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DIGGERS & DEALERS

Artemis steps up in Pilbara

It is all go at Artemis Resources Ltd’s going up, that we exponentially increase “The only experts that are around are
assets in the West Pilbara region of the amount that we get paid. We’ve essentially Novo, because nobody else is
Western Australia. looked at $6/t so that it works on both doing it. They’ve got about seven years of
sides as a trial run. experience in Marble Bar and Nullagine.”
In early June, the first truck load of
copper oxide ore left the company’s “Effectively it removed the liability, cre- Artemis and Novo believe the con-
Whundo copper mine, 30km south of ating a profit, but it also gives Blackrock glomerate/paleoplacer style gold min-
Karratha. the opportunity to do test work to make eralisation to the south of Karratha is
sure the material from Whundo will leach.” similar, or even a possible historic geo-
The delivery marks the start of a supply logical extension, to the Witwatersrand
contract between Artemis and Black- Artemis chairman David Lenigas said Basin gold province in South Africa.
rock Metals Ltd, with the latter initially transport operations were slightly de-
purchasing 50,000t of ore grading 1.5% layed by formalities on Blackrock’s end. Mead pointed out the West Pilbara and
copper at a price of $6/t for Artemis. South Africa were joined in a super-con-
“Blackrock required adjustments to tinent called Ur, about 3 billion years ago.
Blackrock has contracted Karratha their existing Whim Creek permits to
Earthmoving and Sand Supplies to haul import outside copper ore, but these “The style of mineralisation is the
16,600t per week to the Whim Creek matters were quickly resolved and the same. [But] there are still a few question
copper SX-EW plant, earning Artemis a transport operations are now well under marks about actually how the gold has
monthly revenue of about $100,000. way,” he said. formed,” he said.

Artemis executive director Ed Mead Elsewhere in the West Pilbara, Artemis The Witwatersrand Basin holds the
told Paydirt the deal came about from a has formed a JV with Canadian gold world’s largest known gold reserves and
fortuitous phone call with Blackrock ex- company Novo Resources Corp to fast- has produced over 1.5 boz, representing
ecutives. track gold exploration and project devel- about 50% of all the gold ever mined.
opment in the region.
“Blackrock made contact with me The JV is specific to conglomerate gold
asking about copper oxide. We ended up Novo has invested $2 million to earn plays only, such as Artemis’s Purdy’s
structuring a deal where we do a mine- into a new 50/50 JV on gold exploration, Reward gold project, 35km south of Kar-
gate sale,” he said. development, mining and collaboration ratha, where the conglomerate minerali-
around Karratha. sation varies in thicknesses of 80-100m.
Mead said the 50,000t stockpile was
an environmental liability that the Depart- Mead said he was “very excited” about Artemis considers the mineralisa-
ment of Mines wanted Artemis to push the deal and at the time of print was pre- tion at Purdy’s Reward to be similar to
back into the Whundo mine pit. paring to accompany two Novo geolo- Novo’s wholly-owned Beaton’s Creek
gists on a site visit to assess 20-30km project near Nullagine, which is being
“We turned a $75,000 liability into a strike of conglomerate outcropping. fast-tracked towards production following
$300,000 profit, which is not something a $US14 million private placement in May.
that is done every day of the week.” The partnership comes as both com-
panies realise the potential of finding Lenigas said teaming up with Novo
Pricing of additional ore will be ne- gold-bearing conglomerates in Artemis’s was sure to speed up overall exploration
gotiated based on grade, associated 1,536sq km tenements. efforts on gold plays in the region.
delivery costs and potential heap leach
recoveries. Mead said gold finds among the locals “Our Purdy’s Reward gold project and
of the Pilbara region were commonplace, Novo’s adjacent Comet Well gold project
The next parcel up for grabs is 30,000t but the prospectivity was largely unrec- have now identified gold-bearing con-
of ore at a grade of 3.9%, which Artemis ognised by gold companies. glomerates over a massive 8km strike,
expects will fetch a significantly higher and it’s great to partner with a company
price than $6/t. “We know there is a lot of gold, yet gold that has extensive knowledge of this
companies have never really been that style of gold mineralisation. Between us
“That is still to be negotiated, but the successful up there,” he said. this deal now ties up the whole area for a
argument would be that if we are getting much bigger exploration effort,” he said.
$6/t at 1.5%, then if we can do 3% we “If you are going to try to do gold explo-
should at least get $12/t,” he said. ration for conglomerate-style gold, then – Jon Daly
you need to have experts.
“In fact we might find, with the grade

PAGE 52 JULY 2017 AUSTRALIA’S PAYDIRT

WA’s uranium stance made

The West Australian Government is Bill Johnston approvals.
standing firm on its election promise “The various WA agencies will
to block all future uranium mining leases
from being granted in the State. continue to stringently regulate the
industry and ensure the four mines
However, the four projects given the meet their regulatory and environmental
go ahead by the previous government responsibilities if they proceed.”
– Toro Energy Ltd’s Wiluna, Cameco
Corp’s Kintyre and Yeelirrie and Vimy Association of Mining & Exploration
Resources Ltd’s Mulga Rock – will be Companies chief executive Simon
allowed to proceed. Bennison said the announcement was
good news for the respective companies.
The decision was made after legal
advice confirmed the Government could “The Hon Bill Johnston MLA, Minister
not legally deny secondary approvals for Mines and Petroleum, provided
for the purpose of hampering State certainty for the four approved uranium
Ministerial approvals already given. projects,” he said.

In the announcement made on “Each new mine will bring jobs, revenue,
June 20, WA Mines and Petroleum royalties and social benefits to WA.”
Minister Bill Johnston said the decision
considered the potential liability risk for Vimy managing director Mike Young
WA taxpayers. also welcomed the announcement.

“This announcement supports the Labor “Cabinet endorsement of Premier
Party’s commitment to halt the expansion McGowan’s long standing policy position
of uranium mining in WA,” he said. on uranium refutes claims by those who
sought to misrepresent the Premier’s
“We made a commitment that all position and argue that Vimy had not
uranium mining projects with State achieved the necessary approvals. This
Ministerial approvals will be able to announcement puts the issue beyond
continue, providing they meet all planning doubt,” he said.

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 53

DIGGERS & DEALERS

Ready to Rumble again

In light of a resurgent resources sector, aware of 10 holes drilled technical information,” Sikora said.
junior companies are starting to get in 1928 and 1951 with the As Paydirt went to print, Rumble was
busy again and Rumble Resources Ltd is most recent explorers fo-
a prime example. cussed primarily on the fast-tracking an exploration programme
gold potential within the at Braeside with regional soil geochem-
While lithium and cobalt opportunities package. istry under way and negotiations starting
are being grasped by peers in its class, for an airborne VTEM survey over the
Rumble has taken another route to re- Rock chip sampling regional geochemical base metal trends.
emerge in the market. has also been minimal,
however, historic grab samples of 18.9% Rumble is earning a 70% interest in
Despite managing director Shane zinc, 79% lead, 11.64% copper, 325 g/t Braeside by committing $1.5 million over
Sikora’s bullishness on the fundamentals silver and 13 g/t gold throughout the pro- three years,
of lithium and cobalt, it is the gap in the ject area has excited and enticed Brett
lead-zinc sector Rumble is looking to fill. Keillor to join Rumble as technical di- The base metal potential has been
rector. left untouched, despite a history of lead-
“The fundamentals of lead and zinc silver-zinc mining from the Ragged Hills
mean the sector is crying out for a high- Keillor is well-known in the industry,
grade discovery,” Sikora told Paydirt. serving the likes of Resolute Mining Ltd
“Lead is often forgotten about but lead and more recently Independence Group
prices are going from strength to strength; NL as chief geologist.
lead stockpiles follow zinc stockpiles.”
Additionally, Keillor has twice been
At the time of print, zinc was $US1.56/ recognised as AMEC Prospector of the
lb, while lead was trading near five-year Year for the Marymia (1998) and Tropi-
highs of $US0.95/lb, which makes the cana (2012) discoveries.
Braeside zinc-lead-silver project, 140km
east of Marble Bar, Western Australia, all “Brett has the know-how, which is why
the more appealing for Rumble. people should get excited by Braeside. It
has been properly critiqued, meaning the
Little modern day exploration has been first order targets will be based on sound
conducted at Braeside, with Rumble only

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LEFT: Mining at Braeside occurred between 1901-1959, with 2,927t lead, 24t zinc and 28,093oz silver produced from small-scale operations
between 1949 and 1959. ABOVE: High-grade base metal mineralisation at surface across a 60km strike at Braeside has excited Rumble

deposit, where about 50,000t of tailings Rumble’s programme is designed track, investors are starting to warm to
remains on site averaging 3.47% lead, to fast-track systematic exploration for stories like Rumble.
1.72% zinc and 22 g/t silver from dump VMS feeder pipe deposits, with infill
samples. geochemistry over conductors generated Sikora said the initial reaction from in-
by the VTEM and ground TEM over the vestors and analysts on Australia’s East
Results from lithogeochemistry con- conductors hopefully leading to drilling Coast was positive.
ducted at Ragged Hill, suggests the of the highest ranked targets sometime
mineralised structure likely represents a around October. “Braeside is a project with sound fun-
deeper feeder fracture with underlying damentals, the farm-in isn’t onerous
sub-volcanic porphyritic rhyolite; es- The company is well-funded to carry and the project has been verified by a
sentially meaning there is potential for out its initial exploration programme technical geologist. We can do low-cost
VMS/porphyry-related breccia pipe base and there is a sense in the market that exploration to get a result as early as
metals deposits. if further funding is required down the possible,” he said.

– Mark Andrews

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 55

DIGGERS & DEALERS

Neometals prepares
for the future

Chris Reed substitute for graphite and its larger sur- cobalt, is expected to be operational this
face area enables electrons to enter and month.
The lithium market is as hot as ever, exit the anode at such a pace that super
and while forecasts consistently pro- quick recharging, enhanced battery life “We hope to complete the pilot [testing]
ject demand to remain strong, the likeli- and safety performance can be achieved. by the end of the third quarter,” Reed said.
hood that prices will remain at current
20-year highs are slim. “The lithium titanate is the next step to Subject to shareholder approval and
value-add on that. We’ve all got to pre- final investment decision – and assuming
Therefore, some companies are pre- pare the businesses for lower prices at Neometals proves its practices to be
paring to secure their long-term futures some point in the future. We identified economically viable – commercial plant
in the sector, with the likes of Neometals that [lithium titanate] as a niche we could fabrication and construction is scheduled
Ltd applying some outside-the-box get in and we’re not going any further to start early next year.
thinking to stay ahead of the game. than that, we are not going to do cells
or bicycles or cars or anything. Then we While there is some certainty around
Last month, Neometals announced focused on recycling because there is a the company’s technology, Reed pre-
successful proof-of-concept testing of need for that as well,” Neometals man- ferred not to provide an update “ad hoc”
direct lithium and potassium extraction aging director Chris Reed told Paydirt. about the sale of its 13.8% stake in Mt
from brines, while battery cycle testing Marion.
of lithium titanate also proved a success. “We are trying to find where there are
needs and meet those needs, preferably In April, Neometals issued an offer by
Lithium titanate – a leading anode with a material which we make. The recy- way of notice of sale to its JV partners of
(negative electrode) – can be used as a cling is such a small percentage it is a bit all its remaining interest in the Mt Marion
hard to unscramble the egg, but we have lithium mine, 40km south of Kalgoorlie,
got some bright people that came up with for $US96 million.
a process and are building a pilot plant
right now to test it.” Jiangxi Ganfeng Lithium Co. Ltd, one
of China’s largest lithium producers, and
A pilot-scale hydrometallurgical plant Mineral Resources Ltd each hold 43.1%
to test Neometals’ co-developed tech- of Mt Marion, however, neither reacted to
nology to recycle lithium ion batteries to Neometals’ offer.
recover high-value materials, such as
Therefore, Neometals is entertaining
third party interest in its share of Mt
Marion.

PAGE 56 JULY 2017 AUSTRALIA’S PAYDIRT

The likes of Mt Marion, Wodgina and Mt “We have record pricing, 20-year high “The most conservative exposure
Cattlin are filling the market with spo- in pricing, we can still take our off-take to the industrial revolution is through
dumene concentrate. Chris Reed says independently, so we could exercise all lithium ion batteries and portable energy
our off-take options, sell our equity and storage. We have lithium and titanium
the next bottleneck will be in conversion use some of the money to build a down [at Barrambie], which both go in the bat-
capacity, however, that will be offset streaming plant with our off-take. In the teries. They both go into recycling, from
long-term, the chemical conversion which we’ll recover cobalt at industry
by the number of battery plants in the plants for hydroxide are going to be twice leading costs [$US4.45/lb] and that is
making as profitable as the mine, in the long about it for us,” Reed said.
term, at the moment they are probably
Neometals had not made an an- equally as profitable.” “The good offshoot for us is that we
nouncement concerning Mt Marion at the use titanium in the anode material for the
time of print and Reed believes the un- With its strong balance sheet and a lithium titanate and we are using titanium
certainty on the sale process was a drag strategic alignment with partners which as an absorbent in the brine technology.
on the share price. has removed operating and financial The two minerals have a natural affinity for
risks, Neometals has few peers in the each other and we are just exploiting that.”
Neometals was trading at 27c/share lithium space. Reed is hopeful the fact
on the back of a $150 million market cap will be recognised soon. – Mark Andrews
and $53.5 million in the bank at the end
of June.

The short-term pain is being eased
somewhat by the potential and number of
projects in the pipeline which will ensure
Neometals remains relevant for a long
time to come in the lithium sector.

About 80,00t of concentrate has been
exported from the Mt Marion lithium mine
and another 50,000t is expected to be
shipped in June, meaning an annual ca-
pacity target of 400,000t is well on track.

While it is kicking goals on the mining
side, the battery recycling project is on-
song and a study in conjunction with
Mineral Resources determining the feasi-
bility of producing 20,000 tpa LCE lithium
hydroxide in the Eastern Goldfields has
also progressed favourably.

“The mine [Mt Marion] is de-risked and
it is almost at full production,” Reed said.

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AUSTRALIA’S PAYDIRT JULY 2017 PAGE 57

DIGGERS & DEALERS

Evolution on a path to the top

Evolution Mining Ltd executive Jake Klein Evolution last year bolstered its portfolio
chairman Jake Klein believes his with another tier one asset by acquiring
company still has a way to go before it “We certainly aspire to be the bench- the gold rights to Glencore’s Ernest
can lay claim to the tag of benchmark mark, but we recognise that we still have Henry mine in Queensland.
producer, particularly on a global stage. a way to go yet.”
Evolution has experienced only one
Despite lifting Evolution to the es- Klein’s honest remarks are in contrast full quarter of attributable production
teemed position of Australia’s second to a recent peer comparison report by from Ernest Henry, with 22,246oz of pay-
largest gold producer on the back of a Global Mining Research which shows able gold at a negative AISC of $447/oz
carefully executed acquisition strategy, Evolution is a runaway leader when free added during the March quarter.
Klein continues to remain humble as cash flow is plotted against enterprise
supporters and industry colleagues sing value. “If it’s not the best [asset in our port-
the praises of him and his team. folio], then it’s pretty close to the best,”
Net mine cash flow from Evolution’s Klein said.
Evolution now boasts a market cap operations totalled $324.4 million over
of more than $4 billion, having been the first nine months of FY2017, allowing “I’m very pleased with where we’re at.
transformed from a sub-$500 million un- the company to wipe $200 million of debt The thing which has opened my eyes
heralded producer at the start of 2015, off its books during that period, with the is just the size of the opportunity which
surging past the likes of Northern Star promise of a “big repayment” to come in I think is still largely in front of us. Aus-
Resources Ltd, OceanaGold Corp, St the June quarter. tralia is the second largest gold pro-
Barbara Ltd and Regis Resources Ltd on ducing country in the world and there is
the Australian gold producer index. “Clearly, the Ernest Henry transaction no reason why we shouldn’t have at least
last year, on the back of the Cowal trans- one of the world’s leading mid-tier gold
However, the job is far from over for action in 2015, has significantly shifted companies [listed on the ASX].”
Klein and he has set his sights on gaining us down the cost curve,” Klein said.
much wider recognition by challenging Evolution formed in 2011 following a
some of the world’s biggest gold players “Evolution is not the lowest, but it cer- merger between Catalpa Resources and
for a place at the top of the sector. tainly is among the lowest cost gold pro- Klein’s Conquest Mining and will soon
ducers in the world. Three or four years celebrate hitting guidance for a remark-
“I often ask investors who they think ago there wouldn’t have been many able sixth consecutive year.
are the best companies in the world – Australian gold producers who were any
excluding Evolution – and the response better than the third or fourth quartile. At the time of the merger, investors
is always Agnico Eagle [Mines Ltd] and/ Evolution certainly wasn’t in the position were sceptical of Evolution’s ability to
or Randgold Resources [Ltd],” Klein told it is now.” maintain a sustainable portfolio, which
Paydirt. comprised four mature mines and the
Klein freely admits Evolution – cur- undeveloped Mt Carlton project in
“Those two companies have delivered rent holder of the Miner of the Year gong Queensland.
over more than a decade, whereas Evo- awarded by Paydirt’s sister publication
lution is probably only three or four years Gold Mining Journal – is further ahead History will show Mt Carlton has gone
into its delivery path, so I think it’s early of where he expected his company would on to become a key plank in Evolution’s
days to say we’re a benchmark. be at this point of its lifecycle. rise, with consistent production from Mt
Rawdon, Cracow, Edna May and Pajingo
Following the addition of the Cowal (sold to Minjar Gold Pty Ltd in September
and Mungari operations two years ago, last year) combining to play a vital role in
the M&A which followed.

“Having a portfolio of assets allows
you to deliver a far more consistent re-
turn than is deliverable as a single-asset
company,” Klein said.

“We now have seven assets and that
really does allow you to deliver a consist-
ency which investors want and which is
very difficult to achieve unless you have a
portfolio because there have been times
over the last six years where some as-
sets have performed better than others.”

Evolution took the unusual step last
year of announcing a three-year produc-
tion and cost guidance, such was the
confidence in its portfolio and the long-
term outlook for gold. The company ex-
pected to churn out 800,000-860,000oz
at $675-720/oz AISC in FY2017, with
820,000-880,000oz at $630-675/oz
AISC forecast in FY2018 and 830,000-
890,000oz at $625-675/oz AISC in
FY2019.

PAGE 58 JULY 2017 AUSTRALIA’S PAYDIRT

Klein said addressing investors’ con- Evolution’s board has approved development of the E42 Stage H cutback
cerns around sustainability of perfor- at Cowal, NSW. Inset: Ernest Henry delivered a negative AISC of $447/oz
mance was critical to driving longer term
success. for Evolution during the March quarter

“I think people have been surprised by scale, it has mine life and it is a province- Prolific North American investors are
the upside in terms of the sector’s – and type opportunity. We think we are still also closely following the company’s
Evolution’s – capacity to deliver cash in the relatively early stages of demon- progress, however, Klein believes the
flow,” Klein said. strating that potential.” chance to jump on the fast-moving
Australian gold train may have already
“In our case, our costs in US dollars are Cowal was added to Evolution’s port- passed for some.
down over 40% over the last five years. folio five weeks after the company
In Australian dollars, they are down over picked up the Mungari operations, near “We have had very good traction from
24%. So while there’s been a significant Kalgoorlie, from La Mancha Australia Pty pre-eminent Australian institutions, in-
improvement in the cost profile in Aus- Ltd. Before 2015 had come to a close, cluding groups like AMP, Colonial and
tralia, the key question investors have is Klein and his team had consolidated Australian Super,” he said.
how sustainable that is. 980sq km of prospective ground around
the project from the takeover of Phoenix “Some of our biggest shareholders are
“At Evolution, we now have an average Gold. Australian pre-eminent institutions and
mine life in our portfolio of over eight I think while there is still an opportunity
years on a reserve basis, not assuming “It’s probably been more challenging for us to engage and attract interest from
any conversion from resources to re- than we understood at the time, but we’re the North American market, I think Aus-
serves. That’s starting to give a level of really enthusiastic about the exploration tralian institutions have been somewhat
confidence to investors that it is sustain- potential,” Klein said. “It’s a new district, quicker on the uptake.”
able and will allow us in time – if we can we’re now getting our heads around the
demonstrate it – to close the gap on en- geology and we are building momentum As Evolution prepares to enter its sev-
terprise value over cash flow.” in what is a new district. enth year, Klein has once again prom-
ised his company – winner of last year’s
Evolution produced 202,926oz across “The key driver is going to be finding Dealer Award – will not deviate from its
its portfolio of assets for a record low a replacement for the Frog’s Leg deposit original aim of being a sustainable, low-
$840/oz AISC during the March quarter, as it depletes, but we’re up for that chal- cost producer that will prosper through
with the company also surpassing the 3 lenge.” any stage of the gold cycle.
moz mark in the three-month period.
Evolution has attracted interest from “It’s about keeping to that strategy and
In February, the company’s board some of the world’s biggest gold inves- not doing what the gold sector has done
approved the E42 Stage H cutback at tors over the last two years, including so many times before, which is lose its
Cowal, near West Wyalong in New South Egyptian billionaire Naguib Sawiris, who head and do some value-destructive
Wales, as well as construction of a dual claimed a 31% stake in the company deals when the sector is in a good
leach circuit in the processing plant. following the Mungari acquisition and space,” Klein said.
played a key role in the subsequent play
Preparatory works for the E42 Stage for Cowal. – Michael Washbourne
H cutback were under way at the time of
print, with material movement planned to
ramp up later this quarter. Engineering
design works for the dual leach project
have also kicked off, with construction
targeted for the December quarter.

Klein said the mine continued to ex-
ceed the expectations the company had
for it at the time of the acquisition from
Barrick Gold Corp in mid-2015.

“Cowal is in a different league, it’s
a very exciting asset,” he said. “It has

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 59

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Ian Murray Gold Road

going back to
the future

W hen you hear Ian Murray prioritise exploration for the year
ahead, you could be forgiven for thinking Gold Road Resources
Ltd has come full circle but the managing director would argue the
company never ceased being an explorer first and foremost.

“We’re a gold explorer with a develop- it a belt with one discovery and over the quite stacking up, the Gold Road explo-
ment project,” Murray told Paydirt last next two years we aim to make a second ration team was unleashed again to find
month. “The advantage is, from the end big discovery. From there we plan to a deposit capable of being developed in
of 2018 when we start generating cash complete the studies on the second dis- Yamarna, one the most remote regions
flow from Gruyere, we will be a self- covery at the same time as making a of Western Australia.
funded explorer.” third big discovery. Eventually, we want a
500,000 ozpa production profile.” That exploration push resulted in the
The comments indicate both the confi- discovery of Gruyere in 2012 and the
dence Gold Road has for its JV with Gold Murray knows his ambitions can seem project has since grown into the largest
Fields Ltd over Gruyere and the esteem wide-eyed but he only has to point at Australian greenfields gold discovery of
in which it holds the remaining 5,000sq Gruyere’s discovery and development as the decade with a reserve of 3.5 moz
km of ground it has across the Yamarna evidence of where thinking big has previ- gold and resource of 6.16 moz.
belt. For Murray, the Gold Road growth ously got the company.
story will not end when Gruyere is com- “Unless you set such ambitious tar-
missioned. Gold Road has controlled the Yamarna gets, you’ll never achieve them,” Murray
belt since 2007, making its first discovery said. “Four years ago, if we said we were
“We don’t just want to be a half owner at the Central Bore prospect two years going to find a 270,000 ozpa deposit we
of Gruyere,” Murray said. “We still control later. Central Bore was taken through to would’ve been laughed at but we did it.”
5,000sq km of ground but we can’t call feasibility study but with the numbers not
The entire gold sector now acknowl-

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 61

DIGGERS & DEALERS

With the Gruyere development in hand, Gold Road has turned its focus back to the drill bit
with a $30 million exploration programme for this year

edges Gold Road is well on its way to re- Fields cannot increase its stake in Gold maiden resource for, such as YAM14.”

alising its early ambitions, a fact ratified Road unless the junior agrees to it or is The work could be defined as near-

by Gold Fields’ willingness to pay $350 subject to a third-party takeover offer, or mine exploration with the goal being to

million for the project last year. the major walks away from the JV. fill Gruyere’s production profile.

The JV has run smoothly since its for- Gruyere’s ownership and development “The aim is to increase the amount of

mulation. The first stage of the Gruyere in hand, Gold Road is now throwing itself material to give us flexibility in the mining

village is now complete and work begin- wholeheartedly back into exploration, plan and smooth out the production pro-

ning on the Anne Beadell borefield. In led by executive director exploration and file,” Murray said. “When we modelled

June, it was announced a JV comprising growth Justin Osborne. Gruyere initially we pushed the cutback

Amec Foster Wheeler and Civmec had The company’s Yamarna belt holdings out to Year 6 because of the debt profile.

won the $298 million EPC contract for are split into three groups; the Gruyere Now that we have no debt, we can bring

Gruyere’s construction. JV ground, the South Yamarna JV with it forward to Year 3 and hopefully include

“All the major contracts are now in Sumitomo and the 100%-owned North Attila and Alaric to stop the profile dip-

“place and we are fully focused on building Yamarna project. ping down. So, those satellite deposits

the project on time can improve both

and on budget,” We have looked at a spin-out for Gruyere mine life and eco-
but we think it is a few steps backward
Murray said in nomics.”
mid-June. The other two

Murray declared project areas are

he was happy with because the challenge for an explorer is you less advanced but
the JV relationship are hand-to-mouth; you have to keep going back with a combined
which sees Gold $20 million com-

Fields manage to shareholders which gets tougher as the mitted to them this
Gruyere’s con- cycle turns. year, Gold Road
struction and Gold intends to lift their

Fields retain lead- profile over the

ership on the JV course of 2017.

exploration front. At Gruyere, $10 million is being spent “We have seven rigs going across the

Gold Fields’ continued enthusiasm for this year on generating satellite material belt but it is a strike length of 150km north

Gruyere was confirmed in May when it for the Gruyere plant. to south; it is a massive footprint in which

paid a 27% premium to acquire a 10% “The focus is on drilling out the inferred to be chasing new gold camps,” Murray

interest in Gold Road. material at depth and converting the Attila said. “There are a lot of areas where we

“We agreed to Gold Fields acquiring and Alaric deposits into reserves,” Murray have never been drilled into the bedrock

10% when we signed the JV but it has said. “There are deposits in that area which before but are known to contain gold

taken them until now to find a block of used to have resources on them but are anomalism.”

shares to buy,” he said. no longer JORC-compliant and there are Gold Road’s exploration team spent

Under existing arrangements, Gold also new prospects we hope to produce a the first two months of 2017 ranking

PAGE 62 JULY 2017 AUSTRALIA’S PAYDIRT

Gold Road general manager exploration John Donaldson (left) and resource geologist and cash flow on the horizon, Gold Road
Kyle Prentice analyse the core at Gruyere can afford to go it alone if it desires.

Founding Gold Road Ziggy Lubieniecki examines RC samples “In 2017, things are totally different to
five years ago,” Murray said. “We have
and prioritising 138 targets along the “South Yamarna has a $3 million got Gruyere and cash and want to retain
Yamarna belt, with the three exploration budget but we think that is too small,” 100% of North Yamarna and at least 50%
teams competing to win their share of ex- Murray said. “We set that budget before of South Yamarna. We don’t even need a
ploration funding. we did the Gold Fields deal, at a time JV partner for a second project. Before
when we thought we’d have limited cash finding Gruyere we hadn’t developed a
Gold Road has a toll-treating and in- for exploration. We are now speaking with project before, we didn’t have the skills
frastructure agreement in place with the Sumitomo about increasing expenditure.” and we had a small market cap. Gruyere
Gruyere JV but Murray is clear that the is changing the company’s risk profile;
main focus is not satellite deposits. Osborne and his team is keen to see we have built up our skills set and with
the South Yamarna budget expanded cash flow generated through Gruyere,
“The aim is to find more plus-1 moz with the Mt Carlon camp-scale target – a the balance sheet will be transformed
gold deposits along this belt,” he said. 10km by 10km greenstone belt west of from where it was five years ago.”
Yamarna – looking particularly enticing.
In the North Yamarna project area, Gold The new-found strength is something
Road is spending $15 million this year on “Greenstones are what we are looking Murray is determined to hang on to, de-
the first concerted bedrock drilling. Five for and South Yamarna has the largest spite the temptation to create greater
targets have been identified with a dia- share and therefore better potential than value through corporate deals.
mond rig and a RC rig currently drilling in North Yamarna so we should have a se-
an effort to progress at least one to re- rious exploration budget there,” Murray “We have looked at a spin-out for
source definition stage this year. said. Gruyere but we think it is a few steps back-
ward because the challenge for an ex-
In parallel, a new round of reconnais- A $30 million exploration war chest is plorer is you are hand-to-mouth; you have
sance aircore drilling has started to gen- a far cry from 2012 when Gold Road was to keep going back to shareholders which
erate the next quota of bedrock drill targets. forced to partner with Sumitomo in order gets tougher as the cycle turns,” he said.
to keep its South Yamarna tenements in
At the South Yamarna JV, Gold Road good state. Now, with cash in the bank “For the first time, Gold Road is a self-
is set to negotiate with partner Sumitomo funded explorer and to separate would be
to increase the $3 million budget for 2017. to go back to a very different structure.”

It would also mean sacrificing some
of the institutional investors currently
arriving on the share register. North
America has been a fertile market for
Gold Road with some 40% of its share-
holders domiciled there. Murray now ex-
pects to see more Australian institutions
arrive as Gruyere nears production.

“I expect about six months out we will
start seeing them come on,” he said.
“Our story now appeals to the super
funds because we have the potential to
pay fully-franked dividends due to the
fact we have no debt.”

And, if further discoveries lead to more
developments, the company has the
chance to join Australia’s gold mid-tier.

“There is no other company out there
which can offer 500,000 ozpa off the
back of organic growth,” Murray said. “It
may take us 5-10 years to deliver that
but getting Gruyere into production is the
base to start from.”

The Australian gold mid-tier has be-
come crowded in recent years thanks
to the success of Evolution Mining Ltd,
Northern Star Resources Ltd, Saracen
Mineral Holdings Ltd, Resolute Mining
Ltd and others. Murray believes their
success has been beneficial to the entire
domestic gold sector.

“All credit must go to the Aussie pro-
ducers for getting Australian gold com-
panies back on the radar. Five years ago,
the North American funds looked at Aus-
tralia as a high-risk, high-cost jurisdiction
but those companies are showing they
can perform and the entire Australian
gold space has benefitted.”

– Dominic Piper

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 63

“We are passionate about He may not be a writer, designer or architect but
resources because most of Karl Simich has no doubt whatsoever that Sandfire
all we like creating things – Resources NL is in the creative industry.
not just commercial rewards
but also educational and done things. Whether they pay dividends and undertake DeGrussa – which makes the
training opportunities, are shareholders, financiers aggressive organic exploration – deposit an obvious candidate
community upliftment, value or off-take customers – we it’s a pretty good story!” for development.
for shareholders, and in the have flourishing long-term
process generating royalties and relationships with all of them. That story has put Sandfire in a “Having a combination of
taxes for government,” Simich position from which it can begin like-minded people with
says. “We are always innovating “And, we have transformed a planning for a new generation of complimenting skill-sets who
and challenging ourselves.” junior with a $4 million market production. can combine and work together
cap to a $1 billion mid-tier as a team in a diligent and
Simich – who started his career mining house. The first growth initiative is disciplined way – that’s our IP
as a wide-eyed accounting already in motion. In April, and it takes a lot of time to get
graduate working in the audit, “We will be celebrating five years Sandfire announced a highly that right.”
corporate services and, briefly, of production at the end of June attractive feasibility study
the insolvency business – is still
fascinated by an industry he
joined during the dark days of
the 1987 stock market crash.

“I love the dynamics of the
mining industry. It’s wonderful
to see all of these different
disciplines coming together
to find a solution and build a
project.

Simich has been involved in
nine mine developments over
30 years in the industry, but few
can compare with the success
of Sandfire’s DeGrussa copper-
gold mine in Western Australia’s
Doolgunna district.

Discovered by Sandfire’s own and, in that period, DeGrussa for its 70%-owned Monty Simich does not expect
exploration team in 2009, has generated some $2.5 billion copper deposit, 10km east of Monty – which is scheduled
DeGrussa was fast-tracked in revenues and $1.2 billion in DeGrussa. The study confirmed to begin commissioning in the
through development and by pre-tax operating cash-flow – all a mine plan of 800,000t @ latter half of 2018 – to be the
2012 the mine was in production. against the backdrop of a falling 9.4% copper and 1.5 g/t gold end of Sandfire’s existence in
Since coming on-stream, it has commodity market. could produce 70,000t copper, Doolgunna.
produced 321,000t copper and 21,000oz gold and 288,000oz
184,000oz gold. The success of DeGrussa has silver over a three-year mine life. “From an exploration point of
also allowed it to repay all of its view we have only just begun
In the process, Sandfire and debt (around $400 million) and Capital development for Monty and the best place we could
Simich have silenced a number pay out 39c/share in dividends is estimated at $70 million possibly make a discovery is
of critics who suggested his over the same period. upfront and Simich is convinced in our own backyard,” he says.
team wouldn’t be able to stick to it is Sandfire’s expertise in “We have the knowledge, the
its ambitious timetable or create “Such has been the cash such developments – as well IP, the experience and the
an operation with any longevity. generation we’ve been able as the project’s proximity to exploration budget best suited
to extinguish all of our debt,
“The last five years with Sandfire
and DeGrussa have been
textbook,” Simich says. “Anyone
in the market would struggle
to challenge the way we have

sandfire.com.au

to making the next discovery in wealth upliftment, community lethargic, if I can put it that way; “But we don’t let those thoughts
this part of the world – and we improvement, employment it was too small for a major and distract us. We have a clear
intend to make it happen.” opportunities and benefits to just couldn’t get the attention it mission and we are focussed
the government in the form of deserved,” Simich says. “The on our goal of establishing
However, for all Doolgunna’s royalties and tax payments. previous owners were running a modern, state-of-the-art
obvious potential – the company It is a great opportunity just out of money and couldn’t see a mining operation in Montana.
has interests in more than smacking you in the face.” clear pathway to development, Throughout all of the mine
5,800sq km of ground in the so it was just going through the developments I’ve been involved
region – Simich is determined “Black Butte has received more motions. It needed an injection in there has been a common
not to restrict the company’s than 53,000m of diamond drilling of positive energy, funding and theme of persistence – a ‘never-
outlook, saying it is highly by Tintina and has a NI 43-101 support.” say-die’ attitude which comes
motivated to use its resources to compliant measured-indicated with having the flexibility and
capture further opportunities. resource of 15.7mt @ 3.4% for The US and Montana is also dexterity to re-engineer the
533,600t copper, making it one considered to have some circumstances to always find
To achieve its aims, the company of the highest grade undeveloped challenges in permitting new a solution. It’s a question of
is beginning to look outside of its copper projects in the world by mining projects, but Simich saying: ‘Let’s change something
home patch. In addition to the grade and, when you include the has found that the State has a here to make it work.”
numerous earn-in agreements inferred resources, not far off $4 well-recognised system and is
in Western Australia, the last billion of in- ground value”. welcoming of and conducive to Adaption is a characteristic
few years have seen it strike new investment. Some sections which has been apparent at
similar ventures in New South “We see a great value of the market may remain Sandfire from the very start,
Wales, Queensland and Papua opportunity here with an unconvinced but Simich is and it is likely to continue as the
New Guinea. But it is Sandfire’s investment cost to date of less unperturbed. company works to assert itself
most recent acquisition, the than three cents per pound of in mining’s mid-tier ranks.
Black Butte copper project in copper.” “When I was at Kimberley
the US state of Montana, which Diamonds we spent 3-5 years “We have a strong share price,
has made the market sit up and Sandfire’s plan is to reinvigorate trying to educate the market. good cash-flow, great banking
take notice of the company’s the project with Sandfire’s It was ground-breaking at the relationships and strong off-
international ambitions. unique brand of enthusiasm, time but investors kept saying: take,” Simich says. “We have
expertise and determination. ‘why do you think you can do got everything we want and
“With our cash-flow, our that?’ It was a kind of tall poppy need to have in an organic
strong balance sheet and “When you are looking at a new syndrome and we saw it again sense. We are in a wonderful
our wonderful team, we are opportunity you need to have with DeGrussa and perhaps a position, having now laid the
in an ideal position to look three things – an asset, the little bit now with Black Butte. groundwork to put ourselves
at a multitude of growth people and the money,” Simich there.
opportunities,” Simich says. says. “Sandfire obviously has the
people and, in my experience, “We like to think of ourselves as being
He says the Black Butte deal – the money can always be straightforward and transparent and now
which has seen Sandfire acquire found for the right project. And is the time to get on with the job. The next
a 61% stake in Tintina Resources the Black Butte project is an
(TAX.V:TAU), 100% owner of excellent project. chapter is about to be written.”
Black Butte – came after 18
months of due diligence. So, how did an ASX-listed
company get its hands on it?
“We concluded it was a
wonderful opportunity to create “For a period it was a project
significant value and bring which had become a bit

DIGGERS & DEALERS

Peel-ing in the interest

Aconversation regarding the Considering Apollo Hill abuts Gwalia 13.1% zinc, 780 g/t silver and 49.6% zinc,
potential divestment and with Peel firmly entrenched in New 2.4% lead and 75 g/t silver.
of the Apollo Hill gold project South Wales’ Cobar Basin base metals
in Western Australia turned scene, the latter thought it appropriate to Infill drilling at the near-surface, high-
into something quite different approach St Barbara about taking on the grade T1 lens was expected to be com-
for both Peel Mining Ltd and prospective gold play. pleted at the end of June, with result from
St Barbara Ltd. the 27-hole, 4,000m programme plus ad-
A deal on Apollo Hill did not transpire, ditional met test work to underpin a PFS.
however, somewhat enlightened by what
Peel was chasing, the outcome of St Bar- Tyson indicated the PFS on the T1
bara’s due diligence was to subscribe for lens would be completed by the end of
$3.28 million worth of shares at 20.5c for August, with the likely scenario being an
a 9.6% stake in the base metals hopeful. underground mining operation.

“St Barbara liked us because we are Both underground and open pit opera-
targeted, efficient explorers who put most tions were being assessed at the time of
of our money into the ground, about 80% print.
of our spend goes into the ground,” Peel
managing director Rob Tyson told Paydirt. Whichever option the Mallee Bull JV
(50% CBH/50% Peel) proceeds with,
“St Barbara did a bottom up assessment Tyson said a small scale start-up re-
of us in terms of our risk. There isn’t a lot quiring a low capex was desired.
of risk associated with us; Mallee Bull un-
derwrites the investment thesis. Wirlong, Having CBH’s Endeavour mine and fa-
then Wagga Tank ticked all the boxes in cilities in close proximity means Mallee
that part of the world, which has scale. Bull material can be trucked and pro-
cessed there, giving Peel an opportunity
“I think it was also a grade strategy for to spin some cash at a reasonable cost.
St Barbara, with Gwalia being high-grade,
Peel has potential for small to medium Initially, the plan is to start small and
tonnes, but high-grade [base metals] po- stage Mallee Bull’s growth progressively
tential on a global scale, with potential for in a region coming in for some attention
larger scale [project size] also. St Barbara once again.
is spinning a lot of cash and for $3 million
for 9.5% [it represented a good opportu- The attraction to the Cobar Basin
nity]. has been potentially landing CSA-style
copper mineralisation and while the idea
“It has been great for the profile of the and riches are enticing, acquiring ground
company, no doubt. It has opened a lot of in the region is not easy.
doors and I have fielded calls from people
who didn’t necessarily know much about Peel has a large footprint on free
Peel, but whose interest spiked from St ground in the region and appears to be
Barbara’s interest. the partner of choice.

“They are willing to bank-roll explora- In addition to the Mallee Bull JV,
tion and have made that clear; they also JOGMEC has already spent about $5.5
have the technical capabilities of under- million of a $7 million farm-in to earn a
ground mining and are happy to share 50% stake in the 2,500sq km Cobar Su-
and be involved.” perbasin project, which hosts the Wir-
long copper discovery.
The potential to tap into St Barbara’s
expertise adds another string to the bow Drilling at Wirlong was ongoing at the
for Peel, which calls CBH Resources time of print, with one of the better in-
Ltd – a wholly owned subsidiary of Ja- tercepts to date returning 4m @ 1.33%
pan’s Toho Zinc Co. Ltd – partner at the copper from 699m, 17m @ 4.59% copper,
Mallee Bull copper-silver-gold project, 8 g/t silver from 738m and 5m @ 0.62%
near Cobar. copper, 1.05% lead, 2.22% zinc and 15.9
g/t silver from 780m.
Mallee Bull is the lead project in Peel’s
portfolio, with best intercepts of 13.5m JOGMEC sees obvious potential at
@ 21.1% zinc, 14.1% lead, 268 g/t silver Wirlong and has extended its budget,
from 82m from the T1 zinc-lead-silver with the next work programme being
lens reported recently. planned at the time of print.

Final assays were yet to be received at “The whole trend is tens of kilometres
the time of print, with preliminary met test
work also encouraging for the company long, it is fair to say,” Tyson said.
– 90.3% zinc, 92.3% lead and 82.3% “We have been focusing on a 2km
silver producing separate lead and zinc
concentrates grading up to 55.6% lead, strike at the Wirlong prospect area it-
self; it is outcropping volcanic and sedi-
ments. They have been sheared and
formed with chloride alteration at surface
in terms of iron-rich alteration, bleeding
lead and copper.

PAGE 66 JULY 2017 AUSTRALIA’S PAYDIRT

“We had a very good hit of 17m @ 4.6% Peel has sown up a large portion of the free ground in the Cobar Basin, NSW
copper and we have been following that AUSTRALIA’S PAYDIRT JULY 2017 PAGE 67
up. We have a downhole EM conductor
that we are targeting at the moment. We
are not quite sure what is going on there,
but we will find out shortly. This system
has got some really good copper min-
eralisation – classic Cobar-style – quite
similar to Mallee Bull, but a much bigger
footprint. It certainly ticks the boxes when
you look at CSA-style [mineralisation].”

Wirlong is shaping as a longer-term
project, with Tyson indicating JOGMEC
would like to divest its interest, potentially
to a Japanese corporation, at some point.

While the fate of the Cober Superbasin
and Mallee Bull projects do not solely
rest with Peel, Wagga Tank does and is
the final part of a three-pronged attack
being rolled out in Cobar.

Rain events have stifled Peel’s earlier
attempts to get busy on the project this
year, however, activity was cranking up in
June, Tyson said.

Peel’s drilling programme at Wagga
Tank will be the first since 1989, with
significant intercepts to follow up on at
the polymetallic VHMS style deposit in-
cluding 27m @ 10% zinc, 6.41% lead,
89 g/t silver, 0.42 g/t gold, 0.21% copper
from 240m including 10m @ 19.39%
zinc, 12.35% lead, 171 g/t silver, 0.67 g/t
gold and 0.3% copper.

“Wagga Tank is ours 100% and we can
march to our own beat there and we have
the ability to do our own thing,” Tyson said.

“Mallee Bull is obviously the one that
we want to move to cash flow, if possible,
as soon as we can. I’d hope that by this
time next year we might be well and truly
on the way with all the permitting and ap-
provals process and possibly by the end
of next year making moves to break dirt
[at Mallee Bull].”

In the meantime, Peel will continue to
look at opportunities to offload Apollo
Hill, while hoping the market starts to
recognise the potential the likes of St
Barbara, CBH and JOGMEC have been
attracted to.

But, Tyson won’t be holding his breath.
“We have the knowledge of the Japa-
nese and CBH and now St Barbara’s un-
derground knowledge too,” he said.
“We certainly did get a pick-up on the
back of St Barbara’s interest, but inves-
tors are a bit goldfish-like; they tend to
have short memories. I don’t think there
are many true investors out there, lots of
traders, not many people that go along
for the ride. In saying that, our largest
shareholder Josh Pitt is the best investor
you could ever ask for.”

– Mark Andrews

SEPRO MOBILE
MILL PLANT

• Fourth generation mechanical design • Installation and commissioning two weeks
• Industry best practice gravity • Civils – Compacted gravel or concrete pads
• Reduced EPC
recovery design • Expansion by additional grinding
• Delivery five to six months
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Sepro Mineral Systems Corp. [email protected]
Australia +61 (08) 9245 4514
seprosystems.com
Canada +1 604 888 5568

A fast, simple, proven gravity
gold recovery plant on wheels

The challenge The process Banks Island Gold followed a similar path in
Northern British Columbia, Canada at their
Defining the grade of a “nuggetty” gold deposit Gravity recovery can mean different things to Yellow Giant project which comprises a dense
by drilling can be costly, time consuming, and can different people. The mobile mill flow sheet is media pre-concentration plant followed by a
lead to years of non-action where there may be a very much the modern industry standard for free Sepro mobile grinding and gravity and mobile
very viable project. One of the main challenges of milling gravity gold recovery processes. It com- flotation plants. Banks Island Gold processed
confidently defining a resource is the size of the prises three main components. A mill to effect over 30,000 tons of ore and recovered over
samples taken by drilling. The larger the sample, gold particle liberation; a cyclone to effectively 7,500oz of gold and over 24,000oz of silver over
the higher the confidence and with nuggetty gold retain gold in the circulating load and a Falcon the first five months of operation in early 2015. A
deposits, large samples (lots of drill holes) are crucial gravity concentrator to upgrade the gold into a dense media separation circuit which pre-
to de-risk the large upfront preproduction capital costs. high grade small mass concentrate stream which concentrated the mill feed allowed the reduction
can be effectively treated in downstream pro- of the subsequent fixed plant size. DMS can be a
The mining industry is fraught with uncer- cesses to produce gold Dore. The plant also very complimentary addition to the mobile mill
tainty, large capital requirements and exposure includes pumps, piping, screening and automation concept especially in sulphide ores.
to commodity price fluctuations. So how does to create a completely mobile processing plant
one get around the paralysis of perpetual drilling on a single trailer controlled via a containerised Vulture Peak gold in Arizona have also had
campaigns required to define a resource with MCC and control room. success with their gravity only plant. The plant
enough confidence to build a large fixed plant?
The best way is to take a bigger sample. Prefer- Vibrating Sizetec Screen
ably a sample big enough that it helps to more
accurately define or confirm the expected grades To Flotation
and recoveries and may even generate some cash or Leach
flow. One of the best ways to do this is to start
mining and processing. New Mill Feed

Early production options Ve r t ic a l Falcon
Tank Concentrator
Toll milling is one route to early production. It Pump
can be attractive if there is an existing mill with
excess capacity close by and the parties can Tyre Drive Ball Mill Scats To Gold Room
come to a workable commercial agreement.
Hopefully the ore contains enough gold to pay The early adopters has been operational since early 2016 and
the mining, haulage and processing bills with a comprises two stages of gravity recovery. One in
bit left over at the end for the operator. A few companies have already embraced the the mill recirculating load and a scavenger Falcon
approach and realised the value of the mobile on the cyclone overflow stream.
Then there’s the DIY option – pulling together concept. Hemco Mine in Nicaragua run a 125
a process plant from a combination of new/refur- tonne per day gravity, flotation process plant and Fourth generation mobile plant
bished equipment hopefully yielding a small, low have been operating their mobile processing
cost, fixed plant in a short space of time. This pro- plants since 2013. Hemco are also utilising Sepro’s Through the installations of these plants around
cess is generally difficult to get right without the intensive leaching system (SLR) to improve the the world, Sepro have refined the design of the
assistance of professional engineers, metallurgists secondary recovery of the gravity and flotation mobile plant and added some new features to
and the associated costs; not to mention the risk of concentrates. The SLR3000 is a simple, effective make the plant even faster and simpler to deploy.
undetected problems often inherent to old equipment. intensive leach reactor which has a nominal
batch size of three tonnes of gravity concentrate. Sepro’s fully wireless automation package now
The trial mine is a tool which some West It operates as a stirred tank during leaching which eliminates the need for any field instrumentation
Australian miners have used to get production up gives industry leading leach kinetics. At the end wiring. This saves skilled labour requirements for
and running and as an early stage proof of of the leach batch it turns into a sand filter which the installation. Skilled electricians don’t come
concept. The option to mine and process 30,000 delivers clear pregnant solution to electrowinning. cheap and this addition has the potential to save
tonnes may in some cases make a viable stand- even more time and cost in the site installation.
alone business case, if the gold can be extracted Sepro Mobile Mill Plant at Banks Island.
cheaply either through toll agreement or a The flowsheet has been proven to be robust and
simple, small scale process plant. other changes have been around improving the
ease of installation and maintenance of the plant.
For small scale remote applications like these
a completely mobile processing plant can be a About Sepro
game changer, especially if the ore is expected to
have high gravity recoverable gold content. The Sepro started out life as Falcon Concentrators
plant is relatively low cost to get up and running and has grown to supply a range of mineral
as there is little required in the way of site civils processing solutions for various applications.
work and pre-engineering. The plant is towed to Falcon is still the heart of the organisation and
site on a trailer and chocked into place on level gold recovery and processing is a core part of the
compacted ground or concrete slab using the business. Sepro aims to offer simple, effective
hydraulic footings. With power and water ready solutions for mineral processing applications
for connection, the plant can be up and running around the world.
in a matter of days. It is also a fully mobile asset
which is material for the residual value of the
plant at the end of a project.

DIGGERS & DEALERS

Independence day of reckoning

The company’s development pipeline That moment also coincided with the Peter Bradford
may be thinning but Independence underground mining cycle heating up
Group NL managing director Peter Brad- again and also Barminco’s ramping up Bradford has long-maintained the deal
ford will not be distracted from the job at at the Northern Star [Resources Ltd] for Sirius was about more than just Nova
hand; completion of the Nova nickel pro- Kalgoorlie operations.” with the company’s landholding in the
ject’s ramp-up to full production. Fraser Range proving an added attraction.
Issues were rectified at the end of IGO has since doubled down on its Fraser
Nova is expected to achieve nameplate the December quarter with Barminco’s Range bet, increasing its tenure on the
capacity this quarter but with one site management and supervision belt to more than 12,000sq km.
development complete and another, the strengthened, employee numbers
Stockman base metal project in Victoria, increased and equipment fleet expanded. It is from this ground IGO would like to
recently sold, Independence’s growth refill its development pipeline.
profile looks relatively flat. “They [Barminco] have recovered
well and if there was a prize for the best “The first prize [for development]
“In the pipeline we have got some recovery among contractors in 2017, would be leveraging off our ground and
very early stage exploration and at they would win it.” exploration on the Fraser Range and
the other end we have just put Nova creating a camp of projects which would
into development and sold Stockman,” With underground development steady, be truly company-making,” Bradford
Bradford told Paydirt. “There is nothing focus has now switched to ensuring the said.
in the resource/feasibility study stage so plant is full and capable of running at the
we have a bit of work in front of us to fill 1.5 mtpa nameplate capacity. “We have accumulated 12,000sq
that. km of ground around there and it will
“Up until now we have been running receive the lion’s share of our $50 million
“We have made no secret of the fact the plant on a campaign basis but in the exploration budget for FY18.”
we want to continue to find opportunities June quarter we began transitioning to
to grow the business but the total focus continuous operations and expand in the Exploration success in the district has
for now is on the Nova ramp-up; M&A will September quarter. been limited since Nova’s discovery but
come but not just yet.” Bradford believes the belt is still in its
“It is only now that we are getting the infancy.
The company’s takeover of Sirius first opportunity to do the tweaking you
Resources and its Nova project is would normally do at the start. It will be “There is a lot of methodical work to
evidence corporate activity holds no an invaluable learning curve on use and be done at this stage of a new mineral
fears for Independence (IGO). Many blend of reagents to get the concentrate field,” he said. “There are a lot of studies
commentators were sceptical about right and we are going through that at the to show just how long it takes to make
the deal given the ambitious acquisition moment. Nothing we have seen so far discoveries; an average of seven years
came with a hefty $1 billion price tag says we won’t be able to resolve issues for gold and 20 years for copper. The
but Bradford is satisfied the investment fairly easily.” fact we haven’t found another deposit
will quickly generate a return once on the Fraser Range doesn’t make it
nameplate capacity is achieved. If the schedule is achieved, Nova will infertile. Nova was only discovered
be generating its average annual output in 2011/12. Since then we have gone
“The outcome from the current of 26,000t nickel and 11,500t copper through a commodities downturn which
development will repay the investment and by the end of the year, giving IGO the has meant juniors have been unable to
the opportunity we have given ourselves incentive to increase efforts to restock raise the money needed for this kind
is to accelerate Fraser Range and give the development pipeline. of exploration; it just hasn’t been done
ourselves the potential to discover another justice.”
Nova or extensions of it.”

Whether Nova will repay the investment
will begin to become apparent from the
end of this quarter when the first full-
capacity production results are released.
Bradford said despite a wobble at the
end of 2016 when underground mining
contractor Barminco fell behind in its
development rates, Nova was still on
target to hit nameplate numbers this
quarter.

“Although Barminco has done a
consistent job sticking to the schedule,
we did have a setback earlier in the
financial year over a loss of critical
development advances,” he said. “It is
always a challenge when you begin to
move from a single decline into multiple
developments. The workload expanded
and Barminco missed the timing of
when it should’ve been gearing up.

PAGE 70 JULY 2017 AUSTRALIA’S PAYDIRT

IGO started transitioning the Nova plant to continuous operations during the June quarter

IGO’s FY18 exploration plans should All-in cash costs rose from $1,051/oz payability to all three commodities,”
go some way to resolving the lack of to $1,229/oz as the JV worked to unlock Bradford said.
exploration. The company already has higher grade ounces for 2018 and 2019.
some drill-ready targets which are set Bradford said exploration expenditure Further expansion is not on the agenda
to be tested this year. In parallel, further would also be reduced this year. at the company’s Long nickel mine in
aircore drilling and geophysical surveys Kambalda however.
will be conducted to ramp up target “IGO contributed $10 million to
generation. exploration last year but the high-cost A solid producer for nearly 40 years,
work around the pits has stopped and Long’s reserves give it less than two
“Some prospects have been advanced this year our contribution will be about $5 years to run. IGO has launched a new
to drill-ready status and we will have million,” he said. exploration push but Bradford explained
some RC and diamond drilling of those any success wouldn’t translate into
advanced targets this year. In conjunction, The larger exploration expenditure immediate mine life.
we will do some geochemical work, came in anticipation of pit expansion
some airborne geophysics and follow-up studies to feed the expanded 7.5 mtpa “These are bigger picture targets and
ground geophysics to build the layers up Tropicana mill. Bradford said with the mill it is unlikely they will be progressed
to drive discovery.” expansion now successfully completed, within the remaining mine life so there
exploration would be dedicated to will inevitably be a period of care-and-
IGO has swept up a number of junior pushing out the mine’s existence. maintenance,” he said. “But what a
explorers along the Fraser Range, remarkable mine it has been.”
believing its control of Nova gives it “Anything beyond the current size
unparalleled advantages when hunting would require a major capital spend and Once geophysical surveys and early
for new orebodies. there is no need for that unless reserves drilling is complete, IGO will decide on
are dramatically expanded. So, the focus the best strategy to pursue at the mine
“We have already got Nova and have is largely on extending mine life,” he said. which essentially launched the company.
a team there doing work to understand
its signatures to help with that next Nova and Tropicana represent the “There are other potential options but
discovery,” Bradford said. Tier 1 assets in the IGO portfolio but we would be better to understand the
the company’s other mines remain solid regional targets ourselves first and then
Further work is also needed on the contributors. decide whether we are best or someone
Nova mining lease itself. Sirius’s regional else more focused and hungry,” Bradford
exploration funds were quickly diverted to The Jaguar base metal operation will said.
the Nova deposit drill-out and a number never be a world-beater but the recent
of prospects remain untested. uplift in zinc prices has meant it has The latter was the option chosen for
enjoyed one of its better production IGO’s Stockman base metal project in
“There was EM completed but the years. Victoria which was sold to CopperChem
majority of the conductors were not Ltd in a $47 million deal last month.
drilled. A key programme is to drill “The uplift in the zinc price has helped
them and also undertake 3D seismic Jaguar at a time when we are in the “We think CopperChem is the right size
to generate more targets on the Nova bottom of the Bentley underground mine of company to take Stockman on and
lease,” Bradford said. “We did some 2D where we find lower grades; it has been can focus on the opportunity to unlock
seismic in February and the results were very welcome,” Bradford said. its potential,” Bradford said. “We retain
very good. Those targets will be drilled in a royalty so we had to do a lot of work
the 2018 calendar year.” Zinc’s improved outlook has also to convince ourselves that CopperChem
fuelled development considerations at
Away from Nova, IGO is juggling the Jaguar where a feasibility study is under was the right company.”
demands of assets at various stages of way for the development of the Triumph It looks like the sign of a maturing
their life. deposit. IGO is also investigating a new
flowsheet to produce separate copper company prepared to walk away from
At Tropicana – a 30/70 JV with and precious metals concentrates. a project which is not quite the right fit.
AngloGold Ashanti Ltd – production The next step towards full maturity will be
fell 20,000oz in the March quarter to “We are looking at producing a separate uncovering the next Nova or Tropicana
99,884oz due to planned lower grades. gold-silver concentrate, thereby cleaning for the portfolio.
up the copper concentrate and adding
– Dominic Piper

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 71

DIGGERS & DEALERS

Strike embraces rig challenge

Strike Drilling currently has more work Strike Drilling has grown into a seven-rig business since founding in 2014
on its plate than it can handle, but
managing director Richard Bennett is not No job is considered too challenging “Everyone wants an edge, but I think
complaining. for Strike, with the company recently the key thing is making sure you’re
completing an extensive drilling efficient with what you do and how you
Those who know Bennett, well will programme for Sipa in the Great Sandy do it,” he said.
attest to the fact he is never one to shy Desert for the second year running.
away from a challenge and this approach Striking the right balance between
has helped him become one of the Strike deploys units such as the completing a drilling programme and
industry’s success stories. X350 track-mounted drill rig – winner keeping the costs down is a conundrum
of last year’s Golden Gecko Award for Bennett and his team are often faced
With exploration picking up over the last environmental excellence – to complete with. Bennett said his company is often
12 months, many companies have turned these jobs, among other innovative referred to as one of the most expensive
to Bennett and his Perth-based company equipment. drilling contractors in the game, but he is
to punch holes into their projects, including not fazed by that tag.
some on rather tricky terrain. “We’ve invested heavily into these
track machines that are purpose-built “We know we’re at the upper end of
Strike’s client list already boasts some and of high capacity,” Bennett said. the pricing structure when we go out to
big names, including Western Areas tender, but all our rigs are fully utilised
Ltd, Gold Fields Australia Pty Ltd and “Companies have backed us, but we’ve and we’re finding it tough to keep up with
Independence Group Ltd, and the list is backed the industry too. We’re in our third the work because of our size,” he said.
growing by the week. year now with some of these companies
who were keen with this concept when “It’s about us being efficient and
“We’ve got way more work than we we first put it out there on the table.” keeping it tight at the back-end of our
can actually handle, so we’re picking business. There’s no room for waste.
out clients carefully and looking after the For Bennett, not much has changed for Those efficiencies allow our margins
existing ones,” Bennett told Paydirt. drilling firms in terms of the requirements to be better, but on the other hand we
of the jobs at hand despite the recent have to be a cost-effective and profitable
“There’s a really big push on for aircore influx of new technologies and other group to keep putting new gear on the
and grassroots/greenfields exploration. innovations designed to make the ground and to pay it down.”
We’re putting a fourth rig on the ground industry more efficient.
now that does high capacity aircore Bennett is confident the exploration
which is able to go deeper than traditional “They want you to be productive, but industry is in a much healthier state than
aircore rigs have been able to go. We’re they want you get on with it,” Bennett said. when he founded Strike back in 2014,
backing it all the way.” but there is one thing missing which he
“Safety is also really important. You knows will confirm the worst is over.
Bennett established his reputation can put the best gear on the ground, but
in the industry through Peak Drilling if you have the wrong guy hanging on to “I’m dying to see some new discoveries,
Services in 2000 when the resources the levers, there can be a lot of hurt for it’s what the market needs,” he said. “We
sector was on the nose. Eight years both the client and yourself.” need a bit of positive sentiment, that’s
on, at the top of the market, he sold his what gives everyone a kick, whether
booming business to Transfield Services Bennett said mining companies and they’re a geologist or an investor or a
Group and took a break from drilling until drilling contractors were both driving contractor like us.”
he unveiled Strike in 2014. innovation, but he sounded a warning to
industry not to get too carried away with – Michael Washbourne
History shows Bennett founded Strike some of these new technologies.
as the market was once again bottoming
out, but his tenacity allowed him and his
team to enter a shrinking services sector
with great success.

“Look at Warren Buffett; he buys low
and gets out high,” Bennett said.

“We can buy equipment well priced
and on time, rather than being on the
back of a 12-month waiting list when the
market starts to fire. You obviously don’t
know when that will be when you start,
but you back yourself in.

“It can’t stay low forever, commodities
are always going to be needed. Lithium
is kicking off; that’s a market we didn’t
have when we started, so that’s been a
good shot in the arm.”

Other clients on Strike’s books include
Encounter Resources Ltd, Pilbara Minerals
Ltd, Ramelius Resources Ltd, Latitude
Consolidated Ltd, Sipa Resources Ltd
and Cliffs Natural Resources Inc.

PAGE 72 JULY 2017 AUSTRALIA’S PAYDIRT

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DIGGERS & DEALERS

Tight future tipped for potash plays

Only two Australian-based potash pro- if you have to pay a couple of hundred couple of decades has been growing at
jects are likely to get off the ground, dollars per tonne just to get it to port, 2-3% per year, whereas the staple crops

according to one of the country’s leading you’re really taking the fun out of it,” such as your wheat and rice are growing

agricommodity marketing and sales Erwin said. at just under 1%, so we’re seeing slightly

experts. “I’ve been involved with a couple of faster growth rates in the crops which

A host of ASX-listed companies – phosphate projects here in Australia use SoP, which is also a good underlying

including Agrimin Ltd, Kalium Lakes with ASX-listed companies and they’ve demand thematic.”

Ltd, Centrex Metals Ltd, POZ Minerals all been challenged by logistics. They’ve Kalium Lakes managing director Brett

Ltd and Australian Potash Ltd – are been a little bit too far from the coast, Hazelden agreed.

developing potash or phosphate projects given the market price at the time, and “We’ve had some existing investors top

in Western Australia and the Northern I don’t think that really has changed up and we’ve had some new investors

Territory, with prices for both reasonably much.” come in as well,” Hazelden said. “We’re

favourable at the moment. Erwin said Australian investors tended actually getting approached now by lots

However, sales and marketing to favour homegrown potash/phosphate of other people wanting to know more

consultant Mike Erwin believes the plays because “they don’t really seem to about the company and when the next

market is not big enough for all of those understand overseas fertiliser projects”, potential raise might be. It’s a good

companies to become producers, putting the likes of Kalium Lakes and sign for the industry in general, not just

particularly among those in the sulphate Agrimin firmly on the radars of some of the potash industry, that investors are

of potash (SoP) space. the country’s biggest fund managers. coming back into the market.

“I think the quality is good, but there’s Both companies have completed “People want good projects, they

probably only one or two [SoP projects] impressive capital raisings in the last usually back good projects and good

that are going to succeed,” Erwin told six months, with Agrimin rattling the management. You can see a lot of prices

Paydirt. “tin for $13.2 million via a placement have bottomed out, but they’ve started
“They’re pushing product into coming up again. Demand for

a very small marketplace and One of the challenges labour is a little bit more, it still
I think they’ve forgotten there for SoP is getting a really hasn’t really pushed any prices
might only be a total world market up, but it’s a good time to be doing
of not even 1mt of a particular good product that somebody business in WA and working with
product, yet everybody seems to will pay a premium for…but if
be considering these projects at people who want to get jobs
the same time.” done.”

Recent success in the potash

Kalium Lakes and Agrimin are you have to pay a couple of space has not been limited to
both in the throes of completing hundred dollars per tonne just the capital markets. Last month,
pre-feasibility studies on their Australian Potash announced

respective Beyondie and Lake to get it to port, you’re really it has signed two non-binding
Mackay projects, both of which taking the fun out of it. MoUs with two Chinese-based
are brine-hosted SoP plays. off-takers.

Erwin, who joined Angolan- Kalium Lakes became the first

focused phosphate hopeful new listing in the agricommodity

Minbos Ltd earlier this year, said logistics and entitlement offer during the March space in many years when it debuted on

was the biggest development hurdle for quarter. Kalium Lakes recently raised the bourse last December. The company

agricommodity projects to overcome. $4.5 million via a placement, having also is run by a number of former Iron Ore

Avenira Ltd (then Minemakers) raised $6 million from an IPO late last Holdings staff and was the brainchild of

abandoned plans to develop the Wonarah year. pastoralist Brent Smoothy, who saw a

phosphate project – 1,300km from Agrimin chief executive Mark Savich niche in the market to tap into.

Darwin port – in 2014 after conceding put the success of his company’s raising “He’s paying a lot of money for potash

there was no practical solution to the down to the quality of the Lake Mackay at the farm gate – about $1,200/t – and

asset’s remote location. project. it’s all fully imported into Australia,”

Lake Mackay is the largest SoP- “Our placement was cornerstoned by Hazelden said.

bearing salt lake in Australia, but is Australian Super and I think generally “It’s been an interesting move into

located 540km north-west of Alice most of the money that came in was for potash, it wasn’t something that was

Springs on the WA/NT border. Beyondie the project,” Savich told Paydirt. big on the radar. Brent identified the

is 160km south-east of Newman, while “Most people understand fertilisers opportunity, got myself involved and then

POZ’s Highland Plains phosphate are becoming more demanding as for two years we worked on getting the

project is more than 200km from the populations grow, arable land is shrinking project to an advanced stage before we

NT coast and Australian Potash’s Lake and SoP is a premium form of fertiliser could IPO it and de-risk it.”

Wells project is about 180km north-east which is better for the environment and Prices for SoP have held firm in recent

of Laverton. just a bit more sustainable because it years in comparison to those for muriate

“One of the challenges for SoP doesn’t have chloride in it. of potash (MoP) products, while rock

is getting a really good product that “The other thing is SoP is used for phosphate prices have also slipped in line

somebody will pay a premium for…but fruits and vegetables, which for the last with the general downturn in resources.

PAGE 74 JULY 2017 AUSTRALIA’S PAYDIRT

Agrimin’s Lake Mackay project
sits on the largest SoP-bearing

salt lake in Australia

Inset: Kalium Lakes has started
building pilot-scale evaporation

ponds at Beyondie

Savich said one of the key questions Kalium Lakes began construction of documentation as well as undertaking
put to him by investors was the impact large scale pilot plant evaporation ponds lab evaporation trials ahead of its
new development projects such as Lake at the Beyondie project last month, with impending PFS, including an update of
Mackay will have on long-term pricing subsequent activities to underpin a BFS its hydrogeological model using data
when they come online. which will follow the current PFS work. collected from last year’s infill drilling
campaign at Lake Mackay.
“Our project is targeted to be around Salts produced from the pilot scale
the fifth largest SoP operation in the ponds will be sent to Germany for Savich said now was a good time to be
world, so I often get asked about the purification testing. advancing a potash project.
ability for the market to take on that new
supply,” Savich said. “We’re making sure we demonstrate “Where prices are today they definitely
we can produce salts on site and actually incentivise new production, especially for
“It really comes down to educating get a product out to a large extent,” the cost structure we’re looking at for our
investors about brine resources and how Hazelden told Paydirt. project,” Savich said.
they differ to hard rock resources. Like
all sorts of resources projects, there are “We pride ourselves on being project “The industry is getting a little bit tighter
risks but I think it’s harder for investors to developers and builders, so instead of from what we’ve seen. During our 2015
understand what are the key risks for a talking about it we’re showing that we and 2016 work programmes, contractors
brines project.” can get out there and do something. and service providers were looking for
We’re out here to make a project happen business and we were getting good rates
Potash and phosphate projects and get it into production.” and good people, but that has definitely
typically carry a high development tightened up in the last few months.
capex, which Erwin said was something In conjunction with PFS work, Kalium
that often turned away investors seeking Lakes is also finalising environmental “Compared to what we’ve seen in the
a quick return on their cash injection. referrals and Native Title agreements for last decade or so, I think it’s still a very
the project, as well as securing all of the good time to be doing exploration.”
“If your capex is going to be a couple of associated mining tenure.
million dollars, you might struggle given – Michael Washbourne
that prices are pretty low,” Erwin said. Agrimin is also been advancing
its Native Title and environmental

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 75

DIGGERS & DEALERS

Searching the shadows of a Legend

Mark Wilson Core samples from Independence Group’s Nova nickel mine. Legend is hoping
to emulate its large neighbour’s discovery
Legend Mining Ltd is hot on the heels
of what it thinks could be its very own Nova nickel mine would yield similar finds. physics we used,” he said.
Nova-Bollinger nickel-copper discovery The Fraser Range is characterised by “Unless another Nova fortuitously
in the Fraser Range.
thick cover that runs about 130km south- happens to be in that detectable depth
The company carried out an aircore west to north-east and is about 40km range, it is going to be very difficult to find
drilling programme at its Rockford pro- wide, so if a treasure is below, it is buried using the same techniques.
ject in April and May, targeting several deep.
areas covered by aeromag, gravity and “I think those techniques are far less
moving-loop EM survey. “Our strategy has almost always been receptive than people think they are.
to apply the best science that we can and People who think they can use EM and
In June, Legend announced drill-hole go off the back of that,” Wilson said. “The see down 300-400m … really it shows
RKAC119 had returned results of 31m @ best science is obviously these innova- you can only see 100-200m, so unless
0.009% nickel and 0.03% copper from tive EM surveys that we do, which we you have got Nova No.2 just lurking not
20m to end-of-hole, including 4m @ believe can define a conductor.” too far beneath the surface, you could
0.14% nickel and 0.06% copper. easily walk across it and not notice it.”
At the time of print, Wilson said a RC
This hole intersected a similar lithology drilling programme was about to be un- But as the adage goes: fortune favours
to that of RKAC068 – just 100m away – dertaken to identify the N1 conductor the bold and a find similar to Nova is
which returned a result of 37m @ 0.1% identified by previous surveys. worth the effort, according to Wilson.
nickel and 0.01% copper from 24m in May.
“[The drilling programme] is planned to On current resource/reserve base, in
The results have now confirmed a go over about three weeks, but experi- excess of 10 years production can be
plus-300m wide zone of anomalous ence in the Fraser Range has told us that expected from Nova, with FY2017 esti-
nickel and copper values. nothing tends to happen quickly or on time mated to deliver 9-10,000t nickel, 3,900-
out there and I wouldn’t be surprised if 4,000t copper and 280-320t cobalt.
However, Legend managing director three weeks becomes six weeks,” he said.
Mark Wilson told Paydirt the project, “If you look at the published feasibility
covering 2,792sq km, still had a lot of un- “The conductor we are about to drill studies from Independence Group [Ltd]
tapped potential. has been identified 500m below surface.” down at Nova, they’ve got a cost of be-
tween $1.50-$2/lb to produce nickel.
“With our EM surveys, we have only According to S2 Resources Ltd man- Even with these subdued prices of nickel,
really touched on 5% of the total project aging director Mark Bennett, mimicking the current price is about $6/lb,” he said.
area to date. We’ve been there about 21 the approach Sirius took in finding Nova
months now and there is still a hell of a may not be the answer. “There is still a tremendous margin in
lot in front of us,” he said. it. It is the quality of the orebody at Nova,
In October last year, Bennett told Pay- both in terms of the grade in nickel and
“It is an iterative process exploring out dirt he was sure there was another Nova the grade in copper and cobalt that goes
there, because no one has invented the waiting to be found, but finding it was a with it which still gives this economic
silver bullet yet, as to exactly what you different ball game. significance, if you can find another one
should do and how to go about it.” with that style of mineralisation.”
“In hindsight, if you look at how we
The greenfield exploration area of the found Nova, if it wasn’t for a particular – Jon Daly
Fraser Range has been causing some part of the orebody, a very small part we
headaches for junior explorers who call the pan-handle, rather than the pan,
thought simply drilling holes near the coming very close to surface, we would
never have detected it with the geo-

PAGE 76 JULY 2017 AUSTRALIA’S PAYDIRT

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DIGGERS & DEALERS

Nifty shift to exploration
for Metals X

Metals X’s gold assets – including Higginsville – are now controlled by Westgold

Warren Hallam “There was a plan to demerge and it was Some 80% of underground costs and
Nifty that created the catalyst and incen- 50% of plant costs at Nifty are fixed,
Almost a year into its ownership of tive to do so.” giving the company an opportunity to
the asset, Metals X Ltd has got the drive down opex by lifting production
Nifty copper operation into a position Metals X’s gold assets were spun out rates.
where the mine can finally start fulfilling into Westgold Resources Ltd with Metals
its potential. X managing director Peter Cook moving “We want to go from producing 24,000
to the precious metals miner. tpa copper to 36,000 tpa and then 40,000
When it picked up Nifty – 40km south- tpa,” Hallam said. “At 40,000 tpa, we be-
east of Woodie Woodie in the Pilbara dis- Hallam pointed to the market cap of lieve we can achieve a $US1.75/lb cash
trict of Western Australia – Metals X took both companies as evidence of the strat- cost with no additional capital required.”
on an operation with reputational baggage. egy’s success.
Metals X reported AISC of $US2.84/lb
“It certainly had baggage,” Metals X “There is no doubt we have created in the March quarter, continuing a three-
managing director Warren Hallam ad- significant shareholder value through the quarter downward trend, but only mine
mitted to Paydirt at the AMEC Conven- demerger,” he said. “The two companies development will bring further rewards.
tion in Perth. “But it was nothing to do have a combined value of more than $1 The company has stepped up its efforts
with the asset itself.” billion where previously it was $850-900 in the first half of 2017.
million. By any financial measure, perfor-
Metals X took significant criticism in mance has been up post-merger.” “This is not capital development work; it
the market for its bid for Nifty; both be- is all about getting stopes online,” Hallam
cause of the asset’s negative reputation The sceptics’ first point satisfied, it is said. “There was so little done under the
after more than a decade of underper- the second argument – Nifty’s worth to previous owners that we have three years’
formance and a perception the company the portfolio – which Hallam is now fo- worth of development to catch up on.
was diluting the gold producer advan- cused on answering. We have set some hefty targets but we
tages it had built for itself. think we can achieve it in the next 12-18
The deal for Nifty brought not only a months.”
Nine months on from completing the 154,000t copper reserve and 713,000t
transaction, Hallam believes the com- resource but major infrastructure in- Increased development rates is a
pany has solved the portfolio problem cluding a 2.5 mtpa concentrator, under- starting point but Metals X will need to
and is now set to counter those sceptical ground mining services and a 3.5 mtpa deliver more longevity if it is to fully re-
about the mine’s value. underground conveyor and crusher. alise Nifty’s worth which will mean con-
verting some of the 713,000t copper in
“Originally, the deal did cause confu- Metals X’s first task has been to en- resources as well as proving up exten-
sion because investors were interested sure the mine can provide the volume of sions and new prospects.
in pure-play gold and base metals com- ore necessary to feed such a plant.
panies, not a combination,” Hallam said. “The target is to get back to a seven
“We know this plant can run at 2.5 or eight-year mine life,” Hallam said. “We
mtpa and so at current production there have already drilled more than 20,000m
is 40% spare capacity,” Hallam said. since we started here, enabling us to
produce a reserve upgrade last month.”
With the spare capacity in mind, Metals
X has spent much of 2017 opening up The upgrade represented a 59% in-
the mine in an effort to drive mining rates crease to reserves, equivalent to an ad-
from 4,500 tpd to 5,000 tpd by the end ditional five years of mine life. There are
of this year and 6,500 tpd by the middle
of 2018.

PAGE 78 JULY 2017 AUSTRALIA’S PAYDIRT

Nifty is currently running at only 40% capacity

further targets to the west and east of By overlaying the various geophysical but if the sulphides stack up there is no
current reserves. datasets – 3D IP, gravity, magnetics and reason why it couldn’t have its own plant.”

“We are far from finished but wanted to seismic, the company is hopeful of iden- Finch and Maroochydore are just the
put out a reserve statement now to show tifying a new generation of prospects. first two of several targets Metals X plans
to test along the 100km of mineralised
how far we’d come,” Hallam said. “We The first to be tested is the Finch strike around Nifty.
will put another one out in September.” target, 10km south-east of Nifty, and in
“This financial year we were a bit slow
After three decades of relative inac- the same geological setting. A rig was out of the blocks with only $5-6 million
tivity on the ground, there is also ample scheduled to arrive on site in the middle spent on exploration but next year the
budget is for $12-15 million and only on
opportunity for more resource discovery, of last month to begin drilling at Finch exploration at Nifty,” Hallam said. “There
particularly given Nifty’s fractured own- while a second rig will arrive at the Ma- are not a lot of acquisition opportunities
in Australia at present so we are better to
ership history. roochydore deposit this month. focus on our existing ground.”
“WMC made the discovery and did all Some 90km from Nifty, Maroochy-
Away from Nifty, Metals X is enjoying
the early work but after Straits took it on, dore already has a 486,000t copper a period of strong margins at its 50%-
they didn’t have the money to do much and 19,000t cobalt resource but recent owned Renison tin operation in Tasma-
nia’s north-west.Renison is currently
exploration and Aditya is a smelter com- drilling into undefined sulphide minerali- producing cash flow of $30 million thanks
pany that wasn’t really interested in ex- sation intercepted 10m @ 2.95% copper to margins around $9,000/t, based on a
tin price of $27,000/t.
ploration and only did enough to comply and 1m @ 9.4% copper, giving Metals X
The first stage of a three-phase ex-
“with the licences,” Hallam said. incentive to undertake further work. pansion project has begun, with an XRT
ore sorting system expected to increase
This financial year we were a bit slow production by 50% to 1,500 tpa tin and
out of the blocks with only $5-6 million reduce AISC to $17,500/t.
spent on exploration but next year the budget
The company has further plans to in-
is for $12-15 million and only on exploration stall a tin fumer plant and build a new tail-
ings dam. It is also finalising its Rentails
at Nifty” retreatment project.

“It means we’ve picked up a 1985 explo- The drilling will include some metal- “We’ve been quite surprised by the
ration target but one which has 30 years’ lurgical holes which will allow Metals X banks’ response,” Hallam said. “Tin has
worth of geophysics on the regional side.” to pursue alternative flowsheets for Ma- had a good run but there are still not a
roochydore. lot of projects in town so it has meant we
Metals X has added to the extensive have been getting a reasonable amount
geophysical database by undertaking a “There was a lot of acid consumption of focus from the financial community.”
seismic survey designed to map altera- in the original feasibility study because of
tion patterns, indicating the sedimentary the carbonate material but we are looking – Dominic Piper
layering and mineralisation. at ore sorting for that,” Hallam said.
“There is still the SX-EW plant at Nifty
“It has been used with great success at which could be used for Maroochydore
both Telfer and DeGrussa,” Hallam said.

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 79

DIGGERS & DEALERS

Ardea hardens cobalt story

Cobalt is the latest commodity to be Matt Painter The attempts by Vale and Heron to
caught up in the electric vehicle rev- bring the KNP into development faltered
olution but unlike lithium and graphite, nickel cut-offs, the task now is to rebuild around excessive capex requirements.
there are a number of cobalt stories those mineralisation envelopes around Painter said a major focus of the PFS
already ahead of the field. cobalt cut-offs and then see how the would be driving down capex numbers.
nickel and cobalt cut-offs interact.”
Their superior positioning has nothing “The metallurgy for the cobalt is not
to do with previous cobalt rushes; rather Painter said the extensive historical a challenge, the technical questions
it is a result of cobalt’s traditional status work on the KNP gave Ardea a massive are well understood. But we know we
as a by-product in copper and nickel- advantage over its cobalt development need to lower the capex and there are
dominant projects. peers. a number of avenues we are checking
out, including variations on processing,
Ardea Resources Ltd’s Kalgoorlie “Without work of the past what we size of operation, finding the sweet spot,
nickel project (KNP) is a case in point. are doing now would be impossible,” he potential for pilot-sized start-up or a
The KNP last caught the market’s said. “This is the best database I have smaller plant to begin with.”
attention more than a decade ago when ever seen. We can go back and pull out
Canadian base metal miner Inco farmed good data and it allows us to do a PFS The failure of the KNP and other laterite
into the Heron Resources Ltd project. for $1 million in 12 months; it is a real projects to get off the ground in the last
The predominantly nickel laterite project advantage.” nickel boom has left many investors
was then advanced by Inco’s successor, sceptical about their economics but
Vale, before the Brazilian mining giant The new drilling was completed in Painter was at pains to point out cobalt
walked away from the project in 2009. June with early assay results from Black was not the only catalyst of the KNP’s
Range identifying a “extensive blanket of renewal.
Nickel prices have stubbornly refused strong cobalt and nickel mineralisation”
to budge much since then, leaving the with results including hits of 10m @ “At current prices, we are looking at a
49.7mt @ 0.12% cobalt and 0.86% nickel 0.12% cobalt and 0.74% nickel, 16m @ 50/50 revenue split – which is the first
resource in limbo and when owner Heron 0.16% cobalt and 0.74% nickel and 10m time that has been the case with this
merged with TriAusMin to acquire the @ 0.21% cobalt and 0.75% nickel. project – but even at current prices the
Woodlawn base metal project in New nickel component makes money.”
South Wales, the KNP was hived off into Painter said the exploration drilling
spin-out company Ardea. programme was largely designed to Regardless of the current travails in the
identify high-grade cobalt zones which nickel market, both metals are linked to
Even when the new company listed, could be incorporated into the PFS. the electric vehicle revolution and Painter
KNP’s cobalt potential did not feature is keen to ensure Ardea gets in at the
heavily in the promotional material but “There is a ridiculous amount of ground floor.
since opening at 18c on February 9, mineralisation throughout the KNP. We
Ardea’s share price has performed well, have defined most of the high-grade “We would like to see it producing as
hitting a high of 70.5c in April and has material and we are now looking at all soon as possible because the world
sat comfortably in the 50-60c range for the different bits and pieces we can bring needs more cobalt and there is not
four months. in, including from the drilling at Kalpini.” much to compare it in project terms. The
infrastructure and logistics are good, it is
“The market reaction has been quite The results will be plugged into a new higher grade than most cobalt projects
amazing,” Ardea managing director resource to be announced this month and it is in a top tier jurisdiction; there is
Matt Painter told Paydirt. “Cobalt was and along with metallurgical results not much more you could wish for.”
mentioned in the IPO prospectus but it from drilling at Goongarrie and Highway,
was not a major thrust. Subsequently, we will be used to formulate a PFS, to be There are fears the suite of battery
had a few people who knew the project completed by January 2018. minerals are at risk of oversupply if new
well asking about the cobalt so we started projects go ahead but Painter sees plenty
doing some back-of-the-envelope figures of slack in the market.
and global comparisons and found it was
really big.” “Over the past six months, the forecast
for EVs has been going up and up,” he
The initial work prompted Ardea to said. “It is not just one or two of the major
reconsider KNP as a nickel-cobalt play car manufacturers talking about EVs; it is
and the company has spent the last all of them.
four months piecing together the cobalt
potential. “I know there are a lot of cobalt
deposits in the DRC but even if they
Work started in late February with a start producing to their maximum it still
PFS into the KNP cobalt zone launched, won’t be enough and if they encountered
incorporating step-out RC drilling the restricted supply that is when a major
Kalpini prospect, resource upgrade price spike will come.”
drilling at Black Range and metallurgical
drilling at Goongarrie, Highway and – Dominic Piper
Black Range.

“All the previous work was built on

PAGE 80 JULY 2017 AUSTRALIA’S PAYDIRT

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SAREIC REVIEW

A AlivelydebateensuedforSAREIC’sspeciallyconvenedenergypanel.Panellists(fromleft)wereJeremy
Schulz, Barry Goldstein, Ian Plimer, Terry Kallis, Rebecca Knol and Greg Allen

more reliable mix vital
for SA energy reform
I t was inevitable energy would become a hot topic for discussion
at this year’s South Australia Resources & Energy Investment SACOME chief executive Rebecca
Conference and a specially convened panel on the subject be- Knol maintained a pragmatic stance in
trayed just how complicated the situation has become. keeping with the Chamber’s recent ef-
forts to secure power supply for member
Last year’s energy crisis plunged much could’ve taken action. We knew there companies.
of the State into darkness and is estimated were a lot of plant closures coming.”
to have cost BHP Ltd alone $137 million She said the 50% renewable target
due to production outages at Olympic Dam. Kallis said the State Government’s was one industry would have to work
50% renewable target was “a fairly blunt around and find workable solutions for.
The State and Federal Governments instrument” given a 20% reduction on
have moved to reassure South Australians fossil fuel reliance could rectify the en- “Everybody is after reliable, secure and
that policies were being set to rectify the ergy security issues revolving around the affordable energy within the constraints
issue but the SAREIC energy panel high- ageing fleet and he remains concerned of a market which has a renewable en-
lighted just how disparate opinions remain. policies will continue to be made based ergy target of 50%,” Knol said. “I think we
on rhetoric, not science. need to get nuclear back on the agenda
Resources industry veteran (and cli- and talk openly about how renewables
mate change sceptic) Ian Plimer pulled “It was a little bit of overreaction but the can be backed up by base load sources
no punches in suggesting Australia had danger is that in the short term, we will of power.”
whittled away its energy security for the have a lot of decisions made politically
sake of ideological dogma. without scientific or technical facts sitting Carnegie Clean Energy has recently
behind them.” expanded its renewable energy busi-
“We have kicked a wonderful own ness to include a microgrid division as
goal on energy,” Plimer said. “We once A solution, he said, would be an energy well as its wave energy technology. Greg
had a very stable, reliable, cheap energy planning council with an independent Allen, Carnegie’s chief operating officer,
system. We have fallen for the three-card board primed to provide politicians with said renewable energy and storage tech-
trick of the greenies. nology was beginning to converge with
“answers to technical questions and pricing to make it more competitive.
“There is no point persisting in a place
where the energy is unreliable; if I had market questions. “Renewables and battery costs are on
an operation here I would sell it and go a downward trajectory at the moment,”
somewhere much more reliable.” We have kicked Allen said. “We are finding the technology
a wonderful piece and the price piece are coming to-
Plimer is not alone in his assessment gether, particularly on solar PV. There is
and many commentators have blamed own goal on energy. more and more coming into the market
the SA Government’s ambitious 50% re- We once had a very and at a price which is competitive with
newable energy goal for the energy crisis. stable, reliable, cheap fossil fuels with or without subsidies.”
energy system. We
However, according to Kallis & Co’s have fallen for the Allen said this was particularly the
Terry Kallis, much of the public debate three-card trick of the case when considering destinations at
had focused on the wrong areas. the fringes or beyond the power grid,
greenies. such as remote mining sites.
“The reality is that our September
blackout could’ve been avoided par- “This industry started out by supplying
tially… if the appropriate response power to cattle stations and it has grown
was undertaken early on,” Kallis said. to the point where it is not unreasonable
“We knew storms were coming and we to achieve 90% annual contribution from
a renewable energy system for a small

PAGE 82 JULY 2017 AUSTRALIA’S PAYDIRT

town. It is a few steps away that we would Terry Kallis also emerging as possibilities thanks to
be able to do that for mine sites as well,” the advances in power electronics.
he said. “giant tariff” on power prices.
Both Kallis and Allen countered this “We run 12 [microgrid] systems where
Batteries are also allowing jurisdictions we’ve taken 12 customers off the grid,”
to smooth out price spikes and inconsist- argument by suggesting all energy was Allen said. “Power utilities came to us
ency in existing fossil fuel networks. subsidised to some extent. and said: ‘If you can take these off in a
more reliable way it will save us on main-
“Batteries are competitive right now “The National Electricity Market is tenance costs of poles and wires to ser-
in a spinning reserve application; either postage-stamped in infrastructure vice them’.
improving the efficiency of existing fossil prices. If all infrastructure was costed
fuel generators or reducing the mainte- properly, prices to rural communities “We are achieving higher levels of reli-
nance costs associated with fossil fuel would treble. If that happened every man ability at much lower costs from their own
generators. In the case of large grid sys- and the dog would look at local genera- standalone power systems.”
tems, they can help remove volatility in tion and solar and wind, etc would be
prices and providing energy security,” competitive straight up,” Kallis said. “ Kallis said he was currently working on
Allen said. a project which was looking at using both
Allen said decentralised grids were gas and renewables.
“There are many jurisdictions using
batteries to keep systems stable. Cali- “People always see that or this but you
fornia has installed 250MW capacity and can do both to make it work,” he said.
Korea uses batteries for all its frequency
controls. It gives you faster frequency re- He also railed against any suggestion
sponse than traditional diesel generation it was renewables which were pushing
back-up and keeps system stable.” up energy prices in SA.

Former SA Mines Minister Roger “It is a fallacy to think renewable en-
Goldsworthy said he was surprised by ergy is producing a bad price,” he said.
the State Government’s pursuit of a 50% “When Northern power station came off;
renewables target as such technology that created a two-speed market. When
could not provide the baseload power wind was running it went from $100/MwH
needed to keep a tab on power prices. wholesale price to $30. Unless you are
Minotaur Exploration Ltd technical di- contracted in the right way and under-
rector Tony Belperio agreed, adding stand it, you are exposed. The issue is
that the national RET scheme was like a it is not getting passed on through the
wholesale market.”

– Dominic Piper

Three hundred delegates joined 24 presenters and 25 sponsors for the 15th edition of the South Australian Resources & Energy
Investment Conference. Despite a tough four years for the sector, it was clear from this year’s even that optimism is slowly returning
to South Australia’s resources sector. Delegate, sponsorship and presentation numbers were up on 2016 and the company stories on
show displayed a level of progress at the junior end of the market which has been sadly lacking in recent years. Paydirt would like to
thank all SAREIC’s sponsors, delegates and presenters – particularly host sponsor, the SA Department of Premier and Cabinet – for

their continued support for this vital event

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 83

SAREIC REVIEW

The SA Government’s Charles Moore debates the future of the State’s exploration sector
with DET CRC’s David Giles, Alliance’s Steve Johnston and Investigator’s John Anderson

Team SA approach the way
Activity in South Australia’s resources
industry has been quiet, particularly just with Investigator but everybody that project, the shallow depth of cover in the
on the exploration front, however, the is out there testing new ground.” southern Gawler on the Eyre Peninsula
opportunity to snag a world-class deposit is right up there. That is what we are used
has seen a handful of companies remain Anderson believes Australia’s next big to in WA – 1-2m of cover – there is also a
loyal to ground held in the State. discoveries are bound to come from SA good base of information in SA which is
leading the charge in testing theories and right up our alley. The other thing is the
Those companies include Alliance Re- developing techniques and technologies, regulatory environment, it is well under-
sources Ltd and Investigator Resources in which the DET CRC is a key player. stood. I know there are some changes
Ltd, both of which have had to deal with happening to the Mining Act, but I know it
regulatory and geological challenges “As we move forward and there is a works pretty well.”
during their time in SA. real sense among universities in the
State that the big challenges we all face With changes to the SA Mining Act
Despite the obstacles encountered, as a state are not appropriate for a single afoot, better access to land has been a
management and directors at Investigator institution to handle,” DET CRC Pro- common narrative in submissions from
and Alliance still strongly believe SA is the gramme 3 leader David Giles said. mining companies and it is certainly an
best place to explore and do business. issue not being shirked by government,
“We are more and more moving for- according to Charles Moore, director of
During the closing panel session at wards with a Team SA approach, which resources, infrastructure and investment
SAREIC, Investigator managing director I think is fabulous as a researcher be- task force in the Department of the Pre-
John Anderson said the State’s explora- cause it means I don’t have to try and mier and Cabinet.
tion sector remained largely geologically do everything myself. Over the next few
immature as interest waxed and waned, years, we hope for that capability to re- While access to land is an issue in
with various geologists and institutions main in the State, but for it to look a little SA, Moore pointed out that the problem
having a crack at developing the SA bit different.” wasn’t limited to the State, with other
mining story. world-class mining jurisdictions such as
Through the collaborative work of in- Chile facing similar challenges.
“The challenge of the cover is also a novators such as DET CRC and industry,
challenge of geological dogma and my there are high hopes for SA to become “Without putting forward any govern-
feeling is that geophysics has dominated Australia’s premier resources jurisdic- ment policy positions, it is an issue that
exploration for quite a while and quite tion; a mantle Alliance managing director we need to listen to and research from
rightly so, but you end up developing Steve Johnston believes it already holds. people outside our industry. Some of
geophysical targets,” Anderson said. these issues relate to trust and the ability
Alliance (51%) is in JV with Tyranna to build these relationships so that regu-
“We have to integrate more of our ge- Resources Ltd (49%) at the multi-el- latory frameworks remain important,”
ology, geochemistry etc... the next round ement Wilcherry Hill project, Gawler Moore said.
of targets do not have to be deep, they Craton, while it was formerly focused on
may not have the geological signatures the Four Mile uranium project. “Certainly Chile is finding the same
that we imagine. I think there is great thing, where some areas of the commu-
opportunity not only for companies like In addition to the untapped mineral po- nity are more trusting in mining and some
Investigator to develop ideas, test them tential, facilities like the core library had are not. I think that is something we need
and take the initial risk, but then to put kept Alliance entrenched in SA, Johnston to keep working at. Community expecta-
those questions out there to actually said. tions have changed, so how do we work
create a substantial geological reset and with that and make it simple from a regu-
rejuvenate the State again. That is what “There is world-class prospectivity latory point of view is the question.”
I think is happening at the moment, not here in SA,” Johnston said. “I love
Western Australia, it is a great place to – Mark Andrews
work, but SA is ahead of WA now.

“We recently came into the Wilcherry

PAGE 84 JULY 2017 AUSTRALIA’S PAYDIRT

Energy plan to focus on gas reserves

South Australian Treasurer and Mineral Tom Koutsantonis abate and the industry, led by represent-
Resources Minister Tom Koutsan- ative body South Australian Chamber
tonis said a source of secure and reliable However, finding gas is far from the of Minerals & Energy (SACOME) has
energy was a “non-negotiable” for the only challenge in SA, particularly in taken the initiative, bringing together 20
State. the State’s south-east where minerals companies which account for 16% of the
and petroleum development has often State’s energy demands to pursue col-
SA was plunged into darkness earlier clashed with other land users. lective power agreements.
in the year with BHP Ltd alone claiming
the energy crisis cost it more than $130 The SA Government is aiming to “It was pleasing to see SACOME’s
million at its Olympic Dam mine. And, counter landholder opposition through strong leadership in bringing together a
during his opening address to SAREIC, its newly developed PACE Royalty Re- number of companies… to the Australian
Koutsantonis said his Government’s turn. Koutsantonis said the Otway Basin Competition and Consumer Commission
Energy Plan would take “back greater ground would be eligible for the scheme (ACCC) to collectively negotiate long-
control of South Australia’s energy which will see landholders share in the term supply contracts,” Koutsantonis
security” with the State’s gas prospects royalties generated from production on said.
set to be key. their land.
Other than the energy crisis, it is the
“[The plan] incentivises local explora- “PACE Royalty Return assigns 10% of Government’s Mining Act review which
tion for more gas supplies to feed new the State’s royalties to landowners who weighs heaviest on the minds of miners,
generation while allowing South Australia allow new gas production on their land,” developers and explorers in the State.
to remain on the forefront of renewable he said. “Deputy Prime Minister Barnaby Koutsantonis said he was hopeful the
energy including the next generation of Joyce and Federal Resources Minister review would be completed before the
storage technology,” Koutsantonis said. Matt Canavan welcome the initiative and March 2018 State election.
suggested it should be expanded be-
The task for SA government and in- yond South Australia. “We would like to have the review com-
dustry is to find sufficient supplies of gas pleted before the election, it might not be,
and renewables to feed its requirements. “The royalty is not compensation, it’s but would like it,” he said.
Koutsantonis was adamant SA hosted about sharing of the economic benefits
ample gas reserves to support new gen- of mining.” Koutsantonis said the Government
eration. was looking to industry to provide fur-
New resources project investment will ther leadership, particularly on issues
“South Australia has enough gas in the be stifled if SA’s energy crisis doesn’t around land access and environmental
ground to power the grid for centuries; it’s approvals.
a question of measures to extract more of
it, faster and competitively,” he said. “At its heart, the Mining Act Review is
about greater efficiency, accountability,
The SA Government has allocated $48 transparency and engagement that de-
million to its PACE Gas scheme with the liver the net outcomes we all want, and
$24 million allocated in the first round provides a strong footing to progress the
expected to generate $174 million in new sector, where responsibilities for all are
investment by oil and gas companies. clear,” he said.
The second round is currently open for
submissions. “To make sure that we get the right
balance for the sector and community
Koutsantonis said any new produc- moving forward, the Mining Act Review
tion identified through the grant scheme team has completed one of the largest
would be offered first to SA electricity community consultations on legislation
generators; “increasing the affordability that has been undertaken in decades.”
of supply and putting downward pressure
on prices”. Koutsantonis urged miners to conduct
their community engagement in a similar
In an effort to further encourage way.
explorers, the State Government has
offered new gas acreage in the Otway “When you are trying to minimise
pushback, that’s when you get the most
“Basin. pushback,” he said. “People are entitled
South Australia to protest peacefully but I don’t think such
has enough gas civil disobedience will [take the form of]
in the ground to power sabotage.”
the grid for centuries;
it’s a question of With two movements to compete with
measures to extract – environmentalists and the lock-the-
more of it... gate group – miners must confront op-
position with clarity and logic according
to Koutsantonis.

“We have an approach based on sci-
ence,” he said. “We don’t let emotion or
ideology get in the way of policy.”

– Dominic Piper

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 85

SAREIC REVIEW

Wills steps in at Marmota

Kevin Wills Wills’ first engagement in the position test work and expecting to estimate an in-
was presenting to a familiar crowd; the ferred resource and commencing drilling
With the resignation of managing who’s who of South Australia’s resources over Kingfisher [prospect],” Wills said.
director Ian Warland, Marmota Ltd sector attending SAREIC.
has a new-look board. Expanded phase two drilling at Gos-
Those following Marmota would know hawk was expected to start at the time
Formerly chief consulting geologist, the focus is on gold exploration in the of print, following up from encouraging
Kevin Wills is now executive director, Gawler Craton around the 1 moz Chal- results from the 2016 campaign where
exploration, while Dr Colin Rose is ex- lenger mine. plus-1 g/t gold intersections over a zone
ecutive chairman and Peter Thompson 500m long have excited Marmota. The
technical director (non-executive). While unearthing another Challenger most significant intersections reported
would satisfy, it is not necessarily the occurred between 10m and 40m.
end game for Marmota, according to
Wills. In addition to drilling, calcrete sampling
will continue through Marmota’s aptly
“We are not convinced we have a named GET programme.
Challenger, there might be other [types
of] orebodies out there. We shouldn’t “The Gawler Exploration Taskforce,
just think there is a Challenger orebody which we call GET, has been set up for
out there,” he said. reconnaissance calcrete work,” Wills said.

With 5,700sq km of ground around “We have calcrete samples already
Challenger, Marmota has as good a commenced with more infill [work] and
chance as any of finding a similar ore- we have a regional assessment ongoing
body and can boast previous form in “dis- for the identification of targets and initial
covering new valuable gold deposits”. drill testing.”

News flow from the company is ex- – Mark Andrews
pected to come from the Aurora Tank
project, where drilling is taking place this
month.

“In June we are doing the expansion
drilling, commencing the metallurgical

Tyranna proves more to Challenger

Regional exploration around Chal- Bruno Seneque from 36m encouraged Tyranna to plan
lenger has been sparse and limited a 75-hole, 5,000m programme at the
since the discovery of that deposit, how- At the time of print, RC drilling was prospect.
ever, Tyranna Resources Ltd is proving under way at Monsoon where historical
potential exists beyond the mine. intercepts of 12m @ 2.2 g/t gold from Once drilling is completed at Monsoon,
30m, 14m @ 1.1 g/t from 35m including walk-up drill targets at Black Knight will
Admittedly, there has been a bit of luck 1m @ 8.1 g/t from 44m and 6m @ 3.9 g/t be pursued with 1,500m of RC drilling,
involved in Tyranna’s success to date, which is part of Tyranna’s plan to drill
according to managing director Bruno 15,000-20,000m this calendar year.
Seneque, nevertheless the signs are
good. Monsoon and Black Knight are among
targets within 30km of Challenger which
“We have proved we can make a dis- Tyranna will focus on this year, Seneque
covery,” he said. said.

“Within 12 months [of the Greene- “We are near a producing gold plant,
wood discovery] we have a resource of which has produced 1 moz at 6 g/t [since
23,000oz gold.” 2002], we are well funded and we’re
strongly backed,” he said.
Greenewood is one of a number of
targets Tyranna has within the Jumbuck “We are improving our knowledge as
project area, where Tyranna controls we go and we are here to stay.”
9,700sq km around the Challenger mine.
Further afield in South Australia, a
Greenewood, Tyranna’s first significant ground moving loop electromagnetic
discovery at Jumbuck, is in the northern survey following up on heli-electromag-
part of the package and while keen to netic conductors at the Wilcherry Hill
follow up on intersections such as 8m @ multi-commodity JV with Alliance Re-
3.35 g/t and increase the resource, at- sources Ltd (49%) was in progress late
tention will also be paid to prospects in last month.
the southern area of Jumbuck this year.
– Mark Andrews

PAGE 86 JULY 2017 AUSTRALIA’S PAYDIRT

New discovery key to SA revival

Industry legend Derek Carter says than directly by the mining industry. Derek Carter
South Australia is crying out for another “The bad news is investment has de-
Olympic Dam or Prominent Hill. State’s exploration spend during the De-
creased and the amount of exploration cember quarter was up almost 25% to
Carter, who founded Minotaur Explo- has decreased significantly over the last $12.4 million, compared to a 6% lift na-
ration Ltd and played a key role in the few years,” Carter said. tionally.
discovery of Prominent Hill in 2001, said
a major find would provide the kick-start “The good news is in the last six “It’s still well below par, I have to say,
SA’s stagnant resources sector so badly months that has increased on all facets. but there is definitely a turnaround in ex-
needed. I can see there is a change for the better ploration,” he said.
with some of these government initiatives
“My main interest is exploration, but and with the market turning around.” Carter also welcomed the possible
exploration is way down,” Carter said. changes to the State’s Mining Act, which
According to Carter, a positive sign for he said was “outdated and needs to be
“We know we have a state of great the State’s resources industry was the re- revised”.
potential, but many of these great mines cent uptick in advertisements for mining
were discovered some years ago, so we jobs in SA, including 132 new roles ad- – Michael Washbourne
need to get out there and find some more vertised in February, representing a
of these.” three-fold increase on the same amount
from 12 months earlier.
Speaking on behalf of the SA Min-
erals and Petroleum Experts Group It was also the highest number of new
(SAMPEG), Carter was blunt in his as- jobs advertised since October 2014.
sessment of SA’s resources sector, citing
a number of “concerning” figures during “That represents a definite increase in
his presentation. activity in the industry,” Carter said.

This included just $174 million of new “Perhaps not surprisingly, 30% of
capital expenditure during FY2016 and those people are professionals and 50%
more people being employed in the are trades. That is quite good news.”
equipment and technical services sector
Carter also referred to figures from
the SA Government which showed the

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 87

SAREIC REVIEW

Copper strategy gathers pace

Charles Moore – said recent market trends had justified period of time, including Olympic Dam in
the initiative. 2015 achieving record levels of 203,000t
The importance of copper – and South of copper cathode, a 10-year production
Australia’s role in future production of “I make the observation that the high,” Moore said.
the red metal – is starting to be realised, State’s approach to install the Copper
according to Charles Moore. Strategy was followed by copper prices “The Copper Strategy is about creating
increasing late last year and they’re still future opportunities. There are a number
A $20 million State Government- about 25% higher than they were when of smaller projects on the way and part of
backed programme was launched in we initiated the strategy,” Moore said. our strategy is about how we bring that
2015 with the objective of tripling SA’s pipeline together so we can achieve our
copper production to 1 mtpa by 2030. “We don’t want to take any credit for it, target.”
but it’s interesting to see what has hap-
Copper prices were subdued for much pened over time because it just goes to SA hosts about 68% of Australia’s
of the first 12 months of the programme, show that copper is a commodity for the known copper resources and Moore said
but Moore – director of the Department present and for the future.” it was imperative the State boosted its
of Premier and Cabinet’s Resources, In- contribution towards the country’s overall
frastructure and Investment Task Force CRU reported earlier this year a struc- exports of the red metal beyond the cur-
tural deficit was imminent for the global rent 30%.
copper market, with existing mine pro-
duction declining annually by 1% due to An airborne geophysical survey over
decreasing ore grades. the Gawler Craton – believed to be the
largest in Australia’s history – was under
In SA, the downturn in copper pricing way at the time of print in a bid to unearth
led to a number of project delays, in- a series of new copper discoveries.
cluding the inevitable downsizing and
cancellations of some developments, It follows on from a 20,000sq km
despite continuing strong production gravity survey and subsequent drilling
from existing mines. programme, overseen by Geoscience
Australia, in the Coompana region.
“Even with subdued prices, we’ve
achieved high production during that – Michael Washbourne

PAGE 88 JULY 2017 AUSTRALIA’S PAYDIRT

Explorers out of favour with instos

Institutional investors are more likely Nic Seret can, but just a caution…I’ve seen a lot
to favour development projects over of investors and the analyst community
exploration plays, according to Taylor “As always, good projects get funded. doing a lot of work on the market, where
Collison’s Nic Seret. Hopefully those small greenshoots and customers are coming from and there-
trends we’re seeing continue and we get fore what prices are going to do,” Seret
“Timelines are really important to in- a bit more activity in the market.” said.
stitutional investors; they want some
visibility on what the actual price of the The emergence of lithium, cobalt and “Some of these fashion metals [com-
commodity will be by the time you’re pro- graphite over the past five years has panies] need to answer a couple of ques-
ducing,” Seret said. captured the intrigue of the market, but tions, in our opinion, on where those
Seret sounded a warning for what he customers are going to come from and
“We’re certainly seeing big interest in termed “fashion metals”. what prices they are going to pay.”
projects that can hit those targets within,
say, a two-year timeframe. I don’t think “I’ve got no issue making hay while the Seret also encouraged junior energy
that’s going to change in the short-term.” sun shines and raising money where you companies to pursue opportunities in
the east coast gas market, especially
Seret said cash-strapped explorers with larger firms such as Adelaide-based
have a greater chance of acquiring funds Santos Ltd under pressure to reduce
from a major looking to boost its mineral their cash burn.
inventory, based on in-house research
by Taylor Collison. “Obviously juniors are a bit more agile,
they don’t have a lot of the balance sheet
“There’s a renewed interest from the constraints the large companies have at
majors to use junior exploration com- this point in time,” Seret said.
panies to get out there and get active
again,” he said. “We’ve seen quite a few “It paints a bleak picture for the majors,
JVs formed in recent times and the ma- but it creates opportunity for the juniors
jors are obviously very actively looking, and I think that trend continues for a
so it’s a great source of funds going for- number of reasons.”
ward.
– Michael Washbourne

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 89

SAREIC REVIEW

Strategies key for future

Paul Heithersay expansion at Olympic Dam, however, SA’s Copper Strategy has a target of
Heithersay said several advanced pro- 1 mtpa production of the red metal by
Energy policies may have been the jects indicated a brighter future for the 2030. Heithersay admitted it was an am-
major debate at SAREIC but Depart- State with the Central Eyre iron project bitious goal but one he is confident the
ment of Premier and Cabinet deputy chief and Carrapateena copper-gold project State’s geology can fulfil.
executive Paul Heithersay reminded del- heading towards development.
egates the entire policy framework had to “The nature of how geology works is
be in order if the State was to win back With government strategies launched that something must be missing between
investment. for copper and magnetite, Heithersay Olympic Dam and the rest [of the small
praised Treasurer Tom Koutsantonis’ copper deposits],” Heithersay said.
South Australia can boast 68% of Aus- support for the industry.
tralia’s copper, 80% of its uranium and In an effort to identify the “missing
more than 14bt of iron ore but also needed “We have a number of government link” between the 79mt copper Olympic
the right policies to encourage investment initiatives; which is a tribute to treasury’s Dam deposit and the State’s next largest
to develop those resources, he said. counter-cyclical spending,” he said. copper orebody, the 1.75mt Prominent
Hill, the SA Government has launched a
“A lot of investment could be made if we The Government is considering further series of new programmes through the
get the settings right,” Heithersay said. strategies for mineral sands and uranium Geological Survey.
with Heithersay suggesting such road-
Resource investment in SA has been maps allowed for greater interaction with “We have done lots of geophysical
sluggish since the commodity price community. work and the aeromag survey of the
downturn and BHP Ltd’s decision to stop Gawler Craton is between 53% and 87%
Mining has fallen from the lofty ped- complete,” Heithersay said.
estal it occupied at the beginning of the
decade and Heithersay is keen to re- Among other programmes is the Aus-
establish the sector’s credentials as an LAMP magnetotelluric project which
economic driver. maps ancient fluid pathways in the crust.

“We have to let the community know “The magnetotelluric inversion map-
mining is back in town. We have to ping has worked very well identifying
disavow them of the notion that mining fluid pathways on the Olympic Domain,”
stopped when BHP chose not to go Heithersay said.
ahead [with the Olympic Dam expan-
sion]. We have to ask how we bring com- Elsewhere, the PACE Copper pro-
munity along and designing a strategy gramme is undertaking deep crustal
means the community hearing about it seismic, magnetotelluric and gravity
and warming to it,” he said. work, as well as geochemical surveys,
in the Coompana province.

Real-time drilling edges closer

Deep Exploration Technologies CRC DET CRC’s Programme 3 has come a David Giles
(DET CRC) is making strong pro- long way since its first drilling trial – a col-
gress in its bid to develop a “rapid, cheap laboration between Geoscience Australia those companies and DSD provided us
but reliable” drilling process. and the Geological Survey of Victoria – in with the perfect platform to get lots of me-
Victoria’s Stavely region in 2014. tres on the dial with the technologies…to
The Adelaide-based, government- bring many of those to a commercialisa-
funded research group is currently tri- While that trial involved a combination tion decision point and a number of those
alling a series of technologies it hopes of diamond and sonic drilling through have now been commercialised,” Giles
will allow exploration companies to make some challenging rock cover in western said.
real-time decisions while punching drill Victoria, DET CRC has since turned its
holes into prospective ground. focus to the Brukunga region of eastern At the time of print, another trial drilling
South Australia. programme was being conducted.
“We’re testing these things basically
until they break so we have robust tech- With support from the SA Government – Michael Washbourne
nologies to put out there into the market- and junior explorers Minotaur Explora-
place,” DET CRC’s David Giles said. tion Ltd and Kingston Resources Ltd,
DET CRC completed an 8,000m drilling
“Our philosophy all along has been if programme in 2015/16 to test a number
you want to find things you need to put a of new technologies.
drill hole into them ultimately and so the
most efficient way of giving a kick-start Those technologies include the now
to the exploration industry under cover commercialised Wireless Sub, Auto-
is creating a way to pick and drill more Sonde, Lab-at-Rig, FMS Fluids, Real
holes, more quickly, more cheaply and Time Drill Project and 3D Seismic Explo-
gather data in real time so decisions can ration for Hard Rock Environments.
be made on the fly.”
“It was terrifically successful for us and

PAGE 90 JULY 2017 AUSTRALIA’S PAYDIRT

Resources debate heats up

Rebecca Knol A handful of marginal seats – including Energy generation, cost, supply and
Stuart, Giles and Flinders – have impli- security are also expected to be key
SACOME chief executive Rebecca cations for current and future resources issues for both major political parties
Knol expects the future of South projects, according to Knol. during the election campaign.
Australia’s resources industry to be a hot
topic for debate in the lead-up to next “It is incumbent on our sector to en- Knol, who joined SACOME last year,
year’s State election. sure that if there is a change in Govern- also called for greater collaboration be-
ment that the importance of our sector to tween the resources and agricultural
Polls are currently predicting the SA the overall health of the State economy sectors, citing many common trends be-
Liberals will win back Government for is not compromised during an election tween the two industries.
the first time since 2002, with the centrist campaign,” Knol said.
Nick Xenophon Team also tipped to do “Both sectors have been and continue
well in key marginal seats. “SA’s history of prosperity is inextri- to be the engine room for the State’s
cably linked to the success of its min- economy, so it’s important in an election
erals and energy sector and its services year that the solid contribution our sector
supply chain. SA holds 68% of Australia’s has made to the State is not eroded in
copper resources, 80% of our uranium divisive campaigns,” she said.
resources, 28% of Australia’s economic
gold and more than 14bt of iron ore. “We need to work together for the ben-
efit of the State. We need to tell our sto-
“We are a mining state and the sector ries of success and of collaboration.
contributes $4 billion to our annual ex-
port revenue, delivering a further $208 “The risk of divisive combat is the
million to the State in royalties. The State will be the ultimate loser. The
sector employs 10,000 people directly challenges ahead for our sector require
and supports a further 16,500 people in cross-sectoral collaboration, so let’s em-
the mining equipment, technology and brace them. We have a proven ability to
services sector.” challenge prevailing conditions.”

– Michael Washbourne

On the Road to production

Iron Road Ltd is hoping the second half Andrew Stocks mtpa of high quality magnetite concen-
of 2017 will be every bit as good as the trates over 30 years at Central Eyre, with
first six months of the year. has gone. product to be transported along a 148km
“This is a real project with real mo- infrastructure corridor to proposed port
Having battled through two years of low facilities at Cape Hardy.
iron ore prices, Iron Road is now back on mentum, heading into our final steps to
the radar of investors after announcing it production.” “We have diligently pushed the pro-
had received expressions of interest from ject towards development,” Stocks said.
three Chinese banks for the debt funding Central Eyre has previously been “We’ve studied the project, we under-
component of its $US4 billion Central awarded Major Project Facilitation status stand it, we’ve addressed the project’s
Eyre iron project on South Australia’s by the Federal Government and placed strengths and weaknesses and we’ve
Eyre Peninsula. on the Infrastructure Priority List by Infra- exploited its natural advantages.
structure Australia.
This was followed in early May with the “It’s been a journey, but it’s been helped
award of a mining lease and development Appointing local construction partners by the different levels of government. The
authorisation by the SA Government. and finalising the project’s operational Federal Government has given us Major
readiness planning will also be high on Project Facilitation, the only project of
Iron Road managing director Andrew the agenda for Iron Road as 2017 draws any type in SA to have that facilitation.
Stocks said talks with China Construction to a close. The infrastructure components have
Bank (CCB) and Industrial and Commer- been listed by Infrastructure Australia
cial Bank of China (ICBC) – the world’s Iron Road is looking to produce 20 as a priority to the nation. In fact, it’s the
two largest banks – and China Develop- only project that’s termed ‘opportunity for
ment Bank (CDB) were progressing well growth’.”
and he hoped to achieve financial close
before year’s end. Iron Road has also signed MoUs with
five Chinese steel mills, including Shan-
Stocks said he also expected the pro- dong Iron & Steel, for off-take and has
ject to receive Commonwealth EPBC ap- maintained ties with Sumitomo Corp
proval in the coming months. subsidiary Emerald Grain over grain
export opportunities using shared infra-
“We’re hoping to have these in place by structure on the Eyre Peninsula.
the end of the year,” Stocks said.
– Michael Washbourne
“I look forward to next year being able
to tell you about how well that process

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 91

SAREIC REVIEW

SA closing in on Mining Act

Kyra Reznikov South Australia’s Treasurer and Min- responses to public representations;
ister for Mineral Resources and Energy agreements to bind successors; notice
South Australia’s leading law firm on Tom Koutsantonis expects the whole of entry to “owners”; subsequent explo-
mining matters in the State, Finlay- process to be completed by the end of ration licences and commencement of
sons Lawyers, is confident industry will 2017, with Finlaysons special counsel rental payments.
benefit from a review of the Mining Act. Kyra Reznikov saying amending legisla-
tion was originally expected mid-year. Regarding rental payments, Reznikov
A review into the Mining Act 1971 said it made sense for payments to start
and Mining Regulations 2011, Mines “I am not sure exactly about the timing in line with that of operations.
and Works Inspection Act 1920 and of that but Minister Koutsantonis was
Opal Mining Act 1995 was launched last certainly keen to have the whole thing “The first rental payment is already due
September to ensure South Australia’s wrapped up by the end of the year, so at a time when cash flow is not yet being
standing as a premier destination for I am expecting it fairly soon,” Reznikov generated by on-the-ground operations.
mining and exploration activities. said. Given that rental is presumably to com-
pensate the land owners for the impact
The initial submission round has been “We obviously don’t know the extent to of operations on their land, it makes no
completed, with the review team consid- which our recommendations have been sense that the rental payment be paid at
ering and developing recommendations incorporated into the proposals and a time when there are no operations on
from the submissions received from then of course we ultimately don’t know the land and there are no impacts being
stakeholders in South Australia’s mining what parliament is going to do with the generated,” she said.
industry. recommendations that are made with
regards proposed changes to the mining “The easy fix here is to simply delay
legislation. the start of rental payments until opera-
tions do commence. While we are at it,
“However, it has been our experience there are a number of simple ways that
that the review has been very ably led the existing provisions can be cleaned up
and the eight key aims of the proposal to ensure that we don’t have overlapping
give us strong expectations that there rental payments when we have overlap-
are some positive changes afoot.” ping ELs and MLs and similarly that we
don’t have overlapping rental payments
In her presentation at SAREIC, and compensation payments.”
Reznikov identified “six easy fixes” to
the Mining Act, which included changes – Mark Andrews
to legislation around mining operations;

Australia well placed in uranium sector

Australia is well placed to take advan- Currently, there are four projects in “This report looks specifically at South
tage of the next upswing in uranium WA ready for development (subject to Australia but comments outside of South
prices, according to Minerals Council of financing) when the uranium cycle turns. Australia, regards power generation. The
Australia, executive director uranium Meanwhile, Boss Resources Ltd’s ac- outcome is consistent with a wide range
Daniel Zavattiero. tivity at the Honeymoon project in South of scenarios; it does not necessarily
Australia has “strong potential” to be re- apply to other jurisdictions in Australia. In
“I think the reality is that we are in a vived once market conditions dictate. fact, some of the modelling suggests that
better position today for an upturn than nuclear might well be viable elsewhere
a decade ago when the previous upturn The SA Government has been proac- as the challenges facing base load gen-
occurred,” Zavattiero told delegates at tive addressing the future of uranium in eration in South Australia are not shared
SAREIC. state and country, with the Nuclear Fuel with other regions of the NEM [National
Cycle Royal Commission an initiative of Electricity Market],” Zavattiero said.
“That is based on the fact that we have the State Government back in 2015.
projects that are operating well in Aus- “It is clear that Australia’s uranium in-
tralia now; South Australia is a strong The Royal Commission looked at ex- dustry is now serving as a platform for
jurisdiction for uranium mining, we have panding uranium mining, processing op- a wider discussion on the nuclear fuel
projects approved in Western Australia portunities, power generation and the cycle and power generation opportu-
and waiting for a market upturn. potential waste industry in Australia. nities and options, but we do need fur-
ther reforms to properly consider these
“I think we all agree that a normalised In the case of mining, the Royal Com- options and opportunities in the years
uranium climate in Australia, across the mission concluded that expanding ura- ahead...and unnecessary restrictions
states is good for the industry overall.” nium mining and exploration would must be removed.”
provide additional benefits to South
Zavattiero said significant govern- Australia, while processing and power – Mark Andrews
ment policy changes in countries such generation, not currently commercially
as China, UAE, India and potentially viable in the next decade or so, could
Ukraine, was opening up new markets give the State a competitive advantage
for Australian uranium. in the future.

PAGE 92 JULY 2017 AUSTRALIA’S PAYDIRT

Aligning new gold discoveries

Alliance Resources Ltd managing “I wouldn’t be surprised if we get over Wilcherry totalling about 1,200sq km.
director Steve Johnston had never 1km of strike with these high-grade “We think this represents a really good
seen anything quite like it during his results.”
extensive career in the mining industry. opportunity for an explorer using modern
Alliance acquired 51% of the Wilcherry geophysical methods,” he said.
Johnston, a geologist, has held senior project last year for $2 million, with
executive and technical roles for the Tyranna Resources Ltd retaining the “We looked at it from our West Aus-
likes of Metals Exploration, Wiluna other 49%. tralian experience and said ‘this is just
Gold Mines, Metana Minerals, Croesus like land in the Kalgoorlie district of the
Mining and Exco Resources Ltd and Steve Johnston Eastern Goldfields, but it’s in SA’. It’s
been a part of several major discoveries Johnston said previous explorers highly mineralised, so we really like it.”
in gold, base metals and uranium across identified significant mineralised sys-
the country. tems within palaeoproterozoic metasedi- Alliance initially entered the project
ments intruded by Hiltaba suite granites. because of its base metal potential, par-
Yet the results of Alliance’s most re- Shallow cover exists over almost 80% ticularly for tin at the Zealous prospect
cent work at the Wilcherry project, on of the seven exploration licences at and zinc-lead-silver at Telephone Dam,
South Australia’s northern Eyre Penin- before looking more closely at the gold.
sula, caught Johnston’s eye like nothing
else had before. Drilling at Zealous between 2012 and
2014 intersected several promising re-
Broad zones of bonanza gold hits, in- sults, including 20m @ 1.29% tin from
cluding 14m @ 36.1 g/t, 49m @ 6.3 g/t 42m, 10m @ 1.23% tin from 128m and
and 2m @ 61.2 g/t, were returned from 2.3% tin from 119m.
a 24-hole RC drilling programme at the
Weednanna prospect in March. “For those not familiar with tin, these
results are spectacular because 1% tin
“In my professional career of 30 years at current prices is equivalent to about 5
these are the best gold intercepts I’ve g/t gold,” Johnston said.
been associated with – and yet we had
no market kick,” Johnston said. Five holes for 1,500m were being
drilled into Zealous at the time of print.

– Michael Washbourne

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 93

SAREIC REVIEW

Hawsons demand exceeds output

Quentin Hill Formosa Plastics Group, Gunvor Group major mining companies, according to
and Mitsubishi Corp, with blue-chip figures from Wood Mackenzie and MBR.
Demand for pellet feed from Carpen- customers from key Asian markets now
taria Exploration Ltd’s Hawsons subscribed to 11.4 mtpa of the Hawsons “To paraphrase Wood Mackenzie,
iron project is now exceeding the initial “supergrade” product. new pellet feed and high-grade projects
planned production rate of 10 mtpa. are unlikely to be economic unless they
Confirmation of the latest off-take have a technological breakthrough or at-
In late May, Carpentaria announced deals came as Carpentaria was final- tract an extra premium due to superior
it had signed non-binding LOIs with ising a revised PFS on Hawsons, 60km quality,” Hill said.
leading Chinese steelmaker Shagang south-west of Broken Hill.
International and Kuwait’s United Steel “Hawsons has both of those; we are
Industrial Co for a combined 3.5 mtpa of “This is unusual for a project at this uniquely placed.”
potential off-take. stage of development… there is great
demand for this product,” Carpentaria Hill said while Australian investors had
Carpentaria has previously signed managing director Quentin Hill said. largely ignored his company for the past
LOIs with Emirates Steel, Bahrain Steel, three years due to low iron ore prices, other
Hill said the PFS – due at the time of industry participants such as steelmakers
print – would prove a tipping point for and traders have been taking notice.
strategic investors looking to cash in on
the project. “Our growing list of off-take support,
I think, reflects what the local market
Despite having a modest market cap doesn’t understand,” he said.
of less than $10 million, Carpentaria is
viewed by customers in Asia and the “It is the competition for the product
Middle East as a potential new and re- from buyers that will drive the develop-
liable supplier of direct reduction feed ment of this project. Many steel mills have
pellets. a real commercial incentive to support
new, competitive, long-life, high-grade
About 90% of global direct reduction pellet feed and direct reduction projects
feed pellet supply is contained to 10 into production.”
projects operated by four of the world’s
– Michael Washbourne

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Resources. Williams Vincent
Jane
Thomas Kyra
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Our Resources team has a unique
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PAGE 94 JULY 2017 AUSTRALIA’S PAYDIRT

Investigator raises its porphyry game

South Australia’s busiest explorer, key role. Paris has been the company’s John Anderson
Investigator Resources Ltd, is eager flagship project for five years. In April,
to attract a major partner to its hunt for it announced a resource upgrade to 42 gator-style targets but we are openly
the State’s first porphyry-related deposit. moz @ 139 g/t silver, paving the way for saying that we are looking for a company
PFS work to begin. which wants to explore for porphyries;
Investigator has set an end-of-year we’re more interested in the stuff starting
deadline for release of a PFS on its Paris Anderson said the company was just at surface.”
silver project but recent drilling at the aiming to complete the PFS later in 2017
nearby Nankivel prospect has the com- by which time the company also hopes to Investigator has upgraded its target
pany intrigued by its porphyry prospec- have attracted a JV partner to Nankivel. map for Paris-Nankivel, having identi-
tivity. fied numerous targets along connecting
Drilling earlier this year intercepted the structures with five shallow epithermal
“We have confirmed a range of epi- prospective core of a large multi-phase targets and at least four interpreted por-
thermal and porphyry targets extending porphyry mineral system at Nankivel. phyry centres in the project area.
away from Paris at the Nankivel pros- Anderson said the four holes contained
pect which is likely Olympic Dam age,” low but encouraging chalcopyrite, repre- “It warrants an aggressive geophysical
Investigator managing director John An- senting a “breakthrough for South Aus- programme,” Anderson said.
derson said. tralian metal potential”.
– Dominic Piper
The recent work at both Paris and “It is pretty exciting,” Anderson said.
Nankivel has made Investigator a The drilling also uncovered a shallow
shining light in SA’s moribund explora- gold-silver-copper target at Nankivel
tion sector. Exploration activity ground which Investigator plans to test further
almost to a standstill from 2015 with only before the end of the year. Porphyry ex-
$184 million spent in the State in 2015- ploration is, however, expensive work
16. However, quarter-on-quarter explo- and Anderson knows Nankivel explora-
ration expenditure was up almost 25% in tion requires much deeper pockets than
the December period with Investigator’s Investigator can offer.
efforts at Paris and Nankivel playing a “We will be back testing the Investi-

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 95

SAREIC REVIEW

Challenger costs on downtrend

Wayne Rossiter said. “It is critical to develop in advance “WPG is working to put that 400,000oz
of mining to move into new stoping back in and we see a further four or five
WPG Resources Ltd chief executive areas, otherwise you run out of places years of mine life potential even without a
Wayne Rossiter is hopeful a better to mine. We got squeezed in the De- new discovery,” Rossiter said.
defined M3 structure will allow the com- cember quarter when we were down to
pany to drive down operating costs at its one stope. But, we have been working Once below surface conditions are
Challenger gold mine. with the mining contractor very closely improved, WPG can shift focus to above
to improve performance and the March ground where it intends to lift capacity at
WPG bought Challenger from Kings- quarter was on target for development the 600,000 tpa Challenger mill.
gate Consolidated Ltd last year but has and we are ahead of development for
struggled to keep AISC below break- this [June] quarter.” “It is in the mill where bottlenecks
even with the mine posting AISC of occur,” Rossiter said. “In the past, the
$1,495/oz for the March quarter. This Rossiter said the contractor had re- mill has done 800,000 tpa and we think
was an improvement on the $1,614/oz turned to vertical development and WPG we can get to 700,000 tpa for minimal
AISC recorded for the December quarter, expected costs to decline towards the capex, and can progressively scale up
Rossiter saying the downward trend was $1,250/oz target. to 800,000 tpa. There is certainly no
likely to continue as underground mining shortage of ore.”
rates improved and mining moved into Further improvement may come from
new areas. development in new areas with WPG The company is also processing ore
confident it could bring the M3 structure from its Tarcoola gold mine, 100km
“The principle reason for this [higher into production from May. south-east of the Challenger mill.
than anticipated costs] is some under-
performance by our mining contractor Rossiter said exploration drilling had First gold from Tarcoola was produced
in underground development,” Rossiter focused on the M3/SEZ lode which had in February and despite encountering a
been mined sporadically in the past from gold depletion zone early in the mining
both surface and underground. plan, WPG is satisfied with progress
since hitting fresh rock in March.
“We have done sufficient drilling to put
an exploration target of 120-160,000oz Sampling from within the pit has iden-
on the M3,” he said. “And, typically in tified a number of previously unknown
Challenger your grades go up as you quartz veins and the company has now
do more detailed infill drilling and that is set itself a target of 20,000 ozpa gold pro-
what you are seeing now in M3.” duction from Tarcoola.

Bringing M3 back into the resource “We have also done some soil sampling
statement will go part of the way to re- and IP work and come up with a dissemi-
confirming the 400,000oz previous nated sulphide target, 40m below the sur-
owner Kingsgate wrote out of the Chal- face, which is pretty interesting and could
lenger resource prior to divestment. be a game-changer,” Rossiter said.

– Dominic Piper

Scoping study puts meat on Siviour bone

Momentum is building within Renascor itself; it is flat-lying and consistent,” he David Christensen
Resources Ltd after a scoping study said.
into its Siviour graphite project found a Christensen said the company would
NPV of $551 million could be achieved. The investment market has come to undertake further met work this year as
recognise mining parameters are far well as completing a bulk sampling cam-
Renascor only started work at Siviour from the only defining factor in graphite paign and establishing a pilot production
– on South Australia’s Eyre Peninsula projects and while Christensen accepted programme to initiate customer assess-
– early last year but such is the esteem the company had more work to do on ment and off-take discussions.
the company holds the project in, it has marketing, he pointed to metallurgical
pushed hard on development. results as an indication of the quality of “By the end of the year we will increase
product Siviour could potentially pro- confidence by completing a PFS,” Chris-
“It is one of the top 10 graphite de- duce. tensen said.
posits in the world, it is globally competi-
tive and I think it hits the mark as a Tier “We assessed [the metallurgical sam- – Dominic Piper
1 graphite project,” Renascor managing ples] using a conventional flowsheet
director David Christensen said. and delivered 94% average concentrate
grade,” he said. “There is opportunity to
The scoping study, released in late optimise and tailor the flowsheet to this
May, confirmed a 123,000 tpa flake specific orebody. There is also the op-
graphite concentrate project could de- portunity to move downstream because
liver a NPV of $551 million and IRR of we are able to produce plus-99% TGC
59% thanks to a $144 million capex and through additional regrinding. That is
cash costs of $450/t, among the lowest important for getting into the spherical
in the industry according to Christensen. graphite market.”

“The good results relate to the orebody

PAGE 96 JULY 2017 AUSTRALIA’S PAYDIRT

Land access still biggest issue

Improved legislation surrounding land “There is a flawed assumption, held by Les Cox
access is still at the top of the priority some parts of the community, that pre-
list for South Australia, according to the scription leads to better environmental ronmental approvals process.
Association of Mining and Exploration outcomes, but AMEC and our members “The current format of the PEPR de-
Companies (AMEC). do not subscribe to that theory.”
mands the same volume of information
As part of its submission to the Mining AMEC also recommended the Mining from an exploration licence holder as it
Act review, AMEC recommended SA Act transferred all matters relating to does from a mining lease holder,” Cox
should maintain its voluntary land ac- mining and exploration to the jurisdiction said.
cess framework while also implementing of the Wardens Court.
an immediate multi-use land framework “Exploration activity has a much lower
in a bid to reduce the cost of conducting Cox said a handful of extraneous costs impact on a tenement than a functioning
exploration activities in the State. were hurting the State’s exploration in- mine does, so each should have a distinct
dustry, with SA’s minimum expenditure PEPR that is proportional to their impact.”
AMEC regional manager Les Cox said requirement of $35,000 per annum far
a balanced approach should be under- more than neighbours’ Western Australia – Michael Washbourne
taken to protect environmental and con- ($15,000 per annum) and the Northern
servation values alongside social and Territory ($10,400 per annum).
economic dividends for project develop-
ment. “The capital cost fee is a disincentive
to applying for a mineral lease or a mis-
“The outcome industry does not want cellaneous purposes licence and needs
to see from the revision of the Mining Act to be adjusted,” Cox said. “This fee is
is the introduction of a prescriptive, rigid, unique to SA and has not been picked
statutory land access framework which up by other jurisdictions for a reason – it
would only result in unnecessary and is a barrier to investment.”
costly delays through the court system
and which ultimately benefits no one,” Other recommendations from AMEC
Cox said. were removal of the mineral claim re-
quirement and consolidation of the envi-

AUSTRALIA’S PAYDIRT JULY 2017 PAGE 97

SAREIC REVIEW

Lincoln raises hopes for
Kookaburra Gully
Lincoln Minerals Ltd is looking to con-
solidate its position as the foremost Dwayne Povey Gully, which hosts measured-indicated-
graphite developer in Australia. inferred resources of 2.03mt @ 15.2%
commodities and the only producing TGC (5% TGC cut-off).
Subject to shareholder approval, a [graphite] mine in Australia, in a soaring
share placement through direct invest- new era and global market.” Meanwhile, pilot plant testing of a 37t
ment agreements with entities controlled sample is also under way.
by directors Yubo Jin and James Zhang, Development start-up is being tar-
Lincoln proposes to raise $9.6 million to geted for late 2017/early 2018, with the “At the start of May, a bulk sample
progress development of Kookaburra intended 40,000 tpa high purity graphite was en route to China and we’re looking
Gully on South Australia’s Eyre Penin- concentrate grading 98% TGC (easily to undertake some pilot plant test work.
sula. upgradable to 99% TGC) putting Kooka- Dr John [Parker] and the Premier [Jay
burra Gully in the top 10 of high-grade Weatherill] were up in China [mid-May]
The company was granted a ML mid- graphite deposits worldwide. and managed to visit the place where
2016 and was close to lodging the PEPR pilot plant test work on the graphite is
for Kookaburra Gully at the time of print. In addition to preparing the PEPR and going to be undertaken,” Povey said.
finding ways to optimise capex (about
“The last six months we have been $40 million) and opex, refining the re- Conventional open cut mining in five
finalising all our environmental and spe- source status and defining reserves is stages is planned at Kookaburra Gully
cialist consultant studies to formulate our also under way after an infill drilling pro- where the total area within the mineral
programme for environmental protection gramme was completed at Kookaburra lease covers 3sq km of which only 1sq
and rehabilitation [PEPR]. We are very km will be impacted.
happy to be in the graphite space as it is
going to be entering a new multi-billion Subject to the mining rate, the mine life
dollar new era, expanding global graphite at Kookaburra Gully is estimated at 8-10
markets around the world,” Lincoln chief years based on the current 2mt resource,
geologist Dwayne Povey said. however, there remains potential to con-
vert 1.85mt @ 9.8% TGC at the historic
“With the completion and approval of Koppio mine into mineable reserves for
the PEPR in 2017, Kookaburra Gully is an additional 5-6 years of mine life, while
set to become one of South Australia’s the extent of Kookaburra Gully Extended
newest mines in one of the hottest global remains an unknown.

– Mark Andrews

Mithril on the move

Like many juniors, Mithril Resources money recently. We have multiple work programme at Coompana is expected
Ltd has used the downtime in the programmes under way, so you will to take the best part of this year to com-
mining sector to revisit historic data and see news flow coming out of Mithril. plete, with Mithril to conduct a desktop
core and is now ready to re-emerge as an We are not standing still and resting on assessment of results in due course.
active explorer. our laurels. We have active new targets
in the copper-cobalt-nickel and gold “The deal is structured to allow us to sit
The company has a suite of assets in space,” Mithril managing director David back and see what comes out of the gov-
South Australia, Western Australia and Hutton said. ernment drilling programme, where gov-
Northern Territory with copper, cobalt, ernment will hopefully technically de-risk
nickel and gold being targeted. With cash of about $1 million at the by and large this area, and then we will
time of print, Mithril will still need to be commence our desktop assessments,”
Results are currently pending from prudent with its exploration spending. Hutton said.
drilling recently completed at the Mexi
nickel target, within the Lignum Dam To this end, the company has the “The Coompana area is fantastic; it
project area outside of Kalgoorlie luxury of being involved in the Coompana is a greenfields conceptual province.
while diamond drilling at Nanadie Well project, far western South Australia, All this data has been generated by the
(copper-gold, cobalt) and Stark (copper- which is subject to a State Government Government and I credit the Government
nickel) – also in WA – is expected to start scientific programme. for getting out there and doing this work.
this month. There are challenges with the cover
Oz Minerals Ltd approached Mithril to and remoteness, but as a greenfields
“We have come through a very difficult take over duties as technical consultant conceptual play, with Oz Minerals, the
period in the industry like everyone at Coompana, which is prospective for Government and us this is one space to
else,;we have used that period to go back nickel-copper-PGEs. certainly watch.”
and rework our projects. We have been
the beneficiaries through supportive For a minimal financial contribution, – Mark Andrews
stockbrokers and shareholders in raising Mithril can earn 20% in Coompana.

The SA Geological Survey’s work

PAGE 98 JULY 2017 AUSTRALIA’S PAYDIRT

GEOLOGICAL
SURVEY OF
South Australia

DISCOVERY DAY

PACE

PLAN for ACCELERATING
EXPLORATION

IN PARTNERSHIP WITH

SA

EXPLORATION
& MINING
CONFERENCE

saexplorers.com.au

Register ADELAIDE CONVENTION CENTRE
now Thursday l 7 December l 2017

www.minerals.dpc.sa.gov.au/gssa_dd

Discover

New Data
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15/05/2017–204908

6 - 8 September 2017

Perth, Australia

Presenters to Date

Hon. Mark McGowan MLA, Premier, Government of Western Australia
John Welborn, Managing Director and CEO, Resolute Mining Ltd
Kevin Urama, Senior Advisor to the President, African Development Bank (AfDB)
Andrew Spinks, Managing Director, Kibaran Resources Ltd
Archie Koimtsidis, Managing Director, Cardinal Resources Ltd
Bertrand Montembault, Partner, Herbert Smith Freehills
Nick Martin, Managing Director, Northcott Capital Ltd
Tim Carstens, Managing Director, Base Resources Ltd and Chairman, AAMEG
Phil Edmands, Partner, Energy and Resources, Gilbert + Tobin
Julian Hanna, Managing Director, MOD Resources Ltd
Andrew Cunningham, Director, Walkabout Resources Ltd
Tim McManus, Chief Executive Officer, Bass Metals Ltd
Mike Christie, Global Exploration Director, First Quantum Minerals Ltd
Brandon Munro, Managing Director and CEO, Bannerman Resources Ltd
John Cook, Director African Operations, Business for Development
Errol Smart, Managing Director and CEO, Orion Minerals NL
Mark Strizek, Managing Director, Vital Metals Ltd
Brendan Borg, Managing Director, Celsius Resources Ltd

For all enquiries please contact Christine or Namukale
(+61) 8 9321 0355 [email protected] [email protected]