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Latin America spotlight
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MINT0253-FP A4 RefinerOfChoice PaydirtMag.indd 1 20/1/20 4:28 pm
contents
PAYDIRT (ISSN 1445-3436)
Published by
Paydirt Media Pty Ltd. 5 NEWS
A.C.N. 063 985 133 The West Australian Government has had its
Head Office: hands full coordinating the State’s response
Suite 9, 1297 Hay St, West Perth to the coronavirus pandemic. The mining
Western Australia 6005 industry has played its part in adhering to
P.O. Box 1589, West Perth government requests and in an exclusive
Western Australia 6872 interview with Mark Andrews, WA Minister for
Phone: (+61 8) 9321 0355 Mines Bill Johnston sang the praises of min-
Facsimile: (+61 8) 9321 0426 ers and explorers and said the Government
[email protected] would strive to assist the industry as it looked
www.paydirt.com.au for a rebound
COVER
Editorial: 22
Editor: Dominic Piper The global fertiliser industry has been largely
Deputy editor: Mark Andrews a closed one for the last century. However,
Journalist: Michael Washbourne there is a new generation of Australian 22
Art director: Nick Brown mining companies positioning themselves
Contributors: Brendan Ryan to meet growing demand for new products.
Paydirt looks at the WA juniors pinning their
(Johannesburg)
hopes on the State’s salt lakes to provide that
Advertising: product
Advertising manager: Richa Fuller
Subscriptions: Kate Blanchard 28 FERTILISERS
Phone: (+61 8) 9321 0355 Growing populations, rising middle classes
Facsimile: (+61 8) 9321 0426
The Perth Mint Pre-press and printing: and shrinking arable land are all contributing
to greater demand for fertiliser products
across the globe. While WA is one location
Vanguard Press, 26 John St,
for new projects, a group of ASX-listed
Northbridge WA 6003
juniors are internationally focused players
Member of:
– Australasia’s 36 and hoping to penetrate domestic markets
with their potash and phosphate products
LATIN AMERICA
refiner of choice Paydirt Media The COVID-19 pandemic put a halt to 36
production and exploration in much
Executive chairman: Bill Repard
of the Latin American region but with
Finance manager: Giovanny Jefferson
governments beginning to ease restrictions,
Accounts/administration:
Lana Luketic Australian and international miners alike
are preparing to restart activity. We look at
Conferences: Melita Fogarty, the companies best placed to hit the ground
Namukale Nakazwe, running
• Trusted as a partner to the • Trusted to deliver quality refining at Christine Oelschlaeger,
Australasian mining industry for a competitive and sustainable price Mitchelle Matambo 44 COVID-19 FIGHT
120 years A different perspective on space-based 20/2/20 8:16 am May 2020 VOLUME 1. ISSUE 282 $11.95
• Trusted as the lowest risk refining Aggregate Availability © 2020 Aurora Australis Network Mining has been designated an essential
communications …
• Trusted to provide highly efficient operation in the world underpinned 1 + 1 = 99.9+ % Diverse Path We cordially invite you to contact us by phone or email so we can learn more about your project and requirements, and to discuss how our small team of the right people can bring a different perspective to your operations! Aurora Australis Network ABN 55 008 922 530 8/95 Canning Highway South Perth, 6151 Western Australia Tel: +61 8 6363 5030 Emai
the fight against coronavirus but some
and modern refining services to by an exclusive guarantee by the Primary Link ♦ Inherently diverse system design; ♦ Link speeds from 256kbps through to greater than 100Mbps; ♦ Comms on the Pause (COTP) : The ability to “stop and prop”, and gain access to your network within ~3 minutes via an auto-acquire antenna ♦ Comms on the Move (COTM) : The ability to maintain access to your network, even whilst moving on land, sea or air. With systems d
gold producers Government of Western Australia system; possibilities; communications and Western Fertile ground: Dominic Piper spoke to Gekko Systems
A spare. It wouldn’t make sense to drive a 4WD to site without a spare tyre; yet countless remote sites are operating with just a single satellite link; when it stops, the whole site is affected. With so many core business systems and operational systems relying on a reliable “always-on” IP network, we strongly believe in the value of delivering a robust satellite comms architecture that delivers overall reliability figures that approach the myth
Potash to flourish
l Latin America spotlight
strategically
systems
A4 Paydirt Ad.indd 1
and
9 ISSN 1445-3436 771445 343007 about her company’s efforts to build
Cover image: ventilators for use in Ballarat Hospital
Salt Lake’s Lake Way project, West Australian
Goldfields
perthmint.com/refine Member of: 44
Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be re-
produced in any form without the consent of the
publisher. This includes photographs either taken
by Paydirt Media staff or provided by other parties.
MINT0253-FP A4 RefinerOfChoice PaydirtMag.indd 1 20/1/20 4:28 pm
Potash growth attracts majors
and juniors alike
It is a fascinating time both do- tiliser division will provide them with, as the PR experts may say,
mestically and internationally in the “great visuals” for ESG investors and host governments.
fertiliser space and the positioning of The drawbacks for the majors could be a benefit for the in-
the major miners is perhaps the most creasingly fertile crop (did you see what I did there?) of emerging
fascinating. Australian potash juniors.
BHP Ltd has begun talking up These companies don’t need massive economies-of-scale to
development of its Jansen potash justify investment cases, they simply need enough offtake con-
project in Canada while Anglo American plc splashed out £405 tracts to secure funding for what are relatively low capex and
million for Sirius Minerals and its Woodsmith project in North opex operations.
Yorkshire in January. Their size is also such that they are unlikely to disturb the big
Anglo’s move for Sirius was somewhat ironic given it formerly international supply chains but they will be readily welcomed into
controlled Cleveland Potash plc, the owner of Woodsmith’s near- local and regional supply chains; whether their mines are located
neighbour, the Boulby potash mine, but discarded it in 2000 when in Western Australia, Africa or Europe.
management consultancy McKinsey advised the company ferti- It is rare for a mature mining jurisdiction such as WA to find
lisers were non-core to its portfolio. a completely new minerals sector but there is just that opportu-
Two decades on and not only has Anglo decided to re-enter nity with potash. As with all emerging sectors, not every hopeful
the fertiliser market, it will do so with a relatively unheralded prod- will make it to production, and even when they do some will still
uct; polyhalite. While Boulby produces product for the plus-60 stumble (as we have seen with the nascent lithium sector) but if a
mtpa muriate-of-potash (MoP) market, Woodsmith’s polyhalite junior potash sector is to succeed anywhere the world’s best min-
(or POLY4 as it has been marketed) currently comprises around ing jurisdiction, with all its associated skills, regulatory capacity
200,000 mtpa. and know-how, will be it.
To have success, Anglo will have to define a new market for a
product which has proven less effective than the other growing
potash market segment, sulphate-of-potash (SoP).
This is not taking into account the engineering challenge of COVID-19
building a deep (1,500m) mine in the North York Moors (a nation-
pipeline to a processing facility at the Teesside industrial zone adjustment continues
al park) with a plan of hauling product along a 37km underground
(which is incidentally right next door to the Riverside stadium,
home to the mighty Middlesbrough FC). As I said last month, Paydirt continues to adjust to the new
BHP has its own chequered history in the potash market. In realities of physical distancing brought on by the global
2010, the company was left with a $US300 million bill from its coronavirus pandemic.
failed takeover bid for Canadian miner Potash Corp of Saskatch-
ewan after the Canadian Government said it was not in the na- Our conference schedule has obviously been thrown
tional interest. Potash Corp later merged with Agrium to form Nu- into disarray by the lockdown restrictions but the entire
trien Inc, the world’s largest potash producer. company is working hard on new dates, new opportunities
This time around, BHP is talking up the potential of its Jansen and new ways of delivering the events which have grown
potash project, also in Saskatchewan. Nutrien chief executive into integral dates on the mining calendar. We will have
Chuck Magro has called it a “sure-fire way to destroy shareholder more information on our conferences in the next few
value”. months.
The global fertiliser market is dominated by Nutrien and a
handful of other integrated and/or state-owned fertiliser or chemi- Our editorial team also continues to adjust to coronavirus
cal companies, operating from just a few locations. restrictions. The launch of Paydirt Remote on our Paydirt
So, why are the mining majors attempting to break into the sec- TV YouTube channel has been a great success with plenty
tor? The demand fundamentals are most readily cited – growing of positive feedback. Paydirt TV, like the publications,
populations, emerging middle class, less arable land – but there is designed to bring the best of the Australian mining
are also other considerations. sector to our audiences. If you haven’t watched any of our
Chief among these is a “softer” play. Both Anglo and BHP have
set out to alter their public image in an effort to prove their sus- interviews yet, please visit youtube.com and search for
tainability credentials. Both companies are shifting away from en- Paydirt TV then like and subscribe.
ergy coal and are eager to identify themselves with “21st century,
sustainable, green commodities”. A strong, customer-facing fer-
[email protected] @DominicPiper
Page 4 MaY 2020 aUSTRaLIa’S PaYDIRT
neWs
Bill Johnston
Ahead of the curve
but restrictions to remain
espite slowing the spread of COV- believes is also credit to the foresight of
DID-19 in the State, West Australian government in the early stages of COV-
Minister of Mines and Petroleum Hon Bill ID-19 in WA.
Johnston doesn’t expect travel restric- “I think it shows that in a crisis govern-
tions to soften any time soon. ments are key to solving problems and
WA’s hard border closure was enforced that if you have a government like we
at the beginning of April, with Premier do in Western Australia – strong, stable
Mark McGowan reiterating that interstate leadership from the Premier – you can
borders would be shut for at least six solve problems by working cooperatively
months and intrastate travel restrictions with industry,” Johnston said.
applicable for a “period of time”. “People forget that the Premier
There are exemptions which allow cer- brought together roundtables of industry
tain people to travel for various reasons participants at the beginning of February crease on the $130.3 billion in 2018.
and to clarify who is eligible, the WA- to start discussing how we were going to Iron ore sales tipped a record $97.7
made G2G app is now free for anyone respond to this situation. We didn’t wait billion (50% increase on 2018), as prices
to use. until there was a crisis. Under Mark’s soared due to supply constrains in Bra-
“I don’t want to speculate but what leadership we were very early in engag- zil. Meanwhile, gold sales reached an
I would say is that we continue to work ing with industry to make sure we were all-time high of $13.8 billion on the back
very closely with health authorities. The listening to what the challenges were and of an average $2,000/oz price and nickel
Premier has made clear how we can step we were there in advance; we were there sales – more than $3.1 billion – were at
down restrictions, but I think you can ex- working with industry to solve problems their highest level since 2014.
pect the travel restrictions for quite some as they occurred rather than trying to LME nickel prices weren’t far off
time yet given that we now have the G2G play catch up. $US19,000/t in mid-2019 and at the time
so that workers in the industry can have “I think it is a real credit to the industry of print the price was similarly placed to
a steady process with dealing with the that they have reacted to the demands 12 months ago at $US12,100.
travel restrictions,” Johnston told Pay- of this incredible virus. We have been The nickel price slide and coronavirus
dirt. very fortunate that companies have concerns have done little to deter sec-
been prepared to tions of the WA’s exploration scene from
maintain very, very carrying on activities around the State
high standards and with the likes of Legend Mining Ltd, Chal-
adapt their prac- ice Gold Mines Ltd, Cassini Resources
tices to ensure we Ltd and St George Mining Ltd just a few
reduce the risks of the companies reporting recent suc-
of contagion. The cess.
fact that in Western Gold activity at both ends of the WA
Australia we have spectrum remain vibrant and with talk of
been able to get gold hitting an unprecedented $3,000/oz,
down to zero new the sector appears to be in good stead
infections a day to remain buoyant for as long as uncer-
[in late April] is a tainty in the world lingers.
credit to the whole Gold and nickel are commodities the
population of the State’s mining sector were founded on
State, but particu- and to ensure supply of both commodi-
Mark McGowan larly the mining ties remains constant explorers in the
industry which has space and other commodities have been
The coronavirus has led to mass shut- adapted itsr work practices to deal with afforded some leeway in financial com-
downs and job cuts around the world and this incredible contagion,” he said. mitments to tenements holdings.
despite its mineral riches, WA has not Johnston said there was a constant “An exemption from exploration ex-
been immune to the situation. Neverthe- line of communication open with the Fed- penditure will be considered if tenement
less, industry and government have been eral Government and calls with senior of- holders are unable to meet the tene-
mutual in praise for each other’s acumen ficials ensuring that not only the health of ment’s expenditure requirements as a
in navigating difficult times. participants in the Australian resources direct result of COVID-19 or because of
Organisations such as Association sector is protected, but that the sector restrictions imposed by the State and
of Mineral and Exploration Companies can continue to operate in support of the Federal governments. This decision will
(AMEC) have been lauded for their at- country’s economy. be valid until March 31, 2021, unless
tention to detail in helping industry un- WA itself is coming off a bumper 2019, rescinded earlier,” the Government an-
derstand and adapt to changes that have in which the resources sector achieved nounced in late March.
impacted the sector, which Johnston record sales of $167.3 billion; a 28% in- Johnston said applications should be
aUSTRaLIa’S PaYDIRT MaY 2020 Page 5
neWs
Discounted raising designed
made to the Department of Mines, Indus-
try Regulation and Safety (DMIRS), de-
tailing the reasons an extension of time to restart Dacian
is required through the existing Form 5
process.
“Of course, in the exploration sector for
the first time in history we have issued a
directive to the delegates of the depart-
ment so that people can claim an exemp-
tion from expenditure obligations based
on COVID19. We saw that as a sensible
way of supporting industry. We have
taken about $190 million of obligations
off the exploration sector to deal with this
current crisis,” Johnston said.
“People can deal with this, but they still
need to submit their Form 5 and be con-
fident they will be able to retain ground
without having to risk going to isolated ar-
eas where we are trying to keep people The G2G PASS app went live in late April and can be accessed by anyone. Paper-
away from Aboriginal communities. We based forms will also remain available for interstate travel, while people travelling WA
are very pleased to support the explora- will be able to apply for manual exemption at checkpoints, subject to having correct
tion sector and we are looking forward to supporting documentation in hand. Both exemption methods are free to use. Visit the
it coming back even stronger after these G2G Pass website or the WA Government website for further information
restrictions.
“We’ve had a very high level of pro- welcomed, AMEC is calling on the Fed- “As a result, they do not have a turno-
gramme of works applications which is eral Government to widen the scope of ver to reduce by 30%, meaning that they
an indication of exploration activity right the $130 billion JobKeeper package. do not fit a key test to qualify for support
up to the start of COVID-19 restrictions. AMEC chief executive Warren Pearce under the JobKeeper initiative despite
We are very hopeful that with the sup- said the eligibility criteria for JobKeeper clearly it. AMEC is calling on the [Fed-
port of the Federal Government we will allowance essentially excluded small eral] Government to widen the criteria,
be able to keep all those explorers go- exploration companies because they to ensure that small mineral exploration
ing and we would really hope and expect don’t have any turnover. companies can access the financial sup-
that there will be a strong comeback “They exist on their ability to raise in- port that they need, and so that they are
post-COVID-19 restrictions,” he said. vestment from which they fund explora not unintentionally excluded.”
While the WA Government’s explora- tion and employ staff,” Pearce said.
tion expenditure exemption has been – Mark Andrews
Activity in Western Australia’s mining sector remains lively amid the global coronavirus health crisis
Page 6 MaY 2020 aUSTRaLIa’S PaYDIRT
Discounted raising designed
to restart Dacian
acian Gold Ltd has set out the path for its long road to recovery Morgans while it worked out how best to exploit its underground
Dfollowing the announcement of a $98 million capital raising in resources.
April. “The move towards a more measured and staged approach
The raising – comprising a $70 million placement and institution- at Westralia, whilst accelerating ore production from the open
al entitlement offer and $28 million retail entitlement offer – is de- pits, will allow the company time to further optimise the strategy
signed to provide the struggling gold miner with the balance sheet to unlock maximum value for the company and shareholders,”
relief and working capital space to plan for life beyond its recently he said.
announced three-year production plan. Analysts remained cautious following release of the updated
The placement and entitlement were placed at a 79% discount strategy.
to the last trading price. “New management appears to have rebased expectations
Long-term shareholders will be hoping the capital raising is the with lower risk open pit material and this raising should reduce
final chapter in a frustrating two-year story which has seen Dacian some of the debt obligation pressure,” RBC Capital Markets said
fall from gold market starlet to major disappointment. Shares in the in a client note. “In our view, however, perceived risk around the
company have fallen more than 75% in little more than a year after asset is unlikely to wane anytime soon and Dacian is unlikely to
it admitted to reconciliation problems at its Mt Morgans gold mine find significant shareholder support until prolonged cash flows
in Western Australia. can be demonstrated.
Managing director Leigh Junk said the capital raising would en- “The steep discount [around 79%] is likely to be commensu-
able the company to reset operations and growth ambitions. rate with the risk/reward deemed appropriate by the underwrit-
“The successful completion of the offer will also allow Dacian ers in this current environment – although we would have to as-
the flexibility and opportunity to invest in the future growth of the sess the absolute impact of the large dilution to our estimates.”
Mt Morgans operation and define the various potential pathways to Dacian is the highest profile of a string of WA junior gold pro-
production beyond the three-year outlook,” he said. ducers who have stumbled despite the Australian dollar gold
The raising came a month after Dacian announced a new pro- price hitting record levels in recent years.
duction strategy for Mt Morgans focused on a lower risk open pit – Dominic Piper
production. The strategy has seen the company forgo underground
operations at the Westralia mine in favour of open pit mining at Ju-
piter and the Mt Marven open pit. The new three-year outlook to
FY2023 is forecast to produce 120-130,000oz at AISC of $1,250-
1,350/oz in FY2021 and 110-120,000oz in FY2022 and FY2023.
When Mt Morgan hit commercial rates in late 2018, Dacian was Exploring
forecasting annual production of 180-210,000 ozpa at AISC of
$1,000/oz. The mine never met those expectations with production
and guidance consistently slipping over the course of 2019 due to together for success
poor reconciliation at both Westralia and the Jupiter open pit.
Junk said the new outlook would reduce operational risk at Mt
Dacian will phase out underground mining at its Mt Morgans
gold operation after disappointing grade reconciliation
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aUSTRaLIa’S PaYDIRT MaY 2020 Page 7
neWs
Bardoc Gold Project PFS
Reserve: Mine Life:
10.4mt @ 2.4 g/t for 7 years
789,000oz gold AISC:
Capex: $1,220/oz
$142m NPV:
Throughput: $332m
1.8 mtpa IRR:
Production: 32%
135,000 ozpa
gold-in-concentrate and the payables we
have been quoted by traders are exception-
al,” he said. “It doesn’t make sense to build a
high capex plant at the front of the project’s
Bardoc aims to rewrite life when you can ship a gold concentrate
offshore and get high payables at recover-
ies as good as through a normal plant. The
option is a bit of a no-brainer and the more
recent history we progressed it over the last 12 months
the better the metrics have become.”
Ryan said the gold-in-concentrate mar-
ket was growing in China, Japan, Korea
and India with the likes of Evolution Mining
Ltd (at Mt Carlton) and Mandalay Resourc-
es Ltd (at Costerfield) shipping concentrate
ardoc Gold Ltd has moved swiftly to source at Excelsior open pit, we currently to China.
Blay the ghosts of the past to rest on its quote 330,000oz. So, we’ve built that con- To solidify its concentrate potential, Bar-
namesake gold project with a robust PFS servatism into our models. We know the doc will undertake further metallurgical test-
full of conservative numbers and plenty of likelihood of those models performing is go- ing throughout 2020.
upside. ing to be exceptional and more than likely “We want to look at more test work, pro-
The PFS was based on underground and we will see an over-reconciliation of ounces duce 50-100kg of gold-in-concentrate and
open pit mining across three centres – Aph- once we go into production,” he said. market that through various traders to get
rodite, Excelsior and Zoroastrian – 40km Bardoc has already proved 80% of the the best terms for our shareholders on an
north of Kalgoorlie. The three deposits were mine plan up to the indicated category but offtake agreement,” Ryan said.
consolidated under the Bardoc banner after Ryan said drilling would continue through On financing the $142 million project,
a series of mergers in 2017 and 2018. 2020 in an effort to convert as much of the Ryan is confident the company’s relation-
Bardoc announced the PFS results in underground ounces as possible into indi- ship with Burnvoir Corporate Finance will
early April and will now head into DFS work cated resources and probable reserves. pave a smooth path to funding.
with chief executive Robert Ryan pointing to “That will translate into the strength of the “We engaged Burnvoir who have speci-
a cautious gold price assumption of $2,100/ project in the longer term,” he said. ality in debt and equity financing and they
oz (currently $2,700/oz) and a 10.43mt @ In April, the company announced infill did a lot of work with our board when they
2.4 g/t for 789,000oz probable reserve. drilling results from the Aphrodite deposit. were involved with Pilbara Minerals,” he
The company’s predecessor Excelsior Hits of 22.6m @ 44.54 g/t from 202m, said. “They raised $400 million for Pilgan-
Gold had come unstuck due to grade rec- 18.1m @ 5.05 g/t from 322m, 6.9m @ 4.72 goora, we have a capital requirement of
onciliation issues, a common occurrence g/t from 107m and 7.1m @ 5.12 g/t from $142 million and xo we are very confident in
in the recent history of the West Austral- 203m conformed to model grades and that 60/40 ratio in being able to get finance,
ian junior gold sector. Ryan is determined widths in the 1.68 moz gold deposit. particularly given the amount of indicated
to ensure Bardoc doesn’t fall at the same While mining is set to occur along con- resources and reserves we have.”
hurdle as so many others. ventional Eastern Goldfields lines, Bardoc While Ryan has the company fully fo-
“We’ve learnt from the mistake of oth- is deviating from the norm in production. cused on the Bardoc DFS, he is also keep-
ers and the history of the company,” he While it will make use of a standard CIL and ing an eye on corporate developments
told Paydirt. “Excelsior had a few issues flotation plant, it has chosen to pursue gold around Kalgoorlie.
around mining and reconciliation of the ore dore and gold-in-concentrate production “The one thing we want to focus on is our
zones, which is quite common in the indus- over traditional gold. strong project and our ability to continue
try. A lot of that has to do with being too ag- Ryan said company investigations into developing,” he said. “But, Kalgoorlie has a
gressive in the geological modelling. the burgeoning gold-in-concentrate market lot of small landholders so there is an op-
“When I came in, I looked at the technical made it an obvious fit for Bardoc’s refrac- portunity to target smaller producers that
detail of the project. One of the big things tory material. have small resources which may add value
we now point to is that Excelsior used to “There is a big hole in the market where to Bardoc itself.”
quote about 470,000oz as an open pit re- people are seeing extreme value by selling – Dominic Piper
Page 8 MaY 2020 aUSTRaLIa’S PaYDIRT
AuTeco plans crowing start
Mine Life:
7 years
AISC:
$1,220/oz
NPV:
$332m
IRR:
32%
AuTeco has chosen a prolific
gold-bearing belt in Ontario
t might be only a few months since Ray ploration run.
IShorrocks and the AuTeco Minerals Ltd Repeating the Bellevue dose at AuTeco to rejuvenate one of Canada’s
team arrived at Pickle Crow in Ontario, nev- is the aim and the company has equipped highest-grade gold mines
ertheless the Australian company has high itself in the best possible fashion to do so. Pickle Crow was last mined in 1966 and
expectations for one of Canada’s highest- Former Bellevue exploration front-man there has been little modern exploration un-
grade historical gold mines. Marcus Harden heads the AuTeco team in dertaken since, despite the plethora of infra-
The company completed formal docu- the same capacity on a permanent basis, structure facilities still in place and a mining
mentation with First Mining Corp to acquire while Steve Parsons, Mike Naylor and Sam lease valid until 2067.
up to 80% of PC Gold Inc, the outfit which Brooks – all key players at Bellevue – round Despite the gold market taking off a few
owns Pickle Crow, in mid-March and has out the board and management at AuTeco. years ago, interest in Canada’s exploration
quickly outlined plans to convert the existing It is perhaps Bellevue’s growing reputa- and mining sectors has waned as investor
resource into JORC standards during the tion in North America that turned what was attention has focused on opportunities in
first week of April. shaping as a straightforward buy-in for Au- medical marijuana and cryptocurrencies.
There is potential for a resource of about Teco at Pickle Crow into something more Australian gold companies have ben-
400,000-500,000oz gold @ 7-8 g/t for Au- competitive. efitted by swooping on unloved projects in
Teco to work with. “I think we did reignite interest in the pro- North America and AuTeco is looking to
“We have organised our drillers so we can ject,” Shorrocks said. “At one stage in mid- continue the trend of returning an asset to
really go after it with some low hanging fruit December I was getting very fearful that its past glories at Pickle Crow.
drilling of about 5,000m sometime in May,” they were playing me off with someone else “The cannabis and bitcoin [sectors] are
AuTeco executive chairman Ray Shorrocks as they started getting very tough with ne- hurting big time. We have taken a view that
told Paydirt. gotiations.” the Canadian markets for gold will come
Shorrocks said the timing of drilling would How many suitors were in line to get a back, whether it is this year or next, but that
be determined by the first nations people’s slice of Pickle Crow remains history and any doesn’t really worry us because we will be
hunting season. In the meantime, geo- company which missed out will now have to getting on with our job,” Shorrocks said.
chem work would be the focus ahead of the watch on as AuTeco pieces together what’s “One of the things we will be doing is get-
planned 5-6 hole drilling programme in Q2. left of an underground project which pro- ting straight back into the basics. We didn’t
“We have walk-up drill targets at two very duced 1.5 moz gold @ 16 g/t. put a hole in the ground at Bellevue until we
strong gold-rich veins through the surface AuTeco has reported unmined drill inter- fully understood what it what we were trying
and all those lodes are open down plunge sections adjacent to Pickle Crow under- to chase. The previous owners at Bellevue
and adjacent to the existing underground ground mine infrastructure including: 13.1 thought that there was nothing on the other
development. It reminds me of another m @ 43.28 g/t gold from 530.35m, 7.6m @ side of that fault, and all we did was step on
Bellevue [Gold Ltd], which, let’s face it, has 8.23 g/t from 492.5m, 2.83 m @ 11.24 g/t the other side of that fault and in the first 3-4
been hyper successful,” Shorrocks said. from 547.67m, 4m @ 9.05 g/t from 102m, holes we struck it rich.”
Shorrocks was the chairman at Bellevue 3.9 m @ 17.39 g/t from 200m and 3.2m @
during the start of that company’s stellar ex- 134.26 g/t from 1139.8m. – Mark Andrews
aUSTRaLIa’S PaYDIRT MaY 2020 Page 9
neWs
Four in a row for BCI and MRL
Mineral Resources has agreed to purchase
CI Minerals Ltd managing director payment on March 31. the Buckland iron ore project from BCI
BAlwyn Vorster has foreshadowed a BCI indicated the cash injection – for up to $20 million cash
potential role for Minerals Resources several years earlier than originally an-
Ltd (MRL) in the future construction and ticipated – would help offset its reduced on the business so far and we do not see
operation of the Mardie salt and potash income stream from Iron Valley in 2020 any major delays at this point, but it does
project after his company sold the last of after earlier agreeing to rebate 40% of its add that extra element of complexity.”
its remaining iron ore assets to the multi- net royalty from MRL towards required Completion of the DFS will mark the
faceted mining services group. capital works, including waste stripping start of a busy nine-month period for BCI
Mineral Resources has agreed to pur- and infrastructure upgrades. as it targets first construction activities at
chase the Buckland iron ore project from “We are not going to contribute any Mardie in late Q1 2021. In a bid to hit that
BCI for up to $20 million cash, including capital to the development, but we are milestone as planned, Vorster has his
$6 million upon formal completion of the basically offering them a discount on the team focused on four key work streams
transaction, and a 1% FOB revenue roy- royalty that they’re paying us,” Vorster – approvals, engineering, marketing and
alty on future iron ore mining from the said. funding.
134mt Bungaroo South deposit. “It means the $40 million we have in “We hope to have the mining leases
It is the fourth major deal struck be- the bank is earmarked for Mardie pur- and port leases in place by September
tween MRL and BCI – including its pre- poses and keeping the company afloat.” and that is also the target date for a
cursor companies BC Iron and Iron Ore A DFS on Mardie is due at the end board final investment decision,” Vorster
Holdings – over the past decade, begin- of next month. Last year’s updated said.
ning with Phil’s Creek, followed by Iron PFS indicated almost $500 million was “If we can get all that in place, we hope
Valley and more recently the Kumina needed to build an operation capable of to raise the equity part of the capital by
tenements. producing 4 mtpa salt and 100,000 tpa the end of the year. We then hope to
The sale of Buckland means BCI’s only sulphate-of-potash over a 60-year mine get ministerial approval, environmental
exposure to iron ore is through royalty life. That assessment included, for the approval and so on very early in 2021,
streams and the cashed-up junior now first time, BCI’s plans to develop its own which will then allow towards the end of
has a clear pathway to pursue develop- port facility on the Pilbara coast. Q1 2021 for construction to start.”
ment of Mardie, about 100km south-west Vorster said the DFS would include a BCI has marketing teams based in Be-
of Dampier. more detailed design of the port layout ijing and Singapore focused mostly on
Speaking to Paydirt last month, Vorst- and its development costings. placing the proposed Mardie salt prod-
er hinted at the possibility of a fifth trans- “All the Mardie-owned port facility, jet- uct with customers in the Asian chemical
action between BCI and MRL in the not ty, transhipping operation and so on, that market.
too distant future. has been engineered to a much higher “In very simple terms, the salt market
“With their expertise in building and level than what we have ever had be- is a GDP play so if the Asian economy is
operating, I am quite hopeful that there fore,” he said. ticking along, then salt demand and salt
could be a role for them in some shape “Of course, if you talk to the engineers prices are ticking along,” Vorster said.
or form on our Mardie project,” Vorster they will say you can’t build something “We may expect in the short term, so
said. “Not that we are selling the Mardie that has a DFS design, so naturally the in the next 6-12 months, some challeng-
project, but there will be many contracts, next phase beyond the DFS will be our es on the economic growth side in Asia,
both construction and operation, that I FEED phase and that will take it to 80- but there is no doubt that there will be
would hope someone like them could get 90% engineering and so on, but the DFS very strong stimulus packages coming
involved in.” is essential to lock in the scope and de- out again later this year in Asia. We hope
In announcing the sale of Buckland, signs. then the GDP growth rate will be healthy,
BCI confirmed that MRL had agreed to “The aim is still very much by June which will drive the chemical industry,
bring forward the first of two deferred $4 to have an announcement on the DFS. salt demand, salt prices and so on.”
million cash payments from the sale of We’re in a good position overall with the – Michael Washbourne
Kumina in late 2018. BCI received that COVID-19, it’s had a relatively low impact
Page 10 MaY 2020 aUSTRaLIa’S PaYDIRT
1 - 2 April 2020
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neWs
he global COVID-19 tions when COVID-19
Tpandemic is shap- Candles lit for new restrictions are lifted.
ing as the catalyst for “I think both com-
new entrants to partici- panies would like to
pate in future uranium see a higher price and
supply after a decade yellowcake party Cameco certainly is on
dominated by the sec- record as saying that,”
tor’s leading producers. Young said.
Early signs are in- “Now they’ve got the
dicating just that with opportunity to not so
uranium surprising many as the best- “There’s certainly potential for these much use the COVID problem to their ad-
performing commodity this year, up 27% disruptions to run longer and harder than vantage, but I think given that they’ve ac-
since the start of January. Gold (up 16%) what we can anticipate at the moment, tually shut down production and wellhead
is the only other commodity still in positive so there’s every chance that 20 mlb can development they can basically bring it
territory. gape open ever further. That’s what’s got back on in their time to suit them.
Yellowcake prices have soared on the traders and others worried and that’s the “I think that this is the sustainable price
back of a string of major shutdowns, in- result that we’re seeing in the spot price.” rise that we’ve been looking for. It’s not
cluding the world’s largest uranium mine, Munro also believes Cameco’s “care- just anecdotal, there is real hard evidence
Cigar Lake, which Cameco Corp has fully chosen words” in announcing the there.”
now placed on “indeterminant” care- indefinite closure of Cigar Lake are telling. KazAtomProm’s decision to halt pro-
and-maintenance, despite initial plans to “Indeterminant we know can mean up duction for three months is set to impact
suspend production for just four weeks to two years because McArthur River, its capacity to undertake wellhead devel-
while the company evaluated the impact then the world’s largest uranium mine, opment which is critical for in-situ recov-
of COVID-19 and the risks associated was put on to indeterminant care-and- ery mines such as those in widespread
with continuing operations in a region of maintenance by Cameco about two years abundance throughout Kazakhstan.
northern Canada where there is a large ago – and there’s still no sign of that open- Young believes this is a crucial point
indigenous population. being overlooked by most market com-
Since then, the Husab and Ross- mentators.
ing mines in Namibia have scaled back “Wellhead development is the same as
production due to enforced lockdowns underground mine development,” Young
in the uranium-rich country and leading said. “It’s about driving your drives and
producer KazAtomProm flagged a major establishing stopes underground. It’s
supply disruption of at least 10 mlb after expensive, it’s deep, it’s not as risky as
announcing a three-month shutdown of underground development, but it is your
its operations. future production, so that’s an interesting
Kazakhstan last year accounted for point.
more than 42% of the world’s uranium “We don’t really have see-through on
production. what it will do to their future production,
And while no shutdowns have occurred but we know that there will be a future
in Australia as yet, Olympic Dam’s output production reduction because of the cur-
from the March quarter was down 18% on rent reduction in the wellhead develop-
the previous three-month period and 30% ment.”
on a year-on-year basis. John Borshoff At the time of print, the uranium spot
Concerns about future supply triggered price was nudging $US33/lb. For Deep
positive market reactions for a throng of ing up again,” he said. Yellow Ltd managing director John Bor-
ASX-listed uranium players, including “Cameco flagged in that announce- shoff, it is nowhere near the levels re-
Bannerman Resources Ltd, Vimy Re- ment that things had got worse rather quired to justify any restarts or new pro-
sources Ltd and Deep Yellow Ltd. than better and they seemed to be posi- duction coming online.
“What we’ve seen is a compounding tioning the market for a bit of a long haul, “When I hear people talking about the
news flow of production disruption and but reassuring people that in the longer uranium price going from $US24/lb to
my estimates are that the total aggregat- term this would all be good for uranium $US28/lb, I can’t describe how uninter-
ed production disruption can quite easily and therefore good for Cameco.” esting this is to me,” Borshoff told Paydirt
be 20 mlb out of a market that was only Vimy managing director Mike Young last month.
expected to produce 135 mlb,” Banner- is not expecting either Cameco or Kaz- “Like I say to many people, what’s the
man chief executive Brandon Munro told AtomProm to be in a rush to resume pro- difference between drowning 5m below
Paydirt. duction at any of their shuttered opera- the water or drowning 3m below the wa-
Page 12 MaY 2020 aUSTRaLIa’S PaYDIRT
the date of signing.
“Then there’s the time waiting for those
delivery dates to come up. Even once
they’ve pushed the button on McArthur
River, Cameo has said it will take about
14 months to get that operation up and
running again.
“The reality is there’s few pounds
around the world that can actually come
as new production at under $US50/lb,
$US60/lb or $US70/lb, but I do think
we need to see prices continue to rise
Brandon Munro significantly before there’s going to be Mike Young
any real incentive for new production to
ter? It’s still under water. come on, other than a few hundred thou- supply and they want to see new supply
“The real change will be when that sand pounds here and there.” from good jurisdictions and they also re-
price breaks through into potential areas Both Vimy and Bannerman have com- ally encourage juniors coming into the
of pain for utilities. In other words, short- pleted DFS reports for their respective market.
ages declared, fear setting in and ac- undeveloped Mulga Rock and Etango “So, what’s basically happened with
knowledgment there will be a shortage… uranium projects in Western Australia COVID is it’s drastically accelerated a
it’s not a sector for fools.” and Namibia, and would appear to be at process that was under way, that Bran-
As the founder of Paladin Energy Ltd, the starting gate for any new production don and I have both been on air several
Borshoff has experienced what it takes to potentially come online in the next few times discussing, and now everyone is
to both start up and shut down a uranium years. seeing it at large and everyone is getting
mine and he fears some on the gravy train as it
in the industry are poised were.”
to make potentially fatal COMMODITY PRICE PERFORMANCE YEAR TO DATE Deep Yellow is pushing
mistakes. ahead with plans to com-
“This whole concept plete a PFS on its Tumas
of the mothballed ca- 30% +27% Uranium project in Namibia this
pacity coming online is year despite the com-
not as simple as people 20% pany being somewhat
might think – you have to +16% Gold restricted in what it can
re-engage, you have to 10% do due to the COVID-19
re-finance, teams have pandemic.
to be found, all sorts of 0% Borshoff has outlined
aspects; they’re not just a nine-month game plan
sitting there with the en- -10% -11% Silver for his company to stick
gines idling as soon as -17% Zinc to during the various pe-
-17% Nickel
the price reaches a cer- -20% -18% Copper riods of lockdown and
tain level,” he said. -30% working from home.
“Yes, there’s going “I don’t believe this is
to be some eager to -40% the new norm for working
get started, but I would in companies like what
say to them don’t waste Source: Westmetall, TradeTech : 16 April 2020 I’m running, but we’re
sweat on getting a pro- adopting systems for us
ject to market if you’re to remain as productive
not maximising the op- as we can and I’m happy
portunity for your shareholders, as will Young said his company was doing a with what we’ve got,” he said.
occur with the supply dynamic as it is.” “refresh” of its DFS published more than “Work is proceeding on schedule. We
Munro said companies such as Came- two years ago as it prepares to take ad- still hope to complete it [PFS] in the mid-
co and Paladin would want to see the vantage of the opportunity to be part of dle of the next half, so September/Octo-
uranium price sustaining a level “in the the next contracting cycle. ber, and our work towards that I think will
high 40s” before being incentivised to “Going forward I think there’s going to be pleasantly surprising. There was a lot
restart McArthur River and Langer-Hein- be a paradigm shift with respect to the more in our scoping study [published in
rich, respectively. utilities in terms of their security of sup- January] than one would presume be-
He concurred with Borshoff that no ex- ply and that bodes well for Brandon and cause of the team that we had working
isting mine can be easily rebooted with a I because the way utilities manage their on it and because of the knowledge we
simple flick of the switch. contracts, they do what’s called portfo- have of both the project and the uranium
“It’s not a case of them, let’s say lio management, where they basically sector.”
Cameco, signing a nice portfolio of con- baseload their requirements with some – Michael Washbourne
tracts that enables it to sell all of that new bigger producers and then they basically
McArthur River production and then start have several tranches of other produc-
the next month,” Munro said. “Long-term ers,” Young said.
contracts typically start three years from “They desperately want to see new
aUSTRaLIa’S PaYDIRT MaY 2020 Page 13
oPInIon
China’s reopening still raw
hina is ready to move on from the coro- country has ordered all mines and furnaces restrictions on movement squeezed flows of
Cnavirus and get back to business as closed from March 26 with the result that lo- raw material.
usual. cal producers Samancor, Tharisa and Glen- With several Chinese smelters also NEW DATES ANNOUNCED SOON
“With the spread of COVID-19 under con- core-Merafe Chrome have declared force locked down over the peak of the coronavi-
trol, we should actively carry out the resump- majeure on deliveries. rus outbreak in China, the country’s shortfall
tion of work and production,” President Xi Cobalt supply is dominated by the Demo- has translated into accelerated imports of
Jinping said in early April. cratic Republic of Congo, where producers refined tin metal.
Xi’s comments, reported by state media are proactively reducing output and shipping China imported 1,660t of tin in January-
under the headline “Chinese president un- routes via South Africa risk being disrupted February, compared with 3,000t and 2,500t
pauses China’s economy”, were made dur- by port closures. for the whole of 2019 and 2018 respectively.
ing a tour of Zhejiang province. The effects of such country-by-country It flipped to being a net refined tin importer
As ever, Xi’s whistle-stop tour was an ex- lockdowns are most acute on those raw ma- for the first time since 2017.
ercise in subliminal messaging. Those com- terial supply chains that were already under It may be a template for how raw materi-
ments were made during a visit to an auto pressure, such as nickel. als’ disruption translates into higher imports
parts supplier in the Daqi industrial park in Indonesia, which has historically been a of refined metal, upending a long-running
the city of Ningbo. key supplier of nickel ore to China’s nickel pig trend of increased Chinese self-sufficiency
He also dropped in on Ningbo Zhoushan iron (NPI) producers, has this year banned at the metal stage of the production value
port, one of the world’s busiest, and praised all unprocessed ore exports. chain.
it for getting throughput back to pre-corona- The market was looking to the Philippines However, that assumes that flows of re-
virus levels. to pick up some of the slack, but that coun- fined metal aren’t subject to the same levels Hon. Bill Johnston MLA
The political messaging, however, masks try has just suspended mining operations in of lockdown and shipping problems that are Minister for Mines and Petroleum
the fragility of China’s metals raw material the southern province of Surigao del Norte, already stressing raw materials chains. Government of Western Australia
supply chains. home to most of the country’s nickel mines. China’s increased draw on refined tin from
As the coronavirus spreads, so too do the It has also stopped the entry of foreign ves- the international market hasn’t done any-
lockdowns on activity in key supplier coun- sels to the province, risking a full cut-off of thing to help tin prices.
tries such as Chile, Peru, South Africa and shipments. London Metal Exchange tin sank to a
Indonesia. China’s nickel ore imports were already decade-low of $US12,700/t in March and is
China has rapidly built out its metals refin- down by 5% in the first two months of this currently trading at $US14,550/t, still the low-
ing capacity over the last decade but at the year due to the combination of the Indone- est price level since the base metals cyclical
cost of needing ever more imported raw ma- sian ban and the seasonal drop in Filipino trough on 2016.
terials to feed its smelters. production over the rainy season. That’s because all the base metals mar-
Some of those supply chains are now Unless either country reverses its policy kets are more focused right now on the col-
starting to creak. decisions, imports of ore are going to fall lapse in global demand, both at the first-use
The metallic spectrum of China’s raw much harder. fabricator and the end-use consumer stage.
materials imports is highly differentiated, Some compensation may come from ac- Supply disruptions due to mining lock-
depending on the origin and number of sup- celerated flows of Indonesian NPI direct to downs and logistics bottlenecks are still play-
plier countries. China’s stainless steel producers. China’s ing catch-up with the demand shock rippling
Ongoing emergency lockdowns in Chile ferronickel imports, a customs code that in- around the world.
and Peru, for example, place at risk flows of cludes NPI, jumped by 60% year-on-year in Moreover, Chinese importers are proba-
copper, zinc and lead concentrates. January-February. bly carrying sufficient supplies of raw materi-
Chile and Peru accounted for 55% of But the market was already sceptical that als to ensure production over the short term.
China’s inbound cargoes of copper concen- Indonesian NPI could fill the ore gap and But the longer lockdowns go on, and there
trate in 2017, the last year China’s customs continued exports are dependent on wheth- are plenty of indications that they will be ex-
department published a full breakdown of er Indonesia can maintain mining operations tended for as long as it takes to control the
metal imports. as it rolls out increasingly draconian anti- spread of the virus, the greater the potential
The two countries are also major suppli- virus restrictions on movement. for supply chain disruption.
ers of zinc concentrate, but so too is Aus- Tin is another metal with a stressed Chi- As the biggest buyer of metallic raw mate-
tralia, where mining operations have so far nese supply chain. rials, this is a ticking time-bomb for China’s
been less affected. The country’s smelters rely on imports metals producers.
The pressure on supply chains is accen- of tin concentrates from Myanmar, where President Xi may be keen to stress that
tuated in metals such as chrome, where production has been steadily declining over China is open for business as usual, but it’s
production is concentrated in one particular recent years as tin miners exhaust easily- far from being business as usual for miners
country. exploited resources. around the world.
South Africa last year accounted for 83% China’s imports of tin concentrates fell by The pressure on the country’s raw materi-
of China’s imports of chrome ore, a core 20% last year and were down another 29% als supply chains is only going to get worse.
input for stainless steel producers. The in January-February as border controls and
– Andy Home, Reuters
Page 14 MaY 2020 aUSTRaLIa’S PaYDIRT
2020
BATTERY
MINERALS
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Joe Belladonna Scott Williamson Andrew Radonjic
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Western Areas Ltd Blackstone Minerals Ltd Venture Minerals Ltd
Mark Thompson Allan Mulligan Andrew Spinks
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neWs
No rest for new Poseidon chief
or a brief moment, Peter Harold was Swan in the mid-1990s. a total interval of 23.1m @ 4% nickel and
Fconsidering an exit from the nickel Black Swan is Poseidon’s most ad- 0.4% copper (true width 13.3m).
game he has become so entrenched in vanced asset in a portfolio of three key It is only the second time that signifi-
over the last three decades. projects, all located within a 300km ra- cant massive sulphides have been inter-
Harold signed off as managing director dius of Kalgoorlie. Previous studies have sected within the Black Swan dissemi-
of Panoramic Resources Ltd – the com- indicated just $13 million is needed to re- nated channel since the discovery of the
pany he founded in 2001 as Sally Malay vive the Silver Swan underground mine Gosling lode in 1996.
Mining – in October and was planning to and another $19 million to refurbish the “I can’t take any credit for that, it’s a
take an extended break to contemplate Black Swan processing plant. fantastic discovery,” Harold said. “A lot of
his next career move. Harold revealed he has always been a work has been done by [chief geologist]
Less than a month into his sabbati- keen follower of Mt Windarra – the pro- Steve Warriner and Neil Hutchinson,
cal, he was approached by the team at ject widely recognised for giving rise to who was the previous GM exploration
Poseidon Nickel Ltd, which was seren- WA’s first nickel boom in 1969. at Poseidon and now a consultant to us,
dipitously looking for a new managing di- Lake Johnston is another asset to and also the guys at Newexco.
rector with vast experience in the nickel have also caught his eye, particularly in “It’s a decent sized EM anomaly and
sector. recent times following the discovery of a good intersection to start off with…es-
the Abi Rose orebody only a pecially given there’s been some other
few years ago. good discoveries just recently. I think if
An internal strategy ses- we can continue to get further intersec-
sion with the existing Posei- tions on Golden Swan that will be very
don crew just a few weeks good for our business.”
before he officially started as Poseidon has also commissioned
managing director vindicated a scoping study on the estimated
to Harold his decision to take 180,000oz of gold tailings stockpiled at
on the role. Mt Windarra – an opportunity that Harold
“It was actually a really believes warrants further investigation at
good exercise to get
to know everybody
and just really un-
derstand where the
studies were at with
the three nickel pro-
jects,” Harold said.
“Clearly the Black
Swan restart has
Poseidon boasts more than 400,000t of nickel resource been the primary
in its portfolio of assets in the WA Goldfields
focus of the busi-
ness and I wanted
It quickly became evident both parties to understand where that was at
were the perfect fit for one another and and really get my mind around
Harold officially started in his new role at what work had been done there.
the beginning of March. “It’s a really interesting as-
“After 18.5 years at Panoramic, I was set base and also a really great
actually thinking about doing something bunch of people. I’m very, very
else because nickel can be a little bit lucky because the guys here
frustrating, but I guess I’ve now been in are very well known in the nickel New Poseidon managing director Peter Harold with company
nickel for over 30 years, I kind of know industry, they’ve been around consultant David Riekie at the Black Swan open pit
everything about it, so I figured I better the world and we’ve got a really
stay in there,” Harold told Paydirt. good mix of people sort of my age and a time when the gold price is nudging
“I knew the assets pretty well but then a lot of people who are younger.” $3,000/oz. Results from the study could
didn’t really know the people, so I’ve got While one of Harold’s first official du- be released later this month.
to know them pretty quickly. Obviously, ties as Poseidon’s managing director Dewatering activities at Black Swan
we’ve had this COVID-19 situation com- was the daunting task of having to write remain ongoing for now amid the coro-
ing over the top of everything, so it’s up a COVIC-19 policy for his new com- navirus pandemic, with Harold insisting
been a little bit of a challenge, but we’re pany, positive news quickly followed with the company was taking every precau-
managing our way through that and I’m confirmation of the new Golden Swan tion necessary and will immediately halt
very excited about the future.” discovery at Black Swan. work if required.
In some respects, Harold’s time in Assays for the first hole drilled into
nickel has come full circle, having been Golden Swan returned 7.6m @ 8.8% – Michael Washbourne
part of the MPI Mines team which dis- nickel (true width 4.3m), including 2.1m
covered the Silver Swan deposit at Black @ 15.9% nickel (true width 1.2m), from
Page 16 MaY 2020 aUSTRaLIa’S PaYDIRT
6 October 2020
Perth, Western Australia
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aUSTRaLIa’S PaYDIRT aPRIL 2020 Page 17
neWs
Another legend
in the making
Brad Underwood
A cluster of interpreted intrusions,
including the Lantern intrusion, occurs
t took Legend Mining Ltd a good four Prior to the shutdown of drilling, an within a zone of 15km by 12km at
Iyears to present the best nickel sulphide aircore programme north of Lantern Galileo’s Fraser Range project
intersection in the Fraser Range since was aiming to define new targets, while
Nova and now there is a company believ- down-hole EM surveying at LARC003 Galileo has almost $5 million and with
ing it can do the same. (12m disseminated nickel-copper sul- work on the ground remaining light un-
Creasy Group-backed Galileo Min- phide intersected) is the next step. til the coronavirus situation eases, the
ing Ltd floated with $15 million exactly Down-hole EM work will be subject to company is well funded for some time.
two years ago and is now on the hunt COVID-19 restrictions in Western Aus- Nevertheless, in addition to the WA
for nickel on its extensive Fraser Range tralia, however, petrographical work of Government’s exemption from explora-
ground package. rock chips continues and a Programme tion expenditure, subject to qualifica-
“We are very much going down the of Work approvals from the WA Mines tion under considerations given to tene-
same path; we have the same style of Department is pending for follow up drill- ment holders financially stressed from
mineralisation as Legend at Mawson, so ing around LARC003. COVID-19, Underwood called for further
I think it is a fair call for people to expect Despite subdued sentiment in the re- measures to be put in place.
that we might also have similar results sources sector, a series of positive an- “I think the overall response to the
when we get into our deeper drilling,” nouncements within the WA nickel scene coronavirus has been amazing and I
Galileo managing director Brad Under- has sparked interest among investors. think that is why we have seen a limit-
wood told Paydirt. There are few nickel sulphide stories in ed increase in numbers. In terms of the
“I believe it should have a good impact the market right now, which explains the exploration industry, it has been good
on us if they are successful. We are drill- excitement created when a hint of poten- that there has been assistance with the
ing a similar type of prospect just at an tial is revealed. reduction in exploration expenditure. It
earlier stage. It is a really good story for “It is a really good prospect,” Under- would also be nice if they reduced some
Legend, they have been there for four wood said about Lantern. of the tenement rents, which can be quite
years and when they started delivering “There are four out there – Nova, Sil- substantial,” Underwood said.
results the market started to notice.” ver Knight, Mawson and Lantern – it is “There are some companies that have
Like Legend, Galileo also acquired its so rare to come across nickel-copper been poorly funded for a long time and
Fraser Range tenement package from sulphides in the Fraser Range and in two perhaps their exemptions might not qualify
the Creasy Group. of these instances there are JORC com- and that would be a good thing. It is case
The company holds 492sq km of pliant resources. by case, so for people that have been gen-
ground in the Albany Fraser Orogen and “There is Mawson and then there is uinely exploring for a number of years and
has already claimed nickel sulphide po- the Lantern prospect which is ours. It have been directly impacted due to the
tential at the Lantern prospect in green- is an early-stage prospect, with the first coronavirus, it is fantastic that those com-
field terrain. RC just done but it is the same style as panies are allowed an exemption.”
While drilling has been postponed Mawson, which appears to be heading to
at Lantern for the time being, initial RC resource stage and hopefully ours does – Mark Andrews
drilling intersected disseminated nickel- too,” he said.
copper sulphide mineralisation.
Page 18 MaY 2020 aUSTRaLIa’S PaYDIRT
Baby luck for Chalice
newborn and a nickel sulphide dis- interest to grow around Julimar.
A covery in close succession made for “I suspect there are very few compa-
a wild ride for Chalice Gold Mines Ltd nies that have ground in that area, but
managing director Alex Dorsch in March. the ones that do might be looking a bit
Paydirt dared to ask which one brought more closely to see whether any EM
most joy and as rare as nickel sulphide geophysics have been done and things
discoveries are, Dorsch beamed much like that to see if there is any history of
brighter when speaking of the birth of his nickel exploration,” Dorsch said.
second child. Given that Julimar is an hour drive from
The first drill hole at Julimar, 70km Perth’s CBD, it is fair to assume that pre-
north-east of Perth, was the icing on the vious explorers have had at crack at the
cake for Dorsch. prospect.
Chalice’s intersection of 19m @ 2.59% However, as Dorsch explains, identi-
nickel, 1.04% copper, 8.37 g/t palladium fying the prospectivity at Julimar is not Alex Dorsch
and 1.11 g/t platinum from 48m in fresh easy.
rock, including a massive sulphide zone “A lot of the intrusion there is cov-
of 13m @ 3.15% nickel, 1.19% copper, ered with transported cover. The survey “If you look at the supply side of Class
8.85 g/t palladium and 1.09 g/t platinum, doesn’t have it mapped as an outcrop- 1 nickel, you see a very empty pipeline
was well received in the market. ping ultramafic or mafic rocks, so from of undeveloped projects, so I guess the
The stunning first strike meant expec- that perspective it was overlooked for a sector is needing to go into the green-
tations were high for the follow-up act. little while. We grew more and more ex- fields space to satisfy that existing de-
Preliminary results released by Chal- cited by it as we saw there was such little mand. If there is any material increase in
ice from the second hole, 900m away, work done,” he said. demand, then the cupboard is going to
indicated no massive sulphides struck “What we liked about it is that there be bare very quickly.”
and XRF testing hadn’t detected any sig- is quite a long magnetic feature along a Chalice is one of the lucky juniors in
nificant nickel or copper mineralisation. prospective boundary of the Yilgarn Cra- play currently with a treasury of cash and
Nevertheless, the company sees po- ton. There is a potential source for these investments totalling $25 million and two
tential for additional zones of mineralisa- mineralised fluids to come up. It certainly emerging projects in Julimar and Karri at
tion at Julimar. ticked all the right boxes technically but Pyramid Hill.
“The second hole was targeting an en- was still very much a conceptual play.” Pyramid Hill is close to Melbourne,
tirely separate target and as such does At the time of print, Chalice had the Victoria, and is being diamond drilled by
not detract from our recent discovery,” ability to continue drilling at Julimar in a local outfit.
Dorsch said. the Avon Valley, a sub-region of Western Dorsch is keen to continue drilling for
Chalice hasn’t contained its excitement Australia’s Wheatbelt, as Chalice looks to as long as permitted.
to Julimar and has expanded its hold- capitalise on the discovery momentum. “It is our intent to keep those drill pro-
ing with another 18 licence applications “Since I joined Chalice, we have been grammes at Julimar and Pyramid Hill
“over anything that looks quite interesting looking at nickel pretty closely and we going and we are still very excited by
in the vicinity”, Dorsch told Paydirt. have consistently found it very hard the things that we are drilling in Victo-
Magnetics and gravity surveys will be to come across advanced exploration ria where we have completed a couple
applied by Chalice, as Dorsch expects stage opportunities,” Dorsch said. of diamond holes on the Karri prospect,”
Dorsch said.
“Aircore results released recently are
very encouraging and we are starting to
see grades that are getting above the 10
g/t gold mark. We are seeing intersec-
tions like 1m @ 15 g/t within a sizable
4km-long continuous gold trend. Our dia-
mond programme is about 11 holes. We
are going to get that programme finished
and hopefully that will give us a good ge-
ological picture of what we are looking at
underneath that aircore anomaly.”
Chalice has made a promising start to
diamond drilling at Karri with first-ever
testing at depth striking 2.55m @ 2.29 g/t
gold within 11.45m @ 1.02 g/t from 284m
from the first hole.
– Mark Andrews
Chalice moved to peg more ground around Julimar, 70km from
Perth, after early nickel sulphide potential was discovered
aUSTRaLIa’S PaYDIRT MaY 2020 Page 19
neWs
Getting behind the greatest etting behind the greatest etting behind the greatest etting behind the greatest
G G G
since Novaince Novaince Novaince Nova
s s s
Legend’s RK000D8 intersection at Mawson was hailed as the best nickel hit since Nova in
doration has come for Legend Min-
Aing Ltd since announcing results re- 2012 in the Fraser Range
sembling the best in the Fraser Range
since Nova, however, managing director the company closed trading session at through. In previous years it would have
Mark Wilson was quick to praise the per- 17.5c/share, more than double where it been just Derek Waterfield [executive di-
formance of the Association of Mining and started the year. The performance is in- rector, technical], one other and our field-
Exploration Companies (AMEC) amid the dication that despite the times, Legend’s ie,” Wilson said.
chaos of COVID-19. story was being well received and sus- Legend’s beefed up crew is supporting
Wilson was also parochial about the tained since it announced the three mas- an aircore rig, which was infilling the greater
way the West Australian resources indus- sive nickel-copper sulphide intercepts in Mawson area, and a diamond rig focused
try had accepted and adapted to changed RKDD008 (199.4-205.0m (5.6m); 218.2- on the main prospect at Mawson at the time
working conditions enforced to help flatten 225.1m [6.9m]; 234.9-247.7m [12.8m] at of print.
the trajectory of coronavirus. the end of March. The Federal and State Governments’
“I think it has been handled magnifi- Diamond hole RKDD008 was recog- designation of mining as an essential in-
cently. To my knowledge, the fact there nised as the best nickel intersection on dustry has proved “serendipitous” for Leg-
has only been one COVID situation at one the Fraser Range since Nova, with five end as it looks to continue the excitement
mine site throughout all WA onshore in- significant intervals of nickel-copper sul- at Mawson, with the next set of assays ex-
dustry is exceptional. I think industry gen- phide mineralisation reported, including pected as the coronavirus spread slows in
erally has to be congratulated for recognis- the three comprising massive sulphides of WA and optimism rises that some lockdown
ing there was an issue, putting practices in pyrrhotite-chalcopyrite-pentlandite. measures will be loosened in the State.
place to deal with it and making sure they “I think when the assays [see Drill Bits Regardless, a nickel sulphide discovery
adhered to those practices,” Wilson said. sponsored by Bostech on pages 54-55] always gets attention and Wilson is confi-
“I must admit that AMEC as an organisa- come out people will recognise that there dent of not disappointing the market.
tion supporting us has been a wonderful is 25m of massive sulphides within a 41m “The market reaction has been very
assistance to me in particular and really overall sulphidic intercept. The grades that healthy even within these uncertain times
helped me manage some little situations come out will take any of the mystique out that we are all living in. I think the market
that I have found myself in.” of the intercept entirely. Nova when dis- has this uncanny ability to look through the
Legend has been building momentum covered was 4m @ 3.8% nickel and 1.4% present and predict the future,” he said.
at Mawson, part of the Rockford project, copper. I think when our results come out “The constant flow of press that China is
since the backend of 2019; some seven people are going to make the direct com- back at work – China consumes 50% of all
years after Sirius hit the headlines with the parison of 4m versus the 40m and the these base metals that are produced – so
Nova nickel sulphide discovery. Nova grade versus our grade,” Wilson I think there is a perception that the market
It has taken many companies and mil- said. for these things is going to be very healthy
lions of exploration dollars for anyone to “I think we have the width covered, now in the future. In our case and the likes of
get a sniff of something in the class of it’s about the grade and our real challenge Chalice [Gold Mines Ltd], our assets are
Nova and now that Legend appears on- is to find the source of that mineralisation. still in the ground and we haven’t expend-
course for a potential replica, even COV- I’ve been constantly saying since the dis- ed the mass of capital in developing mines
ID-19 cannot derail further progress. covery hole last year that this has all the and building plants.
Better still for Wilson, has been the abil- hallmarks of a large system.” “We are in this lovely situation where we
ity able to tell the Mawson story to people To help define exactly what Mawson are just developing an asset without mas-
across the globe, all from his desk in Perth. may mature into is a growing throng of sive capital expenditure. The way I see it
“It shows what can be done; you can sit geologists and field assistants, a situation is that the market is quite happy to come
in your office [and communicate] pretty Legend is not accustomed to. on the journey with us and once we have
seamlessly via technology but take noth- “We have just put on our second geolo- the big bucks spent you start getting a dif-
ing away from the fact that nothing re- gist for the year after adding another one ferent character perspective and yardstick
places face-to-face interaction in terms of last year. We also have an extra field as- pointed against you with your performance
getting your story out there,” Wilson said. sistant we wouldn’t usually have, so our and risk profile,” he said.
As Wilson spoke to Paydirt in mid-April, team of five geologists are now rostering – Mark Andrews
Page 20 MaY 2020 aUSTRaLIa’S PaYDIRT
aUSTRaLIa’S PaYDIRT MaY 2020 Page 21
coVeR
The Aussie juniors
finding fertile ground
for potash growth
A s a growing global population places more emphasis rowing global population places more emphasis
s a g
A on quality diet, a new generation of Australian potash on quality diet, a new generation of Australian potash
d
developers are positioning themselves to supply the evelopers are positioning themselves to supply the
f
fertiliser which will allow farmers to meet demand.ertiliser which will allow farmers to meet demand.
Page 22 MaY 2020 aUSTRaLIa’S PaYDIRT
s people in Asia, Africa and Latin Salt Lake is perhaps the most ad- high-quality product with demand.”
AAmerica demand better diets, farm- vanced, having built its solar evaporation That demand is set to increase as
ers are switching from broad acre crops ponds and trenches on its Lake Way pro- people in emerging economies demand
of staples such as wheat, maize and rice ject near Wiluna at the start of the year. more nutritious diets.
to high-value fruit and vegetable produc- Salt Lake expects to have its process- “It has great thematics,” Salt Lake
tion. This switch comes at a price; tradi- ing plant commissioned by the end of managing director Tony Swiericzuk told
tional fertilisers are insufficient or have 2020 with Lake Way then set to produce Paydirt. “The world needs more food
too much chloride in them for use in these 245,000 tpa of SoP from the end of 2021. and in particular there is growing de-
high-value crops, leading farmers to seek This comes just five years after the mand for chloride-sensitive fruit and veg-
alternatives. company made the switch from uranium etable crops.”
Sulphate of potash (SoP) has emerged exploration in the US to WA potash. Global potash production is currently
as a key fertiliser in high-value crops. Kalium Lakes stands to be the second dominated by muriate-of-potash (MoP)
Free of chloride and other dangerous WA potash producer to hit the market, which has a 70 mtpa market based on
elements, it is ideally suited to fruit and having made its final investment decision supplying chloride-tolerant crops while
vegetable production. The market stands on the 185,000 tpa Beyondie project in SoP’s market is only 7 mtpa. However,
at 7 mtpa but with CAGR of around 5%, December. shifts in diet across both emerging econ-
its outlook is robust. At a proposed 426,000 tpa over 20 omies and the developed world point
A new generation of potash projects years, Agrimin Ltd’s Mackay project is towards greater demand in the coming
have sprouted up across the globe to potentially the largest of the WA projects decade.
meet the changing demand, with a group while Australian Potash Ltd and Reward “There is an enormous shift in diet, in
of ASX-listed companies and executive Minerals Ltd are both pursuing plus- Asia but also in the Western World with
teams leading the charge. 120,000 tpa operations. the move towards healthier food,” Eidne
While Anglo American plc garnered The concurrent development of half a said. “We all see that shift in the super-
the most headlines after swooping for the dozen projects could send alarm bells market with more healthy options and
Gina Rinehart-backed Sirius Minerals plc ringing over their impact on supply/de- an emphasis on high-quality fresh food.
and its North Yorkshire polyhalite project mand balances, but Argonaut Securities For instance, the US’ avocado consump-
in the UK, a cohort of juniors are mak- director Michael Eidne believes the mar- tion has increased eightfold in just a few
ing their own bid for the growing mar- ket can absorb the new arrivals. years.
ket. Salt Lake Potash Ltd, Agrimin Ltd, “Demand for SoP is currently around “In China, this has led to land use
Kalium Lakes Potash Ltd, Reward Min- 7 mtpa with CAGR of 2.5%,” Eidne told changes from broad acre to much more
erals Ltd and Australian Potash Ltd are Paydirt. “If you look at the sequencing of intensive, greenhouse style farming in
all developing potash plays on the vast the WA projects, they would all fall within response to demand shifts.”
salt lake systems of Western Australia. that CAGR over the next decade. The main source of SoP is currently
Meanwhile ASX-listed Danakali Ltd and “Farmers also find it very difficult to via the Mannheim process which takes
Kore Potash plc are focused on projects procure SoP so there is a market there. a MoP feedstock through a costly, en-
in Africa. In Europe, Highfield Resources The experience in the Mannheim sec- ergy intensive process to produce SoP.
Ltd and Davenport Resources Ltd have tor [which makes up 70% of current SoP Eidne said Mannheim SoP producers
their own potash development plans. production] is that the market expands to were coming under increasing pressure
The WA juniors have made remarkable take the supply. So, I don’t think there will to change their approach.
progress in just a few years. be any flooding of the market. SoP is a
aUSTRaLIa’S PaYDIRT MaY 2020 Page 23
coVeR
“We have seen an increased aware- nitely impact prices. But the WA projects a reminder to the WA potash hopefuls
ness around ESG issues in the Mannhe- all claim to be at the bottom of the cost that they are not alone in recognising the
im process space,” he said. “It is viewed curve, particularly in comparison to the growth potential of fertilisers. A string of
as environmentally unfriendly and cus- Mannheim producers so there is some other potash projects are being devel-
tomers are looking for alternatives.” inbuilt protection for the WA producers. oped around the world, including ASX-
Cost structures are also a major con- “I don’t think it will be truly disruptive listed juniors in Europe and Africa.
sideration, according to Swiericzuk. and displace the Mannheim production In Spain, Highfield Resources Ltd ex-
“There is essentially a bifurcation of because the market will be there for pects to receive final permitting for its
the cost curve; a complete separation both.” 500,000 tpa Muga MoP project by the
between primary and secondary produc- Investors are backing this prediction. end of the year. Meanwhile in Germany,
tion,” he said. Salt Lake’s $US165 million debt facility Davenport Resources Ltd has ambitious
While more than 50% of the Mannheim with Taurus Funds Management, final- plans for its 5.3nt resources at South
producers are loss-making at $US410/t, ised in late 2019, was the strongest in- Harz project including MoP, SoP and
the WA juniors are all pitching projects dication to date international financiers magnesium sulphate.
within the bottom cost quartile of global were eager to enter the potash market. In Africa, Kore Potash is taking on the
SoP production. Salt Lake’s DFS esti- Danakali also secured financing with the sizeable 2.2 mtpa Sintoukola MoP pro-
mated a C1 cash cost of $US205/t, Ag- African Development Corporation for its ject in Republic of Congo while the most
rimin’s $US222/t, Reward’s $US335/t Colluli project before Christmas then, in advanced of the international juniors is
and Australian Potash’s $US262/t. January, Anglo American plc announced Danakali, which is developing the Col-
Eidne said cost advantages would be a £405 million takeover of troubled Sirius luli project in Eritrea. Unlike the solar
vital in the WA potash juniors establish- Minerals and its Woodsmith polyhalite evaporation plays in WA, Danakali will
ing themselves in the SoP market. project in North Yorkshire. mine solid salts, lowering its cost base
“There is a valid concern in any grow- Woodsmith is set to produce a special- still further.
ing sector about how new product could ty SoP product, POLY4, which currently The challenge for all the internation-
be absorbed,” he said. “If the WA sector boasts a market of just 200,000 tpa. ally focused potash developers will be
suddenly brings on 1 mtpa it will defi- Anglo’s purchase of Woodsmith was matching the WA’s investment profile.
Page 24 MaY 2020 aUSTRaLIa’S PaYDIRT
“This is one of the largest untapped re- siderations of miners and investors as the ruler over the various players. Eidne
sources – Australia has about 50% of the advantageous for WA producers. believes the established potash produc-
world’s salt lakes – in one of the best min- “From an ESG perspective, the WA ers – seven companies account for more
ing jurisdictions in the world,” Eidne said. projects are top drawer,” he said. “It is than 75% of global supply – are eyeing
“Miners and investors are looking in- one of the strongest points the produc- off the upstarts.
creasingly for Tier 1 jurisdictions and WA ers have; they are low impact, have good “These projects are not going to stay
is a world-class mining destination with rehabilitation and clean processing.” with the smaller guys once they are up
the skills and the infrastructure to match. Those considerations play into the ma- and running but they are probably too
It compares very favourably to Europe, jor mining houses’ pivot towards greener small for the likes of BHP, Rio and Anglo,”
where there is a strong environmentalist commodities. As well as Anglo’s recent he said. “But for the likes of Yara, Nutrien
anti-mining sentiment, and the African purchase, BHP Ltd has expressed its in- and the other fertiliser companies, they
countries which are politically unstable terest in building its fertiliser group via its could be a good fit. It will allow them to di-
and often lacking in infrastructure.” Jansen potash project in Canada, but so versify their supply and production away
However, where WA has mining ad- far the majors have failed to break into a from Mannheim and improve their ESG
vantages, the international companies market dominated by integrated fertiliser credentials.”
boast a market head start given their producers. When and where established produc-
proximity to major markets in Europe, the Given the WA juniors are operating in ers move into the WA sector could de-
US and Brazil. the majors’ iron ore backyard, it could be pend on how long it takes for each of the
Eidne also points to growing ESG con- expected BHP and Rio Tinto Ltd had run juniors to hit the market.
“ If the WA sector suddenly
brings on 1 mtpa it will
definitely impact prices. But the
WA projects all claim to be at
the bottom of the cost curve,
particularly in comparison to
the Mannheim producers so
there is some inbuilt protection
for the WA producers.
aUSTRaLIa’S PaYDIRT MaY 2020 Page 25
coVeR
Salt Lake is set to be first to produc-
tion but Eidne warned peers not to get
involved in a race.
“Some people view it as a race, but I
don’t and I’m unsure if it is helpful. What
we need is for several companies to get
established and producing and perform-
ing to build confidence in the sector.”
Australian Potash managing director
Matt Shackleton shares a similar senti-
ment, believing a collegiate approach will
benefit all players.
“There are 5-6 CEOs continually wan-
dering the world and Australia telling the
story,” he told Paydirt. “I think the story is
starting to get out there because so many
of us are telling it. The next step for the
Australian SoP proponents is to put one
of these projects together successfully.
When us guys down here in Australia
start to present into that fertiliser theme,
we will really see that SoP value created.”
Shackleton and his peers have WA
Government backing for the sector to
flourish. Last year the sector was provid-
ed relief in the form of a reduction in rent
rates for minerals in brine mining leases
from the previous $18.70/ha to $2.32/ha
for the first five years and $4.64/ha there-
after.
WA Minister for Mines and Petroleum
Hon Bill Johnston said it was the level of
interest in the potash space that encour-
aged the State to act on the “inappropri-
ate” rental rate on leases paid by potash
hopefuls.
“It was well received by industry and it
recognises the peculiar nature of the pot- As people in Asia, Africa and Latin America demand better diets,
ash industry, which needs a very large farmers are switching from broad acre crops of staples such as wheat,
footprint. We were able to arrange a maize and rice to high-value fruit and vegetable production
special arrangement that only applies to
minerals in brine like potash so they don’t Australia to directly support individual “I have talked to potential funders here
have to have unnecessary costs on their mines for infrastructure, but we’re very in Australia and overseas and we think
projects and properly protects the interest keen to provide the proper environment… there is a strong case for supporting
of the resource holder; the people of the each project has particular issues and we these projects. We’re a low risk jurisdic-
State,” Johnston told Paydirt. are in constant discussions about how we tion, we have a very good framework for
While willing to provide a backdrop can be of assistance and make sure pro- supporting the industry and making sure
for potash companies to thrive in project jects can proceed,” Johnston said. that it operates to everyone’s benefit. We
development, including supporting R&D “We’re very excited about the oppor- think that investors should see this as a
initiatives to get the best out of potash in tunities in this area. Clearly, potash is low risk opportunity to participate in a
Australia, opening the State’s coffers to an important opportunity for fertiliser for growing global demand for fertiliser as
build infrastructure akin to the Northern domestic use but also for export and as we’d expect the need for agricultural pro-
Australia Infrastructure Facility (NAIF) is there is an expectation for growth and ductivity to increase, not just in Australia,
not currently part of the strategy. productivity in the agricultural sector, but around the globe,” Johnston said.
“It is not common for us in Western which will need more fertiliser. As with all commodities, the coronavi-
Page 26 MaY 2020 aUSTRaLIa’S PaYDIRT
While Western Australia’s potash juniors can rely on
the State’s premier mining credentials – regulatory
and political stability, skills – their international peers
have their own advantages.
The international brigade
Danakali Ltd (Colluli SoP project, Eritrea): The Colluli deposit
comprises solid salts, not brines, allowing for low-cost open pit mining
and processing. At only 180km from port, it is well endowed with The Fertiliser Products
infrastructure solutions. The project has already attracted African and
European development bank support and is close to key European, Muriate-of-potash (MoP): The most commonly used potash fertiliser
African and South Asian markets. with an annual market of 55 mtp. It is used to farm a variety of foods,
particularly chloride-loving vegetables such as sugar beets, corn, celery
Highfield Resources Ltd (Muga MoP, Spain): Blessed with access and Swiss chard. It can be beneficial for soils that are low in chloride,
to key infrastructure in a Tier 1 jurisdiction, Muga can keep freight costs building the plants’ disease resistance. However, in soils or irrigation
down. It is also close to key European markets for which it can attract water with high chloride levels, it can create imbalance in plants. The
premiums. sector is dominated by a handful of players with projects in Canada,
Russia, Belarus and Brazil.
Davenport Resources Ltd (South Harz, Germany): Close to key
domestic and European markets, South Harz also boasts a long Sulphate-of-potash (SoP): SoP fetches a premium over MoP but is a
production history. It is surrounded by high-quality infrastructure and is much smaller market, currently 7 mtpa. Using SoP and can improve a
likely to attract European and German development funding. plant’s ability to absorb essential nutrients like phosphorus and iron. It
Kore Potash plc (Sintoukola, Republic of Congo): One of the largest is particularly vital to high-value crops such as fruits, vegetables, nuts,
potash resources in the world, capable of producing 5 mtpa MoP. It is tea, coffee and tobacco which can be sensitive to chloride. Most SoP is
just 90km from the proposed port site and its Atlantic coast location produced via the Mannheim process. It involves pouring potassium and
means freight costs to Brazil, a key market, are low. It also enjoys strong other raw minerals into a muffle furnace to create a reaction between
Government support. potassium chloride and sulfuric acid. It accounts for more than 60% of
global SoP production but given its high energy intensity it sits high on
Phosphate: In the form of rock phosphate, phosphate is a key ingredient the cost curve.
in three fertilisers; SSP, TSP and MAP. Annual global production is The sector is also coming under increasing environmental pressure.
around 200 mtpa but is dominated by a handful of largely state-owned In contrast, SoP can be produced by using salt mixtures from natural
companies. While the US and China retain all production for domestic brines which requires brine with high sulfate levels, such as typically
use, Morocco is the world’s largest phosphate exporter, accounting for found in the WA salt lakes. Processing is less energy intensive than the
35% of global export supply. Around 85% of production comes from five Mannheim process, allowing for lower cash costs.
majors, who are vertically integrated.
rus pandemic has placed a huge caveat quality and yield will drop,” he said. “If Investors are wary of nascent sectors
over those predictions. All fertiliser prices they skip a season it hurts them the very of the Australian mining scene following
have come off in line with the pandemic, next. The demand for potash is growing the bursting of the lithium bubble last year
but SoP prices have proven slightly more with global population growth and it has but Eidne believes they will eventually be
resilient. While supply chains are affect- been pretty steady growth of 2-3% per convinced of case for SoP.
ed, the rush on supermarkets has shown annum in a big market place.” “It is an exciting, if still unproven, sec-
the global restrictions will do little to ease Swiericzuk agrees, pointing to a 4% tor,” he said. “Hopefully, we a few compa-
demand for food. price deviation over the last decade as nies get up and we get some confidence
Kore Potash’s newly installed chief ex- evidence of SoP’s stability. into the market. We are at the ground
ecutive Brad Sampson sees a rebound in “SOP prices haven’t changed in floor of a long-term industry. What would
the near term. three months but then they have barely you have done to be in at the ground floor
“Potash prices have been smashed changed in 10 years. That reinforces the of the iron ore industry?”
but, farmers can’t go too long without special nature of SOP and the markets
putting potassium into the ground or their which demand it,” he said. – Dominic Piper
aUSTRaLIa’S PaYDIRT MaY 2020 Page 27
FeRtILIseR sPotLIGHt
Danakali
keeps itself
busy in
lockdown
otash junior Danakali Ltd is weathering
Pthe inevitable impacts of the COVID-19
pandemic and remains hopeful it can stay on
track with development of its Colluli potash
project in Eritrea.
Danakali announced in April that the Af-
rican Finance Corporation (AFC) had post-
poned the second tranche of its proposed Danakali is blessed by quality, low-cost infrastructure options in Eritrea
investment in the company in response to
the global uncertainty created by the coro- largest development finance institutions with the market once there is something there.
navirus. This would usually be a heavy blow $US4.5 billion of assets under management. “The timing has to be right and as oth-
to a would-be developer but for Danakali the Along with Afreximbank it has approved ers assess what the pandemic means for
arrival of bad news could not have been bet- a $US200 million debt facility for Colluli’s their businesses, we have been able to
ter timed. construction and in December took $US21.5 continue discussions with the investors out
“This is the world’s crisis and we are not million in Danakali shares as part of a two- there which is good. We will push on, but it
immune to that, but we are seeing different stage $US50 million investment. will clearly take a bit more time in the current
ways of working,” Danakali chief executive While the second tranche has been de- environment than it would’ve a few months
Niels Wage told Paydirt. “It will impact the layed, Wage said AFC remained committed ago.”
way we operate to some extent but we have to the project. Aiding Danakali in investor discussions is
gone through our Phase 1 EPCM work and “We have the cash from the first tranche a robust SoP market.
in Phase 2 a lot of the work is done from the which was received from December so we “The SoP situation has been relatively
desktop so we have been able to keep pro- can continue to work as planned,” he said. good in these current circumstances,” Wage
ductivity up.” “The discussion with AFC is now about look- said. “The fertiliser market in general has
Colluli is poised to be Africa’s first major ing at the conditions precedent on the sen- seen some supply chain issues but people
potash operation with the company plan- ior debt, which they are also the significant still need to eat and farmers need to put
ning to produce 472,000 tpa of SoP in its first provider of. It is a question of what the best fertiliser on the ground. So, there is a lot of
module. In contrast to other potash projects, time is to raise the final funding required for support in countries for the farmers and ferti-
Colluli is a solid salt deposit close to surface, the project. liser industries. In India, they have exempted
allowing for conventional mining which will “The good thing is AFC are in very close agriculture from the lockdown so the flows
likely lead to the lowest cash costs in the contact and they are committed to the continue. If you look at SoP in particular it
global potash space. agreement and the project and they remain has been pretty robust. Production has been
Wage said those fundamentals – less a strategic partner for Danakali and Col- good, and on price it is one of the areas in
than $US150/t compared to an average of luli. They are committed to developing Africa fertilisers which has been holding up pretty
$US250/t for other development projects and Eritrea and they are a big believer in the well.”
– meant interest in the project had been re- SoP market and developing that region. Eritrea is one of the most isolated coun-
tained despite the pandemic-induced global “We are confident that second tranche will tries in Africa and a countrywide lockdown
economic crisis. come at the right time when global markets has meant cases of coronavirus are still
“Good projects will always be financed are less volatile than today.” comparatively low. Wage said while the
and we always see a lot of interest in this While the $US200 million credit facility in-country team could continue work from
project,” Wage said. “It is unique because it and $US50 million investment will see Da- home, the company would eventually need
is coming from solid salts, it is very low cost nakali close in on Colluli’s $US302 million to get back on the ground.
and significant quality and long life. It is fair to capex price tag, Wage said the company “At some stage we will need to work at site
say that even in the current global financial was still pursuing further financing options. with the technical team but when that will be
market it is something people are still look- “We have a range of options on the table is the same crystal ball question everyone is
ing at.” particularly when you think about Colluli as facing. Things may be slower and a bit differ-
This includes AFC despite its recent deci- an impact investment,” he said. “Our project ent but at this stage we can still continue with
sion to postpone its second tranche invest- is a very green fertiliser project and will have the EPCM and FEED work.”
ment. Lagos-based AFC is a private sector a significant development impact for Eritrea
investment bank, largely focused on infra- which makes for a lot of interest. We are also – Dominic Piper
structure developments. It is one of Africa’s talking to strategic investors. We will update
Page 28 MaY 2020 aUSTRaLIa’S PaYDIRT
Salt Lake thinks big
with Lake Way development
he coronavirus pandemic has done lit- port despite the current global conditions de-risking is well advanced ahead of the
Ttle to halt Salt Lake Potash Ltd’s pro- reinforce Swiericzuk’s argument that Lake major works around the processing plant
gress on its Lake Way potash develop- Way represents a unique opportunity in construction.
ment project in Western Australia. the Australian resources space; a robust “The big spend will be putting the big
While the global pandemic has strangled commodity combined with a low-cost Lego pieces together later in the year and
most of the international economy with a capex and opex scenario. Q3 and Q4 will see a very fast build,” Swi-
vice-like grip, Salt Lake (SO4) continued “Potash has a great thematic. The agri- ericzuk said.
its serene progress at Lake Way, near culture sector is strong and fertiliser prices Project development has become in-
Wiluna in the Northeastern Goldfields. have been incredibly resilient in the face creasingly difficult as governments impose
In April, the company completed civil of the coronavirus,” he said. “Lake Way, more stringent restrictions on movement
earthworks at its processing plant site, like all the brine producers in Australia and but according to Swiericzuk Lake Way’s
paving the way for plant construction which around the world, will be in the lowest cost timetable has not be delayed by the pan-
is due for completion by the end of 2020. quartile. And, it is smothered by infrastruc- demic.
Speaking to Paydirt in April, SO4 man- ture with the Goldfields pipeline and high- “It is an opportune time in our schedule
aging director Tony Swiericzuk said the way on the edge of the lake and the Wiluna for this to occur. We finished Stage 2 on-
company was on target to hit its own ambi- township and airstrip within 15km. lake civils in early February and the off-lake
tious deadlines. “It is very attractive from a support in- civils in April. So, we are in a period of fi-
“We want to be commissioning the plant frastructure perspective, which is helping nalising engineering and procurement and
by the end of 2020,” Swiericzuk said. fast-track the project and supports the low then we will be in baseline operation of the
SO4 is already well advanced with Lake capex and opex numbers.” ponds.”
Way’s development. It began construction SO4’s decision to stage Lake Way’s If SO4 can stick to its development time-
of the on-lake solar evaporation ponds and construction has been assisted by the pot- line, Lake Way could be commissioning by
trenches in early 2019 and by the beginning ash development process which allows for the end of the year.
of 2020 had 400ha of brines under sun. sequencing. “It is a simple flowsheet and product and
These ponds will produce the feed for the “A potash project is very different to a we have done plenty of trials with our har-
processing plant. metals project. It is a more spaced time- vest salts and been through different labs
“We have got more than 50% of our frame than a traditional metals project and and flowsheets and circuits and got some
on-lake delivery – trenching and ponds we intentionally set about fast-tracking the fantastic results in terms of quality,” Swier-
– completed,” Swiericzuk said. “Now we project by staging it. That means we could iczuk said.
are faced with the plant and NPI which will get the long-lead task of precipitation out “This management team has done a few
roughly cost $100 million. We completed of the way early,” Swiericzuk said. commissioning projects together and we
the civil earthworks for the plant site and “The first stage was to get brine as fast know you’ll always have little bumps along
have locked in a lot of the long-lead items as we could under sun because that is the road, but this is not a technical plant;
on fixed lump sum terms.” how we make ore. The salts precipitate there are no high temperatures or pressure
SO4 raised $20 million via a placement out and that’s basically your orebody so or acid. So, we are expecting a rapid ramp-
in April to provide further cash reserves for you are creating a ROM feed. We started up. We plan for a rapid ramp-up and then
the next stage of construction. that process in January 2019 and hit the halve the schedule for your internal target.”
The capital raising was the fourth in the ground running. Stage 1 was construc- Once Lake Way is up and running, SO4
past 15 months, bringing the total of funds tion of 125ha of solar evaporation ponds can turn attention to the other eight lakes it
raised to more than $76 million. In addition, which have been under sun since March has in its WA portfolio.
the company has a $US165 million debt fa- last year and by December we completed “We are laser focused on Lake Way, we
cility with Taurus Funds Management. Stage 2, a further 275ha.” want to get that built, get cashflow going
SO4’s ability to attract financier sup- The staged approach has meant project and get the balance sheet in order,” Swier-
iczuk said. “Once we do that, we can look
at other things. This is a multiple lake port-
folio and while I jokingly say we’re going
to create the Pilbara of potash, the nine-
lake portfolio we have does lend itself to
creating a SOP province. Building ponds
and trenches is all control-C/control-V
stuff. We now understand the optimum
methodology and how to construct them
fast and cheaply. The plant is the same,
off-the-shelf, so we will gladly be stepping
across other lakes as the market can take
the product.”
– Dominic Piper
SO4 started on-lake construction in March 2019 as part
of its staged approach to Lake Way’s development
aUSTRaLIa’S PaYDIRT MaY 2020 Page 29
FeRtILIseR sPotLIGHt
End in sight for Celamin
he COVID-19 pandemic “Tim Markwell and
Tmight have delayed the myself, together with
long-awaited return of Cel- Robin [Widdup] and Taz
amin Holdings Ltd’s interest [Aldaoud], are constantly
in the Chaketma phosphate reviewing what information
project, but managing di- we’ve been able to access,
rector Simon Eley is “com- what information we do
fortable and confident” his need to access and who is
company will finally see going to do that work,” Eley
an end to the standoff over said.
ownership rights as soon “We’ve already identi-
as restrictions are lifted in fied some people at the top
Tunisia. of their game both in terms
A hearing for the urgent of knowing the region and
application to compel the the commodity, so we’ve
return of Celamin’s interest got people ready and will-
in the operating company ing and raring to go.
which holds the Chaketma “We’re even talking
permits was scheduled for about doing some due
March 18, more than 2.5 diligence for a potential
years after the International investor via a Go-Pro
Court of Arbitration of the from someone on the
International Chamber of ground locally. As much
Commerce found the com- Celamin looks set to regain its interest in the operating company which holds the as COVID-19 has stopped
pany’s former JV partner Chaketma phosphate project in Tunisia progress and on-ground
Tunisian Mining Services activities, we’ll be ready as
(TMS) had fraudulently soon as there is an open-
transferred the rights to the project. ularly impressed with the consistency and, ing for us to get busy once we get our inter-
However, with the coronavirus enforcing more recently, the speed with which the est back as we expect.”
widespread shutdowns around the world, Tunisian courts had reacted to Celamin’s Eley said the company continues to fol-
including in Tunisia, that hearing was post- applications for a resolution to the owner- low global commentary around food secu-
poned just two days before it was due to ship dispute. rity and the opportunity for a phosphate
take place, meaning Celamin will have to “The ability for us to be able to put pres- developer such as Celamin to feed into
wait just that little bit longer to have its in- sure on TMS to honour those damages that thematic.
terest in Chakema returned. payments, in addition to the transfer of our “We’re looking at a global population
“We were literally within days of that fi- interest, was quite clear and the courts in 2050 of 10 billion people, so between
nal hearing and being awarded back that were incredibly quick to act on that for us,” where we sit now and where we need to
interest to be able to resume our manage- he said. get to, that’s 56% more food,” he said.
ment rights of the operating company and “In particular, the way they responded “Obviously not all of that is going to
further undertake both accounting and to TMS’s request for a delay…the judge come from cropping which requires fer-
technical due diligence on work that TMS did not understand TMS’s request for an tilisers, but you can rest assured that the
have done over the last five years that adjournment for the urgent application and bulk of it will, so I think there’s a huge task
we’ve been completely in the dark about,” was also dismissive of the reasons why a there from where we sit today in order to
Eley told Paydirt. request for an adjournment would be re- meet that gap.
“To be clear, this is not reopening the quired.” “To us, it’s just another good ex- “Combine that with the fact that the
case we won or unpicking the arbitration ample of the Tunisian administration being amount of arable land is steadily declin-
or anything like that; this was effectively effective and consistent. We’ve only had ing and we’ll need to grow more from less.
Celamin seeking orders pursuant to the positive decisions confirming and enforc- Then add to that the fact we’ve got some
arbitration, orders whereby the court could ing the arbitration award and not once pretty serious greenhouse gas emission
step in and act on behalf of TMS to formal- have the Tunisian authorities stepped restrictions now which means that we
ise the transfer of our interest. aside from it.” can’t have tractors burning diesel around
“It’s a little bit deflating, but we remain A BFS is the major foreseeable goal for the clock in order to meet those increased
comfortable and confident it will occur. We Celamin at Chaketma, which hosts an in- demands.
just need to wait for these confinement ferred resource of 130mt @ 20.5% P2O5. “The answer to all of that is a better un-
measures to resolve.” While the company remains limited in derstanding of how we can get more out of
On top of returning Celamin’s interest in what activities it can undertake on the pro- the land and one of the key elements for
Chaketma, TMS must also pay damages ject, Eley likened that work to the prover- that is effective use of fertilisers, of which
and costs totalling $US4.4 million ($7.9 bial “ducks on the pond – calm on top but phosphate plays a huge role.”
million). Daily interest is also accruing on flat out underneath” to ensure no further
that amount. time is lost once management rights are – Michael Washbourne
Eley said his company had been partic- restored.
Page 30 MaY 2020 aUSTRaLIa’S PaYDIRT
German potash play
readies for partner
avenport Resources Ltd managing viously ran the Boulby potash
Ddirector Chris Gilchrist is under no illu- mine in north-east England
sions; his company needs to find a strategic for Cleveland Potash when
partner if it is to fulfil its German potash am- it was under Anglo Ameri-
bitions in the next few years. can plc’s ownership. He said
Davenport boasts Western Europe’s the Boulby experience and
largest potash inventory with 5.3bt of JORC the permitting successes of
2012-compliant inferred resources across neighbour Sirius Minerals dis-
four licences which make up its South Harz pelled the notion Europe was
project. opposed to mining.
However, with a market cap of just $8 mil- “People are looking at Highfield [Re- radar and got the licences for €1.5 million.
lion, it will need some funding help if it is to sources Ltd, see page 32] and saying that “We not only got the licenses – which
finance development of the 150mt resource is typical of Europe but they are completely have no royalties or rents attached to them
on the Ohmgebirge licence, its proposed wrong,” he said. “You can build mine here. – but also the historical exploration data.
first mine. We’ve got assets in Thüringen, a state with Davenport converted the East German re-
“We need to find a strategic partner for the lowest GDP per capita in Germany. serves into JORC standards and defined
a JV,” Gilchrist told Paydirt. “We have vari- That has the politicians begging us to de- 5.3bt of inferred resources.”
ous non-disclosure agreements in place velop this project.” Across that 5.3bt, Davenport has a num-
and will appoint a London-based advisor to The key to successful European mining ber of product options. While Ohmgebirge
help in that regard in the coming months. developments, according to Gilchrist, is to has been chosen for its low-cost start-up
We have put together a data room and we minimise the footprint. requirements to produce MoP, the other
have already had some discussions with “Getting approvals in Europe is to have a licences hold potential for magnesium sul-
potential partners. sustainable tailings solution and we’re well phate, SoP and polyhalite, all of which Gil-
The potash market is tightly controlled by placed to do that,” he said. “Our licences christ is confident of finding a market for.
a handful of major players and while several are in an area with a long history of mining “The scoping studies showed the projects
of them would likely show interest, Gilchrist and there are many abandoned industrial were well placed for the European market,”
said Davenport was willing to start discus- sites for us to build a plant without disturb- he said. “It is quite a mature market, about
sions with several parties. ing houses or habitats. And, because the 5.5 mtpa but it only produces 3.5 mtpa do-
“There are a number of groups who could area has a long history of mining, there is mestically. The rest is coming from Israel,
be interested; from potash miners, to chem- a massive amount of underground voiding Jordan, Canada, etc. at high costs. So, we
ical companies and fertiliser producers,” he we can use for tailings storage so we will could put potash into Europe cheaper than
said. “We have seen some of the Australian not need any surface tailings.” is currently being bought.
juniors sign offtake agreements with vari- Thüringen – part of the former East Ger- “Potash is very market driven so you
ous fertiliser companies.” many – was a prolific potash producing have to look at the market and then work
The arrival of the West Australian salt province from the 1890s onwards. Potash back to your process. You must also look
lake developers has added greater compe- mining was the largest generator of foreign at value because SoP and magnesium sul-
tition to the potash development space but exchange during communist rule but the phate are more valuable but you can’t just
Gilchrist is confident Davenport has sev- operations were abandoned after reunifica- drop 300,000 tpa of SoP on the European
eral advantages which outweigh those of tion. market because it isn’t big enough. There is
the WA upstarts. “The licences are adjacent to old mines, a much bigger equation in play.
“I would argue we are more advantaged not mines themselves but were areas the “There can be some challenges in pro-
than the West Australian projects thanks to East German state mining company were cessing but we are very fortunate to have
the infrastructure we have,” he said. going to push into,” Gilchrist said. “Explo- all the building blocks to produce most pot-
“We completed preliminary scoping ration and drilling were undertaken by the ash products. We are working with a pot-
studies on the licence areas and we have state mining company just before reunifi- ash processing specialist which has a pilot
shown they can build a project for less than cation but then the new unified Govern- plant facility in Germany. I’ve worked with
the average capex of new potash projects ment tried to sell these assets; when they them for many years and they always get it
because of the infrastructure advantages; couldn’t, they parked them on the shelf.” right and eventually work with the process
access to power, water and transport in- Gilchrist’s industry contacts brought design engineers to ensure the design is
frastructure, and we will produce a sweeter them to Davenport’s attention. translated into a plant.”
product. “We were made aware of them about two There may be few examples of potash
“The studies also showed we would have years ago by a German potash consultan- developments in Europe, or anywhere for
direct access to the European potash mar- cy. We approached the Government which Davenport to draw from but given Gilchrist
ket; that puts us ahead of the WA projects in said we would have to bid for them in an has experience with most of them, it could
our estimations.” open tender. Kalium Salts wasn’t in a posi- find itself having all the right partnerships in
Gilchrist is familiar with European and tion to bid and it wasn’t a strategic fit for the the years ahead.
indeed global potash markets, having pre- other potash players, so we crept under the - Dominic Piper
aUSTRaLIa’S PaYDIRT MaY 2020 Page 31
FeRtILIseR sPotLIGHt
Muga mining
concession on track
ichard Crookes expects to receive a min- constant dialogue with mining authorities
Ring concession for Highfield Resources and making sure that the concession sub-
Ltd’s Muga potash project in Spain by the mission is progressing through the system.”
end of the year. Fast forward to the award of a mining con-
Spain has been one of the countries most cession and it will then be a matter of revis-
impacted by COVID-19, but in positive signs iting the banks who agreed to finance the Richard Crookes
the infection rate was reportedly “gradually 500,000 tpa Muga potash project.
slowing” in the country at the beginning of A syndicate of major European commer- duction can be attributed to Saskatchewan,
last month, and workers continued to effec- cial banks had previously approved debt Russia and Belarus and while those players
tively transition to remote working conditions. credit of €185 million for the development of could churn out large quantities on demand
“We are probably in daily communica- Muga, which is based on a two-phased ap- and control pricing, Crookes said they were
tion with the relevant approval authorities. proach starting with an initial capex of €368 disciplined in their approach.
We have to talk to the Mines Department million. Meanwhile, given fertiliser application is
and Environmental Department in Navarra, Phase two capex required to double MoP seasonal, producers are accustomed to
Aragon and Madrid; three approval au- production is €208 million, with C1 cash building up inventories and scaling back
thorities are making decisions because of costs being €82/t (including salt by-product), production when necessary, which keeps
the way the project straddles the provincial NPV €1.97 billion and IRR 25%. the supply and demand equation in good
boundary between Navarra and Aragon,” “We anticipate resurrecting the previously balance.
Highfield chairman Crookes told Paydirt. approved project finance debt facility that “The good thing is that the MoP market is
“The Government is obviously working we had for the project when we thought we growing at about 2-3% per annum [CAGR],
from home, but our guys are actually finding were going to get permitted for the project a from currently about 68-69 mtpa,” Crookes
they are answering their phones and taking couple of years ago. There was a four-bank said.
calls and we are in this pretty good space syndicate with €185 million from European “As much as the large projects can prob-
now. The mining concession documentation banks on offer,” Crookes said. ably meet that increased demand, there is
was submitted as we were closing the office “Assuming the banks open up for busi- room for good projects like ours with low
on March 13 and they are processing it. Our ness later this year, and I am sure they will, capital intensity, low opex and reasonable
timeline hasn’t changed yet, however given we will dust that off and get it reapproved margins in good locations to come in and
the situation we still expect to receive the as we get the mining concession approval. capture local market share without disrupt-
Hopefully we will ing the market.”
resurrect that circa Globally, potash prices were low at the
€200 million debt time of print, but encouragingly for Highfield
facility and we will the price of $US275/t (€250/t) was nearly
try and fill the gap $US65/t higher than the Vancouver FOB
with some off-taker price, while Brazil was faring a little better.
finance and new Potash supply from Brazil into South East
equity. We are Asia has been curbed due to restrictions im-
pretty confident that posed to flatten the coronavirus curve.
the project is strong While prices have also come off in Eu-
enough to attract rope, a premium remains for Highfield.
that funding. There “We talk about the location benefits of our
has been success project being in those markets which have a
A mining concession for Muga is anticipated by the end of 2020 in the project fi- higher premium and higher net back to the
nancing market for producer. Almost all of our first module of
mining concession by the end of the year.” some other potash projects recently and I production will be sold into our local market
Highfield was granted environmental ap- see no reason why with this project – being and that ensures we retain the best prices,
proval for Muga in 2019 and followed up with in a good location – shouldn’t get financed.” the best net backs possible,” Crookes said.
submissions for power and water permits Crookes admitted the market was diffi- As construction of Muga gets closer, Eu-
plus other permits required for the start of cult to break into, however, Muga’s position ropean potash consumers have started po-
construction. in northern Spain means it can easily sup- sitioning themselves for off-take.
“Given we are doing mostly desktop work, ply key demand areas in Europe and its low Earlier this year, Swiss-based agri-trader
the engineering work can continue, we have freight costs allows for access to the Brazil- Keytrade AG signed a MoU to buy 300,000t
increased communication through Microsoft ian and other potential overseas markets. of MoP from Muga.
Teams ensuring that the work streams are Africa is a region Highfield has identified Highfield sees the potential future part-
progressing. We can work remotely, there for growth and Crookes is confident his com- nership with Keytrade delivering “enhanced
was some field work, it wasn’t critical and pany can emerge in an industry dominated insights into the MoP market which will be
that has now been paused,” Crookes said. by large producers. invaluable in the first years of production”.
“Now it’s about ensuring that we are in It is estimated that 80-90% of global pro-
– Mark Andrews
Page 32 MaY 2020 aUSTRaLIa’S PaYDIRT
Mackay DFS to arrive in June
he fertiliser sector is poised for an in- “We have probably collected the most “We used to get questions on whether
Tteresting few years and Agrimin Ltd is comprehensive long-term database other there was a going to be a potash industry
primed to be a key player. than an operating mine, definitely in terms in Australia and I think that has moved to
Anglo American plc’s £405 million take- of any development projects. The trial has when the first production will occur, how
over of Sirius Minerals for the Woodsmith validated the data used in the DFS, which much and what is the timeline,” he said.
polyhalite (POLY4) fertiliser project in was the whole purpose of running the trial.” “I believe investors view the industry
North Yorkshire now means that the larg- Agrimin has been a frontrunner in Aus- completely differently to three years ago,
est undeveloped SoP or chloride-free pot- tralia’s potash sector and an indication of but as we have seen, starting a new in-
ash project in the western world belongs Savich’s long-term outlook for SoP is the dustry is difficult. Companies are going
to Agrimin. build-up of ground accumulated by the through pretty tough times at the moment,
A DFS on Agrimin’s McKay SoP project, company. but I am confident this industry will emerge
about 785km from the West Australian Agrimin’s most recent acquisition of the quite strongly in the next decade for WA.”
north-west port of Wyndham, will be com- Lake Auld potash project gives the com- Just how the fertiliser space evolves has
pleted in Q2 with financing possibilities pany a substantial holding of land covering taken quite an interesting turn of late with
then to be explored. the broader Canning Palaeovalley system Anglo American’s foray into the sector.
“Everything is on the table,” Agrimin and “associated chain of lakes that in- “It is the first time we have seen a min-
chief executive Mark Savich told Paydirt cludes the southern half of Lake Auld and ing company as such come into the ferti-
about what structure the development of Percival Lakes,” Savich said. liser space. The space has predominantly
Mackay may take. “We have been looking at those projects been occupied by fertiliser and chemical
Off-take discussions will also ramp up
post DFS release, as Savich prepares for
the reality of entering a downbeat market
for funding.
“We are adjusting our expectations and
we need to recognise that the market and
business environments have shifted and
are softer than they were,” Savich said.
“We will continue to connect with all the
groups we have been talking to for a long
period of time and hopefully we will be able
to bring them on the journey with us when
the DFS is completed.”
The Mackay SoP DFS has been two
years in the making, with a May 2018 PFS
highlighting potential for a 426,000 tpa pro-
ject over an initial 20-year mine life.
EBITDA over the life-of-mine was esti- Agrimin’s McKay SoP project is about 785km from the
mated at $2.7 billion based on cash costs West Australian north-west port of Wyndham
of $US222/t FOB from Wyndham.
A post-tax NPV of $US453 million and for the best part of seven years and it has companies within the industry. I think it is
post-tax IRR of 20%, based on an average been through patience that we have been a great sign overall and what Anglo has
$US555/t SoP price, with capital costs of able to consolidate that full tenement pack- done makes Agrimin the largest undevel-
$US409 million estimated. age,” he said. oped SoP or chloride-free potash project
A key part of the DFS has been running “They have been pretty low-cost acqui- in the Western world,” Savich said.
a year-long pilot evaporation trial on Lake sitions and we see the potential there. We “There are a couple of big projects in
Mackay. are excited to add some exploration po- Ethiopia and Eritrea, but the next one
Agrimin recently confirmed that the DFS tential to the mix as we move through the down is really us and we think that places
process design targeting SoP and SoPM approvals and development phase of Lake us pretty well to be an interesting proposi-
(magnesium oxide) product specifications McKay.” tion for bigger players. Bringing Lake Auld
achieved an overall 80% process recovery It was probably unthinkable three years into the mix demonstrates that we do have
(brine extraction to product). ago for an ASX company to be talking a lot more growth than just Lake McKay.
The positive outcomes serve as another about project development and potential “Hopefully the initial 426,000 tpa pro-
major de-risking milestone for the Mackay expansion in the fertiliser space and while duction in our PFS is just the beginning for
project, with samples making their way to the ribbon is some way from being cut at us. We hope to show that we can get much
potential off-takers and project partners. Mackay, it is companies like Agrimin which larger over time and that will be important.
“We will have well over 12 months of have been integral in pioneering a new in- It will be interesting to see if there is any
data collection; that means we will have dustry in Australia. further interest from mining companies in
collected data from all seasons, which Savich said there were several projects the sector outside of the traditional ferti-
is critical because brine chemistries and at different stages of development in Aus- liser players,” he said.
salts that form do change through different tralia, which had helped the industry ma-
seasons,” Savich said. ture. – Mark Andrews
aUSTRaLIa’S PaYDIRT MaY 2020 Page 33
FeRtILIseR sPotLIGHt Greg Cochran
Reward for patience
he global COVID-19 pandemic might “It’s been intensive. Once we went
Thave forced Reward Minerals Ltd to through the six-week public review pro-
temporarily suspend activities at its Lake cess at the state level, it prompted would
Disappointment sulphate of potash (SoP) you believe somewhere around 140 sub-
project, but it appears unlikely to delay missions, which is almost unheard of.
perhaps the biggest milestone in the Some other projects, certainly not in our
company’s history to date. space but in other more sensitive miner-
Reward is anticipating formal confir- als, have attracted a similarly large num-
mation of its environmental approvals – ber of comments, but this is certainly a
both at state and federal level – over the fairly recent record, I’d suggest.
coming months for the project, marking “A huge feather in the cap must go to
the end of an arduous process that has the team involved in putting all this to-
been at least four years in the making. gether. It’s been four years in the mak-
At the time of print, the statutory ap- ing since the initial on the ground work
peals process for a state environmental started, and the studies started two on the ground work.
permit was nearing its conclusion and years before that, so it’s been 6-7 years Cochran said he was not at all fazed
could be finalised imminently. It comes of effort to get it to this point. It’s amazing by the forced site closure given the com-
after the board of Western Australia’s the hurdles we’ve met.” pany is currently focused on finalising the
Environmental Protection Authority Perhaps fortunately for Cochran, he environmental approvals to attract a po-
(EPA) presented its recommendation for has become somewhat accustomed to tential strategic partner to assist with the
development approval to the Minister for lengthy and heavily scrutinised approv- project’s development.
Environment late last year. als processes, having endured a similar “I think a number of the companies and
Reward was also awaiting feedback on experience in obtaining state and federal investors, as in funds, that we’ve been
the “preliminary documentation” submit- environmental permits for the Honey- speaking to previously were perhaps a
ted to the Commonwealth Department of moon uranium mine in South Australia little bit nervous in terms of whether or
Agriculture, Water and the Environment during the mid-to-late 2000s. not we would get the go-ahead on the
earlier this year for consideration for a Cochran is however not as experi- environmental side,” Cochran said.
federal environmental approval. Assum- enced in dealing with global health crises “It’s a small project and while we’re not
ing the green light is given, all key ap- such as the COVID-19 outbreak which going to bet the bank and lose the bank
provals would likely be in hand by mid- has forced many industries around the if we don’t get environmental approval,
year. world to shut down for extended periods. it was a major issue in decision-making
Lake Disappointment, about 340km The northern part of the Lake Disap-
east of Newman, is only the second SoP pointment project – which hosts the with potential strategic partners. Now
project in WA after Kalium Lakes Ltd’s camp, trenches and evaporation ponds that we see the light at the end of the tun-
upcoming Beyondie mine to receive a used in recent crystallisation trials – is nel is not a looming train smash, we’re
development approval recommendation, located within the federally-sensitive quite excited about a constructive en-
although this is the first SoP project to be East Pilbara Designated Biosecurity gagement with one of the groups we’ve
assessed by public review. Area. Under present interpretations, all been dealing with, but also potentially
“We have been assessed at a level of of Reward’s activities on site have been others we’re now opening the door to.”
scrutiny that is unparalleled in the SoP deemed non-essential and the company With a strategic partner on board,
space in terms of level of detail,” Reward now must patiently wait for certain re- Cochran believes the company can final-
chief executive Greg Cochran told Paydirt. strictions to be lifted before resuming any ise its pumping trials, process flowsheet
and resource-to-reserve conversion re-
quirements – all for input into a DFS –
within 12-18 months.
The 2018 PFS estimated $451 million
(including contingency and pre-produc-
tion costs) is needed to produce 407,500
tpa SoP for a cash cost of $335/t and
AISC of $376/t FOB Port Hedland, based
on a 27-year mine life which currently
represents less than 10% of the Lake
Disappointment resource.
“It sounds simple, but the devil is in the
detail because there’s still a lot of work
to do,” Cochran said. “In saying that, we
reckon with the permitting behind us,
we’re in a really strong position.”
– Michael Washbourne
Reward is poised to receive state and federal environmental approvals for its Lake
Disappointment SoP project over the coming months
Page 34 MaY 2020 aUSTRaLIa’S PaYDIRT
NAIF is conducting due diligence on providing
potential support for Lake Wells
Aussie-made potash
for the taking
roject financing can be a challenge in Wells’ opex of $US262/t to sit inside the first larger, volume driven markets. To a degree
Pthe best of times, so any opportunity to quartile of industry costs, with just a fifth of it may ultimately help us move into the Euro-
ease that burden must be taken, particularly the measured resource estimate featuring pean markets which is where we have been
now. in APC’s plans to date. focusing a fair bit of attention and I think it
That is exactly what Australian Potash The company is also hoping that access will give us an opportunity to distinguish
Ltd (APC) is successfully doing to give its to the Northern Australia Infrastructure Fa- ourselves there, too,” Shackleton said.
Lake Wells SoP project, 500km east of cility (NAIF) can be included in the project Creating an identity in what is still a niche
Kalgoorlie, a good chance of being among financing structure. market in Australia is a neat idea and one
the emerging pack of potash players in After a carefully considered process, APC hopes will give it the upper hand.
Western Australia. NAIF made the decision in April to proceed There are few primary SoP deposits
Last month, Migao International (Singa- with formal due diligence on APC’s request globally and while the current world market
pore) Pte Ltd signed a binding 10-year take- for funding in relation to Lake Wells. for SoP is about 7 mtpa (70,000-90,000 tpa
or-pay term sheet for 50,000 tpa of APC’s Shackleton applauded NAIF’s proactiv- in Australia), there are a number of Man-
K-BriteTM premium SoP from Lake Wells to ity in engaging with APC, which has so far heim producers filling the void and a small
be distributed through China. spawned a strategic positioning paper on number of low-cost solar salt players also
Migao’s commitment follows Redox Pty what infrastructure NAIF could potentially contributing to SoP demand.
Ltd’s declared interest in March to distribute fund to complement Lake Wells. Therefore, Shackleton sees potential for
20,000 tpa of K-Brite in Australia and New Discussions between the two parties are the band of WA SoP hopefuls to coexist
Zealand over a 10-year period also. confidential. in the sector, however, converting proof of
Two off-take agreements in place with “At the conclusion of the due diligence concept to reality remains key.
top tier distributors means APC has almost phase we would have developed a formal “Is there enough demand for all the SoP
half of its 150,000 tpa SoP production from loan application to NAIF, which is then sub- projects being promoted in WA to get up?
Lake Wells accounted for in the market. ject to NAIF credit control and the approvals Technically yes. If they are willing to sell it
APC managing director Matt Shackle- process. That is the first step in our funding for less than the Manheim producers then
ton told Paydirt the off-take arrangements pathway. At the same time, we have been in they will take over the market. I think the re-
were essential in securing project financing. consultation with various project financing ality is that there probably isn’t the capital
“These are bulk projects and it would be banks, both domestically and overseas,” appetite to develop all those projects in WA.
impossible to imagine getting traditional Shackleton said. There is only a finite amount of capital that
project debt financing without off-take. “There is only a very small component will get located to one particular sector and
Private equity money potentially wouldn’t of field work to do, so we are not being I think those that get in the market first and
require off-take positions, but that would delayed by travel restrictions imposed on get their hands on it first will probably be the
perhaps come in slightly more expensive,” us. In terms of us being able to continue ones that produce,” Shackleton said.
Shackleton said. to advance [financing] conversations we While the flow of capital into the Austral-
In pursuit of $208 million development have been having all along we can con- ian market is at early stages, there is no
capex for the 30-year Lake Wells project, tinue with that in addition to offtakes, NAIF doubting the heat building within the broad-
Shackleton said having 125,000-135,000 funding and EPA approvals process. We er fertiliser space.
tpa in the hands of off-takers was the strat- are very confident of completing those, but “Anglo [American plc] taking over Sirius is
egy. where the market is going; that is anybody’s a fairly solid piece of support for the fertiliser
“The conversations with those tradi- guess.” thematic, as is BHP’s [Ltd] continued dis-
tional debt financiers have been ongoing One thing Shackleton is banking on is cussions about Jansen in Canada. BHP’s
for some time and we’ll conclude those having the K-Brite™ brand to distinguish investment in that is somewhat delayed, but
once we have got our off-take programme Lake Wells SoP in markets such as China, the fact that it is still part of their portfolio
completed. We’d be looking at getting to an where visibility of domestic and imported and it hasn’t been hived off speaks volumes
indicative term sheet stage of those conver- products is important. for that fertiliser thematic,” Shackleton said.
sations with debt financiers in the second “That was the genesis behind the idea of – Mark Andrews
quarter of this year,” Shackleton said. developing our own brand, which is to po-
The 2019 DFS metrics outlined Lake tentially give us that little extra edge in those
aUSTRaLIa’S PaYDIRT MaY 2020 Page 35
LAtIn AMeRIcA
Latin miners prepare
for post-COVID restart
ay has traditionally seen Australia’s were ongoing with government in Peru Argentine President Alberto Fernandez,
MLatin American-focused miners and and Mexico. who imposed a country-wide lockdown in
explorers gather for the annual Latin Musselwhite in northern Ontario, mid-March, has moved to put mining on a
America Down Under conference. In 2020, Eléonore in Quebec as well as Cerro Ne- list of essential sectors, although the virus
however, the forum has succumbed to the gro in Argentina have been impacted by has snarled transport and miners’ logis-
ravages of the COVID-19 pandemic. Con- COVID-19 shutdowns in their respective tics.
ference organiser Paydirt has postponed jurisdictions, while Newmont has also Canada’s Quebec province announced
the 2020 event, with new dates to be an- scaled back operations at Penasquito in it would redesignate mining an essential
nounced in coming weeks. Mexico. service, while in northern Ontario mining
To fill the gap in the schedule, Paydirt However, as the coronavirus shows is already seen as essential.
is committed to covering the very best sto- signs of peaking, and authorities in Bue- At the time of print, a national state of
ries from the region, including a special nos Aires and Quebec City lift restrictions emergency remained in place in Peru and
eight-page Latin America feature in this around mining, which they have deemed Yanacocha, which comprises an estimat-
edition. as an “essential service”, Newmont is look- ed 3% of Newmont’s 2020 gold produc-
While Australian juniors have found their ing to a phased restart, Palmer said. tion, was limited to gold production from
progress hampered by lockdowns and un- “I would expect we would be able to leach pads as managing critical safety and
responsive markets, there is hope on the bring operations that have been on care- environmental activities took priority.
horizon, with the region’s majors preparing and-maintenance back into some level of Meanwhile, operations at the Antamina
themselves for a restart. production,” Palmer told Reuters by phone copper-zinc mine run by the consortium
As Newmont Corp prepares for po- from Perth in mid-April. of BHP Ltd (33.75%), Glencore (33.75%),
tential restarts to operations in Canada, “In those countries where restrictions Teck Resources and Mitsubishi Corp
chief executive Tom Palmer told Reuters have been lifted... it is days or weeks,” he (10%) remained temporarily suspended.
discussions relating to the importance of said, without specifying how long other Under an exemption from the Peruvian
mining to the economy and communities mines may take to restart. Government, most of the 2,400-strong
Paydirt has postponed the 2020
LADU event, with new dates to
be announced in coming weeks
Page 36 MaY 2020 aUSTRaLIa’S PaYDIRT
workforce demobilised from site with a record concentrator throughput to the nine the scope of the works contained in the
skeleton staff performing essential tasks, months ended March 31, but also looking contracts, until June 30 to the extent that
including disinfecting the site, to enable to prepare for an uncertain few years in the operational continuity in the site or respec-
the operation to restart when it is deemed country. tive area is maintained.
appropriate. “We are actively monitoring the rapidly BHP estimates its contribution to be in
Freeport-McMoRan Inc has also had evolving social, political and economic the order of $US25 million, which includes
to ramp down operations at Cerro Verde situation in Chile. We expect the next two an initial $US8 million of aid provided be-
– one of the largest employers in the Areq- years to remain highly uncertain, with the tween March 23 and April 13.
uipa region – with the concentrator func- process for arriving at a new constitution BHP’s support for its employees and
tioning at just one-third of the desired rate. dominating the agenda. This will intro- contractors in Chile is similar to the posi-
Freeport’s 53.6%-owned Cerro Verde duce high levels of uncertainty into deci- tion First Quantum Minerals Ltd has taken
concentrating facilities are among the sion making in both the public and private in Panama.
world’s largest, with the mine producing 1 spheres,” BHP stated. Cobre Panama was placed on care-
blb copper and 29 mlb molyb- and-maintenance after the Di-
denum in 2019. rector General of Health of the
The state of emergency in Ministry of Health of the Repub-
Peru has seen nightly curfews lic of Panama (MINSA) ordered
in place for the best part of the temporary suspension of
a month, however, President labour activities at its Panama-
Martin Vizcarra expects presi- nian subsidiary Minera Pana-
dential elections to proceed in ma, S.A., as a sanitary control
2021 and the country’s econ- measure due to COVID-19.
omy to awaken from “hiberna- Cobre Panama will be kept
tion”, Reuters reported. on care-and-maintenance until
Mining is a major contribu- MINSA is satisfied the quaran-
tor to Peru’s economy and tine conditions are appropriate.
emerging projects like Anglo Cobre Panama operations
American plc’s $US5 billion general manager Gordon White
Quellaveco copper project are said the company would con-
primed to inject further cash A national state of emergency was in place in Peru at the time of print tinue to support its employees,
into the country’s coffers. their families and the wider
While production of 300,000 tpa copper For the time being, as BHP has signifi- community during this challenging period.
is not expected to start until 2022, 10,000 cantly reduced both its number of employ- “So far, we have donated 60 container-
construction workers were in full swing at ees (from 7,310 to 4,910) and contractors ised health clinic modules to the Ministry
Quellaveco prior to the strict COVID-19 (21,911 to 11,289) in its operations in Chile, of Health for use as health posts and com-
measures imposed by the Peruvian Gov- it has taken on the responsibility of under- munity quarantine facilities, both in the
ernment. Anglo has therefore temporarily taking a significant part of the contractor region and nationally, to assist the protec-
withdrawn the majority of employees and companies’ cost to maintain the remunera- tion of those most vulnerable in our com-
contractors from Quellaveco and con- tion of their demobilised workers and their munities. The mine is also donating much
struction work significantly reduced, with respective jobs. needed medical supplies such as ventila-
only critical areas of the project continuing For smaller and medium-sized compa- tors to the Ministry of Health. We have also
as normal, until such time as workers can nies deemed to be in more fragile finan- responded to the Government’s request to
return safely. cial situations and whose local or regional support families in need with food and sup-
Across the border in Chile, BHP Ltd workforce is important, BHP will continue plies,” White said.
is not only trying to absorb the impact of to voluntarily pay 70% or 90% (as the case – Paydirt with Reuters
COVID-19 on Escondida, where produc- may be) of the fixed remuneration and so-
tion was reportedly increased courtesy of cial security contributions associated with
Los Cerros finds partner mineralised porphyry to the north and north-east. Field crews
will also attend to ground preparation for IP surveys at Tesorito
and Chuscal, for which Los Cerros is poised to have its own
as Colombia opens up equipment to use for.
Subject to a positive outcome from a six-month trial of the
strategic partnership agreement with Ausino, Los Cerros will
Timing was good for Los Cerros last month. Just as it was acquire IP equipment from its partner, plus a diamond drill rig
bringing in Hong Kong’s Ausino Investment Ltd (Ausino) with all the trimmings and after-sale support in the form of
as a strategic partner, the Colombian Ministry of Mines and continued expertise on site to build internal capabilities. A
Energy was reopening its fields to exploration. specialist geophysics team to conduct surveys over targets
within Los Cerros’ portfolio totalling 100,000ha of land in the
In line with strict compliance to Colombia’s guidelines in mid-Cauca gold belt of Colombia will also be provided by Ausino.
managing the COVID-19 pandemic, Los Cerros was preparing
its geologists to return Tesorito within the company’s Quinchia Subject to the six-month trial period, Ausino is committed to
gold project, 100km south of Medellin in the country’s central- providing equipment and services to Los Cerros for 18 months
west as Paydirt went to print. up to a value of $2 million.
Geologists will be completing field work to better understand It will be at Los Cerros’ discretion whether to pay Ausino in cash
the regional structure and potential extensions of the Tesorito or shares, subject to conditions.
aUSTRaLIa’S PaYDIRT MaY 2020 Page 37
LAtIn AMeRIcA
Meteroic hopes to resume drilling at its
Juruena project in Central Brazil from July
Meteoric hits refresh
eteoric Resources NL managing di- stock retreat to levels only slightly higher
Mrector Andrew Tunks is confident his than 12 months ago.
company can win back the support of the Meteoric did however bank $7 million
investment community after a disappoint- during its run and Tunks is determined
ing end to an otherwise promising first to use the downtime created by the
year exploring for gold in Central Brazil. COVID-19 shutdown to carefully plot the Andrew Tunks
It has been 12 months since Meteoric company’s next move and restore faith
acquired the Juruena and Novo Astro among investors. its own, but the next hole was 50m below
projects from Crusader Resources (since “We need to get some runs on the that again, so we’re going to go back and
renamed Big River Gold Ltd) and while board again, we need to convince the try and extend it further.
drilling results at the former exceeded market that we have what we say we “Our second target is Crentes…that’s
expectations, exploration at the latter fell have,” Tunks said. quite an impressive multi-element inter-
short of the mark. “I still think we can do that. I think it was cept. We drilled over the top of that and
“I’m really gutted by the Novo stuff,” a a great decision to pick up these projects. didn’t get a lot but we got sniffs, so clear-
candid Tunks told Paydirt last month. A lot of people made a lot of money over ly we’ve got go back and drill underneath
“When we drilled into Novo and we the last year in this stock. It was traded that. This has long been thought of as po-
saw the core in November…before the very heavily, we had very high volumes tential porphyry area – there’s been sev-
results came back, I was convinced we and you had the opportunity to get in and eral porphyry discoveries along this Alta
had made a really significant discovery. out and make some money. And really Floresta belt – so we are quite excited by
I still see the potential there, but those that’s what this whole business is about.” the potential around and down-dip of that
results…I really took that hard. Meteoric had planned to resume drill- hole on the Crentes structure.”
“As a pretty experienced explorer, you ing at Juruena last month, but access Tunks said the market response to the
learn not to get too ahead of yourself be- to parts of Brazil is currently restricted results at Novo Astro meant the compa-
cause exploration is a tough business, due to the global coronavirus pandemic. ny had no choice but to prioritise its best
but I really thought looking at that core Tunks has tentatively pencilled in July for high-grade above all others, meaning the
we had made a discovery. There was so a formal return to work, pending further likes of Querosene and Tomate – both
much veining and sulphides and altera- advice from the Brazilian Government. part of the Juruena licence – would be
tion. Everything we knew about those Dona Maria and the nearby Crentes placed on the backburner for the time be-
systems said we were in the sweet spot, target will be the main areas of focus ing and revisited at a later date.
but we weren’t.” when the company is back on the ground. A review of the multi-element data col-
Meteoric’s share price ran from less “We drilled the second-best hole on lected from the recent drilling at Novo As-
than 1c at the time of the acquisition to the ASX last year [20.6m @ 94.9 g/t at tro is also ongoing.
as high as 8c during the peak of a drilling Dona Maria] – it was a bloody cracker – With $7 million in the bank, Meteoric
programme at Juruena which produced and we drilled a couple of others not far is also entertaining other project acquisi-
intercepts such as 20.6m @ 94.9 g/t gold off that as well,” Tunks said. tions, including in Australia.
from 96.8m (including 3.65m @ 508.4 “What we were really excited about is “We feel there are going to be some
g/t from 107.5m) and 14m @ 81.7 g/t having clearly defined a steeply plunging companies who are really hurting during
gold from 142m (including 2m @ 71.6 g/t high-grade shoot and that is absolutely and after this period, so we’ve started
from 144.5m and 2.5m @ 287.4 g/t from continuing on at depth. Our last hole was to evaluate some opportunities,” Tunks
149m) at the Dona Maria prospect. well below the current resource model. said. “We’re certainly seeing some things
Unfortunately for the Tolga Kumova- The second-last hole clipped the re- that I think are pretty interesting.”
backed company, the underwhelming re- source model right at the base and that – Michael Washbourne
sults at Novo Astro late last year saw the would normally extend the resource on
Page 38 MaY 2020 aUSTRaLIa’S PaYDIRT
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aUSTRaLIa’S PaYDIRT MaY 2020 Page 39
LAtIn AMeRIcA
Tempus headed
for the TSX
Tempus has postponed drilling at Rio
Zarza in Ecuador until at least Q4 2020
empus Resources Ltd managing director Brendan Borg has the coming months as part of a planned capital raising to ensure
Tflagged a likely dual listing on the TSX for the Americas-fo- the company is funded to complete exploration programmes in
cused explorer. both Canada and Ecuador over the course of 2020.
Borg said North American investors had reacted positively to Borg said the company was looking to complete a decent
the company’s acquisitions of the Zamora gold assets and the portion of that capital raise via the incentivised Canadian flow-
Blackdome-Elizabeth project in Canada over the past year and through financing scheme.
it therefore made sense for Tempus to consider future admission “It allows us to raise money at a premium to the underlying
to the TSX to complement its existing ASX listing. raise price, which is a really beneficial tax incentive that they
“Ultimately with Tempus we’ll be looking to dual list it on the have in Canada, on the basis that the money raised needs to go
TSX,” Borg told Paydirt last month. into the ground in Canada, which is what we were planning to do
“Given the location of our projects, we do get a lot of interest with the funds anyway,” Borg said.
from North America, so in Canada and the US in particular, and “We’re liaising with some key broker and investor groups over
also given the fact that we have a brownfield project in Canada in North America regarding that capital raise right at the mo-
that’s had past production and has existing resources.” ment, I guess with a view to being able to complete that raise in
While no date has been set for a potential Canadian trading the coming weeks to months.
debut, Tempus will test the North American investment waters in “In terms of investor interest, obviously at the moment senti-
ment is a little bit up and down, but the market seems to be
coming to terms with the likely path forward with the COVID-19
pandemic. The fact we’re in gold and in a Tier-1 jurisdiction is go-
ing to put us at an advantage over a lot of other companies that
will be looking to raise funds in the coming months.”
Despite listing on the ASX in August 2018 on the back of two
Australian-based projects, Tempus was soon presented with the
opportunity to pick up the Zamora projects in Ecuador where the
likes of Solgold plc have been enjoying exploration success for
several years.
A drilling permit was recently granted for Rio Zarza, the key
concession on the Zamora package which is directly adjacent to
the Fruta del Norte mine operated by Lundin Gold Inc.
“Our projects contain similar geological structures to what we
see on the Lundin ground where Fruta del Norte was discov-
ered, so that was really the key attraction for us,” Borg said.
“It’s in a part of the world that has just recently reopened for
exploration and reopened for the redevelopment of large-scale
projects, with Fruta del Norte being one of two large-scale pro-
THE PEAK INDUSTRY ASSOCIATION SUPPORTING jects that have come into production in these last couple of
years.
COMPANIES DOING BUSINESS IN LATIN AMERICA “There is an improving attitude towards Ecuador in the market.
ALABC is committed to providing the highest level of A lot of big Australian companies are in there doing explora-
support to your organisation as we have done for the tion and development work and this was a chance for us to get
past 30 years. our hands on what we saw as some highly prospective ground
directly adjacent to Fruta del Norte. And we had a good team
We are providing constant relevant and reliable COVID- that came with the project, which is always very important when
19 updates via our website. you’re going into a new country for the first time.”
Please contact us for collaboration opportunities to Although the drilling permit for Rio Zarza is now in hand, Tem-
provide the market with valuable insights and support. pus has opted to postpone its maiden campaign until Q4 2020
due in part to the travel restrictions imposed in Ecuador because
Webinar Partner with
Registration us of the COVID-19 pandemic.
Borg said the company also believed it was more prudent to
ALABC COVID-19 HELP LINE 1-300-0-ALABC focus on the lower risk brownfields opportunity at Blackdome-
Page 40 MaY 2020 aUSTRaLIa’S PaYDIRT
pany shortly after the acquisition of
Zamora. The gold specialist has previ-
ously worked with Borg on other projects
in South America.
Blackdome-Elizabeth consists of two
separate mineralisation styles. The Eliz-
abeth zone, about 200km north of Van-
couver, has a historic inferred resource
of 206,000oz gold @ 12.26 g/t. Black-
dome is a further 30km to the north and
previously produced 225,000oz gold at a
grade of 20 g/t.
Brendan Borg
“It’s a high-grade project and we see
significant opportunities to be able to
Elizabeth in Canada in the current eco- expand that resource base,” Borg said. Blackdome-Elizabeth in British Columbia,
nomic climate. “That’s where we think we can really add Canada is considered a low-risk
“If we’re going to spend the money that value to the project, as part of an overall brownfields opportunity by Tempus
we do have and the money that we will be strategy to bring the mine back into pro-
raising shortly, we think it’s probably bet- duction using the existing permitted tail- late last year in the Northern Territory
ter applied to the lower risk gold project ings facility and mill.” and the results were semi-encouraging,
in Canada at the moment rather than the A review of all historic data on Black- but not sufficiently encouraging enough
higher risk/higher reward Ecuador pro- dome-Elizabeth is under way, with Tem- for us to be allocating funds towards
ject,” Borg said. pus planning to update the existing NI43- those in the coming period,” Borig said.
“While we have a presence in Ecua- 101 resource numbers to an estimate “We just want to allocate our money to-
dor, we also need to bring some people compliant with JORC 2012 standards wards the Canadian project in particular
in and obviously we can’t do that at the before year’s end. in the short-to-medium term and then in
moment, so some of the guys from the With plenty of work on the horizon in the medium term towards the Ecuado-
exploration team in British Columbia will both Ecuador and Canada, Borg indi- rian projects as we think they have the
go down to Ecuador when they can.” cated the company was likely to divest most potential for us to generate value for
Tempus was introduced to Blackdome- its copper projects in South Australia and shareholders of Tempus.”
Elizabeth by new exploration manager the Northern Territory.
Kevin Piepgrass, who joined the com- “We conducted a drilling programme – Michael Washbourne
DURATRAY SUSPENDED DUMP BODY (SDB)
CUSTOMIZED DESIGN TO OUTLAST AND OUTPERFORM
duratray.com | [email protected] | +61 3 87612800
aUSTRaLIa’S PaYDIRT MaY 2020 Page 41
LAtIn AMeRIcA
Lake opens the funding gates
A
An upcoming PFS on Lake’s Kachi lithium n upcoming PFS on Lake’s Kachi lithium
b
brine project in Argentina is expected to rine project in Argentina is expected to
c confirm a low cost of productiononfirm a low cost of production
hen it comes to technology, there is Before the COVID-19 pandemic insti- With a DFS and environmental studies to
Wno better third-party advocate than Bill gated major shutdowns around the world, begin imminently, Lake is turning its atten-
Gates. the Lake-Lilac partnership was gathering tion to securing about $US20-25 million of
The Microsoft founder has become an momentum with 20,000L of Kachi lithium debt funding to underpin its quest towards
unexpected supporter of Lake Resources brine samples delivered to Lilac’s pilot plant commercial production in 2023.
NL when his Breakthrough Energy Ven- in California, US. It comes after Lake recently pocketed
tures fund was the lead participant in a $3.4 million from an oversubscribed place-
recent $US20 million investment in the Ar- ment and a further $2.5 million from a sub-
gentine lithium hopeful’s technology partner sequent share purchase plan which will
Lilac Solutions Inc. help the company keep its head above
Breakthrough’s high-profile investor base water, especially with some timeframes
also includes the likes of Michael Bloomb- now uncertain due to the global COVID-19
erg, Amazon.com Inc president Jeff Bezos outbreak.
and Alibaba Group Holding Ltd co-founder “COVID-19 has shown us the need for
Jack Ma. diversification of supply chains,” Promnitz
“Having investors of that calibre speaks said.
volumes for the technology and also for its “We’re seeing strong interest from buyers
potential,” Lake managing director Steve because they want to get a premium prod-
Promnitz told Paydirt. uct out of a really well-known area which is
“These investors made their fortunes in- Steve Promnitz Argentina’s Lithium Triangle. We’ve got an
vesting in disruption. They recognise that opportunity here to scale up and so that
Lilac’s technology could be disruptive to the “Our task now is to prove the value of the funding is for a range of things to demon-
lithium brine industry while also producing Lilac technology by getting the samples strate that we can get on that critical time-
something that’s sustainable and scalable, into the hands of the offtakers, getting the line and basically keep ahead of the curve
and a premium product. pilot plant operating successfully, feeding and not lose six months.
“Naturally it’s raised the profile of both that into a full feasibility study and then be- “It was a real benefit that we have the
Lake as well as Lilac and investors want ing able to jointly pitch to some of the large brines actually in the US. We may even
to invest with other successful investors… electric vehicle manufacturers who are the send another batch there, just to make cer-
markets always say follow the money; ones really looking for sustainability in the tain that we can keep that going, while still
here’s a classic example.” supply chain,” Promnitz said. respecting the need for care with our peo-
For the past two years, Lake has pro- “If you’ve got a premium product and ple on the ground in Argentina as well as in
moted Lilac’s direct extraction ion exchange you’ve got something that’s at the low end the US.”
technology as the perfect fit for its Kachi of the cost curve with a sustainability angle COVID-19 has so far had limited impact
lithium brine project in Argentina’s Catama- and you’ve got large investors who think on Lake’s current activities, according to
rca province. Both companies have also that particular technology stands out over Promnitz, who added the company had
spruiked the innovative process as “signifi- and above others, that’s a pretty unusual sought waivers in both Argentina and the
cantly faster, cheaper and more scalable” but sweet spot to be in.” US for essential chemical industry opera-
than other existing lithium extraction meth- Over the coming months, Lilac will pro- tions.
ods. cess the Kachi brine into high-purity lithium The Argentine Government also recently
Lilac has indicated the funding will help chloride for conversion to battery-grade reaffirmed its ongoing support for growth of
ramp up efforts to commercialise its tech- lithium carbonate which will be sent to po- the country’s lithium sector.
nology, as well as expand its engineering tential offtakers. Once that phase is com- “All sectors have suffered from COV-
team and scale up production of the ion ex- plete, Lilac and Lake intend to move the ID-19, but the electric vehicle and energy
change beads which are core to the overall pilot plant to Argentina to continue the test storage sectors still need lithium batteries,”
lithium extraction system. work on site. Promnitz said. “That demand has maybe
Other groups to participate in the invest- Lake was also poised to release a PFS been postponed slightly, but it’s still there,
ment round were MIT’s The Engine fund, at the time of print which was expected to it’s still very real and we’re going to be well
Lowercarbon Capital and The Grantham confirm low production costs using the Lilac positioned.”
Foundation. technology.
– Michael Washbourne
Page 42 MaY 2020 aUSTRaLIa’S PaYDIRT
COMMITTED
TO A BETTER
FUTURE
We believe in the fundamental
necessity of copper in the modern
world. Market forces may change,
but the need for copper does not
stop, and neither do we.
Our people set First Quantum apart.
In times of uncertainty we work harder than ever,
because that’s the First Quantum way. Where others
see problems, we see an opportunity to do things
differently, and go beyond.
Our highly skilled team are working to deliver a
brighter tomorrow, together.
Smarter, bolder, driven.
first-quantum.com
coVID-19 FIGHt
Elizabeth Lewis-Gray
Mining engineers
breathe air into
COVID-19 fight
ining was deemed an essential in- bending his mind to it, it really only took MIT design to make emergency backup
Mdustry at the very start of Australia’s him about five days. He worked pretty units here locally,” Caratti said.
fight against the economic effects of the closely with our amazing team of engi- The design and fabrication team is
COVID-19 pandemic but now engineer- neering people and he also engaged comprised of personnel from Lycopo-
ing groups are taking the battle further, with a clinical anaesthetist who helped dium, ECG Engineering (which is partly
designing and building ventilators for use him understand what was required and owned by Lycopodium) and the compa-
in remote hospitals. who gave him fittings and things which ny’s long-term industry partner Alloytech.
Both Lycopodium Ltd and Gekko Sys- you then insert into the patients.” “The cost to produce the units will be
tems are throwing their design and inno- At Lycopodium, chairman Mick Caratti, borne directly by the parties involved,
vation might behind the cause. having read about the lack of ventilators and I thank everyone for their absolute
Gekko is well-known for its process in remote communities, recalled that commitment to what is a critical endeav-
flowsheet innovations and plant equip- Massachusetts University of Technology our that may well save lives in the face of
ment capabilities but after being ap- (MIT) had developed a ventilator suitable COVID-19 going forward,” Lycopodium
proached by the City of Ballarat, man- for use as emergency backup for natural managing director Peter De Leo said.
aging director Elizabeth Lewis-Gray set disasters and pandemics. Gekko’s ventilator is an original design
co-founder Sandy Gray to work on a new “I realised from an engineering point of with Gray mindful of the current supply
project. view it would be relatively easy to use the chain restrictions.
“We had been approached by “We are now confirming all the
the Committee of Ballarat who had parts,” Lewis-Gray said. “You have
spoken to the hospital and they to be able to buy components that
were concerned about their access are available, which is a problem for
to ventilators if the situation got out other ventilator producers. So, we
of hand,” Lewis-Gray told Paydirt. had to find out what was available
“Being a regional hospital, they were before Sandy could finalise the de-
particularly concerned that all venti- sign of the prototype.”
lators would go to the major city hos- The company has already re-
pitals and what would happen to the ceived Victorian State Government
regions. funding for the project.
“They asked whether it was some- “The Victorian Government was
thing we could help with. I spoke to very much on the front foot,” Lewis-
Sandy and Sandy being Sandy said: Gray said. “I’ve worked with the Gov-
‘I’m sure I can do something’ and he ernment in the past so knew some
got onto it. From the time he started people to call to find out where we
The OLGA gold onstream analyser
Page 44 MaY 2020 aUSTRaLIa’S PaYDIRT
would put a proposal. We wrote a Sandy Gray with
proposal in 18 hours. It is a staged the prototype
proposal; firstly, validating the pro- ventilator he has
totype and then secondly making designed along
sure we could build the prototype with the Gekko
and get it through the Therapeutic Systems team
Goods Administration [TGA] ap-
provals and then onto manufactur-
ing.
“Getting the TGA approval is the
most complicated and time con-
suming part of the process. We
are working all day and night to get
through it.”
Lewis-Gray said Gekko had been
inundated with offers of support and
assistance for the ventilator pro-
gramme.
“It’s absolutely extraordinary the
offers of support from within and
outside of the mining sector,” she “[These] can be used in Australia if
said. “A lot of people within the sec- needed or can be sent to support the
tor have been in touch asking can communities where Lycopodium oper-
they fund it or can we help deliver ates in Africa, including Ghana or Burki-
the product to remote places. You’d na Faso,” De Leo said.
be amazed how many people are A shift to producing medical supplies
supporting and engaging with us. may appear a large one for mining ser-
It’s inspirational.” vices companies but for Lewis-Gray it
Servicing remote locations is a was a natural pivot for Gekko. Peter De Leo
particular concern for miners con- “We’ve always prided ourselves on
scious of their potential impact on having cross-functional capability at pneumatics, hydraulics, control systems.
vulnerable host communities. Gekko,” she explained. “We are a one- So, when you look at who can design and
“They are wanting to get access stop shop for innovation. We can design, build these things a mining company has
for their local communities.” prototype and manufacture everything the skills. I think that’s what convinced the
Lycopodium also needs TGA on the one site so that makes us very Government. You’d think a medical sup-
approval for its ventilator. Once this is agile. There isn’t much focus on that in plies company would be more likely, but it
achieved the company intends to pro- Australia anymore. sits right in our skills set.
duce 100 units. “This product speaks a lot to what we do “We can get into manufacturing, we
think, pretty rapidly.”
Lewis-Gray was also the inaugural
chairperson of METS Ignited and is
adamant Australia’s mining industry
is best placed to provide similar solu-
tions to crises such as the coronavi-
rus pandemic.
“I absolutely believe that mining
is the lead industry when it comes
to bringing technology to Australia,
bringing innovation to Australia,” she
said. “It is probably the only indus-
try where we can say we truly are a
world leader. In METS we are defi-
nitely in the top 2-3 in terms of inno-
vation.
“It seems obvious to me that rapid
agile world-class innovation comes
from a sector we are world class in.
We are very fortunate in this country
to have a leading sector and related
supply sector that is able to respond.
It is no surprise that Nev Power is
leading the national corporate re-
sponse; we have skills in the min-
ing industry that other sectors don’t
have.”
- Dominic Piper
Lycopodium plans to build 100 of its own designed ventilators
aUSTRaLIa’S PaYDIRT MaY 2020 Page 45
It
An employee at B2Gold Corp’s Fekola
exploration camp, 5km from the mine site
in Mali, tested positive for COVID-19 in
mid-April.
Given the positive case occurred
“some distance” from the Fekola mine,
operations continued at full capacity at the
time of print.
After testing positive, the employee was
immediately isolated and was reportedly
in a stable condition with only moderate
symptoms while still in quarantine in late
Kogi’s Nigerian April.
subsidiary KCM country Meanwhile, the entire exploration group NEW DATES ANNOUNCED SOON
manager Alabi Samuel within the Fekola exploration camp were
with Kogi managing isolated and contact tracing for anyone
director David Turvey and the affected employee may have come
KCM project geologist into contact with on site or within the
Sunday Awoyemi at the community completed.
Agbaja project, about All individuals identified by the contact
120km south of Abuja
tracing residing outside of the Fekola
exploration camp were also immediately
Kogi embraces placed into quarantine.
In a statement the company said a
wide range of preventative measures
against the coronavirus had also been
communication implemented in Mali, including restricting
the movement of people and goods
between Bamako and site.
“As part of these contingency plans,
ife goes on and so will the Agbaja cast is at feasibility stage, with potential devel- the Fekola mine had commenced
Lsteel project in Nigeria, Kogi Iron Ltd opment of the project about three years a full isolation of all staff on site [to
managing director David Turvey told Pay- away. be completed by April 19] related to
dirt recently. By Q3 2021, Kogi hopes to have spent operations. This will further improve
Navigating the nuances of COVID-19 is $5.5-7 million on the feasibility study. social distancing measures and continue
of immediate concern, nevertheless Kogi Most of the spend will be dedicated to to protect all stakeholders in the area
has detailed plans to spend a $10-14 mil- steel tests and plant design to determine of Mali where the company operates.
lion in the next 12 months to progress the the viability of a conventional process flow All these measures were put in place in
feasibility study on Agbaja, near Abuja. sheet, while a range of cost assumptions close consultation with the Government,
“Funding is of course a requirement and will also remain ongoing. the Fekola mine workers union, the
we need to do some steel test work in vari- Ore reserve drilling and mine planning communities near the mine and the
ous countries, including South Africa, US are priorities, too, with $2-3 million budg- employees operating on site,”
and Sweden, but it is more the funding eted for such activities. the statement read.
side of things. We withdrew some funding Agbaja – considered Nigeria’s only iron
some months ago and we will wait for the ore deposit qualified under JORC stand-
volatility to settle down,” Turvey sad. ards – has a current indicated and inferred
“The investors we did have lined up at resource of 586.3mt @ 41.3% iron which Turvey said Kogi had not experienced
the 11th hour remain interested at the ap- Kogi plans to upgrade in due course. that in Nigeria, largely because most of its
propriate time. We do have money in the Agbaja has been identified as a project workforce were locals, however, he was
bank from a previous raise, we have been of significance in Nigeria, which has long confident it wouldn’t be an issue in country.
very mindful to preserve cash, both admin- sought to diversify its economy from the “I do like this requirement by everyone
istratively in Australia and in an operational dominant oil and gas sector. for fair and reasonable communication.
sense in Nigeria. All discretionary cash Kogi hopes to fulfill the Government’s For whatever reason, my communication
has been deferred, stopped or revised be- expectations by providing jobs and rev- has improved, you think about people, you
cause of the lead times of the expenses enue to Africa’s second largest economy communicate more with your family and
related for the feasibility study. and Turvey appears focused on using the in a slightly different way. It flows through
“Life goes on as far as the feasibility current situation to strengthen the com- to some commercial reality even down to
study goes, but funding will be significantly pany’s bond with the tiers of government foreign investment policy, mining law and
impacted and most of it will come from Eu- in country. the like; I see these things as longer-term
rope and London,” he said. Furthermore, Turvey said COVID-19 benefits of better communication,” Turvey
For some time now Kogi has aspired to had highlighted the value of clear commu- said.
offset Nigeria’s reliance on importing 3-5 nications. “Within your organisation it is very key
mtpa of raw steel material by developing Some media have reported that West- because you are providing some leader-
an iron ore and steel project tailored to erners in parts of Africa were being target- ship and you are empowering people.”
domestic consumption at Agbaja, about ed by locals who believed that outsiders
120km south of Abuja. were responsible for spreading the coro- – Mark Andrews
The integrated iron ore and steel project navirus.
Page 46 MaY 2020 aUSTRaLIa’S PaYDIRT
NEW DATES ANNOUNCED SOON
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ReGIonAL RounDuP
Kore to hit the spot with DX PFS
rad Sampson knows Africa well and world-class assets,” Sampson explained given the certificates previously awarded
Bwhen approached two years ago to to Paydirt as his reasoning for taking on for Kola and Dougou required reapproval
drive Kore Potash plc’s projects in the the mantle of Kore’s chief executive. on an annual three yearly basis, while the
Republic of Congo there was little hesita- “The chairman [David Hathorn] is ex- company hopes for future amendments
tion from the mining engineer. Anglo American and the rest of the board to the ESIA for Dougou to include the
Sampson had just completed a binding is high calibre. When they asked me to planned mining and processing of the
agreement to sell DRC copper producer come and look at the assets, I got pretty Dougou Extension (DX) sylvinite deposit.
Tiger Resources Ltd to a Chinese outfit
for $US250 million when the opportunity
to join Kore presented in 2018. Farmers can’t go too long without putting
Taking over from Sean Bennett, who
took the company onto the AIM and JSE potassium into the ground or their [crop]
bourses during his three-year stint as quality and yield will drop. If they skip a season
chief executive, Sampson was imme-
diately enamoured by both country and “ it hurts them the very next season.
projects Kore was involved in.
Although Congo’s mining sector re-
sembles a blank canvas, a potash in- excited about the quality of the assets The good news comes as Kore pre-
dustry did once exist, run by French in- and Congo is not much different from pared to release a PFS on the DX project.
terests. other African countries.” “The only thing that would delay the PFS
That was before a period of commu- In addition to the comfortable work en- release is if we get into any meaty discus-
nist rule which effectively brought an vironment and it appears Kore’s relation- sions with any of our senior shareholders
end to the 500,000 tpa potash business ship with the Government is positive. or directors that want to get into any tech-
hedged towards export markets around Sampson also speaks highly of Con- nical things, but even COVID-19 can’t do
the 1970s. go’s surf conditions anything to slow us down,” Sampson said.
“When the area was stabilised by com- Last month, Congo’s Minister of Tour- Sampson said the DX PFS results were
munists, the French fled and the mine ism and Environment granted 25-year looking good and he expected vast im-
was flooded leaving behind this massive approvals to the ESIAs for both the Dou- provements in estimated capital costs from
zone from Gabon all the way down the gou and Kola mining licences, within $330 million indicated in the scoping study
coastline through Congo to northern An- Kore’s 97%-owned Sintoukola project. to below $300 million in the latest report.
gola, within which Kore has some truly It is a significant milestone for Kore, With the likelihood capital markets will
Page 48 MaY 2020 aUSTRaLIa’S PaYDIRT
AFRIcA
remain fragile for as long as anyone can out of the market they will do it because interest in us or they are going to give up
imagine, Kore’s plan to progress a pro- they have big balance sheets and know market share to us and that is not some-
ject that is fundable hasn’t changed. the business really well,” Sampson said. thing they would want to do.”
“There aren’t too many hurdles in the “The challenge is how does a small A DFS on Kola alone was released in
way of development now; it is funding company get a potash project going be- early 2019, with a preproduction capital
and equity capital markets’ appetite to cause most of them need big capital, but cost of $US2.1 billion estimated for a 33-
fund this,” Sampson said. we have a project that we can bring into year 2.2 mtpa MoP project.
“Total capital costs should be under production with small capital.” Therefore, the 400,000 tpa DX MoP
$300 million, that is imminently finance- Sampson believed M&A in the potash project is just the starter for Kore.
able. We have multiple groups talking to sector will also continue, however, he Growing demand for MoP and a coun-
us about offtake and we have lenders wasn’t sure where Kore sat in discus- try looking to lessen its dependence on
that want to loan us money; they are just sions. oil revenues, means government sup-
waiting for us to finish the PFS. There is “I am not sure what the trigger is for port is there for Kore to help deliver
a solid plan on how we are go- much needed employment and
ing to finance this thing, we just cash into Congo’s economy
need equity capital markets to survived by 5 million people.
be open, that is really it.” On the global stage, Samp-
A surge in potash prices son believes Sintoukola will of-
would also help after they fer diversification in the market
have copped a hammering in- and help alleviate the reliance
line with the global economic on the heavyweight northern
downturn. hemisphere potash producers.
However, a rebound in prices “There is about 70 mpta of
is simply explained. potash [MoP] traded and this
“Farmers can’t go too long is different to the West Aus-
without putting potassium into tralia SoP companies looking
the ground or their [crop] quality at a market of about only 1
and yield will drop. If they skip mtpa. Our market is 70 mtpa
a season it hurts them the very and made up of the same type
next season. The demand for of companies in Canada, Rus-
potash is growing as global pop- sia, Germany… they are all the
ulation is growing and it [MoP] same,” Sampson said.
has been pretty steady growth “In Canada, they are going
of 2-3% per annum in a big mar- 1.5km underground and trans-
ketplace,” Sampson said. porting it 1,700km by railway
The CAGR of a big sec- Kore is listed on three exchanges – the ASX,JSE and AIM line to a port and then out to
tor has compelled the likes of – with the company intent on exiting one this year the target markets. One of the
Anglo American plc to enter a biggest markets is Brazil and
one of the markets growing
from a small base, but on a stiff growth
The demand for potash is growing as global curve is Africa.
population is growing and it [MoP] has been
Brad Sampson
pretty steady growth of 2-3% per annum in a big
marketplace.
market controlled by a select few play- companies to look at us. Some people
ers. are concerned about the Congo risk,
A company like Anglo American has which I get because there is not really
the clout to muscle in for a share of a mining industry in the Congo yet,” he
the potash market, but there remains a said.
question mark on a junior’s capability to “The Government risk factor will just
impact the sector. go away eventually. I think for now the “We are right here in Africa, our potash
“You might not see it in Australia be- big strategics will sit and watch us until is shallow, high grade, it is cheaper at the
cause you see the juniors tinkering with they can see we are absolutely going to mine gate for them anyway and because
potash, but the space is dominated by go into production. As we start to dem- of the transport costs it is cheap to deliver
majors. The guys that operate in the onstrate or companies start to see our to customers and no-one else can com-
space like the Mosaic Company are not financing, marketing and overall strategy pete. That is what got me excited and this
actually that afraid of BHP [Ltd]; if they on how everything is going to work, the project deserves to be built,” he said.
need to go to a price war to keep BHP big guys are going to have to show some
– Mark Andrews
aUSTRaLIa’S PaYDIRT MaY 2020 Page 49
ReGIonAL RounDuP
Predictable rise to a
greenfields discovery
n direct contrast to the name of his com- with the reassurance it needed to continue to have previously run its ruler over the
Ipany, Predictive Discovery Ltd managing looking for high-grade gold in underex- Koundian project. Predictive was sched-
director Paul Roberts was not anticipating plored regions. uled to begin initial regolith mapping and
such an overwhelming market response to “Up until this point, the compliment peo- geochemical programmes last month, with
spectacular drilling results from his compa- ple would give me is ‘well, you’ve been very pilot ground geophysical and aeromag-
ny’s Kaninko gold project in Guinea. persistent’ and I think that this is evidence netic surveys are to be completed over the
Predictive’s shares soared 733% on April that persistence pays,” Roberts said. course of this year.
15 – the biggest single-day rise on the ASX “I’ve always believed that we could cre- Roberts had nothing but praise for Guin-
in the past three years – after reporting an ate wealth for shareholders through green- ean authorities’ reception for his company
intersection of 46m @ 6.58 g/t gold (includ- fields discovery. Obviously I didn’t expect it since first enquiring about available pro-
ing 10m @ 26.52 g/t) along with several to take a decade to get to this point. jects in the country.
other encouraging drill hits at the North- “It’s a tough road, but if you’re persistent “What we found after our first exploratory
East Bankan prospect. and you’ve got the right strategy and you trip was the Mines Department was actu-
“When we got these results – and we keep your costs under control – and I think ally very welcoming; they also had a very
knew they were very good – we didn’t we’ve demonstrated we can do all of those transparent mining registry system, so what
expect to see this quite extraordinary re- – then success will come.” we saw on the map was what was actually
sponse, given that we ac- available,” he said.
tually didn’t get much of a “We work very closely
response from the [earlier] with the local directors of
power auger results,” Rob- mines in the field and that’s
erts told Paydirt. obviously helped us pick up
“I think it’s fair because more ground. It’s kind of like
this is a new discovery and a virtuous feedback loop
new discoveries don’t come and it follows our modus
along very often. However, operandi to pick up ground,
we didn’t expect the market pick up these cheap per-
would be as kind to us as mits, evaluate them at low
that.” cost, identify the best ones,
Other key intersections convert them into explora-
reported last month were tion permits and accelerate
42m @ 2.92 g/t gold from our exploration…their at-
8m, 50m @ 1.53 g/t from titude is really aligned with
surface (including 20m @ what we’re trying to do.”
2.51 g/t from 30m) and 42m With no COVID-19 re-
@ 1.56 g/t from surface strictions in place in Guinea
(including 30m @ 2.07 g/t Paul Roberts at the time of print, Predic-
from 12m). tive was planning another
Each of the 24 aircore holes drilled into Predictive ventured into Guinea after round of power auger drilling at North-East
North-East Bankan were down to a maxi- taking on board feedback from Austral- Bankan to expand the company’s coverage
mum depth of 50m. The discovery hole ian investors that it should have some of the area. An aircore programme will likely
which had market tongues wagging fin- 100%-owned projects in its portfolio, which follow, pending rig availability.
ished in mineralisation. at the time was comprised mostly of JV Predictive is also awaiting the results of
Predictive is confident the broad anoma- assets. The company had also previously recent drilling at the nearby Bankan Creek
lous zone which has given rise to the pros- badged itself as prospect generator, but prospect, with further exploration there also
pect is at least 300m wide, 450m long and that business approach failed to gain the on the company’s agenda.
open at depth. Mineralisation stops abruptly major traction it wanted in the market. Meanwhile, COVID-19 restrictions are
to both the north and the south due to the Predictive added the 300sq km Koundian currently preventing Predictive and JV
limitations of the power auger coverage. project to its growing presence in Guinea’s partner Resolute Mining Ltd from follow-
This breakthrough greenfields discovery Siguiri Basin in early April. This ground is ing up on a series of recent promising drill-
has been more than a decade in the mak- along strike from the 2 moz Tri-K gold mine ing results at Ouarigue South, part of the
ing for a company which entered Guinea being developed by Managem Group and Ferkessedougou North project, in Cote
in September 2018, having spent sev- is just 7km north of the 1.2 moz Koulekoun d’Ivoire.
eral years prior exploring for gold in Cote deposit. AngloGold Ashanti Ltd’s 10 moz Best drill hits from the nine-hole diamond
d’Ivoire and Burkina Faso. Siguiri operation is also 75km to the south- programme reported last month were 51m
Roberts said the drilling success at east. @ 1.27 g/t gold from 169m, 14m @ 10.74
North-East Bankan and the subsequent Former ASX-listed explorer Drake Re- g/t from 33m and 33m @ 1.62 g/t from 28m.
market reaction had provided Predictive sources is the only company believed
– Michael Washbourne
Page 50 MaY 2020 aUSTRaLIa’S PaYDIRT
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