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INDABA REVIEW

Low key Indaba but
seeds of future growth

ready to be sowed

Even in quieter times the Australia Lounge continues to attract a strong crowd to its corner of the Mining Indaba exhibition space

In a year when subdued was the buzzword of the conference, new had squandered an opportunity during
South African Minister for Mineral Resources, Mosebenzi Zwane, the last commodities boom.
delivered the kind of opening address that did anything but set the
pulses racing. “I am convinced that during our sum-
mer season, as an industry, we have
While previous years had seen the icised for delivering an anodyne keynote failed ourselves in not preparing better
spiky Susan Shabangu and the forthright address, his presence only highlighted for this winter,” he said. “What lessons
Ngoako Ramatlhodi take the stage for the the lack of clear mining policy initiative in can be learnt to ensure that as we move
Indaba welcome, Zwane’s appearance the country. into the next season, our workers don’t
as the new incumbent in one of the South remain the ones worst affected by the
African Government’s most troubled Mining has always had an uneasy rela- winter?”
portfolios betrayed the confusion and tionship in South Africa’s democratic era
indecision which seems to have gripped but the present era is symbolised not by For the industry, regulatory certainty
the Jacob Zuma-led Government. confrontation but listlessness. No one, it would be at the top of the list of lessons.
appears, has a clear vision for where the Even a decade after the new mining
Not only is Zwane new to mining, he industry is headed. legislation was introduced, the industry
is a relative novice on the national stage continues to operate within regulatory
and while he personally could not be crit- Zwane admitted as much in his ad- uncertainty with the MPRD Amendment
dress, acknowledging that South Africa Bill still yet to be ratified.

Zwane said he appreciated the impor-
tance of regulatory and political certainty

PAGE 52 MARCH 2016 AUSTRALIA’S PAYDIRT

but it was only when pressed by media

in a news conference following the event

that he gave a firm commitment to pass-

ing the Bill this year.

Further work is also needed on South

Africa’s Mining Charter.

“It is an important transformation tool

and its targets remain applicable beyond

2014. The social and labour plan com-

mitments constitute a critical component

of restoring and sustaining the dignity of

mineworkers and communities,” Zwane

said.

Clashes between mineworkers and

their employers has been a recurring

theme throughout the last decade, culmi-

nating in the Marikana tragedy in 2012.

Zwane said all stakeholders should con-

tinue to find ways to avoid a recurrence.

“We should take lessons from the pro-

tracted platinum strike in which there

were no winners and ensure that such

events are not repeated,” he said.

On support for industry itself, Zwane New South African Minister for Mineral Resources, Mosebenzi Zwane

said the Government was “investing in opens the 2016 Mining Indaba
research and development throughout

the mining, minerals and upstream petro- pable reassurance for investors.” Ashanti Ltd counterpart Venkat in ebul-

leum value chain” as well as investing in While the initial spotlight was on South lient mood.

pre-competitive exploration data through Africa’s new mines minister, the tone of Outside of South Africa, there is a

the Council for Geosciences. the conference soon turned to the wider general acceptance that investors and

“Our goal is to substantially increase Sub-Sahara African region as miners, governments cannot afford to be greedy.

the share of the global exploration ex- governments and investors could be Miners are still adapting to the changing

penditure.” seen trying to adapt to the new realities nature of the social licence to operate but

Jacques Barradas, partner specialis- of the post-boom commodities market. now governments are also faced with the

“ing in the mining sector, at Grant Thorn- While five years ago, the majority of realisation that mining investment is so

ton Johannesburg said Zwane’s raising discussions were about Africa’s iron ore mobile that excessive demands will only

of R&D funding was laudable. result in a flight of capital.

“Unfortunately, this is a I am convinced that during our Linkages to other indus-
process which should have tries appear to be the hope

started many years ago be- summer season, as an industry, for many nations. While
cause the benefits in sup- we have failed ourselves in not beneficiation of minerals
porting research and devel- remains the ideal, govern-

opment take years to come preparing better for this winter. ments across the continent
to fruition. This really will are investigating ways other

be part of the Department of industries such as agricul-

Mineral Resources’ long term strategy,” and coal potential, the future for bulk ture, fisheries and manufacturing could

he said. commodities on the continent is bleak. benefit from mining development.

Barradas also commended the Min- Without the requisite multibillion dollar in- Former Zimbabwean Finance Minister

ister for ensuring the MPRDA Act re- frastructure, African nations cannot hope Tendai Biti said this was the great chal-

mained a priority. to compete with the iron ore behemoths lenge of coming decades in African min-

“The updated Act will hopefully bring of Australia and Brazil and as thermal ing; “to change from a high value, low im-

South Africa on par with other emerging coal prices continue to slide, even China pact industry to a high value, high impact

economies while ensuring that as a na- and India, once sources of considerable industry”.

tion, we continue to lead on the African investment, are beginning to turn away “The mining industry operates in an

continent in terms of governance and from the sector. enclave which hardly touches the do-

reporting standards and requirements,” There was discussion about Africa’s mestic economies of many African coun-

he said. infrastructure gap, but it appeared at tries,” he said.

Deloitte Africa Mining Leader, Andrew times to be futile. Even when the spot At a time when there is little hope for

Lane, said industry would have hoped for iron ore price was $US190/t, companies near-term development, raising such top-

Zwane to deliver a “more tangible action struggled to raise the necessary funds ics now may ensure action is ready to be

plan” for the sector. for related infrastructure. Now it is less taken when opportunities do return.

“What actually creates certainty is co- than $US50/t, their job is impossible. – Dominic Piper
hesiveness in government’s statements,” Of the traditional minerals, only gold

Lane said.” How is he going to ensure appears to be in the ascendency with

business stability in the current climate? both Randgold Resources Ltd chief ex-

We would have liked to see a more pal- ecutive Mark Bristow and his AngloGold

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 53

INDABA REVIEW

404ct gem is largest ever
recovered by Australians

Shares in Lucapa Diamonds Ltd The 404ct diamond recovered from Lucapa’s Lulo project is the largest diamond
jumped nearly 30% on February ever reported by an Australian company
15 after it reported the largest ever
diamond recovered by an ASX-listed “It should be there by the end of quar- are very few projects that can produce
company. ter one and from there we can begin drill- the quality and size of diamonds as fre-
ing the gravity lows we have identified,” quently as Lulo does and the source of
The 404ct, Type IIa D-colour gem he said. these diamonds will be a very special
was recovered from alluvial mining mine.
at Mining Block 8 on the company’s Finding the kimberlite source could
40%-owned Lulo project in Angola. catapult Lulo into the upper echelons of “We are very gung-ho on finding that
the diamond industry. Far East Capital source. It is an exciting project and I don’t
The diamond is the biggest re- managing director (and Lucapa share- know of any other project in the world
corded diamond ever found in An- holder) Warwick Grigor stated recently that can match its potential.”
gola, the 27th largest diamond on that Lucapa had “upped the ante” with
record and the largest diamond ever the 404ct discovery. Lucapa is in partnership with Angolan
discovered by an Australian com- state diamond miner Endiama (32%) and
pany. “For those of you who weren’t con- local company Rosas & Petalas (28%).
vinced that there was something special Wetherall said Lucapa’s partners were
Lucapa chief executive Stephen about this project, notwithstanding the equally excited about the project.
Wetherall said he was very happy multitude of special stones that have
with the discovery because it was been produced, you have no more rea- “With the results being achieved En-
further proof of the quality of dia- sons to doubt the quality,” Grigor said in diama sees how special this operation
monds Lulo was capable of produc- his weekly commentary. “Never before is and they are showing a lot of interest.
ing. have I seen a diamond project with so Our relationship goes from strength to
much promise, and now, with such spec- strength.”
“We are very pleased,” Wetherall tacular delivery. It would not be contrite
told Paydirt. “We have been telling to start calling this ‘world-class’. If the – Dominic Piper
the market Lulo is a special piece alluvials are generating such amazing
of ground and we have frequently stones, how good will the pipe be?”
recovered large special diamonds
since mining started in August 2015. Wetherall steered clear of such super-
This 404.2ct diamond is the icing on the latives but agreed that Lulo was among
cake. Our long-term shareholders share the best projects he’d seen in a 20-year
our belief but I think this will go a long diamond career.
way to attracting new investors.”
“It is as exciting as that and I have been
The diamond is the largest of more in the space for a good few years. There
than 60 large special diamonds recov-
ered from alluvial operations at Lulo. The
previous largest was 120.4ct. In the par-
cels sold to date, the value of Lulo’s dia-
monds has averaged $US1,473/ct.

Alluvial operations at Lulo are set to
continue but Wetherall knows the greater
prize lies in finding the kimberlite source
of the diamonds.

“We had two primary objectives in set-
ting up the alluvials operation; generate
free cash-flow to fund the kimberlite ex-
ploration and start generating a return
on our in-country investment and that is
what we plan to do this year.”

The large diamonds have been re-
covered from an area of Mining Block
8 which has also been found to contain
kimberlitic material. Lucapa has recently
completed gravity and EM surveys and
is confident the hard rock source of the
alluvial diamonds is in or near Mining
Block 8.

Wetherall said a drill rig was now being
mobilised to site.

PAGE 54 MARCH 2016 AUSTRALIA’S PAYDIRT

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INDABA REVIEW

The screaming opportunity for
Anglo American

Amid an intense asset have seen in most of our lives in terms The medium-term goal
review during Mining of this industry and to me that screams for Anglo American is to
Indaba, Anglo American new opportunity,” Cutifani said at Mining reduce net debt from over
Coal South Africa chief ex- Indaba. $US12 billion (at the end
ecutive Themba Mkhwana- of 2015) to $US6 billion
zi threw his support behind “That is what we are working on, that through sales and positive
the coal industry. is what we are working with and in fact free cash flow, which will
many people in this room we are collabo- hopefully go some way to
Speaking just days rating with in terms of developing new redeeming its credit rating.
before thec ompany an- models and approaches to the way we
nounced plans to divest its do our work. Given the world around us, One avenue through
coal and iron ore divisions, the need to establish a more robust out- which Cutifani hopes Anglo
Mkhwanazi said coal would look as a platform for the future and the American can be returned
remain an important com- long-term future we see requires us to to a solid investment grade
modity, particularly with the do things differently. We are a self-help rating is its copper busi-
world population set to ex- group, we understand that our share- ness.
pand by a further 2 billion holders demand we do the best with the
people by 2050. resources we have and we’ll deliver on At Mining Indaba, he said
those expectations and the future poten- it was too early to disclose
“From a coal perspec- tial we see within the business.” the precise plans for a cop-
tive we believe that coal is per rejuvenation, but hinted
a positive story because Anglo American has targeted net debt the plan was a master-
coal will continue to be one to be less than $US10 billion (pro forma) stroke in the making.
of the key drivers in terms by the end of 2016, with $US3-4 billion
of economic development,” expected to be recouped from disposals. “I expect to be able to
he said. talk this year about the
While coal and platinum operations in significant changes we are
“The fact that 50% of the South Africa and Australia are to be sold making in our copper busi-
current global population off, the company’s nickel, niobium, phos- ness. It is too early to go
already has access to elec- phates and Moranbah and Grosvenor Mark Cutifani through any details but the
tricity, what you are finding met coal disposal processes are already works we are doing with our
is that countries in the emerging markets under way. teams are certainly going to make a dif-
are driving quite hard in terms of putting ference and will change the face of our
on electric power capacity. Coal will be- company and our competitive position in
come a feature of that because of its [low] the industry. We are going through a step
cost and also because of its abundance. change and it takes time and it is impor-
We see that coal is a positive story going tant,” Cutifani said.
forward given its costs, reliability and its Anglo American’s overhaul, which in-
abundance.” cludes exiting coal and iron ore, is being
done at one of the lowest ebbs ever in
Despite Mkhwanazi’s bullishness on the mining industry, with Cutifani antici-
the commodity, Anglo American has pri- pating an even tougher year ahead.
oritised its diamonds, PGMs and copper But, with adversity comes opportunity
businesses, leaving the bulk commodi- and this remake to suit the demands of
ties and other minerals in the portfolio the market will position Anglo American
to be disposed of or managed for cash as a much stronger group, Cutifani said.
generation. “The world is changing at a faster rate
than any of us have probably been able
Therefore, the company’s thermal and to digest – certainly in the last five years
met coal operations in South Africa and – and it will get faster. The key question is
Australia remain up for grabs, as Anglo can we position ourselves as a country,
American chief executive Mark Cutifani continent and a company as partners at
attempts to revive the faltering company. each level within our community in devel-
oping the future? Can we work together
Coming up to three years in the posi- or get ahead of the curve and help lift Af-
tion as chief executive, Cutifani has over- rica up and beyond other competitors?”
seen monthly revenue losses and an- he asked.
nounced 85,000 job cuts worldwide, as
commodity prices have deteriorated and – Mark Andrews
global economies have stumbled.

“In talking about the new Anglo Ameri-
can, we talk about the opportunity we
see in probably the toughest time we

PAGE 56 MARCH 2016 AUSTRALIA’S PAYDIRT

South Africa turns to
platinum for growth

An investment seminar panel which included South African Minister of Mineral Resources, Mosebenzi Zwane (second from right)
and Minister for Trade and Industry Dr Rob Davies (third from right) debates the future of South Africa’s mining sector

With its gold and bulk commodity sec- Ltd launched a $US294 million takeover Dr Davies recognised the impact of
tors continuing to whither on the offer in October last year and even An- falling commodity prices but said South
vine, South Africa’s embattled govern- glo Platinum plc has been forced to re- Africa needed to find new ways to extract
ment is looking to the platinum sector to structure, closing shafts and selling its value from its reserves.
provide a boost to both the economy and Rustenburg operations to Sibanye for
mood in the mining sector. a discounted initial upfront payment of “There are structural changes to com-
R1.5 billion. modity prices occurring as China’s econ-
Speaking on the opening day of this omy adjusts to the ‘new normal’. But, if
year’s Mining Indaba, newly installed However, the ANC Government re- your existing customers are not prepared
South African Minister of Mineral Re- mains unperturbed and is looking to plat- to pay the same prices for your product,
sources, Mosebenzi Zwane said plati- inum to not only increase its own contri- the smart thing to do is find new uses for
num could take on the role of economic bution to the national economy but also your product.”
leader, a title once held by gold. foster new industries.
Fuel cell technology is one such use
“With more work we should be able to A special economic zone will be es- and has been touted as a potentially im-
turn platinum into what gold previously tablished in the country’s North West portant driver of platinum demand. Dr
was to South Africa,” he said. province before the end of 2016 as the Davies said the special economic zone
Government continues its efforts to drive was designed to encourage the develop-
In the current environment, such no- value-adding beneficiation sectors in the ment of such technology in South Africa.
tions appear ambitious. Although the country.
country boasts 77% of global reported “We need to establish a set of indus-
platinum reserves, the precious metal’s Minister for Trade and Industry Dr Rob tries that make use of platinum,” he said.
price slide of recent years has left the Davies said he was confident the special “There have been a lot of reasons why
South African platinum mining sector in economic zone would be in place this beneficiation hasn’t happened before but
disarray. year, allowing South Africa to develop we are determined and need to create
expertise in emerging technologies. the conditions to make those industries
Lonmin plc has shed 90% of its value viable.”
in the last 12 months and was earlier this “A special economic zone is being es-
year forced into a further 93% discount- tablished in North West Province with the – Dominic Piper
ed rights issue of $US407 million to stay aim of bringing fuel cell technology and
afloat. Aquarius Platinum Ltd’s value had other technologies which use platinum to
also tumbled 95% before Sibanye Gold South Africa,” Davies said.

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 57





INDABA REVIEW

South Africa needs to tighten
up its investment case: Tete

South Africa needs to stop scoring own Tete pointed to the current delays over “We understand the policy settings are
goals and provide more political and the MPRDA Bill – legislation designed to vital to encouraging investment and we
regulatory stability if it is to attract more clarify the many uncertainties created by are treating the matter of the MPRDA Bill
investment into its mining industry. the original Mineral and Petroleum De- as urgent,” he said. “We are also review-
velopment Act – as an example of how ing the Mining Charter and that will be
Speaking at a South African invest- uncertainty left investors wary. completed by April.”
ment seminar, the Chamber of Mines of
South Africa president, Mike Tete told “As South Africans, we need to ensure Zwane admitted South Africa was ex-
delegates international investors were we create stability and in that regard we periencing tough times in mining but said
looking for certainty when making invest- need to expedite the MPRDA Bill. When the country had done better than many
ments. I travel the world investors always ask others “under the conditions”.
me why it is taking so long. We need to
“In mining, South Africa competes strengthen our regulatory environment Some of the country’s major miners –
with Australia, Canada and other African and ensure that whatever we agree to including AngloGold Ashanti Ltd, Gold
countries for investment and investors must be implemented.” Fields Ltd, Anglo Platinum plc and Lon-
only want to put money into jurisdictions min plc – have either closed, suspended,
where investment conditions are stable,” Solidarity’s Gideon du Plessis agreed, divested or attempted to sell their domes-
he said. saying South Africa’s mining sector was tic operations in recent years but Zwane
like a football team which mixed spectac- said companies had yet to completely
Once the strongest in the world, South ular “goals” with lamentable “own goals”. divest their assets.
Africa’s mining industry largely missed He pointed to the failure of AMCU to join
last decade’s commodity boom as it wage negotiation agreements and the Instead, he is optimistic the resources
struggled to find its place in the post- Government’s inability to get the MPRDA sector would rebound in the near future.
apartheid national landscape. Bill through parliament.
“The long commodities winter is com-
A series of debilitating crises have New Minister for Mineral Resources, ing to an end. We should be able to re-
struck the sector since, including wide- Mosebenzi Zwane, said his government vive the mining industry and we will work
spread labour unrest, political interfer- recognised the need to push the Bill to attract investors,” he said.
ence, increasing power costs and a lack through.
of infrastructure development. – Dominic Piper

Build now for tomorrow’s mines

Rio Tinto Ltd chief execu- Infrastructure development must trepreneurs and retail development.
tive of diamonds and continue for governments to real- “We have seen across the continent

minerals, Alan Davies, has ise maximum potential from mining large infrastructure projects are catalysts
for transformative growth and change.”
called on African govern- and other industries such as agri-
African Development Bank (AfDB) es-
ments to help miners through culture. timates that more than $US360 billion
was needed by 2040, with 51 priority pro-
the current downturn. Some of Africa’s most promis- jects demanding $US68 billion by 2020.

Davies said adjusting the ing assets are in remote locations, Attracting such investment is a chal-
lenge in any cycle, but with Africa’s
cost base through produc- meaning the capital required to minerals sector a cornerstone for devel-
opment and economic growth, Davies
tivity and other direct cost Alan Davies build such heavy infrastructure can encouraged the private sector, govern-
reductions needed to be ad- cost billions of dollars. ments and financiers to look at the long-
term benefits of their investment.
dressed right now. The infrastructure deficit Africa
“Infrastructure is a catalyst for invest-
“This can come in the form of labour is facing is large and building roads, rail, ment to follow,” Davies said.

productivity, electricity and power costs ports and associated items needs to be “It is a challenging climate at the mo-
ment, there is no doubt about that, but
and reduced bureaucracy,” Davies said. the combined focus of private sector, the focus must be on the long term and
the conditions that create and underpin
“By focusing more on these types of governments and financiers alike. development regardless of what point of
the cycle we are at. I am confident that
improvements, governments will improve Furthermore, the process of construct- we can rise to the challenge.”

their operating environments, simplify ing infrastructure solutions would be – Mark Andrews

their systems and attract new investment made easier through regional integration

to help new business and improve their and cooperation, Davies said.

competitiveness.” “Borders should not be in the way

Commodity prices are not demand- when contemplating projects,” he said.

ing investment in the mining sector any- “Platform for growth is investment in

where in the world, however, now is not infrastructure. Infrastructure is the life-

the time to lose sight of what is needed blood of countries, the backbone of in-

for growth in Africa, Davies said. dustries, and the trade path of global en-

PAGE 60 MARCH 2016 AUSTRALIA’S PAYDIRT



INDABA REVIEW

Africa must invest in Africa

Black Rhino Group chairman and frastructure. Enhancing domestic
Emir of Kano Lamido Sanusi
believes Africa itself must provide mechanisms to attract investment,
some of the investment needed to
increase GDP and productivity on including sovereign guarantees,
the continent.
etc will assist in this.”
Speaking during his keynote
address to Mining Indaba, Sanusi Africa’s infrastructure deficit
said China’s domestic economic
woes meant it could no longer be and the restrictions this places on
relied upon to be the major investor
in Africa. growth was highlighted throughout

“So, we need new sources of the Mining Indaba with the IMF’s
investment,” Sanusi said, point-
ing to the fact only $US1 billion estimation that Sub-Saharan Af-
of the current $US18 billion being
spent on minerals projects in Af- rica would need $US93 billion of
rica was raised on the continent
(through the Johannesburg Stock infrastructure investment each
Exchange).
year to bridge the gap by 2040 oft-
“African capital markets are lack-
ing efficiency and to deepen them quoted.
we must look to trade reform. Re-
silience depends on strong and Sanusi said public financial sup-
robust financial systems and we
need platforms to encourage in- port for infrastructure, including

multilateral lending, could not pro-

vide all of that funding.

“It is clear that relying on public

finance for infrastructure invest-

ment is unsuitable,” he said. “But

governments need to provide

transparency, good governance

and political stability [to encourage

private investment].”

Black Rhino chairman Emir Lamido Sanusi on – Dominic Piper
the Mining Indaba stage

PAGE 62 MARCH 2016 AUSTRALIA’S PAYDIRT



INDABA REVIEW

South32’s new manganese plan

Prior to Mining Indaba, South32 Ltd re- Graham Kerr ket for the foreseeable future, as sustain-
leased a detailed plan of how it would ing capital expenditure is expected to be
tackle the current slump in the manga- started in South Africa in February, with slashed by 80% to $US7 million.
nese market. the Hotazel mines expected to ramp-up
to a saleable production rate of 2.9 mtpa, South32’s restructuring plans has re-
South32, 60% owner of the world’s subject to market conditions. sulted in a staff reduction of 620 employ-
largest manganese company, Samancor ees across the Samancor JV.
Manganese JV, announced sweeping At that nominated rate, it is estimated
changes to its manganese business in 900,000 tpa will be taken out of the mar- While South32 has made the hard de-
order to capture the upside when prices cisions on its business, Kerr called on
rebound, chief executive Graham Kerr peers in the space to do the same thing
said. for the sake of the manganese industry.

“For our part, South32 are taking ac- “All manganese participants have a
tion now so we are appropriately struc- role to play in supporting a healthy, sus-
tured for the current environment, yet tainable manganese industry,” he said.
flexible enough to benefit from an even-
tual recovery in prices,” he said. “The industry cannot depend on a
quick demand and price recovery as
“These actions include accelerating market fundamentals have changed.
the second phase of the Central Block
development at Wessels, reducing sale- “Looking ahead, the industry needs to
able production at the Wessels mine, make rational decisions and take a dis-
optimising the mining and processing ciplined supply approach. The industry’s
footprint at Mamatwan’s and continuing future depends on it.”
operation of only one of four furnaces at
the Metalloys smelter.” South32 has flagged that it expects to
book pre-tax, non-cash charges of about
Mining activity at a reduced rate re- $US1.7 billion (post-tax) in its December
2015 half year financials.

– Mark Andrews

ECG finds fruits in Africa

In the scheme of power graphite project in Tanzania.
supply in Africa, ECG En-
gineering is a new player. Mining contracts have
However, it has already
found a good footing in the been core to ECG’s busi-
region.
ness and while it does have
The Perth-based com-
pany specialises in a num- capabilities to service other
ber of areas, including pro-
ject management, power industries, Huddy said pros-
generation, plant integrity,
power and control systems, pects in other areas were
automation and operations
support, which are highly just as tight as the resources
sought-after in Africa.
sector.
Unlike some of its peers
in the services sector, ECG “In these times you are
remains busy in the mining
industry, despite the lull in probably best-served keep-
activity at the moment.
ing your head down and
Mark Huddy, general manager at ECG,
has only been in the position for six working hard and we cer-
months, and quite can’t pinpoint exactly
why the company is thriving in the mining tainly don’t want to get car-
sector right now.
ried away with what we have
“We are probably lucky that we are still
young and new,” Huddy said. got and we certainly don’t

“We are built around tighter times, in want to take anything for
terms of overhead build-up and salary
granted either,” Huddy said.

ECG has found a hotspot for its business in Africa “It may well take a while

for things to materially

rates and all that. It is hard to put a finger change in this industry and we are still

on what has been our main selling point learning to become a business. We are

and I am not sure whether it is luck or just only 18 months old and probably not

good timing.” even that. Therefore we are sticking with

Huddy isn’t complaining about the flur- our knitting; working hard and respecting

ry of activity for the company and was re- what we are doing and who we are doing

cently selected to deliver power genera- it for.”

tion and transmission systems solutions – Mark Andrews
for Kibaran Resources Ltd’s Epanko

PAGE 64 MARCH 2016 AUSTRALIA’S PAYDIRT



INDABA REVIEW

Exploration unlikely
to fire up soon

Companies must conduct their The new global exploration trends panel discussed the future of the sector
social and political due diligence on the first day of Mining Indaba
as carefully as they do their technical
due diligence when acquiring pro- cal infrastructure as an attraction when budgets now for short-term gains.
jects in Africa. assessing exploration destinations. “In the longer term, the focus on

Speaking during a panel discus- “If you have good infrastructure of geo- brownfields not greenfields exploration
sion on global exploration trends, physics, geochemical data, mapping, etc will tell,” he said. “Companies have to
Veracity Worldwide chief executive that can save a company two or three try to avoid destroying their R&D teams
Stephen Fox said the changing face years and can allow for more specific because it takes five or six years to put
of politics in Africa meant companies early stage work on the actual mineral them back in place. There is a lot you can
had to ensure projects they were occurrences and target generation,” he do with a core team in the downturn es-
picking up didn’t come with social said. pecially when taking that back-to-basics
and community problems. approach.”
Tainton pointed to Botswana as the
“Today’s environment places best example among a number of coun- Tainton said the current climate for
greater emphasis on appropri- tries which had opened up their explora- commodities meant exploration teams
ate probity and companies need to tion sector by providing extensive pre- had to conduct “more efficient explora-
make sure they steer clear of pro- competitive data. However, he said, the tion”.
jects with baggage,” Fox said. “A key integration of such information was now
issue for companies to think about needed. “The internal prioritisation process is
is that [they’re] a political actor. The becoming more ruthless,” he said. “We
days of the ‘Big Man’ in African poli- “The challenge is to bring together all will have to eventually go back to green-
tics are largely gone and being able to go the cross-border data together into one fields exploration in more remote places,
straight to the top is not enough today. platform,” Tainton said. “It is still frag- or invest in new technology.”
It is important to understand the social mented and that is a drawback for inves-
history of the licence. More disclosure is tors. A lot of information has been sub- He pointed to the work on copper por-
required, particularly in the EU.” mitted by companies but how to make phyry targeting as an example of new
that available to the next generation of technology being integrated with tradi-
Despite this changing landscape, and explorers is the challenge.” tional methods.
the stricter legislation introduced by
western governments on companies op- When that next generation of explor- Dr David Twist, founding partner of
erating in foreign jurisdictions, Fox found ers will materialise is open for debate. private equity fund African Minerals Ex-
companies were still unwilling to make a The current downturn has decimated the ploration and Development, said he ex-
proper commitment to getting their politi- junior mining sector with panel modera- pected large companies to return to ex-
cal and social approach right. tor Chris Hinde of SNL Metals & Mining ploration eventually.
pointing out more than half of the world’s
“Companies are still reluctant to pay 3,000 listed mining companies had mar- “But in the short term balance sheets
upfront to make sure they get the politics ket caps of less than $10 million. are far too stretched and obviously jun-
and probity issues right,” he said. iors won’t be increasing exploration ei-
The panellists expected the major com- ther,” Twist said. “We have seen private
Aureus Mining plc chief executive Da- panies to return to exploration in coming equity emerge and that is where a lot of
vid Reading agreed, saying even at the years but Reading warned all sectors of investment will come from.”
exploration stage a failure to secure a the industry against slashing exploration
social licence would lead to trouble. – Dominic Piper

“If you haven’t got that social licence
your project will fall down very quickly,”
Reading said. “You have to do these
things to get social licence and have
chance of being successful.”

Ken Tainton, exploration director for
Africa-Eurasia at Rio Tinto Ltd agreed
social licence had become increasingly
important but warned African govern-
ments there were certain agreements
they had to continue to adhere to.

“Countries have to understand what is
going to incentivise us to enter a particu-
lar jurisdiction; 1) Can we safely put peo-
ple in place? 2) Rule of law; 3) Security of
tenure,” he said.

Reading also pointed to greater techni-

PAGE 66 MARCH 2016 AUSTRALIA’S PAYDIRT



INDABA REVIEW

Infrastructure to be built for all

Apanel addressing financing options A panel discussion on driving investment in infrastructure was hosted by
to drive infrastructure in Africa unani- Africa Finance Corporation executive director Oliver Andrews
mously agreed a co-operative approach
must be taken. between the countries, the anchors and and BHP Billiton have rail running side-
developers of finance could actually cre- by-side in WA, while Fortescue Metals
This means financing groups, govern- ate opportunities for long-term investors Group Ltd also has facilities in the region.
ment and companies – mining and non- to come in to some of these projects. The
mining – need to devise a strategy which role of government, the regulatory frame- “If you look here in South Africa, there
will attract maximum investment to ben- works and other policies is important to are much better examples of multiuser
efit all stakeholders. attract such investment.” infrastructure, Richards Bay for example,
which has formed the ability for smaller
“It is much better – we think – for a Resolute Mining Ltd managing John operators to actually get into production
company, the anchor, to build infrastruc- Welborn said the mining sector was not and drive economic benefit,” Welborn
ture that is multiuse and hence where the great at supporting multiuse infrastruc- said.
costs can be shared not among different ture, as miners were more interested in
companies but different sectors,” IFC co- owning their roads, rail and ports. “That is a real challenge for the mining
head director of infrastructure and natu- industry; to see and drive the solutions all
ral resources Sujoy Bose said. Welborn used Rio Tinto Ltd and BHP the way through to financiers. The South
Billiton Ltd’s presence in the Pilbara re- African example needs a really strong
“In my mind we are going to have to gion of Western Australia as an example role of government in the financing be-
look at these holistic approaches to de- of “a complete absence of multiuser in- cause they are the main driver and vi-
veloping the associated infrastructure to frastructure” and “terrible example of ef- sionary behind multiuser infrastructure.”
actually make sure that the cost of infra- ficiency in infrastructure use”.
structure is shared among as many us- – Mark Andrews
ers as we can.” The Pilbara is the world’s largest iron
ore producing hub and both Rio Tinto
In theory, the model of shared costs
makes sense, particularly in an African
context where many countries across the
vast continent are landlocked making ac-
cess to ports, for instance, unattainable
without some sort of regional integration.

Bose said while shared costs and
agreements can be discussed, essen-
tially there will have to be an anchor – a
mine for example – to underpin initial de-
velopment.

“The ultimate goal has to be multiuse
but it is going to take an anchor other-
wise there is just not the capital. I think
there are models we are still trying to
pursue whereby the division of the risk

Be honest or walk away

Randgold Resources Ltd Bristow estimated about nership needs some work.”
chief executive Mark AngloGold Ashanti Ltd chief executive
Bristow said miners needed 25% of the gold industry was
to be savvy with their busi- Srinivasan Venkatakrishnan (Venkat)
nesses to ensure Africa’s currently unprofitable, mean- said if proper due diligence was carried
gold mining sector has a out by companies there should be no
sustainable future. ing miners weren’t making a major issues in meeting the expectations
of governments and communities.
“One needs to be disci- return and essentially wast-
plined and also we are not “You should still be able to generate
being truthful to our host ing national assets. cash in different gold cycles, the quan-
countries if we are design- tity of cash may vary, but the overarching
ing businesses to be mar- “We must be more diligent [key] is doing due diligence correctly. If
ginal. It is better to leave the deposit doesn’t make sense at global
the gold in the ground then wait for a gold in delivering profitable busi- prices you probably shouldn’t have de-
price scenario which will deliver the as- veloped it in the first place,” Venkat said.
set where the host country will be able to nesses,” Bristow said.
benefit,” Bristow said. – Mark Andrews
“We should be more trans-

Mark Bristow parent in the way we deal
with our host country gov-

ernments in explaining the

assumptions and conditions on which we

are going to develop assets so they un-

derstand the risks that we are posing on

their own assets. I think that whole part-

PAGE 68 MARCH 2016 AUSTRALIA’S PAYDIRT

Another bleak year ahead:
Nedbank

One of the most active Africa is also home to
investment banks on some of 2015’s standout

the continent sees little im- commodities and Zafer

provement for the African said the bank continued to

mining sector in 2016. take an interest in a num-

Nedbank Capital has par- ber of graphite, potash and

ticipated in deals across the phosphate projects on the

commodity spectrum over continent.

the last decade but accord- He said the question of

ing to Haaris Zafer – princi- price outlook had largely

pal for Mining M&A Africa overtaken political risk con-

at the bank – there are few siderations when it came

sectors providing cheer at to judging African mining

the moment. projects.

“Commodity prices are “Traditionally, ranking

not proving an incentive projects in Africa was first

now and will continue to about political risk, then

be that way,” Zafer said. the underlying commodity,

“We’ve been in a holding then the question of infra-

pattern since 2013. 2015 structure. However, the po-

was already quite slow but litical risk in Africa is largely

because of the price col- accepted now, even in the

lapses at the end of the likes of DRC, Zambia and

year there was a sting in Mali where we have seen

the tail.” political upheaval.

The outlook is bleakest “It is now a question of do

in the bulk commodities of you want to invest in cop-

iron ore and coal which, just Nedbank predicts little activity in Africa’s mining sector this year per? And, if the economics

a few years ago, were be- make sense then the infra-

ing held up as the likely catalysts for an for supply discipline before moving back structure will happen.”

unequalled generation of investment and into the sector. He pointed to the increasing stability of

growth on the continent. “Supply discipline is needed in zinc, West and East Africa as cause for con-

“In iron ore there is really nothing. There copper and even PGMs. If supply disci- fidence in Africa’s future, however like

are few producers we are aligned to but pline doesn’t take place recovery will be many visitors to Cape Town for the 2016

“nothing in development, the economics tough. I was at LME Week late last year Mining Indaba, he remained cautious
just don’t make sense at cur- over South Africa’s immedi-

rent prices,” Zafer said. ate future.

The South African domes- They also need to work through “In various spots of West
tic coal sector did offer some the massive inventories but the and East Africa there has
chinks of light but growth in been steady progress but

the seaborne market was only way majors can remain profitable it has probably been South
likely to remain flat, he said. is by lifting volumes. That will lead Africa that international in-
vestors have not been very
“There has been a bit of

consolidation and activity in to more concentration and I think the happy with. The Government
the South African space and bloodletting will continue in 2016. needs to instil a lot more
you will continue to see that. confidence,” Zafer said.

India and Pakistan continue “There have been enough

to build new coal-fired power positive signs and hope-

plants but the seaborne thermal coal is and Wood Mackenzie stated that 200- fully it will get through the trouble and

under pressure. In this environment it 250,000 tpa of zinc has to come out in the economy will come good. It still has

will remain tough and there will be no 2016 if the price is to recover. enormous potential but the World Bank

spectacular recovery. There is not a lot “They also need to work through the is predicting South Africa will be in re-

of capital around but if it is a regional or massive inventories but the only way cession by the end of this year and that

local proposition, projects may work.” majors can remain profitable is by lifting could prove a watershed moment for the

Base metals prices have also taken a volumes. That will lead to more concen- country.”

beating in recent years and Zafer said tration and I think the bloodletting will – Dominic Piper
the investment community was looking continue in 2016.”

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 69

INDABA REVIEW

Black Mountain banks
on vermiculite

One-time silver hopeful Black Black Mountain has acquired the Namakera vermiculite mine in Uganda
Mountain Resources Ltd is and all associated site infrastructure
seeking a fresh start in the agricul-
tural sector after taking control of the and Luca Bechis also joins the board as “To have an opportunity to secure an
world’s largest vermiculite deposit a non-executive director. asset which is in production, which has
and a promising phosphate project. existing infrastructure and existing sales
Brewer, who founded African Phos- and marketing agreements, allows us to
Black Mountain has entered into phate late last year, welcomed the op- hit the ground running,” Brewer told Pay-
a binding heads of agreement with portunity to move into production almost dirt.
private company African Phosphate immediately.
Pty Ltd to acquire Namakera Mining “This is not a greenfield exploration
Company Ltd, operator of the Nam- Black Mountain executive director Jason play…more than 80% of Uganda’s popu-
akera vermiculite mine and owner of Brewer on site at Namakera lation is involved in the agricultural sector
the Busumbu phosphate project in and 90% of the country’s foreign earn-
Uganda. ings come out of the sector, so clearly
there is a lot of potential for the country
The acquisition includes the exist- in terms of the export markets to Europe
ing mining and exploration licences, and Asia, but also regionally in Africa.”
all mining equipment, the process-
ing plant, power generator, mine of- Production from Namakera, about
fice and associated site infrastruc- 190km north-east of Uganda’s capital
ture. Kampala, began in 2002 and sales for
the first 11 months of 2015 totalled 1,118t
Black Mountain will fork out 400 vermiculite, of which 70% was classed
million shares to the vendors, finan- as either premium large or medium flake,
ciers and advisors at the completion selling for more than $US400/t.
of the transaction, as well as a 1%
per annum royalty on revenue received Black Mountain will soon start a BFS
from mineral production at Namakera. with the intention of increasing produc-
The company has also committed to rais- tion from 30,000 tpa to at least 80,000
ing $2.5 million in new capital investment tpa, representing about 10% of current
into the operation, including exploration global demand for vermiculite products.
and mine development.
“We’ve got to go in there and look at
Sanlam Private Wealth Australia and different ways of optimising the opera-
Verdant Capital have been appointed ad- tion,” Brewer said.
visors to the company to assist with the
acquisition and ensure all capital require- “Over the first 3-6 months we’ll look
ments are met. to make a number of modifications and
develop partnerships with our mineral
Namakera, a former Rio Tinto plc as- processing group, then we’ll look to
set, is considered the world’s largest
vermiculite deposit, boasting an inferred
resource of 57.4mt @ 26.7% vermiculite
(JORC 2004) with a flake size greater
than 18mm.

Black Mountain’s planned move into
Africa’s booming agricultural sector – the
African Development Bank is forecasting
growth of $US500 billion over the next
five years – will also result in an overhaul
of the company’s board and manage-
ment team.

Executive director Peter Landau and
company secretary Jane Flegg depart,
while non-executive director Jason
Brewer transitions to an executive role.
John Ryan will continue to manage the
company’s US silver projects.

Simon Grant-Rennick will become
Black Mountain’s new chairman, Julian
Ford takes over as company secretary

PAGE 70 MARCH 2016 AUSTRALIA’S PAYDIRT

boost our sales throughput to around the An impending BFS will target an increase in vermiculite production at Namakera
100,000 tpa level. from 30,000 tpa to 80,000 tpa

“It’s a fantastic opportunity and with “The expansion [in production] will ob- Diamond drilling results reported by a
Namakera being a world-class deposit, viously take us to being one of the ma- previous owner to the ASX in 2012 sug-
we have to sit back, take stock and work jor players in the world, so we’ve got the gested high-grade and extensive phos-
out how best to maximise its potential potential to really dominate world pro- phate mineralisation at Busumbu, with
because the opportunities are immense.” duction of that medium and large flake, grades of up to 30.5% P2O5 and best
which is a fantastic position to be in, no intercepts of 35.4m @ 25.8% P2O5 from
Vermiculite is a naturally occurring, question about it.” 4.7m and 29.2m @ 25.1% P2O5 from 7m.
inert laminar mineral used extensively
in agriculture and horticulture as well as Black Mountain is also upbeat about – Michael Washbourne
in some aspects of construction, heavy the exploration and development upside
industry and manufacturing. More than at Busumbu, also on the Namakera min-
50% of global vermiculite sources are ing lease.
used in fertilisers because of its non-
combustible, compressible, highly absor-
bent and non-reactive properties.

Brewer, whose last formal role in the
resources industry was with Continental
Coal Ltd, admitted he was still learning
about vermiculite.

“It has been eye-opening to see how
strategic and critical a mineral it is,”
Brewer said.

“Southern Africa is really the only re-
gion which produces large and medium
flake vermiculite – and that’s the pre-
mium product. Europe, North and South
America are all producing a fine and su-
perfine product, but that’s at the lower
end of the pricing matrix. We’re targeting
a high, premium product.

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 71

INDABA REVIEW

Governments head for rehab

It is time for African countries to enter answer is, regrettably, no. Some pro- ing on the raw mineral wealth would also
rehab, drop their dependency on com- gress has been made but much more reduce the temptation to look toward na-
modities and diversify their economies, could’ve been achieved,” he said. tionalisation.
according to a former Zimbabwean fi-
nance minister. Africa did react to the commodities “Without beneficiation, minerals hardly
boom. Across the continent, govern- touch African countries and the situa-
Delivering the keynote address on the ments reached for a greater share of tion actually increases dependency [on
second day of Mining Indaba, Tendai Biti mineral wealth by increasing royalty income from extractive industries],” Biti
said diversification of their economies rates and taxes and installing – to vary- said. “What is needed is a major para-
would reduce the dependency many Af- ing extents – nationalisation policies. digm shift by all stakeholders. There is
rican countries have on extractive indus- a need to create mutually transformative
tries. Biti recognised this move but said it policy which will change the minerals
was not restricted to Africa. sector from high value, low impact to high
“Commodities have been a drug for value, high impact.”
at least 24 African countries and like all “During the boom, governments ques-
drugs, you get addicted,” the former Fi- tioned the distribution of revenue,” he Biti said mining often operated in “an
nance Minister in the Zimbabwean Unity said. “Every major commodity-based enclave” within African countries, “hardly
Government said. “It is time to get rehab economy moved towards nationalisation touching the domestic economy”. He
and move away from a dependency on in some way.” pointed to the development of the Ma-
the mining sector and into other sectors range diamond fields in his own country
such as agriculture and fisheries.” He said the tension between guaran- as an example of a region where rich
teeing the state a fair return on these mineral wealth had failed to bring wider
Biti said African countries had failed finite reserves and ensuring parity for development.
to make the most of the commodities investors would be ever present but
boom of the last decade and needed to declared the traditional “accumulation” In contrast, he said, Zimplats plc’s op-
re-adjust policies to ensure development model of resource development needed erations in Zimbabwe were a good exam-
goals were met. to be overhauled. Instead, he argued ple of high impact development.
value addition of raw commodities was
“If you take a balance sheet of whether the only way to ensure the “resource – Dominic Piper
Africa was able to utilise the boom the curse” was lifted. Finding ways of build-

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PAGE 72 MARCH 2016 AUSTRALIA’S PAYDIRT

Time for new mining policies

Asenior industry advisor has called for fulfilling such aspirations. big economic development
a rethink on African mining policies. De Sa said despite cur-
Speaking at a special information ses- through manufacturing in
sion hosted by World Bank Group, Afri- rent low commodity prices,
can Union Commission senior industry African countries needed to recent years were in coun-
advisor Frank Mugyeni said it was im- remain committed to devel-
perative that African countries position oping their mining sectors, tries that were not resource
themselves now to capture the fruits of with regional integration
the next mining boom. to be an important pillar in rich, but resource poor.”
bringing wealth and oppor-
“We need to revisit our policies to see tunities to the continent. How beneficiation and
what worked and what didn’t, so we can
have it right this time around. When you “We have to move away downstream processing
look at mining boom cycles [and busts] from the model of enclave
it is not the first time we have seen this mining towards a model will be managed by coun-
situation,” Mugyeni said. where mining and resource
abundance can be used as an instrument tries will be critical and key
“We have to have informed policies to leverage economic development,” de
in place because most other times we Sa said. to that will be adopting pro-
have rushed to put in policies to facilitate
beneficiation and we forget that some of “Countries need to develop a common active policies now.
those policies might not work for us.” vision and policies and then allocate re-
sources for the development of natural Paulo de Sa OECD economist and
World Bank Group practice manager, resources because what is missing in trade policy analyst Jane
energy and extractives global practice many countries is the long-term vision.
Paulo de Sa said African countries were Downstream processing and beneficia- Korinek said it was wrong to
right to expect economic development to tion is seen as the only way to develop the
be driven by the resources sector, how- economy but this is not necessarily the assume that placing export bans on raw
ever, many countries are a long way from case. Most countries that have achieved
materials would help downstream indus-

tries to flourish.

“We [have] found that the downstream

industries benefit from the removal of

export taxes across the board,” Korinek

said.

“We found that if all countries removed

their export taxes the downstream indus-

tries were actually far better off.”

– Mark Andrews

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 73

INDABA REVIEW

Bleak present to fuel
copper’s bright future

An expert panel – including Ivanhoe Mines Inc chief executive, Lars-Erik Johansson (far right), and ZCCM Investment Holdings plc
chief executive Dr Plus Chiulfya Kasolo (second right) – discusses copper’s fortunes for 2016

It seems no one in the mining or finance other cycle and we will see ups and flation to come; prices could go lower but
sectors is prepared to predict exactly downs in the near future,” he said. costs will also come down.”
where the copper price or the copper
mining industry is headed in 2016. However, Johansson, Gait and their Gait said further cost-cutting would
fellow panellists – ZCCM Investment not necessarily create a stronger copper
Commonly seen as a bellwether Holdings plc chief executive Dr Plus sector.
among the base metals, copper endured Chiulfya Kasolo and Wood Mackenzie,
a bumpy ride in 2015, hitting a high of senior research manager, copper mines “It is about the short-term response
$US2.92/lb in April before ending the costs, Nick Pickins – agreed the endur- and the long-term response,” he said.
year in a sharp decline towards $US2/lb. ing instability would sow the seeds of the “There is a difference between deflation
copper industry’s next rebound. [through cost-cutting] and productivity
That decline culminated in the lowest improvements. In the short-term, the in-
copper spot price in six years in January “Volatility in the markets makes financ- dustry is trying to defer costs but even-
($US1.98/lb) but the red metal rebound- ing new projects more difficult,” Johans- tually it will have to put in investment. It
ed immediately following the end of the son said. is about how sustainable high-grading
Chinese new year holiday, closing at is compared with the productivity gains
$US2.06/lb on February 15. Gait said significant supply challenges from the introduction of new technol-
remained in the copper space. ogy, such as the arrival of SX-EW in the
Meanwhile, on the supply side, major 1990s.”
producers are still considering produc- “Above all there is the geological scar-
tion cuts as lower prices eat into margins. city of copper; it is the scarcest of all the Achieving productivity gains has be-
major industrial minerals,” he said. come more problematic for copper min-
Prior to the reopening of Chinese mar- ers as mining depths have increased and
kets, a specially convened panel told Kasolo said lower prices left existing head grades have fallen.
Mining Indaba delegates volatility in the copper operations facing unenviable fu-
copper market was likely to remain as the tures, particularly in Africa. “Also, the average time between dis-
world’s economy lurched between crisis covery and first production is now 30
and growth. “The biggest problem is the cost of years versus 10-15 years two decades
production as grades fall and input costs ago,” Gait said.
“Copper mining is not just sensitive to go up. Most copper mining countries [in
economic growth but is sensitive to the Africa] are not mechanised and to do so However, for those willing to bet on
acceleration and deceleration of growth,” is a challenge on a political and social copper’s revival, the current environment
Bernstein senior research analyst at Paul front,” he said. could be ideal.
Gait said.
For Pickins, the extensive cost-cutting “Now is the time to buy assets and I
Ivanhoe Mines Inc chief executive, sparked by the prolonged downturn in think China is thinking the same,” Gait
Lars-Erik Johansson, shared a similar copper prices cannot last much longer. said.
sentiment, saying there was little unique
about the current state of the market. “Margins are still tight despite having – Dominic Piper
had three or four years of cost deflation
“This cycle is not any different to any and I’m unsure how far that trend has to
run,” he said. “There may be further de-

PAGE 74 MARCH 2016 AUSTRALIA’S PAYDIRT

Cheaper, cleaner nuclear power

Peninsula Energy Ltd managing direc- ers of the nuclear sector “I believe that period
tor Gus Simpson lamented the lack of this century; cost will be [of oversupply] is pretty
knowledge about the nuclear power sec- another. much behind us and we
tor in today’s society. are moving towards a
“We are at about the time where supply and
Currently, uranium consumption is same upfront capital ex- security is very much
growing at about 3-4% a year, with 430 penditure as a coal-fired going to be more of a
nuclear reactors demanding 200 mlbpa. power station. The overall concern for the exist-
cost today of generating ing utilities out there
“That is a pretty healthy business,” electricity through nuclear and the new ones. This
Simpson said. within the Chinese envi- will ultimately result in
ronment, with a second- Gus Simpson a normalisation of pric-
“Outside of that, there are more nu- ary Chinese company as a ing. I am not a believer
clear power stations in construction than supplier is a very low cost in $US100/lb uranium,
at any time in history. While that is widely option for the consumer of more $US65/lb uranium and if that is
available information, I am always sur- this technology which I don’t believe is a achieved over life-of-mine for us that will
prised by how few people are aware of well known fact,” Simpson said. make us an extremely successful com-
that [fact].” pany,” Simpson said.
There is no doubt the nuclear power Peninsula started uranium production
Simpson said there were about 70- sector has taken a step back since the at the Lance ISR project in Wyoming,
odd nuclear power stations currently in devastating Fukushima incident five US, last year, while it also owns 74% of
construction outside of the industrialised years ago. the earlier stage Karoo project in South
world, the majority being in China, India, Africa.
Russia and the Middle East. A further Post Fukushima, nuclear reactors in
160 were in the planning stages. Japan were shut down, causing a pro- – Mark Andrews
longed oversupply situation in uranium.
“I believe this number is on the low
side,” Simpson said. Simpson believes uranium demand will
pick up and a return to better pricing is
Reducing carbon from the power gen- on the way.
eration source by adding nuclear power
to the energy mix will be one of the driv-

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 75

INDABA REVIEW

Mineral sands
flavour to return:

Strandline

Strandline Resources released a scoping study for its Fungoni project in Tanzania last month

Asmall taste of the mineral sands quality Strandline Resources Ltd Capital costs have been estimated at
has on Tanzania’s coast was revealed last month. $12.3 million which would be paid back
in two years considering average annual

revenue of $15.3 million, operating costs

A scoping study on Fungoni – a small producing 20,000 tpa of non-magnetic of $8.1 million a year and annual free

high-grade, zircon-rich deposit, near Dar concentrate @ 60% zircon and 10% ru- cash flow of $7.2 million.

Es Salaam – was released to market a tile plus 25,000 tpa of chloride ilmenite @ Strandline managing director Tom
week after a site visit from Paydirt.
55-60% titanium dioxide. Eadie said the company would enter the

The overall indicated DFS phase immediately.

resource at Fungoni, “The fact it is zircon-rich

with a cut-off grade of and low capital cost plus it

1%, is 11.3mt @ 3.1% will give us operating expe-

heavy minerals (HM). rience in Tanzania and mar-

However, mineral keting experience [in min-

sands expert TZMI eral sands] is great for the

bumped the cut-off company,” Eadie said.

grade to 2.8% and based “Another key to it is that

the study on an indicated we can potentially use a to-

resource of 2.4mt con- tally transportable process-

taining 8.3% (HM), with ing plant designed by Sedg-

the endowment of zircon man. They actually have

being 22%, rutile (4%) built one and are building

and ilmenite (44%). one for the US, so using that

TZMI ran the study in same design they can build

conjunction with Sedg- one for us quite quickly and

man Ltd, setting param- cheaply.”

eters for a fully trans- Unlike some African

portable processing mining assets stranded
Strandline receives strong local community support in Tanzania by a lack of infrastructure,
plant initially capable of

PAGE 76 MARCH 2016 AUSTRALIA’S PAYDIRT

“Our main focus is finding big
world-class mineral sands deposits
somewhere between north and central
Tanzania, around Taijiri and Madimba too.

Fungoni, and many of Strandline’s as- With a good climate and plenty of arable land, Tanzania is looking to
sets covering 3,500sq km of Tanzania’s boost its agriculture sector
coastline, are close to existing infrastruc-
ture such as roads and ports. Geologist Fanuel Festo says Fungoni is the pick of the projects
for Strandline at the moment
For example, Fungoni can be easily
accessed within an hour from Dar Es Sa- AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 77
laam, with bitumen roads running most
the way and with a port nearby.

Such factors will assist Strandline’s
endeavours to become a mineral sands
powerhouse in the next few years.

Fungoni is the starter project for the
market to mull over, however, it is not the
end game, as clearly stated by Eadie.

“Our main focus is finding big world-
class mineral sands deposits some-
where between north and central Tanza-
nia, around Taijiri and Madimba too,” he
said.

“We can make money from these small
high-grade deposits; Fungoni is the first
we have found and along the way we
may find deposits where we can shift the
plant to, such as if we found something
at Mafia Island but our focus remains big,
high-grade world-class deposits.”

Fungoni is likely to be a three or four
year mining proposition which offers
Strandline entry into production and cash

INDABA REVIEW

“ The wet season can cause some access problems in Tanzania
However, mineral sands isn’t a basket case flow at a low risk.
commodity like iron ore or nickel where people “We have already moved into a DFS
don’t see much of a future. It is more like copper
which is fundamentally oversupplied right now. which we think will cost less than $1
million,” Eadie said.

Eadie and his team, which includes

a number of noticeable faces at board

level – former Iluka Resources Ltd

managing director Mike Folwell as non-

executive chairman and non-executive

directors Didier Murcia and Mark Hanlon

with Mark Alvin as consultant geologist

– are convinced Strandline can rise to

the mid-tier of mineral sands producers

at some point, however, like many juniors

right now, the company is suffering from

a stunted share price.

“Our share price might not look that

great until mineral sands becomes popu-

lar again,” Eadie said.

“That is a concern for us because in

the meantime we are going to have to

raise money and things like that. How-

ever, mineral sands isn’t a basket case

commodity like iron ore or nickel where

people don’t see much of a future. It is

more like copper which is fundamentally

oversupplied right now.”

Iluka’s decision to suspend mining

and concentrate production activities at

Fungoni is composed of zircon, rutile and ilmenite Jacinth-Ambrosia for a period of 18-24

PAGE 78 MARCH 2016 AUSTRALIA’S PAYDIRT

A milk and yoghurt production centre near Fungoni means there is supporting infrastructure for Strandline to leverage off

months, starting in April, will allow global five years we could be pretty major with 10.38% THM, 7.5m @ 13.16%, 7.5m @
inventory to be drawn down and hope- some big resources and production. You 16.1%, 18m @ 11.45% and 22.5m @
fully breathe some life into zircon prices. have to be patient sometimes and there 8.66% all from surface) and Madimba,
are other ways of handling this short- near Mtwara.
At peak production Jacinth-Ambrosia term lull. We have good geologists and
can produce up to 30% of global zircon a technical team who could start looking Resources from these projects are ex-
demand. for other commodities that are flavour of pected to be much larger than Fungoni
the month and our in-country expertise and therefore command higher capex re-
Eadie sees Iluka’s position on zircon would give us an advantage over other quirements, however, in terms of devel-
as a short-term issue and remains confi- companies.” opment Tanga and Mtwara appear most
dent there are no problems with the long- likely second in line to become mines.
term fundamentals for the mineral sands Strandline has started low-level project
industry. generation and exploration work in Tan- “That is only because they are the
zania on commodities such as lithium,
“Right now the industry is not expand- cobalt and tantalum.
ing like we thought it would; there is just
too much supply. It might take half a year However, before Strandline generates
or two years, but when things turnover all any excitement from those prospects, it
of a sudden we’ll be a market darling,” he hopes to get a near-term kick from the
said. market with some resource announce-
ments from Taijiri, within the Tanga pro-
“When mineral sands becomes flavour ject area, (12m @ 8.26% THM, 9m @
of the month again we will be seen as
one of the good companies. Certainly in

Port infrastructure will become more accessible once a new highway is completed Auger drilling was completed
at Fungoni in December

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 79

INDABA REVIEW

“ A cement operation is in close proximity to Fungoni
places we have drilled We’re a well regarded company with Subject to funding,
and right now we can well regarded people, so we won’t have Cummins said a lot
only focus on where we trouble raising money it is just at what price of auger drilling was
have a resource,” Eadie planned for this year
said.
and dilution which is the struggle currently. across numerous
With 3,500sq km targets.

of exploration tenure, “The benefit of

Strandline is not strapped for mineral and are getting those resource estima- mineral sands projects is you can go very

sands opportunities. tions completed in the next few months,” quickly from an auger drilling programme

Starting from Tanzania’s north, the Cummins said. straight into a resource drill out, which we

company owns Tanga North and Tan- Cummins said the company was fortu- have shown at Madimba and Tanga as

ga South, (near Base Resources Ltd’s nate to have probably the only systematic well. We have done our first pass air-core

Kwale project in Kenya), Bagamoyo, database in the country which gave it a programmes and we are resource esti-

Fungoni, Mafia Island, Kiswere, Sudi Bay massive head start in ranking and prior- mating now. As an exploration team we

and Madimba. itising its projects. are probably trying to ignore the noise in

Strandline consultant geologist the market at the moment and are

Brendan Cummins said the com- just trying to get on exploring with

pany was lucky to have a spread of the funds that we have and do it ef-

projects at different stages. ficiently at the lowest cost, like what

Cummins said it was also a plus most juniors are going through,”

to have really good geologists and Cummins said.

field technicians with big company While Cummins and his team

training in the goldfields of Mwan- take care of business on the

za. ground, Eadie has the task of keep-

“We have a full range of grass- ing the company funded in this dif-

roots type exploration projects that ficult period.

need first-class work completed. Investors are hardly warming

We have done reconnaissance to any commodities and while the

work over all of them so we know downturn has helped Strandline

what we are dealing with in terms of acquire the suite of assets at a

access and infrastructure. Then we discount, generating interest in a

have the more advanced projects mineral sands stock has been a

that we are starting to develop now A resource at Taijiri was being compiled at the time of print challenge.

PAGE 80 MARCH 2016 AUSTRALIA’S PAYDIRT

A bitumen road from Dar Es Salaam takes you most of the way to Fungoni

The company was trading at less than ence in Africa, says Tanzania is his fa- impact on the country, taking a hard

1c/share on the ASX at the time of print vourite work destination in Africa, while stance against corruption, while boosting

and Eadie is aware of the need to boost Cummins, who also has great experi- his popularity by dedicating time and re-

Strandline’s standing. ence across the continent, speaks warm- sources to social causes.

“I think we are solid in the long term ly about the Government and mining leg- A big winner last year was cancelling

as long as we survive, but in the short islation in place. Tanzania’s national day prior to Christ-

term we have to think of how we can Tanzania’s mining legislation is loosely mas and instead encouraging people to

get a bit more interest. Brokers are say- based around the Western Australian clean their towns. The money usually set

ing how are they going to get people to system and the industry is backed by the aside for national day festivities was do-

buy mineral sands stocks now, no doubt Government. nated to hospitals.

there will be some private equity come An election held last year was won by “The Government in place is very

in, but mums and dads and Joe Punter the ruling Chama Cha Mapinduzi party, good. The same party was voted in but is

won’t have a bar of us until mineral sands with John Magufuli chosen as president. now headed by Magufuli. He is focusing

becomes popular,” Eadie said. So far Magufuli has had a profound a lot on agriculture, mining is important

“We’re a well regarded to Tanzania, but I think they

company with well regarded see bigger value for the

people, so we won’t have country in agriculture. They

trouble raising money it is have so much arable land

just at what price and dilu- and good climate they just

tion which is the struggle need investment in agricul-

currently. We have lots of ture,” Cummins said.

news flow coming out and “I would say agriculture is

we will be raising money at higher on the list than min-

some point in the future.” ing, but mining would be a

Mineral sands prices may close second. The footprint

be concerning to investors, of mining is so small that

however, those prepared to there won’t be any clash

back Strandline can do so between mining and agri-

knowing that the company culture.”

is in a mining friendly juris- – Mark Andrews
diction.

Eadie, a mining industry
stalwart with vast experi- Strandline will look to do more auger drilling across its portfolio this year

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 81

INDABA REVIEW

Growth the option
for IchorCoal

The Usutu Colliery was placed on care-and-maintenance in 1991

Coal prices have flunked for sometime but that has done little to would also have complimented a deal
stop South African thermal coal producer IchorCoal N.V. from IchorCoal completed with another ASX-
seeking expansion in the sector. listed entity, Continental Coal plc.

Last year, the company made an $80 to 10 mtpa by 2017 and eventually 15-20 In June 2015, IchorCoal bought Con-
million bid for ASX-listed Universal Coal mtpa in the longer-term and the addition tinental Coal’s Penumbra and Vlakvark-
plc which was trumped by Coal of Africa of Universal’s assets would have deliv- fontein mines for R128 million, which
Ltd. ered 2bt of coal resources to IchorCoal, came with a rail siding and export alloca-
including the operating Kangala mine tion of 18,000 tpa at Richards Bay Coal
IchorCoal, a 29.99% shareholder in and the New Clydesdale Colliery. Terminal (RBCT).
Universal, aspires to increase production
Signing off the Universal acquisition IchorCoal’s willingness to participate in
M&A is driven by a supply gap of 60 mtpa
in the South African coal sector.

Vunene mine overseer Ben Maslela Production from the underground will ramp up to 1.6 mtpa
showed Paydirt through the
underground mine

PAGE 82 MARCH 2016 AUSTRALIA’S PAYDIRT

South African power provider Eskom is The first underground blast in 25 years at Usutu occurred in February
completing two new power stations and
with the possibility of a third being built, “From my perspective, the demand
IchorCoal’s strategy to grow its business scenario here continues to be good for
appears justified. thermal coal producers and I don’t see
that we will be stranded with coal only
“The whole business case for Ichor- suitable for Eskom.
Coal was predicated on Eskom continu-
ing to prioritise coal electricity generation “On the supply side, the majors are
which seems to still be the case,” Ichor- still reluctant to invest heavily in South
Coal chief executive Nonkululeko Nyem- Africa’s mining space, including coal,
bezi-Heita told Paydirt. so I don’t see SA thermal coal being in
the net over-supply position that you see
globally. Supply here seems to be good,

Open pit reserves are expected to last at least two years Eskom will initially be targeted as
Vunene’s main customer

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 83

INDABA REVIEW

Eskom’s Camden power station is 6km from Usutu

so generally SA producers seem to be tomer, the quality of coal in IchorCoal’s plans to manipulate shorter-term con-
able to navigate the downturn in reason- portfolio is also fit for export. tracts above traditionally longer ones,
able fashion.” which have provided the industry with
Delivering more coal into the export some stability.
The market is promising on the domes- market will be important in the future,
tic front, and while Eskom is a key cus- particularly if Eskom goes ahead with Pending the outcome of Eskom’s plans,
IchorCoal is comfortable with adapting to
IchorCoal N.V. chief executive Nonku- Nonkululeko Nyembezi-Heita any change in environment and will con-
luleko Nyembezi-Heita says the mining tinue with its M&A policy.
industry is no longer dominated by men “If you are looking at the other risks
as it once was. prevalent in the mining industry at the And Nyembezi-Heita is confident there
moment you are talking about regulatory, will be opportunities for IchorCoal.
“There is still a belief that mining is a reputational risks, decisions that man-
very male dominated industry, but it’s agement make, dealing with corruption, Nyembezi-Heita said many junior coal
not,” Nyembezi-Heita said at a Women dealing with communities, social licence mining companies in RSA started opera-
In Mining panel discussion at Mining In- to operate; those are all things that actu- tions just before or after the GFC on the
daba. ally lent themselves to affecting change,” back of more positive outlook for coal
she said. than currently being experienced.
Prior to being appointed IchorCoal
chief executive, Nyembezi-Heita was “These are all areas that can make it “There were a lot of mines developed
chief executive at ArcelorMittal South Af- quite easy to bring in people that might for the export market when export prices
rica and chief corporate strategy officer not enjoy going down 1km from the sur- were $US90-100/t and even when prices
at Vodacom Group in SA. face of the earth to work, because let’s were coming down, we thought the mini-
be honest there is an element of the min- mum was going to be $US70/t, but with
Nyembezi-Heita is also independent ing industry that women don’t enjoy, will the price at $US50/t we do expect a lot
non-executive chairman of the Johan- never enjoy and should not be forced to more distress on the junior mining front,”
nesburg Stock Exchange, where women be selected just because we want to fill Nyembezi-Heita said.
occupy half of the 14 board positions. quotas.”
“We are also seeing the majors want-
“At the JSE at the top level, there is a ing to retire their operations on the back
high number of women running the or- of commodity prices, so I think there are
ganisation,” she said. going to be a lot more assets coming to
the market that we can price for today.
“To confront new challenges you need I don’t think we will be short of potential
greater diversity to meet those chal- acquisitions to target and we can rework
lenges. You are doing a disservice by the numbers to reflect the reality today.”
limiting the pool from which you pull a
workforce,” Nyembezi-Heita said about A weak rand to the US and Austral-
looking at diversity of race, gender and ian dollar, means RSA coal companies
skills across all areas of a business. reporting in rand earnings are on Ichor-
Coal’s radar.
While an advocate for more women to
become involved in the mining sector, While the net is being cast over local
Nyembezi-Heita said companies need- players, rejuvenation of the historic Usu-
ed to constantly adapt to different envi- tu Colliery, 200km south-east of Johan-
ronments in the sector and companies nesburg in the Ermelo region, was near-
shouldn’t have to compromise their busi- ing completion at the time of print.
nesses based on efforts to fill quotas.
Usutu, run by Vunene Mining of which

PAGE 84 MARCH 2016 AUSTRALIA’S PAYDIRT

IchorCoal is a 74% owner, was last in The quality of coal from Usutu is good enough for the export market
operation 25 years ago. At its peak in the
1970s and 80s, Usutu produced 450,000 Usutu was once South Africa’s largest single-mine coal producer
tpm coal; RSA’s largest single producing
coal mine. Usutu is 200km south-east of Johannesburg
AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 85
The first underground mine blast
since the nearby Camden power station
was mothballed by Eskom in 1991 was
achieved in February. The colliery was
placed on care-and-maintenance for
some time, with Vunene managing the
programme for a number of years.

With Camden recommissioned,
Vunene will seek Eskom as a customer
for its Usutu coal. Open cast production
starts this month and will be followed
with underground production once open
pit reserves are depleted in about two
years.

Vunene will look to hit an underground
production rate of 1.6 mtpa, with reserves
of 36mt at Usutu likely to last 20 years.

While negotiations remain ongoing,
Eskom has first right of refusal for off-
take of underground production.

“In the first instance we will be looking
for Eskom to take the bulk of it. That said,
we just bought Penumbra across the
road, plus Vunene has coal qualities that
are good to export. We exported 40% of
our output in 2014 and we will be looking
quite anxiously at the export market in
the hope that we see a recovery,” Nyem-
bezi-Heita said.

Nyembezi-Heita isn’t hedging any bets
on an immediate coal price recovery, but
is hopeful light will return to the sector in
the latter part of 2017 and into 2018.

“I don’t think there is any one driver that
can identify the environment that is going
to drive the seaborne coal market up. I
suspect as well as a cyclical downturn
that we are seeing we are also seeing
a structural shift. Even when the cycle
turns, structurally coal will be in a differ-
ent place in the future than it is today. I
will be very cautious calling a recovery
any time soon, so it could push out to
2018 quite easily,” she said.

How China responds from this down-
turn with its industrial output and how
India handles its internal supply/demand
dynamic are two of the factors expected
to impact coal prices.

Furthermore, Nyembezi-Heita believes
the world is finally taking climate change
and radiation issues seriously which will
force structural changes in the sector.

“Until such time that the coal sector
does come up with technology that ad-
dresses those concerns, you are not go-
ing to see very much build in our sector. I
think what you will see before a recovery
in the coal price is a technological break-
through on cleaner coal,” she said.

– Mark Andrews

REGIONAL ROUNDUP

Chile’s small copper miners
battling to stay afloat

Like his father before him, Alberto Carr- mining outpost of Inca de Oro, may be unlikely panacea in terms of absorbing
izo has worked in Chile’s copper mines short-lived. the lost jobs from copper.
since he was a teenager, supporting his
family as prices for the metal boomed in “I’ve still got the strength to keep work- Although the sector has shrunk signifi-
recent decades. ing another 10 or 15 years [but] things cantly since the height of the boom, as
are complicated ... I’m going to look for many as 27,000 people still work in small
But as copper prices have slid to a a gold mine because prices are better,” or medium scale copper mining compa-
more than six-year low, Carrizo and his Carrizo said. nies in Chile.
colleagues labouring away at the count-
less smaller mines that pock mark the Like their larger peers, small- and Between them, they are producing
Atacama desert are finding the buckets medium-sized mining companies are some 390,000 tpa of copper, about 7%
of ore they spend all day digging from the coping with the copper price drop by cut- of Chile’s total.
ground are fetching less and less money. ting jobs, reducing salaries and heaping
more work onto fewer labourers. “There are five or six (medium scale)
Some are responding by turning to mines that if we don’t do something in
gold mining, others are finding work in With leathery hands, miners at small- terms of supporting production, their op-
growing industries like renewable ener- scale operations across the Atacama erational continuity is in danger ... that’s
gy, while a dwindling few are hanging on, are painstakingly picking out rocks that about 50,000t of copper,” Alberto Salas,
hoping prices will yet recover. contain higher grade ore. When China’s head of mining industry association Son-
economy was still growing in double ami, said.
They are at the sharp end of a com- digits, or near there, it could hardly buy
modities downturn that was triggered by copper fast enough to manufacture wir- Right now, only government aid stands
slowing growth in China and which has ing, cables and plumbing materials for its between many small and medium mines
led half of all the small mining operations construction boom. The metal sold for a and failure. State-backed loans, subsi-
in top copper exporter Chile to shut in the giddy $US4/lb or more – around double dies for essential ingredients such as
last eight years. today’s price – and miners would load sulphuric acid, and courses to help min-
trucks with as much material as possible. ers improve technical skills are among
Although 93% of the country’s out- key measures.
put comes from larger mines, a sharper But now some are turning to gold,
drop in copper prices could send more whose safe-haven status has driven up “Small-scale mining is a constant con-
small and medium-sized mines over the prices for the precious metal nearly 15% cern, which is why we’ve run relevant
edge. Small mines generally employ up so far in 2016. initiatives that increase productivity and
to 80 workers but are often much smaller, strengthen the sector,” Mining Minister
while medium-sized ones have a maxi- “A lot of miners are moving to gold from Aurora Williams told Reuters.
mum of 400. copper because with the current level of
the dollar it’s very profitable,” Reinaldo Under the most important of those initi-
The mass closing of mines represents Leiva, the top government mining author- atives, state-run mining company Enami
a potential social and political disaster ity in the Atacama region, said. purchases copper from such miners at
for Michelle Bachelet, who has staked a subsidised rate. Last year Chile spent
her centre-left presidency on improving “For the miner who has been working some $US22 million, and once prices re-
social equality while keeping the coun- in mining for generations, it’s very diffi- cover the loans must be paid back with
try’s famously successful economy tick- cult to switch to another activity because interest.
ing along. Copper makes up half of all of it’s all he knows how to do,” Leiva said.
Chile’s exports. But if copper prices fall further, industry
Reuters spoke to a dozen miners who insiders say such measures will not be
Mines of all sizes shed some 23,000 had recently made the switch to gold, or enough. The Government has set aside
jobs last year alone, around 10% of posi- were looking to do so. some $US20 million through June for the
tions in the sector, making it by far the loans and is currently paying miners up
biggest loser in Chile’s economy, accord- Grey-haired Nolberto Barrera has to $US2.43/lb for their copper, some 40c
ing to data from the Government’s INE been working in Chile’s mines for half a more than average spot prices, and has
statistics agency. century, after getting his start while still said that will not increase at least until
in school at the age of 12. midyear. But costs for small-scale pro-
Carrizo, 59, was one of 100 workers ducers average around $US2.50/lb.
laid off from a medium-sized operation “I was working at a copper mine but
last year. since prices have dropped I’m going to For Bernardo Carrizo, Alberto Carr-
dedicate myself to gold. It’s the only way izo’s younger brother and a union head
Like many other miners who were let to make a little bit of money,” Barrera for small-scale miners, the Government
go by larger operations, Carrizo has said. He even tried his hand at working at aid is crucial.
since turned to small-scale mining and a local vineyard before returning to what
now spends his days 305m underground, he knows best. “We still haven’t stopped but we’re
chipping away at the copper-rich bowels swimming upstream,” he said. “And
of a mountain he first visited while his fa- However, Chilean gold production is what’s coming doesn’t look good be-
ther worked there in 1969. tiny compared with its copper industry, cause the trend (for copper prices) is
accounting for just 1.3% of global output lower.”
But his stint at the Rodesia mine, which in 2015. It employed around 6,000 peo-
overlooks the dusty streets of the tiny ple in 2013, the last year for which reli- – Anthony Esposito, Reuters
able data is available. That makes it an

PAGE 86 MARCH 2016 AUSTRALIA’S PAYDIRT

LATIN AMERICA

Crusader explores
lithium potential

Crusader Resources Ltd re- piece of work on Juruena will be to
mains focused on developing
the Juruena gold project in Brazil drill out the first year of production
despite signing a MoU to explore
opportunities in the booming lithium to indicated or better status, allow-
sector elsewhere in the country.
ing us to publish some forecasts
Increased investor interest in
lithium tempted the company to re- on what we think the project will
assess the potential of its Magna
prospect in Goiás State, Central return,” Stephen said.
Brazil. Previous exploration work in
2007 only tested for tin, indium and “Juruena displays two under-
gold, and returned modest results.
ground opportunities, both of
However, a recent review of the
previous rock-chip programme which have good mineable widths
confirmed grades of up to 1.3%
lithium oxide within a zinnwaldite- and good continuity, meaning we
rich greisen zone, proximal to the
anomalous tin and indium-bearing should be able to minimise the
greisen.
mining dilution and hold on to a
Crusader signed a MoU early last
month to establish a strategic JV with reasonable head grade. We’ve
exploration and mineral processing tech-
nology company Lepidico Ltd to pursue stated from day one that are our
a range of lithium opportunities in Brazil,
starting with Magna. target was to have a deposit great-

The agreement gives the JV exclusive er than 10 g/t.”
rights to use of Lepidico’s patented L-
Max technology in Brazil for the recovery Applications for trial mining li-
of the alkali metal from lithium-bearing
micas, including lepidolite, zinnwaldite Crusader has signed a MoU to explore development cences for Juruena were lodged
and polilithionite.
opportunities for its Magna lithium prospect in Brazil late last year. Crusader has
Crusader executive director Paul Ste-
phen said Magna was shaping as a de- flagged a similar development
posit his company could exploit, but he
acknowledged another party was re- Brazil’s 2014 output of 4,000t accounted pathway for the project to the one which
quired to help make that happen.
for 1% of global production. helped it put the Posse iron ore mine into
“Our expertise is in gold and iron ore
so rather than try and reinvent the wheel, Brazil’s Government recently passed production in March 2013.
we’ve looked to put the project in with
a team that is able to operate in that legislation that zeroed importation taxes “I can’t over-emphasise the benefit of
space,” Stephen told Paydirt.
for electric cars and some hybrid vehi- the experience we’ve gained by putting
“Our driver has always been to gen-
erate value for shareholders and we cles, of which lithium-ion batteries are a Posse into production,” Stephen said.
think we’ve got a project in Magna that
is worth commercialising, so we’ll look to key component. “Brazil is a fantastic environment for
do something with it.”
Stephen expects Brazil’s lithium pro- mining, but it is a bureaucratic system
Brazil is the world’s eighth largest lithi-
um producer despite no company specif- duction levels to rise rapidly over coming and there’s a long history of newcom-
ically searching for lithium in the country.
Most lithium is produced as a by-product years as more explorers specifically test ers having trouble dealing with the pro-
of tin, tungsten or tantalum mining opera-
tions. for the metal and a series of lithium-relat- cesses required to maintain and apply for

Australia (13,000 tpa) and Chile ed developments come online. licences.
(12,900t) head the list of top lithium pro-
ducers, while China (5,000 tpa) and Ar- “We’re not experts in the lithium space, “We’re not in a situation of having to
gentina (2,900 tpa) are other key players.
but we know if there’s one thing you need go to external consultants and rely upon

to make a lithium-ion battery, it’s lithium,” someone else to guide us through the

Stephen said. process because we can do all that in-

“The economics of lithium are chang- ternally. Our experience is our biggest

ing on a daily basis and there’s some re- asset.”

ally interesting things happening in that Crusader has also opened discussions

space in Brazil, not least of which is what with potential funding partners for a debt

Warren Buffett is doing in conjunction facility to develop Juruena, with a final

with a Chinese automaker, Build Your firm agreement likely to come after the

Dreams, which is looking to build a lith- release of the scoping study and a new

ium mega-factory in Sao Paolo.” resource statement during the second

Crusader’s venture into lithium has not quarter.

distracted the company from advancing “It’s got good economics and if the

Juruena as planned and a scoping study numbers stack up, the funding will be

on the promising gold project is due in there,” Stephen said.

the coming months. “At the end of the day, good projects

Drilling at the Dona Maria/Crentes always manage to find funding and this

(196,300t @ 11.8 g/t gold for 74,700oz) is an exceptionally good project, so our

and Querosene (263,500t @ 12.3 g/t confidence in being able to fund it is

gold for 104,100oz) deposits is under driven by the fact we think it’s a great

way in a bid to increase the resource project.”

confidence level. – Michael Washbourne
“We’ve based the current scoping

study on inferred resources and our next

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 87

REGIONAL ROUNDUP LATIN AMERICA

Antas ahead of schedule

Avanco Resources Ltd is contracts through to the
rapidly approaching the end of 2018.

commissioning phase at its Antas is tipped to be-

Antas copper mine in Brazil. come one of the lowest-

As Paydirt went to print, cost copper producers

first ore was flowing through in Brazil, with minegate

the ball mill and the com- and C1 cash costs of

pany was preparing to test $US0.48/lb and $US0.99/

each individual phase of lb respectively to fall with-

the new processing facility, in the first quartile.

including the cyclone and “We are a very low-cost

flotation circuits. producer because of the

Construction works also high-grade nature of the

wrapped up early last month orebody, which means

and the major contractor we’re in a good position to

was demobilising from site weather out the bottom of

at the time of print. Commissioning of the new processing plant will start this month this market and we should

Avanco managing direc- be well-placed to rise with

tor Tony Polglase said the mine devel- with an enviable cash position of $43.5 it, as and when that comes,” Polglase

opment at Antas was progressing “well million, plus a $US4 million drawdown said.

ahead of schedule”. facility from key shareholder BlackRock “The interesting thing is the orebody

“Obviously things can still go wrong, World Mining Trust. actually improves in grade as it goes

but it all looks very encouraging at the “We’ve always been very conservative deeper, so we have a great opportu-

moment,” Polglase said. in the way we’ve approached our busi- nity to establish ourselves in the copper

“We’ve established the first stage of ness as far as the market goes,” Polglase space and that puts us in an extremely

the open pit and we’ve also established said. good position for the coming years.

the second phase of the open pit. We’re “From the engineering side of things, “We’re looking at a potential head

in very good shape. we’ve over-engineered and I think it grade going into the plant in excess of 2%

“We’re well established on the mine would be fair to say we’ve built a healthy copper and about 0.5 g/t gold. We’ve got

site, we’re operating well…there’s a sig- contingency into our capital estimates. grade control over the deposit and where

nificant stock of ore on the ROM pad, so “We’ve been really lucky the Brazilian we’ve drilled it’s basically demonstrated

the mine is advancing a lot quicker than real has weakened considerably since that the resource and reserve numbers

what we expected. we did our initial costings. are holding together really well.”

“We told the market we would start “Above and beyond that, we’ve raised Avanco is upbeat about the near-mine

commissioning at the end of the quar- all our finance through equity, which opportunities around Antas, including

ter, but I would say we’re well ahead of means we don’t have the banks lean- Pedra Branca. The company is looking

schedule.” ing on us at the moment and we’re not to complete a scoping study for the un-

More than 11,000t of ore grading scared about interest rates going up derground project in the coming months.

2.55% copper has been extracted and because we’re debt-free and covenant- Recent diamond drilling results con-

delivered to the ROM pad since first free.” firmed the high-grade nature of the Pedra

earthworks began last October. Avanco is also on the verge of award- Branca orebody, including hits of 24.6m

The processing facility was also ener- ing concentrate off-take contracts fol- @ 1.15% copper and 0.35 g/t gold from

gised via a 10km grid power line during lowing a competitive bidding process. 138.4m (including 7m @ 2.07% copper

the last quarter. Three groups were shortlisted in late and 0.66 g/t gold from 152m) and 24.7m

Antas is expected to produce about December for closing negotiations and @ 1.93% copper and 0.41 g/t gold from

12,000 tpa of copper in concentrate, plus the company plans to award two off-take 275.3m (including 9.7m @ 3.1% copper

about 7,000 ozpa of gold and 0.66 g/t gold from

credits, later this year 275.3m).

before ramping up pro- Further drilling is

duction to 15,000 tpa by planned for Pedra Branca

2018. East in the next quarter to

Development of the increase the confidence

Pedra Branca under- level of the resource to

ground project could lift indicated status and facili-

production at Antas to tate the design of the pro-

50,000 tpa within five posed box-cut.

years, pending study re- – Michael Washbourne
sults.

Avanco has the luxury

of being fully funded into
the start of production, More than 11,000t has been extracted from the Antas open pit since October

PAGE 88 MARCH 2016 AUSTRALIA’S PAYDIRT

LATIN

AMERICA

17-18 May 2016, Perth

EARLY BIRD
RATE

$AAV9A9I0L.A00BLINE CU.NGTSITL
18 MARCH
2016

Keynote Presenters to date:

HE Mr. Javier Córdova Unda, Minister of Mines, Republic of Ecuador
HE Mr. Richard Lozada, Vice Minister for Mining, Republic of Venezuela

Santiago Angel Urdinola, President, Colombian Mining Association
Ms. Silvana Habib-Daza, President, National Mining Agency of Colombia
Hon. Bill Marmion, Minister for Finance; Mines and Petroleum, Western Australia
Hon. Josh Frydenberg, Minister for Resources, Energy and Northern Australia, Government of Australia

(via video message)

Conference sponsors &
supporters to date:

www.latinamericadownunder.com

To present, exhibit or attend as a delegate please contact
Melita Fogarty on (+61) 8 9321 0355 or email [email protected]

REGIONAL ROUNDUP

Highfield hatches Muga
masterplan

Highfield Resources Ltd “We are really fortunate from
managing director Anthony
Hall expects to have finalised that perspective and I also think
the development plans for his
company’s Muga potash pro- we’re very fortunate in that
ject in Spain by the end of the
first half. there probably isn’t another pro-

Early construction works ject as strategically valuable as
have begun at Muga – recently
confirmed as the world’s high- our project, in any commodity
est-margin potash project – as
the company awaits receipt of either, given the nature of the
an environmental permit and
mining licence over the coming potash industry and how that
months.
plays into the global fertiliser
Highfield has received credit
approval from three of the four industry.”
banks in the proposed project
finance syndicate. The fourth Hall credited his company’s
lender was set to confirm its
participation at the time of print. success to a genuine belief in-

“What that means is we now vestors still want to tip money
have €166.5 million available to
us and we expect to receive the into resources projects because
final bank’s approval before the end of
February,” Hall told Paydirt. they typically generate the best

“It means we will have been able to se- returns when the economy im-
cure basically €222 million in what is a
super-difficult market to finance projects. proves.

“The positive thing for us is there hasn’t “We’re able to finance a mine
been a lot of financing that the European
banks have done in recent times, given at 55% debt-to-equity levels
where commodity prices are. It definitely
helped to have a project that is so robust, in what is a very complicated
because obviously they have been look-
ing for work.” market because we’ve got enor-

A recent optimisation study on Muga Highfield’s Muga project in Spain will have easy access mously strategically valuable
flagged a revised pre-production capex to all of the key potash markets assets and we’ve got multiple
of €267 million, up from the €249.5 mil- projects at our disposal,” Hall
lion estimated in the earlier DFS. How-
ever, the project NPV increased from sales ratio of 75:25 into Europe and the said.
$US1.42 billion to $US1.46 billion at an
8% discount rate and from $US1.8 billion US respectively. “I think people are genuinely looking
to $US2.04 billion at a 10% discount rate.
“We’ve been arguing for a long time for the next ‘star’, if you like, when the
Muga’s mine life also lifted from 24
years to 47 years, based on a production that potash is very different to commodi- markets return and I guess we’re sort of
rate of 108 mtpa of K60 granular muriate
of potash (MoP). ties like iron ore and people have always fortunate that people out there are con-

An independent report by Argus FMB been very focused on the cost curve as sidering us in that light.”
recently found Muga was set to become
the world’s highest-margin and lowest- opposed to the margin curve, so it was With financing arrangements to play
cost potash operation in the target mar-
kets of Europe, Brazil and the US. great to have Argus come out and basi- out in the background, Highfield’s prima-

The report, commissioned by High- cally confirm our Muga mine will have the ry focus over the next six months will be
field’s project finance banking syndicate,
was based on average potash prices for highest margins of any global producer, to take Muga into the construction phase.
the 2015 calendar year and assumed a
and that’s really exciting,” Hall said. Late last year the company entered into

“When you’ve got roughly 75% of the a collaboration agreement with experi-

market that’s either producing in the mid- enced Spanish construction firm Acciona

dle of Canada or the middle of Russia Infraestructuras.

or Belarus, you would expect us to have Fifty people have been employed to

that sort of an advantage, given how im- work exclusively on construction, while

portant the logistics are into the markets another five people are working sepa-

that we’re targeting.” rately on a strategy to produce sulphate

Not only is Highfield setting a bench- of potash (SoP) once Muga is up and

mark for the rest of the world’s potash running.

hopefuls, but also other junior resources “Producing MoP basically enables you

companies, at a time when sentiment to move into that SoP market,” Hall said.

towards the mining sector is at depress- “Based on some of the high-level work

ingly low levels. we’ve done so far, we actually think we’re

The company has been one of the going to have an unbelievably compelling

strongest performers on the ASX in re- SoP proposition once we’ve got our MoP

cent times, reaching a 12-month high of project into production.

$2.08/share last May and trading consist- “SoP is an interesting market that

ently above $1.75/share since January. would be fantastic for us to diversify into

“We challenge people to find a better once we are a MoP producer, but it’s very

undeveloped project, in any commodity, difficult to move into SoP unless you con-

and I just don’t think there is one,” Hall trol the MoP stream.”

said. – Michael Washbourne

PAGE 90 MARCH 2016 AUSTRALIA’S PAYDIRT

EUROPE

History is Variscan’s future

Zinc explorer Variscan Mines Ltd could Variscan flew the very first VTEM
announce a maiden resource for the survey over France last year
Porte-aux-Moines deposit in France be-
fore the end of the month. There are currently no active

Variscan has spent the past six months mines in France, but Variscan
digitising historical drill results from Por-
te-aux-Moines after gaining access to a is widely acknowledged as the A maiden resource for the Porte-aux-Moines
historical two-gigabyte dataset from the
French geological survey, BRGM. leading resources explorer in the deposit is imminent

Assays from the historical drill core country and Jones believes his
have confirmed the potential of the high-
grade, zinc-rich VMS deposit, strength- company is capable of taking the project cash, plus about $2 million of liquid in-
ening the company’s belief an economic
discovery could be made within its Mer- through the development stages. vestments.
léac project licence.
“It’s not dissimilar to what we see al- “We are relatively well positioned, al-
Variscan has received assays for 56 of
the 58 holes, reporting a number of inter- most everywhere else in the world, in beit if we do move into large drilling pro-
sections greater than 15% zinc equiva-
lent and some individual intervals up to terms of the environmental studies, the grammes we will need further assistance
50.3% zinc equivalent.
community relationships, and the ap- because drilling is an expensive exer-
Some of the best intersections were
27m @ 14% zinc, 3.3% lead, 0.8% cop- proval process will probably be very cise,” Jones said.
per, 161.4 g/t silver and 0.8 g/t gold from
143.5m (26% zinc equivalent), 12.5m @ similar to what we see in parts of Austral- Jones was upbeat about the prospects
11.3% zinc, 2.7% lead, 2.5% copper, 157
g/t silver from 49m (24.2% zinc equiva- ia, like New South Wales for instance,” for zinc over the next few years, citing the
lent) and 8.5m @ 14.5% zinc, 3.4% lead,
1.6% copper, 144.2 g/t silver from 99.5m Jones said. recent closures of Lisheen, Century and
(27.2% zinc equivalent).
“The mining industry has basically some of Glencore’s mines as a catalyst
Variscan managing director Greg
Jones said the assaying was continu- been on hold since the mid-1980s. The for a likely supply-demand imbalance.
ing but the results so far had confirmed
the high-quality work completed by the last mineral mine closed in France in Zinc has enjoyed a positive start to
BRGM more than 35 years ago.
the early 2000s, but the French Govern- 2016, trending up from about $US1,450/t
“Our aim is to complete that work and
to have an independent JORC resource ment’s been very clear in its desire to in mid-January to just below $US1,700/t
completed towards the end of this quar-
ter,” Jones told Paydirt. reactivate the mineral industry and has at the time of print.

“To confirm a JORC-compliant re- been very supportive. “We follow a number of the metals and
source is a huge step for the company.
It allows us to confirm the asset we’re “We think from a government point of some are obviously worse than others,
dealing with and then we can start talking
about the next steps such as drilling, in- view it’s very positive and such as the supply glut for
creasing tonnages and taking it through
to a possible scoping study over the next from a prospectivity point of iron, but in some of the met-
12-18 months.
view it’s very good as well. als – and zinc is one of them
“It’s very high grade, so the likelihood
of it being of economic quality is high, but It’s something we will get to – there’s been a complete
it requires tonnes so the next step for us
is to define that, and that’s certainly part test over the next few years lack of exploration focus and
of our exploration programme.”
if we can manage to find success over the last decade
Variscan expects to be just as busy
over the next six months converting the enough tonnes at Porte-aux- and at some point that will
remaining historical data as well as gen-
erating a 3D model of the mineralisation Moines, but we don’t see any start to bite,” Jones said.
at Porte-aux-Moines.
major hurdles.” “Supply-demand funda-
Following up a number of high-priority
VMS targets identified during last year’s Variscan confirmed its mentals must take over at
VTEM survey – the first-ever undertaken
in France – is also high on the company’s faith in France’s mining fu- Greg Jones some point. Zinc is one of
agenda for 2016. ture late last year when it those metals that you can’t

picked up three further ex- replace, there’s no other re-

ploration licences, mostly prospective for placement product. We feel this may be

specialty metals tin and tungsten. the start of a return to a little bit of nor-

The Sydney-based junior also raised mality to the zinc market, so we’re very

$1.6 million via a placement and sepa- positive about the future of zinc.”

rate share purchase plan in November – Michael Washbourne
and finished last year with $1.39 million

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 91

REGIONAL ROUNDUP

Iran offers mining riches

Iran’s rich deposits of zinc, copper, and time consuming. Foreign energy
gold and other minerals are tempting
international investors after the lifting executives hoping to invest in oil and
of Western sanctions, but develop-
ment of the sector will take time and gas fields there complain Tehran
problems will have to be overcome.
has still not revealed contract terms,
A slump in metals prices and un-
certainty about working with the Teh- abruptly cancelling a conference due
ran Government, which controls vir-
tually all the country’s mines, means to be held last month when they had
that many foreign mining firms are not
scrambling to sign deals. expected it to do so.

Nevertheless, some agreements Although minerals development
have already been struck and other
foreign firms have been looking at may take years, Iran’s bounty and low
Iran’s mining and metals sector in
the weeks following the scrapping of energy costs will eventually build it
sanctions as part of a nuclear deal,
which came into force in January. into a substantial player in the global

Iran, which boasts one of the metals industry, analysts say.
world’s largest undeveloped zinc pro-
jects and myriad other mines, has Iran’s Mehdiabad project is one
been trying to lure investors since it
became clear that sanctions would be of the world’s largest zinc deposits,
lifted under last year’s deal signed by
Tehran and six world powers. which was previously due to be devel-

Iran’s state-owned mines and met- oped by Australia’s Union Resources,
al holding company IMIDRO told an
Australian mining conference in No- with output of 300,000 tpa.
vember that its mining sector needed
$20 billion of investment by 2025. Iran says it has 68 types of miner-

“Iran absolutely has world class mining als, including iron ore, coal, gold and
assets, which have hitherto been shroud-
ed from investors, but we’re in the depths copper with total reserves of 43bt.
of one of the darkest, worst downturns in
mining for some time,” Hannam & Part- Besides growing as a producer, the
ners chief executive Neil Passmore said.
country of 80 million people is also set
The slump in commodity prices has hit
international mining firms, forcing them to help boost global demand for met-
to sell assets, cut dividends and slash
capital spending to preserve cash, but als since it is the biggest economy to
some deals with Iran are still being done.
rejoin the global trading system since
“During the six to 12 months that it’s
looked likely sanctions would be lifted, Russia, following the breakup of the
people have been starting to do some
work and now that things have opened Soviet Union over two decades ago.
up, they’re increasing the pace,” Pass-
more added. “As they get more oil revenue,

In India, national aluminium company there’s no reason why they shouldn’t
NALCO said in January it planned to
send a team to Iran to explore setting up Mark Bristow look to diversify the economy and
a smelter worth about $US2 billion and
state-run KIOCL is considering building drive metals exports,” Robin Bhar,
an iron ore pellet complex.
A spokesman for global miner Rio Tin- head of metals research at Societe Gen-
Other companies from Italy and China
to South Korea have either signed deals to Ltd, which was previously involved in erale, said.
or are looking into possibilities. But high-
lighting the uncertainty among potential the Sara Gunay gold project in Iran, said “It plays both ways, as they’re wel-
investors, NALCO said it was also look-
ing at Oman and Qatar as possible sites there was no work being done by their comed back into the international fold,
for its aluminium smelter.
exploration team regarding the country. hopefully they’ll also contribute to the de-

Chief executive Mark Bristow of Rand- mand side of the ledger, as they’ve got a

gold Resources Ltd, which has experi- young and rising population.”

ence of mining in risky areas of Africa, – Eric Onstad, Reuters
told Reuters the firm was not interested

in Iran.

Dealing with Iran, which is beset by

political infighting between pragmatic

and hardline factions, can be complex

Iran’s mineral wealth

Iron ore: 34mt iron ore produced in 2014 and has 2.7bt of reserves. The Gol Gohar and
the Chadormalu mines account for the bulk of output
Steel: 14.9mt crude steel produced in 2014 with aims to increase to 52mt by 2025
Gold: 8.04 moz reserves. In 2014, Iran launched the Zarshuran plant, which it billed as
the biggest gold processing operation in the Middle East
Copper: 194,000t cathode copper produced in 2014 with aims to boost that to 800,000t
by 2025. It has 2.6bt of reserves. One of the major mines is the Sarcheshmeh complex
in the south-east Kerman province.
Zinc: 11mt of reserves. The Mehdiabad project, with one of the world’s biggest zinc
deposits, has been under consideration since the 1990s.

– Based on data from IMIDRO

PAGE 92 MARCH 2016 AUSTRALIA’S PAYDIRT

ASIA

Focused Finders ramps up

Finders Resources Ltd is on the HSBC and Societe Generale
verge of ramping up to full pro- – for a $US162 million project

duction at its Wetar copper project finance facility. Daewoo also in-

in Indonesia. vested $US45 million to acquire

Commissioning of the new 24.1% interest in the project.

25,000 tpa SXEW plant is expect- The senior lenders fund-

ed to start before the end of the ing package is comprised of a

month, with full copper cathode $US127 million term loan facil-

production to follow sometime dur- ity, a $US20 million cost overrun

ing the next quarter. facility and a $US15 million VAT

The new facility will operate working capital facility. Find-

alongside the existing 3,000 tpa ers also has a hedge book for

SXEW demonstration plant the copper and diesel fuel valued at

company has been running for the $44.1 million.

past 18 months, lifting Wetar’s pro- Once in full production, the

duction to 28,000 tpa. company expects its operating

Finders is the only pure copper Finders is the only pure copper cathode producer in Indonesia costs to drop as low as $US1.05/

cathode producer in Indonesia lb, making Wetar one of the low-

and its Wetar product is sold at a pre- The new power station is also live and est cost cathode copper operations in

mium to the LME copper price without now energising the existing plant. the Asia-Pacific region. Finders is also

any specification issues. The new SXEW The Wetar expansion project has exempt of any export tariffs because it

plant will allow the company to produce a tracked on budget, although a delay in produces a refined copper product.

99.999%, or “five nines”, copper cathode the delivery of some fabricated steel saw Cash generated from the new produc-

product. it fall slightly behind schedule. However, tion set-up will be tipped back into the

During the December quarter, Finders the Finders team were not fazed by the ground to advance several other aspects

produced 494t and sold 280t at an av- setback. of the project, including regional explora-

erage price of $US2.08/lb and grade of “The fabricated steel [delays] was tion.

1.99% copper. Products were exported unexpected, but by the same token we Based on current reserves of 8.9mt @

to countries such as Thailand, China, In- expected to have some weather delays 2.4% copper, Wetar has a forecast 10-

dia and Pakistan. around this time which really haven’t year mine life, including about 6.5 years

Finders managing director Barry Cahill arisen,” Cahill said. of steady-state production, and the pro-

said the last few months on Wetar Island “We’re basically trying to construct the ject boasts a number of near-mine tar-

had been “quite frenetic” as the project guts of this plant during the wet period gets, including the Meron prospect, 1km

entered the final stages of commission- [November to March] so we had expec- from the leach pads.

ing. tations we would have delays due to the “In this market, as we all know, cash

“We’re right at the pointy end of com- weather, but they really haven’t eventu- is king,” Cahill said. “You need cash flow

missioning, so there’s just lots and lots ated so there has sort of been a bit of an to keep advancing your projects because
of things happening,” Cahill told Paydirt. offset.”
you’re not going to be able to get it out of

“Everything has to come into Wetar by Cahill is expecting no surprises once the market.

landing craft. It’s not like in Western Aus- the 25,000 tpa plant goes live, insisting “Our focus has been to build the plant,

tralia where you can make a phone call it is “standard, proven, well-known tech- generate cash flow, pay off our debt as

and there’s an overnight truck for you to nology” used in many other SXEW plants quick as possible and then start advanc-

get a part you need. We really have to be around the world. ing the project and build a resource and

fairly well self-sufficient. Finders was able to build the new reserve base much bigger than what

“We’re basically due to commission plant after striking a deal with four banks we’ve already got. We’re pretty confident

the 25,000 tpa SXEW plant at the end – BNP Paribas, Commonwealth Bank, we can do that, based on the way these

of this quarter and then start orebodies occur.”

full production early in the next Finders is anticipating a re-

quarter. We’re very close to be- rating of the company once in

ing a 28,000 tpa copper cathode full production and Cahill hopes

producer, which makes us quite to see his company’s share price

a robust little mining company. lift well above the 12c/share it

“I don’t think we’ll blow a sigh was trading at the time of print.

of relief until the end of Q2 when Corporate research and

we’re producing properly and stockbroking firm Argonaut as-

turning over some really good signed a 23c/share target price

revenue.” for the company in a recent mar-

A new crushing circuit was ket report.

commissioned late last year and The new 25,000 tpa SXEW plant at Wetar is – Michael Washbourne
the company has been stack-

ing the heap since mid-January. expected to go live this quarter

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 93

SIGNED, SEALED AND DELIVERED

Kidman had used the services of for-
mer JV partner Blue Tiger Mining Pty
Ltd for underground works following its
acquisition of Burbanks in May 2015, but
that arrangement was terminated in De-
cember.

Late last month, Kidman acquired the
remaining 20% of Burbanks it did not al-
ready own from Blue Tiger.

Mitchell Services will conduct surface and underground drilling at Cannington BGC extends stay at
for the next three years. Picture: Courtesy of South32 Koolyanobbing

New mining contractor PYBAR takes over BGC Contracting Pty Ltd has been ex-
for Cannington mining at Burbanks tended its working relationship with Cliffs
Natural Resources Inc at the Koolyanob-
Mitchell Services Ltd has secured PYBAR Mining Services has been ap- bing iron ore project in Western Australia.
a three-year contract at South32 Ltd’s pointed mining contractor at Kidman Re-
Cannington silver-lead-zinc mine in sources Ltd’s Burbanks gold mine, near The current mining contract was due
Queensland. Coolgardie in Western Australia. to be completed next year, but has been
extended through to 2022. The five-year
The contract is for the provision of PYBAR will initially focus on develop- contract extension is valued at more than
surface and underground drilling and is ing the unmined Dahmu lode on multiple $520 million.
expected to deliver $US14 million in rev- levels, with stoping set to begin during
enue. the June quarter. Under the terms of the contract, BGC
Contracting will continue to provide the
Mitchell Services will purchase a new Development will also begin for the full range of mining services, including
underground rig to meet the require- first time along the high-grade Hadfield drilling, blasting, loading, hauling, dump-
ments of the contract, with the required and Jesson lodes on the historic 4 level, ing, crushing, screening and train load-
capital expenditure to be financed using which is the limit of all previous produc- out.
traditional long-term equipment finance tion where the average grade was 27.4
from a commercial lender. g/t gold. BGC Contracting has worked at the
project, about 400km north-east of Perth,
since April 2004, initially delivering off-
road haulage services before expanding
its involvement to include contract mining
operations in 2007.

“This has been a tough period as the
iron ore price has fallen and I believe that
by maintaining strong relationships with
Cliffs at all levels of our organisation, we
have helped them succeed at Koolyanob-
bing in what has been a difficult market
for all iron ore miners,” BGC Contracting
chief executive Greg Heylen said.

Basil Read to dig up BGC Contracting has signed a five-year extension with Cliffs Natural Resources
diamonds at Lerala at the Koolyanobbing iron ore project

Lerala Diamond Mines Ltd, the Bot-
swana subsidiary of Kimberley Dia-
monds Ltd, has awarded a contract for
open-pit mining operations to Basil Read
Botswana Pty Ltd.

Following a two-stage competitive
tender process, in which eight compa-
nies bid for the contract, Basil Read was
selected to begin open-pit mining at the
Lerala diamond mine later this month.

The key terms of the contract include
an initial five years of mining, which may
be extended further, and drilling, blast-
ing, loading and hauling of ore and waste.

The contract is valued at $47 million,
based on current exchange rates.

Basil Read was set to mobilise staff
and equipment on site late last month.

PAGE 94 MARCH 2016 AUSTRALIA’S PAYDIRT

DRA acquires marine GR Engineering has been contracted to complete the feasibility study on
engineering business Dacian Gold’s Mt Morgans project

South African engineering and project lurgical testwork programmes, engaging AUMS set to take Geita
management firm DRA Group has ac- and managing specialist consultants underground
quired Cape Town-based ports and har- relating to the tailings storage facility
bour engineering business RLH Consult- design and civil geotechnical work, and African Underground Mining Services
ing Engineers. development of the project implementa- (AUMS) has been appointed the pre-
tion plan. ferred contractor for the underground
RLH will be integrated into DRA’s new mine establishment and operation at An-
Cape Town office, servicing projects in Dacian is targeting completion of the gloGold Ashanti Ltd’s Geita gold mine in
South Africa as well as others jurisdic- feasibility study during the fourth quarter, Tanzania.
tions, including West Africa. allowing the company’s board to con-
sider an investment decision for project The contract value is estimated at
Additional services DRA will now be development and potential financing ar- $US70 million over a term of 31 months.
able to offer current and future clients rangements within that timeframe. Work will primarily focus on Geita’s Star
following the acquisition include marine and Comet pit.
project concept planning and evaluation, A detailed scoping study completed
ports, harbours and coastal engineering, last September showed Mt Morgans had AUMS is a 50/50 JV between Ausdrill
marine terminals and pipelines, environ- the potential to be developed into an ini- Ltd and Barminco Holdings Ltd.
mental data collection and analysis, and tial seven-year operation, producing 1.2
port logistics and materials handling. moz of gold at an AISC of $929/oz. Alcoa pens another deal
with Boeing
“Diversification into marine engineer- Clough hooks up dual
ing, as offered by RLH, has been part of Ichthys contracts Lightweight metals leader Alcoa Inc
DRA’s strategy for the past year and we has signed another long-term supply
are very excited about RLH forming part Engineering and project services com- agreement with Boeing for multi-material
of our team, DRA Africa managing direc- pany Clough Ltd secured two contracts aerospace parts.
tor Johann de Bruin said. in as many days for hook-up services
at the INPEX-led Ichthys LNG project in Under this agreement, Alcoa will sup-
Meanwhile, DRA has been awarded late January. ply components for the 777X, Boeing’s
the optimisation study and front-end en- newest commercial airplane, as well as
gineering and design (FEED) contracting One contract is with Daewoo Ship- the 737 MAX and the 787 Dreamliner.
package for Coal of Africa Ltd’s Makhado building and Marine Engineering Co Ltd
project in the Limpopo Province, South and the other is with Samsung Heavy The deal draws on capabilities gained
Africa. Industries Co Ltd. The scope of work in- through the Firth Rixson acquisition and
cludes the preparation and execution of the company’s new aluminium-lithium fa-
DRA previously oversaw preparation offshore hook-up and assistance to com- cility in Lafayette, Indiana.
for a DFS on the project’s coal processing missioning.
and handling facilities. This latest award It is the fourth multi-year agreement
will include the infrastructure components Work officially started last month with Alcoa has signed with Boeing in recent
and the integration of a number of spe- the mobilisation of engineering and tech- times. Late last year, Alcoa announced
cialist consultants. nical teams to the respective fabrication a series of long-term supply contracts
yards in Geoje, Korea, before moving on- with Boeing for fastening systems and
Both hard coking and thermal coal are shore to the Browse Basin, about 200km titanium seat track assemblies.
expected to be produced from Makhado off the northern coastline of Western
for export and domestic consumption. Australia. Alcoa has secured about $US10 billion
The operation will initially be an open- of aerospace contracts since the start of
cast mine, with potential for underground Project management will be executed 2015, including the Boeing transactions.
expansion in future years. from Clough’s Perth office, with the tech-
nical support from the company’s Korean
Coal of Africa expects work to start JV arm CloughCoens.
in the second half of 2016, followed by
a 26-month build programme. First coal
production is slated for 2019.

GR knuckles down at
Mt Morgans

Dacian Gold Ltd has selected GR En-
gineering Services Ltd to oversee the
feasibility study for the Mt Morgans gold
project, about 20km south-west of Laver-
ton, Western Australia.

GR started feasibility work in late Jan-
uary. The scope of the contract includes
estimating the cost of establishing and
operating a 2.5 mtpa processing facility
and site service infrastructure.

Other key contract terms are develop-
ing, managing and supervising metal-

AUSTRALIA’S PAYDIRT MARCH 2016 PAGE 95

COMINGS AND GOINGS

Felicity Gooding um Ltd in Australia and Africa, director. Wong, a director of Central Asia Resources Ltd,
Centamin plc, Mawson West GWR Group Ltd and West but will remain as a non-exec-
Minderoo Group chief Ltd, Ausgold Ltd and Central Peak Iron Ltd, has consider- utive director of the company.
operating officer and Petroleum Ltd. Will Burbury able experience in Indone- Thompson will continue to as-
chief financial officer Felic- has resigned as Sheffield’s sian and Malaysian mining sist the company in complet-
ity Gooding has joined the company secretary, but re- sectors. ing its asset sales in Kazakh-
board of Impact Minerals Ltd mains non-executive chair- stan and driving a process to
as a non-executive director. man of the company. Tom Palmer introduce a new project and
Gooding has held senior posi- management group.
tions at PwC, Diageo plc and New Talisman Gold Mines Tom Palmer will succeed
Fortescue Metals Group Ltd. Ltd has appointed Rich- Chris Robison as execu- Dacian Gold Ltd has ap-
She replaces Aaron Hood, ard Justice as company tive vice-president and chief pointed Grant Dyker as
who has resigned to take up secretary. Justice, an experi- operating officer of New- its new chief financial officer.
a new corporate position in enced accountant and chief mont Mining Corp on May 1. Dyker previously held the role
Melbourne. financial officer, replaces Palmer joined the company at a number of successful
Franco Girotto in the role. in March 2014 after 20 years mid-tier resource companies,
Lincoln Minerals Ltd has at Rio Tinto Ltd. Robison has including Sirius Resources,
appointed James Tenghui Ramelius Resources Ltd decided to retire after a distin- Doray Minerals Ltd and Avo-
Zhang as a non-executive has appointed Duncan guished 36-year career in the ca Resources.
director. Zhang is expected Coutts as the company’s mining industry.
to provide crucial support chief operating officer. Coutts Mzi Mgudlwa will take over
to Lincoln as the company is a mining engineer with Paul Rix has joined the as chief executive of re-
looks to secure funding for its experience in both open pit board of Adelaide-based source-focused law firm EN-
proposed Kookaburra Gully and underground mining in graphite and magnesia devel- Safrica from March 1. Mgudl-
graphite mine. Western Australia, including oper Archer Exploration Ltd wa has served as deputy
six years with Harmony Gold as a non-executive director. chief executive since 2006.
Susan Hunter has resigned Australia and two years with Rix has more than 30 years Outgoing chief executive Piet
as joint company secre- Metals X Ltd. of experience in the market- Faber, who has been at the
tary of Pioneer Resources Ltd ing of industrial minerals and helm of the firm for more than
after more than three years in Duncan Coutts products, having previously 25 years, is standing down
the role. Julie Wolseley will worked for Queensland Mag- due to health reasons.
continue as the sole company Christopher Langdon has nesia Pty Ltd as general man-
secretary. retired as a director of ager marketing. Noel White
Panoramic Resources Ltd.
Founding directors Robert Langdon served on the com- Base Resources Ltd CuDeco Ltd has appointed
Richardson and Malcolm pany’s board for 12 years and managing director Tim Noel White as its new
Smartt have resigned from was integral in the financing Carstens is the new chair- independent non-executive
the board of Crossland Stra- and ramp-up of the Savannah man of the Australia-Africa chairman. An award-winning
tegic Metals Ltd. Dato Sia nickel mine in 2004 as well Minerals & Energy Group geologist, White has worked
Hok Kiang has been appoint- as the acquisition of the Lan- (AAMEG). Carstens takes on several resources projects
ed the new chairman, while franchi project and the com- over the role from long-serv- across the globe and was in-
Grahame Clegg has stepped pany’s gold and PGE assets. ing chairman and one of the tegral in the discovery of the
in as interim company secre- organisation’s founding direc- Cannington silver-lead de-
tary. Alara Resources Ltd has tors, Bill Turner. posit, about 130km from Cu-
appointed Atmavireshwar Deco’s Cloncurry operations.
Sheffield Resources Ltd Sthapak as an executive di- Non-executive directors
has appointed Mark Di rector. Sthapak’s primary fo- Alan Jenks and Rodney Michael Ruane and Simon
Silvio to the roles of chief fi- cus will be Alara’s Al Hadee- Baxter have resigned from Coxhell have been elect-
nancial officer and company tha and Daris copper-gold the board of Triton Minerals ed to the board of Echo Re-
secretary. Di Silvio has over projects in Oman. Ltd. sources Ltd. The pair replace
25 years of resources industry chairman Mat Longworth
experience, including almost Tungsten Mining NL has Peter Thompson has re- and managing director Ernst
10 years in senior executive appointed Teck Siong signed as managing di- Kohler on the company’s
roles with Woodside Petrole- Wong as a non-executive rector and chief executive of board.

PAGE 96 MARCH 2016 AUSTRALIA’S PAYDIRT

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LEFTFIELD

Amec Foster delivers for Starlight

Since 2012, Amec Foster Amec Foster Wheeler raised almost $50,000 for the Starlight Children’s Foundation in 2015
Wheeler has been a strong
supporter of Australia’s Star- “In this current market, where every- creasing pressure for funding and it’s
light Children’s Foundation, one is under increased pressure to deliv- important that organisations with the ca-
raising more than $180,000 for er more for less, campaigns like this give pacity to do so continue their support.”
the charity to date. our people a chance to enjoy some fun
engagement activities and give back to Amec Foster Wheeler will start this
During the 2015 fundrais- their community without comprising their year’s fundraising campaign on Starlight
ing campaign Amec Foster productivity,” Brown said. Day, May 6.
Wheeler managed to rake in
$49,430 which was recently “Charities like Starlight are under in-
presented to Starlight.

Over the past four years,
Amec Foster Wheeler has
held an annual three-week
long fundraising campaign,
with events such as bake
sales, quiz nights and family
days in its Perth and Brisbane offices to
raise money.

Amec Foster Wheeler president for
Australia Malcolm Brown said supporting
Starlight, which aims to brighten the lives
of seriously ill children and their families,
was not only beneficial for the charity but
also to the culture of the organisation.

INDEX

Acacia 4 Dacian 95, 96 Lithex 50 Resolute 68
Advaita 21 Doray 96 Lonmin 57, 60
African Phosphate 70-71 Lucapa Rio Tinto 8, 21, 60, 66, 68, 70,
Alara 96 54
Alcoa 95 Magnis 92, 96
Altura 12 Mawson West 50
Anglo American 7, 56 Echo 96 Metalicity 96 Sheffield 96
Anglo Platinum 57, 60 Evolution 4 Metals of Africa 50
AngloGold Ashanti 4, 53, 60, Exxaro 7 Metals X 20-27 Sibanye Gold 57
68, 95 Eyre Peninsula Minerals Mineral Resources 96
Aquarius Platinum 57 48 Mining Projects 14 South32 64, 94
Archer 96 MMG 12
Atlas Iron 15 Mozambi 33 St George Mining 18
Aureus 66 46
Aurora 41 Finders 93 Strandline 76-81
Ausgold 96 First Graphite 35
Austin Fortescue 68, 96 Strike 21
Avanco 6
88 Syrah 21, 24, 25, 27, 38

GAM 50 Neometals 14 Talga 29, 44
Gangfeng 14 New Talisman 96 Talison Lithium 15, 50
Gemfields 27 Newcrest Tribal Mining
Glencore 91 Newmont 4 Triton 12
Gold Fields 4, 60 Northern Star 96 Tungsten Mining 27, 38, 96
Gold Terrace 48, 50 Tyranna
4 96
12

Base 80, 96 Harmony Gold 4, 96 Universal Coal 82
BHP Billiton 8, 18, 21, 68 Highfield 90
Black Mountain Oakdale 51
Black Rock 70-71 Orocobre 14 Vale 8
Blackham 36-37 Valence 32
IchorCoal 82-85 Panoramic 96 Variscan 91
6 Iluka 78 Peninsula Energy 75 Vunene 84, 85
Impact 96 Peninsula Mines 40-41
Centamin 96 IMX Pilbara Minerals 12, 15, 50 Walkabout 38
Central Asia 96 Ivanhoe 33-34 Pioneer 96 West Peak 96
Central Petroleum 96 74 Promesa Western Areas 18
Cliffs 94-95 6 Woodside 11, 96
Coal of Africa 82, 94 KBL 6
Continental Coal 71, 82 Kibaran 39, 64 Queensland Magnesia 96
Crossland 96 Kidman
Crusader 87 Kimberley Diamonds 94 Zimplats 72
CuDeco 96 Kumba 94
Ramelius 96
7 Randgold 4, 53, 68, 92
Renascor
Lincoln 32, 96 48, 50

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