GMJ128-July-September-WEB_Neat

July – September 2017 VOLUME 1. ISSUE 128
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Breaking cover:

Rewriting the Goldfields playbook

ISSN 1324-4396 LEGEND OF DIGGERS
03 INDUSTRY & DEALERS
NICK GIORGETTA PREVIEW
9 771324 439005



GOLD MINING JOURNAL (ISSN 1324-4396) COVER 16
Published by Paydirt Media Pty Ltd.
A.C.N. 063 985 133 Junior explorer Breaker Resources NL has defied assumptions about
the Eastern Goldfields’ maturity to make a genuine virgin discovery
EDITORIAL in well-trodden ground. Dominic Piper spoke to Breaker managing
Editor: director Tom Sanders about the exploration process which led to
the Bombora discovery and what it says about the region’s enduring
Dominic Piper prospectivity

Deputy editor: LEGEND OF INDUSTRY 22
Mark Andrews
In the first of a new series of profiles, we look at Diggers & Dealers
Journalists: chairman Nick Giorgetta, widely known as “King” of the one gram dirt.
Michael Washbourne, Giorgetta built a career out of squeezing a bit extra from small mills
and low-grade orebodies and let GMJ into the secrets of his 45 years
Jonathon Daly of mining success

Art director: DIGGERS PREVIEW 26
Marian Noonan
Preparations are nearly complete for this year’s Diggers & Dealers,
Contributors: the 26th edition of Australia’s largest mining forum. Ahead of the
Keith Goode, conference, we look at the emerging gold stories hoping to find the
Brendan Ryan (Johannesburg) spotlight in the Diggers tent

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EDITOR’S LETTER

Explorers back in town

Welcome to the new guise Gold Mining Journal, following the biggest
change to our publication’s look in its 23-year history.

And, from an industry viewpoint, the change couldn’t be better timed as there
is a genuine freshness to the gold sector in 2017.

Australia’s gold miners have been performing well for the last four years but
there is evidence gold explorers – largely locked out of the party until now – are
beginning to experience the trickle-down effect many predicted.

According to BDO’s excellent Explorer Quarterly Cash Update, nine exploration
companies listed on the ASX in the March 2017 quarter, equal to the two
previous periods combined. Only one of these was gold-focused but the June
quarter saw three gold-related companies list and this edition features stories
on at least three other current gold IPOs.

BDO’s report also highlighted increased capital raising activity across the exploration sector with inflows of
$913 million for the March quarter, up an astounding $378 million on March 2016.

Of the 15 companies which raised more than $10 million during the period, six of them were gold-focused,
compiling a combined $227 million.

The funds are beginning to flow into exploration budgets. Overall exploration expenditure was down quarter-
on-quarter but there was a 13% increase in comparison to the March 2016 period with gold leading the way.

All of which suggests investors – satisfied by returns from gold miners – are dropping their caution for the
first time in six years and warming to gold exploration.

Dacian Gold Ltd has made the most headlines, having eventually found funding for its $200 million Mt
Morgans development, but earlier stage plays are also able to raise big chunks of cash. Breaker Resources
NL, the focus of our cover story this month – and it is quite literally a story about cover – is a clear example
of the market’s willingness to consider gold exploration.

Breaker shares have enjoyed a 221% increase since September 1 off the back of early-stage exploration
success on the company’s Lake Roe project in Western Australia. That allowed the company to raise $12.4
million in October, which should be sufficient to take Lake Roe to maiden resource and beyond.

Breaker’s progress at Lake Roe has been marked by the use of innovative exploration techniques and
technology, a trend driving much of this new wave of Australian gold exploration. Suddenly, our historic
goldfields no longer look quite so mature.

GMJ will strive to embrace this new era but you will find we haven’t completely abandoned our roots and
our new look comes with a timely reminder from an industry legend that the more things change, the more
things stay the same.

Diggers & Dealers chairman Nick Giorgetta is our Legend of Industry and told me he was happy to give
advice to anyone.

His most vital tip: Ensure you get into production without diluting shareholders.

“I think some companies are a bit scared to take the plunge but there is no reason to be scared. Operations
don’t have to be big, they just have to be profitable,” he says in these pages.

The new look may be finished but we are still striving to provide fresh content; if readers have any ideas for
new features, stories or coverage, give us a call or drop us a line at any of the following:

[email protected] @DominicPiper /dominicpiper /PaydirtMediaAustralia

Page 4

NEWS

Sams Creek into NZ IPO

by Dominic Piper

The 1 moz Sams Creek gold project is set to become the potential but which is bolstered by exploration opportunities.
flagship asset of New Zealand-focused IPO Condamine
Resources Ltd. “In Sams Creek we have that; a substantial-sized project
which is backed up by exploration potential.”

Condamine announced its intentions in early July, having Nahajski Staples said Condamine had set itself a three-year

agreed a $3.8 million share sale deal for Mod Resources development timetable at Sams Creek.

Ltd’s 80% interest in the project – 100km north of Reefton on Development will, of course, be dependent on funding and
New Zealand’s South Island. Condamine hopes a $7-10 million IPO will go most of the

Sams Creek had been the main focus of the Julian Hanna- way to fulfilling those requirements. Nahajski Staples said

led Mod but with the explorer pre-occupied in the past two the company planned to list in the December quarter.

years by its Botswana copper assets, it has been searching The ASX will be the initial destination for the company’s
for divestment options for its New Zealand portfolio. shares but it is also considering a domestic listing.

The deal will see Mod receive $1.75 million in cash and 10.25 “The ASX seems a good fit for the company at this moment
million 20c shares in Condamine, giving it a 15% holding in but we don’t rule out a New Zealand listing later down the
the fledgling company. track,” Nahajski Staples said.

Condamine founding director Anna Nahajski Staples told New Zealand has been an exploration
GMJ the time was right to use Sams backwater in recent years despite the likes
Creek as the launching pad for an IPO. of OceanaGold enjoying solid production

“There has been an upswing in IPO profiles in the country but Nahajski Staples

activity since late 2016 and although is convinced by the opportunity it offers.

the rate of activity dropped off in the “We feel very comfortable with the mining
first quarter of this year, there is clear and regulatory environment in New Zealand;
evidence money is flowing back into it is an excellent jurisdiction to operate in,”
resources IPOs,” Nahajski Staples said. she said.
“If you look at the 2017 performance
of IPOs, they are up 10% on average Although the IPO portfolio will only continue
versus 1% for the ASX200.” the Mod assets, Condamine is viewing
its public listing as a catalyst for further
Mod had earned its 80% interest in acquisitions.
Sams Creek (OceanaGold Corp retains
20%) by spending $NZ6 million on the “The whole portfolio comes from Mod but
project, including upgrading half of the Anna Nahajski Staples once we are listed there are a lot of things
1.02 moz inferred resource to indicated
status for total indicated resources of we can implement,” Nahajski Staples said.
10.1mt @ 1.77 g/t for 575,000oz gold. “There appears to be quite a few exploration
opportunities in New Zealand.”

Follow-up drilling in 2015 focused Mod’s attention on the Mod managing director Julian Hanna said the Sams Creek
higher grade Main Zone within the Sams Creek porphyry deal would allow the company to sink all its efforts into
but with exploration on its Kalahari copper project gathering Botswana.

pace, Mod chose to divest its New Zealand interests rather “The [deal] provides the opportunity to monetise the

than pursue development studies. company’s non-core gold assets by divesting them to a new,

Condamine’s arrival means those studies can be re-initiated dedicated New Zealand-focused gold exploration company,”
and Nahajski Staples believes investors will quickly warm to Hanna said.

the Sams Creek story. “This transaction has the additional benefit of preserving

“It is a simple strategy for investors, one which fits the current Mod shareholders’ exposure to an excellent gold project
environment,” she said. “Given the challenging last few which has significant upside. We look forward to supporting
years, we think investors are still cautious and so you have Condamine through the IPO process.”

to present them with something which has strong near-term

Page 5

NEWS

New floats warming up

Dacian Gold Ltd and Gascoyne Resources Ltd represent consolidate the area.
the group of up-and-coming producers in Australia,
however, there is a sparse gap below. However, sheer persistence by Calidus managing director
David Reeves has enabled 253sq km of ground in the area
Breaker Resources NL is the leader among just a handful of to be either controlled, under application or optioned by
genuine gold explorers on the ASX but a rush of new listings Calidus, with the Klondyke shear prospect standing out.
could change the pattern.
“We’ve completed approximately 1,000m of an initial 10,000m
In the last two months alone, Riversgold Ltd, Condamine drilling programme aimed to increase our confidence in the
Resources Ltd, Prospech Ltd and Calidus Resources Ltd resource and expand it along strike. We’re initially targeting
all opened or completed IPOs as investors warm to gold a resource north of 500,000oz @ 2.2 g/t gold at Klondyke.
exploration plays. We are not stepping too far out from known mineralisation,
so it’s low-risk and highly likely that we can achieve what we
Calidus – the result of a successful reverse takeover of AIM- have set out to do,” Calidus director Adam Miethke told GMJ.
listed Keras Resources by Pharmanet Group – hopes to “After the initial 10,000m programme we hope to roll straight
fill the exploration void and has hit the ground running at into another 10,000m, take all the data and compile a new
Warrawoona, 20km east of Australia’s hottest town, Marble resource early next year and complete a PFS in the next 24
Bar. months,”

Warrawoona has largely flown under the radar with several Step out drilling at Klondyke – 5.6mt @ 2 g/t for 374,000oz –
private concerns having previously tied up much of the was focused to the west, as Calidus works towards building
ground, meaning no one landholder has been able to confidence in the resource.

In addition to Klondyke, drilling is also planned for this year
at Copehnagen – 36,000oz @ 6.1 g/t gold – with Calidus
keen to follow up on a hit of 9m @ 27.33 g/t.

Copenhagen represents part of the regional upside, which
also includes the likes of Coronation (9m @ 5.21 g/t from
9m) and Fieldings Gully (14m @ 3.09 g/t from 53m), for the
company.

While it is early days, Miethke said emulating Gascoyne’s
accomplishments at Dalgaranga could be achieved by
Calidus.

“I think the stage we are starting from is about the same as
Gascoyne and from here our KPI is to add resources for
$US5-10/oz. We’re targeting over 1 moz, with the bulk of
those ounces to come from Klondyke and a couple of higher
grade satellite pits. Mineralisation at Warrawoona is coarse
nuggetty gold and we’re using a range of different assay
methods, meaning there is potential the grade will stick or
improve a bit more. We are also doing metallurgical work as
we de-risk Klondyke,” he said.

Miethke, formerly with Argonaut Securities Ltd, is joined on
the board by fellow non-executive director Peter Hepburn-
Brown, while European Metals Holdings Ltd duo Keith
Coughlan and Reeves lead the way at Calidus as non-
executive chairman and managing director, respectively.

The board was successful in raising $7.87 million at IPO,
with about 20% participation from institutional funds and the
rest coming from retail.

Page 6



NEWS

Full steam ahead for ABC

by Michael Washbourne

ABC Bullion has become the first independent
bullion dealer in Australia to be granted full
membership to the prestigious London Bullion
Market Association.

Following an application process which required
recommendations from three full members, ABC
Bullion – the bullion trading and distribution
division of Sydney-based Pallion Group – recently
joined the likes of Credit Suisse, Glencore, J.P.
Morgan and the Royal Bank of Canada on the
illustrious list.

Only 68 organisations globally are accredited as
full members, including The Perth Mint.

ABC Bullion’s elevation to full member status Andrew Cochineas
follows ABC Refinery’s appointment to LBMA’s
Good Delivery list for gold in December 2015.

Pallion chief executive Andrew Cochineas said the group we put behind our metal and it also gives people comfort in

was “extremely proud” to have cemented its position in the terms of the way that we source our metal,” he said.

global bullion market. “Our customers can be assured that not only is the gold

“This is not something the LBMA hands out like smarties,” they’re getting of international accredited quality – of which

Cochineas told GMJ. there are only about 70-odd LBMA Good Delivery refiners in

“Breaking a monopoly is something that no one ever thought the world – but the bullion dealer that is selling the metal to
would happen, especially at the refining level, but that them is also part of a list made up predominantly of entities
happened at the end of 2015 and now it has happened at like major banks.”

the bullion level as well. Cochineas believes those in the Australian gold sector have

“As a private group, this is a massive pat on the back for plenty to look forward to over the next 12-18 months due to
the way we conduct our business and I personally feel very increased economic uncertainty and political unrest globally.

gratified and chuffed to be part of such an illustrious team. It “The Australian bullion market is what I call a ‘golden light’

is a real recognition of the esteem in which the ABC Bullion in our economy, simply due to the fact we are the second

brand is held globally.” largest gold producer in the world, yet

Holding full membership to the ABC BULLION SERVICES we only have two LBMA accredited
LBMA carries a number of benefits, gold refineries in Australia,” he said.

including voting rights at AGMs * Bullion sales, trading and buy backs “The benefit of course is the

as well as the ability to sponsor * Fully insured bullion storage Australian dollar is generally tipped
applications for other companies to * Pool allocated precious metals to fall and to continue to fall over the
become full members. next 12-18 months. Meanwhile, the

With ABC Bullion widely regarded * Bullion for self-managed superannuation US dollar gold price is predicted to
as a cornerstone of the Australian fund investment increase, particularly with increased
physical gold trading scheme, unrest globally, but especially in the
Cochineas said validation from an * Logistic solutions for global delivery US and Europe.

international body such as LBMA “Demand for gold in places like

would have flow-on benefits to others in the industry. China and India continues to increase, so I see quite a lot of

“It gives international bullion clients, central banks, merchant support from an economic viewpoint for a higher US dollar
banks and investors comfort in the purity of our metal, it also gold price. All of that is really positive for the Aussie dollar
gives them comfort in our net worth, in the due diligence that gold price.”

Page 8



NEWS

India braces for gold GST

India has introduced an Integrated Goods and Services “However, my recent survey on the impact of an unofficial
Act, 2017, aimed to streamline the labyrinthine taxation market suggests that it may only flourish and there could be
structure that was in place before the reform. more goldsmiths who would go private instead of working for
a jewellery firm as the unofficially imported gold should be
India accounts for 20% of all gold sales internationally landing at their place for converting to jewellery.”
and the new GST system will see all precious metals and
diamonds taxed at a slightly higher rate of 3%, consolidating Legitimate importers might be put on the back foot, as the
various taxes, including the 1.2% Value-Added Tax. GST rules stipulate:

Metals Demand Asia director with the GFMS team at “The import of goods has been defined in the IGST Act,
Thomson Reuters, Cameron Alexander, told GMJ the impact 2017, as bringing goods into India from a place outside
on consumers would be quite limited. India. All imports shall be deemed as inter-State supplies
and accordingly Integrated tax shall be levied in addition to
“As of today rates in Mumbai: Customs duty of 10%, the applicable Custom duties.”
Education cess of 0.3%, stamp duty of 0.2% and 1.1% VAT
equal 11.6%. From tomorrow: Customs duty of 10% and 3% This means import agencies would have to pay the 10%
GST will equal 13%, thus the increase is only 1.4%,” he said customs duty and GST of 3% on their imported goods.
at the time of print.
The lack of accurate definitions and full clarity of the
Prior to the changes, the VAT varied in each new system’s impact has placed importers,
region, with states like Kerala charging more specifically banks, in a tight spot.
5%.
On average, banks contribute to more
Originally, the Government was going than 50% of the total supplies each year
to introduce an 18% tax on firms and and have been instrumental in providing
individuals providing manufacturing gold metal loans.
services across the gold supply chain,
but lowered it to 5% on June 10. The changes might ultimately benefit
consumers, who are currently getting a bad
This is good news for consumers, as the 18% deal in the market.
tax may have resulted in at least a 20% to 30%
rise in wholesaler/retailer’s gross margins to cushion Prior to the GST system the industry was
against the crunch. fragmented and dominated by small independent
retails where under-carating was widespread.
According to the World Gold Council, the gold market
will ultimately benefit from a more transparent and efficient GST will bring greater transparency and coax more of the
supply chain. gold market into the formal sector, making it harder for
independents to under-carat consumers.
A committee chaired by the Government’s chief economic
advisor, Arvind Subramanian, expects the GST system will Another key benefit of the new system is that a firm can
boost India’s economic growth by 0.5%. offset its taxes against its revenues, using input tax credits,
which will hopefully put a stop to double taxation across the
This is on top of the World Bank expectation that India’s supply chain.
economy will grow by 7.2% in 2017, before jumping to 7.7%
in 2019. Aside from the positives, Alexander said the new system
could have some negative side-effects.
Alexander said it was a positive step for the county’s gold
industry. “Branch-to-branch transfer cost is a concern for large
jewellery retailers with multiple showrooms. Cost of working
“There is a greater shift that would happen towards capital should see a rise given the increased need for
the organised trade. It helps retail chains, which are compliance,” he said.
professionally managed, to increase their footprint as it
creates a level playing field,” he said. “All sectors across India should see increased compliance
that would lead to less avenues to stash cash as easily as it
“In anticipation of this, many large retailers have allocated was done earlier, which means more tax outgo from profits
funds for massive branch expansion in two years. There is and there are some sections who do not like buying gold
less likely to be stock transfer from branch to branch; rather from earnings that are taxed. If unofficial trade is not brought
it would be fresh stock on launch of every new showroom. under control then it impacts even organised segments.”

Page 10

OPINION

Reading old workings

by Keith Goode

As the Australian gold between two of the old shafts
mining industry passes at Sandstone North (before

through another phase of Alto Metals Ltd).

Goldfields revival, I continue However, the old shafts
to be amazed that many (especially if they are in the
explorers do not seem able top of a spoil/mullock heap),
to read the old workings, contain key geological and
although I admit I’ve never mining information and
seen a course on the subject. characteristics.

It is common practice to The two main geological

examine the rock chips left on aspects of old shafts are the

the ground from previous long axis and the spoil heap.

explorers to see what Typical pictures taken of old workings strike The long axis represents the
was intersected; mafic, in various WA Goldfields projects using of the orebody that was mined and can be plotted
ultramafic, sediments, and drone as a compass and a camera – or more easily now a
if lucky quartz veins (that may have even oxidized brown due described in the July edition of Paydirt.
to sulphides breaking down). Most explorers also walk the
Mapping the strike directions of the long axes of the shafts
edges of pits from previous operations to see the exposed
identifies whether there were parallel and/or cross-cutting
geology from different angles and the often standout of
vein structures that were mined. Such identification can often
weathered veining – you just have to take note of pit edges
highlight orebodies striking east/west and north-east/south-
and any cracks implying future wall failures.
west compared to the more common north-west/south-east.
Another technique is to look at the last buckets of spoil
The spoil heap, if present, should be examined for its host
(often on a waste dump), in case they contain ore grade
rock composition – mafic, ultramafic, sedimentary, quartz or
as the mine approached closure. You can also note the
sulphide minerals. If quartz is present, the rough percentage
state of the walls themselves in terms of competency, and
which is quartz and whether it is bucky/blocky, laminated,
any white patches, often indicating oxidation proximal to
variegated or salt and pepper textured due to the degree of
mineralisation, or possibly even palaeochannels, always
iron.
taking into consideration that the patterns on some of the pit

walls may be due to an eroded layer. Then there are the mining aspects; whether the long axis of

However, many overlook the really old workings of the late the shaft contained two compartments (or squares) or three
19th/early 20th centuries and the wealth of geological and compartments (usually inferring that money was spent as
mining information they contain. I often wonder if the group such shafts are often relatively deep, together with winding
I’m visiting think: “Keith’s focus on old workings must be a gear, etc).

mining thing” as I examine old stopes, bedding planes, The quality of the timbering style, if it still remains, is also

remnant sticks (props), rails, scotch cars’ handles (trucking relevant and, of course, there is the rock drop for depth (or

limitations) and mining styles (production limitations). a splosh).

I digress slightly but have often wondered whether geologists Additional information can also be gleaned from old stopes
have instructed someone to drill a hole near old workings such as angle of dip, wall rock competency and others.

without studying the workings first. After all, how else can By examining the old workings, especially the long axes of
one explain the clearly barren drill holes from drilling parallel the old shafts and stopes, the chance of drilling parallel to
to old stopes at Wombola (before Silver Lake Resources such workings should be reduced, and possibly lead to more
Ltd took over the project), drilling parallel to the stope and encouraging exploration results.
long axis of the shaft on the outside northern edge of the
Lady Shenton pit at Menzies (before Intermin Resources Ltd Disclosure and Disclaimer: This article has been written by Keith
arrived), or drilling eastwards away from the clear (it’s partly Goode, the Managing Director of Eagle Research Advisory Pty Ltd,
exposed on surface) north/south striking vein structure (an independent research company) who is a Financial Services
Representative with Taylor Collison Ltd (AFSL 247083).

Page 11

ANALYSIS

Gold mine production
growth grinds to a halt

Following eight years of uninterrupted gains, the growth in a sharp decline in China (the world’s largest gold producer)
global mine production looks set to end in 2017. offset some weighty additions from the project pipeline.

Since 2008, the annual supply of new gold (as opposed to Chinese output fell by around 10% year-on-year in Q1, due
recycled material) has grown by around 800t (25.7 moz), an to an extended New Year holiday at some mining and refining
increase of around 30%. This growth has been driven by the companies and, more significantly, the introduction of
rise of China, Russia and Mexico as major gold producers, stricter environmental regulation (targeting the discharge of
a plethora of new mine start-ups across Africa (outside cyanide in tailings), which meant a number of more marginal
of South Africa) and a recovery in more mature mining operations were forced to close. Outside of this, sizeable
jurisdictions such as Canada and Australia. country-level declines were limited, with Mongolia the only
other exceeding 3t (100,000oz) year-on-year; Mongolia
In contrast, notable declines over this period were limited, continued to be impacted by a low-grade gold mining phase
with South Africa the only one to register a drop greater at the Oyu Tolgoi copper mine.
than 50t (1.6 moz). South Africa was surpassed by China as
the world’s top producer in 2007 and has continued to slide Offsetting these losses were the ramp-up of a number of
down the global rankings and now sits sixth. projects which entered production in 2016, namely Merian
(Suriname), Yaramoko and Karma (both in Burkina Faso) and
Gold mine supply declined by 0.4% year-on-year in 1Q17, as

Page 12

Long Canyon and the Cripple Creek/Victor expansion The pot of gold at rainbow’s
(both in the US).
end diminished in 2017
Interestingly, 2016 saw the largest number of major
project start-ups (more than 100,000 ozpa) since 12-month period prior to
2013. It is often the case that projects which started
in the year prior have a more significant impact on the mid-2013 price crash when sustaining capex averaged
production than the start-up of projects within the
current quarter. This reflects the time required to ramp $US290/oz. The sharp fall in gold prices in 2013 led to the
a mine up to full capacity. Without the contribution of
these 2016 start-ups, the decline in 1Q17, and 2017 slashing of non-essential expenditure across the industry.
as a whole, would be significantly greater.
However, in spite of the re-emergence of this cost inflation,
The average global AISC rose in 1Q17, both quarter- the industry as a whole remains cash flow positive; even the
on-quarter (4%) and year-on-year (8%). This was 90th percentile of the AISC curve was in profit during the
driven by a recovery in some key producer currencies quarter. Furthermore, with the gold price expected to rise
(most notably the South African rand), the general
pick-up in the commodities sector (which is fuelling
an increase in labour expenses and the costs of mine-
site consumables) and an increase in sustaining capital
expenditure (as the industry looks to adequately reinvest
following a period of austerity).

Looking at the world largest gold miners (covered within
Metals Focus’ Peer Group Analysis quarterly report),
sustaining capex averaged $US160/oz in 1Q17, up 17%
year-on-year. However, this still compares favourably to the

Page 13

ANALYSIS

South
Africa was
surpassed
by China as
the world’s
top producer

in 2007

through the remainder of the year, we expect margins to friendly, jurisdictions such as Australia and Canada. This,

increase in spite of continued cost inflation. along with the more robust performance of local gold prices

In line with the contraction in Q1, we forecast global gold in those countries, means Australian and Canadian gold
output continues to grow. Elsewhere, output from Indonesia
mine production to fall marginally in 2017, bringing to a is expected to increase. In spite of a difficult first half, mining

close nearly a decade of continued growth. In keeping with of higher grade open pit ore at
Grasberg will still lift production
the first quarter trend, this will year-on-year.

be principally driven by lower As outlined in Metals Focus’
upcoming 5-Year Forecast,
output from China, as the ongoing About Metals Focus
(www.metalsfocus.com)
effects of stricter environmental

legislation (particularly

surrounding the disposal of Metals Focus is an independent precious over the long term a significant

cyanide tailings) continue to metals consultancy, with an experienced team amount of investment is required

impact the rest of this year and of 20 precious metals specialists in London, to sustain global production at

into 2018. Mumbai, Hong Kong, Taipei, Shanghai and current, near-record, levels. As

This will outweigh new additions Istanbul. The quality of Metals Focus’ work such, and in spite of the higher
from the development pipeline, is underpinned by a combination of top- gold prices (as put forward in our
which is expected to push quality desk-based research, coupled with an base-case forecast scenario),
production higher in a few extensive program of travel to generate ‘bottom gold mine production will enter a
countries. Even though global up’ research for our forecasting reports and period of secular decline before
exploration expenditure was consultancy services. For more information, the end of this decade.
slashed during gold’s recent bear please contact Charles de Meester
cycle, the remaining budgets were ([email protected])

largely deployed in stable, mining-

Page 14



COVER

Lifting the covers
on Goldfields’

forgotten ground

by Dominic Piper

There is plenty of recent evidence to suggest reports of Australian gold
exploration’s death have been greatly exaggerated.

It is true there have been few Tier 1 deposits discovered new geological interpretations using modern exploration
in the last 15 years with only Tropicana and now Gruyere applications.
as stand-outs. However, there is growing evidence a
new generation of gold explorers are breaking down the Both companies have enjoyed strong investor support for
perception of the Eastern Goldfields as a mature district. their innovative approaches with Dacian now in construction
But, where once it was the major mining houses who led at its Mt Morgans gold project near Laverton and Gascoyne
the exploration push, today it is innovative, daring junior at a similar stage of development at Dalgaranga. Others
explorers who are making the breakthroughs. are joining the gold exploration push with perhaps the most
intriguing being Breaker Resources NL and its Bombora
Dacian Gold Ltd and Gascoyne Resources Ltd may not have discovery on the Lake Roe project, 100km east of Kalgoorlie.
made genuine greenfields discoveries but have found more
ounces in what were assumed to be tired areas through Breaker listed in 2012 with an innovative approach in
mind. Its strategy was to pick up Eastern Goldfields ground

Page 16

Lake Roe gold project, WA is near Kalgoorlie and is between two established deposits
[Karonie and Carosue Dam] so it has good structural set-up.
previously ignored by explorers and miners because of thin The aircore then quickly established it was on the fractionated
layers of transported cover material. dolerite which is host to most of the gold deposits in the WA
“We saw an opportunity to look in underexplored parts of Goldfields.”
Australia’s best gold province and there is a lot of ground
which hasn’t been touched or only lightly touched in the The results from Bombora – 20m @ 1.63 g/t gold, 15m
Goldfields,” Breaker executive chairman Tom Sanders tells @ 0.5 g/t and 4m @ 1.16 g/t – produced a smattering of
GMJ. “We developed the technical skills to explore under market interest but it was a year later when further aircore
cover and then looked for the structural set-up in high- work on the Bombora North and The Gap targets indicated
endowment terrain to which we could apply modern, multi- mineralisation was continuous over 2.2km of strike and 600m
element geochemical techniques which weren’t available 20 widths when investors really jumped on board.
years ago.”
The approach took some time to bear fruit but by August The September 2016 announcements of 18m @ 2.97 g/t
2015 an extensive aircore drilling programme had allowed gold and 18m @ 2.16 g/t from Bombora North and 26m @
Breaker to identify a 2km-long, 400m-wide zone of continuous 2.55 g/t and 12m @ 4.41 g/t from The Gap led to the Breaker
mineralisation at the Bombora prospect. share price jumping from 20c to 68c in the space of a week.
“There was a lot of trial and error but we recognised that Lake
Roe had the good geological setting we were looking for. It The company took advantage of the spark, raising $12.4
million in September to fund its exploration ramp-up. Some
80,000m of aircore, RC and diamond drilling has now been
completed with work set to continue through 2017.

Most pleasing for Sanders has been the confirmation through
RC drilling that Breaker’s approach is proving fruitful.

“The best indicator of how well aircore drilling worked as a
targeting tool was the fact we had three discoveries in our
first three RC programmes,” he says.

Resource infill drilling only started in February this year,
highlighting just how successful the aircore and early RC
work has been.

“About 80% of the drilling has been reconnaissance but it
has still been throwing up results,” Sanders says. “I don’t
think the market actually appreciated how remarkable that
is, to be consistently hitting primary bedrock gold through
aircore drilling. We only started proper 40m by 20m spaced
infill drilling earlier this year.”

Since the turn of the year, Breaker’s resource drilling has
included hits of 7m @ 61.78 g/t gold, 24m @ 7.75 g/t, 19m
@ 7.56 g/t, 54m @ 2.38 g/t, 37m @ 3.44 g/t, 21m @ 5.1 g/t
and 27m @ 3.86 g/t.

Such consistent results have Sanders understandably
excited.

“It is still so early but it is looking like a whole new gold camp

“here,” he says. “The intersections we have been getting are
We saw an opportunity to
look in underexplored parts
of Australia’s best gold province
and there is a lot of ground which
hasn’t been touched or only lightly
touched in the Goldfields.

Page 17

COVER

Lake Roe sits between obviously mineable; they are close to surface, have good
two mining centres widths and produce consistent high grades. That bodes
well for both open pit options and longer term underground
possibilities.”

While ambitious shareholders may be already comparing
Lake Roe to other recent West Australian Tier 1 discoveries
such as Tropicana, Gruyere and Nova – comparisons
Sanders is also happy to draw – a more obvious development
story to aspire towards could be Sandfire Resources NL and
its DeGrussa copper project.

Tropicana, Gruyere and Nova were all discovered in remote
locations and the respective junior owners eventually had
to bring in major partners to build projects which were
increasingly capital-intensive.

In contrast, DeGrussa, like Lake Roe, was a high-grade
discovery in a well-trodden belt, and Sandfire used location
to its advantage, quickly taking the project from discovery to
production on low capital requirements while retaining 100%
of the asset.

Lake Roe’s location means there is an array of options for
Breaker to consider; something Sanders is conscious of.

“All the results indicate Lake Roe has got scale and quality
and it is in a good part of the world so it has all the hallmarks
of a standalone operation,” Sanders says. “But we don’t
feel pressure to partner up with anyone. There is a lot of
experience on the board and management regards both
mining and exploration and its location means we won’t have
the higher capex requirements of a Tropicana or Gruyere.”

Page 18

High-grade intercepts have
been common in the last

18 months of drilling

Instead, the company can choose both the pace and to kick-start development, Sanders believes Breaker is in
style of development. the enviable position of being able to choose how best to
increase the project’s value; either through the drill bit or the
“Capex wouldn’t need to be huge at the front end,” excavator.
Sanders says. “If you’ve got wide, high-grade material
at surface as we appear to have at Lake Roe, it is not “You must prioritise the things which add value but it is a
a big issue to kick-off operations small and not have trade-off,” he says. “If you’re doing regional exploration work
the expense of a huge plant. and still finding mineralisation, there is no question you are
adding value but you have to consider how much of that
“To me it seems like a sensible strategy and one which work you can do before you have to raise more money. If
minimises shareholder dilution while yielding maximum the share price is high and you can go back to the market
value.” at a higher price; that is fine. But, if you don’t think the value
is being reflected in the share price, there is nothing wrong
The potential for a low-cost start-up means there is no with digging it up.
requirement for a multimillion ounce resource to be defined
before economic studies were initiated. While more remote “Starting small also minimises the risk. So, even though
it is already looking like a standalone operation, we could
“discoveries had to build the economies-of-scale necessary choose to do custom milling at one of the nearby mills while
I don’t think the market
actually appreciated
how remarkable that is, to be
consistently hitting primary bedrock
gold through aircore drilling.

Page 19

COVER

Seeing through thin, transported cover has been key to Breaker’s success

we continue with the regional work and the more detailed happening once you have got the high-density drilling and
resource work.” we are learning a lot as we start the infill and it keeps opening
new doors for us deeper and along strike,” Sanders says.
The first step in any development scenario is a JORC-
compliant resource and Breaker is working towards a year- Sanders is eager to ensure the balance between further
end deadline for release of a maiden estimate. greenfields work and development is maintained.

“Once you outline a resource, you get a feel for how big “You ensure value is increased by establishing a mineable
a system is. You only really get to understand what is resource but also extending the footprint,” he says.

Breaker’s infill programme will coincide
with further step-out drilling both north
and south of the 2.2km established
strike length as well as at depth. And,
the company is far from finished with
its first-pass reconnaissance drilling.

“We have a lot of follow-up work to do
on other targets because the initial
programme was over a 6km strike
length but we have largely focused on
that 2.2km,” Sanders says.

His hopes are that Lake Roe could
represent an entire new gold camp,
right in the heart of the Eastern
Goldfields. In late June, further
aircore drilling results enhanced
this assessment, with mineralisation
extended a further 2km to 8km in total.

A long section of Bombora “The latest results look similar to
those aircore results we saw early on

Page 20

carry that risk. The problem is juniors can only carry the risk
so far unless they take different approaches and that is what
we are trying to develop.”

Smaller companies may not have the armies of geologists
companies such as Western Mining, CRA or Kennecott
were famed for in previous eras but Sanders sees plenty
of evidence juniors have the wherewithal to drive new
discoveries.

“The junior sector is innovative and very flexible. Breaker is
not alone in developing new techniques but we have been
working on our strategy for a few years now so are more
advanced than most but we are definitely not alone in the
innovation stakes,” he says.

“However, it needs capital to take the risks the majors used
to take and without capital new discoveries won’t be made.”

After drilling more than 80,000m (above)
Breaker will release a resource this year;
and the Bombora lode intersected (below)

in drilling at Bombora,” Sanders says. “Importantly, the gold
pathfinder anomalies are coincident with the strongly altered
quartz dolerite, the main host rock for gold at Bombora,
which we have now tracked into the Northern and Southern
hinge areas.”

It is further confirmation that Breaker’s innovative approach
is revitalising exploration in a mature district and Sanders
believes the trend will continue.

“The fact is 70-80% of the Goldfields is under cover of some
sort and so despite a perception that it is mature, it is still
largely unexplored. The limiting factor has been the cost of
exploration and development and with the majors out of the
picture for the past 20 or 30 years, the juniors have had to

Page 21

LEGEND OF INDUSTRY

Page 22

Mining’s Renaissance man

by Dominic Piper

If some mining executives can dine out for years on the back There can have been few better times in history in which to
of a single success, Nick Giorgetta will never have to buy arrive in the small Eastern Goldfields town.

a meal again when he eventually steps away from mining. “It was a big change but Kambalda was a vibrant place in

While others have been fortunate enough to build one or those days, full of young professionals eager to get ahead

two successful companies, Giorgetta has managed it three and I really enjoyed it,” Giorgetta says.

times; first with Samantha Gold in the 1980s and 90s, then Giorgetta spent the rest of the decade learning the ropes in
Equigold in the early 2000s and most recently with Regis an industry which was beginning to go through a period of
Resources Ltd. innovation in processing technology.

All three companies shared similar success stories, turning “The big breakthrough for the industry came in 1978 with the
lower grade deposits into successful producers by extracting development of the carbon-in-pulp process,” he says. “It was
more tonnes and ounces from mills built at relatively low cost. a completely new technology and I was lucky enough to do

For Giorgetta, gold mining remains a simple business when some research and could teach myself the process.”

done properly. Using his intricate knowledge of the emerging process,

“Gold is always extremely cheap to bring into production,” he Giorgetta formed a syndicate aimed at VAT leaching of ore

says. “At Samantha Gold we built the mill for $18 million and for prospectors. By 1984, he had established Goldfields

in the last seven years Regis has built three plants for $250 Metallurgical Services.

million for a combined capacity of 10 mtpa. Any operation “I realised prospectors were very naïve, if I could do the

“that has 200-300,000oz can make it as a standalone mill work and explain the process to them, everyone could
because the required capex is
make money. From there I
not that big.”
created Goldfields Metallurgical
I definitely don’t have
He also believes too many of Services and we designed and

today’s gold companies have another one in me but commissioned plants all over
lost the will to take interesting I’m happy to talk to anyone to the country before coming into
exploration plays into the next production ourselves at Cobar

stage. convince them that you have to in New South Wales.”

“People need to bite the back yourself and go for it. It was in Cobar where the
bullet and get on with it. Once Giorgetta model of project

operations are under way you management began to truly

can understand the geology emerge.

better, you have got cash flow you can make use of, you “It was a great learning curve,” he says. “We acquired the
have got a camp to utilise. These are all things you can’t do tailings project from CRA and produced 250,000oz in the
as a pure exploration play.” next four years. It was a privately-held company, producing

The key is to ensure productivity is high and costs are low. gold from tailings which was tax-free. We could keep

“To do that you need to have the right kind of people around costs down because we were treating 2 mtpa using a total
you. I think we [Regis] have half the workforce of other workforce of 15 people. Public companies were doing half as
companies. It can be done but throwing more people at a much with five times the amount of staff.”

problem will not solve anything.” Following the success in Cobar, Giorgetta joined forces with

Italian-born Giorgetta came to Australia for “just a few years” Simon Lee at the newly acquired Samantha Gold.

in 1969, ostensibly to avoid national service and have a look “It was just a shell Simon had got hold of and he asked

around. Nearly 50 years on, he is still here and has become whether I would come in as managing director. I sold

one of the most respected executives in the gold mining Goldfields Metallurgical Services into it and we became

industry. quite serious with what we wanted to do because we thought

A chemical engineer by profession – there was little need our experience could help us do things better.”

for metallurgists as such in 1960s Italy – Giorgetta got his Samantha Gold’s first play was back in Giorgetta’s old

introduction to mining when he moved to Kambalda in 1971. stomping ground of Kambalda with the Poseidon South mine

Page 23

LEGEND OF INDUSTRY

at Higginsville brought into production in May 1989, just 14 almost every investor was disappointed and by the time of
months after discovery. the challenge, only his mum was still onside.”

Poseidon South subsequently produced more than The coup sounds brutal but for shareholders who had
600,000oz over the following decade before closing in 1999, become disillusioned with the company’s performance, the
with Samantha Gold growing off the back of its Higginsville turnaround was almost instantaneous, within 18 months the
success. company was in production and is now worth $2 billion.

“As we got more cash flow we spent more on exploration and At the time, Regis was a modern-day gold success story but

kicked on and in the space of six years grew the market cap the company has been joined by an increasing band of mid-

to $800 million,” Giorgetta says. tier Australian gold miners in recent years. Giorgetta thinks

“By the time of its closure, Poseidon South was under the there is plenty of room for more and is frustrated by the lack

ownership of Resolute Mining Ltd of activity during what he sees as

which had paid $800 million to There is a lack “the best time ever to build a gold
takeover Samantha Gold in 1994. of experience in mine”.

Giorgetta wasted little time out of “I would like to see more starters,”

the game and within two years he developing projects; I think he says. “Every year at Diggers we

had raised $20 million at IPO for a some companies are a bit watch any number of companies
new float, Equigold. scared to take the plunge... who are on the cusp of production
but never seem to get there.
“By the end of 1996 we were in
“There is a lack of experience in
production [at Dalgaranga near
developing projects; I think some
Mt Magnet]. From there we kept
companies are a bit scared to take the plunge but there is
expanding and the big breakthrough came in 2000-01 when
no reason to be scared. Operations don’t have to be big,
we built the Mt Rawdon plant in south-east Queensland,”
they just have to be profitable. But, so many companies just
Giorgetta says.
want to keep exploring, making deposits bigger. However, to
Gold production from Mt Rawdon saw Equigold’s group do that they have to keep issuing paper and have to dilute
output swell to beyond 250,000 ozpa (it also had the shareholders before they are even in production. That is
Kirkalocka project in WA) but by then it was also attracting a big problem. At Samantha Gold, we only had 24 million
interest for its more exotic exploration moves. shares on issue when we went into production.”

“We moved into Cote d’Ivoire in the late 1990s. Following So, can we expect the veteran miner to go around again?
the end of the civil war we realised we could get big tracts
“I definitely don’t have another one in me but I’m happy to talk
of land in virgin country with the right geology. We preferred
to anyone to convince them that you have to back yourself
Ghana but Cote d’Ivoire has 35% of the Birimian greenstone
and go for it,” he says. “There is no doubt it is possible to do
belt within its borders, but only 6 moz of gold in resources
again. My advice is go back to basics, back yourself and
compared to 70 moz of gold in Ghana,” Giorgetta says.
make sure you have good people around you; pragmatic
Equigold ended up with 16,000sq km of licences in a country people who understand finance. People use far too many
which is now among the hottest gold exploration destinations consultants today; you should back your own judgement.”
in the world.
Giorgetta retains his long-held belief that mining is something
By 2008, it was building the Bonikro mine, motivating Lihir Australians should be proud of rather than embarrassed
Gold to come in with a $1.1 billion takeover for the company. about. In his role as chairman of Diggers & Dealers he has

By that time, Giorgetta had been in the industry nearly 40 been vociferous in his defence of the sector.

years but he felt there was still another effort left in him. “I love the industry,” he said. “Along with agriculture, it is the

“Some of the people we were working with, such as Mark only industry which creates new wealth, which is important

Clark and Morgan Hart, didn’t want a change of culture and at a time when there is a lot of wealth shifting around the

were too young to retire so we started over again,” he says. world.”

This time, the move involved Regis Resources Ltd, a It is clear Giorgetta’s pride in the industry goes beyond
rudderless WA gold explorer. simple value creation.

“We knew it had Duketon and thought it was undervalued,” “When we arrived at Mt Rawdon, the town was on its knees.
Giorgetta says.“We were content to just buy shares on market The community was very sceptical when we came in but we
but then found the management had raised $60 million in built the mine and on the back of that people were employed,
two years at ever-reducing prices. So, we approached the house prices doubled, young people got trades and training
managing director [David Walker] but he didn’t want a bar and the whole town changed as a result. It is still there and
of it. Instead, we challenged the board and quickly found will be 23 years of operation which is amazing.”

Page 24



DIGGERS & DEALERS PREVIEW

Precious memories set
to return to Kal

Paydirt executive chairman Bill Repard is on the bus again with the rest of team at Diggers & Dealers

Page 26

Diggers & Dealers organisers are expecting the busiest GMJ’S TOP FIVE
forum in five years, largely thanks to the renewed DIGGERS PRESENTATIONS:
interest in the gold space.
ROBERT ZOELLICK: The former US trade representative
Delegate numbers have been steadily rising from the lows and World Bank president has developed a reputation as
of 2013 and 2014, with more than 2,100 people expected a Republican who is prepared to question Donald Trump’s
to be in attendance for this year’s festivities. Those who take abilities. Zoellick is set to deliver his keynote address
in the plenary session will witness a gold resurgence with on gold’s place in the global economy and given he has
27 company presentations based around the precious metal. previously argued for a return of a modified gold standard,
The programme features the usual array of Australian mid- he is to deliver some controversy for the Day 1 audience
tier and junior miners – as well as an increasing number of
explorers – but will also have a big-company feel thanks to NICK HOLLAND, GOLD FIELDS: Chief executive of the
the presence of Gold Fields Ltd chief executive Nick Holland. largest gold producer in Australia, Holland is making a rare
appearance at Diggers. His presentation style may not be as
Holland’s address will be eagerly anticipated. Thanks to a flamboyant as his suits but underneath the measured tone
series of new discoveries and corporate deals, Gold Fields there is always biting comment about political risk and the
has grown into the largest gold producer in Australia over failures of the gold industry
the last three years. Some 43% of group production now
comes from Western Australia and late last year the South MICHAEL FOTIOS, EASTERN GOLDFIELDS: The well-
African miner’s intentions were further demonstrated by its regarded Fotios is certain to have a near-full house for
willingness to pay $350 million for a 50% share of Gold Road his presentation, having raised $25 million in April to fund
Resources Ltd’s Gruyere project in WA. development of the company’s Davyhurst mill and mining
hub project. Commissioning has begun at the 1.2 mtpa
With political turbulence in Ghana and South Africa, Davyhurst mill with the company set to build on its 1.6 moz
investors will be keen to hear Holland’s views on Australia’s resource base this year
investment credentials and whether the company plans to
expand its presence here. JUSTIN OSBORNE, GOLD ROAD RESOURCES: Gold
Road’s intentions to return to the drill bit are demonstrated by
This year’s keynote address will come from former World the presence of technical director Osborne, rather than Ian
Bank president Robert Zoellick. Murray, on the presenters list. With 16,000sq km of ground
and a $30 million budget to play with, Osborne will struggle
Zoellick served in President George W Bush’s cabinet as US to get through all his plans in 25 minutes
Trade Representative and was Deputy Secretary of State in
2005-2006. He currently serves on the board of Singaporean STUART TONKIN, NORTHERN STAR RESOURCES:
sovereign wealth fund, Temasek, and is the former chairman Having spent much of this decade listening to Bill Beament
of Goldman Sachs’ International Advisers. chart the company’s recent progress, delegates will have
a new voice to follow this year as chief executive Tonkin
Zoellick made headlines in 2010 when, as World Bank delivers the Northern Star address. The voice may change
president, he called for a modified gold standard to be but the tone won’t with Tonkin likely to continue the theme of
adopted in the global economy, saying gold could act as an growth for the mid-tier miner
international reference point for inflation, deflation and future
currency values. intrinsically linked to one of Australia’s last remaining iconic
mining towns. Kalgoorlie-Boulder receives a major economic
More recently, he has been an outspoken critic of US boost from the conference every year, and 2017 promises to
President Donald Trump’s protectionist rhetoric, warning a be as fruitful as ever with delegates likely to be more willing
trade war with China could have serious consequences for to open their wallets after the end of several lean years for
the world economy. the sector.
Diggers & Dealers chairman Nick Giorgetta said the forum
Whether Diggers & Dealers will be around to find out whether was going nowhere.
Trump’s tweets turn into policies in the coming years is still “Diggers and Dealers continues to take a long-term
open for debate. commitment to Kalgoorlie-Boulder and encourages all
parties to ensure the Arts Centre remains a valuable part of
The future of Australia’s largest mining conference is under the Goldfields community,” he said.
a cloud, following the West Australian State Government’s
insistence the City of Kalgoorlie-Boulder places the event’s
host venue, the Goldfields Arts Centre, on care-and-
maintenance from June 30 when its lease ended.

Minister for Education and Training Sue Ellery said the State
Government would honour existing bookings but would not
guarantee anything beyond June 30, 2018.

The decision has thrown doubt over the forum, which is

Page 27

Pan Pacific Perth 7
November 14-15

Keynote address:

Project: Alturas Project: Mount Morgans
Location: El Indio Belt; 500km north of Location: 20km west of Laverton,
Santiago, Chile Western Australia
Company: Barrick Gold Corp Company: Dacian Gold Ltd
Resource: 5.5 moz @ 1.25 g/t (inferred) Resource: 3.3 moz @ 2.3 g/t

Project: Hot Maden Project: Sanbrado
Location: 1,050km east of Istanbul, north-east Location: Burkina Faso
Turkey Company: West African Resources
Company: Mariana Resources Ltd/Lidya Madenulik Sanayi ve Resource: 894,000oz @ 1.7 g/t gold (reserves); 1.3 moz
Ticaret A.S. @ 1.4 g/t (resources)
Resource: 3.43 moz @ 15 g/t gold equivalent (inferred)
Project: Öksüt
Project: Yaramoko Location: Middle Anatolia,Turkey; 295km
Location: Balé, 200km south-west of south-east of Ankara
Ouagdougou, south-west Burkina Faso Company: Stratex International plc
Company: Roxgold Inc Resource:1.2 moz @ 1.4 g/t (reserves)
Resource: 738,000oz @ 17.1 g/t (indicated); 567,000oz @
14.31 g/t (inferred) Project: Federation/Liberator
Location: Northern Territory,Australia
Project: Yaouré Company: Newmont Mining Corp
Location: Côte d’Ivoire Resource: 650,000oz @ 6.5 g/t
Company: Perseus Mining Limited
Resource: 5.2 moz @ 1.54 g/t Project: Cascabel
Location: 180km north of Quito, Ecuador
Project: Gross Company: SolGold Inc
Location: Southwestern Yakutia, 125km Resource: Yet to be defined
north-east of Ikabya station, Russia
Company: Nordgold SE Project: Moose River
Resource: Proven and probable gold reserves 4.4 moz Location: 37km from Touquoy, Canada
(reserves); 7.6 moz (resources) Company: Atlantic Gold Corp
Resource: 760,000oz @ 1.44 g/t (reserves)
Project: Hope Bay
Location: Nunavat, Canada Project: Houndé
Company: TMAC Resources Location: 250km south-west of
Resource: 3.5 moz @ 7.7 g/t (reserves); 4.51 moz @ 9.2 g/t Ouagadougou, Burkina Faso
(resources) Company: Endeavour Mining Corp
Resource: 2.55 moz @ 2.09 g/t
Project: Nyanzaga
Location: 50km south-west of Mwanza, Project: Namdini
northern Tanzania Location: Bolgatanga region, Ghana
Company: OreCorp Ltd/Acacia Mining plc Company: Cardinal Resources Ltd
Resource: 2.22 moz @ 3.48 g/t Resource: 4 moz @ 1.2 g/t

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DIGGERS & DEALERS PREVIEW

Bartons gets the nod

$22 million will be spent on exploration at Nullagine in 2017

by Michael Washbourne

An extensive review of the depth potential at Millennium “Nullagine has that same potential to us. I think it will be
Minerals Ltd’s Nullagine mine identified the high-grade that natural progression of the region, as we’ve seen in the
Bartons deposit as the leading candidate for the company’s Eastern Goldfields.”
first underground venture.
High-grade material from the underground is expected to
Subsequent metallurgical test work demonstrated the deeper help Millennium offset the higher costs it incurred in the first
fresh ore from Bartons can be treated through Nullagine’s half as a result of operational interruptions caused by heavy
existing CIL plant, in the Pilbara, Western Australia. rainfall in the region.

Millennium opted to fast-track a cutback at Bartons in late Several pits required dewatering, with Millennium forced
June, with pre-strip works taking place at the time of print. to process a greater portion of low-grade stockpiles than
planned.
Two drill rigs were also turning at Bartons ahead of impending
resource and reserve estimates. Nullagine’s output of 16,543oz for the March quarter was
about 3,500oz below guidance, with the mine expected to
Millennium chief executive Peter Cash said his company produce 19,000-21,000oz at $1,340-1,380/oz AISC for the
hoped to establish its first underground mining operation June quarter.
before the end of the year.
Millennium’s full-year guidance is 80,000-85,000oz at
“A big part of the upside for the Millennium story is that each $1,190-1,220/oz.
and every one of our orebodies is open at depth,” Cash told
GMJ. “We incurred some additional cost to catch up, but it’s really
set us up for the back half of the year,” Cash said.
“We only chose four deposits out of about 30 to drill
underneath and Bartons was a clear winner. We’ve gone “We’re back on a level playing field now and we should see
back in there and done subsequent drilling programmes and about 40,000-42,000oz at around $1,200/oz AISC for the
built a conceptual underground mine design and schedule second half of the year.”
before we embark on this next phase.
Millennium has also been working away feverishly on
“The high-grade material coming from the fresh rock at improving gold recoveries at Nullagine, with test work on
Bartons shores up our back end of the year. We’re expecting fresh ore from five deposits pointing to likely increases in
to move from a 1.5 g/t head grade to north of 2 g/t from the both mine life and annual production.
fresher material.”
An expansionary study assessing the potential addition of a
Incoming chief operating officer Dean Will has been tasked flotation circuit is due at the end of July and, if feasible, such
with driving Millennium’s underground strategy. a facility will be constructed for first processing in early 2018.

Cash said there was a buzz building inside the company as “We’re looking to exploit the significant inventory of fresh
the prospect of mining from underground edged closer. ores that require flotation, with a view that we can lift
our production profile from 80-85,000 ozpa, through the
“We’ve always drawn analogies between Nullagine and the combination of both treating free milling fresh ores as well
early phases it’s in with the Eastern Goldfields,” he said. as sulphides ores, to north of 100,000-120,000 ozpa,” Cash
said.
“If you look at any of those historic operations in the Eastern
Goldfields, from Norseman to Kalgoorlie and all the way up “It’s all focused on margin. It’s great to lift your production
to Wiluna, they all commenced their life as shallow, oxide profile to north of 100,000oz, but if you’re not maintaining
open cuts. Over the course of the last 20-30 years they’ve your margin there is no point.”
been turned into Tier One assets by exploiting the depth
potential from underground.

Page 30

Saintly options for Barbs

by Mark Andrews

Cashed-up and debt free, St Barbara production of 30,430/oz at AISC of $1,025/oz.
Ltd is well and truly off the canvas
and entering a new phase of growth. “Simberi is having a blinder and punching well above
its weight now,” Vassie said.
The company has already committed
to spending $100 million on the Gwalia Nevertheless, St Barbara has hedged 50,000oz gold
Expansion programme and once fully at $1,725/oz and another 50,000oz at $1,730/oz at
complete – within the next three years – Simberi to be delivered from July 2017 to June 2018.
there will be options aplenty at the mine.
St Barbara has hit a sweet spot in PNG with Simberi
A ventilation upgrade and paste and it is hoping the farm-in with Newcrest Mining Ltd
aggregate fill involving mixing paste from on Tatau Island can also bear fruit.
surface with waste crushed underground
to fill stope cavities are the two major The target for Newcrest and St Barbara is a
works comprising the Gwalia Expansion. significant copper-gold porphyry find, with regional
soil sampling undertaken in the March quarter.
Upon completion of the programme, Bob Vassie Success at Tatau will mean further exposure in
mining at Gwalia – one of Australia’s highest-grade and
lowest-cost gold mines – can extend to 2,000m below PNG and while options in other jurisdictions are
surface by FY2024. also being considered, St Barbara has made a couple of
plays in Australia already.
St Barbara is already drilling down to about 2,200m with
eight holes passing through intervals representing the South After scouring gold ground in Australia that wasn’t too
West Branch and South Gwalia Series reported in the March tightly held by the majors, the company came up with eight
quarter. opportunities to target.

Subject to successful exploration, St Barbara is prepared to While all of them weren’t transact-able at the time, high
go deeper and can do so with relative ease given the work priorities on the list were Peel Mining Ltd (active in New
done on the Gwalia Expansion. South Wales’ Cobar Basin) and Catalyst Metals Ltd which
manages the entire Whitelaw gold belt in Victoria.
“That whole expansion of Gwalia is likely to be a longer-term
gain,” St Barbara managing director Bob Vassie told GMJ. Both Peel and Catalyst have JVs with other companies and
now welcome St Barbara’s equity participation.
“Outside of that, we have done all the data acquisition
around Gwalia with deep 3D seismic on either side, which “The reason we made equity investments was because of
is being processed at the moment. That will help us target existing arrangements those companies had in place. Our
other shears or structures around greater Gwalia. Whether preference would be an earn-in style arrangement in which
we are successful with the exploration phase or if we want you can spend enough to know whether you want to be there
to go deeper at Gwalia, our cash flow is so strong we can or not. If things go really well then we will end up with a share
well afford it.” of the project; that is our preferred model,” Vassie said.

The company reported $161 million cash at bank at the end St Barbara’s willingness to participate in early-stage to
of the first quarter, and the board is now faced with a decision advanced-stage plays could potentially be a boon for juniors
on what to do regarding dividends and further investments. sitting on prospective projects, but effectively hamstrung by
cash flow to fund exploration activities and studies.
“The bank balance is growing and we can afford our future
organically,” Vassie said. Given the strong cost and production performance at Gwalia
and with Simberi contributing solidly, there is no need for any
“Inorganic growth is another matter and something we turn hasty decision making by St Barbara.
our attention to. It is something that we can’t control too much,
but we are busy looking at opportunities both in Australia Rather, the company can focus on further enhancing its
and in selected jurisdictions we consider reasonable.” status in the Australian gold sector.

Beyond Australian borders, St Barbara is represented in “We are on track for another excellent year and in fact we will
Papua New Guinea where the Simberi operation performed break some new records,” Vassie said.
at unprecedented levels in the March quarter, with record

Page 31

DIGGERS & DEALERS PREVIEW

S2 flies where eagles dare

by Mark Andrews

Although Sirius Resources has been Mark Bennett
defunct since Independence Group
NL acquired the company for the Nova the top 20 or 30 investors are the bigger investors and are in
nickel project in 2015, the name still it for the international stuff that is what we are doing.
bears great relevance for Mark Bennett
and S2 Resources Ltd. “You can’t be driven by what people are saying, [you must]
have a strategy and stick to it, otherwise you end up not
But, it is also a double-edged sword, as achieving anything.”
S2 managing director Bennett explained
to GMJ recently. S2 will spend the Northern Hemisphere summer aligning the
ducks on the ground in Sweden and Finland, with a series of
“Sirius is a great advantage because prospecting and geophysical activities required to generate
we are known to people now. A lot of a decent pipeline of drilling targets.
people have made a lot of money out of
that and got to understand what we do After using in-country expertise in Sweden and Finland
as a company – high risk, high reward during the settling-in period, S2 now has its own people on
exploration – and are in it for that,” he the ground to find the next company-making orebody.
said.
“We are just doing what we have always done really, but
“Shareholders are much more aligned to that sort of exploration is characterised by long periods
what we are doing than would otherwise of apparent inactivity when we are doing all the leg work.
be the case and it does give you that Then, one day we maybe make a discovery which appears
extra credibility showing that we can to have been made overnight but we have actually spent the
make discoveries and actually turn them previous five years prepping,” Bennett said.
into mines as well. At the same time, it
brings an expectation that you can pull The stated ambition is to capture an elephant-sized deposit
another rabbit out of the hat instantly, and to do that, S2 has spent the past two years consolidating
which is a bit amusing; you have to walk
before you can run.”

Sirius’ non-core assets were spun into S2 following the
Independence takeover but Bennett said the new entity had
experienced “an interesting, polarised” start.

With a mostly Australian investor base, pushing the
350,000oz Polar Bear gold project along was expected to
be the priority. However, its location under a salt lake setting
means there are challenges to overcome and despite
rumblings from some investors to focus on the local play, S2
has placed Polar Bear on ice, with Bennett adamant there
are bigger fish to fry in Scandinavia.

“We have switched our positions entirely,” Bennett said of
S2’s strategy to focus on exploration in Scandinavia.

“Primarily, most of the investors are in S2 because of their
belief in Scandinavia and the international stuff and they
don’t really care about Polar Bear; a lot of them see Polar
Bear as a distraction. At the same time, the smaller retail
investors who haven’t taken the time to think through that
still see Polar Bear as [the priority] because it is what they
understand. We have this dual attitude, if you like, but given

Page 32

the Central Lapland million at the end of March
greenstone belt, to the – Bennett is confident
point of accumulating raising money won’t be
40% of available ground an issue when the time
in northern Finland. comes.

It may be unfamiliar The compelling investment

territory for some down case being built in Finland

under, but Bennett likens and at the Skellefte zinc-

the Central Lapland copper-silver-gold VMS

greenstone belt to West project, Sweden, is the

Africa 30 years ago. current lure for investors,

“There’s [currently] one with S2 working on

big mine and not much a sweetener in North

else,” he said. America at the time of

In addition to being one print.

of the more significant Sticking to its niche

landholders, S2 is also of early-stage base

an early-mover in the and precious metals

region. exploration, S2 is finding

gbphTrai/hgtismeg7re.ee7bsfeortmeergeaono,lzldetaKhsbmiettlateiitlncaeeotpo;omrnAoplgjaauennnncidycdt.oerE-eaxgplleorMedinegsroLutndd’sn5e5amr [email protected]’e3snlCaenndt,rhalasLgthaobepledlcaaonhmmdaosegurabenneetneeosxntfpoflanooevruaanbtiideloalntib,nhlnetoohtrgsethproleoarutsnntddeinchNpaNaldeeedevnv.ataydbdaeao.e,fBnweohnpsenpureoreptrttru5issn0aeiitddmy hoainezt
“There are lots of places there which have never seen a
Kittila is in similar surrounds to Anglo American plc’s copper- drill rig; I thought it would be a place that has been done to
nickel-PGE and Boliden’s Kevitsa nickel-copper-PGE mine. death. The fact that people are still finding big things there
now shows a lack of [exploration] maturity,” he said.
Even more encouraging for S2 has been the recent discovery
by TSX-V listed Aurion Resources Ltd. “Hopefully, we will be able to consummate something in
North America, which will be another exploration project not
Aurion discovered a 1.1km-long by 500m-wide area of an operation. We haven’t had to test the North American
high-grade gold mineralisation in the Aamarusko zone late [capital] market yet, but if we do find something and should
in 2016 at the Risti project, with the average grade of 133 we ever wish to dip into the capital markets, having a project
samples being 74.3 g/t gold.

“The market got excited about Aurora’s discovery in one of there will certainly position us better.”

the few remaining unexplored gold belts and now every man

and his dog wants to be there,” Bennett said. Former Doray Minerals Ltd managing director Allan Kelly

Notable players joining Aurora and S2 in the belt include was preparing a new gold listing at the time of print.

Canadian miner B2 Gold Corp with the Kutuvuoma project, Kelly, who founded Doray in 2009 and masterminded the

and Rupert Resources Ltd which has the permitted high-grade Andy Well gold discovery in Western Australia,

Pahtavaara mine where results from recent drilling returned will head Riversgold Ltd.

four holes grading over 10 g/t gold, including 1m @ 245 g/t. An IPO, raising up to $8 million at 20c/share, was the plan

Such prospectivity has thrown the spotlight on Finland and for Riversgold, which has a number of drill-ready targets to

S2 has not gone unnoticed in the field. hit upon listing.

“All through the Sirius days no-one really paid our booth at Investors keen on Riversgold will get exposure to projects
PDAC much attention even though Nova was exactly the in the Tintina gold belt, Alaska, the Eastern Goldfields
nickel-copper deposit they understood, it was just irrelevant and Cambodia where a JV has been agreed with Emerald
to them. However, despite S2 being a much smaller company, Resources NL over ground adjacent to the latter’s 1.13 moz
Finland being this new hotspot meant our booth at PDAC had Okvau gold deposit.
never been busier. We were swamped with people interested
in Finland,” Bennett said. Joining Kelly at Riversgold is former Western Metals and First
Quantum Ltd mining engineer Rod Webster (non-executive
The response was similar at Mines and Money in London chairman) and founding director of Sirius Resources Jeff
and while flush with cash at the moment – S2 had $19.3 Foster (non-executive director).

Page 33

DIGGERS & DEALERS PREVIEW

Classic play at Forrestania

by Michael Washbourne

Classic Minerals Ltd has barely come up for air since Classic will raise more money this year,
acquiring the Forrestania gold project in March. according to managing director Justin Doutch

Diamond and RC drill rigs are now turning at the project, up a lot more ounces. We’re striving to get to 500,000oz
120km south of Southern Cross, with the company having within 12 months.” Classic’s maiden drilling programme
also completed and delivered a scoping study while adding – comprising about 3,000m of diamond and RC drilling –
another gold play to its rejuvenated portfolio. began in early June, with first assay results expected back
from the lab at the time of print.
“It’s fair to say we’ve been pedalling pretty hard the last
few months since acquiring the project,” Classic managing Initial drilling was focused on testing high-grade depth
director Justin Doutch told GMJ. extensions at Lady Ada and Lady Magdalene as well as
additional high-priority targets around the former Sons of
Previously focused on copper-nickel prospects in the Gwalia operations.
Fraser Range, Classic jumped at the chance to advance
Forrestania, which hosts two known deposits and a JORC- “The gold price back in the early 2000s wasn’t justifying
compliant resource of 5.9mt @ 1.25 g/t gold for 240,000oz. enough for Sons of Gwalia to drill anything at depth, but
obviously now is a great time to be involved with gold and
Forrestania is part of the same mineral province as Western have a near-term project like this,” Doutch said.
Areas Ltd’s namesake nickel operations, Kidman Resources
Ltd’s Earl Grey lithium project and the former Bounty mine. “We’ve reviewed a lot of the data over the last 3-4 months
and we’ve been looking a fair bit at these possible extensions
An extensive review of historical data on the Lady Ada which run to the south-southeast of both of the main deposits.
and Lady Magdalene deposits allowed Classic to finalise a
scoping study on May 1, exactly two months to the day since “Our deepest hole out there is going to be around 250-300m
picking up the project. because we think these high-grade zones can continue at
depth. There is potential for a decent-sized deposit which the
Based on a $1,700/oz gold price, the scoping study found drilling will hopefully justify.”
the project could produce 111,000oz over 2.5 years at a
diluted grade of 1.95 g/t gold for an initial development capex Classic also snapped up the rights to two exploration licences
as low as $25 million, plus contingency and working capital which comprise the Kat Gap gold project, about 50km south-
totalling about $14 million. southeast of Forrestania. Kat Gap hosts a historical inferred
resource of 440,000t @ 2.9 g/t gold for 42,000oz over the
Other key financial metrics from the scoping study included 37.5sq km permitted area.
free cash flow of $60-70 million, NPV of $52-58 million, AISC
of $1,080-1,160/oz and payback within 18-24 months. “We looked at that project being within 80km of the two main
deposits at Forrestania and we believed quite strongly it
“The scoping study itself has given us a lot of confidence would complement what we have up the road,” Doutch said.
that this project, although it has a known resource, has the
potential to grow and that’s what we’re testing now,” Doutch “We’re planning some drill programmes over that, obviously
said. once we’ve finished this programme [at Forrestania].”

“We want to get that life-of-mine around the five, six, seven- The impending sale of the Doherty’s gold project, 65km
year mark and to do that we obviously need to drill and pick north of Sandstone, for $1.2 million will provide a timely
cash injection for Classic as it looks to aggressively ramp up
exploration at Forrestania.

Page 34

History on Katanning’s side

by Michael Washbourne

Matthew Greentree’s previous association with the 1.56 g/t from 92m and 4m @ 3.47 g/t from 102m (including
Katanning gold project could be a boon for Ausgold Ltd. 1m @ 11.05 g/t from 105m).

Greentree, who joined the company as chief executive Gold mineralisation was identified over a strike length of at
in April, worked on the project during his time with SRK least 600m and remains open along strike and down-dip.
Consulting, making him a standout candidate for the top job
at the junior gold explorer. “Datatine is a bit different to the other prospects in terms of
orientation,” Greentree said.
“I always felt the project had a lot of merit, I see a lot of
opportunities which haven’t been realised,” Greentree told “One of the [historical] drill holes intercepted economic
GMJ grades…but we could never explain it. New geophysics
showed the drill lines were pointing in the wrong direction
“I looked at the Katanning project back in 2013 and I’d kept so we turned [the drill rigs] 90 degrees and you can see
in touch with [executive director] Denis
Rakich since then, so when he started from the results we have extensive,
dropping hints about needing to appoint reasonably high grade mineralisation.”
a CEO with an exploration bent, we got
talking more. As part of the company’s review of
Katanning, Ausgold made the decision to
“So here I am, it’s been a busy start and acquire the nearby Dumbleyung project
the work I’m doing now – and will be from Chalice Gold Mines Ltd for 15
doing over the next year or so – will be million ordinary fully paid shares, plus 10
to try and develop the project as far as million options exercisable at 3.5c/share,
we can push it.” expiring after two years.

Greentree has spent his first three Chalice is also subscribing to a placement
months in the hot seat overseeing of $1 million (40 million shares in Ausgold
a review of the assets in Ausgold’s at 2.5c/share) as part of the transaction
portfolio, with an impending resource for Dumbleyung, which is comprised of
update for Katanning to be the project’s four tenements totalling 461sq km.
first major milestone under his reign.
Matthew Greentree Ausgold now holds more than 4,000sq
The new estimate will incorporate the undefined Frasers km of prospective tenure around
deposit and a portion of the main Jinkas lode into the
16.4mt @ 1.21 g/t gold for 637,000oz resource previously Katanning, which Greentree believes is the ideal platform for
announced in October 2015. his company to launch its revised strategy.

“I want to understand what we’ve actually got and what we’ve “I think we’re sitting in a nice space because we’re an
got to do next in terms of resource definition,” Greentree said. explorer, but we’re also sitting on 637,000oz so people are
already looking at us in terms of becoming a developer,” he
“Building on from that, there will be a programme to extend said.
the resource. We’ve also got three other moderately
advanced exploration targets we will be drilling as well as “Being an explorer is great, it gives you lots of flexibility, but
some infill drilling and resource extension work. having a big resource base is what people look for in terms
of value. There’s a lot of growth potential in this larger ground
“It’s what you call your low-hanging fruit, easy stuff we can holding we’ve now got hold of.”
deliver ounces on.”
While most of the attention will be on Katanning, Greentree
Greentree is also keen to follow up on some encouraging is also excited about the other projects – Yamarna (nickel-
recent drilling results from Datatine, one of the high priority copper) and Doolgunna (copper-gold) in Western Australia
targets he put forward in his 2013 technical review of the and Cracow (copper-gold) in Queensland – in the company’s
project. exploration portfolio.

Some of the better intercepts recorded at Datatine from a Ausgold has applied for a co-funded drilling campaign at
RC programme completed earlier this year were 12m @ Doolgunna, adjacent to the DeGrussa copper mine and
2.01 g/t from 73m (including 3m @ 4.3 g/t from 80m), 4m @ within 20km of the Plutonic gold mine, to test a series of
near-mine targets later this year.

Page 35

DIGGERS & DEALERS PREVIEW

Win-win for Musgrave

by Michael Washbourne

By the end of July, Musgrave “From our perspective at the
Minerals Ltd will either have moment, our EV is sitting around the

a new JV partner at Cue or own $12 million mark, with the majority

the project in its entirety. of that value attributed to the Cue

Silver Lakes Resources Ltd has JV, so we think it puts the EV of the
divested its remaining Murchison project at around $12 million.”

assets, including its 40% interest Waugh said both Lena and Break of

in Cue, to Westgold Resources Day remained open – to the north

Ltd for a total consideration of and south respectively – with the

about $10 million. company planning to follow up on a

Musgrave has been farming into Musgrave is preparing maiden resource number of shallow RAB anomalies
Cue since late 2015 and is on estimates for Break of Day and Lena in the regolith post resource update,
track to lift its stake in the project before opening the books for a
to 80% by the end of this quarter. scoping study.

Under the terms of the farm-in agreement, Further exploration along strike
Musgrave had 30 days from June 23 to exercise a pre- to find replicas of Lena and Break of Day is also on the
emptive right to purchase Silver Lake’s remaining interest in immediate agenda.

Cue on equivalent terms. The impending resource update will be the first estimate

Westgold has put $1.5 million on the table for the JV interest. released by Musgrave since taking on the project more than
Musgrave reported a healthy cash position of $4.1 million at 18 months ago. Exploration success has seen the company’s
the end of May. stock grow from just 1.6c at the time of the acquisition to as a
high as 13c/share last October.
At the time of print, Musgrave had not informed the market
of its decision. Speaking to GMJ in late June, Musgrave Some of the better gold hits include 21m @ 21.5 g/t from
managing director Rob Waugh said both options were 157m, 14m @ 14.4 g/t from 111m and 15m @ 16.6 g/t from
attractive. 170m at Break of Day and 3m @ 46.8 g/t, 4m @ 19.6 g/t and
2m @ 17.3 g/t at Lena.
“Either we have Westgold as a new JV partner and the
structure of the JV won’t change, or we accept the pre- “It was the right timing in the market for us to get involved,
emptive and Musgrave becomes 100% owner of the project,” just before the gold price really started to kick up,” Waugh
Waugh said. said.

“In any case, it’s a very good outcome for Musgrave in that “We’ve seen our share price increase and the market
we could have Westgold as a partner, who are a fantastic capitalisation of the company has increased. We certainly
operator and very active in the region, or we have flexibility felt it was a very good opportunity for us to get involved in
to progress it how we want.” some gold upside, but also the base metal upside in the
project and really that has proven out over time.”
Westgold is also acquiring the Tuckabianna gold processing
facility and underlying mining tenure from Silver Lake, adding Recent drilling at Mt Eelya, within the northern Hollandaire
another potential milling option to the mix if Musgrave can project area, returned a number of encouraging base metal
advance Cue to that point. intercepts, including 16m @ 3.1% zinc and 0.2% copper
from 12m downhole (including 2m @ 18.1% zinc and 0.5%
Tuckabianna and Ramelius Resources Ltd’s Mt Magnet copper from 17m downhole).
operations are both within 40km of Cue.
“There’s significant potential for additional VMS deposits to
Musgrave is also preparing to imminently release updated be found in the region,” Waugh said.
resources for the Break of Day and Lena deposits, building
on the 1.93mt @ 2.05 g/t for 126,900oz previously defined “We know VMS is formed within fields and clusters and, as
for the Moyagee project area. such, it really highlights the potential that Musgrave has on
the base metal front.”
“That resource upgrade will really give us a better picture of

the value of that bid from Westgold,” Waugh said.

Page 36

Alto’s new look at old patch

by Mark Andrews

Western Australia’s gold-bearing Sandstone belt has produce 100,000 ozpa gold of high-grade oxide/primary gold
been well looked over since mining started in the material over 7-10 years.
region in the 1890s.
“The bigger picture here is to explore a number of areas we
Soft oxide ore extracted near surface has provided a bounty believe have a chance of being 1 moz gold deposits,” he said.
for companies in the Sandstone area however very few have
been prepared to test gold potential at any real depths. “We are following up the low-hanging fruit left behind by
others. Some of these prospects could turn into 1 moz
In the modern era, Troy Resources Ltd showed the way in a deposits or may end up not being standalone deposits, but
production sense, pouring Sandstone’s 300,000th ounce of could potentially be mined and treated in someone else’s
gold back in 2006. treatment plant.”

By 2010, Troy had produced more than 500,000oz gold from If toll treating some of the oxide material from Sandstone is
Sandstone, with the profitability of the mine allowing for the path chosen, Ryan said there were a number of options
dividends to be paid and spreading shareholders’ exposure for Alto to consider.
to projects overseas.
In the meantime, the priority is delineating relatively shallow
Sandstone was placed on care-and- gold deposits, such as the newly discovered
maintenance in September 2010, Troy leaving Indomitable and Vanguard North plays and re-
a decade and $20 million worth of exploration looking at the historic Lord Nelson and Lord
data behind. Henry mines where Troy started operations in
2005 and 2006, respectively.
Alto Metals Ltd is the latest beneficiary of the
database and although it is taking a different In keeping with its short-term objective, the
approach to exploration in the area, managing company completed 94 aircore holes at
director Dermot Ryan told GMJ there was Indomitable, Vanguard and Bulchina earlier
ample material to leverage off in the Yilgarn. this year

“We have a comprehensive database, so we Dermot Ryan “We are currently processing 1m samples,
pretty much know where all the drilling has we finished that aircore programme in late
been done. I think the work by all previous explorers has
been to a very high standard; it is a question of the strategy May and have engaged a RC drill programme to follow up
they have employed,” Ryan said. the results at Indomitable and Vanguard North. Between
now and Diggers & Dealers we will be pushing as many of
“Troy had a relatively small mill and could treat relatively soft those aircore holes as far down as possible and getting our
material which drove their exploration strategy. We are not 1m splits back and also 4m composites back from the RC
constrained by that mill and we are exploring for something programme,” Ryan said.
bigger, in the hard rock predominantly. My experience says
the big high-grade deposits are in the fresh rock and not the At the time of print, RC drilling was being undertaken at
oxide zone in the Yilgarn.” Indomitable, with the rig destined for Vanguard North next.

Ryan said most of the drilling conducted in the Sandstone Having only started to get busy on the ground in March
area had been to a depth of a 100m or less, with only a 2016, Alto has made an encouraging start at Sandstone with
dozen or so holes punched deeper. 4m composite samples from Vanguard reported recently
including 13.2 g/t, 12.1 g/t and 9.1 g/t, while 1m and 4m
“If you look at the major deposits in the Yilgarn, some of composite samples from Indomitable included 3m @ 3.7 g/t
those pits are 100-150m deep and certainly underground from 120m, 11m @ 2.1 g/t from 45m, including 2m @ 6.9 g/t
workings are down to 1,000m.” from 60m, and 9m @ 3.5 g/t from 64m.

Acquiring a project with a well-known mining history and Progression made at Vanguard and Indomitable will provide
existing resources totalling 3.58mt @ 2 g/t gold for 228,400oz major news flow for Alto this year, while bringing other
means there is some “low-hanging fruit” Alto could process prospects into play is also on the agenda.
for a quick buck in the near term but Ryan has a longer term
vision for the company. Aircore and RC drilling totalling about 20,000m was in
progress with resource estimates on all known deposits
The strategy is to look for 1 moz-plus deposits, ably suited to expected by the end of the year.

Page 37

DIGGERS & DEALERS PREVIEW

Middle Island planted
on Sandstone

Rick Yeates by Mark Andrews

With PFS numbers to reboot the 600,000 tpa Sandstone
mill falling a fraction short, Middle Island Resources
Ltd has been at the drawing board devising another plan to
make the project work.

As it stands, the project is operationally sound, however,
the mineral inventory within currently economic in-pit shells
is not sufficient to warrant recommissioning of the mill and
associated infrastructure at an estimated cost of $9.5 million.

Therefore, Middle Island is assessing options to extend
and enhance the production profile by identifying a modest
quantity of high-grade ounces – circa 2 g/t gold – which can
be brought into the front-end of the production schedule.

“It is primarily about identifying 10,000-20,000oz of high-
grade ore we can bring into the front-end of the schedule so
we can improve project payback,” Middle Island managing
director Rick Yeates told GMJ.

The company has a series of options it is looking at to boost
inventories and hopes to complete works in progress, allowing
for a decision to be made to start or defer rejuvenation of the
Sandstone project in December.

Transactions such as the recent Wirraminna option would
likely help Middle Island’s cause to add high-grade open pit
tonnes to the production schedule and provide a catalyst for
the earlier recommissioning of the Sandstone plant.

In June, Middle Island signed an option deed to fully acquire
Wirraminna at an exercise price of $300,000 payable at any
time within a four-year period.

A resource of 10,000oz at about 2 g/t gold exists at
Wirraminna, with potential at depth and at least two other
mineralised laterite deposits associated.

Middle Island is excited by the potential at Wirraminna given
previous drilling intercepts of 11m @ 23.8 g/t gold, 16m @
14.6 g/t and 19m @ 4.85 g/t.

“Wirraminna may well represent part of the answer to a
decision on recommissioning, but at this stage we suspect
that it is probably not the whole answer, so we need to find
something to complement it,” Yeates said.

“We need to find something in the short term. We have done
some recent drilling at the McIntyre prospect and identified
thick, low-grade zones we feel have been depleted near
surface to some extent. They are very shallow dipping, so

Page 38

Despite a long history of exploration, many greenfields opportunities remain at Sandstone

we need to track that down-dip to see if we can find some may be beyond us,” Yeates
high grade associated with the mineralisation.” said.

Results from recent RC drilling at McIntyre included 25m @ “As such, we are keen to
0.81 g/t gold and 8m @ 1 g/t, with further drilling along strike identify any mid-tier or major
and down-dip planned for the second half of 2017. miners, particularly those
with block-caving, sub-level
Additionally, RC results from Two Mile Hill which will be experience to have a look at
incorporated into an updated resource estimate prior to the opportunity with a view
further pit optimisation studies included 2m @ 44.7 g/t gold to partnering with us on that
and 4m @ 3.37 g/t. particular deposit.”

A 400m gold mineralised intersection from a diamond hole at With Two Mile Hill recapturing Over the last 30 years more
Two Mile Hill has provided the encouragement to complete outside attention and offering than 1 million metres of drilling
one more diamond hole into the target – funded by an EIS potential longevity for Middle
grant – in the near term. Island, Yeates said there has been completed in the
was plenty to contemplate, Sandstone greenstone belt
“Two Mile Hill is a fabulous system; the tonalite is a felsic but was confident both near-
intrusive, the surface dimensions of which are 250m length term and long-term ambitions
and 80m width and we drilled it to 500m. It is effectively could be met.
mineralised from end to end and top to bottom. It is intensely
altered, saracite carbonate altered, intensely sheeted veined; The scope of work for Middle Island includes further
veining is arranged in sub-horizontal orientation, with a lot of greenfields exploration at Sandstone, where Yeates believes
visible gold throughout that veining,” Yeates said. there is substantial potential.

The open pit cutback at Two Mile Hill is already in the “There is a multitude of targets we are trying to prioritise to
Sandstone production schedule, with Middle Island also drill over the next six months. That is just within our block
looking at an underground mining operation to access high- alone, which demonstrates the greenfields potential there,
grade mineralisation. but certainly over the last 30 years or so there has been more
than 1 million metres of drilling completed in the Sandstone
The high-grade material is within a banded iron formation greenstone belt,” he said.
adjacent to the tonalite at a depth of about 200m.
“There is something like 2% of that drilling below 100m
There are three options being considered to access ore depth. Given in Archean terrain the longest dimension of
underground; open stoping of high-grade zones within the any deposit is almost always in a down plunge direction it
tonalite; semi-selective mining within the tonalite via sub- is only logical, particularly given it is such a high-grade field,
level caving; and block caving of the entire tonalite, which is that there is substantial opportunity at depth. It is really more
the most obvious option at this stage. about access to appropriate funding to be able to explore the
potential at the moment.”
“The first option is within our reach given our balance sheet
at the moment; the latter two options involve a lot of pre-
production capital which, where we stand at the moment,

Page 39

DIGGERS & DEALERS PREVIEW

Finding Latitude at Mt Ida

by Michael Washbourne

Latitude Consolidated Ltd is including 4m @ 3.34 g/t from
holding fire on an immediate surface (including 1m @ 8.58
resource update for its Mt Ida g/t) and 8m @ 4.34 g/t from
gold project. 7m (including 5m @ 6.61 g/t).

An update of the existing “We got some great intercepts,
1.24mt @ 2.5 g/t for 97,300oz we proved the mineralisation
gold resource was planned for was contiguous and we
this quarter following a series of extended the strike extent
positive drilling results. of the mineralisation quite
significantly,” Edwards said.
However, the company has
elected to do further work on Latitude has been actively drilling “Probably what we’re most
the project, about 110km west at Mt Ida since last October excited about is the contact
of Leonora, with a view towards between mafic and ultramafic
putting out a more substantial rocks at Tim’s Find because
resource in due course. the mineralisation is
consistent and contiguous
“We were ready to go and along this contact.
upgrade it, but we had a bit of
feedback which basically said we wouldn’t get a massive “Every time we put a drill hole
bang for our buck based on the size of the resource we were down and we hit that contact, we hit mineralisation. It’s a big
initially targeting,” Latitude chief executive Mike Edwards told strike length, we know the mineralisation is there, now it’s
GMJ. just a matter of defining it.”

“It was decided it would be a much better idea to keep Desktop study work from exploration manager Alan Downie
fleshing it out, try and get it to 2-2.5km [strike length] and and structural consultant Jon Standing, of Model Earth
then do the upgrade where it could end up being triple or Consulting, has also highlighted potential for resource
even quadruple what we’ve got. If it’s a quite significant extensions at the historical Boudie Rat and Forrest Belle
upgrade, we have a much better chance of getting the uplift pits, both to the north of Tim’s Find.
we’re looking for.”
Both pits were only mined to a maximum depth of 25m in the
Latitude started acquiring ground along the Mt Ida gold belt late 1990s, completed on the back of limited drilling.
last July, initially pulling together 64sq km of prospective
ground. “There is a good chance this mineralisation could extend the
full length of our mining licence,” Edwards said.
The company now holds more than 312sq km of tenure,
including the Quinn’s and Mt Ida South gold prospects, and “Our mining licence is 4km and the next round of work will
has been actively drilling at the project since October. be some aircore to really try and firm up exactly where this
mineralisation is. Then we’ll come back in and hit it with
Edwards admitted his company’s approach to the first drilling some RC drilling.”
campaign had been “a bit scatter gun” due to some tenement
expenditure requirements and a desire to test a handful of Edwards said his company was “constantly reviewing” other
prospective targets. projects, not just in the Mt Ida region, as it looked to build its
portfolio and boost its profile in the exploration game.
It proved to be the right strategy as there were no complaints
when drilling confirmed the potential of the Tim’s Find With just under $1 million in the bank at the time of print,
prospect. Initially, drilling looked to test mineralisation down Latitude is likely to rattle the tin for some extra cash to ensure
to 60m as well as potential high-grade extensions over a it has enough funds to complete all its upcoming work.
strike length 400m to the south.
“We’ve got broker support at the moment, so if we wanted to
Latitude recently confirmed the shallow mineralisation had go and raise a couple of million dollars we could, but that will
extended beyond 450m to the south – a total strike length come down to a decision from the board on how they want to
of over 1,350m – with drilling returning encouraging results, play it,” Edwards said.

Page 40

Parsons Draig-ed back
in by Bellevue

by Mark Andrews

Having sealed the deal to sell Gryphon Minerals to September quarter, leading
Canadian outfit Teranga Gold Corp at the end of 2016 into the extension and
for $100 million, Steve Parsons took some time out from the underground programme
industry. later this year.

After a decade in Burkina Faso developing the 3.6 moz “It really doesn’t get any
Banfora gold project, a longer stint on the sidelines would better than having walk-
have been ideal for Parsons, however, he says some up targets to drill,” Parsons
opportunities are too hard to ignore. said.

The Bellevue gold project, near Leinster in the Wiluna- “These old targets haven’t
Norseman gold belt, Western Australia, was the hook,
Parsons joining Draig Resources Ltd as executive director been looked at for 20 years,
at the end of March.
so we are refining them all
“Sometimes, when things present themselves you really do
have to jump on them,” Parsons told GMJ. and getting back out there

“We spent quite a bit of time assessing this to ensure this and drilling them. That is
has all the ingredients of being a major discovery, so we
have dived in, boots-and-all, ready to go. These things don’t going to be happening in Steve Parsons
turn up very often and we will give it a good shake.”
the next 2-3 months to see
Historical production from Bellevue was 800,000oz @ 15 g/t
gold, with Parsons keen on testing underground extensions whether we have another Bellevue sitting there just below
at the mine.
the old mine.”
“There’s a real chance of a brand new discovery to get up
and going on,” he said. Drilling will be in full flight during Diggers & Dealers and
with Australian gold players still revelling in strong domestic
“This project produced 800,000oz gold at 15 g/t over 100 prices, Parsons hopes for a similar reception to the one Draig
years. It was a really profitable mine that went on for a received upon a company presentation at a conference in
century and it stopped 20 years ago and 20 years ago was Sydney during May.
the last time anyone worked on it. There are a lot of new
innovations we can use to revisit some really simple targets Following the presentation, Draig’s share price rocketed
in areas that haven’t been looked at in a long time.” some 50% to over 5c. At the time of print, Draig was trading
at 4.8c/share.
Draig’s main game is drill testing extensions at Bellevue,
where a very high-grade lode was mined underground to “Gold production in Australia is what investors want to see
450m below surface. and Australian discoveries are what people want to see, as
well, and because of that I think there is interest in Draig and
The Bellevue high-grade lode is truncated by an offsetting we hope to capitalise on the interest in the Australian gold
fault at 450m vertical depth, with previous studies indicating sector at the moment.”
offset and extensions of the high-grade lode are highly likely.
After wooing the masses in Kalgoorlie, Parsons plans to take
Underground offset and extension drilling will occur in the the Draig story overseas once the Northern Hemisphere
December quarter, as near-term activity is focused on summer finishes.
testing and analysing the historical tailings dam for potential
high-grade gold. “We plan to show the story off in the Northern Hemisphere,
UK and Europe, in September, October and November to
Following testing of the tailings dam, drilling shallow, leverage off investors who got into Gryphon,” he said.
near-mine open pit targets are planned at Bellevue in the
During that time, the team at Draig would have settled into
the familiar surrounds of West Perth; back to where it all
began for Parsons more than a decade ago.

Page 41

6 - 8 September 2017

Perth,Western Australia

Presenters to date

Hon. Mark McGowan MLA, Premier, Government of Western Australia
Hon. John-Peter Amewu, Minister of Lands and Natural Resources, Republic of Ghana

H.E. Abdoulaye Magassouba, Minister of Mines and Geology, Republic of Guinea
Speaker TBC, Ministry of Industry and Mines, Republic of Senegal

Kevin Urama, Senior Advisor to the President, African Development Bank (AfDB)
Robert Owen-Jones, Assistant Secretary, Australian Competitiveness Branch, DFAT and Chair, Kimberley Process

John Welborn, Managing Director and CEO, Resolute Mining Ltd
Andrew Spinks, Managing Director, Kibaran Resources Ltd

Archie Koimtsidis, Managing Director, Cardinal Resources Ltd
Bertrand Montembault, Partner, Herbert Smith Freehills
Nick Martin, Managing Director, Northcott Capital Ltd

Tim Carstens, Managing Director, Base Resources Ltd and Chairman, AAMEG
Phil Edmands, Partner, Energy and Resources, Gilbert + Tobin
Julian Hanna, Managing Director, MOD Resources Ltd
Andrew Cunningham, Director, Walkabout Resources Ltd
Tim McManus, Chief Executive Officer, Bass Metals Ltd

Mike Christie, Global Exploration Director, First Quantum Minerals Ltd
Brandon Munro, Managing Director and CEO, Bannerman Resources Ltd

John Cook, Director African Operations, Business for Development
Errol Smart, Managing Director and CEO, Orion Minerals NL
Mark Strizek, Managing Director, Vital Metals Ltd
Brendan Borg, Managing Director, Celsius Resources Ltd
Lindsay Reed, Chief Executive Officer, Minbos Resources Ltd
Matthew Yates, CEO and Managing Director, OreCorp Ltd

Jeff Quartermaine, Managing Director and CEO, Perseus Mining Ltd
David Flanagan, Executive Chairman, Battery Minerals Ltd

Richard Hyde, Managing Director, West African Resources Ltd
Ben Gargett, Partner, PwC

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

Conference Sponsors

www.africadownunderconference.com

COUNTRY PROFILE: GHANA

Africa’s Gold Coast
extends north

Ghana is one of the premier mining jurisdictions in the world and there remains
an abundance of gold left to be discovered in the West African nation.

Obuasi, currently owned by AngloGold Ashanti Ltd, is centuries, with many companies looking for replicas in
Ghana’s most famous gold mine and while operations Ghana’s south.
remain on care-and-maintenance with no production forecast
for 2017, there is no doubting the place of the plus-65 moz Landing an Obuasi look-a-like has been elusive, but miners
asset in the country’s history. and explorers have proved there is a plentiful supply of the
precious metal in Ghana.
Gold mining has taken place in and around Obuasi for
Just last year, Asanko Gold Inc unveiled its namesake

Page 44

Ghana gold production

Mined production Artisan estimate (t) Ghana total production (t)
105.8
101.9 106.3

90.8 94.3 91.2 89.4 94.3
80.3 78.7
mine and Ghana’s newest operation in
the Asankrangwa belt, which is forecast to 15.0 14.0 12.5 12.5 12.0
produce 230,000-240,000oz gold at AISC of 1/01/2014 1/01/2015 1/01/2016 1/01/2017 1/01/2018
$US880-920/oz this year.

At a throughput of 5 mtpa, Asanko can
produce 230,000 ozpa over a 20-year mine
life, while a DFS on doubling capacity to 10
mtpa at a capital cost of $US200 million to
produce 450,000 ozpa at AISC of $US890/oz
over eight years has been completed.

COUNTRY PROFILE: GHANA

Gold accounts for 95% of Ghana’s mineral
revenues, with the bulk of the precious
metal extracted from the country’s south

A decision by the board on the Ghana gold projects sector, with more than 3.6 moz production
expansion will be made in time, returning $US3.3 billion in export revenues
as Asanko starts to open up a
relatively new gold mining to the economy in 2015.
region in Ghana.
Commercial-scale production
The belt which hosts of diamonds, manganese and
Asanko runs parallel to bauxite offers some diversity
the Sefwi-Bibiani gold to the minerals sector but
trend (annual production gold is the mainstay and will
500,000oz) to the west and remain so for the foreseeable
the Ashanti belt (2 mozpa) to future.
the east.
Advanced Exploration Operating While the attention has been on
All three gold-rich trends are in Construction Started Prefeas/Scoping exploiting gold occurrences in
Ghana’s south; the region largely Expansion Preproduction the south, companies such as
responsible for the country’s Exploration Reserves Development Australia’s Azumah Resources
mineral revenues. Feasibility Complete Satellite Ltd have had varying degrees of
Grassroots Target Outline success in Ghana’s Upper West
About 95% of mineral revenue in region.
Ghana is derived from the gold
Gold mining in the Upper West

Page 46

12 Early Stage Late Stage Mine Site

10

Number of projects reporting drilling 8

6

4

2

0
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar

2012 2013 2014 2015 2016 2017

is reported to have first taken Resources Ltd has taken the limelight to the Upper East
place in the 1920s and 1930s but region with its Namdini gold project, wowing the sector with
the level of artisanal activity was a 4 moz @ 1.2 g/t resource.
insignificant compared to events
in the south. Namdini, about 40km from the Burkina Faso border, is in
Bolgatanga, a region previously thought to be gold-barren.
It wasn’t until the 1960s when a
Russia-backed geological and Cardinal’s success has attracted global attention with
prospecting programme was analysts firmly believing a resource in the vicinity of 6 moz
undertaken that more was known gold is achievable.
about the prospectivity of the
Upper West. Adding to outside expectations has been confirmation
mineralisation at Namdini has been intersected to a vertical
It then took another 30 years depth of more than 600m, extending a further 250m to
before more detailed geological 350m below the initial resource, with a 200m to 300m wide
reports were formalised, which mineralised corridor intersected over a 600m strike length.
was the precursor for BHP Ltd to investigate the Wa-Lawra
belt. “We haven’t seen a resource so close to surface for quite a
few years. This is what I can say the world has been waiting
BHP’s work in the early 1990s was followed up later in the for; a decent size, baseline resource that now needs to be
decade by an Ashanti Goldfields-IAMGOLD JV. RC and optimised in many ways shapes and forms as time goes...,”
diamond drilling by the JV on eight targets returned some Cardinal managing director Archie Koimtsidis said upon
encouraging results before the tenements were optioned to announcing the 4 moz maiden resource at Namdini last year.
Semafo in 1999.
More will be known about Namdini when mining and
Semafo did little work on the tenements before exiting and processing studies are released later this year, as the
paving the way for Azumah to have a crack at the Wa gold mission starts for Cardinal to repeat the feat within the other
project. 800sq km of ground held in the region.

Since 2005, Azumah has built the Wa resource to 2.1 moz Cardinal’s achievements are encouraging participation from
gold, including reserves of 624,000oz @ 2.14 g/t, with the other companies – such as the recently arrived ASX-listed
project all but ready to be developed. Gulf Industrials Ltd – in the Upper East and a new chapter
may need to be added to Ghana’s geological textbooks
Despite studies revealing a 90,000 ozpa gold project over focusing on the prospectivity of the Gold Coast’s new north.
seven years at a cost of $142 million as viable, Azumah
has committed to expanding resources at Wa, such is the
potential of the area.

As Azumah continues to plough away at Wa, Cardinal

Page 47

AFRICA

Giro’s maiden resource
shines for Amani

by Jon Daly

A2.3 moz maiden resource at the Kebigada deposit, A 2.3 moz gold resource at Giro,
within the Giro gold project, was announced by Amani 30km from Kibali, was reported
Gold Ltd in July.
by Amani in the DRC
Amani reported a maiden indicated and inferred mineral
resource of 48.7mt @ 1.5 g/t gold for 2.3 moz with a 0.9 g/t drill spacing,” he said.
cut-off grade.
The mineralisation remains open at depth and high-grade
At a lower cut-off grade of 0.6g/t of gold, a resource of 78.6mt intersections in deeper diamond drill holes suggest there
for 3 moz gold was defined at Kebigada. is good potential for higher grades with further drilling and
additional resources underlying nearby soil anomalies.
The resource is defined over a strike length of 1.3km with
maximum width of 350m and a maximum depth of 300m Assay results from three deep diamond drill holes to test
below surface. the continuation of high-grade shoots beneath the current
resource were pending at the time of print.
The 497sq km project sits within the prospective Moto
greenstone belt in the Haut Uele Province, north-east Preparations are underway for infill and metallurgical drilling
Democratic Republic of Congo. to define a measured resource that will be included in
feasibility studies.
Amani chairman Klaus Eckhof was instrumental in the
discovery of the Kibali gold mine – currently a Randgold Amani also plans to start a shallow RC drilling programme to
Resources Ltd and AngloGold Ashanti Ltd JV – which is less investigate high-grade soil anomalies surrounding Kebigada
than 30km from Giro. and any significant discoveries will be followed up with
further drilling to identify potential satellite resources.
Kibali produced 642,720oz of gold in 2015 and Eckhof said
Giro Goldfields SARL, Amani’s in-country JV with Sokimo, Eckhof said results showing recoveries of more than 90%
had received the support from the Haut Uele governor, who from an initial gold deportment study were very pleasing and
encouraged the company to rival Kilbali as a producer in the further confirmed the robustness of the deposit.
province.
“Kebigada has now moved to the next level as we
Eckhof said the milestone confirmed his belief that Kebigada moved towards pre-feasibility and feasibility studies with
and the greater Giro project had the potential to host a multi- consideration to be given to possible commencement of
million ounce resource. early production,” he said.

“We are also confident of increasing the grade with further “There are significant under explored areas within the Giro
infill drilling which is supported by the better grades project, requiring further attention and providing potential for
reported in the indicated resource where we have closer new discoveries.”

The encouraging results come on the back of a non-binding
MoU with Hong Kong’s Lucky Winner Investment Ltd, which
will provide a capital injection of $25 million to help Amani
progress the project.

Page 48

Hits and millions come
for West African

West African Resources Ltd will receive an West African struck 1.6
injection of $C17.25 million to advance kg/t gold at Sanbrado,
the Sanbrado gold project in Burkina Faso. Burkina Faso, in June

The funds will be delivered via a bought Earlier this year, West African released a feasibility study on
deal private placement at C32c/share and is an open pit scenario at Sanbrado, 90km east-south-east of
being led by Sprott Capital Partners as part Ouagadougou.
of a syndicate of underwriters which includes
Cormark Securities Inc and BMO Capital The study was completed within 12 months of the high-
Markets. grade discovery, with West African wasting no time trying
to monetise the asset by aiming for first gold production in
Subject to all conditions and regulatory 2019.
approvals being satisfied, the offer was due to
close on July 19. The feasibility study released in February highlighted the
potential for 150,000 ozpa gold at AISC of $US708/oz to be
The deal was announced shortly after West extracted from the first three years of operation, followed by
African reported a hit of 1.6 kg/t gold from 93,000 ozpa at $US759/oz over nine years based on current
drilling at M1 South in June. probable reserves of 16.8mt @ 1.7 g/t for 894,000oz gold.

Drilling at TAN17-DD111 returned the best A gold price of $US1,200/oz was the base case used in the
hit to date in 2017 for West African; 21m @ study, which indicated capex of $US131 million could be
53.13 g/t gold from 408.5m, including 0.5m @ paid pack in two years of production.
1,613.41 g/t and 0.5m @ 530.38 g/t and 14.5m @ 38.27 g/t
from 459m. A pre-tax NPV (5%) of $US143 million, IRR 27% and post-
tax NPV (5%) of $US100 million for an IRR of 21% rounded
The high-grade mineralisation extended to more than 350m out the potential strong returns from Sanbrado.
– double the average depth of the current reserve – and
remains wide open at depth. Discussions with lenders and potential financiers are in
progress, with conventional debt and equity finance the path
“Five out of six diamond holes this year at M1 South have hit being pursued.
extremely high grades over significant widths which will add
to the resource base and have a material impact on project Potential lenders can consider the prospect of backing West
economics,” West African managing director Richard Hyde African with some certainty given mining and environment
said. permits for Sanbrado have been approved.

“It is essential we define the extent of the deposits and
maximise the project NPV, before finalising a development
strategy and project finance. The board has decided to focus
on resource and extensional drilling for the remainder of
2017, and will revisit development scenarios in the first half
of 2018.”

A resource update is being worked on and with $14 million
cash West African is well funded to complete its objectives
this year.

At the time of print the company had six rigs on site, double
shifting to infill and extend mineralisation at the M1 and M5
deposits.

A resource and reserve update for both M1 and M5 will be
included in the DFS, scheduled for completion in Q3.

Page 49

AFRICA

Tanzania rattles miners

by Jon Daly

ASX-listed companies’ investments in Tanzania have exports by the Government’s First Committee report,
been thrown into disarray after the East African country’s Magufuli saying the investigation had found 10 times more
parliament passed two laws allowing the Government to gold in Acacia’s containers than the company had declared,
renegotiate mining contracts. as well as undeclared minerals such as iron and sulphur.

Tanzania is Africa’s third largest gold producer and also “Enough is enough ... we need investors, but not this kind of
boasts a thriving gold and graphite development sector but exploitation. We are supposed to share profits,” Magufuli said
the new laws are likely to put a freeze on further development. in a television address.

On July 3, the ASX advised Tanzanian-focused companies Magufuli said if Acacia “confess that they have been looting
to go into trading halts as they scrambled to make sense of the country, the Government is ready to do business”.
the new laws.
Acacia denies these accusations, maintaining it has always
Industry has complained that President John Magufuli is adhered to national and international reporting standards.
unfairly squeezing them through a strict interpretation of tax
laws, increased fines and demands they rapidly list on the “Acacia strongly refutes these new unfounded accusations.
local stock markets. We have always conducted our business to the highest
standards and operated in full compliance with Tanzanian
Magufuli has said the reforms will increase transparency and law,” Acacia said in a statement.
revenues.
“We do not understand the findings of the [investigation]
There are three bills in total covering natural resources committee and believe they contain significant discrepancies
contracts, sovereignty and amendments to existing laws and compared to all previous data analysed.”
they would allow the Government to renegotiate or dissolve
contracts. The company has called the findings inaccurate and flawed,
citing claims 250,000oz gold was found in containers from
“Parliament has passed two [laws] legislation: the Natural the Bulyanhulu and Buzwagi mines.
Wealth and Resources [Permanent Sovereignty] and the
Natural Wealth and Resources Contracts [Review and Re- Figures within the report also imply its three operations
negotiation of Unconscionable Terms] bills,” the state-run produce 16.9t of iridium, which is 60% more than annual
Tanzania Information Services said in a statement. worldwide production.

The statement did not mention the third bill, which is also Investec analyst Hunter Hillcoat said the committee’s findings
in parliament, but the justice minister Palamagamba Kabudi were implausible, adding the motives of the Tanzanian
said all three would be passed in July. Government were unclear.

Tanzania’s Chamber of Minerals and Energy has called for “Whether that motive is nationalisation or a grab for more
more discussion on the bills. taxes or a share of the mines – no one knows yet. The
market is understandably pricing in risk.”
The passing of the laws comes after months of wrangling
between the Government and the country’s largest producer, By May 25, Acacia’s share price dropped 65%, from 434.3p/
Acacia Mining plc, over gold-copper concentrate exports. share to 281.8787p/share.

The company operates three gold mines in Tanzania – In June, Acacia and the Tanzanian Government agreed to
Bulyanhulu, Buzwagi and North Mara – and is the county’s enter into talks to reach a resolution following a meeting
biggest investor and employer. between Magufuli and Barrick Gold Corp chairman John
Thornton. Acacia was spun out of Barrick in 2011.
In 2016, Acacia spent $US831 million, the equivalent of 80%
of its sales, on employees, taxes, suppliers and communities. The Tanzanian Government is also pushing piece of draft
legislation through its parliament, which recommends
Since entering the country in 1998, the company has made changes to the legal framework governing the natural
an overall capital investment of more than $US4 billion into resources sector in Tanzania, while a 1% clearing fee on
its Tanzanian mining assets. mineral exports has been introduced.

But Acacia has seen its cash position almost halve since the
export ban, with 30% of its sales unable to take place.

On May 24, Acacia was accused of under-declaring its

Page 50