell said. Central Yandal greenstone belt first, secondary and pebble
crushers to be replaced.
“We have effectively an additional 15km of strike between
Julius and Ramone, which hasn’t had a decent go. There has Coxhell said there was a noticeable tightening of availability
been wide-spaced RAB drilling done by previous workers of good skilled people, however, not at the levels seen
but with the datasets we have been compiling and collating, during boom times. Costs for drilling and associated services
we are in a position where we can be quite specific about remained in check for the time being.
those areas of interest that we want to follow up on.”
He said there weren’t any foreseeable headwinds in the way
There are few companies which can boast to be a genuine of production ambitions being achieved and was confident
near-term gold producer, with such blue-sky exploration there would be funding options for the Yandal project
potential ahead of it. available to Echo.

Echo’s story is certainly resonating and when GMJ caught “That will be a mix presumably of debt and equity. If the
up with the company, Coxhell had just arrived back in Perth equity markets are open and there is an opportunity to tap
after two weeks on the road in various parts of the world those markets for a significant portion of the capital that is
telling the Yandal story and making introductions to new and required, and our shareholders are happy with that strategy,
potential international investors. then obviously that is a good option for us to explore and

understand,” Coxhell said.

A substantial cutback was completed at the Orelia open pit in 2012. Orelia is “Our starting point from a development mine
subject to drilling and remains open along strike and at depth proposition is two simple open pits... most
large open pits progressively develop into
underground mines, but you have to do
the work to demonstrate that it doesn’t just
continue. That’s our longer term opportunity.
We know how we are going to put this thing into
production. There aren’t too many companies
putting their hands up saying we want to be a
producer in the space we’re in at the moment.
Gascoyne [Resources Ltd] and Dacian [Gold
Ltd] are just about there, so the next emerging
gold producers are ourselves and Kin [Mining
NL].”

Gold Mining Journal Page 38 April - June 2018

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Gold Mining Journal Image courtesy of Western Areas Ltd April - June 2018

AUSTRALIAN REVIEW

Crunch time for NTM

by Michael Washbourne

NTM Gold Ltd managing director Andrew Muir
believes the upcoming resource update for the
Redcliffe gold project will give his company the “line
in the sand” moment investors are craving.

Muir, a former resources analyst for Hartleys Ltd and
JP Morgan, joined the little-known explorer in January
tasked with raising the profile of the company’s
flagship project, about 35km north-east of Leonora.

A 7,500m RC drilling programme across the project’s

three main deposits – Nambi, Bindy and Golden

Terrace South (GTS) – was ongoing at the time of

print. Diamond drilling will begin once the third and

final shift at GTS is completed, with an updated

resource targeted for mid-year. NTM is in the midst of a 7,500m RC drilling programme

The current resource of 5.48mt @ 1.57 g/t gold for at its Redcliffe gold project, near Leonora

277,600oz was last updated in 2011.

“Ultimately you need to draw a line in the sand by greenfields/extensional work.

which people can value you and for us that will be our “We’ve got about 40km of strike on our tenements and whilst

resource,” Muir told GMJ. there has been a fair bit of work done, there’s still probably

“There’s been a fair bit of drilling done since the last 10-15km of strike that’s had no or very minimal work done
resource and I think investors are pretty keen to see that on it,” Muir said.

work recognised in some way.” Leonora has become somewhat of a hotspot for gold

RC drilling at the Nambi prospect has been completed and explorers in recent years, particularly on the back of the
returned a number of high-grade hits such as 4m @ 7.16 g/t success both Dacian Gold Ltd and Kin Mining NL have
(including 1m @ 20.2 g/t), 5m @ 6.96 g/t (including 1m @ achieved.

17.1 g/t), 2m @ 9.3 g/t and 4m @ 4.59 g/t (including 1m @ Dacian was set to pour the first gold bar from its Mt Morgan

14.8 g/t). operation at the time of print, while Kin continues to kick goals

The RC rig was turning at Bindy at the time of print as part on the exploration front as it charges towards production
of an expanded drilling programme for that prospect, with later this year.

the sporadic nature of previous drilling unable to give NTM a “I think there’s still a lot of upside in the region, largely due

clear picture of the mineralisation. to the historical focus of a lot of previous explorers who were

“We’ve got mineralisation over at least 800m, then looking for shallow and oxide mineralisation,” Muir said.

there’s a 400m gap in the drilling and then another line of “There hasn’t been a lot of deeper drilling, at least in this

mineralisation, so it could potentially be up to 1,500m long,” part of the world, but over the last couple of years we’ve

Muir said. found that if you drill deeper past the oxide material, there

“Unfortunately the line spacing it’s been drilled on is quite are some pretty good grades to be discovered.”

poor – the lines are 100m apart – so on the back of some While Muir and the NTM team are not quite in a position

good results from those lines we’re basically going to infill a to think about mining and processing opportunities, the

lot of those on 50m to give us a better handle on the grade company does have the luxury of being within 50-75km of

distribution and the orientation. five operating mills.

“It’s a recurring theme at these deposits that you do tend “Whilst it’s obviously very early days to commit to any sort
to get quite big mineralised systems. It’s just a matter of of development – and we’re not in a rush to do that – at the
delineating where the higher grades are.” right point in time, having a number of mills to potentially
choose from gives us a lot of flexibility,” Muir said.
A recent heavily oversubscribed placement of $1.5 million
has provided NTM with enough cash to complete its near- “Having said that, if we find a monster deposit, it would be
term exploration targets, including some regional drilling and nice to build our own mill.”

Gold Mining Journal Page 40 April - June 2018

Blackham’s redemption

by Mark Andrews

Blackham Resources Ltd has “It failed,” Jerkovic told GMJ.
bounced off the ropes to
post record gold production at its “The previous 30 years
Matilda-Wiluna mine after costs before that it was actually
had ballooned above $2,200/oz a successful asset and
gold during 2017. operated under Newmont/
Normandy/Great Central, all

Record gold production at large companies, for a long

record AISC from Matilda- time. The ground wasn’t fully

Wiluna of 6,498oz @ $1,158/ consolidated like it is now,

oz was reported in January but for the first time in a long

and bettered in February with time a company has that

6,713oz @ $912/oz produced. Options at 8c/share – to be converted by January total northern goldfield under
The monthly results were a 2019 – could deliver $42 million to Blackham one owner. The availability
critical outcome for the company of the refractory sulphide ore

given the forced recapitalisation process undertaken after and free milling ore to feed what will be two circuits instead

a $60 million financing solution did not come to pass, of mingling them in one circuit is the plan.”

meaning Blackham could not pay down a $14.8 million debt Solving debt issues is the order of the day for Blackham,
commitment due to Orion Mine Finance on December 31. but the long-term strategy is to take Matilda-Wiluna to

Thankfully for Blackham, key contractor at Matilda-Wiluna, nameplate 200,000 ozpa gold production, which requires

MACA Ltd, offered a new secure facility for the company recommissioning of the biox plant and adding a crushing

while Orion, Hartleys Ltd and existing shareholders strongly float circuit at the front end.

backed the $36 million recapitalisation strategy. Essentially, Blackham’s plan has been stalled by a year and

Existing shareholders picked up 80% of the raising which the likely event of beefing up the plant will occur in 2019.

immediately helped reduce some liabilities to creditors and “We can then start to debunk these myths regarding sulphide
strengthen Blackham’s balance sheet. circuits and the reason I say that is because they are not

A new-look balance sheet will be taken care of by executive uncommon. Fosterville in Victoria, that plant has operated

chairman Milan Jerkovic (formerly non-executive chairman) for 30 years and there are sulphides being processed by

and former Resolute Mining Ltd chief financial officer Northern Star [Resources Ltd] in Kalgoorlie. There is an

and company secretary Greg Fitzgerald who has been extra step in there, but it is about economics. We are sitting

appointed as a non-executive director. Bryan Dixon remains on a very large resource base that has been drilled, we don’t

as managing director of Blackham, while Linton Kirk and have to find it, we just have to turn into an economic plan,”

Jonathan Lea have joined the technical advisory committee. Jerkovic said.

Jerkovic told GMJ Blackham was on track to have $25 “Part of our recapitalisation plan is to go and spend money on
million cash by the end of the quarter and be in a position drilling some immediate visible targets to extend our current
to quickly repay debt and all outstanding credit owed by the free milling reserves beyond five years; it is currently three
end of 2018. years and we want to improve that plan. We have a very
solid plan in the short term and we want to make that solid
Heavy investment in stripping waste and preparing for cash flow generating plan visible for the next five years.”
the mining of high-grade ore at Matilda-Wiluna was made
in 2017, however, poor weather and other issues meant At the time of print, drilling was focused on turning resources
the intended sequence of events was derailed, pinning into reserves to sure up material for the free milling circuit,
Blackham’s back to the wall. while underground drilling at Golden Age to develop a six-
month rolling plan and a potential 2-3 year strategy at the
Minimal money is expected to be spent on stripping waste orebody was also under way.
this year, with high-grade ore available, affording Blackham
the opportunity to rebuild credibility at Wiluna. “We have gone back to a different method of mining that has
been very successful in the last quarter and we want to drill
Blackham purchased the Wiluna assets from receivers and up more material to keep going with that by adding a base
despite pouring gold under its watch in October 2016, the feed of high-grade ore into the plant and mill,” Jerkovic said.
jury remains hung on its belief in the project.

Gold Mining Journal Page 41 April - June 2018

Gold Mining Journal April - June 2018

LATIN AMERICA

Lundin Gold eyes growth
after mine in Ecuador built

by Susan Taylor, Reuters

Lundin Gold Inc has a hearty appetite Fruta del Norte was sold for $US240
for growth even as the Canadian million in 2014 by Kinross Gold Corp,

miner focuses on building its first mine which halted development in 2013 amid

in Ecuador on time and budget, chief falling gold prices and government

executive Ron Hochstein said at PDAC plans to increase taxes.

in March. Earlier this year, Australia’s Newcrest

“We want to grow to be an at least Mining Ltd said it would pay $250

1 mozpa gold producer with 3-4 million to buy a 27.1% stake in Lundin

operations,” Hochstein said. Gold. Newcrest spent $40 million last

“Our appetite is a good one. We’ve got year on a 14.5% interest in Ecuadorean
great opportunities to grow organically explorer SolGold plc.

and obviously we’ll look at other places Newcrest was part of a $400 million

as well,” with an emphasis on growing equity raise including investments by

the company in North and Latin the Lundin Family Trusts, which holds

America, he said. 22.3%, and streaming partner Orion

The Vancouver-based miner is first Ecuador’s mining sector is being closely examined Mine Finance Group, which holds
focused on building Fruta del Norte, by a number of large mining houses 11.4%.
which will be Ecuador’s biggest gold
To avoid additional debt or shareholder

mine, after raising $US1 billion in financing over the past dilution to finance its mine, management discussed

year. partnership options with eight gold companies over the past

The start of production is targeted by the end of 2019. year, Hochstein said.

The underground mine is expected to operate for 15 years “This wasn’t a case of bringing in a strategic investor as a

and produce over 325,000 ozpa gold, and encompasses takeover. This is a partnership to grow Lundin Gold,” he said.

six of the company’s 29 mining concessions, which cover In an exploration JV, Newcrest could operate and earn 50%
70,000ha of land. in eight of Lundin Gold’s concessions by spending $20

“We see this as a company-builder,” Hochstein said, flagging million over five years.

exploration potential and the mine’s low production costs. For now, Lundin Gold’s priority is to show shareholders it can

Lying along Latin America’s mineral-rich Andean mountain build its mine on time and budget.

range, Ecuador is drawing interest from dozens of global “We can’t stumble now,” Hochstein said.
miners such as BHP Ltd and Rio Tinto Ltd, Hochstein said.

YTGOOEUDTRASY Past and present Conference Proceedings

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For details or to download an order form visit
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Gold Mining Journal Page 43 April - June 2018

LATIN AMERICA

Beadell finds harmony
with Golden Harp

by Mark Andrews

Beadell Resources Ltd’s ambition plant will enable the Tucano gold
of becoming an Americas-focused mine to be fully optimised for the
gold producer appears on course, with first time with recoveries expected
Golden Harp Resources Inc agreeing to be in the order of 93% compared
to a merger. with 88% previously recorded.

Subject to relevant approvals, including Current reserves include 18.5mt

that of both sets of shareholders, @ 1.77 g/t gold for 1.1 moz, with

the new entity will be aptly named open pit resources totalling 35.4mt

Americano Mining Inc. Tucano will enter phase three by mid-2018 @ 1.61 g/t for 1.8 moz.
It is proposed Americano will be listed Ongoing exploration across the

on the ASX and TSXV, with a spot on the latter considered to 2,500sq km greenstone package occupied by Beadell plus

be essential in improving exposure to North American capital underground supply is part of the upside at Tucano where

markets with increased liquidity and analyst coverage. average life-of-mine production is 150,000-170,000 ozpa

Beadell managing director Simon Jackson told GMJ a gold.

TSX listing would provide better comparisons with other Tucano and the emerging targets Beadell has already

companies facing similar cost structures in South America identified – Mutum and high-grade discoveries boasting

rather than being compared to Australian-focused gold underground potential beneath Tap AB – will be critical in

producers. Americano’s strategy of becoming an intermediate gold

“My view has always been that a Brazilian gold mine should producer.

be listed in Toronto which is where the vast majority of Jackson said Americano would participate in M&A

South American gold producers and developers are listed,” opportunities at some point in the future to create an

Jackson said. intermediate gold producer for investors to consider,

“Having a Perth-based South American gold producer however, “how and when that occurs is a long way down
doesn’t really make a lot of sense. Joining up with some the track”.

equity players over there [North America] allows you to get “My view is that the way to get the best valuation on gold

some volume and so on. I think by finding a shareholder – assets is to be an intermediate producer. You can pick your

Golden Harp is just a shell – and getting Sprott equity and own definition on what that might be – 300,000-400,000

the Lundins involved in the equity, even at a very small level ozpa [for instance]. If you can get complimentary assets,

to start with, is part of that stepping stone to getting that maybe two or three that may produce in that level, then you

volume and ultimately a valuation re-rate in Toronto.” are probably going to get the best valuation on your assets.

One of the principal terms of the merger, via a scheme of Our job is to get the best valuation on our assets and the
arrangement, requires Golden Harp to undertake a private Australian market isn’t giving us that at the moment. The
placement of common shares to raise about $C4 million longer term aim here is to be an intermediate producer,”
in which Sprott Inc and entities associated with the Lundin Jackson said.

family will be main subscribers. Jackson expected all paperwork, court proceedings and

Earlier this year, Beadell received substantial support from approvals processes to take some time, with the newly
Sprott Private Resource Lending, via a senior secured credit formed Americano to go live sometime mid-year.

facility up to $US60 million, as the turnaround at Tucano in Americano will be headquartered in West Perth and will

Brazil began to gather pace. have an office in Toronto.

Tucano, Amapa State, northern Brazil, is expected to move Jackson will be president and chief executive with Craig
into phase three of its life with upgrading of the CIL plant under Readhead chairman and Nicole Adshead-Bell, Brant Hinze,
way and fully financed for operation by mid-2018. A new ball Timo Jauritso and Adam Lundin all non-executive directors
mill, pre-leach thickener, additional CIL tank and oxygen of Americano.

Gold Mining Journal Page 44 April - June 2018

LATIN

AMERICA

16-17 May 2018

Pan Pacific Perth

The premier forum for Australian-Latin American relations

Sponsorship and exhibition opportunities are still available.
BOOK YOUR SPOT TODAY for your chance to engage with
delegates from Argentina, Brazil, Colombia, Peru and more!

Sponsors and supporters to date:

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To present, exhibit or attend as a delegate please contact
Gold MininMg JeoulrnFalogarty on (+61) 8 9321 0355 or email [email protected] u- June 2018

AMERICAS

Another Aussie pitches
up in US

by Dominic Piper

The Australian invasion of the North American gold and Eagle Mountain has already recovered
copper space continues with Eagle Mountain Mining Ltd samples of up to 11% copper and 80 g/t gold
the latest company to list on the ASX on the back of a suite from its Silver Mountain property in Arizona
of US assets.
we started sampling we were getting 3-5 g/t gold and 3-5%
The last 18 months have seen a dozen or more Australian copper off the waste dumps.”
juniors pick up ground in the US and Canada as they attempt
to take advantage of what many observers believe is a lack Such grades from waste material are obviously intriguing
of junior explorer mentality in the North American mining but the project has been dormant for nearly 100 years. Bass
sector. thinks this is for reasons regulatory, physical and geological.

Eagle Mountain closed its first day of trading at 34c/share on “It is the most difficult terrain I’ve ever seen,” he said. “It
March 16, delivering a sound follow-up to its oversubscribed is only 70 miles from Phoenix but is at 6,000 feet. It takes
$8 million IPO. a two-hour drive up a dirt track and then two hours on the
ATVs to get to the start of the prospects.
The company’s assets are all located in the US state of
Arizona, a jurisdiction famed for its Tier 1 gold and copper “Ownership has also been fragmented. The claims were
orebodies. Freeport-McMoRan and Grupo Mexico dominate never owned by a company and were always held by
copper production in the State but Eagle Mountain managing three individuals including a deceased estate with multiple
director Charlie Bass believes there is opportunity for smaller holders.”
players to carve a niche among the majors.

“Most US mining companies are big and only interested in
Tier 1 assets,” Bass told GMJ. “I think they have lost that
exploration culture that Canada and Australia still have.”

Bass – a founder of Aquila Resources – believes Eagle
Mountain’s flagship Silver Mountain project is a case in
point. The area was mined extensively up until the 1920s
but has since seen little concerted exploration. Kennecott
looked at the ground in the 1980s without ever holding it
and eventually walked away to refocus on large tonnage
opportunities.

Bass happened to come across the project in 2011 and
took it upon himself to produce the first modern exploration
assessment of the ground.

“I met a geologist who had been associated with the project
and he said it was the best thing he had ever seen that was

“not controlled by a major,” Bass said. “No one has ever

really been back since mining ended in the 1920s but when

Most US mining companies
are big and only interested in
Tier 1 assets. I think they have lost
that exploration culture that Canada
and Australia still have.

Gold Mining Journal Page 46 April - June 2018

With no modern exploration conducted, Eagle
Mountain finds itself with essentially a greenfields

opportunity in a mature mining district

Bass was the first person to attempt consolidation, starting but we could’ve been shooting ourselves in the foot. It is now
the process in 2013. Once agreements were reached, he ramping beyond what I can do personally and I’m not greedy,
launched a series of early-stage exploration programmes I would like to see other people share in the success,” he
to build a coherent picture out of the confusing geological said.
indications.
With $8 million raised, the company can
“We have had to throw everything at it step up the levels of exploration.
because it is very difficult to understand;
there are at least three separate events,” “What we are targeting now is AEM
Bass said. targets overlain with IP, geology at
surface and some nearby old workings.
“All the mapping suggests we are in a Once we understand why we are getting
Proterozoic system with a VMS camp but certain geophysical responses it will help
at the southern end we start seeing the us ascertain very quickly what we are
Laramide Arc [a key geological feature looking [for] but until we start drilling and
controlling gold and copper deposits get below the weathered material we
in Arizona and neighbouring Nevada]. can’t have a real understanding.”
So, we are at the crux of the VMS trend
and Laramide Arc and also another Charlie Bass One challenge will be finding a drilling
mineralising event; it is very complex.” contractor capable of doing the work.
With its steep terrain, Silver Mountain is
Bass has spent $4 million himself only likely to be accessed via heli-borne
since 2013 on mapping, sampling and rigs.
geophysics but believes the project now needs more intense
geophysics and drilling to define exactly what it holds. “A few of the preferred drillers have disappeared from the
region,” Bass said. “There are some logistical challenges so
“Two years ago I thought about drilling this myself,” he said. we have to see which drillers are prepared to take this on.”
“Not to hit mineralisation but to start unravelling the geology,

Gold Mining Journal Page 47 April - June 2018

ASIA-PACIFIC

Mount Ridley starts
climbing in the Philippines

by Mark Andrews

Amid a changing landscape now and hope to be drilling in three months’ time. The
in the Philippines, exposure landscape is changing in the Philippines. It is all about safe,
to a project located on the gold- environmentally friendly, quality mining,” proposed Mt Ridley
rich island of Mindanao may managing director Osman told GMJ.
be welcomed by ASX-focused
investors. “They are looking to better the standard of mining so they
can realise the full potential of the orebodies they have; their
Mount Ridley Mines Ltd Kabir Osman world-class orebodies may not have been treated the best
will acquire 100% of the way in the past so they are endeavouring to do that better
issued capital of Prometheus in the future.
Developments Pte Ltd, which
owns rights in the high-grade “Our very first site visit was enough for us to say ‘yes’ to
epithermal Diwalwal mineral the project. In fact, we walked away initially because of the
field. potential size of it. We had to be sure that we could do it
right. The people we partnered with in the Philippines are
An investment agreement struck with Paraiso Consolidated very good, and the key is to have the right partners. The
Mining Corporation (Pacominco) and a JV agreement with political environment is right for it. That is a concern for a
JB Management Mining Corporation (JBMMC) paved the lot of people, but it has gone 180 degrees from two years
way for Prometheus to acquire an 80% economic interest ago and the vast majority of those road blocks have been
and 40% legal interest in three mining tenements covering removed.”
the Diwalwal gold project, 80km south of Medusa Mining
Ltd’s Co-o mine. Mount Ridley intends to conduct underground diamond
drilling at Balite and Buenas Tinago in April, as it looks to
Given backing from Prometheus’s
Kabir Osman and Robert McKenna, confirm historical high-grade
Mount Ridley will have strong gold mineralisation and identify
experience of doing business in additional mineralisation.
the Philippines and will hit the
ground running at Diwalwal upon A total of 21 diamond holes were
completion of the acquisition, which completed at Balite, outside
is expected sometime in April. Mount Ridley’s agreement area,
in 2005. A number of high-grade
Prometheus has been particularly intersections at Balite, south of
Buenas-Tinago, were recorded
active on the project in the and offers Mount Ridley impetus
to investigate further.
past six months, conducting
“We hope to have a maiden
reconnaissance exploration resource within 12 months,”
Osman said.
activities in conjunction with
“The potential is there and we
community liaison work. hope to deliver on that, it is under
explored and we want to treat it
Due diligence and preparation work with the respect it deserves from
has been done with a quick restart a project development point of
to mining in the near term in mind. view and get in there and do it
right.”
The project was discovered in

1983, with an estimated 2.7 moz

gold produced predominantly from

the Balite and Buenas-Tinago veins

alone. Mindanao is well known

“We are accessing the site for its gold potential

Gold Mining Journal Page 48 April - June 2018

WHEREVER WE ARE
TREND WITH US

#paydirtmedia #magazines #conferences

Gold Mining Journal Geopacific Resources Ltd’s Woodlark gold project in April - June 2018
Papua New Guinea, 2018

DEALS OF GOLD www.ddh1.com.au

NPJV EMERGES AS KEY CIL processing plant.

PILBARA CONTRACTOR LNG will be used to fuel the processing

NPJV continues to make strides facility’s carbon regeneration kiln, elution
as an emerging mining and boiler and bullion furnace, thereby reducing
construction contractor after being the cost and complexity of having multiple
selected to undertake drill pad and fuel sources within the plant.
access track earthworks for Calidus
Resources Ltd at the Warrawoona Construction of the LNG facilities and the
gold project in the Pilbara. 15MW power station remains on track for
completion prior to the commissioning of
Three people from NPJV – a JV the processing plant, slated for May.
between Njamal Services and
Pilbara Resource Group – will be “Execution of the long-term LNG supply
employed to complete the 12-month agreement with EVOL provides Dalgaranga
contract which was awarded based with a low-cost, clean, reliable and locally
on the company’s work for Atlas sourced fuel solution,” Gascoyne managing
director Mike Dunbar said.

Iron Ltd at the Mt Webber project. “The LNG supply agreement with extension

NPJV was launched in November NPJV will undertake drill pad and options provides certainty for the project,
2016 with only three employees access track works for Calidus at giving us the ability to grow the project,
and an ambitious plan to introduce knowing that there is a long-term fuel
a new concept in Native Title the Warrawoona gold project solution in place.”

contracting.

The organisation now employs over 60 people, with 50% NEWMONT FLYING HIGH WITH ALLIANCE

being Njamal people, the Traditional Owners of the land UNTIL 2021
stretching east of South Hedland, past Marble Bar and out
to Wandanyaon in the Great Sandy Desert. Alliance Aviation Services Ltd will continue to be the airline
of choice for Newmont Mining Corp for at least the next three
“It’s extremely gratifying to see our business model being years.
embraced by industry and delivering benefits for both
indigenous and non-indigenous workers,” NPJV managing Newmont recently signed a three-year contract extension for
director Scott Dryland said. air charter services to various Newmont sites until 2021.

Alliance has been providing services to Newmont sites from

LNG FUEL SOLUTION IDENTIFIED AT bases in Perth and Brisbane since 2012. Flights will now
DALGARANGA also depart from the airline’s new base in Darwin and service
charters to sites such as Granites in the Tanami.

Gascoyne Resources Ltd has signed a long-term LNG “With Alliance undertaking flights between Darwin and
supply agreement with EVOL, a fully owned subsidiary of the Granites itself, rather than through a subcontractor, it
Wesfarmers, to finalise the power generation needs of its increases our flying for Newmont by approximately 25%,”
Dalgaranga project. Alliance chief executive Lee Schofield said.

EVOL is supplying the plus-1 million litre LNG storage “We are very proud of this extension and consider it a great
facility and vaporisation equipment required to supply Zenith acknowledgement of our ability to provide Newmont with
Energy Ltd’s 15MW gas-fired power station and the 2.5 mtpa safe, reliable and cost-effective services.”

Gold Mining Journal Page 50 April - June 2018


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