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

pd256-Dec17-Jan18-web

INDABA PREVIEW

Vital chance in Niger

Vital Metals Ltd hopes to capitalise on ties to bring wealth to the country. Mark Strizek
the wave of good energy being gen- Issoufou said agriculture was a key
erated in the West African gold space by ment saw Middle Island exit but Vital
taking a punt on a project in Niger. part of the economy and mining activity managing director Mark Strizek believes
is seen as having potential to help fund while there are challenges to contend
Save for Areva’s participation in the essentials such as irrigation which will with in Niger, as there are in other juris-
uranium industry and Chinese interest in drive the agriculture sector. dictions, the prospectivity in country can-
oil, mining has been non-existent in Ni- not be ignored.
ger, a situation the Government is look- Despite Niger’s ranking as the world’s
ing to turnaround. fourth largest uranium producer few oth- “You have to go out there and take a
er minerals have been exploited to any risk. Coming off Africa Down Under af-
On a recent visit to Perth, Republic of great extent. ter talking to fellow explorers there was
Niger President HE Mahamadou Issou- certainly some positive sentiment there
fou said building on the country’s annual Australian company Middle Island Re- that we should really be having another
gold production of 1,142kg and increas- sources Ltd had a crack at projects near look at this. I believe the Government un-
ing uranium and coal output have been the Samira Hill gold mine in recent times, derstands that it needs to get the country
identified as the other mining opportuni- but left empty handed. back on the map and we are certainly go-
ing to have a crack. You don’t get reward-
Issues securing permits from govern- ed for sitting on the sidelines,” Strizek
told Paydirt.
It has been a long, hard road for Vital Metals Ltd at the Watershed project in Queens-
land, but a turnaround in tungsten prices could reward the company for its persistence. “This opportunity came across my
desk. It has 20,000-30,000 artisanals on
Tungsten is widely used in modern technologies and with use in emerging battery it and it was visible from Google Earth;
technology also growing, prices have increased 50% to a high of $US335/mtu APT in that instantly attracted my attention.
the past 12 months on the back of this increased demand and reduced supply. We are not really hanging around here
though, we are putting the pedal to the
Prices had settled to about $US285/mtu APT at the time of print, but were still strong metal in a very systematic way and trying
enough to make Watershed look attractive, while the Australian dollar/US exchange to work in a quick manner to determine
rate is also helping project economics. whether this thing has any legs or not.”

Since a 2014 DFS, Vital has identified capex and opex savings and recently engaged General sentiment in the mining sector
Provisio Corporate to scout non-equity funding for Watershed. is positive and particularly so in the gold
space, giving Vital impetus to get moving
Vital managing director Mark Strizek said Watershed was a potential world top 10 in Niger as soon as possible.
tungsten mine as discussions with potential offtakers ramped up in parallel with the
funding process. The three exploration permits Vital is
keen on are held by a subsidiary of Turk-
The DFS estimated a capex of $100 million would be needed to get the ready-to-build ish multidisciplinary contractor SUMMA.
Watershed project off the ground.
SUMMA is well spread in a number
While funding solutions are being worked on, Vital continues to work on resource
estimations, optimisation of the process flow sheet and mine schedule and improving
capital and operating costs.

PAGE 52 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

of jurisdictions around the world, in- Vital hopes to be drilling for gold in Niger by the end of 2017
cluding Equatorial Guinea, Senegal,
Congo, Rwanda and Venezuela, and work recently carried out had proved really attractive to the market. Outside of
while its expertise covers fields in fruitful enough to keep Vital interested in West African and Cardinal there is really
contracting, real estate development, Burkina Faso. not a lot out there,” he said.
hospitality, health care and natural
resources, mining exploration is not a “We had some good exploration re- – Mark Andrews
pillar of its business. sults with a little bit of zinc at the bottom
of the [Kollo] target,
“They are looking at us for our but outside of that
exploration expertise and we have we have Bongou
shown at Watershed [tungsten pro- which needs further
ject in Queensland] we can take pro- drilling and then
jects through to DFS. We have skin also Tangassogo.
in the game and this is our chance to We have pretty at-
show our stuff and we will be running tractive large tar-
very hard on this,” Strizek said. gets that probably
require a little bit
Strizek said he hoped to be drilling more auger work.
in Niger sometime soon, with Vital We definitely want
committed to spending $US1 million to do that, but it
over six months. The company can is a matter of pri-
then elect to withdraw or continue to orities and this one
a 50% interest in the holding compa- [Niger] ranks a little
ny by sole funding exploration for a bit higher at the mo-
further two years. ment,” Strizek said.

“Then we could end up in a 50/50 With outside in-
JV with SUMMA where they could terest growing in
fund 50% of the JV or withdraw for a 2.5% West African and
gross revenue royalty,” Strizek said. Cardinal, Strizek re-
mains interested in
“We could also end up with 90% of the what lies ahead for
project, allowing for the Government’s both companies.
10% free-carried interest.”
“If they were to
Bouli, north of Samira Hill, is the most be taken off the
advanced project, while Bella Tondi (near market, it leaves a
Bouli) has been swamped with artisan- lot of opportunity
als. for someone com-
ing onboard as an
The Government has moved the arti- ASX junior knocking
sanals on, paving the way for Vital’s en- on the door with a
trance at Bella Tondi. potential 1 moz re-
source which will be
“We are chasing something large, we
think this ground has potential for plus-
1 moz gold and with artisanal workings
over 1.5km this is too good to pass up,”
Strizek.

While Niger represents new pastures,
West Africa is not foreign to Vital.

The company has been exploring
in a belt being brought to life by fellow
ASX explorers West African Resources
Ltd and Cardinal Resources Ltd for five
years.

Nahouri, formerly the Doulnia gold
project in Burkina Faso, is within the
Markoye structural corridor which hosts
West African’s Sanbrado project where
indicated resources at M1 South are
1.2mt @ 14.4 g/t gold for 556,000oz and
M5 are 35.9mt @ 1.3 g/t for 1.46 moz and
Cardinal’s 120mt @ 1.1 g/t for 4.3 moz
gold indicated and 84mt @ 1.2 g/t for 3.1
moz (0.5 g/t cut-off) Namdini deposit.

Vital has not yet reached that level of
success, however, auger results have
identified new gold targets grading up
to 3.5 g/t at Tangassogo and 1.1 g/t at
Boungou South.

Strizek said region-wide exploration

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 53

INDABA PREVIEW

Roxgold basks in risk glory

Roxgold Inc continues to reap the re- Roxgold’s Yaramoko operation continues to exceed expectations
wards of developing a new gold mine
during a downturn. “very favourable terms” on a debt financ- of 53.2%, payback in 1.8 years and an
ing package. Lead contractors DRA average AISC of $US630/oz, based on a
The TSX-listed company has operated Group and Australian Underground Min- gold price of $US1,300/oz.
the Yaramoko gold mine in Burkina Faso ing Services could also see the upside
since mid-2016, having developed the and took on some of the development Dorward said the economics com-
asset during the leanest of periods for risk. pared favourably to those for the 55 Zone
both the precious metal and African re- which the company put into production
sources projects. “We kept the project as a cleanskin,” almost two years ago.
he said. “There are no secondary royal-
Roxgold’s success to date is hard to ties or streams on the project other than “We were very happy to see that it was
ignore. After churning out 77,157oz in the the Government of Burkina Faso statuto- following in the 55 Zone’s footsteps in so
first seven months of operation at Yar- ry royalty. So, when we bring a new pro- far as it was capital efficient, high margin,
amoko, the company has added another ject on like Bagassi South, it’ll be largely high IRR and low cost,” he said.
91,970oz to its production history over to the benefit of our shareholders and
the first nine months of 2017 and is on we’re not making a royalty company rich- “I’m very confident this will get the final
track to hit the upper end of its recently er. It accrues to our shareholders, which tick off. We’ve already started some of
revised 115,000-125,000oz guidance for has always been very much the central the early works, including expanding our
the calendar year. theme of our strategy on the financing.” camp to accommodate the initial work-
force. We have kicked off the detailed
“It ticks like a Swiss watch,” Roxgold With operations strongly outperform- engineering and design work with DRA,
president and chief executive John Dor- ing the feasibility study estimates, Rox- who built the original processing plant,
ward told Paydirt. gold is now able to think about the next and we’ve also started looking at getting
phase of growth for Yaramoko. It appears in orders for long-lead items, primar-
“When you compare it to the feasibility that will most likely come in the form of a ily the secondary crusher which is the
study we published in 2014, it’s essential- high-grade underground satellite opera- main piece of kit we need to be able to
ly beaten the feasibility on pretty much tion at Bagassi South. increase the throughput.”
every major assumption; the throughputs
have been better, the grades have been According to a feasibility study re- Like the 55 Zone, Bagassi South is
better, the recoveries have been better leased in November, the deposit can be also forecast to boast high gold recover-
and the costs have been better. developed for $US29.6 million and will ies of at least 98.5% gold.
add another 40,000 ozpa to Roxgold’s
“It’s pretty rare that a project does bet- production profile. Based on proven and “Our original test work indicated the re-
ter than its feasibility study. To be able to probable reserves of 170,000oz @ 11.54 coveries should be just over 96%, but it’s
turn the project on and have it ramp up g/t gold, Bagassi South has an estimated been at or slightly above 99% since we
so smoothly, has been quite remarkable mine life of 4.2 years. started,” Dorward said.
for us. It’s a real credit to the team, led by
our chief operating officer Paul Criddle.” Key economics from the study includ- “The mineralogy is really straight for-
ed a post-tax NPV of $US50 million, IRR ward. The orebody is a quartz vein stuck
Dorward and Criddle previously in a granite and it’s a very sharp contrast,
worked together to develop the Sabodala which makes it good for mining. It’s a
gold mine in Senegal for Mineral Depos-
its Ltd in the late 2000s. The Australian
pair joined Roxgold in 2012, a year after
the company drilled the breakthrough
discovery hole at Yaramoko.

History shows the decision to develop
the $US106.5 million project, which ac-
cording to the feasibility study was fore-
cast to produce 99,500 ozpa over an
initial 7.4 years of mine life, proved to be
the right one. However, the Roxgold team
didn’t have it all its own way.

“Financing a project when people
aren’t that interested in mining projects
is certainly challenging,” Dorward said.
“It was tough sledding to get the project
financed from the equity perspective, but
we always had a good roster of strong
supporters and many of those sharehold-
ers are still on our books because they
saw the benefits of a really high-grade,
high-margin project.”

Dorward said the quality of the Yar-
amoko project had enticed both BNP
Paribas and Societe Generale to offer

PAGE 54 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

bit like an old-fashioned gold mine that Roxgold is likely to be on the radar of larger mining companies
some of the old timers would have mined
in the goldfields of Australia.” price goes up. That’s not our game. We ments with low risk from what we’re do-
want projects that we can put into pro- ing and we’ve just pushed the button on a
Roxgold continues to exceed expecta- duction and make a significant return on pretty significant exploration programme
tions for the advance rates on both ore our investment. to define more of these structures, which
and waste development at Yaramoko, we believe we will. It’s a matter of time,
with the ratio of development ore to “Organic growth is our first priority. You not an ‘if’ we find these structures.”
stoped ore also increasing as the grades can see from the feasibility we just put out
improve. that the opportunities for us in our own – Michael Washbourne
little patch of paradise look very good.
A strong operating mine such as Yar- We can get high return, accretive invest-
amoko is no doubt attracting attention
from some of the larger companies which
have a strong foothold in West Africa,
with Dorward admitting it was unlikely
Roxgold would remain a single-asset
business in the long run.

“Something will happen, but whether
that’s us finding a new investment or us
becoming part of a larger group, that re-
mains to be seen,” he said.

“We are looking at other opportunities.
I do believe that part of our competitive
advantage is that we have a very good
mine-building team and we have a very
good team operating in francophone
West Africa.

“For us, that opportunity needs to be
high-grade and high-margin. We’re not
looking to build ounces for the sake of
building ounces, or warehousing re-
sources on the books for when the gold

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 55

INDABA PREVIEW

$20m sets Battery Minerals
up for big 2018

Battery Minerals Ltd has set its sights David Flanagan
on going straight to the front of the
graphite development queue following The cash will also allow Battery Miner- Balama Central has an existing 16.3mt
completion of a $20 million placement als to fast-track its DFS on the Balama @ 10.4% TGC resource with more than
last month. Central graphite project in conjunction 54% of flake size distribution falling into
with the final Montepuez development the large and jumbo flake categories.
The Mozambique-focused company work.
had seen a number of East African peers Flanagan said a recent concept study
overtake it in the graphite space but with “It’s about keeping the current develop- – which provided the evidence for the
companies in neighbouring Tanzania ment plan while also advancing Balama,” push towards DFS – had lifted Balama
hamstrung by political problems, Battery Flanagan said. Central’s standing.
Minerals has an opportunity to improve
its positioning. “Balama is a wonderful project with
a terrific resource and very high value
The capital raising saw 325 million concentrate,” he said. “The current
shares at 6c/each placed in two tranches plan is to complete a DFS on the pro-
to professional, institutional and sophis- ject by mid-year and advance to pro-
ticated investors. Each share will come duction at Balama after Montepuez.”
with an attached free option, handing
Battery Minerals the opportunity to fully Battery Minerals’ ultimate plan will
fund its Montepuez graphite project. see Montepuez Stage 1 produce
50,000 tpa of flake graphite. Produc-
“The share price only needs to go tion will be increased to 100,000 tpa
through 10c [6.7c at the time of print] in Stage 2 and will be later joined by
and on exercising the options we will get production from Balama Central.
a further $33 million. So, that is a total
of $53 million which gets us pretty close Many graphite developers have
to being fully funded,” managing director stalled in the last 18 months as they
David Flanagan told Paydirt. struggle to pin down project finance.
However, Flanagan believes the worm
The cash injection comes at a time is turning once again.
when Battery Minerals is building up a
head of steam in Mozambique. “Battery investors are far better in-
formed than they were a year ago and
In October, the company completed that definitely makes it easier to dem-
a value engineering study which iden- onstrate why we are a good invest-
tified capex savings of 66% (down to ment,” he said. “As Syrah [Resources
$US42.3 million) and opex reductions Ltd] starts its project in Mozambique,
of more than 20%. Among the cost- it will provide strong evidence that you
saving measures were an increase in can get things done and build a great
head grade from 8.8% TGC to 12% project.”
TGC in the first 10 years of operation,
a smaller infrastructure footprint, own- Battery Minerals has been drilling at Montepuez – Dominic Piper
er-operator mining, lower water con- for more than three years
sumption and increased recoveries.

Work has now turned to grade con-
trol drilling, designed to underpin daily
mining plans ahead of the grant of the
mining lease, expected before the end
of 2017.

The company expects to receive all
final approvals in the March quarter,
paving the way for construction to start
in April and commissioning before the
end of 2018.

Flanagan said funds from the initial
placement would allow the company to
stick to its ambitious schedule.

“This first $20 million allows us to
purchase some plant and equipment,
build the camp and do it all quickly,” he
said.

PAGE 56 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Hyde seeks more
‘outrageous’ grades

As problems go, Richard Hyde’s cur- Richard Hyde ject in January 2014 as part of its acqui-
rent predicament is not a terrible one sition of Channel Resources, it intended
to be facing. which continue to be generated from to pursue a small heap-leach operation
West African’s (WAF) M1 discovery on its based on low-grade oxide resources at
The last five years have seen numer- Sanbrado gold project in Burkina Faso. the M5 deposit. However, with markets
ous junior gold explorers disappoint in- reluctant to support junior gold develop-
vestors by delaying feasibility studies When WAF got its hands on the pro- ments, WAF was forced to reconsider its
and development decisions but Hyde approach.
believes the reasons for his West Afri-
can Resources Ltd to delay its updated A final roll of the dice came in Decem-
DFS are justified – the company keeps ber 2015 via a $2 million capital rais-
on finding additional high-grade ounces. ing intended to fund drilling on two new
targets; M1 and M3 and despite initially
“We have had to change our plans a mixed results, an intercept of 12m @
few times and delay the DFS release but 53.11 g/t gold, including 1m @ 534.45
that is because we know there is mate- g/t, from M1 in February 2016 dramati-
rial improvement to the project coming,” cally changed the complexion of Sanb-
Hyde told Paydirt. “These are ‘good’ de- rado.
lays if you like, they are not halting our
overall plans and we are pushing ahead Subsequent results have backed up
with our intentions to begin ground- the discovery hole. At the end of October,
breaking next year.” the company delivered an updated re-

The material changes referred to are To page 60
based on the exceptional drilling results

PAGE 58 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

Tel: +61 8 9388 7742 | Fax: +61 8 9388 0804 | Mob: +61 431 084 305
Suite 1, 91 Hay Street, Subiaco WA 6008
www.vitalmetals.com.au ASX:VML

INDABA PREVIEW

istry, the geophysics and the

structure – there is a lot of ex-

ploration opportunity to pursue,”

Hyde said.

WAF also has the advantage

of having the lower grade M5

deposit (1.05 moz gold @ 1.2

g/t indicated and 712,000oz @

1.3 g/t inferred) to blend with M1

material.

“We can run it through the

same plant because it is on the

same recovery grade curve,”

Hyde said. “We will have to blend

to avoid blasting the high-grade

material out of the tails but we

will have to be specific on how

we do it and we are currently do-

ing a lot of test work on that; it is

a luxury problem to have.”

B2Gold paid $US600 million

for Fekola – through the acqui-

West African Resources has completed 60,000m of drilling this year as it builds the sition of ASX-listed Papillon Re-
economic case for its plus-150,000 ozpa Sanbrado gold project sources – and spent $US395
million on building it. WAF’s cur-

source comprised of 1.2mt @ 14.4 g/t for cluding 1m @ 534.45 g/t), 18m @ 82.3 rent market cap of $220 million would

556,000oz gold (indicated) and 410,000t g/t (including 1m @ 1,107 g/t) and 16m @ make funding such a capex difficult –

@ 14.4 g/t for 191,000oz (inferred). 69.1 g/t (including 2m @ 315.3 g/t). even in these buoyant times for the gold

The hits have continued to roll in to Hyde said such numbers had forced sector – but Sanbrado’s grade delivers

such an extent that WAF is planning yet the company to reconsider traditional as- succour with capex of $150 million like-

another resource upgrade in February sumptions about development. ly to prove sufficient even if production

ahead of the release of the long-awaited “The high-grade has just kept going in the initial years reaches beyond the

DFS update. and it took probably 12 months for us to 250,000 ozpa mark.

Hyde remains comfortable with delay- truly understand it because you get stuck “The funding is achievable for a

ing the release of economic studies for in the mindset of geology/geometry but at company of our size and it is about as

Sanbrado. these outrageous high grades you don’t straightforward a project as you can get,

“When we acquired Channel Resourc- need heaps of tonnes to get the ounces,” with conventional mining and processing

es, the licence only had 18 months to run he said. and a location in a country where there

so we had to do the DFS and apply for The updated DFS will likely see pro- have been 10-12 mines built in the last 10

the mining licence within 18 months. That duction in the first few years exceeding years,” Hyde said.

is why we went for the heap leach but 200,000 ozpa, making Sanbrado almost Advanced discussions have already

then we hit the high-grade mineralisation unique in a West African gold sector taken place with banks such as Mac-

at M1 and it changed the entire project.” where NPV often equals capex. And, quarie, Societe Generale and BNP

The change has been dramatic. Out with further drilling results due for re- Paribas while Hyde said there was also

went the modest 50,000 ozpa heap- lease before the end of the year, Hyde considerable interest from private equity

leach concept, replaced in February believes 250,000 ozpa production in the groups.

2017 by a nine-year, 150,000 ozpa open early years of operation could be attain- It may seem misleading to hear Hyde

pit/CIL feasibility study model. able. talk about WAF funding development of

Even the new project scenario appears An additional discovery would bring Sanbrado itself given the track record of

to be a moving feast with the latest re- that target further within reach and now Australian juniors in West Africa – only

sults suggesting a more robust open pit/ the company is more clearly defining the Perseus Mining Ltd has reached pro-

underground operation can be built. Sanbrado model, it is beginning to hunt ducer status in the last decade – but he

“We have updated the mining licence for other targets. is determined the company will do things

for submission early next year and if we “Another M1 could add another on its own terms.

can fill the first five years of mine life with 100,000 ozpa for a relatively small capi- “There is no threat of takeover at this

150-200,000 ozpa-plus production, it is tal outlay,” Hyde said. “That puts us into stage but too many management teams

looking like one of the most robust devel- the same league as projects like Fekola are entrenched with $1 million salaries

opment projects in West Africa.” [the 400,000 ozpa operation in Mali re- and don’t want to risk the opportunity to

The frequency of intercepts at M1 has cently switched on by B2Gold Corp].” transact. I am still a major shareholder

been pleasing but it is the high-grade Ground IP and magnetic surveys were and whatever we do it will be in share-

nature of the hits which is having most carried out over M1 and M5 earlier this holders’ best interests. If the best inter-

impact on WAF’s conception of the pro- year and WAF will continue to test the ests are to build a project we’ll do that,”

ject. Results since discovery have includ- limits of the project before entering a de- he said.

ed 21m @ 53.13 g/t (including 0.5m @ cision to mine. – Dominic Piper
1,613.41 g/t), 29.5m @ 20.7 g/t (including “We’ve put in a lot of work and now we

1.5m @ 250.3 g/t), 12m @ 53.11 g/t (in- know what it looks like – the geochem-

PAGE 60 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Sibanye stakes claim
in DRDGold

Leading South African gold and plati- Tailings storage facilities and surface gold processing plants from Sibanye-Stillwater’s
num producer Sibanye-Stillwater Driefontein operations have been vended into DRDGold via a R1.3 billion deal
could take a controlling stake in tailings
retreatment company DRDGold Ltd with- churning 1 mtpm of blended material will Investors reacted positively to the deal,
in two years after agreeing to exchange be developed in phase two. Cashed-up with Sibanye-Stillwater shares up 3.65%
a suite of gold surface processing assets DRDGold flagged up to R2 billion of capi- on November 22 when both companies
and tailings storage facilities in a deal val- tal required to develop the project. presented the merger plans to their re-
ued at R1.3 billion ($US93 million). spective markets. DRDGold shares fin-
DRDGold chief executive Niël Pretori- ished down slightly.
Sibanye-Stillwater will initially hold us said he expected substantial revenue
38% of the issued share capital in DRD- to be generated during the initial devel- Froneman said the deal was struck
Gold, but has an option to increase its opment phase. on the basis his company would retain
equity ownership to 50.1% within two plenty of leverage to the project’s upside.
years by acquiring additional shares at a “It is a combination of infrastructure
10% discount. and assets that enable us to approach “Sibanye is not a company that partici-
this in bite-sized chunks,” he said. pates in projects or other companies as a
DRDGold will assume management minority shareholder and it was very im-
and operation of five tailings storage “The quality of assets following this portant from day one to agree that there
facilities, three surface gold processing transaction is such that we can get should be a mechanism for us getting to
plants and land set aside for the future into early stage cash flows while we go 50+1%,” he said.
development of a central processing through the mountain of work that has
plant, regional tailings storage facility been done by the Sibanye team and its “It is important that we don’t have pro-
and return water dam. predecessors. jects that dilute us, such as a project like
this, and therefore the DRDGold vehicle
A further three active tailings storage “We’re essentially doubling the size of will provide a basis for raising capital
facilities will also be transferred – for the company.” without actually diluting Sibanye share-
no additional consideration – once they holders.”
have been decommissioned by Sibanye- Neal Froneman
Stillwater. The deal caps an eventful year for
Sibanye which saw it complete a R2.2
The combined asset package – to be billion takeover of US platinum and palla-
known as the West Rand tailings retreat- dium producer Stillwater in April but also
ment project – contains 3.82 moz gold halt dividends for the first time since the
and 42.9 mlb uranium. DRDGold’s re- company was spun out of Gold Fields Ltd
serves will be lifted to 6.81 moz gold post in 2013, due to first-half losses and rising
the transaction being completed. debt levels.

Sibanye-Stillwater chief executive Earlier in November, Sibanye-Stillwa-
Neal Froneman said the deal all but guar- ter announced it was axing part of its
anteed development of the project. South African workforce, with redeploy-
ments or voluntary redundancies of-
“This is an investment in DRDGold fered to more than 3,000 people from the
and a future tailings company that I think Cooke gold mine.
is going to have a very exciting growth
trajectory,” he said. “From a value per- – Michael Washbourne
spective, we realise R1.3 billion of value
immediately, which is only a portion of
the total value of the West Rand tailings
retreatment project.”

The transaction, which does not in-
clude the Cooke and Ezulwini gold and
uranium tailings treatment plants, is ex-
pected to close in Q2 2018.

DRDGold will look to establish infra-
structure and a mine plan capable of
extracting the entire resource over two
phases. Existing infrastructure will be uti-
lised in the first instance, with a planned
upgrade of two surface plants at Drie-
fontein set to treat 400,000-600,000 tpm
from a single source.

A central, high-volume process facil-
ity and new deposition site capable of

PAGE 62 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

No deviation from Strandline

Despite the shake-up in Tanzania’s Defining a string of multi-decade
mining sector, mineral sands ex- mineral sands producing projects is

plorer Strandline Resources Ltd has the desired outcome to satisfy Rio

stayed true to its plan and the benefits Tinto’s investment. While there is

of its composure during the sticky pe- pressure to meet Rio Tinto’s needs,

riod could be seen soon. Strandline can carry out its JV com-

After riding out a depressed min- mitments knowing it already has two

eral sands market, Strandline – and its potential company-making projects.

mining company peers in Tanzania – Tanga in Tanzania is shaping as a

were faced with dramatic changes to potential large-scale project to follow

mining legislation which forced many Fungoni, while Coburn, 250km north

to stop work and investors question of Perth, is already at the starting gate.

their support for the mineral-rich East A DFS estimates a mine life in ex-

African nation. Resource building at Tajiri, Tanga South in Tanzania, cess of 19 years at 23.4 mtpa is pos-

With due consideration by the board is shaping as company-making for Strandline sible.

and JV partners in southern Tanzania, Coburn is fully permitted and bears

Rio Tinto Ltd, the decision was made zircon, premium high-grade ilmenite and rich assemblage of zircon (23%), ilmenite

“to push hard and stick to the script” on a strong rutile product as well – are very (48%) and rutile-leucoxene (12%).

Strandline’s suite of properties along the saleable. There are emerging supply Rising heavy mineral sands prices

country’s coast. gaps forecast for zircon in 2018, accord- have spurred interest and Strandline is

That meant forging ahead with one of ing to TZMI’s forecast.” looking at ways of partnering with a con-

the world’s largest mineral sands explo- Graham believes there is more upside tractor, off-taker or strategic investor to

ration campaigns and delivering a DFS in the mineral sands market, but would bring Coburn to fruition.

on starter project Fungoni, 25km from be happy to see prices stabilise where With the minerals sand space largely

Dar es Salaam. they are now. occupied by majors, Strandline is in an

According to DFS estimations, the “If it was to stay at today’s prices for the enviable position of having a low-cost

capital cost to get Fungoni going is next 20 years, Strandline would be a very starter project ready to develop and a

$US30 million and subject to milestones successful company,” Graham said. pipeline of longer-life assets for a sus-

being hit, including receiving a mining Based on TZMI 2017 forecasts, Stran- tainable future.

lease and securing funding, the premium dline is working on a $US556/t basket Right now, the company is also being

grade zircon and ilmenite project could price for its high value products and with helped by buoyancy in the sector and

see the light of day in late 2019. two development-ready projects, the fu- solid performances by peers in the field.

The low capital start-up is based on ture is bright. “There are some very successful pro-

reserves of 12.3mt @ 3.9% total heavy A mix of debt and equity is being pur- ducers thriving in the market conditions

minerals for 480,000t contained heavy sued to fund Fungoni, with the size of the right now. You see Iluka [Resources Ltd]

minerals comprised of 42.3% ilmenite, project appealing to a select group of po- doing fantastic, Base [Resources Ltd] in

18.2% zircon, 4.4% rutile, 1.2% leucox- tential financiers for Strandline to narrow Kenya also going strong and it is a credit

ene and 1.5% monazite. its focus on. to those companies to position their busi-

Fungoni is initially poised to produce Discussions are under way with finan- nesses for the ups in the cycle,” Graham

at a rate of 2 mpta over a six-year life- ciers and potential off-takers, with award said.

of-mine and be the driving force behind of a mining licence likely to motivate par- “There are some very mature com-

Strandline’s strategy to be a significant ties to confirm their participation in Fun- petitors to us but we are an emerging

mineral sands company, goni. player in the sector and we are focusing

as managing director Luke As the dust begins to on the next two or three decades of min-

Graham explained to Pay- settle in the Tanzanian eral sands production. We are starting

dirt. mining sector, there has with Fungoni, which is a strategic-sized

“The market has come been movement in project project, and we are hoping to have the

off a low base from 2013 approvals and Strandline optionality in our portfolio to become a

through to 2016, and is re- hopes to be granted a min- significant global player in time.

covering. Our project port- ing licence soon. “From an exploration point of view we

folio – in today’s market In the meantime, explo- are doing a significant amount of explo-

at today’s prices – across ration is continuing in Tan- ration and are developing a portfolio of

Fungoni, Coburn or our zania where new discov- projects. We are a little bit unique in that

generation projects Tanga ery Bagamoyo is shaping we are doing so much work on growth
and potentially Bagamoyo, Luke Graham up better than expected. and generation projects right now and

in time would be very prof- The $14.5 million JV on we have two development-ready pro-

itable in these market conditions,” he greenfields opportunities with Rio Tinto jects in two jurisdictions – Tanzania and

said. in the south is also progressing nicely. Australia – both of which are large min-

“Our product suite being at the premi- Strandline is project manager of the eral sands producing jurisdictions.”

um end at Fungoni and Coburn [Western Rio Tinto JV and was overseeing an air- – Mark Andrews
Australia] in particular – premium grade core programme at the time of print.

PAGE 64 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Mod going underground

An imminent PFS may be just one have built a strong in-country team as Julian Hanna
milestone along a road with myriad well.”
opportunities for Mod Resources Ltd on the company is also working to refine
its Kalahari copper project in Botswana. The PFS is based on a resource con- EM prospects along the 50km-long T3
taining more than 400,000t copper and Dome zone.
Mod is set to release a PFS on its T3 14.8 moz silver, built since T3’s discov-
discovery this month but with the de- ery in March 2016. The move into DFS “Exploration of the regional targets
posit’s underground potential growing will likely see further resources added to along the T3 Dome has been held up
and testing set to begin on a host of both the open pit and the emerging un- because the T3 deposit keeps deliver-
other regional targets, Mod managing derground potential. ing. We have at least 20 targets and
director Julian Hanna cannot afford to every geologist in the company has
have a narrow focus. Drilling results in October confirmed a different opinion on which one we
vein mineralisation extends well out- should drill first,” Hanna said.
The company has a plethora of ex- side the planned T3 open pit. Mod will
ploration targets to hit but Hanna is now target high-grade intercepts gen- Mod is currently working through en-
also conscious of the opportunity the erating from these veins. vironmental permitting and discussions
currently buoyant base metals market with local farmers over access to the
offers. “That has been the biggest change we T3 Dome targets but that is just the
have undergone in the last six months; start of its plans for the 12,000sq km
“We are pretty keen to get T3 into realising the underground potential of landholding it has on the Kalahari cop-
development,” Hanna told Paydirt. T3,” Hanna said. “We are now chasing per belt.
“Both internally and from investors, high-grade veins, they are not going to
there is optimism about the outlook for be the usual wide intersections we have “We have already demonstrated
the copper price and we don’t want to seen from T3 but they will be high grade.” copper-in-soil anomalies similar to T3
miss that.” at the T20 Dome – 50km south-west
The deeper potential has been identi- of T3 – and plan to narrow down the
The Botswana Government is also fied too late for inclusion in the PFS but targets with airborne EM,” Hanna said.
keen to see T3 brought into production a concurrent underground scoping study
and Mod has built a management team could allow Mod to incorporate it in DFS Such is the rate Mod is going at –
Hanna said was capable of moving work. the company is currently running sev-
straight into DFS work should the PFS en exploration rigs on T3 – Hanna be-
prove positive. Further exploration in the next three lieves its healthy cash balance of $13
months could see the DFS expanded million may need to be boosted.
“We are definitely keen to take it into further. A recent airborne EM survey
development ourselves,” he said. “We illuminated a variety of further drilling “We are looking at ways of really
have a very experienced team; both targets close to T3 which are set to be pushing the project ahead,” he said.
in exploration and operations and we tested in the current programme while “We have seven rigs at the moment
but there is a strong argument that we
need more drilling.”

PAGE 66 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

The recent resource upgrade has al-
ready seen the parameters of the PFS
expanded to consider a 4 mtpa through-
put but Hanna is eager to push that fur-
ther with another discovery.

“Finding another T3 and spring board-
ing into another mine off the existing in-
frastructure is a big goal for us,” he said.
“The underground could become quite
extensive but it won’t extend the mine
life; it will push production further.”

If the rate of exploration and develop-
ment is to be increased, Mod will require
more funding. With analysts forecasting
a good run ahead for copper, Hanna has
been actively pursuing support in Britain
and Asia.

“A London listing is a possibility,” Han-
na said. “I’ve been surprised by how few
copper stories there are on the London
market. We are also talking and had
strong interest from Singapore and Hong
Kong. All three of those markets under-
stand the copper story better than the
Australian market and people are look-
ing for exposure.”

– Dominic Piper

Mod now has seven rigs turning on its T3
copper-silver deposit in Botswana

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 67

Johannesburg-based Nucleus Mining and Africa
Logistics is a well-established African logistics busi-
ness having provided supply chain solutions from
greenfields to developing and operating mining pro-
jects for 14 years. We spoke to chief executive Iain
Clark about the company’s experience and exper-
tise on the African continent.

Logistics and supply chain management is most usually Africa often presents a unique set of challenges for min-
associated with the operational phase of projects but you ers and explorers. How does Nucleus approach such chal-
offer a range of services for earlier stage projects as well. lenges?
What are some of the challenges facing exploration com-
panies? IC: With Nucleus having a lot of experience operating in geo-
graphically difficult areas, we offer tried and tested solutions.
Iain Clark: Nucleus seeks to involve itself in the very early Other than the geographical challenges, especially in greenfield
stages of projects or even earlier when only a potential project projects, there are stringent customs and government regula-
is envisaged. In this way, we learn to understand the immediate tions that need to be understood. We have built up strong net-
requirements, the current infrastructure available and what sort works and experienced teams on the ground, that ensure se-
of logistical planning we will need to get in place. This helps us curity, local compliance and detailed management from A to Z,
to build the foundations of relationships with junior miners and while providing timely information and feedback.
their potential or appointed EPCM companies. Importantly, this
allows us to assist feasibility studies by creating an understand- As projects develop into construction and later operational
ing of the type of infrastructure required, the geographical chal- phases, Nucleus has the flexibility in approach to develop and
lenges, what the client’s end goal is and even a general idea of adapt to the current requirements thus always remaining effec-
the potential design and structures for the project at that early tive in terms of time and cost. We offer a single point of engage-
stage. Where relevant we conduct detailed route surveys, practi- ment and accountability with complete visibility to our clients.
cal logistical operational plans, and local expertise to assist with
these studies. A number of Australian companies have run into trouble
by underestimating the logistical challenges facing them
PAGE 68 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT in Africa, particularly during the construction phase. Can
Nucleus engage in planning and development strategies
at this stage of the project and what advantages can you
bring to projects at this stage?

IC: On the face of it smaller companies often can look at po-
tential projects and have the idea that due to the challenges in
infrastructure or geographical and political challenges the logis-
tics and challenges will simply be too complicated and expen-
sive! These are genuine and valid concerns, but I believe we
have over the years developed procedures and workable solu-
tions that can both reduce costs and increase efficiencies. We
have been operating in the region for over 14 years and have
experienced most of the challenges that can occur, and yet still
manage to execute a cost effective and efficient service.

A generation ago, cargo would barely be tracked be-
tween leaving port and arriving at site but technology is
now playing an increasing role in supply chain manage-
ment and logistics. How is Nucleus using technology to
provide solutions?

IC: Nucleus is continually developing its technological ability
through innovation and the policy of full transparency and real-
time visibility to our customers. We offer integration with our cli-
ents systems in order to offer real time visibility of warehouse re-
ceipts, stock, despatches, status of goods for departure relating
to customs and country specific inspections, QC inspections,
manifests and tracking.

A significant feature also allows our customers, and their sup-
pliers, access to all documentation, real time, at the click of a
button. Obviously, with the development of GPS technology we
are able to track all vehicles live and receive alerts immediately
of any delays of deviations from the route.

Customs paperwork and cross-border compliance often Each African jurisdiction offers unique challenges for
provide unwanted delays and distractions for miners. What supply chain management. In which regions does your ex-
is Nucleus’ approach to ensuring customs and cross-bor- pertise lie and how do you ensure you have the right level
der issues do not hamper operations? of experience and expertise in those locations?

IC: Nucleus has built its business around documentation in- IC: We have either recently completed or are busy in some
tegrity. Our key account managers and operational teams have capacity with a spread of different projects ranging from copper
in-depth knowledge and experience with the different counties and cobalt, tin, graphite, gold and other commodities in counties
in Africa’s specific requirements and regulations. This is espe- such as Uganda, Tanzania, Mozambique, Zambia, Democratic
cially relevant to avoiding delays at borders and in final clearing of Congo, Ivory Coast, Ghana and Senegal to name a few. We
and, of course, negating the possibility of any penalties for non- are operating various modes of transport in these regions rang-
compliance. In the past, we have saved our clients significant ing from abnormal loads, bulk truck triaxles or super links and
amounts in these penalties and have a track record of eliminat- express 1-8t loads, to airfreight and sea freight.
ing them completely. We understand the regulations and we op-
erate by the rules without compromising transit times and safety.

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 69

INDABA PREVIEW

Etango shapes up in wake
of Cameco cuts

Cameco Corp’s decision to suspend Bannerman was able to reduce the forecast capex for its Etango uranium project
production from the world’s largest on the back of the success of its heap leach demonstration plant
uranium mine is set to benefit advanced
developers such as Bannerman Re- for an undetermined amount of time.” “It will give KazAtomProm access to
sources Ltd.
Uranium experts say the temporary long-term contracts in compliance with
With the uranium spot price continu-
ing to teeter at decade lows of $US20/lb, suspension of McArthur River is the lat- the current laws that prohibit KazAtom-
Cameco has opted to shutter its McAr-
thur River mine and Key Lake processing est in a series of positive news for the Prom selling into the spot market, taking
facility in Canada for 10 months starting
from January in a bid to work off the large troubled yellowcake sector which has re- a lot of pressure off the spot market and
inventory holding it has built up over the
last few years. mained in the doldrums since the Fuku- allowing it to recover to an economic bal-

Previously, the company had said it shima incident of 2011. ance point,” Munro said.
would rather hold its inventory than sell
for below $US30/lb. The world’s second The steady restart of Japan’s once “In achieving that objective, THK needs
largest uranium producer behind Kaz-
AtomProm has also stated it could ex- mighty nuclear fleet and the recent re- to build an inventory position and given
tend the length of the suspension if the
uranium spot price remains supressed. election of President Shinzo Abe are both how illiquid the spot market is at the mo-

Namibia-focused Bannerman has wel- set to have a positive impact on uranium ment, one would expect any substantive
comed the move, with managing director
Brandon Munro saying he expected the demand, along with other government- level of buying from them to build that po-
10-month suspension to reduce global
uranium production by more than 12 mlb. backed, nuclear-related developments in sition will support a price recovery.”

Cameco’s action also received sup- South Korea and France. Positive developments in the uranium
port from Bannerman’s ASX-listed peers
Vimy Resources Ltd (Western Australia) On the other side of the supply-de- sector come as Bannerman continues
and Boss Resources Ltd (South Aus-
tralia). All companies, including Cameco, mand equation, the looming establish- to churn out its own good news from its
saw their share prices tick upward when
the news broke in early November. ment of Trading House KazAtomProm 95%-owned Etango project, 38km east

Munro said the decision by Cameco (THK) is widely tipped to positively influ- of Swakopmund.
to suspend its flagship asset had caught
some in the industry off guard. ence uranium supply dynamics. In November, Bannerman announced

“Some element of voluntary supply a processing optimisation study had
disruption has been inevitable – many
would say overdue – but the strength slashed $US73 million off the previ-
of their response has demonstrated
both how critical the economic situation ously forecast $US793 million of pre-
has become for the producers and the
strength of their resolve to deal with production capex required to develop
it,” Munro told Paydirt.
Etango.
“They [Cameco] have been very
comfortable for a couple of years Munro said the ability to substan-
with low pricing and high levels of
inventory. This news will shift them tially reduce capex without compro-
out of their comfort zone and back to
their traditional stance, which is sup- mising the project’s operating costs
ply side concern and risk mitigation.
or risk profile was a critical result for
“The various third party modelling
they [nuclear utilities] have relied on his company.
to maintain this position of comfort
has now been thrown in the air be- “One of the cheap tricks for reduc-
cause all those models need to take
production from the world’s largest ing capex is to switch from owner-
uranium mine out of their supply side
mining to contract mining, where typ-

ically you push your operating costs

up, but we haven’t needed to do any

Brandon Munro of that,” he said.

PAGE 70 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

“All of the wins we’ve obtained Namibia, which is still reeling
have been through either im-
proved performance and design, from many years of low yellow-
which is possible because of the
results at our [heap leach] dem- cake prices and the recent col-
onstration plant, or through incor-
porating technologies and equip- lapse of ASX-listed producer
ment that either weren’t available
in 2012 when we did our original Paladin Energy Ltd.
DFS or had not been sufficiently
road-tested to have an accept- Etango is the country’s best
able risk profile.”
near-term development option
The processing optimisation
study is the first stage of an up- – the proposed open pit will be
dated DFS the company is under-
taking on Etango. A mining opti- twice the size of Rio Tinto plc’s
misation study was completed on
the project in late 2015. Rössing mine – and Munro said

Some of the key highlights from the both investors and analysts were
processing optimisation study were
large capital reductions from a simplified beginning to appreciate the pro-
crushing circuit, confirmation that ion
exchange was a viable and superior al- ject’s importance to a revival of
ternative to solvent extraction, improved
recovery and reduced reagent consump- Namibia’s uranium sector.
tion.
If developed, Etango will be one of the largest uranium “During the boom times, it
An ongoing membrane study assess-
ing the application of nano-filtration tech- mines in Namibia was assumed that the array of
nology in the processing circuit is due in
early 2018 and will be factored into the uranium development projects
updated DFS.
“It’s been a challenging time with the would proceed according to a timeline

uranium price remaining so low for so that we’re all familiar with from gold and

long, but it’s reassuring to know that copper projects,” Munro said. “And for

we’ve been able to use both that time and the large part, we’ve seen very little con-

our technical and corporate overheads crete advancement of that selection of

very effectively,” Munro said. projects.

“The results from the processing op- “Any host country, including Namibia,

timisation study demonstrate an excep- ultimately benefits from having its expec-

tional return on investment when you tations of resources recalibrated and our

calculate the NPV effect of the last 12 sector is benefiting from recalibrated ex-

months of investment.” pectation at both a government and com-

Positive developments at both industry munity level as a result.”

and project level are sure be welcome – Michael Washbourne
news for the residents of uranium-rich

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 71

INDABA PREVIEW

Black Rock cashed up for DFS

The economics of Black Rock’s Mahenge graphite project have not materially changed
as a result of the proposed new mining laws in Tanzania

Strong investor interest has helped Vries said the company had been over- markets until we’ve finished the DFS.
Black Rock Mining Ltd raise more whelmed by the level of investor support It’s a much easier conversation to have
than enough cash to complete a DFS on and it therefore became a simple deci- because people can come into the stock
its Mahenge graphite project in Tanzania sion to increase the size of the place- knowing that we’re not planning to dilute
within the next 12 months. ment. them halfway through.”

In November, Black Rock pocketed “We were very, very pleasantly sur- Investor support for Black Rock comes
$4.75 million – $1.2 million more than the prised by the level of interest and sup- on the back of a rollercoaster ride for the
original target – from a heavily oversub- port for the company and so that led us company in recent months, with respect-
scribed placement which attracted multi- to go back and make a bit of a strategic ed mining identity Richard Crookes sign-
ple bids from institutional investors. decision as to whether we fully fund our- ing on as chairman in October.
selves now or wait a bit and get on with
The company now has about $5.25 the DFS and then put the tin back out at a De Vries was formally appointed chief
million in the bank to comfortably com- later date,” de Vries told Paydirt. executive in August, having filled the role
plete all planned items for the upcoming in an interim capacity since late April af-
DFS on Mahenge, about 125km south- “We thought it was just simpler to be ter initially joining the company as chief
west of Dar es Salaam. able to say if we can get enough money operating officer only one month earlier.
now, we don’t need to go back to the
Black Rock chief executive John de The board and management changes

PAGE 72 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

come amid a period of uncertainty for tell you is the exact date. So, we’ve ap- unlike the hundreds of gold projects in
many Tanzanian graphite hopefuls fol- proached this business model as some- which people have a pretty good idea of
lowing the proposed changes to the thing which is big enough to be invest- what works and what doesn’t work,” de
country’s mining laws. able but small enough to be fundable Vries said.
and one that lets you either accelerate or
However, Black Rock has quietly change the timing in response to what’s “There’s just not that experience in
pushed ahead with its plans to develop going on in the market. graphite. So, unless you want a career-
Mahenge, with an optimised PFS com- limiting outcome, it’s best to run a pilot
pleted in August confirming no material “Going in with a sensible size module plant and be able to fully describe what
changes to the key assumptions from the from which we can then use cash flow for the material properties are going to do
original study. a second and third module is a lot more and then design the mill to deliver it.”
pragmatic way of doing it.”
Black Rock has proposed a three- Black Rock remains open to produc-
stage development strategy to deliver up DFS activities either under way or on ing graphite products for both the battery
to 250,000 tpa of 98.5% graphite concen- the immediate horizon include grade and building materials markets, with re-
trate from Mahenge over 31 years. Pre- control drilling, environmental permitting cent 200-cycle battery test results con-
production capex for stage one remains and collection of a bulk sample for a pilot firming Mahenge has the potential to
at $US90.1 million, with steady-state plant run in Canada. help manufacturers produce more stable
opex reduced slightly to $US378/t, based lithium-ion batteries at a lower cost and
on a basket sales price of $US1,241/t. De Vries, an experienced mining en- with a longer life cycle.
Stages two and three are to be funded gineer who has worked for the likes of
from free cash flow. WMC Resources, AMC Consultants, “Most people just build a battery and
BHP Nickel West and St Barbara Ltd, see how it goes, whereas we did an ar-
Other key economics from the opti- said the pilot plant testing would aid ray of different battery types and designs
mised PFS include a post-tax, unlev- the company’s negotiations with po- and electrolytes,” de Vries said. “Al-
ered NPV of $US905 million and IRR of tential off-takers as well as validate the though these things are all customised to
45.1%, taking into account the proposed flowsheet for Mahenge. a particular product, to be able to come
16% free-carried interest position of the out of the box on the first shot and to get
Tanzanian Government, as well as the Black Rock has previously executed to where we have is just unbelievable.”
royalty fee increasing to 4.3%. MoUs with Japan’s MEIWA Corp and
Chinese spherical graphite manufacturer – Michael Washbourne
“Our business model is all about ‘crawl, Yingkou Botian Material Technology Ltd
walk, run’,” de Vries said. Company.

“We know there is going to be a lot of “There’s not a collective design history
demand for graphite, the only thing I can’t on graphite in the engineering houses,

17 October 2017
Pan Pacific Perth

The CD-Rom of the 2017
Australian Nickel Conference

is available

CD-Rom – $60 (inc.GST)
Phone (+61) 8 9321 0355 or email [email protected]

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 73

INDABA PREVIEW

Celsius riding a cobalt high

Celsius Resources Ltd has topped up Celsius is on track to release a maiden resource and scoping study for its
its cash balance as it prepares to Opuwo cobalt project in Namibia in early 2018
unveil a maiden resource estimate and
scoping study for its Opuwo cobalt project “To date we’ve only really focused said. “When we did that deal our share
in northern Namibia. on the known mineralisation and so price was sitting around about 4c and
we haven’t really done any exploration we’ve just hit 10c, so we’re all pretty hap-
On the back of some promising drill in- across the broader tenement package py with how it’s gone.”
tercepts and consolidation of its project for something else that may be in exist-
tenure, Celsius rattled the tin for $3.9 mil- ence,” Borg said. Results of metallurgical test work on a
lion via a heavily oversubscribed place- selection of samples from Opuwo were
ment in late October. “We know we’ve got a vast mineral- due at the time of print, however, Borg
ised system here that extends over about said his team was encouraged by some
Celsius now boasts a cash position of 15km, so the question now is what else of the early findings.
more than $7 million, allowing the com- exists is on this tenement package that
pany to comfortably finish resource drill- we’ve yet to discover. That’s where these “The cobalt mineral that’s present is
ing and metallurgical test work in time for additional funds will allow us to explore linnaeite, which is a simple cobalt sul-
the planned release of aforementioned that aspect of the project as well as ad- phide, and importantly there is no arse-
project milestones in early 2018. vance the known areas.” nic in the structure,” he said.

Funds will also be directed towards Prior to completion of the restructure in “A lot of the other cobalt minerals in
exploration of the company’s newly ac- early September, Celsius was earning up projects around the world have arsenic
quired licences following a restructure of to 76% of Opuwo via staged expenditure, within the structure of the mineral and
its partnership with Gecko Namibia Pty with a call option providing the company that obviously impacts the quality of
Ltd, as well as early PFS work. with an opportunity to acquire a further product you can ultimately produce.”
20% for just $1.25 million up to finalisa-
Celsius managing director Brendan tion of a BFS. Borg was enticed to pursue cobalt pro-
Borg said the placement was more than jects following some informative discus-
three times oversubscribed. However, exploration success has sions with electric vehicle manufacturers
since placed a higher value on the pro- in mid-2015. His previous experience in
“We ended up having bids for the offer ject and Gecko agreed to immediately Namibia then led him to working on the
in excess of $12.3 million and that was boost Celsius’s interest in Opuwo to 95% country’s first cobalt discovery.
just for ones who actually put in the for- in exchange for 31.25 million shares.
mal bids,” Borg told Paydirt. Gecko also handed over a 95% stake “This is the first and only cobalt dis-
in the surrounding licences for a further covery in Namibia with grades that are
“We knew we would be able to be 12.5 million shares. potentially commercial,” he said. “Since
picky with who we placed the stock to we picked up this project, the cobalt
and I think the way the share price has Gecko managing director Pine van price has gone from about $US25,000/t
behaved since we did the placement has Wyk, who played a key role in the devel- to $US60,000/t and I think there’s plenty
shown we did quite a good job.” opment of the Langer Heinrich uranium more left in terms of the cobalt price run
mine for Paladin Energy Ltd, also gained up. So, a project like this will really start
The impending project milestones will a spot on the Celsius board as a non- to look attractive if the price keeps push-
come a little more than a year after Opu- executive director. ing up towards $US100,000/t.”
wo was vended into the Celsius portfo-
lio and battery minerals specialist Borg “It’s a win-win for everybody,” Borg – Michael Washbourne
signed on as managing director.

Resource drilling is due to wrap in mid-
December, with South African-based
geologists recently running the rule over
results to ensure they complied with the
correct resource calculation procedures.

Some of the best intercepts to date
include 19m @ 0.13% cobalt and 0.62%
copper from 87m (including 7m @ 0.13%
cobalt and 1.11% copper from 87m) and
13m @ 0.14% cobalt and 0.51% copper
from 125m (including 10m @ 0.17% co-
balt and 0.66% copper from 125m and
3m @ 0.23% cobalt and 0.36% copper
from 132m), using a cut-off grade of
0.05% cobalt.

In the past year, Celsius has identified
copper-cobalt mineralisation extending
more than 15km across its tenure.

Borg said his company would soon
cast its eye over the three new licences
acquired from Gecko as part of the re-
structure of its JV, which also saw Cel-
sius lift its stake in Opuwo to 95%.

PAGE 74 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Nzuri cobalt in high demand

With a robust feasibility study now
under its belt, Nzuri Copper Ltd has
set its sights on realising value from the

cobalt potential of its Kalongwe project in

the DRC.

A feasibility study completed in Octo-

ber found a conventional open pit mine

and 1 mtpa DMS processing plant could

be developed at Kalongwe for a modest

upfront capex of $US53.12 million.

Key economics from the study includ-

ed pre-tax NPV of $116 million, IRR of

71%, C1 cash costs of $US1.35/lb and

payback in 21 months, based on produc-

tion of 19,360 tpa copper and 1,507 tpa

cobalt over seven years. Nzuri has released a robust feasibility study for the initial development of its

A maiden reserve of 6.98mt @ 3.03% Kalongwe project in the DRC
copper and 0.36% cobalt containing

211,494t copper and 25,128t cobalt was concentrate, with the expanded stage Test work on a 4.2t sample collected

announced with the study, which fo- two to assess the viability of making di- from diamond drilling during the final

cused only on an initial DMS production rect copper and cobalt products. campaign before the feasibility study was

scenario. The feasibility study also assumes completed was due to take place at the

Kalongwe is fully permitted and has an transportation of concentrate 377km by time of print.

estimated 12-month timeline to produc- road to Lubumbashi, although Nzuri an- Other work programmes in the imme-

tion post-funding and board approval. ticipates a reduction in its life-of-mine op- diate pipeline include in-situ/tank leach-

Nzuri is set to open more formal discus- erating costs if it can sell its concentrate ing of the cobalt-only ore and leach test-

sions for off-take now that its project to customers in Kolwezi, some 100km ing of the DMS mineralised rejects.

numbers are out in the marketplace. closer to site than the DRC capital. Nzuri plans to keep a diamond drill rig

One thing which has become clear to “There’s monstrous upside if we can turning at Kalongwe through the wet sea-

both chief executive Mark Arnesen and bring that customer base back to Kol- son, which runs from October to April, in

chief operating officer Adam Smits since wezi, which is 25% of the travel distance, a bid to maintain the momentum which

the release of the feasibility study is in- and that equates to reducing the cost carried both the company and project

vestors want to see more emphasis on of production from $US1.35/lb to about through 2017.

the cobalt content of Nzuri’s ground, just $US1.05/lb in real terms,” Smits said. Arnesen, who has experience in the

15km from Ivanhoe Mines Ltd’s Kakula “There aren’t any off-takers in Kolwe- DRC from his time as finance director at

copper-cobalt project. zi that we could find that would pay us Moto Goldmines, said development of

“What the feasibility did for us was for the cobalt at the moment but we are Kalongwe would go a long way to clean-

really highlight the value of the cobalt,” aware of two Chinese groups who are ing up the country’s “unethical” cobalt

Arnesen told Paydirt. building SX-EW plants which can pro- mining industry.

“It was always apparent that we’ve got cess cobalt. “There was a report recently from

some very good cobalt grades, but right “Both of those plants will just toll treat Amnesty International which was quite

now it’s still very much a copper project and each can take about 10,000t copper, damning in respect to the big users of

first and foremost. But, given this excite- so about half of our output, as well as all batteries, basically questioning if they

ment around cobalt, people we’ve spo- of the cobalt that we produce. So, there’s knew where their supply was coming

ken to have said they would like to see huge upside if we can sell to those two from,” Arnesen said.

us attach a lot more emphasis to the co- off-takers.” “It’s no secret a lot of the cobalt from

balt and that will happen in phase the DRC is unregulated and we

two.” expect to see and deal with more

Investor interest in Nzuri’s co- and more people who thought

balt potential peaked on the back they had a steady supply of ore,

of recent exploration results from but are now saying it’s not ethi-

the Monwezi West prospect, in- cal.”

cluding drill hits of 4m @ 0.23% Smits added: “The amount of

cobalt from 4m, 19m @ 0.48% cobalt the world needs is expect-

cobalt from 20m (including 7m @ ed to double over the next five

1.04% cobalt from 27m), 11m @ years, so getting new cobalt play-

0.1% cobalt from 1m and 2m @ ers like ourselves into production

0.19% cobalt from 75m. is an absolute must.”

Stage one development of Ka- Small capital works have begun at Kalongwe, about 15km – Michael Washbourne
longwe is forecast to produce

143,000 tpa of DMS and spiral from Ivanhoe’s Kakula copper-cobalt project

PAGE 76 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

BMAINTETREA2R0LY1S8

14 -15 March – Perth,Western Australia

graphite cobalt

nickel

lithium rare earths

Presentation Opportunities
Now Available

www.batterymineralsconference.com

To present, exhibit or attend as a delegate please contact
Namukale Nakazwe-Msiska on (+61) 8 9321 0355 or email [email protected]

INDABA PREVIEW

Kasbah prepares for new
chapter in Morocco

Morocco is not renowned for its metal prospectivity but successful development of Achmmach could change perceptions

Ahost of projects on the African conti- LME tin prices subsequently cascad- believes the project’s latent potential may
nent drifted out of the spotlight during ing from $US24,000/t to $US13,250/t by soon be realised.
the last commodity downturn but with a January 2016, Kasbah found itself re-
bull market taking hold this year, many of drawing its plans in an effort to reduce “It is a matter of things having their time
them are beginning to find new life. upfront capex and make Achmmach a and I think this project’s time is close,”
more attractive investment. Clark told Paydirt. “The project remains
The rebound has been led by the tra- one of the most advanced tin projects on
ditional major metals (gold and copper) The process culminated in a failed the planet.”
and emerging commodities (lithium and merger with TSX-listed Asian Mineral Re-
cobalt) but there remains a plethora sources Ltd in 2016. Long-serving man- Clark has had one eye on the tin mar-
of development projects ket for several years from his recent stint
awaiting an injection of en- aging director Wayne as managing director of Wolf Minerals
thusiasm and momentum. Bramwell soon left the Ltd, the UK-focused tungsten-tin miner.
company as Achm- Wolf suffered many of the same market
One such asset is the mach – despite hav- headwinds as Kasbah but Clark sees
Achmmach tin project in ing Toyota Tsusho as ample evidence a turnaround has begun.
Morocco. Achmmach shot a 25% JV partner and
to prominence during the Pala Investments as a “There are a lot of similarities between
last resources boom, with major Kasbah share- Kasbah and Wolf,” he said. “They are in
project owner Kasbah holder – appeared rud- specialty metals in a place where people
Resources Ltd taking it derless. think you can’t mine [Morocco and Brit-
through to DFS in March ain]. The tin price fell out of bed around
2014 before falling victim to However, with tin pric- the same time as the tungsten price and
the bite of the downturn. es putting on 50% in the it is also coming back now but tin has the
last 18 months, newly advantage of having less Chinese con-
The DFS had been far appointed Kasbah chief trol of the market than in tungsten.”
from disastrous but with Russell Clark executive Russell Clark
Market indicators point to a sustained

PAGE 78 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

rally in tin prices. While the from there we will need to do
International Tin Research
Institute is predicting annual a capital raising to get going,”
demand growth of 1-2% over
the next five years, issues Clark said. “We are looking at
loom on the supply side.
a London listing and will also
“That is the real story,”
Clark said. “Two percent tidy up the register ahead of a
growth is about 5,000 tpa,
which is one Achmmach a rights issue.”
year, but there are not many
projects around the world The ASX usurped London
ready to come on stream. My-
anmar, Indonesia and China as the home of African pro-
are all reducing production so
there is a gap to do with sup- jects during the last boom but
ply, not demand.”
Clark – who built up consid-
The LME tin price was
hovering just below the erable UK contacts during his
$US20,000/t mark at the
time of print. Clark said time with Wolf – believes the
$US25,000/t was the likely incentive
price for new developments but “as we pendulum has swung back to
have seen in tungsten there will be a
three or four-year development lag on the northern hemisphere.
that”.
“There is a lot more enthu-
All of which could see Achmmach re-
turn to prominence if Kasbah can gener- siasm for Africa in London
ate some market interest.
and they tend to be more
Clark spent his first four weeks in the
job familiarising himself with the project comfortable with riskier juris-
and building his understanding of Kas-
bah’s reputation among investors. dictions,” he said.

“The lost momentum had a lot to do Kasbah has drilled more than 120,000m at Achmmach Not that Morocco falls into
with internal disruption in the company
which came about as a result of the the “riskier” category. Since
failed merger but when I went to the pro-
ject in November, I was blown away by 10-year mine life but could be easily dou- the Arab Spring, the country has enjoyed
the quality of people we have,” he said.
bled by further infill drilling,” Clark said. a largely balanced political landscape
“This project has had $90 million spent
on it, including 120,000m of drilling. The “This is a classic underground project and its 2015 Mining Act is designed to
site is in good shape, all the core has
been well maintained and it is ready to where you can start with a six-year mine foster government policies for a threefold
go. It is not in the middle of the desert
or on top of a mountain; it is only a few life and end up mining for 30 years.” increase in resources-related revenue
hours from Rabat.”
The company has also discarded over the coming decade.
The task now is to convince investors
Kasbah has the wherewithal to get Ach- the reworked DFS, which envisaged a If Kasbah can get its marketing pitch
mmach back on track.
smaller start-up, in favour of beginning at right, it could play an integral role in Mo-
“In the last three weeks, I’ve been to
London, Sydney and Melbourne, trying 750,000 tpa. The decision came follow- rocco realising those goals.
to say Kasbah is still here and has got a
new lease of life,” Clark said. “Only about ing consultation with AMC Consultants – Dominic Piper
half the brokers in London had heard of and a full review of
Kasbah, while in Australia there were a
number of firms who had been in and out the DFS is now un-
because of the lack of development but
I explained that we don’t determine tin der way.
prices.”
“AMC asked
With a clearly defined 14.9mt @ 0.85%
tin resource and 6.56mt @ 0.85% tin re- some questions
serve, Kasbah doesn’t need to under-
take any further exploration. Instead, the about the proposed
company’s new strategy will see it focus
on rebuilding the development path. kit and offered up

“That 6.6mt reserve was sufficient for a some other op-

tions,” Clark said.

“We are now look-

ing at a 750,000

tpa operation from

the get-go and are

considering things

like ore sorting and

HPGR. Neither of

these options are

new technologies

and have advanced

considerably since

the first DFS was

completed.”

Results of the

DFS review are due

in the March quar-

ter, by which time

Kasbah will also be

well advanced in

putting together a

funding strategy.

“We have $5 mil-

lion in the bank

which will go on

the DFS review and

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 79





INDABA PREVIEW

Chilalo firms for development

Graphex Mining Ltd and Graphex upgraded the
its Chinese partners are high-grade portion of the re-

poised to hit the go button source at Chilalo earlier this

on the Chilalo graphite pro- year to 16.9mt @ 11.9% TGC

ject once the dust settles in for 1.7mt, including 5.2mt @

Tanzania. 11.9% TGC for 600,000t in

With a feasibility study the indicated category. It was

and all of the required regu- essentially the only major

latory permits in the bag, technical work completed on

Graphex and CN Docking the project in 2017.

Joint Investment and Devel- “I’ve always said the suc-

opment Co Ltd were close to cess of this project is not

finalising a JV, off-take and about the size of the re-

financing agreement in July source; it’s about product

to all but ensure Chilalo’s quality and then obtaining the

development. Then, Tanza- required off-take and financ-

nia’s Government stunned ing,” Hoskins said.

the resources industry with “We’ve still only scratched

a proposed set of amend- the surface for the explora-

ments to its mining laws. tion potential on our ground

CN Docking – a subsidi- and both us and the Chinese

ary of China National Build- intend to move about growing

ing Materials – was quick Graphex and CN Docking have committed to developing the Chilalo the resource once we’re in

to reaffirm its commitment graphite project in Tanzania, pending clarification of certain production.”

to Chilalo when the amend- amendments to the country’s mining laws While the legislative chang-

ments were first made pub- es had a negative impact on

lic, however, both parties have acknowl- end of the calendar year, we’ll be able to Graphex’s share price mid-year, rising

edged the legislative changes have finalise those agreements.” coarse flake graphite prices in the sec-

added complexity to the discussions Graphex and CN Docking have also ond half helped the company’s stock re-

and as such the negotiations have taken committed to compiling a joint feasibil- cover some lost ground.

longer than expected. ity study which will likely be completed in Coarse flake graphite prices are up

A non-binding term sheet signed by March. Pending the legislative changes roughly 50% over the last 12 months as

both companies earlier this year point- in Tanzania, a decision to mine could fol- a raft of environmental changes in China,

ed to a proposed equity investment of low and Chilalo would be set on a course headlined by supply restrictions in major

$US18-20 million from CN Docking for a for first production in early 2019. graphite producing provinces, begins to

50% interest in Chilalo. CN Docking’s commitment to the take effect.

Representatives from CN Docking and project follows an extensive technical “Like coal, graphite is a dust polluter

Graphex, including managing director due diligence programme through 2016 and there have been significant restric-

Phil Hoskins, met with newly appointed which demonstrated Chilalo could pro- tions placed on graphite production in

Minister for Minerals Angellah Kairuki, duce the coarsest flake graphite in the Shandong province for the coarse flake

as well as Tanzania’s Commissioner for world. graphite and in Heilongjiang province

Minerals and Director of Legal Services, The test work successfully produced a for your battery-type graphite fines,”

in Dar es Salaam in November to seek flake size – +20 mesh or above 850 mi- Hoskins said.

clarification on certain aspects of the cron – which has not yet been managed “Our expectation is the environmental

proposed new legislation. by any of Graphex’s peers in the graphite concerns and mine closures in China will

“It was a very encouraging meeting,” space. become permanent, so supply will come

Hoskins told Paydirt. “From the outset “To demonstrate how far we’ve come off permanently, and continue to have a

we have said we just want to understand in the negotiations and testament to our positive impact on coarse flake graphite

more about the legislation. good relationship with CN Docking, they prices. That’s why our Chinese partners

“We have an advanced project that is were happy to share those results with believe the 21st Century is the century

ready to go, but ultimately the success or us ahead of finalising the transaction,” for graphite.”

failure of Graphex hinges on us getting Hoskins said. Hoskins said at least 95% of his com-

those off-take and financing agreements “Those results were outstanding. We pany’s forecast revenue from Chilalo

finalised. clearly have the coarsest flake graphite would come from markets outside of the

“We’ve exchanged all the binding product in the world, which backs up the burgeoning lithium-ion battery space, of

documentation [with CN Docking] and market-leading expandability that our which fine flake graphite is a key ingredi-

negotiated that rather extensively. We’re graphite has demonstrated historically. ent.

now just looking for the Tanzanian Gov- You can understand why the Chinese – Michael Washbourne
ernment to provide a little bit more col- haven’t really flinched at these amend-

our to the legislation. Upon receiving that ments to the legislation and why they’re

clarification, which we expect prior to the still committed to the Chilalo project.”

PAGE 82 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

Diamonds deliver for Lucapa

Lucapa Diamond Company Ltd had Lucapa recovered two high-value diamonds weighing 129.58ct and 78.61ct
plenty to celebrate last month as the respectively from alluvial mining of its Lulo project in Angola
good news kept flowing from its diamond
projects in Angola and Lesotho. project in Lesotho. million loan funding from Equigold, Lu-
Equigold has elected to convert its fees capa decided not to pursue a secondary
A high-value 129.59ct diamond was listing on London’s AIM market as previ-
recovered from alluvial mining at the Lulo relating to a $US15 million financing facil- ously flagged to shareholders.
project in Angola, along with another ity for Mothae – immediately adjacent to
large stone weighing 78.61ct. Tests have Gem Diamonds Ltd’s Letseng diamond
confirmed both diamonds are premium mine – into Lucapa
Type IIa D-colour gems. shares.

It is the eighth 100ct-plus diamond Lu- Singapore-based
capa and its project partners Endiama Equigold was is-
and Rosas & Petalas have recovered sued more than 2.4
from Lulo, and the seventh in just 2.5 million ordinary fully
years of commercial mining. paid shares in Luca-
pa at a VWAP price
Lucapa managing director Stephen of 26.9c/share. Un-
Weatherall said erosive geological forc- der the terms of the
es had deposited these “very rare and financing facility,
valuable” diamonds in a relatively local- Equigold was able
ised area at Lulo. to further increase
its shareholding in
“These localised recoveries, and other ASX-listed Lucapa
indicators, point to the huge potential of a by converting the
large stone primary kimberlite source at last two scheduled
Lulo,” Weatherall said. quarterly repay-
ments, totalling
“We continue to systematically ad- $US3.75 million,
vance our efforts to locate that primary into Lucapa shares.
diamond source with an ongoing drilling
programme funded from the strong re- Lucapa has drawn
turns being generated from the Lulo al- down $US10 mil-
luvial mining operations. lion of the Equigold
facility and hopes
“Having started with a list of more than to have Mothae –
200 anomalies, the Lulo partners are now a former Lucara
working through a list of 70 prioritised Diamonds plc as-
drilling targets, systematically eliminating set which Lucapa
low interest kimberlites. We continue to acquired earlier this
assess ways to speed up this systematic year – in production
drilling and sampling programme – an by Q2 2018.
approach we believe provides the best
opportunity to unlock Lulo’s true value.” On the back of
securing the $US15
The large diamond finds preceded
another successful sale of alluvial gems
from Lulo, yielding gross proceeds of
$US7.3 million at an average price of
$US1,770/ct.

Lulo diamond sales have totalled
$US31.6 million, averaging $US1,668/
ct, from eight sales events in 2017, with
the recent finds potentially up for tender
in December.

Record monthly treatment of 29,657
bcm of alluvial gravels was achieved
at Lulo in October, putting the mine on
course to exceed its annual operational
target of 240,000 bcm.

October also saw 49 large special dia-
monds produced from Lulo – the second
highest monthly total on record.

Meanwhile, Lucapa received a boost
from the Simon Lee-backed Equigold
Pte Ltd as it seeks to advance phase one
development of the Mothae kimberlite

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 83

INDABA PREVIEW

Auction disaster stalls Mustang

Mustang Resources Ltd Montepuez ruby project
has been forced to de- presents an opportunity
lay a number of planned for feasible long-term com-
mercial development.”
activities for its Montepuez
Mustang has been active
ruby project in Mozambique at the project since early
2016, having acquired con-
following a disastrous maid- tractual rights to earn a
majority interest in a suite
en auction. of prospecting and explo-
ration licences in northern
An internal review of the Mozambique.

auction, held at Port Louis in Later that year the
company installed
Mauritius on October 27-30, a bulk sampling
plant which it sub-
found the company did not sequently upgraded
to 120 tph for only
take an adequate volume of $1.14 million. It is be-
lieved this was installed for significantly
rubies to the tender and was less than what Gemfields plc forked out
for two similar plants on its neighbouring
subsequently punished by ground.
Mustang has provided elementary
buyers and investors alike. washing and sorting equipment to artisa-
nal miners since early 2017 to allow them
Mustang received just Mustang has suspended bulk sampling to continue their unregulated and illegal
practices under safer working conditions.
$713,456 at an average activities at Montepuez following a To date, artisanal miners have yielded
360,206ct from Mustang’s ground, repre-
price of $24.21/ct from the disastrous first ruby auction senting about 83% of the company’s total
ruby yield.
sale of 29,463ct, having More than 40 buyers attended the in-
augural ruby auction in Mauritius. Some
brought 405,000ct to the auction, with Mustang’s artisanal miner develop- of the “valuable” feedback provided to
the company included grading catego-
the prices realised for individual sched- ment programme (AMDP) has also been ries being too broad and the offering
not containing enough total volumes of
ules ranging from $6/ct to $1,944/ct. halted, pending a review of the sale of stones across certain categories, in par-
ticular the high quality categories.
Investors were also quick to jump off associated rubies. It was also emphasised to the compa-
ny that some buyers will pay “attractive”
the ASX-listed company with its stock In a statement to the ASX, Daymond and “substantial revenue” for lower qual-
ity stones where volumes are large.
slipping from as high as 20c/share in the said the company – currently the world’s Meanwhile, Mustang has upgraded
the resource at its nearby Caula graph-
lead-up to the tender to as low as 3c/ only listed ruby miner – had come a long ite project, adjacent to Syrah Resources
Ltd’s Balama graphite project, to 5.4mt
share in the days which followed. way in the past 18 months, but it had also @ 13% TGC containing 702,600t, using
a 6% cut-off grade.
Christiaan Jordaan quit as Mustang’s been confronted by a number of chal- Caula hosts an oxidised zone of 2.4mt
@ 10.9% TGC containing 261,600t and a
managing director on November 13, al- lenges, particularly in finding expertise in fresh zone of 3mt @ 14.7% TGC contain-
ing 441,000t. More than 55% of the fresh
though the company insisted his depar- ruby sales and marketing. graphite has been classed as jumbo and
large flake.
ture was due to personal reasons and “The results of the company’s first ruby Exploration drilling at Caula was set to
resume at the time of print.
the board had “reluctantly” accepted his auction, being the first real market test,
– Michael Washbourne
resignation. clearly fell short of the company’s hopes,

Jordaan remains on the board as a but presentation of the company’s inven-

non-executive director, with Ian Day- tory to the market is the only real mecha-

mond taking over as interim executive nism for gaining accurate feedback on

chairman until a new managing director the value of the rubies being recovered,”

is appointed. he said.

In the immediate aftermath of the “The company continues to hold the

auction disaster, Mustang announced a view that the Montepuez gemfield has

planned upgrade of the Montepuez bulk world-class ruby prospectivity and that

sampling plant had this prospectivity, com-

been postponed to al- bined with the contin-

low the company to fo- ued demand growth

cus on building the re- for rubies, warrants the

quired inventory ahead continuation of the com-

of a second tender in pany’s exploration pro-

mid-2018. gramme.”

The internal review Daymond added the

recommended fine- company’s strategy for

tuning of the company’s its ruby assets would re-

ruby grading system, in- main unchanged, partic-

cluding a regrade of the ularly on the exploration

current ruby inventory side, despite the “disap-
comprising 386,033ct. Christiaan Jordaan has resigned as pointing” auction results.
Mustang’s managing director “Ultimately, the com-
Bulk sampling ac-

tivities have been sus- pany still seeks to pro-

pended, with the company preferring to ceed to formal JORC-compliant mineral

save cash by processing surface stock- resource estimation and feasibility stud-

piles – currently totalling 96,000t – dur- ies,” he said. “The outcome of these

ing the wet season. activities will determine of Mustang’s

PAGE 84 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

According to plan for Laconia

Companies such as Laconia Resourc- Drilling was under way at Kraaipan, southern Botswana, at the time of print
es Ltd are providing clear evidence
market conditions are ripe for juniors. ing in has about three or four smaller de- ager so he knows the gold greenstone
posits, but the main one is the KalGold rocks quite well. There is definitely gold
Laconia had only just started drilling mine, which has been in production since in the country and in the southern part
the Kraaipan gold-nickel-copper-PGM 1996,” he said. where we are there are similar green-
project, southern Botswana, when Pay- stones,” Hills said.
dirt last caught up Quinton Hills, howev- “Harmony is doing about 20,000m drill-
er, the chief executive was pleased to re- ing to extend KalGold so it is bound to be It is a good time for Laconia to be active
port interest in the company was sound. bigger than 4 moz. It is a proven terrain in in Botswana, with positive sentiment re-
terms of gold mineralisation, is there gold turning to the exploration sector and Mod
“The share price has definitely ap- in our tenement? The historic exploration Resources Ltd providing a beacon of light
preciated in the last couple of months; I suggests there is definitely gold there. Is for resources companies in country.
think it is mainly people trying to get set it an economic deposit? Hopefully, we
in the stock to be exposed to the drill pro- will find out.” “Mod has Botswana back on people’s
gramme,” Hills said. radar again,” Hills said. “It has been a suc-
Coal, copper and diamond projects re- cessful story and knowing that there are
“If we hit something we will see a steady ceive more air time than gold stories in other ASX-listed companies doing well in
rise in the share price, most of the inves- Botswana and despite the bulk of gold Botswana can only be good for Laconia.”
tors that invest in our end of the market activity occurring in the greenstones
are looking for that risk event where their near Zimbabwe, the gold endowment of – Mark Andrews
money could go up 3-4 times.” Botswana is unquestionable.

Laconia’s share price has doubled “Most of the gold exploration has been
since it raised $2.4 million at 2c/share up in the north in the greenstones near
in mid-2017, which is testament to Hills Zimbabwe. Our country manager was
delivering to plan in an encouraging envi- the Gallery Gold [which was bought by
ronment for explorers. IAMGold Corp in 2005] exploration man-

“I told everyone the plan and what I
was going to try and do with the soil geo-
chemistry and historical geophysics and
it has come together as well as I would
have expected with some really nice
compelling targets,” Hills said.

“Now we are drilling them, we are hit-
ting the right sorts of rocks. But, unless
you have visible gold it is hard to know if
there is gold in the rocks, so we have our
fingers crossed.

“The market is definitely more buoy-
ant and people are looking at exploration
again. Funds are still difficult to raise but
people always want to be exposed to a
good drill programme, especially if you
have got some good compelling targets
and a good chance of finding new min-
eralisation.”

In readiness for drilling, EM and mag-
netic modelling results provided further
confirmation of the strength of targets
KB01 and KB05; the highest priority
prospects.

Laconia hopes geochemical and geo-
physical techniques applied in Western
Australia’s Yilgarn will prove to be suc-
cessful in the Kraaipan terrane.

The techniques have not been used
extensively across Kraaipan and it is
hard to dismiss the theory considering
Laconia’s early showings.

With Kraaipan just 45km north of Har-
mony Gold Mining Co.’s 4 moz Kalgold
mine in South Africa, Hills is confident
Laconia is in the right geological setting.

“The terrain that we have been explor-

PAGE 86 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Nxuu beginning for Kihabe

It has been a long time coming, but Mount Burgess is set to announce a resource upgrade for the Nxuu deposit at the
Mount Burgess Mining NL looks set to Kihabe zinc-lead-silver project in Botswana in early 2018
finally unveil a feasibility study on its Ki-
habe zinc-lead-silver project in Botswana tends to investigate alternative power for much larger sums in the near future.
later in 2018. solutions, including gas, solar or hybrid- As it stands, Mount Burgess has
type options.
Pending successful drilling results enough cash in the bank to fund the
and access to a suitable power solution, “The fact we have taken the decision to next batch of work programmes, includ-
Mount Burgess will soon formally push look for alternative power solutions basi- ing diamond drilling to upgrade the cur-
the button on devising project econom- cally confirms we are not convinced that rent Nxuu resource to JORC-compliant
ics over the flagship Nxuu deposit, some we should be sitting and waiting for grid standards.
five years after the junior explorer was power to be the main option for the pro-
stripped of its prospecting licence for fail- ject,” Forrester said. “We know the boundaries of the re-
ing to complete a feasibility study on the source, it’s just a matter of determining
project within a specified period. While Forrester said his company’s exactly what the final grade is going to be
dealings with the Botswana Government from all sides,” Forrester said.
Following an exhaustive legal battle, since the end of the licence stand-off had
Mount Burgess was issued a new pros- been positive, he acknowledged inves- “It will probably take some more drilling
pecting licence in early 2016, but only tors were still wary of the messy dispute early next year and once that’s done we
after chief executive Nigel Forrester ap- rearing its ugly head. should be able to report that in a meas-
pealed directly to Botswana President ured and indicated resource category.
Ian Khama. Mount Burgess raised just shy of Then subject to power being available,
$250,000 via a placement in October, we can finally proceed to completing a
One of the company’s founding share- with similar small cash grabs the only feasibility study.”
holders, Forrester has tipped a large way to top up the bank balance in recent
amount of his own money into keep- times. However, Forrester is hopeful the Additional holes at the Kihabe deposit
ing Mount Burgess afloat over the past company will be able to tap the market are also likely to be part of the next phase
five years and now at long last he can of drilling, with the company keen to tar-
express his confidence in being able to Nigel Forrester get a high-grade portion as supplemen-
take the project through to development. tal feed to the Nxuu resource.

“If we can get power at a reasonable Potential silver and germanium credits
cost, this project will work; it’s as simple will also be included in the revised re-
as that,” Forrester told Paydirt. source estimate.

“We have some very, very supportive Mount Burgess has another five years
shareholders who have been with us remaining on its current prospecting li-
for a very long time, even through that cence, with Forrester eager to look be-
period when we basically didn’t have a yond the existing resource envelope.
project, but now we’ve got to get this up
and going to give everybody a chance of “Before we lost our initial licence, we
getting their money back. had generated some seven other anom-
alies which were particularly interesting,”
“It’s not going to be easy from here, Forrester said.
despite the fact we are involved in a zinc
project, but we’re confident we can go “Because this is a sedex system,
down the most low-risk avenue to get this where you find one of these it’s likely that
thing up and running.” you will find several others. We’re confi-
dent, we just need to do the exploration.”
Reliable long-term power supply to
the project site was the sticking point for – Michael Washbourne
Mount Burgess being unable to complete
a feasibility study initially. The company
claimed it had previously been assured
by government officials that grid power
would be made available from 2012.

Mount Burgess welcomed news in
November that three international con-
tractors had been appointed to construct
the first phase of Botswana’s North
West Transmission Grid. Construction
is scheduled to begin in January and is
earmarked for completion by December
2019.

Kihabe could potentially tap into the
Toteng/Shakawe transmission line which
runs within 100km of the project to the
west. However, Mount Burgess still in-

PAGE 88 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

Peak time to pass baton

Pending changes to Tan- The recent price surge
zania’s mining legisla- has been attributed to Te-

tion failed to deter Peak sla announcing plans to

Resources Ltd from follow- incorporate a three-phase

ing through with long-held permanent magnet mo-

plans to implement a man- tor containing neodymium

agement restructure ahead and praseodymium in its

of the next phase of project new Model 3 electric car,

development. having used an induction

Darren Townsend of- motor which did not con-

ficially stepped down as tain those rare earths in

managing director in No- previous models.

vember, with chief operat- A recent report from

ing officer Rocky Smith tak- Swiss financial giants

ing over as chief executive. UBS also identified rare

The transition had been on earths as the third most

the cards since the release critical element in a func-

of a BFS on the company’s tioning Chevrolet Bolt bat-

Ngualla rare earths project tery behind lithium and

in April. cobalt.

Projects such as Ngualla “For the first time we’ve

have been clouded with un- New Peak chief executive Rocky Smith with former managing director actually seen one of the

certainty since the Tanza- Darren Townsend outside the company’s West Perth office big investment banks rec-

nian Government unveiled ognise rare earths are a

a new set of mining laws in July, although life, using lower pricing assumptions for very important part of the raw materials

the legislation is yet to be formally imple- neodymium and praseodymium. required for these vehicles,” Townsend

mented. Combined pre-production capex to de- said.

However, Peak is pushing ahead with velop the Ngualla mine and rare earths “Once that word gets out and is better

development plans for Ngualla in a bid refinery at Tees Valley in the UK was up understood – combined with the antici-

to take advantage of expected near-term slightly to $US365 million, but it still re- pated price increases for the oxides – we

demand for key magnet metals neodymi- mains one of the lowest capital intensive think it’s going to be game on again in the

um and praseodymium. rare earth projects in the world. equity markets for rare earths.”

“Now that we’ve come to the end of “Having come from Mountain Pass and Smith has accompanied Townsend

the BFS and we’ve just put in our min- some of the problems we experienced on most of the company’s investor road-

ing licence application, we don’t need as there as a high-cost operation, it was shows in the past 18 months and is ready

many people as we had for the BFS so it pretty obvious to me that keeping this to lead Peak’s quest to lock down project

was a logical time to trim the decks a little thing as low cost as we possibly could finance for Ngualla.

bit,” Townsend said. was very important,” Smith said. “We’ll look at what makes the most

“I saw a situation where we had more “We looked at any area where there sense for the group, but I have to say I

than enough experienced executives on was a cost that was higher than we ex- think it’s going to be a little bit hard to just

deck and so I thought now was a good pected and we found we had a very ex- go with traditional western bank finance,”

time to transition to a non-executive role pensive reagent, so we came in at the Smith said.

with the company. end of the BFS and did a series of tests “Once we go down the road of some

“Rocky has been with us two years and we were able to locate a much lower strategic equity and finance then we may

now and has actually built and operated cost, more effective reagent for the rare have some better options with western

a rare earths mine, whereas I haven’t, so earth collector which helped us reduce banks and other leads to follow up on.

it made perfect sense to hand the reins the overall operating cost. That’s one area we need to focus some

over to Rocky for this next phase.” “In the subsequent months after that attention on.

Smith was instrumental in the develop- we were able to do some additional work “Getting more off-take opportunities

ment of the processing flowsheet which on the flotation process and we were out there is another. We haven’t pursued

underpinned the robust economics of the able to increase the capacity of the exist- that as much with the low prices, but now

Ngualla BFS and subsequent optimisa- ing plant by about 16%. The net of that that prices have started to shift I think

tion studies, having joined Peak after a was a very small capital increase, but we’ll have an opportunity to set some off-

successful stint managing the Mountain a substantial decrease in the operating take agreements at a better price with

Pass rare earths operation in the US. costs.” some of those higher end strategic off-

A recent process optimisation study Neodymium and praseodymium ox- take partners.”

helped the company build on the posi- ide prices have risen 75% since Peak – Michael Washbourne
tive results from the BFS, including released the initial BFS results in April

lower operating costs of $US32.24/kg and were hovering above $US70/kg at

and a higher average annual EBITDA of the time of print. Peak’s target price is if

$US150 million over the 26 years of mine $US77.50/kg.

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 89

INDABA PREVIEW

Kefi lines up Tulu Kapi

Ethiopia’s next commercial mining pro- earn a 25% interest (5% free-carried), Harry Anagnostaras-Adams
ject is just months away from the start the prospective bond holders have con-
of construction. firmed finance issuance and drawdown with the first stages of community reset-
of facilities can arrive within 2-3 months. tlement, which will pave the way for the
Kefi Minerals plc’s Tulu Kapi has been construction team to start mobilising
looked at in a number of ways, with re- Anagnostaras-Adams expects the for- equipment to site.
cent re-workings of project design indi- malities of finance drawdown to coincide
cating viability of expanded production in “What we are doing is lining the nuts
years 1-3 from 115,000 ozpa to 145,000 and bolts of the various timetables so
ozpa gold. At a gold price of $US1,250/ that construction can commence in the
oz, project finance can be repaid within new year,” Anagnostaras-Adams said.
three years.
Maiden production is likely in early
A consortium of financiers including 2019 at a rate of 1.9-2.1 mtpa for 144,000
Oryx, the Ethiopian Government, Kefi, ozpa @ 2.1 g/t gold for the first three
Ausdrill Ltd and Lycopodium Ltd were years, with all-in costs of $US1,051. Cur-
close to finalising details for the $US245 rent life-of-mine gold production from
million project at the time of print. Tulu Kapi is 980,000oz.

“We have been working for about six “The plan to expand the plant by 25%
months on draft documentation with the came out of motivation on two fronts;
Government for financing, plans for re- one was to give the plant capacity to run
settling the community, various plans down low-grade stockpiles that other-
for building the infrastructure that the wise would sit there for some years. Sec-
Government has to build for us for equity ondly, it was to give the plant the capacity
in the project,” Kefi executive chairman to process from the high-grade satellite
Harry Anagnostaras-Adams said. deposits ASAP,” Anagnostaras-Adams
said.
“We are at the stage now where we
have a shortlist of outstanding matters, “We saw that as an opportunity and it
which are being dealt with at ministerial was only really when we worked through
level, so it appears from a government the costing of that with the project team
timetable point of view they are working and the financing of it with the bond fi-
to approve the package and financing ar- nanciers that we realised it was all quite
rangements in the next month or so.” feasible and an attractive opportunity,
plus the flow sheet doesn’t change.”
Once the relevant documents are
signed off by government, which can – Mark Andrews

Tulu Kapi has undergone another facelift and is now poised to deliver
144,000 ozpa gold in the first three years of production

PAGE 90 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT



INDABA PREVIEW

Okapi’s second coming

New floats have been According to Fergu- started with mapping, sampling of out-
hard to get away and son, investor scepticism crops and soil sampling to define drill
at its first attempt, the now- towards DRC has waned targets.
listed Okapi Resources Ltd and the potential opportu-
fell short. nities in country are start- Current artisanal activity and historic
ing to be fully realised. production of 1,000kg gold from the area
The company, chaired by are impressions for Okapi to follow-up
AVZ Minerals Ltd’s Klaus “I think people are be- on.
Eckhof with Nigel Fergu- coming more and more
son as managing director, aware of what the DRC “I think Mambasa is going to come on
succeeded second time is and what it can pro- quite nicely and I think we should have
around with overwhelming vide you with. Historically, some drill targets out of that which we
support to find a home on there has been a lot of can hit with a man portable diamond rig,”
the ASX in October. bad noise coming out of Ferguson said.
the country, there is still
“Everything seems to bad noise but not as bad Alongside Mambasa, Okapi listed with
be revitalised in the indus- as it used to be,” he said. the small, high-grade Crackerjack gold
try, there is a lot of buzz Nigel Ferguson “The returns for what project in Western Australia.
around the place and jun- you put in are just amaz-
iors seem to be getting a ing. Moto Gold Mines Early indications are that Crackerjack
good share of interest at – which Klaus had previously – was an won’t amount to a multi-million ounce
the moment,” Ferguson told Paydirt. absolute stonker and I think there is prob- project, but Ferguson is certain there is
ably another one or two of those in there. potential for 500,000oz gold.
“We were probably three months There are some huge, high-grade tin
ahead of the eight ball when we first tried plays going on, while the Chinese have Work is under way to determine if there
to do the float. We almost got it across moved on a lot of the copper-gold pro- is enough encouragement to conduct a
the line and it was only $250,000 shy. We jects in the DRC.” drilling programme at Crackerjack.
pulled it, rebadged it as Okapi and that Okapi’s immediate focus is on the
was extremely well received. We were brownfields Mambasa gold project, “We have also been approached by a
over the moon with the response and which was chosen because it sits in a couple of companies who are interested
were $600,000 over-subscribed.” similar structural and stratigraphic set- in doing JVs. That area has been left [un-
ting to the 20 moz Geita mine in Tanza- touched] for sometime but it is starting to
Unfortunately some of the top 20 appli- nia and the 1 moz Makapela and 1.3 moz get some good attention now, so there is
cants had to be cut back in their original Adumbi projects in DRC. a bit of a penchant to get up there and get
pursuit of shares, but such is the interest, The main structure targeted for explo- things done,” Ferguson said.
Okapi stock has been picked up on mar- ration contains Adumbi along strike and
ket and at the time of print the company to the north-west. Market conditions in the gold sector
was trading at 31c/share. Okapi’s exploration campaign has are conducive for explorers to get active
and Okapi is also looking to expand its
“I think it is on the back of management portfolio in both jurisdiction and com-
and the gold project in the DRC,” Fergu- modity.
son said of Okapi’s popularity.
Opportunities in Africa are enticing for
Okapi, while gold and lithium plays are
front of mind.

“Commodity-wise, nothing is being
left out because lithium is the here and
now – and I think there is going to be an-
other two to four years of that – but we
see there is still a lot of noise here on the
gold,” Ferguson said. “And, I think copper
is going to make a good comeback, so
we think copper and cobalt are the per-
fect mix.

“Africa is where we’ll look. We might be
tempted elsewhere if there is a sizeable
project available or I can see value in it. I
think there is scope for a couple of things
in WA and there are things we are look-
ing at which might be of interest. Then,
there is the DRC which is of interest and
we are just starting to crank up there.”

– Mark Andrews

Mambasa is a brownfields project favoured for its position in similar
structural and stratigraphic settings as Geita

PAGE 92 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

OPINION

A role for mining in protection
from extremism

The mining sector has a role in prevent- investments on the ground. local leaders to identify targeted training
ing and countering violent extremism Mining companies do not want to be a and potential employment programmes

in Africa. target for extremist groups nor do they for groups that may be disproportionately

Violent extremism and terrorism con- want to operate in an unstable environ- affected, then they may mitigate some of

tinue to threaten international peace and ment that threatens the safety of their the drivers.

security. employees or security of their supplies As the report sets out, the mining sec-

Across the African continent, groups and operations. In this regard, decisions tor is already engaged in a range of ac-

such as Al Qaeda in the Islamic Maghreb by a mining company about its approach tivities that may exacerbate or mitigate

(AQIM), Boko Haram and al-Shabaab to security may positively or negatively drivers of violent extremism. Our field re-

contribute to insecurity, from the Sahel influence perceptions about the compa- search found several examples of mining

and the Lake Chad Basin across to the ny within the local community. An entirely sector engagement to support activities

Horn of Africa. Terrorist groups operating hard security approach may alienate the related indirectly to P/CVE programmes,

on the continent have a history of target- local community and be perceived as an namely in the areas of education and skill

ing both local and foreign interests, dem- unnecessary threat. Local communities development, empowering youth, engag-

onstrated most again with the attack on a can often be the best form of defence ing communities and gender equality and

Turkish café in Ouagadougou in August against potential security risks. If there empowering women. However, there is

2017 and the attack on the Mogadishu is poor engagement and interaction with no standard approach, guidance or good

markets in October 2017. the local community, it may serve to fuel practice guides to support companies

Foreign extractives companies operat- local grievances and potentially exacer- to ensure they are actually contributing

ing on the continent have been the target bate some of the drivers of violent ex- to initiatives that strengthen community

of direct attacks and kidnapping of their tremism. resilience to violent extremism, despite

employees by terrorist groups. It is well The mining sector also has several their vested interest in reducing these

understood that violent extremism poses structural characteristics that may di- threats.

a threat to the operations of mining com- rectly affect some of the drivers of violent There is a need for further engage-

panies in Africa. What is less well under- extremism. Projects are often located in ment across the sector with a range of

stood, however, is that mining companies geographically challenging areas where stakeholders – local communities, gov-

– as private sector actors and stakehold- there is poor governance and insecurity; ernments and international organisations

ers – also have a potential role in national the scale of operations can disrupt socio- – to ensure good practices are being

and regional efforts on the continent to economic development in an area; and identified, developed and shared.

prevent and counter violent extremism environmental impacts can affect liveli- It’s also important that the mining sec-

(P/CVE). hoods and local communities. These tor defines the ways it is willing to engage

This was one of several findings in characteristics, among others, mean that on P/CVE and its own limitations and re-

a new report released last month by a mining company can either exacerbate sponsibilities. That requires further dis-

the Australian Strategic Policy Institute or mitigate some of the potential drivers cussion and dialogue on the issues. This
(ASPI) – Preventing and countering vio- of violent extremism. new ASPI report presents a first step
lent extremism in Africa: the role of the in that effort. It is hoped the report will
mining sector. For example, a potential structural serve as a catalyst for debate about the
driver of violent extremism is margin-

This new report draws on a combi- alisation and discrimination. If a mining potential role of mining companies in P/

nation of desktop and field research to company fails to adequately assess local CVE. Events such as Mining Indaba and

examine the links between the mining needs and allows disparities in econom- Africa Down Under in 2018 will provide

sector and the potential drivers of violent ic benefits to particular ethnic or religious a valuable opportunity to progress those

extremism in sub-Saharan Africa. While groups, then this may exacerbate per- discussions in the year ahead.

the report focused on four case study ceptions of marginalisation. Alternative- The mining sector is well placed not

countries – Burkina Faso, Ghana, Kenya ly, if a company engages effectively with only to mitigate the risks of violent ex-

and Mali – the lessons have tremism in Africa, but

much broader application. also seize the opportuni-

The report finds that the ty to contribute to global

mining sector has several efforts to address this

reasons for stepping up its ongoing threat. As Khalid

engagement in efforts to Koser sets out in the fore-

prevent and counter violent word to the report: “The

extremism. global effort to prevent

First is the idea that Lisa Sharland is the head of international program at the Australian Stra- violent extremism can’t

mining companies have a tegic Policy Institute (ASPI). Tim Grice is the founding director of Leapfrog succeed without the pri-

direct interest in improv- International. Sara Zeiger is a senior research analyst at Hedayah. The vate sector.” The mining
ing the security of their report Preventing and countering violent extremism in Africa: the role of the sector is an important
operations, personnel and mining sector was published by ASPI in partnership with Hedayah.
part of that equation.

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 93

INDABA PREVIEW

Newcrest joins mining’s elite

Newcrest became the 25th member company of the ICMM at a council meeting in London in November, joining a host of
other major mining groups in the elite organisation for sustainable development

Newcrest Mining Ltd’s commitment to tor to local communities for its ongoing ations in Australia, Papua New Guinea,
sustainable development in coun- provision of operating supplies, wages, Indonesia, and Côte d’Ivoire,” Butler said.

tries such as Cote d’Ivoire has seen the sustainable development projects and Newcrest now sits alongside a host

gold major accepted as the 25th member enhancement of existing infrastructure. of other member companies with strong

company of the International Council of ICMM chief executive Tom Butler for- ties to Africa, including Gold Fields Ltd,

Mining and Metals (ICMM). mally welcomed Newcrest to the organi- African Rainbow Minerals Ltd, Anglo-

“We are proud to become the 25th sation at a council meeting, attended by Gold Ashanti Ltd, Anglo American plc,

member company of ICMM,” Newcrest the heads of the other member compa- Lonmin plc, South32 Ltd, Newmont Min-

chief executive Sandeep Biswas said. nies, in London in early November. ing Corp and Rio Tinto Ltd.

“Newcrest is committed to ICMM princi- “Newcrest have demonstrated their Member companies’ sustainability per-

ples on sustainable development and is commitment to ICMM’s sustainable de- formance is independently assessed on

working across our operations to embed velopment framework across their oper- an annual basis to ensure their policies

them. align with the ICMM 10 Princi-

“Sustainable mining delivers ICMM member companies: ples, among a list of other man-

safe and profitable operations. datory requirements.

It means that local communities African Rainbow Minerals Ltd JX Nippon Mining & Metals “Newcrest’s membership of

are engaged and respected, AngloGold Ashanti Ltd Lonmin plc ICMM provides the opportu-

that environmental impacts are Anglo American plc Mitsubishi Materials nity to benchmark our perfor-

assessed and managed, and Antofagasta Minerals SA MMG Ltd mance and to learn from our
that business decisions are Areva Newcrest Mining Ltd global peer companies, and to
made ethically and transpar- Newmont Mining Corp contribute our own experience
ently.” Barrick Gold Corp Polyus Gold International in support of ICMM’s efforts to
BHP Ltd shape global industry stand-
Newcrest has operated Codelco Rio Tinto Ltd ards,” Biswas said.
the Bonikro gold mine, about South32 Ltd
250km north-west of Abidjan, Freeport-McMoRan Inc Sumitomo Metal Mining Co Brazilian iron ore giant Vale
Côte d’Ivoire, since 2008. The Glencore Teck Resources Ltd SA was accepted to the ICMM
mine employs more than 1,000 as a member company in Oc-
Goldcorp Inc

Ivoirians and is widely recog- Gold Fields Ltd Vale SA tober.

nised as an important contribu- Hydro

PAGE 94 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

Meet the
team

at Mining Indaba

Bill Repard Dominic Piper Mark Andrews

EXECUTIVE CHAIRMAN EDITOR DEPUTY EDITOR

M: (+61) 418 768 578 M: (+61) 424 934 494 M: (+61) 407 477 697
E: [email protected] E: [email protected] E: [email protected]

Michael Washbourne Christine Oelschlaeger Namukale Richa Fuller
JOURNALIST AFRICA DOWN UNDER Nakazwe-Msiska ADVERTISING MANAGER
AFRICA DOWN UNDER
M: (+61) 400 956 703 M: (+61) 420 225 058 M: (+61) 433 594 404
E: [email protected] E: [email protected] M: (+61) 450 508 836 E: [email protected]
E: [email protected]

www.paydirt.com.au

29 - 31 August 2018
Perth,Western Australia

REGIONAL ROUNDUP

Whoever wins Chile election,
Codelco may get boost

The world’s largest copper miner, Codelco has been hit hard by copper prices, but is looking to rebound with
Codelco, may see a boost in invest- help from a supportive Chilean government
ment cash regardless of who wins this
month’s presidential run-off in Chile, as The law dates back to 1958 and was The Frente Amplio has called for the
both candidates have vowed to end the overhauled in 1976 under former dicta- recapitalisation of Codelco, and mining
state-run firm’s funding of the military. tor Augusto Pinochet to fund the growing royalties worth billions of dollars to pay
military. for increased social spending.
Conservative front-runner Sebastian
Pinera and his centre-left rival Alejandro The next Chilean president, who Codelco, which produced 1.7mt of cop-
Guillier, set to face off in the December will take over from President Michelle per in 2016, has a five-year investment
17 vote, have both pledged to overturn Bachelet in March and will have a strong plan that includes construction of a new
the dictatorship-era law that transfers hand assembling Codelco’s board, will level at its century-old El Teniente mine
to the military 10% of Codelco’s export weigh heavily on the company’s invest- and expansion at Radomiro Tomic. Both
sales, worth $US866 million last year. ment plans. were delayed last year as a result of the
copper price slump.
There is no guarantee that Codelco, Though the candidates agree that the
which delivers all its profits to the state, military funding law should be eliminated, The company is also eyeing projects
would keep the funds should the law they differ on what Codelco’s priorities as far off as Mongolia, though the dip in
be overturned. That decision would ulti- should be. copper prices forced it to slash its explo-
mately lie with Congress. ration budget by 47% last year.
Pinera, who has been skeptical of
But the candidates’ rare agreement Codelco’s management and says he Some in Chile are sceptical about the
that the tax should be eliminated bodes would like to see greater emphasis on ef- chances of the military funding law being
well for the cash-strapped miner, which ficiency, has called for a “realistic invest- repealed. Repeated attempts to overturn
needs to invest an estimated $US20 bil- ment plan” and for “maximising perfor- it in the past have failed, scuttled by sup-
lion to revamp its ageing mines, expand mance of existing assets”. porters of the politically powerful military.
abroad and keep output flowing.
Guillier, who hails from the northern “I’m not very optimistic ... because
“This tax affects the competitiveness mining province of Antofagasta, has em- we’ve been talking about it for 25 years,”
of Codelco, its ability to finance its op- phasised new investment and prioritised Gustavo Lagos, a mining professor with
erations and investments and its possi- company-worker relations, similar to the Universidad Catolica, said.
bilities to grow internationally,” Guillier, a Bachelet.
senator and former journalist, wrote in a – Dave Sherwood and
proposal describing his plans for Chile’s But his plans could be swayed by ne- Fabian Cambero, Reuters
mining industry. gotiations with the leftist Frente Amplio
bloc, which garnered a larger-than-antic-
Billionaire businessman Pinera, who ipated share of the vote in Sunday’s first-
served as president between 2010 and round presidential and Congressional
2014, has likewise criticised the law, call- elections.
ing for a new formula for financing that
would increase Codelco’s autonomy and
stabilise its finances in the long term.

A Codelco spokeswoman said the
company would not comment on how
the funds might be used ahead of any
change in the law.

Codelco, which ships around two-
thirds of its copper to Asia, was the
world’s top copper producer based on its
annual output to June 2017, according to
rating agency Moody’s.

But it has been hard-hit by a downturn
in copper prices in recent years, and de-
clining ore grades at its mines.

Those factors, alongside the punitive
tax, have left the miner hamstrung, ac-
cording to Juan Carlos Guajardo, of Chil-
ean mining consultancy Plusmining.

“It’s a 10% royalty. Ask any mining
company and they’ll tell you the same
thing. It’s asphyxiating, it’s brutal,” he
said.

PAGE 96 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

LATIN AMERICA

Ecuador doubles down on
foreign investment

Industry enthusiasm for re- standards,” he said. “We
cently released concessions
is leading the Ecuador Gov- will continue to come to
ernment to reassess its ambi-
tions for the resources sector. Australia to attract, not only

Ecuador flung open its investment, but good invest-
doors to foreign investors
last year, releasing hundreds ment with good practice and
of thousands of square kilo-
metres to exploration, allo- technological and human
cated through a competitive
bidding process. capability transfer to grow

The move was so popular this important sector for our
with investors that Ecuado-
rian Minister of Mines Javier country.”
Cordova Unda has admitted
his Government’s expec- Australian companies will
tations may have to be re-
drawn. be responsible for 90% of

“We said at Latin America the $US1 billion committed to
Down Under in 2015 that we
wanted to attract $US8 bil- exploration and development
lion of foreign investment by
2024. We are right on track for the next four years.
with the new concessions
granted and the develop- Cordova acknowledged
ments at the existing pro-
jects to achieve $US5 billion Ecuador’s regulatory regime
by 2021 and may eventu-
ally achieve even more than would have to be beefed up
$US8 billion,” Cordova told
Paydirt. to handle the increased lev-

Ecuador’s resources sec- els of interest.
tor had been largely closed
to foreign investors for more “We need to improve, not
than a decade until former president
Rafael Correa abandoned its restrictive only as a mining depart-
investment policy in favour of a more wel-
coming tax regime. ment but also at the minis-

Miners both large and small have since try of environment,” he said.
flooded to the South American country in
an effort to find projects comparable to “The important challenge is
the massive Fruta del Norte in the coun-
try’s south. to process the applications;

In May 2016, the Government opened we need to keep up the pace
a bidding process for new concessions
with more than 900 applications lodged. and be efficient. Planning is

Cordova was instrumental in designing in place to grow both depart-
Ecuador’s new mining policy but even he
has been taken by the response from in- ments.”
dustry.
Cordova also plans to tink-
“We have been very surprised by the
level of interest,” he said. “We knew there er with the mining investment
would be interest because we under-
stood that less than 10% of the country policy. Correa’s successor,
had been explored and the mining ca-
dastre had been closed for seven years.” Lenin Moreno, has empow-

Javier Cordova Unda ered the young mining min-

ister to formulate further im-

Cordova said the bids were transpar- provements.

ent, including submissions of detailed “I have already presented the Presi-

technical and investment programmes. dent with ideas,” he said. “Even though

The result is more than $US1 billion com- we have made major advances and

mitted to exploration and development in are competitive there are still areas we

Ecuador over the next four years. can improve on. The President’s first

Australian companies are at the van- response was very positive and we will

guard of Ecuador’s mining boom. Fortes- announce some things in the next few

cue Metals Group Ltd has acquired more months.”

than 14,000sq km of ground while BHP One of Cordova’s targets is the wind-

Ltd and Newcrest Mining Ltd have also fall tax currently imposed on mining

shown interest. At the junior end, Sun- companies. He has already managed to

stone Metals Ltd is hoping to emulate restructure it to ensure miners can re-

AIM-listed, Brisbane-based SolGold plc cover their investment and benefit from a

and its Cascabel discovery further four-year holiday but Cordova has

Cordova visited Australia in October to the entire tax in his sights.

speak with investors and reiterate Ecua- “It’s a smart idea to get rid of the tax

dor’s desire to forge ties to the country’s and the President is open to improve-

mining sector. ments,” he said.

“It is important to have commitment – Dominic Piper
from Australia because of its capabili-

ties in mining, environmental and social

AUSTRALIA’S PAYDIRT DECEMBER 2017 - JANUARY 2018 PAGE 97

REGIONAL ROUNDUP LATIN AMERICA

Hot Chili smokes on high grade

Having survived the mining sec- Hot Chili is complementing the 1.5mt copper and 1 moz gold Productora project
tor slump, Hot Chili Ltd has en- with nearby high-grade satellite assets in Chile
hanced its flagship Productora play
with the addition of nearby high- ductora already and are now unearthing quite a number of other discussions we
grade projects to re-emerge as a some very sexy-looking bolt-on incre- are entertaining at the moment.”
copper developer of choice. mental additions to Productora which re-
ally add a significant amount of gloss to Picking off the potential low-hanging
“The balance sheet strengthening an investment decision from here for our fruit on the near-mine extensions at San
and getting rid of the debt earlier on shareholders,” he said. Antonio is the exploration priority, with
were key events leading up to Hot work at Lulu likely to ramp-up mid-2018,
Chili turning up the exploration drill- “Everything is stacking to the upside. Easterday said.
ing and really making a final push on The environment has a multiple of 10 on it
the project [Productora],” Hot Chili for us, in terms of the copper price back- “We have put this underground togeth-
managing director Christian Easter- ground and the opportunities we have er for the first time and some of the drill-
day told Paydirt. uncovered at San Antonio and Lulu.” ing indicates there is probably another
untouched lode sitting next to San Anto-
“We looked at the opportunities Like San Antonio, Lulu has been pri- nio,” he said.
we had, we wanted to enrich that vately held for the last 50 years and nev-
with a high-grade blend strategy and er auctioned. “Importantly, we have had the good
we have been aware of a number of fortune of a major geochem programme
stranded high-grade assets sitting No drilling has been conducted at Lulu undertaken by the property owner about
within trucking distance of Produc- which sits next to a 600m deep under- three months before we did the deal. A
tora that we have had our eyes on. It ground deposit running 6% copper and 4km trend south of San Antonio has four
took a bit of time, but we were able 3 g/t gold. 1km-plus high order copper geochemical
to get some very good deals, with anomalies.”
options.” Easterday said it was testament to the
company’s patience and capabilities in Easterday hopes San Antonio is more
The latest acquisition, San Anto- Chile that it was able to strike deals with than just a small underground, with av-
nio, was secured in November, giv- the local landholders of San Antonio and erage production widths of 10-30m to a
ing Hot Chili run on ground bereft of Lulu and indicated further similar deals depth of 130m a demonstration of the
modern day exploration. would be done. scale and grade. Furthermore, it is within
a similar structural setting to Punta del
No heavy cash commitments are due “Unfortunately the local landholders Cobre and Candelaria.
for the first three years at San Antonio have high-cost, low-tonnage processing
where nine holes have been drilled and options which doesn’t make these pro- “We think that the project has a lot of
2mt extracted from a 200m strike under- jects standalone, but drop a 14-15 mtpa legs in it on its own and we are looking
ground. processing facility in the middle of them for one high-grade underground sulphide
and suddenly these things have a home,” ore source to be paired with Productora,”
From surface, grades of 2-3% copper he said. Easterday said.
and up to 0.5 g/t gold credits are poten-
tially what Hot Chili will be dealing with. “We are really pleased with the first – Mark Andrews
two projects and that is just the begin-
“Putting 1 mtpa of high-grade ore into ning, we are not finished there. There’s
a 14-15 mtpa process plant in the fu-
ture is a huge alleviating of value. Just 1
mpta at the grades we are targeting lifts
head grade by 30% and metal produced
by 30% and now we are approaching a
100,000 tpa project,” Easterday said.

Even more importantly, the higher
grade material will drive down production
costs at Productora, potentially leading to
higher margins in a rising copper market.

At $US3-3.30/lb copper, large-scale,
bulk tonnage copper projects such as
Productora start to look attractive again.
The problem is, there are very few such
projects available on the ASX.

At the time of print, Hot Chili had a
market cap of $30 million fully diluted,
a $250 million deal signed with partner
CMP during a depressed copper mar-
ket and now some high-grade additions
to complement Productora, giving East-
erday encouragement that there is little
downside for the company.

“We have put $100 million into Pro-

PAGE 98 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT

LATIN

AMERICA

16-17 May 2018

Perth,Western Australia

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REGIONAL ROUNDUP ASIA

Emerald making Okvau sparkle

Emerald Resources NL has cleared a Emerald is seeking to begin construction of Okvau in 2018
major development hurdle in its quest
to start construction at the Okvau gold required to develop or operate a mine – of $US419 million and payback in 2.5
project in Cambodia. is expected to follow soon after. years.

Cambodia’s Ministry of Environment The acquisition of the first of the neces- C1 cash costs and AISC are estimated
last month granted an environmental sary approvals for Okvau’s development at $US650/oz and $US731/oz respectively
contract for Okvau, paving the way for continues a bumper 12 months for Emer- over the life of mine.
Emerald to complete its application for ald following its takeover of Renaissance
an industrial mining licence as well as Minerals in November 2016. During 2017, Emerald also expanded
finalise a mineral investment agreement its Cambodian footprint from 347sq km
ahead of first construction works in 2018. Emerald released a DFS in May which to 1,500sq km after entering into agree-
found the project could support a 2 mtpa ments to farm-in to five exploration li-
“It’s probably the biggest tick the pro- operation producing 106,000 ozpa over cences around Okvau.
ject needed to go forward,” Emerald an initial life of 7.2 years, based on a
managing director Morgan Hart told Pay- maiden reserve of 14.3mt @ 2 g/t gold “Okvau is a very, very robust project
dirt. for 907,000oz. with a lot of exploration upside to it,” Hart
said.
“Obviously we’ve still got the funding At a gold price of $US1,250/oz, Okvau
that we’re paralleling with the licencing would generate a post-tax NPV of $US110 “This is Cambodia’s first big scale min-
process and then we’ll be in a position to million, IRR of 40%, gross revenue of ing project and I know the Government
seriously start talking about constructing $952 million, pre-tax operating cash flow is very keen to see it get away because
the project next year.” they want to attract other mining compa-
Okvau is set to become Cambodia’s first nies into Cambodia.”
Emerald’s mandated debt financier major commercial mining operation
was also close to completing its due dili- Hart acknowledged he and other
gence of the project at the time of print. members of the Emerald team had a
Approval of the indicative terms of the loyal market following because of their
financing proposal effectively guaran- history of successful mine development
tees funding for the majority of Okvau’s stories, including Bonikro (Equigold) and
$US98 million capital requirement. Duketon (Regis Resources Ltd), with
many expecting them to repeat the trick
The award of an environmental con- at Okvau.
tract also ensures the 1.14 moz project
remains at the head of the queue to be- “There have been a lot of people over
come Cambodia’s first major commercial the years who have been up to this pro-
mine. Under the terms of the contract, ject to have look and I think it’s fair to
Emerald has provided surety for rehabili- say they all leave impressed with the
tation of the project area upon the mine’s prospectivity of the area and the region,”
closure. Hart said.

Okvau sits within the Phnom Prich “We’re not necessarily massive pro-
Wildlife Sanctuary and will need to be moters of stocks; we just like to do pro-
declassed from its current “conservation motion with actions rather than words.
zone” to “sustainable use zone” to allow We like to see licences granted, get the
development works to occur. banking done and then construct and op-
erate. We think that’s the best way you
“Just over 40% of Cambodia is under can promote a company or a project.”
some kind of environmental restrictions,
but the Government allows projects to – Michael Washbourne
be excluded from these zones in envi-
ronmentally sensitive areas if there is a
benefit to the rest of the community,” Hart
said.

“We’ve completed a full environmental
impact assessment on the project, it’s
gone through mediation status with the
Government and the environmental au-
thorities in Cambodia and we’ve come
down to an agreement where they’re
comfortable they can licence the project
and we can move it forward.”

An industrial mining licence cover-
ing up to 11.5sq km could be issued to
Emerald as early as December, with the
mineral investment agreement – allow-
ing companies to lock in the terms of a
project for the duration of its life, but not

PAGE 100 DECEMBER 2017 - JANUARY 2018 AUSTRALIA’S PAYDIRT


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