October 2015 VOLUME 1. ISSUE 232 $11.95
front and back cover
Africa receives government boost
• Bases metals... zinc ready to bloom ISSN 1445-3436
• Heron in NSW... Woodlawn to come again 09
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PAYDIRT (ISSN 1445-3436) 12 NEWS 20
Published by The phrase “cashed-up junior” is seldom 26
Paydirt Media Pty Ltd. used in the current climate but thanks to
A.C.N. 063 985 133 a string of investments, including from
Andrew Forrest, Impact Minerals Ltd finds
Head Office: itself with a very healthy bank balance.
Suite 9, 1297 Hay St, West Perth Michael Washbourne spoke to managing
Western Australia 6005 director Mike Jones about how the com-
P.O. Box 1589, West Perth pany planned to spend the cash
Western Australia 6872
Phone: (+61 8) 9321 0355 20 COVER
Facsimile: (+61 8) 9321 0426 Australia’s diplomatic relationship with
[email protected] Africa has waxed and waned over the last
www.paydirt.com.au 25 years but with Foreign Affairs Minister
Julie Bishop announcing the formation
Editorial: of a new advisory panel, the Advisory
Editor: Dominic Piper Group on Australian African Relations, at
Deputy editor: Mark Andrews Africa Down Under, Paydirt looks at how
Journalists: Michael Washbourne, Australia’s mineral investment on the
Rhys Dickinson continent could benefit from increased
Graphics: Marian Noonan political focus
Keith Goode (Sydney), Brendan Ryan 26 AFRICADOWN UNDER
(Johannesburg), Ross Louthean One of the mainstays on the Australian
resources events calendar, Africa Down
Advertising: Under returned to Perth with all the
Advertising executive: Tony Mwarey colour, interest and enthusiasm we have
Subscriptions: Magda Thibaut come to expect from it. We provide full
Phone: (+61 8) 9321 0355 coverage of this year’s forum, including
Facsimile: (+61 8) 9321 0426 the appearance of 14 African ministers,
WA Premier Colin Barnett and a raft of
Pre-press and printing: exciting junior development players
Vanguard Press 26 John St,
Northbridge WA 6003 76 BASE METALS
Member of: There is plenty of expectation that zinc is
set for a breakout year in 2016 and Pay-
Paydirt Media dirt is this month looking at the Australian
Executive chairman: Bill Repard juniors positioning themselves for those
Finance manager: Giovanny Jefferson events. Leading our coverage is Rhys
Accounts/administration: Dickinson’s visit to Heron Resources
Heather Melling Ltd’s Woodlawn project in New South
Conferences: Tammy Caldwell, Wales
94 REGIONAL ROUND-UP
Cover image: Australian Foreign Silver in Mexico has never been at the
Affairs Minister Julie Bishop was a top of Australian juniors’ exploration hit-
guest of Paydirt for this year’s Africa lists but some exciting drilling results from
Down Under conference Azure Minerals Ltd could have explorers
and investors alike reconsidering whether
the world’s largest silver producer still has
plenty of the precious metal to discover
Member of: 76
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taken by Paydirt Media staff or provided by other
Cost is the ruler of all
If there was one thing investors could glean from last of the mining tax on coming into office but in the end, Abbott and his
month’s Africa Down Under conference it is that grade Treasurer Joe Hockey, had lost the economic management trust Liberal
may be king, but the cash curve is mining’s equivalent governments are supposed to have and other strange policies left Ab-
of the Magna Carta. bott plainly out of touch with much of the electorate.
While previous ADU programmes have been domi-
nated by iron ore and coal stories, this year’s In Malcolm Turnbull, the resources sector now has a leader who un-
line-up saw the conference go back to its derstands the importance of natural resources to Australia’s economy
roots with the majority of the presentations but does not show that support by producing simplistic, divisive slogans
focused on gold and copper (although such as “coal is good for humanity”.
diamonds and platinum were unsurpris-
ingly absent). Instead, Turnbull has the ability to prosecute an argument which
The reality is, no matter how good a shows Australia remains dependent on natural resources for so much
project looks, if its capital costs are high of its wealth.
and its production costs are not at the bottom of the cost curve, there is
not enough enthusiasm in equity markets to get development funding. And, his recognition of the importance of technological change could
The difficulty for African projects – particularly bulk commodity pro- see him throw his weight behind an industry where Australia is a tech-
jects – is that they are often located in such infrastructure-poor regions nological leader, mining, engineering and technology services (METS).
that any savings made in labour costs and elsewhere are often negated
by the cost of operating in remote locations. The cabinet reshuffle may bring other benefits to the industry.
The problem is accentuated when projects require the construction Ian Macfarlane has been weighed down by an overburdened portfolio
of major infrastructure such as rail and ports but even in precious and of energy, science and resources but rumours are circulating around
base metals, projects in Africa can be uncompetitive because of the Canberra that he will be relieved of the resources portion of the Industry
high cost of power, water and other inputs.
On top of these costs, there are the seemingly ever-changing tax “portfolio when the new Cabinet is announced.
burdens implemented by African governments. In Malcolm Turnbull, the
In a new report released at Africa Down Under, PwC has captured resources sector now has
just how much the design of a tax regime can have on the economics a leader who understands the
of a project. importance of natural resources to
PwC measures the impact of the tax regimes of four African coun- Australia’s economy but does not
tries – Tanzania, Burkina Faso, Namibia and Ghana – by assuming the show that support by producing
development of a standard gold mine operating under the same condi- simplistic, divisive slogans such as
tions, with the same assumed capital and operating costs. “coal is good for humanity”.
The report found that only one of the four established mining jurisdic-
tion, Namibia, in which the current tax regime generates sufficient IRR Re-establishing a resources-specific portfolio would allow a new min-
to allow a clear decision to mine to go ahead. Tanzanian and Ghana ister to focus more intently on issues facing the industry, particularly
were deemed “maybes” while a gold project in Burkina Faso would the implementation of the Exploration Development Incentive scheme
need a grade 32% higher than in Namibia to be economically viable. which is in danger of dying out due to neglect.
To read the report, follow the links from Paydirt’s Facebook page.
I am not arguing against taxation in the mining industry, often when On the international front, the continuity of Julie Bishop as Foreign
tax policy has been too loose there has been an eventual backlash Affairs Minister has already been welcomed by Australia-Africa Mining
which has led to calls for nationalisation, etc. Industry Group (AAMIG). As shown by her appearance at Africa Down
However, any government, and particularly African governments, Under, Bishop is knowledgeable about Australian investment in Africa
who are trying to establish sustainable mining industries despite a pau- and AAMIG members can rightly expect continued support, particularly
city of infrastructure, skills and regulatory frameworks, need to under- as the Advisory Group on Australian African Relations (AGAAR) cranks
stand how delicate the cost equation has become for them. up.
If costs structures are disrupted, projects will not get up.
Capital is fluid and even minor changes to a tax regime can lead to With commodity prices and equity and debt markets make life for
projects being deemed uneconomic. And, once a project fails, a gov- miners almost unbearable, a period of moderation on the political front
ernment soon develops a reputation for being hostile or unfair towards – one where the Government offers support without headlines – could
foreign direct investment. be exactly what the industry requires and just what Turnbull is likely to
This may not be accurate but perception is always very difficult to deliver.
[email protected] @DominicPiper
Time for some peace
How to react to the news of another change in Australian Prime Min-
ister? At first glance it may feel like the industry has lost an ally in outgo-
ing PM Tony Abbott. However, I think his demise may well turn out to
be a good thing.
As I wrote last month, the sector was in danger of being dragged into
unwanted fights as Abbott waged war over coal, environmentalists and
environmental laws, renewable energy and carbon emissions.
The majority of the industry may well have been on Abbott’s side in
most of these debates, but being on the same side as an unpopular
prime minister is less desirable than being on the side of popular senti-
ment when those debates become decisive.
Abbott will be remembered fondly by the industry for his swift removal
PAGE 4 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Happy hunting ground for Newcrest
and Taruga in Cote d’Ivoire
Meeting and greeting, catching up with old
chums and sometimes pulling off game-
changing deals is what the conference circuit
is all about, including Paydirt’s Africa Down
For Taruga Gold Ltd and Newcrest Mining
Ltd, the conference was a chance to further
talks over the Dabakala gold project in Cote
“Nothing was signed at Africa Down Under,
but certainly we were able to well advance
discussions,” Taruga managing director Ber-
nard Aylward told Paydirt.
“Paul [Kitto, Newcrest’s exploration man-
ager] and I had a few chats getting it sorted
out. Newcrest had done a fair amount of DD
and check sampling in the ground and were
pretty keen. Paul is a good explorer and keen
to get it happening.”
A non-binding heads of agreement was
inked following the conference, which will see
Newcrest farm-in to Taruga’s Dabakala pro-
ject by spending up to $US1.7 million within Taruga managing director Bernard Aylward, Resolute general manager business development
three years of the heads of agreement being Peter Venn and Newcrest exploration manager Paul Kitto at Africa Down Under 2015
executed for a 75% interest.
Newcrest has exclusivity over Dabakala un- good projects and they are doing exploration ing the Ivorian economy, among other things
til November 30. work,” he said. “What you are seeing now is I by facilitating foreign investment,” Randgold
Newcrest has existing concessions abut- think the start of things turning around. I won’t chief executive Mark Bristow said in July.
ting Dabakala, while Taruga enjoys JVs with tell you that people have that fear of missing “Combined with the country’s geological
Resolute Mining Ltd over three other conces- out at the moment, but they are certainly get- assets, this is creating new opportunities for
sions in the area. ting themselves positioned, I think there is a the mining industry which Randgold, with its
Earlier this year, Taruga entered JV ar- bit of urgency as well.” long-established presence here, is particu-
rangements over the Nielle, Tiebissou and From Taruga’s perspective, having Rand- larly well placed to grasp.”
M’Baihaikro concessions. Resolute will earn gold Resources Ltd step up its exploration In addition to its prospects in Cote d’Ivoire,
a 75% stake in Taruga’s in-country subsidiary efforts in Cote d’Ivoire was a boost for the Taruga has “very good” projects in Mali and
by investing $US3 million over four years. company. Niger that are ripe for exploration, Aylward
“I think the last six months for us has been “We are very encouraged by the Govern- said.
really positive. We’ve had Sprott come on ment’s commitment to building and diversify- However, the current excitement undoubt-
board as a major investor, edly appears to be in Cote
we’ve had Newcrest, which d’Ivoire.
are actively exploring ground “If you listened to John
in Cote d’Ivoire come on Welborn talk at Africa Down
board, Resolute is on board, Under about how well Sy-
so it all looks pretty good for ama was going, and Bibiani
us,” Aylward said. looks OK for them, but then
“It is a very lean time for he made the comment they
juniors, the market is tough were actively exploring and
and pretty unforgiving but we very positive about their
are still going pretty well.” ground in Cote d’Ivoire. That
The sting from the West ground is the JV with us and
African gold sector has dis- they think there is a very
sipated, however, Aylward good chance of discovery
sees some good signs re- there,” Aylward said.
turning. – Mark Andrews
Aylward said the interest
shown by Newcrest, plus A full wrap of Africa Down Un-
transactions made by Acacia der 2015 starts on page 26
Mining plc and SEMAFO, in
Burkina Faso was positive for
West African gold explorers.
“We are seeing a lot of Taruga has attracted the attention of noted gold producers – Newcrest and
companies putting a foot on Resolute – to its ground in Cote d’Ivoire
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 5
SA launches brave
South Australian Minister for of the issues that could prevent South
Mineral Resources and En-
ergy Tom Koutsantonis launched Australia from reaching its full potential
a directions paper last month to
guide the development of the as a copper producer.
State’s long-term copper mining
strategy. “In the weeks ahead, we will be look-
The Minister has called on ing to the community, landowners,
South Australians to provide
input for the strategy, which producers, explorers, researchers, in-
aims to position Australia as the
world’s third largest copper pro- novators and suppliers to provide their
ducer by 2030.
guidance on the final design of this
South Australia currently
hosts 68% of Australia’s copper long-term strategy.
resources and the State is look-
ing to triple its production of the The State’s biggest copper miner, Oz
Minerals Ltd, welcomed the ambitious
Koutsantonis said South Aus-
tralia’s geology and geography plan.
put it in the box seat to supply
the world’s fast-growing econo- Oz chief executive and managing di-
rector Andrew Cole said improvement
“The copper strategy will ad-
dress a broad range of issues in the sector was necessary, as South
Australia’s copper production was dis-
proportionate to its red metal endow-
“South Australia holds 68% of Aus-
tralia’s known copper reserves, howev-
er, we only produce 30% of the nation’s
copper,” Cole said.
“The State Government’s plan to tri-
Tom Koutsantonis ple the size of the copper industry and
make South Australia a copper mining
facing the State as it powerhouse should be congratulated. The
develops this sector growth of the copper industry will generate
of the economy from huge economic benefits for South Australia
exploration to export and benefit local businesses, service provid-
and everything in be- ers and skilled workers as well as the wider
tween,” Koutsantonis community.”
said. Oz currently employs more than 1,000 staff
“To succeed, the at its Prominent Hill operation and Cole hoped
strategy also needs the company – with the help of the State Gov-
the community’s sup- ernment – could do the same at its Carrapa-
port for the required teena project.
investment in jobs, “If the Government gets the settings right
training, research and there is no reason that the industry can’t ex-
other opportunities pand,” Cole said.
that can be created by “I’d strongly encourage stakeholders to re-
South Australia tak- spond to the directions paper, as it provides
ing a larger and more an exciting opportunity to make a genuine
influential role in the contribution towards shaping the future of the
world copper market.” industry.”
“The directions The State Government will host two work-
paper on the cop- shops in Adelaide and regional South Aus-
per strategy seeks tralia to source feedback on the key themes of
the views of industry, the directions paper.
regional and Aborigi- Submissions close on October 23 to allow
nal communities, and a final copper strategy to be issued before the
other stakeholders on end of the year.
“how we tackle some
The copper strategy will address
a broad range of issues facing
the State as it develops this sector
of the economy from exploration to
export and everything in between.
PAGE 6 OCTOBER 2015 AUSTRALIA’S PAYDIRT
From bad to worse for
Just when you thought things could Zuma might get in on the act.
not get any worse...a comparison Don’t hold your breath.
between what I wrote in mid-August for Quizzed by journalists after his
my Bush Telegraph and the situation speech, Magara laid his neck firmly on
barely a month later in mid-September the block declaring he was “confident”
as I write this one is sobering. that Lonmin would find solutions to its
In mid-August, in my overview of multiple crises and pull through to ben-
South Africa’s bombed-out platinum efit from the inevitable rebound in the
sector, I pointed out that Lonmin plc platinum market.
shares had plunged to a low of 760c I guess he had to say that but
and that the rand was hitting near re- Magara would not be drawn on the
cord lows of around R12.6 to the US specifics of what Lonmin is looking at
dollar and R20 to the pound sterling. to deal with its financial situation. He
So, a month later, the Lonmin share trotted out the company line that all will
price is now down to 500c and the rand be made clear in November when the
is at R13.70, having dropped as low as company reports its results for the year
nearly R14 before staging a “recov- to end-September.
ery” that is so slight it could not even You have to wonder what the Lon-
be termed a “dead cat bounce”. min share price might be by then.
More bad news over the past month Still, “when the going gets tough,
included Impala Platinum Ltd (Implats) the tough get going” and so it is that
– the world’s second largest platinum Ben Magara Sibanye Gold Ltd chief executive Neal
producer – passing its final dividend; Froneman has made his long-awaited
chopping its capital expenditure to focus on such issues as the industry’s toxic industrial play to get into platinum and has struck an
the completion of two new key shafts and an- relations situation and the crippling financial agreement to buy the Rustenburg division
nouncing a R4 billion equity issue to help fund demands of black economic empowerment from Anglo American Platinum plc (Amplats) .
that work. schemes then Lonmin may be in even bigger The price is R4.5 billion, of which R1.5
According to chief executive Terence billion will be paid up front either in cash or
Goodlace; “prices have decreased further Sibanye equity, and Froneman has clearly
and made our lives more
difficult and we have gone done some tough bargain-
ing getting Amplats to agree
We have had mining ‘indabas’ andback into our plans and have to kick in up to R800 million
should the Rustenburg op-
looked to make further cuts”. eration subsequently prove
to be loss-making between
mining ‘lekgotlas’; all of which haveThe $64,000 question
“produced a lot of optimistic hot air fromremains what Lonmin – the
trouble than it appears to be.
Over the past five years, there have been a
world’s third largest platinum which nothing material has emerged 2016 and 2018.
producer – is going to do to Froneman reckons he
cope with its looming finan- on the ground. The same depressing has negotiated a good deal
cial crisis which will come to scenario of government vagueness, given his belief in the under-
a head in the middle of next lying fundamentals of the
year when debt facilities to- intransigence and foot-dragging has platinum business which
talling some $US560 million continued while the labour unions have indicate the price must inevi-
have to be rolled over. tably turn – it’s just a matter
gotten more and more militant. of when that happens. That,
On August 27, Lonmin by the way, is currently the
chief executive Ben Magara
gave a speech in Johannes- mantra of every platinum
burg at an African Mining company chief executive.
Network function in which he pointed out that series of meetings between the Government He pointed out the deal nearly doubles the
around 80% of South Africa’s current platinum and the mining industry to promote some size of Sibanye and reckoned there was no
output was being produced at a loss. form of unity and common approach that will reason why the group’s market capitalisation
He called for “decisive action” from the save jobs and promote new investment for the should not also double as a result.
South African Government to help out and overall benefit of the South African economy. His optimism could well be justified if the
highlighted the extent of the risks to “SA Inc” We have had mining “indabas” and mining platinum price does actually recover as the
commenting; “with all the linkages through “lekgotlas”; all of which have produced a lot of platinum industry players believe it must –
procurements and services and – you name optimistic hot air from which nothing material preferably sooner rather than later. But I reck-
it – some two million people benefit from the has emerged on the ground. The same de- on Amplats got the best of this deal through
platinum industry. pressing scenario of government vagueness, which it gets rid of its biggest “dog” for a pos-
“It’s the country’s biggest export earner. It intransigence and foot-dragging has contin- sible future liability of R800 million against its
earned R90 billion in 2013. It’s an essential ued while the labour unions have gotten more expected receipts of R4.5 billion.
Brendan Ryan is a Johannesburg-based min-
industry for the sustainability of South Africa.” and more militant. ing writer
Personally, I think if Magara is counting on Next up is a mining “phakisa” due in Octo-
“decisive action” from government to deal with ber, at which it seems even President Jacob
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 7
Big boys look differently at China
In August, BHP Billiton Ltd revised analysis of steel demand drivers in
downwards its forecast of “peak China is the issue of overcapacity
steel” production in China, the in the country’s steel production
world’s largest producer of the stuff. sector.
It will happen, BHP Billiton said, Industrial overcapacity is “the
sometime in the mid-2020s and largest problem facing the Chi-
the peak will be between 935 and nese economy now”, according to
985mt, or 960mt in the middle of Xu Shaoshi, chairman of powerful
that range. state planning body the National
Rio Tinto Ltd, by contrast, is Development and Reform Com-
sticking with its call that the peak mission (NDRC).
will come around 2030 and will be And much of that excess capac-
around 1bt. ity is in the steel sector, where it
BHP Billiton’s shift of stance is manifest in razor-thin margins,
grabbed a lot of media cover- poor profitability and bombed-out
age. After all, these are two of the local steel prices.
world’s largest producers of iron Overcapacity means inefficient
ore and China is the world’s larg- markets, steel-mills over-produc-
est buyer of their product. Rio Tinto believes Chinese steel production will continue growing to 2030 at ing relative to demand just to gen-
For BHP Billiton and Rio Tinto an annual average of just 1%, compared with 14% of the previous 15 years erate cash flow and service debts
and their shareholders “peak steel” with all the accompanying risks of
in China is more than just an academic talk- fense of the company’s contention that “peak violent destocking events and mini debt de-
ing-point. steel” in China is still a long way off. fault chain reactions.
When it comes and at what level will deter- His presentation, is both a fascinating in- It also exposes the steel sector to direct
mine whether the two Pilbara producers have sight into the group’s forecasting methodol- government intervention in the form of en-
been right to keep building out new iron ore ogy and full of interesting snippets. forced capacity closures, such as have been
capacity. Such as a projection that by 2030 nearly taking place on environmental grounds in ar-
But the real significance of these “peak 25% of China’s current urban residential eas surrounding smog-plagued Beijing.
steel” forecasts is not the relatively small 40mt building stock will be demolished and rebuilt, Steel production may indeed grow at an
gap that has opened between the two compa- one or two-story buildings being replaced by average rate of 1% over the next 15 years,
nies, but what they still have in common. higher-rise structures needing more steel. but such a smooth long-term projection may
Both are still taking a benign view of Chi- The key takeaway, though, is that Chinese mask high levels of what Rio’s Tulpule terms
na’s industrial economy, one in which the cur- steel production will continue growing to “volatility”.
rent slowdown is merely a blip in the longer- 2030, albeit at an annual average rate of just There is a direct analogy here with that
term trend. 1%, compared with the booming 14% of the other plank of iron ore producers’ thinking,
It’s a view that contrasts starkly with the previous 15 years. namely that their lower production will dis-
current doom and gloom pervading just about In other words, a slowdown and a sharp place higher cost production, forcing the mar-
every industrial commodity, several of which one at that, but not actual contraction and cer- ket to rebalance.
are trading at levels last seen during the GFC. tainly not the end of the China growth story. Such a belief in the efficiency of the iron ore
If they are right, the current negativity about BHP Billiton in essence agrees, even if its market is why the consensus view was that
China is overdone, the markets misreading view is that Chinese steel production is not the price wouldn’t fall below $US90-100/t. Un-
the necessarily messy transition from invest- going to be quite so strong for quite so long. til, of course, it did.
ment- to consumer-driven model, a process It hasn’t lifted the bonnet on its research Reality has a nasty habit of not being as ef-
dubbed the “new normal”. engine in the same way as Rio Tinto but, ac- ficient as theory says it should be. Higher-cost
If the markets are right, however, Rio Tinto cording to chief executive Andrew Mackenzie, producers may not meekly accept their fate
and BHP Billiton are going to be taking a lot speaking to analysts at the time of the com- but will rather struggle on. Costs themselves
more criticism for their “saturate and domi- pany’s first-half results, “we redo our fore- are a moving target and right now they are
nate” approach to iron ore supply. casts bottom-up, in incredible detail, every six falling as commodity price weakness feeds
Chinese steel production is not growing at months”. into a vicious circle of cost deflation.
all right now. Cumulative output was 476mt in And those forecasts, positing “peak steel” a The iron ore displacement cycle has al-
the first seven months of 2015, down by 1.8% decade in the future, are, Mackenzie said, “a ready proved to be a lost messier than ex-
on last year’s equivalent level. realistic view”. pected, which is why, even after the recent
It’s the first time Chinese steel production There are plenty of others who would take rally, the price is currently still struggling be-
has actually contracted in more than a decade issue with such a rose-tinted view of China low $US60/t.
and follows a warning in January by Zhang right now. After underestimating the inefficiency of
Guangning, chairman of the China Iron & Analysts at Goldman Sachs, for example, the iron ore market, there is a similar risk of
Steel Association, (CISA), that “China’s steel have argued both that the slowdown in Chi- ignoring the even greater inefficiencies of the
sector has already entered a period of peak- na’s industrial activity has been harder than Chinese steel market.
ing and flattening out”. suggested by the official macroeconomic fig- It’s not the contrast between Rio Tinto and
To which Rio Tinto’s response, or rather ures and that demand for all metals will con- BHP Billtion’s views of “peak steel” that is im-
that of its head economist Vivek Tulpule, is tinue to suffer from a longer-term debt delev- portant. After all what’s 40mt or so between
that “it is important to see through near-term eraging cycle that has only just begun. friends?
volatility and cycles” when “looking at long- Only time will tell who is reading China It’s the widening gap between their collec-
term trends”. right, particularly given the number of moving tive view of China and that of most other com-
Tulpule was speaking at Rio Tinto’s inves- parts in the equation, each and every one of mentators right now that is the real stand-out.
tor presentation in Sydney in September and them subject to a host of known unknowns. – Andy Home, Reuters
chose the occasion to launch a detailed de- But missing from Rio and BHP’s bottom-up
PAGE 8 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Big data: Resources sector
positioned for longer-term growth
That resources companies continue to con- partner systems has delivered multi-billion- Real-time analytics is being used to stream-
tend with price volatility, geopolitical tur- dollar projects more effectively and more ef- line processes. For example, Fortescue Met-
moil, rising costs, declining grades of product ficiently. als Group Ltd has introduced a productivity
and an increasing difficulty in gaining access Of course, the significant benefits offered reporting tool that is shared with field opera-
to finance is a given. by digital technologies can also require sig- tions teams’ mobile devices and that offers
At the same time, the price outlook for nificant investment – to harness their capabili- on-site mining supervisors an almost real-
some commodities is improving, and the sec- ties and manage associated risks. time tracking of operations against production
tor generally remains in favour with investors. Given the risk-averse nature of many in the plans via a business intelligence dashboard,
But in a world where volatility has become sector, operators have generally been cau- streamed to a tablet device.
the norm, the key for future success lies in tious to fully expose themselves to new tech- Real time and predictive analytics are also
determining not how to ride the sector’s typi- nologies until they are comfortable the invest- enabling organisations to reduce operational
cal waves, but how to accelerate from a down ment is worth the reward. risks and improve asset performance. As the
cycle. But in the current commodity price and cost shift from investment to production sees a
Digital technology and “big data” analyt- pressure climate, spending on new digital renewed desire to take advantage of existing
ics are two ways in which organisations are technologies should be a priority, and there is assets, real-time information on the condition
increasing their agility and positioning them- an opportunity for Australia to be at the fore- of equipment can be analysed to improve as-
selves for longer-term growth. front of developing the ICT solutions that will set performance and maintenance schedules.
The Australian resources sector is project- Big Data is also being analysed to assist
ed to spend over $2.9 billion on information exploration efforts and success. For example,
and communications tech-
nology (ICT) in 2015, with Mining IQ’s private cloud was
90% of companies increas- used to map the entire Cooper
Basin, with a large volume of
As the sector focuses on costing their levels of digital in- data condensed into one holis-
reduction, better use of thevestment. tic model, manipulated in 3D by
a single server.
“masses of data generated from globalThe sector is turning to in-
play a fundamental role in the sector’s digital
novations in digital technol- operations is providing cost savings While there are many op-
ogy — advances in comput- portunities and benefits avail-
ing, networks and devices, and productivity improvements across able from harnessing big data,
as well as the capabilities planning, operations, safety and supply there are also challenges. Data
they deliver — for a range collected must be reliable and
of reasons. The increasing chain management, as well as to consistent, and it’s imperative
need to deal with large and optimise exploration activities and the that common data collection
complex data requires ad- processes are in place, which
vanced digital technologies use of existing assets. might mean changing current
that can generate efficien- processes and daily opera-
cies in mineral exploration, tions, and involve a significant
make operations safer, drive investment.
cost reductions and respond to environmental Big data isn’t a new concept for the re- Data must also be timely. This is a chal-
imperatives. sources sector, however the extent to which lenge with any data set, but becomes more
Drone technologies are providing miners it is being used, and the benefits harnessing pronounced when dealing with very large data
with affordable, lightweight and unmanned it can deliver, has taken off over the last two volumes. Organisations must also be able to
aerial vehicles to help with safe search and years. react instantly for data value to be truly max-
rescue operations and gather information to As the sector focuses on cost reduction, imised. This is proving a challenge for many
aid mine site mapping. Unmanned autono- better use of the masses of data generated organisations without adequate analytical
mous vehicles have reached a usable stage from global operations is providing cost sav- tools and capabilities. Another key challenge
and are helping to improve productivity and ings and productivity improvements across is the ability to sort through and understand
safety, and reduce labour costs. planning, operations, safety and supply chain data and to display and demonstrate mean-
Automated oil and gas drilling systems management, as well as to optimise explora- ingful results from which the organisation can
have also become more commonplace over tion activities and the use of existing assets. extract efficiency gains.
the last decade, with a number of operators Perhaps for these reasons, resources op-
focusing on developing systems fully inde- erators have really only begun to scratch the
pendent of humans via advanced sensors ca- surface when it comes to the benefits that
pable of monitoring terrestrial, marine and at- come from the right approach to, and invest-
mospheric conditions, reducing the likelihood ment in, big data.
of human error and enabling early detection Demonstrated success in lowering costs,
of, and response to, environmental hazards. improving productivity and driving better
Interoperability – the ability for technologi- safety outcomes will push those not yet in the
cal systems to interact and provide real-time game to catch up with the trend soon.
optimisation of extraction, excavation and
processing – is occurring at an increasingly Michael Scott is a Deloitte Consulting partner while
granular level. And integrating ICT systems Matt Judkins leads Deloitte Access Economics’
across engineering, contracting and services Western Australia practice. Both are based in Perth
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 9
Iron Road on a roll
Iron Road Ltd’s Central Eyre Iron Project
(CEIP) on South Australia’s Eyre Peninsula
has been backed by several parties wanting a
slice of the action.
The CEIP is a $US4 billion mining and in-
frastructure magnetite project scheduled to
produce 21.5 mtpa of 67% iron concentrate
over a current mine life in excess of 25 years.
Investors have typically shied away from
such projects due to the high capital costs at-
tached and considering the current environ-
ment of iron ore prices – $US59/t at the time
of print – one would expect little love for the
CEIP right now.
However, Iron Road has bucked that trend
with a series of MoUs put in place last month.
The latest development saw Aixi Invest-
ments enter a MoU to progress funding for
port and rail facilities.
A deep sea port and export facility capable
of loading Capesize vessels up to 220,000t at
Cape Hardy is planned, while an infrastruc-
ture corridor consisting of a railway line from
the mine at Warramboo to port, power line,
water pipeline and bore field are required. The quality of Iron Road’s Central Eyre Iron Project in South Australia has
Aixi, highly regarded for its contacts with Chinese steel mills queuing up for its magnetite
infrastructure investors around the world,
will evaluate investment in the rail and port Yikang under the Shandong-South Australia
infrastructure assets related to CEIP, plus Cooperation Action Plan (2015-18). Next year
cooperate in the negotiations of third-party marks the 30th anniversary of the Shandong-
contracts, including construction contracts, South Australia sister state relationship and
operation agreements and the negotiations of the latest round of MoUs signals the strength
an infrastructure access agreement. of the partnership.
“We are moving ever closer to securing Stocks said the willingness of the parties
off-take and then funding for CEIP, which will to enter these MoUs despite iron ore market
allow us to make a final investment decision conditions indicated what the Chinese are
ahead of construction,” Iron Road managing thinking.
director Andrew Stocks told Paydirt. “We may find out that China’s appetite for
“We are continuing project finance discus- iron ore is robust over the long-term and the
sions with a number of parties across the agreements that we entered into with these
globe, we have a premium product, significant mills verifies this belief,” Stocks said.
scale, significant mine life... and don’t forget “We also recognised that China would not
projects like this are becoming increasingly Andrew Stocks only demand but pay a premium for a pre-
rare. mium product. The high quality blending feed
“We also have support of state and federal tered a further agreement towards signing a stocks, such as what we will produce at CEIP,
governments and now significant interest from letter of intent to purchase Iron Road’s CEIP is increasingly in demand in China because
five [Chinese] steel mills, construction and in- product, while four other Chinese steel mills China is focusing on reaching energy efficien-
frastructure groups. We are currently target- have signed similar agreements but have re- cy targets, improving air quality along with
ing a 2017 commencement of construction.” quested to remain anonymous at this stage. improving production efficiencies. We can
By construction start-up, Iron Road should The signing was done alongside SA Gov- support the mills in this regard.”
have off-take agreements secured and its foot ernment officials, including Premier Jay Stocks said he hoped the strides taken by
in the door with five potential parties. Weatherill and Shandong Provincial Commit- Iron Road would bode well for other compa-
Shandong Iron & Steel Group Ltd has en- tee of the Communist Party of China Jiang nies in the space.
“I have always thought that success breeds
MoUs signed by Iron Road in September success and confidence breeds confidence,”
he said. “The iron ore price has come off its
• Agreement with five Chinese steel mills to evaluate the commercial and technical benefits of highs and that forces companies like Iron
using CEIP product, with intent to move towards purchase agreement Road that are looking to develop new projects
• Infrastructure funding MoU with Aixi Investments for port and rail to take a very hard line in reducing costs.”
• Indigenous Land Use Agreement signed with the Barngarla Aboriginal Corporation covering – Mark Andrews
the project area
• MoU signed with the Wudinna District Council for upgrading infrastructure in the area
• MoU signed with the District Council of Cleve concerning rail and port facilities in the area
• MoU signed with a number of Eyre Peninsula peak industry groups to collaborate with Iron
Road to increase employment and business opportunities to create better outcomes in the
PAGE 10 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Aboriginal breakthrough in
glum iron ore times
Fortescue chief executive Nev Power, Australian Aboriginal Mining Corporation (AAMC) chairman Daniel Tucker and managing director
Fergus Campbell sign an agreement at Fortescue’s headquarters. The agreement will see AAMC on track to become Australia’s first
Aboriginal-owned and operated iron ore miner
There have been better times for iron ore to find an opportunity. We have very strong AAMC in what is a “very unique occurrence”.
miners, but amid the gloom there is a ray partners and working with Fortescue now has “It is a fact that Aboriginal businesses em-
of sunshine. allowed us to get to this point.”
ploy a lot more Aboriginal people than non-
Australian Aboriginal Mining Corporation Tucker said AAMC would take small steps Aboriginal businesses, so there is enormous
(AAMC) has moved closer to establishing as it strove towards production and hoped to leverage through the Aboriginal community
Australia’s first Aboriginal-owned and oper- extend more opportunities for Aboriginal peo- for that,” Power said.
ated iron ore mine in the Pilbara. ple beyond the mine gate.
“Furthermore, it is really important to us
Last month, the private enterprise formal- Additionally, AAMC has committed to lead- that positive steps are taken towards ending
ised an iron ore sale and purchase agreement ing indigenous-owned mining and civil con- the disadvantage that exists in a lot of our re-
concerning its Extension and Breakaway pro- tractor Carey Mining Pty Ltd to provide min- mote and indigenous communities. We think
jects, north of Yandi, with Fortescue Metals ing and ore haulage services to its iron ore this is a very significant step forward in being
Group Ltd. projects. able to provide assistance to help a group that
is starting a grassroots operation here in the
At the time of print, iron ore was trading “What we have now is the opportunity to Pilbara.”
at $US59/t – a price which would deliver start our own iron ore project up in the Pilbara
AAMC “a very small, modest margin” under and in working closely with the Fortescue The start date to production from Extension
the agreement with Fortescue, according to Group we will be able to develop our project. and Breakaway hinges on a supportive com-
AAMC managing director Fergus Campbell. Through that we will be able to add value mercial environment.
to Fortescue and also create value for their
Campbell said AAMC was looking for con- shareholders and also create opportunities When that time comes AAMC can deliver
ditions in the iron ore market to stabilise and for our people, not just in blue collar opportu- up to 2 mtpa iron ore from its projects via
improve before making an investment deci- nities but also opportunities in the white collar Fortescue’s rail or port facilities over a five-
sion and proceeding with mine developments. professions as well,” Tucker said. year period.
Nevertheless, AAMC chairman Dan- The agreement with AAMC builds on Access to Fortescue’s rail will depend on
iel Tucker said the historic agreement with Fortescue’s legacy of helping Aboriginal peo- factors including the “prevailing rail volume
Fortescue would open doors for Aboriginals ple prosper from what mining can offer. and any potential for surplus capacity”, while
in the mining sector. Fortescue can buy ore from AAMC at delivery
Fortescue’s direct workforce is 13% Abo- point.
“This has never been done before so it is an riginal, while an estimated 1,000 Aboriginal
icebreaker,” Tucker told media. people work for Fortescue or its contractors. “We will look at marketing this as a part of
our product portfolio because, again, it is a
“We might see other Aboriginal people do Under the company’s Billion Opportunities support service that we can provide. To set up
similar types of arrangements in the future. programme, Aboriginal businesses and JVs and market 2 mtpa is a tough gig, so we will
We don’t know that [yet], this is the first time it have been awarded more than $1.8 billion in provide that support,” Power said.
has ever been done. contracts from Fortescue.
– Mark Andrews
“It has been a long time coming [for Aborigi- Fortescue chief executive Nev Power said
nal people], but there are going to be oppor- the company was proud to be partnering with
tunities which present and we have been able
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 11
Forrest’s squad makes
Versatile explorer Impact Minerals Ltd will Impact has started drilling at Broken Hill after Andrew Forrest’s Squadron Resources made a
have up to $9.3 million of funds to draw on timely cash investment in the junior explorer
for upcoming exploration activities after wel-
coming mining magnate Andrew Forrest to its explorer. They may have done some things breakthrough PGM discoveries – some of the
share register. highest-graded hits ever reported in Australia
privately, but this would be their first invest- – earlier this year.
Squadron Resources Pty Ltd, the private
mining investment vehicle of Forrest’s Min- ment into an advanced exploration company, Impact is also gearing up for a major drill
deroo Group, will invest up to $7.3 million in programme at Commonwealth with some on-
Impact and become the company’s second so that’s another feather in our cap.” going mapping, sampling and geochemistry
cornerstone investor. work before the first holes of the new cam-
Squadron’s cash injection and a full take-up paign are punched into the ground in Q1 2016.
At the time of print, Impact also finalised a
$1.9 million rights issue to top up its burgeon- of the rights issue could not have come at a A maiden inferred resource of 720,000t @
ing cash reserves and position the company 2.8 g/t gold, 48 g/t silver, 1.5% zinc, 0.6% lead
as one of best-funded junior explorers on the better time for Impact, which reported a cash and 0.1% copper (including 145,000t @ 4.3
ASX. g/t gold, 142 g/t silver, 4.8% zinc, 1.7% lead
position of just $570,000 at the end of June. and 0.2% copper) was defined at Common-
Impact managing director Mike Jones said wealth last February.
his company was introduced to Squadron Impact is also due to receive another $1.1
through a mutual contact earlier this year No work has been completed on Mulga
when it became clear both parties had some- million from the R&D rebate, ensuring all Tank since early 2014, but the company was
thing to offer each other. making plans to fly an airborne EM survey
three of its exploration projects, including the over the project at the time of print and could
“As serendipity would have it, they actually be drilling high-priority targets before Christ-
had a bit of interest in the Lachlan Fold Belt nickel-rich Mulga Tank in mas.
where our Commonwealth gold project is and
also, in particular, in Broken Hill where our Western Australia, will be Jones said the company’s strategy was to
nickel-copper-platinum project is,” Jones told keep pushing ahead with all three projects de-
Paydirt. adequately funded for at spite the current market malaise.
“We were actually able to consummate a least the next 12 months. “We’ve received a little bit of criticism for
deal pretty quickly and it’s been structured re- having too much on our plate, but what I can
ally nicely for us. We’re getting an initial $3 “Our board has always say is each of those projects has had its mo-
million up-front cash injection and there’s an ment in the sun at appropriate times and it’s
option for Squadron to invest up to $4.3 mil- been of the opinion that allowed us to raise capital off the back of it,”
lion more, including options at 3.25c/share, Jones said.
and also then the opportunity to invest $1 we should keep active
million into each of the two projects at 19.9% “There’s a lot of projects in the market
interest.” and if we bring in good re- which are not economic and that’s not what
we want. We want the ones that can operate
Squadron chief investment officer Aaron sults, we will be rewarded throughout any cycle and in the lowest cost
Hood will join Impact’s board under the con- quartile.”
ditions of the deal, while renowned geologist for that, not necessarily in
John Clout becomes avail- – Michael Washbourne
able to the junior as a tech- share price but certainly
by being able to raise
Jones said having
someone of Forrest’s money to go to the next
standing associated with
Impact could only be a level,” Jones said.
good thing, pointing to the
increased profiles afford- Andrew Forrest “If we had shut up shop
ed to Poseidon Nickel Ltd like a lot of people have
and A1 Consolidated Ltd
on the back of his invest- done I think we would be
dead in the water right now. But here we are,
“Andrew has done a fan-
tastic job getting Fortes- we’re well funded, we have great cornerstone
cue up and running, it re-
ally is a great resources investors and some great projects.”
success story, so having someone like that
behind our company is great,” Jones said. Drilling started at Broken Hill last month,
“They’ve obviously got an interest in nick- prior to the rights issue closing. Impact is
el…but they’re diversifying. Both [Poseidon
and A1] are development and production looking to complete up to 1,500m of dia-
companies, whereas this is really their first
publicly announced investment in a junior mond drilling at the project to follow up on its
PAGE 12 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Australia and the EITI
The resource curse, otherwise known as the fiable disaggregated information from compa- nance Ministers and Central Bank Governors
paradox of plenty, is an affliction which af- ny financial reports regarding payments made held in Cairns in September 2014 noted the
fects developing nations rich with natural re- to governments. This information would build strong commitment to a global response to
sources but poor in economic growth. public accountability and trust in governments cross-border tax avoidance and evasion so
In our region, countries such as Timor- and companies. that the tax system supports growth-enhanc-
Leste, Papua New Guinea, Solomon Islands Improved payment disclosure can also in- ing fiscal strategies and economic resilience.
and Nauru all suffer from this condition. They crease investor confidence and market stabil- The G20 Finance Ministers endorsed the
have multi-billion dollar resource projects that ity by mitigating the financial and political risks finalised global Common Reporting Standard
are operated by foreign multinational corpo- associated with global extractive industries for automatic exchange of tax information on
rations, yet their failure to meet some of the investment. a reciprocal basis which will provide a step-
millennium development goals, coupled with This is not a new idea. In 2011, the Austral- change in the ability to tackle and deter cross-
inequitable economic growth, continues to ian Government announced it would pilot the border tax evasion. Nations will begin ex-
plague their people. Extractive Industries Transparency Initiative changing information automatically between
Non-renewable natural resources are of- (EITI). A voluntary initiative, the EITI requires each other and with other countries by 2017
ten among the greatest source of wealth in participating governments to publish what or end-2018, subject to the completion of nec-
resource-rich countries. Good management
of the revenues generated by
their exploration, production
and sale is often essential for
Unfortunately, in someeconomic development in these
countries these paymentsnations.
Unfortunately, in some coun-
to governments have not alwaystries these payments to govern-
“been expended for the public good.ments have not always been
they receive from extractive companies and essary legislative procedures.
In recent years Europe, the
US and Canada have legislated
mandatory reporting of pay-
ments to governments by large
extractive corporations listed on
their stock exchanges. Together
the US and EU laws will cover
about 65% of the value of the
expended for the public good. Secrecy regarding the flow of global extractive industries mar-
Secrecy regarding the flow of funds from extractive industries to ket, and over 3,000 companies.
funds from extractive industries governments has allowed misuse of
to governments has allowed revenues and corrupt behaviour. A number of large Australian
misuse of revenues and cor- resources companies will also be
subject to mandatory disclosure
rupt behaviour. This can create obligations as a result of their list-
mistrust between local commu- ing on EU, US or Canadian stock
nities, their governments and exchanges.
companies sometimes leading to delays, con- those companies to publish what they pay to We should all work together toward ending
flict and social and political instability. governments. This largely includes taxes, roy- the paradox of plenty. The time for greater
In response to this issue an international alties and other statutory payments. transparency in the extractive industry is now,
network of 700 civil society organisations has The EITI Standard is implemented in 48 the world is moving and Australia must do
been campaigning to improve transparency countries with 32 currently classified as com- what we can to improve the lives of the po-
and accountability of payments to govern- pliant. It consists of a set of requirements that tentially of billions of people around the world.
ments by encouraging large companies to governments and companies have to adhere I encourage anyone interested to visit my
publish what they pay to government. It has to in order to become recognised as “EITI website at http://www.mattthistlethwaite.com.
been widely recognised by many international Compliant”. A multi-stakeholder group con- au/publish_what_ you_pay _policy _discus-
bodies, including the OECD and the G20, that sisting of industry, civil society and govern- sion and make a comment on Labor’s Publish
greater transparency and accountability of ment was established to guide and deliver the What You Pay Discussion Paper.
payments to governments will boost growth pilot. The multi-stakeholder group has now
and the equity of growth throughout the world. delivered its report to the Australian Govern-
Their argument is that improved disclosure ment.
of the value and nature of payments to gov- The OECD Base Erosion and Profit Shift-
ernments by extractive industries companies ing (BEPS) Action Plan documents actions
will assist efforts to fight corruption by govern- that governments have committed to in an ef-
ment officials and contractors in resource rich fort to prevent multi-national companies from
developing nations. reducing their fair share of taxation cost. The
More information of this nature will assist plan includes a strong recommended action
citizens and civil society groups to hold their relating to transfer pricing
governments to account regarding public fi- documentation and country- Matt Thistlethwaite MP is the
nances and national incomes and expendi- by country reporting by mul- Federal Labor member for
ture. Over time, it is expected this improved tinational companies. Kingsfor Smith and is shadow
transparency will result in more equitable This action would require parliamentary secretary for
growth in countries concerned and ultimately annual reporting for each Foreign Affairs and Immigra-
higher living standards. tax jurisdiction in which they tion. He previous served as
The benefits of revenue transparency have do business specifying the parliamentary secretary for
been demonstrated in Timor-Leste where amount of revenue, profit be- Pacific Island Affairs, Multicul-
extractive resource revenues have been di- fore income tax and income tural Affairs and Infrastructure
rected to a sovereign wealth fund invested tax paid, total employment, and Transport. He previously
in building local infrastructure and improved capital, retained earnings worked as a senior consultant
development outcomes. and tangible assets. with law firm Mallesons Ste-
A mandatory reporting regime for extractive The official Communiqué phen Jaques
industries will increase the availability of veri- from the meeting of G20 Fi-
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 13
Case histories of discovery
The world’s pre-eminent
gold exploration event
Pan Pacific Perth
Pan Pacific Perth
Jointly organised by:
Keith Yates & Associates Pty Ltd
Sponsors to date: Closing Drinks Sponsor: Dinner Sponsor: Lanyard Sponsor: Gold Nugget Sponsor: Presenter Gifts Sponsor:
Exhibitors to date:
For all enquiries about exhibiting or attending please contact Melita Fogarty
on (+61) 8 9321 0355 or email [email protected]
Monday 16th November Wednesday 18th November
5.00pm Welcome reception and registration 8:00am Registration
Exhibition Area, Pan Pacific Perth 8.30am Guyana Aurora Gold Deposit: Discovery history and
geology of Guyana’s new multi-million ounce
Tuesday 17th November gold mine
7:30am Registration Nathaniel Silvio* and Augusto Flores IV
Guyana Goldfields Inc.
8:30am Welcome and opening
Bill Repard and Keith Yates
9.15am Suriname Geology and Discovery History of the Merian
8.45am Canada The Borden Gold Deposit, Ontario’s Most Au Deposits, Suriname, South America
Sam Anderson*, Jose Wilson, Santjitsing Radjkoemar,
David Palmer Kirk Schmidt and Daven Mashburn
Probe Metals Inc. /Goldcorp Inc. Newmont Mining Corporation/Surgold LLC
9.30am USA The Haile gold mine, South Carolina, USA – 10.00am Morning Tea
An Old Tradition and a New Opportunity
10.30am Australia The Discovery and Geology of the Gruyere
James M. Berry *, Reid M. Mobley, Ken A. Gillon and Gold Deposit
C. Cole Bates
Romarco Minerals Inc. Justin Osborne*, Rick Berg and John Donaldson
Gold Road Resources Limited
10.15am Canada Amaruq - A new gold discovery in Nunavut, 11.15am Australia Invincible – discovery to development
Canada Julian Woodcock*, Andrew Foley, Greg Tossel,
Gemma Lavery, Paul Edmonds and David Doutch
Denis Vaillancourt Gold Fields Limited.
Agnico Eagle Limited
11.00am Morning Tea 12.00pm Lunch
11.30am Canada The Coffee Creek Gold Deposit, Yukon Territory, 1.00pm Australia The Pegasus Discovery and the Re-Emergence
Canada. A new style of gold deposit in an of the Kundana Goldfield, Western Australia –
historic gold district A Lesson in Critical Thinking and Persistence
in a Mature Brownfields Exploration
Tim Smith Environment
Kaminak Gold Corporation
12.15pm Burkina The Kiaka Gold Deposit, Burkina Faso Darren Cooke*, Glenn Grayson, Jodi Williams and
Faso Victor King*, Andrew Brown, Michael Badie Wanye, Rick Gordon
Ada Koumangdiwe and Ousséini Yameogo Northern Star Resources Limited
B2 Gold Corp.
1.45pm Philippines The Discovery of the Didipio Alkalic Porphyry
1.00pm Lunch Cu-Au Deposit
2.00pm Senegal The discovery and development of the Petowal Cecilio “Boyet” Bautista* and Chito Gozar
gold deposit, eastern Senegal OceanaGold Corporation
Bills J H*, Cocis D, Sow H, Sarr A, Bakhoum I, Tesfu A 2.30pm Afternoon Tea
and Parr R
Toro Gold Limited 3.00pm Colombia The Discovery and Geology of the Nuevo
Chaquiro Copper and Gold Deposit
2.45pm Sudan The Discovery and Geology of the Galat Sufar Paul Bartos, Rex Brommecker*, and Nicholas Winer
South Deposit, Republic of the Sudan AngloGold Ashanti Limited
Emmanuel Abanyin, Bushra Abdel Salam, Erzuah 3.45pm Long Term Trends in Gold Discovery
Ackah, Moses Appiah, Moawia Mohamedy, Stuart Richard Schodde
Mills, Hugh Stuart * MinEx Consulting Pty Ltd
Orca Gold Inc.
3.30pm Afternoon Tea 5.00pm Closure followed by farewell drinks
Lobby Lounge, Pan Pacific
4.00pm Serbia Cukaru Peki Cu-Au deposit, Serbia Discovery
History, Geology and Ore Types
Dejan I. Koželj*, Vertrees M. Canby, and Leon Z. Naftali
Freeport-McMoRan Exploration Corporation/
Reservoir Minerals Inc.
4.45pm Chile The Discovery and Geology of the Salares Norte wwRwer.negegisiwsttgererantNigoonOld/ W.co!m/
Gold-Silver Deposit, Northern Chile
6:30pm Francisco Azevedo*, Nathan Brewer*, Diego Huete This programme is subject to change without prior notice
7:30pm Verdugo, Alex Santos, Lisseth Roncal, Regina
Baumgartner, Alex Trueman and Andrew Foley
Gold Fields Ltd.
Pre-dinner drinks in Lobby Lounge,
Pan Pacific Perth
Dinner in Golden Ballroom, Pan Pacific Perth
An Australian invasion could
boost NZ exploration
One of the resounding themes at the 2015
AusIMM New Zealand Mining Conference
was what established Australian gold miners
could provide in the drive to lift mineral explo-
ration in New Zealand.
The conference, in the majestic Dunedin
Centre that takes in Dunedin’s Town Hall, was
held over three days and spiced by pre- and
post-conference tours and technical courses.
Gold is a strong factor in the NZ minerals
scene, coal is on the nose because the State-
owned Solid Energy got itself into an impos-
sible debt position as both export coking and
domestic coal prices nose-dived, base metals
are an elusive dream undoubtedly hidden in
locked-up conservation estates and platinum
group metals is a known target not helped by
having had juniors who talked big but proved
in the past two decades only to be exploration
The important new arrivals are Newcrest
Mining Ltd and Evolution Mining Ltd, two of
the leading performers on the Australian gold
scene. In Newcrest’s case it has been a re-
Several speakers, including Energy & Re- The main street of Waihi features an old headframe which is now a tourist landmark
sources Minister Simon Bridges, made men-
tion of the recent arrivals on the scene, and touted to be taking up a JV with New Talisman old volcanic belt and while it has had more
the fact that OceanaGold Corp had under- Gold Mines Ltd on the Rahu block, considered owners than a Fremantle café in recent dec-
taken rationalisation and was now pushing to be a clone of the Talisman mine slowly be- ades, it has lacked a sustained, modern ex-
forward on extending the 25 year old Macraes ing reactivated by cash-tight New Talisman. ploration programme.
operation well into the next decade. Evolution picked up the Puhipuhi epith- The big gold move in NZ has been Oceana-
Newcrest has a JV with Brisbane-based ermal gold-silver project near Whangarei in Gold’s acquisition of the only North Island
Laneway Resources Ltd on ground surround- Northland from cash-poor Australian junior hard rock mining centre of Waihi from New-
ing the historic Karangahake gold mining De Grey Mining Ltd. Puhipuhi has long been mont Mining Corp for $US101 million.
centre near Waihi on the North Island and is considered a classic epithermal model in an Based on known reserves, the price paid
was above the in-ground value, meaning the
OceanaGold geoscience team saw great val-
ue in the regional exploration targets, includ-
ing Waihi West and Wharekirauponga (WKP).
Over a series of owners, Waihi was mined
by underground methods until the 1950s. It
was revived in modern times by an open cut
over the famous Martha mine within Waihi
township that about two decades ago passed
from Robert de Crespigny’s Normandy Mining
over to Newmont.
It operated successfully thanks to a strong
community and social programme which
negated the scare campaigns – the mine is
at base of the Coromandel Peninsula, the
heartland of green politics – which implied
you could be poisoned by chemicals. It also
successfully negotiated the added challenge
of mining the Correnso deposit which sits un-
derneath some homes in Waihi East.
The Dunedin Conference was told by
Waihi’s public affairs manager, Kit Wilson,
that mining companies should send in the so-
ciologists before the geologists.
Straterra chief executive Chris Baker headed a panel session at the He said miners were facing a war of words
AusIMM New Zealand Mining Conference with anti-miners using modern social media
PAGE 16 OCTOBER 2015 AUSTRALIA’S PAYDIRT
to create concern and an inaccurate view based mining lobby Straterra, Chris Bak-
about what will happen with mining activity.
er, said the new consent applications may
Wilson said that one exploration target,
north of Waihi, at Onemana takes in recent- fair better, because the new EPA business
ly replanted pine forest accessed by exist-
ing forestry roads. chief, who replaced a public servant, had
“The population is predominantly retired a business background.
and comparatively wealthy. They enjoy the
quiet life and would like it to stay that way,” Baker said the challenge was to find
ways for regulators to work well with each
“What can be agreed on over a flat white
with one group can take three months and other and Straterra would provide some
a Memorandum of Understanding with an-
other,” he said. background following a visit to mines de-
Wilson said that if you are planning on partments and industry groups in Austral-
mining directly under people’s homes, you
had better know who they are, what they ia with NZ Government officials.
think, and how they would like to be com-
municated with. Paydirt asked Energy & Resources
“You wouldn’t construct a mine without Minister Simon Bridges what carrots NZ
rigorous investigation of the resource. It is
vital that we comprehensively apply that could dangle to lure mineral explorers to
same rigour using the disciplines of sociology,
psychology, and microeconomics in our host NZ, in the same way that South Australia
transformed itself to a State with major
Ignore these disciplines at your peril was
his message. new discoveries following release of new
Wilson said he saw the mining industry data and drilling incentives.
through the eyes of a sociologist.
Bridges, one of the sharp and emerg-
“I would suggest the view is valid because
there’s a saying attributed to Mark Twain: ‘A ing faces in the Key National Government,
mine is a hole in the ground owned by a liar’.”
New Zealand Energy & Resources Minister Simon Bridges said exploration for minerals should get a
Gold mining in NZ gained a positive change
early this year with a progressive slide of much-needed boost from the collation of
the Kiwi dollar against the American green-
back; although not as dramatic as in Australia Island’s West Coast held up for almost two Government-funded geological data, as had
where the exchange rate movements saved
many gold miners from unsustainable high years, by which time the coking coal price had the oil and gas sector.
gone from a peak to the basement. He empathised with companies facing the
Coal has not been so lucky. The energy
commodity went into the doldrums and Aus- Bathurst chief executive Richard Tacon near 40% plunge in gold prices since late
tralian company Bathurst Resources Ltd suf-
fered the indignity of having mining consents said Escarpment was in early development 2011, but believed they were resilient and
on its big Escarpment project on the South
and the company was operating lean and could adapt to the new opportunities.
mean to make positive cash flow out of its “The Government is committed to support-
three domestic open cast mines on the South ing the sector for the long haul,” Bridges said.
Island. During question time, Bridges took note of
The company was now looking to see what concerns about Resource Management Act
opportunities may come with the break-up of issues, the year-long laxity in getting land
Solid Energy. back onto the permit register and whether the
The big negative for resource investment Government was looking at offering “incen-
in the past year came from two decisions by tives” to attract miners to NZ.
the Environmental Protection Authority (EPA) He said almost 33% of NZ has to date been
in what many saw as green politics vetoing covered by airborne aeromagnetic surveying,
two seabed mining projects – Trans-Tasman with more surveys over Otago and Southland
Resources’ iron sands project off the Tarana- next on the list, part of an overall $NZ6 million
ki coast and Chatham Rock Phosphate’s programme.
Chatham Rise phosphate nodules project. – Ross Louthean
Both companies will be putting in new re-
source consents, and head of Wellington-
Waihi public affairs manager Kit Wilson The 2015 AusIMM New Zealand Mining Conference was hosted in Dunedin
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 17
changing the tide
The day of reckoning looms for Minerals when the deal is complet-
Northern Minerals Ltd at its ed in the near term.
Browns Range rare earths pro- Jien will provide Northern Miner-
ject in Western Australia. als with access to capital networks
A DFS was released in March in order to fund pre-production capi-
indicating potential for the dys- tal costs of $329 million at Browns
prosium-rich project to be in Range.
construction next year ahead of The DFS highlighted life-of-mine
commissioning in 2017. (11.25 years) production of 3.13 mil-
That is still the plan despite lion kg dysprosium, while studies
current conditions in the re- remain ongoing to optimise the bas-
sources sector hardly favouring ket of rare earths Northern Minerals
juniors with development assets. can deliver to market.
Sentiment is poor for min- Key works under way include in-
ers and explorers in any given vestigations to reduce downstream
commodity right now; but there solvent extraction separation costs
are added challenges for a com- by separating yttrium in the hydro-
pany such as Northern Miner- metallurgical process.
als, which operates in the niche Yttrium supply is reported to be
space of rare earths. Northern Minerals has released an optimised study on its Browns Range DFS limited for the foreseeable future,
“It is stalling,” Northern Miner- meaning Northern Minerals can
als managing director George Bauk said of Adamas estimates more than 40% of the add another valuable revenue stream from
the rare earths market. 1,900t of dysprosium produced in 2014 came Browns Range. Lutetium – a critical element
“It stalls from an equity market perspective from illegal operations in China. in pet scanners – has also been identified as
because [investors] want to see commerciali- China’s clamp down on illegal mining activi- another valuable rare earth to be extracted
sation and success stories, which is where ties is tipped to be a game-changer for dys- from Browns Range.
the disconnect is. prosium players, as the global market’s major Removing and utilising the yttrium will also
“[For example] up until recently, people supply stream will be severely cut. increase the percentage of the dysprosium in
have gone into buying a Honda Prius for the Demand for dysprosium oxide is expected the mixed rare earth carbonate.
feel-good [factor], but from a commercial to grow at about 4% p.a. through to 2020, how- Bench scale test work assessing the re-
point of view it has been hard to justify buy- ever, there is a lack of new mines coming on moval of yttrium was being conducted at AN-
ing a Prius versus a Toyota Corolla. For the stream to fill the void, according to Adamas. STO and was scheduled to be completed by
technologies to really take effect, it needs to Northern Minerals is one of the few com- mid-September, with pilot plant level studies
be competitive from a price perspective.” panies on the rise in the global dysprosium to follow before the completion of a DFS in
As Bauk suggests, clean energy and high space and it is being backed in by the Austral- early 2016.
technology applications are integral to rare ian Government. Meanwhile, the WA Department of Mines
earths demand. However, with a diversity of In August, the FIRB granted approval of and Petroleum has approved the project man-
elements grouped together under the rare Jien’s proposed $49.5 million investment in agement plan submitted for Browns Range
earths banner, following the market can be Northern Minerals, with the former intending which is a vital part of the overall approvals
difficult. to make the transaction upon receiving regu- process.
Therefore since March, Northern Miner- latory approval from China. “For Northern Minerals, we are getting
als has ramped up the marketing of its story, The transaction is comprised of a convert- closer to the day of reckoning as we get clos-
which is predominantly based on dysprosium; ible note plus share placement and options to er to production. By getting over hurdles like
a rare earth used in magnets in the motoring Jien which will end up with 33% of Northern licences and the like, we are starting to add
sector. value,” Bauk said.
Reward for its efforts include courting Jien The company has held onto a loyal band
Mining – the Australian subsidiary of China’s of shareholders who have been with the com-
Jilin Jien Nickel Industry Co Ltd – which re- pany from the outset and don’t look like jump-
cently signed a MoU over off-take of 50% of ing off now.
Browns Range’s product. Despite the current market malaise and the
Jien is obviously bullish on dysprosium in impact on share prices, particularly for rare
the near future, as the China FOB price at earths companies, Northern Minerals has
the time of print was $US210/kg, down from treaded water and was trading at 20c/share at
$US295/kg at the start of 2015. Dysprosium the time of print.
prices were as a high as $US2,850/kg in mid- However, with the likes of Molycorp Inc
2011. in the US moving to care-and-maintenance
Adamas Intelligence, expert providers of activities at its Mountain Pass project, rare
intelligence and analysis on “critical sectors earths mines outside of China are slim, which
in the mining and metals sector”, expects could be the opportunity for Northern Miner-
dysprosium prices to improve on their current als to be the shining light in the sector.
value, however not to the levels experienced George Bauk – Mark Andrews
four years ago.
PAGE 18 OCTOBER 2015 AUSTRALIA’S PAYDIRT
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A new paradigm for
West Australian Premier Colin Barnett opens this year’s Africa Down Under. After 13 years, the mining-focused event has grown into the foremost
The formation of the new Advisory Group on Australian African Relations should, for the first time, offer the
Australian Government a wider perspective on the country’s links with the African continent. Dominic Piper
investigates how it might shape policy and what it will mean for Australian resources investment in Africa.
After decades of neglect was followed by in 2014, the International Mining for Develop- Coleman,” Bishop said during her address to
the well-intentioned but often chaotic at- ment Centre was closed and aid budgets for the conference. “This group of eminent repre-
tempts by the Rudd-Gillard Government, the region reduced, questions were raised as sentatives from business, civil society and the
Australia’s diplomatic engagement with Africa to whether the Australian Government had public sector will inform the Australian Gov-
entered a new phase in 2013 with the arrival abandoned its African interests. ernment’s thinking and policies on Africa.”
of the Abbott Government and new Foreign Af-
fairs Minister Julie Bishop. The Government has answered emphati- The formation of AGAAR represents the
cally, with a new, high-powered advisory most concrete attempt yet at establishing a
Bishop’s mantra of “economic diplomacy” group given the task of framing Australia’s proactive, rather than reactive, approach to
appeared made for the Australia-Africa rela- engagement with the 53 nations which make African policy initiatives.
tionship – one which had burgeoned in the up Africa.
last 15 years on the back of private sector For more than a decade, Australia’s diplo-
investment – calling as it did for the Govern- Bishop announced the formation of the Ad- matic engagement with the region has trailed
ment to support business, trade, investment visory Group on Australian African Relations that of the private, primarily mining, sector.
and growth and to build prosperity in Austral- (AGAAR) at this year’s Africa Down Under While missions were opened or reopened in
ia, in our region and globally. Abuja, Accra and Addis Ababa in the period
“I am...pleased to announce the creation of 2003-2010, Australian miners invested more
However, when AusAid was subsumed into a new body, the Advisory Group on Austral- than $40 billion on African resources projects
the Department of Foreign Affairs and Trade ia-Africa Relations, which will be chaired by in the period 2000-2015.
the CEO of Woodside [Petroleum Ltd], Peter
PAGE 20 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Paydirt chairman Bill Repard will sit on the Australian Government’s
“ new Advisory Group for Australian African Relations
The expansion of trade and investment
links between Australia and Africa will
continue to be underpinned by our investment
in mining. Mining has made, and will continue
to make, a substantial contribution to economic
development and poverty alleviation in Africa.
A well-managed mining sector can help drive
sustainable growth and poverty reduction.
Among providing direction on lifting Africa’s Australian Minister for Foreign Affairs, Julie Bishop (right), speaks with AAMIG
profile in Australia, engaging with the African chief executive Trish O’Reilly during Africa Down Under
Diaspora in Australia and promoting innova-
tion on the continent, AGAAR will be tasked AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 21
with garnering private sector advice on Aus-
tralian business’ role in Africa, in the process
contributing to and supporting Australia’s
economic diplomacy strategy for Africa. And
it is to resources, where those business links
are strongest, that the Government is likely to
Australia’s modern engagement with Africa
can be traced back to the Rudd Government’s
first Foreign Affairs Minister, Stephen Smith,
who was one of the first politicians of the mod-
ern era to recognise Australian mining’s grow-
ing investment in Africa.
Smith made his first appearance at Africa
Down Under in 2009 (he remains a regular
delegate to the forum, even in 2015) and his
of Julia Gillard’s ascent to the Prime
Ministership, the deposed Rudd resur-
faced as Foreign Affairs Minister and
with former Australian High Commis-
sioner to South Africa Philip Green as
chief of staff, he stepped up both Aus-
tralia’s diplomatic and aid efforts on
the continent. Rudd declared that by
2015–16, 0.15% of gross national in-
come would be directed to the world’s
49 least developed countries (of which
African countries comprise 33).
It was ironic that while the Rudd and
the Labor Government was involved in
bloody war with miners on the domes-
tic front, Australian miners in Africa
were direct beneficiaries of increased
It was recognition for the leading role
Australian companies were playing on
a continent intent on using its consider-
able natural resources wealth to kick-
start a wave of development that had
Bishop casts her eye over one of Kibaran Resources’ specially designed graphite pencils, been delayed for more than 50 years.
presented to her by Kibaran’s Sauda Simba However, sustainable development
cannot be achieved without a robust
regulatory framework and the $125 million the
Every time I’ve visited Africa, I’m reminded Labor Government committed to its African
aid programme was designed to lift capacity
of what people want to see; true economic in governance and regulation; community and
“development. Africa is home to some of the environmental sustainability; and operational
world’s fastest-growing economies, many of them effectiveness and safety in the mining sector.
buoyed by recent oil and gas finds. But it is also Much of the increased aid budget for Africa
home to some of the world’s poorest people. was directed through the Australian Awards
programme and the establishment of the In-
ternational Mining for Development Centre
(IM4DC) at the University of Western Aus-
experiences there in talking to Australian re- “The Australian Government had seriously tralia.
sources and METS companies informed the neglected engagement with Africa in the past. The Australia Awards programme provides
Labor Government’s foreign policy on the re- We do have a small number of very strong post-graduate study and development op-
gion, one which strove to recognise Australia relationships but the Government has recog- portunities for African nationals. Since 2011,
as an Indian Ocean as well as Pacific Ocean nised that we need to make our engagement Australia has offered almost 3,500 Awards –
country. at a much higher level a foreign policy and a comprising doctorates, Masters degrees and
Under this new policy direction, re-en- public policy.” short-course awards – across 51 countries in
gagement with Africa was made a priority. Following the cabinet reshuffles in the wake Africa, many of them based at the IM4DC, a
An Australian embassy was reopened in Ad-
dis Ababa (capital of Ethiopia and seat of the
African Union) in 2009 and Australia’s aid
commitment to Africa increased from $116.4
million in the 2008-09 budget to $163.9 mil-
lion in 2009-10 and then to $200.9 million in
2010-11. The 2009-10 figures represented
4.3% of total Australian aid and the 2010-11
This re-engagement was framed within the
context of Australia’s ultimately successful bid
for a seat on the UN Security Council in 2012.
Speaking at the 2009 Africa Down Under,
Smith dismissed suggestions the re-engage-
ment policy was a cynical attempt to buy Se-
curity Council votes, instead saying that as
a trading nation Australia could not afford to
ignore a continent with more than 1 billion in-
“In the Australian context, many people see
the Government’s efforts in Africa as being
done in the context of our bid for membership
to the UN Security Council,” Smith said in
2009. “The need for engagement transcends
that. It is a short-term goal but long-term we
need greater engagement and the resources
industry is leading the way. Labor’s shadow spokesperson for Foreign Affairs, Tanya Plibersek
PAGE 22 OCTOBER 2015 AUSTRALIA’S PAYDIRT
partnership between UWA and the University
The Awards programme and IM4DC were
the closest embodiment of a Team Australia
approach to economic diplomacy witnessed
in Australia’s foreign policy.
IM4DC provided access for resource-rich
developing countries to education and train-
ing, as well as technical and other advice,
including through: short courses in Australia
and overseas; fellowships in Australia; men-
toring and capacity building of local institu-
tions; publishing guides and tools; and con-
ference and alumni events and support.
Australian mining companies are begin-
ning to benefit from IM4DC’s work. Stronger
capacity within mining regulators in Africa
means greater transparency and a more level
playing field for the Australian mid-tier and
junior companies who are often competing
with foreign rivals armed with multi-billion dol-
lar, government-backed infrastructure loans.
However, like other policy initiatives of the
Rudd-Gillard Government, the increased Af-
rican engagement and aid budget was strong
on promise but rushed in implementation.
An independent review of Australia’s ap-
proach during this period found it did not “con-
form to the traditional incremental approach
of the aid programme but was more ambitious
and driven by a ‘big push to get things going’”.
This inevitably led to waste and when the
Abbott Government came to power in Sep-
tember 2013 with a mandate to slash the Fed-
eral Budget, AusAid was a predictable target
and Bishop soon announced it would be sub-
sumed into DFAT.
In the 2015/16 Federal Budget, Australian
aid to Sub-Saharan Africa was cut by 70% to
The IM4DC became an inevitable victim of
the cuts with the centre closing in June. Bish-
op said at Africa Down Under Australia’s aid Woodside Petroleum’s Peter Coleman will chair the Advisory Group for Australian African Relations
programme in Africa had been reshaped “in
line with our belief that the best way to help contingent at Africa Down Under suggested, ment, business groups, NGOs and civil soci-
countries grow their economies and improve however, that the new centre’s geographic ety alike the opportunity to reset the terms of
living standards is to focus on prosperity”. spread would be widened. Australia’s engagement with Africa.
The withdrawal of funding for IM4DC left “I want to engage industry, government and By bringing all groups together for the first
many in the sector concerned the Govern- NGOs so the centre can offer a broad range time, there is a chance to break the mistrust
ment was preparing to abandon the ground- of services. It should be capable of accessing which exists between them.
work it had laid in Africa. the very best expertise that Australia has to While DFAT and Austrade have previously
While the national aid agency and the min- offer from wherever it exists. Clearly, I would heralded a “Team Australia” approach to en-
ing sector had never been the cosiest of bed- like the centre to be commercially viable in the gagement with Africa, too often development
fellows, they had worked together effectively longer term so the private sector will be pivotal assistance has operated in silos. The private
in recent years and the success of the IM4DC to its success. I am confident that this will give sector and the NGOs active on the continent
in supporting and improving skills develop- Australia another avenue to share our mining perform admirable work but most often this
expertise with our international partners.” work happens in isolation, their distrust of
The formation of AGAAR gives the Govern- each other preventing the kind of collabora-
ment, collaborative local development and
the governance and the regulatory framework tion which will lead to
around mining in Africa. greater impact.
The 2014/15 Federal It is fitting that Bish-
op’s AGAAR announce-
Africa Down Under has alreadyBudget referred to the ment should have been
made at Africa Down
launch of a new centre to
Under, a forum which,
dipped its toe into the water inreplace the IM4DC, one fo- in its 12 years, has
been the physical em-
“this regard. Through the Australia-Africacused almost exclusively on bodiment of AGAAR’s
the Asia-Pacific region. Research Forum we are helping to build agenda. The conference
Bishop said she wanted links between educational institutions on
the two continents and two years ago we
the new centre to “help de-
veloping countries get the
most from their economic
resources”. welcomed the agriculture-focused Crawford has built on its mining
Her comments in front of Fund to the conference for the first time. investment base to pro-
mote other aspects of
a large African ministerial
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 23
The Witoto Children’s Choir’s performance at the Africa Down Under ministerial dinner. Cultural exchange is likely to become
an important part of future Africa Down Under conferences
the Australian-African relationship. appearance of the Witoto Children’s Choir at services (METS) firms.
That Woodside’s Coleman has been cho- this year’s Ministerial Dinner highlighted the Bishop said it was this mining relationship
sen as the group’s chair and Paydirt execu- cultural diversity the relationship could tap which would continue to underpin Australia’s
tive chairman Bill Repard will also sit on the into.” trade and investment links to Africa.
group betrays the importance of the extrac- Resources, however, continues to provide “The expansion of trade and investment
tive industries to the Australian-African rela- the strongest link in the relationship. links between Australia and Africa will con-
tionship but according to Repard, Africa Down In 2014 two-way trade was $10 billion – tinue to be underpinned by our investment in
Under’s growth since its inception in 2003 has overwhelmingly dominated by the extractive mining. Mining has made, and will continue to
proven that the resources sector can provide make, a substantial contribution to economic
the cornerstone of future Aus- development and poverty
tralian-African relations, rather alleviation in Africa. A well-
than its defining framework. managed mining sector can
help drive sustainable growth
So many Africans have told“As far back as 2009, we and poverty reduction.”
As far back as Smith’s time
floated the idea of Africa Down as Foreign Affairs Minister,
me: ‘We don’t want just aid, weUnder morphing into an Africa
“want trade that fuels progress. WeWeek with the mining forum in-
industries – while Australian resources sector
corporating other aspects of the don’t want patrons, we want partners the Australian Government
relationship including agricul- who help us build our own capacity to spoke of the need for cooper-
ture, education and cultural ex- ation with the Australian min-
change,” Repard said. grow. We don’t want the indignity of ing industry on the continent
“Africa Down Under has al- dependence, we want to make our own and in AGAAR, Bishop may
choices and determine our own future.’ have provided the sector with
ready dipped its toe into the wa- the perfect conduit through
ter in this regard. Through the which to fulfil the Govern-
Australia-Africa Research Fo-
rum we are helping to build links ment’s “economic diplomacy”
between educational institutions objectives.
on the two continents and two years ago we investment in Africa in the last decade is esti- Coleman certainly sees AGAAR’s role as
welcomed the agriculture-focused Crawford mated at around $40 billion. defining that partnership.
Fund to the conference for the first time. Despite the recent resources downturn, “Every time I’ve visited Africa, I’m reminded
“We are also engaging the African Dias- more than 200 ASX-listed companies con- of what people want to see; true economic
pora in Perth. The highly successful Africa tinue to operate some 700 projects in Africa. development. Africa is home to some of the
Down Under Cup has seen teams of African And, behind the miners and explorers, the world’s fastest-growing economies, many of
migrants compete in a five-a-side football continent is the largest overseas market for them buoyed by recent oil and gas finds. But
tournament for the last four years, while the Australian mining equipment, technology and it is also home to some of the world’s poorest
PAGE 24 OCTOBER 2015 AUSTRALIA’S PAYDIRT
people,” he said during an Africa Down Under shadow foreign affairs spokesperson, Tanya tory, not just Africa but the world will benefit
dinner address. Plibersek, argued that aid and private sector immeasurably.”
“Wherever local people are on the eco- investment must “marry with new technology It is in the area of policy and regulation that
nomic spectrum, universally they want to to both meet long-standing needs and devel- Australia can have the greatest impact on
be responsible for their own destiny. Strong op innovative new ways to hurdle the middle- Africa. Its aid budgets and commitments to
financial institutions and robust financial sys- income trap ahead [of African economies]”. the continent are dwarfed by those of other
Labor’s focus appears to be on transpar- donors but both public and private sector
ency, with shadow parliamentary secretary mining expertise offer resource-rich African
tems will be vital to Africa’s future.
“Private sector investment, which appropri- countries opportunity to
realise their development
ately manages risk, is potential.
crucial to the proper
By leveraging off the
Australia, and in particular ourdevelopment of these reputation its miners have
built on the continent,
Australia can develop
world-leading mining sector, has theand systems in Africa. strong links to Africa
without having to match
“expertise to help African countries in theseThere is a widespread the aid budgets of larger
understanding today areas [of mining-related infrastructure, economies.
that aid alone won’t like rail, ports, power, water, internet and
achieve true economic telecommunications]. Infrastructure and skills;
development – and
that it can actually
stymie development these are all crucial capabilities for Africa to “The Australian Gov-
if kept in place for too develop further so it can continue to attract ernment will continue to
long. support industry to seek
“So many Africans foreign investment and grow its economies. profit with a purpose,”
have told me: ‘We Bishop said.
don’t want just aid, we “Australia, and in par-
want trade that fuels ticular our world-leading
progress. We don’t want patrons, we want for foreign affairs, Matt Thistlethwaite, having mining sector, has the expertise to help Af-
partners who help us build our own capacity recently completed a discussion paper on the rican countries in these areas [of mining-
to grow. We don’t want the indignity of de- global Publish What You Pay initiative. related infrastructure, like rail, ports, power,
pendence, we want to make our own choices “This is a natural area for private sector water, internet and telecommunications].
and determine our own future.’” partnership,” Plibersek said. “Civil society, Infrastructure and skills; these are all crucial
The Labor Opposition also appears willing government and business all have a stake in capabilities for Africa to develop further so it
to recognise the role the private sector, and greater transparency in the extractive indus- can continue to attract foreign investment and
in particular mining, can play in sustainable tries. If more African nations can find the right grow its economies.”
development on the continent. policy settings, to vault over some of the worst – Dominic Piper
Speaking at Africa Down Under, Labor’s hazards of the traditional development trajec-
Action from the Africa Down Under Football Cup. In recent years, event organisers have worked to incorporate Australia’s
growing African Diaspora into the conference
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 25
AFRICA DOWN UNDER REVIEW
keep African dreams alive
In keeping with tradition, Africa Down Under closed with a panel debate. This year expert panellists – Sundance’s Giulio Casello, PwC’s Ben Gargett,
DRA’s Neil Goddard, Gilbert + Tobin’s Michael Blakiston and Nedbank’s Mark Tyler – discussed infrastructure solutions in Africa in a session
convened by Middle Island managing director Rick Yeates
The gloom of commodity prices and equity markets were cast aside for a few days at the start of September as Africa
Down Under returned to the Pan Pacific Hotel Perth.
Delegates from across the world returned to the most important event in Australian-African relations and despite the
travails of the mining industry, the conference once again delivered the debate, discussion and connections that it has
become synonymous with.
Paydirt provides full coverage of this year’s conference across a 50-page special report, including interviews, features
and photos from the packed four-day programme.
Alack of supporting infrastructure remains before making investments. are very short-sighted, very short-term. A
a headache for many mining companies
hopeful of developing a project in Africa. “There is no way Western banks are getting bank I spoke with this morning said they will
The naysayers, particularly in the current involved in funding a $US5 billion project in stress test it a $US30/t iron ore. I can guar-
commodity price cycle, are sensing justifica-
tion about African mining projects being Africa at the moment,” Casello said. “The iron antee that there will be no iron ore projects
all too hard to conquer. However, there
remains a band of industry participants ore price isn’t supporting it and their views ever built again anywhere in the world if they
steeled for the challenge ahead.
are going to stress test at $US30/t and
Sundance Resources Ltd chief execu-
tive Giulio Casello is one such believer in nobody is expecting that iron ore will be
Africa’s mining future.
sitting at $US30/t. That is a nonsensical
There is no doubting the quality of
Sundance’s Mbalam/Nabeba iron ore number.If the iron ore prices in the long
project, but the problem has always been
funding $US3.5 billion in rail and port fa- term was $US30/t forget Africa, there is
no new projects anywhere in the world,
Recently, the task has been made
harder by iron ore’s dip to $US45/t, which everybody will be stressed to the max.
caused panic in the sector and forced
financiers into marking projects harder “If you assume that the world is not
going to grow, if Africa is not going to
grow, China and India are not going to
grow and the whole world is going to
sit in a recession for the next 10 years,
sure then $US30/t is something you’ll
look at, but that is not going to happen.
“Right now this project [Mbalam/Na-
Mark Tyler beba] makes money even in really poor
PAGE 26 OCTOBER 2015 AUSTRALIA’S PAYDIRT
times. Today, at $US55/t, it is making project risk. They will look to then spread
plenty of money. You’d expect the mar-
ket to clean itself up by 2020, so there the risk over other projects and that can
will be projects [developed]. The other
thing that Africa has is that China has make it tough in its own right.”
a very much a strategic desire to actu-
ally start making metal outside of China. Tyler said banks were obligated to
This is something that China has ex-
pressed, particularly with the environ- recoup 100% of any money loaned and
mental issues it has of its own.”
would therefore shun split risk scenario
Should Mbalam/Nabeba in Came-
roon and the Republic of Congo see the in case one of the links was susceptible
light of day, it could well set the tone for
other companies and projects to follow. to defaulting on its repayments.
Not only because the 510km of rail He said someone needed to be re-
established from Sundance’s mine to
port facilities can be tapped into by oth- sponsible for paying back the debt,
er users, but due to the pathway taken
to execute finance for infrastructure re- which could be a problem under a multi-
user infrastructure agreement.
Such is the importance of the rail and
port facilities for Cameroon’s mining in- “I think even the development finance
dustry, the Government has agreed to
pursue funding options with China and institutions have taken that view and
they are then splitting the benefits for
Cameroon is hopeful an arrangement
can be made with the next 12 months, the infrastructure users, so it is difficult
and while this is the direction the Gov-
ernment has chosen, Nedbank Capi- to get institutions like the IFC or World
tal’s head of resources Mark Tyler said
banks were also open for business to coun- Bank to fund railway lines that are ser-
vicing just one mine,” Tyler said.
“I think the other thing that is available to
countries is for the government itself to bor- “The benefits of that railway will only
row the money and then build the infrastruc-
ture and then have an obligation to the banks,” accrue to the mine, but if you were to
build a road for instance, then others
“In many cases, countries will be willing to
do this but no longer have debt borrowing ca- along the road could use it and the ben-
pacity, so are just not allowed, by creditors,
to borrow any more money. It can become efits of the road for the community are
quite a difficult task, many rich countries that
have paid off their debt are able to raise more better. So there may be a bit more of a
money but for the rest of them they are under
supervision of western institutions so it makes relaxed view, but if it is going to be asso-
ciated with one particular mine then they
While banks are becoming increasingly fru-
gal in their lending, there is a step-change oc- are going to lump all those costs on that
curring in the industry to ensure projects have
a chance of being built. Giulio Casello particular mine and require that mine to
Gone are the days of engineering outfits carry the credit risk on it.”
standing back as miners and financiers wran-
gled over funding deals. Now, a myriad of “I think for one project to bear the mas- PwC Africa Practice Leader and Resourc-
groups are prepared to share the risk associ-
ated with taking on debt. sive burden of infrastructure load will kill a lot es Sector partner Ben Gargett said govern-
DRA mining division project development of projects and will mean the infrastructure ments had a role to play in taking on the risks
managing director Neal Goddard said his en-
gineering firm had increased its participation doesn’t get built for the good of that country associated with funding and developing infra-
in bringing together financiers, banks, miners
and where possible governments to thrash for the next 30 or 40 years.” structure.
out ideas on how best to advance mine de-
velopments. Splitting risk between different groups ap- He said it was necessary for governments
A sticking point in discussions has always pears a sensible solution however this sce- and regional bodies to work on combined so-
been trying to ensure that establishing in-
frastructure is not contingent on one project nario is not without its problems, according to lutions, considering it was possible infrastruc-
Gilbert+Tobin partner Michael Blakiston. ture could overlap in a number of countries.
“Commenting on what Mark [Tyler] said
‘that infrastructure should be part of the pro- “One of the problems with multi-users is the “At the end of the day, those governments
ject’, I think as long as the western banks have
that outlook then they are going to have a lot socially transmitted debt in the supply chain,” will need to sign on the dotted line whatever
of problems getting the project off the ground
and financing projects,” Goddard said. he said. agreements are reached, so the facilitation
“Ultimately, the lender that is going to look of bringing those together is a role those in-
at that will consider what happens if one of the dividual governments will need,” Gargett said.
mines goes under and you can find that the – Mark Andrews
other party finds potentially worse exposure.
Having been down that path it is a really chal-
lenging process to get a bank to take a single
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 27
AFRICA DOWN UNDER REVIEW
PwC warns against
Anew report launched by PwC at this insufficient [cash] left for the miner to
year’s Africa Down Under suggests
African governments’ tax regimes are generate a commercial return. It is, af-
stymieing new mine developments.
ter all, the miner who is taking on 100%
The report – Over-taxed: Does the
tax regime encourage new mines? – is of the capital operating risk of the pro-
focused on the impact taxes can have
on the decision to develop mines. The ject.”
research report was based on theoreti-
cal assumptions, including building a Gargett said miners were more mo-
150,000 ozpa gold mine for a capital
cost of $150 million in each of four coun- bile with their capital these days and
tries; Tanzania, Burkina Faso, Namibia
and Ghana. were constantly reviewing where the
At AISC of $US957/oz, it was found allocation of capital would be best
that Namibian projects had the best
chance of an upstart at this point in time. spent, particularly with funding scarce
PwC Africa Practice Leader and Re- in the current market.
sources Sector partner, Ben Gargett,
said the report highlighted Namibia as Therefore, he urged governments to
the only country of the four where min-
ing companies would see a profit which consider taking a smaller share of the
exceeded revenue returns for govern-
ment. The research, he said, fuelled mining pie, rather than risking having
perceptions African governments were over-
taxing the mining sector. no pie at all.
“Surely, it is in the interest of both [govern- “That decision to mine may well be
ment and company] for there to be greater
economic activity. New mines developed, out of the hands of the miner and in
foreign direct investment, creation of jobs,
industry and the opportunity to generate prof- the hands of those that finance these
its from Africa’s vast mineral wealth,” Gargett
said. projects. And the financiers are even
a step further removed and typically
don’t have the same connection with
the company, with the Government
Ben Gargett and with the country, acting purely on a
commercial basis,” Gargett said.
A deposit left unmined is of no value to “The challenge is that the project needs to
the host government and its people or to the be that much better for your share of the pie,
miner. your share of the return. It needs to be at a
“There is only so much profit and cash flow level that encourages the miner sufficiently
a mine can make but if the costs are too high to invest capital in your country; to encour-
the projects are uneconomic. The same ap- age the miner to take the risk and spend the
plies with government taxes as they are one money.”
of the costs incurred by a mining company. – Mark Andrews
If they are too great for the project, there is
Thinking fast key to crisis management
Companies operating in Africa are sufficient,” he said. “In fact, one can
susceptible to a range of crises and say that the formula for success of a
the task of handling them is increas- company is becoming more and more
ingly difficult, according to a leading law complex because there are more and
firm. more parameters and more and more
The Ebola outbreak of 2014 was one
example, however, other common cri- Nevertheless, managing crises can
ses include political stability, strikes, be made easier if companies are pre-
tax instability, extortion and corruption, pared to react fast to avoid problems
legal instability and conflicts. from escalating.
Increasingly, terrorism is becoming To do so, Brabant said following the
a massive threat as is resource nation- three “A’s” of anticipation, attitudes and
alism, disease outbreaks and crises in above the law; and seven “P’s” per-
local communities. severance, perfection, partnerships,
pragmatism, people, planet and profits,
Handling any crisis in Africa is diffi- would help in dealing with any problem-
cult, with Herbert Smith Freehills part- atic situations.
ner Stephane Brabant saying the task
was growing increasingly more difficult – Mark Andrews
and a country’s laws were not always
enough to deal with them. Stephane Brabant
“The law is a prerequisite, it contrib-
utes to crisis prevention, but it is not
PAGE 28 OCTOBER 2015 AUSTRALIA’S PAYDIRT
2 - 4 September 2015
TO ALNLoSvPoOteNl SPeOrRthSL, aSnPgEleAyKERS,
EXHIBITORS AND DELEGATES
AFRICA DOWN UNDER REVIEW
SA takes crisis head on
South African Deputy Minister of Mineral Godfrey Oliphant On the infrastructure front, Oliphant said
Resources Godfrey Oliphant says the idea South Africa was addressing its growing en-
of his country being besieged by a commod- which was established to help industry save ergy problem by investing heavily in ESKOM’s
ity curse needs to be tackled with actions, not jobs and encourage growth and transforma- 10 Year Transmission Development Plan.
words. tion following the GFC.
“The recent challenges in access to elec-
And it is for that reason South Africa estab- “Government has committed to remaining tricity further prompted the development of a
lished the Mining Phaksia. responsive to the needs of the sector in terms multi-pronged approach to energy security,
of investment in public goods, such as infra- including the exploration of other innovations
South African President Jacob Zuma first structure, education and skills,” Oliphant said. such as co-generation in the mining industry,”
made mention of the Mining Phaksia in his Oliphant said.
State of the Nation address late last year, “In the space of infrastructure, we used the
which Oliphant described as “an intensive MIGDETT forum with a dedicated task team “We are proud to announce that Medupi,
programme of engagement on tangible efforts for infrastructure to identify key bottlenecks the first of our new generation coal-fired
to address the challenges facing the domestic for mining sector investment and these have power plants, has started generating elec-
mining industry and identifying opportunities been mainstreamed into the Government’s tricity. When that is in full production it will
for growth and sustainable development”. infrastructure development plan, led by the be producing 4,800MW. Another still under
Presidential Infrastructure Co-ordination Task construction, Kusile, will produce a further
Zuma said the Phaksia would employ Team.” 4,800MW.”
a methodology similar to Malaysia’s “Big
Fast Results” initiative and incorporated six South Africa was also considering “revital-
themes: improving upstream linkages be- ising” its nuclear power programme and par-
tween mines and South Africa’s capital equip- taking in the development of the Grand Inga
ment sector, exploring win-win beneficiation hydroelectric project, which could produce up
of bulk resources and precious metals, pur- to 40,000MW if built.
suing social and community development,
supporting exploration activities, enhancing On transport, Oliphant said South Africa
research, development and innovation and had begun work on the expansion of critical
planning and implementing holistic mine mod- freight rail lines, including the Sishen-Saldan-
ernisation. ha iron ore line.
At the time of print the inaugural Mining It also planned to inject money into rail net-
Phaksia Laboratory was scheduled to con- works that accessed coal resources in Water-
vene for the first time. burg and Limpopo.
Oliphant said the Mining Phaksia would be Oliphant also said the Government was in
complemented by the continued good work the process of reviewing its Mineral and Pe-
of the Mining Industry Growth, Development troleum Resources Development Act, which
and Employment Task Team (MIGDETT), had gone unmodified for almost a decade.
– Rhys Dickinson
Base continues search for next development
Base Resources Ltd managing director Tim Base managing director Tim Carstens with WA Carstens said the company was satisfied
Carstens is not about to give his successful Minister for Mines and Petroleum Bill Marmion with Kwale’s performance but was still work-
development team any rest and is keen to find ing on optimisation.
a second project with which to test it. at the Africa Down Under Ministerial Dinner
“It has been a rapid ramp-up and the focus
The development team cut its teeth on Kenya’s first commercial-scale mining for this year has been on recoveries after we
the company’s Kwale mineral sands project operation, Kwale enjoyed its first full year of achieved high throughputs early on. We have
in southern Kenya, but now that operation is operation in 2014/15, achieving cash-flow hit design recoveries on the ilmenite and the
running cash-flow positive, Carstens is scour- positive status in December. The operation rutile but there is still work to do on the zircon
ing the world looking for Base’s next potential also satisfied all its project finance completion where recoveries are currently sitting at 64%
mine. tests in June, meaning it is now fully opera- but we are on our way to the design figure of
tional. 78%,” he said.
“The challenge is now giving them [the de-
velopment team] a second project,” Carstens The company made its first debt repayment
said. “We have been looking at a number of in June but is now renegotiating terms as it
opportunities and that will continue. We are looks to ride out the burden of lower mineral
also doing a bit of work looking at the explo- sands prices.
ration potential around our ground in Kenya
because there is some potential that hasn’t “The market backdrop is no different to
been tapped.” other commodity prices; our prices are about
a third of what they were two years ago,”
Base had identified what it thought was the Carstens said.
ideal opportunity last year when it launched
an unsuccessful merger bid for World Tita- “We’ve established a market share for all
nium Resources Ltd and its Ranobe mineral of our products, which has not been an easy
sands project on Madagascar. task and we are now working through refi-
nancing to get a repayment profile that better
Carstens’ attempts to keep the team to- suits the current commodities climate.”
gether stem from the successful ramp up of
Kwale. – Dominic Piper
PAGE 30 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Labor to focus on transparency
Australia’s Opposition spokesperson for for- avenues to pursue an an- hazards of the traditional
eign affairs, Tanya Plibersek, has reiterat- ti-corruption agenda; gov- development trajectory,
ed her party’s support for Australian resources ernment must increase not just Africa but the
companies operating in Africa, saying it was “a its capacity to mobilise world will benefit immeas-
natural area for private sector partnership”. domestic resources; and urably.”
business needs a level
Speaking on the first day of Africa Down playing field and greater Plibersek also criticised
Under, Plibersek said Australia could offer Af- trust in the institutions the Australian Govern-
rican countries expertise in natural resources which underpin invest- ment for its recent reduc-
management. ment. tion of aid programmes
in Africa, saying foreign
“Many of the strongly growing African “Lack of transparency policy required a longer
economies are heavily based around re- in corporate affairs shel- term outlook.
source extraction,” Plibersek said in her first ters corruption, and tax
ever appearance at Africa Down Under. “It avoidance and profit shift- “This is the time to
will be critical for Africa’s future that those ing deprive developing Tanya Plibersek be increasing our pres-
nations manage the long-term sustainability nations of desperately
questions around commodities exports, the needed tax revenue – by one estimate, as ence in Africa, not pull-
environmental consequences of resource much as 4% of their GDP. Countries receiv- ing away,” she said.
extraction, and the need for economic diver- ing the full value of their commodities can “Unfortunately, the Australian Government
sification. build infrastructure and institutions to support has reduced our footprint in Africa. The Ab-
further sustainable economic growth.” bott Government cancelled plans to open an
“These are questions Australia has grap- Australian embassy in Senegal, which would
pled with, and expertise Australia can bring Labor’s shadow parliamentary secretary, have strengthened our engagement with fran-
to the table.” Matt Thistlethwaite, recently launched a dis- cophone Africa and West Africa.
cussion paper on Publish What You Pay, an “We have cut our aid; aid which has gone
However, her address also revealed that international network of civil society organi- to meeting the preconditions for economic
transparency was an issue of importance of sations, governments and corporations (see growth, like reducing child mortality, and in-
any future Labor Government’s work in Africa. page 13). creasing primary school education.
“Sub-Saharan African countries, which
“Many of you work in the extractive indus- Plibersek said initiatives such as Publish have struggled most to meet the Millennium
tries, and so you know that these can be huge What You Pay could allow global standards Development Goals, have been very badly af-
generators of national wealth in Australia and to be set for transparency and reporting of tax fected, with 70% cut to their aid from Austral-
in Africa. You would have also been closely payments, allowing African countries to build ia. The Middle East and North Africa region
following international moves towards greater sustainable development policies. has been slashed by 82%.”
transparency,” Plibersek said.
“If more African nations can find the right – Dominic Piper
“Civil society, government and business all policy settings, to vault over some of the worst
have a stake in greater transparency in the
extractive industries: civil society wants new
Sudan cracks down on artisanal miners
Sudan is looking to es- Petroleum last year while well as to facilitate investment in the mineral
tablish a formal min- attending Africa Down Un- sector.”
ing code to help regulate der in Perth. Recent figures from GRAS show 166 min-
ing companies are currently active in Sudan
widespread concerns Speaking via a translator, – up from the 125 reported in September 2014
– including 10 producing companies and an-
over artisanal mining Sudan’s State Minister of other 15 on the verge of production.
practices. Minerals Osheak Moham- Estimated annual production from Sudan
includes 50-70 tpa gold, 100,000 tpa of chro-
More than one million med Ahmed Tahir said arti- mite, 50 tpa copper and 70,000 tpa iron.
artisanal miners are be- sanal gold mining account- Other key producing commodities are gyp-
sum (100,000 tpa), salt (100,000 tpa) and
lieved to be operating in ed for more than 80% of the marble (500,000 tpa).
Sudan, yet government country’s resources indus- “In 2014, Sudan produced more than 70t of
gold – most of it from small scale and artisa-
authorities have only is- try, but few knew enough nal mining – and 58,000t of chromite,” Tahir
sued about 370 permits about the negative impacts
“Sudan has important mineral wealth.
for small-scale mining their illegal activities were Some [deposits] have already been discov-
ered and others are waiting to be discovered.
activities. Osheak Mohammed Ahmed Tahir having on others. Gold is fast becoming our top commodity and
Artisanal mining has “That’s why the Gov- there now are more than 200 locations for
upset many of the estab- ernment is doing its best
– Michael Washbourne
lished companies which hold permitted tenure to organise, upgrade and legalise these ac-
in the country. There are also concerns about tivities…and also the Government is doing its
the increasingly high levels of mercury used in best to safeguard [the industry] in better and
the non-legalised activity. safer environments,” Tahir told delegates at
Sudan does not currently have a formal this year’s Africa Down Under.
mining code in place, but officials from the “The industry is doing tremendous effort
Geological Research Authority of the Sudan to organise the sector in order to properly ex-
(GRAS) have been actively working to devel- plore and exploit in a very safe environment –
op one after consulting with bureaucrats from especially to reduce and completely eradicate
Western Australia’s Department of Mines and the use of mercury in the artisanal mining – as
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 31
AFRICA DOWN UNDER REVIEW
Ethiopia was welcomed warmly in its second appearance at Africa Down Under. Paydirt editor Dominic Piper was the MC at a luncheon
attended by State Minister of Mines, Ethiopia, HE Alemu Sime, Mulu Desta, general manager of consultancy group Piacentini & Son, Kefi
executive chairman Harry Anagnostaras-Adams and Mark Sawers, Ambassador to Ethiopia
Ethiopia set for mining boom
Ethiopia has stood back and watched its Ethiopia’s intent to engage with Australia While the country has experienced dou-
African counterparts start to unlock their has been warmly welcomed by Australia’s ble digit economic growth for 12 consecutive
years, its ambition for the minerals sector is a
mineral potential. diplomatic corps, led by Australian Minister contribution of 10% of GDP within 10 years.
Some nations have flourished, while others for Foreign Affairs Julie Bishop. “As far as raw materials goes, we want the
mining sector to provide all the raw materials
have faltered in their attempts to build a min- “The private sector [is important] to drive required for Ethiopia to use,” Sime said.
ing industry to deliver shared benefits for all growth to drive GDP, drive investment and Industrial minerals such as potash, coal
and iron ore are priorities for development,
stakeholders. the closer the connection can be between with the country endowed with more than
500mt of coal, 1bt of potash and 181mt of
Ethiopia has had time to observe how its the Government of Ethiopia and the Austral- phosphate.
peers on the continent have approached their ian Government then altogether we can en- More than 22 geothermal fields have been
identified in the Ethiopian Rift Valley, with in-
mining industries and plans to take the good sure that the business enabling environment stalled power of 2,400MW currently servicing
lessons learned to form a blueprint for its own in Ethiopia attracts Australian investment,”
When the Renaissance Dam (Africa’s
industry. Bishop said at the conference. largest) is completed, power capacity will
increase to 10,000MW, however, like many
“We have learned from experiences of oth- “That is the process we will be undertak- under-developed African states, power sup-
ply will be an issue for Ethiopia in the future.
ers,” State Minister of Mines, Ethiopia, HE ing and I have just spoken with our head of
Ethiopia is Africa’s second most populous
Alemu Sime said during a luncheon at Africa mission in Ethiopia and had an update on the state, with about 96 million people, 70% of
whom are under 30. Some 39% of the popula-
Down Under. current situation there and the state of the re- tion lives below the poverty line, according to
“We are learning from the experience of the lationship, which is in a good state.”
“We are fighting poverty and we are focus-
successful countries on how to use our natu- Mark Sawers, Ambassador to Ethiopia, ing on [eliminating] poverty,” Sime said.
ral resources. Australia has the experience, leads Australia’s government presence on the “We know that our No.1 enemy is poverty,
our No. 2 enemy is poverty and enemy No. 3
which is one of the reasons why we come ground in Ethiopia, is poverty. We don’t have any other enemies
and to eradicate it we formulate policies and
here [Africa Down Under] to learn how the Sawers, who started his ambassadorial we have a vision of being a middle income
country in the coming 10 years.”
Australian Government [implements] practic- role earlier this year, said he was surprised at
Fulfilling this goal will mean diversification
es and regulations. The second reason is to the deep level of commitment from the Ethio- in its economy, which has largely been sur-
vived by agriculture, particularly coffee.
attract investors from Australia pian Government to deliver
to invest in Ethiopia.” on its development task.
Ethiopia has a large reli- Evidence of the Gov-
ance on its agriculture sector, ernment’s commitment to
with coffee being its major ex- growth and development
port crop, however its minerals is clear when visiting Ad-
remain untapped. dis Ababa, which, he said,
“To explore these resources resembled somewhat of a
we need multinational compa- “construction zone”.
nies, so our focus regarding Addis Ababa is the seat
this resource development is of the African Union and is
to [leverage] from Australian second only to New York for
[expertise] as mining is one of State Minister of Mines, Ethiopia, the number of embassies it
its strengths,” Sime said. HE Alemu Sime hosts.
PAGE 34 OCTOBER 2015 AUSTRALIA’S PAYDIRT
The mining, manufacturing, textiles and Julie Bishop Currently, the regulatory authorities are un-
energy sectors are areas Ethiopia wants to der-equipped and under-staffed and access
exploit and it is in a hurry to do so. you get down to the nitty gritty they were to databases to encourage exploration is sub-
ready to approve it, so we were a bit lucky in a standard, according to Anagnostaras-Adams.
“We are ready to learn from others, but we sense that they were familiar with the project
want the shortest way to get prepared; we and they wanted to get on with it.” “It can be so much better, but this comes
don’t want to go the way of countries develop- from better investment, both in time and mon-
ing before us,” Sime said of Ethiopia’s mining Despite an eagerness to see its resources ey. It is something the Ethiopian Government
sector. sector blossom the Government would not wants to do and the Australian Government is
be walked over, according to Anagnostaras- keen to facilitate,” Anagnostaras-Adams said.
However, the Government has work ahead Adams, and was firm in its priorities.
of it with few companies holding granted min- Sawers said the governments were in firm
ing licences, with Kefi Minerals plc an excep- “I found they were very direct, but once discussions on how best to engage Australian
tion. everything had been explained, we shook expertise and investment to lessen the reli-
hands and it was very much ‘now let’s get on ance on state-led growth in Ethiopia.
Kefi’s Tulu Kapi gold project is set for pro- with it’,” he said.
duction in 2017, which will be a historic occa- Herein is an opportunity for Australia’s
sion for Ethiopia. Sime said as Ethiopia’s mining sector ad- METS sector to be at the forefront of Ethio-
vanced, the Government would learn more pia’s emergence in the mining sector.
Tulu Kapi was meant to come on stream and be able to act quicker, however, he made
three years ago, however, gold prices and no apologies for being thorough in due dili- Mulu Desta, general manager of consul-
subsequent financial difficulties got in the way gence. tancy group Piacentini & Son Pty Ltd, said de-
of then-owner, Nyota Minerals Ltd. spite Ethiopia’s troubled past the country had
“This is our first time which is why we have vastly changed from when he left for Australia
As Nyota stalled, so too did Ethiopia’s min- to take care of every aspect because we don’t 20 years ago.
ing sector and it still finds itself in the teething have the experience,” Sime said.
stages of formulating codes and practices. However, while the country is undergoing
Therefore, working closely with Australian a dramatic construction boom, the pace of
“It is still very early days for the Ethiopian companies and government, especially the growth in the mining sector is not the same.
mining industry because there was no prior WA Government, would be beneficial for Ethi-
mining industry. But you have an incredibly opia’s industry, Sime said. “We do have three greenstone belts which
sincere, pro-development government which are under-explored or mis-explored,” Desta
is very self deprecating and very interested in said.
learning and engaging,” Kefi executive chair-
man Harry Anagnostaras-Adams said. “I think what Ethiopia needs is services in
mining and exploration, mining contractors,
“When I arrived I came to a government drill rigs etc... more services are needed to
that was disappointed and felt it had been come into the country for it to function as a
let down. There has been no internationally- mining industry. Australia has specialities in
financed mine development in Ethiopia but this area and is the best in the field. I have
what I found was a government that was en- been in the industry for over 20 years and
gaging, although perhaps a little bit jaundiced what I am trying to do is establish or link WA’s
and wary of the other guy who said they were service industry with that region.”
going to do it [build Tulu Kapi].
– Mark Andrews
“They want it to happen, the Ministry and
regulatory authorities are second to none,
better than I have ever experienced. When
Kefi thrives in Ethiopia
Kefi Minerals plc has beefed up planned an- is after another $US100 million diction, Anagnostaras-Adams
nual gold production from its Tulu Kapi gold
operation in Ethiopia by 33%. of secured debt finance and is assured financing will be fi-
With a mining lease granted for 20 years $US20 million equity finance in nalised soon and has started
by the Ethiopian Government, mining contrac-
tors have been competing for the Tulu Kapi development funding. the resettlement of a nearby
job, with the winning bidder detailing plans
for an average 100,000 ozpa gold production “We have completed the DFS community, comprised of 260
over 10 years at AISC of $US760/oz.
and independent sign offs and households and 1,500 people.
The original DFS released mid-year de-
tailed the viability of a 75,000 ozpa gold pro- we are in the midst of contract- “We are launching into the re-
ject over 13 years at AISC of $US779/oz.
ing and financing. On the fi- settlement phase and look to be
The revised production plan was an-
nounced in early September, with the win- nancing side, I would say that in production in 2017,” he said.
ning bidder and its nearest competitors now
locking horns on an expanded scope of work, the plethora of private equity Tulu Kapi will start as an open
including pre-mining site earthworks and 10
years of open pit mining. groups around the world are de- pit operation however Anag-
Kefi expects mining costs to improve fur- cidedly absent from real action Harry Anagnostaras-Adams nostaras-Adams has no doubt
ther and is set to appoint a project contactor, in this space while the plethora in its underground prospectivity.
in addition to securing development funding
(equity capital to be raised at project level) of hungry groups from China “We are not counting in all
and starting construction, in the near future.
are decidedly active,” Kefi executive chairman these numbers of the high-grade under-
Pre-production funding and working capital
is estimated at $US121.6 million, while Kefi Harry Anagnostaras-Adams said. ground, but the core of the orebody contin-
“I am not suggesting that is the way we will ues down below running at about 5 g/t [gold]
be financing, but they are some of the candi- and it continues but we don’t know how far.
dates involved. The odds are we will be developing an under-
“It never ceases to amaze me that hun- ground mine in the not too distant future to run
dreds of people in the world are claiming to in parallel with the open pit. There are also
be active investors at the bottom of the cycle some satellite discoveries that we have to get
and yet there are hundreds of projects not fi- to,” he said.
nanced.” – Mark Andrews
Although Tulu Kapi is in a new mining juris-
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 35
AFRICA DOWN UNDER REVIEW
Ghana calls on more
The Ghanaian Government came ball mills and production of cyanide,
to Africa Down Under to tell Aus- where local industries can supply the
tralian miners it understood the pres- gold sector.
sures weak commodity prices were Ghana is not the only African gov-
placing on them, but also empha- ernment to address the challenge
sised it was not about to back down and a number – most publicly South
from its own demands of industry. Africa, Zambia, DRC and Namibia
Speaking on behalf of late with- – are keen to devise policies which
drawal Minister of Lands and Natu- require some downstream value-ad-
ral Resources, Nii Osah Mills, Dr. dition in the mining chain, through the
Toni Aubynn, chief executive of the processing of raw materials such as
Ghana Minerals Commission, told copper, bauxite, gold and diamonds
delegates the Ghanaian Govern- into refined products.
ment was working hard to ensure Aubynn said that while such down-
the country’s gold industry survived stream linkages were important, up-
the prevailing tough market condi- Toni Aubynn stream and even side-stream link-
tions. ages between the mining sector and
“The Government appreciates the challeng- ment,” he said. “Mining should be a catalyst other parts of the economy were often more
ing environment brought about by lower com- for investment in the country.” achievable and sustainable.
modity prices,” Aubynn said. “The Govern- Among the areas of focus would be a diver- “All the linkages are important but when it
ment recently approved AngloGold Ashanti’s sification of the mineral production base “in comes to the downstream; the beneficiation
[Ltd] plan to re-strategise its Obuasi mine and order that a weak gold price doesn’t set the and manufacturing, you need to look at how
it also approved Noble Gold’s [subsidiary of economy back”. they might link up globally,” he said. “I have
Noble Mineral Resources] restructure [which The Government also plans to step up the had this argument before; about setting up re-
led to its takeover by Resolute Mining Ltd]. implementation of local content regulations fineries in Ghana. It sounds romantic to have
“It has also announced the release of funds with a view to creating local industries which refineries in the country but it should be an
for outstanding VAT to companies and I am can supply equipment and skills to the gold economic decision.”
currently speaking with the various ministries sector. Upstream linkages may be more immedi-
on expediting licensing. We are also address- Speaking at the Australian-African Re- ately achievable but, again, policies must be
ing the issue of power in the country.” search Forum on the eve of Africa Down based on realistic expectations.
These recent developments have been Under, Aubynn said creating such linkages “It might look easier to achieve the up-
welcomed by a Ghanaian gold sector which was vital to sustainable development in Afri- stream linkages and it is the link which directly
has come under increasing pressure thanks
to the precious metal’s fall over touches communities but it may be that com-
the last two years. munities are not well prepared
to support such industries.”
“The Government recognises He called on government,
industry and even Australia to
I have had this argument before;the need to maintain a careful work together to ensure local
about setting up refineries inbalance and the outcome of a capacity was fostered.
“There needs to be support
recent review into the terms- for local suppliers to the mines.
Ghana. It sounds romantic to haveof-investment agreement has
“refineries in the country but it shouldbeen widely acclaimed as
can countries in which economic growth had
mutually beneficial and a win- be an economic decision. It is important that benefits are
win,” Aubynn said. “The revised well harnessed. The Govern-
agreement is expected to be a ment should support local busi-
template for future stability and investment rarely been inclusive. ness and mining companies should work with
agreements.” “Africa has experienced one of the best local companies to ensure they have the re-
It also appears the Ghanaian Government growth rates in last decade but at the same quired quality and I see this as another oppor-
has dropped plans to increase the tax burden time we see huge disparities; poverty, a lack tunity for engagement with Australia.”
on gold miners. The Government has toyed of infrastructure, energy challenges. You ask For Aubynn, it is the side-stream linkages
with the idea of lifting royalty rates in recent yourself, where has the growth gone to? It where mining can have most impact on na-
years as the pace of growth in the country hasn’t led to transformation,” he said. tional development.
slowed – it was among the world’s best per- “Africa had not historically benefitted to the “The more impactful linkages will be the
forming economies in the first decade of the greatest extent possible but mineral resourc- side-stream ones; infrastructure, ports, roads,
century – and the World Bank and IMF in- es have been used to catalyse other sectors of etc built by mining can help underpin other
creased pressure on it to fix huge deficits in the economy. The growth of the mining sector parts of the economy. If you have more power
its budget. in Australia has seen clear linkages between and infrastructure available, new opportuni-
However, Aubynn indicated the Govern- the production of commodities and the inputs ties will arise but if you don’t have power, the
ment would continue to pursue policies which which that production requires. This is rare in rest will be unachievable,” he said.
required miners to increase the resources Africa where most inputs are imported.” – Dominic Piper
sector’s interaction with other industries. Ghana’s local content policies are focused
“Creating linkages to other sectors of the on addressing this area with the Government
economy is a key objective of the Govern- identifying areas, such as the fabrication of
PAGE 36 OCTOBER 2015 AUSTRALIA’S PAYDIRT
AFRICA DOWN UNDER REVIEW
Woodside remerges in Africa
After leaving Africa in position as chairman of the However, she reaffirmed that once the
2012 in order to con- company committed to a country it would de-
centrate on commissioning Australian Government’s liver on its promises, most importantly its CSR
of the Pluto LNG plant in obligations.
Western Australia, Wood- Advisory Group on Africa-
side Petroleum Ltd has re- “From first getting acreage to drilling you
turned to the continent with Australia relations, which are looking at a minimum of three years, it can
renewed vigour. even be up to six [years],” Baird said.
Paydirt executive chair-
Its strategic exit from “It takes several years to build stability. In
Africa allowed production man Bill Repard is also a terms of investment for building stability, you
from Pluto to be brought on are probably looking at $5 billion for oil and
stream within seven years member of. more than double that for LNG. So you can
of discovery; one of the understand why there needs to be ultra sta-
quickest LNG discovery-to- The advisory panel “aims ble, fair fiscal terms and we need to take into
production turnarounds in account the stability of the country because
history. to enhance the institutional, we are in for the long run.
With Pluto operations commercial and people-to- “Oil and gas runs with the oil price and we
bedded down, Woodside’s investment dollar have a price less than $US50/b [at the mo-
was then focused on Australian assets and people links with Africa”, ment]. It was $US100/b this time last year.
exploration, and while it continues its Asia Pa- Investment decisions we have to make are
cific strategy with increased activities in My- which is critical to doing difficult at $US100/b oil and it is more difficult
anmar and an $11.6 billion merger proposal at $US50/b oil.”
with Papua New Guinea outfit Oil Search Ltd business on the continent.
in the pipeline, Africa is clearly back on its Competition is fierce for risk capital at the
agenda. Globally, Woodside has moment and Woodside will be prudent in se-
lecting which opportunities and regions it is
Woodside’s return has been made easier Jayne Baird a presence in 17 countries, willing to invest in.
by Australian hard rock companies carrying which include Gabon, Mo-
the mantle on the continent, according to vice However, its history of discoveries in Africa
president of exploration, Africa and Atlantic rocco and Cameroon. – Mauritania, Sierra Leone, Kenya and Libya
margins, Jayne Baird. – demonstrates a nous and willingness to ex-
“We actually have an interest in Gabon and plore different regions of the continent.
Woodside’s new African vision will be
helped by chief executive Peter Coleman’s Cameroon and we are actually drilling a well – Mark Andrews
as we speak in Cameroon. We are also plan-
ning to acquire 3D seismic in Gabon,” Baird
said. “We are still looking to extend our portfo-
lio in Sub-Saharan Africa and East Africa we
are very interested in.”
The company has tested the waters in Tan-
zania, however, elected not to proceed with its
interest due to technicalities with the project.
Despite being enthusiastic about assess-
ing African opportunities, Baird said people
needed to understand that exploration was
expensive and timely and Woodside would
not be taking investment decisions lightly.
AAMIG looking slick
The Australia-Africa Mining Industry Group “In a very short space of improvement in health and
received a glowing endorsement from one time we have demonstrated
of Australia’s major oil and gas companies, a real need for our assis- education,” O’Reilly said.
Woodside Petroleum Ltd, at Africa Down Un- tance, however, we have
der this year. also created expectations. “In-ground discoveries
In order to be representative
“Going back into Africa our job has been of the industry and meet our made by Australian compa-
made easy by the fantastic reputation that the own expectations we need
Australian miners [have built] and we have to build the organisation and nies in Africa amount to $687
been working closely with AAMIG [Australia- we can only build the organ-
Africa Mining Industry Group] which has been isation if the 200-plus [Aus- billion, and it is this mineral
really advantageous,” Woodside vice presi- tralian] mining companies
dent of exploration, Africa and Atlantic mar- which are in Africa come wealth that Australia can
gins, Jayne Baird. and join us and support us,”
O’Reilly said. help unlock and translate
Upon confirming its re-entry into Africa,
Woodside joined AAMIG last year and is now “The Australian resource into socio-economic growth,
one of 112 members of the group which sup- sector has a key role in the
ports the Australian extractive industries in development of Africa and we heard that very benefitting Africa’s impover-
Africa. clearly from Julie Bishop; 1 billion people, 54
countries and a middle class of 300 million ished peoples.
AAMIG was formed in 2011 and such is its people, the size of America.”
impact on the extractive industries, there have “The predicted investment
been calls from the oil and gas industry for its With a large footprint already in Africa,
assistance. O’Reilly said Australian mining and services by Australian companies
companies, of which there were more than
To this end, a name change has been pro- 700, contributed on many levels, including in mining, and the resulting
posed to incorporate AAMIG’s energy strat- long-term investment, tax revenue, employ-
egy. ment, training and capacity building. Trish O’Reilly jobs growth, training, tax rev-
enue and infrastructure de-
The proposed name change will be ratified “This is followed [up] by socio-economic
at a board meeting this month, AAMIG chief velopment – including roads,
executive Trish O’Reilly told Paydirt.
rail and electricity – will be vital in efforts to
permanently lift millions of people out of pov-
erty. In this sense, the Australian resources
industry’s future investment in Africa is a po-
tential game changer.
“Let us work together both as an industry
group and with key partners so we have the
opportunity to play a key role in the successful
development of Africa,” O’Reilly said.
– Mark Andrews
PAGE 38 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Barnett urges Africa:
West Australian Premier Colin Barnett That unrivalled level of construction is
has told African visitors to forget
about the depressed position of commod- now coming to an end and Barnett said
ity markets and remain committed to natu-
ral resources development. other regions, specifically Africa, would
Speaking at the opening of Africa likely build the next generation of pro-
Down Under in Perth, Barnett said the in-
dustry was cyclical and volatile and would jects.
therefore rise again, bringing unmatched
potential to developing economies. “WA is maturing,” he said. “There will
“When prices are high people talk of be new projects and growth but we will
us having a commodity boom and the
industry is the future but when they fall never achieve the same scale again.
the industry has no future; that is naive,”
Barnett said. “Keep faith and there is no That means major expansion will come
quicker way to prosperity than resources.
Investment in mining and petroleum will from Africa and I hope WA can be a part-
give the revenues to achieve what you
want to.” ner in that.”
Barnett pointed to the “juggernaut of In an offer of support, the WA Govern-
an industry” that was WA’s natural resources
sector as evidence of what could be achieved. ment last year signed a MoU with COME-
“While the focus has been on our weak- SA – The Common Market for Eastern
nesses, by the end of the decade we will have
and Southern Africa – to improve the
management of natural resources.
Barnett declared he was satisfied with
how the MoU was moving.
Colin Barnett “It is early days but I am pleased with
the way it is progressing. I think WA can
tripled our LNG production – making Australia share its experience and expertise.”
the largest LNG producer in the world – and – Dominic Piper
we will have doubled our iron ore production,”
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 39
AFRICA DOWN UNDER REVIEW
Colluli to conquer all: Durrant
Danakali Ltd’s Eri- commonly used open fields potassium sulphate projects worldwide.
trean Colluli potassi- In spite of its confidence in the project, Dur-
um sulphate project will cut mining methods,
satisfy the world’s appe- rant said Danakali would enter the market
tite for fertiliser long into delivering pre-crushed cautiously.
the future, according to
James Durrant. ore by a surface miner “Our developing strategy of entering the
market at sensible and sustainable volumes
The company’s study to the processing plant for phase one and doubling for phase two af-
manager said Colluli’s ter year five, using a simple, low risk, modu-
monstrous 1.289bt re- without a need for ex- larised approach to maintain low capital whilst
source – nearly 90% of preparing for growth beyond phase two is the
which has been proven plosives.” best way to deliver this project,” he said.
commercially viable –
offered approximately Durrant said un- “Using the PFS production rates of 425,000t
205mt of potassium sul- per module, and inclusive of the costs to build
phate and a 200-year like solution or under- a product export terminal at Anfila Bay, we ex-
plus mine life. pect to have initial development costs of less
ground mining, which than $US450 million and expect to have the
The deposit’s make- lowest capital intensity of advanced potas-
up also made it stand out from the pack. often lost 50% of its sium sulphate projects. This gives us oper-
ating costs of lower than any of the existing
“Our project is positively unique in every product in waste, Dan- producers, producing potassium sulphate…
way,” Durrant said. for $US188/t free on board and selling it for
akali would leave “vir- $US588/t at the product export terminal. We
“We’re the only ones that can mine the expect to find ourselves at the very bottom of
potash from the surface with an open pit and tually nothing behind” the cost curve giving us forecast annual free
because we are not solution mining like eve- cash flows of over $US200 million, an NPV of
ryone else we are the only ones that don’t at Colluli. $US846 million and an IRR of 24.7%.”
need enormous quantities of ground water.
We don’t need to wait for ponds to evaporate James Durrant Pilot tests on Col- A DFS at Colluli is expected to be complet-
before producing our product, unlike our brine luli’s product to date ed by December.
solution mining competitors. Our shallow
rock resource enables us to mine the three have only reinforced – Rhys Dickinson
potassium-bearing salts in solid form from
the surface using simple, proven, low risk, Danakali’s confidence in the project.
The company’s most recent testwork at
Canada’s Saskatchewan Research Council
generated more than 300kg of high purity
potassium sulphate in standard, granular and
soluble form for distribution for potential off-
Despite ongoing volatility in the commodity
markets, potassium sulphate prices have held
a steady course and Danakali was buoyed by
the fact resources for the product were geo-
logically scarce and there were few advanced
In fact, Colluli is one of only three green-
Lesotho diamonds set to sparkle
Lesotho is anticipating its annual diamond Lebohang Thotanyana “There is a strong market for our stones in
production to exceed more than 1.5 mct the Southern African Development Commu-
from 2017. prices per carat. nity (SADC) region because 86% of what we
Some of the largest diamond discoveries in produce is currently being exported to other
Four new mines – Liqhobong, Mothae, Kolo SADC countries,” Thotanyana said.
and Lemphane – are currently going through Lesotho include Lesotho Promise (603ct), Le-
the commissioning phase and are expected to sotho Brown (601ct), Lesotho Legacy (493ct) “Lesotho is one country that remains un-
enter various stages of production throughout and Leseli la Letseng (478ct). tapped so there are plenty of opportunities for
Large stones sizing 357ct and 314ct, as
Lesotho currently produces about 345,000 well as four more stones larger than 100ct, Thotanyana said his department was cur-
ctpa from its two operating mines, Letseng were recovered from Letseng earlier this year. rently reviewing all legal and regulatory
and Kao, accounting for about $US340 mil- framework relating to Lesotho’s mining sector,
lion of the global diamond market. Lesotho also has known potential for sand- including institutional reforms and establish-
stone deposits, dolerite intrusions and other ing a mining authority.
That figure is expected to nearly double to industrial minerals, as well as untapped op-
$US670 million based on incoming produc- portunities in the base metals and rare earths One of the highlights of Lesotho’s new min-
tion forecasts, according to Lesotho’s Minister spaces. erals and mining policy – approved earlier this
of Mining Lebohang Thotanyana. year – is a typical three-month wait time for a
two-year prospecting licence with a one-year
“Lesotho is currently ranked ninth in terms extension option.
of the value of diamonds brought to the [world]
market, just behind Australia [$US380 mil- “This is the only policy that is truly and hon-
lion],” Thotanyana told Africa Down Under. estly anchored in the Africa Mining Vision,”
“We hope that in 2017, when we have all
these new diamond mines that are currently “It aims to stimulate investment in the min-
in development and being commissioned, we ing sector and also to create a conducive en-
will jump over Australia to position seven.” vironment for external FTI.”
Lesotho is highly regarded for its diamond – Michael Washbourne
prospectivity, including the discovery of some
of the world’s largest known diamond gems
and attracting some of the highest market
PAGE 40 OCTOBER 2015 AUSTRALIA’S PAYDIRT
AFRICA DOWN UNDER REVIEW
Roxgold close to production
in Burkina Faso
Roxgold Inc is all but set to become Burkina also think, given the grades, a debt facility with BNP Pari-
Faso’s next gold producer. it will be a very compelling
Construction has progressed well at the project and will be one of the bas and Societe Generale. This
company’s Yaramoko project since March, highest margin, highest profit
with the 190-man accommodation village generating projects. We think it came despite lean times in the
nearing completion at the time of print. is a prize worth pursuing.”
market and a sudden change in
The company expected to mobilise staff to Immediate upside for the
site by the end of September as ramp up to company is the Bagassi South government, which saw Blaise
production in quarter two 2016 continues. opportunity, 1.8km south of
the 55 Zone, in Burkina Faso’s Compaore ousted and Michel
An initial seven-year mine life, produc- Hounde greenstone belt.
ing 99,500 ozpa gold, is planned from Yar- Kafando appointed interim
amoko’s 55 Zone however Roxgold chief ex- “We think this is a project
ecutive John Dorward envisions an ultimately which will make the grade and we plan to be president of Burkina Faso last
larger, longer life project. back drilling this in the fourth quarter, with a
view to having a resource on it early next year. year.
“For about $US5 million we should be look- That will be one of the primary reasons to un-
ing at getting additional throughput through derpin an expansion of the processing plant at John Dorward National elections are sched-
the Yaramoko processing facility,” Dorward Yaramoko,” Dorward said. uled for October 11.
Probable reserves at Yaramoko are cur- “I’d like to thank BNP and So-
“What we are really developing at Yar- rently 759,000oz @ 11.83 g/t gold, with indi-
amoko in the next 12 months is a project that cated resources of 810,000oz @ 15.8 g/t and ciete Generale for sticking with us,” Dorward
is able to generate in the order of 150,000 inferred resources of 278,000oz @ 10.26 g/t.
ozpa with something approaching a 10-year said.
mine life. We think we have the resource base Roxgold has been able to attract $US75
so far and the deposits to support that. We million in project financing for Yaramoko via “We have had a few ups and downs in the
financing route, we had a bank bail out on us
late last year and hiccups in Burkina Faso, but
the banks have certainly stayed true to us and
we are in the process of drawing down and
expect that we will have our initial draw down
under the project finance later this month.”
– Mark Andrews
PAGE 42 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Africa its own biggest market
African countries should look no further than levels that currently exist. “We have a number of
their continental neighbours for export op- “There’s a lot of things
portunities, according to Austrade International instances globally where
Operations Group acting executive director that have to occur, but in it-
Grame Barty. self, purely based on popu- Austrade is implement-
lation and purely based on
China and India are frequently listed as the demand and opportunity, ing PRETSS (Policy, Re-
world’s two largest growth markets for the Africa is its own biggest
coming decades and many other countries market.” search, Equipment, Tech-
are vying to tap into the pair’s developing
wealth. Barty, whose recent nology, Skilling, Services)
career has centred on
Several African jurisdictions are among emerging markets such as strategies across a num-
those competing for a slice of the global eco- Latin America, warned “re-
nomic pie, but Australia’s government trade source-dominated” Africa ber of industries – of which
commission believes the best opportunities to look beyond the extrac-
for those countries lie within the continent it- tives industry and to temper mining is one – and we’ve
self. development expectations.
found that to be a very
“If you’re looking at the African opportunity “We’ve seen where other
– and African countries themselves are look- countries have tried to hurry these things; successful model,” Barty
ing at the opportunity – I would say to them they become disappointed,” Barty said.
that the African opportunity is not just export said.
to other markets internationally, whether “We know it can’t just be about extractive
that’s into India or whether that’s into China,” industries, there has to be other things. We “The African econo-
Barty said. have to create a path that’s beyond reliance
on resources alone, or any single product, of mies, without doubt, rep-
“In our view, Africa’s biggest market is Af- course.”
rica itself, and once Africa starts finding ways Grame Barty resent a continuing high
to actually meet that demand from its popula- Barty endorsed Africa’s trade and invest- value-add and sustainable
tion in terms of energy, urbanisation and food ment relationship with Australia, urging visit-
production, then the demand for resources ing delegates at Africa Down Under to adopt mining proposition for ex-
and energy within Africa will escalate beyond Western Australia’s best practice in govern-
ance and skilling. plorers, juniors and METS companies, but we
think research collaboration and educational
skilling are the key outcomes for long-term
sustainability for shared value solutions with
“This is not just about profit-taking for our
investments; this is about sustainability for Af-
rican communities for 2050 and beyond.”
– Michael Washbourne
The CD-Rom of Paydirt’s 2015
Africa Down Under Conference
will be available soon
CD Rom includes
• Over 60 presentations • Conference media coverage
• Australia’s Paydirt preview and review reports • Conference Sponsors
CD-Rom – $160 (inc.GST)
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AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 43
AFRICA DOWN UNDER REVIEW
Kibaran in German double deal
Kibaran Resources Ltd’s sprint to said. “We expect to be in produc-
graphite production in Tanzania tion in late 2016, early 2017 which
continues to build momentum with will leave us as one of the first new
an off-take agreement signed and a graphite companies into produc-
German Government guarantee for tion.”
project financing. Spinks said it was important to be
Kibaran announced the bank an early mover into production as
guarantee on the eve of Africa current graphite demand was much
Down Under, the agreement paving smaller than projected supply from
the way for the company to begin new operations.
project finance discussions. Both German deals follow the
Managing director Andrew release of a positive BFS for
Spinks said confirmation of the “in- Epanko. The BFS, completed by
principle eligibility for cover” was GR Engineering Services, showed
the “first major milestone in our debt Epanko was capable of producing
funding process”. Kibaran’s Andrew Spinks and Sauda Simba discuss the company’s graphite 40,000 tpa of graphite concentrate
The guarantee hands German product with Australian Minister for Foreign Affairs Julie Bishop over 15 years for a pre-tax NPV of
state-owned bank KfW IPEX-Bank $US197.4 million, IRR of 41.2% and
lenders insurance against commercial and Kibaran finalised an off-take agreement with annual EBITDA of $33.6 million.
political risk over funding of Kibaran’s Epanko German industrial conglomerate Thyssen- Capex for the 440,000 tpa operation was
graphite project in Tanzania. Krupp Group. Under the agreement, Thys- slated at $US77.5 million with cash costs of
“Confirmation...under an untied loan guar- senKrupp will take 20,000 tpa from Epanko, $US570/t of graphite concentrate.
antee follows six months of negotiations and around 50% of the operation’s planned pro- With development plans at Epanko seem-
provides a level of certainty for the bank to duction. With a similar agreement already ingly locked in, Kibaran is returning to explo-
provide debt funding for the development signed with a European trader, some 75% of ration on its other Tanzanian graphite assets.
of Epanko,” Spinks said. “This is significant planned graphite production from Epanko is In Merelani, the company sees a project
as it strengthens our strategic alliance with now locked into sales agreements. which can quickly follow Epanko’s lead.
Germany, which is the world’s fourth larg- Speaking at Africa Down Under, Spinks “We believe Merelani can be brought on-
est economy. The Germans also discovered said the off-take agreements and the bank stream not too far behind Epanko,” Spinks
graphite, named it, have been working with it guarantee gave Kibaran unique advantages said.
for centuries and have been one of the lead- in the highly competitive graphite develop- The company is also investigating in-coun-
ers of its development for the battery and re- ment space. try beneficiation of its graphite, which could
newable markets, so partnering up with them “We’ve had a terrific three months with the create both value-addition and economic op-
is fantastic for our shareholders and the Tan- granting of the mining lease, completion of portunities for Tanzania, Spinks said.
zanian community.” the BFS, finalisation of the off-take and now – Dominic Piper
The announcement came a week after the German Government backing,” Spinks
Walkabout set to fly
As Walkabout Resources Ltd managing di- Allan Mulligan Producing a resource will help in negotia-
rector Allan Mulligan took to the stage at tions with potential partners and end users in
Africa Down Under, an airborne VTEM survey While there are some graphite companies the spherical graphite market.
at the company’s Lindi Jumbo project in Tanza- chasing multi-billion tonne deposits, Mulligan
nia was being prepared. said a small resource was all the company re- Mulligan said the spherical graphite market
quired as its initial designs focused on mining was growing at a rapid rate, with the emer-
The survey of about 200 line-km aimed a “couple hundred thousand tonnes per an- gence of new battery technologies across all
to identify drilling hotspots at Lindi Jumbo, num”. forms of light energy use driving the sector.
120km from Mtwara Port.
The transformation of China’s economy
Once drill targets had been defined, Walka- from manufacturing-based to downstream
bout intended to conduct RC drilling of 1,000m technology-based is also fuelling growth in
and 200m of diamond drilling for metallurgical graphite demand.
“Progress in the sector is also strategic and
Drilling is scheduled to be completed by the we think that a lot of national governments do
end of October and should encouraging re- not want all this technology held in China’s
sults be returned, the plan is to head straight hands only and they are starting to develop
into resource drilling. their own industries,” Mulligan said.
“The graphite bubble, which I can say we “Assessments of future demand and supply
are now part of, has proven to be robust in its forecast, we think, are weak and unfounded,
longevity and that has surprised the tradition- and we think that potentially the demand will
al markets. In October last year, we all thought be a lot higher than what has been stated.”
it had gone belly up, but it came back with a
vengeance. We have a fairly simple business – Mark Andrews
and operating model; low capex and early
cash flow development,” Mulligan said.
PAGE 44 OCTOBER 2015 AUSTRALIA’S PAYDIRT
AFRICA DOWN UNDER REVIEW
Sundance still perched on iron ore
Financiers have not been filled with much Giulio Casello earlier this year, with the Cameroon Govern-
confidence to back companies looking to ment committing to source funding for 510km
develop iron ore mines. that also want that, then forget about iron ore.” of rail and port infrastructure.
Sundance remains in the iron ore game
At the time of print, the iron ore spot price The Government’s commitment was for-
was at a level – $US56.50/t – only majors are with its Mbalam/Nabeba project encompass- malised under a Transition Agreement signed
comfortable producing at and leaves others ing Cameroon and Congo. in June, with an outcome possible within 12
feeling rather jittery about future prospects in months.
the industry. Funding port and facilities to transport 40
mtpa of high-grade iron ore from Mbalam/Na- “You can build things, but you can do it dif-
However, Sundance Resources Ltd chief beba at a cost of about $US3.5 billion remains ferently to what you did before and you need
executive Giulio Casello believes short-term Sundance’s challenge. to do it in a cooperative manner,” Casello said.
bearishness in the space needs to be over-
come as, inevitably, the value of iron ore will The company made inroads on that front “No doubt that Western markets today, par-
rebound. ticularly the banks, are extremely short-term
focused. [You] need to get them to look be-
“Iron ore will come back, we know it is a cy- yond the next three months of what the iron
clical industry, we are down hopefully some- ore price is but that’s almost impossible. We
where near the bottom, but hopefully it will need to get them to look at what the iron ore
come back. Now more than any other time is price will be in 2020 and what the value of the
one of the best times to invest,” Casello said. project will be in that time but that is very dif-
ficult. That is why we are very pleased and
“Iron ore is not flavour of the month, but proud of what we have done with a partner,
that’s the key issue, it is about flavour of the which is the Government; a partner that wants
month. Iron ore is not about the short-term to see the pie and share in it.”
story, it is not about the peaks and the troughs.
Babies are born, people grow, people want – Mark Andrews
things better for their children and if you don’t
believe that there are 1 billion people in Africa,
1 billion in India, 1.5 billion people in China
Smarter thinking key to African success
Governments need to up the ante to en- David Nancarrow know what your expenditure is going to be
courage growth in Africa’s mining industry, and you know how much tax you are going
according to DLA Piper partner David Nancar- “As quick as we can get through explora- to pay at that very important and quite scary
row. tion development and into operation the rev- time of actually spending money with no rev-
enue can start. So wherever we can minimise enue to come.”
With a host of Africa’s top mining ministers delays – and at the Government side it’s nor-
looking on, Nancarrow told Africa Down Un- mally at the front in application, in granting of On the other side of the coin, Nancarrow
der attendees investing in infrastructure was mining titles, approvals all those aspects of said companies operating in Africa should be
the key to attracting more explorers to the getting a project started – it is a good thing. more welcoming of government participation
continent. in their projects.
“Incentives at the outset for that initial build
He said a majority of Africa’s great deposits up phase, development phase and tax con- He said companies too often focused on
were landlocked and getting product to mar- cessions during that period are becoming the negatives of state participation – many of
ket had become increasingly difficult. more uniform and creating certainty so you which weren’t based on fact.
Governments with assets a long way from “Our view is that we see it as a positive
the coast or established transport corridors move,” Nancarrow said.
needed to do more to assist potential inves-
tors, starting with a re-think as to how major “We see it as if the State has buy-in, when
transport, power and water infrastructure was it’s at the right percentage…in the range of
funded. 5-15%, what we find then is that the State has
ownership. We are not talking about 49% or
“Governments are starting to consider this 51% ownership which other countries of the
and are looking for the ability to do deals in world have in relation to local companies, we
relation to encouraging investment…outside are talking about a stake. They are already a
the mining convention,” Nancarrow said. stakeholder, but now they are a stakeholder
of the business as well. These are being man-
“Allowing companies to monetise and make dated and if they are being mandated uni-
money from that infrastructure is something formly across different jurisdictions we think
governments are looking at and are starting it creates certainty necessary for investors to
to consider as an important factor for encour- know what they are in for when they come into
aging investment in the mining sector.” a country.”
African nations could also assist investors – Rhys Dickinson
by cleaning up their applications processes
and providing initial tax concessions to in-
coming companies, according to Nancarrow.
“Time is the enemy of most businesses,” he
PAGE 46 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Governments must listen to industry
Governments have a key “It’s all well and good for the “It’s a really good case study,” Blakiston
role to play in how a project World Bank to put out tenders said. “The contractors, along with the compa-
ny, suffer pain when the prices are a particular
can be restructured to ensure for people to come and advise level, but once the price moves the contractor
gets an uplift in their earnings on their con-
it does not fail, according to countries on the sort of mining tracts.”
Gilbert & Tobin partner Michael code they produce – and that After slamming WA Premier Colin Barnett
for his firm stance on royalties and conces-
Blakiston. led in one case to 450 pages of sions last year, Blakiston heaped praise on
the State Government for its support of the lo-
Addressing delegates at Af- legislation – but that does not cal mining industry during what he described
as an “atrocious” last 12 months for the entire
rica Down Under, Blakiston im- attract investment.” sector.
plored governments to “listen to Blakiston cited the Cam- “We started with a rebate for the magnetite
miners because they were the first affected by
what is going on in the industry” eroon Government’s recent the downturn and now they’ve moved to the
small hematite iron ore [miners] and provided
or risk losing out on potential pledge to source funding for a rebate there,” Blakiston said.
foreign investment to other pro- port and rail infrastructure to “In addition, they’ve provided concessions
on port charges, haulage charges and they’ve
spective jurisdictions. service Sundance Resources also established a range of other initiatives to
support the industry, so I can stand here today
Blakiston claimed too many Ltd’s Mbalam/Nabeba iron ore quite proud that our Premier has responded to
the challenges that we’re facing in this state,
countries were revamping min- project as the perfect example notwithstanding how blessed we are with our
ing codes in a desperate bid to Michael Blakiston of how a government could help
gain a “more equitable distribu- revitalise a stalled development – Michael Washbourne
tion of wealth” at a time when project, describing it as a “bell-
mining companies were being confronted with wether for how business can now be done”.
serious challenges due to falling commodity Feasibility studies have pinned a $US3.5
prices and constrained debt markets. billion capital cost on the project, which in-
“When you see the landscape changing cludes building 510km of rail and establishing
so regularly and changes made to the mining new port facilities on the central-west coast
code which are perceived to be of benefit, but of Africa.
not necessarily prepared by those who act Blakiston also urged companies with seem-
for mining companies, there is not an appre- ingly doomed mining projects to follow the
ciation of the things that make these sorts of lead of Atlas Iron Ltd and take a closer look
environments attractive in these tough times,” at the West Australian company’s “pain and
Blakiston said. gain” share arrangement with its contractors.
The Australia-Africa Mining Industry Group (AAMIG) is the peak
body supporting Australian companies to be partners of choice in the
development of Africa’s resources sector.
Our Primary Roles
• To create a forum for AAMIG members to
network and share operational experience
in responsible business practices;
• To represent at an industry level on behalf
of our members; and
• To assist Australian companies to engage
with Australian and African governments
and relevant institutions and organisations.
To enquire about membership, please visit www.aamig.com
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 47
AFRICA DOWN UNDER REVIEW
Change for the greater good
Deloitte tax partner Jacques Van Rhyn Jacques Van Rhyn shale gas industry has grown exponentially.
posed an interesting question to compa- Why? Because certain companies focus
nies attending this year’s Africa Down Under Companies needed to leave behind the purely on extraction while other others focus
conference: Are miners contributing to their model of raising enough capital to build big purely on processing and transportation. By
own demise? projects with dedicated processing plants and collaborating, they build bigger processing
rail and port facilities, according to Van Rhyn. plants that can put more volume through and
“The downturn in the mining industry has get economies of scale.”
largely been created by an oversupply in the They should also do away with the idea
market and therefore a downturn in prices,” of developing marginal, short-life mines with Van Rhyn said this collaborative strategy
Van Rhyn said. standalone infrastructure, he said. has reduced capital costs because there was
less of a reliance on a single project being the
“The question that we have to ask today is: “If we are serious about building a sustain- cash cow.
Does it have to be like this? Do we have to able future, collaboration is needed,” Van
have these major cyclical changes in the in- Rhyn said. “We need to consider mines that are in
dustry? And can we create a more stable and close proximity and with similar commodities
consistent mining industry? We have to ask “Through true collaboration we can ensure and ask whether we can enter into cost col-
ourselves an even braver question: Are we that marginal mines that focus on extraction laboration agreements where we share infra-
creating the cyclical nature in the industry by rather than processing and transporting can structure and jointly develop that infrastruc-
working in isolation from each other, worrying have a future. Mining companies need to con- ture, such as port and rail,” he said.
about our own mines, putting more product in sider how to work together. In the US their
the market than the market can sustain and He called on governments to engage with
therefore creating an oversupply at one time the private sector to assist an industry that
and an undersupply at a later time?” was experiencing difficult times.
Van Rhyn said innovation was the key to “We need to have true stakeholder engage-
combating the crisis. ment, not one of adversaries, but one of find-
ing true solutions,” he said.
Unfortunately, 90% of innovation failed, ac-
cording to the tax partner. “We need to think big, yet test small and fail
fast. We need to leverage emerging technol-
“[It] fails because no single innovation in ogy and we need to become part of an innova-
isolation will solve the problem of the indus- tion ecosystem. With this we need to prepare
try,” he said. for new operational efficiencies and accept
the way that we did things previously might
“If we don’t work together we cannot build a not work in the future.”
sustainable mining future. We have to appre-
ciate that we are all connected and therefore – Rhys Dickinson
interdependent on each other. And we need
to be brave.”
Malawi readies for mining rise
Malawi might be in its infan- In anticipation of an explorer parent manner. We have a 40% tax allowance
cy when it comes to min- influx, Botolo said Malawi was granted for capital expenditure on new build-
ing, but it’s preparing for a long reviewing its Mines and Minerals ings and machinery, 50% deduction on ex-
and lucrative association with Act and aligning it with interna- penses incurred on training, an exemption on
the industry. tional best practice. import duty for equipment and parts, including
motor vehicles of 10t and above.”
Secretary for natural re- “Our Mines and Minerals Act
sources, energy and mining, draft is in the hands of the Min- On transparency, Botolo confirmed Ma-
Ben Botolo, told Africa Down ister for Mines and Justice and lawi was in the process of applying to join the
Under delegates Malawi was we hope by December it can be Extractive Industries Transparency Initiative
looking to diversify its econ- passed into law,” Botolo said. (EITI), a global standard promoting open and
omy and reduce its depend- accountable management of natural resourc-
ence on its agriculture indus- On the ground, Malawi was es.
try, which produces tobacco, in the process of establishing a
sugarcane, cotton, tea, corn, national data centre to increase At present, more than 20 nations had
potatoes, sorghum, cattle and prospective investors’ access to signed on to comply with the EITI.
goats. scientific data.
Ben Botolo It would also allow for online “The EITI is one way of looking at all these
Mining in Malawi relies tenement licensing, Botolo said. issues in the mining sector so we have more
mostly on the private sector and limited arti- The Government had also committed to investors coming into the country to invest in
sanal work, which has focused on brick clay, funding a nationwide geological mapping pro- the sector,” he said.
gemstones and lime. gramme in 2016.
A new fiscal regime was also being estab- “[With the] new mines and minerals policy
The country’s only commercial-scale mine, lished, according to Botolo. in progress, a new mining law to be enacted
Paladin Energy Ltd’s Kaleykera uranium “The mining fiscal regime is finished,” he in 2015, a variety of minerals, a minerals infor-
mine, was placed on care-and-maintenance said. mation database available, minimal require-
last year. “The Minister of Finance has a fiscal regime ments for registration of companies, security
and all issues, like corporate social responsi- of tenure and the establishment of the Malawi
But Botolo believes the country has much bility, are in it. But again we’re looking at the Investment and Trade Centre as a one-stop
more to offer, particularly in the form of cop- issues of taxes and royalties in a very trans- centre, I see a good future for mining in Ma-
per, nickel, niobium, tantalum and zirconium lawi.”
– Rhys Dickinson
PAGE 48 OCTOBER 2015 AUSTRALIA’S PAYDIRT
Acacia ready to test
On track with its production strategy, Acacia exploration,” Spora said. “We are JVs to prove up further drill targets.
Mining plc is preparing for its next stage of
growth with the drill bit to lead the way. building our footprint across Africa “There has been significant success
Acacia has performed a remarkable turna- and we are now in four countries; on the Houndé belt and we expect to
round in recent years from basket-case to
leading African gold producer, slashing costs Tanzania, Kenya, Burkina Faso see further opportunity,” Spora said.
and increasing production across its three
Tanzanian assets. and Mali.” On its Tintinba project in Mali,
With the operational restructuring now al- Acacia has been in Kenya for Acacia is testing ground along the
most complete – the company expects its
biggest mine, Bulyanhulu to be performing to three years, having acquired the Senegal-Mali shear zone. The 150sq
expectations from the start of 2016 – the com-
pany can return to its growth strategy. West Kenya gold project from ASX- km project is located around halfway
And while the recent downturn has seen listed Aviva Corporation Ltd. The Peter Spora between the 11 moz Sadiola mine and
a number of assets across Africa put up for company has a budget of $8 million the 10 moz Gara-Yalea complex.
sale, Acacia’s head of exploration, Peter Spo-
ra, told Africa Down Under, the London-listed for Kenya and Spora said aspects “We are trying to acquire additional
miner was content to focus on exploration for
now, having spent the last three years ex- of the ground held on the Liranda Corridor – ground in Mali,” Spora said.
panding its interests outside Tanzania.
on the edge of Lake Victoria – reminded him Back in Tanzania, the company will also
“We are looking for more opportunities
around Bulyanhulu and we see opportunity of the Kundana goldfield in Western Australia. begin considering divestment options for its
to expand resources underground at North
Mara [but] 75% of our budget is in greenfields “These narrow, high-grade vein systems Buzwagi gold mine.
are vertically controlled and we are drilling Spora said the seven year old mine was
four, 600m holes targeting down to 550m be- in “harvest mode” with closure scheduled for
low surface,” he said. 2019.
In West Africa, Acacia has struck JV deals “We shortened the mine life and there is
with three juniors on the Houndé belt in Burki- now two years of mining and three years of
na Faso. A budget of $US5.5 million will allow stockpiles ahead of us,” he said. “There is still
it to test extensions to exiting trends and new 1 moz below the open pit so there are divest-
prospects. An extensive soil sampling cam- ment options for us.”
paign has also been undertaken on all three – Dominic Piper
AUSTRALIA’S PAYDIRT OCTOBER 2015 PAGE 49
AFRICA DOWN UNDER REVIEW
Resolute ready for
John Welborn’s confidence in the future of John Welborn off this experience.
his new company appears to be growing by “My pride in joining Resolute comes from
the week. in Mali and Ravenswood in Queensland) now
performing strongly – group production for the fact the company has a reputation for of-
When Welborn was appointed Resolute fering the best of what mining companies can
Mining Ltd’s new chief executive in July, he FY2015 was above bring to Africa,” he said.
was understandably reticent to lay out any guidance and cash
revolutionary plans for the company. How- costs narrowly beat Having closed its Golden Pride mine in
ever, as he comes to grips with Resolute’s forecast – Welborn Tanzania last year, Resolute’s African growth
portfolio, he is becoming increasingly vocal can pursue expansion profile is firmly set on West Africa, with Syama
about the opportunities that lay ahead for the opportunities. being joined by the Bibiani project in Ghana
gold miner. as well as exploration ground in Cote d’Ivoire.
“The company is in
Predecessor Peter Sullivan’s necessary fo- transition but looking “West Africa is the sweet spot,” Welborn
cus in the last five years of his 16-year stint on to extend mine life on said.
getting Resolute’s operational performance in all our projects and we
order has given Welborn licence to approach have a great footprint Syama, Welborn said, was a much changed
his reign with growth in mind. from which to build operation thanks to the addition of an oxide
more assets,” he said. circuit and the impending move from open pit
His goals are simple; grow the market cap, to underground mining.
grow the resources base, grow production. Welborn was un-
equivocal in his belief “Syama is now effectively two mines in one.
“Resolute has a market cap of $180 million, that Africa would be The new oxide circuit allows us to mine the
which is only a small reflection of a company the geographic focus satellite oxide orebodies in a series of open
with 5.3 moz gold in reserves and 9 moz gold for such growth. pits while we continue to mine the sulphides
in resources; that is second only to Newcrest out of the main pit and underground.
Mining [Ltd] on the ASX,” Welborn said at Af- “Africa has mas-
rica Down Under. sive mineral endow- “It all gives us a lot of opportunity and op-
ment and can deliver tionality and we are targeting plus-250,000
With Resolute’s operating mines (Syama more opportunity than ozpa production from Syama,” he said.
anywhere else but it
needs stability and in- The company’s next development will be
centives to invest. We Bibiani, acquired from struggling ASX-listed
want to look at new op- junior Noble Mineral Resources Ltd last year.
portunities and talk to Resolute is undertaking a DFS on an under-
African governments ground scenario at the Ghanaian project, fol-
about opportunity.” lowing the successful completion of a scop-
ing study which pointed to a $US30 million
As well as nearly 10 project capable of mining 4.3mt @ 4.2 g/t for
years at Syama, Res- 574,000oz gold.
olute’s 16-year African
track record includes “This is the sort of opportunity Resolute has
operating mines in had a lot of success with in the past. The com-
Tanzania and Ghana. pany is good at getting mines operating that
Welborn said the com- others have struggled with.”
pany would leverage
The operational changes at Syama com-
plete, Welborn is keen to turn attention to ex-
“We have a very large exploration portfolio.
In the recent past, we have been a buyer of
assets but will be reinvigorating our explora-
tion focus,” he said, pointing to Mali and Cote
d’Ivoire as the most likely destinations.
“Cote d’Ivoire is the missing piece in West
African gold. There has been not nearly
enough exploration undertaken in Cote
d’Ivoire and we are very keen to get in there.”
However, the focus will not be entirely on
the current portfolio.
“We are very keen to look at new opportuni-
ties,” Welborn said.
– Dominic Piper
PAGE 50 OCTOBER 2015 AUSTRALIA’S PAYDIRT