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Guyana:
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CONTENTS
PAYDIRT (ISSN 1445-3436) 5 NEWS 19
Published by The future of the Kalgoorlie Super Pit re- 22
Paydirt Media Pty Ltd. mains in doubt, with leading suitor Chinese 58
A.C.N. 063 985 133 outfit Shandong Tyan Home pulling out of
talks with Barrick Gold Corp to buy 50%
Head Office: of the gold mine in Kalgoorlie. While one
Suite 9, 1297 Hay St, West Perth Canadian company isn’t having much luck
Western Australia 6005 dealing with an Australian asset, another
P.O. Box 1589, West Perth is. Superior Gold Inc has started life as
Western Australia 6872 owner of the Plutonic gold mine which was
Phone: (+61 8) 9321 0355 acquired from Northern Star Resources
Facsimile: (+61 8) 9321 0426 Ltd in 2016. Superior president Chris
[email protected]
www.paydirt.com.au
Bradbrook discussed the reasons for the
purchase with Mark Andrews
Editorial: 19 COVER
Editor: Dominic Piper Australian miners and explorers are known
Deputy editor: Mark Andrews for entering new frontiers in pursuit of
Journalists: Michael Washbourne, the next best mineral deposit. Generally,
Jonathon Daly hot-on-the-heels of these intrepid explor-
Art director: Marian Noonan ers and miners is Paydirt. This month sees
Contributors: Dominic Piper provide an engaging insight
Keith Goode (Sydney), Brendan Ryan into Guyana, in north-east South America.
(Johannesburg), Ross Louthean The geology of the region shares similari-
ties to West Africa but has not undergone
Advertising: the same level of gold exploration over the
Advertising manager: Richa Fuller last 15 years. A couple of Australian jun-
Subscriptions: Mitchelle Matambo iors, including Alicanto Minerals Ltd, could
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426
Pre-press and printing: be about to change that
Vanguard Press 26 John St, 22 LATIN AMERICA
Northbridge WA 6003 PREVIEW
Member of:
Latin American Down Under (LADU)
returns to Perth, May 17-18 at the Pan Pa-
cific Hotel. The sixth LADU event will once
Paydirt Media again bring together the mining fraternities
Executive chairman: Bill Repard and government delegations from both
Finance manager: Giovanny Jefferson sides of the Pacific to enhance relation-
Accounts/administration: ships and work collaboratively to develop
Heather Melling the mining sector across Latin America
Conferences: Melita Fogarty, 58 SAREIC PREVIEW
Namukale Nakazwe-Msiska, Power issues have plagued South Aus-
Christine Oelschlaeger
tralia in recent times, which has not helped
the State’s miners and explorers sell their
stories to the investment community. The
State’s resources sector may be expe-
riencing a lull, however, in compiling a
preview to the South Australian Resources
Energy and Investment Conference at the
Hilton, Adelaide, May 23-24, Paydirt found
Cover image: Alicanto Minerals Ltd pro- there are some bright sparks generating
ject geologist Chrystelle Thiboult-Boyer excitement in the industry
with a core sample from drilling at the
company’s Arakaka project in Guyana
Member of:
Australia-Africa Minerals & Energy Group
Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be
reproduced in any form without the consent of
the publisher. This includes photographs either
taken by Paydirt Media staff or provided by other
parties
Mining ill-equipped
for culture war
I’ve had a number of conversations most important aspect of the Australian economy and an intrin-
with company executives in the past sic part of the national character.
month about the mining industry’s
place in society and community This belief is simply not reflected in wider culture and despite
perceptions of the industry. all the community programmes the major miners participate in
Those I discussed the issue with – the donations to the arts, sponsorship of sporting clubs and
agreed; the mining industry is in promotion of charities – mining is not well reflected in Australian
danger of losing the culture war. everyday life.
I have spoken before about community attitudes to the in-
dustry and how its reputation globally is somewhere just ahead It is not adept at deploying soft power; it is not winning hearts
of tobacco companies and weapons manufacturers. It cannot and minds.
be disputed that 19th and 20th Century mining left an unenvi-
able legacy of poor environmental practices and equally woeful Look at popular culture. Australian literature, music, film and
employee relations, particularly in the developing world but the television is littered with stories about regional Australia. Indeed,
reputation is far from deserved in a 21st Century context. despite being the most urbanised population in the world, many
Having tackled and eliminated many of the irresponsible ac- of us cling to the mythology of the bush as being the defining
tivities of early centuries, the resources industry can now justifi- characteristic of Australiana.
ably boast strong sustainable development credentials across
the globe. But ask yourself, how much of this bush culture involves min-
I have witnessed this first-hand and I believe the industry to ing? The answer is very little. Whether it is Banjo Patterson, Slim
have a sustainable development story unrivalled by any other. Dusty or Blue Heelers, images of rural and regional Australia are
There is no other industry which can provide the almost imme- always associated with the farmer, not the miner.
diate economic and social upliftment to developing economies
and communities that mining can. When future generations look back, there will be little to docu-
Even in a highly developed economy such as Australia, the ment the Australian mining sector other than Bureau of Statis-
positive effects of mining – particularly during boom periods tics reports, company media releases and maybe a few long-
such as the one experienced in recent years – can be dramatic forgotten copies of Paydirt. But it is in popular culture where the
and there are few Australians who wouldn’t now recognise the culture wars are won.
economic importance of resources to the nation.
On this subject, the industry has done a good job highlighting How do we change this? One executive I spoke with suggest-
its importance but it is not enough to speak purely of economic ed there should be a book prize for stories about the industry
benefits. Indeed, the industry does itself a disservice by focus- which is one way of ensuring the lives of people involved in the
ing its public debates purely on economics. It can build commu- mining industry are documented. Various industry groups have
nity attitudes which are begrudging of mining – ‘ok, we know we launched photography prizes in recent years, including the Inter-
can’t do without mining but it is a dirty, harmful industry’ – when national Women in Mining association.
instead Australians should be proud of the place the sector oc-
cupies in our history. There are myriad other opportunities.
There is a need to win the hearts and minds of Australians, On a recent trip to Britain, my seven-year-old son was devas-
because outside of the industry, there are few Australians who tated that we didn’t get to the geology section during a six-hour
are proud of our mining heritage and current world-leading ex- visit to the Natural History Museum. I would love to say he has
pertise. developed his passion for rocks from reading his dad’s insightful
One of the executives I spoke with told me how his son was commentary on the industry but the truth is it came from playing
almost embarrassed to say his dad worked in the industry, such the computer game Minecraft; the worldwide phenomenon in
is the reputation it has in vast parts of the community. which players can build entire worlds.
The popular success of the anti-mining tax debate gave the I am not completely au fait with the game but the simple tenet
sector a false sense of its standing. And, with the high wages of of it is that any material you wish to use must be either grown
the boom an ever-fading memory for many former sector work- or mined.
ers, the public perception will only get worse. The mining tax From here, my son’s understanding of the importance of min-
campaign probably didn’t move hearts and minds, only back ing to society has grown as has his love of geology. It may not
pockets and now those back pockets are no longer directly reli- lead him becoming a mining professional but it is likely he will be
ant on mining, the community support will be weakened. more predisposed to having positive attitudes towards the sec-
Many in the industry refuse to accept the resources sector’s tor as he grows up.
standing and often tell me how the wider community under- This is soft power at its most effective, building awareness and
stands the importance of mining to Australia’s story. acceptance of the industry without the need for ad campaigns or
But, much like the accusations levelled at politicians and pub- parliamentary reviews. Failing to deploy it effectively can have
lic servants in Canberra, mining industry insiders often live in a disastrous consequences; the industry is finding this out in the
bubble where they reaffirm each other’s belief that mining is the Philippines and El Salvador and Australia’s industry can’t afford
to fall into a similar situation.
[email protected] @DominicPiper
PAGE 4 MAY 2017 AUSTRALIA’S PAYDIRT
NEWS
A Superior offer
Chris Bradbrook doesn’t Bradbrook said the com-
believe Australian play- pany would continue to look
ers missed an opportunity to at other potential acquisi-
buy the underrated Plutonic tions in Australia and else-
gold mine, rather the offer where.
tabled by Superior Gold Inc Superior’s interest in
was better than whatever Plutonic and fellow Cana-
else Northern Star Resourc- dians Kirkland Lake Gold
es Ltd was being presented. Ltd’s $C1 billion takeover
“Northern Star ran a of Newmarket Gold in 2016
process where they were for the Fosterville (140,000-
maybe looking at selling it, 145,000oz gold in FY2017)
divesting it, so I don’t think and Cosmo (60,000-
it was the local guys that 65,000oz FY2017 guid-
lost the opportunity, it was ance) mines has reignited
more the structure that we North American interest in
offered Northern Star was assets down under.
more attractive to them. I “I would say that story
think we offered them a rea- Northern Star retains exposure to the Plutonic gold mine through [Kirkland Lake] would have
sonable value upfront as a a 19.7% shareholding in Canadian outfit Superior Gold got North American and in-
big shareholder to increase vestors, not just Canadian
that value over time,” Superior president Immediate plans are for Superior to but American investors also, actually
Chris Bradbrook told Paydirt. have Plutonic performing at a nomi- paying a lot of attention to Australian as-
“That was something I don’t think nal 80,000 ozpa gold, with a target of sets,” Bradbrook said.
anyone else offered. The North Ameri- 100,000 ozpa production the objective Time will tell which Australian asset
can market is very attuned to the ability from a mine which has run for almost 30 or company is next in line to be cherry-
to take these assets when no-one else years and churned out more than 5 moz picked by a cashed-up North American
cares about them and put them in the gold. group, however, companies down under
hands of one company and they make In the first two quarters running under hoping to attract that particular atten-
them work. I actually don’t think the lo- the Superior banner, more than 43,000oz tion should be aware that assets offering
cal guys missed an opportunity, I’d like gold was produced from Plutonic. good value are not limited to Australia.
to think that it was us actually pitching a “We have been thrilled with it. We “I think Canadians tend to look at the
better deal to Northern Star.” haven’t hired anyone new, we have the quality of the asset opposed to where it
Superior listed on the TSX-V earlier same Northern Star employees running is,” Bradbrook said.
this year after raising $32 million in an it. I can’t claim any credit with how the “Obviously, Australia is the second
IPO eight times oversubscribed, with operation is working, it is all down to the largest producer in the world, so the first
the key asset being Plutonic which was operating team,” Bradbrook said. reaction to our acquisition of Plutonic was
acquired in October 2016. The company “We see lots of opportunity to make ‘why would the Australians not want it?’.
also has the Hermes gold project and an Plutonic something more, something You do have to get over that but beyond
interest in the Bryah Basin JV, both of bigger and something better; that is our that assets are where they are, Australia
which are south-west of Plutonic. primary focus. However, you have to be is a great place for gold assets, a great
Under the Plutonic acquisition terms, opportunistic and aware of what is out place to do business and I think there are
Northern Star holds a 19.7% interest in there and what might be available. We lots of similarities between the Australian
Superior, with the latter on a promise to are always looking at other things but we and Canadian miners and it’s an area I
extract maximum value from the West think Plutonic is such an undervalued as- am very comfortable working in.”
Australian gold mine. set that there is lots of opportunity there.” Bradbrook is also at ease with Supe-
rior’s single listing on the TSX-V for now,
The future of the Super Pit in Kalgoorlie remains uncertain, with Shandong Tyan however, an Australian listing is “clearly
Home pulling out of talks regarding the purchase of Barrick Gold Corp’s 50% stake in something to look at in the future” for the
Australia’s largest open pit gold mine.
company, he said.
It has been reported the companies were negotiating a deal based on a price of
“We have a great share registry from
$US1.3 billion for Tyan Home to join Newmont Mining Corp in ownership of the Super North America and Europe but there are
Pit. lots of people in North America and Eu-
In an announcement to the Shanghai Stock Exchange, Tyan Home cited China’s rope that don’t own us yet, so until we
tightening of regulations concerning outbound investments as a reason for ending the have a broader share registry in North
talks.
America we’re happy where we are now.”
The decision is bittersweet for Barrick after it did a deal in April with Shandong Gold
Group for the 50% sale of Veladero, San Juan province, Argentina, for $US960 million. – Mark Andrews
Barrick and Shandong will also work together to explore the joint development of the
Pascua-Lama deposit, Chile, and evaluate additional investment opportunities in the El
Indio gold belt on the border of Argentina and Chile.
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 5
NEWS
457 visa class scrapped
Australia’s resources sec- “This will ensure Austral-
tor won’t be greatly im- ian workers are given the ab-
pacted by the Government’s solute first priority for jobs,
“putting Australian workers while businesses will be
first” stance which will see able to temporarily access
the abolishment of the 457 the critical skills they need
visas, according to senior to grow if skilled Australians
lecturer, Discipline of Work workers are not available,”
and Organisational Studies the Government said.
at the University of Sydney, “The new visa will also
Dr Chris Wright. include a strengthened
High wages and a lack of training obligation for em-
skilled people in Australia ployers sponsoring foreign
to fill positions in the indus- skilled workers to provide
try were major talking points enhanced training outcomes
during the last mining boom for Australians in high-need
in Australia, which stirred industries and occupations.
debate around the issuing of Australia has abolished the Subclass 457 Visa and replaced it with the These changes will give Aus-
457 visas to foreign workers. Temporary Skill Shortage Visa. The new visa will include mandatory tralian job seekers more op-
“I don’t think the changes criminal checks and tighter English language requirements portunity to find work while
will have a big impact on the finding the right balance so
resources sector. In 2005-06 7.2% of all cording to the employer demand, the businesses can prosper by acquiring the
457 visas issued were for jobs in mining downturn in mining has diminished expertise they need.”
but in 2015-16 mining accounted for only mining employers’ use of the scheme. Resources industry employer group,
2.4% [which equates to 1,090 visas for There has been a less dramatic decline AMMA, welcomed the Government’s
primary applicants],” Wright told Paydirt. in industries connected to mining such move, saying the new temporary immi-
“Since the 457 visa is regulated ac- as construction [down from 8.8% in gration programme would help ensure
2005-06 to 6.6% in skilled migrants, and the significant
2015-16]. None of contribution they make in Australia, “is
the top nominated no longer trivialised and leveraged for
occupations for the cheap political point-scoring”.
457 visa in 2015-16 “If today’s announcement is at all ef-
were mining indus- fective at silencing the cheap politics and
try jobs – instead scaremongering that has taken place
they were ones as- around temporary skilled migration in re-
sociated with the IT, cent years, AMMA would welcome that
hospitality, health outcome,” acting AMMA chief execu-
and business ser- tive Tara Diamond said in a release last
vices sectors.” month.
Instead of the “The resource industry is one sector
Subclass 457 visa, that has seen a dramatic change in la-
a new Temporary bour demand and skills availability in re-
Skill Shortage Visa cent years. The same temporary skilled
programme has migration programmes that were critical
been introduced, to filling crippling skills shortages during
classed as Short the major project investment and con-
Term (two years) struction boom, have more recently seen
and Medium Term numbers drop to almost non-existent, as
(four years) visas. skills and labour pressures have eased.”
Both visas will be According to Department of Immigra-
subject to labour tion figures, the resources industry made
market testing, with 6,630 applications for 457 visas in 2011-
tightened English 12; 2,600 in 2013-14 and 230 in 2016-17.
requirements, a “Clearly, any groups characterising the
condition to be met 457 Visa programme as detracting from
by Medium Term Australian job opportunities have been
visa applicants in- misinformed at best, and acting mischie-
tending to fill ar- vously at worse,” Diamond said.
eas of critical skills – Mark Andrews
shortages in Aus-
tralia.
PAGE 6 MAY 2017 AUSTRALIA’S PAYDIRT
BUSH TELEGRAPH
Tete takes on
Eskom challenge
Back in 1999, Anglo American plc and kets which have dramatically changed before the highest court in the land, the
the former Gold Fields of South Africa Kumba’s profitability and outlook. Constitutional Court, depending on what
took the first steps that led to the creation This brings me to the key difference is contained in the latest redraft of the
of one of South Africa’s most success- between the 1999 deal and the 2012 Mining Charter due to be gazetted im-
ful black economic empowerment (BEE) deal. In 1999 Anglo American’s strategy minently.
groups through the sale of some unwant- was a positive one, designed to create a The industry is being hamstrung by
ed coal mines. black-controlled coal group which could use of the deliberately vague new min-
The company which bought those coal emulate the success of the country’s ing legislation which came into force in
mines was Eyesizwe Coal which subse- then existing coal majors and so con- 2005 to meet political and social ideolog-
quently merged with Kumba Resources tribute to the success of the “new South ical targets at the cost of the businesses
in 2006 – a commodity group unbundled Africa”. themselves.
from the former state-controlled steel That was then. This is now and the As if that’s not bad enough, major
group Iscor – to become Exxaro Re- current driving strategy for Anglo Ameri- state-controlled entities like Eskom have
sources. can is negative. It is getting out of vari- imposed their own ideological require-
Anglo American is now doing it again, ous South African businesses because ments that it wants suppliers to adhere
selling unwanted coal mines to a BEE of pressure from its overseas sharehold- to which go beyond the legislated regula-
buyer who has huge ambitions to use ers as well as management’s desire to tions.
them as a base to develop a “black- limit its exposure to a country where the The future looks bleak.
owned mining champion”. But the cir- ruling politicians seem hell-bent on de- This brings me back to New Largo.
cumstances behind the deal announced stroying what’s left of South Africa’s min- The colliery is supposed to supply some
on April 10 are hugely different – and, ing industry. 14 mtpa coal to Eskom’s Kusile power
frankly, seriously depressing – to the fac- In 1999, South Africa was enjoying a station which is currently under con-
tors that drove the 1999 deal. honeymoon period under late president struction. But there’s no coal supply
Anglo American has just agreed to Nelson Mandela following his election agreement between Anglo American
sell its Eskom-dedicated New Vaal, New in 1994. Now, South Africa’s sovereign and Eskom which started construction of
Denmark and Kriel collieries, along with debt has just been downgraded to junk the power station without having that es-
four other closed coal mines, to Seriti status by two of the top three global rat- sential building block in place.
Resources Ltd – a 79% black-controlled ings agencies following a string of self- The two have been arguing over the
company which is led by Mike Teke who serving decisions by President Jacob terms for the past five years. New Largo
is currently both the president of the Zuma who inexplicably remains in office was left out of the latest deal because
“country’s Chamber of Mines and chair- despite widespread allegations of cor- they are still arguing and there’s a huge
man of the Richards Bay Coal Terminal, ruption. amount at stake because it will cost some
South Africa’s dominant coal R20 billion to build that mine.
exporting facility. In 1999 Anglo American’s No ordinary BEE company is
Teke – who has vast expe- strategy was a positive going to be able to raise that
kind of money.
rience in the coal business one, designed to create a black-
including controlling the Opti- It gets all the more inter-
mum colliery which he acquired controlled coal group which esting because Kusile was
could emulate the success of
from BHP Billiton Ltd through a designed to use New Largo
previous empowerment deal coal. Using alternative coal is
but then sold to Glencore – has not good for the high-tech fur-
made no secret of his ambi- the country’s then existing coal naces yet the first generating
tious plans for Seriti. majors…the current driving strategy set at Kusile has been started
up using a mix of coal supplied
He’s after other assets that
Anglo American could sell off for Anglo American is negative. from junior coal miners operat-
with first up likely to be the New ing in the area.
Largo colliery which was ex- That should give you some
plicitly excluded from this deal; idea of the mindset of the
more of which later. In 1999, negotiations had yet to start management at Eskom that Teke is go-
Teke has also got his eye on Anglo on the new mining legislation which ing to have to deal with should he even-
American’s export coal mines as well as would transform the industry but industry tually take over New Largo. He’s a highly
its controlling stake in iron ore producer executives believed a workable system competent executive and can probably
Kumba Iron Ore. Two years ago, Anglo would be reached through reasonable find the necessary financial backing but,
American management earmarked Kum- compromise between state and busi- frankly, good luck mate because you are
ba for disposal as a “non-core” asset but ness. The future looked promising. going to need it.
this year changed its mind following the Now, the Chamber of Mines is poised Brendan Ryan is a Johannesburg-based
unexpected recovery in the iron ore mar- to haul the South African Government mining writer
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 7
NEWS
Cyclone Debbie maroons
Queensland coal
Coal miners in North Queensland face exports jumped over 12mt, leaving the “We are working with Aurizon to se-
an uphill battle recovering from dam- net impact at 13.5mt. cure resourcing for traffic management
aged infrastructure and production loss- to assist the recovery effort. We have
es in the wake of Cyclone Debbie. Mine sites were left with no way to get also managed to expedite approvals to
their product to port after extreme rain- help relocate wheel loaders to Hay Point
The tropical cyclone lashed Queens- fall crippled Aurizon Ltd’s rail network. to assist with recovery operations at the
land and New South Wales in early April port,” Lynham said.
and with infrastructure outages expected Aurizon mobilised all available crews
to last about five weeks, stranding large and resources to inspect and repair the “We have also been working closely
amounts of the world’s premium coking Newlands, Goonyella, Blackwater and with companies like Hastings Deering
coal onsite, prices are tipped to rise. Moura coal systems which form the Group, a mining and earthmoving equip-
Central Queensland Coal Network. ment company in Rockhampton, to get
In 2011, Cyclone Yasi washed away their business and 600 staff back to
20mt of coking coal production from the ANZ said stockpiles at the mines work as soon as the flooding subsides.”
Bowen Basin; one of Australia’s richest were understood to be fairly high and
coal reserves, accounting for about half with no means of moving stocks, mining In early April, despite heavy rain im-
the world’s seaborne coking coal supply. may have to be suspended, or at least pacting access, power, logistics and
slowed. services, BHP Billiton Ltd confirmed that
ANZ Ltd’s commodity researchers ex- work had resumed and mine production
pect losses in the order of 13mt of cok- “With rail infrastructure the bottle- had restarted at 11 of its partially-owned
ing coal and 3mt of thermal coal as a neck in the system, the likelihood of ex- coal mines in the region.
result of Cyclone Debbie’s impact and ports recovering any lost production will
predicted coking coal prices would rise be limited to the stockpiles held at the With no damage occurring to mine
above $US200/t in the weeks that fol- ports,” ANZ said. infrastructure, work had also resumed
lowed as buyers grew desperate. at Glencore Australia’s Oaky Creek,
With the Goonyella rail network signifi- Clermont and Rollestone coal mines,
Already, Yancoal Australia Ltd and cantly impacted by land slips, sites like but production remained suspended at
QCoal Group have declared force ma- Realm Resources Ltd’s Foxleigh coal Collinsville and Newlands at the time of
jeure on deliveries to the world’s largest mine have sought alternative rail lines print.
importer of coking coal, China, which and ports while repairs continued.
has been left scrambling to supplement
supply loses. Queensland State Development Min-
ister Anthony Lynham said his number
While Australian exports fell 25mt, US one priority was the re-establishment of
essential services.
In times of hardship, the mining industry to the Salvation Army would help deliver these local communities affected by
has always dug deep for communities in urgently needed services and support to flooding, and it’s important we roll up our
need. regional Queensland communities such sleeves to help with flood preparation
as Mackay and Moranbah. and recovery,” Cowan said.
The cyclone-battered coast of
Queensland is no exception and despite “This is far from over for the people “There’s an extraordinary amount of
economic woes, several mining compa- of Queensland. Many families have lost community spirit, and when people are
nies have stepped up to help the recov- their homes and communities continue faced with these types of events we all
ery effort. to be without power. Communities are pitch in to do what we can to protect
relying on organisations like the Salva- property and community assets.”
In April, Queensland State Devel- tion Army for help,” Knox said.
opment Minister Anthony Lynham an- Evolution Mining Ltd even deployed a
nounced the recovery effort had yielded Despite economic woes and crippling team led by mine rescue personnel to
key successes, including the restoration damage to its rail network, Aurizon Ltd assist with recovery efforts in affected
of 89% of power in North Queensland, has put all hands on deck to support communities.
two days ahead of schedule. clean-up efforts and deliver much need
supplies. Evolution executive chairman Jake
“My Department of State Development Klein said: “Our thoughts are with the
is working with local councils, other state Crews also helped the Rockhampton people of Queensland who have been
agencies, businesses and the Federal community prepare for rising floodwa- affected by the cyclone, which include
Government to plan for and deliver an ters by building a flood proof barrier at some of our own employees and their
economic recovery plan,” Lynham said. Rockhampton Airport and sandbagging families.
the information centre and showgrounds.
Queensland Premier Annastacia “We have mobilised a team to support
Palaszczuk congratulated BHP Billiton Aurizon Vvce president Peter Cowan our employees who require it, and to
Ltd for donating $250,000 to charities said there was a long tradition of Aurizon provide assistance to the broader com-
nominated by the Government. and its employees helping the commu- munity.”
nity during natural disasters.
BHP Billiton/Mitsubishi Alliance asset
president Frans Knox said the donation “Aurizon employees live and work in
PAGE 8 MAY 2017 AUSTRALIA’S PAYDIRT
Labor pledges to cut red tape
New West Australian Mines and Petro- the potential $28 million clean-up job.
leum Minister Bill Johnston has prom- “We don’t want to allow rogue ele-
ised to do everything in his power to sup- ments to undermine the interests of the
port investment in the State’s resources sector more broadly,” Johnston said.
sector. “We have to make sure that decent,
Speaking at a WA Mining Club lunch- hard-working contributors to the mining
eon in late March – his first public ap- sector are not having costs put on them
pearance since being appointed to by unscrupulous players who take ad-
the position – Johnston said the Mark vantage of interaction of Commonwealth
McGowan-led Labor Government was and State laws to get away from their re-
committed to working with the industry habilitation obligations.
to reduce red tape currently holding back “That means the rest of the industry
some projects. will end up paying more and I am per-
“We are going to look at how we can sonally committed to ensuring that that
streamline approvals and how we can doesn’t happen. I don’t want to have
streamline departmental arrangements costs shifted on to the rest of the industry
to ensure that we focus on outcomes for from people who are not having the long-
the industry,” Johnston said. Bill Johnston term interests of our State at the front of
“My role as Minister for Mines and their minds.”
Petroleum is to create an environment by then-WA Nationals leader Brendon On the eve of Johnston’s first public
for the mining and resources sector to Grylls. address, the WA Department of Mines
succeed, because your success means Johnston said projects such as the and Petroleum released its annual indus-
more jobs for people in this State and $US2.4 billion development of South try update, reporting total sales of $94.8
that’s what we’re about.” Flank, a BHP Billiton Ltd operation, billion from the State’s mining operations
Johnston, who has also taken on the would have been at risk if the proposed through 2016, up $3.3 billion on the pre-
newly created Asian Engagement portfo- mining tax was introduced. ceding 12 months.
lio, told the audience to expect a govern- “The idea of increasing tax on the min- Mineral sales accounted for almost
ment focused on improving investment ing sector was not something we thought 80% of that total, with iron exports con-
opportunities for the sector. would support investment,” Johnston tributing to 72%, or $53.9 billion, of all
This included “more efficient and ef- said. total exports.
fective” policies around environmental “I, like everybody else, read the com- “Many people say Sydney Airport is
regulations. ments from BHP [Billiton] about their in- the most important piece of economic
“The fact is, without continuing invest- vestment profile in this State and clearly infrastructure in Australia, but actually
ment in the sector, without new mines if we had a mining tax added to those they’re wrong – the channel at Port Hed-
and without new discoveries, there is no major companies, it would have been a land is the most important piece of eco-
future for the sector,” Johnston said. problem and would have discouraged nomic infrastructure we have,” Johnston
““It’s investors who actually make the investment.” said. “About 4% of our country’s GDP
decisions about which goes out of that channel. It
projects proceed, not gov- The fact is, without continuing is just a remarkable port.”
ernments. Governments investment in the sector, without Johnston, who served
are facilitators and regula-
tors, but at the end of the new mines and without new discoveries, as Shadow Minister for
there is no future for the sector. Mines and Petroleum for
day it’s the private sector five years, also intends to
that makes the invest- promote WA’s technical
ments.” capabilities in the mining
Since assuming of- sector alongside its mineral
fice following a landslide wealth.
election victory on March 11, Labor has Johnston also confirmed the co-funded “Wouldn’t it be great if we were known
moved quickly to clear up uncertainty drilling grants under the existing Explora- as a place you came to for solutions to
surrounding some polices which could tion Incentive Scheme would continue, complex problems in the resource indus-
impact the sector. pointing out more dollars were punched try [when] people around the world are
Labor has a long-held “no new uranium into WA projects in 2016 than the previ- confronted with technical problems?” he
mines” policy but confirmed all projects ous year. said.
which had been approved for mining However, Johnston sounded a warn- “Supporting business in WA, in con-
under the previous Liberal Government ing to rorters of the government-assisted necting to opportunities outside of WA,
would proceed, including those owned Mining Rehabilitation Fund (MRF), in a is going to be a very, very key part of
by Toro Energy Ltd (Wiluna), Vimy Re- thinly veiled swipe at the former manage- my role, both as Minister for Mines and
sources Ltd (Mulga Rock) and Cameco ment team of Kimberley Diamonds Ltd. Petroleum and as Minister for Asian En-
Corp (Yeelirrie). Liquidators for Kimberley Diamonds gagement.”
A line was also quickly drawn through have abandoned the failed Ellendale – Michael Washbourne
the controversial mining tax proposed mine, with the MRF now responsible for
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 9
NEWS
BC Iron steeled for the future
BC Iron Ltd remains committed to de- cided that even if the iron ore price goes reported breakeven price of $US42-44/t.
veloping iron ore projects despite di- up, it is very unlikely we would get agree- Vorster, who merged his Iron Ore Hold-
versifying into other commodities under ment from our JV partners to reopen the
new managing director Alwyn Vorster. mine in the current format,” Vorster told ings into BC Iron in mid-2014, knew upon
Paydirt. his arrival he had to undertake a diversi-
Vorster has spent the past 10 months fication strategy for his new company to
since joining the company exploring op- “So, it was decided the asset was best survive at the bottom of the cycle.
tions in potash, salt, gold and base met- suited to sit with Fortescue whereby they
als in a move aimed at becoming less can make the decisions as to where it fits “Pure iron ore junior companies like BC
dependent on a single commodity. into their mine plan and when it fits into Iron, Atlas [Iron Ltd], Grange [Resources
their mine plan. And if they make the de- Ltd] and to a certain extent Mt Gibson
BC Iron was once an ASX200 compa- cision to re-open it, then BC Iron will still [Iron Ltd] don’t necessarily have tier one
ny after putting its Nullagine project into get some benefits via the royalty stream assets; we probably have tier two and tier
production and operating the Pilbara- that we agreed.” three assets due to the affordability in the
based mine in conjunction with JV part- iron ore space,” Vorster said.
ner Fortescue Metals Group Ltd. Iron ore hit a three-year high of $US94/t
in February, but has since slid back down “These tier two and three assets are
However, low iron ore prices forced BC to around $US65/t at the time of print, as normally quite high cost as well, so when
Iron to shut the mine in December 2015 a surge of supply hits the market and there is a downturn it hits us more dra-
and the company ultimately decided to massive stockpiles build up at Chinese matically than what it hits the majors…so
offload its 75% stake in the mothballed ports. it’s very unlikely the BC Irons, the Atlases
operation to Fortescue late last year. and the Granges of the world can actu-
BC Iron suspended operations at Nul- ally get to a space where we can com-
Vorster said limited ore reserves, ma- lagine when the iron ore price dropped pete on cost.
jor environmental rehabilitation obliga- below $US40/t, but resisted the tempta-
tions and a heavy reliance on rail and tion to turn the mine back on when things “After months of consultations with key
port charges to Fortescue all contributed improved due to concerns around long- shareholders and stakeholders, we set
to the decision to part with Nullagine. term stability. the vision that said we are committed to
iron ore – it is in our DNA and it’s what
“Those three factors weighed heavily This was despite Nullagine having a made the company – but we are going
on our minds and in the end it was de-
PAGE 10 MAY 2017 AUSTRALIA’S PAYDIRT
to look wider to diversify our The company is still on the
income stream and reduce risk lookout for prospective gold
for the company and its share- and base metals projects, with
holders.” Vorster and his team to cast
That diversification strat- their net wider than the tradi-
egy has started with BC Iron tional assets found in WA.
acquiring a 15% interest in Iron Valley, a former Iron Ore
the Carnegie potash project, Holdings operation which is run
220km north-east of Wiluna, by Mineral Resources Ltd, re-
Western Australia, after enter- mains the company’s flagship
ing into a JV with newly listed asset and, according to Vor-
Kalium Lakes Ltd ster, is an example of BC Iron’s
BC Iron will earn a further ideal business model.
15% interest in Carnegie upon “My preferred model is that
contributing $1 million of ex- we are the manager of a di-
penditure towards a scoping versified portfolio of assets,
study and related exploration but with an emphasis on the
activities. manager, not necessarily the
Several members of the Kali- Iron Valley will continue to be the lead project in BC Iron’s newly operator...Iron Valley is proving
um Lakes team, including man- diversified portfolio of assets that it can work in that regard,”
aging director Brett Hazelden he said.
and chief development officer Rudolph few of the current [Australian potash] Vorster described the undeveloped
van Niekerk, worked under Vorster at players who are struggling with funding. Buckland project, West Pilbara, as the
Iron Ore Holdings. We have the right skillset in terms of the “sleeper” in the company’s portfolio and
“That was the swinging factor for us in management and we have funding we the time had come for BC Iron to wake it
deciding to partner with them, acknowl- can contribute to fast-track that project to up from its slumber and provide share-
edging that their main project is Beyon- become competitive.” holders with some clarity around a poten-
die [potash project, also in WA],” Vorster BC Iron is also looking to advance the tial development and funding model.
said. Mardi salt project, 100km south of Damp- – Michael Washbourne
“We think we can accelerate Carnegie ier, with a scoping study due at the time
very quickly to catch up with at least a of print.
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 11
NEWS
El Salvador makes history
El Salvador
On March 29, El Salvador made a little across the developing world and increas- for the second year running the country’s
bit of history. ingly impacting industrial metals. Presidential Mineral Industry Environ-
The tiny Central American country mental Award.
passed a law banning all exploration, This is the flip side of the green revo-
mining and processing of metals; without lution, which holds so much demand But that has been swept aside by the
exception. It is the first nation to do so. promise for industrial stalwarts such as Government’s anti-mining campaign,
copper and has propelled new materials which at the last count had led to the clo-
The legislation prohibits the use of such as lithium and cobalt into the public sure of 23 mines out of a national total
toxic chemicals like cyanide and mercury spotlight. of 41 and the suspension of 75 develop-
and makes permanent an executive or- ment licences.
der passed by former President Antonio The vote in El Salvador follows a pro-
Saca in 2009 and renewed by subse- tracted battle with a Canadian junior, Eco-warrior turned government minis-
quent administrations. Pacific Rim Mining, over its proposed El ter Regina Lopez appears to have taken
Dorado gold and silver mine. The project a leaf out of El Salvador’s book, linking
Several regions of the country have was bitterly resisted by locals and envi- her environmental audit of the mining
attracted interest from international gold ronmental activists because of its impact sector to water supplies.
and silver mining companies. on water supplies.
And she has the support of Philippine
In October, El Salvador won an arbi- Pacific Rim had sued the Government President Rodrigo Duterte, who has
tration at the World Bank’s International for failing to issue a mining licence after upped the rhetoric in an already heated
Centre for Settlement of Investment the company had submitted its environ- national debate by suggesting he might
Disputes (ICSID) against Australian-Ca- mental impact study, a decision the IC- favour a total ban on mining similar to
nadian miner OceanaGold Corp, which SID ratified last October. that in El Salvador.
was seeking $US250 million over the
2009 denial of an extraction permit. That paved the way for the new anti- The threat may turn out to be overstat-
mining law, which was passed with cross- ed but Lopez’ actions have already roiled
In its decision, the ICSID ordered the party support and codifies a previous de the nickel market because of the impact
company to pay El Salvador $US8 million facto moratorium on mining permits. on the flow of ore to China’s nickel pig
for legal costs. iron sector.
El Salvador may be an extreme case
The decision, which enjoys broad pop- but it is not unique in looking again at the Similar arguments have been playing
ular support, is all the more remarkable trade-off between the economic benefit out in Malaysia over that country’s baux-
given the parlous state of the country’s and environmental impact of mining. ite mining, which also stands accused of
economy. environmental depredation.
Pacific Rim was bought in 2013 by
But in a public debate that pitted water OceanaGold, which operates mines in Malaysia placed a moratorium on
supplies against economics, water won. New Zealand, the United States and the bauxite mining at the start of 2016. It has
Philippines. been extended several times, most re-
The decision will not affect any met- cently until June this year.
als supply chain. There are no major The company’s Didipio gold and cop-
mines in the country, although one was per mine in the Philippines was served on The issue in the Philippines and Malay-
planned. February 14 with a suspension order by sia has been one of unregulated opera-
the country’s Department of Energy and tors maximising profit over environmen-
El Salvador has specific issues with Natural Resources due to allegations in- tal impact.
water. Its Ministry of the Environment cluding “the potential adverse impact to
and Natural Resources estimates that the agricultural areas of the province”. But as OceanaGold will attest, the
90% of surface water is contaminated. danger is that all operators pay the price
OceanaGold, which is appealing for the bad behaviour of the few.
However, it is symptomatic of the en- against that order, had ironically just won
vironmental pressures that are building Such pressures on mining impact only
PAGE 12 MAY 2017 AUSTRALIA’S PAYDIRT
the very start of the supply chain for closed and a new plan for alleviating It’s not the only one.
many metals. smog over the winter months in Beijing Copper has a similar green story
China’s alumina refineries have al- and the surrounding area will force large thanks to the increased call on the metal
ready adapted to the Malaysian bauxite swathes of industrial capacity off-line, from everything from electric vehicles to
ban by searching for raw material further including the entire aluminium supply wind stations.
“afield in countries such as Guinea and chain from carbon anode plants to refin- And then there are the next-generation
the Solomon Islands. eries and smelters. metals such as lithium and cobalt, which
But it is China that has have seen extreme bull ral-
opened a whole new chapter El Salvador has specific lies on expectations for usage
in the environmental metals growth in the electric trans-
issues with water. Its Ministry
story. of the Environment and Natural port and grid storage sectors.
Here the issue is first and But even while the green
foremost air, not water, as revolution is generating a de-
Beijing seeks a solution to the Resources estimates that 90% of mand boost of varying intensi-
smog that plagues many parts surface water is contaminated. ty across the industrial metals
of the country, not least the spectrum, it is also pinching
capital. with increasing frequency the
The old environmental in- supply of those metals, par-
spection regime has been dismantled Environmental clampdown has be- ticularly at the mining stage.
and replaced with a new centrally con- come a defining part of the price narra- This is a story that has been playing
trolled system with inspection teams fan- tive in steel and aluminium as a result. out in miniature in small communities
ning across the country with increasing The latter, it’s worth noting, is the best across the developing world.
regularity. performer among the major industrial El Salvador’s decision to reject any sort
In China too, mining is being targeted metals so far this year, as the market of mining elevates it to a national level.
by policymakers but such is the low level tries to work out the implications of the It may yet turn out to be a historical
of visibility on large parts of the sector planned Chinese shutdowns. outlier in the mining industry’s evolution
that the impact of the clampdown is hard All of which is ironic for a metal that is but the battle for hearts and minds in the
to gauge. expected only to benefit from the green metals versus environment war is only
Not so when it comes to the country’s technology revolution due to its light- going to become hotter.
giant metals-processing industries. weighting potential in vehicle construc- – Andy Home, Reuters
Steel capacity is being aggressively tion.
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AUSTRALIA’S PAYDIRT MAY 2017 PAGE 13
NEWS
Well timed split for Metals X
Metals X Ltd chose a good time The mine, on Tasmania’s west
to demerge its gold assets into
Westgold Resources Ltd late last coast, is delivering a cash margin of
year.
$10,000/t on a tin price of $28,000/t
Australian gold prices have fa-
voured local players for several according to reports in late March.
years and with Westgold led by
gold industry legend Peter Cook, With eight years of reserves and
the company was always going to
be well supported in the market. 16 years of resources, plus poten-
So far, Westgold – a top 10 gold tial to add to that, the next step at
producer in Australia – has been
appreciated on the ASX, trading at Renison – a 50/50 JV with Yunnan
$2.30/share at the time of print, af-
ter starting on the bourse at about Tin Group – is adding an ore sort-
$1.70.
ing, x-ray transmission component
Metals X has also held its own,
improving trading from 56c/share to the production process, which
at the start of this year to 75c/share
in mid-April. will add another 20% to production
“Copper prices started to move capacity and reduce costs when
in November, so it was good timing
to split around December and both implemented at the end of the year.
stocks have gone quite well since
that time,” Metals X managing di- The expansion at Renison can
rector Warren Hallam told Paydirt.
be done with minimal capital, which
Metals X acquired the Nifty cop-
per operation in Western Australia gives Metals X the opportunity to
in 2016 and was therefore happy to see
the red metal rally and hold its ground act on the Rentails development if
since the start of the year, reaching
$US2.60/lb last month. studies compel the company to do
Production from Nifty has been run- so.
ning at about 27,000-30,000 tpa, how-
ever, early analysis of the geology has “That [Rentails] project would be
Metals X confident it can announce a
reasonably significant reserve increase delivering around $50 million cash
later this month.
flow if it was up and running now,”
“We have also got an underground rig
drilling about 80-100m per day at the mo- Hallam said.
ment and a lot of that drilling will come
into another reserve upgrade towards “We are dotting I’s and crossing
the end of the year,” Hallam said.
T’s on feasibility and modelling,
Over a period of 10 years, about 600m
of known mineralisation extending to Warren Hallam in preparation of starting to talk to
1.2km has been mined at Nifty, with Met-
als X setting up to drill down-plunge to banks and in the next three or four
demonstrate the orebody is at least a
couple of kilometres long. the next few years is the company’s am- months. We will start to make a decision
Hallam said the objective was to dou- bition. on where to go with that at some point
ble or triple current existing reserves
(5.24mt @ 1.85% copper for 97,000t) and “That is simply by opening up the this year there will definitely be a deci-
turn Nifty back into a long-life mine.
mine, getting the mining areas up, get- sion.”
Additionally, the nearby Maroochydore
deposit – 486,000t copper and 19,000t ting the mine to deliver and maximising Rentails has been in the pipeline for
cobalt – is the most advanced of a num-
ber of regional prospects Metals X hopes the throughput through the process plant some time and while there is much noise
to capitalise on in WA’s East Pilbara re-
gion. [a 2.5 mtpa concentrator],” Hallam said. around lithium-ion batteries, most punt-
In the meantime, boosting production “Up to now, that process plant can only ers appear to have forgotten the impor-
to around 45,000-50,000 tpa copper in
run on a two weeks on/one week off ba- tance of tin and other elements that make
sis, so it is about filling that up.” up batteries. As a global top 10 primary
Current AISC at a production rate of tin producer, Metals X is keen to make
about 30,000 tpa is $US2.15/lb, with Met- them remember.
als X targeting AISC of $US1.75/lb within “There are not many analysts around
12-18 months. that understand the tin market at the mo-
“The underground [cost] is 80% fixed ment. I think it is a little bit of a black box
and the processing is about 50% fixed, for them. But, there is growing interest,
so really we have about 10% of the re- especially as batteries are coming more
duction costs still to go in just doing and more to the forefront,” Hallam said.
things different and better, but the rest is “We all know that even though they
going to be volume-driven,” Hallam said might be called lithium batteries, they
“We have at least a five-year plan on use lots of other stuff in them. Also,
the table now, so we are busily working 25,000t out of the 355,000t of annual [tin]
that into detail so we can scrape out a demand is going into lead acid batteries
reserve. Everything is there and lined up and that market itself has grown. Obvi-
to do that.” ously, lithium-ion batteries have another
Nifty was only acquired via an off- formula but certainly tin is in all those
market takeover in September last year electronics and there is a lot more inter-
but Metals X is starting to get a handle est in the market, particularly with where
on operations with a new management electric cars are going.”
team coming together. – Mark Andrews
The company can nurture the newest
of its assets knowing that the Renison tin
mine in Tasmania is “working very well”.
PAGE 14 MAY 2017 AUSTRALIA’S PAYDIRT
SAVE THE DATE
17 October 2017
Pan Pacific Perth
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NEWS
Aus Tin revisits roots
In some respects, Aus Tin TIN COBALT
Mining Ltd can claim to be
ahead of the game when 22000
speaking about cobalt. 55000
The company was listed 50000
on the back of the Mt Co- 20000 45000
balt project, 40km west of
Gympie, Queensland, in
2010 and managed to sur- 18000 40000
vive the cull when Peter 35000
Williams took the helm as
chief executive of the then
AusNiCo in 2013. 30000
“We divested quite a 16000
number of nickel projects. 25000
I held onto Mt Cobalt be-
cause I quite like it,” Wil- 14000 20000
liams told Paydirt recently. Apr 2016
Jun 2016 Aug 2016 Oct 2016 Dec 2016 Feb 2017
“We had a programme
of work lined up at Mt Co- SOURCE: TRADINGECONOMICS.COM
balt last year, and I might Cobalt prices have risen about 65% since the start of the year to almost $US55,000/t, while tin has
add that this was before ranged between $US18,760/t and $US22,225/t so far this year
things started to get quite
frothy in cobalt. We put out some drilling Cobalt, which Aus Tin will investigate fur- “I think we were predicting four years
results with grades of 0.8% cobalt which ther this quarter. ago that tin prices were going to go
is pretty good for this particular type of The Pembroke nickel-copper sulphide through the roof, as the San Rafael mine
mineralisation. target, 1km south of Mt Cobalt, will also in South America [Peru] was in its twilight
“I think there is actually a broader play receive some attention in light of higher- years and there were forecast supply
there in terms of a nickel-cobalt play grade mineralisation – 2m @ 0.1% co- shortages,” Williams said.
and perhaps one that the company had balt, 0.61% copper, 0.35 g/t gold and “We have seen a modest increase
originally contemplated where you have 1.77% nickel from 70m – detected from in demand but certainly there were
a lateritic cover over a sulphide target. previous drilling. many people forecasting tin to go to
Perhaps that is one that we will need to While feeling more enthused about the $US50,000/t but Myanmar came along
investigate further and focus on the co- nickel-cobalt potential in Queensland, in and brought a whole lot of tin back into
balt and potentially develop the cobalt to Tasmania, Aus Tin has some work to do the market.”
help fund the larger target,” he said. at the Granville tin project. Nevertheless, demand for tin is stead-
Aus Tin has made the first steps to- News that the recovery of finer tin from ily growing and the trend is expected to
wards determining the opportunity it has the circular jig was lower than expected continue, particularly as new applica-
at Mt Cobalt, indicating it will reassess has not been well received and a series tions for tin in the energy storage and
historical inferred resources for both of modifications were scheduled to be generation sectors are ever increasing
nickel and cobalt at the project. made at the time of print. and supply from major producing coun-
Inferred resources at Ridley (580,000t Despite the setback, Aus Tin is con- tries China and Indonesia is declining.
@ 0.9% nickel and 0.08% cobalt) and tinuing with the approvals process for “At some point the supply is going to
Jackson North (220,000t @ 0.8% nickel expansion of Granville, which entails re- drop away as we have seen, particularly
and 0.05% cobalt), 3km south-east of suming mining at the high-grade open pit in Indonesia, their annual production has
Mt Cobalt, were compiled 10 years ago and increasing in-concentrate produc- been progressively dropping over a pe-
but were considered small compared to tion to 550 tpa contained tin. riod of time,” Williams said.
other lateritic nickel projects. The Tasmanian EPA was undertak- “We are seeing LME stocks dropping
Therefore, there was no compelling ing the final assessment of the Devel- pretty dramatically. Earlier in the year
reason for the company to undertake any opment Proposal and Environmental they were down around 3,500t, they then
more significant work at the time, how- Management Plan at the time of print. popped back up to 5,000t and I think they
ever, a review of data from the 1970s, Concurrently, Aus Tin was also await- are down around 3,500t again. That only
uncovered intersections in the ilk of 14m ing approval to develop a trial mine and represents a couple of weeks of sup-
@ 0.1% cobalt and 1.12% nickel from sur- pilot processing plant at the Taronga tin ply, so it is pretty modest. On the back
face and is encouragement for Aus Tin to project, New South Wales. of all that we would expect prices to rally
follow up. The tin price has yet to break strongly but I think Myanmar is still in the
In the meantime, results from the nine- through the $US22,000/t mark (about mix and I suspect the Indonesians are
hole programme completed last year $US20,000/t at the time of print) it sitting on a bit more tin, so I don’t neces-
targeting cobalt-enriched asbolite within touched late last year and it is well off the sarily see the tin price skyrocketing.”
a lateritic cover, included 7m @ 0.84% highs some in the industry were forecast- – Mark Andrews
cobalt and 0.83% nickel from 29m at Mt ing just a few years ago.
PAGE 16 MAY 2017 AUSTRALIA’S PAYDIRT
Full on Monty for
Talisman and Sandfire
Talisman Mining Ltd is the upside. The fee that we
close to finalising a deci- have agreed is dependent
sion on the make-up of its on a number of factors that
portion of the financing for basically recognises all of
development of the Monty the downstream process-
project, which is set to be one ing costs associated with a
of the highest grade copper tonne of ore and converting
mines in the world. it into a concentrate and then
Talisman managing direc- selling it on the market; we
tor Dan Madden told Paydirt feel it is quite closely aligned
Australia’s big four banks with Sandfire,” Madden said.
were among a host of poten- Monty, just 10km from De-
tial financiers the company grussa, is within the wider
was in discussions with and a Springfield project area in
number of scenarios were on Western Australia’s Bryah
the table. Basin, which is a proven
Madden said traditional world-class VMS province.
debt financing was the pre- It was less than two years
ferred option and he was con- ago that the Monty discovery
fident of securing 100% of the hole was released to market
funding required. Resources at Monty currently total 1.05mt @ 9.4% copper and and with Sandfire already set
Monty is a JV between Tal- 1.6 g/t gold for 99,000t copper and 55,000oz gold up at Degrussa (where ore is
expected to last until 2021)
isman (30%) and Sandfire
Resources NL (70%), with a completed and purchase agreement – applicable to proving its economic viability has hap-
feasibility study last month indicating Monty ore and near Monty extensions – pened relatively quickly.
total capital to bring the Monty under- struck with Sandfire. Madden is certain there is potential for
ground – 920,000t for 80,000t copper @ Monty is part of the wider Springfield more high-grade deposits around Monty
8.7% copper and 42,000oz gold @ 1.4 JV between Talisman and Sandfire and – laterally and at depth – and within the
g/t (reserves) – on-stream was $90 mil- any further discoveries will be subject to Springfield package.
lion. separate ore sale and purchase agree- At the time of print, the JV was prepar-
Talisman’s share of capex for mine de- ments. ing three deep diamond holes either side
velopment is $22 million, with a payback In relation to Monty, up to 400,000 tpa of Monty, with results expected in a cou-
period of 17 months, pre-tax IRR 78% of ore will be blended with Sandfire’s De- ple of months.
and pre-tax cash flow of $64 million esti- grussa feed, with the point-of-sale occur- While Madden is happy with the Sand-
mated in the company’s feasibility study. ring when Monty ore hits the weighbridge fire partnership and willing to contribute
“The financing is a question that needs near the Degrussa ROM pad. to unearthing the exploration potential,
to be resolved and put out to market, Talisman will receive a net ore sale rev- he also knows the time and money it
which we will look to do probably in the enue payment on an equivalent payable takes to bring such deposits to fruition.
next month or two,” Madden said. metal-in-concentrate basis after deduc- “When you have got grade like that
“It may be the missing piece in the tion of ore treatment fee (of which some then you have significant value, it then
puzzle to investors but we are looking up components are subject to annual index- comes down to a question of scale and
to 100% financing there, which means ation and/or pegged to annual industry capital costs,” Madden said.
there is no equity component involved. determined benchmarks) per tonne of “Sandfire have the processing plant
“There are other considerations to do delivered ore and royalties. and therefore have an economic ad-
with the big four banks and their views; The ore sales are derived from inde- vantage [in the region] and cost basis to
hedging is something that we don’t want pendently calculated head grade, pre- compete against but the value that these
to have mandatory exposure to and we’re vailing metal prices, fixed recovery for- things can deliver means they certainly
cognisant of the equity market in terms mulae and fixed payabilities. have the potential to stand on their own
of what the gearing ratio is and wheth- All of this will come into effect towards two feet. They are obviously very hard
er we’ll need equity. All of those factors the back end of 2018 when first produc- things to find which means you need the
will come into play in our final decision tion from Monty is targeted. patience. It is early stages across the
but we have some good options, from “We feel that the agreement we have basin looking for these, so there maybe
well respected financiers, to fund up to entered into with the ore sales and pur- parties that want to persevere but Sand-
100%.” chase agreement will basically minimise fire certainly has a significant footprint in
While Madden is confident on closing a lot of the downside risk to us, while the region.”
a financing deal soon, he said the mar- exposing ourselves to participation in – Mark Andrews
ket may need time to digest the ore sale increase in grade and the majority of
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 17
Case histories of discovery
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Alturas (Chile) – Barrick Gold Limited Mount Morgans (Australia) – Dacian Gold Limited
Hot Maden (Turkey) – Mariana Resources Ltd/ Sanbrado (Burkina Faso) – West African Resources
Limited
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Öksüt (Turkey) – Stratex International Plc
Yaramoko (Burkina Faso) – Roxgold Inc. Federation/Liberator (Australia) – Newmont
Yaouré (Côte d’Ivoire) – Perseus Mining Limited Mining Corporation
Gross (Russia) – Nordgold N.V. Cascabel (Ecuador) – SolGold plc
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COVER
Opportunity found in
South America’s
forgotten gold province
When walking through the thick The country borders large gold Guyana, though, has failed to entice
jungle of north-west Guyana it producers in Suriname and Ven- gold explorers in the same way and cur-
is hard not to conclude that, from a ezuela and the geology of the region rently boasts just two commercial-scale
gold exploration perspective at least, shares similarities to West Africa, mines – Aurora and Karouni – both of
the country is truly a “Lost World”. which has undergone the most in- which opened in the last three years.
tense gold exploration push on the
planet over the last 15 years. Even politically and culturally, Guyana
appears detached from the rest of the
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 19
COVER
in gold and/or diamonds and you can’t do
that by simply going to California.”
Richards has documented his Guya-
nese exploits in his recently published
autobiography, Gold Rush: How I Made
and Lost a Fortune, and he remains con-
vinced the country is host to the kind of
large-scale gold deposits every explorer
hopes to discover.
“If you took a map with all the multimil-
lion ounce gold deposits on it, there is al-
most a gaping hole where Guyana is,” he
said. “The idea of Guyana as a last fron-
tier is as true today as it was in the 90s.”
Why, then, has Guyana missed the
gold exploration rush of the last decade
and will the trend change?
Troy Resources Ltd operates the Ka-
rouni gold mine in central Guyana. Chief
executive Martin Purvis believes a lack
of infrastructure and associated access
issues in a country which is largely cov-
ered by almost impenetrable jungle is
“For all its gold prospectivity, Guyana’s interior remains difficult to penetrate, one reason for the lack of exploration.
as highlighted by this isolated artisanal mining operation “The physical conditions of the coun-
I was aware of Guyana as a sort of last try – the jungle environment – and the
frontier, with unexplored areas with gold small population mean it has seen little
infrastructure development in the past
and diamonds in remote locations. That was the 100 years, so it has been left behind,”
Purvis said. “As a result, it has been diffi-
cult for major miners to progress projects
attraction for me. I wanted to make my fortune in because there is a lack of information
gold and/or diamonds and you can’t do that by compared to that which can be found in
regions where there is a lot of commer-
simply going to California. cial mining activity.”
Alicanto Minerals Ltd is the most ac-
tive junior explorer in Guyana. The com-
world. Although located on the South time before others were prepared to go,” pany’s chief geologist, Marcus Harden,
American mainland, its status as a for- Richards told Paydirt. “I was aware of points to previous interest by a host of
mer British colony – Britain took control Guyana as a sort of last frontier, with un- companies as evidence that the gold
of the country from the Dutch in 1815 – explored areas with gold and diamonds world knows what the country is capable
places it culturally and politically as part in remote locations. That was the attrac- of producing.
of the Caribbean. Indeed, for most Aus- tion for me. I wanted to make my fortune “Lots of companies have tried but just
tralians, Guyana is perhaps best known
for producing cricketing greats such as
Lance Gibbs, Clive Lloyd, Carl Hooper
and Shivnarine Chanderpaul; a fact in-
congruent with its geographic location in
Latin America.
The country is underlain by the Gui-
ana Shield, a Proterozoic-aged craton
that was contiguous with the Leo Mann
Shield of West Africa prior to the opening
of the Atlantic Ocean, meaning it shares
much the same lithology and style of
mineralisation as the Birimian gold belts
of West Africa which host more than 200
moz gold. It also has a thriving small-
scale gold sector which produces more
than 400,000 ozpa from licensed artisa-
nal operations.
Poz Minerals Ltd executive chairman
Jim Richards launched his mining ca-
reer in Guyana in 1990, seeing its “Lost
World” status as a major attraction. Even in the remote areas of Guyana’s north-west, there is still opportunity to
“I went there in the early 90s, a long find a cold beer at the end of a hard day’s prospecting
PAGE 20 MAY 2017 AUSTRALIA’S PAYDIRT
about everyone failed,” Harden said. The Guiana Shield of north-east South America is home to numerous multimillion ounce
“They found good anomalies early on gold deposits but only three have been discovered in Guyana to date
then drilled 2,000m but didn’t get what
they wanted and so walked away.” If it is difficult to establish an explora- they are overshadowed by the rewards
tion concern in Guyana, development on offer.
As well as the jungle vegetation and and operation bring even further chal-
lack of infrastructure, much of Guyana lenges, as Troy has found out. Harden has worked extensively in
is covered by sand, making early-stage West Africa and ranks Guyana as high-
exploration even more of a task. Purvis admits the company was “a bit ly as anywhere he has explored while
naïve” when building Karouni and has Schwertfeger – who spent more than 15
“Sand cover has been an impediment been caught out by not building dura- years with Newmont Mining Corp – re-
to exploration,” Purvis said. “Troy is try- ble enough training and logistics frame- tains his conviction that Guyana com-
ing to unlock the jigsaw below the jun- works and procedures to withstand Guy- pares favourably with any gold districts
gle and sand cover to give us the best ana’s unique environment. across the world.
chance of success.”
“At that development stage, when you Troy scoured the globe when look-
Richards believes the sheer prolifera- have to start building roads and things, it ing for new acquisitions in 2013, finally
tion of gold in Guyana can also make ef- can be easy to underestimate the chal- choosing Azimuth Resources and the
fective exploration difficult. lenge,” Richards said. Karouni project because it handed it ac-
cess to an enviable gold-prospective
“The whole country is littered with gold Schwertfeger and Harden also point land package.
and gold deposits but that can also be a to Guyana’s tenement structure as a
problem,” he said. “You could go almost partial impediment to greater invest- “Troy went to Guyana in the first place
anywhere in Guyana and pan for gold ment. because of the massive opportunity it
and there are lots of quartz veins but the presented for exploration,” Purvis said.
problem comes in sorting through a lot “There is a real patchwork of landown- “We have some of the best and most
of red herrings. Golden Star spent hun- ers who then lease out ground to indi- prospective ground in what is arguably
dreds of millions and couldn’t follow up vidual alluvial mining operators, which one of the world’s up and coming gold
on Omai.” makes access negotiations quite difficult jurisdictions.
at times,” Schwertfeger said.
Harden agrees, with Alicanto the ben- Richards agrees, saying Guyana still
eficiary of previous explorers’ inability to Alicanto has spent its four years in the held vast untapped potential when com-
hone in on targets. country building relationships and strik- pared to other gold regions.
ing low-cost access deals which have al-
“We’re determined not to drill 2,000m lowed it to tie up some of the largest land “When you look at the potential for
and give up,” he said. “Even when previ- packages Guyana has seen. plus-10 moz deposits, the prize is worth
ous explorers drilled [on the company’s [those barriers],” he said.
Arakaka project] it didn’t kill the prospec- It is a process that not every company
tivity, just the company.” is capable of undertaking. Politically, it is also attractive. Since
independence in 1966, Guyana has en-
The cover and access issues also “I think it is a barrier to entry and his- joyed a largely stable democracy – albeit
make establishment difficult. torically companies have come unstuck, with governments demonstrating some
wanting exclusive rights and pushing socialist tendencies. Richards said the
“I think a lot of the reason why Guy- people off their artisanal workings,” sovereign risk profile of the country was
ana is underexplored is down to access,” Harden said. “It could also be consid- in stark contrast to other regions.
Richards explained. “When you go there ered a barrier to entry for larger compa-
you wonder how you would explore at all nies. They wouldn’t be able to have the “If you look at West Africa; there have
but if you have got the commitment to set in-country presence needed without the been next to no positive political risk de-
up the infrastructure, the logistics, the associated expense.” velopments in the last decade and sov-
people and the team you can achieve a ereign risk is still very high. I think Guy-
lot for your money. The barriers to success may be real ana’s sovereign risk is much lower than
but for those involved in the country,
“Getting to the Aurora project [now
an operating mine owned by TSX-listed
Guyana Goldfields Inc], took three days
via boats. To resupply, we had to use
a river plane and then carry everything
10km through the jungle. We even had to
drag the drill rig by hand through the jun-
gle. In comparison, West Africa is much
drier and more accessible and Ghana
had had an active mining industry for
hundreds of years with all the associated
infrastructure.”
Harden has spent four years in-coun-
try doing exactly that and both he and
Alicanto managing director Travis Schw-
ertfeger believe the company is now ben-
efitting from that establishment period.
“We’ve spent a lot of time establish-
ing ourselves in-country,” Schwertfeger
said. “You need to be constantly on the
ground, speaking to local people, setting
your procedures up to ensure you can
function.”
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 21
COVER
So, are Guyana Goldfields, Troy
and Alicanto the pioneers of the
long-anticipated Guyanese gold
rush?
“I think respect is building in North
America because of what Guyana
Goldfields was able to achieve in
a difficult time in the market; that
shows the ability to build a mine in
Guyana. Troy has also done an ex-
cellent job in taking a project through
permitting and construction in such
a short space of time,” Schwertfeger
said.
Purvis is proud to have Troy play-
ing its role and believes they may be
opening the country up to further de-
velopment.
“The pioneering work of Guyana
Goldfields and Troy played its part in
lifting awareness of Guyana and its
potential,” he said. “The majors have
looked at Guyana over two decades
or more and obviously Suriname and
Poz Minerals Ltd executive chairman Jim Richards on his gold dredge during Venezuela have long histories of
his days as a Guyanese “pork knocker” gold mining.
“However, the lack of information
West Africa. If I had a choice between volvement by international companies. and access has been a major impedi-
the two, I’d go to Guyana in a heartbeat. “The success of Guyana Goldfields ment and the majors have just not been
It has far more prospectivity, is underex- and Troy has led to a rerating of the im- willing to invest to prove up the major ge-
plored and has a generally supportive age of exploration companies in the ological structures. But, it is usually jun-
government and there is no track record Government’s eyes,” he said. “They are iors who act as pioneers in new regions
of nationalisation of assets.” seeing success after decades of disap- and we are now seeing the majors com-
Purvis said the importance of small- pointment and have become much more ing in with a watching brief. As that de-
scale mining to the economy – artisanal welcoming.” velops, I’m sure more interest will come
miners produced more than 400,000oz Schwertfeger has been impressed by from the larger companies.”
gold last year – meant government and both the simplicity of the tax regime and Alicanto can attest to such interest,
the population in general were well- the support government and the Guy- with Barrick Gold Corp last year farming
versed in gold mining. ana Geology and Minerals Commission into the Arakaka project.
““People understand and are happy to (GGMC) has provided Alicanto. Schwertfeger said there was a queue
embrace mining; the indus- of parties interested in Araka-
try is part of Guyana’s cul- But, it is usually juniors who ka and expects more should
ture. Now, the challenge is the company take its newest
taking it to the next level, a act as pioneers in new regions project, Ianna, to the market.
large-scale level, and Troy “I’d expect the same level of
and we are now seeing the majors
and Guyana Goldfields can interest in Ianna if it begins to
help achieve that.” coming in with a watching brief. As stack up,” he said.
Richards encouraged com-
Guyana’s Common- that develops, I’m sure more interest
will come from the larger companies.
wealth connections mean panies to look at Guyana but
its legal system is based on warned it was not for the non-
English Common Law and committed.
Purvis said the regulatory “A company has to be will-
framework was robust. ing to put at least $5 million
“In many cases in the developing “There is a 30% corporate tax, an 8% into establishing itself in-country. It takes
world, regulatory systems and process- gold royalty and development projects a year just to set up the team and every-
es are antiquated which makes it difficult are VAT and import duty exempt,” he thing associated with that so if a junior
to move through the regulatory process said. “There is no free-carried interest for explorer has got $400,000 in the bank
with any certainty,” he said. “However, the Government, no export tax on gold or Guyana is not the place for them. In fact,
Guyana has new agreements and struc- on repatriation of profits. It is a simple tax you are probably going to need $10 mil-
tures which are best practice and the structure which is very competitive with lion to make a decent fist of it.”
country has learnt not to make the same West African countries.” A $10 million budget may be beyond
mistakes of others. It is a fairly transpar- The GGMC has initiated a policy, Vi- the reach of many explorers but if it gives
ent system, most of the guidelines and sion 2020, through which it wants to map a company a sniff of a 10 moz gold de-
regulations are very clear.” the entire country for all minerals and it posit, it could just be worth the risk.
Harden said Troy and Guyana Gold- has proven open to collaboration with in- – Dominic Piper
fields had paved the way for further in- dustry.
PAGE 22 MAY 2017 AUSTRALIA’S PAYDIRT
Alicanto takes flight
through Guyana jungle
Every fence of drilling we have phatic, reinforcing both the belief in the West African exploration ground largely
done over 12km of strike has prospectivity of the project and the sense tied up, the decision was taken to cross
hit mineralisation; we have with- in bringing in a major partner to assist in the Atlantic and gain a foothold in South
out question demonstrated the realising that potential. America.
continuity of the system.”
Alicanto grew out of the successful The rationale was simple; the green-
As an indication of Alicanto Minerals Gryphon Minerals/Adamus Resourc- stone belts of north-east South Amer-
Ltd’s satisfaction with initial drilling on its es stable and listed on the ASX in late ica were essentially the same as those
Arakaka gold project in Guyana, Travis 2011 with a smattering of West Austral- which had turned West Africa into a gold
Schwertfeger’s statement is pretty em- ian gold and base metals assets. But, exploration hotspot, yet countries such
Gryphon and Adamus’ success in West as Guyana, Suriname and French Gui-
Africa had given the board a craving for ana had seen only limited work in com-
further overseas developments and with parison.
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 23
COVER
of drilling needed and the market wasn’t
conducive to raising more money,” Ali-
canto managing director Schwertfeger
told Paydirt.
Instead of battening down the hatches,
Alicanto kept momentum in the project,
adopting a no-frills approach at Arakaka.
“We couldn’t afford drilling so we went
to a back-to-basics approach on the
ground; doing the mapping and the soil
sampling and pulling together the data-
sets to build the geological picture at
Arakaka in anticipation of it being ready
when the market turned,” Schwertfeger
said.
Chief geologist Marcus Harden was
given the task of leading the low-cost ex-
ploration push and he now sees the pe-
riod as a blessing in disguise for Alicanto.
“You often need that time on green-
fields projects but rarely get it when
investors are in pursuit of high-grade
drilling results,” Harden told Paydirt on
site at Arakaka. “But, the board made
the conscious decision that early drilling
wouldn’t change anything anyway so we
had more than a year to put the geologi-
“Alicanto chief geologist Marcus Harden has been integral to building the geological cal picture together.”
understanding of Arakaka, a key attraction to Barrick The result was a comprehensive as-
sessment of Arakaka
Evidence of large gold You often need that time on which further reinforced
systems in Guyana was greenfields projects but rarely the company’s belief it was
there. All the gold majors capable of hosting multimil-
had been present at vari- get it when investors are in pursuit of lion ounce deposits.
ous times without seeing
With the market still far
high-grade drilling results. But, the
things through and the board made the conscious decision that from welcoming towards
more recent discoveries at juniors with ambitious ex-
Aurora (Guyana Goldfields ploration plans, Schwert-
Inc) and Karouni (Azimuth/ early drilling wouldn’t change anything feger and the board chose
Troy Resources Ltd) had anyway so we had more than a year to to use the geological un-
proven economic deposits derstanding Alicanto had
were present. put the geological picture together. compiled to find a different
Alicanto picked up funding option.
Arakaka and the Tassawini “There are probably four
gold project at the end of projects for a junior within
2012 when it acquired Strata- that one project area so it
Gold Guyana Inc from Takara would’ve been a big funding
Resources Inc in a $650,000 challenge going it alone,” he
deal. Takara had largely fo- said. “Instead, we made a
cused on Tassawini (taking conscious effort to get a JV
it to feasibility study) but Ali- partner for the project. We
canto swiftly changed focus opened up the data room
to Arakaka, which had been and had a number of mid-tier
previously drilled by New- and major companies show
mont Mining Corp. interest before we eventually
To Alicanto, Arakaka had struck a deal with Barrick
potential for multimillion [Gold Corp].
ounce discoveries; the prob- “We had turned the down-
lem was the hostile mar- turn to our advantage be-
ket conditions of early 2013 cause without that time and
meant juniors with ambitious work we couldn’t have taken
plans were finding it impossi- the project to the majors.
ble to raise support. That year of low-cost explo-
“We saw value in a differ- ration ultimately added a lot
ent place to StrataGold but Arakaka’s jungle environment is tough on exploration vehicles. of value to the project.”
we couldn’t afford the kind Site mechanic Andrew Makanlall works on a Toyota Hilux The JV agreement offers
PAGE 24 MAY 2017 AUSTRALIA’S PAYDIRT
Harden points out the structural orientation exposed by trenching at the Goat
Hill prospect on the Arakaka main trend. Mineralisation in Guyana shares many
Sabrina Williams prepares samples from Alicanto’s similarities to the deposits of West Africa’s greenstone belts
recent drilling campaign. Guyana’s familiarity with this way we have that pressure Australians still see it as limiting the up-
gold mining means there are always willing employ- taken off us and can concentrate side so it becomes about balancing out
the two sides. If we come across some-
ees, even in remote locations on exploration.”
A withdrawal does not appear thing which is smaller but high-grade,
Barrick the opportunity to secure 65% of imminent. The deal with Barrick was that a junior could develop by itself, we
Arakaka by spending $US10 million over signed in March 2016 and the interven- could retain 100% of it,” he said.
four years. Shareholders can bemoan ing period has seen a successful initial “We have Sprott in there as a major
such deals for giving away upside but diamond drilling campaign undertaken at investor and they are interested in the
Schwertfeger is adamant it was undoubt- Arakaka. project generation model and we see
edly the best option for both Alicanto and Alicanto’s share price spiked shortly ourselves as early movers in Guyana
Arakaka’s progress. after the Barrick JV was announced. It and with more opportunity still available.”
“It was a conscious decision to pursue is ironic then that the subsequent drilling Alicanto retains management of the
project level dilution rather than com- results have failed to excite the market project with Barrick seemingly happy the
pany level and maintain a tighter capital further despite delivering Barrick exactly team’s experience – Schwertfeger spent
structure,” he said. “It was exactly the what it was hoping for from early work. more than 15 years with Newmont while
right strategy to undertake at the time Harden said the initial exploration drill- Harden has a similar wealth of experi-
because even a few ‘director’s special ing was never likely to deliver the kind of ence in West Africa with First Quantum
“holes’ would not have got the market results shareholders of explorers hoped Minerals Ltd, Resolute Mining Ltd and
response we would’ve needed to fund for. Gryphon – is strong enough to carry the
a proper exploration cam- project on.
paign at Arakaka.” We had turned the downturn to Schwertfeger credits this
Any claim of giving away our advantage because without trust again to Alicanto’s ear-
ly work at Arakaka.
upside is also rejected by
Schwertfeger. that time and work we couldn’t have “We matched Barrick’s
“If Barrick walked we taken the project to the majors. That criteria for greenstone belt
projects and there was rec-
would have received $4
million worth of drilling for year of low-cost exploration ultimately ognition of a potential en-
free and we can approach added a lot of value to the project. dowment which would suit
Arakaka like a junior or take their hurdles. The deal was
it to one of the companies aligned with their model
who missed out originally and they were particularly
but are ready to come back in. “We received a bit of a rerating off the happy with the quality of work we had
“We would, of course, prefer to have back of the Barrick deal but it was per- done at the early stages.”
35% of a 5 moz deposit so it is a genu- haps slightly premature. I don’t think the Part of the reason for bringing in a JV
ine no-lose situation for Alicanto. And, market appreciated how greenfields this partner was the sheer breath of the op-
retaining Barrick’s interest is worthwhile project still was,” he said. portunity. Alicanto had gathered 15km of
for Alicanto because it takes away that Schwertfeger accepted Australian in- near-continuous plus-100 ppb soil sam-
pressure of having to please capital vestors were less comfortable with such ples along the Arakaka Main Trend with
markets in anticipation of the next capi- JV models in their junior investments. a further 15km of plus-100 ppb anoma-
tal raising. As an industry, we can waste “The North American investors get the lies on the Xenopsaris trend to the south
money chasing high-grade numbers but project generation model but I think the of Arakaka. Both trends have extensive
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 25
COVER
An example of the cross-cutting quartz veins at Goat Hill. Harden believes
the extensive early-stage work undertaken by Alicanto has been vital to its
recent progress. “If we were just a junior we would’ve likely hammered this
area with drilling without understanding the structure and probably have
missed the mineralisation,” he said
Project geologist Chrystelle Thiboult-Boyer inspects agreeing to a programme of framework
core from hole ARDD223 with sampler Simon Atherley “The challenge we always diamond and RC holes to better define
Barrick-size targets. By definition, this
had as a junior was how do means bulk tonnage opportunities and
Alicanto guided drilling towards the dior-
small-scale alluvial workings along them we apply 5,000m of drilling along 30km ite intrusions associated with mineralisa-
tion at Arakaka.
with estimates suggesting more than 1 of anomalies? That is why we went to
“We noticed during the mapping and
moz gold has been mined from the area the majors, to get to the stage where we re-logging exercise that there was vis-
ible gold associated with quartz veining
over the last 100 years. could undertake proper targeted drilling,” at the margins of the diorite,” Harden ex-
plained. “But in there was also a broader,
Narrowing the focus on such a large Harden said. disseminated mineralised zone within
the diorite. We didn’t want to be chasing
area was always likely to be an expen- Barrick committed to a $1.8 million the veins because that can be expensive
for a junior but as it is in the same setting,
sive exercise. drilling programme for 2016 with the JV it meant we could target the bulk miner-
alisation and the high grade would look
Alicanto’s standing in the Guyanese mining community is rising thanks to more inter- after itself.”
action with the Government and the Guyanese Geological and Minerals Commission
(GGMC). Here, GGMC geologist Ladonna Fredericks inspects some exposed quartz A programme of 1km-spaced sections
up and down the trend was agreed in an
veining at Arakaka effort to identify the best prospects for
targeted drilling.
“The idea was to provide framework
information and identify more structures
under the valley where we hadn’t previ-
ously drilled with a view to driving a more
targeted programme,” Harden said. “We
found three high-strain zones, two of
which were almost entirely covered. In
fact, almost every line of drilling hit vis-
ible gold over a 10km strike. That is a re-
markable rate given none of that drilling
was targeted.”
The drilling also identified a number of
favourable structural contacts between
diorites and metasediments on the three
mineralised structures with the wide-
PAGE 26 MAY 2017 AUSTRALIA’S PAYDIRT
spread carbonate, biotite and sericite A pork knocker operation on the Arakaka main trend. The small-scale miners are
alteration also identified in diamond drill- mostly working the saprolite material along the trend
ing; a further indication of Arakaka’s po-
tential to host bulk tonnage targets. Harden and project geologist Martin Tuffour talk over freshly recovered core
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 27
Alicanto was completing the second
phase of the reconnaissance drilling pro-
gramme when Paydirt visited Arakaka
in late March and Schwertfeger said the
results had shown exactly the kind of ge-
ology Barrick was hoping to find.
“Barrick wants to see substantial dior-
ite, the primary host with disseminated
mineralisation, and it needs it on the
structural intersections; the flexures and/
or fold closures,” he said. “That is where
the targeted drilling programme will be
focused.”
Barrick has had a number of their ex-
ploration group specialists visit Arakaka
in the last 12 months and its enthusiasm
was reflected in its decision to up the an-
nual exploration spend to $2.5 million for
2017.
The framework drilling at Arakaka
complete, the JV committee will now
begin planning the first targeted drilling
programme on the bulk disseminated
targets.
“We will begin the ranking exercise
shortly,” Schwertfeger said. “We will rank
the prospects and identify the top three
or four for drilling in the first targeted pro-
gramme later this year.”
The JV will commit 4,500m to the first
targeted drilling but Schwertfeger said
there were at least six targets worthy of
follow up.
The farm-in allows Barrick to take
control at the end of the second year or
COVER
walk away from the project and it now,” Harden said.
Schwertfeger believes suc- The drilling was expected to
cess on just one of the targets be completed in April with the
later in 2017 would add enough diamond rig then moving back
to fuel further investment. to Arakaka main trend for the
However, he warned inves- targeted drilling. While Barrick
tors not to expect dramatic is driving the exploration time-
results from the next drilling table and budget at Arakaka,
programme. its timing also has a direct ef-
“If we get early success on fect on the other half of Alican-
one of the prospects it is likely to’s Guyanese portfolio.
we will ramp up work on some In November, the company
of the others,” he said. “But, announced it had finalised a
there is also the option to go three-year option agreement
straight into a resource defi- over the Ianna gold project,
nition programme if there is 20km south-west of Arakaka,
early success but the next pro- an asset previously worked by
gramme certainly won’t deliver the now delisted Intercept Min-
a resource regardless of the erals.
outcomes. The opportunity at Ianna is
“In fact, that was the way the similar to that at Arakaka with
JV was structured. We knew mineralisation hosted in a
it would take $10 million, and composite diorite-granodiorite
probably four years, to get to intrusive body.
a maiden resource and it was Work has begun to generate
structured accordingly.” conceptual drill targets with the
Barrick unquestionably calls potential for higher grade tar-
the shots for the JV however gets on structures different to
such is the respect Alicanto those previously targeted by
is granted it has already man- Intercept which drilled more
aged to persuade the major than 12,400m of RC and 926m
about the merits of the Xenop- of diamond drilling, almost all
saris trend. to a depth of only 50m.
“The relationship has been An example of trenching along the Xenopsaris trend. Barrick had “Intercept did a little bit of
excellent from the start. Bar- originally dismissed the area but recent trenching results have drilling around the intrusion
“rick has been extremely sup-
convinced it to put 1,200m of diamond drilling into it but only ever drilled down to
portive on the project
and have given us a 60m but still hit 50m
lot of latitude to run
the programme on If we get early success on one of the @ 2.47 g/t gold and
our own and set the 48m @ 1.19 g/t,”
budgets. The pro- prospects it is likely we will ramp up
work on some of the others. But, there is Harden said.
The exploration
approach will be
gramme is dynamic also the option to go straight into a resource similar to Arakaka,
to match what we definition programme if there is early success forgoing immediate
have learnt.” drilling in favour of
The diamond rig but the next programme certainly won’t deliver building the geologi-
was moving to Xen- a resource regardless of the outcomes. cal picture at Ianna.
opsaris as Paydirt
“We are inter-
went to print to drill ested in the diorite
a 1,200m recon- and its margins,”
naissance programme which was Schwertfeger said. “The diorite
agreed to after encouraging trench- is a topographic high in the area
ing results last year. and the centre of the diorite has
Results from the trenching pro- the best geochem results to date
gramme identified three targets; with the geochemical signature
Fozzie (where trenching returned more erratic on the margins. But,
rock chips of up to 33.68 g/t gold hi-res satellite imagery we have
within 17m @ 0.69 g/t), Beaker (rock acquired shows it is a function of
chips up to 162.23 g/t within 22m @ the regolith, not a control on min-
2.02 g/t) and Gonzo (rock chips up eralisation. It means the margins
to 5.44 g/t within 6m @ 8.33g/t. of the body are yet to be properly
“Barrick was not particularly in- defined and explored.
terested in Xenopsaris originally but “It will be the same process as
Alicanto did the trenching and it has for Arakaka; build the picture for
become of interest in the last two The gold is clearly visible in this sample recovered from a six months by doing the mapping
months which is why we are drilling pork knockers’ operations at Arakaka and the geochem and putting to-
PAGE 28 MAY 2017 AUSTRALIA’S PAYDIRT
gether the datasets to gen- the differences in the ways
erate conceptual targets. companies structure their
We will drill 2,000m but we deals with the local small-
want to make sure we know scale miners. TSX-listed
exactly where to put those companies have a ten-
holes.” dency to want exclusive
Schwertfeger said drilling rights and push people off
at Ianna would be largely their artisanal workings.
dependent on the progress We came in for low-cost
at Arakaka. options by allowing the al-
“We want to dovetail the luvial operations to continue
work with Arakaka so we and it makes it easier to get
keep our burn rate low – we through the complexity of
don’t want two exploration multiple landholders. They
teams if we can help it,” he can also be a good explora-
said. tion tool.”
Consolidation of the Ianna Schwertfeger sees the
footprint will be another con- company’s ability to con-
sideration. The current pro- solidate the Alicanto ground
ject area comprises 13 me- as another attraction to Bar-
dium-scale mining permits Historical hole ROD0803 returned 20.5m @ 1.43 g/t gold when drilled rick.
and a number of pre-existing by previous explorers. “This is the same geological setting but “It is a barrier to entry
“small claims which lie within mineralisation is less associated with quartz veining and more for the majors and mid-
the medium-scale permits with the diorite; this is what we are really looking for,” Harden said tier companies; it would be
and straddle key ar-
eas of interest over almost impossible
54sq km. However,
with broad zones of It is a barrier to entry for the majors and for them to pull the
mineralisation de- mid-tier companies; it would be almost tenements together.
tected throughout Alicanto offers them
impossible for them to pull the tenements a consolidated land
package and high
together. Alicanto offers them a consolidated quality work.”
the district, Alicanto
is confident it can ex- land package and high quality work. If the company can
pand exploration to deliver the same at
other prospects. Ianna, it could find
To achieve this, the company will have Schwertfeger said the company’s will- itself back in front of the majors and mid-
to negotiate individual deals with the ingness to regularly meet with people on tiers.
patchwork of landowners present in the the ground and the deals it had struck “We need to get this first drilling pro-
area. with those landowners had turned the gramme into Ianna. That will either in-
“We are looking to expand our foot- land ownership issue from a barrier to crease the value of that project to a point
print of the project but it does take time,” entry to an advantage for Alicanto. where, like Arakaka, we bring in a partner
Schwertfeger said. “I think one of the biggest things is or take a decision to fund it through to a
Alicanto’s success in expanding its resource ourselves,” Schwertfeger said.
landholding at Arakaka is proof the If the former comes to fruition, Alicanto
company’s softly-softly approach can will return to its project generation model
pay off. Harden has spent the last four in the hope of finding a third Guyanese
years based in Guyana; using his affable project.
nature to build up Alicanto’s reputation “If we went the way of JV at Ianna, we
around Arakaka. The result has been a could then make a decision on another
consistent expansion of the company’s early-stage project to build up,” Schw-
option agreements around the original ertfeger said. “We have looked at neigh-
Arakaka licences, giving Alicanto the bouring countries but it makes sense
best consolidated land position of any to stay here because there is so much
foreign company in Guyana over the last prospectivity, the company is now well-
two decades. respected in the community and we are
“You really have to build your social increasing our relations with the Govern-
licence to operate here because land ment and the Guyanese Geological and
ownership can be a problem due to its Mines Commission who are very sup-
complexity,” Harden said. “I think it is portive.”
where some other companies previously The increasing interaction with govern-
made the mistake; they found it hard to ment is another example of how Alicanto
put together a consolidated package. has slowly, almost imperceptibly built its
But, if you are here on the ground you standing in Guyana to a position at the
can talk to individual landowners and find very heart of what could be the world’s
out their concerns and the terms they are next big gold exploration destination.
willing to do business on and build up the Travis Schwertfeger – Dominic Piper
relationship over months and years.”
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 29
COVER
Hell and back
story of Troy
After a 24-month period in which a
confluence of issues sent the compa- tina Kirschner presidency rapidly making provement in mining, processing and
ny on a downward spiral, Troy Resources Casposo untenable, Karouni’s swift de- costs as we continue to bed down opera-
Ltd is daring to project a glimmer of confi- velopment became of vital importance to tions over coming months,” he said at the
dence about the rest of 2017. the company. time.
“It’s fair to say we have had everything “The situation in Argentina is now be- Reflecting on the ramp-up now, Purvis
bar the kitchen sink thrown at us,” man- ing rectified but at the time we felt we admits Troy placed too much expectation
aging director Martin Purvis told Paydirt. had to leave. So, having exited both Bra- on itself.
zil and Argentina, we needed Karouni
At the start of 2015, Troy was prepar- to start producing cash flow. To effect “We probably expected too much, too
ing to expand its operating portfolio into that change, it had to be developed very soon in what was clearly a ‘frontier’ min-
a third jurisdiction, Guyana. The junior quickly and on a shoestring budget.” ing environment,” he said. “It took us a
gold miner already operated mines in long time to fit into the operating environ-
Brazil and Argentina over more than a Troy had already forged a reputation of ment; finding training systems and logis-
decade, however, within months it was being able to achieve exactly that; most tics which worked.
facing the possibility of having no opera- recently managing to reduce Casposo’s
tional assets at all; the Andorinhas gold capex from an estimated $US86.5 mil- “The remoteness of site is a huge chal-
mine in Brazil was in closure mode and lion in feasibility studies to $US46 million lenge. Also, we perhaps underestimated
the geopolitical situation in Argentina on completion of development. The chal- the impact of the wet season and how
was beginning to weigh on the value of lenge with Karouni, though, was building difficult it was going to be dealing with
the Casposo gold-silver mine. a project in a country with little track re- the saprolite during the wet. Both these
cord of commercial-scale development. things made it a magnitude of difficulty
“Two years ago, Troy found itself in an more to get things ramped up.”
almost impossible position,” Purvis said. “We were probably a bit naïve in what
“We were invested in Argentina and in an we thought we could achieve in taking on By the end of October, Troy appeared
end-of-mine situation in Brazil with geo- this opportunity in a totally new environ- to be getting a handle on both mining
political challenges in both countries. On ment,” Purvis said. “The attrition we were and processing but before the end of the
top of that, we had the challenge of pio- experiencing on the asset base meant year, it had experienced its most debili-
neering mining in Guyana.” there was enormous pressure on Karou- tating setback to date when a pit wall slip
ni to deliver.” in the Smarts 3 pit caused major disrup-
Troy entered Guyana via the $100 mil- tion to the mining plan.
lion acquisition of Azimuth Resources in Construction on the $US86.8 million
June 2013 which delivered it the Karouni project went well. The build started in “After the initial teething problems we
gold project in the country’s south-east. February 2015 and when first gold was felt by September-October that we had
poured in November that year, Troy was more answers than questions and we
Azimuth had defined a 1.6 moz gold anticipating a quick ramp-up. were off to the races,” Purvis explained.
resource over the Smarts and Hicks de- “But then we had the pit wall slip in De-
posits at Karouni and Troy identified the However, by mid-2016 Troy was bat- cember and that took the wind out of our
opportunity to develop a quick, low-cost tling with slower-than-anticipated min- sails.”
starter project which would allow it to ing and processing rates, largely a result
fund further exploration on the massive of the clay-like saprolite material being The failure, on the southern wall of
landholding Azimuth had built up along mined. Smarts 3, restricted access to one of
the Guiana Shield. Karouni’s highest grade sections from
Purvis declared himself satisfied with December until the middle of February.
The plan was for the Karouni project progress at Karouni in the company’s Purvis said the slip had been both unex-
to hit steady-state production just as the September 2016 quarterly report, saying pected and highly disruptive.
high-grade Casposo mine was at its ze- the issues encountered were “expect-
nith. But, with the political situation in Ar- ed… teething problems”. “All the evidence was that these types
gentina during the final years of the Cris- of slips only occurred in the upper levels
“Following the very steep learning of the strata, in the sand and clay layers,
curve, we expect to see continued im- but this went much deeper, into the tran-
PAGE 30 MAY 2017 AUSTRALIA’S PAYDIRT
sition zone some 30-40m below the sur- Purvis said. “That pro- Singapore and there is at
face. It was something we hadn’t seen cess will help with the
before,” he said. mining plan for Smarts 3 least another decade’s
and we have now moved
“The problem was that of all the places the rig into the Smarts 4 worth of potential explo-
it could’ve happened Smarts 3 was the and Smarts 1 pits to give
worst place because it had the highest us a more complete de- ration in front of us.”
grades and lowest stripping ratios. It is tailed picture of the min-
undoubtedly our best pit and to take it out eralisation.” Troy spent $1.8 million
for several months while we make it safe
and rectify the issue was a big setback.” Troy has also contin- on exploration in the De-
ued to iron out its plan-
Prior to the slip, Smarts 3 was provid- ning, training and logis- cember quarter but that
ing up to 50% of ore feed to the Karouni tics schedules without
plant. The subsequent adjustments to overcommitting further figure appears set to rise
the mine plan saw the majority of mining funds.
diverted to the lower grade, higher strip- with Purvis keen to fol-
ping Smarts 4 pit. “One of the tempta-
tions when you are low up on a number of
“So, we went from 3-3.5 g/t head grade struggling is to throw
at 6-7:1 strip to remobilising to Smarts 4 more resources at recent breakthroughs.
with its lower grade and 11-12:1 strip ra- things rather than concentrate on effi-
tio. The crew did a fabulous job getting ciencies of individual units but we won’t In late January, the
things up and running again to deliver do that. We need to focus on optimising
sufficient feed but it definitely tripped us the plant, the mining fleet and our operat- company announced RC
up just as the plant was stabilising and ing systems.
the mining fleet was working really well.” drilling had delivered hits
“There is no doubt we have suffered on
The company’s March quarterly fig- costs but we can now start to drag them of 6m @ 1.83 g/t, 26m @
ures had not been released as Paydirt down but that will need to be driven by
went to print but Purvis was confident the improved efficiency and better knowl- 0.46 g/t and 10m @ 0.66
worst was behind the company. edge of operating in this environment. All
indications suggest that Guyana should Martin Purvis g/t (from the Goldstar
“This is probably the most challenging be a low-cost environment and once we prospect), 28m @ 1.64
quarter we have been through [March get to predictable and sustainable lev-
quarter] and I think we will be able to put els it points to improved performance all g/t, 10m @ 2.53 g/t and
on a better performance going forward,” round.”
he said. 29m @ 1.65 g/t (from Hicks 4) and 6m @
Troy’s reputation for simple, low-cost
Part of the challenge has been the cor- project development has taken a hit due 2.91 g/t and 6m @ 2.12 g/t (from Smarts
porate position Troy has found itself in to Karouni’s travails but Purvis said the
which has seen Karouni’s development way executive director project develop- NW).
fall directly under the spotlight. ment, Ken Nilsson, and his development
team had handle the challenges had only In addition, a review of historical geo-
“There aren’t many projects that don’t enhanced their standing.
present challenges at an early stage but physical data, led by non-executive di-
other companies can often manage their “The effort of Ken and his team has
impact because of the different revenue been quite amazing and the entire com- rector John Jones, identified an initial
streams they have; we didn’t have that pany has come through this test of char-
luxury,” he said. “As a small miner with acter; it hasn’t beaten us by any means.” further 11 gold targets near the Karouni
only one cash-generating asset, we don’t
have the benefit of diversity. So, the wall So, when will investors recognise a mine area.
slip was a significant road bump for us.” strongly performing Karouni?
“We are slowly unlocking the explo-
Purvis admitted the necessary fast- “We’ve never been able to put a tangi-
tracking of Karouni’s development had ble target down on paper,” Purvis said. ration secrets and the team has done a
also led to geological problems within the “We need to get runs on the board be-
two deposits. fore we start making assessments about marvellous job,” Purvis said. “The team
steady-state production. In the next three
“We obviously did sufficient drilling to six months we should have a better started with a decades-old ‘mud map’
to take away the geological risk but we idea of what steady-state looks like in this
probably didn’t recognise how complex type of operating environment.” and have since come up with a clear
the mineralisation at Smarts is. Hicks
is a far simpler mineralised system By that stage, the company may also picture of the structure and mineralogy
than Smarts but it would’ve added 6-12 have recovered its exploration mojo
months to the development timetable to which was necessarily put on hold during of the region. Now we have to back our-
understand that before we started mining construction and ramp-up.
and we didn’t have that time.” selves with a carefully managed explora-
“Troy went to Guyana in the first place
This was one instance in which the because of the massive opportunity it tion effort.
wall slip provided opportunity to rectify presented for exploration,” Purvis said.
problems. “We have some of the best and most “These are all camp-scale targets
prospective ground in what is arguably
“Following the wall failure, while we one of the world’s up and coming gold ju- 6-7km long so you do have to plan ex-
were clearing up all the debris, we came risdictions. Our landholding is larger than
back in with an RC rig and got much more ploration carefully. There is a lot of sand
clarity on the Smarts mineralisation,”
cover and a lot of jungle so you have to
organise your programmes accordingly
otherwise Guyana can be an expensive
place to explore.”
With Casposo almost off the books
and Karouni possibly nearing a position
of sustainable production Troy has the
opportunity to finally execute its longer
term strategy. It has reduced debt from
$US72 million to $US29 million, renego-
tiating terms with Investec in the process,
and its cleaner balance sheet has given it
extra stability.
“There have been so many changes on
so many levels at Troy over the past four
to five years,” Purvis said. “A lot of those
changes were initiated by our previous
chairman, the late David Dix, before he
died [in February 2016]. That process ran
out of momentum following David’s death
but I’d like to think that he would still have
been proud of what we have actually
managed to achieve against some very
heavy odds and daunting challenges.
– Dominic Piper
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 31
LATIN AMERICA DOWN UNDER PREVIEW
Argentina emerges as
unlikely hotspot
Ahead of the sixth Latin America Down Under conference – to be held at the Pan Pacific Perth on May
17-18 – Paydirt looks at both the investment climate in the region and the Australian companies active
there, starting with Argentina, which just a few years ago was considered a basket case.
It would have been folly for anybody to “This is a very important meeting [for “No reasonable person should have
have taken the stage at the first Latin Argentina to attend] because we have anticipated an easy journey for the Macri
America Down Under conference in 2012 the possibility of growing the mining in- Administration, as it set about the daunt-
and suggest Argentina would be the re- dustry and it is important politically to de- ing task of taking the helm of an institu-
gion’s most proactive mining jurisdiction. velop the mining industry in our country,” tional wreck – without a working dash-
Meilan said during last year’s event. board – which had all the potential for a
At the time, the country’s resources hyper-inflationary meltdown and socio-
sector was riddled with provincial- and Twelve months on, there are signs the political mayhem,” he said.
community-level opposition and ham- Macri Government is beginning to deliver
strung by populist national government on its promises to rectify the country’s “The precipice was avoided thanks to
policies which created a hostile invest- economic woes and attract new foreign quick action on a host of fronts, includ-
ment environment. Argentina was con- investment into its mining sector. ing: disactivating a quagmire of ruinous,
spicuous by its absence on the inaugural booby-trapped policies and regulations;
Latin America Down Under programme, “The patient seems to have stabilised,” owning-up to a laundry list of ‘social net’
with no government representation and Diego Temperley, managing director of entitlements – some of which were hast-
Genesis Minerals Ltd and De Grey Min- boutique investment banking firm Capi- ily activated by the outgoing administra-
ing Ltd – now both firmly focused on tal Agroindustrial, told Paydirt. “Presi- tion; returning from diplomatic and finan-
Australia – the only companies talking up dent Macri pushed-through a series of cial isolation by re-engaging spitefully
Argentinian assets. measures to address a host of legacy broken relations – including with OECD
issues and imbalances, thereby stem- governments and foreign investors; and,
Five years on, however, and with Bra- ming an imminent economic collapse concomitantly facing grave fiscal and
zil still wracked by political controversy and laying the necessary groundwork to monetary imbalances – all these niceties
and inertia and Chile and Peru strug- pursue a gradualist path to normalising being legacies of the Kirchner era.”
gling amid a flattening copper price and the economy.”
labour and community issues, Argentina Meilan last year told Latin America
is emerging as Latin America’s brightest Former President Christina Kirchner Down Under delegates that the Govern-
hope. ran a highly populist agenda in the later ment’s remedial work on the economy
years of her term, plunging Argentina would have positive benefits for the min-
In 2016, newly appointed Secretary into economic crisis and, increasingly, ing sector but also emphasised the prior-
of Mining, Daniel Meilan, spoke at Latin international isolation. Temperley said he ity treatment mining policy would receive.
America Down Under, assuring inves- was cautiously, but increasingly, optimis-
tors recently elected president, Mauricio tic about Argentina’s economic outlook While the country remains highly pro-
Macri, would make the country more at- for 2017 even though economic woes spective for a wealth of minerals – includ-
tractive to miners and explorers. continued through to the end of 2016. ing gold, silver, lithium and copper – an
PAGE 32 MAY 2017 AUSTRALIA’S PAYDIRT
The 2016 Latin America Down Under VIP Ministerial Dinner at Fraser’s in Perth’s iconic Kings Park
uncertainty policy and regulatory envi- risk takers investors, elimination of un- investment is taking too long to materi-
ronment at the national level and outright necessary red tape, proper, scientific ori- alise, but it is obvious that any cautious
opposition to mining at the provincial ented mining and environmental agency investor will take its time to check how
level has left miners wary of investing in rulemaking, correct social-impact poli- perdurable the reforms are.”
Argentina. cies and general understanding of the
key need to develop mining as a matter Celorrio said the success of compa-
Meilan had promised to offer investors of national interest is the real challenge nies such as Orocobre and Galaxy would
more certainty and according to Argen- not only in Argentina but all over the have a bearing on Argentina’s profile in
tinian mining law specialist Ignacio Ce- world,” he said. the mining sector for years to come.
lorrio, there is already evidence the Gov-
ernment is delivering. No country can expect mining policy to “The federal and provincial govern-
completely buck commodity trends and ments where these projects are and so-
“The increase in mining exploration in this regard Argentina is benefitting ciety in general would do itself an impor-
and development is evident, significant from a global lithium exploration rush. tant favour to correctly guide and protect
and real,” Celorrio said. “Argentina is, Along with neighbours Chile and Bolivia, this investment, as many analysts will
without doubt, a more attractive place for the country is part of the “Lithium Trian- use it as a test of how serious Argentina
mining investment, but still there is sig- gle” and was experiencing major invest- is about foreign investment.”
nificant room for expansion and the ve- ments in the battery mineral even before
locity of project development has its own Macri’s election. Courting international investors is high
terms. Many major players are taking on the Macri Government’s agenda and
their time to confirm how real the reforms Among the most active lithium devel- Temperley said much progress had al-
are and how sustainable in time they will opers are two ASX-listed companies, ready been made in thawing internation-
be.” Orocobre Ltd and Galaxy Resources Ltd, al relations.
both of whom have been in Argentina for
Among the biggest government pol- almost a decade. “Macri adopted an active foreign policy
icy initiatives is a draft Federal Mining aimed at fulfilling one of his campaign
Agreement (FMA) which the Govern- “Many lithium investments in Argentina promises: ‘Returning Argentina back to
ment hopes will improve relations be- started before the Macri policy changes the world’,” Temperley said. “This is in
tween federal and provincial authorities. but any foreign mining investor will tell sharp contrast to the largely isolationist
that the conditions for investment now and inward looking Kirchner days, when
The FMA is designed to standardise are much more favourable,” Celorrio Venezuela was perhaps the country’s
certain conditions and rules which prov- said. “There is a feeling in Argentina that leading foreign policy interest, followed
inces were requiring from mining pro- by Iran, Cuba, China and Russia – to
jects and eliminate the restriction some
provinces have placed on certain mining the detriment of relations with the United
methods. States and other Western nations.
“Secretary Meilan has put significant “He has demonstrably courted the
personal capital into this pact, which was West, while maintaining ties with Rus-
subscribed by the mining authorities of all sia and China – the latter which was an
23 Argentine provinces,” Celorrio said. important source of financing when mar-
kets were closed to the country.”
“It has raised some doubts in mining
companies, as it is more oriented to in- Argentina is coming from a long way
ternal policy instead of strengthening the back but if the Macri Government contin-
investing oriented expectations. It will ues in the same vein, it may begin provid-
be interesting to see the reaction to the ing Chile, Brazil and Peru with the kind of
FMA, if approved.” competition in the mining field its national
team has always produced on the foot-
Celorrio said more work was needed ball pitch.
to realise the pro-investment principles
of Argentina’s mining code. – Dominic Piper
“Protection of serious and competent Ignacio Celorrio
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 33
LATIN
AMERICA
17-18 May 2017
Perth,Western Australia
LADU offers unrivalled access, information, opportunity and discussion on this dynamic region.
Book your spot now to:
• Explore the opportunities available in a largely untapped region full of potential
• Establish new networks and secure viable prospects for investment from key stakeholders
• Gain unique access to nine Latin American ministerial delegations
• Exchange ideas with key mining project developers
• Build relationships with potential partners and clients
• Discover more about best practice in Latin America – government relations, law, infrastructure,
finance, security, sustainability and social responsibility
Conference sponsors &
supporters to date:
To present, exhibit or attend as a delegate please contact
Melita Fogarty on (+61) 8 9321 0355 or email [email protected]
2017 Keynote speakers Hon Bill Johnston MLA,
Minister for Mines and Petroleum,
HE Sir Peter Cosgrove AK MC, Government of Western Australia
Governor General,
Commonwealth of Australia Sr Mario Capello,
Undersecretary for Mining,
HE Aurora Williams, Argentine Republic
Minister for Mining,
Republic of Chile Sr Walter Spurrier,
Economist,
HE Ricardo Labo, Spurrier Group/Thinktank
Vice Minister for Mining,
Republic of Peru Sr Esau Garza,
Trade Commissioner,
HE Jorge Arreaza, ProMexico
Minister for Ecological Mining Development,
Bolivarian Republic of Venezuela
Other presenters to date:
Minister TBA, Minister for Natural Resources, Co-operative Republic of Guyana
Sr David Gonzalez, Promotion Manager, National Mining Agency of Colombia
Nestor Bernal, Director, Department of Mineral Resources, Republic of Paraguay
Chris Gale, Managing Director, Latin Resources Limited
Christian Easterday, Managing Director, Hot Chili Limited
Tony Rovira, Managing Director, Azure Minerals Limited
Paul Stephen, Managing Director, Crusader Resources Limited
Zenon Wozniak, Director Operations, First Quantum Minerals Limited
Travis Schwertfeger, Managing Director, Alicanto Minerals Limited
Nick Mather, Chief Executive Officer, SolGold plc
Boyd White, Energy Advisor, Dark Horse Resources
Stabro Kasaneva, Chief Executive Officer, Austral Gold Limited
Graeme Drew, Managing Director, AusQuest Limited
Harris Gomez, Managing Partner, Harris Gomez Group
Florencia Heredia, Partner, HOLT Abogados
Jaime Alvarez, General Manager, Global Operations, Globe 24-7 HR Consulting
Christian Easterday, Managing Director, Hot Chili Limited
Ignacio Celorrio, Partner - National Resources Group, Quevedo Law Firm
Andy Fourie, Professor Civil, Environmental and Mining Engineering, University of WA
Andrew Patterson, Chief Consultant International Development, MMG Limited
Anna Littleboy, Research Director, CSIRO
Bruce Wilson, Head of Resources Division, Department of Industry Innovation and Science
For updates on the programme, sponsors or to register please visit
www.latinamericadownunder.com
LATIN AMERICA DOWN UNDER PREVIEW
Crusader senses gold rush
Crusader Resources Ltd is pre- Crusader is also undertaking
paring to announce the achieve-
ment of two key milestones at its Ju- engineering work at Juruena after
ruena and Borborema gold projects
in Brazil. acquiring a primary crushing plant
A feasibility study on Juruena, from a local equipment supplier.
Central Brazil, is due this month fol-
lowing the release of an updated re- Stephen hoped the award of a
source which yielded a 36% grade
increase at one prospect. mining licence for Borborema would
Brazilian authorities are also open doors for the company to at-
tipped to soon award a mining li-
cence for Borborema, in the coun- tract the funding needed to com-
try’s north-east.
plete a BFS on the project, with a
Crusader executive director Paul
Stephen said the Juruena feasibility view to ultimately pouring first gold
study would be the first chance for
investors to run their eyes over the early next year.
project’s economics.
“We recognised that the biggest
“When we acquired the project
[in 2014] it had had a substantial challenge for this project was get-
amount of work completed and all
up with infrastructure costs it had ting it permitted, so our focus has
around $C35 million spent on it,
but they hadn’t got to the stage of been on achieving those approvals,”
wrapping a resource around any of
the work they’d done,” Stephen told he said.
Paydirt.
“There’s been a substantial
“The primary reason for that is
their focus was on identifying a large amount of work done on the project;
porphyry system and they were tar-
geting a 10-20 moz resource, but it’s had 95,000m of drilling put into it,
they didn’t get there. We’ve now
put out two resources and in doing it’s a very good project from the per-
feasibility on a starter project there, it
will let us show some economics for the spective of where it’s located and it’s
first time and I think people will start to
recognise that this is a really advanced got excellent infrastructure.
project.”
“What we’ve always wanted to do
Crusader updated the resources for
the Querosene and Dona Maria pros- with Borborema was present a very
pects late last year, with 436,000t @ 14.7
g/t gold for 206,000oz now defined and clear pathway to production and it’s
substantial portions of both resources
now classed as indicated. been very intentional on our part
The overall grade at Querosene was not to go out and promote the story
lifted by 36% to 16.7 g/t gold.
around Borborema until we have
Preliminary metallurgical test work for
both Querosene and Dona Maria also achieved that licence.
returned strong recoveries above 90%,
with further testing to come. “Our feedback is there is good de-
“Whenever you do an infill drill pro- mand for new projects globally and
gramme, especially on high-grade re-
sources, there’s a substantial risk of Crusader is awaiting the award of a mining licence there especially is investor interest
getting negative results out of that, so for its Borborema gold project in Brazil in projects with scale. Borborema
to be able to do an infill programme and is a 2.4 moz resource, it’s got a 1.6
increase your overall level of confidence
and the number of ounces in the ground gold project. There’s a lot of gold endow- moz reserve, so while it’s not the biggest
was really pleasing,” Stephen said.
ment at Juruena and there’s obviously a gold project in the world, it’s got some re-
“I think it really points to us confirming
our view that this is a very substantial history of artisanal mining, but the chal- ally attractive scale to it and puts us in
lenge for companies like us taking these the profile of having two production as-
projects into production is you’ve got to sets with combined [output] well above
be able to show these projects are capa- 100,000 ozpa.”
ble of being put into production. Crusader is now debt-free after repay-
“Getting over that initial drilling hurdle ing the final $3.5 million outstanding on
and proving up those two resources is its debt facility – used to finance the de-
such a critical part of the equation. We velopment of the Posse iron ore mine in
know there’s a lot of companies watching 2011 – with Macquarie Bank.
what we’re doing at Juruena as a result “We are now free to engage with par-
of that work.” ties that will look to help us fund our way
Not included in the resource update into production on the gold projects,” Ste-
was the discovery of a new mineralised phen said.
zone at Tatu, which returned hits of 37m “If we take on more debt it will be pro-
@ 3.71 g/t gold from 132m (including 2m ject-specific and we intend to use some
@ 47.67 g/t from 138m) and 2m @ 15.44 form of debt and equity to fund both Bor-
g/t from 166m. borema and Juruena. It’s no secret we’ve
Early indications have pointed to Tatu engaged with the IFC, who are a major
linking up with Dona Maria at depth. shareholder in Crusader, and we see
More regional exploration work is them as being a very supportive share-
planned for later this year, with Crusader holder that is definitively interested in
hoping to record similar hits to the 1m seeing us move those projects into pro-
@ 1,992 g/t gold and 0.4m @ 2,009 g/t duction.”
intercepts struck during last year’s pro- – Michael Washbourne
gramme.
PAGE 36 MAY 2017 AUSTRALIA’S PAYDIRT
Welcome to LatAm
The teams behind the world’s Grose said junior companies would of Commodity Discovery Fund
two biggest mining investment also be catered for, with organisers plan- and Keith Spence of Global
conferences have joined forces to ning to run the Investment Battlefield con- Mining Capital.
launch a new Latin American re- cept which was successfully launched at
sources event. February’s Mining Indaba in Cape Town. The only criteria for entry in
that the company is currently
African Mining Indaba owner “The Investment Battlefield will give developing one to two projects
Euro Money and the Prospec- emerging mining in Latin America, and has a
tors & Developers Association of companies the op- market cap below $US50 mil-
Canada (PDAC) are pooling their portunity to pitch lion.
resources to host the inaugural their projects to a
Mining Cumbre event in Santiago, panel of expert in- Grose said Santiago had
Chile on July 11-12. vestors, competing been chosen as the host city
for a number of priz- for the inaugural event be-
The conference will be the first es that will support cause of both its accessibility
of its kind in Latin America with the development and the strong mining culture
most mining events in the region of new projects,” in Chile.
focusing solely on the host coun- Grose said.
try. “We will have a big inter-
“Identifying the national representation and
Mining Indaba managing direc- best emerging min- it was important the host city
tor Alex Grose said Mining Cum- ing companies for was easily reachable,” he said.
bre – Spanish for meeting – would investors and sup- Alex Grose “We also looked for a country
deliver delegates everything they porting the devel- with a strong mining culture
have to expect from Mining Indaba. opment of new pro- and Santiago ticked both boxes. Chile
jects is at the core takes mining very seriously and is a
“It is the same philosophy as Mining of Mining Cumbre. world leader.”
Indaba in that we are looking to bring to- The Investment Bat-
gether investors, companies and govern- tlefield competition – Dominic Piper
ments but with a purely Latin American takes this one step
focus,” Grose said. “Much like Indaba further by showcas-
we will unite major, mid-tier and junior ing the leading jun-
mining corporates who seek investment, ior miners.”
institutional and private equity investors
who want to strike deals in the mining The six participat-
sector and government ministers who ing mining compa-
engage both groups to discuss new pro- nies will pitch their
jects in their countries.” projects and receive
live feedback from a
Grose said the partnership with PDAC judging panel which
also excited the Mining Indaba team. will include Den-
ham’s Donally as
“In the same way that London finances well as Andor Lips
African projects, North America finances
Latin America. And PDAC is as strong as
it gets when it comes to attracting finan-
ciers in North America.”
The main programme will afford
speaking spots to companies, investors
and government.
“The speaker programme is almost full
and we have had a good response to the
concept both in the region and interna-
tionally,” Grose said. “Chile, Brazil and
Argentina have all confirmed ministerial
representation and we have seen some
of the big funds come in as well.”
Gold Fields Ltd, Newmont Mining
Corp, Yamana Gold Inc and SQM are
the largest miners to have so far com-
mitted and confirmed investor speakers
include industry heavyweight Rick Rule,
chief executive of Sprott Asset Manage-
ment, Marin Valdes (managing director,
Latin America Resource Capital Funds)
and Caroline Donally (director, Denham
Capital).
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 37
LATIN AMERICA DOWN UNDER PREVIEW
Big wet delays AusQuest in Peru
Unusual heavy summer rainfall in Peru Graeme Drew
has slowed AusQuest Ltd’s kick-start-
ing of work on projects under its strategic Meanwhile, a further $US500,000 has jects but they don’t have to select them.
alliance agreement (SAA) with South32 been proposed for other opportunities We have to do certain levels of work to
Ltd. which may interest South32. get them to the stage where South32
can decide whether they are of interest
Earlier this year, a SAA was estab- “They have exclusivity over all our pro-
lished whereby AusQuest will generate or not,” Drew said.
and secure early-stage exploration op- “When we get to the point where we
portunities to be exclusively offered to
South32 over a three-year period. can see a clear way forward in terms
of definitive identification of drill tar-
Under JV terms and conditions, gets, then that is the time they could
South32 would provide funding for tar- get involved. That is when money
gets deemed as exploration opportu- starts coming in to help us define the
nities or drill-ready opportunities, with targets and then ultimately JV to drill
money used to drill targets or take pros- them if the survey is successful.”
pects to the drilling stage.
Drew said AusQuest was more than
The alliance is largely based on per- happy with the arrangement, adding
formance; putting to the test AusQuest’s that investors recognised the signifi-
expertise and nous in targeting and iden- cance of the deal and were supportive
tifying new deposits and mineral provinc- of the venture.
es with large-scale potential in Western
Australia and Peru. “It’s been very positive and we have
spoken a lot about how it works; it
In the early stages of the SAA, targets is very innovative. It’s almost like a
at Jimberlana, Balladonia and Gibson performance-based alliance. So far,
Soak (Fraser Range) have been iden- there are five happening and we hope
tified, with $US500,000 provided by to have 10-plus across the line to be
South32 for AusQuest to drill the nickel drilled [using South32s money]. That’s
plays in WA, while additional funding for the aim to have a lot drilled under the
the Blue Billy zinc JV is available once a alliance. It is up to us to get some
drill programme is agreed. meat on the bones and let the drill bit
talk for itself,” Drew said.
“It was always going to take 2-3
months to get our feet under the table, AusQuest’s expertise and nous in identifying new – Mark Andrews
the rain has delayed us a bit at Cholo deposits and mineral provinces with large-scale
and Los Otros [Peru] but the weather potential in Peru will be put to the test under a
has started to turn. We hope to restart strategic alliance agreement with South32
IP in May and we are looking at various
contractors now. By June/July we may
have some results,” AusQuest manag-
ing director Graeme Drew told Paydirt.
“Peru is still in the early stages and
we have been focused on getting work
done on our Australian projects under
the JV. That is starting to happen and
now we will look to start getting things
moving in Peru in the next four weeks.”
AusQuest will have access to about
$US500,000 from South32 to identify
drill targets at the potential large-scale
copper porphyries – Cholo and Los
Otros – southern Peru.
“The Los Otros area, which is close
to Moquegua, is quite hilly and moun-
tainous in some places and copped a
fair amount of rain recently. Certainly,
there were creeks flowing as we were
starting stream sampling but sampling
streams is not what you want to do. So,
we pulled back from that and did some
work on our own ground which was still
dry. We should be getting back there
[Los Otros] now,” Drew said.
PAGE 38 MAY 2017 AUSTRALIA’S PAYDIRT
Sails up for Hot Chili
Murray Black’s Blue Spec is funding a RC drilling campaign at Productora. The programme will not cost Hot Chili,
with Blue Spec taking on all risk
Hot Chili Ltd’s sails have been half mium to our closing price before the an- Amid a buoyant copper market and
mast as the winds have blown in the nouncement. It has allowed us, to some with a project which was about 70% com-
copper sector. degree, to minimise dilution for a major plete when the “music stopped” in the re-
reset. From here, we have terms of 8% sources sector, Easterday believes the
The company has been weighed down coupon rate which is extremely attractive right ingredients are in place to trigger
by the impending repayment of a $US6.5 against the Australian convertible note a long-term rerating of Hot Chili. The re-
million debt to Sprott Asset Management environment for coupon rates [generally sources sector collapse of 2014 struck at
and strengthening its cash position to 10-12%] and the other important thing we a crucial time in project development, just
pursue growth potential at Productora, are doing is listing the convertible notes as concerted efforts were being made to
Chile. on the market. All of this is a forerunner secure the last five years of mine life at
to and against a backdrop of rising cop- Productora.
Hot Chili has navigated the testy wa- per prices.”
ters by arranging $13 million private Combined with the nearby Alice de-
placement offering via an unsecured Effectively, the company believes it posit, indicated and inferred resources at
convertible note structure, unlike any has solved its issues and is well placed Productora total 236.6mt @ 0.48% cop-
seen in the Australian market. to list on the TSX-V, in addition to its ASX per, 0.1 g/t gold and 135 ppm molybde-
listing, with North America’s largest re- num for 1.13mt copper, 730,000oz gold
Support for the funding was led by sources investor – Sprott – as its largest and 32,000t molybdenum.
Sprott, with loyal supporters Taurus shareholder.
Fund Management and Hot Chili’s JV “Over the last few years it has really
partner at Productora, Compania Minera The recent number crunching a bal- been about trying to firstly survive and
del Pacifico S.A. (CAP) strongly partici- ance sheet organisation has come amid ensure that we didn’t lose the asset or do
pating. a run which has seen copper move from something stupid,” Easterday said.
about $US2/lb to more than $US2.60/lb
Sprott now has a senior position in Hot in the past 12 months amid concerns of a “We had to navigate some hectic wa-
Chili with a 20-25% shareholding and en- supply shortage. ters, I counted some 40 ASX peer stocks
titlement to board representation. In turn, four years ago in the exploration and
Hot Chili is debt free. “Productora is a $US3/lb copper pro- development space in copper and now
ject like the rest of the development pipe- there are 13. There has been a mass ex-
“What the funding allowed us to do is line,” Easterday said. tinction event in the junior space and Hot
pay off the debt and move all the securi- Chili has made it through. We cut all of
ties from the company’s subsidiary and “Projects of any significance won’t be our expenses, we shaved the company
our assets and replace it with an unse- developed until copper moves to $US3/lb down to be here ready for now. Our ma-
cured convertible note,” Hot Chili man- and is sustainable at $US3/lb and above. jor shareholders have enabled us to fight
aging director Christian Easterday told Being not far away from that mark, the another day; they are interested in the
Paydirt. timing is now; we are lifting the sail.”
“That was struck at about 35% pre-
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 39
LATIN AMERICA DOWN UNDER PREVIEW
long game, not the short game.” Cascabel in Ecuador.
By dealing with its overhang issues
Thanks to good copper and
in the manner it has, Hot Chili has di-
luted its project ownership to about gold grades at Cascabel, SolGold
40%; a situation Easterday is comfort-
able with considering the company is was transformed from a $30 mil-
mainly accounted for by its loyal band
of major shareholders. lion to a $900 million company in
The commitment to Hot Chili dem- a couple of months despite a bad
onstrated by Rick Rule and the team
at Sprott has been mirrored by non- market, on the back of a financing
executive chairman Murray Black and
his company Blue Spec Sondajes deal struck with Newcrest Mining
Chile.
Ltd and Maxit.
Through Blue Spec, Black has
made the unprecedented move of “What a lot of people who aren’t
funding – at Blue Spec’s own risk and
at no cost to Hot Chili – RC drill test- familiar with the SolGold story
ing of multiple large-scale porphyry
copper targets along the western ex- don’t understand is that those in-
tent of Productora, following the dis-
covery of Alice (17.9mt @ 0.41% copper, tercepts were there already when
0.04 g/t gold, 39 ppm molybdenum for
73,000t copper, 23,0000z gold and 700t they were $30 million,” Easterday
molybdenum) two years ago.
said.
“[It is a] mistake to think we are try-
ing to find more little Alices. Alice was “It was the financing that was
a proof of concept, we only had a cou-
ple of months to drill it out before we done by Maxit and Newcrest
put the PFS out,” Easterday said.
which BHP [Billiton Ltd] tried to
“We didn’t have the money to chase all
go over the top of, and in a three-
Christian Easterday month period with all the issues
suddenly removed for SolGold,
of this but we did a very methodical job the company was completely rerated off
on everything pre-drilling that we needed what it had already done.
to do and now we are finally in a position “Discovery rerate stories in markets
where we are taking the next move for- like this are very real, they are very con-
ward for the company.” temporary. We feel like we are in a prime
Black and his Kalgoorlie-based Blue location and to have 70% of a project
Spec are essentially front-ending Hot built, what this now does is allow us the
Chili’s growth potential and giving it ability to see if Productora will become
some chance of realising similar suc- something a lot bigger.”
cess to that achieved by SolGold plc at – Mark Andrews
PAGE 40 MAY 2017 AUSTRALIA’S PAYDIRT
Southern Copper faces
striking workers
Southern Copper Corp hoped to dis- Anglo American saw stable output from its Los Bronces copper mine in Chile last year
suade workers at its Toquepala and
Cuajone mines in Peru from striking last planning to strike. ing April 7 or 10, according to a regula-
month, as a second labour union this The union, one of five represent- tory filing.
year in the world’s No.2 copper producer
seeks a larger share of profits. ing Southern Copper workers in Peru, Gonzalez said a labour agreement
planned to hold an indefinite strike start- with workers was still in force and the
The company’s chief executive, Oscar
Gonzalez, said he did not think the La-
bour Ministry would give the green light
for the strike, adding that the firm could
hire contract staff to protect output if its
workers went against the Government.
“A union in a country that’s facing eco-
nomic problems can’t paralyse a compa-
ny and keep it from generating revenues
for the State,” Gonzalez said in an inter-
view on at the CRU World Copper Con-
ference in Santiago, referring to Peru’s
faltering growth prospects this year amid
destructive flooding.
“They’re the ones who are going to
look bad,” Gonzalez said of workers
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 41
LATIN AMERICA DOWN UNDER PREVIEW
company was not planning to Larger profits are at the centre of union-led stikes at mines in Peru
give them a bigger share of prof-
its, though it would seek agree- the head of its copper division said in an last year because of severe weather and
ment through dialogue. interview. what Anglo American described as ille-
gal industrial action by contractors.
Toquepala and Cuajone, both Copper prices jumped 18% in 2016
in southern Peru, together pro- and have been supported so far this year He said a recovery in output, which
duced some 310,000t of copper by strikes and a lack of new capacity. could take place once an area of lower
last year, according to govern- quality ore has been worked through,
ment data. “All of that has kept the market in almost would not happen before 2018-19.
a neutral position where there wasn’t a
Union representatives were surplus,” Hennie Faul, Anglo American’s Faul said Anglo American had reduced
not immediately available for chief executive officer for copper, said. “I the risk of further industrial action at its
comment outside regular work- couldn’t call it a tight position, but at least operations.
ing hours. it got the prices to stabilise.”
“In short, we could see some disrup-
In March, workers at Peru’s Given a broadly stable copper market tions. We believe we’ve done a lot of
biggest copper mine, Freeport- and a continued need to shore up the work to minimise that, but I will not rule
McMoRan Inc’s Cerro Verde, balance sheet following the commodi- that [strikes] out because there are still
downed tools for three weeks to ties market crash of 2015 and early 2016, heightened tensions everywhere in
demand a better share of min- Faul said the company would only look terms of labour negotiations,” he said.
ing profits after production at the at copper expansion once a decision had
mine doubled and global copper been made around year-end on restoring Anglo American has also experienced
prices improved. dividends. some regulatory frustration.
Southern Copper, owned by The first expansion project would be In February, it suspended operations
Grupo Mexico, boosted its cop- at Quellaveco in Peru, where all permits at the El Soldado mine in Chile, which
per output by 21% to 900,000t have been approved and the project of produced around 36,000t of copper in
last year on the back of an ex- up to 225,000 tpa could be executed by 2015, after failing to get regulatory ap-
pansion at a mine in Mexico. the end of 2018. proval for a redesign.
Gonzalez said the company’s cash costs
were now the world’s lowest at a little un- “Should we get to make the decision Faul said he hoped for a decision from
der $US1/lb. we’re going to go for further expansion authorities in April following an appeal by
in copper, that [Quellaveco] will be one Anglo American.
Gonzalez said former investment of our first projects,” Faul said, adding
banker Pedro Pablo Kuczynski had im- it would be an easier decision to make The mine broke even last year and
proved the investment climate in Peru if prices stayed where they were or in- is making money after prices have
since replacing a former military officer creased. strengthened, he said, so Anglo Ameri-
as the country’s president last year. can would be reluctant to give it up, but
In Anglo American’s main copper in- would mothball it or try to sell without a
Southern Copper is now considering terests in Chile – Los Bronces and Col- resolution to the design issue.
expanding the capacity of its smelter lahuasi – expansion is six years or more
in southern Peru by 40,000t, or 14%, a away, he said, although the company “We can’t be in protracted discus-
move that would boost Kuczynski’s goal eventually sees potential for expansion sions,” he said. “If we don’t get that re-
of bolstering local metals processing. around Los Bronces to try to compen- solved, we will run out of ore in the next
sate for a decline in grades. three weeks and then we’ll just have to
Gonzalez also said he hoped Kuczyn- take a decision.”
ski’s Government would this year issue At Los Bronces, Faul saw roughly sta-
a long-awaited construction permit for ble output after a fall of 24% to 307,200t – Reuters
Southern’s $US1.4 billion Tia Maria cop-
per project.
The proposed mine, which would take
two years to build and would produce
around 120,000 tpa copper, was derailed
in 2015 by protesters who feared it would
pollute a farming valley.
“We hope Tia Maria can happen but
there’s a question mark, it depends a lot
on the Government acting appropriately,”
Gonzalez said.
He added that Southern Copper had
offered to buy all Anglo American plc’s
81.9% stake in the proposed Quellaveco
copper mine in southern Peru, but has
not yet received an answer.
Anglo American has previously re-
buffed Southern’s bid to buy part of its
Quellaveco stake.
Meanwhile, the South African miner
could begin to expand copper capac-
ity starting in Peru in 2018 after another
year without added supplies as the com-
pany remains focused on cutting costs,
PAGE 42 MAY 2017 AUSTRALIA’S PAYDIRT
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Exploration to grow Beadell
Having overseen a major turna- Following a turnaround in operations, Beadell is looking to boost exploration
round in operations at Tucano, of its wider land package at Tucano, northern Brazil
Beadell Resources Ltd managing di-
rector Simon Jackson is looking for- for the tenements and will fork out shareholders – I’m a shareholder as
ward to exploring a much wider land three further payments of $US500,000 well – and the way to get the best valu-
package in Brazil. over a 12-month period. A 0.75% NSR ation on your assets in a gold business
is also payable on any gold produced is to grow your company to be an inter-
Jackson took the reins of the em- from the ground. mediate producer. That is our ultimate
battled gold producer in November objective here and we think we’ve got
2015 at a time when serious ques- “We’ve effectively done a deal to buy the building blocks of that through the
tions were being asked of Tucano out our JV partner, which now gives us land package we have at Tucano.”
on the back of an inconsistent pro- 100% ownership of that land package,”
duction profile. Jackson said. Funds raised from the recent share
placement will be put towards explora-
Eighteen months on and opera- “Whilst we have a mature operation tion in and around Tucano, as well as to
tions at Tucano appear to be run- that produces around 150,000 ozpa, I upgrade a number of long-lead items at
ning smoothly for the first time in think the real potential and the real up- the processing plant.
years, with 145,870oz gold pro- side here is to do with the exploration op-
duced in CY2016 (up 19% of portunities in this big land package. A feasibility study on a new ball mill
the previous year) at an AISC of was due at the time of print.
$US866/oz (down 14%). “You see it referenced a lot in the media
that the major companies are struggling “These plant upgrades will allow us to
With consistent gold production to replace their reserves and I think what fully optimise the project for the first time
now achieved, Jackson can finally they’re after is the exact type of thing we in its history,” Jackson said.
turn his attention to exploring the have in terms of a land position, so I think
wider 2,500sq km prospective we’re in a pretty good position going for- “At the moment we do have a con-
ground package his company holds ward if we can continue to explore and straint on how much of the fresh rock we
in northern Brazil. have the success that we’ve been having can put through the circuit at a time, on a
since we started drilling last April.” percentage basis, so by installing a new
“The reason I was excited about the ball mill and a couple of other bits of gear
opportunity to join Beadell was the ex- Jackson, a chartered accountant, has we will be able to optimise that properly
ploration potential,” Jackson told Pay- also orchestrated two major capital rais- and start to reap the benefits.
dirt. ings for Beadell during his time at the
company, including $50.5 million via a “I think we’ve made tremendous strides
“There was an operation that wasn’t placement and SPP in February. with our operations. We hit our produc-
running as smoothly as it perhaps could tion targets last year and we’re on budget
have been, but it was our view that we A similar amount of capital was also so far this year.”
could make it run better and we could turn raised in February 2016.
it around and make it run as it should. We Beadell has guided production
gave ourselves a couple of years to do “We’ve received tremendous support of 140,000-150,000oz and AISC of
that and we’re 18 months into that. from institutional shareholders and we’ve $US830-930/oz for CY2017.
really built a really strong international
“From an exploration point of view, share registry of well-known institutional Jackson would not rule out adding an-
in my career I haven’t seen a situation investors,” Jackson said. other asset to the mix as the company
where you have such a strong land posi- looks to continue its resurgence.
tion in the right age rocks but there has “Our over-riding objective is to max-
been little or no gold exploration. What imise the value of all assets for our – Michael Washbourne
we’ve done since we started, from an
exploration point of view, has certainly
backed up that excitement and we’ve had
really strong results so far.”
Some of those results include high-
grade drill hits of 20m @ 9.88 g/t gold
from 111m (including 8m @ 20.27 g/t
from 142m), 17m @ 11.79 g/t from 91m
(including 2m @ 84.15 g/t from 47m) and
20m @ 27.96 g/t from 35m (including 4m
@ 126.83 g/t from 38m) at the Tap AB2
trough lode.
In a sign Beadell is serious about ex-
ploring the potential of Tucano, the com-
pany has entered into a binding agree-
ment to acquire the issued capital of the
Brazilian company which holds 30% of a
prospective 576sq km ground package
surrounding the mine.
Beadell will initially pay $US300,000
PAGE 44 MAY 2017 AUSTRALIA’S PAYDIRT
Austral takes a turn at Casposo
There remains a distinct Australian fla- Austral is looking to add another dimension to gold-silver operations at Guanaco in Chile
vour to the running of the Casposo
gold-silver mine in Argentina’s San Juan ground control issues,” Brown said. up to 70% at Troy down to a range of 15-
province, with Austral Gold Ltd beefing up “When you go to a narrower vein mine
its interest in the project to 70%. 20%. Now, there is a lot of work happen-
methodology you sacrifice production
Austral’s stake in the project started rates to an extent but you’re reducing ing in retraining staff and implementing
at 51% when it paid Troy Resources Ltd your dilution. We have been successful
$US1 million in March 2016, before out- so far in reducing dilution from anywhere ground control standards so we can ac-
laying a further $US1 million this year for
another 19%. tually get our production rates up to what
The company has the option to wholly we are expecting.” To page 46
own Casposo via a series of staged pay-
ments totalling $US7 million over the
next five years.
As the ownership structure plays out,
the job at hand for Austral is to implement
its own ideas at Casposo, which is on
track to produce 50,000oz gold equiva-
lent this calendar year.
Austral vice president corporate de-
velopment Mike Brown told Paydirt the
recommissioning and ramp up of Cas-
poso was progressing well, as the focus
shifted to narrow vein mining.
“Troy went in on a wider scale which
initially was successful but later ran into
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 45
LATIN AMERICA DOWN UNDER PREVIEW
Under agreed terms, Austral can take full ownership of Casposo, Argentina, in the next five years
Brown said there were some upgrades deposit received the greenlight, a signifi- tral’s focus has purely been on mining
made to the plant but the main change cant impact on operations was expected. and production. In 2016, 43,698oz gold
to operations had been the underground and 57,328oz silver at average C1 costs
mining methodology. “We will get an immediate uptick in of $US713/oz gold equivalent was pro-
ongoing operation at Guanaco and then duced from Guanaco.
Largely Argentine shareholder-owned once Amancaya production is trucked
and with chairman Eduardo Elsztain also to the Guanaco plant then we will get “We have been following the struc-
an Argentine, Austral can leverage from that uplift. Putting the Guanaco material tures and grade along these structures
its in-country expertise at Casposo. through the new plant will increase gold and haven’t really been able to sit back
recovery to 95%,” Brown said. and have the luxury of fully evaluating the
Casposo is Austral’s only project in potential of it properly because we have
Argentina and the acquisition is in-line “The Amancaya orebody, according to been trying to mine it and pull out 50,000
with its strategy to expand and invest in our last resource report, was essentially ozpa,” Brown said.
precious metals opportunities in South all inferred resource at just on 8 g/t gold.
America. The purpose of the infill drilling was to “Bringing Amancaya on will allow us to
convert as much of that inferred resource sit back and evaluate the immediate de-
The company’s flagship project is Gua- to indicated and/or higher. The infill re- posit and the environs around it to see
naco, 220km south-east of Antofagasta, sults already published have been out- if we can keep going. It has always had
northern Chile. standing; there aren’t too many deposits three years [mine life] in front of it since
at surface which average 8 g/t gold over 2010, so we expect to have a significant
Guanaco has predominantly been a 2-4m widths on a single plain structure.” mine life there from now on.”
heap leach operation, with gold recover-
ies in the range of 73-75%. The easy open pit mining option poten- In the near term, finalising the techni-
tially on offer at Amancaya means capex cal report on Amancaya and commis-
Historically, justifying the investment for the development has been estimated sioning the new plant are two important
of a new plant has been tricky, given the a less than $US4 million. steps ahead for Austral, as it looks to a
short reserve window mined and a large new source of power.
amount of ore sourced from inferred re- The high-grade shoots delineated at
sources. Amancaya are expected to be mined for “The energising of the transmission
at least one to two years, and with the line to the grid is another half step we are
However, the game is about to change addition of a new agitation leach plant, taking,” Brown said.
at Guanaco with the imminent arrival of Austral is hopeful of higher gold recover-
production from the high-grade Aman- ies. “We will transition from diesel gen-
caya deposit, 73km from the Guanaco eration on site to grid connected power,
plant. Combining Amancaya feed with pro- which has a number of benefits but the
duction from Guanaco will relieve some immediate one will allow us to test the
A technical report on Amancaya is at of the pressure on the latter to fill the new grinding circuit of the new plant and then
an advanced stage and an independent plant, while also allowing Austral to ex- start ramping up testing and production
PFS was expected to be completed late plore its large land holding at Guanaco. of the new plant.”
last month.
Historically, there was a lot of explora- – Mark Andrews
Brown said pre-stripping and initial tion activity at Guanaco, however, Aus-
preparations for production had started
at Amancaya and once mining of the
PAGE 46 MAY 2017 AUSTRALIA’S PAYDIRT
Santana tunes up Cuitaboca play
Santana has either divested or sidelined other assets to focus on the Cuitaboca silver project
Santana Minerals Ltd has cleared the tana build up its portfolio of early-stage “Cuitaboca is the only thing we are do-
decks in anticipation of delivering big exploration assets in Mexico but during ing,” managing director Tony McDonald
at its Cuitaboca silver project in north- the last six months it has released much told Paydirt.
west Mexico. of its ground in order to focus on the bulk-
tonnage silver targets it has at Cuitaboca. Santana farmed into the project – in
The previous two years had seen San- Sinaloa State, north-west Mexico – in
2015, and has since largely focused on
McDonald said Santana was seeing good value in its Mexican the bulk-tonnage potential at the Mojar-
drilling programmes, paying around $US100/m dina prospect.
Trenching in early 2016 returned re-
sults of 61m @ 61 g/t silver, 3m @ 401
g/t, 9m @ 313 g/t and 12m @ 102 g/t.
The company followed up with first-pass
RC drilling which produced hits of 83m
@ 97 g/t silver from surface, 67m @ 66
g/t from 31m and 51m @ 42 g/t silver and
0.23% zinc from 21m.
A second RC campaign in October
2016 delivered hits of 35m @ 221 g/t
silver from surface, 52m @ 127 g/t from
surface, 6m @ 194 g/t from 75m, 11m @
55 g/t from surface and 45m @ 45 g/t
from 65m.
“From those two drilling campaigns
we have identified two high-grade north-
west to south-east trending vein systems
– Evangelina and Las Animas – which
are both open at depth and along strike,”
McDonald said.
The company is now drilling a third pro-
gramme of RC holes to test the known
mineralised envelope as well as stepping
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 47
LATIN AMERICA DOWN UNDER PREVIEW
out south-east along strike. system to the north but we
“We will do 2,400m of RC
haven’t got there yet,” he said.
drilling, mainly at Mojardina,”
McDonald said. “We are look- “We need to put in around
ing to expand mineralisation
both to the north and to the 15km of roads in the northern
south where we are confident
of stepping out up to 1km.” part of the project and that is
Santana hopes the step-out why we chose Mojardina first;
drilling will allow it to determine
the importance of the junction it’s simple to access and has
of Mojardina South and newly
discovered vein zones to the potential for the bulk-tonnage
south.
silver we are looking for.”
Following that drilling, the rig
will move to the Jesus Maria McDonald was speaking on
prospect north-west of Mojar-
dina. Trenching last year pro- his return to the company’s
duced average intercepts of
10m @ 11 g/t silver along 300m strike at corporate office in Brisbane
Jesus Maria with follow-up RC work pro-
ducing hits of 5m @ 113 g/t silver and 9m after an extensive tour of
@ 47 g/t.
North American investment
However, Santana remains uncon-
vinced the drilling hit the most relevant centres. He said the response
targets.
to Santana’s bulk-tonnage
“The limited drilling to date has not in-
tersected the primary flexure but trench- strategy had been very posi-
ing results indicate high-grade zones are
evident,” McDonald told investors. “The Tony McDonald tive.
latest interpretation suggests there is
“We spoke to a lot of inves-
better potential along strike to the east tors in New York and Toronto and they
for the host zone to break apart and yield were telling us to do more of the same,”
he said. “The North American investors
wider zones of mineralisation.
“The focus is now on identifying chang- like the approach of identifying the min-
es in flexure/strike where higher grades eralisation, going through it logically and
coming up with a resource at the right
report at wider true widths.”
McDonald said Santana had sharp- time. The message was that they don’t
ened its focus on Cuitaboca because want us to come up with a resource too
of the array and quality of targets it had early.”
While Santana has remained reso-
identified on the project.
“There are still other targets to test and lutely fixed to the local Australian market,
we know there is increasing gold in the McDonald admitted the Santana story
PAGE 48 MAY 2017 AUSTRALIA’S PAYDIRT
was a much easier pitch in the market at the right time,”
North America. McDonald said. “The risk fear
is different to last year; things
“They are very receptive to are a bit flat at the moment but
both Mexico and silver up there there is enough energy build-
and we think the next serious ing to give us confidence we
funding is likely to come out will find investor support.
of North America because of
that,” he said. “People are saying: ‘If you
bring us quality projects, we’ll
Although investors in New start investing’.”
York and Toronto are well-edu-
cated on Mexican silver plays, McDonald is also optimistic
McDonald was hesitant to com- about stronger sentiment to-
mit Santana to a TSX listing. wards silver.
“A dual listing is not a consid- “Hopefully we will also see
eration at the moment. We want a correction in silver prices.
to spend money in the ground, There are a few funds in
not on regulatory requirements North America who are look-
but we will have to consider a ing for opportunities to invest
dual listing down the track to because they see silver as
get full value for shareholders.” undervalued. The gold/silver
price ratio is currently 70:1
Santana expects to have when historically it has been
around $1 million in the bank by 40:1.
the time the current drilling pro-
gramme is completed in June, “Even investors in Sydney
leaving the company needing to and Melbourne are keen; the
raise money in the second half message out of there being:
of the year. ‘Stick to the silver, don’t go off
chasing lithium or cobalt’.”
“This programme will get us
to the start of the next which A third round of RC drilling started on Santana’s Mojardina – Dominic Piper
will likely be resource definition prospect in late April
work but we have to go back to
AUSTRALIA’S PAYDIRT MAY 2017 PAGE 49
LATIN AMERICA DOWN UNDER PREVIEW
3D embarks on Haitian adventure
Australian juniors are known for their
intrepidness but 3D Resources Ltd
has shown greater ambition than most,
securing an option over two gold projects
in Haiti.
The small Caribbean nation of 10 mil-
lion people is rarely mentioned in regards
resources investment. As the poorest
country in the Western Hemisphere, it is
more readily associated with poverty and
natural disasters, such as the 7.0 magni-
tude earthquake which destroyed much
of the capital, Port-au-Prince, in 2010.
However, neighbouring Dominican
Republic is a well-known gold producer
thanks to the prolific Pueblo Viejo gold-
silver mine (700,000oz gold production
in 2016). Such prospectivity and a new
focus on mining from recently elected
president Jovenel Moise gave 3D en-
couragement to investigate the country.
The junior has secured options over While Haiti has no formal mining sector, the Pueblo Viejo gold-silver mine in neighbouring
two projects in Haiti. Under the terms Dominican Republic produced 700,000oz gold for Barrick and Goldcorp last year
of the heads-of-agreement, 3D will pay
$US100,000 to acquire an initial 70% ensured foreign investors remained wary and according to 3D managing director
interest in two companies which respec- of the country. Peter Mitchell, the Moise Government is
tively own 100% of the Morne Bossa gold Some exploration has been undertak- pursuing mining development as a key
project and 80% of the Grand Bois gold en with a JV between Newmont Mining economic driver.
project in the north of the country. Corp and Eurasian Minerals Inc the last “The new president is very keen to
Haiti’s gold endowment has been to conduct work, in 2013, but with a new move quickly on the Mining Act and he
known about since the 1970s when the Mining Act (designed by the World Bank) sees mining as an important part of the
UN Development Programme undertook presented to the Senate by newly elected economy,” Mitchell told Paydirt. “There
a number of exploration campaigns but President Moise, there is a renewed in- is phenomenal support for this project.”
the authoritarian and erratic regimes of terest in the country. Mitchell, who visited Haiti in March as
Francois “Papa Doc” Duvalier and his Newmont bought Eurasian’s share part of 3D’s due diligence project, said
son Jean-Claude “Baby Doc” Duvalier of their JV for $US4 million in late 2015 the company had met with both the Pres-
ident and members of the Senate.
“There is a lot of underlying support for
development of these projects in particu-
lar,” he said.
Of the two, Grand Bois is the more ad-
vanced, with Eurasian/Newmont having
drilled 75 holes on the property, defining
a non-compliant resource of 3.99mt @
2.059 g/t gold for 264,083oz (at a 1 g/t
cut-off).
Newmont dropped its interest in Grand
Bois in late 2013, preferring to pursue
larger bulk tonnage targets in other parts
of the JV project area but Mitchell be-
lieves the prospect is an enticing one for
a junior of 3D’s size.
“Newmont spent a lot of money but
largely on what proved to be sub-eco-
nomic copper with high-grade gold as-
sociated but they got some very good
intercepts,” Mitchell said. “But they were
obviously looking for something larger
but for a junior it is very suitable.”
3D has an existing portfolio of West
3D has secured options over two gold projects in Haiti Australian exploration assets but has
PAGE 50 MAY 2017 AUSTRALIA’S PAYDIRT
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