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Published by Paydirt Media, 2017-12-03 23:04:20


December 2017 - January 2018 VOLUME 1. ISSUE 256 $11.95


front and back cover

supplied seperately

The Tanzanian paradox

And... First look at Novo’s Pilbara gold discovery ISSN 1445-3436

9 771445 343007


PAYDIRT (ISSN 1445-3436) 5 NEWS 22
Published by Australia’s largest copper producer Oz 28
Paydirt Media Pty Ltd. Minerals has wasted no time in proceeding 34
A.C.N. 063 985 133 to the next stage of a $36 million earn-in
agreement with Cassini Resources at the
Head Office: West Musgrave nickel-copper project,
Suite 9, 1297 Hay St, West Perth 120km east of Warburton in Western Aus-
Western Australia 6005 tralia. Oz will spend $19 million over the
P.O. Box 1589, West Perth next 18 months to claim a 51% stake in the
Western Australia 6872 project. Michael Washbourne reports
Phone: (+61 8) 9321 0355
Facsimile: (+61 8) 9321 0426 22 SITE VISIT
[email protected] Believe it or not there is gold in the iron ore heartland of the Pilbara. Just how
much gold there is and whether the
conglomerate-style mineralisation could
be a geological match for South Africa’s
Editorial: Witswatersrand Basin has generated
Editor: Dominic Piper worldwide attention. Dominic Piper and
Deputy editor: Mark Andrews Mark Andrews visited Novo Resources and
Journalists: Michael Washbourne Artemis Resources’ Pilbara conglomerate
Photography: Picture This discovery for a first-hand look at the gold
Art director: Marian Noonan nuggets which have investors in a spin
Keith Goode (Sydney), Brendan Ryan 28 COVER
(Johannesburg), Ross Louthean Miners and explorers across Africa are
gathering momentum after a harrowing five
Advertising: years, however, one of Africa’s largest gold
Advertising manager: Richa Fuller mining jurisdictions, Tanzania, is in danger
Subscriptions: Mitchelle Matambo of missing out on the next boom following
Phone: (+61 8) 9321 0355 the introduction of new mining legislation
Facsimile: (+61 8) 9321 0426 by President John Magufuli. Paydirt spoke
with a number of players to determine
Pre-press and printing: whether the dust had settled and what lies
Vanguard Press 26 John St, ahead for Tanzania’s mining sector
Northbridge WA 6003
Member of: 34 MINING INDABA
The resources sector has enjoyed a
Paydirt Media positive 12 months, largely on the back
Executive chairman: Bill Repard of improving commodity prices and the
Finance manager: Giovanny Jefferson sexiness of commodities of the future like
Accounts/administration: lithium and cobalt. Junior companies have
Heather Melling been at the forefront of exploration for
Conferences: Melita Fogarty, these new metals, while players in more
Namukale Nakazwe-Msiska, traditional commodities are once again
Christine Oelschlaeger enjoying investor interest. Buoyant capital
and commodity markets means prospec-
tive projects in Africa appear attractive,
which was evident as Paydirt compiled its
67-page preview to Mining Indaba, to be
held in Cape Town from February 5-8

Member of:

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

Time for honesty in Tanzania

Tanzania has dominated the Paydirt economic development and even less to rectify the situation.
team’s conversations over this edition If the company had been proactive, it could have renegotiated

and the country’s new mining policy is cer- its development agreements to ensure greater broad-based

tain to be a major topic of discussion at Feb- economic growth was achieved. Investor-friendly policies are

ruary’s Mining Indaba in Cape Town. designed to ensure the investor is duly rewarded for their risk-

At first glance, the move by Tanza- taking but also to ensure the injection of capital delivers benefits

nian President John Magufuli to rip to the entire economy.

up development agreements, in- In Tanzania, this has not happened. Of course, the company

crease royalty rates and demand did not have to renegotiate agreements, its rights were protected

free-carried interests in opera- by international arbitration laws, but if it had identified the issues

tions appears a classic govern- earlier, it could have adjusted its agreements long before Magu-

ment cash grab, the likes of which fuli launched his attack.

we have seen many times over the years. This is not about being a good corporate citizen; it is about

It is an approach that is certain to choke investment, poten- sensible risk management. By not acting earlier it has entered

“tially setting back Tanzania’s mining industry for years to come, into what has already proven a costly negotiating exercise, one
just at a time when it appears a second generation of develop- which could have far reaching effects on its business, other in-

ment is taking place. dustry players and the Tanza-

It also highlights a certain Barrick/Acacia has done little nian economy as a whole.
naivety in governments – This is not to deflect blame

across the world, not just in to acknowledge the unequal from the Tanzanian Govern-
Africa – of how capital markets economic development and even ment. Magufuli’s approach
work and the balance of risk has been heavy-handed and

versus reward. less to rectify the situation. at times overtly populist and
It certainly caught industry his and previous governments

off guard but on closer inspec- have as many questions to an-

tion the policy reaction from Magufuli is predictable and sug- swer about the lack of broad-based economic development as

gests the sector – including Barrick Gold Corp and its subsidiary Barrick/Acacia.

Acacia Mining plc in particular – should’ve been paying more However, the company should have recognised the changing

attention to the industry’s reputation in the country. attitudes in the country and moved to negate them.

Paydirt has visited Tanzania many times since the country Junior chance upon us

emerged on the international investment scene and it has been

apparent while talking to locals around Dar es Salaam during You’ll notice much of this edition is dedicated to stories of jun-

my visits that the general population remains suspicious of in- ior explorers and miners in Africa. This has been a deliberate

ternational miners. move. While the majors have enjoyed great success in this last

Barrick/Acacia has never been truly accepted in Tanzania. Its two years, juniors have struggled to build momentum in their

operations have been blighted by illegal miner incursions and projects and share price. However, momentum is gathering and

the social setting around North Mara in particular is at times their time appears to be dawning.

openly hostile. Those ongoing issues were a major motivating In Australia, the trickle-down effect on the mining sector has

factor behind Barrick’s decision to spin out the assets in the first already been witnessed with investors taking substantial profits

place. made in the gold mid-tiers and investing them in juniors.

In fact, the change in company name from African Barrick Now that those Australian-focused juniors are reaching full

Gold to Acacia was part of a wider marketing push to try to gain value, investors are beginning to look for the next opportunity.

acceptance in the country. For many Australian punters, the natural place to go is Africa.

The problem is that better marketing strategies will only take During the last mining boom, it took several years for enthu-

you so far if your actual performance and direct communication siasm for domestic projects to migrate to African projects. This

with host communities and governments is still poor. time around, thanks to the knowledge built up over the last dec-

When Tanzania entered the international mining fray in the ade, the perceived sovereign risk for many African jurisdictions

late 90s, it did so by building an investor-friendly tax regime with is lower, ensuring the shift of capital should be swifter.

low income tax and royalty rates and a simplified permitting pro- Africa remains the most prospective, underexplored region in

cess. the world and as investors seek value, they will lower their risk

Such policy decisions are essential when a country like Tan- hurdles in search of undervalued assets.

zania is trying to elevate its standing among potential investors, The move towards African juniors was already in evidence at

particularly when the country had little geological information to Africa Down Under in September and by the time the mining

attract miners. world descends on Cape Town in February, it is likely the explo-

The investor-friendly regime was a huge success, creating ration boom will be in full swing.

one of Africa’s largest gold mining industries but two decades

on it is obvious that economic development opportunities cre-

ated by mining operations have not been broad-based enough.

Tanzania’s per capita GDP of $US3,100 places it 191st glob-

ally, which is lamentable for a country with such riches.

Barrick/Acacia has done little to acknowledge the unequal [email protected] @DominicPiper



Oz commits to West Musgrave

Oz Minerals Ltd has given the strong- Oz has committed to the next phase of an earn-in agreement at the West Musgrave nickel-
est indication yet it is looking to Cas- copper project, as well as taking over PFS management responsibilities from Cassini
sini Resources Ltd’s West Musgrave
nickel-copper project as its next major ably volatile. A low-cost, long-life project road to Australia’s east coast following
mining operation. really allows you to take advantage of the release of the scoping study and met
periods in the commodity cycle where with several investors who had previous-
The South Australian-focused copper prices are up, but it also means you’re ly not expressed an interest in the com-
producer wasted no time in electing to insulated against the downside.” pany, with Oz’s long-term commitment to
proceed to the next stage of a $36 million the West Musgrave project the catalyst
earn-in agreement with Cassini to earn Work on the PFS has already start- for change.
up to 70% of the project – 120km east of ed, with Oz taking over as manager of
Warburton in Western Australia – follow- the study to allow the project to be pro- Improving sentiment towards nickel on
ing the release of a robust scoping study gressed seamlessly towards a decision the back of predictions of increased de-
last month. to mine in the next few years. mand from the electric car market also
appears to have piqued investor interest.
Oz will now spend $19 million over the Cassini, which received a manage-
next 18 months to claim a 51% stake in ment fee of $1.9 million from Oz, will “We’re not getting carried away – we’re
the project. Most of that expenditure will oversee the exploration arm of the PFS, coming off a pretty low base – but we be-
be directed towards a PFS which is due with $8 million to be spent
for release in early 2019. on geology-based activi- lieve there is a fair amount
ties in this next phase of the of growth for nickel to come
Cassini managing director Richard agreement. Oz will focus over the next few years,”
Bevan said the scoping study outcomes on key study items such as Bevan said.
had validated Oz’s commitment to the improving metallurgical re-
project. coveries, lowering costs for “Definitely in the last few
non-process infrastructure months people have start-
“When you listen to them present, they and resource conversion. ed to understand the op-
talk about Prominent Hill, then Carrapa- portunity in nickel. It’s cer-
teena and then the next project is West “The aim of the scoping tainly a much better time to
Musgrave,” Bevan told Paydirt. study was just to make sure be putting something out
there weren’t any fatal flaws there into the market when
“The timeline on this project fits in in the project and that there investors are receptive
nicely after Carrapateena. It’s their most weren’t any risks around and understanding of the
advanced asset after Carrapateena and the metallurgy, the water opportunities around the
all indications are that they see this as and the overall economics,” Richard Bevan nickel space.”
a real project which they’re committed Bevan said.
to bringing it into production as soon as In an ASX release, Oz
they possibly can.” “I think we’ve ticked all those boxes chief executive Andrew
pretty resoundingly. And while we’ve only Cole described West Musgrave as an
The scoping study confirmed the flag- been able to report an eight-year mine “exciting new mineral province with at-
ship Nebo-Babel deposits could be de- life, we think there is a clear line of sight tractive near-mine and district opportuni-
veloped for a pre-production capex of on a 15-year-plus operation.” ties”.
$730-800 million and would churn out
20,000-25,000 tpa nickel, 25,000-30,000 Bevan took the Cassini story on the – Michael Washbourne
tpa copper and 700-1,000 tpa cobalt over
an initial eight-year mine life.

Key financials from the study includ-
ed an average post-tax net cash flow
of $120-150 million, IRR of 20-25%, C1
costs of $US2-2.30/lb nickel and pay-
back within 3-4 years.

A 10 mtpa operation was considered
for the study. In 2015, Cassini flagged
cash costs of $US2.61/lb and a $264
million capex for an initial 1.5 mtpa op-
eration that could be expanded to 4 mtpa
after eight years.

“When we did our scoping study we
were pretty cognisant of the capex, but
having Oz on board with a bit more bal-
ance sheet strength has allowed us to
model it on a size which presents the
maximum financial metrics,” Bevan said.

“We are at the low end of the cost
curve and that’s where you want to be
with these sorts of projects because as
we know the metal price cycle is reason-



Dysprosium in the EV mix

Northern Minerals Ltd chief Pilot plant testing at Browns Range will be a learning curve for Northern Minerals
operating officer Robin
Jones said it was important to ket through rare earth production from JFMAG to Northern Minerals is expected
remember the electric vehicle Browns Range is gaining momentum early in 2018, with product to market slat-
story was not just about lithium. with the pilot plant project advancing well. ed for September.

Jones’ Northern Minerals is The board granted project approval Jones said it took a long time to strike
developing the Browns Range earlier this year and MACA Ltd had a sales agreement, which came prior to
heavy rare earths project, West- mined 180,000t of ore from the Wolver- the commencement of mining in June.
ern Australia, where dysprosium ine and Gambit West deposits to Novem-
is the mineral largely distributed. ber, with more planned. More than half “It has been an intense 2017,” he said.
the process plant equipment from Si- The company has secured all neces-
China produces 99% of the sary approvals for the proposed full-
world’s dysprosium, which is im- nosteel MECC has scale development of Browns Range,
portant in the make-up of EVs. also been delivered while New York financier – Innovation
to site in East Kim- Structured Financiers Co. LLC – has pro-
About 100g of dysprosium is berley. vided Northern Minerals with a two-and-
required per EV and outside of a-half year $US30 million research and
China and Browns Range there It is a critical time development loan facility.
is little available supply coming at Browns Range The loan affords Northern Minerals ac-
on-stream. with successful min- cess to tax offsets which are applicable
ing and pilot plant to R&D activities being undertaken to as-
“EVs are not just about lithium, we re- operation outcomes sess the technical and economic viability
ally can’t forget about rare earths, par- in the next couple of Browns Range.
ticularly dysprosium,” Jones said. months going some While pilot plant testing ramps up,
way to eliminating Northern Minerals will also continue
“Outside of Northern Minerals and any lingering doubts to explore on multiple other heavy rare
China, there are no other significant around the project. earths opportunities.
suppliers of dysprosium. More than one Based on current resources, full-scale
Browns Range is going to be needed to Jones said pilot production lasting 11 years is possible,
fill the supply gap going forward.” plant testing was but with 170 targets yet to be drilled, the
not about making company is aiming to add an additional
Northern Minerals’ role in the EV mar- money, but learn- nine years of mine life.
ing more about “The blue sky potential excites me and
the processes and we only really have scratched the surface
challenges along so far. We’ve only really worked on the
the way. WA side of the project and determined an
11-year mine life, which has been limited
Testing, commis- by exploration funding, but the blue sky
sioning and ore pro- potential is enormous,” Jones said.
cessing activities Browns Range is on the WA/North-
as part of the three- ern Territory border and covers 1,500sq
year pilot plant pro- km over a 60km by 30km area, most of
ject will start early which is yet to be explored.
next year, with all pi-
lot plant production – Mark Andrews
headed to Chinese
group JFMAG.

Pre-payment of
$10 million from


Collerina not the norm

It has been a long time coming, but co- There are no other projects that can produce nickel, cobalt and HPA like Collerina
balt and nickel companies are receiving
some positive attention in the resources ing up to 0.4% cobalt which hadn’t been have a pilot plant in operation during that
sector. drilled yet, however, the immediate focus period also.
for Collerina is having HPA test work and
Cobalt in particular has had compa- a mini-rig programme completed by the Kairaitis, the founder and former man-
nies fine-tooth combing projects previ- second half of February. aging director of Aurelia Metals Ltd, said
ously overlooked, as prices have surged the project was amenable to cheap pro-
extraordinarily from $US23,500/t at the A recent $3.5 million share placement cessing, with initial metallurgical test
start of 2016 to $US61,000/t at the time will help the company complete the mini- work utilising counter-current atmos-
of print. rig programme ahead of a PFS which is pheric leaching (CCAL) yielding good re-
expected to start sometime in Q1 2018. coveries with low levels of acid consump-
While there are many outfits emerg- tion.
ing on the ASX as potential cobalt play- The company hopes to have a gauge
ers, there is a unique point of difference on initial capex and opex numbers in the Adding HPA to the nickel and cobalt
about Collerina Cobalt Ltd. June quarter, while it is also aimed to production mix will have huge ramifica-
tions on project revenue, particularly as
“There is no other company looking to society moves towards cleaner and more
produce cobalt, nickel and HPA from a efficient energy options through the in-
single deposit,” newly appointed techni- creasing use of lithium-ion batteries and
cal director Rimas Kairaitis said. LED lighting which Collerina sees its
products destined for.
The Homeville deposit, between Co-
bar and Dubbo, 130km from Clean Teq “Collerina has been off the radar for
Holdings Ltd’s Sunrise project in New a while, but the company’s time is now,”
South Wales, is the asset which makes Kairaitis said.
Collerina peerless.
“Collerina is confident it has the ca-
In November, successful sample pro- pacity to deliver the 4Ns which changes
duction of high purity alumina (HPA) pro- project economics. We have two sets
vided further confirmation of the potential of peers – the nickel and cobalt players
to produce three commodities from its which have come streaming back on
namesake project. prices. On a peer-to-peer basis, we feel
we can compete on an operating and
The ability to produce HPA is the cost basis.”
kicker for Collerina, particularly pro-
duction of the 99.99% purity four nines – Mark Andrews
HPA (4N HPA) which is trading at about
$US25,000t. Rimas Kairaitis

“At 26,000 tpa the HPA market is rela-
tively small at the moment. But, by the
time this thing is in production demand
will probably be about 60,000 tpa,” chair-
man Norm Seckold said.

A self-confessed nickel tragic, Seckold
bought control of the company way back
in 2009 and is confident the specialised
technology being developed to unlock
the project can’t be used by rivals in the

“We have the IP, so we aren’t going to
get a whole lot of people using the same
technology as us; they can’t,” he said.
“That is why we are going to be running
like crazy to get this thing into produc-

Homeville is currently host to a small
laterite ore resource of 16.3mt @ 0.93%
nickel for 151,000t (0.7% cut-off), 0.05%
cobalt for 8,100t, 19% iron and 3.1% alu-
minium for 505,300t.

Mineralisation is from surface to about
60m with the deposit open along strike
and at depth, giving Collerina plenty of
potential upside to build upon the current
32 years’ of production.

Seckold said there were areas grad-



Vanadium next cab off the
battery rank

It may currently be the “forgotten” the last following September’s release of through its Gabanintha project near
battery mineral but half an hour in a Chinese Government policy document Meekatharra.
the presence of Vince Algar will leave which called for more investment in en-
most people convinced the Australian ergy storage. In the last three years, the company has
Vanadium Ltd managing director is in- built Gabanintha’s resource to 179.6mt
tent on changing that. Publisher the China National Devel- @ 0.75% vanadium pentoxide (V2O5),
opment and Reform Commission has including a high-grade measured-indi-
The enthusiastic Algar is leading called for even larger scale flow battery cated resource of 15mt @ 1.05% V2O5.
Australian Vanadium’s push into new systems with a 200MW/800MWh vana-
markets beyond the traditional steel dium energy storage project being built “That puts the project in a unique po-
sector as the company takes its Gab- in Dalian, Liaoning Province, by Chinese sition globally as a high-grade resource
anintha vanadium project in the Mur- system manufacturer Rongke Power and with another orebody the size of [nearby
chison region of Western Australia UniEnergy Technologies (UET). Windamurra] sat on top of it,” Algar said.
through feasibility study.
“There are similar projects in Japan The Wood Group has been appointed
Lithium, graphite, cobalt and nickel and the US,” Algar said. to work on test programmes and circuit
have been conveniently grouped as design with a view to releasing a DFS in
the “battery minerals” due to demand Australian investors may take some 2018.
from the lithium-ion battery technol- convincing with renewables and battery
ogy dominating the electric vehicle storage still on the outer domestically As the other developers in the space
space, Algar argues other battery due to inertia within Canberra. are finding out, the key to battery miner-
technologies are finding favour away als success is the ability to produce a
from the EV market. “It is extremely difficult to penetrate en- marketable product.
ergy market in Australia because of the
He told Paydirt that China’s push political situation but the fact remains va- “It is always about defining the process
towards eliminating fossil fuels meant it nadium is ideal for long-term needs and at the beginning. We are working with
was imperative high-quality, large-scale energy shifting,” Algar said. electrolyte researchers and are talking to
storage solutions were found. battery makers to understand if we can
His vision for renewables and batter- produce to their specifications,” Algar
“Now that China is so intent on using ies in Australia goes far beyond simple said.
more renewable power, the entire ener- market penetration.
gy sector is changing,” Algar said. “The Marketing will go hand-in-hand with
problem is, renewable power, and wind “There is real opportunity to build a metallurgy at Gabanintha.
in particular, is not ‘despatchable’ so downstream battery technology industry
large-scale capture of renewables must in Australia and we should be taking ad- “We think we have an idea of the prod-
happen.” vantage of our manufacturing space and uct and have got an idea of the players
using the car-making skills we are los- in the space,” Algar said. “We will be ag-
Vanadium redox flow technology is ing,” he said. “However, if you are not in- gressive in the next year, finding custom-
emerging as the most suitable battery for centivising renewables technology now, ers for vanadium and getting them in.”
such large-scale storage and transfer, you will kill the industry.”
with its advantages over other systems – Dominic Piper
(lithium-ion included) – scalability, 20- If Australian Vanadium is to secure
year lifespans, immediate energy release its place in this supply chain, it will be
and superior charge retention – making it
highly suitable to grid connection.

“It is a different opportunity which Chi-
na seems to be embracing; the idea of
vanadium redox flow as the best option
for the long-term storage projects they
are building.”

Last month, Robert Friedland’s va-
nadium redox flow battery company,
Pu Neng, was commissioned to build a
3MW/12MWh battery for the first phase
of the Hubei Zaoyang storage integration
demonstration project in Zaoyang, Hubei
Province. The battery storage system will
be used to assist the integration of power
from large-scale photovoltaics (PV) lo-

Pu Neng’s battery will be the first ma-
jor project in China but is unlikely to be



Tanzania and South Africa:
Mining’s biggest problems

Things could always be worse – even ed sweeping meas- and chief financial of-
for the South African mining industry ures such as the right ficer Andrew Wray both
and investors in South African mining eq- by government to re- resigned within two
uities. I mean, you could, for example, be negotiate existing mine weeks.
running a mine in Tanzania or be a share- development agree-
holder in Acacia Mining plc or Shanta ments (MDA’s); to take Management chang-
Gold plc. a 16% free-carried in- es have also taken
terest in all mining pro- place at Shanta Gold
The upheaval in Tanzania following jects and acquire up where Eric Zurrin has
the crackdown on that country’s mining to 50% of any mining been appointed chief
industry by new president John Magufuli asset commensurate executive in place of
has wrought havoc on Acacia in particu- with the value of the Tony Bradbury be-
lar and hammered the share prices of tax benefits provided cause the Shanta
both gold producers which are totally de- to the owners of the board felt an executive
pendent on their operations inside Tan- asset by the Tanzanian Mosebenzi Zwane “with a different set of
zania. Government. skills” was required
to guide the company
Both are quoted on the London Stock The Government has also increased through the new situation in Tanzania.
Exchange and, by early November, both mine royalty payments by 50% to 6% The changes made so far by Zurrin
shares were at 12-month lows with Shan- and slapped a new 1% “clearing fee” on include a cost-cutting programme to
ta down 74% and Acacia down 68%. gold exports while at the same time it has save $US5 million in annual costs along
stopped making VAT repayments due to with a 40% reduction in the work force
Other mining companies affected in- the mines while it carries out an investi- at Shanta’s only operating mine and the
clude AngloGold Ashanti Ltd which runs gation of the tax system. implementation of steps to make Shanta
the Geita gold mine and Petra Diamonds “more Tanzanian”.
Ltd which operates the Williamson mine All of which, frankly, makes the situa- A number of Tanzanian nationals
but the bulk of their operations are situ- tion in South Africa look pretty good by have been promoted to “key leadership
ated outside of Tanzania and any impact comparison although I am not hearing roles in the company and to the execu-
on their share prices has been minimal. anything like the same level of interna- tive committee” with Zurrin insisting that
tional “wailing and gnashing of teeth” these changes were all made on merit.
By comparison in South Africa it has over the situation in Tanzania as I keep According to a statement released by
gone fairly quiet – for the present at any hearing over what’s going on in South Shanta this makes the company “now
rate – over the confrontation between the Africa. better positioned with highly qualified
Chamber of Mines and the Department Tanzanian individuals in senior manage-
of Mineral Resources (DMR) concerning Acacia was singled out for particular ment positions with in-country relations
the Mining Charter. government attention and the impact across all levels of government”.
has been devastating. The latest nega- Implication seems to be that Tanzani-
The two legal actions launched by the tive development has been the resigna- an national executives will be better able
Chamber against the DMR – over the tion of the company’s top management to negotiate the new mining dispensation
“once empowered, always empowered” following a “framework agreement” an- with government officials and politicians.
ownership aspect of the Mining Charter nounced in October between controlling That assumption may not be sound
and for a complete “setting aside” of the shareholder Barrick Gold Corp and the judging by what has happened in South
entire Charter – are working their way Tanzanian Government. Africa where a number of senior black
through the Courts. mining businessmen – such as Exxaro
Announced as “modern, 21st Century Resources Ltd chief executive Mxolisi
Minister of Mineral Resources Mose- partnership”, the deal apparently stipu- Mgojo and Royal Bafokeng Platinum Ltd
benzi Zwane – the man who famously lates that Barrick will share equally “the chief executive Steve Phiri – have also
claimed at this year’s Africa Down Under economic benefits” generated by Aca- had run-ins with the country’s regulators
that every investor he had met follow- cia’s mines with the Tanzanian Govern- and politicians.
ing publication of the redrafted Mining ment to which it has also agreed to pay Reason is they tried to uphold share-
Charter “had expressed a willingness to $US300 million in part settlement for out- holder and market interests against the
comply” – seems to be keeping his head standing tax allegedly owed by Acacia. political ideology the ANC Government
down for now. has been trying to force down the mining
Barrick described the deal as a “ges- industry’s throat.
He had clearly not spoken, or had sim- ture of goodwill” ahead of detailed ne- Brendan Ryan is a Johannesburg-based
ply ignored, the views of the investors gotiations to be held with the Tanzanian mining writer
backing and running the country’s mines. Government.
The Chamber’s utter contempt for him
was underscored through a decision by Market reaction appears to be that
its members to boycott the opening func- Acacia has been “sold down the river”
tion of the Johannesburg Mining Indaba by Barrick and the actions of the com-
attended by Zwane in early October. pany’s top management team back that
up. Acacia chief executive Brad Gordon
The upheaval in Tanzania has been
caused by new legislation which includ-



Agrimin spices up Mackay

With traditional commodities starting Agrimin has a Native Title agreement in place with the Kiwirrkurra people at Lake Mackay
to resonate with punters again and
the importance of new age minerals like “Any growth in the market is great for a The company is already two years
lithium being realised, renewed interest in primary producer like ourselves,” Savich down the track with environmental stud-
the mining sector is far reaching. said. ies. Savich is not expecting anything left-
field to contend with.
However, for some participants, the Production is becoming more of a real-
resources sector doesn’t necessarily feel ity for Agrimin, with Native Title granted Environmental work will continue, as
like a natural habitat, even though they by the Kiwirrkurra people in November Agrimin was preparing a PFS to be re-
are currently feeling the benefits. and heritage clearance covering almost leased in Q4 2017.
the entire SoP resource also received.
“We try and not lump ourselves in the A scoping study indicated the potential
mining industry, but one way or another “We’ve gone a long way to de-risking for Mackay to deliver 370,000 tpa SoP
we are there. We deal with the Depart- the project,” Savich said. product over a 20-year mine life at an ini-
ment of Mines, we need a mining lease, tial capital cost of $US259 million.
and I think most of the investors that “It is on WA’s largest salt lake, a Class
invest in our company invest in other A Aboriginal reserve, so getting the Average AISC of $US277/t FOB were
commodities like lithium. And, if they are clearance for 97% of the lake surface is estimated, which would return good
making money in other stocks, they are a huge milestone for us. It allows us to cash margins at current market prices of
probably feeling pretty good about them- now convert the exploration licences to a around $US500/t.
selves and they are probably feeling mining lease and obviously with the min-
pretty good about us as well,” Agrimin Ltd ing lease comes the 21-year tenure. That With demand increasing and supply
chief executive Mark Savich told Paydirt. is the next step from here and what we dwindling, Agrimin is well positioned to
needed the mining agreement for.” take advantage of improving market con-
Agrimin’s niche in Western Australia’s ditions for SoP and hoped to be in pro-
mining sector is in the fertiliser space All aspects of Native Title are in hand duction by 2021.
where it is looking to develop the Mackay for Agrimin and the next piece of the puz-
sulphate of potash (SoP) project on Lake zle is attaining environmental approvals. Should the stated ambition be
Mackay – the largest undeveloped SoP- achieved, 2017 will be looked back upon
bearing salt lake in the world. Mark Savich as a pivotal year in the company’s devel-
China’s consumption of potash for
fertiliser-intensive crops is increasing “It has been a transformational year for
against a backdrop of falling domestic us, we raised $13.2 million in March and
production. everything changed overnight,” Savich
Therefore, it is expected imports of
potash into China will rise to satisfy de- “We went from not having enough
mand for high yield crops such as fruit money to do what we wanted, to having
and vegetables. capacity to do more. Last December we
had two employees, now we have nine
Currently, China buys MoP and uses full-time and seven who roster on and off.
the Mannheim Process to convert it to It is a different mentality for us now and
SoP. it is a matter of keeping our head down
and getting our work done as quickly as
Savich said Agrimin’s SoP product possible, which is what people gave us
could undercut the Mannheim producers money to do.”
in China and other markets around the
world. – Mark Andrews



Altura rises to
new heights

Most emerging companies would be happy to settle for a pro- within 17 months of an investment deci-
longed period of steady state production before contemplating sion.
any expansion plans. Try telling that to Altura Mining Ltd.
Altura managing director James Brown
said unprecedented demand for his com-

pany’s product had prompted the earlier

First ore is just months away from be- the first lithium concentrate sales from than expected look at project expansion.

ing processed at Altura’s namesake lithi- the project. “We’ve always been crawl before you

um project in Western Australia’s Pilbara It is anticipated first production from walk people, but given where the mar-

region, but the company is already draw- the expanded plant can be achieved ket is and certainly with encouragement

ing up plans to double output by from our substantial partners in

late 2019. China who are looking for more

A scoping study completed product, along with external par-

last month confirmed that du- ties that currently aren’t part of

plicating the size of the under- our off-take arrangements, it’s

construction processing plant prudent for us now to commence

to double the developing opera- that study,” Brown told Paydirt

tion’s production profile was the during a site visit last month.

best expansion option for the “Clearly the best option for us

project, about 120km south of was to duplicate existing mod-

Port Hedland. ules which we know are deliver-

Altura was quick to com- able because we know the price,

mission an immediate DFS we know the installation, etc. It

to examine the viability of lift- gives us a short lead time, so

ing production from the initial we’ll look to deliver something

nameplate output of 220,000 that will be approaching double

tpa to 440,000 tpa. Results from production in 2019.”

the expansion study are due in Altura is anticipating minimal

April, potentially coinciding with Altura managing director James Brown disruption to initial plant opera-


Mining activities are in full swing as Altura prepares for first production in early 2018

tions while the upgrade is completed. tember 2016, based on the initial produc- using a $539/t spodumene concentrate

The company said only minor modifica- tion of 220,000 tpa @ 6% lithium oxide, market price.

tions to existing infrastructure will be re- Altura would generate a NPV of $411 mil- With interest in near-term lithium pro-

“quired, with the camp and water bores lion and IRR of 58.1% of the life of mine. jects continuing to soar, Altura was able
already having enough capacity to to finalise its project funding pack-

cater for an expanded workforce. age in September via a $US110 mil-

The scoping study flagged the We believe our off- lion senior secured loan facility pro-
introduction of a night shift – on take partners’ growth vided by a consortium of leading US
top of the existing day shift fleet and Swiss-based investment man-

supplied by NRW Holdings Ltd – plans are sufficient to warrant agement groups.
would accommodate the expan- development of stage two. A separate $26 million placement

sion plans. NRW expects the extra to international institutions and so-

shift will generate an additional $20 phisticated investors in October pro-

million a year in revenue, having vided the sweetener for Altura to pur-

already signed a five-year, $110 million Other key numbers from the study were sue its expansion studies.

mining services contract with Altura. a capex of $139.7 million, cash costs of Binding off-take agreements have also

Altura’s mine life is expected to remain $315.90/t and payback within 1.8 years, been signed with Chinese-based battery

above 10 years, based on the recently

revised resource estimate of 44mt @ 1%

lithium oxide containing 441,000t and re-

serve estimate of 34.2mt @ 1.04% lithi-

um oxide containing 357,000t.

Brown said his company would consid-

er all funding options for the expansion,

with cash flow from operations certain to

give Altura plenty of flexibility at the ne-

gotiating table.

“It will all depend on the timing and

whether we use a staged implementation

for the expansion,” Brown said.

“At the moment we’ve got multiple op-

tions which could involve anything from a

pre-payment option from a new customer

to – and something we’d probably like to

avoid – additional equity issue to pay for

it. And at that point in time we should be

in production, so it will be a little bit more

transparent for people, obviously moving

from a greenfields site to a brownfields

site with clearer transparent cash flows.”

According to the DFS released in Sep- Construction of the processing plant was more than 50% complete at the time of print



Bulk earthworks have been completed on the tailings storage facility

groups Shaanxi J&R Optimum Energy Altura was one of the first movers on The company had high hopes for its
Co Ltd and Lionergy Ltd for 200,000 tpa, lithium in the Pilbara, having made its coal assets in Indonesia and the Philip-
representing more than 90% of the stage initial discovery in 2009 and delineating pines, as well as a 30% interest in Atlas
one production. Iron Ltd’s then-upcoming Mt Webber iron
Altura chief operating officer Chris Evans ore mine, but the resources downturn
“When you go through the DFS pro- a resource two years later. A preliminary saw the company seek quick sales in
cess, the decisions being made with re- scoping study was completed in 2012, 2014 and renew its focus on lithium.
gards to tonnage and size, a lot of those but a lack of market interest in lithium as-
were in 2015 when the market was still sets globally saw the project shelved. While bold at the time, the decision to
fairly opaque. Now it’s become fairly pursue lithium proved a fruitful one as
transparent to us that there is a need for global interest in electric vehicles – and
different supply,” Brown said. the minerals required to build them –
started to take off.
“I don’t think anyone who is already
in the market or about to enter the mar- “There’s no secret we’re in a different
ket like we are is looking to expand their realm nowadays,” Brown said. “The peo-
production. When we enter the market, ple we’re now talking to are a mixture of
that’s all additional tonnage so we’ve got traders, converters and battery users and
to be confident our additional tonnage, obviously downstream we’ve got a group
on top of that from stage two, will be ab- of auto-manufacturers that are entering
sorbed in the same way. the fray looking to secure upstream sup-
ply for their EV range.
“We believe our off-take partners’
growth plans are sufficient to warrant “It’s something that we obviously
development of stage two, but we’re also haven’t seen before, but we believe that
the sort of people who like to have proof trend will continue if the discussions and
of plan for stage one before we commit the approaches we’ve had from some of
to stage two.” the larger auto-manufacturers looking to
test the water on the resources side are
Resource extension drilling is planned for the 2018 field season anything to go by.”

Altura will be the first of three Pilbara-
based hard lock lithium producers to
come online in 2018, followed by direct
neighbours Pilbara Minerals Ltd (Pilgan-
goora) and Mineral Resources Ltd (Wod-
gina). In fact, up until recently Altura’s
project was also known as Pilgangoora
but the company decided to change the
name to avoid any confusion.

Brown is a strong advocate for work-
ing with his company’s neighbours rather
than against them, despite all companies
competing for a piece of what is still a rel-
atively small global lithium market. Altura
and Pilbara Minerals have a formal co-
operative agreement to jointly explore


a lot of interest once it gets on the ves-

sel,” Brown said.

“That’s not the case with our lithium

concentrates. There’s certainly a value-

add to that and it’s been clearly demon-

strated in the price of lithium carbonate

and lithium hydroxide.

“As a group, we don’t want to be seen

as just raw material suppliers in the short

term because of the buoyancy in the

price. Having the ability to access the val-

ue-add side of our product is something

that is very attractive to us.”

Altura’s stock hit a nine-year high of

47c/share in November – a fourfold in-

crease on the company’s share price at

the start of FY2018 – as investors warm

to a company which previously shied

Altura fortuitously acquired the former Roy Hill Rail Camp 2 to house its workforce away from major marketing ploys.

Now armed with a strong balance

opportunities in the region and exchange missioning in Q1 2018. sheet and a register including US asset

confidential information for the benefit of Lionergy is currently building a lithium manager BlackRock Inc, Altura is deter-

both parties. carbonate plant in China which will re- mined to leave an imprint on a rejuvenat-

Both companies are currently sharing portedly be ready to consume that first ed investment market.

the costs of upgrading access roads to batch of spodumene concentrate. Altura “From the very beginning we have said

their respective projects. has an option to take equity in the plant, we would like to be known as a company

The agreement was struck on the back but the company is unwilling to commit that delivers what it says it’s going to do;

of Brown and Pilbara Minerals boss Ken to any downstream processing oppor- that’s always been number one for us,”

Brinsden previously working together tunities until after it achieves consistent Brown said.
“when the latter was at the helm of At- production.
“We’re quite happy with the share price

las. Mt Webber architect Chris appreciation and our market capi-

Evans, now Altura’s chief op- Having the ability to talisation is significantly higher
erating officer, is another key than what it was three or four

player behind the scenes. access the value-add side months ago prior to the funding
“People have described [our of our product is something that package being announced. We’re
also very dividend focused and we
relationship with Pilbara Miner-

als] as somewhat unique, but is very attractive to us. want to be able to not only show
we’ve been brought up to get our shareholders we can deliver

on with our neighbours and I on appreciation of share price, but

think we have a great working also have a strategy where we can

relationship,” Brown said. “I think we, as miners, naturally want to pay dividends down the track.”

“Our teams meet every other week and have as much input into the downstream – Michael Washbourne
discuss opportunities and share what we processing of our material as we can, but

can to help each other. People need to history tells us that we usually don’t show

remember that both of us are developing

on a similar timeframe and there’s ab-

solutely no benefit for either one of us if

someone experiences any pitfalls or de-

lays. We’ve got to make sure we continue

to facilitate that for each other.

“We’ve got different shareholder

groups, we’ve got different stakeholders

to answer to, except for the Njamal people

which are common to both operations.

Certainly their off-take arrangements are

different to ours and essentially our prod-

ucts will end up in different locations, so

I don’t see it as a competition between

the two.”

When Paydirt visited the project with

Altura’s management team in mid-No-

vember, construction of the processing

plant was 50% complete and mining ac-

tivities were in full swing. More than 95%

of the required remaining equipment was

also on site as the company targets com- Almost all equipment for the remaining construction of the project has arrived on site



Pilbara glistens again

While the extent of Pilbara’s con- Civmec is looking to engage Njamal people at Altura’s lithium project
glomerate gold potential is only just
beginning to be revealed, the nature of involvement at Pilgangoora with the out- business, labour hire, freight and logis-
the region’s lithium mineralisation is at a fit selected to expand the camp site and tics and waste management. These are
more defined stage. upgrade road access at site earlier in the four legitimate businesses the Njamal
year. people can take anywhere. They will
Companies such as Altura Mining Ltd be set up as independent businesses
and Pilbara Minerals Ltd, which in effect Dryland, who is general manager of owned by traditional owners. We have
are tapping different parts of the same NPJV, said there was nothing new about definitely turned it around from relying
orebody, have led the lithium charge in commercial ventures being established on a resource in the ground to relying on
one of the premier patches of mining to develop opportunities for traditional themselves.”
ground in the world. owners in specific areas, however, the
comprehensive capabilities and busi- Lithium demand is expected to grow
The lithium story hasn’t unfolded quick- ness strategy implemented set the NPJV sharply in the near term and be sus-
ly enough for some in the Pilbara who are apart. tained for a long period of time meaning
still recovering from banking on sustained the opportunities for the Njamal people in
iron ore prices in the vicinity of $US120/t. Dryland and his team at PRG have the well-endowed Pilbara region appear
At the time of print, iron ore was trading played an important role in connecting to be only just starting.
at $US62/t, far from the heady days of the Njamal people and the mining sector
$US140/t in 2012. and it will be a satisfying day for Dryland Such has been the success of the
when the ultimate ambition is achieved. NPJV to date, Dryland is looking to
The fall has meant iron ore opportuni- broaden PRG’s horizons in the new year
ties have faded for miners and service “If you look back over history there in another environment.
providers alike, particularly at the junior are not a lot of 100% indigenous or tra-
end, but lithium is providing somewhat of ditional owners-owned businesses that “We’re heading over to Chile in the first
a beacon in the Pilbara. are successful; I don’t know of any suc- quarter of next year and we are looking
cessful ones. That is where we differ, forward to working with different geo-
“I think everyone put a lot of eggs in we are looking at the long-term future, graphical indigenous groups. It’s a new
that one iron ore basket. I think the down- rather than the short game which is the frontier for the PRG and we’re looking at
turn was a big shocking downturn for eve- cash grab and royalties based. We have implementing a lot of the stuff we have
ryone. The financial analysts said that turned it around to establish contract- learnt here in WA over in Chile,” Dryland
iron ore would never go below $US120/t ing opportunities and built that through said.
again and within one year it was down capable businesses for the long term,”
below $US40/t,” Pilbara Resource Group Dryland said. “It is an exciting opportunity and I be-
director Scott Dryland told Paydirt. lieve that if we can apply what we have
“We have a five-year succession plan learned here through dealings with in-
“I think everyone is a lot more cau- and a 10-year succession plan, so in 10 digenous guys in South America, it’s an
tious and playing a lot safer these days years out of the 30-year mine life of Pil- excellent opportunity for us to expand.”
and keeping their cards close to their bara Minerals, the intention is that the
chests in the mining industry, especially venture will be 100% Njamal-run. We – Mark Andrews
in lithium. I believe the lithium market is have got four businesses set up – crane
definitely going to expand and I think the
Njamal people are lucky to be placed
where they are right now.

“With the high grade spodumene they
have within those two mines [Pilgan-
goora and Altura] or that one orebody, I
think the sustainable future for Njamal is
not to rely on the resource because it will
be gone one day or another.”

Dryland’s Pilbara Resource Group
(PRG) is a multidisciplinary contracting
group which provide a range of services
to the mining industry. The company has
partnered with the Njamal people – tradi-
tional owners of the land stretching east
of South Hedland to beyond Marble Bar
and through Wandanya on the Great
Sandy Desert – in an official Njamal Ser-
vices/PRG JV (NPJV).

The NPJV has been awarded a $1.5
million contract to work with RCR Tom-
linson on construction and installation of
offices, crib rooms and ablutions for Pil-
bara Minerals at Pilgangoora.

The work with RCR builds on NPJV’s


Peel finds a Knight

Peel Mining Ltd has deliv- graphic contact, in progress
ered another discovery at the time of print.

in New South Wales’ Cobar “We’re completing essen-

Basin. tial IP away from this area

The company delivered and targeting other pros-

Southern Knights to market pects. We have another dia-

in November and the zinc dis- mond drill rig also dedicated

covery did not go unnoticed. here and with the capital rais-

Peel shares appreciated ing we can expand and ac-

30% to 60c/share (48c/share celerate our activities,” Tyson

at the time of print) when said.

it confirmed the Southern While further investigations

Knights discovery, south of at Southern Knights and the

Wagga Tank, with assays in- ground nearby are being pur-

cluding 21m @ 31% zinc, 12% sued enthusiastically by Peel,

lead, 258 g/t silver, 1.4 g/t gold some exciting news at its

from 194m; 10m @ 16.28% flagship Mallee Bull polyme-

zinc, 11.17% lead, 387 g/t sil- tallic project is on the horizon.

ver and 0.63 g/t gold from An early start to production

148m and 22m @ 8.48% zinc, from the T1 lens at Mallee

3.06% lead, 115 g/t silver, 0.24 Bull is being assessed and a

g/t gold from 161m and 9m @ decision was expected to be

8.84% zinc, 2.07% lead, 14 g/t made by Christmas or early

silver and 0.58 g/t gold from in the new year.

188m. Mallee Bull is a JV with

Southern Knights sits along- CBH Resources/Toho Zinc

side the other fruits of Peel’s and there is scope to utilise

labour – Mallee Bull, Wirlong facilities at CBH’s nearby En-

and Wagga Tank – in a port- deavour mine.

folio a decade in the making. “We’re hopefully moving

“Peel has shown persever- towards a development deci-

ance in the last 10 years; eight sion sooner rather than later,”

of which have been in the Co- Tyson said.

bar Basin. When things [in the It is a good time to be mak-

market] went south, we took ing discoveries and bringing

the opportunity to dominate Deals and discoveries have been the order of the day for Peel on zinc-related opportunities,
the area and it is paying off,” since listing 10 years ago with zinc stocks declining and
Peel managing director Rob prices trending upwards from

Tyson said in Perth recently. the first drill holes (WTRC035) intercept- below $US1.20/lb in June to $US1.42/lb at

Since listing, Peel has conducted ed quite shallow, through-the-roof type the time of print.

125km of drilling, mainly RC and dia- mineralisation of 25m @ 40% combined “Wagga Tank and Southern Knights are

mond, with Tyson promising to keep the lead-zinc,” he said. genuine discoveries and have the poten-

rigs turning. “We have been rapid to follow it up. tial to be a very large system. There are

Having just completed a $6 million The strike potential is there, particularly not many new zinc deposits being discov-

share placement, Peel has $9.3 million this linear feature that corresponds very ered at the moment and we are happy

cash and is welcoming growing inter- well with the mag. We started stepping that we have made some,” Tyson said.

est from born-again gold miner St Bar- out along strike and now have minerali- Peel will go hard at its zinc plays in the

bara Ltd which boasts a shareholding of sation over 700m, with strong mineralisa- near term, while its Apollo Hill gold pro-

10.8% in Peel. tion over about 300m. The really exciting ject in Western Australia will be housed

Given what is unfolding at Southern part is the potential beyond the Southern in a separate entity.

Knights, Tyson is keen to continue drilling Knights area. We have effectively 800m “Apollo Hill will be spun out with an IPO

there and testing beyond the area. of strike untested back up to Wagga Tank, probably in the new year. It is a really

Drilling at Southern Knights was due to which is open to the north.” good piece of real estate and we want to

begin at the time of print, meaning follow- Geologists within Peel’s inner sanctum give it its own focus,” Tyson said.

up drilling at Wirlong is likely to happen in believe Southern Knights is typical Co- – Mark Andrews
the new year. bar Basin mineralisation, with Tyson of

Tyson expects Wirlong to be a critical the opinion it is more VMS-style.

part of Peel’s future, however, Southern Nevertheless, Tyson said the explora-

Knights is demanding immediate atten- tion techniques used to target both sys-

tion. tems was not vastly different, with RAB

“We were quite surprised when one of and RC drilling, to pin down the strati-



Deficit fatigue taking hold of tin

A tin deficit has driven companies back into the DRC

Why has tin been shut out of the base It could be down to simple lack of inter- widen from 3,000t in 2017 to 7,300t in
metals rally this year? est. 2018 in the context of a 360,000t global
Trading on the LME around marketplace.
$US19,400/t, tin is down 7% since the Tin has always been a low-liquidity
start of January. The rest of the metallic contract for LME but volumes have Such a fundamental picture normally
pack is up by an average 20%. shrunk further over the last couple of excites bullish spirits but not, it seems, in
years and open interest of 15,640 lots at this particular commodity market.
Perhaps it’s because no one has the end of October was down 26% year-
worked out how to write tin into the hot on-year. The problem is that supply deficit has
electric vehicle story that has galvanised been a running theme of the tin market
the others. It is now too small for many fund play- for many years and there is still scant
ers to get involved. Chronically tight time evidence of any supply-chain tightness,
Tin does, however, have its place in spreads, in backwardation since May, generating what might be called deficit
the green technology revolution. It is, ac- don’t help either. fatigue.
cording to tin producers association ITRI,
increasing its material share in the next Tin’s inertia is all the more remarkable Low LME stocks of 2,145t might give
generation of lead-acid batteries used in because it is a metal with an underlying the appearance of physical market tight-
hybrid vehicles. narrative of supply deficit. ness.

The shortfall, according to ITRI, will But there is another 8,550t sitting in


warehouses registered with

the Shanghai Futures Ex-

change in China. True, these

have been trending lower

since September but are still

up by 6,132t on the start of the


China’s falling mine produc-

tion was once part of tin’s bull

story. Until one of its produc-

ers, Yunnan Tin Group Ltd,

tapped a whole new source of

tin across the Myanmar bor-

der in the Man Maw mining


It’s worth remembering that

the wider tin market, including

ITRI, didn’t even know there

was a tin-mining district in My-

anmar until imports of its con-

centrate started turning up in

Chinese trade figures in 2013.

Last year, that flow of raw material posits. demand for tin from the DRC which isn’t

amounted to 472,500t, containing what Although China’s imports are on track tainted with the suspicion of conflict la-

ITRI estimates was 57,000t of tin. to exceed 50,000t again this year, more bour is attracting outside interest.

This huge new source of feed for its of this material is coming from processed A Canadian-listed company, Alphamin

smelters translated into steadily falling ore stockpiles as the mine’s own produc- Inc, has just raised $US80 million to help

Chinese imports of refined tin. Net im- tion slides. bring the Bisie tin mine in Kivu into pro-

ports were almost 30,000t in 2012. Last The question, though, given tin’s re- duction.

year, they were 9,300t. cent supply history, is whether there is The mine will produce around 10,000

They totalled just 1,500t in the first nine another surprise looming. tpa in contained metal. The target for first

“months of this year, and the country was Step forward, perhaps, the Democratic production is 2019.

a very small net exporter over the July- Republic of Congo. Bisie was itself once an artisanal op-

September period. eration administered by a

Myanmar blew a large Tin does, however, have its place unit of the DRC army. In-
hole in tin’s deficit narra- deed, it was the ugly post-

tive. in the green technology revolution. er child for conflict miner-
ITRI, the sole public It is, according to tin producers als and played a starring
role in their inclusion in
source of tin production

and consumption figures, association ITRI, increasing its material the Dodds-Frank Act.
can’t be blamed for not share in the next generation of lead-acid A successful rebirth as
seeing it coming since no
a mechanised mine with

one else did either. Rath- batteries used in hybrid vehicles. supporting infrastructure
er, the Myanmar Surprise would, according to Al-

underlines the difficulties phamin, mean “unlocking”

in tracking a notoriously one of the richest tin de-

opaque and unpredictable global supply The DRC has long been a major tin posits in the world and, as a result, the

chain. producer, albeit chaotic, where mining is entire North Kivu region of the DRC.

This year has sprung another little sup- still often done by hand and pits in tin-rich Alphamin is a pioneer, challenging the

ply surprise. Kivu Province have tended to be run by political risk wall that has held back in-

Indonesia, the world’s largest exporter army or rebel militia groups. vestment in the DRC tin sector.

of tin, is on track to buck a four-year slide Official production of tin concentrates, It’s still a risky proposition, given the

in shipments. Exports rose by 20% year- as published by the country’s central multiple challenges of working in what

on-year to 63,200t in the first 10 months bank, slumped from 19,000t to just 6,000t even by DRC standards is an anarchic

of 2017 despite government pressure on between 2012 and 2013. It hasn’t fully province.

the independent production sector and a recovered since, with output last year at But if you’re suffering from tin deficit fa-

long-running decline in ore grades. 13,200t. tigue and wondering where the next sup-

When it comes to tin, supply has a habit The official reason for this decline was ply surprise might come from, keep an

of performing better than forecast. a 2012 ban on illegal mining in Kivu. The eye on progress at the Bisie tin mine.

Deficit has proved to be repeatedly elu- more probable reality was a transfer of – Andy Home, Reuters
sive in this particular market. mines from the official sector into the

This doesn’t mean deficit doesn’t exist, hands of the M23 rebel group – which

nor that it couldn’t start to manifest itself briefly captured the provincial capital of

in refined metal availability. Goma in November 2012 – and its many

A key factor in ITRI’s renewed deficit successors.

call is the depletion of the Myanmar de- The combination of rich tin seams and



Up, up and away...

Avisit to Australia in late 2017 con- International mining people are feeling the warmth in the resources hub of Perth
firmed to Sander Grieve that the
shackles constraining the mining bitious companies, with North American bodes well for IPOs in 2018.
sector have been released. capital markets showing a willingness to “The pipeline has been materially
back rejuvenation stories.
“I was much encouraged, Perth, is slower in the last 36 months. We saw
a shadow of what we have seen in In the first half of 2017, 32 new list- some signs of life, but they were really
the North American context, maybe ings joined the TSX/TSX-V, continuing a in the ones and twos but now we are
slightly more stark, because of the trend which saw 38% more equity capital seeing a more convincing, stable base
level of concentration. It was ter- raised by mining companies in 2016. of companies that were in the process
rific to see the renewed enthusiasm in the past year. We expect 2018 to get
which matches the experience we The TSX and TSX-V were the premier good traction for IPOs and RTOs in the
are getting in North America. It has bourses for financing resources projects market place and various listings in com-
been a long winter and it is nice to in 2016, with the $C9.4 billion raised ac- panies with freer capital markets in North
see that spring is here,” Grieve, part- counting for 57% of mining equity financ- America,” Grieve said.
ner, head of mining, co-head of cor- ings globally.
porate department at Canadian law The deep pockets of North American
firm Bennett Jones told Paydirt. Capital appears to be more available investors has seen Australian-based
now than in the past few years, which companies Cardinal Resources Ltd, Sol-
“It is my sincere hope that we have Gold plc and Aguia Resources Ltd seek
now turned the corner and there ap- Sander Grieve listings on the Canadian exchanges in
pears to be real activity in the mar- 2017, as their respective projects start to
ket and substantial interest in the head down the development path.
sector. We were really encouraged
by the level of activity and level of Cardinal and fellow dual listed West
enthusiasm in Perth and Brisbane.” African gold explorer West African Re-
sources Ltd have received worldwide at-
Although gold had eased off tention and both companies have been
from $US1,350/oz in September to the subject of M&A speculation.
$US1,283/oz in mid-November, Grieve
was confident the resources sector would Grieve said there was a lot of market
hit the new year with a head of steam. attention on both stories and while none-
the-wiser as to the future of each, he
He expected quality gold projects and said there was substantial interest more
well understood exploration stories to broadly in consolidation.
continue to drag investors back into re-
sources stocks and into metals of the fu- “I think if you are a fundamentalist and
ture such as cobalt and lithium. the rerate is gaining steam in the space,
this is your moment and to some extent
Just as Australian companies have you are probably 12 months too late,”
dusted off cobalt projects this year, inter- Grieve said.
est in the base metal is also high in North
America. “The truism for most investors is that

Top mining financings in the first half
of 2017 on the TSX-V were largely gold
players, however, Cobalt27 Capital Corp
eclipsed all by raising $C200 million to
buy physical cobalt and several explora-
tion-stage cobalt royalties.

“There has been some action in the
traditional commodities but that has defi-
nitely spread into some of the new-econ-
omy metals such as cobalt and lithium,
where plays are getting traction,” Sander

The electric vehicle sector and battery
market is sexy and could spur new com-
panies looking to list on assets with the
potential to play a role in the technologi-
cal and electric revolution under way.

Meanwhile, in response to depressed
commodity prices and poor sentiment for
resources during the downturn, blue chip
miners opted to shed assets and consoli-
date portfolios to sustain their business-
es. This has led to opportunities for am-


you never catch the absolute bottom and The deep pockets of North American capital markets have attracted
you will never sell at the absolute top, so the likes of Cardinal to list in Canada
you have to make your bed on momentum
and see where the sector is going. There demonstrated they had regained their so there is evidence that governments –
is still the belief amongst the fundamen- M&A appetite. when they get in their mind to create an
tal players in the space that we are at the interesting and stable platform for invest-
beacon of the next rally and not the end, “SolGold has captured a lot of investor ment – can make a material difference,”
so that will tend to drive people’s con- attention and a lot of investor enthusiasm Grieve said.
solidation ambitions and [potentially see] here. They have been substantially re-
them transact as quickly as possible. rated during the course of the last year – Mark Andrews
and a while back there were some sub-
“Commodity price increases will pro- stantial regulatory concerns. But, now
vide some of the background and oppor- we are seeing Ecuador as being the best
tunity for that so we will have to expect improved mining jurisdiction in the world
there will be a very good trail of M&A
continuing through 2018 as those op-
portunities occur. There are still capital
markets on the choosy end of investment
and there are some companies having
difficulty accessing capital markets at
this time, so that will continue to be part
of the M&A story as well.”

Australian juniors are already experi-
encing big-company interest.

SolGold’s success in Ecuador at the
Cascabel copper-gold project drew com-
peting bids from both BHP Ltd and New-
crest Mining Ltd for a significant stake in
the company.

Newcrest prevailed, which was not
only a boon for SolGold shareholders
but the entire junior sector, as the majors

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Community divided over
Pilbara conglomerates

For most of the 100 years since its discovery, it was widely accepted in geological circles that there was
nothing comparable to South Africa’s Witswatersrand Basin, a goldfield which has produced 1.5 boz of gold.
However, in September 2016 prospectors in Karratha, in Western Australia’s Pilbara region, stumbled across
gold nuggets believed to be hosted in a conglomerate-style setting similar to the Witswatersrand. Mining com-
panies have been quick to follow prospectors into the country and the regularity of gold nugget discoveries has
sent share prices and market caps through the roof. The jury remains out on the validity of the Pilbara being
the world’s next mega gold-producing hub but the current hype is unavoidable and Paydirt was on hand to
soak-up the atmosphere in November. Over the next few pages Dominic Piper and Mark Andrews attempt to
paint a picture of what Novo Resources Corp and Artemis Resources Ltd have discovered so far and what the
next step in demystifying the Pilbara conglomerate story will be.

Like all the great gold discoveries, there president Quinton Hennigh reported that people found thousands of ounces out
are conflicting reports and anecdotes about 200 people a week were still ar- of the ground; all of it was derived from
about how the sudden Pilbara conglom- riving in Karratha to take part in the gold weathering of the conglomerate from
erates gold rush started around the Novo bonanza. what we can see,” Hennigh said.
Resources Corp/Artemis Resources Ltd
JV at Purdy’s Reward. “During the course of about six months To page 24

Whichever version was borne first – the A nugget pulled from a Pilbara conglomerate. Optiro has been appointed
one about Rio Tinto Ltd employees mark- as scrutineers by Novo
ing out a parking lot south of Purdy’s Re-
ward finding gold and tracing the nuggets
back to its origin; or the mid-30s chop-
per pilot from Port Hedland who landed
nearby to find that a lone prospector was
swimming in gold – both are likely to be-
come part of folklore should the Pilbara
gold conglomerates indeed host more
ounces than the famed Witswatersrand
in South Africa.

Once news broke about the easy pick-
ings of gold, metal-detecting prospectors
swarmed to Karratha and yielded thou-
sands of ounces of gold between Sep-
tember to November 2016.

Even when it was believed the low-
hanging fruit had been exhausted, Novo


PILBARA GOLD “We have now made contact and ac-
quaintances with many of the prospec-
PAGE 24 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT tors and any time I meet a prospector
who was out there in the early days I
make an effort to try and buy the gold
from them. I have a historic collection of
what was found here on the ground late
last year [2016], it is quite interesting and
most of these guys can tell you exactly
where they found each nugget too.”

When Paydirt visited Purdy’s Reward
and Novo’s wholly-owned Comet Well
project, metal detector-wielding prospec-
tors were still plucking nuggets out of the
ground, an hour’s drive from Karratha’s
city centre.

Dedicated prospectors have managed
to make a quick buck, while Novo has
benefitted from the countless number of
boots on ground in the early days of the
Pilbara conglomerates gold rush.

“We have a good sense of where the
gold is distributed,” Hennigh said.

“One thing that they did leave behind is
little holes in the ground where they dug
up nuggets. These holes are the best
guides in showing us where the conglom-
erate was or is. Most of the conglomerate
does not outcrop it sub crops, so what
you see on surface is decomposed ma-
terial like cobbles and boulders; stuff like

“Now that we have trenches going
and drilling going we can see a lot more
about the geology. I’d say in the last four
weeks we’ve learned about as much as
we did in the first three or four months of
being out here.”

Hennigh’s eyes are slowly, but surely,
being opened to the opportunities ahead
for Novo in Karratha, however, he is no
stranger to the wider Pilbara region.

Hennigh helped start Novo in 2010
and for the past seven years the com-
pany has “prospected heavily in the
East Pilbara” and defined a resource of
299,000oz gold @ 2.7 g/t at its Beatons
Creek project, 350km east of Karratha.

Like Purdy’s Reward, Beatons Creek
is hosted by conglomerates within the
Hardey Sandstone Formation, part of the
Fortescue Group.

Indications so far are that the discrete
conglomerate horizons carrying multi-
gram, potentially economic grades found
at Beatons Creek aren’t common at the
Karratha gold project, which includes
Purdy’s Reward and Comet Well.

Novo is applying a concept to the Kar-
ratha gold project that suggests the Kar-
ratha prospects are near-shore marine
alluvial deposits akin to Nome (Alaska),
Orange River (Namibia) where diamonds
are mined, and the west coast of New
Zealand’s South Island.

Novo’s academic work is prevailing

positively and being backed by some of We do know that the gold is quite coarse Pilbara version of the Wits; it has got its
the biggest investors in the world, includ- and the conglomerates are what we call own characteristics and where that goes
ing Eric Sprott. polymeric; they have lots of different we don’t know yet, but we hope those de-
types of clasts in them. They don’t fit the posits do continue out into this basin like
Sprott’s investment in Novo has given Witswatersrand model per se. They are the ones in the Witswatersrand.”
him a seat on the board, and the well- definitely cousins of one another but the
known gold and silver investor has also Wits has finer grain gold, quartz cobbles, Having determined gold was coming
taken positions in other Pilbara conglom- quartz pebbles, is more organised and from a conglomerate unit which had nev-
erate hopefuls De Grey Mining Ltd, Kai- things like that but otherwise the geology er been mapped before, Novo has been
ros Minerals Ltd and Artemis. is very similar. We see this as more of a aggressively staking ground for the past
12 months, accumulating a land package
“The theory has been going quite well
and it would appear everything so far is Many prospectors have made a quick buck from the hysteria
confirming the thesis, we are not all there surrounding conglomerate gold in the Pilbara
yet but there is gold and there are nug-
gets,” Sprott told Paydirt.

“I am not surprised at how quickly
the market has reacted, even now with
the recent action every stock has done
every bit as well as Novo has. I am not
surprised, the market cap of some of the
Australian companies was quite low and
if there is 10 moz here this whole thing
holds together and who knows what will
happen. It is justified [the current market
appreciation]; it is a great time to buy.”

More buying may occur with further
confirmation that the Pilbara conglomer-
ate deposits are a particular type of al-
luvial system and Hennigh’s theories are
on the mark.

“People think these are like little chan-
nels or something and they have con-
centrations in river beds and what not,”
Hennigh told Paydirt TV. “[But] these are
scheelite deposits. These are the kind
that you form in a marine environment.



Trenching is revealing more about the Pilbara conglomerate story

totalling 10,000sq km. first taste of this. We have to get the ten- 100%-owned ground which is imme-
Purdy’s Reward and Comet Well are ements granted at Comet Well. That will diately down dip of Purdy’s and Comet
allow us then to get heritage clearance Well.”
in the part of the system where the con- and step out because these conglom-
glomerate “daylights” at surface, making erate horizons continue down strike for At the time of print, a binding term
them the priority for exploration. about 8km,” Hennigh said. sheet with Ngarluma Aboriginal Corpora-
tion (NAC) in relation to Comet Well and
The three-pronged approach to ex- “It is really critical that we open up surrounding tenements, which are sub-
ploration under way at the time of print the rest of this property to exploration ject to various sale, royalty, farm-in and
included; core drilling to reveal more ge- and then ultimately if we are talking JV arrangements, was signed.
ological information about the conglom- six months out we will also start step-
erate horizons; large diameter drilling ping out and doing some drilling on our NAC has made it a priority to prepare
for assaying of the large nuggetty-style and execute heritage agreements with
mineralisation; and systematic
trenching down the strike of the the Novo JV and progress herit-
outcrop. age surveys on Comet Well and
surrounding tenements.
“That information is really
going to help us determine the Once heritage agreements and
geology and grade if we can receipt of necessary regulatory
get bulk samples out of those approvals are received, Novo will
trenches or large enough sam- issue NAC 100,000 Novo com-
ples to get meaningful sam- mon shares, subject to a statutory
ples,” Hennigh said. hold period expiring four months
from the date of issuance.
Despite already building a
market cap in excess of $C1 bil- – Dominic Piper and Mark
lion and trading at $C7.50/share Andrews
in November on the back of suc-
cess to date, Hennigh said the An exclusive one-on-one in-
“hard yards are on us now and terview with Novo president
we have to do some pretty seri- Quinton Hennigh is
ous work”. featured on Paydirt TV

“Exploration at Purdy’s will be Novo president Quinton Hennigh
critical and that will give us our



becomes of

While most of continent’s miners and explorers gather momen- African resources jurisdictions – Tanza-
tum after a harrowing five-year downturn Tanzania – one of nia, Namibia, Ghana and Egypt – found
Africa’s largest gold mining jurisdictions – is in danger of missing out that Magufuli’s changes would have a
on the next boom following the introduction of new mining legislation negative impact on project economics.
by President John Magufuli.
“Tanzania’s recent changes, allowing
Announced in July, the new policy calls However, while clarity appears closer the Government to take a much higher
for the Tanzanian Government to receive for the country’s biggest miner, Tanza- stake in the mine, have had a hugely det-
a 16% free-carried interest in all mining nia’s junior mining sector continues to rimental effect,” Gargett says in the re-
projects (with the right to acquire a fur- falter under the clouds of uncertainty. port Two steps forward, one step back.
ther 34%), royalty rates to be increased The last seven years has seen a group “These changes ultimately impact the
from 4% to 6% and existing development of small Australian companies building IRRs achieved by mining companies and
agreements to be scrapped without any gold, graphite and rare earths projects in may determine whether the project goes
arbitration. the country but Magufuli’s change of pol- ahead at all.”
icy direction has brought those ambitions
Magufuli’s move has been interpreted to a shuddering halt at a crucial point in Markets were quick to recognise the
as an attack on Barrick Gold Corp sub- their development. negative impact. Acacia shares are down
sidiary Acacia Mining plc – the country’s more than 66% since February while
largest miner – whom he had previously “At a time when the mining industry shares in the majority of the Australian
accused of reporting misleading copper- has turned positive and with increased explorers and developers have come off
gold concentrate exports to avoid paying political stability in Africa as a whole, between 10% and 75% since the start
taxes. the timing of the Tanzanian tax changes of the year. That many of these compa-
may impede the recovery of the mining nies are in the midst of project financing
Barrick has spent the last five months industry in that country,” PwC partner discussions has increased the effect the
in negotiation with the Government, ap- and Australia-Africa Practice leader Ben changes have had on their development
parently striking a deal which will ensure Gargett tells Paydirt. plans.
Acacia can keep operating but under
dramatically altered terms. A PwC analysis of tax regimes in four The affected ASX-listed companies
have continued to reiterate their commit-
ment to the East African country, citing
both the investment they have made and


Ben Gargett

policy shift is directed largely at existing change in mining policy was a huge
success and Tanzanian gold production
operations. sprung from nothing in 1997 when the
policy was introduced to more than 1.7
“If the Government can work through mozpa in the late 2000s, making it one of
Africa’s largest gold producers.
with advanced projects like ours first,
Barrick – later to spin out the assets
we’ll be in the first wave of new mines into African Barrick Gold (now Acacia) –
was the largest miner in the country with
in the country, which is what they want three operating mines in the country’s
prolific Lake Victoria goldfields – Buzw-
to see,” Graphex managing director Phil agi, North Mara and Bulyanhulu.

Hoskins says. “A lot the hype around Each mine operated under develop-
ment agreements but as the mining
the legislation has been born out of the boom of the mid-2000s gripped, Tanza-
nians began to question the contribu-
favourable fiscal regimes for existing tion foreign miners were making to the
the relationships they have built with host miners. So, a lot of that negativity is not
Magufuli’s rise to the presidency in
communities, but Gargett says capital is aimed at aspiring miners like us.” 2015 further fuelled questions around
economic impact.
much less sentimental. The current situation must be placed
Phil Hoskins
“If it doesn’t line up financially, capi- in context. For the first 30 years after

tal will go elsewhere. Financiers take a independence in 1963, Tanzania was

much colder view of the world than min- a socialist republic, led by father of in-

ing companies,” he says. dependence Julius Nyerere. However,

The question is whether Magufuli’s as economic development stalled in the

Government has heeded the warnings late 80s and early 90s, successive presi-

markets have given them and whether it dents worked with the World Bank to lib-

even cares. eralise the investment climate and build a

The ASX-listed juniors adjusting to the national mining policy which allowed for

political landscape believe the country is private foreign ownership of mining pro-

keen to keep investment channels open. jects and introduced an investor-friendly

“Our view on this is the risk clock is not tax regime, including a 3% royalty and a

11.59, it’s now 12.05,” Black Rock Mining smooth permitting process.

“Ltd chief executive John de Vries says. From an industry perspective, the

“I’m pretty confident Tanza-

nia wants to get back to work.

I’m pretty confident that once If the Government can
they’ve got a legislative fix to work through with
their position against Acacia,

they’ll come back and [apply advanced projects like ours
a] more liberal regime to the first, we’ll be in the first wave

rest of the industry and we’ll

get ourselves reset.” of new mines in the country,
Graphex Mining Ltd is an- which is what they want to see.

other junior confident the



ber and she has already said she would

work to both clean up the sector and

make it investor-friendly.

“We met with the Minister and her of-

fice in November and it was very posi-

tive,” Kibaran Resources Ltd managing

director Andrew Spinks says. “There is

no doubt the Government wants to see

investment in its mining sector and wants

to see the country’s mineral resources

developed to international best practice.”

There is little doubt Magufuli’s policy

shift has turned Tanzania into a less at-

tractive investment destination.

According to South African mining law

expert Peter Leon, it is little surprise the

changes have affected investment in


The Tanzanian Government’s new mining policies could threaten jobs throughout “Clearly what’s happened from a legis-
the country’s mining and related services industries lative and regulatory perspective it is not
positive for foreign direct investment,” he

His first target was not mining revenues Barrick’s intervention may have gone says. “I will always tell the Government

but bribery and corruption. However, with some way to solving Acacia’s problems here in [South Africa] that capital is very

the mining development agreements – although the subsidiary company still unsentimental and will go where it gets

shrouded in secrecy and the mines de- has to approve the deal – but the junior the best returns.”

partment itself a target for his anti-graft sector remains far from stable with the 10 Gargett agrees, saying governments

push, it was inevitable Magufuli would ASX-listed juniors in the country facing have to realise the effect policy changes

eventually turn to resources. ongoing uncertainty. can have at the individual project and in-

There is widespread feeling in Tan- None of these companies are currently dustrywide levels.

zania that the development agreements in operation but many are heading to- “Governments need to get the fiscal

contained too many concessions around wards development. But, after emerging regime right and balanced and they have

tax and royalty rates and that citizens of from a five-year period when financing to realise that pulling one fiscal lever can

a country which is among the poorest in African projects was almost impossible, make a big difference to project econom-

the world – per capita GDP of $US3,100 they now find themselves further thwart- ics,” he says.

places it 191st globally – should be see- ed by the legislative turmoil. The miners and developers are well

ing more benefit from its vast reserves. Heightening this is the confusion which aware of the situation but having invest-

As the largest producer in the country, still exists over exactly how the new leg- ed considerably in their Tanzanian pro-

Acacia was an obvious mark. In March, islation will be implemented. jects, they are understandably reluctant

the Government banned the exportation Magufuli appointed a new mines minis- to walk away from them. Instead, they

of un-smelted copper-gold concentrate ter, Angellah Kairuki, to cabinet in Octo- are attempting to negotiate a path which

from its Buzwagi and Bulyanhulu sees project development continue

mines and following an audit at while regulation and future policy are

its export facilities at Dar es Sa- determined.

laam, Acacia was accused of un- Strandline Resources Ltd was pre-

derreporting gold-in-concentrate paring to move into DFS on its Fun-

grades, thus avoiding paying roy- goni mineral sands project when the

alties on production. legislative changes were announced.

The Government said Acacia Managing director Luke Graham ad-

was exporting 250,000oz a month mits the shift came as a surprise but

– as opposed to the company’s says Strandline has quickly adjusted

reports of 250,000 ozpa – via con- to the new scenario.

centrates and slapped a $US190 “The nature of the legislation and

billion royalty bill on the company. how quickly it was endorsed by the

Acacia rejected the claim and Government came as a surprise,”

when Magufuli introduced the new Graham says. “However, when we

legislation in July, parent com- took things into consideration we

pany Barrick stepped in to lead and our JV partner [Rio Tinto Ltd]

negotiations. In October, Barrick decided to push hard and stick to

chairman John Thornton told a the script and we continued our ex-

news conference in Dar es Sa- ploration and continued our develop-

laam that Acacia would pay Tan- ment.”

zania $US300 million as a show It is a strategy shared by many of

of good faith. Tanzania would also the Australian explorers and devel-

receive a 16% stake in Acacia’s opers in the country.

three gold mines under the frame- “The amended Mining Act condi-

work agreement. Kevin Urama tions are workable because of the


risk and scale approach we took with “ Exploration in Tanzania is at a standstill
Lindi Jumbo at the outset,” Walkabout The fiscal regime is quite clear and from
Resources Ltd executive director Allan a junior point-of-view, by the time we are
Mulligan says. “The high-grade, premi- ready to go for finance we can build the royalty
um product and modest capital mean the changes into our models.
project economics can withstand these new laws were introduced. caused by the shift, Magufuli’s policies
sorts of interventions.”
However, the former investment bank- are not that stringent by developing
Instead, Mulligan says, Walkabout has
turned to China for funding “because of er didn’t immediately hit the divestment economy standards.
their more pragmatic approach to these
issues”. button. “If you look at the rules that have been

“We have also used the delay in the “The fiscal regime is quite clear and set, they’re not inconsistent with what
award of the mining licence to continue
engineering, design and procurement from a junior point-of-view, by the time you see elsewhere in Africa,” de Vries
work with our development partner in
Yantai, China. Also, we are engaging we are ready to go for finance we can says. “Zambia is 20%, there’s free-car-
closely with the new Minister and her
team and I know they are acutely aware build the royalty changes into our mod- ried interest in Ghana and Botswana, so
of the need to resolve these issues
promptly.” els,” Bowles says. it’s pretty much a standard cost of doing

When news first broke of the policy, the “From what has been released, if you business in Africa.”
ASX advised relevant companies to put
their shares into suspension until there take that as the structure, if the econom- Findings from the PwC report indicat-
was greater certainty about
how individual projects would ics are right and if we see a business ed the new laws made Tanzania less at-
be affected. The compa-
nies themselves would much model, we will push on. When things tractive but Gargett believes the process
rather make their own way
through the situation, particu- settle down and we can raise money, we has eroded confidence as much as the
larly as other mining markets
such as London’s AIM and the will.” settings.
TSX did not enforce suspen-
sion. The fact is, for all the uncertainty “Governments have a right to set what-

“Sovereign risk takes lots of ever fiscal policies they want
forms. In my last role we had
to wait two or three years for but it is about communication.
heritage clearance before we
could drill a hole in outback Mining is a long-term invest-
WA,” de Vries says.
ment game and trust is very
Tanga Resources Ltd
managing director Matthew important so it comes back to
Bowles was the victim of un-
fortunate timing, starting his relationships and communi-
role with Tanga on the day the
cation,” Gargett says. “Where

the relationship between in-

dustry and government is

strong, they talk about poten-

tial changes but in Tanzania

there was no engagement

with industry at all.”

There is even an admission

among miners that Tanzania’s

development agreements

went too far in favouring the

investor, particularly given the

failure of the industry to fuel

wider economic prosperity in

Andrew Spinks the intervening period.



The most ambitious among the ASX-

listed companies even see the changes

as a new opportunity for the junior sector.

Peak Resources Ltd chief executive

Rocky Smith says he is looking for-

ward to introducing the company and its

Ngualla rare earths project to the Gov-


“We’re in an area of Tanzania that

doesn’t have a lot of mineral develop-

ment so they’re in need of economic

support in that area,” Smith says. “I think

there are some real positives for us. This

[the battery minerals sector] is some-

thing to encourage. There are a number

of them [battery minerals projects] out

there and if the Government was to spin

this the right way, it would be found to be

very beneficial. We’re going to be trying

to point that out to the Government and
Acacia Gold’s three Tanzanian operations have been wracked by social unrest help them in any way we can to kind of

push that direction.”

Kevin Urama, senior advisor to the Af- eign investment is unwelcome in Magu- Tanga executives Bowles and techni-

rican Development Bank president, told fuli’s Tanzania. cal director John Stockley are prepared

Paydirt at Africa Down Under that policy “There is no doubt Magufuli undertook to bide their time.

settings must change throughout a coun- a blitzkrieg on bribery and corruption “We are waiting on the promulgation of

try’s development to ensure inclusive and the industry saw some carnage off the regulations,” Bowles says. “We are

growth is achieved. the back of that,” Spinks says. “But, this on a slow burn rate ahead of that but are

“Countries which are beginning at the is not a Mugabe-style government and it excited about getting back on the ground.

earliest stage of development; all they re- is a question now of how the Government “Africa is a waiting game,” Stockley

ally need is to increase incomes to kick- can encourage investment – particularly adds. “If we make no ruckus and keep

start development,” Urama said. “That risk capital – back into the country.” working and toeing the line, we’ll get

is why you are able to go into a country Graham believes Strandline will find ahead. When the big elephants are fight-

today and they give you concessions to itself facing a similar situation – the abil- ing, lay down in the grass.”

allow you to start mining because they ity to position itself as a favoured project Patience may be a virtue for executives

need resources in order to deal with within a redrawn Tanzanian mining in- on the ground in Tanzania but sharehold-

the emergency policy issues. When the dustry. ers’ tolerance is likely to break sooner.

economy starts growing, you need to “I feel that will hold us in good stead as Tanga, like a number of peers, is taking

start evolving. the dust continues to settle, the country action to mitigate shareholder frustration.

“As incomes grow, needs change and improves its perception, the regulations “As soon as you mention Tanzania to

the awareness of communities begin to are put in place and they get back to the investors at the moment, the blinkers

change. And, once that awareness be- business of mining. We will be in a great come down and that is frustrating be-

gins to change, their demands for inclu- position to launch our projects further cause it is a fantastic project,” Bowles

sion also begin to change.” from that position.” says. “But, we need a sensible corpo-

According to Gargett, fiscal poli- rate strategy so we are now looking

cies throughout Africa share much to diversify shareholders’ risk by get-

the same model, one based on reve- ting exposure to other commodities in

nue generation from royalties, corpo- other countries but we will continue

rate tax and free-carried interests, re- low-cost exploration in Tanzania.”

stricting the policy options available. Walkabout has similarly moved

“Most of the regimes were set up to spread its risk profile, acquiring

with guidance from the World Bank,” projects in Namibia and Northern

he says. “The concepts are pretty Ireland. However, Mulligan says the

similar and the differences are how Tanzanian situation did not prompt

each government pulls the various le- the move.

vers of in royalties, free-carried inter- “Tanzanian sovereign risk was nev-

est and corporate income tax.” er a driver,” he says. “The Namibian

Spinks has preached patience with lithium project has been on the cards

investors since the news of the new for more than a year. We believe the

legislation broke. Kibaran is in ad- setting is well placed for significant

vanced discussions over financing of lithium discoveries to be found. In re-

its Epanko graphite project in Tanza- spect of Northern Ireland, this was an

nia. opportunistic purchase because the

Spinks believes optimism should setting was excellent, the platform

remain high for Tanzania’s develop- and data-set is of very high standard

ment and rejects any suggestion for- Allan Mulligan and we could hit the ground running.”


Acacia was slapped with a $US190 billion tax bill from the Tanzanian Government in 2017

Back in Tanzania, the junior sector Mulligan says. “There is no room for Is there a danger of Tanzania setting

must bide its time, perhaps in the hope movement before the Act has been in- a precedent for other African countries?

“that July’s policy announcement was just terpreted into regulations and neither is “In Namibia, the industry is certainly

Magufuli’s opening gambit in ongoing ne- there the ability to negotiate special or worried it will drift across the continent,”

gotiations. Tanga’s Stockley says.

“When I looked at it Now we have news from Barrick “But, if you look at Na-
and spoke to a few of the mibia and see the suc-

companies, I thought it in terms of framework around the cess the industry has
seemed so illogical and potential solution for Acacia which is had thanks to the as-
thought no new mines sistance provided by

would get developed very early days and looks like all parties government, you realise
and existing mines won’t are in verbal agreement to try and find an that capital will go where
be able to operate,” a agreement that works. I think it is still very it is welcomed.”
London-based fund
manager tells Paydirt. early but there is some progress. According to PwC’s
analysis, Namibia’s poli-
“I guess now, it [leg- cy settings would gener-
islation] is very likely to ate the best IRR among

change and I think the the four selected coun-

market reaction probably reflects that in individual agreements at this stage. In- tries and with the global mining sector in

share prices broadly sold off, but not at- dustry must make do with what it has and boom mode progress will have to be swift

tributing zero value to Tanzanian assets work together with the governing author- otherwise Tanzania may find itself miss-

whether they be in production or explora- ity to bring to account economic opportu- ing out to more attractive destinations.

tion and development. nities in the mineral sector.” “While mineral deposits are not mo-

“Now we have news from bile, the capital which is al-

Barrick in terms of framework located to fund construction

around the potential solution for of the assets certainly is,”

Acacia which is very early days Gargett says. “This capital

and looks like all parties are in will naturally be shifted by

verbal agreement to try and find companies to projects which

an agreement that works. I think generate the best return and

it is still very early but there is in jurisdictions which provide

some progress.” stability and certainty.”

Having spent much of the last – Dominic Piper,
three months in-country, Mul- Mark Andrews and
ligan believes the Tanzanian
Michael Washbourne
Government is still not in a posi-

tion to explain exactly how the

new laws will be managed.

“I don’t think the Govern-

ment is currently in a position

to discuss policy other than to

validate and clarify what it is,”



Juniors’ highs provide
Indaba interest

After a long, often harsh winter the African junior mining sector is squeeze on base metal fundamentals
likely to find the climate inside the Mining Indaba conference as and also helping investor sentiment
welcoming as the Cape Town sunshine outside it. along.

“In the last three months in particular

interest has picked up and we will hope-

The last six years have seen junior ers across Africa. Ian Stuart, director of fully close on a few deals before the end

mining participation at the conference private entity Advino Resources Pty Ltd, of the year.”

dwindle but thanks to renewed appetite has been biding his time over vending Meanwhile, established juniors such

in equity markets, explorers, developers Namibian zinc assets into the market but as Mod Resources Ltd, Cardinal Re-

and smaller producers will head to the has seen a discernible uptick in interest sources Ltd and West African Resources

Mother City with a spring in their step in recent months. Ltd have seen their share prices reach

come February. “Our model is based on being oppor- multi-year highs on the back of support

For Australian juniors, Mining Indaba tunistic and when companies couldn’t for exploration success.

will come at an opportune time, with raise money in a flat market, we got a The increased support from investors

a number of them recently completing soft option on a good zinc project in the follows similar moves on domestic plays

capital raisings which should provide the stable jurisdiction of Namibia,” Stuart ex- and the good news for African-focused

momentum for a year of high activity on plained. “But, from there you have to be companies is they could have time to
“patient and wait for the market to turn.”
the ground. catch up with their locally based peers.
A $20 million placement
Far East Capital founder
completed by Mozambique-
focused Battery Minerals Ltd And, it’s not just private Warwick Grigor believes the
in November highlighted the pendulum has swung in favour
change in sentiment among
Australian investors. The equity groups which have of a rising market.
dominated the space in the last few “The challenge at this point

of the market cycle is to get

placement took the amount years, but specialist fund managers in step with the current psy-
of capital raised by ASX- chology,” Grigor said. “The

listed African-focused com- showing interest in the juniors bottom fishers are all making
panies past $250 million for again. Hopefully, it is a trend which good profits. In many cases,
the calendar year, a vast im- these guys go overweight in

provement on 2016. is going to be that good value. their fishing, so they look for
African-focused IPOs have a chance to take some money

also re-emerged on the ASX off the table on an improving

with Frontier Diamonds Ltd market. They provide stock for

hoping to join AVZ Minerals Ltd and Oka- Turn it seemingly has in the latter part more cautious investors who wait, to buy

pi Resources Ltd as new IPOs to hit the of 2017. on breakouts of downtrends.

bourse before the end of the year. “The last six months have been chalk “As more and more people see that the

Further listings in 2018 appear likely and cheese with earlier in the year. There direction has turned, fear of falling prices

as the gold and base metals stories has been a general lift in commodities, is replaced by fear of missing out, sucking

are joined by battery minerals explor- with battery minerals providing another more buyers into the game. The search


is on for fundamentals to justify the psy- his team have identified are explorers, To foster this interest, organisers have
chology, not the other way around. developers and small-cap producers and expanded Mining Indaba’s Junior Show-
the investors interested in their stories. case, affording juniors and investors an
“The African scene has been a bit qui- exclusive place to conduct one-on-one
eter than it has been in past years. I’m There were early signs of this at the meetings and network.
not sure exactly why, but recent news 2017 forum but Grose and Mining Indaba
from Tanzania is an example of how rule head of investor relations Kael O’Sullivan “I think companies will be delighted
changes can diminish the interest. There are finding investors are even more en- with the work we have done,” O’Sullivan
are still some very good stories, but we thusiastic about 2018. said. “We had more than 160 juniors pre-
are not yet back to the point where eve- sent last year and our task was to find
ryone wants to be there.” “We have a 71% increase in the num- ways to make those juniors more visible
ber of investors for 2017 and they are and the Junior Showcase was built out of
Junior company attendance at Mining now beginning to change their views the feedback we received from investors
Indaba has always been a mirror to the about who they want to see,” O’Sullivan who like wandering the floor and hearing
overall health of the sector and execu- said. about a story over a chance meeting or
tives will be keenly looking at numbers a coffee.”
– both peers and investors – during Feb- “Investors have made a good return
ruary’s conference to gauge how far Af- out of the majors in the last 18-24 months With booth space already half full,
rican resources stories have rebounded. and they are now starting to express in- Grose believes the Junior Showcase will
terest in juniors because the value is still allow the conference to cater for sectors
Mining Indaba organisers have worked on the table. And, it’s not just private eq- which have perhaps been neglected in
hard to win back junior company partici- uity groups which have dominated the previous years.
pation after a four-year period in which space in the last few years, but special-
the event was dominated by the majors ist fund managers showing interest in “It is important that Mining Indaba ap-
and service providers. the juniors again. Hopefully, it is a trend peals to everyone in Cape Town that
which is going to be that good value.” week, which is something we see as both
Mining Indaba managing director Alex a challenge as well as an opportunity,”
Grose still sees caution in the junior sec- O’Sullivan’s search for investors also Grose said. “We recognise some com-
tor but believes the changing sentiment, extends to the upper reaches of the in- panies may not want to listen to the Min-
coupled with changes to the conference dustry. ister’s address or the majors’ presenta-
format, will elevate the junior sector at tions so we have worked hard to provide
Mining Indaba 2018. “The majors also want to see the jun- different levels of companies with the
iors and we are getting a lot of corporate things they need; whether it is a space to
“We are certainly not where we were development teams keen to participate arrange meetings with investors or pre-
six or seven years ago but there is cau- in the junior showcase,” he said. “The sent to potential new investors.”
tious optimism,” Grose told Paydirt. majors are in a much better cash posi-
“There will be modest growth this year tion than they have been for a number of – Dominic Piper
but certainly our focus has been on mak- years and having spent five years cutting
ing sure the right people are coming to costs they have seen their share price
Mining Indaba.” recover and are now looking at what they
can do with that cash.”
Among the “right people” Grose and

Politics never far from Indaba agenda

Mining Indaba has always been a hot- WA Minster for Mines and Petroleum is not focused on a single country and
bed for political debate but recent Bill Johnston will be at the there is plenty of interest in other jurisdic-
news out of Tanzania and Zimbabwe, as 2018 Mining Indaba tions,” Grose said. “We are seeing inter-
well as the ongoing issues within the host est over Botswana, much of West Africa
country’s mining sector, will add extra ston, WA’s Minister for Mines and Petro- and countries such as Kenya are trying
spice to the 2018 event. leum. to establish themselves.

Africa has largely escaped the “hope- Mining Indaba managing director Alex “We have 25 African countries com-
less continent” tag over the last decade Grose said organisers would never shy mitted to coming and along with the
but issues around sustainable develop- away from the issues facing mining on non-African delegations – including the
ment, bribery and corruption and envi- the African continent. West Australian Minister for Mines, Bill
ronmental performance continue to dog Johnston – we will have some insightful
the extractives industry across many of “There are political challenges in South discussion.”
the 53 sovereign states. Africa, in Tanzania and in Zimbabwe but
the beauty of this conference is that it The host country’s Government re-
Australian government – both federal mains at odds with many of the indus-
and state – has supported improved try’s largest participants but Grose said
governance of the African mining sec- both parties would receive opportunity to
tor in recent years and both the Federal discuss and debate their respective posi-
Government and West Australian State tions.
Government will be actively engaged in
Mining Indaba’s inter-governmental sum- “The South Africa Government is still
mit, with African and non-African govern- very supportive of the conference,” he
ment presenters sharing the stage for the said. “We are an apolitical body, we try to
first time. sit in the middle and support everyone.
We can only provide the platform for
Among the speakers will be Bill John- them to come together.”



Labor launches
publish-what-you-pay policy

Australia’s Federal Opposition has is needed to ensure governments can
launched a new policy designed to better target revenues to make an impact

ensure the country’s largest resources on people’s lives. If there is corruption, it

companies disclose payments arising can be identified more easily.

from extraction, mining and development. “The benefit of the legislation is that

Announced on October 31 by Shadow it can go down to project level and work

Assistant Minister for Treasury Matt This- out how much payment is being made to

tlethwaite, the policy will see an elected government and then that government

Labor Government legislate to establish can be held to account.”

a mandatory extractive industries trans- Thistlethwaite said that by reasserting

parency scheme. their world’s best practice credentials,

Resources companies will be required Australian mining companies could el-

to disclose information on payments for evate their standing in the marketplace.

taxes, royalties, dividends, production “We are living in the information age,

bonuses, licence fees, infrastructure im- when tax information is more available

provements and production entitlements and companies can’t hide from the fact

in both Australia and overseas jurisdic- there is a desire to know more about

tions. what they are doing,” he said. “

Thistlethwaite told Paydirt the policy “If Australian companies can demon-

would bring Australia into line with other strate that they are meeting best practice

major resource nations such as the UK and are good corporate citizens it will be

and Canada. a platform for investment.”

“We want Australia’s mining and tax Shadow Minister Assisting for Re-

policy to be world’s best practice and sources, Tim Hammond, said the regime

currently it is not,” Thistlethwaite said. “At would offer companies certainty.

the moment, we have to hope companies “Australians expect our flag carrier

are listed in the UK or Canada and abide companies to meet world’s best practice

by their standards.” for governance and accountability, and

Thistlethwaite said Australian com- Tim Hammond Labor’s plan will clarify what that means

panies had forged a reputation for be- in relation to tax transparency,” Ham-

ing among the world’s best corporate ready disclosing payments are empha- mond said.

citizens and the policy would ensure they sising the need for compatibility. We The scheme will be restricted to large

would remain world leaders. have tried to make it as consistent as resources companies which meet at

““The aim is to ensure – given Austral- possible.” least two of three thresholds; a balance

ia’s large exposure to sheet of more than $50

the global mining indus- million, net turnover

try – we operate under More transparency and accountability exceeding $100 million
best practice,” he said. is needed to ensure governments can and more than 250 em-
The UK and Canada

have already legislated better target revenues to make an impact “The policy is de-
on the issue and This- on people’s lives. If there is corruption, it signed not to be on-

tlethwaite said dual- erous, particularly on

listed Australian com- can be identified more easily. smaller companies,”
panies had welcomed Hammond said. “It only

Labor’s policy. applies to large compa-

“We estimate that 18 nies – those that have

ASX-listed companies are already dis- Thistlethwaite said the policy was im- the two-out-of-three combination. In ad-

closing payments because of require- portant given Australia’s role as a devel- dition, only payments [or series of pay-

ments in other jurisdictions. Those com- opment partner to emerging nations in ments] over $150,000 would need to be

panies would like to see a level playing Africa and the Asia-Pacific region. disclosed.”

field.” “I’ve visited Asian-Pacific nations Thistlethwaite said he expected 60-70

He said the regime would be designed which have large extractive industries but Australian extractives companies to fall

to closely match its UK equivalent to low development status,” he said. “They under the scheme.

avoid unnecessary doubling up of report- have multibillion dollar resource projects – Dominic Piper
ing. but those projects don’t make significant

“We have done a lot of consultation difference to the lives of citizens.

with the miners and those who are al- “More transparency and accountability



29 - 31 August 2018

Perth,Western Australia

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


Great prospects for Zimbabwe

Robert Mugabe’s resignation as Presi- Harry Greaves ings facilities, plant, equipment and all
dent of Zimbabwe has presented the other infrastructure – has been signed.
country and its people with a new dawn. ing to have a massive effect and there is
a very big opportunity here for whoever Under the agreement, Prospect will
“The euphoria is unbelievable, we comes in. The next government, if they assume 50% ownership of the plant and
drove down the centre of Harare [No- adopt the right policies, will see an in- mine once three months of annualised
vember 21] and it was the craziest thing credible flow of investment into the min- production is reached.
you have ever seen, the entire nation ing sector.”
broke out into celebration, it is really quite The deal was agreed in November,
an epic time for this country,” Prospect Prospect has a head start on compa- with both parties having to reach agree-
Resources Ltd executive director Harry nies potentially looking to invest in Zim- ment within a three-month period.
Greaves told Paydirt from Harare. babwe.
A PFS released on Arcadia in July in-
“It is an absolutely incredible thing; it is The company has a deal in place for dicated the reserve of 15.8mt @ 1.34%
totally, totally amazing. We drove around China’s Sinomine Resources Exploration lithium and 125 ppm tantalum could see
yesterday evening and masses of people Co Ltd and Sinomine International Explo- a standalone 1.2 mtpa operation last an
were dancing in the street, there was not ration Co Ltd to fully fund and construct initial 15 years.
any sign of any danger or anything, no the mine and plant for the Arcadia lithium
criminal activity, just people celebrating project. The development schedule outlined by
that there is hope and possibly a new be- Prospect has production and plant com-
ginning for this country.” Sinomine, a long-time presence in missioning starting in Q3 2018.
Zimbabwe, will invest $10 million in Pros-
The emotion gripping Zimbabwe is pect and receive off-take of 390,000t Executive chairman Hugh Warner told
unlike anything Greaves has ever expe- spodumene concentrate and 1mt of pet- Paydirt the company’s time had now ar-
rienced and he has high hopes for the alite concentrate. rived, with investors from London, Mel-
country’s future, particularly as many bourne and Sydney quick to re-engage
Zimbabweans living abroad consider re- The proposed seven-year deal will be with Prospect upon learning of Mugabe’s
turning home. linked to market pricing for lithium car- departure.
bonate sold into China.
“I think there is going to be an incred- “When you look at ASX, AIM and the
ible return of the diaspora. If you look at Meanwhile, indicative terms for a fa- LSE, Prospect is probably one of the
when similar things happened in Zam- cility agreement and build-and-transfer easiest investment vehicles for anyone
bia, probably not quite as dramatic as contract – stating Sinomine will build, who wants to be exposed to mining in
here, but over 90% of the diaspora went construct and commission the mine, tail- Zimbabwe,” Warner said.
home to Zambia. That is a massively ex-
citing development, it will bring a lot of “We are compliant with all the rules,
skills and development for Zimbabwe,” we have an amazing team of people in
Greaves said. country, and we have already got the
sixth largest lithium deposit in the world
Greaves said the mining sector could funded by the Chinese. So, if you want to
help the country’s development, with op- bet on the turnaround of mining in Africa,
portunities to rejuvenate known mining Prospect is an easy choice.
assets and visit untapped mineral-rich
districts. “We have always got a good reception
here, but the feedback has always been:
“This country has effectively been ‘We can’t invest in Zimbabwe’. Obvi-
quarantined from exploration since the ously things take time to click into place,
1960s. There has been no big explora- but I think that perception would have
tion literally since then so I think it is go- changed overnight.”

Prospect’s share price appreciated
12% in light of the changing landscape in
Zimbabwe, with almost $700,000 traded
through the company immediately.

The company has been adding tene-
ments to its portfolio and will be in the
box seat if there is a mining and explora-
tion renaissance in Zimbabwe.

“We have a pipeline of projects we
have been following for a while and with
the change in circumstance we can pick
up the pace on those, but there is a tre-
mendous smorgasbord of projects we
have been looking at and now we can be
rerated and pick up the pace,” Greaves

– Mark Andrews

The streets of Harare hit party mode on November 21



Smart money on zinc

High-grade zinc-copper pro- Orion was preparing a high-powered is now receiving due atten-
jects with big regional ex- Sky-TEM airborne EM survey over about tion and is starting to field
ploration potential are rare, 1,000sq km of the Areachap belt, which interest from a variety of
which suits Orion Minerals NL hosts Prieska. groups.
The survey was primed to investigate While the company is
“That is what sets us aside, an area containing 98sq km of combined “starting to pop up” on a
there are a lot of semi-quick, strike of outcropping within Orion’s land- lot of radar screens, Smart
mid-scale start-ups going back holding. said there was a lot of up-
to old mines, but very few of side in share price perfor-
them have very good explora- “That [Sky-TEM] hasn’t been done for mance to be seen before
tion portfolios alongside,” Orion a long time. The last major regional air- any corporate activity
managing director Errol Smart borne survey that was done in the belt could be considered.
told Paydirt. was in the early 1980s,” Smart said.
“We have slipped under
Current zinc and copper “There is a lot of positive stuff under the radar screen and peo-
prices are encouraging activity way, but the main Prieska project has ple are wondering how the
in the sector, but there are few really delivered in spades for us. All the majors missed this oppor-
companies as committed as drilling that we have been doing has tunity,” he said.
Orion is in South Africa’s North- turned out as good as we would have
ern Cape. hoped and in many cases better than “The fact is that we man-
what we hoped.” aged to do a big land con-
Smart believes the company solidation at the bottom of
is undertaking the most intense Smart said it had been a long time the market and that is what
zinc-copper exploration pro- since anybody had run such an intense sets us aside. For the first
gramme anywhere in the world drill out of both shallow and underground time, this geological belt is
at the moment and with 15 rigs deposits in South Africa, while the com- in single ownership and we
turning, it is hard to argue. pany’s greenfields exploration strategy certainly don’t want to be
was unrivalled in the country’s junior encouraging anything [cor-
Resource drilling at the his- space. porate] too early.”
toric Prieska project is in full Errol Smart Private equity group
swing, with a resource state- “We are very active and we are start- Tembo Capital has moved
ment to be completed by the ing to get in the greenfields in the hinter- early and backed Orion and while a com-
end of the first quarter. land and that is definitely where we are pelling investment case is being built at
doing stuff which hasn’t been done for a Prieska, investors are still cautious about
Any delay in announcing the resource long, long time,” he said. South Africa.
to market will only be because of explora- Smart said the political situation in
tion success, Smart explained. With market conditions positive, Orion South Africa had definitely impacted Ori-
on’s share price, but he remained bullish
“On the fringes of the orebody we have about the country’s future.
been finding a lot more massive sulphide “I think a similar project in Australia
ore and these extensions we recently would have us looking at multiples of
discovered may cause a little bit of a de- share price value compared to what we
lay in completion of the resource,” Smart are in South Africa,” he said.
said. “The situation on the ground and politi-
cal developments in South Africa in the
“Our maiden JORC resource should last few months, I see a lot of positive
be out early 2018 and we are still on tar- movements. I think it is going to be very
get to complete the BFS by the end of the interesting to see what happens with the
third quarter.” ANC elective conference in December,
but there is potential for a new guard to
So far, BFS-related studies at Prieska come in and have a very positive influ-
have gone swimmingly, with geotechni- ence on South Africa. I think it all has the
cal investigations completed and logis- potential to have a positive influence on
tics for infrastructure on-song. investor sentiment in South Africa and
then we could see a very significant re-
Initial metallurgical test work has con- rating very quickly.”
firmed Prieska is amenable to concentra-
tion by froth flotation to produce saleable – Mark Andrews
concentrate products.

Results from the deep sulphide target
achieved recoveries exceeding 89% for
copper and 93% zinc for a differential
flotation flow sheet aimed at producing
separate copper and zinc concentrates.

Meanwhile, from the +105 open pit tar-
get, recoveries exceeding 89% for cop-
per and 91% for zinc in a combined bulk
cleaner concentrate were achieved.

With met test work progressing well,



Base lifted by higher prices

Base’s Phase 2 development plans for Kwale will see production levels maintained throughout the life of mine

Not even the current constitutional cri- While production has been consist- product sold figures, with unit revenue
sis in Kenya appears to be stopping ent, revenues have been anything but. increasing from $200/t in the September
Base Resources Ltd from making the Prices for the three key commodities 2016 period to $271/t for the recent Sep-
most of a reinvigorated mineral sands have lagged for more than four years but tember 2017 period.
market. 2017 has seen improvements in all three
markets. Carstens said the turnaround in ilmen-
It could be safely assumed that the po- ite in particular represented a recovery
litical situation in Kenya – which has seen The price increases have been re- rather than a spike in prices.
the Supreme Court declare August’s flected in Kwale’s revenue per tonne of
presidential election results null and void “Ilmenite price had become irrational;
and has left the country facing an un- Tim Carstens instead of the traditional 4-6 times ratio
certain political future – would dampen of rutile-to-ilmenite, it was at 12 times in
the performance of the country’s only the last 12 months,” he said. “What we
commercial-scale miner. Instead, Base’s have seen isn’t a price improvement as
Kwale operation is performing strongly; such it is simply a recovery to the long-
a positive amplified by recent strength in term average ratio. Now, we are starting
mineral sands prices. to see rutile prices move up which will
take ilmenite with it.”
Kwale – near the port city of Mombasa
in southern Kenya – produced 119,376t Zircon prices have also improved from
of ilmenite, 22,789t of rutile and 9,136t of around $US800/t in December 2016
zircon for the September quarter, broadly to around $US1,200/t currently and
in line with the previous seven quarters. Carstens said he expected a more bal-
Base managing director Tim Carstens anced market with steady, unspectacular
told Paydirt he was “delighted” with op- growth for the foreseeable future.
“There has been a dramatic recovery
“Not just in the last quarter, but for the in zircon this year and the supply/demand
last seven reporting periods Kwale has dynamics support further increases; how
been a stable, robust operation produc- far the recovery goes because it bumps
ing good cash flow; it is just humming into substitution, etc. I’m not sure – it is
along,” he said. certainly this side of $2,000/t,” he said.
“We will see discipline from the majors


and beyond that a tight market, even with

[Iluka Resources Ltd’s] Jacinth-Ambrosia

coming back online.

“That points to renewed balance and

we expect a nice square market moving

up on fundamentals rather than short-

term strategies.”

The price turnaround has come at an

opportune time for Base as it begins im-

plementation of its Kwale Phase 2 devel-

opment strategy.

The Phase 2 development will see

mining rates and heavy mineral concen-

trator capacity lifted in an effort to keep

production volumes at current levels for

the life of mine.

“The aim is to keep the mineral sep-

aration plant as the constraint so it will

dictate how much product comes out,”

Carstens said.

The development will also see in-

creased use of hydraulic mining units

which have been successfully deployed

at Kwale this year.

“The hydraulic mining units have been

fantastic, if we knew then what we know

now we may have started with them,”

Carstens said. “The big issue was that

we didn’t know how the orebody was go-

ing to perform so it would’ve been a cou-

rageous move [to start operations with

hydraulic mining units] but now we have

the experience we realise it is perfect be-

cause of the high slime content.”

Carstens said the mining units were

consistently beating their nameplate 800

tph rate which negated the need for a

second dozer trap in Phase 2.

The recent increased rates have al-

lowed Base to build up stockpiles, ensur-

ing the mineral separation plant is well-

fed ahead of a one-month shutdown of

the heavy mineral concentrator plant.

The Phase 2 expansion has resulted in

a shortened mine life but Base plans to

lift exploration efforts from January.

“We are all permitted and every regula-

tory approval received. We stopped the

exploration during the election because Concentrate stockpiles are being increased ahead of a one-month shutdown of

we didn’t want it becoming a political is- the heavy mineral concentrator plant

sue but we will restart now.”

Much of the company’s recent explora- the most prospective for mine life exten- expects the company to be debt free

tion has been focused within the mining sions. within 18 months.

lease with the South Dune resource in- Exploration expenditure could increase “We have a scheduled repayment

creased by 29% to 114.1mt @ 3% heavy further in coming years as Base’s debt every six months and on top of that 50%

mineral sands. In the new year, focus burden lessens. Net debt was reduced of free cash flow goes towards debt. Net

will switch to the north-east zone of the by $US11.9 million in the September debt by Q1 CY2019 will be zero although

“wider Kwale project which is considered quarter to $US86.6 million and Carstens if prices continue to climb as they are it
Not just in the last quarter, but for the last could be earlier,” he said.
seven reporting periods Kwale has been
a stable, robust operation producing good cash The option remains, however, to re-
flow; it is just humming along. structure debt facilities if required.

“We don’t need to do that but if we do
something which fundamentally changes
the shape of the business we would look
at restructuring the debt,” Carstens said.

Such comments imply the company is



still weighing up corporate Carstens said the clam-

moves. In 2015, it failed in our from Nairobi’s business

its attempts to take over community was becoming

World Titanium Resources louder as the economic re-

Ltd but Carstens said M&A ality – more than $US2.5

options continued to be billion has been wiped

monitored. off the Nairobi Stock Ex-

“We have had one decent change since August – of

crack at M&A and made no the constitutional crisis was

secret of our desire to do brought into sharp relief.

something,” he said. “Some Outbreaks of violence are

of the opportunities are still occurring but Carstens

changing shape and there senses an overall desire to

are more coming forward move on in the country.

but that does not mean they “You can feel the popu-

are more attractive relative lation is done with this vio-

opportunities.” lence which has only been

Given the political tur- at the margins anyway. It is

moil in Kenya and Tanza- not broad-based and there

nia – where it has explora- is a sense of overwhelming

tion ground – Base could be forgiven for the county-level government is function- fatigue across the country,” he said.

wanting to diversify its geographic risk ing very well. At the National Govern- Carstens may have convinced inves-

however Carstens dismissed the sug- ment level, we don’t need anything in the tors Kenya’s political problems have not
“gestion geopolitics were driving the com- foreseeable future. I think investors have affected Kwale operations but he is still
pany’s M&A strategy. struggling to distance

“It is not a geopolitical At first, the reaction from investors the company from the
was: ‘What does this mean for
thing; the jurisdiction is political fallout of new
a screening tool but it is mining policies in neigh-
project-led,” he said. bouring Tanzania.

Kenya’s election Base?’ Which is understandable but “When the changes

crisis has been well- we are in a quiet corner of the country in Tanzania were an-
documented in the in- nounced, our share

ternational media in re- and there has been no impact on day- price took a hit of 10-
cent months but while to-day operations and the county-level 15%, just on the spectre
Carstens admitted it was of what was happen-

a distraction, he said government is functioning very well. At the ing across the border,”
there was only negligible National Government level, we don’t need Carstens said. “People
impact on Kwale. tend not to be nuanced

“At first, the reac- anything in the foreseeable future. with East Africa but the
tion from investors was: politics between the two

‘What does this mean countries could not be

for Base?’ Which is un- more different. Tanzania

derstandable but we are in a quiet cor- got that now and nothing has happened had 30 years of socialism but Kenya is

ner of the country and there has been in two months since the Supreme Court the arch-capitalist.”

no impact on day-to-day operations and decision to change things.” Carstens said investor concerns about

the potential impact on Base (the com-

pany does have exploration ground in

Tanzania) had dissipated but remained

wary of the long-term impacts of the leg-


“Tanzania doesn’t set a good prec-

edent for other countries and it will be

interesting to see what it actually does to

investment there,” he said. “I’d certainly

struggle to convince my board to spend

money in Tanzania. We would want to

see fundamental change before that po-

sition would change.”

– Dominic Piper

An exclusive one-on-one interview
with Base managing director
Tim Carstens is featured on
Paydirt TV

Kwale’s Phase 2 expansion will see a 75% increase in spiral capacity



Nigeria and Mintek collaborate

Nigeria’s commitment to Nigeria’s Minister of Mines and Steel Development Hon Dr Kayode Fayemi
developing its mining sec-
tor is strengthening. innovation specialists Mintek to collabo- Nigeria, but they just get taken out raw
rate in technical research in the areas of without any value addition, without any
During Africa Down Un- minerals processing and beneficiation to beneficiation and the market in Nigeria
der 2017, Nigeria’s Minister boost capacity in both Nigeria and South is large enough to benefit from additional
of Mines and Steel Develop- Africa. value from these minerals.”
ment, Hon Dr Kayode Faye-
mi, told Paydirt the country’s The collaboration agreement is part of Commenting on the MoU, Mintek act-
20-year resources roadmap a MoU signed in 2013 by the South Af- ing chief executive David Msiza said:
was progressing well. rican and Nigerian governments, which “Mintek is well vested to play a collabo-
outlines a partnership between South rative role on the African continent and
Part of setting the roadmap Africa and Nigeria in the field of mining, for the furtherance of mineral processing
– designed 18 months ago – geology, metallurgy and minerals pro- and beneficiation programmes in the Ni-
was for the Government to cessing. gerian mining sector.”
identify and develop a plat-
form conducive to attracting “Downstream processing and benefi-
foreign investment via the ciation is clearly a priority we are dealing
country’s mining sector. with; value addition for the mining sector
is a major challenge,” Fayemi said earlier
Nigeria is desperate to di- this year.
versify its economy, which is
heavily reliant on the oil sec- “There are a whole lot of minerals in
tor, with mining of coal, gold,
iron ore, limestone, lead/zinc,
barites and bitumen identified
as go-to areas.

It is hoped that in the next
20 years the mining sector
can contribute at least 3-5% of Nigeria’s

“The current 0.33% contribution now
is really peanuts. We believe that if we
continue on the trajectory that we are
on now, we are confident that we will
be moving in the direction of 3-5% GDP
from mining,” Fayemi said.

Therefore, the Government has started
work to improve geological data, financ-
ing solutions, mining infrastructure, while
also putting in place guidelines to protect
and formalise the artisanal mining sector.

Meanwhile, late in 2017 Nigeria’s
Raw Materials Research and Develop-
ment Council (RMRDC), an agency of
the Federal Government, signed a MoU
with leading mineral and metallurgical

Perth,Western Australia The CD-Rom for the 2017
Africa Down Under Conference

is available

CD-Rom includes

• Over 50 presentations • Conference media coverage
• Australia’s Paydirt preview and review reports • Conference Sponsors

CD-Rom – $95 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]



Aussies switch back to Africa

For many years Australian- Company Commodity Mechanism of raising
based mining companies
have viewed Africa as an attrac- Q1 CY17
tive place to do business. Mod Resources Ltd Copper $14.9 million proceeds from the issue of shares and

Having developed their ex-

ploration and development $0.32 million from the exercise of options

skills in the Australian outback, Q2 CY17
many companies see Africa –
with its similar geological and Far Ltd Oil & gas $80.00 million in proceeds from the issue of shares

climatic settings – as the next Coal of Africa Ltd Coal $16.79 million in proceeds from the issue of shares
logical step when expanding, or and $11.58 million in borrowings
perhaps as the first step for a

new exploration play. Despite Cardinal Resources Ltd Gold $22.80 million in proceeds from the issue of shares

two decades of modern explo- Orecorp Ltd Gold $20.64 million in proceeds from the issue of shares
ration, Africa still represents a Deep Yellow Ltd Uranium $15.12 million in proceeds from the issue of shares
continent of opportunity.

This view led to the creation Universal Coal plc Coal $12.77 million in borrowings
of a vibrant African-focused Danakali Ltd Potash $12.35 million in proceeds from the issues of shares
resources sector in Australia

in the period 2005-2013. How- and $0.30 million from the exercise of options
ever, for the past few years
while commodity prices have Oklo Resources Ltd Gold $8.69 million in proceeds from the issue of shares,

been low, Australian compa- $3.12 million in proceeds from the exercise of options

nies have turned their attention Q3 CY17
away from Africa, deploying
their depleted available capital Syrah Resources Ltd Graphite $73.15 million in proceeds from the issue of shares

to areas of perceived lower risk West African Resources Ltd Gold $23.02 million in proceeds from the issue of shares
in their own backyard. It does
not mean they have left Africa Amani Gold Ltd Gold $15.01 million in proceeds from the issue of shares

altogether but they have gener- AVZ Minerals Ltd Lithium $14.67 million in proceeds from the issues of shares

ally taken their foot off the ac-

celerator. have increased, leading some Australian touch, in terms of regulatory hoops to

What was the reason for this? Well, companies to once again turn to Africa. jump through, but has not always had the

when these companies found funds During 2017 we have seen improve- same access to the deep pools of capital

in the equity capital markets harder to ment in the ability of companies operat- as AIM or TSX. This equation seems to

come by, they became far more careful ing in Africa to raise funds in Australia. have changed during 2017 with the re-

in where those funds would be spent. In the first quarter of the year, only one sultant likelihood being that an increase

This meant not only cutting back on as company raised more than $10 million in African companies seeking to list on

much overhead and administration ex- but as the year has progressed large ASX, such as South Africa’s Frontier Dia-

penditure as possible, but also cutting amounts have been raised by more com- monds Ltd which is pursuing an ASX IPO

back on exploration expenditure and the panies. rather than the London listing it might

acquisition of new ground. The focus on There is no sign of this trend slowing have in the past.

lower risk meant exploration expenditure down or the ability to raise funds reduc-

reverted to domestic projects, a move ing. We can expect to see some larger

further driven by the fact that the histori- amounts raised in Australia for African

cally high cost of operating in Australia projects such as Resource Generation

had reduced significantly compared to Ltd’s Boikarabelo coal mine in the Water-

the highs of previous years. berg region of South Africa.

In the last 12 months, increased com- The ASX has not only turned on the tap

modity prices and the increased appetite for funding for Australian companies op-

of the equity capital markets for min- erating in Africa but it is also seeking to

ing stocks has meant Australian mining be a listing destination for African com-

companies are finding equity funding panies. There are good reasons for an

much easier to come by. As a result, African-based company, even a South

they are far more interested in spending African company, to look to capital mar-

that money. In Australia, costs are begin- kets outside the continent with securities Sherif Andrawes is a member of the

ning to rise again; drill rig utilisation has markets in the UK (AIM), Canada (TSX) Board of BDO Australia. He is also the
increased – leaving few rigs available – and Australia (ASX) the most common National Leader of BDO Australia’s Natu-
and the availability of assay lab time is destinations.
ral Resources Group and is the Austral-
scarce once more. The world has turned A comparison of the three gener- ian representative on BDOs’ international

and as a consequence, costs in Australia ally shows that ASX carries the lightest Natural Resources Group.



All go for Oklo

As interest surrounding the core, 6,000m RC and 1,500m
corporate futures of Cardinal
Resources Ltd and West African diamond at a cost of $3.5 million
Resources Ltd intensifies, due at-
tention to up and coming explor- – expected to be completed by the
ers with multi-million ounce gold
potential in West Africa is starting. end of January.

Exploration has been off the Oklo’s confidence in Dandoko
boil for a while, however, 2017
has seen better sentiment return was further emphasised late in
to the resources sector and a will-
ingness from investors to support 2017 when it acquired Kourouf-
juniors, particularly those in the
lithium and gold space. ing, 20km south-east of its flag-

Mining conferences around the ship project.
world have been abuzz on the
back of demand for commodities Kouroufing gives Oklo more
driving resources stocks on an
upward trajectory and Oklo Re- than 1,300sq km of ground in
sources Ltd has been one com-
pany keenly followed. Mali, with field programmes ex-

Canadian investment dealer pected to start at the new acquisi-
and research house Paradigm
Capital Inc rated Oklo as one of tion in December.
the top 15 exploration stories in a
research note in late 2017, adding Before then, Taylor said, results
to the list of admirers the junior
explorer is attracting. from current drilling would be re-

Oklo’s momentum started to- leased with a steady flow of num-
wards the end of 2016 when the
decision was made to commit to a bers expected through to June.
big auger programme at the Dan-
doko project, within the Kenieba “The drilling we have an-
inlier of west Mali. Paradigm has been
impressed with the outcomes so far. nounced is just phase one and I

“The results to date certainly suggest suspect with more good results
the potential for Oklo to outline a sizeable
gold discovery [2-5 moz]. With the Fe- we will kick off with phase two
kola [5.15 moz], Gounkoto [5.4 moz] and
Tabakoto [3.8 moz] mines all in a radius straight away and just keep drill-
of about 50 km, this region is certainly
known for large deposits. This is not ing,” he said.
‘moose pasture’, this is elephant hunting
grounds,” Paradigm stated in a research It is a good time to be active
report released after the Beaver Creek
Precious Metals Summit in Colorado, in in Mali considering B2Gold Corp
poured first gold at the nearby 5
Oklo felt the warmth at Beaver Creek
with 39 meetings back-to-back keeping moz Fekola mine three months
managing director Simon Taylor on his
toes. ahead of schedule and AIM-listed

Visits to London and Hong Kong which Hummingbird Resources plc is on
followed proved to be just as fruitful for
Oklo, with the bevy of corporate and in- track for maiden production from
vestor interest extended.
Dandoko has investors swarming to Oklo Yanfolila by the end of 2017. A to-
Onlookers are excited about the 12km-
long Dandoko gold corridor where re- tal of 132,000oz gold at AISC of
sults such as 73m @ 1.02 g/t gold, 29m
@ 10.42 g/t and 6m @ 53.77 g/t have than 100,000m of drilling in the past 12 $US695/oz is expected from Yanfolila in
captured the imagination of the market.
months, with the five Seko anomalies – the first full year of production.
The company has completed more
54m @ 1.37 g/t gold from surface includ- To make sure it capitalises on the spot-

ing 24m @ 2.02 g/t from 12m; 35m @ light beaming on Mali’s gold front, Oklo

1.86 g/t from 55m including 15m @ 3.02 has brought former B2Gold geologist

g/t from 64m; 13m @ 2.27 g/t from 23m Treeve Oates in as project geologist.

and 18m @ 2.01 g/t from 55m – stand- The company has over $12 million in

outs. the bank, sufficient to keep up meaning-

“It has really been text book, we have ful exploration and appease its followers.

gone under the auger work, we got gold “This is a new discovery and it is not

in the oxide and we put some diamond somewhere we have gone into and done

holes in the fresh rock and we’ve got a whole lot of drilling and are trying to

gold mineralisation in the primary zone work out a different plunge or dip or what

as well,” Taylor told Paydirt. was done historically; it is a clean slate if

“I think technically we have had a really you like,” Taylor said of why Oklo is cur-

successful 12 months and now we have rently so popular.

come out of a quiet three months of the “It is a brand new discovery and a lot

wet season and started drilling again.” of the investors really want to find the

Detailed aircore drilling of the oxide next new one. The footprint there is big

mineralisation over the five main Seko enough for a new discovery and that is

gold anomalies and follow-up aircore one of the main takeaways I got from

drilling over other geochemical anoma- the US, London and Hong Kong. There

lies in the Dandoko corridor was under is interest from both investors and cor-

way at the time of print. porately, we just have to keep our heads

Outside of Dandoko, first-pass recon- down and keep drilling.”

naissance auger drill testing over Oklo’s – Mark Andrews
projects in Mali’s south was also planned,

with phase one drilling – 25,000m air-


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