WWW.RESOURCEGLOBALNETWORK.COM
MINING | Newfield Resources
NEWFIELD RESOURCES Developing a generational diamond asset in Sierra Leone
Resource Global Network
MINING | Newfield Resources
Australian exploration firm Newfield Resources gained ownership of the Tongo Mine Development in Eastern Sierra Leone through the acquisition of AIM-listed Stellar Diamonds in April 2018. Stellar had been active in West Africa for several years but was struggling to raise the capital required to get the diamond mining project off the ground, in a difficult market for junior resources companies. These conditions compelled CEO Karl Smithson to approach Newfield, who were active in Sierra Leone with a merger proposition. A merger between Newfield and Stellar was subsequently accepted via a UK Court sanctioned scheme of arrangement and with it Newfield shareholders invested approximately US$25 million to fund development at Tongo. The majority of the Stellar technical team also migrated across to Newfield to provide continuity to the project on the ground.
“The transaction was a win-win for both Stellar and Newfield shareholders and the funding Newfield brought to the project has enabled Tongo to advance rapidly to the
Resource Global Network
MINING | Newfield Resources mine development phase,” says Smithson –
tonnes per hour (tph) DMS processing plant.
now an executive director of Newfield.
However, based on the future production profile of the mine, the company recently
During the last 16 months or so since
made the decision to install a plant capacity
the acquisition of Stellar, Newfield has
of 100tph and is working closely with South
completed an independent Front End
Africa-based engineering consultants METC
Engineering Design (FEED) study for Tongo,
Engineering in terms of the final design of the
which included the design of a detailed
plant.
underground mine, and increased the mine resource by 64% through further drilling and
“We got through all of that in the last 12
exploration work.
months, which brings us to now. In July, the board of Newfield ratified the project and
Newfield also looked into the process
made an investment decision to bring the
design for the project, initially deciding on
funding in to construct the mine.”
the relocation and refurbishment of a 50
Resource Global Network
Growing the resource
“But we need to prove that through further drilling, geological work and evaluation. That
While the arrival at an investment decision
will be a programme we will tackle some time
resembles a major milestone for Newfield,
in the future.”
Smithson believes the most pleasing development of the last year has been the
For now, the Tongo project has 7.4 Mcts
expansion of the Tongo resource from 4.5
in resource, of which 1.1 Mcts has been
million carats (Mcts) to 7.4 Mcts.
declared as reserve for an eight year life of mine (LOM). However, Newfield intends to
“Based on the other deposits in the licence
convert much of this resource into reserve as
area [only four of 11 kimberlites have been
it progresses the project and therefore sees
drilled to resource level] and the possibility
a much longer LOM than currently stated in
of going deeper on the existing deposits
official ASX documentation.
within the mine life, we believe that there is potential to double the current resource,” reveals Smithson.
MINING | Newfield Resources
“Notwithstanding that, there is additional
presidents against a backdrop of challenging
potential from the rest of the concession,
conditions – from the country’s emergence
where we have orebodies not yet in resource.
out of civil war in 2002 to the Ebola crisis of
We know they are diamondiferous and we
2014/15.
know they hold good grade too. However, this team of geologists remained “Bringing those into the future mine plan
in Sierra Leone throughout the bouts of
will be part of our strategy. If we are able
turmoil and continued to spend money
to achieve this, we are potentially looking
on exploration, while building strong
at around 20 to 30 years LOM at Tongo,”
relationships with the government and the
Smithson projects. In fact, Newfield has
Ministry of Mines & Mineral Resources.
already started drilling on a fifth kimberlite and should bring that into resource within
“We get a lot of credibility for having
the next six to nine months.
been there as long as we have and done
Long-term stakeholders
exploration for so long. You have to do the hard miles and if you pay your dues in terms
Smithson and his team have been active in
of taxes and community support you get the
Sierra Leone for approximately 17 years now,
respect and support that you deserve, and
and in that time they have witnessed the
we certainly have.”
rise and fall of different governments and
Resource Global Network
Sierra Leone remains fairly strapped for cash
“Also, the Tongo concession area is safe and
and is still reliant on donor aid in the form of
we don’t have a need for armed security on-
loans from the IMF and other international
site. We largely look after ourselves and have
banks, but the situation is presently
around 20 expats there now with about 150
stable and the country is one of the better
locals that we’re employing.”
investment jurisdictions on the continent according to Smithson.
Socially responsible mine development
“Sierra Leone is a former UK colony and
Local employment is a key part of Newfield’s
follows British law and language with a
corporate social responsibility (CSR) strategy
parliamentary political system. So, there are
and is hugely welcomed by national citizens
certain similarities in terms of constitutional
in a country where unemployment is rife,
structures that you would find in the UK.”
particularly in the communities surrounding the Tongo mine.
The Mining Code was passed by Parliament in 2009 and is currently being updated with
“We have already created 150 jobs and
sponsorship from the World Bank. “Soon,
will be creating between 700 and 800
we’ll have a robust mining and fiscal regime
further jobs during the next phases of the
that we can understand and operate under
mine development. We will provide lots
easily.
MINING | Newfield Resources of opportunities, particularly in the local
company to make certain expenditures
communities, to get proper contracted
in the local communities throughout the
employment with all the right insurances in
development of the mine and during the
place,” says Smithson.
LOM.
“We are going to provide a significant uplift
Through the CDA, the local communities
when considering the statistics, which reveal
form a committee of around 20 people
that every one person employed supports 10
and they decide what programmes need
more in their extended family. It’s going to
to be prioritised to bring most benefit
have a massive impact.”
to the communities. Whether this is the construction of water wells or even
Beyond this, there is also a legal requirement
schools, Newfield helps facilitate these vital
- stipulated in the Mining Charter – for
improvements.
Newfield to have a community development agreement (CDA) in place at the Tongo
“The CDA programmes help locals feel
project. This legal document binds the
engaged with the company and the
Resource Global Network development of their own community. That’s
“This time next year Newfield will be a
a very good thing, and through that forum we
company that is in production. Everyone’s
maintain harmonious relationships.”
very happy and shareholders are extremely
Coming full circle Speaking on behalf of the entire Newfield
supportive, which is shown by the recent bond raises of $30 million equivalent for the construction funds.”
team, Smithson reveals that everyone is thrilled about the progress made at the
However, the current mine plan is just the
Tongo Mine Development over the past year
tip of the iceberg for the company, given
and a half since the acquisition of Stellar.
the significant opportunities to grow the resource at Tongo, which has been labelled a
“As a geologist, it’s not very often one can
‘generational asset’ by Newfield – being that
make a discovery, evaluate that discovery
is could sustain diamond production for up
and bring it into production. We’ve seen the
to 30 years.
whole cycle and that’s extremely rewarding for ourselves.
ASX:NWF
j
Published by Anderson Murray Media Ltd
To tell the resource market your story, contact: editorial@resourceglobalnetwork.com
WWW.RESOURCEGLOBALNETWORK.COM