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SEPTEMBER 2018 Volume 1. Issue 264 $11.95

Northern Minerals: ISSN 1445-3436
In rare range 08

• Diggers & Dealers Review 9 771445 343007
• SAREIC wrap up • Base Metals spotlight

• Mining Cumbre focus

Page 1 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

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contents

PAYDIRT (ISSN 1445-3436) 5 NEWS 5
Published by A logical joining of forces will see Ausdrill
Paydirt Media Pty Ltd. and Barminco create the second largest
A.C.N. 063 985 133 mining services company in Australia.
Last month, the two heavyweight
Head Office: contractors announced a deal to
Suite 9, 1297 Hay St, West Perth merge under the Ausdrill banner, with
Western Australia 6005 shareholders to decide the fate of
P.O. Box 1589, West Perth the companies in October. Post the
Western Australia 6872 announcement, Ausdrill reported an
Phone: (+61 8) 9321 0355 institutional entitlement offer of $175
Facsimile: (+61 8) 9321 0426 million had been completed signalling
[email protected] strong support for the Barminco
www.paydirt.com.au acquisition. Mark Andrews reports

20 COVER
Western Australia’s place in the
Editorial: downstream processing sector is gathering
Editor: Dominic Piper momentum and Northern Minerals’
Deputy editor: Mark Andrews opening of the Browns Range rare earths
Journalist: Michael Washbourne pilot plant in the State’s north recently
Photography: Picture This marked another major milestone for the
Art director: Nick Brown dynamic industry. Mark Andrews was on
Contributors: hand for the momentous occasion
Keith Goode (Sydney), Brendan Ryan
(Johannesburg), Ross Louthean 26 DIGGERS & DEALERS
Diggers & Dealers was back to its best
Advertising: from an attendance perspective, however,
Advertising manager: Richa Fuller with so much volatility in global markets
Subscriptions: Mitchelle Matambo and commodities, many dealers were kept
Phone: (+61 8) 9321 0355 at bay. Nevertheless, there was a feeling
Facsimile: (+61 8) 9321 0426 among delegates that the mining sector
was set to flourish. Paydirt was once again
Pre-press and printing: out in full force tracking all the diggers and
Vanguard Press 26 John St, the dealers
Northbridge WA 6003
Member of:

Paydirt Media 20
Executive chairman: Bill Repard
Finance manager: Giovanny Jefferson 54 SAREIC
Accounts/administration: This year’s SAREIC provided the new
Heather Melling South Australian Government a platform
to set its agenda for the State’s mining
Conferences: Melita Fogarty, and energy sector. While there were new
Namukale Nakazwe-Msiska, faces representing SA’s governing Liberal
Party, there were also fresh faces behind
Christine Oelschlaeger the podium delivering insight on the next
generation of potential mines emerging in
SEPTEMBER 2018 VOLUME 1. ISSUE 264 $11.95 the State. Paydirt covered the event from
all angles
Northern Minerals:ISSN 1445-3436
In rare range08

• Diggers & Dealers Review9 771445 343007
• SAREIC wrap up • Base Metals spotlight
54
• Mining Cumbre focus

PAGE 1 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Cover image: Northern Minerals
managing director George Bauk at the
Browns Range rare earths pilot plant
in WA’s north

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.

Political ineptitude a real
energy drain

With political leaders in Australia, the seen the Right become the major critic of globalisation.
US and UK continuing to spend Trump’s intentions to pull out of the Paris Climate Accord and

most of their time on internal divisions move to reduce efficiency restrictions on new cars are another part

and extreme partisanship, you begin of his nationalistic/protectionist approach. Thanks to the recent oil

to wonder what affect their actions will and gas discoveries in the US, Trump sees economic opportunity

have on the resources world. in withdrawing from international consensus on climate change.

I am not talking here about specific The problem, however, is the lack of any discernible policy at-

resource-related policy – it is one of tached to his decisions. Opportunism and dogma are driving deci-

the few areas where Australian Federal politicians show a modi- sion-making in government, leaving business and industry devoid

cum of bipartisanship – but the effect this era of politics will have of a coherent framework to base their own investment decisions

on macroeconomics and thus metals demand, perhaps for dec- on.

ades to come. The recent energy crisis in Australia has been brought about by

The Australian mining sector stands to be a major loser if the similar dogma and partisanship. The recent change in Australian

current trend for nationalism and protectionism – as defined by leadership was driven by a lack of energy policy but there is little

Brexit and US President Donald Trump’s nationalistic policies – evidence that the new leaders will provide the kind of stable policy

prevails. environment business is crying out for.

“The Australian mining sector has been one of the biggest ben- Just as in the UK where the business lobby is growing increas-

eficiaries of globalisation. The 2000s mining boom was predicated ingly exacerbated by the Tories’ incapability of providing certainty

on international trade, with open markets around Brexit, Australian industry has

allowing the country’s miners to sell iron There is no schism, begun desperately urging the Govern-
ore and coal to international buyers in un- ment to find a workable, long-term solu-

heralded volumes. China’s entry onto the no chance of civil war tion.
global free-market stage fuelled its rapid in the Australian resources Much of the mainstream media is de-
economic growth, propelling demand
fining the split within the Coalition Gov-

further. As its steel industry flourished, sector; it has already learned ernment as being over coal; those politi-
and it began investing in other parts of that energy sources are a cians offering unwavering support to the
the developing world, demand spiked,
coal sector and those who want to see it

driving sales and prices still higher. “broad church”. In contrast, phased out completely.
At the same time, the ease of interna- the major parties are knifing The problem is that they are letting

tional capital flow has allowed both Aus- their own in an effort to ideology get in the way of policy. Re-
tralian mining projects to attract greater gardless of the rise of renewables and
foreign investment and Australian miners energy storage, coal will continue to
establish their credentials, all play a vital role in the global energy mix
to become world leaders, acquiring and the while failing to produce and attempting to base future energy
developing projects across the planet. policy around “protecting” the Australian

The unfolding trade war between the

US and China is a major threat to glo- clear policy direction. coal industry is plainly ridiculous.
balisation and open markets. Trump’s Australia’s mining sector has quickly

tariffs are already causing widespread disruption to metals prices, come to grips with the opportunity to balance both fossil fuels and

particularly copper and iron ore, as markets try to get their heads renewables. Coal prices have shown remarkable resilience in re-

around the exact ramifications. cent years but at the same time there is a growing acceptance

The LME copper price dropped to 10-month lows at the begin- among Australia’s mining community that renewable energy and

ning of July as the trade war began to escalate with sellers con- battery storage are in the ascendency and will play an increasingly

cerned that it would hurt demand for the bellwether metal. influential role in future energy supply both locally and internation-

Interestingly, physical copper premiums in China jumped 13% ally.

over the first three weeks of August as, according to Reuters, buy- There is no schism, no chance of civil war in the Australian re-

ers rushed to take up US scrap supply before China’s own tariffs sources sector; it has already learned that energy sources are a

kicked in. “broad church”. In contrast, the major parties are knifing their own

Trump’s approach has won grassroots support in the US, where in an effort to establish their credentials, all the while failing to pro-

communities in traditional industrial heartlands feel increasingly duce clear policy direction.

under threat from globalisation. A continuation of this trend will only lead to one thing; a lack of

Juan Manuel Barroso, spoke on the topic during his keynote investment in new projects whether in coal, gas, lithium or cobalt.

speaker at Diggers & Dealers, pointing out that the US has tra-

ditionally been seen as the primary architect and beneficiary of

globalisation but is now questioning its own role in the global econ-

omy. [email protected]

Similarly, anti-globalisation arguments have traditionally come @DominicPiper
from the Left but Trump’s trade policies and populist rhetoric have

Page 4 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

news

Ausdrill raises the
services bar

Barminco has welcomed the proposed acquisition by Ausdrill

Through sheer weight of numbers Dig- 22.1% of Ausdrill upon completion of the derwritten 1 –for-2.13 pro-rata acceler-
gers & Dealers 2018 was the most transaction, scheduled for October 31. ated non-renounceable entitlement offer
vibrant forum in years with positivity re- to raise $250 million as a means of re-
verberating under the big tent, however, Barminco non-executive chairman ducing pro-forma gearing and to facilitate
the essence of the affair – to sign, seal Keith Gordon will take a seat on the repayment of its senior unsecured notes
and deliver a deal – was subdued. board of what will be a more rounded due in November 2019.
Ausdrill, which expected to deliver annu-
Nevertheless, there was one transac- al revenue in the range of $1.8 billion as “Given that we are raising funds for a
tion simmering away but it didn’t involve a it services a more diverse customer base rights issue, the success of the equity
decisive move from any of the cashed-up across a variety of geographies. raise will be our truest indication of how
Australian gold producers as had been shareholders will vote. If they are sup-
anticipated. “It has been 14 years in the making, it porting the equity raise, we expect they
has been talked about many times and will support the vote,” Ausdrill acting chief
Instead, it was a couple of well-oiled I think from my own knowledge the first executive Theresa Mlikota told Paydirt.
service providers ploughing away behind time we looked at it was about 2004. I
the scenes engineering a contract to was then lawyer for both companies, in While Ausdrill shareholders will have
create Australia’s second largest mining fact. It [Barminco] went to private equity their say on the transaction on October
services company. in 2007, so there was no discussions for 25, the immediate reaction in the market
some time, but discussions have been was positive.
Ausdrill Ltd and Barminco Holdings on-and-off for the last 3-4 years before
Pty Ltd are intimately known to each oth- getting to this point,” Ausdrill executive “Have a look at EMECO’s share price
er – they are JV partners in the African chairman Ian Cochrane told Paydirt. response after our announcement, they
Underground Mining Services machine got a very good run, so that equipment
– and the bond is set to strengthen with “It was a question of when our value rental market is going gangbusters. To
Ausdrill launching an on-market bid to expectations became aligned, that was be quite frank, the gear is in demand, so
acquire Barminco. the reason we haven’t been able to do it if you have got any you are in a sweet
in the past. You’d have to ask them what spot at the moment,” Mlikota said.
The two parties have entered into a drove them, but from our perspective we
binding agreement with the proposal reached a point where the value was “Also, the maintenance services that
set to see Ausdrill acquire all equity and aligned and regarded by us as a very at- go with the gear which is part of our busi-
equity-like instruments in Barminco in tractive proposition.” ness; we are at full capacity, it is in very
exchange for 150.7 million fully paid or- hot demand at the minute.”
dinary ex-dividend Ausdrill shares and Ausdrill’s M&A move came on the back
$25.4 million cash. of the company reporting a 95.7% in- It is a period of significant change for
crease in net profit (after tax) to $61.1 mil- 31 year old Ausdrill, with recently hon-
The deal is said to be the equivalent lion for the full year ended June 30 2018. oured GJ Stokes Memorial Award winner
to an equity acquisition price of $271.5 and Ausdrill founder Ron Sayers retiring
million and an EPV of $697 million, with To further strengthen its balance and Mark Norwell starting as the chief
Barminco shareholders expected to own sheet, Ausdrill will undertake a fully un- executive on September 17.

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 5

news

Andrew Broad ing, but exploration is probably the only They have been able to turn the business
space where there is still a fair amount of around from some lows a few years ago
Norwell, a former executive at CIMIC, capacity in the market.” and made a real difference.”
will have the task of taking the ASX200
services company into a new era of During the downturn, Ausdrill stumped With a strong balance sheet head-
growth, underpinned by strong founda- up for a select group of ASX explorers lined by cash reserves of $137.3 million
tions in Africa. by taking equity positions for drilling ser- at June 30, plus access to capital and
vices and has pumped some $15 million committed lines of funding, Ausdrill is
“In Africa, we are adding projects. We into the gold exploration sector domesti- poised for growth and is well positioned
added three projects and a new project cally and abroad. to tackle further opportunities in the
in the underground. We are going to be Americas given Norwell’s experience in
adding at least another two next year, so Demand for such collaboration is much the region.
again we are seeing very buoyant activ- lower now and Ausdrill is choosing to fo-
ity there. The order book in that African cus its investment energy on other other However, Cochrane said the integra-
space is very strong and we are still get- areas of the industry. tion of Ausdrill and Barminco would be
ting other work outside of the work we first priority for Norwell.
have won,” Mlikota said. Technology will be a key focus with
Ausdrill preparing its workforce for the “Assuming the deal goes ahead and
“Coming back to Australia, in explora- mines of tomorrow, branching into in- the shareholders approve it, we will
tion we are seeing a lot of demand com- novations such as the Chrysos Photo- have to bed it down and ensure the in-
ing. It is still being very competitively nAssay material analysis process and tegration takes place smoothly. In the
priced because the services are increas- investing heavily in leading international medium to longer term, the growth strat-
seismic services company HiSeis. egy into North America becomes a valid
one and is very much assisted by us
“A more recent investment for us is our and the acquisition of 100% of AUMS,”
almost 20% position in HiSeis. HiSeis Cochrane said.
will be an exploration tool part of our kit
going forward and we are just starting to – Mark Andrews
get some good traction with the mining
industry in how this is used. It is basically Ausdrill founder Ron Sayers was
taking the seismic technology that was acknowledged with the prestigious
developed in the oil and gas sector and
adapting it to a hard rock environment,” GJ Stokes Memorial Award at
Ausdrill chief operating officer Andrew Diggers & Dealers 2018
Broad said at Diggers & Dealers.

“We have a very
strong growth fo-
cus. There is a
very stable leader-
ship team in place;
a lot of us have
been around for a
long time. There’s
a good mix of new
people that have
come into the busi-
ness in the last few
years as well. We
have a great team.

Page 6 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

bush telegraph

Deep problems for SA
gold sector

Just when you thought the outlook for what’s left of Nick Holland
the South African gold mining industry could not get
any worse it did, with Gold Fields Ltd’s management Schmidt told investors at a presentation in
August: “the next six months are critical.
admitting in so many words it had been unable to We have to work through the restructuring
fix its troubled South Deep mine. – if that does happen.”

Let’s put that in perspective. It is common payback. Asked at the same presentation what it
knowledge the South African gold mining Just to rub that message in Harmony would take to make Gold Fields throw in the
industry is on its way out because of the in- towel at South Deep, chief executive Nick
creasing depth of the remaining operations Gold Mining Co. Ltd – which has been buy- Holland commented: “Let’s assume we get
which pushes up operating costs dramati- ing up “unloved and unwanted” gold mines through this restructuring – and I think this
cally. from the rest of the industry since the late restructuring is not going to be easy – and
1990s – recently revalued a number of fast forward to February next year.
The two exceptions to that assessment them.
were believed, until now, to be South Deep “We need to know that we have a cred-
and the Mponeng mine which is owned by In August, Harmony announced it was ible plan and that we are starting to see that
AngloGold Ashanti Ltd. taking a R5.3 billion impairment charge we are meeting what we say we are going to
against various operations including Tshe- do on a week-by-week and month-by-month
While academic geologists and indus- pong; Target 1; Joel; Kusasalethu; Unisel; basis.
try optimists like to talk about the fact that Masimong; Doornkop and Target North.
the remaining gold resource in the Wit- Reasons given were forecast cost inflation “The thing that would cause Paul and I
watersrand Basin is still the largest in the and the current “subdued” gold price. to lose more confidence is if we continue to
world, the harsh reality is that much of this miss targets. Whatever [targets] we set out
gold will never be mined because it is just Bottom-line is that Harmony does not for ourselves post all of this we have to hit.”
too deep to get at. have a future in South Africa looking 10 or
so years ahead which is why it is pushing so Arguably the most down-to-earth assess-
Most of it is at depths well below 4km. hard for the development of the Wafi-Golpu ment of South Deep’s situation has come
Leaving aside the crucial issues of safety copper-gold project in Papua New Guinea from Nedbank CIB analysts Leon Esterhui-
and the new mining technology required to in which it is a 50/50 JV partner with New- zen and Arnold van Graan who reckon this
operate at those depths, the costs of sink- crest Mining Ltd. latest restructuring reflects a company that
ing a mine to get at that gold is so prohibitive has given up on the asset but does not know
no mining company is going to attempt it. So, of the two gold mines believed to what to do with it.
have a long-term future in South Africa,
You are talking about a period of up to 10 South Deep’s prospects now look decid- Shutting down South Deep or selling it
years without any payback while billions of edly dodgy. will result in a R20 billion impairment at Gold
dollars are sunk into a hole in the ground. Fields along with the loss of the bulk of the
Gold Fields has battled for the past 10 group’s stated gold reserves and resources.
That could, and was, done in the “glory years to get South Deep right after spend-
days” of South African deep-level mining – ing a total of some R32 billion on it. During But Gold Fields operates a highly suc-
from about the 1930s to the 1970s – when this period, South Deep has missed pro- cessful string of mines in Australia, Gha-
mining houses like Anglo American Corpo- duction target after production target while na and Peru which generate all its profits
ration and Gold Fields of South Africa as well operations have been “rebased” twice with but are not being properly reflected in the
as mining family dynasties like the Oppenhe- forecast output chopped back each time. group’s share price because of the market’s
imers were forces to be reckoned with. negative fixation with South Deep.
The mine is now about to undergo yet
Those houses and their backers had the another major restructuring involving the re- Some analysts reckon Gold Fields would
deep pockets required to fund the develop- trenchment of up to a third of the workforce be better off if management “bit the bullet”
ment of a deep-level mine by themselves and will be “rebased” yet again but this time and got rid of the South Deep “albatross”
and were prepared to take the risks given management is not giving out any specific to become a major international gold group
their belief in the long-term rewards. production targets for the remainder of with no South African exposure.
2018 or the 2019 financial year.
This is no longer the case. No sane in- See more on Gold Fields’ South Deep
vestor these days will tie up the amount of They are not sure what’s going to hap- decision on page 95.
capital needed for the amount of time re- pen. In fact, it appears they are not sure if
quired to build a deep-level South African they can actually get the restructuring in
gold mine when there are much less risky place.
alternatives available offering a far quicker
Gold Fields chief financial officer Paul

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 7

goode news

Northern Star leads
automation charge

At the Adobe Sym- try was not doing
posium Confer- enough to promote

ence in Sydney on itself, leading to a fall

August 15, Adobe in graduate mining

included its latest and geology regis-

product, the Adobe trations, but North-

Sensei which uses ern Star is clearly

a blue dot and artifi- doing its part in grad-

cial intelligence (AI) uate and apprentice

to result in mind- training.

blowing advances Visible gold present in the intersection of 765 g/t into Zodiac around 914m down-hole At the strategy

in terms of graphics from an underground drill drive day, Northern Star

and marketing capa- showed the first au-

bilities. Although AI, tomated liner han-

robots, innovation, and automation are vation/contracting group called NSMS. dler for replacing the liners inside mills.

all advancing at an accelerated pace, it The creation of NSMS has allowed it Its use at Kanowna Belle has resulted

was stated that only 9% of top ASX-listed to streamline its five mine acquisitions, in a 30% improvement in reline time, a

companies were embracing automation. enabling the movement of equipment be- 12-month payback and significantly im-

Quite clearly Northern Star Resources tween sites. In 2017, it identified the ben- proved safety systems. At Jundee, it was

Ltd has to be among the leaders, as it efits that could be achieved from replac- also shown that Northern Star was re-

showed 10 applications being used in ing the underground mining contractor placing its steel mill liners with synthetic

automation and innovation during its at EKJV (Kundana). Within 12 months, ones which last longer.

strategy day and subsequent site visit to contracting costs reduced by $5 million Before the trip underground a live re-

Jundee ahead of Diggers & Dealers in plus $18 million in proposed variations, a mote operation of a bogger from an of-

August. reduction of $74/oz at EKJV plus associ- fice on surface was demonstrated. Yes,

Northern Star’s Jundee site visit was ated culture, safety, quality and produc- I know that has been around for ages

the most impressive organised large- tivity improvements. NSMS has also en- however now you can use a mouse to

size group mine visit I’ve ever been abled rapid transition of the recent South draw in an imaginary wall so the bog-

on, and it was underground too. Small Kalgoorlie acquisition into Northern Star. ger in the example turned left because

groups were able to see and experience NSMS now has 520 employees and it thought there was a wall there instead

the operation in detail and ask individual is behind the training and upskilling of of continuing down the drive – as in no

questions even of the operators instead apprentices, graduate training and em- bund wall requirement – and the colours

of the usual rugby scrum. ployment. Northern Star is one company on either side of the front and back cam-

Possibly un-noticed by the visitors was filling the training void left by the old Aus- era screens in the “MineGem” software

the dramatic simplification in gearing tralian mining houses and is also increas- package showed if the sidewalls were

up: there were no belts, instead the self- ingly employing women. In the future, too close to the bogger, etc.

rescuer was in a shoulder bag and the people could say “I worked at Northern The operator remote bogs in the stope

cap-lamps were flat square-shaped LED Star” and it means something, much as and the bogger travels autonomously be-

good quality two-beam. people now say the same of WMC, CRA, tween the stope and stockpile in second

In the strategy presentation, Northern etc. gear, applying multiple sensors to reduce

Star showed that since 2011 it had cre- At a recent AMEC lunch in Sydney, it accidental vehicle damage.

ated its own internal automation/inno- was commented that the mining indus- Of the automations shown under-

Page 8 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

ground at Jundee, the most impressive Northern Star also showed an inno- trying a prototype of lowering a Go-Pro
was the stope drilling. Operators basi- vative wearable device that could stop camera down old shafts to map geology,
cally have an iPad among the control moving machinery if someone got too geotech, ground conditions and depth.
sticks and a box on the side of the drill close and the latest ability of drone use
as shown in the image. The Minnovare underground to see inside and 3D map Northern Star included the results
software system utilises a single sensor stopes, etc. as shown in the image. The from a 3D seismic survey which identi-
for azimuth direction and dip, resulting in drone lifts off the ground and uses lasers fied the Zodiac system discovery with its
increased accuracy at the collar, reduced to initially scan the walls to provide its material footprint as shown in section in
dilution, accurate positioning, the correct own GPS system before doing its au- the image. Reviewing the drill core ex-
burden, improved fragmentation, higher tonomous mapping exercise beyond line amples in the core shed at Jundee on the
ore recovery, reduced reliance on survey of sight, but shown in 3D on a computer site visit showed the visible gold present
mark-up, and use of digital plans. It was screen. in the intersection of 765 g/t into Zodiac
shown that over an almost 60-day peri- around 914m down-hole from an under-
od, cumulative drill metres had increased The Emesent.io Hovermap under- ground drill drive.
by around 17%, and there had been a ground drone 3D mapping system ap-
75% decrease in drill-hole deviation. plies simultaneous localisation and map- There are also the new bulk sampling
ping algorithms and has been developed and direct sampling of RC chip tech-
Northern Star also had an automated in conjunction with CSIRO, and a private niques which are being applied, plus the
drilling jumbo as shown in the image, group is considering an ASX listing The increasing use of the new ore sorters.
also with an iPad amongst the controls. comment was made that at this stage it
The iSure system increased control of has to wait for the dust to settle after a In the Adobe symposium, there was
the drilling with faster set-up times and blast due to reflectance from airborne speculation as to what sort of world could
faster round boring, together with the dust. result when AI has greater brainpower
ability to increase the round length due than the human race, and AI develops
to its hole accuracy. It can be seen that In the space of a year since my last its own AI but automation and innovation
the face has relatively few markings, Paydirt column addressing explora- is rapidly happening and should be em-
and during shift change the jumbo oper- tion drones for surface mapping, they braced. The train is leaving the station,
ates non-manned/automated resulting in have advanced to seeing a video of the climb aboard or watch it power off into
greater development advance. Physicals ground being covered (in addition to the distant horizon.
apparently seen at Jundee have been the mapping) shown on a mobile phone
60,000m per month and a 25% reduction such that outcrops, etc. can be identi- Disclosure and Disclaimer: This article
in drill consumable costs. It was com- fied and located for instant check-up. It has been written by Keith Goode, the
mented that the jumbo can currently only was viewed as simply a case of time and Managing Director of Eagle Research
drill ahead but meshing and bolting were software development before such low- Advisory Pty Ltd (an independent re-
regarded as possibilities with a software cost drones (around $2,000) could be search company) who is a Financial
upgrade. capable of aeromag/other mag survey- Services Representative with State One
ing. Black Cat Syndicate Ltd was even Stockbroking (AFSL247100).

Examples of the automation and innovation programmes being rolled out
by Northern Star at its Jundee gold mine

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 9

news

Moho making discovery magic

Upcoming float Moho Resources NL is Up to 2,000m of gold-focused exten- look at some of these good quality projects
out to prove there is still investor ap- sional drilling, plus 1,000m of diamond that were being neglected or had been dis-

petite for greenfields exploration stories. holes targeting nickel anomalism, is posed by companies that just couldn’t put

Moho – named after the boundary sep- planned post IPO with Silver Swan North the time and resources into progressing

arating the crust and mantle of the earth considered to be a potential source of ear- them.”

across which seismic waves change ve- ly cash flow. Empress Springs, about 20km south of

locities – is seeking to raise up to $6 million “It’s had several phases of gold-nickel the 1.2 moz Croydon gold mine, is a for-

via an IPO (minimum subscription of $4.5 exploration over at least the last 30 years mer Independence Group NL asset that

million) to complete an ASX listing later this and we’ve managed to accumulate a very has been given a positive assessment by

month. detailed database,” Sadleir said. respected geologist Jon Hronsky.

Managing director Shane Sadleir and “We have prospectors looking over the An airborne magnetic survey has been

commercial director Ralph Winter are driv- ground each year and they continually pick completed and ground gravity and geo-

ing the Moho float, alongside veteran min- up reasonable-sized nuggets.” chemical work to soon be undertaken at

ing executive Adrian Larking, with Western Extensive gold mineralisation has been the project, which is comprised of three

Areas Ltd co-founder Terry Street- granted exploration permits cover-

er recently joining the company as ing 760sq km. A 5,000m aircore

non-executive chairman. programme is planned for Q4

Gold is the dominant mineral 2018.

in the Moho portfolio, although Moho can earn up to 70% of

the Silver Swan North project ap- Empress Springs from a $2.4 mil-

pears to have a nice nickel sweet- lion exploration spend before July

ener the company is keen to sink 2023. Independence can buy back

its teeth into. 19% of a discovery on completion

All three projects – Empress of a PFS for up to 3.5 times Mo-

Springs in Queensland & Silver ho’s total expenditure incurred on

Swan North and Burracoppin all Empress Springs tenements.

in Western Australia – are early “That way we can focus on ex-

stage exploration plays with po- ploration for further discoveries,

tential to deliver greenfields dis- rather than trying to be a mining

coveries. company when we’re an explora-
Moho Resources commercial director Ralph Winter and tion company,” Winter said.
“Greenfields exploration has managing director Shane Sadleir at their Subiaco office “Our core strengths are in explo-
been very weak over the last few

years and certainly there been a bit ration and discovery and we prefer

of a pullback since the GFC,” Winter said. identified over the 40sq km of tenure Moho to focus on that rather than trying to be all

“People want certainty in their invest- holds, is earning into or has under applica- things to all men.”

ments and that’s why they’ve been fol- tion at Silver Swan North. A high-grade in- Moho’s third project at Burracoppin,

lowing more production-oriented stories. I tercept of 3m @ 37 g/t gold has also been about 10km from Ramelius Resources

think they’re now starting to be a little bit recorded on one of the key tenements. Ltd’s Edna May operation, is less ad-

more open to greenfields exploration. In In addition to its 100%-owned tene- vanced than the other two, however, the

our case, we’ve spent a lot of time, money ments, Moho is earning into one mining company recently doubled its land holding

and effort into refining our targets and our lease and one exploration licence on the in the area because it believes in the po-

projects before we list to give ourselves property via a $1 million expenditure com- tential of the project.

and our investors certainty that we’re mov- mitment before June 2025. Sadleir, who was a founding director of

ing towards something that could poten- “It’s a great example of something that Bannerman Resources Ltd and Scotgold

tially be a major discovery.” was being overlooked but we managed Resources Ltd, expects the Moho story

Silver Swan North, adjacent to Poseidon to pick it up when the market was down will resonate strongly with investors who

Nickel Ltd’s Silver Swan processing plant, and depressed,” Winter said. are backing new listings.

50km north-east of Kalgoorlie, is the most “That’s really our strategy; to come in “It’s taken 3-4 years to get to this point,

advanced project in Moho’s portfolio. when the market wasn’t in a good way and but now that we’ve separated the chaff

from the wheat, we are confident we have

UPCOMING FLOATS RECENT FLOATS the three best projects to deliver a signifi-
cant discovery for us,” he said.

Aldoro Resources Ltd Montem Resources Ltd Kingswest Resources Ltd “We’re about discovery and we’d like to
emulate what Sandfire [Resources NL]

AMD Resources Ltd Trigg Mining Ltd Constellation Resources Ltd and Sirius [Resources] have done in the

Awati Resources Ltd Nickel Mines Ltd very recent past.”

Black Dragon Gold Corp Rafaella Resources Ltd – Michael Washbourne

Coolgardie Minerals Ltd Sultan Resources Ltd

Moho Resources NL Tempus Resources Ltd

Page 10 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Rig
demand
heats up

Drilling companies and other contrac- Strike Drilling and DDH1 Drilling are joining forces under an equity
tors are often the first to realise when partnership arrangement
the market has turned, in both directions.
there now. We’ve also been drilling iron and the DDH1 guys are good people so
Strike Drilling Pty Ltd managing direc- ore and lithium has been big for us. Gold we decided to run with it.
tor Richard Bennett can recall the exact is still the biggest sector and you can re-
moment the resources sector emerged ally see the uptick in nickel now. “It’s really business as usual. The one
from the recent downturn. thing we didn’t want was a change in the
“I’m really keen to see the market show business because that’s the first step
“Two years ago when I was leaving these small guys a bit of love, they’re put- to bringing a good business undone.
Diggers, I ordered a rig on the drive ting good announcements out, but they That was the reason why they bought in
home,” Bennett told Paydirt on the side- don’t seem to be getting any traction. and why we were so vocal about don’t
lines of this year’s Diggers & Dealers Unfortunately that has a bit of a knock- change the business. I think that can re-
Mining Forum in Kalgoorlie. on effect across drilling budgets…but I ally unsettle the camp if you do that.”
can still see our work flow pushing along
“Those couple of days in Kalgoorlie strongly through the back half of this year Strike and deep drilling specialists
just reaffirmed that we’re back on and we and into next year.” DDH1 have collaborated on various con-
needed to start building equipment while tracts for the past three years.
those build slots were open because Bennett said rig mechanics were also
you get a quality product when you don’t being swamped with work orders and With so many jobs coming through the
have so many other rigs being built and it were starting to command higher wages, door, Bennett said he would need to stay
all comes at a good price.” another sign the sector was well and truly loyal to the long-term clients who backed
into an upswing. Strike during the downturn. However, he
Two years on and Bennett has never was confident of still being able to take
been busier since founding Strike, a Strike already boasts a strong client list on new customers.
small but highly sought-after drilling firm, that includes Ramelius Resources Ltd,
almost five years ago. Encounter Resources Ltd, Gold Fields “When you’ve got new customers com-
Ltd and Western Areas Ltd. ing on, you’ve just got to be honest and
Strike is now an eight-rig business, say we’ll fit you in when we can,” Bennett
specialising in RC and aircore drilling That client list is potentially about to get said.
services. Demand for the company’s ma- bigger after fellow Perth-based contrac-
chines has been so hot in recent times tor DDH1 Drilling Pty Ltd – through its “When it gets busy, you want to try and
that one rig just completed four different private equity backer Oakwood Capital lock a rig in at the same time you’re do-
jobs within a two-month stretch. Management – took an equity stake in ing all your heritages and PoWs because
Strike, effectively bringing both compa- if you don’t lock one in, we can’t promise
“It’s gone from nickel to mineral sands nies together under the same corporate you one. Possession is nine-tenths of the
to gold and now copper,” Bennett said. banner. law with a drilling rig and clients always
find a few extra holes to drill.
“That just shows you the diversity out Strike will retain its branding and will
continue to be managed by Bennett and “In this market, the clients have to be
Richard Bennett his team. flexible. We try to be everything to every-
one, but the reality is you can’t. We have
“With all of DDH1’s contacts and vice alliances with other drilling groups who
versa, we saw an opportunity to help do similar work and we try to help each
each other cover a lot more ground,” other out where we can. Although we are
Bennett said. competitors out there, there’s enough
room for everyone as a contractor in this
“At the end of last year we got ap- market.”
proached to look at it and although we
thought maybe it was a little bit early be- – Michael Washbourne
cause we’re still such a young company,
for us we could see this was a good fit

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 11

NEWS

Venture roars on Thor discovery

What began as a search for the next phic terrain. That’s what we’ve been doing search commissioned by Rio Tinto Ltd ear-
Greenbushes has delivered Venture and we’ve been using extensive geochem- lier this year ranked tin higher than lithium
and cobalt as the metal most impacted by
Minerals Ltd a promising VMS discovery istry to assist us because the rocks are all new technology.

about 240km south of Perth. cooked up and they all look quite similar. “That’s given all the tin juniors a bit of
encouragement to push ahead with their
Maiden drilling at Venture’s Thor prospect “Geochemistry is the key for us and that projects,” Radonjic said. “Tin has been de-
scribed as the forgotten EV metal. It’s had a
intersected a 17m zone of disseminated, is helping us to unlock what the original rock steady rise but not a dramatic rise like lithi-
um, graphite or cobalt. Tin is a small market,
semi-massive and massive sulphides, with was. Once you’ve done that you can start but it’s four times bigger than cobalt, so I
think there’s a fair bit of upside for tin.”
preliminary XRF analysis and visual inspec- pulling together your geological model and
Venture is undertaking a scoping study on
tion of the diamond core verifying the pres- start ticking a few boxes about your target- a potential underground mine at Mt Lindsay,
having previously tipped about $35 million
ence of copper and zinc within the pyrrho- ing.” into conceptualising a large open-pit opera-

tite-dominated rocks. Venture initially pegged about 1,000sq Venture has reported a promising VMS
discovery at the Thor project
Research by Venture has also confirmed km in south west Western Australia last
tion on Tasmania’s west coast.
Thor has the same EM and geochemical year chasing repeats of the lithium-tin-tan- “Because Mt Lindsay can be a big low-

signature as the adjacent Kingsley VMS talum mineralisation which hosts the famed grade deposit or it can be a small high-grade
deposit, we’re looking at mining the top of the
discovery but is up to 20km of strike larger Greenbushes mine, about 30km north of hill out by simply putting a tunnel into the side
of the hill to extract the high-grade core,” Ra-
on a VMS-style targeting sequence. Thor. donjic said.

Assessment of the known pegma- “There’s about 4mt available to us so
we’ve just commissioned an underground
tites to date has not delivered the results scoping study. We’re using the same min-
ing engineers that were involved in the open
Venture had hoped for, however, the pit study, we’re using the same process en-
gineers who did the plant design and cost-
exploration success at Thor appears to ing and we’re trying to get that capex down
around the $50 million mark.”
have offset that disappointment.
– Michael Washbourne
It took Venture almost a year to be

granted approval to drill in the region

due to extensive permitting require-

ments, but Radonjic said his company

had received nothing but encourage-

ment to explore there.

“Very fortuitously the owners of the

Kingsley project have donated a lot of

core to the Perth Core Library, so we

were able to access that and study that,

and we were also able to read up on a

couple of reports written by the Geo-

logical Survey,” Radonjic said.

“There’s a fair bit of information out

there, obviously trying to encourage

people to go and explore down there

and that was evident by the fact when

we put in an application to get EIS fund-

Andrew Radonjic ing to drill the first hole at Thor it was
quickly accepted and the Government

shares half the cost. Clearly they think

The market reacted positively to the po- this area has some untapped potential.”

tential breakthrough discovery with Ven- Venture now plans to fly an airborne EM

ture’s share price jumping 35% in early Au- survey over the entire 281sq km property it

gust as managing director Andrew Radonjic has retained in a bid to generate better tar-

was doing the rounds at Diggers & Dealers. gets for drilling later this year, particularly

“We’re pretty excited because this is a with the company approved to immediately

grassroots exploration play in an area which drill another seven holes before needing to

probably hasn’t had a lot of exploration in submit another application.

the past, mainly because the terrain is highly Radonjic said the company was also

metamorphic and it’s a little bit more chal- looking to prove up some promising nickel-

lenging to track down than your more tradi- copper targets at the nearby Odin prospect

tional deposits,” Radonjic told Paydirt. which was previously tested for lithium po-

“Everyone is exploring in the more tradi- tential.

tional areas, but to go and find the bigger Venture continues to review the econom-

deposits you need to go and think outside ics of its Mt Lindsay tin-tungsten project in

the box a little bit and head towards ele- Tasmania in light of improving prices for

phant country where people haven’t really both metals.

had a good look at the geology and adapted Radonjic said the company had been

out how a deposit might look in a metamor- encouraged to do so after independent re-

Page 12 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

NEWS

Nornickel, the world’s second-largest nickel producer, reported demand for the metal from
the battery sector leapt 38% in the first half of this year versus the same period last year

Electric cars boosting nickel
demand: Nornickel

Expectations of a boom in demand for The firm reported a 77% jump in first- SA to be the world’s biggest nickel pro-
electric vehicles are leading investors
and battery makers to stockpile nickel half core earnings, with strong global ducer, said it expected the nickel deficit
and helping to fuel a spike in global pric-
es of the metal, Russian mining company prices offsetting the impact of US sanc- on global markets to widen from 15,000t
Norilsk Nickel said last month.
tions on aluminium giant Rusal, which to 124,000t.
Nornickel, the world’s second-largest
nickel producer, said demand for the holds a 27.8% stake in Nornickel. – Polina Ivanova, Reuters
metal from the battery sector leapt 38% At $US3.1 billion, Nornickel’s first-half
in the first half of this year versus the
same period last year. EBITDA beat ana-

Along with demand from the stainless lyst expectations.
steel sector, this helped boost prices to
$US15,750/t in June, their highest in over “We enjoyed [a]
four years, the company said, with the
battery sector accounting for 5% of total favourable global
global nickel demand.
commodity mar-
Nornickel said the expected pick-up in
demand for EVs was also a factor behind kets environment
a drop in industry inventories, as inves-
tors and battery makers built up stocks. in the first half of

Nickel inventories at the London and 2018,” Nornickel
Shanghai exchanges fell to 274,000t
from 411,000t between January and July, president and co-
the company said.
owner Vladimir
Nornickel sold 101,000t of nickel in the
first half of the year. It also mines cobalt, Potanin said in a
also used in EV batteries, and revenue
from that metal rose 52% in the first half statement. Celebrating 25 years
of this year, the company added. “As a result, aver-

On a phone call with investors and age realised prices
producers, Nornickel said it expected the for all our key met-
battery sector to become the industry’s
second-largest market in the next few als [except for plati-
years, behind stainless steel.
num] rallied in the
“Consumption by the battery sector for
electric vehicles may be lagging behind range of 20-40%.”
stainless steel, but it is growing at a fu-
rious pace,” Anton Berlin, head of Nor- Shares in the
nickel’s marketing department, said.
nickel producer

were up 1.9% on

the day, recover-

ing from a fall after

news that Russia

President Vladimir

Putin would con-

sider a proposal

to raise further

revenue for the

state budget from

metals and mining 29a Clayton St, Bellevue WA 6056
companies. Nor-

nickel, which vies www.bostech.com.au 08 9250 4252

with Brazil’s Vale

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 13

news

Philippines lifts two-year
exploration moratorium

The Philippines has lifted a two-year tract local and foreign direct invest- new mineral agreements will still be
moratorium on approving mining ment”, Cimatu lifted the exploration signed.”
exploration permits, in a move that the moratorium in an order published in a
Government and industry hope will local newspaper in late July. The lifting of the moratorium comes
help determine the potential of some more than a month after a government
prospects in the world’s No. 2 nickel However, mining remains a contro- panel said 23 out of 27 mines have
ore exporter. versial issue in the South East Asian passed an initial review for compli-
nation due to past examples of envi- ance with state regulations.
In August, Filipino Environment and ronmental mismanagement, and only
Natural Resources Secretary, Roy 3% of 9 million ha identified by the “We hope that the resumption of
Cimatu, announced at 23 of 27 mines State as having high mineral reserves processing of exploration permits
reviewed for compliance with state is mined. will translate into more investments
regulations will continue to operate, in the mining industry,” Ronald Reci-
while the remaining four that failed the Duterte has repeatedly criticised doro, executive director at the Cham-
audit could face closure. miners for polluting rivers and de- ber of Mines of the Philippines, which
stroying forests, warning them in July groups the country’s big miners, said.
The decision is the second min- of big changes ahead during his state-
ing policy measure to be amended in of-the-nation address. The latest measure will also allow
recent months, but environment offi- the Government to determine which
cials said a ban on new mining opera- Environment and Natural Resources areas are best suited to mining or tour-
tions was still in place, suggesting the Undersecretary Analiza Teh said the ism, according to Philippines environ-
impact of the new order will be limited. new order will only allow exploration ment undersecretary Jonas Leones.
at 16 previously approved mining con-
Cimatu, who took over from commit- tracts. “We can only do that if we have ex-
ted environmentalist Regina Lopez in ploration data,” Leones said.
May last year, also lifted a moratorium “Only those with existing MPSAs
on government approvals for small- (mineral production sharing agree- The Philippines is the second big-
scale mining projects last month. ments) can proceed with exploration gest supplier of nickel ore to top buy-
only,” Teh told Reuters. er China, after Indonesia, where it is
Citing President Rodrigo Duterte’s used to produce stainless steel.
push on “increasing competitiveness “The exploration permit allows only
and the ease of doing business to at- mapping and drilling so it can proceed – Manolo Serapio Jr, Reuters
to determine mining potential, but no

No steely resolution
for Norilsk in Botswana

Botswana’s reputation as one of Afri- Marriott said Nornickel was assess- ised. I think it is reasonable to assume it
ca’s premier mining investment desti- ing its options regarding the next steps might have helped to start resolving this
nations is on the wane, according to Rus- to take on a matter which has severely issue if that amount of money had been
sian nickel powerhouse Norilsk Nickel’s soured since BCL Ltd – a wholly-owned paid, I think it would have been a sign
Africa chief executive Michael Marriott. subsidiary of the Botswana Government of good faith,” Marriott told Paydirt last
– went into administration in 2016 follow- month.
The opportunities for Southern Africa ing a firm commitment to purchase big
to participate in the beneficiation of nick- stakes in the Tati and Nkomati nickel op- While there appears to be no set date
el ores was also falling by the wayside, erations. for a conclusion to the wrangle with the
he said. Government, JV partners Norilsk and
The sale of Norilsk’s 85%-owned Tati African Rainbow Minerals Ltd continue
A frustrated Marriott spoke to Pay- operation, east of Francistown, as well as operations at Nkomati – the only nickel
dirt after an application in the Botswana its 50% share in South Africa’s Nkomati concentrate producer in South Africa.
courts to have the dispute between No- nickel mine was agreed in 2014, but has
rilsk Nickel (Nornickel) and the Botswana yet to be delivered despite the Govern- Marriott said operations at Nkomati,
Government over the purchase of the ment’s claims earlier this year that it had 300km east of Johannesburg, would run
former’s African assets heard in Lon- forwarded $45 million to settle the deal. for the foreseeable future, with the JV
don’s International Court of Arbitration partners beefing up their commitment to
was turned down recently. “Sadly, that payment never material- the mine.

Page 14 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Nkomati hosts South Africa’s
largest nickel reserve

In late 2017, TDS Projects with the Botswana Government
Construction was enlisted to
build a 13km tailings pipeline to and we all know the best way
connect the cross valley tailings
storage facility at Nkomati’s On- to do that is through sensible
verwacht site.
dialogue. Unfortunately, the dia-
With estimated reserves of
408.6mt ore containing about logue to date has been unsuc-
1.35mt nickel, Nkomati hosts
one of the largest nickel reserves cessful in resolving the issue.”
in South Africa.
Michael Marriott Nornickel’s sale of its African
The nickel market is experiencing an assets to BCL was meant to
upsurge thanks to the realisation of the
metal’s importance to the battery sector Botswana has been pushing for great- be the company’s exit from the
but Botswana’s opportunity to capture er beneficiation for more than a decade region, as the Russian outfit
the full benefits as a processing hub are in an effort to extract greater value out of made the decision to focus energy and
in jeopardy. resources in its homeland.

“I think the people of Botswana cer- its mineral sectors and boost its restrict- “They believe they have far better op-
tainly are [aware of nickel’s role in the
EV/battery space] and I think there are ed economy. portunities and better returns on their in-
elements within the Botswana Govern-
ment that understand that, but, sadly, it And, while the current situation be- vestment [in Russia] than they do in the
doesn’t seem to result in them actually
moving forward with this transaction. Are tween Nornickel and the Government international space,” Marriott said.
they cognisant of it? They must be,” Mar-
riott said. could potentially prove harmful to Bot- Having such a big company like Noril-

“Even during the transaction, prior to swana’s standing as a go-to destination sk fall out with the Government does not
its final conclusion, we’d already started
shipping our ores from Nkomati nickel to for mining investment, according to Mar- bode well for Botswana, however, Mar-
BCL in Botswana for beneficiation. Ob-
viously that has been stopped and re- riott, the impact of the unresolved dispute riott believes the consequences will im-
versed and that means we have to con-
tinue shipping our ores to various other is being felt on the ground. pact the entire Southern African region.
destinations for beneficiation; it is a sad
state of affairs.” “Sadly, nobody knows how long this “The opportunity for a beneficiation

will take. If it is a thorough legal court facility, the Botswana smelter, has been

process it sadly is going to be extremely lost,” he said.

protracted. It could go on for a long time. “The entire Southern African region –

The court systems [so far] are being op- South Africa, Zimbabwe and Botswana

posed and blocked at every level. Every in particular – is producing nickel ores

single little technical issue is being raised from various mines and the majority of

by various lawyers,” Marriott said. these ores are being shipped overseas

“You have a group of creditors in Bot- for upwards beneficiation, so there is

swana who still remain unpaid and you definitely a lost opportunity for the entire

have 5,000-plus employees who don’t region. It is a blight on the investment

have jobs. Their extended families don’t space in Botswana.”

have a source of income while this pro- – Mark Andrews
cess is taking place. I think our argu-

ment is that we need to settle this issue

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 15

news The annual gathering of New Zealand’s
exploration and mining sector in mid-
Political hurdles September will be in an environment far
and new frontiers different to last year, in part due to the coun-
try’s new leadership, but also the excite-
for NZ mining ment for battery minerals.

Page 16 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT The NZ Branch of the AusIMM will host
its annual conference (September 17-18) in
the port city of Tauranga on the North Is-
land, which will be preceded by site tours
and an epithermal gold workshop – the lat-
ter being an attraction for Australian gold
seekers.

The political tapestry was altered when
the Jacinda Ardern-led Labour Party cob-
bled a relationship with New Zealand Firsts
and the Greens party to win government,
despite the deposed National Party having
won the most seats, but not an absolute
majority.

Ardern had taken over leadership just
before the election from union man Andrew
Little who had looked set to take Labour to
a significant political defeat. The charismat-
ic Ardern lifted Labour in polling, appealing
to young voters with free university tui-
tion, alarm on climate change and a need
for more affordable housing (many basic
homes in Auckland are valued at more than
$NZ1 million).

Ardern took time off to have her first
baby, a situation revelled in by the press,
and while the Nationals hoped acting
Prime Minister Winston Peters – leader of
NZ First – would stumble while running the
country, he didn’t.

Polling since the election shows Nation-
als ahead of Labour and the rest, but on
preferred prime minister stakes, National
leader Simon Bridges gained little more
than 10%.

Like Germany, NZ adopted the MMP
preferential voting system, with voters
electing only half the politicians, with the
other half coming from the percentage of
votes a party gains. So, splinter or minor
parties that don’t get close to winning a
seat, gain some of the other seats.

Therefore, Winston Peters decided to go
with Ardern instead of then National leader
Sir Bill English.

By bringing the Greens into the fold to
make up the numbers there were claims

An aggressive exploration budget at
Macraes has seen OceanaGold make

good progress at the mine

that Ardern has taken Labour much further back from a disastrous scenario, it has vour than seen in Australia – there are few

left. Evidence of this was shown when she several problems. This includes a bank already established targets that could see

told a Greenpeace gathering that there balance that could not meet L&M Coal’s rapid advances, unlike those in Australia.

would be action against new oil permits. demand. It also has struck a coal JV with Besides the conservation estate in NZ

This then saw a ban on new offshore ex- ASX-listed Jameson Resources Ltd on takes in virtually all Crown country and

ploration permits, despite the re-emerging the Crown Mountain coking coal project in there are pressures on what exploration

oil price attracting companies to look at NZ. Canada, in which it was providing the prime can take place, given the hyperactive and

Coal, a significant contributor to revenue, early funding to earn up to a 50% interest. exaggerated claims and measures by

is also in the firing line of the anti-fossil fuel If the appeal fails, the interest will be in some environmentalists.

groups that swamp social media with amaz- what might be the middle ground. One of the country’s prominent busi-

ing claims. However, the real challenge for Gold and coal dominate NZ mining ness commentators, Kerry McDonald, who

coal does not come from the fact Greens though there are relatively small industrial has been chairman and a director of ma-

MP Eugenie Sage is Conservation Minis- mineral and other operations, as well as jor companies, said it was time for a royal

ter (a former employee of Forest & Bird that quarrying. commission into failures of successive

has opposed virtually any new mining on The big earner is gold and this is domi- governments in NZ since the millennium.

the South Island), but also because leading nated by OceanaGold Corp which has To the surprise of some, he gave per-

coal producer Bathurst Resources Ltd fell its original Macraes open cut and under- haps the worst report card to Sir John Key

foul of a High Court decision in late August. ground operations near Dunedin and the and Sir Bill English who dramatically im-

Bathurst took over major mines owned Waihi epithermal gold-silver operations at proved the economy and helped put some

by Solid Energy when that state-owned the base of the Coromandel Peninsula on flesh into the NZ Stock Exchange by partial

company hit the financial wall, through BT the North Island. privatisation of some of the biggest energy

Mining – a JV with the Tally’s food group. The aggressive exploration budget of companies.

But, it also holds mines in Southland and OceanaGold has seen healthy progress They had pushed hard on immigration

the big Escarpment coking coal project on at Macraes and enormous advances at and that had been a factor behind Auck-

the West Coast, above Westport. A failure Waihi, with the big WKP target looking land’s population dominance becoming

more promising and targets lateral greater and affordable housing disappear-

to or under the Martha open cut ing for low to middle income earners.

shaping up for development. “When the economic engine of a democ-

Most other gold producers are racy fails, social and environmental impera-

minnows taking in alluvial gold tives become unaffordable. But rather than

dredges by prospectors on the fix the economy, politicians have obfuscat-

South Island and an advancing ed and spent more of the nation’s precious

programme by New Talisman Gold capital on political band aids – reinforcing

Mines Ltd to re-open the historic the downward spiral,” he said.

Talisman mine at Karangahake, McDonald said Labour under Helen

near Waihi. Clark from 1999-2008 was probably rated

New Zealand Prime Minister Jacinda Ardern Meanwhile, the Tauranga confer- as the most thoughtful, politically learned
in Cabinet beside deputy prime minister ence will have several papers on
Winston Peters battery metals, driven primarily by and astute leader in recent times. But, she
initiatives by GNS Science and the
and deputy Sir Michael Cullen developed

a political model that has had a disastrous

minerals administrator New Zealand impact on policy quality.

to beat court challenges from Forest & Bird Petroleum & Minerals (NZP&M). The big The first 100 days of the Ardern Coali-

and others saw Escarpment put on ice focus will be on nickel, cobalt and lithium. tion Government “brought a real sense of

when the coking coal price tanked about NZ Energy & Resources Minister Dr engagement with serious policy issues,

four years ago. Megan Woods made it clear at a confer- considering it received a toxic inheritance”.

Escarpment and some other leases ence in Queenstown recently that there McDonald said, however, Ardern and Pe-

were being purchased from L&M Coal, a was great interest in the battery metals, ters have a largely socialist-social welfare

Christchurch company later sold to Asian and this has also been reflected by recent agenda based on increased spending while

interests, and it went to the NZ High Court research work taking in the development of ignoringtheneedtodevelopsustainableeco-

claiming it was already owed $US40 mil- latest airborne data. nomic capacity.

lion, and won the decision. However, while the electricity companies – Ross Louthean

Bathurst will take this to the Court of Ap- and all political parties are embracing the

peals, but as a company that has climbed onset of electric vehicles – with greater fer-

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 17

news

Canada takes a hit

One of the A total of
world’s lead-
ing mining coun- 366 applica-
tries appears to
be testing the tions were re-
patience of savvy
investors. ceived in May

A new study – alone, with
Permit Times for
Mining Explora- DMIRS target-
tion 2017 – by the
Fraser Institute ing to process
has revealed that
investors are los- 80% of ap-
ing confidence in
the mineral ex- plications re-
ploration permit
processes in Ca- ceived within
nadian provinces
such as British 30 business
Colombia, Ontario and Quebec.
days despite
Fraser Institute resident scholar and
co-author of the study Kenneth Green the increase
told Paydirt that recent developments
in Canadian courts over land access in demand.
tended to go against the miners and ex-
plorers, which could lead to cash being “2017 was
drained from the country’s mining sector.
a very good
“Ultimately, uncompetitive mining poli-
cies send valuable investment dollars year for the
and the jobs and prosperity they create
elsewhere. In the jurisdictions in Canada resources
where things are getting worse and the
permit times are getting longer, we would sector in
expect capital in mining investment to
flee and either go to juicier Canadian ju- Western Aus-
risdictions or other jurisdictions like Aus- A new study has found investors are losing confidence in the mineral tralia. 2018
tralia,” Green said.
exploration permit process in Canada. Photo credit: Kate Haycock has gone very
“Australia does quite well in our annual
Mining Survey, as do Scandinavian coun- well. The av-
tries. Canada does well, but the trends
here are difficult because we are seeing Fraser Institute mining survey, with 50% erage for the first six months of the year
longer permit approvals times and lower
confidence in getting approvals in certain of respondents indicating a lack of trans- is 380 work applications up from the
jurisdictions in Canada with increased
concerns about land claims. There have parency in Ontario as deterring invest- year before with the average of 200 per
been some recent developments where
the courts have given the First Nations ment, while 48% of respondents believed month, so that shows strong activity,” WA
Aboriginals greater authority to approve
or veto projects and increased the obli- that to be the case in British Colombia Minister of Mines Bill Johnston said at
gation and rigour of what is called con-
sultation.” and 40% in Quebec. In contrast, only the Pitcher Partners luncheon in July.

The Permit Times for Mining Explora- 17% of respondents in Finland indicated Despite the surge in activity in WA and
tion 2017 study was based on the annual
a lack of transparency deterred invest- the State Government’s commitment to

ment in that country, while in Sweden act quickly on applications, respondents

and Western Australia the figure was 9%. in the annual Fraser Institute Survey indi-

“Attracting scarce investment dollars cated that it generally took permits longer

requires sound, clear policies and pre- to be granted in Australia than Canada.

dictable timelines, and investors have “Most of the Australian jurisdictions

said loud and clear that Canada is lag- take a longer time to receive permits,

ging on this front,” Ashley Stedman, a longer than Canada, and there are few

senior policy analyst with the Fraser In- cases where it takes 15 months or more

stitute and study co-author, said. to receive permits,” Green said.

While some jurisdictions in Canada “In the Northern Territory, 50% of peo-

may be on the nose with investors, the ple said it took more than that and in New

pace of activity in WA has shifted up a South Wales 41% of people said it took

gear as positive sentiment returns to the longer than 15 months. In Canada, most

sector. of the companies get their permits within

Earlier this year, the WA Government six months. That is a challenge. Clearly

reported a 50% increase in Programme WA performs better than that, with 29%

of Work (PoW) applications since the of respondents getting permits in two

start of the year. months or less and WA has a higher

The Department of Mines, Industry [55%] percentage of companies receiv-

Regulation and Safety (DMIRS) reported ing permits in six months compared to

a stark increase in average PoW appli- 44% in Queensland.”

cations per month in 2018 compared to – Mark Andrews
2017.

Page 18 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Bauk takes
to task

Led by West Australian Minister of
Mines and Petroleum Bill Johnston,
the State Government continues to ex-

pand its dialogue with battery minerals

industry insiders.

In light of the launch of the Lithium and

Energy Materials Industry Consortium,

Northern Minerals Ltd managing director

George Bauk was appointed as found-

ing member of the Industry Stakeholder

Reference Group, which will advise the

Government’s Ministerial Taskforce.

The Taskforce is chaired by Minister

Johnston and includes senior govern-

ment representatives, with the associ-

ated Industry Stakeholder Reference

Group to ensure close engagement be-

tween government and key players in the

mining sector, ahead of presenting rec-

ommendations to the WA Government

within six months.

“The State Government is really fo- Northern Minerals managing director George Bauk

cused on looking at downstream pro-

cessing and I see a real sense of urgency these smart jobs that make WA a great ematics and that in itself raises impor-
that we have to get on with it. We have a
great opportunity to leverage from what place to live. We are benefitting from tant questions. If you believe all the stats
the iron ore and oil and gas boom of that say that 75% of the fastest growing
we have in Western Australia to develop
an industry beyond what we have done the 1960s and this is the next chapter of jobs require STEM skills, then we have a
WA’s history. It is about clean technology problem with uptake. We have a problem
to date,” Bauk told Paydirt.
“We now have to take the next steps and we can service it; we don’t take it out with curriculum, we have a problem with
of WA unprocessed. We really need to the number of science teachers that are
and I think the opportunities are enor-
mous, it links to STEMS; it links to all take the next step.” out there. There is a general systemic is-
WA chief scientist Profes- sue in education that needs addressing

sor Peter Klinken told Paydirt if you want to participate in this rapidly

the country needed to stiffen changing world,” Klinken said.

the spine on science and Klinken said it was a concern not only

mathematics in the education for the mining industry, but other sec-

system if it wanted to maxim- tors, however, Rio Tinto Ltd’s $2 million

ise the opportunities arising investment in the South Metro TAFE in

from the tech metals driving collaboration with the WA Government

the fourth industrial revolu- to set up high-tech automation courses

tion. is indicative of the measures being taken

Klinken, a key player in the to prepare WA’s mining future.

taskforce, said there wasn’t a “They will start developing courses

noticeable drop-off in science that are specifically suited to the mining

graduates, however there industry. Industry is really saying that we

were fewer school kids taking are all in this together; its government, its

up science and mathematics industry, community that is saying this is

across Australia, which was industry 4.0. We are in the fourth indus-

an issue. trial revolution,” Klinken said.

“I chair a STEM advisory “We really need to make changes to

panel here in WA and I guess make sure our really strong fundamen-

we have heard a whole load tals in our really strong sectors continue

of issues raised around the to keep pace and don’t get left behind.”

uptake of STEM. One of them - Mark Andrews
is that it is optional in Year 11

and 12, so kids can opt out

WA chief scientist Professor Peter Klinken of doing science and math-

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 19

COVER

Great
Northern
Minerals

hope

George Bauk – Northern Minerals
Ltd managing director – entered
mining folklore in July when the Browns
Range pilot plant, 160km south-east of
Halls Creek in Western Australia, was

officially opened.

Page 20 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

On hand to witness the momentous US consul general Rachel Cooke (front left) and WA Regional Development Minister
occasion was WA Minister for Region- Alannah MacTiernan (front centre) joined Northern Minerals managing director
al Development Alannah MacTiernan George Bauk at the Browns Range pilot plant in late July
who proclaimed Bauk as a “legend” for
bringing Browns Range to fruition.

As much as Browns Range is a min-
eral rarity, its isolation and potential as
a wealth creator for all the communities
around it on the WA/Northern Territory
border make it a welcome addition to the
Kimberley region.

The significance of the project amid
the fourth industrial revolution was also
highlighted by MacTiernan.

“The China interest has been the
most conscious and actually understood
the significance of this project. I think
George has been talking with you Rachel
[Cooke, US consul general] to sell this
story to your country because it is a mas-
sive project and we are looking for these
really good partnerships internationally,”
MacTiernan said.

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 21

COVER

Northern Minerals chief operating officer Robin Jones has been instrumental
in achieving mechanical completion at the Browns Range pilot plant

“I think this is going to be one of the the revolution that is the tech metals, growing at a CAGR of 9% up until 2024
from an industry that was worth $US9 bil-
great highlights of my parliamentary ca- metals that are required for the 21st cen- lion in 2016.

reer to be able to have some involvement tury for all of those new technologies that Rare earths such as dysprosium and
neodymium are important components in
in this project, indicated by the fact that are driving change, not just for the elec- dysprosium-neodymium iron boron per-
manent magnets, part of applications in
the Premier came out here a year ago tric vehicles but also for the wind turbines electric motors driving wind turbine gen-
erators, EVs and hybrid vehicles.
to turn the sod on this project. It really is and more and more of the tech products
Dysprosium in particular is a key con-
saying that we do understand and here that are being created.” cern for Northern Minerals at Browns
Range. According to the company, about
we have the beginnings of a revolution; Bauk is hardly rushing to claim legend 100g of dysprosium will be required per
EV and with projections suggesting EV
status in the Kimberley region, how- production to increase to 20 million vehi-
cles a year by 2025, the demand for the
ever, the efforts of the entire Northern material will stretch by 2,000 tpa.

Minerals team should not be underes- With 99% of dysprosium production
currently attributed to China, alternative
timated. sources hold appeal to consumers eager
to secure supply.
Browns Range is the first heavy rare
“Rare earths are a real critical compo-
earths (HRE) project outside of China nent, I think all the focus and attention
has been on lithium, which is an essen-
to produce the high-value dysprosium tial part as well, but you need all the oth-
er ingredients and rare earths are a real
and terbium products. Coupled with centrepiece and driver of clean energy
solutions like the electric vehicle and
Lynas Corporation Ltd’s Mt Weld pro- wind turbines,” Bauk told Paydirt on site
at Browns Range.
ject near Laverton, it will mean WA is
Unlike the speed in which the EV mar-
responsible for the vast majority of rare ket in particular is tipped to grow, Browns
Range has been a slow work in progress.
earths production outside of China.

The rare earths space has been un-

der-played in light of the lithium boom

with the industry battling for any great

traction since a mini price boom ended

in 2011.

The sector remains an opaque one

but just as the recognition of lithium’s

importance to the electric vehicle and

Browns Range has provided jobs and energy storage revolution continues to

opportunities for people in the nearby grow, the rare earths growth narrative

communities. The project is 160km is starting to emerge.

south-east of Halls Creek and 4km Forecasts from Global Market In-

from the Northern Territory border sights have the rare earths market

Page 22 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

commended the company for full-scale at Browns Range.

advancing the pilot plant project At full tilt, Browns Range has the poten-

to completion within 14 months tial to produce 300 tpa dysprosium and

of board approval for project go- 3,000 tpa TREO over an initial 11-year

ahead. life, while there remains significant upside

A major endorsement for North- through exploration.

ern Minerals and Browns Range “We really want to make sure we com-

has been locking down 100% mission the plant by the end of the year,

sales of the revenue-generating but during the process we are not going to

products of dysprosium and ter- stand still and see what this plant can do

bium to Lianyugang Zeyu New in its current form,” Bauk said.

Materials Sales Co Ltd, a 51% “We are looking at ore sorting technol-

subsidiary of Guangdong Rare ogy already and we hope to have that in

Earths Group, while executing place in early 2019 which could double

an EPC contract with Sinosteel the output of this pilot plant. We are also

MECC to build the 60,000 tpa pi- looking at downstream processing, so we

Northern Minerals general manager Tony Hadley lot plant was influential in secur- have engaged with our four US-based
has experience in the rare earths sector having ing project financing. companies which have different tech-
spent time at Mt Weld nologies. We are currently looking to do
The calibre of the groups which some basic desktop studies and we hope
have come to the party for North-

ern Minerals indicates the quality to have downstream processing in stage

of Browns Range and the neces- three – all here in WA, maybe on site here

Founded in 2006, it wasn’t until 2010 sity to secure rare earths supply. producing separated rare earths (dyspro-

that Northern Minerals picked rare earths “I think it [rare earths] has been over- sium oxides and terbium oxides). If we

as its core focus. It was an apt time to be looked and we have been trying to sim- can do that there is going to be a bigger

in the sector and by April 2011, shares plify the story by saying it [the EV revo- market that can consume those products

had taken off, hitting 99c/share. lution] is not just a lithium story, but we outside of China.”

The popularity of rare earths stocks don’t have that Elon Musk story behind WA’s ploy to expand into downstream

came on the back of supply uncertainty it,” Bauk said. processing and maximise the opportu-

as China moved to increase resource “One of the benefits we have is a dif- nities prevailing in the fourth industrial

taxes and restrict exports. ferent suite of rare earths to what Lynas revolution were ramped up in July when

With few projects outside of Mt Weld is making, so we both have a role to play. industry and government launched the

and Mountain Pass, California, able to fill We have a very important role and one Lithium and Energy Materials Industry

the void left by China, rare earths prices of the real drivers in this space is when Consortium at The Westin Hotel in Perth.

and projects were in vogue. you have such a major spike in the com- MacTiernan told Paydirt that every ef-

However, the height of the rare earths modity, like we saw back in 2011, the first fort would be made by government to en-

wave didn’t last long, as consumers re- response is substitution, elimination be- sure the necessary infrastructure, skilled

acted to constrained supply by seeking haviour. So, instead of investing in sup- personnel and R&D would be in place for

alternatives, resulting in a quick retrac- ply, people started looking at alternatives the intergovernmental/agency taskforce

tion of prices. to some of the rare earths. to thrive.

The World Trade Organisation’s ruling “The reason why we embarked on our “We have put this [Duncan Rd in the

against China’s stance on export quo- process in a very aggressive manner Kimberley] up as one of our top two priori-

tas also had an impact and it has only was to convince the market about secu- ties for Federal Government engagement

been recently that rare earths have gar- rity of supply, so that they could see there on road infrastructure, and we need them

nered more attention in the conversation is an alternative on the horizon,” he said. to be looking at these proposed changes

around EVs and society’s high-tech fu- Projections for dysprosium demand to the R&D packages,” MacTiernan said.

ture. suggest more than one fully-

The failure of Molycorp Inc at Mountain fledged Browns Range project

Pass and Lynas’ well-known problems will be required to fill the expected

put a stain on the mindset of investors for 2025 supply gap and while it has

some time, however, the tide appears to taken Northern Minerals eight

be turning favourably. years and $170 million to get

Lynas has rebounded strongly and is on Browns Range to where it is now,

track to deliver a full-year profit for the first it still has a three-year pilot plant

time since 2000 when it was still under the stage in front of it.

guise of gold producer. The project is emerging as cru-

Lynas’ revival has been on the back of cial, not only for the company,

strong demand from customers in Japan but WA’s ambition of becoming a

for its neodymium and praseodymium downstream processing power-

(NdPr). house.

A strong Lynas not only serves its own Northern Minerals is using the

followers well. Others in the sector such as three-year pilot plant stage, which

Northern Minerals are building confidence will produce 570,000kg of TREO,

within markets that alternative sources of a mixed rare earth carbonate con-

rare earths outside of China exist. taining dysprosium and terbium,

Bauk said a number of potential end- to nail down all links in the value- Northern Minerals non-executive director Adrian

users had visited Browns Range and chain before committing to going Griffin alongside alternate director Bin Cai and

non-executive chairman Colin McCavana

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 23

COVER

Three years of ore has been stockpiled at Browns Range. The beneficiation plant Northern Minerals Ltd managing di-
has capacity of 72,000 tpa and the hydrometallurgical plant 3,840 tpa rector George Bauk was recently
named founding member of the In-
dustry Stakeholder Group to advise
the West Australian Government Min-
isterial Taskforce.

The Ministerial Taskforce will oversee
the development of the Lithium and
Energy Materials Strategy, which was
launched in July.

Bauk’s appointment is another en-
dorsement of the Browns Range pro-
ject, the benefits of which will be far
reaching, according to Member for
Kimberley, WA MP Josie Farrer.

“Not only is this the only heavy rare
earths project outside of China, but
as you will probably hear today, [there
are] economic benefits… for the Kim-
berley itself, the State, and in fact
Australia as a whole,” Farrer said.

“However, I will like to mention this
company’s social conscience, North-
ern Minerals have been exceptional
as far as mining companies go. They
have developed a relationship with
the Ringer Soak community and local
surrounds, and they have also, as I
have heard, negotiated an agreement
that is fair without being difficult,
which is unheard of.

“It has provided opportunity for peo-
ple in this region to gain meaningful
employment. Being in such a remote
area, opportunities like this are few
and far between. Northern Minerals
have also been strong advocators in
securing funds to improve the Duncan
Road to the Ringer Soak community.
I can honestly say it is a smooth drive
and often not possible during the wet
season, with access to essential ser-
vices cut during the wet season.

“Thank you for creating employment
for some of our people which gives
them opportunities in going forward.
I wish this project every success,”
she said.

Member for Kimberley,
WA MP Josie Farrer

Page 24 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

“They [Federal changes to R&D grants] minerals that come out of the ground that site, conducting a 5,000m first-pass as-
are really going to slow down the expan- will be part of the electric vehicle evolu- sessment of seven potential prospects
sion of this incredibly significant industry tion; this is a significant piece of equip- which started in the June quarter.
and again we would hope the fact that this ment,” he said.
is an industry that is primarily coming out Bauk said the company had only drilled
of Western Australia is not a reason for “We have taken on downstream pro- 14 targets and there were another 170
the Federal Government to be disinter- cessing. Traditionally in Australia we targets identified.
ested. Historically, there has been a bit of mine it and go through the first stage of
a problem for Western Australia in getting processing and then we ship it overseas. During the September quarter, North-
Federal Government attention for those This plant has a hydrometallurgical plant ern Minerals hopes to follow-up with drill-
industries that are primarily West Austral- which takes the next stage of processing ing at the Iceman and Dazzler prospects
ian-based. But, we are out there talking to and as part of our commitment to further (where recent preliminary analysis by
the Feds saying that you really have to get developing this project we are in the pro- pXRF suggests drill intercepts with TREO
on top of these changes to R&D because cess of signing up a test programme to grades of up to 8%), while a programme
we are on the cusp of something really look at the next stage of processing. [This] at John Galt is in the pipeline.
important and we don’t want this slowed would take our mixed rare earth carbon-
down.” ate to a separated rare earths [product] Northern Minerals was a recipient of a
that will feed the rest of the world and $215,000 EIS grant from the State Gov-
Albeit on a small scale, projects such China with heavy rare earths for years to ernment this year.
as Browns Range are vital in keeping come.”
the ongoing thematic of Australia being “We have a drill rig on site at the mo-
a viable downstream processing hub and Exploration will be essential in achiev- ment that is having huge success and we
Bauk is committed to embracing the op- ing Northern Minerals’ long-term ambi- have huge potential to build on the 11-
portunity to advance the country’s role in tions and delivering rare earths for more year mine life we have, so that is a huge
this field. than 20 years. The company is eager to opportunity. That is our second best as-
get stuck into its large land package which set; our best asset at Northern Minerals
“This is a really significant plant, it might encompasses a 60km by 30km area. though is our people,” Bauk said.
not be significant in size, but in terms of
At the time of print, Top Drill was on – Mark Andrews

McCavana, Farrer and Bauk in front of the newly commissioned Browns Range processing plant
AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 25

DIGGERS & DEALERS REVIEW

Fighting the dark forces
of protectionism

Former EU commissioner Jose Manuel Barroso has warned
the Australian mining community that the global economy is
“under attack” from nationalism, populism and protectionism.

Delivering the keynote address at this peace. Yes, there are risks and there President Donald Trump tweets about
year’s Diggers & Dealers Forum, Bar- will be setbacks but we will prepare fu- were a serious risk to continued global
roso – who served as EU commissioner ture generations better if we teach them growth, according to Barroso.
for 10 years and is also a former Portu- to embrace change. We can be patriotic
guese prime minister – said the EU and without being nationalistic.” “The most serious risk [to growth] is the
Australia shared many of the same eco- rise of protectionism, not only increasing
nomic and cultural principles and should He said the rise in protectionist rhetoric tariffs but restricting cross-border invest-
be concerned by the populist trends from some global leaders would lead to a ment,” he said. “We are seeing attempts
emerging both economically and politi- slowdown in the global economy, just at to delegitimise the World Trade Organisa-
cally. the time when growth is becoming wide- tion and other institutions. It is an ultra-
spread. politicised approach, which is not good
“The EU and Australian principles are for trade. You must respect sanctions, but
under attack from nationalistic trends, “We are in the middle of one of the best if you have unilateral decision, you don’t
ugly nationalism, and protectionism chal- performances in decades because there have stability and that is not good for sus-
lenges,” Barroso said. “The origin of two is growth in the major economies of US, tainable development.”
world wars was that same nationalism.” Europe and Japan, Chinese growth is
slower but continues to be spectacular The popular shift towards protection-
The chairman of Goldman Sachs Inter- and the emerging economies are also in ism has been widely interpreted as a
national said the world should be under positive territory,” Barroso said. “This is response to fears cultivated by globalisa-
no illusions over what was at stake for fu- not very common.” tion. Barroso said the trend was hardly
ture generations. surprising and was similar to previous
The unfolding trade war between the waves of globalisation.
“If we have open trade we will have US and Europe, China or whoever else

Page 26 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

“The most serious The second tent at this year’s Diggers
risk (to growth) is & Dealers was a big hit with delegates
the rise of protectionism,

not only increasing
tariffs but restricting
cross-border investment

“This is not the first time in history fears AWARD WINNERS He also predicted the UK would re
of globalisation have grown as nation alise how closely aligned it was with Eu-
states become less powerful, almost G.J. Stokes Memorial Award rope.
instinctively it creates a [defensive re- Ron Sayers
sponse]” he said. “The difference is previ- “Recent times have shown the UK is
ous globalisations – such as the renais- Digger Award closer to the EU than it thought and is
sance and the industrial revolution – took Kirkland Lake Gold Ltd much closer than with the US on issues
much longer to unfold. Today, driven by such as Iran, trade and climate change.”
technology, it is much faster and creates Dealer Award
the sense that, in fact, nobody is in con- Kidman Resources Ltd – Dominic Piper
trol which creates anxiety.”
Media Award Former EU commissioner Jose Manuel
Barroso expressed his surprise that the Stuart McKinnon, The West Australian Barroso delivered the keynote address
loudest anti-globalisation voices should
come from countries which have played Best Emerging Company at Diggers & Dealers and as is
the greatest roles in the movement. Metro Mining Ltd customary addressed the large
media throng after his presentation
“Part of a movement versus globalisa- Soviet Union, the China-Russia rela-
tion is from the US but elsewhere glo- tionship has changed dramatically. Rus-
balisation is seen as Americanisation sia’s economy is much less diversified
because the US was the creator of the than before.”
New World Order – the UN, the IMF, the
World Bank, the OECD – economically The same trends could be identified
and politically but also culturally through in the Brexit phenomenon, Barroso
language, Hollywood and Silicon Valley.” said, adding that the UK was one of the
most important members of the EU.
Just as surprising is the make-up of
the political coalitions opposing globali- “If the UK politicians attack the EU
sation. Monday to Saturday and then ask the
people to vote on it on Sunday, the out-
“We see this movement against it from come is obvious,” Barroso said.
the Right but also from the Left because
it sees globalisation as global capital- However, his predictions about the
ism. Sometimes the two sides of politics Brexit negotiation outcomes were less
merge.” apocalyptic than many other commen-
tators.
Barroso attributed the rise in national-
istic politics in the US, Russia and the UK “Europe wants agreement and typical-
to a perception that these countries were ly it comes late in the process and there
“losing” as a result of globalisation. will be some drama,” he said. “But, there
is no country more important to the EU
“We are seeing a global rebalance than the UK.”
of power,” he said. “Germany is winning
but the US is losing. Russia is losing but
China is winning. Since the collapse of the

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 27

DIGGERS & DEALERS REVIEW

Shorters gonna short no more

The turnaround in nickel’s fortunes has sumes 73% of annual nickel production – ganic growth projects.
been so dramatic they have pushed grew 7.8% last year and by another 9.7% At its existing Forrestania operations,
the short-sellers to the margins of the in the first five months of this year and will
Western Areas Ltd share register. remain the dominant market for nickel but the company is augmenting high-grade
Lougher and others in the nickel space nickel sulphide mining from the Flying
This year has been kind to nickel play- expect the battery mar- Fox and Spotted Quoll mines with prod-
ers. The metal is the only one on the LME ket (currently 5% of nickel
in positive year-to-date territory, up 4% at demand) to exert greater uct from the recently commissioned mill
a current $US13,100/t thanks to increases influence on nickel prices enhancement recovery project (MREP).
in stainless steel production and the un- in the coming decade as
folding electric vehicle narrative. electric vehicle production The MREP uses Western Areas’ pat-
steps up. ented BioHeap leaching technology to
According to Western Areas managing recover material from waste tailings. This
director Dan Lougher, even stock market Offering further encour- year it will produce 1,400t of higher grade
bears are beginning to warm to his com- agement for nickel sul- product but will ultimately have the ca-
pany as a result. phide producers such as pacity to produce 4,000 tpa of high-grade
Western Areas is battery- 45-55%) nickel concentrate from tailings
“Western Areas was the No.1 shorted makers’ preference for and lower grade orebodies such as New
stock on the ASX in July 2017, now just Class 1 refined nickel. Morning, Daybreak and Lounge Lizard.
over 1% is short and we are no longer
in the Top 100 shorted stocks,” Lougher “Nickel sulphide is pre- As the MREP product sits outside For-
said. ferred for batteries be- restania’s regular production, it is not
cause of the chemistry,” Lougher said. bound to existing offtake contracts.
Driving the change in sentiment was,
he said, the company’s consistent per- This could insulate nickel sulphide min- “We are getting a lot of interest from
formance, the development of a clear ers who suffered from the rise of nickel battery precursor manufacturers,” Lough-
organic growth strategy and greater en- pig iron (NPI) producers during the last er said. “We are constructing a bagging
gagement with institutional investors. price boom.
However, it has been the shift in nickel facility for the MREP product
market fundamentals which have had the The problem for battery-makers is the because it is out of contract
greatest influence. lack of new nickel sulphide developments and we expect to be paid a
across the globe. premium for it.”
“We believe there is a structural
change occurring in the nickel market,” “The nickel pie is not actually grow- Away from Forrestania,
Lougher said. “We are getting inbound ing; anything coming into the market is Western Areas has commit-
inquiries for… future nickel concentrate replacement, not new supply,” Lougher ted to $32 million on early
contracts, primarily linked to the battery said. works on its Odysseus ore-
market, and there is currently less than body at the Cosmos nickel
250,000t of nickel in LME stockpiles and Large-scale high pressure acid leach complex.
that is shrinking on the back of stainless (HPAL) nickel projects built a decade ago
steel demand.” have also failed to hit full production, all of The early works pro-
which could play into the hands of West- gramme will see evaporation
The stainless steel sector – which con- ern Areas as it considers a number of or- ponds built, dewatering and
decline rehab begin and a
new 520-person camp estab-
lished.

A DFS is scheduled for
release this month with the
company considering a shaft
haulage system, a rarity in
modern Australian mining.

– Dominic Piper

Dan Lougher

Page 28 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Independence accelerates
in Fraser Range

Peter Bradford

Two-thirds of Independence Group with CSIRO and universities to try and 60% revenue lift. It is like having internal
NL’s FY2019 exploration budget will understand the genesis of this deposit. growth from the delivery of a whole new
be dedicated to Nova and the Fraser mine,” Bradford said.
Range as it gears up for nickel’s future in “In FY2019, we start to leverage on all
the electric vehicle domain. that work and we have 20,000m of drill- “We have a PFS under way and that is
ing planned and that drilling is already on the back of successful metallurgical
Independence has budgeted for $51 under way.” test work that we completed in the June
million of exploration in FY2019 across quarter where we have made nickel sul-
its suite of assets, with a strong focus on Late last year, the company started phate. It is our first step.”
finding more nickel to execute its battery its nickel sulphate plan from scratch and
grade nickel sulphate strategy. has evolved a hydromet strategy, where- Bradford said many of the elements of
by nickel sulphate can be produced di- the nickel sulphate had hit the necessary
“If we understand the plumbing system rectly from Nova concentrate. specifications, with Wood Group and
then that is the short cut to finding exten- SGS tweaking aspects of the chrystalli-
sions to Nova-Bollinger. We have done A PFS is under way to determine the vi- sation process to tighten the product.
3D seismic, the single biggest 3D seis- ability of Independence’s nickel sulphate
mic survey in Australia with some 300 play which could yield an increase in rev- “We will [potentially] be able to produce
cubic kilometres,” Independence manag- enue equivalent to that of a new mine. battery grade nickel sulphate from con-
ing director Peter Bradford said. centrate without the need for more com-
“If we produce nickel sulphate, we get plicated and expensive ion exchange.
“We have done new AMT, we are doing paid for a lot more of the nickel in our We expect to complete the PFS in the
new squid EM, low temperature, we have concentrate and that nickel sulphate to- December quarter and then be looking to
done a full geological reassessment and day attracts a premium price relative to decisions in calendar year 2019.”
interpretation and we have collaborated nickel metal of about $4-5,000/t. If you
combine those two it equates to about – Mark Andrews

42 year mine life Binding offtake zircon 100%, TiO2 50% Mineral Sands
100% owned State Environmental Approval granted
Outstanding economics Targeting initial production in 2019/2020
World’s best mining jurisdiction Robust Zircon and Ti02 Feedstock Market
US$200m debt mandated on attractive terms Significant exploration upside

ASX : SFX www.sheffieldsresources.com.au

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 29

DIGGERS & DEALERS REVIEW

BHP’s Mt Keith then realise the full 50,000 tpa aspiration
concentrator produced over several years.”

more than 40,000t of Following Independence Group NL’s
nickel concentrate closure of the Long nickel mine earlier this
in FY2018 year, Nickel West put its Kambalda con-
centrator on care-and-maintenance due to
BHP approves more the lack of available third-party feed in the
nickel mines district.
BHP Ltd’s nickel division has received concentrators over the next three years,
a major boost with three new mines supplementing ore from Cliffs and the However, that decision was offset by the
set to be brought online over the next two Leinster underground mines, and bridging fact Nickel West achieved its highest per-
years. production to the block cave,” Haegel said. centage of equity production since FY2011.

On the back of the Mt Keith concentrator Nickel West is also looking to advance oth- “This drive to increase our equity produc-
producing more than 40,000t of nickel con- er promising opportunities at Bethemo, north tion will reduce Nickel West dependence on
centrate for the first time in six years, BHP of Yakabindie, and Curiosity, which can be ac- third party supply in the mid-term,” Haegel
Nickel West has revealed plans to develop cessed from the Rocky’s Reward pit. said.
the Yakabindie, Venus and Leinster B11
orebodies. The performance of the Mt Keith concen- Nickel West is currently undertaking the
trator over the past year has brought a nota- Stage 3 cutback of the Rocky’s Reward
EPA approval for Yakabindie, 20km south ble smile to Haegel’s face and enticed BHP pit which is expected to deliver a further
of the longstanding Mt 26,000t of contained nickel. An assess-
Keith nickel mine, ap- authorities to commis- ment on a potential Stage 4 cutback is un-
pears imminent, pav- sion a concept study der way.
ing the way for first dirt into a potential expan-
to be turned in Janu- sion to 50,000 tpa. Development of the Camelot satellite pit,
ary. 15km north of Perseverance, will be de-
“It has been well un- veloped at the same time as the Stage 3
BHP Nickel West derstood within Nickel cutback.
has also approved West over the years
development of the that additional milling Meanwhile, BHP’s move into the nickel
high-grade Venus de- and grinding capacity sulphate space is also gaining significant
posit, with first stoping would be required as traction, with battery segments expected to
production expected the grades declined,” account for almost 70% of refinery sales by
towards the end of Haegel said. year’s end.
FY2019.
“Bringing a low-cost “Based on forward orders and indica-
Development of the mindset to this oppor- tions, we now expect to achieve 90% within
company’s first block Eduard Haegel tunity, we’ve initiated a three years; that is by the end of 2019,”
cave at Leinster B11, below the mothballed study into installing a Haegel said.
Perseverance mine, has begun and is likely third SAG mill. This investment will leverage
to be producing from mid-2020. spare flotation capacity in the concentrator “I believe that we have timed our entry
and also allow us to reduce the average into the battery and nickel sulphate markets
BHP Nickel West asset president Eduard grind size, further increasing our recovery. well, as interest by customers and potential
Haegel said the mine developments marked “The bottleneck will move to flotation customers is significantly exceeding our ex-
an exciting new chapter for the division. after achieving around 45,000 tpa and the pectations.”
gradual replacement of flotation cells with
“Together these developments will large capacity modern technology would Long-lead items for BHP’s 100,000 tpa
maintain the feed of ore into our Leinster nickel sulphate refinery in Kwinana are ex-
pected to arrive on site later this quarter. It
follows a successful run of the CSIRO-led
mini plant which produced 100kg/day of on-
spec nickel sulphate for potential custom-
ers in the battery industry.

Approvals have been received for the
initial development of the refinery, although
preparations are already under way to ex-
pand the facility to 200,000 tpa, creating the
world’s largest nickel sulphate plant.

“With enormous scale benefits, the in-
ternal use of sulphuric acid from our local
Kalgoorlie smelter, and the synergies with
the refinery, Nickel West also expects to be
one of the lowest cost nickel sulphate pro-
ducers in the world,” Haegel said.

Nickel West has also elected to retain the
cobalt credits in its nickel sulphate refining
process.

Haegel said the company would continue
to maintain its Kambalda concentrator on
the basis it will be restarted at some point
in the future.

– Michael Washbourne

Page 30 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

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DIGGERS & DEALERS REVIEW

Sandfire springs into action

Sandfire Resources NL has finalised its in the Doolgunna region. 6,500sq km of prospective tenure in the
acquisition of the remaining interest Sandfire’s flagship DeGrussa mine Doolgunna region and Simich is confi-
in the Springfield JV which hosts the up- dent Sandfire will remain there for many
coming high-grade Monty copper mine. has about four years of feed left, based more years to come.
on current reserves, while Monty will add
A binding agreement was signed last limited but almost 10% grading copper Sandfire produced 64,918t copper and
month to acquire Talisman’s 30% stake ore later this year. 39,273oz gold for a record low C1 cost
in the Springfield JV for $72.3 million on of $US0.93/lb in FY2018 and has guid-
a debt-free and cash-free basis with an “Extending that mine life just gives ed 63,000-67,000t copper and 37,000-
ongoing 1% NSR royalty payable on any us time to keep the momentum going 40,000oz gold at a C1 cost of $US1-1.05/
future discoveries. and gives us more chance to create lb for FY2019.
opportunities for ourselves in the re-
Consolidation of 100% of Monty and gion,” Sandfire managing director Karl “It’s been a really, really rewarding year
the surrounding exploration tenure is Simich said. and everyone in our organisation has
seen as crucial to Sandfire’s bid to ex- worked extremely well to achieve those
tend the life of its existing operations “We’ve been running hard for six years. results,” Simich said. “At constant com-
When we started the operation we had a modity prices, these results will continue
to get better and better, which is very
seven-year mine life, so es- pleasing.”
sentially we’ve extended it
by nearly 50% and we think Sandfire is continuing to progress
there’s further potential there the Montana-based Black Butte copper
in terms of moving some of project through the arduous permitting
those resources into the ore process in the US. A DFS is due later
reserve and into the mine this year, with the company confident of
plan.” breaking first ground during Q1 2019.

Sandfire has also been “We believe this project will be permit-
buoyed by a recent techni- ted, we just need to get through that pro-
cal discovery at Morck’s cess,” Simich said.
Well, part of its farm-in with
Auris Minerals Ltd, with the “From a West Australian perspec-
first sulphides intersected tive, we can’t believe it’s going at glacial
outside of DeGrussa and speed. If you are in the US, they can’t be-
Monty. lieve we’re going so fast.”

The company controls or – Michael Washbourne
Karl Simich is farming into more than

Saracen crows about 300, now for 400

Having reached a desired run rate of cen managing director Raleigh Finlayson on the Karari paste plant initiative, under-
300,000 ozpa gold, Saracen Mineral said. ground developments at Whirling Dervish
Holdings Ltd is pressing on with its next and Thunderbox, Kailis stage two open pit
target of 400,000 ozpa across its suite of “Importantly, it is not the sins of the past and an airstrip at Carosue Dam; at a com-
West Australian assets. and growth for growth’s sake, it is about bined cost of $80 million.
lowering our margin with this plan, which
With cash and bullion of $107 million is what we do. There is $140 million [worth] “The undrawn debt facility, ideally we
and no debt, Saracen has beefed up its of initiatives in one year.” get to the end of the year and it remains
exploration commitment to $60 million for undrawn. The only case we might use that
FY2019 as its starts its flight towards being Saracen has a pot of $269 million in is if the gold price tracks lower. We want
a 400,000 ozpa gold producer. funding available, which includes a $150 to maintain our commitment of $60 million
million undrawn debt facility, as it embarks spend to set us up for the next 10 years,”
Production guidance for FY2019 is 325- Finlayson said.
345,000oz gold at AISC of $1,050-1,100/ Raleigh Finlayson
oz. With $140 million budgeted for explora-
tion and development purposes, dividends
Saracen expects to hit its increased pro- won’t be in the company’s equation in
duction guidance, despite a number of de- FY2019.
velopments under way during the period.
“Dividends is certainly in the conversa-
“We have some growth initiatives com- tion, [but we] certainly won’t be doing it in
ing up, like the Karari paste plant, but this this financial year, while we have a heavy
is really trying to say that we have reached exploration and development spend, but
our longstanding corporate objective of it is certainly in the conversation for FY19
300,000 ozpa, but we are not prepared to onwards,” Finlayson said.
let the dog catch the rabbit or the train to
arrive at the station; we have now reset to – Mark Andrews
our flight to 400,000 ozpa objective,” Sara-

Page 32 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Northern
Star
shines
again

Leading gold miner Northern Star Re- Technology and innovation has been integral to the
sources Ltd will tip a record $60 million success of Northern Star’s Jundee operations
into exploration in FY2019 as it looks to or-
ganically grow production towards 700,000 Tanami. business for.”
ozpa. Northern Star’s total output for FY2018 In April, Northern Star declared com-

Having achieved its targeted 600,000 was 575,121oz, exceeding the top end of mercial production for the 50,000 ozpa
ozpa run rate six months ahead of sched- the 540,000-560,000oz guidance, at an Millennium mine, within the Kalgoorlie
ule, Northern Star has set its sights on con- AISC of $1,029/oz. operations, just three years after the initial
verting more of its 15.9 moz resource base discovery.
into reserves. That result was despite the company
pausing operations at Paulsens in Decem- “It takes typically on average 13 years
Northern Star has guided production of ber to undertake an extensive review of the from discovery to production for gold
600,000-640,000oz at $1,025-1,125/oz Pilbara-based mine. mines globally,” Tonkin said. “We’ve rap-
AISC from its revered Jundee and Kalgoor- idly brought Millennium into production
lie operations for FY2019. A 10-year outlook Jundee churned out 302,427oz in FY2018 and we’re also opening up the parallel
unveiled last year indicated group output at $870/oz AISC, while the Kalgoorlie op- lodes of Pope John, Strzelecki, Barkers
could top 700,000oz in FY2020 and build erations contributed 285,303oz at $1,174/oz and we’re aiming to replicate what we do
to 750,000 ozpa thereafter, based purely on AISC. Production from the 3.7 moz South at the East Kundana JV along the same
organic growth. Kalgoorlie operations recently acquired Zuleika Shear.”
from Westgold Resources Ltd were not in-
The $60 million exploration budget – up cluded in the FY2018 figures. A $15 million investment in a fixed sec-
33% on the FY2018 allocation – is the big- ondary crushing circuit at Jundee helped
gest in Northern Star’s history. Since 2014 “Our consistent delivery of guidance has lift throughput from 1.3 mtpa to 2 mtpa.
when the company completed a series been key, we do what we say we’ll do,”
of prolific acquisitions, Northern Star has Tonkin said. Jundee continues to raise the bar on the
spent close to $200 million on exploration technological front, with new innovations
work to grow resource and reserves and “We see enormous opportunity within such as drones which capture 3D cavity
extend mine lives. our business to add production and that surveys and remote loading systems now
can either be with the addition of drilling in full flight.
Northern Star chief executive Stuart success at Paulens, the redevelopment
Tonkin said the company’s tenacious explo- of Central Tanami, but more importantly it Tonkin said the company was commit-
ration team, headed by Michael Mulroney could actually be growth within Kalgoorlie ted to investing in training, education, re-
and Jamie Rogers, had convinced the and growth at Jundee. It’s much more ef- search and implementation of the latest
board to commit more funds to exploration. ficient and capital effective to build up that mine technologies.
production from existing production.”
“They actually came with a $100 million- “If you’re taking technology and innova-
plus wishlist, but we had to hone that down,” At the time of print, Northern Star was tion forward, you need to upskill and you
Tonkin said. due to report its full-year production num- need to develop your workforce,” he said.
bers, including confirmation of its annual
“This year is going to be focused on dividend to shareholders. “We’re trying to build and retain that
bringing a lot of the measured and indi- technical skill in the business, we’re putting
cated [resources] higher up in confidence Since 2012, Northern Star has paid fully- a lot of investment into that and it’s really
into our proven and probable reserves. We franked dividends, with its current stated paying dividends in the motivation of the
absolutely have the people and the capac- policy being 6% of revenue. teams that we have operating our sites.”
ity – and now the funding – to get that next
leg of our reserve and resource base which “Shareholders are rewarded as we grow – Michael Washbourne
feeds into the production growth.” production because we’re getting greater
revenue and obviously it’s hedged to the A feature-length story on Northern Star Re-
At the end of July, Northern Star reported gold price that’s been achieved,” Tonkin said. sources will appear in the October-Decem-
a 5.7 moz uplift in resources, despite deple- ber edition of Paydirt’s sister publication,
tion of 600,000oz, and 14% increase in re- “We’re not here for the practice. We Gold Mining Journal
serves to 4 moz. want to run a business, a profitable busi-
ness. That’s what makes us sustainable
More than 150 geologists are currently and that’s what we’re future-proofing the
employed by Northern Star across its
assets, including Paulsens and Central

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 33

DIGGERS AND DEALERS REVIEW

Peter Cook: The Distinguished One

No-one pulls a crowd better on day three taken over. We have a Mining Act writ- Peter Cook
of Diggers & Dealers than Peter Cook. ten here in 1976 before computers were
While this year’s entertainment at the even invented. We now have a Mines “[We have] four process plants with about
Westrac Gala dinner – comedian Jeff Department or a regulator that’s turned 5 mtpa plant capacity in there and we are
Green – brought tears of laughter, it is fair to itself into a platoon of multidisciplinary, on the up in here. Our production forecasts
say Cook’s Westgold Resources Ltd pres- self-interested people, forcing regula- this year between 300-320,000oz, costs
entation was not far behind. tion on the industry through guidelines. are a little higher, but I would say we are in
I am calling for the modern-day Eureka a development phase,” Cook said.
Among the jokes and perfectly-timed Stockade now, it is time to push back and
banter about his peers, Cook called on in- the industry needs to push back collec- “Development tonnes cost three times as
dustry to stage a modern day Eureka and tively and fight these impediments that much as a production tonne. This is the big-
repel any potential state government royalty are pushing the industry into oblivion, but gest aggregation [Central Murchison pro-
hikes that may arise. that’s not really true,” he said. ject] play in gold since the Super Pit. It is not
just one goldfield, it is all the goldfields in
“It is not just the current government, it Amid battling against government red the Central Murchison, collectively 10 moz
started with the Libs with this royalty review tape in the last 12 months, by its stand- of production.”
process linked to some arbitrary mine gate ards Cook said his company was “pretty
value which, conveniently for their purpos- quiet” when it came to digging and dealing. – Mark Andrews
es, ignored the cost of mining gold and the
cost of mining nickel,” Cook, managing di- Nevertheless, Westgold managed to
rector of Westgold, said. complete four deals, which included the
outright purchase of Australian Contract
“Then, blow me down, we get a change Mining, Polar Bear from S2 Resources
of government and they start blaming the Ltd and the Musgrave project as well as
other blokes with an increase in royalties the sale of South Kalgoorlie operations to
again. Enough is enough. The gold industry Northern Star Resources Ltd.
has become a proxy in Western Australia
for unfunded budget commitments and our The company’s flag is tightly pinned
lack of GST share, which all you people to operations comprising the Central
from the Eastern States need to send back, Murchison gold project where fore-
particularly those miners in Tasmania, who cast production in FY2019 is 300-
I can say you build bloody good roads with 320,000 ozpa at AISC of $1,300-1,350/oz.
our GST money.
Big Bell is slated to come on stream in
“We are also under attack from our late CY2019 and scheduled to hit a run rate
regulator. It is crazy, the risk society has of 100,000 ozpa gold by the end of FY2020.

AngloGold ramps up mines

AngloGold Ashanti Ltd is gearing up for $US782/oz. That result was largely driven Exploration Incline.
increased production and greater re- by grade.” AngloGold recently extended the mine
coveries from its Sunrise Dam gold mine.
AngloGold is yet to report the impact of life of Tropicana, 330km east-northeast of
On the back of producing 27% more an additional flotation and ultra-fine grind Kalgoorlie, out to 2026 with processing ac-
gold at Sunrise Dam in 2017, AngloGold circuit on the Sunrise Dam processing tivities to continue for another three years
is anticipating the mine will break into the plant. The $US28 million recovery en- thereafter.
top 10 Australian gold producing assets by hancement project was commissioned on
year’s end. schedule in June and is forecast to deliver Tropicana is on track to deliver 478,000-
an IRR of 34%. 492,000oz in 2018 before ramping up to
AngloGold has set a “high-level” target 515,000-535,000oz next year.
of 4 mtpa @ 3 g/t gold with at least 90% “Metallurgical recovery has declined
recoveries to achieve sustainable produc- over time as the mine has got deeper and “Clever design and attention to detail
tion of 300,000-350,000 ozpa at the mine arsenic content in the sulphides has in- has been the key to the evolution of the
from 2019. creased,” Erickson said. “It does vary con- open pits at Tropicana and it has unlocked
siderably between ore zones, but the new enormous value,” Erickson said.
A long-term AISC of $US900-950/oz circuit will achieve an average increase
has been guided. in metallurgical recovery of 8-10%. And “A combination of mine sequencing and
as well as contributing towards increased design optimisation changes has resulted
“Sunrise Dam is undergoing a renais- production, this also provides AngloGold in the removal of nearly 100mt of waste
sance with a new mining strategy and the with a strategic advantage in the district.” from the open-pit designs.”
recent commissioning of the recovery en-
hancement project,” AngloGold Australia Other initiatives AngloGold is imple- An additional 6MW ball mill – valued at
senior vice-president Michael Erickson menting at the mine, 55km south of Laver- $US28 million with payback of less than
said. ton, to meet the 4 mtpa production target a year – is currently being installed at the
include an underground haulage system Tropicana processing plant.
“The operation started the year mag- which leverages off the existing Western
nificently with production of 88,000oz in – Michael Washbourne
the March quarter at a total cash cost of

Page 34 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 35

DIGGERS AND DEALERS REVIEW

Construction of Gruyere was over 60% complete
prior to Diggers & Dealers

Gruyere locked down
at right time

An aggressive campaign to attract But, as Murray, Lubieniecki and Gold absolute cultural alignment. Their work
people to the opportunities on offer at Road executive director, exploration and on gender and diversity in general was
the Gruyere JV is in the making. growth, Justin Osborne, have shown, absolutely first-class so that is why we
things are possible in the Yamarna. aligned with them,” he said.
But, it will be done without the lynchpin
of Gruyere, Ian Murray. Gold Road’s work at Gruyere was Mathews forewarned industry 12
enough to inspire Gold Fields Ltd to months ago of the increasing pressures
Murray – who joined Eleckra Mines come in as an equal partner at the pro- on labour costs as commodities other
in 2007, long before the junior became ject and the uniqueness of being part of than gold picked up and the scrap for tal-
$570 million market capped Gold Road a ground-breaking project may well be a ent started.
Resources Ltd – will retire on September selling point for the JV to lure workers.
17 with the chief executive reins to be Accordingly, the Gruyere JV has al-
taken by former AngloGold Ashanti Ltd “We are aggressively workshopping to tered its roster pattern from the 2:1
general manager of Tropicana and Sun- see how we can actually attract people to (weeks) design in the feasibility to an
rise Dam, Duncan Gibbs. Gruyere – it is long life, it has great facili- even 8:6 (days).
ties – we are starting to sell the project in
“The end of one chapter, but the start local communities as well as Perth and Shift rosters are something companies
of the next; spread the word, looking for the universities,” Gold Fields Australia can control, however, the Gruyere JV has
quality NED roles,” Murray said in a short Pty Ltd executive vice president Austral- been powerless to curb the 50% price in-
note to Paydirt. asia Stuart Mathews said. crease in steel, copper, nickel and power
prices since the 2016 feasibility study.
Murray has already agreed to take on “Also, as Gold Fields, we have recog-
chairmanship of Rox Resources Ltd spin- nised there are pressures in the mining “That is the cost inflation we have seen
out Helios Gold Ltd, while he remains a industry in general. You can go down driven by those inputs [in that two-year
significant shareholder of Gold Road. the usual path of going into universities, period],” Murray said in relation to costs
but that is a bit broken, I think. If we are at Gruyere escalating from an original
Whatever the future holds for Murray, going to be around for the long term we $532 million to over $620 million cur-
his achievements and those of geologist are looking right down into the primary rently.
Ziggy Lubieniecki in tapping the Yamarna schools.
greenstone belt and discovering Gruyere “I think on a per annum basis we
will be forever etched into Australian min- “We’ve aligned with Football West, worked out 5-10% [cost inflation] and
ing history. we are a major sponsor, that gets our thank goodness we were advanced and
branding out there, but it also gives us kicked-off in early 2017 when we signed
Despite Western Australia’s stand- an opportunity right down to primary the EPC contract or we would have been
ing as a mature mining destination, the school level as a vehicle to attract peo- locked in to higher costs if we signed it off
Yamarna greenstone belt was and still ple to industry. Partly that alignment with this year for example.”
is under-explored, the challenging cover Football West was because there was an
providing a true test of mettle for anyone Mathews said the JV would have been
looking to enter the fray. a “little bit more exposed” had the EPC

Page 36 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

contract been locked in 12 months Gold Fields Australia executive vice president Stuart Mathews
later than it was at Gruyere, which and departing Gold Road executive chairman Ian Murray
is scheduled for first production in
Q2 2019. with that,” Murray said. exploration JVs and I think that is very
“I know that Aussie producers say that much what was happening in the early
Gruyere is poised to deliver 2000s where all the majors and mid-tiers
250,000 ozpa gold over 13 years, Aussie assets are expensive, certainly did the same thing,” Osborne said.
reflecting its standing as a true Tier Gold Road is not expensive. Our EV per
1 asset. ounce is sitting at under $250/oz where “That is how they started getting back
the producers are sitting at $600/oz re- into exploration and I think what we might
Projects such as Gruyere are serve, so relative to the producers we see over the next 12-18 months is a bit
rare and reason enough to compel are still very cheap.” more of that in the exploration space.
global gold giant Gold Fields, which That has definitely ticked up in the last 12
is amid a five-year commitment to While true M&A on Australian shores months and all the drillers are struggling
spend $100 million on exploration appears out of reach, even for the to find drillers to drill; they are all working,
in WA, to act on the opportunity to cashed up producers, the last 12 months so we are certainly seeing an uptick in
participate in the project. has seen medium and large cap produc- exploration.”
ers show a willingness to get back to the
More significant consolidation in roots of exploration. Mathews agreed and hoped that a con-
the gold sector was meant to follow certed effort would bear fruit like Gruyere
the Gold Road/Gold Fields tie-up “Northern Star Resources [Ltd], St Bar- – 97mt @ 1.2 g/t gold for 3.74 moz, with
at Gruyere, however, that has yet bara [Ltd], Independence Group [NL] and total resources of 157mt @ 1.29 g/t for
to eventuate and is becoming in- Saracen [Mineral Holdings Ltd] have done
creasingly challenging in Australia. 6.5 moz.
“In 2012/13, you had that explora-
“Looking at the gold space it is
quite expensive to do major M&As. tion stop almost completely except
We have our work cut-out just on our big for the work that Gold Road was do-
assets,” Mathews said. “We are spend- ing up to the discovery of Gruyere.
ing $100 million annually just on our Then if you look at Gold Fields, we
three mines and that includes our share actually ramped up [exploration],
of Gruyere as well. That keeps us busy, we actually said that we are not
and we are still finding and discovering spending enough,” Mathews said.
on that ground.
“We are one of the few to spend
“Gold Fields will look at the M&A space and we actually doubled our ex-
if it is something logical that we can bolt- ploration spend from 2014 and we
on, that’s for sure, but the actual produc- have been able to get rewarded for
ing space is difficult at the moment.” that. Now you are starting to see
everyone else turn to exploration
Solid Australian dollar gold prices have because true M&A is expensive for
stiffened the balance sheets of domestic operating assets and there is still
producers and while some are returning stuff to be discovered in Australia
dividends to shareholders, there remains and Western Australia.”
room for inorganic growth.
– Mark Andrews
“I haven’t seen an increase in divi-
dends from the producers, so at some
stage they will have to look at what to do

Murray will depart Gold Road this month after 11 years leading the company
AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 37

DIGGERS AND DEALERS REVIEW

St Barbara shops around

Everyone loves a comeback and in re- St Barbara has 16% in Catalyst Metals on the responsibility of being ambassa-
cent times there has been none better Ltd which is focused on the White Law dor of the Workplace Gender Equality
than St Barbara Ltd’s great escape from trend in Victoria and 16% in NSW poly- Agency (WGEA) pay equity campaign
obscurity. metallic explorer Peel Mining Ltd, while and has made successful inroads for St
it has entered the Tanami, Northern Ter- Barbara in this regard.
“I have to pinch myself and the peo- ritory, through an interest in Prodigy NL.
ple near me, it has been a fantastic four The overall pay equity gap at the com-
years and to have another record year “We also recently invested in Duketon pany has reduced from 43% in 2007 to
with the same team from four years ago [Mining Ltd] near Regis’s ground. We 14% in 2018 compared to 17% nationally
is just so pleasing – the highlight of my have covered a few states and we are and 16% across the mining industry, ac-
career,” St Barbara managing director looking to spend $27 million on our own cording to WGEA’s pay equity gap statis-
Bob Vassie said. ground in those splits plus the Newcrest tics reported in February.
[Mining Ltd] JV, a $28 million JV which
Just four years ago the company had a we don’t count as our money, but we ex- “I am involved with the AusIMM [Coun-
debt burden totalling $420 million, which ecute it.” cil for Diversity and Inclusion] and as an
it wiped out within 23 months and has ambassador for the WGEA and we have
since turned its fortunes It is clear St Barbara has had a good
around at the Gwalia gold look around Australia for M&A oppor- won a number of awards
mine in Western Australia tunities and with cash in hand and a in 2017-18 and also for
and Simberi, Papua New strong growth outlook – FY2019 guid- four years in a row we
Guinea. ance of 350-375,000oz @ $1,030-1,100/ have been WGEA Em-
oz – amid capital outlay on extension and ployer of Choice for Gen-
Output from the compa- expansion projects, the company will re- der Equality,” Vassie said.
ny’s two production cen- main cashed up for some time yet.
tres totalled 403,000oz “A lot of companies get
gold at a record low AISC Having assessed domestic options awarded that, but we are
of $891/oz in FY2018, available, offshore M&A beckons for St the only mining company
while it boasts a debt free Barbara. that gets recognised in
position and cash and that way. All the mining
cash deposits of $344 Vassie said that he liked opportunities companies here: you put
million. presenting in North America, which were your numbers in on what
ahead of potential plays in Africa from St you are doing on gender
The company also paid Barbara’s perspective. equality and just go the
a dividend for the first extra yard and you might
time since 1995 and with Whatever lays ahead for St Barbara, be recognised as an em-
plenty of cash, Vassie there is no doubt it will align itself with ployer of choice.”
said it may continue. a partner adhering to the same cultural
values which have enabled it to become While making sig-
In addition to reward- one of Australia’s top gold stocks. nificant strides in the
ing shareholders, St Bar- workplace gender equal-
bara has reinvested in the While keeping the company alive was ity arena, St Barbara has
Gwalia extension and a tough enough in 2014, Vassie also took also welcomed the op-
PFS on a mass extraction Bob Vassie portunity to participate
alternative at the mine, while exploration in the Shooting Stars
at Simberi has focused on sulphide ore programme set up by Saracen Mineral
to see if there is potential for a long life Holdings Ltd managing director Raleigh
mine extension. Finlayson.
“Raleigh took some good leader-
“We are really doing our [best with] or- ship and sponsored the Shooting Stars
ganic growth opportunities and we are [programme] focused on getting female
trying in-organically through M&A. We Aboriginal people through school and
can’t talk about that, but we’re looking we are coming in behind that in Leonora
over a few things,” Vassie said. with $100,000 per year for three years;
we really want to work with Raleigh and
Vassie said he was “getting cramp with make that programme successful,” Vas-
being in a position to do something” and sie said.
has temporarily settled for positions in a Shooting Stars uses netball to encour-
variety of companies across Australia. age greater engagement and school
attendance of young Aboriginal girls in
“We don’t have a lot of ground our- remote towns and communities in WA,
selves, we are drilling at Pinjin, north- with the Leonora programme aiming to
west of Kalgoorlie. We have the whole increase Aboriginal student participa-
package around Gwalia and a little pack- tion at the local high school from a rate
age at Back Creek, New South Wales. of 58% to 80%.
But, because we didn’t have ground, we
thought we’d try and get someone else’s. – Mark Andrews
We tried JVs but there’s too much money
flowing into juniors so we had to end up
with equity,” Vassie said.

Page 38 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Novo to bulk up story

Significantly-sized bulk sampling cam- then as the sea level rises and falls across surface and boasting good grades, Novo
paigns have been identified as a that sediment it is kind of like Mother Na- has positive attributes to work with. Hen-
means of uncovering more about the Pil- ture in a gold pan. This is basically a battle nigh believes the team will design the most
bara conglomerate gold story, Novo Re- between the fluvial system and the marine cost-effective way to move the projects
sources Corp president Dr Quinton Hen- system where the gold is getting reworked, forward.
nigh told delegates at Diggers & Dealers. as you would see in a gold pan when you
are shaking it back and forth.” Novo is continuing with Native Title and
Novo has led the charge on the Pilbara environmental work to have exploration li-
conglomerate gold front, with the Comet Hennigh repeated that defining a re- cences converted into mining leases.
Well JV with two private West Australian source would be very challenging.
companies and the adjoining Purdy’s Re- “Until we have a mining lease, we are
ward JV with Artemis Resources Ltd. He said because of the nature of the limited to about 20,000t of earthmoving,”
coarse gold and the lack of fine grain gold Hennigh said.
Initial bulk sampling by Novo of 300- distributed through the Pilbara rocks, core
400kg turned out to be too small after it drilling provided necessary insight into “We have environmental specialists who
was realised that batches of 5-10t at least the geological characteristics however are working on the environmental studies
were more suitable. other methods would be needed to assess for us. They are taking into consideration
grade. all aspects of this project. One of the key
Nevertheless, data from the bulk sam- aspects is going to be processing.”
pling at Purdy’s Reward provided Novo “That comes through bulk sampling, so
with some valuable information, according we are opening up [more] bulk samples,” Steinert was commissioned to conduct
to Hennigh. Hennigh said. some ore sorting for Novo last year and
Hennigh is confident there will be innova-
“Most of the gold is concentrated within “Our objective is to define the continu- tive solutions for processing the coarse
about half a metre of the basal contact, ous nature of these things, the continuity gold material.
there is some very, very impressive grades of the deposit itself as well as the grade
and we learned a lot about the geology by and that will lead to a bulk sampling exer- “We are now talking to various ore sort-
opening up the trenches and getting these cise. That is roughly a one-year timeframe. ing companies about the ability to do this
bulk samples,” Hennigh said. When I talk about bulk sampling, I am talk- at a commercial scale perhaps going for-
ing about samples in the order of tens of ward. We might even start with ore sorting
“If you can imagine a sedimentary base- thousands of tonnes.” of some sort for test mining coming up in
ment forming where rivers and other small the not too [distant future],” he said.
streams are inputting a lot of sediment and With the gold deposits appearing near
– Mark Andrews

Regis goes under (ground)

Anew chapter in the Regis Resources During the current quarter, Regis is tunity which is at Garden Well. We have
Ltd story has begun with underground moving ahead with permitting work, order- known for some time we have high-grade
activities now under way at Rosemont. ing long lead items and starting the mining intercepts below the Garden Well open pit.
contract tendering process, while upgrad- In the last quarter our drilling has turned up
Regis’ board approved the company’s ing the 1.4mt @ 5.1 g/t gold for 230,000oz a fourth high-grade zone, which is about
first underground development at its Duke- underground resource at Rosemont after 300m south of the Garden Well open pit
ton operations in August and expects first the completion of recent extensional and and 200m below surface and still very
material from the Rosemont underground infill drilling. much open down-plunge.”
in the December 2019 quarter.
“It is the first phase underground for the Clark said the company’s bigger picture
Modest capital expenditure of about $29 business, it gener- exploration focus was finding resources at
million in pre-produc- ates good returns Duketon down to 1,000m below surface by
tion costs and $10 mil- and pays for all the 2020.
lion is expected over start-up and mine
the anticipated five- access capital to get “That is a big goal,” he said. “It’s about
year underground life- down to the opera- targeting drilling to make sure we hit the
of-mine at Rosemont. tion and the coarse best targets we possibly can. On a district
dolorite unit and ba- scale we are undertaking MT surveys with
While the under- sically opens up that a view to getting a better understanding
ground will provide whole 4km [Rose- of the geology and the opportunities. At a
an uplift of about 35- mont shear zone] for mine scale we are currently well advanced
40,000 ozpa gold on us,” Regis executive in assessing the applicability of seismic
open pit production chairman Mark Clark to Rosemont in the first case then, if that
to a combined 120- works, applying it to other deposits within
130,000 ozpa, Regis Mark Clark said. the database. The view there is to try to
is banking on the under- “We have taken target our drilling as best we possibly can
ground infrastructure because it is expensive drilling at depth.”
opening up further opportunities along the the model from Rosemont and that has led
prospective 4km Rosemont shear zone. us to the next logical underground oppor- – Mark Andrews

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 39

DIGGERS AND DEALERS REVIEW

Pantoro Installation of an ore sorter at its Nicholsons
builds gold plant has allowed Pantoro to remove
Kimberley 40-60% of feed as waste before milling
confidence

Pantoro Ltd has taken advantage of the begin producing ore before the end of the 100,000 ozpa capacity however that may
opportunity offered to it by a positive calendar year. need additional feed, something Cmrlec
gold price environment to turn its portfo- is conscious of.
lio from short mine life to something more “We are 150m into the decline at Wagtail
sustainable. and are expecting bonanza grade zones “There is a lot of exploration still to do,”
once it begins making a contribution from he said. “We have done a site-wide geo-
The Australian gold price environment the December quarter,” Cmrlec said. chemistry programme and plan to follow
has been kind to marginal producers in up with geophysics.”
recent years but every miner knows they Further contribution could come from
must use the benign conditions to build the Rowdies orebody which sits between From a regional perspective, Pantoro is
robustness into their portfolio and Pan- Nicholsons and Wagtail. Recent drilling keen to define JORC-compliant resourc-
toro can, for the first time, begin to prove results from Rowdies included hits of es on the Grants Creek and Mary River
it has achieved that objective. 1.2m @ 35.53 g/t, 2.15m @ 42.33 g/t, 1m prospects.
@ 12.3 g/t and 1m @ 18.51 g/t, all from
Pantoro’s flagship asset is the high- outside of the current reserve. “There is no JORC-compliant resourc-
grade Nicholsons gold mine in the es at Grants Hill but there were several
Kimberley, Western Australia, where “Rowdies is looking very similar to Ni- drill programmes completed and notices-
52,202oz gold at around 7.6 g/t was pro- cholsons where the resource has kept up- of-intent lodged in the 80s and 90s,” Cmr-
duced at AISC of $1,130/oz in FY2018. grading as we have gone along,” Cmrlec lec said. “We expect access to be granted
said. this month [August]. We will then drill a re-
The mine has now produced more than source and reserve out to 100m and get
110,000oz gold since operations began in The addition of Wagtail and potentially it into the mine plan during the next year.
late 2015, allowing Pantoro to pay back Rowdies has led Pantoro to reconsider
debt and build a cash position of more the size of the Nicholsons plant, which “It is 100km from the Nicholsons plant
than $14 million. Now, with a new under- processed 231,000t last year, up from but as it is on the Great Northern Highway
ground mine in development and several 197,000t the previous year. it is simple haulage of $12-14/t.”
plant upgrades set for installation, man-
aging director Paul Cmrlec is intent on The company has replaced its mobile Mary River is much closer to the pro-
taking the company beyond its once lim- tertiary crusher with a fixed crusher, re- cessing plant (25km) but has seen no
ited horizons. ducing feed to the mill. Upgrades to the modern-day exploration despite having
gravity circuit are also under way but Cm- up to 20 historical shafts from WA’s first
“We have paid back the debt and the rlec pointed to the installation of an ore gold rush and evidence of alluvial mining
gold prepayment and are now starting sorter as potentially having the greatest as recently as the 1990s.
to build our second underground mine,” impact on mill performance.
Cmrlec said. “We have produced more “It has never been drilled apart from
than 110,000oz, having initially defined “It was installed to remove waste from three RC holes across the entire 17km
an 80,000oz reserve which has now been the mill feed and has resulted in 40-60% strike,” Crmlec said.
expanded to 220,000oz. We are now tar- of the feed being removed as waste,” he
geting 80-100,000 ozpa gold production said. “That means more gold being milled Pantoro released first drilling results
and want to get away from the mindset of without increasing mill capacity.” from an eight-hole diamond/RC pro-
the Halls Creek project being just about gramme in August, including hits of
the Nicholsons mine.” Pantoro was one of several miners to 31.65m @ 1.78 g/t, 8m @ 1.2 g/t and 8m
extoll the virtues of ore sorting during Dig- @ 1.65 g/t gold.
Underground mining is currently taking gers & Dealers, marking a step-change
place on the Johnston, Hall and Anderson from the scepticism which has long sur- Crmlec said the acquisition of Mary
lodes in the main Nicholsons mine but rounded the technology. River and the company’s plans for Nichol-
with decline development having started sons and Grants Creek showed the envi-
from the bottom of the Wagtail open pit “We have had a few people say to us able position Pantoro found itself in.
(2km to the south of Nicholsons), Cmrlec ‘it didn’t work in the 90s so why would
expects the company’s second mine to it work now?’ But, you just have to con- “We have the only processing plant in
sider the computing technology advances the Kimberley,” he said. “There is not an-
since then to realise the differences.” other regional opportunity where there is
such little competition.”
Pantoro’s ultimate target is to reach
– Dominic Piper

Page 40 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Bryah unfurls manganese drive

An enticing manganese opportunity rock chip assays of 48.8% manganese “Manganese is a well-traded commodity
on its Bryah Basin ground has Bryah from the Horseshoe South mine, 52.1% and we have been approached by a lot of
Resources Ltd contemplating ways it can from Black Hill, 49.1% from Black Caviar, traders and end-users; it is a very attrac-
move into a cash generating position inside 50.9% from the historical Mudderwearie tive market,” he said. “There is a diversity
12 months. mine and 42.1% from Devils Hill. of end-users and energy storage is the wild
card. There are a lot of carmakers looking
Bryah listed in October 2017 boasting Bryah now intends to follow up the rock for alternative chemical mixes for their bat-
a suite of copper-gold assets in the pro- chip sampling with a drilling campaign as it teries and the nickel-cobalt-manganese
lific Bryah district of Western Australia pushes to define a mining proposition for cathodes are predicted to become the
but when rock chip sampling in March re- the manganese. dominant cathodes in electric vehicles.”
vealed the presence of high-grade manga-
nese on two prospects, the company ad- “We could prove up millions of tonnes The 44% manganese CIF China product
justed its exploration strategy accordingly. for just a few hundred thousand dollars of was trading at around $US7 per dry metric
drilling,” Marston said. tonne (dmtu) – which equates to $US300/t
Bryah has since picked up an option – in May. Marston believes transport, lo-
over the historical Horseshoe South man- The presence of near-surface minerali- gistics and shipping costs could see Bryah
ganese mine and a further 154sq km sation and historical operations make an deliver high-grade material for around
of manganese exploration rights in the early-cash flow scenario a distinct possi- $US2/dmtu 40% manganese, $6.90/
Meekatharra area, defining a new focus bility, according to Marston. DMTU so $US305/t.
for the company.
“There is probably 5,000t of mineralisa- “We see it as a good way to fund explo-
“The Bryah Basin has always been tion on the surface in the mining licence ration and development of our copper-gold
known for manganese, with a private op- at Horseshoe South which has never been assets,” he said.
erator next door and MinRes [Mineral Re- touched, as well as 215,000 cubic metres
sources Ltd] having done some work on of stockpiles,” he said. “There is an oppor- Exploration for copper and gold is about
one of the prospects [Devils Hill] without tunity to upgrade that to a plus-30% man- to step up with Bryah launching a 6,000m
ever drilling it,” Bryah managing director ganese concentrate which can be sold drilling programme at the beginning of Au-
Neil Marston told Paydirt. into the marketplace while at the same gust.
time answering some of the environmental
The Bryah Basin has a distinct manga- legacy issues on the mining licence.” “That is a $400,000 programme based
nese history stretching back to the 1960s but on the six targets identified from the EM
has seen little consolidated exploration in the While more than 90% of global manga- survey we conducted earlier in the year,”
past 20 years. Bryah is set to change this. nese production is currently consumed by Marston said. “It is on the same strati-
the steel industry, the sector is, like most graphic position as the Horseshoe Lights
“After we identified the mineralisation other commodities, finding growing inter- copper mine and we have Sandfire [Re-
at the first two prospects, we began look- est from the electric vehicle and battery sources NL] exploring right next door so
ing for other opportunities and have since storage space. this could be a VMS.”
been picking up manganese in rock chip
samples on a very regular basis.” Marston said falling head grades had – Dominic Piper
end-users prepared to consider new
The sampling programme included best sources of supply.

Extensive manganese outcropping on its Bryah Basin ground has Bryah Resources
keen to build a development strategy for mining the steel additive

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 41

DIGGERS AND DEALERS REVIEW

Less is more for Evolution

Despite producing 5% less gold than in gold industry. a strong focus and discipline on upgrad-
the preceding 12 months, Evolution “Twelve months ago at this conference, ing the asset base by selling lower quality
Mining Ltd “shot the lights out” on every assets in the upturn and acquiring higher
other aspect of the business in FY2018, I commented that the number of times quality assets in the downturn. It also
according to executive chairman Jake the word ‘record’ was used in the June means you have to have the courage to
Klein. quarterly reports that had just been re- swim against the tide.
leased was unprecedented,” Klein said.
Record figures were reported for statu- “When things are at their darkest for
tory net profit after tax (up 21% to $263.4 “At the time many were questioning the sector, that’s when you need to be
million), underlying net profit after tax (up whether that was as good as it gets for growing. And when everything seems
21% to $250.8 million), sales revenue (up the gold sector in Australia. But, over too good to be true, then maybe it’s time
4% to $1.54 billion), EBITDA (up 11% to the last 12 months, Evolution and many to think about selling some assets.”
$795.1 million), AISC (down 12% to $797/ of our ASX-listed peers have gone on to
oz), operating mine cash flow (up 15% to break new records in FY2018. There is Evolution will tip up to $55 million into
$811.8 million) and net mine cash flow absolutely no doubt the Australian gold exploration across its portfolio – Cowal,
(up 17% to $539.9 mil- sector is in great shape.” Ernest Henry, Mungari, Mt Carlton, Mt
lion).
However, just as he has done during Rawdon and Cracow –
Other key achieve- his previous presentations to Diggers & in FY2019 as it strives to
ments for FY2018 were Dealers, Klein cautioned his gold peers stay atop the Australian
an increased cash bal- against getting carried away with their mid-tier gold sector.
ance of $323.2 million “rockstar” status.
(up from $285.8 million) Since the start of
and net bank debt reduc- “We operate in a very cyclical industry FY2015, Evolution has
ing from $325.8 million to and this is exacerbated by the fact we in increased the average
just $71.8 million, which the sector seem to have an unconscious reserve life of its assets
is expected to be cleared bias when thinking about our future that from 5.1 to 9.6 years.
before the end of the cal- the gold price is more likely to go up than
endar year. to go down,” Klein said. “We continue to believe
there is more to be found
Evolution also paid a “This has proven to be a dangerous as- around our assets and
fully franked dividend of sumption and has led to a lot of general- that is why we have com-
4c, up 33% on FY2017, ist investors viewing us as a boom-bust mitted up to $55 million to
with nearly $300 million sector and one to be avoided. It has also exploration over the next
returned to shareholders meant that stock prices advance too far 12 months,” Klein said.
via 11 consecutive divi- and are overly optimistic on the up cycles
dends. and likewise are overly pessimistic on the “In addition to our ex-
downside. tensive exploration pro-
Group output of grammes at our operat-
801,187oz was down “Our approach at Evolution has been ing assets, we recently
slightly on FY2017, large- to build a business that can prosper moved to secure early
ly due to the sale of the through this inevitable cycle. This means stage projects such as
Edna May gold mine last September. Connors Arc, which is
Evolution has guided 720,000-770,000oz Jake Klein a very large prospec-
at $850-900/oz AISC for FY2019. tive ground position in
Queensland.”
Over the past three years, Evolution Evolution has committed $15-20 mil-
has slashed its group AISC by $295/oz lion of its $55 million exploration budget
through strategic acquisitions and divest- to Cowal, with a further $60 million also
ments. likely to be spent on upgrading the opera-
tion’s processing plant from 7.5 mtpa to
“We have a focus on profitability over 9.8 mtpa throughput.
production and quality over quantity,” A further $15-20 million has also been
Klein said. allocated to discovering a new high-
grade ore source at Mungari, which de-
“Yes, it’s meant that we’ve produced livered a lower than expected output in
less gold, but growing production is not FY2018 due to a 16% reduction in grade.
our highest priority. Rather our focus is “Gold has been discovered in the
on reducing costs and extending mine Kalgoorlie area for 125 years and we
life to build a business that will be able to don’t intend to die wondering about
prosper through the cycle.” whether we can find more,” Klein said.
“We believe in the region and are com-
Since forming in 2011, Evolution has mitting an additional $15-20 million in dis-
met production and cost guidance for covery spend over the next 12 months.”
each reporting period and now ranks as
one of the world’s lowest cost gold pro- – Michael Washbourne
ducers.

Klein noted his company was not alone
in delivering successful results for the

Page 42 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Demand high for Metro bauxite

Metro Mining Ltd celebrated its Best cation on the Cape York Peninsula.
Emerging Company win at Diggers
& Dealers by executing two additional Australia accounted for 37% of Chi-
binding offtake agreements for its newly
minted Bauxite Hills mine. na’s total imported bauxite in 2017, be-

The Queensland-based miner has hind only Guinea (40%).
committed to ship a further 780,000t to
China, with 580,000t to be delivered this “Guinea has very good quality bauxite
year and the remainder to be exported
over the next 18 months, at the option – good alumina content, low silica con-
of Metro.
tent – but the main enemy for Guinea,
Both contracts are based on market
pricing with standard bonus and pen- of course, is ocean freight,” Finnis said.
alty clauses associated with the bauxite
specification. “It’s a 45-day steam versus a 12-day

About 90% of Metro’s planned 2018 pro- for us, so we can send three vessels
duction has now been sold or contracted
for sale, along with 80% of its proposed while they send one. The all-in delivered
2019 output.
cost we see at the moment from Guinea
Metro officially began production at
Bauxite Hills in April – just 10 months after to China is $US57/t, so we have a sig-
the start of construction – and has since
shipped more than 700,000t of bauxite to nificant advantage over those guys with
its Chinese customers.
Simon Finnis regards to cost.” forecast imported
“We send a ship about every six days CM Group has
and we continually mine, screen and load
vessels,” Metro managing director Simon “We’re aiming for 11,500 tpd this year bauxite demand from China will double
Finnis said.
and 12,500 tpd next year, which easily puts to almost 180mt over the next decade.

us on track to meet our target of 3 mtpa.” “Some bauxite resources are run-

Due to unfavourable weather conditions ning out, the quality is getting worse and

in Far North Queensland during the early those guys are already turning to imported

months of the year, Bauxite Hills will not bauxite,” Finnis said. “Shandong Province

operate during the wet season but Finnis doesn’t have any bauxite, it relies entirely

said that had been factored into production on imported bauxite already. Last year,

guidance. about 70mt of bauxite was imported into

Finnis believes his company is ideally Shandong alone.”

placed to meet China’s growing demand – Michael Washbourne
for imported bauxite due to its premier lo-

Thunderbird primed for launch
Sheffield Resources Ltd hopes to have triple to more than $200 million over the need three or four Thunderbirds to come
locked away 90% of its forecast rev- in and fill that supply gap.”
enue from Stage 1 development of the past year as rising zircon demand be-
Thunderbird minerals sands project by the Following Diggers & Dealers, Sheffield
end of the September quarter. came more prevalent in the marketplace. was granted environmental approval for
the Kimberley-based Thunderbird pro-
At the time of print, Sheffield had se- With a global zircon supply deficit of ject and remains hopeful of finalising Na-
cured binding contracts for 77% of the tive Title agreements within the next few
proposed production, having announced 4.7% p.a. looming for the next decade, months.
a maiden ilmenite offtake agreement in
the lead-up to Diggers & Dealers. the company was quick to lock away Project financing
arrangements are
Bengbu Zhongheng New Materials 100% of its zircon and premium zircon also close to being
S&T Co Ltd has committed to purchas- signed off, paving
ing 150,000 tpa of LTR ilmenite for five revenue streams under binding contracts. the way for Sheffield
years, representing 50% of the estimated to begin its two-year
total volume of LTR ilmenite from Stage 1 “The reason it’s fall- construction of the
production. project.
ing off is because all
Sheffield managing director Bruce “We’re quite ex-
McFadzean said LTR ilmenite was a key the [existing] mines cited by other discus-
ingredient in the growing chloride slag sions we’re having
market. are getting old, there’s with the Northern
Bruce McFadzean Australia Infrastruc-
“We didn’t even target going into that been threatened sup- ture Fund, where
market and we’ve just sold 50% into a we’re hoping to con-
binding contract,” McFadzean said. ply come out of South clude some long-dated debt for a lot of
our infrastructure which will reduce our
“We now have 77% of our first five Africa, in particular operating costs,” McFadzean said.
years [of production] locked away under
binding contracts and we expect to have Richards Bay, in the – Michael Washbourne
done 90% by end of this quarter.”
last 12 months and
Sheffield has watched its market cap
that will continue,”

McFadzean said.

“Zircon prices

have changed in the

last 18 months from

about $US950/t to up

around the $1,570-1,650/t mark. We’re

fortunate we have 62% of our revenue

in zircon and there’s no sign of that sup-

ply gap being filled. Even with [Rio Tinto

Ltd’s] Zulti South going ahead, you still

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 43

DIGGERS & DEALERS REVIEW

Fortescue owners leaving Metals X with several years
stays low of work to catch up on. Hallam said that while
mined tonnes in the June quarter were simi-
Fortescue Metals Group Ltd’s position as Elizabeth Gaines lar to the March quarter (despite the delayed
the world’s lowest-cost iron ore produc- replacement of the underground conveyor
er is not under threat despite chief execu- taking control of Atlas under compulsory belt), production suffered from a delay in
tive Elizabeth Gaines hinting at increased acquisition laws, however, Gaines played several higher grade stopes being brought
costs in FY2019. down the significance of the company’s on-line.
stake.
According to data from Metalyt- The delays forced Metals X to mine from
ics, Fortescue’s reported C1 costs of “If you’re a Fortescue shareholder, you’d lower grade stopes and areas within the his-
$US12.36/t come in at the very bottom be thinking far more about the investments torical “checkerboard” zone, resulting in ore
end of the iron ore cost curve, ahead of in a $1.3 billion Eliwana mine and rail pro- grades dropping 17% to 1.2% copper.
major rivals Rio Tinto Ltd, BHP Ltd, Roy ject.”
Hill Holdings Pty Ltd and Vale SA. Hallam said that with more than 60% of
– Michael Washbourne 2018 development occurring outside the
Fortescue founder and chairman An- “checkerboard” the company expected im-
drew Forrest has previously expressed a Metals X provements in the second half of the calen-
desire to see the company produce iron gets Nifty dar year.
ore from the Pilbara for less than $US10/t,
but Gaines said her focus was more about Metals X Ltd’s recent $50 million place- “Development is moving ahead quickly
ensuring the miner retained its standing as ment should ensure the Nifty copper now,” he said.
a low-cost producer. mine finally reaches its 40,000 tpa produc-
tion potential. For FY2019, the company expects to draw
“We’ve demonstrated that we’ve been more than 50% of total production from out-
able to get below $US10/t production Metals X said the raising – announced on side the “checkerboard” allowing it to reduce
costs for one month in our [FY2017] an- July 31 – would give it the financial flexibility dilution and introduce a third long hole stop-
nual report, but I think overall there are ex- needed to reach targeted production levels ing drill rig.
ternal factors – currency and fuel – and we and accelerate exploration at Nifty as well
are seeing some inflation in the Pilbara as as fund the company’s growth projects. Development should also be aided by
well,” she said. Metals X’s drilling push which has seen Nif-
Metals X acquired Nifty – 40km south- ty’s reserve life extended from one year to
“I think it’s challenging to get to single east of Woodie Woodie in the Pilbara, six as a result of 20,000m of drilling. Hallam
digits, but we stay very focused on being Western Australia – two years ago from said a change in drilling strategy would con-
the lowest-cost producer. We’ve given Aditya Birla which had failed to get the 2.5 tinue to provide further benefits.
guidance this year [FY2019] of $US12- mtpa operation performing efficiently or
13/t, and that’s still very low cost.” anywhere near its capacity. “The original geological model didn’t stack
up so we pulled up stumps and said if ‘we
Fortescue reported another year of im- Some 80% of underground costs and don’t know then we have to infill’,” he said. “All
pressive results for FY2018 during which 50% of plant costs at the 2.5 mtpa capac- reserves are now done on a 20m by 20m grid
$US500 million of debt was wiped off the ity mine are fixed, giving the new owner an so we have taken the risk out of the model.”
company’s balance sheet and a record obvious opportunity to drive down costs and
shipment of 170mt was also achieved. improve margins by increasing volumes. The drill bit could also prove influential
outside the immediate mining area with the
Despite a higher strip ratio of 1.4:1, To date, however, Metals X’s plan to ex- company launching the first major explora-
Fortescue was still able to slash its C1 pand mining and production has not run tion push around Nifty for 30 years.
costs by 4% and post an underlying EBID- smoothly. The June quarter yielded just
TA of $US3.2 billion. 3,850t of copper-in-concentrate, down 13% “We think there is another Nifty in the
on the previous quarter and still well short 3,220sq km of ground we have here,” Hallam
A fully franked dividend of 23c/share, of the company’s stated 40,000 tpa target. said. “There has not been a lot of exploration
representing a 62% payout on full-year net since the 1980s.
profit after tax, was returned to Fortescue Speaking at Diggers & Dealers a week af-
shareholders. Fortescue’s net debt posi- ter the raising, Metals X managing director “At Nifty there is 20,000m of drilling con-
tion stands at $US3.1 billion, with no fur- Warren Hallam admitted the company was nected to the six-year reserve. The plan is
ther repayments due until 2022. still playing production catch-up. to come out 350m to understand what the
next 500-600m down-plunge looks like; we
“In the last couple of years all of our avail- “We are a bit behind in the ramp-up now,” came out 1km away, drilled seven holes and
able capital has been allocated to debt re- Hallam said, estimating a 4-6 week lag in its hit 30m of mineralisation.”
payments,” Gaines said. “We’re very hap- timetable.
py with our debt position and we’re looking The most obvious target is Maroochydore –
to reallocate capital to invest in growth and Nifty’s problems largely stem from a lack 85km south-east of Nifty – where the compa-
also returns to shareholders.” of underground development by previous ny has a defined resource of 43.5mt @ 0.91%
copper and 391 ppm cobalt (including a high-
Prior to Gaines taking the stage at Dig- grade primary sulphide resource of 5.43mt @
gers & Dealers for the first time, Fortescue 1.66% copper and 292 ppm cobalt).
announced it was selling down its stake in
embattled junior Atlas Iron Ltd from 19.9% “We will be upping the ante on Maroochy-
to 11.3%. dore and are excited by it,” Hallam said.

Fortescue’s holding effectively pre- Away from copper, Metals X continues to
vents Hancock Prospecting Pty Ltd from refine its Tasmanian tin business where the
installation of an ore sorter at its 50%-owned
Renison tin mine should see mining costs re-
duced by 20% and production increased by
a similar figure.

“The new ore sorter will increase produc-
tion to 8,000 tpa tin and increase overall mar-
gins,” Hallam said.

– Dominic Piper

Page 44 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Gascoyne steams ahead

Australia’s newest gold producer, livery of the plant. sources.
Gascoyne Resources Ltd, expects to “We are doing
achieve commercial production at Dalga- “The mining was
ranga as early as the end of this month. the exploration to
a little bit slow to find the smaller
First gold from Dalgaranga was poured deposits, but are
ahead of schedule in late May following a ramp up initial- also mindful that
rapid construction period led by GR En- another large one
gineering Services Ltd. ly…so we had to will be lurking out
in this belt some-
Almost 10,000oz has been produced modify our milling where,” Dunbar
at Dalgaranga to date and production is said
nearing a steady-state 100,000 ozpa. schedule,” he said.
“We’ve identi-
“It’s quite a unique position to be in to “Instead of fied over 30km of
have the first pour done and dusted in- Mike Dunbar prospective stra-
side nine months from finishing the bulk stockpiling lower- tigraphy with min-
earthworks,” Gascoyne managing direc- eralised structures that have that min-
tor Mike Dunbar said. grade laterite ma- eralisation associated with them but are
yet to be fully tested, so we have a lot of
“GR did a fantastic job on the construc- terial that we had potential to continue there.”
tion and we finished six weeks ahead of Gascoyne also continues to advance
schedule and under budget, something to mine to get to its 1 moz Glenburgh project, 250km east
that not too many people can actually of Carnarvon, with 25,000m drilled so far
say when talking about constructing a the oxide ore in this year.
new mine.” Glenburgh has a granted mining li-
the pits, we actu- cence and Native Title agreement in
Ore from three open pits – Gilbeys, Sly place, as well as an approved mining
Fox and Golden Wings – is feeding the ally had to process some of that. It was proposal and mine closure plan.
centralised 2.5 mtpa processing plant at
Dalgaranga, about 70km north-west of a good problem to have, but still a chal- – Michael Washbourne
Mt Magnet.
lenge to overcome.”
Dunbar admitted his company had
been slightly caught out by the early de- Gascoyne has hedged 174,500oz at a

flat $1,717/oz forward sales price for the

first four years of production.

Dalgaranga’s current reserves are

supporting an initial 6.2 years of produc-

tion, but Dunbar said the project carried

plenty of exploration upside.

Gascoyne has completed about

45,000m of drilling at Dalgaranga this

year alone and has at least 10 prospec-

tive near-mine targets, including Hen-

dricks and Vickers, without defined re-

NRW eyes more gold contracts

NRW Holdings Ltd wants to add more “It is important for us because it takes million of new work since the takeover
gold mining contracts to its record us back into the gold space, it’s a key was completed last September.
$2.2 billion order book. area for us to get back into,” NRW chief
executive Jules Pemberton said. “Our market capitalisation has grown
Despite its humble beginnings being [to $630 million] off the back of the Gold-
associated with reputable mines such as “It has been dominated by a couple ing acquisition,” Pemberton said.
Granny Smith and Kanowna Belle, NRW of our peers over the past few years, so
diversified away “We raised equity at a premium off the
from the gold indus- it has been pretty back of the Golding acquisition. It was
try last decade and important for us to the right time, the right place and the
currently only has make sure we keep right fit for us.”
one gold contract that connection in
– for Gascoyne the gold space for Other key mining contracts on NRW’s
Resources Ltd at commodity diversity books include a $110 million, five-year
Dalgaranga – on its as well.” agreement with Altura Mining Ltd at the
books. Pilgangoora lithium mine and the $830
NRW recently million Middlemount Coal JV in Queens-
Iron ore in the won a $176 million land.
Pilbara and coal earthworks contract
on the east coast at BHP Ltd’s South Pemberton said while the company
of Australia have Flank iron ore pro- was not actively looking for further ac-
dominated NRW’s Jules Pemberton ject, pushing the quisitions, it was keeping one ear to the
contract wins in recent years. company’s total or- ground for available opportunities.
der book to a record $2.2 billion, includ-
NRW has a six-year mining services ing $950 million secured for FY2019. “We’re going to grow 40% this year
contract at Dalgaranga, valued at $324 It capped an impressive 12 months and that’s off the back of work-in-hand
million, as well drill and blast responsibili- for NRW during which it also acquired from the existing businesses that we
ties for Newcrest Mining Ltd at the Telfer Queensland-based Golding Contractors. have. Supporting that growth is far more
gold mine. Golding has delivered NRW almost $730 important than running around trying to
buy something else,” he said.

– Michael Washbourne

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 45

DIGGERS & DEALERS REVIEW

Ready, set, grow for Pilbara Minerals

Defying popular belief that the lithium spodumene concentrate – barely under Ken Brinsden
market is bound for oversupply, Pilbara way, Brinsden said the company was be-
Minerals Ltd has hit ‘Go’ on stage two of ing pushed to forge ahead with stage two ally. To have done that within 3.5 years is
the Pilgangoora lithium-tantalum project in operations. an absolutely amazing effort from the team
Western Australia’s iron ore heartland. and incredibly well done,” Brinsden said.
“The tantalum becomes an important by-
“For anyone that frets – and they do, product credit to our spodumene produc- “We have already received some of the
there’s lot of people that fret about it – on tion, representing about 15% of our revenue funding related to stage two. POSCO made
what is happening on the question of supply base,” he said. “Out of that significant scale a direct investment in Pilbara Minerals and
and demand, well I can tell you from per- comes the opportunity to grow and that is they actually did that at a significant pre-
sonal experience at Pilbara Minerals there what we intend to do. mium when they did put into the company.
is nothing wrong with the demand side and We are using that money to support the
in fact if we could produce more we could “We have sold 100% of our product in continued progress of the project ordering
be selling more,” Pilbara managing director long-term agreements to key customers long lead items and progressing some of
Ken Brinsden said at Diggers & Dealers. and they are telling us to get on with the ex- the more detailed engineering.”
pansion, keep growing, and they are putting
Brinsden was speaking after the com- their money where their mouth is. They are – Mark Andrews
pany delivered the first shipment of Pilgan- in essence underwriting the construction
goora lithium DSO to Atlas Iron Ltd – under cost of our stage two project.”
a total sales agreement of 1.5 million wet
metric tonne – to the latter’s facilities in Prior to Diggers & Dealers, Pilbara re-
Port Hedland in June, confirming a path to leased a DFS on stage two of Pilgangoora,
near-term cash flow even before first spo- which Brinsden expects to be at the com-
dumene concentrates were produced. missioning phase by around October 2019.

Production of first spodumene con- The company will spend about $230 mil-
centrates for customers General Lithium, lion to increase processing capacity at Pil-
Gangfeng Lithium, POSCO and Great Wall, gangoora to 5 mtpa which will potentially
remained on-track for August, according to make the project one of the largest lithium
Brinsden. raw material mines globally.

With stage one of Pilgangoora – 2 mtpa “That is incredible having already estab-
for life-of-mine production of 330,000 tpa lished 45,000t LCE of capacity; that would
certainly put us in the top four mines glob-

Tawana on task at Bald Hill
Tawana Resources NL has declared listed Alliance Mineral Assets Ltd, which tracts of $US880/t with Burwill Lithium
commercial production from its Bald will see the two companies unite to form Co Ltd for 2018 and 2019, with prices to
Hill lithium-tantalum mine, less than two a $400 million business from early Oc- be negotiated on market indicators for
years after drilling the first hole on the tober. the ensuing three years.
property.
A spin-out company, Cowan Lithium Calderwood said the company was
As managing director Mark Calder- Ltd, housing Tawana’s non-core assets also assessing options to expand its pro-
wood was presenting the Tawana story is also on track for a separate listing in duction capacity at Bald Hill.
to Diggers & Dealers, the fourth ship- the coming months.
ment of Bald Hill concentrate left Esper- “Given the plant itself only cost us $32
ance port bound for China. Bald Hill’s current reserve of 11.3mt million, including the tantalum spirals, we
@ 1.01% lithium and 160 ppm tantalum can double this plant very cheaply,” he said.
Tawana also reported the newly com- will support at least another nine years
missioned Bald Hill processing plant was of operations in the Eastern Goldfields, “It’s not a $200 million project, it’s $30
running at 206 tph, about 20% above although the existing mining lease ac- million per DMS unit. It’s pretty low cost
nameplate, with the company now aim- counts for just 1% of Tawana’s permitted in terms of both capital and operating ex-
ing to push throughput towards 240 tph. exploration tenure. penditure.”
Production guidance for the second half
of 2018 is 60,000-75,000t of spodumene “We had a pretty small reserve when – Michael Washbourne
concentrate. we started the mine, only about 3.5
years, but we have about nine years at Mark Calderwood
“Our spodumene concentrate is the moment and we should expand that
amongst the best, it’s certainly the best quite a bit over the next 12 months,” Cal-
DMS product that has ever been export- derwood said.
ed from WA,” Calderwood said.
“More recently we’ve done about
“We can dial up or dial down the grade 11,000m of infill drilling and we’ll hope-
of concentrate as we wish with the DMS fully fire up from about October with mul-
densities.” tiple rigs and start growing the resources
and reserves quite quickly.”
Tawana is currently wrapping up a
merger with its JV partner, Singapore- Tawana holds fixed-price offtake con-

Page 46 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Primero kicks straight
from outset

Primero Group Ltd became the first work in non-traditional minerals, such as ing up there. It will be a learning process
new engineering float on the ASX in the battery minerals,” he said. for Northern Minerals as well in scaling

seven years when it listed in July and Primero’s minerals processing divi- up that processing facility. Hopefully it

so far the market appears to like what it sion has good exposure in the battery will lead to the full-scale project getting

sees. minerals space with new and renewed off the ground.”

“Timing is everything and I think from contracts awarded last month for Gal- Henry is happy to have such a special-

an investors’ point of view it is a good op- axy Resources Ltd, Tawana Resources ty battery mineral-related project under

portunity for investors to see a new prod- NL, Savannah Resources plc (Portugal), the belt and will look to build on any op-

uct in the market,” Primero non-executive Piedmont Lithium Ltd (North Carolina) portunities forthcoming.

chairman Mark Connelly told Paydirt. and Sigma Lithium Resources (Brazil). “It is a specific battery mineral, which is

Since listing, the company has traded The niche battery minerals sector is what we are specialising in, so it is really

between a low of 37c/share to as high as the sweet spot Primero is coating itself good for the résumé and experience as

47.5c/share and at the time of print was in at the moment, while the aforemen- well. Some of our team were actually in-

travelling well at 44c. tioned contract awards also demonstrate volved in the Mt Weld project as well sev-

In a release to market, Primero an- the company’s geographical spread and en or eight years ago, so we have contin-

nounced an increase in contracted rev- ability to engage with an array of cul- ued on with that experience,” Henry said.

enue for FY2019 giving it an order book tures, which was displayed during the Battery minerals has emerged as a

in excess of $120 million of work-in-hand. build of Northern Minerals Ltd’s Browns sector of choice for many and further

Primero’s primary skill sets include Range rare earths pilot plant in Western analysis is supporting forecasts for ex-

EPCM, power/energy and non-process Australia. ponential demand growth in lithium, rare

infrastructure (NPI), with new contract “We showcased our ability to work with earths, cobalt and the like. On that basis

awards announced last month covering Chinese EPC companies which have it appears Primero’s entry on the domes-

the NPI and minerals processing divi- come in and provided the funding and a tic bourse has been timed perfectly.

sions for new and existing long-term cli- lot of the procurement and engineering. “Talking to people in the [resources]

ents of the business. Our role there has been more structure community we are at the right time of the

Despite flatness in the market, Prim- and commissioning, but it is a really excit- cycle with a bit of a run in the next 3-5

ero’s new contract awards and renewals ing project for the battery minerals space years with some sustained growth fore-

demonstrates the standing the company in Western Australia,” Primero managing cast,” Henry said.

has established which should help the director Cameron Henry said. “We now have a global presence with

transition from private to public entity. “To be able to get a project of that size quite a few projects in North America,

“The quality of management, reputa- and scale, it is quite complex with the South America and now Europe, so

tion and the delivery model that Prim- metallurgical process route they are tak- there are a lot of opportunities. We do

ero has been able to a little bit in Africa, prob-

demonstrate to the ably not a lot in the near

market also gives term but in the medium

them opportunity to to long term we’ll give it

grow their base as a good run.

well,” Connelly said. “We are concentrat-

“Going public pro- ing on the sort of sub-

vides it capital; it is $100 million EPC world,

a capital-intensive in minerals processing,

business so we can energy and non-process

bid on other oppor- infrastructure space. We

tunities that come have a lot of exposure

forward. It allows us in the iron ore markets

to attract and retain in Western Australia [in-

good people, which is cluding contracts with

also important to the Rio Tinto Ltd] so there is

industry. a lot of sustaining capi-

“We’re coming tal and new projects that

across an industry are going to take a lot of

that in some respects capital spend over the

is looking for a new next 3-5 years,” he said.

player and also look- – Mark Andrews
ing for new talent,

which we have and Primero managing director Cameron Henry with non-executive chairman

we have the ability to Mark Connelly at Diggers & Dealers, Kalgoorlie

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 47

DIGGERS & DEALERS REVIEW

Thackaringa cobalt stacks up

Cobalt Blue Holdings Ltd chief execu- Development of Thackaringa will attract space made for a compelling business case.
tive Joe Kaderavek believes his com- a capex of $550 million (including a $56 “We believe it will grow threefold or more
pany’s Thackaringa project is capable of million contingency) and generate a pre-
withstanding even the biggest of plunges in tax NPV of $792 million, IRR of 27% and in the next decade and present an exciting
the cobalt price. payback within four years of first produc- opportunity for our business,” he said.
tion.
A recent PFS on Thackaringa, 23km “We’re a $2 upstart from Australia, so for
west of Broken Hill, found the project could A cobalt sulphate price of $US33.80/lb us to break into that chain and have the
economically produce 40,331t of cobalt was assumed for the PFS. credibility to sell product – a very high spec
metal in sulphate over an initial mine life of product – we will need a partner and we
12.8 years for $US12.80/lb. Kaderavek said the outlook for cobalt sul- will need technological assistance.”
phate in the emerging battery technology
Cobalt was trading at just under Cobalt Blue formed a strategic “first-
$US30/lb at the time of print, up almost mover” partnership with LG International
20% since Kaderavek’s presentation at Corp in March and is leveraging off the
Diggers & Dealers. global electronics giant’s technological
expertise and potential funding support.
“If you have a look at the historical co-
balt price curve, only one year in the last The company will soon embark on a
40 was the average price of cobalt, in major drilling campaign at Thackaringa
real terms, below $US12/lb,” Kaderavek in a bid to convert more resources (72mt
said. @ 852 ppm cobalt for 61,500t contained
metal) into reserves (46.3mt @ 819 ppm
“So, we can say not only to equity in- cobalt).
vestors but importantly to project finance
and debt providers that there is eco- “We believe if we can get a 20-year
nomic resilience in the project. We’ve got life-of-mine out of the project, it will ma-
a large resource base, a long life mine terially swing the economic payback of
and the economic ability to trade through the project,” Kaderavek said.
even the trough of the market.”
Joe Kaderavek – Michael Washbourne

Collerina puts HPA first

Collerina Cobalt Ltd has parked up on the solvent extraction method used by
plans to develop a nickel-cobalt-
scandium mine in central New South some 25% of global copper producers
Wales in favour of direct production of
high purity alumina (HPA). and allows the company to skip over the

While the company will retain an option often lengthy and high-cost process of
to develop the mine, Collerina believes
it can now skip the mining process and synthesising aluminium metal feedstock
produce HPA at a Newcastle-based re-
finery from alternatively-sourced indus- to produce HPA.
trial feedstock.
No acid plant, leach vessels, filtration
A PFS on Collerina’s new “HPA First”
process is due next month and techni- plant, neutralisation circuits or tailings are
cal director Rimas Kairaitis expects the
market to subsequently provide a more required in the “HPA First” process.
accurate valuation of the company once
the economics are made public. “What we’ve effectively done is cap-

“We think that when our capital figures ture over 90% of the [original] project
land and when our business case lands
it will be absolutely compelling,” Kairaitis revenue and reduced the capex by about
said.
75% and the opex by 30%,” Kairaitis said.
“It will be in a different risk universe to
our peers and we think our operating mar- Rimas Kairaitis “We call it ‘HPA First’ because it allows
gins will be at the very lowest end of the us to build a high purity alumina refinery
HPA market cost curve.” neutral” given the market value of the end in a location of our choice and at this
product. stage that looks like Newcastle, We main-
Collerina will roll directly into pilot plant tain an option on the nickel-cobalt opera-
test work following the PFS, with the com- HPA has two major growth markets, one tion that we’re able to back-end and build
pany looking to run an 8kg per day process of which is LED lighting. The other, which at a later date, and the refinery can just
which Kairaitis expects will be “net cost has attracted most of the investment com- plug into that process.”
munity’s attention, is the ceramic coating Collerina recently raised $4 million via
of lithium-ion battery separators. a rights issue to ensure the company is
funded through to completion of a DFS.
“As safety becomes a key priority in high Kairaitis is also set to replace Justin
temperature EV batteries, the use of ‘gold Werner as managing director of Collerina
standard’ ceramic-coated battery separa- this month.
tors becomes critical to prevent the pro-
cess of thermal runaway…which is a polite – Michael Washbourne
way of saying ‘fire’,” Kairaitis said.

Collerina’s “HPA First” process is based

Page 48 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT

Blackstone’s little gems
in Kalgoorlie

The sentiment towards the junior end While Williamson concurs with the syn- balt space was particularly high earlier
of town feels likes it is as tough as it opsis of cobalt in future battery make-up, this year when maiden drilling from its
has been in the last two years, accord- he believes thee market has overreacted flagship Little Gem project, British Co-
ing to Blackstone Minerals Ltd managing to Musk’s comments and turned the in- lombia, Canada, returned 1.1m @ 3%
director Scott Williamson. dustry on its head. cobalt, 44 g/t gold, within 4.3m @ 1%
cobalt, 15 g/t gold and 1m @ 1.2%, 5 g/t,
“It is not quite as bad as the bottom of “He [Musk] basically said he doesn’t within 3.2m @ 0.8% and 4 g/t.
the market like in the period 2013-2015, need cobalt, but he clearly does. There
but it is a tough market,” Williamson told will be a reduction in cobalt in battery The results from Little Gem were in-
Paydirt. chemistry but it won’t be completely line with historical drilling and adit chan-
substituted out. It is all about reducing nel sampling which returned 3% cobalt
US President Donald Trump’s moves the cobalt content, but in the next 5-10 and 20 g/t gold.
to impose tariffs on steel and aluminium years they won’t fully substitute cobalt
imports and the ensuing trade war has out; cobalt will be present over the next Williamson said such impressive first-
effectively stymied the momentum jun- 5-10 years in the battery chemistry,” Wil- up hits had been to the company’s detri-
iors were starting to build after a dire few liamson said. ment.
years, Williamson said.
“After 10 years there may be a chance “Since Trump began the trade war, the
Compounding Blackstone’s problems they commercialise chemistries that don’t turn in sentiment has been pretty brutal.
has been Elon Musk’s commentary have cobalt, but that is a long way from We have been affected by the macro
around the shrinkage of cobalt require- now. In the meantime, cobalt demand is stuff, the cobalt market turning plus our
ments in battery chemistry, which has going to double and triple over the next drilling has gone from one of the highest-
changed the dynamics of the cobalt mar- five years. We are confident cobalt is the grade cobalt hits anywhere in the world
ket and the attractiveness of companies right place to be.” – and while we still have some of the
like Blackstone with assets containing highest grade – subsequent hits have not
the blue metal. The company’s confidence in the co- been the same as our first hole,” he said.

AUSTRALIA’S PAYDIRT SEPTEMBER 2018 Page 49

DIGGERS & DEALERS REVIEW

ery at Little Gem.

While the recent response to Lit-

tle Gem has been underwhelming,

a cobalt price of $US61,000/t and

$US1,211/oz for gold are encourag-

ing enough for hopefuls in the space

to keep the faith in exploration, as

the market tries to figure out just

what it wants.

Appeasing investors is no mean

feat and Blackstone can certainly

attest to that.

Prior to focusing on Little Gem,

the company announced the Silver

Swan South gold discovery, 8km

along strike from Northern Star Re-

sources Ltd’s 5 moz Kanowna Belle

gold mine.

A second phase aircore drilling

programme at Silver Swan South at

the Black Eagle prospect produced
Blackstone managing director Scott Williamson and technical director Andrew Radonjic take 10m @ 3.2 g/t gold from 68m within

visitors through the Black Falcon nickel sulphide play at Silver Swan South, Kalgoorlie 15m @ 2.2 g/t from 64m end-of-

“We set expectations through that first programmes. hole.
hole and the market expected us to do “We began where we did because “We first announced the Silver
that every hole. We are still delivering
economic grades, but not the same as when we started this process early on Swan South gold discovery back in March
our first hole. We are still waiting on as- we targeted around the adits. Now, we and the market response was under-
says, but of the first six holes, four of them are looking at using all the other targeting whelming and that is when we decided to
hit economic grades. We still believe Little tools like geophysics and geochem to see focus on Little Gem,” Williamson said.
Gem is our flagship asset, we just have to where we should start drilling next. So, it
gauge where the market is at and where is all about refining targets and finding Also at Silver Swan South, there is an
we should be continuing with our other new targets,” Williamson said. emerging nickel sulphide story at Black
assets.” Falcon, to the south of Black Eagle.
Little Gem is 15km along strike from the
Assays from five holes of the initial dia- 4.4 moz @ 17 g/t Bralorne-Pioneer gold “We think that we can add value
mond drilling campaign were pending at mining complex, while Blackstone is well through testing those targets, we are just
the time of print, while an IP survey over spread with 48km of ground in a region working out how to message that through
the 1.8km Little Gem strike length was bearing similar geology to the Bou-Azzer the market,” Williamson said.
being carried out. cobalt district in Morocco.
“The market, until now, only ever want-
Additionally, IP over the 2km Jewel “We have teams of geos out all across ed the cobalt so we think that given the
trend, the second target at Little Gem, that 48km and it is the first time anyone way the market has responded to the
was also being completed in order to gen- has looked at cobalt,” Williamson said. cobalt story now is the time to talk about
erate and refine targets for further drilling Silver Swan.”
At the time of print, Blackstone reported
visible gold and cobalt from a new discov- During Diggers & Dealers, Blackstone
hosted Paydirt and a handful of investors
at Silver South Swan, half an hour drive

Silver Swan South is along trend from the 655,000t
@ 9.5% Silver Swan nickel sulphide deposit

Page 50 SEPTEMBER 2018 AUSTRALIA’S PAYDIRT