pd272-Jun19-mag-web

JUNE 2019 Volume 1. Issue 272 $11.95

Defying history: ISSN 1445-3436
Aussie revival in Indonesia 05

l Latin America Down Under review 9 771445 343007
l Copper spotlight

l Mining services feature

Page 1 JUNE 2019 AUSTRALIA’S PAYDIRT

“You’d never know
all this used to
be a mine.”

Australian miners and farmers are working together towards a common goal.
Mining land is being rehabilitated to graze cattle and grow crops. When the mining is
gone, the rehabilitated land will be here to stay – preserving it for future generations.

There’s more to Australian mining.

ZZZPLQHUDOVRUJDX

contents

PAYDIRT (ISSN 1445-3436) 5 NEWS
Published by Lithium, nickel, cobalt and graphite, etc have
Paydirt Media Pty Ltd. all experienced the limelight in recent times,
A.C.N. 063 985 133 however, there appears a groundswell of activity
building in the vanadium sector. There are
Head Office: several Australian companies with prospective
Suite 9, 1297 Hay St, West Perth opportunities in the vanadium field and
Western Australia 6005 none more so than Neometals at its flagship
P.O. Box 1589, West Perth Barrambie play. Michael Washbourne spoke to
Western Australia 6872 Neometals managing director Chris Reed after
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 the company released a DFS on Barrambie
[email protected]
www.paydirt.com.au 20 COVER 20
Mining investments in Indonesia have been
tarnished by failures in the past. Bre-X was
one such scandal which made international
Editorial: headlines and while astute investors know
Editor: Dominic Piper better than to judge the country on that
Deputy editor: Mark Andrews particular episode, there have been other
Journalist: Michael Washbourne examples of troubled investment stories.
Photography: Picture This However, while accompanying the team from
Art director: Nick Brown Nusantara Resources to the 2 moz Awak
Contributors: Brendan Ryan Mas gold project on the island of Sulawesi,
(Johannesburg) Michael Washbourne found a story whereby
both country and company are proving fruitful
Advertising:
Advertising manager: Richa Fuller outcomes are possible in Indonesia
Subscriptions: Kate Blanchard
Phone: (+61 8) 9321 0355 28 LATIN AMERICA
Facsimile: (+61 8) 9321 0426 DOWN UNDER

Pre-press and printing: The eighth Latin America Down Under
Vanguard Press, 26 John St, conference in Perth during May again proved to
Northbridge WA 6003 be the forum of choice to strengthen Australia-
Member of: Latin American relations across a broad range
of sectors. Paydirt dedicates over 20 pages
Paydirt Media of coverage in this edition providing all the 28
Executive chairman: Bill Repard highlights from the two-day event
Finance manager: Giovanny Jefferson
Accounts/administration: 50 COPPER SPOTLIGHT
Lana Luketic Copper has been one of the better performing
Conferences: Melita Fogarty, base metals in recent times, however, May
Namukale Nakazwe-Msiska, was a bad month for the red metal. Continuing
Christine Oelschlaeger, tensions between US and China have impacted
Mitchelle Matambo sentiment towards copper, but that has done
little to dampen the spirits of the exploration
JUNE 2019 VOLUME 1. ISSUE 272 $11.95 sector, particularly in Western Australia’s
Paterson province. Paydirt takes a look at some
of the work being done in the region and other
areas of interest in the copper space

Defying history:ISSN 1445-3436 58 MINING SERVICES
Aussie revival in Indonesia05 Mining services companies are starting to get
busy again and the opportunity for budding
l Latin America Down Under review9 771445 343007 Australian mining services companies is wider
l Copper spotlight... than it has ever been, according to Jolimont
Global Mining Systems – a JV fund between 58
Paterson province alight Jolimont Capital and Resources Capital Fund.
l Mining services feature Dominic Piper spoke to Jolimont about the
state of play in mining services, while Paydirt
PAGE 1 JUNE 2019 AUSTRALIA’S PAYDIRT takes a look at some of the leading lights in
the sector
Cover image: Drilling at Nusantara’s
Awak Mas gold project in Sulawesi,
Indonesia

Member of:

Registered by Australia Post PP 643938/0071.
No pages or articles in this publication may be re-
produced in any form without the consent of the
publisher. This includes photographs either taken
by Paydirt Media staff or provided by other parties.

A market
in confusion

A brief trip to London at the end of This change has led many juniors to believe they can replicate
last month confirmed what has be- the move but for the reasons pointed out above, it is unlikely.
come increasingly apparent in Aus-
tralia for several months; junior min- So, where then could the money come from? The answer
ers with development ambitions are seems to lie with those two great bogeymen of the junior mining
stuck in a bind. world; debt and private equity.

The phenomenon is not restricted Speaking at Latin America Down Under last month, Noah’s
to Australia and in fact the root cause can probably be traced to Rule managing director Sean Russo laid out an eloquent case for
North America. Despite our own parochial protestations, Toronto pursuing debt – as he always does – arguing that used correctly,
and Vancouver have always been the home of the deepest re- debt instruments offer the best, cheapest source of finance in the
source capital pools but as cannabis and cryptocurrencies con- current climate.
tinue to grip speculative interest in the Canadian market, junior
miners are not getting a look in. “There have never been more lenders and rarely less equity.
I’ve never seen so much debt with so few strings attached availa-
During his visit to Perth last month, the TSX’s Dean McPher- ble,” Russo said. “It is a risky scenario but you can make it work.”
son was frank in his assessment of the situation, admitting the
rise of cannabis stocks likely meant the good times were over for The caveat is that there are plenty of caveats. Where retail and
speculative mining plays (particularly those under $C50 million some institutional investors are prepared to consider ambitious
market cap). forecasts for blue skies ahead, debt providers want robust cli-
mate models to predict the future conditions.
Many market analysts suggest it is the North American indus-
try’s own fault with too many hand-to-mouth junior miners soak- “My advice is; don’t start financing unless you have the re-
ing up investors’ cash down the years with little to show for it. The sources to finish it,” Russo said. “Being in the vicinity of being
Canadian sector has had few junior company success stories in bankable on a project is not good enough.”
the past decade and with other options for high-risk investments
on the table, patience among investors has worn thin. It is the same for private equity groups. The level of due dili-
gence they apply is far in excess of your average institutional fund
This deprives Australian juniors of a vital source of potential or investment group.
funding. How bad it has got for Canadian companies was ap-
parent at the 1-2-1 Investment Conference in London. More than Speaking to one prominent London-based private equity group,
half the participating companies were TSX-listed, a demographic it is apparent many emerging companies are uncomfortable with
unimaginable just a few years ago. this level of scrutiny.

Our London visit also showed that market is not sure what it “Many don’t like the things we insist on around governance, a
wants meaning it may not be the panacea ASX and TSX juniors seat on the board, etc.,” he said. “In a lot of cases, they’d rather
are hoping for. pass on our proposal than be subject to our conditions and I know
other private equity groups have the same experience.”
For one, Brexit still looms and while the City itself may not be
affected to any great extent, the uncertainty which seems likely to Perhaps this is what is keeping many companies back. No
drag on for a long time yet makes everyone uncomfortable. one likes having limitations placed on them – whether it be hedg-
ing, covenants or non-executive positions on their board – but if
One experienced adviser told me the idea of a deep pool of projects are to eventually deliver on what has been promised of
London capital ready to be deployed on resources plays was a them, they have to be robust enough to withstand such levels of
myth. scrutiny.

For sure, there is money available and, in the case of Africa, True, there are plenty of examples of poor debt deals but these
appetite but there are few specialist resources funds in London are far outweighed by the volume of bad equity deals and compa-
and the more generalist investors are restricted in their ability or nies and projects which have soon fallen over after starting. It is
willingness to increase their exposure to resources plays. obvious traditional equity has consistently failed to apply the right
level of due diligence.
The London retail investment space is also confused and con-
fusing and the resources sector overall simply doesn’t play a As Russo said: “Many people around companies are cheering
large a role in the City capital markets as it does in Canada or them on but their risk is not the same as the company’s. Brokers,
Australia. technical experts, advisers; they’re not climbing that [financing]
cliff with you.”
In Australia, the market is very much split between the haves
and the have-nots. The established gold producers continue to [email protected] @DominicPiper
post record profit growth and impressive share price apprecia-
tion. Their share registers have fundamentally changed over the
last three years and now boast a decidedly Northern Hemisphere
flavour.

Page 4 JUNE 2019 AUSTRALIA’S PAYDIRT

Barrambie back in vogue

Neometals Ltd has moved a step closer to unlocking what managing
director Chris Reed described as the “most valuable” resource his
company has ever possessed.

Capping what was the hydrometallurgical

a good month for va- flowsheet has been

nadium players, Neo- optimised, the com-

metals published an pany will progress to a

updated DFS on its FEED study.

Barrambie vanadium- A final investment

titanium-magnetite decision is not likely

project which con- to be made before the

firmed both the tech- December 2020 quar-

nical and economic ter.

viability of primary Reed said without

vanadium pentoxide any Australian-based

production from the vanadium-titanium

vanadium-rich Central operation to compare

Bands deposit. against, investors

Neometals is now needed to look abroad

looking to complete for suitable examples

the titanium aspect of but also have faith

its processing puzzle in the company’s in-

and has embarked stincts.

on a pilot-scale evalu- “All your examples

ation programme to are listed in Toronto or

determine the optimal listed on the London

“whole of deposit” Neometals has invested about $30 million in the Barrambie vanadium-titanium- Stock Exchange, there
flowsheet for Barram- magnetite project, about 80km north-west of Sandstone, since acquiring it in 2002 are none listed in the
bie, about 80km north-
southern hemisphere,”

west of Sandstone, he said.

Western Australia. ed $30 million in Barrambie since acquir- “The big deposits are in South Africa,

The Barrambie resource of 280.1mt @ ing the project in 2002. A PFS released in Russia, China and Canada, so in terms

9.18% titanium dioxide and 0.44% vanadi- 2015 based on a hydrometallurgical op- of being in operation, there’s none in Aus-

um pentoxide is made up of Central Bands tion indicated a 99% pure titanium dioxide tralia to compare. So, it’s hard for Austral-

(221mt) and the titanium-rich Eastern chemical feedstock could be produced at ian investors to get a handle because they

Band (59mt) deposit. “industry-leading” operating costs. just aren’t across the processing routes for

“Barrambie is certainly the most valu- Pilot testwork – including comminution these deposits.

able mineral resource by contained metal and beneficiation – is scheduled to be car- “We’ll approach this just like we did Mt

that we’ve ever had, it just needs more ried out over the next six months and will Marion – knock off the technical feasibil-

work to unlock it,” Reed told Paydirt. focus on using atmospheric acid leaching ity, knock off the approvals – and when

“The project is so big I couldn’t have to recover titanium, vanadium and iron the market is right these projects get de-

gone to the board and said ‘look, this is go- products. Once Neometals is satisfied veloped.”

ing to take five years and ‘X’ amount A year ago Neometals was plan-

of dollars’. We’ve had to do it in stag- Barrambie vanadium DFS ning to spin out Barrambie into a sep-
es so we’re now filling out the final arate listed vehicle so it could focus

steps for a ‘whole of deposit’ evalu- Resource: 280.1mt @ 0.44% V2O5 on its burgeoning lithium business,
ation. Reserve: 39.9mt @ 0.78% V2O5 including Mt Marion.

“Essentially we’re taking each However, in December the com-

stage to pilot…we’ve done a DFS Processing: 6,337 tpa FeV80 pany announced those demerger

on the traditional vanadium, we’ve Throughput: Stage 1 13 mtpa; Stage 2 19 mtpa plans had been scrapped following
got a pilot done on the traditional ti- Opex: $US26.27 /kg the sale of its 13.8% interest in the
tanium and we’ve had a PFS on the producing Mt Marion lithium opera-

hydromet that we’re now moving to a Mine life: 15 years tion to co-owners Mineral Resources

full pilot which will enable us to have Payback: 5.1 years Ltd and Gangfeng Lithium Co Ltd for
a look at it to DFS-level accuracy. Capex: $US484 million ($692 million) $104 million.
We’re very confident of where we’re
“I guess we’ve been vindicated

going to end up.” Pre-tax NPV: $US301 million ($430 million) to some extent in that unfortunately

Neometals has reportedly invest- IRR: 21% spodumene prices have materially

AUSTRALIA’S PAYDIRT JUNE 2019 Page 5

NEWS

declined since then and the value of what we sold for a good price May was vanadium month...
would invariably have gone down,” Reed said.
Tando Resources Ltd opened proceedings with a scoping study
“So, to that extent, I think we did make the right decision, it certain- which confirmed its SPD vanadium project in South Africa was
ly provided us the opportunity to take an enterprise value determined “technically and financially robust”.
by the market and turn that into cash.”
Phase 1 development of 2.2 mtpa standalone mining and
Despite having a significant cash war chest at its disposal, Ne- beneficiation operation at SPD will require $US18.8-20 million
omtetals has informed shareholders that external funding – a likely of capital. Production of 790,000 tpa of a V2O5 concentrate is
mix of debt, JV interest and/or equity – will be required to underpin estimated to cost $US11.70/t.
Barrambie’s eventual development.
Other key highlights from the study include an EBITDA of $US234-
Although vanadium pentoxide prices have dipped sharply since 431 million over the life of mine (currently 25 years), a pre-tax NPV
peaking at almost $US28.50/lb last November, Reed remains confi- of $US68-138 million and IRR of 48-66%. Payback is estimated to
dent Barrambie will one day become a deposit in high demand. occur within 1.9-2.8 years.

“Growth in vanadium is underpinned by use in steel, but there’s a Tando also raised $1.7 million via a placement last month as it looks
growing use in vanadium redox batteries and there’s already quite a to advance offtake agreements and complete a PFS for SPD.
number of solid-state lithium battery producers who are using lithi-
um-vanadium in the cathode, so we’re very confident on where the Technology Metals Ltd’s Gabanintha vanadium project in Western
high purity vanadium chemical market is heading,” Reed said. Australia attracted the attention of Chinese rare earths manufacturer
CNMC Ningxia Orient Group Co Ltd.
“In terms of titanium …leading lithium battery anode materials ac-
tually use a lithium titanate. So, there is this commonality that they Last month a non-binding MoU aimed at establishing a more formal
[vanadium and titanium] are associated with a sustainable future, ei- V2O5 offtake agreement down the track was executed between
ther through the batteries or alloys for materials which make them Technology Metals and CNMC, which produces vanadium nitrogen
stronger and lighter. alloys and ferrovanadium for use in the Chinese steel industry.

“So, they are very relevant commodities that we are very comfort- Under the terms of the MoU, Technology Metals has committed to
able in having long-term exposure to.” supplying an initial minimum quantity of 2,000 tpa V2O5 on a take-
or-pay basis. The MoU is effective until October 1 unless the parties
In parallel to its ongoing work on Barrambie, Neometals will con- mutually agree to terminate or extend the term.
tinue to advance its plans to build a Kalgoorlie-based lithium refinery
as well as progress its lithium-ion battery recycling ambitions. Lithium Australia NL announced a maiden vanadium resource of
185mt @ 0.33% V2O5 for a portion of its Youanmi complex in the
– Michael Washbourne Mid-West region of WA. It comprises oxide resources of 96mt @
0.34% V2O5 and fresh resources of 88mt @ 0.33% V2O5.

Metallurgical characteristics of the oxide mineralisation at Youanmi
will now be evaluated, initially focusing on the potential for direct
leaching of the vanadium and associated base metals. A drilling
programme is also being planned.

While Lithium Australia does not consider vanadium to be a core
part of its business, vanadium flow batteries are an area of interest
for the company and it has also pegged prospective ground near the
Coates vanadium deposit only 35km east of Perth.

TNG Ltd has signed a binding life-of-mine offtake and marketing
agreement with speciality chemical distributor DKSH for titanium
dioxide pigments from its Mt Peake vanadium-titanium-iron project in
the Northern Territory.

Under the terms of the agreement, TNG will sell and DKSH will
purchase up to 150,000 tpa – 100% of the proposed titanium dioxide
production from Mt Peake – on an FOB basis.

TNG already has binding life-of-mine agreements in place with
Korean group WOOJIN Metals for 60% of its vanadium output and
a binding term sheet for its iron products with Singapore-based
Gunvor Group.

Tando is seeking to develop an initial 2.2 mtpa standalone
mining and beneficiation operation at the SPD vanadium
project, South Africa

Page 6 JUNE 2019 AUSTRALIA’S PAYDIRT

BUSH TELEGRAPH

Bell tolling in SA gold sector

Send not to know for whom the bell options “generating higher returns and dollar Wafi-Golpu copper-gold project in
tolls, It tolls for thee” are the words of
John Donne in his poem For Whom The quicker payback periods” elsewhere in Papua New Guinea.
Bell Tolls.
the world. Guess what? He’s right. Sibanye-Stillwater’s overwhelming pri-
The bell is tolling for the South Afri-
can gold mining industry following the Mponeng right now has an estimated ority is to deleverage its balance sheet
decision by AngloGold Ashanti Ltd chief
executive Kevin Dushnisky to put the eight-year economic life on its remaining after all the debt it has taken on to make
group’s last remaining SA gold mine –
Mponeng – up for sale. reserves but the life-of-mine could be ex- a string of recent acquisitions, in particu-

This announcement not only marks an tended by a further 20 years through ad- lar US palladium miner Stillwater.
abrupt about-face by AngloGold – for-
mer chief executive Srinivasan Venka- ditional investment. Dushnisky would not Heaven-Sent may or may not meet Du-
takrishnan declared Mponeng to be a
core asset and “not for sale” in Novem- quantify that required investment. shnisky’s wish that Mponeng be placed
ber 2017 – but it also signals the demise
of one of the two deep-level gold mines What it comes down to is that – as I in “strong hands” with “appropriate finan-
held to have a long-term future in SA.
have pointed out before in these columns cial and technical expertise”.
The other is South Deep,
which also appears to be on – SA may still have the greatest unmined Selling Mponeng to someone who can
its way out.
resources of gold left in the world but it’s operate the mine responsibly is crucial
Mponeng – the former
Western Deep Levels South never going to be mined because it sits given the likelihood that the SA Govern-
– is the deepest gold mine in
SA operating down to levels at depths below 4km and cannot be ex- ment will seek redress from former own-
approaching 4km below sur-
face. ploited profitably. er AngloGold in the event that it subse-

What set it apart from the There are three potential purchasers quently turns sour.
other deep-level mines un-
til now was that AngloGold for Mponeng and the successful bidder is Whoever takes Mponeng over, it is
believed it could become the
“gold mine of the future” and highly unlikely that they will
go even deeper using inno-
vative mechanised mining technology. pump in the investment

This, of course, has been the “holy needed – rumoured to be
grail” of SA gold miners since even be-
fore I got involved with the industry back up to $1 billion – to extend
in the late 1970s. The aim was to find a
viable way of mining gold without using Mponeng’s life. Instead, they
explosives because of the productivity
and safety benefits this would bring. will run it down and maxim-

In the late 1970s the SA gold industry ise profits over the remaining
was both powerful and profitable and
had massive research and development eight years or so of opera-
technical facilities available to it. An-
glo American plc had its own research tions.
laboratory while the industry funded a
huge joint research initiative through the Which brings me back
Chamber of Mines and both had back-up
from the State through powerful institu- to South Deep – SA’s other
tions like the Council for Scientific and
Industrial Research (CSIR) and Mintek. former great hope for the fu-

Still, they did not succeed and those Kevin Dushnisky ture of gold mining. Owner
R&D facilities no longer exist or are now
a shadow of their former selves. and operator Gold Fields

Dushnisky, appointed AngloGold chief Ltd simply cannot get it right
executive late last year, has looked at
this and decided to pull the plug because likely to get a bargain given Dushnisky’s and there is all kinds of speculation flying
he reckons AngloGold has got better
obvious desire to wash his hands of SA. over a possible sale.

And that’s despite Dushnisky’s “soft In April, the Gold Fields share price

soap” view that “under the right owner- performed a major oscillation jumping

ship, these assets offer a compelling, 25% in a week and then losing all those

longer-term value proposition”. gains over two days trading at a time

He has limited options facing a buyer’s when other gold shares were flat be-

market in which no major foreign gold cause the gold price was flat.

miner is going to look at Mponeng for the Much has also been read into com-

same reasons that Dushnisky wants out. ments from Gold Fields chief executive

The three potential buyers are Sibanye- Nick Holland who pointed out in April the

Stillwater and Harmony Gold Mining Co. group would soon reach a 2 moz produc-

Ltd – which are major SA gold groups tion “milestone” from its non-South Afri-

– along with Heaven-Sent SA Sunshine can operations thanks to growing output

Investment which is a Hong Kong-based from its Gruyere mine in Western Aus-

company that previously bought the Ko- tralia.

panang mine from AngloGold. Feeling amongst some observors is

Buying Mponeng could make strate- that Gold Fields may be preparing for life

gic sense for either Sibanye-Stillwater without South Deep.

or Harmony because both run gold

mines that are close to or adjacent with Brendan Ryan is a Johannesburg-
Mponeng. based mining writer

But, both groups are currently under

serious financial strain and have other

priorities. Harmony has to find a way

to fund its 50% share of the multi-billion

AUSTRALIA’S PAYDIRT JUNE 2019 Page 7

NEWS

Acacia fined, Barrick pitches deal

Barrick Gold Corp’s bid to acquire Acacia Mining plc for an implied value of $US787 million came after
the Tanzanian Government slapped the latter with a $US2.4 million for alleged pollution at North Mara.

For two long years, Barrick and the Acacia and the Tanzanian Government, unaffected despite the crackdown by the
Tanzanian Government have been nego- the latter was fined $US2.4 million for al- environmental agency.
tiating a basis for settlement of Acacia’s leged pollution at its North Mara mine.
ongoing disputes and been working on Acacia confirmed the mine would be is-
viable frameworks for Acacia to restart Acacia has been embroiled in a well sued with an EPO relating to alleged his-
full operations in country. publicised and long-running tax dispute torical breaches of environmental regula-
with Tanzania since mid-2017. tions in Tanzania.
As negotiations continue, Barrick has
been afforded the opportunity to assess Acacia was forced to cut output by a “The mine’s technical team has been
Acacia’s assets in Tanzania and deemed third after the Government banned the ex- working constructively and collaboratively
its offer in late May as reflecting “fair value” port of mineral concentrates from its two with the Government of Tanzania to try
for Acacia shareholders. other mines, Bulyanhulu and Buzwagi, in to address...concerns regarding alleged
2017. breaches of various environmental regula-
Barrick’s pitch to acquire all the Acacia tions and alleged discharges of a hazard-
shares it does not already own involves a Tanzania’s National Environment Man- ous substance from the mine,” Acacia said
share-for-share exchange of 0.153 Barrick agement Council (NEMC) has issued an in a statement.
shares for each ordinary share in Acacia, environmental protection order (EPO)
with total consideration to the minority relating to alleged pollution from North Acacia said in January it had been fined
shareholders of Acacia totalling $US285 Mara’s tailings dam, Tanzania Mining Min- 300 million Tanzanian shillings over alle-
million. ister Doto Biteko said. gations of breaching environmental regu-
lations at the mine.
“Since the proposal is in Barrick shares, “The North Mara gold mine has been
the Acacia minority shareholders will be given two weeks to pay the fine and three The company said it has been asked
able to benefit from any future potential weeks to rectify the problem at its tailings to build a new tailings dam, a structure
upside in both the Acacia assets and Bar- storage facility,” Biteko told Reuters in late for storing uneconomical ore, as it faces
rick’s broader portfolio of assets,” Barrick May. a $190 billion tax bill from Tanzanian au-
said in a statement. thorities, which has severely limited the
“If the mine fails to comply to the order, London-listed company’s operations in the
Barrick has until June 18 to commit to tougher measures will be taken against it.” East African nation.
the offer to Acacia.
Last month, Biteko and the country’s – Paydirt staff with Reuters
In another blow to relations between environment minister, January Makamba,
visited the mine, where operations remain

Acacia has been fined $US2.4 million for alleged pollution breaches at North Mara

Page 8 JUNE 2019 AUSTRALIA’S PAYDIRT

SECURE YOUR INVESTMENTS
IN WEST AFRICA

The Australian High Commission, Ghana, will host the West Africa Mining
Security Conference in Accra on 11-12 June. The conference will bring
together academics, security practitioners, subject matter experts and
the mining industry to discuss strategic security trends in West Africa.
It will provide senior executives, operations and security managers
with the information to inform future security and investment decisions.
Conference tickets only US$300.
For further information contact Deputy High Commissioner,
Glen Askew ([email protected]) or Second Secretary
Jill Suggate ([email protected]).
https://ghana.embassy.gov.au/acra/Conference.html

11-12 June
2019

NEWS

Investors onboard with SoP

Australian Potash Ltd managing director Matt Shackleton To assist with the company’s next phase
believes Australian investors are “really getting up the of development, Scott Nicholas was recent-
curve pretty quickly” on the brine SoP/potash space. ly appointed chief financial officer and his
experience in organising large-scale pro-
The sector is led by Kalium Lakes Ltd, A DFS on the Lake Wells SoP project ject financing, construction and operations
which is closing in on financing for Aus- is expected to be completed by Austral- contracts and off-take agreements bodes
tralia’s first commercial scale SoP project at ian Potash in the second half of 2019, with well for Australian Potash.
Beyondie, Western Australia. Shackleton drilling and a test pump programme being
said there were a handful of other com- completed ahead of reserve estimations for In the meantime, Australian Potash will
panies trekking a similar path and sharing the study. forge ahead in Australia’s first collaborative
stories were helping build credibility in the research programme involving the West
market. An On-playa pond trial was also in pro- Australian No-Tillage Association (WANT-
gress at the time of print and was expected FA) and UWA’s Institute of Agriculture in a
Seven of the eight SoP projects in Aus- to be completed by the end of June. two-year controlled environmental study
tralia were held by listed entities. Shackle- assessing commonly used MoP versus
ton said while some valuations were exces- Assuming robust outcomes from the SoP.
sive given the amount of work completed, DFS, Australian Potash will charge into pro-
the likes of Kalium Lakes and Australian ject financing and once that is secured the The aim of the programme is to deter-
Potash were validating the viability of the company will be in production in late 2020/ mine the full effects of both potassium
sector. early 2021. sources on crop yield, safety and value.

“I think a lot of the investment community “Our production process is little bit easier “We are doing field trials at five farm
is following certain individuals or personali- than Kalium Lakes’ so we have a little bit of sites across the Wheatbelt. We are trying
ties because those individuals and person- a head start in terms of how long it takes to to stimulate demand and these research
alities have made those investors a lot of develop projects, but they have a head start programmes and the field trials allow us to
money in the past. That is just the normal on funding,” Shackleton said. touch base with the likely end-users of SoP
course of things on the ASX, often it is not here in WA,” Shackleton said.
really the project, it is the person, but I think Securing an off-take agreement will be
the investment community is really getting an integral part of the funding mix, which “I think a lot of the farmers understand
up the curve pretty quickly. Kalium Lakes may include export credit sponsored plant that it is better to use the sulphate vari-
has a DFS in the market, which looks like procurement. ety than the chloride variety for a range of
it has funding and that is excellent because reasons, but they have never been able to
we now have a legitimate peer that we can “A lot of the gold mines do that and get afford it. If we can get in front of them and
refer ourselves to,” Shackleton told Paydirt. a company from China to build the compo- show them the benefits of SoP then we can
nents for you and depending on how much have a conversation about price. We can
“Australian Potash is likely to be the sec- you spend you can often get financing from produce it and make a lot of money still,
ond one producing. We are close to finish- the same entity,” Shackleton said. “Those even if we sell it to them for about two-thirds
ing our DFS, so we are likely to be the sec- sorts of things are backed up by the credit of the price they are currently paying to get
ond one in that pond. The other thing with export agencies in China. That is a well- the imported stuff.
seven listed entities holding these projects worn path and we are on that path. Off-take
at the moment is that there are a lot of MDs will also be part of the funding, while a tra- “We reckon demand for SoP in Australia
around the country talking about the same ditional equity and debt component, which is currently sitting around 70-75,000 tpa.
thing. There are a lot of blokes telling inves- we will endeavour to minimise, will be the We actually think that the latent demand for
tors exactly what it is we are doing and, give blend of financing.” SoP is probably 200,000-300,000 tpa at
or take some comments, we are all essen- the right price.”
tially telling them the same thing.” Having spent a vast amount of time in
China, Shackleton said Australian Potash – Mark Andrews
was most likely to engage a partner from
the country.

Demand for SoP in Australia
is currently negligble

Page 10 JUNE 2019 AUSTRALIA’S PAYDIRT

JORC brings
brine in line

Reporting brine resources will become more consistent and
transparent under guidelines implemented last month

Guidelines for reporting brine resource project, Western Australia, and has used ally helpful for the sector. Hopefully that
and reserve estimations have been the services of AQ2 since the outset to kind of behaviour will stop,” he said.
welcomed across the industry. ensure full compliance with its reporting.
Shackleton said the guideline provides
The development of the Guidelines for “ASX can, at times, be a little soft and a a standardised reporting model for brine
the Resources and Reserve Estimations little random in maintaining compliance players to follow, which requires compe-
for Brines was accepted and implement- with the regulations. Now that there is tent person/s reporting brines to include
ed by the Joint Ore Reserve Committee a guideline there is something that they specifics on measures such as retained
(JORC) last month. can refer to in order to make everybody porosity, specific yield, the sediment type
behave and report the same way. That brines is extracted from, the depth of aq-
Brine reporting under the guidelines ap- is going to give confidence to the sector uifers and other modifying factors.
plies to all minerals contained in brine because it removes the randomness of
– lithium, uranium, potassium etc. – and reporting,” Shackleton said. “It is a generic statement and I think it is
has been introduced to improve consist- going to be good for lithium players on the
ency and transparency of information pro- “Whilst everybody is reporting the same ASX going forward, too,” Shackleton said.
vided to market, according to Association way investors can have confidence in
of Minerals and Exploration Companies what they are looking at is accurate and Prior to JORC accepting the guideline on
(AMEC). that is going to be good for the sector. brine reporting, companies were using a
Given that there has been a great deal of range of methods to delineate resources.
AMEC was a key player in developing the latitude in what has been permitted, com-
guidelines, along with Kalium Lakes Ltd, panies are just operating within the rules “This brine guideline will improve the con-
Snowden and Perth-based hydrogeology they have been given. sistency of information provided to the
consultants AQ2. market and increase the transparency of
“There are some of us that have elected a growing industry,” AMEC chief execu-
Brines are recognised as a complex voluntarily to be more conservative in our tive Warren Pearce said.
form of geology, therefore, a recognised estimates and there are a couple of peer
framework is critically important in such companies which have – in the words of “The JORC Code provides the framework
a nascent sector, Australian Potash Ltd Kerry Packer on taxation ‘it is every man’s for consistent mineral valuation, and this
managing director Matt Shackleton told responsibility to minimise tax’. I think that guideline provides a standardised meth-
Paydirt. rings true to companies that have elected odology for the application of the JORC
to be less conservative in their estimates Code to brines.”
Australian Potash is on the cusp of re- for resources and I don’t think that is re-
leasing a DFS on its Lake Wells potash – Mark Andrews

AUSTRALIA’S PAYDIRT JUNE 2019 Page 11

NEWS

Victoria pledges responsible mining

The Victorian Labor Government has record and that of their executives and Meanwhile, the new guidelines have
released a new set of guidelines for directors will be undertaken in the licens- Victoria’s resources sector will comply
its resources sector to follow to ensure re- ing process. with a new set of guidelines to ensure
sponsible behaviours are adhered to by
miners and explorers in the State. The Government believes the sector responsible mining and exploration
will benefit from the changes through activities are carried out within the State
Victoria’s mining industry is boom- the provision of upfront and consistent
ing on the back of its gold sector. Now, information on how mining licence appli- been applied in the assessment process
the State’s Resources Minister Jaclyn cations are assessed, essentially “mak- of potential licensees for the Stavely
Symes is putting the onus on miners and ing it easier for people with a good track Ground Release, western Victoria, as
explorers to prove they are reputable, record to apply”. the State looks to capitalise on the grow-
community-focused and set up appropri- ing demand for gold and copper, in par-
ately for the duration of projects, includ- Farmers and communities will also ticular. The Government stated that the
ing the full rehabilitation of sites around be provided with greater assurances in need for gold and copper was increasing
the State. terms of public safety, infrastructure and as they were key components for tech-
environmental protection when miners nology and renewable energy products,
“We’re raising the bar to make sure our and explorers conduct activities on pub- with up to 12 times more copper being
mining sector employs the most quali- lic and private land under the new guide- used than in traditional generation tech-
fied and reputable people to access our lines. nologies.
state’s mineral resources with a strong
focus on supporting the communities There are now some 120,000 people
they work in,” Symes said. employed in Victoria’s mining and explo-
ration sector, with the Government throw-
“We’re attracting people to our min- ing its support behind industry initiatives
erals and mining industry with a strong such as State of Discovery – Victoria’s
track record of integrity and collaborating first ever mineral resource strategy.
with the community, to ensure we can
keep supporting local economies and State of Discovery was launched in
creating Victorian jobs.” 2018, with the Government looking to
build momentum in the exploration sec-
As part of the new guidelines, thor- tor via the Lockington Ground Release,
ough assessment of a company’s track northern Victoria, later this year.

Women’s basic needs ignored

Outgoing head of research at the Re- ing to see movement Governments in Chile and South Africa
sponsible Mining Foundation (RMF) on this issue in the RMI have been proactive in encouraging
Jennifer Rietbergen has lamented the 2020 report. Also, simi- more gender diversity and equality
lack of attention to some basic needs of lar lack of evidence of within their mining sectors
women workers in the mining sector. companies having sys-
tems to provide women improvement in responsible mining.
In the first Responsible Mining Index workers with personal Key to RMI’s assessment are the “poli-
(RMI 2018), RMF covered over 30 com- protective equipment
panies – listed, state-owned and private- [PPE] that fits properly cies and practices of large, geographically
ly held – from 16 home countries, with and is fit-for-purpose. dispersed mining companies on a range
participating companies operating more Such a basic require-
than 700 sites in over 40 countries. ment is not a huge ex-
pense and something
The RMI did not include the oil and gas that would make wom-
sector and focused on company-wide en workers feel at least
behaviour, while actions on 127 mine respected.”
sites were also assessed.
Results from the RMI
“The near complete lack of evidence 2018 report showed
of companies having systems in place to that there was good work being done by
prevent sexual harassment and gender- industry to strengthen gender equality
based violence in the workplace was a and gender diversity in their workforces
surprising outcome,” Rietbergen told and governance bodies, however, there
Paydirt. remains further scope for improvement to
make the industry safer and more suitable
“Some 75% of companies could not for women workers.
demonstrate having any such systems in
place, and given the widespread occur- RMI’s assessment of companies aims to
rence of harassment of women workers, it keep the sector on the path of continuous
is very disappointing to see a lack of sys-
tematic action on this issue. We are hop-

Page 12 JUNE 2019 AUSTRALIA’S PAYDIRT

of economic, environmental, social than 15% of senior management
and governance (EESG) issues,
with the emphasis on leading prac- roles were filled by women.
tice and learning”.
In regards companies using
Rietbergen, who will remain with
RMF in an ad-hoc advisory role, en- targets or quota systems to ad-
couraged companies to further im-
plement systems and commitments dress the gender balance, Riet-
to gender diversity in the mining
workforce and curb the prevailing bergen was neutral in her opin-
male dominant culture and attitudes
towards women in mining. ion.

While Rietbergen could not iden- “I know there are arguments
tify one particular company dem- A global Responsible Mining Index has found some for and against targets and quo-
onstrating leading practices across companies don’t have systems in place that provide tas. What I have heard from
all aspects of gender diversity and gender women workers with basic needs such as senior female mining executives
equality, she applauded the impact some inexpensive fit-for-purpose PPE is that quotas help eliminate un-
governments were having on shaping the
mining sector in their respective countries. intentional biases that are there

“What we did see was the impact gov- and women can always prove
ernment regulations can have on com-
pany behaviour. We found evidence that the mining workforce, particularly in key themselves no matter how they
the regulations set by South Africa and
Chile are making a difference in terms of leadership positions, a gradual shift and got to their position. Targets can also
how companies are putting measures in
place to address gender-related issues,” a virtuous cycle of change would be in- send a strong message that company
Rietbergen said.
evitable. leadership is serious about addressing
With some governments actively lead-
ing the charge in striking a more even “I think the situation at board and sen- gender imbalance in their workforce,”
gender balance within their workforces,
the mining sector is being urged to sup- ior management level does really have Rietbergen said.
port their leadership teams in areas of
gender awareness training and commit- an impact. I think part of the problem is “Women’s concerns may well vary
ments to diversity as means of enacting
real change. that companies are largely controlled by depending on the company culture and

Rietbergen said as more women joined a not very diverse group of people. Ul- the working environment they find them-

timately, it is mainly men who are mak- selves in. For example, white collar work-

ing decisions and deciding priorities, and ers in company headquarters may be

automatically from a male [perspective],” more concerned about the gender pay

Rietbergen said. “Women might not see gap, which is evident in Australia as well.

any point in raising concerns in the work “On the other hand, women based on

place if they are not going to be dealt mine sites may have quite different con-

with in a serious manner. In some cases, cerns around very fundamental issues

where women have raised concerns, such as sexual harassment or their own

they have faced reprisals, including re- physical safety and a general lack of re-

dundancy.” spect from their male co-workers.”

Rietbergen said statistics from Aus- – Mark Andrews
IMM indicated that less than 3% of min-

ing chief executive positions and less

BHP to defend damages

Anglo-Australian mining giant BHP SA, killed 19 and spilled about 40 million the company has wrought,” he added.
Ltd is facing a landmark $US5 billion cubic meters of toxic sludge into com- Brazil charged 22 people in 2016 with
damages claim in the UK for being “woe- munities, the Rio Doce river and Atlantic
fully negligent” in the run-up to a 2015 Ocean 650km away. offences, including murder, over the
dam failure that led to Brazil’s worst envi- Fundao dam’s collapse. The miners last
ronmental disaster, a lawsuit alleges. Claimants allege BHP was aware of year settled a $US5 billion civil claim with
rising safety concerns, failed to act on local authorities to establish a clean-
The claim, which will be largest group repeated warnings from independent up fund. Other public cases, such as a
action to be heard in England, was safety experts, increased industrial out- $US40 billion civil reparation case, are
served on the miner on May 6 on behalf put of iron ore, despite safety concerns, suspended.
of 235,000 Brazilian individuals and or- and placed the pursuit of profit over hu-
ganisations, including municipal gov- man and environmental risk. BHP, which has separately settled a
ernments, utility companies, indigenous US investor class action and continues
tribes and the Catholic Church, accord- “Driven by concern for declining rev- to battle Australian shareholder lawsuits,
ing to law firm SPG Law. enues amidst the falling market price has rejected all charges against the com-
of iron ore, the company took risks, in- pany, as well as current and former staff.
BHP spokesman Neil Burrows said the creased production and turned a blind
miner intended to defend itself against eye to dangers that ultimately claimed Although the disaster ranks as Brazil’s
the proceedings, brought in the north- lives and destroyed communities,” Tom worst environmental catastrophe, the
western English city of Liverpool. Goodhead, a partner at SPG Law, which collapse of a Vale-operated tailings dam
is representing claimants, said. in the town of Brumadinho in January left
The collapse of the Fundao tailings a higher death toll, currently estimated at
dam, which stored mining waste and is “BHP was woefully negligent in its duty 300 people.
owned by the Samarco JV between BHP of care and the damages sought are en-
and Brazilian iron ore mining giant Vale tirely commensurate with the devastation – Kirstin Ridley, Barbara Lewis, Reuters

AUSTRALIA’S PAYDIRT JUNE 2019 Page 13

NEWS

Koolan Island back in business

Mt Gibson Iron Ltd – exporter of the wall issues in the Main Pit, isolation and based on Platts Indices.”
highest grade DSO hematite iron ore weather conditions are seen as potential
in Australia – is back in play. risks to the project now. Koolan Island will serve Mt Gibson well

The company restarted sales of high- “It is an isolated site on an island and for the next 5.5 years from reserves of
grade iron ore from Koolan Island Main the fact that everything needs to be
Pit to customers in China in April amid brought in is a key challenge,” Kerr said 21mt @ 65.5% iron, but thereafter, the
buoyancy in prices for the bulk commod- about Koolan Island, which is 140km
ity. north of Derby in Western Australia’s company is planning on being engaged
Kimberley region.
While the current market conditions in other projects.
are triggering companies to rethink about “We have relationships with good sup-
iron ore projects once again, Mt Gibson’s pliers and transport groups which worked At the end of the March quarter, the
decision to restart operations at Koolan well previously and we have basically re-
Island was made two years ago. instated some of them, but making sure company reported $394 million in cash
that everything we need is on the island
A positive feasibility study on Koolan is a challenge. The other aspect is that it and liquids and expected to be cash flow
Island in April 2017, which confirmed the is in the far north of WA and does have
Main Pit seawall design and construc- a wet season that runs from November positive from May onwards at Koolan Is-
tion was safe and viable, convinced Mt to March/April. Therefore, we have differ-
Gibson to kick-start redevelopment and ent practices in mining to deal with that to land.
refurbishment works on site. make sure operations are interrupted as
minimally as possible.” There may be potential to extract an-
Mt Gibson’s decision two years ago
was based on an assumed average Output from Koolan Island is being other 1-2 years from strike and depth
Platts 62% iron ore price of $US55/dmt sold under existing off-take agreements
and US/Australian dollar exchange rate previously in place, with 80% of material extensions at Koolan Island, however,
of 75c, with a breakeven price of $US46/ going to Shougang Fushan, a group as-
dmt CFR. sociated with a Chinese steel producer, there is little potential outside the Main
and 20% to a trader in Hong Kong.
The base case scenario meant a NPV Pit. Therefore, with a healthy cash bal-
of $252 million and IRR of 37% was esti- “The off-take agreements are agree-
mated for Koolan Island, which are sub- ments under which customers are obli- ance, Mt Gibson is assessing potential
ject to significant increases in light of cur- gated to purchase the production that we
rent spot prices. sell and they are done on a percentage acquisition opportunities in iron ore and
of available production,” Kerr said.
Speaking to Paydirt upon the restart other complimentary areas.
of sales from Koolan Island, Mt Gibson “It means that if we have variations in
chief executive Peter Kerr said the focus our production levels we don’t have an Kerr said the company had a broad
for the next 3-6 months was making sure obligation to sell a fixed volume. It basi-
the mine ran smoothly. cally means a percentage allocation of mind on acquisitions, with domestic op-
whatever we produce – and we provide
“There is a build up process where we information to our customers well ahead portunities high on the radar.
want to run four, possibly five shipments of time about what volumes are coming
per month consistently. There is quite a up – but the price they pay at the time “We have looked overseas, but our
lot of work involved ensuring that we can is in effect the market price at the time
do that,” Kerr said. strong preference as an initial move

Having seemingly overcome the sea- would be in Australia. In actual fact, our

focus is on good projects anywhere and

we have our eyes on a handful, but if

we could do something in Australia that

would be our preference,” Kerr said.

“Our focus has been in bulk materi-

als, so iron ore, coking or met coal which

goes into steelmaking as a co-product

for iron ore; it has similar distribution

and customer relation characteristics.

We have also been looking at a number

of base metals opportunities where we

have a skill set, but the battery minerals

space is something we haven’t been fo-

cusing on.”

– Mark Andrews

Mt Gibson’s flagship Koolan Island project came
back online as final shipments from the Iron Hill deposit
in the Mid West were wrapped up

Page 14 AJPURNIEL 2019 AUSTRALIA’S PAYDIRT

A good venture for iron ore

Conditions in the iron ore market con- Andrew Radonjic to achieve first shipment of DSO mate-
tinue to rejuvenate interest in Austral- rial.
ian projects, with Venture Minerals Ltd to buy and receive 100% of Riley mate-
the latest company securing an off-take rial over the two years of iron ore produc- Radonjic said several groups had
deal for its high-grade Tasmanian DSO tion from the reserve base of 1.8mt @ started approaching Venture back in
iron ore. 57% iron. February, interested in offering various
streams of financing options, which is
At the time of print, iron ore prices The price determined is based on an indication the company’s larger value
remained strong ($US93/t), as sup- Platts Iron Ore Index, adjusted for grade proposition is well understood.
ply from Brazil remained uncertain with and content.
shipments from the country dropping to “We want to cut costs from the high
18.34mt in April, down from 25.88mt in Venture started reviewing Riley back in $US40/t to the low 40s, even down into
the corresponding period in 2018. February and expects to start production the 30s. We will attack every cost cen-
in Q4 2019. tre and get costs down, but at the end of
While Venture’s 2mt output over two the day we will still have $US48/t to play
years from the Riley iron ore mine won’t Riley has been mined before, however, with,” Radonjic said.
do much to impact the global market, the it has been on care-and-maintenance
cash made will underpin the company’s since August 2014; a time when the iron “An emphasis will be on logistic ef-
grander tin plans in Tasmania. ore price was 30% lower than today. ficiencies to protect us from the down
side. Iron ore is the two-year plan, but
“We’re on track to be Australia’s next The iron ore price has continued to im- longer term, a smaller, higher-grade, un-
iron ore producer and then the second prove since Venture started to re-look at derground project at Mt Lindsay is the
tin miner in Australia and it is all about Riley and in a matter of weeks the com- aim. Capex to get Mt Lindsay up will be
leveraging from the work we have done pany plans to have an update on a 2012 $50 million, as we have estimated, so if
previously,” Venture managing director mine study and new costs scenario in we make $20 million from Riley then that
Andrew Radonjic told Paydirt last month. hand. is the equity component done.”

“When we announced the Riley revi- Riley is within 2km of a sealed road, Mt Lindsay is Venture’s nearby tin play,
sion, the No. 1 thing that needed to be making trucking to port doable, with an where an EM survey has been com-
done was arrange off-take.” estimated $5 million needed for Venture pleted aiming to identify newer, higher-
grade, Renison Bell-style targets.
With interest in off-take from Riley
coming from all angles – including steel Tin has been identified as one of the
mills and traders – it was one of the last metals most impacted by new technolo-
players to the party which Venture chose gy, with the International Tin Association
to partner with. (ITA) forecasting tin demand rising up to
60,000 tpa by 2030.
“These guys actually came in late.
Being a new project to them they didn’t ITA noted earlier this year that tin con-
quite understand the product, so getting sumption in 2018 had surprisingly ex-
a price with them was an important step. ceeded expectations, growing by 2.5%.
They are one of the largest traders in vol-
ume of seaborne product,” Radonjic said. The bullish long-term outlook for tin,
coupled with iron ore’s current popular-
Prosperity Steel United Singapore Pte ity, has reinvigorated Venture and its fol-
Ltd is the company Venture has engaged lowers.

“I think investors see it as getting two
bites of the cherry; short-term with the
iron ore and the long-term tin potential.
You couldn’t start a brand new mine to-
day because you’d miss the boat and tin
will come back,” Radonjic said.

Mt Lindsay currently hosts a total 45mt
@ 0.2% tin and 0.1% tungsten for 81,000t
tin and 3.2 mtu tungsten, including a
high-grade portion of 4.7mt @ 0.4% tin
and 0.3% tungsten for 18,000t tin and 1.4
mtu tungsten.

“Instead of a big open pit we’re looking
at going purely underground and concen-
trating on a smaller, higher grade project,
which means a smaller plant, 500,000
tpa probably,” Radonjic told Paydirt ear-
lier this year.

– Mark Andrews

Patersons has fully underwritten an entitlement offer for Venture to raise $1.56 million

AUSTRALIA’S PAYDIRT JUNE 2019 Page 15

NEWS

FIFO sleep under scrutiny

FIFO workers in Western Australia’s Pil- based operations and has identified an time as someone with a blood alcohol
bara region have been asked to share efficient workforce as a key part of that concentration of 0.05%, the legal limit for
their thoughts and experiences on how a growth strategy. driving a standard motor vehicle.
lack of quality sleep is potentially impact-
ing their professional and personal lives. Young said taking the MRF’s research Studies have also indicated that hu-
directly to those most at risk was an im- mans can only shift their internal body
On the back of a recent parliamentary portant first step in addressing a much clocks by up to 1.5 hours per day, mean-
inquiry which put sleep health on the broader sleep epidemic issue in society. ing sudden changes and adjustments to
national agenda, Royal Perth Hospital’s already long working hours can be prob-
Medical Research Foundation (MRF) “Given we know that poor quality sleep lematic.
has taken its research to the regions and has such a significant negative health
is seeking feedback from those on the impact over time, it was prudent to ex- “We know from some really good basic
frontline in a bid to mitigate the risks of plore the issues from the mining compa- biology that we have a pretty impressive
having a potentially fatigued workforce nies’ perspective, or anyone with a 24/7 clock inside us…but there are also lots
on a 24/7 operation such as a mine site. workforce for that matter, to see what of secondary clocks in the body and so
some of the possible solutions could be every organ is kind of responding in re-
The inaugural Pilbara Sleep Health for the organisations,” she said. lation to how that central clock is timing
Summit was held at Karratha’s Red Earth everything,” Eastwood said.
Arts Precinct on May 20-22. Among the RPH Medical Research Foundation chief
guest speakers were Oxford University executive Joce Young with Professor Peter “The challenge with shift workers is
circadian health expert Professor Russell Eastwood of UWA’s Centre for Sleep Science that all of sudden you’re telling that clock
Foster and Australasian Sleep Associa- that you’re 12 hours out of sync, so it’s
tion president Professor Peter Eastwood. “This is very much about the conver- not just the central clock that is off, it’s
sation being focused particularly around every other clock in your body that’s off.
Speaking to Paydirt ahead of the the workforce that is in the regions Your gut thinks it should be eating when
summit, Eastwood said while the health and allowing them to be centre of the you should be sleeping. Your brain thinks
consequences of a lack of sleep were dialogue, as opposed to it being a city- it should be thinking when you’re actually
well documented, understanding how it based dialogue and then solutions later asleep.
directly impacts a particular workforce is being applied to the regions.”
not as well understood. “Everything is out of sync and really
Eastwood, a Winthrop Professor at that’s what makes a FIFO lifestyle so ex-
“We’re not going there with any pre- The University of Western Australia’s tremely hard.”
conceived ideas about what the current Centre for Sleep Science, said studies
challenges are or aren’t for FIFO work- have shown that a normal healthy per- Eastwood said the mining industry
ers,” he said. son who is awake for more than 17 con- had been very proficient at addressing
secutive hours has the same reaction fatigue and drowsiness in the workforce.
“We’re just providing a bit of a platform However, he believes this should not be
to get everyone up to speed with where limited to when only on site.
we are at the moment with clinical and
research knowledge on sleep health. “The employer expects the workers
The whole point of this meeting is to have to come to work, be ready to work and
a genuine two-way conversation about they’ll test you to make sure that you’re
what are the common challenges in a ready to work,” he said.
24/7 workforce in our North-West and if
there are things we can do to help.” “My view is there is also a responsibil-
ity from the employer to get the employee
Led by its chief science and technol- back home ready for home. It shouldn’t
ogy manager Neil Kavanagh, Woodside take the employee five days to then be-
Energy Ltd was a strong supporter of last come a functional father or mother in
month’s summit which was orchestrated their home unit. They should be able to
by MRF chief executive Joce Young. get back there on day one or day two and
become part of the family again.”
Woodside is believed to be contem-
plating an expansion of its Karratha- – Michael Washbourne

Page 16 JUNE 2019 AUSTRALIA’S PAYDIRT

Perth, Western Australia 9
November 12-13

PRESENTATIONS TO DATE:

Fosterville Tabakoroni Karlawinda Osiris

Kirkland Lake Gold Ltd. Resolute Mining Limited Capricorn Metals Ltd ATAC Resources Ltd.
Australia Mali Australia Canada

Back River Okvau Kora North Bellevue

Sabina Gold & Silver Corp. Emerald Resources NL K92 Mining Inc. Bellevue Gold Limited
Canada Cambodia Papua New Guinea Australia

Bolcana Kharmagtai BOMBORA

Eldorado Gold Corporation Xanadu Mines Ltd Breaker Resources NL
Romania Mongolia Australia

The world’s pre-eminent gold exploration event

24 years of world-class discoveries from
43 countries around the globe

Jointly organised by:

Proceedings Sponsor: Dinner Sponsor: Keith Yates & Associates Pty Ltd Café Sponsor: Gold Nugget Sponsor:
Closing Drinks Sponsor:

Presenter Gift Sponsor: Destination Sponsors: Lunch Sponsor:

Exhibitors
to date:

www.newgengold.com

For all enquiries about presenting, exhibiting or attending please contact Mitchelle Matambo on (+61) 8 9321 0355
or email [email protected]

25NEWS Celebrating
Years
Est.1994

In the latest of our series of retrospectives to celebrate Paydirt’s 25th
anniversary this year, we look in the June archives and find stories
emanating around gold M&A, nickel prices of $US52,300/t and a new

investment vehicle that launched in 1997 and is still thriving today.

June 1995 sentiment towards emerging companies, IPOs and juniors in
the domestic market was flat and Lion Selection was viewed
Ironically, with much of this as a beacon of opportunity “and maybe the path cash-starved
edition dedicated to coverage or new venture junior explorers and floats needing impetus to
from the Latin America Down get over the line will need”.
Under conference, 24 years
ago gold producer Ramsgate In Africa, instability in Sierra Leone was potentially going to
Resources had just pegged have in impact on mineral sands production in that country,
ground in Argentina chasing a with West Australian companies such as Ticor and Westralian
big copper-gold opportunity. Sands Ltd well positioned to increase output amid firming
mineral sands prices, according to a commodities focus report
Back then Ross Louthean by J.B. Were & Son.
wrote: “Paydirt understands
Ramsgate will place a strong JUNE 1998
focus on Argentina where, like so many South American
countries today, the incentives to explore are great from a Equinox Resources had reported
geological, taxation and political point of view.” it was on the cusp of being
granted a series of exploration
Meanwhile, the $450 million Mt Keith nickel operation had permits having potential IOCG
just been opened by then West Australian Premier Richard mineralisation in the iron ore-
Court. From a resource of 132mt @ 0.6% nickel, WMC had rich territory of Sweden. Equinox
planned production over 20 years at a rate of 6.6 mtpa for managing director Craig Williams
28,000 tpa nickel contained in concentrates. told Paydirt the company was
hoping to get the first of its tenure
At the opening of Mt Keith, WMC managing director granted in Sweden, near Kiruna.
Hugh Morgan said the company was forging ahead to
increase production from 28,000 tpa to 42,000 tpa nickel in Meanwhile, Worsley Alumina
concentrates by the end of 1997. was banking on new technology to drive an $800 million
expansion of its refinery, near Collie. Worsley was looking to
JUNE 1997 double production of alumina to 3.1 mtpa and while the scale-up
was significant, the initiatives in place to drive the project were
Robin Widdup was the talk slated as being world leading.
of the town as the brainchild
behind investment vehicle Lion “With automotive processes the demand for human resources
Selection Group. As Paydirt isn’t the same, you may need less operators but require more
went to print that month, Lion technical staff, perhaps people with higher computer skills,
Selection was aiming to raise because some areas of the plant will be computer operated,”
$100 million (plus $50 million Kaiser Engineering Pty Ltd and Bechtel Ltd (KBJV) engineering
oversubscription capacity) and technical manager Paul Potter said.
and it appeared Widdup
had conjured overwhelming
support. The popularity of
the float was because the

Page 18 JUNE 2019 AUSTRALIA’S PAYDIRT

June 2000 leader with its robust support of the former ‘Cinderella state’s’
resources industry,” Paydirt’s Barry Avery wrote.
Australia’s first vanadium In other news, nickel prices had just shot through the
mine had just been un- $US52,000/t mark and were predicted to surge even further.
veiled, there were three Nickel’s run was on the back of unprecedented demand from
nickel laterite projects in China and with severe under investment in the preceding pe-
play and there was talk of riod, nickel supply was constrained. Metals X Ltd has earlier
a platinum mine – Platinum that year completed a scoping study on Wingellina on the
Australia’s Panton PGE pro- back of a resource of 213.2mt @ 0.95% nickel, 0.074% cobalt
ject, north of Halls Creek and 45.9% iron oxide.
in Western Australia – also
coming into play. How times June 2009
have changed. In this edi-
tion there was much antici- Rough diamond prices had recovered some lost ground
pation that South African gold heavyweights – AngloGold during April/May and the share prices of a number of dia-
Ashanti Ltd, Harmony Gold Mining Co. Ltd and Gold Fields mond junior companies responded accordingly, however,
Ltd – would be attending Diggers & Dealers to see which Paydirt’s long-time Johannesburg-based mining writer
Australian gold companies they could get their hands on as Brendan Ryan reported the outlook was not all rosy for
M&A was on the agenda. the sector. Faring better than diamond companies was
Joseph Gutnick had also expanded his horizons in the dia- Equinox Minerals which had just opened its Lumwana cop-
mond field by investing about $C13 million in Canadian junior per-uranium mine in Zambia in front of more than 2,000
Tahera Corp. people, including its newest President Rupiah Banda. As
legend has it, Equinox’s Craig Williams was later to master-
June 2004 mind the deal to sell the mine to Barrick Gold for a healthy
$7.2 billion.
Two well-known West Aus- M&A was also on the table down under, with Avoca Re-
tralians made the cover of sources pitching $49 million to take over fellow Eastern
Paydirt – Andrew Forrest Goldfields player Dioro Exploration and fill the vacancy in
and John Bowler – as Si- Australia’s mid-tier gold sector.
berian Mining Corporation Meanwhile, PGM projects were still in play back then and
Ltd (SMC) celebrated gold Platinum Australia was all the rage on the ASX with the
production at the Sand King start of PGM concentrate production from Smokey Hills on
mine. SMC, of which For- the Eastern Limb of South Africa’s Bushveld Complex.
rest was managing director,
floated in 2003 on the back June 2013
of a $2.2 million IPO. Shares
rose quickly from 20c/share With long-serving Federal
to as high as $1.80/share. Resources Minister Mar-
A review of Paydirt’s South Australian Resources Energy tin Ferguson falling on his
& Investment Conference also featured in this edition, with sword after his support for
CBH director Professor Ian Plimer telling conference go- the Kevin Rudd leadership
ers that the strong cash flow from the Endeavour mine in coup that wasn’t, the Aus-
New South Wales would help fund exploration activities at tralian Government turned
Rasp, Broken Hill. to Gary Gray, one of the few
politicians in Australia with
June 2007 direct experience in the in-
dustry, to head up the port-
While there were not many folio.
copper mines in Australia Paydirt’s Dominic Piper spoke to Gray about his thoughts
ready to go, Hillgrove Re- on the sector, the Government’s track record and where Aus-
sources Ltd had Kanman- tralia’s mining industry was headed.
too, 55km from Adelaide. “My view is that resources policy is best characterised by
The brownfields project was bipartisanship and the need to grow resources for the benefit
preparing to come online of the community. One of the great defining aspects of na-
in favourable conditions for tional resource policy is the consistency between us (Gray,
copper and gold at a time Ferguson and former Liberal Resources Minister Ian Mac-
South Australia was a “fla- Farlane). We all like the sector, care for it and want to see it
vour of the month” mining grow,” Gray said.
jurisdiction. Gray also added: “Next year we will start the first very large
“The cherry on the top is the fact that the project resides in exports of magnetite. That is an example of advanced min-
the State which is internationally regarded as being among eral processing; a market that didn’t exist for us five years
the top six most mining friendly in the world. Premier Mike ago but will exist now for the next 40-50 years. I was recently
Rann consistently reinforced his “pro-mining” views and the at the opening of Gindalbie Metals Ltd’s Karara mine in WA
government-run mining body, PIRSA, is a clear Australian and that is $3 billion invested in sophisticated minerals pro-
cessing.”

AUSTRALIA’S PAYDIRT JUNE 2019 Page 19

COVER

History no burden
to Australia’s new
Indonesian adventurers

Page 20 JUNE 2019 AUSTRALIA’S PAYDIRT

At first glance, history suggests Indonesia has not Among those tales of disaster is the
been a happy hunting ground for foreign mining curious case of Intrepid Mines which in-
companies. A closer inspection of past events indicates famously had its 80% interest in the $5
the country itself was not always to blame. Headlined billion Tujuh Bukit copper-gold project
by the now infamous Bre-X scandal – which spawned a “stolen” by its local partner in 2012.
Hollywood feature film starring Matthew McConaughey
– the list of Indonesian mining horror stories does not More recently, ASX-listed miners Find-
ers Resources Ltd (copper on Wetar Is-
immediately paint a pretty picture. land) and Kingsrose Mining Ltd (gold in
Sumatra) encountered choppy waters
and while both appear to have recovered,
they are still somewhat bruised from the
corporate and/or technical setbacks.

A growing list of troubled investment
stories can be enough to turn investors
away from a country, especially one
which raised eyebrows in early 2014
when it followed through with prolonged
threats to ban exports of raw minerals.

However, two of the newest kids on
the Indonesian block – Nusantara Re-
sources Ltd and Nickel Mines Ltd – have
dismissed concerns about the country’s
chequered mining history and are con-
fidently brushing aside the issues which
have challenged those before them.

“There is a clear
intent here to
achieve a financing
outcome with Indika.

Awak Mas was first discovered in the late 1980s
and held by several companies over the years
until Nusantara took ownership in 2017

AUSTRALIA’S PAYDIRT JUNE 2019 Page 21

COVER

What Nusantara to guarantee the eral incarnations and owners since it
best chance of was first discovered in the late 1980s.
development for Among those to have run their ruler over
Awak Mas. the project were Australia’s Lone Star
Exploration and US-based Vista Gold
has achieved since “We’re really not Corp. One Asia Resources Ltd held the
that different from rights prior to Nusantara.
a lot of other junior
Near-mine exploration will continue to
its IPO has been companies in that be a focus of Nusantara this year while
we have to navi- negotiations for project finance are ad-
gate through that vanced. Foulis said the company’s ap-
proach to understanding the geology of
tremendous financing element Awak Mas was very high on its list of
to get to the other achievements to date.
side,” Foulis told
Paydirt. “Ultimately, it’s that resource and re-
serve that are the foundation of any pro-
“I think it’s im- ject and they need to be robust for eve-
rything to work,” Foulis said.
portant to recog-
“I think our geological team, under
Nusantara chairman Greg Foulis nise the achieve- the supervision of Colin McMillan, has
ments of Mike and been incredibly diligent and incredibly
thorough and there’s been a tremendous
the organisation amount of work that’s been put into what
I’d call the front end of the economics of
under Mike’s lead- the project.

Nusantara is bidding ership. What Nusantara has achieved “With many of the gold projects that
to become one of since its IPO has been tremendous in I’ve seen across my career, both in Aus-
terms of permitting, licence, people, tralia and internationally, most have a
very significant blue sky upside that is
Indonesia’s next major resource/reserve and DFS, which has really only crystallised after production.
A majority of those projects are double
gold producers with plans clearly set us up now for the next stages, or triple or a significant multiple of the
to bring the longstanding being finance and ultimately rolling on initial start-up specifications or scope,
into development. and Awak Mas is no different from that.
Awak Mas project in We believe there is a lot more gold to be
“We think it’s an appropriate time now found and there’s a lot more potential
from a deposit perspective.”
South Sulawesi into to step change to what is ideally a more
production by 2021. Indonesian-centric model, in terms of Mike Spreadborough, who was
people and services, as we look to build instrumental in Nusantara’s first 18
months as a public company, stepped
Since undertaking a $16.2 million IPO the project. There is a clear intent here down as managing director last month
in August 2017, Nusantara has redefined to achieve a financing outcome with In-
a 2 moz resource, including a 1.1 moz re- dika.”
serve, and completed a robust DFS sup-
porting development of a 100,000 ozpa Foulis spent most of last month in
operation for an upfront cost of $US146 Jakarta overseeing the administration
million, plus $US16 million of pre-produc- changes to ensure a “business as usual”
tion mining expenditure. approach is maintained during the transi-
tion. Several meetings with Indika repre-
Nusantara’s efforts have attracted the sentatives were also held as Nusantara
attention of local integrated energy and narrows down the required pieces of its
resource company PT Indika Energy financing puzzle.
Tbk, which contributed $7.04 million to-
wards a $10.25 million placement late Lion Selection Group (23%) and Aus-
last year and emerged with a 19.9% tralian Super (14%) are other key share-
stake in the ASX-listed gold developer. holders in Nusan-
tara.
Underpinning the partnership is a pro-
vision for Indika to assist with the financ- According to the
ing and development of Awak Mas, as DFS released last
well as acquire a project-level interest of October, Awak Mas
no less than 25%. will generate rev-
enue of $US1.33
Last month, Nusantara relocated billion over its initial
its in-country headquarters to Indika’s 11-year mine life.
premises in Jakarta as discussions with Other key financial
its local partner and prospective financi- estimates include
ers ramp up. As part of the changes, in- an IRR of 20.3%,
augural managing director Mike Spread- post-tax NPV of
borough stepped down from his position $US152 million, C1
and chairman Greg Foulis has assumed costs of $US643/
an interim executive role while the com- oz and AISC of
pany seeks out a new Indonesian-based $US758/oz, as-
chief. suming a gold price
of $US1,250/oz.
Foulis said the company had reached
a natural “pivot point” in its lifecycle Awak Mas has
which meant it had to embrace change been through sev-

Page 22 JUNE 2019 AUSTRALIA’S PAYDIRT

Nusantara has redefined a 2 moz “Our foundation asset was our mine, but we’ve
resource, including a 1.1 moz reserve, now moved into the downstream and that’s
at Awak Mas really where the value is. The mine, whilst it’s a
fantastic asset, it’s a small part of the revenue.

Nickel Mines is a As Indonesia suppliers. The Hengjaya mine is just
bit of a misnomer rolled out its ex- 12km from the IMIP.
port ban on un-
processed mate- It proved to be the start of a blossom-
rial in 2014, Nickel ing relationship between both companies
Mines – then a pri- and in 2017 Tsingshan and Nickel Mines
formalised a collaboration and subscrip-
vate entity – was tion agreement whereby ore from Heng-
jaya would become the predominant
left at somewhat feedstock for a two-line rotary kiln elec-
tric furnace (RKEF) plant at the IMIP.
Nickel Mines managing director Justin Werner of a standstill with
what to do with Despite being China’s largest stainless
steel producer, Tsingshan had no capi-
the ore it was ex- tal markets experience, allowing Nickel
Mines to step up and become something
tracting from its much larger than it had ever envisaged.

What started out as 80%-owned Hengjaya nickel mine, hav- Nickel Mines initially went to market
plans to float a budding ing only just begun selling to customers in with plans to raise $125 million via an
high-grade Indonesian nickel China and Japan. IPO, but investor interest was so strong
mine unexpectedly evolved the total subscription was boosted to
Meanwhile, leading Chinese stainless $200 million, making it second only to
steel producer Tsingshan Holdings Group the relisting of Jupiter Mines Ltd for $240
million as the largest new resources float
into something much more unveiled bold plans to establish down- on the ASX last year.
substantial for the aptly named stream processing facilities at the Indo-
nesian Morowali Industrial Park (IMIP), Following the IPO, Nickel Mines was
Nickel Mines. Central Sulawesi. able to lift its interest in the two RKEF

As the IMIP took shape in 2015, Nickel

Mines resumed mining operations and

began selling ore to Tsingshan and ulti-

mately becoming one of its highest-grade

AUSTRALIA’S PAYDIRT JUNE 2019 Page 23

COVER

lines to 60%, known collectively as the ule; the opex and the commissioning and “I think what sets us apart from other
Hengjaya nickel project. In November, the ramp-up was as expected; and then nickel producers is that we’re not reliant on
the company announced it planned to ac- the first quarter cost results were also as a mine life or having to extend that. These
quire up to 80% in two additional RKEF expected. We’re very focused on continu- RKEF lines will run steady-state 24/7. We
lines, subsequently named the Ranger ing to grow our nickel production, but also don’t have to worry about drilling and find-
nickel project. continuing to meet what we say we’re going ing more resources or expanding it and
to do as well.” wrapping a feasibility study.”
First nickel pig iron was produced from
one of the Hengjaya kilns in February, less The Hengjaya kilns are forecast to pro- At the time of print, Nickel Mines an-
than a year after breaking ground. Nickel duce 150,000 tpa of nickel pig iron contain- nounced it had signed a binding term sheet
Mines managing director Justin Werner ing 15,000t of nickel metal equivalent. A and commitment letter with Decent Invest-
said the company could not have joined similar production rate is anticipated from ment International Private Ltd, an associate
forces with a better partner in Tsingshan. the Ranger kilns. of the company’s operating partner Shang-
hai Decent Investment Group Co Ltd, which
“They are the pioneers of RKEF tech- With Nickel Mines seeking to increase its would underpin its acquisition of the addi-
nology and they’re still the industry leader interest in Ranger from the current 17% to tional 43% in Ranger.
in terms of building and operating these 60% over the coming six months, the com-
plants, so from a capital intensity point of pany could finish the year with claims to a Under the term sheet, Shanghai De-
view, there’s no one else in the world that run rate of about 20,000 tpa nickel metal cent has agreed to receive $US40 million
can build RKEF plants at the speed and the equivalent. worth of Nickel Mines shares as partial
cost that these guys can do it,” Werner told consideration for the 43% interest it is
Paydirt. “Nickel Mines is a bit of misnomer now divesting. Nickel Mines will also raise up
because we probably identify more as an to $US30 million of additional equity via a
“They already have 20 lines existing industrial company than a mining compa- placement to a new and existing share-
and operating, so for them it’s almost like ny,” Werner said. holders.
a cookie cutter, they just come in and build
what they’ve done previously a number of “Our foundation asset was our mine, but Both the Hengjaya and Ranger nickel
times. we’ve now moved into the downstream and projects have seven-year zero tax ex-
that’s really where the value is. The mine, emptions with a further two years at 50%
“They’re all about on-time delivery and whilst it’s a fantastic asset, it’s a small part of the nominal rate.
doing what you say you’ll do. We’re delight- of the revenue.
ed the plant was built well ahead of sched-

First nickel pig iron from Hengjaya was produced earlier this year, less than 12 months after breaking ground
Page 24 JUNE 2019 AUSTRALIA’S PAYDIRT

“There’s no doubt By year’s end, Nickel Mines is set to
their approach hold a 60% interest in four RKEF lines
towards sovereignty
and the changes they’ve

made to the rules in
recent years have
certainly caused a bit of
heartache, for foreign
miners in particular.

Justin Werner

The first of two new RKEF lines at
Ranger came online last month

AUSTRALIA’S PAYDIRT JUNE 2019 Page 25

COVER

This part of the Awak Mas senior geologist
world is growing Joko Nugroho
faster than the
national average

Australian Consul-General in Makassar, Richard Mathews

Sulawesi is one of the biggest islands in This includes Makassar have that knowledge base that comes with
the Indonesian archipelago, covering New Port which is now opera- language.

an area of roughly 175,000sq km. According tional on 1,420ha of reclaimed “The other thing, of course, is the com-
to the latest census data, the island to the land. It has double the con- plications of the Indonesian legal regime in
east of Borneo has a total population of tainer handling capacity of the some areas like mining. There’s no doubt
previous facilities and plans their approach towards sovereignty and
the changes they’ve made to the rules in
about 17 million, with more than half of that are under way to build a bulk recent years have certainly caused a bit of
number residing in South Sulawesi. commodity handling terminal heartache, for foreign miners in particular.
which will link up to a new rail-
“We’ve just got to be positive about that
way servicing the west coast. and work within the system if we want to
invest in this part of the world.”
Last year South Sulawesi’s economic Richard Mathews, Austral-
growth was 7.2%, well above the national ia’s Consul-General in Makassar, hopes With President Widodo winning a sec-
average of 5.17%, and the Bank of Indo- the investment in new infrastructure across ond term following parliamentary elections
nesia is predicting growth of at least 7.6% Sulawesi will attract more foreign dollars in April, Indonesia’s governance appears
for the province in 2019. from Indonesia’s closest neighbours. stable for at least another five years. The
conclusion of provincial elections which
Makassar is the provincial capital of “This is just an example of the massive were widespread throughout 2018 is also
South Sulawesi and home to one of Indo- expenditure they’re putting into infrastruc- seen as an important catalyst for attracting
nesia’s busiest trade ports. The city has ture across the eastern provinces and that more foreign investment.
been subject to significant investment in makes things, of course, a lot more attrac-
recent years, largely due to President Joko tive for foreign investors,” Mathews told Mathews encouraged more Australian
Widodo’s ambitions to upgrade infrastruc- Paydirt. miners and explorers to look at Indonesia,
ture across the region. highlighting the immediate success both
“This part of the world is growing faster Nusantara and Nickel Mines have enjoyed
than the national average already. The since entering the country.

Government is really putting its money into “The embassy has a full-time officer
working on the mining sector, who works
developing this part of the world and I think with our miners such as Nusantara and
companies like that, to help them under-
the prospects for carefully thought-out in- stand the regimes and to overcome the
various sorts of obstacles,” he said.
vestments from Australia are pretty good.”
“We’re certainly very active through the
In March, the respective trade minis- embassy and also through our consular-
generals in trying to help miners be suc-
ters from Indonesia and Australia signed cessful in this part of the world. Out here
in the provinces we can provide local intel-
a Comprehensive Economic Partnership ligence, we can provide introductions and
contacts with local political and business
Agreement (IA-CEPA) which Mathews leaders and so forth.

hopes is ratified by year’s end. It has been “We’ve got the government infrastructure
here in Indonesia to help our miners explore
earmarked as the catalyst for instilling the opportunities and to try and help them
succeed. We’re certainly keen to encour-
greater business confidence between the age more of them to look at the prospects
that exist in this part of the world.”
two countries.

Mathews, who has been posted in

Makassar for the past three years, believes

the two biggest barriers to foreign invest-

ment in Indonesia are a lack of knowledge

of the opportunities on offer and the fact

the local language is not widely spoken.

“I think there’s a lack of awareness in

Australia, in the business community es-

Indonesia is now recognised as having pecially, about the rapid reach of growth in

one of the premier mining skills bases this country,” he said.
in the Asia-Pacific region
“Language helps. If you’re going to deal

with local governments here, you need to

Page 26 JUNE 2019 AUSTRALIA’S PAYDIRT

It’s no more difficult Nusantara is targeting first gold
than anywhere else production at Awak Mas in 2021
in the world

Nickel Mines managing director Justin Werner

While many of the world’s majors – in- basis it was a nickel leverage story and to breathe new life into its promising resourc-
cluding BHP Ltd, Rio Tinto Ltd and a degree completely ignored any sovereign es sector.

Newmont Mining Corp – have explored, element to that investment.” “Certainly Indonesia has, over the past

mined and enjoyed varying degrees of suc- Werner, who has lived and worked in two decades, improved its capabilities in

cess in Indonesia over the years, investors Indonesia in various roles for the past 20 the mining sector and has a large and grow-

have shunned the country in more recent years, said partnering with a reputable local ing pool of well-trained mining engineers

times due to some of the disasters which company was vital for foreign miners and and technical experts,” he said.

are still fresh in the memory bank. explorers to be successful. “In the past, if you were a foreign miner

One of those is Intrepid which raised the “With the right local partner, and if you you had to import lots of expats to run your
“ire of investors earlier this decade when its operate correctly, it’s no more difficult than mine and do all the management; now you
local partner at Tujuh Bukit sud- don’t need to import and bring in

denly seized control of the pro- At the end of the day, I think so many foreigners. You can run a
ject and transferred the owner- gold mine here with minimal high-

ship over to other parties. some investors have been cost management and employees
At the time, Intrepid had spent selective in terms of turning on if you have the right local people on
board.”
about $100 million on the pro-

ject. It later emerged the compa- the Indonesia bias or turning it off. – Michael Washbourne
ny’s partner held a mining lease

which legally could not be trans-

ferred over to a foreign entity.

Security of tenure at Awak Mas is some- anywhere else in the world,” Werner said.

thing Nusantara has promoted heavily “It’s a rapidly advancing democracy, they

since signing a new contract of work (CoW) are trying to make things more transpar-

agreement with the Indonesian Govern- ent, they are trying to be more supportive

ment in March 2018. This CoW provides of foreign investment. Like everywhere,

the company with title security until at least there are rules and if you follow the rules

2050 and carries no mandatory divestment you should be right.

until 10 years after first production. “Indonesia has a chequered history, but I

“It’s always important to dissect what are also think people tend to forget there have

so-called horror stories as best you can been deals done that were very good. The

and understand what the real story was,” recent sale of Martabe by EMR [Capital] for

Foulis said. nearly $US800 million was a great win for

“In the case of Intrepid, they didn’t neces- them and a great win for the country. So, if

sarily have full legal security over that asset, you know how to operate there, you can be

yet continued to invest and promote it. very successful.”

“At the end of the day, I think some inves- Mathews said the abundance of local

tors have been selective in terms of turning mining talent – a direct consequence of

on the Indonesia bias or turning it off. I think having so many majors operating in coun-

the market turned sideways last year and try in years gone by – could help spur for-

basically invested in Nickel Mines on the eign companies to return to Indonesia and

AUSTRALIA’S PAYDIRT JUNE 2019 Page 27

LADU REVIEW

Latin America Down Under 2019 at The Westin Hotel, Perth, May 15-16, was the place to
be, according to Global Lithium LLC president Joe Lowry.

“This is a really appropriate forum for me to be having this discussion because Australia, Chile and
Argentina are the lithium world right now,” he said. “This particular forum – Latin America Down
Under in Australia – is key to lithium.”

Lowry’s keynote address on day two was highly anticipated given the quick rise and realisation
of lithium’s importance to the future. In addition to Lowry’s thoughts on lithium, the conference
programme featured a well-rounded mix of company presentations and a high level of engagement
from both Australian and Latin American governments, while one of the highlights was once again
the VIP Ministerial Dinner at the State Reception Centre, Kings Park. Bryan Charlton from Picture
This captured all the action and Paydirt provides a full wrap of proceedings in the coming pages.

Building bonds across
the ponds

As countries and companies brace for if lithium production in Latin America said that Latin American companies had
the fourth industrial revolution, Aus- surpasses us in 2021; what you need to started to penetrate Australia’s mining

tralia and its Latin American counterparts worry about is how that market grows sector and welcomed their participation

are primed to prosper together in the new and how we have an understanding and in the construction and maintenance of

world. involvement with each other.” coal mines and experience in seismic

The point was made by West Australian Beazley encouraged Australia and Lat- technologies.

Governor Kim Beazley “The future benefit

AC at the Latin America to be gained by our re-

Down Under Ministerial source industries is fair

Dinner held at the State and transparent, with

Reception Centre last rigorous discussion and

month. exchange. Discussions

Beazley drew on the that bring new ideas and

historic trade ties es- new ways forward to bet-

tablished over many ter scales of economy

decades between Aus- where there will be more

tralia and Latin American commercial, community

countries as a platform and social successes,”

for more profound rela- Beazley said.

tionships in the future. “As markets shift

An area Beazley iden- from cost minimisation

tified for greater unity and mine optimisation,

was in the lithium sector we have a lot to share

where Australia, Chile between us to find so-

and Argentina are par- lutions to improve pro-

ticularly rich in the hard WA Governor Hon Kim Beazley (right) greets Argentine Secretary of Mining duction, raise operation
rock and brine variety, Carolina Sánchez, Argentine Ambassador to Australia HE Hugo Gobbi and standards and practices,
respectively, while Brazil as well as better posi-
is also starting to forge Paydirt executive chairman Bill Repard tioning ourselves further

ahead in the arena. for growth. We all need

“The best way to operate is to inter- in America to continue to build bonds and to effectively capture opportunities for

twine; the best way for us to effectively strengthen business ties, as the world successful market entry and expansion

operate, particularly in the new miner- progresses into a new era of renewable strategies and forums such as this con-

als for the fourth industrial revolution is and sustainable industrial environments. ference are a unique and valuable way to

to be actively engaged with each other,” While Australia’s mining reputation has do this through our shared mining activity

Beazley said. “You don’t have to worry served it well in Latin America, Beazley and connections.”

Page 28 JUNE 2019 AUSTRALIA’S PAYDIRT

Beazley’s message followed into Global in the sector was a concern. to respect the rights of private companies

Lithium LLC president Joe Lowry’s keynote “For a junior, we try and grow the com- in exploration and development because of

presentation and in the subsequent panel pany as much as we can, so when it comes the capital intensity of private exploration and

discussion, which included Chilean Vice to financing your project, your capital debt to development of this mineral. There are now

Minister of Mines HE Pablo Terrazas, Latin equity ratio is not an issue,” he said. “Within many operators in the same salar in Argenti-

Resources Ltd managing director Chris that, lithium explorers, juniors, we all face the na and better ways of getting exploration per-

“Gale, Alfaro Abogados partner Ignacio same constraints access to capital for explo- mits in the same salar is being looked at by
Celorrio, Strike Resources Ltd manag- ration can be tricky. the Government, so any type of disturbances

ing director William in the development

Johnston and Galan You don’t have to worry if lithium production of a project can be
Lithium Ltd manag- in Latin America surpasses us in 2021; avoided. I have also
ing director Juan recently got intelli-

Pablo Vargas de la what you need to worry about is how that market gence from the Gov-
Vega. grows and how we have an understanding and ernment about what

Lowry, consid- can be added in re-

ered a global guru involvement with each other. gards to lithium.”
on lithium, said de- Many companies

mand – for both hard are finding the invest-

rock and brine material – was only going to “But, good news from us will be good for ment landscape in Argentina appealing, with

strengthen as the world shifted into greater the sector and it’s opening the lithium mar- Strike one of the latest ASX juniors to have

use of e-mobility and therefore more and ket to explorers because the mining industry entered on the back of tenure near Orocobre.

more lithium-charged batteries would be without exploration is nothing. We just need “We were attracted to the country because

needed. one success in the junior sector to demon- of the favourable regime. The project we just

However, while there is an insatiable ap- strate it can be achieved, but it is a tough gig.” acquired is in the same salar as Orocobre

petite for lithium, bringing new supply to the One thing Galan and fellow Argentine lith- and we think we can benefit from learning

market is challenging. ium hopeful Strike Resources can appear to from companies like Orocobre,” Johnson

Financing any project has its challenges count on at the moment is government sup- said.

and while there have been few lithium plays port. “There have been lots of problems differ-

around the world to have ent companies have en-

come online seamlessly, the countered and sometimes

next wave of wannabe min- you can sit back, take it in

ers will have to overwhelm- and we are now at a stage

ingly convince investors that where we have a pretty

their project has merit. clear path forward.”

Meanwhile, the lithium Argentina’s push to ad-

sector only really boomed vance its lithium sector ap-

in 2015, therefore, there is pears to be on track, while

a drain on skills in the space the growth trajectory in

which is dominated by four Chile is apace.

large companies. Terrazas said his gov-

“Lithium went from the ernment had made a

1990s till about 2015 without strategic decision to sig-

a great deal of new projects nificantly increase their

coming online; there is a participation in lithium from

dearth of technical talent the current 2% of global

out there because there is production.

so much growth, so many Part of Chile’s strategy

projects, but there are only is to also look further down

really four big lithium com- the lithium chain into val-

panies and there’s a very great lack of talent,” Understanding the political regime in Ar- ue-added products.

Lowry said. gentina, particularly in a provincial context, is “It is not impossible that some companies

“The limiting factor right now is financing critically important. may want to get into aspects of battery de-

more than the length of time it takes and Oro- Argentina has enjoyed a groundswell of velopment and make a whole battery, but

cobre [Ltd] is kind of a poster child for that, but mining activity under the administration of the lithium terms will be within a wide range

they got into production. I am trying to raise Mauricio Macri and while the federal govern- of possibilities the way in which Chile would

money for people right now and it is not easy ment is on side, Celorrio urged companies to like to add value to the lithium business in the

and that is going to be more of a limiting fac- keep relationships at provincial level tight. country,” Terrazas said.

tor than the skill-set. The skill-set is an issue “With the expectation now around the de- “We want to expand new uses of lithium

particularly the timeline to execution.” velopment of lithium as the catalyst of the EV and be active in research and opportunities

Galan is one such ASX-listed lithium hope- revolution and for batteries, there is analysis and this is another tool Chile is using to bring

ful starting to pull together an idea of what being done on ways to increase value of what value-add to lithium interests.”

their project in Argentina’s Hombre Muerto Argentina can bring as part of that revolution,” – Mark Andrews
salar looks like. Vargas de la Vega was asked Celorrio said.

whether the lack of capacity and capabilities “This administration is being very careful

AUSTRALIA’S PAYDIRT JUNE 2019 Page 29

LADU REVIEW

Australia and Latin America
the key to lithium: Lowry

Morgan Stanley spooked the lithium bility is on,” Lowry said. 25% of the lithium market both hard rock
sector last year when it claimed “[To achieve that] 1 mtpa [demand] by and brine processors could yield battery-
that a glut of lithium supply entering the grade product about 60% of the time.
market would tramp lithium prices to 2025 from 270,000t, the capital that has
$US7,000/t in 2022/23. to be invested is significant for an industry “When the future is that battery is 85%
this small.” of the market there are going to have to be
Lithium prices may have cooled through- much more robust chemical processes,”
out 2018, making it hard for emerging play- Lowry estimates that $US12 billion will Lowry said.
ers to garner any further traction than they need to be invested in the lithium industry
had managed since the back end of 2015. within five years to meet demand. “There are no great brines in China, it
sells it for a low price, but then it has to sell
At that point in time, panic pricing, ac- High profile lithium project failures have to another company to get cleaned up so
cording to Global Lithium LLC president discouraged investment in lithium projects, the lithium also has a quality problem that
Joe Lowry, had driven lithium hydroxide while the challenges faced in expanding needs to be solved via technology.
and carbonate prices up 300% to what has production from existing mines and ramp-
proved to be unsustainable levels. ing up new ones have impacted the sector “When juniors make an announcement
badly. that they are going to produce 99.5% lith-
For people like Lowry, who sold about ium carbonate that is battery grade when
1% of the world market in 2016, it was a Amid the failures and difficulties of bring- actually battery grade is not the point; it
good time personally. ing new supply on-stream, Lowry sees op- is the impurities and level of consistency
portunities. of the impurities in the lithium that make it
“I sold it for $US26,850/t on a take or battery grade, not the lithium content.”
leave basis and at the same time I was “If you are interested in lithium, now is
writing about the market and writing that a good time,” he said. “My thesis is that As all lithium is not created equal and
the natural new normal will be about the market is going to outgrow the supply. with demand projections outweighing sup-
$US12,000-14,000/t where it is settling Anyone interested in lithium and interested ply forecasts, the superiority debate on
right now,” Lowry said. in the lithium market has a great oppor- brines versus hard rock lithium production
tunity now because share prices are so appears to be fading.
There are few experts in the world to depressed. If you look at the market cap
exude such an intimate understanding of of the Australia [lithium] companies and Lowry said that Tier 1 batteries required
the dynamics shaping the lithium sector even the big four companies, they are very Tier 1 lithium, which Australia and parts of
and there are even less that are able to much down.” Latin America are capable of supplying.
thoroughly explain the market as well as
Lowry. Albermale, SQM, Ganfeng and Tianqi “The world needs all the lithium in the
accounted for 68% of lithium production in world, whether it comes from hard rock
Considered a guru on lithium worldwide, 2018 and must spend $US7 billion to main- or brine, and with this audience if you are
Lowry recognises the complexities as- tain that position in 2025. from South America you are in brine and
sociated with the lithium market, which is in Western Australia it is hard rock,” Lowry
small by any standard and has attracted “That means that there are a lot of juniors said.
varying opinions, leading to a lot of unclear around the world that need to get financed
information making its way into the public and need to get moving around the world. “There shouldn’t be an ‘us versus them’
sphere. That is a real challenge because if we attitude because the world needs them
take the No.5 and No.6 producers out in both. Brines is the lowest cost route to lith-
In addition to the Morgan Stanley report total they only produced 35,000t last year ium carbonate and hard rock is the lowest
in early 2018, which was a real driver be- and we’re talking about a market going cost to hydroxide, with variations occurring
hind what is currently a “confused” lithium 270,000t to 1 mtpa by 2025,” Lowry said. along the cost curve depending on the
market, there were movements in Chile quality of asset.”
paving the way for its two big producers in Two years ago there were just seven lith-
the Atacama to increase production from ium producers worldwide and as the sec- Australia’s path to the lithium chemical
80,000 tpa to 400,000 tpa. tor boomed, no less than 350 companies market is just beginning, with lithium hy-
emerged in the field many of which were droxide plants being established south of
Meanwhile, Western Australia was rap- ASX-listed. Perth in Kwinana and Kemerton.
idly ascending as a hard rock producer
with six mines in operation compared to Access to capital has stymied progress Lithium hydroxides is the fastest growing
one a few years ago. of many companies in the ensuing period, chemical and Australia has a strategy to
however, with some encouragement from have a long future in this area.
An obvious reaction to such dramatic investors there is great potential to capture
change within a short timeframe leads in a lithium sector highly geared towards “The fundamental raw material for the
some to the simple view of an imminent batteries. battery industry was lithium carbonate for
oversupply of lithium in the market; con- most of the last four years and now we
trary to Lowry’s research and analysis. In 2018, almost 60% of lithium demand have transitioned to higher nickel anodes
was battery-related, compared to 25% five for batteries that power Teslas and other
“Last year there was about 270,000t of years ago. vehicles that want longer range. We now
demand and we’re going to 1 mtpa and we have a market where lithium carbonate
there is no arguing that e-mobility is hap- Future battery-related lithium demand is is still significant and growing, but lithium
pening, whether it is EVs, scooters or fer- expected to rise to 85% and while quantity hydroxide is going to have to be filled out,”
ries in Scandinavia, the transition to immo- of supply is a worry, so is quality. Lowry said.

Lowry said when battery demand was

Page 30 JUNE 2019 AUSTRALIA’S PAYDIRT

“My message to South America and WA ing from those three countries primarily,

is that it is all good, lithium has a bright fu- not forgetting Brazil. Brazil has developing

ture. mines and there’s possibilities in Peru and

“That is why this is a really appropriate some other places in Latin America; this

forum for me to be having this discus- particular forum, Latin America Down Un-

sion because Australia, Chile and Argen- der in Australia – key to lithium,” he said.

tina are the lithium world right now. China – Mark Andrews
converts the Australian precursors into
“chemicals, but the raw materials are com-
My message to South America and WA is that Joe Lowry
it is all good, lithium has a bright future.

WA expertise available Bill Johnston
for export: Johnston

West Australian Minister for Mines resources success was due to much processing,” he said. “Increased demand
and Petroleum Bill Johnston has more than world-class reserves.
offered Latin American countries the for electric vehicles and energy storage
State’s experienced workforce, cutting- “WA has been able to become a juris-
edge technologies and regulatory capa- diction of choice for mining investment systems has created a unique opportu-
bilities to further their own resources de- due to our stable and secure laws and
velopment. regulatory framework,” he said. “This has nity for WA to become a central player in
allowed investors to make long-term in-
Speaking at the opening of Latin Ameri- vestment decisions and shifted a poten- the global battery value chain.”
ca Down Under, Johnston acknowledged tial focus from short-term profit taking.”
there was “an excellent opportunity for A Future Battery Industry Strategy was
the State to deepen its economic ties Johnston said the State’s willingness
with Latin America”, measured at $664 to adopt new technologies had also al- released in January and in April WA was
million in the 2017-18 financial year. lowed it to become a resources power-
house and he invited visiting delegates to accepted into one of the International En-
“As a leading jurisdiction in responsi- take advantage of that expertise.
ble resource development, WA is able ergy Agency’s Hybrid & Electric Vehicle
to share its skills and expertise to assist “The WA story is a technology story,
other countries,” Johnston said. “WA has not a quarry story,” he said. “Our METS Technology Collaboration programmes
world-class capability in regulation, re- sector can assist in developing tech-
search, training, equipment and technol- nologies to help address environmental, – Critical Raw Materials for Electric Ve-
ogy and can offer its services to countries power, water and infrastructure issues
worldwide.” that impact the mining sector in Latin hicles (CRM4EV).
America.
WA generated $127.4 billion of revenue “The programme aims to provide in-
in 2017-18 and while it remains a world- “Perth has become an internationally
renowned producer of iron ore, gold, recognised centre for the mining equip- formation on raw materials, including
lithium and nickel, it is now also a leading ment, technology and services sectors
LNG producer. (METS). WA shares with many of the lithium, which are considered critical for
countries represented here resources
Johnston said the skills built in the LNG within the emerging battery material sec- the ramp up of electric vehicle sales and
sector were readily exportable. tor.”
to identify supply chain issues,” Johnston
“Latin American can benefit from WA’s Value-addition is one area where WA
expert petroleum workforce which has has often failed to exploit its natural ad- said.
world-class experience in subsea ex- vantages but the State Government now
ploration and production technologies, sees, in the trend towards widespread Johnston acknowledged mining juris-
marine services, petroleum-related re- e-mobility, a rare opportunity to create
search, front-end engineering and de- downstream industries in the State. dictions the world over shared similar
sign, and geophysical surveying,” he said.
“Many of us seek to extract more value problems.
Johnston also emphasised that WA’s from our minerals through downstream
“Mining companies across the globe

face declining ore grades, rising costs,

price volatility and geopolitical uncer-

tainty, as well as the need to continue to

maintain environmental and safety per-

formance,” he said.

“New technologies are playing an in-

creasingly important role in solving these

problems, opening up previously uneco-

nomical deposits and providing improve-

ments in operational efficiency, safety

and profitability.”

– Dominic Piper

AUSTRALIA’S PAYDIRT JUNE 2019 Page 31

LADU REVIEW

Galan gets going

Galan Lithium Ltd managing director our maiden JORC in Q3 this year,” Vargas hole one – intercepted conductive brines
Juan Pablo Vargas de la Vega came de la Vega said. returning 143m @ 784 mg/l lithium.

to Latin America Down Under bearing good Admittedly, Argentina can be a difficult Results from hole five, 2.4km from hole
one, were released in early May confirming
news. place to move quickly, however, the ground consistent brine coverage over a very large
area.
“We have been given permits to drill six covered and milestones within reach is tes-
The company hopes to keep the momen-
more holes and what that means for us, it tament to Galan’s dedication to both project tum going with the next six holes and has
an interesting pipeline of milestones com-
means that a potential maiden JORC [re- and country. ing up.

source] is now in sight. We are very excited It has only been 18 months since Vargas “In the next 18 months we want to have a
JORC [resource], PEA and pilot plant up,”
to announce that to market. We will keep de la Vega started to picture what the Hom- Vargas de la Vega said.

drilling, we have the targets and we expect bre Muerto salar could deliver for Galan. “We have been doing a lot of work and
Argentina can be a difficult place, but we
Juan Pablo Vargas de la Vega Considered the sec- have managed to get sign off from authori-
ond best lithium-brine ties today for six more drill holes. We have
been granted drill permits twice now for
hosting salar in the 11 holes so far. This is a reflection of our
strong relationships in Argentina and com-
world behind the Ata- mitment to Argentina. I spent six months of
my time in Argentina last year and I plan
cama, Hombre Muerto to spend another six months more in Ar-
gentina.”
is now home to Ga-

lan’s flagship Cande-

las project.

Galan’s focus is on

the Northern Candelas

channel area where its

maiden hole returned

192m @ 802 mg/l lithi-

um with very low impu-

rity levels, while hole – Mark Andrews

three – 2.5km from

ASX : MEI www.meteoric.com.au

AN EMERGING COPPER GOLD MAJOR Brazilian Bonanza
Grade Gold
solgold.com.au LSE & TSX : SOLG
Juruena Project:
Page 32 JUNE 2019 AUSTRALIA’S PAYDIRT High-grade
Dona Maria
and Querosene
Resources –
436,000t @ 14.7 g/t
for 205koz Au –
drilling imminent.

Carolina Sánchez

Argentina’s lithium push

Argentina will not be slowing its push to at- for junior exploration companies and we are portant role in engaging with the local com-
tract more foreign dollars into its mining a great destination for advanced projects,” munities because they come in from a zero
economy, according to secretary for mining Sánchez said. [base] and can engage in a very positive way
Carolina Sánchez. with the local communities.”
“We have all the human resources to real-
Since late 2015 when the influential Mau- ly make mining a great activity in Argentina.” Argentina last month became the 52nd
ricio Macri assumed the presidency, more member country of the Extractive Industries
than $US1.04 billion of new investment has Exports from Argentine mining operations Transparency Initiative (EITI) and has an
been tipped into the country’s mining sector. totalled almost $US3.5 billion in 2018, with existing treaty for mining with neighbouring
This is on top of more than $US1.76 billion of construction activities relating to the sector Chile.
in-country acquisitions through that period. reportedly accumulating more than $US1.53
billion. Mining is the country’s sixth largest Mining roundtables, including some dedi-
Argentina was last year also the world’s export contributor. cated specifically to lithium, between gov-
No.1 destination for lithium exploration and ernment, companies and trade unions are
more than $US241 million was spent on the Sánchez said the country’s aim was to becoming more commonplace in Argentina.
search for commodities of all types during have at least $US400 million invested in the
2018, an increase of 92% over the past three ground via exploration and development Sánchez said the Macri Government’s
years, compared to just 10% globally. over the coming years. commitment to improving infrastructure in
Argentina would also improve the chances
Only three other South American countries “We have a focus for making mining a of attracting further foreign investment in its
reported increases of more than 12% in 2018. sustainable activity,” she said. mining sector.

Three new mines have been brought on- “We have MoUs for cooperation of mining “Argentina is presenting a lot of opportuni-
line in Argentina since late 2015, with anoth- with Victoria and Western Australia and we ties in different sectors for development and
er four currently under construction or being are trying to learn from their best practices, business, and mining is one of the most im-
expanded. A further 10 projects have been but we are trying to focus also on the social portant ones,” she said.
added to the exploration project pipeline and licence and all the risks and conflicts that
a similar number have competed preliminary could exist. We are working very closely with “We are trying to re-emerge in the world
economic studies. communication firms and also to get out to and also trying to strengthen our institutions.”
the provinces and form the social licence.
“We really see Argentina as a destination – Michael Washbourne
“Exploration companies have a very im-

Developing the high-grade Oposura
zinc-lead-silver mine in Mexico

@AzureMinerals ASX: AZS

Azure Minerals Limited
www.azureminerals.com.au

AUSTRALIA’S PAYDIRT JUNE 2019 Page 33

LADU REVIEW

Chile targets juniors for exploration

Juniors are expected to boost exploration mote it globally. We are sensing that with of new materials and innovations that add
activity in Chile under an exploring the these measures we will increase explora- value to lithium, salts and other materials
future strategy currently in the wings. tion activities in Chile, especially through in the supply chain of e-mobility and green
juniors,” Terrazas said. growth is the aim.
The Government is working towards
defining strategic exploration concessions Terrazas said there were many opportu- Meanwhile, Chile’s production develop-
appealing to both juniors and majors to ex- nities for juniors and majors to strike deals ment body – CORFO – has invited compa-
ploit collaboratively. in Chile, which hosts 22% of the world’s nies to tender their investment proposals
copper reserves and 48% of the global for projects that can add value to the coun-
Chilean Vice Minister of Mines HE Pa- lithium reserves. try’s lithium production.
blo Terrazas told delegates at Latin Amer-
ica Down Under the Government would Capitalising on its lithium resources is The intent is to manufacture lithium-
provide mediation for interested parties high on the Government’s agenda. To based, value-added products using supply
through a work group. this end, Chile will invest heavily in the from SQM.
next decade in the new Clean Technolo-
“We are currently still working on this, gies Institute, whereby the development – Mark Andrews
but upon this launch we are going to pro-

Chilean Vice Minister of Mines HE Pablo Terrazas, SQM chairman Alberto Salas, HE Ariel Lorenzo Rodriguez from Embassy of Cuba,
Chilean Ambassador to Australia HE Patricio Fernando Powell Osorio, Honorary Consul for Chile Carlos Alberto Moncada

Big copper hot in Chile

Christian Easterday’s desire to secure Hot Chili will spend the next 12 months Christian Easterday
Hot Chili Ltd a seat at the table of world delivering against a reshaping of the com-
copper influencers has been unwavering. pany’s resources and reserves by the inclu- manage its funding discussions.
sion of Cortadera and its high-grade satel- Therefore, Hot Chili can focus on explo-
And, with a combined development sce- lite deposits in advance of undertaking a
nario of the recently acquired Cortadera revised PFS. ration and project economics, which will no
with Productora likely to underpin a glob- doubt spark some interest in Chile.
ally significant new copper development on A PFS solely on Productora demon-
the coastal range of Chile, Hot Chili hopes strated production potential of 66,000 tpa “Exploration is still very quiet in Chile,
to pull up a chair alongside the big copper copper and 25,000 ozpa gold over an initial although we have seen some pick up in
companies. eight years. groups hunting for more advanced oppor-
tunities in the exploration and development
“By that I mean the global copper table A confirmation drilling programme across space. We anticipate that this will gather
where the entry fee is 100,000 tpa of cop- the Cortadera porphyry discovery, which is momentum,” Easterday said.
per production. Other than BHP [Ltd] and scheduled to be completed in parallel with
Oz [Minerals Ltd], the Australians have very its strategic funding process, was in play at – Mark Andrews
few representatives in big copper,” Easter- the time of Latin America Down Under.
day told Paydirt.
The Cortadera acquisition is a game-
“[Cortadera and Productora] are virtually changer for Hot Chili and has generated
unrivalled in size, location and infrastruc- strong in-bound interest in the company,
ture advantage by our peers.” which has appointed Sternship Advisors to

Page 34 JUNE 2019 AUSTRALIA’S PAYDIRT

Dark Horse rides into new era

The soon-to-be-renamed Dark Horse Re- tential also to be a company-making project,” but when we took over Cachi about a year
sources Ltd believes it is on the cusp of Mason said. ago, there were only two major targets,” Ma-
two “company-making” discoveries in Argen- son said.
tina. “We’re very fortunate, many projects in lithi-
um brine these days only have a small portion “We will commence a fairly extensive drill-
Dark Horse is set to rebadge as Andean In- of salar and may be actually on the extremi- ing programme over Cachi which we expect
ternational from later this month, ahead of the ties of the salar. The San Jorge project is cen- to continue until we define what we would
start of a major exploration programme at its tred on the San Francisco salar, it’s 7,000ha consider a company-making project.”
San Jorge lithium brine project in Catamarca in area and we have another 30,000ha sur-
province. rounding the nucleus of the salar, which en- Dark Horse is awaiting final assay results
compasses the full lithium brine basin. from a recent drilling programme at Las
San Jorge and the Cachi gold project Opeñas, in the San Juan province near the
in Santa Cruz were described as potential “We’re very keen to commence exploration border of Chile.
“company-making” assets by Dark Horse on that, which we expect to start June/July.”
managing director David Mason at Latin Las Opeñas is also in a region which is
America Down Under last month. Drilling at Cachi is pencilled in for Sep- home to several epithermal-style gold-silver
tember/October, some 18 months after Dark deposits, including Veladero (12 moz), Pas-
Exploration at San Jorge could start as Horse acquired the project. cua Lama (18 moz) and Gualcamayo (2 moz).
early as this month, beginning with surface
Hosted in the gold-endowed Deseado “On the surface we’ve seen some abso-
sampling, be- Massif region, Cachi is surrounded by sev- lutely extraordinary gold and silver values up
fore moving eral prolific mines, including the 8.1 moz over 185 g/t gold and 6,500kg/t silver,” Mason
into geophys- Cerro Negro (Newmont Goldcorp Corp), the said.
ics, ahead of 2.6 moz Cerro Moro (Yamana Gold Inc) and
drilling in the the 10.8 moz Cerro Vanguardia (AngloGold “To make an epithermal gold project
final quarter Ashanti Ltd). commercial, you need in the vicinity of 5-10
of this year. g/t gold and certainly this area is showing
Collectively, Deseado Massif hosts more some very, very good prospectivity.”
“This pro- than 28 moz.
ject has the – Michael Washbourne
size and po- “The surface exploration work that we’ve
David Mason done to date is showing many, many targets,

ASX: LRS P: +61 8 6117 4798 Pioneering junior producing
E: [email protected] Follow us @latinresources results in Chile’s major
www.latinresources.com.au mining region.

• Surrounded by global majors - Anglo American,
Teck, Barrick Gold and Kinross

• Game Changer - Discovery announced at

Vidalita Project, with drilling continuing

• Multiple mineralised systems - High-grade gold,
copper, silver announced

• Renowned geological and mining precinct -
Land of gold and copper giants with more than
100Moz gold produced

• Attractive value opportunity - Emu is

the inexpensive entry point into Chile.

ASX : EMU www.emunl.com.au

AUSTRALIA’S PAYDIRT JUNE 2019 Page 35

LADU REVIEW

E2 in the shadow of giants

E2 Metals Ltd – Argentina’s newest ex- Surface rock Todd Williams
plorer – has set its sights on maiden sampling of multiple
drilling at its Conserrat gold-silver project in high-grade epither- El Tranquilo district which is home to more
the coming months. mal veins returned than 1.5 moz gold equivalent.
values up to 7.6 g/t
Having just completed a drilling cam- gold and 7,510 g/t “We believe that we’ve got another El
paign at its Sierra Morena project, also in silver. No drilling Tranquilo, we just need to do more work to
the Santa Cruz province, E2 is now turn- had previously been prove the potential,” Williams said.
ing its attention to a greenfields exploration completed over the
play, 15km along trend from AngloGold area. Corona is the least advanced in E2’s
Ashanti Ltd’s Cerro Venguardia operation. portfolio, but Williams said the company
“We really wanted was encouraged by the project’s similari-
Cerro Vanguardia hosts a resource of to demonstrate that ties to Newmont Goldcorp’s recent Silica
8.9 moz gold and 137 moz silver. we didn’t just have Cap discovery at Cerro Negro, 30km to
multiple, isolated the north.
“When we started with this project back vein outcrops and
in 2017, we essentially acquired it as va- occurrences, but – Michael Washbourne
cant ground next to the Cerro Vanguardia we were actually sit-
mining lease,” E2 managing director Todd ting on what could
Williams said. be a single, large
vein field made up
“We noted there we 400km of epither- of multiple parallel
mal veins that had been mapped to date at veins, similar to Cerro Vanguardia,” Wil-
Cerro Vanguardia and over 10 moz of gold liams said.
equivalent ore mined there for 20 years.
Looking at the distribution of these veins, Drilling at Conserrat is pencilled in for
it’s quite clear that there’s a north-west the second half of this year.
trend to these veins and they do not stop
at the edge of the mining lease. E2 acquired Conserrat, Sierra Morena
and Corona from private company Circum
“We picked this block up as a nearology Pacific Pty Ltd last year, having previously
play to look for the continuation of the Cer- been focused in New South Wales and
ro Vanguardia epithermal vein field and to New Zealand.
date we’ve mapped and sampled veins
over 24sq km.” Sierra Morena is adjacent to Pan Ameri-
can Silver Corp’s COSE development pro-
E2 has prioritised the Veta Blanca pros- ject and Patagonia Gold plc’s Cap Oeste
pect at Conserrat following systematic heap leach mine. Both are hosted in the
mapping and sampling which confirmed it
had grade, scale and continuity.

Meteoric gold rush

Meteoric Resources NL managing di- Freeport – have now moved into the Alta score of 1,995. A hit of 10m @ 101.1 g/t
rector Andrew Tunks has likened the Floresta belt,” Tunks said. (including 2.4m @ 389 g/t) from 127m at
recent exploration rush in Western Austral- Dona Maria produced a gram-metre score
ia’s Paterson province to a slightly earlier “There’s been over 3 million hectares of 1,011.
scramble for available ground on Brazil’s pegged across Alta Floresta in the last
Alta Floresta belt where his company is two years. It’s Brazil’s hottest exploration “Anything above 50 is a great intercept,
now based. destination and we’ve been lucky enough anything above 100 is fantastic and above
to pick up 700sq km on the western edge 1,000 you just don’t see,” Tunks said.
Rio Tinto Ltd had tongues wagging late of the belt.”
last year when it started building an airstrip “There’s probably only one or two of
and an extensive exploration camp in the At the time of print, Meteoric was finalis- these intercepts of that quality drilled in the
Paterson, prompting a wave of juniors to ing its acquisition of the Juruena and Novo world in any one year. This is an amazing
peg whatever nearby ground was up for Astro gold projects from Brazil-focused gold deposit that’s lying in wait for us to ex-
grabs. junior Crusader Resources Ltd. plore.”

A similar rush appears to have occurred Having raised $3 million on the back of Tunks believes his company has stum-
almost two years earlier in Brazil when ru- the acquisition, Meteoric plans to start drill- bled upon a potential multi-million ounce
mours of a major porphyry copper discov- ing at Juruena this month in a bid to update goldfield possessing some of the best
ery by Anglo American plc started to seep the existing resources at Dona Maria and bonanza-grade results he has ever seen.
into the market. Querosene.
Garimpeiros have mined and produced
“Like Rio, they haven’t said a lot about Previous drilling at Querosene returned more than 500,000oz from the Alta Flo-
it, but the big players of the world porphyry a mouth-watering intercept of 3.6m @ resta belt over the last 30 years.
copper field – Codelco, AngloGold, Vale, 554.3 g/t gold (including 1m @ 1,992
g/t) from 147m, generating a gram-metre – Michael Washbourne

Page 36 JUNE 2019 AUSTRALIA’S PAYDIRT

Brazil bounces back

Brazil’s Government is committed to re- terrible incidents never happen again,” Alexandre Vidigal de Oliveira
storing confidence in its mining sector he said.
following a second fatal tailings dam col- “By doing so, we achieve a quid pro
lapse in three years. “At present, we are putting in every ef- quo and we bring forth an even more at-
fort we can in order to make the activity tractive mining sector for whoever wish-
More than 300 people were killed safer for everyone and creating a scenar- es to produce, do business, invest and
when a tailings dam at Vale SA’s Córrego io of integrity and legal certainty, with a create jobs in our country.
do Feijão iron ore mine in Minas Gerais view to enhance the confidence and the
state suffered a “catastrophic failure” on reputation of mining among the society “We have got a big responsibility to-
January 25, less than a month after new and the investors.” wards our citizens and our minerals and
Brazil President Jair Bolsonaro assumed natural resources. That means that one
office. Mining accounts for 4% of Brazil’s of our main concerns is – and always will
GDP, but uncertainty over the future of be – the sustainability of the activity.”
The tragic incident occurred a little its iron ore production in the wake of the
more than three years since the tailings latest tailings dam collapse has placed – Michael Washbourne
dam collapse at Vale-BHP Ltd’s Samar- that contribution under a serious cloud.
co Mariana operations, killing 19 people.
At the time it was described as Brazil’s Brazil Secretary of Geology and Min-
worst environmental disaster. eral Transformation Alexandre Vidigal de
Oliveira said the federal government was
In a video message to Latin America working with individual states and mu-
Down Under delegates, Brazil Minister of nicipalities to improve regulatory frame-
Energy and Mining Admiral Bento Albu- works so international investment was
querque stressed the newly elected fed- not comprised.
eral government would not be sweeping
the issue under the carpet. “One of the main objectives of the Gov-
ernment is to improve the legal frame-
“We are still investigating the causes, works so Brazil’s regulatory system is
alongside the most gratified experts in held to the highest of international stand-
the world, in order to ensure that those ards,” he said.

Latin’s resource goal

Latin Resources Ltd’s newly acquired lithi- potential purchase of a small mobile plant CBL-run lithium hydroxide plant which is
um projects in Brazil are set to deliver the for pilot test work which would run parallel to 30% owned by the Brazilian Government.
company its first spodumene resource. the search for a JV partner to construct and
later operate a much larger processing unit. “This particular plant requires investment
Painstakingly long delays over the grant to lift it from industrial to battery-grade and if
of drill permits for one of its Argentine lithium One of the catalysts for pegging this par- Latin Resources actually proves up a good
projects prompted Latin to look elsewhere ticular patch of ground in Brazil was its prox- resource there, we think we can help with
for more immediate exploration opportuni- imity to TSX-listed Sigma Lithium Corp’s that investment,” Gale said.
ties in the spodumene pegmatite space. Groto di Cirilo project, which boasts a re-
source containing 37mt @ 1.48% lithium “We’ll be talking to the Brazilian Govern-
That search saw the company try its luck oxide. ment about that opportunity really soon.”
in nearby Brazil and Latin now has with
three projects – Salinas, Seletas and Outra Another key selling point was the nearby Gale was confident his company would
Lado – all in the pro-mining state of Minas soon be awarded a long-awaited drill permit
Gerais. Chris Gale for its San Luis spodumene project in Ar-
gentina, with a drilling programme planned
“The great thing about these projects is for the second half of this year.
they are drill-ready, permitted and in a great
mining jurisdiction, so next month [June] we Further exploration work is also on the
hope to start drilling,” Latin managing direc- cards on Latin’s 70,000ha ground holding
tor Chris Gale said. in Argentina’s Catamarca province.

“Our major goal at Latin Resources is for In Peru – where Latin first set foot more
this to be our first JORC spodumene re- than a decade ago – the company’s JV
source. Realistically that’s not too far away partner First Quantum Minerals Ltd will
for us now.” soon start another round of drilling at the Ilo
Sur copper project.
Salinas will be the first cab off the rank
for Latin. Previous explorers have reported “Just to give you an idea of the value of
rock chip samples of up to 3.06% lithium this particular project, First Quantum has
oxide and spodumene content of 35% in the right to take out a 1% NSR for $US40
the rock. million,” Gale said.

Latin has already begun investigating the – Michael Washbourne

AUSTRALIA’S PAYDIRT JUNE 2019 Page 37

LADU REVIEW

Debt available but lender beware

Amid a world of equity mar- than risk,” he said. “And, a lit-
ket pain for junior min- tle like rock climber Alex Hon-
ers, Noah’s Rule managing nold in the documentary Free
Solo, it is not about reducing
director Sean Russo sees risk but expanding your com-
fort zone. For junior miners,
blue sky in the debt space but that means you have to have
a big comfort zone, particu-
has warned companies to be larly if they are using debt.”

careful. Being comfortable with
debt would necessarily mean
Russo has always had a becoming comfortable with
a level of hedging, according
somewhat of a contrarian to Russo. Done prudently, it
could increase a company’s
view of the junior sector, ex- equity market appeal, as was
Sean Russo the case with TSX-listed At-
tolling the virtues of hedging lantic Gold Corp, according to
Russo.
in a world where companies “I had begun talking to them 5-6 years
earlier when they had a market cap of $25
are wedded to the idea of million but a capex of $150 million,” he said.
“I told them I could I get more than $80 mil-
“being leveraged to the gold lion in debt which they didn’t really believe.
Eventually, Macquarie said it would lend a
price”. At Latin America Down lot more than that if they did hedging and
Caterpillar lent some money and the man-
Under he told delegates that agement found another source of debt
funding. So, eventually there was no need
while the current equity strike for equity and while 75% of production was
locked in, it represented only 10% of the
was one of the worst in history, resource.
“However, giving away that upside on
project funding was still avail- the gold price allowed them to avoid dilu-
tion in the early days and the market hates
able for companies with bulletproof pro- ensure their project fundamentals were early dilution even more than it hates
hedging.”
jects. sound. Russo’s prediction was that the hostile
market conditions for juniors would contin-
“There has never been more lenders “My advice is; don’t start financing un- ue for sometime yet but would eventually
ease, as they always did.
and rarely less equity. I’ve never seen so less you have the resources to finish it,” “Equity interest in pre-production or even
producing companies is as bad as any of
much debt with so few strings attached Russo said. “Being in the vicinity of being us remember,” he said. “The easy money
has all followed new age business. In a
available,” Russo said. “It is a risky sce- bankable on a project is not good enough.” world of unicorns, junior mining is about as
unappetising as it can get. And, in these
nario but you can make it work.” He admitted it wasn’t a popular opinion current market conditions, it is not surpris-
ing that a country which creates unicorns
To make it work, companies needed to on the junior mining circuit where compa- [the US] is doing better than one which just
mines and farms [Australia].”
nies are surround- For those company executives seem-
ingly facing their darkest days, Russo had
ed by associates a point of historical optimism.
“These things have to revert at some
encouraging them point but we have to be patient. In the late-
90s; the blood, sweat and tears were out of
to move into capital fashion. It is the same today.”

development.

“Many people

around companies

are cheering them

on,” Russo said.

“But, their risk is

not the same as
LITHIUM AND GOLD IN ARGENTINA the company’s.

darkhorseresources.com.au ASX: DHR Brokers, technical
experts, advisers;

they’re not climbing

that [financing] cliff

with you.”

However, with

readily available

debt funding in the

marketplace, com-

panies who do rec-

ognise the opportu-

nities and risks can

succeed, according

to Russo.

“Most juniors

have only one op-

portunity and are

faced with a com-

plex matrix of risks

they can’t control – Dominic Piper

but I see it more as

uncertainty rather

Page 38 JUNE 2019 AUSTRALIA’S PAYDIRT

Troy back on exploration track

Operating in Latin America has certainly RC drilling last year produced encourag- Ken Nilsson
thrown plenty of challenges at Troy ing hits of 4m @ 59.7 g/t gold, 5m @ 22.84
Resources Ltd over the years, but rather g/t, 6m @ 6.9 g/t, 5m @ 13.94 g/t, 9m @ trends and orientation.
than shying away the junior miner is redou- 40.5 g/t and 43m @ 3.5 g/t. The last hole The reinvigoration of exploration at Ka-
bling its efforts in the region. had stepped out 950m from the artisanal
pit, raising Troy’s hopes for the prospect. rouni is part of a wider rebuilding exercise
Troy’s 15 years in South America have being undertaken at Troy after several op-
been a mixed bag. It has built four mines An 18-hole, 4,400m programme was erational setbacks in Guyana, Argentina
but has also encountered geological, engi- launched in April as the company pursues and Brazil.
neering and regulatory problems through answers to questions around the structural
that period. controls in the Karouni district. Nilsson said efforts to turn the company
around were beginning to bear fruit.
Its latest venture, the Karouni gold mine “As an engineer I am always dubious
in Guyana, has experienced problems of about exploration but in this case what “We need to get credibility back in the
its own but executive director Ken Nilsson I’ve seen makes it obvious,” Nilsson said. market. Most remarkably, a year ago we
remains committed to the asset, launch- “This is an opportunity to gain a reason- had $US16 million corporate debt, today it
ing a new exploration project to extend its able mine life really for the first time in the is down to $US3.6 million,” he said.
mine life. company’s history.”
The next quest will be to restock the
“We did an initial burst of exploration in Although the company is still waiting on portfolio. Nilsson, a resident of Brazil, said
the early years after acquisition but then first assays, Nilsson is already confident South America’s largest nation was a pre-
we had to redirect the money elsewhere,” given the first three diamond holes all re- ferred destination.
Nilsson said. “We kick-started it 12 months turned visible gold in core.
ago and as part of that push we soon ac- “We will rationalise what we have but we
quired the Ohio Creek project.” The decision to use a diamond rig could have a preference of staying in Brazil,” he
prove vital for Troy. Mining of the main said. “We still have two companies reg-
Acquired in August last year, Ohio Creek Smarts and Hicks deposits at Karouni has istered in Brazil with some iron ore tene-
has been a prolific producer for the private been blighted by geological complexity ments under negotiation at the moment.”
groups which have held it but has received but by attempting to solve Ohio Creek’s
little modern exploration. structural puzzle early the company could Further acquisitions in Guyana are also
on the agenda. The country is renowned
quickly move it into for its gold prospectivity but hasn’t seen
reserve. It could the same level of exploration investment
even have ben- as neighbours or the geologically analo-
efits for the existing gous nations of West Africa.
open pits at Ka-
rouni. “I’m a little surprised more companies
haven’t come into Guyana but as we move
“Exploration in forward life becomes easier,” Nilsson said.
Guyana is diffi- “It has been a little bit stifled by tenement
cult,” Nilsson said. access but it is opening up and I expect it
“The geology is [an exploration boom] will happen, particu-
very complex with larly at the junior end of the market.”
confused structural
controls. As a con- – Dominic Piper
sequence, we are
applying what we
are learning from
the exploration
back into around
the mine site and
looking at convert-
ing resources to re-
serves.”

Troy also plans
to attack other re-
gional targets this
year, including the
Gem Creek, Gold-
star, Upper Itaki
and Kaburi Hills
prospects. Nilsson
said the company
would be applying
West African explo-
ration methodology
to identify structural

AUSTRALIA’S PAYDIRT JUNE 2019 Page 39

LADU REVIEW

SolGold leads way for all
in Ecuador
SolGold plc continues to set the standard 0.6 g/t silver. in 2017, Lundin Mining Inc is developing the
for other explorers in Ecuador with the The new resource will form the basis of 9.05 moz @ 8.35 g/t gold deposit.

release of a preliminary economic assess- SolGold’s first public attempt to put some Australian junior Tempus Resources Ltd
had chosen to follow Lundin into the south
ment (PEA) for its massive Cascabel cop- numbers around the project’s economics. of the country, securing two projects in the
Rio Zamora region.
per-gold project this month. “We are beginning the conversion to be-
“We have been watching Ecuador for
Highlights from the PEA included esti- ing a mining company,” SolGold exploration 9-12 months and last week we signed
an agreement to acquire two projects for
mated life-of-mine average production of manager Jason Ward said at Latin America $US100,000 cash and $600,000 in shares,”
Tempus executive director Brendan Borg
150,000 tpa copper, 245,000 ozpa gold and Down Under. said.

913,000 ozpa silver in concentrate, with Making the leap from explorer to miner The two projects, Rio Zarza and Valle
del Tigre, cover Jurassic age rocks and
high copper 28.2%, 22.1 g/t gold and 65.7 on such a project is a massive one but are wedged between Fruta del Norte and
ground acquired by Newcrest. They were
g/t silver contents in sales concentrates. Ward said SolGold was confident it would both previously exposed to limited drilling
by TSX-listed juniors without success but
The mining method preferred in the study have the knowledge and experience to deal Tempus believes the exploration model
was wrong.
with the development challenges.
“At Rio Zarza 16 holes were drilled in
“People say ‘you can’t mine that’. We 2010/11, before there was a thorough un-
derstanding of the geology,” Borg said. “It
can if we hire the right people,” Ward showed a fair bit of smoke. The alteration
profile was identical to Fruta del Norte and
said. we are looking for repetitions or offsets of
the mineralised body.
Ward also pointed to the infrastructure

advantages, including cheap available

hydropower as reasons why the compa-

ny believes it “can get Tier 1 economics

out of this Tier 1 project”.

SolGold will apply block cave mining

methods to the porphyry deposit.

“It is the best approach for the environ-

ment and is the cheapest method. The

rock is soft and fractious and vertically

elongated.”

By the time development

Jason Ward starts, Ward will likely be fully fo-

cused on delivering SolGold its

next discovery.

was underground, with an estimated pre- Given the company moved into

production capex of $US2.4-2.8 billion and Ecuador three years before the ca-

total capex, including life-of-mine sustain- dastre system was opened, it has

ing capital of $US10.1-10.5 billion depend- built a best-in-class tenement port-

ing on which one of the four production folio in the country.

cases was selected. “SolGold is the largest landholder

Payback was estimated to take less than in Ecuador with 3,200sq km,” Ward

four years, with the project boasting an said. “We are in the least explored

NPV of $US4.1-4.5 billion and IRR of 24.8% part of the most prolific copper belt

to 26.5%, subject to discount a rates and on earth and the regional explora-

commodity prices used. tion programme is why I’m excited.

SolGold’s discovery of Cascabel in 2013 There is phenomenal outcrop and

sparked a modern-day ground rush in Ec- all the right structural hosts. We

uador with majors from across the world, have 42 geologists working just on Brendan Borg

and Australia in particular, staking claims the regional exploration.”

in the country. While the likes of BHP Ltd, The company has 12 priority pro-

Newcrest Mining Ltd, Fortescue Metals jects comprising a combination of

Group Ltd and Hancock Prospecting Pty epithermal all gold and porphyries. “The original drilling was at the same
depth as Fruta del Norte and didn’t reach
Ltd have been relatively quiet since picking “We are focused on the porphyries but if the target depth. We will build on that in-
formation; it presents a real opportunity for
up their tenements, SolGold has contin- an epithermal is rich enough we will take on Tempus but we have to drill deeper, 600-
800m below surface.
ued to plough exploration dollars into the that as well,” Ward said.
“We are hoping to achieve even a frac-
ground. The focus of SolGold and others on the tion of SolGold’s success.”

The AIM-listed company is spending porphyry potential of Ecuador has left the

$US72 million this year on exploration and door ajar for others. The country’s most ad-

it is already beginning to bear fruit with a vanced project is the Fruta del Norte gold

recent doubling of the overall resource to deposit in the country’s south where, after a – Dominic Piper

2.95bt @ 0.4% copper, 0.29 g/t gold and dispute with the Government was resolved

Page 40 JUNE 2019 AUSTRALIA’S PAYDIRT

Azure goes it alone in Mexico

Azure Minerals Ltd is closing likely have to find time to return
in on a PFS for its Oposura
base metals project in Mexico to its Alacran silver-gold pro-
with managing director Tony
Rovira revelling in the simplicity ject after Teck Resources Ltd
of the project.
chose not to pursue its claw-
Azure has had Oposura – lo-
cated in Sonora State, northern back option over the asset.
Mexico – less than two years
but has made rapid progress Teck had reinitiated interest
thanks to easy accessibility
and seemingly simple geology. in the project, also in Sonora,

“The Oposura deposit is an in 2016 after Azure produced
outcropping, flat-lying massive
sulphide orebody that wraps maiden resources for the Mesa
around the hill,” Rovira told
Latin America Down Under. de Plata (27.4 moz @ 82 g/t sil-
“Within a year of acquiring the
project we had defined a maiden ver) and Loma Bonita (4.8moz
resource and produced a second resource
last week.” @ 28 g/t silver and 150,000oz

The updated resource of 3.1mt @ 5% zinc @ 0.9 g/t gold) deposits.
and 2.7% lead came as a result of exten-
sional drilling on the East Zone of the project, Teck’s interest was in the
expanding that half of the deposit by 20%.
The drilling also allowed Azure to book 85% porphyry potential of the pro-
of the contained metal into the indicated cat-
egory, a vital confirmation ahead of the final ject and while the search has
stages of the PFS. Tony Rovira proven fruitless it has left Azure

Rovira said the resource upgrade would with a “very valuable database
likely result in an increased Oposura mine
life, estimated at five years in the October and several high priority tar-
2018 scoping study. The drilling also indicat-
ed potential to continue increasing the size “We will mine 500,000 tpa but will only gets to follow up”, according to Rovira.
of the project.
process 295,000 tpa as we will use an ore As part of its relinquishment, Teck will be-
“It is already of a sufficient size to take into
production with upside to potentially double sorter to upgrade the ore by 40% before it come a 19.9% shareholder in Azure.
the size of the resource,” Rovira said. “We
are confident that with further drilling of find- gets to the processing plant,” Rovira said. Rovira said Azure would now revisit
ing further mineralisation.”
“Using an ore sorter results in significant op- Alacran’s economic potential while pro-
The scoping study indicated project NPV
of $112 million, IRR of 76% and EBITDA of erating and capex savings and allows us to gressing exploration on the project.
$237 million could be realised at Oposura.
Rovira said the simplicity of the deposit improve the quality of the concentrate.” – Dominic Piper
meant development would be straightfor- Negotiations
ward.
over the sale of that
“It is simple geology, mining and process-
ing,” he said. “It will be three years of open pit concentrate will
and then three years of underground. There
is very little weathering or oxidation so we likely begin follow-
can access the high-grade ore from Day 1 of
mining, meaning mine capex is virtually zero. ing completion of

“At 42c/lb, C1 cash costs are in the low- the PFS but Azure
est quartile globally while the Year 1 C1 cash
cost of 14c/lb would place Oposura in the is already assured
lowest 1-2% of zinc projects.”
of easy access to
The scoping study estimated project
capex at $US52 million with Azure keen to markets. Mexico
utilise the rapidly advancing ore sorting tech-
nology to keep a lid on both capital and op- has a well-estab- ARGENTINE–AUSTRALIAN
erating costs.
lished base metals CHAMBER OF COMMERCE
industry meaning AND INDUSTRY
infrastructure is

readily accessible

for Azure.

“Access in Mex-

ico is really good

with roads to the

nearby port of Doing business
Guaymas, the zinc on the same latitude

and lead smelters
at Torreon or to the

zinc and lead con-

centrate blending

facilities at Manza-

nillo Port,” Rovira

said. “It is a very

clean concentrate

with plus-53% zinc,

plus-60% lead and

320 g/t silver.”

While Oposura Bouchard 680, piso 12. | C1106ABJ. Buenos Aires, Argentina.
represents an im- Tel: +54.11.4590.8787 | [email protected] | ww.auscham.com.ar
mediate focus for

Azure, it will also

AUSTRALIA’S PAYDIRT JUNE 2019 Page 41

LADU REVIEW

Cobre Panama awakes

First Quantum Minerals Ltd has hailed the rain, a high annual rainfall of typically 5-7m “Mining is basically new to Panama, cer-
successful start of operations at a mine per year, a lack of skilled mining workforce tainly at this scale, and the Government is
nobody else wanted to build. in Panama, plus the huge level of invest- new to mining, but it’s supportive,” Wozniak
ment required to make it happen. said.
Operations at Cobre Panama – the
largest copper concentrator mine ever de- “What has been developed and is op- First Quantum is also advancing large
veloped as a single parcel – kicked off in erational today is an international shipping porphyry projects in Argentina (Taca Taca)
February. Throughput is currently being port, a 300MW power station and mining and Peru (Haquira) as the company seeks
ramped up to an initial 85 mtpa run rate. facilities that are absolutely world-class or to push its overall output beyond 1 mtpa
best in class.” copper.
First Quantum has poured some $US6.3
billion into developing Cobre Panama, in- Cobre Panama, 120km west of Panama – Michael Washbourne
cluding construction of an international port City, is forecast to contribute 3% towards
and 300MW power station. It is the largest the country’s GDP. Zenon Wozniak
private investment in Panama’s history.
First Quantum has also tipped at least
Cobre Panama was discovered by geolo- $US58 million into the local communities
gists for the United Nations in 1966, but its through the upgrade of roads, electrification
high capital cost and expected operational of villages, construction of new schools and
challenges has seen many baulk at its de- medical clinics.
velopment over the years until TSX-listed
First Quantum assumed control of the pro- Cobre Panama is reportedly now the
ject six years ago. third largest private sector employer in the
country. More than 13,000 workers were
First Quantum director of projects Zenon employed during construction and some
Wozniak said the company had “awoken a have now transitioned to operational roles.
sleeping giant”.
Operations will eventually be upscaled to
“The reason it took so long is because 100 mtpa via a $US327 million expansion
many people knew this mine would be very, which First Quantum announced in April.
very difficult and costly to build – some Full production is anticipated in 2021.
thought maybe impossible,” he said.
Cobre Panama’s reserve of 3.14bt @
“Maybe impossible because the location 0.38% copper currently support at least 40
was very remote with extremely difficult ter- years of mining operations.

Request for more drilling

AusQuest Ltd is gearing up for a second Graeme Drew IP survey is being completed over the area
round of drilling in Peru under its stra- to identify potential drill targets associated
tegic alliance with South32 Ltd following “Meetings with South32 are now being with structures known to host copper min-
confirmation of an extensive IOCG system scheduled for the middle of the year to final- eralisation, such as Los Chapitos.
at the Cerro de Fierro project. ise another round of drilling. It’s an exciting
time for the company and its shareholders.” “Southern Peru is clearly an exciting
Analysis of results from initial drilling at place to explore, with many large-scale
Cerro de Fierro, about 140km south-east Cerro de Fierro is in a region of south- copper deposits already known and being
of the 1.8bt Marcona iron ore mine, helped ern Peru which also hosts notable copper mined, but with many more to be found,
redefine five targets for further inspection discoveries at Mina Justa (475mt @ 0.68% especially we think along the coastal belt
by the drill bit. copper) and Los Chapitos (best hit of 168m where we are focusing our efforts,” Drew
@ 0.72% copper). said.
South32 will once again fund the pro-
gramme, having last year tipped $6.5 mil- South32 can earn a 70% interest in Cerro “In 2019 our exploration focus will shift to
lion into drilling and other exploration activi- de Fierro by spending $US4 million on the the north around Cerro de Fierro and the
ties at AusQuest’s projects in both Peru and project. Parcoy project where we have already has
Australia. The BHP Ltd spinout has been in some significant exploration success.”
partnership with the Graeme Drew-led jun- Parcoy, 50km north of Cerro de Fierro,
ior since 2017. is another project on South32’s radar. An Los Ostros is the third and final project in
Peru subject to the alliance with South32,
“The strategic alliance that was signed although exploration work there has been
with South32 was a game changer for us,” limited to date.
Drew said.
AusQuest will also step up its efforts to
“Mapping and sampling programmes find a funding partner for its 100%-owned
are now under way [at Cerro de Fierro] to Chololo project where drilling last year in-
complete coverage of the prospect before a dicated the potential for a buried porphyry
second round of drilling is planned in order system.
to be able to scope out the full potential of
the area. – Michael Washbourne

Page 42 JUNE 2019 AUSTRALIA’S PAYDIRT

Working together the key

The University of Queensland’s Sustain- Brereton, Resource Dynamics Pty Ltd really be mixed,” Price said.
able Minerals Institute Professor David
Brereton said the broader reputation of the chief operating officer Christian Price and “You cannot progress technology in the
mining industry needed to be caressed by
industry itself. University of Western Australia Professor education sector, there needs to be more

Speaking during a panel discussion on Sam Spearing (pictured above) all champi- collaboration with the sector. Similar to what
disruptive technology and mining education
at Latin America Down Under, Brereton oned for universities, industry and govern- happen with safety 10-15 years ago, people
said the human capital within the mining in-
dustry during the last downturn was trashed ment to work collaboratively to overcome tried to work out how to keep people safe
and the severe impact of that was being felt
now. challenges of bringing people into the sec- and it was only through collaboration from

Therefore, attracting people to the in- tor. the industry side of things that it started to
dustry is becoming increasingly difficult, as
students continue to choose other profes- “Most children don’t understand where happen.”
sional career paths that are likely to offer
more job prospects. things come from,” Spearing said. – Mark Andrews
“Mining can always improve, and we
“It is not the responsibility of the univer-
sity to boost the mining sector in the broad have taken strides
sense, what it can do is demonstrate the
research it has done that is highly relevant,” in WA, with commu-
Brereton said.
nity relations, sus-
“To attract more students you need to
market mining as a really exciting industry tainability, first na-
and promote all the things that you can do.
Mining is attractive and people need to see tion grant rights and
the intellectual challenges and the exciting
things need to be promoted rather than the things like that, so
traditional view of mining.”
the mining industry
Perceptions of mining being a boom-
bust, cyclical sector is one such challenge now is very different
for industry to handle better, which requires
a collective effort by everyone connected to to 30-40 years ago,
the resources world.
but I don’t think we
“However, when the crunch comes and
the prices go up and jobs get stretched, the have sold that mes- Critical Mass
industry returns to normal competitive be- sage very well.” Arrives
haviour,” Brereton said. “In effect the small-
er companies that have helped find people Price said that
end up seeing their staff poached by a big while there is min-
company. Equally, the other problem is ing awareness pro-
when the cycle turns the big temptation is to
focus on yourself and cut positions to save grammes through-
money without thinking what that potentially
does collectively to the industry.” out the sector in

play, the focus of

some were nar-

row as companies

pushed their own Combining Cortadera & Productora
brands and agen-

das, which is sty- !  Underpins new large-scale, long life copper
mieing innovation development – GLOBALLY SIGNFICANT
and technology ad-

vancements in min- !  Unlocks US$90M invested in Productora to date
ing.
!  Transforms Hot Chili into a premier ASX copper
“There are a lot of developer
well resourced pro-
grammes out there

and groups doing ASX : HCH
their own thing, but www.hotchili.net.au
the messages that
can come out can

AUSTRALIA’S PAYDIRT JUNE 2019 Page 43

LADU REVIEW

Aircore delivers
for Emu
Aircore drilling has not traditionally been used in
Chile, however, that has not stopped Emu NL
having early success at its flagship Vidalita project in

Chile’s Maricunga belt.

“Most drilling methods are quite slow pared to Salares Norte. Tony Wiggins
so we have used this technique which is Salares Norte – 3.47 moz gold and
what you would normally see out near ties for later this year.
Eneabba or somewhere like that drilling 39.27 moz silver – is owned by Gold Meanwhile, the company is assessing
for minerals sands,” Emu geologist Tony Fields Ltd, while the belt is also occupied
Wiggins said. by the likes of Kinross Gold Corp (Mari- options on how best to fund future activi-
cunga 6.3 moz gold) and Newmont Min- ties.
“We get core, we also get regular sam- ing Corp and Barrick Gold Corp (Norte
ples so it is a really handy for analysing Abierto 13.3 moz gold, 32 moz silver and “We are exploring financing options,
an epithermal system. It is somewhat of 3.38 mlb copper). in terms of complementary exploration
a revolution and we wouldn’t have been partners or capital market participants
able to get as far as we have without us- “Most Australian investors probably to allow us to finance the next round of
ing aircore, there is no doubt about that.” wouldn’t be too familiar with what the drilling and advancing the project,” Hig-
Maricunga belt is. It is a really exciting gins said.
Of course, there are limitations at area in the sense that the geological
depth with aircore drilling, however, Emu endowment in terms of tenements; peo- – Mark Andrews
managed to strike shallow mineralisation ple who have secured tenements have
– 24m @ 5 g/t gold and 28 g/t silver from gone on to secure more tenements and
20m, within a wider interval of 48m @ to build on a large 136sq km footprint is
2.8 g/t and 19 g/t silver – in March. what we need when talking about large
orebodies,” Higgins said.
That has been reported as the dis-
covery hole and while it is early days at At the time of print, Emu was waiting
Vidalita, some are excited by the similar for a further 15 assays from drilling to be
geological characteristics it has com- returned before it started plotting activi-

New cadastre for Colombia
Backed by new President Iván Duque “We were very much looking to be have traditionally opposed mining – in a bid
Márquez, Colombia is set to unveil a more like an oil country rather than a min- to attract more foreign mining investment.
new mining cadastre in October. ing country. We thought we were a lot like
Venezuela and had a lot of oil, but now we “We still have a lot of challenges, but eve-
Duque was sworn in last August and im- realise that we have more minerals than oil. ry year we are improving,” Gonzalez said.
mediately won support from foreign inves-
tors for announcing a commitment to im- “Colombia is a country that is just begin- “I’m happy to announce that finally we’re
proving the country’s mining sector. ning to understand the sector and just be- going to have the new mining cadastre sys-
ginning to develop the mining activities in tem by October this year. This is very im-
Mining is still a relatively new industry the country.” portant for us because it will let us improve
to Colombia despite being the world’s fifth all the processes for applying for a conces-
largest exporter of coal and one of the hot- Colombia’s gold output is expected to in- sion contract.
test exploration destinations for gold and crease by 26% next year when Continental
copper. Gold Inc’s Burtica mine is brought online. “We are trying to implement not only the
AngloGold Ashanti Ltd Gramalote project is best practices from around the world, but
Colombia ($US1.7 billion) was second set to join the country’s production pipeline also to make it more efficient and of course
only to Peru ($US2.65 billion) in terms of in 2022. more transparent for investors.”
foreign mining investment for Latin Ameri-
can jurisdictions last year. However, mining Increased gold production, coupled with – Michael Washbourne
accounts for just 2% of the country’s GDP. a resurgence in copper exploration, has
given Colombia hope of diversifying away
Only 3.17% of the country is subject to from a reliance on coal, which currently ac-
mining or exploration activity. counts for 90% of its exports.

“This is a very young sector for Colom- Gonzalez said regulators were looking to
bia,” National Mining Agency of Colombia streamline the sometimes troublesome ap-
vice-president of promotion and develop- provals process – many local communities
ment David Gonzalez said.

Page 44 JUNE 2019 AUSTRALIA’S PAYDIRT David Gonzalez

Perceptions
versus reality

At a time when the mining industry’s community image has been called into question, companies
have been urged to rethink how they communicate with those whose lives they directly impact.

Despite a long history of mining in “The great privilege of this industry is offering employment and keeping them
informed by what we do.”
country, sections of the Brazil population that it operates in really difficult environ-
Colombia is another country whose
have become divided over the intentions ments where the greatest human chal- population is divided over the intentions
of the mining industry. While those in
of industry following a second fatal tail- lenges exist in our world and it is well government offices are keen to promote
the sector as much as possible, many of
ings dam collapse inside the past three resourced. It has great capacity and ac- the regional communities are strongly
opposed to any detrimental impact to the
years. cess to great capability that it can apply local environment.

While such tragic events capture an to solving its own problems, but in the “We have to make an effort to highlight
the good things the mining sector does,”
extreme version of the consequences of same vein also solving those problems National Mining Agency of Colombia
vice-president of promotion and devel-
mining, the international headlines they for the communities it works alongside.” opment David Gonzalez said.

attract do not portray the industry in the Moffat added some communities were “Sometimes the communities are very
afraid about the use of their land and the
best of lights and many misconceptions “becoming a bit sick” of seeing compa- local authorities are also afraid about the
impact that can cause in their territories.
are subsequently bandied around. nies heavily promoting their contribu- At the National Mining Agency, we ten-
der documents to incorporate the mining
During a panel discussion on the dif- tions to the regions on mediums such as activities in the development plans so
they can be confident about where they
ference between perceptions and reality television, yet it vastly differs to what is are able or not able to do mining activi-
ties.”
in the mining industry, Reflexivity man- happening in their own backyard.
Rovira said shareholders of junior
aging director Kieren Moffat said com- Azure Minerals Ltd has been actively companies were more focused on where
their money was being spent over obliga-
panies needed to be more conscious of exploring in Mexico for more than a dec- tions to the local communities, however,
that did not preclude the likes of Azure
how they communicate their intentions in ade and managing director Tony Rovira from ignoring those close by.

a bid to reshape perceptions which may said the only way to successful engage “We’ve done a few JVs with larger
companies over the years and what
have become skewed. with communities was to employ local we’ve found is when they come in and do
their due diligence they want to see that,
“I feel like we always end up in the workers and provide nothing more than in effect, you’ve got that social licence to
operate with the local communities, oth-
same place which is ‘if we just told peo- realistic expectations for what a potential erwise they don’t want to come in at all,”
Rovira said.
ple how important we are then, they’ll mine could offer.
“If you want to do business with big
love us’,” Moffat said. “If people in the local communities companies then you need to be doing
the right thing all the way through. You
“I think we’ve got to get past that and can see that there’s a benefit for them in can’t just be accountable there and then;
it just doesn’t work like that.
try and focus back on what we do. Rep- terms of they’ve got some stable steady
“The same applies when you go from
utation is grounded in behaviour and work and you might pay above the go- being a junior explorer to being a mining
company and you need to raise finance.
what we do as a company and we do ing rate – but not too much more that it The financial companies, the banks, they
will have their own expectations as well.”
as an industry is important, but engag- breeds unrealistic expectations – they
Gonzalez added: “It’s not a trend, it’s
ing destructively in political conversation are more likely to be on board with what an obligation to be socially responsible…
so try to think local.”
doesn’t do the industry any favours. you’re doing,” Rovira said.
– Michael Washbourne
“It’s really think-

ing and acting

locally and look-

ing after the local

people. The last

thing we want to be

seen as is a bunch

of foreigners fly-

ing in there, doing

the job and flying

out again, because

there’s no link or

relationship with

the local people,

and you need that

relationship.

“We’re not a

big company that

can write a whole

Paydirt editor Dominic Piper (second from left) convened the bunch of cheques,

closing panel session which featured Azure managing director but we can make

Tony Rovira, Reflexivity’s Kieren Moffat and David Gonzalez a difference to the

from the National Mining Agency of Colombia local people just by

AUSTRALIA’S PAYDIRT JUNE 2019 Page 45

LADU REVIEW

Collaboration may be key
to Latin breakthrough

Latin America could prove a lucrative mar- are the right fit according to METS Ignited cult operating environment.”
ket for Australian METS companies but general manager industry engagement Pe- However, he admitted that without the

prospective entrants need to get their ap- ter Clarke. use of innovative leaps in product and tech-

proach right if they are to succeed. “You have to find a way to get that product niques, a junior of Emu’s size could not af-

Speaking as part of the Pathways to inno- into industry,” he said. “You need to find the ford to be drilling 4,000m above sea level as

vation: The role of METS in Latin American right person to approach and demonstrate it is in Chile.

mining panel session at Latin America Down how you can de-risk your product.” “Emu wouldn’t be here without technol-

Under, Stef Pienaar of Global io said his and Ronan Collins of drilling and sampling ogy,” he said.

other Australian METS companies had al- solutions company Cardbored agreed with Imdex has built its reputation on working

ready achieved success in Latin America. Lawie, saying his company had found pen- collaboratively with drillers to provide new

“South America has been very good to us; etration was difficult in Latin American given solutions to complex problems. Lawie said

they really value Australian METS compa- the limited resources it had at its disposal. a number of Imdex clients were now ask-

nies and our expertise. We’ve seen a lot of “We’re several stages behind a company ing the company to engage with their own

eagerness to adopt new technology,” Pien- like Imdex or Global io and bureaucracy is clients.

aar said. where we struggle with it,” Collins said. “The “Sometimes innovation is about putting a

Perth-based Global io has worked with big companies are slow-moving and bureau- few different things together. As Imdex prod-

industry heavyweights such as BHP Ltd, cratic which makes it difficult for a company uct ranges grows we need to be talking to

and Barrick Gold Corp throughout the resource companies rather than

the world. Pienaar said the lessons just the drillers.”

he had learned from the company’s Global io is experiencing a similar

Latin American experience were trend, according to Pienaar.

often associated with national cul- “We’re getting closer,” he said.

tures. “There are a few examples of mining

“The way their cultures are set up contractors coming to us and saying

– which is very hierarchical – deci- ‘how do we approach partners?’”

sions have to be made at the top METS Ignited has been set the

and that means you can lose mo- task of facilitating Australian METS

mentum if the leadership is chang- industry’s global brand and helping

ing,” he said. “The key learning for individual companies access inter-

us is that although you can open national markets. Clarke said the

the door and get it implemented, the group’s focus over the next two years

actual sustaining of it is really hard. (From right) Gavin Rutherford (Emu NL) speaks on the METS would include helping SMEs exploit
It’s not just a drop in of a product or panel session alongside Stef Pienaar (Global io), Ronan Collins those markets.
technology and then forget about (Cardbored), Dave Lawie (Imdex), Peter Clarke (METS Ignited)
it. It’s really about how you set up a “We have a specific development
long-term partnership. You have to and convenor Mark Andrews (Paydirt) strategic approach by collaboration
with groups in Latin America, starting

be there to protect your investment in Chile and moving into Peru, then

and ensure they [the client] capture all the like ours to partner with them. We are built as Argentina, Brazil, Ecuador, etc,” Clarke said.

value from your technology.” a company a bit like a junior explorer, devel- Collaboration is vital to Australian METS

Imdex Ltd is one of Australia’s most promi- oping products quickly. When it goes outside companies give their size in comparison to

nent international METS companies and has of that into the bureaucracy side of things – competitors from other regions where com-

enjoyed strong success in the Latin Ameri- documentation for getting feet on the ground panies such as Sandvik, Epiroc and Cater-

can region. Chief technologist Dave Lawie in Chile for instance – that’s where it hurts pillar dominate technology and innovation in

said Imdex’s size allowed it to overcome a us. That’s where going in with a smaller com- mining.

number of cultural issues smaller companies pany is much more suitable for us.” “Collaboration and M&A are the only way,”

may encounter. Finding the right size of mining company Clarke said. “Northern Europe and North

“Our experience is that Latin America is can be difficult. While majors are slow-mov- America dominate the space and the indus-

one of the better regions to take new technol- ing, junior companies are often already at try majors are buying up all the good ideas.”

ogy into,” Lawie said. “But, the fact we have the end of their risk profile. Clarke lamented the lack of an Australian

Chileans working in Chile and Peruvians Emu NL director Gavin Rutherford said it METS giant – save the niche dominance of

working in Peru and Brazilians working in could be a difficult leap for a junior to make. Orica Ltd – and had experienced the lack of

Brazil makes all the difference in trying to get “Could we collaborate with METS compa- a local company with global scale.

these things adopted and tested and used in nies? It depends on the guarantees,” Ruther- “I sold a METS company 4-5 years ago,”

these countries.” ford said. he said. “We had tried hard to find an Aus-

Ensuring the right cultural fit extends to “The first thing we need is assurance. We tralia company to take us over but ended up

corporate culture as well. With majors and are already in a business of trying things so being acquired by Outotec.”

juniors often proving reluctant to innovations, we can’t get into the double-jeopardy situa- – Dominic Piper
METS companies must find partners who tion of using unproven equipment in a diffi-

Page 46 JUNE 2019 AUSTRALIA’S PAYDIRT

Reforms spark Argentina
and Brazil

Reforms implemented under Argentine
President Mauricio Macri’s reign have
reinvigorated the country’s economy.

However, as Argentina heads to the poll- “Argentina, 30 years
ing booths later this year, just how effective
Macri’s ideas have been will be determined. from now, will be a ma-

According to Australian Ambassador to jor player in the global
Argentina HE Brett Hackett, Macri has ta-
bled a positive reform agenda in country mining sector,” Gobbi
since winning presidency in 2015 and while
the sentiment has been right, timing has per- said.
haps curtailed ideal progress in Argentina.
“Australian compa-
Nevertheless, Hackett has encouraged
Australia to swing in behind the efforts of nies have been going
what is now a more outward-looking Argen-
tina. to Argentina, they have

“The Macri Administration is a reformed been investing in Ar-
administration and has been very clear
about its goals. It’s timing of a number of gentina and exploring
reforms has been unlucky with a number of
international headwinds which has slowed Argentina; the funda-
progress now,” Hackett said.
mentals for why peo-
At the time of Latin America Down Under,
Hackett had been Australia’s representa- ple are going haven’t
tive in Argentina for four months and his first
impressions were that some sections of the changed – the geolo-
country believed reforms had been rolled out
too slowly and Macri himself had been too gy, regulations and law
optimistic when he took office.
and regulatory mining
“I think it is very important that we rec-
ognise that the agenda the President has system and the capac-
adopted is a positive agenda. It is a reform-
orientated agenda, but it is an agenda that is ity to build. There is HE Brett Hackett, Australian Ambassador to Argentina with
not going to be completed in a single term of
office and not in two terms of office,” Hackett more orientation in so- accreditation to Paraguay and Uruguay discussed politics
said.
ciety and more people in Latin America with Argentine Ambassador to Australia
“What Argentina is embarking on now is
a generational change. Changes happening working in the mining HE Hugo Gobbi, Paydirt’s Dominic Piper, Australian
now will only have effect in a decade or two
decades. The generation coming through sector, more people Ambassador to Brazil HE Tim Kane, Brazilian Ambassador
the school system now are going to face a
more open liberal future whether it is in the are engaging in the to Australia Sergio Eduardo Moreira Lima and Chilean
mining sector, financial sector or science
and technology.” industry and what was Ambassador to Australia HE Patricio Fernando Powell Osorio

If Macri wins a second term in office, the something very small
outcome could be fruitful for the mining sec-
tor. in Argentina has grown

Argentina’s mining sector is developing immensely and there is more capacity.” people and a country that is 10% bigger than
fast, which will bode well for the Australian
companies already present in country and Australian companies have been particu- Australia geographically, you tend not to be
any potential entrant in the future.
larly attracted to exploring Argentina’s lithium so focused on looking outward because you
Argentine Ambassador to Australia HE
Hugo Gobbi said mining had been accepted salars and as demand for the battery mineral don’t have to, but that is changing. It is a fas-
in the country and the mire of the sector in
the last 40 years will be vastly different in the intensifies in the near-term, there is good op- cinating time to be in Brazil. I think reforms
days ahead.
portunity for increased participation in the are happening and we have to take advan-

sector. tage of that and get in on the ground floor,

The positive impact on mining in Argentina which is now.”

under Macri is the task new Brazilian Presi- The pro-business stance and commit-

dent Jair Bolsonaro has in front of him. ment to stamping out corruption in political

A series of recent tragic tailings dam circles initiated by Bolsanaro has resulted in

wall busts in the country has damaged the positive GDP growth in Brazil and a flourish-

country’s mining reputation and with Bolsan- ing stock market, Brazilian Ambassador to

aro winning 55% of the vote, there is a fair Australia Sergio Eduardo Moreira Lima said.

amount of trust instilled in him. “Generally, the stock market performance

Bolsanaro is also leading a reformist agen- was also a record in terms of recovered val-

da in Brazil, with pension and tax reform first ue of our assets,” Moreira Lima said.

priorities. Australian Ambassador to Brazil “There is good opportunity to invest in Bra-

HE Tim Kane is confident the former will be zil right now because assets are still under-

achieved this year. valued as a consequence of problems in the

“Following pension reform there is talk past. Bolsanaro is successfully bringing in

about taxation reform, continuing streamlin- reform and I hope that we will improve and

ing bureaucracy, opening up the economy the valuation of assets will improve. The time

and some say for the very first time Brazil is is now for people who can make investments

looking outwards rather than inward,” Kane in assets in conditions in Brazil that are very

said. favourable.”

“When you have market of 210 million – Mark Andrews

AUSTRALIA’S PAYDIRT JUNE 2019 Page 47

LADU REVIEW

TSX rides high

Miners and explorers lamenting the the bourse’s reputation and an indication Dean McPherson
capital drain away from the sector into that capital could be accessed by miners.
marijuana and blockchain are overplaying junior space I am talking market caps be-
the situation, according to TSX and TSX- “The competition for capital between low $C50 million,” McPherson said.
V head of business development Dean marijuana does not exist on the stock ex-
McPherson. change and from my experience in finance “Deals are being scrutinised a lot more
and mining it is not a factor for companies and gone are the days when you had just
McPherson was presenting at Latin with a market cap above $C100 million; it one meeting with a potential investor, you
America Down Under for the second con- is for a junior mining company, so you have are now having 5-10 meetings and having
secutive year to encourage more compa- to get in there and demonstrate what you to explain and come back with details. In-
nies to look at the Toronto exchanges as a have,” McPherson said. vestors are taking a lot harder look at the
gateway to accessing wealth North Ameri- properties now.”
can investors. “I came down here to encourage com-
panies to broaden their access to capital – Mark Andrews
While investors have been distracted and that it is attractive to list in Canada as
by cannabis and blockchain stories in the a gateway to North America. The idea that
past, the maturation of both sectors has you are facing competition for capital is
seen the environment transition from the oversold.”
mad rush of picking the next 10 bagger to
one of consolidation. It appears that companies riding a plus-
$C100 million market cap have the atten-
Against the backdrop of the evolving tion of the North American investment
marijuana and technological sectors, min- community, however, that doesn’t discount
ing deals are being done, highlighted by smaller caps from tapping the can either.
big ticket gold M&A whereby the world’s
biggest gold producers – Barrick Gold “I don’t know that we will see that in the
Corp and Newmont Mining Corp – are junior mining sector that we had before
hosted on the TSX. where you could put up any property and
any management team and you will have
McPherson said the fact that companies $C5-8 million on the books at the end of
such as Barrick and Newmont wanted to day. I don’t think those days are coming
retain their TSX listings spoke volumes for back in the junior space and when I say

ASX whets Latin appetite

The ASX is primed to play host to more “If we can get our heads around Africa Ltd ($240 million) and Nickel Mines Ltd ($200
resources projects in Latin America, ac- and the challenges that [continent] presents million).
cording to the exchange’s business develop- in terms of geopolitical issues, travel, staff,
ment manager of listings, Josh Collard. etc…I think it’s something we should seri- Europe-focused Adriatic Metals plc was
ously look at,” Collard said. the best-performing new stock, up 188% on
ASX-listed resources companies with its debut listing price.
flagship projects in Latin America have “It takes 50 hours to get to West Africa
traditionally struggled to gain traction, with from Australia, but it also takes 50 hours to “Australian investors have quite a high
many pursuing a secondary listing on a rival get to mine sites in South America. risk appetite and high risk tolerance for early
exchange in a bid to generate financial sup- stage investors, they do have a higher risk-
port. “We hear about the amount of operations reward profile than a lot of investors around
there, the prospectivity of the minerals in the the world,” Collard said.
Currently there are almost 50 ASX-listed ground…I feel, for us as an exchange and
miners and explorers operating in Latin for us as an industry, this is something that “Interestingly enough, those investors
America, less than half the total number of is very under-served and under-developed, haven’t really swayed away too much from
companies focused on projects on the Afri- collectively, and it would be great to increase the sector, there’s been limited reallocation
can continent. the profile there.” of that early stage, higher risk capital to alter-
native assets which you have seen in other
Josh Collard The ASX has outperformed most other markets.
exchanges in the past five years, particularly
in the metals and mining sector and the gold “The Australian community has helped
industry alone. raise, for exploration and production, over
$100 billion in the past 10 years for metals
Last year the best-performing sector on and mining. The ASX is really consolidat-
the ASX was resources, with $4.1 billion of ing to be a true global exchange and that’s
the total $8.5 billion raised via new floats at- something we’re very proud of.”
tributed to either mining or energy-related
entities. According to the ASX, there are 14 listed
companies in Chile, nine in Argentina, seven
The top four IPOs of 2018 were Viva En- in Brazil and five in Peru.
ergy Australia ($2.7 billion), Coronado Global
Resources Inc ($775 million), Jupiter Mines – Michael Washbourne

Page 48 JUNE 2019 AUSTRALIA’S PAYDIRT

LATIN

AMERICA

15-16 May 2019

Perth,Western Australia

The premier forum for Australian-Latin American relations

Thank you to all sponsors,
speakers, exhibitors and delegates

www.latinamericadownunder.com

AUSTRALIA’S PAYDIRT JUNE 2019 Page 49

COPPER SPOTLIGHT

Encounter closes in

Copper has been one of the better performing base metals in recent times, however, May was
a bad month for the red metal. Continuing tensions between US and China have impacted
sentiment towards copper, but that has done little to dampen the spirits of the exploration sector,
particularly in Western Australia’s Paterson province, where there are many companies eager to

replicate what Rio Tinto Ltd has discovered at Winu.

Encounter has teamed with Independence
at its Yeneena copper project in the
Paterson province

Encounter Resources Ltd has kicked off the Lookout Rocks prospect and the Aria dued compared to what happened in the
what could be the most intriguing field IOCG target. Bryah Basin and Fraser Range following
season it has undertaken in more than a the respective discoveries of DeGrussa
decade exploring for copper in Western The 2019 field season at Yeneena began and Nova, he expects more mid-tiers and
Australia’s Paterson province. in early April with a magnetotelluric (MT) majors to strike partnerships with juniors in
crew running a 100km line survey to identify the province.
After rumours emerged of a potential conductive zones within the intrusive pipe
major copper discovery by Rio Tinto Ltd structure at Aria. “It’s clearly one of the hottest places in
late last year, the market spotlight quickly the world for copper exploration right now,”
expanded to include what established Pat- Copper mineralisation was intersected in Robinson said.
erson explorers such as Encounter, Sipa the only two diamond holes drilled into Aria
Resources Ltd and Antipa Resources Ltd to date. “The appetite for large companies to refill
were up to. their project portfolio pipeline in base and
“We think that this MT technology might precious metals, but in particular copper, is
Encounter was wrapping up its 2018 pro- potentially light something up within that as hot as it has been in the last decade. I
gramme when images of an extensive ex- large intrusion, which may be related to think the retail share market appetite is still
ploration camp at Winu surfaced. With sev- sulphide and if it is, obviously that will be a pretty flat, but the appetite for corporate
eral outsiders keen to get in on the action, very exciting drill target for us to follow up,” exploration opportunities in this sector has
the long-time resident of the Paterson soon Robinson said. never been higher in recent times.
announced a partnership with Independ-
ence Group NL for the 2019 field season. “It’s consistent with exactly what we’re “I think the key here is the targets you’ve
trying to do, which is if we’re going to find got to be going after have got to have scale,
On top of subscribing for a $1.8 million big orebodies, they’re going to be under and if they’ve got scale then there are nu-
placement to become a 9% shareholder in cover, so you’re going to have to go about merous partners that you can get into bed
Encounter, Independence is collaborating it in different ways, with new ideas and new with to advance these exploration ideas.
with the junior on an exploration strategy for technologies, as well as applying existing
the Yeneena copper-cobalt project. technologies in areas where it hasn’t been “The big guys aren’t short of money,
trialled before to give you the best chance they’re short of project opportunities and
“Together we’ll spend about $1.6 million of success.” it has become quite a competitive market-
in the ground this field season and they’ll place to try to get hold of the best explo-
make a decision as to whether they want to Encounter is also looking to trial the ration opportunities. I do think we’re at the
go into a project earn-in between now and CSIRO-developed Ultrafine+ geochemical start of a really prosperous period for explo-
March next year, and if they do then they’ll sampling technique which aims to sepa- ration.”
be spending up to $15 million to earn a 70% rate and analyse the -2 micron fraction of
interest,” Encounter managing director Will a surface soil sample. It will be trialled at Robinson said the Winu discovery had
Robinson told Paydirt. BM1 and BM7 in areas of thin cover where not changed his company’s meticulous
traditional soil geochemistry is largely inef- approach to science-based exploration. If
“We think it’s a good way to advance fective. anything, it has only enhanced the belief of
projects like this and we like working with finding another big deposit under the exten-
highly capable exploration teams. It’s been The hype surrounding Rio Tinto’s focus sive cover.
a wonderful partnership so far with Inde- on Winu has generated more activity in the
pendence, working together with our skills Paterson than Robinson and his crew have Alongside its copper ambitions in the
and their skills, we think we can get a better seen in years, particularly in the northern Paterson, Encounter continues to build an
result.” part of a province which is also home to interesting portfolio of early-stage gold pro-
Newcrest Mining Ltd’s Telfer gold mine and jects in the Tanami/West Arunta and Laver-
Independence’s earn-in option covers Metals X Ltd’s Nifty copper operations. ton districts.
1,250sq km of tenure and includes the
14km long BM1-BM7 copper-cobalt trend, Robinson said while the “nearology” Newcrest is sole-funding the 2019 explo-
rush in the Paterson was somewhat sub- ration programme in Tanami/West Arunta

Page 50 JUNE 2019 AUSTRALIA’S PAYDIRT