RESOURCE Volume 5, Issue 3
GLOBAL NETWORK
Mining, renewable energy and oil & gas worldwide
speaks to:
World Gold Council INTERNATIONAL COUNCIL ON MINING & METALS WEST AFRICAN GOLD FOCUS:
TERANGA GOLD HUMMINGBIRD RESOURCES AVESORO RESOURCES
The paths are paved with
gold in west africa
THE GOLD ISSUE
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MINING | Brookfield Multiplex
WELCOME
“West Africa has gone from having almost no gold production to a profile that is close to North America, which I never thought would’ve occurred when I started in this industry.” These are the words of Richard Young, president and CEO of Teranga Gold - a TSX-listed gold miner and our headline feature company in RGN’s 2018 gold issue, which pays homage to West Africa’s golden generation. A combination of many great geological formations, vast untapped reserves, modern mining codes and improving business conditions first attracted Young and Teranga to the region in 2010, when it acquired the Sabodala Gold Mine in Senegal. Teranga has spent the last four years optimising Sabodala’s production performance, while also expanding into Burkina Faso and Ivory Coast, thus epitomising the broader pattern of growth in West Africa’s gold sector. Our lead story reveals how Teranga has thrived in the region under a fundamental commitment to responsible mining, and we also speak to fellow West African
Executive Team Editor Jacob Ambrose Willson Content Manager Michelle Madureira Content Director (APAC and Americas) David Hunter Creative Director Hugo Currie ICT Director Stuart Clark Contributors Amit Aggarwal Mickey Fulp Jim Rogers
gold producers Hummingbird and Avesoro Resources, reflecting on each’s recent successes. We feature a wide range of gold miners from around the globe throughout the rest
Managing Director Simon Curran
of the issue and provide an up-to-date investment perspective through an exclusive interview with the World Gold Council – the world’s leading authority on the ‘safe haven’ metal. RGN is also proud to present an illuminating piece on the International Council on Mining and Metals (ICMM), after speaking to its CEO Tom Butler. ICMM has united several major players in the sector and led a charge towards sustainable development since its formation in 2001. You can read this, along with your usual fix of mining, renewable energy and oil & gas stories over the following pages. We hope you enjoy this issue and encourage you to connect with us on email, Facebook and Twitter. Thanks for reading!
Jacob Ambrose Willson
RGN is published by Anderson Murray Media: a diverse media and information services company focused on creating and distributing engaging content to business leaders across the globe. Anderson Murray Media Fulham Green, 69-79 Fulham High Street, Main Reception, Bedford House, London SW6 3JW Tel. +44 (0)207 148 5630
VISIT US ONLINE AT WWW.RESOURCEGLOBALNETWORK.COM
CONTENTS
WORLD GOLD COUNCIL
NEWS 10 Global resources news Our selection of mining, oil & gas and renewable energy stories from the last month
ASSOCIATION PIECES 18 World Gold Council The world’s leading authority on the global gold industry 28 ICMM Leading the progress narrative for sustainable development in mining
COLUMNS 42 Mickey Fulp The well-respected Mercenary Geologist returns with a passionate case for Nevada’s gold industry 50 EY Digitalisation is the key to future growth in the gold mining space 58 Jim Rogers Famous gold owner gives his view on the investment climate
ICMM
TERANGA GOLD
CONTENTS MINING 66 Teranga Gold Multi-jurisdictional West African gold producer reaches for mid-tier status 88 Hummingbird Resources Coming full circle at Yanfolila in Mali 102 Avesoro Resources Completing a turnaround in Liberia and expanding into Burkina Faso 114 Chalice Gold Mines Cashed up and debt free with Canadian and Australian gold assets 128 Raiden Resources Serbia-focused copper-gold junior partners with Rio Tinto 138 AusQuest Building a mutually advantageous alliance with South32 150 NTM Gold Breaking new ground in a historic Western Australian goldfield
MINING SERVICES 162 Process IQ Driving out hidden inefficiencies in gold and base metal plants
CLASSIFIED ADVERTISING 170 Classifieds
APPOINTMENTS & EVENTS 172 Appointments Notable appointments in the resources industry from the past month 173 Events Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come
AVESORO RESOURCES
PROCESS IQ
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NEWS | Brookfield Multiplex MINING
GLOBAL RESO
Our selection of mi renewable energy news
Resource Global Network 11
OURCES NEWS
ining, oil & gas and s from around the world
12
NEWS
HIGHER GOLD PRICES GIVE EXTRA SHINE TO BARRICK GOLD Q1 EARNINGS Barrick Gold Corp has reported a 5% rise in its first quarter 2018 earnings, reflecting higher prices for gold and lower depreciation. Prior to adjustments relating to the divestment of a 25% stake in its Cerro Casale project in Chile, Barrick’s net income was US$158 million (14 cents per share), a steep drop from the $679 million made in Q1 2017. However, the Canadian mining giant’s adjusted net earnings revealed a 5% increase to US$170 million, (15 cents per share) compared with $162 million (14 cents per share) in the same quarter one year ago. This rise in adjusted earnings is largely correlated with increasing gold prices
throughout the first three months of 2018, with average spot prices climbing to $1,329 per troy ounce, compared to an average of $1,219 a troy ounce in the prior year quarter. Like many majors in the resources sector, Barrick has become leaner and cut back its debt by over 50% during the past three years. The world’s largest gold miner by output said it plans to lower its total debt from $6.4 billion to about $5 billion by the end of 2018.
Resource Global Network 13
HUMMINGBIRD ANNOUNCES RAMP UP AT YANFOLILA GOLD MINE IN MALI West Africa-focused Hummingbird Resources has announced a ramp up in gold production from its flagship Yanfolila mine in Mali. The high grade asset began producing gold in December 2017, with the performance of the plant steadily improving month by month. The plant operated at an average of 95% of design throughput during the first two weeks of March and has also consistently delivered a recovery rate of around 96%, exceeding design specification. Total gold recovered to March 14 was 16,804 ounces (oz), of which 11,958 oz has been
poured and 4,846 oz are currently within circuit inventory. “We are delighted that the plant has performed so well and that the work carried out by our highly experienced team and contractors has so far been rewarded in ramp up operations with 96% recoveries, over 3g/t head grade and a steady increase in plant throughput towards design,” said CEO Dan Betts. “This is an impressive achievement in such a short space of time,” he added.
14
NEWS
JOBS IN GLOBAL RENEWABLE ENERGY SECTOR SURPASS 10 MILLION IN 2017 The renewable energy industry created more than 500,000 new jobs in 2017 worldwide, according to latest figures from International Renewable Energy Agency (IRENA). Incorporating the half a million new jobs added last year, total employment in the renewables sector across the world now stands at 10.3 million, exceeding the 10 million mark for the first time. The fifth edition of IRENA’s Renewable Energy and Jobs – Annual Review, launched at the organisation’s 15th council in Abu Dhabi, found that renewable energy jobs grew by 5.3% from 2016. China, Brazil, the US, India, Germany and Japan remain the world’s largest renewable
energy employers, representing over 70% of the world’s renewable energy jobs. “Renewable energy has become a pillar of low-carbon economic growth for governments all over the world, a fact reflected by the growing number of jobs created in the sector,” said Adnan Z. Amin, director general of IRENA. “The data also underscores an increasingly regionalised picture, highlighting that in countries where attractive policies exist, the economic, social and environmental benefits of renewable energy are most evident,” he said.
Resource Global Network 15
BRENT CRUDE RISES AFTER TRUMP PULLS US FROM IRAN NUCLEAR DEAL Brent crude is trading at US$76 a barrel – its highest since 2014 – after US President Donald Trump revealed his decision to pull the US of the current nuclear containment deal with Iran. The latest 2.2% rise in Brent crude to $76.47 caps a volatile period for the commodity, which had previously fallen by as much as 4% as the global trading market waited with bated breath for Trump’s decision. In a televised address, Trump declared his decision to pull the US from the historic nuclear containment deal with Iran that was reached in 2015 after 13 years of negotiation between Iran and several Western powers, including the UK and France.
Under the deal Iran agreed to limit its uranium enrichment levels until 2031, while in return economic sanctions imposed by the West were lifted, allowing Iran to resume selling oil across international markets. However, in his address Trump said: “[The deal is a] horrible, one-sided deal that should have never, ever been made.” He also said he would reimpose the economic sanctions that were lifted in the 2015 deal.
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GOLD | World Gold Council
The world’s leading authority
y on the global gold industry
Resource Global Network
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GOLD | World Gold Council
Headlining RGN’s 2018 gold issue is the World Gold Council – the leading global authority on all things gold. This year, RGN’s editor Jacob Ambrose Willson interviews the council’s head of research and chief market strategist John Reade, encountering a number of pertinent topics within the contemporary gold environment. Using data from the council’s Gold Demand Trends Q1 2018 report, Reade provides an upto-date account of the forces shaping current demand, along with an outlook for the rest of the year. Other topics of discussion include new mine supply trends and the impact of cryptocurrencies on gold as an investment opportunity.
factors driving market change. This allows us
Jacob Ambrose Willson: Please provide a
2017 Gold Demand Trends report was that
quick summary of what the World Gold
global demand for gold fell by 7%. Explain
Council does and your own role at the
some of the reasons why demand for the
organisation.
precious metal dropped by this amount last
to operate with insight and act with authority in seeking to resolve industry issues, create pro-gold policies and raise standards across the industry. We concentrate on delivering structural change that has long-term impact and is at scale. Based in the UK, with operations in India, the Far East and the US, the World Gold Council is an association whose members comprise the world’s leading gold mining companies. I joined the World Gold Council in February 2017 as head of research and chief market strategist. In my role, I am responsible for producing strategic research and developing insights on the gold market; leading our global dialogue by engaging with leading economists, academics, policy makers, fund managers and investors on gold; and leading our research team. JAW: The headline trend identified in the FY
year? John Reade: The World Gold Council is the market development organisation for the
JR: The decline in demand in 2017 was largely
gold industry. Our purpose is to stimulate
due to lower investment demand. Partly this
and sustain demand for gold, provide
was because of tough comparisons to a very
industry leadership, and be the global
strong year previously, but some areas were
authority on the gold market.
weak, particularly a sharp drop in US bar and coin demand to a 10-year low. Jewellery
The World Gold Council has broad
demand reported an increase of 4% year
experience and deep knowledge of the
on year, but this still left the sector weak by historic standards.
Resource Global Network
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GOLD | World Gold Council
“Our purpose is to stimulate and sustain demand for gol on the gold market” – John Reade, head
JAW: Has the global gold industry been able
JR: We are expecting a recovery in the
to arrest this decline in demand during the
balance of 2018, with firm Chinese demand,
first quarter of 2018?
improved Indian demand and probably better investment demand – already we
JR: The first quarter of 2018 was also soft,
have seen stronger inflows into gold-backed
with overall demand down 7% compared to
exchange-traded funds in April, although we
the same quarter of 2017.
have not yet seen any reports of bar and coin demand recovery in the US.
Overall jewellery demand was in line, with China and the US compensating for a
In India, jewellery demand in Q2 started
weaker Indian market. Investment demand
well, with healthy demand during the April
in the first quarter was down year-on-year,
Akshaya Tritiya festival, despite higher local
continuing the trend of late 2017.
prices compared with last year.
JAW: What is the World Gold Council’s overall
Looking ahead, improving macroeconomic
outlook on the gold industry for the rest of
indicators suggest a positive outlook for
2018? Discuss any key market trends that
jewellery demand. In China, the industry is
have been identified by the World Gold
optimistic, expecting a recovery in jewellery
Council.
demand in 2018.
Resource Global Network
ld, provide industry leadership, and be the global authority d of research and chief market strategist
JAW: Demand for gold from emerging
JR: While new mine supply grew in 2017 and
markets across Asia has steadily increased
may grow again in 2018, the industry has
over recent years. Does the World Gold
struggled to make sufficient new discoveries.
Council foresee this trend continuing into
In addition, the gold mining industry reduced
the coming years as more Asians move into
capital development expenditure following
middle class status?
the 2013 fall in gold, and some previously favourable countries for mine development
JR: Yes, very much so. For the foreseeable
have become less hospitable. We expect new
future we expect greater economic growth
mine supply to peak in 2018 or soon after
rates from emerging economies than
and then decline slowly thereafter.
developed markets. Increased income and numbers of middle class consumers will
JAW: The World Gold Council’s membership is
increase the relative importance of emerging
made up of many world-leading gold mining
market gold demand and should lead to
companies. How closely do you work with
higher absolute gold demand levels.
these members and why should any major gold miner become a member?
JAW: Looking at the supply side, new gold deposit discoveries have slowed down in
JR: We support our members by stimulating
recent years. How well equipped is the
demand in new and existing markets through
current global mining industry to meet the
research, insight and partnerships with
world’s demand for gold?
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GOLD | World Gold Council
John Reade, head of research and chief market strategist
ResourceGlobal GlobalNetwork Network 25 Resource leaders in investment, jewellery, industry and
With the US economic recovery now
academia. We work across the entire supply
the second longest on record and with
chain, from sustainable and responsible
unemployment approaching all-time lows,
gold mining through to the consumer
the chances of a recession in the US over the
marketplace.
next few years is increasing.
All our members have a seat on the board
Increased global trade tensions, a more
and many are actively involved in our
truculent stance from many world leaders
programmes and initiatives. The conflict-free
and ongoing uncertainty about the intension
gold standard, for example, which provides
of North Korea have elevated geopolitical
assurance that their gold is not contributing
risks too.
to conflict, was a member-led initiative. JAW: Finally, how has the reputation of gold Our members share our vision of ensuring a
as a safe investment been challenged by the
sustainable gold mining industry, based on a
rise of new investment opportunities such as
deep understanding of gold’s role in society,
the cryptocurrency market?
now and in the future. JR: There is no doubt that cryptocurrencies JAW: Does the World Gold Council foresee
and blockchain initiatives hit the headlines
any geopolitical turbulence or market turmoil
last year, but we have seen no evidence that
that would facilitate a rise in gold investment,
this frenzy affected demand for gold.
bearing in mind its status as a ‘safe haven’ commodity?
We’ve looked at volumes on futures and spot exchanges and spoken to bar and coin
JR: Gold does have a well-founded reputation
dealers in the US, where demand was weak
as a safe haven during times of economic
last year, and in no case have we seen gold
turmoil and often is boosted by geopolitical
demand hit by the surge and then decline in
turbulence, although the effect of the latter is
bitcoin and other crypto assets.
often short-lived. Forecasting either market turmoil or geopolitical turbulence is very difficult, but we believe that there is likely to be incidents of both over the next few years.
aj r
Building a Multi-Asset Mid-Tier West African Gold Producer
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28
MINING | ICMM
speaks to ICMM’s chief executive officer Tom Butler
Leading the progress narrative for sustainable development in mining
Resource Global Network
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MINING | ICMM
Back in the 1990s, the global mining industry seemed to be sleepwalking into its own funeral. The accumulation of several disastrous incidents, including tailings collapses, contaminations of rivers and a general lack of stewardship within communities living in the shadow of mining projects resulted in the mobilisation of large swathes of civil society against the sector. In light of this growing opprobrium at the turn of the century, the then CEO of Rio Tinto managed to convince a group of fellow majors that the reputation of the mining industry was under threat and that leaders of the industry needed to band together and take action. The result of these meetings was the formation of the International Council on Mining & Metals (ICMM) in 2001, after a twoyear consultation process concluded that a new and authoritative industry body was required for the industry to improve itself across all five continents. “What underpinned this [need for improvement] was the necessity of preserving access to capital, markets and resources and that is still the underlying purpose today of ICMM,� says CEO Tom Butler.
Resource Global Network
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MINING | ICMM
Resource Global Network “The purpose of ICMM is to help by preserving the reputation of the industry which helps maintain access to those three things.”
A new face for responsible mining When ICMM was put together its founding members signed up to a set of 10 principles which form the basis of the organisation’s sustainable development framework. Over the years this framework has been tightened through the addition of position statements, which are essentially extra policy commitments. ICMM’s rigorous 10 principles serve as a best practise framework for sustainable development in the mining industry and as a result, the organisation has played a key role in preserving and enhancing the reputation of the sector in recent years. This notion rings even more true for ICMM’s members, who are expected to implement the principles in full and to transparently report on performance. “What really put our members on the map was our first position statement, which was around protected areas and in particular a commitment not to explore or mine in World Heritage sites. “I think at the time, this was a very strong signal as it meant that some members had to pull out of some exploration work and it showed that the members were serious about these commitments.”
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MINING | ICMM The organisation’s key aim has remained clear and consistent since the early days and that is to promote safe, fair and responsible mining practises. ICMM has four chief methods of achieving this aim, with the first strand focusing on leadership through performance. “This means setting the pace in terms of commitments that the members make and laying out what we consider to be good practise, or additional policy commitments that are raising the game across the industry.” ICMM’s second method involves listening and engaging with external stakeholders, civil societies, NGOs and representatives from other industries. Thirdly, the organisation tries to open up strong lines of communication from the mining industry itself, to better articulate the positive impact it has, particularly in developing countries. “The fourth method is focused on engaging with international organisations that are involved in the industry. We have a close relationship with the World Bank, OECD, International Maritime Organisation and other similar organisations. “This is to make sure that we are involved in any policy or approach that they are developing, and we’ve had a chance to have our say in it.”
ResourceGlobal GlobalNetwork Network 35 Resource
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MINING | ICMM
Resource Global Network
An esteemed membership ICMM’s membership is comprised of some of the world’s largest and most influential mining companies in the world, from founding members such as Rio Tinto, BHP, Anglo American and Newmont to more recent additions like Glencore, Newcrest Mining and South32. However, Butler stresses that size is not a formal criterion and that all companies must follow the same admission process. “If a company wants to apply for membership, they have to go through a fairly rigorous admissions process which looks at how closely aligned their existing policies are to our sustainable development framework requirements.” An independent panel of three experts will assess the credentials of an applicant and identify any gaps between the company’s current policies and the requirements of the ICMM. If the gaps are too wide, they would advise the applicant to work on closing the gaps before re-applying. In other applications, the admissions panel will identify any gaps and produce a negotiated action plan, which admits the company on the basis that it agrees to close those gaps within two years. ICMM is structured to maximise collaboration between industry leaders in
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MINING | ICMM
the mining and metals space, but as well to
other stakeholders to grapple with specific
encourage communication with all types of
topics.”
stakeholders in the industry. Arguably, its most important feature is the
Contemporary industry concerns
fact that it is CEO-led. The council of CEO’s
Late last year ICMM convened a group of
from all member companies meet twice a
mobile equipment suppliers to talk about the
year and act like a board for ICMM.
topic of diesel particulate matter. This is a big contemporary issue especially underground
“The CEOs have agreed not to delegate
in terms of pollution.
attendance at those meetings and as a result it gives off a very strong signal to their
The convening was to see if ICMM could
own employees but also externally that
collaborate within the industry and help
they are personally engaged on the topic of
suppliers try and mitigate this pressing
sustainability.
issue. Another ongoing concern facing the global mining sector is that of environmental
“That kind of commitment is essentially
impact, particularly worries about water
demonstrating to the rest of the industry
usage.
that they are serious from the very top down about the commitments they have made to
Some of the world’s major mining hotspots,
ICMM. It also gives us the ability to convene
from South America to Southern Africa and
Resource Global Network many parts of Australia, are currently faced with water scarcity and ICMM is leading the discussion on efficient water usage at mine sites in these areas. Ensuring that supply chains are fully transparent is another key goal for the industry, after major concerns have been raised regarding human rights abuses in mining projects within certain areas, particularly cobalt mining in the Democratic Republic of Congo.
”Our members do not use child labour or artisanal labour to produce their products, but we are looking at how you can address traceability concerns and make people understand that what they are using is coming from responsible suppliers like our members.” However, during its years of operation the mining sector has gone a long way to
“People are putting a lot of pressure on end
addressing these issues and although it is by
users like Apple to demonstrate that their
no means perfect today, Butler believes the
supply chain is clean, and the end result is
linear narrative of progress will continue in
quite a lot of focus on our side in terms of
the coming years.
looking at what we can do,” says Butler. “I think there are lots of converging pressures “Our members do not use child labour or
which are all pushing in the same direction.
artisanal labour to produce their products,
The UN has announced its Sustainable
but we are looking at how you can address
Development Goals (SDG), and there is a
traceability concerns and make people
lot of pressure from society. As a result,
understand that what they are using is
financiers, banks and investors and pension
coming from responsible suppliers like our
funds are all paying close attention to
members.”
sustainability issues.
A catalyst for change
“In terms of the outlook, those converging
From the outset, ICMM has aimed to serve
pressures will result in not just ICMM
as a catalyst for change after the reputation
members, but general stakeholders in
of the global mining industry was left in
the industry having to respond to those
tatters by a series of environmental incidents
pressures and mine in a more sustainable
and continued neglect of local communities
way.”
during the 1990s.
ab r
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42
COLUMNS | Mickey Fulp
NEVA
Mickey Fulp, the well-respected Merc
Resource Global Network
ADA IS SIMPLY THE BEST
cenary Geologist returns with a passionate case for Nevada’s gold industry
43
COLUMNS||Ian Mickey Thomson Fulp 44 COLUMNS
In my opinion, Nevada is hands down the world’s premier venue for gold exploration and mining for a litany of reasons: •
It is the world’s 4th largest gold
producer behind China, Australia, and Russia with nearly 5.3 million ounces of production in 2016. •
It is a geologically endowed gold
province with several types of economic mineral deposits hosting world-class tonnages and/or grades. •
It currently has nearly 40 active gold
mines and also hosts the world’s largest and most comprehensive gold processing facilities. Six operating mills in Northern Nevada process a wide variety of simple, complex, and refractory gold ores. •
It is part of the United States of
America where geopolitical risk is low, mineral tenure is secure, and the rule of law is sacrosanct. •
In 2015, the mining industry had over
14,000 direct employees and an additional 65,000 goods and services jobs. The average mine employee was paid $92,000. •
It is located in an arid, moderate,
intercontinental climate with excellent infrastructure, unsurpassed accessibility, and a services industry that allow year-round
ResourceGlobal GlobalNetwork Network 45 Resource
MICKEY FULP The Mercenary Geologist Michael S. “Mickey” Fulp is a certified professional geologist with a B.Sc. Earth Sciences with honour from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years’ experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, uranium, coal, oil and gas, and water in North and South America, Europe, and Asia. Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specialising in geological mapping, property evaluation, and business development. In addition to Mickey’s professional credentials and experience, he is highaltitude proficient, and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia. Mickey is well-known and highly respected throughout the mining and exploration community due to his ongoing work as an analyst, writer, and speaker.
46
COLUMNS | Mickey Fulp
ResourceGlobal GlobalNetwork Network 47 Resource mining operations and with a few exceptions in the Northern part of the state, year-round exploration. •
It has a low-density population that
outside of the two major metropolitan areas, makes its living off the land by farming, ranching and mining. •
It has no personal or corporate state
income taxes. Mining companies pay a 5% net mineral proceeds tax. With the recent Trump tax cuts, US-domiciled corporations and subsidiaries will pay a competitively low 21% federal income tax beginning in 2018.
”In 2015, Nevada’s mining industry had over 14,000 direct employees and an additional 65,000 goods and services jobs. The average mine employee was paid $92,000” Mickey Fulp, the Mercenary Geologist •
•
With exception of the Las Vegas
A US Forest Service bureaucracy that
formerly used bureaucratic, regulatory, and
and to a lesser extent, the Reno and Lake
legal tactics to advance the Obama regime’s
Tahoe areas that rely on gambling revenues,
anti-development agenda has now become
the population is rural, individualistic,
responsive and efficient under the Trump
and overwhelmingly supports extractive
administration. Timely processing of work
industries.
applications, permitting, and environmental documents is now the norm.
•
It has a reasonable regulatory state
bureaucracy that ensures environmentally
I prefer to put my hard-earned speculative
responsible, safe development, production,
dollars into gold explorers in the Western
and reclamation.
US and will continue to do so as the new bull market for all metals, including gold,
•
85% of the state is federal land, mostly
continues to develop.
Bureau of Land Management with significant military reservations and minor Forest
Ciao for now,
Service holdings. With exception of areas withdrawn for military purposes, the vast
Mickey Fulp
majority of federal lands are open to mineral entry.
Mercenary Geologist
ha r
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COLUMNS | Amit Aggarwal, EY
HOW ARE GOLD MINERS ACHIEVIN
Resource Global Network
NG LONG-TERM VALUE CREATION? Digitalisation is the key to future growth in the gold mining space Amit Aggarwal, EY global mining & metals analyst
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COLUMNS | Amit Aggarwal, EY
Gold miners have seen improved financial performance in the last few years on the back of strengthening gold prices and relentless costcutting measures. Industry players have used strong cash generation to reduce financial risk through debt repayments. And some of the gold companies that are now in better financial shape are currently looking for long-term value creation by identifying opportunities for growth. While yesteryear experiences will continue to favour capital discipline, strategies are beginning to shift to long-term value creation. This will enable gold miners to differentiate themselves and also to attract capital at competitive rates. Strong financial performance, and a focus on controlling costs and productivity, has also enabled gold miners to take on digital transformation initiatives and accelerate technology implementation. However, there still exists a disconnect between the potential of digital transformation and the successful implementation of new technologies, which gold miners will need to address to achieve their productivity ambitions.
ResourceGlobal GlobalNetwork Network 53 Resource
AMIT AGGARWAL Amit Aggarwal is a mining and metals analyst with EY. He has over 12 years of business and equity research experience in the mining and metals industry. He specialises in analysing the global gold industry and also has significant experience researching global steel, iron ore and coal sectors. He completed his MBA (Banking and Finance) from the Nanyang Business School, Singapore and Bachelor of Commerce from Delhi University, India. He lives in Delhi, India with his wife and two daughters.Â
EY EY is a global leader in assurance, tax, transaction and advisory services, and has dedicated Global Industry Centers around the world that serve as virtual hubs for sharing industryfocused knowledge and experience. The organisation’s 28 regions are grouped under four geographic areas: Americas; Europe, Middle East, India and Africa (EMEIA); Asia-Pacific; and Japan. Find out more about the EY Global Mining & Metals Network at www.ey.com/ miningmetals.
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COLUMNS | Amit Aggarwal, EY
Portfolio optimisation and shareholder returns Gold miners have generated significant cash in recent years, due to a recovery in gold prices, a relentless focus on cost reduction and asset sales in prior years. A positive outlook for gold prices is likely to lead to further cash generation. Gold miners have largely returned cash to shareholders through higher dividends and share buybacks, and at the expense of long-term capital expenditure for growth. Indeed, investors have highlighted the lack of longterm value creation across the gold sector. Sector players continue to review their portfolios as many face declining gold output in the future. The sector therefore needs to adopt a balanced capital agenda that not only recognises the call to reward shareholders but also facilitates sustainability of operations. Meanwhile, due to low spend on exploration and declining discovery rates in the recent past, reserves and resources have fallen in the last few years and miners are struggling with short mine lives. Most miners have, however, communicated a weak appetite for mergers and acquisitions (M&A) and/or major capital expenditures, and continue to favour returning cash to shareholders. It is worth noting that many mid-tier gold miners have augmented their portfolios by
longer looking at asset sales. Better market
taking advantage of asset sales executed
conditions have also resulted in a re-rating of
by large miners. But that window now
assets. In light of this, gold miners that look
seems to have closed as large miners are no
to M&A as a route to growth now run the risk
ResourceGlobal GlobalNetwork Network 55 Resource
of overpaying for assets.
as a means to reduce capital needs and to mitigate risk. JVs have the potential to
To achieve growth, some major gold miners
deliver substantial value to stakeholders
have preferred to form joint ventures (JVs)
when managed well. However, in a JV, non-
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COLUMNS | Amit Aggarwal, EY operators may be particularly vulnerable to
• Ore sorting technology can reduce
operating risks as they have limited say in
processing costs by providing higher
day-to-day operations.
grade mill feed and by not processing diluting material.
Changing investor sentiment has given gold miners the opportunity to revisit their
Miners are also adopting innovative digital
growth strategies. Miners need to ensure
technologies to address long-standing
sustainability of shareholder value creation
industry challenges such as mineral reserves
by investing capital for long-term growth.
growth, low grade ore, safety, social license to operate and transparency among
There is also a need for players to look
stakeholders. For example:
at strategies for differentiation, whether through a focus on specific geographies, by
• Huge computer processing capabilities
choosing to operate in low risk jurisdictions
are enabling miners to identify new drill
or seeking operational excellence.
targets more efficiently.
Digital is enabling miners to improve productivity and address sector issues Gold miners remain focused on margin
• One major gold miner is using remote hard braking, advanced obstacle detection and warning systems to enhance operators’ safety.
improvement and have increasingly adopted digitalisation to innovate their operations,
• Electrification of mines is reducing the risk
lower costs and improve productivity. By
of health hazards in underground mines,
using technology, miners aim to reduce
and because less ventilation equipment
capital, labour and water intensities, while
is required, it is also reducing capital
also increasing mining intensity.
intensity.
Some of the ways digitalisation has
Lower usage of energy and water helps the
helped companies cut costs and improve
industry manage operating and capital costs.
productivity include:
And a focus on safety and environmental care builds trust and transparency with local
• Tyre management solutions are improving tyre life and safely increasing truck speeds by monitoring tyre temperature and
communities by addressing issues relating to the social license to operate.
pressure using sensors. For example,
The digital disconnect
this has enabled a major gold miner to
While the concept of digital mining is
save around US$17 million in annual
not new, there remains a gap between
productivity improvement since 2014.
companies’ objectives and what they are actually achieving.
Resource Global Network Indeed, EY identified digital effectiveness as the number one risk facing the mining and metals sector in a recent report. Experience shows that for mining companies to extract the full value of the next wave of opportunities, they will need to develop a comprehensive digital implementation strategy to close this gap.
Connecting the disconnected In addition to developing a strategic path
�Gold miners remain focused on margin improvement and have increasingly adopted digitalisation to innovate their operations, lower costs and improve productivity. By using technology, miners aim to reduce capital, labour and water intensities, while also increasing mining intensity.� Amit Aggarwal
forward when considering digital solutions, mining companies will need to: Build
technical and technological advances;
consensus between stakeholders on their
liaising with regulators and communities to
digital vision; prepare a robust business
plan and communicate health, safety and
case for digital implementation; and address
environmental (HSE) benefits and the impact
concerns relating to the perceived high cost.
of technology on employment; and speaking to academics and experts for deeper insights
They also need to address issues relating to
on how to innovate and attract the right
accountability for digital projects and their
talent.
benefits, the extent to which employees are trained and skilled in using new technologies
The digital agenda needs to be paired with
and how to use existing systems and
a market-to-mine approach to business, as
processes that are not being optimised.
well as strong leadership and a culture that supports reducing losses and increasing
Externally, miners will also need to
output. Companies that maintain the status
collaborate and partner more closely with
quo can only expect to yield the same results
others across the mining ecosystem.
they are seeing today.
This includes working with other original equipment manufacturers (OEMs) and technology providers to understand Amit Aggarwal is an EY Global Mining & Metals Analyst, based in India. The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.
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COLUMNS | Jim Rogers
THE IN
Resource Global Network
NVESTOR’S PERSPECTIVE Famous gold owner Jim Rogers gives his view on the investment climate
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COLUMNS||Ian JimThomson Rogers 60 COLUMNS
SPEAKS TO JIM ROGERS Jacob Ambrose Willson: You have recently said you expect gold to fall below $1,000 in light of building geopolitical and financial turmoil – why would this be a good time for traders to invest in gold? Jim Rogers: My market timing is amongst the world’s worst, but if it happens I would use that opportunity to buy, because as people lose more confidence in governments and in money (paper money especially), they have always gone to gold and silver. Whether they should or not is irrelevant; they have and they will certainly continue to do so at least in our lifetimes. Therefore, I would be backing up on gold because as the economy of the world gets worse and worse and people lose more confidence in governments and paper money, then the refuge will be gold and silver. JAW: Gold is revered as a ‘safe haven’ investment and people flock to it in times of turmoil – Is there ever a case for refraining from investing in gold? JR: Many economists for decades have explained that gold is ‘a barbaric relic’ and that gold and silver have little economic value in the world. We all know that wheat has economic value. Gold does not have much economic value compared to other commodities, but as I said before it doesn’t
ResourceGlobal GlobalNetwork Network 61 Resource
JIM ROGERS Jim Rogers is a businessmen, investor, financial commentator, author and gold owner. The US national bought his first gold in 1971 and while he has given some away, he has never sold any of his gold reserves. He is the chairman of Rogers Holdings and Beeland Interests and co-founder of the Quantum Fund along with Hungarian-American investor George Soros. In the late 1990s, Rogers created the Rogers International Commodities Index (RICI), a composite US Dollar based total return index that represents the value of a basket of commodities consumed in the global economy, from agriculture to energy and metals. A firm believer in being exposed to gold as an insurance policy if nothing else, Rogers tells RGN where he foresees gold spot prices going in the near future and explains the pros and cons of investing in each type of the ‘safe haven’ commodity.
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COLUMNS | Jim Rogers
ResourceGlobal GlobalNetwork Network 63 Resource matter what people think, they’ve always gone to gold and they will again. JAW: Buying gold bullion or gold coins are considered one of the more risk-free ways of investing in gold, but is there any advantages to be taken from investing in gold mining or gold producing companies? JR: I don’t know anything that is risk-free in the investment world. But if you can find the right miner you are going to make much more money because you are going to get
”As people lose more confidence in governments and in money (paper money especially), they have always gone to gold and silver and they will continue to do so in the future” – Jim Rogers
huge financial and operational leverage. JR: Gold futures are good because you can The problem is that there are hundreds, if
get huge leverage. Or if you can find great
not thousands, of gold mines and miners in
companies, for example a great gold penny
the world.
stock that’s about to find a huge gold deposit and can go into production, you’ll make a
The famous American author Mark Twain
staggering amount of money.
once said: “The definition of a gold mine is a hole in the ground with a liar at the top.”
As far as most people are concerned coins
We’ve all seen millions of losses in gold mines
are useful because the problem with bullion
over the years, but if you find the right one
is that in a time of emergency its hard to take
and the right price, you will make much more
the bullion down to the grocery store and
money.
buy a loaf of bread.
Likewise, if you are really good at timing, you
They don’t know if its real or not and even
will make much more money in gold futures
if they accept that it is real, its hard to make
than in gold coins, bullion or anything else.
change.
But you have to be good at timing to do that. Coins are usually better, they are more JAW: In your opinion what are the better
transportable and easier to confirm and
trading instruments to use in this process?
recognise compared to bullion.
www.jimrogers.com
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MINING | Teranga Gold
TERANGA GOLD Multi-jurisdictional West African gold producer reaches for mid-tier status
Resource Global Network
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MINING | Teranga Gold
Resource Global Network
Teranga Gold went to IPO in 2010 under the guidance of Alan Hill and Richard Young - two veterans from the formative years of the world’s largest gold mining company, Barrick Gold. The pair have worked together for 30 years, striking up a symbiotic relationship since their days at Barrick, with Hill providing the technical and operational graft and Young the financial and strategic know-how. Back in 2010, the experienced pair were looking to build a new gold company in a high growth region of the world, and West Africa contained all the ingredients they were searching for. Thus, Teranga was born with a view to leveraging its initial asset, the Sabodala Gold Mine in Senegal, into something much bigger. With Hill in the role of chairman at Teranga and Young as President and CEO, the company laid out ambitious plans to become a mid-tier, multi-jurisdictional gold producer in West Africa. Sabodala first commenced production in 2009, although Teranga spent the next few years optimising the mine’s output before expanding the company’s presence into Burkina Faso with the acquisition of Gryphon Minerals in 2016. This was swiftly followed by
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MINING | Teranga Gold Teranga’s entry into Ivory Coast via two joint
form the basis of Teranga’s modus operandi
ventures, the first in 2016 and the second in
in West Africa. In fact, this attitude has been
2017.
fossilised into the business through its name Teranga – which means hospitality and
This expansion of the company’s organic
friendliness in Wolof, the main local language
growth pipeline demonstrates Teranga’s
of Senegal.
position as a multi-jurisdictional company in one of the highest growth regions in the
Senegal is the company’s original host
world for gold mining and is paving the way
country in the region and hosts a section
for its evolution to mid-tier status.
of the West African Birimian gold belt, a sweeping geological formation that has
Over the last two decades, West Africa has
provided a steady stream of world-class
transformed into one of the premier regions
gold deposits across multiple jurisdictions,
for gold exploration and extraction in the
including the Sabodala mine.
world, with many great geological formations, modern mining codes and increasingly
Sabodala is located approximately 650 km
receptive governments – an enticing prospect
Southeast of the capital city Dakar and is the
for foreign investors and mining firms.
largest-scale gold mine and mill in Senegal, although the industry is still in its nascency
“It’s been one of the fastest growing regions
and the Senegalese government recently
for gold production over the last quarter
revealed aims to become one of Africa’s top
century,” says Young. “West Africa has
seven exporters of gold by 2035.
gone from almost no production to having a production profile that is close to North
At the outset, Sabodala was producing
America, which I never thought would’ve
around 130,000 ounces (oz) of gold per
occurred when I started in this industry.”
annum, however, Teranga was intent on boosting its production profile and following
This unprecedented growth in the West
the expansion of its processing plant in 2012,
African gold mining sector has been driven by
has averaged annual production of more
a willingness to see industrial development
than 200,000 oz.
by leaders and governments, along with a clear but fair caveat that the rules are
The company also completed a mill
followed, and the benefits of responsible
optimisation project in 2015 and the results
mining shared equally.
were tangible in the company’s subsequent
What’s in a name? With this in mind, it was quickly decided that corporate social responsibility (CSR) would
output figures. “The Sabodala mine had a record year last year, following on a record year in the previous year,” confirms Young.
Resource Global Network
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MINING | Teranga Gold
“West Africa has been one of the fastest growing regions for gold production over the last quarter of a century.� Richard Young, president and CEO
Resource Global Network
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MINING | Teranga Gold During FY 2017 Sabodala produced 233,000 oz of gold, almost double its original output figures, and while the operation has matured Teranga’s unit mining and processing costs have fallen to the lowest in company history. “These [improvements] are a reflection of the investment we’ve made in training programmes for our Senegalese nationals. We’ve moved from 10-15% of our workforce being ex-pats at the time of IPO to between 5-6% today and really benefitted from the investment made in our employees.” Furthermore, the optimisation of operations at Sabodala has allowed Teranga to increase its free cash flow, which has played an integral role in Teranga’s broader expansion plans. Since 2013 the company has finalised four deals in the region, an impressive achievement given the downturn in gold prices at that time. Young hopes that of these four deals – two acquisitions and two JVs – in Burkina Faso and Ivory Coast, at least three (if not all four) can be advanced into producing mines. This, along with the optimised performance of the Sabodala mine, should comfortably take the company into mid-tier production status. “We are very pleased with these transactions,” says Young. “They set us up very well for the future, not only as gold prices rise but as we see an increase rise in our production profile in tandem.”
Australian Resource Business Global Network
A benchmark for responsible mining Although Teranga has been highly focused on attaining that coveted mid-tier status over the last few years, that hasn’t diminished the company’s philosophy with regards to setting the benchmark for responsible gold mining in West Africa. “The board has given us a very clear mission and that is to share the benefits of responsible mining with all of our stakeholders. From a shareholder perspective, that means our ability to operate and grow our business without issue, and for the local and regional communities, it is about ensuring they are better off after we leave.” Having been active in Senegal for over eight years, Teranga has established a broad range of CSR programmes, which is typified by the growth of its CSR group in the country. In 2010 the company had two individuals on the team, today there is about 50. “To start off with, we addressed historic stakeholder grievances,” reveals Young. “Then we began engaging with the local and regional communities to understand what their vision was and how we could participate in that.” After liaising with the local and regional communities over an extended period, Teranga was able to identify some clear priority areas, with the most pressing concerns being agriculture and food security.
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MINING | Teranga Gold
Resource Global Network
“That’s an area where we think we’ve done a tremendous job. This is a region which has a distinct rainy season, but when that ends there is absolutely no precipitation, meaning it’s a very short growing season. “So, we installed pumps with drip irrigation and have created 12 market gardens to date, which has allowed the women in this region to create sustainable livelihoods.” The market gardens have given nearly 1,000 women vital food security and economic assurance, while improving the health of families in the region that didn’t previously have access to fresh fruits and vegetables.
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MINING | Teranga Gold
“In terms of sustainable economic development, we think all of the things we are doing are going to help sustain this region long after we are gone.�
Resource Global Network
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MINING | Teranga Gold
Richard Young, president and CEO Teranga has also focused on youth and
are going to help sustain this region long
education, giving over 200 students from
after we are gone.”
local communities the opportunity to attend colleges and universities in Dakar
Development pipeline
and crucially covering the fees associated
Teranga’s social sustainability outlook is also
with those courses.
being implemented across its development stage projects in the other West African
In addition, Teranga offers training
countries where it operates. This been
programmes at site to those in the region,
epitomised by the company’s decision to
bringing in casual labour, teaching trades
change the name of a project in Burkina Faso,
and key skills that can be used locally,
on the request of the community.
regionally or at national level. The company received the Banfora Gold “In terms of sustainable economic
Project as part of its acquisition of Gryphon
development, we are also really focused
Minerals in 2016, however Banfora is actually
on small business enterprises and looking
the name of a large town about 90 km away
to help grow those enterprises in the
from the mine site and so the name did not
region. We think all of these programmes
give the local community the pride in the mine that they were looking for.
Resource Global Network
Consequently, the project was renamed Wahgnion, which means ‘together we will succeed’. Since then Teranga has made swift progress in advancing the mine through the development stages. A feasibility study was completed in late 2017, full construction work began in Q1 2018 and financing has recently been concluded. Teranga secured US$165 million in funding from Taurus Funds Management for the Wahgnion project, a sum that Young describes as pivotal to the company’s financing plans. Another significant development within the company came with the de-listing of the stock on the ASX in December 2017. When the company first listed, it did so out of an Australian outfit. But being a Canadianheadquartered company, the stock largely migrated back to the world’s largest mining and resource exchange (the TSX) and liquidity declined materially on the ASX. Therefore, the significant cost of the dual listing no longer made sense anymore and
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MINING | Teranga Gold
“With one producing mine, a second one on target to come on line next year and Golden Hill, we have an attractive organic growth pipeline.�
Resource Global Network
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MINING | Teranga Gold
the decision was made. Overall, Teranga’s
“We’ll have an updated reserve out mid-
shareholders have been overwhelmingly
year, which we believe will show increased
supportive of its growth strategy, particularly
reserves and better economics for Wahgnion.
prominent board member David Mimran.
On this project we are just getting started,” proclaims Young.
“David is our largest shareholder with 22% of the company. He’s also on our board and
Wahgnion currently has a nine-year mine
is the largest private employer in two of the
life but the company hopes to extend this to
countries in which we operate. He believes
between 11 and 13 years with this updated
in our vision and is helping us execute that
reserve.
vision.” The company also has an advanced The future looks bright for Teranga with the
exploration project, Golden Hill, situated
Wahgnion project on track to pour first gold
on the prolific Hounde belt in Burkina Faso.
next year, which will increase the overall
Work at Golden Hill is advancing rapidly and
production profile by 50% and potentially
Teranga is investing $8 million in Golden Hill
double the company’s free cash flow
drill programmes in 2018.
generation.
Resource Global Network
Teranga plans to release an initial resource
“Golden Hill is moving forward faster than
for the project’s most advanced prospects by
we could have ever anticipated and beyond
year end. Preliminary metallurgical test work
that, we’ve done two joint ventures in Ivory
programmes are underway and base line
Coast which we are really excited about. With
environmental studies are planned for later
one producing mine, a second one on target
this year.
to come online next year and Golden Hill, an advanced exploration project, we have an
“Taurus also provided an additional $25
attractive organic growth pipeline.”
million to take our Golden Hill exploration project through to feasibility, assuming that
With all this in mind, Teranga will certainly
the drill results continue to be as positive as
become a mid-tier gold producer in West
they’ve been. We’re very pleased with their
Africa, and with responsible mining at the
confidence in the project.
core of its philosophy, the firm is creating a positive legacy wherever it goes in the region.
TSX:TGZ
j a
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AFRICA. IN THE PALM OF YOUR HAND.
ONLINE NOW WWW.AFRICANBUSINESSNETWORK.CO.ZA
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MINING | Hummingbird Resources
HUMMINGBIRD
COMING FULL CIRCLE A
The world’s leading authority
Resource Global Network
D RESOURCES
AT Y A N F O L I L A I N M A L I
y on the global gold industry
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MINING | Hummingbird Resources
For Dan Betts, managing director of Hummingbird Resources, trying to describe the company’s achievements in the first quarter of 2018 without using superlatives is a difficult proposition. The West Africa-focused miner achieved first production from the Yanfolila Gold Mine in Mali back in December 2017, before earmarking the first three months of 2018 as a key ramp-up period for its flagship project. Low and behold, in a Q1 production update Hummingbird announced that the mine had reached nameplate capacity, thus completing the company’s journey from construction of the mine to full commercial production. Hummingbird’s MD talks to RGN about 2018 production targets at Yanfolila, along with further exploration plans and development opportunities. Over the last three months, Hummingbird has rapidly progressed from a developer under pressure to deliver on time and on budget, to a cash generative gold producer. “It’s a complete change in the time and our situation in the business as we’ve got the cash flow. Its totally transformational and a
Resource Global Network
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MINING | Hummingbird Resources
“We want to show the market and any potential investors that we are not just going to - having become a cash generative business - get dizzy with cash flow and go off doing different things� Dan Betts, managing director
Resource Global Network huge milestone,” remarks Betts. While it has undoubtedly been an exciting period for the company, this transition has presented a whole new set of challenges to the team, who have had to ensure that every single small component is taken care of for the operation to run smoothly. “To do that in three months, which is a pretty short amount of time in the mining industry, I think is amazing and hats off to the team, overall they’ve done a fantastic job.” The next challenge for Hummingbird at Yanfolila is to maintain current production levels for the rest of the year and meet the overall production guidance for the mine that was set at between 105,000 ounces (oz) and 115,000 oz of gold. While Betts wishes not to belittle the difficulty of achieving this target – remember sustained gold production is dependent on a number of circumstances and Hummingbird is relatively new to the game – he feels that overcoming challenges is nothing new for the company. “I think we have to be diligent. We have built a fantastic operating team, the new manager is extremely experienced and has brought a lot of steady leadership and organisation to the operating team, making sure our maintenance schedule is proactive and not reactive.” Beyond the 2018 production guidance for Yanfolila, Hummingbird has also devised a
93
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BRINGING MORE TO MINING
Resource Global Network 95
TIMELAPSE VIDEO YANFOLILA GOLD MINE
detailed exploration plan for the surrounding
misleading according to Betts, as the gold has
area which should further cement the future
already been discovered by Hummingbird’s
of the operation beyond its current seven-
predecessor, and so the MD prefers to use
year mine life.
the term ‘Resource conversion’.
The project is located within the highly
“What we need to do is go to those Resources
prospective Yanfolila Greenstone Belt, which
that we inherited from Gold Fields - we have
has been subject to lots of previous mining
over 1 million ounces of gold in Resource
activity down the years, most notably by
outside of the mine plan - and we need to put
Yanfolila’s former owner Gold Fields.
more drill holes into it, understand it better
Low hanging fruit
and convert those Resources into Reserves to extend the mine life and extend the
In fact, Hummingbird actually inherited
profitability of the business – that is the low
a significant gold resource outside of
hanging fruit.”
the current mine plan, and it is for this reason that the company has identified an
This year, Hummingbird will proceed with this
exploration strategy for 2018 that focuses on
Resource conversion by setting up its own
‘low hanging fruit’.
data base and inventory of Resources, before converting them into Reserves. “I think it’s
However, the word exploration is somewhat
the most intelligent way to add value to the
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MINING | Hummingbird Resources
Resource Global Network
business, but we will only do it in a disciplined Nonetheless, Hummingbird is not solely way,” reveals Betts.
predicated on Yanfolila and the associated Resource conversion in the surrounding area.
“We want to show the market and any
It has a significant asset in Liberia called the
potential investors that we are not just
Dugbe Gold Project and also a material stake
going to - having become a cash generative
in fellow West African explorer, Cora Gold.
business - get dizzy with cash flow and go off doing different things.”
In fact, Cora Gold was created when Hummingbird teamed up with a private
Clearly for Betts and Hummingbird, the
company and agreed to hand over some of
name of the game is discipline and as
its West African exploration assets to the
such the company has pledged to spend
consequent business, in return for a 50%
no more than 15% of free cash flow on its
share in Cora, diluted to 34% post the IPO
exploration programme at Yanfolila each
fund raise.
year. This should amount to at least US$8 million, enough to add significant value to
Arms’-length exploration
the business while conforming to its highly-
Betts has previously commented on
regimented mantra.
the attractiveness of this ‘arms’-length exploration incubator’ model Hummingbird
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MINING | Hummingbird Resources
has with Cora and it seems like the relationship is about to bear fruits, judging by the stellar results of a maiden drilling campaign in Southern Mali. Cora’s Tekeledougou drilling programme identified two gold zones: Woyoni, with 56 metres at 2.2 g/t Au, including 22 metres at 4.86 g/t Au and Kouroudian, with 17 metres at 6.8 g/t Au including 1 metre at 102 g/t Au. “If there is any continuity there and they can build a resource base, it’s only 8 km from our plant so it could be a monumental winwin for both of us. They can effectively save themselves the huge CAPEX of building a mine and can be fast-tracked into cash flow by running through our mill.
Resource Global Network
“We know them well, we trust the management team, and we have great faith in Jon Forster and his skills as an exploration geologist. Overall, we are totally supportive; Hummingbird’s representatives sit on the board and we are totally behind them, so good luck to them.� All things considered, Hummingbird has significant growth plans for Mali over the coming years and fortunately has been blessed with a pro-mining government that is also highly cooperative and considerate towards foreign investors. Working with a wholeheartedly supportive regime has become even more coveted when considering the recent plight of foreign mining companies in countries such as Tanzania and the Democratic Republic of Congo, where outfits have been subject to
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MINING | Hummingbird Resources
hasty unilateral action during the last 12
together and the only way that works is if
months.
communities believe in what you are doing.
While Mali is in the process of resolving a
“This is reflected in the tangible actions
$100 million VAT dispute with Randgold
you take in their villages and communities,
Resources, the government has reassured
and we’ve made a significant positive
Hummingbird and its fellow miners that there contribution, which we will continue to do. will be no knee jerk reaction and it remains
Where we’ve made the greatest impact is
fully supportive of mining developments in
within local healthcare, having run successful
the country, according to Betts.
projects regarding malnutrition-awareness, health and hygiene education and premature
Hummingbird has also been very conscious
birthing issues, to name but a few.
of the role it plays within the communities that it operates in right from the beginning
“In particular, our relationship with Critical
of its time in West Africa and has tried to
Care International, who have been managing
commit in a meaningful way to improving
our health care response, has been
living standards and quality of life.
exceptional. The tangible evidence is that they’ve been saving dozens and dozens of
“We are a guest in their communities and the only way to succeed is if everyone works
lives so I’m really proud of that,” beams Betts.
Resource Global Network
Brave new world
“We are also looking to explore and extend
To conclude, Hummingbird has taken its
the mine life, but we are really focusing on
first steps into the challenging sphere of
making the operation absolutely hum, if you’ll
running a full-scale commercial gold mine,
pardon the pun.
after progressing from explorer and mine developer to producer at Yanfolila in rapid
“That’s the first and foremost priority
time.
this year. If you get that right you have unbelievably strong cash flows, and we are
Therefore, in acknowledgement of the
clearly under-valued based on those cash
challenges faced by a typical African gold
flows, and you have optionality in terms of
company in the first three to six months
exploration internally and M&A.”
of production, Betts reveals that the main priority for Hummingbird over the next 12 months is consolidation.
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MINING | Avesoro Resources
Completing a turnaround in Liberia and expanding into Burkina Faso
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AVESORO RESOURCES
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MINING | Avesoro Resources
On May 10th, West Africafocused gold miner Avesoro Resources published a glowing financial update, with gold production and sales more than trebling in the first quarter of 2018, which helped quarterly revenue rise to US$91.4 million. This incredible figure represents more than 90% of the full year 2017 revenue of $98 million reported by the company in March, after it was able to complete a successful turnaround at the New Liberty Gold Mine in Liberia. Avesoro’s annual performance was also bolstered by the acquisition of two producing gold mines in Burkina Faso, which combined with the revival of New Liberty to create a positive spiral in the company’s fortunes, propelling it towards mid-tier status.
industry, after achieving first marketable
“We are delighted with the continued strong
introducing a number of initiatives to boost
operational performance delivered in the
operations at the mine.
production as recently as March 2016. However, dark clouds were quick to form around Liberia’s inaugural large-scale gold mine. Just two months after reaching full production, Avesoro (then operating under the name Aureus Mining) was forced to suspend operations at New Liberty amid commissioning delays and a tailings leak, which was exacerbated by a deteriorating financial position and retreating gold prices.
A timely intervention It was at this point that Turkish gold miner MNG Gold swooped in to arrest the company’s decline, signing a deal to become the majority shareholder of Aureus and providing a cash injection totalling $150 million to rescue the New Liberty mine, before renaming the company Avesoro. After refreshing the boardroom with several appointments from MNG’s team, Avesoro commenced a new strategy for New Liberty,
first quarter,” says Avesoro’s CEO and director Serhan Umurhan.
“Primary amongst these was the decision to transition to an owner-operator mining
“All of our mines performed in line with
model, which significantly reduced the
expectations, leaving us on track to meet
ongoing costs of mining operations. We also
2018 production guidance. We go forward in
purchased additional fleet to allow for an
2018 from a position of strength.”
increased mining rate and to catch up on the stripping shortfall the company inherited.”
New Liberty is the first and largest commercial gold mine in Liberia’s fledgling
Furthermore, Avesoro has improved
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MINING | Avesoro Resources
All of our mines performed in line with expectations, leaving us on track to meet 2018 production guidance. We go forward in 2018 from a position of strength.” Serhan Umurhan, CEO and director equipment availability, recruited additional
However, fast forward to Avesoro’s Q1 2018
high-quality staff for both the mining
production report and irrefutable evidence
operation and process plant, undertaken
emerges of the turnaround at New Liberty.
a proactive maintenance schedule and optimised the process plant allowing for
The mine produced a record quarterly gold
an increased throughput from 90ktpm to
output of 27,870 ounces (oz), a 9% increase
140ktpm.
on the production sum achieved in the previous three-month period at the end of
Factor in improved tailings and surface water 2017. management and the result is a stable and profitable mine, which was not much more
Addressing the size of the task the company
than a far-fetched dream back in mid-2016.
had on its hands, Umurhan says: “It has
Resource Global Network
undoubtedly been challenging, but we knew
The next challenge for Avesoro at New
there was a quality asset here and that we
Liberty is to continue delivering high
had the capabilities within the team to bring
standards in line with the company’s renewed
it into stable production.
mine plan and production targets. However, the miner has also devised plans to extend
“As the most recent record production results the LOM at New Liberty. have shown, we have succeeded in achieving that. I would like to thank all our staff who
“We have a lot of inferred gold ounces below
have shown great determination in bringing
the pit shell that are not currently included
about this result.”
within the mine plan and have just completed a 52-hole drill programme with the aim of
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MINING | Avesoro Resources
increasing the confidence level in these
from the Youga and Balogo gold mines in
ounces, with extremely encouraging results
Burkina Faso during the first quarter of the
to date confirming the resource model.”
year, with the combined production figure of both mines increasing by 39% on the last
The results of this drilling programme will be
quarter to 40,218 oz.
combined with near mine exploration that is currently underway. “2018 is an exciting
This is an impressive result considering
year for exploration across the whole group,”
Avesoro purchased the mines only
reveals Umurhan.
last year in what the company called a
Welcome to Burkina Faso Avesoro also delivered strong output growth
‘transformational’ move, in the sense that it gives them the chance to grow their portfolio and expand their geographic reach in the West Africa region.
ResourceGlobal GlobalNetwork Network 109 Resource
In particular, Avesoro was able to apply its
“To date, the average mined grade from
skills at the Youga mine to deliver the highest
Balogo has been approximately 18 grams per
quarterly production from the process plant
tonne (g/t) and during the quarter this has
in a decade and has already extended the
fed through to the process plant, with the
mine life and devised a more cost-effective
feed grade for the quarter increasing by 37%
mining process.
to 4.5 g/t.�
The Balogo mine is also held in high regard
Youga and Balogo are proven gold-producing
by the company despite its previous owner
assets that complement the New Liberty
struggling to raise the necessary finance
mine and provide an instant boost to
that would reflect its true potential. Avesoro
Avesoro’s production portfolio, in addition to
began mining the high-grade asset in March
adding high quality exploration upside that
2017.
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MINING | Avesoro Resources
will provide further organic growth in the
“We will continue to focus on delivering
future.
on our production guidance through 2018 whilst also assessing various other M&A
Taking into account the additional output
opportunities.
from the Youga and Balogo mines, Avesoro’s total Q1 production figure came to 68,088 oz,
“We have a very strong platform to grow from
which represents an all-time high return and
both organically and by acquisition.”
keeps the company on track to meet its 2018 guidance of between 220,000 oz to 240,000
A golden horizon
oz.
Umurhan also has a reasonable right to believe that external market conditions
“Our primary ambition is to become a
will further sweeten the fruits of success
premier mid-tier gold producer and that
born out of Avesoro’s increased operational
ultimately means we have to reach 500,000
productivity.
oz [annual production rate] and the acquisition of Youga and Balogo has been a
Gold is widely considered a ‘safe haven’
significant first step in reaching that target,”
commodity and will continue to be perceived
Umurhan proclaims.
in this way by investors long into the future.
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Interest in gold as a portfolio buffer also
After completing a turnaround at New Liberty
peaks during times of geopolitical tension or
and bolstering its production portfolio with
upheaval and this is when gold spot prices
the two Burkina Faso acquisitions, Avesoro is
tend to rise, which is only good news for
well on the way to a golden horizon.
international gold mining companies, and Avesoro’s CEO and director expects gold
In the short term, the company is confident
to rise in the face of escalating tensions
it can soon reach a 300,000 oz annual
between the world’s two largest economies.
production target through organic growth and exploration across its three mines, but in
“President Trump’s foreign policy and the
the long term it will look to achieve a 500,000
current brewing trade war with China have
oz annual guidance through M&A activity and
increased political instability and uncertainty
is currently assessing various opportunities
in these regions and we are seeing investors
throughout the continent.
turn to gold as a traditional haven.”
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AFRICA’S LEADER
IN MINING AND MINERALS PROCESSING
MINERALS PROCESSING
MINE DESIGN
INFRASTRUCTURE
WINDER SYSTEMS
CONTRACT OPERATIONS
STUDIES draglobal.com
*OHANNESBURG 3OUTH !FRICA s 0ERTH !USTRALIA s 4ORONTO #ANADA
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MINING | Chalice Gold Mines
CHALIC GOLD
Cashed up and debt free with Canad and Australian gold assets
CE D
dian
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MINING | Chalice Gold Mines
Alex Dorsch of Chalice Gold Mines traces the company’s history back to 2006 when it listed on “Here the Australian Stock Exchange, we originally owning the historic are 18 Chalice gold mine in Western months Australia. However, the CEO later and explains how it wasn’t until we’ve built the 2009 venture into Eritrea a substantial in Northern Africa that the portfolio of company was materialised, after exploration assets its acquisition of the Zara Gold in the world-class Project. Chalice advanced the domains of Canada and project over the next three years, Australia,” says Dorsch. The until a significant US$114 million CEO believes that what sets bid, lobbed by a Chinese-Eritrean Chalice apart from its exploration consortium convinced the competitors is the company’s company to sell. Using the funds combination of financial capability and broad technical and commercial from the Eritrea sale, Chalice spotted an opportunity in Canada strengths. and snapped up a gold project in Financial and technical 2012, before making a healthy profit again with a divestment in proficiency “It’s a unique business model where the 2016. company can apply its strong financial
By this point Chalice had developed a strong
position as well as its deep technical and
nous in reading the market and commodity
commercial ability to really interrogate
price cycle, with an ability to smell the right
projects quickly, pick opportune times to
time to invest in order to maximise investor
acquire and make material progress in
returns.
developing each one.”
The company changed tact slightly in 2017,
Returning to its transaction history, the sales
when the board found there was a growing
in Eritrea and Canada put the company in a
appetite for risk in the sector and decided to
commanding financial position, in that it has
build a commanding exploration portfolio,
been well cashed up and debt free ever since.
targeting discovery in Canada and Australia. This is a rare position for a junior exploration
Resource Global Network
company to find itself in; having a war chest
highly regarded industry veteran Tim Goyder.
of over AUS$40 million. Crucially, the healthy
He has a great track record of success and is
balance sheet has meant Chalice has not had
an integral part of the business as executive
to rely on capital markets and going back
chairman.
to shareholders every time it needs to raise funds to support development plans.
“Beyond that, within the wider team there is a demonstrable depth and breadth of
Dorsch also regards the board and 25-strong
experience which I think is another key driver
Chalice team as another key area of strength
of the business.�
within the business. “We have a very experienced board led by well-known and
The decision to focus its exploration portfolio
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MINING | Chalice Gold Mines
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on Canada and Australia ended up being
“We like the geological selling point and
a no-brainer for the board for myriad
investment certainty that comes with
reasons beyond the obvious low sovereign
mining friendly jurisdictions, so from that
risk attached to operating in these secure,
perspective it’s a very attractive proposition
mining-friendly regions.
to be operating in those countries.”
In fact, mining-friendly is a bit of an
East Cadillac Gold Project
understatement, particularly in the case of
Chalice’s flagship asset is the East Cadillac
Québec. The Canadian province rebates
Gold Project, located in the world-class Abitibi
Chalice around 30% of its direct exploration
greenstone belt in Québec along the Cadillac
expenditure and on top of that, there is no
break, which hosts over 100 million ounces
state royalty – making it a very attractive
(Moz) of gold discovered and a number of
region for exploration.
globally significant gold mines.
“It’s the endowment of both regions and
“We are in very good company and have a
their geological potential,” says Dorsch. “We
regionally significant ground position now
consider Canada and Australia world-class
covering over 27 km of strike along that
domains, with a lot more to give in terms of
break. We are very encouraged by what we
exploration potential.
have seen from the work to date.
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MINING | Chalice Gold Mines
ResourceGlobal GlobalNetwork Network 121 Resource
“We’ve only had the property for just over 18
property in October last year and have only
months and have continued to expand the
just completed that programme in early
ground holding, while undertaking a back-to-
April,” reveals Dorsch.
basics, ground-up exploration programme to give it the best chance of success in making a
From the initial phase of drilling Chalice has
substantial discovery.”
made two promising gold discoveries to date, with a large portion of results still pending
When Chalice first picked up the project, they
and a number of additional targets waiting to
noticed it had significant exploration gaps
be tested. The drilling was performed by two
and was likened to a patchwork of random
reliable international drilling contractors.
sampling and ineffective drilling. Seeing this, Chalice stepped back and began with regional “We had great support from Foraco, G4, sampling and all the modern geophysical
ALS, MRB & Associates, Abitibi Geophysics,
tools it had at its disposal, including 3D
amongst others in Val-d’Or; they have all
Induced Polarisation, aeromagnetic and
done an excellent job. To drill the best part
LIDAR surveys.
of 30,000 metres on time, under budget and without significant incident is very
“We used all of those tools successfully and
commendable, so we are really happy with
started our first phase of drilling on the
that outcome.”
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MINING | Chalice Gold Mines
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Alex Dorsch, CEO
Australian assets
“It is a difficult area to explore but we have
Turning to the Australian portfolio, Chalice
the right EM and gravity signatures on our
has established two main projects Down
block that gives us a lot of excitement about
Under: The Warrego North Project in the
exploration success,” says a hopeful Dorsch.
Northern Territory and the Pyramid Hill Gold Project in Victoria.
Chalice also recently picked up a district scale land position at Pyramid Hill, extending over
The former is located in the very well-
3,350km2 of ground North of Bendigo in
endowed Tennant Creek area in close
Victoria. Initial findings indicate that there is
proximity to several historic mines dating
a real lack of exploration under the Murray
back to the mid-20th century, including the
Basin cover in that area.
1.6Moz gold-producing Warrego Mine. This notion has been strengthened by the “We are immediately Northwest of the
Victorian government’s declaration that there
Warrego mine, a very high-grade historical
is potentially over 32Moz of gold extending
gold-copper mine in the Tennant Creek IOCG
North of Bendigo, which has given Chalice
domain. The area has many similar mines,
extra motivation to begin work on the project
all with a relatively small surficial footprint
very shortly.
but very high-grade ore bodies extending at depth.
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MINING | Chalice Gold Mines
Commodity markets
acquire projects that we genuinely want to
Chalice is looking to accelerate work across
run.
all of its projects over the next 12 months but will also uphold an aggressive acquisition
“Our strategy is very much based on making
strategy.
timely acquisitions of undervalued assets and at the moment our focus is on gold and
“We are looking at upwards of 10
nickel sulphide projects.”
opportunities at any one time and enjoy the luxury of having a significant amount
Dorsch believes that macro conditions
of capital to deploy – but we always look at
shaping the gold market have not had quite
acquisitions with an owner’s mindset; we
as profound an effect on prices as usual,
Resource Global Network the cycle by the company. Hence, Chalice is keeping its ear to the ground with regards to opportunities in this space. “Ours is a distinctive and unique value proposition,” concludes Dorsch. “Typically, junior explorers don’t have the ability to operate at our level, so I like to think we have a particularly strong value proposition given we are trading around our cash backing, with a proven model based on acquiring assets at opportune times,
citing ongoing political instability in North
progressing them rapidly and delivering
Korea and the Middle East.
value to shareholders.
However, Chalice continues to monitor these
“Having that financial ability, commercial
external forces and remains bullish on gold
mindset as well as the technical ability really
and other base metals, which are viewed
does differentiate us.”
as being at the beginning of an upturn in
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MINING | Raiden Resources
RAIDEN RE
Serbia-focused copper-gold j
ESOURCES
junior partners with Rio Tinto
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MINING | Raiden Resources
Formerly known as Subzero Group, Raiden Resources was relisted on the ASX in February 2018. In the months building up to its revival, the firm busied itself with the takeover of Timok Resources, which heralded the dawn of Raiden’s entry into the recently revived resource sector of Serbia. Through the acquisition of Timok Resources, Raiden gained ownership of two wholly-owned Serbian entities, giving it access to a number of highly prospective coppergold projects in the Eastern European nation. Then, in an unprecedented development for a recently listed junior, Raiden executed an option to an earn in agreement with Rio Tinto, merely one month after it assumed control of its Serbian assets. The restructuring process at Raiden saw Dusko Ljubojevic appointed managing director along with several other appointments at board level. Ljubojevic is a highly experienced geologist of Balkan descent who has spent many years with juniors and major companies across Africa, Asia, Australia, North America and Eastern Europe, including in Serbia. “That was one of the reasons I came on board,” he says. “We started focusing on this region because we were aware of the
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MINING | Raiden Resources
Limestone ridge potential it has as a re-emerging copper-gold
Timok acquisition that Raiden was able to
producing district, which despite the fact
establish a foothold in Serbia’s mining sector
that it has and continues to yield world-class
under its new identity. The board’s ultimate
discoveries, remains underexplored.”
goal is to explore its projects and continue to expand the extensive copper-gold portfolio in
Working in Serbia is nothing new to many
solid jurisdictions. Ljubojevic believes Raiden
of the company’s new board members
has gained an enviable portfolio in a Tier 1
and management team and this previous
jurisdiction.
experience will provide Raiden with a major advantage as it begins to advance its Serbian
“This is about as good of a ground package
operations.
as any exploration company could hope to secure in its initial portfolio. The projects are
“We are essentially hitting the ground
situated within a district which is dominated
running. We are not evaluating a new
by major development companies such as
jurisdiction and are very comfortable here
Rio Tinto, Freeport McMoRan, JOGMEC (Japan
with the service providers, the regulators and
Oil, Gas and Metals National Corporation),
we know how to operate in Serbia.”
and a number of producing state-owned mines. Plus, it is located in a favourable
However, it wasn’t until the completion of the
mining jurisdiction.”
Resource Global Network
Magnetite sample In Serbia, Raiden holds a significant acreage
which is home to the Timok Magmatic
position of over 300 km², encompassing
Complex. Timok is a relatively small district
a sizeable portfolio of approximately six
which is one of the main copper producing
projects which are either granted or under
centres in Europe and has become the
application. The projects are at varying
focus of several international companies’
stages, from defined, drill ready targets, to
endeavours who have recently entered
early stage exploration projects, providing
Serbia.
the company with a solid pipeline of opportunities.
“Our portfolio includes two projects within Timok and the areas remain underexplored.
These projects are located in some of the
What we are targeting are porphyry copper-
most prospective geological regions of Serbia
gold and epithermal mineralisation which
and in some instances, these areas that have
constitute the Bor and Majdanpek deposits
seen little to no modern exploration activity
and have been actively mined for decades
to date. “This provided a fantastic opportunity
by the Serbian state mining company, RTB
for an explorer to move in,” says Ljubojevic.
Bor.”
Most of the projects are located within the
Ljubojevic explains how there are possibly
Carpatho-Balkan zone in Eastern Serbia,
further extensions of Timok style geology
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MINING | Raiden Resources
“SERBIA IS PROBABLY THE MO DESTINATION FOR MINING IN EUR THE NUMBER OF MAJOR CO DUSKO LJUBOJEVIC, M which strikes South towards the Bulgarian border, where the company has secured three more projects – Donje Nevlje, Pirot and Stara Planina – all of which are conducive for porphyry style and intrusion related mineralisation. Focusing on the Stara Planina project, it has two large geochemically defined anomalies
both of these in equal
which were confirmed by geophysics
measure: “Serbia is
undertaken by Raiden in late 2017. The
probably the most favourable
geophysics correlated very well with the
investment destination for mining and
surficial geochemistry and will be followed
exploration companies in Europe, and that is
up in the company’s maiden drill programme
reflected in the number of major companies
this year.
in the country.
This is just one example of the promising
“It’s a relatively small country and you have
geology and targets which are a hallmark of
a number of global development companies
Raiden’s Serbian portfolio. Any mining firm in
competing for the acreage, which says a lot
the world would say that the geology of any
about the quality of the jurisdiction and the
given host region is central to the chances of
prospectivity of the geology.”
a successful project, but equally important is the quality of the host jurisdiction.
Modern mining has taken place in Serbia for over a century, therefore it has a very
According to Ljubojevic, Serbia provides
well-established mining workforce that is
Resource Global Network
OST FAVOURABLE INVESTMENT ROPE, AND THAT IS REFLECTED IN OMPANIES IN THE COUNTRY” MANAGING DIRECTOR The Rio Tinto JV agreement has undoubtedly been the most significant news item coming out of Raiden during its first few months of operation, but what will the US$31 million earn-in deal actually translate into for the junior? very costcompetitive in comparison with many Western jurisdictions. Infrastructure is also highly developed as a legacy of the former Socialist state, when extensive road and rail systems were constructed throughout the
“In the short run, it allows us to focus our own initial funding and time on our most advanced asset – the Stara Planina project,” noted Ljubojevic. Raiden is well cashed up with a budget of over $4 million, meaning it can properly test the large targets at its most advanced project.
entire country. “In the medium term it provides us with a In fact, rail systems run right through most of
partner with not just ability to finance, but
Raiden’s projects and power is probably the
also has experience and technical skills in this
cheapest in Europe, says Ljubojevic. When
geological environment and targeting these
it gets there, the company will also benefit
porphyry systems.
from an in-country smelter facility and good transportation links to neighbouring
“In the long run, Rio Tinto is a partner which
countries via rail, leading to numerous ports.
has the ability to not just explore but to develop in case there will be a discovery. We
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MINING | Raiden Resources
Malachite and azurite within porphyry
Resource Global Network
Andesite porphyry, showing varying degrees of alteration and leaching are in partnership with somebody that can
are prospective for porphyry systems.”
add some real long-term value.” Under its new incarnation, Raiden has Capturing the attention of one of the world’s
already achieved what most junior mining
largest mining companies, not even one
companies can only dream of. The company’s
month into its relisting, is a major affirmation
JV with Rio Tinto will provide it significant
of the quality of Raidens’ portfolio and the
upside potential on the joint venture
management team’s ability to close the deal.
properties, while allowing it to fast-track its other more advanced projects aggressively.
“Many juniors state they are targeting Tier 1 deposits, but in our case this has been
In the mining industry, the story always ends
confirmed,” Ljubojevic declares.
in production. But, for Raiden the focus will continue to centre on discovery in a region
“A company like Rio Tinto is after Tier 1 deposits. By entering into this agreement with us, it signals to the market that our projects
ASX:RDN
which continues to produce Tier 1 assets.
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MINING | AusQuest
AUSQ
Building a mutually advanta
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QUEST
ageous alliance with South32
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MINING | AusQuest
AusQuest is a multi-commodity junior explorer with major ambitions. The ASX-listed company has maintained the same philosophy since its original listing back in 2003, and that has been to focus on largescale discoveries that would pique the interest of players from the mid to large-cap space. “We’ve never got into the small mine game,” admits managing director Graeme Drew. “The idea was always to retain an interest in projects that a major company would eventually develop. This is a niche which fits our background in terms of our people and their expertise.” AusQuest has followed this principle closely throughout its history, establishing a number of promising joint ventures with large companies in Australia and overseas, at times coming close to fashioning a project with the legs to sustain the appetite of a
The alliance with South32 was a momentous
major.
occasion for AusQuest and a realisation of a fundamental company aim, but what has the
However, this changed when the company
deal translated to during its first 12 months
entered the Peruvian copper-gold
and what is in store for the future?
exploration space in 2011. Six years later AusQuest was finally able to attract the
The art of the deal
major partner it had been searching for,
“We have regular technical meetings with
signing a strategic alliance agreement (SAA)
South32 and regular communication with
with South32, a giant of the Australian
their people. We work closely with them
mining sector having been spun out of BHP
presenting the projects, discussing the results
in 2015.
Resource Global Network
and agreeing the way forward including drill
have so far provided us with in excess of
targets and programmes,” reveals Mr Drew.
$8 million and that is likely to increase over the next six months as we move into some
AusQuest’s technical team is strong and
exciting drilling programmes.”
boasts over 200 years of collective experience in the mineral exploration space, a good
In Peru, where AusQuest has identified three
fit with the well-documented technical
separate projects, over 8,000 metres of
experience of South32’s team.
diamond drilling is planned for the first two projects in the next six months. This drilling is
“From a financial point of view, we now have
estimated to cost US$4 million with South32,
10 projects under the SAA and they [South32]
as part of the agreement, providing the
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MINING | AusQuest means to fund these campaigns along with capital to support additional drilling at some of the company’s Australian projects. South32 provides technical and financial support to AusQuest’s various drilling programmes in Peru and Australia, earning the right to exclusivity over all these titles as well as the right to earn equity in each of them. South32 can claim equity up to 70% by spending US$4 million on each project and has the right to go to 80% if it chooses to fund a pre-feasibility study on any project. Alternatively, South32 could choose to end its participation in a project, leaving AusQuest to fund pro-rata to maintain its equity. “If we present a project to South32 and it is rejected twice then it becomes our project. But, our aim is to have all of our projects accepted because when you are looking for major deposits, the more frogs you kiss the more chance you’ve got of finding the prince,” Drew quips. “Realistically if one of them comes in, we’ll be extremely pleased. If more than one comes in it will be a dream come true.” AusQuest is also providing management for the initial drilling programmes, which is a major bonus for the company because it has already expended substantial time and effort developing the prospects and has the knowledge and commitment to successfully drive them through the early drilling stages.
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MINING | AusQuest
“This is a little different to handing the
it gives us financial incentives (bonuses) to
projects over to a major or bringing another
provide new projects and opportunities to
company in just to do the drilling, often
South32 on an annual basis, which then helps
without the same conviction that we would
us to undertake (pay for) the generative work
have.
to provide the pipeline of projects that they are interested in.�
“Overall, we think the relationship is working extremely well. The agreement is relatively
One of the more recent outcomes of a
unique in terms of the way it is structured as
strategic meeting between the two partners
ResourceGlobal GlobalNetwork Network 145 Resource AusQuest’s strategy because when developing multi-asset ventures, junior explorers often fall into a momentumsapping trap. They successfully raise funds for a drilling programme, achieve interesting but not compelling results and then have to wait for an extended period while raising more capital for further drilling. However, in AusQuest’s case this common pitfall has been effectively bypassed by the SAA, as the funding arrangement gives the company the breathing space required to focus on testing several prospects at the same time. “I think it’s almost unheard of to have 10 projects being funded under the one agreement. This is fantastic from our point of view. It gives us the chance to succeed and South32 multiple chances to have a potential development.” While Drew concedes that it is highly unlikely all 10 will deliver viable returns, he maintains they will all be subject to the best scientific tools; mapping, sampling, geophysics and drilling, which gives them a fighting chance of discovering orebodies. came in March 2018, when AusQuest confirmed that South32 would be extending
The Peruvian pipeline
its funding to cover four additional
In total, AusQuest has five projects that are
exploration opportunities, taking the total
currently at the drilling stage, two of which
to 10 projects under the SAA and triggering
are in Peru. Generally, the Peruvian targets
a second bonus payment of US$500,000 to
are large scale plays and occur undercover,
AusQuest.
particularly in the South where there is lots of soil, sediment and volcanic cover masking the
This serves as further vindication of
rocks.
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MINING | AusQuest
This is bread and butter work for AusQuest,
Also at the drilling stage is the Cerro de Fierro
having applied techniques learned from
prospect, an iron oxide-copper-gold (IOCG)
its experience searching for undercover
target at the Northern end of AusQuest’s
mineralisation in Australia, including airborne
target area.
and ground geophysical surveys. “We recognised its prospectivity based on the Delving further into AusQuest’s Peruvian
combination of magnetics and radiometrics
portfolio, Mr Drew highlights the Chololo
from our proprietary airborne survey data.
Porphyry Copper prospect as first cab off
There was a large potassium anomaly which
the rank in Southern Peru. It was found
suggested regional potassic alteration of the
through mapping and sampling, while
rocks, and an isolated magnetic response
ground geophysics revealed a large-scale IP
several square kilometres in size sitting
chargeability anomaly, which bodes well for a
within it, making it an obvious target for IOCG
new copper discovery.
mineralisation.”
The undercover target has never been tested,
Subsequent mapping and sampling has
and AusQuest is excited to be starting a wide-
confirmed the presence of abundant copper
spaced 5,000 metre drilling programme in
in the area, not only in structures but also in
May.
the rocks as well, plus there is potential for
Resource Global Network
the prospect to be sweetened by the possible
of process water that would be useful when
co-existence of gold.
developing new deposits,� Drew ponders.
AusQuest is currently undertaking drill
As drill programmes across five projects fast
permitting for the Cerro de Fierro project and
approach, AusQuest can look back upon its
hopes to have this completed by mid-year at
strategic alliance with South32 as a defining
which point access construction can begin.
moment in the junior’s history. With the
This is necessary for both projects as they
technical and financial support of a major
occur in elevated regions of the country.
industry player, the company has a golden opportunity to establish a world-beater of
“All of our projects in Peru are close to the
a project at home in Australia or in its new
coast, so infrastructure requirements are
Peruvian frontier.
potentially less than for the larger deposits that occur inland within the Andes. Being close to the sea could also provide a source
ASX:AQD
j
147
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150
MINING | NTM Gold
NTM GOLD
Resource Global Network
Breaking new ground in a historic Western Australian goldfield
151
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MINING | NTM Gold
When ASX-listed junior explorer The Mertondale Shear Northern Manganese merged Zone with fellow Western Australia“The main mineralising structure is the focused junior Redcliffe Mertondale Shear Zone which is a major Resources in 2016, the former linking structure between two major regional gained access to the Redcliffe structures,” says Muir. “It’s highly fertile, Gold Project, located 240 km and there has been quite a lot of gold found North of Kalgoorlie and 40 km previously in the Mertondale Shear.” Northeast of the historic gold mining town Leonora. Renamed In fact, over 1.4 million ounces (Moz) of gold NTM Gold and with a new single has been extracted and produced from the asset focus, the amalgamated Mertondale Shear in both past and present company made instant progress endowment, most of which has been shallow in the shape of five successful oxide gold. However, large swathes of the drill programmes towards region have received little to no exploration the back end of 2016, which attention due to the presence of deeper significantly enhanced NTM’s cover. It is amongst these underexplored areas that NTM has focused its efforts. understanding of the geology and the mineralisation present across the site. Drilling continued “Nearby exploration and existing deposits highlight the potential of the region and throughout 2017 while the company refined its management whilst there has been some exploration, it hasn’t been conclusive with regards to finding team under the leadership of veteran geologist Rodney Foster. mineralisation at deeper depths. So, it’s been our philosophy to drill deeper and we’ve had
At the start of 2018, Foster handed the
some good exploration success so far.
reins of the company to Andrew Muir, another highly experienced geologist with
“We are also in the unusual position of having
an additional 13 years in the finance sector.
a reasonable sized land holding. We’ve
RGN finds out how the new managing
got about 170 km² of prospective ground,”
director plans to build NTM through
reveals Muir.
advancing the Redcliffe project. “We already have a modest resource The Redcliffe project is located in the vast
base which is growing, but one of the key
Eastern Goldfields of Western Australia,
differentiators between us and our peers is
within a prolific gold bearing structure of
that we have four or five processing plants
which NTM has secured a substantial tenure
within 50-75 km of our project.”
in.
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MINING | NTM Gold
Therefore, while the project is well connected gold rest with the Redcliffe project, which has to WA’s unofficial gold capital Kalgoorlie, it
a current resource estimate of 278,100 oz
is also conveniently located within trucking
(5.48 Mt @ 1.57g/t Au).
distance of a number of processing plants, which gives NTM a range of development
NTM has completed a succession of drilling
options once the company looks to
programmes across a number of prospective
commence gold production.
targets over the last 18 months, many of which have provided excellent results.
However, there is plenty of work to be done before the company can begin to think about “We are getting grades of up to 10-15 g/t in processing any ore, and its hopes of striking
some of the higher-grade parts. Not all of
Resource Global Network
them are like this, but we are chasing higher-
metres of defined strike that could potentially
grade shoots at depth. To date, the high-
rise to 1.5 km.
grade parts are probably averaging at 5 g/t which is easily mineable underground.�
The Bindy prospect
Until recently the drilling completed at Bindy was coarsely spaced at 100 metre intervals, so during the first quarter of
Some of the most impressive results from
2018 the company returned with a more
the sustained drilling activity at the Redcliffe
comprehensive infill RC drilling programme.
project comes from the Bindy prospect, a large mineralised system with over 800
155
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MINING | NTM Gold
ResourceGlobal GlobalNetwork Network 157 Resource At the beginning of April, the company published an enticing set of assay results from the infill programme at Bindy, with notable intersections including: 20 metres @4.25g/t Au (Incl.10m @ 7.92g/t Au), 10 metres @4.20 g/t Au (Incl.5m @ 7.83g/t Au) and 15 metres @2.37g/t Au (Incl.5m @ 4.93g/t Au). Overall, this drilling programme has significantly enhanced NTM’s understanding of the prospect and increased the company’s confidence in the grade distribution by giving a fuller picture of the continuity of mineralisation at Bindy. In the same statement, NTM also revealed it had initiated diamond drilling at the Nambi prospect, another target within the Redcliffe project for which the company has high expectations. The diamond drilling was quickly completed and now NTM is analysing the data and will publish the results in due course. Significantly, there was visible gold in the drill core, further boosting expectations of the deposit. Taking into account the wealth of drilling activity conducted over the last 18 months, NTM hopes to significantly increase the overall resource at the Redcliffe project, with an updated resource announcement due by mid-2018. “Based on the drilling we’ve done to date I am very confident that we can significantly increase our resource base in both the short term as well as the long term. We are confident that there will be a meaningful resource base on the project,” Muir declares.
158
MINING | NTM Gold
Investor support
Widening his gaze to the contemporary
On the investor side, the company has been
global commodity market, Muir believes
continually well funded from its investor base
there is always a case for having a portfolio
on the ASX and this was demonstrated by a
with exposure to gold. “It has safe haven
recent $1.25 million capital raise, a crucial
status and with the current geopolitical
result for the junior as it looks to continue
climate at the moment, we think that gold is a
with its aggressive drilling campaigns.
very good place to be.
“We had some very strong demand from the
“Of course, the Australian dollar is also
market so we decided to increase the raise
helping. With the dollar at about 80 cents
to $1.5 million. We also had bids for over $4
it boosts the Australian gold price up quite
million which was a fantastic outcome.
nicely. The sentiment largely shifts on US dollar pricing, but we think gold is an easily
“But given our current capacity and aims, we
understandable commodity, it’s a very
didn’t want to make the raise too big. We’ve
transparent, very liquid market and you can
still got plenty of funds to go out and do what
always sell it.”
we need to do in the short to medium term.”
Resource Global Network
For now, NTM is occupied on getting its
“We are active, we are drilling, we will have
updated mineral resource out by the middle
strong news flow over the next few months
of 2018, but beyond this it aims to expand
with the drill results coming through at all
greenfields exploration across its large land
three major prospects and we will have the
holding in the Mertondale Shear.
resource update by mid-year.
“In addition to the majority of our deposits
“That will be a major piece of news and value
having significant upside at depth and
point for the company. Beyond that we will
strike, there is 15 km of our 40 km length of
be looking to expand exploration beyond the
tenements that hasn’t been tested properly,
deposits in an aggressive exploration drive.”
so that’s another target for us,” says the MD.
ASX:NTM
159
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162
MINING SERVICES | Process IQ
PROCESS IQ Completing a turnaround in Liberia and expanding into Burkina Faso
Resource Global Network
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Driving out hidden inefficiencies in minerals processing plants
AVESORO RESOURCES
164
MINING SERVICES | Process IQ
Process IQ was formed by Pieter Strobos and Daniel van der Spuy after the South African duo emigrated to Australia in 2000 and 2006 respectively. The directors of the company have been involved in the mining industry for the vast majority of their professional careers, crossing paths at Mintek South Africa before they decided to set up a process control and instrumentation service company based in Perth in 2011. Process IQ has achieved triple-digit growth annually since then and is now well-known and respected in the mining industry.
‘technology exhaustion’ from the hail of silver bullets out there,” says Strobos. “Process IQ fulfil the role of ‘technology integrator’, assessing many different technologies and applying appropriate solutions for mining companies. “Since the personnel at Process IQ are proficient in a wide variety of technologies, we can provide efficient support services to mines, particularly remote operations. “The majority of the measurement techniques we supply are unique. For example: fast online measurement of cyanide (Cynoprobe), carbon concentration, dissolved oxygen and pH in CIP gold plants and elemental analyses (like Ni, Cu, C and sulphur with Blue Cube MQi) and particle size measurement in flotation plants.
A large degree of Process IQ’s clients stretch back over 17 years to when Strobos first
“We also assist in introducing unique and
settled in Australia. The firm’s business
improved measurement control techniques
director tells RGN how Process IQ has
in SAG and Ball milling circuits.”
developed into a client–focused mining technology and service business that
An example of one of the company’s most
understands minerals processing and is
recent products is MillSlicer. “Vibration
continually sourcing the best technologies
technology is used to analyse the impact on
that can be applied to the mining industry to
the mill shell, and from that we can provide
solve problems.
the operators with a visual presentation of what’s going on inside their mills as well as
Process IQ is unique in that it not only uses
five additional signals that has never before
traditional technology but is at the forefront
been used in mills.
of developing and applying emerging technology related to Industry 4.0 in the
“This can have a substantial economic impact
mining industry.
on mines as it has a direct influence on throughput and liner wear of mills.”
“Some mining companies often suffer from
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MINING SERVICES | Process IQ
In fact, Strobos reveals that some clients
companies, for instance to optimise grinding
have reported throughput improvements
circuits.
of between 10-20% after combining this technology with their advanced
“Through our remote monitoring capability,
control algorithms. This is a significant
we can provide expert data analyses and
operational improvement that could make
support services to mining clients anywhere
a huge difference to a company’s financial
in the world in real time.
performance. “Many suppliers of cloud-based systems start MillSlicer was developed by the firm’s US
their presentations with ‘imagine’ while we
partner, Digital Control Lab, and Process IQ is actually do solve real-life problems for the registered as distributor of the technology in
mining industry,” says Strobos.
Australia, South East Asia, Russia and Africa. Process IQ currently services many gold, base “We have skills that cover the full spectrum of metal, battery mineral, mineral sands as well automation and optimisation, including basic as iron ore mines, working with brownfields and specialised instrumentation through to
and greenfields sites.
advanced control systems and the Industrial Internet of Things (IIoT) platforms with
As a first step, Process IQ will typically visit
artificial intelligence (AI) for monitoring and
an existing plant to conduct a detailed review
optimisation.
of the operation. This may include a gap analyses on the existing instrumentation
“In Perth we have experts in every aspect
and control infrastructure, talking to site
of minerals processing - from design
personnel, collecting data and identifying
through to operations and support. Process
opportunities to improve throughput,
IQ collaborate with other METS (Mining,
recovery and efficiency.
Equipment, Technology and Services)
Resource Global Network
“For study managers of greenfields projects,
processing plant is a significant expense for
we advise thinking about ‘The Digital Mine’
a miner, through losses of valuable metals in
early on - typically before the detailed
the tails or inefficient or sub-optimal use of
feasibility study (DFS) phase. Process IQ can
equipment, power or reagents.
assist by specifying the Basis of Design at this early stage to ensure the process and control
The problem is that these types of losses
system design of new mines are future-
don’t appear on quarterly or annual financial
proof.”
statements, therefore it is often difficult to account for internally and can easily be
Several factors can affect the safety and
ignored. However, it is just as important for
performance of metallurgical processing
productivity to audit these types of losses as
plants, including mineralogy, feed grade, the
the more obvious ones.
age of equipment and instrumentation, level of process control, skill level of operators and Through the application of digital remote managers – as well as their ability to harness
data analytics, Process IQ can solve process
data and turn it into useful information to
problems even before the client becomes
drive decisions.
aware of it.
It is Process IQ’s role to evaluate these key
The manual handling of data is a big problem
performance indicators and provide cost-
in the mining industry, according to Strobos,
effective solutions to inefficiencies or unsafe
with platforms such as IoT and AI forming
work practices.
part of a natural solution to the manual data problem.
Mining companies need a social license to operate, and part of this is being sustainable
This is another key area of business for
- namely being good stewards of the earth’s
Process IQ, which is a vital consideration
natural resources. An inefficient mine or
amongst metallurgical mills and plants. In
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MINING SERVICES | Process IQ
“Some mining companies can often suffer from ‘technology exhaustion’ from the hail of silver bullets out there. Process IQ can assist by fulfilling the role of ‘technology integrator’ Pieter Strobos, business director
ResourceGlobal GlobalNetwork Network 169 Resource many cases, plant operators continue to
efficiencies and reduce errors and downtime
persist with manual measurements and
on equipment.”
laborious filling in of manual log sheets to record data. These are often shelved and
Strobos believes that the biggest novel
seldom looked at. This information could
development made by Process IQ is the
be valuable if it were automated, digitised,
IoT platform and the application of AI. The
analysed and used in process control.
business director hopes that the company can lead the process of digitisation in the
Process IQ is spearheading the transition
mining sector, which is currently lagging
towards digitisation of data in the mineral
behind advanced manufacturing and other
processing industry through its automated
industries in terms of automation and
analysers, IoT platform and application of
machine learning.
machine learning. The mining industry is faced with several “One example is working with a client to get
unique challenges such as unpredictable
their data directly from the lab into our cloud- feed materials, which make automation based platform where it can be integrated
challenging. To some extent, mineral
with other plant data for viewing, analyses
processing absorbs a lot of the natural
and optimisation.”
variability, making it easier for downstream processing.
In support of its digitised data handling services, Process IQ offers a wide range of
However, a lot of technology has been
measurement devices to help operators
developed over recent years that can now
augment other information such as in-field
also be applied in mining to handle this
status and availability of equipment.
variability through online measurement and machine learning.
“The use of cloud-based services enables us to cross traditional boundaries and
Finally, Strobos has a simple message for
access information from sources such
any METS companies: “Partner with us in
as design drawings, asset management,
your digital transformation journey to help
process control, part procurement and
improve mining.”
availability, operators shift information, etc. This information can greatly enhance
a j
170
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172
APPOINTMENTS & EVENTS
APPOINTMENTS Billionaire Agarwal names new boss of Vedanta Resources Diversified miner Vedanta Resources has ended its year-long search for a new boss with the appointment of Srinivasan Venkatakrishnan. Venkatakrishnan has been CEO of Africa’s largest gold producer AngloGold Ashanti for five years but will leave the post to take the helm at Vedanta on August 31. Vedanta’s billionaire owner Anil Agarwal has been looking for a new leader since former Rio Tinto CEO Tom Albanese announced his departure.
Saudi Aramco makes symbolic female board appointment Lynn Laverty Elsenhans has been appointed to the board of Saudi Aramco in a milestone move for Saudi Arabia, a country with very few female executives. The US oil executive joins the world’s most profitable company under a significant shake-up of its 11-member board. Elsenhans is a former chief executive and chair of US oil refiner Sunoco and was named one of the world’s most powerful women in 2008.
Orocobre lands appoints new director to board from TTC Lithium brine producer Orocobre will welcome Masaharu Katayama from Toyota Tsusho Corporation (TTC) to its board of directors. The appointment follows the placement of Orocobre shares to TTC, which allow the latter to appoint a representative to Orocobre’s board. Orocobre’s chairman Rob Hubbard said: “[Katayama] brings a wealth of talent and corporate experience with him from his role with TTC.”
Susan Dio appointed chairman and president of BP America BP has appointed Susan Dio as chairman and president of its American operation, effective from May 1st, 2018. Dio succeeds John Mingé, who will move to chair a study by the National Petroleum Council (NPC), before retiring in March 2019. “Susan’s breadth of operational and commercial experience gained with BP around the world make her ideally suited for the key role of representing BP in the US,” said chief executive Bob Dudley.
Resource Global Network 173
EVENTS Our pick of the top mining, oil & gas and renewable energy events happening around the world in the months to come
World Renewable Energy Congress June 25-27 Stockholm Sweden 2018 Precious Metals Summit - Beaver Creek September 20-22 Colorado US Mining Investment Europe June 6-7 Frankfurt Germany The Third UK Onshore Oil and Gas Summit July 05 Birmingham UK Solar and Storage Finance Asia July 02-03 Singapore
Want to promote your resources event? Email the editor at editorial@resourceglobalnetwork.com
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