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November 2017 VOLUME 1. ISSUE 255 $11.95

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Australian mining’s
electric future

• Australian Nickel Conference review ISSN 1445-3436
• Northern Territory spotlight 10
• Europe in focus
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CONTENTS

PAYDIRT (ISSN 1445-3436) 6 NEWS 6
Published by Gold miners in Western Australia staunchly 20
Paydirt Media Pty Ltd. opposed the idea of increased royalties 26
A.C.N. 063 985 133 on production. Major companies like Gold
Fields and Newcrest Mining joined forces,
Head Office: while workers and contractors in the indus-
Suite 9, 1297 Hay St, West Perth try rallied to voice concerns about how the
Western Australia 6005 hike would impact jobs. In the end, the WA
P.O. Box 1589, West Perth Labor Government’s proposal was blocked
Western Australia 6872 and smiles were returned to the faces of
Phone: (+61 8) 9321 0355 the State’s gold community. Mark Andrews
Facsimile: (+61 8) 9321 0426 reports
[email protected]
www.paydirt.com.au 20 COVER
The growth in electric vehicles and home
battery storage has sent interest in the bat-
tery minerals sector surging. Graphite and
Editorial: lithium companies were the first to move
Editor: Dominic Piper and have recently been join by nickel and
Deputy editor: Mark Andrews cobalt players. Paydirt speaks with compa-
Journalists: Michael Washbourne, nies at the heart of the industry to discover
Jonathon Daly Australia’s likely role in the 21st Century’s
Photography: Picture This big power revolution
Art director: Marian Noonan
Contributors:
Keith Goode (Sydney), Brendan Ryan
(Johannesburg), Ross Louthean

Advertising: 26 AUSTRALIAN NICKEL
Advertising manager: Richa Fuller CONFERENCE
Subscriptions: Mitchelle Matambo
Phone: (+61 8) 9321 0355 More than 250 delegates attended this
Facsimile: (+61 8) 9321 0426
year’s Australian Nickel Conference at the
Pre-press and printing:
Vanguard Press 26 John St, Pan Pacific Perth. It has been a struggle
Northbridge WA 6003 for most nickel players over the last five
Member of:
years, as soft prices put many companies
Paydirt Media
Executive chairman: Bill Repard on the back foot and into other commodi-
Finance manager: Giovanny Jefferson
Accounts/administration: ties. However, it appears the bottom has
Heather Melling
Conferences: Melita Fogarty, been reached and happier days are ahead,
Namukale Nakazwe-Msiska, with nickel’s importance in the make-up
Christine Oelschlaeger
of batteries starting to be realised. Paydirt

provides extensive coverage from the
conference

42 BATTERY MINERALS
Australian companies with projects con-
taining in-demand minerals which will feed
the burgeoning battery and EV markets are
being rejuvenated. Paydirt found a host of
companies full of optimism as the opportu-
nity arises to tap into a new customer base

Member of: 64 EUROPE
Australian companies are spread far and
Registered by Australia Post PP 643938/0071. wide across the globe. Africa and Latin
No pages or articles in this publication may be America have long been popular destina-
reproduced in any form without the consent of tions for ASX juniors, but activity now ap-
the publisher. This includes photographs either pears to be increasing in Europe. Paydirt
taken by Paydirt Media staff or provided by other takes a look at some of the projects in play
parties and found that Europe is fast becoming
more than just a holiday destination for
Australians

Anti-battery argument falls flat

Much of this edition of Paydirt, and a fair Goldman Sachs points out that while the Trump administration
chunk of last month’s, is taken up with in the US is likely to rollback some energy policies, China, India

discussion about the battery minerals – lithi- and Western Europe are all tightening their policy settings.

um, cobalt, graphite and nickel. In Europe, French and UK authorities have declared no more

A glance at the daily announcements sales of internal combustion engines from 2040 – following on

on the ASX gives an indication as to from even more ambitious regulations being adopted in the

why, with the volume of releases in Netherlands and Norway. Meanwhile, China continues to intro-

these commodities outstripping duce fuel consumption credit regulations.

all others apart from gold. The other driver towards a tipping point is cost-competitive-

“Bubble” you may cry and we ness between EVs and traditional petrol vehicles. With battery

can assure you the Paydirt edito- prices continuing to fall, major banks are beginning to bring for-

rial team has been dissecting the ward the tipping point (to 2018 in the case of UBS).

key drivers of the battery minerals boom for more than two years It is true that renewables are still far from the panacea their

now. The conclusion I have arrived at is that while there is cer- most vociferous supporters suggested they would be 15-20

tainly froth in the array of market announcements – I don’t for a years ago and it is unlikely they will be capable of providing the

minute expect there to be 50 new lithium, graphite and cobalt baseload energy needs of any country for the foreseeable fu-

mines in Australia in five years’ time – there is also plenty of ture. But, when combined with cheaper battery storage, renewa-

substance and each month the market is receiving further con- bles are becoming a key part of the energy mix.

firmation from “outside sources”. They do not provide baseload energy but unlike other forms of

In the last three months we have seen UBS, Morgan Stanley supply, they can ramp-up quickly to provide the peak demand-

and Goldman Sachs release variously bullish reports on future period support many networks need.

“electric vehicle uptake and the recent Frankfurt Motor Show was Again, this is no ideological argument; it is a matter of tech-

dominated by new launches and plans for EVs from the world’s nological development and economics and a huge number of

major car manufacturers. Australian companies are

The evidence that lithi- None of that is going to do much recognising this.
um-ion batteries will play a to change future demand for the I don’t believe manage-
key role in future transport battery minerals because whatever
and general power needs is ment of each of the 60-odd
now, I believe, undeniable. companies in lithium, 30-
odd in graphite, 20-odd in

But, it still surprises me how happens in Australia will be heavily cobalt and the 16 compa-
much scepticism remains in outweighed by the fact that the majority nies who spoke on the topic
the Australian mining com- at the Australian Nickel

munity around the battery of the world is heading down the EV Conference last month are
minerals. and battery storage route. ideologically opposed to
coal-fired power, or have
Healthy scepticism is, of

course, necessary when- aligned themselves to the

ever any new technology is battery sector for ethical

promoted but as EVs and home battery storage descend from reasons; it is simply that they recognise the opportunity being

the realms of science fiction to modern-day reality, I have a placed in front of them.

growing suspicion much of the scepticism is ideologically based When you have a BHP Ltd division extolling the battery revolu-

rather than analytically driven. tion and preparing itself for entry into downstream processing, it

This is perhaps because the hard rock mining industry has is time to take notice.

long been associated with the coal mining sector and also has a If EVs, or trucks, buses or home batteries can offer similar

higher percentage of climate change sceptics than the general performance and reliability and are cost-competitive to their

population. But, it doesn’t really matter whether you think cli- older generation peers, then they will be adopted. The rate of

mate change is a liberal conspiracy or that coal-fired power will technological change is greater now than at almost any time in

always trump other sources in Australia. It doesn’t even matter human history, so it is difficult to be too outlandish with projec-

if Australia goes it alone and keeps the energy mix at current tions.

ratios. If you don’t agree, feel free to fax me your arguments. I’ll just

None of that is going to do much to change future demand for have to check which storage room we put the office fax machine

the battery minerals because whatever happens in Australia will in.

be heavily outweighed by the fact that the majority of the world

is heading down the EV and battery storage route.

The two drivers for the EV and battery market are policy set-

tings and cost-competitiveness, and both are heading towards

a tipping point.

Take-up of EVs has so far largely been driven by the former

and the rate of government policies encouraging their adoption

is increasing. In its recent research report on the future of EVs,

Goldman Sachs identifies government subsidies as a potential [email protected] @DominicPiper
“wildcard” to a “more aggressive hyper-adoption scenario”.

PAGE 4 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

NEWS

Kidman no joke for WA

China’s emphatic ploy to have space, so it is pleasing that the
its streets ruled by electric WA Government has seen fit to

vehicles in the near-future has give us support and in many ways

turned the lithium sector “on its it validates this project now, we

head”, according to one of Aus- think it is a good endorsement.”

tralia’s leading lithium developers. There appears to be no end of

“I am surprised at how quickly support for Kidman and while the

the market has now started to partnership with SQM is a big dif-

acknowledge the fact that this ferentiator among its peers, the

lithium demand looks like it is fact no off-take deal has been

very much real. I suppose the locked in offers Kidman some

quick turnaround since China exposure to further upside in the

came out with news a few weeks lithium cycle.

ago on making sure vehicles are “Around the world at the mo-

electric [in the future] was the ment it is very hard to find a lith-

catalyst which turned the sector ium company that hasn’t already

on its head, with lithium stocks sold its off-take. We still haven’t

rerating on the back of it,” Kidman sold our off-take. Other lithium

Resources Ltd managing director companies have sold their off-

Martin Donohue told Paydirt. take to [help] finance building

It has been reported car making their mine and concentrator. We

giants BMW and China’s Great have a done a JV to retain our

Wall Motor Co Ltd are assessing optionality to who we sell it to,”

opportunities to jointly manufac- Donohue said.

ture cars, including electric and “There are more buyers than

standard versions of the Mini, in suppliers at present. That might

China. change in years to come, but right

The confirmation of a potential now we are in a very unique posi-

BMW/Great Wall JV came on the tion where a lot of off-takers are

back of BMW reporting sales of Kidman managing director Martin Donohue said there were a willing to assist building the refin-
electrified vehicles for the first lot of cultural similarities with his company and SQM ery in return for an off-take agree-
three months of 2017 had ex- ment.

ceeded its entire sales for 2016. in the market and Kidman’s status con- “We are not going to rush into that be-

BMW has the largest share of the elec- tinued to rise in October, with the West cause we are in a very good strategic po-

trified market in the world and is on track Australian Government granting Mt Hol- sition at the moment and we will weigh

to deliver its 2017 target of 100,000 EVs land Level 2 Lead Agency Service. up the best deal for all stakeholders once

sold. Gorgon and Roy Hill are recent exam- the time is right.”

Companies like BMW cranking up their ples of WA mining projects granted Lead One of the potential risks for investing

EV production and sales, plus legislation Agency Service by the Department of in Kidman is its ability to fund its share

affecting the automotive industry in Chi- Jobs, Tourism, Science and Innovation, of the refinery, however, Donohue is con-

na and across Europe, is being lapped such is the significance of each project fident the company will be able to carry

up by lithium players, with Kidman one of to the State. its load.

the standout stocks. Receiving Lead Agency Service “From the very beginning of discus-

Kidman sold 50% of Mt Holland to Chil- means project development activities at sions with SQM, we knew we had a

ean powerhouse SQM for a total $US110 Mt Holland will be streamlined, particu- world-class resource. [SQM] identified

million – $US30 million cash and $US80 larly with regards to the assessment of that and the idea was that it should be an

million in staged payments – which will an industrial site for the refinery and the integrated model from day one and that

cover initial development costs. approvals for the mining and concentra- was what really attracted us to entering

The JV deal announced in July was tor operation to help advance the feasi- with SQM. It never entered our thinking

followed by a positive scoping study on bility study quickly. and there has not been a discussion on

the Earl Grey deposit at Mt Holland last Donohue said a feasibility study would not building a refinery,” Donohue said.

month. be released sometime next year, while – Mark Andrews
A production target of 47mt @ 1.4% according to scoping study guidance,

lithium oxide over 25 years from a con- construction could potentially start in

ventional processing circuit was defined 2018 and production at the start of

in the scoping study. FY2020.

Meanwhile, a resource of 128mt @ “Government support is a key in these

1.44% lithium oxide for 1.84mt, hints at things and we are now in a very good po-

potential mine life expansion and higher sition,” Donohue said.

annual processing rates. “We knew it all along, SQM identified

The scoping study was well received us and they are the global leaders in this

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 5

NEWS

Boots to stay on ground

It is game back on for gold hard times a few years ago,
players in Western Aus-
tralia after the State Gov- Northern Star was one com-
ernment’s proposed roy-
alty increase was defeated pany to pull out the cheque
in parliament.
book and begin a serious
WA’s Liberal and Na-
tional parties strongly transformation to growth.
blocked the motion to the
dismay of the Labor Party Not only has Northern Star
which labelled its oppo-
nents “budget wreckers”. added mines to its portfolio

The 50% gold royalty through acquisition, $250
increase was proposed
to partially fix the budget million in exploration and ex-
deficit accumulated by the
State. pansionary capital has been

Led by the Chamber invested by the business
of Minerals and Energy
(CME), WA’s leading gold which comprises three oper-
miners and service pro-
viders banded together to ating centres in WA and an
voice their concerns about
the debilitating impact an increase in roy- interest in Central Tanami,
alties from 2.5% to 3.75% would have on
the sector. NT.

One of WA’s biggest gold producers At the Jundee and

Kalgoorlie operations,

Northern Star knows what

the next 10 years of produc-

tion looks like, however, the

future of its Paulsens mine

Ben Wyatt remains unclear.

Despite the threat of an

even threatened to seek out other juris- increased royalty rate being removed,
dictions when considering future invest-
ment opportunities. the task of securing Paulsens’ long-term

“If you actually do the analysis, North- future is far from easy given the mine’s
ern Territory is now
a better location to struggles even in a strong gold price en-
own a gold mine
than Western Aus- vironment.
tralia if this goes
ahead,” Northern An emotional Beament said a review at
Star Resources Ltd
executive chairman Paulsens – the mine on which Northern
Bill Beament said.
“Put that into Star was built – was under way and talk
perspective; I think
Western Australia of an increased royalty rate triggered a
is in the top three of
the Fraser Institute’s closer look at the operation.
desirable mining
jurisdictions world- “About 15-20% of the state’s produc-
wide and I think
Northern Territory tion is either marginal or breakeven, or
was 37 on the last
analysis. But, mov- even losing money. People say it is only
ing forward [NT] is
a better gold juris- [royalty increase] $20/oz, I lost $45/oz
diction than West-
ern Australia. I find on one of my mines. Sandeep [Biswas]
that astounding.
Why would you put made $20/oz on his Telfer mine, which
your state’s min-
ing industry and by the way is the third largest gold mine
77% of where Aus-
tralia’s gold produc- in the State. You can’t compromise be-
tion comes from at
risk?” cause there is too much marginal pro-
As the global min-
ing sector fell on duction at risk here; gold is a marginal

business.”

Newcrest Mining Ltd also faces an

interesting predicament at Telfer in the

Pilbara.

With a global portfolio of assets span-

ning Latin America, Africa, Papua New

Guinea and Australia, Telfer delivers

Newcrest the lowest profit margin.

After speaking with investors in Asia

and US and informing them of what

was being proposed in WA, Biswas said

many of the company’s investors were

concerned about the situation.

“If this [royalty hike] comes in there will

be more job losses than will otherwise be

the case and that is 100% certain,” Bis-

was said.

“[Telfer] is one of the most remote gold

PAGE 6 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Northern Star executive chairman Bill Beament, Gold Fields chief executive Nick Holland and Newcrest chief executive
Sandeep Biswas at the Chamber of Minerals and Energy media briefing in Perth last month

mines on the planet and also one of the “The Martu people feel comfortable at decision-making on investment in gold
lowest grade. The bottom line is this: Tel- Telfer and to find work elsewhere they than the royalty rate does,” he said.
fer cannot sustainably absorb this royalty would struggle, really struggle.”
increase,” Biswas said. It was argued by the WA gold industry
Now the royalty hike is defunct, or- that the royalty increase would cost up to
“[Due to] an increase in costs and de- ganisations like Birra, in partnership 3,000 jobs with the potential closure of
clining grades, Telfer is a marginal mine. with Newcrest, have more time up their mines, while the next wave of new gold
This increase will wipe out Telfer’s earn- sleeves to consider options for the gen- mines in the State would be jeopardised
ings, making its expansion potentially un- erations of Martu people to come beyond as companies would be forced to cut
economic. The royalty increase puts our the life of Telfer. back on discretionary spending; in other
mine at risk. Telfer is not the only mar- words exploration.
ginal mine in the State; there are others Mines don’t last forever and as WA
and together they highlight the Govern- Treasurer Ben Wyatt pointedly stated However, Wyatt said the impact of the
ment’s lack of prior work and consulta- when trying to explain reasoning for the increased royalty, which was designed to
tion on this issue.” proposed changes to gold royalties, cir- generate $400 million for the State ini-
cumstances also change. tially, would not have been that dramatic.
Telfer directly employs 1,550 people
with four times as many people down the “The economy of Western Australia “Coming from a gold mining commu-
supply chain piggybacking off the mine. hasn’t been that great. I, as Treasurer, nity [Laverton], it was very much in the
inherited the worst set of fiscal books context of I would never make a decision
Biswas said about 150 WA-based busi- inherited by a new government in WA’s that would have a negative impact on the
nesses were utilised at Telfer in FY2017 history. When circumstances change, gold sector, but I also had to make a deci-
as Newcrest spent about $400 million things change. Since the election and sion that ensures West Australians get a
with nearly 6,500 people employed as a the budget we lost $5 billion in revenue, fair return and also contributes to budget
result. I am not making that up, that’s the reality repair,” Wyatt said in justification of his
of what happened,” Wyatt said to a rally decision.
Importantly, Telfer has been an em- of gold mine workers gathered outside
ployment and social hub, particularly for WA Parliament last month. “Last year alone the gold price fluctu-
groups like the Martu people who are the ated across the $300 range and what we
traditional owners of the land surround- “Nobody here and certainly no gold saw was exploration increasing. Across
ing Telfer. owner would be expected to not react that 12-month period, a $50 increase im-
when circumstances change. You all pact of this gold royalty accounts to a 1c
“If Telfer was to close; Birra would no know that when you go to work, when movement in the exchange rate.”
longer trade, Martu employment devas- circumstances change things change, so
tated and the door closed on future train- I had to react. – Mark Andrews
ing,” Birra Manpower Solutions’ Rod An-
thony said. “Weather has a much bigger impact on

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 7

NEWS

Wyatt whacks miners

West Australian Treas-
urer Ben Wyatt has put
the onus on the State’s gold

mining companies and ser-

vice providers to guarantee

employees their jobs in the

wake of his failed royalty hike

proposal.

More than 500 gold mine

workers and people associ-

ated with the industry in WA

marched on Parliament last

month protesting against the

royalty increase from 2.5% to

3.75%.

“If this gold increase doesn’t

go ahead and it stays at 2.5%,

I say to all you contractors

and to all you employees: Go

to them, go to who is giving

you that contract and say ‘will

you now guarantee our em-

ployment and our contract’,

because I dare say they won’t

because they know there are

so many other things in play,” WA Treasurer Ben Wyatt addresses gold miners at Parliament, with the opposition Liberal Party,
Wyatt said. led by Mike Nahan watching on

“I have been particularly

disappointed by having no data, no anal- “The previous government had in- gaged with representatives from the sec-

ysis [provided]. And, the CME coming creased the property tax dramatically; tor and conducted financial analysis on

out and threatening employment straight there was no capacity to do that any- the impact of the hike.

away; going to the issue that your em- more. I looked at the payroll tax and “We have been a good opposition, we

ployment is at threat when they knew full made a decision very much focusing on have looked at the facts, we have looked

well it wasn’t and they hadn’t done the the larger corporations. I also looked at at them before but we have renewed the

work or received the information in re- gold and made a decision around gold.” look at it. Now, the idea that it won’t im-

spect of that royalty increase.” WA Liberal leader Mike Nahan said the pact jobs quite simply brings into ques-

According to data collated by Treasury Government would be held to account on tion the competence of the Government

from annual reports lodged on the ASX, the agreement made in 2015 to leave the on this issue,” Nahan said.

more than 80% of all gold in WA was pro- gold royalty rate alone. WA Nationals leader Mia Davies ac-

duced eat an average $1,200/oz AISC, “I was Treasurer at the time, our rev- cused the Government of being dishon-

with margins in the $200-800/oz range. enue was in free fall – iron ore prices est and making promises it never intend-

Wyatt said Treasury was “fairly con- had collapsed – we were struggling. We ed to keep during the election campaign,

servative” with its numbers, as analysis looked at it in detail, we discussed it with while One Nation Upper House MLC

from the private sector suggested. you, we discussed it with industry, we Robin Scott said the gold industry was

“That is why we made the decision. had long consultation and we decided not the cause of WA’s budget deficit and

We had a transition point of $1,200/oz that at that time not to increase the roy- he did not accept that gold miners be

and I have said to all the miners [and] alty on gold,” Nahan said. punished with the tax hike.

the CME, if that price is no good, come “At that time the Labor Party in opposi- “You can forget Labor; they have stuck

up with another one. I am happy to con- tion agreed to it with us, they promised their head in the sand, they have refused

sider any other transition price [to see] to not increase the royalty on gold going to listen to our industry leaders. If the

whether $1,200/oz is appropriate or not,” into the election. They have now changed Liberals refuse to reject this royalty hike

Wyatt said. their mind. You heard Mr Wyatt’s views, there will be no place for them to hide,”

The gold royalty hike and an increase let me put a counter view. This is a back- Scott said.

to payroll tax were key repair items in the flip, he promised, they promised, Mark – Mark Andrews
Government’s maiden budget. McGowan looked at you and said we will

Wyatt said the Government had in- not increase the royalty on gold before

herited the “worst set of fiscal books” the election. As such, they do not have a

ever handed to a new government in the mandate to do so.”

State’s history and since the election and Nahan said the entire Liberals party

budget, a further $5 billion in revenue room understood the importance of the

had been lost. gold industry to the State and had en-

PAGE 8 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Kelly opens dam for Riversgold

With his latest venture now near term as well.”
officially under way, Allan Explaining to Australian

Kelly admits the pressure is on investors the opportunity in

to replicate his past exploration Alaska was a challenge for

success. Kelly and his team during the

Kelly’s Riversgold Ltd de- IPO process.

buted on the ASX last month “It’s obvious when you talk

after completing a $6.1 million about something like Donlin

IPO, with the company wast- Creek, which is 42 moz and

ing no time getting to work on maybe the biggest unde-

making a major discovery at its veloped gold deposit in the

Kurnalpi project, about 100km world, but nine people out

east of Kalgoorlie. of 10 in Australia have never

Having struck gold at Andy heard of it,” Kelly said.

Well almost immediately af- “You need to explain the

ter floating Doray Minerals situation. Alaska is half as

Ltd in 2009, Kelly accepts his big as WA, it’s a big place,

loyal followers will have high it’s only got 200,000 people

expectations for Riversgold but huge mineral resources.

to achieve something similar If you haven’t worked there,

at Kurnalpi or the company’s then you just don’t have that

flagship South West Alaska understanding.”

project. Kelly said his company

“With Doray, there were no would have about $5 million

expectations because no one to spend across its portfolio

really knew who we were,” over the next two years after

Kelly told Paydirt after ringing the costs of the IPO are tak-

the bell to mark Riversgold’s en out. First up on the agen-

opening day of trade. da for Riversgold is a three-

“There’s probably a bit more week drilling programme at

expectation on us around what Yilgani on the Kurnalpi tene-

we’re going to do from day ments, adjacent to Breaker

one. It’s going to be pretty hard Riversgold managing director Allan Kelly rings the bell to mark Resources NL’s Lake Roe

to match first drill hole success the company’s official start of trade on the ASX project.

at Andy Well, but having said “We’re effectively going to

that I think we’ve probably got a lot more projects in WA out at Kurnalpi and some try and do a drill programme every quar-

opportunities with what we’ve got in Riv- really exciting stuff in Alaska that we will ter in WA for the next 18 months,” Kelly

ersgold than what we had previously.” work on next year.” said.

Riversgold was the 100th new list- Kelly has held the Luna-Quicksilver Riversgold also plans to punch a few

ing on the ASX this year, with its shares and Kisa properties which make up the diamond holes into the Churchill Dam

closing at 10% above the IPO price of South West Alaska project for almost two IOCG project after Christmas while com-

20c/share. Prolific gold producer Evolu- decades and he is champing at the bit to pleting permitting and other logistical re-

tion Mining Ltd is the company’s largest spend some “real dollars” on the pro- quirements to be able to drill in Alaska by

shareholder, having injected $2.5 million spective ground hosted on the renowned mid-next year.

for a 15.1% interest in the junior explorer. Tintina gold belt. The company remains in discussions

Joining Kelly on the three-man Rivers- “The Alaskan stuff is high-risk and ex- with Emerald Resources NL about a po-

gold board is former Sirius Resources pensive in a short field season, but we’re tential JV in Cambodia where Riversgold

technical director Jeff Foster, who played looking for a much bigger prize there,” has applications for a series of tene-

a major role in the discovery of the No- Kelly said. ments next to the 1 moz Okvau deposit.

va-Bollinger nickel deposit, and experi- “We’re looking for a multi-million ounce “It’s the same deposit-style as Alaska,

enced mining executive Rod Webster as deposit in Alaska, whereas in WA the hence our interest in it,” Kelly said.

the non-executive chairman. prize is smaller but you can work on it 12 “We’ll see how that fits into the story,

Kelly left Doray last December, having months a year, it has easy access and but ideally it goes to someone like Emer-

guided Andy Well through development you’ve got existing mills, so if you find ald who is already developing and has in-

as well as acquiring and building the De- something then there’s an easy way to country expertise there, so hopefully that

flector gold-copper project, before decid- monetise it very quickly. will materialise once that’s all granted.”

ing to return to his exploration roots. “I think the combination of the two is a – Michael Washbourne
“It’s great to be back in greenfields ex- very good mix. On one hand, you’ve got

ploration and putting together a story and the high risk, high reward stuff and on the

seeing what we can come up with,” he other a project that generates news flow

said. “We’ve got a really nice portfolio of and gives you more opportunities in the

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 9

NEWS

Matsa hunts Red October

First ore from Matsa’s Fortitude trial gold mine was delivered to the Sunrise Dam processing plant last month

Matsa Resources Ltd has taken two project, which hosts Fortitude. ganisation to deal with, they’ve really
giant steps towards becoming a rec- A 68-person camp and administration helped us along, they’re taking every-
ognised gold producer. thing that we can produce and we hope
centre was just one piece of supporting to stay with them for the life of the area,”
The Paul Poli-chaired company de- mine infrastructure which enticed the Poli said.
livered first ore from its Fortitude trial company to make a bid for the historic
mine to the nearby Sunrise Dam gold Red October operation which has pro- “But there a number of other mill op-
processing plant early last month, less duced 342,000oz at an average grade of erators that are very, very keen to get our
than a week after acquiring Saracen Min- 6.1 g/t gold. ore, so we’ve certainly got some options
eral Holdings Ltd’s Red October project, up our sleeve. At this stage, however, An-
about 65km south of Laverton. “I cannot think of any other acquisition gloGold has done the right thing by us,
that would suit our circumstances better,” so I don’t see a reason why we wouldn’t
At the time of print, Matsa was due to Poli said. keep doing the right thing back.”
receive first income from processing of
the Fortitude ore. “And we got it at what I think is an in- Poli said the WA Government’s pro-
credibly good price; $16/oz, which means posed increase in gold royalties to 3.75%
Ore is expected to be delivered con- all the assets that came with it were free. would have minimal impact on his com-
tinuously to Sunrise Dam until the end of It really was a bargain.” pany’s plans for Fortitude and other de-
March when Matsa will need to make a velopment projects, had it come into ef-
decision on whether to continue opera- Red October currently hosts a resource fect.
tions on a larger scale. of 99,000oz, lifting the total resource
across Matsa’s Lake Carey footprint to “From my point of view, the gold roy-
“The trial mine is expected to finish in 453,000oz. A number of near-mine tar- alty has gone up a couple of percent and
about March and we’re very, very hope- gets identified by Saracen, including whilst that’s an extra cost, it means we
ful that we can go straight into the larger Treasure Island, will be drilled over the just need to pull in our budget that little bit
mining,” Poli told Paydirt. coming months in a bid to add ounces to further and tighten our belts somewhere
the inventory. else,” he said.
“We’ve been very fortunate that this
is all going according to budget. We’re Exploration of the underground at Red “The production profile at Fortitude is
probably a couple of weeks behind time- October will coincide with studies to as- probably about $20 million a year at this
wise, but financially it’s all going ahead of sess a potential restart of the operations point in time, so we’re looking at paying
what we would have hoped.” which Saracen suspended in June. about $300,000, which does not make or
break the project.”
Cash flow from Fortitude will allow Matsa signed an ore purchase agree-
Matsa to push the button on exploration ment with AngloGold Ashanti Ltd to pro- Poli said his company planned to re-
work at a number of projects across its cess ore from Fortitude for the length of sume exploration of the wider Lake
portfolio, including Red October. the trial mine and Poli flagged a potential Carey project area this month, with pro-
extension of that deal to incorporate Red grammes also in the pipeline for its base
Matsa picked up the recently moth- October. metals projects in Thailand.
balled underground mine and surround-
ing 64sq km of prospective tenements for Saracen previously trucked ore from – Michael Washbourne
$2 million worth of cash and shares. Red the mine to its Carosue Dam operations
October is immediately adjacent and some 120km to the south.
contiguous to the company’s Lake Carey
“We think AngloGold are a terrific or-

PAGE 10 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

BUSH TELEGRAPH

Safe and sound in North Kivu

North Kivu – the remote prov- level of violence and “gang war-
ince in the north-east of the fare” between various factions

Democratic Republic of Congo underground citing an incident

(DRC) which has Uganda and in which its search and rescue

Rwanda on its eastern bounda- teams found the bodies of 10 il-

ries – is “safer to live in than Jo- legal miners who had been shot

hannesburg”, according to Boris “execution style”.

Kamstra, the chief executive of In June, Sibanye-Stillwater

Canadian-listed Alphamin Re- shut down its Cooke gold mine

sources. operations at Randfontein, west

Alphamin is about to build of Johannesburg, to flush illegal

a tin mine in North Kivu once miners out of its workings who

it has raised the final $US130 were being supported by the

million of the $US152 million it group’s employees.

needs to complete the project. A total of 665 illegal miners

Kamstra went to great lengths were arrested.

at a recent presentation in Jo- And it’s not just gold that’s

hannesburg to stress that the affected. Thousands of illegal

DRC was getting unjustifiably mineworkers have invaded lease

bad press regarding safety and areas around Kimberley, held

security. by Petra Diamonds Ltd, and are

Kamstra lives in Johannes- panning surface dumps to recov-

burg and he drew a comparison er diamonds. The company has

between the typical Joburg ur- been following the legal route to

ban way of life – where houses get them removed for more than

usually have an armed re- a year with minimal success.

sponse company on call and are There are places in the DRC safer than Johannesburg, according So Kamstra got my full atten-

surrounded by high walls and to Alphamin Resources chief executive Boris Kamstra tion when he said that Alphamin

electric fences – and the way he had had “exeptional support”

lives at the mine site. for this mine in a country which – let’s from the North Kivu Government in deal-

In North Kivu he lives in a tent with the face it – is synonymous with anarchy, ing with artisanal and illegal miners in

flaps open so he can listen to the sounds civil war and general mayhem. And, let’s the region, which at one stage had num-

of the surrounding jungle, something he not forget recent events in neighbouring bered up to 15,000 in 2008/2009 but had

particularly likes to do. Uganda and Rwanda. now dropped to around 400.

According to Kamstra, there are crimi- His comments do resonate to an ex- Assuming all goes to plan then Al-

nal elements in any society but the out- tent, given recent events in Johannes- phamin’s proposed Bisie mine in North

side perception in peoples’ minds of burg where there have been a series of Kivu will be the richest tin mine in the

North Kivu is that there are armies run- hold-ups of tourists who had just flown world with an average grade of 4.5%.

ning around. There are not. They are no into the country and had their vehicles Initial production of tin-in-concentrate is

different to the crowd running around Jo- hijacked on freeways near OR Tambo In- expected during the first quarter of 2019

hannesburg and they are probably less ternational Airport. with the underground mine forecast to

violent and far less aggressive than any They resonate with me in particular on reach steady-state production by the end

of these cash-in-transit (robbery) people, the subject of illegal mining, which is now of 2019.

he said. totally out of hand in South Africa, with The mine is expected to produce an

Kamstra had a particular go at the me- the police and the Department of Mineral estimated 9,600t of tin-in-concentrate

dia, such as CNN, BBC, Sky News and Resources (DMR) either unwilling, un- annually with an initial life-of-mine of 12.5

the likes because “they don’t necessarily able or both to deal with the situation. years. Average EBITDA from the mine is

like good news and it does not make for On September 29, regional general estimated at around $110 million mean-

good viewership numbers”. manager Simphiwe Kubekha of Harmo- ing the payback period is less than two

“The news out of our particular area of ny Gold Mining Co Ltd’s Tshepong and years.

North Kivu is exceptionally good news. Phakisa gold mines, near Welkom in the But, seriously, I do think Kamstra is ex-

Safety and security have improved dra- Free State, was shot and killed on his aggerating the situation in Johannesburg

matically. Mines are pioneering indus- way home, allegedly by illegal minework- although I see it’s getting dark as I finish

tries and they drag with them a whole ers. this column so I better do a final check of

host of enabling infrastructure which is In September 2016, the Chamber of the perimeter and then let the Rottweil-

just not enabling for the mine itself but for Mines gave a presentation on illegal ers out for the night!

a whole host of peripheral activities. We gold mining which it said at the time was Brendan Ryan is a Johannesburg-based

are already seeing the impact of that.” “spiraling out of control” and costing the mining writer

Now Kamstra is clearly talking to his country some R6 billion annually in lost

own book, because he has to convince revenues.

investors to stump up the funds he needs The Chamber highlighted the rising

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 11

NEWS

NZ looks beyond the gold
and coal momentum

Improved commodity and climates were The increased fees appears to be be- be based on the West Coast – not so
the fundamentals behind the better sen- hind the decision of ASX-listed New Age much because it is in need of new indus-

timent at this year’s AusIMM New Zea- Exploration Ltd – a cash-tight Melbourne try but because unique uses are being

land Mining Conference junior – to drop half of its groundholdin- found – and has received $NZ10-12 mil-

OceanaGold Corp’s stepping up of gon the South Island where it is making lion in a four-year funding package from

exploration around its Macraes mine on a bold grassroots move to find a mirror the Ministry of Business, Innovation and

the South Island and Waihi on the North image of Macraes gold deposits in the Employment.

was the good news from the gold sector, southern sector of the Otago Schists. Its goal is not simply extraction but to

while there appears to be light shining The country has already lost Evolu- find a niche in downstream processing

through in the coal sector. tion Mining Ltd and Newcrest Mining Ltd “value adding materials” which could go

The prime driver behind coal’s come- from the North Island. Evolution halted into new types of carbon fibres, magnets,

back is ASX-listed Bathurst Resources work on the Puihipuhi gold-silver project, 3D printing powder and supplying the

Ltd, which has overcome several chal- near Whangarei, primarily through poor burgeoning green battery industry.

lenges in the past four years – plummet- results while Newcrest stepped out of a The minerals group of the institute is

ing coking coal prices and anti-mining JV with Laneway Resources Ltd near Ka- looking to underpin a charge into the re-

opposition – to JV the Escarpment pro- rangahake for similar reasons, and then cently coined “green minerals” sector –

ject with local firm Tally Energy to form sold its local subsidiary to give New Tal- those required for high-end sustainable

isman Gold Mines Ltd 100% of the Rahu technologies, including wind farms, re-
“BT Mining.
BT will take over the country’s biggest prospect, near Karangahake. newable energies and the revolutionary

mine, Stockton, from Solid En- electric car the most obvious

ergy in the same coalfield as Es- One Newcrest operative examples.
carpment and also Solid Ener- apparently told a NZ Whether Kiwi environmental-
gy’s two key North Island mines.
ists take up the green minerals

Bathurst’s chief executive miner it was easier to progress theme is yet to be debated.
Richard Tacon said the compa- exploration in Indonesia and Institute chairman and former

ny’s financial performance was Lion Nathan chief Kevin Stratful

improving at its mines, includ- Papua New Guinea, and he wasn’t outlined the vision of the insti-
ing the 100%-held mines on the referring to the vocal minority of tute: “Key to this is collaboration
South Island where new con- within this industry, but we have

tracts were being won. anti-miners on the Coromandel. to remain an independent body
While the signs are looking in our own right,” he said.

good, there is still a lack of junior Stratful said the institute

explorers in the NZ mining sector, with It is understood Newcrest was frus- wanted to move on from ore extraction,

those on the local NZ Stock Exchange trated with the bureaucracy on the Rahu further up the chain towards finding new

(NZX) capable of being counted on one project. One Newcrest operative appar- ways of processing ore into new materi-

hand. Regular presenter Tony Haworth ently told a NZ miner it was easier to als; with tungsten, types of coal and the

of Campbell MacPherson said the NZX progress exploration in Indonesia and plethora of rare earths the initial focus.

was reviewing a merger of two of its jun- Papua New Guinea, and he wasn’t refer- The institute is looking at coal for po-

ior boards to regenerate trading momen- ring to the vocal minority of anti-miners tential manufacturing of “carbon foam”

tum. on the Coromandel. – a new type of lightweight and machi-

The signs from government were The importance of gold developments neable composite product. Tungsten, as

mixed with new survey and aeromag- in NZ was shown by OceanaGold’s chief scheelite (a potential by-product from

netic work by NZ Petroleum and Mines of Macraes operations, Dale Oram, who Macraes) could be processed into a pow-

(NZPM) and GNS Science designed pointed out the company made econom- der and used for 3D printing while rare

to open new doors for exploration tem- ic contributions to the country of $373 earths – considered the “highest risk but

pered by journalist Simon Hartley’s rev- million in 2016. highest reward” of the institute’s targets –

elation that NZP&M had hiked mineral This took in payments to the Govern- is a key input into electric vehicles, home

permit costs by 70%, a puzzling move for ment of $42.5 million, $239 million in batteries and wind turbines as well as

a country spending front-end money to payments to local and national suppliers, having uses in communications and the

lure new mineral explorers to New Zea- employee expenses of $91 million and medical sector.

land. about $1 million in community contribu- Stratful said the institute could not fi-

If NZPM wants to get more revenue, it tions. nancially “run on goverment subsidies,”

needs to understand that while the share One of the exciting developments was so income would be generated by selling

market is now willing to give funds to jun- the formation of the NZ Institute of Min- its research to companies, royalties and

ior companies, the buck stops on high erals to Materials Research (NZIMMR) intellectual property rights developed

cost permit fees and snail-paced pro- which has a government grant to find along the way.

cessing of permits and regulatory issues. new uses for minerals. The institute will – Ross Louthean

PAGE 12 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

The X factor in Mongolia

Cashed up and debt-free, Mongolian Xanadu hopes to demonstrate copper-gold mineralisation extends to depths
copper-gold explorer Xanadu Mines of 1km at the Kharmagtai project, Mongolia
Ltd has the freedom to drill at Kharmagtai
and hopes to receive due recognition for opened it in the morning and within 30 tor to replace retiring chairman Mark
its efforts. minutes we had the book full and closed Wheatley.
the gate by lunchtime,” Stewart said.
Despite already producing standout The addition of Tomlinson came as
drill results in the copper space, Xanadu “We didn’t cast the net very far and got copper took off to over $US3/lb. Prices
remains an underrated stock, according some support from North American and have since retracted to about $US2.90/
to managing director Andrew Stewart. Australian institutions and it was almost lb, an inevitable occurrence, according to
done. Now that the debt is gone we are Stewart.
“We are putting out some really world- in a very good position and we are drilling
class intercepts and I think we are only some fantastic holes plus we now have “I think we will see more of a steady
second to Solgold [plc in Ecuador]. They money to step the drilling up potentially way back upwards because there is no
are getting longer intercepts than us, but as we come into winter.” question that at the moment there is a
ours are admittedly much shallower from lack of good discoveries out there,” he
surface. We are starting to drill some The cash injection has capped a stel- said.
deeper holes and get some world-class lar period for Xanadu dating back to May
intercepts,” Stewart told Paydirt. with the appointment of Kevin Tomlinson “Copper projects are typically high
as an independent non-executive direc- capex and take a bit of time to put into
“We have a project which has miner- production. If we want things to go into
alisation at surface and we are starting
to see mineralisation extending down to
at least 600-700m. It would be nice to
show that it extends down to 1km before
the end of the year. Our share price re-
ally hasn’t been reflective of the results
we have been putting out. Hopefully, we
have taken away some of those excuses
now and we start to see a bit of a rerat-
ing in the next six months to where we
should be. I think we are a long way short
of that [true value] for Kharmagtai.”

At the time of print, Xanadu was trading
at 24c/share, equating to a market cap of
$122 million, and had just cleared more
than $3 million of debt due to shareholder
Noble Resources International Pte Ltd.

Stewart declared himself unfussed by
the money owed but said it was a con-
cern for some Australian shareholders
and prompted the company to undertake
a $15.4 million placement to domestic
and international institutional and sophis-
ticated investors.

“That placement of $15.4 million was
incredibly heavily oversubscribed. We

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 13

NEWS

Kharmagtai is one hour from Oyu Tolgoi, offering Xanadu potential below current resources at the Stock-
logistical benefits of power and water to leverage from work Hill deposit.

production... well there hasn’t been continue to target high-grade mineralisa- Drilling and detailed infill mapping has
enough exploration done. What we are tion down plunge. demonstrated increased scale of the
seeing and something the market hasn’t mineralised system with “exceptional”
really picked up is that M&A activity in “The results we are getting are very depth continuity.
the copper space is quite aggressive. If good and they are based on our better
you draw your attention to Solgold, peo- understanding,” he said. Xanadu’s success is part of a renais-
ple saw Newcrest [Mining Ltd] come in sance of exploration activity in Mongolia,
and were taken by surprise, but the re- Success in extensional drilling around with Rio Tinto funded for Phase 2 of Oyu
ality is that there is a real need for new the current resource of 1,533 mlb cop- Tolgoi and Chilean state-owned copper
projects and new discoveries. per and 2 moz gold, and the continu- major Codelco recently setting up shop
ity of mineralisation below the resource in the country.
“These major companies are short of “has again confirmed that there is real
marginal tonnes of copper and what they potential for significant extensions to the Rio Tinto is also drilling a project 40km
are looking for is new discoveries, so it is resources”, Stewart said. from Kharmagtai.
exciting times to be putting drill holes in
like we are starting to.” In addition to activities at Copper Hill, Stewart said there was a “land-grab”
Xanadu has also reported rapid growth underway in Mongolia, as the lure of
As M&A heats up, Stewart said snagging a massive outcropping copper-
Xanadu’s primary concern was gaining a gold orebody in the Asian country was
better understanding of the near-surface unrivalled anywhere in the world.
copper-gold porphyry potential at Khar-
magtai, which is a one-hour drive from “We hope we can start to build some
Rio Tinto Ltd’s Oyu Tolgoi project. global recognition for Mongolia from an
exploration perspective,” Stewart said.
With $15 million, Stewart said, Xanadu
could have a huge impact with the drill Investment dealer Paradigm Capital
bit, even as winter approaches. Subzero was just one of a handful of North Ameri-
temperatures won’t deter Xanadu from can houses impressed by Xanadu’s feats
continuing with its accelerated explora- in Mongolia and listed the company as
tion programme, which will include three one of its favourite explorers in the world
rigs on site. at the moment.

A steady flow of drilling results can be Among the other ASX companies to
expected from the company as it looks to capture Paradigm’s attention are West
build on the high-grade extensions below African gold explorers Cardinal Resourc-
the Copper Hill deposit. es Ltd and Oklo Resources Ltd.

High-grade extensions have been de- – Mark Andrews
fined below 200m, with broad zones of
mineralisation at shallow depths report-
ed early last month.

Highlights included: 411.6m @ 0.54%
copper and 0.79 g/t gold (1.04% copper
equivalent) from surface, including 134m
@ 1.01% copper and 1.84 g/t gold (2.18%
copper equivalent) from 14m and 112m
@ 0.49% copper and 0.48 g/t (0.8%
copper equivalent) from 224m, includ-
ing 38m @ 0.71% copper and 0.48 g/t
(1.01% copper equivalent) from 292m.

Stewart said diamond drilling would

PAGE 14 NOVEMBER 2017 AUSTRALIA’S PAYDIRT



NEWS

Kalium on top of the lake

Pilbara potash hopeful Kalium Kalium Lakes is looking to develop a 150,000 tpa SOP operation at Beyondie,
Lakes Ltd can now add a tech- 160km south-east of Newman
nically robust PFS to a growing list
of achievements inside its first 12 ian market and grow with that over time.” various groups to come in and assist
months of public life. Kalium Lakes was the final resources with,” he said.

A PFS released last month found float of 2016, raising $6 million from its “We’ve also engaged with a marketing
Kalium Lakes could develop a base IPO before adding a further $4.5 mil- expert who has been introducing us to a
case 150,000 tpa operation at its lion via a placement in May to fund the lot of fertiliser companies and the gen-
Beyondie sulphate of potash (SOP) construction of pilot-scale evaporation eral agricultural side of things. It’s simi-
project for a pre-production capex ponds at Beyondie, 160km south-east of lar [to iron ore] but obviously a different
of $220 million, based on an initial Newman. group of customers.”
21-year mine life and $US500/t SOP
sales price. Since listing, the company has also The initial phase of the pilot pond test-
signed non-binding MoUs for potential ing is nearing completion, with a range of
Key financials from the study, which off-take with two large fertiliser groups salts to soon be shipped to Germany for
was signed off by German potash ex- from China and Germany for up to further assessment.
perts K-UTEC AG Salt Technologies, 110,000 tpa of the proposed production
included lowest quartile operating from Beyondie. Kalium Lakes also intends to investi-
costs of $244-253/t FOB Geraldton gate the economic potential of its mag-
or Fremantle ports and life-of-mine “We’re probably a little bit ahead nesium by-products, having signed a LOI
free cash flow of more than $1 billion. of where we were expecting to be 12 with EcoMag Ltd in July to trial recover-
months ago at the IPO stage,” Hazelden ies of hydrated magnesium carbonate
“Over 20 years that [free cash flow] said. from the pilot ponds.
is a nice little earner and hopefully a
good dividend for those who invest in “The only thing that has really slowed Recovery of magnesium by-products
the stock in the years to come,” Kalium us down was a bit of wet weather at the were not included in the PFS outcomes.
Lakes managing director Brett Hazelden start of the year, but we only lost about
told Paydirt. two weeks. We’re really happy with the Hazelden said the outlook for SOP
progress of those pilot-scale ponds.” was positive despite prices tapering off
“In any resource industry you want to slightly over the past year.
be in that lowest quartile operating cost Hazelden said rising international de-
bracket, so we are right where we want mand for new SOP supply all but en- “We think our price expectations are
to be. We’re not going to beat China in sured his company would secure further quite conservative if you compare us to
terms of being the lowest cost producer, off-take deals in the coming months, with some of the other potential potash play-
but we’ll definitely beat most of the other Australian customers also in the mix. ers out there looking to develop projects
guys in there. It’s definitely a good result in Australia and overseas,” he said.
for us.” It also appears likely those off-take dis-
cussions may lead into negotiations for “Prices are looking healthy so we’re
A maiden reserve of 2.66mt @ 14,210 project finance, following a model that happy with where they sit. We think we’ve
mg/L SOP, based on a cut-off grade of Hazelden and several of his former Iron made the lowest cost assumptions going
3,500 mg/L and representing about 21% Ore Holdings colleagues are very famil- forward in terms of price received, so if it
of the total lake surface area within the iar with. goes up from there, then it’s all positive
company’s tenement package, was also news and hopefully our NPV should go
announced alongside the PFS. “The banks love project finance and up rather than down.”
off-take all tied up together in equity, so
Other critical numbers for a base case there’s a whole heap of different strate- – Michael Washbourne
development scenario, including costs to gies and scenarios we’re looking at for
construct a 78km gas pipeline, are a pre-
tax NPV of $388 million, IRR of 28.7%,
average annual EBITDA of $83 million
and payback within 3.7 years.

Phased development of Beyondie was
also considered, with a 75,000 tpa start-
up operation estimated to require $124
million of pre-production capital.

“That opportunity gives us a bit of flex-
ibility when we’re doing our debt and eq-
uity raising in the coming year or two,”
Hazelden said.

“I think we’re a really attractive propo-
sition. Most people aren’t aware of pot-
ash because it’s never been done in Aus-
tralia before, so everyone is still getting
their heads around how it all works. But
that’s the opportunity for us in the grand
scheme of things; to capture the Austral-

PAGE 16 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Roy headed up the Hill

Roy Hill Holdings Pty Ltd chief pits, Fitzgerald said the operation was Barry Fitzgerald
executive Barry Fitzgerald performing reliably on both the supply
says the company’s namesake and quality fronts. automatic drilling and we think it is eco-
iron ore mine is poised to hit a nomic.”
run rate of 55 mtpa by Christmas. Maintaining production rates and op-
timising performance is the next chal- Roy Hill’s adoption of autonomous sys-
In September, the desired run lenge, which the ongoing development tems is in preparation for the “enormous
rate was achieved for the first and roll out of the company’s SMART change” Fitzgerald sees unfolding in the
time and the 90-day lenders’ test mining strategy is central. mining industry, whereby the consumeri-
period for production triggered. sation of autonomy – robotics and data
Autonomy is a key part of the SMART analytic techniques – would become
Ramp-up hasn’t happened as mining initiative, with cruise control cur- more prevalent.
quickly or as smoothly as Roy rently being introduced in the rail system.
Hill envisioned, but Fitzgerald Fitzgerald said the company would enjoy Fitzgerald believes technology will be
believes the company now bet- the benefits that cruise control and driv- so readily available and accessible that
ter understands the mining and er-assist technology offer and keep its companies could pick their preferred op-
processing requirements to treat options open for that technology to ad- erating systems from the shelf like in a
material from the orebody. vance to the next stage before consider- “supermarket”.
ing fully automating rail operations.
“The reality was that the ore- He urged industry to embrace, review,
body had a few more difficulties Fitzgerald said the use of autonomous understand and apply technology across
than we thought and the mate- drill rigs was a step the company was the sector and called for service provid-
rial was much harder,” Fitzger- also taking to introduce autonomy more ers to collaborate and find ways of doing
ald told the WA Mining Club last broadly across the business in the con- things differently.
month. text of the SMART mining plan.
“I think some of the stuff on big data
“There were more difficulties “The autonomous drills are slightly analytics is a really good opportunity
in blending or getting the exact cost-beneficial in terms of overall eco- where people in different areas can de-
blend between grade and physi- nomics, they do provide an economic velop value propositions, which allow
cal properties. We had signifi- return, but we think of it as part of a much you to analyse the data so you don’t
cant wear [on the plant] that we hadn’t larger package which will drive the whole need to have the data but you need to
foreseen because when we started the move forward,” he said. be able to use that data and package it,”
project seven years ago all the experts Fitzgerald said.
said to me: ‘Barry you will never make “As a new company we need to make
40% lump, that material is so soft.’ I am sure we move forward, so autonomous “I think there are other opportunities in
happy to say 18 months on we have got drills is a good way to introduce auton- the longer term in maintenance, whether
some of the hardest material in town.” omy into the business. It is basically a it is robotics, echo skeletons or 3D print-
baby step, we have done two drills and ing. Who knows where that leads to and
A change in mining, material handling have proven that up. We did a compara- I think there is a whole lot [more] stuff
and the introduction of some jaw crush- tive test between manual drilling and coming up.”
ers at Roy Hill, 340km south-east of Port
Hedland, were part of the solutions im- – Mark Andrews
plemented to have the mine running in
good shape today.

Fitzgerald said it was a “horrible peri-
od” for the company as it worked through
the problems and doubts around Roy
Hill’s viability surfaced.

“I can assure you that there were some
interesting questions around the busi-
ness about whether we were ever going
to get out of that,” he said.

“Those problems are now solved. We
know what the issues are and we now
believe we are at the point [nominal run
rate]. With our improved orebody knowl-
edge and better mine planning, we con-
tinue to ramp up our mining capacity. Our
crushing has certainly allowed us to not
only introduce the crushed material with
realistic aerate, but also allow us to put
the right feed into the process plant.”

With 28mt of ROM material stock-
piled, 1mt per week now consistently
processed through the plant, and 53mt
of iron ore produced to date from three

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 17





COVER

Electrical storm
brewing

First graphite, then lithium, now cobalt and nickel; the forecast im- Goldman Sachs and Morgan Stanley
pending electric vehicle revolution has already had a disrupting in- predicted the EV sector to reach an in-
flection point between 2018 and 2030
fluence on the fortunes of a number of commodities and the companies when consumer cost for battery-pow-

associated with them. But, just how far does the EV boom have left to ered cars will reach parity with internal
travel and how many Australian companies will be along for the ride? combustion engine vehicles. UBS was
most bullish, suggesting parity could be

reached in 2018, resulting in a 20-fold

Paydirt looks at the markets in ques- in August with German majors BMW, increase in EV sales to more than 15
tion, the demands being placed on the Mercedes-Benz, Daimler, Audi and Volk- million units by 2025. Morgan Stanley

commodities and the companies hoping swagen, as well as Honda and Volvo, all estimates there will be more than 1 bil-

to take advantage of the EV boom. revealing new EVs. lion EVs on the road by 2050. Goldman

The trend is being driven by two major Sachs is more conservative, forecasting

What is the EV market and what is factors; the falling cost of building batter- sales to reach 9.72 million units in 2030

the likely growth? ies and the rise in government incentives (8% of global auto sales) and 44.19 mil-

2017 could loom as the defining year and disincentives around EVs and petrol lion units by 2040 (32%). Even this pre-

of the EV revolution. While electric cars vehicles. diction is a base case scenario. If “hy-

have been on the market for a decade, On the latter, we have seen numerous per-adoption” occurs, Goldman Sachs

it was this year’s arrival of Tesla Motor European and Asian governments move believes EV uptake from 2025 would see

Inc’s first mass market car, the Model 3, to enact policies which will restrict the EV sales growing to 20 million units in

and General Motor’s launch of the Chevy number of petrol and diesel cars hitting 2030 (17% of global auto sales) and 71

Bolt which catapulted the sector to the the road in coming decades. million or 51% by 2050.

world’s attention. Financial market analysts are now The battery revolution does not stop at

The level of EV adoption by the scrambling to clearly define exactly how transportation. Even Australia, where the

world’s largest auto manufacturers was far this revolution will go. In three sepa- uptake of EVs has been slower than in the

on display at the Frankfurt Motor Show rate reports released this year, UBS, rest of the developed world, batteries are

PAGE 20 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

taking hold in the home storage sector. But how well positioned are
A recent report by energy consultancy
SunWiz suggests 62% of West Austral- Australian developers? None of
ian households would consider installing
a battery in their home to capture excess the lithium hopefuls have got to
energy created from solar panels.
market while the graphite sector
In South Australia, Tesla is building
the world’s largest storage battery; a 100 has largely flattered to deceive,
MW/129 MWh Powerpack system to be
paired with global renewable energy pro- especially sector behemoth
vider Neoen’s Hornsdale wind farm near
Jamestown in the north of the State. Syrah Resources Ltd which has

In Britain last month, power provider been flagging imminent produc-
E.ON opened the country’s first indus-
trial-scale battery site in Sheffield, York- tion starts for the last two years.
shire. The 10MW Blackburn Meadows
battery is the first in a series of power Graphite demand appears
storage plants set to be built in Britain in
response to a call from the National Grid unquestioned but supply looms
– the owner of Britain’s power transmis-
sion network, for contracts to help it keep as a major issue. The graphite Nickel makes up 5% of a Chevy Bolt battery
electricity supply and demand in bal-
ance as more intermittent wind and solar market is currently dominated
comes online.
by Chinese sources and while
How are the supply/demand dynam-
ics of each commodity likely to be im- tighter environmental regulations in Chi- ing partners. The lack of concrete deals
pacted?
na have reduced output there, there is has frustrated attempts to secure project
At 100% adoption of EVs – which is
decades away – UBS predicts lithium a lingering doubt as to whether the new funding. Complicating matters further
demand will increase by nearly 2,900%,
cobalt by 1,928%, rare earths by 655%, generation of Australian and African pro- has been policy changes in Tanzania
nickel by 105% and copper by 22%.
jects will be able to find a market. where the Government is clamping down
According to UBS’s breakdown of a
Chevy Bolt, aluminium (16%) and graph- There is a plethora of different graph- hard on foreign miners, adding more un-
ite (15%) are the dominant minerals in the
battery, while steel (13%), iron (9%), cop- ite products with unique specifications certainty to financiers’ risk assessments
per (8%), cobalt (6%), nickel (5%), man-
ganese (5%), polyester (3%) and lithium demanded by customers, even those in of the half-dozen Australian-owned Tan-
(2%) are the other major components.
the battery space, making it difficult for zanian graphite projects.
Can Australian companies take ad-
vantage of the boom in commodity developers to secure traditional debt fi- Kibaran Resources Ltd is one of the
demand?
nancing facilities. Tanzanian graphite sector’s most ad-
ASX-listed companies were among
the first to benefit from the battery boom. Instead, they have been forced into vanced players with its Epanko project.
Graphite companies were the early mov-
ers, followed by a longer sustained lithi- MoUs with a variety of offtake and trad- Managing director Andrew Spinks told
um drive. Cobalt and latterly nickel have
joined the party. Paydirt there was renewed optimism at

both the political and marketing levels.

“The recent appointment of a new Tan-

zanian Government Cabinet represents

a major change for the minerals industry

in the country,” Spinks said. “The new

minerals minister, Angellah Kairuki, has

reiterated that the Government’s invest-

ment climate is investor-friendly. There is

still some hard work to get through but

the winds have changed significantly.”

Conditions also appear to be changing

in graphite markets. After an initial burst

in 2013/14, graphite buyers cooled their

buying interest in 2015/16, leaving new

developers struggling to secure offtake

agreements and finance projects.

Kibaran is one of the few to have

locked in sales contracts for the majority

of production and Spinks believes end-

users are beginning to address looming

supply issues.
Andrew Spinks “It was apparent during my recent visit

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 21

COVER

WA’s hard rock lithium sector has emerged as a genuine contender to South America’s massive lithium brine industry

to China and elsewhere in supply concerns have how it thinks the world is going to pan out
Asia that there has been filtered through the over the next couple of years – clearly
a significant change and supply chain, Austral- it sees electric vehicles as a big part of
everyone is surprised by ian lithium developer that future,” Blue Ocean Equities senior
the rapid growth in de- Pilbara Minerals Ltd resources analyst Steuart McIntyre said.
mand for battery miner- announced in October
als,” Spinks said. “There an agreement with one “Clearly, I think, the fact Great Wall Mo-
is an appetite for the raw of China’s largest car tors is stepping materially outside its core
materials and the direct manufacturers Great business model, to move upstream to se-
feedback I received from Wall Motor Co. of Chi- cure supply, even when it doesn’t have
the anode producers was na. conversion facilities is a pretty strong sig-
that we haven’t seen any- nal for future demand. Unfortunately the
thing yet and that it will be Hong Kong and lithium market remains relatively opaque,
very positive for all the Shanghai-registered so this sort of signal is about as good a
battery minerals. Great Wall is market signal as you are likely to get.”
Dan Lougher capped at $US18.1 bil-
“The Chinese Gov- lion and its landmark Like Pilbara Minerals in the lithium
ernment continues to clamp down on offtake and funding deal with Pilbara space, Western Areas Ltd managing
graphite mines which are not adhering Minerals allows for the Stage 2 expan- director Dan Lougher has experienced
to environmental standards and that has sion of the Pilgangoora lithium-tantalum similar interest in his company’s nickel
resulted in a shortage of supply which is project. production.
leading to significant increases in prices “Great Wall doesn’t currently own its
for natural flake graphite and spherical own conversion facility. We believe this “We’ve had several groups visit our
graphite.” represents a strong read-through for po- office in Perth looking to secure nickel
tential demand – you have a major Chi- sulphate supply,” he said. “They are look-
Kibaran has 14,000 tpa offtake and nese car manufacturer which is showing ing to lock in supply for four or five years’
marketing agreements in place with time.”
Japanese trading house Sojitz and Ger-
man industrial giant ThyssenKrupp. Securing offtake contracts is vital in
Those offtake agreements are examples
of how European and Asian groups are
desperately seeking alternative supplies
of battery minerals and their derivative
products, a market currently dominated
by Chinese interests.

As the battery market heats up, battery
makers and their end-users are becom-
ing increasingly concerned about secur-
ing supply for all of the key minerals.

In the clearest indication yet that such

PAGE 22 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

lithium where increased production from Pilbara Minerals leads the lithium charge in Australia and has recently announced an
massive South American brine opera- off-take and funding deal with Chinese major car manufacturer Great Wall Motors, which
tions looms as a potential roadblock to
WA’s hard rock developers by the middle paves the way for Stage 2 expansion of the Pilgangoora lithium-tantalum project
of next decade.
sales contracts into the battery market product quality.
Hard rock lithium developments have by the end of 2018, even before we have “We have to understand the specifica-
been scarce in the last decade but the started nickel sulphate production, and
boom has refuelled exploration, particu- 75% the following year.” tions because you are making a chemi-
larly in WA which hosts considerable cal; you have to get what the customer
spodumene resources. Lithium expert What opportunities exist for down- wants,” Independence managing director
Joe Lowry believes WA’s lithium hopefuls stream processing? Peter Bradford said. “I have worked with-
have an enviable opportunity in that framework before during my time
Companies focused in any of the four in both mineral sands mining and down-
“As we have seen with Mt Cattlin and relevant commodities
Mt Marion, Australia’s lithium story is face marketing chal- stream mineral sands [ti-
no longer just about Talison and Green- lenges. Unlike tradi- tanium pigment] process-
bushes,” Lowry told Paydirt. “Between tional base and pre- ing. It is a different way
now and 2025, the market needs at least cious metals markets, of doing business to what
400,000t LCE of new capacity to come where concentrates miners are used to. It is all
online for even the more conservative are sold at market about quality of what you
market growth estimates to be realised. prices with penalties are making.”
Much of this will be hard rock. based on impurities,
the battery minerals Haegel said a mind
“Australian hard rock combined with all must meet stringent shift has to be undertaken
Chinese conversion capacity to lithium specifications of their to understand the step
chemicals is what has kept the market in customers. In graphite change in quality expec-
balance the past five years. Australia will and nickel sulphate, it tations and requirements.
remain a major player in the future.” becomes a question of
“In a metal world, the
The cobalt sector is also facing dif- boundaries are much
ficulties. Much of the world’s cobalt re- Eduard Haegel wider than they are as a
serves reside in DRC. The Australian
projects compare unfavourably with their
Congolese peers but ongoing questions
over conflict minerals in DRC mean sup-
pliers – particularly those like Tesla who
have pinned their hopes to ethical sup-
ply chains – are keen to find alternative
sources.

Grade is likely to be a problem for the
new generation of cobalt projects, many
of which started life as nickel plays. The
Mt Thirsty JV between Conico Ltd and
Barra Resources Ltd has been the first
to market with a scoping study but the in-
vestment community reacted badly to the
numbers, sending shares in each com-
pany down 40% in the first day of trade
following release of the study.

The nickel sector is the latest to feel
the battery charge. BHP Nickel West
is spending $43 million to build a nickel
sulphate plant at its Kwinana nickel refin-
ery, Western Areas and Independence
Group NL are both investigating market
opportunities in the space and WA’s nick-
el explorers and developers are redraw-
ing their project plans around a nickel
sulphate strategy.

Speaking at the Australian Nickel Con-
ference, BHP Nickel West asset presi-
dent Eduard Haegel said the battery
market would dominate the division’s
nickel sales by the end of this decade.

“I said in August that we expected 90%
of sales to be into batteries within five
years; we are already well ahead and
could reach that level within four years,”
Haegel said. “We expect to be at 50%

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 23

COVER

EVs on roads in China will surge to unprecedented levels in the next few years the whole way with this project and that
is not to try and produce a concentrate
chemical. We are on very tight specs and work together to “maximise downstream and then ship that off somewhere,” Eu-
to ensure you deliver that you have to processing options” in country for the ropean Metals managing director Keith
have different processes, expectations ASX-listed junior’s Cinovec lithium pro- Couglan said.
and planning because you can contami- ject.
nate quite easily” Haegel said. “We want to produce battery-grade
“It’s always been our intention to go material and that is very much what the
Some miners have moved Czech Government would like to see
to circumvent these chal- happen as well. They want to see the
lenges by entering the value benefit of that streaming, the jobs it will
addition chain. create and the industry it will help stimu-
late. Our interests are very much aligned
Talison Lithium, owner of with theirs in regards to that.”
Greenbushes – the world’s
largest hard rock lithium mine Many Australian miners remain re-
– has begun construction on luctant to enter the downstream space
a $400 million, 24,000 tpa in any commodity given the poor track
lithium hydroxide plant near record of those who have attempted it.
Kwinana, WA. The lithium space has recent examples
with the-now thriving Galaxy Resources
The likes of Pilbara Miner- Ltd pushed close to the precipice by the
als and Altura Mining Ltd are failure of its lithium conversion facility in
also investigating the down- China.
stream possibilities but are
looking to Asia as a preferred Galaxy was forced to sell the Jiangsu
destination. lithium conversion plant to Sichuan Tian-
qi Lithium Industries Inc for a net price of
European Metals Holdings $US173.2 million in April 2015.
Ltd last month signed a MoU
with the Czech Government Galaxy’s near-death experience has
which will see the two groups not deterred the Kidman Resources Ltd/
SQM JV at Mt Holland from pursuing the
option of building a refinery for its Earl
Grey material in WA.

Kidman managing director Martin
Donohue said WA was under-appreciat-
ed as a mining jurisdiction and the com-
pany’s combination with SQM would give
it the necessary expertise to establish a
world-class lithium refinery in the State.

While Kidman and SQM endeavour
to showcase their wherewithal in WA,
Donohue dulled down expectations the
JV’s possible refinery model would be
easily replicated.

“It makes perfect sense to build a re-
finery here. SQM can bring a lot of tech-
nical skill to Australia which is a great

addition to an incremental
growth in the skills base
here in Australia as well. I
think it is a perfect way to
go about it, the transport,
logistics, shipping costs
and all the rest of it are
more than compensated by
setting something up do-
mestically,” Donohue said.

“Lithium is not a straight
forward commodity. It is a
chemical business in many
ways so I’d say that the
technical challenges that
need to be met means that
refineries just won’t pop up
everywhere. You have to
find a source of spodumene
concentrate to underpin
and obviously WA has a

PAGE 24 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

good natural endowment and in our case The 2017 Chevrolet Bolt EV captured the world’s attention this year.
a very big resource and still growing.” PICTURE: Suzanne Pressman for Chevrolet

Lowry said Tianqi’s investment deci- tion is currently dominated by Chinese potential for the spheronisation plant to
sion at Greenbushes showed WA could producers who use the highly toxic and be built in Tanzania, a potentially benefi-
prove competitive in a downstream pro- corrosive hydrofluoric acid in their purifi- cial move for a country desperate to in-
cessing setting, which would be further cation method. troduce beneficiation to its minerals sec-
qualified if Kidman and SQM can also tor. Spinks said there were also longer
demonstrate a viable option. Spinks said Kibaran’s new method pro- term ambitions to build anode and bat-
vided customers both cost and environ- tery facilities in the country.
“From a capital perspective, by the mental benefits.
time you build a mine and conversion Australia’s high labour costs have
capacity to process spodumene, capital “At the moment, all the battery-grade seen manufacturing most often leave
costs in total are similar to a brine pro- material is coming out of China which the country in the last decade but Hae-
ject. As for opex, there is not one answer uses hydrofluoric acid,” he said. “The gel is increasingly confident WA’s metal
to the hard rock versus brine question. It anode manufacturers and their custom- reserves and its expertise could see an
depends on the individual resources and ers are looking for clean, green, ethical entirely new industry emerge.
location. supply but they are also looking for low-
cost supply. While there are other ways “We hope nickel sulphate is just the
“As you can see from Tianqi’s hydrox- of producing spherical graphite, they are beginning of the story. We are continuing
ide project in WA, downstream process- high-cost. This process doesn’t use hy- testwork on producing a cobalt sulphate
ing is certainly considered viable in Aus- drofluoric acid but it is low-cost and will which is also an important part of produc-
tralia. I expect more of this in the future. position us to be a major supplier of bat- ing cathode precursor material. A precur-
And yes, this will be margin/value adding tery-grade graphite globally.” sor facility may be a future part of Nickel
in most cases.” West and we are conducting a concept
Further details will be included in the study now,” he said.
The nickel sector has traditionally BFS but Kibaran has already flagged the
stuck very close to the headframe and And, Haegel’s vision for
concentrator but the opportunities in the battery supply chain in
nickel sulphate are proving enticing. WA stretches even further.
While Western Areas and Independence
are still ascertaining whether they can “The challenge will take
incorporate downstream processing into time to work through but the
their existing flow sheets, Nickel West is prospect is exciting to us.
already there, using its ample infrastruc- The whole of WA has an op-
ture to integrate a nickel sulphate produc- portunity for the industry to
tion stream at its Kwinana nickel refinery. make a material difference
to the supply of batteries.”
At full production, Kwinana will be-
come the largest nickel sulphate facility – Dominic Piper,
in the world. Mark Andrews and
Michael Washbourne
Haegel is now talking up the opportu-
nity for Nickel West to take further steps. Tesla’s first mass market car, the Model 3
PICTURE: Timothy Artman
“Producing metal is just the beginning
of the lithium-ion battery supply chain,”
he said. “It is clear that many companies
do more than one step and Nickel West
moving further downstream helps reduce
some of those steps.”

Graphite requires several steps before
it is turned into a suitable battery product
and several Australian graphite develop-
ers are pursuing downstream
processing in order to improve
margins.

Kibaran is set to release a
BFS this month on the con-
struction of a battery-grade
graphite production facil-
ity associated with Epanko.
Spinks said production of
spherical graphite could dou-
ble Epanko’s revenue capa-
bilities.

The BFS will include
Kibaran’s recent processing
breakthrough which it claims
can produce spherical, bat-
tery-grade graphite without
the use of hydrofluoric acid.

Spherical graphite produc-

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 25

NICKEL REVIEW

Nickel’s forecast role
in batteries: No rain

More than 250 delegates attended Paydirt’s highly anticipated Australian Nickel Conference at the Pan
Pacific Hotel, Perth, in October as a greater understanding of nickel’s role in the battery revolution and
electric vehicle market builds. This year’s conference featured a cross-section of the industry, with keynote
speaker Macquarie Group Ltd consultant Jim Lennon giving nickel players reason to be very optimistic
about their futures. Paydirt reviews all the highlights from the conference over the coming pages.

Nickel’s prominent role in the make-up it and as we began to increase our under- February this year, so we were already
of batteries to power the burgeoning standing we began to see there was real looking for alternative markets. The EV
electric vehicle market is fast being real- value for us,” Haegel said. market was very slow initially, but has
ised by a wider audience. grown rapidly.”
“It has been unfolding for the best part
Admittedly, BHP Nickel West only ar- of 15 months, it has only really been in Unlike the graphite and lithium players
rived to the party about 15 months ago, that timeframe and it has been very excit- targeting participation in the battery mar-
but in that time it has captured global ing. There has constantly been reinforce- ket which have to prove their concepts,
attention by committing $US43 million ment along the way that this is indeed the product and viability to potential battery
to conversion of its nickel refinery into right direction for us to be going.” customers and off-takers, Western Ar-
a nickel sulphate facility, while touting eas has sat back and opened the door
the possibility of doubling production to Waiting on the dance floor for Nickel to potential clients in their West Perth
200,000 tpa quicker than initially guided. West to charge up the battery sector was abode for the past two-and-a-half years.
Australia’s highest-grade nickel sulphide
Coming to the realisation that it was producer Western Areas Ltd. Interest has intensified in the past two
not benefitting from the switch to nickel months, with Lougher saying just about
pig iron across the steel industry, Nickel Despite the quality of its material, soft every existing and new battery pre-build-
West sought other avenues to remain vi- nickel prices and the same lower payabil- er making or looking to double capacity
able in the sector. ities being experienced by the their peers had reached out to Western Areas.
proved flashing red lights for Western Ar-
While conducting due diligence, it eas, spurring it to seek change to ensure “That tells me that this is starting,”
was only comments from Tesla founder profitability was maintained. Lougher said. “We see customers com-
and chief executive Elon Musk that lith- ing to us, so identification of a customer
ium-ion batteries really should be called “With nickel barely over $US10,000/t is relatively easy for us. The problem
nickel-graphite batteries which sparked you have to start asking yourself: ‘How we have is that there are too many bat-
interest from Nickel West asset president are we going to exist in this market un- teries – style, types, energies – so the
Eduard Haegel. less we change?’” Western Areas man- general person on the street and a lot
aging director Dan Lougher said. of other people don’t know the differ-
“That was new information and we had ence between a sulphide and a sulphate
no idea at that moment the role that nick- “The first change for us was we were and they mingle the words. They are
el played and so began the journey of un- talking to [stainless steel producer] the things we are trying to address. We
derstanding. We put some resources into Tsingshan in 2012 about roasting con-
centrates and we then did the contract in

PAGE 26 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

produce sulphide and we can produce a the price surge of the latter to about “The difference between producing

sulphate crystal.” $US60,000/t this year, and Lennon sees sulphate and not having to go to metal

Regardless of the layman’s under- a trend towards substituting cobalt for and perhaps selling a product at a pre-

standing of the difference in nickel prod- nickel in battery chemistry. mium was quite a big switch in the eco-

ucts, its importance to the battery market Lithium remains in short supply, but af- nomics,” Sullivan said.

will soon become obvious. ter 2018 expectations are that supply will “It is a factor in pushing us down this

Nickel is currently a 2 mtpa market, be adequate, while stock levels of materi- road and we have put a fair bit of effort

with the use of nickel in lithium-ion bat- als needed to make nickel sulphate are in establishing the metallurgy can work.

teries driving EVs about 10,000-15,000t good for the time being, Lennon said. The beauty of having nickel in solution is

based on 1 million EV plug-ins delivered “There is close to 300,000t nickel bri- that really we have a lot of flexibility as

globally last year, according to Macquar- quettes sitting in inventory globally, so to how you might take it out of solution.

ie Group Ltd consultant Jim Lennon. within the next 3-4 years I think you are At the moment we are looking at nickel

Lennon said the number of EVs deliv- going to start to see a significant draw sulphate, cobalt sulphate those precur-

ered had grown 35% already this year down of inventories,” Lennon said. sor metals; we do have aluminium, man-

and he expected an overall 40% increase “The market is going to normalise and ganese, uranium, other metals we have

in the lithium-ion battery-powered EV then we will see the price move sub- to get rid of at the moment. There is still

section by the end of 2017. stantially higher. The issue is that you quite a lot of flexibility in the metallurgy,

And, with China’s shift towards nickel- are not going to need that incremental but that opportunity has opened up and

contained batteries, exponential growth demand from NPI, you are not going to changed our view on that current re-

in demand for the base metal is expect- need it from sulphide mines because I source.”

ed. don’t know if there is an extra 200,000- The battery and EV markets are creat-

“The overall [nickel] market is going to 300,000t sulphide mining capacity that ing plenty of hype in the nickel sector at

grow by about 20,000t this year. Over the can come on, so it has to come from lat- the moment, however, Lougher is wary of

next few years it is going to be growing erites; it has to come from rather expen- the market running too hard and fast at

anywhere between 30,000-50,000 tpa sive and rather technically challenging this stage.

so it is quite a significant slug of growth technology. Lougher said patience was required

in the market. If you think of the in what is going to be a “slow,

nickel market of 2 mtpa, 1% is OCTOBER 2018 PRICE PREDICTIONS rocky ride” ahead for the nickel

20,000t, so it is quite a signifi- sector.

cant growth,” Lennon said. “We don’t need it [the nickel

“For 2025, forecasts vary be- price] to go to $US25-30,000/t

tween probably 15 million units right now; we need steady

and 25 million units and there growth and seeing that there is

is a lot of uncertainty about [the a control in the market in terms

chemistry mix between differ- of pricing and product availabil-

ent batteries. So, our expec- ity in the world of nickel. I don’t

tation is that by 2025 at least Jim Lennon $US13,000/t Dan Lougher $US14,500/t think there is a current disrup-

350,000t nickel is consumed in tor, but don’t hold your breath; I

all batteries.” have seen some strange things

Lennon said some forecast- happen,” Lougher said.

ers had quoted demand for He said there was nothing in

nickel by 2025 in the vicinity of the current market to disrupt

700,000 tpa nickel. nickel’s influence in batteries,

Haegel said: “Jim shared however, with the likes of Toyo-

350,000-700,000t nickel de- ta persisting with hydrogen fuel

mand by 2025, they are the cell technology, a particular

same sorts of numbers we rare earth could emerge as a

see. If I convert that to nickel Eduard Haegel $US12,999/t Peter Sullivan $US13,500/t potential substitute for nickel in
sulphate, we will still need 1.5- the future.

3.5mt of nickel sulphate by “I met a guy a few months

2025, this is going to be a pretty wild ride. “That does imply a significant uplift in ago who said niobium could be a mate-

You won’t see it now, you won’t see it in price in the 2020s, and given the lead rial to replace nickel,” Lennon said.

a couple of years, but by 2025 you will time capacity it is going to take some “So I think in a post 10-year horizon

certainly see it.” time, but it is going to happen sooner anything can happen, certainly over the

As the volume of EV production lines rather than later.” next 7-8 years lithium-ion technology is

increases, automakers may be heading Lennon’s synopsis is a boon for the fairly well established and not much is

towards major restructures of their busi- likes of Peter Sullivan’s GME Resources going to change that, but further out you

ness models. Ltd, with its NiWest laterite project in never know.”

“I would say that it is uneconomic for Western Australia granted a new lease Whatever the future, the overwhelm-

an automaker to be running two parallel on life by interest in the battery market. ing takeaway from this year’s Australian

production lines and at some stage they Sullivan, chairman of GME, said a lot Nickel Conference is that nothing will rain

are going to say: ‘Well, this is the future, of iterations on how to develop the later- on nickel’s parade in the immediate fu-

we then try and switch entirely to EVs’,” ite resource had been looked at and the ture.

Lennon said. last effort was assessing the potential of – Mark Andrews
At the moment there appears to be a heap leach SX-EW process to produce

more supply of nickel than cobalt, hence metal.

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 27

NICKEL REVIEW

Golden opportunities at risk

The future of Western the Nova deposit. Nova is it offers opportunity for WA to become a
Australia’s explora- largest WA nickel discov- vital supplier to the burgeoning electric
vehicle industry.
tion incentive scheme ery for 40 years and the
“There is no question we are very keen
is in doubt after Mines best quality find among to take all opportunity to take advantage
of the EV opportunity,” Johnston said.
Minister Bill Johnston the 25 prospects identi-
“It is a tough time to be in government
said the State Govern- fied through the five years in WA; the finances are very, very bad.
We are determined to try to make the
ment would be forced to the EIS has been running. most of opportunities.”

make budget savings af- “Let’s hope we can find Johnston also moved to reassure min-
ers the Government was striving to re-
ter seeing its bid to raise room in the budget to con- duce regulatory burden within the State.

the gold royalty quashed. tinue the EIS,” Johnston “WA had the most agencies of any gov-
ernment in Australia,” he said. “By bring-
Speaking at the said. ing many of these agencies together we
can strengthen the decision-making pro-
opening of the Austral- Hon Bill Johnston WA remains one of the cess. It will make for less duplication and
ian Nickel Conference, nickel sector’s most im- less red tape. We understand by making
government more efficient we can assist
Johnston said the State’s portant jurisdictions with industry in making its investment deci-
sions.”
finances were in such dire straits that the the State responsible for 7% of annual
– Dominic Piper
Government would be forced to find sav- nickel production globally. Johnston ac-

ings measures regardless of their suc- knowledged the employment opportuni-

cess. ties the sector delivered to West Australi-

“We have to find $100 million worth of ans and said he was pleased BHP Nickel

savings and even things we would like to West had made a continued commitment

do, we may not be able to do,” Johnston to its WA nickel business through its

said. plans to start nickel sulphate production

The Minister’s admission came despite next year.

his reference to the important role the Nickel sulphate is a key ingredient of

$10 million a year exploration incentive lithium-ion batteries and combined with

scheme (EIS) played in the discovery of plans for lithium processing in the State,

PAGE 28 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Sulphate could be just
first paddle downstream

In what is becoming a tradition at the home in coming years. quantities. It is clear the pre-
event, BHP Nickel West asset presi-
dent Eduard Haegel used the Australian The company is con- ferred feed source is nickel
Nickel Conference to profess his growing
optimism for the future of the division. verting its Kwinana nickel powder and briquettes.”

When Haegel made his maiden ap- refinery into a 100,000 Construction on the nickel
pearance at the conference in 2015, he
floated a cautiously optimistic turnaround tpa nickel sulphate facility, sulphate production line is
strategy for a group which most industry
observers expected to be preparing for potentially making it the expected to start this month.
closure by 2019. The success of that
turnaround was confirmed last year by world’s largest supplier of Haegel said the plant –
Haegel and this year his enthusiasm for
the future was stronger still. the key lithium-ion battery which will be fully automated

“I am even more optimistic about Nick- ingredient. – would tie in “seamlessly
el West and the options about the indus-
try,” Haegel enthused at the conference. “It is clear that nickel- with current infrastructure” at
“The opportunity for nickel is that under-
lying demand is huge.” rich chemistry has won the Eduard Haegel Kwinana.
race in battery technology The company is also pur-
Haegel has positioned Nickel West as
a likely premium nickel sulphate produc- as they offer higher energy suing production of a cobalt
er, an advantage he intends to hammer
density, are lighter, deliver increased sulphate. Eventually, Nickel West could

range and require lower cost raw mate- take a further step in the battery mate-

rial,” Haegel said. rial supply chain by producing a cathode

Nickel West believes the nickel bri- precursor product.

quettes it produces will be the most cost- “A cathode precursor facility could be

effective feed source for nickel sulphate. a future part of Nickel West and we are

“Nickel cathode is too slow to dissolve currently conducting a concept study,”

and nickel hydroxide, while attractive, has Haegel said.

low margins and is only available in small – Dominic Piper

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 29

NICKEL REVIEW

Exploration back on for IGO

With operations at Nova on tar- km of ground on the Fraser Range.
get, Independence Group NL
is preparing to increase the pace of A major programme of 3D seis-
its Fraser Range exploration push.
mic will start in December with re-
The company’s exploration de-
partment has been quiet in 2017 sults expected in mid-2018.
with efforts and funds focused on
development at Nova. But, with Having acquired additional
the life-of-mine grade control drill-
ing and underground development ground in the region over the last
set to be completed by the end of
the current financial year, the next two years, Independence is well-
12 months will see the exploration
budget increase to $40 million. placed to undertake the kind of ex-

Managing director Peter Brad- ploration needed by a young min-
ford said the geometry of the ore-
body allowed Independence to ac- eral field like the Fraser Range.
celerate its programmes.
“We believe there are more No-
“By the end of FY2018 we will
have substantially completed capi- vas to be found but systematic
tal development on the mine,” Bradford
said. “That is unusual in the WA mining exploration is needed and that
industry where it is often a never-ending
story.” hasn’t been done yet,” Bradford

Completion of grade control drilling will said. “Since the Nova discovery,
also deliver greater understanding of the
the land had been held by un-

derfunded nickel explorers. They

have done work but always tried to

Peter Bradford target the best prospects, not the

systematic work we are committed

Fraser Range geology as the company to. There has been very little work below

ups the ante in its push to find the next 250m and none outside of the Nova and

Nova. Sirius ground.”

Bradford said exploration would be split – Dominic Piper
between incremental in-mine extensions

and regional work across its 12,000sq

PAGE 30 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

MREP ensures Morning is broken

Western Areas Ltd is confident the by Western Areas as it “You do have to have
New Morning orebody will prove to strives to maintain its per-
be the first deposit its new bioheap pro- formance and margins an element of patience
cess will help unlock. amid a tough period for
nickel miners. Other in- and we are watching the
“MREP will open up new doors for the novations include the use
whole industry,” Lougher said of the com- of ore sorting technology space extremely careful-
pany’s under-construction mine recovery to monetise low-grade
enhancement project (MREP). material, changes to min- ly,” he said. “We are see-
ing methods and a new
The MREP flow sheet has been devel- off-take agreement with ing a lot of new cathode
oped to treat tailings at the company’s Chinese stainless steel
Forrestania operations but Lougher said producer Tsingshan. precursor manufacturers
its installation would unlock opportunities
in the low-grade New Morning deposit. The five-year off-take coming to our offices and
with Tsingshan represents the first time
“We still believe New Morning has an Australian nickel sulphide miner has the two largest Chinese
value. We have gone back to the metal- moved into the Chinese roasting space.
lurgy using the bioheap technology and battery producers were
we can use heap leach pads to produce “In the roasting process the sulphide
a crude nickel sulphate. We can then put concentrate is mixed with laterite ore,” in our offices two weeks
that through the MREP and produce a Lougher said. “It is working extremely
high-grade nickel sulphide concentrate. well; the payabilities and economics Dan Lougher ago. This demand is two
of your contracts become so impor- or three years away but
“From there, we are convinced it is just tant, especially when nickel is below
the beginning for this technology and it $US10,000/t.” they recognise they have
will allow us to mine low-grade sulphides
for which flotation is not economic.” On the emerging demand from batter- to invest in new capacity today.”
ies, Lougher preached patience.
The construction of MREP is the lat- Lougher said he expected new hydro-
est innovation programme instigated
metallurgical technology to be devel-

oped to feed the battery market but he

believed demand would continue to play

into nickel sulphide producers’ hands.

“It will be something which pushes

payabilities up from the 60 percents to

the 80s,” he said.

– Dominic Piper

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 31

NICKEL REVIEW

St George: The one to watch

St George Mining Ltd will the battery market, Prineas needed by 2020 and at $US10/lb nickel
look to build on the un- prices there was enough incentive to
precedented exploration said it was a good time to spur the next wave of projects.
success in the Cathedrals
belt at its Mt Alexander pro- be drilling. “Now is a good time to get exposure to
ject in Western Australia. nickel,” he said. “St George is a great way
The company is looking to play the rebound in the nickel market.”
At the time of the Aus-
tralian Nickel Conference, to continue its success at At 12c/share, Prineas believes inves-
a 3,000m diamond drilling tors can back St George on the cheap
programme was about to be Cathedrals so far this year and acknowledged where it all began for
started in areas of the Ca- some of its contemporaries.
thedrals belt never touched which has included stel-
before. “Western Areas [Ltd] started as min-
lar results from MAD56: nows,” he said.
“It will be the first drilling to
the south of the Cathedrals belt and the 7.5m @ 3.9% nickel, 1.74% “If you look at the BRW rich list and you
first ever deep drill holes to test miner- take away the iron ore miners, nickel has
alisation at depth. Every conductor in the copper, 0.12% cobalt and probably created the most wealth in WA.”
Cathedrals belt has hit nickel sulphides;
unprecedented success,” St George ex- 3.32g/t total PGEs from It is this narrative that is giving St
ecutive chairman John Prineas said. George’s largest shareholders – City
John Prineas 57.8m, including 3.15m @ Natural Resources, Oceanic Capital,
The drill programme will also test the 6.36% nickel, 2.92% cop- Impulzive and Prineas himself – high ex-
western extension of the Cathedrals pectations for the companye.
belt for the first time, near the Ida fault, per, 0.2% cobalt and 5.03
and with the current attention received “Our largest shareholders aren’t look-
by nickel companies courtesy of the in- g/t total PGEs from 61.81m and MAD55: ing to double their money, they are look-
creasing linkages between nickel and ing at making 50 times their investment,”
4.28m @ 2.75% nickel, 1.21% copper, Prineas said.

0.09% cobalt and 2.59 g/t total PGEs – Mark Andrews

from 60.67m, including 1.05m @ 5.91%

nickel, 2.63% copper, 0.21% cobalt and

2.57 g/t total PGEs from 63.9m.

“It is a great opportunity to prove up

more mineralisation in the area,” he said.

Using analysis from Wood Mackenzie,

which pointed to an estimated long-term

nickel price of $US22,000/t, Prineas

said new project developments would be

PAGE 32 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Bright nickel outlook

The nickel sector is through its worst Jim Lennon “It is incredibly complex because of the
five years in living memory and will variations in the type of vehicles, the size
likely experience a steady period of by weakness in Q4. Lennon said stain- of the batteries used and the chemistry
growth before the battery revolution truly less steel growth had fallen from 8% in mix within those batteries. There is also
hits next decade, according to nickel spe- 2016 to 5% for this year. However, an a lot of uncertainty about the supply of
cialist Jim Lennon. encouraging sign for nickel miners has raw materials and it is almost impossible
been higher growth in the nickel-intense to say what’s going on,” he said.
Speaking at the Australian Nickel Con- 300-series stainless steel which is set to
ference, Lennon – the London-based grow 6% this year. “Our expectation is that you will see
consultant to Macquarie Bank – said the battery market moving to 200,000
market conditions were better than they Lennon’s appearance at the confer- tpa nickel use by 2022 and 400,000 tpa
had been in several years. ence coincided with a new burst of inter- by 2025, but that is only based on current
est in nickel thanks to its association with assumptions. It could change.”
“Today, we are definitely off the bot- the growing electric vehicle (EV) market.
tom after the worst five years in my 37 The unsuitability of nickel pig iron to
years covering the sector,” Lennon said. Demand from the battery market cur- the production of the nickel sulphate
“Physical premiums are improving and rently accounts for only 1% of nickel de- product required in batteries also means
the market is on the mend after several mand but Lennon expects this to grow greater demand pressure will be placed
years of oversupply. China and stain- as EV adoption rates lift throughout the on nickel sulphide and HPAL production.
less steel will continue to drive nickel in world. However, after several years of closures
the short term but batteries are the slow and underinvestment in the sector, a
burner and have the potential to lead to a “In the short term, that is not enough supply problem is looming.
nickel bull market.” to move the dial but growth projections
for EVs suggest it will be a major market “Out to the mid-2020s we start to see
The LME nickel price had languished for nickel within the next seven or eight a huge deficit and a lot more investment
between $US9,000/t and $US11,000/t years. In the next five years, it is fore- will be needed post-2022 but where will
since Indonesia banned the export of cast to add 1% per annum to demand,” these capacity increases come from?”
raw laterite ore in 2014 but Lennon said he said. Lennon asked.
that significant increases in demand in
2016 and 2017 had removed some of the Lennon warned the battery sector was Such supply imbalances may have
overhanging nickel stocks. much more opaque than nickel’s tradi- nickel miners imagining a run back to a
tional markets. the $US50,000/t mark seen prior to the
“The improvement in physical premi- GFC but as they proved then with the
ums reflects a tightening of the market development of a nickel pig iron sector,
with majors going into the market to fulfil Chinese firms are highly adaptable.
orders. That should be a precursor of an
improved market,” Lennon said. “The next revolution will come from
China,” Lennon said. “They are building
Inventory levels had reached 25 weeks HPAL plants in Indonesia and the Phil-
by the end of 2015 but thanks to supply ippines from which they can develop an
deficits of 100,000t in 2016 and 60,000t intermediate process to produce nickel
this year, inventories were heading to- sulphate. But, it is more expensive than
wards more normalised levels of around nickel pig iron. The incentive price for
12 weeks. HPAL is $US15-25,000/t.”

Stainless steel production has been – Dominic Piper
inconsistent throughout 2017 with record
demand in Q3 expected to be followed

CSIRO seeks out Voisey Bay/Nova

Australia’s lead science agency “A big part of that has been looking has not been a replica discovered.
CSIRO has spent significant time de- at some of the similarities and differ- Having Nova in operation, Independ-
veloping its understanding of the nature ence between intrusion-hosted ores and
of world-class nickel orebodies Voisey komatiite-hosted ores and trying to un- ence has the natural advantage of being
Bay and Nova. derstand why they are different and what able to see what the orebody looks like
that tells us about those processes.” and with CSIRO embedded in research
“In the last few years we have been try- and development activities at the mine,
ing to understand mafic intrusion-hosted Aiding CSIRO’s research has been the the pair have as good a chance as any-
ores like Norilsk’s Voisey Bay-style and collaboration with Independence Group one of making another major discovery.
trying to understand more about ore NL at Nova in Western Australia’s Fraser
formation and exploration applications,” Range. Barnes said the CSIRO welcomed the
CSIRO mineral resources science leader opportunity to collaborate with other min-
Steve Barnes told delegates at the Aus- Nova is WA’s largest nickel discovery ing companies to unlock the mineral po-
tralian Nickel Conference. in many decades and despite the flurry of tential in Australia.
activity in the Fraser Range since, there
– Mark Andrews

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 33

NICKEL REVIEW

PAGE 34 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

17 October 2017
Pan Pacific Perth

Sun shines for nickel

South African-based Suntech Geo- persion and pulp hydrodynamics.
metallurgical Laboratories wants Recent test work by Suntech has
to help Australian nickel producers
achieve greater concentrate recover- suggested that a modified by-polymer
ies. is helping improve nickel recoveries
through a reduction in pulp viscosity,
“It is well known that pendlantite increased froth depth and neutralisa-
recoveries are a problem for most tion of ions in solutions.
nickel producers, with lots of penalty
elements in their concentrate like “Clients are starting to have a lot of
magnesium oxide,” Suntech manag- confidence in us,” Gwavava said.
ing director Brighton Gwavava (pic-
tured left) said. “I’m sure each and every one of you
would like to have an additional 3-4%
“Slime coating and entrainment of your nickel into the concentrate.”
are major causes for poor flotation
performance in pendlantite flotation. Suntech has to date completed met-
Different clays cause different prob- allurgical test work on 260 projects,
lems.” including for ASX-listed companies
Cardinal Resources Ltd and Syrah
Gwavava said many metallurgists Resources Ltd.
were adopting a “one size fits all”
policy when designing metallurgical Founded in 2010, Suntech gener-
plants, but this was having a negative ated just $US100,000 revenue in its
impact on ore grinding, energy dis- maiden year but is on track to rake in
about $US4 million for 2017.

– Michael Washbourne

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 35

NICKEL REVIEW

Ardea races to the drill bit

Ardea Resources Ltd is mine schedule prior to the re- Ardea plans to produce cobalt and
bringing forward some lease of a PFS in March. nickel sulphates for direct supply to key
battery manufacturers via solution ex-
of the drilling slated for “We are going over every- traction. First production is targeted for
2020.
the DFS phase of its fast- thing from scratch, remodel-
Unsolicited research by US-based
tracked development strat- ling the whole lot, to ensure Palisade Research recently declared
that “Ardea provides more leverage to
egy for the cobalt-focused we have the most accurate the price of cobalt than any other public
vehicle globally, offering significant rela-
Kalgoorlie nickel project models possible,” Painter tive value compared to its nickel laterite
peers”.
(KNP). said.
Painter said his company was also as-
Having raised $10 million “We’re going to be drilling sessing the potential of its scandium ox-
ide by-products.
via a placement and SPP in excess of 100,000m, most-
“The scandium hadn’t been picked up
during September, cashed- Matthew Painter ly shallow holes, to upgrade a beforehand, we discovered that earlier
up Ardea has opted to get series of resources in various on this year with our initial drilling,” he
said.
the ball rolling early on fu- prospects but also in outlying
“We’re doing some systematic sam-
ture plans to upgrade a number of re- areas such as Kalpini, Highway and Ye- pling out there at the moment to get an
idea of what we’re dealing with and we’ll
sources across its extensive land pack- rilla that are known to have high-grade be releasing a subsidiary resource on
that very shortly.”
age. cobalt and nickel. We expect to see an
– Michael Washbourne
It continues a remarkable rise for Ar- increase in tonnes as a function of this.”

dea, which was spun out of Heron Re- As part of the upcoming PFS, Ardea

sources Ltd earlier this year, with the will assess the viability of a 2 mtpa op-

new company trading at an all-time high eration at KNP producing about 2,500

of $1.15/share post the Australian Nickel tpa cobalt and 15,000 tpa nickel.

Conference. The cobalt-rich portion of the project,

Ardea managing director Matthew known as the KNP Cobalt Zone, currently

Painter said the fast-tracked drilling was hosts a resource of 64.4mt @ 0.13% co-

designed to upgrade and incorporate a balt and 0.77% nickel containing 81,000t

number of additional resources into the cobalt and 495,000t nickel.

PAGE 36 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

GME favours heap leach

GME Resources Ltd is favouring a work and will deliver us “We have an opportunity
heap leach operation to process lat- solutions that we can
erites from its NiWest project for direct metallurgically extract to capture some extra pre-
supply into the nickel sulphate battery the metal from.”
markets. mium in the process,” Sul-
The PFS – due in the
Following the successful completion March quarter – will as- livan said.
of metallurgical test work to confirm the sess the viability of a
ability to produce high purity nickel prod- 1.5 mtpa heap leach “There’s a notable cost
ucts from NiWest, GME will look to final- operation from a large
ise a PFS on the project – adjacent to resource which is likely saving with this [heap
Glencore’s Murrin Murrin nickel refinery to support a 15-20 year
in the North Eastern Goldfields – over mine life. leach] process we’re look-
the next few months.
NiWest hosts a re- ing at to directly produce
Laterites such as those found at Ni- source of 81mt @ 1.03%
West and Murrin Murrin are typically pro- nickel and 0.06% cobalt containing sulphates. We’ve seen
cessed via high-pressure acid leaching 830,000t nickel and 52,000t cobalt, in-
(HPAL), but GME chairman Peter Sulli- cluding a higher grade zone of 35mt @ quite a big swing in the ba-
van said the economics were stacking up 1.21% nickel and 0.08% cobalt contain-
for heap leach processing. ing 427,000t nickel and 27,000t cobalt. sic economics from where

“These laterites are relatively low in Heap leach processing will likely com- Peter Sullivan the project has been as a
iron and have been heap leached at Mur- mand a substantially lower capex than a result of the emergence of
rin Murrin before,” Sullivan said. “They HPAL and/or atmospheric leach process-
stopped it for operational reasons in re- ing scenario, with the subsequent direct nickel use for batteries.”
cent times, but it did operate for three or solvent extraction stage also requiring
four years, so we are comfortable that considerably less capital than if the metal Sullivan hinted the company was likely
our heap leach process is one that will is refined at the back-end of the process.
to progress immediately to a DFS once

the PFS has been completed, with first

nickel-cobalt production targeted for the

first half of 2021.

GME’s success at NiWest appears to

have caught the attention of the market,

with the company’s stock jumping from

2c/share to 15c/share over the past 12

months despite nickel’s struggles.

– Michael Washbourne

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 37

NICKEL REVIEW

Mincor set to explore again

Mincor Resources revisit the company’s “sig- McMahon is also high on Muccilli’s agen-
NL is on the cusp nificant nickel option”. da, despite the imminent start of gold
of restarting field work production from the company’s ground.
on what managing di- “This district needs ex-
rector Peter Muccilli ploration and I believe we Mincor is on track to achieve gold pro-
described as the “best have a strong case to put ducer status at its Widgiemooltha project
piece of nickel real es- forward that the most pro- late in the March quarter.
tate” in the country. spective nickel ground is
on our ground,” he said. “We’ll continue with the gold explora-
As PCF Capital boss tion, but we clearly have a strong option
Liam Twigger called “This is an incredibly on the nickel price,” Muccilli said.
for consolidation of prospective part of Kam-
the Kambalda nickel balda. Republican Hill is a “We have a key piece of Kambalda’s
district, Mincor an- great target, very low-cost future and I think it rates very, very highly
nounced it was plan- exploration and that’s not in comparison to anyone else’s projects
ning to undertake some Peter Muccilli far away. The work we’re out there. We’re a lot closer to restart-
geochemistry over the doing right now has really ing nickel exploration than we were two
Republican Hill greenfields target. re-rated this project and years ago.”
I’m quite excited about continuing to work
Republican Hill was one of three pros- with the geos on this. Hopefully we’ll be Muccilli said revenue from the gold
pects identified for follow-up exploration in a drill position sometime in the future.” production would help fund any upcom-
in 2015 before the declining nickel price While no definite work programmes ing nickel exploration programmes.
forced Mincor to shelve all field work over have been confirmed, Muccilli is also
its 300sq km land package. keen to revisit the Cassini and Voyce dis- Historically, more than 22 moz of gold
coveries made prior to the shutdown of and 1.6mt of nickel has been produced
Mincor has since also mothballed its Mincor’s nickel business. from the Kambalda district, with almost
nickel mines in Kambalda and focused Further exploration of the near-term half of the total nickel production sourced
on developing its gold assets. However, potential at Kambalda Dome and Ken/ from Mincor’s ground.
Muccilli believes the time has come to
– Michael Washbourne

PAGE 38 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Cassini riding nickel wave

Cassini Resources Ltd managing di- Richard Bevan NL at Tropicana and retain a 30% inter-
rector Richard Bevan hopes long- est in a producing asset.
term pricing forecasts continue to track The scoping study will mark comple-
the proposed development timeline for tion of the first stage of the lucrative $36 Ahead of the scoping study’s release,
his company’s West Musgrave nickel- million JV that junior explorer Cassini the JV has completed about 200 metal-
copper project. and South Australian copper producer lurgical float tests on 18 different ore
Oz entered into last year. types, identified a critical water supply
Expected supply deficits for nickel and and assessed a range of transport logis-
copper have forecasters tipping strong Oz is widely tipped to proceed to the tics.
and continued growth for both base met- next stage of the JV to ultimately lift its
als over the next five years, particularly stake in the project from 51% to 70%. “A lot of de-risking has been done in
on the back of the electric vehicle revolu- this stage,” Bevan said.
tion. Bevan said his company was looking
to follow the lead of Independence Group “This was one of the reasons why it
Cassini – in conjunction with JV part- was key for us to get that large funding
ner Oz Minerals Ltd – will soon release partner on board to help us along the
a revised scoping study on West Mus- journey and really give some certainty to
grave’s flagship Nebo-Babel deposit the project going forward.”
which is expected to confirm the project
is on track to be developed within that About $8 million of the total JV spend
timeframe. is set aside for regional exploration in the
next stage and Bevan said his geology
“The key thing that drove us for the re- team was “champing at the bit to get out
lationship with Oz was to be able to fund there and strike a blow for good”.
it through the flat spot of the nickel com-
modity price cycle,” Bevan said. “What we think this exploration will do
is support a multi-decade mining district
“If our timeline plays out and Oz contin- out there in the West Musgrave,” he said.
ues forward, we’re looking at commenc-
ing production around 2022 and that re- “These are a lot of opportunities to in-
ally does sit well with a lot of the forward crease the resource base and add value
nickel commodity price forecasts.” to the project.”

– Michael Washbourne

Metals X goes low at Wingellina

Australia’s largest undeveloped nickel- Warren Hallam tested all the resins, we got good uptake
cobalt-scandium project, Wingellina, to separate the cobalt and nickel. All we
could see the light of day in the near fu- assessing the merit of a smaller, lower didn’t do in 2011 was convert that into
ture. capital intensive start-up as cobalt prices nickel sulphate and cobalt sulphate and
heat up and the temperature in the nickel we don’t really see that would be an is-
However, the grandiose 40,000 tpa market rises. sue at all in that process.”
nickel and 3,000 tpa cobalt mark that
Wingellina is capable of producing will “We could [potentially] start off with a Hallam said Metals X had the flexibil-
not be aimed for, Metals X managing di- 5,000 or 10,000 tpa nickel project, look- ity to produce carbonates, hydroxides
rector Warren Hallam said. ing at atmospheric leaching and acid re- or sulphides, plus nickel and cobalt sul-
generation,” Hallam said. phate, from the material at Wingellina,
The capital cost of building such a pro- with all options on the table.
ject has been estimated at $2.5 billion “Or do we look at producing nickel
and despite a NPV of over $3 billion, find- and cobalt sulphate for the battery mar- And, with historical test work to fall
ing support has always been the major ket? There is a whole bunch of test work back on, Metals X is expected to move
hurdle in the way of Wingellina’s devel- that has been done. In 2011, we already quickly with studies to capitalise on the
opment. positive sentiment being lapped up in the
cobalt and nickel space.
“Where do you find $2.5 billion?” Hal-
lam asked. “The objective is to come out with a low
capital option to bring Wingellina forward
“We have been busily working with much quicker,” Hallam said.
various JV partners to basically fund $1
billion of that and then we find the next Metals X is well positioned for a swift
$1.5 billion. As the nickel price came off, turn into production, pending viable eco-
we put that on hold. Our JV partners are nomics at Wingellina, as EPA approval
all still there and with cobalt prices com- has been received, access to water se-
ing back there is more and more inter- cured and a mining agreement in place
est.” with Native Title holders.

At the time of print, Metals X was about – Mark Andrews
to start infill drilling at Wingellina, while

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 39

NICKEL REVIEW

Exploring for Legend status

In many respects Legend Mining Ltd is a Mark Wilson greater Albany-Fraser region, has it hunt-
rare company; a junior explorer backed ing in the right area.
by a well-to-do mining entrepreneur with replicas of the famed deposits are being
a significant landholding serviced by in- chased. “We believe if you are not in this zone,
frastructure in a highly prospective but you are less likely to find another Nova,”
remote part of Western Australia. “I will go as far now to predict that Wilson said.
the next [major] discovery is a matter of
All the key ingredients are there for when, not if,” Wilson said. Legend’s entire 2,700sq km of title is
a world-class operation, bar the game- within the Fraser Zone, Wilson said.
changing discovery which could turn Wilson believes Legend’s location in
a $20 million company into a $2 billion the Fraser Zone, which is characterised “Nova sits within the southern gravity
nickel powerhouse. by a gravity anomaly and sits within the anomaly and we have the entire north-
ern or central anomaly tied up in our own
Others have come and gone in the project,” he said.
Fraser Range since the Nova discovery
and there are few in a position, or are “If you are not in this zone, you are like
willing, to go the distance in the region the little boy who fell out the boat.”
like Legend is.
Accompanying Legend in the zone is
Legendary prospector Mark Creasy is Independence Group NL, Creasy Group
the company’s largest shareholder and and the MMG Ltd/Segue Resources Ltd
has put substantial cash on the table. His JV.
enthusiasm for exploration in the region
is matched only by Legend managing di- Any success struck will serve all com-
rector Mark Wilson. panies in the region well and Legend
has the chance to do so with a series of
“I am the second largest shareholder, exploration programmes outlined to mid-
I bought my shares on market and more 2018.
than six years of my net salary has gone
into buying this equity position,” Wilson This month, 3,000m of aircore target-
said. ing Area D and EM conductors will start,
followed by systematic MLTEM, FLTEM
Wilson’s hard-earned has gone into and LF EM in the New Year.
the Rockford project – 120km north-east
of Nova and 100km south of Tropicana Between March and June a further
– where potential nickel-copper and gold 3,500m of aircore is scheduled, with RC/
diamond drilling to follow.

– Mark Andrews

Rox to rebound with nickel bounce

Based on the size and grade of nickel Ian Mulholland Fisher gold JV, also in Western Australia,
resources at Fisher East and Collu- however with a pocketful of cash and re-
rabbie, Rox Resources Ltd is underval- the nickel bounce occurs. ceivables in hand, the company can act
ued compared to its peers, according to While waiting for that event to hap- quickly once nickel becomes sexy again.
managing director Ian Mulholland.
pen, Rox has forged ahead with the Mt “The value proposition with Rox is that
Rox has defined resources of 50,600t we have $17 million in cash and receiva-
@ 2.5% nickel at Fisher East and 13,500t bles and we are basically trading at cash
@ 2.3% nickel equivalent at Collurabbie, backing at the moment,” Mulholland said.
with analysis by Mulholland suggesting
the company should be closer up the “We have outstanding gold and nick-
value chain to Western Areas Ltd. el assets located in WA, which in 2016
was voted by the Fraser Institute as the
“The enterprise value per kilo tonne world’s No. 1 mining jurisdiction. We are
of nickel resource versus grade of re- looking to double those resources to over
source, we see there seems to be a bit 100,000t contained nickel.
of a relationship between the grade and
the enterprise value the market gives,” “Studies have demonstrated we have a
Mulholland said. technically robust project at Fisher East
and we just need a higher nickel price,
“Ourselves and Mincor [Resources NL] while we are focused on growing share-
are a couple of anomalies in this and I holder value by acquiring, developing
would say this demonstrates we are quite and exploring projects.”
undervalued compared to our peers.”
– Mark Andrews
Collurabbie and Fisher East are 70km
apart and primed to be progressed when

PAGE 40 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Battery boom lifts Panoramic

The battery revolution is giving Pano- Peter Harold dated set of project economics at the
ramic Resources Ltd every chance of time of print.
restarting its Savannah nickel mine in the going to have a very, very good future.”
near term. According to a feasibility study re- With his company’s share price trading
at a three-year high of 46c/share, Harold
Savannah was placed on care-and- leased earlier this year, Panoramic could said the battery revolution was breath-
maintenance in May 2016 due to declin- be treating ore from Savannah within six ing new life into the nickel industry and
ing nickel prices, but with the base metal months of a restart decision and provide Panoramic’s plans for Savannah.
now trading around $US5.30/lb on the enough feed to keep the operation tick-
LME and long-term forecasts looking ing over for at least 12 months. “There’s going to be a lot of nickel and
promising, Panoramic is edging closer a lot of cobalt going into these batteries,”
towards a restart of its East Kimberley During that time, development of the he said.
operation. 900m vent shaft to reach the Savannah
North orebody will be completed. “If cobalt gets too expensive, they’ll
Panoramic will churn about 11,000 tpa work something out to reduce the amount
nickel, 5,800 tpa copper and 760 tpa co- Panoramic was due to release an up- of cobalt, but you’ll still need to have a
balt over an eight-and-a-half year mine lot of nickel. I don’t think you’ll see nickel
life if a restart of Savannah is ticked off being taken out of the batteries anytime
by the company’s board. soon.

“This thing is busting its bum to re- “We are in for a global disruption and
start,” Panoramic managing director Pe- it’s going to be driven by electric vehicles
ter Harold said. and electricity generated differently. And
when it comes, it is going to come very
“I think you can comfortably say we’ve quickly.”
seen the worst and with this revolution
we’re going to have into the new technol- – Michael Washbourne
ogies around electric vehicles and bat-
teries in the home, then all of these com-
modities – nickel, copper, cobalt – are

17 October 2017
Pan Pacific Perth

The CD-Rom of the 2017
Australian Nickel Conference

will be available soon

CD-Rom – $60 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 41

BATTERY MINERALS

Battery-powered mining:
Let’s surf the wave of
public opinion

The rising concerns of public health Policymakers are already urging the in- exposure to diesel fumes at work are
authorities, health professionals troduction of financial penalties for those growing.” Britain’s largest trade union,
and legislators regarding the increasing driving polluting vehicles into designated Unite, acknowledges “that exposure to
health hazard of air pollution due largely “clean air zones” (CAZ). London, for diesel fumes was a ticking time bomb” on
to diesel engine exhaust fumes provides example, plans to introduce a £10 toxic a par with asbestos, leading it to set up a
the West Australian mining industry the “T-charge” on up to 10,000 of the old- diesel emissions register for employees
impetus to improve the quality of the air est most polluting vehicles every week- to record their exposure to toxic air.
breathed by our underground miners day. Proposals have also been made to
where diesel-powered mobile equipment increase the number of CAZs in the UK Such trends mean it is now time for the
predominates. from the current six to 27. Australian mining industry and its regula-
tors to follow suit by announcing a “clean
In recent weeks, both the UK and The scale of the public health problem air plan” for its underground mines. This
French governments have taken action in the UK is immense with “poor air qual- should include guidelines for a phased
to remove polluting vehicles from their ity”, primarily due to vehicular exhaust withdrawal from diesel engine-based
roads as soon as is practical. Indeed, pollutants, causing 40,000-50,000 early technology to the development of clean-
Britain is to ban all new diesel and petrol deaths year. Furthermore, as reported er, more efficient and cost effective elec-
vehicles from 2040 as part of the Gov- in The Lancet in January, 2016 “outdoor tric battery alternatives. The foreseeable
ernment’s “clean air plan”. However, oth- air pollution is estimated to have caused future lies with electric power because
er European countries have gone further, 400,000 premature deaths in Europe in even with the latest advancements in die-
including Norway which intends to sell 2011”. sel technologies, health challenges due
only electric cars from 2025 and India, to the inhalation of diesel engine exhaust
which has set a similar target for 2030. Indeed, as reported in The Guardian in pollutants still exist.
September this year: “Legal claims over

PAGE 42 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

OPINION

Load-haul dump vehicles (LHD or bog- tilation costs are pivotal to making the ed recently, “the days of underground

gers) cause the most serious health chal- mine viable, and one means of reduc- miners being exposed to carcinogenic

lenges to workers since they are most ing ventilation requirements and costs pollutants on a daily basis” are dwindling.

frequently used in dead ends where ven- is through electrification of mine equip- Future underground mines, fully

“tilation is most difficult. Not surprisingly, ment.” equipped with electrically-powered mo-

most equipment manu- bile equipment, will be

facturers see diesel-pow- Such trends mean it is now time for healthier, more efficient,
ered LHD vehicles as the cost-effective and profit-

most important item of the Australian mining industry and able; a win-win solution
equipment to eliminate. for all concerned. That
its regulators to follow suit by announcing
One of the first miners a “clean air plan” for its underground having been said, it is the
to embrace battery elec- deep and ultra-deep hard
tric vehicles was Kirk- rock mines that will be the

land Lake Gold Ltd at its mines. This should include guidelines for main beneficiaries initial-
namesake mine in Sud- a phased withdrawal from diesel engine- ly because of the unique
bury, Ontario, Canada in ventilation challenges as-

2013. Mining contractor based technology to the development of sociated with the use of
RDH Mining Equipment cleaner, more efficient and cost effective diesel-powered mobile
introduced eight battery- equipment in high ambi-

powered loaders and electric battery alternatives. ent rock temperature en-
three battery-powered vironments.

20t trucks into Kirkland’s As the trend for

operations. deeper mines continue

More recently, Atlas Copco launched MEDATECH is also in the process it becomes less cost-effective to use

its battery-operated Scoop-tram ST7 of developing a system whereby a 40t diesel-powered mobile equipment, due

Loader with its ST7 Battery as the first battery-powered haul truck can, quite mainly to the associated ventilation cost

step in developing a range of battery- remarkably, have its battery bank re- increases. Dann Gwyn, product man-

powered heavy mobile equipment for charged at the unloading point in the ager, underground mining at GE Mining

underground mines, including LHD vehi- time it takes to dump the ore. The gen- stated: “Depending on the vehicle, it typi-

cles, trucks and drills. eral concept involves a lithium-ion bat- cally costs upwards of $100 to fill a tank

Caterpillar Underground Mining Group tery with increased energy density and versus $20 to charge a battery”. He add-

is also preparing to ship a proof-of-con- a smart battery management system ed that “maintenance costs are also less

cept R1300G battery electric LHD ma- capable of delivering an extremely high- due to elimination of oil changes, mainte-

chine to a Canadian mine for field trials. charge power. nance of transmission and replacement

As Jay Armburger, Caterpillar’s product The battery bank is thereby adequately of DPM filters”.

manager, stated: “Our customers are charged to complete one full circuit, re- Use of electric motors also results in up

planning for deeper mines with very high turning to the unloading station for the to 70% reduction in energy consumption,

ambient rock temperatures where ven- next recharge. Consequently, as report- because diesel engines have greater

Atlas Copco’s new Scooptram ST7 loader with its ST7 battery
marks the first step in the major mining equipment manufacturer’s

development of a battery-powered heavy mobile equipment fleet

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 43

BATTERY MINERALS

mechanical and heat losses. Further effi- nance, idling policies and operator train- the charging station at the bottom of the

ciency gains can be generated by regen- ing ramp.

erative braking systems with the electric Those wanting a more detailed analy- Clearly a cost benefit analysis is also

motors capturing energy released by the sis of these issues are referred to the required that considers all the direct and

brakes, as they are activated to slow the “Global Mining Standards and Guide- indirect aspects of both diesel-powered

truck’s speed down the ramp. It is also lines Group’s – “Recommended Practic- and electric battery-powered mobile

claimed that up to 30% of the energy es for Battery Electric Vehicles (BEVs) in equipment.

consumed while the truck is driving up Underground Mining”, published in April It is now the time for the WA mining in-

the ramp can be regenerated as it travels 2017. However, here are a few mining dustry and its regulators to take the lead

downwards. design and operational issues worthy of by initiating a three-point strategy for re-

The 20t trucks (powered by lithium- brief mention: placing all diesel-powered equipment in

phosphate batteries) referred to earlier at • Greenfield and brownfield mines underground mines within the next 10

Kirkland Lake, deliver two hours of ser- have different challenges and opportu- years or so. In the meantime, the indus-

vice on a 20% grade, after which “they nities to capitalise on the application of try could progress in sequence to:

swap out the pack” and keep going. The BEVs. • Continue developing more effective

recharge time is 90 minutes, so after the • Design issues needing to be taken metrics for assessing the health risks

two hours, the next battery pack is ready into account include shift durations, to miners currently employed in mines

to go. battery running time compared to shift where diesel-powered mobile equipment

It is also noted that Atlas Copco’s 7t length, charging requirements/systems predominate.

“loader, which generates no toxic emis- and equipment selection. • Use risk assessment data sheets

sions and produces 80% less (RADS) as an information tool

heat, further contributes to to inform all mining person-

reduced ventilation require- MEDATECH is also in the nel of the specific and holistic
ments. process of developing a health hazards facing miners
working in diesel fume-polluted
The main purpose of produc-

ing an “overall risk assessment system whereby a 40t battery- environments.
data sheet for the WA under- powered haul truck can, quite • Education, Research
ground mining sector” would
and Training are three major is-

be to fully inform everyone remarkably, have its battery bank sues needing urgent attention
from the company directors, recharged at the unloading point in to enable the industry to plan
to management personnel and and design mines for battery

mineworkers of the nature and the time it takes to dump the ore. powered mobile equipment and
complexity of the challenge to to thereafter operate and main-

mineworkers’ health in mines tain the fleet at optimum capac-

heavily dependent on diesel- ity.

powered mobile equipment, and the • In-mine working range of battery The goal must be elimination of diesel-

control measures currently available to pack and additional infrastructure re- powered mobile equipment from under-

ameliorate the hazards, not forgetting quired for the maintenance and opera- ground mines as soon as is practicable.

that there may well be other carcinogens tion of the BEV fleet. However, in the immediate future min-

also present in the mine atmosphere, for • Continuing technology advances ing companies should be encouraged

example: with BEVs and reduced airflows with to consider embracing the concept of

• Nickel and nickel compounds BEVs may lengthen the blast fumes fully electrified mines as electric battery

• Silica clearing times, thus perhaps requiring technology develops further and increas-

• Asbestos temporary increase in airflows/velocities ingly becomes the preferable option for

• Radon in order to conform to the minimum air- reasons of improved miners’ health, cost

While there are a number of unpleas- flow required to effectively clear blasting savings and operational efficiency.

ant short-term effects of working in die- fumes in a timely manner and maintain There is no better way to close this ar-

sel engine fumes polluted atmospheres, satisfactory ambient working tempera- ticle than to quote Andreas Nordbrandt,

the longer term adverse effects could tures. president of Atlas Copco’s underground

include: • An obvious initial approach to the rock excavation division, who very re-

• Lung cancer introduction of BEVs is to adapt the mo- cently stated: “Our customers’ future is

• Respiratory illnesses including in- bile diesel equipment connectors used electric”. He went on to say the company

creased risk of asthma for tethered drills and bolters to charging would “continue to support all custom-

• Impairment of the immune system BEVs. ers who rely on diesel-driven equipment,

• Cardiovascular diseases • Whereas diesel-powered mobile but the decision to completely advance

• Control measures available include equipment converts all kinetic energy to beyond diesel is a definitive move”. Most

the following hierarchy of controls: heat, their BEV equivalents can convert importantly, he said, “electric machines

• Elimination – remove the hazard some of the kinetic energy through re- contribute to a safer and healthier work

• Substitution – replace the cause of generative braking back into electricity. environment for miners everywhere”.

the hazard • Regenerative braking can be a “dou- Emeritus Professor Odwyn Jones AO

• Engineering controls – use of after- ble-edged sword” since a fully charged and Professor Sam Spearing (Director WA

treatment devices, idling technology, BEV at the surface will be unable to store School of Mines).
control cabs, tele-operating systems and all the braking energy as it moves down

upgrade ventilation the ramp, thereby requiring friction brak-

• Administrative controls – change the ing or the use of resistors. In this case

way people work e.g. preventive mainte- it could be more appropriate to have

PAGE 44 NOVEMBER 2017 AUSTRALIA’S PAYDIRT

Battery storage:
A question of balance

Tesla’s 100MW battery storage facility at Jamestown, South Australia, is set to open in December

Alittle more than a year after a state- ing the 2016 blackout period. vide back-up power in the event of any
wide blackout shoved it to the front Speaking at an event marking the start interruption to supply from the grid until
of Australia’s energy debate, South Aus- the grid is restored.”
tralia remains under the spotlight but Pre- of the 100-day target, Musk said the pro-
mier Jay Weatherill is gambling on the ject served as a great example “to the The SA Government has long pinned
State being a battery-powered. rest of the world of what could be done”. its energy hopes to renewables but with
the Federal Government seemingly una-
On September 30, transmission com- For Weatherill, the project is a final ble to find consensus within its own party
pany ElectraNet signed a grid connec- pitch at fortifying his energy policy ahead – never mind the general electorate – it is
tion agreement with Tesla Inc, the Elon of next year’s State election, which based unlikely there will be further large-scale
Musk-led company at the heart of the on current polls suggest his ALP Govern- battery facilities built in Australia.
battery revolution. ment will lose.
However, governments elsewhere ap-
Tesla has been tasked with providing a “There were lots of people that were pear more willing to defer ideological
100MW/129 MWh Powerpack system to making jokes about SA and making fun arguments in favour of finding ways of
be paired with global renewable energy of our leadership in renewable energy. balancing energy needs at times of peak
provider Neoen’s Hornsdale wind farm, Well, today they’re laughing out of the demand.
near Jamestown. other side of their face,” Weatherill was
quoted as saying by the ABC. The Yorkshire town of Sheffield has
The SA Government’s award of the become the first home of industrial-
power contract came after Musk weighed ElectraNet has awarded a 30MW scale battery power in Britain, following
into the Australian energy debate earlier large-scale battery project on the Yorke E.ON UK’s opening of a 10MW battery at
this year, promising he could build the Peninsula to Adelaide company Consoli- Blackburn Meadows.
100MW facility “within 100 days or its dated Power Projects (CPP).
free”. British Gas is also building a 49MW fa-
CPP will work with international power cility at the site of a former power station
The Powerpack will charge using re- company ABB and battery provider Sam- in Cumbria and EDF Energy is develop-
newable energy from Hornsdale and sung to deliver the project. ing a similar size project in Nottingham-
then deliver electricity during peak hours shire.
to help maintain the reliable operation of ElectraNet chief executive Steve Mas-
SA’s electrical infrastructure. ters said the project was an example of The buzz of battery activity in Britain
how SA was adapting to a changing en- comes after a request from transmission
Set for completion in December, the ergy mix. network operator National Grid to help
system will be the largest lithium-ion keep its supply and demand in balance.
battery storage project in the world and “The battery will demonstrate how
will provide enough power for more than energy storage can strengthen the grid National Grid commercial develop-
30,000 homes, approximately equal to and improve reliability for the lower Yorke ment manager Leon Walker said battery
the amount of homes that lost power dur- Peninsula,” Masters said. “It will work storage was “an ultra-fast way of keeping
with AGL’s existing 90MW Wattle Point electricity supply and demand balanced”.
wind farm and rooftop solar PV to pro-

AUSTRALIA’S PAYDIRT NOVEMBER 2017 PAGE 45

CASE HISTORIES OF DISCOVERY

The world’s pre-eminent gold exploration event

RENGOISWTER

Pan Pacific Perth 7
November 14-15

Pan Pacific Perth 7
November 14-15

Jointly organised by:

Keith Yates & Associates Pty Ltd

Proceedings Sponsor: Dinner Sponsor: Closing Drinks Sponsor: Lanyard Sponsor: Wine Sponsor: Gold Nugget Sponsor:

Presenter Gifts Sponsor: Café Sponsor: Lunch Sponsor: Morning Tea Sponsor: Destination Sponsors:

Exhibitors:

www.newgengold.com

Limited last minute sponsorship opportunities are still available.
Contact Mel Fogarty on (+61) 8 9321 0355 or [email protected] to take advantage!

Conference programme

Monday 13th November Wednesday 15th November

5.00pm Welcome reception 8:30am Registration
Exhibition Area, Pan Pacific, Perth
Session Five
Tuesday 14th November 8.30am Canada Putting the hope back into Hope Bay
9.15am Canada David King*, Terry MacGibbon, and Scott Parsons
7.45am Registration TMAC Resources Inc.
8.30am Welcome and opening 10.00am
Keith Yates and Bill Repard Moose River: Applying a different approach
Session One to revitalise a stale goldfield in Atlantic
8.45am Keynote Address: Transforming the business Canada
of gold exploration Wally Bucknell*, John Utely
Dan Wood AO, former Executive General Manager Atlantic Gold Corporation
Exploration, Newcrest Mining Limited
Morning Tea

9.30am Ethiopia The Tulu Kapi Gold Project: A history of Session Six
repeated discoveries in Western Ethiopia
Jeff Rayner*, Fabio Granitzio and Tadesse Worku 10.30am Australia Mt Morgans: Bringing Dacian Gold’s
Kefi Minerals Plc two plus-1 million ounce discoveries into
production with five years of an IPO
10.15am Russia Gross gold deposit: A giant in Siberia Dan Baldwin*, Christopher Oorschot,
Howard Golden* and Alexander Lapo Anna Probst and Rohan Williams
Nordgold Management LLC Dacian Gold Limited

11.00am Morning Tea 11.15am Australia Tanami Operations, Callie Mine: Multiple
new discoveries supporting transformational
Session Two growth in a mature mining camp
Shaun Schmeider*, Stuart Perazzo and Chris Robinson
11.30am Burkina Houndé gold discovery: One mine and a long Newmont Australia
Faso story for exploration
Gérard de Hert* and Paul-Claude Delisle 12.00pm Lunch
Endeavour Mining Corporation
Session Seven

12.15pm Burkina The Yaramoko mine: Timing of mineralisation 1.00pm Chile Alturas: A greenfield discovery resetting
Faso and regional implication for the Houndé belt exploration maturity in El Indio Belt
Yan Bourassa*, Razack Ouedraogo, Raul Guerra*
Théodore Kabore and Adrian Woolford Barrick Gold Limited
Roxgold Inc.
1.45pm Ecuador Alpala: The discovery and geology of a
1:00pm Lunch world-class porphyry copper-gold deposit
in the Cascabel project of northern Ecuador
Session Three Benn Whistler*, Steve Garwin, Jason Ward,
Nick Mather, Bruce Rohrlach, Santiago Vaca,
2.00pm Burkina Sanbrado: Continuing discovery success José Silva, Bayardo Rosero, Alfredo Cruz, Carlos
Faso along the Markoye Fault Diaz, Alex Chafla, Santiago Mantilla, Leonardo
Aguilar and Alvaro Guachamin
Richard Hyde and Vincent Morel* SolGold plc
West African Resources Limited

2.45pm Ghana Namdini: A major discovery in a new Ghanaian
gold district
Paul Abbott, Kevin Tomlinson*, Julian Barnes, 2.30pm Afternoon Tea
Richard Bray, Malik Easah, Archie Koimtsidis,
Ernest Opoku-Boamah and Seth Okyere Session Eight
Cardinal Resources Limited
3.00pm Turkey High grade gold-copper mineralisation at the
3.30pm Afternoon Tea 3.45pm Turkey Hot Maden project, north-east Turkey
Eric Roth*, Sandstorm Gold Ltd. (formerly Mariana
Session Four Resources Ltd.); Firuz Alizade, Polimetal Madencilik

4.00pm Côte 85 Years of exploration and mining in the Öksüt gold deposit: Discovery, history and
d’Ivoire Yaouré gold district geology
Cissé Amadou*, Chris Picken, and Jean-Alexandre Cayn Bahri Yıldız*, Richard Sillitoe, Bob Foster and David
Perseus Mining Limited Hall, Stratex Madencilik (Subsidiary of Stratex
International Plc.); Malcom Stallman, Centerra
4.45pm Tanzania Nyanzaga: Small company approach, big Gold Inc.
company view
Jim Brigden* and Matthew Yates, OreCorp Limited; 4.30pm Forum
Malcom Titley, CSA Global Pty Ltd; Peter Spora, 5.30pm Closure followed by farewell drinks
Acacia Mining plc

7.00pm Dinner * Presenter

This programme is subject to change without prior notice

BATTERY MINERALS

Australian Mines bolts clear

The queue is building behind Aus- scale, we avoid the mistakes of the
tralian Mines Ltd in the cobalt
field. other companies who have made

As companies sweat on the pro- them in the past.
spectivity of the ground recently
picked up in the cobalt rush, Australi- “The reason why we built the
an Mines is setting up for production.
demonstration plant in Welshpool
“There is no other cobalt compa-
ny in Australia, at the moment, with is because of the metallurgists and
all approvals in place that can start
mining tomorrow,” Australian Mines engineers that are based in Perth
managing director Ben Bell told Pay-
dirt. and built Ravensthorpe and Mur-

“That puts us to the forefront to be- rin Murrin. Next month [November]
ing able to respond to these things
[cobalt prices] and that is why we we will be able to demonstrate we
have nine [potential] off-take agree-
ments at the moment.” can make our own product from

Bell estimated that Australian our plant and we will have de-
Mines was at least 12 months ahead
of any other Australian cobalt hope- risked the project further.”
ful and with the potential to lock away
100mt of cobalt over 48 years of pro- At the time of print, it appeared
duction from Sconi, the company
has one of the biggest and most ad- the market was realising how close
vanced resources in the country.
Australian Mines is to production,
Australian Mines is also flush with
$5 million cash which will take it with the company’s stock surging
through the next important phases of
project development. over 30% to 4.5c/share.

With environmental and min- “There is a lot on in the cobalt
ing approvals in hand, Australian
Mines has started trial mining at its space and it takes a while for the
100%-owned flagship Sconi cobalt-nick-
el-scandium project in northern Queens- better cobalt projects to get no-
land.
ticed,” Bell said.
A BFS is underway at Sconi with sam-
ples sent to Perth for preparation via a Closer analysis of Australian
demonstration plant.
Mines would see a PFS estimated
A 20t bulk sample from Sconi is enough
end-product to meet the requirements production of 3,010 tpa cobalt sul-
of potential end-users, with the nine
off-takers allocated material for as- phate, 24,420 tpa nickel sulphate
sessment ahead of the BFS comple-
tion at the end of Q1 2018. and 77 tpa scandium oxide for at

A pressure acid leach with solvent least 20 years from Sconi is pos-
extraction processing route – similar to
what Vale and Glencore use – is being sible, while other prospective pro-
trialled so a final product can be deliv-
ered straight to battery makers for use. jects in the portfolio include Flem-

“There are no steps between what we ington and Thackaringa in New
deliver and what they [battery makers]
use,” Bell said. Ben Bell South Wales.

“If you were a battery maker I can give A PFS at Flemington was due
you the product which can go straight
into production. That is not the case for Australian Mines is charging ahead, to start last month; timely given Rob-
most companies which is why people are
asking for samples, they just want to be with many of its peers a fair way off pro- ert Friedland’s Clean Teq Holdings Ltd
able to put the first batch through and
say: ‘That is what we need, where do I ducing a scoping study and achieving a is due to release a DFS on the nearby
sign?’”
mining licence. Syerston project in Q4.

Bell said there weren’t too many chal- “It is an extension of Clean Teq’s and

lenges ahead of the company reaching the resource is relatively small compared

“production at Sconi in 2019. to the one next door, but the reason for
There are no steps putting it out now is to show that the
between what we [Syerston] orebody continues into our
deliver and what they block of land,” Bell said.
[battery makers] use. “The next six months we will be
working that resource up to a large
economic deposit. You will get more
news flow out of NSW, we’ll drill that
more and put more results out.

“But, our project in Queensland is

going to drive the company because

“We can mine at a low cost because it [our off-take agreements] says these

[mineralisation] sticks out of the ground. guys are taking it all; these will be $100

In terms of costs of mining, we will be million-type contracts we are talking

one of the lowest. We are probably about about and that will significantly change

$US3/lb nickel equivalent compared to the way people see the company.”

nickel at the moment of $US5-6/lb. That – Mark Andrews
is the attraction, it is not a complicated

process,” he said.

“As much as we are building a demon-

stration plant, people can see it is scal-

able. Whatever we learn at the smaller

PAGE 48 NOVEMBER 2017 AUSTRALIA’S PAYDIRT



BATTERY MINERALS

Tawana digs in at Bald Hill

Former African-focused iron is also funded through to
ore hopeful Tawana Re- first concentrate shipment,

sources NL will become Aus- with the third and final pre-

tralia’s newest lithium produc- payment from offtake part-

er early next year. ner Burwill Holdings Ltd

Mining of the company’s received last month.

Bald Hill lithium-tantalum Burwill’s full $12.5 million

project will begin this month prepayment is interest-free

ahead of the planned first and is to be repaid from

concentrate shipment in the 15% of each lithium con-

March quarter. centrate shipment until the

Production only 14 months debt is cleared, although

after the completion of due Calderwood is anticipating

diligence drilling will cap a re- Tawana will soon be producing lithium concentrate from Bald Hill further off-take deals with

markable rebirth for Tawana, the Hong Kong-listed group.

which saw its share price plummet to The preferred mining contractor was “They want everything we can pro-

0.2c/share in April 2016 when plans to due to mobilise on site late last month. duce, they want more if we can produce

develop the Mofe Creek iron ore project Tawana will soon release an updated more and there will be some news flow

in Liberia were shelved. reserve for Bald Hill, having announced out on that soon,” Calderwood said.

Perseus Mining Ltd founder Mark Cal- an upgraded resource of 18.9mt @ “The amount of inquires we’ve had

derwood took the reins of the company 1.18% lithium and 149 ppm tantalum last from other people has been quite impres-

in July 2016 and quickly vended Bald month, representing a 47% increase in sive, but we’ve got the one off-take and

Hill into a revamped portfolio. Tawana’s contained lithium. we’re happy with that at the moment.”

share price is now nudging 40c/share Bald Hill’s current reserve stands at According to the PFS released in July,

and excitement is building inside the 4.3mt @ 1.18% lithium and 208 ppm tan- Tawana will produce 150,000 tpa spo-

soon-to-be producer’s new Osborne talum. dumene concentrate from the DMS cir-

Park headquarters. “It’s a healthy increase, which is fun- cuit and 260,000 lbpa tantalum pentox-

“It’s been tremendously quick,” Calder- damentally from only four-odd months of ide from the existing processing facility

wood told Paydirt. drilling,” Calderwood said. at Bald Hill.

“A year ago, we hadn’t even started “The next step of course is to increase Key economics from the study were

drilling. It’s probably going to be one of our reserves, which is what people are IRR of 185%, payback within 12 months,

the quickest development projects in really looking for. We’re infill drilling at NPV of $150 million for the starter pit,

West Australian history, from the start of the moment and we’ll start doing some operating cash flow of $223 million, aver-

drilling to production. optimisation work soon to see what indi- age EBITDA of $83 million per annum,

“It’s nothing like [building] a gold pro- cators we have to be able to increase the life-of-mine operating costs of $508/t

ject and it’s not easy to fund like a gold pit with a bit more engineering. and an overall capex of just $42 million.

project either. But, we’ve had good sup- “It converts very well to reserves. The “It’s going to be a solid margin busi-

port from our shareholders and our off- last bunch of indicated resources con- ness,” Calderwood said. “Shareholders

take partners are quite eager to get prod- verted at 94% conversion rate, so I would should be looking forward to a dividend

uct.” expect a not dissimilar number. It just in the next few years, I would hope, given

Tawana’s move to its new larger office comes down to doing the work.” the payback on the project is so quick.”

coincided with the appointments of sev- Tawana finds itself in the unusual po- Calderwood, who co-authored a book

eral key personnel as construction ac- sition of not completing a DFS before on the history of WA pegmatites, said

tivities ramp up at Bald Hill, about 50km achieving producer status. The company even he was surprised by the rapid emer-

south-east of Kambalda. gence of lithium over the past 18

Among those new faces are months.

Tony Dominkovich (EPC super- “I’m a believer now,” he said.

intendent), Steve Zaninovich “The fact countries like England,

(project director), Rob Broad France and China have come out

(project manager) and Darren stipulating there will be no new

Buchholz (operations manag- diesel and petrol cars after cer-

er). tain dates has really sent a mes-

Design of the lithium DMS cir- sage that times are changing.

cuit was about 80% complete at “A combination of the stick and

the time of print, with concrete the carrot will send us into elec-

and steel works well advanced tric cars over the next 20 years.

and bulk earthworks nearing It will take 20 years to get all the

completion. Administration cars across to that, but certainly

buildings were also in position, it’s where we’re headed.”

along with the communication Construction activities at Bald Hill are ramping up – Michael Washbourne
towers.

PAGE 50 NOVEMBER 2017 AUSTRALIA’S PAYDIRT